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SENATE BILL NO. 2001
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-FOURTH LEGISLATURE - SECOND SPECIAL SESSION
BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR
Introduced: 5/21/26
Referred: Finance
A BILL
FOR AN ACT ENTITLED
"An Act relating to the taxation of certain natural gas project property and related 1
facilities; relating to the determination of the value of taxable real and personal property 2
for purposes of calculating local contributions for public school funding; relating to 3
municipal property taxes; relating to the Alaska Gasline Development Corporation; 4
relating to revenue from a North Slope natural gas project; relating to an alternative 5
volumetric tax on natural gas throughput; relating to agreements and payments related 6
to a natural gas project; relating to community impact grants; relating to the regulation 7
of liquefied natural gas import facilities by the Regulatory Commission of Alaska; 8
relating to an Alaska liquefied natural gas project mitigation fund; and providing for an 9
effective date." 10
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 11
* Section 1. The uncodified law of the State of Alaska is amended by adding a new section 12
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to read: 1
LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that the tax 2
treatment in this Act is necessary to advance a major natural gas project and to ensure that 3
(1) the project maximizes the benefit to the state by ensuring direct and 4
affordable access to natural gas to the residents of the state; and 5
(2) communities affected by the natural gas project are protected from the 6
negative effects of the project. 7
(b) Nothing in this Act is intended to establish, modify, impair, waive, or otherwise 8
affect the tax treatment, assessment methodology, valuation, taxing authority, or applicability 9
of taxes imposed under AS 29.45 or AS 43.56 with respect to any other property, project, 10
facility, infrastructure, or taxpayer. It is the intent of the legislature that this Act be narrowly 11
construed and not serve as precedent, guidance, or interpretive authority for the taxation of 12
any other property subject to taxation under AS 29.45 or AS 43.56. 13
* Sec. 2. AS 14.17.510 is amended by adding a new subsection to read: 14
(d) In this section, the full and true value of the taxable real and personal 15
property does not include property subject to the alternative volumetric tax levied 16
under AS 43.59. 17
* Sec. 3. AS 29.45.080(c) is amended to read: 18
(c) A municipality may levy and collect a tax on the full and true value of that 19
portion of taxable property taxable under AS 43.56 as assessed by the Department of 20
Revenue which value, when combined with the value of property otherwise taxable by 21
the municipality, does not exceed the product of the percentage determined in (f) of 22
this section of the average per capita assessed full and true value of property in the 23
state multiplied by the number of residents of the taxing municipality. Property 24
subject to tax abatement under AS 43.59.010 or to the alternative volumetric tax 25
levied under AS 43.59.020 is not included in the value of property for the purpose 26
of making the calculation under this subsection. 27
* Sec. 4. AS 31.25.010 is amended to read: 28
Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 29
public corporation and government instrumentality acting in the best interest and as a 30
fiduciary of the state for the purposes required by AS 31.25.005, located for 31
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administrative purposes in the Department of Commerce, Community, and Economic 1
Development, but having a legal existence independent of and separate from the state. 2
The corporation may not be terminated as long as it has bonds, notes, or other 3
obligations outstanding. The corporation may dissolve when no bonds, notes, or other 4
obligations of the corporation or a subsidiary of the corporation are outstanding and 5
the corporation or a subsidiary of the corporation is no longer engaged in the 6
development, financing, construction, or operation of an in -state natural gas pipeline 7
or an Alaska liquefied natural gas project. Upon termination of the corporation, its 8
rights and property pass to the state. 9
* Sec. 5. AS 31.25.040(b) is amended to read: 10
(b) The board shall by regulation adopted under AS 44.62 (Administrative 11
Procedure Act) adopt and publish procedures to govern the procurement by the 12
corporation of supplies, services, professional services, and construction. The 13
procurement procedures must 14
(1) reflect competitive bidding principles and provide vendors 15
reasonable and equitable opportunities to participate in the procurement 16
process; 17
(2) include procurement methods to meet emergency and 18
extraordinary circumstances; 19
(3) comply with the five percent preference under AS 36.30.321(a); 20
and 21
(4) provide for an Alaska veterans' preference that is consistent with 22
the Alaska veterans' preference in AS 36.30.175. 23
* Sec. 6. AS 31.25.080(a) is amended to read: 24
(a) In addition to other powers granted in this chapter, the corporation may 25
(1) determine the form of ownership and the operating structure of an 26
in-state natural gas pipeline developed by the corporation and may , subject to 27
AS 31.25.120(b), enter into agreements with other persons for joint ownership, joint 28
operation, or both of an in -state natural gas pipeline or an Alaska liquefied natural gas 29
project; 30
(2) plan, finance, construct, develop, acquire, maintain, and operate a 31
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pipeline system and other transportation mechanism, including pipelines, compressors, 1
storage facilities, and other related facilities, equipment, and works of public 2
improvement, in the state to facilitate production, transportation, and delivery of 3
natural gas or other related natural resources to the point of consumption or to the 4
point of distribution for consumption; 5
(3) lease or rent facilities, structures, and properties; 6
(4) exercise the power of eminent domain and file a declaration of 7
taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 8
necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project; 9
the exercise of powers by the corporation under this paragraph may not exceed the 10
permissible exercise of the powers by the state; 11
(5) acquire, by purchase, lease, or gift, land, structures, real or personal 12
property, an interest in property, a right -of-way, a franchise, an easement, or other 13
interest in land, or an interest in or right to capacity in a pipeline system determined to 14
be necessary or convenient for the development, financing, construction, or operation 15
of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or 16
part of an in -state natural gas pipeline project or an Alaska liquefied natural gas 17
project; 18
(6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or 19
part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, 20
or an interest in an asset of the corporation; 21
(7) elect to provide transportation of natural gas as a contract carrier, 22
common carrier, or otherwise; 23
(8) provide light, water, security, and other services for property of the 24
corporation; 25
(9) conduct hearings to gather and develop data consistent with the 26
purpose and powers of the corporation; 27
(10) advocate for new pipeline capacity before the Federal Energy 28
Regulatory Commission; 29
(11) make and execute agreements, contracts, and other instruments 30
necessary or convenient in the exercise of the powers and functions of the corporation 31
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under this chapter, including a contract with a person, firm, corporation, governmental 1
agency, or other entity; 2
(12) sue and be sued in its own name; 3
(13) adopt an official seal; 4
(14) adopt bylaws for the regulation of its affairs and the conduct of its 5
business and adopt regulations and policies in connection with the performance of its 6
functions and duties; 7
(15) employ fiscal consultants, engineers, attorneys, appraisers, and 8
other consultants and employees that may, in the judgment of the corporation, be 9
required and fix and pay their compensation from funds available to the corporation; 10
(16) procure insurance against a loss in connection with its operation; 11
(17) borrow money as provided in this chapter to carry out its 12
corporate purposes and issue its obligations as evidence of borrowing; 13
(18) include in a borrowing the amounts necessary to pay financing 14
charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 15
and legal fees, and other expenses that are necessary or incident to the borrowing; 16
(19) receive, administer, and comply with the conditions and 17
requirements of an appropriation, gift, grant, or donation of property or money; 18
(20) do all acts and things necessary, convenient, or desirable to carry 19
out the powers expressly granted or necessarily implied in this chapter; 20
(21) invest or reinvest, subject to its contracts with noteholders and 21
bondholders, money or funds held by the corporation, including funds in the in -state 22
natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project 23
fund (AS 31.25.110), in obligations or other securities or investments in which banks 24
or trust companies in the state may legally invest funds held in reserves or sinking 25
funds or funds not required for immediate disbursement, and in certificates of deposit 26
or time deposits secured by obligations of, or guaranteed by, the state or the United 27
States; 28
(22) enter into, as it determines to be necessary or appropriate, any 29
swap or hedge, cap, or other contract providing for payments based on levels of or 30
changes in interest rates or indices or in the cost or price of any commodity, supply, or 31
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expense expected to be used or incurred in connection with the acquisition, 1
construction, or operation of any facility or property owned, leased, or operated by the 2
corporation, or an option with respect to any of the foregoing; 3
(23) except as provided in (g) of this section, acquire an ownership or 4
participation interest in an Alaska liquefied natural gas project, natural gas treatment 5
facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal 6
facilities related to the infrastructure of an Alaska liquefied natural gas project, or an 7
entity or joint venture that has an ownership interest in or is engaged in the planning, 8
financing, acquisition, maintenance, construction, and operation of an Alaska liquefied 9
natural gas project; 10
(24) after consultation with the commissioner of revenue and the 11
commissioner of natural resources, enter into contracts relating to an Alaska liquefied 12
natural gas project, including contracts for services related to operation, marketing, 13
transportation, gas treatment, marine terminal operation, or liquefaction. 14
* Sec. 7. AS 31.25.080 is amended by adding new subsections to read: 15
(h) If the corporation or a subsidiary of the corporation negotiates with another 16
entity to acquire an interest in an Alaska liquefied natural gas project, the corporation 17
shall provide an opportunity for municipalities in the state to purchase a portion of the 18
corporation's right to acquire additional equity interest in the natural gas project not 19
exercised by the corporation, through an entity managed by the corporation. A 20
municipality may not acquire a direct interest in a natural gas project under this 21
subsection. 22
(i) The corporation shall, to the maximum extent possible, use contractors and 23
suppliers in the state in order to benefit from the experience of workers and businesses 24
in the state in arctic engineering and construction. 25
* Sec. 8. AS 31.25.090(f) is amended to read: 26
(f) Subject to the restrictions in this section, the [THE] corporation may 27
enter into confidentiality agreements necessary to acquire or provide information to 28
carry out its functions. If a state agency determines that a law or provision of a 29
contract to which the state agency is a party requires the state agency to preserve the 30
confidentiality of the information and that delivering the information to the 31
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corporation would violate the confidentiality provision of that law or contract, the state 1
agency shall 2
(1) identify the applicable law or contract provision to the corporation; 3
and 4
(2) obtain the consent of the person who has the right to waive the 5
confidentiality of the information under the applicable law or contract provision before 6
the state agency transfers the information to the corporation. 7
* Sec. 9. AS 31.25.090 is amended by adding new subsections to read: 8
(j) If all parties to a confidentiality agreement entered into under (f) of this 9
section agree to waive the confidentiality required by the agreement, in whole or in 10
part, information subject to that waiver may be released to a legislator or a public 11
agent. Information released under this subsection may include reasonable redactions. 12
Information released under this subsection may include 13
(1) a contract or agreement or a specific term of a contract or 14
agreement; 15
(2) a pending contract or agreement or a specific term of a pending 16
contract or agreement; 17
(3) a record, file, or other information in possession of the corporation, 18
a subsidiary of the corporation, or an entity partnered with the corporation; or 19
(4) the confidentiality agreement or terms of the confidentiality 20
agreement. 21
(k) Notwithstanding (g) or (j) of this section, information subject to a 22
confidentiality agreement entered into by the corporation may be discussed in a 23
legislative committee in regular or executive session if all parties to the confidentiality 24
agreement consent to the session, the consent is lawful, and one or more of the 25
consenting parties is available to testify at the session. 26
(l) A confidentiality agreement entered into under (f) of this section may not 27
(1) prevent compliance with an administrative or court order 28
mandating disclosure; 29
(2) except as provided in (m) of this section, make confidential 30
information that may lead to 31
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(A) a significant fiscal liability, obligation, or risk to the state; 1
or 2
(B) appropriations or other state funding or in -kind payments 3
or services from the state; or 4
(3) make confidential the existence of information related to a state 5
interest option under AS 31.25.125. 6
(m) A confidentiality agreement entered into under (f) of this section may 7
make confidential specific known or reasonably anticipated project economics or costs 8
related to the Alaska liquefied natural gas project only if the parties to the contract 9
agree that release of the project economics or costs would cause commercial or 10
competitive harm to an entity involved in the Alaska liquefied natural gas project. 11
(n) In this section, "public agent" means 12
(1) a public agency, as defined in AS 40.25.220, or an agent or 13
contractor of a public agency; 14
(2) an agent or contractor of a member of the legislature or of a 15
legislative committee. 16
* Sec. 10. AS 31.25.120 is amended by adding a new subsection to read: 17
(b) Unless the legislature approves the action by law under this subsection, the 18
corporation may not transfer, sell, or otherwise dispose of an ownership or 19
management interest in a subsidiary of the corporation. The corporation shall notify 20
the presiding officer of each house if the corporation intends to transfer, sell, or 21
otherwise dispose of an ownership or management interest in a subsidiary of the 22
corporation. The legislature shall have 90 legislative days to consider the transfer, sale, 23
or disposition. If the legislature does not disapprove the transfer, sale, or disposition of 24
an ownership interest within 90 legislative days, the corporation may move forward 25
with the transfer, sale, or disposition. In this subsection, "legislative day" means a day 26
the legislature is in regular or special session. 27
* Sec. 11. AS 31.25 is amended by adding a new section to read: 28
Sec. 31.25.125. Involvement in revenue-generating projects. (a) If the 29
corporation negotiates with another entity for participation by the corporation in a 30
revenue-generating project, the corporation shall negotiate an option for the state to 31
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acquire an interest in the project. The corporation shall immediately notify the 1
president of the senate, the speaker of the house of representatives, and the chairs of 2
the finance committee of each house of the legislature on each occasion that an option 3
is available for consideration by the legislature. 4
(b) The corporation shall immediately notify the president of the senate, the 5
speaker of the house of representatives, and the chairs of the finance committee of 6
each house of the legislature on each occasion that the state may exercise an option 7
negotiated under (a) of this section. The corporation shall notify the legislature under 8
this subsection on the earlier of the date that 9
(1) the corporation determines, with reasonable assurance and 10
considering the totality of circumstances, including review of all relevant financial 11
information, that the revenue-generating project will be completed, with or without 12
state investment; or 13
(2) a final investment decision is made for the revenue-generating 14
project. 15
(c) The state may not acquire an interest in a revenue-generating project under 16
this section unless the interest is approved by the legislature by law. When making an 17
investment decision under this section, the legislature shall act as a prudent investor. 18
(d) The Department of Revenue shall cooperate with and assist the legislature 19
in determining whether to acquire an interest in a revenue -generating project under (c) 20
of this section by exercising an option negotiated under (a) of this section, including 21
by identifying potential funding sources for exercising the option and potential fiscal 22
effects on the state. If requested by the legislature, another state agency shall cooperate 23
with and assist the legislature with making a determination under (c) of this section. 24
(e) In this section, 25
(1) "corporation" includes a subsidiary of the corporation; 26
notwithstanding the definition of "subsidiary of the corporation" in AS 31.25.390, a 27
subsidiary of a corporation does not include a partially owned subsidiary for purposes 28
of this section; 29
(2) "revenue -generating project" means a project, entity ownership, 30
legal business arrangement, partnership, joint venture, or other commercial endeavor 31
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expected to generate revenue. 1
* Sec. 12. AS 31.25.130(a) is amended to read: 2
(a) Except as otherwise provided in this chapter and except for 3
AS 44.62.310 - 44.62.319 (Open Meetings Act), AS 44.62 (Administrative Procedure 4
Act) does not apply to this chapter. The corporation shall make available to members 5
of the public copies of the regulations adopted under (b) - (e) of this section. 6
* Sec. 13. AS 31.25 is amended by adding a new section to article 1 to read: 7
Sec. 31.25.145. Accounting. (a) The corporation shall deposit into separate 8
accounts in the general fund revenue 9
(1) generated by a subsidiary of the corporation; and 10
(2) resulting from an option negotiated under AS 31.25.125. 11
(b) The legislature may appropriate the annual estimated balance in the 12
accounts for operations of the corporation or for any other purpose. 13
* Sec. 14. AS 31.25 is amended by adding a new section to read: 14
Sec. 31.25.285. Legislative notification of ownership change. (a) Unless 15
prevented by a confidentiality agreement entered into and subject to AS 31.25.090, the 16
corporation shall promptly notify the president of the senate, the speaker of the house 17
of representatives, and the chairs of the finance committee of each house of the 18
legislature if 19
(1) an entity in a legal relationship with the corporation, or a subsidiary 20
of the corporation, has a significant change in ownership structure; or 21
(2) the corporation becomes aware that an entity in a legal relationship 22
with the corporation, or a subsidiary of the corporation, plans to make a significant 23
change in ownership structure. 24
(b) In this section, "legal relationship" means a partnership, joint venture, joint 25
ownership agreement, or other legally binding business arrangement 26
(1) of which the corporation, or a subsidiary of the corporation, has at 27
least a 10 percent interest; or 28
(2) that has an interest in a third entity in which the corporation, or a 29
subsidiary of the corporation, also has at least a 10 percent interest; and 30
(3) that formed for the purpose of shared ownership or shared 31
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management of, or pooling of resources for, an entity in which the corporation, or a 1
subsidiary of the corporation, has an ownership or management interest. 2
* Sec. 15. AS 31.25.390 is amended by adding a new paragraph to read: 3
(8) "subsidiary of the corporation" means a subsidiary controlled by 4
the corporation. 5
* Sec. 16. AS 43.56.010(a) is amended to read: 6
(a) Except as provided in AS 43.59.010 and 43.59.020, an [AN] annual tax 7
of 20 mills is levied each tax year beginning January 1, 1974, on the full and true 8
value of taxable property taxable under this chapter. 9
* Sec. 17. AS 43.56.020(d) is amended to read: 10
(d) Taxable property subject to tax abatement under AS 43.59.010 or the 11
volumetric tax imposed under AS 43.59.020 [OF A NATURAL GAS PIPELINE 12
PROJECT OWNED OR FINANCED BY THE ALASKA GASLINE 13
DEVELOPMENT CORPORATION OR A JOINT VENTURE, PARTNERSHIP, OR 14
OTHER ENTITY THAT INCLUDES THE ALASKA GASLINE DEVELOPMENT 15
CORPORATION] is exempt from state taxes levied or authorized under 16
AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) 17
[BEFORE THE COMMENCEMENT OF COMMERCIAL OPERATIONS OF THAT 18
NATURAL GAS PIPELINE PROJECT. IN THIS SUBSECTION, 19
"COMMENCEMENT OF COMMERCIAL OPERATIONS" MEANS THE FIRST 20
FLOW OF NATURAL GAS IN THE PROJECT THAT GENERATES REVENUE 21
TO THE OWNERS OF THE NATURAL GAS PIPELINE PROJECT]. 22
* Sec. 18. AS 43 is amended by adding a new chapter to read: 23
Chapter 59. Natural Gas Project Temporary Tax Abatement and Volumetric Tax. 24
Sec. 43.59.010. Temporary tax abatement. (a) Property of a natural gas 25
project is not subject to the taxes levied under AS 29.45.080, AS 43.56.010, or 26
AS 43.59.020 during the temporary tax abatement period. The abatement period 27
begins on the effective date of this section and ends on the earlier of 28
(1) the day after the natural gas project achieves a throughput of 29
500,000,000 cubic feet of natural gas a day, calculated as a rolling average over a 30
consecutive 30-day period; or 31
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(2) five years after the date of commencement of commercial 1
operations of the natural gas project. 2
(b) A natural gas project is eligible for the tax abatement under this section 3
only if the department determines that the project is eligible under AS 43.59.025. 4
Sec. 43.59.020. Imposition of alternative volumetric tax. (a) The owner of 5
property subject to tax under this section shall pay an alternative volumetric tax on the 6
throughput of the property. The alternative volumetric tax applies beginning on the 7
day after the expiration of the abatement period under AS 43.59.010. 8
(b) The volumetric tax is the sum of the amounts calculated under this 9
subsection for each component of a natural gas project. The tax for a component is 10
calculated by multiplying the tax rate for the component, set out under (c) of this 11
section, by the component weight, calculated under (d) of this section, by the total 12
units of component throughput, defined under (e) of this section, for the tax period. 13
(c) The tax rate is 14
(1) $0.06 for a gas pipeline component; 15
(2) $0.12 for a gas treatment plant and carbon capture facility 16
component; 17
(3) $0.12 for a liquefied natural gas plant component. 18
(d) The component weight is the capital expenditures for a completed 19
component divided by the total capital expenditures for all completed components. 20
The department shall calculate the component weights upon commencement of 21
commercial operations of each major phase of the project. The department shall 22
calculate the final and fixed component weight upon commencement of commercial 23
operations of the project. Each time a component weight is calculated under this 24
subsection, the department shall provide the revised component weight to each 25
taxpayer under this section and to a municipality collecting the tax due under this 26
section. 27
(e) A unit of component throughput is 1,000 cubic feet of natural gas. 28
(f) Beginning after the first year the tax applies to throughput of a natural gas 29
project, the tax rate for throughput under (c) of this section shall be adjusted on 30
January 1 of each year for inflation, using 100 percent of the average of the annual 31
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change over the preceding five calendar years in the Consumer Price Index for all 1
urban consumers for urban Alaska, as determined by the United States Department of 2
Labor, Bureau of Labor Statistics. However, the annual adjustment under this 3
subsection must increase the rates by at least one percent and not more than two 4
percent. 5
(g) A natural gas project is subject to the alternative volumetric tax levied 6
under this section only if the department determines that the project is eligible under 7
AS 43.59.025. 8
(h) The tax levied under this section is in place of 9
(1) all state taxes levied on taxable property, including property used 10
or committed by contract or other agreement for use in the natural gas project; 11
(2) taxes levied under AS 43.56.010; and 12
(3) taxes levied under AS 29.45.080. 13
(i) An owner of property subject to tax under this section shall, on or before 14
the last day of each month, file a return with the department and with each 15
municipality collecting tax under this section. The return must state the throughput, in 16
cubic feet of natural gas for each day, for each component of property subject to tax 17
for the month preceding the month in which the return is due and include an 18
installment payment for the month of the return. An installment payment is considered 19
delinquent if the payment is not received by the department on or before the last day 20
of each month. 21
(j) The tax levied under this section is due annually, on the calendar year. The 22
owner of the property shall, on or before April 30 each year, pay any remaining tax 23
due under this section for tax accruing from throughput in the previous calendar year. 24
A tax payment under this subsection is considered delinquent if the payment is not 25
received by the department on or before April 30 each year. 26
(k) Notwithstanding AS 43.05.220, if a tax payment or installment payment 27
required under this section is delinquent, the department or a municipality shall assess 28
a penalty of 15 percent of the amount of delinquent taxes and interest on the 29
delinquent taxes, exclusive of penalty, at the rate specified in AS 43.05.225. 30
Sec. 43.59.025. Eligibility. (a) A natural gas project is eligible for the tax 31
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abatement under AS 43.59.010 and the alternative volumetric tax under AS 43.59.020 1
only if the department determines that the plans for the project meet the requirements 2
of this section. 3
(b) To be eligible under this section, plans for the project must include a spur 4
line meeting the requirements of this subsection that serves the City of Fairbanks and 5
the Fairbanks North Star Borough. The spur line must 6
(1) have sufficient capacity to serve reasonably projected residential, 7
commercial, and industrial demand in the Interior area of the state; 8
(2) be scheduled to begin operations within two years after the 9
commencement of commercial operations of a major component of the natural gas 10
project; 11
(3) be designed to connect with local distribution infrastructure 12
capable of delivering natural gas to the City of Fairbanks and the surrounding urban 13
area; 14
(4) be designed and operated to deliver gas at the lowest reasonable 15
cost consistent with safe and reliable service; and 16
(5) allocate costs, including capital, financing, construction, 17
operations, and maintenance costs, 18
(A) across all consumers systemwide; costs related to 19
financing, construction, operations, or maintenance of the spur line may not be 20
allocated solely to the Interior area of the state; in this subparagraph, 21
"systemwide" means the area from the North Slope to the Southcentral regions 22
of the state; and 23
(B) justly, reasonably, and not unduly discriminatorily. 24
(c) If the department determines that the requirements of (b) of this section 25
have been met, the department shall issue a written determination that the natural gas 26
project is eligible for the tax abatement under AS 43.59.010 and the alternative 27
volumetric tax under AS 43.59.020. 28
Sec. 43.59.030. Collection and allocation of alternative tax. The department 29
shall levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the 30
portion of the project property located in the unorganized borough. A municipality 31
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may levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the 1
portion of the project property located in the municipality. The department shall adopt 2
regulations providing for a methodology to determine the amount that each 3
municipality and the department may levy based on the proportion of capital 4
expenditures located within each municipality and in the unorganized borough. 5
Sec. 43.59.040. Administrative appeals; distraint of property. (a) A 6
decision by the department regarding the imposition or calculation of the tax levied 7
under AS 43.59.020 may be appealed to the department for an informal conference 8
under AS 43.05.240, and a final decision may be appealed to the office of 9
administrative hearings under AS 43.05.405. 10
(b) The remedy of distraint of property set out in AS 43.20.270 applies to the 11
tax levied in this section. However, only the property subject to tax under 12
AS 43.59.020 may be distrained. 13
Sec. 43.59.050. Termination of status; application. (a) The alternative 14
volumetric tax applicable to a natural gas project under AS 43.59.020 terminates on 15
January 1, 2032, if commencement of construction of the first 730 miles of the gas 16
pipeline has not begun by that date. 17
(b) A natural gas project that does not meet the conditions of (a) of this section 18
and for which the alternative volumetric tax under AS 43.59.020 does not apply is 19
subject to all other state and municipal taxes on taxable property, including taxes 20
levied under AS 29.45.080 and AS 43.56.010. 21
Sec. 43.59.060. Reporting; regulations. (a) The owner of property subject to 22
tax under this section shall, at the request of the department, provide to the department 23
the information necessary to calculate the tax under this section, including capital 24
expenditures made by the owner. Notwithstanding AS 40.25.100(a) and AS 43.05.230, 25
the department shall hold confidential proprietary information provided to the 26
department under this subsection at the request of the owner. In this subsection 27
"proprietary information" means information that, if publicly disclosed, would 28
adversely affect the competitive position of the owner or materially diminish the 29
commercial value of the information to the owner. 30
(b) The department shall adopt regulations under AS 44.62 (Administrative 31
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Procedure Act) to implement this chapter, including procedures for 1
(1) measuring throughput; 2
(2) throughput reporting; 3
(3) calculating the rolling average of throughput; and 4
(4) reporting and verifying capital expenditures for the purposes of the 5
calculations under AS 43.59.020(d) and adopting regulations under AS 43.59.030. 6
Sec. 43.59.100. Definitions. In this chapter, 7
(1) "capital expenditure" means an actual expenditure incurred to 8
acquire, construct, improve, or maintain a natural gas project or a component of a 9
natural gas project; 10
(2) "commencement of commercial operations" means the first flow of 11
natural gas through a natural gas project or a component of a natural gas project that 12
treats, transports, or processes a commercial amount of natural gas; 13
(3) "gas pipeline" 14
(A) means a main natural gas pipeline from the outlet flange of 15
the gas treatment plant on the North Slope to the inlet flange of the liquefied 16
natural gas plant located in the Kenai Peninsula region of the state; 17
(B) does not include any gas lines downstream of any offtake 18
point between a gas treatment plant and a liquefied natural gas plant; 19
(4) "gas treatment plant" means a facility and the related activities 20
required to receive natural gas from a Prudhoe Bay unit gas transmission line, a Point 21
Thomson unit gas transmission line, or other facilities, to treat the natural gas to 22
pipeline specifications, to dispose of or deliver byproducts, to deliver liquid products 23
for further transportation, and to deliver treated natural gas for transportation through a 24
gas pipeline; 25
(5) "liquefied natural gas plant" means a facility for liquefying natural 26
gas and includes structures, equipment, underlying land rights, and other associated 27
systems, storage, and facilities for off-loading liquefied natural gas; 28
(6) "natural gas project" and "project" means a natural gas project that 29
includes, collectively, a Prudhoe Bay unit gas transmission line, a Point Thomson unit 30
gas transmission line, a gas pipeline, a gas treatment plant, a liquefied natural gas 31
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plant, and a marine terminal; in this paragraph, 1
(A) "marine terminal" means a terminal and those facilities 2
required to receive liquefied natural gas from the boundary of the liquefied 3
natural gas plant for marine transportation, including auxiliary vessels used in 4
the operation of the terminal; 5
(B) "Point Thomson unit gas transmission line" means a natural 6
gas transmission line from the outlet flange of the Point Thomson unit 7
production facility to the inlet flange of the gas treatment plant; and 8
(C) "Prudhoe Bay unit gas transmission line" means a natural 9
gas transmission line from the outlet flange of the Prudhoe Bay unit central gas 10
facility to the inlet flange of the gas treatment plant; 11
(7) "spur line" 12
(A) means 13
(i) a natural gas transmission or lateral line that 14
branches from the main gas pipeline for the primary purpose of 15
delivering natural gas to a local community or utility distribution 16
system; and 17
(ii) compressing and metering equipment and 18
interconnection facilities related to the transmission or lateral line 19
described in (A)(i) of this paragraph; 20
(B) does not include infrastructure used for the export of 21
natural gas or lateral lines not necessary for delivering natural gas to a local 22
community or utility distribution system; 23
(8) "throughput" 24
(A) means 25
(i) the volume of natural gas measured by summing all 26
volumes sold or otherwise delivered at each outlet or offtake point 27
along the gas pipeline; and 28
(ii) natural gas consumed as fuel for the operation of a 29
liquefaction facility; 30
(B) does not include natural gas consumed as fuel for pipeline 31
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compression. 1
* Sec. 19. AS 44.33 is amended by adding a new section to read: 2
Article 13A. Alaska Liquefied Natural Gas Project Mitigation Fund. 3
Sec. 44.33.850. Alaska liquefied natural gas project mitigation fund. (a) 4
The Alaska liquefied natural gas project mitigation fund is established as a separate 5
fund in the state treasury. The department shall administer the fund for the purposes 6
set out in this section. Money in the fund does not lapse. Nothing in this section 7
creates a dedicated fund. Each fiscal year, the legislature may appropriate to the fund 8
up to $90,000,000 of revenue received by the state from an Alaska liquefied natural 9
gas project. 10
(b) In a fiscal year, if the legislature appropriates less than or equal to 11
$30,000,000 to the fund, the department shall distribute the balance of the fund, in 12
equal amounts, to the North Slope Borough, the Fairbanks North Star Borough, the 13
Denali Borough, the Municipality of Anchorage, the Matanuska-Susitna Borough, and 14
the Kenai Peninsula Borough. 15
(c) In a fiscal year, if the legislature appropriates more than $30,000,000 but 16
less than or equal to $60,000,000 to the fund, the department shall distribute 17
(1) $5,000,000 each to the North Slope Borough, the Fairbanks North 18
Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska-19
Susitna Borough, and the Kenai Peninsula Borough; and 20
(2) the remainder of the balance of the fund equally to the North Slope 21
Borough and the Kenai Peninsula Borough. 22
(d) In a fiscal year, if the legislature appropriates more than $60,000,000 to the 23
fund, the department shall distribute 24
(1) $5,000,000 each to the North Slope Borough, the Fairbanks North 25
Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska-26
Susitna Borough, and the Kenai Peninsula Borough; 27
(2) $15,000,000 each to the North Slope Borough and the Kenai 28
Peninsula Borough; and 29
(3) the remainder of the balance of the fund proportionately to each 30
municipality in the state based on the municipality's population, except that money 31
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may not be distributed to a municipality benefiting from a spur line. 1
(e) In this section, 2
(1) "Alaska liquefied natural gas project" has the meaning given in 3
AS 31.25.390; 4
(2) "department" means the Department of Commerce, Community, 5
and Economic Development; 6
(3) "fund" means the Alaska liquefied natural gas project mitigation 7
fund established under (a) of this section; 8
(4) "spur line" means a natural gas transmission or lateral line that 9
branches from the main gas pipeline for the primary purpose of delivering natural gas 10
to a local community or utility distribution system. 11
* Sec. 20. AS 42.05.711(v) is repealed. 12
* Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to 13
read: 14
REQUIRED REPORT: PHASE TWO OF THE ALASKA LIQUEFIED NATURAL 15
GAS PROJECT. (a) Before a final investment decision is made on phase two of the Alaska 16
liquefied natural gas project, the Alaska Gasline Development Corporation shall deliver a 17
report to the senate secretary and the chief clerk of the house of representatives and shall 18
notify the legislature that the report is available. The report must include 19
(1) a discussion and review of the effects and effectiveness of this Act on the 20
Alaska liquefied natural gas project; 21
(2) if applicable, suggestions for additional changes to law related to the 22
Alaska liquefied natural gas project, before implementation of phase two. 23
(b) In this section, 24
(1) "Alaska liquefied natural gas project" has the meaning given in 25
AS 31.25.390; 26
(2) "phase two" means a phase of the Alaska liquefied natural gas project that 27
includes a liquefied natural gas plant, as defined in AS 31.25.390, and other related 28
infrastructure required for the export of liquefied natural gas. 29
* Sec. 22. The uncodified law of the State of Alaska is amended by adding a new section to 30
read: 31
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APPROPRIATION FOR COMMUNITY IMPACT GRANTS. After the state receives 1
the $40,000,000 payment committed to the state under sec. 25(a)(1) of this Act, the legislature 2
may appropriate $40,000,000 to the Department of Commerce, Community, and Economic 3
Development for payment of community impact grants to eligible communities. The 4
department shall use the money appropriated to the department under this section to timely 5
distribute grants to communities for activities, services, or facilities that offset actual or 6
expected effects of construction of a gas pipeline. When administering grants under this 7
section, the department shall prioritize granting awards based on the needs of the community, 8
the severity of the effects caused by construction of the pipeline, and the correlation of the 9
effect to the construction of the pipeline. In this section, "gas pipeline" has the meaning given 10
in AS 31.25.390. 11
* Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to 12
read: 13
APPLICABILITY: ALASKA GASLINE DEVELOPMENT CORPORATION 14
CONFIDENTIALITY AGREEMENTS, SUBSIDIARIES, NOTIFICATIONS, LEGAL 15
RELATIONSHIPS. (a) AS 31.25.080(a)(1) and (6) as amended by sec. 6 of this Act, apply to 16
a transfer or disposition occurring on or after the effective date of sec. 6 of this Act. 17
(b) AS 31.25.090(l), added by sec. 9 of this Act, applies to a confidentiality 18
agreement entered into on or after the effective date of sec. 9 of this Act. 19
(c) AS 31.25.145, added by sec. 13 of this Act, applies to revenue generated on and 20
after the effective date of sec. 13 of this Act. 21
(d) AS 31.25.285, added by sec. 14 of this Act, applies to a legal relationship entered 22
into on or after the effective date of sec. 14 of this Act. In this subsection, "legal relationship" 23
has the meaning given in AS 31.25.285(b), added by sec. 14 of this Act. 24
* Sec. 24. The uncodified law of the State of Alaska is amended by adding a new section to 25
read: 26
TRANSITION: EXISTING OPTIONS. (a) Within 30 days after the effective date of 27
sec. 11 of this Act, the Alaska Gasline Development Corporation shall notify the president of 28
the senate, the speaker of the house of representatives, and the chairs of the finance committee 29
of each house of the legislature of any existing options to invest in a revenue-generating 30
project, as required under AS 31.25.125, added by sec. 11 of this Act. 31
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(b) An option for state participation in a revenue-generating project negotiated by the 1
Alaska Gasline Development Corporation agreed to before the effective date of AS 31.25.125, 2
added by sec. 11 of this Act, must allow the state to exercise the option for at least 180 days 3
after the corporation notifies the legislature under AS 31.25.125, added by sec. 11 of this Act. 4
* Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to 5
read: 6
CONDITIONAL EFFECT: ALTERNATIVE VOLUMETRIC TAX; 7
NOTIFICATION TO THE REVISOR OF STATUTES. (a) Sections 1 - 3, 16 - 18, 21, and 22 8
of this Act take effect only if, before January 1, 2032, the commissioner of revenue 9
determines that the primary owner of property that could be taxable under AS 43.59.020, 10
added by sec. 18 of this Act, has committed to 11
(1) pay $40,000,000 to the state, which the legislature may appropriate to the 12
Department of Commerce, Community, and Economic Development for payment of 13
community impact grants to eligible communities in accordance with sec. 22 of this Act; 14
(2) negotiate a project labor agreement for the construction of an economically 15
viable gas pipeline project; in this paragraph, "project labor agreement" means a 16
comprehensive collective bargaining agreement between the contractors of the owner of the 17
gas treatment plant, carbon capture facility, liquefied natural gas plant, and gas pipeline and 18
the appropriate labor representatives to ensure expedited construction with labor stability for 19
the project by qualified residents of the state; and 20
(3) construct a spur line; to meet the requirement of this paragraph, the owner 21
responsible for constructing the spur line shall 22
(A) on or before completion of construction of 730 miles of the gas 23
pipeline, timely and in good faith begin all necessary permit applications and take 24
action on any other regulatory requirements necessary for the construction of the spur 25
line, including, if the Regulatory Commission of Alaska has jurisdiction over the 26
tariffs, 27
(i) initiating a tariff proceeding; and 28
(ii) filing with the commission for systemwide tariff treatment 29
for the spur line with an economically viable gas sales contract, and not for 30
tariff treatment that allocates costs for financing, construction, operations, and 31
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maintenance of the spur line solely to the Interior region of the state; in this 1
sub-subparagraph, "systemwide" means the area from the North Slope to the 2
Southcentral region of the state; and 3
(B) begin construction on a spur line within one year after receiving all 4
permits and meeting the necessary regulatory requirements described in (A) of this 5
paragraph. 6
(b) If the commissioner of revenue determines that the conditions in (a) of this section 7
have been met, the commissioner of revenue shall notify the revisor of statutes in writing 8
within 30 days after making the determination. 9
(c) In this section, 10
(1) "economically viable gas sales contract" means a contract, precedent 11
agreement, memorandum of understanding, tariff-supported sales arrangement, or other 12
commercially reasonable arrangement for the sale, delivery, transportation, or distribution of 13
natural gas to serve current or reasonably projected residential, commercial, institutional, 14
utility, or industrial demand in the City of Fairbanks, the Fairbanks North Star Borough, or 15
the surrounding Interior area of the state, including demand aggregated by a public utility, gas 16
distribution utility, local government, state agency, or other entity serving customers in the 17
Interior area of the state; the gas sales contract need not demonstrate that the spur line alone 18
will recover all capital, financing, construction, operation, or maintenance costs solely from 19
customers in the Interior area of the state; 20
(2) "gas pipeline" means a gas pipeline, as defined in AS 31.25.390, that is 21
expected to be subject to the alternative volumetric tax under AS 43.59.020, enacted by sec. 22
18 of this Act; 23
(3) "spur line" means a spur line, as defined in AS 43.59.100, enacted by sec. 24
18 of this Act, used for the primary purpose of delivering natural gas to the City of Fairbanks 25
and the Fairbanks North Star Borough. 26
* Sec. 26. If, under sec. 25 of this Act, secs. 1 - 3, 16 - 18, 21, and 22 of this Act take 27
effect, they take effect on the day after the date the commissioner of revenue determines that 28
the conditions in sec. 25(a) of this Act have been met. 29
* Sec. 27. Except as provided in sec. 26 of this Act, this Act takes effect immediately under 30
AS 01.10.070(c). 31