NATURAL GAS PROJECTS/INCOME TAX/SURCHARGE

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SENATE BILL NO. 275

IN THE LEGISLATURE OF THE STATE OF ALASKA

THIRTY-FOURTH LEGISLATURE - SECOND SESSION

BY THE SENATE RESOURCES COMMITTEE

Introduced: 3/5/26
Referred: Resources, Finance

A BILL

FOR AN ACT ENTITLED

"An Act relating to natural gas and natural gas projects; relating to the Alaska Gasline 1
Development Corporation; relating to the powers and duties of the Legislative Budget 2
and Audit Committee; relating to the value of certain oil and gas; relating to an income 3
tax on certain natural gas-related entities; relating to the oil and gas production tax; 4
establishing a surcharge on gas processed in the state; and providing for an effective 5
date." 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 7
* Section 1. AS 24.20.201(a) is amended to read: 8
(a) The Legislative Budget and Audit Committee has the power to 9
(1) organize, adopt rules for the conduct of its business, and prescribe 10
procedures for the comprehensive fiscal analysis, budget review, and post-audit 11
functions; 12
(2) hold public hearings, administer oaths, issue subpoenas, compel the 13
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attendance of witnesses and production of papers, books, accounts, documents, and 1
testimony, and have the deposition of witnesses taken in a manner prescribed by court 2
rule or law for taking depositions in civil actions; 3
(3) require all state officials and agencies of state government to give 4
full cooperation to the committee or its staff in assembling, generating, and furnishing 5
requested information, including assembling, generating, or furnishing information in 6
the form or format requested by the committee or the committee's staff; 7
(4) review revenue projections, state agency appropriation requests, the 8
expenditure of state funds, including the relationship between state agency program 9
accomplishments and legislative intent, and the fiscal policies and procedures of state 10
government; 11
(5) review and approve proposed changes to agency authorized 12
budgets as provided in AS 37.07 (Executive Budget Act); 13
(6) make recommendations concerning appropriations, their 14
expenditure, and the fiscal policies and procedures of state government to the governor 15
when appropriate, and to the legislature; 16
(7) prepare and distribute reports, memoranda, or other necessary 17
materials; 18
(8) sue in the name of the legislature during the interim between 19
sessions if authorized by majority vote of the full membership of the committee; 20
(9) make recommendations to the legislature and to agencies of the 21
state that perform lending or investment functions concerning the structure and 22
operating practices of the agencies; 23
(10) enter into and enforce all contracts necessary or desirable for the 24
functions of the committee; 25
(11) provide for annual post audits of the Alaska Housing Finance 26
Corporation, the Alaska Aerospace Corporation, [AND] the Alaska Industrial 27
Development and Export Authority, and the Alaska Gasline Development 28
Corporation. 29
* Sec. 2. AS 24.20.206 is amended to read: 30
Sec. 24.20.206. Duties. The Legislative Budget and Audit Committee shall 31
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(1) annually review the long-range operating plans of all agencies of 1
the state that perform lending or investment functions; 2
(2) review periodic reports from all agencies of the state that perform 3
lending or investment functions; 4
(3) prepare a complete report of investment programs, plans, 5
performance, and policies of all agencies of the state that perform lending or 6
investment functions and notify the legislature on or before the first day of each 7
regular session that the report is available; 8
(4) in conjunction with the finance committee of each house, 9
recommend annually to the legislature the investment policy for the general fund 10
surplus and for the income from the permanent fund; 11
(5) provide for an annual post audit and annual operational and 12
performance evaluation of the Alaska Permanent Fund Corporation investments and 13
investment programs; 14
(6) provide for an annual operational and performance evaluation of 15
the Alaska Housing Finance Corporation and the Alaska Industrial Development and 16
Export Authority; the performance evaluation must include, but is not limited to, a 17
comparison of the effect on various sectors of the economy by public and private 18
lending, the effect on resident and nonresident employment, the effect on real wages, 19
and the effect on state and local operating and capital budgets of the programs of the 20
Alaska Housing Finance Corporation and the Alaska Industrial Development and 21
Export Authority; 22
(7) provide assistance to the trustees of the trust established in 23
AS 37.14.400 - 37.14.450 in carrying out their duties under AS 37.14.415; 24
(8) provide for an annual post audit and annual operational and 25
performance evaluation of the Alaska Gasline Development Corporation, 26
including evaluation of ownership and management interests, investments, and 27
projects of the corporation. 28
* Sec. 3. AS 31.25.080(a) is amended to read: 29
(a) In addition to other powers granted in this chapter, the corporation may 30
(1) determine the form of ownership and the operating structure of an 31
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in-state natural gas pipeline developed by the corporation and may enter into 1
agreements with other persons for joint ownership, joint operation, or both of an in-2
state natural gas pipeline or an Alaska liquefied natural gas project; 3
(2) plan, finance, construct, develop, acquire, maintain, and operate a 4
pipeline system and other transportation mechanism, including pipelines, compressors, 5
storage facilities, and other related facilities, equipment, and works of public 6
improvement, in the state to facilitate production, transportation, and delivery of 7
natural gas or other related natural resources to the point of consumption or to the 8
point of distribution for consumption; 9
(3) lease or rent facilities, structures, and properties; 10
(4) exercise the power of eminent domain and file a declaration of 11
taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 12
necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project; 13
the exercise of powers by the corporation under this paragraph may not exceed the 14
permissible exercise of the powers by the state; 15
(5) acquire, by purchase, lease, or gift, land, structures, real or personal 16
property, an interest in property, a right-of-way, a franchise, an easement, or other 17
interest in land, or an interest in or right to capacity in a pipeline system determined to 18
be necessary or convenient for the development, financing, construction, or operation 19
of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or 20
part of an in-state natural gas pipeline project or an Alaska liquefied natural gas 21
project; 22
(6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or 23
part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, 24
or an interest in an asset of the corporation; 25
(7) elect to provide transportation of natural gas as a contract carrier, 26
common carrier, or otherwise; 27
(8) provide light, water, security, and other services for property of the 28
corporation; 29
(9) conduct hearings to gather and develop data consistent with the 30
purpose and powers of the corporation; 31
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(10) advocate for new pipeline capacity before the Federal Energy 1
Regulatory Commission; 2
(11) make and execute agreements, contracts, and other instruments 3
necessary or convenient in the exercise of the powers and functions of the corporation 4
under this chapter, including a contract with a person, firm, corporation, governmental 5
agency, or other entity; 6
(12) sue and be sued in its own name; 7
(13) adopt an official seal; 8
(14) adopt bylaws for the regulation of its affairs and the conduct of its 9
business and adopt regulations and policies in connection with the performance of its 10
functions and duties; 11
(15) employ fiscal consultants, engineers, attorneys, appraisers, and 12
other consultants and employees that may, in the judgment of the corporation, be 13
required and fix and pay their compensation from funds available to the corporation; 14
(16) procure insurance against a loss in connection with its operation; 15
(17) borrow money as provided in this chapter to carry out its 16
corporate purposes and issue its obligations as evidence of borrowing; 17
(18) include in a borrowing the amounts necessary to pay financing 18
charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 19
and legal fees, and other expenses that are necessary or incident to the borrowing; 20
(19) receive, administer, and comply with the conditions and 21
requirements of an appropriation, gift, grant, or donation of property or money; 22
(20) do all acts and things necessary, convenient, or desirable to carry 23
out the powers expressly granted or necessarily implied in this chapter; 24
(21) invest or reinvest, subject to its contracts with noteholders and 25
bondholders, money or funds held by the corporation, including funds in the in-state 26
natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project 27
fund (AS 31.25.110), in obligations or other securities or investments in which banks 28
or trust companies in the state may legally invest funds held in reserves or sinking 29
funds or funds not required for immediate disbursement, and in certificates of deposit 30
or time deposits secured by obligations of, or guaranteed by, the state or the United 31
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States; 1
(22) enter into, as it determines to be necessary or appropriate, any 2
swap or hedge, cap, or other contract providing for payments based on levels of or 3
changes in interest rates or indices or in the cost or price of any commodity, supply, or 4
expense expected to be used or incurred in connection with the acquisition, 5
construction, or operation of any facility or property owned, leased, or operated by the 6
corporation, or an option with respect to any of the foregoing; 7
(23) except as provided in (g) of this section, acquire an ownership or 8
participation interest in an Alaska liquefied natural gas project, natural gas treatment 9
facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal 10
facilities related to the infrastructure of an Alaska liquefied natural gas project, or an 11
entity or joint venture that has an ownership interest in or is engaged in the planning, 12
financing, acquisition, maintenance, construction, and operation of an Alaska liquefied 13
natural gas project; 14
(24) after complying with AS 31.25.280, if applicable, and after 15
consultation with the commissioner of revenue and the commissioner of natural 16
resources, enter into contracts relating to an Alaska liquefied natural gas project, 17
including contracts for services related to operation, marketing, transportation, gas 18
treatment, marine terminal operation, or liquefaction. 19
* Sec. 4. AS 31.25.090(f) is amended to read: 20
(f) Except as provided in (l) of this section, the [THE] corporation may enter 21
into confidentiality agreements necessary to acquire or provide information to carry 22
out its functions. If a state agency determines that a law or provision of a contract to 23
which the state agency is a party requires the state agency to preserve the 24
confidentiality of the information and that delivering the information to the 25
corporation would violate the confidentiality provision of that law or contract, the state 26
agency shall 27
(1) identify the applicable law or contract provision to the corporation; 28
and 29
(2) obtain the consent of the person who has the right to waive the 30
confidentiality of the information under the applicable law or contract provision before 31
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the state agency transfers the information to the corporation. 1
* Sec. 5. AS 31.25.090(g) is amended to read: 2
(g) The portions of records containing information acquired or provided by the 3
corporation under a confidentiality agreement are not subject to AS 40.25.100 - 4
40.25.295. The corporation may enter into confidentiality agreements with a public 5
agent [AGENCY, AS DEFINED IN AS 40.25.220,] to allow release of confidential 6
information. The portions of the records and files of a public agency bound by a 7
confidentiality agreement that reflect, incorporate, or analyze information subject to a 8
confidentiality agreement under this subsection are not public records. Confidentiality 9
agreements entered into under this subsection are valid and binding against all parties 10
in accordance with the terms of the confidentiality agreement. In this subsection, 11
"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) a member of the legislature, or an agent or contractor of a 15
member of the legislature or of a legislative committee. 16
* Sec. 6. AS 31.25.090(h) is amended to read: 17
(h) Information and trade secrets of the corporation are confidential and not 18
subject to AS 40.25.100 - 40.25.295 if the corporation determines that disclosure 19
would cause commercial or competitive harm or damage to the corporation. 20
Information that discloses the particulars of a business or the affairs of a private 21
enterprise, investor, advisor, consultant, counsel, or manager that is developed or 22
obtained by the corporation and related to the development, financing, construction, or 23
operation of an in-state natural gas pipeline project by the corporation is confidential 24
and not subject to AS 40.25.100 - 40.25.295. This subsection does not apply to 25
information required to be made public by the corporation under AS 31.25.275. 26
The corporation may waive the confidentiality described in this subsection, except for 27
information that is confidential under another provision of state law or under a federal 28
law or regulation and except for information acquired from another person that is 29
subject to a confidentiality agreement, if the waiver is consistent with the interests of 30
the state and will facilitate the development, financing, or construction of an in-state 31
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natural gas pipeline. On the date that the in-state natural gas pipeline project becomes 1
operational, the corporation shall make available, upon request under AS 40.25.100 - 2
40.25.295, records that were exempt from AS 40.25.100 - 40.25.295 under this 3
subsection or (g) of this section, unless the corporation determines that 4
(1) maintaining the confidentiality of the information is necessary to 5
protect the economic interests of the corporation or the state; or 6
(2) disclosure of the information will violate another provision of state 7
law, a federal law or regulation, or the terms of a confidentiality agreement or other 8
agreement to which the corporation is a party or that is binding on the corporation. 9
* Sec. 7. AS 31.25.090 is amended by adding new subsections to read: 10
(j) On and after the effective date of this subsection, at the request of a 11
legislator, the corporation shall enter into a confidentiality agreement with the 12
legislator to allow release of confidential information. Information released under (g) 13
of this section or this subsection may be discussed by a legislative committee in 14
executive session if each legislator attending the executive session has signed a 15
confidentiality agreement relating to the information discussed. 16
(k) A confidentiality agreement entered into under (f) of this section may be 17
waived, in whole or in part, with the agreement of the parties to the confidentiality 18
agreement, to allow publication of information covered by the confidentiality 19
agreement. Information made public under this subsection may include redactions. 20
Information subject to a confidentiality agreement made public under this subsection 21
may include 22
(1) a contract or agreement or a specific term of a contract or 23
agreement; 24
(2) a pending contract or agreement or a specific term of a pending 25
contract or agreement; 26
(3) a record, file, or other information in possession of the corporation, 27
a subsidiary of the corporation, or an entity partnered with the corporation; or 28
(4) the confidentiality agreement or terms of the confidentiality 29
agreement. 30
(l) The corporation may not enter into a confidentiality agreement that 31
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(1) prevents the publication of information required to be published 1
under AS 31.25.275; 2
(2) makes confidential contract terms, including contract terms for in-3
kind payments or services, that bind the corporation, or a subsidiary of the 4
corporation, to assume duties or liabilities under a contract; 5
(3) makes confidential contract terms governing the ownership or 6
management structure of a subsidiary of the corporation; 7
(4) makes confidential information related to a state ownership or 8
management interest option under AS 31.25.125; or 9
(5) prevents compliance with an administrative or court order 10
mandating disclosure. 11
* Sec. 8. AS 31.25.120 is amended by adding a new subsection to read: 12
(b) Unless the legislature approves the action by law, the corporation may not 13
transfer, sell, or otherwise dispose of an ownership or management interest in a 14
subsidiary of the corporation. 15
* Sec. 9. AS 31.25 is amended by adding a new section to read: 16
Sec. 31.25.125. State ownership of projects. (a) If the corporation negotiates 17
with another entity for participation by the corporation in a revenue-generating 18
project, the corporation shall negotiate an option for the state to acquire an ownership 19
or management interest in the project. The corporation shall immediately notify the 20
president of the senate, the speaker of the house of representatives, and the chairs of 21
the finance committee of each house of the legislature on each occasion that an option 22
is available for consideration by the legislature under (b)(1) of this section. 23
(b) An option negotiated under this section must 24
(1) before being agreed to, be approved by the legislature by law; and 25
(2) allow the state to exercise the option for at least 180 days after the 26
date on which the corporation determines, with reasonable assurance and considering 27
the totality of circumstances, including review of all relevant financial information, 28
that the revenue-generating project will be completed, with or without state 29
investment. 30
(c) The state may not acquire an interest in a revenue-generating project under 31
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this section unless the interest is approved by the legislature by law. When making an 1
investment decision under this section, the legislature shall act as a prudent investor. 2
(d) The corporation, and any other entity participating in a revenue-generating 3
project, shall 4
(1) cooperate with and assist the legislature in determining whether to 5
acquire an interest or whether to exercise an interest acquired under this section; 6
(2) provide information requested by the legislature related to the 7
project, including 8
(A) information necessary for the legislature to act as a prudent 9
investor; and 10
(B) all financial records of or related to the revenue-generating 11
project; and 12
(3) ensure a representative of the corporation or the other entity is 13
available to testify during public hearings of legislative committees requesting 14
testimony. 15
(e) The corporation shall immediately notify the president of the senate, the 16
speaker of the house of representatives, and the chairs of the finance committee of 17
each house of the legislature on each occasion that the state may exercise an option 18
negotiated under this section. The Department of Revenue shall cooperate with and 19
assist the legislature in determining whether to acquire an interest in a revenue-20
generating project by exercising an option negotiated under this section, including by 21
identifying potential funding sources for exercising the option and potential fiscal 22
effects on the state. 23
(f) The corporation shall deposit into a separate account in the general fund 24
revenue resulting from an option negotiated under this section. The legislature may 25
appropriate the annual estimated balance in the account for any purpose. 26
(g) In this section, 27
(1) "corporation" includes a subsidiary of the corporation; 28
(2) "revenue-generating project" means a project, entity ownership, 29
legal business arrangement, partnership, joint venture, or other commercial endeavor 30
expected to generate revenue. 31
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* Sec. 10. AS 31.25 is amended by adding a new section to article 1 to read: 1
Sec. 31.25.145. Separate accounting. The corporation shall deposit into a 2
separate account in the general fund revenue generated by a subsidiary of the 3
corporation. The legislature may appropriate the annual estimated balance in the 4
account for operations of the corporation or for any other purpose. 5
* Sec. 11. AS 31.25 is amended by adding new sections to read: 6
Sec. 31.25.275. Required public disclosures. (a) For each project developed 7
by the corporation or project in which the corporation has an ownership or 8
management interest, the corporation shall publish on a publicly available Internet 9
website the following information related to the owners of, investors in, lenders to, 10
and creditors of the project: 11
(1) the full legal name of each owner, investor, lender, and creditor; 12
(2) the mailing and physical address of each owner, investor, lender, 13
and creditor; 14
(3) the name of the project; 15
(4) categorization as an owner, investor, lender, or creditor; 16
(5) whether each owner, investor, lender, and creditor is a foreign 17
entity or domestic entity; 18
(6) the name, title or position, and contact information of each natural 19
person legally authorized to bind an owner, investor, lender, or creditor in matters 20
related to the project; 21
(7) the name, title or position, and contact information of each natural 22
person authorized to act as an intermediary for or communicate on behalf of an owner, 23
investor, lender, or creditor in matters related to the project; 24
(8) the physical address of the location of the primary business 25
operations for each owner, investor, lender, and creditor; 26
(9) for each owner, the percentage of ownership in the project, a 27
history of past ownership percentage, and the dates of changes to an ownership 28
percentage; the total ownership percentages published must add up to 100 percent; and 29
(10) for each investor, lender, or creditor, 30
(A) the value of initial investment, loan, or credit; this 31
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subparagraph applies only to an initial investment, loan, or credit amount that 1
exceeds $2,000,000; 2
(B) a description of the asset invested, loaned, or credited; and 3
(C) the dates of the initial and any subsequent increases or 4
changes to the amount invested, loaned, or credited. 5
(b) Except as provided in (c) of this section, for each gas purchase agreement 6
for gas transported through or processed by a project developed by the corporation or 7
project in which the corporation has an ownership or management interest, the 8
corporation shall publish on a publicly available Internet website the following 9
information related to each purchase agreement: 10
(1) the full legal name of each purchaser; 11
(2) the mailing and physical address of each purchaser; 12
(3) whether the purchaser is a foreign entity or domestic entity; 13
(4) the name, title or position, and contact information of each natural 14
person authorized to bind the purchaser in matters related to the project; 15
(5) the name, title or position, and contact information of each natural 16
person authorized to act as an intermediary for or communicate on behalf of the 17
purchaser in matters related to the project; 18
(6) the physical address of the location of the primary business 19
operations of the purchaser; and 20
(7) the state or nation expected to use the gas. 21
(c) The corporation shall redact from the Internet website required by this 22
section personally identifying information related to a gas purchase agreement made 23
for the purpose of providing gas for residential use. 24
(d) The corporation shall maintain the Internet website required by this 25
section. To comply with this subsection, the corporation shall 26
(1) update the Internet website as often as reasonably practicable, but 27
at least once each calendar quarter; 28
(2) include an entry on the Internet website for each 29
(A) owner, investor, lender, and creditor for each project 30
developed by the corporation or project in which the corporation has an 31
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ownership or management interest; and 1
(B) gas purchase agreement for gas transported through or 2
processed by a project developed by the corporation or project in which the 3
corporation has an ownership or management interest; 4
(3) ensure the Internet website is searchable; at a minimum, the 5
Internet website must be searchable by the following categories: 6
(A) for information published under (a) of this section: 7
(i) legal name; 8
(ii) project name; 9
(iii) categorization as an owner, investor, lender, or 10
creditor; 11
(iv) foreign or domestic entity status; 12
(v) name of natural person authorized to bind an entity; 13
(vi) name of natural person authorized to act as an 14
intermediary; and 15
(vii) country of primary business operations; and 16
(B) for information published under (b) of this section: 17
(i) legal name; 18
(ii) foreign or domestic entity status; 19
(iii) state or nation expected to use the gas; 20
(iv) name of natural person authorized to bind the 21
entity; 22
(v) name of natural person authorized to act as an 23
intermediary; and 24
(vi) country of primary business operations; and 25
(4) list the date of each entry and the date of any change to an entry on 26
the Internet website. 27
(e) Notwithstanding AS 09.50.250, a civil action or claim for damages or costs 28
alleging violation of a confidentiality agreement may not be brought against the 29
corporation, a state agency, an officer or employee of the corporation, or the state for 30
publishing the information required under this section. 31
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(f) In this section, "corporation" includes a subsidiary of the corporation. 1
Sec. 31.25.280. Legislative approval of relationships with foreign entities. 2
(a) Unless the legislature approves the action by law, the corporation or a subsidiary of 3
the corporation may not enter into a legal relationship with a foreign entity, either 4
indirectly through another person or entity or directly. Before a legal relationship is 5
approved under this section, the corporation shall 6
(1) notify the president of the senate, the speaker of the house of 7
representatives, and the chairs of the finance committee of each house of the 8
legislature of the corporation's or subsidiary's request to enter into the legal 9
relationship; and 10
(2) provide legislative committees the opportunity to hold public 11
hearings relating to the proposed legal relationship. 12
(b) To facilitate approval under (a) of this section, to the greatest extent 13
possible, the corporation or the subsidiary of the corporation, as applicable, shall 14
cooperate with the legislature, including by 15
(1) providing all allowable information requested by the legislature or 16
a committee of the legislature; and 17
(2) ensuring that a representative of the foreign entity is available, if 18
requested, to testify relating to the proposed legal relationship during public hearings 19
of legislative committees requesting testimony. 20
(c) In this section, "legal relationship" includes a partnership, joint venture, 21
joint ownership agreement, merger, gas purchase agreement, or other legal agreement 22
made for the purpose of investing in, obtaining monetary returns from, or obtaining an 23
ownership interest in 24
(1) a project developed by the corporation or a subsidiary of the 25
corporation; 26
(2) a project in which the corporation or a subsidiary of the corporation 27
has an ownership or management interest; or 28
(3) an entity engaged in a project described in (1) or (2) of this 29
subsection. 30
Sec. 31.25.285. Legislative notification of ownership change. (a) The 31
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corporation shall promptly notify the president of the senate, the speaker of the house 1
of representatives, and the chairs of the finance committee of each house of the 2
legislature if 3
(1) an entity in a legal relationship with the corporation or a subsidiary 4
of the corporation has a significant change in ownership structure; or 5
(2) the corporation becomes aware that an entity in a legal relationship 6
with the corporation or a subsidiary of the corporation plans to make a significant 7
change in ownership structure. 8
(b) In this section, "legal relationship" means a partnership, joint venture, joint 9
ownership agreement, or other legally binding business arrangement 10
(1) of which the corporation or a subsidiary of the corporation has at 11
least a 10 percent interest; and 12
(2) formed for the purpose of shared ownership or shared management 13
of, or pooling of resources for, an entity in which the corporation or a subsidiary of the 14
corporation has an ownership or management interest. 15
* Sec. 12. AS 31.25.390 is amended by adding new paragraphs to read: 16
(8) "foreign entity" means 17
(A) an entity whose primary operations are not physically 18
located in the United States and that is not managed primarily by citizens of 19
the United States; or 20
(B) a natural person who is not a citizen of the United States; 21
(9) "subsidiary of the corporation" includes a subsidiary partially 22
owned by the corporation. 23
* Sec. 13. AS 38.05.180 is amended by adding a new subsection to read: 24
(mm) Before taking oil or gas royalties in value, the commissioner shall 25
determine that the value taken is based on the value of oil or gas of the same kind, 26
quality, and character prevailing for that field, unit, or area during the calendar month 27
the oil or gas is produced. The commissioner may take royalties on oil or gas that is 28
produced but not sold and may take royalties on gas that is produced and stored in a 29
gas storage facility. The commissioner may not, when making a value determination 30
under this subsection, base a value for oil or gas on oil or gas sold at no cost or at a 31
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cost substantially lower than that of other oil or gas of the same kind, quality, and 1
character. After determining the value of oil or gas under this subsection, the 2
commissioner shall 3
(1) prepare a written report evidencing the determination of value; 4
(2) publish on the department's Internet website 5
(A) the determined value; 6
(B) a summary of the reasoning for the determination; and 7
(C) notice that the written determination required under (1) of 8
this subsection is available as a public record under AS 40.25.100 - 40.25.295 9
(Alaska Public Records Act); and 10
(3) maintain the publication required under (2) of this subsection on 11
the department's Internet website for at least 10 years. 12
* Sec. 14. AS 43.05.230(a) is amended to read: 13
(a) It is unlawful for a current or former officer, employee, or agent of the 14
state to divulge the amount of income or the particulars set out or disclosed in a report 15
or return made under this title, except 16
(1) in connection with official investigations or proceedings of the 17
department, whether judicial or administrative, involving taxes due under this title; 18
(2) in connection with official investigations or proceedings of the 19
child support enforcement agency, whether judicial or administrative, involving child 20
support obligations imposed or imposable under AS 25 or AS 47; 21
(3) as provided in AS 38.05.036 pertaining to audit functions of the 22
Department of Natural Resources; 23
(4) as provided in AS 43.05.405 - 43.05.499; [AND] 24
(5) as otherwise provided in this section or AS 43.55.890; and 25
(6) in connection with publication of a determination as required 26
by AS 43.55.020(o). 27
* Sec. 15. AS 43.05.230(k) is amended to read: 28
(k) The name of each person required to pay taxes in kind [THAT THE 29
DEPARTMENT HAS ALLOWED TO MAKE AN ELECTION] under 30
AS 43.55.014(a) and the amount of gas produced from each lease or property for 31
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which taxes are paid in kind [TO WHICH AN EFFECTIVE ELECTION] under 1
AS 43.55.014 [APPLIES] is public information. 2
* Sec. 16. AS 43.20 is amended by adding a new section to read: 3
Sec. 43.20.019. Tax on income of certain natural gas-related pass-through 4
entities. (a) If a qualified entity has taxable income over $5,000,000 in a tax year, the 5
qualified entity shall pay a tax of 9.4 percent on the taxable income over $5,000,000. 6
(b) For the purpose of calculating taxable income under this section, 7
(1) taxable income of a qualified entity is determined under 8
AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 9
26 U.S.C. 1361(a)(2) (Internal Revenue Code), as that section read on January 1, 10
2026; 11
(2) notwithstanding AS 43.20.021 and 43.20.036, the qualified entity 12
may not apply as a credit or deduction against tax liability a credit or deduction 13
allowed as to federal taxes under 26 U.S.C. (Internal Revenue Code), except that the 14
qualified entity may take a credit or deduction allowed for a C corporation under (1) of 15
this subsection. 16
(c) The tax under this section does not apply to a corporation subject to tax 17
under AS 43.20.011 or to an entity that is part of a unitary business with a corporation 18
subject to tax under AS 43.20.011. 19
(d) For the purpose of determining the tax due under this section, the 20
department shall 21
(1) aggregate the taxable income of two or more taxpayers if the 22
department determines that, without the provisions of this section, the taxable income 23
would reasonably be expected to be attributed to a single entity; 24
(2) except as provided in (c) of this section, include in the calculation 25
of taxable income of the qualified entity income that is attributable to an entity that is 26
part of a unitary business with the qualified entity paying tax under this section; and 27
(3) adopt regulations to prevent evasion of taxes imposed under this 28
section. 29
(e) When providing a tax return under AS 43.20.030, a qualified entity shall 30
provide the information necessary, as directed by the department, for the department 31
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to determine the income of the qualified entity as if the qualified entity were taxable 1
under AS 43.20.011. 2
(f) For the purpose of calculating income under this section, a qualified entity 3
may deduct from income a payment to the shareholder, owner, member, or partner of 4
the qualified entity if 5
(1) the shareholder, owner, member, or partner is a taxpayer under this 6
chapter; 7
(2) the payment does not include a transfer of property; and 8
(3) the payment is included in the shareholder's, owner's, member's, or 9
partner's income for the purposes of this chapter. 10
(g) In this section, 11
(1) "carbon capture" and "carbon storage" have the meanings given in 12
AS 43.55.165(e)(23); 13
(2) "natural gas pipeline" means a natural gas pipeline that transports 14
natural gas from north of 68 degrees North latitude to a location outside of the lease or 15
property where the natural gas is produced for the direct purpose of sale and delivery 16
of the natural gas to a commercial market; 17
(3) "natural gas pipeline carrier" means an entity that 18
(A) owns, operates, manages, or controls a natural gas pipeline; 19
(B) transports natural gas in a natural gas pipeline as a common 20
carrier or contract carrier; or 21
(C) holds an ownership, investment, or similar interest in a 22
natural gas pipeline, but does not include a natural person; 23
(4) "producer" means an owner of an operating right, operating 24
interest, or working interest in a mineral interest in oil or gas in the state; 25
(5) "qualified entity" means a sole proprietorship, partnership, limited 26
liability company, or entity that has elected to file federal returns under 26 U.S.C. 27
1361 - 1379 (Internal Revenue Code) that is 28
(A) a natural gas pipeline carrier in the state; 29
(B) a producer engaged in the transportation of natural gas by a 30
natural gas pipeline in the state; 31
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(C) a producer supplying natural gas to a natural gas pipeline 1
carrier in the state or supplying gas to an intermediary for transportation by a 2
natural gas pipeline in the state; 3
(D) an entity engaged in gas treatment, carbon capture, or 4
carbon storage activities in the state related to natural gas transported by a 5
natural gas pipeline in the state or an owner of or investor in an entity engaged 6
in gas treatment, carbon capture, or carbon storage activities in the state related 7
to natural gas transported by a natural gas pipeline in the state; 8
(E) an entity engaged in liquefied natural gas processing of 9
natural gas transported by a natural gas pipeline in the state or an owner of or 10
investor in an entity engaged in liquefied natural gas processing of natural gas 11
transported by a natural gas pipeline in the state; or 12
(F) an entity engaged in the sale of gas transported by a natural 13
gas pipeline in the state; 14
(6) "taxable income" means income 15
(A) from the transportation, supplying, or sale of gas that is 16
transported by a natural gas pipeline in the state; 17
(B) from gas treatment, carbon capture, or carbon storage 18
activities related to gas that is transported by a natural gas pipeline in the state; 19
(C) from liquefied natural gas processing of gas that is 20
transported by a natural gas pipeline in the state; and 21
(D) as included under (d)(2) of this section, attributable to an 22
entity that is part of a unitary business with a qualified entity paying tax under 23
this section. 24
* Sec. 17. AS 43.20.030(a) is amended to read: 25
(a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer 26
[CORPORATION] as a partner, is required to make a return under the provisions of 27
the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 28
days after the federal return is required to be filed, a return setting out 29
(1) the amount of tax due under this chapter, less credits claimed 30
against the tax; and 31
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(2) other information for the purpose of carrying out the provisions of 1
this chapter that the department requires. 2
* Sec. 18. AS 43.20.031(i) is amended to read: 3
(i) A taxpayer that [CORPORATION WHICH] is a member of a group of 4
unitary corporations or entities that [WHICH] collectively has income from business 5
activity taxable both inside and outside the state, or income from other sources both 6
inside and outside the state, shall determine its income from sources in this state by 7
use of the combined method of accounting. 8
* Sec. 19. AS 43.20.144(d) is amended to read: 9
(d) The sales factor of a taxpayer subject to this section is a fraction, 10
(1) the numerator of which is the sum of the following for the tax 11
period: 12
(A) the tariffs allowed and received by or for the taxpayer for 13
transporting oil or gas by pipeline in this state, regardless of whether the tariffs 14
are paid by third parties or by entities within the taxpayer's consolidated 15
business; and 16
(B) the total sales of the taxpayer in this state, determined in 17
accordance with AS 43.19 (Multistate Tax Compact), but excluding 18
(i) those sales already included in the tariffs described 19
in (A) of this paragraph; 20
(ii) constructive sales or deemed sales of natural gas 21
delivered to the state as payment of tax under [AN ELECTION MADE 22
BY THE TAXPAYER UNDER] AS 43.55.014; 23
(iii) fees, allowed and received, that are paid between 24
entities within the consolidated business of the taxpayer for 25
transporting the taxpayer's natural gas; and 26
(2) the denominator of which is the sum of the following for the tax 27
period: 28
(A) the tariffs allowed and received by or for the taxpayer's 29
consolidated business for transporting oil or gas by pipeline everywhere, 30
regardless of whether the tariffs are paid by third parties or by entities within 31
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the taxpayer's consolidated business; and 1
(B) the total sales of the taxpayer's consolidated business 2
everywhere, determined in accordance with AS 43.19 (Multistate Tax 3
Compact), but excluding 4
(i) those sales already included in the tariffs described 5
in (A) of this paragraph; 6
(ii) constructive sales or deemed sales of natural gas 7
delivered to the state as payment of tax under [AN ELECTION MADE 8
BY THE TAXPAYER UNDER] AS 43.55.014 or delivered in another 9
tax jurisdiction under a law comparable to AS 43.55.014; 10
(iii) fees, allowed and received, that are paid between 11
entities within the consolidated business of the taxpayer for 12
transporting the taxpayer's natural gas. 13
* Sec. 20. AS 43.20.144(f) is amended to read: 14
(f) The extraction factor of a taxpayer subject to this section is a fraction, 15
(1) the numerator of which is the sum of the following for the tax 16
period: 17
(A) the number of barrels of the taxpayer's oil (net of royalty to 18
an unrelated party) produced from or allocated to leases or properties of the 19
taxpayer in this state; and 20
(B) one-sixth of the number of Mcf of the taxpayer's gas, 21
excluding reinjected gas but including gas paid as tax in kind [SUBJECT TO 22
AN ELECTION] under AS 43.55.014, (net of royalty to an unrelated party) 23
produced from or allocated to leases or properties of the taxpayer in this state; 24
and 25
(2) the denominator of which is the sum of the following for the tax 26
period: 27
(A) the number of barrels of oil of the taxpayer's consolidated 28
business (net of royalty to an unrelated party) produced from or allocated to 29
leases or properties of the taxpayer's consolidated business everywhere; and 30
(B) one-sixth of the number of Mcf of gas, excluding reinjected 31
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gas but including gas paid as tax in kind [SUBJECT TO AN ELECTION] 1
under AS 43.55.014, of the taxpayer's consolidated business (net of royalty to 2
an unrelated party) produced from or allocated to leases or properties of the 3
taxpayer's consolidated business everywhere. 4
* Sec. 21. AS 43.55.014(a) is amended to read: 5
(a) If the commissioner makes a written determination, as described in 6
this subsection, that it is in the best interest of the state, a producer shall, at the 7
times and under the circumstances prescribed by the commissioner, [FOR GAS 8
PRODUCED ON AND AFTER JANUARY 1, 2022, OTHER THAN GAS 9
DESCRIBED IN (e) OF THIS SECTION, THE DEPARTMENT SHALL ALLOW A 10
PRODUCER TO MAKE AN ELECTION, UNDER REGULATIONS ADOPTED BY 11
THE DEPARTMENT, TO] pay in gas the [PRODUCTION] tax levied by this section 12
in lieu of the tax otherwise levied for the gas by AS 43.55.011(e). The determination 13
must include a comparison of the payment of the tax in gas to the payment of the 14
tax in money and must include relevant and specific information regarding the 15
particular producer and the determination. The commissioner shall submit a 16
determination made under this subsection to the legislature at the first 17
opportunity during a current session or, if the legislature is not in session, at the 18
next regular session. The legislature may, within 60 days after receiving the 19
determination or before adjournment of the session, whichever is sooner, revoke 20
the determination by concurrent resolution. Except as provided in this section, 21
the department may not allow a producer to pay a tax under this section or 22
AS 43.55.011(e) in gas. This [AN ELECTION UNDER THIS] subsection applies 23
only to gas produced from 24
(1) oil and gas leases modified under AS 38.05.180(hh) and under 25
which the state takes [FROM WHICH THE COMMISSIONER OF NATURAL 26
RESOURCES HAS DETERMINED TO TAKE] royalty gas in kind under 27
AS 38.05.182; and 28
(2) deposits located in the state north of 68 degrees North latitude 29
or located in leases or properties in the state that include land north of 68 degrees 30
North latitude. 31
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* Sec. 22. AS 43.55.014(b) is amended to read: 1
(b) A production tax levied by this section is equal to 13 percent of the gas 2
otherwise taxable under AS 43.55.011(e)(3) produced from each oil and gas lease 3
subject to a requirement to pay the tax in kind under [TO WHICH AN 4
EFFECTIVE ELECTION UNDER] (a) of this section [APPLIES], when and as that 5
gas is produced. The producer shall pay the tax in gas by delivering that 13 percent of 6
the gas to the state at the point of production. 7
* Sec. 23. AS 43.55.014(d) is amended to read: 8
(d) An assessment under AS 43.05.245 against a producer for an 9
underpayment of a tax levied by this section may be made in terms of an amount of 10
gas or an amount of money, as determined under regulations adopted by the 11
department. If the assessment is made in terms of money, the amount for a month of 12
production for an oil and gas lease subject to a requirement to pay the tax in kind 13
[AN EFFECTIVE ELECTION] under (a) of this section is the product of the number 14
of units of gas by which the producer's delivery to the state was less than the amount 15
required by (b) of this section, multiplied by the average gross value at the point of 16
production for each unit of the gas produced by the producer from the lease during the 17
month other than gas that was not subject to tax or gas that was delivered to the state 18
under (b) of this section. The department may allow a credit or refund under 19
AS 43.05.275 for an overpayment of a tax levied by this section that may be issued in 20
the form of gas or money, as determined under regulations adopted by the department. 21
If the credit or refund is allowed in terms of money, the amount of the credit or refund 22
for a month of production for an oil and gas lease subject to a requirement to pay the 23
tax in kind [AN EFFECTIVE ELECTION] under (a) of this section is the product of 24
the number of units of gas by which the producer's delivery to the state was more than 25
the amount required under (b) of this section, multiplied by the average gross value at 26
the point of production for each unit of the gas produced by the producer from the 27
lease during the month other than gas that was not subject to tax or gas that was 28
delivered to the state under (b) of this section. Interest that is determined as a 29
percentage of the amount of a tax underpayment or overpayment and a penalty that is 30
a percentage of the amount of a tax underpayment are calculated as a percentage of the 31
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amount of money determined in this subsection. An amount of gas that was less than 1
the amount required to be delivered to the state under (b) of this section or an amount 2
of gas that was more than the amount required to be delivered to the state under (b) of 3
this section that is adjusted as provided by a gas balancing agreement to which the 4
state is a party under AS 38.05.020(b)(11) is not subject to assessment under 5
AS 43.05.245 or a credit or refund under AS 43.05.275. In this subsection, "unit" 6
means a unit of measurement for gas identified by the department under regulations 7
adopted by the department and may be expressed as 1,000 cubic feet, 1,000,000 8
British thermal units, or another appropriate unit of measurement specified by the 9
department under regulations adopted by the department. 10
* Sec. 24. AS 43.55.020(f) is repealed and reenacted to read: 11
(f) The department, based on the value determined under (n) of this section, 12
(1) may require tax to be paid on oil or gas that is produced, but not 13
sold; 14
(2) may require tax to be paid on gas that is produced and stored in a 15
gas storage facility; 16
(3) shall require tax to be paid on oil or gas that is produced and sold at 17
no cost or under circumstances where the sale price does not represent the prevailing 18
value for oil or gas of like kind, quality, or character for the field, unit, or area from 19
which the product is produced; 20
(4) shall publish information related to the value of the oil or gas as 21
required under (o) of this section. 22
* Sec. 25. AS 43.55.020 is amended by adding new subsections to read: 23
(n) When making a value determination for purposes of the payment of tax 24
under (f) of this section, the department 25
(1) shall base the value for oil or gas on the value of oil or gas of the 26
same kind, quality, and character prevailing for that field, unit, or area during the 27
calendar month of production or sale; and 28
(2) may not base a value for oil or gas on oil or gas sold at no cost or at 29
a cost substantially lower than that of other oil or gas of the same kind, quality, and 30
character. 31
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(o) After determining the value of oil or gas for purposes of (f) of this section, 1
the department shall 2
(1) prepare a written report evidencing the determination of value; 3
(2) publish on the department's Internet website 4
(A) the determined value; 5
(B) a summary of the reasoning for the determination; and 6
(C) notice that the written determination required under (1) of 7
this subsection is available as a public record under AS 40.25.100 - 40.25.295 8
(Alaska Public Records Act); and 9
(3) maintain the publication required under (2) of this subsection on 10
the department's Internet website for at least 10 years. 11
* Sec. 26. AS 43.55.023(c) is amended to read: 12
(c) A credit or portion of a credit under this section 13
(1) may not be used to reduce a person's tax liability under 14
AS 43.55.011(e) for any calendar year below zero; 15
(2) may, if not used under this subsection, be applied in a later 16
calendar year; 17
(3) may, regardless of when the credit was earned, be used to satisfy a 18
tax, interest, penalty, fee, or other charge that 19
(A) is related to the tax due under this chapter for a prior year, 20
except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 21
43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 22
(B) has not, for the purpose of art. IX, sec. 17(a), Constitution 23
of the State of Alaska, been subject to an administrative proceeding or 24
litigation. 25
* Sec. 27. AS 43.55.023(e) is amended to read: 26
(e) A person to which a transferable tax credit certificate is issued under (d) of 27
this section may transfer the certificate to another person, and a transferee may further 28
transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 29
notwithstanding any action the department may take with respect to the applicant 30
under (g) of this section, the owner of a certificate may apply the credit or a portion of 31
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the credit shown on the certificate 1
(1) against a tax levied by AS 43.55.011(e); however, a credit shown 2
on a transferable tax credit certificate may not be applied under this paragraph to 3
reduce a transferee's total tax liability under AS 43.55.011(e) for oil and gas produced 4
during a calendar year to less than 80 percent of the tax that would otherwise be due 5
without applying that credit; any portion of a credit not used under this paragraph may 6
be applied in a later period; or 7
(2) regardless of when the credit was earned, to satisfy a tax, interest, 8
penalty, fee, or other charge that 9
(A) is related to the tax due under this chapter, except for a 10
surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or 11
the tax levied by AS 43.55.011(i) or 43.55.014; 12
(B) is for a calendar year before the year in which the 13
certificate is applied; and 14
(C) has not, for the purpose of art. IX, sec. 17(a), Constitution 15
of the State of Alaska, been subject to an administrative proceeding or 16
litigation. 17
* Sec. 28. AS 43.55.025(h) is amended to read: 18
(h) A producer that purchases a production tax credit certificate may apply the 19
credits against its production tax levied by AS 43.55.011(e). Regardless of the price 20
the producer paid for the certificate, the producer may receive a credit against its 21
production tax liability for the full amount of the credit, but for not more than the 22
amount for which the certificate is issued. A production tax credit or a portion of a 23
production tax credit or a production tax credit certificate or a portion of a production 24
tax credit certificate allowed under this section 25
(1) may not be applied more than once; 26
(2) may be applied in a later calendar year; 27
(3) may, regardless of when the credit was earned, be applied to satisfy 28
a tax, interest, penalty, fee, or other charge that 29
(A) is related to the tax due under this chapter for a prior year, 30
except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 31
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43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014; and 1
(B) has not, for the purpose of art. IX, sec. 17(a), Constitution 2
of the State of Alaska, been subject to an administrative proceeding or 3
litigation. 4
* Sec. 29. AS 43.55.030(a) is amended to read: 5
(a) A producer that produces oil or gas from a lease or property in the state 6
during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 7
for that oil or gas, shall file with the department on March 31 of the following year a 8
statement, under oath, in a form prescribed by the department, giving, with other 9
information required, the following: 10
(1) a description of each lease or property from which oil or gas was 11
produced, by name, legal description, lease number, or accounting codes assigned by 12
the department; 13
(2) the names of the producer and, if different, the person paying the 14
tax, if any; 15
(3) the gross amount of oil and the gross amount of gas produced from 16
each lease or property, separately identifying the gross amount of gas produced from 17
each oil and gas lease for which tax is paid in kind [TO WHICH AN EFFECTIVE 18
ELECTION] under AS 43.55.014(a) [APPLIES], the amount of gas delivered to the 19
state under AS 43.55.014(b), and the percentage of the gross amount of oil and gas 20
owned by the producer; 21
(4) the gross value at the point of production of the oil and of the gas 22
produced from each lease or property owned by the producer and the costs of 23
transportation of the oil and gas; 24
(5) the name of the first purchaser and the price received for the oil and 25
for the gas, unless relieved from this requirement in whole or in part by the 26
department; 27
(6) the producer's qualified capital expenditures, as defined in 28
AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 29
payments or credits under AS 43.55.170; 30
(7) the production tax values of the oil and gas under AS 43.55.160(a) 31
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or of the oil under AS 43.55.160(h), as applicable; 1
(8) any claims for tax credits to be applied; and 2
(9) calculations showing the amounts, if any, that were or are due 3
under AS 43.55.020(a) and interest on any underpayment or overpayment. 4
* Sec. 30. AS 43.55.160(h) is amended to read: 5
(h) For oil produced on and after January 1, 2022, except as provided in (b), 6
(f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 7
production tax value of oil taxable under AS 43.55.011(e) produced by a producer 8
during a calendar year 9
(1) from leases or properties in the state that include land north of 68 10
degrees North latitude is the gross value at the point of production of that oil, less the 11
producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 12
explore for, develop, or produce oil and gas deposits located in the state north of 68 13
degrees North latitude or located in leases or properties in the state that include land 14
north of 68 degrees North latitude, as adjusted under AS 43.55.170; for oil produced 15
on and after January 1, 2026, lease expenditures deductible under this paragraph 16
may not include costs incurred to explore for, develop, or produce gas deposits 17
located in the state north of 68 degrees North latitude or located in leases or 18
properties in the state that include land north of 68 degrees North latitude; 19
(2) before or during the last calendar year under AS 43.55.024(b) for 20
which the producer could take a tax credit under AS 43.55.024(a), from leases or 21
properties in the state outside the Cook Inlet sedimentary basin, no part of which is 22
north of 68 degrees North latitude, other than leases or properties subject to 23
AS 43.55.011(p), is the gross value at the point of production of that oil, less the 24
producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 25
explore for, develop, or produce oil and gas deposits located in the state outside the 26
Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil 27
and gas deposits located in a lease or property that includes land north of 68 degrees 28
North latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from 29
which commercial production has not begun, as adjusted under AS 43.55.170; 30
(3) from leases or properties subject to AS 43.55.011(p) is the gross 31
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value at the point of production of that oil, less the producer's lease expenditures under 1
AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and 2
gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 3
January 1, 2027, located in leases or properties in the state outside the Cook Inlet 4
sedimentary basin, no part of which is north of 68 degrees North latitude from which 5
commercial production has not begun, as adjusted under AS 43.55.170; 6
(4) from leases or properties in the state no part of which is north of 68 7
degrees North latitude, other than leases or properties subject to (2) or (3) of this 8
subsection, is the gross value at the point of production of that oil less the producer's 9
lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 10
develop, or produce oil and gas deposits located in the state south of 68 degrees North 11
latitude, other than oil and gas deposits located in a lease or property in the state that 12
includes land north of 68 degrees North latitude, and excluding lease expenditures that 13
are deductible under (2) or (3) of this subsection or would be deductible under (2) or 14
(3) of this subsection if not prohibited by (b) of this section, as adjusted under 15
AS 43.55.170; a separate annual production tax value shall be calculated for 16
(A) oil produced from each lease or property in the Cook Inlet 17
sedimentary basin; 18
(B) oil produced from each lease or property outside the Cook 19
Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, 20
other than leases or properties subject to (3) of this subsection. 21
* Sec. 31. AS 43.55.165(a) is amended to read: 22
(a) For purposes of this chapter, a producer's lease expenditures for a calendar 23
year are 24
(1) costs, other than items listed in (e) of this section, that are 25
(A) except as provided in (t) of this section, incurred by the 26
producer during the calendar year after March 31, 2006, to explore for, 27
develop, or produce oil or gas deposits located within the producer's leases or 28
properties in the state or, in the case of land in which the producer does not 29
own an operating right, operating interest, or working interest, to explore for 30
oil or gas deposits within other land in the state; and 31
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(B) allowed by the department by regulation, based on the 1
department's determination that the costs satisfy the following three 2
requirements: 3
(i) the costs must be incurred upstream of the point of 4
production of oil and gas; 5
(ii) the costs must be ordinary and necessary costs of 6
exploring for, developing, or producing, as applicable, oil or gas 7
deposits; and 8
(iii) the costs must be direct costs of exploring for, 9
developing, or producing, as applicable, oil or gas deposits; 10
(2) a reasonable allowance for that calendar year, as determined under 11
regulations adopted by the department, for overhead expenses that are directly related 12
to exploring for, developing, or producing, as applicable, the oil or gas deposits; and 13
(3) lease expenditures incurred in a previous calendar year, subject to 14
(l) - (r) of this section, that 15
(A) met the requirements of AS 43.55.160(e) in the year in 16
which the lease expenditures were incurred; 17
(B) have not been deducted in the determination of the 18
production tax value of oil and gas under AS 43.55.160(a) or (h) in a previous 19
calendar year; 20
(C) were not the basis of a credit under this title; and 21
(D) were incurred to explore for, develop, or produce an oil or 22
gas deposit located in the state outside the Cook Inlet sedimentary basin. 23
* Sec. 32. AS 43.55.165(e) is amended to read: 24
(e) For purposes of this section, lease expenditures do not include 25
(1) depreciation, depletion, or amortization; 26
(2) oil or gas royalty payments, production payments, lease profit 27
shares, or other payments or distributions of a share of oil or gas production, profit, or 28
revenue, except that a producer's lease expenditures applicable to oil and gas produced 29
from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 30
profit paid to the state under that lease; 31
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(3) taxes based on or measured by net income; 1
(4) interest or other financing charges or costs of raising equity or debt 2
capital; 3
(5) acquisition costs for a lease or property or exploration license; 4
(6) costs arising from fraud, wilful misconduct, gross negligence, 5
violation of law, or failure to comply with an obligation under a lease, permit, or 6
license issued by the state or federal government; 7
(7) fines or penalties imposed by law; 8
(8) costs of arbitration, litigation, or other dispute resolution activities 9
that involve the state or concern the rights or obligations among owners of interests in, 10
or rights to production from, one or more leases or properties or a unit; 11
(9) costs incurred in organizing a partnership, joint venture, or other 12
business entity or arrangement; 13
(10) amounts paid to indemnify the state; the exclusion provided by 14
this paragraph does not apply to the costs of obtaining insurance or a surety bond from 15
a third-party insurer or surety; 16
(11) surcharges levied under AS 43.55.201, [OR] 43.55.300, or 17
43.55.320; 18
(12) an expenditure otherwise deductible under (b) of this section that 19
is a result of an internal transfer, a transaction with an affiliate, or a transaction 20
between related parties, or is otherwise not an arm's length transaction, unless the 21
producer establishes to the satisfaction of the department that the amount of the 22
expenditure does not exceed the fair market value of the expenditure; 23
(13) an expenditure incurred to purchase an interest in any corporation, 24
partnership, limited liability company, business trust, or any other business entity, 25
whether or not the transaction is treated as an asset sale for federal income tax 26
purposes; 27
(14) a tax levied under AS 43.55.011 or 43.55.014; 28
(15) costs incurred for dismantlement, removal, surrender, or 29
abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 30
restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 31
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conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 1
excluded under this paragraph if the dismantlement, removal, surrender, or 2
abandonment for which the cost is incurred is undertaken for the purpose of replacing, 3
renovating, or improving the facility, pipeline, well pad, platform, or other structure; 4
(16) costs incurred for containment, control, cleanup, or removal in 5
connection with any unpermitted release of oil or a hazardous substance and any 6
liability for damages imposed on the producer or explorer for that unpermitted release; 7
this paragraph does not apply to the cost of developing and maintaining an oil 8
discharge prevention and contingency plan under AS 46.04.030; 9
(17) costs incurred to satisfy a work commitment under an exploration 10
license under AS 38.05.132; 11
(18) that portion of expenditures, that would otherwise be qualified 12
capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 13
are less than the product of $0.30 multiplied by the total taxable production from each 14
lease or property, in BTU equivalent barrels, during that calendar year, except that, 15
when a portion of a calendar year is subject to this provision, the expenditures and 16
volumes shall be prorated within that calendar year; 17
(19) costs incurred for repair, replacement, or deferred maintenance of 18
a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 19
undertaken in response to a failure, problem, or event that results in an unscheduled 20
interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 21
repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 22
equipment, other than a well, that is undertaken in response to, or is otherwise 23
associated with, an unpermitted release of a hazardous substance or of gas; however, 24
costs under this paragraph that would otherwise constitute lease expenditures under (a) 25
and (b) of this section may be treated as lease expenditures if the department 26
determines that the repair or replacement is solely necessitated by an act of war, by an 27
unanticipated grave natural disaster or other natural phenomenon of an exceptional, 28
inevitable, and irresistible character, the effects of which could not have been 29
prevented or avoided by the exercise of due care or foresight, or by an intentional or 30
negligent act or omission of a third party, other than a party or its agents in privity of 31
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contract with, or employed by, the producer or an operator acting for the producer, but 1
only if the producer or operator, as applicable, exercised due care in operating and 2
maintaining the facility, pipeline, structure, or equipment, and took reasonable 3
precautions against the act or omission of the third party and against the consequences 4
of the act or omission; in this paragraph, 5
(A) "costs incurred for repair, replacement, or deferred 6
maintenance of a facility, a pipeline, a structure, or equipment" includes costs 7
to dismantle and remove the facility, pipeline, structure, or equipment that is 8
being replaced; 9
(B) "hazardous substance" has the meaning given in 10
AS 46.03.826; 11
(C) "replacement" includes renovation or improvement; 12
(20) costs incurred to construct, acquire, or operate a refinery or crude 13
oil topping plant, regardless of whether the products of the refinery or topping plant 14
are used in oil or gas exploration, development, or production operations; however, if 15
a producer owns a refinery or crude oil topping plant that is located on or near the 16
premises of the producer's lease or property in the state and that processes the 17
producer's oil produced from that lease or property into a product that the producer 18
uses in the operation of the lease or property in drilling for or producing oil or gas, the 19
producer's lease expenditures include the amount calculated by subtracting from the 20
fair market value of the product used the prevailing value, as determined under 21
AS 43.55.020(f), of the oil that is processed; 22
(21) costs of lobbying, public relations, public relations advertising, or 23
policy advocacy; 24
(22) costs incurred as part of a capital expenditure or other action taken 25
for a carbon management purpose under AS 38.05.081 or a carbon offset project under 26
AS 38.95.400 - 38.95.499; 27
(23) costs incurred for carbon capture or carbon storage, including fees 28
incurred under AS 41.06.160, surcharges incurred under AS 41.06.175, or costs 29
associated with obtaining, operating, or maintaining a license or lease under 30
AS 38.05.700 - 38.05.795; in this paragraph, 31
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(A) "carbon capture" means the process of capturing carbon 1
dioxide from a chemical, mechanical, or industrial process, or directly from the 2
ambient atmosphere, and reducing the carbon dioxide to a concentrated form, 3
including a supercritical fluid; "carbon capture" does not include gas 4
processing or gas treatment; 5
(B) "carbon storage" means the long-term geologic storage of 6
carbon dioxide in a carbon storage facility permitted under AS 41.06.120 or a 7
Class VI injection well, as defined in 40 C.F.R. 146.5(f). 8
* Sec. 33. AS 43.55.165 is amended by adding a new subsection to read: 9
(t) For oil produced on and after January 1, 2026, lease expenditures under 10
this section do not include costs incurred to explore for, develop, or produce gas 11
deposits located in the state north of 68 degrees North latitude or located in leases or 12
properties in the state that include land north of 68 degrees North latitude. 13
* Sec. 34. AS 43.55.201(b) is amended to read: 14
(b) The surcharge imposed by (a) of this section is in addition to the tax 15
imposed by AS 43.55.011 and is due on the last day of the month on oil produced 16
from each lease or property during the preceding month. The surcharge is in addition 17
to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320. 18
* Sec. 35. AS 43.55 is amended by adding a new section to article 3 to read: 19
Sec. 43.55.320. Surcharge on liquefied natural gas. (a) Every processor of 20
liquefied natural gas shall pay a surcharge of $.15 for each Mcf of natural gas 21
processed in the state. In this subsection, 22
(1) "Mcf" means the quantity of gas contained in 1,000 cubic feet of 23
space, measured at a temperature of 60 degrees Fahrenheit and an absolute pressure of 24
14.65 pounds per square inch; 25
(2) "processor of liquefied natural gas" means a person that processes 26
natural gas by cooling it for the purpose of converting the natural gas to a liquid state 27
for transportation or storage. 28
(b) The surcharge imposed by (a) of this section 29
(1) applies only to a processor with the capacity to process more than 30
50 MMcf of natural gas per day; in this paragraph, "MMcf" means the quantity of gas 31
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contained in 1,000,000 cubic feet of space, measured in the same manner as gas 1
described in (a) of this section; 2
(2) is in addition to the tax imposed by AS 43.55.011 and the 3
surcharges imposed by AS 43.55.201 and 43.55.300. 4
(c) A tax credit authorized under this chapter may not be applied to reduce a 5
processor's liability for the surcharge. 6
(d) The surcharge is due on the last day of the month on gas processed during 7
the preceding month. The surcharge shall be paid at the same time and in the same 8
manner as the surcharge imposed under AS 43.55.201. 9
(e) The department may aggregate the quantity of gas processed by two or 10
more processors if the department determines that, without the provisions of this 11
section, the gas processed would reasonably be expected to be attributed to a single 12
entity. 13
* Sec. 36. AS 43.55.900(24) is amended to read: 14
(24) "surcharge" means 15
(A) when used in AS 43.55.201 - 43.55.299, the surcharge 16
levied by AS 43.55.201; 17
(B) when used in AS 43.55.300 and 43.55.310 [AS 43.55.300 - 18
43.55.310], the surcharge levied by AS 43.55.300; 19
(C) when used in AS 43.55.320, the surcharge levied by 20
AS 43.55.320; 21
* Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 22
read: 23
APPLICABILITY. (a) AS 31.25.080(a)(6), as amended by sec. 3 of this Act, applies 24
to a transfer or disposition occurring on or after the effective date of sec. 3 of this Act. 25
(b) AS 31.25.080(a)(24), as amended by sec. 3 of this Act, applies to a contract 26
entered into on or after the effective date of sec. 3 of this Act. 27
(c) AS 31.25.090(l), added by sec. 7 of this Act, applies to an agreement entered into 28
on or after the effective date of sec. 7 of this Act. 29
(d) AS 31.25.145, added by sec. 10 of this Act, applies to revenue generated on and 30
after the effective date of sec. 10 of this Act. 31
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(e) AS 31.25.280, added by sec. 11 of this Act, applies to a relationship with a foreign 1
entity entered into on or after the effective date of sec. 11 of this Act. In this subsection, "legal 2
relationship" has the meaning given in AS 31.25.280(c). 3
(f) AS 31.25.285, added by sec. 11 of this Act, applies to a legal relationship entered 4
into on an after the effective date of sec. 11 of this Act. In this subsection, "legal relationship" 5
has the meaning given in AS 31.25.285(b). 6
(g) AS 43.20.019, added by sec. 16 of this Act, applies to a qualified entity with 7
taxable income over $5,000,000 for a tax year beginning on or after January 1, 2027. In this 8
subsection, "qualified entity" has the meaning given in AS 43.20.019(g). 9
(h) AS 43.55.014(a), as amended by sec. 21 of this Act, applies to gas produced on 10
and after the effective date of sec. 21 of this Act. An election made under AS 43.55.014(a) 11
before the effective date of sec. 21 of this Act, if part of a contractual agreement, is not made 12
void by sec. 21 of this Act. 13
(i) AS 43.55.020(f), as repealed and reenacted by sec. 24 of this Act, and 14
AS 43.55.020(n), added by sec. 25 of this Act, apply to oil and gas produced on and after the 15
effective date of secs. 24 and 25 of this Act. 16
* Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 17
read: 18
TRANSITION. (a) The Alaska Gasline Development Corporation shall, by January 1, 19
2027, first publish the information required under AS 31.25.275, added by sec. 11 of this Act. 20
The first publication required under AS 31.25.275 must include information about each 21
(1) owner, investor, lender, and creditor since July 1, 2024, for each project 22
developed by the corporation or project in which the corporation has an ownership or 23
management interest; and 24
(2) gas purchase agreement entered into since July 1, 2024, for gas transported 25
through or processed by a project developed by the corporation or project in which the 26
corporation has an ownership or management interest. 27
(b) Within 30 days after the effective date of sec. 9 of this Act, the corporation shall 28
notify the president of the senate, the speaker of the house of representatives, and the chairs of 29
the finance committee of each house of the legislature of any existing options to invest in a 30
revenue-generating project, as required under AS 31.25.125. 31
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* Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 1
read: 2
RETROACTIVITY. (a) Sections 30, 31, and 33 of this Act are retroactive to 3
January 1, 2026. 4
(b) If secs. 15, 19 - 23, and 29 of this Act take effect after July 1, 2026, secs. 15, 19 - 5
23, and 29 of this Act are retroactive to July 1, 2026. 6
* Sec. 40. Sections 15, 19 - 23, and 29 of this Act take effect July 1, 2026. 7
* Sec. 41. Sections 16 - 18, 26 - 28, 32, and 34 - 36 of this Act take effect January 1, 2027. 8
* Sec. 42. Except as provided in secs. 40 and 41 of this Act, this Act takes effect 9
immediately under AS 01.10.070(c). 10