SB 2001

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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
1  "An Act relating to the taxation of certain natural gas project property and related
2  facilities; relating to the determination of the value of taxable real and personal property
3  for purposes of calculating local contributions for public school funding; relating to
4  municipal property taxes; relating to the Alaska Gasline Development Corporation;
5  relating to revenue from a North Slope natural gas project; relating to an alternative
6  volumetric tax on natural gas throughput; relating to agreements and payments related
7  to a natural gas project; relating to community impact grants; relating to the regulation
8  of liquefied natural gas import facilities by the Regulatory Commission of Alaska;
9  relating to an Alaska liquefied natural gas project mitigation fund; and providing for an
10 effective date."
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
12   * Section 1. The uncodified law of the State of Alaska is amended by adding a new section
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1  to read:
2LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that the tax
3  treatment in this Act is necessary to advance a major natural gas project and to ensure that
4(1) the project maximizes the benefit to the state by ensuring direct and
5  affordable access to natural gas to the residents of the state; and
6(2) communities affected by the natural gas project are protected from the
7  negative effects of the project.
8(b) Nothing in this Act is intended to establish, modify, impair, waive, or otherwise
9  affect the tax treatment, assessment methodology, valuation, taxing authority, or applicability
10 of taxes imposed under AS 29.45 or AS 43.56 with respect to any other property, project,
11 facility, infrastructure, or taxpayer. It is the intent of the legislature that this Act be narrowly
12 construed and not serve as precedent, guidance, or interpretive authority for the taxation of
13 any other property subject to taxation under AS 29.45 or AS 43.56.
14  * Sec. 2. AS 14.17.510 is amended by adding a new subsection to read:
15(d) In this section, the full and true value of the taxable real and personal
16property does not include property subject to the alternative volumetric tax levied
17under AS 43.59.
18  * Sec. 3. AS 29.45.080(c) is amended to read:
19(c) A municipality may levy and collect a tax on the full and true value of that
20portion of taxable property taxable under AS 43.56 as assessed by the Department of
21Revenue which value, when combined with the value of property otherwise taxable by
22the municipality, does not exceed the product of the percentage determined in (f) of
23this section of the average per capita assessed full and true value of property in the
24state multiplied by the number of residents of the taxing municipality. Property
25subject to tax abatement under AS 43.59.010 or to the alternative volumetric tax
26levied under AS 43.59.020 is not included in the value of property for the purpose
27of making the calculation under this subsection.
28  * Sec. 4. AS 31.25.010 is amended to read:
29Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a
30public corporation and government instrumentality acting in the best interest and as a
31fiduciary of the state for the purposes required by AS 31.25.005, located for
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1administrative purposes in the Department of Commerce, Community, and Economic
2Development, but having a legal existence independent of and separate from the state.
3The corporation may not be terminated as long as it has bonds, notes, or other
4obligations outstanding. The corporation may dissolve when no bonds, notes, or other
5obligations of the corporation or a subsidiary of the corporation are outstanding and
6the corporation or a subsidiary of the corporation is no longer engaged in the
7development, financing, construction, or operation of an in-state natural gas pipeline
8or an Alaska liquefied natural gas project. Upon termination of the corporation, its
9rights and property pass to the state.
10  * Sec. 5. AS 31.25.040(b) is amended to read:
11(b) The board shall by regulation adopted under AS 44.62 (Administrative
12Procedure Act) adopt and publish procedures to govern the procurement by the
13corporation of supplies, services, professional services, and construction. The
14procurement procedures must
15(1)   reflect competitive bidding principles and provide vendors
16reasonable and equitable opportunities to participate in the procurement
17process;
18(2)     include procurement methods to meet emergency and
19extraordinary circumstances;
20(3) comply with the five percent preference under AS 36.30.321(a);
21and
22(4) provide for an Alaska veterans' preference that is consistent with
23the Alaska veterans' preference in AS 36.30.175.
24  * Sec. 6. AS 31.25.080(a) is amended to read:
25(a) In addition to other powers granted in this chapter, the corporation may
26(1) determine the form of ownership and the operating structure of an
27in-state natural gas pipeline developed by the corporation and may, subject to
28AS 31.25.120(b), enter into agreements with other persons for joint ownership, joint
29operation, or both of an in-state natural gas pipeline or an Alaska liquefied natural gas
30project;
31(2) plan, finance, construct, develop, acquire, maintain, and operate a
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1pipeline system and other transportation mechanism, including pipelines, compressors,
2storage facilities, and other related facilities, equipment, and works of public
3improvement, in the state to facilitate production, transportation, and delivery of
4natural gas or other related natural resources to the point of consumption or to the
5point of distribution for consumption;
6(3) lease or rent facilities, structures, and properties;
7(4) exercise the power of eminent domain and file a declaration of
8taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is
9necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project;
10the exercise of powers by the corporation under this paragraph may not exceed the
11permissible exercise of the powers by the state;
12(5) acquire, by purchase, lease, or gift, land, structures, real or personal
13property, an interest in property, a right-of-way, a franchise, an easement, or other
14interest in land, or an interest in or right to capacity in a pipeline system determined to
15be necessary or convenient for the development, financing, construction, or operation
16of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or
17part of an in-state natural gas pipeline project or an Alaska liquefied natural gas
18project;
19(6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or
20part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project,
21or an interest in an asset of the corporation;
22(7) elect to provide transportation of natural gas as a contract carrier,
23common carrier, or otherwise;
24(8) provide light, water, security, and other services for property of the
25corporation;
26(9) conduct hearings to gather and develop data consistent with the
27purpose and powers of the corporation;
28(10) advocate for new pipeline capacity before the Federal Energy
29Regulatory Commission;
30(11) make and execute agreements, contracts, and other instruments
31necessary or convenient in the exercise of the powers and functions of the corporation
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1under this chapter, including a contract with a person, firm, corporation, governmental
2agency, or other entity;
3(12) sue and be sued in its own name;
4(13) adopt an official seal;
5(14) adopt bylaws for the regulation of its affairs and the conduct of its
6business and adopt regulations and policies in connection with the performance of its
7functions and duties;
8(15) employ fiscal consultants, engineers, attorneys, appraisers, and
9other consultants and employees that may, in the judgment of the corporation, be
10required and fix and pay their compensation from funds available to the corporation;
11(16) procure insurance against a loss in connection with its operation;
12(17)     borrow money as provided in this chapter to carry out its
13corporate purposes and issue its obligations as evidence of borrowing;
14(18) include in a borrowing the amounts necessary to pay financing
15charges, to pay interest on the obligations, and to pay the interest, consultant, advisory,
16and legal fees, and other expenses that are necessary or incident to the borrowing;
17(19)     receive, administer, and comply with the conditions and
18requirements of an appropriation, gift, grant, or donation of property or money;
19(20) do all acts and things necessary, convenient, or desirable to carry
20out the powers expressly granted or necessarily implied in this chapter;
21(21) invest or reinvest, subject to its contracts with noteholders and
22bondholders, money or funds held by the corporation, including funds in the in-state
23natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project
24fund (AS 31.25.110), in obligations or other securities or investments in which banks
25or trust companies in the state may legally invest funds held in reserves or sinking
26funds or funds not required for immediate disbursement, and in certificates of deposit
27or time deposits secured by obligations of, or guaranteed by, the state or the United
28States;
29(22) enter into, as it determines to be necessary or appropriate, any
30swap or hedge, cap, or other contract providing for payments based on levels of or
31changes in interest rates or indices or in the cost or price of any commodity, supply, or
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1expense expected to be used or incurred in connection with the acquisition,
2construction, or operation of any facility or property owned, leased, or operated by the
3corporation, or an option with respect to any of the foregoing;
4(23) except as provided in (g) of this section, acquire an ownership or
5participation interest in an Alaska liquefied natural gas project, natural gas treatment
6facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal
7facilities related to the infrastructure of an Alaska liquefied natural gas project, or an
8entity or joint venture that has an ownership interest in or is engaged in the planning,
9financing, acquisition, maintenance, construction, and operation of an Alaska liquefied
10natural gas project;
11(24)    after consultation with the commissioner of revenue and the
12commissioner of natural resources, enter into contracts relating to an Alaska liquefied
13natural gas project, including contracts for services related to operation, marketing,
14transportation, gas treatment, marine terminal operation, or liquefaction.
15  * Sec. 7. AS 31.25.080 is amended by adding new subsections to read:
16(h) If the corporation or a subsidiary of the corporation negotiates with another
17entity to acquire an interest in an Alaska liquefied natural gas project, the corporation
18shall provide an opportunity for municipalities in the state to purchase a portion of the
19corporation's right to acquire additional equity interest in the natural gas project not
20exercised by the corporation, through an entity managed by the corporation. A
21municipality may not acquire a direct interest in a natural gas project under this
22subsection.
23(i) The corporation shall, to the maximum extent possible, use contractors and
24suppliers in the state in order to benefit from the experience of workers and businesses
25in the state in arctic engineering and construction.
26  * Sec. 8. AS 31.25.090(f) is amended to read:
27(f) Subject to the restrictions in this section, the [THE] corporation may
28enter into confidentiality agreements necessary to acquire or provide information to
29carry out its functions. If a state agency determines that a law or provision of a
30contract to which the state agency is a party requires the state agency to preserve the
31confidentiality of the information and that delivering the information to the
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1corporation would violate the confidentiality provision of that law or contract, the state
2agency shall
3(1) identify the applicable law or contract provision to the corporation;
4and
5(2) obtain the consent of the person who has the right to waive the
6confidentiality of the information under the applicable law or contract provision before
7the state agency transfers the information to the corporation.
8   * Sec. 9. AS 31.25.090 is amended by adding new subsections to read:
9(j) If all parties to a confidentiality agreement entered into under (f) of this
10section agree to waive the confidentiality required by the agreement, in whole or in
11part, information subject to that waiver may be released to a legislator or a public
12agent. Information released under this subsection may include reasonable redactions.
13Information released under this subsection may include
14(1)   a contract or agreement or a specific term of a contract or
15agreement;
16(2) a pending contract or agreement or a specific term of a pending
17contract or agreement;
18(3) a record, file, or other information in possession of the corporation,
19a subsidiary of the corporation, or an entity partnered with the corporation; or
20(4)   the confidentiality agreement or terms of the confidentiality
21agreement.
22(k)    Notwithstanding (g) or (j) of this section, information subject to a
23confidentiality agreement entered into by the corporation may be discussed in a
24legislative committee in regular or executive session if all parties to the confidentiality
25agreement consent to the session, the consent is lawful, and one or more of the
26consenting parties is available to testify at the session.
27(l) A confidentiality agreement entered into under (f) of this section may not
28(1)    prevent compliance with an administrative or court order
29mandating disclosure;
30(2)   except as provided in (m) of this section, make confidential
31information that may lead to
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1(A) a significant fiscal liability, obligation, or risk to the state;
2or
3(B) appropriations or other state funding or in-kind payments
4or services from the state; or
5(3) make confidential the existence of information related to a state
6interest option under AS 31.25.125.
7(m) A confidentiality agreement entered into under (f) of this section may
8make confidential specific known or reasonably anticipated project economics or costs
9related to the Alaska liquefied natural gas project only if the parties to the contract
10agree that release of the project economics or costs would cause commercial or
11competitive harm to an entity involved in the Alaska liquefied natural gas project.
12(n) In this section, "public agent" means
13(1)   a public agency, as defined in AS 40.25.220, or an agent or
14contractor of a public agency;
15(2) an agent or contractor of a member of the legislature or of a
16legislative committee.
17  * Sec. 10. AS 31.25.120 is amended by adding a new subsection to read:
18(b) Unless the legislature approves the action by law under this subsection, the
19corporation may not transfer, sell, or otherwise dispose of an ownership or
20management interest in a subsidiary of the corporation. The corporation shall notify
21the presiding officer of each house if the corporation intends to transfer, sell, or
22otherwise dispose of an ownership or management interest in a subsidiary of the
23corporation. The legislature shall have 90 legislative days to consider the transfer, sale,
24or disposition. If the legislature does not disapprove the transfer, sale, or disposition of
25an ownership interest within 90 legislative days, the corporation may move forward
26with the transfer, sale, or disposition. In this subsection, "legislative day" means a day
27the legislature is in regular or special session.
28  * Sec. 11. AS 31.25 is amended by adding a new section to read:
29Sec. 31.25.125. Involvement in revenue-generating projects. (a) If the
30corporation negotiates with another entity for participation by the corporation in a
31revenue-generating project, the corporation shall negotiate an option for the state to
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1acquire an interest in the project. The corporation shall immediately notify the
2president of the senate, the speaker of the house of representatives, and the chairs of
3the finance committee of each house of the legislature on each occasion that an option
4is available for consideration by the legislature.
5(b) The corporation shall immediately notify the president of the senate, the
6speaker of the house of representatives, and the chairs of the finance committee of
7each house of the legislature on each occasion that the state may exercise an option
8negotiated under (a) of this section. The corporation shall notify the legislature under
9this subsection on the earlier of the date that
10(1)   the corporation determines, with reasonable assurance and
11considering the totality of circumstances, including review of all relevant financial
12information, that the revenue-generating project will be completed, with or without
13state investment; or
14(2) a final investment decision is made for the revenue-generating
15project.
16(c) The state may not acquire an interest in a revenue-generating project under
17this section unless the interest is approved by the legislature by law. When making an
18investment decision under this section, the legislature shall act as a prudent investor.
19(d) The Department of Revenue shall cooperate with and assist the legislature
20in determining whether to acquire an interest in a revenue-generating project under (c)
21of this section by exercising an option negotiated under (a) of this section, including
22by identifying potential funding sources for exercising the option and potential fiscal
23effects on the state. If requested by the legislature, another state agency shall cooperate
24with and assist the legislature with making a determination under (c) of this section.
25(e) In this section,
26(1)   "corporation" includes a subsidiary of the corporation;
27notwithstanding the definition of "subsidiary of the corporation" in AS 31.25.390, a
28subsidiary of a corporation does not include a partially owned subsidiary for purposes
29of this section;
30(2) "revenue-generating project" means a project, entity ownership,
31legal business arrangement, partnership, joint venture, or other commercial endeavor
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1expected to generate revenue.
2   * Sec. 12. AS 31.25.130(a) is amended to read:
3(a)      Except as otherwise provided in this chapter and except for
4AS 44.62.310 - 44.62.319 (Open Meetings Act), AS 44.62 (Administrative Procedure
5Act) does not apply to this chapter. The corporation shall make available to members
6of the public copies of the regulations adopted under (b) - (e) of this section.
7   * Sec. 13. AS 31.25 is amended by adding a new section to article 1 to read:
8Sec. 31.25.145. Accounting. (a) The corporation shall deposit into separate
9accounts in the general fund revenue
10(1) generated by a subsidiary of the corporation; and
11(2) resulting from an option negotiated under AS 31.25.125.
12(b)      The legislature may appropriate the annual estimated balance in the
13accounts for operations of the corporation or for any other purpose.
14  * Sec. 14. AS 31.25 is amended by adding a new section to read:
15Sec. 31.25.285. Legislative notification of ownership change. (a) Unless
16prevented by a confidentiality agreement entered into and subject to AS 31.25.090, the
17corporation shall promptly notify the president of the senate, the speaker of the house
18of representatives, and the chairs of the finance committee of each house of the
19legislature if
20(1) an entity in a legal relationship with the corporation, or a subsidiary
21of the corporation, has a significant change in ownership structure; or
22(2) the corporation becomes aware that an entity in a legal relationship
23with the corporation, or a subsidiary of the corporation, plans to make a significant
24change in ownership structure.
25(b) In this section, "legal relationship" means a partnership, joint venture, joint
26ownership agreement, or other legally binding business arrangement
27(1) of which the corporation, or a subsidiary of the corporation, has at
28least a 10 percent interest; or
29(2) that has an interest in a third entity in which the corporation, or a
30subsidiary of the corporation, also has at least a 10 percent interest; and
31(3)   that formed for the purpose of shared ownership or shared
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1management of, or pooling of resources for, an entity in which the corporation, or a
2subsidiary of the corporation, has an ownership or management interest.
3   * Sec. 15. AS 31.25.390 is amended by adding a new paragraph to read:
4(8) "subsidiary of the corporation" means a subsidiary controlled by
5the corporation.
6   * Sec. 16. AS 43.56.010(a) is amended to read:
7(a) Except as provided in AS 43.59.010 and 43.59.020, an [AN] annual tax
8of 20 mills is levied each tax year beginning January 1, 1974, on the full and true
9value of taxable property taxable under this chapter.
10  * Sec. 17. AS 43.56.020(d) is amended to read:
11(d) Taxable property subject to tax abatement under AS 43.59.010 or the
12volumetric tax imposed under AS 43.59.020 [OF A NATURAL GAS PIPELINE
13PROJECT       OWNED        OR     FINANCED        BY     THE     ALASKA      GASLINE
14DEVELOPMENT CORPORATION OR A JOINT VENTURE, PARTNERSHIP, OR
15OTHER ENTITY THAT INCLUDES THE ALASKA GASLINE DEVELOPMENT
16CORPORATION] is exempt from state taxes levied or authorized under
17AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b)
18[BEFORE THE COMMENCEMENT OF COMMERCIAL OPERATIONS OF THAT
19NATURAL  GAS   PIPELINE        PROJECT.        IN     THIS      SUBSECTION,
20"COMMENCEMENT OF COMMERCIAL OPERATIONS" MEANS THE FIRST
21FLOW OF NATURAL GAS IN THE PROJECT THAT GENERATES REVENUE
22TO THE OWNERS OF THE NATURAL GAS PIPELINE PROJECT].
23  * Sec. 18. AS 43 is amended by adding a new chapter to read:
24   Chapter 59. Natural Gas Project Temporary Tax Abatement and Volumetric Tax.
25Sec. 43.59.010. Temporary tax abatement. (a) Property of a natural gas
26project is not subject to the taxes levied under AS 29.45.080, AS 43.56.010, or
27AS 43.59.020 during the temporary tax abatement period. The abatement period
28begins on the effective date of this section and ends on the earlier of
29(1) the day after the natural gas project achieves a throughput of
30500,000,000 cubic feet of natural gas a day, calculated as a rolling average over a
31consecutive 30-day period; or
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1(2)    five years after the date of commencement of commercial
2operations of the natural gas project.
3(b) A natural gas project is eligible for the tax abatement under this section
4only if the department determines that the project is eligible under AS 43.59.025.
5Sec. 43.59.020. Imposition of alternative volumetric tax. (a) The owner of
6property subject to tax under this section shall pay an alternative volumetric tax on the
7throughput of the property. The alternative volumetric tax applies beginning on the
8day after the expiration of the abatement period under AS 43.59.010.
9(b)   The volumetric tax is the sum of the amounts calculated under this
10subsection for each component of a natural gas project. The tax for a component is
11calculated by multiplying the tax rate for the component, set out under (c) of this
12section, by the component weight, calculated under (d) of this section, by the total
13units of component throughput, defined under (e) of this section, for the tax period.
14(c) The tax rate is
15(1) $0.06 for a gas pipeline component;
16(2)   $0.12 for a gas treatment plant and carbon capture facility
17component;
18(3) $0.12 for a liquefied natural gas plant component.
19(d)   The component weight is the capital expenditures for a completed
20component divided by the total capital expenditures for all completed components.
21The department shall calculate the component weights upon commencement of
22commercial operations of each major phase of the project. The department shall
23calculate the final and fixed component weight upon commencement of commercial
24operations of the project. Each time a component weight is calculated under this
25subsection, the department shall provide the revised component weight to each
26taxpayer under this section and to a municipality collecting the tax due under this
27section.
28(e) A unit of component throughput is 1,000 cubic feet of natural gas.
29(f) Beginning after the first year the tax applies to throughput of a natural gas
30project, the tax rate for throughput under (c) of this section shall be adjusted on
31January 1 of each year for inflation, using 100 percent of the average of the annual
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1change over the preceding five calendar years in the Consumer Price Index for all
2urban consumers for urban Alaska, as determined by the United States Department of
3Labor, Bureau of Labor Statistics. However, the annual adjustment under this
4subsection must increase the rates by at least one percent and not more than two
5percent.
6(g) A natural gas project is subject to the alternative volumetric tax levied
7under this section only if the department determines that the project is eligible under
8AS 43.59.025.
9(h) The tax levied under this section is in place of
10(1) all state taxes levied on taxable property, including property used
11or committed by contract or other agreement for use in the natural gas project;
12(2) taxes levied under AS 43.56.010; and
13(3) taxes levied under AS 29.45.080.
14(i) An owner of property subject to tax under this section shall, on or before
15the last day of each month, file a return with the department and with each
16municipality collecting tax under this section. The return must state the throughput, in
17cubic feet of natural gas for each day, for each component of property subject to tax
18for the month preceding the month in which the return is due and include an
19installment payment for the month of the return. An installment payment is considered
20delinquent if the payment is not received by the department on or before the last day
21of each month.
22(j) The tax levied under this section is due annually, on the calendar year. The
23owner of the property shall, on or before April 30 each year, pay any remaining tax
24due under this section for tax accruing from throughput in the previous calendar year.
25A tax payment under this subsection is considered delinquent if the payment is not
26received by the department on or before April 30 each year.
27(k) Notwithstanding AS 43.05.220, if a tax payment or installment payment
28required under this section is delinquent, the department or a municipality shall assess
29a penalty of 15 percent of the amount of delinquent taxes and interest on the
30delinquent taxes, exclusive of penalty, at the rate specified in AS 43.05.225.
31Sec. 43.59.025. Eligibility. (a) A natural gas project is eligible for the tax
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1abatement under AS 43.59.010 and the alternative volumetric tax under AS 43.59.020
2only if the department determines that the plans for the project meet the requirements
3of this section.
4(b) To be eligible under this section, plans for the project must include a spur
5line meeting the requirements of this subsection that serves the City of Fairbanks and
6the Fairbanks North Star Borough. The spur line must
7(1) have sufficient capacity to serve reasonably projected residential,
8commercial, and industrial demand in the Interior area of the state;
9(2)   be scheduled to begin operations within two years after the
10commencement of commercial operations of a major component of the natural gas
11project;
12(3)   be designed to connect with local distribution infrastructure
13capable of delivering natural gas to the City of Fairbanks and the surrounding urban
14area;
15(4) be designed and operated to deliver gas at the lowest reasonable
16cost consistent with safe and reliable service; and
17(5)    allocate costs, including capital, financing, construction,
18operations, and maintenance costs,
19(A)    across all consumers systemwide; costs related to
20financing, construction, operations, or maintenance of the spur line may not be
21allocated solely to the Interior area of the state; in this subparagraph,
22"systemwide" means the area from the North Slope to the Southcentral regions
23of the state; and
24(B) justly, reasonably, and not unduly discriminatorily.
25(c) If the department determines that the requirements of (b) of this section
26have been met, the department shall issue a written determination that the natural gas
27project is eligible for the tax abatement under AS 43.59.010 and the alternative
28volumetric tax under AS 43.59.020.
29Sec. 43.59.030. Collection and allocation of alternative tax. The department
30shall levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the
31portion of the project property located in the unorganized borough. A municipality
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1may levy and collect the alternative volumetric tax imposed by AS 43.59.020 on the
2portion of the project property located in the municipality. The department shall adopt
3regulations providing for a methodology to determine the amount that each
4municipality and the department may levy based on the proportion of capital
5expenditures located within each municipality and in the unorganized borough.
6Sec. 43.59.040. Administrative appeals; distraint of property. (a) A
7decision by the department regarding the imposition or calculation of the tax levied
8under AS 43.59.020 may be appealed to the department for an informal conference
9under AS 43.05.240, and a final decision may be appealed to the office of
10administrative hearings under AS 43.05.405.
11(b) The remedy of distraint of property set out in AS 43.20.270 applies to the
12tax levied in this section. However, only the property subject to tax under
13AS 43.59.020 may be distrained.
14Sec. 43.59.050. Termination of status; application. (a) The alternative
15volumetric tax applicable to a natural gas project under AS 43.59.020 terminates on
16January 1, 2032, if commencement of construction of the first 730 miles of the gas
17pipeline has not begun by that date.
18(b) A natural gas project that does not meet the conditions of (a) of this section
19and for which the alternative volumetric tax under AS 43.59.020 does not apply is
20subject to all other state and municipal taxes on taxable property, including taxes
21levied under AS 29.45.080 and AS 43.56.010.
22Sec. 43.59.060. Reporting; regulations. (a) The owner of property subject to
23tax under this section shall, at the request of the department, provide to the department
24the information necessary to calculate the tax under this section, including capital
25expenditures made by the owner. Notwithstanding AS 40.25.100(a) and AS 43.05.230,
26the department shall hold confidential proprietary information provided to the
27department under this subsection at the request of the owner. In this subsection
28"proprietary information" means information that, if publicly disclosed, would
29adversely affect the competitive position of the owner or materially diminish the
30commercial value of the information to the owner.
31(b) The department shall adopt regulations under AS 44.62 (Administrative
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1Procedure Act) to implement this chapter, including procedures for
2(1) measuring throughput;
3(2) throughput reporting;
4(3) calculating the rolling average of throughput; and
5(4) reporting and verifying capital expenditures for the purposes of the
6calculations under AS 43.59.020(d) and adopting regulations under AS 43.59.030.
7Sec. 43.59.100. Definitions. In this chapter,
8(1)    "capital expenditure" means an actual expenditure incurred to
9acquire, construct, improve, or maintain a natural gas project or a component of a
10natural gas project;
11(2) "commencement of commercial operations" means the first flow of
12natural gas through a natural gas project or a component of a natural gas project that
13treats, transports, or processes a commercial amount of natural gas;
14(3) "gas pipeline"
15(A) means a main natural gas pipeline from the outlet flange of
16the gas treatment plant on the North Slope to the inlet flange of the liquefied
17natural gas plant located in the Kenai Peninsula region of the state;
18(B) does not include any gas lines downstream of any offtake
19point between a gas treatment plant and a liquefied natural gas plant;
20(4) "gas treatment plant" means a facility and the related activities
21required to receive natural gas from a Prudhoe Bay unit gas transmission line, a Point
22Thomson unit gas transmission line, or other facilities, to treat the natural gas to
23pipeline specifications, to dispose of or deliver byproducts, to deliver liquid products
24for further transportation, and to deliver treated natural gas for transportation through a
25gas pipeline;
26(5) "liquefied natural gas plant" means a facility for liquefying natural
27gas and includes structures, equipment, underlying land rights, and other associated
28systems, storage, and facilities for off-loading liquefied natural gas;
29(6) "natural gas project" and "project" means a natural gas project that
30includes, collectively, a Prudhoe Bay unit gas transmission line, a Point Thomson unit
31gas transmission line, a gas pipeline, a gas treatment plant, a liquefied natural gas
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1plant, and a marine terminal; in this paragraph,
2(A) "marine terminal" means a terminal and those facilities
3required to receive liquefied natural gas from the boundary of the liquefied
4natural gas plant for marine transportation, including auxiliary vessels used in
5the operation of the terminal;
6(B) "Point Thomson unit gas transmission line" means a natural
7gas transmission line from the outlet flange of the Point Thomson unit
8production facility to the inlet flange of the gas treatment plant; and
9(C) "Prudhoe Bay unit gas transmission line" means a natural
10gas transmission line from the outlet flange of the Prudhoe Bay unit central gas
11facility to the inlet flange of the gas treatment plant;
12(7) "spur line"
13(A) means
14(i)    a natural gas transmission or lateral line that
15branches from the main gas pipeline for the primary purpose of
16delivering natural gas to a local community or utility distribution
17system; and
18(ii)     compressing and metering equipment and
19interconnection facilities related to the transmission or lateral line
20described in (A)(i) of this paragraph;
21(B)   does not include infrastructure used for the export of
22natural gas or lateral lines not necessary for delivering natural gas to a local
23community or utility distribution system;
24(8) "throughput"
25(A) means
26(i) the volume of natural gas measured by summing all
27volumes sold or otherwise delivered at each outlet or offtake point
28along the gas pipeline; and
29(ii) natural gas consumed as fuel for the operation of a
30liquefaction facility;
31(B) does not include natural gas consumed as fuel for pipeline
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1compression.
2   * Sec. 19. AS 44.33 is amended by adding a new section to read:
3Article 13A. Alaska Liquefied Natural Gas Project Mitigation Fund.
4Sec. 44.33.850. Alaska liquefied natural gas project mitigation fund. (a)
5The Alaska liquefied natural gas project mitigation fund is established as a separate
6fund in the state treasury. The department shall administer the fund for the purposes
7set out in this section. Money in the fund does not lapse. Nothing in this section
8creates a dedicated fund. Each fiscal year, the legislature may appropriate to the fund
9up to $90,000,000 of revenue received by the state from an Alaska liquefied natural
10gas project.
11(b)     In a fiscal year, if the legislature appropriates less than or equal to
12$30,000,000 to the fund, the department shall distribute the balance of the fund, in
13equal amounts, to the North Slope Borough, the Fairbanks North Star Borough, the
14Denali Borough, the Municipality of Anchorage, the Matanuska-Susitna Borough, and
15the Kenai Peninsula Borough.
16(c) In a fiscal year, if the legislature appropriates more than $30,000,000 but
17less than or equal to $60,000,000 to the fund, the department shall distribute
18(1) $5,000,000 each to the North Slope Borough, the Fairbanks North
19Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska-
20Susitna Borough, and the Kenai Peninsula Borough; and
21(2) the remainder of the balance of the fund equally to the North Slope
22Borough and the Kenai Peninsula Borough.
23(d) In a fiscal year, if the legislature appropriates more than $60,000,000 to the
24fund, the department shall distribute
25(1) $5,000,000 each to the North Slope Borough, the Fairbanks North
26Star Borough, the Denali Borough, the Municipality of Anchorage, the Matanuska-
27Susitna Borough, and the Kenai Peninsula Borough;
28(2)   $15,000,000 each to the North Slope Borough and the Kenai
29Peninsula Borough; and
30(3) the remainder of the balance of the fund proportionately to each
31municipality in the state based on the municipality's population, except that money
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1may not be distributed to a municipality benefiting from a spur line.
2(e) In this section,
3(1) "Alaska liquefied natural gas project" has the meaning given in
4AS 31.25.390;
5(2) "department" means the Department of Commerce, Community,
6and Economic Development;
7(3) "fund" means the Alaska liquefied natural gas project mitigation
8fund established under (a) of this section;
9(4) "spur line" means a natural gas transmission or lateral line that
10branches from the main gas pipeline for the primary purpose of delivering natural gas
11to a local community or utility distribution system.
12  * Sec. 20. AS 42.05.711(v) is repealed.
13  * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to
14 read:
15REQUIRED REPORT: PHASE TWO OF THE ALASKA LIQUEFIED NATURAL
16 GAS PROJECT. (a) Before a final investment decision is made on phase two of the Alaska
17 liquefied natural gas project, the Alaska Gasline Development Corporation shall deliver a
18 report to the senate secretary and the chief clerk of the house of representatives and shall
19 notify the legislature that the report is available. The report must include
20(1) a discussion and review of the effects and effectiveness of this Act on the
21 Alaska liquefied natural gas project;
22(2) if applicable, suggestions for additional changes to law related to the
23 Alaska liquefied natural gas project, before implementation of phase two.
24(b) In this section,
25(1)   "Alaska liquefied natural gas project" has the meaning given in
26 AS 31.25.390;
27(2) "phase two" means a phase of the Alaska liquefied natural gas project that
28 includes a liquefied natural gas plant, as defined in AS 31.25.390, and other related
29 infrastructure required for the export of liquefied natural gas.
30  * Sec. 22. The uncodified law of the State of Alaska is amended by adding a new section to
31 read:
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1APPROPRIATION FOR COMMUNITY IMPACT GRANTS. After the state receives
2  the $40,000,000 payment committed to the state under sec. 25(a)(1) of this Act, the legislature
3  may appropriate $40,000,000 to the Department of Commerce, Community, and Economic
4  Development for payment of community impact grants to eligible communities. The
5  department shall use the money appropriated to the department under this section to timely
6  distribute grants to communities for activities, services, or facilities that offset actual or
7  expected effects of construction of a gas pipeline. When administering grants under this
8  section, the department shall prioritize granting awards based on the needs of the community,
9  the severity of the effects caused by construction of the pipeline, and the correlation of the
10 effect to the construction of the pipeline. In this section, "gas pipeline" has the meaning given
11 in AS 31.25.390.
12   * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to
13 read:
14APPLICABILITY:  ALASKA        GASLINE       DEVELOPMENT  CORPORATION
15 CONFIDENTIALITY AGREEMENTS, SUBSIDIARIES, NOTIFICATIONS, LEGAL
16 RELATIONSHIPS. (a) AS 31.25.080(a)(1) and (6) as amended by sec. 6 of this Act, apply to
17 a transfer or disposition occurring on or after the effective date of sec. 6 of this Act.
18(b)   AS 31.25.090(l), added by sec. 9 of this Act, applies to a confidentiality
19 agreement entered into on or after the effective date of sec. 9 of this Act.
20(c) AS 31.25.145, added by sec. 13 of this Act, applies to revenue generated on and
21 after the effective date of sec. 13 of this Act.
22(d) AS 31.25.285, added by sec. 14 of this Act, applies to a legal relationship entered
23 into on or after the effective date of sec. 14 of this Act. In this subsection, "legal relationship"
24 has the meaning given in AS 31.25.285(b), added by sec. 14 of this Act.
25   * Sec. 24. The uncodified law of the State of Alaska is amended by adding a new section to
26 read:
27TRANSITION: EXISTING OPTIONS. (a) Within 30 days after the effective date of
28 sec. 11 of this Act, the Alaska Gasline Development Corporation shall notify the president of
29 the senate, the speaker of the house of representatives, and the chairs of the finance committee
30 of each house of the legislature of any existing options to invest in a revenue-generating
31 project, as required under AS 31.25.125, added by sec. 11 of this Act.
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1(b) An option for state participation in a revenue-generating project negotiated by the
2  Alaska Gasline Development Corporation agreed to before the effective date of AS 31.25.125,
3  added by sec. 11 of this Act, must allow the state to exercise the option for at least 180 days
4  after the corporation notifies the legislature under AS 31.25.125, added by sec. 11 of this Act.
5   * Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to
6  read:
7CONDITIONAL  EFFECT:        ALTERNATIVE  VOLUMETRIC        TAX;
8  NOTIFICATION TO THE REVISOR OF STATUTES. (a) Sections 1 - 3, 16 - 18, 21, and 22
9  of this Act take effect only if, before January 1, 2032, the commissioner of revenue
10 determines that the primary owner of property that could be taxable under AS 43.59.020,
11 added by sec. 18 of this Act, has committed to
12(1) pay $40,000,000 to the state, which the legislature may appropriate to the
13 Department of Commerce, Community, and Economic Development for payment of
14 community impact grants to eligible communities in accordance with sec. 22 of this Act;
15(2) negotiate a project labor agreement for the construction of an economically
16 viable gas pipeline project; in this paragraph, "project labor agreement" means a
17 comprehensive collective bargaining agreement between the contractors of the owner of the
18 gas treatment plant, carbon capture facility, liquefied natural gas plant, and gas pipeline and
19 the appropriate labor representatives to ensure expedited construction with labor stability for
20 the project by qualified residents of the state; and
21(3) construct a spur line; to meet the requirement of this paragraph, the owner
22 responsible for constructing the spur line shall
23(A) on or before completion of construction of 730 miles of the gas
24pipeline, timely and in good faith begin all necessary permit applications and take
25action on any other regulatory requirements necessary for the construction of the spur
26line, including, if the Regulatory Commission of Alaska has jurisdiction over the
27tariffs,
28(i) initiating a tariff proceeding; and
29(ii) filing with the commission for systemwide tariff treatment
30for the spur line with an economically viable gas sales contract, and not for
31tariff treatment that allocates costs for financing, construction, operations, and
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1maintenance of the spur line solely to the Interior region of the state; in this
2sub-subparagraph, "systemwide" means the area from the North Slope to the
3Southcentral region of the state; and
4(B) begin construction on a spur line within one year after receiving all
5permits and meeting the necessary regulatory requirements described in (A) of this
6paragraph.
7(b) If the commissioner of revenue determines that the conditions in (a) of this section
8  have been met, the commissioner of revenue shall notify the revisor of statutes in writing
9  within 30 days after making the determination.
10(c) In this section,
11(1)   "economically viable gas sales contract" means a contract, precedent
12 agreement, memorandum of understanding, tariff-supported sales arrangement, or other
13 commercially reasonable arrangement for the sale, delivery, transportation, or distribution of
14 natural gas to serve current or reasonably projected residential, commercial, institutional,
15 utility, or industrial demand in the City of Fairbanks, the Fairbanks North Star Borough, or
16 the surrounding Interior area of the state, including demand aggregated by a public utility, gas
17 distribution utility, local government, state agency, or other entity serving customers in the
18 Interior area of the state; the gas sales contract need not demonstrate that the spur line alone
19 will recover all capital, financing, construction, operation, or maintenance costs solely from
20 customers in the Interior area of the state;
21(2) "gas pipeline" means a gas pipeline, as defined in AS 31.25.390, that is
22 expected to be subject to the alternative volumetric tax under AS 43.59.020, enacted by sec.
23 18 of this Act;
24(3) "spur line" means a spur line, as defined in AS 43.59.100, enacted by sec.
25 18 of this Act, used for the primary purpose of delivering natural gas to the City of Fairbanks
26 and the Fairbanks North Star Borough.
27  * Sec. 26. If, under sec. 25 of this Act, secs. 1 - 3, 16 - 18, 21, and 22 of this Act take
28 effect, they take effect on the day after the date the commissioner of revenue determines that
29 the conditions in sec. 25(a) of this Act have been met.
30  * Sec. 27. Except as provided in sec. 26 of this Act, this Act takes effect immediately under
31 AS 01.10.070(c).
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