SB 280 — An Act relating to the taxation of certain natural gas pipeline property; relating to municipal taxation limitations; establishing an alternative volumetric tax on natural gas throughput; relating to the allocation of revenue from the alternative volumetric tax; and providing for an effective date.

(2) "major component of a natural gas pipeline project" means each part of an Alaska liquefied natural gas project as defined in AS 31.25.390, an in-state natural gas pipeline as defined in AS 31.25.390, and integrated carbon capture, utilization, and storage infrastructure, including a carbon dioxide storage facility under AS 41.06;

(3) "taxable property" has the meaning given in AS 43.56.027.

AS 29.60.86043.56 is amended by adding a new subsectionsections to read:

(e) Amounts allocated under AS 43.59.040(3) for distribution on a per capita basis shall be distributed to municipalities, reserves, and communities in the unorganized borough in accordance with this section.

* Sec.

9.

AS 31.25.010 is amended to read:

31.25.010.43.56.021.

Structure.Temporary abatement.

The(a) AlaskaTaxable Gaslineproperty Developmentof Corporation is a publicqualified corporationproperty and governmentany instrumentalityreal actingor inpersonal theproperty bestused interestor andcommitted asby acontract fiduciaryor ofother theagreement state for the purposesconstruction, requiredoperation, byor ASmaintenance 31.25.005,of locatedthe forqualified administrativeproperty purposesis innot thesubject Departmentto ofthe Commerce,tax Community,levied andunder EconomicAS Development,43.56.010(a) butor having a legalmunicipal existencetax independentlevied ofunder andAS separate29.45.080 fromduring the state.ramp-up period.

TheFor corporationpurposes mayof notthis besubsection, terminatedthe ramp-up period begins on the date of commencement of commercial operations, as longdefined in AS 43.56.020(d), and ends on the earlier of (1) the day after the qualified property achieves a throughput of 1,000,000,000 cubic feet of natural gas per day, calculated as ita hasrolling bonds,average notes,over ora otherconsecutive obligations30-day outstanding.period;

The corporation may dissolve when no bonds, notes, or other(2) obligations10 ofyears theafter corporation or a subsidiary of the corporationdate are outstanding and the corporation or a subsidiary of thecommencement corporation is no longer engaged in the development, financing, construction, or operation of ancommercial in-stateoperations. natural gas pipeline or an Alaska liquefied natural gas project.

Upon(b) terminationDuring the ramp-up period described in (a) of this section, the corporation,owner itsof rightsa andqualified property passshall submit quarterly reports to the state.department detailing the daily volume of natural gas throughput.

*Upon Sec.verification that the throughput threshold has been met and the ramp-up period has ended, the commissioner shall issue a written determination to the owner and to any municipality within which the qualified SB0280A -3- SB 280 New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\A property is located.

10.The abatement provided in (a) of this section expires permanently upon the issuance of the written determination and does not resume if the daily gas volume subsequently decreases below the throughput threshold.

AS(c) 31.25.030The isprovisions amendedof bythis addingsection ado newnot subsectionapply to read:a spur line.

(f)In Notwithstandingthis applicationsubsection, of"spur ASline" 44.62.310means -a 44.62.319natural (Opengas Meetingstransmission Act)line underor ASlateral 31.25.130,line absentthat exigentbranches circumstances,from the boardmain shallnatural providegas atpipeline leastproject 10to workingdeliver days'natural publicgas noticeto beforea local community or utility distribution system, including a meeting.line described in AS 31.25.005(4) and 31.25.390 or similar infrastructure not serving as the primary export or mainline transmission facility and not defined as a major component under AS 43.56.020(d).

InTaxable theproperty eventassociated ofwith exigenta SB0280Bspur -3-line CSSBremains 280(RES)subject Newto Texttaxation Underlinedunder [DELETEDAS TEXT43.56.010 BRACKETED]without 34-GS2038\S circumstances, the boardbenefit shallof providethe atabatement leastin three(a) workingof days'this publicsection. notice before a meeting.

The board shall provide public notice of a regularly scheduled meeting within 24 hours after the meeting is scheduled.

In this subsection, "working day" means a calendar day other than Saturday, Sunday, an official federal holiday, or an official holiday of this state.

* Sec.

11.

AS 31.25.040(b) is amended to read:

(b) The board shall by regulation adopted under AS 44.62 (Administrative Procedure Act) adopt and publish procedures to govern the procurement by the corporation of supplies, services, professional services, and construction.

The procurement procedures must (1) reflect competitive bidding principles and provide vendors reasonable and equitable opportunities to participate in the procurement process;

(2) include procurement methods to meet emergency and extraordinary circumstances;

(3) comply with the five percent preference under AS 36.30.321(a);

and (4) provide for an Alaska veterans' preference that is consistent with the Alaska veterans' preference in AS 36.30.175.

* Sec.

12.

AS 31.25.080(a) is amended to read:

(a) In addition to other powers granted in this chapter, the corporation may (1) determine the form of ownership and the operating structure of an in-state natural gas pipeline developed by the corporation and may, subject to AS 31.25.120(b), enter into agreements with other persons for joint ownership, joint operation, or both of an in-state natural gas pipeline or an Alaska liquefied natural gas project;

(2) plan, finance, construct, develop, acquire, maintain, and operate a pipeline system and other transportation mechanism, including pipelines, compressors, storage facilities, and other related facilities, equipment, and works of public improvement, in the state to facilitate production, transportation, and delivery of natural gas or other related natural resources to the point of consumption or to the CSSB 280(RES) -4- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S point of distribution for consumption;

(3) lease or rent facilities, structures, and properties;

(4) exercise the power of eminent domain and file a declaration of taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is necessary for an in-state natural gas pipeline or an Alaska liquefied natural gas project;

the exercise of powers by the corporation under this paragraph may not exceed the permissible exercise of the powers by the state;

(5) acquire, by purchase, lease, or gift, land, structures, real or personal property, an interest in property, a right-of-way, a franchise, an easement, or other interest in land, or an interest in or right to capacity in a pipeline system determined to be necessary or convenient for the development, financing, construction, or operation of an in-state natural gas pipeline project or an Alaska liquefied natural gas project or part of an in-state natural gas pipeline project or an Alaska liquefied natural gas project;

(6) subject to AS 31.25.120(b), transfer or otherwise dispose of all or part of an in-state natural gas pipeline project, an Alaska liquefied natural gas project, or an interest in an asset of the corporation;

(7) elect to provide transportation of natural gas as a contract carrier, common carrier, or otherwise;

(8) provide light, water, security, and other services for property of the corporation;

(9) conduct hearings to gather and develop data consistent with the purpose and powers of the corporation;

(10) advocate for new pipeline capacity before the Federal Energy Regulatory Commission;

(11) make and execute agreements, contracts, and other instruments necessary or convenient in the exercise of the powers and functions of the corporation under this chapter, including a contract with a person, firm, corporation, governmental agency, or other entity;

(12) sue and be sued in its own name;

(13) adopt an official seal;

SB0280B -5- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (14) adopt bylaws for the regulation of its affairs and the conduct of its business and adopt regulations and policies in connection with the performance of its functions and duties;

(15) employ fiscal consultants, engineers, attorneys, appraisers, and other consultants and employees that may, in the judgment of the corporation, be required and fix and pay their compensation from funds available to the corporation;

(16) procure insurance against a loss in connection with its operation;

(17) borrow money as provided in this chapter to carry out its corporate purposes and issue its obligations as evidence of borrowing;

(18) include in a borrowing the amounts necessary to pay financing charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, and legal fees, and other expenses that are necessary or incident to the borrowing;

(19) receive, administer, and comply with the conditions and requirements of an appropriation, gift, grant, or donation of property or money;

(20) do all acts and things necessary, convenient, or desirable to carry out the powers expressly granted or necessarily implied in this chapter;

(21) invest or reinvest, subject to its contracts with noteholders and bondholders, money or funds held by the corporation, including funds in the in-state natural gas pipeline fund (AS 31.25.100) and the Alaska liquefied natural gas project fund (AS 31.25.110), in obligations or other securities or investments in which banks or trust companies in the state may legally invest funds held in reserves or sinking funds or funds not required for immediate disbursement, and in certificates of deposit or time deposits secured by obligations of, or guaranteed by, the state or the United States;

(22) enter into, as it determines to be necessary or appropriate, any swap or hedge, cap, or other contract providing for payments based on levels of or changes in interest rates or indices or in the cost or price of any commodity, supply, or expense expected to be used or incurred in connection with the acquisition, construction, or operation of any facility or property owned, leased, or operated by the corporation, or an option with respect to any of the foregoing;

(23) except as provided in (g) of this section, acquire an ownership or CSSB 280(RES) -6- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S participation interest in an Alaska liquefied natural gas project, natural gas treatment facilities, natural gas pipeline facilities, liquefaction facilities, marine terminal facilities related to the infrastructure of an Alaska liquefied natural gas project, or an entity or joint venture that has an ownership interest in or is engaged in the planning, financing, acquisition, maintenance, construction, and operation of an Alaska liquefied natural gas project;

(24) after consultation with the commissioner of revenue and the commissioner of natural resources, enter into contracts relating to an Alaska liquefied natural gas project, including contracts for services related to operation, marketing, transportation, gas treatment, marine terminal operation, or liquefaction.

* Sec.

13.

AS 31.25.080 is amended by adding new subsections to read:

(h) The corporation shall, to the maximum extent possible, use contractors and suppliers in the state in order to benefit from the experience of workers and businesses in the state in arctic engineering and construction.

(i) A gas sales agreement entered into by the corporation, or a subsidiary of the corporation, (1) shall require that a public utility in the state, or an entity shipping gas for delivery to a public utility in the state, have priority over sales to out-of-state purchasers if the transportation capacity of a gas pipeline is reduced;

and (2) may include other reasonable terms and conditions that are consistent with this chapter and that are for the mutual benefit of the gas pipeline and the public.

(j) A gas pipeline advanced, operated, or owned, in whole or in part, by the corporation, or a subsidiary of the corporation, must include a direct spur line to serve the City of Fairbanks and the Fairbanks North Star Borough.

(k) An owner or operator of a gas pipeline advanced, operated, or owned, in whole or in part, by the corporation, or a subsidiary of the corporation, (1) may not recoup cost overruns from the construction of the first phase of a gas pipeline by increasing the rates charged to a utility;

in this paragraph, (A) "cost overrun" means a cost in excess of $15,000,000,000;

(B) "first phase of a gas pipeline" means at least 730 miles of SB0280B -7- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S 42-inch pipeline constructed to transport natural gas from the North Slope and deliver the natural gas to in-state consumers;

(2) may not charge a utility in the state more than (A) $12 for each 1,000 cubic feet of natural gas after completion of the gas pipeline, but before the completion of a related liquefied natural gas plant;

(B) $5 for each 1,000 cubic feet of natural gas after completion of a liquefied natural gas plant related to the gas pipeline.

(l) An owner or operator of a gas pipeline advanced, operated, or owned, in whole or in part, by the corporation or a subsidiary of the corporation, shall ensure that natural gas that is produced from the Cook Inlet sedimentary basin and available for sale and transportation is transported, on commercially reasonable terms, by the gas pipeline.

This subsection does not apply if the commissioner of natural resources determines in writing that the supply of economically recoverable natural gas available for commercial sale from the Cook Inlet sedimentary basin is insufficient.

* Sec.

14.

AS 31.25.090(f) is amended to read:

(f) Subject to the restrictions in this section, the [THE] corporation may enter into confidentiality agreements necessary to acquire or provide information to carry out its functions.

If a state agency determines that a law or provision of a contract to which the state agency is a party requires the state agency to preserve the confidentiality of the information and that delivering the information to the corporation would violate the confidentiality provision of that law or contract, the state agency shall (1) identify the applicable law or contract provision to the corporation;

and (2) obtain the consent of the person who has the right to waive the confidentiality of the information under the applicable law or contract provision before the state agency transfers the information to the corporation.

* Sec.

15.

AS 31.25.090 is amended by adding new subsections to read:

(j) The parties to a confidentiality agreement entered into under (f) of this section may agree to waive confidentiality, in whole or in part, to allow the release of CSSB 280(RES) -8- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S information to a legislator or a public agent or for publication.

Information released under this subsection may include reasonable redactions.

Information released under this subsection may include (1) a contract or agreement or a specific term of a contract or agreement;

(2) a pending contract or agreement or a specific term of a pending contract or agreement;

(3) a record, file, or other information in possession of the corporation, a subsidiary of the corporation, or an entity partnered with the corporation;

or (4) the confidentiality agreement or terms of the confidentiality agreement.

(k) A confidentiality agreement entered into under (f) of this section may not (1) prevent compliance with an administrative or court order mandating disclosure;

(2) make confidential contract terms, including terms for in-kind payments or services, or prospective contract terms, that bind the corporation, a subsidiary of the corporation, or an entity with which the corporation, or a subsidiary of the corporation, has a legal relationship to assume fiscal or performance liability, obligation, or risk that could extend to or encumber the state, either directly or indirectly;

in this paragraph, "legal relationship" means a partnership, joint venture, joint ownership agreement, or other legally binding business arrangement formed for the purpose of shared ownership or management of, or pooling of resources for, an entity in which the corporation, or a subsidiary of the corporation, has an ownership or management interest;

(3) make confidential information that is related to known or reasonably anticipated project economics that may lead to a significant fiscal effect or liability to the state and that is necessary for the state to consider for a policy decision, including a decision related to appropriations or other state funding or in-kind payments or services from the state;

(4) make confidential contract terms governing the ownership or management structure of a subsidiary of the corporation;

or SB0280B -9- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (5) make confidential information related to a state interest option under AS 31.25.125.

(l) Upon request of a legislative committee or a member of the legislature, the corporation or a subsidiary of the corporation shall provide information disclosable under (k)(2) - (5) of this section.

A legislative committee or member of the legislature may request the information to be provided in a summarized format, with written explanations, as necessary to assist the legislature in assessing relevant fiscal effects, liabilities, or risks to the state.

(m) If the public disclosure of the information described in (k)(3) of this section would cause commercial or competitive harm to an entity involved in a component of the Alaska liquefied natural gas project, the information may be made confidential under a confidentiality agreement entered into under (f) of this section if, under the agreement, (1) reasonable estimations or ranges of estimations of the information may be publicly disclosed;

or (2) the information can be publicly disclosed in a redacted or generalized format and the information disclosed is accurate and sufficient for a public agent to assess the related fiscal effect, risk, or liability to the state.

(n) In this section, "public agent" means (1) a public agency, as defined in AS 40.25.220, or an agent or contractor of a public agency;

(2) an agent or contractor of a member of the legislature or of a legislative committee.

* Sec.

16.

AS 31.25.120 is amended by adding a new subsection to read:

(b) Unless the legislature approves the action by law, the corporation may not transfer, sell, or otherwise dispose of an ownership or management interest in a subsidiary of the corporation.

* Sec.

17.

AS 31.25 is amended by adding a new section to read:

31.25.125.43.56.022.

InvolvementImposition inof revenue-generatingalternative projects.volumetric tax.

(a) IfThe theowner corporationof negotiates with another entity for participation by the corporation in a revenue-generatingqualified project,property the corporation shall negotiatepay an optionalternative fortax on the statethroughput toof CSSB 280(RES) -10- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S acquire an interest in the project.qualified property.

The corporationvolumetric shalltax immediatelyapplies notifybeginning theon president of the senate,day theafter speaker of the houseexpiration of representatives, and the chairsramp-up ofperiod thedescribed financein committeeAS of43.56.021. each house of the legislature on each occasion that an option is available for consideration by the legislature.

(b) AnThe optionrate negotiatedof undertax thisis section$0.06 mustper (1)1,000 beforecubic beingfeet agreedof to,natural begas approvedthroughput. by the legislature by law;

andThe (2)rate allowin thethis statesubsection toincreases exerciseby one percent of the optionrate forimposed atduring leastthe 12prior monthsyear afteron notificationJanuary 1 of theeach legislatureyear underfollowing (d)the offirst thisyear section.of imposition.

(c) AtThe thetax requestlevied ofunder thethis legislature,section ais statein agencyplace shallof cooperate(1) withall andtaxes assistlevied theon legislaturetaxable inproperty, determiningincluding whetherproperty toused approveor undercommitted (b)(1)by ofcontract thisor sectionother theagreement termsfor ofuse anin optionthe negotiatedqualified underproperty; (a) of this section.

(d)(2) Thetaxes corporationlevied shall immediately notify the president of the senate, the speaker of the house of representatives, and the chairs of the finance committee of each house of the legislature on each occasion that the state may exercise an option negotiated under (a)AS of43.56.010; this section.

The(3) corporationad shallvalorem notifytaxes thelevied legislature under thisAS subsection29.45.080; on the later of the date that (1) the corporation determines, with reasonable assurance and considering the totality of circumstances, including review of all relevant financial information, that the revenue-generating project will be completed, with or without state investment;

and (4) during the construction, operation, or (2)maintenance aof finalthe investmentqualified decisionproperty, isany mademunicipal forsales or use tax levied under AS 29.45.650 or 29.45.700, municipal taxes on or measured by gross or net income, or any municipal license, excise, fee charge, or other tax on or pertaining to the revenue-generatingpurchase, project.use, consumption, or ownership of property or services.

(e)(d) TheA statereturn mayshall notbe acquirefiled anwith interestthe indepartment aand revenue-generatingto projecteach municipality that taxes qualified property under this section unlesson or before the interestlast isday approvedof byeach month for the legislaturepreceding bymonth's law.throughput.

WhenThe makingtax anshall investmentbe decisionpaid underto thisthe section,department with the legislatureSB shall280 act-4- asSB0280A aNew prudentText investor.Underlined [DELETED TEXT BRACKETED] 34-GS2038\A return.

(f)(e) TheA Departmentpayment ofis Revenueconsidered shalllate cooperateif withnot andreceived assistby the legislaturelast inday determiningof whetherthe tomonth acquire an interest in awhich revenue-generating project under (e) of this section by exercising an option negotiated under (a) of this section, including by identifying potential funding sources for exercising the optionreturn andis potentialdue. fiscal effects on the state.

If(f) requestedThe byprovisions theof legislature,AS another43.56.090, state43.56.100, agency43.56.135, shall43.56.140, cooperate with and assist43.56.150 thedo legislaturenot withapply makingto athe determinationalternative undervolumetric (e)tax oflevied under this section.

SB0280B -11- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (g) TheWhen corporation,the andtax anylevied other entity participating in a revenue-generating project, shall (1) cooperate with and assist the legislature in determining whether to approve the terms of an option negotiated under (a) of this section orbecomes todelinquent, acquirea anpenalty interestof in10 thepercent projectshall bybe exercisingadded. an option negotiated under this section;

(2)Interest provideon information requested by the legislaturedelinquent relatedtaxes, toexclusive theof project,penalty, includingshall (A)be informationassessed necessaryat for the legislaturerate tospecified actin asAS a43.05.225. prudent investor;

and(h) (B)The financialremedy recordsof distraint of orproperty relatedset out in AS 43.20.270 applies to the revenue-generatingtax project;levied in this section.

andHowever, (3)only ensure that at least one representative of the corporationqualified andproperty ofmay eachbe participatingdistrained. entity are available to testify during public hearings of legislative committees requesting testimony.

(h) In this section, (1) "corporation" includes a subsidiary of the corporation;

notwithstanding the definition of "subsidiary of the corporation" in AS 31.25.390, a subsidiary of a corporation does not include a partially owned subsidiary for purposes of this section;

(2) "revenue-generating project" means a project, entity ownership, legal business arrangement, partnership, joint venture, or other commercial endeavor expected to generate revenue.

* Sec.

18.

AS 31.25.130(a) is amended to read:

(a) Except as otherwise provided in this chapter and except for AS 44.62.310 - 44.62.319 (Open Meetings Act), AS 44.62 (Administrative Procedure Act) does not apply to this chapter.

The corporation shall make available to members of the public copies of the regulations adopted under (b) - (e) of this section.

* Sec.

19.

AS 31.25 is amended by adding a new section to article 1 to read:

31.25.145.43.56.023.

Accounting.Allocation of alternative tax.

(a) TheA corporationmunicipality shall depositlevy intoand separatecollect accountsthe inalternative thevolumetric generaltax fundon revenuethe (1)portion generatedof bythe aqualified subsidiaryproperty oflocated within the corporation;municipality.

andThe CSSBstate 280(RES)shall -12-levy SB0280Band Newcollect Textthe Underlinedalternative [DELETEDvolumetric TEXTtax BRACKETED]on 34-GS2038\Sthe (2)portion resultingof fromthe anqualified optionproperty negotiatedlocated underin ASthe 31.25.125.unorganized borough.

(b) EachRevenue year,collected theby legislature may appropriate the annualstate estimatedunder balance(a) in the account described in (a)(1) of this section forshall operationsbe ofdeposited in the corporationgeneral orfund. for any other purpose.

*(c) Sec.The department shall adopt regulations providing for a methodology to determine the amount that each municipality and the state may levy based on the original cost of the portion of the qualified property located within each municipality and the unorganized borough.

20.If a portion of the qualified property is located within both a borough and a city within that borough, the department shall develop a methodology by regulation to allocate the tax revenue between the taxing jurisdictions.

AS(d) 31.25.160The isassessment amendedof bythe addingtax alevied newon subsectionqualified toproperty read:for purposes of this section is legally vested in the department.

(g)Any Thedispute corporation,regarding orthe aassessment, subsidiaryincluding of the corporation,allocation mayor issuejurisdiction bondsof only if the legislaturetax, approvesshall issuancebe oftreated theas bonds,an exceptadministrative fordecision refundingunder bonds.AS 43.56.024.

Refunding bonds may be issued without further approval by the legislature in a principal amount sufficient to provide funds for the payment of all bonds to be refunded by the refunding bonds and, in addition, for the payment of all other amounts that the corporation considers appropriate in connection with the refunding, including expenses incident to the redeeming, calling, retiring, or paying of the outstanding bonds, the funding of reserves, and the issuance of the refunding bonds.

* Sec.

21.

AS 31.25.260(a) is amended to read:

(a) The exercise of the powers granted by this chapter is, in all respects, for the benefit of the people of the state, for the people's [THEIR] well-being and prosperity, and for the improvement of the people's [THEIR] social and economic conditions, and, except as provided in AS 43.59.010(f), the corporation is not required to pay a tax or assessment on any property owned by the corporation under the provisions of this chapter or on the income from it, including state taxes levied or authorized under AS 43.56.010(a) and municipal taxes under AS 43.56.010(b) as provided in AS 43.56.020.

* Sec.

22.

AS 31.25.260(a), as amended by sec.

21 of this Act, is amended to read:

(a) The exercise of the powers granted by this chapter is, in all respects, for the benefit of the people of the state, for the people's well-being and prosperity, and for the improvement of the people's social and economic conditions, and [, EXCEPT AS PROVIDED IN AS 43.59.010(f),] the corporation is not required to pay a tax or assessment on any property owned by the corporation under the provisions of this chapter or on the income from it, including state taxes levied or authorized under AS 43.56.010(a) and municipal taxes under AS 43.56.010(b) as provided in AS 43.56.020.

SB0280B -13- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S * Sec.

23.

AS 31.25 is amended by adding new sections to read:

31.25.280.43.56.024.

RelationshipsAdministrative withappeals. foreign entities.

(a) TheNotwithstanding corporationAS shall43.56.120, promptlya providedecision writtenby notice to the presidentdepartment ofregarding the senate,imposition theor speakercalculation of the housetax oflevied representatives,under andAS the43.56.022 chairsmay ofbe appealed to the financedepartment committeefor ofan eachinformal houseconference ofSB0280A the-5- legislatureSB if280 theNew corporation,Text orUnderlined a[DELETED subsidiaryTEXT ofBRACKETED] the34-GS2038\A corporation,under entersAS into43.05.240, and a legalfinal relationshipdecision withmay abe foreignappealed entity,to eitherthe directlyoffice orof indirectlyadministrative throughhearings anotherunder personAS or43.05.405. entity.

(b) The notificationState underAssessment thisReview sectionBoard mustestablished (1)under beAS provided43.56.040 atdoes leastnot quarterlyhave onjurisdiction theover calendara year;qualified property.

(2) include (A) the full legal name of the foreign entity;

(B) a description of the legal relationship and any project related to the legal relationship;

(C) the name of at least one individual authorized to bind the foreign entity on matters related to the legal relationship;

(D) the physical address of the primary business operations of the foreign entity;

and (E) the date the legal relationship was entered into.

(b) In addition to providing notification under (a) of this section, the corporation shall ensure that an agent of the corporation or a subsidiary of the corporation, if requested, is available to testify relating to the legal relationship during one or more public hearings of legislative committees requesting testimony.

(c) In this section, "legal relationship" means a partnership, joint venture, joint ownership agreement, merger, or other legal agreement made for the purpose of investing in, obtaining monetary returns from, or obtaining an ownership interest in (1) a project developed by the corporation or a subsidiary of the corporation;

(2) a project in which the corporation or a subsidiary of the corporation has an ownership or management interest;

or (3) an entity engaged in a project described in (1) or (2) of this subsection.

31.25.285.43.56.025.

LegislativeTermination notification of ownershipstatus. change.

(a) The CSSBbenefits 280(RES)and -14-alternative SB0280Btax Newstatus Textprovided Underlinedfor [DELETEDa TEXTqualified BRACKETED]property 34-GS2038\Sunder corporationAS shall43.56.021 promptlyand notify43.56.022 theterminate presidenton ofJanuary the1, senate,2040, theif speaker of the housequalified ofproperty representatives,has andnot thecommenced chairscommercial ofoperations, theas financedefined committee of each house of the legislature if (1) an entity in aAS legal43.56.020(d), relationshipon with the corporation, or abefore subsidiarythat ofdate. the corporation, has a significant change in ownership structure;

or (2) the corporation becomes aware that an entity in a legal relationship with the corporation, or a subsidiary of the corporation, plans to make a significant change in ownership structure.

(b) In this section, "legal relationship" means a partnership, joint venture, joint ownership agreement, or other legally binding business arrangement (1) of which the corporation, or a subsidiary of the corporation, has at least a 10 percent interest;

or (2) that has an interest in a third entity in which the corporation, or a subsidiary of the corporation, also has at least a 10 percent interest;

and (3) that formed for the purpose of shared ownership or shared management of, or pooling of resources for, an entity in which the corporation, or a subsidiary of the corporation, has an ownership or management interest.

* Sec.

24.

AS 31.25.390 is amended by adding new paragraphs to read:

(8) "foreign entity" means (A) an entity whose primary operations are not physically located in the United States and that is not managed primarily by citizens of the United States;

or (B) a natural person who is not a citizen of the United States;

(9) "subsidiary of the corporation" includes a subsidiary partially owned by the corporation.

* Sec.

25.

AS 38.05.180 is amended by adding a new subsection to read:

(mm) Before taking oil or gas royalties in value, the commissioner shall determine that the value taken is based on the value of oil or gas of the same kind, quality, and character prevailing for that field, unit, or area during the calendar month the oil or gas is produced.

The commissioner may take royalties on oil or gas that is produced but not sold and may take royalties on gas that is produced and stored in a SB0280B -15- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S gas storage facility.

The commissioner may not, when making a value determination under this subsection, base a value for oil or gas on oil or gas sold at no cost or at a cost substantially lower than that of other oil or gas of the same kind, quality, and character.

* Sec.

26.

AS 42.05 is amended by adding a new section to read:

42.05.387.43.56.026.

RatesRegulations. charged by Alaska Gasline Development Corporation gas pipeline.

(a)The Andepartment ownershall oradopt operatorregulations ofunder aAS gas44.62 pipeline(Administrative advanced,Procedure operated,Act) orto owned,implement inAS whole43.56.021 or- in43.56.027, part,including byprocedures thefor Alaskathroughput Gaslinereporting, Developmentthe Corporation,determination or a subsidiary of theoriginal corporation, (1) may not recoup cost overrunsfor fromallocation thepurposes, constructionand of the firstcalculation phase of a gas pipeline by increasing the ratesrolling chargedaverage. to a utility;

inRegulations thisadopted paragraph,under "costthis overrun"section andshall "firstfurther phasedefine ofthroughput afor gas pipeline" have the meaningspurposes givenof in AS 31.25.080;43.56.021 - 43.56.027.

(2) may not charge a utility in the state more than (A) $12 for each 1,000 cubic feet of natural gas after completion of the gas pipeline, but before the completion of a related liquefied natural gas plant;

(B) $5 for each 1,000 cubic feet of natural gas after completion of a liquefied natural gas plant related to the gas pipeline.

(b) The commission has jurisdiction to enforce this section to the extent not preempted by federal law.

(c) In this section, (1) "gas pipeline" has the meaning given in AS 31.25.390;

(2) "liquefied natural gas plant" has the meaning given in AS 31.25.390.

* Sec.

27.

AS 43.20 is amended by adding a new section to read:

43.20.019.43.56.027.

Tax on income of certain oil and gas pass-through entities.

(a) Each taxable year, a tax is imposed on the entire taxable income derived from sources in the state of every qualified entity.

The tax is computed as follows:

If the taxable income is:

Then the tax is:

Less than $1,000,000 zero CSSB 280(RES) -16- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S $1,000,000 but less than $2,000,000 5 percent of the taxable income over $1,000,000 $2,000,000 but less than $3,000,000 $50,000 plus 6 percent of the taxable income over $2,000,000 $3,000,000 but less than $4,000,000 $110,000 plus 7 percent of the taxable income over $3,000,000 $4,000,000 but less than $5,000,000 $180,000 plus 8 percent of the taxable income over $4,000,000 $5,000,000 or more $260,000 plus 9.4 percent of the taxable income over $5,000,000.

(b) For purposes of calculating taxable income under this section, (1) taxable income of a qualified entity is determined under AS 43.20.144 as if the qualified entity were taxable as a C corporation, as defined by 26 U.S.C.

1361(a)(2) (Internal Revenue Code), as that section read on January 1, 2026;

(2) notwithstanding AS 43.20.021 and AS 43.20.036, a qualified entity may not apply as a credit or deduction against tax liability a credit or deduction allowed as to federal taxes under 26 U.S.C.

(Internal Revenue Code), except that the qualified entity may take a credit or deduction allowed for a C corporation under (1) of this subsection.

(c) The tax under this section does not apply to a corporation subject to tax under AS 43.20.011 or to an entity that is part of a unitary business with a corporation subject to tax under AS 43.20.011.

(d) A public corporation is exempt from the tax under this section.

If a qualified entity is held in part by a public corporation, income in proportion to the ownership interest held by the public corporation is exempt from the tax under this section.

The department may direct each owner of a qualified entity that is owned in part by the Alaska Gasline Development Corporation (AS 31.25) to file a return with the department.

Notwithstanding AS 40.25.100(a) and AS 43.05.230(a), a return filed by the Alaska Gasline Development Corporation under this subsection is a public record and is not confidential.

SB0280B -17- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (e) For the purpose of determining the tax due under this section, the department shall (1) aggregate the taxable income of two or more entities if the department determines that, without the provisions of this section, the taxable income would reasonably be expected to be attributed to a single entity;

(2) except as provided in (c) of this section, include in the calculation of taxable income of the qualified entity income that is attributable to an entity that is part of a unitary business with the qualified entity paying tax under this section;

and (3) adopt regulations to prevent evasion of taxes imposed under this section.

(f) For purposes of calculating income under this section, a qualified entity may deduct from income a payment to the shareholder, owner, member, or partner of the qualified entity, if (1) the shareholder, owner, member, or partner is a taxpayer under this chapter;

(2) the payment does not include a transfer of property;

(3) the payment is included in the shareholder's, owner's, member's, or partner's income for purposes of this chapter;

and (4) the payment was not made with the specific intent to reduce or evade the payment of tax under this chapter.

(g) In this section, (1) "carbon capture" and "carbon storage" have the meanings given in AS 43.55.165(e)(23);

(2) "pipeline" means a pipeline that transports oil or gas from north of 68 degrees North latitude to a location outside of the lease or property where the oil or gas is produced for the direct purpose of sale and delivery of the oil or gas to a commercial market;

(3) "qualified entity" (A) means a sole proprietorship, partnership, limited liability company, or entity that has elected to file federal returns under 26 U.S.C.

1361 - 1379 (Internal Revenue Code) that CSSB 280(RES) -18- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (i) has taxable income;

(ii) owns, operates, manages, or controls an entity that has taxable income;

(iii) holds an ownership, investment, or similar interest in an entity that has taxable income;

or (iv) owns an operating right, operating interest, or working interest in a mineral interest of an entity with taxable income;

(B) does not include a natural person;

(4) "taxable income" means income (A) from the production of oil or gas from a lease or property in the state;

(B) from the transportation of oil or gas by pipeline in the state;

(C) from the supply of oil or gas for transportation by pipeline in the state, whether directly, to an intermediary, or as an intermediary;

(D) from gas treatment, carbon capture, or carbon storage activities in the state;

(E) from liquefied natural gas processing in the state;

(F) from the marine transportation of liquefied natural gas produced in the state;

and (G) of an entity that is part of a unitary business with a carrier or producer paying tax under this section as provided under (e)(2) of this section.

* Sec.

28.

AS 43.20.030(a) is amended to read:

(a) If a taxpayer [CORPORATION], or a partnership that has a taxpayer [CORPORATION] as a partner, is required to make a return under the provisions of the Internal Revenue Code, the taxpayer [IT] shall file with the department, within 30 days after the federal return is required to be filed, a return setting out (1) the amount of tax due under this chapter, less credits claimed against the tax;

and (2) other information for the purpose of carrying out the provisions of this chapter that the department requires.

SB0280B -19- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S * Sec.

29.

AS 43.20.031(i) is amended to read:

(i) A taxpayer that [CORPORATION WHICH] is a member of a group of unitary corporations or entities that [WHICH] collectively has income from business activity taxable both inside and outside the state, or income from other sources both inside and outside the state, shall determine its income from sources in this state by use of the combined method of accounting.

* Sec.

30.

AS 43.55.011(f) is amended to read:

(f) The levy of tax under (e) of this section for (1) oil and gas produced before January 1, 2022, from leases or properties that include land north of 68 degrees North latitude, other than gas subject to (o) of this section, may not be less than (A) four percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is more than $25;

(B) three percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $20 but not over $25;

(C) two percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $17.50 but not over $20;

(D) one percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $15 but not over $17.50;

or (E) zero percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is $15 or less;

[AND] CSSB 280(RES) -20- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (2) oil produced on and after January 1, 2022, and before January 1, 2027, from leases or properties that include land north of 68 degrees North latitude, may not be less than (A) four percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is more than $25;

(B) three percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $20 but not over $25;

(C) two percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $17.50 but not over $20;

(D) one percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $15 but not over $17.50;

or (E) zero percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is $15 or less;

and (3) oil produced on and after January 1, 2027, from leases or properties that include land north of 68 degrees North latitude, may not be less than (A) six percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is more than $25;

(B) three percent of the gross value at the point of SB0280B -21- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $20 but not over $25;

(C) two percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $17.50 but not over $20;

(D) one percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is over $15 but not over $17.50;

or (E) zero percent of the gross value at the point of production when the average price per barrel for Alaska North Slope crude oil for sale on the United States West Coast during the calendar year for which the tax is due is $15 or less.

* Sec.

31.

AS 43.55.020(a) is amended to read:

(a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay the tax as follows:

(1) for oil and gas produced before January 1, 2014, an installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month;

except as otherwise provided under (2) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment payment may not be less than zero:

(A) for oil and gas not subject to AS 43.55.011(o) or (p) produced from leases or properties in the state outside the Cook Inlet sedimentary basin, other than leases or properties subject to AS 43.55.011(f), the greater of (i) zero;

or CSSB 280(RES) -22- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated;

(B) for oil and gas produced from leases or properties subject to AS 43.55.011(f), the greatest of (i) zero;

(ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated;

or (iii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated;

(C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for each lease or property, the greater of (i) zero;

or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil or gas, respectively, SB0280B -23- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated;

(D) for oil and gas subject to AS 43.55.011(p), the lesser of (i) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated, but not less than zero;

or (ii) four percent of the gross value at the point of production of the oil and gas produced from the leases or properties during the month, but not less than zero;

(2) an amount calculated under (1)(C) of this subsection for oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year;

(3) an installment payment of the estimated tax levied by AS 43.55.011(i) for each lease or property is due for each month of the calendar year on the last day of the following month;

the amount of the installment payment is the sum of (A) the applicable tax rate for oil provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the oil taxable under AS 43.55.011(i) and produced from the lease or property CSSB 280(RES) -24- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S during the month;

and (B) the applicable tax rate for gas provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the gas taxable under AS 43.55.011(i) and produced from the lease or property during the month;

(4) any amount of tax levied by AS 43.55.011, net of any credits applied as allowed by law, that exceeds the total of the amounts due as installment payments of estimated tax is due on March 31 of the year following the calendar year of production;

(5) for oil and gas produced on and after January 1, 2014, and before January 1, 2022, an installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month;

except as otherwise provided under (6) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment payment may not be less than zero:

(A) for oil and gas not subject to AS 43.55.011(o) or (p) produced from leases or properties in the state outside the Cook Inlet sedimentary basin, other than leases or properties subject to AS 43.55.011(f), the greater of (i) zero;

or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated;

(B) for oil and gas produced from leases or properties subject to AS 43.55.011(f), the greatest of SB0280B -25- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (i) zero;

(ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated;

or (iii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated, except that, for the purposes of this calculation, a reduction from the gross value at the point of production may apply for oil and gas subject to AS 43.55.160(f) or (g);

(C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for each lease or property, the greater of (i) zero;

or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil or gas, respectively, produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated;

(D) for oil and gas subject to AS 43.55.011(p), the lesser of (i) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil and gas under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or CSSB 280(RES) -26- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S properties during the month for which the installment payment is calculated, but not less than zero;

or (ii) four percent of the gross value at the point of production of the oil and gas produced from the leases or properties during the month, but not less than zero;

(6) an amount calculated under (5)(C) of this subsection for oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k) for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year;

(7) for oil and gas produced on or after January 1, 2022, an installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month;

except as otherwise provided under (10) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment payment may not be less than zero:

(A) for oil produced from leases or properties subject to AS 43.55.011(f), the greatest of (i) zero;

(ii) the percent applicable under AS 43.55.011(f) [ZERO PERCENT, ONE PERCENT, TWO PERCENT, THREE PERCENT, OR FOUR PERCENT, AS APPLICABLE,] of the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated;

or (iii) 35 percent multiplied by the remainder obtained by SB0280B -27- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160(h)(1) from the gross value at the point of production of the oil produced from those leases or properties during the month for which the installment payment is calculated, except that, for the purposes of this calculation, a reduction from the gross value at the point of production may apply for oil subject to AS 43.55.160(f) or 43.55.160(f) and (g);

(B) for oil produced before or during the last calendar year under AS 43.55.024(b) for which the producer could take a tax credit under AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, other than leases or properties subject to AS 43.55.011(o) or (p), the greater of (i) zero;

or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160(h)(2) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated;

(C) for oil and gas produced from leases or properties subject to AS 43.55.011(p), except as otherwise provided under (8) of this subsection, the sum of (i) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160(h)(3) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated, but not less than zero;

and (ii) 13 percent of the gross value at the point of CSSB 280(RES) -28- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S production of the gas produced from the leases or properties during the month, but not less than zero;

(D) for oil produced from leases or properties in the state, no part of which is north of 68 degrees North latitude, other than leases or properties subject to (B), (C), or (F) of this paragraph, the greater of (i) zero;

or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the oil under AS 43.55.160(h)(4) from the gross value at the point of production of the oil produced from the leases or properties during the month for which the installment payment is calculated;

(E) for gas produced from each lease or property in the state outside the Cook Inlet sedimentary basin, other than a lease or property subject to AS 43.55.011(o) or (p), 13 percent of the gross value at the point of production of the gas produced from the lease or property during the month for which the installment payment is calculated, but not less than zero;

(F) for oil subject to AS 43.55.011(k), for each lease or property, the greater of (i) zero;

or (ii) 35 percent multiplied by the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for the oil produced from the lease or property from the gross value at the point of production of the oil produced from the lease or property during the month for which the installment payment is calculated;

(G) for gas subject to AS 43.55.011(j) or (o), for each lease or property, the greater of (i) zero;

or (ii) 13 percent of the gross value at the point of SB0280B -29- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S production of the gas produced from the lease or property during the month for which the installment payment is calculated;

(8) an amount calculated under (7)(C) of this subsection may not exceed four percent of the gross value at the point of production of the oil and gas produced from leases or properties subject to AS 43.55.011(p) during the month for which the installment payment is calculated;

(9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point of production is determined under AS 43.55.011(f) [AS 43.55.011(f)(1) or (2)] but substituting the phrase "month for which the installment payment is calculated" in AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is due";

(10) an amount calculated under (7)(F) or (G) of this subsection for oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas, or set out in AS 43.55.011(k) for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011(k) the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year.

* Sec.

32.

AS 43.55.020 is amended by adding a new subsection to read:

(n) If oil or gas is produced and sold at no cost or under circumstances in which the sales price does not represent the prevailing value for oil or gas of like kind, quality, or character for the field, unit, or area from which the product is produced, the department shall require tax to be paid based on the value of the oil or gas.

To determine the value of the oil or gas for purposes of this subsection, the department (1) shall base the value for oil or gas on the value of oil or gas of the same kind, quality, and character prevailing for that field, unit, or area during the calendar month of production or sale;

and (2) may not base a value for oil or gas on oil or gas sold at no cost or at a cost substantially lower than that of other oil or gas of the same kind, quality, and character.

CSSB 280(RES) -30- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S * Sec.

33.

AS 43.55.023(c) is amended to read:

(c) A credit or portion of a credit under this section (1) may not be used to reduce a person's tax liability under AS 43.55.011(e) for any calendar year below zero;

(2) may, if not used under this subsection, be applied in a later calendar year;

(3) may, regardless of when the credit was earned, be used to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter for a prior year, except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014;

and (B) has not, for the purpose of art.

IX, sec.

17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation.

* Sec.

34.

AS 43.55.023(e) is amended to read:

(e) A person to which a transferable tax credit certificate is issued under (d) of this section may transfer the certificate to another person, and a transferee may further transfer the certificate.

Subject to the limitations set out in (a) - (d) of this section, and notwithstanding any action the department may take with respect to the applicant under (g) of this section, the owner of a certificate may apply the credit or a portion of the credit shown on the certificate (1) against a tax levied by AS 43.55.011(e);

however, a credit shown on a transferable tax credit certificate may not be applied under this paragraph to reduce a transferee's total tax liability under AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80 percent of the tax that would otherwise be due without applying that credit;

any portion of a credit not used under this paragraph may be applied in a later period;

or (2) regardless of when the credit was earned, to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter, except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or SB0280B -31- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S the tax levied by AS 43.55.011(i) or 43.55.014;

(B) is for a calendar year before the year in which the certificate is applied;

and (C) has not, for the purpose of art.

IX, sec.

17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation.

* Sec.

35.

AS 43.55.025(h) is amended to read:

(h) A producer that purchases a production tax credit certificate may apply the credits against its production tax levied by AS 43.55.011(e).

Regardless of the price the producer paid for the certificate, the producer may receive a credit against its production tax liability for the full amount of the credit, but for not more than the amount for which the certificate is issued.

A production tax credit or a portion of a production tax credit or a production tax credit certificate or a portion of a production tax credit certificate allowed under this section (1) may not be applied more than once;

(2) may be applied in a later calendar year;

(3) may, regardless of when the credit was earned, be applied to satisfy a tax, interest, penalty, fee, or other charge that (A) is related to the tax due under this chapter for a prior year, except for a surcharge under AS 43.55.201 - 43.55.299, [OR] 43.55.300, or 43.55.320 or the tax levied by AS 43.55.011(i) or 43.55.014;

and (B) has not, for the purpose of art.

IX, sec.

17(a), Constitution of the State of Alaska, been subject to an administrative proceeding or litigation.

* Sec.

36.

AS 43.55.165(e) is amended to read:

(e) For purposes of this section, lease expenditures do not include (1) depreciation, depletion, or amortization;

(2) oil or gas royalty payments, production payments, lease profit shares, or other payments or distributions of a share of oil or gas production, profit, or revenue, except that a producer's lease expenditures applicable to oil and gas produced from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net CSSB 280(RES) -32- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S profit paid to the state under that lease;

(3) taxes based on or measured by net income;

(4) interest or other financing charges or costs of raising equity or debt capital;

(5) acquisition costs for a lease or property or exploration license;

(6) costs arising from fraud, wilful misconduct, gross negligence, violation of law, or failure to comply with an obligation under a lease, permit, or license issued by the state or federal government;

(7) fines or penalties imposed by law;

(8) costs of arbitration, litigation, or other dispute resolution activities that involve the state or concern the rights or obligations among owners of interests in, or rights to production from, one or more leases or properties or a unit;

(9) costs incurred in organizing a partnership, joint venture, or other business entity or arrangement;

(10) amounts paid to indemnify the state;

the exclusion provided by this paragraph does not apply to the costs of obtaining insurance or a surety bond from a third-party insurer or surety;

(11) surcharges levied under AS 43.55.201, [OR] 43.55.300, or 43.55.320;

(12) an expenditure otherwise deductible under (b) of this section that is a result of an internal transfer, a transaction with an affiliate, or a transaction between related parties, or is otherwise not an arm's length transaction, unless the producer establishes to the satisfaction of the department that the amount of the expenditure does not exceed the fair market value of the expenditure;

(13) an expenditure incurred to purchase an interest in any corporation, partnership, limited liability company, business trust, or any other business entity, whether or not the transaction is treated as an asset sale for federal income tax purposes;

(14) a tax levied under AS 43.55.011 or 43.55.014;

(15) costs incurred for dismantlement, removal, surrender, or abandonment of a facility, pipeline, well pad, platform, or other structure, or for the SB0280B -33- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in conjunction with dismantlement, removal, surrender, or abandonment;

a cost is not excluded under this paragraph if the dismantlement, removal, surrender, or abandonment for which the cost is incurred is undertaken for the purpose of replacing, renovating, or improving the facility, pipeline, well pad, platform, or other structure;

(16) costs incurred for containment, control, cleanup, or removal in connection with any unpermitted release of oil or a hazardous substance and any liability for damages imposed on the producer or explorer for that unpermitted release;

this paragraph does not apply to the cost of developing and maintaining an oil discharge prevention and contingency plan under AS 46.04.030;

(17) costs incurred to satisfy a work commitment under an exploration license under AS 38.05.132;

(18) that portion of expenditures, that would otherwise be qualified capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that are less than the product of $0.30 multiplied by the total taxable production from each lease or property, in BTU equivalent barrels, during that calendar year, except that, when a portion of a calendar year is subject to this provision, the expenditures and volumes shall be prorated within that calendar year;

(19) costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment, other than a well, that results in or is undertaken in response to a failure, problem, or event that results in an unscheduled interruption of, or reduction in the rate of, oil or gas production;

or costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment, other than a well, that is undertaken in response to, or is otherwise associated with, an unpermitted release of a hazardous substance or of gas;

however, costs under this paragraph that would otherwise constitute lease expenditures under (a) and (b) of this section may be treated as lease expenditures if the department determines that the repair or replacement is solely necessitated by an act of war, by an unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character, the effects of which could not have been prevented or avoided by the exercise of due care or foresight, or by an intentional or CSSB 280(RES) -34- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S negligent act or omission of a third party, other than a party or its agents in privity of contract with, or employed by, the producer or an operator acting for the producer, but only if the producer or operator, as applicable, exercised due care in operating and maintaining the facility, pipeline, structure, or equipment, and took reasonable precautions against the act or omission of the third party and against the consequences of the act or omission;

in this paragraph, (A) "costs incurred for repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or equipment" includes costs to dismantle and remove the facility, pipeline, structure, or equipment that is being replaced;

(B) "hazardous substance" has the meaning given in AS 46.03.826;

(C) "replacement" includes renovation or improvement;

(20) costs incurred to construct, acquire, or operate a refinery or crude oil topping plant, regardless of whether the products of the refinery or topping plant are used in oil or gas exploration, development, or production operations;

however, if a producer owns a refinery or crude oil topping plant that is located on or near the premises of the producer's lease or property in the state and that processes the producer's oil produced from that lease or property into a product that the producer uses in the operation of the lease or property in drilling for or producing oil or gas, the producer's lease expenditures include the amount calculated by subtracting from the fair market value of the product used the prevailing value, as determined under AS 43.55.020(f), of the oil that is processed;

(21) costs of lobbying, public relations, public relations advertising, or policy advocacy;

(22) costs incurred as part of a capital expenditure or other action taken for a carbon management purpose under AS 38.05.081 or a carbon offset project under AS 38.95.400 - 38.95.499;

(23) costs incurred for carbon capture or carbon storage, including fees incurred under AS 41.06.160, surcharges incurred under AS 41.06.175, or costs associated with obtaining, operating, or maintaining a license or lease under SB0280B -35- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S AS 38.05.700 - 38.05.795;

in this paragraph, (A) "carbon capture" means the process of capturing carbon dioxide from a chemical, mechanical, or industrial process, or directly from the ambient atmosphere, and reducing the carbon dioxide to a concentrated form, including a supercritical fluid;

"carbon capture" does not include gas processing or gas treatment;

(B) "carbon storage" means the long-term geologic storage of carbon dioxide in a carbon storage facility permitted under AS 41.06.120 or a Class VI injection well, as defined in 40 C.F.R.

146.5(f).

* Sec.

37.

AS 43.55.201(b) is amended to read:

(b) The surcharge imposed by (a) of this section is in addition to the tax imposed by AS 43.55.011 and is due on the last day of the month on oil produced from each lease or property during the preceding month.

The surcharge is in addition to the surcharge imposed by AS 43.55.300 - 43.55.310 and 43.55.320.

* Sec.

38.

AS 43.55 is amended by adding new sections to article 3 to read:

Sec.

43.55.320.

Infrastructure maintenance surcharge on oil.

(a) Every producer of oil shall pay a surcharge of $0.30 per barrel of oil produced from each lease or property in the state, less any oil the ownership or right to which is exempt from taxation.

(b) The surcharge imposed by (a) of this section is in addition to the tax imposed by AS 43.55.011 and the surcharges imposed by AS 43.55.201 and 43.55.300.

(c) A tax credit authorized under this chapter may not be applied to reduce a producer's liability for the surcharge.

(d) The surcharge is due on the last day of the month on oil produced from each lease or property during the preceding month.

The surcharge shall be paid at the same time and in the same manner as the surcharge imposed under AS 43.55.201.

Sec.

43.55.325.

Dalton Highway pipeline corridor maintenance fund.

(a) The Dalton Highway pipeline corridor maintenance fund is established in the general fund.

(b) The legislature may appropriate to the fund the revenue collected under CSSB 280(RES) -36- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S AS 43.55.320 and other money.

(c) Money in the fund may be used by the legislature to make appropriations for maintenance and operation costs of the James Dalton Highway (AS 19.40) and within the James Dalton Highway corridor.

(d) Nothing in this section creates a dedicated fund.

* Sec.

39.

AS 43.55.900(24) is amended to read:

(24) "surcharge" means (A) when used in AS 43.55.201 - 43.55.299, the surcharge levied by AS 43.55.201;

(B) when used in AS 43.55.300 - 43.55.310, the surcharge levied by AS 43.55.300;

(C) when used in AS 43.55.320 - 43.55.325, the surcharge levied by AS 43.55.320;

* Sec.

40.

AS 43.56.020(b) is amended to read:

(b) There is exempt from state taxes levied or authorized under AS 43.56.010(a), (1) before the construction commencement date, property that is committed by contract or other agreement for use in this state primarily for the production or pipeline transportation of gas or unrefined oil, or in the operation or maintenance of facilities for the production or pipeline transportation of gas or unrefined oil;

and (2) a spur line that services a Fairbanks natural gas utility.

* Sec.

41.

AS 43.56.020(d) is amended to read:

(d) Real or personal property used or committed by contract or other agreement for the construction, operation, or maintenance [TAXABLE PROPERTY] of a natural gas pipeline project [OWNED OR FINANCED BY THE ALASKA GASLINE DEVELOPMENT CORPORATION OR A JOINT VENTURE, PARTNERSHIP, OR OTHER ENTITY THAT INCLUDES THE ALASKA GASLINE DEVELOPMENT CORPORATION] is exempt from state taxes levied or authorized under AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) [BEFORE THE COMMENCEMENT OF COMMERCIAL SB0280B -37- CSSB 280(RES) New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S OPERATIONS OF THAT NATURAL GAS PIPELINE PROJECT].

In this subsection, "natural gas pipeline project" means a natural gas pipeline project subject to, or expected by the department to be subject to, the tax under AS 43.59.010 ["COMMENCEMENT OF COMMERCIAL OPERATIONS" MEANS THE FIRST FLOW OF NATURAL GAS IN THE PROJECT THAT GENERATES REVENUE TO THE OWNERS OF THE NATURAL GAS PIPELINE PROJECT].

* Sec.

42.

AS 43.56.020(d), as amended by sec.

41 of this Act, is amended to read:

(d) Taxable property [REAL OR PERSONAL PROPERTY USED OR COMMITTED BY CONTRACT OR OTHER AGREEMENT FOR THE CONSTRUCTION, OPERATION, OR MAINTENANCE] of a natural gas pipeline project owned or financed by the Alaska Gasline Development Corporation or a joint venture, partnership, or other entity that includes the Alaska Gasline Development Corporation is exempt from state taxes levied or authorized under AS 43.56.010(a) and municipal taxes levied or authorized under AS 43.56.010(b) before the commencement of commercial operations of that natural gas pipeline project.

In this subsection, "commencement of commercial operations" means the first flow of natural gas in the project that generates revenue to the owners of the natural gas pipeline project ["NATURAL GAS PIPELINE PROJECT" MEANS A NATURAL GAS PIPELINE PROJECT SUBJECT TO, OR EXPECTED BY THE DEPARTMENT TO BE SUBJECT TO, THE TAX UNDER AS 43.59.010].

* Sec.

43.

AS 43.56.030 is amended to read:

Sec.

43.56.030.

In place of other taxes.

Except for those taxes imposed under AS 43.55, the taxes levied or authorized under AS 43.56.010(b) are in place of (1) all other ad valorem taxes or other taxes imposed by a municipality on property subject to tax under this chapter or exempted from taxation by AS 43.56.020;

and (2) all other taxes imposed by a municipality on or with respect to the property subject to tax under this chapter or exempted from taxation by AS 43.56.020, including [, BUT NOT LIMITED TO,] (A) taxes on the retail sale or use of the property except for the retail sales tax on the first $1,000 of each sale;

CSSB 280(RES) -38- SB0280B New Text Underlined [DELETED TEXT BRACKETED] 34-GS2038\S (B) taxes on the sale or use of gas, including liquefied natural gas, or unrefined oil;

(C) taxes on the sale or use of services used in or associated with the property or in its maintenance or operation except for the sales tax on the first $1,000 of each sale;

(D) taxes on or measured by gross or net income from the property, including income from (i) the exploration for, production of, or pipeline transportation of gas or unrefined oil or property;

or (ii) a liquefied natural gas plant;

and (E) any license, excise, fee, charge or other tax on or pertaining to the property or services.

* Sec.

44.

AS 43.56.060(a) is amended to read:

(a) The department shall assess, at its full and true value as of January 1 of the assessment year, property for the tax levied under AS 43.56.010(b) and AS 29.45.080 on property used or committed by contract or other agreement for use (1) for the pipeline transportation of gas or unrefined oil or for the production of gas or unrefined oil;

(2) as part of or related to a liquefied natural gas plant [AT ITS FULL AND TRUE VALUE AS OF JANUARY 1 OF THE ASSESSMENT YEAR].

* Sec.

45.