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HOUSE CS FOR SENATE BILL NO. 239(L&C)
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - SECOND SESSION
BY THE HOUSE LABOR AND COMMERCE COMMITTEE
Offered: 5/10/24
Referred: Rules
Sponsor(s): SENATOR DUNBAR
A BILL
FOR AN ACT ENTITLED
"An Act relating to the Alaska Industrial Development and Export Authority; relating 1
to state loans for oil and gas development projects in the Cook Inlet sedimentary basin; 2
and relating to workforce housing development projects." 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 4
* Section 1. AS 42.05.141 is amended by adding a new subsection to read: 5
(g) The commission shall, as required under AS 44.88.850(b), determine 6
whether the sale price in a gas sales agreement for gas produced through a project 7
partially or fully funded by a loan under AS 44.88.850 constitutes a just and 8
reasonable immediate delivery price for gas. 9
* Sec. 2. AS 44.25.020 is amended to read: 10
Sec. 44.25.020. Duties of department. The Department of Revenue shall 11
(1) enforce the tax laws of the state; 12
(2) collect, account for, have custody of, invest, and manage all state 13
funds and all revenues of the state except revenues incidental to a program of licensing 14 33-LS1072\R
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and regulation carried on by another state department, funds managed and invested by 1
the Alaska Retirement Management Board, and as otherwise provided by law; 2
(3) invest and manage the balance of the power development fund in 3
accordance with AS 44.83.386; 4
(4) administer the surety bond program for licensure as a fish 5
processor or primary fish buyer; 6
(5) provide reasonable assistance to the Alaska Industrial 7
Development and Export Authority under AS 44.88.850(c). 8
* Sec. 3. AS 44.37.020 is amended by adding a new subsection to read: 9
(d) The Department of Natural Resources shall provide reasonable assistance 10
to the Alaska Industrial Development and Export Authority under AS 44.88.850(c). 11
* Sec. 4. AS 44.88.070 is amended to read: 12
Sec. 44.88.070. Purpose of the authority. The purpose of the authority is to 13
promote, develop, and advance the general prosperity and economic welfare of the 14
people of the state, to relieve problems of unemployment, and to create additional 15
employment by 16
(1) providing various means of financing and means of facilitating the 17
financing, in cooperation with federal, state, and private institutions, of industrial, 18
manufacturing, energy, export, small business, and business enterprises and the other 19
facilities referred to in AS 44.88.010(a) in the state; 20
(2) owning and operating or providing development project financing 21
for the enterprises and other facilities described in AS 44.88.172; 22
(3) fostering the expansion of exports of goods, services, and raw 23
materials of the state; 24
(4) cooperating and acting in conjunction with other organizations, 25
public and private, the objects of which are the promotion and advancement of export 26
trade activities in the state; 27
(5) establishing a source of funding credit guarantees and insurance, 28
not otherwise available, to support export development; 29
(6) providing and cooperating or participating with federal, state, and 30
private institutions to provide actual and potential state exporters, particularly small- 31 33-LS1072\R
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and medium-sized exporters, with financial assistance in support of export 1
transactions; 2
(7) providing various means of financing and means of facilitating 3
the financing of construction of new workforce housing facilities. 4
* Sec. 5. AS 44.88.080 is amended to read: 5
Sec. 44.88.080. Powers of the authority. In furtherance of its corporate 6
purposes, the authority has the following powers in addition to its other powers: 7
(1) to sue and be sued; 8
(2) to have a seal and alter it at pleasure; 9
(3) to make and alter bylaws for its organization and internal 10
management; 11
(4) to adopt regulations governing the exercise of its corporate powers; 12
(5) to acquire an interest in a project as necessary or appropriate to 13
provide financing for the project, whether by purchase, gift, or lease; 14
(6) to lease to others a project acquired by it for the rentals and upon 15
the terms and conditions the authority may consider advisable, including, without 16
limitation, provisions for options to purchase or renew; 17
(7) to issue bonds and otherwise to incur indebtedness, in accordance 18
with AS 44.88.090, in order to pay the cost of a project or development projects or in 19
order to provide money for the authority's purposes under this chapter; the authority 20
may also secure payment of the bonds or other indebtedness as provided in this 21
chapter; 22
(8) to sell, by installment sale or otherwise, exchange, donate, convey, 23
or encumber, in any manner by mortgage or by creation of any other security interest, 24
real or personal property owned by it, or in which it has an interest, including a 25
project, when, in the judgment of the authority, the action is in furtherance of its 26
corporate purposes; 27
(9) to accept gifts, grants, or loans from, and enter into contracts or 28
other transactions regarding them with, a federal agency, an agency or instrumentality 29
of the state, a municipality, a private organization, or other source; 30
(10) to deposit or invest its funds, subject to agreements with 31 33-LS1072\R
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bondholders; 1
(11) to enter into contracts or agreements with respect to the exercise 2
of any of its powers, and do all things necessary or convenient to carry out its 3
corporate purposes and exercise the powers granted in this chapter; 4
(12) to purchase or insure loans to finance the costs of manufacturing, 5
industrial, and business enterprise projects; 6
(13) to enter into loan agreements with respect to one or more projects 7
upon the terms and conditions the authority considers advisable; 8
(14) to acquire, manage, and operate projects as the authority considers 9
necessary or appropriate to serve a public purpose; 10
(15) to assist private lenders to make loans to finance the costs of 11
projects through loan commitments, short-term financing, or otherwise; 12
(16) to accept gifts, grants, or loans from a federal agency, from an 13
agency or instrumentality of the state or of a municipality, or from any other source; 14
(17) to enter into contracts or other transactions with a federal agency, 15
with an agency or instrumentality of the state or of a municipality, or with a private 16
organization or other entity consistent with the exercise of any power under this 17
chapter; 18
(18) to facilitate the expansion of a secondary market for the resale of 19
federally or commercially insured loans made to finance the costs of projects in the 20
state held by federal and state chartered financial institutions or by the Alaska 21
Commercial Fishing and Agriculture Bank; 22
(19) to charge fees or other forms of remuneration for the use or 23
possession of the projects described in (14) of this section in accordance with the 24
agreements described in (11) and (17) of this section, other agreements pertaining to 25
the projects, covenants, or representations made in bond documents pertaining to the 26
projects, or regulations of the authority pertaining to the projects; 27
(20) to participate with government or private industry in programs for 28
technical assistance, loans, technology, transfer, or other programs related to the 29
exportation of goods, services, or raw materials of the state with respect to its 30
financing activities; 31 33-LS1072\R
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(21) to provide export finance training for office staff and other 1
individuals involved in export finance assistance, including the training sessions that 2
may be provided by the United States Export-Import Bank or other organizations; 3
(22) to coordinate to the maximum extent possible its efforts to 4
promote the export of goods, services, and raw materials of the state with programs 5
and goals of the United States Export-Import Bank, the International Trade 6
Administration of the United States Department of Commerce, the Foreign Credit 7
Insurance Association, and other private and public programs designed to provide 8
export assistance and export-related financing; 9
(23) to guarantee loans related to qualified export transactions under 10
regulations adopted by the authority; 11
(24) to provide financing assistance, in cooperation with federal, state, 12
and private institutions, as provided in this chapter for small business enterprises; 13
(25) to make cooperative agreements with the Department of 14
Transportation and Public Facilities, acting on behalf of the international airports 15
revenue fund established under AS 37.15.430, to acquire, equip, operate, maintain, 16
construct, or install facilities that will enhance the competitiveness of the international 17
airports, including a cooperative agreement to lend amounts from the international 18
airports revenue fund to finance the development or improvement of utilities serving 19
the airports; 20
(26) to screen potential applicants for a new business incentive grant 21
and recommend the award of the grants under AS 45.81.020; 22
(27) to oversee the administration of outstanding grants awarded by the 23
Alaska Science and Technology Foundation under former AS 37.17.010 - 37.17.110; 24
(28) to oversee the administration of outstanding BIDCO assistance 25
grants and loans made by the Alaska Science and Technology Foundation under 26
former AS 37.17.200 - 37.17.390; 27
(29) to guarantee loans made to the Alaska Insurance Guaranty 28
Association (AS 21.80.040), with these guarantees limited to loans necessary to make 29
the association financially able to meet cash flow needs up to a maximum outstanding 30
principal balance at any time of $30,000,000;
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(30) with legislative approval and notwithstanding AS 44.88.060, to 1
purchase from the Alaska Energy Authority as an investment of the revolving fund, 2
loans of the power project fund established under AS 42.45.010; 3
(31) to consider, when exercising the powers listed in this section, the 4
interests of local governments affected by the authority's activities to share in the 5
benefits of these activities, with appropriate consideration of the authority's ability to 6
meet debt obligations, issue new debt, and fulfill the authority's purposes; 7
(32) to provide development project financing for all or a portion of 8
the cost of a development project as provided in AS 44.88.172; 9
(33) to provide various means of financing and means of 10
facilitating the financing of construction of new workforce housing facilities. 11
* Sec. 6. AS 44.88 is amended by adding new sections to read: 12
Article 10A. Cook Inlet Reserve-Based Lending. 13
Sec. 44.88.850. Cook Inlet reserve-based lending account. (a) The Cook 14
Inlet reserve-based lending account is established in the revolving fund. The account 15
consists of money or assets deposited into the account by the authority and 16
contributions from other sources. 17
(b) The authority may use money in the account to make one or more reserve-18
based loans to fund oil and gas development projects the authority considers necessary 19
to increase oil and gas production from the Cook Inlet sedimentary basin. The 20
authority may, as a term of the loan, accept an ownership share in the project funded 21
by the loan. If the authority accepts an ownership share as a term of the loan, the 22
ownership share must be in the form of a carried interest that does not obligate the 23
authority to contribute to the development costs of the project. The authority may 24
make a loan under this section only 25
(1) to a legal entity in compliance with state and federal laws; 26
(2) if the loan applicant provides a written waiver permitting the 27
authority to access or obtain copies of the loan applicant's confidential records that are 28
in possession of the Department of Natural Resources or the Department of Revenue; 29
information provided to the authority under this section shall be kept confidential by 30
the authority unless disclosure is authorized by the loan applicant or borrower; 31 33-LS1072\R
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(3) if the authority obtains an independent study performed by an 1
experienced, qualified expert that confirms the valuation of the loan security and the 2
capacity of the loan to support the oil and gas development project and to cause or 3
increase the commercial production of oil or gas from the Cook Inlet sedimentary 4
basin; 5
(4) if the Regulatory Commission of Alaska determines, under 6
AS 42.05.141(g), that the sale price in a gas sales agreement for gas produced through 7
a project partially or fully funded by a loan under this section does not exceed a just 8
and reasonable immediate delivery price for gas; 9
(5) if the authority determines that the sales price for oil and gas 10
produced through a project partially or fully funded by a loan under this section is 11
reasonable and in the best interests of residents of the state. 12
(c) The authority may request assistance from the Department of Revenue 13
under AS 44.25.020(a)(5) or the Department of Natural Resources under 14
AS 44.37.020(d) to execute this section. 15
(d) The authority may accept an overriding royalty interest in a lease for 16
which a loan has been extended under (b) of this section if, as a term of the loan, the 17
overriding royalty interest is subject to prior approval by the Department of Natural 18
Resources. The authority may only have the overriding royalty interest transferred to 19
the authority if the borrower defaults. 20
Sec. 44.88.855. Cook Inlet oil and gas development projects; report. (a) 21
The authority shall evaluate oil and gas development projects the authority believes 22
have reasonable potential to increase oil and gas production from the Cook Inlet 23
sedimentary basin. Each year, the authority shall prepare a report related to those oil 24
and gas development projects and shall, by the first day of each regular session of the 25
legislature, deliver the report to the senate secretary and the chief clerk of the house of 26
representatives and notify the legislature that the report is available. At the request of a 27
legislative committee, a representative of the authority shall appear in that committee 28
to review the report. For each oil and gas development project, the report must include 29
(1) a cost estimate for the project; 30
(2) the potential recoverable gas from the project; 31 33-LS1072\R
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(3) the projected rate of return for the project; 1
(4) if the authority recommends a reserve-based loan for the project, 2
the amount of funds necessary for deposit into the Cook Inlet reserve-based lending 3
account to provide a loan for the project and the recommended source of funds for the 4
deposit. 5
(b) Notwithstanding AS 44.88.215, 44.88.850(b)(2), or any other law, a 6
borrower's information shall be subject to the public reporting requirements under this 7
section. Each year, the authority shall prepare a report related to Cook Inlet reserve-8
based loans made under AS 44.88.850 and shall, by the first day of each regular 9
session of the legislature, deliver the report to the senate secretary and the chief clerk 10
of the house of representatives and notify the legislature that the report is available. At 11
the request of a legislative committee, a representative of the authority shall appear in 12
that committee to review the report. The report must 13
(1) identify each entity borrowing funds under AS 44.88.850; 14
(2) list the amount borrowed by each borrower and the date each loan 15
was approved; 16
(3) include a summary of the terms of the lending agreement with each 17
borrower; 18
(4) summarize each project for which a loan was made, including the 19
status of the project and the volume of oil and gas produced and expected to be 20
produced from the project; 21
(5) list the status of payments made on the loan, including whether the 22
loan is or ever was in default. 23
* Sec. 7. AS 44.88.900(6) is amended to read: 24
(6) "development project" has the meaning given to "project" in 25
(13)(A), [AND] (D) - (H), and (J) of this section; 26
* Sec. 8. AS 44.88.900(13) is amended to read: 27
(13) "project" means 28
(A) a plant or facility used or intended for use in connection 29
with making, processing, preparing, transporting, or producing in any manner, 30
goods, products, or substances of any kind or nature or in connection with 31 33-LS1072\R
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developing or utilizing a natural resource, or extracting, smelting, transporting, 1
converting, assembling, or producing in any manner, minerals, raw materials, 2
chemicals, compounds, alloys, fibers, commodities and materials, products, or 3
substances of any kind or nature; 4
(B) a plant or facility used or intended for use in connection 5
with a business enterprise; 6
(C) commercial activity by a business enterprise; 7
(D) a plant or facility demonstrating technological advances of 8
new methods and procedures and prototype commercial applications for the 9
exploration, development, production, transportation, conversion, and use of 10
energy resources; 11
(E) infrastructure for a new tourism destination facility or for 12
the expansion of a tourism destination facility; in this subparagraph, "tourism 13
destination facility" does not include a hotel or other overnight lodging facility; 14
(F) a plant or facility, other than a plant or facility described in 15
(D) of this paragraph, for the generation, transmission, development, 16
transportation, conversion, or use of energy resources; 17
(G) a plant or facility that enhances, provides for, or promotes 18
economic development with respect to transportation, communications, 19
community public purposes, technical innovations, prototype commercial 20
applications of intellectual property, or research; 21
(H) a plant or facility used or intended for use as a federal 22
facility, including a United States military, national guard, or coast guard 23
facility; 24
(I) infrastructure for an area that is designated as a military 25
facility zone under AS 26.30; 26
(J) a new workforce housing facility; 27
* Sec. 9. AS 44.88.900 is amended by adding new paragraphs to read: 28
(20) "oil and gas development project" means a development project to 29
produce proven oil or gas reserves; 30
(21) "reserve-based loan" means a loan made against and fully secured 31 33-LS1072\R
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by an oil and gas field, proven undeveloped or developed oil and gas reserves, or other 1
assets of the entity receiving the loan. 2
(22) "workforce housing" means residential housing that contains five 3
or more dwelling units. 4