WASHINGTON, D.C. - Senator Frank H. Murkowski, Ranking Member of the Senate Energy and Natural Resources Committee, today filed a tax proposal amendment to the pending Senate energy bill that would act as a ‘safety net’ to help ensure the construction of an Alaska natural gas pipeline. “This is an important step to help make a natural gas pipeline for Alaska a reality,” said Murkowski. “This tax proposal would provide a ‘safety net’ for construction of the pipeline. The credit would kick in only if the price of natural gas drops below $3.25 per million btu (british thermal unit), and would stay in place only until gasline construction costs are recovered. And unlike the existing gas credits, this proposal has a payback provision which never expires or disappears until all credit is paid back.” “Alaskans are ready to do their part to protect America’s energy security. This provision helps ensure the economic viability of the gas line project. Without these safeguards, Alaska natural gas will stay in the ground for a very long time. “This truly is a win-win situation for all involved,” Murkowski said. “The nation will benefit because the increased supplies of this clean burning fuel will provide an affordable energy product for American families and allow for expanded uses of new technology at the same time. Alaskan communities will benefit from the construction jobs and access to natural gas that will fuel their future energy needs. And in the end, because of the payback provision, it won’t cost the federal government a penny.” “Increased domestic production must be a part of the Senate energy bill if it’s every going to be balanced. Now, more than ever, we must look here at home for our energy solutions. American energy solutions are free from the bloodshed of the Middle East or the chaos of Central America. They’re stable, reliable, and help put Americans to work.” ### AMENDMENT NO. ___ Calendar No. ___ Purpose: To amend the Internal Revenue Code of 1986 to provide a credit for the production of Alaska natural gas. IN THE SENATE OF THE UNITED STATES—107th Cong., 2d Sess. S. 517 To authorize funding the Department of Energy to enhance its mission areas through technology transfer and partnerships for fiscal years 2002 through 2006, and for other purposes. Referred to the Committee on ______________ and ordered to be printed Ordered to lie on the table and to be printed AMENDMENT intended to be proposed by ________ to the amendment (No. ___) proposed by __________. Viz: At the appropriate place insert the following: SEC. ___. CREDIT FOR PRODUCTION OF ALASKA NATURAL GAS. (a) IN GENERAL.—Subpart D of part IV of sub- chapter A of chapter 1 (relating to business related credits), as amended by this Act, is amended by adding at the end the following new section: ‘‘SEC. 45M. ALASKA NATURAL GAS. ‘‘(a) IN GENERAL.—For purposes of section 38, the Alaska natural gas credit of any taxpayer for any taxable year is the credit amount per 1,000,000 Btu of Alaska natural gas entering the intake gate of the processing plant on the North Slope of Alaska (other than Alaska natural gas delivered within Alaska) any intake or tie-in point which was derived from an area of the state of Alaska lying north of 64 degrees North latitude, which is attributable to the taxpayer and sold by or on behalf of the taxpayer to an unrelated person during such taxable year (within the meaning of section 45). ‘‘(b) CREDIT AMOUNT.—For purposes of this section— ‘‘(1) IN GENERAL.—The credit amount per 1,000,000 Btu of Alaska natural gas entering the intake gate of the processing plant on the North Slope of Alaska any intake or tie-in point which was derived from an area of the state of Alaska lying north of 64 degrees North latitude (determined in United States dollars), is the excess of— ‘‘(A) $3.25, over ‘‘(B) the average monthly price at the AECO C Hub in Alberta, Canada, for Alaska natural gas for the month in which occurs the date of such entering. ‘‘(2) INFLATION ADJUSTMENT.—In the case of any taxable year beginning in a calendar year after the first calendar year ending after the date described in subsection (f) (1), the dollar amount contained in paragraph (1)(A) shall be increased to an amount equal to such dollar amount multiplied by the inflation adjustment factor for such calendar year (determined under section 43(b) (3)(B) by substituting ‘the calendar year ending before the date described in section 45M(f)(1)’ for ‘1990’). ‘‘(c) ALASKA NATURAL GAS.—For purposes of this section, the term ‘Alaska natural gas’ means gas natural gas entering any intake or tie-in point which was derived from an area of the state of Alaska lying north of 64 degrees North latitude produced in compliance with the applicable State and Federal pollution prevention, control, and permit requirements from the area generally known as the North Slope of Alaska (including the continental shelf thereof within the meaning of section 638(1)), determined without regard to the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)). ‘‘(d) RECAPTURE.— ‘‘(1) IN GENERAL.—With respect to each 1,000,000 Btu of Alaska natural gas entering the intake gate of the processing plant on the North Slope of Alaska any intake or tie-in point which was derived from an area of the state of Alaska lying north of 64 degrees North latitude after the date which is 3 years after the date described in subsection (f) (1), if the average monthly price described in subsection (b) (1)(B) exceeds 150 percent of the amount described in subsection (b) (1)(A) for the month in which occurs the date of such entering, the taxpayer’s tax under this chapter for the taxable year shall be increased by an amount equal to the lesser of— ‘‘(A) such excess, or ‘‘(B) the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted if the Alaska natural gas credit received by the taxpayer for such years had been zero. ‘‘(2) SPECIAL RULES.— ‘‘(A) TAX BENEFIT RULE.—The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted. ‘‘(B) NO CREDITS AGAINST TAX.—Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55. ‘‘(e) APPLICATION OF RULES.—For purposes of this section, rules similar to the rules of paragraphs (3), (4), and (5) of section 45(d) shall apply. ‘‘(f) NO DOUBLE BENEFIT.—The amount of any deduction or other credit allowable under this chapter for any fuel taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such fuel. ‘‘(g) APPLICATION OF SECTION.—This section shall apply to Alaska natural gas entering the intake gate of the processing plant on the North Slope of Alaska any intake or tie-in point which was derived from an area of the state of Alaska lying north of 64 degrees North latitude for the period— ‘‘(1) beginning with the later of— ‘‘(A) January 1, 2010, or ‘‘(B) the initial date for the interstate transportation of such Alaska natural gas, and ‘‘(2) except with respect to subsection (d), ending with the date which is __ years after the date described in paragraph (1).’’. (b) CREDIT TREATED AS BUSINESS CREDIT.—Section 38(b), as amended by this Act, is amended by striking ‘‘plus’’ at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting ‘‘, plus’’, and by adding at the end the following new paragraph: ‘‘(24) the Alaska natural gas credit determined under section 45M(a).’’. (c) ALLOWING CREDIT AGAINST ENTIRE REGULAR TAX AND MINIMUM TAX.— (1) IN GENERAL.—Subsection (c) of section 38 (relating to limitation based on amount of tax), as amended by this Act, is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph: ‘‘(5) SPECIAL RULES FOR ALASKA NATURAL GAS CREDIT.— ‘‘(A) IN GENERAL.—In the case of the Alaska natural gas credit— ‘‘(i) this section and section 39 shall be applied separately with respect to the credit, and ‘‘ (ii) in applying paragraph (1) to the credit— ‘‘ (I) the amounts in subparagraphs (A) and (B) thereof shall be treated as being zero, and ‘‘ (II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the Alaska natural gas credit). ‘‘(B) ALASKA NATURAL GAS CREDIT.—For purposes of this subsection, the term ‘Alaska natural gas credit’ means the credit allowable under subsection (a) by reason of section 45M(a).’’. (2) CONFORMING AMENDMENTS.—Subclause (II) of section 38(c)(2)(A)(ii), as amended by this Act, subclause (II) of section 38(c)(3)(A)(ii), as amended by this Act, and subclause (II) of section 38(c)(4)(A)(ii), as added by this Act, are each amended by inserting ‘‘or the Alaska natural gas credit’’ after ‘‘producer credit’’. (d) CLERICAL AMENDMENT.—The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following new item: “Sec. 45M. Alaska natural gas.’’.