Current through February 24, 2025
(a) Reasonable
costs of transportation shall be calculated from the point of production to the
sales delivery point.
(b)
Reasonable costs of transportation under
11 AAC 83.228(a)
are actual costs of transportation. The actual costs of transportation are
(1) in the case of transportation of oil or
gas by a regulated carrier, the tariff on file with the FERC or other
regulatory agency having jurisdiction that is applicable to that transportation
of the oil or gas by the carrier, from the point where that oil or gas is
tendered into the facilities of the carrier to the point where it is delivered
from the facilities of the carrier;
(2) in the case of transportation of oil by a
tanker or other vessel that is not owned or effectively owned by the lessee
(A) for a single voyage charter, the
reasonable cost for that transportation is, for purposes of this chapter, the
charter fee for that vessel, plus any voyage and port costs not included in
that fee that are incurred with respect to that transportation during the term
of the charter and that are borne by the lessee plus the positioning cost, if
any, borne by the lessee for that vessel;
(B) for a consecutive voyage charter or a
time charter, the reasonable cost for that transportation is, for purposes of
this chapter, the charter fee for that vessel, plus any voyage and port costs
not included in that fee that are incurred with respect to that transportation
during the term of the charter and that are borne by the lessee, plus the
positioning cost (amortized over the lesser of 36 months or the term of the
charter in the case of a time charter, and amortized on the basis of the number
of voyages in the case of a consecutive voyage charter), if any, borne by the
lessee for that vessel;
(C) for a
contract of affreightment, the reasonable cost for that transportation is, for
purposes of this chapter, the affreightment fee specified in that contract,
plus any voyage and port costs and any positioning costs not included in that
fee that are incurred with respect to that transportation during the term of
the contract of affreightment and that are borne by the lessee.
(c) In the case of
transportation of oil by a tanker or other vessel that is owned or effectively
owned by the lessee, the department will, in its discretion, authorize the
lessee to use the fair market value of like transportation as the reasonable
cost for the transportation in question. The department, and not the lessee,
will determine the fair market value of like transportation, on the basis of
third-party time charters (that is, time charters in which the lessee does not
own or effectively own the vessel) of one year or more that are reported to the
department for like vessels; and when it makes its determination, the
department will notify the lessee. Two vessels will be considered like vessels
for purposes of this chapter if the difference between them in deadweight
tonnage is less than 10,000 deadweight tons and if they are both Jones Act
vessels, or are both CDS vessels, or are both ODS vessels, or are both CDS/ODS
vessels. If the department does not authorize the lessee to use fair market
value of like transportation (as described in this subsection) as the
reasonable cost for the transportation in question, then the reasonable cost
for that transportation is, for purposes of this chapter, the lessee's actual
cost for that transportation. This actual cost equals the sum of
(1) the voyage and port costs incurred with
respect to that transportation;
(2)
the positioning cost, amortized over 36 months, for that vessel, but only for
placing that vessel into position before its employment in the Alaska trade and
not for placing it into position after its employment in the Alaska trade for
employment in another trade;
(3)
depreciation of the vessel; if the vessel is actually owned by the lessee,
depreciation must be calculated in accordance with the applicable FASB
Financial Accounting Standards for such owned assets; if the vessel is
effectively owned by the lessee, depreciation must be calculated in accordance
with FASB-13 from the standpoint of a lessee under a capital lease;
and
(4) an amount which, when taken
together with depreciation under (3) of this subsection, will provide a
reasonable return on the acquisition cost of the vessel over its expected life;
for purposes of this paragraph
(A)
"acquisition cost" means the cost of the vessel which may be capitalized by its
actual owner under generally accepted accounting principles, but not including
costs of improvements made after the date the vessel is placed in service by or
on behalf of the lessee, and
(B)
"expected life" means the period of the time used to calculate depreciation
under (3) of this subsection.
(d) In the case of transportation of gas as
LNG where not all of the LNG transportation facilities are subject to tariff
regulation (by FERC or another agency of the United States, a state, territory
or possession of the United States or a foreign nation)
(1) when the lessee does not have or
effectively have an ownership interest in the LNG transportation facility, the
reasonable cost of transportation for that LNG transportation facility is, for
purposes of this chapter, the amount charged to the lessee for that LNG
transportation; or
(2) when the
lessee has or effectively has an ownership interest in the LNG transportation
facility, the department will, in its discretion, authorize the lessee to use
the fair market value of like transportation as the reasonable cost for the
transportation in question; the department, and not the lessee, will determine
the fair market value of like transportation, on the basis of third-party
charters or leases (that is, charters or leases in which the lessee does not
own or effectively own the LNG transportation facility in question) of three
years or more that are reported to the department for like LNG transportation
facilities; and if it makes such a determination, the department will notify
the lessee of its determination; if the department does not authorize or
require the lessee to use fair market value of like transportation (as
described in this paragraph) as the reasonable cost for the transportation in
question, then the reasonable cost for that transportation is, for purposes of
this chapter, the lessee's actual cost for that transportation; this actual
cost equals the sum of
(A) the direct
operating costs of the LNG transportation facility (in the case of an LNG
tanker, its respective voyage and port costs) incurred with respect to the
lessee's gas;
(B) depreciation of
the LNG transportation facility (if the facility is actually owned by the
lessee, depreciation must be calculated in accordance with the applicable FASB
Financial Accounting Standards for the owner of such assets; if the LNG
transportation facility is effectively owned by the lessee, depreciation must
be calculated in accordance with FASB-13 from the standpoint of a lessee under
a capital lease); and
(C) an amount
that, when taken together with depreciation under (B) of this paragraph, will
provide a reasonable return on the acquisition cost of the LNG transportation
facility over its expected life; for the purposes of this subparagraph
(i) "acquisition cost" means the cost of the
LNG transportation facility which may be capitalized by its actual owner under
generally accepted accounting principles, and
(ii) "expected life" means the period of time
used to calculate depreciation under (B) of this paragraph.
(e)
Reasonable cost of transportation under sec. 228(b) of this chapter is fair
market value. Fair market value of transportation is to be determined
(1) for shipments of oil, on the basis of
third party charters (that is, time charters in which the lessee does not own
or effectively own the vessel) of one year or more, plus regulated
transportation costs determined under (a) of this section; two vessels will be
considered like vessels for purposes of comparing like transportation under
this chapter if the difference between them in deadweight tonnage is less than
10,000 deadweight tons and if they are both Jones Act vessels, or are both CDS
vessels, or are both ODS vessels or are both CDS/ODS vessels; or
(2) for shipments of gas as LNG, on the basis
of third party charters or leases (that is, charters or leases in which the
lessee does not own or effectively own the LNG transportation facility in
question) of three years or more which are reported to the department for like
LNG transportation facilities, plus regulated transportation costs determined
under (b)(1) of this section.
(f) If a lessee sells its oil or gas to a
third party in what would otherwise be a bona fide, arm's-length sale but at
the time of this particular sale the lessee expects to repurchase that oil or
gas at a subsequent time and place, then that sale to the third party and the
repurchase from the third party, when it occurs, must be disregarded and the
oil or gas subject to that sale must be regarded as if it had remained the
lessee's own oil or gas throughout the time between that sale and repurchase.
In determining the value at the point of production in such a case, the
reasonable cost of transportation between the point of sale for that sale and
the point of repurchase must be determined as if the lessee were the shipper.
This subsection does not apply if the lessee's expected repurchase does not in
fact occur.
(g) For the purposes of
this chapter, "voyage and port costs" for a vessel are
(1) costs actually incurred for fuel for the
vessel while in port and at sea, stores and provisions for the vessel and for
her captain and crew, wages, and benefits of the vessel's captain and crew,
routine maintenance, port and dock fees, storage costs, demurrage, tug and
pilotage fees, marine agents' fees in port, lightering, transshipment charges,
customs fees and duties, regular and customary gratuities that are also legal,
insurance premiums actually paid to third party insurers, minor cargo losses or
measuring differentials, loading and unloading inspection fees, Panama Canal
transit fees, a reasonable management fee (to be prorated equally among
vessels) for coordinating arrivals and departures into and out of ports for
vessels owned, effectively owned or chartered by the shipper and other
reasonable costs associated with the operation or maintenance (or both) of the
vessel; and
(2) in addition to the
costs listed in (1) of this subsection, in the case of catastrophic loss or
damage of a vessel transporting oil or LNG from Alaska or en route to Alaska to
take on oil or LNG, a portion of the loss (for loss or damage of the ship, for
injury or loss of her captain or crew and for damage and cleanup due to
spillage of part or all of her cargo, but not for the loss of the cargo itself)
that is borne by the lessee as the result of that catastrophic loss or damage
and that is not reimbursed by insurance or by a third party but excluding any
civil and criminal penalties and civil punitive damages which may be assessed
as a result of this loss or damage; a lessee's portion of the loss is
determined by dividing the unreimbursed liability on the basis of deadweight
tonnage among the vessels owned, effectively owned or chartered by the lessee
to transport oil or LNG (whichever was lost) from Alaska.
(h) A lessee "effectively owns," "has
effective ownership of" or "effectively has an ownership interest in" a vessel
or LNG transportation facility for purposes of this section if
(1) the vessel or LNG transportation facility
is owned by another person comprising part of a consolidated business in which
the lessee is also a part;
(2) the
vessel or LNG transportation facility is the subject of a capital lease on
which the lessee or another person comprising part of a consolidated business
in which the lessee is also a part, is the lessee under that capital
lease;
(3) the vessel or LNG
transportation facility was built to the account of the lessee (or another
person comprising part of the consolidated business in which the lessee is also
a part), was sold and was chartered back by the lessee (or another person
comprising part of the consolidated business in which the lessee is also a
part) all in a simultaneous transaction and the vessel or LNG transportation
facility is on a term charter or lease to the lessee (or another person
comprising part of the consolidated business in which the lessee is also a
part) for a period of 15 years or longer.
(i) For purposes of this chapter, the
"positioning cost" for a vessel includes the costs not included in the charter
for that vessel that are borne by the lessee for placing that vessel into
position before the first voyage under that charter or the estimated costs to
be borne by the lessee for delivering it up at a specified location after the
last voyage under that charter, or both if the lessee is obligated under the
terms of the charter or contract of affreightment to bear them both.
(j) A reasonable return under (c)(4) or
(d)(2)(C) of this section is presumed to be that internal rate of return (after
federal income tax) on the amount which yields an investment that equals two
percent plus the average annual national inflation rate (measured by the GNP
deflator) during
(1) the period between the
time the commitment is made to construct or acquire the vessel or LNG
transportation facility and the time when the vessel or LNG transportation
facility has been received (or delivered) and is ready to be placed into
service, or
(2) if the period in
(1) of the subsection falls entirely within a calendar year, that entire
calendar year.
(k) At
the request of the lessee, the department will in its discretion, or, on its
own motion, the department will replace the presumed return under (j) of this
section with one based on the rate of return imputed to that investment or
similar ones by the person owning or effectively owning the vessel or LNG
transportation facility.
(l) The
third-party nature of an agreement between a shipper and a third-party carrier
regarding transportation costs is not affected during the term of that
agreement by a subsequent consolidation of that lessee and carrier into a
consolidated business, if, at the time they entered that agreement, neither the
lessee nor the carrier exercised, directly or indirectly, any control over the
business affairs of the other in anticipation of their subsequent consolidation
into the same consolidated business.
Authority:AS
38.05.020
AS
38.05.180