There is established in the Department of Natural Resources the Alaska Royalty Oil and Gas Development Advisory Board.

In this chapter,

(1) 'board' means the Alaska Royalty Oil and Gas Development Advisory Board;

(2) 'state lease' means an oil and gas lease or gas only lease on state land.

Members of the board are in the exempt service under Section 39.25.110 and shall receive per diem and travel allowances as provided by law for other boards and commissions.

It is the purpose of this chapter to facilitate the wise development of Alaska's oil and gas royalty interests by providing means and procedures for sales, exchanges, or other disposition of those interests in ways calculated to promote private economic growth consistent with applicable environmental standards and public fiscal stability, and in accordance with Section 38.05.183 .

Notwithstanding Section 40.25.110 - 40.25.120, the board may provide by regulation for the confidentiality of those documents and records in its possession or control which contain confidential business or marketing information the protection of which is essential to the person who has submitted them to the board or in the judgment of the board is essential to the best interest of the state. Such confidentiality, however, shall not preclude the proper review by the legislature.

(a) The board shall prescribe its own rules of procedure. It shall meet at a time and place determined by the chairman, and at other times and places as the chairman, or a majority of the board members, considers necessary. A quorum is a majority of the voting members of the board. The votes of the board members shall be recorded. Effective action to carry out the powers granted under this chapter requires the affirmative vote of a majority of the board members. A board member may not, with respect to a matter before the board, vote for or on behalf of another member of the board.

(b) A member of the board may not act upon a matter in which the relationship of a member of the board with any person creates a conflict of interest. A board member may not have an official connection with or hold stock or securities in, or have a pecuniary interest in, a corporation, company, or association engaged in the production or transportation of oil or gas.

(a) If legislative approval is required by Section 38.06.055 , a sale, exchange, encumbrance, or other disposition of oil or gas or of the rights or waiver of the rights to receive future production of royalty oil or gas may not be made by the commissioner of natural resources under Section 38.05.183 without prior review of the proposed sale, exchange, encumbrance, or other disposition by the board. A written recommendation of the board on the proposed sale, exchange, encumbrance, or other disposition of oil or gas or of the rights or waiver of the rights to receive future production of royalty oil or gas shall be submitted to the legislature at the time a bill approving the proposed sale, exchange, encumbrance, or other disposition is introduced in the legislature.

(b) Bids or applications for the purchase of royalty oil or gas may be rejected by the commissioner of natural resources if prior written notice of the proposed disapproval is given to the board.

(c) Competitive bidding in a sale, exchange, or other disposition described in (a) of this section may not be waived by the commissioner of natural resources under Section 38.05.183 unless prior written notice of proposed waiver is given to the board.

(d) [Repealed, Sec. 5 ch 112 SLA 1980].

(a) The board consists of the commissioner of commerce, community, and economic development; the commissioner of revenue; the commissioner of natural resources, who is a nonvoting member; and five public members.

(b) The public members shall be appointed by the governor to serve at the pleasure of the governor for five-year staggered terms and confirmed by a vote of a majority of the members of the legislature in joint session. The public members may not be state officers or employees. Four of the public members may not be, nor have been in the past five years, employed by a person whose primary business is, or who owns a controlling interest in a corporation whose primary business is, the exploration for or development, production, transportation, sale, refining, or processing of petroleum products. One of the public members shall possess experience in petroleum-related fields in such areas as exploration, development, production, or economics.

(c) A chairman shall be elected by the board from among the public members.

(d) A public member shall continue in office at the expiration of a term until a successor is appointed and qualifies.

(e) Vacancies in public membership shall be filled in the same manner as original appointment. Except as provided in Section 39.05.080 (4), an appointee to fill a vacancy shall hold office for the balance of the term for which the predecessor on the board was appointed. A vacancy in board membership does not impair the authority of a quorum of the board members to exercise all the powers and duties of the board.

(a) In addition to the recommendation by the board required under Section 38.06.050, the commissioner of natural resources may not enter into a sale, exchange, or other disposition of oil or gas or of the rights or waiver of the rights to receive future production of royalty oil or gas under Section 38.05.183 without the prior approval of the legislature. The legislature may approve a sale, exchange, or other disposition of oil or gas or of the rights or of a waiver of the rights to receive future production of royalty oil or gas only by enacting legislation.

(b) The provisions of (a) of this section do not apply to

(1) the sale, exchange, or other disposition of oil or gas for one year or less if the sale, exchange, or other disposition is entered into to relieve storage or market conditions;

(2) contracts for the sale of state-owned royalty gas or oil that specify the sale and delivery of not more than

(A) 400 barrels of crude oil per day;

(B) 460 barrels of natural gas liquids per day; and

(C) 2,400 Mcf of natural gas per day.

(c) A sale, exchange, or other disposition of oil or gas under (b)(1) of this section may not be continued after the end of one year or renewed with the same party without the prior approval of the legislature under (a) of this section. This subsection does not apply to a sequential competitively bid sale of oil or gas made with the same party under (b)(1) of this section.

(a) In the exercise of its powers under Section 38.06.040 (a) and 38.06.050 the board shall consider

(1) the revenue needs and projected fiscal condition of the state;

(2) the existence and extent of present and projected local and regional needs for oil and gas products and by-products, the effect of state or federal commodity allocation requirements which might be applicable to those products and by-products, and the priorities among competing needs;

(3) the desirability of localized capital investment, increased payroll, secondary development and other possible effects of the sale, exchange, or other disposition of oil and gas or both;

(4) the projected social impacts of the transaction;

(5) the projected additional costs and responsibilities which could be imposed upon the state and affected political subdivisions by development related to the transaction;

(6) the existence of specific local or regional labor or consumption markets or both which should be met by the transaction;

(7) the projected positive and negative environmental effects related to the transaction; and

(8) the projected effects of the proposed transaction upon existing private commercial enterprise and patterns of investments.

(b) When it is economically feasible and in the public interest, the board may recommend to the commissioner of natural resources, as a condition of the sale of oil or gas obtained by the state as royalty, that

(1) the oil or gas be refined or processed in the state;

(2) the purchaser be a refiner who supplies products to the Alaska market with price or supply benefits to state citizens; or

(3) the purchaser construct a processing or refining facility in the state.

(c) The board shall make a full report to the legislature on each criterion specified in (a) or (b) of this section for any disposition of royalty oil or gas that requires legislative approval. The board's report shall be submitted for legislative review at the time a bill for legislative approval of a proposed disposition of royalty oil or gas is introduced in the legislature.

(a) The board shall

(1) in accordance with the criteria set out in Section 38.06.070 , develop a plan for the wise development of the state's oil and gas royalty interests; the plan of development shall be consistent with

(A) growth of the private sector of the economy;

(B) environmental standards required by law; and

(C) public fiscal stability;

(2) hold public hearings on proposed sales, exchanges, or other disposals of royalty oil or gas to determine whether the proposals comply with Section 38.06.070 ;

(3) examine proposed sales, exchanges, or other disposal of, and recommend to the legislature that it approve or disapprove a proposed sale, exchange, or other disposal of

(A) the oil or gas that is obtained by the state as royalty under Section 38.05.182; or

(B) the rights to receive future oil or gas production under state leases; and

(4) recommend to the commissioner of natural resources the conditions relating to the sale, delivery, transportation, refining, or processing of oil or gas which the commissioner may include in the offer and sale of oil or gas obtained by the state as royalty under Section 38.05.182 .

(b) The board may

(1) direct the commissioner of natural resources to solicit development plans or bids consistent with the criteria set out in Section 38.06.070 for

(A) the sale, exchange, or other disposal of oil or gas obtained by the state as royalty under Section 38.05.182 ; or

(B) the sale, exchange, or other disposal of all or a portion of the rights to receive future oil or gas production under a state lease;

(2) employ an executive director, and contract for the services of professionals, persons with knowledge of economics and other disciplines, and persons with technical skills who may be necessary to assist the board in the exercise of its powers and duties; and

(3) adopt regulations under the Administrative Procedure Act (Section 44.62) that are necessary for the exercise of its powers and duties.