00 SENATE BILL NO. 138 01 "An Act relating to the purposes of the Alaska Gasline Development Corporation to 02 advance to develop a large-diameter natural gas pipeline project, including treatment 03 and liquefaction facilities; establishing the large-diameter natural gas pipeline project 04 fund; creating a subsidiary related to a large-diameter natural gas pipeline project, 05 including treatment and liquefaction facilities; relating to the authority of the 06 commissioner of natural resources to negotiate contracts related to North Slope natural 07 gas projects, to enter into confidentiality agreements in support of contract negotiations 08 and implementation, and to take custody of gas delivered to the state under an election 09 to pay the oil and gas production tax in kind; relating to the sale, exchange, or disposal 10 of gas delivered to the state under an election to pay the oil and gas production tax in 11 kind; relating to the duties of the commissioner of revenue to direct the disposition of 12 revenues received from gas delivered to the state in kind and to consult with the 01 commissioner of natural resources on the custody and disposition of gas delivered to the 02 state in kind; relating to the authority of the commissioner of natural resources to 03 propose modifications to existing state oil and gas leases; making certain information 04 provided to the Department of Natural Resources and the Department of Revenue 05 exempt from inspection as a public record; making certain tax information related to an 06 election to pay the oil and gas production tax in kind exempt from tax confidentiality 07 provisions; relating to establishing under the oil and gas production tax a gross tax rate 08 for gas after 2021; making the alternate minimum tax on oil and gas produced north of 09 68 degrees North latitude after 2021 apply only to oil; relating to apportionment factors 10 of the Alaska Net Income Tax Act; authorizing a producer's election to pay the oil and 11 gas production tax in kind for certain gas and relating to the authorization; relating to 12 monthly installment payments of the oil and gas production tax; relating to interest 13 payments on monthly installment payments of the oil and gas production tax; relating to 14 settlements between producers and royalty owners for oil and gas production tax; 15 relating to annual statements by producers and explorers; relating to annual production 16 tax values; relating to lease expenditures; amending the definition of gross value at the 17 'point of production' for gas for purposes of the oil and gas production tax; adding 18 definitions related to natural gas terms; clarifying that credit may not be taken against 19 the in-kind levy of the oil and gas production tax for gas for purposes of the exploration 20 incentive credit, the oil or gas producer education credit, and the film production tax 21 credit; making conforming amendments; and providing for an effective date." 22 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 23  * Section 1. AS 31.25.005 is amended to read: 24 Sec. 31.25.005. Purpose. The corporation shall, for the benefit of the state, to 01 the fullest extent possible,  02 (1) advance an in-state natural gas pipeline as described in the July 1, 03 2011, project plan prepared under former AS 38.34.040 by the corporation while a 04 subsidiary of the Alaska Housing Finance Corporation, with modifications determined 05 by the corporation to be appropriate to develop, finance, construct, and operate an in- 06 state natural gas pipeline in a safe, prudent, economical, and efficient manner, for the 07 purpose of making natural gas, including propane and other hydrocarbons associated 08 with natural gas other than oil, available to Fairbanks, the Southcentral region of the 09 state, and other communities in the state at the lowest rates possible; 10 (2) endeavor to develop natural gas pipelines and other transportation 11 mechanisms to deliver natural gas, including propane and other hydrocarbons 12 associated with natural gas other than oil, to public utility and industrial customers in 13 areas of the state to which the natural gas, including propane and other hydrocarbons 14 associated with natural gas other than oil, may be delivered at commercially 15 reasonable rates; and 16 (3) endeavor to develop natural gas pipelines and other transportation 17 mechanisms that offer commercially reasonable rates for shippers and access for 18 shippers who produce natural gas, including propane and other hydrocarbons 19 associated with natural gas other than oil, in the state;  20 (4) advance to develop a large-diameter natural gas pipeline  21 project other than the in-state natural gas pipeline described in (1) of this section  22 by acquiring an equity interest in a large-diameter natural gas pipeline project  23 through the subsidiary under AS 31.25.122;  24 (5) advance to develop, finance, construct, and operate facilities  25 for liquefaction and treatment in connection with a large-diameter natural gas  26 pipeline project other than the in-state natural gas pipeline described in (1) of  27 this section through the subsidiary under AS 31.25.122.  28  * Sec. 2. AS 31.25.010 is amended to read: 29 Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 30 public corporation and government instrumentality located for administrative purposes 31 in the Department of Commerce, Community, and Economic Development, but 01 having a legal existence independent of and separate from the state. The corporation 02 may not be terminated as long as it has bonds, notes, or other obligations outstanding. 03 The corporation may dissolve when no bonds, notes, or other obligations of the 04 corporation or a subsidiary of the corporation are outstanding and the corporation or a 05 subsidiary of the corporation is no longer engaged in the development, financing, 06 construction, or operation of an in-state natural gas pipeline or a large-diameter  07 natural gas pipeline project. Upon termination of the corporation, its rights and 08 property pass to the state.  09  * Sec. 3. AS 31.25.080(f) is amended to read: 10 (f) The corporation shall, to the maximum extent practicable without delaying 11 the progress of developing the [AN] in-state natural gas pipeline project described in  12 AS 31.25.005(1) and without causing the in-state natural gas pipeline project 13 described in AS 31.25.005(1) to become a competing natural gas pipeline project for 14 purposes of AS 43.90.440, coordinate with and accommodate the developers of a 15 large-diameter [IN-STATE] natural gas pipeline project by planning for the 16 development and use of [COMMON] pipeline facilities from the North Slope to [THE 17 LIVENGOOD AREA OR TO ANOTHER POINT FROM WHICH A LARGE- 18 DIAMETER IN-STATE NATURAL GAS PIPELINE MAY BE CONSTRUCTED 19 SOUTH TO] tidewater in either the Prince William Sound or Cook Inlet area. The  20 corporation may use money appropriated to the large-diameter natural gas  21 pipeline project fund created in AS 31.25.110 for the purposes described in this  22 subsection and may not use money appropriated to the in-state natural gas  23 pipeline fund created in AS 31.25.100 for the purposes described in this  24 subsection. [IN THIS SUBSECTION, "LARGE-DIAMETER IN-STATE NATURAL 25 GAS PIPELINE" MEANS A PIPELINE IN THE STATE WITH A DIAMETER OF 26 42 INCHES OR MORE.] 27  * Sec. 4. AS 31.25.100 is amended to read: 28 Sec. 31.25.100. In-state natural gas pipeline fund. The in-state natural gas 29 pipeline fund is established in the corporation and consists of money appropriated to 30 it. The corporation shall determine fund management and may contract with the 31 Department of Revenue for fund management. Unless otherwise provided by law, 01 money appropriated to the fund lapses into the general fund on the day this section is 02 repealed. Interest and other income received on money in the fund shall be separately 03 accounted for and may be appropriated to the fund. The corporation may use money 04 appropriated to the fund without further appropriation solely for the cost of managing 05 the fund and for the planning, financing, development, acquisition, maintenance, 06 construction, and operation of the [AN] in-state natural gas pipeline described in  07 AS 31.25.005(1) and may not use money appropriated to the fund for any other  08 purpose, including the purposes described in AS 31.25.005(4) and (5) and  09 31.25.080(f). 10  * Sec. 5. AS 31.25 is amended by adding a new section to read: 11 Sec. 31.25.110. Large-diameter natural gas pipeline project fund. The 12 large-diameter natural gas pipeline project fund is established in the subsidiary and 13 consists of money appropriated to it. The subsidiary shall determine fund management 14 and may contract with the Department of Revenue for fund management. Interest and 15 other income received on money in the fund shall be separately accounted for and may 16 be appropriated to the fund. The subsidiary may use money appropriated to the fund 17 without further appropriation for the purpose of managing the fund and for the 18 planning, financing, acquisition, maintenance, construction, and operation of a large- 19 diameter natural gas pipeline project, including treatment and liquefaction facilities, 20 and may not use the money appropriated to the fund for the purpose described in 21 AS 31.25.005(1). If money is appropriated to the fund to finance the cost of a large- 22 diameter natural gas pipeline project described in AS 31.25.005(4) and (5), the 23 subsidiary shall create an account in the fund for that purpose and shall hold the 24 money appropriated for that purpose in that account. In this section, "subsidiary" 25 means a subsidiary established under AS 31.25.122. 26  * Sec. 6. AS 31.25.120 is amended to read: 27 Sec. 31.25.120. Creation of subsidiaries for an in-state natural gas pipeline  28 project. The corporation may create subsidiary corporations for the purpose of 29 developing, constructing, operating, and financing in-state natural gas pipeline 30 projects or other transportation mechanisms; for the purpose of aiding in the 31 development, construction, operation, and financing of in-state natural gas pipeline 01 projects; or for the purpose of acquiring the state's royalty share of natural gas, natural 02 gas from the North Slope, and natural gas from other regions of the state, including the 03 state's outer continental shelf, and making that natural gas available to markets in the 04 state, including the delivery of natural gas, including propane and other hydrocarbons 05 associated with natural gas other than oil, to coastal communities in the state, or for 06 export. A subsidiary corporation created under this section may be incorporated under 07 AS 10.20.146 - 10.20.166. Except as provided in AS 31.25.110, the [THE] 08 corporation may transfer assets of the corporation to a subsidiary created under this 09 section. A subsidiary created under this section may borrow money and issue bonds as 10 evidence of that borrowing and has all the powers of the corporation that the 11 corporation grants to it. Unless otherwise provided by the corporation, the debts, 12 liabilities, and obligations of a subsidiary corporation created under this section are not 13 the debts, liabilities, or obligations of the corporation. A subsidiary corporation  14 created under this section may use money appropriated under AS 31.25.100 and  15 may not use money appropriated under AS 31.25.110.  16  * Sec. 7. AS 31.25 is amended by adding a new section to read: 17 Sec. 31.25.122. Creation of a subsidiary for a large-diameter natural gas  18 pipeline project. (a) To maximize the economic recovery and value of the state's 19 natural gas royalties and gas tax revenues for the benefit of the people of the state, a 20 subsidiary of the corporation is established as a public corporation and government 21 instrumentality for administrative purposes of the corporation, but having a legal 22 existence independent of and separate from the state and the corporation, for the 23 purposes of acquiring a state equity interest in a large-diameter natural gas pipeline 24 project, in natural gas treatment facilities, in liquefaction facilities, and in marine 25 terminal facilities related to a large-diameter natural gas project, and in entities that are 26 developing, constructing, and operating such facilities; for the purposes of financing 27 the acquisition, capital costs and operating costs related to the state equity interests; 28 for the purposes of supporting in the development, construction, operation, and 29 financing a large-diameter natural gas pipeline project in which the subsidiary has an 30 equity interest; and for the purposes of transferring net revenues received by the 31 subsidiary related to equity interests acquired to the permanent fund and the general 01 fund as determined by the commissioner of natural resources in consultation with the 02 commissioner of revenue. The subsidiary created under this section may use money 03 appropriated under AS 31.25.110 and may not use money appropriated under 04 AS 31.25.100. 05 (b) The subsidiary created under this section shall be governed by a board of 06 directors consisting of 07 (1) the chair of the corporation; 08 (2) the commissioner of natural resources; 09 (3) the commissioner of revenue; and 10 (4) four public members, one of whom is a public member of the board 11 of directors under AS 31.25.030(a)(1). 12 (c) Public members of the subsidiary board shall be appointed by the 13 governor. Subsidiary board members appointed under (b)(4) of this section shall be 14 compensated as provided in AS 31.25.020(d). Public members of the subsidiary 15 board serve five-year terms. A public member serves at the pleasure of the 16 governor. The provisions of AS 31.25.030, 31.25.035, and 31.25.040 apply to the 17 board of the subsidiary. 18 (d) In addition to other powers granted in this section, the subsidiary may 19 (1) determine the form of ownership and the operating structure of a 20 large-diameter natural gas pipeline project developed by the subsidiary and may enter 21 into agreements with other persons for joint ownership, joint operation, or both, of a 22 large-diameter natural gas pipeline project; 23 (2) plan, finance, construct, develop, acquire, maintain, and operate a 24 pipeline system and other transportation mechanism, including pipelines, treatment 25 and liquefaction facilities, marine terminals, compressors, storage facilities, and other 26 related facilities, equipment, and works of public improvement in the state to facilitate 27 production, transportation, and delivery of natural gas or other related natural 28 resources to the point of consumption or to the point of distribution for consumption; 29 (3) lease or rent facilities, structures, and properties; 30 (4) exercise the power of eminent domain and file a declaration of 31 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 01 necessary for a large-diameter natural gas pipeline project; the exercise of powers by 02 the subsidiary under this paragraph may not exceed the permissible exercise of the 03 powers by the state; 04 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 05 property, an interest in property, a right-of-way, a franchise, an easement, or other 06 interest in land, or an interest in or right to capacity in a pipeline system determined to 07 be necessary or convenient for the development, financing, construction, or operation 08 of a large-diameter natural gas pipeline project; 09 (6) transfer or otherwise dispose of all or part of a large-diameter 10 natural gas pipeline project developed by the subsidiary or transfer or otherwise 11 dispose of an interest in an asset of the subsidiary; 12 (7) elect to provide transportation of natural gas as a contract carrier, 13 common carrier, or otherwise; 14 (8) provide light, water, security, and other services for property of the 15 subsidiary; 16 (9) conduct hearings to gather and develop data consistent with the 17 purpose and powers of the subsidiary; 18 (10) advocate for new capacity in the project before regulatory 19 agencies; 20 (11) make and execute agreements, contracts, and other instruments 21 necessary or convenient in the exercise of the powers and functions of the subsidiary  22 under this section, including a contract with a person, firm, corporation, governmental 23 agency, or other entity; 24 (12) sue and be sued in its own name; 25 (13) adopt an official seal; 26 (14) adopt bylaws for the regulation of its affairs and the conduct of its 27 business and adopt regulations and policies in connection with the performance of its 28 functions and duties; 29 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 30 other consultants and employees that may, in the judgment of the subsidiary, be 31 required and fix and pay their compensation from funds available to the subsidiary; 01 (16) procure insurance against a loss in connection with its operation; 02 (17) borrow money as provided in this chapter to carry out its 03 corporate purposes and issue its obligations as evidence of borrowing; 04 (18) include in a borrowing the amounts necessary to pay financing 05 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 06 and legal fees, and other expenses that are necessary or incident to the borrowing; 07 (19) receive, administer, and comply with the conditions and 08 requirements of an appropriation, gift, grant, or donation of property or money; 09 (20) do all acts and things necessary, convenient, or desirable to carry 10 out the powers expressly granted or necessarily implied in this section; 11 (21) invest or reinvest, subject to its contracts with noteholders and 12 bondholders, money or funds held by the subsidiary, including funds in the large- 13 diameter natural gas project pipeline fund (AS 31.25.110), in obligations or other 14 securities or investments in which banks or trust companies in the state may legally 15 invest funds held in reserves or sinking funds or funds not required for immediate 16 disbursement, and in certificates of deposit or time deposits secured by obligations of, 17 or guaranteed by, the state or the United States; 18 (22) enter into, as it determines to be necessary or appropriate, any 19 swap or hedge, cap, or other contract providing for payments based on levels of or 20 changes in interest rates or indices or in the cost or price of any commodity, supply, or 21 expense expected to be used or incurred in connection with the acquisition, 22 construction, or operation of any facility or property owned, leased, or operated by the 23 subsidiary, or an option with respect to any of the foregoing. 24 (e) Except as provided in AS 31.25.100, the corporation may transfer assets to 25 the subsidiary. The provisions of AS 31.25.090, 31.25.130, 31.25.140, 31.25.160, 26 31.25.170, 31.25.180, 31.25.190, 31.25.200, 31.25.210, 31.25.220, 31.25.230, 27 31.25.240, 31.25.250, 31.25.260, 31.25.270, and 31.25.390 apply to the subsidiary 28 created under this section for a large-diameter natural gas pipeline project, and 29 references in those sections to 30 (1) "the corporation" shall refer to the subsidiary created under this 31 section; and 01 (2) "in-state natural gas pipeline" shall refer to a large-diameter natural 02 gas pipeline project as described in AS 31.25.005(4) and (5). 03 (f) The subsidiary under this section shall employ a project coordinator, who 04 may not be a member of the board. The project coordinator shall be appointed by the 05 subsidiary board and serves at the pleasure of the subsidiary board. The subsidiary 06 board may engage professional and technical advisers as independent contractors. The 07 project coordinator may hire employees for the subsidiary and engage professional and 08 technical advisers as independent contractors upon approval of the subsidiary board. 09 Employees of the subsidiary created under this section are state employees in the 10 exempt service under AS 39.25.110. The subsidiary board shall prescribe the duties 11 and compensation of subsidiary personnel, including the project coordinator. 12 (g) The subsidiary may not be terminated as long as it has bonds, notes, or 13 other obligations outstanding. Upon termination of the subsidiary, its rights and 14 property pass to the state. 15  * Sec. 8. AS 31.25.390(5) is amended to read: 16 (5) "in-state natural gas pipeline" means a natural gas pipeline for 17 transporting natural gas in the state as described in AS 31.25.005(1); 18  * Sec. 9. AS 31.25.390 is amended by adding new paragraphs to read:  19 (7) "large-diameter natural gas pipeline project" means a natural gas 20 pipeline project as described in AS 31.25.005(4) and (5) that includes facilities for 21 treatment and liquefaction of natural gas, including any marine terminal facilities; 22 (8) "subsidiary board" means the governing board of a subsidiary 23 created under AS 31.25.122. 24 * Sec. 10. AS 38.05.020(b) is amended to read: 25 (b) The commissioner may 26 (1) establish reasonable procedures and adopt reasonable regulations 27 necessary to carry out this chapter and, whenever necessary, issue directives or orders 28 to the director to carry out specific functions and duties; regulations adopted by the 29 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 30 orders by the commissioner classifying land, issued after January 3, 1959, are not 31 required to be adopted under AS 44.62 (Administrative Procedure Act); 01 (2) enter into agreements considered necessary to carry out the 02 purposes of this chapter, including agreements with federal and state agencies; 03 (3) review any order or action of the director; 04 (4) exercise the powers and do the acts necessary to carry out the 05 provisions and objectives of this chapter; 06 (5) notwithstanding the provisions of any other section of this chapter, 07 grant an extension of the time within which payments due on any exploration license, 08 lease, or sale of state land, minerals, or materials may be made, including payment of 09 rental and royalties, on a finding that compliance with the requirements is or was 10 prevented by reason of war, riots, or acts of God; 11 (6) classify tracts for agricultural uses; 12 (7) after consulting with the Board of Agriculture and Conservation 13 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 14 of a contract for the sale of agricultural land if 15 (A) the land is inaccessible by road; or 16 (B) transportation, marketing, and development costs render 17 the required development uneconomic; 18 (8) reconvey or relinquish land or an interest in land to the federal 19 government if 20 (A) the land is described in an amended application for an 21 allotment under 43 U.S.C. 1617; and 22 (B) the reconveyance or relinquishment is 23 (i) for the purposes provided in 43 U.S.C. 1617; and 24 (ii) in the best interests of the state; 25 (9) lead and coordinate all matters relating to the state's review and 26 authorization of resource development projects; 27 (10) enter into commercial agreements with a duration of not more  28 than two years for project services related to a North Slope natural gas project;  29 (11) in consultation with the commissioner of revenue, participate  30 in the negotiation of contracts and development of terms for inclusion in  31 proposed contracts associated with a North Slope natural gas project; a contract  01 negotiated under this paragraph to which the state is a party is not effective  02 unless the legislature authorizes the governor to execute the contract;  03 (12) enter into confidentiality agreements to maintain the  04 confidentiality of information related to contract negotiations and contract  05 implementation associated with a North Slope natural gas project; information  06 under those confidentiality agreements is not subject to AS 40.25 (Alaska Public  07 Records Act), except that  08 (A) the terms of a proposed contract that the commissioner  09 presents to the legislature for the purpose of obtaining authorization for  10 the governor to execute is not confidential; and  11 (B) confidential information obtained under this paragraph  12 may be shared with the legislature only in committees held in executive  13 session or under confidentiality agreements; 14 (13) exercise the powers and do the acts necessary to carry out the 15 provisions and objectives of AS 43.90 that relate to this chapter. 16 * Sec. 11. AS 38.05.020(b), as amended by sec. 10 of this Act, is amended to read: 17 (b) The commissioner may 18 (1) establish reasonable procedures and adopt reasonable regulations 19 necessary to carry out this chapter and, whenever necessary, issue directives or orders 20 to the director to carry out specific functions and duties; regulations adopted by the 21 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 22 orders by the commissioner classifying land, issued after January 3, 1959, are not 23 required to be adopted under AS 44.62 (Administrative Procedure Act); 24 (2) enter into agreements considered necessary to carry out the 25 purposes of this chapter, including agreements with federal and state agencies; 26 (3) review any order or action of the director; 27 (4) exercise the powers and do the acts necessary to carry out the 28 provisions and objectives of this chapter; 29 (5) notwithstanding the provisions of any other section of this chapter, 30 grant an extension of the time within which payments due on any exploration license, 31 lease, or sale of state land, minerals, or materials may be made, including payment of 01 rental and royalties, on a finding that compliance with the requirements is or was 02 prevented by reason of war, riots, or acts of God; 03 (6) classify tracts for agricultural uses; 04 (7) after consulting with the Board of Agriculture and Conservation 05 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 06 of a contract for the sale of agricultural land if 07 (A) the land is inaccessible by road; or 08 (B) transportation, marketing, and development costs render 09 the required development uneconomic; 10 (8) reconvey or relinquish land or an interest in land to the federal 11 government if 12 (A) the land is described in an amended application for an 13 allotment under 43 U.S.C. 1617; and 14 (B) the reconveyance or relinquishment is 15 (i) for the purposes provided in 43 U.S.C. 1617; and 16 (ii) in the best interests of the state; 17 (9) lead and coordinate all matters relating to the state's review and 18 authorization of resource development projects; 19 (10) enter into commercial agreements with a duration of not more 20 than two years for project services related to a North Slope natural gas project; 21 (11) in consultation with the commissioner of revenue, participate in 22 the negotiation of contracts and development of terms for inclusion in proposed 23 contracts associated with a North Slope natural gas project; a contract negotiated 24 under this paragraph to which the state is a party is not effective unless the legislature 25 authorizes the governor to execute the contract; 26 (12) enter into confidentiality agreements to maintain the 27 confidentiality of information related to contract negotiations and contract 28 implementation associated with a North Slope natural gas project; information under 29 those confidentiality agreements is not subject to AS 40.25 (Alaska Public Records 30 Act), except that 31 (A) the terms of a proposed contract that the commissioner 01 presents to the legislature for the purpose of obtaining authorization for the 02 governor to execute is not confidential; and 03 (B) confidential information obtained under this paragraph may 04 be shared with the legislature only in committees held in executive session or 05 under confidentiality agreements; 06 (13) in consultation with the commissioner of revenue, take  07 custody of gas delivered to the state under AS 43.55.014(b) and manage the  08 project services and disposition and sale of that gas;  09 (14) exercise the powers and do the acts necessary to carry out the 10 provisions and objectives of AS 43.90 that relate to this chapter. 11 * Sec. 12. AS 38.05.180(i) is amended to read: 12 (i) The commissioner may provide for the establishment of an exploration 13 incentive credit system under which a lessee of state land drilling an exploratory well 14 on that land may earn credits based upon the footage drilled and the region in which 15 the well is situated. The commissioner may also provide for credits to be earned by 16 persons performing geophysical work on state land, if that work is performed during 17 the two seasons immediately preceding an announced lease sale and on land included 18 within the sale area and the geophysical information is made public following the sale. 19 Credits may not exceed 50 percent of the cost of the drilling or geophysical work. 20 Credits may be used during a limited period established by the commissioner and may 21 be assigned during that period. Credits may be applied against (1) royalty and rental 22 payments for oil and gas or for gas only payable to the state or (2) taxes payable under 23 AS 43.55.011 [AS 43.55]. A credit may not exceed 50 percent of the payment toward 24 which it is being applied. Amounts due the Alaska permanent fund (AS 37.13.010) 25 shall be calculated before the application of credits under this subsection. 26 * Sec. 13. AS 38.05.180 is amended by adding a new subsection to read: 27 (hh) Notwithstanding any other provisions of this chapter, if the commissioner 28 makes a written determination that a North Slope natural gas project has sufficient 29 financial commitment for a work plan and budget necessary to support major permits 30 and regulatory filings required by state and federal agencies, and sufficient 31 commitment of gas by lessees, the commissioner may propose modifications to 01 existing leases that relate to 02 (1) switching between taking the state's royalty gas in value and in 03 kind to ensure that the state's actions do not unreasonably 04 (A) cause the lessee or other person to bear disproportionate 05 transportation costs with respect to the state's royalty gas; or 06 (B) interfere with long-term marketing of natural gas by the 07 lessee or other person; 08 (2) providing a method for establishing a fair market value for each 09 component of the state's royalty gas and using appropriate adjustments to reflect fair 10 market value deductions for actual and reasonable transportation and processing costs 11 for the state's royalty gas from the North Slope to the first destination market; and 12 (3) establishing fixed royalty rates and modifying net profit shares 13 under leases subject to this subsection. 14 * Sec. 14. AS 38.05.180(hh), as enacted in sec. 13 of this Act, is amended to read: 15 (hh) Notwithstanding any other provisions of this chapter, if the commissioner 16 makes a written determination that a North Slope natural gas project has sufficient 17 financial commitment for a work plan and budget necessary to support major permits 18 and regulatory filings required by state and federal agencies, and sufficient 19 commitment of gas by lessees, the commissioner may propose modifications to 20 existing leases that relate to 21 (1) switching between taking the state's royalty gas in value and in 22 kind to ensure that the state's actions do not unreasonably 23 (A) cause the lessee or other person to bear disproportionate 24 transportation costs with respect to the state's royalty gas or gas delivered to  25 the state under AS 43.55.014(b); or 26 (B) interfere with long-term marketing of natural gas by the 27 lessee or other person; 28 (2) providing a method for establishing a fair market value for each 29 component of the state's royalty gas and using appropriate adjustments to reflect fair 30 market value deductions for actual and reasonable transportation and processing costs 31 for the state's royalty gas from the North Slope to the first destination market; and 01 (3) establishing fixed royalty rates and modifying net profit shares 02 under leases subject to this subsection. 03  * Sec. 15. AS 38.05.183(a) is amended to read: 04 (a) The sale, exchange, or other disposal of a mineral obtained by the state as a 05 royalty under AS 38.05.182, [OR] the sale, exchange, or other disposal in whole or in 06 part of a right to receive future mineral production under a state lease under this 07 chapter, or the sale, exchange, or other disposal of gas delivered to the state under  08 AS 43.55.014(b) shall be by competitive bid and the sale, exchange, or other disposal 09 made to the highest responsible bidder, except that competitive bidding is not required 10 when the commissioner, after prior written notice to the Alaska Royalty Oil and Gas 11 Development Advisory Board under AS 38.06.050, determines that the best interest of 12 the state does not require it or that no competition exists. 13  * Sec. 16. AS 38.05.183(c) is amended to read: 14 (c) If the commissioner determines that a sale, exchange, or other disposal of a 15 mineral obtained by the state as a royalty under AS 38.05.182, [OR] of a right to 16 receive future mineral production under a state lease under this chapter, or of gas  17 delivered to the state under AS 43.55.014(b) shall be made otherwise than by 18 competitive bid, and the Alaska Royalty Oil and Gas Development Advisory Board 19 has been notified in writing of that determination, the commissioner shall make public 20 in writing the specific findings and conclusions upon which that determination is 21 based. 22  * Sec. 17. AS 38.05.183(d) is amended to read: 23 (d) Oil or gas taken in kind by the state as its royalty share or gas delivered to  24 the state under AS 43.55.014(b) may not be sold or otherwise disposed of for export 25 from the state until the commissioner determines that the [ROYALTY-IN-KIND] oil 26 or gas is surplus to the present and projected intrastate domestic and industrial needs. 27 The commissioner shall make public, in writing, the specific findings and reasons on 28 which the determination is based. 29  * Sec. 18. AS 38.05.183(e) is amended to read: 30 (e) When a sale, exchange, or other disposal of oil or gas taken in kind by the 31 state as its royalty share, or a sale, exchange, or other disposal in whole or in part of a 01 right to receive future royalty oil or gas, under a state lease under this chapter is made 02 other than by competitive bid, or when a sale, exchange, or other disposal of gas  03 delivered to the state under AS 43.55.014(b) is made other than by competitive  04 bid, the sale, exchange, or other disposal shall be awarded by the commissioner to the 05 prospective buyer whose proposal offers the maximum benefits to citizens of the state. 06 The commissioner shall consider 07 (1) the cash value offered; 08 (2) the projected effects of the sale, exchange, or other disposal on the 09 economy of the state; 10 (3) the projected benefits of refining or processing the oil or gas in the 11 state; 12 (4) the ability of the prospective buyer to provide refined products or 13 by-products for distribution and sale in the state with price or supply benefits to the 14 citizens of the state; and 15 (5) the criteria listed in AS 38.06.070(a). 16 * Sec. 19. AS 38.05.965 is amended by adding new paragraphs to read: 17 (26) "North Slope natural gas project" means a project to produce 18 natural gas from state oil and gas leases that include land north of 68 degrees North 19 latitude for transport in a gaseous state from the North Slope;  20 (27) "project services" means services provided by a gas treatment 21 plant, pipeline, liquefaction facility, or marine terminal, marine transportation 22 services, or other services necessary to take natural gas to market. 23 * Sec. 20. AS 40.25.100(a) is amended to read: 24 (a) Information in the possession of the Department of Revenue that discloses 25 the particulars of the business or affairs of a taxpayer or other person, including  26 information under AS 38.05.020(b)(11) that is subject to a confidentiality  27 agreement under AS 38.05.020(b)(12), is not a matter of public record, except as 28 provided in AS 43.05.230(i) or for purposes of investigation and law enforcement. The 29 information shall be kept confidential except when its production is required in an 30 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 31 court proceeding. These restrictions do not prohibit the publication of statistics 01 presented in a manner that prevents the identification of particular reports and items, 02 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 03 and relevant information that may assist in the collection of delinquent taxes, or 04 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 05 43.05.499. 06  * Sec. 21. AS 40.25.100, as amended by sec. 20 of this Act, is amended to read: 07 (a) Information in the possession of the Department of Revenue that discloses 08 the particulars of the business or affairs of a taxpayer or other person, including 09 information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement 10 under AS 38.05.020(b)(12), is not a matter of public record, except as provided in 11 AS 43.05.230(i) or (k) or for purposes of investigation and law enforcement. The 12 information shall be kept confidential except when its production is required in an 13 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 14 court proceeding. These restrictions do not prohibit the publication of statistics 15 presented in a manner that prevents the identification of particular reports and items, 16 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 17 and relevant information that may assist in the collection of delinquent taxes, or 18 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 19 43.05.499. 20 * Sec. 22. AS 40.25.120(a) is amended to read: 21 (a) Every person has a right to inspect a public record in the state, including 22 public records in recorders' offices, except 23 (1) records of vital statistics and adoption proceedings, which shall be 24 treated in the manner required by AS 18.50; 25 (2) records pertaining to juveniles unless disclosure is authorized by 26 law; 27 (3) medical and related public health records; 28 (4) records required to be kept confidential by a federal law or 29 regulation or by state law; 30 (5) to the extent the records are required to be kept confidential under 31 20 U.S.C. 1232g and the regulations adopted under 20 U.S.C. 1232g in order to secure 01 or retain federal assistance; 02 (6) records or information compiled for law enforcement purposes, but 03 only to the extent that the production of the law enforcement records or information 04 (A) could reasonably be expected to interfere with enforcement 05 proceedings; 06 (B) would deprive a person of a right to a fair trial or an 07 impartial adjudication; 08 (C) could reasonably be expected to constitute an unwarranted 09 invasion of the personal privacy of a suspect, defendant, victim, or witness; 10 (D) could reasonably be expected to disclose the identity of a 11 confidential source; 12 (E) would disclose confidential techniques and procedures for 13 law enforcement investigations or prosecutions; 14 (F) would disclose guidelines for law enforcement 15 investigations or prosecutions if the disclosure could reasonably be expected to 16 risk circumvention of the law; or 17 (G) could reasonably be expected to endanger the life or 18 physical safety of an individual; 19 (7) names, addresses, and other information identifying a person as a 20 participant in the Alaska Higher Education Savings Trust under AS 14.40.802 or the 21 advance college tuition savings program under AS 14.40.803 - 14.40.817; 22 (8) public records containing information that would disclose or might 23 lead to the disclosure of a component in the process used to execute or adopt an 24 electronic signature if the disclosure would or might cause the electronic signature to 25 cease being under the sole control of the person using it; 26 (9) reports submitted under AS 05.25.030 concerning certain 27 collisions, accidents, or other casualties involving boats; 28 (10) records or information pertaining to a plan, program, or 29 procedures for establishing, maintaining, or restoring security in the state, or to a 30 detailed description or evaluation of systems, facilities, or infrastructure in the state, 31 but only to the extent that the production of the records or information 01 (A) could reasonably be expected to interfere with the 02 implementation or enforcement of the security plan, program, or procedures; 03 (B) would disclose confidential guidelines for investigations or 04 enforcement and the disclosure could reasonably be expected to risk 05 circumvention of the law; or 06 (C) could reasonably be expected to endanger the life or 07 physical safety of an individual or to present a real and substantial risk to the 08 public health and welfare; 09 (11) the written notification regarding a proposed regulation provided 10 under AS 24.20.105 to the Department of Law and the affected state agency and 11 communications between the Legislative Affairs Agency, the Department of Law, and 12 the affected state agency under AS 24.20.105; 13 (12) records that are 14 (A) proprietary, privileged, or a trade secret in accordance with 15 AS 43.90.150 or 43.90.220(e); 16 (B) applications that are received under AS 43.90 until notice is 17 published under AS 43.90.160; 18 (13) information of the Alaska Gasline Development Corporation 19 created under AS 31.25.010 or a subsidiary of the Alaska Gasline Development 20 Corporation that is confidential by law or under a valid confidentiality agreement; 21 (14) information under AS 38.05.020(b)(11) that is subject to a  22 confidentiality agreement under AS 38.05.020(b)(12). 23  * Sec. 23. AS 43.05.010 is amended to read: 24 Sec. 43.05.010. Duties of the commissioner. The commissioner of revenue 25 shall 26 (1) exercise general supervision and direct the activities of the 27 Department of Revenue; 28 (2) supervise the fiscal affairs and responsibilities of the department; 29 (3) prescribe uniform rules for investigations and hearings; 30 (4) keep a record of all departmental proceedings, record and file all 31 bonds, and assume custody of returns, reports, papers, and documents of the 01 department; 02 (5) adopt a seal and affix it to each order, process, or certificate issued 03 by the commissioner; 04 (6) keep a record of each order, process, and certificate issued by the 05 commissioner, and keep the record open to public inspection at all reasonable times; 06 (7) hold hearings and investigations necessary for the administration of 07 state tax and revenue laws; 08 (8) except as provided in AS 43.05.405 - 43.05.499 and in 09 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 10 Department of Revenue and enter orders on the appeals that are final unless reversed 11 or modified by the courts; 12 (9) issue subpoenas to require the attendance of witnesses and the 13 production of necessary books, papers, documents, correspondence, and other things; 14 (10) order the taking of depositions before a person competent to 15 administer oaths; 16 (11) administer oaths and take acknowledgments; 17 (12) request the attorney general for rulings on the interpretation of the 18 tax and revenue laws administered by the department; 19 (13) call upon the attorney general to institute actions for recovery of 20 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 21 (14) issue warrants for the collection of unpaid tax penalties and 22 interest and take all steps necessary and proper to enforce full and complete 23 compliance with the tax, license, excise, and other revenue laws of the state; 24 (15) report to the legislature before February 15 of each year the total 25 amount of contributions reported and the total amount of credit claimed during the 26 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 27 AS 43.65.018, AS 43.75.018, and AS 43.77.045;  28 (16) consult with the commissioner of natural resources on  29 negotiation of contracts and development of terms for inclusion in proposed  30 contracts associated with a North Slope natural gas project. 31  * Sec. 24. AS 43.05.010, as amended by sec. 23 of this Act, is amended to read: 01 Sec. 43.05.010. Duties of the commissioner. The commissioner of revenue 02 shall 03 (1) exercise general supervision and direct the activities of the 04 Department of Revenue; 05 (2) supervise the fiscal affairs and responsibilities of the department; 06 (3) prescribe uniform rules for investigations and hearings; 07 (4) keep a record of all departmental proceedings, record and file all 08 bonds, and assume custody of returns, reports, papers, and documents of the 09 department; 10 (5) adopt a seal and affix it to each order, process, or certificate issued 11 by the commissioner; 12 (6) keep a record of each order, process, and certificate issued by the 13 commissioner, and keep the record open to public inspection at all reasonable times; 14 (7) hold hearings and investigations necessary for the administration of 15 state tax and revenue laws; 16 (8) except as provided in AS 43.05.405 - 43.05.499 and in 17 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 18 Department of Revenue and enter orders on the appeals that are final unless reversed 19 or modified by the courts; 20 (9) issue subpoenas to require the attendance of witnesses and the 21 production of necessary books, papers, documents, correspondence, and other things; 22 (10) order the taking of depositions before a person competent to 23 administer oaths; 24 (11) administer oaths and take acknowledgments; 25 (12) request the attorney general for rulings on the interpretation of the 26 tax and revenue laws administered by the department; 27 (13) call upon the attorney general to institute actions for recovery of 28 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 29 (14) issue warrants for the collection of unpaid tax penalties and 30 interest and take all steps necessary and proper to enforce full and complete 31 compliance with the tax, license, excise, and other revenue laws of the state; 01 (15) report to the legislature before February 15 of each year the total 02 amount of contributions reported and the total amount of credit claimed during the 03 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 04 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 05 (16) consult with the commissioner of natural resources on negotiation 06 of contracts and development of terms for inclusion in proposed contracts associated 07 with a North Slope natural gas project; 08 (17) direct the disposition of revenues received from gas delivered  09 to the state under AS 43.55.014(b) by entering into agreements with the  10 commissioner of natural resources related to the management of the custody and  11 disposition of gas delivered to the state under AS 43.55.014(b). 12 * Sec. 25. AS 43.05.230 is amended by adding a new subsection to read: 13 (k) The name of each person that the department has allowed to make an 14 election under AS 43.55.014(a) and the amount of gas produced from each lease or 15 property to which an effective election under AS 43.55.014 applies is public 16 information. 17 * Sec. 26. AS 43.20.144(f) is amended to read:  18 (f) The extraction factor of a taxpayer subject to this section is a fraction, 19 (1) the numerator of which is the sum of the following for the tax 20 period: 21 (A) the number of barrels of the taxpayer's oil (net of royalty to 22 an unrelated party) produced from or allocated to leases or properties of the 23 taxpayer in this state; and 24 (B) one-sixth of the number of Mcf of the taxpayer's gas,  25 including gas subject to an election under AS 43.55.014, (net of royalty to 26 an unrelated party) produced from or allocated to leases or properties of the 27 taxpayer in this state, excluding reinjected gas; and 28 (2) the denominator of which is the sum of the following for the tax 29 period: 30 (A) the number of barrels of oil of the taxpayer's consolidated 31 business (net of royalty to an unrelated party) produced from or allocated to 01 leases or properties of the taxpayer's consolidated business everywhere; and 02 (B) one-sixth of the number of Mcf of gas, including gas  03 subject to an election under AS 43.55.014, of the taxpayer's consolidated 04 business (net of royalty to an unrelated party) produced from or allocated to 05 leases or properties of the taxpayer's consolidated business everywhere, 06 excluding reinjected gas. 07  * Sec. 27. AS 43.55.011(e) is amended to read: 08 (e) There is levied on the producer of oil or gas a tax for all oil and gas 09 produced each calendar year from each lease or property in the state, less any oil and 10 gas the ownership or right to which is exempt from taxation or constitutes a 11 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as 12 otherwise provided under (f), (j), (k), (o), and (p) of this section, for oil and gas  13 produced  14 (1) before January 1, 2014, the tax is equal to the sum of 15 (A) the annual production tax value of the taxable oil and gas 16 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 17 (B) the sum, over all months of the calendar year, of the tax 18 amounts determined under (g) of this section; 19 (2) on and after January 1, 2014, and before January 1, 2022, the tax 20 is equal to the annual production tax value of the taxable oil and gas as calculated 21 under AS 43.55.160(a)(1) multiplied by 35 percent; 22 (3) on and after January 1, 2022, the tax for  23 (A) oil is equal to the annual production tax value of the  24 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent;  25 (B) gas is equal to 10.5 percent of the gross value at the  26 point of production of the taxable gas; if the gross value at the point of  27 production of gas produced from a lease or property is less than zero, that  28 gross value at the point of production is considered zero for purposes of  29 this subparagraph.  30 * Sec. 28. AS 43.55.011(f) is amended to read: 31 (f) The levy of tax under (e) of this section for 01 (1) oil and gas produced before January 1, 2022, from leases or  02 properties that include land north of 68 degrees North latitude, other than [OIL 03 AND GAS PRODUCTION SUBJECT TO (i) OF THIS SECTION AND] gas subject 04 to (o) of this section, may not be less than 05 (A) [(1)] four percent of the gross value at the point of 06 production when the average price per barrel for Alaska North Slope crude oil 07 for sale on the United States West Coast during the calendar year for which the 08 tax is due is more than $25; 09 (B) [(2)] three percent of the gross value at the point of 10 production when the average price per barrel for Alaska North Slope crude oil 11 for sale on the United States West Coast during the calendar year for which the 12 tax is due is over $20 but not over $25; 13 (C) [(3)] two percent of the gross value at the point of 14 production when the average price per barrel for Alaska North Slope crude oil 15 for sale on the United States West Coast during the calendar year for which the 16 tax is due is over $17.50 but not over $20; 17 (D) [(4)] one percent of the gross value at the point of 18 production when the average price per barrel for Alaska North Slope crude oil 19 for sale on the United States West Coast during the calendar year for which the 20 tax is due is over $15 but not over $17.50; or 21 (E) [(5)] zero percent of the gross value at the point of 22 production when the average price per barrel for Alaska North Slope crude oil 23 for sale on the United States West Coast during the calendar year for which the 24 tax is due is $15 or less; and 25 (2) oil produced on and after January 1, 2022, from leases or  26 properties that include land north of 68 degrees North latitude, may not be less  27 than  28 (A) four percent of the gross value at the point of  29 production when the average price per barrel for Alaska North Slope  30 crude oil for sale on the United States West Coast during the calendar  31 year for which the tax is due is more than $25;  01 (B) three percent of the gross value at the point of  02 production when the average price per barrel for Alaska North Slope  03 crude oil for sale on the United States West Coast during the calendar  04 year for which the tax is due is over $20 but not over $25;  05 (C) two percent of the gross value at the point of production  06 when the average price per barrel for Alaska North Slope crude oil for  07 sale on the United States West Coast during the calendar year for which  08 the tax is due is over $17.50 but not over $20;  09 (D) one percent of the gross value at the point of production  10 when the average price per barrel for Alaska North Slope crude oil for  11 sale on the United States West Coast during the calendar year for which  12 the tax is due is over $15 but not over $17.50; or  13 (E) zero percent of the gross value at the point of  14 production when the average price per barrel for Alaska North Slope  15 crude oil for sale on the United States West Coast during the calendar  16 year for which the tax is due is $15 or less. 17  * Sec. 29. AS 43.55 is amended by adding a new section to read: 18 Sec. 43.55.014. Payment in kind of tax for gas. (a) For gas produced on and 19 after January 1, 2022, from oil and gas leases that have been modified under 20 AS 38.05.180(hh), other than gas described in (e) of this section, the department may 21 allow a producer to make an irrevocable election, under regulations adopted by the 22 department, to pay a production tax in kind levied by this section in lieu of the tax 23 otherwise levied for the gas by AS 43.55.011(e). 24 (b) A production tax in kind is levied by this section equal to 10.5 percent of 25 the gas otherwise taxable under AS 43.55.011(e)(3) produced from each lease or 26 property to which an effective election under (a) of this section applies, when and as 27 that gas is produced. The producer shall pay the tax in kind by delivering that 10.5 28 percent of the gas to the state at the entrance of the transportation facility specified by 29 the state. 30 (c) The Department of Natural Resources shall manage under 31 AS 38.05.020(b)(13) the custody and disposition of gas delivered to the state under (b) 01 of this section. 02 (d) If a deficiency in a tax levied by this section is assessed, or if a provision 03 of this title providing for interest or a penalty based on a percentage of a tax liability or 04 tax deficiency applies to gas for which a tax is levied by this section, the amount of the 05 deficiency and the tax amount on which the interest or penalty percentage is calculated 06 is treated for the purpose only of that calculation as having been levied by 07 AS 43.55.011(e) rather than this section. 08 (e) This section does not apply to gas 09 (1) flared, released, or allowed to escape upstream of the point of 10 production of gas; or 11 (2) used in the operation of a lease or property in the state for drilling 12 for or producing oil or gas, or for repressuring a reservoir. 13  * Sec. 30. AS 43.55.019(a) is amended to read: 14 (a) A producer of oil or gas is allowed a credit against the tax levied by  15 AS 43.55.011(e) [DUE UNDER THIS CHAPTER] for cash contributions accepted for 16 (1) direct instruction, research, and educational support purposes, 17 including library and museum acquisitions, and contributions to endowment, by an 18 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 19 four-year college accredited by a regional accreditation association; 20 (2) secondary school level vocational education courses, programs, and 21 facilities by a school district in the state; 22 (3) vocational education courses, programs, and facilities by a state- 23 operated vocational technical education and training school; 24 (4) a facility or an annual intercollegiate sports tournament by a 25 nonprofit, public or private, Alaska two-year or four-year college accredited by a 26 regional accreditation association; 27 (5) Alaska Native cultural or heritage programs and educational 28 support, including mentoring and tutoring, provided by a nonprofit agency for public 29 school staff and for students who are in grades kindergarten through 12 in the state; 30 (6) education, research, rehabilitation, and facilities by an institution 31 that is located in the state and that qualifies as a coastal ecosystem learning center 01 under the Coastal America Partnership established by the federal government; and 02 (7) the Alaska higher education investment fund under AS 37.14.750. 03  * Sec. 31. AS 43.55.019(e) is amended to read: 04 (e) The credit under this section may not reduce a person's tax liability under  05 AS 43.55.011(e) [THIS CHAPTER] to below zero for any tax year. An unused credit 06 or portion of a credit not used under this section for a tax year may not be sold, traded, 07 transferred, or applied in a subsequent tax year. 08  * Sec. 32. AS 43.55.020(a) is amended to read: 09 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 10 the tax as follows: 11 (1) for oil and gas produced before January 1, 2014, an installment 12 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 13 as allowed by law, is due for each month of the calendar year on the last day of the 14 following month; except as otherwise provided under (2) of this subsection, the 15 amount of the installment payment is the sum of the following amounts, less 1/12 of 16 the tax credits that are allowed by law to be applied against the tax levied by 17 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 18 not be less than zero: 19 (A) for oil and gas not subject to AS 43.55.011(o) or (p)  20 produced from leases or properties in the state outside the Cook Inlet 21 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 22 the greater of 23 (i) zero; or 24 (ii) the sum of 25 percent and the tax rate calculated for 25 the month under AS 43.55.011(g) multiplied by the remainder obtained 26 by subtracting 1/12 of the producer's adjusted lease expenditures for the 27 calendar year of production under AS 43.55.165 and 43.55.170 that are 28 deductible for the oil and gas under AS 43.55.160 from the gross value 29 at the point of production of the oil and gas produced from the leases or 30 properties during the month for which the installment payment is 31 calculated; 01 (B) for oil and gas produced from leases or properties subject 02 to AS 43.55.011(f), the greatest of 03 (i) zero; 04 (ii) zero percent, one percent, two percent, three 05 percent, or four percent, as applicable, of the gross value at the point of 06 production of the oil and gas produced from the leases or properties 07 during the month for which the installment payment is calculated; or 08 (iii) the sum of 25 percent and the tax rate calculated for 09 the month under AS 43.55.011(g) multiplied by the remainder obtained 10 by subtracting 1/12 of the producer's adjusted lease expenditures for the 11 calendar year of production under AS 43.55.165 and 43.55.170 that are 12 deductible for the oil and gas under AS 43.55.160 from the gross value 13 at the point of production of the oil and gas produced from those leases 14 or properties during the month for which the installment payment is 15 calculated; 16 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 17 each lease or property, the greater of 18 (i) zero; or 19 (ii) the sum of 25 percent and the tax rate calculated for 20 the month under AS 43.55.011(g) multiplied by the remainder obtained 21 by subtracting 1/12 of the producer's adjusted lease expenditures for the 22 calendar year of production under AS 43.55.165 and 43.55.170 that are 23 deductible under AS 43.55.160 for the oil or gas, respectively, 24 produced from the lease or property from the gross value at the point of 25 production of the oil or gas, respectively, produced from the lease or 26 property during the month for which the installment payment is 27 calculated; 28 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 29 (i) the sum of 25 percent and the tax rate calculated for 30 the month under AS 43.55.011(g) multiplied by the remainder obtained 31 by subtracting 1/12 of the producer's adjusted lease expenditures for the 01 calendar year of production under AS 43.55.165 and 43.55.170 that are 02 deductible for the oil and gas under AS 43.55.160 from the gross value 03 at the point of production of the oil and gas produced from the leases or 04 properties during the month for which the installment payment is 05 calculated, but not less than zero; or 06 (ii) four percent of the gross value at the point of 07 production of the oil and gas produced from the leases or properties 08 during the month, but not less than zero; 09 (2) an amount calculated under (1)(C) of this subsection for oil or gas 10 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 11 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 12 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 13 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 14 amount of taxable gas produced during the month for the amount of taxable gas 15 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 16 (2)(A), as applicable, the amount of taxable oil produced during the month for the 17 amount of taxable oil produced during the calendar year; 18 (3) an installment payment of the estimated tax levied by 19 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 20 on the last day of the following month; the amount of the installment payment is the 21 sum of 22 (A) the applicable tax rate for oil provided under 23 AS 43.55.011(i), multiplied by the gross value at the point of production of the 24 oil taxable under AS 43.55.011(i) and produced from the lease or property 25 during the month; and 26 (B) the applicable tax rate for gas provided under 27 AS 43.55.011(i), multiplied by the gross value at the point of production of the 28 gas taxable under AS 43.55.011(i) and produced from the lease or property 29 during the month; 30 (4) any amount of tax levied by AS 43.55.011, net of any credits 31 applied as allowed by law, that exceeds the total of the amounts due as installment 01 payments of estimated tax is due on March 31 of the year following the calendar year 02 of production; 03 (5) for oil and gas produced on and after January 1, 2014, and before  04 January 1, 2022, an installment payment of the estimated tax levied by 05 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 06 month of the calendar year on the last day of the following month; except as otherwise 07 provided under (6) of this subsection, the amount of the installment payment is the 08 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 09 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 10 of the installment payment may not be less than zero: 11 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 12 produced from leases or properties in the state outside the Cook Inlet 13 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 14 the greater of 15 (i) zero; or 16 (ii) 35 percent multiplied by the remainder obtained by 17 subtracting 1/12 of the producer's adjusted lease expenditures for the 18 calendar year of production under AS 43.55.165 and 43.55.170 that are 19 deductible for the oil and gas under AS 43.55.160 from the gross value 20 at the point of production of the oil and gas produced from the leases or 21 properties during the month for which the installment payment is 22 calculated; 23 (B) for oil and gas produced from leases or properties subject 24 to AS 43.55.011(f), the greatest of 25 (i) zero; 26 (ii) zero percent, one percent, two percent, three 27 percent, or four percent, as applicable, of the gross value at the point of 28 production of the oil and gas produced from the leases or properties 29 during the month for which the installment payment is calculated; or 30 (iii) 35 percent multiplied by the remainder obtained by 31 subtracting 1/12 of the producer's adjusted lease expenditures for the 01 calendar year of production under AS 43.55.165 and 43.55.170 that are 02 deductible for the oil and gas under AS 43.55.160 from the gross value 03 at the point of production of the oil and gas produced from those leases 04 or properties during the month for which the installment payment is 05 calculated, except that, for the purposes of this calculation, a reduction 06 from the gross value at the point of production may apply for oil and 07 gas subject to AS 43.55.160(f) or (g); 08 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 09 each lease or property, the greater of 10 (i) zero; or 11 (ii) 35 percent multiplied by the remainder obtained by 12 subtracting 1/12 of the producer's adjusted lease expenditures for the 13 calendar year of production under AS 43.55.165 and 43.55.170 that are 14 deductible under AS 43.55.160 for the oil or gas, respectively, 15 produced from the lease or property from the gross value at the point of 16 production of the oil or gas, respectively, produced from the lease or 17 property during the month for which the installment payment is 18 calculated; 19 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 20 (i) 35 percent multiplied by the remainder obtained by 21 subtracting 1/12 of the producer's adjusted lease expenditures for the 22 calendar year of production under AS 43.55.165 and 43.55.170 that are 23 deductible for the oil and gas under AS 43.55.160 from the gross value 24 at the point of production of the oil and gas produced from the leases or 25 properties during the month for which the installment payment is 26 calculated, but not less than zero; or 27 (ii) four percent of the gross value at the point of 28 production of the oil and gas produced from the leases or properties 29 during the month, but not less than zero; 30 (6) an amount calculated under (5)(C) of this subsection for oil or gas 31 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 01 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 02 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 03 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 04 amount of taxable gas produced during the month for the amount of taxable gas 05 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 06 (2)(A), as applicable, the amount of taxable oil produced during the month for the 07 amount of taxable oil produced during the calendar year; 08 (7) for oil and gas produced on or after January 1, 2022, an  09 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax  10 credits applied as allowed by law, is due for each month of the calendar year on  11 the last day of the following month; the amount of the installment payment is the  12 sum of the following amounts, less 1/12 of the tax credits that are allowed by law  13 to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but  14 the amount of the installment payment may not be less than zero:  15 (A) for oil produced from leases or properties that include  16 land north of 68 degrees North latitude, the greatest of  17 (i) zero;  18 (ii) zero percent, one percent, two percent, three  19 percent, or four percent, as applicable, of the gross value at the  20 point of production of the oil produced from the leases or  21 properties during the month for which the installment payment is  22 calculated; or  23 (iii) 35 percent multiplied by the remainder obtained  24 by subtracting 1/12 of the producer's adjusted lease expenditures  25 for the calendar year of production under AS 43.55.165 and  26 43.55.170 that are deductible for the oil under AS 43.55.160(h)(1)  27 from the gross value at the point of production of the oil produced  28 from those leases or properties during the month for which the  29 installment payment is calculated, except that, for the purposes of  30 this calculation, a reduction from the gross value at the point of  31 production may apply for oil subject to AS 43.55.160(f) or  01 43.55.160(f) and (g);  02 (B) for oil produced before or during the last calendar year  03 under AS 43.55.024(b) for which the producer could take a tax credit  04 under AS 43.55.024(a), from leases or properties in the state outside the  05 Cook Inlet sedimentary basin, no part of which is north of 68 degrees  06 North latitude, other than leases or properties subject to AS 43.55.011(p),  07 the greater of  08 (i) zero; or  09 (ii) 35 percent multiplied by the remainder obtained  10 by subtracting 1/12 of the producer's adjusted lease expenditures  11 for the calendar year of production under AS 43.55.165 and  12 43.55.170 that are deductible for the oil under AS 43.55.160(h)(2)  13 from the gross value at the point of production of the oil produced  14 from the leases or properties during the month for which the  15 installment payment is calculated;  16 (C) for oil and gas produced from leases or properties  17 subject to AS 43.55.011(p), except as otherwise provided under (8) of this  18 subsection, the sum of  19 (i) 35 percent multiplied by the remainder obtained  20 by subtracting 1/12 of the producer's adjusted lease expenditures  21 for the calendar year of production under AS 43.55.165 and  22 43.55.170 that are deductible for the oil under AS 43.55.160(h)(3)  23 from the gross value at the point of production of the oil produced  24 from the leases or properties during the month for which the  25 installment payment is calculated, but not less than zero; and  26 (ii) 10.5 percent of the gross value at the point of  27 production of the gas produced from the leases or properties  28 during the month, but not less than zero;  29 (D) for oil produced from leases or properties in the state,  30 no part of which is north of 68 degrees North latitude, other than leases or  31 properties subject to (B) or (C) of this paragraph, the greater of  01 (i) zero; or  02 (ii) 35 percent multiplied by the remainder obtained  03 by subtracting 1/12 of the producer's adjusted lease expenditures  04 for the calendar year of production under AS 43.55.165 and  05 43.55.170 that are deductible for the oil under AS 43.55.160(h)(4)  06 from the gross value at the point of production of the oil produced  07 from the leases or properties during the month for which the  08 installment payment is calculated;  09 (E) for gas produced from each lease or property in the  10 state, other than a lease or property subject to AS 43.55.011(p), 10.5  11 percent of the gross value at the point of production of the gas produced  12 from the lease or property during the month for which the installment  13 payment is calculated, but not less than zero;  14 (8) an amount calculated under (7)(C) of this subsection may not  15 exceed four percent of the gross value at the point of production of the oil and gas  16 produced from leases or properties subject to AS 43.55.011(p) during the month  17 for which the installment payment is calculated;  18 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and  19 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the  20 point of production is determined under AS 43.55.011(f)(1) or (2) but substituting  21 the phrase "month for which the installment payment is calculated" in  22 AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is  23 due." 24 * Sec. 33. AS 43.55.020(g) is amended to read: 25 (g) Notwithstanding any contrary provision of AS 43.05.225, 26 (1) before January 1, 2014, an unpaid amount of an installment 27 payment required under (a)(1) - (3) of this section that is not paid when due bears 28 interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal 29 Revenue Code), as amended, compounded daily, from the date the installment 30 payment is due until March 31 following the calendar year of production, and (B) as 31 provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued 01 under (A) of this paragraph that remains unpaid after that March 31 is treated as an 02 addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax 03 due under (a)(4) of this section that is not paid when due bears interest as provided for 04 a delinquent tax under AS 43.05.225; 05 (2) on and after January 1, 2014, an unpaid amount of an installment 06 payment required under (a)(3), (5), [OR] (6), or (7) of this section that is not paid 07 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 08 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 09 installment payment is due until March 31 following the calendar year of production, 10 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 11 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 12 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 13 amount of tax due under (a)(4) of this section that is not paid when due bears interest 14 as provided for a delinquent tax under AS 43.05.225. 15  * Sec. 34. AS 43.55.020(h) is amended to read: 16 (h) Notwithstanding any contrary provision of AS 43.05.280, 17 (1) an overpayment of an installment payment required under (a)(1),  18 (2), (3), (5), (6), or (7) [(a)(1) - (3), (5), OR (6)] of this section bears interest at the rate 19 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 20 amended, compounded daily, from the later of the date the installment payment is due 21 or the date the overpayment is made, until the earlier of 22 (A) the date it is refunded or is applied to an underpayment; or 23 (B) March 31 following the calendar year of production; 24 (2) except as provided under (1) of this subsection, interest with 25 respect to an overpayment is allowed only on any net overpayment of the payments 26 required under (a) of this section that remains after the later of March 31 following the 27 calendar year of production or the date that the statement required under 28 AS 43.55.030(a) is filed; 29 (3) interest is allowed under (2) of this subsection only from a date that 30 is 90 days after the later of March 31 following the calendar year of production or the 31 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 01 if the overpayment was refunded within the 90-day period; 02 (4) interest under (2) and (3) of this subsection is paid at the rate and in 03 the manner provided in AS 43.05.225(1). 04  * Sec. 35. AS 43.55.020(l) is amended to read: 05 (l) For oil and gas produced on [ON] and after January 1, 2014, and before  06 January 1, 2022, in making settlement with the royalty owner for oil and gas that is 07 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 08 taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in 09 value at the time the tax becomes due to the amount of the tax paid. If the total 10 deductions of installment payments of estimated tax for a calendar year exceed the 11 actual tax for that calendar year, the producer shall, before April 1 of the following 12 year, refund the excess to the royalty owner. Unless otherwise agreed between the 13 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 14 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 15 right to which constitutes a landowner's royalty interest, is considered to be the gross 16 value at the point of production of the taxable royalty oil and gas produced during the 17 calendar year multiplied by a figure that is a quotient, in which 18 (1) the numerator is the producer's total tax liability under 19 AS 43.55.011(e)(2) [AS 43.55.011(e)] for the calendar year of production; and 20 (2) the denominator is the total gross value at the point of production 21 of the oil and gas taxable under AS 43.55.011(e) produced by the producer from all 22 leases and properties in the state during the calendar year. 23  * Sec. 36. AS 43.55.020 is amended by adding a new subsection to read: 24 (m) For oil and gas produced on and after January 1, 2022, in making 25 settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011, 26 the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or 27 may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes 28 due to the amount of the tax paid. If the total deductions of installment payments of 29 estimated tax for a calendar year exceed the actual tax for that calendar year, the 30 producer shall, before April 1 of the following year, refund the excess to the royalty 31 owner. In making settlement with the royalty owner for gas that is taxable under 01 AS 43.55.014, the producer may deduct the amount of the gas paid as in kind tax on 02 taxable royalty gas or may deduct the gross value at the point of production of the gas 03 paid as in-kind tax on taxable royalty gas. Unless otherwise agreed between the 04 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 05 taxable royalty oil for a calendar year, other than oil the ownership or right to which 06 constitutes a landowner's royalty interest, is considered to be the gross value at the 07 point of production of the taxable royalty oil produced during the calendar year 08 multiplied by a figure that is a quotient, in which 09 (1) the numerator is the producer's total tax liability under 10 AS 43.55.011(e)(3)(A) for the calendar year of production; and 11 (2) the denominator is the total gross value at the point of production 12 of the oil taxable under AS 43.55.011(e) produced by the producer from all leases and 13 properties in the state during the calendar year. 14  * Sec. 37. AS 43.55.030(a) is amended to read: 15 (a) A producer that produces oil or gas from a lease or property in the state 16 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 17 for that oil or gas, shall file with the department on March 31 of the following year a 18 statement, under oath, in a form prescribed by the department, giving, with other 19 information required, the following: 20 (1) a description of each lease or property from which oil or gas was 21 produced, by name, legal description, lease number, or accounting codes assigned by 22 the department; 23 (2) the names of the producer and, if different, the person paying the 24 tax, if any; 25 (3) the gross amount of oil and the gross amount of gas produced from 26 each lease or property, separately identifying the gross amount of gas produced  27 from each lease or property to which an effective election under AS 43.55.014(a)  28 applies, the amount of gas delivered to the state under AS 43.55.014(b), and the 29 percentage of the gross amount of oil and gas owned by the producer; 30 (4) the gross value at the point of production of the oil and of the gas 31 produced from each lease or property owned by the producer and the costs of 01 transportation of the oil and gas; 02 (5) the name of the first purchaser and the price received for the oil and 03 for the gas, unless relieved from this requirement in whole or in part by the 04 department; 05 (6) the producer's qualified capital expenditures, as defined in 06 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 07 payments or credits under AS 43.55.170; 08 (7) the production tax values of the oil and gas under AS 43.55.160(a)  09 or of the oil under AS 43.55.160(h), as applicable [AS 43.55.160]; 10 (8) any claims for tax credits to be applied; and 11 (9) calculations showing the amounts, if any, that were or are due 12 under AS 43.55.020(a) and interest on any underpayment or overpayment. 13  * Sec. 38. AS 43.55.160(a) is amended to read: 14 (a) For oil and gas produced before January 1, 2022, except [EXCEPT] as 15 provided in (b), (f), and (g) of this section, for the purposes of 16 (1) AS 43.55.011(e)(1) and (2), the annual production tax value of 17 taxable oil, gas, or oil and gas produced during a calendar year in a category for which 18 a separate annual production tax value is required to be calculated under this 19 paragraph is the gross value at the point of production of that oil, gas, or oil and gas 20 taxable under AS 43.55.011(e), less the producer's lease expenditures under 21 AS 43.55.165 for the calendar year applicable to the oil, gas, or oil and gas in that 22 category produced by the producer during the calendar year, as adjusted under 23 AS 43.55.170; a separate annual production tax value shall be calculated for 24 (A) oil and gas produced from leases or properties in the state 25 that include land north of 68 degrees North latitude, other than gas produced 26 before 2022 and used in the state; 27 (B) oil and gas produced from leases or properties in the state 28 outside the Cook Inlet sedimentary basin, no part of which is north of 68 29 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 30 and (b); this subparagraph does not apply to 31 (i) gas produced before 2022 and used in the state; or 01 (ii) oil and gas subject to AS 43.55.011(p); 02 (C) oil produced before 2022 from each lease or property in the 03 Cook Inlet sedimentary basin; 04 (D) gas produced before 2022 from each lease or property in 05 the Cook Inlet sedimentary basin; 06 (E) gas produced before 2022 from each lease or property in 07 the state outside the Cook Inlet sedimentary basin and used in the state, other 08 than gas subject to AS 43.55.011(p); 09 (F) oil and gas subject to AS 43.55.011(p) produced from 10 leases or properties in the state; 11 (G) oil and gas produced from leases or properties in the state 12 no part of which is north of 68 degrees North latitude, other than oil or gas 13 described in (B), (C), (D), (E), or (F) of this paragraph; 14 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 15 the monthly production tax value of the taxable 16 (A) oil and gas produced during a month from leases or 17 properties in the state that include land north of 68 degrees North latitude is the 18 gross value at the point of production of the oil and gas taxable under 19 AS 43.55.011(e) and produced by the producer from those leases or properties, 20 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 21 calendar year applicable to the oil and gas produced by the producer from 22 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 23 does not apply to gas subject to AS 43.55.011(o); 24 (B) oil and gas produced during a month from leases or 25 properties in the state outside the Cook Inlet sedimentary basin, no part of 26 which is north of 68 degrees North latitude, is the gross value at the point of 27 production of the oil and gas taxable under AS 43.55.011(e) and produced by 28 the producer from those leases or properties, less 1/12 of the producer's lease 29 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 30 gas produced by the producer from those leases or properties, as adjusted under 31 AS 43.55.170; this subparagraph does not apply to gas subject to 01 AS 43.55.011(o); 02 (C) oil produced during a month from a lease or property in the 03 Cook Inlet sedimentary basin is the gross value at the point of production of 04 the oil taxable under AS 43.55.011(e) and produced by the producer from that 05 lease or property, less 1/12 of the producer's lease expenditures under 06 AS 43.55.165 for the calendar year applicable to the oil produced by the 07 producer from that lease or property, as adjusted under AS 43.55.170; 08 (D) gas produced during a month from a lease or property in 09 the Cook Inlet sedimentary basin is the gross value at the point of production 10 of the gas taxable under AS 43.55.011(e) and produced by the producer from 11 that lease or property, less 1/12 of the producer's lease expenditures under 12 AS 43.55.165 for the calendar year applicable to the gas produced by the 13 producer from that lease or property, as adjusted under AS 43.55.170; 14 (E) gas produced during a month from a lease or property 15 outside the Cook Inlet sedimentary basin and used in the state is the gross 16 value at the point of production of that gas taxable under AS 43.55.011(e) and 17 produced by the producer from that lease or property, less 1/12 of the 18 producer's lease expenditures under AS 43.55.165 for the calendar year 19 applicable to that gas produced by the producer from that lease or property, as 20 adjusted under AS 43.55.170. 21   * Sec. 39. AS 43.55.160(e) is amended to read: 22 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 23 would otherwise be deductible by a producer in a calendar year but whose deduction 24 would cause an annual production tax value calculated under (a)(1) or (h) of this 25 section of taxable oil or gas produced during the calendar year to be less than zero 26 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 27 However, the department shall provide by regulation a method to ensure that, for a 28 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 29 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 30 otherwise be deductible by a producer for that period but whose deduction would 31 cause a production tax value calculated under (a)(1)(C), (D), (E), or (F) of this section 01 to be less than zero are accounted for as though the adjusted lease expenditures had 02 first been used as deductions in calculating the production tax values of oil or gas 03 subject to any of the limitations under AS 43.55.011(j), (k), (o), or (p) that have 04 positive production tax values so as to reduce the tax liability calculated without 05 regard to the limitation to the maximum amount provided for under the applicable 06 provision of AS 43.55.011(j), (k), (o), or (p). Only the amount of those adjusted lease 07 expenditures remaining after the accounting provided for under this subsection may be 08 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 09 subsection, "producer" includes "explorer." 10 * Sec. 40. AS 43.55.160(f) is amended to read: 11 (f) On and after January 1, 2014, in the calculation of an annual production tax 12 value of a producer under (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at 13 the point of production of oil or gas produced from a lease or property north of 68 14 degrees North latitude meeting one or more of the following criteria is reduced by 20 15 percent: (1) the oil or gas is produced from a lease or property that does not contain a 16 lease that was within a unit on January 1, 2003; (2) the oil or gas is produced from a 17 participating area established after December 31, 2011, that is within a unit formed 18 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 19 contain a reservoir that had previously been in a participating area established before 20 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 21 existing participating area by the Department of Natural Resources on and after 22 January 1, 2014, and the producer demonstrates to the department that the volume of 23 oil or gas produced is from acreage added to an existing participating area. This 24 subsection does not apply to gas produced before 2022 that is used in the state or to  25 gas produced on and after January 1, 2022. A reduction under this subsection may 26 not reduce the gross value at the point of production below zero. In this subsection, 27 "participating area" means a reservoir or portion of a reservoir producing or 28 contributing to production as approved by the Department of Natural Resources. 29 * Sec. 41. AS 43.55.160(g) is amended to read: 30 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 31 section, in the calculation of an annual production tax value of a producer under 01 (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at the point of production of 02 oil or gas produced from a lease or property north of 68 degrees North latitude that 03 does not contain a lease that was within a unit on January 1, 2003, is reduced by 10 04 percent if the oil or gas is produced from a unit made up solely of leases that have a 05 royalty share of more than 12.5 percent in amount or value of the production removed 06 or sold from the lease as determined under AS 38.05.180(f). This subsection does not 07 apply if the royalty obligation for one or more of the leases in the unit has been 08 reduced to 12.5 percent or less under AS 38.05.180(j) for all or part of the calendar 09 year for which the annual production tax value is calculated. This subsection does not 10 apply to gas produced before 2022 that is used in the state or to gas produced on and  11 after January 1, 2022. A reduction under this subsection may not reduce the gross 12 value at the point of production below zero. 13 * Sec. 42. AS 43.55.160 is amended by adding a new subsection to read: 14 (h) For oil produced on and after January 1, 2022, except as provided in (b), 15 (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 16 production tax value of oil taxable under AS 43.55.011(e) produced by a producer 17 during a calendar year 18 (1) from leases or properties in the state that include land north of 68 19 degrees North latitude is the gross value at the point of production of that oil, less the 20 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 21 explore for, develop, or produce oil or gas deposits located in the state north of 68 22 degrees North latitude or located in leases or properties in the state that include land 23 north of 68 degrees North latitude, as adjusted under AS 43.55.170; 24 (2) before or during the last calendar year under AS 43.55.024(b) for 25 which the producer could take a tax credit under AS 43.55.024(a), from leases or 26 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 27 north of 68 degrees North latitude, other than leases or properties subject to 28 AS 43.55.011(p), is the gross value at the point of production of that oil, less the 29 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 30 explore for, develop, or produce oil or gas deposits located in the state outside the 31 Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil or 01 gas deposits located in a lease or property that includes land north of 68 degrees North 02 latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from which 03 commercial production has not begun, as adjusted under AS 43.55.170; 04 (3) from leases or properties subject to AS 43.55.011(p) is the gross 05 value at the point of production of that oil, less the producer's lease expenditures under 06 AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil or 07 gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 08 January 1, 2027, located in leases or properties in the state outside the Cook Inlet 09 sedimentary basin, no part of which is north of 68 degrees North latitude from which 10 commercial production has not begun, as adjusted under AS 43.55.170; 11 (4) from leases or properties in the state no part of which is north of 68 12 degrees North latitude, other than leases or properties subject to (2) or (3) of this 13 subsection, is the gross value at the point of production of that oil less the producer's 14 lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 15 develop, or produce oil or gas deposits located in the state south of 68 degrees North 16 latitude, other than oil or gas deposits located in a lease or property in the state that 17 includes land north of 68 degrees North latitude, and excluding lease expenditures that 18 are deductible under (2) or (3) of this subsection or would be deductible under (2) or 19 (3) of this subsection if not prohibited by (b) of this section, as adjusted under 20 AS 43.55.170. 21  * Sec. 43. AS 43.55.165(e) is amended to read:  22 (e) For purposes of this section, lease expenditures do not include 23 (1) depreciation, depletion, or amortization; 24 (2) oil or gas royalty payments, production payments, lease profit 25 shares, or other payments or distributions of a share of oil or gas production, profit, or 26 revenue, except that a producer's lease expenditures applicable to oil and gas produced 27 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 28 profit paid to the state under that lease; 29 (3) taxes based on or measured by net income; 30 (4) interest or other financing charges or costs of raising equity or debt 31 capital; 01 (5) acquisition costs for a lease or property or exploration license; 02 (6) costs arising from fraud, willful misconduct, gross negligence, 03 violation of law, or failure to comply with an obligation under a lease, permit, or 04 license issued by the state or federal government; 05 (7) fines or penalties imposed by law; 06 (8) costs of arbitration, litigation, or other dispute resolution activities 07 that involve the state or concern the rights or obligations among owners of interests in, 08 or rights to production from, one or more leases or properties or a unit; 09 (9) costs incurred in organizing a partnership, joint venture, or other 10 business entity or arrangement; 11 (10) amounts paid to indemnify the state; the exclusion provided by 12 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 13 a third-party insurer or surety; 14 (11) surcharges levied under AS 43.55.201 or 43.55.300; 15 (12) an expenditure otherwise deductible under (b) of this section that 16 is a result of an internal transfer, a transaction with an affiliate, or a transaction 17 between related parties, or is otherwise not an arm's length transaction, unless the 18 producer establishes to the satisfaction of the department that the amount of the 19 expenditure does not exceed the fair market value of the expenditure; 20 (13) an expenditure incurred to purchase an interest in any corporation, 21 partnership, limited liability company, business trust, or any other business entity, 22 whether or not the transaction is treated as an asset sale for federal income tax 23 purposes; 24 (14) a tax levied under AS 43.55.011 or 43.55.014; 25 (15) costs incurred for dismantlement, removal, surrender, or 26 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 27 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 28 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 29 excluded under this paragraph if the dismantlement, removal, surrender, or 30 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 31 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 01 (16) costs incurred for containment, control, cleanup, or removal in 02 connection with any unpermitted release of oil or a hazardous substance and any 03 liability for damages imposed on the producer or explorer for that unpermitted release; 04 this paragraph does not apply to the cost of developing and maintaining an oil 05 discharge prevention and contingency plan under AS 46.04.030; 06 (17) costs incurred to satisfy a work commitment under an exploration 07 license under AS 38.05.132; 08 (18) that portion of expenditures, that would otherwise be qualified 09 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 10 are less than the product of $0.30 multiplied by the total taxable production from each 11 lease or property, in BTU equivalent barrels, during that calendar year, except that, 12 when a portion of a calendar year is subject to this provision, the expenditures and 13 volumes shall be prorated within that calendar year; 14 (19) costs incurred for repair, replacement, or deferred maintenance of 15 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 16 undertaken in response to a failure, problem, or event that results in an unscheduled 17 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 18 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 19 equipment, other than a well, that is undertaken in response to, or is otherwise 20 associated with, an unpermitted release of a hazardous substance or of gas; however, 21 costs under this paragraph that would otherwise constitute lease expenditures under (a) 22 and (b) of this section may be treated as lease expenditures if the department 23 determines that the repair or replacement is solely necessitated by an act of war, by an 24 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 25 inevitable, and irresistible character, the effects of which could not have been 26 prevented or avoided by the exercise of due care or foresight, or by an intentional or 27 negligent act or omission of a third party, other than a party or its agents in privity of 28 contract with, or employed by, the producer or an operator acting for the producer, but 29 only if the producer or operator, as applicable, exercised due care in operating and 30 maintaining the facility, pipeline, structure, or equipment, and took reasonable 31 precautions against the act or omission of the third party and against the consequences 01 of the act or omission; in this paragraph, 02 (A) "costs incurred for repair, replacement, or deferred 03 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 04 to dismantle and remove the facility, pipeline, structure, or equipment that is 05 being replaced; 06 (B) "hazardous substance" has the meaning given in 07 AS 46.03.826; 08 (C) "replacement" includes renovation or improvement; 09 (20) costs incurred to construct, acquire, or operate a refinery or crude 10 oil topping plant, regardless of whether the products of the refinery or topping plant 11 are used in oil or gas exploration, development, or production operations; however, if 12 a producer owns a refinery or crude oil topping plant that is located on or near the 13 premises of the producer's lease or property in the state and that processes the 14 producer's oil produced from that lease or property into a product that the producer 15 uses in the operation of the lease or property in drilling for or producing oil or gas, the 16 producer's lease expenditures include the amount calculated by subtracting from the 17 fair market value of the product used the prevailing value, as determined under 18 AS 43.55.020(f), of the oil that is processed; 19 (21) costs of lobbying, public relations, public relations advertising, or 20 policy advocacy. 21  * Sec. 44. AS 43.55.900(10) is amended to read: 22 (10) "gas processing plant" means a facility that 23 (A) extracts and recovers liquid hydrocarbons from a gaseous 24 mixture of hydrocarbons by gas processing; and 25 (B) is located upstream of the inlet of any pipeline  26 transporting gas to a gas treatment plant and upstream of the inlet of any gas 27 pipeline system transporting gas to a market; 28  * Sec. 45. AS 43.55.900(20) is amended to read: 29 (20) "point of production" means 30 (A) for oil, the automatic custody transfer meter or device 31 through which the oil enters into the facilities of a carrier pipeline or other 01 transportation carrier in a condition of pipeline quality; in the absence of an 02 automatic custody transfer meter or device, "point of production" means the 03 mechanism or device to measure the quantity of oil that has been approved by 04 the department for that purpose, through which the oil is tendered and accepted 05 in a condition of pipeline quality into the facilities of a carrier pipeline or other 06 transportation carrier or into a field topping plant; 07 (B) for gas [, OTHER THAN GAS DESCRIBED IN (C) OF 08 THIS PARAGRAPH,] that is 09 (i) not subjected to or recovered by mechanical 10 separation or run through a gas processing plant, the furthest  11 upstream of the first point where the gas is accurately metered, the 12 inlet of any pipeline transporting the gas to a gas treatment plant,  13 or the inlet of any gas pipeline system transporting gas to a market; 14 (ii) subjected to or recovered by mechanical separation 15 but not run through a gas processing plant, the furthest upstream of  16 the first point where the gas is accurately metered after completion of 17 mechanical separation, the inlet of any pipeline transporting the gas  18 to a gas treatment plant, or the inlet of any gas pipeline system  19 transporting gas to a market; 20 (iii) run through a gas processing plant, the furthest  21 upstream of the first point where the gas is accurately metered 22 downstream of the plant, the inlet of any pipeline transporting the  23 gas to a gas treatment plant, or the inlet of any gas pipeline system  24 transporting gas to a market; 25 [(C) FOR GAS RUN THROUGH AN INTEGRATED GAS 26 PROCESSING PLANT AND GAS TREATMENT FACILITY THAT DOES 27 NOT ACCURATELY METER THE GAS AFTER THE GAS PROCESSING 28 AND BEFORE THE GAS TREATMENT, THE FIRST POINT WHERE GAS 29 PROCESSING IS COMPLETED OR WHERE GAS TREATMENT BEGINS, 30 WHICHEVER IS FURTHER UPSTREAM;] 31  * Sec. 46. AS 43.55.900 is amended by adding a new paragraph to read: 01 (25) "gas treatment plant" means a facility that performs gas treatment, 02 regardless of whether the facility also performs gas processing. 03 * Sec. 47. AS 43.98.030(c) is amended to read: 04 (c) A taxpayer acquiring a transferable tax credit certificate may use the credit 05 or a portion of the credit to offset taxes imposed under AS 21.09.210, AS 21.66.110, 06 AS 43.20, AS 43.55.011 [AS 43.55], AS 43.56, AS 43.65, AS 43.75, and AS 43.77. 07 Except as provided in (e) of this section, any portion of the credit not used may be 08 used at a later period or transferred under (b) of this section. 09 * Sec. 48. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 12 Natural Resources may adopt regulations to implement this Act. The regulations take effect 13 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 14 provisions of this Act being implemented. 15  * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the catch 18 line of AS 38.05.183 from "Sale of royalty" to "Sale of royalty and of gas delivered to the 19 state under AS 43.55.014(b)." 20  * Sec. 50. Sections 1 - 10, 12, 13, 19, 20, 22, 23, 30, 31, 47, and 48 of this Act take effect 21 immediately under AS 01.10.070(c). 22 * Sec. 51. Except as provided in sec. 50 of this Act, this Act takes effect January 1, 2015.