00 2d CS FOR HOUSE BILL NO. 247(RLS) am 01 "An Act amending the powers of the board of trustees of the Alaska Retirement 02 Management Board to authorize purchase and sale of transferable tax credit certificates 03 issued in conjunction with the production tax on oil and gas; relating to interest 04 applicable to delinquent tax; relating to the oil and gas production tax, tax payments, 05 and credits; relating to exploration incentive credits; relating to refunds for the gas 06 storage facility tax credit, the liquefied natural gas storage facility tax credit, and the 07 qualified in-state oil refinery infrastructure expenditures tax credit; relating to the 08 confidential information status and public record status of information in the possession 09 of the Department of Revenue; relating to oil and gas lease expenditures and production 10 tax credits for municipal entities; requiring a bond or cash deposit with a business 11 license application for an oil or gas business; establishing a legislative working group to 12 study the fiscal regime and tax structure and rates for oil and gas produced south of 68 01 degrees North latitude; and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03  * Section 1. AS 37.10.220(b) is amended to read: 04 (b) The board may 05 (1) employ outside investment advisors to review investment policies; 06 (2) enter into an agreement with the fiduciary of another state fund in 07 order to assume the management and investment of those assets; 08 (3) contract for other services necessary to execute the board's powers 09 and duties; 10 (4) enter into confidentiality agreements that would exempt records 11 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 12 the value of investment by the board or that could impair the ability of the board to 13 acquire, maintain, or dispose of investments;  14 (5) purchase, in whole or in part, transferable tax credit  15 certificates issued under AS 43.55.023 and production tax credit certificates  16 issued under AS 43.55.025 for 60 percent of the face value of a transferable tax  17 credit certificate or production tax credit certificate, and sell transferable tax  18 credit certificates and production tax credit certificates to the Department of  19 Revenue under AS 43.55.023(r) and 43.55.025(q) for a cash refund of the full face  20 value of the certificate; under this paragraph, the board  21 (A) may  22 (i) on the written application of a person to whom a  23 transferable tax credit certificate has been issued under  24 AS 43.55.023(d) or former AS 43.55.023(m) or to whom a  25 production tax credit certificate has been issued under  26 AS 43.55.025(f), purchase a transferable tax credit certificate or a  27 production tax credit certificate; and  28 (ii) sell a transferable tax credit certificate or  29 production tax credit certificate only if the commissioner of  30 revenue determines that economic conditions are acceptable for the  01 state to purchase and pay for the credit; and  02 (B) shall apply the proceeds from a sale made under this  03 paragraph to defray the unfunded pension liabilities of the systems for  04 which the board has responsibility. 05  * Sec. 2. AS 38.05.036(a) is amended to read: 06 (a) The department may conduct audits regarding royalty and net profits under 07 oil and gas contracts, agreements, or leases under this chapter and regarding costs 08 related to exploration licenses entered into under AS 38.05.131 - 38.05.134 and 09 exploration incentive credits under this chapter [OR UNDER AS 41.09]. For purposes 10 of an audit under this section, 11 (1) the department may examine the books, papers, records, or 12 memoranda of a person regarding matters related to the audit; and 13 (2) the records and premises where a business is conducted shall be 14 open at all reasonable times for inspection by the department. 15  * Sec. 3. AS 38.05.036(b) is amended to read: 16 (b) The Department of Revenue may obtain from the department information 17 relating to royalty and net profits payments and to exploration incentive credits under 18 this chapter [OR UNDER AS 41.09], whether or not that information is confidential. 19 The Department of Revenue may use the information in carrying out its functions and 20 responsibilities under AS 43, and shall hold that information confidential to the extent 21 required by an agreement with the department or by AS 38.05.035(a)(8) [, 22 AS 41.09.010(d),] or AS 43.05.230. 23  * Sec. 4. AS 38.05.036(c) is amended to read: 24 (c) The department may obtain from the Department of Revenue all 25 information obtained under AS 43 relating to royalty and net profits and to exploration 26 incentive credits. The department may use the information for purposes of carrying out 27 its responsibilities and functions under this chapter [AND AS 41.09]. Information 28 made available to the department that was obtained under AS 43 is confidential and 29 subject to the provisions of AS 43.05.230. 30  * Sec. 5. AS 38.05.036(f) is amended to read: 31 (f) Except as otherwise provided in this section or in connection with official 01 investigations or proceedings of the department, it is unlawful for a current or former 02 officer, employee, or agent of the state to divulge information obtained by the 03 department as a result of an audit under this section that is required by an agreement 04 with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be kept 05 confidential. 06  * Sec. 6. AS 38.05.036(g) is amended to read: 07 (g) Nothing in this section prohibits the publication of statistics in a manner 08 that maintains the confidentiality of information to the extent required by an 09 agreement with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)]. 10  * Sec. 7. AS 40.25.100(a) is amended to read: 11 (a) Information in the possession of the Department of Revenue that discloses 12 the particulars of the business or affairs of a taxpayer or other person, including 13 information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement 14 under AS 38.05.020(b)(12), is not a matter of public record, except as provided in 15 AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or for purposes of investigation and 16 law enforcement. The information shall be kept confidential except when its 17 production is required in an official investigation, administrative adjudication under 18 AS 43.05.405 - 43.05.499, or court proceeding. These restrictions do not prohibit the 19 publication of statistics presented in a manner that prevents the identification of 20 particular reports and items, prohibit the publication of tax lists showing the names of 21 taxpayers who are delinquent and relevant information that may assist in the collection 22 of delinquent taxes, or prohibit the publication of records, proceedings, and decisions 23 under AS 43.05.405 - 43.05.499. 24  * Sec. 8. AS 43.05.225 is amended to read: 25 Sec. 43.05.225. Interest. Unless otherwise provided, 26 (1) a delinquent tax under this title, 27 (A) before January 1, 2014, bears interest in each calendar 28 quarter at the rate of five percentage points above the annual rate charged 29 member banks for advances by the 12th Federal Reserve District as of the first 30 day of that calendar quarter, or at the annual rate of 11 percent, whichever is 31 greater, compounded quarterly as of the last day of that quarter; [OR] 01 (B) on and after January 1, 2014, and before January 1, 2017,  02 bears interest in each calendar quarter at the rate of three percentage points 03 above the annual rate charged member banks for advances by the 12th Federal 04 Reserve District as of the first day of that calendar quarter; 05 (C) on and after January 1, 2017, bears interest  06 (i) for the first four years after a tax becomes  07 delinquent, in each calendar quarter at the rate of five percentage  08 points above the annual rate charged member banks for advances  09 by the 12th Federal Reserve District as of the first day of that  10 calendar quarter, compounded quarterly as of the last day of that  11 quarter; and  12 (ii) after the first four years after a tax becomes  13 delinquent, in each calendar quarter at a rate of five percentage  14 points above the annual rate charged member banks for advances  15 by the 12th Federal Reserve District as of the first day of that  16 calendar quarter; 17 (2) the interest rate is 12 percent a year for 18 (A) delinquent fees payable under AS 05.15.095(c); and 19 (B) unclaimed property that is not timely paid or delivered, as 20 allowed by AS 34.45.470(a). 21 * Sec. 9. AS 43.05.230 is amended by adding a new subsection to read: 22 (l) For tax credit certificates purchased by the department in the preceding 23 calendar year under AS 43.55.028, the department shall make the following 24 information public by April 30 of each year: 25 (1) the name of each person from whom the department purchased a 26 transferable tax credit certificate; and 27 (2) the aggregate amount of the tax credit certificates purchased from 28 the person in the preceding calendar year. 29  * Sec. 10. AS 43.20.046(e) is amended to read: 30 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 31 may use available money in the oil and gas tax credit fund established in AS 43.55.028 01 to make the refund applied for under (d) of this section in whole or in part if the 02 department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN 03 OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT 04 TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits, 05 the claimant's total tax liability under this chapter for the calendar year in which the 06 claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" 07 MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED 08 AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS 09 NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.] 10  * Sec. 11. AS 43.20.047(e) is amended to read: 11 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 12 may use money available in the oil and gas tax credit fund established in AS 43.55.028 13 to make a refund or payment under (d) of this section in whole or in part if the 14 department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN 15 OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT 16 TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits, 17 the claimant's total tax liability under this chapter for the calendar year in which the 18 claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" 19 MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED 20 AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS 21 NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.] 22  * Sec. 12. AS 43.20.053(e) is amended to read: 23 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 24 may use money available in the oil and gas tax credit fund established in AS 43.55.028 25 to make a refund or payment under (d) of this section in whole or in part if the 26 department finds that, 27 [(1) THE CLAIMANT DOES NOT HAVE AN OUTSTANDING 28 LIABILITY TO THE STATE FOR UNPAID DELINQUENT TAXES UNDER THIS 29 TITLE; AND 30 (2)] after application of all available tax credits, the claimant's total tax 31 liability under this chapter for the calendar year in which the claim is made is zero. 01  * Sec. 13. AS 43.55.011(e) is amended to read: 02 (e) There is levied on the producer of oil or gas a tax for all oil and gas 03 produced each calendar year from each lease or property in the state, less any oil and 04 gas the ownership or right to which is exempt from taxation or constitutes a 05 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as 06 otherwise provided under (f) [, (j), (k), (o),] and (p) of this section, for oil and gas 07 produced 08 (1) before January 1, 2014, the tax is equal to the sum of 09 (A) the annual production tax value of the taxable oil and gas 10 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 11 (B) the sum, over all months of the calendar year, of the tax 12 amounts determined under (g) of this section; 13 (2) on and after January 1, 2014, and before January 1, 2022, the tax is 14 equal to the annual production tax value of the taxable oil and gas as calculated under 15 AS 43.55.160(a)(1) multiplied by 35 percent; 16 (3) on and after January 1, 2022, the tax for 17 (A) oil is equal to the annual production tax value of the 18 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent; 19 (B) gas is equal to 13 percent of the gross value at the point of 20 production of the taxable gas; if the gross value at the point of production of 21 gas produced from a lease or property is less than zero, that gross value at the 22 point of production is considered zero for purposes of this subparagraph. 23  * Sec. 14. AS 43.55.011(f) is amended to read: 24 (f) The levy of tax under (e) of this section for 25 (1) oil and gas produced before January 1, 2017 [2022], from leases or 26 properties that include land north of 68 degrees North latitude, other than gas subject 27 to (o) of this section, may not be less than 28 (A) four percent of the gross value at the point of production 29 when the average price per barrel for Alaska North Slope crude oil for sale on 30 the United States West Coast during the calendar year for which the tax is due 31 is more than $25; 01 (B) three percent of the gross value at the point of production 02 when the average price per barrel for Alaska North Slope crude oil for sale on 03 the United States West Coast during the calendar year for which the tax is due 04 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 sale on 07 the United States West Coast during the calendar year for which the tax is due 08 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 sale on 11 the United States West Coast during the calendar year for which the tax is due 12 is over $15 but not over $17.50; or 13 (E) zero percent of the gross value at the point of production 14 when the average price per barrel for Alaska North Slope crude oil for sale on 15 the United States West Coast during the calendar year for which the tax is due 16 is $15 or less; [AND] 17 (2) oil and gas produced after December 31, 2016, and before  18 January 1, 2022, from leases or properties that include land north of 68 degrees  19 North latitude, other than gas subject to (o) of this section, may not be less than  20 (A) five percent of the gross value at the point of production  21 when the average price per barrel for Alaska North Slope crude oil for  22 sale on the United States West Coast during the calendar year for which  23 the tax is due is more than $70;  24 (B) four percent of the gross value at the point of  25 production when the average price per barrel for Alaska North Slope  26 crude oil for sale on the United States West Coast during the calendar  27 year for which the tax is due is over $25 but not over $70;  28 (C) three 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 over $20 but not over $25;  01 (D) two percent of the gross value at the point of production  02 when the average price per barrel for Alaska North Slope crude oil for  03 sale on the United States West Coast during the calendar year for which  04 the tax is due is over $17.50 but not over $20;  05 (E) one 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 $15 but not over $17.50; or  09 (F) zero percent of the gross value at the point of  10 production when the average price per barrel for Alaska North Slope  11 crude oil for sale on the United States West Coast during the calendar  12 year for which the tax is due is $15 or less; and  13 (3) oil produced on and after January 1, 2022, from leases or properties 14 that include land north of 68 degrees North latitude, may not be less than 15 (A) five percent of the gross value at the point of production  16 when the average price per barrel for Alaska North Slope crude oil for  17 sale on the United States West Coast during the calendar year for which  18 the tax is due is more than $70;  19 (B) four percent of the gross value at the point of production 20 when the average price per barrel for Alaska North Slope crude oil for sale on 21 the United States West Coast during the calendar year for which the tax is due 22 is over [MORE THAN] $25 but not over $70; 23 (C) [(B)] three percent of the gross value at the point of 24 production when the average price per barrel for Alaska North Slope crude oil 25 for sale on the United States West Coast during the calendar year for which the 26 tax is due is over $20 but not over $25; 27 (D) [(C)] two percent of the gross value at the point of 28 production when the average price per barrel for Alaska North Slope crude oil 29 for sale on the United States West Coast during the calendar year for which the 30 tax is due is over $17.50 but not over $20; 31 (E) [(D)] one percent of the gross value at the point of 01 production when the average price per barrel for Alaska North Slope crude oil 02 for sale on the United States West Coast during the calendar year for which the 03 tax is due is over $15 but not over $17.50; or 04 (F) [(E)] zero percent of the gross value at the point of 05 production when the average price per barrel for Alaska North Slope crude oil 06 for sale on the United States West Coast during the calendar year for which the 07 tax is due is $15 or less. 08  * Sec. 15. AS 43.55.011(f), as amended by sec. 14 of this Act, is amended to read: 09 (f) The levy of tax under (e) of this section for 10 (1) oil and gas produced before January 1, 2017, from leases or 11 properties that include land north of 68 degrees North latitude [, OTHER THAN GAS 12 SUBJECT TO (o) OF THIS SECTION,] may not be less than 13 (A) four percent of the gross value at the point of production 14 when the average price per barrel for Alaska North Slope crude oil for sale on 15 the United States West Coast during the calendar year for which the tax is due 16 is more than $25; 17 (B) three percent of the gross value at the point of production 18 when the average price per barrel for Alaska North Slope crude oil for sale on 19 the United States West Coast during the calendar year for which the tax is due 20 is over $20 but not over $25; 21 (C) two percent of the gross value at the point of production 22 when the average price per barrel for Alaska North Slope crude oil for sale on 23 the United States West Coast during the calendar year for which the tax is due 24 is over $17.50 but not over $20; 25 (D) one percent of the gross value at the point of production 26 when the average price per barrel for Alaska North Slope crude oil for sale on 27 the United States West Coast during the calendar year for which the tax is due 28 is over $15 but not over $17.50; or 29 (E) zero percent of the gross value at the point of production 30 when the average price per barrel for Alaska North Slope crude oil for sale on 31 the United States West Coast during the calendar year for which the tax is due 01 is $15 or less; 02 (2) oil and gas produced after December 31, 2016, and before 03 January 1, 2022, from leases or properties that include land north of 68 degrees North 04 latitude, other than gas subject to (o) of this section, may not be less than 05 (A) five percent of the gross value at the point of production 06 when the average price per barrel for Alaska North Slope crude oil for sale on 07 the United States West Coast during the calendar year for which the tax is due 08 is more than $70; 09 (B) four percent of the gross value at the point of production 10 when the average price per barrel for Alaska North Slope crude oil for sale on 11 the United States West Coast during the calendar year for which the tax is due 12 is over $25 but not over $70; 13 (C) three percent of the gross value at the point of production 14 when the average price per barrel for Alaska North Slope crude oil for sale on 15 the United States West Coast during the calendar year for which the tax is due 16 is over $20 but not over $25; 17 (D) two percent of the gross value at the point of production 18 when the average price per barrel for Alaska North Slope crude oil for sale on 19 the United States West Coast during the calendar year for which the tax is due 20 is over $17.50 but not over $20; 21 (E) one percent of the gross value at the point of production 22 when the average price per barrel for Alaska North Slope crude oil for sale on 23 the United States West Coast during the calendar year for which the tax is due 24 is over $15 but not over $17.50; or 25 (F) zero percent of the gross value at the point of production 26 when the average price per barrel for Alaska North Slope crude oil for sale on 27 the United States West Coast during the calendar year for which the tax is due 28 is $15 or less; and 29 (3) oil produced on and after January 1, 2022, from leases or properties 30 that include land north of 68 degrees North latitude, may not be less than 31 (A) five percent of the gross value at the point of production 01 when the average price per barrel for Alaska North Slope crude oil for sale on 02 the United States West Coast during the calendar year for which the tax is due 03 is more than $70; 04 (B) four percent of the gross value at the point of production 05 when the average price per barrel for Alaska North Slope crude oil for sale on 06 the United States West Coast during the calendar year for which the tax is due 07 is over $25 but not over $70; 08 (C) three percent of the gross value at the point of production 09 when the average price per barrel for Alaska North Slope crude oil for sale on 10 the United States West Coast during the calendar year for which the tax is due 11 is over $20 but not over $25; 12 (D) two percent of the gross value at the point of production 13 when the average price per barrel for Alaska North Slope crude oil for sale on 14 the United States West Coast during the calendar year for which the tax is due 15 is over $17.50 but not over $20; 16 (E) one percent of the gross value at the point of production 17 when the average price per barrel for Alaska North Slope crude oil for sale on 18 the United States West Coast during the calendar year for which the tax is due 19 is over $15 but not over $17.50; or 20 (F) zero percent of the gross value at the point of production 21 when the average price per barrel for Alaska North Slope crude oil for sale on 22 the United States West Coast during the calendar year for which the tax is due 23 is $15 or less. 24  * Sec. 16. AS 43.55.011(m) is amended to read: 25 (m) Notwithstanding any contrary provision of [AS 38.05.180(i), 26 AS 41.09.010,] AS 43.55.024 [,] or 43.55.025, the department shall provide by 27 regulation a method to ensure that, for a calendar year for which a producer's tax 28 liability is limited by (j), (k), or (o) of this section, tax credits based on a lease 29 expenditure incurred before January 1, 2011, that are otherwise available under 30 [AS 38.05.180(i), AS 41.09.010,] AS 43.55.024 [,] or 43.55.025 and allocated to gas 31 subject to the limitations in (j), (k), and (o) of this section are accounted for as though 01 the credits had been applied first against a tax liability calculated without regard to the 02 limitations under (j), (k), and (o) of this section so as to reduce the tax liability to the 03 maximum amount provided for under (j) or (o) of this section for the production of gas 04 or (k) of this section for the production of oil. The regulation must provide for a 05 reasonable method to allocate tax credits to gas subject to (j) and (o) of this section. 06 Only the amount of a tax credit remaining after the accounting provided for under this 07 subsection may be used for a later calendar year, transferred to another person, or 08 applied against a tax levied on the production of oil or gas not subject to (j), (k), or (o) 09 of this section to the extent otherwise allowed. 10  * Sec. 17. AS 43.55.020(a) is amended to read: 11 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 12 the tax as follows: 13 (1) for oil and gas produced before January 1, 2014, an installment 14 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 15 as allowed by law, is due for each month of the calendar year on the last day of the 16 following month; except as otherwise provided under (2) of this subsection, the 17 amount of the installment payment is the sum of the following amounts, less 1/12 of 18 the tax credits that are allowed by law to be applied against the tax levied by 19 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 20 not be less than zero: 21 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 22 produced from leases or properties in the state outside the Cook Inlet 23 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 24 the greater of 25 (i) zero; or 26 (ii) the sum of 25 percent and the tax rate calculated for 27 the month under AS 43.55.011(g) multiplied by the remainder obtained 28 by subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the oil and gas under AS 43.55.160 from the gross value 31 at the point of production of the oil and gas produced from the leases or 01 properties during the month for which the installment payment is 02 calculated; 03 (B) for oil and gas produced from leases or properties subject 04 to AS 43.55.011(f), the greatest of 05 (i) zero; 06 (ii) zero percent, one percent, two percent, three 07 percent, or four percent, as applicable, of the gross value at the point of 08 production of the oil and gas produced from the leases or properties 09 during the month for which the installment payment is calculated; or 10 (iii) the sum of 25 percent and the tax rate calculated for 11 the month under AS 43.55.011(g) multiplied by the remainder obtained 12 by 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 for the oil and gas under AS 43.55.160 from the gross value 15 at the point of production of the oil and gas produced from those leases 16 or properties during the month for which the installment payment is 17 calculated; 18 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 19 each lease or property, the greater of 20 (i) zero; or 21 (ii) the sum of 25 percent and the tax rate calculated for 22 the month under AS 43.55.011(g) multiplied by the remainder obtained 23 by subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible under AS 43.55.160 for the oil or gas, respectively, 26 produced from the lease or property from the gross value at the point of 27 production of the oil or gas, respectively, produced from the lease or 28 property during the month for which the installment payment is 29 calculated; 30 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 31 (i) the sum of 25 percent and the tax rate calculated for 01 the month under AS 43.55.011(g) multiplied by the remainder obtained 02 by subtracting 1/12 of the producer's adjusted lease expenditures for the 03 calendar year of production under AS 43.55.165 and 43.55.170 that are 04 deductible for the oil and gas under AS 43.55.160 from the gross value 05 at the point of production of the oil and gas produced from the leases or 06 properties during the month for which the installment payment is 07 calculated, but not less than zero; or 08 (ii) four percent of the gross value at the point of 09 production of the oil and gas produced from the leases or properties 10 during the month, but not less than zero; 11 (2) an amount calculated under (1)(C) of this subsection for oil or gas 12 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 13 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 14 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 15 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 16 amount of taxable gas produced during the month for the amount of taxable gas 17 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 18 (2)(A), as applicable, the amount of taxable oil produced during the month for the 19 amount of taxable oil produced during the calendar year; 20 (3) an installment payment of the estimated tax levied by 21 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 22 on the last day of the following month; the amount of the installment payment is the 23 sum of 24 (A) the applicable tax rate for oil provided under 25 AS 43.55.011(i), multiplied by the gross value at the point of production of the 26 oil taxable under AS 43.55.011(i) and produced from the lease or property 27 during the month; and 28 (B) the applicable tax rate for gas provided under 29 AS 43.55.011(i), multiplied by the gross value at the point of production of the 30 gas taxable under AS 43.55.011(i) and produced from the lease or property 31 during the month; 01 (4) any amount of tax levied by AS 43.55.011, net of any credits 02 applied as allowed by law, that exceeds the total of the amounts due as installment 03 payments of estimated tax is due on March 31 of the year following the calendar year 04 of production; 05 (5) for oil and gas produced on and after January 1, 2014, and before 06 January 1, 2022, an installment payment of the estimated tax levied by 07 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 08 month of the calendar year on the last day of the following month; except as otherwise 09 provided under (6) and (10) of this subsection, the amount of the installment payment 10 is the sum of the following amounts, less 1/12 of the tax credits that are allowed by 11 law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but 12 the amount of the installment payment may not be less than zero: 13 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 14 produced from leases or properties in the state outside the Cook Inlet 15 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 16 the greater of 17 (i) zero; or 18 (ii) 35 percent multiplied by the remainder obtained by 19 subtracting 1/12 of the producer's adjusted lease expenditures for the 20 calendar year of production under AS 43.55.165 and 43.55.170 that are 21 deductible for the oil and gas under AS 43.55.160 from the gross value 22 at the point of production of the oil and gas produced from the leases or 23 properties during the month for which the installment payment is 24 calculated; 25 (B) for oil and gas produced from leases or properties subject 26 to AS 43.55.011(f), the greatest of 27 (i) zero; 28 (ii) zero percent, one percent, two percent, three 29 percent, or four percent, as applicable, of the gross value at the point of 30 production of the oil and gas produced from the leases or properties 31 during the month for which the installment payment is calculated; or 01 (iii) 35 percent multiplied by the remainder obtained by 02 subtracting 1/12 of the producer's adjusted lease expenditures for the 03 calendar year of production under AS 43.55.165 and 43.55.170 that are 04 deductible for the oil and gas under AS 43.55.160 from the gross value 05 at the point of production of the oil and gas produced from those leases 06 or properties during the month for which the installment payment is 07 calculated, except that, for the purposes of this calculation, a reduction 08 from the gross value at the point of production may apply for oil and 09 gas subject to AS 43.55.160(f) or (g); 10 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 11 each lease or property, the greater of 12 (i) zero; or 13 (ii) 35 percent multiplied by the remainder obtained by 14 subtracting 1/12 of the producer's adjusted lease expenditures for the 15 calendar year of production under AS 43.55.165 and 43.55.170 that are 16 deductible under AS 43.55.160 for the oil or gas, respectively, 17 produced from the lease or property from the gross value at the point of 18 production of the oil or gas, respectively, produced from the lease or 19 property during the month for which the installment payment is 20 calculated; 21 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 22 (i) 35 percent multiplied by the remainder obtained by 23 subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible for the oil and gas under AS 43.55.160 from the gross value 26 at the point of production of the oil and gas produced from the leases or 27 properties during the month for which the installment payment is 28 calculated, but not less than zero; or 29 (ii) four percent of the gross value at the point of 30 production of the oil and gas produced from the leases or properties 31 during the month, but not less than zero; 01 (6) an amount calculated under (5)(C) of this subsection for oil or gas 02 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 03 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 04 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 05 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 06 amount of taxable gas produced during the month for the amount of taxable gas 07 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 08 (2)(A), as applicable, the amount of taxable oil produced during the month for the 09 amount of taxable oil produced during the calendar year; 10 (7) for oil and gas produced on or after January 1, 2022, an installment 11 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 12 as allowed by law, is due for each month of the calendar year on the last day of the 13 following month; except as provided in (10) of this subsection, the amount of the 14 installment payment is the sum of the following amounts, less 1/12 of the tax credits 15 that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the 16 calendar year, but the amount of the installment payment may not be less than zero: 17 (A) for oil produced from leases or properties that include land 18 north of 68 degrees North latitude, the greatest of 19 (i) zero; 20 (ii) zero percent, one percent, two percent, three 21 percent, or four percent, as applicable, of the gross value at the point of 22 production of the oil produced from the leases or properties during the 23 month for which the installment payment is calculated; or 24 (iii) 35 percent multiplied by the remainder obtained by 25 subtracting 1/12 of the producer's adjusted lease expenditures for the 26 calendar year of production under AS 43.55.165 and 43.55.170 that are 27 deductible for the oil under AS 43.55.160(h)(1) from the gross value at 28 the point of production of the oil produced from those leases or 29 properties during the month for which the installment payment is 30 calculated, except that, for the purposes of this calculation, a reduction 31 from the gross value at the point of production may apply for oil 01 subject to AS 43.55.160(f) or 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 under 04 AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 05 sedimentary basin, no part of which is north of 68 degrees North latitude, other 06 than leases or properties subject to AS 43.55.011(p), the greater of 07 (i) zero; or 08 (ii) 35 percent multiplied by the remainder obtained by 09 subtracting 1/12 of the producer's adjusted lease expenditures for the 10 calendar year of production under AS 43.55.165 and 43.55.170 that are 11 deductible for the oil under AS 43.55.160(h)(2) from the gross value at 12 the point of production of the oil produced from the leases or properties 13 during the month for which the installment payment is calculated; 14 (C) for oil and gas produced from leases or properties subject 15 to AS 43.55.011(p), except as otherwise provided under (8) of this subsection, 16 the sum of 17 (i) 35 percent multiplied by the remainder obtained by 18 subtracting 1/12 of the producer's adjusted lease expenditures for the 19 calendar year of production under AS 43.55.165 and 43.55.170 that are 20 deductible for the oil under AS 43.55.160(h)(3) from the gross value at 21 the point of production of the oil produced from the leases or properties 22 during the month for which the installment payment is calculated, but 23 not less than zero; and 24 (ii) 13 percent of the gross value at the point of 25 production of the gas produced from the leases or properties during the 26 month, but not less than zero; 27 (D) for oil produced from leases or properties in the state, no 28 part of which is north of 68 degrees North latitude, other than leases or 29 properties subject to (B) or (C) of this paragraph, the greater of 30 (i) zero; or 31 (ii) 35 percent multiplied by the remainder obtained by 01 subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible for the oil under AS 43.55.160(h)(4) from the gross value at 04 the point of production of the oil produced from the leases or properties 05 during the month for which the installment payment is calculated; 06 (E) for gas produced from each lease or property in the state, 07 other than a lease or property subject to AS 43.55.011(p), 13 percent of the 08 gross value at the point of production of the gas produced from the lease or 09 property during the month for which the installment payment is calculated, but 10 not less than zero; 11 (8) an amount calculated under (7)(C) of this subsection may not 12 exceed four percent of the gross value at the point of production of the oil and gas 13 produced from leases or properties subject to AS 43.55.011(p) during the month for 14 which the installment payment is calculated; 15 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 16 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point 17 of production is determined under AS 43.55.011(f)(1) - (3) [AS 43.55.011(f)(1) OR 18 (2)] but substituting the phrase "month for which the installment payment is 19 calculated" in AS 43.55.011(f)(1) - (3) [AS 43.55.011(f)(1) AND (2)] for the phrase 20 "calendar year for which the tax is due";  21 (10) after December 31, 2016, for the purposes of a calculation  22 under (5) or (7) of this subsection, a credit under AS 43.55.024(j) may not be  23 applied to reduce an installment payment to less than the applicable percentage  24 under AS 43.55.011(f). ["] 25  * Sec. 18. AS 43.55.020(a), as amended by sec. 17 of this Act, is amended to read: 26 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 27 the tax as follows: 28 (1) [FOR OIL AND GAS PRODUCED BEFORE JANUARY 1, 2014, 29 AN INSTALLMENT PAYMENT OF THE ESTIMATED TAX LEVIED BY 30 AS 43.55.011(e), NET OF ANY TAX CREDITS APPLIED AS ALLOWED BY 31 LAW, IS DUE FOR EACH MONTH OF THE CALENDAR YEAR ON THE LAST 01 DAY OF THE FOLLOWING MONTH; EXCEPT AS OTHERWISE PROVIDED 02 UNDER (2) OF THIS SUBSECTION, THE AMOUNT OF THE INSTALLMENT 03 PAYMENT IS THE SUM OF THE FOLLOWING AMOUNTS, LESS 1/12 OF THE 04 TAX CREDITS THAT ARE ALLOWED BY LAW TO BE APPLIED AGAINST 05 THE TAX LEVIED BY AS 43.55.011(e) FOR THE CALENDAR YEAR, BUT THE 06 AMOUNT OF THE INSTALLMENT PAYMENT MAY NOT BE LESS THAN 07 ZERO: 08 (A) FOR OIL AND GAS NOT SUBJECT TO AS 43.55.011(o) 09 OR (p) PRODUCED FROM LEASES OR PROPERTIES IN THE STATE 10 OUTSIDE THE COOK INLET SEDIMENTARY BASIN, OTHER THAN 11 LEASES OR PROPERTIES SUBJECT TO AS 43.55.011(f), THE GREATER 12 OF 13 (i) ZERO; OR 14 (ii) THE SUM OF 25 PERCENT AND THE TAX 15 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 16 MULTIPLIED BY THE REMAINDER OBTAINED BY 17 SUBTRACTING 1/12 OF THE PRODUCER'S ADJUSTED LEASE 18 EXPENDITURES FOR THE CALENDAR YEAR OF PRODUCTION 19 UNDER AS 43.55.165 AND 43.55.170 THAT ARE DEDUCTIBLE 20 FOR THE OIL AND GAS UNDER AS 43.55.160 FROM THE 21 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 22 AND GAS PRODUCED FROM THE LEASES OR PROPERTIES 23 DURING THE MONTH FOR WHICH THE INSTALLMENT 24 PAYMENT IS CALCULATED; 25 (B) FOR OIL AND GAS PRODUCED FROM LEASES OR 26 PROPERTIES SUBJECT TO AS 43.55.011(f), THE GREATEST OF 27 (i) ZERO; 28 (ii) ZERO PERCENT, ONE PERCENT, TWO 29 PERCENT, THREE PERCENT, OR FOUR PERCENT, AS 30 APPLICABLE, OF THE GROSS VALUE AT THE POINT OF 31 PRODUCTION OF THE OIL AND GAS PRODUCED FROM THE 01 LEASES OR PROPERTIES DURING THE MONTH FOR WHICH 02 THE INSTALLMENT PAYMENT IS CALCULATED; OR 03 (iii) THE SUM OF 25 PERCENT AND THE TAX 04 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 05 MULTIPLIED BY THE REMAINDER OBTAINED BY 06 SUBTRACTING 1/12 OF THE PRODUCER'S ADJUSTED LEASE 07 EXPENDITURES FOR THE CALENDAR YEAR OF PRODUCTION 08 UNDER AS 43.55.165 AND 43.55.170 THAT ARE DEDUCTIBLE 09 FOR THE OIL AND GAS UNDER AS 43.55.160 FROM THE 10 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 11 AND GAS PRODUCED FROM THOSE LEASES OR PROPERTIES 12 DURING THE MONTH FOR WHICH THE INSTALLMENT 13 PAYMENT IS CALCULATED; 14 (C) FOR OIL OR GAS SUBJECT TO AS 43.55.011(j), (k), 15 OR (o), FOR EACH LEASE OR PROPERTY, THE GREATER OF 16 (i) ZERO; OR 17 (ii) THE SUM OF 25 PERCENT AND THE TAX 18 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 19 MULTIPLIED BY THE REMAINDER OBTAINED BY 20 SUBTRACTING 1/12 OF THE PRODUCER'S ADJUSTED LEASE 21 EXPENDITURES FOR THE CALENDAR YEAR OF PRODUCTION 22 UNDER AS 43.55.165 AND 43.55.170 THAT ARE DEDUCTIBLE 23 UNDER AS 43.55.160 FOR THE OIL OR GAS, RESPECTIVELY, 24 PRODUCED FROM THE LEASE OR PROPERTY FROM THE 25 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 26 OR GAS, RESPECTIVELY, PRODUCED FROM THE LEASE OR 27 PROPERTY DURING THE MONTH FOR WHICH THE 28 INSTALLMENT PAYMENT IS CALCULATED; 29 (D) FOR OIL AND GAS SUBJECT TO AS 43.55.011(p), 30 THE LESSER OF 31 (i) THE SUM OF 25 PERCENT AND THE TAX 01 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 02 MULTIPLIED BY THE REMAINDER OBTAINED BY 03 SUBTRACTING 1/12 OF THE PRODUCER'S ADJUSTED LEASE 04 EXPENDITURES FOR THE CALENDAR YEAR OF PRODUCTION 05 UNDER AS 43.55.165 AND 43.55.170 THAT ARE DEDUCTIBLE 06 FOR THE OIL AND GAS UNDER AS 43.55.160 FROM THE 07 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 08 AND GAS PRODUCED FROM THE LEASES OR PROPERTIES 09 DURING THE MONTH FOR WHICH THE INSTALLMENT 10 PAYMENT IS CALCULATED, BUT NOT LESS THAN ZERO; OR 11 (ii) FOUR PERCENT OF THE GROSS VALUE AT 12 THE POINT OF PRODUCTION OF THE OIL AND GAS 13 PRODUCED FROM THE LEASES OR PROPERTIES DURING THE 14 MONTH, BUT NOT LESS THAN ZERO; 15 (2) AN AMOUNT CALCULATED UNDER (1)(C) OF THIS 16 SUBSECTION FOR OIL OR GAS SUBJECT TO AS 43.55.011(j), (k), OR (o) MAY 17 NOT EXCEED THE PRODUCT OBTAINED BY CARRYING OUT THE 18 CALCULATION SET OUT IN AS 43.55.011(j)(1) OR (2) OR 43.55.011(o), AS 19 APPLICABLE, FOR GAS OR SET OUT IN AS 43.55.011(k)(1) OR (2), AS 20 APPLICABLE, FOR OIL, BUT SUBSTITUTING IN AS 43.55.011(j)(1)(A) OR 21 (2)(A) OR 43.55.011(o), AS APPLICABLE, THE AMOUNT OF TAXABLE GAS 22 PRODUCED DURING THE MONTH FOR THE AMOUNT OF TAXABLE GAS 23 PRODUCED DURING THE CALENDAR YEAR AND SUBSTITUTING IN 24 AS 43.55.011(k)(1)(A) OR (2)(A), AS APPLICABLE, THE AMOUNT OF 25 TAXABLE OIL PRODUCED DURING THE MONTH FOR THE AMOUNT OF 26 TAXABLE OIL PRODUCED DURING THE CALENDAR YEAR; 27 (3)] an installment payment of the estimated tax levied by 28 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 29 on the last day of the following month; the amount of the installment payment is the 30 sum of 31 (A) the applicable tax rate for oil provided under 01 AS 43.55.011(i), multiplied by the gross value at the point of production of the 02 oil taxable under AS 43.55.011(i) and produced from the lease or property 03 during the month; and 04 (B) the applicable tax rate for gas provided under 05 AS 43.55.011(i), multiplied by the gross value at the point of production of the 06 gas taxable under AS 43.55.011(i) and produced from the lease or property 07 during the month; 08 (2) [(4)] any amount of tax levied by AS 43.55.011, net of any credits 09 applied as allowed by law, that exceeds the total of the amounts due as installment 10 payments of estimated tax is due on March 31 of the year following the calendar year 11 of production; 12 (3) [(5)] for oil and gas produced on and after January 1, 2014, and 13 before January 1, 2022, an installment payment of the estimated tax levied by 14 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 15 month of the calendar year on the last day of the following month; except as otherwise 16 provided under (7) [(6) AND (10)] of this subsection, the amount of the installment 17 payment is the sum of the following amounts, less 1/12 of the tax credits that are 18 allowed by law to be applied against the tax levied by AS 43.55.011(e) for the 19 calendar year, but the amount of the installment payment may not be less than zero: 20 (A) for oil and gas not subject to AS 43.55.011(p) 21 [AS 43.55.011(o) OR (p)] produced from leases or properties in the state 22 outside the Cook Inlet sedimentary basin, other than leases or properties 23 subject to AS 43.55.011(f), the greater of 24 (i) zero; or 25 (ii) 35 percent multiplied by the remainder obtained by 26 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) 35 percent multiplied by the remainder obtained by 09 subtracting 1/12 of the producer's adjusted lease expenditures for the 10 calendar year of production under AS 43.55.165 and 43.55.170 that are 11 deductible for the oil and gas under AS 43.55.160 from the gross value 12 at the point of production of the oil and gas produced from those leases 13 or properties during the month for which the installment payment is 14 calculated, except that, for the purposes of this calculation, a reduction 15 from the gross value at the point of production may apply for oil and 16 gas subject to AS 43.55.160(f) or (g); 17 (C) [FOR OIL OR GAS SUBJECT TO AS 43.55.011(j), (k), 18 OR (o), FOR EACH LEASE OR PROPERTY, THE GREATER OF 19 (i) ZERO; OR 20 (ii) 35 PERCENT MULTIPLIED BY THE 21 REMAINDER OBTAINED BY SUBTRACTING 1/12 OF THE 22 PRODUCER'S ADJUSTED LEASE EXPENDITURES FOR THE 23 CALENDAR YEAR OF PRODUCTION UNDER AS 43.55.165 AND 24 43.55.170 THAT ARE DEDUCTIBLE UNDER AS 43.55.160 FOR 25 THE OIL OR GAS, RESPECTIVELY, PRODUCED FROM THE 26 LEASE OR PROPERTY FROM THE GROSS VALUE AT THE 27 POINT OF PRODUCTION OF THE OIL OR GAS, RESPECTIVELY, 28 PRODUCED FROM THE LEASE OR PROPERTY DURING THE 29 MONTH FOR WHICH THE INSTALLMENT PAYMENT IS 30 CALCULATED; 31 (D)] for oil and gas subject to AS 43.55.011(p), the lesser of 01 (i) 35 percent multiplied by the remainder obtained by 02 subtracting 1/12 of the producer's adjusted lease expenditures for the 03 calendar year of production under AS 43.55.165 and 43.55.170 that are 04 deductible for the oil and gas under AS 43.55.160 from the gross value 05 at the point of production of the oil and gas produced from the leases or 06 properties during the month for which the installment payment is 07 calculated, but not less than zero; or 08 (ii) four percent of the gross value at the point of 09 production of the oil and gas produced from the leases or properties 10 during the month, but not less than zero; 11 (4) [(6) AN AMOUNT CALCULATED UNDER (5)(C) OF THIS 12 SUBSECTION FOR OIL OR GAS SUBJECT TO AS 43.55.011(j), (k), OR (o) MAY 13 NOT EXCEED THE PRODUCT OBTAINED BY CARRYING OUT THE 14 CALCULATION SET OUT IN AS 43.55.011(j)(1) OR (2) OR 43.55.011(o), AS 15 APPLICABLE, FOR GAS OR SET OUT IN AS 43.55.011(k)(1) OR (2), AS 16 APPLICABLE, FOR OIL, BUT SUBSTITUTING IN AS 43.55.011(j)(1)(A) OR 17 (2)(A) OR 43.55.011(o), AS APPLICABLE, THE AMOUNT OF TAXABLE GAS 18 PRODUCED DURING THE MONTH FOR THE AMOUNT OF TAXABLE GAS 19 PRODUCED DURING THE CALENDAR YEAR AND SUBSTITUTING IN 20 AS 43.55.011(k)(1)(A) OR (2)(A), AS APPLICABLE, THE AMOUNT OF 21 TAXABLE OIL PRODUCED DURING THE MONTH FOR THE AMOUNT OF 22 TAXABLE OIL PRODUCED DURING THE CALENDAR YEAR; 23 (7)] for oil and gas produced on or after January 1, 2022, an 24 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax 25 credits applied as allowed by law, is due for each month of the calendar year on the 26 last day of the following month; except as provided in (7) [(10)] of this subsection, the 27 amount of the installment payment is the sum of the following amounts, less 1/12 of 28 the tax credits that are allowed by law to be applied against the tax levied by 29 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 30 not be less than zero: 31 (A) for oil produced from leases or properties that include land 01 north of 68 degrees North latitude, the greatest of 02 (i) zero; 03 (ii) zero percent, one percent, two percent, three 04 percent, or four percent, as applicable, of the gross value at the point of 05 production of the oil produced from the leases or properties during the 06 month for which the installment payment is calculated; or 07 (iii) 35 percent multiplied by the remainder obtained by 08 subtracting 1/12 of the producer's adjusted lease expenditures for the 09 calendar year of production under AS 43.55.165 and 43.55.170 that are 10 deductible for the oil under AS 43.55.160(h)(1) from the gross value at 11 the point of production of the oil produced from those leases or 12 properties during the month for which the installment payment is 13 calculated, except that, for the purposes of this calculation, a reduction 14 from the gross value at the point of production may apply for oil 15 subject to AS 43.55.160(f) or 43.55.160(f) and (g); 16 (B) for oil produced before or during the last calendar year 17 under AS 43.55.024(b) for which the producer could take a tax credit under 18 AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 19 sedimentary basin, no part of which is north of 68 degrees North latitude, other 20 than leases or properties subject to AS 43.55.011(p), the greater of 21 (i) zero; or 22 (ii) 35 percent multiplied by the remainder obtained by 23 subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible for the oil under AS 43.55.160(h)(2) from the gross value at 26 the point of production of the oil produced from the leases or properties 27 during the month for which the installment payment is calculated; 28 (C) for oil and gas produced from leases or properties subject 29 to AS 43.55.011(p), except as otherwise provided under (5) [(8)] of this 30 subsection, the sum of 31 (i) 35 percent multiplied by the remainder obtained by 01 subtracting 1/12 of the producer's adjusted lease expenditures for the 02 calendar year of production under AS 43.55.165 and 43.55.170 that are 03 deductible for the oil under AS 43.55.160(h)(3) from the gross value at 04 the point of production of the oil produced from the leases or properties 05 during the month for which the installment payment is calculated, but 06 not less than zero; and 07 (ii) 13 percent of the gross value at the point of 08 production of the gas produced from the leases or properties during the 09 month, but not less than zero; 10 (D) for oil produced from leases or properties in the state, no 11 part of which is north of 68 degrees North latitude, other than leases or 12 properties subject to (B) or (C) of this paragraph, the greater of 13 (i) zero; or 14 (ii) 35 percent multiplied by the remainder obtained by 15 subtracting 1/12 of the producer's adjusted lease expenditures for the 16 calendar year of production under AS 43.55.165 and 43.55.170 that are 17 deductible for the oil under AS 43.55.160(h)(4) from the gross value at 18 the point of production of the oil produced from the leases or properties 19 during the month for which the installment payment is calculated; 20 (E) for gas produced from each lease or property in the state, 21 other than a lease or property subject to AS 43.55.011(p), 13 percent of the 22 gross value at the point of production of the gas produced from the lease or 23 property during the month for which the installment payment is calculated, but 24 not less than zero; 25 (5) [(8)] an amount calculated under (4)(C) [(7)(C)] of this subsection 26 may not exceed four percent of the gross value at the point of production of the oil and 27 gas produced from leases or properties subject to AS 43.55.011(p) during the month 28 for which the installment payment is calculated; 29 (6) [(9)] for purposes of the calculation under (3)(B)(ii) [(1)(B)(ii), 30 (5)(B)(ii),] and (4)(A)(ii) [(7)(A)(ii)] of this subsection, the applicable percentage of 31 the gross value at the point of production is determined under AS 43.55.011(f)(1) - (3) 01 but substituting the phrase "month for which the installment payment is calculated" in 02 AS 43.55.011(f)(1) - (3) for the phrase "calendar year for which the tax is due"; 03 (7) [(10)] after December 31, 2016, for the purposes of a calculation 04 under (3) or (4) [(5) OR (7)] of this subsection, a credit under AS 43.55.024(j) may 05 not be applied to reduce an installment payment to less than the applicable percentage 06 under AS 43.55.011(f). 07  * Sec. 19. AS 43.55.020(g) is amended to read: 08 (g) Notwithstanding any contrary provision of AS 43.05.225, 09 (1) before January 1, 2014, an unpaid amount of an installment 10 payment required under (a)(1) [(a)(1) - (3)] of this section that is not paid when due 11 bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 12 (Internal Revenue Code), as amended, compounded daily, from the date the 13 installment payment is due until March 31 following the calendar year of production, 14 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 15 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 16 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 17 amount of tax due under (a)(2) [(a)(4)] of this section that is not paid when due bears 18 interest as provided for a delinquent tax under AS 43.05.225; 19 (2) on and after January 1, 2014, an unpaid amount of an installment 20 payment required under (a)(1), (3), or (4) [(a)(3), (5), (6), OR (7)] of this section that 21 is not paid when due bears interest (A) at the rate provided for an underpayment under 22 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the 23 date the installment payment is due until March 31 following the calendar year of 24 production, and (B) as provided for a delinquent tax under AS 43.05.225 after that 25 March 31; interest accrued under (A) of this paragraph that remains unpaid after that 26 March 31 is treated as an addition to tax that bears interest under (B) of this paragraph; 27 an unpaid amount of tax due under (a)(2) [(a)(4)] of this section that is not paid when 28 due bears interest as provided for a delinquent tax under AS 43.05.225. 29  * Sec. 20. AS 43.55.020(h) is amended to read: 30 (h) Notwithstanding any contrary provision of AS 43.05.280, 31 (1) an overpayment of an installment payment required under (a)(1),  01 (3), or (4) [(a)(1), (2), (3), (5), (6), OR (7)] of this section bears interest at the rate 02 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 03 amended, compounded daily, from the later of the date the installment payment is due 04 or the date the overpayment is made, until the earlier of 05 (A) the date it is refunded or is applied to an underpayment; or 06 (B) March 31 following the calendar year of production; 07 (2) except as provided under (1) of this subsection, interest with 08 respect to an overpayment is allowed only on any net overpayment of the payments 09 required under (a) of this section that remains after the later of March 31 following the 10 calendar year of production or the date that the statement required under 11 AS 43.55.030(a) is filed; 12 (3) interest is allowed under (2) of this subsection only from a date that 13 is 90 days after the later of March 31 following the calendar year of production or the 14 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 15 if the overpayment was refunded within the 90-day period; 16 (4) interest under (2) and (3) of this subsection is paid at the rate and in 17 the manner provided in AS 43.05.225(1). 18  * Sec. 21. AS 43.55.020(i) is amended to read: 19 (i) Notwithstanding any contrary provision of AS 43.05.225 or (g) or (h) of 20 this section, if the amount of a tax payment, including an installment payment, due 21 under (a)(1) and (2) [(a)(1) - (4)] of this section is affected by the retroactive 22 application of a regulation adopted under this chapter, the department shall determine 23 whether the retroactive application of the regulation caused an underpayment or an 24 overpayment of the amount due and adjust the interest due on the affected payment as 25 follows: 26 (1) if an underpayment of the amount due occurred, the department 27 shall waive interest that would otherwise accrue for the underpayment before the first 28 day of the second month following the month in which the regulation became 29 effective, if 30 (A) the department determines that the producer's 31 underpayment resulted because the regulation was not in effect when the 01 payment was due; and 02 (B) the producer demonstrates that it made a good faith 03 estimate of its tax obligation in light of the regulations then in effect when the 04 payment was due and paid the estimated tax; 05 (2) if an overpayment of the amount due occurred and the department 06 determines that the producer's overpayment resulted because the regulation was not in 07 effect when the payment was due, the obligation for a refund for the overpayment does 08 not begin to accrue interest earlier than the following, as applicable: 09 (A) except as otherwise provided under (B) of this paragraph, 10 the first day of the second month following the month in which the regulation 11 became effective; 12 (B) 90 days after an amended statement under AS 43.55.030(a) 13 and an application to request a refund of production tax paid is filed, if the 14 overpayment was for a period for which an amended statement under 15 AS 43.55.030(a) was required to be filed before the regulation became 16 effective. 17  * Sec. 22. AS 43.55.023(a) is amended to read: 18 (a) A producer or explorer may take a tax credit for a qualified capital 19 expenditure as follows: 20 (1) notwithstanding that a qualified capital expenditure may be a 21 deductible lease expenditure for purposes of calculating the production tax value of oil 22 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 23 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 24 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 25 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 26 expenditure; 27 (2) a producer or explorer may take a credit for a qualified capital 28 expenditure incurred in connection with geological or geophysical exploration or in 29 connection with an exploration well only if the producer or explorer 30 (A) agrees, in writing, to the applicable provisions of 31 AS 43.55.025(f)(2); and 01 (B) submits to the Department of Natural Resources all data 02 that would be required to be submitted under AS 43.55.025(f)(2); 03 (3) a credit for a qualified capital expenditure incurred to explore for, 04 develop, or produce oil or gas deposits located 05 (A) north of 68 degrees North latitude may be taken only if the 06 expenditure is incurred before January 1, 2014; 07 (B) in the Cook Inlet sedimentary basin may be taken only  08 if the expenditure is incurred before July 1, 2016. 09  * Sec. 23. AS 43.55.023(a), as amended by sec. 22 of this Act, is amended to read: 10 (a) A producer or explorer may take a tax credit for a qualified capital 11 expenditure as follows: 12 (1) notwithstanding that a qualified capital expenditure may be a 13 deductible lease expenditure for purposes of calculating the production tax value of oil 14 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 15 [AS 38.05.180(i), AS 41.09.010,] AS 43.20.043 [,] or AS 43.55.025, a producer or 16 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 17 against a tax levied by AS 43.55.011(e) in the amount of 10 [20] percent of that 18 expenditure; 19 (2) a producer or explorer may take a credit for a qualified capital 20 expenditure incurred in connection with geological or geophysical exploration or in 21 connection with an exploration well only if the producer or explorer 22 (A) agrees, in writing, to the applicable provisions of 23 AS 43.55.025(f)(2); and 24 (B) submits to the Department of Natural Resources all data 25 that would be required to be submitted under AS 43.55.025(f)(2); 26 (3) a credit for a qualified capital expenditure incurred to explore for, 27 develop, or produce oil or gas deposits located 28 (A) north of 68 degrees North latitude may be taken only if the 29 expenditure is incurred before January 1, 2014; 30 (B) in the Cook Inlet sedimentary basin may be taken only if 31 the expenditure is incurred before July 1, 2016. 01  * Sec. 24. AS 43.55.023(b) is amended to read: 02 (b) Before January 1, 2014, a producer or explorer may elect to take a tax 03 credit in the amount of 25 percent of a carried-forward annual loss. For lease 04 expenditures incurred on and after January 1, 2014, and before January 1, 2016, to 05 explore for, develop, or produce oil or gas deposits located north of 68 degrees North 06 latitude, a producer or explorer may elect to take a tax credit in the amount of 45 07 percent of a carried-forward annual loss. For lease expenditures incurred during  08 calendar year 2016 [ON AND AFTER JANUARY 1, 2016,] to explore for, develop, 09 or produce oil or gas deposits located north of 68 degrees North latitude, a producer or 10 explorer may elect to take a tax credit in the amount of 35 percent of a carried-forward 11 annual loss. For lease expenditures incurred north of 68 degrees North latitude, a  12 producer may elect to take a tax credit in the amount of 32 percent of a carried- 13 forward annual loss incurred during calendar year 2017 or 2018; 29 percent of a  14 carried-forward annual loss incurred during calendar year 2019 or 2020; 26  15 percent of a carried-forward annual loss incurred during calendar year 2021 or  16 2022; and 25 percent of a carried-forward annual loss incurred after calendar  17 year 2022. For lease expenditures incurred on or after January 1, 2014, and before  18 January 1, 2018, to explore for, develop, or produce oil or gas deposits located south 19 of 68 degrees North latitude, a producer or explorer may elect to take a tax credit in 20 the amount of 25 percent of a carried-forward annual loss. For lease expenditures  21 incurred after December 31, 2017, to explore for, develop, or produce oil or gas  22 deposits located south of 68 degrees North latitude and outside of the Cook Inlet  23 sedimentary basin, a producer may elect to take a tax credit in the amount of 25  24 percent of a carried-forward annual loss. A credit under this subsection for an  25 expenditure incurred after December 31, 2016, is subject to the requirements of  26 (q) of this section. A credit under this subsection may be applied against a tax levied 27 by AS 43.55.011(e). For purposes of this subsection, 28 (1) a carried-forward annual loss is the amount of a producer's or 29 explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 30 previous calendar year that was not deductible in calculating production tax values for 31 that calendar year under AS 43.55.160;  01 (2) for lease expenditures incurred after December 31, 2016, any  02 reduction under AS 43.55.160(f) or (g) is added back to the calculation of  03 production tax values for that calendar year under AS 43.55.160 for the  04 determination of a carried-forward annual loss.  05  * Sec. 25. AS 43.55.023(d) is amended to read: 06 (d) A person that is entitled to take a tax credit under this section that wishes 07 to transfer the unused credit to another person or obtain a cash payment under 08 AS 43.55.028 may apply to the department for a transferable tax credit certificate. An 09 application under this subsection must be in a form prescribed by the department and 10 must include supporting information and documentation that the department 11 reasonably requires. The department shall grant or deny an application, or grant an 12 application as to a lesser amount than that claimed and deny it as to the excess, not 13 later than 120 days after the latest of (1) March 31 of the year following the calendar 14 year in which the [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward 15 annual loss for which the credit is claimed was incurred; (2) the date the statement 16 required under AS 43.55.030(a) or (e) was filed for the calendar year in which the 17 [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward annual loss for which 18 the credit is claimed was incurred; or (3) the date the application was received by the 19 department. If, based on the information then available to it, the department is 20 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 21 the applicant a transferable tax credit certificate for the amount of the credit. A 22 certificate issued under this subsection does not expire. 23  * Sec. 26. AS 43.55.023(e) is amended to read: 24 (e) A person to which a transferable tax credit certificate is issued under (d) of 25 this section may transfer the certificate to another person, and a transferee may further 26 transfer the certificate. Subject to the limitations set out in former (a) of this section  27 and (b) - (d) [(a) - (d)] of this section, and notwithstanding any action the department 28 may take with respect to the applicant under (g) of this section, the owner of a 29 certificate may apply the credit or a portion of the credit shown on the certificate only 30 against a tax levied by AS 43.55.011(e). However, a credit shown on a transferable tax 31 credit certificate may not be applied to reduce a transferee's total tax liability under 01 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80 02 percent of the tax that would otherwise be due without applying that credit. Any 03 portion of a credit not used under this subsection may be applied in a later period. 04  * Sec. 27. AS 43.55.023(l) is amended to read: 05 (l) A producer or explorer may apply for a tax credit for a well lease 06 expenditure incurred in the state [SOUTH OF 68 DEGREES NORTH LATITUDE] 07 after June 30, 2010, as follows: 08 (1) notwithstanding that a well lease expenditure incurred in the state 09 [SOUTH OF 68 DEGREES NORTH LATITUDE] may be a deductible lease 10 expenditure for purposes of calculating the production tax value of oil and gas under 11 AS 43.55.160(a), unless a credit for that expenditure is taken under (a) of this section, 12 [AS 38.05.180(i), AS 41.09.010,] AS 43.20.043, or AS 43.55.025, a producer or 13 explorer that incurs a well lease expenditure in the state [SOUTH OF 68 DEGREES 14 NORTH LATITUDE] may elect to apply a tax credit against a tax levied by 15 AS 43.55.011(e) in the amount of 16 (A) 40 percent of that expenditure incurred south of 68  17 degrees North latitude before January 1, 2017;  18 (B) 20 percent of that expenditure incurred inside the Cook  19 Inlet sedimentary basin after December 31, 2016, and before January 1,  20 2018;  21 (C) 30 percent of that expenditure incurred outside the  22 Cook Inlet sedimentary basin and south of 68 degrees North latitude after  23 December 31, 2016 [; A TAX CREDIT UNDER THIS PARAGRAPH MAY 24 BE APPLIED FOR A SINGLE CALENDAR YEAR]; 25 (2) a producer or explorer may take a credit for a well lease 26 expenditure incurred 27 (A) in the state south of 68 degrees North latitude in connection 28 with geological or geophysical exploration or in connection with an 29 exploration well only if the producer or explorer 30 (i) [(A)] agrees, in writing, to the applicable provisions 31 of AS 43.55.025(f)(2); and 01 (ii) [(B)] submits to the Department of Natural 02 Resources all data that would be required to be submitted under 03 AS 43.55.025(f)(2);  04 (B) in the Cook Inlet sedimentary basin only if the  05 producer or explorer produced oil or gas in the Cook Inlet sedimentary  06 basin before January 1, 2017. 07  * Sec. 28. AS 43.55.023 is amended by adding new subsections to read: 08 (q) For a calendar year after December 31, 2016, to qualify for a credit under 09 (b) of this section, 10 (1) the producer incurring the expenditure may not have an average 11 daily production of more than 15,000 BTU equivalent barrels a day in the state during 12 the calendar year in which the expenditure is incurred; 13 (2) the expenditure must be incurred for a lease 14 (A) from which the state receives a royalty under AS 38.05 or 15 federal law and in a unit under a unit plan of development approved by the 16 commissioner of natural resources as consistent with AS 38.05.180 or by the 17 applicable federal agency; and 18 (B) in which the producer has a working interest; and 19 (3) if the unit is in the Cook Inlet sedimentary basin, the producer 20 incurring the expenditure must have produced oil or gas in the Cook Inlet sedimentary 21 basin before January 1, 2017. 22 (r) Notwithstanding the limitation on the use of a transferable tax credit 23 certificate by a transferee in (e) of this section, and subject to appropriation, the 24 department shall issue a cash refund to the Alaska Retirement Management Board for 25 a transferable tax credit certificate originally issued to a person under (d) of this 26 section and purchased by the Alaska Retirement Management Board under 27 AS 37.10.220(b) within five years after the board's purchase of the certificate. The 28 refund shall be made from funds appropriated from the general fund to the department 29 for that purpose. 30  * Sec. 29. AS 43.55.024(i) is amended to read: 31 (i) A producer may apply against the producer's tax liability for the calendar 01 year under AS 43.55.011(e) a tax credit of $5 for each barrel of oil taxable under 02 AS 43.55.011(e) that receives a reduction in the gross value at the point of  03 production under [MEETS ONE OR MORE OF THE CRITERIA IN] 04 AS 43.55.160(f) or (g) and that is produced during a calendar year after December 31, 05 2013. A tax credit authorized by this subsection may not reduce a producer's tax 06 liability for a calendar year under AS 43.55.011(e) below zero. 07  * Sec. 30. AS 43.55.024(j) is amended to read: 08 (j) A producer may apply against the producer's tax liability for the calendar 09 year under AS 43.55.011(e) a tax credit in the amount specified in this subsection for 10 each barrel of oil taxable under AS 43.55.011(e) that does not receive a reduction in  11 the gross value at the point of production under [MEET ANY OF THE CRITERIA 12 IN] AS 43.55.160(f) or (g) and that is produced during a calendar year after 13 December 31, 2013, from leases or properties north of 68 degrees North latitude. A tax 14 credit under this subsection may not reduce a producer's tax liability for a calendar 15 year under AS 43.55.011(e) below the amount calculated under AS 43.55.011(f). The 16 amount of the tax credit for a barrel of taxable oil subject to this subsection produced 17 during a month of the calendar year is 18 (1) $8 for each barrel of taxable oil if the average gross value at the 19 point of production for the month is less than $80 a barrel; 20 (2) $7 for each barrel of taxable oil if the average gross value at the 21 point of production for the month is greater than or equal to $80 a barrel, but less than 22 $90 a barrel; 23 (3) $6 for each barrel of taxable oil if the average gross value at the 24 point of production for the month is greater than or equal to $90 a barrel, but less than 25 $100 a barrel; 26 (4) $5 for each barrel of taxable oil if the average gross value at the 27 point of production for the month is greater than or equal to $100 a barrel, but less 28 than $110 a barrel; 29 (5) $4 for each barrel of taxable oil if the average gross value at the 30 point of production for the month is greater than or equal to $110 a barrel, but less 31 than $120 a barrel; 01 (6) $3 for each barrel of taxable oil if the average gross value at the 02 point of production for the month is greater than or equal to $120 a barrel, but less 03 than $130 a barrel; 04 (7) $2 for each barrel of taxable oil if the average gross value at the 05 point of production for the month is greater than or equal to $130 a barrel, but less 06 than $140 a barrel; 07 (8) $1 for each barrel of taxable oil if the average gross value at the 08 point of production for the month is greater than or equal to $140 a barrel, but less 09 than $150 a barrel; 10 (9) zero if the average gross value at the point of production for the 11 month is greater than or equal to $150 a barrel. 12  * Sec. 31. AS 43.55.025(m) is amended to read: 13 (m) The persons that drill the first four exploration wells in the state and 14 within the areas described in (o) of this section on state lands, private lands, or federal 15 onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a 16 prospect in a basin described in (o) of this section are eligible for a credit under (a)(6) 17 of this section. A credit under this subsection may not be taken for more than two 18 exploration wells in a single area described in (o)(1) - (6) of this section. 19 Notwithstanding (b) of this section, exploration [EXPLORATION] expenditures 20 eligible for the credit in this subsection must be incurred for work performed after 21 June 1, 2012, and before July 1, 2017, except that expenditures to complete an  22 exploration well that was spudded but not completed before July 1, 2017, are  23 eligible for the credit under this subsection [JULY 1, 2016]. A person planning to 24 drill an exploration well on private land and to apply for a credit under this subsection 25 shall obtain written consent from the owner of the oil and gas interest for the full 26 public release of all well data after the expiration of the confidentiality period 27 applicable to information collected under (f) of this section. The written consent of the 28 owner of the oil and gas interest must be submitted to the commissioner of natural 29 resources before approval of the proposed exploration well. In addition to the 30 requirements in (c)(1), (c)(2)(A), and (c)(2)(C) of this section and submission of the 31 written consent of the owner of the oil and gas interest, a person planning to drill an 01 exploration well shall obtain approval from the commissioner of natural resources 02 before the well is spudded. The commissioner of natural resources shall make a 03 written determination approving or rejecting an exploration well within 60 days after 04 receiving the request for approval or as soon as is practicable thereafter. Before 05 approving the exploration well, the commissioner of natural resources shall consider 06 the following: the location of the well; the proximity to a community in need of a local 07 energy source; the proximity of existing infrastructure; the experience and safety 08 record of the explorer in conducting operations in remote or roadless areas; the 09 projected cost schedule; whether seismic mapping and seismic data sufficiently 10 identify a particular trap for exploration; whether the targeted and planned depth and 11 range are designed to penetrate and fully evaluate the hydrocarbon potential of the 12 proposed prospect and reach the level below which economic hydrocarbon reservoirs 13 are likely to be found, or reach 12,000 feet or more true vertical depth; and whether 14 the exploration plan provides for a full evaluation of the wellbore below surface casing 15 to the depth of the well. Whether the exploration well for which a credit is requested 16 under this subsection is located within an area and a basin described under (o) of this 17 section shall be determined by the commissioner of natural resources and reported to 18 the commissioner. A taxpayer that obtains a credit under this subsection may not claim 19 a tax credit under AS 43.55.023 or another provision in this section for the same 20 exploration expenditure. 21  * Sec. 32. AS 43.55.025 is amended by adding a new subsection to read: 22 (q) Notwithstanding the limitation on the use of a production tax credit 23 certificate by a transferee in (f) of this section, and subject to appropriation, the 24 department shall issue a cash refund to the Alaska Retirement Management Board for 25 a production tax credit certificate originally issued to an explorer under (f) of this 26 section and purchased by the Alaska Retirement Management Board under 27 AS 37.10.220(b) within five years of the board's purchase of the certificate. The 28 refund shall be made from funds appropriated from the general fund to the department 29 for that purpose. 30  * Sec. 33. AS 43.55.028(a) is amended to read: 31 (a) The oil and gas tax credit fund is established as a separate fund of the state. 01 The purpose of the fund is to purchase transferable tax credit certificates issued under 02 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to 03 pay refunds and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053. The  04 fund may not be used to purchase a transferable tax credit certificate or  05 production tax credit certificate from the Alaska Retirement Management Board  06 that the board purchased under AS 37.10.220(b) or to pay a refund under  07 AS 43.55.023(r) or 43.55.025(q). 08  * Sec. 34. AS 43.55.028(e) is amended to read: 09 (e) The department, on the written application of a person to whom a 10 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 11 AS 43.55.023(m) or to whom a production tax credit certificate has been issued under 12 AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 13 purchase, in whole or in part, the certificate. The department may not purchase a  14 total of more than $70,000,000 in tax credit certificates from a person in a  15 calendar year. The department may only purchase a certificate or part of a  16 certificate if the department finds that 17 (1) the calendar year of the purchase is not earlier than the first 18 calendar year for which the credit shown on the certificate would otherwise be allowed 19 to be applied against a tax; 20 (2) the application is not the result of the division of a single entity  21 into multiple entities that would reasonably be expected to apply as a single entity  22 if the $70,000,000 limitation in this subsection did not exist [APPLICANT DOES 23 NOT HAVE AN OUTSTANDING LIABILITY TO THE STATE FOR UNPAID 24 DELINQUENT TAXES UNDER THIS TITLE]; 25 (3) the applicant's total tax liability under AS 43.55.011(e), after 26 application of all available tax credits, for the calendar year in which the application is 27 made is zero; 28 (4) the applicant's average daily production of oil and gas taxable 29 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 30 the application is made was not more than 15,000 [50,000] BTU equivalent barrels; 31 and 01 (5) the purchase is consistent with this section and regulations adopted 02 under this section. 03  * Sec. 35. AS 43.55.028(g) is amended to read: 04 (g) The department shall [MAY] adopt regulations to carry out the purposes 05 of this section, including standards and procedures to allocate available money among 06 applications for purchases under this chapter and claims for refunds and payments 07 under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the 08 applications for purchase and claims for refund exceed the amount of available money 09 in the fund. The regulations adopted by the department, when allocating available  10 money in the fund under this section, 11 (1) may not [, WHEN ALLOCATING AVAILABLE MONEY IN 12 THE FUND UNDER THIS SECTION,] distinguish an application for the purchase of 13 a credit certificate issued under former AS 43.55.023(m) or a claim for a refund or 14 payment under AS 43.20.046, 43.20.047, or 43.20.053;  15 (2) must grant a preference, between two applicants, to the  16 applicant with a higher percentage of resident workers in the applicant's  17 workforce, including workers employed by the applicant's direct contractors, in  18 the state in the previous calendar year; in this paragraph, "resident worker" has  19 the meaning given in AS 43.40.092(b). 20  * Sec. 36. AS 43.55.028 is amended by adding a new subsection to read: 21 (j) If an applicant or claimant has an outstanding liability to the state directly 22 related to the applicant's or claimant's oil or gas exploration, development, or 23 production and the department has not previously reduced the amount paid to that 24 applicant or claimant for a certificate or refund because of that outstanding liability, 25 the department may purchase only that portion of a certificate or pay only that portion 26 of a refund that exceeds the outstanding liability. The department may apply the 27 amount by which the department reduced its purchase of a certificate or payment for a 28 refund because of an outstanding liability to satisfy the outstanding liability. 29 Satisfaction of an outstanding liability under this subsection does not affect the 30 applicant's ability to contest that liability. The department may enter into contracts or 31 agreements with another department to which the outstanding liability is owed. In this 01 subsection, "outstanding liability" means an amount of tax, interest, penalty, fee, 02 rental, royalty, or other charge for which the state has issued a demand for payment 03 that has not been paid when due and, if contested, has not been finally resolved against 04 the state. 05  * Sec. 37. AS 43.55.029(a) is amended to read: 06 (a) An explorer or producer that has applied for a production tax credit under 07 AS 43.55.023(a) or [,] (b), [OR (l) OR] 43.55.025(a), or former AS 43.55.023(l) may 08 make a present assignment of the production tax credit certificate expected to be 09 issued by the department to a third-party assignee. The assignment may be made either 10 at the time the application is filed with the department or not later than 30 days after 11 the date of filing with the department. Once a notice of assignment in compliance with 12 this section is filed with the department, the assignment is irrevocable and cannot be 13 modified by the explorer or producer without the written consent of the assignee 14 named in the assignment. If a production tax credit certificate is issued to the explorer 15 or producer, the notice of assignment remains effective and shall be filed with the 16 department by the explorer or producer together with any application for the 17 department to purchase the certificate under AS 43.55.028(e). 18  * Sec. 38. AS 43.55.029(a), as amended by sec. 37 of this Act, is amended to read: 19 (a) An explorer or producer that has applied for a production tax credit under 20 AS 43.55.023(b) [AS 43.55.023(a) OR (b)], 43.55.025(a), or former AS 43.55.023(a)  21 or (l) [AS 43.55.023(l)] may make a present assignment of the production tax credit 22 certificate expected to be issued by the department to a third-party assignee. The 23 assignment may be made either at the time the application is filed with the department 24 or not later than 30 days after the date of filing with the department. Once a notice of 25 assignment in compliance with this section is filed with the department, the 26 assignment is irrevocable and cannot be modified by the explorer or producer without 27 the written consent of the assignee named in the assignment. If a production tax credit 28 certificate is issued to the explorer or producer, the notice of assignment remains 29 effective and shall be filed with the department by the explorer or producer together 30 with any application for the department to purchase the certificate under 31 AS 43.55.028(e). 01  * Sec. 39. AS 43.55.030(a) is amended to read: 02 (a) A producer that produces oil or gas from a lease or property in the state 03 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 04 for that oil or gas, shall file with the department on March 31 of the following year a 05 statement, under oath, in a form prescribed by the department, giving, with other 06 information required, the following: 07 (1) a description of each lease or property from which oil or gas was 08 produced, by name, legal description, lease number, or accounting codes assigned by 09 the department; 10 (2) the names of the producer and, if different, the person paying the 11 tax, if any; 12 (3) the gross amount of oil and the gross amount of gas produced from 13 each lease or property, separately identifying the gross amount of gas produced from 14 each oil and gas lease to which an effective election under AS 43.55.014(a) applies, 15 the amount of gas delivered to the state under AS 43.55.014(b), and the percentage of 16 the gross amount of oil and gas owned by the producer; 17 (4) the gross value at the point of production of the oil and of the gas 18 produced from each lease or property owned by the producer and the costs of 19 transportation of the oil and gas; 20 (5) the name of the first purchaser and the price received for the oil and 21 for the gas, unless relieved from this requirement in whole or in part by the 22 department; 23 (6) the producer's qualified capital expenditures, [AS DEFINED IN 24 AS 43.55.023,] other lease expenditures under AS 43.55.165, and adjustments or other 25 payments or credits under AS 43.55.170; 26 (7) the production tax values of the oil and gas under AS 43.55.160(a) 27 or of the oil under AS 43.55.160(h), as applicable; 28 (8) any claims for tax credits to be applied; and 29 (9) calculations showing the amounts, if any, that were or are due 30 under AS 43.55.020(a) and interest on any underpayment or overpayment. 31  * Sec. 40. AS 43.55.030(e) is amended to read: 01 (e) An explorer or producer that incurs a lease expenditure under 02 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 03 year but does not produce oil or gas from a lease or property in the state during the 04 calendar year shall file with the department, on March 31 of the following year, a 05 statement, under oath, in a form prescribed by the department, giving, with other 06 information required, the following: 07 (1) the explorer's or producer's qualified capital expenditures, [AS 08 DEFINED IN AS 43.55.023,] other lease expenditures under AS 43.55.165, and 09 adjustments or other payments or credits under AS 43.55.170; and 10 (2) if the explorer or producer receives a payment or credit under 11 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 12 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 13  * Sec. 41. AS 43.55.150 is amended by adding a new subsection to read: 14 (d) For purposes of calculating the tax under this chapter, the gross value at 15 the point of production may not be less than zero. 16  * Sec. 42. AS 43.55.160(a) is amended to read: 17 (a) For oil and gas produced before January 1, 2022, except as provided in (b), 18 (f), and (g) of this section, for the purposes of 19 (1) AS 43.55.011(e)(1) and (2), the annual production tax value of 20 taxable oil, gas, or oil and gas produced during a calendar year in a category for which 21 a separate annual production tax value is required to be calculated under this 22 paragraph is the gross value at the point of production of that oil, gas, or oil and gas 23 taxable under AS 43.55.011(e), less the producer's lease expenditures under 24 AS 43.55.165 for the calendar year applicable to the oil, gas, or oil and gas in that 25 category produced by the producer during the calendar year, as adjusted under 26 AS 43.55.170; a separate annual production tax value shall be calculated for 27 (A) oil and gas produced from leases or properties in the state 28 that include land north of 68 degrees North latitude, other than gas produced 29 before 2022 and used in the state; 30 (B) oil and gas produced from leases or properties in the state 31 outside the Cook Inlet sedimentary basin, no part of which is north of 68 01 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 02 and (b); this subparagraph does not apply to 03 (i) gas produced before 2022 and used in the state; or 04 (ii) oil and gas subject to AS 43.55.011(p); 05 (C) [OIL PRODUCED BEFORE 2022 FROM EACH LEASE 06 OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN; 07 (D) GAS PRODUCED BEFORE 2022 FROM EACH LEASE 08 OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN; 09 (E) GAS PRODUCED BEFORE 2022 FROM EACH LEASE 10 OR PROPERTY IN THE STATE OUTSIDE THE COOK INLET 11 SEDIMENTARY BASIN AND USED IN THE STATE, OTHER THAN GAS 12 SUBJECT TO AS 43.55.011(p); 13 (F)] oil and gas subject to AS 43.55.011(p) produced from 14 leases or properties in the state; 15 (D) [(G)] oil and gas produced from leases or properties in the 16 state no part of which is north of 68 degrees North latitude, other than oil or 17 gas described in (B) or [,] (C) [, (D), (E), OR (F)] of this paragraph; 18 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 19 the monthly production tax value of the taxable 20 (A) oil and gas produced during a month from leases or 21 properties in the state that include land north of 68 degrees North latitude is the 22 gross value at the point of production of the oil and gas taxable under 23 AS 43.55.011(e) and produced by the producer from those leases or properties, 24 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 25 calendar year applicable to the oil and gas produced by the producer from 26 those leases or properties, as adjusted under AS 43.55.170; [THIS 27 SUBPARAGRAPH DOES NOT APPLY TO GAS SUBJECT TO 28 AS 43.55.011(o);] 29 (B) oil and gas produced during a month from leases or 30 properties in the state outside the Cook Inlet sedimentary basin, no part of 31 which is north of 68 degrees North latitude, is the gross value at the point of 01 production of the oil and gas taxable under AS 43.55.011(e) and produced by 02 the producer from those leases or properties, less 1/12 of the producer's lease 03 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 04 gas produced by the producer from those leases or properties, as adjusted under 05 AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY TO GAS 06 SUBJECT TO AS 43.55.011(o);] 07 (C) oil produced during a month from a lease or property in the 08 Cook Inlet sedimentary basin is the gross value at the point of production of 09 the oil taxable under AS 43.55.011(e) and produced by the producer from that 10 lease or property, less 1/12 of the producer's lease expenditures under 11 AS 43.55.165 for the calendar year applicable to the oil produced by the 12 producer from that lease or property, as adjusted under AS 43.55.170; 13 (D) gas produced during a month from a lease or property in 14 the Cook Inlet sedimentary basin is the gross value at the point of production 15 of the gas taxable under AS 43.55.011(e) and produced by the producer from 16 that lease or property, less 1/12 of the producer's lease expenditures under 17 AS 43.55.165 for the calendar year applicable to the gas produced by the 18 producer from that lease or property, as adjusted under AS 43.55.170; 19 (E) gas produced during a month from a lease or property 20 outside the Cook Inlet sedimentary basin and used in the state is the gross 21 value at the point of production of that gas taxable under AS 43.55.011(e) and 22 produced by the producer from that lease or property, less 1/12 of the 23 producer's lease expenditures under AS 43.55.165 for the calendar year 24 applicable to that gas produced by the producer from that lease or property, as 25 adjusted under AS 43.55.170. 26  * Sec. 43. AS 43.55.160(e) is amended to read: 27 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 28 would otherwise be deductible by a producer in a calendar year but whose deduction 29 would cause an annual production tax value calculated under (a)(1) or (h) of this 30 section of taxable oil or gas produced during the calendar year to be less than zero 31 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 01 However, the department shall provide by regulation a method to ensure that, for a 02 period for which a producer's tax liability is limited by AS 43.55.011(p) 03 [AS 43.55.011(j), (k), (o), OR (p)], any adjusted lease expenditures under 04 AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer for that 05 period but whose deduction would cause a production tax value calculated under 06 (a)(1)(C) [, (D), (E), OR (F),] or (h)(3) of this section to be less than zero are 07 accounted for as though the adjusted lease expenditures had first been used as 08 deductions in calculating the production tax values of oil or gas subject to any of the 09 limitations under AS 43.55.011(p) [AS 43.55.011(j), (k), (o), OR (p)] that have 10 positive production tax values so as to reduce the tax liability calculated without 11 regard to the limitation to the maximum amount provided for under the applicable 12 provision of AS 43.55.011(p) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of 13 those adjusted lease expenditures remaining after the accounting provided for under 14 this subsection may be used to establish a carried-forward annual loss under 15 AS 43.55.023(b). In this subsection, "producer" includes "explorer." 16  * Sec. 44. AS 43.55.160(f) is amended to read: 17 (f) On and after January 1, 2014, in the calculation of an annual production tax 18 value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the 19 point of production of oil or gas produced from a lease or property north of 68 degrees 20 North latitude meeting one or more of the following criteria is reduced by 20 percent: 21 (1) the oil or gas is produced from a lease or property that does not contain a lease that 22 was within a unit on January 1, 2003; (2) the oil or gas is produced from a 23 participating area established after December 31, 2011, that is within a unit formed 24 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 25 contain a reservoir that had previously been in a participating area established before 26 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 27 existing participating area by the Department of Natural Resources on and after 28 January 1, 2014, and the producer demonstrates to the department that the volume of 29 oil or gas produced is from acreage added to an existing participating area. This 30 subsection does not apply to gas produced before 2022 that is used in the state or to 31 gas produced on and after January 1, 2022. For oil and gas first produced from a  01 lease or property after December 31, 2016, a reduction allowed under this  02 subsection applies from the date of commencement of regular production of oil  03 and gas in commercial quantities from that lease or property and expires after  04 three years, consecutive or nonconsecutive, in which the average annual price per  05 barrel for Alaska North Slope crude oil for sale on the United States West Coast  06 is more than $70 or after seven years, whichever occurs first. For oil and gas first  07 produced from a lease or property before January 1, 2017, a reduction allowed  08 under this subsection expires on the earlier of January 1, 2023, or January 1  09 following three years, consecutive or nonconsecutive, in which the average annual  10 price per barrel for Alaska North Slope crude oil for sale on the United States  11 West Coast is more than $70. A reduction under this subsection may not reduce the 12 gross value at the point of production below zero. In this subsection, "participating 13 area" means a reservoir or portion of a reservoir producing or contributing to 14 production as approved by the Department of Natural Resources. 15  * Sec. 45. AS 43.55.160(g) is amended to read: 16 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 17 section, in the calculation of an annual production tax value of a producer under 18 (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or 19 gas produced from a lease or property north of 68 degrees North latitude that does not 20 contain a lease that was within a unit on January 1, 2003, is reduced by 10 percent if 21 the oil or gas is produced from a unit made up solely of leases that have a royalty 22 share of more than 12.5 percent in amount or value of the production removed or sold 23 from the lease as determined under AS 38.05.180(f). This subsection does not apply if 24 the royalty obligation for one or more of the leases in the unit has been reduced to 12.5 25 percent or less under AS 38.05.180(j) for all or part of the calendar year for which the 26 annual production tax value is calculated. This subsection does not apply to gas 27 produced before 2022 that is used in the state or to gas produced on and after 28 January 1, 2022. For oil or gas first produced after December 31, 2016, the  29 reduction under this subsection shall apply to oil or gas produced from a lease or  30 property for the first five years after the commencement of production in  31 commercial quantities of oil or gas from that lease or property. For oil or gas first  01 produced before January 1, 2017, the reduction under this subsection for a lease  02 or property shall expire January 1, 2021. A reduction under this subsection may not 03 reduce the gross value at the point of production below zero. 04  * Sec. 46. AS 43.55.165(a) is amended to read: 05 (a) For [EXCEPT AS PROVIDED IN (j) AND (k) OF THIS SECTION, 06 FOR] purposes of this chapter, a producer's lease expenditures for a calendar year are 07 (1) costs, other than items listed in (e) of this section, that are 08 (A) incurred by the producer during the calendar year after 09 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 10 within the producer's leases or properties in the state or, in the case of land in 11 which the producer does not own an operating right, operating interest, or 12 working interest, to explore for oil or gas deposits within other land in the 13 state; and 14 (B) allowed by the department by regulation, based on the 15 department's determination that the costs satisfy the following three 16 requirements: 17 (i) the costs must be incurred upstream of the point of 18 production of oil and gas; 19 (ii) the costs must be ordinary and necessary costs of 20 exploring for, developing, or producing, as applicable, oil or gas 21 deposits; and 22 (iii) the costs must be direct costs of exploring for, 23 developing, or producing, as applicable, oil or gas deposits; and 24 (2) a reasonable allowance for that calendar year, as determined under 25 regulations adopted by the department, for overhead expenses that are directly related 26 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 27  * Sec. 47. AS 43.55.165(e) is amended to read: 28 (e) For purposes of this section, lease expenditures do not include 29 (1) depreciation, depletion, or amortization; 30 (2) oil or gas royalty payments, production payments, lease profit 31 shares, or other payments or distributions of a share of oil or gas production, profit, or 01 revenue, except that a producer's lease expenditures applicable to oil and gas produced 02 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 03 profit paid to the state under that lease; 04 (3) taxes based on or measured by net income; 05 (4) interest or other financing charges or costs of raising equity or debt 06 capital; 07 (5) acquisition costs for a lease or property or exploration license; 08 (6) costs arising from fraud, wilful misconduct, gross negligence, 09 violation of law, or failure to comply with an obligation under a lease, permit, or 10 license issued by the state or federal government; 11 (7) fines or penalties imposed by law; 12 (8) costs of arbitration, litigation, or other dispute resolution activities 13 that involve the state or concern the rights or obligations among owners of interests in, 14 or rights to production from, one or more leases or properties or a unit; 15 (9) costs incurred in organizing a partnership, joint venture, or other 16 business entity or arrangement; 17 (10) amounts paid to indemnify the state; the exclusion provided by 18 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 19 a third-party insurer or surety; 20 (11) surcharges levied under AS 43.55.201 or 43.55.300; 21 (12) an expenditure otherwise deductible under (b) of this section that 22 is a result of an internal transfer, a transaction with an affiliate, or a transaction 23 between related parties, or is otherwise not an arm's length transaction, unless the 24 producer establishes to the satisfaction of the department that the amount of the 25 expenditure does not exceed the fair market value of the expenditure; 26 (13) an expenditure incurred to purchase an interest in any corporation, 27 partnership, limited liability company, business trust, or any other business entity, 28 whether or not the transaction is treated as an asset sale for federal income tax 29 purposes; 30 (14) a tax levied under AS 43.55.011 or 43.55.014; 31 (15) costs incurred for dismantlement, removal, surrender, or 01 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 02 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 03 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 04 excluded under this paragraph if the dismantlement, removal, surrender, or 05 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 06 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 07 (16) costs incurred for containment, control, cleanup, or removal in 08 connection with any unpermitted release of oil or a hazardous substance and any 09 liability for damages imposed on the producer or explorer for that unpermitted release; 10 this paragraph does not apply to the cost of developing and maintaining an oil 11 discharge prevention and contingency plan under AS 46.04.030; 12 (17) costs incurred to satisfy a work commitment under an exploration 13 license under AS 38.05.132; 14 (18) that portion of expenditures, that would otherwise be qualified 15 capital expenditures, [AS DEFINED IN AS 43.55.023,] incurred during a calendar 16 year that are less than the product of $0.30 multiplied by the total taxable production 17 from each lease or property, in BTU equivalent barrels, during that calendar year, 18 except that, when a portion of a calendar year is subject to this provision, the 19 expenditures and volumes shall be prorated within that calendar year; 20 (19) costs incurred for repair, replacement, or deferred maintenance of 21 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 22 undertaken in response to a failure, problem, or event that results in an unscheduled 23 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 24 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 25 equipment, other than a well, that is undertaken in response to, or is otherwise 26 associated with, an unpermitted release of a hazardous substance or of gas; however, 27 costs under this paragraph that would otherwise constitute lease expenditures under (a) 28 and (b) of this section may be treated as lease expenditures if the department 29 determines that the repair or replacement is solely necessitated by an act of war, by an 30 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 31 inevitable, and irresistible character, the effects of which could not have been 01 prevented or avoided by the exercise of due care or foresight, or by an intentional or 02 negligent act or omission of a third party, other than a party or its agents in privity of 03 contract with, or employed by, the producer or an operator acting for the producer, but 04 only if the producer or operator, as applicable, exercised due care in operating and 05 maintaining the facility, pipeline, structure, or equipment, and took reasonable 06 precautions against the act or omission of the third party and against the consequences 07 of the act or omission; in this paragraph, 08 (A) "costs incurred for repair, replacement, or deferred 09 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 10 to dismantle and remove the facility, pipeline, structure, or equipment that is 11 being replaced; 12 (B) "hazardous substance" has the meaning given in 13 AS 46.03.826; 14 (C) "replacement" includes renovation or improvement; 15 (20) costs incurred to construct, acquire, or operate a refinery or crude 16 oil topping plant, regardless of whether the products of the refinery or topping plant 17 are used in oil or gas exploration, development, or production operations; however, if 18 a producer owns a refinery or crude oil topping plant that is located on or near the 19 premises of the producer's lease or property in the state and that processes the 20 producer's oil produced from that lease or property into a product that the producer 21 uses in the operation of the lease or property in drilling for or producing oil or gas, the 22 producer's lease expenditures include the amount calculated by subtracting from the 23 fair market value of the product used the prevailing value, as determined under 24 AS 43.55.020(f), of the oil that is processed; 25 (21) costs of lobbying, public relations, public relations advertising, or 26 policy advocacy. 27  * Sec. 48. AS 43.55.165(f) is amended to read: 28 (f) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 29 incurred to explore for an oil or gas deposit located within land in which an explorer 30 does not own a working interest, the term "producer" in this section includes 31 "explorer." For purposes of AS 43.55.023(b), for expenditures incurred before  01 January 1, 2017, to explore for an oil or gas deposit located within land in which  02 an explorer does not own a working interest, the term "producer" in this section  03 includes "explorer." 04  * Sec. 49. AS 43.55.165(f), as amended by sec. 48 of this Act, is amended to read: 05 (f) [FOR PURPOSES OF AS 43.55.023(a) AND ONLY AS TO 06 EXPENDITURES INCURRED TO EXPLORE FOR AN OIL OR GAS DEPOSIT 07 LOCATED WITHIN LAND IN WHICH AN EXPLORER DOES NOT OWN A 08 WORKING INTEREST, THE TERM "PRODUCER" IN THIS SECTION 09 INCLUDES "EXPLORER."] For purposes of AS 43.55.023(b), for expenditures 10 incurred before January 1, 2017, to explore for an oil or gas deposit located within 11 land in which an explorer does not own a working interest, the term "producer" in this 12 section includes "explorer." 13  * Sec. 50. AS 43.55.165(h) is amended to read: 14 (h) The department shall adopt regulations that provide for reasonable 15 methods of allocating costs between oil and gas [, BETWEEN GAS SUBJECT TO 16 AS 43.55.011(o) AND OTHER GAS,] and between leases or properties in those 17 circumstances where an allocation of costs is required to determine lease expenditures 18 that are costs of exploring for, developing, or producing oil deposits or costs of 19 exploring for, developing, or producing gas deposits, or that are costs of exploring for, 20 developing, or producing oil or gas deposits located within different leases or 21 properties. 22  * Sec. 51. AS 43.55.170(c) is amended to read: 23 (c) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 24 incurred to explore for an oil or gas deposit located within land in which an explorer 25 does not own a working interest, the term "producer" in this section includes 26 "explorer." For purposes of AS 43.55.023(b), for expenditures incurred before  27 January 1, 2017, to explore for an oil or gas deposit located within land in which  28 an explorer does not own a working interest, the term "producer" in this section  29 includes "explorer." 30  * Sec. 52. AS 43.55.170(c), as amended by sec. 51 of this Act, is amended to read: 31 (c) [FOR PURPOSES OF AS 43.55.023(a) AND ONLY AS TO 01 EXPENDITURES INCURRED TO EXPLORE FOR AN OIL OR GAS DEPOSIT 02 LOCATED WITHIN LAND IN WHICH AN EXPLORER DOES NOT OWN A 03 WORKING INTEREST, THE TERM "PRODUCER" IN THIS SECTION 04 INCLUDES "EXPLORER."] For purposes of AS 43.55.023(b), for expenditures 05 incurred before January 1, 2017, to explore for an oil or gas deposit located within 06 land in which an explorer does not own a working interest, the term "producer" in this 07 section includes "explorer." 08  * Sec. 53. AS 43.55.890 is amended to read: 09 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 10 provision of AS 40.25.100, and regardless of whether the information is considered 11 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 12 particular returns or reports, the department may publish the following information 13 under this chapter, if aggregated among three or more producers or explorers, showing 14 by month or calendar year and by lease or property, unit, or area of the state: 15 (1) the amount of oil or gas production; 16 (2) the amount of taxes levied under this chapter or paid under this 17 chapter; 18 (3) the effective tax rates under this chapter; 19 (4) the gross value of oil or gas at the point of production; 20 (5) the transportation costs for oil or gas; 21 (6) qualified capital expenditures [, AS DEFINED IN AS 43.55.023]; 22 (7) exploration expenditures under AS 43.55.025; 23 (8) production tax values of oil or gas under AS 43.55.160; 24 (9) lease expenditures under AS 43.55.165; 25 (10) adjustments to lease expenditures under AS 43.55.170; 26 (11) tax credits applicable or potentially applicable against taxes levied 27 by this chapter. 28  * Sec. 54. AS 43.55.895(b) is amended to read: 29 (b) A municipal entity subject to taxation because of this section 30 (1) is eligible for [ALL] tax credits proportionate to its production  31 taxable under AS 43.55.011(e); and  01 (2) shall allocate its lease expenditures in proportion to its  02 production taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO THE 03 SAME EXTENT AS ANY OTHER PRODUCER]. 04 * Sec. 55. AS 43.55.900 is amended by adding a new paragraph to read: 05 (26) "qualified capital expenditure" 06 (A) means, except as otherwise provided in (B) of this 07 paragraph, an expenditure that is a lease expenditure under AS 43.55.165 and 08 is 09 (i) incurred for geological or geophysical exploration; 10 (ii) treated as a capitalized expenditure under 26 U.S.C. 11 (Internal Revenue Code), as amended, regardless of elections made 12 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is 13 treated as a capitalized expenditure for federal income tax reporting 14 purposes by the person incurring the expenditure; or 15 (iii) treated as a capitalized expenditure under 26 U.S.C. 16 (Internal Revenue Code), as amended, regardless of elections made 17 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is 18 eligible to be deducted as an expense under 26 U.S.C. 263(c) (Internal 19 Revenue Code), as amended; 20 (B) does not include an expenditure incurred to acquire an asset 21 the cost of previously acquiring which was a lease expenditure under 22 AS 43.55.165 or would have been a lease expenditure under AS 43.55.165 if it 23 had been incurred after March 31, 2006, or that has previously been placed in 24 service in the state; an expenditure to acquire an asset is not excluded under 25 this subparagraph if not more than an immaterial portion of the asset meets a 26 description under this subparagraph; for purposes of this subparagraph, "asset" 27 includes geological, geophysical, and well data and interpretations. 28  * Sec. 56. AS 43.70 is amended by adding new sections to read: 29 Sec. 43.70.025. Bond or cash deposit required for an oil or gas business. (a) 30 At the time of applying for a license under this chapter, an applicant engaged in the 31 business of oil or gas exploration, development, or production shall file a surety bond 01 in the amount of $250,000 running to the state, conditioned upon the applicant's 02 promise to pay all 03 (1) taxes and contributions due the state and political subdivisions; and 04 (2) unsecured creditors furnishing labor or material or renting or 05 supplying equipment to the applicant. 06 (b) In lieu of the surety bond required under this section, the applicant may 07 file with the commissioner a cash deposit or other negotiable security acceptable to the 08 commissioner in the amount of $250,000. 09 (c) The bond required by this section remains in effect until cancelled by 10 action of the surety, the principal, or, if the commissioner finds that the business is 11 producing oil or gas in commercial quantities, by the commissioner. 12 Sec. 43.70.028. Claims against an oil or gas business. (a) A person having a 13 claim against a person required to file a surety bond under AS 43.70.025 because of 14 the failure to pay a liability described in AS 43.70.025(a) may bring suit upon the 15 bond. A copy of the complaint shall be served by registered or certified mail on the 16 commissioner at the time suit is filed, and the commissioner shall maintain a record, 17 available for public inspection, of all suits commenced. This service on the 18 commissioner shall constitute service on the surety, and the commissioner shall 19 transmit the complaint or a copy of it to the surety within 72 hours after it is received. 20 The surety on the bond is not liable in an aggregate amount in excess of that named in 21 the bond, but, if claims pending at any one time exceed the amount of the bond, the 22 claims shall be satisfied from the bond in the following order: 23 (1) material, equipment, and supplies delivered in the state by an 24 unsecured creditor; 25 (2) labor, including employee benefits provided by an unsecured 26 creditor; 27 (3) taxes and other amounts due to the city and borough, in that order; 28 (4) repair of public facilities; 29 (5) taxes and other amounts due to the state. 30 (b) If a judgment is entered against a cash deposit, the commissioner, upon 31 receipt of a certified copy of a final judgment, shall pay the judgment from the amount 01 of the deposit in accordance with the priorities set out in (a) of this section. 02 (c) An action described in (a) of this section may not be commenced on the 03 bond more than three years after the bond's cancellation. 04 * Sec. 57. AS 38.05.180(i); AS 41.09.010, 41.09.020, 41.09.030, 41.09.090; and 05 AS 43.20.053(j)(4) are repealed January 1, 2017. 06 * Sec. 58. AS 43.55.011(j), 43.55.011(k), 43.55.011(m), 43.55.011(o), 43.55.023(l), and 07 43.55.023(n) are repealed January 1, 2019.  08 * Sec. 59. AS 43.55.023(a), 43.55.023(o), 43.55.028(i), 43.55.075(d)(1), 43.55.165(j), and 09 43.55.165(k) are repealed January 1, 2022. 10 * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 LEGISLATIVE WORKING GROUP. (a) A legislative working group is established 13 to analyze the Cook Inlet fiscal regime for oil and gas, review the state's tax structure and 14 rates on oil and gas produced south of 68 degrees North latitude, recommend changes to the 15 legislature for consideration during the First Regular Session of the Thirtieth Alaska State 16 Legislature, and develop terms for a comprehensive fiscal regime, including 17 (1) a tax structure that accounts for the unique circumstances for each oil and 18 gas producing area south of 68 degrees North latitude; 19 (2) incentives other than direct monetary support from the state for the 20 exploration, development, and production of oil and gas south of 68 degrees North latitude; 21 (3) consideration of the competitiveness of the area south of 68 degrees North 22 latitude to attract new oil and gas development; 23 (4) consideration of the unique market considerations of the Cook Inlet 24 sedimentary basin and the need to support energy supply security for communities in 25 Southcentral Alaska; 26 (5) alternative means of state support for the exploration, development, and 27 production of oil and gas in the Cook Inlet sedimentary basin, including loan guarantees or 28 other financial support through the Alaska Industrial Development and Export Authority, or 29 other state corporation or entity; 30 (6) the applicability of the recommended tax structure to gas currently subject 31 to AS 43.55.011(o). 01 (b) The recommended changes under (a) of this section may not include refundable or 02 deductible tax credits or carried-forward lease expenditures. 03 (c) The working group consists of 04 (1) two co-chairs, one of whom is a member of the house of representatives 05 appointed by the speaker of the house of representatives, and one of whom is a member of the 06 senate appointed by the president of the senate; and 07 (2) members appointed by the co-chairs; members must be legislators and must 08 include members of the majority and minority caucuses. 09 (d) The co-chairs of the working group may form an advisory group to the working 10 group, composed of members who are not legislators and who have expertise and skills to 11 assist in the review and development of a new plan for the tax structure and rates on oil and 12 gas produced south of 68 degrees North latitude. The members of an advisory group may 13 include commissioners or employees of state departments, members of the oil and gas 14 industry or trade associations, and economists. 15 (e) The working group may be supported by legislative consultants under contract 16 through the Legislative Budget and Audit Committee. 17  * Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 APPLICABILITY. AS 43.20.046(e), as amended by sec. 10 of this Act, 20 AS 43.20.047(e), as amended by sec. 11 of this Act, AS 43.20.053(e), as amended by sec. 12 21 of this Act, AS 43.55.028(e), as amended by sec. 34 of this Act, AS 43.55.028(j), added by 22 sec. 36 of this Act, and regulations related to a tax credit certificate purchase preference for 23 applicants with a workforce of resident workers, adopted under AS 43.55.028(g), as amended 24 by sec. 35 of this Act, apply to a purchase applied for on or after the effective date of secs. 10 25 - 12 and 34 - 36 of this Act. 26  * Sec. 62. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: WELL LEASE EXPENDITURES. (a) Notwithstanding the repeal of 29 AS 43.55.023(l) and (n) by sec. 58 of this Act, and the amendment to AS 43.55.029(a) by sec. 30 37 of this Act, a taxpayer who incurs a well lease expenditure before the repeal of 31 AS 43.55.023(l) and (n) by sec. 58 of this Act that qualifies for a well lease expenditure credit 01 under AS 43.55.023(l) may apply for a credit or transferable tax credit certificate under 02 AS 43.55.023 and assign the tax credit under AS 43.55.029, as those sections read on the day 03 before the repeal of AS 43.55.023(l) and (n) by sec. 58 of this Act. 04 (b) The Department of Revenue may continue to apply and enforce AS 43.55.023(l), 05 as that section read on the day before the repeal of AS 43.55.023(l) by sec. 58 of this Act, for 06 well lease expenditures incurred before the repeal of AS 43.55.023(l) by sec. 58 of this Act. 07  * Sec. 63. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 TRANSITION: QUALIFIED CAPITAL EXPENDITURES. (a) Notwithstanding the 10 repeal of AS 43.55.023(a) and (o) by sec. 59 of this Act, and the amendments to 11 AS 45.55.023(d) by sec. 25 of this Act, AS 43.55.029(a) by sec. 38 of this Act, 12 AS 43.55.030(a) and (e) by secs. 39 and 40 of this Act, AS 43.55.165(f) by sec. 49 of this Act, 13 and AS 43.55.170(c) by sec. 52 of this Act, a taxpayer who incurs a qualified capital 14 expenditure before the repeal of AS 43.55.023(a) and (o) by sec. 59 of this Act that qualifies 15 for a qualified capital expenditure credit under AS 43.55.023(a) may apply for a credit or tax 16 credit certificate under AS 43.55.023(d) and, as applicable, assign the tax credit under 17 AS 43.55.029, as those sections read on the day before the repeal of AS 43.55.023(a) by sec. 18 59 of this Act. 19 (b) The Department of Revenue may continue to apply and enforce AS 43.55.023(a) 20 and (o) and 43.55.029, as those sections read on the day before the repeal of AS 43.55.023(a) 21 by sec. 59 of this Act, for qualified capital expenditures incurred before the repeal of 22 AS 43.55.023(a) by sec. 59 of this Act. 23  * Sec. 64. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITION: LEASE EXPENDITURES FOR A CALENDAR YEAR AFTER 26 2006 AND BEFORE 2010. Notwithstanding AS 43.55.165(a), as amended by sec. 46 of this 27 Act, and the repeal of AS 43.55.165(j) and (k) by sec. 59 of this Act, AS 43.55.165(j) and (k) 28 apply to a producer's total lease expenditures for a calendar year after 2006 and before 2010 29 under AS 43.55.165, as that section read on the day before the repeal of AS 43.55.165(j) and 30 (k) by sec. 59 of this Act. 31  * Sec. 65. The uncodified law of the State of Alaska is amended by adding a new section to 01 read: 02 TRANSITION: PAYMENT OF TAX; FILING. (a) Notwithstanding the amendments 03 to AS 43.55.020 by secs. 18 - 21 of this Act, 04 (1) a person subject to tax under AS 43.55 that is required to make one or more 05 installment payments of estimated tax or other payments of tax under AS 43.55.020 for 06 production before the effective date of secs. 18 - 21 of this Act shall pay the tax under 07 AS 43.55.020, as that section read on the day before the effective date of secs. 18 - 21 of this 08 Act; 09 (2) an unpaid amount of an installment payment required under AS 43.55.020 10 for production before the effective date of secs. 18 - 21 of this Act that is not paid when due 11 bears interest under AS 43.55.020, as that section read on the day before the effective date of 12 secs. 18 - 21 of this Act; 13 (3) an overpayment of an installment payment required under AS 43.55.020 for 14 production before the effective date of secs. 18 - 21 of this Act bears interest under 15 AS 43.55.020, as that section read on the day before the effective date of secs. 18 - 21 of this 16 Act. 17 (b) The Department of Revenue may continue to apply and enforce AS 43.55.020, as 18 that section read on the day before the effective date of secs. 18 - 21 of this Act, for a tax or 19 installment payment for production before the effective date of secs. 18 - 21 of this Act. 20  * Sec. 66. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 TRANSITION: PRODUCTION TAX AND CARRIED-FORWARD ANNUAL 23 LOSSES. Notwithstanding the repeal of AS 43.55.011(j), (k), (m), and (o) by sec. 58 of this 24 Act, and the amendments to AS 43.55.011(e) and (f) by secs. 13 and 15 of this Act, 25 43.55.160(a) and (e) by secs. 42 and 43 of this Act, and 43.55.165(h) by sec. 50 of this Act, 26 (1) for oil and gas produced before the repeal of AS 43.55.011(j), (k), (m), and 27 (o) by sec. 58 of this Act, the production tax and production tax value of that oil and gas shall 28 be determined under AS 43.55.011 and 43.55.160, as those sections read on the day before the 29 repeal of AS 43.55.011(j), (k), (m), and (o) by sec. 58 of this Act; 30 (2) in determining lease expenditures incurred before the effective date of sec. 31 50 of this Act, the Department of Revenue shall continue to apply regulations that were 01 adopted under AS 43.55.165(h) that were in effect on the day before the effective date of sec. 02 50 of this Act; and 03 (3) a lease expenditure incurred before the effective date of sec. 43 of this Act 04 may be used to establish a carried-forward annual loss under AS 43.55.160(e), as that 05 subsection read on the day before the effective date of sec. 43 of this Act. 06 * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 09 Natural Resources may adopt regulations necessary to implement the changes made by this 10 Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not 11 before the effective date of the law implemented by the regulation. The Department of 12 Revenue shall adopt regulations governing the use of tax credits under AS 43.55 for a 13 calendar year for which the applicable tax credit provisions of AS 43.55 differ as between 14 parts of the year as a result of this Act. 15 * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 18 contrary provision of AS 44.62.240, 19 (1) if the Department of Revenue expressly designates in a regulation that the 20 regulation applies retroactively, a regulation adopted by the Department of Revenue to 21 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to 22 the effective date of the law implemented by the regulation; 23 (2) if the Department of Natural Resources expressly designates in the 24 regulation that the regulation applies retroactively, a regulation adopted by the Department of 25 Natural Resources to implement, interpret, make specific, or otherwise carry out the statutory 26 amendments in this Act affecting the administration of oil and gas leases issued under 27 AS 38.05.180(f)(3)(B), (D), or (E), to the extent the regulation relates to the treatment of oil 28 and gas production taxes in determining net profits under those leases, may apply 29 retroactively to the effective date of the law implemented by the regulation. 30 * Sec. 69. Sections 31, 60, 67, and 68 of this Act take effect immediately under 31 AS 01.10.070(c). 01 * Sec. 70. Section 22 of this Act takes effect July 1, 2016. 02  * Sec. 71. Sections 13, 15, 18 - 21, 37, 42, 43, 50, 58, 62, 65, and 66 of this Act take effect 03 January 1, 2019. 04  * Sec. 72. Sections 25, 26, 38 - 40, 46, 47, 49, 52, 53, 55, 59, 63, and 64 of this Act take 05 effect January 1, 2022. 06 * Sec. 73. Except as provided in secs. 69 - 72 of this Act, this Act takes effect January 1, 07 2017.