00 CS FOR SENATE BILL NO. 130(RES) 01 "An Act relating to interest applicable to delinquent tax; relating to the oil and gas 02 production tax, tax payments, and credits; relating to refunds for the gas storage facility 03 tax credit, the liquefied natural gas storage facility tax credit, and the qualified in-state 04 oil refinery infrastructure expenditures tax credit; relating to oil and gas lease 05 expenditures and production tax credits for municipal entities; relating to a bond or 06 cash deposit required for an oil or gas business; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08  * Section 1. AS 38.05.036(a) is amended to read: 09 (a) The department may conduct audits regarding royalty and net profits under 10 oil and gas contracts, agreements, or leases under this chapter and regarding costs 11 related to exploration licenses entered into under AS 38.05.131 - 38.05.134 and 12 exploration incentive credits under this chapter [OR UNDER AS 41.09]. For purposes 13 of an audit under this section, 01 (1) the department may examine the books, papers, records, or 02 memoranda of a person regarding matters related to the audit; and 03 (2) the records and premises where a business is conducted shall be 04 open at all reasonable times for inspection by the department. 05  * Sec. 2. AS 38.05.036(b) is amended to read: 06 (b) The Department of Revenue may obtain from the department information 07 relating to royalty and net profits payments and to exploration incentive credits under 08 this chapter [OR UNDER AS 41.09], whether or not that information is confidential. 09 The Department of Revenue may use the information in carrying out its functions and 10 responsibilities under AS 43, and shall hold that information confidential to the extent 11 required by an agreement with the department or by AS 38.05.035(a)(8) [, 12 AS 41.09.010(d),] or AS 43.05.230. 13  * Sec. 3. AS 38.05.036(c) is amended to read: 14 (c) The department may obtain from the Department of Revenue all 15 information obtained under AS 43 relating to royalty and net profits and to exploration 16 incentive credits. The department may use the information for purposes of carrying out 17 its responsibilities and functions under this chapter [AND AS 41.09]. Information 18 made available to the department that was obtained under AS 43 is confidential and 19 subject to the provisions of AS 43.05.230. 20  * Sec. 4. AS 38.05.036(f) is amended to read: 21 (f) Except as otherwise provided in this section or in connection with official 22 investigations or proceedings of the department, it is unlawful for a current or former 23 officer, employee, or agent of the state to divulge information obtained by the 24 department as a result of an audit under this section that is required by an agreement 25 with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be kept 26 confidential. 27  * Sec. 5. AS 38.05.036(g) is amended to read: 28 (g) Nothing in this section prohibits the publication of statistics in a manner 29 that maintains the confidentiality of information to the extent required by an 30 agreement with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)]. 31  * Sec. 6. AS 43.05.225 is amended to read: 01 Sec. 43.05.225. Interest. Unless otherwise provided, 02 (1) a delinquent tax under this title, 03 (A) before January 1, 2014, bears interest in each calendar 04 quarter at the rate of five percentage points above the annual rate charged 05 member banks for advances by the 12th Federal Reserve District as of the first 06 day of that calendar quarter, or at the annual rate of 11 percent, whichever is 07 greater, compounded quarterly as of the last day of that quarter; [OR] 08 (B) on and after January 1, 2014, and before January 1, 2017,  09 bears interest in each calendar quarter at the rate of three percentage points 10 above the annual rate charged member banks for advances by the 12th Federal 11 Reserve District as of the first day of that calendar quarter, compounded  12 quarterly as of the last day of that quarter; 13 (C) on and after January 1, 2017,  14 (i) for the first three years after a tax becomes  15 delinquent, bears interest in each calendar quarter at the rate of  16 seven percentage points above the annual rate charged member  17 banks for advances by the 12th Federal Reserve District as of the  18 first day of that calendar quarter, compounded quarterly as of the  19 last day of that quarter; and  20 (ii) after the first three years after a tax becomes  21 delinquent, does not bear interest; 22 (2) the interest rate is 12 percent a year for 23 (A) delinquent fees payable under AS 05.15.095(c); and 24 (B) unclaimed property that is not timely paid or delivered, as 25 allowed by AS 34.45.470(a). 26  * Sec. 7. AS 43.20.046(e) is amended to read: 27 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 28 may use available money in the oil and gas tax credit fund established in AS 43.55.028 29 to make the refund applied for under (d) of this section in whole or in part if the 30 department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN 31 OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT 01 TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits, 02 the claimant's total tax liability under this chapter for the calendar year in which the 03 claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" 04 MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED 05 AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS 06 NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.] 07  * Sec. 8. AS 43.20.047(e) is amended to read: 08 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 09 may use money available in the oil and gas tax credit fund established in AS 43.55.028 10 to make a refund or payment under (d) of this section in whole or in part if the 11 department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN 12 OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT 13 TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits, 14 the claimant's total tax liability under this chapter for the calendar year in which the 15 claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" 16 MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED 17 AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS 18 NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.] 19  * Sec. 9. AS 43.20.053(e) is amended to read: 20 (e) Subject to the requirements in AS 43.55.028(j), the [THE] department 21 may use money available in the oil and gas tax credit fund established in AS 43.55.028 22 to make a refund or payment under (d) of this section in whole or in part if the 23 department finds that, 24 [(1) THE CLAIMANT DOES NOT HAVE AN OUTSTANDING 25 LIABILITY TO THE STATE FOR UNPAID DELINQUENT TAXES UNDER THIS 26 TITLE; AND 27 (2)] after application of all available tax credits, the claimant's total tax 28 liability under this chapter for the calendar year in which the claim is made is zero. 29  * Sec. 10. AS 43.55.011(e) is amended to read: 30 (e) There is levied on the producer of oil or gas a tax for all oil and gas 31 produced each calendar year from each lease or property in the state, less any oil and 01 gas the ownership or right to which is exempt from taxation or constitutes a 02 landowner's royalty interest or for which a tax is levied by AS 43.55.014, and less any  03 oil or gas to which (q) of this section applies. Except as otherwise provided under (f) 04 [, (j), (k), (o),] and (p) of this section, for oil and gas produced 05 (1) before January 1, 2014, the tax is equal to the sum of 06 (A) the annual production tax value of the taxable oil and gas 07 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 08 (B) the sum, over all months of the calendar year, of the tax 09 amounts determined under (g) of this section; 10 (2) on and after January 1, 2014, and before January 1, 2022, the tax is 11 equal to the annual production tax value of the taxable oil and gas as calculated under 12 AS 43.55.160(a)(1) multiplied by 35 percent; 13 (3) on and after January 1, 2022, the tax for 14 (A) oil is equal to the annual production tax value of the 15 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent; 16 (B) gas is equal to 13 percent of the gross value at the point of 17 production of the taxable gas; if the gross value at the point of production of 18 gas produced from a lease or property is less than zero, that gross value at the 19 point of production is considered zero for purposes of this subparagraph. 20  * Sec. 11. AS 43.55.011(f) is amended to read: 21 (f) The levy of tax under (e) of this section for 22 (1) oil and gas produced before January 1, 2022, from leases or 23 properties that include land north of 68 degrees North latitude [, OTHER THAN GAS 24 SUBJECT TO (o) OF THIS SECTION,] may not be less than 25 (A) four 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 more than $25; 29 (B) three 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 over $20 but not over $25; 02 (C) two percent of the gross value at the point of production 03 when the average price per barrel for Alaska North Slope crude oil for sale on 04 the United States West Coast during the calendar year for which the tax is due 05 is over $17.50 but not over $20; 06 (D) one percent of the gross value at the point of production 07 when the average price per barrel for Alaska North Slope crude oil for sale on 08 the United States West Coast during the calendar year for which the tax is due 09 is over $15 but not over $17.50; or 10 (E) zero percent of the gross value at the point of production 11 when the average price per barrel for Alaska North Slope crude oil for sale on 12 the United States West Coast during the calendar year for which the tax is due 13 is $15 or less; and 14 (2) oil produced on and after January 1, 2022, from leases or properties 15 that include land north of 68 degrees North latitude, may not be less than 16 (A) four 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 more than $25; 20 (B) three 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 over $20 but not over $25; 24 (C) two percent of the gross value at the point of production 25 when the average price per barrel for Alaska North Slope crude oil for sale on 26 the United States West Coast during the calendar year for which the tax is due 27 is over $17.50 but not over $20; 28 (D) one 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 over $15 but not over $17.50; or 01 (E) zero 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 $15 or less. 05  * Sec. 12. AS 43.55.011 is amended by adding a new subsection to read: 06 (q) On and after January 1, 2018, 07 (1) no tax is levied on oil or gas produced from a lease or property in 08 the Cook Inlet sedimentary basin; 09 (2) a producer or explorer may not earn a tax credit under this chapter 10 for expenditures incurred in the Cook Inlet sedimentary basin. 11  * Sec. 13. AS 43.55.020(a) is amended to read: 12 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 13 the tax as follows: 14 (1) for oil and gas produced before January 1, 2014, an installment 15 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 16 as allowed by law, is due for each month of the calendar year on the last day of the 17 following month; [EXCEPT AS OTHERWISE PROVIDED UNDER (2) OF THIS 18 SUBSECTION,] the amount of the installment payment is the sum of the following 19 amounts, less 1/12 of the tax credits that are allowed by law to be applied against the 20 tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment 21 payment may not be less than zero: 22 (A) for oil and gas not subject to AS 43.55.011(p) 23 [AS 43.55.011(o) OR (p)] produced from leases or properties in the state 24 outside the Cook Inlet sedimentary basin, other than leases or properties 25 subject to AS 43.55.011(f), the greater of 26 (i) zero; or 27 (ii) the sum of 25 percent and the tax rate calculated for 28 the month under AS 43.55.011(g) multiplied by the remainder obtained 29 by subtracting 1/12 of the producer's adjusted lease expenditures for the 30 calendar year of production under AS 43.55.165 and 43.55.170 that are 31 deductible for the oil and gas under AS 43.55.160 from the gross value 01 at the point of production of the oil and gas produced from the leases or 02 properties during the month for which the installment payment is 03 calculated; 04 (B) for oil and gas produced from leases or properties subject 05 to AS 43.55.011(f), the greatest of 06 (i) zero; 07 (ii) zero percent, one percent, two percent, three 08 percent, or four percent, as applicable, 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 for which the installment payment is calculated; or 11 (iii) the sum of 25 percent and the tax rate calculated for 12 the month under AS 43.55.011(g) multiplied by the remainder obtained 13 by subtracting 1/12 of the producer's adjusted lease expenditures for the 14 calendar year of production under AS 43.55.165 and 43.55.170 that are 15 deductible for the oil and gas under AS 43.55.160 from the gross value 16 at the point of production of the oil and gas produced from those leases 17 or properties during the month for which the installment payment is 18 calculated; 19 (C) [FOR OIL OR GAS SUBJECT TO AS 43.55.011(j), (k), 20 OR (o), FOR EACH LEASE OR PROPERTY, THE GREATER OF 21 (i) ZERO; OR 22 (ii) THE SUM OF 25 PERCENT AND THE TAX 23 RATE CALCULATED FOR THE MONTH UNDER AS 43.55.011(g) 24 MULTIPLIED BY THE REMAINDER OBTAINED BY 25 SUBTRACTING 1/12 OF THE PRODUCER'S ADJUSTED LEASE 26 EXPENDITURES FOR THE CALENDAR YEAR OF PRODUCTION 27 UNDER AS 43.55.165 AND 43.55.170 THAT ARE DEDUCTIBLE 28 UNDER AS 43.55.160 FOR THE OIL OR GAS, RESPECTIVELY, 29 PRODUCED FROM THE LEASE OR PROPERTY FROM THE 30 GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 31 OR GAS, RESPECTIVELY, PRODUCED FROM THE LEASE OR 01 PROPERTY DURING THE MONTH FOR WHICH THE 02 INSTALLMENT PAYMENT IS CALCULATED; 03 (D)] for oil and gas subject to AS 43.55.011(p), the lesser of 04 (i) the sum of 25 percent and the tax rate calculated for 05 the month under AS 43.55.011(g) multiplied by the remainder obtained 06 by subtracting 1/12 of the producer's adjusted lease expenditures for the 07 calendar year of production under AS 43.55.165 and 43.55.170 that are 08 deductible for the oil and gas under AS 43.55.160 from the gross value 09 at the point of production of the oil and gas produced from the leases or 10 properties during the month for which the installment payment is 11 calculated, but not less than zero; or 12 (ii) four percent of the gross value at the point of 13 production of the oil and gas produced from the leases or properties 14 during the 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 (3) [(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 (4) [(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 16 OTHERWISE PROVIDED UNDER (6) OF THIS SUBSECTION,] the amount of the 17 installment payment is the sum of the following amounts, less 1/12 of the tax credits 18 that are 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 (5) [(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; the amount of the installment payment is the sum of 27 the following amounts, less 1/12 of the tax credits that are allowed by law to be 28 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 29 of the installment payment may not be less than zero: 30 (A) for oil produced from leases or properties that include land 31 north of 68 degrees North latitude, the greatest of 01 (i) zero; 02 (ii) zero percent, one percent, two percent, three 03 percent, or four percent, as applicable, of the gross value at the point of 04 production of the oil produced from the leases or properties during the 05 month for which the installment payment is calculated; or 06 (iii) 35 percent multiplied by the remainder obtained by 07 subtracting 1/12 of the producer's adjusted lease expenditures for the 08 calendar year of production under AS 43.55.165 and 43.55.170 that are 09 deductible for the oil under AS 43.55.160(h)(1) from the gross value at 10 the point of production of the oil produced from those leases or 11 properties during the month for which the installment payment is 12 calculated, except that, for the purposes of this calculation, a reduction 13 from the gross value at the point of production may apply for oil 14 subject to AS 43.55.160(f) or 43.55.160(f) and (g); 15 (B) for oil produced before or during the last calendar year 16 under AS 43.55.024(b) for which the producer could take a tax credit under 17 AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet 18 sedimentary basin, no part of which is north of 68 degrees North latitude, other 19 than leases or properties subject to AS 43.55.011(p), the greater of 20 (i) zero; or 21 (ii) 35 percent multiplied by the remainder obtained by 22 subtracting 1/12 of the producer's adjusted lease expenditures for the 23 calendar year of production under AS 43.55.165 and 43.55.170 that are 24 deductible for the oil under AS 43.55.160(h)(2) from the gross value at 25 the point of production of the oil produced from the leases or properties 26 during the month for which the installment payment is calculated; 27 (C) for oil and gas produced from leases or properties subject 28 to AS 43.55.011(p), except as otherwise provided under (6) [(8)] of this 29 subsection, the sum of 30 (i) 35 percent multiplied by the remainder obtained by 31 subtracting 1/12 of the producer's adjusted lease expenditures for the 01 calendar year of production under AS 43.55.165 and 43.55.170 that are 02 deductible for the oil under AS 43.55.160(h)(3) from the gross value at 03 the point of production of the oil produced from the leases or properties 04 during the month for which the installment payment is calculated, but 05 not less than zero; and 06 (ii) 13 percent of the gross value at the point of 07 production of the gas produced from the leases or properties during the 08 month, but not less than zero; 09 (D) for oil produced from leases or properties in the state, no 10 part of which is north of 68 degrees North latitude, other than leases or 11 properties subject to (B) or (C) of this paragraph, 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 for the oil under AS 43.55.160(h)(4) from the gross value at 17 the point of production of the oil produced from the leases or properties 18 during the month for which the installment payment is calculated; 19 (E) for gas produced from each lease or property in the state, 20 other than a lease or property subject to AS 43.55.011(p), 13 percent of the 21 gross value at the point of production of the gas produced from the lease or 22 property during the month for which the installment payment is calculated, but 23 not less than zero; 24 (6) [(8)] an amount calculated under (5)(C) [(7)(C)] of this subsection 25 may not exceed four percent of the gross value at the point of production of the oil and 26 gas produced from leases or properties subject to AS 43.55.011(p) during the month 27 for which the installment payment is calculated; 28 (7) [(9)] for purposes of the calculation under (1)(B)(ii), (4)(B)(ii) 29 [(5)(B)(ii)], and (5)(A)(ii) [(7)(A)(ii)] of this subsection, the applicable percentage of 30 the gross value at the point of production is determined under AS 43.55.011(f)(1) or 31 (2) but substituting the phrase "month for which the installment payment is calculated" 01 in AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is due." 02  * Sec. 14. AS 43.55.020(g) is amended to read: 03 (g) Notwithstanding any contrary provision of AS 43.05.225, 04 (1) before January 1, 2014, an unpaid amount of an installment 05 payment required under (a)(1) and (2) [(a)(1) - (3)] of this section that is not paid 06 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 07 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 08 installment payment is due until March 31 following the calendar year of production, 09 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 10 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 11 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 12 amount of tax due under (a)(3) [(a)(4)] of this section that is not paid when due bears 13 interest as provided for a delinquent tax under AS 43.05.225; 14 (2) on and after January 1, 2014, an unpaid amount of an installment 15 payment required under (a)(2), (4), or (5) [(a)(3), (5), (6), OR (7)] of this section that 16 is not paid when due bears interest (A) at the rate provided for an underpayment under 17 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the 18 date the installment payment is due until March 31 following the calendar year of 19 production, and (B) as provided for a delinquent tax under AS 43.05.225 after that 20 March 31; interest accrued under (A) of this paragraph that remains unpaid after that 21 March 31 is treated as an addition to tax that bears interest under (B) of this paragraph; 22 an unpaid amount of tax due under (a)(3) [(a)(4)] of this section that is not paid when 23 due bears interest as provided for a delinquent tax under AS 43.05.225. 24  * Sec. 15. AS 43.55.020(h) is amended to read: 25 (h) Notwithstanding any contrary provision of AS 43.05.280, 26 (1) an overpayment of an installment payment required under (a)(1),  27 (2), (4), or (5) [(a)(1), (2), (3), (5), (6), OR (7)] of this section bears interest at the rate 28 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 29 amended, compounded daily, from the later of the date the installment payment is due 30 or the date the overpayment is made, until the earlier of 31 (A) the date it is refunded or is applied to an underpayment; or 01 (B) March 31 following the calendar year of production; 02 (2) except as provided under (1) of this subsection, interest with 03 respect to an overpayment is allowed only on any net overpayment of the payments 04 required under (a) of this section that remains after the later of March 31 following the 05 calendar year of production or the date that the statement required under 06 AS 43.55.030(a) is filed; 07 (3) interest is allowed under (2) of this subsection only from a date that 08 is 90 days after the later of March 31 following the calendar year of production or the 09 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 10 if the overpayment was refunded within the 90-day period; 11 (4) interest under (2) and (3) of this subsection is paid at the rate and in 12 the manner provided in AS 43.05.225(1). 13  * Sec. 16. AS 43.55.020(i) is amended to read: 14 (i) Notwithstanding any contrary provision of AS 43.05.225 or (g) or (h) of 15 this section, if the amount of a tax payment, including an installment payment, due 16 under (a)(1) - (5) [(a)(1) - (4)] of this section is affected by the retroactive application 17 of a regulation adopted under this chapter, the department shall determine whether the 18 retroactive application of the regulation caused an underpayment or an overpayment of 19 the amount due and adjust the interest due on the affected payment as follows: 20 (1) if an underpayment of the amount due occurred, the department 21 shall waive interest that would otherwise accrue for the underpayment before the first 22 day of the second month following the month in which the regulation became 23 effective, if 24 (A) the department determines that the producer's 25 underpayment resulted because the regulation was not in effect when the 26 payment was due; and 27 (B) the producer demonstrates that it made a good faith 28 estimate of its tax obligation in light of the regulations then in effect when the 29 payment was due and paid the estimated tax; 30 (2) if an overpayment of the amount due occurred and the department 31 determines that the producer's overpayment resulted because the regulation was not in 01 effect when the payment was due, the obligation for a refund for the overpayment does 02 not begin to accrue interest earlier than the following, as applicable: 03 (A) except as otherwise provided under (B) of this paragraph, 04 the first day of the second month following the month in which the regulation 05 became effective; 06 (B) 90 days after an amended statement under AS 43.55.030(a) 07 and an application to request a refund of production tax paid is filed, if the 08 overpayment was for a period for which an amended statement under 09 AS 43.55.030(a) was required to be filed before the regulation became 10 effective. 11  * Sec. 17. AS 43.55.023(a) is amended to read: 12 (a) A producer or explorer may take a tax credit for a qualified capital 13 expenditure as follows: 14 (1) notwithstanding that a qualified capital expenditure may be a 15 deductible lease expenditure for purposes of calculating the production tax value of oil 16 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 17 [AS 38.05.180(i), AS 41.09.010,] AS 43.20.043 [,] or AS 43.55.025, a producer or 18 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 19 against a tax levied by AS 43.55.011(e) in the amount of 10 [20] percent of that 20 expenditure; 21 (2) a producer or explorer may take a credit for a qualified capital 22 expenditure incurred in connection with geological or geophysical exploration or in 23 connection with an exploration well only if the producer or explorer 24 (A) agrees, in writing, to the applicable provisions of 25 AS 43.55.025(f)(2); and 26 (B) submits to the Department of Natural Resources all data 27 that would be required to be submitted under AS 43.55.025(f)(2); 28 (3) a credit for a qualified capital expenditure incurred to explore for, 29 develop, or produce oil or gas deposits located north of 68 degrees North latitude may 30 be taken only if the expenditure is incurred before January 1, 2014. 31  * Sec. 18. AS 43.55.023(a), as amended by sec. 17 of this Act, is amended to read: 01 (a) A producer or explorer may take a tax credit for a qualified capital 02 expenditure as follows: 03 (1) notwithstanding that a qualified capital expenditure may be a 04 deductible lease expenditure for purposes of calculating the production tax value of oil 05 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 06 AS 43.20.043 or AS 43.55.025, a producer or explorer that incurs a qualified capital 07 expenditure may also elect to apply a tax credit against a tax levied by 08 AS 43.55.011(e) in the amount of 10 percent of that expenditure; 09 (2) a producer or explorer may take a credit for a qualified capital 10 expenditure incurred in connection with geological or geophysical exploration or in 11 connection with an exploration well only if the producer or explorer 12 (A) agrees, in writing, to the applicable provisions of 13 AS 43.55.025(f)(2); and 14 (B) submits to the Department of Natural Resources all data 15 that would be required to be submitted under AS 43.55.025(f)(2); 16 (3) a credit for a qualified capital expenditure incurred to explore for, 17 develop, or produce oil or gas deposits located 18 (A) north of 68 degrees North latitude may be taken only if the 19 expenditure is incurred before January 1, 2014;  20 (B) in the Cook Inlet sedimentary basin may be taken only  21 if the expenditure is incurred before January 1, 2018. 22  * Sec. 19. AS 43.55.023(b) is amended to read: 23 (b) Before January 1, 2014, a producer or explorer may elect to take a tax 24 credit in the amount of 25 percent of a carried-forward annual loss. For lease 25 expenditures incurred on and after January 1, 2014, and before January 1, 2016, to 26 explore for, develop, or produce oil or gas deposits located north of 68 degrees North 27 latitude, a producer or explorer may elect to take a tax credit in the amount of 45 28 percent of a carried-forward annual loss. For lease expenditures incurred on and after 29 January 1, 2016, to explore for, develop, or produce oil or gas deposits located north 30 of 68 degrees North latitude, a producer or explorer may elect to take a tax credit in 31 the amount of 35 percent of a carried-forward annual loss. For lease expenditures 01 incurred on or after January 1, 2014, and before January 1, 2017, to explore for, 02 develop, or produce oil or gas deposits located south of 68 degrees North latitude, a 03 producer or explorer may elect to take a tax credit in the amount of 25 percent of a 04 carried-forward annual loss. For lease expenditures incurred on or after January 1,  05 2017, to explore for, develop, or produce oil or gas deposits located south of 68  06 degrees North latitude, a producer or explorer may elect to take a tax credit in  07 the amount of 15 percent of a carried-forward annual loss. A credit under this 08 subsection may be applied against a tax levied by AS 43.55.011(e). For purposes of 09 this subsection, 10 (1) a carried-forward annual loss is the amount of a producer's or 11 explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 12 previous calendar year that was not deductible in calculating production tax values for 13 that calendar year under AS 43.55.160;  14 (2) for lease expenditures incurred on or after January 1, 2017,  15 any reduction under AS 43.55.160(f) or (g) is added back to the calculation of  16 production tax values for that calendar year under AS 43.55.160 for the  17 determination of a carried-forward annual loss.  18  * Sec. 20. AS 43.55.023(b), as amended by sec. 19 of this Act, is amended to read: 19 (b) Before January 1, 2014, a producer or explorer may elect to take a tax 20 credit in the amount of 25 percent of a carried-forward annual loss. For lease 21 expenditures incurred on and after January 1, 2014, and before January 1, 2016, to 22 explore for, develop, or produce oil or gas deposits located north of 68 degrees North 23 latitude, a producer or explorer may elect to take a tax credit in the amount of 45 24 percent of a carried-forward annual loss. For lease expenditures incurred on and after 25 January 1, 2016, to explore for, develop, or produce oil or gas deposits located north 26 of 68 degrees North latitude, a producer or explorer may elect to take a tax credit in 27 the amount of 35 percent of a carried-forward annual loss. For lease expenditures 28 incurred on or after January 1, 2014, and before January 1, 2017, to explore for, 29 develop, or produce oil or gas deposits located south of 68 degrees North latitude, a 30 producer or explorer may elect to take a tax credit in the amount of 25 percent of a 31 carried-forward annual loss. For lease expenditures incurred on or after January 1, 01 2017, to explore for, develop, or produce oil or gas deposits located south of 68 02 degrees North latitude, a producer or explorer may elect to take a tax credit in the 03 amount of 15 percent of a carried-forward annual loss, except that a credit for lease  04 expenditures incurred to explore for, develop, or produce oil or gas deposits  05 located in the Cook Inlet sedimentary basin may only be taken if the expenditure  06 is incurred before January 1, 2018. A credit under this subsection may be applied 07 against a tax levied by AS 43.55.011(e). For purposes of this subsection, 08 (1) a carried-forward annual loss is the amount of a producer's or 09 explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 10 previous calendar year that was not deductible in calculating production tax values for 11 that calendar year under AS 43.55.160; 12 (2) for lease expenditures incurred on or after January 1, 2017, any 13 reduction under AS 43.55.160(f) or (g) is added back to the calculation of production 14 tax values for that calendar year under AS 43.55.160 for the determination of a 15 carried-forward annual loss. 16  * Sec. 21. AS 43.55.023(d) is amended to read: 17 (d) A person that is entitled to take a tax credit under this section that wishes 18 to transfer the unused credit to another person or obtain a cash payment under 19 AS 43.55.028 may apply to the department for a transferable tax credit certificate. An 20 application under this subsection must be in a form prescribed by the department and 21 must include supporting information and documentation that the department 22 reasonably requires. The department shall grant or deny an application, or grant an 23 application as to a lesser amount than that claimed and deny it as to the excess, not 24 later than 120 days after the latest of (1) March 31 of the year following the calendar 25 year in which the [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward 26 annual loss for which the credit is claimed was incurred; (2) the date the statement 27 required under AS 43.55.030(a) or (e) was filed for the calendar year in which the 28 [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward annual loss for which 29 the credit is claimed was incurred; or (3) the date the application was received by the 30 department. If, based on the information then available to it, the department is 31 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 01 the applicant a transferable tax credit certificate for the amount of the credit. A 02 certificate issued under this subsection does not expire. 03  * Sec. 22. AS 43.55.023(e) is amended to read: 04 (e) A person to which a transferable tax credit certificate is issued under (d) of 05 this section may transfer the certificate to another person, and a transferee may further 06 transfer the certificate. Subject to the limitations set out in former (a) of this section  07 and (b) - (d) [(a) - (d)] of this section, and notwithstanding any action the department 08 may take with respect to the applicant under (g) of this section, the owner of a 09 certificate may apply the credit or a portion of the credit shown on the certificate only 10 against a tax levied by AS 43.55.011(e). However, a credit shown on a transferable tax 11 credit certificate may not be applied to reduce a transferee's total tax liability under 12 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80 13 percent of the tax that would otherwise be due without applying that credit. Any 14 portion of a credit not used under this subsection may be applied in a later period. 15  * Sec. 23. AS 43.55.023(l) is amended to read: 16 (l) A producer or explorer may apply for a tax credit for a well lease 17 expenditure incurred in the state south of 68 degrees North latitude after June 30, 18 2010, as follows: 19 (1) notwithstanding that a well lease expenditure incurred in the state 20 south of 68 degrees North latitude may be a deductible lease expenditure for purposes 21 of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a 22 credit for that expenditure is taken under (a) of this section, [AS 38.05.180(i), 23 AS 41.09.010,] AS 43.20.043, or AS 43.55.025, a producer or explorer that incurs a 24 well lease expenditure in the state south of 68 degrees North latitude may elect to 25 apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of 26 (A) 40 percent of that expenditure incurred before January 1,  27 2017;  28 (B) 20 percent of that expenditure incurred on or after  29 January 1, 2017 [; A TAX CREDIT UNDER THIS PARAGRAPH MAY BE 30 APPLIED FOR A SINGLE CALENDAR YEAR]; 31 (2) a producer or explorer may take a credit for a well lease 01 expenditure incurred in the state south of 68 degrees North latitude in connection with 02 geological or geophysical exploration or in connection with an exploration well only if 03 the producer or explorer 04 (A) agrees, in writing, to the applicable provisions of 05 AS 43.55.025(f)(2); and 06 (B) submits to the Department of Natural Resources all data 07 that would be required to be submitted under AS 43.55.025(f)(2). 08  * Sec. 24. AS 43.55.023(l), as amended by sec. 23 of this Act, is amended to read: 09 (l) A producer or explorer may apply for a tax credit for a well lease 10 expenditure incurred in the state south of 68 degrees North latitude after June 30, 11 2010, as follows: 12 (1) notwithstanding that a well lease expenditure incurred in the state 13 south of 68 degrees North latitude may be a deductible lease expenditure for purposes 14 of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a 15 credit for that expenditure is taken under (a) of this section, AS 43.20.043, or 16 AS 43.55.025, a producer or explorer that incurs a well lease expenditure in the state 17 south of 68 degrees North latitude may elect to apply a tax credit against a tax levied 18 by AS 43.55.011(e) in the amount of 19 (A) 40 percent of that expenditure incurred before January 1, 20 2017; 21 (B) 20 percent of that expenditure incurred on or after 22 January 1, 2017;  23 (2) a producer or explorer may take a credit for a well lease 24 expenditure incurred in the state south of 68 degrees North latitude in connection with 25 geological or geophysical exploration or in connection with an exploration well only if 26 the producer or explorer 27 (A) agrees, in writing, to the applicable provisions of 28 AS 43.55.025(f)(2); and 29 (B) submits to the Department of Natural Resources all data 30 that would be required to be submitted under AS 43.55.025(f)(2);  31 (3) a credit for a well lease expenditure incurred to explore  01 for, develop, or produce oil or gas deposits located in the Cook Inlet  02 sedimentary basin may be taken only if the expenditure is incurred before  03 January 1, 2018. 04  * Sec. 25. AS 43.55.025(m) is amended to read: 05 (m) The persons that drill the first four exploration wells in the state and 06 within the areas described in (o) of this section on state lands, private lands, or federal 07 onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a 08 prospect in a basin described in (o) of this section are eligible for a credit under (a)(6) 09 of this section. A credit under this subsection may not be taken for more than two 10 exploration wells in a single area described in (o)(1) - (6) of this section. Exploration 11 expenditures eligible for the credit in this subsection must be incurred for work 12 performed after June 1, 2012, and before July 1, 2016, except that expenditures to  13 complete an exploration well that was spudded but not completed before July 1,  14 2016, are eligible for the credit under this subsection. A person planning to drill an 15 exploration well on private land and to apply for a credit under this subsection shall 16 obtain written consent from the owner of the oil and gas interest for the full public 17 release of all well data after the expiration of the confidentiality period applicable to 18 information collected under (f) of this section. The written consent of the owner of the 19 oil and gas interest must be submitted to the commissioner of natural resources before 20 approval of the proposed exploration well. In addition to the requirements in (c)(1), 21 (c)(2)(A), and (c)(2)(C) of this section and submission of the written consent of the 22 owner of the oil and gas interest, a person planning to drill an exploration well shall 23 obtain approval from the commissioner of natural resources before the well is 24 spudded. The commissioner of natural resources shall make a written determination 25 approving or rejecting an exploration well within 60 days after receiving the request 26 for approval or as soon as is practicable thereafter. Before approving the exploration 27 well, the commissioner of natural resources shall consider the following: the location 28 of the well; the proximity to a community in need of a local energy source; the 29 proximity of existing infrastructure; the experience and safety record of the explorer in 30 conducting operations in remote or roadless areas; the projected cost schedule; 31 whether seismic mapping and seismic data sufficiently identify a particular trap for 01 exploration; whether the targeted and planned depth and range are designed to 02 penetrate and fully evaluate the hydrocarbon potential of the proposed prospect and 03 reach the level below which economic hydrocarbon reservoirs are likely to be found, 04 or reach 12,000 feet or more true vertical depth; and whether the exploration plan 05 provides for a full evaluation of the wellbore below surface casing to the depth of the 06 well. Whether the exploration well for which a credit is requested under this 07 subsection is located within an area and a basin described under (o) of this section 08 shall be determined by the commissioner of natural resources and reported to the 09 commissioner. A taxpayer that obtains a credit under this subsection may not claim a 10 tax credit under AS 43.55.023 or another provision in this section for the same 11 exploration expenditure. 12  * Sec. 26. AS 43.55.028(e) is amended to read: 13 (e) The department, on the written application of a person to whom a 14 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 15 AS 43.55.023(m) or to whom a production tax credit certificate has been issued under 16 AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 17 purchase, in whole or in part, the certificate. The department may not purchase a  18 total of more than $85,000,000 in tax credit certificates from a person in a  19 calendar year. Before purchasing a certificate or part of a certificate, [IF] the 20 department shall find [FINDS] that 21 (1) the calendar year of the purchase is not earlier than the first 22 calendar year for which the credit shown on the certificate would otherwise be allowed 23 to be applied against a tax; 24 (2) the application is not the result of the division of a single entity  25 into multiple entities that would reasonably be expected to apply as a single entity  26 if the $85,000,000 limitation in this subsection did not exist [APPLICANT DOES 27 NOT HAVE AN OUTSTANDING LIABILITY TO THE STATE FOR UNPAID 28 DELINQUENT TAXES UNDER THIS TITLE]; 29 (3) the applicant's total tax liability under AS 43.55.011(e), after 30 application of all available tax credits, for the calendar year in which the application is 31 made is zero; 01 (4) the applicant's average daily production of oil and gas taxable 02 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 03 the application is made was not more than 50,000 BTU equivalent barrels; and 04 (5) the purchase is consistent with this section and regulations adopted 05 under this section. 06  * Sec. 27. AS 43.55.028(g) is amended to read: 07 (g) The department shall [MAY] adopt regulations to carry out the purposes 08 of this section, including standards and procedures to allocate available money among 09 applications for purchases under this chapter and claims for refunds and payments 10 under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the 11 applications for purchase and claims for refund exceed the amount of available money 12 in the fund. The regulations adopted by the department 13 (1) may not, when allocating available money in the fund under this 14 section, distinguish an application for the purchase of a credit certificate issued under 15 former AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046, 16 43.20.047, or 43.20.053;  17 (2) must grant a preference to an applicant if at least 75 percent of  18 the applicant's workforce in the state in the previous calendar year was  19 composed of resident workers; in this paragraph, "resident worker" has the  20 meaning given in AS 43.40.092(b). 21  * Sec. 28. AS 43.55.028 is amended by adding a new subsection to read: 22 (j) If an applicant or claimant has an outstanding liability to the state directly 23 related to the applicant's or claimant's oil or gas exploration, development, or 24 production and the department has not previously reduced the amount paid to that 25 applicant or claimant for a certificate or refund because of that outstanding liability, 26 the department may purchase only that portion of a certificate or pay only that portion 27 of a refund that exceeds the outstanding liability. With the applicant's or claimant's 28 consent, the department may apply the amount by which the department reduced its 29 purchase of a certificate or payment for a refund because of an outstanding liability to 30 satisfy the outstanding liability. Satisfaction of an outstanding liability under this 31 subsection does not affect the applicant's ability to contest that liability. The 01 department may enter into contracts or agreements with another department to which 02 the outstanding liability is owed. In this subsection, "outstanding liability" means an 03 amount of tax, interest, penalty, fee, rental, royalty, or other charge for which the state 04 has issued a demand for payment that has not been paid when due and, if contested, 05 has not been finally resolved against the state. 06  * Sec. 29. AS 43.55.029(a) is amended to read: 07 (a) An explorer or producer that has applied for a production tax credit under 08 former AS 43.55.023(a) [, (b),] or (l) or under AS 43.55.023(b) or 43.55.025(a) may 09 make a present assignment of the production tax credit certificate expected to be 10 issued by the department to a third-party assignee. The assignment may be made either 11 at the time the application is filed with the department or not later than 30 days after 12 the date of filing with the department. Once a notice of assignment in compliance with 13 this section is filed with the department, the assignment is irrevocable and cannot be 14 modified by the explorer or producer without the written consent of the assignee 15 named in the assignment. If a production tax credit certificate is issued to the explorer 16 or producer, the notice of assignment remains effective and shall be filed with the 17 department by the explorer or producer together with any application for the 18 department to purchase the certificate under AS 43.55.028(e). 19  * Sec. 30. AS 43.55.030(a) is amended to read: 20 (a) A producer that produces oil or gas from a lease or property in the state 21 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 22 for that oil or gas, shall file with the department on March 31 of the following year a 23 statement, under oath, in a form prescribed by the department, giving, with other 24 information required, the following: 25 (1) a description of each lease or property from which oil or gas was 26 produced, by name, legal description, lease number, or accounting codes assigned by 27 the department; 28 (2) the names of the producer and, if different, the person paying the 29 tax, if any; 30 (3) the gross amount of oil and the gross amount of gas produced from 31 each lease or property, separately identifying the gross amount of gas produced from 01 each oil and gas lease to which an effective election under AS 43.55.014(a) applies, 02 the amount of gas delivered to the state under AS 43.55.014(b), and the percentage of 03 the gross amount of oil and gas owned by the producer; 04 (4) the gross value at the point of production of the oil and of the gas 05 produced from each lease or property owned by the producer and the costs of 06 transportation of the oil and gas; 07 (5) the name of the first purchaser and the price received for the oil and 08 for the gas, unless relieved from this requirement in whole or in part by the 09 department; 10 (6) the producer's qualified capital expenditures, [AS DEFINED IN 11 AS 43.55.023,] other lease expenditures under AS 43.55.165, and adjustments or other 12 payments or credits under AS 43.55.170; 13 (7) the production tax values of the oil and gas under AS 43.55.160(a) 14 or of the oil under AS 43.55.160(h), as applicable; 15 (8) any claims for tax credits to be applied; and 16 (9) calculations showing the amounts, if any, that were or are due 17 under AS 43.55.020(a) and interest on any underpayment or overpayment. 18  * Sec. 31. AS 43.55.030(e) is amended to read: 19 (e) An explorer or producer that incurs a lease expenditure under 20 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 21 year but does not produce oil or gas from a lease or property in the state during the 22 calendar year shall file with the department, on March 31 of the following year, a 23 statement, under oath, in a form prescribed by the department, giving, with other 24 information required, the following: 25 (1) the explorer's or producer's qualified capital expenditures, [AS 26 DEFINED IN AS 43.55.023,] other lease expenditures under AS 43.55.165, and 27 adjustments or other payments or credits under AS 43.55.170; and 28 (2) if the explorer or producer receives a payment or credit under 29 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 30 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 31  * Sec. 32. AS 43.55.160(a) is amended to read: 01 (a) For oil and gas produced before January 1, 2022, except as provided in (b), 02 (f), and (g) of this section, for the purposes of 03 (1) AS 43.55.011(e)(1) and (2), the annual production tax value of 04 taxable oil, gas, or oil and gas produced during a calendar year in a category for which 05 a separate annual production tax value is required to be calculated under this 06 paragraph is the gross value at the point of production of that oil, gas, or oil and gas 07 taxable under AS 43.55.011(e), less the producer's lease expenditures under 08 AS 43.55.165 for the calendar year applicable to the oil, gas, or oil and gas in that 09 category produced by the producer during the calendar year, as adjusted under 10 AS 43.55.170; a separate annual production tax value shall be calculated for 11 (A) oil and gas produced from leases or properties in the state 12 that include land north of 68 degrees North latitude, other than gas produced 13 before 2022 and used in the state; 14 (B) oil and gas produced from leases or properties in the state 15 outside the Cook Inlet sedimentary basin, no part of which is north of 68 16 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 17 and (b); this subparagraph does not apply to 18 (i) gas produced before 2022 and used in the state; or 19 (ii) oil and gas subject to AS 43.55.011(p); 20 (C) [OIL PRODUCED BEFORE 2022 FROM EACH LEASE 21 OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN; 22 (D) GAS PRODUCED BEFORE 2022 FROM EACH LEASE 23 OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN; 24 (E)] gas produced before 2022 from each lease or property in 25 the state outside the Cook Inlet sedimentary basin and used in the state, other 26 than gas subject to AS 43.55.011(p); 27 (D) [(F)] oil and gas subject to AS 43.55.011(p) produced from 28 leases or properties in the state; 29 (E) [(G)] oil and gas produced from leases or properties in the 30 state no part of which is north of 68 degrees North latitude, other than oil or 31 gas described in (B), (C), or (D) [, (E), OR (F)] of this paragraph; 01 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 02 the monthly production tax value of the taxable 03 (A) oil and gas produced during a month from leases or 04 properties in the state that include land north of 68 degrees North latitude is the 05 gross value at the point of production of the oil and gas taxable under 06 AS 43.55.011(e) and produced by the producer from those leases or properties, 07 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 08 calendar year applicable to the oil and gas produced by the producer from 09 those leases or properties, as adjusted under AS 43.55.170; [THIS 10 SUBPARAGRAPH DOES NOT APPLY TO GAS SUBJECT TO 11 AS 43.55.011(o);] 12 (B) oil and gas produced during a month from leases or 13 properties in the state outside the Cook Inlet sedimentary basin, no part of 14 which is north of 68 degrees North latitude, is the gross value at the point of 15 production of the oil and gas taxable under AS 43.55.011(e) and produced by 16 the producer from those leases or properties, less 1/12 of the producer's lease 17 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 18 gas produced by the producer from those leases or properties, as adjusted under 19 AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY TO GAS 20 SUBJECT TO AS 43.55.011(o);] 21 (C) [OIL PRODUCED DURING A MONTH FROM A 22 LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN IS 23 THE GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 24 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 25 PRODUCER FROM THAT LEASE OR PROPERTY, LESS 1/12 OF THE 26 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 27 CALENDAR YEAR APPLICABLE TO THE OIL PRODUCED BY THE 28 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 29 UNDER AS 43.55.170; 30 (D) GAS PRODUCED DURING A MONTH FROM A 31 LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN IS 01 THE GROSS VALUE AT THE POINT OF PRODUCTION OF THE GAS 02 TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE 03 PRODUCER FROM THAT LEASE OR PROPERTY, LESS 1/12 OF THE 04 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 05 CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE 06 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 07 UNDER AS 43.55.170; 08 (E)] gas produced during a month from a lease or property 09 outside the Cook Inlet sedimentary basin and used in the state is the gross 10 value at the point of production of that gas taxable under AS 43.55.011(e) and 11 produced by the producer from that lease or property, less 1/12 of the 12 producer's lease expenditures under AS 43.55.165 for the calendar year 13 applicable to that gas produced by the producer from that lease or property, as 14 adjusted under AS 43.55.170. 15  * Sec. 33. AS 43.55.160(e) is amended to read: 16 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 17 would otherwise be deductible by a producer in a calendar year but whose deduction 18 would cause an annual production tax value calculated under (a)(1) or (h) of this 19 section of taxable oil or gas produced during the calendar year to be less than zero 20 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 21 However, the department shall provide by regulation a method to ensure that, for a 22 period for which a producer's tax liability is limited by AS 43.55.011(p) 23 [AS 43.55.011(j), (k), (o), OR (p)], any adjusted lease expenditures under 24 AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer for that 25 period but whose deduction would cause a production tax value calculated under 26 (a)(1)(C) or [,] (D) [, (E), OR (F),] or (h)(3) of this section to be less than zero are 27 accounted for as though the adjusted lease expenditures had first been used as 28 deductions in calculating the production tax values of oil or gas subject to any of the 29 limitations under AS 43.55.011(p) [AS 43.55.011(j), (k), (o), OR (p)] that have 30 positive production tax values so as to reduce the tax liability calculated without 31 regard to the limitation to the maximum amount provided for under the applicable 01 provision of AS 43.55.011(p) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of 02 those adjusted lease expenditures remaining after the accounting provided for under 03 this subsection may be used to establish a carried-forward annual loss under 04 AS 43.55.023(b). In this subsection, "producer" includes "explorer." 05  * Sec. 34. AS 43.55.160(f) is amended to read: 06 (f) On and after January 1, 2014, in the calculation of an annual production tax 07 value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the 08 point of production of oil or gas produced from a lease or property north of 68 degrees 09 North latitude meeting one or more of the following criteria is reduced by 20 percent: 10 (1) the oil or gas is produced from a lease or property that does not contain a lease that 11 was within a unit on January 1, 2003; (2) the oil or gas is produced from a 12 participating area established after December 31, 2011, that is within a unit formed 13 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 14 contain a reservoir that had previously been in a participating area established before 15 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 16 existing participating area by the Department of Natural Resources on and after 17 January 1, 2014, and the producer demonstrates to the department that the volume of 18 oil or gas produced is from acreage added to an existing participating area. This 19 subsection does not apply to gas produced before 2022 that is used in the state or to 20 gas produced on and after January 1, 2022. For oil or gas first produced after  21 December 31, 2016, the reduction under this subsection shall apply to oil or gas  22 produced from a lease or property for the first five years after the  23 commencement of production in commercial quantities of oil or gas from that  24 lease or property. For oil or gas first produced before January 1, 2017, the  25 reduction under this subsection for a lease or property shall expire January 1,  26 2021. A reduction under this subsection may not reduce the gross value at the point of 27 production below zero. In this subsection, "participating area" means a reservoir or 28 portion of a reservoir producing or contributing to production as approved by the 29 Department of Natural Resources. 30  * Sec. 35. AS 43.55.160(g) is amended to read: 31 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 01 section, in the calculation of an annual production tax value of a producer under 02 (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or 03 gas produced from a lease or property north of 68 degrees North latitude that does not 04 contain a lease that was within a unit on January 1, 2003, is reduced by 10 percent if 05 the oil or gas is produced from a unit made up solely of leases that have a royalty 06 share of more than 12.5 percent in amount or value of the production removed or sold 07 from the lease as determined under AS 38.05.180(f). This subsection does not apply if 08 the royalty obligation for one or more of the leases in the unit has been reduced to 12.5 09 percent or less under AS 38.05.180(j) for all or part of the calendar year for which the 10 annual production tax value is calculated. This subsection does not apply to gas 11 produced before 2022 that is used in the state or to gas produced on and after 12 January 1, 2022. For oil or gas first produced after December 31, 2016, the  13 reduction under this subsection shall apply to oil or gas produced from a lease or  14 property for the first five years after the commencement of production in  15 commercial quantities of oil or gas from that lease or property. For oil or gas first  16 produced before January 1, 2017, the reduction under this subsection for a lease  17 or property shall expire January 1, 2021. A reduction under this subsection may not 18 reduce the gross value at the point of production below zero. 19  * Sec. 36. AS 43.55.165(a) is amended to read: 20 (a) For [EXCEPT AS PROVIDED IN (j) AND (k) OF THIS SECTION, 21 FOR] purposes of this chapter, a producer's lease expenditures for a calendar year are 22 (1) costs, other than items listed in (e) of this section, that are 23 (A) incurred by the producer during the calendar year after 24 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 25 within the producer's leases or properties in the state or, in the case of land in 26 which the producer does not own an operating right, operating interest, or 27 working interest, to explore for oil or gas deposits within other land in the 28 state; and 29 (B) allowed by the department by regulation, based on the 30 department's determination that the costs satisfy the following three 31 requirements: 01 (i) the costs must be incurred upstream of the point of 02 production of oil and gas; 03 (ii) the costs must be ordinary and necessary costs of 04 exploring for, developing, or producing, as applicable, oil or gas 05 deposits; and 06 (iii) the costs must be direct costs of exploring for, 07 developing, or producing, as applicable, oil or gas deposits; and 08 (2) a reasonable allowance for that calendar year, as determined under 09 regulations adopted by the department, for overhead expenses that are directly related 10 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 11  * Sec. 37. AS 43.55.165(e) is amended to read: 12 (e) For purposes of this section, lease expenditures do not include 13 (1) depreciation, depletion, or amortization; 14 (2) oil or gas royalty payments, production payments, lease profit 15 shares, or other payments or distributions of a share of oil or gas production, profit, or 16 revenue, except that a producer's lease expenditures applicable to oil and gas produced 17 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 18 profit paid to the state under that lease; 19 (3) taxes based on or measured by net income; 20 (4) interest or other financing charges or costs of raising equity or debt 21 capital; 22 (5) acquisition costs for a lease or property or exploration license; 23 (6) costs arising from fraud, wilful misconduct, gross negligence, 24 violation of law, or failure to comply with an obligation under a lease, permit, or 25 license issued by the state or federal government; 26 (7) fines or penalties imposed by law; 27 (8) costs of arbitration, litigation, or other dispute resolution activities 28 that involve the state or concern the rights or obligations among owners of interests in, 29 or rights to production from, one or more leases or properties or a unit; 30 (9) costs incurred in organizing a partnership, joint venture, or other 31 business entity or arrangement; 01 (10) amounts paid to indemnify the state; the exclusion provided by 02 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 03 a third-party insurer or surety; 04 (11) surcharges levied under AS 43.55.201 or 43.55.300; 05 (12) an expenditure otherwise deductible under (b) of this section that 06 is a result of an internal transfer, a transaction with an affiliate, or a transaction 07 between related parties, or is otherwise not an arm's length transaction, unless the 08 producer establishes to the satisfaction of the department that the amount of the 09 expenditure does not exceed the fair market value of the expenditure; 10 (13) an expenditure incurred to purchase an interest in any corporation, 11 partnership, limited liability company, business trust, or any other business entity, 12 whether or not the transaction is treated as an asset sale for federal income tax 13 purposes; 14 (14) a tax levied under AS 43.55.011 or 43.55.014; 15 (15) costs incurred for dismantlement, removal, surrender, or 16 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 17 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 18 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 19 excluded under this paragraph if the dismantlement, removal, surrender, or 20 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 21 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 22 (16) costs incurred for containment, control, cleanup, or removal in 23 connection with any unpermitted release of oil or a hazardous substance and any 24 liability for damages imposed on the producer or explorer for that unpermitted release; 25 this paragraph does not apply to the cost of developing and maintaining an oil 26 discharge prevention and contingency plan under AS 46.04.030; 27 (17) costs incurred to satisfy a work commitment under an exploration 28 license under AS 38.05.132; 29 (18) that portion of expenditures, that would otherwise be qualified 30 capital expenditures, [AS DEFINED IN AS 43.55.023,] incurred during a calendar 31 year that are less than the product of $0.30 multiplied by the total taxable production 01 from each lease or property, in BTU equivalent barrels, during that calendar year, 02 except that, when a portion of a calendar year is subject to this provision, the 03 expenditures and volumes shall be prorated within that calendar year; 04 (19) costs incurred for repair, replacement, or deferred maintenance of 05 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 06 undertaken in response to a failure, problem, or event that results in an unscheduled 07 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 08 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 09 equipment, other than a well, that is undertaken in response to, or is otherwise 10 associated with, an unpermitted release of a hazardous substance or of gas; however, 11 costs under this paragraph that would otherwise constitute lease expenditures under (a) 12 and (b) of this section may be treated as lease expenditures if the department 13 determines that the repair or replacement is solely necessitated by an act of war, by an 14 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 15 inevitable, and irresistible character, the effects of which could not have been 16 prevented or avoided by the exercise of due care or foresight, or by an intentional or 17 negligent act or omission of a third party, other than a party or its agents in privity of 18 contract with, or employed by, the producer or an operator acting for the producer, but 19 only if the producer or operator, as applicable, exercised due care in operating and 20 maintaining the facility, pipeline, structure, or equipment, and took reasonable 21 precautions against the act or omission of the third party and against the consequences 22 of the act or omission; in this paragraph, 23 (A) "costs incurred for repair, replacement, or deferred 24 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 25 to dismantle and remove the facility, pipeline, structure, or equipment that is 26 being replaced; 27 (B) "hazardous substance" has the meaning given in 28 AS 46.03.826; 29 (C) "replacement" includes renovation or improvement; 30 (20) costs incurred to construct, acquire, or operate a refinery or crude 31 oil topping plant, regardless of whether the products of the refinery or topping plant 01 are used in oil or gas exploration, development, or production operations; however, if 02 a producer owns a refinery or crude oil topping plant that is located on or near the 03 premises of the producer's lease or property in the state and that processes the 04 producer's oil produced from that lease or property into a product that the producer 05 uses in the operation of the lease or property in drilling for or producing oil or gas, the 06 producer's lease expenditures include the amount calculated by subtracting from the 07 fair market value of the product used the prevailing value, as determined under 08 AS 43.55.020(f), of the oil that is processed; 09 (21) costs of lobbying, public relations, public relations advertising, or 10 policy advocacy. 11  * Sec. 38. AS 43.55.165(f) is amended to read: 12 (f) For purposes of AS 43.55.023(b) [AS 43.55.023(a) AND (b)] and only as 13 to expenditures incurred to explore for an oil or gas deposit located within land in 14 which an explorer does not own a working interest, the term "producer" in this section 15 includes "explorer." 16  * Sec. 39. AS 43.55.165(h) is amended to read: 17 (h) The department shall adopt regulations that provide for reasonable 18 methods of allocating costs between oil and gas [, BETWEEN GAS SUBJECT TO 19 AS 43.55.011(o) AND OTHER GAS,] and between leases or properties in those 20 circumstances where an allocation of costs is required to determine lease expenditures 21 that are costs of exploring for, developing, or producing oil deposits or costs of 22 exploring for, developing, or producing gas deposits, or that are costs of exploring for, 23 developing, or producing oil or gas deposits located within different leases or 24 properties. 25  * Sec. 40. AS 43.55.170(c) is amended to read: 26 (c) For purposes of AS 43.55.023(b) [AS 43.55.023(a) AND (b)] and only as 27 to expenditures incurred to explore for an oil or gas deposit located within land in 28 which an explorer does not own a working interest, the term "producer" in this section 29 includes "explorer." 30  * Sec. 41. AS 43.55.890 is amended to read: 31 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 01 provision of AS 40.25.100, and regardless of whether the information is considered 02 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 03 particular returns or reports, the department may publish the following information 04 under this chapter, if aggregated among three or more producers or explorers, showing 05 by month or calendar year and by lease or property, unit, or area of the state: 06 (1) the amount of oil or gas production; 07 (2) the amount of taxes levied under this chapter or paid under this 08 chapter; 09 (3) the effective tax rates under this chapter; 10 (4) the gross value of oil or gas at the point of production; 11 (5) the transportation costs for oil or gas; 12 (6) qualified capital expenditures [, AS DEFINED IN AS 43.55.023]; 13 (7) exploration expenditures under AS 43.55.025; 14 (8) production tax values of oil or gas under AS 43.55.160; 15 (9) lease expenditures under AS 43.55.165; 16 (10) adjustments to lease expenditures under AS 43.55.170; 17 (11) tax credits applicable or potentially applicable against taxes levied 18 by this chapter. 19  * Sec. 42. AS 43.55.895(b) is amended to read: 20 (b) A municipal entity subject to taxation because of this section 21 (1) is eligible for [ALL] tax credits proportionate to its production  22 taxable under AS 43.55.011(e); and  23 (2) shall allocate its lease expenditures in proportion to its  24 production taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO THE 25 SAME EXTENT AS ANY OTHER PRODUCER]. 26 * Sec. 43. AS 43.55.900 is amended by adding a new paragraph to read: 27 (26) "qualified capital expenditure" 28 (A) means, except as otherwise provided in (B) of this 29 paragraph, an expenditure that is a lease expenditure under AS 43.55.165 and 30 is 31 (i) incurred for geological or geophysical exploration; 01 (ii) treated as a capitalized expenditure under 26 U.S.C. 02 (Internal Revenue Code), as amended, regardless of elections made 03 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is 04 treated as a capitalized expenditure for federal income tax reporting 05 purposes by the person incurring the expenditure; or 06 (iii) treated as a capitalized expenditure under 26 U.S.C. 07 (Internal Revenue Code), as amended, regardless of elections made 08 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is 09 eligible to be deducted as an expense under 26 U.S.C. 263(c) (Internal 10 Revenue Code), as amended; 11 (B) does not include an expenditure incurred to acquire an asset 12 the cost of previously acquiring which was a lease expenditure under 13 AS 43.55.165 or would have been a lease expenditure under AS 43.55.165 if it 14 had been incurred after March 31, 2006, or that has previously been placed in 15 service in the state; an expenditure to acquire an asset is not excluded under 16 this subparagraph if not more than an immaterial portion of the asset meets a 17 description under this subparagraph; for purposes of this subparagraph, "asset" 18 includes geological, geophysical, and well data and interpretations. 19  * Sec. 44. AS 43.70 is amended by adding new sections to read: 20 Sec. 43.70.025. Bond or cash deposit required for an oil or gas business. (a) 21 At the time of applying for a license under this chapter, an applicant engaged in the 22 business of oil or gas exploration, development, or production shall file a surety bond 23 in the amount of $250,000 running to the state, conditioned upon the applicant's 24 promise to pay all 25 (1) taxes and contributions due the state and political subdivisions; 26 (2) persons furnishing labor or material or renting or supplying 27 equipment to the applicant; and 28 (3) amounts that may be adjudged against the applicant because of 29 negligent or improper work or breach of contract while engaged in the business of oil 30 or gas exploration, development, or production. 31 (b) In lieu of the surety bond required under this section, the applicant may 01 file with the commissioner a cash deposit or other negotiable security acceptable to the 02 commissioner in the amount of $250,000. 03 (c) The bond required by this section remains in effect until cancelled by 04 action of the surety, the principal, or if the commissioner finds that the business is 05 producing oil or gas in commercial quantities, by the commissioner. 06 Sec. 43.70.028. Claims against an oil or gas business. (a) A person having a 07 claim against a person required to file a surety bond under AS 43.70.025 because of 08 the failure to pay a liability described in AS 43.70.025(a) may bring suit upon the 09 bond. A copy of the complaint shall be served by registered or certified mail on the 10 commissioner at the time suit is filed, and the commissioner shall maintain a record, 11 available for public inspection, of all suits commenced. This service on the 12 commissioner shall constitute service on the surety, and the commissioner shall 13 transmit the complaint or a copy of it to the surety within 72 hours after it is received. 14 The surety on the bond is not liable in an aggregate amount in excess of that named in 15 the bond, but if claims pending at any one time exceed the amount of the bond, the 16 claims shall be satisfied from the bond in the following order: 17 (1) labor, including employee benefits; 18 (2) taxes and contributions due the state, city, and borough, in that 19 order; 20 (3) material and equipment; 21 (4) claims for negligent or improper work or breach of contract; 22 (5) repair of public facilities. 23 (b) If a judgment is entered against a cash deposit, the commissioner, upon 24 receipt of a certified copy of a final judgment, shall pay the judgment from the amount 25 of the deposit in accordance with the priorities set out in (a) of this section. 26 (c) An action described in (a) of this section may not be commenced on the 27 bond more than three years after the cancellation of the bond. 28 * Sec. 45. AS 38.05.180(i); AS 41.09.010, 41.09.020, 41.09.030, 41.09.090; 29 AS 43.20.053(j)(4); and AS 43.55.011(m) are repealed January 1, 2017. 30  * Sec. 46. AS 43.55.011(j), 43.55.011(k), and 43.55.011(o) are repealed January 1, 2018. 31 * Sec. 47. AS 43.55.023(a), 43.55.023(l), 43.55.023(n), 43.55.023(o), 43.55.028(i), 01 43.55.075(d)(1), 43.55.165(j), and 43.55.165(k) are repealed January 1, 2022. 02  * Sec. 48. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 APPLICABILITY. Sections 7 - 9, 26, and 28 of this Act apply to a refund or payment 05 applied for on or after January 1, 2017. 06  * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 TRANSITION: QUALIFIED CAPITAL EXPENDITURES AND WELL LEASE 09 EXPENDITURES. (a) Notwithstanding the repeal of AS 43.55.023(a), (l), (n), and (o) by sec. 10 47 of this Act, and the amendments to AS 43.55.023(d) and (e), 43.55.029(a), 43.55.165(f), 11 and 43.55.170(c) by secs. 21, 22, 29, 38, and 40 of this Act, a taxpayer who incurs 12 (1) a qualified capital expenditure before the effective date of sec. 47 of this 13 Act that qualifies for a qualified capital expenditure credit under AS 43.55.023(a) may apply 14 for a credit or transferable tax credit certificate under AS 43.55.023 and assign the tax credit 15 under AS 43.55.029, as those sections read on the day before the effective date of sec. 47 of 16 this Act; 17 (2) a well lease expenditure before the effective date of sec. 47 of this Act that 18 qualifies for a well lease expenditure credit under AS 43.55.023(l) may apply for a credit or 19 transferable tax credit certificate under AS 43.55.023 and assign the tax credit under 20 AS 43.55.029, as those sections read on the day before the effective date of sec. 47 of this 21 Act. 22 (b) The Department of Revenue may continue to apply and enforce AS 43.55.023 and 23 43.55.029, as those sections read on the day before the effective date of sec. 47 of this Act, for 24 qualified capital expenditures and well lease expenditures incurred before the effective date of 25 sec. 47 of this Act. 26  * Sec. 50. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: LEASE EXPENDITURES FOR A CALENDAR YEAR AFTER 29 2006 AND BEFORE 2010. Notwithstanding AS 43.55.165(a), as amended by sec. 36 of this 30 Act, and the repeal of AS 43.55.165(j) and (k) by sec. 47 of this Act, AS 43.55.165(j) and (k) 31 apply to a producer's total lease expenditures for a calendar year after 2006 and before 2010 01 under AS 43.55.165, as that section read on the day before the effective date of sec. 47 of this 02 Act. 03  * Sec. 51. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 TRANSITION: PAYMENT OF TAX; FILING. (a) Notwithstanding the amendments 06 to AS 43.55.020 by secs. 13 - 16 of this Act, 07 (1) a person subject to tax under AS 43.55 that is required to make one or 08 more installment payments of estimated tax or other payments of tax under AS 43.55.020 for 09 production before the effective date of secs. 13 - 16 of this Act shall pay the tax under 10 AS 43.55.020, as that section read on the day before the effective date of secs. 13 - 16 of this 11 Act; 12 (2) an unpaid amount of an installment payment required under AS 43.55.020 13 for production before the effective date of secs. 13 - 16 of this Act that is not paid when due 14 bears interest under AS 43.55.020, as that section read on the day before the effective date of 15 secs. 13 - 16 of this Act; 16 (3) an overpayment of an installment payment required under AS 43.55.020 17 for production before the effective date of secs. 13 - 16 of this Act bears interest under 18 AS 43.55.020, as that section read on the day before the effective date of secs. 13 - 16 of this 19 Act. 20 (b) The Department of Revenue may continue to apply and enforce AS 43.55.020, as 21 that section read on the day before the effective date of secs. 13 - 16 of this Act, for a tax or 22 installment payment for production before the effective date of secs. 13 - 16 of this Act. 23  * Sec. 52. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITION: PRODUCTION TAX AND CARRIED-FORWARD ANNUAL 26 LOSS. Notwithstanding the repeal of AS 43.55.011(j), (k), and (o) by sec. 46 of this Act and 27 the amendments to AS 43.55.011(e) and (f), 43.55.160(a) and (e), and 43.55.165(h) by secs. 28 10, 11, 32, 33, and 39 of this Act, 29 (1) for oil and gas produced before the effective date of sec. 46 of this Act, the 30 production tax and production tax value of that oil and gas shall be determined under 31 AS 43.55.011 and 43.55.160, as those sections read on the day before the effective date of 01 secs. 10, 11, 32, 33, and 46 of this Act; 02 (2) in determining lease expenditures incurred before the effective date of sec. 03 39 of this Act, the Department of Revenue shall continue to apply regulations that were 04 adopted under AS 43.55.165(h) that were in effect on the day before the effective date of sec. 05 39 of this Act; and 06 (3) a lease expenditure incurred before the effective date of sec. 33 of this Act 07 may be used to establish a carried-forward annual loss under AS 43.55.160(e), as that 08 subsection read on the day before the effective date of sec. 33 of this Act. 09 * Sec. 53. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 12 Natural Resources may adopt regulations necessary to implement the changes made by this 13 Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not 14 before the effective date of the law implemented by the regulation. The Department of 15 Revenue shall adopt regulations governing the use of tax credits under AS 43.55 for a 16 calendar year for which the applicable tax credit provisions of AS 43.55 differ as between 17 parts of the year as a result of this Act. 18 * Sec. 54. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 21 contrary provision of AS 44.62.240, 22 (1) if the Department of Revenue expressly designates in a regulation that the 23 regulation applies retroactively, a regulation adopted by the Department of Revenue to 24 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to 25 the effective date of the law implemented by the regulation; 26 (2) if the Department of Natural Resources expressly designates in the 27 regulation that the regulation applies retroactively, a regulation adopted by the Department of 28 Natural Resources to implement, interpret, make specific, or otherwise carry out the statutory 29 amendments in this Act affecting the administration of oil and gas leases issued under 30 AS 38.05.180(f)(3)(B), (D), or (E), to the extent the regulation relates to the treatment of oil 31 and gas production taxes in determining net profits under those leases, may apply 01 retroactively to the effective date of the law implemented by the regulation. 02 * Sec. 55. Sections 25 and 53 of this Act take effect immediately under AS 01.10.070(c). 03  * Sec. 56. Sections 10 - 16, 18, 20, 24, 32, 33, 39, 46, 51, and 52 of this Act take effect 04 January 1, 2018. 05  * Sec. 57. Sections 21, 22, 29 - 31, 36 - 38, 40, 41, 43, 47, 49, and 50 of this Act take effect 06 January 1, 2022. 07 * Sec. 58. Except as provided in secs. 55 - 57 of this Act, this Act takes effect January 1, 08 2017.