CSHB 2001(O&G): "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; providing a limit on the amount of tax that may be levied on the production of certain gas that is produced outside of the Cook Inlet sedimentary basin and south of 68 degrees North latitude; relating to the sharing between agencies of certain information relating to the production tax and to oil and gas or gas only leases; expanding the period in which the Department of Revenue may assess the amount of oil and gas production tax and conservation surcharges; amending the State Personnel Act to place in the exempt service certain state oil and gas auditors and their immediate supervisors; providing for retroactive application of certain statutory and regulatory provisions relating to the production tax on oil and gas and conservation surcharges on oil; making conforming amendments; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 2001(O&G) 01 "An Act relating to the production tax on oil and gas and to conservation surcharges on 02 oil; providing a limit on the amount of tax that may be levied on the production of 03 certain gas that is produced outside of the Cook Inlet sedimentary basin and south of 68 04 degrees North latitude; relating to the sharing between agencies of certain information 05 relating to the production tax and to oil and gas or gas only leases; expanding the 06 period in which the Department of Revenue may assess the amount of oil and gas 07 production tax and conservation surcharges; amending the State Personnel Act to place 08 in the exempt service certain state oil and gas auditors and their immediate supervisors; 09 providing for retroactive application of certain statutory and regulatory provisions 10 relating to the production tax on oil and gas and conservation surcharges on oil; 11 making conforming amendments; and providing for an effective date." 12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:
01 * Section 1. AS 38.05.035(a) is amended to read: 02 (a) The director shall 03 (1) have general charge and supervision of the division and may 04 exercise the powers specifically delegated to the director; the director may employ 05 and fix the compensation of assistants and employees necessary for the operations of 06 the division; the director [AND] is the certifying officer of the division, with the 07 consent of the commissioner, and may approve vouchers for disbursements of money 08 appropriated to the division; 09 (2) manage, inspect, and control state land and improvements on it 10 belonging to the state and under the jurisdiction of the division; 11 (3) execute laws, rules, regulations, and orders adopted by the 12 commissioner; 13 (4) prescribe application procedures and practices for the sale, lease, 14 or other disposition of available land, resources, property, or interest in them; 15 (5) prescribe fees or service charges, with the consent of the 16 commissioner, for any public service rendered; 17 (6) under the conditions and limitations imposed by law and the 18 commissioner, issue deeds, leases, or other conveyances disposing of available land, 19 resources, property, or any interests in them; 20 (7) have jurisdiction over state land, except that land acquired by the 21 Alaska World War II Veterans Board and the Agricultural Loan Board or the 22 departments or agencies succeeding to their respective functions through foreclosure 23 or default; to this end, the director possesses the powers and, with the approval of the 24 commissioner, shall perform the duties necessary to protect the state's rights and 25 interest in state land, including the taking of all necessary action to protect and 26 enforce the state's contractual or other property rights; 27 (8) [REPEALED 28 (9)] maintain the [SUCH] records [AS] the commissioner considers 29 necessary, administer oaths, and do all things incidental to the authority imposed; the 30 following records and files shall be kept confidential upon request of the person 31 supplying the information:
01 (A) the name of the person nominating or applying for the 02 sale, lease, or other disposal of land by competitive bidding; 03 (B) before the announced time of opening, the names of the 04 bidders and the amounts of the bids; 05 (C) all geological, geophysical, and engineering data supplied, 06 whether or not concerned with the extraction or development of natural 07 resources; 08 (D) except as provided in AS 38.05.036, cost data and 09 financial information submitted in support of applications, bonds, leases, and 10 similar items; 11 (E) applications for rights-of-way or easements; 12 (F) requests for information or applications by public agencies 13 for land that [WHICH] is being considered for use for a public purpose; 14 (9) [(10)] account for the fees, licenses, taxes, or other money 15 received in the administration of this chapter including the sale or leasing of land, 16 identify their source, and promptly transmit them to the proper fiscal department after 17 crediting them to the proper fund; receipts from land application filing fees and 18 charges for copies of maps and records shall be deposited immediately in the general 19 fund of the state by the director; 20 (10) [(11)] select and employ or obtain at reasonable compensation 21 cadastral, appraisal, or other professional personnel the director considers necessary 22 for the proper operation of the division; 23 (11) [(12)] be the certifying agent of the state to select, accept, and 24 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 25 devise, judgment, operation of law, or other means any land, of whatever nature or 26 interest, available to the state; and be the certifying agent of the state, to select, 27 accept, or secure by whatever action is necessary in the name of the state any land, or 28 title or interest to land available, granted, or subject to being transferred to the state 29 for any purpose; 30 (12) on request, furnish records, files, and other information 31 related to the administration of AS 38.05.180 to the Department of Revenue for
01 use in forecasting state revenue under or administering AS 43.55, whether or not 02 those records, files, and other information are required to be kept confidential 03 under (8) of this subsection; in the case of records, files, or other information 04 required to be kept confidential under (8) of this subsection, the Department of 05 Revenue shall maintain the confidentiality that the Department of Natural 06 Resources is required to extend to records, files, and other information under (8) 07 of this subsection 08 [(13) REPEALED 09 (14) REPEALED]. 10 * Sec. 2. AS 38.05.036(b) is amended to read: 11 (b) The Department of Revenue may obtain from the department information 12 relating to royalty and net profits payments and to exploration incentive credits under 13 this chapter or under AS 41.09, whether or not that information is confidential. The 14 Department of Revenue may use the information in carrying out its functions and 15 responsibilities under AS 43, and shall hold that information confidential to the extent 16 required by an agreement with the department or by AS 38.05.035(a)(8) 17 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 18 * Sec. 3. AS 38.05.036(f) is amended to read: 19 (f) Except as otherwise provided in this section or in connection with official 20 investigations or proceedings of the department, it is unlawful for a current or former 21 officer, employee, or agent of the state to divulge information obtained by the 22 department as a result of an audit under this section that is required by an agreement 23 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 24 AS 41.09.010(d) to be kept confidential. 25 * Sec. 4. AS 38.05.036(g) is amended to read: 26 (g) Nothing in this section prohibits the publication of statistics in a manner 27 that maintains the confidentiality of information to the extent required by an 28 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 29 AS 41.09.010(d). 30 * Sec. 5. AS 38.05.123(f) is amended to read: 31 (f) As part of the timber sale negotiations authorized by this section, the
01 commissioner may require a prospective purchaser negotiating a timber sale contract 02 to submit financial and technical data that demonstrates that the requirements of this 03 section have been or will be met. Upon the prospective purchaser's request, the 04 commissioner shall keep data provided by the purchaser confidential in accordance 05 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 06 * Sec. 6. AS 38.05.133(e) is amended to read: 07 (e) The commissioner may make a written request to a prospective licensee 08 for additional information on the prospective licensee's proposal. The commissioner 09 shall keep confidential information described in AS 38.05.035(a)(8) 10 [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made 11 a written request that the information remain confidential. 12 * Sec. 7. AS 38.05.180(j) is amended to read: 13 (j) The commissioner 14 (1) may provide for modification of royalty on individual leases, 15 leases unitized as described in (p) of this section, leases subject to an agreement 16 described in (s) or (t) of this section, or interests unitized under AS 31.05 17 (A) to allow for production from an oil or gas field or pool if 18 (i) the oil or gas field or pool has been sufficiently 19 delineated to the satisfaction of the commissioner; 20 (ii) the field or pool has not previously produced oil or 21 gas for sale; and 22 (iii) oil or gas production from the field or pool would 23 not otherwise be economically feasible; 24 (B) to prolong the economic life of an oil or gas field or pool 25 as per barrel or barrel equivalent costs increase or as the price of oil or gas 26 decreases, and the increase or decrease is sufficient to make future production 27 no longer economically feasible; or 28 (C) to reestablish production of shut-in oil or gas that would 29 not otherwise be economically feasible; 30 (2) may not grant a royalty modification unless the lessee or lessees 31 requesting the change make a clear and convincing showing that a modification of
01 royalty meets the requirements of this subsection and is in the best interests of the 02 state; 03 (3) shall provide for an increase or decrease or other modification of 04 the state's royalty share by a sliding scale royalty or other mechanism that shall be 05 based on a change in the price of oil or gas and may also be based on other relevant 06 factors such as a change in production rate, projected ultimate recovery, development 07 costs, and operating costs; 08 (4) may not grant a royalty reduction for a field or pool 09 (A) under (1)(A) of this subsection if the royalty modification 10 for the field or pool would establish a royalty rate of less than five percent in 11 amount or value of the production removed or sold from a lease or leases 12 covering the field or pool; 13 (B) under (1)(B) or (1)(C) of this subsection if the royalty 14 modification for the field or pool would establish a royalty rate of less than 15 three percent in amount or value of the production removed or sold from a 16 lease or leases covering the field or pool; 17 (5) may not grant a royalty reduction under this subsection without 18 including an explicit condition that the royalty reduction is not assignable without the 19 prior written approval, which may not be unreasonably withheld, by the 20 commissioner; the commissioner shall, in the preliminary and final findings and 21 determinations, set out the conditions under which the royalty reduction may be 22 assigned; 23 (6) shall require the lessee or lessees to submit, with the application 24 for the royalty reduction, financial and technical data that demonstrate that the 25 requirements of this subsection are met; the commissioner 26 (A) may require disclosure of only the financial and technical 27 data related to development, production, and transportation of oil and gas or 28 gas only from the field or pool that are reasonably available to the applicant; 29 and 30 (B) shall keep the data confidential under AS 38.05.035(a)(8) 31 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application
01 for the royalty reduction; the confidential data may be disclosed by the 02 commissioner to legislators and to the legislative auditor and as directed by 03 the chair or vice-chair of the Legislative Budget and Audit Committee to the 04 director of the division of legislative finance, the permanent employees of 05 their respective divisions who are responsible for evaluating a royalty 06 reduction, and to agents or contractors of the legislative auditor or the 07 legislative finance director who are engaged under contract to evaluate the 08 royalty reduction, if they sign an appropriate confidentiality agreement; 09 (7) may 10 (A) require the lessee or lessees making application for the 11 royalty reduction under (1)(A) of this subsection to pay for the services of an 12 independent contractor, selected by the lessee or lessees from a list of 13 qualified consultants compiled by the commissioner, to evaluate hydrocarbon 14 development, production, transportation, and economics and to assist the 15 commissioner in evaluating the application and financial and technical data; 16 if, under this subparagraph, the commissioner requires payment for the 17 services of an independent contractor, the total cost of the services to be paid 18 for by the lessee or lessees may not exceed $150,000 for each application, and 19 the commissioner shall determine the relevant scope of the work to be 20 performed by the contractor; selection of an independent contractor under this 21 subparagraph is not subject to AS 36.30; 22 (B) with the mutual consent of the lessee or lessees making 23 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 24 request payment for the services of an independent contractor, selected from a 25 list of qualified consultants to evaluate hydrocarbon development, production, 26 transportation, and economics by the commissioner to assist the commissioner 27 in evaluating the application and financial and technical data; if, under this 28 subparagraph, the commissioner requires payment for the services of an 29 independent contractor, the total cost of the services that may be paid for by 30 the lessee or lessees may not exceed $150,000 for each application, and the 31 commissioner shall determine the relevant scope of the work to be performed
01 by the contractor; selection of an independent contractor under this 02 subparagraph is not subject to AS 36.30; 03 (8) shall make and publish a preliminary findings and determination 04 on the royalty reduction application, give reasonable public notice of the preliminary 05 findings and determination, and invite public comment on the preliminary findings 06 and determination during a 30-day period for receipt of public comment; 07 (9) shall offer to appear before the Legislative Budget and Audit 08 Committee, on a day that is not earlier than 10 days and not later than 20 days after 09 giving public notice under (8) of this subsection, to provide the committee a review of 10 the commissioner's preliminary findings and determination on the royalty reduction 11 application and administrative process; if the Legislative Budget and Audit 12 Committee accepts the commissioner's offer, the committee shall give notice of the 13 committee's meeting to all members of the legislature; 14 (10) shall make copies of the preliminary findings and determination 15 available to 16 (A) the presiding officer of each house of the legislature; 17 (B) the chairs of the legislature's standing committees on 18 resources; and 19 (C) the chairs of the legislature's special committees on oil and 20 gas, if any; 21 (11) shall, within 30 days after the close of the public comment period 22 under (8) of this subsection, 23 (A) prepare a summary of the public response to the 24 commissioner's preliminary findings and determination; 25 (B) make a final findings and determination; the 26 commissioner's final findings and determination prepared under this 27 subparagraph regarding a royalty reduction is final and not appealable to the 28 court; 29 (C) transmit a copy of the final findings and determination to 30 the lessee; 31 (D) with the applicant's consent, amend the applicant's lease or
01 unitization agreement consistent with the commissioner's final decision; and 02 (E) make copies of the final findings and determination 03 available to each person who submitted comment under (8) of this subsection 04 and who has filed a request for the copies; 05 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 06 section in the commissioner's determination under this subsection. 07 * Sec. 8. AS 38.05.275(c) is amended to read: 08 (c) Subsection (b) of this section may not be construed to limit the director in 09 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 10 * Sec. 9. AS 39.25.110 is amended by adding a new paragraph to read: 11 (42) oil and gas auditors performing 12 (A) production tax audits, and their immediate supervisors, in 13 the Department of Revenue; 14 (B) royalty audits, including net profit share audits, and their 15 immediate supervisors, in the Department of Natural Resources. 16 * Sec. 10. AS 41.09.010(d) is amended to read: 17 (d) Data derived from drilling a stratigraphic test well or exploratory well that 18 is provided to the commissioner under (c)(3) of this section shall be kept confidential 19 for 24 months after receipt by the commissioner unless the owner of the well gives 20 written permission to the state to release the well data at an earlier date, and, 21 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 22 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 23 other data provided to the commissioner under (c)(3) of this section, except that the 24 commissioner, under appropriate confidentiality provisions and without preference or 25 discrimination, may display to all interested third parties, but may not distribute or 26 transfer in hard copy or electronic form, those data with respect to all land if the 27 commissioner determines that the limited disclosure is necessary to further the 28 interest of the state in evaluating or developing its land. 29 * Sec. 11. AS 43.05.230(a) is amended to read: 30 (a) It is unlawful for a current or former officer, employee, or agent of the 31 state to divulge the amount of income or the particulars set out or disclosed in a report
01 or return made under this title, except 02 (1) in connection with official investigations or proceedings of the 03 department, whether judicial or administrative, involving taxes due under this title; 04 (2) in connection with official investigations or proceedings of the 05 child support enforcement agency, whether judicial or administrative, involving child 06 support obligations imposed or imposable under AS 25 or AS 47; 07 (3) as provided in AS 38.05.036 pertaining to audit functions of the 08 Department of Natural Resources; 09 (4) as provided in AS 43.05.405 - 43.05.499; and 10 (5) as otherwise provided in this section or AS 43.55.890. 11 * Sec. 12. AS 43.05.230(h) is amended to read: 12 (h) The commissioner shall, upon request, furnish to the Department of 13 Natural Resources copies of tax returns, reports, and other documents filed under 14 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 15 workpapers under those chapters. The Department of Natural Resources shall 16 maintain the confidentiality that the Department of Revenue is required to extend to 17 the returns, reports, documents, determinations, and workpapers furnished to the 18 Department of Natural Resources under this subsection. 19 * Sec. 13. AS 43.05.260(a) is amended to read: 20 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and 21 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 22 years after the return was filed, whether or not a return was filed on or after the date 23 prescribed by law. If the tax is not assessed before the expiration of the applicable 24 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 25 of the tax. 26 * Sec. 14. AS 43.55.011(j) is amended to read: 27 (j) For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of 28 this section on gas produced from a lease or property in the Cook Inlet sedimentary 29 basin may not exceed 30 (1) for a lease or property that first commenced commercial 31 production of gas before April 1, 2006, the product obtained by multiplying (A) the
01 amount of taxable gas produced during the calendar year from the lease or property, 02 times (B) the average rate of tax that was imposed under this chapter on taxable gas 03 produced from the lease or property for the 12-month period ending on March 31, 04 2006, times (C) the quotient obtained by dividing the total gross value at the point of 05 production of the taxable gas produced from the lease or property during the 12- 06 month period ending on March 31, 2006, by the total amount of that gas; 07 (2) for a lease or property that first commences commercial 08 production of gas after March 31, 2006, the product obtained by multiplying (A) the 09 amount of taxable gas produced during the calendar year from the lease or property, 10 times (B) the average rate of tax that was imposed under this chapter on taxable gas 11 produced from all leases or properties in the Cook Inlet sedimentary basin for the 12- 12 month period ending on March 31, 2006, times (C) the average prevailing value for 13 gas delivered in the Cook Inlet area for the 12-month period ending March 31, 2006, 14 as determined by the department under AS 43.55.020(f). 15 * Sec. 15. AS 43.55.011(k) is amended to read: 16 (k) For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of 17 this section on oil produced from a lease or property in the Cook Inlet sedimentary 18 basin may not exceed 19 (1) for a lease or property that first commenced commercial 20 production of oil before April 1, 2006, the product obtained by multiplying (A) the 21 amount of taxable oil produced during the calendar year from the lease or property, 22 times (B) the average rate of tax that was imposed under this chapter on taxable oil 23 produced from the lease or property for the 12-month period ending on March 31, 24 2006, times (C) the quotient obtained by dividing the total gross value at the point of 25 production of the taxable oil produced from the lease or property during the 12-month 26 period ending on March 31, 2006, by the total amount of that oil; 27 (2) for a lease or property that first commences commercial 28 production of oil after March 31, 2006, the product obtained by multiplying (A) the 29 amount of taxable oil produced during the calendar year from the lease or property, 30 times (B) the average rate of tax that was imposed under this chapter on taxable oil 31 produced from all leases or properties in the Cook Inlet sedimentary basin for the 12-
01 month period ending on March 31, 2006, times (C) the average prevailing value for 02 oil produced and delivered in the Cook Inlet area for the 12-month period ending on 03 March 31, 2006, as determined by the department under AS 43.55.020(f). 04 * Sec. 16. AS 43.55.011(l) is amended to read: 05 (l) When a limitation under (j) or (k) of this section on the tax levied 06 by (e) and (o) [(g)] of this section has the effect of reducing the producer's tax on oil 07 or gas produced from a lease or property below the amount of tax that would be 08 levied in the absence of that limitation, the amount of the reduction is applied first 09 against the tax levied by (o) [(g)] of this section. However, that tax may not be 10 reduced below zero. 11 * Sec. 17. AS 43.55.011(m) is amended to read: 12 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 13 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 14 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 15 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 16 basin and that are available to be applied against a tax levied by (e) of this section for 17 [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin 18 during a calendar year may be applied only against the tax levied by (e) of this section 19 for [ON] that gas. The amount by which the amount of tax credits that are allocated 20 to gas produced from leases or properties in the Cook Inlet sedimentary basin and that 21 the producer would otherwise be allowed to use for a later calendar year or transfer to 22 another person exceeds the amount of tax credits whose application would reduce the 23 tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the 24 amount of excess tax credits, and the excess tax credits are subject to the following: 25 (1) for each lease or property for which a limitation under (j) or (k) of 26 this section on the tax levied by (e) and (o) [(g)] of this section has the effect of 27 reducing the producer's tax below the amount of tax that would be levied in the 28 absence of that limitation, the producer shall calculate the amount of that reduction; 29 (2) the producer shall calculate the total of the reductions calculated 30 under (1) of this subsection for all affected leases or properties; 31 (3) the producer shall reduce the amount of excess tax credits by the
01 total calculated under (2) of this subsection, but not to less than zero; 02 (4) any amount of excess tax credits remaining after reduction under 03 (3) of this subsection may be used for a later calendar year, transferred to another 04 person, or applied against a tax levied for [ON] oil or gas produced from a lease or 05 property located anywhere in the state to the extent otherwise allowed under 06 applicable law governing the tax credits. 07 * Sec. 18. AS 43.55.011 is amended by adding new subsections to read: 08 (o) In addition to the tax levied under (e) of this section, for each month for 09 which the gross value at the point of production exceeds $50 a barrel, there is levied 10 on the producer of oil or gas a tax for all oil and gas produced that month from each 11 lease or property in the state, less any oil and gas the ownership or right to which is 12 exempt from taxation or constitutes a landowner's royalty interest. Except as 13 otherwise provided under (j) and (k) of this section, the tax levied under this 14 subsection is equal to the sum over all months of the calendar year of the amount 15 calculated under this subsection. For each month for which this subsection applies, 16 the tax is equal to .225 percent of the monthly gross value at the point of production 17 of the taxable oil and gas multiplied by the number that represents the difference 18 between (1) the quotient of the total monthly gross value at the point of production of 19 the taxable oil and gas produced by the producer during that month divided by the 20 amount of taxable oil and gas produced by the producer in BTU equivalent barrels, 21 and (2) $50. The tax levied under this subsection may not be less than zero or more 22 than 25 percent of the gross value at the point of production of the taxable oil and gas. 23 (p) For a calendar year before 2022, the tax levied by (e) and (o) of this 24 section for gas produced from a lease or property that is outside of the Cook Inlet 25 sedimentary basin and no part of which is north of 68 degrees North latitude may not 26 exceed the product of the amount of taxable gas produced during the calendar year 27 from the lease or property, multiplied by the average rate of tax imposed under this 28 chapter for taxable gas produced from all leases or properties in the Cook Inlet 29 sedimentary basin, multiplied by the average prevailing value for gas delivered in the 30 Cook Inlet area for the 12-month period ending March 31, 2006, as determined by the 31 department under AS 43.55.020(f). This subsection applies only to gas produced from
01 a lease or property for which the start of regular deliveries of marketable gas is after 02 December 31, 2007. 03 * Sec. 19. AS 43.55.020(a) is amended to read: 04 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e), (f), 05 [(g), OR] (i), or (o), and notwithstanding that a producer may be liable for the tax 06 under AS 43.55.011(f) rather than the tax under AS 43.55.011(e), shall pay the tax as 07 follows: 08 (1) an installment payment of the estimated tax levied by 09 AS 43.55.011(e) or (f), net of any tax credits applied as allowed by law, is due for 10 each month of the calendar year on the last day of the following month; the amount of 11 the installment payment is the sum of the amounts calculated under (2) and (3) of this 12 subsection, but not less than zero; 13 (2) the first of the two amounts used to calculate the installment 14 payment for a month under (1) of this subsection is equal to the remainder obtained 15 by subtracting 16 (A) 1/12 of the tax credits that are allowed by law to be 17 applied against the tax levied by AS 43.55.011(e) for the calendar year; from 18 (B) the total of the monthly production values calculated 19 under [IN THE MANNER PROVIDED IN] AS 43.55.160(a)(2) of all oil and 20 gas taxable under AS 43.55.011(e) and produced by the producer from leases 21 or properties in the state during the month, multiplied by 22.5 percent; 22 (3) the second of the two amounts used to calculate the installment 23 payment for a month under (1) of this subsection is the amount calculated for the 24 month under AS 43.55.011(o) [AS 43.55.011(g)]; 25 (4) an installment payment of the estimated tax levied by 26 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 27 on the last day of the following month; the amount of the installment payment is the 28 sum of 29 (A) the applicable percentage rate for oil provided under 30 AS 43.55.011(i), multiplied by the gross value at the point of production of 31 the oil taxable under AS 43.55.011(i) and produced from the lease or property
01 during the month; plus 02 (B) the applicable percentage rate for gas provided under 03 AS 43.55.011(i), multiplied times the gross value at the point of production of 04 the gas taxable under AS 43.55.011(i) and produced from the lease or property 05 during the month; 06 (5) any amount of tax levied by AS 43.55.011(e), (f), (i), and (o) 07 [AS 43.55.011(e) - (g) AND (i)], net of any credits applied as allowed by law, that 08 exceeds the total of the amounts due as installment payments of estimated tax is due 09 on March 31 of the year following the calendar year of production. 10 * Sec. 20. AS 43.55.020(d) is amended to read: 11 (d) In making settlement with the royalty owner for oil and gas that is taxable 12 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 13 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 14 time the tax becomes due to the amount of the tax paid. If the total deductions of 15 installment payments of estimated tax for a calendar year exceed the actual tax for 16 that calendar year, the producer shall, before April 1 of the following year, refund the 17 excess to the royalty owner. Unless otherwise agreed between the producer and the 18 royalty owner, the amount of the tax paid under AS 43.55.011(e), (f), and (o) 19 [AS 43.55.011(e) - (g)] on taxable royalty oil and gas for a calendar year, other than 20 oil and gas the ownership or right to which constitutes a landowner's royalty interest, 21 is considered to be the gross value at the point of production of the taxable royalty oil 22 and gas produced during the calendar year multiplied by a figure that is a quotient, in 23 which 24 (1) the numerator is the producer's total tax liability under 25 AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)] for the calendar year of 26 production; and 27 (2) the denominator is the total gross value at the point of production 28 of the oil and gas taxable under AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)] 29 produced by the producer from all leases and properties in the state during the 30 calendar year. 31 * Sec. 21. AS 43.55.020(g) is amended to read:
01 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 02 amount of an installment payment required under (a)(1) - (4) of this section that is not 03 paid when due bears interest (1) at the rate provided for an underpayment under 26 04 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date 05 the installment payment is due until [THE] March 31 following the calendar year of 06 production [DESCRIBED IN AS 43.55.030(a)], and (2) as provided for a delinquent 07 tax under AS 43.05.225 after that March 31. Interest accrued under (1) of this 08 subsection that remains unpaid after that March 31 is treated as an addition to tax that 09 bears interest under (2) of this subsection. An unpaid amount of tax due under (a)(5) 10 of this section that is not paid when due bears interest as provided for a delinquent tax 11 under AS 43.05.225. 12 * Sec. 22. AS 43.55.020(h) is amended to read: 13 (h) Notwithstanding any contrary provision of AS 43.05.280, 14 (1) an overpayment of an installment payment required under (a)(1) - 15 (4) of this section bears interest at the rate provided for an overpayment under 26 16 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the later 17 of the date the installment payment is due or the date the overpayment is made, until 18 the earlier of 19 (A) the date it is refunded or is applied to an underpayment; [,] 20 or 21 (B) [THE] March 31 following the calendar year of 22 production [DESCRIBED IN AS 43.55.030(a)]; 23 (2) except as provided under (1) of this subsection, interest with 24 respect to an overpayment is allowed only on any net overpayment of the payments 25 required under (a) of this section that remains after the later of [THE] March 31 26 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or 27 the date that the statement required under AS 43.55.030(a) is filed; 28 (3) interest is allowed under (2) of this subsection only from a date 29 that is 90 days after the later of [THE] March 31 following the calendar year of 30 production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement 31 required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment
01 was refunded within the 90-day period; 02 (4) interest under (2) and (3) of this subsection is paid at the rate and 03 in the manner provided in AS 43.05.225(1). 04 * Sec. 23. AS 43.55.023(d) is amended to read: 05 (d) Except as limited by (i) of this section, a person entitled to take a tax 06 credit under this section that wishes to transfer the unused credit to another person 07 may apply to the department for a transferable tax credit certificate. An application 08 under this subsection must be in a form prescribed by the department and must 09 include supporting information and documentation that the department reasonably 10 requires. The department shall grant or deny an application, or grant an application as 11 to a lesser amount than that claimed and deny it as to the excess, not later than 60 12 days after the latest of (1) March 31 of the year following the calendar year in which 13 the qualified capital expenditure or carried-forward annual loss for which the credit is 14 claimed was incurred; (2) if the applicant is required under AS 43.55.030(a) to file a 15 statement on or before March 31 of the year following the calendar year in which the 16 qualified capital expenditures or carried-forward annual loss for which the credit is 17 claimed was incurred, the date the statement required under AS 43.55.030(a) or (e) 18 was filed; or (3) the date the application was received by the department. If, based on 19 the information then available to it, the department is reasonably satisfied that the 20 applicant is entitled to a credit, the department shall issue the applicant a transferable 21 tax credit certificate for the amount of the credit. A certificate issued under this 22 subsection does not expire. 23 * Sec. 24. AS 43.55.023(i) is amended to read: 24 (i) For the purposes of this section, 25 (1) a producer's or explorer's transitional investment expenditures are 26 the sum of the expenditures the producer or explorer incurred after March 31, 2003 27 [2001], and before April 1, 2006, that would be qualified capital expenditures if they 28 were incurred after March 31, 2006, less the sum of the payments or credits the 29 producer or explorer received before April 1, 2006, for the sale or other transfer of 30 assets, including geological, geophysical, or well data or interpretations, acquired by 31 the producer or explorer as a result of expenditures the producer or explorer incurred
01 before April 1, 2006, that would be qualified capital expenditures, if they were 02 incurred after March 31, 2006; 03 (2) a producer or explorer may elect to take a tax credit against a tax 04 due under AS 43.55.011(e) in the amount of 20 percent of the producer's or explorer's 05 transitional investment expenditures, but only to the extent that the amount does not 06 exceed 1/10 of the producer's or explorer's qualified capital expenditures that are 07 incurred during the calendar year for which the credit is taken; 08 (3) a producer or explorer may not take a tax credit for a transitional 09 investment expenditure 10 (A) for any calendar year after the later of 11 (i) 2013; or 12 (ii) the sixth calendar year after the calendar year for 13 which the producer first applies a credit under this subsection against a 14 tax due under AS 43.55.011(e), if the producer did not have 15 commercial production of oil or gas from a lease or property in the 16 state before April 1, 2006; 17 (B) more than once; or 18 (C) if a credit for that expenditure was taken under 19 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 20 (4) notwithstanding (d), (e), and (g) of this section, a producer or 21 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for 22 a transitional investment expenditure. 23 * Sec. 25. AS 43.55.023 is amended by adding a new subsection to read: 24 (l) A person that is exempt from taxation under this chapter may not apply for 25 a transferable tax credit certificate. 26 * Sec. 26. AS 43.55.030(a) is amended to read: 27 (a) A producer that produces oil or gas from a lease or property in the 28 state during a calendar year, whether or not any tax payment is due under 29 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 30 with the department on March 31 of the following year [FOLLOWING THE 31 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under
01 oath, in a form prescribed by the department, giving, with other information required, 02 the following: 03 (1) a description of each lease or property from which [THE] oil or 04 [AND] gas was [WERE] produced, by name, legal description, lease number, or 05 accounting codes assigned by the department; 06 (2) the names of the producer and, if different, the person paying the 07 tax, if any; 08 (3) the gross amount of oil and the gross amount of gas produced from 09 each lease or property, and the percentage of the gross amount of oil and gas owned 10 by the [EACH] producer [FOR WHOM THE TAX IS PAID]; 11 (4) the gross value at the point of production of the oil and of the gas 12 produced from each lease or property owned by the [EACH] producer and the costs 13 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 14 (5) the name of the first purchaser and the price received for the oil 15 and for the gas, unless relieved from this requirement in whole or in part by the 16 department; [AND] 17 (6) the producer's qualified capital expenditures, as defined in 18 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 19 CALCULATED] under AS 43.55.165, and adjustments or other payments or 20 credits under AS 43.55.170; 21 (7) the production tax values of the oil and gas under 22 AS 43.55.160; 23 (8) any claims for tax credits to be applied; and 24 (9) calculations showing the amounts, if any, that were or are due 25 under AS 43.55.020(a) and interest on any underpayment or overpayment 26 [AS 43.55.160 - 43.55.170]. 27 * Sec. 27. AS 43.55.030 is amended by adding new subsections to read: 28 (e) An explorer or producer that incurs a lease expenditure under 29 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 30 year but does not produce oil or gas from a lease or property in the state during the 31 calendar year shall file with the department on March 31 of the following year a
01 statement, under oath, in a form prescribed by the department, giving, with other 02 information required, the following: 03 (1) the producer's qualified capital expenditures, as defined in 04 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 05 payments or credits under AS 43.55.170; and 06 (2) if the explorer or producer receives a payment or credit under 07 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 08 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 09 (f) The department may require a producer, an explorer, or an operator of a 10 lease or property to file monthly reports, as applicable, of 11 (1) the amounts and gross value at the point of production of oil and 12 gas produced; 13 (2) transportation costs of the oil and gas; 14 (3) any unscheduled interruption of, or reduction in the rate of, oil or 15 gas production; 16 (4) lease expenditures and adjustments under AS 43.55.165 and 17 43.55.170; 18 (5) joint interest billings; 19 (6) contracts for the sale or transportation of oil or gas; 20 (7) information and calculations used in determining monthly 21 installment payments of estimated tax under AS 43.55.020(a); and 22 (8) other records and information the department considers necessary 23 for the administration of this chapter. 24 * Sec. 28. AS 43.55.040 is amended to read: 25 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 26 AS 43.05.405 - 43.05.499, the department may 27 (1) require a person engaged in production and the agent or employee 28 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 29 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 30 additional information that is considered by the department as necessary to compute 31 the amount of the tax; notwithstanding any contrary provision of law, the disclosure
01 of additional information under this paragraph to the producer obligated to pay the tax 02 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 03 under this paragraph that is otherwise required to be held confidential under 04 AS 40.25.100(a) or AS 43.05.230(a), the department shall 05 (A) provide the person that furnished the information a 06 reasonable opportunity to be heard regarding the proposed disclosure and the 07 conditions to be imposed under (B) of this paragraph; and 08 (B) impose appropriate conditions limiting 09 (i) access to the information to those legal counsel, 10 consultants, employees, officers, and agents of the producer who have 11 a need to know that information for the purpose of determining or 12 contesting the producer's tax obligation; and 13 (ii) the use of the information to use for that purpose; 14 (2) examine the books, records, and files of the [SUCH A] person; 15 (3) conduct hearings and compel the attendance of witnesses and the 16 production of books, records, and papers of any person; [AND] 17 (4) make an investigation or hold an inquiry that is considered 18 necessary to a disclosure of the facts as to 19 (A) the amount of production from any oil or gas location, or 20 of a company or other producer of oil or gas; and 21 (B) the rendition of the oil and gas for taxing purposes; and 22 (5) require a producer, an explorer, or an operator of a lease or 23 property to file reports and copies of records that the department considers 24 necessary to forecast state revenue under this chapter; in the case of reports and 25 copies of records relating to proposed, expected, or approved unit expenditures 26 for a unit for which one or more working interest owners other than the 27 operator have authority to approve unit expenditures, the required reports and 28 copies of records are limited to those reports or copies of records that constitute 29 or disclose communications between the operator and the working interest 30 owners relating to unit budget matters. 31 * Sec. 29. AS 43.55 is amended by adding a new section to read:
01 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 02 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 03 assessed within six years after the latest return was filed. 04 (b) A decision of a regulatory agency, court, or other body with authority to 05 resolve disputes that results in a retroactive change to a lease expenditure, to an 06 adjustment to a lease expenditure, to costs of transportation, to sale price, to 07 prevailing value, or to consideration of quality differentials relating to the 08 commingling of oils has a corresponding effect, either an increase or decrease, as 09 applicable, on the production tax value of oil or gas or the amount or availability of a 10 tax credit as determined under this chapter. For purposes of this section, a change to a 11 lease expenditure includes a change in the categorization of a lease expenditure as a 12 qualified capital expenditure or as not a qualified capital expenditure. The producer 13 shall 14 (1) within 60 days after the change, notify the department in writing; 15 and 16 (2) within 120 days after the change, file amended returns covering all 17 periods affected by the change, unless the department agrees otherwise or a stay is in 18 place that affects the filing or payment, regardless of the pendency of appeals of the 19 decision. 20 (c) If an alteration in or modification of a producer's federal income tax return 21 or a recomputation of the producer's federal income tax or determination of 22 deficiency occurs that affects the amount of a tax imposed on the producer under this 23 chapter, the producer shall 24 (1) within 60 days after the final determination of the alteration, 25 modification, recomputation, or deficiency, notify the department in writing; and 26 (2) within 120 days after the final determination of the alteration, 27 modification, recomputation, or deficiency, file amended returns covering all affected 28 periods. 29 (d) In this section, 30 (1) "qualified capital expenditure" has the meaning given in 31 AS 43.55.023;
01 (2) "return" includes a report, a statement, and an amended return, 02 report, or statement. 03 * Sec. 30. AS 43.55.110 is amended by adding new subsections to read: 04 (e) The department may require that returns, statements, reports, notifications, 05 and applications filed under this chapter be filed electronically in a form and manner 06 approved or prescribed by the department. 07 (f) The department may require that payments required under this chapter be 08 made electronically in a form and manner approved or prescribed by the department. 09 (g) Notwithstanding AS 44.62, the department may issue, for the information 10 and guidance of producers, explorers, and other interested persons, advisory bulletins 11 stating the department's interpretation of provisions of this chapter and of regulations 12 adopted under this chapter. Unless otherwise provided by the department by 13 regulation, interpretations stated in the advisory bulletins are not binding on the 14 department or others. 15 * Sec. 31. AS 43.55.160(a) is amended to read: 16 (a) Except as provided in (b) of this section, for the purposes of 17 (1) AS 43.55.011(e), the annual production tax value of the taxable 18 (A) oil and gas produced during a calendar year from leases or 19 properties in the state that include land north of 68 degrees North latitude is 20 the gross value at the point of production of the oil and gas taxable under 21 AS 43.55.011(e) and produced by the producer from those leases or 22 properties, less the producer's lease expenditures under AS 43.55.165 for the 23 calendar year applicable to the oil and gas produced by the producer from 24 those leases or properties, as adjusted under AS 43.55.170; 25 (B) oil and gas produced during a calendar year from leases or 26 properties in the state outside the Cook Inlet sedimentary basin, no part of 27 which is north of 68 degrees North latitude, is the gross value at the point of 28 production of the oil and gas taxable under AS 43.55.011(e) and produced by 29 the producer from those leases or properties, less the producer's lease 30 expenditures under AS 43.55.165 for the calendar year applicable to the oil 31 and gas produced by the producer from those leases or properties, as adjusted
01 under AS 43.55.170; 02 (C) oil produced during a calendar year from a lease or 03 property in the Cook Inlet sedimentary basin is the gross value at the point of 04 production of the oil taxable under AS 43.55.011(e) and produced by the 05 producer from that lease or property, less the producer's lease expenditures 06 under AS 43.55.165 for the calendar year applicable to the oil produced by the 07 producer from that lease or property, as adjusted under AS 43.55.170; 08 (D) gas produced during a calendar year from a lease or 09 property in the Cook Inlet sedimentary basin is the gross value at the point of 10 production of the gas taxable under AS 43.55.011(e) and produced by the 11 producer from that lease or property, less the producer's lease expenditures 12 under AS 43.55.165 for the calendar year applicable to the gas produced by 13 the producer from that lease or property, as adjusted under AS 43.55.170; 14 (2) AS 43.55.020(a)(2)(B) [AS 43.55.011(g)], the monthly production 15 tax value of the taxable 16 (A) oil and gas produced during a month from leases or 17 properties in the state that include land north of 68 degrees North latitude is 18 the gross value at the point of production of the oil and gas taxable under 19 AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those 20 leases or properties, less 1/12 of the producer's lease expenditures under 21 AS 43.55.165 for the calendar year applicable to the oil and gas produced by 22 the producer from those leases or properties, as adjusted under AS 43.55.170; 23 (B) oil and gas produced during a month from leases or 24 properties in the state outside the Cook Inlet sedimentary basin, no part of 25 which is north of 68 degrees North latitude, is the gross value at the point of 26 production of the oil and gas taxable under AS 43.55.011(e) 27 [AS 43.55.011(g)] and produced by the producer from those leases or 28 properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 29 for the calendar year applicable to the oil and gas produced by the producer 30 from those leases or properties, as adjusted under AS 43.55.170; 31 (C) oil produced during a month from a lease or property in
01 the Cook Inlet sedimentary basin is the gross value at the point of production 02 of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 03 the producer from that lease or property, less 1/12 of the producer's lease 04 expenditures under AS 43.55.165 for the calendar year applicable to the oil 05 produced by the producer from that lease or property, as adjusted under 06 AS 43.55.170; 07 (D) gas produced during a month from a lease or property in 08 the Cook Inlet sedimentary basin is the gross value at the point of production 09 of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 10 the producer from that lease or property, less 1/12 of the producer's lease 11 expenditures under AS 43.55.165 for the calendar year applicable to the gas 12 produced by the producer from that lease or property, as adjusted under 13 AS 43.55.170. 14 * Sec. 32. AS 43.55.165(a) is amended to read: 15 (a) Except as provided under (e) [(c) - (e)] of this section, for the purposes of 16 AS 43.55.160, a producer's lease expenditures for a calendar year are the ordinary and 17 necessary costs upstream of the point of production of oil and gas that are incurred 18 during the calendar year by the producer after March 31, 2006, and that are direct 19 costs of exploring for, developing, or producing oil or gas deposits located within the 20 producer's leases or properties in the state or, in the case of land in which the 21 producer does not own a working interest, that are direct costs of exploring for oil or 22 gas deposits located within other land in the state. In determining whether costs are 23 lease expenditures, the department shall consider, among other factors, 24 (1) the typical industry practices and standards in the state that 25 determine the costs, other than items listed in (e) of this section, that an operator is 26 allowed to bill a working interest owner that is not the operator, under unit operating 27 agreements or similar operating agreements that were in effect before December 2, 28 2005, and were subject to negotiation with at least one working interest owner with 29 substantial bargaining power, other than the operator; and 30 (2) the standards adopted by the Department of Natural Resources that 31 determine the costs, other than items listed in (e) of this section, that a lessee is
01 allowed to deduct from revenue in calculating net profits under a lease issued under 02 AS 38.05.180(f)(3)(B), (D), or (E). 03 * Sec. 33. AS 43.55.165(e) is amended to read: 04 (e) For purposes of this section, lease expenditures do not include 05 (1) depreciation, depletion, or amortization; 06 (2) oil or gas royalty payments, production payments, lease profit 07 shares, or other payments or distributions of a share of oil or gas production, profit, or 08 revenue; 09 (3) taxes based on or measured by net income; 10 (4) interest or other financing charges or costs of raising equity or 11 debt capital; 12 (5) acquisition costs for a lease or property or exploration license; 13 (6) costs arising from fraud, wilful misconduct, [OR] gross 14 negligence, violation of law, or failure to comply with an obligation under a lease, 15 permit, or license issued by the state or federal government; 16 (7) fines or penalties imposed by law; 17 (8) costs of arbitration, litigation, or other dispute resolution activities 18 that involve the state or concern the rights or obligations among owners of interests 19 in, or rights to production from, one or more leases or properties or a unit; 20 (9) costs incurred in organizing a partnership, joint venture, or other 21 business entity or arrangement; 22 (10) amounts paid to indemnify the state; the exclusion provided by 23 this paragraph does not apply to the costs of obtaining insurance or a surety bond 24 from a third-party insurer or surety; 25 (11) surcharges levied under AS 43.55.201 or 43.55.300; 26 (12) for a transaction that is an internal transfer or is otherwise not an 27 arm's length transaction, expenditures incurred that are in excess of fair market value; 28 (13) an expenditure incurred to purchase an interest in any 29 corporation, partnership, limited liability company, business trust, or any other 30 business entity, whether or not the transaction is treated as an asset sale for federal 31 income tax purposes;
01 (14) a tax levied under AS 43.55.011; 02 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 03 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 04 structure, or for the restoration of a lease, field, unit, area, tract of land, body of 05 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 06 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 07 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 08 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 09 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 10 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 11 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 12 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 13 OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL 14 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 15 OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 16 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 17 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 18 this paragraph if the dismantlement, removal, surrender, or abandonment for which 19 the cost is incurred is undertaken for the purpose of replacing, renovating, or 20 improving the facility, pipeline, well pad, platform, or other structure; [FOR THE 21 PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 22 (A) IN THE CASE OF OIL, ONE BARREL; 23 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;] 24 (16) costs incurred for containment, control, cleanup, or removal in 25 connection with any unpermitted release of oil or a hazardous substance and any 26 liability for damages imposed on the producer or explorer for that unpermitted 27 release; this paragraph does not apply to the cost of developing and maintaining an oil 28 discharge prevention and contingency plan under AS 46.04.030; 29 (17) costs incurred to satisfy a work commitment under an exploration 30 license under AS 38.05.132; 31 (18) that portion of expenditures, that would otherwise be qualified
01 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 02 calendar year that are less than the product of $0.30 multiplied by the total taxable 03 production from each lease or property, in BTU equivalent barrels, during that 04 calendar year, except that, when a portion of a calendar year is subject to this 05 provision, the expenditures and volumes shall be prorated within that calendar year; 06 (19) costs incurred for repair, replacement, or deferred 07 maintenance of a facility, a pipeline, a structure, or equipment, other than a well, 08 that results in or is undertaken in response to a failure, problem, or event that 09 results in an unscheduled interruption of, or reduction in the rate of, oil or gas 10 production; or costs incurred for repair, replacement, or deferred maintenance 11 of a facility, a pipeline, a structure, or equipment, other than a well, that is 12 undertaken in response to, or is otherwise associated with, an unpermitted 13 release of a hazardous substance or of gas; however, costs under this paragraph 14 that would otherwise constitute lease expenditures under (a) of this section may 15 be treated as lease expenditures if the department determines that the repair or 16 replacement is solely necessitated by an act of war, by an unanticipated grave 17 natural disaster or other natural phenomenon of an exceptional, inevitable, and 18 irresistible character, the effects of which could not have been prevented or 19 avoided by the exercise of due care or foresight, or by an intentional or negligent 20 act or omission of a third party, other than a party or its agents in privity of 21 contract with, or employed by, the producer or an operator acting for the 22 producer, but only if the producer or operator, as applicable, exercised due care 23 in operating and maintaining the facility, pipeline, structure, or equipment, and 24 took reasonable precautions against the act or omission of the third party and 25 against the consequences of the act or omission; in this paragraph, 26 (A) "costs incurred for repair, replacement, or deferred 27 maintenance of a facility, a pipeline, a structure, or equipment" includes 28 costs to dismantle and remove the facility, pipeline, structure, or 29 equipment that is being replaced; 30 (B) "hazardous substance" has the meaning given in 31 AS 46.03.826;
01 (C) "replacement" includes renovation or improvement; 02 (20) costs incurred to construct, acquire, or operate a refinery or 03 crude oil topping plant, regardless of whether the products of the refinery or 04 topping plant are used in oil or gas exploration, development, or production 05 operations; however, if a producer owns a refinery or crude oil topping plant 06 that is located on or near the premises of the producer's lease or property in the 07 state and that processes the producer's oil produced from that lease or property 08 into a product that the producer uses in the operation of the lease or property in 09 drilling for or producing oil or gas, the producer's lease expenditures include the 10 amount calculated by subtracting from the fair market value of the product used 11 the prevailing value, as determined under AS 43.55.020(f), of the oil that is 12 processed. 13 * Sec. 34. AS 43.55.170(a) is amended to read: 14 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 15 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 16 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 17 be adjusted by subtracting payments or credits, other than tax credits, received by the 18 producer or by an operator acting for the producer for 19 (1) the use by another person of a production facility in which the 20 producer has an ownership interest or the management by the producer of a 21 production facility under a management agreement providing for the producer to 22 receive a management fee; 23 (2) a reimbursement or similar payment that offsets the producer's 24 lease expenditures, including an insurance recovery from a third-party insurer and a 25 payment from the state or federal government for reimbursement of the producer's 26 upstream costs, including costs for gathering, separating, cleaning, dehydration, 27 compressing, or other field handling associated with the production of oil or gas 28 upstream of the point of production; 29 (3) the sale or other transfer of 30 (A) an asset, including geological, geophysical, or well data or 31 interpretations, acquired by the producer as a result of a lease expenditure or
01 an expenditure that would be a lease expenditure if it were incurred after 02 March 31, 2006; for purposes of this subparagraph, 03 (i) if a producer removes from the state, for use outside 04 the state, an asset described in this subparagraph, the value of the asset 05 at the time it is removed is considered a payment received by the 06 producer for sale or transfer of the asset; 07 (ii) for a transaction that is an internal transfer or is 08 otherwise not an arm's length transaction, if the sale or transfer of the 09 asset is made for less than fair market value, the amount subtracted 10 must be the fair market value; and 11 (B) oil or gas 12 (i) that is not considered produced from a lease or 13 property under AS 43.55.020(e); and 14 (ii) the cost of acquiring which is a lease expenditure 15 incurred by the person that acquires the oil or gas. 16 * Sec. 35. AS 43.55 is amended by adding a new section to article 4 to read: 17 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 18 provision of AS 40.25.100, and regardless of whether the information is considered 19 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 20 particular returns or reports, the department may publish the following information 21 under this chapter, if aggregated among three or more producers or explorers, 22 showing by month or calendar year and by lease or property, unit, or area of the state: 23 (1) the amount of oil or gas production; 24 (2) the amount of taxes levied under this chapter or paid under this 25 chapter; 26 (3) the effective tax rates under this chapter; 27 (4) the gross value of oil or gas at the point of production; 28 (5) the transportation costs for oil or gas; 29 (6) qualified capital expenditures under AS 43.55.023(k); 30 (7) exploration expenditures under AS 43.55.025; 31 (8) production tax values of oil or gas under AS 43.55.160;
01 (9) lease expenditures under AS 43.55.165; 02 (10) adjustments to lease expenditures under AS 43.55.170; 03 (11) tax credits applicable or potentially applicable against taxes 04 levied by this chapter. 05 * Sec. 36. AS 43.55.900 is amended by adding new paragraphs to read: 06 (22) "producer" means an owner of an operating right, operating 07 interest, or working interest in a mineral interest in oil or gas; 08 (23) "unit" means a group of tracts of land that is 09 (A) subject to a cooperative or a unit plan of development or 10 operation that has been certified by the commissioner of natural resources 11 under AS 38.05.180(p); 12 (B) subject to a cooperative or a unit plan of development or 13 operation that has been certified by the United States Secretary of the Interior 14 under 30 U.S.C. 226(m); 15 (C) subject to an agreement of the owners of interests in the 16 tracts of land to validly integrate their interests to provide for the unitized 17 management, development, and operation of the tracts of land as a unit, within 18 the meaning of AS 31.05.110(a); or 19 (D) within the unit area of a unit created by order of the 20 Alaska Oil and Gas Conservation Commission under AS 31.05.110(b). 21 * Sec. 37. AS 43.55.165(c) and 43.55.165(d) are repealed. 22 * Sec. 38. AS 43.55.011(g), 43.55.011(h), and 43.55.160(c) are repealed. 23 * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 APPLICABILITY. (a) Sections 24, 25, 32 - 34, and 37 of this Act apply to oil and 26 gas produced after March 31, 2006. 27 (b) Sections 14 - 20, 31, and 38 of this Act apply to oil and gas produced after 28 December 31, 2007. 29 (c) Sections 26 and 27 of this Act apply to statements and reports under 30 AS 43.55.030(a), as amended by sec. 26 of this Act, and AS 43.55.030(e) and (f), as added 31 by sec. 27 of this Act, required to be filed after December 31, 2007.
01 (d) AS 43.55.075(a), enacted by sec. 29 of this Act, applies to any tax liability under 02 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260 03 had not expired before the effective date of secs. 13 and 29 of this Act. 04 * Sec. 40. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 TRANSITION: ASSIGNMENT OF OIL AND GAS AUDITORS IN THE 07 DEPARTMENT OF REVENUE AND DEPARTMENT OF NATURAL RESOURCES. 08 Notwithstanding any contrary provision of law, employees employed as oil and gas auditors 09 performing production tax audits or as their immediate supervisors in the Department of 10 Revenue and employees employed as oil and gas auditors performing royalty audits, 11 including net profit share audits, or as their immediate supervisors in the Department of 12 Natural Resources are assigned to the exempt service in accordance with AS 39.25.110(42), 13 added by sec. 9 of this Act, and may not be included in the general government or 14 supervisory collective bargaining units of state employees except as provided in this section. 15 All oil and gas auditors performing production tax audits or royalty audits and their 16 immediate supervisors hired before the effective date of sec. 9 of this Act have the option of 17 (1) continuing in the general government or supervisory collective bargaining units and being 18 subject to their respective collective bargaining agreements; or (2) being removed from those 19 bargaining units. Those employees have 90 days from the effective date of sec. 9 of this Act 20 to exercise the option to continue in the collective bargaining units. The option taken under 21 this section by the employee is irrevocable. The employees choosing to be removed from 22 those bargaining units are removed after any notice period required by a collective 23 bargaining agreement. 24 * Sec. 41. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 27 contrary provision of AS 44.62.240, 28 (1) if the Department of Revenue expressly designates in the regulation that 29 the regulation applies retroactively to that date, a regulation adopted by the Department of 30 Revenue to implement, interpret, make specific, or otherwise carry out 31 (A) secs. 24, 25, 32 - 34, and 37 of this Act may apply retroactively to
01 April 1, 2006; 02 (B) secs. 14 - 20, 26, 27, 31, and 38 of this Act may apply 03 retroactively to January 1, 2008; 04 (2) a regulation adopted by the Department of Natural Resources to 05 implement, interpret, make specific, or otherwise carry out statutory provisions for the 06 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the 07 extent the regulation deals with the treatment of oil and gas production taxes in determining 08 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of 09 Natural Resources expressly designates in the regulation that the regulation applies 10 retroactively to that date. 11 * Sec. 42. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 TRANSITION: REGULATIONS. The Department of Natural Resources and the 14 Department of Revenue may proceed to adopt regulations to implement this Act. The 15 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 16 effective date of the law implemented by the regulation. 17 * Sec. 43. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. Sections 24, 25, 20 32 - 34, and 37 of this Act are retroactive to April 1, 2006. 21 * Sec. 44. Sections 14 - 20, 26, 27, 31, and 38 of this Act take effect January 1, 2008. 22 * Sec. 45. Except as provided in sec. 44 of this Act, this Act takes effect immediately under 23 AS 01.10.070(c).