CSHB 2001(FIN) am: "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; 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; prohibiting a producer or explorer from receiving tax credits if certain judgments are not satisfied and requiring, as a condition of receiving the tax credits, the deposit of the amount of certain unpaid judgments and certain interest on those judgments in the court during an appeal and relating to that interest; relating to state oil and gas audit masters; making conforming amendments; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 2001(FIN) am 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; relating to the 04 sharing between agencies of certain information relating to the production tax and to 05 oil and gas or gas only leases; expanding the period in which the Department of 06 Revenue may assess the amount of oil and gas production tax and conservation 07 surcharges; prohibiting a producer or explorer from receiving tax credits if certain 08 judgments are not satisfied and requiring, as a condition of receiving the tax credits, the 09 deposit of the amount of certain unpaid judgments and certain interest on those 10 judgments in the court during an appeal and relating to that interest; relating to state 11 oil and gas audit masters; making conforming amendments; and providing for an 12 effective date."
01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 02 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 03 to read: 04 LEGISLATIVE INTENT. (a) It is the intent of the legislature that the provisions of 05 this Act will 06 (1) ensure a fair and equitable means of assessing and taxing Alaska's oil and 07 gas resources; and 08 (2) encourage the availability to Alaska's citizens of affordable gas produced, 09 transported, and consumed within the state. 10 (b) It is the intent of the legislature that AS 43.55.075(b), enacted by sec. 41 of this 11 Act, relating to the limitation of assessments for the production tax on oil and gas and 12 conservation surcharges on oil, confirms by clarification the long-standing interpretation of 13 AS 43.05.260 by the Department of Revenue. 14 (c) It is the intent of the legislature that costs disallowed in accordance with 15 AS 43.55.165(e)(6), as amended by sec. 48 of this Act, include costs, subsequent to the 16 effective date of the enactment of AS 43.55.165(e)(6), incurred as a result of monitoring and 17 management decisions that fail to properly consider risks posed by changing operating 18 conditions and result in failure to take necessary actions to prevent a pipeline spill, 19 interruption of service, or shutdown. 20 * Sec. 2. AS 38.05.035(a) is amended to read: 21 (a) The director shall 22 (1) have general charge and supervision of the division and may 23 exercise the powers specifically delegated to the director; the director may employ 24 and fix the compensation of assistants and employees necessary for the operations of 25 the division; the director [AND] is the certifying officer of the division, with the 26 consent of the commissioner, and may approve vouchers for disbursements of money 27 appropriated to the division; 28 (2) manage, inspect, and control state land and improvements on it 29 belonging to the state and under the jurisdiction of the division; 30 (3) execute laws, rules, regulations, and orders adopted by the 31 commissioner;
01 (4) prescribe application procedures and practices for the sale, lease, 02 or other disposition of available land, resources, property, or interest in them; 03 (5) prescribe fees or service charges, with the consent of the 04 commissioner, for any public service rendered; 05 (6) under the conditions and limitations imposed by law and the 06 commissioner, issue deeds, leases, or other conveyances disposing of available land, 07 resources, property, or any interests in them; 08 (7) have jurisdiction over state land, except that land acquired by the 09 Alaska World War II Veterans Board and the Agricultural Loan Board or the 10 departments or agencies succeeding to their respective functions through foreclosure 11 or default; to this end, the director possesses the powers and, with the approval of the 12 commissioner, shall perform the duties necessary to protect the state's rights and 13 interest in state land, including the taking of all necessary action to protect and 14 enforce the state's contractual or other property rights; 15 (8) [REPEALED 16 (9)] maintain the [SUCH] records [AS] the commissioner considers 17 necessary, administer oaths, and do all things incidental to the authority imposed; the 18 following records and files shall be kept confidential upon request of the person 19 supplying the information: 20 (A) the name of the person nominating or applying for the 21 sale, lease, or other disposal of land by competitive bidding; 22 (B) before the announced time of opening, the names of the 23 bidders and the amounts of the bids; 24 (C) all geological, geophysical, and engineering data supplied, 25 whether or not concerned with the extraction or development of natural 26 resources; 27 (D) except as provided in AS 38.05.036, cost data and 28 financial information submitted in support of applications, bonds, leases, and 29 similar items; 30 (E) applications for rights-of-way or easements; 31 (F) requests for information or applications by public agencies
01 for land that [WHICH] is being considered for use for a public purpose; 02 (9) [(10)] account for the fees, licenses, taxes, or other money 03 received in the administration of this chapter including the sale or leasing of land, 04 identify their source, and promptly transmit them to the proper fiscal department after 05 crediting them to the proper fund; receipts from land application filing fees and 06 charges for copies of maps and records shall be deposited immediately in the general 07 fund of the state by the director; 08 (10) [(11)] select and employ or obtain at reasonable compensation 09 cadastral, appraisal, or other professional personnel the director considers necessary 10 for the proper operation of the division; 11 (11) [(12)] be the certifying agent of the state to select, accept, and 12 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 13 devise, judgment, operation of law, or other means any land, of whatever nature or 14 interest, available to the state; and be the certifying agent of the state, to select, 15 accept, or secure by whatever action is necessary in the name of the state any land, or 16 title or interest to land available, granted, or subject to being transferred to the state 17 for any purpose; 18 (12) on request, furnish records, files, and other information 19 related to the administration of AS 38.05.180 to the Department of Revenue for 20 use in forecasting state revenue under or administering AS 43.55, whether or not 21 those records, files, and other information are required to be kept confidential 22 under (8) of this subsection; in the case of records, files, or other information 23 required to be kept confidential under (8) of this subsection, the Department of 24 Revenue shall maintain the confidentiality that the Department of Natural 25 Resources is required to extend to records, files, and other information under (8) 26 of this subsection 27 [(13) REPEALED 28 (14) REPEALED]. 29 * Sec. 3. AS 38.05.036(b) is amended to read: 30 (b) The Department of Revenue may obtain from the department information 31 relating to royalty and net profits payments and to exploration incentive credits under
01 this chapter or under AS 41.09, whether or not that information is confidential. The 02 Department of Revenue may use the information in carrying out its functions and 03 responsibilities under AS 43, and shall hold that information confidential to the extent 04 required by an agreement with the department or by AS 38.05.035(a)(8) 05 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 06 * Sec. 4. AS 38.05.036(f) is amended to read: 07 (f) Except as otherwise provided in this section or in connection with official 08 investigations or proceedings of the department, it is unlawful for a current or former 09 officer, employee, or agent of the state to divulge information obtained by the 10 department as a result of an audit under this section that is required by an agreement 11 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 12 AS 41.09.010(d) to be kept confidential. 13 * Sec. 5. AS 38.05.036(g) is amended to read: 14 (g) Nothing in this section prohibits the publication of statistics in a manner 15 that maintains the confidentiality of information to the extent required by an 16 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 17 AS 41.09.010(d). 18 * Sec. 6. AS 38.05.123(f) is amended to read: 19 (f) As part of the timber sale negotiations authorized by this section, the 20 commissioner may require a prospective purchaser negotiating a timber sale contract 21 to submit financial and technical data that demonstrates that the requirements of this 22 section have been or will be met. Upon the prospective purchaser's request, the 23 commissioner shall keep data provided by the purchaser confidential in accordance 24 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 25 * Sec. 7. AS 38.05.133(e) is amended to read: 26 (e) The commissioner may make a written request to a prospective licensee 27 for additional information on the prospective licensee's proposal. The commissioner 28 shall keep confidential information described in AS 38.05.035(a)(8) 29 [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made 30 a written request that the information remain confidential. 31 * Sec. 8. AS 38.05.180(j) is amended to read:
01 (j) The commissioner 02 (1) may provide for modification of royalty on individual leases, 03 leases unitized as described in (p) of this section, leases subject to an agreement 04 described in (s) or (t) of this section, or interests unitized under AS 31.05 05 (A) to allow for production from an oil or gas field or pool if 06 (i) the oil or gas field or pool has been sufficiently 07 delineated to the satisfaction of the commissioner; 08 (ii) the field or pool has not previously produced oil or 09 gas for sale; and 10 (iii) oil or gas production from the field or pool would 11 not otherwise be economically feasible; 12 (B) to prolong the economic life of an oil or gas field or pool 13 as per barrel or barrel equivalent costs increase or as the price of oil or gas 14 decreases, and the increase or decrease is sufficient to make future production 15 no longer economically feasible; or 16 (C) to reestablish production of shut-in oil or gas that would 17 not otherwise be economically feasible; 18 (2) may not grant a royalty modification unless the lessee or lessees 19 requesting the change make a clear and convincing showing that a modification of 20 royalty meets the requirements of this subsection and is in the best interests of the 21 state; 22 (3) shall provide for an increase or decrease or other modification of 23 the state's royalty share by a sliding scale royalty or other mechanism that shall be 24 based on a change in the price of oil or gas and may also be based on other relevant 25 factors such as a change in production rate, projected ultimate recovery, development 26 costs, and operating costs; 27 (4) may not grant a royalty reduction for a field or pool 28 (A) under (1)(A) of this subsection if the royalty modification 29 for the field or pool would establish a royalty rate of less than five percent in 30 amount or value of the production removed or sold from a lease or leases 31 covering the field or pool;
01 (B) under (1)(B) or (1)(C) of this subsection if the royalty 02 modification for the field or pool would establish a royalty rate of less than 03 three percent in amount or value of the production removed or sold from a 04 lease or leases covering the field or pool; 05 (5) may not grant a royalty reduction under this subsection without 06 including an explicit condition that the royalty reduction is not assignable without the 07 prior written approval, which may not be unreasonably withheld, by the 08 commissioner; the commissioner shall, in the preliminary and final findings and 09 determinations, set out the conditions under which the royalty reduction may be 10 assigned; 11 (6) shall require the lessee or lessees to submit, with the application 12 for the royalty reduction, financial and technical data that demonstrate that the 13 requirements of this subsection are met; the commissioner 14 (A) may require disclosure of only the financial and technical 15 data related to development, production, and transportation of oil and gas or 16 gas only from the field or pool that are reasonably available to the applicant; 17 and 18 (B) shall keep the data confidential under AS 38.05.035(a)(8) 19 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application 20 for the royalty reduction; the confidential data may be disclosed by the 21 commissioner to legislators and to the legislative auditor and as directed by 22 the chair or vice-chair of the Legislative Budget and Audit Committee to the 23 director of the division of legislative finance, the permanent employees of 24 their respective divisions who are responsible for evaluating a royalty 25 reduction, and to agents or contractors of the legislative auditor or the 26 legislative finance director who are engaged under contract to evaluate the 27 royalty reduction, if they sign an appropriate confidentiality agreement; 28 (7) may 29 (A) require the lessee or lessees making application for the 30 royalty reduction under (1)(A) of this subsection to pay for the services of an 31 independent contractor, selected by the lessee or lessees from a list of
01 qualified consultants compiled by the commissioner, to evaluate hydrocarbon 02 development, production, transportation, and economics and to assist the 03 commissioner in evaluating the application and financial and technical data; 04 if, under this subparagraph, the commissioner requires payment for the 05 services of an independent contractor, the total cost of the services to be paid 06 for by the lessee or lessees may not exceed $150,000 for each application, and 07 the commissioner shall determine the relevant scope of the work to be 08 performed by the contractor; selection of an independent contractor under this 09 subparagraph is not subject to AS 36.30; 10 (B) with the mutual consent of the lessee or lessees making 11 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 12 request payment for the services of an independent contractor, selected from a 13 list of qualified consultants to evaluate hydrocarbon development, production, 14 transportation, and economics by the commissioner to assist the commissioner 15 in evaluating the application and financial and technical data; if, under this 16 subparagraph, the commissioner requires payment for the services of an 17 independent contractor, the total cost of the services that may be paid for by 18 the lessee or lessees may not exceed $150,000 for each application, and the 19 commissioner shall determine the relevant scope of the work to be performed 20 by the contractor; selection of an independent contractor under this 21 subparagraph is not subject to AS 36.30; 22 (8) shall make and publish a preliminary findings and determination 23 on the royalty reduction application, give reasonable public notice of the preliminary 24 findings and determination, and invite public comment on the preliminary findings 25 and determination during a 30-day period for receipt of public comment; 26 (9) shall offer to appear before the Legislative Budget and Audit 27 Committee, on a day that is not earlier than 10 days and not later than 20 days after 28 giving public notice under (8) of this subsection, to provide the committee a review of 29 the commissioner's preliminary findings and determination on the royalty reduction 30 application and administrative process; if the Legislative Budget and Audit 31 Committee accepts the commissioner's offer, the committee shall give notice of the
01 committee's meeting to all members of the legislature; 02 (10) shall make copies of the preliminary findings and determination 03 available to 04 (A) the presiding officer of each house of the legislature; 05 (B) the chairs of the legislature's standing committees on 06 resources; and 07 (C) the chairs of the legislature's special committees on oil and 08 gas, if any; 09 (11) shall, within 30 days after the close of the public comment period 10 under (8) of this subsection, 11 (A) prepare a summary of the public response to the 12 commissioner's preliminary findings and determination; 13 (B) make a final findings and determination; the 14 commissioner's final findings and determination prepared under this 15 subparagraph regarding a royalty reduction is final and not appealable to the 16 court; 17 (C) transmit a copy of the final findings and determination to 18 the lessee; 19 (D) with the applicant's consent, amend the applicant's lease or 20 unitization agreement consistent with the commissioner's final decision; and 21 (E) make copies of the final findings and determination 22 available to each person who submitted comment under (8) of this subsection 23 and who has filed a request for the copies; 24 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 25 section in the commissioner's determination under this subsection. 26 * Sec. 9. AS 38.05.275(c) is amended to read: 27 (c) Subsection (b) of this section may not be construed to limit the director in 28 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 29 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 30 (42) oil and gas auditor masters employed in a professional capacity 31 by the Department of Revenue and the Department of Natural Resources to collect oil
01 and gas revenue by developing policy, conduction studies, drafting proposed 02 regulations, enforcing regulations, and directing audits by oil and gas revenue 03 auditors. 04 * Sec. 11. AS 41.09.010(d) is amended to read: 05 (d) Data derived from drilling a stratigraphic test well or exploratory well that 06 is provided to the commissioner under (c)(3) of this section shall be kept confidential 07 for 24 months after receipt by the commissioner unless the owner of the well gives 08 written permission to the state to release the well data at an earlier date, and, 09 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 10 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 11 other data provided to the commissioner under (c)(3) of this section, except that the 12 commissioner, under appropriate confidentiality provisions and without preference or 13 discrimination, may display to all interested third parties, but may not distribute or 14 transfer in hard copy or electronic form, those data with respect to all land if the 15 commissioner determines that the limited disclosure is necessary to further the 16 interest of the state in evaluating or developing its land. 17 * Sec. 12. AS 42.45 is amended by adding a new section to read: 18 Sec. 42.45.045. Appropriations for the low income heating energy 19 assistance program. (a) By February 1 each year, the Department of Revenue shall 20 determine whether the state received for the general fund, during the immediately 21 preceding calendar year, an amount of money from the tax levied under 22 AS 43.55.011(e) because the price index calculated under AS 43.55.011(h) was 23 greater than zero. If the state received an amount of money because the price index 24 calculated under AS 43.55.011(h) was greater than zero, the department shall notify 25 the legislature of that amount. 26 (b) The legislature may annually appropriate up to $50,000,000 of the amount 27 reported under (a) of this section for the low income heating energy assistance 28 program. 29 (c) Nothing in this section requires that money be appropriated or creates a 30 dedicated fund. 31 (d) For purposes of this section, "low income heating energy assistance
01 program" means the program created by 7 AAC 44.010 to implement the federal 02 Low-Income Home Energy Assistance Act of 1981, as amended (42 U.S.C. 8621 et 03 seq.). 04 * Sec. 13. AS 43.05.230(h) is amended to read: 05 (h) The commissioner shall, upon request, furnish to the Department of 06 Natural Resources copies of tax returns, reports, and other documents filed under 07 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 08 workpapers under those chapters. The Department of Natural Resources shall 09 maintain the confidentiality that the Department of Revenue is required to extend to 10 the returns, reports, documents, determinations, and workpapers furnished to the 11 Department of Natural Resources under this subsection. 12 * Sec. 14. AS 43.05.260(a) is amended to read: 13 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and 14 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 15 years after the return was filed, whether or not a return was filed on or after the date 16 prescribed by law. If the tax is not assessed before the expiration of the applicable 17 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 18 of the tax. 19 * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read: 20 (e) There is levied on the producer of oil or gas a tax for all oil and gas 21 produced each calendar year from each lease or property in the state, less any oil and 22 gas the ownership or right to which is exempt from taxation or constitutes a 23 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) 24 of this section, the tax is equal to the sum of 25 (1) the production tax value of the taxable oil and gas as calculated 26 under AS 43.55.160 multiplied by 25 percent; and 27 (2) the sum, over all months of the calendar year, of the tax amounts 28 calculated under (g) of this section. 29 * Sec. 16. AS 43.55.011(f) is amended to read: 30 (f) The levy of tax under this section for [ON A PRODUCER OF] oil and gas 31 produced from leases or properties that include land north of 68 degrees North
01 latitude, other than oil and gas subject to (i) of this section and gas subject to (o) 02 of this section, may not be less than 03 (1) four percent of the gross value at the point of production when the 04 average price per barrel for Alaska North Slope crude oil for sale on the United States 05 West Coast during the calendar year for which the tax is due is more than $25; 06 (2) three percent of the gross value at the point of production when the 07 average price per barrel for Alaska North Slope crude oil for sale on the United States 08 West Coast during the calendar year for which the tax is due is over $20 but not over 09 $25; 10 (3) two percent of the gross value at the point of production when the 11 average price per barrel for Alaska North Slope crude oil for sale on the United States 12 West Coast during the calendar year for which the tax is due is over $17.50 but not 13 over $20; 14 (4) one percent of the gross value at the point of production when the 15 average price per barrel for Alaska North Slope crude oil for sale on the United States 16 West Coast during the calendar year for which the tax is due is over $15 but not over 17 $17.50; or 18 (5) zero percent of the gross value at the point of production when the 19 average price per barrel for Alaska North Slope crude oil for sale on the United States 20 West Coast during the calendar year for which the tax is due is $15 or less. 21 * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read: 22 (g) For each month for which the price index determined under (h) of this 23 section is greater than zero, the amount of tax for purposes of (e)(2) of this section is 24 calculated as follows: (1) for oil and gas produced from each lease or property, the 25 monthly production tax value is calculated in the manner described in 26 AS 43.55.160(a) and (b), except that the gross value at the point of production for the 27 month is substituted for the gross value at the point of production for the calendar 28 year and 1/12 of the applicable adjusted lease expenditures for the calendar year is 29 substituted for the applicable adjusted lease expenditures for the calendar year; (2) the 30 monthly production tax value determined under (1) of this subsection is multiplied by 31 the progressivity tax rate for the month. The progressivity tax rate for a month is the
01 product of 0.4 percent multiplied by the price index for the month determined under 02 (h) of this section, except that the progressivity tax rate for a month may not exceed 03 25 percent. Notwithstanding any contrary provision of AS 43.55.150, for purposes of 04 calculating a monthly production tax value under this subsection, the gross value at 05 the point of production of the oil and gas is calculated under regulations adopted by 06 the department that provide for using an appropriate monthly share of the producer's 07 costs of transportation for the calendar year. 08 * Sec. 18. AS 43.55.011(h) is repealed and reenacted to read: 09 (h) For purposes of (g) of this section, the price index for a month is 10 calculated by subtracting 30 from the number that is equal to the total of the monthly 11 production tax values, as calculated under (g) of this section, of the taxable oil and 12 gas produced by the producer from all leases and properties in the state during that 13 month, divided by the total amount of taxable oil and gas produced by the producer 14 from all leases and properties in the state during that month, in BTU equivalent 15 barrels. However, a price index calculated under this subsection may not be less than 16 zero. 17 * Sec. 19. AS 43.55.011(j) is amended to read: 18 (j) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)] 19 of this section for [ON] gas produced from a lease or property in the Cook Inlet 20 sedimentary basin may not exceed 21 (1) for a lease or property that first commenced commercial 22 production of gas before April 1, 2006, the product obtained by multiplying (A) the 23 amount of taxable gas produced during the calendar year from the lease or property, 24 times (B) the average rate of tax that was imposed under this chapter for [ON] 25 taxable gas produced from the lease or property for the 12-month period ending on 26 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 27 the point of production of the taxable gas produced from the lease or property during 28 the 12-month period ending on March 31, 2006, by the total amount of that gas; 29 (2) for a lease or property that first commences commercial 30 production of gas after March 31, 2006, the product obtained by multiplying (A) the 31 amount of taxable gas produced during the calendar year from the lease or property,
01 times (B) the average rate of tax that was imposed under this chapter for [ON] 02 taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin 03 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 04 value for gas delivered in the Cook Inlet area for the 12-month period ending 05 March 31, 2006, as determined by the department under AS 43.55.020(f). 06 * Sec. 20. AS 43.55.011(k) is amended to read: 07 (k) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND 08 (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet 09 sedimentary basin may not exceed 10 (1) for a lease or property that first commenced commercial 11 production of oil before April 1, 2006, the product obtained by multiplying (A) the 12 amount of taxable oil produced during the calendar year from the lease or property, 13 times (B) the average rate of tax that was imposed under this chapter for [ON] 14 taxable oil produced from the lease or property for the 12-month period ending on 15 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 16 the point of production of the taxable oil produced from the lease or property during 17 the 12-month period ending on March 31, 2006, by the total amount of that oil; 18 (2) for a lease or property that first commences commercial 19 production of oil after March 31, 2006, the product obtained by multiplying (A) the 20 amount of taxable oil produced during the calendar year from the lease or property, 21 times (B) the average rate of tax that was imposed under this chapter for [ON] 22 taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin 23 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 24 value for oil produced and delivered in the Cook Inlet area for the 12-month period 25 ending on March 31, 2006, as determined by the department under AS 43.55.020(f). 26 * Sec. 21. AS 43.55.011(m) is amended to read: 27 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 28 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 29 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 30 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 31 basin and that are available to be applied against a tax levied by (e) of this section for
01 [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin 02 during a calendar year may be applied only against the tax levied by (e) of this section 03 for [ON] that gas. The amount by which the amount of tax credits that are allocated 04 to gas produced from leases or properties in the Cook Inlet sedimentary basin and that 05 the producer would otherwise be allowed to use for a later calendar year or transfer to 06 another person exceeds the amount of tax credits whose application would reduce the 07 tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the 08 amount of excess tax credits, and the excess tax credits are subject to the following: 09 (1) for each lease or property for which a limitation under (j) or (k) of 10 this section on the tax levied by (e) [AND (g)] of this section has the effect of 11 reducing the producer's tax below the amount of tax that would be levied in the 12 absence of that limitation, the producer shall calculate the amount of that reduction; 13 (2) the producer shall calculate the total of the reductions calculated 14 under (1) of this subsection for all affected leases or properties; 15 (3) the producer shall reduce the amount of excess tax credits by the 16 total calculated under (2) of this subsection, but not to less than zero; 17 (4) any amount of excess tax credits remaining after reduction under 18 (3) of this subsection may be used for a later calendar year, transferred to another 19 person, or applied against a tax levied for [ON] oil or gas produced from a lease or 20 property located anywhere in the state to the extent otherwise allowed under 21 applicable law governing the tax credits. 22 * Sec. 22. AS 43.55.011 is amended by adding a new subsection to read: 23 (o) Notwithstanding other provisions of this section, for a calendar year 24 before 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas 25 for gas produced from a lease or property outside the Cook Inlet sedimentary basin 26 and used in the state may not exceed the amount of tax for each 1,000 cubic feet of 27 gas that is determined under (j)(2) of this section. 28 * Sec. 23. AS 43.55.020(a) is repealed and reenacted to read: 29 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 30 shall pay the tax as follows: 31 (1) an installment payment of the estimated tax levied by
01 AS 43.55.011(e) - (g), net of any tax credits applied as allowed by law, is due for 02 each month of the calendar year on the last day of the following month; except as 03 otherwise provided under (2) of this subsection, the amount of the installment 04 payment is the sum of the following amounts, less 1/12 of the tax credits that are 05 allowed by law to be applied against the tax levied by AS 43.55.011(e) - (g) for the 06 calendar year, but the amount of the installment payment may not be less than zero: 07 (A) for oil and gas produced from leases or properties in the 08 state outside the Cook Inlet sedimentary basin or not subject to 09 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), 10 the greater of 11 (i) zero; or 12 (ii) the sum of 25 percent and the progressivity tax rate 13 calculated under AS 43.55.011(g) multiplied by the remainder 14 obtained by subtracting 1/12 of the producer's adjusted lease 15 expenditures for the calendar year of production under AS 43.55.165 16 and 43.55.170 that are deductible for the leases or properties under 17 AS 43.55.160 from the gross value at the point of production of the oil 18 and gas produced from the leases or properties during the month for 19 which the installment payment is calculated; 20 (B) for oil and gas produced from leases or properties subject 21 to AS 43.55.011(f), the greatest of 22 (i) zero; 23 (ii) zero percent, one percent, two percent, three 24 percent, or four percent, as applicable, of the gross value at the point of 25 production of the oil and gas produced from those properties; or 26 (iii) the sum of 25 percent and the progressivity tax 27 rate calculated under AS 43.55.011(g) multiplied by the remainder 28 obtained by subtracting 1/12 of the producer's adjusted lease 29 expenditures for the calendar year of production under AS 43.55.165 30 and 43.55.170 that are deductible for those leases or properties under 31 AS 43.55.160 from the gross value at the point of production of the oil
01 and gas produced from those leases or properties during the month for 02 which the installment payment is calculated; 03 (C) for oil and gas produced from each lease or property 04 subject to AS 43.55.011(j), (k), or (o), the greater of 05 (i) zero; or 06 (ii) the sum of 25 percent and the progressivity tax rate 07 calculated under AS 43.55.011(g) multiplied by the remainder 08 obtained by subtracting 1/12 of the producer's adjusted lease 09 expenditures for the calendar year of production under AS 43.55.165 10 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas, 11 respectively, produced from the lease or property from the gross value 12 at the point of production of the oil or gas, respectively, produced from 13 the lease or property during the month for which the installment 14 payment is calculated; 15 (2) an amount calculated under (1)(C) of this subsection for oil or gas 16 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not 17 exceed the product obtained by carrying out the calculation set out in 18 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 19 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 20 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 21 gas produced during the month for the amount of taxable gas produced during the 22 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 23 amount of taxable oil produced during the month for the amount of taxable oil 24 produced during the calendar year; 25 (3) 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 tax 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; and 02 (B) the applicable tax rate for gas provided under 03 AS 43.55.011(i), multiplied by 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 (4) any amount of tax levied by AS 43.55.011(e) - (i), net of any 07 credits applied as allowed by law, that exceeds the total of the amounts due as 08 installment payments of estimated tax is due on March 31 of the year following the 09 calendar year of production. 10 * Sec. 24. AS 43.55.020(g) is amended to read: 11 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 12 amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this 13 section that is not paid when due bears interest (1) at the rate provided for an 14 underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, 15 compounded daily, from the date the installment payment is due until [THE] 16 March 31 following the calendar year of production [DESCRIBED IN 17 AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after 18 that March 31. Interest accrued under (1) of this subsection that remains unpaid after 19 that March 31 is treated as an addition to tax that bears interest under (2) of this 20 subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is 21 not paid when due bears interest as provided for a delinquent tax under AS 43.05.225. 22 * Sec. 25. AS 43.55.020(h) is amended to read: 23 (h) Notwithstanding any contrary provision of AS 43.05.280, 24 (1) an overpayment of an installment payment required under (a)(1) - 25 (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment 26 under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from 27 the later of the date the installment payment is due or the date the overpayment is 28 made, until the earlier of 29 (A) the date it is refunded or is applied to an underpayment; [,] 30 or 31 (B) [THE] March 31 following the calendar year of
01 production [DESCRIBED IN AS 43.55.030(a)]; 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 [THE] March 31 05 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or 06 the date that the statement required under AS 43.55.030(a) is filed; 07 (3) interest is allowed under (2) of this subsection only from a date 08 that is 90 days after the later of [THE] March 31 following the calendar year of 09 production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement 10 required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment 11 was refunded within the 90-day period; 12 (4) interest under (2) and (3) of this subsection is paid at the rate and 13 in the manner provided in AS 43.05.225(1). 14 * Sec. 26. AS 43.55.023(b) is amended to read: 15 (b) A producer or explorer may elect to take a tax credit in the amount of 25 16 [20] percent of a carried-forward annual loss. A credit under this subsection may be 17 applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this 18 subsection, a carried-forward annual loss is the amount of a producer's or explorer's 19 adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous 20 calendar year that was not deductible in calculating production tax values for that 21 calendar year under AS 43.55.160 [AS 43.55.160(b) AND (e)]. 22 * Sec. 27. AS 43.55.023(i) is amended to read: 23 (i) For the purposes of this section, 24 (1) a producer's or explorer's transitional investment expenditures are 25 the sum of the expenditures the producer or explorer incurred after March 31, 2001, 26 and before April 1, 2006, that would be qualified capital expenditures if they were 27 incurred after March 31, 2006, less the sum of the payments or credits the producer or 28 explorer received before April 1, 2006, for the sale or other transfer of assets, 29 including geological, geophysical, or well data or interpretations, acquired by the 30 producer or explorer as a result of expenditures the producer or explorer incurred 31 before April 1, 2006, that would be qualified capital expenditures, if they were
01 incurred after March 31, 2006; 02 (2) a producer or explorer that did not have commercial production 03 of oil or gas from a lease or property in the state before January 1, 2008, may 04 elect to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in 05 the amount of 20 percent of the producer's or explorer's transitional investment 06 expenditures, but only to the extent that the amount does not exceed 1/10 of the 07 producer's or explorer's qualified capital expenditures that were incurred after 08 March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE 09 CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN]; 10 (3) a producer or explorer may not take a tax credit for a transitional 11 investment expenditure 12 (A) for any calendar year after [THE LATER OF 13 (i)] 2013; [OR 14 (ii) THE SIXTH CALENDAR YEAR AFTER THE 15 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST 16 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A 17 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT 18 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A 19 LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;] 20 (B) more than once; or 21 (C) if a credit for that expenditure was taken under 22 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 23 (4) notwithstanding (d), (e), and (g) of this section, a producer or 24 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for 25 a transitional investment expenditure. 26 * Sec. 28. AS 43.55.023 is amended by adding a new subsection to read: 27 (l) Notwithstanding the limitation on the use of a transferable tax credit by a 28 transferee under (e) of this section and subject to appropriations made by law, if and 29 to the extent that purchase of transferable tax credits by the Alaska Retirement 30 Management Board is authorized by law, the department shall issue a cash refund to 31 the Alaska Retirement Management Board for a transferable tax credit originally
01 issued to a person under (d) of this section and purchased by the Alaska Retirement 02 Management Board. 03 * Sec. 29. AS 43.55.025(a) is amended to read: 04 (a) Subject to the terms and conditions of this section, a credit against the 05 production tax levied by [DUE UNDER] AS 43.55.011(e) or (f) is allowed for 06 exploration expenditures that qualify under (b) of this section in an amount equal to 07 one of the following: 08 (1) 30 [20] percent of the total exploration expenditures that qualify 09 only under (b) and (c) of this section; 10 (2) 30 [20] PERCENT of the total exploration expenditures [FOR 11 WORK PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) 12 and (d) of this section; 13 (3) 40 percent of the total exploration expenditures that qualify under 14 (b), (c), and (d) of this section; or 15 (4) 40 percent of the total exploration expenditures that qualify only 16 under (b) and (e) of this section. 17 * Sec. 30. AS 43.55.025(b) is amended to read: 18 (b) To qualify for the production tax credit under (a) of this section, an 19 exploration expenditure must be incurred for work performed [ON OR] after 20 December 31, 2006 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN 21 EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE 22 INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and 23 (1) may be for seismic or other geophysical exploration costs not 24 connected with a specific well; 25 (2) if for an exploration well, 26 (A) must be incurred by an explorer that holds an interest in 27 the exploration well for which the production tax credit is claimed; 28 (B) may be for either a [AN OIL OR GAS DISCOVERY] 29 well that encounters an oil or gas deposit or a dry hole; [AND] 30 (C) must be for a well that has been completed, suspended, 31 or abandoned under AS 31.05.030 at the time the explorer claims the tax
01 credit under (f) of this section; and 02 (D) must be for goods, services, or rentals of personal 03 property reasonably required for the surface preparation, drilling, casing, 04 cementing, and logging of an exploration well, and, in the case of a dry hole, 05 for the expenses required for abandonment if the well is abandoned within 18 06 months after the date the well was spudded; 07 (3) may not be for [TESTING, STIMULATION, OR COMPLETION 08 COSTS;] administration, supervision, engineering, or lease operating costs; 09 geological or management costs; community relations or environmental costs; 10 bonuses, taxes, or other payments to governments related to the well; costs, including 11 repairs and replacements, arising from or associated with fraud, wilful 12 misconduct, gross negligence, criminal negligence, or violation of law, including 13 a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act), or other costs 14 that are generally recognized as indirect costs or financing costs; and 15 (4) may not be incurred for an exploration well or seismic exploration 16 that is included in a plan of exploration or a plan of development for any unit on 17 May 13, 2003. 18 * Sec. 31. AS 43.55.025(c) is repealed and reenacted to read: 19 (c) To be eligible for the 30 percent production tax credit authorized by (a)(1) 20 of this section or the 40 percent production tax credit authorized by (a)(3) of this 21 section, exploration expenditures must 22 (1) qualify under (b) of this section; and 23 (2) be for an exploration well, subject to the following: 24 (A) before spudding the well, 25 (i) the explorer shall submit to the commissioner of 26 natural resources the information necessary to determine whether the 27 geological objective of the well is a potential oil or gas trap that is 28 distinctly separate from any trap that has been tested by a preexisting 29 well; 30 (ii) at the time of the request for a determination under 31 (i), the commissioner of natural resources may request from the
01 explorer that specific data sets, ancillary data, and reports including all 02 results, and copies of data collected and data analyses for the well be 03 provided to the Department of Natural Resources upon completion of 04 the well; in this subparagraph, well data includes all analyses 05 conducted on physical material, and well logs collected from the well 06 and sample analyses; testing geophysical and velocity data including 07 vertical seismic profiles and check shot surveys; testing data and 08 analyses; age data; geochemical analyses; and access to tangible 09 material; and 10 (iii) the commissioner of natural resources must make 11 an affirmative determination on whether the geological objective of 12 the well is a potential oil or gas trap that is distinctly separate from any 13 trap that has been tested by a preexisting well and what information 14 under (ii) must be submitted after completion, abandonment, or 15 suspension under AS 31.05.030; the commissioner of natural resources 16 shall decide whether to make that determination within 60 days after 17 receiving all the necessary information from the explorer and based on 18 the information received and on other information the commissioner of 19 natural resources may consider relevant; 20 (B) for an exploration well other than a well to explore a Cook 21 Inlet prospect, the well must be located and drilled in such a manner that the 22 bottom hole is located not less than three miles away from the bottom hole of 23 a preexisting well drilled for oil or gas, irrespective of whether the preexisting 24 well has been completed, suspended, or abandoned; 25 (C) after completion, abandonment, or suspension under 26 AS 31.05.030 of the exploration well, the commissioner of natural resources 27 must determine that the well was consistent with achieving the explorer's 28 stated geological objective. 29 * Sec. 32. AS 43.55.025(f) is amended to read: 30 (f) For a production tax credit under this section, 31 (1) an explorer shall, in a form prescribed by the department and,
01 except for a credit under (l) of this section, within six months of the completion of 02 the exploration activity, claim the credit and submit information sufficient to 03 demonstrate to the department's satisfaction that the claimed exploration expenditures 04 qualify under this section; in addition, the explorer shall submit information 05 necessary for the commissioner of natural resources to evaluate the validity of 06 the explorer's compliance with the requirements of this section; 07 (2) an explorer shall agree, in writing, 08 (A) to notify the Department of Natural Resources, within 30 09 days after completion of seismic or geophysical data processing, completion 10 of [A] well drilling, or filing of a claim for credit, whichever is the latest, for 11 which exploration costs are claimed, of the date of completion and submit a 12 report to that department describing the processing sequence and providing a 13 list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN 14 EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES 15 FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE 16 MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN 17 ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS 18 SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION 19 NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES 20 TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT 21 THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE 22 EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL 23 RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE 24 SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE 25 EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60 26 DAYS;] 27 (B) to provide to the Department of Natural Resources, within 28 30 days after the date of a request, unless a longer period is provided by the 29 Department of Natural Resources, specific data sets, ancillary data, and 30 reports identified in (A) of this paragraph; in this subparagraph, a seismic 31 or geophysical data set includes the data for an entire seismic survey,
01 irrespective of whether the survey areas cover nonstate land in addition 02 to state land or land in a unit in addition to land outside a unit; 03 (C) that, notwithstanding any provision of AS 38, information 04 provided under this paragraph will be held confidential by the Department of 05 Natural Resources 06 (i) in the case of well data, until the expiration of the 07 24-month period of confidentiality described in AS 31.05.035(c) 08 [FOR 10 YEARS FOLLOWING THE COMPLETION DATE], at 09 which time the Department of Natural Resources [THAT 10 DEPARTMENT] will release the information after 30 days' public 11 notice unless, in the discretion of the commissioner of natural 12 resources, it is necessary to protect information relating to the 13 valuation of unleased acreage in the same vicinity, or unless the 14 well is on private land and the owner, including the lessor but not 15 the lessee, of the oil and gas resources has not given permission to 16 release the well data; 17 (ii) in the case of seismic or other geophysical data, 18 other than seismic data acquired by seismic exploration subject to 19 (l) of this section, for 10 years following the completion date, at 20 which time the Department of Natural Resources will release the 21 information after 30 days' public notice, except as to seismic or 22 other geophysical data acquired from private land, unless the 23 owner, including a lessor but not a lessee, of the oil and gas 24 resources in the private land gives permission to release the 25 seismic or other geophysical data associated with the private land; 26 (iii) in the case of seismic data obtained by seismic 27 exploration subject to (l) of this section, only until the expiration of 28 30 days' public notice issued on or after the date the production 29 tax credit certificate is issued under (5) of this subsection; 30 (3) if more than one explorer holds an interest in a well or seismic 31 exploration, each explorer may claim an amount of credit that is proportional to the
01 explorer's cost incurred; 02 (4) the department may exercise the full extent of its powers as though 03 the explorer were a taxpayer under this title, in order to verify that the claimed 04 expenditures are qualified exploration expenditures under this section; and 05 (5) if the department is satisfied that the explorer's claimed 06 expenditures are qualified under this section and that all data required to be 07 submitted under this section have been submitted, the department shall issue to the 08 explorer a production tax credit certificate for the amount of credit to be allowed 09 against production taxes levied by AS 43.55.011(e) or (f); the credit is available for 10 immediate use; notwithstanding any contrary provision of AS 38, AS 40.25.100, 11 or AS 43.05.230, the following information is not confidential: 12 (A) the explorer's name; 13 (B) the date of the application; 14 (C) the location of the well or seismic exploration; 15 (D) the date of the department's issuance of the certificate; 16 and 17 (E) the date on which the information required to be 18 submitted under this section will be released [DUE UNDER 19 AS 43.55.011(e) OR (f)]. 20 * Sec. 33. AS 43.55.025(i) is repealed and reenacted to read: 21 (i) For a production tax credit under this section, 22 (1) a credit may not be applied to reduce a taxpayer's tax liability 23 under AS 43.55.011(e) or (f) below zero for a calendar year; and 24 (2) an amount of the production tax credit in excess of the amount that 25 may be applied for a calendar year under this subsection may be carried forward and 26 applied against the taxpayer's tax liability under AS 43.55.011(e) or (f) in one or more 27 later calendar years. 28 * Sec. 34. AS 43.55.025(k) is amended by adding a new paragraph to read: 29 (4) "preexisting well" means a well that was spudded more than 540 30 days but less than 35 years before the date on which the exploration well to which it 31 is compared is spudded.
01 * Sec. 35. AS 43.55.025 is amended by adding new subsections to read: 02 (l) Subject to the terms and conditions of this section, if a claim is filed under 03 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 04 by AS 43.55.011(e) or (f) is allowed in an amount equal to five percent of an eligible 05 expenditure under this subsection incurred for seismic exploration performed before 06 July 1, 2003. To be eligible under this subsection, an expenditure must 07 (1) have been for seismic exploration that 08 (A) obtained data that the commissioner of natural resources 09 considers to be in the best interest of the state to acquire for public 10 distribution; and 11 (B) was conducted outside the boundaries of a production unit; 12 however, the amount of the expenditure that is otherwise eligible under this 13 section is reduced proportionately by the portion of the seismic exploration 14 activity that crossed into a production unit; and 15 (2) qualify under (b)(3) of this section. 16 (m) Subject to appropriations made by law, if and to the extent that purchase 17 of transferable tax credits by the Alaska Retirement Management Board is authorized 18 by law, the department shall issue a cash refund to the Alaska Retirement 19 Management Board for a transferable tax credit originally issued to an explorer under 20 (f) of this section and purchased by the Alaska Retirement Management Board. 21 * Sec. 36. AS 43.55.030(a) is amended to read: 22 (a) A producer that produces oil or gas from a lease or property in the 23 state during a calendar year, whether or not any tax payment is due under 24 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 25 with the department on March 31 of the following year [FOLLOWING THE 26 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under 27 oath, in a form prescribed by the department, giving, with other information required, 28 the following: 29 (1) a description of each lease or property from which [THE] oil or 30 [AND] gas was [WERE] produced, by name, legal description, lease number, or 31 accounting codes assigned by the department;
01 (2) the names of the producer and, if different, the person paying the 02 tax, if any; 03 (3) the gross amount of oil and the gross amount of gas produced from 04 each lease or property, and the percentage of the gross amount of oil and gas owned 05 by the [EACH] producer [FOR WHOM THE TAX IS PAID]; 06 (4) the gross value at the point of production of the oil and of the gas 07 produced from each lease or property owned by the [EACH] producer and the costs 08 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 09 (5) the name of the first purchaser and the price received for the oil 10 and for the gas, unless relieved from this requirement in whole or in part by the 11 department; [AND] 12 (6) the producer's qualified capital expenditures, as defined in 13 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 14 CALCULATED] under AS 43.55.165, and adjustments or other payments or 15 credits under AS 43.55.170; 16 (7) the production tax values of the oil and gas under 17 AS 43.55.160; 18 (8) any claims for tax credits to be applied; and 19 (9) calculations showing the amounts, if any, that were or are due 20 under AS 43.55.020(a) and interest on any underpayment or overpayment 21 [AS 43.55.160 - 43.55.170]. 22 * Sec. 37. AS 43.55.030(d) is amended to read: 23 (d) Reports required under this section [BY OR ON BEHALF OF THE 24 PRODUCER] are delinquent the first day following the day the report is due. The 25 person required to file the report is liable for a penalty, as determined by the 26 department under standards adopted in regulation by the department, of not 27 more than $1,000 for each day the person fails to file the report at the time 28 required. The penalty is in addition to the penalties in AS 43.05.220 and 29 43.05.290 and is assessed, collected, and paid in the same manner as a tax 30 deficiency under this title. In this subsection, "report" includes a statement. 31 * Sec. 38. AS 43.55.030 is amended by adding new subsections to read:
01 (e) An explorer or producer that incurs a lease expenditure under 02 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 03 year but does not produce oil or gas from a lease or property in the state during the 04 calendar year shall file with the department on March 31 of the following year a 05 statement, under oath, in a form prescribed by the department, giving, with other 06 information required, the following: 07 (1) the producer's qualified capital expenditures, as defined in 08 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 09 payments or credits under AS 43.55.170; and 10 (2) if the explorer or producer receives a payment or credit under 11 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 12 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 13 (f) The department may require a producer, an explorer, or an operator of a 14 lease or property to file monthly reports, as applicable, of 15 (1) the amounts and gross value at the point of production of oil and 16 gas produced; 17 (2) transportation costs of the oil and gas; 18 (3) any unscheduled interruption of, or reduction in the rate of, oil or 19 gas production; 20 (4) lease expenditures and adjustments under AS 43.55.165 and 21 43.55.170; 22 (5) joint interest billings; 23 (6) contracts for the sale or transportation of oil or gas; 24 (7) information and calculations used in determining monthly 25 installment payments of estimated tax under AS 43.55.020(a); and 26 (8) other records and information the department considers necessary 27 for the administration of this chapter. 28 * Sec. 39. AS 43.55.040 is amended to read: 29 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 30 AS 43.05.405 - 43.05.499, the department may 31 (1) require a person engaged in production and the agent or employee
01 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 02 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 03 additional information that is considered by the department as necessary to compute 04 the amount of the tax; notwithstanding any contrary provision of law, the disclosure 05 of additional information under this paragraph to the producer obligated to pay the tax 06 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 07 under this paragraph that is otherwise required to be held confidential under 08 AS 40.25.100(a) or AS 43.05.230(a), the department shall 09 (A) provide the person that furnished the information a 10 reasonable opportunity to be heard regarding the proposed disclosure and the 11 conditions to be imposed under (B) of this paragraph; and 12 (B) impose appropriate conditions limiting 13 (i) access to the information to those legal counsel, 14 consultants, employees, officers, and agents of the producer who have 15 a need to know that information for the purpose of determining or 16 contesting the producer's tax obligation; and 17 (ii) the use of the information to use for that purpose; 18 (2) examine the books, records, and files of the [SUCH A] person; 19 (3) conduct hearings and compel the attendance of witnesses and the 20 production of books, records, and papers of any person; [AND] 21 (4) make an investigation or hold an inquiry that is considered 22 necessary to a disclosure of the facts as to 23 (A) the amount of production from any oil or gas location, or 24 of a company or other producer of oil or gas; and 25 (B) the rendition of the oil and gas for taxing purposes; 26 (5) require a producer, an explorer, or an operator of a lease or 27 property to file reports and copies of records that the department considers 28 necessary to forecast state revenue under this chapter; in the case of reports and 29 copies of records relating to proposed, expected, or approved unit expenditures 30 for a unit for which one or more working interest owners other than the 31 operator have authority to approve unit expenditures, the required reports and
01 copies of records are limited to those reports or copies of records that constitute 02 or disclose communications between the operator and the working interest 03 owners relating to unit budget matters; and 04 (6) assess against a person required under this section to file a 05 report, statement, or other document a penalty, as determined by the 06 department under standards adopted in regulation by the department, of not 07 more than $1,000 for each day the person fails to file the report, statement, or 08 other document after notice by the department; the penalty is in addition to any 09 penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid 10 in the same manner as a tax deficiency under this title; the penalty shall bear 11 interest at the rate specified under AS 43.05.225(1). 12 * Sec. 40. AS 43.55 is amended by adding a new section to read: 13 Sec. 43.55.055. Penalty for understatement of tax. (a) In addition to other 14 penalties prescribed by law, if there is a substantial understatement of tax required to 15 be shown on a statement required under AS 43.55.030(a), there shall be added to the 16 tax an amount equal to 10 percent of the substantial understatement of tax. 17 (b) In addition to other penalties prescribed by law, if there is a gross 18 understatement of tax required to be shown on a statement required under 19 AS 43.55.030(a), there shall be added to the tax an amount equal to 20 percent of the 20 gross understatement of tax. 21 (c) In addition to the penalties imposed under (a) or (b) of this section, a 22 person who has made a substantial or gross understatement of tax is liable to the state 23 for the reasonable costs of the state's enforcement action, including auditing costs. 24 (d) For purposes of this section, 25 (1) a substantial understatement of tax for any calendar year exists if 26 the amount of the understatement for the calendar year exceeds the lesser of 10 27 percent of the tax required to be shown on the statement for the calendar year or 28 $10,000,000; 29 (2) a gross understatement of tax for any calendar year exists if the 30 amount of the understatement for the calendar year exceeds the lesser of 20 percent of 31 the tax required to be shown on the statement for the calendar year or $20,000,000;
01 (3) "understatement" means the amount by which the tax required to 02 be shown on the statement for the calendar year exceeds the amount of the tax 03 reported as due by the taxpayer as shown on the statement. 04 * Sec. 41. AS 43.55 is amended by adding new sections to read: 05 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 06 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 07 assessed within six years after the return was filed. 08 (b) A decision of a regulatory agency, court, or other body with authority to 09 resolve disputes that results in a retroactive change to a lease expenditure, to an 10 adjustment to a lease expenditure, to costs of transportation, to sale price, to 11 prevailing value, or to consideration of quality differentials relating to the 12 commingling of oils has a corresponding effect, either an increase or decrease, as 13 applicable, on the production tax value of oil or gas or the amount or availability of a 14 tax credit as determined under this chapter. For purposes of this section, a change to a 15 lease expenditure includes a change in the categorization of a lease expenditure as a 16 qualified capital expenditure or as not a qualified capital expenditure. The producer 17 shall 18 (1) within 60 days after the change, notify the department in writing; 19 and 20 (2) within 120 days after the change, file amended returns covering all 21 periods affected by the change, unless the department agrees otherwise or a stay is in 22 place that affects the filing or payment, regardless of the pendency of appeals of the 23 decision. 24 (c) If an alteration in or modification of a producer's federal income tax return 25 or a recomputation of the producer's federal income tax or determination of 26 deficiency occurs that affects the amount of a tax imposed on the producer under this 27 chapter, the producer shall 28 (1) within 60 days after the final determination of the alteration, 29 modification, recomputation, or deficiency, notify the department in writing; and 30 (2) within 120 days after the final determination of the alteration, 31 modification, recomputation, or deficiency, file amended returns covering all affected
01 periods. 02 (d) In this section, 03 (1) "qualified capital expenditure" has the meaning given in 04 AS 43.55.023; 05 (2) "return" includes a report, a statement, and an amended return, 06 report, or statement. 07 Sec. 43.55.078. Exceptions to tax credits. (a) For a calendar year after 2007, 08 a producer or explorer may not take a tax credit under AS 43.55.023, 43.55.024, or 09 43.55.025 against a tax levied under this chapter if a state court or administrative 10 agency or federal court that has subject matter jurisdiction has entered a judgment in 11 favor of the state or a political subdivision of the state in an amount greater than 12 $100,000 against the producer or explorer, the producer or explorer has not satisfied 13 the judgment, and the judgment concerns a matter having connections with this state 14 that are sufficient to satisfy constitutional jurisdictional requirements. 15 (b) Notwithstanding (a) of this section, the producer or explorer may receive 16 a tax credit described in (a) of this section if 17 (1) the judgment is appealed but the appeal has not been decided; and 18 (2) the producer or explorer deposits in the court where the judgment 19 was entered or the appeal is pending, in the form of cash, bond, or other security, 20 (A) the full amount of the judgment; and 21 (B) post-judgment interest on the judgment amount described 22 in (A) of this paragraph; notwithstanding another provision of law, the post- 23 judgment interest rate compounded quarterly on a judgment the amount of 24 which is deposited under (a) of this paragraph is equal to the greater of 25 (i) the applicable statutory rate; or 26 (ii) the rate of return on the producer's or explorer's 27 equity as shown on the producer's or explorer's most recent quarterly 28 earnings report as of the date of the notice of appeal. 29 (c) In this section, 30 (1) "judgment" means any final administrative determination or 31 judgment in favor of the state or a political subdivision of the state;
01 (2) "producer or explorer" includes an affiliate of a producer or 02 explorer. 03 * Sec. 42. 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 (h) Subject to legislative appropriation, the department may compensate a 16 person who provides information to the department about noncompliance with the 17 provisions of this chapter by an explorer or a producer of oil or gas if that information 18 leads to the collection of additional taxes, penalties, or interest from the producer. 19 The amount of compensation under this subsection may not exceed the lesser of 20 $1,000,000 or 10 percent of the additional tax, penalty, or interest collected as a result 21 of the information. A state employee or an agent of the state is not eligible for 22 compensation under this subsection. 23 (i) A person who, under (h) of this section, provides, in 24 bad faith, to the department erroneous information about 25 noncompliance with the provisions of this chapter by an explorer or 26 producer of oil or gas shall pay to the 27 (1) department all expenses related to the department's investigation 28 of the alleged noncompliance; and 29 (2) explorer or producer about whom the noncompliance was alleged 30 all expenses that are incurred by the explorer or producer relating to the department's 31 investigation of the alleged noncompliance.
01 * Sec. 43. AS 43.55.150 is amended to read: 02 Sec. 43.55.150. Determination of gross value at the point of production. 03 (a) For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point of 04 production is calculated using the actual [REASONABLE] costs of transportation of 05 the oil or gas [. THE REASONABLE COSTS OF TRANSPORTATION ARE THE 06 ACTUAL COSTS], except when the 07 (1) shipper [PARTIES TO THE TRANSPORTATION] of oil or gas 08 is [ARE] affiliated with the transportation carrier or with a person that owns an 09 interest in the transportation facility; 10 (2) contract for the transportation of oil or gas is not an arm's length 11 transaction [OR IS NOT REPRESENTATIVE OF THE MARKET VALUE OF 12 THAT TRANSPORTATION]; or [AND] 13 (3) method or terms of transportation of oil or gas are [IS] not 14 reasonable in view of existing alternative [METHODS OF] transportation options. 15 (b) If the department finds that a condition [THE CONDITIONS] in (a)(1), 16 (2), or [AND] (3) of this section is [ARE] present, the gross value at the point of 17 production is calculated using the actual costs of transportation, or the 18 reasonable costs of transportation as determined under this subsection, 19 whichever is lower. The [THE] department shall determine the reasonable costs of 20 transportation, using the fair market value of like transportation, the fair market value 21 of equally efficient and available alternative modes of transportation, or other 22 reasonable methods. Transportation costs fixed by tariff rates that have been 23 adjudicated as just and reasonable by [PROPERLY ON FILE WITH] the 24 Regulatory Commission of Alaska or another [OTHER] regulatory agency and 25 transportation costs in an arm's length transaction paid by parties not affiliated 26 with an owner of the method of transportation shall be considered prima facie 27 reasonable. 28 (c) In determining the gross value of oil under [(a) OF] this section, the 29 department may not allow as reasonable costs of transportation 30 (1) the amount of loss of or damage to, or of expense incurred due to 31 the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense
01 is incurred in connection with a catastrophic oil discharge from the vessel into the 02 marine or inland waters of the state; 03 (2) the incremental costs of transportation of the oil that are 04 attributable to temporary use of or chartered or substituted service provided by 05 another vessel due to the loss of or damage to a vessel regularly used to transport oil 06 and that are incurred in connection with a catastrophic oil discharge into the marine or 07 inland waters of the state; and 08 (3) the costs incurred to charter, contract, or hire vessels and 09 equipment used to contain or clean up a catastrophic oil discharge. 10 * Sec. 44. AS 43.55.160(a) is amended to read: 11 (a) Except as provided in (b) of this section, for the purposes of 12 [(1)] AS 43.55.011(e), the [ANNUAL] production tax value of the 13 taxable 14 (1) [(A)] oil and gas produced during a calendar year from leases or 15 properties in the state that include land north of 68 degrees North latitude is the gross 16 value at the point of production of the oil and gas taxable under AS 43.55.011(e) and 17 produced by the producer from those leases or properties, less the producer's lease 18 expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas 19 produced by the producer from those leases or properties, as adjusted under 20 AS 43.55.170; this subparagraph does not apply to gas subject to 21 AS 43.55.011(o); 22 (2) [(B)] oil and gas produced during a calendar year from leases or 23 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 24 north of 68 degrees North latitude, is the gross value at the point of production of the 25 oil and gas taxable under AS 43.55.011(e) and produced by the producer from those 26 leases or properties, less the producer's lease expenditures under AS 43.55.165 for the 27 calendar year applicable to the oil and gas produced by the producer from those leases 28 or properties, as adjusted under AS 43.55.170; this subparagraph does not apply to 29 gas subject to AS 43.55.011(o); 30 (3) [(C)] oil produced during a calendar year from a lease or property 31 in the Cook Inlet sedimentary basin is the gross value at the point of production of the
01 oil taxable under AS 43.55.011(e) and produced by the producer from that lease or 02 property, less the producer's lease expenditures under AS 43.55.165 for the calendar 03 year applicable to the oil produced by the producer from that lease or property, as 04 adjusted under AS 43.55.170; 05 (4) [(D)] gas produced during a calendar year from a lease or property 06 in the Cook Inlet sedimentary basin is the gross value at the point of production of the 07 gas taxable under AS 43.55.011(e) and produced by the producer from that lease or 08 property, less the producer's lease expenditures under AS 43.55.165 for the calendar 09 year applicable to the gas produced by the producer from that lease or property, as 10 adjusted under AS 43.55.170; 11 (5) gas produced during a calendar year from a lease or property 12 outside the Cook Inlet sedimentary basin and used in the state is the gross value 13 at the point of production of that gas taxable under AS 43.55.011(e) and 14 produced by the producer from that lease or property, less the producer's lease 15 expenditures under AS 43.55.165 for the calendar year applicable to that gas 16 produced by the producer from that lease or property, as adjusted under 17 AS 43.55.170 18 [(2) AS 43.55.011(g), THE MONTHLY PRODUCTION TAX 19 VALUE OF THE TAXABLE 20 (A) OIL AND GAS PRODUCED DURING A MONTH 21 FROM LEASES OR PROPERTIES IN THE STATE THAT INCLUDE 22 LAND NORTH OF 68 DEGREES NORTH LATITUDE IS THE GROSS 23 VALUE AT THE POINT OF PRODUCTION OF THE OIL AND GAS 24 TAXABLE UNDER AS 43.55.011(g) AND PRODUCED BY THE 25 PRODUCER FROM THOSE LEASES OR PROPERTIES, LESS 1/12 OF 26 THE PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR 27 THE CALENDAR YEAR APPLICABLE TO THE OIL AND GAS 28 PRODUCED BY THE PRODUCER FROM THOSE LEASES OR 29 PROPERTIES, AS ADJUSTED UNDER AS 43.55.170; 30 (B) OIL AND GAS PRODUCED DURING A MONTH 31 FROM LEASES OR PROPERTIES IN THE STATE OUTSIDE THE COOK
01 INLET SEDIMENTARY BASIN, NO PART OF WHICH IS NORTH OF 68 02 DEGREES NORTH LATITUDE, IS THE GROSS VALUE AT THE POINT 03 OF PRODUCTION OF THE OIL AND GAS TAXABLE UNDER 04 AS 43.55.011(g) AND PRODUCED BY THE PRODUCER FROM THOSE 05 LEASES OR PROPERTIES, LESS 1/12 OF THE PRODUCER'S LEASE 06 EXPENDITURES UNDER AS 43.55.165 FOR THE CALENDAR YEAR 07 APPLICABLE TO THE OIL AND GAS PRODUCED BY THE PRODUCER 08 FROM THOSE LEASES OR PROPERTIES, AS ADJUSTED UNDER 09 AS 43.55.170; 10 (C) OIL PRODUCED DURING A MONTH FROM A 11 LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN 12 IS THE GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL 13 TAXABLE UNDER AS 43.55.011(g) AND PRODUCED BY THE 14 PRODUCER FROM THAT LEASE OR PROPERTY, LESS 1/12 OF THE 15 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 16 CALENDAR YEAR APPLICABLE TO THE OIL PRODUCED BY THE 17 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 18 UNDER AS 43.55.170; 19 (D) GAS PRODUCED DURING A MONTH FROM A 20 LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY BASIN 21 IS THE GROSS VALUE AT THE POINT OF PRODUCTION OF THE GAS 22 TAXABLE UNDER AS 43.55.011(g) AND PRODUCED BY THE 23 PRODUCER FROM THAT LEASE OR PROPERTY, LESS 1/12 OF THE 24 PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE 25 CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE 26 PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED 27 UNDER AS 43.55.170]. 28 * Sec. 45. AS 43.55.160(e) is amended to read: 29 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 30 would otherwise be deductible by a producer in a calendar year but whose deduction 31 would cause a [AN ANNUAL] production tax value calculated under (a) [(a)(1)] of
01 this section of taxable oil or gas produced during the calendar year to be less than 02 zero may be used to establish a carried-forward annual loss under AS 43.55.023(b). In 03 this subsection, "producer" includes "explorer." 04 * Sec. 46. AS 43.55.165(a) is repealed and reenacted to read: 05 (a) Except as provided in (k) and (l) of this section for purposes of this 06 chapter, a producer's lease expenditures for a calendar year are 07 (1) costs, other than items listed in (e) of this section, that are 08 (A) incurred in the state by the producer during the calendar 09 year after March 31, 2006, to explore for, develop, or produce oil or gas 10 deposits located within the producer's leases or properties in the state or, in the 11 case of land in which the producer does not own an operating right, operating 12 interest, or working interest, to explore for oil or gas deposits within other 13 land in the state; and 14 (B) allowed by the department by regulation, based on the 15 department's determination that the costs satisfy the following three 16 requirements: 17 (i) the costs must be incurred upstream of the point of 18 production of oil and gas; 19 (ii) the costs must be ordinary and necessary costs of 20 exploring for, developing, or producing, as applicable, oil or gas 21 deposits; and 22 (iii) the costs must be direct costs of exploring for, 23 developing, or producing, as applicable, oil or gas deposits; and 24 (2) a reasonable allowance for that calendar year, as determined under 25 regulations adopted by the department, for overhead expenses that are directly related 26 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 27 * Sec. 47. AS 43.55.165(b) is amended to read: 28 (b) For purposes of (a) of this section, 29 (1) direct costs include 30 (A) an expenditure, when incurred, to acquire an item if the 31 acquisition cost is otherwise a direct cost, notwithstanding that the
01 expenditure may be required to be capitalized rather than treated as an 02 expense for financial accounting or federal income tax purposes; 03 (B) payments of or in lieu of property taxes, sales and use 04 taxes, motor fuel taxes, and excise taxes; 05 [(C) A REASONABLE ALLOWANCE, AS DETERMINED 06 UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR 07 OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR, 08 DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED 09 WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;] 10 (2) an activity does not need to be physically located on, near, or 11 within the premises of the lease or property within which an oil or gas deposit being 12 explored for, developed, or produced is located in order for the cost of the activity to 13 be a cost upstream of the point of production of the oil or gas; 14 (3) in determining whether costs are lease expenditures, the 15 department may consider, among other factors, the 16 (A) typical industry practices and standards in the state 17 that determine the costs, other than items listed in (e) of this section, that 18 an operator is allowed to bill a producer that is not the operator, under 19 unit operating agreements or similar operating agreements that were in 20 effect before December 2, 2005, and were subject to negotiation with at 21 least one producer with substantial bargaining power, other than the 22 operator; and 23 (B) standards adopted by the Department of Natural 24 Resources that determine the costs, other than items listed in (e) of this 25 section, that a lessee is allowed to deduct from revenue in calculating net 26 profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E). 27 * Sec. 48. AS 43.55.165(e) is amended to read: 28 (e) For purposes of this section, lease expenditures do not include 29 (1) depreciation, depletion, or amortization; 30 (2) oil or gas royalty payments, production payments, lease profit 31 shares, or other payments or distributions of a share of oil or gas production, profit, or
01 revenue; 02 (3) taxes based on or measured by net income; 03 (4) interest or other financing charges or costs of raising equity or 04 debt capital; 05 (5) acquisition costs for a lease or property or exploration license; 06 (6) costs, including repairs and replacements, arising from or 07 associated with fraud, wilful misconduct, [OR] gross negligence, criminal 08 negligence, or violation of law, including a violation of 33 U.S.C. 1319(c)(1) or 09 1321(b)(3) (Clean Water Act); 10 (7) fines or penalties imposed by law; 11 (8) costs of arbitration, litigation, or other dispute resolution activities 12 that involve the state or concern the rights or obligations among owners of interests 13 in, or rights to production from, one or more leases or properties or a unit; 14 (9) costs incurred in organizing a partnership, joint venture, or other 15 business entity or arrangement; 16 (10) amounts paid to indemnify the state; the exclusion provided by 17 this paragraph does not apply to the costs of obtaining insurance or a surety bond 18 from a third-party insurer or surety; 19 (11) surcharges levied under AS 43.55.201 or 43.55.300; 20 (12) an expenditure incurred for a transaction that is an internal 21 transfer or is otherwise not an arm's length transaction, unless the producer 22 establishes to the satisfaction of the department that the expenditure is not 23 [EXPENDITURES INCURRED THAT ARE] in excess of fair market value; 24 (13) an expenditure incurred to purchase an interest in any 25 corporation, partnership, limited liability company, business trust, or any other 26 business entity, whether or not the transaction is treated as an asset sale for federal 27 income tax purposes; 28 (14) a tax levied under AS 43.55.011; 29 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 30 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 31 structure, or for the restoration of a lease, field, unit, area, tract of land, body of
01 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 02 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 03 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 04 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 05 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 06 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 07 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 08 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 09 OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL 10 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 11 OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 12 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 13 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 14 this paragraph if the dismantlement, removal, surrender, or abandonment for which 15 the cost is incurred is undertaken for the purpose of replacing, renovating, or 16 improving the facility, pipeline, well pad, platform, or other structure; [FOR THE 17 PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 18 (A) IN THE CASE OF OIL, ONE BARREL; 19 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;] 20 (16) costs incurred for containment, control, cleanup, or removal in 21 connection with any unpermitted release of oil or a hazardous substance and any 22 liability for damages imposed on the producer or explorer for that unpermitted 23 release; this paragraph does not apply to the cost of developing and maintaining an oil 24 discharge prevention and contingency plan under AS 46.04.030; 25 (17) costs incurred to satisfy a work commitment under an exploration 26 license under AS 38.05.132; 27 (18) that portion of expenditures, that would otherwise be qualified 28 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 29 calendar year that are less than the product of $0.30 multiplied by the total taxable 30 production from each lease or property, in BTU equivalent barrels, during that 31 calendar year, except that, when a portion of a calendar year is subject to this
01 provision, the expenditures and volumes shall be prorated within that calendar year; 02 (19) 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 (20) costs of lobbying, public relations, public relations 14 advertising, or policy advocacy. 15 * Sec. 49. AS 43.55.165(h) is amended to read: 16 (h) The department shall adopt regulations that provide for reasonable 17 methods of allocating costs between oil and gas, between gas subject to 18 AS 43.55.011(o) and other gas, and between leases or properties in those 19 circumstances where an allocation of costs is required to determine [THE 20 DETERMINATION OF THE] lease expenditures that are costs of exploring for, 21 developing, or producing oil deposits or costs of exploring for, developing, or 22 producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of 23 exploring for, developing, or producing oil or gas deposits located within 24 [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or 25 properties [, REQUIRES AN ALLOCATION OF COSTS]. 26 * Sec. 50. AS 43.55.165 is amended by adding new subsections to read: 27 (k) For purposes of AS 43.55.160, for a calendar year after 2006, a producer's 28 total lease expenditures, before adjustment under AS 43.55.170, that are applicable to 29 oil and gas produced by the producer from all leases or properties within a unit from 30 which 1,000,000,000 BTU equivalent barrels of oil or gas have been cumulatively 31 produced by the close of the most recent calendar year and from which the average
01 daily oil and gas production during the most recent calendar year exceeded 100,000 02 BTU equivalent barrels are determined under this subsection and (l) of this section. 03 Except as otherwise provided under (l) of this section, the producer's total lease 04 expenditures, other than qualified capital expenditures, (1) for calendar year 2007, are 05 equal to the product of 1.37 multiplied by the total lease expenditures for calendar 06 year 2006, other than qualified capital expenditures, that are applicable to oil and gas 07 produced by the producer from all leases or properties within the unit, as reported on 08 the producer's statement under AS 43.55.030(a) for calendar year 2006, and (2) for a 09 calendar year after 2007, are equal to the product of 1.03 multiplied by the total lease 10 expenditures, other than qualified capital expenditures, determined for the previous 11 calendar year under this subsection. The producer's total lease expenditures for a 12 calendar year after 2006 that are applicable to oil and gas produced by the producer 13 from all leases or properties within a unit subject to this subsection are the sum of the 14 producer's qualified capital expenditures incurred during the calendar year that are 15 applicable to that oil and gas plus the lease expenditures, other than qualified capital 16 expenditures, that are applicable to that oil and gas as determined under this 17 subsection and (l) of this section. If a producer whose lease expenditures for 2006 are 18 used to determine lease expenditures for a later calendar year under this subsection 19 transfers an interest in an affected lease or property to a different producer, the 20 transferee's lease expenditures applicable to oil and gas produced by the transferee 21 from the lease or property continue to be determined under this subsection using 22 those 2006 lease expenditures. In this subsection, "qualified capital expenditures" has 23 the meaning given in AS 43.55.023. 24 (l) If, after audit by the department of a producer's statement or amended 25 statement under AS 43.55.030(a) for calendar year 2006, the department finally 26 determines that the reported amount of total lease expenditures, other than qualified 27 capital expenditures, for calendar year 2006 applicable to oil and gas produced by the 28 producer from all leases or properties within a unit subject to (k) of this section 29 exceeds by more than 10 percent the actual amount of those lease expenditures, other 30 than qualified capital expenditures, the producer or transferee, as applicable, shall (1) 31 substitute the actual amount of those lease expenditures, other than qualified capital
01 expenditures, for purposes of the calculations set out in (k) of this section, and (2) file 02 amended statements for affected past tax periods within 60 days after the final 03 determination. 04 * Sec. 51. AS 43.55.170(a) is amended to read: 05 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 06 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 07 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 08 be adjusted by subtracting payments or credits, other than tax credits, received by the 09 producer or by an operator acting for the producer for 10 (1) the use by another person of a production facility in which the 11 producer has an ownership interest or the management by the producer of a 12 production facility under a management agreement providing for the producer to 13 receive a management fee; 14 (2) a reimbursement or similar payment that offsets the producer's 15 lease expenditures, including an insurance recovery from a third-party insurer and a 16 payment from the state or federal government for reimbursement of the producer's 17 upstream costs, including costs for gathering, separating, cleaning, dehydration, 18 compressing, or other field handling associated with the production of oil or gas 19 upstream of the point of production; 20 (3) the sale or other transfer of 21 (A) an asset, including geological, geophysical, or well data or 22 interpretations, acquired by the producer as a result of a lease expenditure or 23 an expenditure that would be a lease expenditure if it were incurred after 24 March 31, 2006; for purposes of this subparagraph, 25 (i) if a producer removes from the state, for use outside 26 the state, an asset described in this subparagraph, the value of the asset 27 at the time it is removed is considered a payment received by the 28 producer for sale or transfer of the asset; 29 (ii) for a transaction that is an internal transfer or is 30 otherwise not an arm's length transaction, if the sale or transfer of the 31 asset is made for less than fair market value, the amount subtracted
01 must be the fair market value; and 02 (B) oil or gas 03 (i) that is not considered produced from a lease or 04 property under AS 43.55.020(e); and 05 (ii) the cost of acquiring which is a lease expenditure 06 incurred by the person that acquires the oil or gas. 07 * Sec. 52. AS 43.55 is amended by adding a new section to article 4 to read: 08 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 09 provision of AS 40.25.100, and regardless of whether the information is considered 10 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 11 particular returns or reports, the department may publish the following information 12 under this chapter, if aggregated among three or more producers or explorers, 13 showing by month or calendar year and by lease or property, unit, or area of the state: 14 (1) the amount of oil or gas production; 15 (2) the amount of taxes levied under this chapter or paid under this 16 chapter; 17 (3) the effective tax rates under this chapter; 18 (4) the gross value of oil or gas at the point of production; 19 (5) the transportation costs for oil or gas; 20 (6) qualified capital expenditures as defined in AS 43.55.023; 21 (7) exploration expenditures under AS 43.55.025; 22 (8) production tax values of oil or gas under AS 43.55.160; 23 (9) lease expenditures under AS 43.55.165; 24 (10) adjustments to lease expenditures under AS 43.55.170; 25 (11) tax credits applicable or potentially applicable against taxes 26 levied by this chapter. 27 * Sec. 53. AS 43.55.900 is amended by adding new paragraphs to read: 28 (22) "producer" means an owner of an operating right, operating 29 interest, or working interest in a mineral interest in oil or gas; 30 (23) "progressivity tax rate" means that part of the tax rate in 31 AS 43.55.011(g) that exceeds 25 percent;
01 (24) "unit" means a group of tracts of land that is 02 (A) subject to a cooperative or a unit plan of development or 03 operation that has been certified by the commissioner of natural resources 04 under AS 38.05.180(p); 05 (B) subject to a cooperative or a unit plan of development or 06 operation that has been certified by the United States Secretary of the Interior 07 under 30 U.S.C. 226(m); 08 (C) subject to an agreement of the owners of interests in the 09 tracts of land to validly integrate their interests to provide for the unitized 10 management, development, and operation of the tracts of land as a unit, within 11 the meaning of AS 31.05.110(a); or 12 (D) within the unit area of a unit created by order of the 13 Alaska Oil and Gas Conservation Commission under AS 31.05.110(b); 14 (25) "used in the state" means delivered for consumption as fuel in the 15 state, including as fuel consumed to generate electricity. 16 * Sec. 54. AS 43.55.160(c), 43.55.165(c), 43.55.165(d), and 43.55.180 are repealed. 17 * Sec. 55. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 APPLICABILITY. (a) Sections 15 - 36, 38, 44 - 51, and 54 of this Act apply to oil 20 and gas produced after December 31, 2007. 21 (b) Sections 36 and 38 of this Act apply to statements and reports under 22 AS 43.55.030(a), as amended by sec. 36 of this Act, and AS 43.55.030(e) and (f), as added 23 by sec. 38 of this Act, required to be filed after December 31, 2007. 24 (c) Sections 29 - 32 and 34 of this Act apply to exploration expenditures incurred for 25 work performed after December 31, 2006, that are the basis of tax credits that may be 26 claimed against taxes levied for oil and gas produced after December 31, 2007. 27 (d) AS 43.55.055, enacted by sec. 40 of this Act, applies to understatements made 28 after the effective date of sec. 40 of this Act. 29 (e) AS 43.55.075(a), enacted by sec. 41 of this Act, applies to any tax liability under 30 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260 31 had not expired before the effective date of secs. 14 and 41 of this Act.
01 (f) The penalty in AS 43.55.030(d), enacted by the amendment to AS 43.55.030(d) in 02 sec. 37 of this Act, applies to any report required to be filed after the effective date of sec. 37 03 of this Act that is not filed timely. 04 (g) The penalty in AS 43.55.040(6), enacted by the amendment to AS 43.55.040 in 05 sec. 39 of this Act, applies to any report, statement, or other document required to be filed 06 after the effective date of sec. 39 of this Act. 07 * Sec. 56. The uncodified law of the State of Alaska is amended by adding new sections to 08 read: 09 OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE 10 INTENT. It is the intent of the legislature that the commissioner of administration shall 11 cause not more than four oil and gas revenue audit master positions to be created in the 12 Department of Revenue and not more than two oil and gas revenue audit master positions to 13 be created in the Department of natural Resources. Oil and gas revenue audit masters shall 14 be employed in a professional capacity to collect oil and gas revenue by developing policy, 15 conducting studies, drafting proposed regulations, enforcing regulations, and directing audits 16 by oil and gas auditors. 17 OIL AND GAS AUDITORS; CLASSIFICATION AND PAY PLANS. 18 Notwithstanding AS 39.25.150(2), the Department of Administration shall develop and 19 implement a distinct position classification plan and a distinct pay plan for oil and gas 20 auditors and their immediate supervisors that perform 21 (1) production tax audits in the Department of Revenue; 22 (2) royalty audits, including net profit share audits, in the Department of 23 Natural Resources. 24 * Sec. 57. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 TRANSITION: DEPARTMENT OF NATURAL RESOURCES REGULATIONS. 27 Notwithstanding any contrary provision of AS 44.62.240, a regulation adopted by the 28 Department of Natural Resources to implement, interpret, make specific, or otherwise carry 29 out statutory provisions for 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 deals with the treatment of oil 31 and gas production taxes in determining net profits under those leases, may apply
01 retroactively to April 1, 2006, if the Department of Natural Resources expressly designates in 02 the regulation that the regulation applies retroactively to that date. 03 * Sec. 58. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 TRANSITION: REGULATIONS. The Department of Natural Resources and the 06 Department of Revenue may proceed to adopt regulations to implement this Act. The 07 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 08 effective date of the law implemented by the regulation. 09 * Sec. 59. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 REVISOR'S INSTRUCTION. In the following statute sections, the revisor of statutes 12 shall substitute the spanned reference 13 (1) AS 43.55.011 - 43.55.170" for the spanned reference "AS 43.55.011 - 14 43.55.180": AS 43.55.020(e), 43.55.080, 43.55.135, 43.55.150(a), 43.55.201(c), and 15 43.55.300(c); 16 (2) "AS 43.55.017 - 43.55.170" for the spanned reference "AS 43.55.017 - 17 43.55.180": AS 43.55.023(g). 18 * Sec. 60. Sections 15 - 36, 38, 44 - 51, and 54 of this Act take effect January 1, 2008. 19 * Sec. 61. Except as provided in sec. 60 of this Act, this Act takes effect immediately under 20 AS 01.10.070(c).