Enrolled HB 2001: 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; relating to state oil and gas audit masters; relating to oil and gas auditors and certain oil and gas auditor supervisors; establishing an oil and gas tax credit fund and authorizing payment from that fund; making conforming amendments; and providing for an effective date.
00Enrolled HB 2001 01 Relating to the production tax on oil and gas and to conservation surcharges on oil; providing 02 a limit on the amount of tax that may be levied on the production of certain gas that is 03 produced outside of the Cook Inlet sedimentary basin; relating to the sharing between 04 agencies of certain information relating to the production tax and to oil and gas or gas only 05 leases; expanding the period in which the Department of Revenue may assess the amount of 06 oil and gas production tax and conservation surcharges; relating to state oil and gas audit 07 masters; relating to oil and gas auditors and certain oil and gas auditor supervisors; 08 establishing an oil and gas tax credit fund and authorizing payment from that fund; making 09 conforming amendments; and providing for an effective date. 10 _______________ 11 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section
01 to read: 02 LEGISLATIVE INTENT. (a) It is the intent of the legislature that the provisions of 03 this Act will 04 (1) ensure a fair and equitable means of assessing and taxing Alaska's oil and 05 gas resources; and 06 (2) encourage the availability to Alaska's citizens of affordable gas produced, 07 transported, and consumed within the state as one step towards reasonable and equitable 08 energy costs throughout Alaska. 09 (b) It is the intent of the legislature that AS 43.55.075(b), enacted by sec. 51 of this 10 Act, confirm by clarification the long-standing interpretation of AS 43.05.260 by the 11 Department of Revenue relating to limitation of assessments for the production tax on oil and 12 gas and conservation surcharges on oil. 13 (c) It is the intent of the legislature that the amount of money received by the state as 14 a result of the retroactivity of certain provisions under sec. 74 of this Act that exceeds the 15 amount of money the state would have received if those provisions had not taken effect until 16 January 1, 2008, will be appropriated to the public education fund (AS 14.17.300). 17 (d) It is the intent of the legislature that the legislature will responsibly invest the 18 amounts received after December 31, 2007, as the result of the enactment of this Act that 19 exceed the amounts that would have been received under AS 43.55.011 - 43.55.180, as those 20 provisions read on June 30, 2007, as if those provisions had been applied after December 31, 21 2007, by making appropriations to the following: 22 (1) the public education fund (AS 14.17.300); 23 (2) the budget reserve fund (art. IX, sec. 17, Constitution of the State of 24 Alaska); 25 (3) to extinguish the amount of the employers' unfunded liability in the 26 teachers' defined benefit retirement plan and the public employees' defined benefit retirement 27 plan; 28 (4) the development and implementation of a long-range fiscal plan for the 29 state; and 30 (5) for statewide energy needs of Alaskans to assist with rising energy costs. 31 * Sec. 2. AS 38.05.035(a) is amended to read:
01 (a) The director shall 02 (1) have general charge and supervision of the division and may 03 exercise the powers specifically delegated to the director; the director may employ 04 and fix the compensation of assistants and employees necessary for the operations of 05 the division; the director [AND] is the certifying officer of the division, with the 06 consent of the commissioner, and may approve vouchers for disbursements of money 07 appropriated to the division; 08 (2) manage, inspect, and control state land and improvements on it 09 belonging to the state and under the jurisdiction of the division; 10 (3) execute laws, rules, regulations, and orders adopted by the 11 commissioner; 12 (4) prescribe application procedures and practices for the sale, lease, or 13 other disposition of available land, resources, property, or interest in them; 14 (5) prescribe fees or service charges, with the consent of the 15 commissioner, for any public service rendered; 16 (6) under the conditions and limitations imposed by law and the 17 commissioner, issue deeds, leases, or other conveyances disposing of available land, 18 resources, property, or any interests in them; 19 (7) have jurisdiction over state land, except that land acquired by the 20 Alaska World War II Veterans Board and the Agricultural Loan Board or the 21 departments or agencies succeeding to their respective functions through foreclosure 22 or default; to this end, the director possesses the powers and, with the approval of the 23 commissioner, shall perform the duties necessary to protect the state's rights and 24 interest in state land, including the taking of all necessary action to protect and enforce 25 the state's contractual or other property rights; 26 (8) [REPEALED 27 (9)] maintain the [SUCH] records [AS] the commissioner considers 28 necessary, administer oaths, and do all things incidental to the authority imposed; the 29 following records and files shall be kept confidential upon request of the person 30 supplying the information: 31 (A) the name of the person nominating or applying for the sale,
01 lease, or other disposal of land by competitive bidding; 02 (B) before the announced time of opening, the names of the 03 bidders and the amounts of the bids; 04 (C) all geological, geophysical, and engineering data supplied, 05 whether or not concerned with the extraction or development of natural 06 resources; 07 (D) except as provided in AS 38.05.036, cost data and financial 08 information submitted in support of applications, bonds, leases, and similar 09 items; 10 (E) applications for rights-of-way or easements; 11 (F) requests for information or applications by public agencies 12 for land that [WHICH] is being considered for use for a public purpose; 13 (9) [(10)] account for the fees, licenses, taxes, or other money received 14 in the administration of this chapter including the sale or leasing of land, identify their 15 source, and promptly transmit them to the proper fiscal department after crediting 16 them to the proper fund; receipts from land application filing fees and charges for 17 copies of maps and records shall be deposited immediately in the general fund of the 18 state by the director; 19 (10) [(11)] select and employ or obtain at reasonable compensation 20 cadastral, appraisal, or other professional personnel the director considers necessary 21 for the proper operation of the division; 22 (11) [(12)] be the certifying agent of the state to select, accept, and 23 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 24 devise, judgment, operation of law, or other means any land, of whatever nature or 25 interest, available to the state; and be the certifying agent of the state, to select, accept, 26 or secure by whatever action is necessary in the name of the state any land, or title or 27 interest to land available, granted, or subject to being transferred to the state for any 28 purpose; 29 (12) on request, furnish records, files, and other information 30 related to the administration of AS 38.05.180 to the Department of Revenue for 31 use in forecasting state revenue under or administering AS 43.55, whether or not
01 those records, files, and other information are required to be kept confidential 02 under (8) of this subsection; in the case of records, files, or other information 03 required to be kept confidential under (8) of this subsection, the Department of 04 Revenue shall maintain the confidentiality that the Department of Natural 05 Resources is required to extend to records, files, and other information under (8) 06 of this subsection 07 [(13) REPEALED 08 (14) REPEALED]. 09 * Sec. 3. AS 38.05.036(b) is amended to read: 10 (b) The Department of Revenue may obtain from the department information 11 relating to royalty and net profits payments and to exploration incentive credits under 12 this chapter or under AS 41.09, whether or not that information is confidential. The 13 Department of Revenue may use the information in carrying out its functions and 14 responsibilities under AS 43, and shall hold that information confidential to the extent 15 required by an agreement with the department or by AS 38.05.035(a)(8) 16 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 17 * Sec. 4. AS 38.05.036(f) is amended to read: 18 (f) Except as otherwise provided in this section or in connection with official 19 investigations or proceedings of the department, it is unlawful for a current or former 20 officer, employee, or agent of the state to divulge information obtained by the 21 department as a result of an audit under this section that is required by an agreement 22 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 23 AS 41.09.010(d) to be kept confidential. 24 * Sec. 5. AS 38.05.036(g) is amended to read: 25 (g) Nothing in this section prohibits the publication of statistics in a manner 26 that maintains the confidentiality of information to the extent required by an 27 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 28 AS 41.09.010(d). 29 * Sec. 6. AS 38.05.123(f) is amended to read: 30 (f) As part of the timber sale negotiations authorized by this section, the 31 commissioner may require a prospective purchaser negotiating a timber sale contract
01 to submit financial and technical data that demonstrates that the requirements of this 02 section have been or will be met. Upon the prospective purchaser's request, the 03 commissioner shall keep data provided by the purchaser confidential in accordance 04 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 05 * Sec. 7. AS 38.05.133(e) is amended to read: 06 (e) The commissioner may make a written request to a prospective licensee for 07 additional information on the prospective licensee's proposal. The commissioner shall 08 keep confidential information described in AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] 09 that is voluntarily provided if the prospective licensee has made a written request that 10 the information remain confidential. 11 * Sec. 8. AS 38.05.180(j) is amended to read: 12 (j) The commissioner 13 (1) may provide for modification of royalty on individual leases, leases 14 unitized as described in (p) of this section, leases subject to an agreement described in 15 (s) or (t) of this section, or interests unitized under AS 31.05 16 (A) to allow for production from an oil or gas field or pool if 17 (i) the oil or gas field or pool has been sufficiently 18 delineated to the satisfaction of the commissioner; 19 (ii) the field or pool has not previously produced oil or 20 gas for sale; and 21 (iii) oil or gas production from the field or pool would 22 not otherwise be economically feasible; 23 (B) to prolong the economic life of an oil or gas field or pool as 24 per barrel or barrel equivalent costs increase or as the price of oil or gas 25 decreases, and the increase or decrease is sufficient to make future production 26 no longer economically feasible; or 27 (C) to reestablish production of shut-in oil or gas that would 28 not otherwise be economically feasible; 29 (2) may not grant a royalty modification unless the lessee or lessees 30 requesting the change make a clear and convincing showing that a modification of 31 royalty meets the requirements of this subsection and is in the best interests of the
01 state; 02 (3) shall provide for an increase or decrease or other modification of 03 the state's royalty share by a sliding scale royalty or other mechanism that shall be 04 based on a change in the price of oil or gas and may also be based on other relevant 05 factors such as a change in production rate, projected ultimate recovery, development 06 costs, and operating costs; 07 (4) may not grant a royalty reduction for a field or pool 08 (A) under (1)(A) of this subsection if the royalty modification 09 for the field or pool would establish a royalty rate of less than five percent in 10 amount or value of the production removed or sold from a lease or leases 11 covering the field or pool; 12 (B) under (1)(B) or (1)(C) of this subsection if the royalty 13 modification for the field or pool would establish a royalty rate of less than 14 three percent in amount or value of the production removed or sold from a 15 lease or leases covering the field or pool; 16 (5) may not grant a royalty reduction under this subsection without 17 including an explicit condition that the royalty reduction is not assignable without the 18 prior written approval, which may not be unreasonably withheld, by the 19 commissioner; the commissioner shall, in the preliminary and final findings and 20 determinations, set out the conditions under which the royalty reduction may be 21 assigned; 22 (6) shall require the lessee or lessees to submit, with the application for 23 the royalty reduction, financial and technical data that demonstrate that the 24 requirements of this subsection are met; the commissioner 25 (A) may require disclosure of only the financial and technical 26 data related to development, production, and transportation of oil and gas or 27 gas only from the field or pool that are reasonably available to the applicant; 28 and 29 (B) shall keep the data confidential under AS 38.05.035(a)(8) 30 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application 31 for the royalty reduction; the confidential data may be disclosed by the
01 commissioner to legislators and to the legislative auditor and as directed by the 02 chair or vice-chair of the Legislative Budget and Audit Committee to the 03 director of the division of legislative finance, the permanent employees of their 04 respective divisions who are responsible for evaluating a royalty reduction, and 05 to agents or contractors of the legislative auditor or the legislative finance 06 director who are engaged under contract to evaluate the royalty reduction, if 07 they sign an appropriate confidentiality agreement; 08 (7) may 09 (A) require the lessee or lessees making application for the 10 royalty reduction under (1)(A) of this subsection to pay for the services of an 11 independent contractor, selected by the lessee or lessees from a list of qualified 12 consultants compiled by the commissioner, to evaluate hydrocarbon 13 development, production, transportation, and economics and to assist the 14 commissioner in evaluating the application and financial and technical data; if, 15 under this subparagraph, the commissioner requires payment for the services of 16 an independent contractor, the total cost of the services to be paid for by the 17 lessee or lessees may not exceed $150,000 for each application, and the 18 commissioner shall determine the relevant scope of the work to be performed 19 by the contractor; selection of an independent contractor under this 20 subparagraph is not subject to AS 36.30; 21 (B) with the mutual consent of the lessee or lessees making 22 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 23 request payment for the services of an independent contractor, selected from a 24 list of qualified consultants to evaluate hydrocarbon development, production, 25 transportation, and economics by the commissioner to assist the commissioner 26 in evaluating the application and financial and technical data; if, under this 27 subparagraph, the commissioner requires payment for the services of an 28 independent contractor, the total cost of the services that may be paid for by 29 the lessee or lessees may not exceed $150,000 for each application, and the 30 commissioner shall determine the relevant scope of the work to be performed 31 by the contractor; selection of an independent contractor under this
01 subparagraph is not subject to AS 36.30; 02 (8) shall make and publish a preliminary findings and determination on 03 the royalty reduction application, give reasonable public notice of the preliminary 04 findings and determination, and invite public comment on the preliminary findings 05 and determination during a 30-day period for receipt of public comment; 06 (9) shall offer to appear before the Legislative Budget and Audit 07 Committee, on a day that is not earlier than 10 days and not later than 20 days after 08 giving public notice under (8) of this subsection, to provide the committee a review of 09 the commissioner's preliminary findings and determination on the royalty reduction 10 application and administrative process; if the Legislative Budget and Audit Committee 11 accepts the commissioner's offer, the committee shall give notice of the committee's 12 meeting to all members of the legislature; 13 (10) shall make copies of the preliminary findings and determination 14 available to 15 (A) the presiding officer of each house of the legislature; 16 (B) the chairs of the legislature's standing committees on 17 resources; and 18 (C) the chairs of the legislature's special committees on oil and 19 gas, if any; 20 (11) shall, within 30 days after the close of the public comment period 21 under (8) of this subsection, 22 (A) prepare a summary of the public response to the 23 commissioner's preliminary findings and determination; 24 (B) make a final findings and determination; the 25 commissioner's final findings and determination prepared under this 26 subparagraph regarding a royalty reduction is final and not appealable to the 27 court; 28 (C) transmit a copy of the final findings and determination to 29 the lessee; 30 (D) with the applicant's consent, amend the applicant's lease or 31 unitization agreement consistent with the commissioner's final decision; and
01 (E) make copies of the final findings and determination 02 available to each person who submitted comment under (8) of this subsection 03 and who has filed a request for the copies; 04 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 05 section in the commissioner's determination under this subsection. 06 * Sec. 9. AS 38.05.275(c) is amended to read: 07 (c) Subsection (b) of this section may not be construed to limit the director in 08 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 09 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 10 (42) oil and gas audit masters employed in a professional capacity by 11 the Department of Revenue and the Department of Natural Resources to collect oil and 12 gas revenue by developing policy, conducting studies, drafting proposed regulations, 13 enforcing regulations, and directing audits by oil and gas revenue auditors. 14 * Sec. 11. AS 41.09.010(d) is amended to read: 15 (d) Data derived from drilling a stratigraphic test well or exploratory well that 16 is provided to the commissioner under (c)(3) of this section shall be kept confidential 17 for 24 months after receipt by the commissioner unless the owner of the well gives 18 written permission to the state to release the well data at an earlier date, and, 19 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 20 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 21 other data provided to the commissioner under (c)(3) of this section, except that the 22 commissioner, under appropriate confidentiality provisions and without preference or 23 discrimination, may display to all interested third parties, but may not distribute or 24 transfer in hard copy or electronic form, those data with respect to all land if the 25 commissioner determines that the limited disclosure is necessary to further the interest 26 of the state in evaluating or developing its land. 27 * Sec. 12. AS 43.05.230(a) is amended to read: 28 (a) It is unlawful for a current or former officer, employee, or agent of the 29 state to divulge the amount of income or the particulars set out or disclosed in a report 30 or return made under this title, except 31 (1) in connection with official investigations or proceedings of the
01 department, whether judicial or administrative, involving taxes due under this title; 02 (2) in connection with official investigations or proceedings of the 03 child support enforcement agency, whether judicial or administrative, involving child 04 support obligations imposed or imposable under AS 25 or AS 47; 05 (3) as provided in AS 38.05.036 pertaining to audit functions of the 06 Department of Natural Resources; 07 (4) as provided in AS 43.05.405 - 43.05.499; and 08 (5) as otherwise provided in this section or AS 43.55.890. 09 * Sec. 13. AS 43.05.230(h) is amended to read: 10 (h) The commissioner shall, upon request, furnish to the Department of 11 Natural Resources copies of tax returns, reports, and other documents filed under 12 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 13 workpapers under those chapters. The Department of Natural Resources shall 14 maintain the confidentiality that the Department of Revenue is required to extend to 15 the returns, reports, documents, determinations, and workpapers furnished to the 16 Department of Natural Resources under this subsection. 17 * Sec. 14. AS 43.05.260(a) is amended to read: 18 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and 19 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 20 years after the return was filed, whether or not a return was filed on or after the date 21 prescribed by law. If the tax is not assessed before the expiration of the applicable 22 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 23 of the tax. 24 * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read: 25 (e) There is levied on the producer of oil or gas a tax for all oil and gas 26 produced each calendar year from each lease or property in the state, less any oil and 27 gas the ownership or right to which is exempt from taxation or constitutes a 28 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 29 this section, the tax is equal to the sum of 30 (1) the annual production tax value of the taxable oil and gas as 31 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and
01 (2) the sum, over all months of the calendar year, of the tax amounts 02 determined under (g) of this section. 03 * Sec. 16. AS 43.55.011(f) is amended to read: 04 (f) The levy of tax under this section for [ON A PRODUCER OF] oil and gas 05 produced north of 68 degrees North latitude, other than oil and gas production 06 subject to (i) of this section and gas subject to (o) of this section, may not be less 07 than 08 (1) four percent of the gross value at the point of production when the 09 average price per barrel for Alaska North Slope crude oil for sale on the United States 10 West Coast during the calendar year for which the tax is due is more than $25; 11 (2) three percent of the gross value at the point of production when the 12 average price per barrel for Alaska North Slope crude oil for sale on the United States 13 West Coast during the calendar year for which the tax is due is over $20 but not over 14 $25; 15 (3) two percent of the gross value at the point of production when the 16 average price per barrel for Alaska North Slope crude oil for sale on the United States 17 West Coast during the calendar year for which the tax is due is over $17.50 but not 18 over $20; 19 (4) one percent of the gross value at the point of production when the 20 average price per barrel for Alaska North Slope crude oil for sale on the United States 21 West Coast during the calendar year for which the tax is due is over $15 but not over 22 $17.50; or 23 (5) zero percent of the gross value at the point of production when the 24 average price per barrel for Alaska North Slope crude oil for sale on the United States 25 West Coast during the calendar year for which the tax is due is $15 or less. 26 * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read: 27 (g) For each month of the calendar year for which the producer's average 28 monthly production tax value under AS 43.55.160(a)(2) per BTU equivalent barrel of 29 the taxable oil and gas is more than $30, the amount of tax for purposes of (e)(2) of 30 this section is determined by multiplying the monthly production tax value of the 31 taxable oil and gas produced during the month by the tax rate calculated as follows:
01 (1) if the producer's average monthly production tax value per BTU 02 equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the 03 tax rate is 0.4 percent multiplied by the number that represents the difference between 04 that average monthly production tax value per BTU equivalent barrel and $30; or 05 (2) if the producer's average monthly production tax value per BTU 06 equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax 07 rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number 08 that represents the difference between the average monthly production tax value per 09 BTU equivalent barrel and $92.50, except that the sum determined under this 10 paragraph may not exceed 50 percent. 11 * Sec. 18. AS 43.55.011(j) is amended to read: 12 (j) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)] 13 of this section for [ON] gas produced from a lease or property in the Cook Inlet 14 sedimentary basin may not exceed 15 (1) for a lease or property that first commenced commercial production 16 of gas before April 1, 2006, the product obtained by multiplying (A) the amount of 17 taxable gas produced during the calendar year from the lease or property, times (B) the 18 average rate of tax that was imposed under this chapter for [ON] taxable gas produced 19 from the lease or property for the 12-month period ending on March 31, 2006, times 20 (C) the quotient obtained by dividing the total gross value at the point of production of 21 the taxable gas produced from the lease or property during the 12-month period ending 22 on March 31, 2006, by the total amount of that gas; 23 (2) for a lease or property that first commences commercial production 24 of gas after March 31, 2006, the product obtained by multiplying (A) the amount of 25 taxable gas produced during the calendar year from the lease or property, times (B) the 26 average rate of tax that was imposed under this chapter for [ON] taxable gas produced 27 from all leases or properties in the Cook Inlet sedimentary basin for the 12-month 28 period ending on March 31, 2006, times (C) the average prevailing value for gas 29 delivered in the Cook Inlet area for the 12-month period ending March 31, 2006, as 30 determined by the department under AS 43.55.020(f). 31 * Sec. 19. AS 43.55.011(k) is amended to read:
01 (k) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)] 02 of this section for [ON] oil produced from a lease or property in the Cook Inlet 03 sedimentary basin may not exceed 04 (1) for a lease or property that first commenced commercial production 05 of oil before April 1, 2006, the product obtained by multiplying (A) the amount of 06 taxable oil produced during the calendar year from the lease or property, times (B) the 07 average rate of tax that was imposed under this chapter for [ON] taxable oil produced 08 from the lease or property for the 12-month period ending on March 31, 2006, times 09 (C) the quotient obtained by dividing the total gross value at the point of production of 10 the taxable oil produced from the lease or property during the 12-month period ending 11 on March 31, 2006, by the total amount of that oil; 12 (2) for a lease or property that first commences commercial production 13 of oil after March 31, 2006, the product obtained by multiplying (A) the amount of 14 taxable oil produced during the calendar year from the lease or property, times (B) the 15 average rate of tax that was imposed under this chapter for [ON] taxable oil produced 16 from all leases or properties in the Cook Inlet sedimentary basin for the 12-month 17 period ending on March 31, 2006, times (C) the average prevailing value for oil 18 produced and delivered in the Cook Inlet area for the 12-month period ending on 19 March 31, 2006, as determined by the department under AS 43.55.020(f). 20 * Sec. 20. AS 43.55.011(m) is repealed and reenacted to read: 21 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 22 AS 41.09.010, AS 43.55.024, or 43.55.025, the department shall provide by regulation 23 a method to ensure that, for a calendar year for which a producer's tax liability is 24 limited by (j), (k), or (o) of this section, tax credits otherwise available under 25 AS 38.05.180(i), AS 41.09.010, AS 43.55.024, or 43.55.025 and allocated to gas 26 subject to the limitations in (j), (k), and (o) of this section are accounted for as though 27 the credits had been applied first against a tax liability calculated without regard to the 28 limitations under (j), (k), and (o) of this section so as to reduce the tax liability to the 29 maximum amount provided for under (j) or (o) of this section for the production of gas 30 or (k) of this section for the production of oil. The regulation must provide for a 31 reasonable method to allocate tax credits to gas subject to (j) and (o) of this section.
01 Only the amount of a tax credit remaining after the accounting provided for under this 02 subsection may be used for a later calendar year, transferred to another person, or 03 applied against a tax levied on the production of oil or gas not subject to (j), (k), or (o) 04 of this section to the extent otherwise allowed. 05 * Sec. 21. AS 43.55.011 is amended by adding a new subsection to read: 06 (o) Notwithstanding other provisions of this section, for a calendar year before 07 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas 08 produced from a lease or property outside the Cook Inlet sedimentary basin and used 09 in the state may not exceed the amount of tax for each 1,000 cubic feet of gas that is 10 determined under (j)(2) of this section. 11 * Sec. 22. AS 43.55.020(a) is repealed and reenacted to read: 12 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 13 shall pay the tax as follows: 14 (1) an installment payment of the estimated tax levied by 15 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 16 month of the calendar year on the last day of the following month; except as otherwise 17 provided under (2) of this subsection, the amount of the installment payment is the 18 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 19 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 20 of the installment payment may not be less than zero: 21 (A) for oil and gas produced from leases or properties in the 22 state outside the Cook Inlet sedimentary basin but not subject to 23 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), the 24 greater of 25 (i) zero; or 26 (ii) the sum of 25 percent and the tax rate calculated for 27 the month under AS 43.55.011(g) multiplied by the remainder obtained 28 by subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible for the leases or properties under AS 43.55.160 from the 31 gross value at the point of production of the oil and gas produced from
01 the leases or properties during the month for which the installment 02 payment is calculated; 03 (B) for oil and gas produced from leases or properties subject 04 to AS 43.55.011(f), the greatest of 05 (i) zero; 06 (ii) zero percent, one percent, two percent, three 07 percent, or four percent, as applicable, of the gross value at the point of 08 production of the oil and gas produced from all leases or properties 09 during the month for which the installment payment is calculated; or 10 (iii) the sum of 25 percent and the tax rate calculated for 11 the month under AS 43.55.011(g) multiplied by the remainder obtained 12 by subtracting 1/12 of the producer's adjusted lease expenditures for the 13 calendar year of production under AS 43.55.165 and 43.55.170 that are 14 deductible for those leases or properties under AS 43.55.160 from the 15 gross value at the point of production of the oil and gas produced from 16 those leases or properties during the month for which the installment 17 payment is calculated; 18 (C) for oil and gas produced from each lease or property 19 subject to AS 43.55.011(j), (k), or (o), the greater of 20 (i) zero; or 21 (ii) the sum of 25 percent and the tax rate calculated for 22 the month under AS 43.55.011(g) multiplied by the remainder obtained 23 by subtracting 1/12 of the producer's adjusted lease expenditures for the 24 calendar year of production under AS 43.55.165 and 43.55.170 that are 25 deductible under AS 43.55.160 for oil or gas, respectively, produced 26 from the lease or property from the gross value at the point of 27 production of the oil or gas, respectively, produced from the lease or 28 property during the month for which the installment payment is 29 calculated; 30 (2) an amount calculated under (1)(C) of this subsection for oil or gas 31 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not
01 exceed the product obtained by carrying out the calculation set out in 02 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 03 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 04 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 05 gas produced during the month for the amount of taxable gas produced during the 06 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 07 amount of taxable oil produced during the month for the amount of taxable oil 08 produced during the calendar year; 09 (3) an installment payment of the estimated tax levied by 10 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 11 on the last day of the following month; the amount of the installment payment is the 12 sum of 13 (A) the applicable tax rate for oil provided under 14 AS 43.55.011(i), multiplied by the gross value at the point of production of the 15 oil taxable under AS 43.55.011(i) and produced from the lease or property 16 during the month; and 17 (B) the applicable tax rate for gas provided under 18 AS 43.55.011(i), multiplied by the gross value at the point of production of the 19 gas taxable under AS 43.55.011(i) and produced from the lease or property 20 during the month; 21 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 22 credits applied as allowed by law, that exceeds the total of the amounts due as 23 installment payments of estimated tax is due on March 31 of the year following the 24 calendar year of production. 25 * Sec. 23. AS 43.55.020(g) is amended to read: 26 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 27 amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this 28 section that is not paid when due bears interest (1) at the rate provided for an 29 underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, 30 compounded daily, from the date the installment payment is due until [THE] March 31 31 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)], and
01 (2) as provided for a delinquent tax under AS 43.05.225 after that March 31. Interest 02 accrued under (1) of this subsection that remains unpaid after that March 31 is treated 03 as an addition to tax that bears interest under (2) of this subsection. An unpaid amount 04 of tax due under (a)(4) [(a)(5)] of this section that is not paid when due bears interest 05 as provided for a delinquent tax under AS 43.05.225. 06 * Sec. 24. AS 43.55.020(h) is amended to read: 07 (h) Notwithstanding any contrary provision of AS 43.05.280, 08 (1) an overpayment of an installment payment required under (a)(1) - 09 (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment 10 under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from 11 the later of the date the installment payment is due or the date the overpayment is 12 made, until the earlier of 13 (A) the date it is refunded or is applied to an underpayment; [,] 14 or 15 (B) [THE] March 31 following the calendar year of 16 production [DESCRIBED IN AS 43.55.030(a)]; 17 (2) except as provided under (1) of this subsection, interest with 18 respect to an overpayment is allowed only on any net overpayment of the payments 19 required under (a) of this section that remains after the later of [THE] March 31 20 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or 21 the date that the statement required under AS 43.55.030(a) is filed; 22 (3) interest is allowed under (2) of this subsection only from a date that 23 is 90 days after the later of [THE] March 31 following the calendar year of 24 production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement required 25 under AS 43.55.030(a) is filed; interest is not allowed if the overpayment was 26 refunded within the 90-day period; 27 (4) interest under (2) and (3) of this subsection is paid at the rate and in 28 the manner provided in AS 43.05.225(1). 29 * Sec. 25. AS 43.55.023(a) is amended to read: 30 (a) A producer or explorer may take a tax credit for a qualified capital 31 expenditure as follows:
01 (1) notwithstanding that a qualified capital expenditure may be a 02 deductible lease expenditure for purposes of calculating the production tax value of oil 03 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 04 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 05 explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a 06 tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of 20 07 percent of that expenditure; however, not more than half of the tax credit may be 08 applied for a single calendar year; 09 (2) a producer or explorer may take a credit for a qualified capital 10 expenditure incurred in connection with geological or geophysical exploration or in 11 connection with an exploration well only if the producer or explorer [PROVIDES TO 12 THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER 13 AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS 14 SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN 15 AGREEMENT] 16 (A) agrees, in writing, to the applicable provisions of 17 AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL 18 RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER COMPLETION 19 OF THE GEOLOGICAL OR GEOPHYSICAL DATA PROCESSING OR 20 COMPLETION OF THE WELL, OR 30 DAYS AFTER THE STATEMENT 21 IS FILED, OF THE DATE OF COMPLETION AND TO SUBMIT A 22 REPORT TO THAT DEPARTMENT DESCRIBING THE PROCESSING 23 SEQUENCE AND PROVIDE A LIST OF DATA SETS AVAILABLE]; 24 (B) submits [TO PROVIDE] to the Department of Natural 25 Resources all data that would be required to be submitted under 26 AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A 27 REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND REPORTS 28 IDENTIFIED IN (A) OF THIS PARAGRAPH; 29 (C) THAT, NOTWITHSTANDING ANY PROVISION OF 30 AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD 31 CONFIDENTIAL THE INFORMATION PROVIDED TO THAT
01 DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS 02 FOLLOWING THE COMPLETION DATE, AFTER WHICH THE 03 DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION 04 AFTER 30 DAYS' PUBLIC NOTICE]. 05 * Sec. 26. AS 43.55.023(b) is amended to read: 06 (b) A producer or explorer may elect to take a tax credit in the amount of 25 07 [20] percent of a carried-forward annual loss. A credit under this subsection may be 08 applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this 09 subsection, a carried-forward annual loss is the amount of a producer's or explorer's 10 adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous calendar 11 year that was not deductible in calculating production tax values for that calendar 12 year under AS 43.55.160 [AS 43.55.160(b) AND (e)]. 13 * Sec. 27. AS 43.55.023(d) is amended to read: 14 (d) Except as limited by (i) of this section, a person that is entitled to take a 15 tax credit under this section that wishes to transfer the unused credit to another person 16 or obtain a cash payment under AS 43.55.028 may apply to the department for [A] 17 transferable tax credit certificates [CERTIFICATE]. An application under this 18 subsection must be in a form prescribed by the department and must include 19 supporting information and documentation that the department reasonably requires. 20 The department shall grant or deny an application, or grant an application as to a lesser 21 amount than that claimed and deny it as to the excess, not later than 120 [60] days 22 after the latest of (1) March 31 of the year following the calendar year in which the 23 qualified capital expenditure or carried-forward annual loss for which the credit is 24 claimed was incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER 25 AS 43.55.030(a) TO FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE 26 YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED 27 CAPITAL EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR 28 WHICH THE CREDIT IS CLAIMED WAS INCURRED,] the date the statement 29 required under AS 43.55.030(a) or (e) was filed for the calendar year in which the 30 qualified capital expenditure or carried-forward annual loss for which the credit 31 is claimed was incurred; or (3) the date the application was received by the
01 department. If, based on the information then available to it, the department is 02 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 03 the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for 04 half of the amount of the credit. The credit shown on one of the two certificates is 05 available for immediate use. The credit shown on the second of the two 06 certificates may not be applied against a tax for a calendar year earlier than the 07 calendar year following the calendar year in which the certificate is issued, and 08 the certificate must contain a conspicuous statement to that effect. A certificate 09 issued under this subsection does not expire. 10 * Sec. 28. AS 43.55.023(e) is amended to read: 11 (e) A person to which a transferable tax credit certificate is issued under (d) of 12 this section may transfer the certificate to another person, and a transferee may further 13 transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)] of this 14 section, and notwithstanding any action the department may take with respect to the 15 applicant under (g) of this section, the owner of a certificate may apply the credit or a 16 portion of the credit shown on the certificate only against a tax levied by [DUE 17 UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax credit 18 certificate may not be applied to reduce a transferee's total tax liability [DUE] under 19 AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less than 80 20 percent of the tax that would otherwise be due without applying that credit. Any 21 portion of a credit not used under this subsection may be applied in a later period. 22 * Sec. 29. AS 43.55.023(g) is amended to read: 23 (g) The issuance of a transferable tax credit certificate under (d) of this section 24 or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under 25 AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later 26 audit a tax credit claim to which the certificate relates or to adjust the claim if the 27 department determines, as a result of the audit, that the applicant was not entitled to 28 the amount of the credit for which the certificate was issued. The tax liability of the 29 applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount 30 of the credit that exceeds that to which the applicant was entitled, or the applicant's 31 available valid outstanding credits applicable against the tax levied by
01 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is increased 02 under this subsection, the increase bears interest under AS 43.05.225 from the date the 03 transferable tax credit certificate was issued. For purposes of this subsection, an 04 applicant that is an explorer is considered a producer subject to the tax levied by 05 AS 43.55.011(e). 06 * Sec. 30. AS 43.55.023(i) is amended to read: 07 (i) For the purposes of this section, 08 (1) a producer's or explorer's transitional investment expenditures are 09 the sum of the expenditures the producer or explorer incurred after March 31, 2001, 10 and before April 1, 2006, that would be qualified capital expenditures if they were 11 incurred after March 31, 2006, less the sum of the payments or credits the producer or 12 explorer received before April 1, 2006, for the sale or other transfer of assets, 13 including geological, geophysical, or well data or interpretations, acquired by the 14 producer or explorer as a result of expenditures the producer or explorer incurred 15 before April 1, 2006, that would be qualified capital expenditures, if they were 16 incurred after March 31, 2006; 17 (2) a producer or explorer that did not have commercial production 18 of oil or gas from a lease or property in the state before January 1, 2008, may 19 elect to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in 20 the amount of 20 percent of the producer's or explorer's transitional investment 21 expenditures, but only to the extent that the amount does not exceed 1/10 of the 22 producer's or explorer's qualified capital expenditures that were incurred after 23 March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE 24 CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN]; 25 (3) a producer or explorer may not take a tax credit for a transitional 26 investment expenditure 27 (A) for any calendar year after [THE LATER OF 28 (i)] 2013; [OR 29 (ii) THE SIXTH CALENDAR YEAR AFTER THE 30 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST 31 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A
01 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT 02 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A 03 LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;] 04 (B) more than once; or 05 (C) if a credit for that expenditure was taken under 06 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 07 (4) notwithstanding (d), (e), and (g) of this section, a producer or 08 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for a 09 transitional investment expenditure. 10 * Sec. 31. AS 43.55.023 is amended by adding a new subsection to read: 11 (l) An entity that is exempt from taxation under this chapter may not apply for 12 a transferable tax credit certificate. 13 * Sec. 32. AS 43.55.024(a) is amended to read: 14 (a) For a calendar year for which a producer's tax liability under 15 AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside the 16 Cook Inlet sedimentary basin, no part of which is north of 68 degrees North latitude, 17 exceeds zero before application of any credits under this chapter, a producer that is 18 qualified under (e) of this section may apply a tax credit against that liability of not 19 more than $6,000,000. 20 * Sec. 33. AS 43.55.024(c) is amended to read: 21 (c) For a calendar year for which a producer's tax liability under 22 AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this 23 chapter, other than a credit under (a) of this section but after application of any credit 24 under (a) of this section, a producer that is qualified under (e) of this section and 25 whose average amount of oil and gas produced a day and taxable under 26 AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may apply 27 a tax credit under this subsection against that liability. A producer whose average 28 amount of oil and gas produced a day and taxable under AS 43.55.011(e) [OR (f)] is 29 (1) not more than 50,000 BTU equivalent barrels may apply a tax 30 credit of not more than $12,000,000 for the calendar year; 31 (2) more than 50,000 and less than 100,000 BTU equivalent barrels
01 may apply a tax credit of not more than $12,000,000 multiplied by the following 02 fraction for the calendar year: 03 1 - [2 X (AP - 50,000)] ÷ 100,000 04 where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR 05 (f)], produced a day during the calendar year in BTU equivalent barrels. 06 * Sec. 34. AS 43.55.024(e) is amended to read: 07 (e) On written application by a producer that includes any information the 08 department may require, the department shall determine whether the producer 09 qualifies for a calendar year under this section. To qualify under this section, a 10 producer must demonstrate that its operation in the state or its ownership of an interest 11 in a lease or property in the state as a distinct producer would not result in the division 12 among multiple producer entities of any production tax liability under 13 AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a 14 single producer if the tax credit provisions of (a) or (c) of this section did not exist. 15 * Sec. 35. AS 43.55.024(g) is amended to read: 16 (g) A tax credit authorized by (c) of this section may not be applied to reduce 17 a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below 18 zero. 19 * Sec. 36. AS 43.55.025(a) is amended to read: 20 (a) Subject to the terms and conditions of this section, a credit against the 21 production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for 22 exploration expenditures that qualify under (b) of this section in an amount equal to 23 one of the following: 24 (1) 30 [20] percent of the total exploration expenditures that qualify 25 only under (b) and (c) of this section; 26 (2) 30 [20] percent of the total exploration expenditures [FOR WORK 27 PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of 28 this section; 29 (3) 40 percent of the total exploration expenditures that qualify under 30 (b), (c), and (d) of this section; or 31 (4) 40 percent of the total exploration expenditures that qualify only
01 under (b) and (e) of this section. 02 * Sec. 37. AS 43.55.025(b) is amended to read: 03 (b) To qualify for the production tax credit under (a) of this section, an 04 exploration expenditure must be incurred for work performed [ON OR] after June 30, 05 2008 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN 06 EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE 07 INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and 08 (1) may be for seismic or other geophysical exploration costs not 09 connected with a specific well; 10 (2) if for an exploration well, 11 (A) must be incurred by an explorer that holds an interest in the 12 exploration well for which the production tax credit is claimed; 13 (B) may be for either a [AN OIL OR GAS DISCOVERY] well 14 that encounters an oil or gas deposit or a dry hole; [AND] 15 (C) must be for a well that has been completed, suspended, 16 or abandoned at the time the explorer claims the tax credit under (f) of 17 this section; and 18 (D) must be for goods, services, or rentals of personal property 19 reasonably required for the surface preparation, drilling, casing, cementing, 20 and logging of an exploration well, and, in the case of a dry hole, for the 21 expenses required for abandonment if the well is abandoned within 18 months 22 after the date the well was spudded; 23 (3) may not be for [TESTING, STIMULATION, OR COMPLETION 24 COSTS;] administration, supervision, engineering, or lease operating costs; geological 25 or management costs; community relations or environmental costs; bonuses, taxes, or 26 other payments to governments related to the well; costs, including repairs and 27 replacements, arising from or associated with fraud, wilful misconduct, gross 28 negligence, criminal negligence, or violation of law, including a violation of 33 29 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs that are generally 30 recognized as indirect costs or financing costs; and 31 (4) may not be incurred for an exploration well or seismic exploration
01 that is included in a plan of exploration or a plan of development for any unit before 02 May 14, 2003 [ON MAY 13, 2003]. 03 * Sec. 38. AS 43.55.025(c) is repealed and reenacted to read: 04 (c) To be eligible for the 30 percent production tax credit authorized by (a)(1) 05 of this section or the 40 percent production tax credit authorized by (a)(3) of this 06 section, exploration expenditures must 07 (1) qualify under (b) of this section; and 08 (2) be for an exploration well, subject to the following: 09 (A) before the well is spudded, 10 (i) the explorer shall submit to the commissioner of 11 natural resources the information necessary to determine whether the 12 geological objective of the well is a potential oil or gas trap that is 13 distinctly separate from any trap that has been tested by a preexisting 14 well; 15 (ii) at the time of the submittal of information under (i) 16 of this subparagraph, the commissioner of natural resources may 17 request from the explorer that specific data sets, ancillary data, and 18 reports including all results, and copies of well data collected and data 19 analyses for the well be provided to the Department of Natural 20 Resources upon completion of the drilling; in this sub-subparagraph, 21 well data include all analyses conducted on physical material, and well 22 logs collected from the well and sample analyses; testing geophysical 23 and velocity data including vertical seismic profiles and check shot 24 surveys; testing data and analyses; age data; geochemical analyses; and 25 access to tangible material; and 26 (iii) the commissioner of natural resources must make 27 an affirmative determination as to whether the geological objective of 28 the well is a potential oil or gas trap that is distinctly separate from any 29 trap that has been tested by a preexisting well and what information 30 under (ii) of this subparagraph must be submitted by the explorer after 31 completion, abandonment, or suspension under AS 31.05.030; the
01 commissioner of natural resources shall make that determination within 02 60 days after receiving all the necessary information from the explorer 03 based on the information received and on other information the 04 commissioner of natural resources considers relevant; 05 (B) for an exploration well other than a well to explore a Cook 06 Inlet prospect, the well must be located and drilled in such a manner that the 07 bottom hole is located not less than three miles away from the bottom hole of a 08 preexisting well drilled for oil or gas, irrespective of whether the preexisting 09 well has been completed, suspended, or abandoned; 10 (C) after completion, suspension, or abandonment under 11 AS 31.05.030 of the exploration well, the commissioner of natural resources 12 must determine that the well was consistent with achieving the explorer's 13 stated geological objective. 14 * Sec. 39. AS 43.55.025(d) is amended to read: 15 (d) To be eligible for the 30 [20] percent production tax credit authorized by 16 (a)(2) of this section or the 40 percent production tax credit authorized by (a)(3) of this 17 section, an exploration expenditure must 18 (1) qualify under (b) of this section; and 19 (2) be for an exploration well that is located not less than 25 miles 20 outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under a 21 plan of development, except that for an exploration well for a Cook Inlet prospect to 22 qualify under this paragraph, the exploration well must be located not less than 10 23 miles outside the outer boundary, as delineated on July 1, 2003, of any unit that is 24 under a plan of development. 25 * Sec. 40. AS 43.55.025(f) is amended to read: 26 (f) For a production tax credit under this section, 27 (1) an explorer shall, in a form prescribed by the department and, 28 except for a credit under (l) of this section, within six months of the completion of 29 the exploration activity, claim the credit and submit information sufficient to 30 demonstrate to the department's satisfaction that the claimed exploration expenditures 31 qualify under this section; in addition, the explorer shall submit information
01 necessary for the commissioner of natural resources to evaluate the validity of the 02 explorer's compliance with the requirements of this section; 03 (2) an explorer shall agree, in writing, 04 (A) to notify the Department of Natural Resources, within 30 05 days after completion of seismic or geophysical data processing, completion of 06 [A] well drilling, or filing of a claim for credit, whichever is the latest, for 07 which exploration costs are claimed, of the date of completion and submit a 08 report to that department describing the processing sequence and providing a 09 list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN 10 EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES 11 FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE 12 MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN 13 ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS 14 SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION 15 NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES 16 TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT 17 THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE 18 EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL 19 RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE SUFFICIENT 20 FOR THE COMMISSIONER TO EVALUATE THE EXPLORER'S CLAIM, 21 MAKE THAT DETERMINATION WITHIN 60 DAYS;] 22 (B) to provide to the Department of Natural Resources, within 23 30 days after the date of a request, unless a longer period is provided by the 24 Department of Natural Resources, specific data sets, ancillary data, and 25 reports identified in (A) of this paragraph; in this subparagraph, 26 (i) a seismic or geophysical data set includes the data 27 for an entire seismic survey, irrespective of whether the survey 28 area covers nonstate land in addition to state land or land in a unit 29 in addition to land outside a unit; 30 (ii) well data include all analyses conducted on 31 physical material, and well logs collected from the well, results, and
01 copies of data collected and data analyses for the well, including 02 well logs; sample analyses; testing geophysical and velocity data 03 including seismic profiles and check shot surveys; testing data and 04 analyses; age data; geochemical analyses; and tangible material; 05 (C) that, notwithstanding any provision of AS 38, information 06 provided under this paragraph will be held confidential by the Department of 07 Natural Resources, 08 (i) in the case of well data, until the expiration of the 09 24-month period of confidentiality described in AS 31.05.035(c) 10 [FOR 10 YEARS FOLLOWING THE COMPLETION DATE], at 11 which time the Department of Natural Resources [THAT 12 DEPARTMENT] will release the information after 30 days' public 13 notice unless, in the discretion of the commissioner of natural 14 resources, it is necessary to protect information relating to the 15 valuation of unleased acreage in the same vicinity, or unless the 16 well is on private land and the owner, including the lessor but not 17 the lessee, of the oil and gas resources has not given permission to 18 release the well data; 19 (ii) in the case of seismic or other geophysical data, 20 other than seismic data acquired by seismic exploration subject to 21 (l) of this section, for 10 years following the completion date, at 22 which time the Department of Natural Resources will release the 23 information after 30 days' public notice, except as to seismic or 24 other geophysical data acquired from private land, unless the 25 owner, including a lessor but not a lessee, of the oil and gas 26 resources in the private land gives permission to release the seismic 27 or other geophysical data associated with the private land; 28 (iii) in the case of seismic data obtained by seismic 29 exploration subject to (l) of this section, only until the expiration of 30 30 days' public notice issued on or after the date the production tax 31 credit certificate is issued under (5) of this subsection;
01 (3) if more than one explorer holds an interest in a well or seismic 02 exploration, each explorer may claim an amount of credit that is proportional to the 03 explorer's cost incurred; 04 (4) the department may exercise the full extent of its powers as though 05 the explorer were a taxpayer under this title, in order to verify that the claimed 06 expenditures are qualified exploration expenditures under this section; and 07 (5) if the department is satisfied that the explorer's claimed 08 expenditures are qualified under this section and that all data required to be 09 submitted under this section have been submitted, the department shall issue to the 10 explorer a production tax credit certificate for the amount of credit to be allowed 11 against production taxes levied by AS 43.55.011(e); notwithstanding any contrary 12 provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is 13 not confidential: 14 (A) the explorer's name; 15 (B) the date of the application; 16 (C) the location of the well or seismic exploration; 17 (D) the date of the department's issuance of the certificate; 18 and 19 (E) the date on which the information required to be 20 submitted under this section will be released [DUE UNDER 21 AS 43.55.011(e) OR (f)]. 22 * Sec. 41. AS 43.55.025(g) is amended to read: 23 (g) An explorer, other than an entity that is exempt from taxation under 24 this chapter, may transfer, convey, or sell its production tax credit certificate to any 25 person, and any person who receives a production tax credit certificate may also 26 transfer, convey, or sell the certificate. 27 * Sec. 42. AS 43.55.025(h) is amended to read: 28 (h) A producer that purchases a production tax credit certificate may apply the 29 credits against its production tax levied by [LIABILITY UNDER] AS 43.55.011(e) 30 [OR (f)]. Regardless of the price the producer paid for the certificate, the producer 31 may receive a credit against its production tax liability for the full amount of the
01 credit, but for not more than the amount for which the certificate is issued. A 02 production tax credit allowed under this section may not be applied more than once. 03 * Sec. 43. AS 43.55.025(i) is repealed and reenacted to read: 04 (i) For a production tax credit under this section, 05 (1) a credit may not be applied to reduce a taxpayer's tax liability under 06 AS 43.55.011(e) below zero for a calendar year; and 07 (2) an amount of the production tax credit in excess of the amount that 08 may be applied for a calendar year under this subsection may be carried forward and 09 applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later 10 calendar years. 11 * Sec. 44. AS 43.55.025(k) is amended by adding a new paragraph to read: 12 (4) "preexisting well" means a well that was spudded more than 540 13 days but less than 35 years before the date on which the exploration well to which it is 14 compared is spudded. 15 * Sec. 45. AS 43.55.025 is amended by adding a new subsection to read: 16 (l) Subject to the terms and conditions of this section, if a claim is filed under 17 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 18 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 19 expenditure under this subsection incurred for seismic exploration performed before 20 July 1, 2003. To be eligible under this subsection, an expenditure must 21 (1) have been for seismic exploration that 22 (A) obtained data that the commissioner of natural resources 23 considers to be in the best interest of the state to acquire for public distribution; 24 and 25 (B) was conducted outside the boundaries of a production unit; 26 however, the amount of the expenditure that is otherwise eligible under this 27 section is reduced proportionately by the portion of the seismic exploration 28 activity that crossed into a production unit; and 29 (2) qualify under (b)(3) of this section. 30 * Sec. 46. AS 43.55 is amended by adding a new section to read: 31 Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of
01 tax credit certificates. (a) The oil and gas tax credit fund is established as a separate 02 fund of the state. The purpose of the fund is to purchase certain transferable tax credit 03 certificates issued under AS 43.55.023 and certain production tax credit certificates 04 issued under AS 43.55.025. 05 (b) The oil and gas tax credit fund consists of 06 (1) money appropriated to the fund, including any appropriation of the 07 percentage provided under (c) of this section of all revenue from taxes levied by 08 AS 43.55.011 that is not required to be deposited in the constitutional budget reserve 09 fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and 10 (2) earnings on the fund. 11 (c) The applicable percentage for a fiscal year under (b)(1) of this section is 12 determined with reference to the average price or value forecast by the department for 13 Alaska North Slope oil sold or otherwise disposed of on the United States West Coast 14 during the fiscal year for which the appropriation of revenue from taxes levied by 15 AS 43.55.011 is made. If that forecast is 16 (1) $60 a barrel or higher, the applicable percentage is 10 percent; 17 (2) less than $60 a barrel, the applicable percentage is 15 percent. 18 (d) The department shall manage the fund. 19 (e) The department, on the written application of the person to whom a 20 transferable tax credit certificate has been issued under AS 43.55.023(d) or a 21 production tax credit certificate has been issued under AS 43.55.025(f), may use 22 available money in the oil and gas tax credit fund to purchase, in whole or in part, the 23 certificate if the department finds that 24 (1) the calendar year of the purchase is not earlier than the first 25 calendar year for which the credit shown on the certificate would otherwise be allowed 26 to be applied against a tax; 27 (2) within 24 months after applying for the transferable tax credit 28 certificate or filing a claim for the production tax credit certificate, the applicant 29 incurred a qualified capital expenditure or was the successful bidder on a bid 30 submitted for a lease on state land under AS 38.05.180(f); 31 (3) the amount expended for the purchase would not exceed the total of
01 qualified capital expenditures and successful bids described in (2) of this subsection 02 that have not been the subject of a finding made under this paragraph for purposes of a 03 previous purchase of a certificate; 04 (4) the applicant does not have an outstanding liability to the state for 05 unpaid delinquent taxes under this title; 06 (5) the applicant's total tax liability under AS 43.55.011(e), after 07 application of all available tax credits, for the calendar year in which the application is 08 made is zero; 09 (6) the applicant's average daily production of oil and gas taxable 10 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 11 the application is made was not more than 50,000 BTU equivalent barrels; and 12 (7) the purchase is consistent with this section and regulations adopted 13 under this section. 14 (f) Money in the fund remaining at the end of a fiscal year does not lapse and 15 remains available for expenditure in successive fiscal years. 16 (g) The department may adopt regulations to carry out the purposes of this 17 section, including standards and procedures to allocate available money among 18 applications for purchases the total amount of which exceeds the amount of available 19 money in the fund. 20 (h) Nothing in this section creates a dedicated fund. 21 (i) In this section, "qualified capital expenditure" has the meaning given in 22 AS 43.55.023. 23 * Sec. 47. AS 43.55.030(a) is amended to read: 24 (a) A producer that produces oil or gas from a lease or property in the 25 state during a calendar year, whether or not any tax payment is due under 26 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 27 with the department on March 31 of the following year [FOLLOWING THE 28 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under 29 oath, in a form prescribed by the department, giving, with other information required, 30 the following: 31 (1) a description of each lease or property from which [THE] oil or
01 [AND] gas was [WERE] produced, by name, legal description, lease number, or 02 accounting codes assigned by the department; 03 (2) the names of the producer and, if different, the person paying the 04 tax, if any; 05 (3) the gross amount of oil and the gross amount of gas produced from 06 each lease or property, and the percentage of the gross amount of oil and gas owned by 07 the [EACH] producer [FOR WHOM THE TAX IS PAID]; 08 (4) the gross value at the point of production of the oil and of the gas 09 produced from each lease or property owned by the [EACH] producer and the costs 10 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 11 (5) the name of the first purchaser and the price received for the oil and 12 for the gas, unless relieved from this requirement in whole or in part by the 13 department; [AND] 14 (6) the producer's qualified capital expenditures, as defined in 15 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 16 CALCULATED] under AS 43.55.165, and adjustments or other payments or 17 credits under AS 43.55.170; 18 (7) the production tax values of the oil and gas under 19 AS 43.55.160; 20 (8) any claims for tax credits to be applied; and 21 (9) calculations showing the amounts, if any, that were or are due 22 under AS 43.55.020(a) and interest on any underpayment or overpayment 23 [AS 43.55.160 - 43.55.170]. 24 * Sec. 48. AS 43.55.030(d) is amended to read: 25 (d) Reports required under this section [BY OR ON BEHALF OF THE 26 PRODUCER] are delinquent the first day following the day the report is due. The 27 person required to file the report is liable for a penalty, as determined by the 28 department under standards adopted in regulation by the department, of not 29 more than $1,000 for each day the person fails to file the report at the time 30 required. The penalty is in addition to the penalties in AS 43.05.220 and 43.05.290 31 and is assessed, collected, and paid in the same manner as a tax deficiency under
01 this title. In this subsection, "report" includes a statement. 02 * Sec. 49. AS 43.55.030 is amended by adding new subsections to read: 03 (e) An explorer or producer that incurs a lease expenditure under 04 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 05 year but does not produce oil or gas from a lease or property in the state during the 06 calendar year shall file with the department on March 31 of the following year a 07 statement, under oath, in a form prescribed by the department, giving, with other 08 information required, the following: 09 (1) the producer's qualified capital expenditures, as defined in 10 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 11 payments or credits under AS 43.55.170; and 12 (2) if the explorer or producer receives a payment or credit under 13 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 14 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 15 (f) The department may require a producer, an explorer, or an operator of a 16 lease or property to file monthly reports, as applicable, of 17 (1) the amounts and gross value at the point of production of oil and 18 gas produced; 19 (2) transportation costs of the oil and gas; 20 (3) any unscheduled interruption of, or reduction in the rate of, oil or 21 gas production; 22 (4) lease expenditures and adjustments under AS 43.55.165 and 23 43.55.170; 24 (5) joint interest billings; 25 (6) contracts for the sale or transportation of oil or gas; 26 (7) information and calculations used in determining monthly 27 installment payments of estimated tax under AS 43.55.020(a); and 28 (8) other records and information the department considers necessary 29 for the administration of this chapter. 30 * Sec. 50. AS 43.55.040 is amended to read: 31 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in
01 AS 43.05.405 - 43.05.499, the department may 02 (1) require a person engaged in production and the agent or employee 03 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 04 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 05 additional information that is considered by the department as necessary to compute 06 the amount of the tax; notwithstanding any contrary provision of law, the disclosure of 07 additional information under this paragraph to the producer obligated to pay the tax 08 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 09 under this paragraph that is otherwise required to be held confidential under 10 AS 40.25.100(a) or AS 43.05.230(a), the department shall 11 (A) provide the person that furnished the information a 12 reasonable opportunity to be heard regarding the proposed disclosure and the 13 conditions to be imposed under (B) of this paragraph; and 14 (B) impose appropriate conditions limiting 15 (i) access to the information to those legal counsel, 16 consultants, employees, officers, and agents of the producer who have a 17 need to know that information for the purpose of determining or 18 contesting the producer's tax obligation; and 19 (ii) the use of the information to use for that purpose; 20 (2) examine the books, records, and files of the [SUCH A] person; 21 (3) conduct hearings and compel the attendance of witnesses and the 22 production of books, records, and papers of any person; [AND] 23 (4) make an investigation or hold an inquiry that is considered 24 necessary to a disclosure of the facts as to 25 (A) the amount of production from any oil or gas location, or of 26 a company or other producer of oil or gas; and 27 (B) the rendition of the oil and gas for taxing purposes; 28 (5) require a producer, an explorer, or an operator of a lease or 29 property to file reports and copies of records that the department considers 30 necessary to forecast state revenue under this chapter; in the case of reports and 31 copies of records relating to proposed, expected, or approved unit expenditures
01 for a unit for which one or more working interest owners other than the operator 02 have authority to approve unit expenditures, the required reports and copies of 03 records are limited to those reports or copies of records that constitute or disclose 04 communications between the operator and the working interest owners relating 05 to unit budget matters; 06 (6) require a producer that has an average total production in the 07 state of more than 100,000 barrels a day for a calendar year to report the gross 08 value at the point of production of the producer's taxable oil and gas in the state 09 for a calendar year and the total amount of lease expenditures in the state for 10 that calendar year; and 11 (7) assess against a person required under this section to file a 12 report, statement, or other document a penalty, as determined by the department 13 under standards adopted in regulation by the department, of not more than 14 $1,000 for each day the person fails to file the report, statement, or other 15 document after notice by the department; the penalty is in addition to any 16 penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in 17 the same manner as a tax deficiency under this title; the penalty shall bear 18 interest at the rate specified under AS 43.05.225(1). 19 * Sec. 51. AS 43.55 is amended by adding a new section to read: 20 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 21 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 22 assessed within six years after the return was filed. 23 (b) A decision of a regulatory agency, court, or other body with authority to 24 resolve disputes that results in a retroactive change to a lease expenditure, to an 25 adjustment to a lease expenditure, to costs of transportation, to sale price, to prevailing 26 value, or to consideration of quality differentials relating to the commingling of oils 27 has a corresponding effect, either an increase or decrease, as applicable, on the 28 production tax value of oil or gas or the amount or availability of a tax credit as 29 determined under this chapter. For purposes of this section, a change to a lease 30 expenditure includes a change in the categorization of a lease expenditure as a 31 qualified capital expenditure or as not a qualified capital expenditure. The producer
01 shall 02 (1) within 60 days after the change, notify the department in writing; 03 and 04 (2) within 120 days after the change, file amended returns covering all 05 periods affected by the change, unless the department agrees otherwise or a stay is in 06 place that affects the filing or payment, regardless of the pendency of appeals of the 07 decision. 08 (c) If an alteration in or modification of a producer's federal income tax return 09 or a recomputation of the producer's federal income tax or determination of deficiency 10 occurs that affects the amount of a tax imposed on the producer under this chapter, the 11 producer shall 12 (1) within 60 days after the final determination of the alteration, 13 modification, recomputation, or deficiency, notify the department in writing; and 14 (2) within 120 days after the final determination of the alteration, 15 modification, recomputation, or deficiency, file amended returns covering all affected 16 periods. 17 (d) In this section, 18 (1) "qualified capital expenditure" has the meaning given in 19 AS 43.55.023; 20 (2) "return" includes a report, a statement, and an amended return, 21 report, or statement. 22 * Sec. 52. AS 43.55.110 is amended by adding new subsections to read: 23 (e) The department may require that returns, statements, reports, notifications, 24 and applications filed under this chapter be filed electronically in a form and manner 25 approved or prescribed by the department. 26 (f) The department may require that payments required under this chapter be 27 made electronically in a form and manner approved or prescribed by the department. 28 (g) Notwithstanding AS 44.62, the department may issue, for the information 29 and guidance of producers, explorers, and other interested persons, advisory bulletins 30 stating the department's interpretation of provisions of this chapter and of regulations 31 adopted under this chapter. Unless otherwise provided by the department by
01 regulation, interpretations stated in the advisory bulletins are not binding on the 02 department or others. 03 (h) Subject to legislative appropriation, the department may compensate a 04 person who provides information to the department about noncompliance with the 05 provisions of this chapter by an explorer or a producer of oil or gas if that information 06 leads to the collection of additional taxes, penalties, or interest from the producer. The 07 amount of compensation under this subsection may not exceed the lesser of $500,000 08 or 10 percent of the additional tax, penalty, or interest collected as a result of the 09 information. A state employee or an agent of the state is not eligible for compensation 10 under this subsection. 11 (i) A person who, under (h) of this section, provides, in bad faith, to the 12 department erroneous information about noncompliance with the provisions of this 13 chapter by an explorer or producer of oil or gas shall pay to the 14 (1) department all expenses related to the department's investigation of 15 the alleged noncompliance; and 16 (2) explorer or producer about whom the noncompliance was alleged 17 all expenses that are incurred by the explorer or producer relating to the department's 18 investigation of the alleged noncompliance. 19 * Sec. 53. AS 43.55.150 is amended to read: 20 Sec. 43.55.150. Determination of gross value at the point of production. (a) 21 For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point of 22 production is calculated using the actual [REASONABLE] costs of transportation of 23 the oil or gas [. THE REASONABLE COSTS OF TRANSPORTATION ARE THE 24 ACTUAL COSTS], except when the 25 (1) shipper [PARTIES TO THE TRANSPORTATION] of oil or gas 26 is [ARE] affiliated with the transportation carrier or with a person that owns an 27 interest in the transportation facility; 28 (2) contract for the transportation of oil or gas is not an arm's length 29 transaction [OR IS NOT REPRESENTATIVE OF THE MARKET VALUE OF 30 THAT TRANSPORTATION]; or [AND] 31 (3) method or terms of transportation of oil or gas are [IS] not
01 reasonable in view of existing alternative [METHODS OF] transportation options. 02 (b) If the department finds that a condition [THE CONDITIONS] in (a)(1), 03 (2), or [AND] (3) of this section is [ARE] present, the gross value at the point of 04 production is calculated using the actual costs of transportation, or the 05 reasonable costs of transportation as determined under this subsection, 06 whichever is lower. The [THE] department shall determine the reasonable costs of 07 transportation, using the fair market value of like transportation, the fair market value 08 of equally efficient and available alternative modes of transportation, or other 09 reasonable methods. Transportation costs fixed by tariff rates that have been 10 adjudicated as just and reasonable by [PROPERLY ON FILE WITH] the 11 Regulatory Commission of Alaska or another [OTHER] regulatory agency and 12 transportation costs in an arm's length transaction paid by parties not affiliated 13 with an owner of the method of transportation shall be considered prima facie 14 reasonable. 15 (c) In determining the gross value of oil under [(a) OF] this section, the 16 department may not allow as reasonable costs of transportation 17 (1) the amount of loss of or damage to, or of expense incurred due to 18 the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense 19 is incurred in connection with a catastrophic oil discharge from the vessel into the 20 marine or inland waters of the state; 21 (2) the incremental costs of transportation of the oil that are 22 attributable to temporary use of or chartered or substituted service provided by another 23 vessel due to the loss of or damage to a vessel regularly used to transport oil and that 24 are incurred in connection with a catastrophic oil discharge into the marine or inland 25 waters of the state; and 26 (3) the costs incurred to charter, contract, or hire vessels and 27 equipment used to contain or clean up a catastrophic oil discharge. 28 * Sec. 54. AS 43.55.160(a) is amended to read: 29 (a) Except as provided in (b) of this section, for the purposes of 30 (1) AS 43.55.011(e), the annual production tax value of the taxable 31 (A) oil and gas produced during a calendar year from leases or
01 properties in the state that include land north of 68 degrees North latitude is the 02 gross value at the point of production of the oil and gas taxable under 03 AS 43.55.011(e) and produced by the producer from those leases or properties, 04 less the producer's lease expenditures under AS 43.55.165 for the calendar year 05 applicable to the oil and gas produced by the producer from those leases or 06 properties, as adjusted under AS 43.55.170; this subparagraph does not 07 apply to gas subject to AS 43.55.011(o); 08 (B) oil and gas produced during a calendar year from leases or 09 properties in the state outside the Cook Inlet sedimentary basin, no part of 10 which is north of 68 degrees North latitude, is the gross value at the point of 11 production of the oil and gas taxable under AS 43.55.011(e) and produced by 12 the producer from those leases or properties, less the producer's lease 13 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 14 gas produced by the producer from those leases or properties, as adjusted under 15 AS 43.55.170; this subparagraph does not apply to gas subject to 16 AS 43.55.011(o); 17 (C) oil produced during a calendar year from a lease or 18 property in the Cook Inlet sedimentary basin is the gross value at the point of 19 production of the oil taxable under AS 43.55.011(e) and produced by the 20 producer from that lease or property, less the producer's lease expenditures 21 under AS 43.55.165 for the calendar year applicable to the oil produced by the 22 producer from that lease or property, as adjusted under AS 43.55.170; 23 (D) gas produced during a calendar year from a lease or 24 property in the Cook Inlet sedimentary basin is the gross value at the point of 25 production of the gas taxable under AS 43.55.011(e) and produced by the 26 producer from that lease or property, less the producer's lease expenditures 27 under AS 43.55.165 for the calendar year applicable to the gas produced by the 28 producer from that lease or property, as adjusted under AS 43.55.170; 29 (E) gas produced during a calendar year from a lease or 30 property outside the Cook Inlet sedimentary basin and used in the state is 31 the gross value at the point of production of that gas taxable under
01 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 03 the calendar year applicable to that gas produced by the producer from 04 that lease or property, as adjusted under AS 43.55.170; 05 (2) AS 43.55.011(g), the monthly production tax value of the taxable 06 (A) oil and gas produced during a month from leases or 07 properties in the state that include land north of 68 degrees North latitude is the 08 gross value at the point of production of the oil and gas taxable under 09 AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those 10 leases or properties, less 1/12 of the producer's lease expenditures under 11 AS 43.55.165 for the calendar year applicable to the oil and gas produced by 12 the producer from those leases or properties, as adjusted under AS 43.55.170; 13 this subparagraph does not apply to gas subject to AS 43.55.011(o); 14 (B) oil and gas produced during a month from leases or 15 properties in the state outside the Cook Inlet sedimentary basin, no part of 16 which is north of 68 degrees North latitude, is the gross value at the point of 17 production of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] 18 and produced by the producer from those leases or properties, less 1/12 of the 19 producer's lease expenditures under AS 43.55.165 for the calendar year 20 applicable to the oil and gas produced by the producer from those leases or 21 properties, as adjusted under AS 43.55.170; this subparagraph does not 22 apply to gas subject to AS 43.55.011(o); 23 (C) oil produced during a month from a lease or property in the 24 Cook Inlet sedimentary basin is the gross value at the point of production of 25 the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by the 26 producer from that lease or property, less 1/12 of the producer's lease 27 expenditures under AS 43.55.165 for the calendar year applicable to the oil 28 produced by the producer from that lease or property, as adjusted under 29 AS 43.55.170; 30 (D) gas produced during a month from a lease or property in 31 the Cook Inlet sedimentary basin is the gross value at the point of production
01 of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 02 the producer from that lease or property, less 1/12 of the producer's lease 03 expenditures under AS 43.55.165 for the calendar year applicable to the gas 04 produced by the producer from that lease or property, as adjusted under 05 AS 43.55.170; 06 (E) gas produced during a month from a lease or property 07 outside the Cook Inlet sedimentary basin and used in the state is the gross 08 value at the point of production of that gas taxable under AS 43.55.011(e) 09 and produced by the producer from that lease or property, less 1/12 of the 10 producer's lease expenditures under AS 43.55.165 for the calendar year 11 applicable to that gas produced by the producer from that lease or 12 property, as adjusted under AS 43.55.170. 13 * Sec. 55. AS 43.55.160(b) is amended to read: 14 (b) A production tax value calculated under [(a) OF] this section may not be 15 less than zero. 16 * Sec. 56. AS 43.55.160(c) is amended to read: 17 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 18 calculating a monthly production tax value under (a)(2) of this section, the gross value 19 at the point of production of the oil and gas [TAXABLE UNDER AS 43.55.011(g)] is 20 calculated under regulations adopted by the department that provide for using an 21 appropriate monthly share of the producer's costs of transportation for the calendar 22 year. 23 * Sec. 57. AS 43.55.160(e) is amended to read: 24 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 25 would otherwise be deductible by a producer in a calendar year but whose deduction 26 would cause an annual production tax value calculated under (a)(1) of this section of 27 taxable oil or gas produced during the calendar year to be less than zero may be used 28 to establish a carried-forward annual loss under AS 43.55.023(b). However, the 29 department shall provide by regulation a method to ensure that, for a period for 30 which a producer's tax liability is limited by AS 43.55.011(j), (k), or (o), any 31 adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would
01 otherwise be deductible by a producer for that period but whose deduction would 02 cause a production tax value calculated under (a)(1)(C), (D), or (E) of this section 03 to be less than zero are accounted for as though the adjusted lease expenditures 04 had first been used as deductions in calculating the production tax values of oil or 05 gas subject to any of the limitations under AS 43.55.011(j), (k), or (o) that have 06 positive production tax values so as to reduce the tax liability calculated without 07 regard to the limitation to the maximum amount provided for under the 08 applicable provision of AS 43.55.011(j), (k), or (o). Only the amount of those 09 adjusted lease expenditures remaining after the accounting provided for under 10 this subsection may be used to establish a carried-forward annual loss under 11 AS 43.55.023(b). In this subsection, "producer" includes "explorer." 12 * Sec. 58. AS 43.55.165(a) is repealed and reenacted to read: 13 (a) Except as provided in (k) and (l) of this section, for purposes of this 14 chapter, a producer's lease expenditures for a calendar year are 15 (1) costs, other than items listed in (e) of this section, that are 16 (A) incurred by the producer during the calendar year after 17 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 18 within the producer's leases or properties in the state or, in the case of land in 19 which the producer does not own an operating right, operating interest, or 20 working interest, to explore for oil or gas deposits within other land in the 21 state; and 22 (B) allowed by the department by regulation, based on the 23 department's determination that the costs satisfy the following three 24 requirements: 25 (i) the costs must be incurred upstream of the point of 26 production of oil and gas; 27 (ii) the costs must be ordinary and necessary costs of 28 exploring for, developing, or producing, as applicable, oil or gas 29 deposits; and 30 (iii) the costs must be direct costs of exploring for, 31 developing, or producing, as applicable, oil or gas deposits; and
01 (2) a reasonable allowance for that calendar year, as determined under 02 regulations adopted by the department, for overhead expenses that are directly related 03 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 04 * Sec. 59. AS 43.55.165(b) is amended to read: 05 (b) For purposes of (a) of this section, 06 (1) direct costs include 07 (A) an expenditure, when incurred, to acquire an item if the 08 acquisition cost is otherwise a direct cost, notwithstanding that the expenditure 09 may be required to be capitalized rather than treated as an expense for financial 10 accounting or federal income tax purposes; 11 (B) payments of or in lieu of property taxes, sales and use 12 taxes, motor fuel taxes, and excise taxes; 13 [(C) A REASONABLE ALLOWANCE, AS DETERMINED 14 UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR 15 OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR, 16 DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED 17 WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;] 18 (2) an activity does not need to be physically located on, near, or 19 within the premises of the lease or property within which an oil or gas deposit being 20 explored for, developed, or produced is located in order for the cost of the activity to 21 be a cost upstream of the point of production of the oil or gas; 22 (3) in determining whether costs are lease expenditures, the 23 department may consider, among other factors, the 24 (A) typical industry practices and standards in the state 25 that determine the costs, other than items listed in (e) of this section, that 26 an operator is allowed to bill a producer that is not the operator, under 27 unit operating agreements or similar operating agreements that were in 28 effect before December 2, 2005, and were subject to negotiation with at 29 least one producer with substantial bargaining power, other than the 30 operator; and 31 (B) standards adopted by the Department of Natural
01 Resources that determine the costs, other than items listed in (e) of this 02 section, that a lessee is allowed to deduct from revenue in calculating net 03 profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E). 04 * Sec. 60. AS 43.55.165(e) is amended to read: 05 (e) For purposes of this section, lease expenditures do not include 06 (1) depreciation, depletion, or amortization; 07 (2) oil or gas royalty payments, production payments, lease profit 08 shares, or other payments or distributions of a share of oil or gas production, profit, or 09 revenue, except that a producer's lease expenditures applicable to oil and gas 10 produced from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the 11 share of net profit paid to the state under that lease; 12 (3) taxes based on or measured by net income; 13 (4) interest or other financing charges or costs of raising equity or debt 14 capital; 15 (5) acquisition costs for a lease or property or exploration license; 16 (6) costs arising from fraud, wilful misconduct, [OR] gross negligence, 17 violation of law, or failure to comply with an obligation under a lease, permit, or 18 license issued by the state or federal government; 19 (7) fines or penalties imposed by law; 20 (8) costs of arbitration, litigation, or other dispute resolution activities 21 that involve the state or concern the rights or obligations among owners of interests in, 22 or rights to production from, one or more leases or properties or a unit; 23 (9) costs incurred in organizing a partnership, joint venture, or other 24 business entity or arrangement; 25 (10) amounts paid to indemnify the state; the exclusion provided by 26 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 27 a third-party insurer or surety; 28 (11) surcharges levied under AS 43.55.201 or 43.55.300; 29 (12) an expenditure otherwise deductible under (b) of this section 30 that is a result of [FOR A TRANSACTION THAT IS] an internal transfer, a 31 transaction with an affiliate, or a transaction between related parties, or is
01 otherwise not an arm's length transaction, unless the producer establishes to the 02 satisfaction of the department that the amount of the expenditure does not exceed 03 the [EXPENDITURES INCURRED THAT ARE IN EXCESS OF] fair market value 04 of the expenditure; 05 (13) an expenditure incurred to purchase an interest in any corporation, 06 partnership, limited liability company, business trust, or any other business entity, 07 whether or not the transaction is treated as an asset sale for federal income tax 08 purposes; 09 (14) a tax levied under AS 43.55.011; 10 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 11 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 12 structure, or for the restoration of a lease, field, unit, area, tract of land, body of 13 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 14 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 15 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 16 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 17 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 18 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 19 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 20 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF OIL 21 EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL PAD, 22 PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY OF 23 WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 24 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 25 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 26 this paragraph if the dismantlement, removal, surrender, or abandonment for which the 27 cost is incurred is undertaken for the purpose of replacing, renovating, or improving 28 the facility, pipeline, well pad, platform, or other structure; [FOR THE PURPOSES 29 OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 30 (A) IN THE CASE OF OIL, ONE BARREL; 31 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;]
01 (16) costs incurred for containment, control, cleanup, or removal in 02 connection with any unpermitted release of oil or a hazardous substance and any 03 liability for damages imposed on the producer or explorer for that unpermitted release; 04 this paragraph does not apply to the cost of developing and maintaining an oil 05 discharge prevention and contingency plan under AS 46.04.030; 06 (17) costs incurred to satisfy a work commitment under an exploration 07 license under AS 38.05.132; 08 (18) that portion of expenditures, that would otherwise be qualified 09 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 10 calendar year that are less than the product of $0.30 multiplied by the total taxable 11 production from each lease or property, in BTU equivalent barrels, during that 12 calendar year, except that, when a portion of a calendar year is subject to this 13 provision, the expenditures and volumes shall be prorated within that calendar year; 14 (19) costs incurred for repair, replacement, or deferred 15 maintenance of a facility, a pipeline, a structure, or equipment, other than a well, 16 that results in or is undertaken in response to a failure, problem, or event that 17 results in an unscheduled interruption of, or reduction in the rate of, oil or gas 18 production; or costs incurred for repair, replacement, or deferred maintenance 19 of a facility, a pipeline, a structure, or equipment, other than a well, that is 20 undertaken in response to, or is otherwise associated with, an unpermitted 21 release of a hazardous substance or of gas; however, costs under this paragraph 22 that would otherwise constitute lease expenditures under (a) and (b) of this 23 section may be treated as lease expenditures if the department determines that 24 the repair or replacement is solely necessitated by an act of war, by an 25 unanticipated grave natural disaster or other natural phenomenon of an 26 exceptional, inevitable, and irresistible character, the effects of which could not 27 have been prevented or avoided by the exercise of due care or foresight, or by an 28 intentional or negligent act or omission of a third party, other than a party or its 29 agents in privity of contract with, or employed by, the producer or an operator 30 acting for the producer, but only if the producer or operator, as applicable, 31 exercised due care in operating and maintaining the facility, pipeline, structure,
01 or equipment, and took reasonable precautions against the act or omission of the 02 third party and against the consequences of the act or omission; in this 03 paragraph, 04 (A) "costs incurred for repair, replacement, or deferred 05 maintenance of a facility, a pipeline, a structure, or equipment" includes 06 costs to dismantle and remove the facility, pipeline, structure, or 07 equipment that is being replaced; 08 (B) "hazardous substance" has the meaning given in 09 AS 46.03.826; 10 (C) "replacement" includes renovation or improvement; 11 (20) costs incurred to construct, acquire, or operate a refinery or 12 crude oil topping plant, regardless of whether the products of the refinery or 13 topping plant are used in oil or gas exploration, development, or production 14 operations; however, if a producer owns a refinery or crude oil topping plant that 15 is located on or near the premises of the producer's lease or property in the state 16 and that processes the producer's oil produced from that lease or property into a 17 product that the producer uses in the operation of the lease or property in 18 drilling for or producing oil or gas, the producer's lease expenditures include the 19 amount calculated by subtracting from the fair market value of the product used 20 the prevailing value, as determined under AS 43.55.020(f), of the oil that is 21 processed; 22 (21) costs of lobbying, public relations, public relations 23 advertising, or policy advocacy. 24 * Sec. 61. AS 43.55.165(h) is amended to read: 25 (h) The department shall adopt regulations that provide for reasonable 26 methods of allocating costs between oil and gas, between gas subject to 27 AS 43.55.011(o) and other gas, and between leases or properties in those 28 circumstances where an allocation of costs is required to determine [THE 29 DETERMINATION OF THE] lease expenditures that are costs of exploring for, 30 developing, or producing oil deposits or costs of exploring for, developing, or 31 producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of
01 exploring for, developing, or producing oil or gas deposits located within 02 [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or 03 properties [, REQUIRES AN ALLOCATION OF COSTS]. 04 * Sec. 62. AS 43.55.165 is amended by adding new subsections to read: 05 (k) For purposes of AS 43.55.160, for a calendar year after 2006 and before 06 2010, a producer's total lease expenditures, before adjustment under AS 43.55.170, 07 that are applicable to oil and gas produced by the producer from all leases or 08 properties from which 1,000,000,000 BTU equivalent barrels of oil or gas have been 09 cumulatively produced by the close of 2006 and from which the average daily oil and 10 gas production during 2006 exceeded 100,000 BTU equivalent barrels as the unit 11 boundaries were defined on January 1, 2007, are determined under this subsection and 12 (l) of this section. Except as otherwise provided under (l) of this section, the 13 producer's total lease expenditures, other than qualified capital expenditures, (1) for 14 calendar year 2007, are equal to the product of 1.37 multiplied by the total lease 15 expenditures for calendar year 2006, other than qualified capital expenditures, that are 16 applicable to oil and gas produced by the producer from all leases or properties within 17 the unit, as reported on the producer's statement under AS 43.55.030(a) for calendar 18 year 2006, and (2) for a calendar year after 2007, are equal to the product of 1.03 19 multiplied by the total lease expenditures, other than qualified capital expenditures, 20 determined for the previous calendar year under this subsection. The producer's total 21 lease expenditures for a calendar year after 2006 that are applicable to oil and gas 22 produced by the producer from all leases or properties within a unit subject to this 23 subsection are the sum of the producer's qualified capital expenditures incurred during 24 the calendar year that are applicable to that oil and gas plus the lease expenditures, 25 other than qualified capital expenditures, that are applicable to that oil and gas as 26 determined under this subsection and (l) of this section. If a producer whose lease 27 expenditures for 2006 are used to determine lease expenditures for a later calendar 28 year under this subsection transfers an interest in an affected lease or property to a 29 different producer or if the unit area of the applicable unit is changed from the area as 30 it existed on December 31, 2006, the transferee's lease expenditures applicable to oil 31 and gas produced by the transferee from the lease or property and a producer's lease
01 expenditures applicable to oil or gas produced from a lease or property within a unit 02 area as it existed on December 31, 2006, continue to be determined under this 03 subsection using those 2006 lease expenditures. In this subsection, "qualified capital 04 expenditures" has the meaning given in AS 43.55.023. 05 (l) If, after audit by the department of a producer's statement or amended 06 statement under AS 43.55.030(a) for calendar year 2006, the department finally 07 determines that the reported amount of total lease expenditures, other than qualified 08 capital expenditures, for calendar year 2006 applicable to oil and gas produced by the 09 producer from all leases or properties within a unit subject to (k) of this section 10 exceeds by more than 10 percent the actual amount of those lease expenditures, other 11 than qualified capital expenditures, the producer or transferee, as applicable, shall (1) 12 substitute the actual amount of those lease expenditures, other than qualified capital 13 expenditures, for purposes of the calculations set out in (k) of this section, and (2) file 14 amended statements for affected past tax periods within 60 days after the final 15 determination. The commissioner may adjust the deduction applicable under (k) of 16 this section on changes in unit boundaries. 17 * Sec. 63. AS 43.55.170(a) is amended to read: 18 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 19 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 20 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 21 be adjusted by subtracting payments or credits, other than tax credits, received by the 22 producer or by an operator acting for the producer for 23 (1) the use by another person of a production facility in which the 24 producer has an ownership interest or the management by the producer of a production 25 facility under a management agreement providing for the producer to receive a 26 management fee; 27 (2) a reimbursement or similar payment that offsets the producer's 28 lease expenditures, including an insurance recovery from a third-party insurer and a 29 payment from the state or federal government for reimbursement of the producer's 30 upstream costs, including costs for gathering, separating, cleaning, dehydration, 31 compressing, or other field handling associated with the production of oil or gas
01 upstream of the point of production; 02 (3) the sale or other transfer of 03 (A) an asset, including geological, geophysical, or well data or 04 interpretations, acquired by the producer as a result of a lease expenditure or an 05 expenditure that would be a lease expenditure if it were incurred after 06 March 31, 2006; for purposes of this subparagraph, 07 (i) if a producer removes from the state, for use outside 08 the state, an asset described in this subparagraph, the value of the asset 09 at the time it is removed is considered a payment received by the 10 producer for sale or transfer of the asset; 11 (ii) for a transaction that is an internal transfer or is 12 otherwise not an arm's length transaction, if the sale or transfer of the 13 asset is made for less than fair market value, the amount subtracted 14 must be the fair market value; and 15 (B) oil or gas 16 (i) that is not considered produced from a lease or 17 property under AS 43.55.020(e); and 18 (ii) the cost of acquiring which is a lease expenditure 19 incurred by the person that acquires the oil or gas. 20 * Sec. 64. AS 43.55 is amended by adding new sections to article 4 to read: 21 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 22 provision of AS 40.25.100, and regardless of whether the information is considered 23 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 24 particular returns or reports, the department may publish the following information 25 under this chapter, if aggregated among three or more producers or explorers, showing 26 by month or calendar year and by lease or property, unit, or area of the state: 27 (1) the amount of oil or gas production; 28 (2) the amount of taxes levied under this chapter or paid under this 29 chapter; 30 (3) the effective tax rates under this chapter; 31 (4) the gross value of oil or gas at the point of production;
01 (5) the transportation costs for oil or gas; 02 (6) qualified capital expenditures, as defined in AS 43.55.023; 03 (7) exploration expenditures under AS 43.55.025; 04 (8) production tax values of oil or gas under AS 43.55.160; 05 (9) lease expenditures under AS 43.55.165; 06 (10) adjustments to lease expenditures under AS 43.55.170; 07 (11) tax credits applicable or potentially applicable against taxes levied 08 by this chapter. 09 Sec. 43.55.895. Applicability to municipal entities. (a) Notwithstanding 10 AS 29.35.670(a) or other provision of law, a producer that is a municipal entity is 11 subject to taxation and payment of surcharges under this chapter for oil and gas that it 12 sells to another party. 13 (b) A municipal entity subject to taxation because of this section is eligible for 14 all tax credits under this chapter to the same extent as any other producer. 15 (c) In this section, "municipal entity" means a municipality, municipally 16 owned utility, public corporation of a municipality, or entity established by more than 17 one municipality. 18 * Sec. 65. AS 43.55.900 is amended by adding new paragraphs to read: 19 (22) "producer" means an owner of an operating right, operating 20 interest, or working interest in a mineral interest in oil or gas; 21 (23) "unit" means a group of tracts of land that is 22 (A) subject to a cooperative or a unit plan of development or 23 operation that has been certified by the commissioner of natural resources 24 under AS 38.05.180(p); 25 (B) subject to a cooperative or a unit plan of development or 26 operation that has been certified by the United States Secretary of the Interior 27 under 30 U.S.C. 226(m); 28 (C) subject to an agreement of the owners of interests in the 29 tracts of land to validly integrate their interests to provide for the unitized 30 management, development, and operation of the tracts of land as a unit, within 31 the meaning of AS 31.05.110(a); or
01 (D) within the unit area of a unit created by order of the Alaska 02 Oil and Gas Conservation Commission under AS 31.05.110(b); 03 (24) "used in the state" means delivered for consumption as fuel in the 04 state, including as fuel consumed to generate electricity. 05 * Sec. 66. AS 43.55.011(h), 43.55.011(l), 43.55.011(n), 43.55.165(c), and 43.55.165(d) are 06 repealed. 07 * Sec. 67. AS 43.55.023(f) is repealed. 08 * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 APPLICABILITY. (a) AS 43.55.075(a), enacted by sec. 51 of this Act, applies to any 11 tax liability under AS 43.55 for the production of oil and gas after December 31, 2006. 12 (b) If an application made under AS 43.55.023(f) is received by the Department of 13 Revenue before January 1, 2008, and is still outstanding on that date, the application is 14 considered to be an application under AS 43.55.028, enacted by sec. 46 of this Act. 15 * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE 18 INTENT. It is the intent of the legislature that the commissioner of administration shall cause 19 not more than four oil and gas revenue audit master positions to be created in the Department 20 of Revenue and not more than two oil and gas revenue audit master positions to be created in 21 the Department of Natural Resources. Oil and gas revenue audit masters shall be employed in 22 a professional capacity to collect oil and gas revenue by developing policy, conducting 23 studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and 24 gas auditors. 25 * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 OIL AND GAS AUDITORS; CLASSIFICATION AND PAY PLANS. 28 Notwithstanding AS 39.25.150(2), the Department of Administration shall develop and 29 implement a distinct position classification plan and a distinct pay plan for oil and gas 30 auditors and their immediate supervisors, other than revenue audit masters, that perform 31 (1) oil and gas tax audits in the Department of Revenue under the direction of
01 an oil and gas revenue audit master; 02 (2) royalty audits, including net profit share audits, in the Department of 03 Natural Resources under the direction of an oil and gas revenue audit master. 04 * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 TRANSITION: PAYMENT OF TAX; FILING. (a) A person subject to tax under 07 AS 43.55 that is required to make one or more installment payments of estimated tax or other 08 payment of tax under AS 43.55.020(a) during the period after March 31, 2006, and before the 09 effective date of sec. 22 of this Act, and under AS 43.55.020(a), as repealed and reenacted by 10 sec. 22 of this Act, for the production of oil or gas during a month after March 31, 2006, and 11 before the effective date of sec. 22 of this Act but that failed to pay the full amount of the 12 installment payments or other payment of tax required under AS 43.55 because of the 13 retroactive application of AS 43.55.165(e)(6) and (19), as amended and enacted in the 14 amendment to AS 43.55.165(e) in sec. 60 of this Act, that are retroactive to April 1, 2006, 15 under sec. 74(b) of this Act, and the retroactive application of secs. 15 - 28, 32 - 35, 53 - 61, 16 63, 65, and 66 of this Act, and that part of AS 43.55.165(e) in sec. 60 of this Act under sec. 17 74(d) of this Act, shall pay, before April 1, 2008, the balance of any tax due under AS 43.55 18 for the period after March 31, 2006, and before the effective date of this section. 19 (b) A person required to file a statement under AS 43.55.030(a), as amended by sec. 20 47 of this Act, or a statement under AS 43.55.030(e) or (f), as enacted by sec. 49 of this Act, 21 but that failed to file a statement required under AS 43.55 because of the retroactive 22 application of sections of this Act under sec. 74(d) of this Act, shall file, before April 1, 2008, 23 any statement required to have been filed after June 30, 2007, and before the effective date of 24 this section. 25 * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 28 contrary provision of AS 44.62.240, 29 (1) if the Department of Revenue expressly designates in the regulation that 30 the regulation applies retroactively to that date, a regulation adopted by the Department of 31 Revenue to implement, interpret, make specific, or otherwise carry out secs. 15 - 28, 32 - 35,
01 53 - 61, 63, 65, and 66 of this Act may apply retroactively to July 1, 2007, except that a 02 regulation adopted by the Department of Revenue to implement, interpret, make specific, or 03 otherwise carry out AS 43.55.165(e)(6) and (19), as amended and enacted in the amendment 04 to AS 43.55.165(e) in sec. 60 of this Act, may apply retroactively to April 1, 2006, and a 05 regulation adopted by the Department of Revenue to implement, interpret, make specific, or 06 otherwise carry out AS 43.55.165(k) and (l), as enacted by sec. 62 of this Act, may apply 07 retroactively to January 1, 2007; 08 (2) a regulation adopted by the Department of Natural Resources to 09 implement, interpret, make specific, or otherwise carry out statutory provisions for the 10 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the 11 extent the regulation deals with the treatment of oil and gas production taxes in determining 12 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of 13 Natural Resources expressly designates in the regulation that the regulation applies 14 retroactively to that date. 15 * Sec. 73. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: REGULATIONS. The Department of Natural Resources and the 18 Department of Revenue may proceed to adopt regulations to implement this Act. The 19 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 20 effective date of the law implemented by the regulation. The department shall adopt 21 regulations governing the use of tax credits under AS 43.55 for a calendar year for which the 22 applicable tax credit provisions of AS 43.55 differ as between parts of the year as a result of 23 the retroactive application of a provision of this Act. 24 * Sec. 74. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 41 of 27 this Act, and AS 43.55.895, enacted by sec. 64 of this Act, are retroactive to July 1, 2003. 28 (b) Section 31 of this Act and AS 43.55.165(e)(6) and (19), as amended and enacted 29 by the amendment to AS 43.55.165(e) in sec. 60 of this Act, are retroactive to April 1, 2006. 30 (c) AS 43.55.165(k) and (l), enacted by sec. 62 of this Act, are retroactive to 31 January 1, 2007.
01 (d) Except as provided in (b) of this section, secs. 15 - 28, 32 - 35, 53 - 61, 63, 65, and 02 66 of this Act are retroactive to July 1, 2007. 03 * Sec. 75. Sections 29, 30, 46, and 67 of this Act take effect January 1, 2008. 04 * Sec. 76. Sections 36 - 40 and 42 - 45 of this Act take effect July 1, 2008. 05 * Sec. 77. Except as provided in secs. 75 and 76 of this Act, this Act takes effect 06 immediately under AS 01.10.070(c).