SB 2001: "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; relating to the issuance of advisory bulletins and the disclosure of certain information relating to the production tax and the sharing between agencies of certain information relating to the production tax and to oil and gas or gas only leases; amending the State Personnel Act to place in the exempt service certain state oil and gas auditors and their immediate supervisors; establishing an oil and gas tax credit fund and authorizing payment from that fund; providing for retroactive application of certain statutory and regulatory provisions relating to the production tax on oil and gas and conservation surcharges on oil; making conforming amendments; and providing for an effective date."
00 SENATE BILL NO. 2001 01 "An Act relating to the production tax on oil and gas and to conservation surcharges on 02 oil; relating to the issuance of advisory bulletins and the disclosure of certain 03 information relating to the production tax and the sharing between agencies of certain 04 information relating to the production tax and to oil and gas or gas only leases; 05 amending the State Personnel Act to place in the exempt service certain state oil and 06 gas auditors and their immediate supervisors; establishing an oil and gas tax credit 07 fund and authorizing payment from that fund; providing for retroactive application of 08 certain statutory and regulatory provisions relating to the production tax on oil and gas 09 and conservation surcharges on oil; making conforming amendments; and providing 10 for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section
01 to read: 02 LEGISLATIVE INTENT. It is the intent of the legislature that AS 43.55.075(b), 03 enacted by sec. 50 of this Act, confirm by clarification the long-standing interpretation of 04 AS 43.05.260 by the Department of Revenue relating to limitation of assessments for the 05 production tax on oil and gas and conservation surcharges on oil. 06 * Sec. 2. AS 38.05.035(a) is amended to read: 07 (a) The director shall 08 (1) have general charge and supervision of the division and may 09 exercise the powers specifically delegated to the director; the director may employ 10 and fix the compensation of assistants and employees necessary for the operations of 11 the division; the director [AND] is the certifying officer of the division, with the 12 consent of the commissioner, and may approve vouchers for disbursements of money 13 appropriated to the division; 14 (2) manage, inspect, and control state land and improvements on it 15 belonging to the state and under the jurisdiction of the division; 16 (3) execute laws, rules, regulations, and orders adopted by the 17 commissioner; 18 (4) prescribe application procedures and practices for the sale, lease, 19 or other disposition of available land, resources, property, or interest in them; 20 (5) prescribe fees or service charges, with the consent of the 21 commissioner, for any public service rendered; 22 (6) under the conditions and limitations imposed by law and the 23 commissioner, issue deeds, leases, or other conveyances disposing of available land, 24 resources, property, or any interests in them; 25 (7) have jurisdiction over state land, except that land acquired by the 26 Alaska World War II Veterans Board and the Agricultural Loan Board or the 27 departments or agencies succeeding to their respective functions through foreclosure 28 or default; to this end, the director possesses the powers and, with the approval of the 29 commissioner, shall perform the duties necessary to protect the state's rights and 30 interest in state land, including the taking of all necessary action to protect and 31 enforce the state's contractual or other property rights;
01 (8) [REPEALED 02 (9)] maintain the [SUCH] records [AS] the commissioner considers 03 necessary, administer oaths, and do all things incidental to the authority imposed; the 04 following records and files shall be kept confidential upon request of the person 05 supplying the information: 06 (A) the name of the person nominating or applying for the 07 sale, lease, or other disposal of land by competitive bidding; 08 (B) before the announced time of opening, the names of the 09 bidders and the amounts of the bids; 10 (C) all geological, geophysical, and engineering data supplied, 11 whether or not concerned with the extraction or development of natural 12 resources; 13 (D) except as provided in AS 38.05.036, cost data and 14 financial information submitted in support of applications, bonds, leases, and 15 similar items; 16 (E) applications for rights-of-way or easements; 17 (F) requests for information or applications by public agencies 18 for land that [WHICH] is being considered for use for a public purpose; 19 (9) [(10)] account for the fees, licenses, taxes, or other money 20 received in the administration of this chapter including the sale or leasing of land, 21 identify their source, and promptly transmit them to the proper fiscal department after 22 crediting them to the proper fund; receipts from land application filing fees and 23 charges for copies of maps and records shall be deposited immediately in the general 24 fund of the state by the director; 25 (10) [(11)] select and employ or obtain at reasonable compensation 26 cadastral, appraisal, or other professional personnel the director considers necessary 27 for the proper operation of the division; 28 (11) [(12)] be the certifying agent of the state to select, accept, and 29 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 30 devise, judgment, operation of law, or other means any land, of whatever nature or 31 interest, available to the state; and be the certifying agent of the state, to select,
01 accept, or secure by whatever action is necessary in the name of the state any land, or 02 title or interest to land available, granted, or subject to being transferred to the state 03 for any purpose; 04 (12) on request, furnish records, files, and other information 05 related to the administration of AS 38.05.180 to the Department of Revenue for 06 use in forecasting state revenue under or administering AS 43.55, whether or not 07 those records, files, and other information are required to be kept confidential 08 under (8) of this subsection; in the case of records, files, or other information 09 required to be kept confidential under (8) of this subsection, the Department of 10 Revenue shall maintain the confidentiality that the Department of Natural 11 Resources is required to extend to records, files, and other information under (8) 12 of this subsection 13 [(13) REPEALED 14 (14) REPEALED]. 15 * Sec. 3. AS 38.05.036(b) is amended to read: 16 (b) The Department of Revenue may obtain from the department information 17 relating to royalty and net profits payments and to exploration incentive credits under 18 this chapter or under AS 41.09, whether or not that information is confidential. The 19 Department of Revenue may use the information in carrying out its functions and 20 responsibilities under AS 43, and shall hold that information confidential to the extent 21 required by an agreement with the department or by AS 38.05.035(a)(8) 22 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 23 * Sec. 4. AS 38.05.036(f) is amended to read: 24 (f) Except as otherwise provided in this section or in connection with official 25 investigations or proceedings of the department, it is unlawful for a current or former 26 officer, employee, or agent of the state to divulge information obtained by the 27 department as a result of an audit under this section that is required by an agreement 28 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 29 AS 41.09.010(d) to be kept confidential. 30 * Sec. 5. AS 38.05.036(g) is amended to read: 31 (g) Nothing in this section prohibits the publication of statistics in a manner
01 that maintains the confidentiality of information to the extent required by an 02 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 03 AS 41.09.010(d). 04 * Sec. 6. AS 38.05.123(f) is amended to read: 05 (f) As part of the timber sale negotiations authorized by this section, the 06 commissioner may require a prospective purchaser negotiating a timber sale contract 07 to submit financial and technical data that demonstrates that the requirements of this 08 section have been or will be met. Upon the prospective purchaser's request, the 09 commissioner shall keep data provided by the purchaser confidential in accordance 10 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 11 * Sec. 7. AS 38.05.133(e) is amended to read: 12 (e) The commissioner may make a written request to a prospective licensee 13 for additional information on the prospective licensee's proposal. The commissioner 14 shall keep confidential information described in AS 38.05.035(a)(8) 15 [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made 16 a written request that the information remain confidential. 17 * Sec. 8. AS 38.05.180(j) is amended to read: 18 (j) The commissioner 19 (1) may provide for modification of royalty on individual leases, 20 leases unitized as described in (p) of this section, leases subject to an agreement 21 described in (s) or (t) of this section, or interests unitized under AS 31.05 22 (A) to allow for production from an oil or gas field or pool if 23 (i) the oil or gas field or pool has been sufficiently 24 delineated to the satisfaction of the commissioner; 25 (ii) the field or pool has not previously produced oil or 26 gas for sale; and 27 (iii) oil or gas production from the field or pool would 28 not otherwise be economically feasible; 29 (B) to prolong the economic life of an oil or gas field or pool 30 as per barrel or barrel equivalent costs increase or as the price of oil or gas 31 decreases, and the increase or decrease is sufficient to make future production
01 no longer economically feasible; or 02 (C) to reestablish production of shut-in oil or gas that would 03 not otherwise be economically feasible; 04 (2) may not grant a royalty modification unless the lessee or lessees 05 requesting the change make a clear and convincing showing that a modification of 06 royalty meets the requirements of this subsection and is in the best interests of the 07 state; 08 (3) shall provide for an increase or decrease or other modification of 09 the state's royalty share by a sliding scale royalty or other mechanism that shall be 10 based on a change in the price of oil or gas and may also be based on other relevant 11 factors such as a change in production rate, projected ultimate recovery, development 12 costs, and operating costs; 13 (4) may not grant a royalty reduction for a field or pool 14 (A) under (1)(A) of this subsection if the royalty modification 15 for the field or pool would establish a royalty rate of less than five percent in 16 amount or value of the production removed or sold from a lease or leases 17 covering the field or pool; 18 (B) under (1)(B) or (1)(C) of this subsection if the royalty 19 modification for the field or pool would establish a royalty rate of less than 20 three percent in amount or value of the production removed or sold from a 21 lease or leases covering the field or pool; 22 (5) may not grant a royalty reduction under this subsection without 23 including an explicit condition that the royalty reduction is not assignable without the 24 prior written approval, which may not be unreasonably withheld, by the 25 commissioner; the commissioner shall, in the preliminary and final findings and 26 determinations, set out the conditions under which the royalty reduction may be 27 assigned; 28 (6) shall require the lessee or lessees to submit, with the application 29 for the royalty reduction, financial and technical data that demonstrate that the 30 requirements of this subsection are met; the commissioner 31 (A) may require disclosure of only the financial and technical
01 data related to development, production, and transportation of oil and gas or 02 gas only from the field or pool that are reasonably available to the applicant; 03 and 04 (B) shall keep the data confidential under AS 38.05.035(a)(8) 05 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application 06 for the royalty reduction; the confidential data may be disclosed by the 07 commissioner to legislators and to the legislative auditor and as directed by 08 the chair or vice-chair of the Legislative Budget and Audit Committee to the 09 director of the division of legislative finance, the permanent employees of 10 their respective divisions who are responsible for evaluating a royalty 11 reduction, and to agents or contractors of the legislative auditor or the 12 legislative finance director who are engaged under contract to evaluate the 13 royalty reduction, if they sign an appropriate confidentiality agreement; 14 (7) may 15 (A) require the lessee or lessees making application for the 16 royalty reduction under (1)(A) of this subsection to pay for the services of an 17 independent contractor, selected by the lessee or lessees from a list of 18 qualified consultants compiled by the commissioner, to evaluate hydrocarbon 19 development, production, transportation, and economics and to assist the 20 commissioner in evaluating the application and financial and technical data; 21 if, under this subparagraph, the commissioner requires payment for the 22 services of an independent contractor, the total cost of the services to be paid 23 for by the lessee or lessees may not exceed $150,000 for each application, and 24 the commissioner shall determine the relevant scope of the work to be 25 performed by the contractor; selection of an independent contractor under this 26 subparagraph is not subject to AS 36.30; 27 (B) with the mutual consent of the lessee or lessees making 28 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 29 request payment for the services of an independent contractor, selected from a 30 list of qualified consultants to evaluate hydrocarbon development, production, 31 transportation, and economics by the commissioner to assist the commissioner
01 in evaluating the application and financial and technical data; if, under this 02 subparagraph, the commissioner requires payment for the services of an 03 independent contractor, the total cost of the services that may be paid for by 04 the lessee or lessees may not exceed $150,000 for each application, and the 05 commissioner shall determine the relevant scope of the work to be performed 06 by the contractor; selection of an independent contractor under this 07 subparagraph is not subject to AS 36.30; 08 (8) shall make and publish a preliminary findings and determination 09 on the royalty reduction application, give reasonable public notice of the preliminary 10 findings and determination, and invite public comment on the preliminary findings 11 and determination during a 30-day period for receipt of public comment; 12 (9) shall offer to appear before the Legislative Budget and Audit 13 Committee, on a day that is not earlier than 10 days and not later than 20 days after 14 giving public notice under (8) of this subsection, to provide the committee a review of 15 the commissioner's preliminary findings and determination on the royalty reduction 16 application and administrative process; if the Legislative Budget and Audit 17 Committee accepts the commissioner's offer, the committee shall give notice of the 18 committee's meeting to all members of the legislature; 19 (10) shall make copies of the preliminary findings and determination 20 available to 21 (A) the presiding officer of each house of the legislature; 22 (B) the chairs of the legislature's standing committees on 23 resources; and 24 (C) the chairs of the legislature's special committees on oil and 25 gas, if any; 26 (11) shall, within 30 days after the close of the public comment period 27 under (8) of this subsection, 28 (A) prepare a summary of the public response to the 29 commissioner's preliminary findings and determination; 30 (B) make a final findings and determination; the 31 commissioner's final findings and determination prepared under this
01 subparagraph regarding a royalty reduction is final and not appealable to the 02 court; 03 (C) transmit a copy of the final findings and determination to 04 the lessee; 05 (D) with the applicant's consent, amend the applicant's lease or 06 unitization agreement consistent with the commissioner's final decision; and 07 (E) make copies of the final findings and determination 08 available to each person who submitted comment under (8) of this subsection 09 and who has filed a request for the copies; 10 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 11 section in the commissioner's determination under this subsection. 12 * Sec. 9. AS 38.05.275(c) is amended to read: 13 (c) Subsection (b) of this section may not be construed to limit the director in 14 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 15 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 16 (42) oil and gas auditors performing 17 (A) production tax audits, and their immediate supervisors, in 18 the Department of Revenue; 19 (B) royalty audits, including net profit share audits, and their 20 immediate supervisors, in the Department of Natural Resources. 21 * Sec. 11. AS 41.09.010(d) is amended to read: 22 (d) Data derived from drilling a stratigraphic test well or exploratory well that 23 is provided to the commissioner under (c)(3) of this section shall be kept confidential 24 for 24 months after receipt by the commissioner unless the owner of the well gives 25 written permission to the state to release the well data at an earlier date, and, 26 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 27 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 28 other data provided to the commissioner under (c)(3) of this section, except that the 29 commissioner, under appropriate confidentiality provisions and without preference or 30 discrimination, may display to all interested third parties, but may not distribute or 31 transfer in hard copy or electronic form, those data with respect to all land if the
01 commissioner determines that the limited disclosure is necessary to further the 02 interest of the state in evaluating or developing its land. 03 * Sec. 12. AS 43.05.230(a) is amended to read: 04 (a) It is unlawful for a current or former officer, employee, or agent of the 05 state to divulge the amount of income or the particulars set out or disclosed in a report 06 or return made under this title, except 07 (1) in connection with official investigations or proceedings of the 08 department, whether judicial or administrative, involving taxes due under this title; 09 (2) in connection with official investigations or proceedings of the 10 child support enforcement agency, whether judicial or administrative, involving child 11 support obligations imposed or imposable under AS 25 or AS 47; 12 (3) as provided in AS 38.05.036 pertaining to audit functions of the 13 Department of Natural Resources; 14 (4) as provided in AS 43.05.405 - 43.05.499; and 15 (5) as otherwise provided in this section or AS 43.55.890. 16 * Sec. 13. AS 43.05.230(h) is amended to read: 17 (h) The commissioner shall, upon request, furnish to the Department of 18 Natural Resources copies of tax returns, reports, and other documents filed under 19 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 20 workpapers under AS 43.55 and AS 43.65. The Department of Natural Resources 21 shall maintain the confidentiality that the Department of Revenue is required to 22 extend to the returns, reports, documents, determinations, and workpapers furnished 23 to the Department of Natural Resources under this subsection. 24 * Sec. 14. AS 43.05.260(a) is amended to read: 25 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and 26 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 27 years after the return was filed, whether or not a return was filed on or after the date 28 prescribed by law. If the tax is not assessed before the expiration of the applicable 29 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 30 of the tax. 31 * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read:
01 (e) There is levied on the producer of oil or gas a tax for all oil and gas 02 produced each calendar year from each lease or property in the state, less any oil and 03 gas the ownership or right to which is exempt from taxation or constitutes a 04 landowner's royalty interest. Except as otherwise provided under (f), (j), and (k) of 05 this section, the tax is equal to the production tax value of the taxable oil and gas as 06 calculated under AS 43.55.160 multiplied by the tax rate determined under (g) of this 07 section. 08 * Sec. 16. AS 43.55.011(f) is repealed and reenacted to read: 09 (f) The provisions of this subsection apply to oil and gas produced from each 10 lease or property within a unit or nonunitized reservoir from which 1,000,000,000 11 BTU equivalent barrels of oil or gas have been cumulatively produced by the close of 12 the most recent calendar year and from which the average daily oil and gas 13 production during the most recent calendar year exceeded 100,000 BTU equivalent 14 barrels. Notwithstanding any contrary provision of law, a producer may not apply tax 15 credits to reduce its total tax liability under (e) of this section for oil and gas produced 16 from all leases or properties within the unit or nonunitized reservoir below 10 percent 17 of the total gross value at the point of production of that oil and gas. If the amount 18 calculated by multiplying the tax rate determined under (g) of this section times the 19 total production tax value of the oil and gas taxable under (e) of this section produced 20 from all of the producer's leases or properties within the unit or nonunitized reservoir 21 is less than 10 percent of the total gross value at the point of production of that oil and 22 gas, the tax levied by (e) of this section for that oil and gas is equal to 10 percent of 23 the total gross value at the point of production of that oil and gas. 24 * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read: 25 (g) The tax rate applied to the production tax value of oil and gas under (e) of 26 this section is 25 percent plus 0.20 percent times the price index for the calendar year 27 determined under (h) of this section. However, the tax rate calculated under this 28 subsection may not be more than 50 percent. 29 * Sec. 18. AS 43.55.011(h) is amended to read: 30 (h) For purposes of (g) of this section, the price index for a calendar year 31 [MONTH] is calculated by subtracting 30 [40] from the number that is equal to [THE
01 QUOTIENT OF] the total [MONTHLY] production tax value of the taxable oil and 02 gas produced by the producer from all leases or properties in the state during that 03 calendar year [DURING THAT MONTH], as calculated under AS 43.55.160, 04 divided by the total amount of that [THE TAXABLE] oil and gas [PRODUCED BY 05 THE PRODUCER DURING THAT MONTH], in BTU equivalent barrels. However, 06 a price index calculated under this subsection may not be less than zero. 07 * Sec. 19. AS 43.55.011(j) is amended to read: 08 (j) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)] 09 of this section for [ON] gas produced from a lease or property in the Cook Inlet 10 sedimentary basin may not exceed 11 (1) for a lease or property that first commenced commercial 12 production of gas before April 1, 2006, the product obtained by multiplying (A) the 13 amount of taxable gas produced during the calendar year from the lease or property, 14 times (B) the average rate of tax that was imposed under this chapter for [ON] 15 taxable gas produced from the lease or property for the 12-month period ending on 16 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 17 the point of production of the taxable gas produced from the lease or property during 18 the 12-month period ending on March 31, 2006, by the total amount of that gas; 19 (2) for a lease or property that first commences commercial 20 production of gas after March 31, 2006, the product obtained by multiplying (A) the 21 amount of taxable gas produced during the calendar year from the lease or property, 22 times (B) the average rate of tax that was imposed under this chapter for [ON] 23 taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin 24 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 25 value for gas delivered in the Cook Inlet area for the 12-month period ending 26 March 31, 2006, as determined by the department under AS 43.55.020(f). 27 * Sec. 20. AS 43.55.011(k) is amended to read: 28 (k) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND 29 (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet 30 sedimentary basin may not exceed 31 (1) for a lease or property that first commenced commercial
01 production of oil before April 1, 2006, the product obtained by multiplying (A) the 02 amount of taxable oil produced during the calendar year from the lease or property, 03 times (B) the average rate of tax that was imposed under this chapter for [ON] 04 taxable oil produced from the lease or property for the 12-month period ending on 05 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 06 the point of production of the taxable oil produced from the lease or property during 07 the 12-month period ending on March 31, 2006, by the total amount of that oil; 08 (2) for a lease or property that first commences commercial 09 production of oil after March 31, 2006, the product obtained by multiplying (A) the 10 amount of taxable oil produced during the calendar year from the lease or property, 11 times (B) the average rate of tax that was imposed under this chapter for [ON] 12 taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin 13 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 14 value for oil produced and delivered in the Cook Inlet area for the 12-month period 15 ending on March 31, 2006, as determined by the department under AS 43.55.020(f). 16 * Sec. 21. AS 43.55.011(m) is amended to read: 17 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 18 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 19 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 20 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 21 basin and that are available to be applied against a tax levied by (e) of this section for 22 [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin 23 during a calendar year may be applied only against the tax levied by (e) of this section 24 for [ON] that gas. The amount by which the amount of tax credits that are allocated 25 to gas produced from leases or properties in the Cook Inlet sedimentary basin and that 26 the producer would otherwise be allowed to use for a later calendar year or transfer to 27 another person exceeds the amount of tax credits whose application would reduce the 28 tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the 29 amount of excess tax credits, and the excess tax credits are subject to the following: 30 (1) for each lease or property for which a limitation under (j) or (k) of 31 this section on the tax levied by (e) [AND (g)] of this section has the effect of
01 reducing the producer's tax below the amount of tax that would be levied in the 02 absence of that limitation, the producer shall calculate the amount of that reduction; 03 (2) the producer shall calculate the total of the reductions calculated 04 under (1) of this subsection for all affected leases or properties; however, for a 05 calendar year for which the producer has Cook Inlet excess adjusted lease 06 expenditures under AS 43.55.160(h), the amount calculated under this 07 paragraph is deemed to be 08 (A) zero, if the amount calculated under AS 43.55.160(i)(2) 09 is greater than or equal to the amount calculated under 10 AS 43.55.160(i)(4); 11 (B) the remainder calculated by subtracting the amount 12 calculated under AS 43.55.160(i)(2) from the amount calculated under 13 AS 43.55.160(i)(4), if the amount calculated under AS 43.55.160(i)(2) is 14 less than the amount calculated under AS 43.55.160(i)(4); 15 (3) the producer shall reduce the amount of excess tax credits by the 16 total calculated under (2) of this subsection, but not to less than zero; 17 (4) any amount of excess tax credits remaining after reduction under 18 (3) of this subsection may be used for a later calendar year, transferred to another 19 person, or applied against a tax levied for [ON] oil or gas produced from a lease or 20 property located anywhere in the state to the extent otherwise allowed under 21 applicable law governing the tax credits. 22 * Sec. 22. AS 43.55.020(a) is repealed and reenacted to read: 23 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) or (i) 24 shall pay the tax as follows: 25 (1) an installment payment of the estimated tax levied by 26 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 27 month of the calendar year on the last day of the following month; except as 28 otherwise provided under (2) of this subsection, the amount of the installment 29 payment is the sum of the following amounts, less 1/12 of the tax credits that are 30 allowed by law to be applied against the tax levied by AS 43.55.011(e) for the 31 calendar year, but the amount of the installment payment may not be less than zero:
01 (A) for oil and gas produced from leases or properties in the 02 state outside the Cook Inlet sedimentary basin other than leases or properties 03 subject to AS 43.55.011(f), the greater of 04 (i) zero; or 05 (ii) 25 percent of the remainder obtained by subtracting 06 1/12 of the producer's adjusted lease expenditures for the calendar year 07 of production under AS 43.55.165 and 43.55.170 that are deductible 08 for the leases or properties under AS 43.55.160 from the gross value at 09 the point of production of the oil and gas produced from the leases or 10 properties during the month for which the installment payment is 11 calculated; 12 (B) for oil and gas produced from leases or properties subject 13 to AS 43.55.011(f), the total for all units or nonunitized reservoirs of the 14 amount for each unit or nonunitized reservoir that is the greatest of 15 (i) zero; 16 (ii) 10 percent of the gross value at the point of 17 production of the oil and gas produced from all leases or properties in 18 the unit or nonunitized reservoir; or 19 (iii) 25 percent of the remainder obtained by 20 subtracting 1/12 of the producer's adjusted lease expenditures for the 21 calendar year of production under AS 43.55.165 and 43.55.170 that are 22 deductible for those leases or properties under AS 43.55.160 from the 23 gross value at the point of production of the oil and gas produced from 24 those leases or properties during the month for which the installment 25 payment is calculated; 26 (C) for oil and gas produced from each lease or property in the 27 Cook Inlet sedimentary basin, the greater of 28 (i) zero; or 29 (ii) 25 percent of the remainder obtained by subtracting 30 1/12 of the producer's adjusted lease expenditures for the calendar year 31 of production under AS 43.55.165 and 43.55.170 that are deductible
01 under AS 43.55.160 for oil or gas, respectively, produced from the 02 lease or property from the gross value at the point of production of the 03 oil or gas, respectively, produced from the lease or property during the 04 month for which the installment payment is calculated; 05 (2) an amount calculated under (1)(C) of this subsection for oil or gas 06 produced from a lease or property in the Cook Inlet sedimentary basin may not 07 exceed the product obtained by carrying out the calculation set out in 08 AS 43.55.011(j)(1) or (2), as applicable, for gas or set out in AS 43.55.011(k)(1) or 09 (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A), as 10 applicable, the amount of taxable gas produced during the month for the amount of 11 taxable gas produced during the calendar year and substituting in 12 AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of taxable oil produced 13 during the month for the amount of taxable oil produced during the calendar year; 14 (3) an installment payment of the estimated tax levied by 15 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 16 on the last day of the following month; the amount of the installment payment is the 17 sum of 18 (A) the applicable tax rate for oil provided under 19 AS 43.55.011(i), multiplied by the gross value at the point of production of 20 the oil taxable under AS 43.55.011(i) and produced from the lease or property 21 during the month; and 22 (B) the applicable tax rate for gas provided under 23 AS 43.55.011(i), multiplied by the gross value at the point of production of 24 the gas taxable under AS 43.55.011(i) and produced from the lease or property 25 during the month; 26 (4) any amount of tax levied by AS 43.55.011(e) and (i), net of any 27 credits applied as allowed by law, that exceeds the total of the amounts due as 28 installment payments of estimated tax is due on March 31 of the year following the 29 calendar year of production. 30 * Sec. 23. AS 43.55.020(d) is amended to read: 31 (d) In making settlement with the royalty owner for oil and gas that is taxable
01 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 02 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 03 time the tax becomes due to the amount of the tax paid. If the total deductions of 04 installment payments of estimated tax for a calendar year exceed the actual tax for 05 that calendar year, the producer shall, before April 1 of the following year, refund the 06 excess to the royalty owner. Unless otherwise agreed between the producer and the 07 royalty owner, the amount of the tax paid under AS 43.55.011(e) [AS 43.55.011(e) - 08 (g)] on taxable royalty oil and gas for a calendar year, other than oil and gas the 09 ownership or right to which constitutes a landowner's royalty interest, is considered to 10 be the gross value at the point of production of the taxable royalty oil and gas 11 produced during the calendar year multiplied by a figure that is a quotient, in which 12 (1) the numerator is the producer's total tax liability under 13 AS 43.55.011(e) [AS 43.55.011(e) - (g)] for the calendar year of production; and 14 (2) the denominator is the total gross value at the point of production 15 of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(e) - (g)] produced by 16 the producer from all leases and properties in the state during the calendar year. 17 * Sec. 24. AS 43.55.020(g) is amended to read: 18 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 19 amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this 20 section that is not paid when due bears interest (1) at the rate provided for an 21 underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, 22 compounded daily, from the date the installment payment is due until [THE] 23 March 31 of the year following the calendar year of production [DESCRIBED IN 24 AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after 25 that March 31. Interest accrued under (1) of this subsection that remains unpaid after 26 that March 31 is treated as an addition to tax that bears interest under (2) of this 27 subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is 28 not paid when due bears interest as provided for a delinquent tax under AS 43.05.225. 29 * Sec. 25. AS 43.55.020(h) is amended to read: 30 (h) Notwithstanding any contrary provision of AS 43.05.280, 31 (1) an overpayment of an installment payment required under (a)(1) -
01 (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment 02 under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from 03 the later of the date the installment payment is due or the date the overpayment is 04 made, until the earlier of 05 (A) the date it is refunded or is applied to an underpayment; [,] 06 or 07 (B) [THE] March 31 of the year following the calendar year 08 of production [DESCRIBED IN AS 43.55.030(a)]; 09 (2) except as provided under (1) of this subsection, interest with 10 respect to an overpayment is allowed only on any net overpayment of the payments 11 required under (a) of this section that remains after the later of [THE] March 31 of 12 the year following the calendar year of production [DESCRIBED IN 13 AS 43.55.030(a)] or the date that the statement required under AS 43.55.030(a) is 14 filed; 15 (3) interest is allowed under (2) of this subsection only from a date 16 that is 90 days after the later of [THE] March 31 of the year following the calendar 17 year of production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement 18 required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment 19 was refunded within the 90-day period; 20 (4) interest under (2) and (3) of this subsection is paid at the rate and 21 in the manner provided in AS 43.05.225(1). 22 * Sec. 26. AS 43.55.023(a) is amended to read: 23 (a) A producer or explorer may take a tax credit for a qualified capital 24 expenditure as follows: 25 (1) notwithstanding that a qualified capital expenditure may be a 26 deductible lease expenditure for purposes of calculating the production tax value of 27 oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 28 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 29 explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a 30 tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of 31 20 percent of that expenditure; however, not more than half of the tax credit may
01 be applied for a single calendar year; 02 (2) a producer or explorer may take a credit for a qualified capital 03 expenditure incurred in connection with geological or geophysical exploration or in 04 connection with an exploration well only if the producer or explorer [PROVIDES TO 05 THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER 06 AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS 07 SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN 08 AGREEMENT] 09 (A) agrees, in writing, to the applicable provisions of 10 AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL 11 RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER 12 COMPLETION OF THE GEOLOGICAL OR GEOPHYSICAL DATA 13 PROCESSING OR COMPLETION OF THE WELL, OR 30 DAYS AFTER 14 THE STATEMENT IS FILED, OF THE DATE OF COMPLETION AND TO 15 SUBMIT A REPORT TO THAT DEPARTMENT DESCRIBING THE 16 PROCESSING SEQUENCE AND PROVIDE A LIST OF DATA SETS 17 AVAILABLE]; 18 (B) if more than one explorer holds an interest in a well, 19 obtains each explorer's written agreement that the explorer will not make 20 the request described in AS 43.55.025(f)(2)(D); and 21 (C) submits [TO PROVIDE] to the Department of Natural 22 Resources all data that would be required to be submitted under 23 AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A 24 REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND 25 REPORTS IDENTIFIED IN (A) OF THIS PARAGRAPH]; 26 (3) a tax credit for a qualified capital expenditure to explore for, 27 develop, or produce oil or gas deposits located within a unit or nonunitized 28 reservoir subject to AS 43.55.011(f) may not be applied against a tax for oil or 29 gas produced from a lease or property outside a unit or nonunitized reservoir 30 subject to AS 43.55.011(f) 31 [(C) THAT, NOTWITHSTANDING ANY PROVISION OF
01 AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD 02 CONFIDENTIAL THE INFORMATION PROVIDED TO THAT 03 DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS 04 FOLLOWING THE COMPLETION DATE, AFTER WHICH THE 05 DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION 06 AFTER 30 DAYS' PUBLIC NOTICE]. 07 * Sec. 27. AS 43.55.023(b) is amended to read: 08 (b) A producer or explorer may elect to take a tax credit in the amount of 25 09 [20] percent of a carried-forward annual loss. A credit under this subsection may be 10 applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this 11 subsection, except as limited by AS 43.55.160(h), a carried-forward annual loss is 12 the amount of a producer's or explorer's adjusted lease expenditures under 13 AS 43.55.165 and 43.55.170 for a previous calendar year that was not deductible in 14 calculating production tax values for that calendar year under AS 43.55.160. 15 However, a carried-forward annual loss may not include an adjusted lease 16 expenditure to explore for, develop, or produce oil or gas deposits located within 17 a unit or nonunitized reservoir subject to AS 43.55.011(f) [AS 43.55.160(b) AND 18 (e)]. 19 * Sec. 28. AS 43.55.023(d) is amended to read: 20 (d) A [EXCEPT AS LIMITED BY (i) OF THIS SECTION, A] person that is 21 entitled to take a tax credit under this section, other than a tax credit described in 22 (a)(3) of this section, and that wishes to transfer the unused credit to another person 23 or obtain a cash payment under AS 43.55.028 may apply to the department for [A] 24 transferable tax credit certificates [CERTIFICATE]. An application under this 25 subsection must be in a form prescribed by the department and must include 26 supporting information and documentation that the department reasonably requires. 27 The department shall grant or deny an application, or grant an application as to a 28 lesser amount than that claimed and deny it as to the excess, not later than 120 [60] 29 days after the latest of (1) March 31 of the year following the calendar year in which 30 the qualified capital expenditure or carried-forward annual loss for which the credit is 31 claimed was incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER
01 AS 43.55.030(a) TO FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE 02 YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED 03 CAPITAL EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR 04 WHICH THE CREDIT IS CLAIMED WAS INCURRED,] the date the statement 05 required under AS 43.55.030(a) or (e) was filed for the calendar year in which 06 the qualified capital expenditure or carried-forward annual loss for which the 07 credit is claimed was incurred; or (3) the date the application was received by the 08 department. If, based on the information then available to it, the department is 09 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 10 the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for 11 half of the amount of the credit. The credit shown on one of the two certificates is 12 available for immediate use. The credit shown on the second of the two 13 certificates may not be applied against a tax for a calendar year earlier than the 14 calendar year following the calendar year in which the certificate is issued, and 15 the certificate must contain a conspicuous statement to that effect. A certificate 16 issued under this subsection does not expire. 17 * Sec. 29. AS 43.55.023(e) is amended to read: 18 (e) A person to which a transferable tax credit certificate is issued under (d) 19 of this section may transfer the certificate to another person, and a transferee may 20 further transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)] 21 of this section, and notwithstanding any action the department may take with respect 22 to the applicant under (g) of this section, the owner of a certificate may apply the 23 credit or a portion of the credit shown on the certificate only against a tax levied by 24 [DUE UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax 25 credit certificate may not be applied to reduce a transferee's total tax liability [DUE] 26 under AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less 27 than 80 percent of the tax that would otherwise be due without applying that credit. 28 Any portion of a credit not used under this subsection may be applied in a later 29 period. 30 * Sec. 30. AS 43.55.023(g) is amended to read: 31 (g) The issuance of a transferable tax credit certificate under (d) of this
01 section or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under 02 AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later 03 audit a tax credit claim to which the certificate relates or to adjust the claim if the 04 department determines, as a result of the audit, that the applicant was not entitled to 05 the amount of the credit for which the certificate was issued. The tax liability of the 06 applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the 07 amount of the credit that exceeds that to which the applicant was entitled, or the 08 applicant's available valid outstanding credits applicable against the tax levied by 09 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is 10 increased under this subsection, the increase bears interest under AS 43.05.225 from 11 the date the transferable tax credit certificate was issued. For purposes of this 12 subsection, an applicant that is an explorer is considered a producer subject to the tax 13 levied by AS 43.55.011(e). 14 * Sec. 31. AS 43.55.023 is amended by adding a new subsection to read: 15 (l) An entity that is exempt from taxation under this chapter may not apply 16 for a transferable tax credit certificate. 17 * Sec. 32. AS 43.55.024(a) is amended to read: 18 (a) For a calendar year for which a producer's tax liability under 19 AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside 20 the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North 21 latitude, exceeds zero before application of any credits under this chapter, a producer 22 that is qualified under (e) of this section may apply a tax credit against that liability of 23 not more than $6,000,000. 24 * Sec. 33. AS 43.55.024(c) is amended to read: 25 (c) For a calendar year for which a producer's tax liability under 26 AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this 27 chapter, other than a credit under (a) of this section but after application of any credit 28 under (a) of this section, a producer that is qualified under (e) of this section and 29 whose average amount of oil and gas produced a day and taxable under 30 AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may 31 apply a tax credit under this subsection against that liability. A producer whose
01 average amount of oil and gas produced a day and taxable under AS 43.55.011(e) 02 [OR (f)] is 03 (1) not more than 50,000 BTU equivalent barrels may apply a tax 04 credit of not more than $12,000,000 for the calendar year; 05 (2) more than 50,000 and less than 100,000 BTU equivalent barrels 06 may apply a tax credit of not more than $12,000,000 multiplied by the following 07 fraction for the calendar year: 08 1 - [2 X (AP - 50,000)] ÷ 100,000 09 where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR 10 (f)], produced a day during the calendar year in BTU equivalent barrels. 11 * Sec. 34. AS 43.55.024(e) is amended to read: 12 (e) On written application by a producer that includes any information the 13 department may require, the department shall determine whether the producer 14 qualifies for a calendar year under this section. To qualify under this section, a 15 producer must demonstrate that its operation in the state or its ownership of an 16 interest in a lease or property in the state as a distinct producer would not result in the 17 division among multiple producer entities of any production tax liability under 18 AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a 19 single producer if the tax credit provisions of (a) or (c) of this section did not exist. 20 * Sec. 35. AS 43.55.024(g) is amended to read: 21 (g) A tax credit authorized by (c) of this section may not be applied to reduce 22 a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below 23 zero. 24 * Sec. 36. AS 43.55.025(a) is amended to read: 25 (a) Subject to the terms and conditions of this section, a credit against the 26 production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for 27 exploration expenditures that qualify under (b) of this section in an amount equal to 28 one of the following: 29 (1) 20 percent of the total exploration expenditures that qualify only 30 under (b) and (c) of this section; 31 (2) 20 percent of the total exploration expenditures [FOR WORK
01 PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of 02 this section; 03 (3) 40 percent of the total exploration expenditures that qualify under 04 (b), (c), and (d) of this section; or 05 (4) 40 percent of the total exploration expenditures that qualify only 06 under (b) and (e) of this section. 07 * Sec. 37. AS 43.55.025(b) is amended to read: 08 (b) To qualify for the production tax credit under (a) of this section, an 09 exploration expenditure must be incurred for work performed [ON OR] after 10 December 31, 2007 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN 11 EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE 12 INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and 13 (1) may be for seismic or other geophysical exploration costs not 14 connected with a specific well; 15 (2) if for an exploration well, 16 (A) must be incurred by an explorer that holds an interest in 17 the exploration well for which the production tax credit is claimed; 18 (B) may be for either a [AN OIL OR GAS DISCOVERY] 19 well that encounters an oil or gas deposit or a dry hole; [AND] 20 (C) must be for a well that has been completed or 21 abandoned at the time the explorer claims the tax credit under (f) of this 22 section; and 23 (D) must be for goods, services, or rentals of personal 24 property reasonably required for the surface preparation, drilling, casing, 25 cementing, and logging of an exploration well, and, in the case of a dry hole, 26 for the expenses required for abandonment if the well is abandoned within 18 27 months after the date the well was spudded; 28 (3) may not be for testing, stimulation, or completion costs; 29 administration, supervision, engineering, or lease operating costs; geological or 30 management costs; community relations or environmental costs; bonuses, taxes, or 31 other payments to governments related to the well; costs arising from gross
01 negligence or violation of health, safety, or environmental statutes or 02 regulations; or other costs that are generally recognized as indirect costs or financing 03 costs; and 04 (4) may not be incurred for an exploration well or seismic exploration 05 that is included in a plan of exploration or a plan of development for any unit on 06 May 13, 2003. 07 * Sec. 38. AS 43.55.025(c) is repealed and reenacted to read: 08 (c) To be eligible for the 20 percent production tax credit authorized by (a)(1) 09 of this section or the 40 percent production tax credit authorized by (a)(3) of this 10 section, exploration expenditures must 11 (1) qualify under (b) of this section; and 12 (2) be for an exploration well, subject to the following: 13 (A) before spudding the well, (i) the explorer shall submit to 14 the commissioner of natural resources the information necessary to determine 15 whether the geological objective of the well is a potential oil or gas trap that is 16 distinctly separate from any trap that has been tested by a preexisting well; 17 and (ii) the commissioner of natural resources must make an affirmative 18 determination on that question; the commissioner of natural resources shall 19 decide whether to make that determination within 60 days after receiving all 20 the necessary information from the explorer and based on the information 21 received and on other information the commissioner of natural resources may 22 consider relevant; 23 (B) for an exploration well other than a well to explore a Cook 24 Inlet prospect, the well must be located and drilled in such a manner that the 25 bottom hole is located not less than three miles away from the bottom hole of 26 a preexisting well drilled for oil or gas, irrespective of whether the preexisting 27 well has been completed, suspended, or abandoned; 28 (C) after completion or abandonment of the exploration well, 29 the commissioner of natural resources must determine that the well adequately 30 achieved the explorer's stated geological objective. 31 * Sec. 39. AS 43.55.025(f) is amended to read:
01 (f) For a production tax credit under this section, 02 (1) an explorer shall, in a form prescribed by the department and, 03 except for a credit under (l) of this section, within six months of the completion of 04 the exploration activity, claim the credit and submit information sufficient to 05 demonstrate to the department's satisfaction that the claimed exploration expenditures 06 qualify under this section; 07 (2) an explorer shall agree, in writing, 08 (A) to notify the Department of Natural Resources, within 30 09 days after completion of seismic or geophysical data processing, completion 10 of [A] well drilling, or filing of a claim for credit, whichever is the latest, for 11 which exploration costs are claimed, of the date of completion and submit a 12 report to that department describing the processing sequence and providing a 13 list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN 14 EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES 15 FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE 16 MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN 17 ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS 18 SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION 19 NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES 20 TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT 21 THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE 22 EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL 23 RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE 24 SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE 25 EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60 26 DAYS;] 27 (B) to provide to the Department of Natural Resources, within 28 30 days after the date of a request, unless a longer period is provided by the 29 Department of Natural Resources, specific data sets, ancillary data, and 30 reports identified in (A) of this paragraph; in this subparagraph, 31 (i) a seismic or geophysical data set includes the
01 data for an entire seismic survey, irrespective of whether the 02 survey area covers nonstate land in addition to state land or land 03 in a unit in addition to land outside a unit; 04 (ii) well data include all derivative products, results, 05 and copies of data collected and data analyses for the well; well 06 logs; sample analyses; geophysical and velocity data including 07 vertical seismic profiles and check shot surveys; and tangible 08 material including, for each whole core collected, a lengthwise cut 09 slab that is at least 1/3 of the whole core volume, and 10 representative samples, as specified by the Department of Natural 11 Resources, of other gaseous, liquid, or solid material collected 12 from drilling or testing the well; 13 (C) that, notwithstanding any provision of AS 38, information 14 provided under this paragraph will be held confidential by the Department of 15 Natural Resources 16 (i) in the case of well data, until the expiration of the 17 24-month period of confidentiality described in AS 31.05.035(c), 18 without extension, after which the Department of Natural 19 Resources [FOR 10 YEARS FOLLOWING THE COMPLETION 20 DATE, AT WHICH TIME THAT DEPARTMENT] will release the 21 information after 30 days' public notice; 22 (ii) in the case of seismic or other geophysical data, 23 other than seismic data acquired by seismic exploration subject to 24 (l) of this section, for 10 years following the completion date, at 25 which time the Department of Natural Resources will release the 26 information after 30 days' public notice; 27 (iii) in the case of seismic data obtained by seismic 28 exploration subject to (l) of this section, only until the expiration of 29 30 days' public notice issued on or after the date the production 30 tax credit certificates are issued under (5) of this subsection; and 31 (D) that, in the case of well data, the explorer will not make
01 a request under AS 31.05.035(c) that the commissioner of natural 02 resources keep the data confidential for longer than the 24-month period 03 of confidentiality described in AS 31.05.035(c); 04 (3) if more than one explorer holds an interest in a well or seismic 05 exploration, 06 (A) each explorer may claim an amount of credit that is 07 proportional to the explorer's cost incurred; 08 (B) in the case of a well, each explorer holding an interest 09 in the well shall agree, in writing, that the explorer will not make the 10 request described in (2)(D) of this subsection; 11 (4) the department may exercise the full extent of its powers as though 12 the explorer were a taxpayer under this title, in order to verify that the claimed 13 expenditures are qualified exploration expenditures under this section; and 14 (5) if the department is satisfied that the explorer's claimed 15 expenditures are qualified under this section and that all data required to be 16 submitted under this section have been submitted, the department shall issue to the 17 explorer two [A] production tax credit certificates, each [CERTIFICATE] for half of 18 the amount of the credit to be allowed against production taxes levied by 19 AS 43.55.011(e); the credit shown on one of the two certificates is available for 20 immediate use; the credit shown on the second of the two certificates may not be 21 applied against a tax for a calendar year earlier than the calendar year following 22 the calendar year in which the certificate is issued, and the certificate must 23 contain a conspicuous statement to that effect; notwithstanding any contrary 24 provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is 25 not confidential: 26 (A) the explorer's name; 27 (B) the date of the application; 28 (C) the location of the well or seismic exploration; 29 (D) the date of the department's issuance of the certificate; 30 and 31 (E) the date on which the information required to be
01 submitted under this section will be released [DUE UNDER 02 AS 43.55.011(e) OR (f)]. 03 * Sec. 40. AS 43.55.025(g) is amended to read: 04 (g) An explorer, other than an entity that is exempt from taxation under 05 this chapter, may transfer, convey, or sell its production tax credit certificate to any 06 person, and any person who receives a production tax credit certificate may also 07 transfer, convey, or sell the certificate. 08 * Sec. 41. AS 43.55.025(h) is amended to read: 09 (h) A producer that purchases a production tax credit certificate may apply 10 the credits against its production tax liability under AS 43.55.011(e) [OR (f)]. 11 Regardless of the price the producer paid for the certificate, the producer may receive 12 a credit against its production tax liability for the full amount of the credit, but for not 13 more than the amount for which the certificate is issued. A production tax credit 14 allowed under this section may not be applied more than once. 15 * Sec. 42. AS 43.55.025(i) is repealed and reenacted to read: 16 (i) For a production tax credit under this section, 17 (1) a credit may not be applied to reduce a taxpayer's tax liability 18 under AS 43.55.011(e) below zero for a calendar year; and 19 (2) an amount of the production tax credit in excess of the amount that 20 may be applied for a calendar year under this subsection may be carried forward and 21 applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later 22 calendar years. 23 * Sec. 43. AS 43.55.025(k) is amended by adding a new paragraph to read: 24 (4) "preexisting well" means a well that was spudded more than 540 25 days but less than 35 years before the date on which the exploration well to which it 26 is compared is spudded. 27 * Sec. 44. AS 43.55.025 is amended by adding a new subsection to read: 28 (l) Subject to the terms and conditions of this section, if a claim is filed under 29 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 30 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 31 expenditure under this subsection incurred for seismic exploration performed before
01 July 1, 2003. To be eligible under this subsection, an expenditure must 02 (1) have been for seismic exploration that 03 (A) obtained data that the commissioner of natural resources 04 considers to be in the best interest of the state to acquire for public 05 distribution; and 06 (B) was conducted outside the boundaries of a production unit; 07 however, the amount of the expenditure that is otherwise eligible under this 08 section is reduced proportionately by the portion of the seismic exploration 09 activity that crossed into a production unit; and 10 (2) qualify under (b)(3) of this section. 11 * Sec. 45. AS 43.55 is amended by adding a new section to read: 12 Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of 13 tax credit certificates. (a) The oil and gas tax credit fund is established as a separate 14 fund of the state. The purpose of the fund is to purchase certain transferable tax credit 15 certificates issued under AS 43.55.023 and certain production tax credit certificates 16 issued under AS 43.55.025. 17 (b) The oil and gas tax credit fund consists of 18 (1) money appropriated to the fund, including any appropriation of the 19 percentage provided under (c) of this section of all revenue from taxes levied by 20 AS 43.55.011 that is not required to be deposited in the constitutional budget reserve 21 fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and 22 (2) earnings on the fund. 23 (c) The applicable percentage for a fiscal year under (b)(1) of this section is 24 determined with reference to the average price or value forecast by the department for 25 Alaska North Slope oil sold or otherwise disposed of on the United States West Coast 26 during the fiscal year for which the appropriation of revenue from taxes levied by 27 AS 43.55.011 is made. If that forecast is 28 (1) $60 a barrel or higher, the applicable percentage is 10 percent; 29 (2) less than $60 a barrel, the applicable percentage is 15 percent. 30 (d) The department shall manage the fund. 31 (e) The department may, on the written application of the person to whom a
01 transferable tax credit certificate has been issued under AS 43.55.023(d) or a 02 production tax credit certificate has been issued under AS 43.55.025(f), use available 03 money in the oil and gas tax credit fund to purchase, in whole or in part, the 04 certificate if the department finds that 05 (1) the calendar year of the purchase is not earlier than the first 06 calendar year for which the credit shown on the certificate would otherwise be 07 allowed to be applied against a tax; 08 (2) within 24 months after applying for the transferable tax credit 09 certificate or filing a claim for the production tax credit certificate, the applicant 10 incurred a qualified capital expenditure or was the successful bidder on a bid 11 submitted for a lease on state land under AS 38.05.180(f); 12 (3) the amount expended for the purchase would not exceed the total 13 of qualified capital expenditures and successful bids described in (2) of this 14 subsection that have not been the subject of a finding made under this paragraph for 15 purposes of a previous purchase of a certificate; 16 (4) the applicant does not have an outstanding liability to the state for 17 unpaid delinquent taxes under this title; 18 (5) the applicant's total tax liability under AS 43.55.011(e), after 19 application of all available tax credits, for the calendar year in which the application 20 is made is zero; 21 (6) the applicant's average amount of oil and gas taxable under 22 AS 43.55.011(e) and produced each day during the calendar year preceding the 23 calendar year in which the application is made was not more than 50,000 BTU 24 equivalent barrels; and 25 (7) the purchase is consistent with this section and regulations adopted 26 under this section. 27 (f) Money in the fund remaining at the end of a fiscal year does not lapse and 28 remains available for expenditure in successive fiscal years. 29 (g) The department may adopt regulations to carry out the purposes of this 30 section, including standards and procedures to allocate available money among 31 applications for purchases the total amount of which exceeds the amount of available
01 money in the fund. 02 (h) Nothing in this section creates a dedicated fund. 03 (i) In this section, "qualified capital expenditure" has the meaning given in 04 AS 43.55.023. 05 * Sec. 46. AS 43.55.030(a) is amended to read: 06 (a) A producer that produces oil or gas from a lease or property in the 07 state during a calendar year, whether or not any tax payment is due under 08 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 09 with the department on March 31 of the following year [FOLLOWING THE 10 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under 11 oath, in a form prescribed by the department, giving, with other information required, 12 the following: 13 (1) a description of each lease or property from which [THE] oil or 14 [AND] gas was [WERE] produced, by name, legal description, lease number, or 15 accounting codes assigned by the department; 16 (2) the names of the producer and, if different, the person paying the 17 tax, if any; 18 (3) the gross amount of oil and the gross amount of gas produced from 19 each lease or property, and the percentage of the gross amount of oil and gas owned 20 by the [EACH] producer [FOR WHOM THE TAX IS PAID]; 21 (4) the gross value at the point of production of the oil and of the gas 22 produced from each lease or property owned by the [EACH] producer and the costs 23 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 24 (5) the name of the first purchaser and the price received for the oil 25 and for the gas, unless relieved from this requirement in whole or in part by the 26 department; [AND] 27 (6) the producer's qualified capital expenditures, as defined in 28 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 29 CALCULATED] under AS 43.55.165, and adjustments or other payments or 30 credits under AS 43.55.170; 31 (7) the production tax values of the oil and gas under
01 AS 43.55.160; 02 (8) any claims for tax credits to be applied; and 03 (9) calculations showing the amounts, if any, that were or are due 04 under AS 43.55.020(a) and interest on any underpayment or overpayment 05 [AS 43.55.160 - 43.55.170]. 06 * Sec. 47. AS 43.55.030(d) is amended to read: 07 (d) Reports required under this section [BY OR ON BEHALF OF THE 08 PRODUCER] are delinquent the first day following the day the report is due. The 09 person required to file the report is liable for a penalty, as determined by the 10 department under standards adopted in regulation by the department, of not 11 more than $1,000 for each day the person fails to file the report at the time 12 required. The penalty is in addition to the penalties in AS 43.05.220 and 13 43.05.290 and is assessed, collected, and paid in the same manner as a tax 14 deficiency under this title. In this subsection, "report" includes a statement. 15 * Sec. 48. AS 43.55.030 is amended by adding new subsections to read: 16 (e) An explorer or producer that incurs a lease expenditure under 17 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 18 year but does not produce oil or gas from a lease or property in the state during the 19 calendar year shall file with the department on March 31 of the following year a 20 statement, under oath, in a form prescribed by the department, giving, with other 21 information required, the following: 22 (1) the producer's qualified capital expenditures, as defined in 23 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 24 payments or credits under AS 43.55.170; and 25 (2) if the explorer or producer receives a payment or credit under 26 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 27 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 28 (f) The department may require a producer, an explorer, or an operator of a 29 lease or property to file monthly reports, as applicable, of 30 (1) the amounts and gross value at the point of production of oil and 31 gas produced;
01 (2) transportation costs of the oil and gas; 02 (3) any unscheduled interruption of, or reduction in the rate of, oil or 03 gas production; 04 (4) lease expenditures and adjustments under AS 43.55.165 and 05 43.55.170; 06 (5) joint interest billings; 07 (6) contracts for the sale or transportation of oil or gas; 08 (7) information and calculations used in determining monthly 09 installment payments of estimated tax under AS 43.55.020(a); and 10 (8) other records and information the department considers necessary 11 for the administration of this chapter. 12 * Sec. 49. AS 43.55.040 is amended to read: 13 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 14 AS 43.05.405 - 43.05.499, the department may 15 (1) require a person engaged in production and the agent or employee 16 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 17 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 18 additional information that is considered by the department as necessary to compute 19 the amount of the tax; notwithstanding any contrary provision of law, the disclosure 20 of additional information under this paragraph to the producer obligated to pay the tax 21 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 22 under this paragraph that is otherwise required to be held confidential under 23 AS 40.25.100(a) or AS 43.05.230(a), the department shall 24 (A) provide the person that furnished the information a 25 reasonable opportunity to be heard regarding the proposed disclosure and the 26 conditions to be imposed under (B) of this paragraph; and 27 (B) impose appropriate conditions limiting 28 (i) access to the information to those legal counsel, 29 consultants, employees, officers, and agents of the producer who have 30 a need to know that information for the purpose of determining or 31 contesting the producer's tax obligation; and
01 (ii) the use of the information to use for that purpose; 02 (2) examine the books, records, and files of the [SUCH A] person; 03 (3) conduct hearings and compel the attendance of witnesses and the 04 production of books, records, and papers of any person; [AND] 05 (4) make an investigation or hold an inquiry that is considered 06 necessary to a disclosure of the facts as to 07 (A) the amount of production from any oil or gas location, or 08 of a company or other producer of oil or gas; and 09 (B) the rendition of the oil and gas for taxing purposes; 10 (5) require a producer, an explorer, or an operator of a lease or 11 property to file reports and copies of records that the department considers 12 necessary to forecast state revenue under this chapter; in the case of reports and 13 copies of records relating to proposed, expected, or approved unit expenditures 14 for a unit for which one or more working interest owners other than the 15 operator have authority to approve unit expenditures, the required reports and 16 copies of records are limited to those reports or copies of records that constitute 17 or disclose communications between the operator and the working interest 18 owners relating to unit budget matters; and 19 (6) assess against a person required under this section to file a 20 report, statement, or other document a penalty, as determined by the 21 department under standards adopted in regulation by the department, of not 22 more than $1,000 for each day the person fails to file the report, statement, or 23 other document at the time required; the penalty is in addition to the penalties in 24 AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the same 25 manner as a tax deficiency under this title. 26 * Sec. 50. AS 43.55 is amended by adding a new section to read: 27 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 28 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 29 assessed within six years after the latest return was filed. 30 (b) A decision of a regulatory agency, court, or other body with authority to 31 resolve disputes that results in a retroactive change to a lease expenditure, to an
01 adjustment to a lease expenditure, to costs of transportation, to sale price, to 02 prevailing value, or to consideration of quality differentials relating to the 03 commingling of oils has a corresponding effect, either an increase or decrease, as 04 applicable, on the production tax value of oil or gas or the amount or availability of a 05 tax credit as determined under this chapter. For purposes of this section, a change to a 06 lease expenditure includes a change in the categorization of a lease expenditure as a 07 qualified capital expenditure or as not a qualified capital expenditure. The producer 08 shall 09 (1) within 60 days after the change, notify the department in writing; 10 and 11 (2) within 120 days after the change, file amended returns covering all 12 periods affected by the change, unless the department agrees otherwise or a stay is in 13 place that affects the filing or payment, regardless of the pendency of appeals of the 14 decision. 15 (c) If an alteration in or modification of a producer's federal income tax return 16 or a recomputation of the producer's federal income tax or determination of 17 deficiency occurs that affects the amount of a tax imposed on the producer under this 18 chapter, the producer shall 19 (1) within 60 days after the final determination of the alteration, 20 modification, recomputation, or deficiency, notify the department in writing; and 21 (2) within 120 days after the final determination of the alteration, 22 modification, recomputation, or deficiency, file amended returns covering all affected 23 periods. 24 (d) In this section, 25 (1) "qualified capital expenditure" has the meaning given in 26 AS 43.55.023; 27 (2) "return" includes a report, a statement, and an amended return, 28 report, or statement. 29 * Sec. 51. AS 43.55.110 is amended by adding new subsections to read: 30 (e) The department may require that returns, statements, reports, notifications, 31 and applications filed under this chapter be filed electronically in a form and manner
01 approved or prescribed by the department. 02 (f) The department may require that payments required under this chapter be 03 made electronically in a form and manner approved or prescribed by the department. 04 (g) Notwithstanding AS 44.62, the department may issue, for the information 05 and guidance of producers, explorers, and other interested persons, advisory bulletins 06 stating the department's interpretation of provisions of this chapter and of regulations 07 adopted under this chapter. Unless otherwise provided by the department by 08 regulation, interpretations stated in the advisory bulletins are not binding on the 09 department or others. 10 * Sec. 52. AS 43.55.160(a) is repealed and reenacted to read: 11 (a) Except as provided in (b) of this section, for purposes of this chapter, the 12 production tax value of the taxable 13 (1) oil and gas produced during a calendar year from a lease or 14 property in the state outside the Cook Inlet sedimentary basin is the amount 15 calculated by deducting from the gross value at the point of production of the oil and 16 gas taxable under AS 43.55.011(e) and produced from the lease or property, 17 (A) the producer's lease expenditures for the calendar year 18 under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of 19 exploring for, developing, or producing oil or gas deposits located within the 20 lease or property; and 21 (B) if the remainder calculated under (A) of this paragraph is 22 greater than zero, the producer's lease expenditures for the calendar year under 23 AS 43.55.165, as adjusted under AS 43.55.170, that are allocated to the lease 24 or property under (e) - (g) of this section; 25 (2) oil produced during a calendar year from a lease or property in the 26 Cook Inlet sedimentary basin is the amount calculated by deducting from the gross 27 value at the point of production of the oil taxable under AS 43.55.011(e) and 28 produced from the lease or property the producer's lease expenditures for the calendar 29 year under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of exploring 30 for, developing, or producing oil deposits located within the lease or property; 31 (3) gas produced during a calendar year from a lease or property in the
01 Cook Inlet sedimentary basin is the amount calculated by deducting from the gross 02 value at the point of production of the gas taxable under AS 43.55.011(e) and 03 produced from the lease or property the producer's lease expenditures for the calendar 04 year under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of exploring 05 for, developing, or producing gas deposits located within the lease or property. 06 * Sec. 53. AS 43.55.160(b) is amended to read: 07 (b) A production tax value calculated under [(a) OF] this section may not be 08 less than zero. 09 * Sec. 54. AS 43.55.160(e) is repealed and reenacted to read: 10 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 11 (1) would otherwise be deductible by a producer under (a)(1)(A) of this section in 12 calculating a production tax value under (a)(1) of this section of oil and gas produced 13 from a lease or property for a calendar year but whose deduction would cause the 14 production tax value to be less than zero; (2) are the producer's costs incurred during 15 the calendar year of exploring for, developing, or producing oil or gas deposits 16 located within the producer's leases or properties in the state outside the Cook Inlet 17 sedimentary basin that do not produce oil or gas during the calendar year; or (3) are 18 the producer's costs incurred during the calendar year of exploring for oil or gas 19 deposits located within land in the state outside the Cook Inlet sedimentary basin in 20 which the producer does not own an operating right, operating interest, or working 21 interest must be allocated to, and deducted in calculating the producer's production 22 tax value of the oil and gas produced during the calendar year from, the producer's 23 other leases or properties, in accordance with the provisions of (f) and (g) of this 24 section, to the extent consistent with (b) of this section. Other than for a lease or 25 property subject to AS 43.55.011(f) and except as otherwise provided under (h) of 26 this section, any remaining adjusted lease expenditures in excess of what may be 27 deducted consistent with (b) of this section may be used to establish a carried-forward 28 annual loss under AS 43.55.023(b). 29 * Sec. 55. AS 43.55.160 is amended by adding new subsections to read: 30 (f) This subsection applies to adjusted lease expenditures required to be 31 allocated under (e) of this section that are the producer's costs of exploring for,
01 developing, or producing oil or gas deposits located within the producer's leases or 02 properties that include land north of 68 degrees North latitude or are the producer's 03 costs of exploring for oil or gas deposits located within land in the state north of 68 04 degrees North latitude in which the producer does not own an operating right, 05 operating interest, or working interest. To the extent consistent with (b) of this 06 section, adjusted lease expenditures under this subsection that are 07 (1) not costs of exploring for, developing, or producing oil or gas 08 deposits located within a lease or property subject to AS 43.55.011(f) must be 09 allocated to one or more leases or properties from which the producer produces oil or 10 gas during the calendar year that include land north of 68 degrees North latitude; 11 (2) costs of exploring for, developing, or producing oil or gas deposits 12 located within a lease or property subject to AS 43.55.011(f) must be allocated to one 13 or more other leases or properties from which the producer produces oil or gas during 14 the calendar year that are within the same unit or overlie the same nonunitized 15 reservoir. 16 (g) This subsection applies to adjusted lease expenditures required to be 17 allocated under (e) of this section that are the producer's costs of exploring for, 18 developing, or producing oil or gas deposits located within the producer's leases or 19 properties outside the Cook Inlet sedimentary basin and no part of which is north of 20 68 degrees North latitude or are the producer's costs of exploring for oil or gas 21 deposits located within land in the state outside the Cook Inlet sedimentary basin and 22 not north of 68 degrees North latitude in which the producer does not own an 23 operating right, operating interest, or working interest. To the extent consistent with 24 (b) of this section, adjusted lease expenditures under this subsection must be allocated 25 to one or more leases or properties that are outside the Cook Inlet sedimentary basin 26 and no part of which is north of 68 degrees North latitude from which the producer 27 produces oil or gas during the calendar year. 28 (h) For purposes of this section, Cook Inlet excess adjusted lease 29 expenditures for a calendar year are determined by adding (1) the adjusted lease 30 expenditures that would otherwise be deductible by a producer in calculating 31 production tax values under (a)(2) or (3) of this section for the calendar year but
01 whose deduction would cause a production tax value to be less than zero; (2) the 02 adjusted lease expenditures that are the producer's costs incurred during the calendar 03 year of exploring for, developing, or producing oil or gas deposits located within the 04 producer's leases or properties in the Cook Inlet sedimentary basin from which no oil 05 or gas is produced during the calendar year; and (3) the adjusted lease expenditures 06 that are the producer's costs incurred during the calendar year of exploring for oil or 07 gas deposits located within land in the Cook Inlet sedimentary basin in which the 08 producer does not own an operating right, operating interest, or working interest. For 09 a calendar year for which a limitation under AS 43.55.011(j) or (k) on the tax levied 10 by AS 43.55.011(e) would have the effect of reducing the producer's tax for oil or gas 11 produced from one or more leases or properties in the Cook Inlet sedimentary basin 12 below the amount of the tax that would be levied in the absence of that limitation, the 13 producer shall perform the calculations set out in (i) of this section. The amount, if 14 any, calculated under (i)(6) of this section is the only amount of Cook Inlet excess 15 adjusted lease expenditures that may be used to establish a carried-forward annual 16 loss under AS 43.55.023(b). 17 (i) A producer subject to (h) of this section shall perform the following 18 calculations: 19 (1) calculate the total amount of Cook Inlet excess adjusted lease 20 expenditures; 21 (2) multiply that total amount by 25 percent; 22 (3) calculate for each lease or property the amount by which a 23 limitation under AS 43.55.011(j) or (k) would reduce the amount of the producer's tax 24 levied by AS 43.55.011(e); 25 (4) calculate the total of the reductions calculated under (3) of this 26 subsection for all affected leases or properties; 27 (5) if the amount calculated under (2) of this subsection is greater than 28 the amount calculated under (4) of this subsection, subtract the latter from the former; 29 and 30 (6) multiply the amount, if any, calculated under (5) of this subsection 31 by four.
01 * Sec. 56. AS 43.55.165(a) is repealed and reenacted to read: 02 (a) For purposes of this chapter, a producer's lease expenditures for a calendar 03 year are 04 (1) costs, other than items listed in (e) of this section, that are 05 (A) incurred by the producer during the calendar year after 06 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 07 within the producer's leases or properties in the state or, in the case of land in 08 which the producer does not own an operating right, operating interest, or 09 working interest, to explore for oil or gas deposits within other land in the 10 state; and 11 (B) allowed by the department by regulation, based on the 12 department's determination that the costs satisfy the following three 13 requirements: 14 (i) the costs must be incurred upstream of the point of 15 production of oil and gas; 16 (ii) the costs must be ordinary and necessary costs of 17 exploring for, developing, or producing, as applicable, oil or gas 18 deposits; and 19 (iii) the costs must be direct costs of exploring for, 20 developing, or producing, as applicable, oil or gas deposits; and 21 (2) a reasonable allowance for that calendar year, as determined under 22 regulations adopted by the department, for overhead expenses that are directly related 23 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 24 * Sec. 57. AS 43.55.165(b) is amended to read: 25 (b) For purposes of (a) of this section, 26 (1) direct costs include 27 (A) an expenditure, when incurred, to acquire an item if the 28 acquisition cost is otherwise a direct cost, notwithstanding that the 29 expenditure may be required to be capitalized rather than treated as an 30 expense for financial accounting or federal income tax purposes; 31 (B) payments of or in lieu of property taxes, sales and use
01 taxes, motor fuel taxes, and excise taxes; 02 [(C) A REASONABLE ALLOWANCE, AS DETERMINED 03 UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR 04 OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR, 05 DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED 06 WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;] 07 (2) an activity does not need to be physically located on, near, or 08 within the premises of the lease or property within which an oil or gas deposit being 09 explored for, developed, or produced is located in order for the cost of the activity to 10 be a cost upstream of the point of production of the oil or gas; 11 (3) in determining whether costs are lease expenditures, the 12 department shall consider, among other factors, the 13 (A) typical industry practices and standards in the state 14 that determine the costs, other than items listed in (e) of this section, that 15 an operator is allowed to bill a producer that is not the operator, under 16 unit operating agreements or similar operating agreements that were in 17 effect before December 2, 2005, and were subject to negotiation with at 18 least one producer with substantial bargaining power, other than the 19 operator; and 20 (B) standards adopted by the Department of Natural 21 Resources that determine the costs, other than items listed in (e) of this 22 section, that a lessee is allowed to deduct from revenue in calculating net 23 profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E). 24 * Sec. 58. AS 43.55.165(e) is amended to read: 25 (e) For purposes of this section, lease expenditures do not include 26 (1) depreciation, depletion, or amortization; 27 (2) oil or gas royalty payments, production payments, lease profit 28 shares, or other payments or distributions of a share of oil or gas production, profit, or 29 revenue; 30 (3) taxes based on or measured by net income; 31 (4) interest or other financing charges or costs of raising equity or
01 debt capital; 02 (5) acquisition costs for a lease or property or exploration license; 03 (6) costs arising from fraud, wilful misconduct, [OR] gross 04 negligence, violation of law, or failure to comply with an obligation under a lease, 05 permit, or license issued by the state or federal government; 06 (7) fines or penalties imposed by law; 07 (8) costs of arbitration, litigation, or other dispute resolution activities 08 that involve the state or concern the rights or obligations among owners of interests 09 in, or rights to production from, one or more leases or properties or a unit; 10 (9) costs incurred in organizing a partnership, joint venture, or other 11 business entity or arrangement; 12 (10) amounts paid to indemnify the state; the exclusion provided by 13 this paragraph does not apply to the costs of obtaining insurance or a surety bond 14 from a third-party insurer or surety; 15 (11) surcharges levied under AS 43.55.201 or 43.55.300; 16 (12) for a transaction that is an internal transfer or is otherwise not an 17 arm's length transaction, expenditures incurred that are in excess of fair market value; 18 (13) an expenditure incurred to purchase an interest in any 19 corporation, partnership, limited liability company, business trust, or any other 20 business entity, whether or not the transaction is treated as an asset sale for federal 21 income tax purposes; 22 (14) a tax levied under AS 43.55.011; 23 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 24 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 25 structure, or for the restoration of a lease, field, unit, area, tract of land, body of 26 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 27 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 28 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 29 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 30 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 31 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY
01 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 02 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 03 OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL 04 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 05 OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 06 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 07 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 08 this paragraph if the dismantlement, removal, surrender, or abandonment for which 09 the cost is incurred is undertaken for the purpose of replacing, renovating, or 10 improving the facility, pipeline, well pad, platform, or other structure; [FOR THE 11 PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 12 (A) IN THE CASE OF OIL, ONE BARREL; 13 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;] 14 (16) costs incurred for containment, control, cleanup, or removal in 15 connection with any unpermitted release of oil or a hazardous substance and any 16 liability for damages imposed on the producer or explorer for that unpermitted 17 release; this paragraph does not apply to the cost of developing and maintaining an oil 18 discharge prevention and contingency plan under AS 46.04.030; 19 (17) costs incurred to satisfy a work commitment under an exploration 20 license under AS 38.05.132; 21 (18) that portion of expenditures, that would otherwise be qualified 22 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 23 calendar year that are less than the product of $0.30 multiplied by the total taxable 24 production from each lease or property, in BTU equivalent barrels, during that 25 calendar year, except that, when a portion of a calendar year is subject to this 26 provision, the expenditures and volumes shall be prorated within that calendar year; 27 (19) costs incurred for repair, replacement, or deferred 28 maintenance of a facility, a pipeline, a structure, or equipment, other than a well, 29 that results in or is undertaken in response to a failure, problem, or event that 30 results in an unscheduled interruption of, or reduction in the rate of, oil or gas 31 production; or costs incurred for repair, replacement, or deferred maintenance
01 of a facility, a pipeline, a structure, or equipment, other than a well, that is 02 undertaken in response to, or is otherwise associated with, an unpermitted 03 release of a hazardous substance or of gas; however, costs under this paragraph 04 that would otherwise constitute lease expenditures under (a) of this section may 05 be treated as lease expenditures if the department determines that the repair or 06 replacement is solely necessitated by an act of war, by an unanticipated grave 07 natural disaster or other natural phenomenon of an exceptional, inevitable, and 08 irresistible character, the effects of which could not have been prevented or 09 avoided by the exercise of due care or foresight, or by an intentional or negligent 10 act or omission of a third party, other than a party or its agents in privity of 11 contract with, or employed by, the producer or an operator acting for the 12 producer, but only if the producer or operator, as applicable, exercised due care 13 in operating and maintaining the facility, pipeline, structure, or equipment, and 14 took reasonable precautions against the act or omission of the third party and 15 against the consequences of the act or omission; in this paragraph, 16 (A) "costs incurred for repair, replacement, or deferred 17 maintenance of a facility, a pipeline, a structure, or equipment" includes 18 costs to dismantle and remove the facility, pipeline, structure, or 19 equipment that is being replaced; 20 (B) "hazardous substance" has the meaning given in 21 AS 46.03.826; 22 (C) "replacement" includes renovation or improvement; 23 (20) costs incurred to construct, acquire, or operate a refinery or 24 crude oil topping plant, regardless of whether the products of the refinery or 25 topping plant are used in oil or gas exploration, development, or production 26 operations; however, if a producer owns a refinery or crude oil topping plant 27 that is located on or near the premises of the producer's lease or property in the 28 state and that processes the producer's oil produced from that lease or property 29 into a product that the producer uses in the operation of the lease or property in 30 drilling for or producing oil or gas, the producer's lease expenditures include the 31 amount calculated by subtracting from the fair market value of the product used
01 the prevailing value, as determined under AS 43.55.020(f), of the oil that is 02 processed. 03 * Sec. 59. AS 43.55.165(h) is amended to read: 04 (h) The department shall adopt regulations that provide for reasonable 05 methods of allocating costs between oil and gas and between leases or properties in 06 those circumstances where an allocation of costs is required to determine [THE 07 DETERMINATION OF THE] lease expenditures that are costs of exploring for, 08 developing, or producing oil deposits or costs of exploring for, developing, or 09 producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of 10 exploring for, developing, or producing oil or gas deposits located within 11 [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or 12 properties [, REQUIRES AN ALLOCATION OF COSTS]. 13 * Sec. 60. AS 43.55.170(a) is amended to read: 14 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 15 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 16 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 17 be adjusted by subtracting payments or credits, other than tax credits, received by the 18 producer or by an operator acting for the producer for 19 (1) the use by another person of a production facility in which the 20 producer has an ownership interest or the management by the producer of a 21 production facility under a management agreement providing for the producer to 22 receive a management fee; 23 (2) a reimbursement or similar payment that offsets the producer's 24 lease expenditures, including an insurance recovery from a third-party insurer and a 25 payment from the state or federal government for reimbursement of the producer's 26 upstream costs, including costs for gathering, separating, cleaning, dehydration, 27 compressing, or other field handling associated with the production of oil or gas 28 upstream of the point of production; 29 (3) the sale or other transfer of 30 (A) an asset, including geological, geophysical, or well data or 31 interpretations, acquired by the producer as a result of a lease expenditure or
01 an expenditure that would be a lease expenditure if it were incurred after 02 March 31, 2006; for purposes of this subparagraph, 03 (i) if a producer removes from the state, for use outside 04 the state, an asset described in this subparagraph, the value of the asset 05 at the time it is removed is considered a payment received by the 06 producer for sale or transfer of the asset; 07 (ii) for a transaction that is an internal transfer or is 08 otherwise not an arm's length transaction, if the sale or transfer of the 09 asset is made for less than fair market value, the amount subtracted 10 must be the fair market value; and 11 (B) oil or gas 12 (i) that is not considered produced from a lease or 13 property under AS 43.55.020(e); and 14 (ii) the cost of acquiring which is a lease expenditure 15 incurred by the person that acquires the oil or gas. 16 * Sec. 61. AS 43.55 is amended by adding a new section to article 4 to read: 17 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 18 provision of AS 40.25.100, and regardless of whether the information is considered 19 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 20 particular returns or reports, the department may publish the following information 21 under this chapter, if aggregated among three or more producers or explorers, 22 showing by month or calendar year and by lease or property, unit, or area of the state: 23 (1) the amount of oil or gas production; 24 (2) the amount of taxes levied under this chapter or paid under this 25 chapter; 26 (3) the effective tax rates under this chapter; 27 (4) the gross value of oil or gas at the point of production; 28 (5) the transportation costs for oil or gas; 29 (6) qualified capital expenditures under AS 43.55.023(k); 30 (7) exploration expenditures under AS 43.55.025; 31 (8) production tax values of oil or gas under AS 43.55.160;
01 (9) lease expenditures under AS 43.55.165; 02 (10) adjustments to lease expenditures under AS 43.55.170; 03 (11) tax credits applicable or potentially applicable against taxes 04 levied by this chapter. 05 * Sec. 62. AS 43.55.900 is amended by adding new paragraphs to read: 06 (22) "nonunitized reservoir" means a pool that is not wholly within a 07 single unit; 08 (23) "pool" has the meaning given in AS 31.05.170; 09 (24) "producer" means an owner of an operating right, operating 10 interest, or working interest in a mineral interest in oil or gas; 11 (25) "unit" means a group of tracts of land that is 12 (A) subject to a cooperative or a unit plan of development or 13 operation that has been certified by the commissioner of natural resources 14 under AS 38.05.180(p); 15 (B) subject to a cooperative or a unit plan of development or 16 operation that has been certified by the United States Secretary of the Interior 17 under 30 U.S.C. 226(m); 18 (C) subject to an agreement of the owners of interests in the 19 tracts of land to validly integrate their interests to provide for the unitized 20 management, development, and operation of the tracts of land as a unit, within 21 the meaning of AS 31.05.110(a); or 22 (D) within the unit area of a unit created by order of the 23 Alaska Oil and Gas Conservation Commission under AS 31.05.110(b). 24 * Sec. 63. AS 43.55.023(f) is repealed. 25 * Sec. 64. AS 43.55.165(c) and 43.55.165(d) are repealed. 26 * Sec. 65. AS 43.55.011(l), 43.55.023(i), and 43.55.160(c) are repealed. 27 * Sec. 66. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 APPLICABILITY. (a) Sections 58, 60, and 64 of this Act apply to oil and gas 30 produced after March 31, 2006. 31 (b) Sections 15 - 25, 32 - 35, 41, 42, 44, 52 - 57, 59, and 65 of this Act apply to oil
01 and gas produced after December 31, 2007. 02 (c) Sections 26 - 29 of this Act apply to expenditures incurred after December 31, 03 2007, that are the basis of tax credits that may be claimed against taxes levied for oil and gas 04 produced after December 31, 2007. 05 (d) Section 30 of this Act applies to transferable tax credit certificates issued under 06 AS 43.55.023(d), as amended by sec. 28 of this Act, and to transferable tax credit certificates 07 issued under AS 43.55.023(d), in effect before January 1, 2008, for which a cash refund has 08 not been issued under AS 43.55.023(f) before January 1, 2008. 09 (e) Sections 36 - 39 and 43 of this Act apply to exploration expenditures incurred for 10 work performed after December 31, 2007, that are the basis of tax credits that may be 11 claimed against taxes levied for oil and gas produced after December 31, 2007. 12 (f) Sections 46 and 48 of this Act apply to statements and reports under 13 AS 43.55.030(a), as amended by sec. 46 of this Act, and AS 43.55.030(e) and (f), as added 14 by sec. 48 of this Act, required to be filed after December 31, 2007. 15 (g) AS 43.55.075(a), enacted by sec. 50 of this Act, applies to any tax liability under 16 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260 17 had not expired before the effective date of secs. 14 and 50 of this Act. 18 * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: ASSIGNMENT OF OIL AND GAS AUDITORS IN THE 21 DEPARTMENT OF REVENUE AND DEPARTMENT OF NATURAL RESOURCES. 22 Notwithstanding any contrary provision of law, employees employed as oil and gas auditors 23 performing production tax audits or as their immediate supervisors in the Department of 24 Revenue and employees employed as oil and gas auditors performing royalty audits, 25 including net profit share audits, or as their immediate supervisors in the Department of 26 Natural Resources are assigned to the exempt service in accordance with AS 39.25.110(42), 27 added by sec. 10 of this Act, and may not be included in the general government or 28 supervisory collective bargaining units of state employees except as provided in this section. 29 All oil and gas auditors performing production tax audits or royalty audits and their 30 immediate supervisors hired before the effective date of sec. 10 of this Act have the option of 31 (1) continuing in the general government or supervisory collective bargaining units and being
01 subject to their respective collective bargaining agreements; or (2) being removed from those 02 bargaining units. Those employees have 90 days from the effective date of sec. 10 of this Act 03 to exercise the option to continue in the collective bargaining units. The option taken under 04 this section by the employee is irrevocable. The employees choosing to be removed from 05 those bargaining units are removed after any notice period required by a collective 06 bargaining agreement. 07 * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 10 contrary provision of AS 44.62.240, 11 (1) if the Department of Revenue expressly designates in the regulation that 12 the regulation applies retroactively to that date, a regulation adopted by the Department of 13 Revenue to implement, interpret, make specific, or otherwise carry out 14 (A) secs. 31, 58, 60, and 64 of this Act may apply retroactively to 15 April 1, 2006; 16 (B) secs. 15 - 30, 32 - 39, 41 - 46, 48, 52 - 57, 59, 63, and 65 of this 17 Act may apply retroactively to January 1, 2008; 18 (2) a regulation adopted by the Department of Natural Resources to 19 implement, interpret, make specific, or otherwise carry out statutory provisions for the 20 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the 21 extent the regulation deals with the treatment of oil and gas production taxes in determining 22 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of 23 Natural Resources expressly designates in the regulation that the regulation applies 24 retroactively to that date. 25 * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 TRANSITION: PENDING APPLICATIONS. (a) Notwithstanding a contrary 28 provision of law, if an application made under AS 43.55.023(d), in effect before January 1, 29 2008, has not been granted or denied by the Department of Revenue before January 1, 2008, 30 the application is subject to the time period for the Department of Revenue's decision on the 31 application provided in AS 43.55.023(d), as amended by sec. 28 of this Act.
01 (b) If an application made under AS 43.55.023(f) is received by the Department of 02 Revenue before January 1, 2008, and is still outstanding on that date, the application is 03 considered to be an application under AS 43.55.028, enacted by sec. 45 of this Act. 04 * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 TRANSITION: REGULATIONS. The Department of Natural Resources and the 07 Department of Revenue may proceed to adopt regulations to implement this Act. The 08 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 09 effective date of the law implemented by the regulation. 10 * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 40 of 13 this Act is retroactive to July 1, 2003. 14 (b) Sections 31, 58, 60, 64, 66(g), and 68 of this Act are retroactive to April 1, 2006. 15 * Sec. 72. Sections 15 - 30, 32 - 39, 41 - 46, 48, 52 - 57, 59, 63, and 65 of this Act take 16 effect January 1, 2008. 17 * Sec. 73. Except as provided in sec. 72 of this Act, this Act takes effect immediately under 18 AS 01.10.070(c).