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CSSB 2001(JUD): "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; providing a production tax limit on certain gas used in the state; 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 audit managers; providing for civil penalties relating to oil and gas production tax payments; 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; identifying certain revenue from the production tax on oil and gas that may be appropriated to the budget reserve fund; making conforming amendments; and providing for an effective date."

00                      CS FOR SENATE BILL NO. 2001(JUD)                                                                   
01 "An Act relating to the production tax on oil and gas and to conservation surcharges on                                 
02 oil; providing a production tax limit on certain gas used in the state; relating to the                                 
03 issuance of advisory bulletins and the disclosure of certain information relating to the                                
04 production tax and the sharing between agencies of certain information relating to the                                  
05 production tax and to oil and gas or gas only leases; amending the State Personnel Act                                  
06 to place in the exempt service certain state oil and gas audit managers; providing for                                  
07 civil penalties relating to oil and gas production tax payments; establishing an oil and                                
08 gas tax credit fund and authorizing payment from that fund; providing for retroactive                                   
09 application of certain statutory and regulatory provisions relating to the production tax                               
10 on oil and gas and conservation surcharges on oil; identifying certain revenue from the                                 
11 production tax on oil and gas that may be appropriated to the budget reserve fund;                                      
12 making conforming amendments; and providing for an effective date."                                                     
01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
02    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
03 to read:                                                                                                                
04       LEGISLATIVE INTENT. It is the intent of the legislature that                                                      
05            (1)  provisions of this Act will ensure a fair and equitable means of assessing                              
06 and taxing the state's oil and gas resources, encourage the availability to the people of the                           
07 state of gas produced, transported, and consumed within the state;                                                      
08            (2)  the enactment of AS 43.55.075(b) in sec. 50 of this Act, relating to                                    
09 limitation of assessments for the production tax on oil and gas and conservation surcharges                             
10 on oil, confirms by clarification the long-standing interpretation of AS 43.05.260 by the                               
11 Department of Revenue; and                                                                                              
12            (3)  the amount of money received by the state as a result of the retroactivity                              
13 of certain provisions under sec. 72(b) of this Act that exceeds the amount that would have                              
14 been received if those provisions had not been retroactive will be appropriated to the budget                           
15 reserve fund (art. IX, sec. 17, Constitution of the State of Alaska).                                                   
16    * Sec. 2. AS 37.10 is amended by adding a new section to read:                                                     
17            Sec. 37.10.440. Appropriations to the budget reserve fund of production                                    
18       tax revenue. (a) By February 1 of each year, the Department of Revenue shall                                    
19       determine the amount of money received by the state for the general fund during the                               
20       immediately preceding calendar year from the tax levied under AS 43.55, as well as                                
21       the amount the state would have received that year from the tax levied at the tax rates                           
22       in AS 43.55.011(e) and (g) under the law in effect immediately before January 1,                                  
23       2007. If the amount received is greater than the amount that would have been                                      
24       received at the tax rates under the law in effect immediately before January 1, 2007,                             
25       the department shall report the difference between the two amounts to the legislature.                            
26            (b)  The legislature may appropriate 50 percent of the amount identified by the                              
27       Department of Revenue under (a) of this section to the budget reserve fund (art. IX,                              
28       sec. 17, Constitution of the State of Alaska).                                                                    
29            (c)  Nothing in this section requires that money be appropriated or creates a                                
30       dedicated fund.                                                                                                   
31    * Sec. 3. AS 38.05.035(a) is amended to read:                                                                      
01            (a)  The director shall                                                                                      
02                 (1)  have general charge and supervision of the division and may                                        
03       exercise the powers specifically delegated to the director; the director may employ                           
04       and fix the compensation of assistants and employees necessary for the operations of                              
05       the division; the director [AND] is the certifying officer of the division, with the                          
06       consent of the commissioner, and may approve vouchers for disbursements of money                                  
07       appropriated to the division;                                                                                     
08                 (2)  manage, inspect, and control state land and improvements on it                                     
09       belonging to the state and under the jurisdiction of the division;                                                
10                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
11       commissioner;                                                                                                     
12                 (4)  prescribe application procedures and practices for the sale, lease,                                
13       or other disposition of available land, resources, property, or interest in them;                                 
14                 (5)  prescribe fees or service charges, with the consent of the                                         
15       commissioner, for any public service rendered;                                                                    
16                 (6)  under the conditions and limitations imposed by law and the                                        
17       commissioner, issue deeds, leases, or other conveyances disposing of available land,                          
18       resources, property, or any interests in them;                                                                
19                 (7)  have jurisdiction over state land, except that land acquired by the                                
20       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
21       departments or agencies succeeding to their respective functions through foreclosure                              
22       or default; to this end, the director possesses the powers and, with the approval of the                      
23       commissioner, shall perform the duties necessary to protect the state's rights and                                
24       interest in state land, including the taking of all necessary action to protect and                               
25       enforce the state's contractual or other property rights;                                                         
26                 (8)  [REPEALED                                                                                          
27                 (9)]  maintain the [SUCH] records [AS] the commissioner considers                                   
28       necessary, administer oaths, and do all things incidental to the authority imposed; the                           
29       following records and files shall be kept confidential upon request of the person                                 
30       supplying the information:                                                                                        
31                      (A)  the name of the person nominating or applying for the                                         
01            sale, lease, or other disposal of land by competitive bidding;                                               
02                      (B)  before the announced time of opening, the names of the                                        
03            bidders and the amounts of the bids;                                                                         
04                      (C)  all geological, geophysical, and engineering data supplied,                                   
05            whether or not concerned with the extraction or development of natural                                       
06            resources;                                                                                                   
07                      (D)  except as provided in AS 38.05.036, cost data and                                             
08            financial information submitted in support of applications, bonds, leases, and                               
09            similar items;                                                                                               
10                      (E)  applications for rights-of-way or easements;                                                  
11                      (F)  requests for information or applications by public agencies                                   
12            for land that [WHICH] is being considered for use for a public purpose;                                  
13                 (9) [(10)]  account for the fees, licenses, taxes, or other money                                   
14       received in the administration of this chapter including the sale or leasing of land,                             
15       identify their source, and promptly transmit them to the proper fiscal department after                           
16       crediting them to the proper fund; receipts from land application filing fees and                                 
17       charges for copies of maps and records shall be deposited immediately in the general                              
18       fund of the state by the director;                                                                                
19                 (10) [(11)]  select and employ or obtain at reasonable compensation                                 
20       cadastral, appraisal, or other professional personnel the director considers necessary                            
21       for the proper operation of the division;                                                                         
22                 (11) [(12)]  be the certifying agent of the state to select, accept, and                            
23       secure by whatever action is necessary in the name of the state, by deed, sale, gift,                             
24       devise, judgment, operation of law, or other means any land, of whatever nature or                                
25       interest, available to the state; and be the certifying agent of the state, to select,                            
26       accept, or secure by whatever action is necessary in the name of the state any land, or                           
27       title or interest to land available, granted, or subject to being transferred to the state                        
28       for any purpose;                                                                                                  
29                 (12)  on request, furnish records, files, and other information                                     
30       related to the administration of AS 38.05.180 to the Department of Revenue for                                
31       use in forecasting state revenue under or administering AS 43.55, whether or not                              
01       those records, files, and other information are required to be kept confidential                              
02       under (8) of this subsection; in the case of records, files, or other information                             
03       required to be kept confidential under (8) of this subsection, the Department of                              
04       Revenue shall maintain the confidentiality that the Department of Natural                                     
05       Resources is required to extend to records, files, and other information under (8)                            
06       of this subsection                                                                                            
07                 [(13)  REPEALED                                                                                         
08                 (14)  REPEALED].                                                                                        
09    * Sec. 4. AS 38.05.036(b) is amended to read:                                                                      
10            (b)  The Department of Revenue may obtain from the department information                                    
11       relating to royalty and net profits payments and to exploration incentive credits under                           
12       this chapter or under AS 41.09, whether or not that information is confidential. The                              
13       Department of Revenue may use the information in carrying out its functions and                                   
14       responsibilities under AS 43, and shall hold that information confidential to the extent                          
15       required by an agreement with the department or by AS 38.05.035(a)(8)                                         
16       [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230.                                                           
17    * Sec. 5. AS 38.05.036(f) is amended to read:                                                                      
18            (f)  Except as otherwise provided in this section or in connection with official                             
19       investigations or proceedings of the department, it is unlawful for a current or former                           
20       officer, employee, or agent of the state to divulge information obtained by the                                   
21       department as a result of an audit under this section that is required by an agreement                            
22       with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                          
23       AS 41.09.010(d) to be kept confidential.                                                                          
24    * Sec. 6. AS 38.05.036(g) is amended to read:                                                                      
25            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
26       that maintains the confidentiality of information to the extent required by an                                    
27       agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                
28       AS 41.09.010(d).                                                                                                  
29    * Sec. 7. AS 38.05.123(f) is amended to read:                                                                      
30            (f)  As part of the timber sale negotiations authorized by this section, the                                 
31       commissioner may require a prospective purchaser negotiating a timber sale contract                               
01       to submit financial and technical data that demonstrates that the requirements of this                            
02       section have been or will be met. Upon the prospective purchaser's request, the                                   
03       commissioner shall keep data provided by the purchaser confidential in accordance                                 
04       with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)].                                             
05    * Sec. 8. AS 38.05.133(e) is amended to read:                                                                      
06            (e)  The commissioner may make a written request to a prospective licensee                                   
07       for additional information on the prospective licensee's proposal. The commissioner                               
08       shall keep confidential information described in AS 38.05.035(a)(8)                                           
09       [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made                            
10       a written request that the information remain confidential.                                                       
11    * Sec. 9. AS 38.05.180(j) is amended to read:                                                                      
12            (j)  The commissioner                                                                                        
13                 (1)  may provide for modification of royalty on individual leases,                                      
14       leases unitized as described in (p) of this section, leases subject to an agreement                               
15       described in (s) or (t) of this section, or interests unitized under AS 31.05                                     
16                      (A)  to allow for production from an oil or gas field or pool if                                   
17                           (i)  the oil or gas field or pool has been sufficiently                                       
18                 delineated to the satisfaction of the commissioner;                                                     
19                           (ii)  the field or pool has not previously produced oil or                                    
20                 gas for sale; and                                                                                       
21                           (iii)  oil or gas production from the field or pool would                                     
22                 not otherwise be economically feasible;                                                                 
23                      (B)  to prolong the economic life of an oil or gas field or pool                                   
24            as per barrel or barrel equivalent costs increase or as the price of oil or gas                              
25            decreases, and the increase or decrease is sufficient to make future production                              
26            no longer economically feasible; or                                                                          
27                      (C)  to reestablish production of shut-in oil or gas that would                                    
28            not otherwise be economically feasible;                                                                      
29                 (2)  may not grant a royalty modification unless the lessee or lessees                                  
30       requesting the change make a clear and convincing showing that a modification of                                  
31       royalty meets the requirements of this subsection and is in the best interests of the                             
01       state;                                                                                                            
02                 (3)  shall provide for an increase or decrease or other modification of                                 
03       the state's royalty share by a sliding scale royalty or other mechanism that shall be                             
04       based on a change in the price of oil or gas and may also be based on other relevant                              
05       factors such as a change in production rate, projected ultimate recovery, development                             
06       costs, and operating costs;                                                                                       
07                 (4)  may not grant a royalty reduction for a field or pool                                              
08                      (A)  under (1)(A) of this subsection if the royalty modification                                   
09            for the field or pool would establish a royalty rate of less than five percent in                            
10            amount or value of the production removed or sold from a lease or leases                                     
11            covering the field or pool;                                                                                  
12                      (B)  under (1)(B) or (1)(C) of this subsection if the royalty                                      
13            modification for the field or pool would establish a royalty rate of less than                               
14            three percent in amount or value of the production removed or sold from a                                    
15            lease or leases covering the field or pool;                                                                  
16                 (5)  may not grant a royalty reduction under this subsection without                                    
17       including an explicit condition that the royalty reduction is not assignable without the                          
18       prior written approval, which may not be unreasonably withheld, by the                                            
19       commissioner; the commissioner shall, in the preliminary and final findings and                                   
20       determinations, set out the conditions under which the royalty reduction may be                                   
21       assigned;                                                                                                         
22                 (6)  shall require the lessee or lessees to submit, with the application                                
23       for the royalty reduction, financial and technical data that demonstrate that the                                 
24       requirements of this subsection are met; the commissioner                                                         
25                      (A)  may require disclosure of only the financial and technical                                    
26            data related to development, production, and transportation of oil and gas or                                
27            gas only from the field or pool that are reasonably available to the applicant;                              
28            and                                                                                                          
29                      (B)  shall keep the data confidential under AS 38.05.035(a)(8)                                 
30            [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application                              
31            for the royalty reduction; the confidential data may be disclosed by the                                     
01            commissioner to legislators and to the legislative auditor and as directed by                                
02            the chair or vice-chair of the Legislative Budget and Audit Committee to the                                 
03            director of the division of legislative finance, the permanent employees of                                  
04            their respective divisions who are responsible for evaluating a royalty                                      
05            reduction, and to agents or contractors of the legislative auditor or the                                    
06            legislative finance director who are engaged under contract to evaluate the                                  
07            royalty reduction, if they sign an appropriate confidentiality agreement;                                    
08                 (7)  may                                                                                                
09                      (A)  require the lessee or lessees making application for the                                      
10            royalty reduction under (1)(A) of this subsection to pay for the services of an                              
11            independent contractor, selected by the lessee or lessees from a list of                                     
12            qualified consultants compiled by the commissioner, to evaluate hydrocarbon                                  
13            development, production, transportation, and economics and to assist the                                     
14            commissioner in evaluating the application and financial and technical data;                                 
15            if, under this subparagraph, the commissioner requires payment for the                                       
16            services of an independent contractor, the total cost of the services to be paid                             
17            for by the lessee or lessees may not exceed $150,000 for each application, and                               
18            the commissioner shall determine the relevant scope of the work to be                                        
19            performed by the contractor; selection of an independent contractor under this                               
20            subparagraph is not subject to AS 36.30;                                                                     
21                      (B)  with the mutual consent of the lessee or lessees making                                       
22            application for the royalty reduction under (1)(B) or (1)(C) of this subsection,                             
23            request payment for the services of an independent contractor, selected from a                               
24            list of qualified consultants to evaluate hydrocarbon development, production,                               
25            transportation, and economics by the commissioner to assist the commissioner                                 
26            in evaluating the application and financial and technical data; if, under this                               
27            subparagraph, the commissioner requires payment for the services of an                                       
28            independent contractor, the total cost of the services that may be paid for by                               
29            the lessee or lessees may not exceed $150,000 for each application, and the                                  
30            commissioner shall determine the relevant scope of the work to be performed                                  
31            by the contractor; selection of an independent contractor under this                                         
01            subparagraph is not subject to AS 36.30;                                                                     
02                 (8)  shall make and publish a preliminary findings and determination                                    
03       on the royalty reduction application, give reasonable public notice of the preliminary                            
04       findings and determination, and invite public comment on the preliminary findings                                 
05       and determination during a 30-day period for receipt of public comment;                                           
06                 (9)  shall offer to appear before the Legislative Budget and Audit                                      
07       Committee, on a day that is not earlier than 10 days and not later than 20 days after                             
08       giving public notice under (8) of this subsection, to provide the committee a review of                           
09       the commissioner's preliminary findings and determination on the royalty reduction                                
10       application and administrative process; if the Legislative Budget and Audit                                       
11       Committee accepts the commissioner's offer, the committee shall give notice of the                                
12       committee's meeting to all members of the legislature;                                                            
13                 (10)  shall make copies of the preliminary findings and determination                                   
14       available to                                                                                                      
15                      (A)  the presiding officer of each house of the legislature;                                       
16                      (B)  the chairs of the legislature's standing committees on                                        
17            resources; and                                                                                               
18                      (C)  the chairs of the legislature's special committees on oil and                                 
19            gas, if any;                                                                                                 
20                 (11)  shall, within 30 days after the close of the public comment period                                
21       under (8) of this subsection,                                                                                     
22                      (A)  prepare a summary of the public response to the                                               
23            commissioner's preliminary findings and determination;                                                       
24                      (B)  make a final findings and determination; the                                                  
25            commissioner's final findings and determination prepared under this                                          
26            subparagraph regarding a royalty reduction is final and not appealable to the                                
27            court;                                                                                                       
28                      (C)  transmit a copy of the final findings and determination to                                    
29            the lessee;                                                                                                  
30                      (D)  with the applicant's consent, amend the applicant's lease or                                  
31            unitization agreement consistent with the commissioner's final decision; and                                 
01                      (E)  make copies of the final findings and determination                                           
02            available to each person who submitted comment under (8) of this subsection                                  
03            and who has filed a request for the copies;                                                                  
04                 (12)  is not limited by the provisions of AS 38.05.134(3) or (f) of this                                
05       section in the commissioner's determination under this subsection.                                                
06    * Sec. 10. AS 38.05.275(c) is amended to read:                                                                     
07            (c)  Subsection (b) of this section may not be construed to limit the director in                            
08       the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)].                               
09    * Sec. 11. AS 39.25.110 is amended by adding a new paragraph to read:                                              
10                 (42)  oil and gas audit managers employed in a professional capacity                                    
11       by the Department of Revenue and the Department of Natural Resources to collect oil                               
12       and gas revenue by developing policy, conducting studies, drafting proposed                                       
13       regulations, enforcing regulations, and supervising audits by oil and gas revenue                                 
14       auditors.                                                                                                         
15    * Sec. 12. AS 41.09.010(d) is amended to read:                                                                     
16            (d)  Data derived from drilling a stratigraphic test well or exploratory well that                           
17       is provided to the commissioner under (c)(3) of this section shall be kept confidential                           
18       for 24 months after receipt by the commissioner unless the owner of the well gives                                
19       written permission to the state to release the well data at an earlier date, and,                                 
20       notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24                                    
21       months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to                              
22       other data provided to the commissioner under (c)(3) of this section, except that the                             
23       commissioner, under appropriate confidentiality provisions and without preference or                              
24       discrimination, may display to all interested third parties, but may not distribute or                            
25       transfer in hard copy or electronic form, those data with respect to all land if the                              
26       commissioner determines that the limited disclosure is necessary to further the                                   
27       interest of the state in evaluating or developing its land.                                                       
28    * Sec. 13. AS 43.05.230(a) is amended to read:                                                                     
29            (a)  It is unlawful for a current or former officer, employee, or agent of the                               
30       state to divulge the amount of income or the particulars set out or disclosed in a report                         
31       or return made under this title, except                                                                           
01                 (1)  in connection with official investigations or proceedings of the                                   
02       department, whether judicial or administrative, involving taxes due under this title;                             
03                 (2)  in connection with official investigations or proceedings of the                                   
04       child support enforcement agency, whether judicial or administrative, involving child                             
05       support obligations imposed or imposable under AS 25 or AS 47;                                                    
06                 (3)  as provided in AS 38.05.036 pertaining to audit functions of the                                   
07       Department of Natural Resources;                                                                                  
08                 (4)  as provided in AS 43.05.405 - 43.05.499; and                                                       
09                 (5)  as otherwise provided in this section or AS 43.55.890.                                         
10    * Sec. 14. AS 43.05.230(h) is amended to read:                                                                     
11            (h)  The commissioner shall, upon request, furnish to the Department of                                      
12       Natural Resources copies of tax returns, reports, and other documents filed under                             
13       AS 43.55 or AS 43.65, and the Department of Revenue's determinations and                                      
14       workpapers under those chapters. The Department of Natural Resources shall                                    
15       maintain the confidentiality that the Department of Revenue is required to extend to                              
16       the returns, reports, documents, determinations, and workpapers furnished to the                                  
17       Department of Natural Resources under this subsection.                                                            
18    * Sec. 15. AS 43.05.260(a) is amended to read:                                                                     
19            (a)  Except as provided in (c) of this section, [AND] AS 43.20.200(b), and                           
20       AS 43.55.075, the amount of a tax imposed by this title must be assessed within three                         
21       years after the return was filed, whether or not a return was filed on or after the date                          
22       prescribed by law. If the tax is not assessed before the expiration of the applicable                         
23       [THREE-YEAR] period, proceedings may not be instituted in court for the collection                                
24       of the tax.                                                                                                       
25    * Sec. 16. AS 43.55.011(e) is repealed and reenacted to read:                                                      
26            (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
27       produced each calendar year from each lease or property in the state, less any oil and                            
28       gas the ownership or right to which is exempt from taxation or constitutes a                                      
29       landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o)                           
30       of this section, the tax is equal to the sum, over all months of the calendar year, of                            
31       each month's production tax value of the taxable oil and gas as calculated under                                  
01       AS 43.55.160 multiplied by the tax rate determined under (g) of this section.                                     
02    * Sec. 17. AS 43.55.011(f) is amended to read:                                                                     
03            (f)  The levy of tax under this section on a producer of oil and gas produced                                
04       north of 68 degrees North latitude, other than gas subject to (o) of this section, may                        
05       not be less than                                                                                                  
06                 (1)  four percent of the gross value at the point of production when the                                
07       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
08       West Coast during the calendar year for which the tax is due is more than $25;                                    
09                 (2)  three percent of the gross value at the point of production when the                               
10       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
11       West Coast during the calendar year for which the tax is due is over $20 but not over                             
12       $25;                                                                                                              
13                 (3)  two percent of the gross value at the point of production when the                                 
14       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
15       West Coast during the calendar year for which the tax is due is over $17.50 but not                               
16       over $20;                                                                                                         
17                 (4)  one percent of the gross value at the point of production when the                                 
18       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
19       West Coast during the calendar year for which the tax is due is over $15 but not over                             
20       $17.50; or                                                                                                        
21                 (5)  zero percent of the gross value at the point of production when the                                
22       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
23       West Coast during the calendar year for which the tax is due is $15 or less.                                    
24    * Sec. 18. 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, for a month for which the price index determined                                 
27       under (h) of this section is greater than zero, 0.40 multiplied by the price index                                
28       determined under (h) of this section. However, a tax rate calculated under this                                   
29       subsection may not be more than 50 percent.                                                                       
30    * Sec. 19. AS 43.55.011(h) is amended to read:                                                                     
31            (h)  For purposes of (g) of this section, the price index for a month is                                     
01       calculated by subtracting 30 [40] from the number that is equal to the quotient of the                        
02       total of the [MONTHLY] production tax values [VALUE] of the taxable oil and gas                           
03       produced by the producer from all leases or properties in the state during that                               
04       month, as calculated under AS 43.55.160, divided by the total amount of that [THE                             
05       TAXABLE] oil and gas produced by the producer during that month, in BTU                                           
06       equivalent barrels. However, a price index calculated under this subsection may not                           
07       be less than zero.                                                                                                
08    * Sec. 20. AS 43.55.011(j) is amended to read:                                                                     
09            (j)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)]                                
10       of this section for [ON] gas produced from a lease or property in the Cook Inlet                              
11       sedimentary basin may not exceed                                                                                  
12                 (1)  for a lease or property that first commenced commercial                                            
13       production of gas before April 1, 2006, the product obtained by multiplying (A) the                               
14       amount of taxable gas produced during the calendar year from the lease or property,                               
15       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
16       taxable gas produced from the lease or property for the 12-month period ending on                                 
17       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
18       the point of production of the taxable gas produced from the lease or property during                             
19       the 12-month period ending on March 31, 2006, by the total amount of that gas;                                    
20                 (2)  for a lease or property that first commences commercial                                            
21       production of gas after March 31, 2006, the product obtained by multiplying (A) the                               
22       amount of taxable gas produced during the calendar year from the lease or property,                               
23       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
24       taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin                            
25       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
26       value for gas delivered in the Cook Inlet area for the 12-month period ending                                     
27       March 31, 2006, as determined by the department under AS 43.55.020(f).                                            
28    * Sec. 21. AS 43.55.011(k) is amended to read:                                                                     
29            (k)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND                                     
30       (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet                         
31       sedimentary basin may not exceed                                                                                  
01                 (1)  for a lease or property that first commenced commercial                                            
02       production of oil before April 1, 2006, the product obtained by multiplying (A) the                               
03       amount of taxable oil produced during the calendar year from the lease or property,                               
04       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
05       taxable oil produced from the lease or property for the 12-month period ending on                                 
06       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
07       the point of production of the taxable oil produced from the lease or property during                             
08       the 12-month period ending on March 31, 2006, by the total amount of that oil;                                    
09                 (2)  for a lease or property that first commences commercial                                            
10       production of oil after March 31, 2006, the product obtained by multiplying (A) the                               
11       amount of taxable oil produced during the calendar year from the lease or property,                               
12       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
13       taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin                            
14       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
15       value for oil produced and delivered in the Cook Inlet area for the 12-month period                               
16       ending on March 31, 2006, as determined by the department under AS 43.55.020(f).                                  
17    * Sec. 22. AS 43.55.011(m) is amended to read:                                                                     
18            (m)  Notwithstanding any contrary provision of AS 38.05.180(i),                                              
19       AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under                                         
20       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are                                 
21       allocated to gas produced from leases or properties in the Cook Inlet sedimentary                                 
22       basin and that are available to be applied against a tax levied by (e) of this section for                    
23       [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin                                   
24       during a calendar year may be applied only against that [THE] tax and tax credits                         
25       under AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025                                
26       that are allocated to gas subject to (o) of this section and that are available to be                         
27       applied against a tax levied by (e) of this section for that gas during a calendar                            
28       year may be applied only against that tax [LEVIED BY (e) OF THIS SECTION                                      
29       ON THAT GAS]. The amount by which the amount of tax credits that are allocated to                                 
30       gas produced from leases or properties in the Cook Inlet sedimentary basin or to gas                          
31       subject to (o) of this section, respectively, and that the producer would otherwise be                        
01       allowed to use for a later calendar year or transfer to another person exceeds the                                
02       amount of tax credits whose application would reduce the tax levied by (e) of this                                
03       section for [ON] that respective gas to zero, if any, is considered the amount of                         
04       excess tax credits, and the excess tax credits are subject to the following, applied                          
05       separately for the Cook Inlet sedimentary basin and for gas subject to (o) of this                            
06       section, respectively:                                                                                        
07                 (1)  for each lease or property for which a limitation under (j), [OR]                              
08       (k), or (o) of this section on the tax levied by (e) [AND (g)] of this section has the                        
09       effect of reducing the producer's tax below the amount of tax that would be levied in                             
10       the absence of that limitation, the producer shall calculate the amount of that                                   
11       reduction;                                                                                                        
12                 (2)  the producer shall calculate the total of the reductions calculated                                
13       under (1) of this subsection for all affected leases or properties;                                               
14                 (3)  the producer shall reduce the amount of excess tax credits by the                                  
15       total calculated under (2) of this subsection, but not to less than zero;                                         
16                 (4)  any amount of excess tax credits remaining after reduction under                                   
17       (3) of this subsection may be used for a later calendar year, transferred to another                              
18       person, or applied against a tax levied for [ON] oil or gas produced from a lease or                          
19       property located anywhere in the state to the extent otherwise allowed under                                      
20       applicable law governing the tax credits.                                                                         
21    * Sec. 23. AS 43.55.011(n) is amended to read:                                                                     
22            (n)  Allocation of credits under (m) of this section shall be made under                                     
23       regulations adopted by the department that provide for reasonable methods of                                      
24       allocating tax credits to gas produced from leases or properties in the Cook Inlet                                
25       sedimentary basin and to gas subject to (o) of this section. The method of allocating                         
26       tax credits available under AS 43.55.024 shall be based on the number of BTU                                      
27       equivalent barrels produced from a lease or property.                                                             
28    * Sec. 24. AS 43.55.011 is amended by adding a new subsection to read:                                             
29            (o)  For a calendar year before 2022, the tax levied by (e) of this section for                              
30       each 1,000 cubic feet of gas that is produced from a lease or property outside of the                             
31       Cook Inlet sedimentary basin and used in the state may not exceed the amount of tax                               
01       for each 1,000 cubic feet of gas that is determined under (j)(2) of this section.                                 
02    * Sec. 25. AS 43.55.020(a) is amended to read:                                                                     
03            (a)  For a calendar year, a producer subject to tax under AS 43.55.011(e), (f),                              
04       [(g),] or (i), and notwithstanding that a producer may be liable for the tax under                                
05       AS 43.55.011(f) rather than the tax under AS 43.55.011(e), shall pay the tax as                                   
06       follows:                                                                                                          
07                 (1)  an installment payment of the estimated tax levied by                                              
08       AS 43.55.011(e) or (f), net of any tax credits applied as allowed by law, is due for                              
09       each month of the calendar year on the last day of the following month; the amount of                             
10       the installment payment is [THE SUM OF THE AMOUNTS CALCULATED                                                     
11       UNDER (2) AND (3) OF THIS SUBSECTION, BUT NOT LESS THAN ZERO;                                                     
12                 (2)  THE FIRST OF THE TWO AMOUNTS USED TO                                                               
13       CALCULATE THE INSTALLMENT PAYMENT FOR A MONTH UNDER (1) OF                                                        
14       THIS SUBSECTION IS] equal to the remainder obtained by subtracting                                                
15                      [(A)]  1/12 of the tax credits that are allowed by law to be                                       
16            applied against the tax levied by AS 43.55.011(e) for the calendar year [;]                                  
17            from                                                                                                         
18                      [(B)]  the total of the monthly production values calculated                                       
19            under AS 43.55.160 [IN THE MANNER PROVIDED IN                                                            
20            AS 43.55.160(a)(2)] of all oil and gas taxable under AS 43.55.011(e) and                                     
21            produced by the producer from leases or properties in the state during the                                   
22            month, multiplied by the total tax rate for the month determined [22.5                                   
23            PERCENT;                                                                                                     
24                 [(3)  THE SECOND OF THE TWO AMOUNTS USED TO                                                             
25       CALCULATE THE INSTALLMENT PAYMENT FOR A MONTH UNDER (1) OF                                                        
26       THIS SUBSECTION IS THE AMOUNT CALCULATED FOR THE MONTH]                                                           
27       under AS 43.55.011(g);                                                                                            
28                 (2) [(4)]  an installment payment of the estimated tax levied by                                    
29       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
30       on the last day of the following month; the amount of the installment payment is the                              
31       sum of                                                                                                            
01                      (A)  the applicable percentage rate for oil provided under                                         
02            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
03            the oil taxable under AS 43.55.011(i) and produced from the lease or property                                
04            during the month; plus                                                                                       
05                      (B)  the applicable percentage rate for gas provided under                                         
06            AS 43.55.011(i), multiplied times the gross value at the point of production of                              
07            the gas taxable under AS 43.55.011(i) and produced from the lease or property                                
08            during the month;                                                                                            
09                 (3) [(5)]  any amount of tax levied by AS 43.55.011(e), (f), and (i)                            
10       [AS 43.55.011(e) - (g) AND (i)], net of any credits applied as allowed by law, that                               
11       exceeds the total of the amounts due as installment payments of estimated tax is due                              
12       on March 31 of the year following the calendar year of production.                                                
13    * Sec. 26. AS 43.55.020(d) is amended to read:                                                                     
14            (d)  In making settlement with the royalty owner for oil and gas that is taxable                             
15       under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable                                 
16       royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the                          
17       time the tax becomes due to the amount of the tax paid. If the total deductions of                                
18       installment payments of estimated tax for a calendar year exceed the actual tax for                               
19       that calendar year, the producer shall, before April 1 of the following year, refund the                          
20       excess to the royalty owner. Unless otherwise agreed between the producer and the                                 
21       royalty owner, the amount of the tax paid under AS 43.55.011(e) and (f)                                       
22       [AS 43.55.011(e) - (g)] on taxable royalty oil and gas for a calendar year, other than                            
23       oil and gas the ownership or right to which constitutes a landowner's royalty interest,                           
24       is considered to be the gross value at the point of production of the taxable royalty oil                         
25       and gas produced during the calendar year multiplied by a figure that is a quotient, in                           
26       which                                                                                                             
27                 (1)  the numerator is the producer's total tax liability under                                          
28       AS 43.55.011(e) and (f) [AS 43.55.011(e) - (g)] for the calendar year of production;                          
29       and                                                                                                               
30                 (2)  the denominator is the total gross value at the point of production                                
31       of the oil and gas taxable under AS 43.55.011(e) and (f) [AS 43.55.011(e) - (g)]                              
01       produced by the producer from all leases and properties in the state during the                                   
02       calendar year.                                                                                                    
03    * Sec. 27. AS 43.55.020(g) is amended to read:                                                                     
04            (g)  Notwithstanding any contrary provision of AS 43.05.225, an unpaid                                       
05       amount of an installment payment required under (a)(1) and (2) [(a)(1) - (4)] of this                         
06       section that is not paid when due bears interest (1) at the rate provided for an                                  
07       underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                            
08       compounded daily, from the date the installment payment is due until [THE]                                        
09       March 31 of the year following the calendar year of production [DESCRIBED IN                                  
10       AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after                               
11       that March 31. Interest accrued under (1) of this subsection that remains unpaid after                            
12       that March 31 is treated as an addition to tax that bears interest under (2) of this                              
13       subsection. An unpaid amount of tax due under (a)(3) [(a)(5)] of this section that is                         
14       not paid when due bears interest as provided for a delinquent tax under AS 43.05.225.                             
15    * Sec. 28. AS 43.55.020(h) is amended to read:                                                                     
16            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
17                 (1)  an overpayment of an installment payment required under (a)(1)                                 
18       and (2) [(a)(1) - (4)] of this section bears interest at the rate provided for an                             
19       overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                             
20       compounded daily, from the later of the date the installment payment is due or the                                
21       date the overpayment is made, until the earlier of                                                                
22                      (A)  the date it is refunded or is applied to an underpayment; [,]                             
23            or                                                                                                           
24                      (B)  [THE] March 31 of the year following the calendar year                                    
25            of production [DESCRIBED IN AS 43.55.030(a)];                                                            
26                 (2)  except as provided under (1) of this subsection, interest with                                     
27       respect to an overpayment is allowed only on any net overpayment of the payments                                  
28       required under (a) of this section that remains after the later of [THE] March 31 of                          
29       the year following the calendar year of production [DESCRIBED IN                                              
30       AS 43.55.030(a)] or the date that the statement required under AS 43.55.030(a) is                                 
31       filed;                                                                                                            
01                 (3)  interest is allowed under (2) of this subsection only from a date                                  
02       that is 90 days after the later of [THE] March 31 of the year following the calendar                          
03       year of production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement                              
04       required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment                               
05       was refunded within the 90-day period;                                                                            
06                 (4)  interest under (2) and (3) of this subsection is paid at the rate and                              
07       in the manner provided in AS 43.05.225(1).                                                                        
08    * Sec. 29. AS 43.55.023(i) is amended to read:                                                                     
09            (i)  For the purposes of this section,                                                                       
10                 (1)  a producer's or explorer's transitional investment expenditures are                                
11       the sum of the expenditures the producer or explorer incurred after March 31, 2001,                               
12       and before April 1, 2006, that would be qualified capital expenditures if they were                               
13       incurred after March 31, 2006, less the sum of the payments or credits the producer or                            
14       explorer received before April 1, 2006, for the sale or other transfer of assets,                                 
15       including geological, geophysical, or well data or interpretations, acquired by the                               
16       producer or explorer as a result of expenditures the producer or explorer incurred                                
17       before April 1, 2006, that would be qualified capital expenditures, if they were                                  
18       incurred after March 31, 2006;                                                                                    
19                 (2)  a producer or explorer that did not have commercial production                                 
20       of oil or gas from a lease or property in the state before January 1, 2008, may                               
21       elect to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in                             
22       the amount of 20 percent of the producer's or explorer's transitional investment                                  
23       expenditures, but only to the extent that the amount does not exceed 1/10 of the                                  
24       producer's or explorer's qualified capital expenditures that were incurred after                              
25       March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE                                           
26       CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN];                                                                     
27                 (3)  a producer or explorer may not take a tax credit for a transitional                                
28       investment expenditure                                                                                            
29                      (A)  for any calendar year after [THE LATER OF                                                     
30                           (i)]  2013; [OR                                                                               
31                           (ii)  THE SIXTH CALENDAR YEAR AFTER THE                                                       
01                 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST                                                              
02                 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A                                                        
03                 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT                                                  
04                 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A                                                         
05                 LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;]                                                   
06                      (B)  more than once; or                                                                            
07                      (C)  if a credit for that expenditure was taken under                                              
08            AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025;                                                
09                 (4)  notwithstanding (d), (e), and (g) of this section, a producer or                                   
10       explorer may not transfer a tax credit or obtain a transferable tax credit certificate for                        
11       a transitional investment expenditure.                                                                            
12    * Sec. 30. AS 43.55.024(a) is amended to read:                                                                     
13            (a)  For a calendar year for which a producer's tax liability under                                          
14       AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside                                
15       the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North                                   
16       latitude, exceeds zero before application of any credits under this chapter, a producer                           
17       that is qualified under (e) of this section may apply a tax credit against that liability of                      
18       not more than $6,000,000.                                                                                         
19    * Sec. 31. AS 43.55.024(c) is amended to read:                                                                     
20            (c)  For a calendar year for which a producer's tax liability under                                          
21       AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this                                
22       chapter, other than a credit under (a) of this section but after application of any credit                        
23       under (a) of this section, a producer that is qualified under (e) of this section and                             
24       whose average amount of oil and gas produced a day and taxable under                                              
25       AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may                                    
26       apply a tax credit under this subsection against that liability. A producer whose                                 
27       average amount of oil and gas produced a day and taxable under AS 43.55.011(e)                                    
28       [OR (f)] is                                                                                                       
29                 (1)  not more than 50,000 BTU equivalent barrels may apply a tax                                        
30       credit of not more than $12,000,000 for the calendar year;                                                        
31                 (2)  more than 50,000 and less than 100,000 BTU equivalent barrels                                      
01       may apply a tax credit of not more than $12,000,000 multiplied by the following                                   
02       fraction for the calendar year:                                                                                   
03                         1 - [2 X (AP - 50,000)] ÷ 100,000                                                               
04       where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR                                    
05       (f)], produced a day during the calendar year in BTU equivalent barrels.                                          
06    * Sec. 32. AS 43.55.024(e) is amended to read:                                                                     
07            (e)  On written application by a producer that includes any information the                                  
08       department may require, the department shall determine whether the producer                                       
09       qualifies for a calendar year under this section. To qualify under this section, a                                
10       producer must demonstrate that its operation in the state or its ownership of an                                  
11       interest in a lease or property in the state as a distinct producer would not result in the                       
12       division among multiple producer entities of any production tax liability under                                   
13       AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a                                  
14       single producer if the tax credit provisions of (a) or (c) of this section did not exist.                         
15    * Sec. 33. AS 43.55.025(a) is amended to read:                                                                     
16            (a)  Subject to the terms and conditions of this section, a credit against the                               
17       production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for                                  
18       exploration expenditures that qualify under (b) of this section in an amount equal to                             
19       one of the following:                                                                                             
20                 (1)  20 percent of the total exploration expenditures that qualify only                                 
21       under (b) and (c) of this section;                                                                                
22                 (2)  20 percent of the total exploration expenditures [FOR WORK                                         
23       PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of                                        
24       this section;                                                                                                     
25                 (3)  40 percent of the total exploration expenditures that qualify under                                
26       (b), (c), and (d) of this section; or                                                                             
27                 (4)  40 percent of the total exploration expenditures that qualify only                                 
28       under (b) and (e) of this section.                                                                                
29    * Sec. 34. AS 43.55.025(b) is amended to read:                                                                     
30            (b)  To qualify for the production tax credit under (a) of this section, an                                  
31       exploration expenditure must be incurred for work performed [ON OR] after                                         
01       December 31, 2007 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN                                    
02       EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE                                                         
03       INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and                                                        
04                 (1)  may be for seismic or other geophysical exploration costs not                                  
05       connected with a specific well;                                                                                   
06                 (2)  if for an exploration well,                                                                        
07                      (A)  must be incurred by an explorer that holds an interest in                                     
08            the exploration well for which the production tax credit is claimed;                                         
09                      (B)  may be for either a [AN OIL OR GAS DISCOVERY]                                             
10            well that encounters an oil or gas deposit or a dry hole; [AND]                                          
11                      (C)  must be for a well that has been completed or                                             
12            abandoned at the time the explorer claims the tax credit under (f) of this                               
13            section; and                                                                                             
14                      (D)  must be for goods, services, or rentals of personal                                       
15            property reasonably required for the surface preparation, drilling, casing,                                  
16            cementing, and logging of an exploration well, and, in the case of a dry hole,                               
17            for the expenses required for abandonment if the well is abandoned within 18                                 
18            months after the date the well was spudded;                                                                  
19                 (3)  may not be for testing, stimulation, or completion costs;                                          
20       administration, supervision, engineering, or lease operating costs; geological or                                 
21       management costs; community relations or environmental costs; bonuses, taxes, or                                  
22       other payments to governments related to the well; costs arising from gross                                   
23       negligence or violation of health, safety, or environmental statutes or                                       
24       regulations; or other costs that are generally recognized as indirect costs or financing                      
25       costs; and                                                                                                        
26                 (4)  may not be incurred for an exploration well or seismic exploration                                 
27       that is included in a plan of exploration or a plan of development for any unit on                                
28       May 13, 2003.                                                                                                     
29    * Sec. 35. AS 43.55.025(c) is repealed and reenacted to read:                                                      
30            (c)  To be eligible for the 20 percent production tax credit authorized by (a)(1)                            
31       of this section or the 40 percent production tax credit authorized by (a)(3) of this                              
01       section, exploration expenditures must                                                                            
02                 (1)  qualify under (b) of this section; and                                                             
03                 (2)  be for an exploration well, subject to the following:                                              
04                      (A)  before spudding the well, (i) the explorer shall submit to                                    
05            the commissioner of natural resources the information necessary to determine                                 
06            whether the geological objective of the well is a potential oil or gas trap that is                          
07            distinctly separate from any trap that has been tested by a preexisting well;                                
08            and (ii) the commissioner of natural resources must make an affirmative                                      
09            determination on that question; the commissioner of natural resources shall                                  
10            decide whether to make that determination within 60 days after receiving all                                 
11            the necessary information from the explorer and based on the information                                     
12            received and on other information the commissioner of natural resources may                                  
13            consider relevant;                                                                                           
14                      (B)  for an exploration well other than a well to explore a Cook                                   
15            Inlet prospect, the well must be located and drilled in such a manner that the                               
16            bottom hole is located not less than three miles away from the bottom hole of                                
17            a preexisting well drilled for oil or gas, irrespective of whether the preexisting                           
18            well has been completed, suspended, or abandoned;                                                            
19                      (C)  after completion or abandonment of the exploration well,                                      
20            the commissioner of natural resources must determine that the well adequately                                
21            achieved the explorer's stated geological objective.                                                         
22    * Sec. 36. AS 43.55.025(f) is amended to read:                                                                     
23            (f)  For a production tax credit under this section,                                                         
24                 (1)  an explorer shall, in a form prescribed by the department and,                                 
25       except for a credit under (l) of this section, within six months of the completion of                         
26       the exploration activity, claim the credit and submit information sufficient to                                   
27       demonstrate to the department's satisfaction that the claimed exploration expenditures                            
28       qualify under this section;                                                                                       
29                 (2)  an explorer shall agree, in writing,                                                               
30                      (A)  to notify the Department of Natural Resources, within 30                                      
31            days after completion of seismic or geophysical data processing, completion                                  
01            of [A] well drilling, or filing of a claim for credit, whichever is the latest, for                      
02            which exploration costs are claimed, of the date of completion and submit a                                  
03            report to that department describing the processing sequence and providing a                                 
04            list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN                                        
05            EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES                                                       
06            FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE                                                         
07            MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN                                                          
08            ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS                                                       
09            SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION                                                        
10            NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES                                                          
11            TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT                                                        
12            THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE                                                                
13            EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL                                                          
14            RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE                                                                
15            SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE                                                              
16            EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60                                                          
17            DAYS;]                                                                                                       
18                      (B)  to provide to the Department of Natural Resources, within                                     
19            30 days after the date of a request, unless a longer period is provided by the                           
20            Department of Natural Resources, specific data sets, ancillary data, and                                 
21            reports identified in (A) of this paragraph; in this subparagraph,                                       
22                           (i)  a seismic or geophysical data set includes the                                       
23                 data for an entire seismic survey, irrespective of whether the                                      
24                 survey area covers nonstate land in addition to state land or land                                  
25                 in a unit in addition to land outside a unit;                                                       
26                           (ii)  well data include all derivative products, results,                                 
27                 and copies of data collected and data analyses for the well; well                                   
28                 logs; sample analyses; geophysical and velocity data including                                      
29                 vertical seismic profiles and check shot surveys; and tangible                                      
30                 material including, for each whole core collected, a lengthwise cut                                 
31                 slab that is at least 1/3 of the whole core volume, and                                             
01                 representative samples, as specified by the Department of Natural                                   
02                 Resources, of other gaseous, liquid, or solid material collected                                    
03                 from drilling or testing the well;                                                                  
04                      (C)  that, notwithstanding any provision of AS 38, information                                     
05            provided under this paragraph will be held confidential by the Department of                                 
06            Natural Resources                                                                                            
07                           (i)  in the case of well data, until the expiration of the                                
08                 24-month period of confidentiality described in AS 31.05.035(c),                                    
09                 without extension, after which the Department of Natural                                            
10                 Resources [FOR 10 YEARS FOLLOWING THE COMPLETION                                                    
11                 DATE, AT WHICH TIME THAT DEPARTMENT] will release the                                                   
12                 information after 30 days' public notice;                                                               
13                           (ii)  in the case of seismic or other geophysical data,                                   
14                 other than seismic data acquired by seismic exploration subject to                                  
15                 (l) of this section, for 10 years following the completion date, at                                 
16                 which time the Department of Natural Resources will release the                                     
17                 information after 30 days' public notice;                                                           
18                           (iii)  in the case of seismic data obtained by seismic                                    
19                 exploration subject to (l) of this section, only until the expiration of                            
20                 30 days' public notice issued on or after the date the production                                   
21                 tax credit certificates are issued under (5) of this subsection; and                                
22                      (D)  that, in the case of well data, the explorer will not make                                
23            a request under AS 31.05.035(c) that the commissioner of natural                                         
24            resources keep the data confidential for longer than the 24-month period                                 
25            of confidentiality described in AS 31.05.035(c);                                                         
26                 (3)  if more than one explorer holds an interest in a well or seismic                                   
27       exploration,                                                                                                      
28                      (A)  each explorer may claim an amount of credit that is                                       
29            proportional to the explorer's cost incurred;                                                                
30                      (B)  in the case of a well, each explorer holding an interest                                  
31            in the well shall agree, in writing, that the explorer will not make the                                 
01            request described in (2)(D) of this subsection;                                                          
02                 (4)  the department may exercise the full extent of its powers as though                                
03       the explorer were a taxpayer under this title, in order to verify that the claimed                                
04       expenditures are qualified exploration expenditures under this section; and                                       
05                 (5)  if the department is satisfied that the explorer's claimed                                         
06       expenditures are qualified under this section and that all data required to be                                
07       submitted under this section have been submitted, the department shall issue to the                           
08       explorer two [A] production tax credit certificates, each [CERTIFICATE] for half of                   
09       the amount of the credit to be allowed against production taxes levied by                                 
10       AS 43.55.011(e); the credit shown on one of the two certificates is available for                             
11       immediate use; the credit shown on the second of the two certificates may not be                              
12       applied against a tax for a calendar year earlier than the calendar year following                            
13       the calendar year in which the certificate is issued, and the certificate must                                
14       contain a conspicuous statement to that effect; notwithstanding any contrary                                  
15       provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is                               
16       not confidential:                                                                                             
17                      (A)  the explorer's name;                                                                      
18                      (B)  the date of the application;                                                              
19                      (C)  the location of the well or seismic exploration;                                          
20                      (D)  the date of the department's issuance of the certificate;                                 
21            and                                                                                                      
22                      (E)  the date on which the information required to be                                          
23            submitted under this section will be released [DUE UNDER                                                 
24            AS 43.55.011(e) OR (f)].                                                                                     
25    * Sec. 37. AS 43.55.025(g) is amended to read:                                                                     
26            (g)  An explorer, other than an entity that is exempt from taxation under                                
27       this chapter, may transfer, convey, or sell its production tax credit certificate to any                      
28       person, and any person who receives a production tax credit certificate may also                                  
29       transfer, convey, or sell the certificate.                                                                        
30    * Sec. 38. AS 43.55.025(h) is amended to read:                                                                     
31            (h)  A producer that purchases a production tax credit certificate may apply                                 
01       the credits against its production tax liability under AS 43.55.011(e) [OR (f)].                                  
02       Regardless of the price the producer paid for the certificate, the producer may receive                           
03       a credit against its production tax liability for the full amount of the credit, but for not                      
04       more than the amount for which the certificate is issued. A production tax credit                                 
05       allowed under this section may not be applied more than once.                                                     
06    * Sec. 39. AS 43.55.025(i) is repealed and reenacted to read:                                                      
07            (i)  For a production tax credit under this section,                                                         
08                 (1)  a credit may not be applied to reduce a taxpayer's tax liability                                   
09       under AS 43.55.011(e) below zero for a calendar year; and                                                         
10                 (2)  an amount of the production tax credit in excess of the amount that                                
11       may be applied for a calendar year under this subsection may be carried forward and                               
12       applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later                           
13       calendar years.                                                                                                   
14    * Sec. 40. AS 43.55.025(k) is amended by adding a new paragraph to read:                                           
15                 (4)  "preexisting well" means a well that was spudded more than 540                                     
16       days but less than 35 years before the date on which the exploration well to which it                             
17       is compared is spudded.                                                                                           
18    * Sec. 41. AS 43.55.025 is amended by adding a new subsection to read:                                             
19            (l)  Subject to the terms and conditions of this section, if a claim is filed under                          
20       (f)(1) of this section before January 1, 2016, a credit against the production tax levied                         
21       by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible                                   
22       expenditure under this subsection incurred for seismic exploration performed before                               
23       July 1, 2003. To be eligible under this subsection, an expenditure must                                           
24                 (1)  have been for seismic exploration that                                                             
25                      (A)  obtained data that the commissioner of natural resources                                      
26            considers to be in the best interest of the state to acquire for public                                      
27            distribution; and                                                                                            
28                      (B)  was conducted outside the boundaries of a production unit;                                    
29            however, the amount of the expenditure that is otherwise eligible under this                                 
30            section is reduced proportionately by the portion of the seismic exploration                                 
31            activity that crossed into a production unit; and                                                            
01                 (2)  qualify under (b)(3) of this section.                                                              
02    * Sec. 42. AS 43.55 is amended by adding a new section to read:                                                    
03            Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of                               
04       tax credit certificates. (a) The oil and gas tax credit fund is established as a separate                       
05       fund of the state. The purpose of the fund is for the purchase of transferable tax credit                         
06       certificates issued under this chapter that are subject to purchase by the department.                            
07            (b)  The oil and gas tax credit fund consists of money appropriated to the fund,                             
08       including any appropriation of the percentage provided under (c) of this section of all                           
09       revenue from taxes levied by AS 43.55.011 that is not required to be deposited in the                             
10       constitutional budget reserve fund established in art. IX, sec. 17(a), Constitution of                            
11       the State of Alaska, and any appropriation from the earnings of the fund.                                         
12            (c)  The applicable percentage for a fiscal year under (b) of this section is                                
13       determined with reference to the average price or value forecast by the department for                            
14       Alaska North Slope oil sold or otherwise disposed of on the United States West Coast                              
15       during the fiscal year for which the appropriation of revenue from taxes levied by                                
16       AS 43.55.011 is made. If that forecast is                                                                         
17                 (1)  $60 a barrel or higher, the applicable percentage is 10 percent;                                   
18                 (2)  less than $60 a barrel, the applicable percentage is 15 percent.                                   
19            (d)  The department shall manage the fund.                                                                   
20            (e)  The department may, on the written application of the person to whom a                                  
21       production tax credit certificate has been issued under AS 43.55.025(f), use available                            
22       money in the oil and gas tax credit fund to purchase, in whole or in part, the                                    
23       certificate if the department finds that                                                                          
24                 (1)  the calendar year of the purchase is not earlier than the first                                    
25       calendar year for which the credit shown on the certificate would otherwise be                                    
26       allowed to be applied against a tax;                                                                              
27                 (2)  within 24 months after applying for the transferable tax credit                                    
28       certificate or filing a claim for the production tax credit certificate, the applicant                            
29       incurred a qualified capital expenditure or was the successful bidder on a bid                                    
30       submitted for a lease on state land under AS 38.05.180(f);                                                        
31                 (3)  the amount expended for the purchase would not exceed the total                                    
01       of qualified capital expenditures and successful bids described in (2) of this                                    
02       subsection that have not been the subject of a finding made under this paragraph for                              
03       purposes of a previous purchase of a certificate;                                                                 
04                 (4)  the applicant does not have an outstanding liability to the state for                              
05       unpaid delinquent taxes under this title;                                                                         
06                 (5)  the applicant's total tax liability under AS 43.55.011(e), after                                   
07       application of all available tax credits, for the calendar year in which the application                          
08       is made is zero;                                                                                                  
09                 (6)  the applicant's average amount of oil and gas taxable under                                        
10       AS 43.55.011(e) and produced each day during the calendar year preceding the                                      
11       calendar year in which the application is made was not more than 50,000 BTU                                       
12       equivalent barrels; and                                                                                           
13                 (7)  the purchase is consistent with this section and regulations adopted                               
14       under this section.                                                                                               
15            (f)  Money in the fund remaining at the end of a fiscal year does not lapse and                              
16       remains available for expenditure in successive fiscal years.                                                     
17            (g)  The department may adopt regulations to carry out the purposes of this                                  
18       section, including standards and procedures to allocate available money among                                     
19       applications for purchases the total amount of which exceeds the amount of available                              
20       money in the fund.                                                                                                
21            (h)  Nothing in this section creates a dedicated fund.                                                       
22            (i)  In this section, "qualified capital expenditure" has the meaning given in                               
23       AS 43.55.023.                                                                                                     
24    * Sec. 43. AS 43.55.030(a) is amended to read:                                                                     
25            (a)  A producer that produces oil or gas from a lease or property in the                                 
26       state during a calendar year, whether or not any tax payment is due under                                     
27       AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file                                 
28       with the department on March 31 of the following year [FOLLOWING THE                                          
29       CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under                                                    
30       oath, in a form prescribed by the department, giving, with other information required,                            
31       the following:                                                                                                    
01                 (1)  a description of each lease or property from which [THE] oil or                                
02       [AND] gas was [WERE] produced, by name, legal description, lease number, or                                   
03       accounting codes assigned by the department;                                                                      
04                 (2)  the names of the producer and, if different, the person paying the                             
05       tax, if any;                                                                                                  
06                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
07       each lease or property, and the percentage of the gross amount of oil and gas owned                               
08       by the [EACH] producer [FOR WHOM THE TAX IS PAID];                                                            
09                 (4)  the gross value at the point of production of the oil and of the gas                               
10       produced from each lease or property owned by the [EACH] producer and the costs                           
11       of transportation of the oil and gas [FOR WHOM THE TAX IS PAID];                                              
12                 (5)  the name of the first purchaser and the price received for the oil                                 
13       and for the gas, unless relieved from this requirement in whole or in part by the                                 
14       department; [AND]                                                                                                 
15                 (6)  the producer's qualified capital expenditures, as defined in                                   
16       AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS                                                    
17       CALCULATED] under AS 43.55.165, and adjustments or other payments or                                          
18       credits under AS 43.55.170;                                                                                   
19                 (7)  the production tax values of the oil and gas under                                             
20       AS 43.55.160;                                                                                                 
21                 (8)  any claims for tax credits to be applied; and                                                  
22                 (9)  calculations showing the amounts, if any, that were or are due                                 
23       under AS 43.55.020(a) and interest on any underpayment or overpayment                                         
24       [AS 43.55.160 - 43.55.170].                                                                                       
25    * Sec. 44. AS 43.55.030(d) is amended to read:                                                                     
26            (d)  Reports required under this section [BY OR ON BEHALF OF THE                                         
27       PRODUCER] are delinquent the first day following the day the report is due. The                               
28       person required to file the report is liable for a penalty, as determined by the                              
29       department under standards adopted in regulation by the department, of not                                    
30       more than $1,000 for each day the person fails to file the report at the time                                 
31       required. The penalty is in addition to the penalties in AS 43.05.220 and                                     
01       43.05.290 and is assessed, collected, and paid in the same manner as a tax                                    
02       deficiency under this title. In this subsection, "report" includes a statement.                               
03    * Sec. 45. AS 43.55.030 is amended by adding new subsections to read:                                              
04            (e)  An explorer or producer that incurs a lease expenditure under                                           
05       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
06       year but does not produce oil or gas from a lease or property in the state during the                             
07       calendar year shall file with the department on March 31 of the following year a                                
08       statement, under oath, in a form prescribed by the department, giving, with other                                 
09       information required, the following:                                                                              
10                 (1)  the producer's qualified capital expenditures, as defined in                                       
11       AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other                               
12       payments or credits under AS 43.55.170; and                                                                       
13                 (2)  if the explorer or producer receives a payment or credit under                                     
14       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
15       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
16            (f)  The department may require a producer, an explorer, or an operator of a                                 
17       lease or property to file monthly reports, as applicable, of                                                      
18                 (1)  the amounts and gross value at the point of production of oil and                                  
19       gas produced;                                                                                                     
20                 (2)  transportation costs of the oil and gas;                                                           
21                 (3)  any unscheduled interruption of, or reduction in the rate of, oil or                               
22       gas production;                                                                                                   
23                 (4)  lease expenditures and adjustments under AS 43.55.165 and                                          
24       43.55.170;                                                                                                        
25                 (5)  joint interest billings;                                                                           
26                 (6)  contracts for the sale or transportation of oil or gas;                                            
27                 (7)  information and calculations used in determining monthly                                           
28       installment payments of estimated tax under AS 43.55.020(a); and                                                  
29                 (8)  other records and information the department considers necessary                                   
30       for the administration of this chapter.                                                                           
31    * Sec. 46. AS 43.55.040 is amended to read:                                                                        
01            Sec. 43.55.040. Powers of Department of Revenue. Except as provided in                                     
02       AS 43.05.405 - 43.05.499, the department may                                                                      
03                 (1)  require a person engaged in production and the agent or employee                                   
04       of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil                         
05       or gas to furnish, whether by the filing of regular statements or reports or otherwise,                           
06       additional information that is considered by the department as necessary to compute                               
07       the amount of the tax; notwithstanding any contrary provision of law, the disclosure                              
08       of additional information under this paragraph to the producer obligated to pay the tax                           
09       does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information                                
10       under this paragraph that is otherwise required to be held confidential under                                     
11       AS 40.25.100(a) or AS 43.05.230(a), the department shall                                                          
12                      (A)  provide the person that furnished the information a                                           
13            reasonable opportunity to be heard regarding the proposed disclosure and the                                 
14            conditions to be imposed under (B) of this paragraph; and                                                    
15                      (B)  impose appropriate conditions limiting                                                        
16                           (i)  access to the information to those legal counsel,                                        
17                 consultants, employees, officers, and agents of the producer who have                                   
18                 a need to know that information for the purpose of determining or                                       
19                 contesting the producer's tax obligation; and                                                           
20                           (ii)  the use of the information to use for that purpose;                                     
21                 (2)  examine the books, records, and files of the [SUCH A] person;                                  
22                 (3)  conduct hearings and compel the attendance of witnesses and the                                    
23       production of books, records, and papers of any person; [AND]                                                     
24                 (4)  make an investigation or hold an inquiry that is considered                                        
25       necessary to a disclosure of the facts as to                                                                      
26                      (A)  the amount of production from any oil or gas location, or                                     
27            of a company or other producer of oil or gas; and                                                            
28                      (B)  the rendition of the oil and gas for taxing purposes;                                     
29                 (5)  require a producer, an explorer, or an operator of a lease or                                  
30       property to file reports and copies of records that the department considers                                  
31       necessary to forecast state revenue under this chapter; in the case of reports and                            
01       copies of records relating to proposed, expected, or approved unit expenditures                               
02       for a unit for which one or more working interest owners other than the                                       
03       operator have authority to approve unit expenditures, the required reports and                                
04       copies of records may include those reports or copies of records that constitute                              
05       or disclose communications between the operator and the working interest                                      
06       owners relating to unit budget matters;                                                                       
07                 (6)  require a producer that has an average total production in the                                 
08       state of more than 100,000 barrels a day for a calendar year to report the gross                              
09       value at the point of production of the producer's taxable oil and gas in the state                           
10       for a calendar year and the total amount of lease expenditures in the state for                               
11       that calendar year; and                                                                                       
12                 (7)  assess against a person required under this section to file a                                  
13       report, statement, or other document a penalty, as determined by the                                          
14       department under standards adopted in regulation by the department, of not                                    
15       more than $1,000 for each day the person fails to file the report, statement, or                              
16       other document at the time required; the penalty is in addition to the penalties in                           
17       AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the same                                   
18       manner as a tax deficiency under this title.                                                                  
19    * Sec. 47. AS 43.55.050 is amended to read:                                                                        
20            Sec. 43.55.050. Incorrect returns. The department may determine whether or                                 
21       not a return required by this chapter to be filed with it is correct. If a person makes an                        
22       untrue or incorrect return of the gross amount of production, the gross value at the                      
23       point of production, the amount of lease expenditures, the amount of credits, or                              
24       other information that affects the amount of tax due under this chapter, [OR                                  
25       THE VALUE OF IT,] or fails or refuses to make a return, the department shall, under                               
26       regulations adopted by it, determine the correct amount of tax due under this                                 
27       chapter [GROSS PRODUCTION OR THE VALUE OF IT, AND COMPUTE THE                                                 
28       TAX].                                                                                                             
29    * Sec. 48. AS 43.55.050 is amended by adding a new subsection to read:                                             
30            (b)  The determination of the correct amount of tax due under this chapter by                                
31       the department is presumed to be correct, and the taxpayer bears the burden of proof                              
01       to prove that the determination by the department is incorrect and to prove the correct                           
02       amount of tax due under this chapter.                                                                             
03    * Sec. 49. AS 43.55 is amended by adding a new section to read:                                                    
04            Sec. 43.55.055. Penalty for understatement of tax. (a) In addition to other                              
05       penalties prescribed by law, if there is a substantial understatement of tax required to                          
06       be shown on a return under this chapter, there shall be added to the tax an amount                                
07       equal to 20 percent of the substantial understatement of tax.                                                     
08            (b)  In addition to other penalties prescribed by law, if there is a gross                                   
09       understatement of tax required to be shown on a return under this chapter, there shall                            
10       be added to the tax an amount equal to 40 percent of the gross understatement of tax.                             
11            (c)  In addition to the penalties imposed under (a) or (b) of this section, a                                
12       person who has made a substantial or gross underpayment of tax is liable to the state                             
13       for the reasonable costs of the state's enforcement action, including auditing costs.                             
14            (d)  For purposes of this section,                                                                           
15                 (1)  a substantial understatement of tax for any taxable year exists if                                 
16       the amount of the understatement for the taxable year exceeds the lesser of 10 percent                            
17       of the tax required to be shown on the return for the taxable year or $10,000,000;                                
18                 (2)  a gross understatement of tax for any taxable year exists if the                                   
19       amount of the understatement for the taxable year exceeds the lesser of 20 percent of                             
20       the tax required to be shown on the return for the taxable year or $20,000,000;                                   
21                 (3)  "understatement" means the amount by which the tax required to                                     
22       be shown on the return for the taxable year exceeds the amount of the tax reported as                             
23       due by the taxpayer as shown on the return.                                                                       
24    * Sec. 50. AS 43.55 is amended by adding a new section to read:                                                    
25            Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except                                   
26       as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be                               
27       assessed within six years after the latest return was filed.                                                      
28            (b)  A decision of a regulatory agency, court, or other body with authority to                               
29       resolve disputes that results in a retroactive change to a lease expenditure, to an                               
30       adjustment to a lease expenditure, to costs of transportation, to sale price, to                                  
31       prevailing value, or to consideration of quality differentials relating to the                                    
01       commingling of oils has a corresponding effect, either an increase or decrease, as                                
02       applicable, on the production tax value of oil or gas or the amount or availability of a                          
03       tax credit as determined under this chapter. For purposes of this section, a change to a                          
04       lease expenditure includes a change in the categorization of a lease expenditure as a                             
05       qualified capital expenditure or as not a qualified capital expenditure. The producer                             
06       shall                                                                                                             
07                 (1)  within 60 days after the change, notify the department in writing;                                 
08       and                                                                                                               
09                 (2)  within 120 days after the change, file amended returns covering all                                
10       periods affected by the change, unless the department agrees otherwise or a stay is in                            
11       place that affects the filing or payment, regardless of the pendency of appeals of the                            
12       decision.                                                                                                         
13            (c)  If an alteration in or modification of a producer's federal income tax return                           
14       or a recomputation of the producer's federal income tax or determination of                                       
15       deficiency occurs that affects the amount of a tax imposed on the producer under this                             
16       chapter, the producer shall                                                                                       
17                 (1)  within 60 days after the final determination of the alteration,                                    
18       modification, recomputation, or deficiency, notify the department in writing; and                                 
19                 (2)  within 120 days after the final determination of the alteration,                                   
20       modification, recomputation, or deficiency, file amended returns covering all affected                            
21       periods.                                                                                                          
22            (d)  In this section,                                                                                        
23                 (1)  "qualified capital expenditure" has the meaning given in                                           
24       AS 43.55.023;                                                                                                     
25                 (2)  "return" includes a report, a statement, and an amended return,                                    
26       report, or statement.                                                                                             
27    * Sec. 51. AS 43.55.110 is amended by adding new subsections to read:                                              
28            (e)  The department may require that returns, statements, reports, notifications,                            
29       and applications filed under this chapter be filed electronically in a form and manner                            
30       approved or prescribed by the department.                                                                         
31            (f)  The department may require that payments required under this chapter be                                 
01       made electronically in a form and manner approved or prescribed by the department.                                
02            (g)  Notwithstanding AS 44.62, the department may issue, for the information                                 
03       and guidance of producers, explorers, and other interested persons, advisory bulletins                            
04       stating the department's interpretation of provisions of this chapter and of regulations                          
05       adopted under this chapter. Unless otherwise provided by the department by                                        
06       regulation, interpretations stated in the advisory bulletins are not binding on the                               
07       department or others.                                                                                             
08            (h)  Subject to legislative appropriation, the department may compensate a                                   
09       person who provides information to the department about noncompliance with the                                    
10       provisions of this chapter by an explorer or a producer of oil or gas if that information                         
11       leads to the collection of additional taxes, penalties, or interest from the producer. The                        
12       amount of compensation under this subsection may not exceed the lesser of                                         
13       $1,000,000 or 10 percent of the additional tax, penalty, or interest collected as a result                        
14       of the information. A state employee or an agent of the state is not eligible for                                 
15       compensation under this subsection.                                                                               
16    * Sec. 52. AS 43.55.150(a) is amended to read:                                                                     
17            (a)  For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point                              
18       of production is calculated using the reasonable costs of transportation of the oil or                            
19       gas. The reasonable costs of transportation are the actual costs, except when the                                 
20                 (1)  parties to the transportation of oil or gas are affiliated;                                        
21                 (2)  contract for the transportation of oil or gas is not                                               
22                      (A)  an arm's length transaction; or                                                       
23                      (B)  [IS NOT] representative of the market value of that                                       
24            transportation; or [AND]                                                                                 
25                 (3)  method of transportation of oil or gas is not reasonable in view of                                
26       existing alternative methods of transportation.                                                                   
27    * Sec. 53. AS 43.55.150(b) is amended to read:                                                                     
28            (b)  If the department finds that a condition [THE CONDITIONS] in (a)(1),                                
29       (2), or [AND] (3) of this section is [ARE] present, the department shall determine the                    
30       reasonable costs of transportation, using the fair market value of like transportation,                           
31       the fair market value of equally efficient and available alternative modes of                                     
01       transportation, or other reasonable methods. Transportation costs fixed by tariff rates                           
02       that have been adjudicated as just and reasonable by [PROPERLY ON FILE                                        
03       WITH] the Regulatory Commission of Alaska or other regulatory agency shall be                                     
04       considered prima facie reasonable.                                                                                
05    * Sec. 54. AS 43.55.160(a) is amended to read:                                                                     
06            (a)  Except as provided in (b) of this section, for the purposes of                                          
07                 [(1)]  AS 43.55.011(e) and AS 43.55.020(a)(2) [, THE ANNUAL                                         
08       PRODUCTION TAX VALUE OF THE TAXABLE                                                                               
09                      (A)  OIL AND GAS PRODUCED DURING A CALENDAR                                                        
10            YEAR FROM LEASES OR PROPERTIES IN THE STATE THAT                                                             
11            INCLUDE LAND NORTH OF 68 DEGREES NORTH LATITUDE IS THE                                                       
12            GROSS VALUE AT THE POINT OF PRODUCTION OF THE OIL AND                                                        
13            GAS TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE                                                        
14            PRODUCER FROM THOSE LEASES OR PROPERTIES, LESS THE                                                           
15            PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE                                                     
16            CALENDAR YEAR APPLICABLE TO THE OIL AND GAS PRODUCED                                                         
17            BY THE PRODUCER FROM THOSE LEASES OR PROPERTIES, AS                                                          
18            ADJUSTED UNDER AS 43.55.170;                                                                                 
19                      (B)  OIL AND GAS PRODUCED DURING A CALENDAR                                                        
20            YEAR FROM LEASES OR PROPERTIES IN THE STATE OUTSIDE THE                                                      
21            COOK INLET SEDIMENTARY BASIN, NO PART OF WHICH IS NORTH                                                      
22            OF 68 DEGREES NORTH LATITUDE, IS THE GROSS VALUE AT THE                                                      
23            POINT OF PRODUCTION OF THE OIL AND GAS TAXABLE UNDER                                                         
24            AS 43.55.011(e) AND PRODUCED BY THE PRODUCER FROM THOSE                                                      
25            LEASES OR PROPERTIES, LESS THE PRODUCER'S LEASE                                                              
26            EXPENDITURES UNDER AS 43.55.165 FOR THE CALENDAR YEAR                                                        
27            APPLICABLE TO THE OIL AND GAS PRODUCED BY THE PRODUCER                                                       
28            FROM THOSE LEASES OR PROPERTIES, AS ADJUSTED UNDER                                                           
29            AS 43.55.170;                                                                                                
30                      (C)  OIL PRODUCED DURING A CALENDAR YEAR                                                           
31            FROM A LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY                                                       
01            BASIN IS THE GROSS VALUE AT THE POINT OF PRODUCTION OF                                                       
02            THE OIL TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY THE                                                    
03            PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE                                                               
04            PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE                                                     
05            CALENDAR YEAR APPLICABLE TO THE OIL PRODUCED BY THE                                                          
06            PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED                                                            
07            UNDER AS 43.55.170;                                                                                          
08                      (D)  GAS PRODUCED DURING A CALENDAR YEAR                                                           
09            FROM A LEASE OR PROPERTY IN THE COOK INLET SEDIMENTARY                                                       
10            BASIN IS THE GROSS VALUE AT THE POINT OF PRODUCTION OF                                                       
11            THE GAS TAXABLE UNDER AS 43.55.011(e) AND PRODUCED BY                                                        
12            THE PRODUCER FROM THAT LEASE OR PROPERTY, LESS THE                                                           
13            PRODUCER'S LEASE EXPENDITURES UNDER AS 43.55.165 FOR THE                                                     
14            CALENDAR YEAR APPLICABLE TO THE GAS PRODUCED BY THE                                                          
15            PRODUCER FROM THAT LEASE OR PROPERTY, AS ADJUSTED                                                            
16            UNDER AS 43.55.170;                                                                                          
17                 (2)  AS 43.55.011(g)], the [MONTHLY] production tax value of the                                        
18       taxable                                                                                                           
19                 (1) [(A)]  oil and gas produced during a month from leases or                                       
20       properties in the state that include land north of 68 degrees North latitude, other than                      
21       gas subject to AS 43.55.011(o), is the gross value at the point of production of the oil                      
22       and gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by the                                   
23       producer from those leases or properties, less 1/12 of the producer's lease                                       
24       expenditures under AS 43.55.165 for the calendar year applicable to the oil and gas                               
25       produced by the producer from those leases or properties, as adjusted under                                       
26       AS 43.55.170;                                                                                                     
27                 (2) [(B)]  oil and gas produced during a month from leases or                                       
28       properties in the state outside the Cook Inlet sedimentary basin, no part of which is                             
29       north of 68 degrees North latitude, other than gas subject to AS 43.55.011(o), is the                         
30       gross value at the point of production of the oil and gas taxable under                                           
31       AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those leases                              
01       or properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 for                              
02       the calendar year applicable to the oil and gas produced by the producer from those                               
03       leases or properties, as adjusted under AS 43.55.170;                                                             
04                 (3) [(C)]  oil produced during a month from a lease or property in the                              
05       Cook Inlet sedimentary basin is the gross value at the point of production of the oil                             
06       taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from                             
07       that lease or property, less 1/12 of the producer's lease expenditures under                                      
08       AS 43.55.165 for the calendar year applicable to the oil produced by the producer                                 
09       from that lease or property, as adjusted under AS 43.55.170;                                                      
10                 (4) [(D)]  gas produced during a month from a lease or property in the                              
11       Cook Inlet sedimentary basin is the gross value at the point of production of the gas                             
12       taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from                             
13       that lease or property, less 1/12 of the producer's lease expenditures under                                      
14       AS 43.55.165 for the calendar year applicable to the gas produced by the producer                                 
15       from that lease or property, as adjusted under AS 43.55.170;                                                  
16                 (5)  gas produced during a month from a lease or property outside                                   
17       the Cook Inlet sedimentary basin and used in the state is the gross value at the                              
18       point of production of that gas taxable under AS 43.55.011(e) and produced by                                 
19       the producer from that lease or property, less 1/12 of the producer's lease                                   
20       expenditures under AS 43.55.165 for the calendar year applicable to that gas                                  
21       produced by the producer from that lease or property as adjusted under                                        
22       AS 43.55.170.                                                                                                 
23    * Sec. 55. AS 43.55.160(c) is amended to read:                                                                     
24            (c)  Notwithstanding any contrary provision of AS 43.55.150, for purposes of                                 
25       calculating a [MONTHLY] production tax value under (a) [(a)(2)] of this section, the                          
26       gross value at the point of production of the oil and gas taxable under                                           
27       AS 43.55.011(e) [AS 43.55.011(g)] is calculated under regulations adopted by the                              
28       department that provide for using an appropriate monthly share of the producer's                                  
29       costs of transportation for the calendar year.                                                                    
30    * Sec. 56. AS 43.55.160(e) is amended to read:                                                                     
31            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
01       would otherwise be deductible by a producer in a calendar year but whose deduction                                
02       would cause a [AN ANNUAL] production tax value calculated under (a) [(a)(1)] of                           
03       this section of taxable oil or gas produced during the calendar year to be less than                              
04       zero may be used to establish a carried-forward annual loss under AS 43.55.023(b). In                             
05       this subsection, "producer" includes "explorer."                                                                  
06    * Sec. 57. AS 43.55.165(a) is repealed and reenacted to read:                                                      
07            (a)  For purposes of this chapter, a producer's lease expenditures for a calendar                            
08       year are                                                                                                          
09                 (1)  costs, other than items listed in (e) of this section, that are                                    
10                      (A)  incurred in the state by the producer during the calendar                                     
11            year after March 31, 2006, to explore for, develop, or produce oil or gas                                    
12            deposits located within the producer's leases or properties in the state or, in the                          
13            case of land in which the producer does not own an operating right, operating                                
14            interest, or working interest, to explore for oil or gas deposits within other                               
15            land in the state; and                                                                                       
16                      (B)  allowed by the department by regulation, based on the                                         
17            department's determination that the costs satisfy the following three                                        
18            requirements:                                                                                                
19                           (i)  the costs must be incurred upstream of the point of                                      
20                 production of oil and gas;                                                                              
21                           (ii)  the costs must be ordinary and necessary costs of                                       
22                 exploring for, developing, or producing, as applicable, oil or gas                                      
23                 deposits; and                                                                                           
24                           (iii)  the costs must be direct costs of exploring for,                                       
25                 developing, or producing, as applicable, oil or gas deposits; and                                       
26                 (2)  a reasonable allowance for that calendar year, as determined under                                 
27       regulations adopted by the department, for overhead expenses that are directly related                            
28       to exploring for, developing, or producing, as applicable, the oil or gas deposits.                               
29    * Sec. 58. AS 43.55.165(b) is amended to read:                                                                     
30            (b)  For purposes of (a) of this section,                                                                    
31                 (1)  direct costs include                                                                               
01                      (A)  an expenditure, when incurred, to acquire an item if the                                      
02            acquisition cost is otherwise a direct cost, notwithstanding that the                                        
03            expenditure may be required to be capitalized rather than treated as an                                      
04            expense for financial accounting or federal income tax purposes;                                             
05                      (B)  payments of or in lieu of                                                                     
06                           (i)  property taxes for properties on which oil and gas                               
07                 exploration, development, or production is taking place; and                                        
08                           (ii)  [,] sales and use taxes, motor fuel taxes, and excise                               
09                 taxes related to transactions or activities involving oil or gas                                    
10                 exploration, development, or production;                                                            
11                      (C)  supplies to be used for oil or gas exploration,                                           
12            development, or production [A REASONABLE ALLOWANCE, AS                                                   
13            DETERMINED UNDER REGULATIONS ADOPTED BY THE                                                                  
14            DEPARTMENT, FOR OVERHEAD EXPENSES DIRECTLY RELATED                                                           
15            TO EXPLORING FOR, DEVELOPING, AND PRODUCING OIL OR GAS                                                       
16            DEPOSITS LOCATED WITHIN LEASES OR PROPERTIES OR OTHER                                                        
17            LAND IN THE STATE];                                                                                          
18                      (D)  purchased fuel;                                                                           
19                      (E)  routine maintenance;                                                                      
20                      (F)  the wages and benefits of employees who are directly                                      
21            participating in exploration, development, or production operations; and                                 
22                      (G)  other direct costs as may be established in regulations                                   
23            adopted by the department;                                                                               
24                 (2)  in determining whether costs are lease expenditures, the                                       
25       department may consider, among other factors, the                                                             
26                      (A)  typical industry practices and standards in the state                                     
27            that determine the costs, other than items listed in (e) of this section, that                           
28            an operator is allowed to bill a producer that is not the operator, under                                
29            unit operating agreements or similar operating agreements that were in                                   
30            effect before December 2, 2005, and were subject to negotiation with at                                  
31            least one producer with substantial bargaining power, other than the                                     
01            operator; and                                                                                            
02                      (B)  standards adopted by the Department of Natural                                            
03            Resources that determine the costs, other than items listed in (e) of this                               
04            section, that a lessee is allowed to deduct from revenue in calculating net                              
05            profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) [AN                                
06            ACTIVITY DOES NOT NEED TO BE PHYSICALLY LOCATED ON,                                                          
07            NEAR, OR WITHIN THE PREMISES OF THE LEASE OR PROPERTY                                                        
08            WITHIN WHICH AN OIL OR GAS DEPOSIT BEING EXPLORED FOR,                                                       
09            DEVELOPED, OR PRODUCED IS LOCATED IN ORDER FOR THE                                                           
10            COST OF THE ACTIVITY TO BE A COST UPSTREAM OF THE POINT                                                      
11            OF PRODUCTION OF THE OIL OR GAS].                                                                            
12    * Sec. 59. AS 43.55.165(e) is amended to read:                                                                     
13            (e)  For purposes of this section, lease expenditures do not include                                         
14                 (1)  depreciation, depletion, or amortization;                                                          
15                 (2)  oil or gas royalty payments, production payments, lease profit                                     
16       shares, or other payments or distributions of a share of oil or gas production, profit, or                        
17       revenue;                                                                                                          
18                 (3)  taxes based on or measured by net income;                                                          
19                 (4)  interest or other financing charges or costs of raising equity or                                  
20       debt capital;                                                                                                     
21                 (5)  acquisition costs for a lease or property or exploration license;                                  
22                 (6)  costs arising from fraud, wilful misconduct, [OR] gross                                            
23       negligence, violation of law, or failure to comply with an obligation under a lease,                          
24       permit, or license issued by the state or federal government;                                                 
25                 (7)  fines or penalties imposed by law;                                                                 
26                 (8)  costs of arbitration, litigation, [OR OTHER] dispute resolution                                    
27       activities, lobbying, public relations, advertising, or policy advocacy [THAT                                 
28       INVOLVE THE STATE OR CONCERN THE RIGHTS OR OBLIGATIONS                                                            
29       AMONG OWNERS OF INTERESTS IN, OR RIGHTS TO PRODUCTION FROM,                                                       
30       ONE OR MORE LEASES OR PROPERTIES OR A UNIT];                                                                      
31                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
01       business entity or arrangement;                                                                                   
02                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
03       this paragraph does not apply to the costs of obtaining insurance or a surety bond                                
04       from a third-party insurer or surety;                                                                             
05                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
06                 (12)  an expenditure otherwise deductible under (b) of this section                                 
07       that is a result of [FOR A TRANSACTION THAT IS] an internal transfer, a                                   
08       transaction with an affiliate, or a transaction between related parties, or is                                
09       otherwise not an arm's length transaction, unless the producer establishes to the                             
10       satisfaction of the department that the amount of the expenditure does not                                    
11       exceed the [EXPENDITURES INCURRED THAT ARE IN EXCESS OF] fair                                                 
12       market value of the expenditure;                                                                              
13                 (13)  an expenditure incurred to purchase an interest in any                                            
14       corporation, partnership, limited liability company, business trust, or any other                                 
15       business entity, whether or not the transaction is treated as an asset sale for federal                           
16       income tax purposes;                                                                                              
17                 (14)  a tax levied under AS 43.55.011;                                                                  
18                 (15)  [THE PORTION OF] costs incurred for dismantlement, removal,                                       
19       surrender, or abandonment of a facility, pipeline, well pad, platform, or other                                   
20       structure, or for the restoration of a lease, field, unit, area, tract of land, body of                       
21       water, or right-of-way in conjunction with dismantlement, removal, surrender, or                                  
22       abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS                                                   
23       OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A                                                    
24       RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                      
25       OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL                                                      
26       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
27       OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO                                                      
28       THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                         
29       OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL                                                     
30       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
31       OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR                                                         
01       MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT,                                                                   
02       REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under                                                 
03       this paragraph if the dismantlement, removal, surrender, or abandonment for which                                 
04       the cost is incurred is undertaken for the purpose of replacing, renovating, or                                   
05       improving the facility, pipeline, well pad, platform, or other structure; [FOR THE                                
06       PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS                                                      
07                      (A)  IN THE CASE OF OIL, ONE BARREL;                                                               
08                      (B)  IN THE CASE OF GAS, 6,000 CUBIC FEET;]                                                        
09                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
10       connection with any unpermitted release of oil or a hazardous substance and any                                   
11       liability for damages imposed on the producer or explorer for that unpermitted                                    
12       release; this paragraph does not apply to the cost of developing and maintaining an oil                           
13       discharge prevention and contingency plan under AS 46.04.030;                                                     
14                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
15       license under AS 38.05.132;                                                                                       
16                 (18)  that portion of expenditures, that would otherwise be qualified                                   
17       capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a                     
18       calendar year that are less than the product of $0.30 multiplied by the total taxable                             
19       production from each lease or property, in BTU equivalent barrels, during that                                    
20       calendar year, except that, when a portion of a calendar year is subject to this                                  
21       provision, the expenditures and volumes shall be prorated within that calendar year;                          
22                 (19)  costs incurred for repair, replacement, or deferred                                           
23       maintenance of a facility, a pipeline, a structure, or equipment, other than a well,                          
24       that results in or is undertaken in response to a failure, problem, or event that                             
25       results in an unscheduled interruption of, or reduction in the rate of, oil or gas                            
26       production; costs incurred for repair, replacement, or deferred maintenance of a                              
27       facility, a pipeline, a structure, or equipment, other than a well, that is                                   
28       undertaken in response to, or is otherwise associated with, an unpermitted                                    
29       release of a hazardous substance or of gas; or costs incurred for repair,                                     
30       replacement, or deferred maintenance of a facility, a pipeline, a structure or                                
31       equipment other than a well that was not maintained or was improperly                                         
01       maintained; however, costs under this paragraph that would otherwise                                          
02       constitute lease expenditures under (a) of this section may be treated as lease                               
03       expenditures if the department determines that the repair or replacement is                                   
04       solely necessitated by an act of war, by an unanticipated grave natural disaster                              
05       or other natural phenomenon of an exceptional, inevitable, and irresistible                                   
06       character, the effects of which could not have been prevented or avoided by the                               
07       exercise of due care or foresight, or by an intentional or negligent act or                                   
08       omission of a third party, other than a party or its agents in privity of contract                            
09       with, or employed by, the producer or an operator acting for the producer, but                                
10       only if the producer or operator, as applicable, exercised due care in operating                              
11       and maintaining the facility, pipeline, structure, or equipment, and took                                     
12       reasonable precautions against the act or omission of the third party and against                             
13       the consequences of the act or omission; in this paragraph,                                                   
14                      (A)  "costs incurred for repair, replacement, or deferred                                      
15            maintenance of a facility, a pipeline, a structure, or equipment" includes                               
16            costs to dismantle and remove the facility, pipeline, structure, or                                      
17            equipment that is being replaced;                                                                        
18                      (B)  "hazardous substance" has the meaning given in                                            
19            AS 46.03.826;                                                                                            
20                      (C)  "replacement" includes renovation or improvement;                                         
21                 (20)  costs incurred to construct, acquire, or operate a refinery or                                
22       crude oil topping plant, regardless of whether the products of the refinery or                                
23       topping plant are used in oil or gas exploration, development, or production                                  
24       operations; however, if a producer owns a refinery or crude oil topping plant                                 
25       that is located on or near the premises of the producer's lease or property in the                            
26       state and that processes the producer's oil produced from that lease or property                              
27       into a product that the producer uses in the operation of the lease or property in                            
28       drilling for or producing oil or gas, the producer's lease expenditures include the                           
29       amount calculated by subtracting from the fair market value of the product used                               
30       the prevailing value, as determined under AS 43.55.020(f), of the oil that is                                 
31       processed;                                                                                                    
01                 (21)  costs relating to office buildings, fixtures and equipment, and                               
02       real property that are not located in the state;                                                              
03                 (22)  overhead, office, or administrative expenses, and all other                                   
04       indirect costs of oil or gas exploration, development, or production.                                       
05    * Sec. 60. AS 43.55.165(h) is amended to read:                                                                     
06            (h)  The department shall adopt regulations that provide for reasonable                                      
07       methods of allocating costs between oil and gas, between gas subject to                                       
08       AS 43.55.011(o) and other gas, and between leases or properties in those                                      
09       circumstances where the determination of the lease expenditures that are applicable to                            
10       oil or to gas, that are applicable to gas subject to AS 43.55.011(o) or to other gas,                         
11       or that are applicable to oil and gas produced from different leases or properties,                               
12       requires an allocation of costs.                                                                                  
13    * Sec. 61. 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. 62. AS 43.55.170(b) is amended to read:                                                                     
17            (b)  Except as otherwise provided under this subsection, if one or more                                      
18       payments or credits subject to this section are received by a producer or by an                                   
19       operator acting for the producer during a calendar year and if either the total amount                            
20       of the payments or credits exceeds the amount of the producer's applicable lease                                  
21       expenditures for that calendar year or the producer has no lease expenditures for that                            
22       calendar year, the producer shall nevertheless subtract those payments or credits from                            
23       the lease expenditures or from zero, respectively, and the producer's applicable                                  
24       adjusted lease expenditures for that calendar year are a negative number and shall be                             
25       applied to the pertinent calculations [CALCULATION] under AS 43.55.160                                    
26       [AS 43.55.160(a)] as a negative number.                                                                           
27    * Sec. 63. AS 43.55 is amended by adding a new section to article 4 to read:                                       
28            Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary                                
29       provision of AS 40.25.100, and regardless of whether the information is considered                                
30       under AS 43.05.230(e) to constitute statistics classified to prevent the identification of                        
31       particular returns or reports, the department may publish                                                         
01                 (1)  the following information under this chapter, if aggregated among                                  
02       three or more producers or explorers, showing by month or calendar year and by lease                              
03       or property, unit, or area of the state:                                                                          
04                      (A)  the amount of oil or gas production;                                                          
05                      (B)  the amount of taxes levied under this chapter or paid under                                   
06            this chapter;                                                                                                
07                      (C)  the effective tax rates under this chapter;                                                   
08                      (D)  the gross value of oil or gas at the point of production;                                     
09                      (E)  the transportation costs for oil or gas;                                                      
10                      (F)  qualified capital expenditures under AS 43.55.023(k);                                         
11                      (G)  exploration expenditures under AS 43.55.025;                                                  
12                      (H)  production tax values of oil or gas under AS 43.55.160;                                       
13                      (I)  lease expenditures under AS 43.55.165;                                                        
14                      (J)  adjustments to lease expenditures under AS 43.55.170;                                         
15                      (K)  tax credits applicable or potentially applicable against                                      
16            taxes levied by this chapter; and                                                                            
17                 (2)  the gross value at the point of production and the total amount of                                 
18       the lease expenditures for each producer required to report under AS 43.55.040(5).                                
19    * Sec. 64. AS 43.55.900 is amended by adding new paragraphs to read:                                               
20                 (22)  "producer" means an owner of an operating right, operating                                        
21       interest, or working interest in a mineral interest in oil or gas;                                                
22                 (23)  "unit" means a group of tracts of land that is                                                    
23                      (A)  subject to a cooperative or a unit plan of development or                                     
24            operation that has been certified by the commissioner of natural resources                                   
25            under AS 38.05.180(p);                                                                                       
26                      (B)  subject to a cooperative or a unit plan of development or                                     
27            operation that has been certified by the United States Secretary of the Interior                             
28            under 30 U.S.C. 226(m);                                                                                      
29                      (C)  subject to an agreement of the owners of interests in the                                     
30            tracts of land to validly integrate their interests to provide for the unitized                              
31            management, development, and operation of the tracts of land as a unit, within                               
01            the meaning of AS 31.05.110(a); or                                                                           
02                      (D)  within the unit area of a unit created by order of the                                        
03            Alaska Oil and Gas Conservation Commission under AS 31.05.110(b).                                            
04    * Sec. 65. AS 43.55.165(c) and 43.55.165(d) are repealed.                                                          
05    * Sec. 66. AS 43.55.011(l) is repealed.                                                                            
06    * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to                         
07 read:                                                                                                                   
08       APPLICABILITY. (a) Sections 57 - 59, 61, and 65 of this Act apply to oil and gas                                  
09 produced after March 31, 2006.                                                                                          
10       (b)  Sections 16 - 28, 30 - 32, 37 - 39, and 54 - 56 of this Act apply to oil and gas                             
11 produced after December 31, 2006.                                                                                       
12       (c)  Sections 43 - 45 of this Act apply to statements and reports under                                           
13 AS 43.55.030(a), as amended by sec. 43 of this Act, and AS 43.55.030(e) and (f), as added                               
14 by sec. 45 of this Act, required to be filed after December 31, 2007.                                                   
15       (d)  Section 49 of this Act applies to understatements made after the effective date of                           
16 sec. 49 of this Act.                                                                                                    
17       (e)  AS 43.05.075, added by sec. 50 of this Act, applies to any tax liability under                               
18 AS 43.55 with respect to which the period of limitation on assessment under AS 43.05.260                                
19 had not expired before the effective date of secs. 15 and 50 of this Act.                                               
20       (f)  Sections 33 - 36 and 40 of this Act apply to exploration expenditures incurred for                           
21 work performed after December 31, 2006, that are the bases of tax credits that may be                                   
22 claimed against taxes levied for oil and gas produced after December 31, 2006.                                          
23    * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to                         
24 read:                                                                                                                   
25       OIL AND GAS REVENUE AUDIT MANAGER POSITIONS; LEGISLATIVE                                                          
26 INTENT. It is the intent of the legislature that the commissioner of administration shall cause                         
27 not more than four oil and gas revenue audit manager positions to be created in the                                     
28 Department of Revenue and not more than two oil and gas revenue audit manager positions                                 
29 to be created in the Department of Natural Resources. Oil and gas revenue audit managers                                
30 shall be employed in a professional capacity to collect oil and gas revenue by developing                               
31 policy, conducting studies, drafting proposed regulations, enforcing regulations, and                                   
01 supervising audits by oil and gas revenue auditors.                                                                     
02    * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04       TRANSITION: PAYMENT OF TAX. A person subject to tax under AS 43.55 that is                                        
05 required to make one or more installment payments of estimated tax under AS 43.55.020(a),                               
06 as amended by sec. 25 of this Act, for the production of oil or gas during a month after                                
07 December 31, 2006, and before January 1, 2008, but that failed to pay the full amount of the                            
08 installment payments required under AS 43.55.020(a) because of the retroactive application                              
09 of secs. 16 - 41, 43 - 45, 54 - 56, and 66 of this Act under sec. 72(b) of this Act, shall pay the                      
10 balance of any tax due under AS 43.55 for the calendar year 2007 before April 1, 2008.                                  
11    * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to                         
12 read:                                                                                                                   
13       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
14 contrary provision of AS 44.62.240,                                                                                     
15            (1)  if the Department of Revenue expressly designates in the regulation that                                
16 the regulation applies retroactively to that date, a regulation adopted by the Department of                            
17 Revenue to implement, interpret, make specific, or otherwise carry out                                                  
18                 (A)  secs. 57 - 59, 61, and 65 of this Act may apply retroactively to                                   
19       April 1, 2006;                                                                                                    
20                 (B)  secs. 16 - 41, 43, and 60 of this Act may apply retroactively to                                   
21       January 1, 2007;                                                                                                  
22            (2)  a regulation adopted by the Department of Natural Resources to                                          
23 implement, interpret, make specific, or otherwise carry out statutory provisions for the                                
24 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the                            
25 extent the regulation deals with the treatment of oil and gas production taxes in determining                           
26 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of                          
27 Natural Resources expressly designates in the regulation that the regulation applies                                    
28 retroactively to that date.                                                                                             
29    * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to                         
30 read:                                                                                                                   
31       TRANSITION: REGULATIONS. The Department of Natural Resources and the                                              
01 Department of Revenue may proceed to adopt regulations to implement this Act. The                                       
02 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the                               
03 effective date of the law implemented by the regulation.                                                                
04    * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to                         
05 read:                                                                                                                   
06       RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Sections 57 -                                                
07 59, 61, and 65 of this Act are retroactive to April 1, 2006.                                                            
08       (b)  Sections 16 - 41, 43 - 45, 54 - 56, 60, and 66 of this Act are retroactive to                                
09 January 1, 2007.                                                                                                        
10    * Sec. 73. This Act takes effect immediately under AS 01.10.070(c).