SCS CSHB 280(RES): "An Act relating to a gas storage facility; relating to the Regulatory Commission of Alaska; relating to the participation by the attorney general in a matter involving the approval of a rate or a gas supply contract; relating to an income tax credit for a gas storage facility; relating to oil and gas production tax credits; relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; relating to production tax credits for certain losses and expenditures, including exploration expenditures; relating to the powers and duties of the director of the division of lands and to lease fees for a gas storage facility on state land; and providing for an effective date."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 280(RES) 01 "An Act relating to a gas storage facility; relating to the Regulatory Commission of 02 Alaska; relating to the participation by the attorney general in a matter involving the 03 approval of a rate or a gas supply contract; relating to an income tax credit for a gas 04 storage facility; relating to oil and gas production tax credits; relating to the powers and 05 duties of the Alaska Oil and Gas Conservation Commission; relating to production tax 06 credits for certain losses and expenditures, including exploration expenditures; relating 07 to the powers and duties of the director of the division of lands and to lease fees for a gas 08 storage facility on state land; and providing for an effective date." 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 11 to read: 12 SHORT TITLE. This Act may be known as the Cook Inlet Recovery Act.
01 * Sec. 2. AS 31.05 is amended by adding a new section to read: 02 Sec. 31.05.032. Certification of gas storage capacity. (a) An owner of a gas 03 storage facility that seeks an exemption under AS 38.05.180(u) or a credit under 04 AS 43.20.046 shall apply to the commission for certification of the facility's working 05 gas storage capacity and certification of the facility's gas withdrawal capability. The 06 application shall be on a form prescribed by the commission. 07 (b) Within six months after receiving an application under (a) of this section, 08 the commission shall determine and certify 09 (1) the working gas storage capacity of the facility on the date the 10 facility commences commercial operation rounded to the nearest 500,000,000 cubic 11 feet; 12 (2) whether the gas storage facility is capable of withdrawing a 13 minimum of 10,000,000 cubic feet of gas a day; and 14 (3) that the facility qualifies as a gas storage facility for the purposes of 15 this section. 16 (c) The commission shall provide a copy of the certifications required by (b) 17 of this section to the owner of the gas storage facility that requested the certification, 18 the commissioner of natural resources, and the commissioner of revenue. 19 (d) If a gas storage facility ceases commercial operation, an owner of the gas 20 storage facility shall give written notice to the commission that commercial operation 21 has ceased. The notice must be filed with the commission before April 1 of the year 22 immediately following the year in which the gas storage facility ceases commercial 23 operation. 24 (e) In this section, 25 (1) "ceases commercial operation" means that the gas storage facility 26 fails to inject or withdraw more than 100,000,000 cubic feet of gas during a calendar 27 year following the year in which a gas storage facility commences commercial 28 operation; 29 (2) "commences commercial operation" means the first injection of 30 non-native gas into a gas storage facility for purposes other than testing; 31 (3) "cushion gas" means native and non-native gas in a gas storage
01 facility that is needed to pressurize the facility and that allows the facility to function; 02 (4) "gas storage facility" means a tank or a depleted or nearly depleted 03 reservoir or pool in the state that is available for the storage of gas; 04 (5) "native gas" means gas in a gas storage facility that was not 05 injected; 06 (6) "non-native gas" means gas that is produced elsewhere and injected 07 into a gas storage facility; 08 (7) "pool" has the meaning given in AS 31.05.170; 09 (8) "working gas storage capacity" means the maximum volume of 10 non-native gas a gas storage facility may safely contain without creating or causing 11 waste; the maximum volume of non-native gas does not include the volume of cushion 12 gas present or the volume required for proper functioning of the gas storage facility at 13 the working gas storage capacity certified under (b) of this section. 14 * Sec. 3. AS 38.05.035(a) is amended to read: 15 (a) The director shall 16 (1) have general charge and supervision of the division and may 17 exercise the powers specifically delegated to the director; the director may employ and 18 fix the compensation of assistants and employees necessary for the operations of the 19 division; the director is the certifying officer of the division, with the consent of the 20 commissioner, and may approve vouchers for disbursements of money appropriated to 21 the division; 22 (2) manage, inspect, and control state land and improvements on it 23 belonging to the state and under the jurisdiction of the division; 24 (3) execute laws, rules, regulations, and orders adopted by the 25 commissioner; 26 (4) prescribe application procedures and practices for the sale, lease, or 27 other disposition of available land, resources, property, or interest in them; 28 (5) prescribe fees or service charges, with the consent of the 29 commissioner, for any public service rendered; 30 (6) under the conditions and limitations imposed by law and the 31 commissioner, issue deeds, leases, or other conveyances disposing of available land,
01 resources, property, or any interests in them; 02 (7) have jurisdiction over state land, except that land acquired by the 03 Alaska World War II Veterans Board and the Agricultural Loan Board or the 04 departments or agencies succeeding to their respective functions through foreclosure 05 or default; to this end, the director possesses the powers and, with the approval of the 06 commissioner, shall perform the duties necessary to protect the state's rights and 07 interest in state land, including the taking of all necessary action to protect and enforce 08 the state's contractual or other property rights; 09 (8) maintain the records the commissioner considers necessary, 10 administer oaths, and do all things incidental to the authority imposed; the following 11 records and files shall be kept confidential upon request of the person supplying the 12 information: 13 (A) the name of the person nominating or applying for the sale, 14 lease, or other disposal of land by competitive bidding; 15 (B) before the announced time of opening, the names of the 16 bidders and the amounts of the bids; 17 (C) all geological, geophysical, and engineering data supplied, 18 whether or not concerned with the extraction or development of natural 19 resources; 20 (D) except as provided in AS 38.05.036, cost data and financial 21 information submitted in support of applications, bonds, leases, and similar 22 items; 23 (E) applications for rights-of-way or easements; 24 (F) requests for information or applications by public agencies 25 for land that is being considered for use for a public purpose; 26 (9) account for the fees, licenses, taxes, or other money received in the 27 administration of this chapter including the sale or leasing of land, identify their 28 source, and promptly transmit them to the proper fiscal department after crediting 29 them to the proper fund; receipts from land application filing fees and charges for 30 copies of maps and records shall be deposited immediately in the general fund of the 31 state by the director;
01 (10) select and employ or obtain at reasonable compensation cadastral, 02 appraisal, or other professional personnel the director considers necessary for the 03 proper operation of the division; 04 (11) be the certifying agent of the state to select, accept, and secure by 05 whatever action is necessary in the name of the state, by deed, sale, gift, devise, 06 judgment, operation of law, or other means any land, of whatever nature or interest, 07 available to the state; and be the certifying agent of the state, to select, accept, or 08 secure by whatever action is necessary in the name of the state any land, or title or 09 interest to land available, granted, or subject to being transferred to the state for any 10 purpose; 11 (12) on request, furnish records, files, and other information related to 12 the administration of AS 38.05.180 to the Department of Revenue for use in 13 forecasting state revenue under or administering AS 43.55, whether or not those 14 records, files, and other information are required to be kept confidential under (8) of 15 this subsection; in the case of records, files, or other information required to be kept 16 confidential under (8) of this subsection, the Department of Revenue shall maintain 17 the confidentiality that the Department of Natural Resources is required to extend to 18 records, files, and other information under (8) of this subsection; 19 (13) when reasonably possible, give priority to and expedite the 20 processing of an application for a lease or assignment of a lease of state land for 21 development and operation of a gas storage facility, for a right-of-way to a gas 22 storage facility, for a change to the allocation of production within a unit, and for 23 a permit necessary for the operation of a gas storage facility; in this paragraph, 24 "gas storage facility" has the meaning given in AS 31.05.032. 25 * Sec. 4. AS 38.05.035 is amended by adding a new subsection to read: 26 (n) The director may not deny an application for a lease or assignment of a 27 lease of state land for the development and operation of a gas storage facility solely 28 because the gas storage facility would be used exclusively or primarily to store gas 29 owned by the owner or operator of the gas storage facility. In this subsection, "gas 30 storage facility" has the meaning given in AS 31.05.032. 31 * Sec. 5. AS 38.05.180(u) is amended to read:
01 (u) To avoid waste or to promote conservation of natural resources, the 02 commissioner may authorize the subsurface storage of oil or gas, whether or not 03 produced from state land, in land leased or subject to lease under this section. This 04 authorization may provide for the payment of a storage fee or rental on the stored oil 05 or gas, or, instead of the fee or rental, for a royalty other than that prescribed in the 06 lease when the stored oil or gas is produced in conjunction with oil or gas not 07 previously produced. A lease on which storage is so authorized shall be extended at 08 least for the period of storage and so long thereafter as oil or gas not previously 09 produced is produced in paying quantities. Notwithstanding the authorization for 10 payments under this subsection, when requested by a lessee, the commissioner 11 shall exempt a gas storage facility that qualifies for a tax credit under 12 AS 43.20.046 from any payment described in this subsection for the periods 13 described in this subsection. The exemption is available for the calendar year in 14 which the facility commences commercial operation and for each of the nine 15 calendar years immediately following the first year of commercial operation; 16 however, an exemption is not applicable for the calendar year after the facility 17 ceases commercial operation or for any subsequent calendar year. The lessee 18 shall provide the commissioner with any information the commissioner requests 19 to determine if the exemption applies. The information related to state land 20 leased for a gas storage facility under this subsection is public information and 21 may be furnished to the Regulatory Commission of Alaska. On request, the 22 commissioner shall provide the name of each person using state land leased for a 23 gas storage facility under this chapter, the years for which an exemption was 24 granted, and the amount of the exemption. Gas withdrawn from a gas storage 25 facility regulated under AS 42.05 is considered to be non-native gas and is not 26 considered to be produced and subject to royalty until all non-native gas injected 27 into the gas storage facility has been withdrawn from the gas storage facility. A 28 person receiving an exemption for a payment under this section that contracts to 29 store gas for a utility regulated under AS 42.05 shall reduce the storage price to 30 reflect the value of the exemption. In this subsection, "ceases commercial 31 operation," "commences commercial operation," "gas storage facility," and
01 "non-native gas" have the meanings given in AS 31.05.032. 02 * Sec. 6. AS 42.05.141 is amended by adding a new subsection to read: 03 (d) When considering whether the approval of a rate or a gas supply contract 04 proposed by a utility to provide a reliable supply of gas for a reasonable price is in the 05 public interest, the commission shall 06 (1) recognize the public benefits of allowing a utility to negotiate 07 different pricing mechanisms with different gas suppliers and to maintain a diversified 08 portfolio of gas supply contracts to protect customers from the risks of inadequate 09 supply or excessive cost that may arise from a single pricing mechanism; and 10 (2) consider whether a utility could meet its responsibility to the public 11 in a timely manner and without undue risk to the public if the commission fails to 12 approve a rate or a gas supply contract proposed by the utility. 13 * Sec. 7. AS 42.05.381 is amended by adding a new subsection to read: 14 (k) The cost to the utility of storing gas in a gas storage facility that is allowed 15 in determining a just and reasonable rate shall reflect the reduction in cost attributable 16 to any exemption from a payment due under AS 38.05.180(u) and the value of a tax 17 credit that the owner of the gas storage facility received under AS 43.20.046. The 18 commission may request the (1) commissioner of natural resources to report the value 19 of the exemption from a payment due under AS 38.05.180(u) that the gas storage 20 facility received; and (2) commissioner of revenue to report information on the 21 amount of tax credits claimed under AS 43.20.046 for the gas storage facility. In this 22 subsection, "gas storage facility" has the meaning given in AS 31.05.032. 23 * Sec. 8. AS 42.05.711 is amended by adding a new subsection to read: 24 (q) The service of natural gas storage furnished by operating a natural gas 25 storage facility that is (1) part of a pipeline facility operated by a pipeline carrier, (2) 26 part of a natural gas pipeline facility operated by a natural gas pipeline carrier, or (3) 27 part of a North Slope natural gas pipeline facility operated by a North Slope natural 28 gas pipeline carrier is exempt from this chapter. In this subsection, "natural gas 29 pipeline carrier," "natural gas pipeline facility," "North Slope natural gas pipeline 30 carrier," "North Slope natural gas pipeline facility," "pipeline carrier," and "pipeline 31 facility" have the meanings given in AS 42.06.630.
01 * Sec. 9. AS 42.05.990(4) is amended to read: 02 (4) "public utility" or "utility" includes every corporation whether 03 public, cooperative, or otherwise, company, individual, or association of individuals, 04 their lessees, trustees, or receivers appointed by a court, that owns, operates, manages, 05 or controls any plant, pipeline, or system for 06 (A) furnishing, by generation, transmission, or distribution, 07 electrical service to the public for compensation; 08 (B) furnishing telecommunications service to the public for 09 compensation; 10 (C) furnishing water, steam, or sewer service to the public for 11 compensation; 12 (D) furnishing by transmission or distribution of natural or 13 manufactured gas to the public for compensation; 14 (E) furnishing for distribution or by distribution petroleum or 15 petroleum products to the public for compensation when the consumer has no 16 alternative in the choice of supplier of a comparable product and service at an 17 equal or lesser price; 18 (F) furnishing collection and disposal service of garbage, 19 refuse, trash, or other waste material to the public for compensation; 20 (G) furnishing the service of natural gas storage to the 21 public for compensation; 22 * Sec. 10. AS 42.05.990 is amended by adding new paragraphs to read: 23 (9) "natural gas storage facility" means a facility that receives natural 24 gas volumes from customers, holds the gas volumes in a reservoir, and delivers the gas 25 volumes to the customer; in this paragraph, "facility" includes 26 (A) all parts of the facility from the point at which the natural 27 gas volumes are received by the facility from the customer to the point at 28 which the natural gas volumes are delivered by the facility to the customer; 29 (B) a facility consisting of a reservoir, either underground or 30 aboveground, and one or more of the following components of the facility: 31 (i) pipe;
01 (ii) compressor stations; 02 (iii) station equipment; 03 (iv) injection and extraction wells; 04 (v) on-site or remote monitoring, supervision, and 05 control facilities; 06 (vi) gas processing plants and gas treatment plants, but 07 not including a liquefied natural gas or manufacturing plant or facility; 08 (vii) other equipment necessary to receive, place into 09 the reservoir, monitor, remove from the reservoir, process, and deliver 10 natural gas; 11 (10) "service of natural gas storage" means the operation of a natural 12 gas storage facility primarily or exclusively for the benefit of third-party customers, 13 and not for the benefit of the owner, operator, or manager of the natural gas storage 14 facility; "service of natural gas storage" does not include the storage of natural gas 15 (A) owned by or contractually obligated to the owner, operator, 16 or manager of the natural gas storage facility; 17 (B) that is incidental to the production or sale of natural gas to 18 one or more third-party customers; or 19 (C) for which the price of storage is not separately itemized. 20 * Sec. 11. AS 43.05.230 is amended by adding a new subsection to read: 21 (j) The name of each person claiming a credit and the amount of credit 22 received for each gas storage facility by that person under AS 43.20.046 is public 23 information. The commissioner shall furnish the information to the Regulatory 24 Commission of Alaska on request. 25 * Sec. 12. AS 43.20 is amended by adding a new section to article 1 to read: 26 Sec. 43.20.046. Gas storage facility tax credit. (a) A person that is an owner 27 of a gas storage facility described in (b) of this section that commences commercial 28 operation after December 31, 2010, and before January 1, 2016, may apply a 29 refundable credit against a tax liability that may be imposed on the person under this 30 chapter for the taxable year in which the gas storage facility commences commercial 31 operation. The tax credit under this section shall be an amount equal to $1.50 for each
01 1,000 cubic feet of working gas storage capacity that is certified under AS 31.05.032 02 less any amount of credit received under this section taken in earlier tax years for that 03 capacity. The total amount of the credit that may be received for a single gas storage 04 facility under this section may not exceed the lesser of $15,000,000 or 25 percent of 05 the costs incurred to establish the gas storage facility. The tax credit in this section is 06 in addition to any other credit under this chapter for which the person is eligible. 07 (b) A gas storage facility qualifying for the credit in this section 08 (1) must have a working gas storage capacity of at least 500,000,000 09 cubic feet of gas other than cushion gas; 10 (2) must have a minimum withdrawal capability of 10,000,000 cubic 11 feet a day as certified by the Alaska Oil and Gas Conservation Commission under 12 AS 31.05.032; 13 (3) may not have been in operation as a gas storage facility before 14 January 1, 2011; 15 (4) must be regulated under AS 42.05 as a utility and be available to 16 furnish the service of natural gas storage to the public for compensation; in this 17 paragraph, "service of natural gas storage" has the meaning given in AS 42.05.990; 18 and 19 (5) if located on state land and leased or subject to a lease under 20 AS 38.05.180, must be in compliance with the terms of the lease. 21 (c) To claim the credit, the person shall submit to the department a copy of the 22 certification of working gas storage capacity and withdrawal capability issued under 23 AS 31.05.032, the date that the gas storage facility commenced commercial operation, 24 and other information required by the department. A person applying the credit against 25 a liability under this chapter shall claim the credit on the person's return. 26 (d) A person entitled to a tax credit under this section that is greater than the 27 person's tax liability under this chapter may request a refund in the amount of the 28 unused portion of the tax credit. 29 (e) The department may use available money in the oil and gas tax credit fund 30 established in AS 43.55.028 to make the refund applied for under (d) of this section in 31 whole or in part if the department finds that (1) the claimant does not have an
01 outstanding liability to the state for unpaid delinquent taxes under this title; and (2) 02 after application of all available tax credits, the claimant's total tax liability under this 03 chapter for the calendar year in which the claim is made is zero. In this subsection, 04 "unpaid delinquent tax" means an amount of tax for which the department has issued 05 an assessment that has not been paid and, if contested, has not been finally resolved in 06 the taxpayer's favor. 07 (f) For the purpose of determining the amount of the credit under this section, 08 the working gas storage capacity on which the credit is based shall be the capacity 09 certified by the Alaska Oil and Gas Conservation Commission under AS 31.05.032. 10 (g) A person may not receive a credit under this section for the acquisition of a 11 gas storage facility for which a credit has been granted under this section. 12 (h) If the gas storage facility for which a credit was received under this section 13 ceases commercial operation during the nine calendar years immediately following the 14 calendar year in which the gas storage facility commences commercial operation, the 15 tax liability under this chapter of the person who claimed the credit shall be increased. 16 The amount of the increase in tax liability 17 (1) shall be determined and assessed for the taxable year in which the 18 gas storage facility ceases commercial operation, regardless of whether the gas storage 19 facility subsequently resumes commercial operation; and 20 (2) is equal to the total amount of the credit taken multiplied by a 21 fraction, the numerator of which is the difference between 10 and the number of 22 calendar years for which the gas storage facility was eligible for a tax credit under this 23 section and the denominator of which is 10. 24 (i) The issuance of a refund under this section does not limit the department's 25 ability to later audit or adjust the claim if the department determines, as a result of the 26 audit, that the person that claimed the credit was not entitled to the amount of the 27 credit. The tax liability of the person receiving the credit under this chapter is 28 increased by the amount of the credit that exceeds that to which the person was 29 entitled. If the tax liability is increased under this subsection, the increase bears 30 interest under AS 43.05.225 from the date the refund was issued. 31 (j) A person claiming a tax credit under this section for a gas storage facility
01 that ceases commercial operation within nine calendar years immediately following 02 the calendar year in which the gas storage facility commences commercial operation 03 shall notify the department in writing of the date the gas storage facility ceased 04 commercial operation. The notice must be filed with the return for the taxable year in 05 which the gas storage facility ceases commercial operation. 06 (k) A refund under this section does not bear interest. 07 (l) In this section, "ceases commercial operation," "commences commercial 08 operation," "gas storage facility," and "working gas storage capacity" have the 09 meanings given in AS 31.05.032. 10 * Sec. 13. AS 43.55.011(m) is amended to read: 11 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 12 AS 41.09.010, AS 43.55.024, or 43.55.025, the department shall provide by regulation 13 a method to ensure that, for a calendar year for which a producer's tax liability is 14 limited by (j), (k), or (o) of this section, tax credits based on a lease expenditure 15 incurred before January 1, 2011, that are otherwise available under 16 AS 38.05.180(i), AS 41.09.010, AS 43.55.024, or 43.55.025 and allocated to gas 17 subject to the limitations in (j), (k), and (o) of this section are accounted for as though 18 the credits had been applied first against a tax liability calculated without regard to the 19 limitations under (j), (k), and (o) of this section so as to reduce the tax liability to the 20 maximum amount provided for under (j) or (o) of this section for the production of gas 21 or (k) of this section for the production of oil. The regulation must provide for a 22 reasonable method to allocate tax credits to gas subject to (j) and (o) of this section. 23 Only the amount of a tax credit remaining after the accounting provided for under this 24 subsection may be used for a later calendar year, transferred to another person, or 25 applied against a tax levied on the production of oil or gas not subject to (j), (k), or (o) 26 of this section to the extent otherwise allowed. 27 * Sec. 14. AS 43.55.020(f) is amended to read: 28 (f) If oil or gas is produced but not sold, gas is produced but is stored in a 29 gas storage facility, or [IF] oil or gas is produced and sold under circumstances where 30 the sale price does not represent the prevailing value for oil or gas of like kind, 31 character, or quality in the field or area from which the product is produced, the
01 department may require the tax to be paid upon the basis of the value of oil or gas of 02 the same kind, quality, and character prevailing for that field or area during the 03 calendar month of production or sale. 04 * Sec. 15. AS 43.55.020 is amended by adding new subsections to read: 05 (i) Cushion gas in a gas storage facility is not considered to be gas used in the 06 operation of a lease or property or gas used for repressuring as described in (e) of this 07 section. Gas withdrawn from a gas storage facility regulated under AS 42.05 is 08 considered to be non-native gas until all non-native gas injected into the gas storage 09 facility has been withdrawn from the gas storage facility. Non-native gas withdrawn 10 from a gas storage facility is not considered to be gas produced for the purposes of 11 AS 43.55.011 - 43.55.180. Gas withdrawn from a gas storage facility after all non- 12 native gas previously injected into the gas storage facility has been withdrawn is gas 13 considered to be produced from the lease or property for the purposes of AS 43.55.011 14 - 43.55.180. In this subsection, "native gas" and "non-native gas" have the meanings 15 given in AS 31.05.032. 16 (j) In this section, "gas storage facility" has the meaning given in 17 AS 31.05.032. 18 * Sec. 16. AS 43.55.023(a) is amended to read: 19 (a) A producer or explorer may take a tax credit for a qualified capital 20 expenditure as follows: 21 (1) notwithstanding that a qualified capital expenditure may be a 22 deductible lease expenditure for purposes of calculating the production tax value of oil 23 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 24 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 25 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 26 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that 27 expenditure; the full amount of the credit for a qualified capital expenditure 28 incurred in the Cook Inlet sedimentary basin after December 31, 2010, may be 29 applied for a single calendar year; however, not more than half of the tax credit for 30 a qualified capital expenditure incurred outside of the Cook Inlet sedimentary 31 basin after December 31, 2010, may be applied for a single calendar year;
01 (2) a producer or explorer may take a credit for a qualified capital 02 expenditure incurred in connection with geological or geophysical exploration or in 03 connection with an exploration well only if the producer or explorer 04 (A) agrees, in writing, to the applicable provisions of 05 AS 43.55.025(f)(2); 06 (B) submits to the Department of Natural Resources all data 07 that would be required to be submitted under AS 43.55.025(f)(2). 08 * Sec. 17. AS 43.55.023(d) is amended to read: 09 (d) Except as limited by (i) of this section, a person that is entitled to take a tax 10 credit under this section that wishes to transfer the unused credit to another person or 11 obtain a cash payment under AS 43.55.028 may apply to the department for 12 transferable tax credit certificates. An application under this subsection must be in a 13 form prescribed by the department and must include supporting information and 14 documentation that the department reasonably requires. The department shall grant or 15 deny an application, or grant an application as to a lesser amount than that claimed and 16 deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the 17 year following the calendar year in which the qualified capital expenditure or carried- 18 forward annual loss for which the credit is claimed was incurred; (2) the date the 19 statement required under AS 43.55.030(a) or (e) was filed for the calendar year in 20 which the qualified capital expenditure or carried-forward annual loss for which the 21 credit is claimed was incurred; or (3) the date the application was received by the 22 department. If, based on the information then available to it, the department is 23 reasonably satisfied that the applicant is entitled to a credit, the department shall, 24 except as provided in (n) of this section, issue the applicant two transferable tax 25 credit certificates, each for half of the amount of the credit; the [. THE] credit shown 26 on one of the two certificates is available for immediate use. The credit shown on the 27 second of the two certificates may not be applied against a tax for a calendar year 28 earlier than the calendar year following the calendar year in which the certificate is 29 issued, and the certificate must contain a conspicuous statement to that effect; a [. A] 30 certificate issued under this subsection does not expire. 31 * Sec. 18. AS 43.55.023(g) is amended to read:
01 (g) The issuance of a transferable tax credit certificate under (d) or (n) of this 02 section or the purchase of a certificate under AS 43.55.028 does not limit the 03 department's ability to later audit a tax credit claim to which the certificate relates or to 04 adjust the claim if the department determines, as a result of the audit, that the applicant 05 was not entitled to the amount of the credit for which the certificate was issued. The 06 tax liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is 07 increased by the amount of the credit that exceeds that to which the applicant was 08 entitled, or the applicant's available valid outstanding credits applicable against the tax 09 levied by AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is 10 increased under this subsection, the increase bears interest under AS 43.05.225 from 11 the date the transferable tax credit certificate was issued. For purposes of this 12 subsection, an applicant that is an explorer is considered a producer subject to the tax 13 levied by AS 43.55.011(e). 14 * Sec. 19. AS 43.55.023 is amended by adding new subsections to read: 15 (m) A producer or explorer may apply for a tax credit for a Cook Inlet well 16 lease expenditure incurred after December 31, 2010, as follows: 17 (1) notwithstanding that a Cook Inlet well lease expenditure may be a 18 deductible lease expenditure for purposes of calculating the production tax value of oil 19 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under (a) 20 of this section, AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a 21 producer or explorer that incurs a Cook Inlet well lease expenditure may elect to apply 22 a tax credit against a tax levied by AS 43.55.011(e) in the amount of 40 percent of that 23 expenditure; a tax credit under this paragraph may be applied for a single calendar 24 year; 25 (2) a producer or explorer may take a credit for a Cook Inlet well lease 26 expenditure incurred in connection with geological or geophysical exploration or in 27 connection with an exploration well only if the producer or explorer 28 (A) agrees, in writing, to the applicable provisions of 29 AS 43.55.025(f)(2); and 30 (B) submits to the Department of Natural Resources all data 31 that would be required to be submitted under AS 43.55.025(f)(2).
01 (n) For a lease expenditure incurred in the Cook Inlet sedimentary basin after 02 December 31, 2010, that qualifies for tax credits under (a) and (b) of this section, and 03 for a Cook Inlet well lease expenditure that qualifies for a tax credit under (m) of this 04 section, the department shall issue a transferable tax credit certificate to the person 05 entitled to the credit for the full amount of the credit. The transferable tax credit is 06 available for immediate use and does not expire. 07 (o) For the purposes of (m) and (n) of this section, a Cook Inlet well lease 08 expenditure is a lease expenditure that is incurred in the Cook Inlet sedimentary basin 09 that is 10 (1) directly related to an exploration well, a stratigraphic test well, a 11 producing well, or an injection well other than a disposal well if the expenditure is a 12 qualified capital expenditure and an intangible drilling and development cost 13 authorized under 26 U.S.C. (Internal Revenue Code), as amended, and 26 C.F.R. 14 1.612-4, regardless of the elections made under 26 U.S.C. 263(c); in this paragraph, an 15 expenditure directly related to a well includes an expenditure for well sidetracking, 16 well deepening, well completion or recompletion, or well workover, regardless of 17 whether the well is or has been a producing well; or 18 (2) an expense for seismic work conducted within the boundaries of a 19 production or exploration unit. 20 * Sec. 20. AS 43.55.028(a) is amended to read: 21 (a) The oil and gas tax credit fund is established as a separate fund of the state. 22 The purpose of the fund is to purchase [CERTAIN] transferable tax credit certificates 23 issued under AS 43.55.023, [AND CERTAIN] production tax credit certificates issued 24 under AS 43.55.025, and to pay refunds claimed under AS 43.20.046. 25 * Sec. 21. AS 43.55.028(e) is amended to read: 26 (e) The department, on the written application of a [THE] person to whom a 27 transferable tax credit certificate has been issued under AS 43.55.023(d) or (n) or to 28 whom a production tax credit certificate has been issued under AS 43.55.025(f), may 29 use available money in the oil and gas tax credit fund to purchase, in whole or in part, 30 the certificate if the department finds that 31 (1) the calendar year of the purchase is not earlier than the first
01 calendar year for which the credit shown on the certificate would otherwise be allowed 02 to be applied against a tax; 03 (2) except for the application of a person for the purchase of a 04 transferable tax credit certificate issued under AS 43.55.023(n), 05 (A) within 24 months after applying for the transferable tax 06 credit certificate or filing a claim for the production tax credit certificate, the 07 applicant incurred a qualified capital expenditure or was the successful bidder 08 on a bid submitted for a lease on state land under AS 38.05.180(f); 09 (B) [(3)] the amount expended for the purchase would not 10 exceed the total of qualified capital expenditures and successful bids described 11 in (A) [(2)] of this paragraph [SUBSECTION] that have not been the subject 12 of a finding made under this subparagraph [PARAGRAPH] for purposes of a 13 previous purchase of a certificate; 14 (3) [(4)] the applicant does not have an outstanding liability to the state 15 for unpaid delinquent taxes under this title; 16 (4) [(5)] the applicant's total tax liability under AS 43.55.011(e), after 17 application of all available tax credits, for the calendar year in which the application is 18 made is zero; 19 (5) [(6)] the applicant's average daily production of oil and gas taxable 20 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 21 the application is made was not more than 50,000 BTU equivalent barrels; and 22 (6) [(7)] the purchase is consistent with this section and regulations 23 adopted under this section. 24 * Sec. 22. AS 43.55.028(g) is amended to read: 25 (g) The department may adopt regulations to carry out the purposes of this 26 section, including standards and procedures to allocate available money among 27 applications for purchases under this chapter and claims for refunds under 28 AS 43.20.046 when the total amount of the applications for purchase and claims 29 for refund exceed [WHICH EXCEEDS] the amount of available money in the fund. 30 The regulations adopted by the department may not, when allocating available 31 money in the fund under this section, distinguish an application for the purchase
01 of a credit certificate issued under AS 43.55.023(n) or a claim for refund under 02 AS 43.20.046. 03 * Sec. 23. AS 44.23.020(e) is amended to read: 04 (e) There is established within the Department of Law the function of public 05 advocacy for regulatory affairs. The attorney general shall participate as a party in a 06 matter that comes before the Regulatory Commission of Alaska when the attorney 07 general determines that participation is in the public interest. When considering 08 whether participation is in the public interest, the attorney general shall consider 09 the issues the Regulatory Commission of Alaska must take into consideration 10 under AS 42.05.141(d). 11 * Sec. 24. This Act takes effect immediately under AS 01.10.070(c).