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2d CSHB 247(RLS): "An Act relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; relating to exploration incentive credits; relating to confidential information status and public record status of information in the possession of the Department of Revenue; relating to interest applicable to delinquent tax; relating to the oil and gas production tax rate for certain oil exempt from taxation or constituting a landowner's royalty interest; relating to oil and gas production tax credits; relating to tax credit certificates; relating to the calculation of the production tax value of oil and gas; relating to refunds for the gas storage facility tax credit, the liquefied natural gas storage facility tax credit, and the qualified in-state oil refinery infrastructure expenditures tax credit; relating to the purchase of tax credit certificates from the oil and gas tax credit fund; relating to lease expenditures; relating to oil and gas lease expenditures and production tax credits for municipal entities; requiring a bond or cash deposit with a business license application for an oil or gas business; establishing a legislative working group to study the fiscal regime and tax structure and rates for oil and gas produced south of 68 degrees North latitude; and providing for an effective date."

00                      2d CS FOR HOUSE BILL NO. 247(RLS)                                                                  
01 "An Act relating to the powers and duties of the Alaska Oil and Gas Conservation                                        
02 Commission; relating to exploration incentive credits; relating to confidential                                         
03 information status and public record status of information in the possession of the                                     
04 Department of Revenue; relating to interest applicable to delinquent tax; relating to the                               
05 oil and gas production tax rate for certain oil exempt from taxation or constituting a                                  
06 landowner's royalty interest; relating to oil and gas production tax credits; relating to                               
07 tax credit certificates; relating to the calculation of the production tax value of oil and                             
08 gas; relating to refunds for the gas storage facility tax credit, the liquefied natural gas                             
09 storage facility tax credit, and the qualified in-state oil refinery infrastructure                                     
10 expenditures tax credit; relating to the purchase of tax credit certificates from the oil                               
11 and gas tax credit fund; relating to lease expenditures; relating to oil and gas lease                                  
12 expenditures and production tax credits for municipal entities; requiring a bond or cash                                
01 deposit with a business license application for an oil or gas business; establishing a                                  
02 legislative working group to study the fiscal regime and tax structure and rates for oil                                
03 and gas produced south of 68 degrees North latitude; and providing for an effective                                     
04 date."                                                                                                                  
05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
06    * Section 1. AS 31.05.030 is amended by adding a new subsection to read:                                           
07            (n)  Upon request of the commissioner of revenue, the commission shall                                       
08                 (1)  verify regular production for the purposes of AS 43.55.023(b) and                                  
09       (l); and                                                                                                          
10                 (2)  determine the commencement of regular production from a lease or                                   
11       property for purposes of AS 43.55.160(f) and (g).                                                                 
12    * Sec. 2. AS 38.05.036(a) is amended to read:                                                                      
13            (a)  The department may conduct audits regarding royalty and net profits under                               
14       oil and gas contracts, agreements, or leases under this chapter and regarding costs                               
15       related to exploration licenses entered into under AS 38.05.131 - 38.05.134 and                                   
16       exploration incentive credits under this chapter [OR UNDER AS 41.09]. For purposes                                
17       of an audit under this section,                                                                               
18                 (1)  the department may examine the books, papers, records, or                                          
19       memoranda of a person regarding matters related to the audit; and                                                 
20                 (2)  the records and premises where a business is conducted shall be                                    
21       open at all reasonable times for inspection by the department.                                                    
22    * Sec. 3. AS 38.05.036(b) is amended to read:                                                                      
23            (b)  The Department of Revenue may obtain from the department information                                    
24       relating to royalty and net profits payments and to exploration incentive credits under                           
25       this chapter [OR UNDER AS 41.09], whether or not that information is confidential.                                
26       The Department of Revenue may use the information in carrying out its functions and                               
27       responsibilities under AS 43, and shall hold that information confidential to the extent                          
28       required by an agreement with the department or by AS 38.05.035(a)(8) [,                                          
29       AS 41.09.010(d),] or AS 43.05.230.                                                                                
01    * Sec. 4. AS 38.05.036(c) is amended to read:                                                                      
02            (c)  The department may obtain from the Department of Revenue all                                            
03       information obtained under AS 43 relating to royalty and net profits and to exploration                           
04       incentive credits. The department may use the information for purposes of carrying out                            
05       its responsibilities and functions under this chapter [AND AS 41.09]. Information                                 
06       made available to the department that was obtained under AS 43 is confidential and                                
07       subject to the provisions of AS 43.05.230.                                                                        
08    * Sec. 5. AS 38.05.036(f) is amended to read:                                                                      
09            (f)  Except as otherwise provided in this section or in connection with official                             
10       investigations or proceedings of the department, it is unlawful for a current or former                           
11       officer, employee, or agent of the state to divulge information obtained by the                                   
12       department as a result of an audit under this section that is required by an agreement                            
13       with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be kept                                      
14       confidential.                                                                                                     
15    * Sec. 6. AS 38.05.036(g) is amended to read:                                                                      
16            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
17       that maintains the confidentiality of information to the extent required by an                                    
18       agreement with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)].                                      
19    * Sec. 7. AS 40.25.100(a) is amended to read:                                                                      
20            (a)  Information in the possession of the Department of Revenue that discloses                               
21       the particulars of the business or affairs of a taxpayer or other person, including                               
22       information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement                              
23       under AS 38.05.020(b)(12), is not a matter of public record, except as provided in                                
24       AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or for purposes of investigation and                           
25       law enforcement. The information shall be kept confidential except when its                                       
26       production is required in an official investigation, administrative adjudication under                            
27       AS 43.05.405 - 43.05.499, or court proceeding. These restrictions do not prohibit the                             
28       publication of statistics presented in a manner that prevents the identification of                               
29       particular reports and items, prohibit the publication of tax lists showing the names of                          
30       taxpayers who are delinquent and relevant information that may assist in the collection                           
31       of delinquent taxes, or prohibit the publication of records, proceedings, and decisions                           
01       under AS 43.05.405 - 43.05.499.                                                                                   
02    * Sec. 8. AS 43.05.225 is amended to read:                                                                         
03            Sec. 43.05.225. Interest. Unless otherwise provided,                                                       
04                 (1)  a delinquent tax under this title,                                                                 
05                      (A)  before January 1, 2014, bears interest in each calendar                                       
06            quarter at the rate of five percentage points above the annual rate charged                                  
07            member banks for advances by the 12th Federal Reserve District as of the first                               
08            day of that calendar quarter, or at the annual rate of 11 percent, whichever is                              
09            greater, compounded quarterly as of the last day of that quarter; [OR]                                       
10                      (B)  on and after January 1, 2014, and before January 1, 2017,                                 
11            bears interest in each calendar quarter at the rate of three percentage points                               
12            above the annual rate charged member banks for advances by the 12th Federal                                  
13            Reserve District as of the first day of that calendar quarter; and                                       
14                      (C)  on and after January 1, 2017, bears interest in each                                      
15            calendar quarter at the rate of five percentage points above the annual                                  
16            rate charged member banks for advances by the 12th Federal Reserve                                       
17            District as of the first day of that calendar quarter, compounded quarterly                              
18            as of the last day of that quarter;                                                                      
19                 (2)  the interest rate is 12 percent a year for                                                         
20                      (A)  delinquent fees payable under AS 05.15.095(c); and                                            
21                      (B)  unclaimed property that is not timely paid or delivered, as                                   
22            allowed by AS 34.45.470(a).                                                                                  
23    * Sec. 9. AS 43.05.230 is amended by adding a new subsection to read:                                              
24            (l)  For tax credit certificates purchased by the department in the preceding                                
25       calendar year under AS 43.55.028, the department shall make the following                                         
26       information public by April 30 of each year:                                                                      
27                 (1)  the name of each person from whom the department purchased a                                       
28       transferable tax credit certificate; and                                                                          
29                 (2)  the aggregate amount of the tax credit certificates purchased from                                 
30       the person in the preceding calendar year.                                                                        
31    * Sec. 10. AS 43.20.046(e) is amended to read:                                                                     
01            (e)  The department may use available money in the oil and gas tax credit fund                               
02       established in AS 43.55.028 to make the refund applied for under (d) of this section in                           
03       whole or in part if the department finds that (1) the claimant does not have an                                   
04       outstanding liability to the state [FOR UNPAID DELINQUENT TAXES UNDER                                             
05       THIS TITLE]; and (2) after application of all available tax credits, the claimant's total                         
06       tax liability under this chapter for the calendar year in which the claim is made is zero.                        
07       [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" MEANS AN AMOUNT                                                      
08       OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED AN ASSESSMENT                                                          
09       THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS NOT BEEN FINALLY                                                    
10       RESOLVED IN THE TAXPAYER'S FAVOR.]                                                                                
11    * Sec. 11. AS 43.20.047(e) is amended to read:                                                                     
12            (e)  The department may use money available in the oil and gas tax credit fund                               
13       established in AS 43.55.028 to make a refund or payment under (d) of this section in                              
14       whole or in part if the department finds that (1) the claimant does not have an                                   
15       outstanding liability to the state [FOR UNPAID DELINQUENT TAXES UNDER                                             
16       THIS TITLE]; and (2) after application of all available tax credits, the claimant's total                         
17       tax liability under this chapter for the calendar year in which the claim is made is zero.                        
18       [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" MEANS AN AMOUNT                                                      
19       OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED AN ASSESSMENT                                                          
20       THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS NOT BEEN FINALLY                                                    
21       RESOLVED IN THE TAXPAYER'S FAVOR.]                                                                                
22    * Sec. 12. AS 43.20.053(e) is amended to read:                                                                     
23            (e)  The department may use money available in the oil and gas tax credit fund                               
24       established in AS 43.55.028 to make a refund or payment under (d) of this section in                              
25       whole or in part if the department finds that                                                                     
26                 (1)  the claimant does not have an outstanding liability to the state                                   
27       [FOR UNPAID DELINQUENT TAXES UNDER THIS TITLE]; and                                                               
28                 (2)  after application of all available tax credits, the claimant's total tax                           
29       liability under this chapter for the calendar year in which the claim is made is zero.                            
30    * Sec. 13. AS 43.55.011(i) is amended to read:                                                                     
31            (i)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
01       produced each calendar year from each lease or property in the state the ownership or                             
02       right to which constitutes a landowner's royalty interest, except for oil and gas the                             
03       ownership or right to which is exempt from taxation. The levy of tax under this                               
04       subsection may not be less than zero. The provisions of this subsection apply to a                            
05       landowner's royalty interest as follows:                                                                          
06                 (1)  the tax levied for oil is equal to five percent of the gross value at                              
07       the point of production of the oil;                                                                               
08                 (2)  the tax levied for gas is equal to 1.667 percent of the gross value at                             
09       the point of production of the gas;                                                                               
10                 (3)  if the department determines that, for purposes of reducing the                                    
11       producer's tax liability under (1) or (2) of this subsection, the producer has received or                        
12       will receive consideration from the royalty owner offsetting all or a part of the                                 
13       producer's royalty obligation, other than a deduction under AS 43.55.020 related to a                             
14       settlement with a royalty owner of the amount of a tax paid, then, notwithstanding (1)                            
15       and (2) of this subsection, the tax is equal to 25 percent of the gross value at the point                        
16       of production of the oil and gas.                                                                                 
17    * Sec. 14. 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 43.55.024 [,] or 43.55.025, the department shall provide by                                     
20       regulation a method to ensure that, for a calendar year for which a producer's tax                                
21       liability is limited by (j), (k), or (o) of this section, tax credits based on a lease                            
22       expenditure incurred before January 1, 2011, that are otherwise available under                                   
23       [AS 38.05.180(i), AS 41.09.010,] AS 43.55.024 [,] or 43.55.025 and allocated to gas                               
24       subject to the limitations in (j), (k), and (o) of this section are accounted for as though                       
25       the credits had been applied first against a tax liability calculated without regard to the                       
26       limitations under (j), (k), and (o) of this section so as to reduce the tax liability to the                      
27       maximum amount provided for under (j) or (o) of this section for the production of gas                            
28       or (k) of this section for the production of oil. The regulation must provide for a                               
29       reasonable method to allocate tax credits to gas subject to (j) and (o) of this section.                          
30       Only the amount of a tax credit remaining after the accounting provided for under this                            
31       subsection may be used for a later calendar year, transferred to another person, or                               
01       applied against a tax levied on the production of oil or gas not subject to (j), (k), or (o)                      
02       of this section to the extent otherwise allowed.                                                                  
03    * Sec. 15. AS 43.55.023(b) is amended to read:                                                                     
04            (b)  Before January 1, 2014, a producer or explorer may elect to take a tax                                  
05       credit in the amount of 25 percent of a carried-forward annual loss. For lease                                    
06       expenditures incurred on and after January 1, 2014, and before January 1, 2016, to                                
07       explore for, develop, or produce oil or gas deposits located north of 68 degrees North                            
08       latitude, a producer or explorer may elect to take a tax credit in the amount of 45                               
09       percent of a carried-forward annual loss. For lease expenditures incurred on and after                            
10       January 1, 2016, to explore for, develop, or produce oil or gas deposits located north                            
11       of 68 degrees North latitude, a producer or explorer may elect to take a tax credit in                            
12       the amount of 35 percent of a carried-forward annual loss. For lease expenditures                                 
13       incurred on or after January 1, 2014, and before January 1, 2018, to explore for,                             
14       develop, or produce oil or gas deposits located south of 68 degrees North latitude, a                             
15       producer or explorer may elect to take a tax credit in the amount of 25 percent of a                              
16       carried-forward annual loss. A credit under this subsection may be applied against a                              
17       tax levied by AS 43.55.011(e). For purposes of this subsection, a carried-forward                                 
18       annual loss is the amount of a producer's or explorer's adjusted lease expenditures                               
19       under AS 43.55.165 and 43.55.170 for a previous calendar year that was not                                        
20       deductible in calculating production tax values for that calendar year under                                      
21       AS 43.55.160. For lease expenditures incurred on or after January 1, 2017, any                                
22       reduction under AS 43.55.160(f) or (g) is added back to the calculation of                                    
23       production tax values for that calendar year under AS 43.55.160 for the                                       
24       determination of a carried-forward annual loss under this subsection. A credit                                
25       under this subsection may be taken for lease expenditures incurred after                                      
26       December 31, 2016,                                                                                            
27                 (1)  in the Cook Inlet sedimentary basin only if, during calendar                                   
28       year 2016, the producer or explorer had regular production of oil or gas in the                               
29       Cook Inlet sedimentary basin;                                                                                 
30                 (2)  north of 68 degrees North latitude only if,                                                    
31                      (A)  during calendar year 2016, the producer or explorer                                       
01            had regular production of an average of less than 15,000 BTU equivalent                                  
02            barrels a day in the state; and                                                                          
03                      (B)  the lease expenditures were incurred under a unit plan                                    
04            of development or a plan of exploration approved before January 1, 2017,                                 
05            by the commissioner of natural resources consistent with AS 38.05.180.                                   
06    * Sec. 16. AS 43.55.023(d) is amended to read:                                                                     
07            (d)  A person that is entitled to take a tax credit under this section that wishes                           
08       to transfer the unused credit to another person or obtain a cash payment under                                    
09       AS 43.55.028 may apply to the department for a transferable tax credit certificate. An                            
10       application under this subsection must be in a form prescribed by the department and                              
11       must include supporting information and documentation that the department                                         
12       reasonably requires. The department shall grant or deny an application, or grant an                               
13       application as to a lesser amount than that claimed and deny it as to the excess, not                             
14       later than 120 days after the latest of (1) March 31 of the year following the calendar                           
15       year in which the [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward                                              
16       annual loss for which the credit is claimed was incurred; (2) the date the statement                              
17       required under AS 43.55.030(a) or (e) was filed for the calendar year in which the                                
18       [QUALIFIED CAPITAL EXPENDITURE OR] carried-forward annual loss for which                                          
19       the credit is claimed was incurred; or (3) the date the application was received by the                           
20       department. If, based on the information then available to it, the department is                                  
21       reasonably satisfied that the applicant is entitled to a credit, the department shall issue                       
22       the applicant a transferable tax credit certificate for the amount of the credit. A                               
23       certificate issued under this subsection does not expire.                                                         
24    * Sec. 17. AS 43.55.023(e) is amended to read:                                                                     
25            (e)  A person to which a transferable tax credit certificate is issued under (d) of                          
26       this section may transfer the certificate to another person, and a transferee may further                         
27       transfer the certificate. Subject to the limitations set out in former (a) of this section                    
28       and (b) - (d) [(a) - (d)] of this section, and notwithstanding any action the department                      
29       may take with respect to the applicant under (g) of this section, the owner of a                                  
30       certificate may apply the credit or a portion of the credit shown on the certificate only                         
31       against a tax levied by AS 43.55.011(e). However, a credit shown on a transferable tax                            
01       credit certificate may not be applied to reduce a transferee's total tax liability under                          
02       AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80                                   
03       percent of the tax that would otherwise be due without applying that credit. Any                                  
04       portion of a credit not used under this subsection may be applied in a later period.                              
05    * Sec. 18. AS 43.55.023(l) is amended to read:                                                                     
06            (l)  A producer or explorer may apply for a tax credit for a well lease                                      
07       expenditure incurred in the state south of 68 degrees North latitude after June 30,                               
08       2010, as follows:                                                                                                 
09                 (1)  notwithstanding that a well lease expenditure incurred in the state                                
10       south of 68 degrees North latitude may be a deductible lease expenditure for purposes                             
11       of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a                            
12       credit for that expenditure is taken under [(a) OF THIS SECTION, AS 38.05.180(i),                                 
13       AS 41.09.010,] AS 43.20.043 [,] or AS 43.55.025, a producer or explorer that incurs a                             
14       well lease expenditure in the state south of 68 degrees North latitude may elect to                               
15       apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of                                       
16                      (A)  40 percent of that expenditure incurred before calendar                               
17            year 2017;                                                                                               
18                      (B)  20 percent of that expenditure incurred in calendar                                       
19            year 2017 or 2018 [A TAX CREDIT UNDER THIS PARAGRAPH MAY BE                                              
20            APPLIED FOR A SINGLE CALENDAR YEAR];                                                                         
21                 (2)  a producer or explorer may take a credit for a well lease                                          
22       expenditure incurred                                                                                              
23                      (A)  in the state south of 68 degrees North latitude in connection                             
24            with geological or geophysical exploration or in connection with an                                          
25            exploration well only if the producer or explorer                                                            
26                           (i) [(A)]  agrees, in writing, to the applicable provisions                               
27                 of AS 43.55.025(f)(2); and                                                                              
28                           (ii) [(B)]  submits to the Department of Natural                                          
29                 Resources all data that would be required to be submitted under                                         
30                 AS 43.55.025(f)(2);                                                                                 
31                      (B)  in the Cook Inlet sedimentary basin only if, during                                       
01            calendar year 2016, the producer or explorer had regular production of                                   
02            oil or gas in the Cook Inlet sedimentary basin.                                                          
03    * Sec. 19. AS 43.55.024(i) is amended to read:                                                                     
04            (i)  A producer may apply against the producer's tax liability for the calendar                              
05       year under AS 43.55.011(e) a tax credit of $5 for each barrel of oil taxable under                                
06       AS 43.55.011(e) that receives a reduction in the gross value at the point of                                  
07       production under [MEETS ONE OR MORE OF THE CRITERIA IN]                                                       
08       AS 43.55.160(f) or (g) and that is produced during a calendar year after December 31,                             
09       2013. A tax credit authorized by this subsection may not reduce a producer's tax                                  
10       liability for a calendar year under AS 43.55.011(e) below zero.                                                   
11    * Sec. 20. AS 43.55.024(j) is amended to read:                                                                     
12            (j)  A producer may apply against the producer's tax liability for the calendar                              
13       year under AS 43.55.011(e) a tax credit in the amount specified in this subsection for                            
14       each barrel of oil taxable under AS 43.55.011(e) that does not receive a reduction in                         
15       the gross value at the point of production under [MEET ANY OF THE CRITERIA                                    
16       IN] AS 43.55.160(f) or (g) and that is produced during a calendar year after                                      
17       December 31, 2013, from leases or properties north of 68 degrees North latitude. A tax                            
18       credit under this subsection may not reduce a producer's tax liability for a calendar                             
19       year under AS 43.55.011(e) below the amount calculated under AS 43.55.011(f). The                                 
20       amount of the tax credit for a barrel of taxable oil subject to this subsection produced                          
21       during a month of the calendar year is                                                                            
22                 (1)  $8 for each barrel of taxable oil if the average gross value at the                                
23       point of production for the month is less than $80 a barrel;                                                      
24                 (2)  $7 for each barrel of taxable oil if the average gross value at the                                
25       point of production for the month is greater than or equal to $80 a barrel, but less than                         
26       $90 a barrel;                                                                                                     
27                 (3)  $6 for each barrel of taxable oil if the average gross value at the                                
28       point of production for the month is greater than or equal to $90 a barrel, but less than                         
29       $100 a barrel;                                                                                                    
30                 (4)  $5 for each barrel of taxable oil if the average gross value at the                                
31       point of production for the month is greater than or equal to $100 a barrel, but less                             
01       than $110 a barrel;                                                                                               
02                 (5)  $4 for each barrel of taxable oil if the average gross value at the                                
03       point of production for the month is greater than or equal to $110 a barrel, but less                             
04       than $120 a barrel;                                                                                               
05                 (6)  $3 for each barrel of taxable oil if the average gross value at the                                
06       point of production for the month is greater than or equal to $120 a barrel, but less                             
07       than $130 a barrel;                                                                                               
08                 (7)  $2 for each barrel of taxable oil if the average gross value at the                                
09       point of production for the month is greater than or equal to $130 a barrel, but less                             
10       than $140 a barrel;                                                                                               
11                 (8)  $1 for each barrel of taxable oil if the average gross value at the                                
12       point of production for the month is greater than or equal to $140 a barrel, but less                             
13       than $150 a barrel;                                                                                               
14                 (9)  zero if the average gross value at the point of production for the                                 
15       month is greater than or equal to $150 a barrel.                                                                  
16    * Sec. 21. AS 43.55.025(m) is amended to read:                                                                     
17            (m)  The persons that drill the first four exploration wells in the state and                                
18       within the areas described in (o) of this section on state lands, private lands, or federal                       
19       onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a                             
20       prospect in a basin described in (o) of this section are eligible for a credit under (a)(6)                       
21       of this section. A credit under this subsection may not be taken for more than two                                
22       exploration wells in a single area described in (o)(1) - (6) of this section. Exploration                         
23       expenditures eligible for the credit in this subsection in an area described in (o)(1) -                      
24       (3), (5), or (6) of this section must be incurred for work performed after June 1, 2012,                      
25       and before July 1, 2016. Notwithstanding (b) of this section, exploration                                     
26       expenditures eligible for the credit in this subsection in the area described in                              
27       (o)(4) of this section must be for work performed after June 1, 2012, and before                              
28       January 1, 2017, except that expenditures to complete an exploration well in an                               
29       area described in (o)(4) of this section that was spudded but not completed before                            
30       January 1, 2017, are eligible for the credit under this subsection. A person                                  
31       planning to drill an exploration well on private land and to apply for a credit under this                        
01       subsection shall obtain written consent from the owner of the oil and gas interest for                            
02       the full public release of all well data after the expiration of the confidentiality period                       
03       applicable to information collected under (f) of this section. The written consent of the                         
04       owner of the oil and gas interest must be submitted to the commissioner of natural                                
05       resources before approval of the proposed exploration well. In addition to the                                    
06       requirements in (c)(1), (c)(2)(A), and (c)(2)(C) of this section and submission of the                            
07       written consent of the owner of the oil and gas interest, a person planning to drill an                           
08       exploration well shall obtain approval from the commissioner of natural resources                                 
09       before the well is spudded. The commissioner of natural resources shall make a                                    
10       written determination approving or rejecting an exploration well within 60 days after                             
11       receiving the request for approval or as soon as is practicable thereafter. Before                                
12       approving the exploration well, the commissioner of natural resources shall consider                              
13       the following: the location of the well; the proximity to a community in need of a local                          
14       energy source; the proximity of existing infrastructure; the experience and safety                                
15       record of the explorer in conducting operations in remote or roadless areas; the                                  
16       projected cost schedule; whether seismic mapping and seismic data sufficiently                                    
17       identify a particular trap for exploration; whether the targeted and planned depth and                            
18       range are designed to penetrate and fully evaluate the hydrocarbon potential of the                               
19       proposed prospect and reach the level below which economic hydrocarbon reservoirs                                 
20       are likely to be found, or reach 12,000 feet or more true vertical depth; and whether                             
21       the exploration plan provides for a full evaluation of the wellbore below surface casing                          
22       to the depth of the well. Whether the exploration well for which a credit is requested                            
23       under this subsection is located within an area and a basin described under (o) of this                           
24       section shall be determined by the commissioner of natural resources and reported to                              
25       the commissioner. A taxpayer that obtains a credit under this subsection may not claim                            
26       a tax credit under AS 43.55.023 or another provision in this section for the same                                 
27       exploration expenditure.                                                                                          
28    * Sec. 22. AS 43.55.025(m), as amended by sec. 21 of this Act, is amended to read:                                 
29            (m)  The persons that drill the first four exploration wells in the state and                                
30       within the areas described in (o) of this section on state lands, private lands, or federal                       
31       onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a                             
01       prospect in a basin described in (o) of this section are eligible for a credit under (a)(6)                       
02       of this section. A credit under this subsection may not be taken for more than two                                
03       exploration wells in a single area described in (o)(1) - (6) of this section. Exploration                         
04       expenditures eligible for the credit in this subsection in an area described in (o)(1) -                          
05       (3), (5), or (6) of this section must be incurred for work performed after June 1, 2012,                          
06       and before July 1, 2016. Notwithstanding (b) of this section, exploration expenditures                            
07       eligible for the credit in this subsection in the area described in (o)(4) of this section                        
08       must be for work performed after June 1, 2012, and before January 1, 2017, except                                 
09       that expenditures to complete an exploration well in an area described in (o)(4) of this                          
10       section that was spudded but not completed before January 1, 2017, are eligible for the                           
11       credit under this subsection. A person planning to drill an exploration well on private                           
12       land and to apply for a credit under this subsection shall obtain written consent from                            
13       the owner of the oil and gas interest for the full public release of all well data after the                      
14       expiration of the confidentiality period applicable to information collected under (f) of                         
15       this section. The written consent of the owner of the oil and gas interest must be                                
16       submitted to the commissioner of natural resources before approval of the proposed                                
17       exploration well. In addition to the requirements in (c)(1), (c)(2)(A), and (c)(2)(C) of                          
18       this section and submission of the written consent of the owner of the oil and gas                                
19       interest, a person planning to drill an exploration well shall obtain approval from the                           
20       commissioner of natural resources before the well is spudded. The commissioner of                                 
21       natural resources shall make a written determination approving or rejecting an                                    
22       exploration well within 60 days after receiving the request for approval or as soon as is                         
23       practicable thereafter. Before approving the exploration well, the commissioner of                                
24       natural resources shall consider the following: the location of the well; the proximity                           
25       to a community in need of a local energy source; the proximity of existing                                        
26       infrastructure; the experience and safety record of the explorer in conducting                                    
27       operations in remote or roadless areas; the projected cost schedule; whether seismic                              
28       mapping and seismic data sufficiently identify a particular trap for exploration;                                 
29       whether the targeted and planned depth and range are designed to penetrate and fully                              
30       evaluate the hydrocarbon potential of the proposed prospect and reach the level below                             
31       which economic hydrocarbon reservoirs are likely to be found, or reach 12,000 feet or                             
01       more true vertical depth; and whether the exploration plan provides for a full                                    
02       evaluation of the wellbore below surface casing to the depth of the well. Whether the                             
03       exploration well for which a credit is requested under this subsection is located within                          
04       an area and a basin described under (o) of this section shall be determined by the                                
05       commissioner of natural resources and reported to the commissioner. A taxpayer that                               
06       obtains a credit under this subsection may not claim a tax credit under [AS 43.55.023                             
07       OR] another provision in this section for the same exploration expenditure.                                       
08    * Sec. 23. AS 43.55.025(o) is amended to read:                                                                     
09            (o)  The activity that is the basis for a credit claimed under (a)(6) and (m) of                             
10       this section [OR (a)(7) AND (n) OF THIS SECTION] must be for the exploration of a                                 
11       basin and within the following areas whose central points are determined using the                                
12       World Geographic System of 1984 datum,                                                                            
13                 (1)  100 miles from 66.896128 degrees North, -162.598187 degrees                                        
14       West;                                                                                                             
15                 (2)  150 miles from 64.839474 degrees North, -147.72094 degrees                                         
16       West;                                                                                                             
17                 (3)  50 miles from 62.776428 degrees North, -164.495201 degrees                                         
18       West;                                                                                                             
19                 (4)  50 miles from 62.110357 degrees North, -145.530551 degrees                                         
20       West;                                                                                                             
21                 (5)  100 miles from 58.189868 degrees North, -157.371104 degrees                                        
22       West;                                                                                                             
23                 (6)  100 miles from 56.005988 degrees North, -160.56083 degrees                                         
24       West.                                                                                                             
25    * Sec. 24. AS 43.55.028(a) is amended to read:                                                                     
26            (a)  The oil and gas tax credit fund is established as a separate fund of the state.                         
27       The purpose of the fund is to purchase transferable tax credit certificates issued under                          
28       former AS 43.55.023 and production tax credit certificates issued under AS 43.55.025                          
29       and to pay refunds and payments claimed under AS 43.20.046, 43.20.047, or                                         
30       43.20.053.                                                                                                        
31    * Sec. 25. AS 43.55.028(e) is amended to read:                                                                     
01            (e)  The department, on the written application of a person to whom a                                        
02       transferable tax credit certificate has been issued under AS 43.55.023(d) or former                               
03       AS 43.55.023(m) or to whom a production tax credit certificate has been issued under                              
04       AS 43.55.025(f), may use available money in the oil and gas tax credit fund to                                    
05       purchase, in whole or in part, the certificate. The department may not purchase a                             
06       total of more than $75,000,000 in tax credit certificates from a person in a                                  
07       calendar year. The department may purchase a certificate or part of a certificate                             
08       only if the department finds that                                                                             
09                 (1)  the calendar year of the purchase is not earlier than the first                                    
10       calendar year for which the credit shown on the certificate would otherwise be allowed                            
11       to be applied against a tax;                                                                                      
12                 (2)  the application is not the result of the division of a single entity                           
13       into multiple entities that would reasonably be expected to apply as a single entity                          
14       if the $75,000,000 limitation in this subsection did not exist [APPLICANT DOES                                
15       NOT HAVE AN OUTSTANDING LIABILITY TO THE STATE FOR UNPAID                                                         
16       DELINQUENT TAXES UNDER THIS TITLE];                                                                               
17                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
18       application of all available tax credits, for the calendar year in which the application is                       
19       made is zero;                                                                                                     
20                 (4)  the applicant's average daily production of oil and gas taxable                                    
21       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
22       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
23                 (5)  the purchase is consistent with this section and regulations adopted                               
24       under this section.                                                                                               
25    * Sec. 26. AS 43.55.028(e), as amended by sec. 25 of this Act, is amended to read:                                 
26            (e)  The department, on the written application of a person to whom a                                        
27       transferable tax credit certificate has been issued under former AS 43.55.023(d) or                           
28       (m) [FORMER AS 43.55.023(m)] or to whom a production tax credit certificate has                               
29       been issued under AS 43.55.025(f), may use available money in the oil and gas tax                                 
30       credit fund to purchase, in whole or in part, the certificate. The department may not                             
31       purchase a total of more than $75,000,000 in tax credit certificates from a person in a                           
01       calendar year. The department may purchase a certificate or part of a certificate only if                         
02       the department finds that                                                                                         
03                 (1)  the calendar year of the purchase is not earlier than the first                                    
04       calendar year for which the credit shown on the certificate would otherwise be allowed                            
05       to be applied against a tax;                                                                                      
06                 (2)  the application is not the result of the division of a single entity into                          
07       multiple entities that would reasonably be expected to apply as a single entity if the                            
08       $75,000,000 limitation in this subsection did not exist;                                                          
09                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
10       application of all available tax credits, for the calendar year in which the application is                       
11       made is zero;                                                                                                     
12                 (4)  the applicant's average daily production of oil and gas taxable                                    
13       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
14       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
15                 (5)  the purchase is consistent with this section and regulations adopted                               
16       under this section.                                                                                               
17    * Sec. 27. AS 43.55.028(g) is amended to read:                                                                     
18            (g)  The department shall [MAY] adopt regulations to carry out the purposes                              
19       of this section, including standards and procedures to allocate available money among                             
20       applications for purchases under this chapter and claims for refunds and payments                                 
21       under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the                                          
22       applications for purchase and claims for refund exceed the amount of available money                              
23       in the fund. The regulations adopted by the department, when allocating available                             
24       money in the fund under this section,                                                                         
25                 (1)  may not [, WHEN ALLOCATING AVAILABLE MONEY IN                                                  
26       THE FUND UNDER THIS SECTION,] distinguish an application for the purchase of                                      
27       a credit certificate issued under former AS 43.55.023(m) or a claim for a refund or                               
28       payment under AS 43.20.046, 43.20.047, or 43.20.053;                                                          
29                 (2)  must grant a preference to an applicant if at least 80 percent of                              
30       the applicant's workforce in the state in the previous calendar year was                                      
31       composed of resident workers; in this paragraph, "resident worker" has the                                    
01       meaning given in AS 43.40.092(b).                                                                           
02    * Sec. 28. AS 43.55.028 is amended by adding a new subsection to read:                                             
03            (j)  If an applicant has an outstanding liability to the state directly related to the                       
04       applicant's oil or gas exploration, development, or production that has not previously                            
05       been the basis of a reduction by the department under this subsection, the department                             
06       may purchase only that portion of a certificate that exceeds the outstanding liability.                           
07       The department may apply the amount by which the department reduced its purchase                                  
08       of a certificate because of an outstanding liability to satisfy the outstanding liability,                        
09       except that, if the outstanding liability is contested through an appeal or adjudicatory                          
10       proceeding already established by law, the department may apply the amount to satisfy                             
11       the outstanding liability only with the applicant's consent. Satisfaction of an                                   
12       outstanding liability under this subsection does not affect the applicant's ability to                            
13       contest that liability. The department may enter into contracts or agreements with                                
14       another department to which the outstanding liability is owed.                                                    
15    * Sec. 29. AS 43.55.029(a) is amended to read:                                                                     
16            (a)  An explorer or producer that has applied for a production tax credit under                              
17       AS 43.55.023(b) [AS 43.55.023(a), (b),] or (l), [OR] 43.55.025(a), or former                          
18       AS 43.55.023(a) may make a present assignment of the production tax credit                                    
19       certificate expected to be issued by the department to a third-party assignee. The                                
20       assignment may be made either at the time the application is filed with the department                            
21       or not later than 30 days after the date of filing with the department. Once a notice of                          
22       assignment in compliance with this section is filed with the department, the                                      
23       assignment is irrevocable and cannot be modified by the explorer or producer without                              
24       the written consent of the assignee named in the assignment. If a production tax credit                           
25       certificate is issued to the explorer or producer, the notice of assignment remains                               
26       effective and shall be filed with the department by the explorer or producer together                             
27       with any application for the department to purchase the certificate under                                         
28       AS 43.55.028(e).                                                                                                  
29    * Sec. 30. AS 43.55.029(a), as amended by sec. 29 of this Act, is amended to read:                                 
30            (a)  An explorer or producer that has applied for a production tax credit under                              
31       AS 43.55.023(b) [OR (l)], 43.55.025(a), or former AS 43.55.023(a) or (l) may make a                           
01       present assignment of the production tax credit certificate expected to be issued by the                          
02       department to a third-party assignee. The assignment may be made either at the time                               
03       the application is filed with the department or not later than 30 days after the date of                          
04       filing with the department. Once a notice of assignment in compliance with this                                   
05       section is filed with the department, the assignment is irrevocable and cannot be                                 
06       modified by the explorer or producer without the written consent of the assignee                                  
07       named in the assignment. If a production tax credit certificate is issued to the explorer                         
08       or producer, the notice of assignment remains effective and shall be filed with the                               
09       department by the explorer or producer together with any application for the                                      
10       department to purchase the certificate under AS 43.55.028(e).                                                     
11    * Sec. 31. AS 43.55.029(a), as amended by secs. 29 and 30 of this Act, is amended to read:                         
12            (a)  An explorer or producer that has applied for a production tax credit under                              
13       AS 43.55.025(a) [AS 43.55.023(b), 43.55.025(a),] or former AS 43.55.023(a), (b), or                       
14       (l) may make a present assignment of the production tax credit certificate expected to                            
15       be issued by the department to a third-party assignee. The assignment may be made                                 
16       either at the time the application is filed with the department or not later than 30 days                         
17       after the date of filing with the department. Once a notice of assignment in compliance                           
18       with this section is filed with the department, the assignment is irrevocable and cannot                          
19       be modified by the explorer or producer without the written consent of the assignee                               
20       named in the assignment. If a production tax credit certificate is issued to the explorer                         
21       or producer, the notice of assignment remains effective and shall be filed with the                               
22       department by the explorer or producer together with any application for the                                      
23       department to purchase the certificate under AS 43.55.028(e).                                                     
24    * Sec. 32. 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 state                               
26       during a calendar year, whether or not any tax payment is due under AS 43.55.020(a)                               
27       for that oil or gas, shall file with the department on March 31 of the following year a                           
28       statement, under oath, in a form prescribed by the department, giving, with other                                 
29       information required, the following:                                                                              
30                 (1)  a description of each lease or property from which oil or gas was                                  
31       produced, by name, legal description, lease number, or accounting codes assigned by                               
01       the department;                                                                                                   
02                 (2)  the names of the producer and, if different, the person paying the                                 
03       tax, if any;                                                                                                      
04                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
05       each lease or property, separately identifying the gross amount of gas produced from                              
06       each oil and gas lease to which an effective election under AS 43.55.014(a) applies,                              
07       the amount of gas delivered to the state under AS 43.55.014(b), and the percentage of                             
08       the gross amount of oil and gas owned by the producer;                                                            
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 producer and the costs of                                       
11       transportation of the oil and gas;                                                                                
12                 (5)  the name of the first purchaser and the price received for the oil and                             
13       for the gas, unless relieved from this requirement in whole or in part by the                                     
14       department;                                                                                                       
15                 (6)  the producer's qualified capital expenditures, [AS DEFINED IN                                      
16       AS 43.55.023,] other lease expenditures under AS 43.55.165, and adjustments or other                              
17       payments or credits under AS 43.55.170;                                                                           
18                 (7)  the production tax values of the oil and gas under AS 43.55.160(a)                                 
19       or of the oil under AS 43.55.160(h), as applicable;                                                               
20                 (8)  any claims for tax credits to be applied; and                                                      
21                 (9)  calculations showing the amounts, if any, that were or are due                                     
22       under AS 43.55.020(a) and interest on any underpayment or overpayment.                                            
23    * Sec. 33. AS 43.55.030(e) is amended to read:                                                                     
24            (e)  An explorer or producer that incurs a lease expenditure under                                           
25       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
26       year but does not produce oil or gas from a lease or property in the state during the                             
27       calendar year shall file with the department, on March 31 of the following year, a                                
28       statement, under oath, in a form prescribed by the department, giving, with other                                 
29       information required, the following:                                                                              
30                 (1)  the explorer's or producer's qualified capital expenditures, [AS                                   
31       DEFINED IN AS 43.55.023,] other lease expenditures under AS 43.55.165, and                                        
01       adjustments or other payments or credits under AS 43.55.170; and                                                  
02                 (2)  if the explorer or producer receives a payment or credit under                                     
03       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
04       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
05    * Sec. 34. AS 43.55.160(d) is amended to read:                                                                     
06            (d)  Irrespective of whether a producer produces taxable oil or gas during a                                 
07       calendar year or month, the producer is considered to have generated a positive                                   
08       production tax value if a calculation described in (a) of this section yields a positive                          
09       number because the producer's adjusted lease expenditures for a calendar year under                               
10       AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a                           
11       payment or credit under AS 43.55.170. [AN EXPLORER THAT HAS TAKEN A                                               
12       TAX CREDIT UNDER AS 43.55.023(b) OR THAT HAS OBTAINED A                                                           
13       TRANSFERABLE TAX CREDIT CERTIFICATE UNDER AS 43.55.023(d) FOR                                                     
14       THE AMOUNT OF A TAX CREDIT UNDER AS 43.55.023(b) IS CONSIDERED A                                                  
15       PRODUCER, SUBJECT TO THE TAX LEVIED UNDER AS 43.55.011(e), TO THE                                                 
16       EXTENT THAT THE EXPLORER GENERATES A POSITIVE PRODUCTION                                                          
17       TAX VALUE AS THE RESULT OF THE EXPLORER'S RECEIVING A                                                             
18       PAYMENT OR CREDIT UNDER AS 43.55.170.]                                                                            
19    * Sec. 35. AS 43.55.160(e) is amended to read:                                                                     
20            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
21       would otherwise be deductible by a producer in a calendar year but whose deduction                                
22       would cause an annual production tax value calculated under (a)(1) or (h) of this                                 
23       section of taxable oil or gas produced during the calendar year to be less than zero                              
24       may be used to establish a carried-forward annual loss under AS 43.55.023(b) or                               
25       43.55.165(a)(3). However, the department shall provide by regulation a method to                              
26       ensure that, for a period for which a producer's tax liability is limited by                                      
27       AS 43.55.011(j), (k), (o), or (p), any adjusted lease expenditures under AS 43.55.165                             
28       and 43.55.170 that would otherwise be deductible by a producer for that period but                                
29       whose deduction would cause a production tax value calculated under (a)(1)(C), (D),                               
30       (E), or (F), or (h)(3) of this section to be less than zero are accounted for as though the                       
31       adjusted lease expenditures had first been used as deductions in calculating the                                  
01       production tax values of oil or gas subject to any of the limitations under                                       
02       AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to                               
03       reduce the tax liability calculated without regard to the limitation to the maximum                               
04       amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p).                          
05       Only the amount of those adjusted lease expenditures remaining after the accounting                               
06       provided for under this subsection may be used to establish a carried-forward annual                              
07       loss under AS 43.55.023(b) or 43.55.165(a)(3). For lease expenditures incurred on                             
08       or after January 1, 2017, a reduction in gross value at the point of production                               
09       under (f) or (g) of this section shall be added back to the calculation of                                    
10       production tax value for the determination of a carried-forward annual loss. In                               
11       this subsection, "producer" includes "explorer."                                                                  
12    * Sec. 36. AS 43.55.160(e), as amended by sec. 35 of this Act, is amended to read:                                 
13            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
14       would otherwise be deductible by a producer in a calendar year but whose deduction                                
15       would cause an annual production tax value calculated under (a)(1) or (h) of this                                 
16       section of taxable oil or gas produced during the calendar year to be less than zero                              
17       may be used to establish a carried-forward annual loss under AS 43.55.165(a)(3)                               
18       [AS 43.55.023(b) OR 43.55.165(a)(3)]. However, the department shall provide by                                    
19       regulation a method to ensure that, for a period for which a producer's tax liability is                          
20       limited by AS 43.55.011(j), (k), (o), or (p), any adjusted lease expenditures under                               
21       AS 43.55.165 and 43.55.170 that would otherwise be deductible by a producer for that                              
22       period but whose deduction would cause a production tax value calculated under                                    
23       (a)(1)(C), (D), (E), or (F), or (h)(3) of this section to be less than zero are accounted                         
24       for as though the adjusted lease expenditures had first been used as deductions in                                
25       calculating the production tax values of oil or gas subject to any of the limitations                             
26       under AS 43.55.011(j), (k), (o), or (p) that have positive production tax values so as to                         
27       reduce the tax liability calculated without regard to the limitation to the maximum                               
28       amount provided for under the applicable provision of AS 43.55.011(j), (k), (o), or (p).                          
29       Only the amount of those adjusted lease expenditures remaining after the accounting                               
30       provided for under this subsection may be used to establish a carried-forward annual                              
31       loss under AS 43.55.165(a)(3) [AS 43.55.023(b) OR 43.55.165(a)(3)]. For lease                                 
01       expenditures incurred on or after January 1, 2017, a reduction in gross value at the                              
02       point of production under (f) or (g) of this section shall be added back to the                                   
03       calculation of production tax value for the determination of a carried-forward annual                             
04       loss. In this subsection, "producer" includes "explorer."                                                         
05    * Sec. 37. AS 43.55.160(f) is amended to read:                                                                     
06            (f)  On and after January 1, 2014, in the calculation of an annual production tax                            
07       value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the                             
08       point of production of oil or gas produced from a lease or property north of 68 degrees                           
09       North latitude meeting one or more of the following criteria is reduced by 20 percent:                            
10       (1) the oil or gas is produced from a lease or property that does not contain a lease that                        
11       was within a unit on January 1, 2003; (2) the oil or gas is produced from a                                       
12       participating area established after December 31, 2011, that is within a unit formed                              
13       under AS 38.05.180(p) before January 1, 2003, if the participating area does not                                  
14       contain a reservoir that had previously been in a participating area established before                           
15       December 31, 2011; (3) the oil or gas is produced from acreage that was added to an                               
16       existing participating area by the Department of Natural Resources on and after                                   
17       January 1, 2014, and the producer demonstrates to the department that the volume of                               
18       oil or gas produced is from acreage added to an existing participating area. This                                 
19       subsection does not apply to gas produced before 2022 that is used in the state or to                             
20       gas produced on and after January 1, 2022. For oil or gas first produced after                                
21       December 31, 2016, a reduction allowed under this subsection applies to oil or gas                            
22       produced from a lease or property for the first 10 years after the commencement                               
23       of regular production of oil or gas from that lease or property. For oil or gas first                         
24       produced before January 1, 2017, a reduction allowed under this subsection for a                              
25       lease or property expires January 1, 2026. The Alaska Oil and Gas Conservation                                
26       Commission shall determine the commencement of regular production for                                         
27       purposes of this subsection. A reduction under this subsection may not reduce the                             
28       gross value at the point of production below zero. In this subsection, "participating                             
29       area" means a reservoir or portion of a reservoir producing or contributing to                                    
30       production as approved by the Department of Natural Resources.                                                    
31    * Sec. 38. AS 43.55.160(g) is amended to read:                                                                     
01            (g)  On and after January 1, 2014, in addition to the reduction under (f) of this                            
02       section, in the calculation of an annual production tax value of a producer under                                 
03       (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or                         
04       gas produced from a lease or property north of 68 degrees North latitude that does not                            
05       contain a lease that was within a unit on January 1, 2003, is reduced by 10 percent if                            
06       the oil or gas is produced from a unit made up solely of leases that have a royalty                               
07       share of more than 12.5 percent in amount or value of the production removed or sold                              
08       from the lease as determined under AS 38.05.180(f). This subsection does not apply if                             
09       the royalty obligation for one or more of the leases in the unit has been reduced to 12.5                         
10       percent or less under AS 38.05.180(j) for all or part of the calendar year for which the                          
11       annual production tax value is calculated. This subsection does not apply to gas                                  
12       produced before 2022 that is used in the state or to gas produced on and after                                    
13       January 1, 2022. For oil or gas first produced after December 31, 2016, a                                     
14       reduction allowed under this subsection applies to oil or gas produced from a                                 
15       lease or property for the first 10 years after the commencement of regular                                    
16       production of oil or gas from that lease or property. For oil or gas first produced                           
17       before January 1, 2017, a reduction allowed under this subsection for a lease or                              
18       property expires January 1, 2026. The Alaska Oil and Gas Conservation                                         
19       Commission shall determine the commencement of regular production for                                         
20       purposes of this subsection. A reduction under this subsection may not reduce the                             
21       gross value at the point of production below zero.                                                                
22    * Sec. 39. AS 43.55.165(a) is amended to read:                                                                     
23            (a)  For the [EXCEPT AS PROVIDED IN (j) AND (k) OF THIS SECTION,                                         
24       FOR] purposes of this chapter, a producer's lease expenditures for a calendar year are                            
25                 (1)  costs, other than items listed in (e) of this section, that are                                    
26                      (A)  incurred by the producer during the calendar year after                                       
27            March 31, 2006, to explore for, develop, or produce oil or gas deposits located                              
28            within the producer's leases or properties in the state or, in the case of land in                           
29            which the producer does not own an operating right, operating interest, or                                   
30            working interest, to explore for oil or gas deposits within other land in the                                
31            state; and                                                                                                   
01                      (B)  allowed by the department by regulation, based on the                                         
02            department's determination that the costs satisfy the following three                                        
03            requirements:                                                                                                
04                           (i)  the costs must be incurred upstream of the point of                                      
05                 production of oil and gas;                                                                              
06                           (ii)  the costs must be ordinary and necessary costs of                                       
07                 exploring for, developing, or producing, as applicable, oil or gas                                      
08                 deposits; and                                                                                           
09                           (iii)  the costs must be direct costs of exploring for,                                       
10                 developing, or producing, as applicable, oil or gas deposits; [AND]                                     
11                 (2)  a reasonable allowance for that calendar year, as determined under                                 
12       regulations adopted by the department, for overhead expenses that are directly related                            
13       to exploring for, developing, or producing, as applicable, the oil or gas deposits; and                       
14                 (3)  lease expenditures incurred in a previous year that                                            
15                      (A)  met the requirements of AS 43.55.160(e) in the year in                                    
16            which the lease expenditures were incurred;                                                              
17                      (B)  have not been deducted in the determination of the                                        
18            production tax value of oil and gas under AS 43.55.160(a) in a previous                                  
19            calendar year;                                                                                           
20                      (C)  were not the basis of a credit under this title; and                                      
21                      (D)  were incurred to explore for, develop, or produce oil or                                  
22            gas deposits located north of 68 degrees North latitude.                                                 
23    * Sec. 40. AS 43.55.165(e) is amended to read:                                                                     
24            (e)  For purposes of this section, lease expenditures do not include                                         
25                 (1)  depreciation, depletion, or amortization;                                                          
26                 (2)  oil or gas royalty payments, production payments, lease profit                                     
27       shares, or other payments or distributions of a share of oil or gas production, profit, or                        
28       revenue, except that a producer's lease expenditures applicable to oil and gas produced                           
29       from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net                             
30       profit paid to the state under that lease;                                                                        
31                 (3)  taxes based on or measured by net income;                                                          
01                 (4)  interest or other financing charges or costs of raising equity or debt                             
02       capital;                                                                                                          
03                 (5)  acquisition costs for a lease or property or exploration license;                                  
04                 (6)  costs arising from fraud, wilful misconduct, gross negligence,                                     
05       violation of law, or failure to comply with an obligation under a lease, permit, or                               
06       license issued by the state or federal government;                                                                
07                 (7)  fines or penalties imposed by law;                                                                 
08                 (8)  costs of arbitration, litigation, or other dispute resolution activities                           
09       that involve the state or concern the rights or obligations among owners of interests in,                         
10       or rights to production from, one or more leases or properties or a unit;                                         
11                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
12       business entity or arrangement;                                                                                   
13                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
14       this paragraph does not apply to the costs of obtaining insurance or a surety bond from                           
15       a third-party insurer or surety;                                                                                  
16                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
17                 (12)  an expenditure otherwise deductible under (b) of this section that                                
18       is a result of an internal transfer, a transaction with an affiliate, or a transaction                            
19       between related parties, or is otherwise not an arm's length transaction, unless the                              
20       producer establishes to the satisfaction of the department that the amount of the                                 
21       expenditure does not exceed the fair market value of the expenditure;                                             
22                 (13)  an expenditure incurred to purchase an interest in any corporation,                               
23       partnership, limited liability company, business trust, or any other business entity,                             
24       whether or not the transaction is treated as an asset sale for federal income tax                                 
25       purposes;                                                                                                         
26                 (14)  a tax levied under AS 43.55.011 or 43.55.014;                                                     
27                 (15)  costs incurred for dismantlement, removal, surrender, or                                          
28       abandonment of a facility, pipeline, well pad, platform, or other structure, or for the                           
29       restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in                       
30       conjunction with dismantlement, removal, surrender, or abandonment; a cost is not                                 
31       excluded under this paragraph if the dismantlement, removal, surrender, or                                        
01       abandonment for which the cost is incurred is undertaken for the purpose of replacing,                            
02       renovating, or improving the facility, pipeline, well pad, platform, or other structure;                          
03                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
04       connection with any unpermitted release of oil or a hazardous substance and any                                   
05       liability for damages imposed on the producer or explorer for that unpermitted release;                           
06       this paragraph does not apply to the cost of developing and maintaining an oil                                    
07       discharge prevention and contingency plan under AS 46.04.030;                                                     
08                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
09       license under AS 38.05.132;                                                                                       
10                 (18)  that portion of expenditures, that would otherwise be qualified                                   
11       capital expenditures [, AS DEFINED IN AS 43.55.023,] incurred during a calendar                                   
12       year that are less than the product of $0.30 multiplied by the total taxable production                           
13       from each lease or property, in BTU equivalent barrels, during that calendar year,                                
14       except that, when a portion of a calendar year is subject to this provision, the                                  
15       expenditures and volumes shall be prorated within that calendar year;                                             
16                 (19)  costs incurred for repair, replacement, or deferred maintenance of                                
17       a facility, a pipeline, a structure, or equipment, other than a well, that results in or is                       
18       undertaken in response to a failure, problem, or event that results in an unscheduled                             
19       interruption of, or reduction in the rate of, oil or gas production; or costs incurred for                        
20       repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or                           
21       equipment, other than a well, that is undertaken in response to, or is otherwise                                  
22       associated with, an unpermitted release of a hazardous substance or of gas; however,                              
23       costs under this paragraph that would otherwise constitute lease expenditures under (a)                           
24       and (b) of this section may be treated as lease expenditures if the department                                    
25       determines that the repair or replacement is solely necessitated by an act of war, by an                          
26       unanticipated grave natural disaster or other natural phenomenon of an exceptional,                               
27       inevitable, and irresistible character, the effects of which could not have been                                  
28       prevented or avoided by the exercise of due care or foresight, or by an intentional or                            
29       negligent act or omission of a third party, other than a party or its agents in privity of                        
30       contract with, or employed by, the producer or an operator acting for the producer, but                           
31       only if the producer or operator, as applicable, exercised due care in operating and                              
01       maintaining the facility, pipeline, structure, or equipment, and took reasonable                                  
02       precautions against the act or omission of the third party and against the consequences                           
03       of the act or omission; in this paragraph,                                                                        
04                      (A)  "costs incurred for repair, replacement, or deferred                                          
05            maintenance of a facility, a pipeline, a structure, or equipment" includes costs                             
06            to dismantle and remove the facility, pipeline, structure, or equipment that is                              
07            being replaced;                                                                                              
08                      (B)  "hazardous substance" has the meaning given in                                                
09            AS 46.03.826;                                                                                                
10                      (C)  "replacement" includes renovation or improvement;                                             
11                 (20)  costs incurred to construct, acquire, or operate a refinery or crude                              
12       oil topping plant, regardless of whether the products of the refinery or topping plant                            
13       are used in oil or gas exploration, development, or production operations; however, if                            
14       a producer owns a refinery or crude oil topping plant that is located on or near the                              
15       premises of the producer's lease or property in the state and that processes the                                  
16       producer's oil produced from that lease or property into a product that the producer                              
17       uses in the operation of the lease or property in drilling for or producing oil or gas, the                       
18       producer's lease expenditures include the amount calculated by subtracting from the                               
19       fair market value of the product used the prevailing value, as determined under                                   
20       AS 43.55.020(f), of the oil that is processed;                                                                    
21                 (21)  costs of lobbying, public relations, public relations advertising, or                             
22       policy advocacy.                                                                                                  
23    * Sec. 41. AS 43.55.165(f) is amended to read:                                                                     
24            (f)  For purposes of AS 43.55.023(b) [AS 43.55.023(a) AND (b)] and only as                               
25       to expenditures incurred to explore for an oil or gas deposit located within land in                              
26       which an explorer does not own a working interest, the term "producer" in this section                            
27       includes "explorer."                                                                                              
28    * Sec. 42. AS 43.55.170(c) is amended to read:                                                                     
29            (c)  For purposes of AS 43.55.023(b) [AS 43.55.023(a) AND (b)] and only as                               
30       to expenditures incurred to explore for an oil or gas deposit located within land in                              
31       which an explorer does not own a working interest, the term "producer" in this section                            
01       includes "explorer."                                                                                              
02    * Sec. 43. AS 43.55.180(a) is amended to read:                                                                     
03            (a)  The department shall study                                                                              
04                 (1)  the effects of the provisions of this chapter on oil and gas                                       
05       exploration, development, and production in the state, on investment expenditures for                             
06       oil and gas exploration, development, and production in the state, on the entry of new                            
07       producers into the oil and gas industry in the state, on state revenue, and on tax                                
08       administration and compliance, giving particular attention to the tax rates provided                              
09       under AS 43.55.011, the tax credits provided under AS 43.55.024, 43.55.025, and                               
10       former AS 43.55.023 [AS 43.55.023 - 43.55.025], and the deductions for and                                    
11       adjustments to lease expenditures provided under AS 43.55.160 - 43.55.170; and                                    
12                 (2)  the effects of the tax rates under AS 43.55.011(i) on state revenue                                
13       and on oil and gas exploration, development, and production on private land, and the                              
14       fairness of those tax rates for private landowners.                                                               
15    * Sec. 44. AS 43.55.890 is amended to read:                                                                        
16            Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary                                
17       provision of AS 40.25.100, and regardless of whether the information is considered                                
18       under AS 43.05.230(e) to constitute statistics classified to prevent the identification of                        
19       particular returns or reports, the department may publish the following information                               
20       under this chapter, if aggregated among three or more producers or explorers, showing                             
21       by month or calendar year and by lease or property, unit, or area of the state:                                   
22                 (1)  the amount of oil or gas production;                                                               
23                 (2)  the amount of taxes levied under this chapter or paid under this                                   
24       chapter;                                                                                                          
25                 (3)  the effective tax rates under this chapter;                                                        
26                 (4)  the gross value of oil or gas at the point of production;                                          
27                 (5)  the transportation costs for oil or gas;                                                           
28                 (6)  qualified capital expenditures [, AS DEFINED IN AS 43.55.023];                                     
29                 (7)  exploration expenditures under AS 43.55.025;                                                       
30                 (8)  production tax values of oil or gas under AS 43.55.160;                                            
31                 (9)  lease expenditures under AS 43.55.165;                                                             
01                 (10)  adjustments to lease expenditures under AS 43.55.170;                                             
02                 (11)  tax credits applicable or potentially applicable against taxes levied                             
03       by this chapter.                                                                                                  
04    * Sec. 45. AS 43.55.895(b) is amended to read:                                                                     
05            (b)  A municipal entity subject to taxation because of this section                                          
06                 (1)  is eligible for [ALL] tax credits proportionate to its production                          
07       taxable under AS 43.55.011(e); and                                                                            
08                 (2)  shall allocate its lease expenditures in proportion to its                                     
09       production taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO THE                                           
10       SAME EXTENT AS ANY OTHER PRODUCER].                                                                               
11    * Sec. 46. AS 43.55.900 is amended by adding new paragraphs to read:                                               
12                 (26)  "qualified capital expenditure"                                                                   
13                      (A)  means, except as otherwise provided in (B) of this                                            
14            paragraph, an expenditure that is a lease expenditure under AS 43.55.165 and                                 
15            is                                                                                                           
16                           (i)  incurred for geological or geophysical exploration;                                      
17                           (ii)  treated as a capitalized expenditure under 26 U.S.C.                                    
18                 (Internal Revenue Code), as amended, regardless of elections made                                       
19                 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is                                      
20                 treated as a capitalized expenditure for federal income tax reporting                                   
21                 purposes by the person incurring the expenditure; or                                                    
22                           (iii)  treated as a capitalized expenditure under 26 U.S.C.                                   
23                 (Internal Revenue Code), as amended, regardless of elections made                                       
24                 under 26 U.S.C. 263(c) (Internal Revenue Code), as amended, and is                                      
25                 eligible to be deducted as an expense under 26 U.S.C. 263(c) (Internal                                  
26                 Revenue Code), as amended;                                                                              
27                      (B)  does not include an expenditure incurred to acquire an asset                                  
28            the cost of previously acquiring which was a lease expenditure under                                         
29            AS 43.55.165 or would have been a lease expenditure under AS 43.55.165 if it                                 
30            had been incurred after March 31, 2006, or that has previously been placed in                                
31            service in the state; an expenditure to acquire an asset is not excluded under                               
01            this subparagraph if not more than an immaterial portion of the asset meets a                                
02            description under this subparagraph; for purposes of this subparagraph, "asset"                              
03            includes geological, geophysical, and well data and interpretations;                                         
04                 (27)  "regular production" has the meaning given in AS 31.05.170.                                       
05    * Sec. 47. AS 43.70 is amended by adding new sections to read:                                                     
06            Sec. 43.70.025. Bond or cash deposit required for an oil or gas business. (a)                              
07       At the time of applying for a license under this chapter, an applicant engaged in the                             
08       business of oil or gas exploration, development, or production shall file a surety bond                           
09       in the amount of $250,000 running to the state, conditioned upon the applicant's                                  
10       promise to pay                                                                                                    
11                 (1)  taxes and contributions due the state and political subdivisions;                                  
12                 (2)  persons furnishing labor or material or renting or supplying                                       
13       equipment to the applicant; and                                                                                   
14                 (3)  costs of repairs to public facilities.                                                             
15            (b)  In lieu of the surety bond required under this section, the applicant may                               
16       file with the commissioner a cash deposit or other negotiable security acceptable to the                          
17       commissioner in the amount of $250,000.                                                                           
18            (c)  The bond required by this section remains in effect until cancelled by                                  
19       action of the surety, the principal, or, if the commissioner finds that the business is                           
20       producing oil or gas in commercial quantities, by the commissioner.                                               
21            Sec. 43.70.028. Claims against an oil or gas business. (a) A person having a                               
22       claim against a person required to file a surety bond under AS 43.70.025 because of                               
23       the failure to pay a liability described in AS 43.70.025(a) may bring suit upon the                               
24       bond. A copy of the complaint shall be served by registered or certified mail on the                              
25       commissioner at the time suit is filed, and the commissioner shall maintain a record,                             
26       available for public inspection, of all suits commenced. This service on the                                      
27       commissioner shall constitute service on the surety, and the commissioner shall                                   
28       transmit the complaint or a copy of it to the surety within 72 hours after it is received.                        
29       The surety on the bond is not liable in an aggregate amount in excess of that named in                            
30       the bond, but, if claims pending at any one time exceed the amount of the bond, the                               
31       claims shall be satisfied from the bond in the following order:                                                   
01                 (1)  material, equipment, and supplies delivered in the state;                                          
02                 (2)  labor, including employee benefits;                                                                
03                 (3)  taxes and other amounts due to the city and borough, in that order;                                
04                 (4)  repair of public facilities;                                                                       
05                 (5)  taxes and other amounts due to the state.                                                          
06            (b)  If a judgment is entered against a cash deposit, the commissioner, upon                                 
07       receipt of a certified copy of a final judgment, shall pay the judgment from the amount                           
08       of the deposit in accordance with the priorities set out in (a) of this section.                                  
09            (c)  An action described in (a) of this section may not be commenced on the                                  
10       bond more than three years after the bond's cancellation.                                                         
11    * Sec. 48. AS 43.99.950 is amended by adding a new paragraph to read:                                              
12                 (3)  "outstanding liability to the state" means an amount of tax, interest,                             
13       penalty, fee, rental, royalty, or other charge for which the state has issued a demand                            
14       for payment that has not been paid when due and, if contested, has not been finally                               
15       resolved against the state.                                                                                       
16    * Sec. 49. AS 38.05.180(i); AS 41.09.010, 41.09.020, 41.09.030, 41.09.090;                                         
17 AS 43.20.053(j)(4); AS 43.55.023(a), 43.55.023(o), 43.55.025(a)(5), 43.55.025(a)(7),                                    
18 43.55.025(l), 43.55.025(n), 43.55.028(i), 43.55.075(d)(1), 43.55.165(j), and 43.55.165(k) are                           
19 repealed January 1, 2017.                                                                                               
20    * Sec. 50. AS 43.55.023(l) and 43.55.023(n) are repealed January 1, 2019.                                          
21    * Sec. 51. AS 43.55.023, 43.55.165(f), and 43.55.170(c) are repealed January 1, 2020.                              
22    * Sec. 52. The uncodified law of the State of Alaska is amended by adding a new section to                         
23 read:                                                                                                                   
24       LEGISLATIVE WORKING GROUP. (a) A legislative working group is established                                         
25 to analyze the Cook Inlet fiscal regime for oil and gas, review the state's tax structure and                           
26 rates on oil and gas produced south of 68 degrees North latitude, recommend changes to the                              
27 legislature for consideration during the First Regular Session of the Thirtieth Alaska State                            
28 Legislature, and develop terms for a comprehensive fiscal regime to take effect January 1,                              
29 2019, including,                                                                                                        
30            (1)  a tax structure that accounts for the unique circumstances for each oil and                             
31 gas producing area south of 68 degrees North latitude;                                                                  
01            (2)  incentives other than direct monetary support from the state for the                                    
02 exploration, development, and production of oil and gas south of 68 degrees North latitude;                             
03            (3)  consideration of the competitiveness of the area south of 68 degrees North                              
04 latitude to attract new oil and gas development;                                                                        
05            (4)  consideration of the unique market considerations of the Cook Inlet                                     
06 sedimentary basin and the need to support energy supply security for communities in                                     
07 Southcentral Alaska;                                                                                                    
08            (5)  alternative means of state support for the exploration, development, and                                
09 production of oil and gas in the Cook Inlet sedimentary basin, including loan guarantees or                             
10 other financial support through the Alaska Industrial Development and Export Authority or                               
11 other state corporation or entity.                                                                                      
12       (b)  The working group consists of                                                                                
13            (1)  two co-chairs, one of whom is a member of the house of representatives                                  
14 appointed by the speaker of the house of representatives, and one of whom is a member of the                            
15 senate appointed by the president of the senate; and                                                                    
16            (2)  members appointed by the co-chairs; members must be legislators and                                     
17 must include members of the majority and minority caucuses.                                                             
18       (c)  The co-chairs of the working group may form an advisory group to the working                                 
19 group, composed of members who are not legislators and who have expertise and skills to                                 
20 assist in the review and development of a new plan for the tax structure and rates on oil and                           
21 gas produced south of 68 degrees North latitude. The members of an advisory group may                                   
22 include commissioners or employees of state departments, members of the oil and gas                                     
23 industry or trade associations, and economists.                                                                         
24       (d)  The working group may be supported by legislative consultants under contract                                 
25 through the Legislative Budget and Audit Committee.                                                                     
26    * Sec. 53. The uncodified law of the State of Alaska is amended by adding a new section to                         
27 read:                                                                                                                   
28       APPLICABILITY. (a) AS 43.55.028(e), as amended by sec. 25 of this Act,                                            
29 AS 43.55.028(j), added by sec. 28 of this Act, and regulations related to a tax credit certificate                      
30 purchase preference for applicants with a workforce of resident workers, adopted under                                  
31 AS 43.55.028(g), as amended by sec. 27 of this Act, apply to a purchase applied for on or                               
01 after the effective date of secs. 25, 27, and 28 of this Act.                                                           
02       (b)  AS 43.55.165(a), as amended by sec. 39 of this Act, applies to lease expenditures                            
03 calculated for a calendar year after December 31, 2016.                                                                 
04    * Sec. 54. The uncodified law of the State of Alaska is amended by adding a new section to                         
05 read:                                                                                                                   
06       TRANSITION: QUALIFIED CAPITAL EXPENDITURES. (a) Notwithstanding the                                               
07 repeal of AS 43.55.023(a) and (o) by sec. 49 of this Act, and the amendments to                                         
08 AS 45.55.023(d) by sec. 16 of this Act, AS 43.55.029(a) by sec. 29 of this Act,                                         
09 AS 43.55.030(a) and (e) by secs. 32 and 33 of this Act, AS 43.55.165(f) by sec. 41 of this Act,                         
10 and AS 43.55.170(c) by sec. 42 of this Act, a taxpayer who incurs a qualified capital                                   
11 expenditure before the repeal of AS 43.55.023(a) and (o) by sec. 49 of this Act that qualifies                          
12 for a qualified capital expenditure credit under AS 43.55.023(a) may apply for a credit or tax                          
13 credit certificate under AS 43.55.023(d) and, as applicable, assign the tax credit under                                
14 AS 43.55.029, as those sections read on the day before the repeal of AS 43.55.023(a) by sec.                            
15 49 of this Act.                                                                                                         
16       (b)  The Department of Revenue may continue to apply and enforce AS 43.55.023(a)                                  
17 and (o) and 43.55.029, as those sections read on the day before the repeal of AS 43.55.023(a)                           
18 by sec. 49 of this Act, for qualified capital expenditures incurred before the repeal of                                
19 AS 43.55.023(a) by sec. 49 of this Act.                                                                                 
20    * Sec. 55. The uncodified law of the State of Alaska is amended by adding a new section to                         
21 read:                                                                                                                   
22       TRANSITION: WELL LEASE EXPENDITURES. (a) Notwithstanding the repeal of                                            
23 AS 43.55.023(l) and (n) by sec. 50 of this Act, and the amendment of AS 43.55.029(a) by sec.                            
24 30 of this Act, a taxpayer who incurs a well lease expenditure before the repeal of                                     
25 AS 43.55.023(l) and (n) by sec. 50 of this Act that qualifies for a well lease expenditure credit                       
26 under AS 43.55.023(l) may apply for a credit or transferable tax credit certificate under                               
27 AS 43.55.023 and assign the tax credit under AS 43.55.029, as those sections read on the day                            
28 before the repeal of AS 43.55.023(l) and (n) by sec. 50 of this Act.                                                    
29       (b)  The Department of Revenue may continue to apply and enforce AS 43.55.023(l),                                 
30 as that subsection read on the day before the repeal of AS 43.55.023(l) by sec. 50 of this Act,                         
31 for well lease expenditures incurred before the repeal of AS 43.55.023(l) by sec. 50 of this                            
01 Act.                                                                                                                    
02    * Sec. 56. The uncodified law of the State of Alaska is amended by adding a new section to                         
03 read:                                                                                                                   
04       TRANSITION: CARRIED-FORWARD ANNUAL LOSSES. (a) Notwithstanding the                                                
05 repeal of AS 43.55.023, 43.55.165(f), and 43.55.170(c) by sec. 51 of this Act, and the                                  
06 amendments of AS 43.55.029(a) by sec. 31 of this Act, AS 43.55.160(d) by sec. 34 of this                                
07 Act, and AS 43.55.160(e) by sec. 36 of this Act, a taxpayer who incurs a carried-forward                                
08 annual loss before the repeal of AS 43.55.023 by sec. 51 of this Act that qualifies for a                               
09 carried-forward annual loss credit under AS 43.55.023(b) may apply for a credit or tax credit                           
10 certificate under AS 43.55.023(d) and assign the tax credit under AS 43.55.029, subject to the                          
11 requirements of AS 43.55.160(d) and (e), as those sections read on the day before the repeal                            
12 of AS 43.55.023 by sec. 51 of this Act.                                                                                 
13       (b)  The Department of Revenue may continue to apply and enforce AS 43.55.023(b),                                 
14 as that section read on the day before the repeal of AS 43.55.023(b) by sec. 51 of this Act, for                        
15 a carried-forward annual loss incurred before the repeal of AS 43.55.023(b) by sec. 51 of this                          
16 Act.                                                                                                                    
17    * Sec. 57. The uncodified law of the State of Alaska is amended by adding a new section to                         
18 read:                                                                                                                   
19       TRANSITION: AS 43.55.023 CREDITS. Notwithstanding the repeal of                                                   
20 AS 43.55.023, 43.55.165(f), and 43.55.170(c) by sec. 51 of this Act, and the amendments to                              
21 AS 43.55.025(m) by sec. 22 of this Act, AS 43.55.028(a) and (e) by secs. 24 and 26 of this                              
22 Act, AS 43.55.029(a) by sec. 31 of this Act, AS 43.55.160(d) by sec. 34 of this Act, and                                
23 AS 43.55.180(a) by sec. 43 of this Act, the Department of Revenue may continue to apply and                             
24 enforce AS 43.55.023, as that section read on the day before the repeal of AS 43.55.023 by                              
25 sec. 51 of this Act, for a credit earned before the repeal of AS 43.55.023 by sec. 51 of this                           
26 Act.                                                                                                                    
27    * Sec. 58. The uncodified law of the State of Alaska is amended by adding a new section to                         
28 read:                                                                                                                   
29       TRANSITION: LEASE EXPENDITURES FOR A CALENDAR YEAR AFTER                                                          
30 2006 AND BEFORE 2010. Notwithstanding AS 43.55.165(a), as amended by sec. 39 of this                                    
31 Act, and the repeal of AS 43.55.165(j) and (k) by sec. 49 of this Act, AS 43.55.165(j) and (k)                          
01 apply to a producer's total lease expenditures for a calendar year after 2006 and before 2010                           
02 under AS 43.55.165, as that section read on the day before the repeal of AS 43.55.165(j) and                            
03 (k) by sec. 49 of this Act.                                                                                             
04    * Sec. 59. The uncodified law of the State of Alaska is amended by adding a new section to                         
05 read:                                                                                                                   
06       TRANSITION:   EXPLORATION    EXPENDITURES    AND    SEISMIC                                                       
07 EXPLORATION EXPENDITURES. (a) Notwithstanding the repeal of AS 43.55.025(a)(5),                                         
08 (a)(7), (l), and (n) by sec. 49 of this Act, a taxpayer who incurs an exploration expenditure or                        
09 seismic exploration expenditure before the repeal of AS 43.55.025(a)(5), (a)(7), (l), and (n) by                        
10 sec. 49 of this Act that qualifies for an exploration or seismic exploration expenditure credit                         
11 under AS 43.55.025(a)(5) or (a)(7) may apply for a credit or production tax credit certificate                          
12 under AS 43.55.025 and assign the tax credit under AS 43.55.029, as those sections read on                              
13 the day before the repeal of AS 43.55.025(a)(5), (a)(7), (l), and (n) by sec. 49 of this Act.                           
14       (b)  The Department of Revenue may continue to apply and enforce                                                  
15 AS 43.55.025(a)(5), (a)(7), (l), and (n), as those sections read on the day before the repeal of                        
16 AS 43.55.025(a)(5), (a)(7), (l), and (n) by sec. 49 of this Act, for exploration expenditures and                       
17 seismic exploration expenditures incurred before the repeal of AS 43.55.025(a)(5), (a)(7), (l),                         
18 and (n) by sec. 49 of this Act.                                                                                         
19    * Sec. 60. The uncodified law of the State of Alaska is amended by adding a new section to                         
20 read:                                                                                                                   
21       TRANSITION: REGULATIONS. The Department of Revenue, the Department of                                             
22 Natural Resources, the Department of Commerce, Community, and Economic Development,                                     
23 and the Alaska Oil and Gas Conservation Commission may adopt regulations necessary to                                   
24 implement the changes made by this Act. The regulations take effect under AS 44.62                                      
25 (Administrative Procedure Act), but not before the effective date of the law implemented by                             
26 the regulation. The Department of Revenue shall adopt regulations governing the use of tax                              
27 credits under AS 43.55 for a calendar year for which the applicable tax credit provisions of                            
28 AS 43.55 differ as between parts of the year as a result of this Act.                                                   
29    * Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section to                         
30 read:                                                                                                                   
31       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
01 contrary provision of AS 44.62.240,                                                                                     
02            (1)  if the Department of Revenue expressly designates in a regulation that the                              
03 regulation applies retroactively, a regulation adopted by the Department of Revenue to                                  
04 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to                         
05 the effective date of the law implemented by the regulation;                                                            
06            (2)  if the Department of Natural Resources expressly designates in the                                      
07 regulation that the regulation applies retroactively, a regulation adopted by the Department of                         
08 Natural Resources to implement, interpret, make specific, or otherwise carry out the statutory                          
09 amendments in this Act affecting the administration of oil and gas leases issued under                                  
10 AS 38.05.180(f)(3)(B), (D), or (E), to the extent the regulation relates to the treatment of oil                        
11 and gas production taxes in determining net profits under those leases, may apply                                       
12 retroactively to the effective date of the law implemented by the regulation.                                           
13    * Sec. 62. Sections 21, 52, 60, and 61 of this Act take effect immediately under                                   
14 AS 01.10.070(c).                                                                                                        
15    * Sec. 63. Sections 30, 50, and 55 of this Act take effect January 1, 2019.                                        
16    * Sec. 64. Sections 22, 24, 26, 31, 34, 36, 43, 51, 56, and 57 of this Act take effect                             
17 January 1, 2020.                                                                                                        
18    * Sec. 65. Except as provided in secs. 62 - 64 of this Act, this Act takes effect January 1,                       
19 2017.