txt

CCS HB 247: "An Act relating to the exploration incentive credits; relating to the powers and duties of the Alaska Oil and Gas Conservation Commission; relating to interest applicable to delinquent tax; relating to the oil and gas production tax, tax payments, and credits; relating to tax credit certificates; 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 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; and providing for an effective date."

00                   CONFERENCE CS FOR HOUSE BILL NO. 247                                                                  
01 "An Act relating to the exploration incentive credits; relating to the powers and duties                                
02 of the Alaska Oil and Gas Conservation Commission; relating to interest applicable to                                   
03 delinquent tax; relating to the oil and gas production tax, tax payments, and credits;                                  
04 relating to tax credit certificates; relating to refunds for the gas storage facility tax                               
05 credit, the liquefied natural gas storage facility tax credit, and the qualified in-state oil                           
06 refinery infrastructure expenditures tax credit; relating to oil and gas lease expenditures                             
07 and production tax credits for municipal entities; requiring a bond or cash deposit with                                
08 a business license application for an oil or gas business; and providing for an effective                               
09 date."                                                                                                                  
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
11    * Section 1. AS 31.05.030 is amended by adding a new subsection to read:                                           
12            (n)  Upon request of the commissioner of revenue, the commission shall                                       
01       determine the commencement of regular production from a lease or property for                                     
02       purposes of AS 43.55.160(f) and (g).                                                                            
03    * Sec. 2. AS 38.05.036(a) is amended to read:                                                                      
04            (a)  The department may conduct audits regarding royalty and net profits under                               
05       oil and gas contracts, agreements, or leases under this chapter and regarding costs                               
06       related to exploration licenses entered into under AS 38.05.131 - 38.05.134 and                                   
07       exploration incentive credits under this chapter [OR UNDER AS 41.09]. For purposes                                
08       of an audit under this section,                                                                               
09                 (1)  the department may examine the books, papers, records, or                                          
10       memoranda of a person regarding matters related to the audit; and                                                 
11                 (2)  the records and premises where a business is conducted shall be                                    
12       open at all reasonable times for inspection by the department.                                                    
13    * Sec. 3. AS 38.05.036(b) is amended to read:                                                                      
14            (b)  The Department of Revenue may obtain from the department information                                    
15       relating to royalty and net profits payments and to exploration incentive credits under                           
16       this chapter [OR UNDER AS 41.09], whether or not that information is confidential.                                
17       The Department of Revenue may use the information in carrying out its functions and                               
18       responsibilities under AS 43, and shall hold that information confidential to the extent                          
19       required by an agreement with the department or by AS 38.05.035(a)(8) [,                                          
20       AS 41.09.010(d),] or AS 43.05.230.                                                                                
21    * Sec. 4. AS 38.05.036(c) is amended to read:                                                                      
22            (c)  The department may obtain from the Department of Revenue all                                            
23       information obtained under AS 43 relating to royalty and net profits and to exploration                           
24       incentive credits. The department may use the information for purposes of carrying out                            
25       its responsibilities and functions under this chapter [AND AS 41.09]. Information                                 
26       made available to the department that was obtained under AS 43 is confidential and                                
27       subject to the provisions of AS 43.05.230.                                                                        
28    * Sec. 5. AS 38.05.036(f) is amended to read:                                                                      
29            (f)  Except as otherwise provided in this section or in connection with official                             
30       investigations or proceedings of the department, it is unlawful for a current or former                           
31       officer, employee, or agent of the state to divulge information obtained by the                                   
01       department as a result of an audit under this section that is required by an agreement                            
02       with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be kept                                      
03       confidential.                                                                                                     
04    * Sec. 6. AS 38.05.036(g) is amended to read:                                                                      
05            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
06       that maintains the confidentiality of information to the extent required by an                                    
07       agreement with the department or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)].                                      
08    * Sec. 7. AS 40.25.100(a) is amended to read:                                                                      
09            (a)  Information in the possession of the Department of Revenue that discloses                               
10       the particulars of the business or affairs of a taxpayer or other person, including                               
11       information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement                              
12       under AS 38.05.020(b)(12), is not a matter of public record, except as provided in                                
13       AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or for purposes of investigation and                           
14       law enforcement. The information shall be kept confidential except when its                                       
15       production is required in an official investigation, administrative adjudication under                            
16       AS 43.05.405 - 43.05.499, or court proceeding. These restrictions do not prohibit the                             
17       publication of statistics presented in a manner that prevents the identification of                               
18       particular reports and items, prohibit the publication of tax lists showing the names of                          
19       taxpayers who are delinquent and relevant information that may assist in the collection                           
20       of delinquent taxes, or prohibit the publication of records, proceedings, and decisions                           
21       under AS 43.05.405 - 43.05.499.                                                                                   
22    * Sec. 8. AS 43.05.225 is amended to read:                                                                         
23            Sec. 43.05.225. Interest. Unless otherwise provided,                                                       
24                 (1)  a delinquent tax [UNDER THIS TITLE,]                                                               
25                      (A)  under this title, before January 1, 2014, bears interest in                               
26            each calendar quarter at the rate of five percentage points above the annual rate                            
27            charged member banks for advances by the 12th Federal Reserve District as of                                 
28            the first day of that calendar quarter, or at the annual rate of 11 percent,                                 
29            whichever is greater, compounded quarterly as of the last day of that quarter;                               
30            [OR]                                                                                                         
31                      (B)  under this title, on and after January 1, 2014, except as                             
01            provided in (C) of this paragraph, bears interest in each calendar quarter at                            
02            the rate of three percentage points above the annual rate charged member                                     
03            banks for advances by the 12th Federal Reserve District as of the first day of                               
04            that calendar quarter;                                                                                   
05                      (C)  under AS 43.55, on and after January 1, 2017,                                             
06                           (i)  for the first three years after a tax becomes                                        
07                 delinquent, bears interest in each calendar quarter at the rate of                                  
08                 seven percentage points above the annual rate charged member                                        
09                 banks for advances by the 12th Federal Reserve District as of the                                   
10                 first day of that calendar quarter, compounded quarterly as of the                                  
11                 last day of that quarter; and                                                                       
12                           (ii)  after the first three years after a tax becomes                                     
13                 delinquent, does not bear interest;                                                                 
14                 (2)  the interest rate is 12 percent a year for                                                         
15                      (A)  delinquent fees payable under AS 05.15.095(c); and                                            
16                      (B)  unclaimed property that is not timely paid or delivered, as                                   
17            allowed by AS 34.45.470(a).                                                                                  
18    * Sec. 9. AS 43.05.230 is amended by adding a new subsection to read:                                              
19            (l)  For tax credit certificates purchased by the department in the preceding                                
20       calendar year under AS 43.55.028, the department shall make the following                                         
21       information public by April 30 of each year:                                                                      
22                 (1)  the name of each person from whom the department purchased a                                       
23       transferable tax credit certificate; and                                                                          
24                 (2)  the aggregate amount of the tax credit certificates purchased from                                 
25       the person in the preceding calendar year.                                                                        
26    * Sec. 10. AS 43.20.046(e) is amended to read:                                                                     
27            (e)  Subject to the requirements in AS 43.55.028(j), the [THE] department                                
28       may use available money in the oil and gas tax credit fund established in AS 43.55.028                            
29       to make the refund applied for under (d) of this section in whole or in part if the                               
30       department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN                                                     
31       OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT                                                          
01       TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits,                                  
02       the claimant's total tax liability under this chapter for the calendar year in which the                          
03       claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX"                                               
04       MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED                                                        
05       AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS                                                       
06       NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.]                                                               
07    * Sec. 11. AS 43.20.047(e) is amended to read:                                                                     
08            (e)  Subject to the requirements in AS 43.55.028(j), the [THE] department                                
09       may use money available in the oil and gas tax credit fund established in AS 43.55.028                            
10       to make a refund or payment under (d) of this section in whole or in part if the                                  
11       department finds that, [(1) THE CLAIMANT DOES NOT HAVE AN                                                     
12       OUTSTANDING LIABILITY TO THE STATE FOR UNPAID DELINQUENT                                                          
13       TAXES UNDER THIS TITLE; AND (2)] after application of all available tax credits,                                  
14       the claimant's total tax liability under this chapter for the calendar year in which the                          
15       claim is made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT TAX"                                               
16       MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED                                                        
17       AN ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED, HAS                                                       
18       NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S FAVOR.]                                                               
19    * Sec. 12. AS 43.20.053(e) is amended to read:                                                                     
20            (e)  Subject to the requirements in AS 43.55.028(j), the [THE] department                                
21       may use money available in the oil and gas tax credit fund established in AS 43.55.028                            
22       to make a refund or payment under (d) of this section in whole or in part if the                                  
23       department finds that,                                                                                        
24                 [(1)  THE CLAIMANT DOES NOT HAVE AN OUTSTANDING                                                         
25       LIABILITY TO THE STATE FOR UNPAID DELINQUENT TAXES UNDER THIS                                                     
26       TITLE; AND                                                                                                        
27                 (2)]  after application of all available tax credits, the claimant's total tax                          
28       liability under this chapter for the calendar year in which the claim is made is zero.                            
29    * Sec. 13. AS 43.55.011(j) is amended to read:                                                                     
30            (j)  For a calendar year [BEFORE 2022], the tax levied by (e) of this section                                
31       for gas produced from a lease or property in the Cook Inlet sedimentary basin may not                             
01       exceed                                                                                                            
02                 (1)  for a lease or property that first commenced commercial production                                 
03       of gas before April 1, 2006, the product obtained by multiplying (A) the amount of                                
04       taxable gas produced during the calendar year from the lease or property, times (B) the                           
05       average rate of tax that was imposed under this chapter for taxable gas produced from                             
06       the lease or property for the 12-month period ending on March 31, 2006, times (C) the                             
07       quotient obtained by dividing the total gross value at the point of production of the                             
08       taxable gas produced from the lease or property during the 12-month period ending on                              
09       March 31, 2006, by the total amount of that gas;                                                                  
10                 (2)  for a lease or property that first commences commercial production                                 
11       of gas after March 31, 2006, the product obtained by multiplying (A) the amount of                                
12       taxable gas produced during the calendar year from the lease or property, times (B) the                           
13       average rate of tax that was imposed under this chapter for taxable gas produced from                             
14       all leases or properties in the Cook Inlet sedimentary basin for the 12-month period                              
15       ending on March 31, 2006, times (C) the average prevailing value for gas delivered in                             
16       the Cook Inlet area for the 12-month period ending March 31, 2006, as determined by                               
17       the department under AS 43.55.020(f).                                                                             
18    * Sec. 14. AS 43.55.011(k) is amended to read:                                                                     
19            (k)  For a calendar year [BEFORE 2022], the tax levied by (e) of this section                                
20       may not exceed one dollar per barrel of oil for oil produced from a lease or property                         
21       in the Cook Inlet sedimentary basin [MAY NOT EXCEED                                                               
22                 (1)  FOR A LEASE OR PROPERTY THAT FIRST COMMENCED                                                       
23       COMMERCIAL PRODUCTION OF OIL BEFORE APRIL 1, 2006, THE PRODUCT                                                    
24       OBTAINED BY MULTIPLYING (A) THE AMOUNT OF TAXABLE OIL                                                             
25       PRODUCED DURING THE CALENDAR YEAR FROM THE LEASE OR                                                               
26       PROPERTY, TIMES (B) THE AVERAGE RATE OF TAX THAT WAS IMPOSED                                                      
27       UNDER THIS CHAPTER FOR TAXABLE OIL PRODUCED FROM THE LEASE                                                        
28       OR PROPERTY FOR THE 12-MONTH PERIOD ENDING ON MARCH 31, 2006,                                                     
29       TIMES (C) THE QUOTIENT OBTAINED BY DIVIDING THE TOTAL GROSS                                                       
30       VALUE AT THE POINT OF PRODUCTION OF THE TAXABLE OIL PRODUCED                                                      
31       FROM THE LEASE OR PROPERTY DURING THE 12-MONTH PERIOD                                                             
01       ENDING ON MARCH 31, 2006, BY THE TOTAL AMOUNT OF THAT OIL;                                                        
02                 (2)  FOR A LEASE OR PROPERTY THAT FIRST COMMENCES                                                       
03       COMMERCIAL PRODUCTION OF OIL AFTER MARCH 31, 2006, THE                                                            
04       PRODUCT OBTAINED BY MULTIPLYING (A) THE AMOUNT OF TAXABLE                                                         
05       OIL PRODUCED DURING THE CALENDAR YEAR FROM THE LEASE OR                                                           
06       PROPERTY, TIMES (B) THE AVERAGE RATE OF TAX THAT WAS IMPOSED                                                      
07       UNDER THIS CHAPTER FOR TAXABLE OIL PRODUCED FROM ALL LEASES                                                       
08       OR PROPERTIES IN THE COOK INLET SEDIMENTARY BASIN FOR THE 12-                                                     
09       MONTH PERIOD ENDING ON MARCH 31, 2006, TIMES (C) THE AVERAGE                                                      
10       PREVAILING VALUE FOR OIL PRODUCED AND DELIVERED IN THE COOK                                                       
11       INLET AREA FOR THE 12-MONTH PERIOD ENDING ON MARCH 31, 2006, AS                                                   
12       DETERMINED BY THE DEPARTMENT UNDER AS 43.55.020(f)].                                                              
13    * Sec. 15. AS 43.55.011(o) is amended to read:                                                                     
14            (o)  Notwithstanding other provisions of this section, for a calendar year                                   
15       [BEFORE 2022], the tax levied under (e) of this section for each 1,000 cubic feet of                              
16       gas for gas produced from a lease or property outside the Cook Inlet sedimentary basin                            
17       and used in the state, other than gas subject to (p) of this section, may not exceed the                          
18       amount of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this                            
19       section.                                                                                                          
20    * Sec. 16. AS 43.55.020(a) is amended to read:                                                                     
21            (a)  For a calendar year, a producer subject to tax under AS 43.55.011 shall pay                             
22       the tax as follows:                                                                                               
23                 (1)  for oil and gas produced before January 1, 2014, an installment                                    
24       payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied                            
25       as allowed by law, is due for each month of the calendar year on the last day of the                              
26       following month; except as otherwise provided under (2) of this subsection, the                                   
27       amount of the installment payment is the sum of the following amounts, less 1/12 of                               
28       the tax credits that are allowed by law to be applied against the tax levied by                                   
29       AS 43.55.011(e) for the calendar year, but the amount of the installment payment may                              
30       not be less than zero:                                                                                            
31                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                         
01            produced from leases or properties in the state outside the cook inlet                                       
02            sedimentary basin, other than leases or properties subject to AS 43.55.011(f),                               
03            the greater of                                                                                               
04                           (i)  zero; or                                                                                 
05                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
06                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
07                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
08                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
09                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
10                 at the point of production of the oil and gas produced from the leases or                               
11                 properties during the month for which the installment payment is                                        
12                 calculated;                                                                                             
13                      (B)  for oil and gas produced from leases or properties subject                                    
14            to AS 43.55.011(f), the greatest of                                                                          
15                           (i)  zero;                                                                                    
16                           (ii)  zero percent, one percent, two percent, three                                           
17                 percent, or four percent, as applicable, of the gross value at the point of                             
18                 production of the oil and gas produced from the leases or properties                                    
19                 during the month for which the installment payment is calculated; or                                    
20                           (iii)  the sum of 25 percent and the tax rate calculated for                                  
21                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
22                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
23                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
24                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
25                 at the point of production of the oil and gas produced from those leases                                
26                 or properties during the month for which the installment payment is                                     
27                 calculated;                                                                                             
28                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                                   
29            each lease or property, the greater of                                                                       
30                           (i)  zero; or                                                                                 
31                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
01                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
02                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
03                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
04                 deductible under AS 43.55.160 for the oil or gas, respectively,                                         
05                 produced from the lease or property from the gross value at the point of                                
06                 production of the oil or gas, respectively, produced from the lease or                                  
07                 property during the month for which the installment payment is                                          
08                 calculated;                                                                                             
09                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                     
10                           (i)  the sum of 25 percent and the tax rate calculated for                                    
11                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
12                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
13                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
14                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
15                 at the point of production of the oil and gas produced from the leases or                               
16                 properties during the month for which the installment payment is                                        
17                 calculated, but not less than zero; or                                                                  
18                           (ii)  four percent of the gross value at the point of                                         
19                 production of the oil and gas produced from the leases or properties                                    
20                 during the month, but not less than zero;                                                               
21                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
22       subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by                                    
23       carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as                             
24       applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but                          
25       substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the                               
26       amount of taxable gas produced during the month for the amount of taxable gas                                     
27       produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or                                    
28       (2)(A), as applicable, the amount of taxable oil produced during the month for the                                
29       amount of taxable oil produced during the calendar year;                                                          
30                 (3)  an installment payment of the estimated tax levied by                                              
31       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
01       on the last day of the following month; the amount of the installment payment is the                              
02       sum of                                                                                                            
03                      (A)  the applicable tax rate for oil provided under                                                
04            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
05            oil taxable under AS 43.55.011(i) and produced from the lease or property                                    
06            during the month; and                                                                                        
07                      (B)  the applicable tax rate for gas provided under                                                
08            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
09            gas taxable under AS 43.55.011(i) and produced from the lease or property                                    
10            during the month;                                                                                            
11                 (4)  any amount of tax levied by AS 43.55.011, net of any credits                                       
12       applied as allowed by law, that exceeds the total of the amounts due as installment                               
13       payments of estimated tax is due on March 31 of the year following the calendar year                              
14       of production;                                                                                                    
15                 (5)  for oil and gas produced on and after January 1, 2014, and before                                  
16       January 1, 2022, an installment payment of the estimated tax levied by                                            
17       AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each                                
18       month of the calendar year on the last day of the following month; except as otherwise                            
19       provided under (6) of this subsection, the amount of the installment payment is the                               
20       sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be                          
21       applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount                           
22       of the installment payment may not be less than zero:                                                             
23                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                         
24            produced from leases or properties in the state outside the Cook Inlet                                       
25            sedimentary basin, other than leases or properties subject to AS 43.55.011(f),                               
26            the greater of                                                                                               
27                           (i)  zero; or                                                                                 
28                           (ii)  35 percent multiplied by the remainder obtained by                                      
29                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
30                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
31                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
01                 at the point of production of the oil and gas produced from the leases or                               
02                 properties during the month for which the installment payment is                                        
03                 calculated;                                                                                             
04                      (B)  for oil and gas produced from leases or properties subject                                    
05            to AS 43.55.011(f), the greatest of                                                                          
06                           (i)  zero;                                                                                    
07                           (ii)  zero percent, one percent, two percent, three                                           
08                 percent, or four percent, as applicable, of the gross value at the point of                             
09                 production of the oil and gas produced from the leases or properties                                    
10                 during the month for which the installment payment is calculated; or                                    
11                           (iii)  35 percent multiplied by the remainder obtained by                                     
12                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
13                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
14                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
15                 at the point of production of the oil and gas produced from those leases                                
16                 or properties during the month for which the installment payment is                                     
17                 calculated, except that, for the purposes of this calculation, a reduction                              
18                 from the gross value at the point of production may apply for oil and                                   
19                 gas subject to AS 43.55.160(f) or (g);                                                                  
20                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                                   
21            each lease or property, the greater of                                                                       
22                           (i)  zero; or                                                                                 
23                           (ii)  35 percent multiplied by the remainder obtained by                                      
24                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
25                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
26                 deductible under AS 43.55.160 for the oil or gas, respectively,                                         
27                 produced from the lease or property from the gross value at the point of                                
28                 production of the oil or gas, respectively, produced from the lease or                                  
29                 property during the month for which the installment payment is                                          
30                 calculated;                                                                                             
31                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                     
01                           (i)  35 percent multiplied by the remainder obtained by                                       
02                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
03                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
04                 deductible for the oil and gas under AS 43.55.160 from the gross value                                  
05                 at the point of production of the oil and gas produced from the leases or                               
06                 properties during the month for which the installment payment is                                        
07                 calculated, but not less than zero; or                                                                  
08                           (ii)  four percent of the gross value at the point of                                         
09                 production of the oil and gas produced from the leases or properties                                    
10                 during the month, but not less than zero;                                                               
11                 (6)  an amount calculated under (5)(C) of this subsection for oil or gas                                
12       subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by                                    
13       carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as                             
14       applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but                          
15       substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the                               
16       amount of taxable gas produced during the month for the amount of taxable gas                                     
17       produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or                                    
18       (2)(A), as applicable, the amount of taxable oil produced during the month for the                                
19       amount of taxable oil produced during the calendar year;                                                          
20                 (7)  for oil and gas produced on or after January 1, 2022, an installment                               
21       payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied                            
22       as allowed by law, is due for each month of the calendar year on the last day of the                              
23       following month; except as otherwise provided under (10) of this subsection, the                              
24       amount of the installment payment is the sum of the following amounts, less 1/12 of                               
25       the tax credits that are allowed by law to be applied against the tax levied by                                   
26       AS 43.55.011(e) for the calendar year, but the amount of the installment payment may                              
27       not be less than zero:                                                                                            
28                      (A)  for oil produced from leases or properties subject to                                     
29            AS 43.55.011(f) [THAT INCLUDE LAND NORTH OF 68 DEGREES                                                   
30            NORTH LATITUDE], the greatest of                                                                             
31                           (i)  zero;                                                                                    
01                           (ii)  zero percent, one percent, two percent, three                                           
02                 percent, or four percent, as applicable, of the gross value at the point of                             
03                 production of the oil produced from the leases or properties during the                                 
04                 month for which the installment payment is calculated; or                                               
05                           (iii)  35 percent multiplied by the remainder obtained by                                     
06                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
07                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
08                 deductible for the oil under AS 43.55.160(h)(1) from the gross value at                                 
09                 the point of production of the oil produced from those leases or                                        
10                 properties during the month for which the installment payment is                                        
11                 calculated, except that, for the purposes of this calculation, a reduction                              
12                 from the gross value at the point of production may apply for oil                                       
13                 subject to AS 43.55.160(f) or 43.55.160(f) and (g);                                                     
14                      (B)  for oil produced before or during the last calendar year                                      
15            under AS 43.55.024(b) for which the producer could take a tax credit under                                   
16            AS 43.55.024(a), from leases or properties in the state outside the Cook Inlet                               
17            sedimentary basin, no part of which is north of 68 degrees North latitude, other                             
18            than leases or properties subject to AS 43.55.011(o) or (p) [AS 43.55.011(p)],                           
19            the greater of                                                                                               
20                           (i)  zero; or                                                                                 
21                           (ii)  35 percent multiplied by the remainder obtained by                                      
22                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
23                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
24                 deductible for the oil under AS 43.55.160(h)(2) from the gross value at                                 
25                 the point of production of the oil produced from the leases or properties                               
26                 during the month for which the installment payment is calculated;                                       
27                      (C)  for oil and gas produced from leases or properties subject                                    
28            to AS 43.55.011(p), except as otherwise provided under (8) of this subsection,                               
29            the sum of                                                                                                   
30                           (i)  35 percent multiplied by the remainder obtained by                                       
31                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
01                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
02                 deductible for the oil under AS 43.55.160(h)(3) from the gross value at                                 
03                 the point of production of the oil produced from the leases or properties                               
04                 during the month for which the installment payment is calculated, but                                   
05                 not less than zero; and                                                                                 
06                           (ii)  13 percent of the gross value at the point of                                           
07                 production of the gas produced from the leases or properties during the                                 
08                 month, but not less than zero;                                                                          
09                      (D)  for oil produced from leases or properties in the state, no                                   
10            part of which is north of 68 degrees North latitude, other than leases or                                    
11            properties subject to (B), [OR] (C), or (F) of this paragraph, the greater of                        
12                           (i)  zero; or                                                                                 
13                           (ii)  35 percent multiplied by the remainder obtained by                                      
14                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
15                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
16                 deductible for the oil under AS 43.55.160(h)(4) from the gross value at                                 
17                 the point of production of the oil produced from the leases or properties                               
18                 during the month for which the installment payment is calculated;                                       
19                      (E)  for gas produced from each lease or property in the state                                   
20            outside the Cook Inlet sedimentary basin, other than a lease or property                                 
21            subject to AS 43.55.011(o) or (p) [AS 43.55.011(p)], 13 percent of the gross                             
22            value at the point of production of the gas produced from the lease or property                              
23            during the month for which the installment payment is calculated, but not less                               
24            than zero;                                                                                                   
25                      (F)  for oil subject to AS 43.55.011(k), for each lease or                                     
26            property, the greater of                                                                                 
27                           (i)  zero; or                                                                             
28                           (ii)  35 percent multiplied by the remainder obtained                                     
29                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
30                 for the calendar year of production under AS 43.55.165 and                                          
31                 43.55.170 that are deductible under AS 43.55.160 for the oil,                                       
01                 produced from the lease or property from the gross value at the                                     
02                 point of production of the oil, produced from the lease or property                                 
03                 during the month for which the installment payment is calculated;                                   
04                      (G)  for gas subject to AS 43.55.011(j) or (o), for each lease                                 
05            or property, the greater of                                                                              
06                           (i)  zero; or                                                                             
07                           (ii)  13 percent of the gross value at the point of                                       
08                 production of the gas produced from the lease or property during                                    
09                 the month for which the installment payment is calculated;                                          
10                 (8)  an amount calculated under (7)(C) of this subsection may not                                       
11       exceed four percent of the gross value at the point of production of the oil and gas                              
12       produced from leases or properties subject to AS 43.55.011(p) during the month for                                
13       which the installment payment is calculated;                                                                      
14                 (9)  for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and                                  
15       (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the point                          
16       of production is determined under AS 43.55.011(f)(1) or (2) but substituting the                                  
17       phrase "month for which the installment payment is calculated" in AS 43.55.011(f)(1)                              
18       and (2) for the phrase "calendar year for which the tax is due";                                              
19                 (10)  an amount calculated under (7)(F) or (G) of this subsection                                   
20       for oil or gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product                             
21       obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or                              
22       43.55.011(o), as applicable, for gas, or set out in AS 43.55.011(k)(1) or (2), as                             
23       applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or                                   
24       43.55.011(o), as applicable, the amount of taxable gas produced during the month                              
25       for the amount of taxable gas produced during the calendar year and substituting                              
26       in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of taxable oil                                  
27       produced during the month for the amount of taxable oil produced during the                                   
28       calendar year. ["]                                                                                            
29    * Sec. 17. AS 43.55.023(a) is amended to read:                                                                     
30            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
31       expenditure as follows:                                                                                           
01                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
02       deductible lease expenditure for purposes of calculating the production tax value of oil                          
03       and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                                
04       [AS 38.05.180(i), AS 41.09.010,] AS 43.20.043 [,] or AS 43.55.025, a producer or                                  
05       explorer that incurs a qualified capital expenditure may also elect to apply a tax credit                         
06       against a tax levied by AS 43.55.011(e) in the amount of 10 [20] percent of that                              
07       expenditure;                                                                                                      
08                 (2)  a producer or explorer may take a credit for a qualified capital                                   
09       expenditure incurred in connection with geological or geophysical exploration or in                               
10       connection with an exploration well only if the producer or explorer                                              
11                      (A)  agrees, in writing, to the applicable provisions of                                           
12            AS 43.55.025(f)(2); and                                                                                      
13                      (B)  submits to the Department of Natural Resources all data                                       
14            that would be required to be submitted under AS 43.55.025(f)(2);                                             
15                 (3)  a credit for a qualified capital expenditure incurred to explore for,                              
16       develop, or produce oil or gas deposits located                                                                   
17                      (A)  north of 68 degrees North latitude may be taken only if the                               
18            expenditure is incurred before January 1, 2014;                                                          
19                      (B)  in the Cook Inlet sedimentary basin may be taken only                                     
20            if the expenditure is incurred before January 1, 2018.                                                   
21    * Sec. 18. AS 43.55.023(b) is amended to read:                                                                     
22            (b)  Before January 1, 2014, a producer or explorer may elect to take a tax                                  
23       credit in the amount of 25 percent of a carried-forward annual loss. For lease                                    
24       expenditures incurred on and after January 1, 2014, and before January 1, 2016, to                                
25       explore for, develop, or produce oil or gas deposits located north of 68 degrees North                            
26       latitude, a producer or explorer may elect to take a tax credit in the amount of 45                               
27       percent of a carried-forward annual loss. For lease expenditures incurred on and after                            
28       January 1, 2016, to explore for, develop, or produce oil or gas deposits located north                            
29       of 68 degrees North latitude, a producer or explorer may elect to take a tax credit in                            
30       the amount of 35 percent of a carried-forward annual loss. For lease expenditures                                 
31       incurred on or after January 1, 2014, and before January 1, 2017, to explore for,                             
01       develop, or produce oil or gas deposits located south of 68 degrees North latitude, a                             
02       producer or explorer may elect to take a tax credit in the amount of 25 percent of a                              
03       carried-forward annual loss. For lease expenditures incurred on or after January 1,                           
04       2017, to explore for, develop, or produce oil or gas deposits located south of 68                             
05       degrees North latitude, a producer or explorer may elect to take a tax credit in                              
06       the amount of 15 percent of a carried-forward annual loss, except that a credit                               
07       for lease expenditures incurred to explore for, develop, or produce oil or gas                                
08       deposits located in the Cook Inlet sedimentary basin may only be taken if the                                 
09       expenditure is incurred before January 1, 2018. A credit under this subsection may                            
10       be applied against a tax levied by AS 43.55.011(e). For purposes of this subsection,                              
11                 (1)  a carried-forward annual loss is the amount of a producer's or                                 
12       explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a                                     
13       previous calendar year that was not deductible in calculating production tax values for                           
14       that calendar year under AS 43.55.160;                                                                        
15                 (2)  for lease expenditures incurred on or after January 1, 2017,                                   
16       any reduction under AS 43.55.160(f) or (g) is added back to the calculation of                                
17       production tax values for that calendar year under AS 43.55.160 for the                                       
18       determination of a carried-forward annual loss.                                                             
19    * Sec. 19. AS 43.55.023(l) is amended to read:                                                                     
20            (l)  A producer or explorer may apply for a tax credit for a well lease                                      
21       expenditure incurred in the state south of 68 degrees North latitude after June 30,                               
22       2010, as follows:                                                                                                 
23                 (1)  notwithstanding that a well lease expenditure incurred in the state                                
24       south of 68 degrees North latitude may be a deductible lease expenditure for purposes                             
25       of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a                            
26       credit for that expenditure is taken under (a) of this section, [AS 38.05.180(i),                                 
27       AS 41.09.010,] AS 43.20.043, or AS 43.55.025, a producer or explorer that incurs a                                
28       well lease expenditure in the state south of 68 degrees North latitude may elect to                               
29       apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of                                       
30                      (A)  40 percent of that expenditure incurred before January 1,                           
31            2017;                                                                                                    
01                      (B)  20 percent of that expenditure incurred on or after                                       
02            January 1, 2017 [; A TAX CREDIT UNDER THIS PARAGRAPH MAY BE                                              
03            APPLIED FOR A SINGLE CALENDAR YEAR];                                                                         
04                 (2)  a producer or explorer may take a credit for a well lease                                          
05       expenditure incurred in the state south of 68 degrees North latitude in connection with                           
06       geological or geophysical exploration or in connection with an exploration well only if                           
07       the producer or explorer                                                                                          
08                      (A)  agrees, in writing, to the applicable provisions of                                           
09            AS 43.55.025(f)(2); and                                                                                      
10                      (B)  submits to the Department of Natural Resources all data                                       
11            that would be required to be submitted under AS 43.55.025(f)(2);                                         
12                 (3)  a credit for a well lease expenditure incurred to explore for,                                 
13       develop, or produce oil or gas deposits located in the Cook Inlet sedimentary                                 
14       basin may be taken only if the expenditure is incurred before January 1, 2018.                                
15    * Sec. 20. AS 43.55.024(i) is amended to read:                                                                     
16            (i)  A producer may apply against the producer's tax liability for the calendar                              
17       year under AS 43.55.011(e) a tax credit of $5 for each barrel of oil taxable under                                
18       AS 43.55.011(e) that receives a reduction in the gross value at the point of                                  
19       production under [MEETS ONE OR MORE OF THE CRITERIA IN]                                                       
20       AS 43.55.160(f) or (g) and that is produced during a calendar year after December 31,                             
21       2013. A tax credit authorized by this subsection may not reduce a producer's tax                                  
22       liability for a calendar year under AS 43.55.011(e) below zero.                                                   
23    * Sec. 21. AS 43.55.024(j) is amended to read:                                                                     
24            (j)  A producer may apply against the producer's tax liability for the calendar                              
25       year under AS 43.55.011(e) a tax credit in the amount specified in this subsection for                            
26       each barrel of oil taxable under AS 43.55.011(e) that does not receive a reduction in                         
27       the gross value at the point of production under [MEET ANY OF THE CRITERIA                                    
28       IN] AS 43.55.160(f) or (g) and that is produced during a calendar year after                                      
29       December 31, 2013, from leases or properties north of 68 degrees North latitude. A tax                            
30       credit under this subsection may not reduce a producer's tax liability for a calendar                             
31       year under AS 43.55.011(e) below the amount calculated under AS 43.55.011(f). The                                 
01       amount of the tax credit for a barrel of taxable oil subject to this subsection produced                          
02       during a month of the calendar year is                                                                            
03                 (1)  $8 for each barrel of taxable oil if the average gross value at the                                
04       point of production for the month is less than $80 a barrel;                                                      
05                 (2)  $7 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 $80 a barrel, but less than                         
07       $90 a barrel;                                                                                                     
08                 (3)  $6 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 $90 a barrel, but less than                         
10       $100 a barrel;                                                                                                    
11                 (4)  $5 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 $100 a barrel, but less                             
13       than $110 a barrel;                                                                                               
14                 (5)  $4 for each barrel of taxable oil if the average gross value at the                                
15       point of production for the month is greater than or equal to $110 a barrel, but less                             
16       than $120 a barrel;                                                                                               
17                 (6)  $3 for each barrel of taxable oil if the average gross value at the                                
18       point of production for the month is greater than or equal to $120 a barrel, but less                             
19       than $130 a barrel;                                                                                               
20                 (7)  $2 for each barrel of taxable oil if the average gross value at the                                
21       point of production for the month is greater than or equal to $130 a barrel, but less                             
22       than $140 a barrel;                                                                                               
23                 (8)  $1 for each barrel of taxable oil if the average gross value at the                                
24       point of production for the month is greater than or equal to $140 a barrel, but less                             
25       than $150 a barrel;                                                                                               
26                 (9)  zero if the average gross value at the point of production for the                                 
27       month is greater than or equal to $150 a barrel.                                                                  
28    * Sec. 22. AS 43.55.025(m) 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.                                     
04       Notwithstanding (b) of this section, exploration [EXPLORATION] expenditures                                   
05       eligible for the credit in this subsection must be incurred for work performed after                              
06       June 1, 2012, and before July 1, 2017, except that expenditures to complete an                                
07       exploration well that was spudded but not completed before July 1, 2017, are                                  
08       eligible for the credit under this subsection [JULY 1, 2016]. A person planning to                            
09       drill an exploration well on private land and to apply for a credit under this subsection                         
10       shall obtain written consent from the owner of the oil and gas interest for the full                              
11       public release of all well data after the expiration of the confidentiality period                                
12       applicable to information collected under (f) of this section. The written consent of the                         
13       owner of the oil and gas interest must be submitted to the commissioner of natural                                
14       resources before approval of the proposed exploration well. In addition to the                                    
15       requirements in (c)(1), (c)(2)(A), and (c)(2)(C) of this section and submission of the                            
16       written consent of the owner of the oil and gas interest, a person planning to drill an                           
17       exploration well shall obtain approval from the commissioner of natural resources                                 
18       before the well is spudded. The commissioner of natural resources shall make a                                    
19       written determination approving or rejecting an exploration well within 60 days after                             
20       receiving the request for approval or as soon as is practicable thereafter. Before                                
21       approving the exploration well, the commissioner of natural resources shall consider                              
22       the following: the location of the well; the proximity to a community in need of a local                          
23       energy source; the proximity of existing infrastructure; the experience and safety                                
24       record of the explorer in conducting operations in remote or roadless areas; the                                  
25       projected cost schedule; whether seismic mapping and seismic data sufficiently                                    
26       identify a particular trap for exploration; whether the targeted and planned depth and                            
27       range are designed to penetrate and fully evaluate the hydrocarbon potential of the                               
28       proposed prospect and reach the level below which economic hydrocarbon reservoirs                                 
29       are likely to be found, or reach 12,000 feet or more true vertical depth; and whether                             
30       the exploration plan provides for a full evaluation of the wellbore below surface casing                          
31       to the depth of the well. Whether the exploration well for which a credit is requested                            
01       under this subsection is located within an area and a basin described under (o) of this                           
02       section shall be determined by the commissioner of natural resources and reported to                              
03       the commissioner. A taxpayer that obtains a credit under this subsection may not claim                            
04       a tax credit under AS 43.55.023 or another provision in this section for the same                                 
05       exploration expenditure.                                                                                          
06    * Sec. 23. AS 43.55.028(e) is amended to read:                                                                     
07            (e)  The department, on the written application of a person to whom a                                        
08       transferable tax credit certificate has been issued under AS 43.55.023(d) or former                               
09       AS 43.55.023(m) or to whom a production tax credit certificate has been issued under                              
10       AS 43.55.025(f), may use available money in the oil and gas tax credit fund to                                    
11       purchase, in whole or in part, the certificate. The department may not purchase a                             
12       total of more than $70,000,000 in tax credit certificates from a person in a                                  
13       calendar year. Before purchasing a certificate or part of a certificate, [IF] the                             
14       department shall find [FINDS] that                                                                            
15                 (1)  the calendar year of the purchase is not earlier than the first                                    
16       calendar year for which the credit shown on the certificate would otherwise be allowed                            
17       to be applied against a tax;                                                                                      
18                 (2)  the application is not the result of the division of a single entity                           
19       into multiple entities that would reasonably be expected to apply as a single entity                          
20       if the $70,000,000 limitation in this subsection did not exist [APPLICANT DOES                                
21       NOT HAVE AN OUTSTANDING LIABILITY TO THE STATE FOR UNPAID                                                         
22       DELINQUENT TAXES UNDER THIS TITLE];                                                                               
23                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
24       application of all available tax credits, for the calendar year in which the application is                       
25       made is zero;                                                                                                     
26                 (4)  the applicant's average daily production of oil and gas taxable                                    
27       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
28       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
29                 (5)  the purchase is consistent with this section and regulations adopted                               
30       under this section.                                                                                               
31    * Sec. 24. AS 43.55.028(g) is amended to read:                                                                     
01            (g)  The department shall [MAY] adopt regulations to carry out the purposes                              
02       of this section, including standards and procedures to allocate available money among                             
03       applications for purchases under this chapter and claims for refunds and payments                                 
04       under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the                                          
05       applications for purchase and claims for refund exceed the amount of available money                              
06       in the fund. The regulations adopted by the department                                                            
07                 (1)  may not, when allocating available money in the fund under this                                
08       section, distinguish an application for the purchase of a credit certificate issued under                         
09       former AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046,                                     
10       43.20.047, or 43.20.053;                                                                                      
11                 (2)  must, when allocating available money in the fund under this                                   
12       section, grant a preference, between two applicants, to the applicant with a                                  
13       higher percentage of resident workers in the applicant's workforce, including                                 
14       workers employed by the applicant's direct contractors, in the state in the                                   
15       previous calendar year; in this paragraph, "resident worker" has the meaning                                  
16       given in AS 43.40.092(b);                                                                                     
17                 (3)  must provide for the purchase of the amount equal to the first                                 
18       50 percent of the credit repurchase limit per person under (e) of this section at a                           
19       rate of 100 percent of the value of the certificate or portion of the certificate                             
20       requested to be purchased and the amount equal to the next 50 percent of the                                  
21       credit repurchase limit per person under (e) of this section at a rate of 75 percent                          
22       of the value of the certificate or portion of the certificate requested to be                                 
23       purchased.                                                                                                    
24    * Sec. 25. AS 43.55.028 is amended by adding a new subsection to read:                                             
25            (j)  If an applicant or claimant has an outstanding liability to the state directly                          
26       related to the applicant's or claimant's oil or gas exploration, development, or                                  
27       production and the department has not previously reduced the amount paid to that                                  
28       applicant or claimant for a certificate or refund because of that outstanding liability,                          
29       the department may purchase only that portion of a certificate or pay only that portion                           
30       of a refund that exceeds the outstanding liability. After notifying the applicant or                              
31       claimant, the department may apply the amount by which the department reduced its                                 
01       purchase of a certificate or payment for a refund because of an outstanding liability to                          
02       satisfy the outstanding liability. Satisfaction of an outstanding liability under this                            
03       subsection does not affect the applicant's ability to contest that liability. The                                 
04       department may enter into contracts or agreements with another department to which                                
05       the outstanding liability is owed. In this subsection, "outstanding liability" means an                           
06       amount of tax, interest, penalty, fee, rental, royalty, or other charge for which the state                       
07       has issued a demand for payment that has not been paid when due and, if contested,                                
08       has not been finally resolved against the state.                                                                  
09    * Sec. 26. AS 43.55.160(f) is amended to read:                                                                     
10            (f)  On and after January 1, 2014, in the calculation of an annual production tax                            
11       value of a producer under (a)(1)(A) or (h)(1) of this section, the gross value at the                             
12       point of production of oil or gas produced from a lease or property north of 68 degrees                           
13       North latitude meeting one or more of the following criteria is reduced by 20 percent:                            
14       (1) the oil or gas is produced from a lease or property that does not contain a lease that                        
15       was within a unit on January 1, 2003; (2) the oil or gas is produced from a                                       
16       participating area established after December 31, 2011, that is within a unit formed                              
17       under AS 38.05.180(p) before January 1, 2003, if the participating area does not                                  
18       contain a reservoir that had previously been in a participating area established before                           
19       December 31, 2011; (3) the oil or gas is produced from acreage that was added to an                               
20       existing participating area by the Department of Natural Resources on and after                                   
21       January 1, 2014, and the producer demonstrates to the department that the volume of                               
22       oil or gas produced is from acreage added to an existing participating area. This                                 
23       subsection does not apply to gas produced before 2022 that is used in the state or to                             
24       gas produced on and after January 1, 2022. For oil and gas first produced from a                              
25       lease or property after December 31, 2016, a reduction allowed under this                                     
26       subsection applies from the date of commencement of regular production of oil                                 
27       and gas from that lease or property and expires after three years, consecutive or                             
28       nonconsecutive, in which the average annual price per barrel for Alaska North                                 
29       Slope crude oil for sale on the United States West Coast is more than $70 or after                            
30       seven years, whichever occurs first. For oil and gas first produced from a lease or                           
31       property before January 1, 2017, a reduction allowed under this subsection                                    
01       expires on the earlier of January 1, 2023, or January 1 following three years,                                
02       consecutive or nonconsecutive, in which the average annual price per barrel for                               
03       Alaska North Slope crude oil for sale on the United States West Coast is more                                 
04       than $70. The Alaska Oil and Gas Conservation Commission shall determine the                                  
05       commencement of regular production of oil and gas for purposes of this section.                               
06       A reduction under this subsection may not reduce the gross value at the point of                                  
07       production below zero. In this subsection, "participating area" means a reservoir or                              
08       portion of a reservoir producing or contributing to production as approved by the                                 
09       Department of Natural Resources.                                                                                  
10    * Sec. 27. AS 43.55.160(g) is amended to read:                                                                     
11            (g)  On and after January 1, 2014, in addition to the reduction under (f) of this                            
12       section, in the calculation of an annual production tax value of a producer under                                 
13       (a)(1)(A) or (h)(1) of this section, the gross value at the point of production of oil or                         
14       gas produced from a lease or property north of 68 degrees North latitude that does not                            
15       contain a lease that was within a unit on January 1, 2003, is reduced by 10 percent if                            
16       the oil or gas is produced from a unit made up solely of leases that have a royalty                               
17       share of more than 12.5 percent in amount or value of the production removed or sold                              
18       from the lease as determined under AS 38.05.180(f). This subsection does not apply if                             
19       the royalty obligation for one or more of the leases in the unit has been reduced to 12.5                         
20       percent or less under AS 38.05.180(j) for all or part of the calendar year for which the                          
21       annual production tax value is calculated. This subsection does not apply to gas                                  
22       produced before 2022 that is used in the state or to gas produced on and after                                    
23       January 1, 2022. For oil and gas first produced from a lease or property after                                
24       December 31, 2016, a reduction allowed under this subsection applies from the                                 
25       date of commencement of regular production of oil and gas from that lease or                                  
26       property and expires after three years, consecutive or nonconsecutive, in which                               
27       the average annual price per barrel for Alaska North Slope crude oil for sale on                              
28       the United States West Coast is more than $70 or after seven years, whichever                                 
29       occurs first. For oil and gas first produced from a lease or property before                                  
30       January 1, 2017, a reduction allowed under this subsection expires on the earlier                             
31       of January 1, 2023, or January 1 following three years, consecutive or                                        
01       nonconsecutive, in which the average annual price per barrel for Alaska North                                 
02       Slope crude oil for sale on the United States West Coast is more than $70. The                                
03       Alaska Oil and Gas Conservation Commission shall determine the                                                
04       commencement of regular production for purposes of this subsection. A reduction                               
05       under this subsection may not reduce the gross value at the point of production below                             
06       zero.                                                                                                           
07    * Sec. 28. AS 43.55.160(h) is amended to read:                                                                     
08            (h)  For oil produced on and after January 1, 2022, except as provided in (b),                               
09       (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual                                  
10       production tax value of oil taxable under AS 43.55.011(e) produced by a producer                                  
11       during a calendar year                                                                                            
12                 (1)  from leases or properties in the state that include land north of 68                               
13       degrees North latitude is the gross value at the point of production of that oil, less the                        
14       producer's lease expenditures under AS 43.55.165 for the calendar year incurred to                                
15       explore for, develop, or produce oil and gas deposits located in the state north of 68                            
16       degrees North latitude or located in leases or properties in the state that include land                          
17       north of 68 degrees North latitude, as adjusted under AS 43.55.170;                                               
18                 (2)  before or during the last calendar year under AS 43.55.024(b) for                                  
19       which the producer could take a tax credit under AS 43.55.024(a), from leases or                                  
20       properties in the state outside the Cook Inlet sedimentary basin, no part of which is                             
21       north of 68 degrees North latitude, other than leases or properties subject to                                    
22       AS 43.55.011(p), is the gross value at the point of production of that oil, less the                              
23       producer's lease expenditures under AS 43.55.165 for the calendar year incurred to                                
24       explore for, develop, or produce oil and gas deposits located in the state outside the                            
25       Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil                               
26       and gas deposits located in a lease or property that includes land north of 68 degrees                            
27       North latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from                             
28       which commercial production has not begun, as adjusted under AS 43.55.170;                                        
29                 (3)  from leases or properties subject to AS 43.55.011(p) is the gross                                  
30       value at the point of production of that oil, less the producer's lease expenditures under                        
31       AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil and                           
01       gas deposits located in leases or properties subject to AS 43.55.011(p) or, before                                
02       January 1, 2027, located in leases or properties in the state outside the Cook Inlet                              
03       sedimentary basin, no part of which is north of 68 degrees North latitude from which                              
04       commercial production has not begun, as adjusted under AS 43.55.170;                                              
05                 (4)  from leases or properties in the state no part of which is north of 68                             
06       degrees North latitude, other than leases or properties subject to (2) or (3) of this                             
07       subsection, is the gross value at the point of production of that oil less the producer's                         
08       lease expenditures under AS 43.55.165 for the calendar year incurred to explore for,                              
09       develop, or produce oil and gas deposits located in the state south of 68 degrees North                           
10       latitude, other than oil and gas deposits located in a lease or property in the state that                        
11       includes land north of 68 degrees North latitude, and excluding lease expenditures that                           
12       are deductible under (2) or (3) of this subsection or would be deductible under (2) or                            
13       (3) of this subsection if not prohibited by (b) of this section, as adjusted under                                
14       AS 43.55.170; a separate annual production tax value shall be calculated for                                  
15                      (A)  oil produced from each lease or property in the Cook                                      
16            Inlet sedimentary basin;                                                                                 
17                      (B)  oil produced from each lease or property outside the                                      
18            Cook Inlet sedimentary basin, no part of which is north of 68 degrees                                    
19            North latitude, other than leases or properties subject to (3) of this                                   
20            subsection.                                                                                            
21    * Sec. 29. AS 43.55.165(a) is amended to read:                                                                     
22            (a)  For [EXCEPT AS PROVIDED IN (j) AND (k) OF THIS SECTION,                                             
23       FOR] purposes of this chapter, a producer's lease expenditures for a calendar year are                            
24                 (1)  costs, other than items listed in (e) of this section, that are                                    
25                      (A)  incurred by the producer during the calendar year after                                       
26            March 31, 2006, to explore for, develop, or produce oil or gas deposits located                              
27            within the producer's leases or properties in the state or, in the case of land in                           
28            which the producer does not own an operating right, operating interest, or                                   
29            working interest, to explore for oil or gas deposits within other land in the                                
30            state; and                                                                                                   
31                      (B)  allowed by the department by regulation, based on the                                         
01            department's determination that the costs satisfy the following three                                        
02            requirements:                                                                                                
03                           (i)  the costs must be incurred upstream of the point of                                      
04                 production of oil and gas;                                                                              
05                           (ii)  the costs must be ordinary and necessary costs of                                       
06                 exploring for, developing, or producing, as applicable, oil or gas                                      
07                 deposits; and                                                                                           
08                           (iii)  the costs must be direct costs of exploring for,                                       
09                 developing, or producing, as applicable, oil or gas deposits; and                                       
10                 (2)  a reasonable allowance for that calendar year, as determined under                                 
11       regulations adopted by the department, for overhead expenses that are directly related                            
12       to exploring for, developing, or producing, as applicable, the oil or gas deposits.                               
13    * Sec. 30. AS 43.55.895(b) is amended to read:                                                                     
14            (b)  A municipal entity subject to taxation because of this section                                          
15                 (1)  is eligible for [ALL] tax credits proportionate to its production                          
16       taxable under AS 43.55.011(e); and                                                                            
17                 (2)  shall allocate its lease expenditures in proportion to its                                     
18       production taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO THE                                           
19       SAME EXTENT AS ANY OTHER PRODUCER].                                                                               
20    * Sec. 31. AS 43.55.900 is amended by adding a new paragraph to read:                                              
21                 (26)  "regular production" has the meaning given in AS 31.05.170.                                       
22    * Sec. 32. AS 43.70 is amended by adding new sections to read:                                                     
23            Sec. 43.70.025. Bond or cash deposit required for an oil or gas business. (a)                              
24       At the time of applying for a license under this chapter, an applicant engaged in the                             
25       business of oil or gas exploration, development, or production shall file a surety bond                           
26       in the amount of $250,000 running to the state, conditioned upon the applicant's                                  
27       promise to pay all                                                                                                
28                 (1)  taxes and contributions due the state and political subdivisions; and                              
29                 (2)  persons furnishing labor or material or renting or supplying                                       
30       equipment to the applicant.                                                                                       
31            (b)  In lieu of the surety bond required under this section, the applicant may                               
01       file with the commissioner a cash deposit or other negotiable security acceptable to the                          
02       commissioner in the amount of $250,000.                                                                           
03            (c)  The bond required by this section remains in effect until cancelled by                                  
04       action of the surety, the principal, or if the commissioner finds that the business is                            
05       producing oil or gas in commercial quantities, by the commissioner.                                               
06            Sec. 43.70.028. Claims against an oil or gas business. (a) A person having a                               
07       claim against a person required to file a surety bond under AS 43.70.025 because of                               
08       the failure to pay a liability described in AS 43.70.025(a) may bring suit upon the                               
09       bond. A copy of the complaint shall be served by registered or certified mail on the                              
10       commissioner at the time suit is filed, and the commissioner shall maintain a record,                             
11       available for public inspection, of all suits commenced. This service on the                                      
12       commissioner shall constitute service on the surety, and the commissioner shall                                   
13       transmit the complaint or a copy of it to the surety within 72 hours after it is received.                        
14       The surety on the bond is not liable in an aggregate amount in excess of that named in                            
15       the bond, but if claims pending at any one time exceed the amount of the bond, the                                
16       claims shall be satisfied from the bond in the following order:                                                   
17                 (1)  material, equipment, and supplies delivered in the state;                                          
18                 (2)  labor, including employee benefits;                                                                
19                 (3)  taxes and other amounts due to the city and borough, in that order;                                
20                 (4)  repair of public facilities;                                                                       
21                 (5)  taxes and other amounts due to the state.                                                          
22            (b)  If a judgment is entered against a cash deposit, the commissioner, upon                                 
23       receipt of a certified copy of a final judgment, shall pay the judgment from the amount                           
24       of the deposit in accordance with the priorities set out in (a) of this section.                                  
25            (c)  An action described in (a) of this section may not be commenced on the                                  
26       bond more than three years after the cancellation of the bond.                                                    
27    * Sec. 33. AS 38.05.180(i); AS 41.09.010, 41.09.020, 41.09.030, 41.09.090;                                         
28 AS 43.20.053(j)(4); and AS 43.55.011(m) are repealed January 1, 2017.                                                   
29    * Sec. 34. AS 43.55.165(j) and 43.55.165(k) are repealed January 1, 2018.                                          
30    * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to                         
31 read:                                                                                                                   
01       APPLICABILITY. (a) AS 43.20.046(e), as amended by sec. 10 of this Act,                                            
02 AS 43.20.047(e), as amended by sec. 11 of this Act, AS 43.20.053(e), as amended by sec. 12                              
03 of this Act, AS 43.55.028(e), as amended by sec. 23 of this Act, and AS 43.55.028(j), as                                
04 amended by sec. 25 of this Act, and regulations related to a tax credit certificate purchase                            
05 preference for applicants with a workforce of resident workers and tax credit purchase rates,                           
06 adopted under AS 43.55.028(g), as amended by sec. 24 of this act, apply to a purchase applied                           
07 for on or after the effective date of secs. 10, 11, 12, and 23 - 25 of this Act.                                        
08       (b)  AS 43.55.011(k), as amended by sec. 14 of this Act, applies to oil produced after                            
09 the effective date of sec. 14 of this Act.                                                                              
10    * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to                         
11 read:                                                                                                                   
12       TRANSITION: LEASE EXPENDITURES FOR A CALENDAR YEAR AFTER                                                          
13 2006 AND BEFORE 2010. Notwithstanding AS 43.55.165(a), as amended by sec. 29 of this                                    
14 Act, and the repeal of AS 43.55.165(j) and (k) by sec. 34 of this Act, AS 43.55.165(j) and (k)                          
15 apply to a producer's total lease expenditures for a calendar year after 2006 and before 2010                           
16 under AS 43.55.165, as that section read on the day before the repeal of AS 43.55.165(j) and                            
17 (k) by sec. 34 of this Act.                                                                                             
18    * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to                         
19 read:                                                                                                                   
20       TRANSITION: REGULATIONS. The Department of Revenue, the Department of                                             
21 Natural Resources, the Department of Commerce, Community, and Economic Development,                                     
22 and the Alaska Oil and Gas Conservation Commission may adopt regulations necessary to                                   
23 implement the changes made by this Act. The regulations take effect under AS 44.62                                      
24 (Administrative Procedure Act), but not before the effective date of the law implemented by                             
25 the regulation. The Department of Revenue shall adopt regulations governing the use of tax                              
26 credits under AS 43.55 for a calendar year for which the applicable tax credit provisions of                            
27 AS 43.55 differ as between parts of the year as a result of this Act.                                                   
28    * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to                         
29 read:                                                                                                                   
30       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
31 contrary provision of AS 44.62.240,                                                                                     
01            (1)  if the Department of Revenue expressly designates in a regulation that the                              
02 regulation applies retroactively, a regulation adopted by the Department of Revenue to                                  
03 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to                         
04 the effective date of the law implemented by the regulation;                                                            
05            (2)  if the Department of Natural Resources expressly designates in the                                      
06 regulation that the regulation applies retroactively, a regulation adopted by the Department of                         
07 Natural Resources to implement, interpret, make specific, or otherwise carry out the statutory                          
08 amendments in this Act affecting the administration of oil and gas leases issued under                                  
09 AS 38.05.180(f)(3)(B), (D), or (E), to the extent the regulation relates to the treatment of oil                        
10 and gas production taxes in determining net profits under those leases, may apply                                       
11 retroactively to the effective date of the law implemented by the regulation.                                           
12    * Sec. 39. Sections 22, 37, and 38 of this Act take effect immediately under                                       
13 AS 01.10.070(c).                                                                                                        
14    * Sec. 40. Sections 29, 34, and 36 of this Act take effect January 1, 2018.                                        
15    * Sec. 41. Except as provided in secs. 39 and 40 of this Act, this Act takes effect January 1,                     
16 2017.