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