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SB 176: "An Act establishing the Alaska Tax Credit Certificate Bond Corporation; relating to purchases of tax credit certificates; relating to overriding royalty interest agreements; and providing for an effective date."

00                             SENATE BILL NO. 176                                                                         
01 "An Act establishing the Alaska Tax Credit Certificate Bond Corporation; relating to                                    
02 purchases of tax credit certificates; relating to overriding royalty interest agreements;                               
03 and providing for an effective date."                                                                                   
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1. AS 36.30.850(b) is amended by adding new paragraphs to read:                                          
06                 (49)  contracts of the Alaska Tax Credit Certificate Bond Corporation                                   
07       under AS 37.18.010 - 37.18.900;                                                                                   
08                 (50)  overriding royalty interest agreements under AS 44.37.230.                                        
09    * Sec. 2. AS 37 is amended by adding a new chapter to read:                                                        
10            Chapter 18. Alaska Tax Credit Certificate Bond Corporation.                                                
11 Sec. 37.18.010. Alaska Tax Credit Certificate Bond Corporation. There is                                              
12 established the Alaska Tax Credit Certificate Bond Corporation. The corporation is a                                    
13 public corporation and government instrumentality in the Department of Revenue                                          
14 managed by a board of directors. The purpose of the corporation is to finance                                           
01 purchases and payments under AS 43.55.028 of transferable tax credit certificates                                       
02 issued under AS 43.55.023, production tax credit certificates issued under                                              
03       AS 43.55.025, and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053.                                   
04 Sec. 37.18.020. Board of directors. The directors of the corporation are the                                          
05 commissioner of commerce, community, and economic development, the                                                      
06 commissioner of administration, and the commissioner of revenue. If a director is                                       
07 absent or otherwise unable to act, the director's designee in the department shall act as                               
08       a director of the corporation in the director's place.                                                            
09 Sec. 37.18.030. Bond authorization. (a) The issuance and sale of bonds by the                                         
10 corporation is authorized as provided in this section for purposes of financing                                         
11 purchases and payments under AS 43.55.028, including the costs of issuance and                                          
12 administration. The net proceeds of the sale of the bonds remaining after payment of                                    
13 costs of issuance and administration shall be transferred to the commissioner of                                        
14 revenue for disbursement under AS 43.55.028 for purchases or payments. Accrued                                          
15 interest paid on the bonds shall be paid into the reserve fund. The authorization to                                    
16       issue bonds in this section expires on December 31, 2021.                                                         
17 (b)  The total unpaid principal amount of bonds, including refunding bonds,                                             
18 but excluding refunded bonds, issued by the corporation for the purposes of financing                                   
19 purchases and payments under AS 43.55.028 may not exceed $1,000,000,000. The                                            
20 bonds do not constitute a general obligation of the state and are not state debt within                                 
21 the meaning of art. IX, sec. 8, Constitution of the State of Alaska. Authorization by the                               
22       voters of the state or the legislature is not required.                                                           
23 (c)  The corporation may enter into agreements with other state agencies as                                             
24       necessary or convenient to implement this section and AS 37.18.                                                   
25 (d)  The corporation may contract for the services of underwriters, paying                                              
26 agents, trustees, escrow agents, bond printers, rating agencies, bond insurance, credit                                 
27 enhancement providers, accountants, financial advisors, disclosure counsel, and bond                                    
28 counsel, and other services as are necessary or desirable to accomplish the bond                                        
29       issuance and sale.                                                                                                
30 Sec. 37.18.040. Reserve fund. (a) The corporation may establish and maintain                                          
31 a special fund called the Alaska Tax Credit Certificate Bond Corporation reserve fund                                   
01       in which there shall be deposited or transferred                                                                  
02                 (1)  all money appropriated by the legislature for the purpose of the                                   
03       fund in accordance with the provisions of (g) of this section;                                                    
04                 (2)  all proceeds of bonds required to be deposited in the fund by terms                                
05       of a contract between the corporation and its bondholders or a resolution of the                                  
06       corporation with respect to the proceeds of bonds;                                                                
07                 (3)  all other money appropriated by the legislature to the reserve fund;                               
08       and                                                                                                               
09                 (4)  any other money or funds of the corporation that it decides to                                     
10       deposit in the fund.                                                                                              
11 (b)  Subject to the provisions of (h) of this section, money in the reserve fund                                        
12 shall be held and applied solely to the payment of the interest on and principal of                                     
13 bonds of the corporation as the interest and principal become due and payable to the                                    
14 retirement of bonds, or for disbursement by the commissioner of revenue for                                             
15 purchases or payments under AS 43.55.028. Money may not be withdrawn if a                                               
16 withdrawal would reduce the amount in the reserve fund to an amount less than the                                       
17 required debt service reserve except for payment of interest then due and payable on                                    
18 bonds and the principal of bonds then maturing and payable and for the retirement of                                    
19 bonds in accordance with the terms of a contract between the corporation and its                                        
20 bondholders and for which payments of other money of the corporation is not then                                        
21       available.                                                                                                        
22 (c)  Money in the reserve fund in excess of the required debt service reserve as                                        
23 defined in (b) of this section, whether because of investment or otherwise, may be                                      
24 withdrawn at any time by the corporation for disbursement by the commissioner of                                        
25 revenue for purchases or payments under AS 43.55.028 or transferred to another fund                                     
26       or account of the corporation subject to the provision of (h) of this section.                                    
27 (d)  Money in the reserve fund may be invested in the same manner and on the                                            
28 same conditions as permitted for investment of funds belonging to the state or held in                                  
29 the treasury under AS 37.10.070; however, the corporation may agree with the                                            
30       bondholders to further limit these investments.                                                                   
31 (e)  For purposes of valuation, investments in the reserve fund shall be valued                                         
01 at par or, if purchased at less than par, at cost unless otherwise provided by resolution                               
02 of the corporation. Valuation on a particular date shall include the amount of interest                                 
03       then earned or accrued to that date on the money or investments in the reserve fund.                              
04 (f)  Notwithstanding any other provision of this chapter, bonds may not be                                              
05 issued by the corporation unless there is in the reserve fund the required debt service                                 
06 reserve for all bonds then issued and outstanding and for the bonds to be issued;                                       
07 however, the corporation may satisfy this requirement by depositing as much of the                                      
08 proceeds of the bonds to be issued, on their issuance, as is needed to meet the required                                
09 debt service reserve or by funding the reserve fund with cash, a surety bond, letter of                                 
10 credit, or other instrument in the face amount necessary to meet the required debt                                      
11 service reserve. The corporation may at any time issue its bonds or notes for the                                       
12 purpose of increasing the amount in the reserve fund to the required debt service                                       
13 reserve, or to meet whatever higher or additional reserve that may be fixed by the                                      
14       corporation with respect to the fund.                                                                             
15 (g)  To assure the maintenance of the required debt service reserve in the                                              
16 reserve fund, the legislature may appropriate annually to the corporation for deposit in                                
17 the fund the sum, certified by the chair of the corporation to the governor and to the                                  
18 legislature, that is necessary to restore the fund to an amount equal to the required debt                              
19 service reserve. The chair annually, before January 30, shall make and deliver to the                                   
20 governor and to the legislature a certificate stating the sum required to restore the fund                              
21 to that amount, and the certified sum may be appropriated and paid to the corporation                                   
22 during the then current state fiscal year. Nothing in this subsection creates a debt or                                 
23       liability of the state.                                                                                           
24 (h)  All amounts received because of money appropriated to the reserve fund                                             
25       shall be held and applied in accordance with (b) of this section.                                                 
26 (i)  All references to the reserve fund in this section include special accounts                                        
27 within the reserve fund that may be created by the corporation to secure the payment                                    
28       of particular bonds.                                                                                              
29 (j)  The commissioner of revenue may, subject to appropriation, lend surplus                                            
30 money in the general fund to the corporation for deposit to any account in the reserve                                  
31 fund in an amount equal to the required debt service reserve. The loans shall be made                                   
01 on the terms and conditions that may be agreed on by the commissioner of revenue                                        
02 and the corporation, including, without limitation, terms and conditions providing that                                 
03 the loans need not be repaid until the obligations of the corporation secured and to be                                 
04       secured by the account in the reserve fund are no longer outstanding.                                             
05 (k)  In this section, "required debt service reserve" means, on the date of                                             
06 computation, the amount required to be on deposit in the reserve fund as provided by                                    
07       resolution of the corporation.                                                                                    
08 Sec. 37.18.050. Bond terms. (a) The bonds may be issued and sold at public                                            
09 or negotiated sale in the manner, in the amounts or series, and at the time or times that                               
10 the corporation determines the bonds, or each series of them, shall be sold at the price                                
11 and on the terms, conditions, and covenants set by the corporation after considering                                    
12       market conditions. Interest rates may be fixed or variable.                                                       
13 (b)  The bonds mature at the time or times fixed by the corporation. The bonds                                          
14 may be subject to redemption before their fixed maturities, as determined by the                                        
15 corporation, with or without a premium or premiums. The bonds may be in                                                 
16 denominations determined by the corporation; may be issued in fully or partially                                        
17 registered form; must be payable as to principal and interest at the place or places                                    
18 determined by the corporation; must be signed in the manner provided by the                                             
19 corporation; and must be issued under and subject to the terms, conditions, covenants,                                  
20 and protective features safeguarding payment of the bonds as found necessary by the                                     
21 corporation. The corporation may obtain credit enhancement to provide liquidity or                                      
22 security for the bonds, including, without limitation, bond insurance, letters of credit,                               
23 surety bonds, or standby bond purchase agreements, and may enter into agreements                                        
24       with providers of such credit enhancement as may be necessary or desirable.                                       
25 (c)  If the corporation finds it reasonably necessary, the corporation may select                                       
26 a trustee or trustees for the holders of the bonds, or any series of them, for the                                      
27 safeguarding and disbursement of any of the money in the bond reserve fund or for                                       
28 duties with respect to the enforcement, authentication, delivery, payment, and                                          
29 registration of the bonds as the corporation may determine. The corporation shall fix                                   
30       the rights, duties, powers, and obligations of the trustee or trustees.                                           
31 (d)  In its determination of all matters and questions relating to the issuance                                         
01 and sale of the bonds and the fixing of their maturities, terms, conditions, and                                        
02 covenants as provided in (a) of this section, the decisions of the corporation shall be                                 
03 those that are reasonably necessary for the best interests of the state and its inhabitants                             
04 and that will accomplish the most advantageous sale of the bonds. Decisions of the                                      
05 corporation, as expressed in a bond resolution, are final and are conclusively                                          
06       considered to comply with the requirements of this chapter.                                                       
07 Sec. 37.18.060. Bond resolution. The corporation shall authorize the issuance                                         
08 of bonds by adopting a resolution and shall prepare all other documents and                                             
09 proceedings necessary for the issuance, sale, and delivery of the bonds or any part or                                  
10 series of them. The bond resolution must fix the principal amount, denominations,                                       
11 date, maturities, manner of sale, place or places of payment, rights of redemption, if                                  
12       any, terms, form, conditions, and covenants of the bonds or each series of them.                                  
13 Sec. 37.18.070. Enforcement by bond owner. (a) The owner or owners of not                                             
14 less than 10 percent, or a higher percentage as specified in the bond resolution, of the                                
15 aggregate principal amount of any series or issue of bonds or the trustee for the owners                                
16 of the bonds or any series of them may, by appropriate proceedings in state court,                                      
17 require and compel the transfer, setting aside, and payment of money and the                                            
18 enforcement of all of the terms, conditions, and covenants as required and provided in                                  
19       this chapter, as appropriate, and the bond resolution.                                                            
20 (b)  A proceeding under (a) of this section may be commenced and conducted                                              
21       only in the Superior Court for the State of Alaska, First Judicial District at Juneau.                            
22 Sec. 37.18.080. Purposes and sufficiency of revenue. The proceeds of bonds                                            
23 may be used for the purposes described in AS 37.18.030 as appropriate. Bonds may                                        
24 not be issued unless the corporation first finds that the discount rate under                                           
25 AS 43.55.028(m) exceeds the true interest cost to be paid on the bonds by at least 1.5                                  
26       percent annually.                                                                                                 
27 Sec. 37.18.090. Refunding. (a) The corporation may refund the bonds or any                                            
28 part of them at or before their maturities or redemption dates by the issuance of                                       
29 refunding bonds of the corporation if, in the opinion of the corporation, refunding is                                  
30 advantageous to and in the best interest of the corporation, the state, and its                                         
31       inhabitants.                                                                                                      
01 (b)  The issuance of refunding bonds need not be authorized by the voters of                                            
02 the state or by an act of the legislature. The corporation shall adopt the resolution or                                
03 resolutions and prepare all other documents and proceedings necessary for the                                           
04 issuance, exchange or sale, and delivery of the refunding bonds. All provisions of this                                 
05 chapter are applicable to the refunding bonds and to the issuance, sale, or exchange of                                 
06       them, except as otherwise provided in this section.                                                               
07 (c)  Refunding bonds may be issued in a principal amount sufficient to provide                                          
08 money for the advance or current refunding of all bonds to be refunded and interest on                                  
09 the refunded bonds and, in addition, for the payment of all costs of issuance and                                       
10 administration of the refunding bonds. These expenses also include the difference in                                    
11 amount between the par value of the refunding bonds and any amount less than par for                                    
12 which the refunding bonds are sold; the premium, if any, necessary to be paid to call                                   
13 or retire the outstanding bonds and the interest accruing on them to the date of the call                               
14 or retirement; and other of these costs. The corporation is authorized to incur expenses                                
15       to carry out this section.                                                                                        
16 (d)  The corporation may contract with a refunding trustee to hold the proceeds                                         
17 of refunding bonds in trust until the proceeds, together with earnings on the proceeds,                                 
18 are applied to pay the principal of premium, if any, and interest on the bonds to be                                    
19 refunded. Until the refunding bond proceeds are applied, the proceeds may be invested                                   
20 in direct obligations of, or obligations guaranteed by, the United States or an agency or                               
21 corporation of the United States whose obligations constitute direct obligations of, or                                 
22 obligations guaranteed by, the United States or other obligations as may be specified                                   
23       in the bond resolution.                                                                                           
24 Sec. 37.18.100. Bonds as legal investments. The bonds are legal investments                                           
25 for all banks, trust companies, savings banks, savings and loan associations, and other                                 
26 persons carrying on a banking business, all insurance companies and other persons                                       
27 carrying on an insurance business, and all executors, administrators, trustees, and other                               
28 fiduciaries. The bonds may be accepted as security for deposits of all money of the                                     
29       state and its political subdivisions.                                                                             
30 Sec. 37.18.800. Statutory construction. This chapter shall be liberally                                               
31       construed to carry out the purposes for which it was enacted.                                                     
01            Sec. 37.18.810. Regulations. The corporation may adopt regulations necessary                               
02       to implement the provisions of this chapter.                                                                      
03            Sec. 37.18.900. Definitions. In this chapter,                                                              
04                 (1)  "bond resolution" means the resolution or resolutions adopted by                                   
05       the corporation under AS 37.18.060 authorizing the issuance of bonds;                                             
06                 (2)  "bonds" means the bonds authorized in this chapter;                                                
07                 (3)  "corporation" means the Alaska Tax Credit Certificate Bond                                         
08       Corporation created in AS 37.18.010;                                                                              
09                 (4)  "costs of issuance and administration" means all costs associated                                  
10 with issuance and administration of bonds and refunding bonds, including costs of                                       
11 bond printing, official statements, financial advisors, travel costs, rating agencies,                                  
12 bond insurance, letters and lines of credit for credit enhancement, underwriters,                                       
13 remarketing agents, legal services, paying agents, bonds registrars, bond and escrow                                    
14 trustees, arbitrage rebate, and all other costs, including administrative costs, both                                   
15       direct and indirect;                                                                                              
16                 (5)  "department" means the Department of Revenue;                                                      
17 (6)  "reserve fund" means the Alaska Tax Credit Certificate Bond                                                        
18       Corporation reserve fund established in AS 37.18.040.                                                             
19    * Sec. 3. AS 43.20.046(e) is amended to read:                                                                      
20 (e)  Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the                                             
21 department may use available money either in the oil and gas tax credit fund                                        
22 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax                                    
23 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for                                    
24 purchases under AS 43.55.028 to make the refund applied for under (d) of this                                       
25 section in whole or in part if the department finds that, after application of all available                            
26 tax credits, the claimant's total tax liability under this chapter for the calendar year in                             
27       which the claim is made is zero.                                                                                  
28    * Sec. 4. AS 43.20.047(e) is amended to read:                                                                    
29 (e)  Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the                                             
30 department may use money available either in the oil and gas tax credit fund                                        
31 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax                                    
01 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for                                    
02 purchases under AS 43.55.028 to make a refund or payment under (d) of this section                                  
03 in whole or in part if the department finds that, after application of all available tax                                
04 credits, the claimant's total tax liability under this chapter for the calendar year in                                 
05       which the claim is made is zero.                                                                                  
06    * Sec. 5. AS 43.20.053(e) is amended to read:                                                                      
07 (e)  Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the                                             
08 department may use money available either in the oil and gas tax credit fund                                        
09 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax                                    
10 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for                                    
11 purchases under AS 43.55.028 to make a refund or payment under (d) of this section                                  
12 in whole or in part if the department finds that, after application of all available tax                                
13 credits, the claimant's total tax liability under this chapter for the calendar year in                                 
14       which the claim is made is zero.                                                                                  
15    * Sec. 6. AS 43.55.028(e) is amended to read:                                                                    
16 (e)  The department, on the written application of a person to whom a                                                   
17 transferable tax credit certificate has been issued under AS 43.55.023(d) or former                                     
18 AS 43.55.023(m) for an expenditure incurred before July 1, 2017, or to whom a                                           
19 production tax credit certificate has been issued under AS 43.55.025(f) for an                                          
20 expenditure incurred before July 1, 2017, may use either available money in the oil                                 
21 and gas tax credit fund or money disbursed to the commissioner to purchase, in                                      
22 whole or in part, the certificate. The department may not purchase with money from                                  
23 the oil and gas tax credit fund a total of more than $70,000,000 in tax credit                                      
24 certificates from a person in a calendar year. Before purchasing a certificate or part of                               
25       a certificate, the department shall find that                                                                     
26 (1)  the calendar year of the purchase is not earlier than the first                                                    
27 calendar year for which the credit shown on the certificate would otherwise be allowed                                  
28       to be applied against a tax;                                                                                      
29 (2)  the application is not the result of the division of a single entity into                                          
30 multiple entities that would reasonably be expected to apply as a single entity if the                                  
31       $70,000,000 limitation in this subsection did not exist;                                                          
01                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
02       application of all available tax credits, for the calendar year in which the application is                       
03       made is zero;                                                                                                     
04                 (4)  the applicant's average daily production of oil and gas taxable                                    
05       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
06       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
07                 (5)  the purchase is consistent with this section and regulations adopted                               
08       under this section.                                                                                               
09    * Sec. 7. AS 43.55.028(g) is amended to read:                                                                    
10 (g)  The department shall adopt regulations to carry out the purposes of this                                           
11 section, including standards and procedures to allocate available money among                                           
12 applications for purchases under this chapter and claims for refunds and payments                                       
13 under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the                                                
14 applications for purchase and claims for refund exceed the amount of available money                                    
15       in the fund. The regulations adopted by the department                                                            
16 (1)  may not, when allocating available money in the fund under this                                                    
17 section, distinguish an application for the purchase of a credit certificate issued under                               
18 former AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046,                                           
19       43.20.047, or 43.20.053;                                                                                          
20 (2)  must, when allocating available money in the fund under this                                                       
21 section, grant a preference, between two applicants, to the applicant with a higher                                     
22 percentage of resident workers in the applicant's workforce, including workers                                          
23 employed by the applicant's direct contractors, in the state in the previous calendar                                   
24       year; in this paragraph, "resident worker" has the meaning given in AS 43.40.092(b);                              
25 (3)  must, for a purchase from money in the fund, provide for the                                                   
26 purchase of the amount equal to the first 50 percent of the credit repurchase limit for                                 
27 each person under (e) of this section at a rate of 100 percent of the value of the                                      
28 certificate or portion of the certificate requested to be purchased and the amount equal                                
29 to the next 50 percent of the credit repurchase limit for each person under (e) of this                                 
30 section at a rate of 75 percent of the value of the certificate or portion of the certificate                           
31       requested to be purchased.                                                                                        
01    * Sec. 8. AS 43.55.028(i) is amended to read:                                                                      
02            (i)  In this section,                                                                                        
03                 (1)  "money disbursed to the commissioner" means money                                            
04       disbursed to the commissioner from the Alaska Tax Credit Certificate Bond                                     
05       Corporation reserve fund established in AS 37.18.040;                                                         
06                 (2)  "true interest cost" means the true interest cost of the bonds                                 
07       anticipated to be issued under AS 37.18 for the purchase in this section;                                     
08                 (3)  "qualified capital expenditure" has the meaning given in                                       
09       AS 43.55.023.                                                                                                     
10    * Sec. 9. AS 43.55.028(j) is amended to read:                                                                      
11 (j)  If an applicant or claimant has an outstanding liability to the state directly                                     
12 related to the applicant's or claimant's oil or gas exploration, development, or                                        
13 production and the department has not previously reduced the amount paid to that                                        
14 applicant or claimant for a certificate or refund because of that outstanding liability,                                
15 the department may purchase only that portion of a certificate or pay only that portion                                 
16 of a refund that exceeds the outstanding liability regardless of whether the purchase                               
17 is made with money from the fund or money disbursed to the commissioner. After                                      
18 notifying the applicant or claimant, the department may apply the amount by which                                       
19 the department reduced its purchase of a certificate or payment for a refund because of                                 
20 an outstanding liability to satisfy the outstanding liability. Satisfaction of an                                       
21 outstanding liability under this subsection does not affect the applicant's ability to                                  
22 contest that liability. The department may enter into contracts or agreements with                                      
23 another department to which the outstanding liability is owed. In this subsection,                                      
24 "outstanding liability" means an amount of tax, interest, penalty, fee, rental, royalty, or                             
25 other charge for which the state has issued a demand for payment that has not been                                      
26       paid when due and, if contested, has not been finally resolved against the state.                                 
27    * Sec. 10. AS 43.55.028 is amended by adding new subsections to read:                                              
28 (k)  The department may negotiate a purchase under this section to be made                                              
29 from money disbursed to the commissioner. The department shall calculate the                                            
30 maximum amount for a purchase from money disbursed to the commissioner based on                                         
31 the calculations in (l) of this section. An applicant or claimant that has requested a                                  
01 purchase by the department from the fund shall provide a notice of interest to the                                      
02 department by the date determined by the commissioner if the applicant or claimant is                                   
03 interested in an offer of purchase by the department from money disbursed to the                                        
04 commissioner. An applicant or claimant that requests a purchase from the fund on or                                     
05 after July 1, 2018, shall include any notice of interest in an offer of purchase by the                                 
06 department from money disbursed to the commissioner at the same time that the                                           
07 applicant or claimant requests a purchase by the department from the fund. The                                          
08 department may not use money disbursed to the commissioner for a purchase in this                                       
09 section if the applicant or claimant failed to provide the department with a notice of                                  
10 interest in an offer of purchase from money disbursed to the commissioner in the time                                   
11 provided in this subsection for that notice. A notice of interest in an offer of purchase                               
12 from money disbursed to the commissioner must include all of the requests for                                           
13 purchase by the department under the fund made by the applicant or claimant and a                                       
14 statement of intent if the applicant intends to offer to meet any of the conditions in (m)                              
15 of this section. An applicant or claimant may not include in a notice of interest any                                   
16 request for purchase by the department from the fund that could have been included in                                   
17 a previous notice of interest under this subsection. The department shall make an offer                                 
18 of purchase from money disbursed to the commissioner to any applicant or claimant                                       
19 that provided the department with a timely notice of interest in an offer of purchase                                   
20 from money disbursed to the commissioner. The time for the department to make an                                        
21 offer of purchase from money disbursed to the commissioner shall depend on the                                          
22 anticipated schedule for disbursement of money to the commissioner. An offer of                                         
23 purchase is conditioned on the disbursement of money to the commissioner. The                                           
24 applicant or claimant shall notify the department of acceptance of the offer of purchase                                
25 not later than ten days after the date of the offer. A transferable tax credit certificate                              
26 issued under AS 43.55.023, a production tax credit certificate issued under                                             
27 AS 43.55.025, and a refund or claim for payment under AS 43.20.046, 43.20.047, or                                       
28 43.20.053, is not eligible for purchase by the department with money disbursed to the                                   
29       commissioner if the applicant or claimant                                                                         
30 (1)  failed to provide the department with a notice of interest in an offer                                             
31 of purchase from money disbursed to the commissioner in the time provided in this                                       
01       subsection for that notice; or                                                                                    
02 (2)  declined an offer of purchase by the department with money                                                         
03 disbursed to the commissioner for that transferable tax credit certificate issued under                                 
04 AS 43.55.023, a production tax credit certificate issued under AS 43.55.025, or a                                       
05       refund or claim for payment under AS 43.20.046, 43.20.047, or 43.20.053.                                          
06 (l)  The department shall calculate the maximum amount for a purchase from                                              
07 money disbursed to the commissioner as provided in this subsection. The maximum                                         
08 amount for a purchase is the sum of the assumed payment amounts for each year                                           
09 discounted each year as provided in (m) of this section. The assumed payment amount                                     
10 for each year is determined based on the assumed appropriations to the fund and the                                     
11 assumed proration methodology for the requests for payment from the fund. The                                           
12 assumed appropriation to the fund each year is the percentage provided under (c) of                                     
13 this section of the total of all taxes levied by AS 43.55.011 as forecast by the                                        
14 department before the application of any tax credits. The assumed proration                                             
15 methodology for the requests for payment from the fund is that the department                                           
16 allocated payments from the fund based on the date of the request for purchase from                                     
17 the fund with requests received in same year allocated together with a priority in                                      
18 allocation for payments to the earliest year. For purposes of the assumed proration                                     
19 methodology, it is assumed that no purchases were made with money disbursed to the                                      
20       commissioner.                                                                                                     
21 (m)  For purposes of the calculation in (l) of this section, the department shall                                       
22 discount the assumed payment amount each year by a discount rate determined under                                       
23 this subsection. Unless another discount rate in this subsection applies, a discount rate                               
24 of 10 percent a year applies to the assumed payment amount for a request for purchase                                   
25 of a transferable tax credit certificate issued under AS 43.55.023 or a production tax                                  
26 credit certificate issued under AS 43.55.025. The agreement of an applicant for a                                       
27 discount rate in (1) - (3) of this subsection shall be consideration exclusively for the                                
28 amount by which the purchase exceeds the amount of the purchase in the absence of                                       
29 the agreement. A discount rate based on the true interest cost plus 1.5 percent and is                                  
30 less than ten percent applies each year to the assumed payment amount for a refund or                                   
31 claim for payment under AS 43.20.046, 43.20.047, or 43.20.053. For the assumed                                          
01 payment amount for a request for purchase of a transferable tax credit certificate                                      
02 issued under AS 43.55.023 or a production tax credit certificate issued under                                           
03 AS 43.55.025, a discount rate based on the true interest cost plus 1.5 percent and is                                   
04       less than ten percent applies each year                                                                           
05 (1)  for either a transferable tax credit certificate issued under                                                      
06 AS 43.55.023 for which the applicant was required to submit data required under                                         
07 AS 43.55.025(f)(2) or a production tax credit certificate issued under AS 43.55.025, if                                 
08 the applicant for the purchase agrees as a condition of the purchase that the 10-year                                   
09 confidentiality period under AS 43.55.025(f)(2)(C)(ii) that would otherwise apply to                                    
10       the seismic data or other geophysical data is explicitly waived by the applicant;                                 
11 (2)  if the applicant, or an entity related to the applicant on the                                                     
12 applicant's consent, and the Department of Natural Resources have agreed to an                                          
13       overriding royalty interest agreement under AS 44.37.230; or                                                      
14 (3)  if the applicant commits to incur not later than 24 months after the                                               
15 purchase of qualified capital expenditures in an amount greater than or equal to the                                    
16       purchase amount provided                                                                                          
17 (A)  the applicant provides evidence of the commitment to the                                                           
18            department; and                                                                                              
19 (B)  the commissioner approves the lower discount rate for the                                                          
20            purchase.                                                                                                    
21 (n)  A transferable tax credit certificate issued under AS 43.55.023, a                                                 
22 production tax credit certificate issued under AS 43.55.025, or a refund or claim for                                   
23 payment under AS 43.20.046, 43.20.047, or 43.20.053 purchased by the department                                         
24 with money disbursed to the commissioner is inapplicable against tax liability                                          
25 regardless of whether the purchase amount was less than the total amount requested                                      
26       for purchase.                                                                                                     
27    * Sec. 11. AS 44.37 is amended by adding a new section to read:                                                    
28                     Article 4. Miscellaneous Provisions.                                                              
29 Sec. 44.37.230. Duties of the department with respect to purchases of tax                                             
30 credit certificates and overriding royalty interest agreements. (a) The department                                    
31 shall consult with the Department of Revenue regarding the discount rate applicable                                     
01       under AS 43.55.028(m).                                                                                            
02 (b)  The department may enter into an overriding royalty interest agreement in                                          
03 favor of the state with an applicant requesting a purchase by the Department of                                         
04 Revenue under AS 43.55.028 from money disbursed to the commissioner from the                                            
05 Alaska Tax Credit Certificate Bond Corporation reserve fund established in                                              
06 AS 37.18.040 of either a transferable tax credit certificate issued under AS 43.55.023                                  
07 or a production tax credit certificate issued under AS 43.55.025. The department may                                    
08 enter into an overriding royalty interest agreement only if the anticipated net present                                 
09 value from the agreement to the state is equal to or greater than the remainder of the                                  
10 value of the tax credit certificate requested for purchase at the proposed lower discount                               
11 rate under AS 43.55.028(m)(2), subtracted from the value of the tax credit certificate                                  
12       requested for purchase calculated in the absence of the agreement.                                                
13 (c)  An applicant requesting a lower discount rate under AS 43.55.028(m)(2)                                             
14 shall submit a proposed overriding royalty interest agreement to the department. The                                    
15       proposed agreement must include                                                                                   
16 (1)  a description of the lease or leases subject to the proposed                                                       
17       agreement in which the applicant holds a working interest;                                                        
18 (2)  the overriding royalty interest in oil produced from the lease or                                                  
19 leases offered to the state under the proposed agreement expressed as a percent of the                                  
20 total oil produced from the lease or leases that does not exceed the working interest of                                
21       the applicant.                                                                                                    
22 (d)  The monthly payment to the state in an overriding royalty interest                                                 
23 agreement must be calculated by multiplying the prevailing value of the monthly oil                                     
24 production by the product of the total monthly volume of oil production from the lease                                  
25 or leases subject to the agreement multiplied by the percent of total oil production                                    
26 offered to the state under the agreement. No deductions may be applied in this                                          
27 payment calculation. The prevailing value of the oil shall be as determined and posted                                  
28       by the Department of Revenue under AS 43.55 as provided in regulation.                                            
29 (e)  The amount of an underpayment or overpayment of a monthly payment for                                              
30 a payment in an overriding royalty interest agreement bears interest in each calendar                                   
31 quarter at the rate of 5.25 percentage points above the annual rate charged to member                                   
01       banks for advances by the 12th Federal Reserve District as of the first day of that                               
02       calendar quarter, compounded quarterly as of the last day of that quarter.                                        
03            (f)  The department shall evaluate an offer for an overriding royalty interest                               
04       agreement by considering the following:                                                                           
05                 (1)  the anticipated costs for issuance and administration for bonds                                    
06       under AS 37.18 if the tax credit certificate was purchased with the proposed lower                                
07       discount rate under AS 43.55.028(m)(2);                                                                           
08                 (2)  the production or projected production from the lease or leases                                    
09       subject to the proposed agreement;                                                                                
10 (3)  the value or projected value of the oil produced from the lease or                                                 
11       leases subject to the proposed agreement;                                                                         
12 (4)  the timing for production from the lease or leases subject to the                                                  
13       proposed agreement;                                                                                               
14 (5)  the likelihood of production from the lease or leases subject to the                                               
15       proposed agreement;                                                                                               
16 (6)  the existence and burdens of other interests on the lease or leases                                                
17       subject to the proposed agreement;                                                                                
18 (7)  any cost data or financial information submitted with the offer or                                                 
19       requested by the department; and                                                                                  
20 (8)  other information submitted with the offer or requested by the                                                     
21       department.                                                                                                       
22 (g)  The department may enter into agreements necessary to carry out the                                                
23 purpose of this section including agreements to maintain the confidentiality of                                         
24 information submitted to the department to evaluate an overriding royalty interest                                      
25       agreement.                                                                                                        
26 (h)  The revenue from an overriding royalty interest agreement shall be                                                 
27       deposited into the general fund.                                                                                  
28            (i)  In this section,                                                                                        
29 (1)  "applicant" includes an entity related to the applicant on consent of                                              
30       the applicant; and                                                                                                
31                 (2)  "department" means the Department of Natural Resources.                                            
01    * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03 TRANSITION: REGULATIONS. The Department of Natural Resources and the                                                    
04 Department of Revenue may adopt regulations necessary to implement the changes made by                                  
05 this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not                            
06 before the effective date of the law implemented by the regulation.                                                     
07    * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to                         
08 read:                                                                                                                   
09       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
10 contrary provision of AS 44.62.240, if the                                                                              
11 (1)  Department of Revenue expressly designates in a regulation that the                                                
12 regulation applies retroactively, a regulation adopted by the Department of Revenue to                                  
13 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to                         
14 the effective date of the law implemented by the regulation;                                                            
15 (2)  Department of Natural Resources expressly designates in a regulation that                                          
16 the regulation applies retroactively, a regulation adopted by the Department of Natural                                 
17 Resources to implement, interpret, make specific, or otherwise carry out this Act may apply                             
18 retroactively to the effective date of the law implemented by the regulation.                                           
19    * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).