Legislature(2007 - 2008)
2007-11-11 House Journal
Full Journal pdf2007-11-11 House Journal Page 1633 HB 2001 The following was again before the House in second reading: CS FOR HOUSE BILL NO. 2001(FIN) am "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; providing a limit on the amount of tax that may be levied on the production of certain gas that is produced outside of the Cook Inlet sedimentary basin; relating to the sharing between agencies of certain information relating to the production tax and to oil and gas or gas only leases; expanding the period in which the Department of Revenue may assess the amount of oil and gas production tax and conservation surcharges; prohibiting a producer or explorer from receiving tax credits if certain judgments are not satisfied and requiring, as a condition of receiving the tax credits, the deposit of the amount of certain unpaid judgments and certain interest on those judgments in the court during an appeal and relating to that interest; relating to state oil and gas auditors and their immediate supervisors; making conforming amendments; and providing for an effective date." 2007-11-11 House Journal Page 1634 Representative Samuels placed a call of the House on the bill. Amendment No. 1 was offered by Representative Kerttula: Page 36, line 23, following "(a)": Insert "Except as provided in (k) and (l) of this section" Page 41, following line 13: Insert a new bill section to read: "* Sec. 48. AS 43.55.165 is amended by adding new subsections to read: (k) For purposes of AS 43.55.160, for a calendar year after 2006, a producer's total lease expenditures, before adjustment under AS 43.55.170, that are applicable to oil and gas produced by the producer from all leases or properties within a unit from which 1,000,000,000 BTU equivalent barrels of oil or gas have been cumulatively produced by the close of the most recent calendar year and from which the average daily oil and gas production during the most recent calendar year exceeded 100,000 BTU equivalent barrels are determined under this subsection and (l) of this section. Except as otherwise provided under (l) of this section, the producer's total lease expenditures, other than qualified capital expenditures, (1) for calendar year 2007, are equal to the product of 1.37 multiplied by the total lease expenditures for calendar year 2006, other than qualified capital expenditures, that are applicable to oil and gas produced by the producer from all leases or properties within the unit, as reported on the producer's statement under AS 43.55.030(a) for calendar year 2006, and (2) for a calendar year after 2007, are equal to the product of 1.03 multiplied by the total lease expenditures, other than qualified capital expenditures, determined for the previous calendar year under this subsection. The producer's total lease expenditures for a calendar year after 2006 that are applicable to oil and gas produced by the producer from all leases or properties within a unit subject to this subsection are the sum of the producer's qualified capital expenditures incurred during the calendar year that are applicable to that oil and gas plus the lease expenditures, other than qualified capital expenditures, that are applicable to that oil and gas as determined under this subsection and (l) of this section. If a producer whose lease expenditures for 2006 are used 2007-11-11 House Journal Page 1635 to determine lease expenditures for a later calendar year under this subsection transfers an interest in an affected lease or property to a different producer, the transferee's lease expenditures applicable to oil and gas produced by the transferee from the lease or property continue to be determined under this subsection using those 2006 lease expenditures. In this subsection, "qualified capital expenditures" has the meaning given in AS 43.55.023. (l) If, after audit by the department of a producer's statement or amended statement under AS 43.55.030(a) for calendar year 2006, the department finally determines that the reported amount of total lease expenditures, other than qualified capital expenditures, for calendar year 2006 applicable to oil and gas produced by the producer from all leases or properties within a unit subject to (k) of this section exceeds by more than 10 percent the actual amount of those lease expenditures, other than qualified capital expenditures, the producer or transferee, as applicable, shall (1) substitute the actual amount of those lease expenditures, other than qualified capital expenditures, for purposes of the calculations set out in (k) of this section, and (2) file amended statements for affected past tax periods within 60 days after the final determination." Renumber the following bill sections accordingly. Page 42, following line 16: Insert a new bill section to read: "* Sec. 50. AS 43.55.180(b) is amended to read: (b) The department shall prepare a report on or before the first day of the 2010 regular session of the legislature with recommendations concerning the determination of lease expenditures under AS 43.55.165(k) and (l). The department shall prepare a report on or before the first day of the 2011 regular session of the legislature on the results of the study made under (a) of this section, including recommendations as to whether any changes should be made to this chapter. The department shall notify the legislature when each [THAT THE] report prepared under this subsection is available." Renumber the following bill sections accordingly. 2007-11-11 House Journal Page 1636 Page 43, line 27: Delete "42 - 48, and 51" Insert "42 - 49, and 53" Page 45, line 9: Delete "42 - 48, and 51" Insert "42 - 49, and 53" Page 45, line 10: Delete "sec. 56" Insert "sec. 58" Representative Kerttula moved and asked unanimous consent that Amendment No. 1 be adopted. Representative Roses objected. The question being: "Shall Amendment No. 1 be adopted?" The roll was taken with the following result: CSHB 2001(FIN) am Second Reading Amendment No. 1 YEAS: 21 NAYS: 19 EXCUSED: 0 ABSENT: 0 Yeas: Buch, Cissna, Crawford, Doll, Doogan, Edgmon, Gara, Gardner, Gruenberg, Guttenberg, Holmes, Joule, Kawasaki, Keller, Kerttula, LeDoux, Lynn, Nelson, Salmon, Thomas, Wilson Nays: Chenault, Coghill, Dahlstrom, Fairclough, Foster, Gatto, Harris, Hawker, Johansen, Johnson, Kelly, Meyer, Neuman, Olson, Ramras, Roses, Samuels, Seaton, Stoltze And so, Amendment No. 1 was adopted. Amendment No. 6 (page 1618), which was moved and pending (page 1626), was again before the House. 2007-11-11 House Journal Page 1637 Representative Crawford moved and asked unanimous consent to withdraw Amendment No. 6. There being no objection, it was so ordered. Amendment No. 7 was offered by Representatives Gara, Stoltze, and Gatto: Page 19, lines 19 - 20: Delete "2003 [2001]" Insert "2001" Page 19, line 27, following "explorer": Insert "that did not have commercial production of oil or gas from a lease or property in the state before January 1, 2008," Page 19, line 28: Delete "due under" Insert "levied by [DUE UNDER]" Page 19, lines 30 - 31: Delete "are incurred during the calendar year for which the credit is taken" Insert "were incurred after March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN]" Page 20, lines 3 - 9: Delete "(A) for any calendar year after the later of (i) 2013; or (ii) the sixth calendar year after the calendar year for which the producer first applies a credit under this subsection against a tax due under AS 43.55.011(e), if the producer did not have commercial production of oil or gas from a lease or property in the state before April 1, 2006;" Insert "(A) for any calendar year after [THE LATER OF (i)] 2013; [OR (ii) THE SIXTH CALENDAR YEAR AFTER 2007-11-11 House Journal Page 1638 THE CALENDAR YEAR FOR WHICH THE PRODUCER FIRST APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;]" Representative Gara moved and asked unanimous consent that Amendment No. 7 be adopted. There was objection. The question being: "Shall Amendment No. 7 be adopted?" The roll was taken with the following result: CSHB 2001(FIN) am Second Reading Amendment No. 7 YEAS: 27 NAYS: 13 EXCUSED: 0 ABSENT: 0 Yeas: Buch, Cissna, Coghill, Crawford, Dahlstrom, Doll, Doogan, Edgmon, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Harris, Holmes, Joule, Kawasaki, Keller, Kelly, Kerttula, LeDoux, Lynn, Nelson, Salmon, Seaton, Stoltze, Thomas Nays: Chenault, Fairclough, Foster, Hawker, Johansen, Johnson, Meyer, Neuman, Olson, Ramras, Roses, Samuels, Wilson And so, Amendment No. 7 was adopted. Amendment No. 14 was offered by Representative Seaton: Page 21, line 31, through page 22, line 1: Delete "costs arising from" Insert "costs, including repairs and replacements, arising from or associated with" Page 22, line 1, following "criminal negligence,": Insert "or" 2007-11-11 House Journal Page 1639 Page 22, lines 3 - 4: Delete "or failure to comply with an obligation under a lease, permit, or license issued by the state or federal government," Page 38, line 24: Delete "costs arising from" Insert "costs, including repairs and replacements, arising from or associated with" Page 38, line 25, following "negligence,": Insert "or" Page 38, lines 26 - 28: Delete ", or failure to comply with an obligation under a lease, permit, or license issued by the state or federal government" Representative Seaton moved and asked unanimous consent that Amendment No. 14 be adopted. Objection was heard and withdrawn. There being no further objection, Amendment No. 14 was adopted. Amendment No. 15 was offered by Representatives Dahlstrom, Meyer, and Gara: Page 1, line 11, following "gas" (title amendment): Delete "auditors and their immediate supervisors" Insert "audit masters" Page 9, following line 28: Insert a new bill section to read: "* Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: (42) oil and gas auditor masters employed in a professional capacity by the Department of Revenue and the Department of Natural Resources to collect oil and gas revenue by developing policy, conducting studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and gas revenue auditors." 2007-11-11 House Journal Page 1640 Renumber the following bill sections accordingly. Page 44, following line 16, insert: "OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE INTENT. It is the intent of the legislature that the commissioner of administration shall cause not more than four oil and gas revenue audit master positions to be created in the Department of Revenue and not more than two oil and gas revenue audit master positions to be created in the Department of Natural Resources. Oil and gas revenue audit masters shall be employed in a professional capacity to collect oil and gas revenue by developing policy, conducting studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and gas auditors." Representative Dahlstrom moved and asked unanimous consent that Amendment No. 15 be adopted. Objection was heard and withdrawn. There being no further objection, Amendment No. 15 was adopted, and the new title follows: CS FOR HOUSE BILL NO. 2001(FIN) am "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; providing a limit on the amount of tax that may be levied on the production of certain gas that is produced outside of the Cook Inlet sedimentary basin; relating to the sharing between agencies of certain information relating to the production tax and to oil and gas or gas only leases; expanding the period in which the Department of Revenue may assess the amount of oil and gas production tax and conservation surcharges; prohibiting a producer or explorer from receiving tax credits if certain judgments are not satisfied and requiring, as a condition of receiving the tax credits, the deposit of the amount of certain unpaid judgments and certain interest on those judgments in the court during an appeal and relating to that interest; relating to state oil and gas audit masters; making conforming amendments; and providing for an effective date." 2007-11-11 House Journal Page 1641 Amendment No. 16 was offered by Representative Seaton: Page 2, line 15: Delete "sec. 46" Insert "sec. 47" Page 37, lines 28 - 31: Delete all material and insert: "(2) an activity must be physically located in the state [DOES NOT NEED TO BE PHYSICALLY LOCATED ON, NEAR, OR WITHIN THE PREMISES OF THE LEASE OR PROPERTY WITHIN WHICH AN OIL OR GAS DEPOSIT BEING EXPLORED FOR, DEVELOPED, OR PRODUCED IS LOCATED] in order for the cost of the activity to be a cost upstream of the point of production of the oil or gas;" Page 38, following line 13: Insert a new bill section to read: "* Sec. 46. AS 43.55.165(b), as amended by sec. 45 of this Act, is amended to read: (b) For purposes of (a) of this section, (1) direct costs include (A) an expenditure, when incurred, to acquire an item if the acquisition cost is otherwise a direct cost, notwithstanding that the expenditure may be required to be capitalized rather than treated as an expense for financial accounting or federal income tax purposes; (B) payments of or in lieu of property taxes, sales and use taxes, motor fuel taxes, and excise taxes; (2) an activity must be physically located on the premises of the lease or property from which oil or gas is recovered [IN THE STATE] in order for the cost of the activity to be a cost upstream of the point of production of the oil or gas; (3) in determining whether costs are lease expenditures, the department may consider, among other factors, the (A) typical industry practices and standards in the state that determine the costs, other than items listed in (e) of this section, that an operator is allowed to bill a producer that is not the operator, under unit operating agreements or similar operating agreements that were in effect before December 2, 2007-11-11 House Journal Page 1642 2005, and were subject to negotiation with at least one producer with substantial bargaining power, other than the operator; and (B) standards adopted by the Department of Natural Resources that determine the costs, other than items listed in (e) of this section, that a lessee is allowed to deduct from revenue in calculating net profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E)." Renumber the following bill sections accordingly. Page 43, line 27: Delete "42 - 48, and 51" Insert "42 - 45, 47 - 49, and 52" Page 44, following line 14: Insert a new subsection to read: "(h) AS 43.55.165(b), as amended by sec. 45 of this Act, applies to oil and gas produced after March 31, 2006." Page 44, line 31, following "leases,": Insert "or AS 43.55.165(b), as amended by sec. 45 of this Act," Page 45, following line 8: Insert new bill sections to read: "* Sec. 57. The uncodified law of the State of Alaska is amended by adding a new section to read: RETROACTIVITY. Section 45 of this Act is retroactive to April 1, 2006. * Sec. 58. The uncodified law of the State of Alaska is amended by adding a new section to read: CONTINGENT EFFECT. Section 46 of this Act takes effect only if a court of competent jurisdiction enters a final judgment on the merits, the final judgment is no longer subject to appeal, and the final judgment nullifies the effect of AS 43.55.165(b), as amended by sec. 45 of this Act. * Sec. 59. If sec. 46 of this Act takes effect, it takes effect on the day after the last day on which the final judgment described in sec. 58 of this Act is no longer subject to appeal." 2007-11-11 House Journal Page 1643 Renumber the following bill sections accordingly. Page 45, line 9: Delete "42 - 48, and 51" Insert "42 - 45, 47 - 49, and 52" Page 45, line 10: Delete "sec. 56" Insert "secs. 59 and 60" Representative Seaton moved and asked unanimous consent that Amendment No. 16 be adopted. Representative Fairclough objected. The question being: "Shall Amendment No. 16 be adopted?" The roll was taken with the following result: CSHB 2001(FIN) am Second Reading Amendment No. 16 YEAS: 20 NAYS: 20 EXCUSED: 0 ABSENT: 0 Yeas: Buch, Cissna, Crawford, Doll, Doogan, Edgmon, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Harris, Kawasaki, Kerttula, LeDoux, Lynn, Nelson, Salmon, Seaton, Wilson Nays: Chenault, Coghill, Dahlstrom, Fairclough, Foster, Hawker, Holmes, Johansen, Johnson, Joule, Keller, Kelly, Meyer, Neuman, Olson, Ramras, Roses, Samuels, Stoltze, Thomas And so, Amendment No. 16 was not adopted. Representative Wilson moved and asked unanimous consent that the House rescind previous action in adopting Amendment No. 1. There being no objection, it was so ordered. Amendment No. 1 was again before the House (page 1634). 2007-11-11 House Journal Page 1644 The question being: "Shall Amendment No. 1 be adopted?" The roll was taken with the following result: CSHB 2001(FIN) am Second Reading Amendment No. 1 YEAS: 21 NAYS: 19 EXCUSED: 0 ABSENT: 0 Yeas: Buch, Cissna, Crawford, Doll, Doogan, Edgmon, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Holmes, Joule, Kawasaki, Keller, Kerttula, LeDoux, Lynn, Nelson, Salmon, Thomas Nays: Chenault, Coghill, Dahlstrom, Fairclough, Foster, Harris, Hawker, Johansen, Johnson, Kelly, Meyer, Neuman, Olson, Ramras, Roses, Samuels, Seaton, Stoltze, Wilson And so, Amendment No. 1 was adopted. Amendment No. 17 was offered by Representatives Kelly and Stoltze: Page 43, line 24: Delete "and 43.55.165(d)" Insert ", 43.55.165(d), and 43.55.180" Page 45, following line 8: Insert a new bill section to read: "* Sec. 56. The uncodified law of the State of Alaska is amended by adding a new section to read: REVISOR'S INSTRUCTION. In the following statute sections, the revisor of statutes shall substitute the spanned reference (1) "AS 43.55.011 - 43.55.170" for the spanned reference "AS 43.55.011 - 43.55.180": AS 43.55.020(e), 43.55.080, 43.55.135, 43.55.150(a), 43.55.201(c), and 43.55.300(c); (2) "AS 43.55.017 - 43.55.170" for the spanned reference "AS 43.55.017 - 43.55.180": AS 43.55.023(g)." Renumber the following bill sections accordingly. 2007-11-11 House Journal Page 1645 Page 45, line 10: Delete "sec. 56" Insert "sec. 57" Representative Kelly moved and asked unanimous consent that Amendment No. 17 be adopted. Representative Ramras objected. The question being: "Shall Amendment No. 17 be adopted?" The roll was taken with the following result: CSHB 2001(FIN) am Second Reading Amendment No. 17 YEAS: 27 NAYS: 13 EXCUSED: 0 ABSENT: 0 Yeas: Buch, Cissna, Coghill, Crawford, Dahlstrom, Doll, Doogan, Edgmon, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Harris, Holmes, Joule, Kawasaki, Keller, Kelly, Kerttula, LeDoux, Lynn, Nelson, Salmon, Seaton, Stoltze, Thomas Nays: Chenault, Fairclough, Foster, Hawker, Johansen, Johnson, Meyer, Neuman, Olson, Ramras, Roses, Samuels, Wilson And so, Amendment No. 17 was adopted. Representative Samuels moved and asked unanimous consent that CSHB 2001(FIN) am be considered engrossed, advanced to third reading, and placed on final passage. There being no objection, it was so ordered. CSHB 2001(FIN) am was read the third time. The question being: "Shall CSHB 2001(FIN) am pass the House?" The roll was taken with the following result: CSHB 2001(FIN) am Third Reading Final Passage YEAS: 28 NAYS: 12 EXCUSED: 0 ABSENT: 0 2007-11-11 House Journal Page 1646 Yeas: Buch, Cissna, Coghill, Dahlstrom, Doll, Doogan, Edgmon, Gara, Gardner, Gatto, Gruenberg, Guttenberg, Harris, Holmes, Joule, Kawasaki, Keller, Kelly, Kerttula, LeDoux, Lynn, Nelson, Neuman, Salmon, Seaton, Stoltze, Thomas, Wilson Nays: Chenault, Crawford, Fairclough, Foster, Hawker, Johansen, Johnson, Meyer, Olson, Ramras, Roses, Samuels And so, CSHB 2001(FIN) am passed the House. Representative Samuels moved and asked unanimous consent that the roll call on the passage of the bill be considered the roll call on the effective date clause. There being no objection, it was so ordered. Representative Kerttula gave notice of reconsideration of the vote on CSHB 2001(FIN) am.