Legislature(2011 - 2012)
2011-03-31 House Journal
Full Journal pdf2011-03-31 House Journal Page 0661 HB 110 The following, which was advanced to third reading from the March 30, 2011, calendar (page 643), was read the third time: 2011-03-31 House Journal Page 0662 CS FOR HOUSE BILL NO. 110(FIN) "An Act relating to the interest rate applicable to certain amounts due for fees, taxes, and payments made and property delivered to the Department of Revenue; relating to the oil and gas production tax rate; relating to monthly installment payments of the oil and gas production tax; relating to oil and gas production tax credits, including qualified capital credits for exploration, development, and production; relating to certain additional nontransferable oil and gas production tax credits; relating to the disclosure of certain tax information; making conforming amendments; and providing for an effective date." The House Rules Committee submitted the following updated fiscal note: 6. Zero, Dept. of Natural Resources Representative Doogan moved and asked unanimous consent that CSHB 110(FIN) be returned to second reading for the specific purpose of considering Amendment No. 1. There being no objection, it was so ordered. The Speaker stated that, without objection, CSHB 110(FIN) would be returned to second reading for all amendments. Amendment No. 1 was offered by Representative Doogan: Page 1, lines 5 - 6 (title amendment): Delete "relating to certain additional nontransferable oil and gas production tax credits;" Page 1, following line 12: Insert a new bill section to read: "* Sec. 2. AS 05.15.095(c) is amended to read: (c) A delinquent fee bears interest at the rate set by AS 43.05.225 [AS 43.05.225(2)]." Renumber the following bill sections accordingly. Page 2, following line 5: Insert a new bill section to read: 2011-03-31 House Journal Page 0663 "* Sec. 4. AS 34.45.470(a) is amended to read: (a) A person who fails to pay or deliver property within the time prescribed by this chapter may be required to pay to the department interest at the annual rate calculated under AS 43.05.225 [AS 43.05.225(2)] on the property or the value of it from the date the property should have been paid or delivered." Renumber the following bill sections accordingly. Page 2, following line 17: Insert a new bill section to read: "* Sec. 6. AS 43.05.225 is amended to read: Sec. 43.05.225. Interest. Unless otherwise provided, (1) when a tax levied in this title becomes delinquent, it bears interest in a calendar quarter at the rate of five [THREE] percentage points above the annual rate charged member banks for advances by the 12th Federal Reserve District as of the first day of that calendar quarter, or at the annual rate of 11 percent, whichever is greater [LESSER], compounded quarterly as of the last day of that quarter; (2) the interest rate is 12 percent a year for (A) delinquent fees payable under AS 05.15.095(c); and (B) unclaimed property that is not timely paid or delivered, as allowed by AS 34.45.470(a)." Renumber the following bill sections accordingly. Page 2, following line 25: Insert a new bill section to read: "* Sec. 8. AS 43.20.046(i) is amended to read: (i) The issuance of a refund under this section does not limit the department's ability to later audit or adjust the claim if the department determines, as a result of the audit, that the person that claimed the credit was not entitled to the amount of the credit. The tax liability of the person receiving the credit under this chapter is increased by the amount of the credit that exceeds that to which the person was entitled. If the tax liability is increased under this subsection, the increase bears interest under AS 43.05.225 [AS 43.05.225(1)] from the date the refund was issued." 2011-03-31 House Journal Page 0664 Renumber the following bill sections accordingly. Page 3, following line 2: Insert a new bill section to read: "* Sec. 10. AS 43.50.570 is amended to read: Sec. 43.50.570. Interest. A licensee who fails to pay an amount due for the purchase of stamps within the time required (1) is considered to have failed to pay the cigarette taxes due under this chapter; and (2) shall pay interest at the rate established under AS 43.05.225 [AS 43.05.225(1)] from the date on which the amount became due until the date of payment." Renumber the following bill sections accordingly. Page 3, following line 21: Insert a new bill section to read: "* Sec. 12. AS 43.55.011(e) is repealed and reenacted to read: (e) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state, less any oil and gas the ownership or right to which is exempt from taxation or constitutes a landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of this section, the tax is equal to the sum of (1) the annual production tax value of the taxable oil and gas as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and (2) the sum, over all months of the calendar year, of the tax amounts determined under (g) of this section." Renumber the following bill sections accordingly. Page 7, following line 25: Insert a new bill section to read: "* Sec. 14. AS 43.55.011(g) is repealed and reenacted to read: (g) For each month of the calendar year for which the producer's average monthly production tax value under AS 43.55.160(a)(2) for each BTU equivalent barrel of the taxable oil and gas is more than $30, the amount of tax for purposes of (e)(2) of this section is determined by multiplying the monthly 2011-03-31 House Journal Page 0665 production tax value of the taxable oil and gas produced during the month by the tax rate calculated as follows: (1) if the producer's average monthly production tax value for each BTU equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number that represents the difference between that average monthly production tax value for each BTU equivalent barrel and $30; or (2) if the producer's average monthly production tax value for each BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number that represents the difference between the average monthly production tax value for each BTU equivalent barrel and $92.50, except that the sum determined under this paragraph may not exceed 50 percent." Renumber the following bill sections accordingly. Page 10, following line 14: Insert a new bill section to read: "* Sec. 16. AS 43.55.020(a) is amended to read: (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) shall pay the tax as follows: (1) an installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each month of the calendar year on the last day of the following month; except as otherwise provided under (2) of this subsection, the amount of the installment payment is the sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount of the installment payment may not be less than zero: (A) for oil and gas produced from leases or properties in the state outside the Cook Inlet sedimentary basin but not subject to AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) 2011-03-31 House Journal Page 0666 multiplied by [APPLICABLE TAX RATES IN AS 43.55.011(e), AS APPLICABLE, AND 43.55.011(g), AS APPLICABLE, APPLIED TO] the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for the leases or properties under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from the leases or properties during the month for which the installment payment is calculated; (B) for oil and gas produced from leases or properties subject to AS 43.55.011(f), the greatest of (i) zero; (ii) zero percent, one percent, two percent, three percent, or four percent, as applicable, of the gross value at the point of production of the oil and gas produced from all leases or properties during the month for which the installment payment is calculated; or (iii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by [APPLICABLE TAX RATES IN AS 43.55.011(e), AS APPLICABLE, AND 43.55.011(g), AS APPLICABLE, APPLIED TO] the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production under AS 43.55.165 and 43.55.170 that are deductible for those leases or properties under AS 43.55.160 from the gross value at the point of production of the oil and gas produced from those leases or properties during the month for which the installment payment is calculated; (C) for oil and gas produced from each lease or property subject to AS 43.55.011(j), (k), or (o), the greater of (i) zero; or (ii) the sum of 25 percent and the tax rate calculated for the month under AS 43.55.011(g) multiplied by [APPLICABLE TAX RATES IN AS 43.55.011(e), AS APPLICABLE, AND 43.55.011(g), AS APPLICABLE, APPLIED TO] the remainder obtained by subtracting 1/12 of the producer's adjusted lease expenditures for the calendar year of production 2011-03-31 House Journal Page 0667 under AS 43.55.165 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas, respectively, produced from the lease or property from the gross value at the point of production of the oil or gas, respectively, produced from the lease or property during the month for which the installment payment is calculated; (2) an amount calculated under (1)(C) of this subsection for oil or gas produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable gas produced during the month for the amount of taxable gas produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of taxable oil produced during the month for the amount of taxable oil produced during the calendar year; (3) an installment payment of the estimated tax levied by AS 43.55.011(i) for each lease or property is due for each month of the calendar year on the last day of the following month; the amount of the installment payment is the sum of (A) the applicable tax rate for oil provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the oil taxable under AS 43.55.011(i) and produced from the lease or property during the month; and (B) the applicable tax rate for gas provided under AS 43.55.011(i), multiplied by the gross value at the point of production of the gas taxable under AS 43.55.011(i) and produced from the lease or property during the month; (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any credits applied as allowed by law, that exceeds the total of the amounts due as installment payments of estimated tax is due on March 31 of the year following the calendar year of production." Renumber the following bill sections accordingly. Page 10, following line 26: Insert a new bill section to read: 2011-03-31 House Journal Page 0668 "* Sec. 18. AS 43.55.020(g) is amended to read: (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid amount of an installment payment required under (a)(1) - (3) of this section that is not paid when due bears interest (1) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date the installment payment is due until March 31 following the calendar year of production, and (2) as provided for a delinquent tax under AS 43.05.225 [AS 43.05.225(1)] after that March 31. Interest accrued under (1) of this subsection that remains unpaid after that March 31 is treated as an addition to tax that bears interest under (2) of this subsection. An unpaid amount of tax due under (a)(4) of this section that is not paid when due bears interest as provided for a delinquent tax under AS 43.05.225 [AS 43.05.225(1)]." Renumber the following bill sections accordingly. Page 11, following line 13: Insert a new bill section to read: "* Sec. 20. AS 43.55.023(a) is amended to read: (a) A producer or explorer may take a tax credit for a qualified capital expenditure as follows: (1) notwithstanding that a qualified capital expenditure may be a deductible lease expenditure for purposes of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or explorer that incurs a qualified capital expenditure may also elect to apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that expenditure; however, not more than half of the tax credit may be applied for a single calendar year; (2) a producer or explorer may take a credit for a qualified capital expenditure incurred in connection with geological or geophysical exploration or in connection with an exploration well only if the producer or explorer (A) agrees, in writing, to the applicable provisions of AS 43.55.025(f)(2); (B) submits to the Department of Natural Resources 2011-03-31 House Journal Page 0669 all data that would be required to be submitted under AS 43.55.025(f)(2)." Renumber the following bill sections accordingly. Page 12, following line 8: Insert a new bill section to read: "* Sec. 22. AS 43.55.023(d) is amended to read: (d) Except as limited by (i) of this section, a person that is entitled to take a tax credit under this section that wishes to transfer the unused credit to another person or obtain a cash payment under AS 43.55.028 may apply to the department for [A] transferable tax credit certificates [CERTIFICATE]. An application under this subsection must be in a form prescribed by the department and must include supporting information and documentation that the department reasonably requires. The department shall grant or deny an application, or grant an application as to a lesser amount than that claimed and deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the year following the calendar year in which the qualified capital expenditure [, WELL LEASE EXPENDITURE,] or carried-forward annual loss for which the credit is claimed was incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified capital expenditure [, WELL LEASE EXPENDITURE,] or carried-forward annual loss for which the credit is claimed was incurred; or (3) the date the application was received by the department. If, based on the information then available to it, the department is reasonably satisfied that the applicant is entitled to a credit, the department shall issue the applicant two [A] transferable tax credit certificates, each for half of [CERTIFICATE FOR] the amount of the credit. The credit shown on one of the two certificates is available for immediate use. The credit shown on the second of the two certificates may not be applied against a tax for a calendar year earlier than the calendar year following the calendar year in which the certificate is issued, and the certificate must contain a conspicuous statement to that effect. A certificate issued under this subsection does not expire." 2011-03-31 House Journal Page 0670 Renumber the following bill sections accordingly. Page 13, following line 5: Insert a new bill section to read: "* Sec. 25. AS 43.55.023(g) is amended to read: (g) The issuance of a transferable tax credit certificate under (d) of this section, [OR] former (m) of this section, or (p) of this section, or the purchase of a certificate under AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to which the certificate relates or to adjust the claim if the department determines, as a result of the audit, that the applicant was not entitled to the amount of the credit for which the certificate was issued. The tax liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit that exceeds that to which the applicant was entitled, or the applicant's available valid outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is increased under this subsection, the increase bears interest under AS 43.05.225 [AS 43.05.225(1)] from the date the transferable tax credit certificate was issued. For purposes of this subsection, an applicant that is an explorer is considered a producer subject to the tax levied by AS 43.55.011(e)." Renumber the following bill sections accordingly. Page 13, line 9: Delete "2021" Insert "2015" Page 14, line 1: Delete "2020" Insert "2014" Delete "2021" Insert "2015" Page 14, line 10, following "expenditure;": Insert "a tax credit under this paragraph may be applied for a single calendar year;" 2011-03-31 House Journal Page 0671 Page 15, line 4, following "(l)": Insert "and (p)" Page 15, following line 16: Insert a new bill section to read: "* Sec. 30. AS 43.55.023 is amended by adding a new subsection to read: (p) For a lease expenditure incurred in the state south of 68 degrees North latitude after December 31, 2014, that qualifies for tax credits under (a) and (b) of this section, and for a well lease expenditure incurred in the state south of 68 degrees North latitude that qualifies for a tax credit under (l) of this section, the department shall issue transferable tax credit certificates to the person entitled to the credit for the full amount of the credit. The transferable tax credit certificates do not expire." Renumber the following bill sections accordingly. Page 15, line 17, through page 17, line 17: Delete all material. Renumber the following bill sections accordingly. Page 18, following line 7: Insert a new bill section to read: "* Sec. 32. AS 43.55.028(e) is amended to read: (e) The department, on the written application of a person to whom a transferable tax credit certificate has been issued under AS 43.55.023(d), [OR] former AS 43.55.023(m), or AS 43.55.023(p), or to whom a production tax credit certificate has been issued under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to purchase, in whole or in part, the certificate if the department finds that (1) the calendar year of the purchase is not earlier than the first calendar year for which the credit shown on the certificate would otherwise be allowed to be applied against a tax; (2) the applicant does not have an outstanding liability to the state for unpaid delinquent taxes under this title; (3) the applicant's total tax liability under AS 43.55.011(e), after application of all available tax credits, for 2011-03-31 House Journal Page 0672 the calendar year in which the application is made is zero; (4)the applicant's average daily production of oil and gas taxable under AS 43.55.011(e) during the calendar year preceding the calendar year in which the application is made was not more than 50,000 BTU equivalent barrels; and (5)the purchase is consistent with this section and regulations adopted under this section." Renumber the following bill sections accordingly. Page 18, following line 16: Insert a new bill section to read: "* Sec. 34. AS 43.55.028(g) is amended to read: (g) The department may adopt regulations to carry out the purposes of this section, including standards and procedures to allocate available money among applications for purchases under this chapter and claims for refunds under AS 43.20.046 when the total amount of the applications for purchase and claims for refund exceed the amount of available money in the fund. The regulations adopted by the department may not, when allocating available money in the fund under this section, distinguish an application for the purchase of a credit certificate issued under former AS 43.55.023(m) or AS 43.55.023(p) or a claim for refund under AS 43.20.046." Renumber the following bill sections accordingly. Page 19, following line 13: Insert a new bill section to read: "* Sec. 36. AS 43.55.890 is amended to read: Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary provision of AS 40.25.100, and regardless of whether the information is considered under AS 43.05.230(e) to constitute statistics classified to prevent the identification of particular returns or reports, the department may publish the following information under this chapter, if aggregated among three or more producers or explorers, showing, by month or calendar year and by lease or property, unit, or area of the state: (1) the amount of oil or gas production; (2) the amount of taxes levied under this chapter or paid 2011-03-31 House Journal Page 0673 under this chapter; (3) the effective tax rates under this chapter; (4) the gross value of oil or gas at the point of production; (5) the transportation costs for oil or gas; (6) qualified capital expenditures, as defined in AS 43.55.023; (7) exploration expenditures under AS 43.55.025; (8) production tax values of oil or gas under AS 43.55.160; (9) lease expenditures under AS 43.55.165; (10) adjustments to lease expenditures under AS 43.55.170; (11) tax credits applicable or potentially applicable against taxes levied by this chapter [; THE INFORMATION RELATING TO TAX CREDITS UNDER THIS PARAGRAPH, TO THE EXTENT THE INFORMATION IS AVAILABLE TO THE DEPARTMENT, MUST INCLUDE THE STATUTORY AUTHORITY FOR EACH TYPE OF CREDIT TAKEN, THE AMOUNT OF CREDITS TAKEN UNDER EACH STATUTE AUTHORIZING A TAX CREDIT, AND WHETHER THE CREDIT IS FOR AN EXPENDITURE RELATED TO OIL OR GAS EXPLORATION, DEVELOPMENT, OR PRODUCTION, INCLUDING THE DRILLING OF WELLS; PERFORMING WORK ON EXISTING WELLS; CONDUCTING GEOLOGICAL OR GEOPHYSICAL EXPLORATION; ACQUIRING, CONSTRUCTING, OR INSTALLING NEW FACILITIES OR EQUIPMENT; AND MAINTAINING, REPAIRING, OR REPLACING EXISTING FACILITIES OR EQUIPMENT]." Renumber the following bill sections accordingly. Page 19, following line 18: Insert a new bill section to read: "* Sec. 38. AS 43.56.160 is amended to read: Sec. 43.56.160. Interest and penalty. When the tax levied by AS 43.56.010(a) becomes delinquent, a penalty of 10 percent shall be added. Interest on the delinquent taxes, exclusive of penalty, shall be assessed at a rate of eight percent a year [THE RATE 2011-03-31 House Journal Page 0674 SPECIFIED IN AS 43.05.225(1)]." Renumber the following bill sections accordingly. Page 19, following line 29: Insert a new bill section to read: "* Sec. 40. AS 43.77.020(d) is amended to read: (d) A person subject to the tax under this chapter shall make quarterly payments of the tax estimated to be due for the year, as required under regulations adopted by the department. A taxpayer will be subject to an estimated tax penalty, determined by applying the interest rate specified in AS 43.05.225 [AS 43.05.225(1)] to the underpayment for each quarter, unless the taxpayer makes estimated tax payments in equal installments that total either (1) at least 90 percent of the taxpayer's tax liability under this chapter for the tax year; or (2) at least 100 percent of the taxpayer's tax liability under this chapter for the prior tax year." Renumber the following bill sections accordingly. Page 20, following line 2: Insert a new bill section to read: "* Sec. 42. AS 43.90.430 is amended to read: Sec. 43.90.430. Interest. When a payment due to the state under this chapter becomes delinquent, the payment bears interest at the rate applicable to a delinquent tax under AS 43.05.225 [AS 43.05.225(1)]." Renumber the following bill sections accordingly. Page 20, line 6: Delete "Sections 10 - 12, 14, 16, and 28" Insert "Sections 19, 21, 23, 26, 28, and 43" Page 20, line 8: Delete "Sections 6 - 8" Insert "Sections 11, 13, and 15" 2011-03-31 House Journal Page 0675 Page 20, line 9: Delete "Sections 15 and 17" Insert "Sections 20, 22, 25, 27, 29, and 30" Page 20, line 10: Delete "2020" Insert "2014" Page 20, following line 10: Insert a new subsection to read: "(d) Sections 12, 14, and 16 of this Act apply to oil and gas produced after December 31, 2014." Page 20, line 19: Delete "Sections 10 - 12, 14, 16, 22, 23, and 28" Insert "Sections 19, 21, 23, 26, 28, 31, 33, and 43" Page 20, line 21: Delete "Section 24" Insert "Section 35" Page 20, line 22: Delete "Sections 6 - 8 and 29(b)" Insert "Sections 11, 13, 15, and 44(b)" Page 20, line 23: Delete "Sections 15, 17, and 29(c)" Insert "Sections 2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 22, 25, 27, 29, 30, 32, 34, 36, 38, 40, 42, and 44(c)" Delete "2021" Insert "2015" Page 20, line 24: Delete "Sections 10 - 12, 14, 16, 22, 23, 28, 29(a), and 31" Insert "Sections 19, 21, 23, 26, 28, 31, 33, 43, 44(a), and 46" Page 20, line 26: Delete "secs. 32 - 35" Insert "secs. 47 - 50" 2011-03-31 House Journal Page 0676 Representative Doogan moved and asked unanimous consent that Amendment No. 1 be adopted. Representative Fairclough objected. The question being: "Shall Amendment No. 1 be adopted?" The roll was taken with the following result: CSHB 110(FIN) Second Reading Amendment No. 1 YEAS: 11 NAYS: 26 EXCUSED: 2 ABSENT: 1 Yeas: Doogan, Gara, Gardner, Gruenberg, Guttenberg, Holmes, Kawasaki, Kerttula, Miller, Petersen, Tuck Nays: Austerman, Chenault, Costello, Dick, Edgmon, Fairclough, Feige, Foster, Gatto, Hawker, Herron, Johansen, Johnson, Joule, Lynn, Millett, Munoz, Olson, Pruitt, Saddler, Seaton, Stoltze, Thomas, Thompson, P.Wilson, T.Wilson Excused: Cissna, Neuman Absent: Keller And so, Amendment No. 1 was not adopted. Amendment No. 2 was offered by Representative Miller: Page 3, lines 3 - 21: Delete all material and insert: "* Sec. 6. AS 43.55.011(e) is amended to read: (e) There is levied on the producer of oil or gas a tax for all oil and gas produced each calendar year from each lease or property in the state, less any oil and gas the ownership or right to which is exempt from taxation or constitutes a landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of this section, (1) and except as provided in (2) of this subsection, the tax is equal to the sum of [(1)] the annual production tax value of the taxable oil and gas (A) produced from a lease or property not 2011-03-31 House Journal Page 0677 described in (B) of this paragraph as calculated under AS 43.55.160(a)(1) multiplied by 25 percent, and the sum, over all months of the calendar year, of the tax amounts determined under (g)(1) of this section; and (B) produced during the first seven consecutive years after the start of sustained production or produced during the first seven years after the effective date of this bill section, whichever is later, from a lease or property containing land that was not or previously had not been within a unit or in commercial production as of December 31, 2008, as calculated under AS 43.55.160(a)(1) multiplied by 15 percent, and [(2)] the sum, over all months of the calendar year, of the tax amounts determined under (g)(2) [(g)] of this section; (2) the tax is equal to the annual production tax value of the taxable oil and gas as calculated under AS 43.55.160(a)(1) multiplied by 25 percent added to the sum, over all months of the calendar year, of the tax amounts determined under (g)(3) of this section, for a producer that (A) produces oil or gas after December 31, 2016, and before January 1, 2018, and produced or whose predecessor produced oil or gas after December 31, 2009, and before January 1, 2011, but produced less than 10 percent more oil or gas during the period after December 31, 2016, and before January 1, 2018, than the producer or the predecessor to the producer produced after December 31, 2009, and before January 1, 2011; or (B) is not included in (A) of this paragraph and produces oil or gas after December 31, 2016, or a producer described in (A) of this paragraph that produces oil or gas after December 31, 2017, but fails to produce two percent more oil or gas than the person or the predecessor to the person produced during the immediately preceding calendar year." Page 3, line 26: Delete "(e)(1)" Insert "(e)(1)(A)" 2011-03-31 House Journal Page 0678 Page 5, line 26: Delete "(e)(2)" Insert "(e)(1)(B)" Page 7, line 25, following "$92.50": Insert "; (3) of (e)(2) of this section is determined by multiplying the monthly production tax value of the taxable oil and gas produced during the month by the tax rate calculated as follows: (A) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number that represents the difference between that average monthly production tax value of a BTU equivalent barrel and $30; or (B) if the producer's average monthly production tax value of a BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number that represents the difference between the average monthly production tax value of a BTU equivalent barrel and $92.50, except that the sum determined under this subparagraph may not exceed 50 percent" Page 7, following line 25: Insert a new bill section to read: "* Sec. 8. AS 43.55.011 is amended by adding a new subsection to read: (p) For purposes of (e) of this section, (1) "sustained production" has the meaning given in AS 43.55.025(l); and (2) production during the applicable periods is measured in BTU equivalent barrels." Renumber the following bill sections accordingly. Page 20, line 6: Delete "Sections 10 - 12, 14, 16, and 28" Insert "Sections 11 - 13, 15, 17, and 29" 2011-03-31 House Journal Page 0679 Page 20, line 8: Delete "Sections 6 - 8" Insert "AS 43.55.011(e)(1), as enacted by sec. 6 of this Act, and secs. 7 - 9" Page 20, following line 8: Insert a new subsection to read: "(c) AS 43.55.011(e)(2), enacted by sec. 6 of this Act, applies to oil and gas produced after December 31, 2016." Reletter the following subsection accordingly. Page 20, line 9: Delete "Sections 15 and 17" Insert "Sections 16 and 18" Page 20, line 19: Delete "Sections 10 - 12, 14, 16, 22, 23, and 28" Insert "Sections 11 - 13, 15, 17, 23, 24, and 29" Page 20, line 21: Delete "Section 24" Insert "Section 25" Page 20, line 22: Delete "Sections 6 - 8 and 29(b)" Insert "Sections 6 - 9, 30(b), and 30(c)" Page 20, line 23: Delete "Sections 15, 17, and 29(c)" Insert "Sections 16, 18, and 30(d)" Page 20, line 24: Delete "Sections 10 - 12, 14, 16, 22, 23, 28, 29(a), and 31" Insert "Sections 11 - 13, 15, 17, 23, 24, 29, 30(a), and 32" Page 20, line 26: Delete "secs. 32 - 35" Insert "secs. 33 - 36" 2011-03-31 House Journal Page 0680 Representative Miller moved and asked unanimous consent that Amendment No. 2 be adopted. Representative Fairclough objected. The question being: "Shall Amendment No. 2 be adopted?" The roll was taken with the following result: CSHB 110(FIN) Second Reading Amendment No. 2 YEAS: 13 NAYS: 24 EXCUSED: 2 ABSENT: 1 Yeas: Doogan, Gara, Gardner, Gruenberg, Guttenberg, Holmes, Kawasaki, Kerttula, Miller, Munoz, Petersen, Seaton, Tuck Nays: Austerman, Chenault, Costello, Dick, Edgmon, Fairclough, Feige, Foster, Gatto, Hawker, Herron, Johansen, Johnson, Joule, Lynn, Millett, Olson, Pruitt, Saddler, Stoltze, Thomas, Thompson, P.Wilson, T.Wilson Excused: Cissna, Neuman Absent: Keller And so, Amendment No. 2 was not adopted. Amendment No. 3 was offered by Representative Gardner: Page 18, following line 16: Insert new bill sections to read: "* Sec. 24. AS 43.55.030(a) is amended to read: (a) A producer that produces oil or gas from a lease or property in the state during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) for that oil or gas, shall file with the department on March 31 of the following year a statement, under oath, in a form prescribed by the department, giving, with other information required by the department under a regulation adopted by the department, the following: (1) a description of each lease or property from which oil or gas was produced, by name, legal description, lease number, or accounting codes assigned by the department; 2011-03-31 House Journal Page 0681 (2) the names of the producer and, if different, the person paying the tax, if any; (3) the gross amount of oil and the gross amount of gas produced from each lease or property, and the percentage of the gross amount of oil and gas owned by the producer; (4) the gross value at the point of production of the oil and of the gas produced from each lease or property owned by the producer and the costs of transportation of the oil and gas; (5) the name of the first purchaser and the price received for the oil and for the gas, unless relieved from this requirement in whole or in part by the department; (6) the producer's qualified capital expenditures, as defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other payments or credits under AS 43.55.170; (7) the production tax values of the oil and gas under AS 43.55.160; (8) any claims for tax credits to be applied; [AND] (9) calculations showing the amounts, if any, that were or are due under AS 43.55.020(a) and interest on any underpayment or overpayment; and (10) for each expenditure that is the basis for a credit claimed under AS 43.55.023 or 43.55.025, a description of the expenditure, a detailed description of the purpose of the expenditure, and a description of the lease or property for which the expenditure was incurred; notwithstanding AS 43.05.230(a), information submitted under this paragraph may be disclosed to the public and shall be disclosed to the legislature in a report submitted within 10 days after the convening of the next regular legislative session following the date a statement is filed under this section. * Sec. 25. AS 43.55.030(e) is amended to read: (e) An explorer or producer that incurs a lease expenditure under AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar year but does not produce oil or gas from a lease or property in the state during the calendar year shall file with the department on March 31 of the following year a statement, under oath, in a form prescribed by the department, giving, with other information required by the department under a regulation adopted by the department, the following: 2011-03-31 House Journal Page 0682 (1) the producer's qualified capital expenditures, as defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other payments or credits under AS 43.55.170; [AND] (2) if the explorer or producer receives a payment or credit under AS 43.55.170, calculations showing whether the explorer or producer is liable for a tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount; and (3) for each expenditure that is the basis for a credit claimed under this chapter, a description of the expenditure, a detailed description of the purpose of the expenditure, and a description of the lease or property for which the expenditure was incurred; notwithstanding AS 43.05.230(a), information submitted under this paragraph may be disclosed to the public and shall be disclosed to the legislature in a report submitted within 10 days after the convening of the next regular legislative session following the date a statement is filed under this section." Renumber the following bill sections accordingly. Page 20, line 6: Delete "Sections 10 - 12, 14, 16, and 28" Insert "Sections 10 - 12, 14, 16, and 30" Page 20, line 19: Delete "Sections 10 - 12, 14, 16, 22, 23, and 28" Insert "Sections 10 - 12, 14, 16, 22, 23, and 30" Page 20, line 21: Delete "Section 24" Insert "Section 26" Page 20, line 22: Delete "Sections 6 - 8 and 29(b)" Insert "Sections 6 - 8 and 31(b)" Page 20, line 23: Delete "Sections 15, 17, and 29(c)" Insert "Sections 15, 17, and 31(c)" 2011-03-31 House Journal Page 0683 Page 20, line 24: Delete "Sections 10 - 12, 14, 16, 22, 23, 28, 29(a), and 31" Insert "Sections 10 - 12, 14, 16, 22, 23, 30, 31(a), and 33" Page 20, line 26: Delete "secs. 32 - 35" Insert "secs. 34 - 37" Representative Gardner moved and asked unanimous consent that Amendment No. 3 be adopted. Representative Hawker objected. The question being: "Shall Amendment No. 3 be adopted?" The roll was taken with the following result: CSHB 110(FIN) Second Reading Amendment No. 3 YEAS: 11 NAYS: 26 EXCUSED: 2 ABSENT: 1 Yeas: Doogan, Gara, Gardner, Gruenberg, Guttenberg, Holmes, Kawasaki, Kerttula, Miller, Petersen, Tuck Nays: Austerman, Chenault, Costello, Dick, Edgmon, Fairclough, Feige, Foster, Gatto, Hawker, Herron, Johansen, Johnson, Joule, Lynn, Millett, Munoz, Olson, Pruitt, Saddler, Seaton, Stoltze, Thomas, Thompson, P.Wilson, T.Wilson Excused: Cissna, Neuman Absent: Keller And so, Amendment No. 3 was not adopted. Amendment No. 4 was offered by Representative Gara: Page 1, lines 1 - 8 (title amendment): Delete all material and insert: ""An Act relating to a tax credit applicable to the oil and gas production tax based on capital expenditures; relating to the 2011-03-31 House Journal Page 0684 alternative tax credit for oil and gas exploration; and providing for an effective date."" Page 1, line 10, through page 20, line 26: Delete all material and insert: "* Section 1. AS 43.55.023(a) is amended to read: (a) A producer or explorer may take a tax credit for a qualified capital expenditure as follows: (1) except as limited by (p) of this section, notwithstanding that a qualified capital expenditure may be a deductible lease expenditure for purposes of calculating the production tax value of oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or explorer that incurs a qualified capital expenditure may also elect to apply a tax credit against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that expenditure; however, not more than half of the tax credit may be applied for a single calendar year; (2) a producer or explorer may take a credit for a qualified capital expenditure incurred in connection with geological or geophysical exploration or in connection with an exploration well only if the producer or explorer (A) agrees, in writing, to the applicable provisions of AS 43.55.025(f)(2); (B) submits to the Department of Natural Resources all data that would be required to be submitted under AS 43.55.025(f)(2). * Sec. 2. AS 43.55.023(d) is amended to read: (d) Except as limited by (i) and (p) of this section, a person that is entitled to take a tax credit under this section that wishes to transfer the unused credit to another person or obtain a cash payment under AS 43.55.028 may apply to the department for transferable tax credit certificates. An application under this subsection must be in a form prescribed by the department and must include supporting information and documentation that the department reasonably requires. The department shall grant or deny an application, or grant an application as to a lesser amount than that claimed and deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the year following the calendar year in which the qualified capital expenditure or carried- 2011-03-31 House Journal Page 0685 forward annual loss for which the credit is claimed was incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified capital expenditure or carried-forward annual loss for which the credit is claimed was incurred; or (3) the date the application was received by the department. If, based on the information then available to it, the department is reasonably satisfied that the applicant is entitled to a credit, the department shall issue the applicant two transferable tax credit certificates, each for half of the amount of the credit. The credit shown on one of the two certificates is available for immediate use. The credit shown on the second of the two certificates may not be applied against a tax for a calendar year earlier than the calendar year following the calendar year in which the certificate is issued, and the certificate must contain a conspicuous statement to that effect. A certificate issued under this subsection does not expire. * Sec. 3. AS 43.55.023 is amended by adding a new subsection to read: (p) The amount of credit for a capital expenditure under (a) of this section for an expenditure that is also a lease expenditure under AS 43.55.165 is reduced by the amount necessary so that the tax benefit percentage is not more than 85 percent of the capital expenditure. The amount of credit for a capital expenditure under (a) of this section that may not be taken because of the limitation in this subsection may not be applied in a later calendar year under (c) of this section and may not be included in an application for a tax credit certificate under (d) of this section. In this subsection, "tax benefit percentage" means the sum of the average monthly tax rate under AS 43.55.011(e) for the calendar year in which the credit is taken and the percentage of the capital expenditure that may be taken as a credit under (a) of this section. * Sec. 4. AS 43.55.025(a) is amended to read: (a) Subject to the terms and conditions of this section and except as limited by (n) of this section, a credit against the production tax levied by AS 43.55.011(e) is allowed for exploration expenditures that qualify under (b) of this section in an amount equal to 50 [ONE OF THE FOLLOWING: (1) 30] percent of the total exploration expenditures except that the amount of the credit is [THAT QUALIFY ONLY UNDER (b) AND (c) OF THIS SECTION; 2011-03-31 House Journal Page 0686 (2) 30 PERCENT OF THE TOTAL EXPLORATION EXPENDITURES THAT QUALIFY ONLY UNDER (b) AND (d) OF THIS SECTION; (3) 40 PERCENT OF THE TOTAL EXPLORATION EXPENDITURES THAT QUALIFY UNDER (b), (c), AND (d) OF THIS SECTION; (4) 40 PERCENT OF THE TOTAL EXPLORATION EXPENDITURES THAT QUALIFY ONLY UNDER (b) AND (e) OF THIS SECTION; OR (5)] 80, 90, or 100 percent, or a lesser amount described in (l) of this section, of the total exploration expenditures described in (b)(1) and (2) of this section and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this section. * Sec. 5. AS 43.55.025(b) is amended to read: (b) To qualify for the production tax credit under (a) of this section, an exploration expenditure must be incurred for work performed after June 30, 2008, and before July 1, 2021 [2016], and (1) may be for seismic or other geophysical exploration costs not connected with a specific well; (2) if for an exploration well, (A) must be incurred by an explorer that holds an interest in the exploration well for which the production tax credit is claimed; (B) may be for either a well that encounters an oil or gas deposit or a dry hole; (C) must be for a well that has been completed, suspended, or abandoned at the time the explorer claims the tax credit under (f) of this section; and (D) must be for goods, services, or rentals of personal property reasonably required for the surface preparation, drilling, casing, cementing, and logging of an exploration well, and, in the case of a dry hole, for the expenses required for abandonment if the well is abandoned within 18 months after the date the well was spudded; (3) may not be for administration, supervision, engineering, or lease operating costs; geological or management costs; community relations or environmental costs; bonuses, taxes, or other payments to governments related to the well; costs, 2011-03-31 House Journal Page 0687 including repairs and replacements, arising from or associated with fraud, wilful misconduct, gross negligence, criminal negligence, or violation of law, including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs that are generally recognized as indirect costs or financing costs; and (4) may not be incurred for an exploration well or seismic exploration that is included in a plan of exploration or a plan of development for any unit before May 14, 2003. * Sec. 6. AS 43.55.025(k) is amended to read: (k) Subject to the terms and conditions of this section, if a claim is filed under (f)(1) of this section before January 1, 2021 [2016], a credit against the production tax levied by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible expenditure under this subsection incurred for seismic exploration performed before July 1, 2003. To be eligible under this subsection, an expenditure must (1) have been for seismic exploration that (A) obtained data that the commissioner of natural resources considers to be in the best interest of the state to acquire for public distribution; and (B) was conducted outside the boundaries of a production unit; however, the amount of the expenditure that is otherwise eligible under this section is reduced proportionately by the portion of the seismic exploration activity that crossed into a production unit; and (2) qualify under (b)(3) of this section. * Sec. 7. AS 43.55.025 is amended by adding a new subsection to read: (n) Except for a credit for an exploration expenditure described in (l) of this section, the amount of credit for an exploration expenditure under (a) of this section for an expenditure that is also a lease expenditure under AS 43.55.165 is reduced by the amount necessary so that the tax benefit percentage is not more than 85 percent of the exploration expenditure. Except for a credit, other than a credit for an exploration expenditure described in (l) of this section, the amount of credit for an exploration expenditure under (a) of this section that may not be taken because of the limitation in this subsection may not be transferred, conveyed, or sold under (g) of this section. In this subsection, "tax benefit percentage" means the sum of the average 2011-03-31 House Journal Page 0688 monthly tax rate under AS 43.55.011(e) for the calendar year in which the credit is taken and the percentage of the exploration expenditure, other than an exploration expenditure described in (l) of this section, that may be taken as a credit under (a) of this section. * Sec. 8. AS 43.55.025(d), 43.55.025(e), and 43.55.025(m) are repealed. * Sec. 9. This Act takes effect January 1, 2012." Representative Gara moved and asked unanimous consent that Amendment No. 4 be adopted. Representative Millett objected.