ALASKA STATE LEGISLATURE  CONFERENCE COMMITTEE ON HB 111  July 15, 2017 9:22 p.m. MEMBERS PRESENT Representative Geran Tarr, Chair Representative Andy Josephson Representative David Talerico Senator Cathy Giessel, Chair Senator Bert Stedman Senator Donald Olson MEMBERS ABSENT  All members present OTHER MEMBERS PRESENT    Representative Gabrielle LeDoux Representative Matt Claman Representative Paul Seaton Representative Neal Foster Representative Dan Ortiz Representative Dean Westlake Representative Lora Reinbold Representative Jennifer Johnston Representative Dan Saddler Senator Dennis Egan Senator Berta Gardner Senator Gary Stevens Senator David Wilson Senator Anna MacKinnon Senator Peter Micciche COMMITTEE CALENDAR  HOUSE BILL NO. 111 "An Act relating to the oil and gas production tax, tax payments, and credits; relating to interest applicable to delinquent oil and gas production tax; and providing for an effective date. - MOVED CCS HB 111 OUT OF COMMITTEE PREVIOUS COMMITTEE ACTION  BILL: HB 111 SHORT TITLE: OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS SPONSOR(s): RESOURCES 02/08/17 (H) READ THE FIRST TIME - REFERRALS 02/08/17 (H) RES, FIN 02/08/17 (H) TALERICO OBJECTED TO INTRODUCTION 02/08/17 (H) INTRODUCTION RULED IN ORDER 02/08/17 (H) SUSTAINED RULING OF CHAIR Y23 N15 E2 02/08/17 (H) RES AT 1:00 PM BARNES 124 02/08/17 (H) Heard & Held 02/08/17 (H) MINUTE(RES) 02/13/17 (H) RES AT 1:00 PM BARNES 124 02/13/17 (H) Heard & Held 02/13/17 (H) MINUTE(RES) 02/17/17 (H) RES AT 1:00 PM BARNES 124 02/17/17 (H) Heard & Held 02/17/17 (H) MINUTE(RES) 02/20/17 (H) RES AT 1:00 PM BARNES 124 02/20/17 (H) Heard & Held 02/20/17 (H) MINUTE(RES) 02/22/17 (H) RES AT 1:00 PM BARNES 124 02/22/17 (H) Heard & Held 02/22/17 (H) MINUTE(RES) 02/22/17 (H) RES AT 6:30 PM BARNES 124 02/22/17 (H) Heard & Held 02/22/17 (H) MINUTE(RES) 02/24/17 (H) RES AT 1:00 PM BARNES 124 02/24/17 (H) Heard & Held 02/24/17 (H) MINUTE(RES) 02/27/17 (H) RES AT 1:00 PM BARNES 124 02/27/17 (H) Heard & Held 02/27/17 (H) MINUTE(RES) 02/27/17 (H) RES AT 7:00 PM CAPITOL 106 02/27/17 (H) Heard & Held 02/27/17 (H) MINUTE(RES) 03/01/17 (H) RES AT 1:00 PM BARNES 124 03/01/17 (H) Heard & Held 03/01/17 (H) MINUTE(RES) 03/01/17 (H) RES AT 6:00 PM BARNES 124 03/01/17 (H) Heard & Held 03/01/17 (H) MINUTE(RES) 03/06/17 (H) RES AT 1:00 PM BARNES 124 03/06/17 (H) Scheduled but Not Heard 03/06/17 (H) RES AT 6:30 PM BARNES 124 03/06/17 (H) Heard & Held 03/06/17 (H) MINUTE(RES) 03/08/17 (H) RES AT 1:00 PM BARNES 124 03/08/17 (H) Heard & Held 03/08/17 (H) MINUTE(RES) 03/08/17 (H) RES AT 6:00 PM BARNES 124 03/08/17 (H) Heard & Held 03/08/17 (H) MINUTE(RES) 03/09/17 (H) RES AT 5:00 PM BARNES 124 03/09/17 (H) -- MEETING CANCELED -- 03/10/17 (H) RES AT 1:00 PM BARNES 124 03/10/17 (H) Heard & Held 03/10/17 (H) MINUTE(RES) 03/11/17 (H) RES AT 12:00 AM BARNES 124 03/11/17 (H) -- MEETING CANCELED -- 03/13/17 (H) RES AT 1:00 PM BARNES 124 03/13/17 (H) 03/14/17 (H) RES AT 3:00 PM BARNES 124 03/14/17 (H) -- Continued from 3/13/17 Meeting at 1:00 PM -- 03/15/17 (H) RES RPT CS(RES) NT 4DP 4DNP 1AM 03/15/17 (H) DP: PARISH, DRUMMOND, JOSEPHSON, TARR 03/15/17 (H) DNP: TALERICO, BIRCH, RAUSCHER, JOHNSON 03/15/17 (H) AM: WESTLAKE 03/20/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/20/17 (H) Heard & Held 03/20/17 (H) MINUTE(FIN) 03/21/17 (H) FIN AT 9:00 AM HOUSE FINANCE 519 03/21/17 (H) Heard & Held 03/21/17 (H) MINUTE(FIN) 03/21/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/21/17 (H) Heard & Held 03/21/17 (H) MINUTE(FIN) 03/22/17 (H) FIN AT 9:00 AM HOUSE FINANCE 519 03/22/17 (H) -- Continued from 3/21/17 at 1:30 PM -- 03/22/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/22/17 (H) Heard & Held 03/22/17 (H) MINUTE(FIN) 03/23/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/23/17 (H) Heard & Held 03/23/17 (H) MINUTE(FIN) 03/24/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/24/17 (H) Heard & Held 03/24/17 (H) MINUTE(FIN) 03/25/17 (H) FIN AT 10:00 AM HOUSE FINANCE 519 03/25/17 (H) Heard & Held 03/25/17 (H) MINUTE(FIN) 03/27/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 03/27/17 (H) Heard & Held 03/27/17 (H) MINUTE(FIN) 04/07/17 (H) FIN AT 1:30 PM HOUSE FINANCE 519 04/07/17 (H) Heard & Held 04/07/17 (H) MINUTE(FIN) 04/08/17 (H) FIN AT 1:00 PM HOUSE FINANCE 519 04/08/17 (H) Moved CSHB 111(FIN) Out of Committee 04/08/17 (H) MINUTE(FIN) 04/09/17 (H) FIN RPT CS(FIN) NT 4DP 4DNP 2NR 1AM 04/09/17 (H) DP: GARA, GUTTENBERG, SEATON, FOSTER 04/09/17 (H) DNP: WILSON, THOMPSON, PRUITT, TILTON 04/09/17 (H) NR: ORTIZ, GRENN 04/09/17 (H) AM: KAWASAKI 04/10/17 (H) MOVED TO BOTTOM OF CALENDAR 04/11/17 (H) TRANSMITTED TO (S) 04/11/17 (H) VERSION: CSHB 111(FIN)(EFD FLD) 04/12/17 (S) READ THE FIRST TIME - REFERRALS 04/12/17 (S) RES, FIN 04/13/17 (S) RES WAIVED PUBLIC HEARING NOTICE,RULE 23 04/13/17 (S) FIN WAIVED PUBLIC HEARING NOTICE,RULE 23 04/14/17 (S) RES AT 3:00 PM BUTROVICH 205 04/14/17 (S) Heard & Held 04/14/17 (S) MINUTE(RES) 04/15/17 (S) RES AT 9:00 AM SENATE FINANCE 532 04/15/17 (S) Heard & Held 04/15/17 (S) MINUTE(RES) 04/15/17 (S) FIN AT 9:01 AM SENATE FINANCE 532 04/15/17 (S) Uniform Rule 23 Waived 04/15/17 (S) FIN AT 2:00 PM SENATE FINANCE 532 04/15/17 (S) Uniform Rule 23 Waived 04/15/17 (S) RES AT 2:00 PM SENATE FINANCE 532 04/15/17 (S) Heard & Held 04/15/17 (S) MINUTE(RES) 04/17/17 (S) RES AT 1:00 PM BUTROVICH 205 04/17/17 (S) Heard & Held 04/17/17 (S) MINUTE(RES) 04/17/17 (S) RES AT 5:00 PM BUTROVICH 205 04/17/17 (S) Heard & Held 04/17/17 (S) MINUTE(RES) 04/18/17 (S) RES AT 2:00 PM BUTROVICH 205 04/18/17 (S) Heard & Held 04/18/17 (S) MINUTE(RES) 04/19/17 (S) RES AT 2:00 PM BUTROVICH 205 04/19/17 (S) Heard & Held 04/19/17 (S) MINUTE(RES) 04/20/17 (S) RES AT 2:00 PM BUTROVICH 205 04/20/17 (S) -- MEETING CANCELED -- 04/21/17 (S) RES AT 2:00 PM BUTROVICH 205 04/21/17 (S) -- MEETING CANCELED -- 04/24/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/24/17 (S) -- MEETING CANCELED -- 04/24/17 (S) RES AT 2:00 PM BUTROVICH 205 04/24/17 (S) Moved SCS CSHB 111(RES) Out of Committee 04/24/17 (S) MINUTE(RES) 04/25/17 (S) RES RPT SCS 4DP 2NR NEW TITLE 04/25/17 (S) DP: GIESSEL, COGHILL, VON IMHOF, MEYER 04/25/17 (S) NR: HUGHES, STEDMAN 04/25/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/25/17 (S) 04/25/17 (S) RES AT 3:30 PM BUTROVICH 205 04/25/17 (S) -- MEETING CANCELED -- 04/26/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/26/17 (S) Heard & Held 04/26/17 (S) MINUTE(FIN) 04/26/17 (S) RES AT 2:00 PM BUTROVICH 205 04/26/17 (S) -- MEETING CANCELED -- 04/27/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/27/17 (S) Heard & Held 04/27/17 (S) MINUTE(FIN) 04/27/17 (S) RES AT 3:30 PM BUTROVICH 205 04/27/17 (S) -- MEETING CANCELED -- 04/28/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/28/17 (S) Heard & Held 04/28/17 (S) MINUTE(FIN) 04/28/17 (S) RES AT 2:00 PM BUTROVICH 205 04/28/17 (S) -- MEETING CANCELED -- 04/29/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/29/17 (S) Heard & Held 04/29/17 (S) MINUTE(FIN) 05/01/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/01/17 (S) -- MEETING CANCELED -- 05/02/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/02/17 (S) -- MEETING CANCELED -- 05/03/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/03/17 (S) -- MEETING CANCELED -- 05/04/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/04/17 (S) Heard & Held 05/04/17 (S) MINUTE(FIN) 05/05/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/05/17 (S) Heard & Held 05/05/17 (S) MINUTE(FIN) 05/06/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/06/17 (S) -- MEETING CANCELED -- 05/09/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/09/17 (S) 05/10/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/10/17 (S) 05/11/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/11/17 (S) Heard & Held 05/11/17 (S) MINUTE(FIN) 05/12/17 (S) FIN RPT SCS 4DP 2NR 1AM NEW TITLE 05/12/17 (S) DP: MACKINNON, BISHOP, VON IMHOF, HUGHES 05/12/17 (S) NR: HOFFMAN, MICCICHE 05/12/17 (S) AM: OLSON 05/12/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/12/17 (S) Moved SCS CSHB 111(FIN) Out of Committee 05/12/17 (S) MINUTE(FIN) 05/13/17 (S) FIN SCS ADOPTED Y15 N3 E2 05/13/17 (S) FIN AT 9:00 AM SENATE FINANCE 532 05/13/17 (S) -- MEETING CANCELED -- 05/15/17 (S) VERSION: SCS CSHB 111(FIN) 05/18/17 (S) FIRST SPECIAL SESSION BILL 05/18/17 (H) FIRST SPECIAL SESSION BILL 05/22/17 (H) CONFERENCE COMMITTEE APPOINTED 05/22/17 (H) TARR (CHAIR), JOSEPHSON, TALERICO 06/01/17 (S) CONFERENCE COMMITTEE APPOINTED 06/01/17 (S) GIESSEL (CHAIR), STEDMAN, OLSON 06/09/17 (H) HB111 AT 9:00 AM BARNES 124 06/09/17 (H) Heard & Held 06/09/17 (H) MINUTE(HB111) 06/23/17 (S) SECOND SPECIAL SESSION BILL 06/23/17 (H) SECOND SPECIAL SESSION BILL 07/12/17 (H) HB111 AT 3:00 PM Anch LIO Conf Rm 07/12/17 (H) Heard & Held 07/12/17 (H) MINUTE(HB111) 07/15/17 (H) HB111 AT 1:00 PM BARNES 124 WITNESS REGISTER No witnesses to record. ACTION NARRATIVE 9:22:45 PM CHAIR GERAN TARR called the meeting to order at 9:22 p.m. Representatives Tarr, Josephson, and Talerico and Senators Olson, Stedman and Giessel were present at the call to order. Also in attendance were Representatives LeDoux, Claman, Seaton, Foster, Ortiz, Westlake, Reinbold, Johnston, and Saddler and Senators Egan, Gardner, Stevens, Wilson, MacKinnon, and Micciche. HB 111-OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS  9:22:58 PM CHAIR TARR announced that the only order of business would be HOUSE BILL NO. 111, ""An Act relating to the oil and gas production tax, tax payments, and credits; relating to interest applicable to delinquent oil and gas production tax; and providing for an effective date." [Before the committee were the CSHB 111(FIN) and SCS CSHB 111(FIN).] 9:23:00 PM CHAIR TARR advised that the Alaska House of Representatives and the Senate had approved SCR 202, allowing the committee to take official action on HB 111. She briefly explained the points of agreement and major features of the bill to include as follows: the end of cash credits statewide, effective July 1, 2017; establish a carry forward annual loss program allowing 100 percent of the carry forward lease expenditures to be deducted in the calculation of future production taxes once the property comes into production; ring fencing that ensures carry forward lease expenditures may only be deducted in the calculation of future taxes after the project that incurred those expenses also comes into regular production; a down lift starting after the tenth year a lease expenditure had been carried forward on a non-producing property, or seventh year for a property in production, will be reduced in value by 10 percent based on the value of the preceding year; establish a working group to address oil and gas tax issues with new consultants; allow application of unpaid credits toward corporate income taxes and production tax audits with certain limitations, such as the CVR language; interest rates at 5.25 percent above the federal reserve rate; and technical amendments, suggested by the Department of Revenue, related to retroactive regulation making to accommodate the July 1, 2017 effective date for the end of the cash credits, as well as the CVR language to clarify limitations. 9:25:08 PM CHAIR TARR explained that the proposed conference committee bill makes changes to the versions passed in the House of Representatives and the Senate and therefore requires limited powers of free conference, detailed in a memorandum the committee will sign. She explained that Sec. 38 is entirely new and provides transition language to allow for the retroactive regulation making to accommodate the July 1, 2017 effective date for the elimination of cash credits and therefore requires free conference powers. Chair Tarr entertained a motion to request the necessary limited and free conference powers. 9:25:40 PM CHAIR GIESSEL made a motion that the committee pass limited powers of free conference for HB 111, and that Uniform Rules 42(a) and 42(b) be suspended relating to tax credits eligible for purchase by the state during calendar year 2017. There being no objection, the motion passed. 9:26:19 PM The committee took an at-ease from 9:26 p.m. to 9:28 p.m. 9:28:01 PM CHAIR GIESSEL made a motion that pursuant to receiving the powers and suspension of the Uniform Rules as requested, the Conference Committee on HB 111 recommends that the House of Representatives and the Senate adopt CCSHB 111, Version 30- LS0450\OO, Shutts/Nauman, 7/15/17, and its forthcoming fiscal notes, with individual recommendations. CHAIR TARR advised that the motion before the committee is to send the report to its respective bodies recommending the approval of Conference CSHB 111, Version 30-LS0450\OO. 9:29:10 PM A roll call vote was taken. Representatives Tarr, Josephson, and Talerico and Senators Giessel, Stedman, and Olson voted in favor of passing Conference CSHB 111, Version 30-LS0450\OO, with its forthcoming fiscal notes, to the committee's respective bodies. There being no objection, Conference CSHB 111 passed out of the Conference Committee on CCS HB 111. 9:30:02 PM ADJOURNMENT  There being no further business before the committee, the Conference Committee on HB 111 meeting was adjourned at 9:30 p.m.