00 HOUSE BILL NO. 238 01 "An Act amending the program of exploration incentive credits for activities 02 involving locatable or leasable minerals or coal deposits on certain land in the 03 state; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 27.30.010(a) is amended to read: 06  (a) The commissioner shall grant to a person described in (d) of this section 07 an exploration incentive credit for the eligible costs of each of the following 08 exploration activities that are performed on or for the benefit of land in the state for 09 the purpose of determining the existence, location, extent, or quality of a locatable or 10 leasable mineral or coal deposit, regardless of whether the land is state-owned land: 11  (1) surveying by geophysical or geochemical methods; 12  (2) drilling exploration holes; 13  (3) conducting underground exploration; 14  (4) surface trenching and bulk sampling; [OR] 01  (5)  geological mapping; or 02  (6) performing other exploratory work, including aerial photographs, 03 geological and geophysical logging, sample analysis, and metallurgical testing. 04 * Sec. 2. AS 27.30.010 is amended by adding a new subsection to read: 05  (e) For the eligible costs incurred in conducting geological mapping or 06 geophysical and geochemical surveying when a mining operation is not initiated based 07 on that mapping or surveying activity, an exploration incentive credit may not be 08 certified for the eligible costs of an exploration activity set out in (a)(1) or (5) of this 09 section 10  (1) unless 11  (A) before making the submission of the exploration activity 12 data to the commissioner under AS 27.30.020(2), the person requesting the 13 taking of the credit has made available to the public the surveying information 14 recovered under (a)(1) of this section and the results of the geological mapping 15 obtained under (a)(5) of this section, as applicable; or 16  (B) at the time of making the submission of the exploration 17 activity data to the commissioner under AS 27.30.020(2), the person requesting 18 the taking of the credit authorizes disclosure to the public of the surveying 19 information recovered under (a)(1) of this section and the results of the 20 geological mapping obtained under (a)(5) of this section, as applicable; 21  (2) if, based on material submitted to the commissioner under 22 AS 27.30.020(2), the commissioner determines that the state will not accept the 23 exploration activity data obtained from the mapping or surveying because that data 24 does not conform to appropriate general or technical standards applicable to mapping 25 or surveying of state land. 26 * Sec. 3. AS 27.30.030(a) is amended to read: 27  (a) In a tax year or royalty payment period, subject to (c) of this section and 28 the respective limitations of this subsection, the person may apply the credit, the taking 29 of which was approved under AS 27.30.020(2), against 30  (1) taxes payable by the person 31  (A) under AS 43.65; application of the credit under this 01 subparagraph may not exceed the lesser of 02  (i) 50 percent of the person's tax liability under 03 AS 43.65 for the tax year that is related to production from the mining 04 operation at which the exploration activities occurred, as shown under 05 (b) of this section; or 06  (ii) 50 percent of the person's total tax liability under 07 AS 43.65 for the tax year; 08  (B) under AS 43.20; when the claim of the credit based on 09 eligible costs does not contain costs of exploration activity data that 10 includes surveying information recovered under AS 27.30.010(a)(1) and the 11 results of geological mapping obtained under AS 27.30.010(a)(5), or when 12 the claim of the credit based on eligible costs contains costs of exploration 13 activity data that includes surveying information recovered under 14 AS 27.30.010(a)(1) or the results of geological mapping obtained under 15 AS 29.30.010(a)(5) and the surveying information and results of geological 16 mapping cannot be certified by the commissioner as eligible costs under 17 AS 27.30.010(e), application of the credit under this subparagraph may not 18 exceed the lesser of 19  (i) an amount equal to the amount determined under 20 (A)(i) of this paragraph; or 21  (ii) 50 percent of the person's total tax liability under 22 AS 43.20 for the tax year; [AND] 23   (C) under AS 43.20; when the claim of the credit based on 24 eligible costs contains costs of exploration activity data that includes either 25 surveying information recovered under AS 27.30.010(a)(1) or the results 26 of geological mapping obtained under AS 27.30.010(a)(5) and the surveying 27 information and results of geological mapping are certified as eligible costs 28 by the commissioner under AS 27.30.010(e), application of the credit under 29 this subparagraph may not exceed the greater of 30  (i) an amount equal to the amount determined under 31 (A)(i) of this paragraph; or 01  (ii) 50 percent of the person's total tax liability under 02 AS 43.20 for the tax year; and 03  (2) mineral production royalty payments payable by the person under 04 AS 38.05.135 - 38.05.175 and 38.05.212 for production from the mining operation at 05 which the exploration activities occurred; application of the credit under this paragraph 06 may not exceed 50 percent of the person's mineral production royalty payment liability 07 from the mining operation at which the exploration activities occurred. 08 * Sec. 4. AS 27.30.030(b) is amended to read: 09  (b) If the person applies the credit against the person's tax liability under 10 (a)(1)(A)(i), [OR] (a)(1)(B)(i), or (a)(1)(C)(i) of this section, the commissioner of 11 revenue shall disallow application of the credit under that provision unless the person 12 files with the person's tax return an accounting of the person's mining operation 13 activities for each mining operation that is included in the tax return and as to which 14 the credit is being applied. The accounting of mining operation activities required by 15 this subsection shall be made 16  (1) on a form prescribed by the Department of Revenue; on the form, 17 the person shall 18  (A) identify the mining operations for which the credit is 19 claimed; and 20  (B) set out the gross income attributable to the mining 21 operations and other information about the mining operations that the 22 Department of Revenue may require; 23  (2) without regard to an exemption to which the person may be entitled 24 under AS 43.65.010(a). 25 * Sec. 5. AS 27.30.090(a) is amended to read: 26  (a)  Except as to information the disclosure of which has been authorized 27 by AS 27.30.010(e)(2), the [THE] commissioner shall keep the exploration activity 28 data provided under AS 27.30.020 confidential for 36 months after receipt by the 29 department. 30 * Sec. 6. AS 27.30.099(2) is amended to read: 31  (2) "eligible costs" means all expenses incurred by a person 01 described in AS 27.30.010(d) in conducting geological mapping or geophysical and 02 geochemical surveying without regard to whether a mining operation is initiated 03 based on the mapping or surveying activities and, in addition, [MEAN] the costs 04 incurred for activities in direct support of exploration activity conducted at the mining 05 operation of the exploration activity for the purpose of determining the existence, 06 location, extent, or quality of a mineral or coal deposit; when used with reference to 07 activities in direct support of exploration activity conducted at the mining 08 operation, the term 09  (A) includes 10  (i) the costs of obtaining the approvals, permits, licenses, 11 and certificates for an exploration activity set out in AS 27.30.010(a) 12 [AS 27.30.010(a)(1) - (5)]; 13  (ii) direct labor costs and the cost of benefits for 14 employees directly associated with work described in  AS 27.30.010(a) 15 [AS 27.30.010(a)(1) - (5)]; 16  (iii) the cost of renting or leasing equipment from parties 17 not affiliated with the person requesting and taking the credit; 18  (iv) the reasonable costs of owning, maintaining, and 19 operating equipment; 20  (v) insurance and bond premiums associated with the 21 activities set out in (i) - (iv) of this subparagraph; 22  (vi) payments to consultants and independent 23 contractors; and 24  (vii) the general expense of operating the person's 25 business, including the costs of materials and supplies, if those expenses 26 and costs are directly attributable to the work described in 27 AS 27.30.010(a) [AS 27.30.010(a)(1) - (5)]; 28  (B) does not include return on investment, insurance or bond 29 premiums not covered under (A)(v) of this paragraph, or any other expense that 30 the person has not incurred to complete work described in AS 27.30.010(a) 31 [AS 27.30.010(a)(1) - (5)]; 01 * Sec. 7. AS 27.30.099(3) is amended to read: 02  (3) "exploration activity data" includes, as applicable, 03  (A) a representative skeleton core for each hole cored or a 04 representative set of cuttings for each hole rotary drilled; 05  (B) chemical analytical data, [AND] noninterpretive geophysical 06 data, and geological mapping; 07  (C) aerial photographs or a topographic or geologic map 08 showing the location of the drill holes, sample locations, or the other 09 exploration activities undertaken; 10 * Sec. 8. This Act is retroactive to January 1, 1997, and applies to activities that qualify 11 for the exploration incentive credit authorized by AS 27.30 that are undertaken after 12 December 31, 1996. 13 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).