00 SENATE CS FOR CS FOR HOUSE BILL NO. 246(RES) am S 01 "An Act relating to certain audits regarding oil and gas royalty and net profits, to audits 02 regarding costs relating to exploration incentive credits and oil and gas exploration 03 licenses, and to the limitation on upland acreage that a person may take or hold under 04 oil and gas leases; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 38.05.036(a) is amended to read: 07 (a) The department may conduct audits regarding [DEPARTMENT OF 08 REVENUE SHALL AUDIT REPORTS, PAYMENTS, AND PAYMENTS DUE 09 RELATING TO] royalty and net profits under oil and gas contracts, agreements, or 10 leases under this chapter and regarding costs related to oil and gas exploration 11 licenses and exploration incentive credits under this chapter or under AS 41.09. 12 For purposes of audit under this section, 13 (1) the department may examine the books, papers, records, or 14 memoranda of a person regarding matters related to the audit; and 01 (2) the records and premises where a business is conducted shall 02 be open at all reasonable times for inspection by the department. 03 * Sec. 2. AS 38.05.036(b) is amended to read: 04 (b) The Department of Revenue may obtain from the department [INSPECT 05 ALL REPORTS AND OTHER] information [FILED IN SUPPORT OF OR] relating 06 to royalty and net profits payments and to exploration incentive credits under this 07 chapter or under AS 41.09, whether or not that information is confidential. The 08 Department of Revenue may use the information in carrying out its functions and 09 responsibilities under AS 43, and shall hold that information confidential to the 10 extent required by an agreement with the department or by AS 38.05.035(a)(9), 11 AS 41.09.010(d), [UNDER OIL AND GAS AGREEMENTS, CONTRACTS, OR 12 LEASES, OR BY THIS CHAPTER] or AS 43.05.230. 13 * Sec. 3. AS 38.05.036(c) is amended to read: 14 (c) The department may obtain from the Department of Revenue all 15 [ALL] information obtained under AS 43 [BY THE DEPARTMENT OF REVENUE] 16 relating to royalty and net profits and to exploration incentive credits. The 17 department may use the information for purposes of carrying out its 18 responsibilities and functions under this chapter and AS 41.09 [PAYMENTS, 19 INCLUDING INFORMATION OBTAINED UNDER AS 43, MAY BE MADE 20 AVAILABLE TO THE DEPARTMENT, IN THE FORM OF SUMMARIES AND, 21 WHEN IN FURTHERANCE OF THE DEPARTMENT'S ROYALTY AND NET 22 PROFITS FUNCTIONS, RELEVANT PORTIONS OF THE AUDITS]. Information 23 made available to the department that was obtained under AS 43 is confidential and 24 subject to the provisions of AS 43.05.230. 25 * Sec. 4. AS 38.05.036 is amended by adding new subsections to read: 26 (f) Except as otherwise provided in this section or in connection with official 27 investigations or proceedings of the department, it is unlawful for a current or former 28 officer, employee, or agent of the state to divulge information obtained by the 29 department as a result of an audit under this section that is required by an agreement 30 with the department or by AS 38.05.035(a)(9) or AS 41.09.010(d) to be kept 31 confidential. 01 (g) Nothing in this section prohibits the publication of statistics in a manner 02 that maintains the confidentiality of information to the extent required by an 03 agreement with the department or by AS 38.05.035(a)(9) or AS 41.09.010(d). 04 (h) A person who knowingly violates (f) of this section commits the crime of 05 misuse of confidential information under AS 11.56.860. In this subsection, 06 "knowingly" has the meaning given in AS 11.81.900. 07 (i) In the course of carrying out its responsibilities under this section, the 08 department may subpoena any person to appear and produce books, records, papers, or 09 memoranda bearing upon matters relating to an audit under this section and to give 10 testimony or answer interrogatories under oath regarding those matters. The 11 department may administer oaths to persons who are so subpoenaed. A subpoena 12 issued under this section may compel attendance of a witness or production of a 13 document or thing, located inside or outside the state, to the maximum extent 14 permitted by law. The authority to issue a subpoena under this section may not be 15 delegated by the commissioner. 16 (j) A subpoena may be served by the commissioner of public safety or a peace 17 officer designated by the commissioner of public safety, by a person designated by the 18 department, or as otherwise provided by law. A subpoena may also be served by 19 registered or certified mail for delivery restricted only to the person subpoenaed. The 20 return delivery receipt must be addressed so that the receipt is returned to the 21 department. 22 (k) If a person who is subpoenaed neglects or refuses to obey the subpoena 23 issued as provided in this section, the department may report the fact to the superior 24 court or the appropriate court of another jurisdiction, and may seek an order from the 25 court compelling obedience to the subpoena. The court, to the maximum extent 26 permitted by law, may compel obedience to the subpoena to the same extent as 27 witnesses may be compelled to obey the subpoenas of the court. 28 (l) The department may conduct audits under this section concurrently with 29 Department of Revenue audits or investigations under AS 43. 30 * Sec. 5. AS 38.05.140(c) is amended to read: 31 (c) A person may not take or hold at one time phosphate leases on state land 01 exceeding in the aggregate 10,240 acres. A person may not take or hold sodium leases 02 or permits during the life of sodium leases on state land exceeding in the aggregate 03 acreage 5,120 acres, except that the commissioner may, where it is necessary in order 04 to secure the economic mining of sodium compounds, permit a person to take or hold 05 sodium leases or permits for up to 15,360 acres. A person may not take or hold at any 06 one time oil or gas leases exceeding in the aggregate 500,000 acres granted on tide and 07 submerged land, including leases held both as lessee and under option or 08 operating agreement from others. A person may not take or hold at any one time 09 oil or gas leases exceeding in the aggregate 750,000 [AND 500,000] acres on all 10 land other than tide and submerged land, of which not more than 500,000 acres may 11 be located north of the Umiat baseline, including leases held both as lessee and 12 under option or operating agreement from others. Where more than a single person 13 holds an interest in an oil or gas lease, each person shall be charged only with that 14 percentage of the total acreage that [WHICH] corresponds to its percentage share of 15 the total beneficial interest in the lease. 16 * Sec. 6. AS 43.05.040(a) is amended to read: 17 (a) The department may examine the books, papers, records, or memoranda of 18 any person to ascertain the correctness of a return filed or to determine whether a tax 19 [OR A PAYMENT FOR OIL OR GAS ROYALTY OR NET PROFITS SHARES 20 UNDER A CONTRACT, AGREEMENT, OR LEASE UNDER AS 38.05] is due, or 21 in an investigation or inspection in connection with tax matters [OR MATTERS 22 RELATING TO OIL AND GAS ROYALTY OR NET PROFITS UNDER 23 CONTRACTS, AGREEMENTS, OR LEASES UNDER AS 38.05]. The records and 24 the premises where a business is conducted shall be open at all reasonable times for 25 official inspection, and the department may subpoena any person to appear and 26 produce books, records, papers, or memoranda bearing upon tax matters [OR 27 MATTERS RELATING TO OIL AND GAS ROYALTY OR NET PROFITS 28 UNDER CONTRACTS, AGREEMENTS, OR LEASES UNDER AS 38.05], and to 29 give testimony or answer interrogatories under oath respecting tax matters [OR 30 MATTERS RELATED TO OIL AND GAS ROYALTY OR NET PROFITS UNDER 31 CONTRACTS, AGREEMENTS, OR LEASES UNDER AS 38.05], and the 01 department may administer oaths to persons who are so subpoenaed. A subpoena 02 issued under this section may compel attendance of a witness or production of a 03 document or thing, located either inside or outside the state, to the maximum extent 04 permitted by law. 05 * Sec. 7. AS 43.05.230(a) is amended to read: 06 (a) It is unlawful for a current or former officer, employee, or agent of the 07 state to divulge the amount of income or the particulars set out or disclosed in a report 08 or return made under this title, except 09 (1) in connection with official investigations or proceedings of the 10 department, whether judicial or administrative, involving taxes due under this title; 11 (2) in connection with official investigations or proceedings of the 12 child support enforcement agency, whether judicial or administrative, involving child 13 support obligations imposed or imposable under AS 25 or AS 47; 14 (3) as provided in AS 38.05.036 pertaining to audit functions of the 15 Department of Natural Resources; 16 (4) as provided in AS 43.05.400 - 43.05.499; and 17 (5) as otherwise provided in this section. 18 * Sec. 8. AS 38.05.036(d), 38.05.036(e), and AS 43.05.010(15) are repealed. 19 * Sec. 9. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 TRANSITION. (a) Litigation, hearings, investigations, and other proceedings 22 pending under a law amended or repealed by secs. 1 - 4 and 6 - 8 of this Act, or in connection 23 with functions transferred by secs. 1 - 4 and 6 - 8 of this Act, continue in effect and may be 24 continued and completed notwithstanding a transfer or amendment or repeal provided for in 25 secs. 1 - 4 and 6 - 8 of this Act. 26 (b) Contracts, rights, liabilities, and obligations created by or under a law amended or 27 repealed by secs. 1 - 4 and 6 - 8 of this Act and in effect on June 30, 2003, remain in effect 28 notwithstanding this Act's taking effect. Records and appropriations of agencies of the state 29 whose functions are transferred under secs. 1 - 4 and 6 - 8 of this Act shall be transferred to 30 implement those provisions of this Act. 31 * Sec. 10. Section 5 of this Act takes effect immediately under AS 01.10.070(c). 01 * Sec. 11. Except as provided in sec. 10 of this Act, this Act takes effect July 1, 2003.