00 CS FOR HOUSE BILL NO. 3001(FIN) 01 "An Act relating to the production tax on oil and gas and to conservation surcharges on 02 oil; relating to criminal penalties for violating conditions governing access to and use of 03 confidential information relating to the production tax; amending the definition of 'gas' 04 as that definition applies in the Alaska Stranded Gas Development Act; making 05 conforming amendments; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 LEGISLATIVE INTENT. (a) It is the intent of the legislature through sec. 11 of this 10 Act to confirm by clarification the long-standing interpretation of AS 43.55.020(f) by the 11 Department of Revenue. 12 (b) It is the intent of the legislature that the division or other unit of the Department of 13 Environmental Conservation assigned responsibility for administration of the programs under 01 AS 46.08 that are principally supported by the conservation surcharges on oil levied under 02 AS 43.55.201 - 43.55.299 and 43.55.300 - 43.55.310 03 (1) reduce program costs, including personnel costs, as necessary to operate 04 within the revenue anticipated to be generated by those surcharges, in the amounts of those 05 surcharges as amended by secs. 26 and 28 of this Act; and 06 (2) request appropriations for exceptional program needs and expansions 07 beyond what can be provided from the estimated amounts collected from those surcharges 08 from alternative funding sources. 09  * Sec. 2. AS 43.05.230(f) is amended to read: 10 (f) A wilful violation of the provisions of this section or of a condition  11 imposed under AS 43.55.040(1)(B) is punishable by a fine of not more than $5,000, 12 or by imprisonment for not more than two years, or by both. 13  * Sec. 3. AS 43.20.031(c) is amended to read: 14 (c) In computing the tax under this chapter, the taxpayer is not entitled to 15 deduct any taxes based on or measured by net income. The taxpayer may deduct the  16 tax levied and paid under AS 43.55. 17  * Sec. 4. AS 43.20.072(b) is amended to read: 18 (b) A taxpayer's business income to be apportioned under this section to the 19 state shall be the federal taxable income of the taxpayer's consolidated business for the 20 tax period, except that 21 (1) taxes based on or measured by net income that are deducted in the 22 determination of the federal taxable income shall be added back; the tax levied and  23 paid under AS 43.55 may not be added back; 24 (2) intangible drilling and development costs that are deducted as 25 expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the 26 federal taxable income shall be capitalized and depreciated as if the option to treat 27 them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been 28 exercised; 29 (3) depletion deducted on the percentage depletion basis under 26 30 U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income 31 shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612 01 (Internal Revenue Code); and 02 (4) depreciation shall be computed on the basis of 26 U.S.C. 167 03 (Internal Revenue Code) as that section read on June 30, 1981. 04  * Sec. 5. AS 43.55.011 is amended by adding new subsections to read: 05 (e) There is levied on the producer of oil or gas a tax for all oil and gas 06 produced each calendar year from each lease or property in the state, less any oil and 07 gas the ownership or right to which is exempt from taxation or constitutes a 08 landowner's royalty interest. Except as otherwise provided under (j) and (k) of this 09 section, the tax is equal to the annual production tax value of the taxable oil and gas as 10 calculated under AS 43.55.160 multiplied by the tax rate determined under (f) of this 11 section. 12 (f) For the purposes of (e) of this section, 13 (1) except as provided under (3) of this subsection, for a producer 14 whose investment factor is 15 (A) equal to or less than $1 per BTU equivalent barrel the tax 16 rate for a calendar year under (e) of this section is 25 percent; 17 (B) equal to or greater than $6 per BTU equivalent barrel the 18 tax rate for a calendar year under (e) of this section is 20 percent; 19 (C) more than $1 and less than $6 per BTU equivalent barrel 20 the tax rate for a calendar year under (e) of this section is the rate determined 21 by the following formula, with the result rounded to the nearest 1/100 of a 22 percent: 23 .25 - .01(IF - 1) 24 where IF = the number that is equal to the producer's investment factor; 25 (2) a producer's investment factor for a calendar year is the quotient 26 obtained by dividing the producer's total qualified capital expenditures incurred during 27 the calendar year by the total amount of taxable and nontaxable oil and gas, in BTU 28 equivalent barrels, produced by the producer from leases or properties in the state 29 during the calendar year; 30 (3) a producer's tax rate for a calendar year 31 (A) in which the producer's qualified capital expenditures are 01 greater than or equal to the total production tax value calculated under 02 AS 43.55.160(a)(1) of taxable oil and gas produced by the producer from 03 leases or properties in the state during the calendar year is the higher of the rate 04 determined in (1) of this subsection or 20 percent, except that the rate may not 05 be greater than 25 percent; 06 (B) in which the producer's qualified capital expenditures are 07 less than the total production tax value calculated under AS 43.55.160(a)(1) of 08 taxable oil and gas produced by the producer from leases or properties in the 09 state during the calendar year is the higher of the rate determined in (1) of this 10 subsection or the rate represented by "R" in the following formula, except that 11 the rate may not be greater than 25 percent or less than 20 percent: 12 [{(R x QC) + (.2 x QC) + [(.25 - R) x PT]} x (1 - IR)] + (QC x IR) = .75 x QC 13 where: 14 QC = the producer's qualified capital expenditures incurred 15 during the calendar year; 16 PT = the total annual production tax value calculated under 17 AS 43.55.160(a)(1) of taxable oil and gas produced by 18 the producer from leases or properties in the state during 19 the calendar year; and 20 IR = the highest percentage tax rate imposed on the taxable 21 income of a corporation by 26 U.S.C. 11 (Internal 22 Revenue Code), as amended, without regard to any 23 additional amount of tax provided under that section in 24 the form of the lesser of a dollar amount or a percentage 25 of income in excess of a stated minimum. 26 (g) In addition to the tax levied under (e) of this section, for each calendar year 27 that includes one or more months for which the price index determined under (h) of 28 this section is greater than zero, there is levied on the producer of oil or gas a tax for 29 all oil and gas produced that calendar year from each lease or property in the state, less 30 any oil and gas the ownership or right to which is exempt from taxation or constitutes 31 a landowner's royalty interest. Except as otherwise provided under (j) and (k) of this 01 section, the tax levied under this subsection is equal to the sum, over all months in the 02 calendar year, of the amounts calculated for each month as follows: .25 percent of the 03 monthly production tax value of the taxable oil and gas as calculated under 04 AS 43.55.160, multiplied by the price index determined under (h) of this section. 05 However, the amount calculated under this subsection for any month may not exceed 06 25 percent of the monthly production tax value of the taxable oil and gas as calculated 07 under AS 43.55.160. 08 (h) For purposes of (g) of this section, the price index for a month is calculated 09 by subtracting 40 from the number that is equal to the quotient of the total monthly 10 production tax value of the taxable oil and gas produced by the producer during that 11 month, as calculated under AS 43.55.160, divided by the total amount of the taxable 12 oil and gas produced by the producer during that month, in BTU equivalent barrels. 13 However, a price index may not be less than zero. 14 (i) There is levied on the producer of oil or gas a tax for all oil and gas 15 produced each calendar year from each lease or property in the state the ownership or 16 right to which constitutes a landowner's royalty interest, except for oil and gas the 17 ownership or right to which is exempt from taxation. The provisions of this subsection 18 apply to a landowner's royalty interest as follows: 19 (1) the tax levied for oil is equal to five percent of the gross value at 20 the point of production of the oil; 21 (2) the tax levied for gas is equal to 1.667 percent of the gross value at 22 the point of production of the gas; 23 (3) if the department determines that, for purposes of reducing the 24 producer's tax liability under (1) or (2) of this subsection, the producer has received or 25 will receive consideration from the royalty owner offsetting all or a part of the 26 producer's royalty obligation, other than a deduction under AS 43.55.020(d) of the 27 amount of a tax paid, then, notwithstanding (1) and (2) of this subsection, the tax is 28 equal to 25 percent of the gross value at the point of production of the oil and gas. 29 (j) For a calendar year before 2022, the total tax levied by (e) and (g) of this 30 section on gas produced from a lease or property in the Cook Inlet sedimentary basin 31 may not exceed 01 (1) for a lease or property that first commenced commercial production 02 of gas before April 1, 2006, the product obtained by multiplying (A) the amount of 03 taxable gas produced during the calendar year from the lease or property, times (B) the 04 average rate of tax that was imposed under this chapter on taxable gas produced from 05 the lease or property for the 12-month period ending on March 31, 2006, times (C) the 06 quotient obtained by dividing the total gross value at the point of production of the 07 taxable gas produced from the lease or property during the 12-month period ending on 08 March 31, 2006, by the total amount of that gas; 09 (2) for a lease or property that first commences commercial production 10 of gas after March 31, 2006, the product obtained by multiplying (A) the amount of 11 taxable gas produced during the calendar year from the lease or property, times (B) the 12 average rate of tax that was imposed under this chapter on taxable gas produced from 13 all leases or properties in the Cook Inlet sedimentary basin for the 12-month period 14 ending on March 31, 2006, times (C) the average prevailing value for gas delivered in 15 the Cook Inlet area for the 12-month period ending March 31, 2006, as determined by 16 the department under AS 43.55.020(f). 17 (k) For a calendar year before 2022, the total tax levied by (e) and (g) of this 18 section on oil produced from a lease or property in the Cook Inlet sedimentary basin 19 may not exceed 20 (1) for a lease or property that first commenced commercial production 21 of oil before April 1, 2006, the product obtained by multiplying (A) the amount of 22 taxable oil produced during the calendar year from the lease or property, times (B) the 23 average rate of tax that was imposed under this chapter on taxable oil produced from 24 the lease or property for the 12-month period ending on March 31, 2006, times (C) the 25 quotient obtained by dividing the total gross value at the point of production of the 26 taxable oil produced from the lease or property during the 12-month period ending on 27 March 31, 2006, by the total amount of that oil; 28 (2) for a lease or property that first commences commercial production 29 of oil after March 31, 2006, the product obtained by multiplying (A) the amount of 30 taxable oil produced during the calendar year from the lease or property, times (B) the 31 average rate of tax that was imposed under this chapter on taxable oil produced from 01 all leases or properties in the Cook Inlet sedimentary basin for the 12-month period 02 ending on March 31, 2006, times (C) the average prevailing value for oil produced and 03 delivered in the Cook Inlet area for the 12-month period ending on March 31, 2006, as 04 determined by the department under AS 43.55.020(f). 05 (l) When a limitation under (j) or (k) of this section on the tax levied by (e) 06 and (g) of this section has the effect of reducing the producer's tax on oil or gas 07 produced from a lease or property below the amount of tax that would be levied in the 08 absence of that limitation, the amount of the reduction is applied first against the tax 09 levied by (g) of this section. However, that tax may not be reduced below zero. 10 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 11 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 12 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 13 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 14 basin and that are available to be applied against a tax levied by (e) of this section on 15 gas produced from leases or properties in the Cook Inlet sedimentary basin during a 16 calendar year may be applied only against the tax levied by (e) of this section on that 17 gas. The amount by which the amount of tax credits that are allocated to gas produced 18 from leases or properties in the Cook Inlet sedimentary basin and that the producer 19 would otherwise be allowed to use for a later calendar year or transfer to another 20 person exceeds the amount of tax credits whose application would reduce the tax 21 levied by (e) of this section on that gas to zero, if any, is considered the amount of 22 excess tax credits, and the excess tax credits are subject to the following: 23 (1) for each lease or property for which a limitation under (j) or (k) of 24 this section on the tax levied by (e) and (g) of this section has the effect of reducing 25 the producer's tax below the amount of tax that would be levied in the absence of that 26 limitation, the producer shall calculate the amount of that reduction; 27 (2) the producer shall calculate the total of the reductions calculated 28 under (1) of this subsection for all affected leases or properties; 29 (3) the producer shall reduce the amount of excess tax credits by the 30 total calculated under (2) of this subsection, but not to less than zero; 31 (4) any amount of excess tax credits remaining after reduction under 01 (3) of this subsection may be used for a later calendar year, transferred to another 02 person, or applied against a tax levied on oil or gas produced from a lease or property 03 located anywhere in the state to the extent otherwise allowed under applicable law 04 governing the tax credits. 05 (n) Allocation of credits under (m) of this section shall be made under 06 regulations adopted by the department that provide for reasonable methods of 07 allocating tax credits to gas produced from leases or properties in the Cook Inlet 08 sedimentary basin. The method of allocating tax credits available under AS 43.55.024 09 shall be based on the number of BTU equivalent barrels produced from a lease or 10 property. 11 (o) The department shall by regulation establish sampling, testing, and 12 averaging methods for determining the heating value of a producer's gas. In the 13 absence of sufficient sampling and testing of gas produced during 2006, the 14 department may provide for the heating value of the gas to be estimated based on 15 sampling and testing of later-produced gas or on other information. 16 (p) For purposes of this section, "qualified capital expenditure" has the 17 meaning given in AS 43.55.023(k). 18  * Sec. 6. AS 43.55.017(a) is amended to read: 19 (a) Except as provided in this chapter, the taxes imposed by this chapter are in 20 place of all taxes now imposed by the state or any of its municipalities, and neither the 21 state nor a municipality may impose a tax on [UPON] 22 (1) producing oil or gas leases; 23 (2) oil or gas produced or extracted in the state; 24 (3) the value of intangible drilling and development costs, as  25 described in 26 U.S.C. 263(c) (Internal Revenue Code), as amended through  26 January 1, 1974 [EXPLORATION EXPENSES]. 27 * Sec. 7. AS 43.55.020(a) is repealed and reenacted to read: 28 (a) The tax levied on a producer for a calendar year by AS 43.55.011(e), (g), 29 and (i) must be paid as follows: 30 (1) an installment payment of the estimated tax levied by 31 AS 43.55.011(e) and (g), net of any tax credits applied as allowed by law, is due for 01 each month of the calendar year on the last day of the following month; the amount of 02 the installment payment is the sum of the amounts calculated under (2) and (3) of this 03 subsection, but not less than zero; 04 (2) the first of the two amounts used to calculate the installment 05 payment for a month under (1) of this subsection is equal to the remainder obtained by 06 subtracting 07 (A) 1/12 of the tax credits that are allowed by law to be applied 08 against the tax levied by AS 43.55.011(e) for the calendar year; from 09 (B) the total of the monthly production values calculated in the 10 manner provided in AS 43.55.160(a)(2) of all oil and gas taxable under 11 AS 43.55.011(e) and produced by the producer from leases or properties in the 12 state during the month, multiplied by 13 (i) for February through December, the tax rate 14 determined under AS 43.55.011(f) for the preceding calendar year or, if 15 the producer did not produce oil or gas during the preceding calendar 16 year, 22.5 percent; 17 (ii) for January, the tax rate determined under 18 AS 43.55.011(f) for the calendar year before the immediately preceding 19 calendar year or, if the producer did not produce oil or gas during the 20 calendar year before the immediately preceding calendar year, 22.5 21 percent; 22 (3) the second of the two amounts used to calculate the installment 23 payment for a month under (1) of this subsection is the amount calculated for the 24 month under AS 43.55.011(g); 25 (4) an installment payment of the estimated tax levied by 26 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 27 on the last day of the following month; the amount of the installment payment is the 28 sum of 29 (A) the applicable percentage rate for oil provided under 30 AS 43.55.011(i), multiplied by the gross value at the point of production of the 31 oil taxable under AS 43.55.011(i) and produced from the lease or property 01 during the month; plus 02 (B) the applicable percentage rate for gas provided under 03 AS 43.55.011(i), multiplied times the gross value at the point of production of 04 the gas taxable under AS 43.55.011(i) and produced from the lease or property 05 during the month; 06 (5) any amount of tax levied by AS 43.55.011(e), (g), and (i), net of 07 any credits applied as allowed by law, that exceeds the total of the amounts due as 08 installment payments of estimated tax is due on March 31 of the year following the 09 calendar year of production. 10 * Sec. 8. AS 43.55.020(b) is amended to read: 11 (b) The production tax on oil and [OR] gas shall be paid to the department 12 by or on behalf of the producer. 13 * Sec. 9. AS 43.55.020(d) is amended to read: 14 (d) In making settlement with the royalty owner for oil and gas that is  15 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 16 taxable royalty oil and [OR] gas, or may deduct taxable royalty oil or gas equivalent 17 in value at the time the tax becomes due to the amount of the tax paid. If the total  18 deductions of installment payments of estimated tax for a calendar year exceed  19 the actual tax for that calendar year, the producer shall, before April 1 of the  20 following year, refund the excess to the royalty owner. Unless otherwise agreed  21 between the producer and the royalty owner, the amount of the tax paid under  22 AS 43.55.011(e) and (g) on taxable royalty oil and gas for a calendar year, other  23 than oil and gas the ownership or right to which constitutes a landowner's  24 royalty interest, is considered to be the gross value at the point of production of  25 the taxable royalty oil and gas produced during the calendar year multiplied by a  26 figure that is a quotient, in which  27 (1) the numerator is the producer's total tax liability under  28 AS 43.55.011(e) and (g) for the calendar year of production; and  29 (2) the denominator is the total gross value at the point of  30 production of the oil and gas taxable under AS 43.55.011(e) and (g) produced by  31 the producer from all leases and properties in the state during the calendar year. 01 * Sec. 10. AS 43.55.020(e) is repealed and reenacted to read: 02 (e) Gas flared, released, or allowed to escape in excess of the amount 03 authorized by the Alaska Oil and Gas Conservation Commission is considered, for the 04 purpose of AS 43.55.011 - 43.55.180, as gas produced from a lease or property. Oil or 05 gas used in the operation of a lease or property in the state in drilling for or producing 06 oil or gas, or for repressuring, except to the extent determined by the Alaska Oil and 07 Gas Conservation Commission to be waste, is not considered, for the purpose of 08 AS 43.55.011 - 43.55.180, as oil or gas produced from a lease or property. 09 * Sec. 11. AS 43.55.020(f) is amended to read: 10 (f) If oil or gas is produced but not sold, or if oil or gas is produced and 11 sold under circumstances where the sale price does not represent the prevailing value 12 for oil or gas of like kind, character, or quality in the field or area from which the 13 product is produced, the department may require the tax to be paid upon the basis of 14 the value of oil or gas of the same kind, quality, and character prevailing for that field  15 or area during the calendar month of production or sale [FOR THAT FIELD OR 16 AREA]. 17 * Sec. 12. AS 43.55.020 is amended by adding new subsections to read: 18 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 19 amount of an installment payment required under (a)(1) - (4) of this section that is not 20 paid when due bears interest (1) at the rate provided for an underpayment under 26 21 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date 22 the installment payment is due until the March 31 described in AS 43.55.030(a), and 23 (2) as provided for a delinquent tax under AS 43.05.225 after that March 31. Interest 24 accrued under (1) of this subsection that remains unpaid after that March 31 is treated 25 as an addition to tax that bears interest under (2) of this subsection. An unpaid amount 26 of tax due under (a)(5) of this section that is not paid when due bears interest as 27 provided for a delinquent tax under AS 43.05.225. 28 (h) Notwithstanding any contrary provision of AS 43.05.280, 29 (1) an overpayment of an installment payment required under (a)(1) - 30 (4) of this section bears interest at the rate provided for an overpayment under 26 31 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the later 01 of the date the installment payment is due or the date the overpayment is made, until 02 the earlier of (A) the date it is refunded or is applied to an underpayment, or (B) the 03 March 31 described in AS 43.55.030(a); 04 (2) except as provided under (1) of this subsection, interest with 05 respect to an overpayment is allowed only on any net overpayment of the payments 06 required under (a) of this section that remains after the later of the March 31 described 07 in AS 43.55.030(a) or the date that the statement required under AS 43.55.030(a) is 08 filed; 09 (3) interest is allowed under (2) of this subsection only from a date that 10 is 90 days after the later of the March 31 described in AS 43.55.030(a) or the date that 11 the statement required under AS 43.55.030(a) is filed; interest is not allowed if the 12 overpayment was refunded within the 90-day period; 13 (4) interest under (2) and (3) of this subsection is paid at the rate and in 14 the manner provided in AS 43.05.225(1). 15  * Sec. 13. AS 43.55 is amended by adding new sections to read: 16 Sec. 43.55.023. Tax credits for certain losses and expenditures. (a) A 17 producer or explorer may take a tax credit for a qualified capital expenditure as 18 follows: 19 (1) notwithstanding that a qualified capital expenditure may be a 20 deductible lease expenditure for purposes of calculating the production tax value of oil 21 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 22 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 23 explorer that incurs a qualified capital expenditure may also elect to take a tax credit 24 against a tax due under AS 43.55.011(e) in the amount of 20 percent of that 25 expenditure; 26 (2) a producer or explorer may take a credit for a qualified capital 27 expenditure incurred in connection with geological or geophysical exploration or in 28 connection with an exploration well only if the producer or explorer provides to the 29 department, as part of the statement required under AS 43.55.030(a) for the calendar 30 year for which the credit is sought to be taken, the producer's or explorer's written 31 agreement 01 (A) to notify the Department of Natural Resources, before the 02 later of 30 days after completion of the geological or geophysical data 03 processing or completion of the well, or 30 days after the statement is filed, of 04 the date of completion and to submit a report to that department describing the 05 processing sequence and provide a list of data sets available; 06 (B) to provide to the Department of Natural Resources, within 07 30 days after the date of a request, specific data sets, ancillary data, and reports 08 identified in (A) of this paragraph; 09 (C) that, notwithstanding any provision of AS 38, the 10 Department of Natural Resources shall hold confidential the information 11 provided to that department under this paragraph for 10 years following the 12 completion date, after which the department shall publicly release the 13 information after 30 days' public notice. 14 (b) A producer or explorer may elect to take a tax credit in the amount of 20 15 percent of a carried-forward annual loss. A credit under this subsection may be applied 16 against a tax due under AS 43.55.011(e). For purposes of this subsection, a carried- 17 forward annual loss is the amount of a producer's or explorer's adjusted lease 18 expenditures under AS 43.55.165 and 43.55.170 for a previous calendar year that was 19 not deductible for that calendar year under AS 43.55.160(b) and (e). 20 (c) A credit or portion of a credit under this section may not be used to reduce 21 a person's tax liability under AS 43.55.011(e) for any calendar year below zero, and 22 any unused credit or portion of a credit not used under this subsection may be applied 23 in a later calendar year. 24 (d) Except as limited by (i) of this section, a person entitled to take a tax credit 25 under this section that wishes to transfer the unused credit to another person may 26 apply to the department for a transferable tax credit certificate. An application under 27 this subsection must be in a form prescribed by the department and must include 28 supporting information and documentation that the department reasonably requires. 29 The department shall grant or deny an application, or grant an application as to a lesser 30 amount than that claimed and deny it as to the excess, not later than 60 days after the 31 latest of (1) March 31 of the year following the calendar year in which the qualified 01 capital expenditure or carried-forward annual loss for which the credit is claimed was 02 incurred; (2) if the applicant is required under AS 43.55.030(a) to file a statement on 03 or before March 31 of the year following the calendar year in which the qualified 04 capital expenditures or carried-forward annual loss for which the credit is claimed was 05 incurred, the date the statement was filed; or (3) the date the application was received 06 by the department. If, based on the information then available to it, the department is 07 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 08 the applicant a transferable tax credit certificate for the amount of the credit. A 09 certificate issued under this subsection does not expire. 10 (e) A person to which a transferable tax credit certificate is issued under (d) of 11 this section may transfer the certificate to another person, and a transferee may further 12 transfer the certificate. Subject to the limitations set out in (a) - (c) of this section, and 13 notwithstanding any action the department may take with respect to the applicant 14 under (g) of this section, the owner of a certificate may apply the credit or a portion of 15 the credit shown on the certificate only against a tax due under AS 43.55.011(e). 16 However, a credit shown on a transferable tax credit certificate may not be applied to 17 reduce a transferee's total tax due under AS 43.55.011(e) on oil and gas produced 18 during a calendar year to less than 80 percent of the tax that would otherwise be due 19 without applying that credit. Any portion of a credit not used under this subsection 20 may be applied in a later period. 21 (f) Under standards established in regulations adopted by the department and 22 subject to appropriations made by law, the department, on the written application of 23 the person to whom a transferable tax credit has been issued under (d) of this section 24 and whose average amount of oil and gas produced a day taxable under 25 AS 43.55.011(e) is not more than 50,000 BTU equivalent barrels a day for the 26 preceding calendar year, shall issue a cash refund, in whole or in part, for the 27 certificate if the department finds 28 (1) within 24 months after having applied for the transferable tax credit 29 certificate, that the applicant incurred a qualified capital expenditure or was the 30 successful bidder on a bid submitted for a lease on state land under AS 38.05.180(f); 31 (2) that the amount of the refund would not exceed the total of 01 qualified capital expenditures and successful bids described in (1) of this subsection 02 that have not been the subject of a finding made under this paragraph for purposes of a 03 previous refund; 04 (3) that the applicant does not have an outstanding liability to the state 05 for unpaid delinquent taxes under this title; and 06 (4) that the sum of the amount of the refund applied for and amounts 07 previously refunded to the applicant during the calendar year under this subsection 08 would not exceed $25,000,000. 09 (g) The issuance of a transferable tax credit certificate under (d) of this section 10 or the issuance of a cash refund under (f) of this section does not limit the department's 11 ability to later audit a tax credit claim to which the certificate relates or to adjust the 12 claim if the department determines, as a result of the audit, that the applicant was not 13 entitled to the amount of the credit for which the certificate was issued. The tax 14 liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased 15 by the amount of the credit that exceeds that to which the applicant was entitled, or the 16 applicant's available valid outstanding credits applicable against the tax levied by 17 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is increased 18 under this subsection, the increase bears interest under AS 43.05.225 from the date the 19 transferable tax credit certificate was issued. For purposes of this subsection, an 20 applicant that is an explorer is considered a producer subject to the tax levied by 21 AS 43.55.011(e). 22 (h) Regulations adopted to implement this section must include provisions 23 prescribing reporting, record keeping, and certification procedures and requirements to 24 verify the accuracy of credits claimed and to ensure that a credit is not used more than 25 once. 26 (i) For the purposes of this section, 27 (1) a producer's or explorer's transitional investment expenditures are 28 the sum of the expenditures the producer or explorer incurred after March 31, 2001, 29 and before April 1, 2006, that would be qualified capital expenditures if they were 30 incurred after March 31, 2006, less the sum of the payments or credits the producer or 31 explorer received before April 1, 2006, for the sale or other transfer of assets, 01 including geological, geophysical, or well data or interpretations, acquired by the 02 producer or explorer as a result of expenditures the producer or explorer incurred 03 before April 1, 2006, that would be qualified capital expenditures, if they were 04 incurred after March 31, 2006; 05 (2) a producer or explorer may elect to take a tax credit against a tax 06 due under AS 43.55.011(e) in the amount of 20 percent of the producer's or explorer's 07 transitional investment expenditures, but only to the extent that the amount does not 08 exceed 1/10 of the producer's or explorer's qualified capital expenditures that are 09 incurred during the calendar year for which the credit is taken; 10 (3) a producer or explorer may not take a tax credit for a transitional 11 investment expenditure 12 (A) for any calendar year after the later of 13 (i) 2013; or 14 (ii) the sixth calendar year after the calendar year for 15 which the producer first applies a credit under this subsection against a 16 tax due under AS 43.55.011(e), if the producer did not have 17 commercial production of oil or gas from a lease or property in the state 18 before April 1, 2006; 19 (B) more than once; or 20 (C) if a credit for that expenditure was taken under 21 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 22 (4) notwithstanding (d), (e), and (g) of this section, a producer or 23 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for a 24 transitional investment expenditure. 25 (j) As a condition of receiving a tax credit under this section, a producer or 26 explorer that obtains the tax credit for or directly related to a pipeline, facility, or other 27 asset that is or becomes subject to regulation by the Federal Energy Regulatory 28 Commission, the Regulatory Commission of Alaska, or a successor regulatory body 29 shall at all times support and in all rate proceedings file to flow through 100 percent of 30 the tax credits to ratepayers as a reduction in the costs of service for the pipeline, 31 facility, or other asset. 01 (k) In this section, "qualified capital expenditure" 02 (1) means, except as otherwise provided in (2) of this subsection, an 03 expenditure that is a lease expenditure under AS 43.55.165 and is 04 (A) incurred for geological or geophysical exploration; or 05 (B) treated as a capitalized expenditure under 26 U.S.C. 06 (Internal Revenue Code), as amended, regardless of elections made under 26 07 U.S.C. 263(c) (Internal Revenue Code), as amended, and is 08 (i) treated as a capitalized expenditure for federal 09 income tax reporting purposes by the person incurring the expenditure; 10 or 11 (ii) eligible to be deducted as an expense under 26 12 U.S.C. 263(c) (Internal Revenue Code), as amended; 13 (2) does not include an expenditure incurred to acquire an asset 14 (A) the cost of previously acquiring which was a lease 15 expenditure under AS 43.55.165 or would have been a lease expenditure under 16 AS 43.55.165 if it had been incurred after March 31, 2006; for purposes of this 17 subparagraph, "asset" includes geological, geophysical, and well data and 18 interpretations; or 19 (B) that has previously been placed in service in the state; an 20 expenditure to acquire an asset is not excluded under this paragraph if not more 21 than an immaterial portion of the asset meets a description under this 22 paragraph. 23 Sec. 43.55.024. Additional nontransferable tax credits. (a) For a calendar 24 year for which a producer's tax liability under AS 43.55.011(e) on oil and gas 25 produced from leases or properties outside the Cook Inlet sedimentary basin, no part 26 of which is north of 68 degrees North latitude, exceeds zero before application of any 27 credits under this chapter, a producer that is qualified under (e) of this section may 28 apply a tax credit against that liability of not more than $6,000,000. 29 (b) A producer may not take a tax credit under (a) of this section for any 30 calendar year after the later of 31 (1) 2016; or 01 (2) the ninth calendar year after the calendar year during which the 02 producer first has commercial oil or gas production before May 1, 2016, from at least 03 one lease or property in the state outside the Cook Inlet sedimentary basin, no part of 04 which is north of 68 degrees North latitude, if the producer did not have commercial 05 oil or gas production from a lease or property in the state outside the Cook Inlet 06 sedimentary basin, no part of which is north of 68 degrees North latitude, before 07 April 1, 2006. 08 (c) For a calendar year for which a producer's tax liability under 09 AS 43.55.011(e) exceeds zero before application of any credits under this chapter, 10 other than a credit under (a) of this section but after application of any credit under (a) 11 of this section, a producer that is qualified under (e) of this section and whose average 12 amount of oil and gas produced a day and taxable under AS 43.55.011(e) is less than 13 100,000 BTU equivalent barrels day may apply a tax credit under this subsection 14 against that liability. A producer whose average amount of oil and gas produced a day 15 and taxable under AS 43.55.011(e) is 16 (1) not more than 50,000 BTU equivalent barrels may apply a tax 17 credit of not more than $12,000,000 for the calendar year; 18 (2) more than 50,000 and less than 100,000 BTU equivalent barrels 19 may apply a tax credit of not more than $12,000,000 multiplied by the following 20 fraction for the calendar year: 21 1 - [2 X (AP - 50,000)] ¸ 100,000 22 where AP = the average amount of oil and gas taxable under AS 43.55.011(e), 23 produced a day during the calendar year in BTU equivalent barrels. 24 (d) A producer may not take a tax credit under (c) of the section for any 25 calendar year after the later of 26 (1) 2016; or 27 (2) if the producer did not have commercial oil or gas production from 28 a lease or property in the state before April 1, 2006, the ninth calendar year after the 29 calendar year during which the producer first has commercial oil or gas production 30 before May 1, 2016, from at least one lease or property in the state. 31 (e) On written application by a producer that includes any information the 01 department may require, the department shall determine whether the producer 02 qualifies for a calendar year under this section. To qualify under this section, a 03 producer must demonstrate that its operation in the state or its ownership of an interest 04 in a lease or property in the state as a distinct producer would not result in the division 05 among multiple producer entities of any production tax liability under 06 AS 43.55.011(e) that reasonably would be expected to be attributed to a single 07 producer if the tax credit provisions of (a) or (c) of this section did not exist. 08 (f) A tax credit authorized by (a) of this section may not be applied to reduce a 09 producer's tax liability for any calendar year under AS 43.55.011(e) on oil and gas 10 produced from leases or properties outside the Cook Inlet sedimentary basin, no part 11 of which is north of 68 degrees North latitude below zero. 12 (g) A tax credit authorized by (c) of this section may not be applied to reduce 13 a producer's tax liability for any calendar year under AS 43.55.011(e) below zero. 14 (h) An unused tax credit or portion of a tax credit under this section is not 15 transferable and may not be carried forward for use in a later calendar year. 16  * Sec. 14. AS 43.55.025(a) is amended to read: 17 (a) Subject to the terms and conditions of this section, [ON OIL AND GAS 18 PRODUCED ON OR AFTER JULY 1, 2004, FROM AN OIL AND GAS LEASE, 19 OR ON GAS PRODUCED FROM A GAS ONLY LEASE,] a credit against the 20 production tax due under AS 43.55.011(e) [THIS CHAPTER] is allowed for 21 exploration expenditures that qualify under (b) of this section in an amount equal to 22 one of the following: 23 (1) 20 percent of the total exploration expenditures that qualify only 24 under (b) and (c) of this section; 25 (2) 20 percent of the total exploration expenditures for work performed 26 before July 1, 2007, and that qualify only under (b) and (d) of this section; 27 (3) 40 percent of the total exploration expenditures that qualify under 28 (b), (c), and (d) of this section; or 29 (4) 40 percent of the total exploration expenditures that qualify only 30 under (b) and (e) of this section. 31  * Sec. 15. AS 43.55.025(b) is amended to read: 01 (b) To qualify for the production tax credit under (a) of this section, an 02 exploration expenditure must be incurred for work performed on or after July 1, 2003, 03 and before July 1, 2016 [2007], except that an exploration expenditure for a Cook Inlet 04 prospect must be incurred for work performed on or after July 1, 2005, [AND 05 BEFORE JULY 1, 2010, AND EXCEPT THAT AN EXPLORATION 06 EXPENDITURE, IN WHOLE OR IN PART, SOUTH OF 68 DEGREES, 15 07 MINUTES, NORTH LATITUDE, AND NOT PART OF A COOK INLET 08 PROSPECT MUST BE INCURRED FOR WORK PERFORMED ON OR AFTER 09 JULY 1, 2003, AND BEFORE JULY 1, 2010,] and 10 (1) may be for seismic or geophysical exploration costs not connected 11 with a specific well; 12 (2) if for an exploration well, 13 (A) must be incurred by an explorer that holds an interest in the 14 exploration well for which the production tax credit is claimed; 15 (B) may be for either an oil or gas discovery well or a dry hole; 16 and 17 (C) must be for goods, services, or rentals of personal property 18 reasonably required for the surface preparation, drilling, casing, cementing, 19 and logging of an exploration well, and, in the case of a dry hole, for the 20 expenses required for abandonment if the well is abandoned within 18 months 21 after the date the well was spudded; 22 (3) may not be for testing, stimulation, or completion costs; 23 administration, supervision, engineering, or lease operating costs; geological or 24 management costs; community relations or environmental costs; bonuses, taxes, or 25 other payments to governments related to the well; or other costs that are generally 26 recognized as indirect costs or financing costs; and 27 (4) may not be incurred for an exploration well or seismic exploration 28 that is included in a plan of exploration or a plan of development for any unit on 29 May 13, 2003. 30  * Sec. 16. AS 43.55.025(f) is amended to read: 31 (f) For a production tax credit under this section, 01 (1) an explorer shall, in a form prescribed by the department and 02 within six months of the completion of the exploration activity, claim the credit and 03 submit information sufficient to demonstrate to the department's satisfaction that the 04 claimed exploration expenditures qualify under this section; 05 (2) an explorer shall agree, in writing, 06 (A) to notify the Department of Natural Resources, within 30 07 days after completion of seismic or geophysical data processing, completion of 08 a well, or filing of a claim for credit, whichever is the latest, for which 09 exploration costs are claimed, of the date of completion and submit a report to 10 that department describing the processing sequence and providing a list of data 11 sets available; if, under (c)(2)(B) of this section, an explorer submits a claim 12 for a credit for expenditures for an exploration well that is located within three 13 miles of a well already drilled for oil and gas, in addition to the submissions 14 required under (1) of this subsection, the explorer shall submit the information 15 necessary for the commissioner of natural resources to evaluate the validity of 16 the explorer's claim that the well is directed at a distinctly separate exploration 17 target, and the commissioner of natural resources shall, upon receipt of all 18 evidence sufficient for the commissioner to evaluate the explorer's claim, make 19 that determination within 60 days; 20 (B) to provide to the Department of Natural Resources, within 21 30 days after the date of a request, specific data sets, ancillary data, and reports 22 identified in (A) of this paragraph; 23 (C) that, notwithstanding any provision of AS 38, information 24 provided under this paragraph will be held confidential by the Department of 25 Natural Resources for 10 years following the completion date, at which time 26 that department will release the information after 30 days' public notice; 27 (3) if more than one explorer holds an interest in a well or seismic 28 exploration, each explorer may claim an amount of credit that is proportional to the 29 explorer's cost incurred; 30 (4) the department may exercise the full extent of its powers as though 31 the explorer were a taxpayer under this title, in order to verify that the claimed 01 expenditures are qualified exploration expenditures under this section; and 02 (5) if the department is satisfied that the explorer's claimed 03 expenditures are qualified under this section, the department shall issue to the explorer 04 a production tax credit certificate for the amount of credit to be allowed against 05 production taxes due under AS 43.55.011(e) [THIS CHAPTER; HOWEVER, 06 NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, THE 07 DEPARTMENT MAY NOT ISSUE TO AN EXPLORER A PRODUCTION TAX 08 CREDIT CERTIFICATE IF THE TOTAL OF PRODUCTION TAX CREDITS 09 SUBMITTED FOR COOK INLET PRODUCTION, BASED ON EXPLORATION 10 EXPENDITURES FOR WORK PERFORMED DURING THE PERIOD 11 DESCRIBED IN (b) OF THIS SECTION FOR THAT PRODUCTION, THAT HAVE 12 BEEN APPROVED BY THE DEPARTMENT EXCEEDS $20,000,000]. 13  * Sec. 17. AS 43.55.025(h) is amended to read: 14 (h) A producer that purchases a production tax credit certificate may apply the 15 credits against its production tax liability under AS 43.55.011(e) [THIS CHAPTER]. 16 Regardless of the price the producer paid for the certificate, the producer may receive 17 a credit against its production tax liability for the full amount of the credit, but for not 18 more than the amount for which the certificate is issued. A production tax credit 19 allowed under this section may not be applied more than once. 20  * Sec. 18. AS 43.55.025(i) is amended to read: 21 (i) For a production tax credit under this section, 22 (1) the amount of the credit that may be applied against the production 23 tax for each calendar year [TAX MONTH] may not exceed the total production tax 24 liability under AS 43.05.011(e) of the taxpayer applying the credit for the same 25 calendar year [MONTH]; and 26 (2) an amount of the production tax credit that is greater than the total 27 tax liability under AS 43.05.011(e) of the taxpayer applying the credit for a calendar  28 year [TAX MONTH] may be carried forward and applied against the taxpayer's 29 production tax liability under AS 43.05.011(e) in one or more immediately following 30 calendar years [MONTHS]. 31 * Sec. 19. AS 43.55.030(a) is amended to read: 01 (a) The [TAX SHALL BE PAID TO THE DEPARTMENT AND THE] 02 person paying the tax shall file with the department on March 31 of the year  03 following the calendar year for which the tax was levied [AT THE TIME THE 04 TAX IS REQUIRED TO BE PAID] a statement, under oath, in a form [ON FORMS] 05 prescribed by [OR ACCEPTABLE TO] the department, giving, with other 06 information required, the following: 07 (1) a description of each [THE] lease or property from which the oil 08 and [OR] gas were [WAS] produced, by name, legal description, lease number, or 09 [BY] accounting codes [CODE NUMBERS] assigned by the department; 10 (2) the names of the producer and the person paying the tax; 11 (3) the gross amount of oil and the gross amount of [OR] gas 12 produced from each [THE] lease or property, and the percentage of the gross amount 13 of oil and gas owned by each producer for whom the tax is paid; 14 (4) the gross [TOTAL] value at the point of production of the oil 15 and of the [OR] gas produced from each [THE] lease or property owned by each 16 producer for whom the tax is paid; [AND] 17 (5) the name of the first purchaser and the price received for the oil 18 and for the [OR] gas, unless relieved from this requirement in whole or in part by  19 the department;  20 (6) the producer's base production under AS 43.55.011(f); and 21 (7) the producer's lease expenditures and adjustments as  22 calculated under AS 43.55.160 - 43.55.170 [IF SOLD IN THE STATE]. 23 * Sec. 20. AS 43.55.030(d) is amended to read: 24 (d) Reports by or on behalf of the producer are delinquent the first day 25 following the day the report [TAX] is due. [EACH PRODUCER IS SUBJECT TO A 26 PENALTY OF $25 A DAY FOR EACH LEASE OR PROPERTY UPON WHICH 27 THE REPORT IS NOT FILED. THE PENALTY FOR FAILURE TO FILE A 28 REPORT IS IN ADDITION TO THE PENALTY FOR DELINQUENT TAXES, 29 AND IS A LIEN AGAINST THE ASSETS OF THE PRODUCER.] 30 * Sec. 21. AS 43.55.040 is amended to read: 31 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 01 AS 43.05.405 - 43.05.499, the department may 02 (1) require a person engaged in production and the agent or employee 03 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 04 or gas to furnish, whether by the filing of regular statements or reports or  05 otherwise, additional information that is considered by the department as necessary to 06 compute the amount of the tax; notwithstanding any contrary provision of law, the  07 disclosure of additional information under this paragraph to the producer  08 obligated to pay the tax does not violate AS 40.25.100(a) or AS 43.05.230(a);  09 before disclosing information under this paragraph that is otherwise required to  10 be held confidential under AS 40.25.100(a) or AS 43.05.230(a), the department  11 shall  12 (A) provide the person that furnished the information a  13 reasonable opportunity to be heard regarding the proposed disclosure and  14 the conditions to be imposed under (B) of this paragraph; and 15 (B) impose appropriate conditions limiting 16 (i) access to the information to those legal counsel,  17 consultants, employees, officers, and agents of the producer who  18 have a need to know that information for the purpose of  19 determining or contesting the producer's tax obligation; and 20 (ii) the use of the information to use for that  21 purpose; 22 (2) examine the books, records, and files of such a person; 23 (3) conduct hearings and compel the attendance of witnesses and the 24 production of books, records, and papers of any person; and 25 (4) make an investigation or hold an inquiry that is considered 26 necessary to a disclosure of the facts as to 27 (A) the amount of production from any oil or gas location, or of 28 a company or other producer of oil or gas; and 29 (B) the rendition of the oil and gas for taxing purposes. 30 * Sec. 22. AS 43.55.080 is amended to read: 31 Sec. 43.55.080. Collection and deposit of revenue. Except as otherwise  01 provided under art. IX, sec. 17, Constitution of the State of Alaska, the [THE] 02 department shall deposit in the general fund the money collected by it under 03 AS 43.55.011 - 43.55.180 [AS 43.55.011 - 43.55.150]. 04 * Sec. 23. AS 43.55.135 is amended to read: 05 Sec. 43.55.135. Measurement. For the purposes of AS 43.55.011 - 43.55.180,  06 except as otherwise provided [AS 43.55.011 - 43.55.150], oil is [SHALL BE] 07 measured in terms of a "barrel of oil" and gas is [SHALL BE] measured in terms of a 08 "cubic foot of gas." 09 * Sec. 24. AS 43.55.150(a) is amended to read: 10 (a) For the purposes of AS 43.55.011 - 43.55.180 [AS 43.55.011 - 43.55.150], 11 the gross value at the point of production is [SHALL BE] calculated using the 12 reasonable costs of transportation of the oil or gas. The reasonable costs of 13 transportation are [SHALL BE] the actual costs, except when the  14 (1) [WHEN THE] parties to the transportation of oil or gas are 15 affiliated; 16 (2) [WHEN THE] contract for the transportation of oil or gas is not an 17 arm's length transaction or is not representative of the market value of that 18 transportation; and  19 (3) [WHEN THE] method of transportation of oil or gas is not 20 reasonable in view of existing alternative methods of transportation. 21 * Sec. 25. AS 43.55 is amended by adding new sections to article 1 to read: 22 Sec. 43.55.160. Determination of production tax value of oil and gas. (a) 23 Except as provided in (b) of this section, for the purposes of 24 (1) AS 43.55.011(e), the annual production tax value of the taxable 25 (A) oil and gas produced during a calendar year from leases or 26 properties in the state that include land north of 68 degrees North latitude is the 27 gross value at the point of production of the oil and gas taxable under 28 AS 43.55.011(e) and produced by the producer from those leases or properties, 29 less the producer's lease expenditures under AS 43.55.165 for the calendar year 30 applicable to the oil and gas produced by the producer from those leases or 31 properties, as adjusted under AS 43.55.170; 01 (B) oil and gas produced during a calendar year from leases or 02 properties in the state outside the Cook Inlet sedimentary basin, no part of 03 which is north of 68 degrees North latitude, is the gross value at the point of 04 production of the oil and gas taxable under AS 43.55.011(e) and produced by 05 the producer from those leases or properties, less the producer's lease 06 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 07 gas produced by the producer from those leases or properties, as adjusted under 08 AS 43.55.170; 09 (C) oil produced during a calendar year from a lease or 10 property in the Cook Inlet sedimentary basin is the gross value at the point of 11 production of the oil taxable under AS 43.55.011(e) and produced by the 12 producer from that lease or property, less the producer's lease expenditures 13 under AS 43.55.165 for the calendar year applicable to the oil produced by the 14 producer from that lease or property, as adjusted under AS 43.55.170; 15 (D) gas produced during a calendar year from a lease or 16 property in the Cook Inlet sedimentary basin is the gross value at the point of 17 production of the gas taxable under AS 43.55.011(e) and produced by the 18 producer from that lease or property, less the producer's lease expenditures 19 under AS 43.55.165 for the calendar year applicable to the gas produced by the 20 producer from that lease or property, as adjusted under AS 43.55.170; 21 (2) AS 43.55.011(g), the monthly production tax value of the taxable 22 (A) oil and gas produced during a month from leases or 23 properties in the state that include land north of 68 degrees North latitude is the 24 gross value at the point of production of the oil and gas taxable under 25 AS 43.55.011(g) and produced by the producer from those leases or properties, 26 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 27 calendar year applicable to the oil and gas produced by the producer from 28 those leases or properties, as adjusted under AS 43.55.170; 29 (B) oil and gas produced during a month from leases or 30 properties in the state outside the Cook Inlet sedimentary basin, no part of 31 which is north of 68 degrees North latitude, is the gross value at the point of 01 production of the oil and gas taxable under AS 43.55.011(g) and produced by 02 the producer from those leases or properties, less 1/12 of the producer's lease 03 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 04 gas produced by the producer from those leases or properties, as adjusted under 05 AS 43.55.170; 06 (C) oil produced during a month from a lease or property in the 07 Cook Inlet sedimentary basin is the gross value at the point of production of 08 the oil taxable under AS 43.55.011(g) and produced by the producer from that 09 lease or property, less 1/12 of the producer's lease expenditures under 10 AS 43.55.165 for the calendar year applicable to the oil produced by the 11 producer from that lease or property, as adjusted under AS 43.55.170; 12 (D) gas produced during a month from a lease or property in 13 the Cook Inlet sedimentary basin is the gross value at the point of production 14 of the gas taxable under AS 43.55.011(g) and produced by the producer from 15 that lease or property, less 1/12 of the producer's lease expenditures under 16 AS 43.55.165 for the calendar year applicable to the gas produced by the 17 producer from that lease or property, as adjusted under AS 43.55.170. 18 (b) A production tax value calculated under (a) of this section may not be less 19 than zero. 20 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 21 calculating a monthly production tax value under (a)(2) of this section, the gross value 22 at the point of production of the oil and gas taxable under AS 43.55.011(g) is 23 calculated under regulations adopted by the department that provide for using an 24 appropriate monthly share of the producer's costs of transportation for the calendar 25 year. 26 (d) Irrespective of whether a producer produces taxable oil or gas during a 27 calendar year or month, the producer is considered to have generated a positive 28 production tax value if a calculation described in (a) of this section yields a positive 29 number because the producer's adjusted lease expenditures for a calendar year under 30 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a 31 payment or credit under AS 43.55.170. An explorer that has taken a tax credit under 01 AS 43.55.023(b) or that has obtained a transferable tax credit certificate under 02 AS 43.55.023(d) for the amount of a tax credit under AS 43.55.023(b) is considered a 03 producer, subject to the tax levied under AS 43.55.011(e), to the extent that the 04 explorer generates a positive production tax value as the result of the explorer's 05 receiving a payment or credit under AS 43.55.170. 06 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 07 would otherwise be deductible by a producer in a calendar year but whose deduction 08 would cause an annual production tax value calculated under (a)(1) of this section of 09 taxable oil or gas produced during the calendar year to be less than zero may be used 10 to establish a carried-forward annual loss under AS 43.55.023(b). In this subsection, 11 "producer" includes "explorer." 12 Sec. 43.55.165. Lease expenditures. (a) Except as provided under (c) - (e) of 13 this section, for the purposes of AS 43.55.160, a producer's lease expenditures for a 14 calendar year are the ordinary and necessary costs upstream of the point of production 15 of oil and gas that are incurred during the calendar year by the producer after 16 March 31, 2006, and that are direct costs of exploring for, developing, or producing oil 17 or gas deposits located within the producer's leases or properties in the state or, in the 18 case of land in which the producer does not own a working interest, that are direct 19 costs of exploring for oil or gas deposits located within other land in the state. In 20 determining whether costs are lease expenditures, the department shall consider, 21 among other factors, 22 (1) the typical industry practices and standards in the state that 23 determine the costs, other than items listed in (e) of this section, that an operator is 24 allowed to bill a working interest owner that is not the operator, under unit operating 25 agreements or similar operating agreements that were in effect before December 2, 26 2005, and were subject to negotiation with at least one working interest owner with 27 substantial bargaining power, other than the operator; and 28 (2) the standards adopted by the Department of Natural Resources that 29 determine the costs, other than items listed in (e) of this section, that a lessee is 30 allowed to deduct from revenue in calculating net profits under a lease issued under 31 AS 38.05.180(f)(3)(B), (D), or (E). 01 (b) For purposes of (a) of this section, 02 (1) direct costs include 03 (A) an expenditure, when incurred, to acquire an item if the 04 acquisition cost is otherwise a direct cost, notwithstanding that the expenditure 05 may be required to be capitalized rather than treated as an expense for financial 06 accounting or federal income tax purposes; 07 (B) payments of or in lieu of property taxes, sales and use 08 taxes, motor fuel taxes, and excise taxes; 09 (C) a reasonable allowance, as determined under regulations 10 adopted by the department, for overhead expenses directly related to exploring 11 for, developing, and producing oil or gas deposits located within leases or 12 properties or other land in the state; 13 (2) an activity does not need to be physically located on, near, or 14 within the premises of the lease or property within which an oil or gas deposit being 15 explored for, developed, or produced is located in order for the cost of the activity to 16 be a cost upstream of the point of production of the oil or gas. 17 (c) Subject to (g) and (h) of this section, if the department finds that the 18 pertinent provisions of a unit operating agreement or similar operating agreement are 19 substantially consistent with the department's determinations and standards under (a) 20 of this section concerning whether costs are lease expenditures, the department may 21 authorize or require a producer, subject to conditions prescribed under regulations 22 adopted by the department, to treat as that portion of its lease expenditures for a 23 calendar year applicable to oil and gas produced from a lease or property in the state 24 only 25 (1) the costs, other than items listed in (e) of this section, that are 26 incurred by the operator during the calendar year and that 27 (A) are billable to the producer by the operator in accordance 28 with the terms of the agreement to which that lease or property is subject; 29 (B) for a producer that is the operator, would be billable to the 30 producer by the operator in accordance with the terms of the agreement to 31 which that lease or property is subject if the producer were not the operator; 01 (C) would be billable to the producer by the operator in 02 accordance with the terms of the agreement if that lease or property were 03 subject to the agreement; or 04 (D) for a producer that is the operator, would be billable to the 05 producer by the operator in accordance with the terms of the agreement if that 06 lease or property were subject to the agreement and if the producer were not 07 the operator; and 08 (2) a reasonable percentage, as determined under regulations adopted 09 by the department, of the costs that are billable under (1) of this subsection as an 10 allowance for overhead expenses directly related to exploring for, developing, and 11 producing oil or gas deposits located within the lease or property, to the extent those 12 expenses are not billable under the agreement. 13 (d) Subject to (g) and (h) of this section, if the department makes the finding 14 described in (c) of this section with respect to a unit operating agreement or similar 15 operating agreement and, in addition, finds that at least one working interest owner 16 party to the agreement, other than the operator, with substantial incentive and ability to 17 effectively audit billings under the agreement in fact is effectively auditing billings 18 under the agreement, the department may authorize or require a producer, subject to 19 conditions prescribed under regulations adopted by the department, to treat as that 20 portion of its lease expenditures for a calendar year applicable to oil and gas produced 21 from a lease or property in the state only 22 (1) the costs, other than items listed in (e) of this section, that are 23 incurred by the operator during the calendar year and that 24 (A) are billed to the producer by the operator under the 25 agreement to which that lease or property is subject and are either not disputed 26 by a working interest owner party to the agreement or are finally determined to 27 be properly billable as a result of dispute resolution; or 28 (B) for a producer that is the operator, would be billable to the 29 producer by the operator in accordance with the terms of the agreement to 30 which that lease or property is subject if the producer were not the operator; 31 and 01 (2) a reasonable percentage, as determined under regulations adopted 02 by the department, of the costs that are billed under (1) of this subsection as an 03 allowance for overhead expenses directly related to exploring for, developing, and 04 producing oil or gas deposits located within the lease or property, to the extent those 05 expenses are not billable under the agreement. 06 (e) For purposes of this section, lease expenditures do not include 07 (1) depreciation, depletion, or amortization; 08 (2) oil or gas royalty payments, production payments, lease profit 09 shares, or other payments or distributions of a share of oil or gas production, profit, or 10 revenue; 11 (3) taxes based on or measured by net income; 12 (4) interest or other financing charges or costs of raising equity or debt 13 capital; 14 (5) acquisition costs for a lease or property or exploration license; 15 (6) costs arising from fraud, wilful misconduct, or gross negligence; 16 (7) fines or penalties imposed by law; 17 (8) costs of arbitration, litigation, or other dispute resolution activities 18 that involve the state or concern the rights or obligations among owners of interests in, 19 or rights to production from, one or more leases or properties or a unit; 20 (9) donations; 21 (10) costs incurred in organizing a partnership, joint venture, or other 22 business entity or arrangement; 23 (11) amounts paid to indemnify the state; the exclusion provided by 24 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 25 a third-party insurer or surety; 26 (12) surcharges levied under AS 43.55.201 or 43.55.300; 27 (13) for a transaction that is an internal transfer or is otherwise not an 28 arm's length transaction, expenditures incurred that are in excess of fair market value; 29 (14) an expenditure incurred to purchase an interest in any corporation, 30 partnership, limited liability company, business trust, or any other business entity, 31 whether or not the transaction is treated as an asset sale for federal income tax 01 purposes; 02 (15) a tax levied under AS 43.55.011; 03 (16) the portion of costs incurred for dismantlement, removal, 04 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 05 structure, or for the restoration of a lease, field, unit, area, body of water, or right-of- 06 way in conjunction with dismantlement, removal, surrender, or abandonment, that is 07 attributable to production of oil or gas occurring before April 1, 2006; the portion is 08 calculated as a ratio of the amount of oil and gas production, in barrels of oil 09 equivalent, associated with the facility, pipeline, well pad, platform, other structure, 10 lease, field, unit, area, body of water, or right-of-way occurring before April 1, 2006, 11 to the total amount of oil and gas production, in barrels of oil equivalent, associated 12 with that facility, pipeline, well pad, platform, other structure, lease, field, unit, area, 13 body of water, or right-of-way through the end of the calendar month before 14 commencement of the dismantlement, removal, surrender, or abandonment; a cost is 15 not excluded under this paragraph if the dismantlement, removal, surrender, or 16 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 17 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 18 for the purposes of this paragraph, "barrel of oil equivalent" means 19 (A) in the case of oil, one barrel; 20 (B) in the case of gas, 6,000 cubic feet; 21 (17) losses or damages resulting from an unpermitted oil discharge that 22 is not confined to a pad, platform, or other structure, or costs to contain, clean up, or 23 remediate that unpermitted oil discharge, to the extent that those costs exceed the 24 routine costs of operation for a producer or explorer that would otherwise be incurred 25 as lease expenditures in the absence of the unpermitted oil discharge; this paragraph 26 does not apply to the cost of developing and maintaining an oil discharge prevention 27 and contingency plan under AS 46.04.030; 28 (18) costs incurred to satisfy a work commitment under an exploration 29 license under AS 38.05.132. 30 (f) For purposes of AS 43.55.023(a) and (b) and only as to expenditures 31 incurred to explore for an oil or gas deposit located within land in which an explorer 01 does not own a working interest, the term "producer" in this section includes 02 "explorer." 03 (g) The department shall specify or approve a reasonable allocation method 04 for determining the portion of a cost that is appropriately treated as a lease expenditure 05 under this section if a cost that would otherwise constitute a lease expenditure under 06 this section is incurred to explore for, develop, or produce 07 (1) both an oil or gas deposit located within land outside the state and 08 an oil or gas deposit located within a lease or property, or other land, in the state; or 09 (2) an oil or gas deposit located partly within land outside the state and 10 partly within a lease or property, or other land, in the state. 11 (h) The department shall adopt regulations that provide for reasonable 12 methods of allocating costs between oil and gas and between leases or properties in 13 those circumstances where the determination of the lease expenditures that are 14 applicable to oil or to gas, or that are applicable to oil and gas produced from different 15 leases or properties, requires an allocation of costs. 16 (i) The department may adopt regulations that establish additional standards 17 necessary to carrying out the purposes of this section and AS 43.55.170, including the 18 incorporation of the concepts of 26 U.S.C. 482 (Internal Revenue Code), as amended, 19 the related or accompanying regulations of that provision, and any ruling or guidance 20 issued by the United States Internal Revenue Service that relates to that provision. 21 (j) For purposes of this section, 22 (1) "explore" includes conducting geological or geophysical 23 exploration, including drilling a stratigraphic test well; 24 (2) "ordinary and necessary" has the meaning given in 26 U.S.C. 162 25 (Internal Revenue Code), as amended, and regulations adopted under that section; 26 (3) "stratigraphic test well" means a well drilled for the sole purpose of 27 obtaining geological information to aid in exploring for an oil or gas deposit and the 28 target zones of which are located in the state. 29 Sec. 43.55.170. Adjustments to lease expenditures. (a) Unless the payment 30 or credit has already been subtracted in calculating billable or billed costs under 31 AS 43.55.165(c) or (d), a producer's lease expenditures under AS 43.55.165 must be 01 adjusted by subtracting payments or credits, other than tax credits, received by the 02 producer or by an operator acting for the producer for 03 (1) the use by another person of a production facility in which the 04 producer has an ownership interest or the management by the producer of a production 05 facility under a management agreement providing for the producer to receive a 06 management fee; 07 (2) a reimbursement or similar payment that offsets the producer's 08 lease expenditures, including an insurance recovery from a third-party insurer and a 09 payment from the state or federal government for reimbursement of the producer's 10 upstream costs, including costs for gathering, separating, cleaning, dehydration, 11 compressing, or other field handling associated with the production of oil or gas 12 upstream of the point of production; 13 (3) the sale or other transfer of 14 (A) an asset, including geological, geophysical, or well data or 15 interpretations, acquired by the producer as a result of a lease expenditure or an 16 expenditure that would be a lease expenditure if it were incurred after 17 March 31, 2006; for purposes of this subparagraph, 18 (i) if a producer removes from the state, for use outside 19 the state, an asset described in this subparagraph, the value of the asset 20 at the time it is removed is considered a payment received by the 21 producer for sale or transfer of the asset; 22 (ii) for a transaction that is an internal transfer or is 23 otherwise not an arm's length transaction, if the sale or transfer of the 24 asset is made for less than fair market value, the amount subtracted 25 must be the fair market value; and 26 (B) oil or gas 27 (i) that is not considered produced from a lease or 28 property under AS 43.55.020(e); and 29 (ii) the cost of acquiring which is a lease expenditure 30 incurred by the person that acquires the oil or gas. 31 (b) Except as otherwise provided under this subsection, if one or more 01 payments or credits subject to this section are received by a producer or by an operator 02 acting for the producer during a calendar year and if either the total amount of the 03 payments or credits exceeds the amount of the producer's applicable lease 04 expenditures for that calendar year or the producer has no lease expenditures for that 05 calendar year, the producer shall nevertheless subtract those payments or credits from 06 the lease expenditures or from zero, respectively, and the producer's applicable 07 adjusted lease expenditures for that calendar year are a negative number and shall be 08 applied to the pertinent calculation under AS 43.55.160(a) as a negative number. 09 (c) For purposes of AS 43.55.023(a) and (b) and only as to expenditures 10 incurred to explore for an oil or gas deposit located within land in which an explorer 11 does not own a working interest, the term "producer" in this section includes 12 "explorer." 13 Sec. 43.55.180. Required report. (a) The department shall study 14 (1) the effects of the provisions of this chapter on oil and gas 15 exploration, development, and production in the state, on investment expenditures for 16 oil and gas exploration, development, and production in the state, on the entry of new 17 producers into the oil and gas industry in the state, on state revenue, and on tax 18 administration and compliance, giving particular attention to the tax rates provided 19 under AS 43.55.011, the tax credits provided under AS 43.55.023 - 43.55.025, and the 20 deductions for and adjustments to lease expenditures provided under AS 43.55.160 - 21 43.55.170; and 22 (2) the effects of the tax rates under AS 43.55.011(i) on state revenue 23 and on oil and gas exploration, development, and production on private land, and the 24 fairness of those tax rates for private landowners. 25 (b) The department shall prepare a report on or before the first day of the 2011 26 regular session of the legislature on the results of the study made under (a) of this 27 section, including recommendations as to whether any changes should be made to this 28 chapter. The department shall notify the legislature that the report prepared under this 29 subsection is available. 30  * Sec. 26. AS 43.55.201 is amended to read: 31 Sec. 43.55.201. Surcharge levied. (a) Every producer of oil shall pay a 01 surcharge of $.01 [$.02] per barrel of oil produced from each lease or property in the 02 state, less any oil the ownership or right to which is exempt from taxation. 03 (b) The surcharge imposed by (a) of this section is in addition to the tax  04 imposed by AS 43.55.011 and is due on the last day of the month on oil produced  05 from each lease or property during the preceding month. The surcharge [SHALL 06 BE PAID IN THE SAME MANNER AS THE TAX IMPOSED BY AS 43.55.011 - 07 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.300 - 08 43.55.310. 09 (c) A producer of oil shall make a report [REPORTS] of production on  10 March 31 of the year following the calendar year of production and in the same 11 manner and under the same penalties as required under AS 43.55.011 - 43.55.180 12 [AS 43.55.011 - 43.55.150]. 13  * Sec. 27. AS 43.55.201 is amended by adding a new subsection to read: 14 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or 15 property is not considered to be produced from a lease or property for purposes of this 16 section. 17  * Sec. 28. AS 43.55.300 is amended to read: 18 Sec. 43.55.300. Surcharge levied. (a) Every producer of oil shall pay a 19 surcharge of $.04 [$.03] per barrel of oil produced from each lease or property in the 20 state, less any oil the ownership or right to which is exempt from taxation. 21 (b) The surcharge imposed by (a) of this section is in addition to the tax  22 imposed by AS 43.55.011 and is due on the last day of the month on oil produced  23 from each lease or property during the preceding month. The surcharge [SHALL 24 BE PAID IN THE SAME MANNER AS THE TAX IMPOSED BY AS 43.55.011 - 25 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.201 - 26 43.55.231. 27 (c) A producer of oil shall make a report [REPORTS] of production on  28 March 31 of the year following the calendar year of production and in the same 29 manner and under the same penalties as required under AS 43.55.011 - 43.55.180 30 [AS 43.55.011 - 43.55.150]. 31  * Sec. 29. AS 43.55.300 is amended by adding a new subsection to read: 01 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or 02 property is not considered to be produced from a lease or property for purposes of this 03 section. 04 * Sec. 30. AS 43.55.900(6) is repealed and reenacted to read: 05 (6) "gas" means 06 (A) all natural, associated, or casinghead gas; 07 (B) all hydrocarbons that 08 (i) are recovered by mechanical separation of well 09 fluids or by gas processing in a gas processing plant; and 10 (ii) exist in a gaseous phase at the completion of 11 mechanical separation and any gas processing in a gas processing plant; 12 and 13 (C) all other hydrocarbons produced from a well not defined as 14 oil; 15  * Sec. 31. AS 43.55.900(7) is repealed and reenacted to read: 16 (7) "gross value at the point of production" means 17 (A) for oil, the value of the oil at its point of production 18 without deduction of any costs upstream of that point of production; 19 (B) for gas, the value of the gas at its point of production 20 without deduction of any costs upstream of that point of production; 21 * Sec. 32. AS 43.55.900(10) is repealed and reenacted to read: 22 (10) "oil" means 23 (A) crude petroleum oil; and 24 (B) all liquid hydrocarbons that are recovered by mechanical 25 separation of well fluids or by gas processing in a gas processing plant; 26 * Sec. 33. AS 43.55.900 is amended by adding new paragraphs to read: 27 (17) "British thermal unit" means the quantity of heat required to raise 28 the temperature of one pound of water from 58.5 degrees Fahrenheit to 59.5 degrees 29 Fahrenheit at a constant pressure of one atmosphere; 30 (18) "BTU equivalent barrel" means 31 (A) in the case of oil, one barrel; 01 (B) in the case of gas, the amount of gas that has a heating 02 value of 6,000,000 British thermal units; 03 (19) "Cook Inlet sedimentary basin" has the meaning given in 04 regulations adopted to implement AS 38.05.180(f)(4); 05 (20) "explorer" means a person who, in exploring for new oil or gas 06 reserves, incurs expenditures; 07 (21) "gas processing" 08 (A) means processing a gaseous mixture of hydrocarbons 09 (i) by means of absorption, adsorption, externally 10 applied refrigeration, artificial compression followed by adiabatic 11 expansion using the Joule-Thomson effect, or another physical process 12 that is not mechanical separation; and 13 (ii) for the purpose of extracting and recovering liquid 14 hydrocarbons; 15 (B) does not include gas treatment; 16 (22) "gas processing plant" means a facility that 17 (A) extracts and recovers liquid hydrocarbons from a gaseous 18 mixture of hydrocarbons by gas processing; and 19 (B) is located upstream of any gas treatment and upstream of 20 the inlet of any gas pipeline system transporting gas to a market; 21 (23) "gas treatment" 22 (A) means conditioning gas and removing from gas 23 nonhydrocarbon substances for the purpose of rendering the gas acceptable for 24 tender and acceptance into a gas pipeline system; 25 (B) includes incidentally removing liquid hydrocarbons from 26 the gas; 27 (C) does not include 28 (i) dehydration required to facilitate the movement of 29 gas from the well to the point where gas processing takes place; 30 (ii) the scrubbing of liquids from gas to facilitate gas 31 processing; 01 (24) "heating value" means the gross number of BTUs released by 02 complete combustion of an amount of gas; 03 (25) "landowner's royalty interest" means 04 (A) a lessor's royalty interest under an oil and gas lease; or 05 (B) a royalty interest that is 06 (i) held by a surface owner of land from which oil or 07 gas is produced; and 08 (ii) granted in exchange for the right to use the surface 09 of that land or as compensation for damage to the surface of that land; 10 (26) "oil and gas lease" includes an oil and gas lease, a gas only lease, 11 and an oil only lease; 12 (27) "point of production" means 13 (A) for oil, the automatic custody transfer meter or device 14 through which the oil enters into the facilities of a carrier pipeline or other 15 transportation carrier in a condition of pipeline quality; in the absence of an 16 automatic custody transfer meter or device, "point of production" means the 17 mechanism or device to measure the quantity of oil that has been approved by 18 the department for that purpose, through which the oil is tendered and accepted 19 in a condition of pipeline quality into the facilities of a carrier pipeline or other 20 transportation carrier or into a field topping plant; 21 (B) for gas, other than gas described in (C) of this paragraph, 22 that is 23 (i) not subjected to or recovered by mechanical 24 separation or run through a gas processing plant, the first point where 25 the gas is accurately metered; 26 (ii) subjected to or recovered by mechanical separation 27 but not run through a gas processing plant, the first point where the gas 28 is accurately metered after completion of mechanical separation; 29 (iii) run through a gas processing plant, the first point 30 where the gas is accurately metered downstream of the plant; 31 (C) for gas run through an integrated gas processing plant and 01 gas treatment facility that does not accurately meter the gas after the gas 02 processing and before the gas treatment, the first point where gas processing is 03 completed or where gas treatment begins, whichever is further upstream. 04 * Sec. 34. AS 43.55.011(a), 43.55.011(b), 43.55.011(c), 43.55.012, 43.55.013, 43.55.016, 05 43.55.025(k)(1), 43.55.025(k)(3), 43.55.900(1), 43.55.900(8), 43.55.900(11), 43.55.900(12), 06 and 43.55.900(16) are repealed. 07 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 APPLICABILITY. (a) Sections 5, 7 - 10, 12 - 14, 16 - 20, 24, and 26 - 34 of this Act 10 and AS 43.55.160 - 43.55.170, enacted by sec. 25 of this Act, apply to oil and gas produced 11 after March 31, 2006. 12 (b) Section 11 of this Act applies to oil and gas produced before, on, or after the 13 effective date of sec. 11 of this Act. 14 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 TRANSITIONAL PROVISIONS. (a) Notwithstanding any contrary provision of 17 AS 43.55.023(i), enacted by sec. 13 of this Act, for oil and gas produced after March 31, 18 2006, and before January 1, 2007, the phrase "20 percent" in AS 43.55.023(i)(2), enacted by 19 sec. 13 of this Act, shall be replaced by the phrase "15 percent." 20 (b) For oil and gas produced before April 1, 2006, the provisions of AS 43.55, and 21 regulations adopted under AS 43.55, that were in effect before April 1, 2006, and that were 22 applicable to the oil and gas continue to apply to that oil and gas. 23 (c) Notwithstanding any contrary provision of AS 43.55.020(a), as repealed and 24 reenacted by sec. 7 of this Act, for oil and gas produced after March 31, 2006, and before 25 January 1, 2007, 26 (1) the amount of the taxes that would have been levied on the producer by 27 AS 43.55, as the provisions of that chapter read on March 31, 2006, is due on the last day of 28 each calendar month on the oil and gas that were produced from each lease or property during 29 the preceding month; 30 (2) the amount, if any, of the taxes levied by AS 43.55.011(e), (g), and (i), 31 enacted by sec. 5 of this Act, net of any credits applied as allowed by law, that exceeds the 01 amount due under (1) of this subsection, is due on March 31, 2007. 02 (d) Notwithstanding any contrary provision of AS 43.55.030(a), as amended by sec. 03 19 of this Act, for oil and gas produced after March 31, 2006, and before January 1, 2007, the 04 person paying the tax shall file with the Department of Revenue, at the time an amount of tax 05 is due 06 (1) under (c)(1) of this section, the statement required under former 07 AS 43.55.030(a), as that subsection read on March 31, 2006; and 08 (2) under (c)(2) of this section, the statement required under AS 43.55.030(a), 09 as amended by sec. 19 of this Act. 10 (e) Notwithstanding any contrary provision of AS 43.55.201(a) or (b), as amended by 11 sec. 26 of this Act, or AS 43.55.300(a) or (b), as amended by sec. 28 of this Act, for oil 12 produced after March 31, 2006, and before January 1, 2007, 13 (1) the amount of the surcharges that would have been imposed on the 14 producer under AS 43.55, as the provisions of that chapter read on March 31, 2006, is due on 15 the last day of each calendar month on oil produced from each lease or property during the 16 preceding month; 17 (2) the amount, if any, of the surcharges imposed under AS 43.55.201(a), as 18 amended by sec. 26 of this Act, and AS 43.55.300(a), as amended by sec. 28 of this Act, that 19 exceeds the amount due under (1) of this subsection, is due on March 31, 2007. 20 (f) Notwithstanding any contrary provision of AS 43.55.201(c), as amended by sec. 21 26 of this Act, or AS 43.55.300(c), as amended by sec. 28 of this Act, for oil produced after 22 March 31, 2006, and before January 1, 2007, at the time an amount of surcharge is due 23 (1) under (e)(1) of this section, the producer shall file the report of production 24 required under former AS 43.55.201(c) and 43.55.300(c), as those provisions read on 25 March 31, 2006; and 26 (2) under (e)(2) of this section, the producer shall file on March 31, 2007, the 27 report of production otherwise required under AS 43.55.201(c), as amended by sec. 26 of this 28 Act, and AS 43.55.300(c), as amended by sec. 28 of this Act. 29 (g) For purposes of taxes to be calculated and due under (c)(1) of this section and 30 statements to be filed under (d)(1) of this section, regulations that were adopted by the 31 Department of Revenue under AS 43.55, as the provisions of that chapter read on March 31, 01 2006, and that were in effect on that date apply to those taxes and statements. 02 (h) Notwithstanding any contrary provision of AS 43.55.020(a) as repealed and 03 reenacted by sec. 7 of this Act, for the installment payment due for January, 2007, the phrase 04 "the tax rate determined under AS 43.55.011(f) for the calendar year before the immediately 05 preceding calendar year" in AS 43.55.020(a)(2)(B)(ii), within AS 43.55.020(a) as repealed 06 and reenacted by sec. 7 of this Act, shall be replaced by the phrase "22.5 percent." 07 (i) Notwithstanding any contrary provision of AS 43.55.160(a)(2), enacted by sec. 25 08 of this Act, for oil and gas produced after March 31, 2006, and before January 1, 2007, the 09 phrase "1/12" in AS 43.55.160(a)(2)(A) - (D), enacted by sec. 25 of this Act, shall be 10 replaced by the phrase "1/9." 11  * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 14 contrary provision of AS 44.62.240, a regulation adopted by the Department of Revenue to 15 implement, interpret, make specific, or otherwise carry out the provisions of secs. 5, 7 - 10, 12 16 - 14, 16 - 20, 24 - 34, and 36 of this Act may apply retroactively to April 1, 2006, if the 17 Department of Revenue expressly designates in the regulation that the regulation applies 18 retroactively to that date. 19 * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 22 heading of 23 (1) AS 43.55 from "Oil and Gas Production Taxes and Oil Surcharge" to "Oil 24 and Gas Production Tax and Oil Surcharge"; 25 (2) article 1 of AS 43.55 from "Oil and Gas Properties Production Taxes" to 26 "Oil and Gas Production Tax"; 27 (3) AS 43.55.011 from "Oil production tax" to "Oil and gas production tax"; 28 (4) AS 43.55.025 from "Tax credit for oil and gas exploration or gas only 29 exploration" to "Alternative tax credit for oil and gas exploration"; 30 (5) AS 43.55.150 from "Determination of gross value" to "Determination of 31 gross value at the point of production." 01 * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 RETROACTIVITY OF PROVISIONS OF ACT. Sections 5, 7 - 10, 12 - 14, 16 - 20, 04 and 24 - 36 of this Act are retroactive to April 1, 2006. 05 * Sec. 40. This Act takes effect immediately under AS 01.10.070(c).