00 CS FOR HOUSE BILL NO. 2001(RES) 01 "An Act relating to the production tax on oil and gas and to conservation surcharges on 02 oil; providing a limit on the amount of tax that may be levied on the production of 03 certain gas that is produced outside of the Cook Inlet sedimentary basin and south of 68 04 degrees North latitude; providing a penalty for the underpayment of an installment 05 payment of the production tax on oil and gas; relating to the sharing between agencies 06 of certain information relating to the production tax and to oil and gas or gas only 07 leases; expanding the period in which the Department of Revenue may assess the 08 amount of oil and gas production tax and conservation surcharges; amending the State 09 Personnel Act to place in the exempt service certain state oil and gas auditors and their 10 immediate supervisors; establishing an oil and gas tax credit fund and authorizing 11 payment from that fund; providing for retroactive application of certain statutory and 12 regulatory provisions relating to the production tax on oil and gas and conservation 01 surcharges on oil; making conforming amendments; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 LEGISLATIVE INTENT. (a) It is the intent of the legislature that provisions of this 07 Act 08 (1) ensure a fair and equitable means of assessing and taxing Alaska's oil and 09 gas resources; 10 (2) encourage the availability to Alaska's citizens of affordable gas produced, 11 transported, and consumed within the state; and 12 (3) confirm by clarification the longstanding interpretation of AS 43.05.260 13 by the Department of Revenue through enactment of AS 43.55.075(b) in sec. 46 of this Act, 14 relating to limitation of assessments for the production tax on oil and gas and conservation 15 surcharges on oil. 16 (b) It is the intent of the legislature that not less than half of the amount of money 17 received by the state as a result of the retroactivity of certain provisions under sec. 66(b) and 18 (c) of this Act that exceeds the amount the state would have received if those provisions had 19 not been made retroactive will be appropriated in equal amounts to 20 (1) reduce the unfunded liability of the state's public employees' retirement 21 system and teachers' retirement system; 22 (2) the public education fund (AS 14.17.300). 23 (c) It is the intent of the legislature that any savings realized by a taxpayer on the 24 production of gas outside of the Cook Inlet sedimentary basin as a result of the addition of 25 AS 43.55.011(p) by sec. 20 of this Act and the amendment to AS 43.55.160(a) by sec. 50 of 26 this Act will be passed on to the ultimate consumer.  27  * Sec. 2. AS 38.05.035(a) is amended to read: 28 (a) The director shall 29 (1) have general charge and supervision of the division and may 30 exercise the powers specifically delegated to the director; the director may employ 01 and fix the compensation of assistants and employees necessary for the operations of 02 the division; the director [AND] is the certifying officer of the division, with the 03 consent of the commissioner, and may approve vouchers for disbursements of money 04 appropriated to the division; 05 (2) manage, inspect, and control state land and improvements on it 06 belonging to the state and under the jurisdiction of the division; 07 (3) execute laws, rules, regulations, and orders adopted by the 08 commissioner; 09 (4) prescribe application procedures and practices for the sale, lease, 10 or other disposition of available land, resources, property, or interest in them; 11 (5) prescribe fees or service charges, with the consent of the 12 commissioner, for any public service rendered; 13 (6) under the conditions and limitations imposed by law and the 14 commissioner, issue deeds, leases, or other conveyances disposing of available land, 15 resources, property, or any interests in them; 16 (7) have jurisdiction over state land, except that land acquired by the 17 Alaska World War II Veterans Board and the Agricultural Loan Board or the 18 departments or agencies succeeding to their respective functions through foreclosure 19 or default; to this end, the director possesses the powers and, with the approval of the 20 commissioner, shall perform the duties necessary to protect the state's rights and 21 interest in state land, including the taking of all necessary action to protect and 22 enforce the state's contractual or other property rights; 23 (8) [REPEALED 24 (9)] maintain the [SUCH] records [AS] the commissioner considers 25 necessary, administer oaths, and do all things incidental to the authority imposed; the 26 following records and files shall be kept confidential upon request of the person 27 supplying the information: 28 (A) the name of the person nominating or applying for the 29 sale, lease, or other disposal of land by competitive bidding; 30 (B) before the announced time of opening, the names of the 31 bidders and the amounts of the bids; 01 (C) all geological, geophysical, and engineering data supplied, 02 whether or not concerned with the extraction or development of natural 03 resources; 04 (D) except as provided in AS 38.05.036, cost data and 05 financial information submitted in support of applications, bonds, leases, and 06 similar items; 07 (E) applications for rights-of-way or easements; 08 (F) requests for information or applications by public agencies 09 for land that [WHICH] is being considered for use for a public purpose; 10 (9) [(10)] account for the fees, licenses, taxes, or other money 11 received in the administration of this chapter including the sale or leasing of land, 12 identify their source, and promptly transmit them to the proper fiscal department after 13 crediting them to the proper fund; receipts from land application filing fees and 14 charges for copies of maps and records shall be deposited immediately in the general 15 fund of the state by the director; 16 (10) [(11)] select and employ or obtain at reasonable compensation 17 cadastral, appraisal, or other professional personnel the director considers necessary 18 for the proper operation of the division; 19 (11) [(12)] be the certifying agent of the state to select, accept, and 20 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 21 devise, judgment, operation of law, or other means any land, of whatever nature or 22 interest, available to the state; and be the certifying agent of the state, to select, 23 accept, or secure by whatever action is necessary in the name of the state any land, or 24 title or interest to land available, granted, or subject to being transferred to the state 25 for any purpose; 26 (12) on request, furnish records, files, and other information  27 related to the administration of AS 38.05.180 to the Department of Revenue for  28 use in forecasting state revenue under or administering AS 43.55, whether or not  29 those records, files, and other information are required to be kept confidential  30 under (8) of this subsection; in the case of records, files, or other information  31 required to be kept confidential under (8) of this subsection, the Department of  01 Revenue shall maintain the confidentiality that the Department of Natural  02 Resources is required to extend to records, files, and other information under (8)  03 of this subsection 04 [(13) REPEALED 05 (14) REPEALED]. 06  * Sec. 3. AS 38.05.036(b) is amended to read: 07 (b) The Department of Revenue may obtain from the department information 08 relating to royalty and net profits payments and to exploration incentive credits under 09 this chapter or under AS 41.09, whether or not that information is confidential. The 10 Department of Revenue may use the information in carrying out its functions and 11 responsibilities under AS 43, and shall hold that information confidential to the extent 12 required by an agreement with the department or by AS 38.05.035(a)(8) 13 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 14  * Sec. 4. AS 38.05.036(f) is amended to read: 15 (f) Except as otherwise provided in this section or in connection with official 16 investigations or proceedings of the department, it is unlawful for a current or former 17 officer, employee, or agent of the state to divulge information obtained by the 18 department as a result of an audit under this section that is required by an agreement 19 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 20 AS 41.09.010(d) to be kept confidential. 21  * Sec. 5. AS 38.05.036(g) is amended to read: 22 (g) Nothing in this section prohibits the publication of statistics in a manner 23 that maintains the confidentiality of information to the extent required by an 24 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 25 AS 41.09.010(d). 26  * Sec. 6. AS 38.05.123(f) is amended to read: 27 (f) As part of the timber sale negotiations authorized by this section, the 28 commissioner may require a prospective purchaser negotiating a timber sale contract 29 to submit financial and technical data that demonstrates that the requirements of this 30 section have been or will be met. Upon the prospective purchaser's request, the 31 commissioner shall keep data provided by the purchaser confidential in accordance 01 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 02  * Sec. 7. AS 38.05.133(e) is amended to read: 03 (e) The commissioner may make a written request to a prospective licensee 04 for additional information on the prospective licensee's proposal. The commissioner 05 shall keep confidential information described in AS 38.05.035(a)(8) 06 [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made 07 a written request that the information remain confidential. 08  * Sec. 8. AS 38.05.180(j) is amended to read: 09 (j) The commissioner 10 (1) may provide for modification of royalty on individual leases, 11 leases unitized as described in (p) of this section, leases subject to an agreement 12 described in (s) or (t) of this section, or interests unitized under AS 31.05 13 (A) to allow for production from an oil or gas field or pool if 14 (i) the oil or gas field or pool has been sufficiently 15 delineated to the satisfaction of the commissioner; 16 (ii) the field or pool has not previously produced oil or 17 gas for sale; and 18 (iii) oil or gas production from the field or pool would 19 not otherwise be economically feasible; 20 (B) to prolong the economic life of an oil or gas field or pool 21 as per barrel or barrel equivalent costs increase or as the price of oil or gas 22 decreases, and the increase or decrease is sufficient to make future production 23 no longer economically feasible; or 24 (C) to reestablish production of shut-in oil or gas that would 25 not otherwise be economically feasible; 26 (2) may not grant a royalty modification unless the lessee or lessees 27 requesting the change make a clear and convincing showing that a modification of 28 royalty meets the requirements of this subsection and is in the best interests of the 29 state; 30 (3) shall provide for an increase or decrease or other modification of 31 the state's royalty share by a sliding scale royalty or other mechanism that shall be 01 based on a change in the price of oil or gas and may also be based on other relevant 02 factors such as a change in production rate, projected ultimate recovery, development 03 costs, and operating costs; 04 (4) may not grant a royalty reduction for a field or pool 05 (A) under (1)(A) of this subsection if the royalty modification 06 for the field or pool would establish a royalty rate of less than five percent in 07 amount or value of the production removed or sold from a lease or leases 08 covering the field or pool; 09 (B) under (1)(B) or (1)(C) of this subsection if the royalty 10 modification for the field or pool would establish a royalty rate of less than 11 three percent in amount or value of the production removed or sold from a 12 lease or leases covering the field or pool; 13 (5) may not grant a royalty reduction under this subsection without 14 including an explicit condition that the royalty reduction is not assignable without the 15 prior written approval, which may not be unreasonably withheld, by the 16 commissioner; the commissioner shall, in the preliminary and final findings and 17 determinations, set out the conditions under which the royalty reduction may be 18 assigned; 19 (6) shall require the lessee or lessees to submit, with the application 20 for the royalty reduction, financial and technical data that demonstrate that the 21 requirements of this subsection are met; the commissioner 22 (A) may require disclosure of only the financial and technical 23 data related to development, production, and transportation of oil and gas or 24 gas only from the field or pool that are reasonably available to the applicant; 25 and 26 (B) shall keep the data confidential under AS 38.05.035(a)(8) 27 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application 28 for the royalty reduction; the confidential data may be disclosed by the 29 commissioner to legislators and to the legislative auditor and as directed by 30 the chair or vice-chair of the Legislative Budget and Audit Committee to the 31 director of the division of legislative finance, the permanent employees of 01 their respective divisions who are responsible for evaluating a royalty 02 reduction, and to agents or contractors of the legislative auditor or the 03 legislative finance director who are engaged under contract to evaluate the 04 royalty reduction, if they sign an appropriate confidentiality agreement; 05 (7) may 06 (A) require the lessee or lessees making application for the 07 royalty reduction under (1)(A) of this subsection to pay for the services of an 08 independent contractor, selected by the lessee or lessees from a list of 09 qualified consultants compiled by the commissioner, to evaluate hydrocarbon 10 development, production, transportation, and economics and to assist the 11 commissioner in evaluating the application and financial and technical data; 12 if, under this subparagraph, the commissioner requires payment for the 13 services of an independent contractor, the total cost of the services to be paid 14 for by the lessee or lessees may not exceed $150,000 for each application, and 15 the commissioner shall determine the relevant scope of the work to be 16 performed by the contractor; selection of an independent contractor under this 17 subparagraph is not subject to AS 36.30; 18 (B) with the mutual consent of the lessee or lessees making 19 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 20 request payment for the services of an independent contractor, selected from a 21 list of qualified consultants to evaluate hydrocarbon development, production, 22 transportation, and economics by the commissioner to assist the commissioner 23 in evaluating the application and financial and technical data; if, under this 24 subparagraph, the commissioner requires payment for the services of an 25 independent contractor, the total cost of the services that may be paid for by 26 the lessee or lessees may not exceed $150,000 for each application, and the 27 commissioner shall determine the relevant scope of the work to be performed 28 by the contractor; selection of an independent contractor under this 29 subparagraph is not subject to AS 36.30; 30 (8) shall make and publish a preliminary findings and determination 31 on the royalty reduction application, give reasonable public notice of the preliminary 01 findings and determination, and invite public comment on the preliminary findings 02 and determination during a 30-day period for receipt of public comment; 03 (9) shall offer to appear before the Legislative Budget and Audit 04 Committee, on a day that is not earlier than 10 days and not later than 20 days after 05 giving public notice under (8) of this subsection, to provide the committee a review of 06 the commissioner's preliminary findings and determination on the royalty reduction 07 application and administrative process; if the Legislative Budget and Audit 08 Committee accepts the commissioner's offer, the committee shall give notice of the 09 committee's meeting to all members of the legislature; 10 (10) shall make copies of the preliminary findings and determination 11 available to 12 (A) the presiding officer of each house of the legislature; 13 (B) the chairs of the legislature's standing committees on 14 resources; and 15 (C) the chairs of the legislature's special committees on oil and 16 gas, if any; 17 (11) shall, within 30 days after the close of the public comment period 18 under (8) of this subsection, 19 (A) prepare a summary of the public response to the 20 commissioner's preliminary findings and determination; 21 (B) make a final findings and determination; the 22 commissioner's final findings and determination prepared under this 23 subparagraph regarding a royalty reduction is final and not appealable to the 24 court; 25 (C) transmit a copy of the final findings and determination to 26 the lessee; 27 (D) with the applicant's consent, amend the applicant's lease or 28 unitization agreement consistent with the commissioner's final decision; and 29 (E) make copies of the final findings and determination 30 available to each person who submitted comment under (8) of this subsection 31 and who has filed a request for the copies; 01 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 02 section in the commissioner's determination under this subsection. 03  * Sec. 9. AS 38.05.275(c) is amended to read: 04 (c) Subsection (b) of this section may not be construed to limit the director in 05 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 06 * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 07 (42) oil and gas auditors performing 08 (A) production tax audits, and their immediate supervisors, in 09 the Department of Revenue; 10 (B) royalty audits, including net profit share audits, and their 11 immediate supervisors, in the Department of Natural Resources. 12  * Sec. 11. AS 41.09.010(d) is amended to read: 13 (d) Data derived from drilling a stratigraphic test well or exploratory well that 14 is provided to the commissioner under (c)(3) of this section shall be kept confidential 15 for 24 months after receipt by the commissioner unless the owner of the well gives 16 written permission to the state to release the well data at an earlier date, and, 17 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 18 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 19 other data provided to the commissioner under (c)(3) of this section, except that the 20 commissioner, under appropriate confidentiality provisions and without preference or 21 discrimination, may display to all interested third parties, but may not distribute or 22 transfer in hard copy or electronic form, those data with respect to all land if the 23 commissioner determines that the limited disclosure is necessary to further the 24 interest of the state in evaluating or developing its land. 25 * Sec. 12. AS 43.05.230(a) is amended to read: 26 (a) It is unlawful for a current or former officer, employee, or agent of the 27 state to divulge the amount of income or the particulars set out or disclosed in a report 28 or return made under this title, except 29 (1) in connection with official investigations or proceedings of the 30 department, whether judicial or administrative, involving taxes due under this title; 31 (2) in connection with official investigations or proceedings of the 01 child support enforcement agency, whether judicial or administrative, involving child 02 support obligations imposed or imposable under AS 25 or AS 47; 03 (3) as provided in AS 38.05.036 pertaining to audit functions of the 04 Department of Natural Resources; 05 (4) as provided in AS 43.05.405 - 43.05.499; and 06 (5) as otherwise provided in this section or AS 43.55.890. 07 * Sec. 13. AS 43.05.230(h) is amended to read: 08 (h) The commissioner shall, upon request, furnish to the Department of 09 Natural Resources copies of tax returns, reports, and other documents filed under 10 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 11 workpapers under those chapters. The Department of Natural Resources shall 12 maintain the confidentiality that the Department of Revenue is required to extend to 13 the returns, reports, documents, determinations, and workpapers furnished to the 14 Department of Natural Resources under this subsection. 15 * Sec. 14. AS 43.05.260(a) is amended to read: 16 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and  17 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 18 years after the return was filed, whether or not a return was filed on or after the date 19 prescribed by law. If the tax is not assessed before the expiration of the applicable 20 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 21 of the tax. 22  * Sec. 15. AS 43.55.011(e) is amended to read: 23 (e) There is levied on the producer of oil or gas a tax for all oil and gas 24 produced each calendar year [MONTH] from each lease or property in the state, less 25 any oil and gas the ownership or right to which is exempt from taxation or constitutes 26 a landowner's royalty interest. Except as otherwise provided under (j) and (k) of this 27 section, the tax is equal to the greater of 25 [22.5] percent of the annual production 28 tax value of the taxable oil and gas as calculated under AS 43.55.160, or the 29 minimum tax determined under (f) of this section. 30  * Sec. 16. AS 43.55.011(j) is amended to read: 31 (j) For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of 01 this section on gas produced from a lease or property in the Cook Inlet sedimentary 02 basin may not exceed 03 (1) for a lease or property that first commenced commercial 04 production of gas before April 1, 2006, the product obtained by multiplying (A) the 05 amount of taxable gas produced during the calendar year from the lease or property, 06 times (B) the average rate of tax that was imposed under this chapter on taxable gas 07 produced from the lease or property for the 12-month period ending on March 31, 08 2006, times (C) the quotient obtained by dividing the total gross value at the point of 09 production of the taxable gas produced from the lease or property during the 12- 10 month period ending on March 31, 2006, by the total amount of that gas; 11 (2) for a lease or property that first commences commercial 12 production of gas after March 31, 2006, the product obtained by multiplying (A) the 13 amount of taxable gas produced during the calendar year from the lease or property, 14 times (B) the average rate of tax that was imposed under this chapter on taxable gas 15 produced from all leases or properties in the Cook Inlet sedimentary basin for the 12- 16 month period ending on March 31, 2006, times (C) the average prevailing value for 17 gas delivered in the Cook Inlet area for the 12-month period ending March 31, 2006, 18 as determined by the department under AS 43.55.020(f). 19  * Sec. 17. AS 43.55.011(k) is amended to read: 20 (k) For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of 21 this section on oil produced from a lease or property in the Cook Inlet sedimentary 22 basin may not exceed 23 (1) for a lease or property that first commenced commercial 24 production of oil before April 1, 2006, the product obtained by multiplying (A) the 25 amount of taxable oil produced during the calendar year from the lease or property, 26 times (B) the average rate of tax that was imposed under this chapter on taxable oil 27 produced from the lease or property for the 12-month period ending on March 31, 28 2006, times (C) the quotient obtained by dividing the total gross value at the point of 29 production of the taxable oil produced from the lease or property during the 12-month 30 period ending on March 31, 2006, by the total amount of that oil; 31 (2) for a lease or property that first commences commercial 01 production of oil after March 31, 2006, the product obtained by multiplying (A) the 02 amount of taxable oil produced during the calendar year from the lease or property, 03 times (B) the average rate of tax that was imposed under this chapter on taxable oil 04 produced from all leases or properties in the Cook Inlet sedimentary basin for the 12- 05 month period ending on March 31, 2006, times (C) the average prevailing value for 06 oil produced and delivered in the Cook Inlet area for the 12-month period ending on 07 March 31, 2006, as determined by the department under AS 43.55.020(f). 08  * Sec. 18. AS 43.55.011(l) is amended to read: 09 (l) When a limitation under (j) or (k) of this section on the tax levied by (e) 10 and (o) [(g)] of this section has the effect of reducing the producer's tax on oil or gas 11 produced from a lease or property below the amount of tax that would be levied in the 12 absence of that limitation, the amount of the reduction is applied first against the tax 13 levied by (o) [(g)] of this section. However, that tax may not be reduced below zero. 14  * Sec. 19. AS 43.55.011(m) is amended to read: 15 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 16 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 17 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 18 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 19 basin and that are available to be applied against a tax levied by (e) of this section for 20 [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin 21 during a calendar year may be applied only against the tax levied by (e) of this section 22 for [ON] that gas. The amount by which the amount of tax credits that are allocated 23 to gas produced from leases or properties in the Cook Inlet sedimentary basin and that 24 the producer would otherwise be allowed to use for a later calendar year or transfer to 25 another person exceeds the amount of tax credits whose application would reduce the 26 tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the 27 amount of excess tax credits, and the excess tax credits are subject to the following: 28 (1) for each lease or property for which a limitation under (j) or (k) of 29 this section on the tax levied by (e) and (o) [(g)] of this section has the effect of 30 reducing the producer's tax below the amount of tax that would be levied in the 31 absence of that limitation, the producer shall calculate the amount of that reduction; 01 (2) the producer shall calculate the total of the reductions calculated 02 under (1) of this subsection for all affected leases or properties; 03 (3) the producer shall reduce the amount of excess tax credits by the 04 total calculated under (2) of this subsection, but not to less than zero; 05 (4) any amount of excess tax credits remaining after reduction under 06 (3) of this subsection may be used for a later calendar year, transferred to another 07 person, or applied against a tax levied for [ON] oil or gas produced from a lease or 08 property located anywhere in the state to the extent otherwise allowed under 09 applicable law governing the tax credits. 10  * Sec. 20. AS 43.55.011 is amended by adding new subsections to read: 11 (o) In addition to the tax levied under (e) of this section, for each month for 12 which the producer's average monthly production tax value of the taxable oil and gas 13 exceeds $30 for each BTU equivalent barrel, there is levied on the producer of oil or 14 gas a tax for all oil and gas produced that month from each lease or property in the 15 state, less any oil and gas the ownership or right to which is exempt from taxation or 16 constitutes a landowner's royalty interest. Except as otherwise provided under (j) and 17 (k) of this section, the tax levied under this subsection is equal to the sum over all 18 months of the calendar year of the amount calculated under this subsection. For each 19 month for which this subsection applies and for which the average monthly 20 production tax value of the taxable oil and gas is 21 (1) not more than $40 for each BTU equivalent barrel, the tax is equal 22 to 0.2 percent of the gross value at the point of production of the taxable oil and gas 23 for that month multiplied by the number that represents the difference between the 24 average production tax value for each BTU equivalent barrel of the taxable oil and 25 gas for that month and $30; 26 (2) more than $40 but not more than $50 for each BTU equivalent 27 barrel, the tax is equal to two percent of the gross value at the point of production of 28 the taxable oil and gas for that month plus 0.3 percent of the gross value at the point 29 of production of the taxable oil and gas for that month multiplied by the number that 30 represents the difference between the average production tax value for each BTU 31 equivalent barrel of the taxable oil and gas for that month and $40; 01 (3) more than $50 but not more than $60 for each BTU equivalent 02 barrel, the tax is equal to five percent of the gross value at the point of production of 03 the taxable oil and gas for that month plus 0.4 percent of the gross value at the point 04 of production of the taxable oil and gas for that month multiplied by the number that 05 represents the difference between the average production tax value for each BTU 06 equivalent barrel of the taxable oil and gas for that month and $50; or 07 (4) more than $60 for each BTU equivalent barrel, the tax is equal to 08 nine percent of the gross value at the point of production of the taxable oil and gas for 09 that month plus 0.5 percent of the gross value at the point of production of the taxable 10 oil and gas for that month multiplied by the number that represents the difference 11 between the average production tax value for each BTU equivalent barrel of the 12 taxable oil and gas for that month and $60. 13 (p) Notwithstanding other provisions of this section, for a calendar year 14 before 2022, the tax levied under (e) and (o) of this section for each 1,000 cubic feet 15 of gas for gas produced from a lease or property outside the Cook Inlet sedimentary 16 basin and used in the state may not exceed the amount of tax for each 1,000 cubic feet 17 of gas that is determined under (j)(2) of this section. 18  * Sec. 21. AS 43.55.020(a) is amended to read: 19 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e), (f), 20 [(g), OR] (i), or (o), and notwithstanding that a producer may be liable for the tax 21 under AS 43.55.011(f) rather than the tax under AS 43.55.011(e), shall pay the tax as 22 follows: 23 (1) an installment payment of the estimated tax levied by 24 AS 43.55.011(e) or (f), net of any tax credits applied as allowed by law, is due for 25 each month of the calendar year on the last day of the following month; the amount of 26 the installment payment is the sum of the amounts calculated under (2) and (3) of this 27 subsection, but not less than zero; 28 (2) the first of the two amounts used to calculate the installment 29 payment for a month under (1) of this subsection is equal to the remainder obtained 30 by subtracting 31 (A) 1/12 of the tax credits that are allowed by law to be 01 applied against the tax levied by AS 43.55.011(e) for the calendar year; from 02 (B) the total of the monthly production values calculated 03 under [IN THE MANNER PROVIDED IN] AS 43.55.160(a)(2) of all oil and 04 gas taxable under AS 43.55.011(e) and produced by the producer from leases 05 or properties in the state during the month, multiplied by 25 [22.5] percent; 06 (3) the second of the two amounts used to calculate the installment 07 payment for a month under (1) of this subsection is the amount calculated for the 08 month under AS 43.55.011(o) [AS 43.55.011(g)]; 09 (4) an installment payment of the estimated tax levied by 10 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 11 on the last day of the following month; the amount of the installment payment is the 12 sum of 13 (A) the applicable percentage rate for oil provided under 14 AS 43.55.011(i), multiplied by the gross value at the point of production of 15 the oil taxable under AS 43.55.011(i) and produced from the lease or property 16 during the month; plus 17 (B) the applicable percentage rate for gas provided under 18 AS 43.55.011(i), multiplied times the gross value at the point of production of 19 the gas taxable under AS 43.55.011(i) and produced from the lease or property 20 during the month; 21 (5) any amount of tax levied by AS 43.55.011(e), (f), (i), and (o) 22 [AS 43.55.011(e) - (g) AND (i)], net of any credits applied as allowed by law, that 23 exceeds the total of the amounts due as installment payments of estimated tax is due 24 on March 31 of the year following the calendar year of production. 25  * Sec. 22. AS 43.55.020(d) is amended to read: 26 (d) In making settlement with the royalty owner for oil and gas that is taxable 27 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 28 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 29 time the tax becomes due to the amount of the tax paid. If the total deductions of 30 installment payments of estimated tax for a calendar year exceed the actual tax for 31 that calendar year, the producer shall, before April 1 of the following year, refund the 01 excess to the royalty owner. Unless otherwise agreed between the producer and the 02 royalty owner, the amount of the tax paid under AS 43.55.011(e), (f), and (o) 03 [AS 43.55.011(e) - (g)] on taxable royalty oil and gas for a calendar year, other than 04 oil and gas the ownership or right to which constitutes a landowner's royalty interest, 05 is considered to be the gross value at the point of production of the taxable royalty oil 06 and gas produced during the calendar year multiplied by a figure that is a quotient, in 07 which 08 (1) the numerator is the producer's total tax liability under 09 AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)] for the calendar year of 10 production; and 11 (2) the denominator is the total gross value at the point of production 12 of the oil and gas taxable under AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)] 13 produced by the producer from all leases and properties in the state during the 14 calendar year. 15  * Sec. 23. AS 43.55.020(g) is amended to read: 16 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 17 amount of an installment payment required under (a)(1) - (4) of this section that is not 18 paid when due bears interest (1) at the rate provided for an underpayment under 26 19 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date 20 the installment payment is due until [THE] March 31 following the calendar year of  21 production [DESCRIBED IN AS 43.55.030(a)], and (2) as provided for a delinquent 22 tax under AS 43.05.225 after that March 31. Interest accrued under (1) of this 23 subsection that remains unpaid after that March 31 is treated as an addition to tax that 24 bears interest under (2) of this subsection. An unpaid amount of tax due under (a)(5) 25 of this section that is not paid when due bears interest as provided for a delinquent tax 26 under AS 43.05.225. 27  * Sec. 24. AS 43.55.020(h) is amended to read: 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 03 (A) the date it is refunded or is applied to an underpayment; [,] 04 or 05 (B) [THE] March 31 following the calendar year of  06 production [DESCRIBED IN AS 43.55.030(a)]; 07 (2) except as provided under (1) of this subsection, interest with 08 respect to an overpayment is allowed only on any net overpayment of the payments 09 required under (a) of this section that remains after the later of [THE] March 31 10 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or 11 the date that the statement required under AS 43.55.030(a) is filed; 12 (3) interest is allowed under (2) of this subsection only from a date 13 that is 90 days after the later of [THE] March 31 following the calendar year of  14 production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement 15 required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment 16 was refunded within the 90-day period; 17 (4) interest under (2) and (3) of this subsection is paid at the rate and 18 in the manner provided in AS 43.05.225(1). 19  * Sec. 25. AS 43.55.020 is amended by adding a new subsection to read: 20 (i) A civil penalty shall be added to the amount of an installment payment 21 required under (a)(1) - (4) of this section if the full amount of the payment is not paid 22 by the date the payment is due. The penalty is equal to five percent of the difference 23 between the amount of the installment payment that was made timely and the amount 24 of the installment payment required under (a)(1) - (4) of this section. If no part of the 25 required installment payment was made timely, the penalty is equal to five percent of 26 the installment payment required under (a)(1) - (4) of this section. The penalty is in 27 addition to the interest imposed under (g) of this section and a penalty added under 28 AS 43.05.220, if any. 29  * Sec. 26. AS 43.55.023(b) is amended to read: 30 (b) A producer or explorer may elect to take a tax credit in the amount of the 31 [20 PERCENT OF A] carried-forward annual loss multiplied by the nominal tax  01 rate in AS 43.55.011(e). A credit under this subsection may be applied against a tax 02 due under AS 43.55.011(e). For purposes of this subsection, 03 (1) a carried-forward annual loss is the amount of a producer's or 04 explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a 05 previous calendar year that was not deductible for that calendar year under 06 AS 43.55.160(b) and (e); and 07 (2) "nominal tax rate" means the tax rate stated in  08 AS 43.55.011(e) that is not the tax determined at the minimum tax rate that may  09 be applicable under AS 43.55.011(f). 10  * Sec. 27. AS 43.55.023(d) is amended to read: 11 (d) Except as limited by (i) of this section, a person entitled to take a tax 12 credit under this section that wishes to transfer the unused credit to another person or  13 obtain a cash payment under AS 43.55.028 may apply to the department for a 14 transferable tax credit certificate. An application under this subsection must be in a 15 form prescribed by the department and must include supporting information and 16 documentation that the department reasonably requires. The department shall grant or 17 deny an application, or grant an application as to a lesser amount than that claimed 18 and deny it as to the excess, not later than 60 days after the latest of (1) March 31 of 19 the year following the calendar year in which the qualified capital expenditure or 20 carried-forward annual loss for which the credit is claimed was incurred; (2) if the 21 applicant is required under AS 43.55.030(a) to file a statement on or before March 31 22 of the year following the calendar year in which the qualified capital expenditures or 23 carried-forward annual loss for which the credit is claimed was incurred, the date the 24 statement required under AS 43.55.030(a) or (e) was filed; or (3) the date the 25 application was received by the department. If, based on the information then 26 available to it, the department is reasonably satisfied that the applicant is entitled to a 27 credit, the department shall issue the applicant a transferable tax credit certificate for 28 the amount of the credit. A certificate issued under this subsection does not expire. 29  * Sec. 28. AS 43.55.023(g) is amended to read: 30 (g) The issuance of a transferable tax credit certificate under (d) of this 31 section or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under 01 AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later 02 audit a tax credit claim to which the certificate relates or to adjust the claim if the 03 department determines, as a result of the audit, that the applicant was not entitled to 04 the amount of the credit for which the certificate was issued. The tax liability of the 05 applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the 06 amount of the credit that exceeds that to which the applicant was entitled, or the 07 applicant's available valid outstanding credits applicable against the tax levied by 08 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is 09 increased under this subsection, the increase bears interest under AS 43.05.225 from 10 the date the transferable tax credit certificate was issued. For purposes of this 11 subsection, an applicant that is an explorer is considered a producer subject to the tax 12 levied by AS 43.55.011(e). 13  * Sec. 29. AS 43.55.023(i) is amended to read: 14 (i) For the purposes of this section, 15 (1) a producer's or explorer's transitional investment expenditures are 16 the sum of the expenditures the producer or explorer incurred after March 31, 2003 17 [2001], and before April 1, 2006, that would be qualified capital expenditures if they 18 were incurred after March 31, 2006, less the sum of the payments or credits the 19 producer or explorer received before April 1, 2006, for the sale or other transfer of 20 assets, including geological, geophysical, or well data or interpretations, acquired by 21 the producer or explorer as a result of expenditures the producer or explorer incurred 22 before April 1, 2006, that would be qualified capital expenditures, if they were 23 incurred after March 31, 2006; 24 (2) a producer or explorer may elect to take a tax credit against a tax 25 due under AS 43.55.011(e) in the amount of 20 percent of the producer's or explorer's 26 transitional investment expenditures, but only to the extent that the amount does not 27 exceed 1/10 of the producer's or explorer's qualified capital expenditures that are 28 incurred during the calendar year for which the credit is taken; 29 (3) a producer or explorer may not take a tax credit for a transitional 30 investment expenditure 31 (A) for any calendar year after the later of 01 (i) 2013; or 02 (ii) the sixth calendar year after the calendar year for 03 which the producer first applies a credit under this subsection against a 04 tax due under AS 43.55.011(e), if the producer did not have 05 commercial production of oil or gas from a lease or property in the 06 state before April 1, 2006; 07 (B) more than once; or 08 (C) if a credit for that expenditure was taken under 09 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 10 (4) notwithstanding (d), (e), and (g) of this section, a producer or 11 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for 12 a transitional investment expenditure. 13  * Sec. 30. AS 43.55.023 is amended by adding new subsections to read: 14 (l) A person that is exempt from taxation under this chapter may not apply for 15 a transferable tax credit certificate. 16 (m) Notwithstanding the limitation on the use of a transferable tax credit by a 17 transferee under (e) of this section and subject to appropriations made by law, if and 18 to the extent that purchase of transferable tax credits by the Alaska Retirement 19 Management Board is authorized by law, the department shall issue a cash refund to 20 the Alaska Retirement Management Board for a transferable tax credit originally 21 issued to a person under (d) of this section and purchased by the Alaska Retirement 22 Management Board. 23  * Sec. 31. AS 43.55.025(a) is amended to read: 24 (a) Subject to the terms and conditions of this section, a credit against the 25 production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for 26 exploration expenditures that qualify under (b) of this section in an amount equal to 27 one of the following: 28 (1) 30 [20] percent of the total exploration expenditures that qualify 29 only under (b) and (c) of this section; 30 (2) 30 [20] PERCENT of the total exploration expenditures [FOR 31 WORK PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) 01 and (d) of this section; 02 (3) 40 percent of the total exploration expenditures that qualify under 03 (b), (c), and (d) of this section; or 04 (4) 40 percent of the total exploration expenditures that qualify only 05 under (b) and (e) of this section. 06  * Sec. 32. AS 43.55.025(b) is amended to read: 07 (b) To qualify for the production tax credit under (a) of this section, an 08 exploration expenditure must be incurred for work performed [ON OR] after 09 December 31, 2006 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN 10 EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE 11 INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and 12 (1) may be for seismic or other geophysical exploration costs not 13 connected with a specific well; 14 (2) if for an exploration well, 15 (A) must be incurred by an explorer that holds an interest in 16 the exploration well for which the production tax credit is claimed; 17 (B) may be for either a [AN OIL OR GAS DISCOVERY] 18 well that encounters an oil or gas deposit or a dry hole; [AND] 19 (C) must be for a well that has been completed, suspended,  20 or abandoned under AS 31.05.030 at the time the explorer claims the tax  21 credit under (f) of this section; and  22 (D) must be for goods, services, or rentals of personal 23 property reasonably required for the surface preparation, drilling, casing, 24 cementing, and logging of an exploration well, and, in the case of a dry hole, 25 for the expenses required for abandonment if the well is abandoned within 18 26 months after the date the well was spudded; 27 (3) may not be for [TESTING, STIMULATION, OR COMPLETION 28 COSTS;] administration, supervision, engineering, or lease operating costs; 29 geological or management costs; community relations or environmental costs; 30 bonuses, taxes, or other payments to governments related to the well; costs arising  31 from gross negligence or violation of health, safety, or environmental statutes or  01 regulations; or other costs that are generally recognized as indirect costs or financing 02 costs; and 03 (4) may not be incurred for an exploration well or seismic exploration 04 that is included in a plan of exploration or a plan of development for any unit on or  05 before May 13, 2003. 06 * Sec. 33. AS 43.55.025(c) is repealed and reenacted to read: 07 (c) To be eligible for the 30 percent production tax credit authorized by (a)(1) 08 of this section or the 40 percent production tax credit authorized by (a)(3) of this 09 section, exploration expenditures must 10 (1) qualify under (b) of this section; and 11 (2) be for an exploration well, subject to the following: 12 (A) before spudding the well, (i) the explorer shall submit to 13 the commissioner of natural resources the information necessary to determine 14 whether the geological objective of the well is a potential oil or gas trap that is 15 distinctly separate from any trap that has been tested by a preexisting well; 16 and (ii) the commissioner of natural resources must make an affirmative 17 determination on that question; the commissioner of natural resources shall 18 decide whether to make that determination within 60 days after receiving all 19 the necessary information from the explorer and based on the information 20 received and on other information the commissioner of natural resources may 21 consider relevant; 22 (B) for an exploration well other than a well to explore a Cook 23 Inlet prospect, the well must be located and drilled in such a manner that the 24 bottom hole is located not less than three miles away from the bottom hole of 25 a preexisting well drilled for oil or gas, irrespective of whether the preexisting 26 well has been completed, suspended, or abandoned; 27 (C) after completion, abandonment, or suspension under 28 AS 31.05.030 of the exploration well, the commissioner of natural resources 29 must determine that the well adequately achieved the explorer's stated 30 geological objective. 31  * Sec. 34. AS 43.55.025(f) is amended to read: 01 (f) For a production tax credit under this section, 02 (1) an explorer shall, in a form prescribed by the department and,  03 except for a credit under (l) of this section, within six months of the completion of 04 the exploration activity, claim the credit and submit information sufficient to 05 demonstrate to the department's satisfaction that the claimed exploration expenditures 06 qualify under this section; 07 (2) an explorer shall agree, in writing, 08 (A) to notify the Department of Natural Resources, within 30 09 days after completion of seismic or geophysical data processing, completion 10 of [A] well drilling, or filing of a claim for credit, whichever is the latest, for 11 which exploration costs are claimed, of the date of completion and submit a 12 report to that department describing the processing sequence and providing a 13 list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN 14 EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES 15 FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE 16 MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN 17 ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS 18 SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION 19 NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES 20 TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT 21 THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE 22 EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL 23 RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE 24 SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE 25 EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60 26 DAYS;] 27 (B) to provide to the Department of Natural Resources, within 28 30 days after the date of a request, unless a longer period is provided by the  29 Department of Natural Resources, specific data sets, ancillary data, and 30 reports identified in (A) of this paragraph; in this subparagraph,  31 (i) a seismic or geophysical data set includes the  01 data for an entire seismic survey, irrespective of whether the  02 survey area covers nonstate land in addition to state land or land  03 in a unit in addition to land outside a unit;  04 (ii) well data include all derivative products, results,  05 and copies of data collected and data analyses for the well,  06 including well logs; sample analyses; geophysical and velocity data  07 including vertical seismic profiles and check shot surveys; and  08 tangible material including, for each whole core collected, a  09 lengthwise cut slab that is at least 1/3 of the whole core volume,  10 and representative samples, as specified by the Department of  11 Natural Resources, of other gaseous, liquid, or solid material  12 collected from drilling or testing the well;  13 (C) that, notwithstanding any provision of AS 38, information 14 provided under this paragraph will be held confidential by the Department of 15 Natural Resources 16 (i) in the case of well data, until the expiration of the  17 24-month period of confidentiality described in AS 31.05.035(c),  18 the Department of Natural Resources [FOR 10 YEARS 19 FOLLOWING THE COMPLETION DATE, AT WHICH TIME 20 THAT DEPARTMENT] will release the information after 30 days' 21 public notice, unless in the discretion of the commissioner of  22 natural resources, it is necessary to protect information relating to  23 the valuation of unleased acreage in the same vicinity; 24 (ii) in the case of seismic or other geophysical data,  25 other than seismic data acquired by seismic exploration subject to  26 (l) of this section, for 10 years following the completion date, at  27 which time the Department of Natural Resources will release the  28 information after 30 days' public notice;  29 (iii) in the case of seismic data obtained by seismic  30 exploration subject to (l) of this section, only until the expiration of  31 30 days' public notice issued on or after the date the production  01 tax credit certificates are issued under (5) of this subsection; and  02 (D) that, in the case of well data, the explorer will not make  03 a request under AS 31.05.035(c) that the commissioner of natural  04 resources keep the data confidential for longer than the 24-month period  05 of confidentiality described in AS 31.05.035(c);  06 (3) if more than one explorer holds an interest in a well or seismic 07 exploration, 08 (A) each explorer may claim an amount of credit that is 09 proportional to the explorer's cost incurred; 10 (B) in the case of a well, each explorer holding an interest  11 in the well shall agree, in writing, that the explorer will not make the  12 request described in (2)(D) of this subsection;  13 (4) the department may exercise the full extent of its powers as though 14 the explorer were a taxpayer under this title, in order to verify that the claimed 15 expenditures are qualified exploration expenditures under this section; and 16 (5) if the department is satisfied that the explorer's claimed 17 expenditures are qualified under this section and that all data required to be  18 submitted under this section have been submitted, the department shall issue to the 19 explorer a production tax credit certificate for the amount of credit to be allowed 20 against production taxes levied by AS 43.55.011(e); the credit is available for  21 immediate use; notwithstanding any contrary provision of AS 38, AS 40.25.100,  22 or AS 43.05.230, the following information is not confidential:  23 (A) the explorer's name;  24 (B) the date of the application;  25 (C) the location of the well or seismic exploration;  26 (D) the date of the department's issuance of the certificate;  27 and  28 (E) the date on which the information required to be  29 submitted under this section will be released [DUE UNDER 30 AS 43.55.011(e) OR (f)]. 31  * Sec. 35. AS 43.55.025(g) is amended to read: 01 (g) An explorer, other than an entity that is exempt from taxation under  02 this chapter, may transfer, convey, or sell its production tax credit certificate to any 03 person, and any person who receives a production tax credit certificate may also 04 transfer, convey, or sell the certificate. 05  * Sec. 36. AS 43.55.025(h) is amended to read: 06 (h) A producer that purchases a production tax credit certificate may apply 07 the credits against its production tax liability under AS 43.55.011(e) [OR (f)]. 08 Regardless of the price the producer paid for the certificate, the producer may receive 09 a credit against its production tax liability for the full amount of the credit, but for not 10 more than the amount for which the certificate is issued. A production tax credit 11 allowed under this section may not be applied more than once. 12  * Sec. 37. AS 43.55.025(i) is repealed and reenacted to read: 13 (i) For a production tax credit under this section, 14 (1) a credit may not be applied to reduce a taxpayer's tax liability 15 under AS 43.55.011(e) below zero for a calendar year; and 16 (2) an amount of the production tax credit in excess of the amount that 17 may be applied for a calendar year under this subsection may be carried forward and 18 applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later 19 calendar years. 20  * Sec. 38. AS 43.55.025(k) is amended by adding a new paragraph to read: 21 (4) "preexisting well" means a well that was spudded more than 540 22 days but less than 35 years before the date on which the exploration well to which it 23 is compared is spudded. 24  * Sec. 39. AS 43.55.025 is amended by adding a new subsection to read: 25 (l) Subject to the terms and conditions of this section, if a claim is filed under 26 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 27 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 28 expenditure under this subsection incurred for seismic exploration performed before 29 July 1, 2003. To be eligible under this subsection, an expenditure must 30 (1) have been for seismic exploration that 31 (A) obtained data that the commissioner of natural resources 01 considers to be in the best interest of the state to acquire for public 02 distribution; and 03 (B) was conducted outside the boundaries of a production unit; 04 however, the amount of the expenditure that is otherwise eligible under this 05 section is reduced proportionately by the portion of the seismic exploration 06 activity that crossed into a production unit; and 07 (2) qualify under (b)(3) of this section. 08  * Sec. 40. AS 43.55.025 is amended by adding a new subsection to read: 09 (m) Subject to appropriations made by law, if and to the extent that purchase 10 of transferable tax credits by the Alaska Retirement Management Board is authorized 11 by law, the department shall issue a cash refund to the Alaska Retirement 12 Management Board for a transferable tax credit originally issued to an explorer under 13 (f) of this section and purchased by the Alaska Retirement Management Board. 14  * Sec. 41. AS 43.55 is amended by adding a new section to read: 15 Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of  16 tax credit certificates. (a) The oil and gas tax credit fund is established as a separate 17 fund of the state. The purpose of the fund is to purchase certain transferable tax credit 18 certificates issued under AS 43.55.023 and certain production tax credit certificates 19 issued under AS 43.55.025. 20 (b) The oil and gas tax credit fund consists of 21 (1) money appropriated to the fund, including any appropriation of the 22 percentage provided under (c) of this section of all revenue from taxes levied by 23 AS 43.55.011 that is not required to be deposited in the constitutional budget reserve 24 fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and 25 (2) earnings on the fund. 26 (c) The applicable percentage for a fiscal year under (b)(1) of this section is 27 determined with reference to the average price or value forecast by the department for 28 Alaska North Slope oil sold or otherwise disposed of on the United States West Coast 29 during the fiscal year for which the appropriation of revenue from taxes levied by 30 AS 43.55.011 is made. If that forecast is 31 (1) $60 a barrel or higher, the applicable percentage is 10 percent; 01 (2) less than $60 a barrel, the applicable percentage is 15 percent. 02 (d) The department shall manage the fund. 03 (e) The department may, on the written application of the person to whom a 04 transferable tax credit certificate has been issued under AS 43.55.023(d) or a 05 production tax credit certificate has been issued under AS 43.55.025(f), use available 06 money in the oil and gas tax credit fund to purchase, in whole or in part, the 07 certificate if the department finds that 08 (1) the calendar year of the purchase is not earlier than the first 09 calendar year for which the credit shown on the certificate would otherwise be 10 allowed to be applied against a tax; 11 (2) within 24 months after applying for the transferable tax credit 12 certificate or filing a claim for the production tax credit certificate, the applicant 13 incurred a qualified capital expenditure or was the successful bidder on a bid 14 submitted for a lease on state land under AS 38.05.180(f); 15 (3) the amount expended for the purchase would not exceed the total 16 of qualified capital expenditures and successful bids described in (2) of this 17 subsection that have not been the subject of a finding made under this paragraph for 18 purposes of a previous purchase of a certificate; 19 (4) the applicant does not have an outstanding liability to the state for 20 unpaid delinquent taxes under this title; 21 (5) the applicant's total tax liability under AS 43.55.011(e), after 22 application of all available tax credits, for the calendar year in which the application 23 is made is zero; 24 (6) the applicant's average amount of oil and gas taxable under 25 AS 43.55.011(e) and produced each day during the calendar year preceding the 26 calendar year in which the application is made was not more than 50,000 BTU 27 equivalent barrels; 28 (7) total purchases of certificates from the person during the calendar 29 year under this subsection would not exceed $25,000,000, except that this limitation 30 does not apply to purchases of certificates from or by the Alaska Retirement 31 Management Board; and 01 (8) the purchase is consistent with this section and regulations adopted 02 under this section. 03 (f) Money in the fund remaining at the end of a fiscal year does not lapse and 04 remains available for expenditure in successive fiscal years. 05 (g) The department may adopt regulations to carry out the purposes of this 06 section, including standards and procedures to allocate available money among 07 applications for purchases the total amount of which exceeds the amount of available 08 money in the fund. 09 (h) Nothing in this section creates a dedicated fund. 10 (i) In this section, "qualified capital expenditure" has the meaning given in 11 AS 43.55.023. 12  * Sec. 42. AS 43.55.030(a) is amended to read: 13 (a) A producer that produces oil or gas from a lease or property in the  14 state during a calendar year, whether or not any tax payment is due under  15 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 16 with the department on March 31 of the following year [FOLLOWING THE 17 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under 18 oath, in a form prescribed by the department, giving, with other information required, 19 the following: 20 (1) a description of each lease or property from which [THE] oil or 21 [AND] gas was [WERE] produced, by name, legal description, lease number, or 22 accounting codes assigned by the department; 23 (2) the names of the producer and, if different, the person paying the 24 tax, if any; 25 (3) the gross amount of oil and the gross amount of gas produced from 26 each lease or property, and the percentage of the gross amount of oil and gas owned 27 by the [EACH] producer [FOR WHOM THE TAX IS PAID]; 28 (4) the gross value at the point of production of the oil and of the gas 29 produced from each lease or property owned by the [EACH] producer and the costs  30 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 31 (5) the name of the first purchaser and the price received for the oil 01 and for the gas, unless relieved from this requirement in whole or in part by the 02 department; [AND] 03 (6) the producer's qualified capital expenditures, as defined in  04 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 05 CALCULATED] under AS 43.55.165, and adjustments or other payments or  06 credits under AS 43.55.170; 07 (7) the production tax values of the oil and gas under  08 AS 43.55.160;  09 (8) any claims for tax credits to be applied; and 10 (9) calculations showing the amounts, if any, that were or are due  11 under AS 43.55.020(a) and interest on any underpayment or overpayment 12 [AS 43.55.160 - 43.55.170]. 13  * Sec. 43. AS 43.55.030(d) is amended to read: 14 (d) Reports required under this section [BY OR ON BEHALF OF THE 15 PRODUCER] are delinquent the first day following the day the report is due. The  16 person required to file the report is liable for a penalty, as determined by the  17 department under standards adopted in regulation by the department, of not  18 more than $1,000 for each day the person fails to file the report at the time  19 required. The penalty is in addition to the penalties in AS 43.05.220 and  20 43.05.290 and is assessed, collected, and paid in the same manner as a tax  21 deficiency under this title. In this subsection, "report" includes a statement." 22  * Sec. 44. AS 43.55.030 is amended by adding new subsections to read: 23 (e) An explorer or producer that incurs a lease expenditure under 24 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 25 year but does not produce oil or gas from a lease or property in the state during the 26 calendar year shall file with the department on March 31 of the following year a 27 statement, under oath, in a form prescribed by the department, giving, with other 28 information required, the following: 29 (1) the producer's qualified capital expenditures, as defined in 30 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 31 payments or credits under AS 43.55.170; and 01 (2) if the explorer or producer receives a payment or credit under 02 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 03 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 04 (f) The department may require a producer, an explorer, or an operator of a 05 lease or property to file monthly reports, as applicable, of 06 (1) the amounts and gross value at the point of production of oil and 07 gas produced; 08 (2) transportation costs of the oil and gas; 09 (3) any unscheduled interruption of, or reduction in the rate of, oil or 10 gas production; 11 (4) lease expenditures and adjustments under AS 43.55.165 and 12 43.55.170; 13 (5) joint interest billings; 14 (6) contracts for the sale or transportation of oil or gas; 15 (7) information and calculations used in determining monthly 16 installment payments of estimated tax under AS 43.55.020(a); and 17 (8) other records and information the department considers necessary 18 for the administration of this chapter. 19 * Sec. 45. AS 43.55.040 is amended to read: 20 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 21 AS 43.05.405 - 43.05.499, the department may 22 (1) require a person engaged in production and the agent or employee 23 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 24 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 25 additional information that is considered by the department as necessary to compute 26 the amount of the tax; notwithstanding any contrary provision of law, the disclosure 27 of additional information under this paragraph to the producer obligated to pay the tax 28 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 29 under this paragraph that is otherwise required to be held confidential under 30 AS 40.25.100(a) or AS 43.05.230(a), the department shall 31 (A) provide the person that furnished the information a 01 reasonable opportunity to be heard regarding the proposed disclosure and the 02 conditions to be imposed under (B) of this paragraph; and 03 (B) impose appropriate conditions limiting 04 (i) access to the information to those legal counsel, 05 consultants, employees, officers, and agents of the producer who have 06 a need to know that information for the purpose of determining or 07 contesting the producer's tax obligation; and 08 (ii) the use of the information to use for that purpose; 09 (2) examine the books, records, and files of the [SUCH A] person; 10 (3) conduct hearings and compel the attendance of witnesses and the 11 production of books, records, and papers of any person; [AND] 12 (4) make an investigation or hold an inquiry that is considered 13 necessary to a disclosure of the facts as to 14 (A) the amount of production from any oil or gas location, or 15 of a company or other producer of oil or gas; and 16 (B) the rendition of the oil and gas for taxing purposes; 17 (5) require a producer, an explorer, or an operator of a lease or  18 property to file reports and copies of records that the department considers  19 necessary to forecast state revenue under this chapter; in the case of reports and  20 copies of records relating to proposed, expected, or approved unit expenditures  21 for a unit for which one or more working interest owners other than the  22 operator have authority to approve unit expenditures, the required reports and  23 copies of records are limited to those reports or copies of records that constitute  24 or disclose communications between the operator and the working interest  25 owners relating to unit budget matters; and  26 (6) assess against a person required under this section to file a  27 report, statement, or other document a penalty, as determined by the  28 department under standards adopted in regulation by the department, of not  29 more than $1,000 for each day the person fails to file the report, statement, or  30 other document at the time required; the penalty is in addition to any penalties  31 under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the  01 same manner as a tax deficiency under this title; the penalty shall bear interest  02 at the rate specified under AS 43.05.225(1); notwithstanding authority granted  03 under AS 43.05.070 to compromise a penalty, the department may not under  04 that section compromise a penalty under this paragraph by agreeing to accept  05 less than 50 percent of the penalty originally assessed by the department. 06 * Sec. 46. AS 43.55 is amended by adding a new section to read: 07 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 08 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 09 assessed within six years after the latest return was filed. 10 (b) A decision of a regulatory agency, court, or other body with authority to 11 resolve disputes that results in a retroactive change to a lease expenditure, to an 12 adjustment to a lease expenditure, to costs of transportation, to sale price, to 13 prevailing value, or to consideration of quality differentials relating to the 14 commingling of oils has a corresponding effect, either an increase or decrease, as 15 applicable, on the production tax value of oil or gas or the amount or availability of a 16 tax credit as determined under this chapter. For purposes of this section, a change to a 17 lease expenditure includes a change in the categorization of a lease expenditure as a 18 qualified capital expenditure or as not a qualified capital expenditure. The producer 19 shall 20 (1) within 60 days after the change, notify the department in writing; 21 and 22 (2) within 120 days after the change, file amended returns covering all 23 periods affected by the change, unless the department agrees otherwise or a stay is in 24 place that affects the filing or payment, regardless of the pendency of appeals of the 25 decision. 26 (c) If an alteration in or modification of a producer's federal income tax return 27 or a recomputation of the producer's federal income tax or determination of 28 deficiency occurs that affects the amount of a tax imposed on the producer under this 29 chapter, the producer shall 30 (1) within 60 days after the final determination of the alteration, 31 modification, recomputation, or deficiency, notify the department in writing; and 01 (2) within 120 days after the final determination of the alteration, 02 modification, recomputation, or deficiency, file amended returns covering all affected 03 periods. 04 (d) In this section, 05 (1) "qualified capital expenditure" has the meaning given in 06 AS 43.55.023; 07 (2) "return" includes a report, a statement, and an amended return, 08 report, or statement. 09  * Sec. 47. AS 43.55.110 is amended by adding new subsections to read: 10 (e) The department may require that returns, statements, reports, notifications, 11 and applications filed under this chapter be filed electronically in a form and manner 12 approved or prescribed by the department. 13 (f) The department may require that payments required under this chapter be 14 made electronically in a form and manner approved or prescribed by the department. 15 (g) Notwithstanding AS 44.62, the department may issue, for the information 16 and guidance of producers, explorers, and other interested persons, advisory bulletins 17 stating the department's interpretation of provisions of this chapter and of regulations 18 adopted under this chapter. Unless otherwise provided by the department by 19 regulation, interpretations stated in the advisory bulletins are not binding on the 20 department or others. 21  * Sec. 48. AS 43.55.150(a) is amended to read: 22 (a) For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point 23 of production is calculated using the reasonable costs of transportation of the oil or 24 gas. The reasonable costs of transportation are the actual costs, except when the 25 (1) parties to the transportation of oil or gas are affiliated; 26 (2) contract for the transportation of oil or gas is not 27 (A) an arm's length transaction; or 28 (B) [IS NOT] representative of the market value of that 29 transportation; or [AND] 30 (3) method of transportation of oil or gas is not reasonable in view of 31 existing alternative methods of transportation. 01  * Sec. 49. AS 43.55.150(b) is amended to read: 02 (b) If the department finds that a condition [THE CONDITIONS] in (a)(1), 03 (2), or [AND] (3) of this section is [ARE] present, the department shall determine the 04 reasonable costs of transportation, using the fair market value of like transportation, 05 the fair market value of equally efficient and available alternative modes of 06 transportation, or other reasonable methods. Transportation costs fixed by tariff rates 07 that have been adjudicated as just and reasonable by [PROPERLY ON FILE 08 WITH] the Regulatory Commission of Alaska or other regulatory agency shall be 09 considered prima facie reasonable. 10  * Sec. 50. AS 43.55.160(a) is amended to read: 11 (a) Except as provided in (b) of this section, for the purposes of 12 (1) AS 43.55.011(e), the annual production tax value of the taxable 13 (A) oil and gas produced during a calendar year from leases or 14 properties in the state that include land north of 68 degrees North latitude is 15 the gross value at the point of production of the oil and gas taxable under 16 AS 43.55.011(e) and produced by the producer from those leases or 17 properties, less the producer's lease expenditures under AS 43.55.165 for the 18 calendar year applicable to the oil and gas produced by the producer from 19 those leases or properties, as adjusted under AS 43.55.170; this  20 subparagraph does not apply to gas taxable under AS 43.55.011(p);  21 (B) oil and gas produced during a calendar year from leases or 22 properties in the state outside the Cook Inlet sedimentary basin, no part of 23 which is north of 68 degrees North latitude, is the gross value at the point of 24 production of the oil and gas taxable under AS 43.55.011(e) and produced by 25 the producer from those leases or properties, less the producer's lease 26 expenditures under AS 43.55.165 for the calendar year applicable to the oil 27 and gas produced by the producer from those leases or properties, as adjusted 28 under AS 43.55.170; this subparagraph does not apply to gas taxable  29 under AS 43.55.011(p); 30 (C) oil produced during a calendar year from a lease or 31 property in the Cook Inlet sedimentary basin is the gross value at the point of 01 production of the oil taxable under AS 43.55.011(e) and produced by the 02 producer from that lease or property, less the producer's lease expenditures 03 under AS 43.55.165 for the calendar year applicable to the oil produced by the 04 producer from that lease or property, as adjusted under AS 43.55.170; 05 (D) gas produced during a calendar year from a lease or 06 property in the Cook Inlet sedimentary basin is the gross value at the point of 07 production of the gas taxable under AS 43.55.011(e) and produced by the 08 producer from that lease or property, less the producer's lease expenditures 09 under AS 43.55.165 for the calendar year applicable to the gas produced by 10 the producer from that lease or property, as adjusted under AS 43.55.170; 11 (E) gas produced during a calendar year from a lease or  12 property outside the Cook Inlet sedimentary basin and used in the state is  13 the gross value at the point of production of that gas taxable under  14 AS 43.55.011(e) and produced by the producer from that lease or  15 property, less the producer's lease expenditures under AS 43.55.165 for  16 the calendar year applicable to that gas produced by the producer from  17 that lease or property, as adjusted under AS 43.55.170; 18 (2) AS 43.55.020(a)(2)(B) [AS 43.55.011(g)], the monthly production 19 tax value of the taxable 20 (A) oil and gas produced during a month from leases or 21 properties in the state that include land north of 68 degrees North latitude is 22 the gross value at the point of production of the oil and gas taxable under 23 AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those 24 leases or properties, less 1/12 of the producer's lease expenditures under 25 AS 43.55.165 for the calendar year applicable to the oil and gas produced by 26 the producer from those leases or properties, as adjusted under AS 43.55.170; 27 this subparagraph does not apply to gas subject to additional tax under  28 AS 43.55.011(o); 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(e) 02 [AS 43.55.011(g)] and produced by the producer from those leases or 03 properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 04 for the calendar year applicable to the oil and gas produced by the producer 05 from those leases or properties, as adjusted under AS 43.55.170; this  06 subparagraph does not apply to gas subject to additional tax under  07 AS 43.55.011(o); 08 (C) oil produced during a month from a lease or property in 09 the Cook Inlet sedimentary basin is the gross value at the point of production 10 of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 11 the producer from that lease or property, less 1/12 of the producer's lease 12 expenditures under AS 43.55.165 for the calendar year applicable to the oil 13 produced by the producer from that lease or property, as adjusted under 14 AS 43.55.170; 15 (D) gas produced during a month from a lease or property in 16 the Cook Inlet sedimentary basin is the gross value at the point of production 17 of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 18 the producer from that lease or property, less 1/12 of the producer's lease 19 expenditures under AS 43.55.165 for the calendar year applicable to the gas 20 produced by the producer from that lease or property, as adjusted under 21 AS 43.55.170;  22 (E) gas produced during a month from a lease or property  23 outside the Cook Inlet sedimentary basin and used in the state is the gross  24 value at the point of production of that gas taxable under AS 43.55.011(e)  25 and produced by the producer from that lease or property, less 1/12 of  26 the producer's lease expenditures under AS 43.55.165 for the calendar  27 year applicable to that gas produced by the producer from that lease or  28 property, as adjusted under AS 43.55.170. 29  * Sec. 51. AS 43.55.165(a) is amended to read: 30 (a) Except as provided under (e) [(c) - (e)] of this section, for the purposes of 31 AS 43.55.160, a producer's lease expenditures for a calendar year are the ordinary and 01 necessary costs upstream of the point of production of oil and gas that are incurred 02 during the calendar year by the producer after March 31, 2006, and that are direct 03 costs of exploring for, developing, or producing oil or gas deposits located within the 04 producer's leases or properties in the state or, in the case of land in which the 05 producer does not own a working interest, that are direct costs of exploring for oil or 06 gas deposits located within other land in the state. In determining whether costs are 07 lease expenditures, the department shall consider, among other factors, 08 (1) the typical industry practices and standards in the state that 09 determine the costs, other than items listed in (e) of this section, that an operator is 10 allowed to bill a working interest owner that is not the operator, under unit operating 11 agreements or similar operating agreements that were in effect before December 2, 12 2005, and were subject to negotiation with at least one working interest owner with 13 substantial bargaining power, other than the operator; and 14 (2) the standards adopted by the Department of Natural Resources that 15 determine the costs, other than items listed in (e) of this section, that a lessee is 16 allowed to deduct from revenue in calculating net profits under a lease issued under 17 AS 38.05.180(f)(3)(B), (D), or (E). 18 * Sec. 52. AS 43.55.165(b) is amended to read: 19 (b) For purposes of (a) of this section, 20 (1) direct costs include 21 (A) an expenditure, when incurred, to acquire an item if the 22 acquisition cost is otherwise a direct cost, notwithstanding that the 23 expenditure may be required to be capitalized rather than treated as an 24 expense for financial accounting or federal income tax purposes; 25 (B) payments of or in lieu of property taxes, sales and use 26 taxes, motor fuel taxes, and excise taxes; 27 (C) a reasonable allowance, as determined under regulations 28 adopted by the department, for overhead expenses directly related to exploring 29 for, developing, and producing oil or gas deposits located within leases or 30 properties or other land in the state; 31 (2) an activity must be physically located in the state [DOES NOT 01 NEED TO BE PHYSICALLY LOCATED ON, NEAR, OR WITHIN THE 02 PREMISES OF THE LEASE OR PROPERTY WITHIN WHICH AN OIL OR GAS 03 DEPOSIT BEING EXPLORED FOR, DEVELOPED, OR PRODUCED IS 04 LOCATED] in order for the cost of the activity to be a cost upstream of the point of 05 production of the oil or gas. 06  * Sec. 53. AS 43.55.165(b), as amended by sec. 52 of this Act, is amended to read: 07 (b) For purposes of (a) of this section, 08 (1) direct costs include 09 (A) an expenditure, when incurred, to acquire an item if the 10 acquisition cost is otherwise a direct cost, notwithstanding that the 11 expenditure may be required to be capitalized rather than treated as an 12 expense for financial accounting or federal income tax purposes; 13 (B) payments of or in lieu of property taxes, sales and use 14 taxes, motor fuel taxes, and excise taxes; 15 (C) a reasonable allowance, as determined under regulations 16 adopted by the department, for overhead expenses directly related to exploring 17 for, developing, and producing oil or gas deposits located within leases or 18 properties or other land in the state; 19 (2) an activity must be physically located on the premises of the  20 lease or property from which oil or gas is recovered [IN THE STATE] in order for 21 the cost of the activity to be a cost upstream of the point of production of the oil or 22 gas. 23  * Sec. 54. AS 43.55.165(e) is amended to read: 24 (e) For purposes of this section, lease expenditures do not include 25 (1) depreciation, depletion, or amortization; 26 (2) oil or gas royalty payments, production payments, lease profit 27 shares, or other payments or distributions of a share of oil or gas production, profit, or 28 revenue; 29 (3) taxes based on or measured by net income; 30 (4) interest or other financing charges or costs of raising equity or 31 debt capital; 01 (5) acquisition costs for a lease or property or exploration license; 02 (6) costs arising from fraud, wilful misconduct, [OR] gross 03 negligence, criminal negligence, violation of law, including a violation of 33  04 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act), or failure to comply with an  05 obligation under a lease, permit, or license issued by the state or federal  06 government; 07 (7) fines or penalties imposed by law; 08 (8) costs of arbitration, litigation, [OR OTHER] dispute resolution,  09 lobbying, public relations advertising, or policy advocacy [ACTIVITIES THAT 10 INVOLVE THE STATE OR CONCERN THE RIGHTS OR OBLIGATIONS 11 AMONG OWNERS OF INTERESTS IN, OR RIGHTS TO PRODUCTION FROM, 12 ONE OR MORE LEASES OR PROPERTIES OR A UNIT]; 13 (9) costs incurred in organizing a partnership, joint venture, or other 14 business entity or arrangement; 15 (10) amounts paid to indemnify the state; the exclusion provided by 16 this paragraph does not apply to the costs of obtaining insurance or a surety bond 17 from a third-party insurer or surety; 18 (11) surcharges levied under AS 43.55.201 or 43.55.300; 19 (12) for a transaction that is an internal transfer or is otherwise not an 20 arm's length transaction, expenditures incurred that are in excess of fair market value; 21 (13) an expenditure incurred to purchase an interest in any 22 corporation, partnership, limited liability company, business trust, or any other 23 business entity, whether or not the transaction is treated as an asset sale for federal 24 income tax purposes; 25 (14) a tax levied under AS 43.55.011; 26 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 27 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 28 structure, or for the restoration of a lease, field, unit, area, tract of land, body of 29 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 30 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 31 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 01 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 02 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 03 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 04 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 05 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 06 OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL 07 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 08 OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 09 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 10 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 11 this paragraph if the dismantlement, removal, surrender, or abandonment for which 12 the cost is incurred is undertaken for the purpose of replacing, renovating, or 13 improving the facility, pipeline, well pad, platform, or other structure; [FOR THE 14 PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 15 (A) IN THE CASE OF OIL, ONE BARREL; 16 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;] 17 (16) costs incurred for containment, control, cleanup, or removal in 18 connection with any unpermitted release of oil or a hazardous substance and any 19 liability for damages imposed on the producer or explorer for that unpermitted 20 release; this paragraph does not apply to the cost of developing and maintaining an oil 21 discharge prevention and contingency plan under AS 46.04.030; 22 (17) costs incurred to satisfy a work commitment under an exploration 23 license under AS 38.05.132; 24 (18) that portion of expenditures, that would otherwise be qualified 25 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 26 calendar year that are less than the product of $0.30 multiplied by the total taxable 27 production from each lease or property, in BTU equivalent barrels, during that 28 calendar year, except that, when a portion of a calendar year is subject to this 29 provision, the expenditures and volumes shall be prorated within that calendar year;  30 (19) costs incurred to construct, acquire, or operate a refinery or  31 crude oil topping plant, regardless of whether the products of the refinery or  01 topping plant are used in oil or gas exploration, development, or production  02 operations; however, if a producer owns a refinery or crude oil topping plant  03 that is located on or near the premises of the producer's lease or property in the  04 state and that processes the producer's oil produced from that lease or property  05 into a product that the producer uses in the operation of the lease or property in  06 drilling for or producing oil or gas, the producer's lease expenditures include the  07 amount calculated by subtracting from the fair market value of the product used  08 the prevailing value, as determined under AS 43.55.020(f), of the oil that is  09 processed;  10 (20) costs relating to office buildings, fixtures and equipment, and  11 real property that are not located in the state. 12  * Sec. 55. AS 43.55.165(h) is amended to read: 13 (h) The department shall adopt regulations that provide for reasonable 14 methods of allocating costs between oil and gas, between gas subject to  15 AS 43.55.011(p) and other gas, and between leases or properties in those 16 circumstances where the determination of the lease expenditures that are applicable to 17 oil or to gas, that are applicable to gas subject to AS 43.55.011(p) or to other gas, 18 or that are applicable to oil and gas produced from different leases or properties, 19 requires an allocation of costs. 20 * Sec. 56. AS 43.55.170(a) is amended to read: 21 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 22 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 23 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 24 be adjusted by subtracting payments or credits, other than tax credits, received by the 25 producer or by an operator acting for the producer for 26 (1) the use by another person of a production facility in which the 27 producer has an ownership interest or the management by the producer of a 28 production facility under a management agreement providing for the producer to 29 receive a management fee; 30 (2) a reimbursement or similar payment that offsets the producer's 31 lease expenditures, including an insurance recovery from a third-party insurer and a 01 payment from the state or federal government for reimbursement of the producer's 02 upstream costs, including costs for gathering, separating, cleaning, dehydration, 03 compressing, or other field handling associated with the production of oil or gas 04 upstream of the point of production; 05 (3) the sale or other transfer of 06 (A) an asset, including geological, geophysical, or well data or 07 interpretations, acquired by the producer as a result of a lease expenditure or 08 an expenditure that would be a lease expenditure if it were incurred after 09 March 31, 2006; for purposes of this subparagraph, 10 (i) if a producer removes from the state, for use outside 11 the state, an asset described in this subparagraph, the value of the asset 12 at the time it is removed is considered a payment received by the 13 producer for sale or transfer of the asset; 14 (ii) for a transaction that is an internal transfer or is 15 otherwise not an arm's length transaction, if the sale or transfer of the 16 asset is made for less than fair market value, the amount subtracted 17 must be the fair market value; and 18 (B) oil or gas 19 (i) that is not considered produced from a lease or 20 property under AS 43.55.020(e); and 21 (ii) the cost of acquiring which is a lease expenditure 22 incurred by the person that acquires the oil or gas. 23  * Sec. 57. AS 43.55 is amended by adding a new section to article 4 to read: 24 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 25 provision of AS 40.25.100, and regardless of whether the information is considered 26 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 27 particular returns or reports, the department may publish the following information 28 under this chapter, if aggregated among three or more producers or explorers, 29 showing by month or calendar year and by lease or property, unit, or area of the state: 30 (1) the amount of oil or gas production; 31 (2) the amount of taxes levied under this chapter or paid under this 01 chapter; 02 (3) the effective tax rates under this chapter; 03 (4) the gross value of oil or gas at the point of production; 04 (5) the transportation costs for oil or gas; 05 (6) qualified capital expenditures under AS 43.55.023(k); 06 (7) exploration expenditures under AS 43.55.025; 07 (8) production tax values of oil or gas under AS 43.55.160; 08 (9) lease expenditures under AS 43.55.165; 09 (10) adjustments to lease expenditures under AS 43.55.170; 10 (11) tax credits applicable or potentially applicable against taxes 11 levied by this chapter. 12 * Sec. 58. AS 43.55.900 is amended by adding new paragraphs to read: 13 (22) "producer" means an owner of an operating right, operating 14 interest, or working interest in a mineral interest in oil or gas; 15 (23) "unit" means a group of tracts of land that is 16 (A) subject to a cooperative or a unit plan of development or 17 operation that has been certified by the commissioner of natural resources 18 under AS 38.05.180(p); 19 (B) subject to a cooperative or a unit plan of development or 20 operation that has been certified by the United States Secretary of the Interior 21 under 30 U.S.C. 226(m); 22 (C) subject to an agreement of the owners of interests in the 23 tracts of land to validly integrate their interests to provide for the unitized 24 management, development, and operation of the tracts of land as a unit, within 25 the meaning of AS 31.05.110(a); or 26 (D) within the unit area of a unit created by order of the 27 Alaska Oil and Gas Conservation Commission under AS 31.05.110(b); 28 (24) "used in the state" means delivered for consumption as fuel in the 29 state, including as fuel consumed to generate electricity. 30  * Sec. 59. AS 43.55.165(c) and 43.55.165(d) are repealed. 31  * Sec. 60. AS 43.55.011(g), 43.55.011(h), and 43.55.160(c) are repealed. 01  * Sec. 61. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 APPLICABILITY. (a) Sections 26, 29, 51, 52, 54, 56, and 59 of this Act, and 04 AS 43.55.023(l), enacted by sec. 30 of this Act, apply to oil and gas produced after 05 March 31, 2006. 06 (b) Sections 15 - 24, 31 - 34, 36 - 39, 44, 50, 55, and 60 of this Act apply to oil and 07 gas produced after December 31, 2006. 08 (c) Sections 42 and 44 of this Act apply to statements and reports under 09 AS 43.55.030(a), as amended by sec. 42 of this Act, and AS 43.55.030(e) and (f), as added 10 by sec. 44 of this Act, required to be filed after December 31, 2007. 11 (d) Sections 31 - 34 and 38 of this Act apply to exploration expenditures incurred for 12 work performed after December 31, 2006, that are the basis of tax credits that may be 13 claimed against taxes levied for oil and gas produced after December 31, 2006. 14 (e) AS 43.55.075(a), enacted by sec. 46 of this Act, applies to any tax liability under 15 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260 16 had not expired before the effective date of secs. 14 and 46 of this Act. 17 (f) Section 28 of this Act applies to transferable tax credit certificates issued under 18 AS 43.55.023(d), as amended by sec. 27 of this Act, and to transferable tax credit certificates 19 issued under AS 43.55.023(d), as amended by sec. 27 of this Act, in effect before January 1, 20 2008, for which a cash refund has not been issued under AS 43.55.023(f) before January 1, 21 2008. 22 (g) AS 43.55.020(i), enacted by sec. 25 of this Act, applies to any installment 23 payment due after the effective date of sec. 25 of this Act that is not paid timely. 24 (h) The penalty in AS 43.55.030(d), enacted by the amendment to AS 43.55.030(d) 25 in sec. 43 of this Act, applies to any report required to be filed after the effective date of sec. 26 43 of this Act that is not filed timely. 27 (i) The penalty in AS 43.55.040(6), enacted by the amendment to AS 43.55.040 in 28 sec. 45 of this Act, applies to any report, statement, or other document required to be filed 29 after the effective date of sec. 45 of this Act.  30  * Sec. 62. The uncodified law of the State of Alaska is amended by adding a new section to 31 read: 01 TRANSITION: ASSIGNMENT OF OIL AND GAS AUDITORS IN THE 02 DEPARTMENT OF REVENUE AND DEPARTMENT OF NATURAL RESOURCES. 03 Notwithstanding any contrary provision of law, employees employed as oil and gas auditors 04 performing production tax audits or as their immediate supervisors in the Department of 05 Revenue and employees employed as oil and gas auditors performing royalty audits, 06 including net profit share audits, or as their immediate supervisors in the Department of 07 Natural Resources are assigned to the exempt service in accordance with AS 39.25.110(42), 08 added by sec. 10 of this Act, and may not be included in the general government or 09 supervisory collective bargaining units of state employees except as provided in this section. 10 All oil and gas auditors performing production tax audits or royalty audits and their 11 immediate supervisors hired before the effective date of sec. 10 of this Act have the option of 12 (1) continuing in the general government or supervisory collective bargaining units and being 13 subject to their respective collective bargaining agreements; or (2) being removed from those 14 bargaining units. Those employees have 90 days from the effective date of sec. 10 of this Act 15 to exercise the option to continue in the collective bargaining units. The option taken under 16 this section by the employee is irrevocable. The employees choosing to be removed from 17 those bargaining units are removed after any notice period required by a collective 18 bargaining agreement. 19  * Sec. 63. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 22 contrary provision of AS 44.62.240, 23 (1) if the Department of Revenue expressly designates in the regulation that 24 the regulation applies retroactively to that date, a regulation adopted by the Department of 25 Revenue to implement, interpret, make specific, or otherwise carry out 26 (A) secs. 26, 29, 51, 52, 54, 56, and 59 of this Act may apply 27 retroactively to April 1, 2006; 28 (B) secs. 15 - 24, 31 - 34, 36 - 39, 42, 44, 50, 55, and 60 of this Act 29 may apply retroactively to January 1, 2007; 30 (2) a regulation adopted by the Department of Natural Resources to 31 implement, interpret, make specific, or otherwise carry out statutory provisions for the 01 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the 02 extent the regulation deals with the treatment of oil and gas production taxes in determining 03 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of 04 Natural Resources expressly designates in the regulation that the regulation applies 05 retroactively to that date. 06  * Sec. 64. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 TRANSITION: PENDING APPLICATIONS. If an application made under 09 AS 43.55.023(f) is received by the Department of Revenue before January 1, 2008, and is 10 still outstanding on that date, the application is considered to be an application under 11 AS 43.55.028, enacted by sec. 41 of this Act. 12  * Sec. 65. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 TRANSITION: REGULATIONS. The Department of Natural Resources and the 15 Department of Revenue may proceed to adopt regulations to implement this Act. The 16 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 17 effective date of the law implemented by the regulation. 18  * Sec. 66. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 35 of 21 this Act is retroactive to July 1, 2003. 22 (b) Sections 26, 29, 51, 52, 54, 56, and 59 of this Act, and AS 43.55.023(l), as 23 enacted in sec. 30 of this Act, are retroactive to April 1, 2006. 24 (c) Sections 15 - 22, 31 - 34, 36 - 39, 50, 55, and 60 of this Act are retroactive to 25 January 1, 2007. 26  * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 CONTINGENT EFFECT. Section 53 of this Act takes effect only if a court of 29 competent jurisdiction enters a final judgment on the merits, the final judgment is no longer 30 subject to appeal, and the final judgment nullifies the effect of AS 43.55.165(b), as amended 31 by sec. 52 of this Act. 01  * Sec. 68. If sec. 53 of this Act takes effect, it takes effect on the day after the last day on 02 which the final judgment described in sec. 67 of this Act is no longer subject to appeal. 03 * Sec. 69. Except as provided in sec. 68 of this Act, this Act takes effect immediately under 04 AS 01.10.070(c).