00 SENATE CS FOR CS FOR HOUSE BILL NO. 2001(FIN) am S 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; relating to the 04 sharing between agencies of certain information relating to the production tax and to 05 oil and gas or gas only leases; expanding the period in which the Department of 06 Revenue may assess the amount of oil and gas production tax and conservation 07 surcharges; relating to state oil and gas audit masters; relating to oil and gas auditors 08 and certain oil and gas auditor supervisors; establishing an oil and gas tax credit fund 09 and authorizing payment from that fund; making conforming amendments; and 10 providing for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 01 to read: 02 LEGISLATIVE INTENT. (a) It is the intent of the legislature that the provisions of 03 this Act will 04 (1) ensure a fair and equitable means of assessing and taxing Alaska's oil and 05 gas resources; and 06 (2) encourage the availability to Alaska's citizens of affordable gas produced, 07 transported, and consumed within the state as one step towards reasonable and equitable 08 energy costs throughout Alaska. 09 (b) It is the intent of the legislature that AS 43.55.075(b), enacted by sec. 51 of this 10 Act, confirm by clarification the long-standing interpretation of AS 43.05.260 by the 11 Department of Revenue relating to limitation of assessments for the production tax on oil and 12 gas and conservation surcharges on oil. 13 (c) It is the intent of the legislature that the amount of money received by the state as 14 a result of the retroactivity of certain provisions under sec. 74 of this Act that exceeds the 15 amount of money the state would have received if those provisions had not taken effect until 16 January 1, 2008, will be appropriated to the public education fund (AS 14.17.300). 17 (d) It is the intent of the legislature that the legislature will responsibly invest the 18 amounts received after December 31, 2007, as the result of the enactment of this Act that 19 exceed the amounts that would have been received under AS 43.55.011 - 43.55.180, as those 20 provisions read on June 30, 2007, as if those provisions had been applied after December 31, 21 2007, by making appropriations to the following: 22 (1) the public education fund (AS 14.17.300); 23 (2) the budget reserve fund (art. IX, sec. 17, Constitution of the State of 24 Alaska); 25 (3) to extinguish the amount of the employers' unfunded liability in the 26 teachers' defined benefit retirement plan and the public employees' defined benefit retirement 27 plan; 28 (4) the development and implementation of a long-range fiscal plan for the 29 state; and 30 (5) for statewide energy needs of Alaskans to assist with rising energy costs. 31 * Sec. 2. AS 38.05.035(a) is amended to read: 01 (a) The director shall 02 (1) have general charge and supervision of the division and may 03 exercise the powers specifically delegated to the director; the director may employ 04 and fix the compensation of assistants and employees necessary for the operations of 05 the division; the director [AND] is the certifying officer of the division, with the 06 consent of the commissioner, and may approve vouchers for disbursements of money 07 appropriated to the division; 08 (2) manage, inspect, and control state land and improvements on it 09 belonging to the state and under the jurisdiction of the division; 10 (3) execute laws, rules, regulations, and orders adopted by the 11 commissioner; 12 (4) prescribe application procedures and practices for the sale, lease, 13 or other disposition of available land, resources, property, or interest in them; 14 (5) prescribe fees or service charges, with the consent of the 15 commissioner, for any public service rendered; 16 (6) under the conditions and limitations imposed by law and the 17 commissioner, issue deeds, leases, or other conveyances disposing of available land, 18 resources, property, or any interests in them; 19 (7) have jurisdiction over state land, except that land acquired by the 20 Alaska World War II Veterans Board and the Agricultural Loan Board or the 21 departments or agencies succeeding to their respective functions through foreclosure 22 or default; to this end, the director possesses the powers and, with the approval of the 23 commissioner, shall perform the duties necessary to protect the state's rights and 24 interest in state land, including the taking of all necessary action to protect and 25 enforce the state's contractual or other property rights; 26 (8) [REPEALED 27 (9)] maintain the [SUCH] records [AS] the commissioner considers 28 necessary, administer oaths, and do all things incidental to the authority imposed; the 29 following records and files shall be kept confidential upon request of the person 30 supplying the information: 31 (A) the name of the person nominating or applying for the 01 sale, lease, or other disposal of land by competitive bidding; 02 (B) before the announced time of opening, the names of the 03 bidders and the amounts of the bids; 04 (C) all geological, geophysical, and engineering data supplied, 05 whether or not concerned with the extraction or development of natural 06 resources; 07 (D) except as provided in AS 38.05.036, cost data and 08 financial information submitted in support of applications, bonds, leases, and 09 similar items; 10 (E) applications for rights-of-way or easements; 11 (F) requests for information or applications by public agencies 12 for land that [WHICH] is being considered for use for a public purpose; 13 (9) [(10)] account for the fees, licenses, taxes, or other money 14 received in the administration of this chapter including the sale or leasing of land, 15 identify their source, and promptly transmit them to the proper fiscal department after 16 crediting them to the proper fund; receipts from land application filing fees and 17 charges for copies of maps and records shall be deposited immediately in the general 18 fund of the state by the director; 19 (10) [(11)] select and employ or obtain at reasonable compensation 20 cadastral, appraisal, or other professional personnel the director considers necessary 21 for the proper operation of the division; 22 (11) [(12)] be the certifying agent of the state to select, accept, and 23 secure by whatever action is necessary in the name of the state, by deed, sale, gift, 24 devise, judgment, operation of law, or other means any land, of whatever nature or 25 interest, available to the state; and be the certifying agent of the state, to select, 26 accept, or secure by whatever action is necessary in the name of the state any land, or 27 title or interest to land available, granted, or subject to being transferred to the state 28 for any purpose; 29 (12) on request, furnish records, files, and other information  30 related to the administration of AS 38.05.180 to the Department of Revenue for  31 use in forecasting state revenue under or administering AS 43.55, whether or not  01 those records, files, and other information are required to be kept confidential  02 under (8) of this subsection; in the case of records, files, or other information  03 required to be kept confidential under (8) of this subsection, the Department of  04 Revenue shall maintain the confidentiality that the Department of Natural  05 Resources is required to extend to records, files, and other information under (8)  06 of this subsection 07 [(13) REPEALED 08 (14) REPEALED]. 09  * Sec. 3. AS 38.05.036(b) is amended to read: 10 (b) The Department of Revenue may obtain from the department information 11 relating to royalty and net profits payments and to exploration incentive credits under 12 this chapter or under AS 41.09, whether or not that information is confidential. The 13 Department of Revenue may use the information in carrying out its functions and 14 responsibilities under AS 43, and shall hold that information confidential to the extent 15 required by an agreement with the department or by AS 38.05.035(a)(8) 16 [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230. 17  * Sec. 4. AS 38.05.036(f) is amended to read: 18 (f) Except as otherwise provided in this section or in connection with official 19 investigations or proceedings of the department, it is unlawful for a current or former 20 officer, employee, or agent of the state to divulge information obtained by the 21 department as a result of an audit under this section that is required by an agreement 22 with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 23 AS 41.09.010(d) to be kept confidential. 24  * Sec. 5. AS 38.05.036(g) is amended to read: 25 (g) Nothing in this section prohibits the publication of statistics in a manner 26 that maintains the confidentiality of information to the extent required by an 27 agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or 28 AS 41.09.010(d). 29  * Sec. 6. AS 38.05.123(f) is amended to read: 30 (f) As part of the timber sale negotiations authorized by this section, the 31 commissioner may require a prospective purchaser negotiating a timber sale contract 01 to submit financial and technical data that demonstrates that the requirements of this 02 section have been or will be met. Upon the prospective purchaser's request, the 03 commissioner shall keep data provided by the purchaser confidential in accordance 04 with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)]. 05  * Sec. 7. AS 38.05.133(e) is amended to read: 06 (e) The commissioner may make a written request to a prospective licensee 07 for additional information on the prospective licensee's proposal. The commissioner 08 shall keep confidential information described in AS 38.05.035(a)(8) 09 [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made 10 a written request that the information remain confidential. 11  * Sec. 8. AS 38.05.180(j) is amended to read: 12 (j) The commissioner 13 (1) may provide for modification of royalty on individual leases, 14 leases unitized as described in (p) of this section, leases subject to an agreement 15 described in (s) or (t) of this section, or interests unitized under AS 31.05 16 (A) to allow for production from an oil or gas field or pool if 17 (i) the oil or gas field or pool has been sufficiently 18 delineated to the satisfaction of the commissioner; 19 (ii) the field or pool has not previously produced oil or 20 gas for sale; and 21 (iii) oil or gas production from the field or pool would 22 not otherwise be economically feasible; 23 (B) to prolong the economic life of an oil or gas field or pool 24 as per barrel or barrel equivalent costs increase or as the price of oil or gas 25 decreases, and the increase or decrease is sufficient to make future production 26 no longer economically feasible; or 27 (C) to reestablish production of shut-in oil or gas that would 28 not otherwise be economically feasible; 29 (2) may not grant a royalty modification unless the lessee or lessees 30 requesting the change make a clear and convincing showing that a modification of 31 royalty meets the requirements of this subsection and is in the best interests of the 01 state; 02 (3) shall provide for an increase or decrease or other modification of 03 the state's royalty share by a sliding scale royalty or other mechanism that shall be 04 based on a change in the price of oil or gas and may also be based on other relevant 05 factors such as a change in production rate, projected ultimate recovery, development 06 costs, and operating costs; 07 (4) may not grant a royalty reduction for a field or pool 08 (A) under (1)(A) of this subsection if the royalty modification 09 for the field or pool would establish a royalty rate of less than five percent in 10 amount or value of the production removed or sold from a lease or leases 11 covering the field or pool; 12 (B) under (1)(B) or (1)(C) of this subsection if the royalty 13 modification for the field or pool would establish a royalty rate of less than 14 three percent in amount or value of the production removed or sold from a 15 lease or leases covering the field or pool; 16 (5) may not grant a royalty reduction under this subsection without 17 including an explicit condition that the royalty reduction is not assignable without the 18 prior written approval, which may not be unreasonably withheld, by the 19 commissioner; the commissioner shall, in the preliminary and final findings and 20 determinations, set out the conditions under which the royalty reduction may be 21 assigned; 22 (6) shall require the lessee or lessees to submit, with the application 23 for the royalty reduction, financial and technical data that demonstrate that the 24 requirements of this subsection are met; the commissioner 25 (A) may require disclosure of only the financial and technical 26 data related to development, production, and transportation of oil and gas or 27 gas only from the field or pool that are reasonably available to the applicant; 28 and 29 (B) shall keep the data confidential under AS 38.05.035(a)(8) 30 [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application 31 for the royalty reduction; the confidential data may be disclosed by the 01 commissioner to legislators and to the legislative auditor and as directed by 02 the chair or vice-chair of the Legislative Budget and Audit Committee to the 03 director of the division of legislative finance, the permanent employees of 04 their respective divisions who are responsible for evaluating a royalty 05 reduction, and to agents or contractors of the legislative auditor or the 06 legislative finance director who are engaged under contract to evaluate the 07 royalty reduction, if they sign an appropriate confidentiality agreement; 08 (7) may 09 (A) require the lessee or lessees making application for the 10 royalty reduction under (1)(A) of this subsection to pay for the services of an 11 independent contractor, selected by the lessee or lessees from a list of 12 qualified consultants compiled by the commissioner, to evaluate hydrocarbon 13 development, production, transportation, and economics and to assist the 14 commissioner in evaluating the application and financial and technical data; 15 if, under this subparagraph, the commissioner requires payment for the 16 services of an independent contractor, the total cost of the services to be paid 17 for by the lessee or lessees may not exceed $150,000 for each application, and 18 the commissioner shall determine the relevant scope of the work to be 19 performed by the contractor; selection of an independent contractor under this 20 subparagraph is not subject to AS 36.30; 21 (B) with the mutual consent of the lessee or lessees making 22 application for the royalty reduction under (1)(B) or (1)(C) of this subsection, 23 request payment for the services of an independent contractor, selected from a 24 list of qualified consultants to evaluate hydrocarbon development, production, 25 transportation, and economics by the commissioner to assist the commissioner 26 in evaluating the application and financial and technical data; if, under this 27 subparagraph, the commissioner requires payment for the services of an 28 independent contractor, the total cost of the services that may be paid for by 29 the lessee or lessees may not exceed $150,000 for each application, and the 30 commissioner shall determine the relevant scope of the work to be performed 31 by the contractor; selection of an independent contractor under this 01 subparagraph is not subject to AS 36.30; 02 (8) shall make and publish a preliminary findings and determination 03 on the royalty reduction application, give reasonable public notice of the preliminary 04 findings and determination, and invite public comment on the preliminary findings 05 and determination during a 30-day period for receipt of public comment; 06 (9) shall offer to appear before the Legislative Budget and Audit 07 Committee, on a day that is not earlier than 10 days and not later than 20 days after 08 giving public notice under (8) of this subsection, to provide the committee a review of 09 the commissioner's preliminary findings and determination on the royalty reduction 10 application and administrative process; if the Legislative Budget and Audit 11 Committee accepts the commissioner's offer, the committee shall give notice of the 12 committee's meeting to all members of the legislature; 13 (10) shall make copies of the preliminary findings and determination 14 available to 15 (A) the presiding officer of each house of the legislature; 16 (B) the chairs of the legislature's standing committees on 17 resources; and 18 (C) the chairs of the legislature's special committees on oil and 19 gas, if any; 20 (11) shall, within 30 days after the close of the public comment period 21 under (8) of this subsection, 22 (A) prepare a summary of the public response to the 23 commissioner's preliminary findings and determination; 24 (B) make a final findings and determination; the 25 commissioner's final findings and determination prepared under this 26 subparagraph regarding a royalty reduction is final and not appealable to the 27 court; 28 (C) transmit a copy of the final findings and determination to 29 the lessee; 30 (D) with the applicant's consent, amend the applicant's lease or 31 unitization agreement consistent with the commissioner's final decision; and 01 (E) make copies of the final findings and determination 02 available to each person who submitted comment under (8) of this subsection 03 and who has filed a request for the copies; 04 (12) is not limited by the provisions of AS 38.05.134(3) or (f) of this 05 section in the commissioner's determination under this subsection. 06  * Sec. 9. AS 38.05.275(c) is amended to read: 07 (c) Subsection (b) of this section may not be construed to limit the director in 08 the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)]. 09  * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read: 10 (42) oil and gas audit masters employed in a professional capacity by 11 the Department of Revenue and the Department of Natural Resources to collect oil 12 and gas revenue by developing policy, conducting studies, drafting proposed 13 regulations, enforcing regulations, and directing audits by oil and gas revenue 14 auditors.  15  * Sec. 11. AS 41.09.010(d) is amended to read: 16 (d) Data derived from drilling a stratigraphic test well or exploratory well that 17 is provided to the commissioner under (c)(3) of this section shall be kept confidential 18 for 24 months after receipt by the commissioner unless the owner of the well gives 19 written permission to the state to release the well data at an earlier date, and, 20 notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24 21 months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to 22 other data provided to the commissioner under (c)(3) of this section, except that the 23 commissioner, under appropriate confidentiality provisions and without preference or 24 discrimination, may display to all interested third parties, but may not distribute or 25 transfer in hard copy or electronic form, those data with respect to all land if the 26 commissioner determines that the limited disclosure is necessary to further the 27 interest of the state in evaluating or developing its land. 28 * Sec. 12. AS 43.05.230(a) is amended to read: 29 (a) It is unlawful for a current or former officer, employee, or agent of the 30 state to divulge the amount of income or the particulars set out or disclosed in a report 31 or return made under this title, except 01 (1) in connection with official investigations or proceedings of the 02 department, whether judicial or administrative, involving taxes due under this title; 03 (2) in connection with official investigations or proceedings of the 04 child support enforcement agency, whether judicial or administrative, involving child 05 support obligations imposed or imposable under AS 25 or AS 47; 06 (3) as provided in AS 38.05.036 pertaining to audit functions of the 07 Department of Natural Resources; 08 (4) as provided in AS 43.05.405 - 43.05.499; and 09 (5) as otherwise provided in this section or AS 43.55.890. 10 * Sec. 13. AS 43.05.230(h) is amended to read: 11 (h) The commissioner shall, upon request, furnish to the Department of 12 Natural Resources copies of tax returns, reports, and other documents filed under 13 AS 43.55 or AS 43.65, and the Department of Revenue's determinations and 14 workpapers under those chapters. The Department of Natural Resources shall 15 maintain the confidentiality that the Department of Revenue is required to extend to 16 the returns, reports, documents, determinations, and workpapers furnished to the 17 Department of Natural Resources under this subsection. 18 * Sec. 14. AS 43.05.260(a) is amended to read: 19 (a) Except as provided in (c) of this section, [AND] AS 43.20.200(b), and  20 AS 43.55.075, the amount of a tax imposed by this title must be assessed within three 21 years after the return was filed, whether or not a return was filed on or after the date 22 prescribed by law. If the tax is not assessed before the expiration of the applicable 23 [THREE-YEAR] period, proceedings may not be instituted in court for the collection 24 of the tax. 25  * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read: 26 (e) There is levied on the producer of oil or gas a tax for all oil and gas 27 produced each calendar year from each lease or property in the state, less any oil and 28 gas the ownership or right to which is exempt from taxation or constitutes a 29 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) 30 of this section, the tax is equal to the sum of 31 (1) the annual production tax value of the taxable oil and gas as 01 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 02 (2) the sum, over all months of the calendar year, of the tax amounts 03 determined under (g) of this section. 04  * Sec. 16. AS 43.55.011(f) is amended to read: 05 (f) The levy of tax under this section for [ON A PRODUCER OF] oil and gas 06 produced north of 68 degrees North latitude, other than oil and gas production  07 subject to (i) of this section and gas subject to (o) of this section, may not be less 08 than 09 (1) four percent of the gross value at the point of production when the 10 average price per barrel for Alaska North Slope crude oil for sale on the United States 11 West Coast during the calendar year for which the tax is due is more than $25; 12 (2) three percent of the gross value at the point of production when the 13 average price per barrel for Alaska North Slope crude oil for sale on the United States 14 West Coast during the calendar year for which the tax is due is over $20 but not over 15 $25; 16 (3) two percent of the gross value at the point of production when the 17 average price per barrel for Alaska North Slope crude oil for sale on the United States 18 West Coast during the calendar year for which the tax is due is over $17.50 but not 19 over $20; 20 (4) one percent of the gross value at the point of production when the 21 average price per barrel for Alaska North Slope crude oil for sale on the United States 22 West Coast during the calendar year for which the tax is due is over $15 but not over 23 $17.50; or 24 (5) zero percent of the gross value at the point of production when the 25 average price per barrel for Alaska North Slope crude oil for sale on the United States 26 West Coast during the calendar year for which the tax is due is $15 or less. 27  * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read: 28 (g) For each month of the calendar year for which the producer's average 29 monthly production tax value under AS 43.55.160(a)(2) per BTU equivalent barrel of 30 the taxable oil and gas is more than $30, the amount of tax for purposes of (e) of this 31 section is determined by multiplying the monthly production tax value of the taxable 01 oil and gas produced during the month by the tax rate calculated as follows: 02 (1) if the producer's average monthly production tax value per BTU 03 equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the 04 tax rate is 0.4 percent multiplied by the number that represents the difference between 05 that average monthly production tax value per BTU equivalent barrel and $30; or 06 (2) if the producer's average monthly production tax value per BTU 07 equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax 08 rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number 09 that represents the difference between the average monthly production tax value per 10 BTU equivalent barrel and $92.50, except that the sum determined under this 11 paragraph may not exceed 50 percent. 12  * Sec. 18. AS 43.55.011(j) is amended to read: 13 (j) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)] 14 of this section for [ON] gas produced from a lease or property in the Cook Inlet 15 sedimentary basin may not exceed 16 (1) for a lease or property that first commenced commercial 17 production of gas before April 1, 2006, the product obtained by multiplying (A) the 18 amount of taxable gas produced during the calendar year from the lease or property, 19 times (B) the average rate of tax that was imposed under this chapter for [ON] 20 taxable gas produced from the lease or property for the 12-month period ending on 21 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 22 the point of production of the taxable gas produced from the lease or property during 23 the 12-month period ending on March 31, 2006, by the total amount of that gas; 24 (2) for a lease or property that first commences commercial 25 production of gas after March 31, 2006, the product obtained by multiplying (A) the 26 amount of taxable gas produced during the calendar year from the lease or property, 27 times (B) the average rate of tax that was imposed under this chapter for [ON] 28 taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin 29 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 30 value for gas delivered in the Cook Inlet area for the 12-month period ending 31 March 31, 2006, as determined by the department under AS 43.55.020(f). 01  * Sec. 19. AS 43.55.011(k) is amended to read: 02 (k) For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND 03 (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet 04 sedimentary basin may not exceed 05 (1) for a lease or property that first commenced commercial 06 production of oil before April 1, 2006, the product obtained by multiplying (A) the 07 amount of taxable oil produced during the calendar year from the lease or property, 08 times (B) the average rate of tax that was imposed under this chapter for [ON] 09 taxable oil produced from the lease or property for the 12-month period ending on 10 March 31, 2006, times (C) the quotient obtained by dividing the total gross value at 11 the point of production of the taxable oil produced from the lease or property during 12 the 12-month period ending on March 31, 2006, by the total amount of that oil; 13 (2) for a lease or property that first commences commercial 14 production of oil after March 31, 2006, the product obtained by multiplying (A) the 15 amount of taxable oil produced during the calendar year from the lease or property, 16 times (B) the average rate of tax that was imposed under this chapter for [ON] 17 taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin 18 for the 12-month period ending on March 31, 2006, times (C) the average prevailing 19 value for oil produced and delivered in the Cook Inlet area for the 12-month period 20 ending on March 31, 2006, as determined by the department under AS 43.55.020(f). 21  * Sec. 20. AS 43.55.011(m) is repealed and reenacted: 22 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 23 AS 41.09.010, AS 43.55.024, or 43.55.025, the department shall provide by 24 regulation a method to ensure that for a calendar year for which a producer's tax 25 liability is limited by AS 43.55.011(j), (k), or (o) tax credits otherwise available under 26 AS 38.05.180(i), AS 41.09.010, AS 43.55.024, or 43.55.025 and allocated to gas 27 subject to the limitations in AS 43.55.011(j), (k), and (o) are accounted for as though 28 the credits had been applied first against a tax liability calculated without regard to 29 the limitations under AS 43.55.011(j), (k), and (o) so as to reduce the tax liability to 30 the maximum amount provided for under AS 43.55.011(j) or (o) for the production of 31 gas or AS 43.55.011(k) for the production of oil. The regulation must provide for a 01 reasonable method to allocate tax credits to gas subject to AS 43.55.011(j) and (o). 02 Only the amount of a tax credit remaining after the accounting provided for under this 03 subsection may be used for a later calendar year, transferred to another person, or 04 applied against a tax levied on the production of oil or gas not subject to 05 AS 43.55.011(j), (k), or (o) to the extent otherwise allowed. 06  * Sec. 21. AS 43.55.011 is amended by adding a new subsection to read: 07 (o) Notwithstanding other provisions of this section, for a calendar year 08 before 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas 09 for gas produced from a lease or property outside the Cook Inlet sedimentary basin 10 and used in the state may not exceed the amount of tax for each 1,000 cubic feet of 11 gas that is determined under (j)(2) of this section. 12  * Sec. 22. AS 43.55.020(a) is repealed and reenacted to read: 13 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 14 shall pay the tax as follows: 15 (1) an installment payment of the estimated tax levied by 16 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 17 month of the calendar year on the last day of the following month; except as 18 otherwise provided under (2) of this subsection, the amount of the installment 19 payment is the sum of the following amounts, less 1/12 of the tax credits that are 20 allowed by law to be applied against the tax levied by AS 43.55.011(e) for the 21 calendar year, but the amount of the installment payment may not be less than zero: 22 (A) for oil and gas produced from leases or properties in the 23 state outside the Cook Inlet sedimentary basin or not subject to 24 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), 25 the greater of 26 (i) zero; or 27 (ii) the sum of 25 percent and the tax rate calculated for 28 the month under AS 43.55.011(g) multiplied by the remainder 29 obtained by subtracting 1/12 of the producer's adjusted lease 30 expenditures for the calendar year of production under AS 43.55.165 31 and 43.55.170 that are deductible for the leases or properties under 01 AS 43.55.160 from the gross value at the point of production of the oil 02 and gas produced from the leases or properties during the month for 03 which the installment payment is calculated; 04 (B) for oil and gas produced from leases or properties subject 05 to AS 43.55.011(f), the greatest of 06 (i) zero; 07 (ii) zero percent, one percent, two percent, three 08 percent, or four percent, as applicable, of the gross value at the point of 09 production of the oil and gas produced from all leases or properties 10 during the month for which the installment payment is calculated; or 11 (iii) the sum of 25 percent and the tax rate calculated 12 for the month under AS 43.55.011(g) multiplied by the remainder 13 obtained by subtracting 1/12 of the producer's adjusted lease 14 expenditures for the calendar year of production under AS 43.55.165 15 and 43.55.170 that are deductible for those leases or properties under 16 AS 43.55.160 from the gross value at the point of production of the oil 17 and gas produced from those leases or properties during the month for 18 which the installment payment is calculated; 19 (C) for oil and gas produced from each lease or property 20 subject to AS 43.55.011(j), (k), or (o), the greater of 21 (i) zero; or 22 (ii) the sum of 25 percent and the tax rate calculated for 23 the month under AS 43.55.011(g) multiplied by the remainder 24 obtained by subtracting 1/12 of the producer's adjusted lease 25 expenditures for the calendar year of production under AS 43.55.165 26 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas, 27 respectively, produced from the lease or property from the gross value 28 at the point of production of the oil or gas, respectively, produced from 29 the lease or property during the month for which the installment 30 payment is calculated; 31 (2) an amount calculated under (1)(C) of this subsection for oil or gas 01 produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not 02 exceed the product obtained by carrying out the calculation set out in 03 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 04 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 05 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 06 gas produced during the month for the amount of taxable gas produced during the 07 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 08 amount of taxable oil produced during the month for the amount of taxable oil 09 produced during the calendar year; 10 (3) an installment payment of the estimated tax levied by 11 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 12 on the last day of the following month; the amount of the installment payment is the 13 sum of 14 (A) the applicable tax rate for oil provided under 15 AS 43.55.011(i), multiplied by the gross value at the point of production of 16 the oil taxable under AS 43.55.011(i) and produced from the lease or property 17 during the month; and 18 (B) the applicable tax rate for gas provided under 19 AS 43.55.011(i), multiplied by the gross value at the point of production of 20 the gas taxable under AS 43.55.011(i) and produced from the lease or property 21 during the month; 22 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 23 credits applied as allowed by law, that exceeds the total of the amounts due as 24 installment payments of estimated tax is due on March 31 of the year following the 25 calendar year of production. 26  * Sec. 23. AS 43.55.020(g) is amended to read: 27 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 28 amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this 29 section that is not paid when due bears interest (1) at the rate provided for an 30 underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended, 31 compounded daily, from the date the installment payment is due until [THE] 01 March 31 following the calendar year of production [DESCRIBED IN 02 AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after 03 that March 31. Interest accrued under (1) of this subsection that remains unpaid after 04 that March 31 is treated as an addition to tax that bears interest under (2) of this 05 subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is 06 not paid when due bears interest as provided for a delinquent tax under AS 43.05.225. 07  * Sec. 24. AS 43.55.020(h) is amended to read: 08 (h) Notwithstanding any contrary provision of AS 43.05.280, 09 (1) an overpayment of an installment payment required under (a)(1) -  10 (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment 11 under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from 12 the later of the date the installment payment is due or the date the overpayment is 13 made, until the earlier of 14 (A) the date it is refunded or is applied to an underpayment; [,] 15 or 16 (B) [THE] March 31 following the calendar year of  17 production [DESCRIBED IN AS 43.55.030(a)]; 18 (2) except as provided under (1) of this subsection, interest with 19 respect to an overpayment is allowed only on any net overpayment of the payments 20 required under (a) of this section that remains after the later of [THE] March 31 21 following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or 22 the date that the statement required under AS 43.55.030(a) is filed; 23 (3) interest is allowed under (2) of this subsection only from a date 24 that is 90 days after the later of [THE] March 31 following the calendar year of  25 production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement 26 required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment 27 was refunded within the 90-day period; 28 (4) interest under (2) and (3) of this subsection is paid at the rate and 29 in the manner provided in AS 43.05.225(1). 30  * Sec. 25. AS 43.55.023(a) is amended to read: 31 (a) A producer or explorer may take a tax credit for a qualified capital 01 expenditure as follows: 02 (1) notwithstanding that a qualified capital expenditure may be a 03 deductible lease expenditure for purposes of calculating the production tax value of 04 oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 05 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 06 explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a 07 tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of 08 20 percent of that expenditure; however, not more than half of the tax credit may  09 be applied for a single calendar year; 10 (2) a producer or explorer may take a credit for a qualified capital 11 expenditure incurred in connection with geological or geophysical exploration or in 12 connection with an exploration well only if the producer or explorer [PROVIDES TO 13 THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER 14 AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS 15 SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN 16 AGREEMENT] 17 (A) agrees, in writing, to the applicable provisions of  18 AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL 19 RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER 20 COMPLETION OF THE GEOLOGICAL OR GEOPHYSICAL DATA 21 PROCESSING OR COMPLETION OF THE WELL, OR 30 DAYS AFTER 22 THE STATEMENT IS FILED, OF THE DATE OF COMPLETION AND TO 23 SUBMIT A REPORT TO THAT DEPARTMENT DESCRIBING THE 24 PROCESSING SEQUENCE AND PROVIDE A LIST OF DATA SETS 25 AVAILABLE]; 26 (B) submits [TO PROVIDE] to the Department of Natural 27 Resources all data that would be required to be submitted under  28 AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A 29 REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND 30 REPORTS IDENTIFIED IN (A) OF THIS PARAGRAPH; 31 (C) THAT, NOTWITHSTANDING ANY PROVISION OF 01 AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD 02 CONFIDENTIAL THE INFORMATION PROVIDED TO THAT 03 DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS 04 FOLLOWING THE COMPLETION DATE, AFTER WHICH THE 05 DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION 06 AFTER 30 DAYS' PUBLIC NOTICE].  07  * Sec. 26. AS 43.55.023(b) is amended to read: 08 (b) A producer or explorer may elect to take a tax credit in the amount of 25 09 [20] percent of a carried-forward annual loss. A credit under this subsection may be 10 applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this 11 subsection, a carried-forward annual loss is the amount of a producer's or explorer's 12 adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous 13 calendar year that was not deductible in calculating production tax values for that 14 calendar year under AS 43.55.160 [AS 43.55.160(b) AND (e)]. 15  * Sec. 27. AS 43.55.023(d) is amended to read: 16 (d) Except as limited by (i) of this section, a person that is entitled to take a 17 tax credit under this section that wishes to transfer the unused credit to another person 18 or obtain a cash payment under AS 43.55.028 may apply to the department for [A] 19 transferable tax credit certificates [CERTIFICATE]. An application under this 20 subsection must be in a form prescribed by the department and must include 21 supporting information and documentation that the department reasonably requires. 22 The department shall grant or deny an application, or grant an application as to a 23 lesser amount than that claimed and deny it as to the excess, not later than 120 [60] 24 days after the latest of (1) March 31 of the year following the calendar year in which 25 the qualified capital expenditure or carried-forward annual loss for which the credit is 26 claimed was incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER 27 AS 43.55.030(a) TO FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE 28 YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED 29 CAPITAL EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR 30 WHICH THE CREDIT IS CLAIMED WAS INCURRED,] the date the statement 31 required under AS 43.55.030(a) or (e) was filed for the calendar year in which  01 the qualified capital expenditure or carried-forward annual loss for which the  02 credit is claimed was incurred; or (3) the date the application was received by the 03 department. If, based on the information then available to it, the department is 04 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 05 the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for 06 half of the amount of the credit. The credit shown on one of the two certificates is  07 available for immediate use. The credit shown on the second of the two  08 certificates may not be applied against a tax for a calendar year earlier than the  09 calendar year following the calendar year in which the certificate is issued, and  10 the certificate must contain a conspicuous statement to that effect. A certificate 11 issued under this subsection does not expire. 12  * Sec. 28. AS 43.55.023(e) is amended to read: 13 (e) A person to which a transferable tax credit certificate is issued under (d) 14 of this section may transfer the certificate to another person, and a transferee may 15 further transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)] 16 of this section, and notwithstanding any action the department may take with respect 17 to the applicant under (g) of this section, the owner of a certificate may apply the 18 credit or a portion of the credit shown on the certificate only against a tax levied by 19 [DUE UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax 20 credit certificate may not be applied to reduce a transferee's total tax liability [DUE] 21 under AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less 22 than 80 percent of the tax that would otherwise be due without applying that credit. 23 Any portion of a credit not used under this subsection may be applied in a later 24 period. 25  * Sec. 29. AS 43.55.023(g) is amended to read: 26 (g) The issuance of a transferable tax credit certificate under (d) of this 27 section or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under 28 AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later 29 audit a tax credit claim to which the certificate relates or to adjust the claim if the 30 department determines, as a result of the audit, that the applicant was not entitled to 31 the amount of the credit for which the certificate was issued. The tax liability of the 01 applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the 02 amount of the credit that exceeds that to which the applicant was entitled, or the 03 applicant's available valid outstanding credits applicable against the tax levied by 04 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is 05 increased under this subsection, the increase bears interest under AS 43.05.225 from 06 the date the transferable tax credit certificate was issued. For purposes of this 07 subsection, an applicant that is an explorer is considered a producer subject to the tax 08 levied by AS 43.55.011(e). 09  * Sec. 30. AS 43.55.023(i) is amended to read: 10 (i) For the purposes of this section, 11 (1) a producer's or explorer's transitional investment expenditures are 12 the sum of the expenditures the producer or explorer incurred after March 31, 2001, 13 and before April 1, 2006, that would be qualified capital expenditures if they were 14 incurred after March 31, 2006, less the sum of the payments or credits the producer or 15 explorer received before April 1, 2006, for the sale or other transfer of assets, 16 including geological, geophysical, or well data or interpretations, acquired by the 17 producer or explorer as a result of expenditures the producer or explorer incurred 18 before April 1, 2006, that would be qualified capital expenditures, if they were 19 incurred after March 31, 2006; 20 (2) a producer or explorer that did not have commercial production  21 of oil or gas from a lease or property in the state before January 1, 2008, may 22 elect to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in 23 the amount of 20 percent of the producer's or explorer's transitional investment 24 expenditures, but only to the extent that the amount does not exceed 1/10 of the 25 producer's or explorer's qualified capital expenditures that were incurred after  26 March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE 27 CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN]; 28 (3) a producer or explorer may not take a tax credit for a transitional 29 investment expenditure 30 (A) for any calendar year after [THE LATER OF 31 (i)] 2013; [OR 01 (ii) THE SIXTH CALENDAR YEAR AFTER THE 02 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST 03 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A 04 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT 05 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A 06 LEASE OR PROPERTY IN THE 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. 31. AS 43.55.023 is amended by adding a new subsection to read: 14 (l) An entity that is exempt from taxation under this chapter may not apply 15 for a transferable tax credit certificate. 16  * Sec. 32. AS 43.55.024(a) is amended to read: 17 (a) For a calendar year for which a producer's tax liability under 18 AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside 19 the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North 20 latitude, exceeds zero before application of any credits under this chapter, a producer 21 that is qualified under (e) of this section may apply a tax credit against that liability of 22 not more than $6,000,000. 23  * Sec. 33. AS 43.55.024(c) is amended to read: 24 (c) For a calendar year for which a producer's tax liability under 25 AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this 26 chapter, other than a credit under (a) of this section but after application of any credit 27 under (a) of this section, a producer that is qualified under (e) of this section and 28 whose average amount of oil and gas produced a day and taxable under 29 AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may 30 apply a tax credit under this subsection against that liability. A producer whose 31 average amount of oil and gas produced a day and taxable under AS 43.55.011(e) 01 [OR (f)] is 02 (1) not more than 50,000 BTU equivalent barrels may apply a tax 03 credit of not more than $12,000,000 for the calendar year; 04 (2) more than 50,000 and less than 100,000 BTU equivalent barrels 05 may apply a tax credit of not more than $12,000,000 multiplied by the following 06 fraction for the calendar year: 07 1 - [2 X (AP - 50,000)] ÷ 100,000 08 where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR 09 (f)], produced a day during the calendar year in BTU equivalent barrels. 10 * Sec. 34. AS 43.55.024(e) is amended to read: 11 (e) On written application by a producer that includes any information the 12 department may require, the department shall determine whether the producer 13 qualifies for a calendar year under this section. To qualify under this section, a 14 producer must demonstrate that its operation in the state or its ownership of an 15 interest in a lease or property in the state as a distinct producer would not result in the 16 division among multiple producer entities of any production tax liability under 17 AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a 18 single producer if the tax credit provisions of (a) or (c) of this section did not exist. 19  * Sec. 35. AS 43.55.024(g) is amended to read: 20 (g) A tax credit authorized by (c) of this section may not be applied to reduce 21 a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below 22 zero. 23  * Sec. 36. 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 WORK 31 PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of 01 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. 37. 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 June 30, 2008 [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 at the time the explorer claims the tax credit under (f) of  21 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, including  31 repairs and replacements, arising from or associated with fraud, wilful  01 misconduct, gross negligence, criminal negligence, or violation of law, including  02 a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs 03 that are generally recognized as indirect costs or financing costs; and 04 (4) may not be incurred for an exploration well or seismic exploration 05 that is included in a plan of exploration or a plan of development for any unit before  06 May 14, 2003 [ON MAY 13, 2003]. 07 * Sec. 38. AS 43.55.025(c) is repealed and reenacted to read: 08 (c) To be eligible for the 30 percent production tax credit authorized by (a)(1) 09 of this section or the 40 percent production tax credit authorized by (a)(3) of this 10 section, exploration expenditures must 11 (1) qualify under (b) of this section; and 12 (2) be for an exploration well, subject to the following: 13 (A) before the well is spudded, 14 (i) the explorer shall submit to the commissioner of 15 natural resources the information necessary to determine whether the 16 geological objective of the well is a potential oil or gas trap that is 17 distinctly separate from any trap that has been tested by a preexisting 18 well; 19 (ii) at the time of the submittal of information under (i) 20 of this subparagraph, the commissioner of natural resources may 21 request from the explorer that specific data sets, ancillary data, and 22 reports including all results, and copies of well data collected and data 23 analyses for the well be provided to the Department of Natural 24 Resources upon completion of the drilling; in this sub-subparagraph, 25 well data include all analyses conducted on physical material, and well 26 logs collected from the well and sample analyses; testing geophysical 27 and velocity data including vertical seismic profiles and check shot 28 surveys; testing data and analyses; age data; geochemical analyses; 29 and access to tangible material; and 30 (iii) the commissioner of natural resources must make 31 an affirmative determination as to whether the geological objective of 01 the well is a potential oil or gas trap that is distinctly separate from any 02 trap that has been tested by a preexisting well and what information 03 under (ii) of this subparagraph must be submitted by the explorer after 04 completion, abandonment, or suspension under AS 31.05.030; the 05 commissioner of natural resources shall make that determination 06 within 60 days after receiving all the necessary information from the 07 explorer based on the information received and on other information 08 the commissioner of natural resources considers relevant; 09 (B) for an exploration well other than a well to explore a Cook 10 Inlet prospect, the well must be located and drilled in such a manner that the 11 bottom hole is located not less than three miles away from the bottom hole of 12 a preexisting well drilled for oil or gas, irrespective of whether the preexisting 13 well has been completed, suspended, or abandoned; 14 (C) after completion, suspension, or abandonment under 15 AS 31.05.030 of the exploration well, the commissioner of natural resources 16 must determine that the well was consistent with achieving the explorer's 17 stated geological objective. 18  * Sec. 39. AS 43.55.025(d) is amended to read: 19 (d) To be eligible for the 30 [20] percent production tax credit authorized by 20 (a)(2) of this section or the 40 percent production tax credit authorized by (a)(3) of 21 this section, an exploration expenditure must 22 (1) qualify under (b) of this section; and 23 (2) be for an exploration well that is located not less than 25 miles 24 outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under 25 a plan of development, except that for an exploration well for a Cook Inlet prospect to 26 qualify under this paragraph, the exploration well must be located not less than 10 27 miles outside the outer boundary, as delineated on July 1, 2003, of any unit that is 28 under a plan of development. 29  * Sec. 40. AS 43.55.025(f) is amended to read: 30 (f) For a production tax credit under this section, 31 (1) an explorer shall, in a form prescribed by the department and,  01 except for a credit under (l) of this section, within six months of the completion of 02 the exploration activity, claim the credit and submit information sufficient to 03 demonstrate to the department's satisfaction that the claimed exploration expenditures 04 qualify under this section; in addition, the explorer shall submit information  05 necessary for the commissioner of natural resources to evaluate the validity of  06 the explorer's compliance with the requirements of 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 analyses conducted on  05 physical material, and well logs collected from the well, results,  06 and copies of data collected and data analyses for the well,  07 including well logs; sample analyses; testing geophysical and  08 velocity data including seismic profiles and check shot surveys;  09 testing data and analyses; age data; geochemical analyses; and  10 tangible material; 11 (C) that, notwithstanding any provision of AS 38, information 12 provided under this paragraph will be held confidential by the Department of 13 Natural Resources 14 (i) in the case of well data, until the expiration of the  15 24-month period of confidentiality described in AS 31.05.035(c) 16 [FOR 10 YEARS FOLLOWING THE COMPLETION DATE], at 17 which time the Department of Natural Resources [THAT 18 DEPARTMENT] will release the information after 30 days' public 19 notice unless, in the discretion of the commissioner of natural  20 resources, it is necessary to protect information relating to the  21 valuation of unleased acreage in the same vicinity, or unless the  22 well is on private land and the owner, including the lessor but not  23 the lessee, of the oil and gas resources has not given permission to  24 release the well data; 25 (ii) in the case of seismic or other geophysical data,  26 other than seismic data acquired by seismic exploration subject to  27 (l) of this section, for 10 years following the completion date, at  28 which time the Department of Natural Resources will release the  29 information after 30 days' public notice, except as to seismic or  30 other geophysical data acquired from private land, unless the  31 owner, including a lessor but not a lessee, of the oil and gas  01 resources in the private land gives permission to release the  02 seismic or other geophysical data associated with the private land;  03 (iii) in the case of seismic data obtained by seismic  04 exploration subject to (l) of this section, only until the expiration of  05 30 days' public notice issued on or after the date the production  06 tax credit certificate is issued under (5) of this subsection;  07 (3) if more than one explorer holds an interest in a well or seismic 08 exploration, each explorer may claim an amount of credit that is proportional to the 09 explorer's cost incurred; 10 (4) the department may exercise the full extent of its powers as though 11 the explorer were a taxpayer under this title, in order to verify that the claimed 12 expenditures are qualified exploration expenditures under this section; and 13 (5) if the department is satisfied that the explorer's claimed 14 expenditures are qualified under this section and that all data required to be  15 submitted under this section have been submitted, the department shall issue to the 16 explorer a production tax credit certificate for the amount of credit to be allowed 17 against production taxes levied by AS 43.55.011(e); notwithstanding any contrary  18 provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is  19 not confidential:  20 (A) the explorer's name;  21 (B) the date of the application;  22 (C) the location of the well or seismic exploration;  23 (D) the date of the department's issuance of the certificate;  24 and  25 (E) the date on which the information required to be  26 submitted under this section will be released [DUE UNDER 27 AS 43.55.011(e) OR (f)]. 28  * Sec. 41. AS 43.55.025(g) is amended to read: 29 (g) An explorer, other than an entity that is exempt from taxation under  30 this chapter, may transfer, convey, or sell its production tax credit certificate to any 31 person, and any person who receives a production tax credit certificate may also 01 transfer, convey, or sell the certificate. 02  * Sec. 42. AS 43.55.025(h) is amended to read: 03 (h) A producer that purchases a production tax credit certificate may apply 04 the credits against its production tax levied by [LIABILITY UNDER] 05 AS 43.55.011(e) [OR (f)]. Regardless of the price the producer paid for the 06 certificate, the producer may receive a credit against its production tax liability for the 07 full amount of the credit, but for not more than the amount for which the certificate is 08 issued. A production tax credit allowed under this section may not be applied more 09 than once. 10  * Sec. 43. AS 43.55.025(i) is repealed and reenacted to read: 11 (i) For a production tax credit under this section, 12 (1) a credit may not be applied to reduce a taxpayer's tax liability 13 under AS 43.55.011(e) below zero for a calendar year; and 14 (2) an amount of the production tax credit in excess of the amount that 15 may be applied for a calendar year under this subsection may be carried forward and 16 applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later 17 calendar years. 18  * Sec. 44. AS 43.55.025(k) is amended by adding a new paragraph to read: 19 (4) "preexisting well" means a well that was spudded more than 540 20 days but less than 35 years before the date on which the exploration well to which it 21 is compared is spudded. 22  * Sec. 45. AS 43.55.025 is amended by adding a new subsection to read: 23 (l) Subject to the terms and conditions of this section, if a claim is filed under 24 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 25 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 26 expenditure under this subsection incurred for seismic exploration performed before 27 July 1, 2003. To be eligible under this subsection, an expenditure must 28 (1) have been for seismic exploration that 29 (A) obtained data that the commissioner of natural resources 30 considers to be in the best interest of the state to acquire for public 31 distribution; and 01 (B) was conducted outside the boundaries of a production unit; 02 however, the amount of the expenditure that is otherwise eligible under this 03 section is reduced proportionately by the portion of the seismic exploration 04 activity that crossed into a production unit; and 05 (2) qualify under (b)(3) of this section. 06  * Sec. 46. AS 43.55 is amended by adding a new section to read: 07 Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of  08 tax credit certificates. (a) The oil and gas tax credit fund is established as a separate 09 fund of the state. The purpose of the fund is to purchase certain transferable tax credit 10 certificates issued under AS 43.55.023 and certain production tax credit certificates 11 issued under AS 43.55.025. 12 (b) The oil and gas tax credit fund consists of 13 (1) money appropriated to the fund, including any appropriation of the 14 percentage provided under (c) of this section of all revenue from taxes levied by 15 AS 43.55.011 that is not required to be deposited in the constitutional budget reserve 16 fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and 17 (2) earnings on the fund. 18 (c) The applicable percentage for a fiscal year under (b)(1) of this section is 19 determined with reference to the average price or value forecast by the department for 20 Alaska North Slope oil sold or otherwise disposed of on the United States West Coast 21 during the fiscal year for which the appropriation of revenue from taxes levied by 22 AS 43.55.011 is made. If that forecast is 23 (1) $60 a barrel or higher, the applicable percentage is 10 percent; 24 (2) less than $60 a barrel, the applicable percentage is 15 percent. 25 (d) The department shall manage the fund. 26 (e) The department, on the written application of the person to whom a 27 transferable tax credit certificate has been issued under AS 43.55.023(d) or a 28 production tax credit certificate has been issued under AS 43.55.025(f), may use 29 available money in the oil and gas tax credit fund to purchase, in whole or in part, the 30 certificate if the department finds that 31 (1) the calendar year of the purchase is not earlier than the first 01 calendar year for which the credit shown on the certificate would otherwise be 02 allowed to be applied against a tax; 03 (2) within 24 months after applying for the transferable tax credit 04 certificate or filing a claim for the production tax credit certificate, the applicant 05 incurred a qualified capital expenditure or was the successful bidder on a bid 06 submitted for a lease on state land under AS 38.05.180(f); 07 (3) the amount expended for the purchase would not exceed the total 08 of qualified capital expenditures and successful bids described in (2) of this 09 subsection that have not been the subject of a finding made under this paragraph for 10 purposes of a previous purchase of a certificate; 11 (4) the applicant does not have an outstanding liability to the state for 12 unpaid delinquent taxes under this title; 13 (5) the applicant's total tax liability under AS 43.55.011(e), after 14 application of all available tax credits, for the calendar year in which the application 15 is made is zero; 16 (6) the applicant's average daily production of oil and gas taxable 17 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 18 the application is made was not more than 50,000 BTU equivalent barrels; and 19 (7) the purchase is consistent with this section and regulations adopted 20 under this section. 21 (f) Money in the fund remaining at the end of a fiscal year does not lapse and 22 remains available for expenditure in successive fiscal years. 23 (g) The department may adopt regulations to carry out the purposes of this 24 section, including standards and procedures to allocate available money among 25 applications for purchases the total amount of which exceeds the amount of available 26 money in the fund. 27 (h) Nothing in this section creates a dedicated fund. 28 (i) In this section, "qualified capital expenditure" has the meaning given in 29 AS 43.55.023. 30  * Sec. 47. AS 43.55.030(a) is amended to read: 31 (a) A producer that produces oil or gas from a lease or property in the  01 state during a calendar year, whether or not any tax payment is due under  02 AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file 03 with the department on March 31 of the following year [FOLLOWING THE 04 CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under 05 oath, in a form prescribed by the department, giving, with other information required, 06 the following: 07 (1) a description of each lease or property from which [THE] oil or 08 [AND] gas was [WERE] produced, by name, legal description, lease number, or 09 accounting codes assigned by the department; 10 (2) the names of the producer and, if different, the person paying the 11 tax, if any; 12 (3) the gross amount of oil and the gross amount of gas produced from 13 each lease or property, and the percentage of the gross amount of oil and gas owned 14 by the [EACH] producer [FOR WHOM THE TAX IS PAID]; 15 (4) the gross value at the point of production of the oil and of the gas 16 produced from each lease or property owned by the [EACH] producer and the costs  17 of transportation of the oil and gas [FOR WHOM THE TAX IS PAID]; 18 (5) the name of the first purchaser and the price received for the oil 19 and for the gas, unless relieved from this requirement in whole or in part by the 20 department; [AND] 21 (6) the producer's qualified capital expenditures, as defined in  22 AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS 23 CALCULATED] under AS 43.55.165, and adjustments or other payments or  24 credits under AS 43.55.170; 25 (7) the production tax values of the oil and gas under  26 AS 43.55.160;  27 (8) any claims for tax credits to be applied; and 28 (9) calculations showing the amounts, if any, that were or are due  29 under AS 43.55.020(a) and interest on any underpayment or overpayment 30 [AS 43.55.160 - 43.55.170]. 31  * Sec. 48. AS 43.55.030(d) is amended to read: 01 (d) Reports required under this section [BY OR ON BEHALF OF THE 02 PRODUCER] are delinquent the first day following the day the report is due. The  03 person required to file the report is liable for a penalty, as determined by the  04 department under standards adopted in regulation by the department, of not  05 more than $1,000 for each day the person fails to file the report at the time  06 required. The penalty is in addition to the penalties in AS 43.05.220 and  07 43.05.290 and is assessed, collected, and paid in the same manner as a tax  08 deficiency under this title. In this subsection, "report" includes a statement. 09  * Sec. 49. AS 43.55.030 is amended by adding new subsections to read: 10 (e) An explorer or producer that incurs a lease expenditure under 11 AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar 12 year but does not produce oil or gas from a lease or property in the state during the 13 calendar year shall file with the department on March 31 of the following year a 14 statement, under oath, in a form prescribed by the department, giving, with other 15 information required, the following: 16 (1) the producer's qualified capital expenditures, as defined in 17 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 18 payments or credits under AS 43.55.170; and 19 (2) if the explorer or producer receives a payment or credit under 20 AS 43.55.170, calculations showing whether the explorer or producer is liable for a 21 tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount. 22 (f) The department may require a producer, an explorer, or an operator of a 23 lease or property to file monthly reports, as applicable, of 24 (1) the amounts and gross value at the point of production of oil and 25 gas produced; 26 (2) transportation costs of the oil and gas; 27 (3) any unscheduled interruption of, or reduction in the rate of, oil or 28 gas production; 29 (4) lease expenditures and adjustments under AS 43.55.165 and 30 43.55.170; 31 (5) joint interest billings; 01 (6) contracts for the sale or transportation of oil or gas; 02 (7) information and calculations used in determining monthly 03 installment payments of estimated tax under AS 43.55.020(a); and 04 (8) other records and information the department considers necessary 05 for the administration of this chapter. 06 * Sec. 50. AS 43.55.040 is amended to read: 07 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 08 AS 43.05.405 - 43.05.499, the department may 09 (1) require a person engaged in production and the agent or employee 10 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 11 or gas to furnish, whether by the filing of regular statements or reports or otherwise, 12 additional information that is considered by the department as necessary to compute 13 the amount of the tax; notwithstanding any contrary provision of law, the disclosure 14 of additional information under this paragraph to the producer obligated to pay the tax 15 does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information 16 under this paragraph that is otherwise required to be held confidential under 17 AS 40.25.100(a) or AS 43.05.230(a), the department shall 18 (A) provide the person that furnished the information a 19 reasonable opportunity to be heard regarding the proposed disclosure and the 20 conditions to be imposed under (B) of this paragraph; and 21 (B) impose appropriate conditions limiting 22 (i) access to the information to those legal counsel, 23 consultants, employees, officers, and agents of the producer who have 24 a need to know that information for the purpose of determining or 25 contesting the producer's tax obligation; and 26 (ii) the use of the information to use for that purpose; 27 (2) examine the books, records, and files of the [SUCH A] person; 28 (3) conduct hearings and compel the attendance of witnesses and the 29 production of books, records, and papers of any person; [AND] 30 (4) make an investigation or hold an inquiry that is considered 31 necessary to a disclosure of the facts as to 01 (A) the amount of production from any oil or gas location, or 02 of a company or other producer of oil or gas; and 03 (B) the rendition of the oil and gas for taxing purposes; 04 (5) require a producer, an explorer, or an operator of a lease or  05 property to file reports and copies of records that the department considers  06 necessary to forecast state revenue under this chapter; in the case of reports and  07 copies of records relating to proposed, expected, or approved unit expenditures  08 for a unit for which one or more working interest owners other than the  09 operator have authority to approve unit expenditures, the required reports and  10 copies of records are limited to those reports or copies of records that constitute  11 or disclose communications between the operator and the working interest  12 owners relating to unit budget matters;  13 (6) require a producer that has an average total production in the  14 state of more than 100,000 barrels a day for a calendar year to report the gross  15 value at the point of production of the producer's taxable oil and gas in the state  16 for a calendar year and the total amount of lease expenditures in the state for  17 that calendar year; and  18 (7) assess against a person required under this section to file a  19 report, statement, or other document a penalty, as determined by the  20 department under standards adopted in regulation by the department, of not  21 more than $1,000 for each day the person fails to file the report, statement, or  22 other document after notice by the department; the penalty is in addition to any  23 penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid  24 in the same manner as a tax deficiency under this title; the penalty shall bear  25 interest at the rate specified under AS 43.05.225(1). 26 * Sec. 51. AS 43.55 is amended by adding a new section to read: 27 Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except 28 as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be 29 assessed within six years after the return was filed. 30 (b) A decision of a regulatory agency, court, or other body with authority to 31 resolve disputes that results in a retroactive change to a lease expenditure, to an 01 adjustment to a lease expenditure, to costs of transportation, to sale price, to 02 prevailing value, or to consideration of quality differentials relating to the 03 commingling of oils has a corresponding effect, either an increase or decrease, as 04 applicable, on the production tax value of oil or gas or the amount or availability of a 05 tax credit as determined under this chapter. For purposes of this section, a change to a 06 lease expenditure includes a change in the categorization of a lease expenditure as a 07 qualified capital expenditure or as not a qualified capital expenditure. The producer 08 shall 09 (1) within 60 days after the change, notify the department in writing; 10 and 11 (2) within 120 days after the change, file amended returns covering all 12 periods affected by the change, unless the department agrees otherwise or a stay is in 13 place that affects the filing or payment, regardless of the pendency of appeals of the 14 decision. 15 (c) If an alteration in or modification of a producer's federal income tax return 16 or a recomputation of the producer's federal income tax or determination of 17 deficiency occurs that affects the amount of a tax imposed on the producer under this 18 chapter, the producer shall 19 (1) within 60 days after the final determination of the alteration, 20 modification, recomputation, or deficiency, notify the department in writing; and 21 (2) within 120 days after the final determination of the alteration, 22 modification, recomputation, or deficiency, file amended returns covering all affected 23 periods. 24 (d) In this section, 25 (1) "qualified capital expenditure" has the meaning given in 26 AS 43.55.023; 27 (2) "return" includes a report, a statement, and an amended return, 28 report, or statement. 29  * Sec. 52. AS 43.55.110 is amended by adding new subsections to read: 30 (e) The department may require that returns, statements, reports, notifications, 31 and applications filed under this chapter be filed electronically in a form and manner 01 approved or prescribed by the department. 02 (f) The department may require that payments required under this chapter be 03 made electronically in a form and manner approved or prescribed by the department. 04 (g) Notwithstanding AS 44.62, the department may issue, for the information 05 and guidance of producers, explorers, and other interested persons, advisory bulletins 06 stating the department's interpretation of provisions of this chapter and of regulations 07 adopted under this chapter. Unless otherwise provided by the department by 08 regulation, interpretations stated in the advisory bulletins are not binding on the 09 department or others. 10 (h) Subject to legislative appropriation, the department may compensate a 11 person who provides information to the department about noncompliance with the 12 provisions of this chapter by an explorer or a producer of oil or gas if that information 13 leads to the collection of additional taxes, penalties, or interest from the producer. The 14 amount of compensation under this subsection may not exceed the lesser of $500,000 15 or 10 percent of the additional tax, penalty, or interest collected as a result of the 16 information. A state employee or an agent of the state is not eligible for compensation 17 under this subsection. 18 (i) A person who, under (h) of this section, provides, in bad faith, to the 19 department erroneous information about noncompliance with the provisions of this 20 chapter by an explorer or producer of oil or gas shall pay to the 21 (1) department all expenses related to the department's investigation 22 of the alleged noncompliance; and 23 (2) explorer or producer about whom the noncompliance was alleged 24 all expenses that are incurred by the explorer or producer relating to the department's 25 investigation of the alleged noncompliance. 26  * Sec. 53. AS 43.55.150 is amended to read: 27 Sec. 43.55.150. Determination of gross value at the point of production.  28 (a) For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point of 29 production is calculated using the actual [REASONABLE] costs of transportation of 30 the oil or gas [. THE REASONABLE COSTS OF TRANSPORTATION ARE THE 31 ACTUAL COSTS], except when the 01 (1) shipper [PARTIES TO THE TRANSPORTATION] of oil or gas 02 is [ARE] affiliated with the transportation carrier or with a person that owns an  03 interest in the transportation facility; 04 (2) contract for the transportation of oil or gas is not an arm's length 05 transaction [OR IS NOT REPRESENTATIVE OF THE MARKET VALUE OF 06 THAT TRANSPORTATION]; or [AND] 07 (3) method or terms of transportation of oil or gas are [IS] not 08 reasonable in view of existing alternative [METHODS OF] transportation options. 09 (b) If the department finds that a condition [THE CONDITIONS] in (a)(1), 10 (2), or [AND] (3) of this section is [ARE] present, the gross value at the point of  11 production is calculated using the actual costs of transportation, or the  12 reasonable costs of transportation as determined under this subsection,  13 whichever is lower. The [THE] department shall determine the reasonable costs of 14 transportation, using the fair market value of like transportation, the fair market value 15 of equally efficient and available alternative modes of transportation, or other 16 reasonable methods. Transportation costs fixed by tariff rates that have been  17 adjudicated as just and reasonable by [PROPERLY ON FILE WITH] the 18 Regulatory Commission of Alaska or another [OTHER] regulatory agency and  19 transportation costs in an arm's length transaction paid by parties not affiliated  20 with an owner of the method of transportation shall be considered prima facie 21 reasonable. 22 (c) In determining the gross value of oil under [(a) OF] this section, the 23 department may not allow as reasonable costs of transportation 24 (1) the amount of loss of or damage to, or of expense incurred due to 25 the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense 26 is incurred in connection with a catastrophic oil discharge from the vessel into the 27 marine or inland waters of the state; 28 (2) the incremental costs of transportation of the oil that are 29 attributable to temporary use of or chartered or substituted service provided by 30 another vessel due to the loss of or damage to a vessel regularly used to transport oil 31 and that are incurred in connection with a catastrophic oil discharge into the marine or 01 inland waters of the state; and 02 (3) the costs incurred to charter, contract, or hire vessels and 03 equipment used to contain or clean up a catastrophic oil discharge. 04  * Sec. 54. AS 43.55.160(a) is amended to read: 05 (a) Except as provided in (b) of this section, for the purposes of 06 (1) AS 43.55.011(e), the annual production tax value of the taxable 07 (A) oil and gas produced during a calendar year from leases or 08 properties in the state that include land north of 68 degrees North latitude is 09 the gross value at the point of production of the oil and gas taxable under 10 AS 43.55.011(e) and produced by the producer from those leases or 11 properties, less the producer's lease expenditures under AS 43.55.165 for the 12 calendar year applicable to the oil and gas produced by the producer from 13 those leases or properties, as adjusted under AS 43.55.170; this  14 subparagraph does not apply to gas subject to AS 43.55.011(o); 15 (B) oil and gas produced during a calendar year from leases or 16 properties in the state outside the Cook Inlet sedimentary basin, no part of 17 which is north of 68 degrees North latitude, is the gross value at the point of 18 production of the oil and gas taxable under AS 43.55.011(e) and produced by 19 the producer from those leases or properties, less the producer's lease 20 expenditures under AS 43.55.165 for the calendar year applicable to the oil 21 and gas produced by the producer from those leases or properties, as adjusted 22 under AS 43.55.170; this subparagraph does not apply to gas subject to  23 AS 43.55.011(o); 24 (C) oil produced during a calendar year from a lease or 25 property in the Cook Inlet sedimentary basin is the gross value at the point of 26 production of the oil taxable under AS 43.55.011(e) and produced by the 27 producer from that lease or property, less the producer's lease expenditures 28 under AS 43.55.165 for the calendar year applicable to the oil produced by the 29 producer from that lease or property, as adjusted under AS 43.55.170; 30 (D) gas 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 gas 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 gas produced by 04 the producer from that lease or property, as adjusted under AS 43.55.170; 05 (E) gas produced during a calendar year from a lease or  06 property outside the Cook Inlet sedimentary basin and used in the state is  07 the gross value at the point of production of that gas taxable under  08 AS 43.55.011(e) and produced by the producer from that lease or  09 property, less the producer's lease expenditures under AS 43.55.165 for  10 the calendar year applicable to that gas produced by the producer from  11 that lease or property, as adjusted under AS 43.55.170;  12 (2) AS 43.55.011(g), the monthly production tax value of the taxable 13 (A) oil and gas produced during a month 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) [AS 43.55.011(g)] and produced by the producer from those 17 leases or properties, less 1/12 of the producer's lease expenditures under 18 AS 43.55.165 for the calendar year applicable to the oil and gas produced by 19 the producer from those leases or properties, as adjusted under AS 43.55.170; 20 this subparagraph does not apply to gas subject to AS 43.55.011(o); 21 (B) oil and gas produced during a month 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) 25 [AS 43.55.011(g)] and produced by the producer from those leases or 26 properties, less 1/12 of the producer's lease expenditures under AS 43.55.165 27 for the calendar year applicable to the oil and gas produced by the producer 28 from those leases or properties, as adjusted under AS 43.55.170; this  29 subparagraph does not apply to gas subject to AS 43.55.011(o); 30 (C) oil produced during a month from a lease or property in 31 the Cook Inlet sedimentary basin is the gross value at the point of production 01 of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 02 the producer from that lease or property, less 1/12 of the producer's lease 03 expenditures under AS 43.55.165 for the calendar year applicable to the oil 04 produced by the producer from that lease or property, as adjusted under 05 AS 43.55.170; 06 (D) gas produced during a month from a lease or property in 07 the Cook Inlet sedimentary basin is the gross value at the point of production 08 of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by 09 the producer from that lease or property, less 1/12 of the producer's lease 10 expenditures under AS 43.55.165 for the calendar year applicable to the gas 11 produced by the producer from that lease or property, as adjusted under 12 AS 43.55.170; 13 (E) gas produced during a month from a lease or property  14 outside the Cook Inlet sedimentary basin and used in the state is the gross  15 value at the point of production of that gas taxable under AS 43.55.011(e)  16 and produced by the producer from that lease or property, less 1/12 of  17 the producer's lease expenditures under AS 43.55.165 for the calendar  18 year applicable to that gas produced by the producer from that lease or  19 property, as adjusted under AS 43.55.170. 20  * Sec. 55. AS 43.55.160(b) is amended to read: 21 (b) A production tax value calculated under [(a) OF] this section may not be 22 less than zero. 23  * Sec. 56. AS 43.55.160(c) is amended to read: 24 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 25 calculating a monthly production tax value under (a)(2) of this section, the gross 26 value at the point of production of the oil and gas [TAXABLE UNDER 27 AS 43.55.011(g)] is calculated under regulations adopted by the department that 28 provide for using an appropriate monthly share of the producer's costs of 29 transportation for the calendar year. 30  * Sec. 57. AS 43.55.160(e) is amended to read: 31 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 01 would otherwise be deductible by a producer in a calendar year but whose deduction 02 would cause an annual production tax value calculated under (a)(1) of this section of 03 taxable oil or gas produced during the calendar year to be less than zero may be used 04 to establish a carried-forward annual loss under AS 43.55.023(b). However, the  05 department shall provide by regulation a method to ensure that, for a period for  06 which a producer's tax liability is limited by AS 43.55.011(j), (k), or (o), any  07 adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would  08 otherwise be deductible by a producer for that period but whose deduction  09 would cause a production tax value calculated under (a)(1)(C), (D) or (E) of this  10 section to be less than zero are accounted for as though the adjusted lease  11 expenditures had first been used as deductions in calculating the production tax  12 values of oil or gas subject to any of the limitations under AS 43.55.011(j), (k), or  13 (o) that have positive production tax values so as to reduce the tax liability  14 calculated without regard to the limitation to the maximum amount provided for  15 under the applicable provision of AS 43.55.011(j), (k), or (o). Only the amount of  16 those adjusted lease expenditures remaining after the accounting provided for  17 under this subsection may be used to establish a carried-forward annual loss  18 under AS 43.55.023(b). In this subsection, "producer" includes "explorer." 19  * Sec. 58. AS 43.55.165(a) is repealed and reenacted to read: 20 (a) Except as provided in (k) and (l) of this section, for purposes of this 21 chapter, a producer's lease expenditures for a calendar year are 22 (1) costs, other than items listed in (e) of this section, that are 23 (A) incurred by the producer during the calendar year after 24 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 25 within the producer's leases or properties in the state or, in the case of land in 26 which the producer does not own an operating right, operating interest, or 27 working interest, to explore for oil or gas deposits within other land in the 28 state; and 29 (B) allowed by the department by regulation, based on the 30 department's determination that the costs satisfy the following three 31 requirements: 01 (i) the costs must be incurred upstream of the point of 02 production of oil and gas; 03 (ii) the costs must be ordinary and necessary costs of 04 exploring for, developing, or producing, as applicable, oil or gas 05 deposits; and 06 (iii) the costs must be direct costs of exploring for, 07 developing, or producing, as applicable, oil or gas deposits; and 08 (2) a reasonable allowance for that calendar year, as determined under 09 regulations adopted by the department, for overhead expenses that are directly related 10 to exploring for, developing, or producing, as applicable, the oil or gas deposits. 11  * Sec. 59. AS 43.55.165(b) is amended to read: 12 (b) For purposes of (a) of this section, 13 (1) direct costs include 14 (A) an expenditure, when incurred, to acquire an item if the 15 acquisition cost is otherwise a direct cost, notwithstanding that the 16 expenditure may be required to be capitalized rather than treated as an 17 expense for financial accounting or federal income tax purposes; 18 (B) payments of or in lieu of property taxes, sales and use 19 taxes, motor fuel taxes, and excise taxes; 20 [(C) A REASONABLE ALLOWANCE, AS DETERMINED 21 UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR 22 OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR, 23 DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED 24 WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;] 25 (2) an activity does not need to be physically located on, near, or 26 within the premises of the lease or property within which an oil or gas deposit being 27 explored for, developed, or produced is located in order for the cost of the activity to 28 be a cost upstream of the point of production of the oil or gas;  29 (3) in determining whether costs are lease expenditures, the  30 department may consider, among other factors, the  31 (A) typical industry practices and standards in the state  01 that determine the costs, other than items listed in (e) of this section, that  02 an operator is allowed to bill a producer that is not the operator, under  03 unit operating agreements or similar operating agreements that were in  04 effect before December 2, 2005, and were subject to negotiation with at  05 least one producer with substantial bargaining power, other than the  06 operator; and  07 (B) standards adopted by the Department of Natural  08 Resources that determine the costs, other than items listed in (e) of this  09 section, that a lessee is allowed to deduct from revenue in calculating net  10 profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E). 11  * Sec. 60. AS 43.55.165(e) is amended to read: 12 (e) For purposes of this section, lease expenditures do not include 13 (1) depreciation, depletion, or amortization; 14 (2) oil or gas royalty payments, production payments, lease profit 15 shares, or other payments or distributions of a share of oil or gas production, profit, or 16 revenue, except that a producer's lease expenditures applicable to oil and gas  17 produced from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the  18 share of net profit paid to the state under that lease; 19 (3) taxes based on or measured by net income; 20 (4) interest or other financing charges or costs of raising equity or 21 debt capital; 22 (5) acquisition costs for a lease or property or exploration license; 23 (6) costs arising from fraud, wilful misconduct, [OR] gross 24 negligence, violation of law, or failure to comply with an obligation under a lease,  25 permit, or license issued by the state or federal government; 26 (7) fines or penalties imposed by law; 27 (8) costs of arbitration, litigation, or other dispute resolution activities 28 that involve the state or concern the rights or obligations among owners of interests 29 in, or rights to production from, one or more leases or properties or a unit; 30 (9) costs incurred in organizing a partnership, joint venture, or other 31 business entity or arrangement; 01 (10) amounts paid to indemnify the state; the exclusion provided by 02 this paragraph does not apply to the costs of obtaining insurance or a surety bond 03 from a third-party insurer or surety; 04 (11) surcharges levied under AS 43.55.201 or 43.55.300; 05 (12) an expenditure otherwise deductible under (b) of this section  06 that is a result of [FOR A TRANSACTION THAT IS] an internal transfer, a  07 transaction with an affiliate, or a transaction between related parties, or is 08 otherwise not an arm's length transaction, unless the producer establishes to the  09 satisfaction of the department that the amount of the expenditure does not  10 exceed the [EXPENDITURES INCURRED THAT ARE IN EXCESS OF] fair 11 market value of the expenditure; 12 (13) an expenditure incurred to purchase an interest in any 13 corporation, partnership, limited liability company, business trust, or any other 14 business entity, whether or not the transaction is treated as an asset sale for federal 15 income tax purposes; 16 (14) a tax levied under AS 43.55.011; 17 (15) [THE PORTION OF] costs incurred for dismantlement, removal, 18 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 19 structure, or for the restoration of a lease, field, unit, area, tract of land, body of 20 water, or right-of-way in conjunction with dismantlement, removal, surrender, or 21 abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS 22 OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A 23 RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 24 OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL 25 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 26 OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO 27 THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF 28 OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL 29 PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY 30 OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR 31 MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT, 01 REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under 02 this paragraph if the dismantlement, removal, surrender, or abandonment for which 03 the cost is incurred is undertaken for the purpose of replacing, renovating, or 04 improving the facility, pipeline, well pad, platform, or other structure; [FOR THE 05 PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS 06 (A) IN THE CASE OF OIL, ONE BARREL; 07 (B) IN THE CASE OF GAS, 6,000 CUBIC FEET;] 08 (16) costs incurred for containment, control, cleanup, or removal in 09 connection with any unpermitted release of oil or a hazardous substance and any 10 liability for damages imposed on the producer or explorer for that unpermitted 11 release; this paragraph does not apply to the cost of developing and maintaining an oil 12 discharge prevention and contingency plan under AS 46.04.030; 13 (17) costs incurred to satisfy a work commitment under an exploration 14 license under AS 38.05.132; 15 (18) that portion of expenditures, that would otherwise be qualified 16 capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a 17 calendar year that are less than the product of $0.30 multiplied by the total taxable 18 production from each lease or property, in BTU equivalent barrels, during that 19 calendar year, except that, when a portion of a calendar year is subject to this 20 provision, the expenditures and volumes shall be prorated within that calendar year;  21 (19) costs incurred for repair, replacement, or deferred  22 maintenance of a facility, a pipeline, a structure, or equipment, other than a well,  23 that results in or is undertaken in response to a failure, problem, or event that  24 results in an unscheduled interruption of, or reduction in the rate of, oil or gas  25 production; or costs incurred for repair, replacement, or deferred maintenance  26 of a facility, a pipeline, a structure, or equipment, other than a well, that is  27 undertaken in response to, or is otherwise associated with, an unpermitted  28 release of a hazardous substance or of gas; however, costs under this paragraph  29 that would otherwise constitute lease expenditures under (a) and (b) of this  30 section may be treated as lease expenditures if the department determines that  31 the repair or replacement is solely necessitated by an act of war, by an  01 unanticipated grave natural disaster or other natural phenomenon of an  02 exceptional, inevitable, and irresistible character, the effects of which could not  03 have been prevented or avoided by the exercise of due care or foresight, or by an  04 intentional or negligent act or omission of a third party, other than a party or its  05 agents in privity of contract with, or employed by, the producer or an operator  06 acting for the producer, but only if the producer or operator, as applicable,  07 exercised due care in operating and maintaining the facility, pipeline, structure,  08 or equipment, and took reasonable precautions against the act or omission of the  09 third party and against the consequences of the act or omission; in this  10 paragraph,  11 (A) "costs incurred for repair, replacement, or deferred  12 maintenance of a facility, a pipeline, a structure, or equipment" includes  13 costs to dismantle and remove the facility, pipeline, structure, or  14 equipment that is being replaced;  15 (B) "hazardous substance" has the meaning given in  16 AS 46.03.826;  17 (C) "replacement" includes renovation or improvement;  18 (20) costs incurred to construct, acquire, or operate a refinery or  19 crude oil topping plant, regardless of whether the products of the refinery or  20 topping plant are used in oil or gas exploration, development, or production  21 operations; however, if a producer owns a refinery or crude oil topping plant  22 that is located on or near the premises of the producer's lease or property in the  23 state and that processes the producer's oil produced from that lease or property  24 into a product that the producer uses in the operation of the lease or property in  25 drilling for or producing oil or gas, the producer's lease expenditures include the  26 amount calculated by subtracting from the fair market value of the product used  27 the prevailing value, as determined under AS 43.55.020(f), of the oil that is  28 processed;  29 (21) costs of lobbying, public relations, public relations  30 advertising, or policy advocacy.  31  * Sec. 61. AS 43.55.165(h) is amended to read: 01 (h) The department shall adopt regulations that provide for reasonable 02 methods of allocating costs between oil and gas, between gas subject to  03 AS 43.55.011(o) and other gas, and between leases or properties in those 04 circumstances where an allocation of costs is required to determine [THE 05 DETERMINATION OF THE] lease expenditures that are costs of exploring for,  06 developing, or producing oil deposits or costs of exploring for, developing, or  07 producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of  08 exploring for, developing, or producing oil or gas deposits located within 09 [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or 10 properties [, REQUIRES AN ALLOCATION OF COSTS]. 11  * Sec. 62. AS 43.55.165 is amended by adding new subsections to read: 12 (k) For purposes of AS 43.55.160, for a calendar year after 2006 and before 13 2010, a producer's total lease expenditures, before adjustment under AS 43.55.170, 14 that are applicable to oil and gas produced by the producer from all leases or 15 properties from which 1,000,000,000 BTU equivalent barrels of oil or gas have been 16 cumulatively produced by the close of 2006 and from which the average daily oil and 17 gas production during 2006 exceeded 100,000 BTU equivalent barrels as the unit 18 boundaries were defined on January 1, 2007, are determined under this subsection 19 and (l) of this section. Except as otherwise provided under (l) of this section, the 20 producer's total lease expenditures, other than qualified capital expenditures, (1) for 21 calendar year 2007, are equal to the product of 1.37 multiplied by the total lease 22 expenditures for calendar year 2006, other than qualified capital expenditures, that are 23 applicable to oil and gas produced by the producer from all leases or properties within 24 the unit, as reported on the producer's statement under AS 43.55.030(a) for calendar 25 year 2006, and (2) for a calendar year after 2007, are equal to the product of 1.03 26 multiplied by the total lease expenditures, other than qualified capital expenditures, 27 determined for the previous calendar year under this subsection. The producer's total 28 lease expenditures for a calendar year after 2006 that are applicable to oil and gas 29 produced by the producer from all leases or properties within a unit subject to this 30 subsection are the sum of the producer's qualified capital expenditures incurred 31 during the calendar year that are applicable to that oil and gas plus the lease 01 expenditures, other than qualified capital expenditures, that are applicable to that oil 02 and gas as determined under this subsection and (l) of this section. If a producer 03 whose lease expenditures for 2006 are used to determine lease expenditures for a later 04 calendar year under this subsection transfers an interest in an affected lease or 05 property to a different producer or if the unit area of the applicable unit is changed 06 from the area as it existed on December 31, 2006, the transferee's lease expenditures 07 applicable to oil and gas produced by the transferee from the lease or property and a 08 producer's lease expenditures applicable to oil or gas produced from a lease or 09 property within a unit area as it existed on December 31, 2006, continue to be 10 determined under this subsection using those 2006 lease expenditures. In this 11 subsection, "qualified capital expenditures" has the meaning given in AS 43.55.023. 12 (l) If, after audit by the department of a producer's statement or amended 13 statement under AS 43.55.030(a) for calendar year 2006, the department finally 14 determines that the reported amount of total lease expenditures, other than qualified 15 capital expenditures, for calendar year 2006 applicable to oil and gas produced by the 16 producer from all leases or properties within a unit subject to (k) of this section 17 exceeds by more than 10 percent the actual amount of those lease expenditures, other 18 than qualified capital expenditures, the producer or transferee, as applicable, shall (1) 19 substitute the actual amount of those lease expenditures, other than qualified capital 20 expenditures, for purposes of the calculations set out in (k) of this section, and (2) file 21 amended statements for affected past tax periods within 60 days after the final 22 determination. The commissioner may adjust the deduction applicable under (k) of 23 this section on changes in unit boundaries. 24 * Sec. 63. AS 43.55.170(a) is amended to read: 25 (a) A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN 26 SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER 27 AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must 28 be adjusted by subtracting payments or credits, other than tax credits, received by the 29 producer or by an operator acting for the producer for 30 (1) the use by another person of a production facility in which the 31 producer has an ownership interest or the management by the producer of a 01 production facility under a management agreement providing for the producer to 02 receive a management fee; 03 (2) a reimbursement or similar payment that offsets the producer's 04 lease expenditures, including an insurance recovery from a third-party insurer and a 05 payment from the state or federal government for reimbursement of the producer's 06 upstream costs, including costs for gathering, separating, cleaning, dehydration, 07 compressing, or other field handling associated with the production of oil or gas 08 upstream of the point of production; 09 (3) the sale or other transfer of 10 (A) an asset, including geological, geophysical, or well data or 11 interpretations, acquired by the producer as a result of a lease expenditure or 12 an expenditure that would be a lease expenditure if it were incurred after 13 March 31, 2006; for purposes of this subparagraph, 14 (i) if a producer removes from the state, for use outside 15 the state, an asset described in this subparagraph, the value of the asset 16 at the time it is removed is considered a payment received by the 17 producer for sale or transfer of the asset; 18 (ii) for a transaction that is an internal transfer or is 19 otherwise not an arm's length transaction, if the sale or transfer of the 20 asset is made for less than fair market value, the amount subtracted 21 must be the fair market value; and 22 (B) oil or gas 23 (i) that is not considered produced from a lease or 24 property under AS 43.55.020(e); and 25 (ii) the cost of acquiring which is a lease expenditure 26 incurred by the person that acquires the oil or gas. 27  * Sec. 64. AS 43.55 is amended by adding new sections to article 4 to read: 28 Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary 29 provision of AS 40.25.100, and regardless of whether the information is considered 30 under AS 43.05.230(e) to constitute statistics classified to prevent the identification of 31 particular returns or reports, the department may publish the following information 01 under this chapter, if aggregated among three or more producers or explorers, 02 showing by month or calendar year and by lease or property, unit, or area of the state: 03 (1) the amount of oil or gas production; 04 (2) the amount of taxes levied under this chapter or paid under this 05 chapter; 06 (3) the effective tax rates under this chapter; 07 (4) the gross value of oil or gas at the point of production; 08 (5) the transportation costs for oil or gas; 09 (6) qualified capital expenditures, as defined in AS 43.55.023; 10 (7) exploration expenditures under AS 43.55.025; 11 (8) production tax values of oil or gas under AS 43.55.160; 12 (9) lease expenditures under AS 43.55.165; 13 (10) adjustments to lease expenditures under AS 43.55.170; 14 (11) tax credits applicable or potentially applicable against taxes 15 levied by this chapter. 16 Sec. 43.55.895. Applicability to municipal entities. (a) Notwithstanding 17 AS 29.35.670(a) or other provision of law, a producer that is a municipal entity is 18 subject to taxation and payment of surcharges under this chapter for oil and gas that it 19 sells to another party. 20 (b) A municipal entity subject to taxation because of this section is eligible 21 for all tax credits under this chapter to the same extent as any other producer. 22 (c) In this section, "municipal entity" means a municipality, municipally 23 owned utility, public corporation of a municipality, or entity established by more than 24 one municipality. 25 * Sec. 65. AS 43.55.900 is amended by adding new paragraphs to read: 26 (22) "producer" means an owner of an operating right, operating 27 interest, or working interest in a mineral interest in oil or gas; 28 (23) "unit" means a group of tracts of land that is 29 (A) subject to a cooperative or a unit plan of development or 30 operation that has been certified by the commissioner of natural resources 31 under AS 38.05.180(p); 01 (B) subject to a cooperative or a unit plan of development or 02 operation that has been certified by the United States Secretary of the Interior 03 under 30 U.S.C. 226(m); 04 (C) subject to an agreement of the owners of interests in the 05 tracts of land to validly integrate their interests to provide for the unitized 06 management, development, and operation of the tracts of land as a unit, within 07 the meaning of AS 31.05.110(a); or 08 (D) within the unit area of a unit created by order of the 09 Alaska Oil and Gas Conservation Commission under AS 31.05.110(b); 10 (24) "used in the state" means delivered for consumption as fuel in the 11 state, including as fuel consumed to generate electricity. 12  * Sec. 66. AS 43.55.011(h), 43.55.011(l), 43.55.011(n), 43.55.165(c), and 43.55.165(d) are 13 repealed. 14  * Sec. 67. AS 43.55.023(f) is repealed.  15  * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 APPLICABILITY. (a) AS 43.55.075(a), enacted by sec. 51 of this Act, applies to any 18 tax liability under AS 43.55 for the production of oil and gas after December 31, 2006. 19 (b) If an application made under AS 43.55.023(f) is received by the Department of 20 Revenue before January 1, 2008, and is still outstanding on that date, the application is 21 considered to be an application under AS 43.55.028, enacted by sec. 46 of this Act. 22  * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE 25 INTENT. It is the intent of the legislature that the commissioner of administration shall cause 26 not more than four oil and gas revenue audit master positions to be created in the Department 27 of Revenue and not more than two oil and gas revenue audit master positions to be created in 28 the Department of natural Resources. Oil and gas revenue audit masters shall be employed in 29 a professional capacity to collect oil and gas revenue by developing policy, conducting 30 studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and 31 gas auditors. 01  * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 OIL AND GAS AUDITORS; CLASSIFICATION AND PAY PLANS. 04 Notwithstanding AS 39.25.150(2), the Department of Administration shall develop and 05 implement a distinct position classification plan and a distinct pay plan for oil and gas 06 auditors and their immediate supervisors, other than revenue audit masters, that perform 07 (1) oil and gas tax audits in the Department of Revenue under the direction of 08 an oil and gas revenue audit master; 09 (2) royalty audits, including net profit share audits, in the Department of 10 Natural Resources under the direction of an oil and gas revenue audit master. 11  * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 TRANSITION: PAYMENT OF TAX; FILING. (a) A person subject to tax under 14 AS 43.55 that is required to make one or more installment payments of estimated tax or other 15 payment of tax under AS 43.55.020(a) during the period after March 31, 2006, and before the 16 effective date of sec. 22 of this Act, and under AS 43.55.020(a), as amended by sec. 22 of 17 this Act, for the production of oil or gas during a month after March 31, 2006, and before the 18 effective date of sec. 22 of this Act but that failed to pay the full amount of the installment 19 payments or other payment of tax required under AS 43.55 because of the retroactive 20 application of AS 43.55.165(e)(6) and (19), as enacted in the amendment to AS 43.55.165(e) 21 in sec. 60 of this Act, that are retroactive to April 1, 2006, under sec. 74(b) of this Act, and 22 the retroactive application of secs. 15 - 28, 32 - 35, 53 - 61, and 63, 65, and 66, and that part 23 of AS 43.55.165(e) in sec. 60 of this Act under sec. 74(d) of this Act, shall pay before 24 April 1, 2008, the balance of any tax due under AS 43.55 for the period after March 31, 25 2006, and before the effective date of this section. 26 (b) A person required to file a statement under AS 43.55.030(a), as amended by sec. 27 47 of this Act, or a statement under AS 43.55.030(e) or (f), as enacted by sec. 49 of this Act, 28 but that failed to file a statement required under AS 43.55 because of the retroactive 29 application of secs. 47 and 49 of this Act under sec. 74(d) of this Act, shall file, before 30 April 1, 2008, any statement required to have been filed after June 30, 2007, and before the 31 effective date of this section. 01  * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 04 contrary provision of AS 44.62.240, 05 (1) if the Department of Revenue expressly designates in the regulation that 06 the regulation applies retroactively to that date, a regulation adopted by the Department of 07 Revenue to implement, interpret, make specific, or otherwise carry out secs. 15 - 28, 32 - 35, 08 53 - 61, and 63, 65, and 66, of this Act may apply retroactively to July 1, 2007, except that a 09 regulation adopted by the Department of Revenue to implement, interpret, make specific, or 10 otherwise carry out AS 43.55.165(e)(6) and (19), as enacted in the amendment to 11 AS 43.55.165(e) in sec. 60 of this Act, may apply retroactively to April 1, 2006, and a 12 regulation adopted by the Department of Revenue to implement, interpret, make specific, or 13 otherwise carry out AS 43.55.165(k) and (l), as enacted by sec. 62 of this Act, may apply 14 retroactively to January 1, 2007; 15 (2) a regulation adopted by the Department of Natural Resources to 16 implement, interpret, make specific, or otherwise carry out statutory provisions for the 17 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the 18 extent the regulation deals with the treatment of oil and gas production taxes in determining 19 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of 20 Natural Resources expressly designates in the regulation that the regulation applies 21 retroactively to that date. 22  * Sec. 73. The uncodified law of the State of Alaska is amended by adding a new section to 23 read: 24 TRANSITION: REGULATIONS. The Department of Natural Resources and the 25 Department of Revenue may proceed to adopt regulations to implement this Act. The 26 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the 27 effective date of the law implemented by the regulation. The department shall adopt 28 regulations governing the use of tax credits under AS 43.55 for a calendar year for which the 29 applicable tax credit provisions of AS 43.55 differ as between parts of the year as a result of 30 the retroactive application of a provision of this Act. 31  * Sec. 74. The uncodified law of the State of Alaska is amended by adding a new section to 01 read: 02 RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 41 of 03 this Act, and AS 43.55.895, enacted by sec. 64 of this Act, are retroactive to July 1, 2003. 04 (b) Section 31 of this Act and AS 43.55.165(e)(6) and(19), as amended and enacted 05 by the amendment to AS 43.55.165(e) in sec. 60 of this Act, are retroactive to April 1, 2006. 06 (c) AS 43.55.165(k) and (l), enacted by sec. 62 of this Act, are retroactive to 07 January 1, 2007. 08 (d) Except as provided in (b) and (c) of this section, secs. 15 - 28, 32 - 35, 53 - 61, 09 and 63, 65, and 66 of this Act are retroactive to July 1, 2007. 10  * Sec. 75. Sections 29, 30, 46, 67 of this Act take effect January 1, 2008. 11  * Sec. 76. Sections 36 - 40 and 42 - 45 of this Act take effect July 1, 2008. 12 * Sec. 77. Except as provided in secs. 75 and 76 of this Act, this Act takes effect 13 immediately under AS 01.10.070(c).