00                             HOUSE BILL NO. 280                                                                          
01 "An Act relating to natural gas; relating to a gas storage facility; relating to the                                    
02 Regulatory Commission of Alaska; relating to the participation by the attorney general                                  
03 in a matter involving the approval of a rate or a gas supply contract; relating to an                                   
04 income tax credit for a gas storage facility; relating to oil and gas production tax credits;                           
05 relating to the powers and duties of the Alaska Oil and Gas Conservation Commission;                                    
06 relating to production tax credits for certain losses and expenditures, including                                       
07 exploration expenditures; relating to the powers and duties of the director of the                                      
08 division of lands and to lease fees for the storage of gas on state land; and providing for                             
09 an effective date."                                                                                                     
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
11    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
12 to read:                                                                                                                
01       SHORT TITLE. This Act may be known as the Cook Inlet Recovery Act.                                                
02    * Sec. 2. AS 31.05 is amended by adding a new section to read:                                                     
03            Sec. 31.05.032. Certification of gas storage capacity. (a) The commission                                  
04       shall certify the working gas storage capacity in a gas storage facility for which a                              
05       person may claim a credit under AS 43.20.046 within six months after receiving an                                 
06       application for certification. The commission shall issue a certificate to the owner of                           
07       the gas storage facility that states the certified capacity to the nearest 1,000,000,000                          
08       cubic feet that is expected to be in place before December 31, 2015, and shall submit a                           
09       copy of the certificate to the commissioner of revenue.                                                           
10            (b)  The owner of a gas storage facility shall apply to the commission for the                               
11       capacity certification in (a) of this section on a form prescribed by the commission.                             
12       The application must be filed at least six months before the commencement of                                      
13       commercial operations.                                                                                            
14            (c)  The owner of a gas storage facility shall report the maximum working gas                                
15       storage capacity for a gas storage facility on a form prescribed by the commission. The                           
16       report shall be filed within six months after the earlier of the date that the gas storage                        
17       facility ceases commercial operations or December 31, 2015. After receiving the                                   
18       report, the commission shall certify the working gas storage capacity of the gas                                  
19       storage facility as of the earlier of the date the gas processing facility ceased                                 
20       commercial operations or December 31, 2015. The commission shall issue a certificate                              
21       to the owner of the gas storage facility and a copy of the certificate to the                                     
22       commissioner of revenue that states the capacity of the gas storage rounded to the                                
23       nearest 1,000,000,000 cubic feet as of the earlier of the date the gas storage facility                           
24       ceased commercial operations or December 31, 2015.                                                                
25            (d)  In this section,                                                                                        
26                 (1)  "ceases commercial operations" means a gas storage facility neither                                
27       injects nor withdraws an average of more than 1,000,000 cubic feet of gas a day,                                  
28       determined on a calendar year basis;                                                                              
29                 (2)  "commencement of commercial operations" means the first                                            
30       injection of non-native gas into the gas storage facility for purposes other than testing;                        
31                 (3)  "cushion gas" means native and non-native gas that is needed to                                    
01       pressurize the gas storage facility and that allows the gas storage facility to function;                         
02                 (4)  "gas storage facility" means a tank, depleted reservoir, injection                                 
03       well for gas storage permitted under AS 31.05, or other structure in the state with a                             
04       minimum capacity of 1,000,000,000 cubic feet of gas other than cushion gas, that is                               
05       used at least in part for the storage of gas on behalf of a utility regulated under                               
06       AS 42.05.141 and designated for sale and delivery in the state;                                                   
07                 (5)  "native gas" means gas in a gas storage facility before any non-                                   
08       native gas is injected;                                                                                           
09                 (6)  "non-native gas" means gas that is produced elsewhere and injected                                 
10       into a gas storage facility;                                                                                      
11                 (7)  "working gas storage capacity" means the maximum volume of gas                                     
12       the gas storage facility may safely contain without waste in addition to the volume of                            
13       cushion gas.                                                                                                      
14    * Sec. 3. AS 38.05.035(a) is amended to read:                                                                      
15            (a)  The director shall                                                                                      
16                 (1)  have general charge and supervision of the division and may                                        
17       exercise the powers specifically delegated to the director; the director may employ and                           
18       fix the compensation of assistants and employees necessary for the operations of the                              
19       division; the director is the certifying officer of the division, with the consent of the                         
20       commissioner, and may approve vouchers for disbursements of money appropriated to                                 
21       the division;                                                                                                     
22                 (2)  manage, inspect, and control state land and improvements on it                                     
23       belonging to the state and under the jurisdiction of the division;                                                
24                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
25       commissioner;                                                                                                     
26                 (4)  prescribe application procedures and practices for the sale, lease, or                             
27       other disposition of available land, resources, property, or interest in them;                                    
28                 (5)  prescribe fees or service charges, with the consent of the                                         
29       commissioner, for any public service rendered;                                                                    
30                 (6)  under the conditions and limitations imposed by law and the                                        
31       commissioner, issue deeds, leases, or other conveyances disposing of available land,                              
01       resources, property, or any interests in them;                                                                    
02                 (7)  have jurisdiction over state land, except that land acquired by the                                
03       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
04       departments or agencies succeeding to their respective functions through foreclosure                              
05       or default; to this end, the director possesses the powers and, with the approval of the                          
06       commissioner, shall perform the duties necessary to protect the state's rights and                                
07       interest in state land, including the taking of all necessary action to protect and enforce                       
08       the state's contractual or other property rights;                                                                 
09                 (8)  maintain the records the commissioner considers necessary,                                         
10       administer oaths, and do all things incidental to the authority imposed; the following                            
11       records and files shall be kept confidential upon request of the person supplying the                             
12       information:                                                                                                      
13                      (A)  the name of the person nominating or applying for the sale,                                   
14            lease, or other disposal of land by competitive bidding;                                                     
15                      (B)  before the announced time of opening, the names of the                                        
16            bidders and the amounts of the bids;                                                                         
17                      (C)  all geological, geophysical, and engineering data supplied,                                   
18            whether or not concerned with the extraction or development of natural                                       
19            resources;                                                                                                   
20                      (D)  except as provided in AS 38.05.036, cost data and financial                                   
21            information submitted in support of applications, bonds, leases, and similar                                 
22            items;                                                                                                       
23                      (E)  applications for rights-of-way or easements;                                                  
24                      (F)  requests for information or applications by public agencies                                   
25            for land that is being considered for use for a public purpose;                                              
26                 (9)  account for the fees, licenses, taxes, or other money received in the                              
27       administration of this chapter including the sale or leasing of land, identify their                              
28       source, and promptly transmit them to the proper fiscal department after crediting                                
29       them to the proper fund; receipts from land application filing fees and charges for                               
30       copies of maps and records shall be deposited immediately in the general fund of the                              
31       state by the director;                                                                                            
01                 (10)  select and employ or obtain at reasonable compensation cadastral,                                 
02       appraisal, or other professional personnel the director considers necessary for the                               
03       proper operation of the division;                                                                                 
04                 (11)  be the certifying agent of the state to select, accept, and secure by                             
05       whatever action is necessary in the name of the state, by deed, sale, gift, devise,                               
06       judgment, operation of law, or other means any land, of whatever nature or interest,                              
07       available to the state; and be the certifying agent of the state, to select, accept, or                           
08       secure by whatever action is necessary in the name of the state any land, or title or                             
09       interest to land available, granted, or subject to being transferred to the state for any                         
10       purpose;                                                                                                          
11                 (12)  on request, furnish records, files, and other information related to                              
12       the administration of AS 38.05.180 to the Department of Revenue for use in                                        
13       forecasting state revenue under or administering AS 43.55, whether or not those                                   
14       records, files, and other information are required to be kept confidential under (8) of                           
15       this subsection; in the case of records, files, or other information required to be kept                          
16       confidential under (8) of this subsection, the Department of Revenue shall maintain                               
17       the confidentiality that the Department of Natural Resources is required to extend to                             
18       records, files, and other information under (8) of this subsection;                                           
19                 (13)  give priority to and expedite the processing of an application                                
20       for a lease or assignment of a lease of state land for development and operation of                           
21       a gas storage facility, for a right-of-way to a gas storage facility, for a change to a                       
22       participating area, and for a permit necessary for the operation of a gas storage                             
23       facility; in this paragraph, "gas storage facility" has the meaning given in                                  
24       AS 31.05.032.                                                                                                 
25    * Sec. 4. AS 38.05 is amended by adding a new section to read:                                                     
26            Sec. 38.05.099. Exemption from rental payments for a gas storage facility.                                 
27       (a) A person using state land leased under AS 38.05.070 - 38.05.105 for a gas storage                             
28       facility is exempt from storage fees or rental payments authorized under                                          
29       AS 38.05.180(u) on that land for the first calendar year of commercial operation of the                           
30       gas storage facility and for each of the nine calendar years immediately following the                            
31       first year of commercial operations; however, if the gas storage facility ceases                                  
01       commercial operations during the eight calendar year period immediately following                                 
02       the first year of commercial operations, the state land is no longer exempt from storage                          
03       fees or rental payments after the calendar year in which the gas storage facility ceases                          
04       commercial operations.                                                                                            
05            (b)  In this section, "ceases commercial operations" and "gas storage facility"                              
06       have the meanings given in AS 31.05.032.                                                                          
07    * Sec. 5. AS 38.05.180(u) is amended to read:                                                                      
08            (u)  To avoid waste, [OR] to promote conservation of natural resources, or to                        
09       store gas designated for sale or delivery in the state and regulated under                                    
10       AS 42.05, the commissioner may authorize the subsurface storage of oil or gas,                            
11       whether or not produced from state land, in land leased or subject to lease under this                            
12       section. This authorization may provide for the payment of a storage fee or rental on                             
13       the stored oil or gas, or, instead of the fee or rental, for a royalty other than that                            
14       prescribed in the lease when the stored oil or gas is produced in conjunction with oil or                         
15       gas not previously produced, except that a storage fee or rental fee on gas owned                             
16       by a utility regulated under AS 42.05 and injected, stored, or withdrawn from a                               
17       gas storage facility and designated for sale or delivery in the state may not be                              
18       required for the first calendar year of commercial operation of the gas storage                               
19       facility and for the nine calendar years immediately following the first year of                              
20       commercial operations; however, if the gas storage facility ceases commercial                                 
21       operations during the eight calendar year period immediately following the first                              
22       year of commercial operations, the gas is no longer exempt from a storage fee or                              
23       rental fee after the calendar year in which the gas storage facility ceases                                   
24       commercial operations. A lease on which storage is so authorized shall be extended                            
25       at least for the period of storage and so long thereafter as oil or gas not previously                            
26       produced is produced in paying quantities. Gas withdrawn from a gas storage                                   
27       facility is considered to be non-native gas and is not considered to be produced                              
28       and subject to royalty until all non-native gas injected into the gas storage facility                        
29       has been withdrawn from the gas storage facility. In this subsection, "ceases                                 
30       commercial operations," "gas storage facility," and "non-native gas" have the                                 
31       meanings given in AS 31.05.032.                                                                               
01    * Sec. 6. AS 42.05.141 is amended by adding a new subsection to read:                                              
02            (d)  When considering whether the approval of a gas supply contract proposed                                 
03       by a utility to provide a reliable supply of gas for a reasonable price is in the public                          
04       interest, the commission shall                                                                                    
05                 (1)  recognize the public benefits from allowing a utility to negotiate                                 
06       different pricing mechanisms with different gas suppliers and to maintain a diversified                           
07       portfolio of gas supply contracts to protect customers from the risks of inadequate                               
08       supply or excessive cost that may arise from a single pricing mechanism; and                                      
09                 (2)  consider whether a utility could meet its responsibility to the public                             
10       in a timely manner and without undue risk to the public if the commission fails to                                
11       approve a rate or a gas supply contract proposed by the utility.                                                  
12    * Sec. 7. AS 42.05.381 is amended by adding a new subsection to read:                                              
13            (k)  In determining the just and reasonable rate for a utility for which the cost                            
14       of gas storage is a factor in determining the rate, the cost of gas storage shall reflect                         
15       the reduction in cost attributable to storage fees and rental payments exempted under                             
16       AS 38.05.099(a) and the value of tax credits taken under AS 43.20.046 for the gas                                 
17       storage facility. In this subsection, "gas storage facility" has the meaning given in                             
18       AS 31.05.032.                                                                                                     
19    * Sec. 8. AS 43.05.230 is amended by adding a new subsection to read:                                              
20            (j)  Information described in this subsection that relates to the tax credit in                              
21       AS 43.20.046 is public information and may be furnished to the Regulatory                                         
22       Commission of Alaska by the commissioner upon request. The commissioner shall                                     
23       disclose                                                                                                          
24                 (1)  the name of each person claiming a credit and the amount of credit                                 
25       issued to that person under AS 43.20.046;                                                                         
26                 (2)  the amount of credit shown on a transferable tax credit certificate                                
27       and the name of the person to whom the tax credit certificate is transferred; and                                 
28                 (3)  the name of each person selling an unused credit to the department                                 
29       under AS 43.20.046 and the amount paid to that person by the department.                                          
30    * Sec. 9. AS 43.20 is amended by adding a new section to article 1 to read:                                        
31            Sec. 43.20.046. Gas storage facility tax credit. (a) A person that is an owner                             
01       of a gas storage facility for which the commencement of commercial operations is                                  
02       after December 31, 2010, and before January 1, 2016, may apply, as a credit against                               
03       the tax liability that may be imposed on the person under this chapter an amount equal                            
04       to $1.50 for each 1,000 cubic feet of working gas storage capacity less any amount of                             
05       the credit under this section taken in earlier tax years. The total amount of the credit                          
06       that may be applied for a single gas storage facility under this section may not exceed                           
07       $30,000,000. The credit is subject to the terms and conditions of this section and is in                          
08       addition to any other credit authorized to the person by this chapter.                                            
09            (b)  The person claiming the credit has the burden of demonstrating                                          
10       compliance with the requirements of this section and the amount of the credit being                               
11       claimed. To claim the credit, the person shall submit, on a form prescribed by the                                
12       department, the volume of a gas storage facility that is the basis for the credit, the date                       
13       that the gas storage facility commences commercial operation, and other information                               
14       required by the department. A person                                                                              
15                 (1)  required to file a return under this chapter shall submit the form                                 
16       claiming the credit with the taxpayer's return;                                                                   
17                 (2)  not required to file a return under this chapter shall submit the form                             
18       claiming the credit before May 1 of the year following the year in which the gas                                  
19       storage facility on which the credit is based first began commercial operation.                                   
20            (c)  A person entitled to the credit in (a) of this section that is not fully applied                        
21       against the tax liability that may be imposed under this chapter may apply to the                                 
22       department for a transferable tax credit certificate in the amount of the unused portion                          
23       of the tax credit. The unused portion of the transferable tax credit certificate may be                           
24       purchased by the department under AS 43.55.028 or, with prior written approval by                                 
25       the department, transferred to another person.                                                                    
26            (d)  After receiving a written application from a person qualifying for the credit                           
27       under this section, the department shall purchase, in whole or in part, any unused                                
28       portion of the credit with money available from the oil and gas tax credit fund                                   
29       (AS 43.55.028) if the department finds that the                                                                   
30                 (1)  applicant does not have an outstanding liability to the state for                                  
31       unpaid delinquent taxes under this title; and                                                                     
01                 (2)  total tax liability of the applicant under this chapter is zero after the                          
02       application of all available tax credits for the tax year in which the application is                             
03       submitted.                                                                                                        
04            (e)  For the purpose of determining the amount of the credit under this section,                             
05       the working gas storage capacity on which the credit is based shall be determined by                              
06       the Alaska Oil and Gas Conservation Commission under AS 31.05.032.                                                
07            (f)  A person may not receive a credit under this section for the acquisition of a                           
08       gas storage facility for which a credit has been granted under this section.                                      
09            (g)  If the gas storage facility for which a credit was taken under this section                             
10       ceases commercial operation during the 10 years immediately following the                                         
11       commencement of commercial operations, the tax liability under this chapter of the                                
12       person who took the credit shall be increased based on the amount of the credit taken                             
13       and the number of years in which the gas storage facility was in commercial operation.                            
14       The amount of the increase in tax liability (1) shall be determined and assessed as of                            
15       the date the gas storage facility first ceases commercial operations, regardless of                               
16       whether the gas storage facility subsequently resumes commercial operations; and (2)                              
17       is equal to the total amount of the credit taken multiplied by a fraction, the numerator                          
18       of which is the difference between 10 and the number of years the gas storage facility                            
19       was engaged in commercial operation rounded to the nearest whole number, and the                                  
20       denominator of which is 10. In this subsection, "commencement of commercial                                       
21       operations" has the meaning given in AS 31.05.032.                                                                
22            (h)  The issuance of a tax credit certificate under this section does not limit the                          
23       department's ability to later audit a tax credit claim to which the certificate relates or to                     
24       adjust the claim if the department determines, as a result of the audit, that the person                          
25       that received the credit was not entitled to the amount of the credit that was issued.                            
26       The tax liability of the person receiving the credit under this chapter is increased by                           
27       the amount of the credit that exceeds that to which the person was entitled. If the tax                           
28       liability is increased under this subsection, the increase bears interest under                                   
29       AS 43.05.225 from the date the transferable tax credit certificate was issued.                                    
30            (i)  A person liable for an increased tax liability under (g) and (h) of this                                
31       section that otherwise is not subject to tax under this chapter is considered to be a                             
01       corporation subject to tax under this chapter.                                                                    
02            (j)  In this section, "ceases commercial operations," "cushion gas," "gas storage                            
03       facility," and "working gas storage capacity" have the meanings given in                                          
04       AS 31.05.032.                                                                                                     
05    * Sec. 10. AS 43.55.020 is amended by adding a new subsection to read:                                             
06            (i)  Cushion gas in a gas storage facility is not considered to be gas used in the                           
07       operation of a lease or property or gas used for repressuring as described in (e) of this                         
08       section. Gas withdrawn from a gas storage facility is considered to be non-native gas                             
09       until all non-native gas injected into the gas storage facility has been withdrawn from                           
10       the gas storage facility. Non-native gas withdrawn from a gas storage facility is not                             
11       considered to be gas produced for the purposes of AS 43.55.011 - 43.55.180. Gas                                   
12       withdrawn from a gas storage facility after all non-native gas previously injected into                           
13       the gas storage facility has been withdrawn is gas considered to be produced from the                             
14       lease or property for the purposes of AS 43.55.011 - 43.55.180. In this subsection,                               
15       "gas storage facility," "native gas," and "non-native gas" have the meanings given in                             
16       AS 38.05.032.                                                                                                     
17    * Sec. 11. AS 43.55.023(a) is amended to read:                                                                     
18            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
19       expenditure as follows:                                                                                           
20                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
21       deductible lease expenditure for purposes of calculating the production tax value of oil                          
22       and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                                
23       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or                                       
24       explorer that incurs a qualified capital expenditure may also elect to apply a tax credit                         
25       against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that                                       
26       expenditure; the full amount of the credit for a qualified capital expenditure for                            
27       activity in the Cook Inlet sedimentary basin after December 31, 2010, may be                                  
28       applied for a single calendar year; however, not more than half of the tax credit for                     
29       a qualified capital expenditure for activity outside of the Cook Inlet sedimentary                            
30       basin after December 31, 2010, may be applied for a single calendar year;                                     
31                 (2)  a producer or explorer may take a credit for a qualified capital                                   
01       expenditure incurred in connection with geological or geophysical exploration or in                               
02       connection with an exploration well only if the producer or explorer                                              
03                      (A)  agrees, in writing, to the applicable provisions of                                           
04            AS 43.55.025(f)(2);                                                                                          
05                      (B)  submits to the Department of Natural Resources all data                                       
06            that would be required to be submitted under AS 43.55.025(f)(2).                                             
07    * Sec. 12. AS 43.55.023(d) is amended to read:                                                                     
08            (d)  Except as limited by (i) of this section, a person that is entitled to take a tax                       
09       credit under this section that wishes to transfer the unused credit to another person or                          
10       obtain a cash payment under AS 43.55.028 may apply to the department for                                          
11       transferable tax credit certificates. An application under this subsection must be in a                           
12       form prescribed by the department and must include supporting information and                                     
13       documentation that the department reasonably requires. The department shall grant or                              
14       deny an application, or grant an application as to a lesser amount than that claimed and                          
15       deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the                         
16       year following the calendar year in which the qualified capital expenditure or carried-                           
17       forward annual loss for which the credit is claimed was incurred; (2) the date the                                
18       statement required under AS 43.55.030(a) or (e) was filed for the calendar year in                                
19       which the qualified capital expenditure or carried-forward annual loss for which the                              
20       credit is claimed was incurred; or (3) the date the application was received by the                               
21       department. If, based on the information then available to it, the department is                                  
22       reasonably satisfied that the applicant is entitled to a credit, the department shall,                        
23       except as provided in (m) of this section, issue the applicant two transferable tax                           
24       credit certificates, each for half of the amount of the credit; the [. THE] credit shown                      
25       on one of the two certificates is available for immediate use. The credit shown on the                            
26       second of the two certificates may not be applied against a tax for a calendar year                               
27       earlier than the calendar year following the calendar year in which the certificate is                            
28       issued, and the certificate must contain a conspicuous statement to that effect; a [. A]                      
29       certificate issued under this subsection does not expire.                                                         
30    * Sec. 13. AS 43.55.023(g) is amended to read:                                                                     
31            (g)  The issuance of a transferable tax credit certificate under (d) or (m) of this                      
01       section or the purchase of a certificate under AS 43.55.028 does not limit the                                    
02       department's ability to later audit a tax credit claim to which the certificate relates or to                     
03       adjust the claim if the department determines, as a result of the audit, that the applicant                       
04       was not entitled to the amount of the credit for which the certificate was issued. The                            
05       tax liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is                                 
06       increased by the amount of the credit that exceeds that to which the applicant was                                
07       entitled, or the applicant's available valid outstanding credits applicable against the tax                       
08       levied by AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is                         
09       increased under this subsection, the increase bears interest under AS 43.05.225 from                              
10       the date the transferable tax credit certificate was issued. For purposes of this                                 
11       subsection, an applicant that is an explorer is considered a producer subject to the tax                          
12       levied by AS 43.55.011(e).                                                                                        
13    * Sec. 14. AS 43.55.023 is amended by adding a new subsection to read:                                             
14            (m)  For a qualified capital expenditure for activity in the Cook Inlet                                      
15       sedimentary basin after December 31, 2010, or adjusted lease expenditures for activity                            
16       in the Cook Inlet sedimentary basin after December 31, 2010, that is the basis for the                            
17       credit under (b) of this section, the department shall issue the applicant a transferable                         
18       tax credit certificate for the full amount of the credit. The transferrable tax credit is                         
19       available for immediate use and does not expire.                                                                  
20    * Sec. 15. AS 43.55.025(a) is amended to read:                                                                     
21            (a)  Subject to the terms and conditions of this section, a credit against the                               
22       production tax levied by AS 43.55.011(e) is allowed for exploration expenditures that                             
23       qualify under (b) of this section in an amount equal to one of the following:                                     
24                 (1)  30 percent of the total exploration expenditures that qualify only                                 
25       under (b) and (c)(1) [(c)] of this section;                                                                   
26                 (2)  except as provided in (6) of this subsection, 30 percent of the                                
27       total exploration expenditures that qualify only under (b) and (d) of this section;                               
28                 (3)  40 percent of the total exploration expenditures that qualify under                                
29       (b), (c)(1) [(c)], and (d) of this section; [OR]                                                              
30                 (4)  40 percent of the total exploration expenditures that qualify only                                 
31       under (b) and (e) of this section;                                                                            
01                 (5)  40 percent of the total explorations expenditures incurred after                               
02       December 31, 2010, that qualify only under (b) and (c)(2) of this section; or                                 
03                 (6)  40 percent of the total exploration expenditures incurred after                                
04       December 31, 2010, for a well located in the Cook Inlet sedimentary basin and                                 
05       that qualify only under (b) and (d) of this section.                                                          
06    * Sec. 16. AS 43.55.025(c) is amended to read:                                                                     
07            (c)  To be eligible for the 30 percent production tax credit authorized by (a)(1)                            
08       of this section or the 40 percent production tax credit authorized by (a)(3) of this                              
09       section, exploration expenditures must                                                                            
10                 [(1)]  qualify under (b) of this section, [;] and                                                   
11                 (1) [(2)]  be for an exploration well outside of the Cook Inlet                                 
12       sedimentary basin or have been exploration expenditures for an exploration well                               
13       in the Cook Inlet sedimentary basin incurred before January 1, 2011, subject to                               
14       the following:                                                                                                    
15                      (A)  before the well is spudded,                                                                   
16                           (i)  the explorer shall submit to the commissioner of                                         
17                 natural resources the information necessary to determine whether the                                    
18                 geological objective of the well is a potential oil or gas trap that is                                 
19                 distinctly separate from any trap that has been tested by a preexisting                                 
20                 well;                                                                                                   
21                           (ii)  at the time of the submittal of information under (i)                                   
22                 of this subparagraph, the commissioner of natural resources may                                         
23                 request from the explorer that specific data sets, ancillary data, and                                  
24                 reports including all results, and copies of well data collected and data                               
25                 analyses for the well be provided to the Department of Natural                                          
26                 Resources upon completion of the drilling; in this sub-subparagraph,                                    
27                 well data include all analyses conducted on physical material, and well                                 
28                 logs collected from the well and sample analyses; testing geophysical                                   
29                 and velocity data including vertical seismic profiles and check shot                                    
30                 surveys; testing data and analyses; age data; geochemical analyses; and                                 
31                 access to tangible material; and                                                                        
01                           (iii)  the commissioner of natural resources must make                                        
02                 an affirmative determination as to whether the geological objective of                                  
03                 the well is a potential oil or gas trap that is distinctly separate from any                            
04                 trap that has been tested by a preexisting well and what information                                    
05                 under (ii) of this subparagraph must be submitted by the explorer after                                 
06                 completion, abandonment, or suspension under AS 31.05.030; the                                          
07                 commissioner of natural resources shall make that determination within                                  
08                 60 days after receiving all the necessary information from the explorer                                 
09                 based on the information received and on other information the                                          
10                 commissioner of natural resources considers relevant;                                                   
11                      (B)  for an exploration well other than exploration                                            
12            expenditures incurred before January 1, 2011, for a well to explore a Cook                               
13            Inlet prospect, the well must be located and drilled in such a manner that the                               
14            bottom hole is located not less than three miles away from the bottom hole of a                              
15            preexisting well drilled for oil or gas, irrespective of whether the preexisting                             
16            well has been completed, suspended, or abandoned;                                                            
17                      (C)  after completion, suspension, or abandonment under                                            
18            AS 31.05.030 of the exploration well, the commissioner of natural resources                                  
19            must determine that the well was consistent with achieving the explorer's                                    
20            stated geological objective; or                                                                          
21                 (2)  be incurred after December 31, 2010, for an exploration well in                                
22       the Cook Inlet sedimentary basin, subject to the following:                                                   
23                      (A)  the well must be located and drilled in such a manner                                     
24            that the bottom hole is located not less than three miles away from the                                  
25            bottom hole of a preexisting well drilled for oil or gas, irrespective of                                
26            whether the preexisting well has been completed, suspended, or                                           
27            abandoned; or                                                                                            
28                      (B)  if the bottom hole is located less than three miles away                                  
29            from the bottom hole of a preexisting well drilled for oil or gas,                                       
30            irrespective of whether the preexisting well has been completed,                                         
31            suspended, or abandoned, before the well is spudded,                                                     
01                           (i)  the explorer shall submit to the commissioner of                                     
02                 natural resources the information necessary to determine whether                                    
03                 the geological objective of the well is a potential oil or gas trap that                            
04                 is distinctly separate from a trap that has been tested by a                                        
05                 preexisting well;                                                                                   
06                           (ii)  at the time of the submittal of information under                                   
07                 (i) of this subparagraph, the commissioner of natural resources                                     
08                 may request from the explorer that specific data sets, ancillary                                    
09                 data, and reports, including all results and copies of well data                                    
10                 collected and data analyses for the well, be provided to the                                        
11                 Department of Natural Resources on completion of the drilling; in                                   
12                 this sub-subparagraph, well data include all analyses conducted on                                  
13                 physical material, well logs collected from the well, and sample                                    
14                 analyses; testing geophysical and velocity data, including vertical                                 
15                 seismic profiles and check shot surveys; testing data and analyses;                                 
16                 age data; geochemical analyses; and access to tangible material;                                    
17                 and                                                                                                 
18                           (iii)  the commissioner of natural resources must                                         
19                 make an affirmative determination as to whether the geological                                      
20                 objective of the well is a potential oil or gas trap that is distinctly                             
21                 separate from a trap that has been tested by a preexisting well and                                 
22                 what information under (ii) of this subparagraph must be                                            
23                 submitted by the explorer after completion, abandonment, or                                         
24                 suspension under AS 31.05.030; the commissioner of natural                                          
25                 resources shall, within 60 days after receiving all the necessary                                   
26                 information from the explorer, make that determination based on                                     
27                 the information received and on other information the                                               
28                 commissioner of natural resources considers relevant; and                                           
29                           (iv)  after completion, suspension, or abandonment of                                     
30                 the exploration well under AS 31.05.030, the commissioner of                                        
31                 natural resources must determine that the well was consistent with                                  
01                 achieving the explorer's stated geological objective.                                               
02    * Sec. 17. AS 43.55.025(f) is amended to read:                                                                     
03            (f)  For a production tax credit under this section,                                                         
04                 (1)  an explorer shall, in a form prescribed by the department and,                                     
05       except for a credit under (k) of this section, within six months of the completion of the                         
06       exploration activity, claim the credit and submit information sufficient to demonstrate                           
07       to the department's satisfaction that the claimed exploration expenditures qualify under                          
08       this section; in addition, the explorer shall submit information necessary for the                                
09       commissioner of natural resources to evaluate the validity of the explorer's compliance                           
10       with the requirements of this section;                                                                            
11                 (2)  an explorer shall agree, in writing,                                                               
12                      (A)  to notify the Department of Natural Resources, within 30                                      
13            days after completion of seismic or geophysical data processing, completion of                               
14            well drilling, or filing of a claim for credit, whichever is the latest, for which                           
15            exploration costs are claimed, of the date of completion and submit a report to                              
16            that department describing the processing sequence and providing a list of data                              
17            sets available;                                                                                              
18                      (B)  to provide to the Department of Natural Resources, within                                     
19            30 days after the date of a request, unless a longer period is provided by the                               
20            Department of Natural Resources, specific data sets, ancillary data, and reports                             
21            identified in (A) of this paragraph; in this subparagraph,                                                   
22                           (i)  a seismic or geophysical data set includes the data                                      
23                 for an entire seismic survey, irrespective of whether the survey area                                   
24                 covers nonstate land in addition to state land or land in a unit in                                     
25                 addition to land outside a unit;                                                                        
26                           (ii)  well data include all analyses conducted on physical                                    
27                 material, and well logs collected from the well, results, and copies of                                 
28                 data collected and data analyses for the well, including well logs;                                     
29                 sample analyses; testing geophysical and velocity data including                                        
30                 seismic profiles and check shot surveys; testing data and analyses; age                                 
31                 data; geochemical analyses; and tangible material;                                                      
01                      (C)  that, notwithstanding any provision of AS 38, information                                     
02            provided under this paragraph will be held confidential by the Department of                                 
03            Natural Resources,                                                                                           
04                           (i)  in the case of well data, until the expiration of the                                    
05                 24-month period of confidentiality described in AS 31.05.035(c), at                                     
06                 which time the Department of Natural Resources will release the                                         
07                 information after 30 days' public notice unless, in the discretion of the                               
08                 commissioner of natural resources, it is necessary to protect                                           
09                 information relating to the valuation of unleased acreage in the same                                   
10                 vicinity, or unless the well is on private land and the owner, including                                
11                 the lessor but not the lessee, of the oil and gas resources has not given                               
12                 permission to release the well data;                                                                    
13                           (ii)  in the case of seismic or other geophysical data,                                       
14                 other than seismic data acquired by seismic exploration subject to (k) of                               
15                 this section, for 10 years following the completion date, at which time                                 
16                 the Department of Natural Resources will release the information after                                  
17                 30 days' public notice, except as to seismic or other geophysical data                                  
18                 acquired from private land, unless the owner, including a lessor but not                                
19                 a lessee, of the oil and gas resources in the private land gives                                        
20                 permission to release the seismic or other geophysical data associated                                  
21                 with the private land;                                                                                  
22                           (iii)  in the case of seismic data obtained by seismic                                        
23                 exploration subject to (k) of this section, only until the expiration of 30                             
24                 days' public notice issued on or after the date the production tax credit                               
25                 certificate is issued under (5) of this subsection;                                                     
26                 (3)  if more than one explorer holds an interest in a well or seismic                                   
27       exploration, each explorer may claim an amount of credit that is proportional to the                              
28       explorer's cost incurred;                                                                                         
29                 (4)  the department may exercise the full extent of its powers as though                                
30       the explorer were a taxpayer under this title, in order to verify that the claimed                                
31       expenditures are qualified exploration expenditures under this section; and                                       
01                 (5)  if the department is satisfied that the explorer's claimed                                         
02       expenditures are qualified under this section and that all data required to be submitted                          
03       under this section have been submitted, the department shall issue to the explorer a                              
04       production tax credit certificate for the amount of credit to be allowed against                                  
05       production taxes levied by AS 43.55.011(e); for a credit based on exploration                                 
06       expenses incurred after December 31, 2010, the department shall issue separate                                
07       credit certificates to an explorer for the amount of credit based on exploration                              
08       expenditures incurred for exploration outside of the Cook Inlet sedimentary                                   
09       basin and for the amount of credit based on exploration expenditures incurred                                 
10       for exploration in the Cook Inlet sedimentary basin; notwithstanding any contrary                             
11       provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is not                               
12       confidential:                                                                                                     
13                      (A)  the explorer's name;                                                                          
14                      (B)  the date of the application;                                                                  
15                      (C)  the location of the well or seismic exploration;                                              
16                      (D)  the date of the department's issuance of the certificate; and                                 
17                      (E)  the date on which the information required to be submitted                                    
18            under this section will be released.                                                                         
19    * Sec. 18. AS 43.55.028(a) is amended to read:                                                                     
20            (a)  The oil and gas tax credit fund is established as a separate fund of the state.                         
21       The purpose of the fund is to purchase unused portions of the credit eligible for                             
22       purchase by the department under AS 43.20.046, certain transferable tax credit                                
23       certificates issued under AS 43.55.023, and certain production tax credit certificates                        
24       issued under AS 43.55.025.                                                                                        
25    * Sec. 19. AS 43.55.028(e) is amended to read:                                                                     
26            (e)  The department, on the written application of the person to whom a                                      
27       transferable tax credit certificate has been issued under AS 43.20.046 or                                     
28       AS 43.55.023(d) or (m) or a production tax credit certificate has been issued under                           
29       AS 43.55.025(f), may use available money in the oil and gas tax credit fund to                                    
30       purchase, in whole or in part, the 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 allowed                            
02       to be applied against a tax;                                                                                      
03                 (2)  except for the application of a person for the purchase of a                                   
04       production tax credit certificate based on exploration expenditures incurred for                              
05       exploration in the Cook Inlet sedimentary basin after December 31, 2010,                                      
06                      (A)  within 24 months after applying for the transferable tax                                  
07            credit certificate or filing a claim for the production tax credit certificate, the                          
08            applicant incurred a qualified capital expenditure or was the successful bidder                              
09            on a bid submitted for a lease on state land under AS 38.05.180(f);                                          
10                      (B) [(3)]  the amount expended for the purchase would not                                      
11            exceed the total of qualified capital expenditures and successful bids described                             
12            in (A) [(2)] of this paragraph [SUBSECTION] that have not been the subject                           
13            of a finding made under this subparagraph [PARAGRAPH] for purposes of a                                  
14            previous purchase of a certificate;                                                                          
15                 (3) [(4)]  the applicant does not have an outstanding liability to the state                        
16       for unpaid delinquent taxes under this title;                                                                     
17                 (4) [(5)]  the applicant's total tax liability under AS 43.55.011(e), after                         
18       application of all available tax credits, for the calendar year in which the application is                       
19       made is zero;                                                                                                     
20                 (5) [(6)]  the applicant's average daily production of oil and gas taxable                          
21       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
22       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
23                 (6) [(7)]  the purchase is consistent with this section and regulations                             
24       adopted under this section.                                                                                       
25    * Sec. 20. AS 43.55.028(g) is amended to read:                                                                     
26            (g)  The department may adopt regulations to carry out the purposes of this                                  
27       section, including standards and procedures to allocate available money among                                     
28       applications for purchases under AS 43.20.046 and this chapter, the total amount of                           
29       which exceeds the amount of available money in the fund. The regulations adopted                              
30       by the department may not, when allocating available money in the fund under                                  
31       this section, distinguish an application for the purchase of a credit certificate                             
01       issued under AS 43.20.046, AS 43.55.023(m), or 43.55.025(f)(5) for exploration                                
02       expenditures incurred after December 31, 2010, in the Cook Inlet sedimentary                                  
03       basin from other applications.                                                                                
04    * Sec. 21. AS 44.23.020(e) is amended to read:                                                                     
05            (e)  There is established within the Department of Law the function of public                                
06       advocacy for regulatory affairs. The attorney general shall participate as a party in a                           
07       matter that comes before the Regulatory Commission of Alaska when the attorney                                    
08       general determines that participation is in the public interest. When considering                             
09       whether participation is in the public interest, the attorney general shall consider                          
10       the issues the Regulatory Commission of Alaska must take into consideration                                   
11       under AS 42.05.141(d).                                                                                        
12    * Sec. 22. AS 43.55.011(m) is repealed January 1, 2011.                                                            
13    * Sec. 23. The uncodified law of the State of Alaska is amended by adding a new section to                         
14 read:                                                                                                                   
15       LIMITATION APPLICABLE TO CERTAIN CREDITS. After December 31, 2010,                                                
16 only the amount of a tax credit that could have been applied against a tax under AS 43.55.011                           
17 before January 1, 2011, and that was not accounted for under AS 43.55.011(m) as that section                            
18 read before January 1, 2011, as a credit applied first against a tax liability under AS 43.55.011                       
19 calculated without regard to the limitations under AS 43.55.011(j), (k), and (o) may be                                 
20 transferred to another person or applied against a tax levied under AS 43.55.011.                                       
21    * Sec. 24. This Act takes effect immediately under AS 01.10.070(c).