00 CS FOR SENATE BILL NO. 305(FIN) 01 "An Act relating to that part of the tax on oil and gas production that increases the rate 02 of tax as the production tax value of oil or the BTU equivalent barrel of gas increases 03 above $30, separating the determination of that rate between oil and gas, and making 04 that rate distinct between oil and gas; relating to availability of a portion of the money 05 received from the tax on oil and gas production for appropriation to the community 06 revenue sharing fund; relating to the allocation of lease expenditures and adjustments to 07 lease expenditures; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09  * Section 1. AS 29.60.850(b) is amended to read: 10 (b) Each fiscal year, the legislature may appropriate to the community revenue 11 sharing fund an amount equal to 20 percent of the money received by the state during 12 the previous calendar year under AS 43.55.011(g) and (p). The amount may not 13 exceed 01 (1) $60,000,000; or 02 (2) the amount that, when added to the fund balance on June 30 of the 03 previous fiscal year, equals $180,000,000. 04  * Sec. 2. AS 43.55.011(e) is amended to read: 05 (e) There is levied on the producer of oil or gas a tax for all oil and gas 06 produced each calendar year from each lease or property in the state, less any oil and 07 gas the ownership or right to which is exempt from taxation or constitutes a 08 landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o) of 09 this section, the tax is equal to the sum of 10 (1) the annual production tax value of the taxable oil and gas as 11 calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 12 (2) the sum, over all months of the calendar year, of the tax amounts 13 determined under 14 (A) subsection (g) of this section; and  15 (B) subsection (p) of this section. 16  * Sec. 3. AS 43.55.011(g) is amended to read: 17 (g) For each month of the calendar year for which the producer's average 18 monthly production tax value under AS 43.55.160(a)(2)(A) - (E) of a 19 [AS 43.55.160(a)(2) PER] BTU equivalent barrel of [THE] taxable oil and gas is more 20 than $30, the amount of tax for purposes of (e)(2)(A) [(e)(2)] of this section is 21 determined by multiplying the monthly production tax value of the taxable oil [AND 22 GAS] produced during the month, gas produced during the month from a lease or  23 property in the Cook Inlet sedimentary basin, and gas produced during the  24 month from a lease or property outside the Cook Inlet sedimentary basin and  25 used in the state by the tax rate calculated as follows: 26 (1) if the producer's average monthly production tax value under  27 AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of [THE] taxable oil 28 and gas for the month is not more than $92.50, the tax rate is 0.4 percent multiplied by 29 the number that represents the difference between the producer's [THAT] average 30 monthly production tax value under AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU 31 equivalent barrel of taxable oil and gas and $30; or 01 (2) if the producer's average monthly production tax value under  02 AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of [THE] taxable oil 03 and gas for the month is more than $92.50, the tax rate is the sum of 25 percent and 04 the product of 0.1 percent multiplied by the number that represents the difference 05 between the producer's average monthly production tax value under  06 AS 43.55.160(a)(2)(A) - (E) of a [PER] BTU equivalent barrel of taxable oil and gas 07 and $92.50, except that the sum determined under this paragraph may not exceed 50 08 percent. 09  * Sec. 4. AS 43.55.011 is amended by adding a new subsection to read: 10 (p) For each month of the calendar year for which the producer's average 11 monthly production tax value under AS 43.55.160(a)(2)(F) and (G) of a BTU 12 equivalent barrel of taxable gas is more than $30, the amount of tax on the production 13 of gas for purposes of (e)(2)(B) of this section is determined by multiplying the 14 monthly production tax value of the taxable gas produced during the month other than 15 gas produced from a lease or property in the Cook Inlet sedimentary basin or gas 16 produced outside the Cook Inlet sedimentary basin and used in the state by the tax rate 17 calculated as follows: 18 (1) if the producer's average monthly production tax value under 19 AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of taxable gas for the 20 month is not more than $92.50, the tax rate is 0.4 percent multiplied by the number 21 that represents the difference between the producer's average monthly production tax 22 value under AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of gas and $30; 23 or 24 (2) if the producer's average monthly production tax value under 25 AS 43.55.160(a)(2)(F) and (G) of a BTU equivalent barrel of taxable gas for the 26 month is more than $92.50, the tax rate is the sum of 25 percent and the product of 0.1 27 percent multiplied by the number that represents the difference between the producer's 28 average monthly production tax value under AS 43.55.160(a)(2)(F) and (G) of a BTU 29 equivalent barrel of gas and $92.50, except that the sum determined under this 30 paragraph may not exceed 50 percent. 31  * Sec. 5. AS 43.55.020(a) is amended to read: 01 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i) 02 and (p) shall pay the tax as follows: 03 (1) an installment payment of the estimated tax levied by 04 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 05 month of the calendar year on the last day of the following month; except as otherwise 06 provided under (2) of this subsection, the amount of the installment payment is the 07 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 08 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 09 of the installment payment may not be less than zero: 10 (A) for oil and gas produced from leases or properties in the 11 state outside the Cook Inlet sedimentary basin but not subject to 12 AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f), the 13 greater of 14 (i) zero; or 15 (ii) an amount equal to the sum of 25 percent and the 16 tax rate calculated for the month under AS 43.55.011(g) multiplied by 17 the remainder obtained by subtracting 1/12 of the producer's adjusted 18 lease expenditures for the calendar year of production applicable to  19 the oil produced by the producer from those leases and properties 20 under AS 43.55.165 and 43.55.170 that are deductible for the leases or 21 properties under AS 43.55.160, from the gross value at the point of 22 production of the oil [AND GAS] produced from the leases or 23 properties during the month for which the installment payment is 24 calculated added to the sum of 25 percent and the tax rate  25 calculated for the month under AS 43.55.011(p) multiplied by the  26 remainder obtained by subtracting 1/12 of the producer's adjusted  27 lease expenditures for the calendar year of production applicable  28 to the gas produced by the producer from those leases and  29 properties under AS 43.55.165 and 43.55.170 that are deductible  30 for the leases or properties under AS 43.55.160 from the gross  31 value at the point of production of the gas produced from the leases  01 or properties during the month for which the installment payment  02 is calculated; 03 (B) for oil and gas produced from leases or properties subject 04 to AS 43.55.011(f), the greatest of 05 (i) zero; 06 (ii) zero percent, one percent, two percent, three 07 percent, or four percent, as applicable, of the gross value at the point of 08 production of the oil and gas produced from all leases or properties 09 during the month for which the installment payment is calculated; or 10 (iii) an amount equal to the sum of 25 percent and the 11 tax rate calculated for the month under AS 43.55.011(g) multiplied by 12 the remainder obtained by subtracting 1/12 of the producer's adjusted 13 lease expenditures for the calendar year of production applicable to  14 the oil produced by the producer from those leases and properties 15 under AS 43.55.165 and 43.55.170 that are deductible for those leases 16 or properties under AS 43.55.160, from the gross value at the point of 17 production of the oil [AND GAS] produced from those leases or 18 properties during the month for which the installment payment is 19 calculated added to the sum of 25 percent and the tax rate  20 calculated for the month under AS 43.55.011(p) multiplied by the  21 remainder obtained by subtracting 1/12 of the producer's adjusted  22 lease expenditures for the calendar year of production applicable  23 to the gas produced by the producer from those leases and  24 properties under AS 43.55.165 and 43.55.170 that are deductible  25 for those leases or properties under AS 43.55.160 from the gross  26 value at the point of production of the gas produced from those  27 leases or properties during the month for which the installment  28 payment is calculated; 29 (C) for oil and gas produced from each lease or property 30 subject to AS 43.55.011(j), (k), or (o), the greater of 31 (i) zero; or 01 (ii) an amount equal to the sum of 25 percent and the 02 tax rate calculated for the month under AS 43.55.011(g) multiplied by 03 the remainder obtained by subtracting 1/12 of the producer's adjusted 04 lease expenditures for the calendar year of production applicable to  05 the oil produced by the producer from those leases and properties 06 under AS 43.55.165 and 43.55.170 that are deductible under 07 AS 43.55.160 for oil [OR GAS, RESPECTIVELY,] produced from the 08 lease or property, from the gross value at the point of production of the 09 oil [OR GAS, RESPECTIVELY,] produced from the lease or property 10 during the month for which the installment payment is calculated 11 added to the sum of 25 percent and the tax rate calculated for the  12 month under AS 43.55.011(g) multiplied by the remainder obtained  13 by subtracting 1/12 of the producer's adjusted lease expenditures  14 for the calendar year of production applicable to the gas produced  15 by the producer from the lease or property under AS 43.55.165 and  16 43.55.170 that are deductible under AS 43.55.160 for gas produced  17 from the lease or property, from the gross value at the point of  18 production of the gas produced from the lease or property during  19 the month for which the installment payment is calculated; 20 (2) an amount calculated under (1)(C) of this subsection for oil or gas 21 produced before 2022 from a lease or property subject to AS 43.55.011(j), (k), or (o) 22 may not exceed the product obtained by carrying out the calculation set out in 23 AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in 24 AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in 25 AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable 26 gas produced during the month for the amount of taxable gas produced during the 27 calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the 28 amount of taxable oil produced during the month for the amount of taxable oil 29 produced during the calendar year; 30 (3) an installment payment of the estimated tax levied by 31 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 01 on the last day of the following month; the amount of the installment payment is the 02 sum of 03 (A) the applicable tax rate for oil provided under 04 AS 43.55.011(i), multiplied by the gross value at the point of production of the 05 oil taxable under AS 43.55.011(i) and produced from the lease or property 06 during the month; and 07 (B) the applicable tax rate for gas provided under 08 AS 43.55.011(i), multiplied by the gross value at the point of production of the 09 gas taxable under AS 43.55.011(i) and produced from the lease or property 10 during the month; 11 (4) any amount of tax levied by AS 43.55.011(e) or (i), net of any 12 credits applied as allowed by law, that exceeds the total of the amounts due as 13 installment payments of estimated tax is due on March 31 of the year following the 14 calendar year of production. 15  * Sec. 6. AS 43.55.020(d) is amended to read: 16 (d) In making settlement with the royalty owner for oil and gas that is taxable 17 under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable 18 royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the 19 time the tax becomes due to the amount of the tax paid. If the total deductions of 20 installment payments of estimated tax for a calendar year exceed the actual tax for that 21 calendar year, the producer shall, before April 1 of the following year, refund the 22 excess to the royalty owner. Unless otherwise agreed between the producer and the 23 royalty owner, the amount of the tax paid under AS 43.55.011(e) - (g) and (p) on 24 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 25 right to which constitutes a landowner's royalty interest, is considered to be the gross 26 value at the point of production of the taxable royalty oil and gas produced during the 27 calendar year multiplied by a figure that is a quotient, in which 28 (1) the numerator is the producer's total tax liability under 29 AS 43.55.011(e) - (g) and (p) for the calendar year of production; and 30 (2) the denominator is the total gross value at the point of production 31 of the oil and gas taxable under AS 43.55.011(e) - (g) and (p) produced by the 01 producer from all leases and properties in the state during the calendar year. 02  * Sec. 7. AS 43.55.160(a) is amended to read: 03 (a) Except as provided in (b) of this section, for the purposes of 04 (1) AS 43.55.011(e), the annual production tax value of the taxable 05 (A) oil [AND GAS] produced during a calendar year from 06 leases or properties in the state that include land north of 68 degrees North 07 latitude is the gross value at the point of production of the oil [AND GAS] 08 taxable under AS 43.55.011(e) and produced by the producer from those leases 09 or properties, less the producer's lease expenditures under AS 43.55.165 for the 10 calendar year applicable to the oil [AND GAS] produced by the producer from 11 those leases or properties, as adjusted under AS 43.55.170; [THIS 12 SUBPARAGRAPH DOES NOT APPLY TO GAS SUBJECT TO 13 AS 43.55.011(o);] 14 (B) oil [AND GAS] produced during a calendar year from 15 leases or properties in the state outside the Cook Inlet sedimentary basin, no 16 part of which is north of 68 degrees North latitude, is the gross value at the 17 point of production of the oil [AND GAS] taxable under AS 43.55.011(e) and 18 produced by the producer from those leases or properties, less the producer's 19 lease expenditures under AS 43.55.165 for the calendar year applicable to the 20 oil [AND GAS] produced by the producer from those leases or properties, as 21 adjusted under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY 22 TO GAS SUBJECT TO AS 43.55.011(o);] 23 (C) oil produced during a calendar year from a lease or 24 property in the Cook Inlet sedimentary basin is the gross value at the point of 25 production of the oil taxable under AS 43.55.011(e) and produced by the 26 producer from that lease or property, less the producer's lease expenditures 27 under AS 43.55.165 for the calendar year applicable to the oil produced by the 28 producer from that lease or property, as adjusted under AS 43.55.170; 29 (D) gas produced during a calendar year from a lease or 30 property in the Cook Inlet sedimentary basin is the gross value at the point of 31 production of the gas taxable under AS 43.55.011(e) and produced by the 01 producer from that lease or property, less the producer's lease expenditures 02 under AS 43.55.165 for the calendar year applicable to the gas produced by the 03 producer from that lease or property, as adjusted under AS 43.55.170; 04 (E) gas produced during a calendar year from a lease or 05 property outside the Cook Inlet sedimentary basin and used in the state is the 06 gross value at the point of production of that gas taxable under 07 AS 43.55.011(e) and produced by the producer from that lease or property, less 08 the producer's lease expenditures under AS 43.55.165 for the calendar year 09 applicable to that gas produced by the producer from that lease or property, as 10 adjusted under AS 43.55.170; 11 (F) gas produced during a calendar year from leases or  12 properties in the state that include land north of 68 degrees North latitude  13 is the gross value at the point of production of the gas taxable under  14 AS 43.55.011(e) and produced by the producer from those leases or  15 properties, less the producer's lease expenditures under AS 43.55.165 for  16 the calendar year applicable to the gas produced by the producer from  17 those leases or properties, as adjusted under AS 43.55.170; this  18 subparagraph does not apply to gas used in the state;  19 (G) gas produced during a calendar year from leases or  20 properties in the state outside the Cook Inlet sedimentary basin, no part of  21 which is north of 68 degrees North latitude, is the gross value at the point  22 of production of the gas taxable under AS 43.55.011(e) and produced by  23 the producer from those leases or properties, less the producer's lease  24 expenditures under AS 43.55.165 for the calendar year applicable to the  25 gas produced by the producer from those leases or properties, as adjusted  26 under AS 43.55.170; this subparagraph does not apply to gas used in the  27 state; 28 (2) AS 43.55.011(g) and (p), the monthly production tax value of the 29 taxable 30 (A) oil [AND GAS] produced during a month from leases or 31 properties in the state that include land north of 68 degrees North latitude is the 01 gross value at the point of production of the oil [AND GAS] taxable under 02 AS 43.55.011(e) and produced by the producer from those leases or properties, 03 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 04 calendar year applicable to the oil [AND GAS] produced by the producer from 05 those leases or properties, as adjusted under AS 43.55.170; [THIS 06 SUBPARAGRAPH DOES NOT APPLY TO GAS SUBJECT TO 07 AS 43.55.011(o);] 08 (B) oil [AND GAS] produced during a month from leases or 09 properties in the state outside the Cook Inlet sedimentary basin, no part of 10 which is north of 68 degrees North latitude, is the gross value at the point of 11 production of the oil [AND GAS] taxable under AS 43.55.011(e) and produced 12 by the producer from those leases or properties, less 1/12 of the producer's 13 lease expenditures under AS 43.55.165 for the calendar year applicable to the 14 oil [AND GAS] produced by the producer from those leases or properties, as 15 adjusted under AS 43.55.170; [THIS SUBPARAGRAPH DOES NOT APPLY 16 TO GAS SUBJECT TO AS 43.55.011(o);] 17 (C) oil produced during a month from a lease or property in the 18 Cook Inlet sedimentary basin is the gross value at the point of production of 19 the oil taxable under AS 43.55.011(e) and produced by the producer from that 20 lease or property, less 1/12 of the producer's lease expenditures under 21 AS 43.55.165 for the calendar year applicable to the oil produced by the 22 producer from that lease or property, as adjusted under AS 43.55.170; 23 (D) gas produced during a month from a lease or property in 24 the Cook Inlet sedimentary basin is the gross value at the point of production 25 of the gas taxable under AS 43.55.011(e) and produced by the producer from 26 that lease or property, less 1/12 of the producer's lease expenditures under 27 AS 43.55.165 for the calendar year applicable to the gas produced by the 28 producer from that lease or property, as adjusted under AS 43.55.170; 29 (E) gas produced during a month from a lease or property 30 outside the Cook Inlet sedimentary basin and used in the state is the gross 31 value at the point of production of that gas taxable under AS 43.55.011(e) and 01 produced by the producer from that lease or property, less 1/12 of the 02 producer's lease expenditures under AS 43.55.165 for the calendar year 03 applicable to that gas produced by the producer from that lease or property, as 04 adjusted under AS 43.55.170;  05 (F) gas produced during a month from leases or properties  06 in the state that include land north of 68 degrees North latitude is the  07 gross value at the point of production of the gas taxable under  08 AS 43.55.011(e) and produced by the producer from those leases or  09 properties, less 1/12 of the producer's lease expenditures under  10 AS 43.55.165 for the calendar year applicable to the gas produced by the  11 producer from those leases or properties, as adjusted under AS 43.55.170;  12 this subparagraph does not apply to gas used in the state;  13 (G) gas produced during a month from leases or properties  14 in the state outside the Cook Inlet sedimentary basin, no part of which is  15 north of 68 degrees North latitude, is the gross value at the point of  16 production of the gas taxable under AS 43.55.011(e) and produced by the  17 producer from those leases or properties, less 1/12 of the producer's lease  18 expenditures under AS 43.55.165 for the calendar year applicable to the  19 gas produced by the producer from those leases or properties, as adjusted  20 under AS 43.55.170; this subparagraph does not apply to gas used in the  21 state. 22 * Sec. 8. AS 43.55.165(h) is amended to read: 23 (h) The department shall adopt regulations that provide for reasonable 24 methods of allocating costs between oil and gas, between gas subject to 25 AS 43.55.011(o) and other gas, and between leases or properties in those 26 circumstances where an allocation of costs is required to determine lease expenditures 27 that are costs of exploring for, developing, or producing oil deposits or costs of 28 exploring for, developing, or producing gas deposits, or that are costs of exploring for, 29 developing, or producing oil or gas deposits located within different leases or 30 properties. When determining a reasonable method of allocating lease  31 expenditures between the production of oil and the production of gas, the  01 department shall consider allocating lease expenditures in proportion to the BTU  02 equivalent barrels of oil produced and gas produced from each lease or property.  03  * Sec. 9. AS 43.55.170 is amended by adding a new subsection to read: 04 (d) The department shall adopt regulations that provide for reasonable 05 methods of allocating the adjustments to a producer's lease expenditures in (a) of this 06 section and the payments and credits described in (b) of this section between oil and 07 gas, between gas subject to AS 43.55.011(o) and other gas, and between leases or 08 properties in those circumstances where an allocation of costs is required to determine 09 lease expenditures that are costs of exploring for, developing, or producing oil 10 deposits, or costs of exploring for, developing, or producing gas deposits, or that are 11 costs of exploring for, developing, or producing oil or gas deposits located within 12 different leases or properties. When determining a reasonable method of allocating the 13 adjustments to a producer's lease expenditures between the production of oil and the 14 production of gas, the department shall consider allocating the adjustments in 15 proportion to the lease expenditures allocated to the production of oil and the 16 production of gas under regulations adopted by the department under 17 AS 43.55.165(h). 18  * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: INSTALLMENT PAYMENTS OF TAX. A producer required to 21 make an installment payment of tax under AS 43.55.020(a)(1) after December 31, 2009, and 22 before the effective date of this Act, and that underpaid the amount due for the installment 23 payment because of the retroactive application of secs. 2 - 4 and 7 of this Act, shall submit the 24 amount of any underpayment on the date the first installment payment is due under 25 AS 43.55.020(a)(1) after the effective date of this Act. Interest on the amount of an 26 underpayment due because of the retroactive application of secs. 2 - 4 and 7 of this Act does 27 not accrue until the day after the date the first installment payment is due under 28 AS 43.55.020(a)(1) after the effective date of this Act. 29  * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 RETROACTIVITY. Sections 2 - 4 and 7 of this Act are retroactive to January 1, 2010. 01  * Sec. 12. This Act takes effect immediately under AS 01.10.070(c).