00 CS FOR SENATE BILL NO. 138(RES) 01 "An Act relating to the purposes of the Alaska Gasline Development Corporation to 02 advance to develop a large-diameter natural gas pipeline project, including treatment 03 and liquefaction facilities; establishing the large-diameter natural gas pipeline project 04 fund; creating a subsidiary related to a large-diameter natural gas pipeline project, 05 including treatment and liquefaction facilities; relating to the authority of the 06 commissioner of natural resources to negotiate contracts related to North Slope natural 07 gas projects, to enter into confidentiality agreements in support of contract negotiations 08 and implementation, and to take custody of gas delivered to the state under an election 09 to pay the gas production tax in gas; relating to the sale, exchange, or disposal of gas 10 delivered to the state under an election to pay the gas production tax in gas; relating to 11 the tax on oil production; relating to the tax on gas production; relating to the duties of 12 the commissioner of revenue to direct the disposition of revenues received from gas 01 delivered to the state and to consult with the commissioner of natural resources on the 02 custody and disposition of gas delivered to the state; relating to the authority of the 03 commissioner of natural resources to propose modifications to existing state oil and gas 04 leases; making certain information provided to the Department of Natural Resources 05 and the Department of Revenue exempt from inspection as a public record; making 06 certain tax information related to an election to pay the gas production tax in gas 07 exempt from tax confidentiality provisions; relating to establishing under the oil and gas 08 production tax a gross tax rate for the production of gas after 2021; making the 09 alternate minimum tax on oil and gas produced north of 68 degrees North latitude after 10 2021 apply only to oil; relating to apportionment factors of the Alaska Net Income Tax 11 Act; authorizing a producer's election to pay the gas production tax in gas for certain 12 gas and relating to the authorization; relating to monthly installment payments of the oil 13 and gas production tax; relating to interest payments on monthly installment payments 14 of the oil and gas production tax; relating to settlements between producers and royalty 15 owners for oil and gas production tax; relating to annual statements by producers and 16 explorers; relating to annual production tax values; relating to lease expenditures; 17 amending the definition of gross value at the 'point of production' for gas for purposes 18 of the oil and gas production tax; adding definitions related to natural gas terms; 19 clarifying that credit may not be taken against the levy of the gas production tax for gas 20 paid in gas for purposes of the exploration incentive credit, the oil or gas producer 21 education credit, and the film production tax credit; requiring the commissioner of 22 revenue to develop a plan and suggest legislation for residents of the state to acquire 23 ownership interests in a North Slope natural gas pipeline project; making conforming 24 amendments; and providing for an effective date." 01 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 02 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 03 to read: 04 LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 05 (1) the future oil and gas development in the state is of vital public interest, 06 particularly the commercial development of the gas deposits from the North Slope; that 07 development will include major infrastructure components including a natural gas pipeline, 08 associated infrastructure, a gas treatment facility, a liquefaction facility, and a marine 09 terminal; 10 (2) much of the infrastructure required for commercial development of North 11 Slope natural gas will be within the boundaries of local governmental entities located within 12 or along the natural gas pipeline route and at the pipeline terminus at tidewater; 13 (3) the development of North Slope natural gas will provide benefits to the 14 state including employment opportunities, royalty and tax revenues, including tax revenue 15 under AS 43.56 (Oil and Gas Exploration, Production, and Pipeline Transportation Property 16 Taxes), and could provide delivery of natural gas to communities along the natural gas 17 pipeline route from the North Slope to a terminus point with liquefaction and marine terminal 18 facilities; 19 (4) the commissioner of natural resources will be authorized, through this 20 legislation, to enter short term commercial agreements and to negotiate with the developers 21 and other parties in order to secure the state's participation through contracts, which will be 22 presented to the legislature for authorization; 23 (5) the interests of the State and local governmental entities must be 24 considered in contract negotiations to protect the financial and other interests of the state and 25 those local governmental entities. 26 (b) It is therefore the intent of the legislature to provide the commissioner of natural 27 resources with the authority necessary to enter short term commercial agreements and 28 negotiate contracts and develop terms for inclusion in proposed contracts, subject to 29 legislative approval, associated with a North Slope natural gas project and that the 30 commissioner of natural resources, in those negotiations, consider and suggest for 31 incorporation into contracts terms for state participation in a North Slope natural gas project 01 that include 02 (1) subject to confidentiality agreements, provisions for reasonable disclosure 03 of information related to the state's interest in a North Slope natural gas project including 04 liquefaction, to representatives of the state administration when those representatives are 05 acting in a proprietary capacity; 06 (2) access and pro-expansion principles, opportunities for delivery of gas to 07 Alaskans, payments in lieu of property taxes on a unit rate per throughput basis, and serial 08 impact payments to be paid by the developers of a North Slope natural gas project to help 09 offset increased services and other costs borne by the state and local governments; 10 (3) to the maximum extent permitted by law, seek to negotiate separately with 11 producers of North Slope gas regarding the purchase or other disposition of liquefied natural 12 gas made from the state's share of natural gas delivered to a liquefaction facility in the state; 13 (4) to the maximum extent permitted by law, contract provisions for project 14 labor agreements, employment of Alaska residents, contracts with Alaska businesses, and 15 provisions to work with state job centers, associated services and job training services. 16 * Sec. 2. AS 31.25.005 is amended to read: 17 Sec. 31.25.005. Purpose. The corporation shall, for the benefit of the state, to 18 the fullest extent possible, 19 (1) advance an in-state natural gas pipeline as described in the July 1, 20 2011, project plan prepared under former AS 38.34.040 by the corporation while a 21 subsidiary of the Alaska Housing Finance Corporation, with modifications determined 22 by the corporation to be appropriate to develop, finance, construct, and operate an in- 23 state natural gas pipeline in a safe, prudent, economical, and efficient manner, for the 24 purpose of making natural gas, including propane and other hydrocarbons associated 25 with natural gas other than oil, available to Fairbanks, the Southcentral region of the 26 state, and other communities in the state at the lowest rates possible; 27 (2) endeavor to develop natural gas pipelines and other transportation 28 mechanisms to deliver natural gas, including propane and other hydrocarbons 29 associated with natural gas other than oil, to public utility and industrial customers in 30 areas of the state to which the natural gas, including propane and other hydrocarbons 31 associated with natural gas other than oil, may be delivered at commercially 01 reasonable rates; and 02 (3) endeavor to develop natural gas pipelines and other transportation 03 mechanisms that offer commercially reasonable rates for shippers and access for 04 shippers who produce natural gas, including propane and other hydrocarbons 05 associated with natural gas other than oil, in the state; 06 (4) advance to develop a large-diameter natural gas pipeline 07 project other than the in-state natural gas pipeline described in (1) of this section 08 by acquiring an equity interest in a large-diameter natural gas pipeline project 09 through the subsidiary under AS 31.25.122; 10 (5) advance to develop, finance, construct, and operate facilities 11 for liquefaction and treatment in connection with a large-diameter natural gas 12 pipeline project other than the in-state natural gas pipeline described in (1) of 13 this section through the subsidiary under AS 31.25.122. 14 * Sec. 3. AS 31.25.010 is amended to read: 15 Sec. 31.25.010. Structure. The Alaska Gasline Development Corporation is a 16 public corporation and government instrumentality located for administrative purposes 17 in the Department of Commerce, Community, and Economic Development, but 18 having a legal existence independent of and separate from the state. The corporation 19 may not be terminated as long as it has bonds, notes, or other obligations outstanding. 20 The corporation may dissolve when no bonds, notes, or other obligations of the 21 corporation or a subsidiary of the corporation are outstanding and the corporation or a 22 subsidiary of the corporation is no longer engaged in the development, financing, 23 construction, or operation of an in-state natural gas pipeline or a large-diameter 24 natural gas pipeline project. Upon termination of the corporation, its rights and 25 property pass to the state. 26 * Sec. 4. AS 31.25.080(f) is amended to read: 27 (f) The corporation shall, to the maximum extent practicable without delaying 28 the progress of developing the [AN] in-state natural gas pipeline project described in 29 AS 31.25.005(1) and without causing the in-state natural gas pipeline project 30 described in AS 31.25.005(1) to become a competing natural gas pipeline project for 31 purposes of AS 43.90.440, coordinate with and accommodate the developers of a 01 large-diameter [IN-STATE] natural gas pipeline project by planning for the 02 development and use of [COMMON] pipeline facilities from the North Slope to [THE 03 LIVENGOOD AREA OR TO ANOTHER POINT FROM WHICH A LARGE- 04 DIAMETER IN-STATE NATURAL GAS PIPELINE MAY BE CONSTRUCTED 05 SOUTH TO] tidewater in either the Prince William Sound or Cook Inlet area. The 06 corporation may use money appropriated to the large-diameter natural gas 07 pipeline project fund created in AS 31.25.110 for the purposes described in this 08 subsection and may not use money appropriated to the in-state natural gas 09 pipeline fund created in AS 31.25.100 for the purposes described in this 10 subsection [IN THIS SUBSECTION, "LARGE-DIAMETER IN-STATE NATURAL 11 GAS PIPELINE" MEANS A PIPELINE IN THE STATE WITH A DIAMETER OF 12 42 INCHES OR MORE]. 13 * Sec. 5. AS 31.25.100 is amended to read: 14 Sec. 31.25.100. In-state natural gas pipeline fund. The in-state natural gas 15 pipeline fund is established in the corporation and consists of money appropriated to 16 it. The corporation shall determine fund management and may contract with the 17 Department of Revenue for fund management. Unless otherwise provided by law, 18 money appropriated to the fund lapses into the general fund on the day this section is 19 repealed. Interest and other income received on money in the fund shall be separately 20 accounted for and may be appropriated to the fund. The corporation may use money 21 appropriated to the fund without further appropriation solely for the cost of managing 22 the fund and for the planning, financing, development, acquisition, maintenance, 23 construction, and operation of the [AN] in-state natural gas pipeline described in 24 AS 31.25.005(1) and may not use money appropriated to the fund for any other 25 purpose, including the purposes described in AS 31.25.005(4) and (5) and 26 31.25.080(f). 27 * Sec. 6. AS 31.25 is amended by adding a new section to read: 28 Sec. 31.25.110. Large-diameter natural gas pipeline project fund. The 29 large-diameter natural gas pipeline project fund is established in the subsidiary and 30 consists of money appropriated to it. The subsidiary shall determine fund management 31 and may contract with the Department of Revenue for fund management. Interest and 01 other income received on money in the fund shall be separately accounted for and may 02 be appropriated to the fund. The subsidiary may use money appropriated to the fund 03 without further appropriation for the purpose of managing the fund and for the 04 planning, financing, acquisition, maintenance, construction, and operation of a large- 05 diameter natural gas pipeline project, including treatment and liquefaction facilities, 06 and may not use the money appropriated to the fund for the purpose described in 07 AS 31.25.005(1). If money is appropriated to the fund to finance the cost of a large- 08 diameter natural gas pipeline project described in AS 31.25.005(4) and (5), the 09 subsidiary shall create an account in the fund for that purpose and shall hold the 10 money appropriated for that purpose in that account. In this section, "subsidiary" 11 means a subsidiary established under AS 31.25.122. 12 * Sec. 7. AS 31.25.120 is amended to read: 13 Sec. 31.25.120. Creation of subsidiaries for an in-state natural gas pipeline 14 project. The corporation may create subsidiary corporations for the purpose of 15 developing, constructing, operating, and financing in-state natural gas pipeline 16 projects or other transportation mechanisms; for the purpose of aiding in the 17 development, construction, operation, and financing of in-state natural gas pipeline 18 projects; or for the purpose of acquiring the state's royalty share of natural gas, natural 19 gas from the North Slope, and natural gas from other regions of the state, including the 20 state's outer continental shelf, and making that natural gas available to markets in the 21 state, including the delivery of natural gas, including propane and other hydrocarbons 22 associated with natural gas other than oil, to coastal communities in the state, or for 23 export. A subsidiary corporation created under this section may be incorporated under 24 AS 10.20.146 - 10.20.166. Except as provided in AS 31.25.110, the [THE] 25 corporation may transfer assets of the corporation to a subsidiary created under this 26 section. A subsidiary created under this section may borrow money and issue bonds as 27 evidence of that borrowing and has all the powers of the corporation that the 28 corporation grants to it. Unless otherwise provided by the corporation, the debts, 29 liabilities, and obligations of a subsidiary corporation created under this section are not 30 the debts, liabilities, or obligations of the corporation. A subsidiary corporation 31 created under this section may use money appropriated under AS 31.25.100 and 01 may not use money appropriated under AS 31.25.110. 02 * Sec. 8. AS 31.25 is amended by adding a new section to read: 03 Sec. 31.25.122. Creation of a subsidiary for a large-diameter natural gas 04 pipeline project. (a) To maximize the economic recovery and value of the state's 05 natural gas royalties and gas tax revenues for the benefit of the people of the state, a 06 subsidiary of the corporation is established as a public corporation and government 07 instrumentality for administrative purposes of the corporation, but having a legal 08 existence independent of and separate from the state and the corporation, for the 09 purposes of acquiring a state equity interest in a large-diameter natural gas pipeline 10 project, in natural gas treatment facilities, in liquefaction facilities, and in marine 11 terminal facilities related to a large-diameter natural gas project, and in entities that are 12 developing, constructing, and operating such facilities; for the purposes of financing 13 the acquisition, capital costs and operating costs related to the state equity interests; 14 for the purposes of supporting in the development, construction, operation, and 15 financing a large-diameter natural gas pipeline project in which the subsidiary has an 16 equity interest; and for the purposes of transferring net revenues received by the 17 subsidiary related to equity interests acquired to the permanent fund and the general 18 fund as determined by the commissioner of natural resources in consultation with the 19 commissioner of revenue. The subsidiary created under this section may use money 20 appropriated under AS 31.25.110 and may not use money appropriated under 21 AS 31.25.100. 22 (b) The subsidiary created under this section shall be governed by a board of 23 directors consisting of 24 (1) the chair of the corporation; 25 (2) the commissioner of natural resources; 26 (3) the commissioner of revenue; and 27 (4) four public members, one of whom is a public member of the board 28 of directors under AS 31.25.030(a)(1). 29 (c) Public members of the subsidiary board shall be appointed by the 30 governor. Subsidiary board members appointed under (b)(4) of this section shall be 31 compensated as provided in AS 31.25.020(d). Public members of the subsidiary 01 board serve five-year terms. A public member serves at the pleasure of the 02 governor. The provisions of AS 31.25.030, 31.25.035, and 31.25.040 apply to the 03 board of the subsidiary. 04 (d) In addition to other powers granted in this section, the subsidiary may 05 (1) determine the form of ownership and the operating structure of a 06 large-diameter natural gas pipeline project developed by the subsidiary and may enter 07 into agreements with other persons for joint ownership, joint operation, or both, of a 08 large-diameter natural gas pipeline project; 09 (2) plan, finance, construct, develop, acquire, maintain, and operate a 10 pipeline system and other transportation mechanism, including pipelines, treatment 11 and liquefaction facilities, marine terminals, compressors, storage facilities, and other 12 related facilities, equipment, and works of public improvement in the state to facilitate 13 production, transportation, and delivery of natural gas or other related natural 14 resources to the point of consumption or to the point of distribution for consumption; 15 (3) lease or rent facilities, structures, and properties; 16 (4) exercise the power of eminent domain and file a declaration of 17 taking under AS 09.55.240 - 09.55.460 to acquire land or an interest in land that is 18 necessary for a large-diameter natural gas pipeline project; the exercise of powers by 19 the subsidiary under this paragraph may not exceed the permissible exercise of the 20 powers by the state; 21 (5) acquire, by purchase, lease, or gift, land, structures, real or personal 22 property, an interest in property, a right-of-way, a franchise, an easement, or other 23 interest in land, or an interest in or right to capacity in a pipeline system determined to 24 be necessary or convenient for the development, financing, construction, or operation 25 of a large-diameter natural gas pipeline project; 26 (6) transfer or otherwise dispose of all or part of a large-diameter 27 natural gas pipeline project developed by the subsidiary or transfer or otherwise 28 dispose of an interest in an asset of the subsidiary; 29 (7) elect to provide transportation of natural gas as a contract carrier, 30 common carrier, or otherwise; 31 (8) provide light, water, security, and other services for property of the 01 subsidiary; 02 (9) conduct hearings to gather and develop data consistent with the 03 purpose and powers of the subsidiary; 04 (10) advocate for new capacity in the project before regulatory 05 agencies; 06 (11) make and execute agreements, contracts, and other instruments 07 necessary or convenient in the exercise of the powers and functions of the subsidiary 08 under this section, including a contract with a person, firm, corporation, governmental 09 agency, or other entity; 10 (12) sue and be sued in its own name; 11 (13) adopt an official seal; 12 (14) adopt bylaws for the regulation of its affairs and the conduct of its 13 business and adopt regulations and policies in connection with the performance of its 14 functions and duties; 15 (15) employ fiscal consultants, engineers, attorneys, appraisers, and 16 other consultants and employees that may, in the judgment of the subsidiary, be 17 required and fix and pay their compensation from funds available to the subsidiary; 18 (16) procure insurance against a loss in connection with its operation; 19 (17) borrow money as provided in this chapter to carry out its 20 corporate purposes and issue its obligations as evidence of borrowing; 21 (18) include in a borrowing the amounts necessary to pay financing 22 charges, to pay interest on the obligations, and to pay the interest, consultant, advisory, 23 and legal fees, and other expenses that are necessary or incident to the borrowing; 24 (19) receive, administer, and comply with the conditions and 25 requirements of an appropriation, gift, grant, or donation of property or money; 26 (20) do all acts and things necessary, convenient, or desirable to carry 27 out the powers expressly granted or necessarily implied in this section; 28 (21) invest or reinvest, subject to its contracts with noteholders and 29 bondholders, money or funds held by the subsidiary, including funds in the large- 30 diameter natural gas project pipeline fund (AS 31.25.110), in obligations or other 31 securities or investments in which banks or trust companies in the state may legally 01 invest funds held in reserves or sinking funds or funds not required for immediate 02 disbursement, and in certificates of deposit or time deposits secured by obligations of, 03 or guaranteed by, the state or the United States; 04 (22) enter into, as it determines to be necessary or appropriate, any 05 swap or hedge, cap, or other contract providing for payments based on levels of or 06 changes in interest rates or indices or in the cost or price of any commodity, supply, or 07 expense expected to be used or incurred in connection with the acquisition, 08 construction, or operation of any facility or property owned, leased, or operated by the 09 subsidiary, or an option with respect to any of the foregoing. 10 (e) Except as provided in AS 31.25.100, the corporation may transfer assets to 11 the subsidiary. The provisions of AS 31.25.090, 31.25.130, 31.25.140, 31.25.160, 12 31.25.170, 31.25.180, 31.25.190, 31.25.200, 31.25.210, 31.25.220, 31.25.230, 13 31.25.240, 31.25.250, 31.25.260, 31.25.270, and 31.25.390 apply to the subsidiary 14 created under this section for a large-diameter natural gas pipeline project, and 15 references in those sections to 16 (1) "the corporation" shall refer to the subsidiary created under this 17 section; and 18 (2) "in-state natural gas pipeline" shall refer to a large-diameter natural 19 gas pipeline project as described in AS 31.25.005(4) and (5). 20 (f) The subsidiary under this section shall employ a project coordinator, who 21 may not be a member of the board. The project coordinator shall be appointed by the 22 subsidiary board and serves at the pleasure of the subsidiary board. The subsidiary 23 board may engage professional and technical advisers as independent contractors. The 24 project coordinator may hire employees for the subsidiary and engage professional and 25 technical advisers as independent contractors upon approval of the subsidiary board. 26 Employees of the subsidiary created under this section are state employees in the 27 exempt service under AS 39.25.110. The subsidiary board shall prescribe the duties 28 and compensation of subsidiary personnel, including the project coordinator. 29 (g) The subsidiary may not be terminated as long as it has bonds, notes, or 30 other obligations outstanding. Upon termination of the subsidiary, its rights and 31 property pass to the state. 01 * Sec. 9. AS 31.25.390(5) is amended to read: 02 (5) "in-state natural gas pipeline" means a natural gas pipeline for 03 transporting natural gas in the state as described in AS 31.25.005(1); 04 * Sec. 10. AS 31.25.390 is amended by adding new paragraphs to read: 05 (7) "large-diameter natural gas pipeline project" means a natural gas 06 pipeline project as described in AS 31.25.005(4) and (5) that includes facilities for 07 treatment and liquefaction of natural gas, including any marine terminal facilities; 08 (8) "subsidiary board" means the governing board of a subsidiary 09 created under AS 31.25.122. 10 * Sec. 11. AS 38.05.020(b) is amended to read: 11 (b) The commissioner may 12 (1) establish reasonable procedures and adopt reasonable regulations 13 necessary to carry out this chapter and, whenever necessary, issue directives or orders 14 to the director to carry out specific functions and duties; regulations adopted by the 15 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 16 orders by the commissioner classifying land, issued after January 3, 1959, are not 17 required to be adopted under AS 44.62 (Administrative Procedure Act); 18 (2) enter into agreements considered necessary to carry out the 19 purposes of this chapter, including agreements with federal and state agencies; 20 (3) review any order or action of the director; 21 (4) exercise the powers and do the acts necessary to carry out the 22 provisions and objectives of this chapter; 23 (5) notwithstanding the provisions of any other section of this chapter, 24 grant an extension of the time within which payments due on any exploration license, 25 lease, or sale of state land, minerals, or materials may be made, including payment of 26 rental and royalties, on a finding that compliance with the requirements is or was 27 prevented by reason of war, riots, or acts of God; 28 (6) classify tracts for agricultural uses; 29 (7) after consulting with the Board of Agriculture and Conservation 30 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 31 of a contract for the sale of agricultural land if 01 (A) the land is inaccessible by road; or 02 (B) transportation, marketing, and development costs render 03 the required development uneconomic; 04 (8) reconvey or relinquish land or an interest in land to the federal 05 government if 06 (A) the land is described in an amended application for an 07 allotment under 43 U.S.C. 1617; and 08 (B) the reconveyance or relinquishment is 09 (i) for the purposes provided in 43 U.S.C. 1617; and 10 (ii) in the best interests of the state; 11 (9) lead and coordinate all matters relating to the state's review and 12 authorization of resource development projects; 13 (10) enter into commercial agreements with a duration of not more 14 than two years for project services related to a North Slope natural gas project; 15 (11) in consultation with the commissioner of revenue, participate 16 in the negotiation of contracts and development of terms for inclusion in 17 proposed contracts associated with a North Slope natural gas project; a contract 18 negotiated under this paragraph to which the state is a party is not effective 19 unless the legislature authorizes the governor to execute the contract; 20 (12) enter into confidentiality agreements to maintain the 21 confidentiality of information related to contract negotiations and contract 22 implementation associated with a North Slope natural gas project; information 23 under those confidentiality agreements is not subject to AS 40.25 (Alaska Public 24 Records Act), except that 25 (A) the terms of a proposed contract that the commissioner 26 presents to the legislature for the purpose of obtaining authorization for 27 the governor to execute is not confidential; and 28 (B) confidential information obtained under this paragraph 29 shall be shared with the legislature only in committees held in executive 30 session or under confidentiality agreements; 31 (13) exercise the powers and do the acts necessary to carry out the 01 provisions and objectives of AS 43.90 that relate to this chapter. 02 * Sec. 12. AS 38.05.020(b), as amended by sec. 11 of this Act, is amended to read: 03 (b) The commissioner may 04 (1) establish reasonable procedures and adopt reasonable regulations 05 necessary to carry out this chapter and, whenever necessary, issue directives or orders 06 to the director to carry out specific functions and duties; regulations adopted by the 07 commissioner shall be adopted under AS 44.62 (Administrative Procedure Act); 08 orders by the commissioner classifying land, issued after January 3, 1959, are not 09 required to be adopted under AS 44.62 (Administrative Procedure Act); 10 (2) enter into agreements considered necessary to carry out the 11 purposes of this chapter, including agreements with federal and state agencies; 12 (3) review any order or action of the director; 13 (4) exercise the powers and do the acts necessary to carry out the 14 provisions and objectives of this chapter; 15 (5) notwithstanding the provisions of any other section of this chapter, 16 grant an extension of the time within which payments due on any exploration license, 17 lease, or sale of state land, minerals, or materials may be made, including payment of 18 rental and royalties, on a finding that compliance with the requirements is or was 19 prevented by reason of war, riots, or acts of God; 20 (6) classify tracts for agricultural uses; 21 (7) after consulting with the Board of Agriculture and Conservation 22 (AS 03.09.010), waive, postpone, or otherwise modify the development requirements 23 of a contract for the sale of agricultural land if 24 (A) the land is inaccessible by road; or 25 (B) transportation, marketing, and development costs render 26 the required development uneconomic; 27 (8) reconvey or relinquish land or an interest in land to the federal 28 government if 29 (A) the land is described in an amended application for an 30 allotment under 43 U.S.C. 1617; and 31 (B) the reconveyance or relinquishment is 01 (i) for the purposes provided in 43 U.S.C. 1617; and 02 (ii) in the best interests of the state; 03 (9) lead and coordinate all matters relating to the state's review and 04 authorization of resource development projects; 05 (10) enter into commercial agreements with a duration of not more 06 than two years for project services related to a North Slope natural gas project; 07 (11) in consultation with the commissioner of revenue, participate in 08 the negotiation of contracts and development of terms for inclusion in proposed 09 contracts associated with a North Slope natural gas project; a contract negotiated 10 under this paragraph to which the state is a party is not effective unless the legislature 11 authorizes the governor to execute the contract; 12 (12) enter into confidentiality agreements to maintain the 13 confidentiality of information related to contract negotiations and contract 14 implementation associated with a North Slope natural gas project; information under 15 those confidentiality agreements is not subject to AS 40.25 (Alaska Public Records 16 Act), except that 17 (A) the terms of a proposed contract that the commissioner 18 presents to the legislature for the purpose of obtaining authorization for the 19 governor to execute is not confidential; and 20 (B) confidential information obtained under this paragraph 21 shall be shared with the legislature only in committees held in executive 22 session or under confidentiality agreements; 23 (13) in consultation with the commissioner of revenue, take 24 custody of gas delivered to the state under AS 43.55.014(b) and manage the 25 project services and disposition and sale of that gas; 26 (14) exercise the powers and do the acts necessary to carry out the 27 provisions and objectives of AS 43.90 that relate to this chapter. 28 * Sec. 13. AS 38.05.180(i) is amended to read: 29 (i) The commissioner may provide for the establishment of an exploration 30 incentive credit system under which a lessee of state land drilling an exploratory well 31 on that land may earn credits based upon the footage drilled and the region in which 01 the well is situated. The commissioner may also provide for credits to be earned by 02 persons performing geophysical work on state land, if that work is performed during 03 the two seasons immediately preceding an announced lease sale and on land included 04 within the sale area and the geophysical information is made public following the sale. 05 Credits may not exceed 50 percent of the cost of the drilling or geophysical work. 06 Credits may be used during a limited period established by the commissioner and may 07 be assigned during that period. Credits may be applied against (1) royalty and rental 08 payments for oil and gas or for gas only payable to the state or (2) taxes payable under 09 AS 43.55.011 [AS 43.55]. A credit may not exceed 50 percent of the payment toward 10 which it is being applied. Amounts due the Alaska permanent fund (AS 37.13.010) 11 shall be calculated before the application of credits under this subsection. 12 * Sec. 14. AS 38.05.180 is amended by adding a new subsection to read: 13 (hh) Notwithstanding any other provisions of this chapter, if the commissioner 14 makes a written determination that a North Slope natural gas project has sufficient 15 financial commitment for a work plan and budget necessary to support major permits 16 and regulatory filings required by state and federal agencies, and sufficient 17 commitment of gas by lessees, the commissioner may propose modifications to 18 existing leases that relate to 19 (1) switching between taking the state's royalty gas in value and in 20 kind to ensure that the state's actions do not unreasonably 21 (A) cause the lessee or other person to bear disproportionate 22 transportation costs with respect to the state's royalty gas; or 23 (B) interfere with long-term marketing of natural gas by the 24 lessee or other person; 25 (2) providing a method for establishing a fair market value for each 26 component of the state's royalty gas and using appropriate adjustments to reflect fair 27 market value deductions for actual and reasonable transportation and processing costs 28 for the state's royalty gas from the North Slope to the first destination market; 29 (3) establishing fixed royalty rates and modifying net profit shares 30 under leases subject to this subsection; a fixed royalty rate established under this 31 paragraph may not be less than 12.5 percent. 01 * Sec. 15. AS 38.05.180(hh), as enacted in sec. 14 of this Act, is amended to read: 02 (hh) Notwithstanding any other provisions of this chapter, if the commissioner 03 makes a written determination that a North Slope natural gas project has sufficient 04 financial commitment for a work plan and budget necessary to support major permits 05 and regulatory filings required by state and federal agencies, and sufficient 06 commitment of gas by lessees, the commissioner may propose modifications to 07 existing leases that relate to 08 (1) switching between taking the state's royalty gas in value and in 09 kind to ensure that the state's actions do not unreasonably 10 (A) cause the lessee or other person to bear disproportionate 11 transportation costs with respect to the state's royalty gas or gas delivered to 12 the state under AS 43.55.014(b); or 13 (B) interfere with long-term marketing of natural gas by the 14 lessee or other person; 15 (2) providing a method for establishing a fair market value for each 16 component of the state's royalty gas and using appropriate adjustments to reflect fair 17 market value deductions for actual and reasonable transportation and processing costs 18 for the state's royalty gas from the North Slope to the first destination market; 19 (3) establishing fixed royalty rates and modifying net profit shares 20 under leases subject to this subsection; a fixed royalty rate established under this 21 paragraph may not be less than 12.5 percent. 22 * Sec. 16. AS 38.05.183(a) is amended to read: 23 (a) The sale, exchange, or other disposal of a mineral obtained by the state as a 24 royalty under AS 38.05.182, [OR] the sale, exchange, or other disposal in whole or in 25 part of a right to receive future mineral production under a state lease under this 26 chapter, or the sale, exchange, or other disposal of gas delivered to the state under 27 AS 43.55.014(b) shall be by competitive bid and the sale, exchange, or other disposal 28 made to the highest responsible bidder, except that competitive bidding is not required 29 when the commissioner, after prior written notice to the Alaska Royalty Oil and Gas 30 Development Advisory Board under AS 38.06.050, determines that the best interest of 31 the state does not require it or that no competition exists. 01 * Sec. 17. AS 38.05.183(c) is amended to read: 02 (c) If the commissioner determines that a sale, exchange, or other disposal of a 03 mineral obtained by the state as a royalty under AS 38.05.182, [OR] of a right to 04 receive future mineral production under a state lease under this chapter, or of gas 05 delivered to the state under AS 43.55.014(b) shall be made otherwise than by 06 competitive bid, and the Alaska Royalty Oil and Gas Development Advisory Board 07 has been notified in writing of that determination, the commissioner shall make public 08 in writing the specific findings and conclusions upon which that determination is 09 based. 10 * Sec. 18. AS 38.05.183(d) is amended to read: 11 (d) Oil or gas taken in kind by the state as its royalty share or gas delivered to 12 the state under AS 43.55.014(b) may not be sold or otherwise disposed of for export 13 from the state until the commissioner determines that the [ROYALTY-IN-KIND] oil 14 or gas is surplus to the present and projected intrastate domestic and industrial needs. 15 The commissioner shall make public, in writing, the specific findings and reasons on 16 which the determination is based. 17 * Sec. 19. AS 38.05.183(e) is amended to read: 18 (e) When a sale, exchange, or other disposal of oil or gas taken in kind by the 19 state as its royalty share, or a sale, exchange, or other disposal in whole or in part of a 20 right to receive future royalty oil or gas, under a state lease under this chapter is made 21 other than by competitive bid, or when a sale, exchange, or other disposal of gas 22 delivered to the state under AS 43.55.014(b) is made other than by competitive 23 bid, the sale, exchange, or other disposal shall be awarded by the commissioner to the 24 prospective buyer whose proposal offers the maximum benefits to citizens of the state. 25 The commissioner shall consider 26 (1) the cash value offered; 27 (2) the projected effects of the sale, exchange, or other disposal on the 28 economy of the state; 29 (3) the projected benefits of refining or processing the oil or gas in the 30 state; 31 (4) the ability of the prospective buyer to provide refined products or 01 by-products for distribution and sale in the state with price or supply benefits to the 02 citizens of the state; and 03 (5) the criteria listed in AS 38.06.070(a). 04 * Sec. 20. AS 38.05.965 is amended by adding new paragraphs to read: 05 (26) "North Slope natural gas project" means a project to produce 06 natural gas from state oil and gas leases that include land north of 68 degrees North 07 latitude for transport in a gaseous state from the North Slope; 08 (27) "project services" means services provided by a gas treatment 09 plant, pipeline, liquefaction facility, or marine terminal, marine transportation 10 services, or other services necessary to take natural gas to market. 11 * Sec. 21. AS 40.25.100(a) is amended to read: 12 (a) Information in the possession of the Department of Revenue that discloses 13 the particulars of the business or affairs of a taxpayer or other person, including 14 information under AS 38.05.020(b)(11) that is subject to a confidentiality 15 agreement under AS 38.05.020(b)(12), is not a matter of public record, except as 16 provided in AS 43.05.230(i) or for purposes of investigation and law enforcement. The 17 information shall be kept confidential except when its production is required in an 18 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 19 court proceeding. These restrictions do not prohibit the publication of statistics 20 presented in a manner that prevents the identification of particular reports and items, 21 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 22 and relevant information that may assist in the collection of delinquent taxes, or 23 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 24 43.05.499. 25 * Sec. 22. AS 40.25.100, as amended by sec. 21 of this Act, is amended to read: 26 (a) Information in the possession of the Department of Revenue that discloses 27 the particulars of the business or affairs of a taxpayer or other person, including 28 information under AS 38.05.020(b)(11) that is subject to a confidentiality agreement 29 under AS 38.05.020(b)(12), is not a matter of public record, except as provided in 30 AS 43.05.230(i) or (k) or for purposes of investigation and law enforcement. The 31 information shall be kept confidential except when its production is required in an 01 official investigation, administrative adjudication under AS 43.05.405 - 43.05.499, or 02 court proceeding. These restrictions do not prohibit the publication of statistics 03 presented in a manner that prevents the identification of particular reports and items, 04 prohibit the publication of tax lists showing the names of taxpayers who are delinquent 05 and relevant information that may assist in the collection of delinquent taxes, or 06 prohibit the publication of records, proceedings, and decisions under AS 43.05.405 - 07 43.05.499. 08 * Sec. 23. AS 40.25.120(a) is amended to read: 09 (a) Every person has a right to inspect a public record in the state, including 10 public records in recorders' offices, except 11 (1) records of vital statistics and adoption proceedings, which shall be 12 treated in the manner required by AS 18.50; 13 (2) records pertaining to juveniles unless disclosure is authorized by 14 law; 15 (3) medical and related public health records; 16 (4) records required to be kept confidential by a federal law or 17 regulation or by state law; 18 (5) to the extent the records are required to be kept confidential under 19 20 U.S.C. 1232g and the regulations adopted under 20 U.S.C. 1232g in order to secure 20 or retain federal assistance; 21 (6) records or information compiled for law enforcement purposes, but 22 only to the extent that the production of the law enforcement records or information 23 (A) could reasonably be expected to interfere with enforcement 24 proceedings; 25 (B) would deprive a person of a right to a fair trial or an 26 impartial adjudication; 27 (C) could reasonably be expected to constitute an unwarranted 28 invasion of the personal privacy of a suspect, defendant, victim, or witness; 29 (D) could reasonably be expected to disclose the identity of a 30 confidential source; 31 (E) would disclose confidential techniques and procedures for 01 law enforcement investigations or prosecutions; 02 (F) would disclose guidelines for law enforcement 03 investigations or prosecutions if the disclosure could reasonably be expected to 04 risk circumvention of the law; or 05 (G) could reasonably be expected to endanger the life or 06 physical safety of an individual; 07 (7) names, addresses, and other information identifying a person as a 08 participant in the Alaska Higher Education Savings Trust under AS 14.40.802 or the 09 advance college tuition savings program under AS 14.40.803 - 14.40.817; 10 (8) public records containing information that would disclose or might 11 lead to the disclosure of a component in the process used to execute or adopt an 12 electronic signature if the disclosure would or might cause the electronic signature to 13 cease being under the sole control of the person using it; 14 (9) reports submitted under AS 05.25.030 concerning certain 15 collisions, accidents, or other casualties involving boats; 16 (10) records or information pertaining to a plan, program, or 17 procedures for establishing, maintaining, or restoring security in the state, or to a 18 detailed description or evaluation of systems, facilities, or infrastructure in the state, 19 but only to the extent that the production of the records or information 20 (A) could reasonably be expected to interfere with the 21 implementation or enforcement of the security plan, program, or procedures; 22 (B) would disclose confidential guidelines for investigations or 23 enforcement and the disclosure could reasonably be expected to risk 24 circumvention of the law; or 25 (C) could reasonably be expected to endanger the life or 26 physical safety of an individual or to present a real and substantial risk to the 27 public health and welfare; 28 (11) the written notification regarding a proposed regulation provided 29 under AS 24.20.105 to the Department of Law and the affected state agency and 30 communications between the Legislative Affairs Agency, the Department of Law, and 31 the affected state agency under AS 24.20.105; 01 (12) records that are 02 (A) proprietary, privileged, or a trade secret in accordance with 03 AS 43.90.150 or 43.90.220(e); 04 (B) applications that are received under AS 43.90 until notice is 05 published under AS 43.90.160; 06 (13) information of the Alaska Gasline Development Corporation 07 created under AS 31.25.010 or a subsidiary of the Alaska Gasline Development 08 Corporation that is confidential by law or under a valid confidentiality agreement; 09 (14) information under AS 38.05.020(b)(11) that is subject to a 10 confidentiality agreement under AS 38.05.020(b)(12). 11 * Sec. 24. AS 43.05.010 is amended to read: 12 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 13 (1) exercise general supervision and direct the activities of the 14 Department of Revenue; 15 (2) supervise the fiscal affairs and responsibilities of the department; 16 (3) prescribe uniform rules for investigations and hearings; 17 (4) keep a record of all departmental proceedings, record and file all 18 bonds, and assume custody of returns, reports, papers, and documents of the 19 department; 20 (5) adopt a seal and affix it to each order, process, or certificate issued 21 by the commissioner; 22 (6) keep a record of each order, process, and certificate issued by the 23 commissioner, and keep the record open to public inspection at all reasonable times; 24 (7) hold hearings and investigations necessary for the administration of 25 state tax and revenue laws; 26 (8) except as provided in AS 43.05.405 - 43.05.499 and in 27 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 28 Department of Revenue and enter orders on the appeals that are final unless reversed 29 or modified by the courts; 30 (9) issue subpoenas to require the attendance of witnesses and the 31 production of necessary books, papers, documents, correspondence, and other things; 01 (10) order the taking of depositions before a person competent to 02 administer oaths; 03 (11) administer oaths and take acknowledgments; 04 (12) request the attorney general for rulings on the interpretation of the 05 tax and revenue laws administered by the department; 06 (13) call upon the attorney general to institute actions for recovery of 07 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 08 (14) issue warrants for the collection of unpaid tax penalties and 09 interest and take all steps necessary and proper to enforce full and complete 10 compliance with the tax, license, excise, and other revenue laws of the state; 11 (15) report to the legislature before February 15 of each year the total 12 amount of contributions reported and the total amount of credit claimed during the 13 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 14 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 15 (16) consult with the commissioner of natural resources on 16 negotiation of contracts and development of terms for inclusion in proposed 17 contracts associated with a North Slope natural gas project. 18 * Sec. 25. AS 43.05.010, as amended by sec. 24 of this Act, is amended to read: 19 Sec. 43.05.010. Duties of commissioner. The commissioner of revenue shall 20 (1) exercise general supervision and direct the activities of the 21 Department of Revenue; 22 (2) supervise the fiscal affairs and responsibilities of the department; 23 (3) prescribe uniform rules for investigations and hearings; 24 (4) keep a record of all departmental proceedings, record and file all 25 bonds, and assume custody of returns, reports, papers, and documents of the 26 department; 27 (5) adopt a seal and affix it to each order, process, or certificate issued 28 by the commissioner; 29 (6) keep a record of each order, process, and certificate issued by the 30 commissioner, and keep the record open to public inspection at all reasonable times; 31 (7) hold hearings and investigations necessary for the administration of 01 state tax and revenue laws; 02 (8) except as provided in AS 43.05.405 - 43.05.499 and in 03 AS 44.64.030, hear and determine appeals of a matter within the jurisdiction of the 04 Department of Revenue and enter orders on the appeals that are final unless reversed 05 or modified by the courts; 06 (9) issue subpoenas to require the attendance of witnesses and the 07 production of necessary books, papers, documents, correspondence, and other things; 08 (10) order the taking of depositions before a person competent to 09 administer oaths; 10 (11) administer oaths and take acknowledgments; 11 (12) request the attorney general for rulings on the interpretation of the 12 tax and revenue laws administered by the department; 13 (13) call upon the attorney general to institute actions for recovery of 14 unpaid taxes, fees, excises, additions to tax, penalties, and interest; 15 (14) issue warrants for the collection of unpaid tax penalties and 16 interest and take all steps necessary and proper to enforce full and complete 17 compliance with the tax, license, excise, and other revenue laws of the state; 18 (15) report to the legislature before February 15 of each year the total 19 amount of contributions reported and the total amount of credit claimed during the 20 previous calendar year under AS 43.20.014, AS 43.55.019, AS 43.56.018, 21 AS 43.65.018, AS 43.75.018, and AS 43.77.045; 22 (16) consult with the commissioner of natural resources on negotiation 23 of contracts and development of terms for inclusion in proposed contracts associated 24 with a North Slope natural gas project; 25 (17) direct the disposition of revenues received from gas delivered 26 to the state under AS 43.55.014(b) by entering into agreements with the 27 commissioner of natural resources related to the management of the custody and 28 disposition of gas delivered to the state under AS 43.55.014(b). 29 * Sec. 26. AS 43.05.230 is amended by adding a new subsection to read: 30 (k) The name of each person that the department has allowed to make an 31 election under AS 43.55.014(a) and the amount of gas produced from each lease or 01 property to which an effective election under AS 43.55.014 applies is public 02 information. 03 * Sec. 27. AS 43.20.144(f) is amended to read: 04 (f) The extraction factor of a taxpayer subject to this section is a fraction, 05 (1) the numerator of which is the sum of the following for the tax 06 period: 07 (A) the number of barrels of the taxpayer's oil (net of royalty to 08 an unrelated party) produced from or allocated to leases or properties of the 09 taxpayer in this state; and 10 (B) one-sixth of the number of Mcf of the taxpayer's gas, 11 including gas subject to an election under AS 43.55.014, (net of royalty to 12 an unrelated party) produced from or allocated to leases or properties of the 13 taxpayer in this state, excluding reinjected gas; and 14 (2) the denominator of which is the sum of the following for the tax 15 period: 16 (A) the number of barrels of oil of the taxpayer's consolidated 17 business (net of royalty to an unrelated party) produced from or allocated to 18 leases or properties of the taxpayer's consolidated business everywhere; and 19 (B) one-sixth of the number of Mcf of gas, including gas 20 subject to an election under AS 43.55.014, of the taxpayer's consolidated 21 business (net of royalty to an unrelated party) produced from or allocated to 22 leases or properties of the taxpayer's consolidated business everywhere, 23 excluding reinjected gas. 24 * Sec. 28. AS 43.55.011(e) is amended to read: 25 (e) There is levied on the producer of oil or gas a tax for all oil and gas 26 produced each calendar year from each lease or property in the state, less any oil and 27 gas the ownership or right to which is exempt from taxation or constitutes a 28 landowner's royalty interest or for which a tax is levied by AS 43.55.014. Except as 29 otherwise provided under (f), (j), (k), (o), and (p) of this section, for oil and gas 30 produced 31 (1) before January 1, 2014, the tax is equal to the sum of 01 (A) the annual production tax value of the taxable oil and gas 02 as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and 03 (B) the sum, over all months of the calendar year, of the tax 04 amounts determined under (g) of this section; 05 (2) on and after January 1, 2014, and before January 1, 2022, the tax 06 is equal to the annual production tax value of the taxable oil and gas as calculated 07 under AS 43.55.160(a)(1) multiplied by 35 percent; 08 (3) on and after January 1, 2022, the tax for 09 (A) oil is equal to the annual production tax value of the 10 taxable oil as calculated under AS 43.55.160(h) multiplied by 35 percent; 11 (B) gas is equal to 10.5 percent of the gross value at the 12 point of production of the taxable gas; if the gross value at the point of 13 production of gas produced from a lease or property is less than zero, that 14 gross value at the point of production is considered zero for purposes of 15 this subparagraph. 16 * Sec. 29. AS 43.55.011(f) is amended to read: 17 (f) The levy of tax under (e) of this section for 18 (1) oil and gas produced before January 1, 2022, from leases or 19 properties that include land north of 68 degrees North latitude, other than [OIL 20 AND GAS PRODUCTION SUBJECT TO (i) OF THIS SECTION AND] gas subject 21 to (o) of this section, may not be less than 22 (A) [(1)] four percent of the gross value at the point of 23 production when the average price per barrel for Alaska North Slope crude oil 24 for sale on the United States West Coast during the calendar year for which the 25 tax is due is more than $25; 26 (B) [(2)] three percent of the gross value at the point of 27 production when the average price per barrel for Alaska North Slope crude oil 28 for sale on the United States West Coast during the calendar year for which the 29 tax is due is over $20 but not over $25; 30 (C) [(3)] two percent of the gross value at the point of 31 production when the average price per barrel for Alaska North Slope crude oil 01 for sale on the United States West Coast during the calendar year for which the 02 tax is due is over $17.50 but not over $20; 03 (D) [(4)] one percent of the gross value at the point of 04 production when the average price per barrel for Alaska North Slope crude oil 05 for sale on the United States West Coast during the calendar year for which the 06 tax is due is over $15 but not over $17.50; or 07 (E) [(5)] zero percent of the gross value at the point of 08 production when the average price per barrel for Alaska North Slope crude oil 09 for sale on the United States West Coast during the calendar year for which the 10 tax is due is $15 or less; and 11 (2) oil produced on and after January 1, 2022, from leases or 12 properties that include land north of 68 degrees North latitude, may not be less 13 than 14 (A) four percent of the gross value at the point of 15 production when the average price per barrel for Alaska North Slope 16 crude oil for sale on the United States West Coast during the calendar 17 year for which the tax is due is more than $25; 18 (B) three percent of the gross value at the point of 19 production when the average price per barrel for Alaska North Slope 20 crude oil for sale on the United States West Coast during the calendar 21 year for which the tax is due is over $20 but not over $25; 22 (C) two percent of the gross value at the point of production 23 when the average price per barrel for Alaska North Slope crude oil for 24 sale on the United States West Coast during the calendar year for which 25 the tax is due is over $17.50 but not over $20; 26 (D) one percent of the gross value at the point of production 27 when the average price per barrel for Alaska North Slope crude oil for 28 sale on the United States West Coast during the calendar year for which 29 the tax is due is over $15 but not over $17.50; or 30 (E) zero percent of the gross value at the point of 31 production when the average price per barrel for Alaska North Slope 01 crude oil for sale on the United States West Coast during the calendar 02 year for which the tax is due is $15 or less. 03 * Sec. 30. AS 43.55 is amended by adding a new section to read: 04 Sec. 43.55.014. Payment in gas of tax for gas. (a) For gas produced on and 05 after January 1, 2022, from oil and gas leases that have been modified under 06 AS 38.05.180(hh), other than gas described in (e) of this section, the department may 07 allow a producer to make an irrevocable election, under regulations adopted by the 08 department, to pay in gas the production tax levied by this section in lieu of the tax 09 otherwise levied for the gas by AS 43.55.011(e). 10 (b) A production tax levied by this section is equal to 10.5 percent of the gas 11 otherwise taxable under AS 43.55.011(e)(3) produced from each lease or property to 12 which an effective election under (a) of this section applies, when and as that gas is 13 produced. The producer shall pay the tax in gas by delivering that 10.5 percent of the 14 gas to the state at the point of production. 15 (c) The Department of Natural Resources shall manage under 16 AS 38.05.020(b)(13) the custody and disposition of gas delivered to the state under (b) 17 of this section. 18 (d) If a deficiency in a tax levied by this section is assessed, or if a provision 19 of this title providing for interest or a penalty based on a percentage of a tax liability or 20 tax deficiency applies to gas for which a tax is levied by this section, the amount of the 21 deficiency and the tax amount on which the interest or penalty percentage is calculated 22 is treated for the purpose only of that calculation as having been levied by 23 AS 43.55.011(e) rather than this section. 24 (e) This section does not apply to gas 25 (1) flared, released, or allowed to escape upstream of the point of 26 production of gas; or 27 (2) used in the operation of a lease or property in the state for drilling 28 for or producing oil or gas, or for repressuring a reservoir. 29 * Sec. 31. AS 43.55.019(a) is amended to read: 30 (a) A producer of oil or gas is allowed a credit against the tax levied by 31 AS 43.55.011(e) [DUE UNDER THIS CHAPTER] for cash contributions accepted for 01 (1) direct instruction, research, and educational support purposes, 02 including library and museum acquisitions, and contributions to endowment, by an 03 Alaska university foundation or by a nonprofit, public or private, Alaska two-year or 04 four-year college accredited by a regional accreditation association; 05 (2) secondary school level vocational education courses, programs, and 06 facilities by a school district in the state; 07 (3) vocational education courses, programs, and facilities by a state- 08 operated vocational technical education and training school; 09 (4) a facility or an annual intercollegiate sports tournament by a 10 nonprofit, public or private, Alaska two-year or four-year college accredited by a 11 regional accreditation association; 12 (5) Alaska Native cultural or heritage programs and educational 13 support, including mentoring and tutoring, provided by a nonprofit agency for public 14 school staff and for students who are in grades kindergarten through 12 in the state; 15 (6) education, research, rehabilitation, and facilities by an institution 16 that is located in the state and that qualifies as a coastal ecosystem learning center 17 under the Coastal America Partnership established by the federal government; and 18 (7) the Alaska higher education investment fund under AS 37.14.750. 19 * Sec. 32. AS 43.55.019(e) is amended to read: 20 (e) The credit under this section may not reduce a person's tax liability under 21 AS 43.55.011(e) [THIS CHAPTER] to below zero for any tax year. An unused credit 22 or portion of a credit not used under this section for a tax year may not be sold, traded, 23 transferred, or applied in a subsequent tax year. 24 * Sec. 33. AS 43.55.020(a) is amended to read: 25 (a) For a calendar year, a producer subject to tax under AS 43.55.011 shall pay 26 the tax as follows: 27 (1) for oil and gas produced before January 1, 2014, an installment 28 payment of the estimated tax levied by AS 43.55.011(e), net of any tax credits applied 29 as allowed by law, is due for each month of the calendar year on the last day of the 30 following month; except as otherwise provided under (2) of this subsection, the 31 amount of the installment payment is the sum of the following amounts, less 1/12 of 01 the tax credits that are allowed by law to be applied against the tax levied by 02 AS 43.55.011(e) for the calendar year, but the amount of the installment payment may 03 not be less than zero: 04 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 05 produced from leases or properties in the state outside the Cook Inlet 06 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 07 the greater of 08 (i) zero; or 09 (ii) the sum of 25 percent and the tax rate calculated for 10 the month under AS 43.55.011(g) multiplied by the remainder obtained 11 by subtracting 1/12 of the producer's adjusted lease expenditures for the 12 calendar year of production under AS 43.55.165 and 43.55.170 that are 13 deductible for the oil and gas under AS 43.55.160 from the gross value 14 at the point of production of the oil and gas produced from the leases or 15 properties during the month for which the installment payment is 16 calculated; 17 (B) for oil and gas produced from leases or properties subject 18 to AS 43.55.011(f), the greatest of 19 (i) zero; 20 (ii) zero percent, one percent, two percent, three 21 percent, or four percent, as applicable, of the gross value at the point of 22 production of the oil and gas produced from the leases or properties 23 during the month for which the installment payment is calculated; or 24 (iii) the sum of 25 percent and the tax rate calculated for 25 the month under AS 43.55.011(g) multiplied by the remainder obtained 26 by subtracting 1/12 of the producer's adjusted lease expenditures for the 27 calendar year of production under AS 43.55.165 and 43.55.170 that are 28 deductible for the oil and gas under AS 43.55.160 from the gross value 29 at the point of production of the oil and gas produced from those leases 30 or properties during the month for which the installment payment is 31 calculated; 01 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 02 each lease or property, the greater of 03 (i) zero; or 04 (ii) the sum of 25 percent and the tax rate calculated for 05 the month under AS 43.55.011(g) multiplied by the remainder obtained 06 by subtracting 1/12 of the producer's adjusted lease expenditures for the 07 calendar year of production under AS 43.55.165 and 43.55.170 that are 08 deductible under AS 43.55.160 for the oil or gas, respectively, 09 produced from the lease or property from the gross value at the point of 10 production of the oil or gas, respectively, produced from the lease or 11 property during the month for which the installment payment is 12 calculated; 13 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 14 (i) the sum of 25 percent and the tax rate calculated for 15 the month under AS 43.55.011(g) multiplied by the remainder obtained 16 by subtracting 1/12 of the producer's adjusted lease expenditures for the 17 calendar year of production under AS 43.55.165 and 43.55.170 that are 18 deductible for the oil and gas under AS 43.55.160 from the gross value 19 at the point of production of the oil and gas produced from the leases or 20 properties during the month for which the installment payment is 21 calculated, but not less than zero; or 22 (ii) four percent of the gross value at the point of 23 production of the oil and gas produced from the leases or properties 24 during the month, but not less than zero; 25 (2) an amount calculated under (1)(C) of this subsection for oil or gas 26 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 27 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 28 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 29 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 30 amount of taxable gas produced during the month for the amount of taxable gas 31 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 01 (2)(A), as applicable, the amount of taxable oil produced during the month for the 02 amount of taxable oil produced during the calendar year; 03 (3) an installment payment of the estimated tax levied by 04 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 05 on the last day of the following month; the amount of the installment payment is the 06 sum of 07 (A) the applicable tax rate for oil provided under 08 AS 43.55.011(i), multiplied by the gross value at the point of production of the 09 oil taxable under AS 43.55.011(i) and produced from the lease or property 10 during the month; and 11 (B) the applicable tax rate for gas provided under 12 AS 43.55.011(i), multiplied by the gross value at the point of production of the 13 gas taxable under AS 43.55.011(i) and produced from the lease or property 14 during the month; 15 (4) any amount of tax levied by AS 43.55.011, net of any credits 16 applied as allowed by law, that exceeds the total of the amounts due as installment 17 payments of estimated tax is due on March 31 of the year following the calendar year 18 of production; 19 (5) for oil and gas produced on and after January 1, 2014, and before 20 January 1, 2022, an installment payment of the estimated tax levied by 21 AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each 22 month of the calendar year on the last day of the following month; except as otherwise 23 provided under (6) of this subsection, the amount of the installment payment is the 24 sum of the following amounts, less 1/12 of the tax credits that are allowed by law to be 25 applied against the tax levied by AS 43.55.011(e) for the calendar year, but the amount 26 of the installment payment may not be less than zero: 27 (A) for oil and gas not subject to AS 43.55.011(o) or (p) 28 produced from leases or properties in the state outside the Cook Inlet 29 sedimentary basin, other than leases or properties subject to AS 43.55.011(f), 30 the greater of 31 (i) zero; or 01 (ii) 35 percent multiplied by the remainder obtained by 02 subtracting 1/12 of the producer's adjusted lease expenditures for the 03 calendar year of production under AS 43.55.165 and 43.55.170 that are 04 deductible for the oil and gas under AS 43.55.160 from the gross value 05 at the point of production of the oil and gas produced from the leases or 06 properties during the month for which the installment payment is 07 calculated; 08 (B) for oil and gas produced from leases or properties subject 09 to AS 43.55.011(f), the greatest of 10 (i) zero; 11 (ii) zero percent, one percent, two percent, three 12 percent, or four percent, as applicable, of the gross value at the point of 13 production of the oil and gas produced from the leases or properties 14 during the month for which the installment payment is calculated; or 15 (iii) 35 percent multiplied by the remainder obtained by 16 subtracting 1/12 of the producer's adjusted lease expenditures for the 17 calendar year of production under AS 43.55.165 and 43.55.170 that are 18 deductible for the oil and gas under AS 43.55.160 from the gross value 19 at the point of production of the oil and gas produced from those leases 20 or properties during the month for which the installment payment is 21 calculated, except that, for the purposes of this calculation, a reduction 22 from the gross value at the point of production may apply for oil and 23 gas subject to AS 43.55.160(f) or (g); 24 (C) for oil or gas subject to AS 43.55.011(j), (k), or (o), for 25 each lease or property, the greater of 26 (i) zero; or 27 (ii) 35 percent multiplied by the remainder obtained by 28 subtracting 1/12 of the producer's adjusted lease expenditures for the 29 calendar year of production under AS 43.55.165 and 43.55.170 that are 30 deductible under AS 43.55.160 for the oil or gas, respectively, 31 produced from the lease or property from the gross value at the point of 01 production of the oil or gas, respectively, produced from the lease or 02 property during the month for which the installment payment is 03 calculated; 04 (D) for oil and gas subject to AS 43.55.011(p), the lesser of 05 (i) 35 percent multiplied by the remainder obtained by 06 subtracting 1/12 of the producer's adjusted lease expenditures for the 07 calendar year of production under AS 43.55.165 and 43.55.170 that are 08 deductible for the oil and gas under AS 43.55.160 from the gross value 09 at the point of production of the oil and gas produced from the leases or 10 properties during the month for which the installment payment is 11 calculated, but not less than zero; or 12 (ii) four percent of the gross value at the point of 13 production of the oil and gas produced from the leases or properties 14 during the month, but not less than zero; 15 (6) an amount calculated under (5)(C) of this subsection for oil or gas 16 subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by 17 carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as 18 applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil, but 19 substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the 20 amount of taxable gas produced during the month for the amount of taxable gas 21 produced during the calendar year and substituting in AS 43.55.011(k)(1)(A) or 22 (2)(A), as applicable, the amount of taxable oil produced during the month for the 23 amount of taxable oil produced during the calendar year; 24 (7) for oil and gas produced on or after January 1, 2022, an 25 installment payment of the estimated tax levied by AS 43.55.011(e), net of any tax 26 credits applied as allowed by law, is due for each month of the calendar year on 27 the last day of the following month; the amount of the installment payment is the 28 sum of the following amounts, less 1/12 of the tax credits that are allowed by law 29 to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but 30 the amount of the installment payment may not be less than zero: 31 (A) for oil produced from leases or properties that include 01 land north of 68 degrees North latitude, the greatest of 02 (i) zero; 03 (ii) zero percent, one percent, two percent, three 04 percent, or four percent, as applicable, of the gross value at the 05 point of production of the oil produced from the leases or 06 properties during the month for which the installment payment is 07 calculated; or 08 (iii) 35 percent multiplied by the remainder obtained 09 by subtracting 1/12 of the producer's adjusted lease expenditures 10 for the calendar year of production under AS 43.55.165 and 11 43.55.170 that are deductible for the oil under AS 43.55.160(h)(1) 12 from the gross value at the point of production of the oil produced 13 from those leases or properties during the month for which the 14 installment payment is calculated, except that, for the purposes of 15 this calculation, a reduction from the gross value at the point of 16 production may apply for oil subject to AS 43.55.160(f) or 17 43.55.160(f) and (g); 18 (B) for oil produced before or during the last calendar year 19 under AS 43.55.024(b) for which the producer could take a tax credit 20 under AS 43.55.024(a), from leases or properties in the state outside the 21 Cook Inlet sedimentary basin, no part of which is north of 68 degrees 22 North latitude, other than leases or properties subject to AS 43.55.011(p), 23 the greater of 24 (i) zero; or 25 (ii) 35 percent multiplied by the remainder obtained 26 by subtracting 1/12 of the producer's adjusted lease expenditures 27 for the calendar year of production under AS 43.55.165 and 28 43.55.170 that are deductible for the oil under AS 43.55.160(h)(2) 29 from the gross value at the point of production of the oil produced 30 from the leases or properties during the month for which the 31 installment payment is calculated; 01 (C) for oil and gas produced from leases or properties 02 subject to AS 43.55.011(p), except as otherwise provided under (8) of this 03 subsection, the sum of 04 (i) 35 percent multiplied by the remainder obtained 05 by subtracting 1/12 of the producer's adjusted lease expenditures 06 for the calendar year of production under AS 43.55.165 and 07 43.55.170 that are deductible for the oil under AS 43.55.160(h)(3) 08 from the gross value at the point of production of the oil produced 09 from the leases or properties during the month for which the 10 installment payment is calculated, but not less than zero; and 11 (ii) 10.5 percent of the gross value at the point of 12 production of the gas produced from the leases or properties 13 during the month, but not less than zero; 14 (D) for oil produced from leases or properties in the state, 15 no part of which is north of 68 degrees North latitude, other than leases or 16 properties subject to (B) or (C) of this paragraph, the greater of 17 (i) zero; or 18 (ii) 35 percent multiplied by the remainder obtained 19 by subtracting 1/12 of the producer's adjusted lease expenditures 20 for the calendar year of production under AS 43.55.165 and 21 43.55.170 that are deductible for the oil under AS 43.55.160(h)(4) 22 from the gross value at the point of production of the oil produced 23 from the leases or properties during the month for which the 24 installment payment is calculated; 25 (E) for gas produced from each lease or property in the 26 state, other than a lease or property subject to AS 43.55.011(p), 10.5 27 percent of the gross value at the point of production of the gas produced 28 from the lease or property during the month for which the installment 29 payment is calculated, but not less than zero; 30 (8) an amount calculated under (7)(C) of this subsection may not 31 exceed four percent of the gross value at the point of production of the oil and gas 01 produced from leases or properties subject to AS 43.55.011(p) during the month 02 for which the installment payment is calculated; 03 (9) for purposes of the calculation under (1)(B)(ii), (5)(B)(ii), and 04 (7)(A)(ii) of this subsection, the applicable percentage of the gross value at the 05 point of production is determined under AS 43.55.011(f)(1) or (2) but substituting 06 the phrase "month for which the installment payment is calculated" in 07 AS 43.55.011(f)(1) and (2) for the phrase "calendar year for which the tax is 08 due." 09 * Sec. 34. AS 43.55.020(g) is amended to read: 10 (g) Notwithstanding any contrary provision of AS 43.05.225, 11 (1) before January 1, 2014, an unpaid amount of an installment 12 payment required under (a)(1) - (3) of this section that is not paid when due bears 13 interest (A) at the rate provided for an underpayment under 26 U.S.C. 6621 (Internal 14 Revenue Code), as amended, compounded daily, from the date the installment 15 payment is due until March 31 following the calendar year of production, and (B) as 16 provided for a delinquent tax under AS 43.05.225 after that March 31; interest accrued 17 under (A) of this paragraph that remains unpaid after that March 31 is treated as an 18 addition to tax that bears interest under (B) of this paragraph; an unpaid amount of tax 19 due under (a)(4) of this section that is not paid when due bears interest as provided for 20 a delinquent tax under AS 43.05.225; 21 (2) on and after January 1, 2014, an unpaid amount of an installment 22 payment required under (a)(3), (5), [OR] (6), or (7) of this section that is not paid 23 when due bears interest (A) at the rate provided for an underpayment under 26 U.S.C. 24 6621 (Internal Revenue Code), as amended, compounded daily, from the date the 25 installment payment is due until March 31 following the calendar year of production, 26 and (B) as provided for a delinquent tax under AS 43.05.225 after that March 31; 27 interest accrued under (A) of this paragraph that remains unpaid after that March 31 is 28 treated as an addition to tax that bears interest under (B) of this paragraph; an unpaid 29 amount of tax due under (a)(4) of this section that is not paid when due bears interest 30 as provided for a delinquent tax under AS 43.05.225. 31 * Sec. 35. AS 43.55.020(h) is amended to read: 01 (h) Notwithstanding any contrary provision of AS 43.05.280, 02 (1) an overpayment of an installment payment required under (a)(1), 03 (2), (3), (5), (6), or (7) [(a)(1) - (3), (5) OR (6)] of this section bears interest at the rate 04 provided for an overpayment under 26 U.S.C. 6621 (Internal Revenue Code), as 05 amended, compounded daily, from the later of the date the installment payment is due 06 or the date the overpayment is made, until the earlier of 07 (A) the date it is refunded or is applied to an underpayment; or 08 (B) March 31 following the calendar year of production; 09 (2) except as provided under (1) of this subsection, interest with 10 respect to an overpayment is allowed only on any net overpayment of the payments 11 required under (a) of this section that remains after the later of March 31 following the 12 calendar year of production or the date that the statement required under 13 AS 43.55.030(a) is filed; 14 (3) interest is allowed under (2) of this subsection only from a date that 15 is 90 days after the later of March 31 following the calendar year of production or the 16 date that the statement required under AS 43.55.030(a) is filed; interest is not allowed 17 if the overpayment was refunded within the 90-day period; 18 (4) interest under (2) and (3) of this subsection is paid at the rate and in 19 the manner provided in AS 43.05.225(1). 20 * Sec. 36. AS 43.55.020(l) is amended to read: 21 (l) For oil and gas produced on [ON] and after January 1, 2014, and before 22 January 1, 2022, in making settlement with the royalty owner for oil and gas that is 23 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 24 taxable royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in 25 value at the time the tax becomes due to the amount of the tax paid. If the total 26 deductions of installment payments of estimated tax for a calendar year exceed the 27 actual tax for that calendar year, the producer shall, before April 1 of the following 28 year, refund the excess to the royalty owner. Unless otherwise agreed between the 29 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 30 taxable royalty oil and gas for a calendar year, other than oil and gas the ownership or 31 right to which constitutes a landowner's royalty interest, is considered to be the gross 01 value at the point of production of the taxable royalty oil and gas produced during the 02 calendar year multiplied by a figure that is a quotient, in which 03 (1) the numerator is the producer's total tax liability under 04 AS 43.55.011(e)(2) [AS 43.55.011(e)] for the calendar year of production; and 05 (2) the denominator is the total gross value at the point of production 06 of the oil and gas taxable under AS 43.55.011(e) produced by the producer from all 07 leases and properties in the state during the calendar year. 08 * Sec. 37. AS 43.55.020 is amended by adding a new subsection to read: 09 (m) For oil and gas produced on and after January 1, 2022, in making 10 settlement with the royalty owner for oil and gas that is taxable under AS 43.55.011, 11 the producer may deduct the amount of the tax paid on taxable royalty oil and gas, or 12 may deduct taxable royalty oil or gas equivalent in value at the time the tax becomes 13 due to the amount of the tax paid. If the total deductions of installment payments of 14 estimated tax for a calendar year exceed the actual tax for that calendar year, the 15 producer shall, before April 1 of the following year, refund the excess to the royalty 16 owner. In making settlement with the royalty owner for gas that is taxable under 17 AS 43.55.014, the producer may deduct the amount of the gas paid as in kind tax on 18 taxable royalty gas or may deduct the gross value at the point of production of the gas 19 paid as in-kind tax on taxable royalty gas. Unless otherwise agreed between the 20 producer and the royalty owner, the amount of the tax paid under AS 43.55.011(e) on 21 taxable royalty oil for a calendar year, other than oil the ownership or right to which 22 constitutes a landowner's royalty interest, is considered to be the gross value at the 23 point of production of the taxable royalty oil produced during the calendar year 24 multiplied by a figure that is a quotient, in which 25 (1) the numerator is the producer's total tax liability under 26 AS 43.55.011(e)(3)(A) for the calendar year of production; and 27 (2) the denominator is the total gross value at the point of production 28 of the oil taxable under AS 43.55.011(e) produced by the producer from all leases and 29 properties in the state during the calendar year. 30 * Sec. 38. AS 43.55.030(a) is amended to read: 31 (a) A producer that produces oil or gas from a lease or property in the state 01 during a calendar year, whether or not any tax payment is due under AS 43.55.020(a) 02 for that oil or gas, shall file with the department on March 31 of the following year a 03 statement, under oath, in a form prescribed by the department, giving, with other 04 information required, the following: 05 (1) a description of each lease or property from which oil or gas was 06 produced, by name, legal description, lease number, or accounting codes assigned by 07 the department; 08 (2) the names of the producer and, if different, the person paying the 09 tax, if any; 10 (3) the gross amount of oil and the gross amount of gas produced from 11 each lease or property, separately identifying the gross amount of gas produced 12 from each lease or property to which an effective election under AS 43.55.014(a) 13 applies, the amount of gas delivered to the state under AS 43.55.014(b), and the 14 percentage of the gross amount of oil and gas owned by the producer; 15 (4) the gross value at the point of production of the oil and of the gas 16 produced from each lease or property owned by the producer and the costs of 17 transportation of the oil and gas; 18 (5) the name of the first purchaser and the price received for the oil and 19 for the gas, unless relieved from this requirement in whole or in part by the 20 department; 21 (6) the producer's qualified capital expenditures, as defined in 22 AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other 23 payments or credits under AS 43.55.170; 24 (7) the production tax values of the oil and gas under AS 43.55.160(a) 25 or of the oil under AS 43.55.160(h), as applicable [AS 43.55.160]; 26 (8) any claims for tax credits to be applied; and 27 (9) calculations showing the amounts, if any, that were or are due 28 under AS 43.55.020(a) and interest on any underpayment or overpayment. 29 * Sec. 39. AS 43.55.160(a) is amended to read: 30 (a) For oil and gas produced before January 1, 2022, except [EXCEPT] as 31 provided in (b), (f), and (g) of this section, for the purposes of 01 (1) AS 43.55.011(e)(1) and (2) [AS 43.55.011(e)], the annual 02 production tax value of taxable oil, gas, or oil and gas produced during a calendar year 03 in a category for which a separate annual production tax value is required to be 04 calculated under this paragraph is the gross value at the point of production of that oil, 05 gas, or oil and gas taxable under AS 43.55.011(e), less the producer's lease 06 expenditures under AS 43.55.165 for the calendar year applicable to the oil, gas, or oil 07 and gas in that category produced by the producer during the calendar year, as 08 adjusted under AS 43.55.170; a separate annual production tax value shall be 09 calculated for 10 (A) oil and gas produced from leases or properties in the state 11 that include land north of 68 degrees North latitude, other than gas produced 12 before 2022 and used in the state; 13 (B) oil and gas produced from leases or properties in the state 14 outside the Cook Inlet sedimentary basin, no part of which is north of 68 15 degrees North latitude and that qualifies for a tax credit under AS 43.55.024(a) 16 and (b); this subparagraph does not apply to 17 (i) gas produced before 2022 and used in the state; or 18 (ii) oil and gas subject to AS 43.55.011(p); 19 (C) oil produced before 2022 from each lease or property in the 20 Cook Inlet sedimentary basin; 21 (D) gas produced before 2022 from each lease or property in 22 the Cook Inlet sedimentary basin; 23 (E) gas produced before 2022 from each lease or property in 24 the state outside the Cook Inlet sedimentary basin and used in the state, other 25 than gas subject to AS 43.55.011(p); 26 (F) oil and gas subject to AS 43.55.011(p) produced from 27 leases or properties in the state; 28 (G) oil and gas produced from leases or properties in the state 29 no part of which is north of 68 degrees North latitude, other than oil or gas 30 described in (B), (C), (D), (E), or (F) of this paragraph; 31 (2) AS 43.55.011(g), for oil and gas produced before January 1, 2014, 01 the monthly production tax value of the taxable 02 (A) oil and gas produced during a month from leases or 03 properties in the state that include land north of 68 degrees North latitude is the 04 gross value at the point of production of the oil and gas taxable under 05 AS 43.55.011(e) and produced by the producer from those leases or properties, 06 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 07 calendar year applicable to the oil and gas produced by the producer from 08 those leases or properties, as adjusted under AS 43.55.170; this subparagraph 09 does not apply to gas subject to AS 43.55.011(o); 10 (B) oil and gas produced during a month from leases or 11 properties in the state outside the Cook Inlet sedimentary basin, no part of 12 which is north of 68 degrees North latitude, is the gross value at the point of 13 production of the oil and gas taxable under AS 43.55.011(e) and produced by 14 the producer from those leases or properties, less 1/12 of the producer's lease 15 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 16 gas produced by the producer from those leases or properties, as adjusted under 17 AS 43.55.170; this subparagraph does not apply to gas subject to 18 AS 43.55.011(o); 19 (C) oil produced during a month from a lease or property in the 20 Cook Inlet sedimentary basin is the gross value at the point of production of 21 the oil taxable under AS 43.55.011(e) and produced by the producer from that 22 lease or property, less 1/12 of the producer's lease expenditures under 23 AS 43.55.165 for the calendar year applicable to the oil produced by the 24 producer from that lease or property, as adjusted under AS 43.55.170; 25 (D) gas produced during a month from a lease or property in 26 the Cook Inlet sedimentary basin is the gross value at the point of production 27 of the gas taxable under AS 43.55.011(e) and produced by the producer from 28 that lease or property, less 1/12 of the producer's lease expenditures under 29 AS 43.55.165 for the calendar year applicable to the gas produced by the 30 producer from that lease or property, as adjusted under AS 43.55.170; 31 (E) gas produced during a month from a lease or property 01 outside the Cook Inlet sedimentary basin and used in the state is the gross 02 value at the point of production of that gas taxable under AS 43.55.011(e) and 03 produced by the producer from that lease or property, less 1/12 of the 04 producer's lease expenditures under AS 43.55.165 for the calendar year 05 applicable to that gas produced by the producer from that lease or property, as 06 adjusted under AS 43.55.170. 07 * Sec. 40. AS 43.55.160(e) is amended to read: 08 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 09 would otherwise be deductible by a producer in a calendar year but whose deduction 10 would cause an annual production tax value calculated under (a)(1) or (h) of this 11 section of taxable oil or gas produced during the calendar year to be less than zero 12 may be used to establish a carried-forward annual loss under AS 43.55.023(b). 13 However, the department shall provide by regulation a method to ensure that, for a 14 period for which a producer's tax liability is limited by AS 43.55.011(j), (k), (o), or 15 (p), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would 16 otherwise be deductible by a producer for that period but whose deduction would 17 cause a production tax value calculated under (a)(1)(C), (D), (E), or (F) of this section 18 to be less than zero are accounted for as though the adjusted lease expenditures had 19 first been used as deductions in calculating the production tax values of oil or gas 20 subject to any of the limitations under AS 43.55.011(j), (k), (o), or (p) that have 21 positive production tax values so as to reduce the tax liability calculated without 22 regard to the limitation to the maximum amount provided for under the applicable 23 provision of AS 43.55.011(j), (k), (o), or (p). Only the amount of those adjusted lease 24 expenditures remaining after the accounting provided for under this subsection may be 25 used to establish a carried-forward annual loss under AS 43.55.023(b). In this 26 subsection, "producer" includes "explorer." 27 * Sec. 41. AS 43.55.160(f) is amended to read: 28 (f) On and after January 1, 2014, in the calculation of an annual production tax 29 value of a producer under (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at 30 the point of production of oil or gas produced from a lease or property north of 68 31 degrees North latitude meeting one or more of the following criteria is reduced by 20 01 percent: (1) the oil or gas is produced from a lease or property that does not contain a 02 lease that was within a unit on January 1, 2003; (2) the oil or gas is produced from a 03 participating area established after December 31, 2011, that is within a unit formed 04 under AS 38.05.180(p) before January 1, 2003, if the participating area does not 05 contain a reservoir that had previously been in a participating area established before 06 December 31, 2011; (3) the oil or gas is produced from acreage that was added to an 07 existing participating area by the Department of Natural Resources on and after 08 January 1, 2014, and the producer demonstrates to the department that the volume of 09 oil or gas produced is from acreage added to an existing participating area. This 10 subsection does not apply to gas produced before 2022 that is used in the state or to 11 gas produced on and after January 1, 2022. A reduction under this subsection may 12 not reduce the gross value at the point of production below zero. In this subsection, 13 "participating area" means a reservoir or portion of a reservoir producing or 14 contributing to production as approved by the Department of Natural Resources. 15 * Sec. 42. AS 43.55.160(g) is amended to read: 16 (g) On and after January 1, 2014, in addition to the reduction under (f) of this 17 section, in the calculation of an annual production tax value of a producer under 18 (a)(1)(A) or (h)(1) [(a)(1)] of this section, the gross value at the point of production of 19 oil or gas produced from a lease or property north of 68 degrees North latitude that 20 does not contain a lease that was within a unit on January 1, 2003, is reduced by 10 21 percent if the oil or gas is produced from a unit made up solely of leases that have a 22 royalty share of more than 12.5 percent in amount or value of the production removed 23 or sold from the lease as determined under AS 38.05.180(f). This subsection does not 24 apply if the royalty obligation for one or more of the leases in the unit has been 25 reduced to 12.5 percent or less under AS 38.05.180(j) for all or part of the calendar 26 year for which the annual production tax value is calculated. This subsection does not 27 apply to gas produced before 2022 that is used in the state or to gas produced on and 28 after January 1, 2022. A reduction under this subsection may not reduce the gross 29 value at the point of production below zero. 30 * Sec. 43. AS 43.55.160 is amended by adding a new subsection to read: 31 (h) For oil produced on and after January 1, 2022, except as provided in (b), 01 (f), and (g) of this section, for the purposes of AS 43.55.011(e)(3), the annual 02 production tax value of oil taxable under AS 43.55.011(e) produced by a producer 03 during a calendar year 04 (1) from leases or properties in the state that include land north of 68 05 degrees North latitude is the gross value at the point of production of that oil, less the 06 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 07 explore for, develop, or produce oil or gas deposits located in the state north of 68 08 degrees North latitude or located in leases or properties in the state that include land 09 north of 68 degrees North latitude, as adjusted under AS 43.55.170; 10 (2) before or during the last calendar year under AS 43.55.024(b) for 11 which the producer could take a tax credit under AS 43.55.024(a), from leases or 12 properties in the state outside the Cook Inlet sedimentary basin, no part of which is 13 north of 68 degrees North latitude, other than leases or properties subject to 14 AS 43.55.011(p), is the gross value at the point of production of that oil, less the 15 producer's lease expenditures under AS 43.55.165 for the calendar year incurred to 16 explore for, develop, or produce oil or gas deposits located in the state outside the 17 Cook Inlet sedimentary basin and south of 68 degrees North latitude, other than oil or 18 gas deposits located in a lease or property that includes land north of 68 degrees North 19 latitude or that is subject to AS 43.55.011(p) or, before January 1, 2027, from which 20 commercial production has not begun, as adjusted under AS 43.55.170; 21 (3) from leases or properties subject to AS 43.55.011(p) is the gross 22 value at the point of production of that oil, less the producer's lease expenditures under 23 AS 43.55.165 for the calendar year incurred to explore for, develop, or produce oil or 24 gas deposits located in leases or properties subject to AS 43.55.011(p) or, before 25 January 1, 2027, located in leases or properties in the state outside the Cook Inlet 26 sedimentary basin, no part of which is north of 68 degrees North latitude from which 27 commercial production has not begun, as adjusted under AS 43.55.170; 28 (4) from leases or properties in the state no part of which is north of 68 29 degrees North latitude, other than leases or properties subject to (2) or (3) of this 30 subsection, is the gross value at the point of production of that oil less the producer's 31 lease expenditures under AS 43.55.165 for the calendar year incurred to explore for, 01 develop, or produce oil or gas deposits located in the state south of 68 degrees North 02 latitude, other than oil or gas deposits located in a lease or property in the state that 03 includes land north of 68 degrees North latitude, and excluding lease expenditures that 04 are deductible under (2) or (3) of this subsection or would be deductible under (2) or 05 (3) of this subsection if not prohibited by (b) of this section, as adjusted under 06 AS 43.55.170. 07 * Sec. 44. AS 43.55.165(e) is amended to read: 08 (e) For purposes of this section, lease expenditures do not include 09 (1) depreciation, depletion, or amortization; 10 (2) oil or gas royalty payments, production payments, lease profit 11 shares, or other payments or distributions of a share of oil or gas production, profit, or 12 revenue, except that a producer's lease expenditures applicable to oil and gas produced 13 from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the share of net 14 profit paid to the state under that lease; 15 (3) taxes based on or measured by net income; 16 (4) interest or other financing charges or costs of raising equity or debt 17 capital; 18 (5) acquisition costs for a lease or property or exploration license; 19 (6) costs arising from fraud, wilful misconduct, gross negligence, 20 violation of law, or failure to comply with an obligation under a lease, permit, or 21 license issued by the state or federal government; 22 (7) fines or penalties imposed by law; 23 (8) costs of arbitration, litigation, or other dispute resolution activities 24 that involve the state or concern the rights or obligations among owners of interests in, 25 or rights to production from, one or more leases or properties or a unit; 26 (9) costs incurred in organizing a partnership, joint venture, or other 27 business entity or arrangement; 28 (10) amounts paid to indemnify the state; the exclusion provided by 29 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 30 a third-party insurer or surety; 31 (11) surcharges levied under AS 43.55.201 or 43.55.300; 01 (12) an expenditure otherwise deductible under (b) of this section that 02 is a result of an internal transfer, a transaction with an affiliate, or a transaction 03 between related parties, or is otherwise not an arm's length transaction, unless the 04 producer establishes to the satisfaction of the department that the amount of the 05 expenditure does not exceed the fair market value of the expenditure; 06 (13) an expenditure incurred to purchase an interest in any corporation, 07 partnership, limited liability company, business trust, or any other business entity, 08 whether or not the transaction is treated as an asset sale for federal income tax 09 purposes; 10 (14) a tax levied under AS 43.55.011 or 43.55.014; 11 (15) costs incurred for dismantlement, removal, surrender, or 12 abandonment of a facility, pipeline, well pad, platform, or other structure, or for the 13 restoration of a lease, field, unit, area, tract of land, body of water, or right-of-way in 14 conjunction with dismantlement, removal, surrender, or abandonment; a cost is not 15 excluded under this paragraph if the dismantlement, removal, surrender, or 16 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 17 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 18 (16) costs incurred for containment, control, cleanup, or removal in 19 connection with any unpermitted release of oil or a hazardous substance and any 20 liability for damages imposed on the producer or explorer for that unpermitted release; 21 this paragraph does not apply to the cost of developing and maintaining an oil 22 discharge prevention and contingency plan under AS 46.04.030; 23 (17) costs incurred to satisfy a work commitment under an exploration 24 license under AS 38.05.132; 25 (18) that portion of expenditures, that would otherwise be qualified 26 capital expenditures, as defined in AS 43.55.023, incurred during a calendar year that 27 are less than the product of $0.30 multiplied by the total taxable production from each 28 lease or property, in BTU equivalent barrels, during that calendar year, except that, 29 when a portion of a calendar year is subject to this provision, the expenditures and 30 volumes shall be prorated within that calendar year; 31 (19) costs incurred for repair, replacement, or deferred maintenance of 01 a facility, a pipeline, a structure, or equipment, other than a well, that results in or is 02 undertaken in response to a failure, problem, or event that results in an unscheduled 03 interruption of, or reduction in the rate of, oil or gas production; or costs incurred for 04 repair, replacement, or deferred maintenance of a facility, a pipeline, a structure, or 05 equipment, other than a well, that is undertaken in response to, or is otherwise 06 associated with, an unpermitted release of a hazardous substance or of gas; however, 07 costs under this paragraph that would otherwise constitute lease expenditures under (a) 08 and (b) of this section may be treated as lease expenditures if the department 09 determines that the repair or replacement is solely necessitated by an act of war, by an 10 unanticipated grave natural disaster or other natural phenomenon of an exceptional, 11 inevitable, and irresistible character, the effects of which could not have been 12 prevented or avoided by the exercise of due care or foresight, or by an intentional or 13 negligent act or omission of a third party, other than a party or its agents in privity of 14 contract with, or employed by, the producer or an operator acting for the producer, but 15 only if the producer or operator, as applicable, exercised due care in operating and 16 maintaining the facility, pipeline, structure, or equipment, and took reasonable 17 precautions against the act or omission of the third party and against the consequences 18 of the act or omission; in this paragraph, 19 (A) "costs incurred for repair, replacement, or deferred 20 maintenance of a facility, a pipeline, a structure, or equipment" includes costs 21 to dismantle and remove the facility, pipeline, structure, or equipment that is 22 being replaced; 23 (B) "hazardous substance" has the meaning given in 24 AS 46.03.826; 25 (C) "replacement" includes renovation or improvement; 26 (20) costs incurred to construct, acquire, or operate a refinery or crude 27 oil topping plant, regardless of whether the products of the refinery or topping plant 28 are used in oil or gas exploration, development, or production operations; however, if 29 a producer owns a refinery or crude oil topping plant that is located on or near the 30 premises of the producer's lease or property in the state and that processes the 31 producer's oil produced from that lease or property into a product that the producer 01 uses in the operation of the lease or property in drilling for or producing oil or gas, the 02 producer's lease expenditures include the amount calculated by subtracting from the 03 fair market value of the product used the prevailing value, as determined under 04 AS 43.55.020(f), of the oil that is processed; 05 (21) costs of lobbying, public relations, public relations advertising, or 06 policy advocacy. 07 * Sec. 45. AS 43.55.900(10) is amended to read: 08 (10) "gas processing plant" means a facility that 09 (A) extracts and recovers liquid hydrocarbons from a gaseous 10 mixture of hydrocarbons by gas processing; and 11 (B) is located upstream of the inlet of any pipeline 12 transporting gas to a gas treatment plant and upstream of the inlet of any gas 13 pipeline system transporting gas to a market; 14 * Sec. 46. AS 43.55.900(20) is amended to read: 15 (20) "point of production" means 16 (A) for oil, the automatic custody transfer meter or device 17 through which the oil enters into the facilities of a carrier pipeline or other 18 transportation carrier in a condition of pipeline quality; in the absence of an 19 automatic custody transfer meter or device, "point of production" means the 20 mechanism or device to measure the quantity of oil that has been approved by 21 the department for that purpose, through which the oil is tendered and accepted 22 in a condition of pipeline quality into the facilities of a carrier pipeline or other 23 transportation carrier or into a field topping plant; 24 (B) for gas [, OTHER THAN GAS DESCRIBED IN (C) OF 25 THIS PARAGRAPH,] that is 26 (i) not subjected to or recovered by mechanical 27 separation or run through a gas processing plant, the furthest 28 upstream of the first point where the gas is accurately metered, the 29 inlet of any pipeline transporting the gas to a gas treatment plant, 30 or the inlet of any gas pipeline system transporting gas to a market; 31 (ii) subjected to or recovered by mechanical separation 01 but not run through a gas processing plant, the furthest upstream of 02 the first point where the gas is accurately metered after completion of 03 mechanical separation, the inlet of any pipeline transporting the gas 04 to a gas treatment plant, or the inlet of any gas pipeline system 05 transporting gas to a market; 06 (iii) run through a gas processing plant, the furthest 07 upstream of the first point where the gas is accurately metered 08 downstream of the plant, the inlet of any pipeline transporting the 09 gas to a gas treatment plant, or the inlet of any gas pipeline system 10 transporting gas to a market; 11 [(C) FOR GAS RUN THROUGH AN INTEGRATED GAS 12 PROCESSING PLANT AND GAS TREATMENT FACILITY THAT DOES 13 NOT ACCURATELY METER THE GAS AFTER THE GAS PROCESSING 14 AND BEFORE THE GAS TREATMENT, THE FIRST POINT WHERE GAS 15 PROCESSING IS COMPLETED OR WHERE GAS TREATMENT BEGINS, 16 WHICHEVER IS FURTHER UPSTREAM;] 17 * Sec. 47. AS 43.55.900 is amended by adding a new paragraph to read: 18 (25) "gas treatment plant" means a facility that performs gas treatment, 19 regardless of whether the facility also performs gas processing. 20 * Sec. 48. AS 43.98.030(c) is amended to read: 21 (c) A taxpayer acquiring a transferable tax credit certificate may use the credit 22 or a portion of the credit to offset taxes imposed under AS 21.09.210, AS 21.66.110, 23 AS 43.20, AS 43.55.011 [AS 43.55], AS 43.56, AS 43.65, AS 43.75, and AS 43.77. 24 Except as provided in (e) of this section, any portion of the credit not used may be 25 used at a later period or transferred under (b) of this section. 26 * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 DEVELOPMENT OF A PLAN FOR RESIDENTS TO PARTICIPATE IN THE 29 OWNERSHIP OF A NORTH SLOPE NATURAL GAS PIPELINE. (a) At the time the 30 commissioner of natural resources submits the first contract to the legislature for approval 31 under AS 38.05.020(b)(11), enacted by sec. 11 of this Act, the commissioner of revenue shall 01 present a plan and suggested legislation to allow a resident of the state to participate as a co- 02 owner in a North Slope natural gas pipeline. The plan must include the recommendations of 03 the commissioner as to 04 (1) the means by which a resident may invest in the North Slope natural gas 05 pipeline that may include providing an option for a resident to designate an amount of a 06 permanent fund dividend to be deducted for the investment; 07 (2) whether the ownership interest in a North Slope natural gas pipeline should 08 be acquired from the portion of a North Slope natural gas pipeline acquired by the state, 09 through the purchase of stock in a publicly traded corporation that invests in a North Slope 10 natural gas pipeline, or some other means; 11 (3) the means for providing notice to a resident receiving an ownership 12 interest that explains the type of ownership interest and the rights and obligations related to 13 that ownership interest; 14 (4) whether the ownership interest received by a resident may be transferred or 15 assigned to another person and the means for transferring the interest; 16 (5) the means by which the proportional share of a dividend or other income 17 may be distributed to a resident or transferee of an interest if a resident receives an ownership 18 interest acquired by the state in a North Slope natural gas pipeline and the state receives a 19 dividend or other income from its ownership interest, and whether the payment should be 20 subject to interest if not timely distributed; 21 (6) the means by which the commissioner may identify a publicly traded 22 corporation that has an ownership interest in a North Slope natural gas pipeline that is subject 23 to investment by an individual under the proposed plan; and 24 (7) the means by which an individual may qualify as a resident for purposes of 25 investing in an ownership interest. 26 (b) In this section, "North Slope natural gas pipeline" means a natural gas pipeline 27 project that transports natural gas produced in the state north of 68 degrees North latitude to a 28 market in the state or to tidewater for export from the state including a facility in the state for 29 liquefying natural gas for transport. 30 * Sec. 50. The uncodified law of the State of Alaska is amended by adding a new section to 31 read: 01 TRANSITION: REGULATIONS. The Department of Revenue and the Department of 02 Natural Resources may adopt regulations to implement this Act. The regulations take effect 03 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 04 provisions of this Act being implemented. 05 * Sec. 51. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the catch 08 line of AS 38.05.183 from "Sale of royalty" to "Sale of royalty and of gas delivered to the 09 state under AS 43.55.014(b)." 10 * Sec. 52. Sections 1 - 11, 13, 14, 20, 21, 23, 24, 31, 32, and 48 - 50 of this Act take effect 11 immediately under AS 01.10.070(c). 12 * Sec. 53. Except as provided in sec. 52 of this Act, this Act takes effect January 1, 2015.