00 SENATE CS FOR CS FOR HOUSE BILL NO. 111(FIN) 01 "An Act relating to credits against the oil and gas production tax; relating to the 02 applicability of certain credits earned under the oil and gas production tax to the tax on 03 corporations; relating to tax credit certificates against the oil and gas production tax 04 and the issuance and assignment of those certificates; relating to interest applicable to 05 delinquent taxes; relating to lease expenditures; relating to the oil and gas tax credit 06 fund; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08  * Section 1. AS 43.05.225 is amended to read: 09 Sec. 43.05.225. Interest. Unless otherwise provided, 10 (1) a delinquent tax under this title  11 (A) [UNDER THIS TITLE,] before January 1, 2014, bears 12 interest in each calendar quarter at the rate of five percentage points above the 13 annual rate charged member banks for advances by the 12th Federal Reserve 01 District as of the first day of that calendar quarter, or at the annual rate of 11 02 percent, whichever is greater, compounded quarterly as of the last day of that 03 quarter; 04 (B) [UNDER THIS TITLE,] on and after January 1, 2014, and  05 before January 1, 2018 [EXCEPT AS PROVIDED IN (C) OF THIS 06 PARAGRAPH], bears interest in each calendar quarter at the rate of three 07 percentage points above the annual rate charged member banks for advances 08 by the 12th Federal Reserve District as of the first day of that calendar quarter; 09 (C) [UNDER AS 43.55,] on and after January 1, 2018 [2017,  10 (i) FOR THE FIRST THREE YEARS AFTER A TAX 11 BECOMES DELINQUENT], bears interest in each calendar quarter at 12 the rate of three [SEVEN] percentage points above the annual rate 13 charged member banks for advances by the 12th federal reserve district 14 as of the first day of that calendar quarter, compounded quarterly as of 15 the last day of that quarter; [AND 16 (ii) AFTER THE FIRST THREE YEARS AFTER A 17 TAX BECOMES DELINQUENT, DOES NOT BEAR INTEREST;] 18 (2) the interest rate is 12 percent a year for 19 (A) delinquent fees payable under AS 05.15.095(c); and 20 (B) unclaimed property that is not timely paid or delivered, as 21 allowed by AS 34.45.470(a). 22  * Sec. 2. AS 43.20.044(a) is amended to read: 23 (a) A taxpayer may apply as a credit against the tax levied under this chapter 24 (1) the exploration incentive credit authorized by AS 27.30; 25 (2) an alternative tax credit for oil and gas exploration earned by  26 the taxpayer under AS 43.55.025 for exploration expenditures incurred for work  27 performed on or after July 1, 2016. 28  * Sec. 3. AS 43.20.047(h) is amended to read: 29 (h) If the liquefied natural gas storage facility for which a credit was received 30 under this section ceases commercial operation during the nine calendar years 31 immediately following the calendar year in which the liquefied natural gas storage 01 facility commences commercial operation, the tax liability under this chapter of the 02 person who claimed the credit shall be increased, and a person not subject to the tax 03 under this chapter that received a payment under (d) or former [AND] (e) of this 04 section shall be liable to the state in the amount determined in this subsection. The 05 amount of the increase in tax liability or liability to the state 06 (1) for a person subject to the tax under this chapter, shall be 07 determined and assessed for the taxable year in which the liquefied natural gas storage 08 facility ceases commercial operation, regardless of whether the liquefied natural gas 09 storage facility subsequently resumes commercial operation; 10 (2) for a person not subject to the tax due under this chapter, shall be 11 determined and assessed as of December 31 of the calendar year in which the liquefied 12 natural gas storage facility ceases commercial operation, regardless of whether the 13 liquefied natural gas storage facility subsequently resumes commercial operation; and 14 (3) is equal to the total amount of the credit taken or received as a 15 payment under (d) of this section, as applicable, multiplied by a fraction, the 16 numerator of which is the difference between 10 and the number of calendar years for 17 which the liquefied natural gas storage facility was eligible for a tax credit under this 18 section and the denominator of which is 10. 19  * Sec. 4. AS 43.55.023(c) is amended to read: 20 (c) A credit or portion of a credit under this section 21 (1) may not be used to reduce a person's tax liability under 22 AS 43.55.011(e) for any calendar year below zero;  23 (2) may, if [, AND ANY UNUSED CREDIT OR PORTION OF A 24 CREDIT] not used under this subsection, [MAY] be applied in a later calendar year;  25 (3) may, regardless of when the credit was earned, be used to  26 satisfy a tax, interest, penalty, fee, or other charge that  27 (A) is related to the tax due under this chapter for a prior  28 year, except for a surcharge under AS 43.55.201 - 43.55.299 or 43.55.300  29 or the tax levied by AS 43.55.011(i); and  30 (B) has not, for the purpose of art. IX, sec. 17(a),  31 Constitution of the State of Alaska, been subject to an administrative  01 proceeding or litigation. 02  * Sec. 5. AS 43.55.023(d) is amended to read: 03 (d) A person that is entitled to take a tax credit under this section that wishes 04 to transfer the unused credit to another person or, for a credit for a lease expenditure  05 incurred before January 1, 2018, obtain a cash payment under AS 43.55.028 may 06 apply to the department for a transferable tax credit certificate. An application under 07 this subsection must be in a form prescribed by the department and must include 08 supporting information and documentation that the department reasonably requires. 09 The department shall grant or deny an application, or grant an application as to a lesser 10 amount than that claimed and deny it as to the excess, not later than 120 days after the 11 latest of (1) March 31 of the year following the calendar year in which the qualified 12 capital expenditure or carried-forward annual loss for which the credit is claimed was 13 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 14 the calendar year in which the qualified capital expenditure or carried-forward annual 15 loss for which the credit is claimed was incurred; or (3) the date the application was 16 received by the department. If, based on the information then available to it, the 17 department is reasonably satisfied that the applicant is entitled to a credit, the 18 department shall issue the applicant a transferable tax credit certificate for the amount 19 of the credit. A certificate issued under this subsection does not expire. 20  * Sec. 6. AS 43.55.023(d), as amended by sec. 5 of this Act, is amended to read: 21 (d) A person that is entitled to take a tax credit under this section that wishes 22 to transfer the unused credit to another person [OR, FOR A CREDIT FOR A LEASE 23 EXPENDITURE INCURRED BEFORE JANUARY 1, 2018, OBTAIN A CASH 24 PAYMENT UNDER AS 43.55.028] may apply to the department for a transferable 25 tax credit certificate. An application under this subsection must be in a form 26 prescribed by the department and must include supporting information and 27 documentation that the department reasonably requires. The department shall grant or 28 deny an application, or grant an application as to a lesser amount than that claimed and 29 deny it as to the excess, not later than 120 days after the latest of (1) March 31 of the 30 year following the calendar year in which the qualified capital expenditure or carried- 31 forward annual loss for which the credit is claimed was incurred; (2) the date the 01 statement required under AS 43.55.030(a) or (e) was filed for the calendar year in 02 which the qualified capital expenditure or carried-forward annual loss for which the 03 credit is claimed was incurred; or (3) the date the application was received by the 04 department. If, based on the information then available to it, the department is 05 reasonably satisfied that the applicant is entitled to a credit, the department shall issue 06 the applicant a transferable tax credit certificate for the amount of the credit. A 07 certificate issued under this subsection does not expire. 08  * Sec. 7. AS 43.55.023(e) is amended to read: 09 (e) A person to which a transferable tax credit certificate is issued under (d) of 10 this section may transfer the certificate to another person, and a transferee may further 11 transfer the certificate. Subject to the limitations set out in (a) - (d) of this section, and 12 notwithstanding any action the department may take with respect to the applicant 13 under (g) of this section, the owner of a certificate may apply the credit or a portion of 14 the credit shown on the certificate 15 (1) [ONLY] against a tax levied by AS 43.55.011(e); however [. 16 HOWEVER], a credit shown on a transferable tax credit certificate may not be applied 17 under this paragraph to reduce a transferee's total tax liability under 18 AS 43.55.011(e) for oil and gas produced during a calendar year to less than 80 19 percent of the tax that would otherwise be due without applying that credit; any [. 20 ANY] portion of a credit not used under this paragraph [SUBSECTION] may be 21 applied in a later period; or  22 (2) regardless of when the credit was earned, to satisfy a tax,  23 interest, penalty, fee, or other charge that  24 (A) is related to the tax due under this chapter, except for a  25 surcharge under AS 43.55.201 - 43.55.299 or 43.55.300 or the tax levied by  26 AS 43.55.011(i);  27 (B) is for a calendar year before the year in which the  28 certificate is applied; and  29 (C) has not, for the purpose of art. IX, sec. 17(a),  30 Constitution of the State of Alaska, been subject to an administrative  31 proceeding or litigation. 01  * Sec. 8. AS 43.55.023(g) is amended to read: 02 (g) The issuance of a transferable tax credit certificate under (d) of this section 03 or former (m) of this section [OR THE PURCHASE OF A CERTIFICATE UNDER 04 AS 43.55.028] does not limit the department's ability to later audit a tax credit claim to 05 which the certificate relates or to adjust the claim if the department determines, as a 06 result of the audit, that the applicant was not entitled to the amount of the credit for 07 which the certificate was issued. The tax liability of the applicant under 08 AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit 09 that exceeds that to which the applicant was entitled, or the applicant's available valid 10 outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced 11 by that amount. If the applicant's tax liability is increased under this subsection, the 12 increase bears interest under AS 43.05.225 from the date the transferable tax credit 13 certificate was issued. For purposes of this subsection, an applicant that is an explorer 14 is considered a producer subject to the tax levied by AS 43.55.011(e). 15  * Sec. 9. AS 43.55.025(a) is amended to read: 16 (a) Subject to the terms and conditions of this section, a credit against the 17 [PRODUCTION] tax levied by AS 43.55.011(e) or, if the credit is for exploration  18 expenditures incurred for work performed on or after July 1, 2016, against the  19 tax levied by AS 43.20 is allowed for exploration expenditures that qualify under (b) 20 of this section in an amount equal to one of the following: 21 (1) 30 percent of the total exploration expenditures that qualify only 22 under (b) and (c) of this section; 23 (2) 30 percent of the total exploration expenditures that qualify only 24 under (b) and (d) of this section; 25 (3) 40 percent of the total exploration expenditures that qualify under 26 (b), (c), and (d) of this section; 27 (4) 40 percent of the total exploration expenditures that qualify only 28 under (b) and (e) of this section; 29 (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this 30 section, of the total exploration expenditures described in (b)(1) and (2) of this section 31 and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this 01 section; 02 (6) the lesser of $25,000,000 or 80 percent of the total exploration 03 drilling expenditures described in (m) of this section and that qualify under (b) and 04 (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or 05 (7) the lesser of $7,500,000 or 75 percent of the total seismic 06 exploration expenditures described in (n) of this section and that qualify under (b) of 07 this section. 08  * Sec. 10. AS 43.55.025(a), as amended by sec. 9 of this Act, is amended to read: 09 (a) Subject to the terms and conditions of this section, a credit against the tax 10 levied by AS 43.55.011(e) or, if the credit is for exploration expenditures incurred for 11 work performed on or after July 1, 2016, against the tax levied by AS 43.20 is allowed 12 for exploration expenditures that qualify under (b) of this section in an amount equal 13 to one of the following: 14 (1) 30 percent of the total exploration expenditures that qualify only 15 under (b) and (c) of this section; 16 (2) 30 percent of the total exploration expenditures that qualify only 17 under (b) and (d) of this section; 18 (3) 40 percent of the total exploration expenditures that qualify under 19 (b), (c), and (d) of this section; 20 (4) 40 percent of the total exploration expenditures that qualify only 21 under (b) and (e) of this section; 22 (5) 80, 90, or 100 percent, or a lesser amount described in (l) of this 23 section, of the total exploration expenditures described in (b)(2) and (3) [(b)(1) AND 24 (2)] of this section and not excluded by (b)(4) and (5) [(b)(3) AND (4)] of this section 25 that qualify only under (l) of this section; 26 (6) the lesser of $25,000,000 or 80 percent of the total exploration 27 drilling expenditures described in (m) of this section and that qualify under (b) and 28 (c)(1), (c)(2)(A), and (c)(2)(C) of this section; or 29 (7) the lesser of $7,500,000 or 75 percent of the total seismic 30 exploration expenditures described in (n) of this section and that qualify under (b) of 31 this section. 01  * Sec. 11. AS 43.55.025(b) is amended to read: 02 (b) To qualify for the production tax credit under (a) of this section, an 03 exploration expenditure 04 (1) must be incurred for work performed after June 30, 2008, and 05 before July 1, 2016, except that, [TO QUALIFY FOR THE PRODUCTION TAX 06 CREDIT UNDER (a)(1), (2), (3), OR (4) OF THIS SECTION] for exploration 07 conducted outside of the Cook Inlet sedimentary basin and south of 68 degrees North 08 latitude, to qualify for the production tax credit under  09 (A) (a)(1), (2), or (3) of this section, an exploration 10 expenditure must be incurred for work performed after June 30, 2008, and 11 before January 1, 2022; [,] and 12 (B) (a)(4) of this section, an exploration expenditure must  13 be incurred for work performed after June 30, 2008, and before  14 January 1, 2018;  15 (2) [(1)] may be for seismic or other geophysical exploration costs not 16 connected with a specific well; 17 (3) [(2)] if for an exploration well, 18 (A) must be incurred by an explorer that holds an interest in the 19 exploration well for which the production tax credit is claimed; 20 (B) may be for either a well that encounters an oil or gas 21 deposit or a dry hole; 22 (C) must be for a well that has been completed, suspended, or 23 abandoned at the time the explorer claims the tax credit under (f) of this 24 section; and 25 (D) must be for goods, services, or rentals of personal property 26 reasonably required for the surface preparation, drilling, casing, cementing, 27 and logging of an exploration well, and, in the case of a dry hole, for the 28 expenses required for abandonment if the well is abandoned within 18 months 29 after the date the well was spudded; 30 (4) [(3)] may not be for administration, supervision, engineering, or 31 lease operating costs; geological or management costs; community relations or 01 environmental costs; bonuses, taxes, or other payments to governments related to the 02 well; costs, including repairs and replacements, arising from or associated with fraud, 03 wilful misconduct, gross negligence, criminal negligence, or violation of law, 04 including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or 05 other costs that are generally recognized as indirect costs or financing costs; and 06 (5) [(4)] may not be incurred for an exploration well or seismic 07 exploration that is included in a plan of exploration or a plan of development for any 08 unit before May 14, 2003. 09  * Sec. 12. AS 43.55.025(f) is amended to read: 10 (f) For a production tax credit under this section, 11 (1) an explorer shall, in a form prescribed by the department and, 12 except for a credit under (k) of this section, within six months of the completion of the 13 exploration activity, claim the credit and submit information sufficient to demonstrate 14 to the department's satisfaction that the claimed exploration expenditures qualify under 15 this section; in addition, the explorer shall submit information necessary for the 16 commissioner of natural resources to evaluate the validity of the explorer's compliance 17 with the requirements of this section; 18 (2) an explorer shall agree, in writing, 19 (A) to notify the Department of Natural Resources, within 30 20 days after completion of seismic or geophysical data processing, completion of 21 well drilling, or filing of a claim for credit, whichever is the latest, for which 22 exploration costs are claimed, of the date of completion and submit a report to 23 that department describing the processing sequence and providing a list of data 24 sets available; 25 (B) to provide to the Department of Natural Resources, within 26 30 days after the date of a request, unless a longer period is provided by the 27 Department of Natural Resources, specific data sets, ancillary data, and reports 28 identified in (A) of this paragraph; in this subparagraph, 29 (i) a seismic or geophysical data set includes the data 30 for an entire seismic survey, irrespective of whether the survey area 31 covers nonstate land in addition to state land or land in a unit in 01 addition to land outside a unit; 02 (ii) well data include all analyses conducted on physical 03 material, and well logs collected from the well, results, and copies of 04 data collected and data analyses for the well, including well logs; 05 sample analyses; testing geophysical and velocity data including 06 seismic profiles and check shot surveys; testing data and analyses; age 07 data; geochemical analyses; and tangible material; 08 (C) that, notwithstanding any provision of AS 38, information 09 provided under this paragraph will be held confidential by the Department of 10 Natural Resources, 11 (i) in the case of well data, until the expiration of the 12 24-month period of confidentiality described in AS 31.05.035(c), at 13 which time the Department of Natural Resources will release the 14 information after 30 days' public notice unless, in the discretion of the 15 commissioner of natural resources, it is necessary to protect 16 information relating to the valuation of unleased acreage in the same 17 vicinity, or unless the well is on private land and the owner, including 18 the lessor but not the lessee, of the oil and gas resources has not given 19 permission to release the well data; 20 (ii) in the case of seismic or other geophysical data, 21 other than seismic data acquired by seismic exploration subject to (k) of 22 this section, for 10 years following the completion date, at which time 23 the Department of Natural Resources will release the information after 24 30 days' public notice, except as to seismic or other geophysical data 25 acquired from private land, unless the owner, including a lessor but not 26 a lessee, of the oil and gas resources in the private land gives 27 permission to release the seismic or other geophysical data associated 28 with the private land; 29 (iii) in the case of seismic data obtained by seismic 30 exploration subject to (k) of this section, only until the expiration of 30 31 days' public notice issued on or after the date the production tax credit 01 certificate is issued under (5) of this subsection; 02 (3) if more than one explorer holds an interest in a well or seismic 03 exploration, each explorer may claim an amount of credit that is proportional to the 04 explorer's cost incurred; 05 (4) the department may exercise the full extent of its powers as though 06 the explorer were a taxpayer under this title, in order to verify that the claimed 07 expenditures are qualified exploration expenditures under this section; and 08 (5) if the department is satisfied that the explorer's claimed 09 expenditures are qualified under this section and that all data required to be submitted 10 under this section have been submitted, the department shall issue to the explorer a 11 production tax credit certificate for the amount of credit to be allowed against 12 production taxes levied by AS 43.55.011(e) and, if the credit is for exploration  13 expenditures incurred for work performed on or after July 1, 2016, against taxes  14 levied by AS 43.20; notwithstanding any contrary provision of AS 38, AS 40.25.100, 15 or AS 43.05.230, the following information is not confidential: 16 (A) the explorer's name; 17 (B) the date of the application; 18 (C) the location of the well or seismic exploration; 19 (D) the date of the department's issuance of the certificate; and 20 (E) the date on which the information required to be submitted 21 under this section will be released. 22  * Sec. 13. AS 43.55.025(g) is amended to read: 23 (g) An explorer, other than an entity that is exempt from taxation under this 24 chapter, may transfer, convey, or sell its production tax credit certificate to any person, 25 and any person who receives a production tax credit certificate may also transfer, 26 convey, or sell the certificate. A production tax credit certificate that is  27 transferred, conveyed, or sold under this section may not be applied against the  28 tax levied by AS 43.20.  29  * Sec. 14. AS 43.55.025(h) is amended to read: 30 (h) A producer that purchases a production tax credit certificate may apply the 31 credits against its production tax levied by AS 43.55.011(e). Regardless of the price 01 the producer paid for the certificate, the producer may receive a credit against its 02 production tax liability for the full amount of the credit, but for not more than the 03 amount for which the certificate is issued. A production tax credit or a portion of a  04 production tax credit or a production tax credit certificate or a portion of a  05 production tax credit certificate allowed under this section 06 (1) may not be applied more than once;  07 (2) may be applied in a later calendar year;  08 (3) may, regardless of when the credit was earned, be used to  09 satisfy a tax, interest, penalty, fee, or other charge that  10 (A) is related to the tax due under this chapter for a prior  11 year, except for a surcharge under AS 43.55.201 - 43.55.299 or 43.55.300  12 or the tax levied by AS 43.55.011(i); and  13 (B) has not, for the purpose of art. IX, sec. 17(a),  14 Constitution of the State of Alaska, been subject to an administrative  15 proceeding or litigation. 16  * Sec. 15. AS 43.55.025(i) is amended to read: 17 (i) For a production tax credit under this section, 18 (1) a credit may not be applied to reduce a taxpayer's tax liability under 19 AS 43.55.011(e) below zero for a calendar year; 20 (2) if the production tax credit is for exploration expenditures  21 incurred for work performed on or after July 1, 2016, the explorer may apply the  22 credit to reduce the explorer's tax liability under AS 43.20, except that the credit  23 may not be applied to reduce the explorer's tax liability under AS 43.20 below  24 zero for a tax year; and 25 (3) [(2)] an amount of the production tax credit in excess of the amount 26 that may be applied for a calendar or tax year under this subsection may be carried 27 forward and applied against the taxpayer's tax liability under AS 43.55.011(e) in one 28 or more later calendar years or under AS 43.20 in one or more later tax years. 29  * Sec. 16. AS 43.55.025(k) is amended to read: 30 (k) Subject to the terms and conditions of this section, if a claim is filed under 31 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 01 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 02 expenditure under this subsection incurred for seismic exploration performed before 03 July 1, 2003. To be eligible under this subsection, an expenditure must 04 (1) have been for seismic exploration that 05 (A) obtained data that the commissioner of natural resources 06 considers to be in the best interest of the state to acquire for public distribution; 07 and 08 (B) was conducted outside the boundaries of a production unit; 09 however, the amount of the expenditure that is otherwise eligible under this 10 section is reduced proportionately by the portion of the seismic exploration 11 activity that crossed into a production unit; and 12 (2) qualify under (b)(4) [(b)(3)] of this section. 13  * Sec. 17. AS 43.55.025 is amended by adding a new subsection to read: 14 (q) On the day on which an application for a tax credit certificate is submitted 15 under (f) of this section, the department shall issue to the explorer a conditional tax 16 credit certificate. A conditional tax credit certificate under this subsection 17 (1) may be used to apply for the purchase of a tax credit certificate 18 under AS 43.55.028(e); 19 (2) may not be sold, transferred, or conveyed; 20 (3) has no value; and 21 (4) expires on the day on which the department issues a transferable 22 tax credit certificate under (f) of this section. 23  * Sec. 18. AS 43.55.028(a) is amended to read: 24 (a) The oil and gas tax credit fund is established as a separate fund of the state. 25 The purpose of the fund is to purchase transferable tax credit certificates issued under 26 AS 43.55.023 and production tax credit certificates issued under AS 43.55.025 and to 27 pay refunds and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053. The  28 oil and gas tax credit fund established under this subsection may not be used to  29 purchase a tax credit certificate for a credit earned under this chapter for activity  30 occurring on or after January 1, 2018. 31  * Sec. 19. AS 43.55.028(e) is amended to read: 01 (e) The department, on the written application of a person to whom a 02 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 03 AS 43.55.023(m) or to whom a production tax credit certificate has been issued under 04 AS 43.55.025(f), may use available money in the oil and gas tax credit fund to 05 purchase, in whole or in part, the certificate. For purposes of this subsection, the  06 department may, at the time of application, accept from an explorer a conditional  07 tax credit certificate issued under AS 43.55.025(q); however, the department may  08 not purchase a conditional tax credit certificate. The department may not purchase 09 a total of more than $70,000,000 in tax credit certificates from a person in a calendar 10 year. Before purchasing a certificate or part of a certificate, the department shall find 11 that 12 (1) the calendar year of the purchase is not earlier than the first 13 calendar year for which the credit shown on the certificate would otherwise be allowed 14 to be applied against a tax; 15 (2) the application is not the result of the division of a single entity into 16 multiple entities that would reasonably be expected to apply as a single entity if the 17 $70,000,000 limitation in this subsection did not exist; 18 (3) the applicant's total tax liability under AS 43.55.011(e), after 19 application of all available tax credits, for the calendar year in which the application is 20 made is zero; 21 (4) the applicant's average daily production of oil and gas taxable 22 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 23 the application is made was not more than 50,000 BTU equivalent barrels; and 24 (5) the purchase is consistent with this section and regulations adopted 25 under this section. 26 * Sec. 20. AS 43.55.028(e), as amended by sec. 19 of this Act, is amended to read: 27 (e) The department, on the written application of a person to whom a 28 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 29 AS 43.55.023(m) for an expenditure incurred before January 1, 2018, or to whom 30 a production tax credit certificate has been issued under AS 43.55.025(f) for an  31 expenditure incurred before January 1, 2018, may use available money in the oil 01 and gas tax credit fund to purchase, in whole or in part, the certificate. For purposes of 02 this subsection, the department may, at the time of application, accept from an 03 explorer a conditional tax credit certificate issued under AS 43.55.025(q); however, 04 the department may not purchase a conditional tax credit certificate. The department 05 may not purchase a total of more than $70,000,000 in tax credit certificates from a 06 person in a calendar year. Before purchasing a certificate or part of a certificate, the 07 department shall find that 08 (1) the calendar year of the purchase is not earlier than the first 09 calendar year for which the credit shown on the certificate would otherwise be allowed 10 to be applied against a tax; 11 (2) the application is not the result of the division of a single entity into 12 multiple entities that would reasonably be expected to apply as a single entity if the 13 $70,000,000 limitation in this subsection did not exist; 14 (3) the applicant's total tax liability under AS 43.55.011(e), after 15 application of all available tax credits, for the calendar year in which the application is 16 made is zero; 17 (4) the applicant's average daily production of oil and gas taxable 18 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 19 the application is made was not more than 50,000 BTU equivalent barrels; and 20 (5) the purchase is consistent with this section and regulations adopted 21 under this section. 22  * Sec. 21. AS 43.55.029(a) is amended to read: 23 (a) An explorer or producer that has applied for a production tax credit under 24 AS 43.55.023(a) or (l) [AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may make a 25 present assignment of the production tax credit certificate expected to be issued by the 26 department to a third-party assignee. The assignment may be made either at the time 27 the application is filed with the department or not later than 30 days after the date of 28 filing with the department. Once a notice of assignment in compliance with this 29 section is filed with the department, the assignment is irrevocable and cannot be 30 modified by the explorer or producer without the written consent of the assignee 31 named in the assignment. If a production tax credit certificate is issued to the explorer 01 or producer, the notice of assignment remains effective and shall be filed with the 02 department by the explorer or producer together with any application for the 03 department to purchase the certificate under AS 43.55.028(e). 04 * Sec. 22. AS 43.55.160(d) is amended to read: 05 (d) Irrespective of whether a producer produces taxable oil or gas during a 06 calendar year or month, the producer is considered to have generated a positive 07 production tax value if a calculation described in (a) of this section yields a positive 08 number because the producer's adjusted lease expenditures for a calendar year under 09 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a 10 payment or credit under AS 43.55.170. An explorer that has [TAKEN A TAX 11 CREDIT UNDER AS 43.55.023(b) OR THAT HAS] obtained a transferable tax credit 12 certificate under AS 43.55.023(d) for the amount of a tax credit under former 13 AS 43.55.023(b) is considered a producer, subject to the tax levied by [UNDER] 14 AS 43.55.011(e), to the extent that the explorer generates a positive production tax 15 value as the result of the explorer's receiving a payment or credit under AS 43.55.170. 16  * Sec. 23. AS 43.55.160(e) is amended to read: 17 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 18 incurred to explore for, develop, or produce oil or gas from a lease or property  19 outside the Cook Inlet sedimentary basin that would otherwise be deductible by a 20 producer in a calendar year but whose deduction would cause an annual production tax 21 value calculated under (a)(1) or (h) of this section of taxable oil or gas produced 22 during the calendar year to be less than zero may be used to establish a carried- 23 forward annual loss under AS 43.55.165(a)(3). A reduction under (f) or (g) of this  24 section must be added back to the calculation of production tax values for that  25 calendar year before the determination of a carried-forward annual loss under  26 this subsection [AS 43.55.023(b)]. However, the department shall provide by 27 regulation a method to ensure that, for a period for which a producer's tax liability is 28 limited by AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)], any adjusted 29 lease expenditures under AS 43.55.165 and 43.55.170 that would otherwise be 30 deductible by a producer for that period but whose deduction would cause a 31 production tax value calculated under (a)(1)(E) or (F) or (h)(3) [(a)(1)(C), (D), (E), 01 OR (F), OR (h)(3)] of this section to be less than zero are accounted for as though the 02 adjusted lease expenditures had first been used as deductions in calculating the 03 production tax values of oil or gas subject to any of the limitations under 04 AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)] that have positive 05 production tax values so as to reduce the tax liability calculated without regard to the 06 limitation to the maximum amount provided for under the applicable provision of 07 AS 43.55.011(o) or (p) [AS 43.55.011(j), (k), (o), OR (p)]. Only the amount of those 08 adjusted lease expenditures remaining after the accounting provided for under this 09 subsection may be used to establish a carried-forward annual loss under 10 AS 43.55.165(a)(3) [AS 43.55.023(b)]. In this subsection, "producer" includes 11 "explorer." 12  * Sec. 24. AS 43.55.165(a), as amended by sec. 29, ch. 4, 4SSLA 2016, is amended to read: 13 (a) For purposes of this chapter, a producer's lease expenditures for a calendar 14 year are 15 (1) costs, other than items listed in (e) of this section, that are 16 (A) incurred by the producer during the calendar year after 17 March 31, 2006, to explore for, develop, or produce oil or gas deposits located 18 within the producer's leases or properties in the state or, in the case of land in 19 which the producer does not own an operating right, operating interest, or 20 working interest, to explore for oil or gas deposits within other land in the 21 state; and 22 (B) allowed by the department by regulation, based on the 23 department's determination that the costs satisfy the following three 24 requirements: 25 (i) the costs must be incurred upstream of the point of 26 production of oil and gas; 27 (ii) the costs must be ordinary and necessary costs of 28 exploring for, developing, or producing, as applicable, oil or gas 29 deposits; and 30 (iii) the costs must be direct costs of exploring for, 31 developing, or producing, as applicable, oil or gas deposits; [AND] 01 (2) a reasonable allowance for that calendar year, as determined under 02 regulations adopted by the department, for overhead expenses that are directly related 03 to exploring for, developing, or producing, as applicable, the oil or gas deposits; and  04 (3) lease expenditures incurred in a previous calendar year,  05 subject to (m) and (n) of this section, that  06 (A) met the requirements of AS 43.55.160(e) in the year in  07 which the lease expenditures were incurred;  08 (B) have not been deducted in the determination of the  09 production tax value of oil and gas under AS 43.55.160(a) or (h) in a  10 previous calendar year;  11 (C) were not the basis of a credit under this title; and  12 (D) were incurred to explore for, develop, or produce an oil  13 or gas deposit located in the state outside the Cook Inlet sedimentary  14 basin. 15  * Sec. 25. AS 43.55.165(f) is amended to read: 16 (f) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 17 incurred to explore for an oil or gas deposit located within land in which an explorer 18 does not own a working interest, the term "producer" in this section includes 19 "explorer." 20  * Sec. 26. AS 43.55.165(l) is amended by adding a new paragraph to read: 21 (4) "carried-forward annual loss" means a loss established under (a)(3) 22 of this section. 23  * Sec. 27. AS 43.55.165 is amended by adding new subsections to read: 24 (m) In a calendar year, after application of a producer's lease expenditures that 25 are incurred in that calendar year, the producer may choose to apply all or a portion of 26 a carried-forward annual loss or carry any unused portion forward. The department 27 may not require a producer to apply all or a portion of a carried-forward annual loss in 28 a calendar year. 29 (n) During a calendar year in which a taxpayer's liability under 30 AS 43.55.011(e) is determined under AS 43.55.011(f), the maximum amount of 31 carried-forward annual loss that a taxpayer may apply in that year is equal to the 01 amount, when combined with the lease expenditures of the current year and any 02 credits under this chapter, necessary to reduce the amount calculated under 03 AS 43.55.011(e) to the equivalent amount of tax due under AS 43.55.011(f) before the 04 application of any credits under this chapter. An amount of carried-forward annual 05 loss not applied under this subsection may continue to be carried forward. 06  * Sec. 28. AS 43.55.170(c) is amended to read: 07 (c) For purposes of AS 43.55.023(a) [AND (b)] and only as to expenditures 08 incurred to explore for an oil or gas deposit located within land in which an explorer 09 does not own a working interest, the term "producer" in this section includes 10 "explorer." 11  * Sec. 29. AS 43.55.023(b) is repealed January 1, 2018. 12  * Sec. 30. AS 43.05.230(l); AS 43.20.046(e), 43.20.047(e), 43.20.053(e); AS 43.55.028, 13 and 43.55.029 are repealed. 14  * Sec. 31. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 APPLICABILITY: TAX CREDITS UNDER AS 43.55.025 APPLIED AGAINST 17 TAX DUE UNDER AS 43.20. AS 43.20.044(a), as amended by sec. 2 of this Act, and 18 AS 43.55.025(a), (f), and (i), as amended by secs. 9, 12, and 15 of this Act, apply to a tax 19 credit that has been earned under AS 43.55.025 for work performed on or after July 1, 2016. 20  * Sec. 32. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 APPLICABILITY: TAX CREDIT AND CREDIT CERTIFICATE CARRYBACK. 23 AS 43.55.023(c), as amended by sec. 4 of this Act, AS 43.55.023(e), as amended by sec. 7 of 24 this Act, and AS 43.55.025(h), as amended by sec. 14 of this Act, apply to a tax credit earned 25 or transferable tax credit certificate issued under AS 43.55.023 or a production tax credit 26 certificate issued under AS 43.55.025(f), regardless of when the credit was earned or the 27 certificate was issued. 28  * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 APPLICABILITY: LEASE EXPENDITURES. AS 43.55.165(a)(3) and 43.55.165(m) 31 and (n), added by secs. 24 and 27 of this Act, apply to a lease expenditure incurred on or after 01 the effective date of secs. 24 and 27 of this Act. 02  * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 TRANSITION: INTEREST ON DELINQUENT TAXES. Notwithstanding the 05 effective date of sec. 1 of this Act, a delinquent tax under AS 43.55 bears interest in each 06 calendar quarter of 2017 as provided under AS 43.05.225(1) as that paragraph read on the day 07 before the effective date of sec. 1 of this Act. 08  * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 TRANSITION: PUBLIC INFORMATION UNDER AS 43.05.230(l). 11 Notwithstanding the repeal of AS 43.05.230(l) by sec. 30 of this Act, on April 30 of the year 12 following the calendar year in which sec. 30 of this Act takes effect, the Department of 13 Revenue shall make public the information required under AS 43.05.230(l), as that section 14 read on the day before the effective date of sec. 30 of this Act. 15  * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: CARRIED-FORWARD ANNUAL LOSSES. (a) Notwithstanding the 18 repeal of AS 43.55.023(b) by sec. 29 of this Act and the amendments to AS 43.55.160(d) and 19 (e), 43.55.165(f), and 43.55.170(c) by secs. 22, 23, 25, and 28 of this Act, a taxpayer who 20 incurs a carried-forward annual loss before the repeal of AS 43.55.023(b) by sec. 29 of this 21 Act that qualifies for a carried-forward annual loss credit under AS 43.55.023(b) may apply 22 for a credit or tax credit certificate under AS 43.55.023(d), subject to the requirements of 23 AS 43.55.160(d) and (e), as those subsections read on the day before the repeal of 24 AS 43.55.023(b) by sec. 29 of this Act. 25 (b) The Department of Revenue may continue to apply and enforce AS 43.55.023(b), 26 as that subsection read on the day before the repeal of AS 43.55.023(b) by sec. 29 of this Act, 27 for a carried-forward annual loss incurred before the repeal of AS 43.55.023(b) by sec. 29 of 28 this Act. 29 * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 TRANSITION: OIL AND GAS CREDIT FUND. Subject to appropriation, the 01 balance of the oil and gas tax credit fund created under AS 43.55.028(a) and repealed by sec. 02 30 of this Act lapses into the general fund. 03  * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 06 contrary provision of AS 44.62.240, if the Department of Revenue expressly designates in a 07 regulation that the regulation applies retroactively, a regulation adopted by the Department of 08 Revenue to implement, interpret, make specific, or otherwise carry out this Act may apply 09 retroactively to the effective date of the law implemented by the regulation. 10  * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 CONDITIONAL EFFECT; NOTIFICATION. (a) Sections 3, 6, 8, 30, 35, and 37 of 13 this Act take effect only if the commissioner of revenue notifies the revisor of statutes in 14 writing as required under (b) of this section. 15 (b) The commissioner of revenue shall notify the revisor of statutes in writing when 16 (1) there are no outstanding applications for purchase of tax credit certificates 17 or claims for refunds or payments for which payment has not been made under 18 AS 43.55.028(e); and 19 (2) it has been at least one year since a person has applied for a purchase, 20 payment, or refund under AS 43.55.028. 21 (c) In this section, 22 (1) "claim for refund or payment" means a refund and payment claimed under 23 AS 43.20.046, 43.20.047, or 43.20.053 subject to payment under AS 43.55.028; 24 (2) "tax credit certificate" means a transferable tax credit certificate issued 25 under AS 43.55.023 or a production tax credit certificate issued under AS 43.55.025 subject 26 to purchase under AS 43.55.028. 27  * Sec. 40. Sections 2, 4, 7, 9, 12 - 15, 17, 19, 31, 32, 38, and 39 of this Act take effect 28 immediately under AS 01.10.070(c). 29  * Sec. 41. Section 24 of this Act takes effect on the effective date of sec. 29, ch. 4, 4SSLA 30 2016. 31  * Sec. 42. If, under sec. 39 of this Act, secs. 3, 6, 8, 30, 35, and 37 of this Act take effect, 01 they take effect on the later of 02 (1) January 1, 2022; or 03 (2) January 1 of the calendar year following the year of notice under sec. 39 of 04 this Act. 05  * Sec. 43. Except as provided in secs. 40 - 42 of this Act, this Act takes effect January 1, 06 2018.