SCS CSHB 3001(NGD): "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; relating to criminal penalties for violating conditions governing access to and use of confidential information relating to the production tax; amending the definition of 'gas' as that definition applies in the Alaska Stranded Gas Development Act; making conforming amendments; and providing for an effective date."
00 SENATE CS FOR CS FOR HOUSE BILL NO. 3001(NGD) 01 "An Act relating to the production tax on oil and gas and to conservation surcharges on 02 oil; relating to criminal penalties for violating conditions governing access to and use of 03 confidential information relating to the production tax; amending the definition of 'gas' 04 as that definition applies in the Alaska Stranded Gas Development Act; making 05 conforming amendments; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 LEGISLATIVE INTENT. (a) It is the intent of the legislature through sec. 11 of this 10 Act to confirm by clarification the long-standing interpretation of AS 43.55.020(f) by the 11 Department of Revenue. 12 (b) It is the intent of the legislature that the division or other unit of the Department of 13 Environmental Conservation assigned responsibility for administration of the programs under
01 AS 46.08 that are principally supported by the conservation surcharges on oil levied under 02 AS 43.55.201 - 43.55.299 and 43.55.300 - 43.55.310 03 (1) reduce program costs, including personnel costs, as necessary to operate 04 within the revenue anticipated to be generated by those surcharges, in the amounts of those 05 surcharges as amended by secs. 26 and 28 of this Act; and 06 (2) request appropriations for exceptional program needs and expansions 07 beyond what can be provided from the estimated amounts collected from those surcharges 08 from alternative funding sources. 09 * Sec. 2. AS 43.05.230(f) is amended to read: 10 (f) A wilful violation of the provisions of this section or of a condition 11 imposed under AS 43.55.040(1)(B) is punishable by a fine of not more than $5,000, 12 or by imprisonment for not more than two years, or by both. 13 * Sec. 3. AS 43.20.031(c) is amended to read: 14 (c) In computing the tax under this chapter, the taxpayer is not entitled to 15 deduct any taxes based on or measured by net income. The taxpayer may deduct the 16 tax levied and paid under AS 43.55. 17 * Sec. 4. AS 43.20.072(b) is amended to read: 18 (b) A taxpayer's business income to be apportioned under this section to the 19 state shall be the federal taxable income of the taxpayer's consolidated business for the 20 tax period, except that 21 (1) taxes based on or measured by net income that are deducted in the 22 determination of the federal taxable income shall be added back; the tax levied and 23 paid under AS 43.55 may not be added back; 24 (2) intangible drilling and development costs that are deducted as 25 expenses under 26 U.S.C. 263(c) (Internal Revenue Code) in the determination of the 26 federal taxable income shall be capitalized and depreciated as if the option to treat 27 them as expenses under 26 U.S.C. 263(c) (Internal Revenue Code) had not been 28 exercised; 29 (3) depletion deducted on the percentage depletion basis under 26 30 U.S.C. 613 (Internal Revenue Code) in the determination of the federal taxable income 31 shall be recomputed and deducted on the cost depletion basis under 26 U.S.C. 612
01 (Internal Revenue Code); and 02 (4) depreciation shall be computed on the basis of 26 U.S.C. 167 03 (Internal Revenue Code) as that section read on June 30, 1981. 04 * Sec. 5. AS 43.55.011 is amended by adding new subsections to read: 05 (e) There is levied on the producer of oil or gas a tax for all oil and gas 06 produced each month from each lease or property in the state, less any oil and gas the 07 ownership or right to which is exempt from taxation or constitutes a landowner's 08 royalty interest. Except as otherwise provided under (j) and (k) of this section, the tax 09 is equal to the greater of 22.5 percent of the production tax value of the taxable oil and 10 gas as calculated under AS 43.55.160, or the minimum tax determined under (f) of this 11 section. 12 (f) The levy of tax under this section on a producer of oil and gas produced 13 north of 68 degrees North latitude may not be less than 14 (1) four percent of the gross value at the point of production when the 15 average price per barrel for Alaska North Slope crude oil for sale on the United States 16 West Coast during the calendar year for which the tax is due is more than $25; 17 (2) three percent of the gross value at the point of production when the 18 average price per barrel for Alaska North Slope crude oil for sale on the United States 19 West Coast during the calendar year for which the tax is due is over $20 but not over 20 $25; 21 (3) two percent of the gross value at the point of production when the 22 average price per barrel for Alaska North Slope crude oil for sale on the United States 23 West Coast during the calendar year for which the tax is due is over $17.50 but not 24 over $20; 25 (4) one percent of the gross value at the point of production when the 26 average price per barrel for Alaska North Slope crude oil for sale on the United States 27 West Coast during the calendar year for which the tax is due is over $15 but not over 28 $17.50; or 29 (5) zero percent of the gross value at the point of production when the 30 average price per barrel for Alaska North Slope crude oil for sale on the United States 31 West Coast during the calendar year for which the tax is due is $15 or less.
01 (g) In addition to the tax levied under (e) of this section, for each calendar year 02 that includes one or more months for which the price index determined under (h) of 03 this section is greater than zero, there is levied on the producer of oil or gas a tax for 04 all oil and gas produced that calendar year from each lease or property in the state, less 05 any oil and gas the ownership or right to which is exempt from taxation or constitutes 06 a landowner's royalty interest. Except as otherwise provided under (j) and (k) of this 07 section, the tax levied under this subsection is equal to the sum, over all months in the 08 calendar year, of the amounts calculated for each month as follows: .25 percent of the 09 monthly production tax value of the taxable oil and gas as calculated under 10 AS 43.55.160, multiplied by the price index determined under (h) of this section. 11 However, the amount calculated under this subsection for any month may not exceed 12 25 percent of the monthly production tax value of the taxable oil and gas as calculated 13 under AS 43.55.160. 14 (h) For purposes of (g) of this section, the price index for a month is calculated 15 by subtracting 40 from the number that is equal to the quotient of the total monthly 16 production tax value of the taxable oil and gas produced by the producer during that 17 month, as calculated under AS 43.55.160, divided by the total amount of the taxable 18 oil and gas produced by the producer during that month, in BTU equivalent barrels. 19 However, a price index may not be less than zero. 20 (i) There is levied on the producer of oil or gas a tax for all oil and gas 21 produced each calendar year from each lease or property in the state the ownership or 22 right to which constitutes a landowner's royalty interest, except for oil and gas the 23 ownership or right to which is exempt from taxation. The provisions of this subsection 24 apply to a landowner's royalty interest as follows: 25 (1) the tax levied for oil is equal to five percent of the gross value at 26 the point of production of the oil; 27 (2) the tax levied for gas is equal to 1.667 percent of the gross value at 28 the point of production of the gas; 29 (3) if the department determines that, for purposes of reducing the 30 producer's tax liability under (1) or (2) of this subsection, the producer has received or 31 will receive consideration from the royalty owner offsetting all or a part of the
01 producer's royalty obligation, other than a deduction under AS 43.55.020(d) of the 02 amount of a tax paid, then, notwithstanding (1) and (2) of this subsection, the tax is 03 equal to 25 percent of the gross value at the point of production of the oil and gas. 04 (j) For a calendar year before 2022, the total tax levied by (e) and (g) of this 05 section on gas produced from a lease or property in the Cook Inlet sedimentary basin 06 may not exceed 07 (1) for a lease or property that first commenced commercial production 08 of gas before April 1, 2006, the product obtained by multiplying (A) the amount of 09 taxable gas produced during the calendar year from the lease or property, times (B) the 10 average rate of tax that was imposed under this chapter on taxable gas produced from 11 the lease or property for the 12-month period ending on March 31, 2006, times (C) the 12 quotient obtained by dividing the total gross value at the point of production of the 13 taxable gas produced from the lease or property during the 12-month period ending on 14 March 31, 2006, by the total amount of that gas; 15 (2) for a lease or property that first commences commercial production 16 of gas after March 31, 2006, the product obtained by multiplying (A) the amount of 17 taxable gas produced during the calendar year from the lease or property, times (B) the 18 average rate of tax that was imposed under this chapter on taxable gas produced from 19 all leases or properties in the Cook Inlet sedimentary basin for the 12-month period 20 ending on March 31, 2006, times (C) the average prevailing value for gas delivered in 21 the Cook Inlet area for the 12-month period ending March 31, 2006, as determined by 22 the department under AS 43.55.020(f). 23 (k) For a calendar year before 2022, the total tax levied by (e) and (g) of this 24 section on oil produced from a lease or property in the Cook Inlet sedimentary basin 25 may not exceed 26 (1) for a lease or property that first commenced commercial production 27 of oil before April 1, 2006, the product obtained by multiplying (A) the amount of 28 taxable oil produced during the calendar year from the lease or property, times (B) the 29 average rate of tax that was imposed under this chapter on taxable oil produced from 30 the lease or property for the 12-month period ending on March 31, 2006, times (C) the 31 quotient obtained by dividing the total gross value at the point of production of the
01 taxable oil produced from the lease or property during the 12-month period ending on 02 March 31, 2006, by the total amount of that oil; 03 (2) for a lease or property that first commences commercial production 04 of oil after March 31, 2006, the product obtained by multiplying (A) the amount of 05 taxable oil produced during the calendar year from the lease or property, times (B) the 06 average rate of tax that was imposed under this chapter on taxable oil produced from 07 all leases or properties in the Cook Inlet sedimentary basin for the 12-month period 08 ending on March 31, 2006, times (C) the average prevailing value for oil produced and 09 delivered in the Cook Inlet area for the 12-month period ending on March 31, 2006, as 10 determined by the department under AS 43.55.020(f). 11 (l) When a limitation under (j) or (k) of this section on the tax levied by (e) 12 and (g) of this section has the effect of reducing the producer's tax on oil or gas 13 produced from a lease or property below the amount of tax that would be levied in the 14 absence of that limitation, the amount of the reduction is applied first against the tax 15 levied by (g) of this section. However, that tax may not be reduced below zero. 16 (m) Notwithstanding any contrary provision of AS 38.05.180(i), 17 AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under 18 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are 19 allocated to gas produced from leases or properties in the Cook Inlet sedimentary 20 basin and that are available to be applied against a tax levied by (e) of this section on 21 gas produced from leases or properties in the Cook Inlet sedimentary basin during a 22 calendar year may be applied only against the tax levied by (e) of this section on that 23 gas. The amount by which the amount of tax credits that are allocated to gas produced 24 from leases or properties in the Cook Inlet sedimentary basin and that the producer 25 would otherwise be allowed to use for a later calendar year or transfer to another 26 person exceeds the amount of tax credits whose application would reduce the tax 27 levied by (e) of this section on that gas to zero, if any, is considered the amount of 28 excess tax credits, and the excess tax credits are subject to the following: 29 (1) for each lease or property for which a limitation under (j) or (k) of 30 this section on the tax levied by (e) and (g) of this section has the effect of reducing 31 the producer's tax below the amount of tax that would be levied in the absence of that
01 limitation, the producer shall calculate the amount of that reduction; 02 (2) the producer shall calculate the total of the reductions calculated 03 under (1) of this subsection for all affected leases or properties; 04 (3) the producer shall reduce the amount of excess tax credits by the 05 total calculated under (2) of this subsection, but not to less than zero; 06 (4) any amount of excess tax credits remaining after reduction under 07 (3) of this subsection may be used for a later calendar year, transferred to another 08 person, or applied against a tax levied on oil or gas produced from a lease or property 09 located anywhere in the state to the extent otherwise allowed under applicable law 10 governing the tax credits. 11 (n) Allocation of credits under (m) of this section shall be made under 12 regulations adopted by the department that provide for reasonable methods of 13 allocating tax credits to gas produced from leases or properties in the Cook Inlet 14 sedimentary basin. The method of allocating tax credits available under AS 43.55.024 15 shall be based on the number of BTU equivalent barrels produced from a lease or 16 property. 17 * Sec. 6. AS 43.55.017(a) is amended to read: 18 (a) Except as provided in this chapter, the taxes imposed by this chapter are in 19 place of all taxes now imposed by the state or any of its municipalities, and neither the 20 state nor a municipality may impose a tax on [UPON] 21 (1) producing oil or gas leases; 22 (2) oil or gas produced or extracted in the state; 23 (3) the value of intangible drilling and development costs, as 24 described in 26 U.S.C. 263(c) (Internal Revenue Code), as amended through 25 January 1, 1974 [EXPLORATION EXPENSES]. 26 * Sec. 7. AS 43.55.020(a) is repealed and reenacted to read: 27 (a) For a calendar year, a producer subject to tax under AS 43.55.011(e), (f), 28 (g), or (i), and notwithstanding that a producer may be liable for the tax under 29 AS 43.55.011(f) rather than the tax under AS 43.55.011(e), shall pay the tax as 30 follows: 31 (1) an installment payment of the estimated tax levied by
01 AS 43.55.011(e) or (f), net of any tax credits applied as allowed by law, is due for 02 each month of the calendar year on the last day of the following month; the amount of 03 the installment payment is the sum of the amounts calculated under (2) and (3) of this 04 subsection, but not less than zero; 05 (2) the first of the two amounts used to calculate the installment 06 payment for a month under (1) of this subsection is equal to the remainder obtained by 07 subtracting 08 (A) 1/12 of the tax credits that are allowed by law to be applied 09 against the tax levied by AS 43.55.011(e) for the calendar year; from 10 (B) the total of the monthly production values calculated in the 11 manner provided in AS 43.55.160(a)(2) of all oil and gas taxable under 12 AS 43.55.011(e) and produced by the producer from leases or properties in the 13 state during the month, multiplied by 22.5 percent. 14 (3) the second of the two amounts used to calculate the installment 15 payment for a month under (1) of this subsection is the amount calculated for the 16 month under AS 43.55.011(g); 17 (4) an installment payment of the estimated tax levied by 18 AS 43.55.011(i) for each lease or property is due for each month of the calendar year 19 on the last day of the following month; the amount of the installment payment is the 20 sum of 21 (A) the applicable percentage rate for oil provided under 22 AS 43.55.011(i), multiplied by the gross value at the point of production of the 23 oil taxable under AS 43.55.011(i) and produced from the lease or property 24 during the month; plus 25 (B) the applicable percentage rate for gas provided under 26 AS 43.55.011(i), multiplied times the gross value at the point of production of 27 the gas taxable under AS 43.55.011(i) and produced from the lease or property 28 during the month; 29 (5) any amount of tax levied by AS 43.55.011(e), (f), (g), and (i), net 30 of any credits applied as allowed by law, that exceeds the total of the amounts due as 31 installment payments of estimated tax is due on March 31 of the year following the
01 calendar year of production. 02 * Sec. 8. AS 43.55.020(b) is amended to read: 03 (b) The production tax on oil and [OR] gas shall be paid to the department 04 by or on behalf of the producer. 05 * Sec. 9. AS 43.55.020(d) is amended to read: 06 (d) In making settlement with the royalty owner for oil and gas that is 07 taxable under AS 43.55.011, the producer may deduct the amount of the tax paid on 08 taxable royalty oil and [OR] gas, or may deduct taxable royalty oil or gas equivalent 09 in value at the time the tax becomes due to the amount of the tax paid. If the total 10 deductions of installment payments of estimated tax for a calendar year exceed 11 the actual tax for that calendar year, the producer shall, before April 1 of the 12 following year, refund the excess to the royalty owner. Unless otherwise agreed 13 between the producer and the royalty owner, the amount of the tax paid under 14 AS 43.55.011(e), (f), and (g) on taxable royalty oil and gas for a calendar year, 15 other than oil and gas the ownership or right to which constitutes a landowner's 16 royalty interest, is considered to be the gross value at the point of production of 17 the taxable royalty oil and gas produced during the calendar year multiplied by a 18 figure that is a quotient, in which 19 (1) the numerator is the producer's total tax liability under 20 AS 43.55.011(e), (f), and (g) for the calendar year of production; and 21 (2) the denominator is the total gross value at the point of 22 production of the oil and gas taxable under AS 43.55.011(e), (f), and (g) produced 23 by the producer from all leases and properties in the state during the calendar 24 year. 25 * Sec. 10. AS 43.55.020(e) is repealed and reenacted to read: 26 (e) Gas flared, released, or allowed to escape in excess of the amount 27 authorized by the Alaska Oil and Gas Conservation Commission is considered, for the 28 purpose of AS 43.55.011 - 43.55.180, as gas produced from a lease or property. Oil or 29 gas used in the operation of a lease or property in the state in drilling for or producing 30 oil or gas, or for repressuring, except to the extent determined by the Alaska Oil and 31 Gas Conservation Commission to be waste, is not considered, for the purpose of
01 AS 43.55.011 - 43.55.180, as oil or gas produced from a lease or property. 02 * Sec. 11. AS 43.55.020(f) is amended to read: 03 (f) If oil or gas is produced but not sold, or if oil or gas is produced and 04 sold under circumstances where the sale price does not represent the prevailing value 05 for oil or gas of like kind, character, or quality in the field or area from which the 06 product is produced, the department may require the tax to be paid upon the basis of 07 the value of oil or gas of the same kind, quality, and character prevailing for that field 08 or area during the calendar month of production or sale [FOR THAT FIELD OR 09 AREA]. 10 * Sec. 12. AS 43.55.020 is amended by adding new subsections to read: 11 (g) Notwithstanding any contrary provision of AS 43.05.225, an unpaid 12 amount of an installment payment required under (a)(1) - (4) of this section that is not 13 paid when due bears interest (1) at the rate provided for an underpayment under 26 14 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date 15 the installment payment is due until the March 31 described in AS 43.55.030(a), and 16 (2) as provided for a delinquent tax under AS 43.05.225 after that March 31. Interest 17 accrued under (1) of this subsection that remains unpaid after that March 31 is treated 18 as an addition to tax that bears interest under (2) of this subsection. An unpaid amount 19 of tax due under (a)(5) of this section that is not paid when due bears interest as 20 provided for a delinquent tax under AS 43.05.225. 21 (h) Notwithstanding any contrary provision of AS 43.05.280, 22 (1) an overpayment of an installment payment required under (a)(1) - 23 (4) of this section bears interest at the rate provided for an overpayment under 26 24 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the later 25 of the date the installment payment is due or the date the overpayment is made, until 26 the earlier of (A) the date it is refunded or is applied to an underpayment, or (B) the 27 March 31 described in AS 43.55.030(a); 28 (2) except as provided under (1) of this subsection, interest with 29 respect to an overpayment is allowed only on any net overpayment of the payments 30 required under (a) of this section that remains after the later of the March 31 described 31 in AS 43.55.030(a) or the date that the statement required under AS 43.55.030(a) is
01 filed; 02 (3) interest is allowed under (2) of this subsection only from a date that 03 is 90 days after the later of the March 31 described in AS 43.55.030(a) or the date that 04 the statement required under AS 43.55.030(a) is filed; interest is not allowed if the 05 overpayment was refunded within the 90-day period; 06 (4) interest under (2) and (3) of this subsection is paid at the rate and in 07 the manner provided in AS 43.05.225(1). 08 * Sec. 13. AS 43.55 is amended by adding new sections to read: 09 Sec. 43.55.023. Tax credits for certain losses and expenditures. (a) A 10 producer or explorer may take a tax credit for a qualified capital expenditure as 11 follows: 12 (1) notwithstanding that a qualified capital expenditure may be a 13 deductible lease expenditure for purposes of calculating the production tax value of oil 14 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 15 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 16 explorer that incurs a qualified capital expenditure may also elect to take a tax credit 17 against a tax due under AS 43.55.011(e) in the amount of 20 percent of that 18 expenditure; 19 (2) a producer or explorer may take a credit for a qualified capital 20 expenditure incurred in connection with geological or geophysical exploration or in 21 connection with an exploration well only if the producer or explorer provides to the 22 department, as part of the statement required under AS 43.55.030(a) for the calendar 23 year for which the credit is sought to be taken, the producer's or explorer's written 24 agreement 25 (A) to notify the Department of Natural Resources, before the 26 later of 30 days after completion of the geological or geophysical data 27 processing or completion of the well, or 30 days after the statement is filed, of 28 the date of completion and to submit a report to that department describing the 29 processing sequence and provide a list of data sets available; 30 (B) to provide to the Department of Natural Resources, within 31 30 days after the date of a request, specific data sets, ancillary data, and reports
01 identified in (A) of this paragraph; 02 (C) that, notwithstanding any provision of AS 38, the 03 Department of Natural Resources shall hold confidential the information 04 provided to that department under this paragraph for 10 years following the 05 completion date, after which the department shall publicly release the 06 information after 30 days' public notice. 07 (b) A producer or explorer may elect to take a tax credit in the amount of 20 08 percent of a carried-forward annual loss. A credit under this subsection may be applied 09 against a tax due under AS 43.55.011(e). For purposes of this subsection, a carried- 10 forward annual loss is the amount of a producer's or explorer's adjusted lease 11 expenditures under AS 43.55.165 and 43.55.170 for a previous calendar year that was 12 not deductible for that calendar year under AS 43.55.160(b) and (e). 13 (c) A credit or portion of a credit under this section may not be used to reduce 14 a person's tax liability under AS 43.55.011(e) for any calendar year below zero, and 15 any unused credit or portion of a credit not used under this subsection may be applied 16 in a later calendar year. 17 (d) Except as limited by (i) of this section, a person entitled to take a tax credit 18 under this section that wishes to transfer the unused credit to another person may 19 apply to the department for a transferable tax credit certificate. An application under 20 this subsection must be in a form prescribed by the department and must include 21 supporting information and documentation that the department reasonably requires. 22 The department shall grant or deny an application, or grant an application as to a lesser 23 amount than that claimed and deny it as to the excess, not later than 60 days after the 24 latest of (1) March 31 of the year following the calendar year in which the qualified 25 capital expenditure or carried-forward annual loss for which the credit is claimed was 26 incurred; (2) if the applicant is required under AS 43.55.030(a) to file a statement on 27 or before March 31 of the year following the calendar year in which the qualified 28 capital expenditures or carried-forward annual loss for which the credit is claimed was 29 incurred, the date the statement was filed; or (3) the date the application was received 30 by the department. If, based on the information then available to it, the department is 31 reasonably satisfied that the applicant is entitled to a credit, the department shall issue
01 the applicant a transferable tax credit certificate for the amount of the credit. A 02 certificate issued under this subsection does not expire. 03 (e) A person to which a transferable tax credit certificate is issued under (d) of 04 this section may transfer the certificate to another person, and a transferee may further 05 transfer the certificate. Subject to the limitations set out in (a) - (c) of this section, and 06 notwithstanding any action the department may take with respect to the applicant 07 under (g) of this section, the owner of a certificate may apply the credit or a portion of 08 the credit shown on the certificate only against a tax due under AS 43.55.011(e). 09 However, a credit shown on a transferable tax credit certificate may not be applied to 10 reduce a transferee's total tax due under AS 43.55.011(e) on oil and gas produced 11 during a calendar year to less than 80 percent of the tax that would otherwise be due 12 without applying that credit. Any portion of a credit not used under this subsection 13 may be applied in a later period. 14 (f) Under standards established in regulations adopted by the department and 15 subject to appropriations made by law, the department, on the written application of 16 the person to whom a transferable tax credit has been issued under (d) of this section 17 and whose average amount of oil and gas produced a day taxable under 18 AS 43.55.011(e) is not more than 50,000 BTU equivalent barrels a day for the 19 preceding calendar year, shall issue a cash refund, in whole or in part, for the 20 certificate if the department finds 21 (1) within 24 months after having applied for the transferable tax credit 22 certificate, that the applicant incurred a qualified capital expenditure or was the 23 successful bidder on a bid submitted for a lease on state land under AS 38.05.180(f); 24 (2) that the amount of the refund would not exceed the total of 25 qualified capital expenditures and successful bids described in (1) of this subsection 26 that have not been the subject of a finding made under this paragraph for purposes of a 27 previous refund; 28 (3) that the applicant does not have an outstanding liability to the state 29 for unpaid delinquent taxes under this title; and 30 (4) that the sum of the amount of the refund applied for and amounts 31 previously refunded to the applicant during the calendar year under this subsection
01 would not exceed $25,000,000. 02 (g) The issuance of a transferable tax credit certificate under (d) of this section 03 or the issuance of a cash refund under (f) of this section does not limit the department's 04 ability to later audit a tax credit claim to which the certificate relates or to adjust the 05 claim if the department determines, as a result of the audit, that the applicant was not 06 entitled to the amount of the credit for which the certificate was issued. The tax 07 liability of the applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased 08 by the amount of the credit that exceeds that to which the applicant was entitled, or the 09 applicant's available valid outstanding credits applicable against the tax levied by 10 AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is increased 11 under this subsection, the increase bears interest under AS 43.05.225 from the date the 12 transferable tax credit certificate was issued. For purposes of this subsection, an 13 applicant that is an explorer is considered a producer subject to the tax levied by 14 AS 43.55.011(e). 15 (h) Regulations adopted to implement this section must include provisions 16 prescribing reporting, record keeping, and certification procedures and requirements to 17 verify the accuracy of credits claimed and to ensure that a credit is not used more than 18 once. 19 (i) For the purposes of this section, 20 (1) a producer's or explorer's transitional investment expenditures are 21 the sum of the expenditures the producer or explorer incurred after March 31, 2001, 22 and before April 1, 2006, that would be qualified capital expenditures if they were 23 incurred after March 31, 2006, less the sum of the payments or credits the producer or 24 explorer received before April 1, 2006, for the sale or other transfer of assets, 25 including geological, geophysical, or well data or interpretations, acquired by the 26 producer or explorer as a result of expenditures the producer or explorer incurred 27 before April 1, 2006, that would be qualified capital expenditures, if they were 28 incurred after March 31, 2006; 29 (2) a producer or explorer may elect to take a tax credit against a tax 30 due under AS 43.55.011(e) in the amount of 20 percent of the producer's or explorer's 31 transitional investment expenditures, but only to the extent that the amount does not
01 exceed 1/10 of the producer's or explorer's qualified capital expenditures that are 02 incurred during the calendar year for which the credit is taken; 03 (3) a producer or explorer may not take a tax credit for a transitional 04 investment expenditure 05 (A) for any calendar year after the later of 06 (i) 2013; or 07 (ii) the sixth calendar year after the calendar year for 08 which the producer first applies a credit under this subsection against a 09 tax due under AS 43.55.011(e), if the producer did not have 10 commercial production of oil or gas from a lease or property in the state 11 before April 1, 2006; 12 (B) more than once; or 13 (C) if a credit for that expenditure was taken under 14 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025; 15 (4) notwithstanding (d), (e), and (g) of this section, a producer or 16 explorer may not transfer a tax credit or obtain a transferable tax credit certificate for a 17 transitional investment expenditure. 18 (j) As a condition of receiving a tax credit under this section, a producer or 19 explorer that obtains the tax credit for or directly related to a pipeline, facility, or other 20 asset that is or becomes subject to regulation by the Federal Energy Regulatory 21 Commission, the Regulatory Commission of Alaska, or a successor regulatory body 22 shall at all times support and in all rate proceedings file to flow through 100 percent of 23 the tax credits to ratepayers as a reduction in the costs of service for the pipeline, 24 facility, or other asset. 25 (k) In this section, "qualified capital expenditure" 26 (1) means, except as otherwise provided in (2) of this subsection, an 27 expenditure that is a lease expenditure under AS 43.55.165 and is 28 (A) incurred for geological or geophysical exploration; or 29 (B) treated as a capitalized expenditure under 26 U.S.C. 30 (Internal Revenue Code), as amended, regardless of elections made under 26 31 U.S.C. 263(c) (Internal Revenue Code), as amended, and is
01 (i) treated as a capitalized expenditure for federal 02 income tax reporting purposes by the person incurring the expenditure; 03 or 04 (ii) eligible to be deducted as an expense under 26 05 U.S.C. 263(c) (Internal Revenue Code), as amended; 06 (2) does not include an expenditure incurred to acquire an asset 07 (A) the cost of previously acquiring which was a lease 08 expenditure under AS 43.55.165 or would have been a lease expenditure under 09 AS 43.55.165 if it had been incurred after March 31, 2006; for purposes of this 10 subparagraph, "asset" includes geological, geophysical, and well data and 11 interpretations; or 12 (B) that has previously been placed in service in the state; an 13 expenditure to acquire an asset is not excluded under this paragraph if not more 14 than an immaterial portion of the asset meets a description under this 15 paragraph. 16 Sec. 43.55.024. Additional nontransferable tax credits. (a) For a calendar 17 year for which a producer's tax liability under AS 43.55.011(e) or (f) on oil and gas 18 produced from leases or properties outside the Cook Inlet sedimentary basin, no part 19 of which is north of 68 degrees North latitude, exceeds zero before application of any 20 credits under this chapter, a producer that is qualified under (e) of this section may 21 apply a tax credit against that liability of not more than $6,000,000. 22 (b) A producer may not take a tax credit under (a) of this section for any 23 calendar year after the later of 24 (1) 2016; or 25 (2) the ninth calendar year after the calendar year during which the 26 producer first has commercial oil or gas production before May 1, 2016, from at least 27 one lease or property in the state outside the Cook Inlet sedimentary basin, no part of 28 which is north of 68 degrees North latitude, if the producer did not have commercial 29 oil or gas production from a lease or property in the state outside the Cook Inlet 30 sedimentary basin, no part of which is north of 68 degrees North latitude, before 31 April 1, 2006.
01 (c) For a calendar year for which a producer's tax liability under 02 AS 43.55.011(e) or (f) exceeds zero before application of any credits under this 03 chapter, other than a credit under (a) of this section but after application of any credit 04 under (a) of this section, a producer that is qualified under (e) of this section and 05 whose average amount of oil and gas produced a day and taxable under 06 AS 43.55.011(e) or (f) is less than 100,000 BTU equivalent barrels a day may apply a 07 tax credit under this subsection against that liability. A producer whose average 08 amount of oil and gas produced a day and taxable under AS 43.55.011(e) or (f) is 09 (1) not more than 50,000 BTU equivalent barrels may apply a tax 10 credit of not more than $12,000,000 for the calendar year; 11 (2) more than 50,000 and less than 100,000 BTU equivalent barrels 12 may apply a tax credit of not more than $12,000,000 multiplied by the following 13 fraction for the calendar year: 14 1 - [2 X (AP - 50,000)] ¸ 100,000 15 where AP = the average amount of oil and gas taxable under AS 43.55.011(e) or (f), 16 produced a day during the calendar year in BTU equivalent barrels. 17 (d) A producer may not take a tax credit under (c) of the section for any 18 calendar year after the later of 19 (1) 2016; or 20 (2) if the producer did not have commercial oil or gas production from 21 a lease or property in the state before April 1, 2006, the ninth calendar year after the 22 calendar year during which the producer first has commercial oil or gas production 23 before May 1, 2016, from at least one lease or property in the state. 24 (e) On written application by a producer that includes any information the 25 department may require, the department shall determine whether the producer 26 qualifies for a calendar year under this section. To qualify under this section, a 27 producer must demonstrate that its operation in the state or its ownership of an interest 28 in a lease or property in the state as a distinct producer would not result in the division 29 among multiple producer entities of any production tax liability under 30 AS 43.55.011(e) or (f) that reasonably would be expected to be attributed to a single 31 producer if the tax credit provisions of (a) or (c) of this section did not exist.
01 (f) A tax credit authorized by (a) of this section may not be applied to reduce a 02 producer's tax liability for any calendar year under AS 43.55.011(e) on oil and gas 03 produced from leases or properties outside the Cook Inlet sedimentary basin, no part 04 of which is north of 68 degrees North latitude below zero. 05 (g) A tax credit authorized by (c) of this section may not be applied to reduce 06 a producer's tax liability for any calendar year under AS 43.55.011(e) or (f) below 07 zero. 08 (h) An unused tax credit or portion of a tax credit under this section is not 09 transferable and may not be carried forward for use in a later calendar year. 10 * Sec. 14. AS 43.55.025(a) is amended to read: 11 (a) Subject to the terms and conditions of this section, [ON OIL AND GAS 12 PRODUCED ON OR AFTER JULY 1, 2004, FROM AN OIL AND GAS LEASE, 13 OR ON GAS PRODUCED FROM A GAS ONLY LEASE,] a credit against the 14 production tax due under AS 43.55.011(e) or (f) [THIS CHAPTER] is allowed for 15 exploration expenditures that qualify under (b) of this section in an amount equal to 16 one of the following: 17 (1) 20 percent of the total exploration expenditures that qualify only 18 under (b) and (c) of this section; 19 (2) 20 percent of the total exploration expenditures for work performed 20 before July 1, 2007, and that qualify only under (b) and (d) of this section; 21 (3) 40 percent of the total exploration expenditures that qualify under 22 (b), (c), and (d) of this section; or 23 (4) 40 percent of the total exploration expenditures that qualify only 24 under (b) and (e) of this section. 25 * Sec. 15. AS 43.55.025(b) is amended to read: 26 (b) To qualify for the production tax credit under (a) of this section, an 27 exploration expenditure must be incurred for work performed on or after July 1, 2003, 28 and before July 1, 2016 [2007], except that an exploration expenditure for a Cook Inlet 29 prospect must be incurred for work performed on or after July 1, 2005, [AND 30 BEFORE JULY 1, 2010, AND EXCEPT THAT AN EXPLORATION 31 EXPENDITURE, IN WHOLE OR IN PART, SOUTH OF 68 DEGREES, 15
01 MINUTES, NORTH LATITUDE, AND NOT PART OF A COOK INLET 02 PROSPECT MUST BE INCURRED FOR WORK PERFORMED ON OR AFTER 03 JULY 1, 2003, AND BEFORE JULY 1, 2010,] and 04 (1) may be for seismic or geophysical exploration costs not connected 05 with a specific well; 06 (2) if for an exploration well, 07 (A) must be incurred by an explorer that holds an interest in the 08 exploration well for which the production tax credit is claimed; 09 (B) may be for either an oil or gas discovery well or a dry hole; 10 and 11 (C) must be for goods, services, or rentals of personal property 12 reasonably required for the surface preparation, drilling, casing, cementing, 13 and logging of an exploration well, and, in the case of a dry hole, for the 14 expenses required for abandonment if the well is abandoned within 18 months 15 after the date the well was spudded; 16 (3) may not be for testing, stimulation, or completion costs; 17 administration, supervision, engineering, or lease operating costs; geological or 18 management costs; community relations or environmental costs; bonuses, taxes, or 19 other payments to governments related to the well; or other costs that are generally 20 recognized as indirect costs or financing costs; and 21 (4) may not be incurred for an exploration well or seismic exploration 22 that is included in a plan of exploration or a plan of development for any unit on 23 May 13, 2003. 24 * Sec. 16. AS 43.55.025(f) is amended to read: 25 (f) For a production tax credit under this section, 26 (1) an explorer shall, in a form prescribed by the department and 27 within six months of the completion of the exploration activity, claim the credit and 28 submit information sufficient to demonstrate to the department's satisfaction that the 29 claimed exploration expenditures qualify under this section; 30 (2) an explorer shall agree, in writing, 31 (A) to notify the Department of Natural Resources, within 30
01 days after completion of seismic or geophysical data processing, completion of 02 a well, or filing of a claim for credit, whichever is the latest, for which 03 exploration costs are claimed, of the date of completion and submit a report to 04 that department describing the processing sequence and providing a list of data 05 sets available; if, under (c)(2)(B) of this section, an explorer submits a claim 06 for a credit for expenditures for an exploration well that is located within three 07 miles of a well already drilled for oil and gas, in addition to the submissions 08 required under (1) of this subsection, the explorer shall submit the information 09 necessary for the commissioner of natural resources to evaluate the validity of 10 the explorer's claim that the well is directed at a distinctly separate exploration 11 target, and the commissioner of natural resources shall, upon receipt of all 12 evidence sufficient for the commissioner to evaluate the explorer's claim, make 13 that determination within 60 days; 14 (B) to provide to the Department of Natural Resources, within 15 30 days after the date of a request, specific data sets, ancillary data, and reports 16 identified in (A) of this paragraph; 17 (C) that, notwithstanding any provision of AS 38, information 18 provided under this paragraph will be held confidential by the Department of 19 Natural Resources for 10 years following the completion date, at which time 20 that department will release the information after 30 days' public notice; 21 (3) if more than one explorer holds an interest in a well or seismic 22 exploration, each explorer may claim an amount of credit that is proportional to the 23 explorer's cost incurred; 24 (4) the department may exercise the full extent of its powers as though 25 the explorer were a taxpayer under this title, in order to verify that the claimed 26 expenditures are qualified exploration expenditures under this section; and 27 (5) if the department is satisfied that the explorer's claimed 28 expenditures are qualified under this section, the department shall issue to the explorer 29 a production tax credit certificate for the amount of credit to be allowed against 30 production taxes due under AS 43.55.011(e) or (f) [THIS CHAPTER; HOWEVER, 31 NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, THE
01 DEPARTMENT MAY NOT ISSUE TO AN EXPLORER A PRODUCTION TAX 02 CREDIT CERTIFICATE IF THE TOTAL OF PRODUCTION TAX CREDITS 03 SUBMITTED FOR COOK INLET PRODUCTION, BASED ON EXPLORATION 04 EXPENDITURES FOR WORK PERFORMED DURING THE PERIOD 05 DESCRIBED IN (b) OF THIS SECTION FOR THAT PRODUCTION, THAT HAVE 06 BEEN APPROVED BY THE DEPARTMENT EXCEEDS $20,000,000]. 07 * Sec. 17. AS 43.55.025(h) is amended to read: 08 (h) A producer that purchases a production tax credit certificate may apply the 09 credits against its production tax liability under AS 43.55.011(e) or (f) [THIS 10 CHAPTER]. Regardless of the price the producer paid for the certificate, the producer 11 may receive a credit against its production tax liability for the full amount of the 12 credit, but for not more than the amount for which the certificate is issued. A 13 production tax credit allowed under this section may not be applied more than once. 14 * Sec. 18. AS 43.55.025(i) is amended to read: 15 (i) For a production tax credit under this section, 16 (1) the amount of the credit that may be applied against the production 17 tax for each calendar year [TAX MONTH] may not exceed the total production tax 18 liability under AS 43.05.011(e) or (f) of the taxpayer applying the credit for the same 19 calendar year [MONTH]; and 20 (2) an amount of the production tax credit that is greater than the total 21 tax liability under AS 43.05.011(e) or (f) of the taxpayer applying the credit for a 22 calendar year [TAX MONTH] may be carried forward and applied against the 23 taxpayer's production tax liability under AS 43.05.011(e) or (f) in one or more 24 immediately following calendar years [MONTHS]. 25 * Sec. 19. AS 43.55.030(a) is amended to read: 26 (a) The [TAX SHALL BE PAID TO THE DEPARTMENT AND THE] 27 person paying the tax shall file with the department on March 31 of the year 28 following the calendar year for which the tax was levied [AT THE TIME THE 29 TAX IS REQUIRED TO BE PAID] a statement, under oath, in a form [ON FORMS] 30 prescribed by [OR ACCEPTABLE TO] the department, giving, with other 31 information required, the following:
01 (1) a description of each [THE] lease or property from which the oil 02 and [OR] gas were [WAS] produced, by name, legal description, lease number, or 03 [BY] accounting codes [CODE NUMBERS] assigned by the department; 04 (2) the names of the producer and the person paying the tax; 05 (3) the gross amount of oil and the gross amount of [OR] gas 06 produced from each [THE] lease or property, and the percentage of the gross amount 07 of oil and gas owned by each producer for whom the tax is paid; 08 (4) the gross [TOTAL] value at the point of production of the oil 09 and of the [OR] gas produced from each [THE] lease or property owned by each 10 producer for whom the tax is paid; [AND] 11 (5) the name of the first purchaser and the price received for the oil 12 and for the [OR] gas, unless relieved from this requirement in whole or in part by 13 the department; and 14 (6) the producer's lease expenditures and adjustments as 15 calculated under AS 43.55.160 - 43.55.170 [IF SOLD IN THE STATE]. 16 * Sec. 20. AS 43.55.030(d) is amended to read: 17 (d) Reports by or on behalf of the producer are delinquent the first day 18 following the day the report [TAX] is due. [EACH PRODUCER IS SUBJECT TO A 19 PENALTY OF $25 A DAY FOR EACH LEASE OR PROPERTY UPON WHICH 20 THE REPORT IS NOT FILED. THE PENALTY FOR FAILURE TO FILE A 21 REPORT IS IN ADDITION TO THE PENALTY FOR DELINQUENT TAXES, 22 AND IS A LIEN AGAINST THE ASSETS OF THE PRODUCER.] 23 * Sec. 21. AS 43.55.040 is amended to read: 24 Sec. 43.55.040. Powers of Department of Revenue. Except as provided in 25 AS 43.05.405 - 43.05.499, the department may 26 (1) require a person engaged in production and the agent or employee 27 of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil 28 or gas to furnish, whether by the filing of regular statements or reports or 29 otherwise, additional information that is considered by the department as necessary to 30 compute the amount of the tax; notwithstanding any contrary provision of law, the 31 disclosure of additional information under this paragraph to the producer
01 obligated to pay the tax does not violate AS 40.25.100(a) or AS 43.05.230(a); 02 before disclosing information under this paragraph that is otherwise required to 03 be held confidential under AS 40.25.100(a) or AS 43.05.230(a), the department 04 shall 05 (A) provide the person that furnished the information a 06 reasonable opportunity to be heard regarding the proposed disclosure and 07 the conditions to be imposed under (B) of this paragraph; and 08 (B) impose appropriate conditions limiting 09 (i) access to the information to those legal counsel, 10 consultants, employees, officers, and agents of the producer who 11 have a need to know that information for the purpose of 12 determining or contesting the producer's tax obligation; and 13 (ii) the use of the information to use for that 14 purpose; 15 (2) examine the books, records, and files of such a person; 16 (3) conduct hearings and compel the attendance of witnesses and the 17 production of books, records, and papers of any person; and 18 (4) make an investigation or hold an inquiry that is considered 19 necessary to a disclosure of the facts as to 20 (A) the amount of production from any oil or gas location, or of 21 a company or other producer of oil or gas; and 22 (B) the rendition of the oil and gas for taxing purposes. 23 * Sec. 22. AS 43.55.080 is amended to read: 24 Sec. 43.55.080. Collection and deposit of revenue. Except as otherwise 25 provided under art. IX, sec. 17, Constitution of the State of Alaska, the [THE] 26 department shall deposit in the general fund the money collected by it under 27 AS 43.55.011 - 43.55.180 [AS 43.55.011 - 43.55.150]. 28 * Sec. 23. AS 43.55.135 is amended to read: 29 Sec. 43.55.135. Measurement. For the purposes of AS 43.55.011 - 43.55.180, 30 except as otherwise provided [AS 43.55.011 - 43.55.150], oil is [SHALL BE] 31 measured in terms of a "barrel of oil" and gas is [SHALL BE] measured in terms of a
01 "cubic foot of gas." 02 * Sec. 24. AS 43.55.150(a) is amended to read: 03 (a) For the purposes of AS 43.55.011 - 43.55.180 [AS 43.55.011 - 43.55.150], 04 the gross value at the point of production is [SHALL BE] calculated using the 05 reasonable costs of transportation of the oil or gas. The reasonable costs of 06 transportation are [SHALL BE] the actual costs, except when the 07 (1) [WHEN THE] parties to the transportation of oil or gas are 08 affiliated; 09 (2) [WHEN THE] contract for the transportation of oil or gas is not an 10 arm's length transaction or is not representative of the market value of that 11 transportation; and 12 (3) [WHEN THE] method of transportation of oil or gas is not 13 reasonable in view of existing alternative methods of transportation. 14 * Sec. 25. AS 43.55 is amended by adding new sections to article 1 to read: 15 Sec. 43.55.160. Determination of production tax value of oil and gas. (a) 16 Except as provided in (b) of this section, for the purposes of 17 (1) AS 43.55.011(e), the annual production tax value of the taxable 18 (A) oil and gas produced during a calendar year from leases or 19 properties in the state that include land north of 68 degrees North latitude is the 20 gross value at the point of production of the oil and gas taxable under 21 AS 43.55.011(e) and produced by the producer from those leases or properties, 22 less the producer's lease expenditures under AS 43.55.165 for the calendar year 23 applicable to the oil and gas produced by the producer from those leases or 24 properties, as adjusted under AS 43.55.170; 25 (B) oil and gas produced during a calendar year from leases or 26 properties in the state outside the Cook Inlet sedimentary basin, no part of 27 which is north of 68 degrees North latitude, is the gross value at the point of 28 production of the oil and gas taxable under AS 43.55.011(e) and produced by 29 the producer from those leases or properties, less the producer's lease 30 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 31 gas produced by the producer from those leases or properties, as adjusted under
01 AS 43.55.170; 02 (C) oil produced during a calendar year from a lease or 03 property in the Cook Inlet sedimentary basin is the gross value at the point of 04 production of the oil taxable under AS 43.55.011(e) and produced by the 05 producer from that lease or property, less the producer's lease expenditures 06 under AS 43.55.165 for the calendar year applicable to the oil produced by the 07 producer from that lease or property, as adjusted under AS 43.55.170; 08 (D) gas produced during a calendar year from a lease or 09 property in the Cook Inlet sedimentary basin is the gross value at the point of 10 production of the gas taxable under AS 43.55.011(e) and produced by the 11 producer from that lease or property, less the producer's lease expenditures 12 under AS 43.55.165 for the calendar year applicable to the gas produced by the 13 producer from that lease or property, as adjusted under AS 43.55.170; 14 (2) AS 43.55.011(g), the monthly production tax value of the taxable 15 (A) oil and gas produced during a month from leases or 16 properties in the state that include land north of 68 degrees North latitude is the 17 gross value at the point of production of the oil and gas taxable under 18 AS 43.55.011(g) and produced by the producer from those leases or properties, 19 less 1/12 of the producer's lease expenditures under AS 43.55.165 for the 20 calendar year applicable to the oil and gas produced by the producer from 21 those leases or properties, as adjusted under AS 43.55.170; 22 (B) oil and gas produced during a month from leases or 23 properties in the state outside the Cook Inlet sedimentary basin, no part of 24 which is north of 68 degrees North latitude, is the gross value at the point of 25 production of the oil and gas taxable under AS 43.55.011(g) and produced by 26 the producer from those leases or properties, less 1/12 of the producer's lease 27 expenditures under AS 43.55.165 for the calendar year applicable to the oil and 28 gas produced by the producer from those leases or properties, as adjusted under 29 AS 43.55.170; 30 (C) oil produced during a month from a lease or property in the 31 Cook Inlet sedimentary basin is the gross value at the point of production of
01 the oil taxable under AS 43.55.011(g) and produced by the producer from that 02 lease or property, less 1/12 of the producer's lease expenditures under 03 AS 43.55.165 for the calendar year applicable to the oil produced by the 04 producer from that lease or property, as adjusted under AS 43.55.170; 05 (D) gas produced during a month from a lease or property in 06 the Cook Inlet sedimentary basin is the gross value at the point of production 07 of the gas taxable under AS 43.55.011(g) and produced by the producer from 08 that lease or property, less 1/12 of the producer's lease expenditures under 09 AS 43.55.165 for the calendar year applicable to the gas produced by the 10 producer from that lease or property, as adjusted under AS 43.55.170. 11 (b) A production tax value calculated under (a) of this section may not be less 12 than zero. 13 (c) Notwithstanding any contrary provision of AS 43.55.150, for purposes of 14 calculating a monthly production tax value under (a)(2) of this section, the gross value 15 at the point of production of the oil and gas taxable under AS 43.55.011(g) is 16 calculated under regulations adopted by the department that provide for using an 17 appropriate monthly share of the producer's costs of transportation for the calendar 18 year. 19 (d) Irrespective of whether a producer produces taxable oil or gas during a 20 calendar year or month, the producer is considered to have generated a positive 21 production tax value if a calculation described in (a) of this section yields a positive 22 number because the producer's adjusted lease expenditures for a calendar year under 23 AS 43.55.165 and 43.55.170 are less than zero as a result of the producer's receiving a 24 payment or credit under AS 43.55.170. An explorer that has taken a tax credit under 25 AS 43.55.023(b) or that has obtained a transferable tax credit certificate under 26 AS 43.55.023(d) for the amount of a tax credit under AS 43.55.023(b) is considered a 27 producer, subject to the tax levied under AS 43.55.011(e), to the extent that the 28 explorer generates a positive production tax value as the result of the explorer's 29 receiving a payment or credit under AS 43.55.170. 30 (e) Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that 31 would otherwise be deductible by a producer in a calendar year but whose deduction
01 would cause an annual production tax value calculated under (a)(1) of this section of 02 taxable oil or gas produced during the calendar year to be less than zero may be used 03 to establish a carried-forward annual loss under AS 43.55.023(b). In this subsection, 04 "producer" includes "explorer." 05 Sec. 43.55.165. Lease expenditures. (a) Except as provided under (c) - (e) of 06 this section, for the purposes of AS 43.55.160, a producer's lease expenditures for a 07 calendar year are the ordinary and necessary costs upstream of the point of production 08 of oil and gas that are incurred during the calendar year by the producer after 09 March 31, 2006, and that are direct costs of exploring for, developing, or producing oil 10 or gas deposits located within the producer's leases or properties in the state or, in the 11 case of land in which the producer does not own a working interest, that are direct 12 costs of exploring for oil or gas deposits located within other land in the state. In 13 determining whether costs are lease expenditures, the department shall consider, 14 among other factors, 15 (1) the typical industry practices and standards in the state that 16 determine the costs, other than items listed in (e) of this section, that an operator is 17 allowed to bill a working interest owner that is not the operator, under unit operating 18 agreements or similar operating agreements that were in effect before December 2, 19 2005, and were subject to negotiation with at least one working interest owner with 20 substantial bargaining power, other than the operator; and 21 (2) the standards adopted by the Department of Natural Resources that 22 determine the costs, other than items listed in (e) of this section, that a lessee is 23 allowed to deduct from revenue in calculating net profits under a lease issued under 24 AS 38.05.180(f)(3)(B), (D), or (E). 25 (b) For purposes of (a) of this section, 26 (1) direct costs include 27 (A) an expenditure, when incurred, to acquire an item if the 28 acquisition cost is otherwise a direct cost, notwithstanding that the expenditure 29 may be required to be capitalized rather than treated as an expense for financial 30 accounting or federal income tax purposes; 31 (B) payments of or in lieu of property taxes, sales and use
01 taxes, motor fuel taxes, and excise taxes; 02 (C) a reasonable allowance, as determined under regulations 03 adopted by the department, for overhead expenses directly related to exploring 04 for, developing, and producing oil or gas deposits located within leases or 05 properties or other land in the state; 06 (2) an activity does not need to be physically located on, near, or 07 within the premises of the lease or property within which an oil or gas deposit being 08 explored for, developed, or produced is located in order for the cost of the activity to 09 be a cost upstream of the point of production of the oil or gas. 10 (c) Subject to (g) and (h) of this section, if the department finds that the 11 pertinent provisions of a unit operating agreement or similar operating agreement are 12 substantially consistent with the department's determinations and standards under (a) 13 of this section concerning whether costs are lease expenditures, the department may 14 authorize or require a producer, subject to conditions prescribed under regulations 15 adopted by the department, to treat as that portion of its lease expenditures for a 16 calendar year applicable to oil and gas produced from a lease or property in the state 17 only 18 (1) the costs, other than items listed in (e) of this section, that are 19 incurred by the operator during the calendar year and that 20 (A) are billable to the producer by the operator in accordance 21 with the terms of the agreement to which that lease or property is subject; 22 (B) for a producer that is the operator, would be billable to the 23 producer by the operator in accordance with the terms of the agreement to 24 which that lease or property is subject if the producer were not the operator; 25 (C) would be billable to the producer by the operator in 26 accordance with the terms of the agreement if that lease or property were 27 subject to the agreement; or 28 (D) for a producer that is the operator, would be billable to the 29 producer by the operator in accordance with the terms of the agreement if that 30 lease or property were subject to the agreement and if the producer were not 31 the operator; and
01 (2) a reasonable percentage, as determined under regulations adopted 02 by the department, of the costs that are billable under (1) of this subsection as an 03 allowance for overhead expenses directly related to exploring for, developing, and 04 producing oil or gas deposits located within the lease or property, to the extent those 05 expenses are not billable under the agreement. 06 (d) Subject to (g) and (h) of this section, if the department makes the finding 07 described in (c) of this section with respect to a unit operating agreement or similar 08 operating agreement and, in addition, finds that at least one working interest owner 09 party to the agreement, other than the operator, with substantial incentive and ability to 10 effectively audit billings under the agreement in fact is effectively auditing billings 11 under the agreement, the department may authorize or require a producer, subject to 12 conditions prescribed under regulations adopted by the department, to treat as that 13 portion of its lease expenditures for a calendar year applicable to oil and gas produced 14 from a lease or property in the state only 15 (1) the costs, other than items listed in (e) of this section, that are 16 incurred by the operator during the calendar year and that 17 (A) are billed to the producer by the operator under the 18 agreement to which that lease or property is subject and are either not disputed 19 by a working interest owner party to the agreement or are finally determined to 20 be properly billable as a result of dispute resolution; or 21 (B) for a producer that is the operator, would be billable to the 22 producer by the operator in accordance with the terms of the agreement to 23 which that lease or property is subject if the producer were not the operator; 24 and 25 (2) a reasonable percentage, as determined under regulations adopted 26 by the department, of the costs that are billed under (1) of this subsection as an 27 allowance for overhead expenses directly related to exploring for, developing, and 28 producing oil or gas deposits located within the lease or property, to the extent those 29 expenses are not billable under the agreement. 30 (e) For purposes of this section, lease expenditures do not include 31 (1) depreciation, depletion, or amortization;
01 (2) oil or gas royalty payments, production payments, lease profit 02 shares, or other payments or distributions of a share of oil or gas production, profit, or 03 revenue; 04 (3) taxes based on or measured by net income; 05 (4) interest or other financing charges or costs of raising equity or debt 06 capital; 07 (5) acquisition costs for a lease or property or exploration license; 08 (6) costs arising from fraud, wilful misconduct, or gross negligence; 09 (7) fines or penalties imposed by law; 10 (8) costs of arbitration, litigation, or other dispute resolution activities 11 that involve the state or concern the rights or obligations among owners of interests in, 12 or rights to production from, one or more leases or properties or a unit; 13 (9) costs incurred in organizing a partnership, joint venture, or other 14 business entity or arrangement; 15 (10) amounts paid to indemnify the state; the exclusion provided by 16 this paragraph does not apply to the costs of obtaining insurance or a surety bond from 17 a third-party insurer or surety; 18 (11) surcharges levied under AS 43.55.201 or 43.55.300; 19 (12) for a transaction that is an internal transfer or is otherwise not an 20 arm's length transaction, expenditures incurred that are in excess of fair market value; 21 (13) an expenditure incurred to purchase an interest in any corporation, 22 partnership, limited liability company, business trust, or any other business entity, 23 whether or not the transaction is treated as an asset sale for federal income tax 24 purposes; 25 (14) a tax levied under AS 43.55.011; 26 (15) the portion of costs incurred for dismantlement, removal, 27 surrender, or abandonment of a facility, pipeline, well pad, platform, or other 28 structure, or for the restoration of a lease, field, unit, area, body of water, or right-of- 29 way in conjunction with dismantlement, removal, surrender, or abandonment, that is 30 attributable to production of oil or gas occurring before April 1, 2006; the portion is 31 calculated as a ratio of the amount of oil and gas production, in barrels of oil
01 equivalent, associated with the facility, pipeline, well pad, platform, other structure, 02 lease, field, unit, area, body of water, or right-of-way occurring before April 1, 2006, 03 to the total amount of oil and gas production, in barrels of oil equivalent, associated 04 with that facility, pipeline, well pad, platform, other structure, lease, field, unit, area, 05 body of water, or right-of-way through the end of the calendar month before 06 commencement of the dismantlement, removal, surrender, or abandonment; a cost is 07 not excluded under this paragraph if the dismantlement, removal, surrender, or 08 abandonment for which the cost is incurred is undertaken for the purpose of replacing, 09 renovating, or improving the facility, pipeline, well pad, platform, or other structure; 10 for the purposes of this paragraph, "barrel of oil equivalent" means 11 (A) in the case of oil, one barrel; 12 (B) in the case of gas, 6,000 cubic feet; 13 (16) costs incurred for containment, control, cleanup, or removal in 14 connection with any unpermitted release of oil or a hazardous substance and any 15 liability for damages imposed on the producer or explorer for that unpermitted release; 16 this paragraph does not apply to the cost of developing and maintaining an oil 17 discharge prevention and contingency plan under AS 46.04.030; 18 (17) costs incurred to satisfy a work commitment under an exploration 19 license under AS 38.05.132; 20 (18) that portion of expenditures, that would otherwise be qualified 21 capital expenditures as defined in AS 43.55.023(k), incurred during a calendar year 22 that are less than the product of $0.30 multiplied by the total taxable production from 23 each lease or property, in BTU equivalent barrels, during that calendar year, except 24 that, when a portion of a calendar year is subject to this provision, the expenditures 25 and volumes shall be prorated within that calendar year. 26 (f) For purposes of AS 43.55.023(a) and (b) and only as to expenditures 27 incurred to explore for an oil or gas deposit located within land in which an explorer 28 does not own a working interest, the term "producer" in this section includes 29 "explorer." 30 (g) The department shall specify or approve a reasonable allocation method 31 for determining the portion of a cost that is appropriately treated as a lease expenditure
01 under this section if a cost that would otherwise constitute a lease expenditure under 02 this section is incurred to explore for, develop, or produce 03 (1) both an oil or gas deposit located within land outside the state and 04 an oil or gas deposit located within a lease or property, or other land, in the state; or 05 (2) an oil or gas deposit located partly within land outside the state and 06 partly within a lease or property, or other land, in the state. 07 (h) The department shall adopt regulations that provide for reasonable 08 methods of allocating costs between oil and gas and between leases or properties in 09 those circumstances where the determination of the lease expenditures that are 10 applicable to oil or to gas, or that are applicable to oil and gas produced from different 11 leases or properties, requires an allocation of costs. 12 (i) The department may adopt regulations that establish additional standards 13 necessary to carrying out the purposes of this section and AS 43.55.170, including the 14 incorporation of the concepts of 26 U.S.C. 482 (Internal Revenue Code), as amended, 15 the related or accompanying regulations of that provision, and any ruling or guidance 16 issued by the United States Internal Revenue Service that relates to that provision. 17 (j) For purposes of this section, 18 (1) "explore" includes conducting geological or geophysical 19 exploration, including drilling a stratigraphic test well; 20 (2) "ordinary and necessary" has the meaning given in 26 U.S.C. 162 21 (Internal Revenue Code), as amended, and regulations adopted under that section; 22 (3) "stratigraphic test well" means a well drilled for the sole purpose of 23 obtaining geological information to aid in exploring for an oil or gas deposit and the 24 target zones of which are located in the state. 25 Sec. 43.55.170. Adjustments to lease expenditures. (a) Unless the payment 26 or credit has already been subtracted in calculating billable or billed costs under 27 AS 43.55.165(c) or (d), a producer's lease expenditures under AS 43.55.165 must be 28 adjusted by subtracting payments or credits, other than tax credits, received by the 29 producer or by an operator acting for the producer for 30 (1) the use by another person of a production facility in which the 31 producer has an ownership interest or the management by the producer of a production
01 facility under a management agreement providing for the producer to receive a 02 management fee; 03 (2) a reimbursement or similar payment that offsets the producer's 04 lease expenditures, including an insurance recovery from a third-party insurer and a 05 payment from the state or federal government for reimbursement of the producer's 06 upstream costs, including costs for gathering, separating, cleaning, dehydration, 07 compressing, or other field handling associated with the production of oil or gas 08 upstream of the point of production; 09 (3) the sale or other transfer of 10 (A) an asset, including geological, geophysical, or well data or 11 interpretations, acquired by the producer as a result of a lease expenditure or an 12 expenditure that would be a lease expenditure if it were incurred after 13 March 31, 2006; for purposes of this subparagraph, 14 (i) if a producer removes from the state, for use outside 15 the state, an asset described in this subparagraph, the value of the asset 16 at the time it is removed is considered a payment received by the 17 producer for sale or transfer of the asset; 18 (ii) for a transaction that is an internal transfer or is 19 otherwise not an arm's length transaction, if the sale or transfer of the 20 asset is made for less than fair market value, the amount subtracted 21 must be the fair market value; and 22 (B) oil or gas 23 (i) that is not considered produced from a lease or 24 property under AS 43.55.020(e); and 25 (ii) the cost of acquiring which is a lease expenditure 26 incurred by the person that acquires the oil or gas. 27 (b) Except as otherwise provided under this subsection, if one or more 28 payments or credits subject to this section are received by a producer or by an operator 29 acting for the producer during a calendar year and if either the total amount of the 30 payments or credits exceeds the amount of the producer's applicable lease 31 expenditures for that calendar year or the producer has no lease expenditures for that
01 calendar year, the producer shall nevertheless subtract those payments or credits from 02 the lease expenditures or from zero, respectively, and the producer's applicable 03 adjusted lease expenditures for that calendar year are a negative number and shall be 04 applied to the pertinent calculation under AS 43.55.160(a) as a negative number. 05 (c) For purposes of AS 43.55.023(a) and (b) and only as to expenditures 06 incurred to explore for an oil or gas deposit located within land in which an explorer 07 does not own a working interest, the term "producer" in this section includes 08 "explorer." 09 Sec. 43.55.180. Required report. (a) The department shall study 10 (1) the effects of the provisions of this chapter on oil and gas 11 exploration, development, and production in the state, on investment expenditures for 12 oil and gas exploration, development, and production in the state, on the entry of new 13 producers into the oil and gas industry in the state, on state revenue, and on tax 14 administration and compliance, giving particular attention to the tax rates provided 15 under AS 43.55.011, the tax credits provided under AS 43.55.023 - 43.55.025, and the 16 deductions for and adjustments to lease expenditures provided under AS 43.55.160 - 17 43.55.170; and 18 (2) the effects of the tax rates under AS 43.55.011(i) on state revenue 19 and on oil and gas exploration, development, and production on private land, and the 20 fairness of those tax rates for private landowners. 21 (b) The department shall prepare a report on or before the first day of the 2011 22 regular session of the legislature on the results of the study made under (a) of this 23 section, including recommendations as to whether any changes should be made to this 24 chapter. The department shall notify the legislature that the report prepared under this 25 subsection is available. 26 * Sec. 26. AS 43.55.201 is amended to read: 27 Sec. 43.55.201. Surcharge levied. (a) Every producer of oil shall pay a 28 surcharge of $.01 [$.02] per barrel of oil produced from each lease or property in the 29 state, less any oil the ownership or right to which is exempt from taxation. 30 (b) The surcharge imposed by (a) of this section is in addition to the tax 31 imposed by AS 43.55.011 and is due on the last day of the month on oil produced
01 from each lease or property during the preceding month. The surcharge [SHALL 02 BE PAID IN THE SAME MANNER AS THE TAX IMPOSED BY AS 43.55.011 - 03 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.300 - 04 43.55.310. 05 (c) A producer of oil shall make a report [REPORTS] of production on 06 March 31 of the year following the calendar year of production and in the same 07 manner and under the same penalties as required under AS 43.55.011 - 43.55.180 08 [AS 43.55.011 - 43.55.150]. 09 * Sec. 27. AS 43.55.201 is amended by adding a new subsection to read: 10 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or 11 property is not considered to be produced from a lease or property for purposes of this 12 section. 13 * Sec. 28. AS 43.55.300 is amended to read: 14 Sec. 43.55.300. Surcharge levied. (a) Every producer of oil shall pay a 15 surcharge of $.04 [$.03] per barrel of oil produced from each lease or property in the 16 state, less any oil the ownership or right to which is exempt from taxation. 17 (b) The surcharge imposed by (a) of this section is in addition to the tax 18 imposed by AS 43.55.011 and is due on the last day of the month on oil produced 19 from each lease or property during the preceding month. The surcharge [SHALL 20 BE PAID IN THE SAME MANNER AS THE TAX IMPOSED BY AS 43.55.011 - 21 43.55.150; AND] is in addition to the surcharge imposed by AS 43.55.201 - 22 43.55.231. 23 (c) A producer of oil shall make a report [REPORTS] of production on 24 March 31 of the year following the calendar year of production and in the same 25 manner and under the same penalties as required under AS 43.55.011 - 43.55.180 26 [AS 43.55.011 - 43.55.150]. 27 * Sec. 29. AS 43.55.300 is amended by adding a new subsection to read: 28 (d) Oil not considered under AS 43.55.020(e) to be produced from a lease or 29 property is not considered to be produced from a lease or property for purposes of this 30 section. 31 * Sec. 30. AS 43.55.900(6) is repealed and reenacted to read:
01 (6) "gas" means 02 (A) all natural, associated, or casinghead gas; 03 (B) all hydrocarbons that 04 (i) are recovered by mechanical separation of well 05 fluids or by gas processing in a gas processing plant; and 06 (ii) exist in a gaseous phase at the completion of 07 mechanical separation and any gas processing in a gas processing plant; 08 and 09 (C) all other hydrocarbons produced from a well not defined as 10 oil; 11 * Sec. 31. AS 43.55.900(7) is repealed and reenacted to read: 12 (7) "gross value at the point of production" means 13 (A) for oil, the value of the oil at its point of production 14 without deduction of any costs upstream of that point of production; 15 (B) for gas, the value of the gas at its point of production 16 without deduction of any costs upstream of that point of production; 17 * Sec. 32. AS 43.55.900(10) is repealed and reenacted to read: 18 (10) "oil" means 19 (A) crude petroleum oil; and 20 (B) all liquid hydrocarbons that are recovered by mechanical 21 separation of well fluids or by gas processing in a gas processing plant; 22 * Sec. 33. AS 43.55.900 is amended by adding new paragraphs to read: 23 (17) "British thermal unit" means the quantity of heat required to raise 24 the temperature of one pound of water from 58.5 degrees Fahrenheit to 59.5 degrees 25 Fahrenheit at a constant pressure of one atmosphere; 26 (18) "BTU equivalent barrel" means 27 (A) in the case of oil, one barrel; 28 (B) in the case of gas, the amount of gas that has a heating 29 value of 6,000,000 British thermal units; 30 (19) "Cook Inlet sedimentary basin" has the meaning given in 31 regulations adopted to implement AS 38.05.180(f)(4);
01 (20) "explorer" means a person who, in exploring for new oil or gas 02 reserves, incurs expenditures; 03 (21) "gas processing" 04 (A) means processing a gaseous mixture of hydrocarbons 05 (i) by means of absorption, adsorption, externally 06 applied refrigeration, artificial compression followed by adiabatic 07 expansion using the Joule-Thomson effect, or another physical process 08 that is not mechanical separation; and 09 (ii) for the purpose of extracting and recovering liquid 10 hydrocarbons; 11 (B) does not include gas treatment; 12 (22) "gas processing plant" means a facility that 13 (A) extracts and recovers liquid hydrocarbons from a gaseous 14 mixture of hydrocarbons by gas processing; and 15 (B) is located upstream of any gas treatment and upstream of 16 the inlet of any gas pipeline system transporting gas to a market; 17 (23) "gas treatment" 18 (A) means conditioning gas and removing from gas 19 nonhydrocarbon substances for the purpose of rendering the gas acceptable for 20 tender and acceptance into a gas pipeline system; 21 (B) includes incidentally removing liquid hydrocarbons from 22 the gas; 23 (C) does not include 24 (i) dehydration required to facilitate the movement of 25 gas from the well to the point where gas processing takes place; 26 (ii) the scrubbing of liquids from gas to facilitate gas 27 processing; 28 (24) "heating value" means the gross number of BTUs released by 29 complete combustion of an amount of gas; 30 (25) "landowner's royalty interest" means 31 (A) a lessor's royalty interest under an oil and gas lease; or
01 (B) a royalty interest that is 02 (i) held by a surface owner of land from which oil or 03 gas is produced; and 04 (ii) granted in exchange for the right to use the surface 05 of that land or as compensation for damage to the surface of that land; 06 (26) "oil and gas lease" includes an oil and gas lease, a gas only lease, 07 and an oil only lease; 08 (27) "point of production" means 09 (A) for oil, the automatic custody transfer meter or device 10 through which the oil enters into the facilities of a carrier pipeline or other 11 transportation carrier in a condition of pipeline quality; in the absence of an 12 automatic custody transfer meter or device, "point of production" means the 13 mechanism or device to measure the quantity of oil that has been approved by 14 the department for that purpose, through which the oil is tendered and accepted 15 in a condition of pipeline quality into the facilities of a carrier pipeline or other 16 transportation carrier or into a field topping plant; 17 (B) for gas, other than gas described in (C) of this paragraph, 18 that is 19 (i) not subjected to or recovered by mechanical 20 separation or run through a gas processing plant, the first point where 21 the gas is accurately metered; 22 (ii) subjected to or recovered by mechanical separation 23 but not run through a gas processing plant, the first point where the gas 24 is accurately metered after completion of mechanical separation; 25 (iii) run through a gas processing plant, the first point 26 where the gas is accurately metered downstream of the plant; 27 (C) for gas run through an integrated gas processing plant and 28 gas treatment facility that does not accurately meter the gas after the gas 29 processing and before the gas treatment, the first point where gas processing is 30 completed or where gas treatment begins, whichever is further upstream. 31 * Sec. 34. AS 43.55.011(a), 43.55.011(b), 43.55.011(c), 43.55.012, 43.55.013, 43.55.016,
01 43.55.025(k)(1), 43.55.025(k)(3), 43.55.900(1), 43.55.900(8), 43.55.900(11), 43.55.900(12), 02 and 43.55.900(16) are repealed. 03 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 APPLICABILITY. (a) Sections 5, 7 - 10, 12 - 14, 16 - 20, 24, and 26 - 34 of this Act 06 and AS 43.55.160 - 43.55.170, enacted by sec. 25 of this Act, apply to oil and gas produced 07 after March 31, 2006. 08 (b) Section 11 of this Act applies to oil and gas produced before, on, or after the 09 effective date of sec. 11 of this Act. 10 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 TRANSITIONAL PROVISIONS. (a) Notwithstanding any contrary provision of 13 AS 43.55.023(i), enacted by sec. 13 of this Act, for oil and gas produced after March 31, 14 2006, and before January 1, 2007, the phrase "20 percent" in AS 43.55.023(i)(2), enacted by 15 sec. 13 of this Act, shall be replaced by the phrase "15 percent." 16 (b) For oil and gas produced before April 1, 2006, the provisions of AS 43.55, and 17 regulations adopted under AS 43.55, that were in effect before April 1, 2006, and that were 18 applicable to the oil and gas continue to apply to that oil and gas. 19 (c) Notwithstanding any contrary provision of AS 43.55.020(a), as repealed and 20 reenacted by sec. 7 of this Act, for oil and gas produced after March 31, 2006, and before 21 January 1, 2007, 22 (1) the amount of the taxes that would have been levied on the producer by 23 AS 43.55, as the provisions of that chapter read on March 31, 2006, is due on the last day of 24 each calendar month on the oil and gas that were produced from each lease or property during 25 the preceding month; 26 (2) the amount, if any, of the taxes levied by AS 43.55.011(e), (f), (g), and (i), 27 enacted by sec. 5 of this Act, net of any credits applied as allowed by law, that exceeds the 28 amount due under (1) of this subsection, is due on March 31, 2007. 29 (d) Notwithstanding any contrary provision of AS 43.55.030(a), as amended by sec. 30 19 of this Act, for oil and gas produced after March 31, 2006, and before January 1, 2007, the 31 person paying the tax shall file with the Department of Revenue, at the time an amount of tax
01 is due 02 (1) under (c)(1) of this section, the statement required under former 03 AS 43.55.030(a), as that subsection read on March 31, 2006; and 04 (2) under (c)(2) of this section, the statement required under AS 43.55.030(a), 05 as amended by sec. 19 of this Act. 06 (e) Notwithstanding any contrary provision of AS 43.55.201(a) or (b), as amended by 07 sec. 26 of this Act, or AS 43.55.300(a) or (b), as amended by sec. 28 of this Act, for oil 08 produced after March 31, 2006, and before January 1, 2007, 09 (1) the amount of the surcharges that would have been imposed on the 10 producer under AS 43.55, as the provisions of that chapter read on March 31, 2006, is due on 11 the last day of each calendar month on oil produced from each lease or property during the 12 preceding month; 13 (2) the amount, if any, of the surcharges imposed under AS 43.55.201(a), as 14 amended by sec. 26 of this Act, and AS 43.55.300(a), as amended by sec. 28 of this Act, that 15 exceeds the amount due under (1) of this subsection, is due on March 31, 2007. 16 (f) Notwithstanding any contrary provision of AS 43.55.201(c), as amended by sec. 17 26 of this Act, or AS 43.55.300(c), as amended by sec. 28 of this Act, for oil produced after 18 March 31, 2006, and before January 1, 2007, at the time an amount of surcharge is due 19 (1) under (e)(1) of this section, the producer shall file the report of production 20 required under former AS 43.55.201(c) and 43.55.300(c), as those provisions read on 21 March 31, 2006; and 22 (2) under (e)(2) of this section, the producer shall file on March 31, 2007, the 23 report of production otherwise required under AS 43.55.201(c), as amended by sec. 26 of this 24 Act, and AS 43.55.300(c), as amended by sec. 28 of this Act. 25 (g) For purposes of taxes to be calculated and due under (c)(1) of this section and 26 statements to be filed under (d)(1) of this section, regulations that were adopted by the 27 Department of Revenue under AS 43.55, as the provisions of that chapter read on March 31, 28 2006, and that were in effect on that date apply to those taxes and statements. 29 (h) Notwithstanding any contrary provision of AS 43.55.160(a)(2), enacted by sec. 25 30 of this Act, for oil and gas produced after March 31, 2006, and before January 1, 2007, the 31 phrase "1/12" in AS 43.55.160(a)(2)(A) - (D), enacted by sec. 25 of this Act, shall be
01 replaced by the phrase "1/9." 02 * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 05 contrary provision of AS 44.62.240, a regulation adopted by the Department of Revenue to 06 implement, interpret, make specific, or otherwise carry out the provisions of secs. 5, 7 - 10, 12 07 - 14, 16 - 20, 24 - 34, and 36 of this Act may apply retroactively to April 1, 2006, if the 08 Department of Revenue expressly designates in the regulation that the regulation applies 09 retroactively to that date. 10 * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 13 heading of 14 (1) AS 43.55 from "Oil and Gas Production Taxes and Oil Surcharge" to "Oil 15 and Gas Production Tax and Oil Surcharge"; 16 (2) article 1 of AS 43.55 from "Oil and Gas Properties Production Taxes" to 17 "Oil and Gas Production Tax"; 18 (3) AS 43.55.011 from "Oil production tax" to "Oil and gas production tax"; 19 (4) AS 43.55.025 from "Tax credit for oil and gas exploration or gas only 20 exploration" to "Alternative tax credit for oil and gas exploration"; 21 (5) AS 43.55.150 from "Determination of gross value" to "Determination of 22 gross value at the point of production." 23 * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 RETROACTIVITY OF PROVISIONS OF ACT. Sections 5, 7 - 10, 12 - 14, 16 - 20, 26 and 24 - 36 of this Act are retroactive to April 1, 2006. 27 * Sec. 40. This Act takes effect immediately under AS 01.10.070(c).