00                            SENATE BILL NO. 239                                                                         
01 "An Act establishing minimum rates of tax under the oil and gas properties production                                   
02 (severance) tax for certain oil produced from North Slope reservoirs; and providing for                                 
03 an effective date."                                                                                                     
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1.  AS 43.55.013 is amended by adding a new subsection to read:                                          
06            (l)  The provisions of this subsection apply to oil produced from a portion of a                             
07       reservoir located north of 68 degrees North latitude. During each month in which the                              
08       average West Coast prevailing value for that oil determined under AS 43.55.020(f) on                              
09       which tax is due under this chapter is equal to or exceeds $35 per barrel, the provisions                         
10       of this section may not apply to reduce the tax rate to less than 10 percent of the gross                         
11       value of that oil at the point of production, except that, if the provisions of this section                      
12       without consideration of the effects of the application of this subsection would result                           
13       in a tax rate of at least 10 percent but not more than 15 percent of the gross value of                           
14       the oil at the point of production, the provisions of this section may not apply to                               

01       reduce the tax rate to less than 15 percent of the gross value of the oil at the point of                         
02       production. For purposes of application and administration of this subsection,                                    
03                 (1)  the provisions of this subsection do not apply to                                                  
04                      (A)  heavy oil; for purposes of this subparagraph, "heavy oil"                                     
05            means oil equal to or less than 20 degrees API gravity; and                                                  
06                      (B)  oil if the taxpayer, by clear and convincing evidence,                                        
07            demonstrates to the commissioner that payment of tax under this chapter                                      
08            without application of the economic limit factor authorized by this section                                  
09            would make the production of the oil uneconomic;                                                             
10                 (2)  on the first July 1 that follows the effective date of this subsection,                            
11       and annually on each July 1 thereafter, the commissioner shall                                                    
12                      (A)  revise the dollar price set out in this subsection to reflect                                 
13            inflation during the intervening period as defined by regulation adopted by the                              
14            department; the dollar price revision shall have effect on the computation of                                
15            the tax due under this chapter retroactively to the index date for the revision as                           
16            described in this subparagraph; and                                                                          
17                      (B)  promptly report the application of the revision described in                                  
18            (A) of this paragraph to all taxpayers subject to the tax levied and collected                               
19            under this chapter.                                                                                          
20    * Sec. 2. This Act takes effect on the first day of the calendar month following this Act's                        
21 becoming law under AS 01.10.070(f)(4).