SB 271: "An Act relating to interest on certain underpayments or overpayments for the oil and gas production tax, to certificates for certain oil and gas production tax credits for qualified capital expenditures, and to alternative tax credits for expenditures for certain oil and gas development and exploration activities for the oil and gas production tax; relating to the use of the oil and gas tax credit fund to purchase certain tax credit certificates; and providing for an effective date."
00 SENATE BILL NO. 271 01 "An Act relating to interest on certain underpayments or overpayments for the oil and 02 gas production tax, to certificates for certain oil and gas production tax credits for 03 qualified capital expenditures, and to alternative tax credits for expenditures for certain 04 oil and gas development and exploration activities for the oil and gas production tax; 05 relating to the use of the oil and gas tax credit fund to purchase certain tax credit 06 certificates; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 43.55.020 is amended by adding a new subsection to read: 09 (i) Notwithstanding any contrary provision of AS 43.05.225 or (g) or (h) of 10 this section, if the amount of a tax payment, including an installment payment, due 11 under (a)(1) - (4) of this section is affected by the retroactive application of a 12 regulation adopted under this chapter, the department shall determine whether the 13 retroactive application of the regulation caused an underpayment or an overpayment of
01 the amount due and adjust the interest due on the affected payment as follows: 02 (1) if an underpayment of the amount due occurred, the department 03 shall waive interest that would otherwise accrue for the underpayment before the first 04 day of the second month following the month in which the regulation became 05 effective, if the department determines that 06 (A) the producer's underpayment resulted because the 07 regulation was not in effect when the payment was due; and 08 (B) the producer made a good faith estimate of its tax 09 obligation in light of the regulations then in effect when the payment was due, 10 and paid the estimated tax; 11 (2) if an overpayment of the amount due occurred and the department 12 determines that the producer's overpayment resulted because the regulation was not in 13 effect when the payment was due, the obligation for a refund for the overpayment does 14 not begin to accure interest earlier than the following, as applicable: 15 (A) except as otherwise provided under (B) of this paragraph, 16 the first day of the second month following the month in which the regulation 17 became effective; 18 (B) 90 days after an amended statement under AS 43.55.030(a) 19 and an application to request a refund of production tax paid is filed, if the 20 overpayment was for a period for which an amended statement under 21 AS 43.55.030(a) was required to be filed before the regulation became 22 effective. 23 * Sec. 2. AS 43.55.023(a) is amended to read: 24 (a) A producer or explorer may take a tax credit for a qualified capital 25 expenditure as follows: 26 (1) notwithstanding that a qualified capital expenditure may be a 27 deductible lease expenditure for purposes of calculating the production tax value of oil 28 and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under 29 AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or 30 explorer that incurs a qualified capital expenditure may also elect to apply a tax credit 31 against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that
01 expenditure; [HOWEVER, NOT MORE THAN HALF OF THE TAX CREDIT MAY 02 BE APPLIED FOR A SINGLE CALENDAR YEAR;] 03 (2) a producer or explorer may take a credit for a qualified capital 04 expenditure incurred in connection with geological or geophysical exploration or in 05 connection with an exploration well only if the producer or explorer 06 (A) agrees, in writing, to the applicable provisions of 07 AS 43.55.025(f) [AS 43.55.025(f)(2)]; 08 (B) submits to the Department of Natural Resources all data 09 that would be required to be submitted under AS 43.55.025(f) 10 [AS 43.55.025(f)(2)]. 11 * Sec. 3. AS 43.55.023(d) is amended to read: 12 (d) Except as limited by (i) of this section, a person that is entitled to take a tax 13 credit under this section that wishes to transfer the unused credit to another person or 14 obtain a cash payment under AS 43.55.028 may apply to the department for a 15 transferable tax credit certificate [CERTIFICATES]. An application under this 16 subsection must be in a form prescribed by the department and must include 17 supporting information and documentation that the department reasonably requires. 18 The department shall grant or deny an application, or grant an application as to a lesser 19 amount than that claimed and deny it as to the excess, not later than 120 days after the 20 latest of (1) March 31 of the year following the calendar year in which the qualified 21 capital expenditure or carried-forward annual loss for which the credit is claimed was 22 incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for 23 the calendar year in which the qualified capital expenditure or carried-forward annual 24 loss for which the credit is claimed was incurred; or (3) the date the application was 25 received by the department. If, based on the information then available to it, the 26 department is reasonably satisfied that the applicant is entitled to a credit, the 27 department shall issue the applicant a [TWO TRANSFERABLE] tax credit certificate 28 [CERTIFICATES, EACH FOR HALF OF THE AMOUNT OF THE CREDIT]. The 29 credit shown on [ONE OF] the certificate [TWO CERTIFICATES] is available for 30 immediate use. [THE CREDIT SHOWN ON THE SECOND OF THE TWO 31 CERTIFICATES MAY NOT BE APPLIED AGAINST A TAX FOR A CALENDAR
01 YEAR EARLIER THAN THE CALENDAR YEAR FOLLOWING THE 02 CALENDAR YEAR IN WHICH THE CERTIFICATE IS ISSUED, AND THE 03 CERTIFICATE MUST CONTAIN A CONSPICUOUS STATEMENT TO THAT 04 EFFECT.] A certificate issued under this subsection does not expire. 05 * Sec. 4. AS 43.55.025(a) is repealed and reenacted to read: 06 (a) Subject to the terms and conditions of this section, a 30 percent credit 07 against the production tax levied by AS 43.55.011(e) is allowed for exploratory well 08 expenditures if 09 (1) the exploration expenditures are incurred and paid by an explorer 10 that holds an interest in the exploratory well for which the production tax credit is 11 claimed; 12 (2) the exploratory well encounters an oil or gas deposit or a dry hole; 13 (3) the exploratory well has been completed, suspended, or abandoned 14 at the time the explorer claims the tax credit under (f) of this section; 15 (4) the exploratory well expenditures are for goods, services, or rentals 16 of personal property reasonably required for the surface preparation, drilling, casing, 17 cementing, and logging of the well, and, in the case of a dry hole, for the expenses 18 required for abandonment if the well is abandoned no later than 18 months after the 19 date the well was spudded; 20 (5) a predrilling conference was held with the Department of Natural 21 Resources to discuss the drilling program and the data acquisition scope and strategy; 22 and 23 (6) the well is not a service well, a stratigraphic test well, or a 24 development well. 25 * Sec. 5. AS 43.55.025(b) is repealed and reenacted to read: 26 (b) Subject to the terms and conditions of this section, a 30 percent credit 27 against the production tax levied by AS 43.55.011(e) is allowed for development well 28 expenditures if 29 (1) the development well expenditures are incurred and paid by a 30 producer that holds an interest in the development well for which the production tax 31 credit is claimed;
01 (2) the development well is drilled to a known productive pool and 02 intended to be a producing well at the time the producer claims the tax credit under (f) 03 of this section; 04 (3) the development well expenditures are for goods, services, or 05 rentals of personal property reasonably required for redrilling, casing, cementing, 06 logging, completing, workover operations, or other operations intended by the 07 producer to increase or enhance well production from the known productive pool; and 08 (4) the well is not a service well, a stratigraphic test well, or an 09 exploratory well. 10 * Sec. 6. AS 43.55.025(c) is repealed and reenacted to read: 11 (c) Subject to the terms and conditions of this section, a 40 percent credit 12 against the production tax levied by AS 43.55.011(e) is allowed for exploratory well 13 expenditures if 14 (1) the exploration expenditures qualifiy for a credit under (a) of this 15 section; and 16 (2) the exploratory well is located not less than 25 miles outside of the 17 outer boundary, as delineated on July 1, 2003, of any unit that is under a plan of 18 development, except that for a well for a Cook Inlet prospect to qualify under this 19 paragraph, the well must be located not less than 10 miles outside the outer boundary, 20 as delineated on July 1, 2003, of any unit that is under a plan of development. 21 * Sec. 7. AS 43.55.025(d) is repealed and reenacted to read: 22 (d) Subject to the terms and conditions of this section, a 40 percent credit 23 against the production tax levied by AS 43.55.011(e) is allowed for seismic 24 exploration expenditures if the seismic exploration was conducted outside the 25 boundaries of a production unit or an exploration unit. However, the amount of the 26 expenditure that is otherwise eligible under this subsection is reduced proportionately 27 by the portion of the seismic exploration activity that crossed into a production unit or 28 an exploration unit. 29 * Sec. 8. AS 43.55.025(e) is repealed and reenacted to read: 30 (e) Notwithstanding (a), (b), (c), or (d) of this section, 31 (1) an exploration or development well credit against the production
01 tax levied by AS 43.55.011(e) 02 (A) must be for exploration or for development well 03 expenditures incurred for work performed after June 30, 2010, and before 04 July 1, 2016; 05 (B) may not be for administration, supervision, engineering, 06 lease operating, geological, management, community relations, or 07 environmental costs; bonuses, taxes, or other payments to governments related 08 to the well; costs, including repairs and replacements, arising from or 09 associated with fraud, wilful misconduct, gross negligence, criminal 10 negligence, or violation of law, including a violation of 33 U.S.C. 1319(c)(1) 11 or 1321(b)(3) (Clean Water Act); or other costs that are generally recognized 12 as indirect costs or financing costs; and 13 (C) may not be incurred for an exploration well or seismic 14 exploration that is included in a plan of exploration or a plan of development 15 for any unit before May 14, 2003; and 16 (2) a certain exploration or development well expenditure may be 17 claimed only once under this section. 18 * Sec. 9. AS 43.55.025(f) is amended to read: 19 (f) For a production tax credit under this section, 20 (1) an explorer or producer shall, in a form prescribed by the 21 department and, except for a credit under (k) of this section, within six months of the 22 completion of the exploration activity or development well activity, claim the credit 23 and submit information sufficient to demonstrate to the department's satisfaction that 24 the claimed exploration or development well expenditures qualify under this section; 25 in addition, the explorer or producer shall submit information necessary for the 26 commissioner of natural resources to evaluate the validity of the explorer's or 27 producer's compliance with the requirements of this section; 28 (2) an explorer claiming a credit under (a), (c), or (d) of this section 29 shall agree, in writing, 30 (A) to notify the Department of Natural Resources, within 30 31 days after completion of seismic or geophysical data processing, completion of
01 well drilling, or filing of a claim for credit, whichever is the latest, for which 02 exploration costs are claimed, of the date of completion and submit a report to 03 that department describing the processing sequence and providing a list of all 04 data sets [AVAILABLE]; 05 (B) to provide to the Department of Natural Resources, within 06 30 days after the date of a request, unless a longer period is provided by the 07 Department of Natural Resources, specific data sets, ancillary data, and reports 08 identified in (A) of this paragraph; in this subparagraph, 09 (i) a seismic or geophysical data set includes the data 10 for an entire seismic survey, irrespective of whether the survey area 11 covers nonstate land in addition to state land or land in a unit in 12 addition to land outside a unit; 13 (ii) well data include all analyses conducted on physical 14 material, and well logs collected from the well, results, and copies of 15 data collected and data analyses for the well, including well logs; 16 sample analyses; testing geophysical and velocity data including 17 seismic profiles and check shot surveys; testing data and analyses; age 18 data; geochemical analyses; and tangible material; 19 (C) that, notwithstanding any provision of AS 38, information 20 provided under this paragraph will be held confidential by the Department of 21 Natural Resources, 22 (i) in the case of well data, until the expiration of the 23 24-month period of confidentiality described in AS 31.05.035(c), at 24 which time the Department of Natural Resources will release the 25 information after 30 days' public notice unless, in the discretion of the 26 commissioner of natural resources, it is necessary to protect 27 information relating to the valuation of unleased acreage in the same 28 vicinity, or unless the well is on private land and the owner, including 29 the lessor but not the lessee, of the oil and gas resources has not given 30 permission to release the well data; 31 (ii) in the case of seismic or other geophysical data,
01 other than seismic data acquired by seismic exploration subject to (k) of 02 this section, for 10 years following the completion date, at which time 03 the Department of Natural Resources will release the information after 04 30 days' public notice, except as to seismic or other geophysical data 05 acquired from private land, unless the owner, including a lessor but not 06 a lessee, of the oil and gas resources in the private land gives 07 permission to release the seismic or other geophysical data associated 08 with the private land; 09 (iii) in the case of seismic data obtained by seismic 10 exploration subject to (k) of this section, only until the expiration of 30 11 days' public notice issued on or after the date the production tax credit 12 certificate is issued under (5) of this subsection; 13 (3) if more than one explorer or producer holds an interest in an 14 exploration [A] well, development well, or seismic exploration, each explorer or 15 producer may claim an amount of credit that is proportional to the explorer's or 16 producer's cost incurred and paid; 17 (4) if an explorer is not also a producer subject to the production 18 tax under this chapter, the department may nonetheless exercise the full extent of its 19 powers as though the explorer were a taxpayer under this title, in order to verify that 20 the claimed expenditures are qualified exploration expenditures under this section; and 21 (5) if the department is satisfied that the explorer's or producer's 22 claimed expenditures are qualified under this section and that all data required to be 23 submitted under this section have been submitted, the department shall issue to the 24 explorer or producer a production tax credit certificate for the amount of credit to be 25 allowed against production taxes levied by AS 43.55.011(e); notwithstanding any 26 contrary provision of AS 38, AS 40.25.100, or AS 43.05.230, the following 27 information is not confidential and may be published: 28 (A) the explorer's or producer's name; 29 (B) the date of the credit application; 30 (C) the location of the well or seismic exploration; 31 (D) the date of the department's issuance of the certificate;
01 [AND] 02 (E) the date on which the information required to be submitted 03 under this section will be released; and 04 (F) the type of seismic or geophysical data or well data that 05 will be released. 06 * Sec. 10. AS 43.55.025(g) is amended to read: 07 (g) An explorer or producer, other than an entity that is exempt from taxation 08 under this chapter, may transfer, convey, or sell its production tax credit certificate to 09 any person, and any person who receives a production tax credit certificate may also 10 transfer, convey, or sell the certificate. 11 * Sec. 11. AS 43.55.025(k) is amended to read: 12 (k) Subject to the terms and conditions of this section, if a claim is filed under 13 (f)(1) of this section before January 1, 2016, a credit against the production tax levied 14 by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible 15 expenditure under this subsection incurred for seismic exploration performed before 16 July 1, 2003. To be eligible under this subsection, an expenditure must 17 (1) have been for seismic exploration that 18 (A) obtained data that the commissioner of natural resources 19 considers to be in the best interest of the state to acquire for public distribution; 20 and 21 (B) was conducted outside the boundaries of a production unit; 22 however, the amount of the expenditure that is otherwise eligible under this 23 section is reduced proportionately by the portion of the seismic exploration 24 activity that crossed into a production unit; and 25 (2) qualify under (e)(2) [(b)(3)] of this section. 26 * Sec. 12. AS 43.55.028(e)(2) and 43.55.028(e)(3) are repealed. 27 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 TRANSITION: APPLICABILITY OF SEC. 1 OF THIS ACT. Section 1 of this Act 30 applies to taxes, including installment payments of estimated tax, due on or after February 27, 31 2007.
01 02 * Sec. 14. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 05 section heading of AS 43.55.025 from "Alternative tax credit for oil and gas exploration" to 06 "Alternative tax credit for exploration and development well expenses". 07 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 RETROACTIVITY OF SECS. 1 - 3 OF THIS ACT. (a) Section 1 of this Act is 10 retroactive to February 28, 2007. 11 (b) Sections 2 and 3 of this Act are retroactive to January 1, 2010. 12 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 RETROACTIVITY OF REGULATIONS. Notwithstanding any contrary provision of 15 AS 44.62.240, if the Department of Revenue expressly designates in the regulation that the 16 regulation applies retroactively to a specific date, the regulation adopted by the Department of 17 Revenue to implement, interpret, make specific or otherwise carry out secs. 1, 2, or 3 of this 18 Act applies retroactively to that date. 19 * Sec. 17. Sections 4 - 12 of this Act take effect July 1, 2010. 20 * Sec. 18. Except as provided in sec. 17 of this Act, this Act takes effect immediately under 21 AS 01.10.070(c).