HB 331: "An Act establishing the Alaska Tax Credit Certificate Bond Corporation; relating to purchases of tax credit certificates; relating to overriding royalty interest agreements; and providing for an effective date."
00 HOUSE BILL NO. 331 01 "An Act establishing the Alaska Tax Credit Certificate Bond Corporation; relating to 02 purchases of tax credit certificates; relating to overriding royalty interest agreements; 03 and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 36.30.850(b) is amended by adding new paragraphs to read: 06 (49) contracts of the Alaska Tax Credit Certificate Bond Corporation 07 under AS 37.18.010 - 37.18.900; 08 (50) overriding royalty interest agreements under AS 44.37.230. 09 * Sec. 2. AS 37 is amended by adding a new chapter to read: 10 Chapter 18. Alaska Tax Credit Certificate Bond Corporation. 11 Sec. 37.18.010. Alaska Tax Credit Certificate Bond Corporation. There is 12 established the Alaska Tax Credit Certificate Bond Corporation. The corporation is a 13 public corporation and government instrumentality in the Department of Revenue 14 managed by a board of directors. The purpose of the corporation is to finance
01 purchases and payments under AS 43.55.028 of transferable tax credit certificates 02 issued under AS 43.55.023, production tax credit certificates issued under 03 AS 43.55.025, and payments claimed under AS 43.20.046, 43.20.047, or 43.20.053. 04 Sec. 37.18.020. Board of directors. The directors of the corporation are the 05 commissioner of commerce, community, and economic development, the 06 commissioner of administration, and the commissioner of revenue. If a director is 07 absent or otherwise unable to act, the director's designee in the department shall act as 08 a director of the corporation in the director's place. 09 Sec. 37.18.030. Bond authorization. (a) The issuance and sale of bonds by the 10 corporation is authorized as provided in this section for purposes of financing 11 purchases and payments under AS 43.55.028, including the costs of issuance and 12 administration. The net proceeds of the sale of the bonds remaining after payment of 13 costs of issuance and administration shall be transferred to the commissioner of 14 revenue for disbursement under AS 43.55.028 for purchases or payments. Accrued 15 interest paid on the bonds shall be paid into the reserve fund. The authorization to 16 issue bonds in this section expires on December 31, 2021. 17 (b) The total unpaid principal amount of bonds, including refunding bonds, 18 but excluding refunded bonds, issued by the corporation for the purposes of financing 19 purchases and payments under AS 43.55.028 may not exceed $1,000,000,000. The 20 bonds do not constitute a general obligation of the state and are not state debt within 21 the meaning of art. IX, sec. 8, Constitution of the State of Alaska. Authorization by the 22 voters of the state or the legislature is not required. 23 (c) The corporation may enter into agreements with other state agencies as 24 necessary or convenient to implement this section and AS 37.18. 25 (d) The corporation may contract for the services of underwriters, paying 26 agents, trustees, escrow agents, bond printers, rating agencies, bond insurance, credit 27 enhancement providers, accountants, financial advisors, disclosure counsel, and bond 28 counsel, and other services as are necessary or desirable to accomplish the bond 29 issuance and sale. 30 Sec. 37.18.040. Reserve fund. (a) The corporation may establish and maintain 31 a special fund called the Alaska Tax Credit Certificate Bond Corporation reserve fund
01 in which there shall be deposited or transferred 02 (1) all money appropriated by the legislature for the purpose of the 03 fund in accordance with the provisions of (g) of this section; 04 (2) all proceeds of bonds required to be deposited in the fund by terms 05 of a contract between the corporation and its bondholders or a resolution of the 06 corporation with respect to the proceeds of bonds; 07 (3) all other money appropriated by the legislature to the reserve fund; 08 and 09 (4) any other money or funds of the corporation that it decides to 10 deposit in the fund. 11 (b) Subject to the provisions of (h) of this section, money in the reserve fund 12 shall be held and applied solely to the payment of the interest on and principal of 13 bonds of the corporation as the interest and principal become due and payable to the 14 retirement of bonds, or for disbursement by the commissioner of revenue for 15 purchases or payments under AS 43.55.028. Money may not be withdrawn if a 16 withdrawal would reduce the amount in the reserve fund to an amount less than the 17 required debt service reserve except for payment of interest then due and payable on 18 bonds and the principal of bonds then maturing and payable and for the retirement of 19 bonds in accordance with the terms of a contract between the corporation and its 20 bondholders and for which payments of other money of the corporation is not then 21 available. 22 (c) Money in the reserve fund in excess of the required debt service reserve as 23 defined in (b) of this section, whether because of investment or otherwise, may be 24 withdrawn at any time by the corporation for disbursement by the commissioner of 25 revenue for purchases or payments under AS 43.55.028 or transferred to another fund 26 or account of the corporation subject to the provision of (h) of this section. 27 (d) Money in the reserve fund may be invested in the same manner and on the 28 same conditions as permitted for investment of funds belonging to the state or held in 29 the treasury under AS 37.10.070; however, the corporation may agree with the 30 bondholders to further limit these investments. 31 (e) For purposes of valuation, investments in the reserve fund shall be valued
01 at par or, if purchased at less than par, at cost unless otherwise provided by resolution 02 of the corporation. Valuation on a particular date shall include the amount of interest 03 then earned or accrued to that date on the money or investments in the reserve fund. 04 (f) Notwithstanding any other provision of this chapter, bonds may not be 05 issued by the corporation unless there is in the reserve fund the required debt service 06 reserve for all bonds then issued and outstanding and for the bonds to be issued; 07 however, the corporation may satisfy this requirement by depositing as much of the 08 proceeds of the bonds to be issued, on their issuance, as is needed to meet the required 09 debt service reserve or by funding the reserve fund with cash, a surety bond, letter of 10 credit, or other instrument in the face amount necessary to meet the required debt 11 service reserve. The corporation may at any time issue its bonds or notes for the 12 purpose of increasing the amount in the reserve fund to the required debt service 13 reserve, or to meet whatever higher or additional reserve that may be fixed by the 14 corporation with respect to the fund. 15 (g) To assure the maintenance of the required debt service reserve in the 16 reserve fund, the legislature may appropriate annually to the corporation for deposit in 17 the fund the sum, certified by the chair of the corporation to the governor and to the 18 legislature, that is necessary to restore the fund to an amount equal to the required debt 19 service reserve. The chair annually, before January 30, shall make and deliver to the 20 governor and to the legislature a certificate stating the sum required to restore the fund 21 to that amount, and the certified sum may be appropriated and paid to the corporation 22 during the then current state fiscal year. Nothing in this subsection creates a debt or 23 liability of the state. 24 (h) All amounts received because of money appropriated to the reserve fund 25 shall be held and applied in accordance with (b) of this section. 26 (i) All references to the reserve fund in this section include special accounts 27 within the reserve fund that may be created by the corporation to secure the payment 28 of particular bonds. 29 (j) The commissioner of revenue may, subject to appropriation, lend surplus 30 money in the general fund to the corporation for deposit to any account in the reserve 31 fund in an amount equal to the required debt service reserve. The loans shall be made
01 on the terms and conditions that may be agreed on by the commissioner of revenue 02 and the corporation, including, without limitation, terms and conditions providing that 03 the loans need not be repaid until the obligations of the corporation secured and to be 04 secured by the account in the reserve fund are no longer outstanding. 05 (k) In this section, "required debt service reserve" means, on the date of 06 computation, the amount required to be on deposit in the reserve fund as provided by 07 resolution of the corporation. 08 Sec. 37.18.050. Bond terms. (a) The bonds may be issued and sold at public 09 or negotiated sale in the manner, in the amounts or series, and at the time or times that 10 the corporation determines the bonds, or each series of them, shall be sold at the price 11 and on the terms, conditions, and covenants set by the corporation after considering 12 market conditions. Interest rates may be fixed or variable. 13 (b) The bonds mature at the time or times fixed by the corporation. The bonds 14 may be subject to redemption before their fixed maturities, as determined by the 15 corporation, with or without a premium or premiums. The bonds may be in 16 denominations determined by the corporation; may be issued in fully or partially 17 registered form; must be payable as to principal and interest at the place or places 18 determined by the corporation; must be signed in the manner provided by the 19 corporation; and must be issued under and subject to the terms, conditions, covenants, 20 and protective features safeguarding payment of the bonds as found necessary by the 21 corporation. The corporation may obtain credit enhancement to provide liquidity or 22 security for the bonds, including, without limitation, bond insurance, letters of credit, 23 surety bonds, or standby bond purchase agreements, and may enter into agreements 24 with providers of such credit enhancement as may be necessary or desirable. 25 (c) If the corporation finds it reasonably necessary, the corporation may select 26 a trustee or trustees for the holders of the bonds, or any series of them, for the 27 safeguarding and disbursement of any of the money in the bond reserve fund or for 28 duties with respect to the enforcement, authentication, delivery, payment, and 29 registration of the bonds as the corporation may determine. The corporation shall fix 30 the rights, duties, powers, and obligations of the trustee or trustees. 31 (d) In its determination of all matters and questions relating to the issuance
01 and sale of the bonds and the fixing of their maturities, terms, conditions, and 02 covenants as provided in (a) of this section, the decisions of the corporation shall be 03 those that are reasonably necessary for the best interests of the state and its inhabitants 04 and that will accomplish the most advantageous sale of the bonds. Decisions of the 05 corporation, as expressed in a bond resolution, are final and are conclusively 06 considered to comply with the requirements of this chapter. 07 Sec. 37.18.060. Bond resolution. The corporation shall authorize the issuance 08 of bonds by adopting a resolution and shall prepare all other documents and 09 proceedings necessary for the issuance, sale, and delivery of the bonds or any part or 10 series of them. The bond resolution must fix the principal amount, denominations, 11 date, maturities, manner of sale, place or places of payment, rights of redemption, if 12 any, terms, form, conditions, and covenants of the bonds or each series of them. 13 Sec. 37.18.070. Enforcement by bond owner. (a) The owner or owners of not 14 less than 10 percent, or a higher percentage as specified in the bond resolution, of the 15 aggregate principal amount of any series or issue of bonds or the trustee for the owners 16 of the bonds or any series of them may, by appropriate proceedings in state court, 17 require and compel the transfer, setting aside, and payment of money and the 18 enforcement of all of the terms, conditions, and covenants as required and provided in 19 this chapter, as appropriate, and the bond resolution. 20 (b) A proceeding under (a) of this section may be commenced and conducted 21 only in the Superior Court for the State of Alaska, First Judicial District at Juneau. 22 Sec. 37.18.080. Purposes and sufficiency of revenue. The proceeds of bonds 23 may be used for the purposes described in AS 37.18.030 as appropriate. Bonds may 24 not be issued unless the corporation first finds that the discount rate under 25 AS 43.55.028(m) exceeds the true interest cost to be paid on the bonds by at least 1.5 26 percent annually. 27 Sec. 37.18.090. Refunding. (a) The corporation may refund the bonds or any 28 part of them at or before their maturities or redemption dates by the issuance of 29 refunding bonds of the corporation if, in the opinion of the corporation, refunding is 30 advantageous to and in the best interest of the corporation, the state, and its 31 inhabitants.
01 (b) The issuance of refunding bonds need not be authorized by the voters of 02 the state or by an act of the legislature. The corporation shall adopt the resolution or 03 resolutions and prepare all other documents and proceedings necessary for the 04 issuance, exchange or sale, and delivery of the refunding bonds. All provisions of this 05 chapter are applicable to the refunding bonds and to the issuance, sale, or exchange of 06 them, except as otherwise provided in this section. 07 (c) Refunding bonds may be issued in a principal amount sufficient to provide 08 money for the advance or current refunding of all bonds to be refunded and interest on 09 the refunded bonds and, in addition, for the payment of all costs of issuance and 10 administration of the refunding bonds. These expenses also include the difference in 11 amount between the par value of the refunding bonds and any amount less than par for 12 which the refunding bonds are sold; the premium, if any, necessary to be paid to call 13 or retire the outstanding bonds and the interest accruing on them to the date of the call 14 or retirement; and other of these costs. The corporation is authorized to incur expenses 15 to carry out this section. 16 (d) The corporation may contract with a refunding trustee to hold the proceeds 17 of refunding bonds in trust until the proceeds, together with earnings on the proceeds, 18 are applied to pay the principal of premium, if any, and interest on the bonds to be 19 refunded. Until the refunding bond proceeds are applied, the proceeds may be invested 20 in direct obligations of, or obligations guaranteed by, the United States or an agency or 21 corporation of the United States whose obligations constitute direct obligations of, or 22 obligations guaranteed by, the United States or other obligations as may be specified 23 in the bond resolution. 24 Sec. 37.18.100. Bonds as legal investments. The bonds are legal investments 25 for all banks, trust companies, savings banks, savings and loan associations, and other 26 persons carrying on a banking business, all insurance companies and other persons 27 carrying on an insurance business, and all executors, administrators, trustees, and other 28 fiduciaries. The bonds may be accepted as security for deposits of all money of the 29 state and its political subdivisions. 30 Sec. 37.18.800. Statutory construction. This chapter shall be liberally 31 construed to carry out the purposes for which it was enacted.
01 Sec. 37.18.810. Regulations. The corporation may adopt regulations necessary 02 to implement the provisions of this chapter. 03 Sec. 37.18.900. Definitions. In this chapter, 04 (1) "bond resolution" means the resolution or resolutions adopted by 05 the corporation under AS 37.18.060 authorizing the issuance of bonds; 06 (2) "bonds" means the bonds authorized in this chapter; 07 (3) "corporation" means the Alaska Tax Credit Certificate Bond 08 Corporation created in AS 37.18.010; 09 (4) "costs of issuance and administration" means all costs associated 10 with issuance and administration of bonds and refunding bonds, including costs of 11 bond printing, official statements, financial advisors, travel costs, rating agencies, 12 bond insurance, letters and lines of credit for credit enhancement, underwriters, 13 remarketing agents, legal services, paying agents, bonds registrars, bond and escrow 14 trustees, arbitrage rebate, and all other costs, including administrative costs, both 15 direct and indirect; 16 (5) "department" means the Department of Revenue; 17 (6) "reserve fund" means the Alaska Tax Credit Certificate Bond 18 Corporation reserve fund established in AS 37.18.040. 19 * Sec. 3. AS 43.20.046(e) is amended to read: 20 (e) Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the 21 department may use available money either in the oil and gas tax credit fund 22 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax 23 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for 24 purchases under AS 43.55.028 to make the refund applied for under (d) of this 25 section in whole or in part if the department finds that, after application of all available 26 tax credits, the claimant's total tax liability under this chapter for the calendar year in 27 which the claim is made is zero. 28 * Sec. 4. AS 43.20.047(e) is amended to read: 29 (e) Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the 30 department may use money available either in the oil and gas tax credit fund 31 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax
01 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for 02 purchases under AS 43.55.028 to make a refund or payment under (d) of this section 03 in whole or in part if the department finds that, after application of all available tax 04 credits, the claimant's total tax liability under this chapter for the calendar year in 05 which the claim is made is zero. 06 * Sec. 5. AS 43.20.053(e) is amended to read: 07 (e) Subject to the requirements in AS 43.55.028 [AS 43.55.028(j)], the 08 department may use money available either in the oil and gas tax credit fund 09 established in AS 43.55.028 or disbursed to the commissioner from the Alaska Tax 10 Credit Certificate Bond Corporation reserve fund established in AS 37.18.040 for 11 purchases under AS 43.55.028 to make a refund or payment under (d) of this section 12 in whole or in part if the department finds that, after application of all available tax 13 credits, the claimant's total tax liability under this chapter for the calendar year in 14 which the claim is made is zero. 15 * Sec. 6. AS 43.55.028(e) is amended to read: 16 (e) The department, on the written application of a person to whom a 17 transferable tax credit certificate has been issued under AS 43.55.023(d) or former 18 AS 43.55.023(m) for an expenditure incurred before July 1, 2017, or to whom a 19 production tax credit certificate has been issued under AS 43.55.025(f) for an 20 expenditure incurred before July 1, 2017, may use either available money in the oil 21 and gas tax credit fund or money disbursed to the commissioner to purchase, in 22 whole or in part, the certificate. The department may not purchase with money from 23 the oil and gas tax credit fund a total of more than $70,000,000 in tax credit 24 certificates from a person in a calendar year. Before purchasing a certificate or part of 25 a certificate, the department shall find that 26 (1) the calendar year of the purchase is not earlier than the first 27 calendar year for which the credit shown on the certificate would otherwise be allowed 28 to be applied against a tax; 29 (2) the application is not the result of the division of a single entity into 30 multiple entities that would reasonably be expected to apply as a single entity if the 31 $70,000,000 limitation in this subsection did not exist;
01 (3) the applicant's total tax liability under AS 43.55.011(e), after 02 application of all available tax credits, for the calendar year in which the application is 03 made is zero; 04 (4) the applicant's average daily production of oil and gas taxable 05 under AS 43.55.011(e) during the calendar year preceding the calendar year in which 06 the application is made was not more than 50,000 BTU equivalent barrels; and 07 (5) the purchase is consistent with this section and regulations adopted 08 under this section. 09 * Sec. 7. AS 43.55.028(g) is amended to read: 10 (g) The department shall adopt regulations to carry out the purposes of this 11 section, including standards and procedures to allocate available money among 12 applications for purchases under this chapter and claims for refunds and payments 13 under AS 43.20.046, 43.20.047, or 43.20.053 when the total amount of the 14 applications for purchase and claims for refund exceed the amount of available money 15 in the fund. The regulations adopted by the department 16 (1) may not, when allocating available money in the fund under this 17 section, distinguish an application for the purchase of a credit certificate issued under 18 former AS 43.55.023(m) or a claim for a refund or payment under AS 43.20.046, 19 43.20.047, or 43.20.053; 20 (2) must, when allocating available money in the fund under this 21 section, grant a preference, between two applicants, to the applicant with a higher 22 percentage of resident workers in the applicant's workforce, including workers 23 employed by the applicant's direct contractors, in the state in the previous calendar 24 year; in this paragraph, "resident worker" has the meaning given in AS 43.40.092(b); 25 (3) must, for a purchase from money in the fund, provide for the 26 purchase of the amount equal to the first 50 percent of the credit repurchase limit for 27 each person under (e) of this section at a rate of 100 percent of the value of the 28 certificate or portion of the certificate requested to be purchased and the amount equal 29 to the next 50 percent of the credit repurchase limit for each person under (e) of this 30 section at a rate of 75 percent of the value of the certificate or portion of the certificate 31 requested to be purchased.
01 * Sec. 8. AS 43.55.028(i) is amended to read: 02 (i) In this section, 03 (1) "money disbursed to the commissioner" means money 04 disbursed to the commissioner from the Alaska Tax Credit Certificate Bond 05 Corporation reserve fund established in AS 37.18.040; 06 (2) "true interest cost" means the true interest cost of the bonds 07 anticipated to be issued under AS 37.18 for the purchase in this section; 08 (3) "qualified capital expenditure" has the meaning given in 09 AS 43.55.023. 10 * Sec. 9. AS 43.55.028(j) is amended to read: 11 (j) If an applicant or claimant has an outstanding liability to the state directly 12 related to the applicant's or claimant's oil or gas exploration, development, or 13 production and the department has not previously reduced the amount paid to that 14 applicant or claimant for a certificate or refund because of that outstanding liability, 15 the department may purchase only that portion of a certificate or pay only that portion 16 of a refund that exceeds the outstanding liability regardless of whether the purchase 17 is made with money from the fund or money disbursed to the commissioner. After 18 notifying the applicant or claimant, the department may apply the amount by which 19 the department reduced its purchase of a certificate or payment for a refund because of 20 an outstanding liability to satisfy the outstanding liability. Satisfaction of an 21 outstanding liability under this subsection does not affect the applicant's ability to 22 contest that liability. The department may enter into contracts or agreements with 23 another department to which the outstanding liability is owed. In this subsection, 24 "outstanding liability" means an amount of tax, interest, penalty, fee, rental, royalty, or 25 other charge for which the state has issued a demand for payment that has not been 26 paid when due and, if contested, has not been finally resolved against the state. 27 * Sec. 10. AS 43.55.028 is amended by adding new subsections to read: 28 (k) The department may negotiate a purchase under this section to be made 29 from money disbursed to the commissioner. The department shall calculate the 30 maximum amount for a purchase from money disbursed to the commissioner based on 31 the calculations in (l) of this section. An applicant or claimant that has requested a
01 purchase by the department from the fund shall provide a notice of interest to the 02 department by the date determined by the commissioner if the applicant or claimant is 03 interested in an offer of purchase by the department from money disbursed to the 04 commissioner. An applicant or claimant that requests a purchase from the fund on or 05 after July 1, 2018, shall include any notice of interest in an offer of purchase by the 06 department from money disbursed to the commissioner at the same time that the 07 applicant or claimant requests a purchase by the department from the fund. The 08 department may not use money disbursed to the commissioner for a purchase in this 09 section if the applicant or claimant failed to provide the department with a notice of 10 interest in an offer of purchase from money disbursed to the commissioner in the time 11 provided in this subsection for that notice. A notice of interest in an offer of purchase 12 from money disbursed to the commissioner must include all of the requests for 13 purchase by the department under the fund made by the applicant or claimant and a 14 statement of intent if the applicant intends to offer to meet any of the conditions in (m) 15 of this section. An applicant or claimant may not include in a notice of interest any 16 request for purchase by the department from the fund that could have been included in 17 a previous notice of interest under this subsection. The department shall make an offer 18 of purchase from money disbursed to the commissioner to any applicant or claimant 19 that provided the department with a timely notice of interest in an offer of purchase 20 from money disbursed to the commissioner. The time for the department to make an 21 offer of purchase from money disbursed to the commissioner shall depend on the 22 anticipated schedule for disbursement of money to the commissioner. An offer of 23 purchase is conditioned on the disbursement of money to the commissioner. The 24 applicant or claimant shall notify the department of acceptance of the offer of purchase 25 not later than ten days after the date of the offer. A transferable tax credit certificate 26 issued under AS 43.55.023, a production tax credit certificate issued under 27 AS 43.55.025, and a refund or claim for payment under AS 43.20.046, 43.20.047, or 28 43.20.053, is not eligible for purchase by the department with money disbursed to the 29 commissioner if the applicant or claimant 30 (1) failed to provide the department with a notice of interest in an offer 31 of purchase from money disbursed to the commissioner in the time provided in this
01 subsection for that notice; or 02 (2) declined an offer of purchase by the department with money 03 disbursed to the commissioner for that transferable tax credit certificate issued under 04 AS 43.55.023, a production tax credit certificate issued under AS 43.55.025, or a 05 refund or claim for payment under AS 43.20.046, 43.20.047, or 43.20.053. 06 (l) The department shall calculate the maximum amount for a purchase from 07 money disbursed to the commissioner as provided in this subsection. The maximum 08 amount for a purchase is the sum of the assumed payment amounts for each year 09 discounted each year as provided in (m) of this section. The assumed payment amount 10 for each year is determined based on the assumed appropriations to the fund and the 11 assumed proration methodology for the requests for payment from the fund. The 12 assumed appropriation to the fund each year is the percentage provided under (c) of 13 this section of the total of all taxes levied by AS 43.55.011 as forecast by the 14 department before the application of any tax credits. The assumed proration 15 methodology for the requests for payment from the fund is that the department 16 allocated payments from the fund based on the date of the request for purchase from 17 the fund with requests received in same year allocated together with a priority in 18 allocation for payments to the earliest year. For purposes of the assumed proration 19 methodology, it is assumed that no purchases were made with money disbursed to the 20 commissioner. 21 (m) For purposes of the calculation in (l) of this section, the department shall 22 discount the assumed payment amount each year by a discount rate determined under 23 this subsection. Unless another discount rate in this subsection applies, a discount rate 24 of 10 percent a year applies to the assumed payment amount for a request for purchase 25 of a transferable tax credit certificate issued under AS 43.55.023 or a production tax 26 credit certificate issued under AS 43.55.025. The agreement of an applicant for a 27 discount rate in (1) - (3) of this subsection shall be consideration exclusively for the 28 amount by which the purchase exceeds the amount of the purchase in the absence of 29 the agreement. A discount rate based on the true interest cost plus 1.5 percent and is 30 less than ten percent applies each year to the assumed payment amount for a refund or 31 claim for payment under AS 43.20.046, 43.20.047, or 43.20.053. For the assumed
01 payment amount for a request for purchase of a transferable tax credit certificate 02 issued under AS 43.55.023 or a production tax credit certificate issued under 03 AS 43.55.025, a discount rate based on the true interest cost plus 1.5 percent and is 04 less than ten percent applies each year 05 (1) for either a transferable tax credit certificate issued under 06 AS 43.55.023 for which the applicant was required to submit data required under 07 AS 43.55.025(f)(2) or a production tax credit certificate issued under AS 43.55.025, if 08 the applicant for the purchase agrees as a condition of the purchase that the 10-year 09 confidentiality period under AS 43.55.025(f)(2)(C)(ii) that would otherwise apply to 10 the seismic data or other geophysical data is explicitly waived by the applicant; 11 (2) if the applicant, or an entity related to the applicant on the 12 applicant's consent, and the Department of Natural Resources have agreed to an 13 overriding royalty interest agreement under AS 44.37.230; or 14 (3) if the applicant commits to incur not later than 24 months after the 15 purchase of qualified capital expenditures in an amount greater than or equal to the 16 purchase amount provided 17 (A) the applicant provides evidence of the commitment to the 18 department; and 19 (B) the commissioner approves the lower discount rate for the 20 purchase. 21 (n) A transferable tax credit certificate issued under AS 43.55.023, a 22 production tax credit certificate issued under AS 43.55.025, or a refund or claim for 23 payment under AS 43.20.046, 43.20.047, or 43.20.053 purchased by the department 24 with money disbursed to the commissioner is inapplicable against tax liability 25 regardless of whether the purchase amount was less than the total amount requested 26 for purchase. 27 * Sec. 11. AS 44.37 is amended by adding a new section to read: 28 Article 4. Miscellaneous Provisions. 29 Sec. 44.37.230. Duties of the department with respect to purchases of tax 30 credit certificates and overriding royalty interest agreements. (a) The department 31 shall consult with the Department of Revenue regarding the discount rate applicable
01 under AS 43.55.028(m). 02 (b) The department may enter into an overriding royalty interest agreement in 03 favor of the state with an applicant requesting a purchase by the Department of 04 Revenue under AS 43.55.028 from money disbursed to the commissioner from the 05 Alaska Tax Credit Certificate Bond Corporation reserve fund established in 06 AS 37.18.040 of either a transferable tax credit certificate issued under AS 43.55.023 07 or a production tax credit certificate issued under AS 43.55.025. The department may 08 enter into an overriding royalty interest agreement only if the anticipated net present 09 value from the agreement to the state is equal to or greater than the remainder of the 10 value of the tax credit certificate requested for purchase at the proposed lower discount 11 rate under AS 43.55.028(m)(2), subtracted from the value of the tax credit certificate 12 requested for purchase calculated in the absence of the agreement. 13 (c) An applicant requesting a lower discount rate under AS 43.55.028(m)(2) 14 shall submit a proposed overriding royalty interest agreement to the department. The 15 proposed agreement must include 16 (1) a description of the lease or leases subject to the proposed 17 agreement in which the applicant holds a working interest; 18 (2) the overriding royalty interest in oil produced from the lease or 19 leases offered to the state under the proposed agreement expressed as a percent of the 20 total oil produced from the lease or leases that does not exceed the working interest of 21 the applicant. 22 (d) The monthly payment to the state in an overriding royalty interest 23 agreement must be calculated by multiplying the prevailing value of the monthly oil 24 production by the product of the total monthly volume of oil production from the lease 25 or leases subject to the agreement multiplied by the percent of total oil production 26 offered to the state under the agreement. No deductions may be applied in this 27 payment calculation. The prevailing value of the oil shall be as determined and posted 28 by the Department of Revenue under AS 43.55 as provided in regulation. 29 (e) The amount of an underpayment or overpayment of a monthly payment for 30 a payment in an overriding royalty interest agreement bears interest in each calendar 31 quarter at the rate of 5.25 percentage points above the annual rate charged to member
01 banks for advances by the 12th Federal Reserve District as of the first day of that 02 calendar quarter, compounded quarterly as of the last day of that quarter. 03 (f) The department shall evaluate an offer for an overriding royalty interest 04 agreement by considering the following: 05 (1) the anticipated costs for issuance and administration for bonds 06 under AS 37.18 if the tax credit certificate was purchased with the proposed lower 07 discount rate under AS 43.55.028(m)(2); 08 (2) the production or projected production from the lease or leases 09 subject to the proposed agreement; 10 (3) the value or projected value of the oil produced from the lease or 11 leases subject to the proposed agreement; 12 (4) the timing for production from the lease or leases subject to the 13 proposed agreement; 14 (5) the likelihood of production from the lease or leases subject to the 15 proposed agreement; 16 (6) the existence and burdens of other interests on the lease or leases 17 subject to the proposed agreement; 18 (7) any cost data or financial information submitted with the offer or 19 requested by the department; and 20 (8) other information submitted with the offer or requested by the 21 department. 22 (g) The department may enter into agreements necessary to carry out the 23 purpose of this section including agreements to maintain the confidentiality of 24 information submitted to the department to evaluate an overriding royalty interest 25 agreement. 26 (h) The revenue from an overriding royalty interest agreement shall be 27 deposited into the general fund. 28 (i) In this section, 29 (1) "applicant" includes an entity related to the applicant on consent of 30 the applicant; and 31 (2) "department" means the Department of Natural Resources.
01 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: REGULATIONS. The Department of Natural Resources and the 04 Department of Revenue may adopt regulations necessary to implement the changes made by 05 this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not 06 before the effective date of the law implemented by the regulation. 07 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 10 contrary provision of AS 44.62.240, if the 11 (1) Department of Revenue expressly designates in a regulation that the 12 regulation applies retroactively, a regulation adopted by the Department of Revenue to 13 implement, interpret, make specific, or otherwise carry out this Act may apply retroactively to 14 the effective date of the law implemented by the regulation; 15 (2) Department of Natural Resources expressly designates in a regulation that 16 the regulation applies retroactively, a regulation adopted by the Department of Natural 17 Resources to implement, interpret, make specific, or otherwise carry out this Act may apply 18 retroactively to the effective date of the law implemented by the regulation. 19 * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).