Legislature(2015 - 2016)BILL RAY CENTER 208
05/12/2016 09:30 AM House RULES
| Audio | Topic |
|---|---|
| Start | |
| HB247 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 247 | TELECONFERENCED | |
HB 247-TAX;CREDITS;INTEREST;REFUNDS;O & G
9:41:15 AM
CHAIR JOHNSON announced that the only order of business would be
HOUSE BILL NO. 247, "An Act relating to confidential information
status and public record status of information in the possession
of the Department of Revenue; relating to interest applicable to
delinquent tax; relating to disclosure of oil and gas production
tax credit information; relating to refunds for the gas storage
facility tax credit, the liquefied natural gas storage facility
tax credit, and the qualified in-state oil refinery
infrastructure expenditures tax credit; relating to the minimum
tax for certain oil and gas production; relating to the minimum
tax calculation for monthly installment payments of estimated
tax; relating to interest on monthly installment payments of
estimated tax; relating to limitations for the application of
tax credits; relating to oil and gas production tax credits for
certain losses and expenditures; relating to limitations for
nontransferable oil and gas production tax credits based on oil
production and the alternative tax credit for oil and gas
exploration; relating to purchase of tax credit certificates
from the oil and gas tax credit fund; relating to a minimum for
gross value at the point of production; relating to lease
expenditures and tax credits for municipal entities; adding a
definition for "qualified capital expenditure"; adding a
definition for "outstanding liability to the state"; repealing
oil and gas exploration incentive credits; repealing the
limitation on the application of credits against tax liability
for lease expenditures incurred before January 1, 2011;
repealing provisions related to the monthly installment payments
for estimated tax for oil and gas produced before January 1,
2014; repealing the oil and gas production tax credit for
qualified capital expenditures and certain well expenditures;
repealing the calculation for certain lease expenditures
applicable before January 1, 2011; making conforming amendments;
and providing for an effective date."
[Before the committee was proposed second committee substitute
(2d CS) for HB 247, Version 29-GH2609\D, Nauman/Shutts, 5/6/16,
adopted during the 5/11/16 hearing of HB 247, and identified as
CS for HB 247, Version 29-GH2609\D, Nauman/Shutts, 5/6/16.]
9:41:25 AM
CHAIR JOHNSON moved to adopt Amendment 1, labeled 29-GH2609\D.2,
Nauman/Shutts, 5/10/16. [Due to its length, Amendment 1 text is
provided at the end of this document.]
9:41:30 AM
REPRESENTATIVE TUCK objected.
9:41:46 AM
RENA DELBRIDGE, Staff, Representative Mike Hawker, Alaska State
Legislature, relayed that Amendment 1 restores current statute
so that the income tax credits for the instate refinery and the
liquefied natural gas (LNG) storage facility would still be
refunded from the oil and gas tax credit fund. In addition,
Amendment 1 would make conforming changes to the "Alaska hire"
provisions under HB 247, so that the income tax credits are not
"discriminated against in prioritizing refunds from that fund."
Ms. Delbridge further explained that Amendment 1 was proposed in
response to Representative Wilson and the administration,
including the Alaska Industrial Development and Export Authority
(AIDEA), all of whom expressed concerns that making the credits
refundable by appropriation through the Department of Revenue
(DOR) could put AIDEA credits at risk in the future. She said,
"It was never the intent to further risk those credits, and it
seemed that they had been more secure coming ... not from the
oil and gas tax credit fund, but the chairman, Representative
Johnson, was happy to make this change."
9:43:50 AM
REPRESENTATIVE TUCK asked Ms. Delbridge to confirm whether he
was right in his summary that "we removed those ... credits
going out from the oil and gas tax credit fund, and so, now
we're putting it back in there because we discovered that the
credit rating for the Department of Revenue may be jeopardized."
MS. DELBRIDGE clarified that there is nothing wrong with the
credit ratings for anyone. She said in Version D, the credits
would be subject to refund by the Department of Revenue through
annual appropriation. The aforementioned parties were concerned
that credits refunded by DOR through appropriation would be more
difficult to receive when due, rather than to simply have the
refunds come out from the oil and gas tax credit fund, as is in
current statute. She restated that Amendment 1 would revert to
current statute.
REPRESENTATIVE TUCK asked for the original purpose of moving the
credits from the oil and gas tax credit fund.
MS. DELBRIDGE answered that the purpose of doing so had been
"fairly genuine." She explained that the tax credits in the
bill are income tax credits - not oil and gas tax credits - thus
it seemed to be clearer, particularly if HB 247 passes and the
credits are closed out, that there are not continuing
obligations coming out of that fund which are unrelated to oil
and gas tax credits.
9:45:13 AM
REPRESENTATIVE TUCK removed his objection. There being no
further objection, Amendment 1 was adopted.
9:45:29 AM
CHAIR JOHNSON moved to adopt Amendment 2, labeled 29-
GH2609\D.19, Nauman/Shutts, 5/11/16. [Due to its length,
Amendment 2 text is provided at the end of this document.]
9:45:31 AM
REPRESENTATIVE KREISS-TOMKINS objected for discussion purposes.
9:45:38 AM
MS. DELBRIDGE directed attention to Version D, page 8, related
to changes in the three-year transitionary provision regarding
who can receive a 35 percent refunded net operating loss credit
on the North Slope. On page 8, line 4, there is an "or" where
there should be an "and," which would mean that an entity could
get a transitional credit with production in the amount of less
than 15,000 barrels a day, produced in 2016 on the North Slope,
or if the lease expenditures creating the credit were incurred
under a unit plan of development or exploration. She said
Amendment 2 would make the change from "or" to "and" to ensure
that a new unit plan of development by an entity that produces
even 50,000 barrels a day would not be included for the purposes
of said three-year transitionary measure.
MS. DELBRIDGE then directed attention to Version D, page 12,
related to the extension of the [regions of the state south of
68 degrees north latitude and outside of the Cook Inlet known
as] middle earth credit in the Copper River Basin. At the
request of Legislative Legal Services, Legislative Affairs
Agency, the amendment would also make a change on page 12, line
10, inserting "Notwithstanding (b) of this section" before
"exploration" to ensure that [43.55.025(b)] "was not wrapped
into the new requirements on the extension." Finally, Amendment
2 restores the definition of a "qualified capital expenditure,"
a term which is used in statute independently of a "qualified
capital expenditure credit." She said restoring the qualified
capital expenditure definition would ensure there is not an
inadvertent change. Additionally, Tax Director Ken Alper
requested the deletion of two repeal statutes currently found in
Version D, page 28.
9:48:26 AM
The committee stood at ease from 9:48 a.m. to 9:53 a.m.
9:53:56 AM
CHAIR JOHNSON moved to adopt Amendment 1 to Amendment 2, which
read as follows [original punctuation provided]:
Add to D.19
page 28 line 13-14
delete repeal 43.55.165(e)(18)
delete repeal 43.55.890(6)
9:54:11 AM
REPRESENTATIVE KREISS-TOMKINS objected for discussion purposes.
9:54:33 AM
MS. DELBRIDGE explained that in Version D there is a blanket
repeal of "qualified capital expenditure," including its
definition where it applies in other statutes. Amendment 1 to
Amendment 2 reinserts a definition for "qualified capital
expenditure" into the proposed legislation at the recommendation
of DOR, because it applies to other provisions in statute
"outside of the credit." Further, in making this change to the
definition, the legislation must also reinsert the term
"qualified capital expenditure"; previously, Version D repealed
two provisions containing the term "qualified capital
expenditure," therefore, the repeals must be deleted to retain
the term in statute.
9:55:37 AM
REPRESENTATIVE KREISS-TOMKINS removed his objection to the
motion to adopt Amendment 1 to Amendment 2. There being no
further objection, Amendment 1 to Amendment 2 was adopted.
9:55:49 AM
MS. DELBRIDGE restated the changes contained in Amendment 2, as
amended, as follows: restores the definition of qualified
capital expenditure; tightens the language in the transitionary
provision; makes a recommended technical change related to the
middle earth credit.
9:56:19 AM
REPRESENTATIVE KREISS-TOMKINS removed his objection to the
motion to adopt Amendment 2 [as amended]. There being no
further objection, Amendment 2, as amended, was adopted.
9:56:31 AM
REPRESENTATIVE KREISS-TOMKINS moved to adopt Amendment 3,
labeled 29-GH2609\D.8, Nauman/Shutts, 5/11/16. [Due to its
length, Amendment 3 text is provided at the end of this
document.]
9:56:34 AM
CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE KREISS-TOMKINS explained that Amendment 3 relates
to gross value reduction (GVR) and its cost to the state now,
and its potential costs in the future, as more oil becomes GVR
eligible. The amendment takes a conservative approach to gross
value reductions, which is important in order to maintain a
stable revenue source from the state's oil and gas. He opined
that removing GVR simplifies Alaska's statutes and ensures a
more reliable revenue stream into the future.
9:57:51 AM
REPRESENTATIVE HERRON asked whether the amendment creates two
different GVRs.
REPRESENTATIVE KREISS-TOMKINS expressed his belief that the
amendment eliminates GVR.
9:58:15 AM
REPRESENTATIVE TUCK confirmed that the intent of the amendment
is to eliminate GVR entirely.
9:58:23 AM
CHAIR JOHNSON questioned whether a 10 percent GVR would still be
in place.
REPRESENTATIVE TUCK said he could not answer Chair Johnson's
question. He pointed out that he received the committee
substitute at 7:30 a.m., before a 9:30 a.m. meeting, and was
required to submit amendments prior to 2:00 p.m., which resulted
in work that was rushed.
9:59:33 AM
A roll call vote was taken. Representatives Kreiss-Tomkins and
Tuck voted in favor of Amendment 3. Representatives Olson,
Chenault, Herron, and Johnson voted against it. Therefore,
Amendment 3 failed by a vote of 2-4.
10:00:22 AM
REPRESENTATIVE TUCK moved to adopt Amendment 4, labeled 29-
GH2609\D.10, Nauman/Shutts, 5/10/16, which read as follows:
Page 11, line 7:
Delete "$8"
Insert "$4 [$8]"
Page 11, line 9:
Delete "$7"
Insert "$3.50 [$7]"
Page 11, line 12:
Delete "$6"
Insert "$3 [$6]"
Page 11, line 15:
Delete "$5"
Insert "$2.50 [$5]"
Page 11, line 18:
Delete "$4"
Insert "$2 [$4]"
Page 11, line 21:
Delete "$3"
Insert "$1.50 [$3]"
Page 11, line 24:
Delete "$2"
Insert "$1 [$2]"
Page 11, line 27:
Delete "$1"
Insert "$0.50 [$1]"
10:00:23 AM
CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE TUCK said the intent of Amendment 4 is to
establish per barrel tax credits from zero to $4, instead of
from zero to $8. In response to Chair Johnson, he clarified
that the amendment does not eliminate progressivity, but would
cut the amount in half.
CHAIR JOHNSON advised that the amendment substantially affects
the state's credit system; although it is not a credit, it
changes the overall mechanism, and he expressed his concern
about "passing policy without ... a real deliberative process.
I'm not sure this has been heard enough."
10:01:59 AM
REPRESENTATIVE HERRON expressed uncertainty related to the
effect on oil prices over $100 per barrel. He asked the maker
of the amendment to withdraw Amendment 4 and present it for
debate on the House floor.
10:02:41 AM
A roll call vote was taken. Representatives Kreiss-Tomkins and
Tuck voted in favor of Amendment 4. Representatives Herron,
Olson, Chenault, and Johnson voted against it. Therefore,
Amendment 4 failed by a vote of 2-4.
10:03:29 AM
REPRESENTATIVE TUCK moved to adopt Amendment 6, labeled 29-
GH2609\D.12, Nauman/Shutts, 5/10/16. [Due to its length,
Amendment 6 text is provided at the end of this document.]
10:03:32 AM
CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE TUCK explained that Amendment 6 would limit
refinery tax credits to companies that have 51 percent ownership
in Alaska and are headquartered in Alaska. He recalled previous
testimony from the industry that the refinery tax credits are
not needed by all in the industry, and the amendment would
ensure that the credits are limited to companies that do need
them.
10:04:17 AM
REPRESENTATIVE CHENAULT expressed his belief that no funds have
been paid from the aforementioned [tax credit] program; in fact,
the first funds paid from oil refinery tax credits will probably
be for an asphalt process in Fairbanks. He pointed out that any
improvements to an instate oil refinery will benefit the state
and its residents because its products will go to the Ted
Stevens Anchorage International Airport, or to consumers along
the Railbelt and around the state. Further, Tesoro Corp. has
spent hundreds of millions of dollars to develop a low-sulfur
fuel process. He questioned whether any refinery could meet the
51 percent ownership requirement, and concluded that if a
refinery needs a tax credit to provide a better product to
Alaskans - which was the original intent of the legislation -
the tax credits should be kept in place.
10:06:38 AM
REPRESENTATIVE OLSON added that Tesoro extended the life of
Flint Hills by several years by supplying ultra low-sulfur
diesel to its plant, at a high cost to Tesoro.
10:07:06 AM
REPRESENTATIVE TUCK stated that three refineries in Alaska would
currently be eligible for the credits [after the changes
proposed by Amendment 6]. He referred to previous testimony
that the credits were not needed by Tesoro. In response to
Representative Chenault, he said the ownership requirement is
that at least 51 percent of the company must be owned by
Alaskans; for example, the two refineries owned by the Arctic
Slope Regional Corporation (ASRC) may qualify. Representative
Tuck pointed out that currently, companies do not need to prove
their need for the tax credits; however, under the limits made
by the amendment, $10 million per year in credits [would go to]
"state corporations and that they're not multinational
corporations that aren't asking for it in the first place."
10:08:36 AM
A roll call vote was taken. Representatives Kreiss-Tomkins and
Tuck voted in favor of Amendment 6. Representatives Herron,
Olson, Chenault, and Johnson voted against it. Therefore,
Amendment 6 failed by a vote of 2-4.
10:09:07 AM
REPRESENTATIVE KREISS-TOMKINS moved to adopt Amendment 7,
labeled 29-GH2609\D.13, Nauman/Shutts, 5/11/16, which read as
follows:
Page 15, line 26:
Delete "$75,000,000"
Insert "$25,000,000"
Page 16, line 3:
Delete "$75,000,000"
Insert "$25,000,000"
Page 16, line 20:
Delete "$75,000,000"
Insert "$25,000,000"
Page 16, line 28:
Delete "$75,000,000"
Insert "$25,000,000"
10:09:13 AM
CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE KREISS-TOMKINS said Amendment 7 relates to
refundable or reimbursable tax credits which the state pays to
holders of tax credits. The proposed second committee
substitute establishes a ceiling or "cap" of $75 million in
refundable or reimbursable credits, which can be claimed or
cashed by the holders; Amendment 7 reduces the ceiling or cap
from $75 million to $25 million. He pointed out that the state
needs to limit its exposure in the amount paid to tax credits
payments, subsidies, and incentives.
10:10:15 AM
REPRESENTATIVE HERRON recalled that the administration
previously testified that $25 million was the cap in 2006. He
suggested that the cap amount should be adjusted for inflation
over ten years. In response to Representative Kreiss-Tomkins,
he reiterated the need to adjust for inflation.
REPRESENTATIVE KREISS-TOMKINS offered to entertain an amendment
to Amendment 7.
10:11:39 AM
CHAIR JOHNSON stated the $25 million cap is an arbitrary number
and opined the $75 million cap is a compromise towards the
"lower end." He recalled industry testimony that this bill is
about allowing companies such as BlueCrest Energy and Furie the
opportunity to continue their work, and [a decrease] may
seriously damage future investment. Further, he said the
amendment would undo some of the balance struck in other areas
of the legislation.
10:12:32 AM
REPRESENTATIVE TUCK noted that the amendment returns the related
provision of the bill to the governor's version of HB 247, which
was supported by public testimony heard by the committee at the
previous meeting. He cautioned that members of the public
"might be confused on, on all the elements of the CS." He
opined that public testimony reflected a lack of trust in the
legislative process and a desire to return to the governor's
original version of HB 247. Representative Tuck concluded that
the $25 million cap per company limits the state's liability,
but would still keep investments in Alaska.
CHAIR JOHNSON said legislators "have to strike a balance between
investment in the future ... while not crippling the industry;
we certainly need to make adjustments."
10:13:53 AM
A roll call vote was taken. Representatives Kreiss-Tomkins and
Tuck voted in favor of Amendment 7. Representatives Chenault,
Herron, Olson, and Johnson voted against it. Therefore,
Amendment 7 failed by a vote of 2-4.
10:14:28 AM
The committee took an at-ease from 10:14 a.m. to 10:19 a.m.
10:19:27 AM
REPRESENTATIVE TUCK moved to adopt Amendment 8, labeled 29-
GH2609\D.14, Shutts, 5/11/16. [Due to its length, Amendment 8
text is provided at the end of this document.]
10:19:34 AM
CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE TUCK informed the committee that Amendment 8 sets
a 5 percent minimum tax. In response to Chair Johnson, he
further explained that the original version of the bill included
a provision for a 5 percent minimum tax - and a 4 percent
minimum tax has been discussed - to ensure that the state would
not "be going upside down in production taxes as we survive
through these low oil prices."
10:21:24 AM
CHAIR JOHNSON spoke to his objection to Amendment 8, observing
that the legislature has tried to strike a balance, and
cautioned that "taking the 4 percent from 5 percent would be the
equivalent of a North Slope producer laying down a rig for six
months, so if you multiply that by the number of producers up
there, that could be the equivalent of two, three, [or] four
rigs laid down." He urged for the committee - even in the
lowest price environment - to encourage companies to continue to
explore, and that the amendment would increase the state's
[production] decline curve from the anticipated 4 percent
decline, closer to a 20 percent decline.
10:21:27 AM
A roll call vote was taken. Representatives Tuck and Kreiss-
Tomkins voted in favor of Amendment 8. Representatives
Chenault, Herron, Olson, and Johnson voted against it.
Therefore, Amendment 8 failed by a vote of 2-4.
10:22:10 AM
REPRESENTATIVE TUCK moved to adopt Amendment 10, labeled 29-
GH2609\D.17, Wallace/Shutts, 5/11/16, which read as follows:
Page 17, lines 13 - 14:
Delete "applicant's workforce in the state in the
previous calendar year was composed"
Insert "total hours worked in the state by the
applicant's employees, contractors, and subcontractors
in the previous calendar year were hours"
10:22:15 AM
CHAIR JOHNSON objected.
REPRESENTATIVE TUCK described Amendment 10 as a local hire
provision to ensure that companies that have a local hire
[policy] receive priority for tax credits. Differing from
[Version D], the amendment would base eligibility on "the amount
of, of man hours, versus [the] number of employees."
Furthermore, both subcontractors and contractors are included in
the provision. Representative Tuck acknowledged that the major
oil and gas companies are doing a really good job at local hire,
but said the problem is at the subcontractor and contractor
level. He added, "So, it doesn't matter how many Alaskans are
hired versus non-residents; it's based on making sure Alaskans
get to work."
10:23:26 AM
REPRESENTATIVE CHENAULT said he is a firm believer in Alaska
hire; however, he questioned what restrictions are placed on
companies or corporations. The second committee substitute
before the committee gives preference to corporations that are
80 percent Alaska hire, so they have priority on the refunds.
He remarked:
My concern is, is when we start talking about total
man hours, is that total man hours worked in Alaska,
[or] is that total man hours that the company has for
employees nationwide or worldwide? ... I do have an
idea of what kind of burden that puts on a, a
corporation, especially smaller companies, to fiscally
track every single hour that every employee that works
for their company does across the state or across the
world. ... I do like a, the CS that's currently
before us that has the "80 percent," and I do wish
that we could hire more Alaskans, [but] sometimes
that's just not available because ... some of these
jobs Alaskans haven't been trained yet to do. I hope
we train them into the future through some of the
training programs we have and, and we're able to put
more Alaskans to work on, on any of these new jobs
....
10:25:18 AM
The committee took an at-ease from 10:25 a.m. to 10:26 a.m.
10:26:48 AM
REPRESENTATIVE HERRON stated that he shared some of the concerns
of the previous speaker; however, speaking from the perspective
of his constituents, he urged for more discussion on this issue
and expressed his support for Amendment 10.
10:27:11 AM
CHAIR JOHNSON cautioned that the amendment would place a
terrible burden on companies to audit their contractors and
review individual timecards, in addition to the risk that
companies would be responsible for mistakes made by contractors
regarding residency, thereby putting their application for
credits in jeopardy.
10:27:45 AM
REPRESENTATIVE TUCK observed that oil companies typically
contract out some facets of a job, in a manner similar to the
state's position as the resource owner that contracts with the
industry to bring its oil to market. As the state invests in
the industry, through this proposed amendment, the state would
make the decision to have as many Alaskans hired as is possible.
He provided an example of a welder who applied for a job in Cook
Inlet and was required to travel to Louisiana to become
certified. Representative Tuck opined the amendment would
ensure that contractors are in compliance with the provisions of
the proposed CS. Also clear in the CS, and in Amendment 10, is
that the [tax credit] applicant's workforce is in the state
during the previous year. The basis on man hours would ensure
that Alaskans are employed on the jobs, not just hired on the
books. Representative Tuck said compliance benefits Alaskans.
10:30:17 AM
The committee took an at-ease from 10:30 a.m. to 10:33 a.m.
10:33:39 AM
REPRESENTATIVE TUCK acknowledged that local hire provisions
create "some scenarios [and] some situations," regarding
contractors and subcontractors. He said he would work with
other committee members on an amendment to offer on the House
floor.
10:34:19 AM
REPRESENTATIVE TUCK withdrew Amendment 10.
10:34:26 AM
CHAIR JOHNSON agreed with the intent of Amendment 10.
10:34:41 AM
REPRESENTATIVE TUCK recalled that Chair Johnson's House Bill
308, proposed in the 26th Alaska State Legislature, raised his
interest in local hire provisions. He said the purpose of
basing the provision on man hours is "more linear" in its
approach in order to capture a bigger portion of the workforce.
10:35:58 AM
The committee took an at-ease from 10:35 a.m. to 10:36 a.m.
10:36:18 AM
CHAIR JOHNSON stated that there were no further amendments to
discuss and Version D, as amended, was before the committee.
10:36:33 AM
REPRESENTATIVE TUCK recalled that at the passage of Senate Bill
21 [passed in the 28th Alaska State Legislature and signed into
law 5/21/13], modeling for the current level of oil prices was
not provided. He opined that at that time the legislature,
administration, and the public did not fully understand the
ramifications of low oil prices. During its present effort to
save money, the state continues to make cash payments to the oil
industry for ongoing work, as demonstrated by House Bill 280
[passed in the 26th Alaska State Legislature and signed into law
5/12/10], which "jumpstarted the Cook Inlet"; however, the
remaining questions are: Is the state meeting the purpose of
the tax credits? Who is receiving the tax credits? Are
[eligible] parties not receiving the tax credits? He said the
legislature does not have sufficient information in this regard,
although [Version D, as amended], does attempt to "grab some of
that information." The oil industry seeks certainty in the
state's tax structure, and the proposed legislation would do so,
but legislators need time to understand details and have the
proposed complex legislation and its amendments properly modeled
before them. Representative Tuck stressed the importance of a
tax structure that is durable, works under all circumstances,
and meets the state's constitutional obligations. He said he
could not support moving the bill out of committee at this time.
10:40:40 AM
REPRESENTATIVE KREISS-TOMKINS expressed his understanding that
the issues are hard, oil prices are low, and the oil industry is
struggling, although there is encouraging activity by BlueCrest
in Cook Inlet, by Armstrong/Repsol on the North Slope, and CD5
by Conoco/Phillips in the National Petroleum Reserve-Alaska
(NPRA). The bill is a huge piece of Alaska's budget, given its
$772 million refundable credit cash payment outlay, even though
some reduction is projected in future years. He said, "There is
no way - and I think that is a factual statement - to close this
budget gap without major reform and reduction in these payments
and subsidies." He acknowledged that the bill is a hard-fought
compromise, unpopular with legislators and the industry.
Representative Kreiss-Tomkins turned attention to his coastal
district, noting his constituents are dependent upon the
economics of the fishing industry, and pointed out that "salmon
prices are in the toilet," some fishing quotas are down, and
production from certain species and fisheries is down. He
pointed out there is proposed legislation to increase gross
taxes on fishing, which would be detrimental to fisherman,
although it may become necessary. In fact, raising taxes on all
sectors is a matter of sharing the burden to close the budget
gap. On the other hand, he said he has a big problem with
subsidies and incentives, because there is no tax credit
program, incentive, or subsidy program to support fishermen and
pay a percentage of the cost of capital upgrades to their
equipment to help them be more efficient and hire more crew.
This type of program would also help fisherman establish a
stronger business in Alaska, would be great for the economy, and
would create more jobs, but the state could not afford such a
program at this time, and it would not garner his support were
it to exist. Regarding incentives and subsidies, he urged the
committee to "take a really hard and difficult look at this,
this outlay that we're paying, because we just can't afford it
mathematically, we can't balance the budget with it ...."
10:45:55 AM
REPRESENTATIVE HERRON stated that as a member of the House
Resources Standing Committee, hearings on HB 247 were a "big
learning curve," and further debate on the House floor revealed
that the bill left the House divided. At this time, further
work has been done on the legislation, and he said he would vote
to move out the version before the committee, in order to return
the bill to the House floor for further debate. As an aside, he
said he would inquire as to whether the present version of the
bill would increase exploration activity on the North Slope and
attract "50 independents," which was the governor's expectation,
or if the bill brings "anybody else to the table, or is, is one
of the majors going to be the only one left up there,
exploring?"
10:48:22 AM
REPRESENTATIVE OLSON said he would support the bill.
10:48:40 AM
REPRESENTATIVE CHENAULT opined there are aspects within HB 247
that everybody doesn't like. He noted the economic decline of
the oil market, which provides over 80 percent of Alaska's
revenue and therefore must be addressed. Alaska's future will
be bleak if the state does not continue to invest in the
industry that pays its bills. He clarified that of the $773-
$775 million in tax credits due this year, $200 million are tax
credits that the state did not pay last year, thus that amount
is "just paying what we owe." Although the remaining amount is
substantial, "it still is in the state's pocket." He said the
legislature needs to exercise caution when crafting legislation
to try to save money on the credits, and to also ensure that the
state continues to see investment by the industry, until the
price of oil goes back up. If not, there will be less
production as the industry will continue to do what it has to do
- what is good for business - which could mean lay down a rig,
lay off more employees, and make smaller or no investments.
Representative Chenault restated that although aspects of the
bill are unpopular, it is the compromise needed to garner 21
votes and move the bill to the Senate floor.
10:52:08 AM
The committee took a brief at-ease.
10:52:53 AM
CHAIR JOHNSON observed that none of the provisions of the bill
are new, and with its changes and compromises, "we tried to
reach across the aisle and bring as many people on board as we
can." Although not perfect, he said now is the time for the
legislation to move forward, and cautioned against allowing the
bill to become a roadblock to finishing the legislative session.
In response to previous comments, he stressed that [oil and gas
consultant firm] enalytica was not instructed to provide
modeling on any amendment. He pointed out that the legislature
had studied the bill for four weeks, and it was not "rushed
through," none of the concepts are new, and the legislature
should act. Chair Johnson expressed his belief that the state's
$4 billion budget could not be closed using "every penny that
the oil companies made."
10:54:49 AM
REPRESENTATIVE CHENAULT moved to report 2D CS for HB 247,
Version 29-GH2609\D, Nauman/Shutts, 5/6/16, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
10:55:04 AM
REPRESENTATIVE TUCK objected.
10:55:26 AM
CHAIR JOHNSON, in response to Representative Tuck, labeled the
bill's accompanying fiscal notes as follows:
Identifier: HB247CS(RLS)-DOR-TAX-05-10-16;
Identifier: HB247 (HRLS) Fund Cap 5-10-16
10:55:52 AM
REPRESENTATIVE TUCK said fiscal note Identifier: HB247 (HRLS)
Fund Cap 5-10-16 for $1.75 billion dollars was prepared by Chair
Johnson, and capitalizes the Oil and Gas Tax Credit Fund with
$1.75 billion from the Constitutional Budget Reserve (CBR) Fund.
He remarked, "This significantly ... adds to the bill ... so I'm
going to object to the attachment of 2894, the OMB Component
Number 2894, to the HB 247 House Rules Fund Cap, dated 5/10/16."
He asked whether it was appropriate to move "to split the
question on the two fiscal notes."
[The committee treated the motion to move the bill from
committee as withdrawn.]
10:57:10 AM
CHAIR JOHNSON asked for a motion to remove one fiscal note.
10:57:18 AM
REPRESENTATIVE TUCK moved to accept fiscal note Identifier: HB
247CS(RLS)-DOR-TAX-05-10-16, OMB Component Number: 2476, and to
withdraw fiscal note Identifier: HB247 (HRLS) Fund Cap 5-10-16,
OMB Component Number: 2894.
10:57:40 AM
CHAIR JOHNSON remarked:
Basically what this does is it funds all of the, all
of our credits that were owed, and there are no more
after this, but ... in some form or fashion, we have
to pay those, and this ... has to be an appropriation
out of the CBR so that we can get them off the books.
And there will be no further appropriations after this
on a year-to-year basis. So this is kind of lumping
it into one sum. But I, I do not have a problem with
the motion and ... I'm not going to object to it - we
can take it up at a future date.
10:57:17 AM
There being no objection, it was so ordered.
10:58:33 AM
REPRESENTATIVE CHENAULT moved to report 2d CS for HB 247,
Version 29-GH2609\D, Nauman/Shutts, 5/6/16, as amended, with
attached fiscal note and individual recommendations. There
being no objection, 2d CSHB 247(RLS) was reported out of the
House Rules Standing Committee.
AMENDMENTS
[The following amendments to HB 247 were discussed or adopted
during the hearing. Shorter amendments are provided in the main
text only.]
Amendment 1, labeled 29-GH2609\D.2, Nauman/Shutts, 5/10/16, read
as follows:
Page 5, lines 1 - 2:
Delete "[USE AVAILABLE MONEY IN THE OIL AND GAS
TAX CREDIT FUND ESTABLISHED IN AS 43.55.028 TO]"
Insert "use available money in the oil and gas
tax credit fund established in AS 43.55.028 to"
Page 5, lines 13 - 14:
Delete "[USE AVAILABLE MONEY IN THE OIL AND GAS
TAX CREDIT FUND ESTABLISHED IN AS 43.55.028 TO]"
Insert "use available money in the oil and gas
tax credit fund established in AS 43.55.028 to"
Page 5, lines 25 - 26:
Delete "[USE AVAILABLE MONEY IN THE OIL AND GAS
TAX CREDIT FUND ESTABLISHED IN AS 43.55.028 TO]"
Insert "use available money in the oil and gas
tax credit fund established in AS 43.55.028 to"
Page 15, lines 9 - 14:
Delete all material.
Renumber the following bill sections accordingly.
Page 15, line 15:
Delete ", as amended by sec. 25 of this Act,"
Page 15, line 19, following "AS 43.55.025":
Insert "and to pay refunds and payments claimed
under AS 43.20.046, 43.20.047, or 43.20.053"
Page 16, line 14:
Delete "sec. 27"
Insert "sec. 26"
Page 17, lines 6 - 20:
Delete all material and insert:
"* Sec. 28. AS 43.55.028(g) is amended to read:
(g) The department shall [MAY] adopt regulations
to carry out the purposes of this section, including
standards and procedures to allocate available money
among applications for purchases under this chapter
and claims for refunds and payments under
AS 43.20.046, 43.20.047, or 43.20.053 when the total
amount of the applications for purchase and claims for
refund exceed the amount of available money in the
fund. The regulations adopted by the department, when
allocating available money in the fund under this
section,
(1) may not [, WHEN ALLOCATING AVAILABLE
MONEY IN THE FUND UNDER THIS SECTION,] distinguish an
application for the purchase of a credit certificate
issued under former AS 43.55.023(m) or a claim for a
refund or payment under AS 43.20.046, 43.20.047, or
43.20.053;
(2) must grant a preference to an applicant
if at least 80 percent of the applicant's workforce in
the state in the previous calendar year was composed
of resident workers; in this paragraph, "resident
worker" has the meaning given in AS 43.40.092(b)."
Page 18, line 17:
Delete "sec. 31"
Insert "sec. 30"
Page 18, line 30:
Delete "secs. 31 and 32"
Insert "secs. 30 and 31"
Page 22, line 19:
Delete "sec. 38"
Insert "sec. 37"
Page 29, line 23:
Delete "sec. 27"
Insert "sec. 26"
Page 29, line 24:
Delete "sec. 30"
Insert "sec. 29"
Page 29, line 26:
Delete "sec. 29"
Insert "sec. 28"
Page 29, line 27:
Delete "secs. 27, 29, and 30"
Insert "secs. 26, 28, and 29"
Page 29, line 28:
Delete "sec. 42"
Insert "sec. 41"
Page 30, line 2:
Delete "sec. 50"
Insert "sec. 49"
Page 30, line 4:
Delete "sec. 31"
Insert "sec. 30"
Delete "secs. 34 and 35"
Insert "secs. 33 and 34"
Page 30, line 5:
Delete "sec. 36"
Insert "sec. 35"
Delete "sec. 43"
Insert "sec. 42"
Page 30, line 6:
Delete "sec. 44"
Insert "sec. 43"
Page 30, line 7:
Delete "sec. 50"
Insert "sec. 49"
Page 30, lines 10 - 11:
Delete "sec. 50"
Insert "sec. 49"
Page 30, line 14:
Delete "sec. 50"
Insert "sec. 49"
Page 30, line 15:
Delete "sec. 50"
Insert "sec. 49"
Page 30, line 19:
Delete "sec. 51"
Insert "sec. 50"
Page 30, lines 19 - 20:
Delete "sec. 32"
Insert "sec. 31"
Page 30, line 21:
Delete "sec. 51"
Insert "sec. 50"
Page 30, line 24:
Delete "sec. 51"
Insert "sec. 50"
Page 30, line 26:
Delete "sec. 51"
Insert "sec. 50"
Page 30, line 27:
Delete "sec. 51"
Insert "sec. 50"
Page 31, line 1:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 2:
Delete "sec. 33"
Insert "sec. 32"
Delete "sec. 37"
Insert "sec. 36"
Page 31, line 3:
Delete "sec. 39"
Insert "sec. 38"
Page 31, line 4:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 8:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 10:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 11:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 16:
Delete "sec. 52"
Insert "sec. 51"
Page 31, line 17:
Delete "secs. 26 and 28"
Insert "secs. 25 and 27"
Page 31, line 18:
Delete "sec. 33"
Insert "sec. 32"
Delete "sec. 37"
Insert "sec. 36"
Page 31, line 19:
Delete "sec. 45"
Insert "sec. 44"
Page 31, line 21:
Delete "sec. 52" in both places
Insert "sec. 51" in both places
Page 31, line 26:
Delete "sec. 42"
Insert "sec. 41"
Page 31, line 27:
Delete "sec. 50"
Insert "sec. 49"
Page 31, line 30:
Delete "sec. 50"
Insert "sec. 49"
Page 32, line 4:
Delete "sec. 50"
Insert "sec. 49"
Page 32, line 6:
Delete "sec. 50"
Insert "sec. 49"
Page 32, line 9:
Delete "sec. 50"
Insert "sec. 49"
Page 32, line 12:
Delete "sec. 50"
Insert "sec. 49"
Page 32, line 14:
Delete "sec. 50"
Insert "sec. 49"
Page 33, line 9:
Delete "53, 61, and 62"
Insert "52, 60, and 61"
Page 33, line 11:
Delete "Sections 32, 51, and 56"
Insert "Sections 31, 50, and 55"
Page 33, line 12:
Delete "26, 28, 33, 37, 39, 45, 52, 57, and 58"
Insert "25, 27, 32, 36, 38, 44, 51, 56, and 57"
Page 33, line 14:
Delete "secs. 63 - 65"
Insert "secs. 62 - 64"
Amendment 2, labeled 29-GH2609\D.19, Nauman/Shutts, 5/11/16,
read as follows:
Page 8, line 4:
Delete "or"
Insert "and"
Page 8, line 6, following "approved":
Insert "before January 1, 2017,"
Page 10, lines 5 - 18:
Delete all material.
Renumber the following bill sections accordingly.
Page 12, line 10:
Delete "Exploration"
Insert "Notwithstanding (b) of this section,
exploration"
Page 13, line 12:
Delete "sec. 22"
Insert "sec. 21"
Page 13, line 21:
Delete "Exploration"
Insert "Notwithstanding (b) of this section,
exploration"
Page 15, line 15:
Delete "sec. 25"
Insert "sec. 24"
Page 16, line 14:
Delete "sec. 27"
Insert "sec. 26"
Page 18, line 17:
Delete "sec. 31"
Insert "sec. 30"
Page 18, line 30:
Delete "secs. 31 and 32"
Insert "secs. 30 and 31"
Page 20, lines 3 - 5:
Delete all material and insert:
"(6) the producer's qualified capital
expenditures, [AS DEFINED IN AS 43.55.023,] other
lease expenditures under AS 43.55.165, and adjustments
or other payments or credits under AS 43.55.170;"
Page 20, lines 18 - 21:
Delete all material and insert:
"(1) the explorer's or producer's qualified
capital expenditures, [AS DEFINED IN AS 43.55.023,]
other lease expenditures under AS 43.55.165, and
adjustments or other payments or credits under
AS 43.55.170; and"
Page 20, line 25, through page 21, line 11:
Delete all material.
Renumber the following bill sections accordingly.
Page 22, line 19:
Delete "sec. 38"
Insert "sec. 36"
Page 25, following line 29:
Insert a new bill section to read:
"* Sec. 41. AS 43.55.165(e) is amended to read:
(e) For purposes of this section, lease
expenditures do not include
(1) depreciation, depletion, or
amortization;
(2) oil or gas royalty payments, production
payments, lease profit shares, or other payments or
distributions of a share of oil or gas production,
profit, or revenue, except that a producer's lease
expenditures applicable to oil and gas produced from a
lease issued under AS 38.05.180(f)(3)(B), (D), or (E)
include the share of net profit paid to the state
under that lease;
(3) taxes based on or measured by net
income;
(4) interest or other financing charges or
costs of raising equity or debt capital;
(5) acquisition costs for a lease or
property or exploration license;
(6) costs arising from fraud, wilful
misconduct, gross negligence, violation of law, or
failure to comply with an obligation under a lease,
permit, or license issued by the state or federal
government;
(7) fines or penalties imposed by law;
(8) costs of arbitration, litigation, or
other dispute resolution activities that involve the
state or concern the rights or obligations among
owners of interests in, or rights to production from,
one or more leases or properties or a unit;
(9) costs incurred in organizing a
partnership, joint venture, or other business entity
or arrangement;
(10) amounts paid to indemnify the state;
the exclusion provided by this paragraph does not
apply to the costs of obtaining insurance or a surety
bond from a third-party insurer or surety;
(11) surcharges levied under AS 43.55.201
or 43.55.300;
(12) an expenditure otherwise deductible
under (b) of this section that is a result of an
internal transfer, a transaction with an affiliate, or
a transaction between related parties, or is otherwise
not an arm's length transaction, unless the producer
establishes to the satisfaction of the department that
the amount of the expenditure does not exceed the fair
market value of the expenditure;
(13) an expenditure incurred to purchase an
interest in any corporation, partnership, limited
liability company, business trust, or any other
business entity, whether or not the transaction is
treated as an asset sale for federal income tax
purposes;
(14) a tax levied under AS 43.55.011 or
43.55.014;
(15) costs incurred for dismantlement,
removal, surrender, or abandonment of a facility,
pipeline, well pad, platform, or other structure, or
for the restoration of a lease, field, unit, area,
tract of land, body of water, or right-of-way in
conjunction with dismantlement, removal, surrender, or
abandonment; a cost is not excluded under this
paragraph if the dismantlement, removal, surrender, or
abandonment for which the cost is incurred is
undertaken for the purpose of replacing, renovating,
or improving the facility, pipeline, well pad,
platform, or other structure;
(16) costs incurred for containment,
control, cleanup, or removal in connection with any
unpermitted release of oil or a hazardous substance
and any liability for damages imposed on the producer
or explorer for that unpermitted release; this
paragraph does not apply to the cost of developing and
maintaining an oil discharge prevention and
contingency plan under AS 46.04.030;
(17) costs incurred to satisfy a work
commitment under an exploration license under
AS 38.05.132;
(18) that portion of expenditures, that
would otherwise be qualified capital expenditures [,
AS DEFINED IN AS 43.55.023,] incurred during a
calendar year that are less than the product of $0.30
multiplied by the total taxable production from each
lease or property, in BTU equivalent barrels, during
that calendar year, except that, when a portion of a
calendar year is subject to this provision, the
expenditures and volumes shall be prorated within that
calendar year;
(19) costs incurred for repair,
replacement, or deferred maintenance of a facility, a
pipeline, a structure, or equipment, other than a
well, that results in or is undertaken in response to
a failure, problem, or event that results in an
unscheduled interruption of, or reduction in the rate
of, oil or gas production; or costs incurred for
repair, replacement, or deferred maintenance of a
facility, a pipeline, a structure, or equipment, other
than a well, that is undertaken in response to, or is
otherwise associated with, an unpermitted release of a
hazardous substance or of gas; however, costs under
this paragraph that would otherwise constitute lease
expenditures under (a) and (b) of this section may be
treated as lease expenditures if the department
determines that the repair or replacement is solely
necessitated by an act of war, by an unanticipated
grave natural disaster or other natural phenomenon of
an exceptional, inevitable, and irresistible
character, the effects of which could not have been
prevented or avoided by the exercise of due care or
foresight, or by an intentional or negligent act or
omission of a third party, other than a party or its
agents in privity of contract with, or employed by,
the producer or an operator acting for the producer,
but only if the producer or operator, as applicable,
exercised due care in operating and maintaining the
facility, pipeline, structure, or equipment, and took
reasonable precautions against the act or omission of
the third party and against the consequences of the
act or omission; in this paragraph,
(A) "costs incurred for repair,
replacement, or deferred maintenance of a facility, a
pipeline, a structure, or equipment" includes costs to
dismantle and remove the facility, pipeline,
structure, or equipment that is being replaced;
(B) "hazardous substance" has the meaning
given in AS 46.03.826;
(C) "replacement" includes renovation or
improvement;
(20) costs incurred to construct, acquire,
or operate a refinery or crude oil topping plant,
regardless of whether the products of the refinery or
topping plant are used in oil or gas exploration,
development, or production operations; however, if a
producer owns a refinery or crude oil topping plant
that is located on or near the premises of the
producer's lease or property in the state and that
processes the producer's oil produced from that lease
or property into a product that the producer uses in
the operation of the lease or property in drilling for
or producing oil or gas, the producer's lease
expenditures include the amount calculated by
subtracting from the fair market value of the product
used the prevailing value, as determined under
AS 43.55.020(f), of the oil that is processed;
(21) costs of lobbying, public relations,
public relations advertising, or policy advocacy."
Renumber the following bill sections accordingly.
Page 26, following line 21:
Insert a new bill section to read:
"* Sec. 45. AS 43.55.890 is amended to read:
Sec. 43.55.890. Disclosure of tax information.
Notwithstanding any contrary provision of
AS 40.25.100, and regardless of whether the
information is considered under AS 43.05.230(e) to
constitute statistics classified to prevent the
identification of particular returns or reports, the
department may publish the following information under
this chapter, if aggregated among three or more
producers or explorers, showing by month or calendar
year and by lease or property, unit, or area of the
state:
(1) the amount of oil or gas production;
(2) the amount of taxes levied under this
chapter or paid under this chapter;
(3) the effective tax rates under this
chapter;
(4) the gross value of oil or gas at the
point of production;
(5) the transportation costs for oil or
gas;
(6) qualified capital expenditures [, AS
DEFINED IN AS 43.55.023];
(7) exploration expenditures under
AS 43.55.025;
(8) production tax values of oil or gas
under AS 43.55.160;
(9) lease expenditures under AS 43.55.165;
(10) adjustments to lease expenditures
under AS 43.55.170;
(11) tax credits applicable or potentially
applicable against taxes levied by this chapter."
Renumber the following bill sections accordingly.
Page 26, line 29:
Delete "a new paragraph"
Insert "new paragraphs"
Page 26, following line 29:
Insert a new paragraph to read:
"(26) "qualified capital expenditure"
(A) means, except as otherwise provided in
(B) of this paragraph, an expenditure that is a lease
expenditure under AS 43.55.165 and is
(i) incurred for geological or geophysical
exploration;
(ii) treated as a capitalized expenditure
under 26 U.S.C. (Internal Revenue Code), as amended,
regardless of elections made under 26 U.S.C. 263(c)
(Internal Revenue Code), as amended, and is treated as
a capitalized expenditure for federal income tax
reporting purposes by the person incurring the
expenditure; or
(iii) treated as a capitalized expenditure
under 26 U.S.C. (Internal Revenue Code), as amended,
regardless of elections made under 26 U.S.C. 263(c)
(Internal Revenue Code), as amended, and is eligible
to be deducted as an expense under 26 U.S.C. 263(c)
(Internal Revenue Code), as amended;
(B) does not include an expenditure
incurred to acquire an asset the cost of previously
acquiring which was a lease expenditure under
AS 43.55.165 or would have been a lease expenditure
under AS 43.55.165 if it had been incurred after
March 31, 2006, or that has previously been placed in
service in the state; an expenditure to acquire an
asset is not excluded under this subparagraph if not
more than an immaterial portion of the asset meets a
description under this subparagraph; for purposes of
this subparagraph, "asset" includes geological,
geophysical, and well data and interpretations;"
Renumber the following paragraph accordingly.
Page 29, line 23:
Delete "sec. 27"
Insert "sec. 26"
Page 29, line 24:
Delete "sec. 30"
Insert "sec. 29"
Page 29, line 26:
Delete "sec. 29"
Insert "sec. 28"
Page 29, line 27:
Delete "secs. 27, 29, and 30"
Insert "secs. 26, 28, and 29"
Page 29, line 28:
Delete "sec. 42"
Insert "sec. 40"
Page 30, line 3:
Delete "AS 43.55.023(n) by sec. 19 of this Act,"
Page 30, line 4:
Delete "sec. 31"
Insert "sec. 30"
Delete "secs. 34 and 35"
Insert "secs. 33 and 34"
Page 30, line 5:
Delete "AS 43.55.075(b) by sec. 36 of this Act,"
Delete "sec. 43"
Insert "sec. 42"
Page 30, line 6:
Delete "sec. 44"
Insert "sec. 43"
Page 30, lines 19 - 20:
Delete "sec. 32"
Insert "sec. 31"
Page 31, line 2:
Delete "sec. 33"
Insert "sec. 32"
Delete "sec. 37"
Insert "sec. 35"
Page 31, line 3:
Delete "sec. 39"
Insert "sec. 37"
Page 31, line 17:
Delete "sec. 23"
Insert "sec. 22"
Delete "secs. 26 and 28"
Insert "secs. 25 and 27"
Page 31, line 18:
Delete "sec. 33"
Insert "sec. 32"
Delete "sec. 37"
Insert "sec. 35"
Page 31, line 19:
Delete "sec. 45"
Insert "sec. 44"
Page 31, line 26:
Delete "sec. 42"
Insert "sec. 40"
Page 33, line 9:
Delete "Sections 22"
Insert "Sections 21"
Page 33, line 11:
Delete "Sections 32"
Insert "Sections 31"
Page 33, line 12:
Delete "Sections 23, 26, 28, 33, 37, 39, 45"
Insert "Sections 22, 25, 27, 32, 35, 37, 44"
Amendment 3, labeled 29-GH2609\D.8, Nauman/Shutts, 5/11/16, read
as follows:
Page 1, line 6, following "interest;":
Insert "relating to the installment payments of
the oil and gas production tax;"
Page 1, line 11, following "fund;":
Insert "relating to certain reductions in the
gross value at the point of production of oil and
gas;"
Page 7, following line 4:
Insert a new bill section to read:
"* Sec. 15. AS 43.55.020(a) is amended to read:
(a) For a calendar year, a producer subject to
tax under AS 43.55.011 shall pay the tax as follows:
(1) for oil and gas produced before
January 1, 2014, an installment payment of the
estimated tax levied by AS 43.55.011(e), net of any
tax credits applied as allowed by law, is due for each
month of the calendar year on the last day of the
following month; except as otherwise provided under
(2) of this subsection, the amount of the installment
payment is the sum of the following amounts, less 1/12
of the tax credits that are allowed by law to be
applied against the tax levied by AS 43.55.011(e) for
the calendar year, but the amount of the installment
payment may not be less than zero:
(A) for oil and gas not subject to
AS 43.55.011(o) or (p) produced from leases or
properties in the state outside the Cook Inlet
sedimentary basin, other than leases or properties
subject to AS 43.55.011(f), the greater of
(i) zero; or
(ii) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from the
leases or properties during the month for which the
installment payment is calculated;
(B) for oil and gas produced from leases or
properties subject to AS 43.55.011(f), the greatest of
(i) zero;
(ii) zero percent, one percent, two
percent, three percent, or four percent, as
applicable, of the gross value at the point of
production of the oil and gas produced from the leases
or properties during the month for which the
installment payment is calculated; or
(iii) the sum of 25 percent and the tax
rate calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from those
leases or properties during the month for which the
installment payment is calculated;
(C) for oil or gas subject to
AS 43.55.011(j), (k), or (o), for each lease or
property, the greater of
(i) zero; or
(ii) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible under AS 43.55.160 for
the oil or gas, respectively, produced from the lease
or property from the gross value at the point of
production of the oil or gas, respectively, produced
from the lease or property during the month for which
the installment payment is calculated;
(D) for oil and gas subject to
AS 43.55.011(p), the lesser of
(i) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from the
leases or properties during the month for which the
installment payment is calculated, but not less than
zero; or
(ii) four percent of the gross value at the
point of production of the oil and gas produced from
the leases or properties during the month, but not
less than zero;
(2) an amount calculated under (1)(C) of
this subsection for oil or gas subject to
AS 43.55.011(j), (k), or (o) may not exceed the
product obtained by carrying out the calculation set
out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as
applicable, for gas or set out in AS 43.55.011(k)(1)
or (2), as applicable, for oil, but substituting in
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as
applicable, the amount of taxable gas produced during
the month for the amount of taxable gas produced
during the calendar year and substituting in
AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the
amount of taxable oil produced during the month for
the amount of taxable oil produced during the calendar
year;
(3) an installment payment of the estimated
tax levied by AS 43.55.011(i) for each lease or
property is due for each month of the calendar year on
the last day of the following month; the amount of the
installment payment is the sum of
(A) the applicable tax rate for oil
provided under AS 43.55.011(i), multiplied by the
gross value at the point of production of the oil
taxable under AS 43.55.011(i) and produced from the
lease or property during the month; and
(B) the applicable tax rate for gas
provided under AS 43.55.011(i), multiplied by the
gross value at the point of production of the gas
taxable under AS 43.55.011(i) and produced from the
lease or property during the month;
(4) any amount of tax levied by
AS 43.55.011, net of any credits applied as allowed by
law, that exceeds the total of the amounts due as
installment payments of estimated tax is due on
March 31 of the year following the calendar year of
production;
(5) for oil and gas produced on and after
January 1, 2014, and before January 1, 2022, an
installment payment of the estimated tax levied by
AS 43.55.011(e), net of any tax credits applied as
allowed by law, is due for each month of the calendar
year on the last day of the following month; except as
otherwise provided under (6) of this subsection, the
amount of the installment payment is the sum of the
following amounts, less 1/12 of the tax credits that
are allowed by law to be applied against the tax
levied by AS 43.55.011(e) for the calendar year, but
the amount of the installment payment may not be less
than zero:
(A) for oil and gas not subject to
AS 43.55.011(o) or (p) produced from leases or
properties in the state outside the Cook Inlet
sedimentary basin, other than leases or properties
subject to AS 43.55.011(f), the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil and gas under AS 43.55.160 from
the gross value at the point of production of the oil
and gas produced from the leases or properties during
the month for which the installment payment is
calculated;
(B) for oil and gas produced from leases or
properties subject to AS 43.55.011(f), the greatest of
(i) zero;
(ii) zero percent, one percent, two
percent, three percent, or four percent, as
applicable, of the gross value at the point of
production of the oil and gas produced from the leases
or properties during the month for which the
installment payment is calculated; or
(iii) 35 percent multiplied by the
remainder obtained by subtracting 1/12 of the
producer's adjusted lease expenditures for the
calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from those
leases or properties during the month for which the
installment payment is calculated, except that, for
the purposes of this calculation, a reduction from the
gross value at the point of production may apply for
oil and gas subject to AS 43.55.160(g)
[AS 43.55.160(f) OR (g)];
(C) for oil or gas subject to
AS 43.55.011(j), (k), or (o), for each lease or
property, the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible under AS 43.55.160 for the oil or gas,
respectively, produced from the lease or property from
the gross value at the point of production of the oil
or gas, respectively, produced from the lease or
property during the month for which the installment
payment is calculated;
(D) for oil and gas subject to
AS 43.55.011(p), the lesser of
(i) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil and gas under AS 43.55.160 from
the gross value at the point of production of the oil
and gas produced from the leases or properties during
the month for which the installment payment is
calculated, but not less than zero; or
(ii) four percent of the gross value at the
point of production of the oil and gas produced from
the leases or properties during the month, but not
less than zero;
(6) an amount calculated under (5)(C) of
this subsection for oil or gas subject to
AS 43.55.011(j), (k), or (o) may not exceed the
product obtained by carrying out the calculation set
out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as
applicable, for gas or set out in AS 43.55.011(k)(1)
or (2), as applicable, for oil, but substituting in
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as
applicable, the amount of taxable gas produced during
the month for the amount of taxable gas produced
during the calendar year and substituting in
AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the
amount of taxable oil produced during the month for
the amount of taxable oil produced during the calendar
year;
(7) for oil and gas produced on or after
January 1, 2022, an installment payment of the
estimated tax levied by AS 43.55.011(e), net of any
tax credits applied as allowed by law, is due for each
month of the calendar year on the last day of the
following month; the amount of the installment payment
is the sum of the following amounts, less 1/12 of the
tax credits that are allowed by law to be applied
against the tax levied by AS 43.55.011(e) for the
calendar year, but the amount of the installment
payment may not be less than zero:
(A) for oil produced from leases or
properties that include land north of 68 degrees North
latitude, the greatest of
(i) zero;
(ii) zero percent, one percent, two
percent, three percent, or four percent, as
applicable, of the gross value at the point of
production of the oil produced from the leases or
properties during the month for which the installment
payment is calculated; or
(iii) 35 percent multiplied by the
remainder obtained by subtracting 1/12 of the
producer's adjusted lease expenditures for the
calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil under
AS 43.55.160(h)(1) from the gross value at the point
of production of the oil produced from those leases or
properties during the month for which the installment
payment is calculated, except that, for the purposes
of this calculation, a reduction from the gross value
at the point of production may apply for oil subject
to AS 43.55.160(g) [AS 43.55.160(f) OR 43.55.160(f)
AND (g)];
(B) for oil produced before or during the
last calendar year under AS 43.55.024(b) for which the
producer could take a tax credit under
AS 43.55.024(a), from leases or properties in the
state outside the Cook Inlet sedimentary basin, no
part of which is north of 68 degrees North latitude,
other than leases or properties subject to
AS 43.55.011(p), the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(2) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated;
(C) for oil and gas produced from leases or
properties subject to AS 43.55.011(p), except as
otherwise provided under (8) of this subsection, the
sum of
(i) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(3) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated,
but not less than zero; and
(ii) 13 percent of the gross value at the
point of production of the gas produced from the
leases or properties during the month, but not less
than zero;
(D) for oil produced from leases or
properties in the state, no part of which is north of
68 degrees North latitude, other than leases or
properties subject to (B) or (C) of this paragraph,
the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(4) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated;
(E) for gas produced from each lease or
property in the state, other than a lease or property
subject to AS 43.55.011(p), 13 percent of the gross
value at the point of production of the gas produced
from the lease or property during the month for which
the installment payment is calculated, but not less
than zero;
(8) an amount calculated under (7)(C) of
this subsection may not exceed four percent of the
gross value at the point of production of the oil and
gas produced from leases or properties subject to
AS 43.55.011(p) during the month for which the
installment payment is calculated;
(9) for purposes of the calculation under
(1)(B)(ii), (5)(B)(ii), and (7)(A)(ii) of this
subsection, the applicable percentage of the gross
value at the point of production is determined under
AS 43.55.011(f)(1) or (2) but substituting the phrase
"month for which the installment payment is
calculated" in AS 43.55.011(f)(1) and (2) for the
phrase "calendar year for which the tax is due.""
Renumber the following bill sections accordingly.
Page 10, line 24:
Delete "AS 43.55.160(f) or (g)"
Insert "AS 43.55.160(g) [AS 43.55.160(f) OR (g)]"
Page 11, line 1:
Delete "AS 43.55.160(f) or (g)"
Insert "AS 43.55.160(g) [AS 43.55.160(f) OR (g)]"
Page 13, line 12:
Delete "sec. 22"
Insert "sec. 23"
Page 15, line 15:
Delete "sec. 25"
Insert "sec. 26"
Page 16, line 14:
Delete "sec. 27"
Insert "sec. 28"
Page 18, line 17:
Delete "sec. 31"
Insert "sec. 32"
Page 18, line 30:
Delete "secs. 31 and 32"
Insert "secs. 32 and 33"
Page 21, following line 11:
Insert a new bill section to read:
"* Sec. 38. AS 43.55.160(a) is amended to read:
(a) For oil and gas produced before January 1,
2022, except as provided in (b) [, (f),] and (g) of
this section, for the purposes of
(1) AS 43.55.011(e)(1) and (2), the annual
production tax value of taxable oil, gas, or oil and
gas produced during a calendar year in a category for
which a separate annual production tax value is
required to be calculated under this paragraph is the
gross value at the point of production of that oil,
gas, or oil and gas taxable under AS 43.55.011(e),
less the producer's lease expenditures under
AS 43.55.165 for the calendar year applicable to the
oil, gas, or oil and gas in that category produced by
the producer during the calendar year, as adjusted
under AS 43.55.170; a separate annual production tax
value shall be calculated for
(A) oil and gas produced from leases or
properties in the state that include land north of 68
degrees North latitude, other than gas produced before
2022 and used in the state;
(B) oil and gas produced from leases or
properties in the state outside the Cook Inlet
sedimentary basin, no part of which is north of 68
degrees North latitude and that qualifies for a tax
credit under AS 43.55.024(a) and (b); this
subparagraph does not apply to
(i) gas produced before 2022 and used in
the state; or
(ii) oil and gas subject to
AS 43.55.011(p);
(C) oil produced before 2022 from each
lease or property in the Cook Inlet sedimentary basin;
(D) gas produced before 2022 from each
lease or property in the Cook Inlet sedimentary basin;
(E) gas produced before 2022 from each
lease or property in the state outside the Cook Inlet
sedimentary basin and used in the state, other than
gas subject to AS 43.55.011(p);
(F) oil and gas subject to AS 43.55.011(p)
produced from leases or properties in the state;
(G) oil and gas produced from leases or
properties in the state no part of which is north of
68 degrees North latitude, other than oil or gas
described in (B), (C), (D), (E), or (F) of this
paragraph;
(2) AS 43.55.011(g), for oil and gas
produced before January 1, 2014, the monthly
production tax value of the taxable
(A) oil and gas produced during a month
from leases or properties in the state that include
land north of 68 degrees North latitude is the gross
value at the point of production of the oil and gas
taxable under AS 43.55.011(e) and produced by the
producer from those leases or properties, less 1/12 of
the producer's lease expenditures under AS 43.55.165
for the calendar year applicable to the oil and gas
produced by the producer from those leases or
properties, as adjusted under AS 43.55.170; this
subparagraph does not apply to gas subject to
AS 43.55.011(o);
(B) oil and gas produced during a month
from leases or properties in the state outside the
Cook Inlet sedimentary basin, no part of which is
north of 68 degrees North latitude, is the gross value
at the point of production of the oil and gas taxable
under AS 43.55.011(e) and produced by the producer
from those leases or properties, less 1/12 of the
producer's lease expenditures under AS 43.55.165 for
the calendar year applicable to the oil and gas
produced by the producer from those leases or
properties, as adjusted under AS 43.55.170; this
subparagraph does not apply to gas subject to
AS 43.55.011(o);
(C) oil produced during a month from a
lease or property in the Cook Inlet sedimentary basin
is the gross value at the point of production of the
oil taxable under AS 43.55.011(e) and produced by the
producer from that lease or property, less 1/12 of the
producer's lease expenditures under AS 43.55.165 for
the calendar year applicable to the oil produced by
the producer from that lease or property, as adjusted
under AS 43.55.170;
(D) gas produced during a month from a
lease or property in the Cook Inlet sedimentary basin
is the gross value at the point of production of the
gas taxable under AS 43.55.011(e) and produced by the
producer from that lease or property, less 1/12 of the
producer's lease expenditures under AS 43.55.165 for
the calendar year applicable to the gas produced by
the producer from that lease or property, as adjusted
under AS 43.55.170;
(E) gas produced during a month from a
lease or property outside the Cook Inlet sedimentary
basin and used in the state is the gross value at the
point of production of that gas taxable under
AS 43.55.011(e) and produced by the producer from that
lease or property, less 1/12 of the producer's lease
expenditures under AS 43.55.165 for the calendar year
applicable to that gas produced by the producer from
that lease or property, as adjusted under
AS 43.55.170."
Renumber the following bill sections accordingly.
Page 22, line 19:
Delete "sec. 38"
Insert "sec. 40"
Page 24, following line 28:
Insert a new bill section to read:
"* Sec. 44. AS 43.55.160(h) is amended to read:
(h) For oil produced on and after January 1,
2022, except as provided in (b) [, (f),] and (g) of
this section, for the purposes of AS 43.55.011(e)(3),
the annual production tax value of oil taxable under
AS 43.55.011(e) produced by a producer during a
calendar year
(1) from leases or properties in the state
that include land north of 68 degrees North latitude
is the gross value at the point of production of that
oil, less the producer's lease expenditures under
AS 43.55.165 for the calendar year incurred to explore
for, develop, or produce oil and gas deposits located
in the state north of 68 degrees North latitude or
located in leases or properties in the state that
include land north of 68 degrees North latitude, as
adjusted under AS 43.55.170;
(2) before or during the last calendar year
under AS 43.55.024(b) for which the producer could
take a tax credit under AS 43.55.024(a), from leases
or properties in the state outside the Cook Inlet
sedimentary basin, no part of which is north of 68
degrees North latitude, other than leases or
properties subject to AS 43.55.011(p), is the gross
value at the point of production of that oil, less the
producer's lease expenditures under AS 43.55.165 for
the calendar year incurred to explore for, develop, or
produce oil and gas deposits located in the state
outside the Cook Inlet sedimentary basin and south of
68 degrees North latitude, other than oil and gas
deposits located in a lease or property that includes
land north of 68 degrees North latitude or that is
subject to AS 43.55.011(p) or, before January 1, 2027,
from which commercial production has not begun, as
adjusted under AS 43.55.170;
(3) from leases or properties subject to
AS 43.55.011(p) is the gross value at the point of
production of that oil, less the producer's lease
expenditures under AS 43.55.165 for the calendar year
incurred to explore for, develop, or produce oil and
gas deposits located in leases or properties subject
to AS 43.55.011(p) or, before January 1, 2027, located
in leases or properties in the state outside the Cook
Inlet sedimentary basin, no part of which is north of
68 degrees North latitude from which commercial
production has not begun, as adjusted under
AS 43.55.170;
(4) from leases or properties in the state
no part of which is north of 68 degrees North
latitude, other than leases or properties subject to
(2) or (3) of this subsection, is the gross value at
the point of production of that oil less the
producer's lease expenditures under AS 43.55.165 for
the calendar year incurred to explore for, develop, or
produce oil and gas deposits located in the state
south of 68 degrees North latitude, other than oil and
gas deposits located in a lease or property in the
state that includes land north of 68 degrees North
latitude, and excluding lease expenditures that are
deductible under (2) or (3) of this subsection or
would be deductible under (2) or (3) of this
subsection if not prohibited by (b) of this section,
as adjusted under AS 43.55.170."
Renumber the following bill sections accordingly.
Page 28, following line 5:
Insert a new bill section to read:
"* Sec. 52. AS 43.98.050 is amended to read:
Sec. 43.98.050. Duties. The duties of the board
include the following:
(1) establish and maintain a salient
collection of information related to oil and gas
exploration, development, and production in the state
and related to tax structures, rates, and credits in
other regions with oil and gas resources;
(2) review historical, current, and
potential levels of investment in the state's oil and
gas sector;
(3) identify factors that affect investment
in oil and gas exploration, development, and
production in the state, including tax structure,
rates, and credits; royalty requirements;
infrastructure; workforce availability; and regulatory
requirements;
(4) review the competitive position of the
state to attract and maintain investment in the oil
and gas sector in the state as compared to the
competitive position of other regions with oil and gas
resources;
(5) in order to facilitate the work of the
board, establish procedures to accept and keep
confidential information that is beneficial to the
work of the board, including the creation of a secure
data room and confidentiality agreements to be signed
by individuals having access to confidential
information;
(6) make written findings and
recommendations to the Alaska State Legislature before
(A) January 31, 2015, or as soon thereafter
as practicable, regarding
(i) changes to the state's regulatory
environment and permitting structure that would be
conducive to encouraging increased investment while
protecting the interests of the people of the state
and the environment;
(ii) the status of the oil and gas industry
labor pool in the state and the effectiveness of
workforce development efforts by the state;
(iii) the status of the oil-and-gas-related
infrastructure of the state, including a description
of infrastructure deficiencies; and
(iv) the competitiveness of the state's
fiscal oil and gas tax regime when compared to other
regions of the world;
(B) January 15, 2017, regarding
(i) the state's tax structure and rates on
oil and gas produced south of 68 degrees North
latitude;
(ii) a tax structure that takes into
account the unique economic circumstances for each oil
and gas producing area south of 68 degrees North
latitude;
(iii) a reduction in the gross value at the
point of production for oil and gas produced south of
68 degrees North latitude that is similar to the
reduction in gross value at the point of production in
AS 43.55.160(g) [AS 43.55.160(f) AND (g)];
(iv) other incentives for oil and gas
production south of 68 degrees North latitude;
(C) January 31, 2021, or as soon thereafter
as practicable, regarding
(i) changes to the state's fiscal regime
that would be conducive to increased and ongoing long-
term investment in and development of the state's oil
and gas resources;
(ii) alternative means for increasing the
state's ability to attract and maintain investment in
and development of the state's oil and gas resources;
and
(iii) a review of the current effectiveness
and future value of any provisions of the state's oil
and gas tax laws that are expiring in the next five
years."
Renumber the following bill sections accordingly.
Page 28, line 13, following "43.55.075(d)(1),":
Insert "43.55.160(f),"
Page 29, line 23:
Delete "sec. 27"
Insert "sec. 28"
Page 29, line 24:
Delete "sec. 30"
Insert "sec. 31"
Page 29, line 26:
Delete "sec. 29"
Insert "sec. 30"
Page 29, line 27:
Delete "secs. 27, 29, and 30"
Insert "secs. 28, 30, and 31"
Page 29, line 28:
Delete "sec. 42"
Insert "sec. 45"
Page 30, line 2:
Delete "sec. 50"
Insert "sec. 54"
Page 30, line 3:
Delete "sec. 16"
Insert "sec. 17"
Delete "sec. 19"
Insert "sec. 20"
Page 30, line 4:
Delete "sec. 31"
Insert "sec. 32"
Delete "secs. 34 and 35"
Insert "secs. 35 and 36"
Page 30, line 5:
Delete "sec. 36"
Insert "sec. 37"
Delete "sec. 43"
Insert "sec. 46"
Page 30, line 6:
Delete "sec. 44"
Insert "sec. 47"
Page 30, line 7:
Delete "sec. 50"
Insert "sec. 54"
Page 30, lines 10 - 11:
Delete "sec. 50"
Insert "sec. 54"
Page 30, line 14:
Delete "sec. 50"
Insert "sec. 54"
Page 30, line 15:
Delete "sec. 50"
Insert "sec. 54"
Page 30, line 19:
Delete "sec. 51"
Insert "sec. 55"
Page 30, lines 19 - 20:
Delete "sec. 32"
Insert "sec. 33"
Page 30, line 21:
Delete "sec. 51"
Insert "sec. 55"
Page 30, line 24:
Delete "sec. 51"
Insert "sec. 55"
Page 30, line 26:
Delete "sec. 51"
Insert "sec. 55"
Page 30, line 27:
Delete "sec. 51"
Insert "sec. 55"
Page 31, line 1:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 2:
Delete "sec. 33"
Insert "sec. 34"
Delete "sec. 37"
Insert "sec. 39"
Page 31, line 3:
Delete "sec. 39"
Insert "sec. 41"
Page 31, line 4:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 8:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 10:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 11:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 16:
Delete "sec. 52"
Insert "sec. 56"
Page 31, line 17:
Delete "sec. 23"
Insert "sec. 24"
Delete "secs. 26 and 28"
Insert "secs. 27 and 29"
Page 31, line 18:
Delete "sec. 33"
Insert "sec. 34"
Delete "sec. 37"
Insert "sec. 39"
Page 31, line 19:
Delete "sec. 45"
Insert "sec. 48"
Page 31, line 21:
Delete "sec. 52" in both places.
Insert "sec. 56" in both places.
Page 31, line 26:
Delete "sec. 42"
Insert "sec. 45"
Page 31, line 27:
Delete "sec. 50"
Insert "sec. 54"
Page 31, line 30:
Delete "sec. 50"
Insert "sec. 54"
Page 32, line 4:
Delete "sec. 50"
Insert "sec. 54"
Page 32, line 6:
Delete "sec. 50"
Insert "sec. 54"
Page 32, line 9:
Delete "sec. 50"
Insert "sec. 54"
Page 32, line 12:
Delete "sec. 50"
Insert "sec. 54"
Page 32, line 14:
Delete "sec. 50"
Insert "sec. 54"
Page 33, line 9:
Delete "Sections 22, 53, 61, and 62"
Insert "Sections 23, 57, 65, and 66"
Page 33, line 11:
Delete "Sections 32, 51, and 56"
Insert "Sections 33, 55, and 60"
Page 33, line 12:
Delete "Sections 23, 26, 28, 33, 37, 39, 45, 52,
57, and 58"
Insert "Sections 24, 27, 29, 34, 39, 41, 48, 56,
61, and 62"
Page 33, line 14:
Delete "secs. 63 - 65"
Insert "secs. 67 - 69"
Amendment 6, labeled 29-GH2609\D.12, Nauman/Shutts, 5/10/16,
read as follows:
Page 1, line 2, following "credits;":
Insert "relating to the qualified in-state oil
refinery infrastructure expenditures tax credit;"
Page 5, following line 23:
Insert a new bill section to read:
"* Sec. 12. AS 43.20.053(a) is amended to read:
(a) A taxpayer that owns an in-state oil
refinery whose primary function is the manufacturing
and sale of refined petroleum products to third
parties in arm's length transactions may apply a
credit against the tax due under this chapter for a
qualified infrastructure expenditure incurred in the
state for a tax year beginning after December 31,
2014, and before January 1, 2020. The total amount of
credit a taxpayer may receive under this section may
not exceed the lesser of 40 percent of qualified
infrastructure expenditures incurred in the state
during the tax year or $10,000,000 for each in-state
refinery for which qualified expenditures are
incurred. To qualify for a credit under this section,
a taxpayer that is a corporation, joint venture, or
partnership must be headquartered in the state and at
least 51 percent of the corporation, joint venture, or
partnership must be owned by residents of the state."
Renumber the following bill sections accordingly.
Page 13, line 12:
Delete "sec. 22"
Insert "sec. 23"
Page 15, line 15:
Delete "sec. 25"
Insert "sec. 26"
Page 16, line 14:
Delete "sec. 27"
Insert "sec. 28"
Page 18, line 17:
Delete "sec. 31"
Insert "sec. 32"
Page 18, line 30:
Delete "secs. 31 and 32"
Insert "secs. 32 and 33"
Page 22, line 19:
Delete "sec. 38"
Insert "sec. 39"
Page 29, line 24:
Delete "sec. 30"
Insert "sec. 31"
Page 29, line 26:
Delete "sec. 29"
Insert "sec. 30"
Page 29, line 27:
Delete "secs. 27, 29, and 30"
Insert "secs. 28, 30, and 31"
Page 29, line 28:
Delete "sec. 42"
Insert "sec. 43"
Page 30, line 2:
Delete "sec. 50"
Insert "sec. 51"
Page 30, line 4:
Delete "sec. 31"
Insert "sec. 32"
Delete "secs. 34 and 35"
Insert "secs. 35 and 36"
Page 30, line 5:
Delete "sec. 36"
Insert "sec. 37"
Delete "sec. 43"
Insert "sec. 44"
Page 30, line 6:
Delete "sec. 44"
Insert "sec. 45"
Page 30, line 7:
Delete "sec. 50"
Insert "sec. 51"
Page 30, lines 10 - 11:
Delete "sec. 50"
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Amendment 8, labeled 29-GH2609\D.14, Shutts, 5/11/16, read
as follows:
Page 1, line 4, following "tax;":
Insert "relating to the minimum oil and gas
production tax for certain oil and gas;"
Page 5, following line 31:
Insert a new bill section to read:
"* Sec. 13. AS 43.55.011(f) is amended to read:
(f) The levy of tax under (e) of this section
for
(1) oil and gas produced before January 1,
2017 [JANUARY 1, 2022], from leases or properties that
include land north of 68 degrees North latitude, other
than gas subject to (o) of this section, may not be
less than
(A) four percent of the gross value at the
point of production when the average price per barrel
for Alaska North Slope crude oil for sale on the
United States West Coast during the calendar year for
which the tax is due is more than $25;
(B) three percent of the gross value at the
point of production when the average price per barrel
for Alaska North Slope crude oil for sale on the
United States West Coast during the calendar year for
which the tax is due is over $20 but not over $25;
(C) two percent of the gross value at the
point of production when the average price per barrel
for Alaska North Slope crude oil for sale on the
United States West Coast during the calendar year for
which the tax is due is over $17.50 but not over $20;
(D) one percent of the gross value at the
point of production when the average price per barrel
for Alaska North Slope crude oil for sale on the
United States West Coast during the calendar year for
which the tax is due is over $15 but not over $17.50;
or
(E) zero percent of the gross value at the
point of production when the average price per barrel
for Alaska North Slope crude oil for sale on the
United States West Coast during the calendar year for
which the tax is due is $15 or less; [AND]
(2) oil and gas produced on and after
January 1, 2017, and before January 1, 2022, from
leases or properties that include land north of 68
degrees North latitude, other than gas subject to (o)
of this section, may not be less than five
[(A) FOUR] percent of the gross value at
the point of production;
(3) oil produced on and after January 1,
2022, from leases or properties that include land
north of 68 degrees North latitude may not be less
than five percent of the gross value at the point of
production [WHEN THE AVERAGE PRICE PER BARREL FOR
ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE UNITED
STATES WEST COAST DURING THE CALENDAR YEAR FOR WHICH
THE TAX IS DUE IS MORE THAN $25;
(B) THREE PERCENT OF THE GROSS VALUE AT THE
POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL
FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE
UNITED STATES WEST COAST DURING THE CALENDAR YEAR FOR
WHICH THE TAX IS DUE IS OVER $20 BUT NOT OVER $25;
(C) TWO PERCENT OF THE GROSS VALUE AT THE
POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL
FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE
UNITED STATES WEST COAST DURING THE CALENDAR YEAR FOR
WHICH THE TAX IS DUE IS OVER $17.50 BUT NOT OVER $20;
(D) ONE PERCENT OF THE GROSS VALUE AT THE
POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL
FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE
UNITED STATES WEST COAST DURING THE CALENDAR YEAR FOR
WHICH THE TAX IS DUE IS OVER $15 BUT NOT OVER $17.50;
OR
(E) ZERO PERCENT OF THE GROSS VALUE AT THE
POINT OF PRODUCTION WHEN THE AVERAGE PRICE PER BARREL
FOR ALASKA NORTH SLOPE CRUDE OIL FOR SALE ON THE
UNITED STATES WEST COAST DURING THE CALENDAR YEAR FOR
WHICH THE TAX IS DUE IS $15 OR LESS]."
Renumber the following bill sections accordingly.
Page 7, following line 4:
Insert a new bill section to read:
"* Sec. 16. AS 43.55.020(a) is amended to read:
(a) For a calendar year, a producer subject to
tax under AS 43.55.011 shall pay the tax as follows:
(1) for oil and gas produced before
January 1, 2014, an installment payment of the
estimated tax levied by AS 43.55.011(e), net of any
tax credits applied as allowed by law, is due for each
month of the calendar year on the last day of the
following month; except as otherwise provided under
(2) of this subsection, the amount of the installment
payment is the sum of the following amounts, less 1/12
of the tax credits that are allowed by law to be
applied against the tax levied by AS 43.55.011(e) for
the calendar year, but the amount of the installment
payment may not be less than zero:
(A) for oil and gas not subject to
AS 43.55.011(o) or (p) produced from leases or
properties in the state outside the Cook Inlet
sedimentary basin, other than leases or properties
subject to AS 43.55.011(f), the greater of
(i) zero; or
(ii) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from the
leases or properties during the month for which the
installment payment is calculated;
(B) for oil and gas produced from leases or
properties subject to AS 43.55.011(f), the greatest of
(i) zero;
(ii) zero percent, one percent, two
percent, three percent, or four percent, as
applicable, of the gross value at the point of
production of the oil and gas produced from the leases
or properties during the month for which the
installment payment is calculated; or
(iii) the sum of 25 percent and the tax
rate calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from those
leases or properties during the month for which the
installment payment is calculated;
(C) for oil or gas subject to
AS 43.55.011(j), (k), or (o), for each lease or
property, the greater of
(i) zero; or
(ii) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible under AS 43.55.160 for
the oil or gas, respectively, produced from the lease
or property from the gross value at the point of
production of the oil or gas, respectively, produced
from the lease or property during the month for which
the installment payment is calculated;
(D) for oil and gas subject to
AS 43.55.011(p), the lesser of
(i) the sum of 25 percent and the tax rate
calculated for the month under AS 43.55.011(g)
multiplied by the remainder obtained by subtracting
1/12 of the producer's adjusted lease expenditures for
the calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from the
leases or properties during the month for which the
installment payment is calculated, but not less than
zero; or
(ii) four percent of the gross value at the
point of production of the oil and gas produced from
the leases or properties during the month, but not
less than zero;
(2) an amount calculated under (1)(C) of
this subsection for oil or gas subject to
AS 43.55.011(j), (k), or (o) may not exceed the
product obtained by carrying out the calculation set
out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as
applicable, for gas or set out in AS 43.55.011(k)(1)
or (2), as applicable, for oil, but substituting in
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as
applicable, the amount of taxable gas produced during
the month for the amount of taxable gas produced
during the calendar year and substituting in as
43.55.011(k)(1)(A) or (2)(A), as applicable, the
amount of taxable oil produced during the month for
the amount of taxable oil produced during the calendar
year;
(3) an installment payment of the estimated
tax levied by AS 43.55.011(i) for each lease or
property is due for each month of the calendar year on
the last day of the following month; the amount of the
installment payment is the sum of
(A) the applicable tax rate for oil
provided under AS 43.55.011(i), multiplied by the
gross value at the point of production of the oil
taxable under AS 43.55.011(i) and produced from the
lease or property during the month; and
(B) the applicable tax rate for gas
provided under AS 43.55.011(i), multiplied by the
gross value at the point of production of the gas
taxable under AS 43.55.011(i) and produced from the
lease or property during the month;
(4) any amount of tax levied by
AS 43.55.011, net of any credits applied as allowed by
law, that exceeds the total of the amounts due as
installment payments of estimated tax is due on
March 31 of the year following the calendar year of
production;
(5) for oil and gas produced on and after
January 1, 2014, and before January 1, 2022, an
installment payment of the estimated tax levied by
AS 43.55.011(e), net of any tax credits applied as
allowed by law, is due for each month of the calendar
year on the last day of the following month; except as
otherwise provided under (6) of this subsection, the
amount of the installment payment is the sum of the
following amounts, less 1/12 of the tax credits that
are allowed by law to be applied against the tax
levied by AS 43.55.011(e) for the calendar year, but
the amount of the installment payment may not be less
than zero:
(A) for oil and gas not subject to
AS 43.55.011(o) or (p) produced from leases or
properties in the state outside the Cook Inlet
sedimentary basin, other than leases or properties
subject to AS 43.55.011(f), the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil and gas under AS 43.55.160 from
the gross value at the point of production of the oil
and gas produced from the leases or properties during
the month for which the installment payment is
calculated;
(B) for oil and gas produced from leases or
properties subject to AS 43.55.011(f), the greatest of
(i) zero;
(ii) zero percent, one percent, two
percent, three percent, [OR] four percent, or five
percent, as applicable, of the gross value at the
point of production of the oil and gas produced from
the leases or properties during the month for which
the installment payment is calculated; or
(iii) 35 percent multiplied by the
remainder obtained by subtracting 1/12 of the
producer's adjusted lease expenditures for the
calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil and gas
under AS 43.55.160 from the gross value at the point
of production of the oil and gas produced from those
leases or properties during the month for which the
installment payment is calculated, except that, for
the purposes of this calculation, a reduction from the
gross value at the point of production may apply for
oil and gas subject to AS 43.55.160(f) or (g);
(C) for oil or gas subject to
AS 43.55.011(j), (k), or (o), for each lease or
property, the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible under AS 43.55.160 for the oil or gas,
respectively, produced from the lease or property from
the gross value at the point of production of the oil
or gas, respectively, produced from the lease or
property during the month for which the installment
payment is calculated;
(D) for oil and gas subject to
AS 43.55.011(p), the lesser of
(i) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil and gas under AS 43.55.160 from
the gross value at the point of production of the oil
and gas produced from the leases or properties during
the month for which the installment payment is
calculated, but not less than zero; or
(ii) four percent of the gross value at the
point of production of the oil and gas produced from
the leases or properties during the month, but not
less than zero;
(6) an amount calculated under (5)(C) of
this subsection for oil or gas subject to
AS 43.55.011(j), (k), or (o) may not exceed the
product obtained by carrying out the calculation set
out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as
applicable, for gas or set out in AS 43.55.011(k)(1)
or (2), as applicable, for oil, but substituting in
AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as
applicable, the amount of taxable gas produced during
the month for the amount of taxable gas produced
during the calendar year and substituting in
AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the
amount of taxable oil produced during the month for
the amount of taxable oil produced during the calendar
year;
(7) for oil and gas produced on or after
January 1, 2022, an installment payment of the
estimated tax levied by AS 43.55.011(e), net of any
tax credits applied as allowed by law, is due for each
month of the calendar year on the last day of the
following month; the amount of the installment payment
is the sum of the following amounts, less 1/12 of the
tax credits that are allowed by law to be applied
against the tax levied by AS 43.55.011(e) for the
calendar year, but the amount of the installment
payment may not be less than zero:
(A) for oil produced from leases or
properties that include land north of 68 degrees North
latitude, the greatest of
(i) zero;
(ii) five [ZERO] percent [, ONE PERCENT,
TWO PERCENT, THREE PERCENT, OR FOUR PERCENT, AS
APPLICABLE,] of the gross value at the point of
production of the oil produced from the leases or
properties during the month for which the installment
payment is calculated; or
(iii) 35 percent multiplied by the
remainder obtained by subtracting 1/12 of the
producer's adjusted lease expenditures for the
calendar year of production under AS 43.55.165 and
43.55.170 that are deductible for the oil under
AS 43.55.160(h)(1) from the gross value at the point
of production of the oil produced from those leases or
properties during the month for which the installment
payment is calculated, except that, for the purposes
of this calculation, a reduction from the gross value
at the point of production may apply for oil subject
to AS 43.55.160(f) or 43.55.160(f) and (g);
(B) for oil produced before or during the
last calendar year under AS 43.55.024(b) for which the
producer could take a tax credit under
AS 43.55.024(a), from leases or properties in the
state outside the Cook Inlet sedimentary basin, no
part of which is north of 68 degrees North latitude,
other than leases or properties subject to
AS 43.55.011(p), the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(2) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated;
(C) for oil and gas produced from leases or
properties subject to AS 43.55.011(p), except as
otherwise provided under (8) of this subsection, the
sum of
(i) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(3) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated,
but not less than zero; and
(ii) 13 percent of the gross value at the
point of production of the gas produced from the
leases or properties during the month, but not less
than zero;
(D) for oil produced from leases or
properties in the state, no part of which is north of
68 degrees North latitude, other than leases or
properties subject to (B) or (C) of this paragraph,
the greater of
(i) zero; or
(ii) 35 percent multiplied by the remainder
obtained by subtracting 1/12 of the producer's
adjusted lease expenditures for the calendar year of
production under AS 43.55.165 and 43.55.170 that are
deductible for the oil under AS 43.55.160(h)(4) from
the gross value at the point of production of the oil
produced from the leases or properties during the
month for which the installment payment is calculated;
(E) for gas produced from each lease or
property in the state, other than a lease or property
subject to AS 43.55.011(p), 13 percent of the gross
value at the point of production of the gas produced
from the lease or property during the month for which
the installment payment is calculated, but not less
than zero;
(8) an amount calculated under (7)(C) of
this subsection may not exceed four percent of the
gross value at the point of production of the oil and
gas produced from leases or properties subject to
AS 43.55.011(p) during the month for which the
installment payment is calculated;
(9) for purposes of the calculation under
(1)(B)(ii), (5)(B)(ii), and (7)(A)(ii) of this
subsection, the applicable percentage of the gross
value at the point of production is determined under
AS 43.55.011(f) [AS 43.55.011(f)(1) OR (2)] but
substituting the phrase "month for which the
installment payment is calculated" in
[AS 43.55.011(f)(1) AND (2)] for the phrase "calendar
year for which the tax is due.""
Renumber the following bill sections accordingly.
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| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 247.D Amendment 1.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 2.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 3.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 4.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 5.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 6.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 7.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 8.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 9.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |
| HB 247.D Amendment 10.pdf |
HRLS 5/12/2016 9:30:00 AM |
HB 247 |