Legislature(2015 - 2016)BARNES 124
03/22/2016 06:00 PM House RESOURCES
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| 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
6:02:06 PM
[CO-CHAIR NAGEAK announced that the only order of business is
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 the proposed committee substitute (CS)
for HB 247, Version 29-GH2609\P, Shutts, 3/18/16, adopted as the
working document on 3/19/16.]
[During this hearing, amendments to Version P of HB 247 were
discussed or adopted. Because of their length, the longer
amendments are found at the end of the minutes for this bill.
The shorter amendments are included in the main text.]
6:02:14 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 17, labeled
29-GH2609\P.4, Shutts, 3/19/16, which read:
Page 3, line 10:
Delete "three"
Insert "five [THREE]"
CO-CHAIR TALERICO objected to the amendment.
CO-CHAIR NAGEAK objected to the amendment for the purpose of
discussion.
REPRESENTATIVE SEATON supported Amendment 17, stating that a 3
percent interest rate [above the Federal Reserve rate] is too
low, 7 percent is too high, and 5 percent seems about right.
6:03:02 PM
REPRESENTATIVE JOSEPHSON explained Amendment 17. He said the 11
percent interest rate under Alaska's Clear and Equitable Share
(ACES) [House Bill 2001, passed in 2007, Twenty-Fifth Alaska
State Legislature] was excessive. However, he continued, an
opportunity cost is at issue here as well as a sovereignty
discussion to some degree. According to the Tax Division
director, he related, the administration's goal [under HB 247]
was to strike an interest rate that was closer to what the
permanent fund might earn. Amendment 17 proposes less than that
and is still a friendly industry rate, that is the state could
make more with its own money doing something else than it would
receive in interest. Representative Josephson recalled the
committee's earlier discussion [during its 1:00 p.m. hearing on
HB 247] about what the law calls "scienter," which basically
means what is in someone's mind when thinking about not paying a
liability and whether it is an honest dispute or someone trying
in his/her mind to say he/she could turn this into an honest
dispute. He said he is not going to go there, but posited that
both sides are obviously very aware of the interest rate. He
offered his agreement that the statute of limitations, an issue
that has come up in regard to the interest rate, needs to be
rectified by the state because it would help the industry and be
fair. But at the same time, he continued, the statute of
limitations is a very much black or white kind of law. [The
proposed interest rate in] Amendment 17 would be somewhat fairer
without being as excessive as was the ACES number. Five percent
is not punitive, it is a fair compromise number, and it still
recognizes the proper place of the industry in the state.
6:05:50 PM
CO-CHAIR TALERICO noted that in his many discussions with Co-
Chair Nageak it was recognized that the 12th Federal Reserve
District is a variable rate based off the commercial banking
loans that the Federal Reserve will make and is something over
which the state has no control. He pointed out that the
interest rate would be the Federal Reserve rate plus 3 percent.
The rate is variable and can change at any time, so what is
really being looked at is a rate that someone else sets plus 3
percent on top of that. He said he is opposed to Amendment 17
because of the variability in that rate and the state's lack of
control over that rate.
REPRESENTATIVE TARR offered her support for Amendment 17. She
said she appreciates the comments about the variable rate and
the state having little control over that, but noted that it is
cheaper to borrow money with the low rates. Amendment 17 tries
to strike the balance between what kind of opportunities are
provided at these different interest rates and consideration
must be given as to whether the state would earn more if those
dollars were invested in the state's accounts.
6:08:04 PM
REPRESENTATIVE JOSEPHSON concluded his explanation of Amendment
17. In regard to the co-chairs' discussion of the Federal
Reserve, he said the Tax Division director previously stated
that the interest rate is two-way. So, to the extent that the
truth is found through the hearings process when there is a
contest, both the industry and the state are risking equally.
If the rate varies it could impact the state as well if the
state does not have a legitimate position. He understood that
when a settlement is achieved it usually will also settle the
interest rate, so that when there is a meeting of the minds in a
settlement over a disputed issue related to these complicated
tax formulas, they will also generally settle the interest rate.
6:09:41 PM
CO-CHAIR TALERICO maintained his objection to Amendment 17.
A roll call vote was taken. Representatives Seaton, Josephson,
Tarr voted in favor of Amendment 17. Representatives Herron,
Chenault, Johnson, Olson, Talerico, and Nageak voted against it.
Therefore, Amendment 17 failed by a vote of 3-6.
6:10:30 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 18, labeled
29-GH2609\P.28, Nauman/Shutts, 3/21/16. [Amendment 18 is
provided at the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE JOSEPHSON explained Amendment 18, noting that in
virtually every hearing the subject came up of trying to invest
state dollars in plays or developments that are a better bet
than others. He said Amendment 18 would add a requirement for
receiving credits that a company must show in advance that a
project is not feasible without the credit. He recalled
numerous oil and gas companies telling the committee that
without the well lease expenditure [credit] or the qualified
capital expense credit they might go out of business and be
forced to leave Alaska. If that is true, then instead of
repealing these credits altogether Amendment 18 would provide
for credits when necessary. By July 1 of the year before the
credit is to be claimed a company must demonstrate to the
commissioner of the Department of Revenue (DOR), who would then
consult with the commissioner of the Department of Natural
Resources (DNR), and together they would find that the
activities qualifying as a well lease expenditure (WLE) or a
qualified capital expenditure (QCE) are economically infeasible
without the credits. He conceded that this law would probably
need some regulations to accompany it, but that if a project is
feasible without the credits then it is feasible without the
credits. For example, this came up in the Caelus Energy Alaska,
LLC, decision on royalty relief and in the Agrium Inc. dispute,
in which he took Agrium's position as well as Caelus's. When
there was some vetting and the case was made that it was not
economical without state assistance, the state saw the wisdom of
assisting and that, he said, is what Amendment 18 is about.
6:12:54 PM
REPRESENTATIVE TARR supported Amendment 18. She said it would
provide an opportunity to be more careful and thoughtful in how
these credits are applied so the state does not find itself
investing in projects that do not come to fruition and are
costly to the state's unrestricted general fund.
CO-CHAIR TALERICO expressed his concern that it would be
cumbersome to the company trying to identify a credit a year in
advance as well as to the commissioner trying to make a
feasibility judgement on that particular credit. He requested
the amendment sponsor to explain how this would function, saying
this might be a detriment to doing as much work as possible.
REPRESENTATIVE JOHNSON said the difficulty he sees is having the
two commissioners get together with no end date, because without
an end date the commissioners could run a project out of
business by not meeting. Without a required deadline for
approval or disapproval the commissioners could deny it by not
meeting. He argued that this would put a lot of responsibility
for the state's resources in the hands of two individuals.
6:15:54 PM
REPRESENTATIVE JOSEPHSON concluded his explanation of Amendment
18. He maintained that Amendment 18 does lay out something of a
schedule on [page 1], lines 14-15. He said the amendment would
result in more economic analysis of a project so there is not
this blanket approval that has been going on and that will next
year result in $825 million of additional outlay [by the state]
that is without discretion, it just happens. While this
description might be a little different for exploration credits,
he added, it is mostly not different and for that reason he is
offering Amendment 18.
6:16:51 PM
CO-CHAIR TALERICO maintained his objection to Amendment 18.
A roll call vote was taken. Representatives Tarr and Josephson
voted in favor of Amendment 18. Representatives Herron,
Chenault, Johnson, Olson, Seaton, Talerico, and Nageak voted
against it. Therefore, Amendment 18 failed by a vote of 2-7.
6:17:45 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 19, labeled
29-GH2609\P.49, Shutts, 3/21/16, which read:
Page 8, line 23:
Delete "$200,000,000"
Insert "$75,000,000"
Page 8, line 23, following "person":
Insert "for each lease"
Page 8, line 31:
Delete "$200,000,000"
Insert "$75,000,000"
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE JOSEPHSON explained Amendment 19, recalling that
yesterday Mr. Alper reported that there have been 6 instances of
a company having received more than $100 million since the
credit system began in about 2007, and 11 instances of a company
having received between $50 million and $100 million, for a
total of 17 instances exceeding $50 million. This is part of
the concern he has generally, he said. If the state was making
$10-$12 billion per year in production revenue as it did in
2009, 2010, and 2011, and maybe 2012, then all things would be
possible and affordable. However, the new spring forecast is
for a $1.5 billion deficit and this is on top of the state's
other deficit of about $3.5 billion. The committee substitute
spans two years of spring forecast. The new $1.5 billion
deficit means the tax credits really need to be reined in.
Amendment 19 is an effort to strike some compromise. The
committee has discussed how $200 million could be a problem in a
situation like Armstrong Oil & Gas Inc.'s Pikka Unit. At [the
committee's 1:00 p.m. hearing today] it was identified that the
$200 million theoretically would not be capped for certain
credits that are unlikely to apply for repurchase, such as
refineries, gas storage [facilities], and [liquefied natural gas
(LNG) storage facilities]. Although the $200 million cap is
something, he said, it is not very limiting and for that reason
he is offering Amendment 19.
6:20:26 PM
REPRESENTATIVE JOHNSON expressed his concern with Amendment 19,
saying he is perplexed in that there are a lot more leases than
there are companies. [By using the word "lease"], a company
holding multiple leases could get to the $75 million cap
multiple times, as opposed to per company which would only be
once. He asserted that using the word "lease" would open this
up to a very large potential drain of money.
CO-CHAIR TALERICO maintained his objection to Amendment 19.
6:21:45 PM
REPRESENTATIVE JOSEPHSON concluded his explanation of Amendment
19, stating that unless there was a drafting error the intention
here is a way of saying the entire lease will only enjoy $75
million. As written, Version P would prohibit a single company
from breaking into, say, five little companies with each getting
$200 million, making this a $1.2 billion problem. However,
Version P would not solve the problem of partnering. Drawing
attention to the CS, page 8, line 23, he explained that with
Amendment 19 the CS would say a $75 million limit for the entire
lease in one unit, presumably.
REPRESENTATIVE TARR requested it be confirmed that Amendment 19
is drafted as stated by the sponsor.
SUSIE SHUTTS, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, Alaska
State Legislature, replied she would read Amendment 19, lines 5-
6, to be from a person for each lease. So, she continued, "a
lease could have more than one person that ... has a tax credit
certificate purchased, but it would be each person for one lease
would be limited."
6:23:50 PM
REPRESENTATIVE SEATON, regarding the explanation by Ms. Shutts,
stated that units are composed of multiple leases. So, with the
terminology that is had, this could be multiple applications if
there were 20 leases in an area that was one field being
developed. He requested Ms. Shutts to confirm if he is correct.
MS. SHUTTS responded, "Yes, this would only be a limitation per
person per lease."
REPRESENTATIVE CHENAULT noted that leases can be made up of many
leases inside a field. So, he surmised, if he was John Q Oil
Company and he owned 10 leases inside a field he would be
eligible for up to 10 credits if he chose to take them that way.
He asked whether his interpretation is correct.
MS. SHUTTS answered correct, it would be per lease. So if there
were 10 leases, then a person would only be limited for the $200
million amount per lease.
REPRESENTATIVE CHENAULT therefore surmised he could be eligible
for up to $2 billion.
MS. SHUTTS replied correct, nothing in Amendment 19 would
prohibit that. It would just be a limitation per lease and if
the person was otherwise eligible.
REPRESENTATIVE JOHNSON inquired whether a lease can be held by a
partnership.
MS. SHUTTS responded that she was unsure.
REPRESENTATIVE JOHNSON remarked that Representative Chenault's
question is germane, but if there were partners in a lease it
could be multiplied times two or three, and if there were three
partners in each of those leases as described by Representative
Chenault, it could be a huge amount. He said he opposes
Amendment 19 due to this and the lack of clarity.
6:27:09 PM
REPRESENTATIVE JOSEPHSON inquired whether the committee would
entertain an amendment to Amendment 19 that would read on line 6
of the amendment "for each lease or property".
REPRESENTATIVE JOSEPHSON withdrew Amendment 19 upon committee
members expressing their disapproval of this proposed amendment
to Amendment 19.
6:27:44 PM
REPRESENTATIVE TARR moved to adopt Amendment 20, labeled 29-
GH2609\P.37, Shutts, 3/21/16, which read:
Page 8, line 23:
Delete "$200,000,000"
Insert "$100,000,000"
Page 8, line 31:
Delete "$200,000,000"
Insert "$100,000,000"
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE TARR explained Amendment 20. She noted that the
administration brought forward HB 247 to look at what the state
could afford and sustain. The substantially smaller cap of $25
million considered in the original version of the bill would
have had a substantial fiscal impact in the near term. She said
she is concerned that the $200 million [proposed in Version P]
is such a large amount. While a big development is hoped for,
the state could find itself in the position where it cannot
reasonably afford the credits. If the state cannot afford this
today and it is known the state likely cannot afford those kind
of numbers in the next few years, does the state put itself in
the same potential for a difficult situation where those would
have to be carried over to a future year, causing an unintended
consequence of actually deterring development? She said she
wants to ensure the state has a reasonable number that it can
afford that does not result in fiscal years where the state
would be unable to fully pay that commitment and would have to
roll it forward, creating a potential ripple effect on
investment. While $100 million may not go very far in the world
of oil development on the North Slope, she said it is still much
more generous than the $25 million cap in the original bill.
She posited that this is one of the areas where the public might
be most critical of members' actions.
6:31:16 PM
REPRESENTATIVE SEATON stated he is definitely of the opinion
that $200 million is too high. However, he continued, better
solutions will be coming up in the amendment process and for
this reason he is opposed to Amendment 20.
REPRESENTATIVE JOHNSON recalled that $200 million was put in to
protect the state against an outlier, an elephant field that
could be billions of dollars. Whether $200 million or $100
million is the right number he does not know, but it serves the
purpose of keeping the state out of a huge billion dollar plus
liability that would happen if there was another Alpine field.
He said he would like to send the committee substitute to the
House Finance Committee for that committee to determine whether
$200 million is the right number.
6:32:33 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 20.
She expressed her concern that the House Finance Committee will
not have the time to delve deeply into the bill with only 26
days left in the session. She offered her hope that the House
Finance Committee is watching the conversation of this committee
and will be able to get up to speed quickly. While she does not
want to deter development, she is having a hard time looking
forward should it continue being a fiscal impact of $600 million
or more and how the state will be able to afford that relative
to other essential state services. If the state finds itself in
the situation where it cannot, and something must be done like
what was done with the [governor's] veto last year, then the
state may end up shooting itself in the foot. She said she
worries about the state getting in over its head and continuing
to stay there.
6:33:56 PM
CO-CHAIR TALERICO maintained his objection to Amendment 20.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 20. Representatives Herron,
Chenault, Johnson, Olson, Seaton, Talerico, and Nageak voted
against it. Therefore, Amendment 20 failed by a vote of 2-7.
6:34:48 PM
REPRESENTATIVE JOSEPHSON withdrew Amendment 21, labeled 29-
GH2609\P.56, Shutts, 3/21/16, but stated he still has concerns
about the outstanding liability issue.
6:35:21 PM
REPRESENTATIVE TARR moved to adopt Amendment 22, labeled 29-
GH2609\P.38, Shutts, 3/21/16. [Amendment 22 is provided at the
end of the minutes on HB 247.]
REPRESENTATIVE OLSON objected to the amendment.
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE TARR explained that instead of adjusting the cap
from $200 million to $100 million, Amendment 22 would keep the
earning potential of $200 million but would limit the use
potential to $100 million in any calendar year and anything in
excess of $100 million would roll over to the following calendar
year. She reiterated her concern over the state's ability to
realistically afford an annual credit cost in the range of $600
million or more. She said Amendment 22 is an attractive option
because, given it would take a very substantial project to be
earning at that level, the frequency at which it would happen
will be limited and it is known from the modeling that this type
of big spend is only going to be in [a project's] early years
during build out. Under the amendment there would not be a time
limit if it rolled over to the next calendar year because it
would be unlikely it would continue for an extended period of
time and would correct itself within a window of a few years
after that. Thus, the extraordinarily generous cap of $200
million per year would remain under Amendment 22, but would be
limited to the use of $100 million per year as way to honor the
earning of the credits while considering the state's near-term
financial outlook.
6:38:03 PM
REPRESENTATIVE SEATON understood Amendment 22 would limit the
amount of credit a company could earn in a year to $200 million
no matter how much the company spends.
REPRESENTATIVE TARR confirmed that that is correct.
REPRESENTATIVE CHENAULT asked whether Amendment 22 would be
diluting the value of the tax credits in a given year.
REPRESENTATIVE TARR replied she does not see it in that way. In
cases where there is transferability it would have the potential
to have somewhat of an impact there because of the limit. But,
that is true of all the other credits if the transferability
option is used, so this would not be unique. The companies
would have the certainty that they can earn that large amount
but also there would be a limit. According to the modeling,
there would be a two or three year period where a company would
earn like that; once out of the major build years the company
would get into much lower credit earning scenarios where it
would quickly be able to roll those over into the next calendar
year and would retain the value of the credit.
REPRESENTATIVE CHENAULT surmised the company would be able to
stack those credits. He said he is concerned that if the earner
only gets 50 cents on the dollar for the tax credit and it is
sold to someone else, then the incentive is not really meeting
what the desire was for it to do.
REPRESENTATIVE TARR responded that there would be the limitation
in statute, but it would be the company's choice whether to
transfer the credits. Should the company choose not to use the
transferability option it would retain 100 percent, $1 would be
$1, it just would be carried over to a credit earned in the
following year. Because the $200 million cap is so substantial
it would, she allowed, sort of have the unintended consequence
that Representative Chenault might be suggesting.
6:41:33 PM
REPRESENTATIVE OLSON asked whether the model referred to by
Representative Tarr was distributed to members.
REPRESENTATIVE TARR replied she has many pages of models that
the [Department of Revenue] prepared for the committee.
REPRESENTATIVE OLSON requested Representative Tarr to copy and
distribute the model she is referring to.
CO-CHAIR TALERICO maintained his objection to Amendment 22.
REPRESENTATIVE TARR requested an at-ease so she could provide a
copy of the modeling.
6:42:40 PM
The committee took an at-ease from 6:42 p.m. to 6:47 p.m.
6:47:11 PM
REPRESENTATIVE TARR noted the modeling in question was in the
Department of Revenue's (DOR) 2/24/16 presentation entitled,
"Additional Modeling and Scenario Analysis - Part 2," on slides
27 through about 39 regarding field assumptions for 750 million
barrels of oil. These slides show the example of peak years
that might butt up to the $200 million cap and also show it
would be a limited period of time of about two or three years in
which those would be rolled over, and then it would be clear.
6:48:20 PM
CO-CHAIR TALERICO maintained his objection to Amendment 22.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 22. Representatives Seaton,
Johnson, Olson, Talerico, Nageak, and Herron voted against it.
Therefore, Amendment 22 failed by a vote of 2-6.
6:49:17 PM
REPRESENTATIVE JOSEPHSON withdrew Amendment 23, labeled 29-
GH2609\P.23, Shutts, 3/20/16.
6:49:43 PM
REPRESENTATIVE TARR moved Amendment 24, labeled 29-GH2609\P.39,
Shutts, 3/21/16, which read:
Page 18, line 9, following "legislators":
Insert "and must include members of the majority
and minority caucuses"
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE TARR explained Amendment 24. She pointed out she
has worked with a few pieces of legislation that provided for
task forces or working groups and the language was sometimes
very prescriptive on who the members would be. The provision
[in Version P] is not quite as prescriptive and leaves it more
to the discretion of the co-chairs [of the proposed legislative
working group]. It is important to work together in a bi-
partisan way through the Cook Inlet working group, she stressed.
Making this minor improvement to that working group structure
would be important for working together, something that is
appreciated by the public.
6:51:09 PM
REPRESENTATIVE HERRON stated it is not critical, but he thinks
the speaker and the president should be consulted on the
appointments of the members by the co-chairs.
REPRESENTATIVE JOHNSON said every task force and committee that
he has been associated with has had representation from the
majority and the minority, and he would anticipate that to
continue. He said he will support the amendment, but qualified
that he does not think it is needed.
6:52:29 PM
REPRESENTATIVE JOSEPHSON referred to page 18 of Version P and
said he thought Ms. Delbridge stated during introduction of the
CS that interested members of the minority caucus would be
represented through the president and the speaker and there
would not be a place at the table for minority caucus members.
RENA DELBRIDGE, Staff, Representative Mike Hawker, Alaska State
Legislature, replied she does not know that that is what she
said. She recalled Representative Tarr had a question as to
whether minority and majority members would be engaged and that
she had offered her belief that the co-chairs had indicated in
drafting the CS that they fully intended that everyone in the
legislature is able to participate in a group like this. The
only prescription is that the group would be led by two co-
chairs, one appointed by the President of the Senate and one
appointed by the Speaker of the House, and those co-chairs would
appoint the members of the legislative working group.
6:53:50 PM
REPRESENTATIVE JOSEPHSON supported Amendment 24, saying that the
Senate working group worked very impressively. There was a role
by the minority caucus and it was filled by Senator
Wielechowski. Everyone was very respectful and a good document
was produced on 12/1/15.
CO-CHAIR NAGEAK commented he thinks this body is as respectful
as the other body.
REPRESENTATIVE JOSEPHSON said that is his point.
REPRESENTATIVE JOHNSON quipped that the Senate was not that
respectful because there were no House members on that Senate
working group and upon asking the House was told it would not be
on the group.
REPRESENTATIVE CHENAULT noted it was stated earlier that efforts
have been made to try to include minority members in any task
force and he does not see that changing. If Amendment 24 makes
the minority more comfortable, he said, then he will support it.
6:55:08 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 24,
stating it would give her constituents an idea that legislative
members are going to work together on this, which would be a
positive thing during these challenging times.
CO-CHAIR NAGEAK said he thinks there has been fairness and that
that will continue.
6:55:46 PM
CO-CHAIR TALERICO removed his objection to Amendment 24.
REPRESENTATIVE JOHNSON objected in order to put the vote on the
record.
A roll call vote was taken. Representatives Olson, Seaton,
Josephson, Tarr, Herron, Chenault, Johnson, Talerico, and Nageak
voted in favor of Amendment 24. Therefore, Amendment 24 passed
by a vote of 9-0.
6:56:47 PM
REPRESENTATIVE JOSEPHSON withdrew Amendment 25, labeled 29-
GH2609\P.9, Nauman, 3/20/16, stating it is redundant of another
amendment.
6:57:05 PM
REPRESENTATIVE TARR moved to adopt Amendment 26, labeled 29-
GH2609\P.40, Nauman/Shutts, 3/21/16. [Amendment 26 is provided
at the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
6:57:15 PM
REPRESENTATIVE TARR explained Amendment 26. She noted that the
original version of HB 247 included a couple of provisions about
making information more available to the public. She said
another amendment will be forthcoming to address getting at more
detailed information related to tax records while being clear
not to violate any Internal Revenue Service (IRS) rules or
antitrust laws. Amendment 26, however, is much more generic in
application. She pointed out that page 2, lines 3-10, of the
amendment are very similar to the provision in the governor's
original bill, although the format in the amendment is slightly
different. It is basically the same request for the name of the
person claiming the credit, the aggregate amount for the
calendar year, and a brief description to give the Alaska public
a better understanding of how things are going. This has the
potential to support the work that is trying to be accomplished
with the credits, she posited. For example, in conversing with
neighbors she has noticed that they do not have the opportunity
to hear the lengthy conversations that take place in this
building and in some ways there may be mistrust that may not be
warranted. Sharing this information with the public in a legal
way, while still protecting the companies, could help bridge
that gap and help people understand more. It even has the
potential for people to think that more should be done because
these investments are what is leading to this activity and job
growth and new opportunities can be seen.
6:59:40 PM
REPRESENTATIVE JOSEPHSON supported Amendment 26, saying he wants
to echo what was said by Representative Tarr. The cost of the
credits is under $700 million this year and is projected to be
under $900 million next year, he said. As this cost grows, his
constituents are going to be asking more and more about what
[the state] is doing and what [the state] is getting for what it
is doing. He maintained there is a way to disclose the names of
companies, their aggregate amounts, and the description of their
activities without disclosing proprietary information that would
violate the IRS code. [The credits] have become such a massive
part of the state's portfolio, third after education and
healthcare, so that the questions from constituents will grow,
not lessen, and they are entitled to know what they are
investing in. Thus, Amendment 26 is very important.
7:01:04 PM
REPRESENTATIVE SEATON requested Mr. Alper be allowed to address
Amendment 26 and whether DOR would be able to put forward this
information without disclosing taxpayer information.
REPRESENTATIVE TARR noted that the language in Amendment 26
comes from Section 8, page 4, lines 25-29, of the original bill
and she therefore surmised that the provision was done right.
KEN ALPER, Director, Tax Division, Department of Revenue (DOR),
responded that the structure of Amendment 26 is different, the
legislative drafting put in numbers 1, 2, and 3, but the content
of what is being asked for is identical to that in Section 8 of
the administration's original bill. A concern was raised that
if the [net] operating loss credits are released it might in
fact be disclosing confidential taxpayer information. However,
that is no longer an issue because the [qualified capital
expenditure] credit has been retained at least for the next five
years, so DOR thinks that is less of a problem because there is
going to be a blended set of information. Bringing attention to
[page 2 of Amendment 26], line 8, exemption to the credit in AS
43.55.024(j), he noted that this is the per-barrel credit. He
explained that everyone knows how many barrels were produced and
everyone knows what the price of oil is more or less, so there
can be a back-in to what people got. If the per-barrel credits
received by a company are disclosed, it would be possible to
tell how much a company received for its oil, which might be
perceived to be a way of backing-in to the company's revenue.
[The department] did its best to restrict this, but the goal is
to make more information available related to these credits.
7:03:33 PM
CO-CHAIR TALERICO expressed his concern with page 2, line 7, of
Amendment 26, which states, "a description of the taxpayer's
activities" and line 9, which states, "the aggregate amount of
credits". He said "the taxpayer's activities" sounds to him
like proprietary information for the operations of what these
folks do on a regular basis and he thinks that they are pretty
sensitive to that information to operate their business, and
therefore it is a red flag to him.
REPRESENTATIVE SEATON requested DOR be allowed to state the
meaning of "taxpayer's activities that generated the credits".
For example, whether that description is meaning North Slope
activity or particular well lease activity.
CO-CHAIR NAGEAK said his understanding is that "a description of
the taxpayer's activities" would mean anything.
MR. ALPER reiterated that the language in Amendment 26 is all
but identical to that proposed in the original bill. He said he
therefore he is comfortable speaking to what the intent was when
proposing the original bill and it is a much more general sense
of activities, such as "we drilled an exploration well in XYZ
Unit in the months of May through September or something."
There is no desire for a detailed sense of the minute-to-minute
or what the detailed project was. That is the sort of thing
that he would be amenable to more restrictive language or that
DOR would resolve in the regulatory process. The department
only wants to be able to give the type of information to give
the public the sense as to where the people's money is going;
for example, a credit was provided towards an exploration
project or a drill pad or simply that there was an operating
loss for overall North Slope activities.
REPRESENTATIVE JOHNSON stated he has the utmost confidence in
this administration and in Mr. Alper, but future administrations
might view that language as opening the door to anything. The
committee is hopefully coming up with a document that is durable
and will not need to be revisited, he continued, and therefore
he cannot support Amendment 26 as it stands.
7:06:58 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 26.
She reiterated that there were parts of the original bill she
liked and that is what she worked from. She said her thought in
keeping this a little more generic was to be more succinct in
the statute and let the regulations be more descriptive, and
suggested it may be slightly more generic than what Mr. Alper
said. Given her constituents would like to better understand
exploration, development, and production activities, and their
associated costs, she said it could be positive because many
times during budget conversations people are shocked at the cost
of things. These developments are very expensive and this
proposed provision could have the impact of people having a much
better understanding and why the state being a co-investor might
be necessary even in tough budget times. The good thing about
leaving it a little more generic in the statute and relying on a
regulatory process is all the people who do this work
professionally then would have the opportunity to work with DOR
to define in more detail what that would mean. Everybody would
have the chance to weigh in through the public comment period
and that would be the better way to inform the department and
come up with the detailed language that would outline what
information would become public. She said her thought is that
it would be a couple-page document, something that is easy for
people to look at.
7:09:11 PM
CO-CHAIR TALERICO maintained his objection to Amendment 26.
A roll call vote was taken. Representatives Josephson, Tarr,
and Seaton voted in favor of Amendment 26. Representatives
Herron, Chenault, Johnson, Olson, Talerico, and Nageak voted
against it. Therefore, Amendment 26 failed by a vote of 3-6.
7:10:11 PM
REPRESENTATIVE JOSEPHSON withdrew Amendment 27, labeled 29-
GH2609\P.11, Nauman/Shutts, 3/19/16.
7:10:17 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 28, labeled
29-GH2609\P.54, Nauman/Shutts, 3/21/16. [Amendment 28 is
provided at the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE JOSEPHSON explained Amendment 28 is about data
sharing. It would enable the Department of Natural Resources
(DNR) to receive seismic and downhole information after the
sunset of the alternative credits for exploration, which sunset
in about four months for the North Slope and in about six years
for the Cook Inlet and Middle Earth. Between 2004 and 2014, he
related, DNR received 725 line miles of onshore and offshore
two-dimensional (2D) data and around 600 square miles of similar
three-dimensional (3D) data. Frontier Basin explorers made
significant contributions to the state in exchange for credits
by providing seismic data to the State of Alaska, along with
gravity magnetics and lakebed geochemical surveys. Current law
states that to be reimbursed for seismic and well work under the
alternative credit for exploration, the applying company will
have its well, seismic, and geographic data made public two
years after filing for a rebate for well data and ten years
after filing for a rebate for seismic and geophysical data. The
Senate working group in its final report made two key
recommendations, he said. One was about a hard 4 percent floor,
and the second was about the importance of disclosure of data to
the state for a number of reasons. The first reason stated by
the working group is that the proprietary information is so
valuable that companies are likely to warehouse it without
moving the project forward. By sharing it with the public
eventually other firms can use it to develop oil and gas
resources. The second reason stated by the working group is
that if a company collects data but cannot fully execute a
project, another firm will later be able to use the information
so it does not go to waste. The third stated reason is that
when the State of Alaska actually owns the data it is a benefit
because of its high value. The Senate working group, chaired by
Senator Giessel, found it was critical that the State of Alaska
get all the seismic and well data possible, he said, and that is
what Amendment 28 aims to achieve.
7:13:19 PM
REPRESENTATIVE CHENAULT said what he takes out of Amendment 28
is that it is for all credits. He believed that the net
operating loss (NOL) [credit] does not currently separate the
company's activities for the whole year. For the qualified
capital expense (QCE) [credit] and the well lease expenditure
(WLE) [credit], he continued, if a company applies as an
explorer the company already has to share that data with DNR.
That is the data DNR has to-date and that should be enough for
DNR to use to help bring others to the state and to show what
great potential is here. For well work that is not exploration,
companies already give data to the Alaska Oil and Gas
Conservation Commission (AOGCC) and much of that information is
already made public. While more information may be great, he
said he thinks that a number of these issues being asked for in
Amendment 28 are already in statute.
REPRESENTATIVE TARR specified she is interested in this issue
because in the co-investor relationship this data is of material
value and can help with further development of Alaska's natural
resources. Providing access to that data makes the state's
investment have more value. Version P retained some provisions
but made some changed ones, and therefore she understands that
there is a gap under the language of Version P. She suggested
it would be of help to hear a response to what was said by
Representative Chenault.
CO-CHAIR TALERICO maintained his objection to Amendment 28.
7:15:57 PM
REPRESENTATIVE SEATON requested that Ms. Delbridge or the
Department of Revenue be allowed to address the aforementioned.
MS. DELBRIDGE confirmed the alternative credit for exploration
expires in a few months as stated by Representative Josephson
and offered her belief that this credit has covered the bulk of
exploration work, also supported by other credits. The desire
to keep seismic and exploration data coming to DNR was clearly
articulated by the department, she continued. The problem,
then, is what credit to use to access that data. The NOL does
not segregate exploration and other activity; it simply applies
to a company's statewide activities as a loss. Companies that
are in Middle Earth keep getting that alternative credit for
exploration until 2022, she believed, so some data will continue
coming from that. For companies doing business in Cook Inlet
that choose to claim the AS [43].53.023 QCE credit, there is
paragraph (2) for an explorer to take in conjunction with
geological or geophysical exploration or in connection with an
exploration well. They are bound to take that only if they
agree in writing to the terms of .025(f)(2), which she believes
is the same statute that Representative Josephson mentioned in
his amendment. For companies that are interested in the well
lease expenditure credit, AS 43.55.023(l), there is again a
paragraph (2) for an explorer who may take a credit for lease
expenditures incurred in the state south of the North Slope in
connection with that geological or geophysical exploration in
exploration wells. Again, if an explorer takes this credit the
explorer must agree in writing to submit that data to DNR along
the same lines of AS 43.55.025(f)(2). So, she said, there is
data that would still come to DNR under those same terms for
exploration and geophysical seismic work for those people
working under the QCE and WLE credits and also in Middle Earth
for the alternative exploration credit.
7:19:01 PM
REPRESENTATIVE SEATON posed a scenario of a producer drilling
wells and shooting seismic within the unit generating data, and
noted that since the producer has it under lease it is not a
competitive advantage or disadvantage. Using the net operating
loss credit there, or other credits under .023, seems like the
state is basically buying that data with the 35 percent credits
or whatever credits that are being applied. He asked whether
there is a downside to having this section apply to .023.
MS. DELBRIDGE requested clarification on whether Representative
Seaton is talking about exploration wells in an existing unit or
simply additional production wells.
REPRESENTATIVE SEATON replied it is already unitized;
exploration work within the unit, the unit is covering the
entire pool.
MS. DELBRIDGE answered that for additional exploration work
within a unit, the company essentially has a proprietary
interest in how it chooses to develop that and what kind of
potential it has. It might include the addition of additional
leases into a unit at some point, they are working that. In
regard to production related drilling for well activity, once
something is going the AOGCC gets all that data from the
producer and it is made public on AOGCC's website within, she
believed, 30 days. So, once a company is producing something
there is no real proprietary interest, but there is not
necessarily the value to DNR in having that information
available to promote the value of a piece of property that
someone else already has claim to develop. For exploration
activity related to the NOL, again the NOL does not break out
exploration or any particular activities, it is a company's
overall loss incurred for that tax year. Hypothetically, a
company could have an NOL that relates to three different
properties that it is working in different parts of Alaska. She
imagined that to segregate certain parts of that as exploration
or not part of the NOL could be extraordinarily challenging.
7:21:50 PM
REPRESENTATIVE TARR pointed out that .023, paragraph (2), and
.025(f)(2) are the exploration components of the QCE and the
WLE. She surmised that in the case of a producer, that producer
would previously have had to share that data.
MS. DELBRIDGE offered her belief that that would depend on
whether the producer applied for one of those credits and if the
producer applied for it as that exploration credit, given there
are the other exploration credits available on the North Slope
and in Cook Inlet. The value to DNR of having that exploration
data is for properties that someone chooses not to develop and
then at the end of 10 years DNR can make that public and
potentially attract other investors to look at those fields
since the rocks don't change. What is seen out of those could
have value 10 years in the future to someone else with different
technology and interests.
7:23:25 PM
REPRESENTATIVE JOSEPHSON noted the QCEs would remain on the
books if Version P stands as it is through the process and the
WLEs would away (the WLEs are QCEs plus something more), but he
is still concerned about gaps in the process. Version P calls
for a gradual elimination of the well lease expenditure and he
does not see in AS 43.55 an unequivocal statement like is
presented in proposed subsection (q) of Amendment 28 that would
say for all credits, whether credits come or credits go, they
would all appear in AS 43.55.023. Seismic and well data is
tangible property interest and cannot be demanded without being
paid for, but in exchange for generous credits the state can
command some strength in requiring that the data be delivered.
Alaska has a pressing deficit, that deficit changed in the last
three or four days, and it is unknown whether the state is going
to have QCEs or well lease expenditures at the end of the day.
It is unknown what the credit regime will look like exactly, but
it is known that it will be in AS 43.55 and Amendment 28 would
cover it so the state would be guaranteed that it would continue
to get that data and that there would be no gap in the process.
7:25:39 PM
CO-CHAIR TALERICO maintained his objection to Amendment 28.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 28. Representatives Seaton, Herron,
Chenault, Johnson, Olson, Talerico, and Nageak voted against it.
Therefore, Amendment 28 failed by a vote of 2-7.
7:26:38 PM
REPRESENTATIVE TARR withdrew Amendment 29, labeled 29-
GH2609\P.45, Shutts, 3/21/16, stating this amendment was already
covered under Amendment 2, which was adopted earlier.
7:26:58 PM
REPRESENTATIVE TARR moved to adopt Amendment 30, labeled 29-
GH2609\P.42, Shutts, 3/21/16. [Amendment 30 is provided at the
end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE TARR explained that Amendment 30 is along the
same lines as the previous amendment and that the committee had
some discussion about this when it adopted [Amendment 2].
Amendment 2 defined outstanding liability to the state as not
just unpaid delinquent taxes but also other outstanding
liabilities. Amendment 30 would still be relevant because it
relates to delinquent taxes as well as other outstanding
liabilities. She said that when developing Amendment 30 she was
working from the original version of the bill, page 4, lines 30-
31, through page 5, line 29.
7:28:59 PM
REPRESENTATIVE HERRON asked what the target is for these
conforming changes. For example, whether the target is in-state
refineries, liquefied natural gas (LNG) storage facilities, or
gas storage facilities.
REPRESENTATIVE TARR answered, "All three." While that was not
well described in the original version of the bill, she said,
Version P included those three.
REPRESENTATIVE HERRON inquired whether Representative Tarr
believes these are necessary conforming changes.
REPRESENTATIVE TARR drew attention to the language that would be
replaced under Amendment 30 and said the key thing is that the
deleted language just has "unpaid delinquent taxes" and
Amendment 30 would say "outstanding liability". So, in
reference to the three particular credits mentioned by
Representative Herron, it would expand what the outstanding
liability means to be beyond just the delinquent taxes and be
what Amendment 2 put back into Version P, which is the same
definition that was in the original version of the bill.
7:30:50 PM
[Co-Chair Talerico's objection to Amendment 30 was treated as
maintained.]
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 30. Representatives Olson, Herron,
Chenault, Johnson, Talerico, Nageak, and Seaton voted against
it. Therefore, Amendment 30 failed by a vote of 2-7.
7:31:45 PM
CO-CHAIR TALERICO specified for the public that NOL is a net
operating loss, a QCE is qualified capital expenditure, and a
WLE is a well lease expenditure.
7:32:28 PM
REPRESENTATIVE TARR withdrew Amendment 31, labeled 29-
GH2609\P.41, Nauman/Shutts, 3/21/16, stating it is the same
amendment as Amendment 32.
7:32:46 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 32, labeled
29-GH2609\P.53, Nauman/Shutts, 3/21/16. [Amendment 32 is
provided at the end of the minutes on HB 247.]
REPRESENTATIVE OLSON objected to the amendment.
7:33:03 PM
REPRESENTATIVE JOSEPHSON explained that, in effect, Amendment 32
is an amendment to Senate Bill 21 [More Alaska Production Act
(MAPA), passed in 2013, Twenty-Eighth Alaska State Legislature].
He recalled that in [Governor Walker's] gubernatorial campaign
prior to December 2014, around the time the state began to
seriously deficit spend, the governor had said he did not want
to make any changes to Senate Bill 21. His sense of Governor
Walker's fiscal plan, he said, is that the governor wanted
everyone to contribute, so he included in his fiscal plan a tax
on fishing, cruise ships relative to other local taxes in
Southeast Alaska, tobacco, mining, personal income, alcohol, and
motor fuel, plus a cut to the permanent fund dividend. A tax on
marijuana has been introduced by a colleague, not the governor.
Representative Josephson said he suspects that when the
administration was looking at its fiscal plan, probably sometime
after July 1 because it took that long to come up with a budget,
the administration thought the oil industry a major player that
should contribute something as well, so the administration is
recommending an increase to the floor on gross production from 4
percent to 5 percent. As has been heard before, there was no
vetting or modeling of oil prices at the prices found today.
The governor has said he wants everyone to have skin in the
game. Amendment 32 is a $50 million revenue measure, he
continued, that is worth offering even though he suspects it
will not gain the favor of five members of the committee.
7:35:56 PM
REPRESENTATIVE TARR supported Amendment 32. What is best for
the state and the financial pressure on the state is what is
guiding her, she said. Amendment 32 would make HB 247 start to
have a bigger impact and would be a good step forward when
combined with other proposed measures. She recalled that the
minimum tax of Senate Bill 21 keeps Alaska on the low end
relative to other jurisdictions. The state would remain very
competitive relative to other areas, she concluded.
CO-CHAIR TALERICO asked whether Amendment 32 would eliminate the
step-down should oil prices decline below $25.
REPRESENTATIVE JOSEPHSON responded that he knows the step-down
Co-Chair Talerico is talking about, but he thinks the amendment
just targets today's price range of $30-$18. He allowed he may
need to "phone a friend" in this regard. However, he continued,
Amendment 32 was not designed to change the step-down; it was
designed to reinstate the original bill and provide for an
increase of the gross floor from 4 percent to 5 percent.
7:38:42 PM
The committee took an at-ease from 7:38 p.m. to 7:47 p.m.
7:47:18 PM
REPRESENTATIVE JOSEPHSON clarified that page 2 of Amendment 32
does eliminate the step-down, so the amendment would create a
hard floor of 5 percent. He said he cannot speak to whether the
amendment would deal with deductions underneath the 5 percent
for credits; that will be taken up in other amendments. He
understood that at current prices the net operating loss would
drive someone's profit beneath zero anyway.
7:48:45 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 32.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 32. Representatives Johnson, Olson,
Seaton, Herron, Chenault, Talerico, and Nageak voted against it.
Therefore, Amendment 32 failed by a vote of 2-7.
7:49:38 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 33, labeled
29-GH2609\P.27, Nauman/Shutts, 3/19/16. [Amendment 33 is
provided at the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
7:49:53 PM
REPRESENTATIVE JOSEPHSON explained Amendment 33. He recalled
the legislature's consultant, enalytica, saying that in fiscal
year (FY) 2014 this amendment might have saved the state as much
as $100 million. Amendment 33 would harden the [minimum tax]
floor. Because the floor would be fixed at 4 percent, the
amendment would also disallow the movement of per-barrel tax
credits within a month, which DOR referred to as a migration
problem. There is some foundation for that for two reasons, he
said. One, it appears there was some inadvertence in not seeing
this phenomenon. The 2013 legislature that looked at the tax
regime did not vet the situation of fluctuating barrels where if
a company could not use all of its per-barrel credit it could
then carry credit over into the next month. Part of the factor
was the volatility of the market, which was probably not vetted
as much, although he cannot say that the committee asked
Director Alper about that as much as the general due diligence
applied to that issue. The committee heard testimony about the
inability to claim an entire per-barrel credit during a specific
month could be held and used later. The testimony was that this
was total inadvertence, it arises during a period of price
volatility. Very approximately this item was part of a floor
hardening spreadsheet that indicated loss of $50 million in
revenue to the state, which the committee saw as recently as
yesterday.
REPRESENTATIVE JOSEPHSON continued, explaining that Amendment 33
would revive subsections (b) and (c) of the original Section 17
of HB 247. Under current law, he noted, sliding-scale credits
lost due to minimum tax can be recovered at annual true-ups. He
recalled that the bi-partisan Senate working group met about six
times [in fall 2015], meeting for a total of about eighteen
hours, and bringing together many experts and many people,
including AOGA. Lenders addressing the working group expressed
a need for borrowers to provide monthly reports regarding
capital requirements and cash positions. One could take from
that that it is unlikely that that is not happening, and that
there is some great accounting difficulty in following this
amendment. Then again, the Senate working group wanted a fixed
floor and the chair of the working group recommended as much.
He offered his belief that this was a nod to the need to reflect
that this was a 4 percent floor and that people believed it was
a 4 percent floor. However, he said, it never really was and
for that reason he is offering Amendment 32.
7:53:38 PM
REPRESENTATIVE SEATON recalled the committee looking at this in
testimony, and questioning and finding that it was related to
the monthly tax calculation for the per-barrel credit, which
mirrored the monthly progressivity tax that was in the previous
tax regime. Given that is what it was built for and if it is
not doing that job, then the committee did not do the job it
thought it was doing when it created this, he posited. He
offered his support for Amendment 33, saying it is essential the
committee implement what it intended to implement when passing
[Senate Bill 21].
REPRESENTATIVE JOSEPHSON noted that Representative Seaton also
stated the aforementioned at a previous committee meeting. It
corroborates what he has said, which is that to the extent there
is legislative history, it reflects a different result. This
was inadvertent and is resulting in millions of dollars lost to
the state, particularly in times of volatility.
7:55:18 PM
CO-CHAIR TALERICO maintained his objection to Amendment 33.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 33. Representatives
Chenault, Johnson, Olson, Herron, Talerico, and Nageak voted
against it. Therefore, Amendment 33 failed by a vote of 3-6.
7:56:14 PM
REPRESENTATIVE TARR moved to adopt Amendment 34, labeled 29-
GH2609\P.36, Shutts, 3/21/16, which read:
Page 6, line 6:
Delete "and before January 1, 2017,"
Page 6, lines 9 - 12:
Delete "For lease expenditures incurred on or
after January 1, 2017, to explore for, develop, or
produce oil or gas deposits located south of 68
degrees North latitude, a producer or explorer may
elect to take a tax credit in the amount of 10 percent
of a carried-forward annual loss."
Page 8, line 2:
Delete "40"
Insert "30 [40]"
Page 8, line 4:
Delete "30"
Insert "20"
Page 8, lines 5 - 8:
Delete ", and before January 1, 2018;
(C) 20 percent of an expenditure incurred
on or after January 1, 2018"
REPRESENTATIVE OLSON objected to Amendment 34.
7:56:25 PM
REPRESENTATIVE TARR explained Amendment 34. She reminded
members that the credits kept for Cook Inlet are the net
operating loss, the qualified capital expenditure, and the well
lease expenditure credits. Version P would provide a step-down
of the well lease expenditure credit, keeping it at 40 percent,
then dropping it to 30 percent in the next calendar year, and
then going down to 20 percent. Amendment 34 would get to the 20
percent one year earlier. Amendment 34 would also keep the 25
percent net operating loss [credit], whereas Version P would
provide for a 10 percent net operating loss [credit]. In some
ways this is a matter of philosophy regarding the different
levers. On the North Slope there is a 35 percent net operating
loss [credit] when a company has a loss, which matches the 35
percent tax rate, barring the per-barrel credit. However, those
credits are split differently in Cook Inlet, and there is no
production tax opportunity to the state to match things up. She
said her thinking is that the state should be more generous
during the early end of things when companies are operating at a
loss and this is where she sees the credits being able to play a
bigger role. Then, once in production and a company is paying
production tax, except in Cook Inlet, the state has less reason
to be generous. The net impact under Version P would be that it
actually goes down to 30 percent by the end of that two-year
period, and the QCE and WLE would expire in 2022. Amendment 34
would not affect the expiration date for those two particular
credits but would make adjustment on the WLE and NOL, and
because these credits can be stacked it would end up being more
generous under the amendment for a company operating at a loss
than is Version P.
7:59:19 PM
CO-CHAIR TALERICO opposed Amendment 34, pointing out that during
development of the committee substitute he was trying to
navigate a little more of a transition in the elimination of tax
credits in Cook Inlet. He said he does not want to pull the rug
out from under someone and wants to provide them some time. He
understood that Amendment 34 would remove that date and would be
effective nearly immediately.
8:00:21 PM
REPRESENTATIVE HERRON said that in looking at the amendment and
the bill, there might be an inadvertent retroactive clause.
REPRESENTATIVE TARR stated it is not inadvertent.
REPRESENTATIVE HERRON asked whether that is a good thing.
REPRESENTATIVE TARR replied that the committee looked at work
currently being done in Cook Inlet and there is a company that
is really still in production that would be able to have access
to these credits. It is a matter of philosophy with the
different levers, she said, and she thinks the state should be
more generous in the pre-production phase where there is truly
loss, so the larger net operating loss should be kept. Version
P would accommodate some existing work, which makes her slightly
uncomfortable in thinking it is leaning towards special interest
legislation because it favors maybe one particular company more
than others. In general, she continued, she would prefer to err
on the side of a more generous net operating loss for support,
which is how the legislature has structured things on the North
Slope and leads her to look at that type of infrastructure.
8:02:32 PM
REPRESENTATIVE CHENAULT stated that the tax credits in Cook
Inlet have done exactly what the legislature expected them to do
and exactly what the legislature hoped for them to do, which was
to incentivize exploration and more production of both oil and
gas. He said he is aware of at least two companies that are on
the verge of continuing to increase the supply of natural gas
and oil to Alaska refineries and the majority of citizens who
live in the Railbelt. While some may make the argument about
Cook Inlet gas prices compared to other areas of the world,
those tax credits did exactly what they were intended to do. He
allowed he is okay with downsizing those, but asserted that
cutting them or going back retroactively is a disincentive.
These corporations can go elsewhere and they may. Care must be
taken as those levers are moved to ensure the region does not
end up back in the position it was in a number of years ago when
the importation of LNG was being considered.
8:04:37 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 34,
saying she does not disagree with Representative Chenault.
Guiding her towards this amendment, she continued, is that it is
downsizes one credit and upsizes another. The amendment is
saying that the stage where the state needs to be helping
companies is when they are losing money while not yet in
production. That is the phase where she is more comfortable
being more generous, which is why condensing the step-down from
a three-year transition to a two-year transition seems
appropriate to her. [Under current law, state support] for
calendar year 2016 is about 65 percent; under Amendment 34 it
would be 55 percent, so still above 50 percent. One of the
producers [before the committee] talked about the credits being
a co-investor situation. When it goes beyond an equal split,
she posited, it is more like the state is a primary investor
rather than a co-investor for that particular project. Under
Amendment 34 in calendar year 2016, the maximum could be 55
percent if a company has a loss stackable with the well lease
expenditure credit, and then it would go down to 45 percent. In
those out years for a company that has a loss, Amendment 34 is
actually more generous than Version P.
REPRESENTATIVE TARR further noted that the legislature's
consultant [enalytica] has advised that a price between $5 and
$7 [per thousand cubic feet] should be able to support any
development, and it was reported to the committee that some of
the new, recently signed contracts through 2023 are at a price
of $7.49 going up to $8.19. The net operating loss opportunity
could be more important for encouraging continued activity, she
posited. It is a matter of which options and kind of behaviors
are trying to be created. Some of the other amendments that
have come before the committee underscore her point that without
having access to some of the information it is very difficult
for her as a policymaker to say what the best tool is and what
gets the results that are the most favorable for the state. She
reiterated that it comes down to philosophy as far as which
activities to encourage and at what phases of development.
8:07:32 PM
CO-CHAIR TALERICO maintained his objection to Amendment 34.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 34. Representatives
Herron, Chenault, Johnson, Olson, Talerico, and Nageak voted
against it. Therefore, Amendment 34 failed by a vote of 3-6.
8:08:32 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 35, labeled
29-GH2609\P.7, Shutts, 3/19/16. [Amendment 35 is provided at
the end of the minutes on HB 247.]
REPRESENTATIVE JOHNSON objected to the amendment.
8:08:52 PM
REPRESENTATIVE JOSEPHSON explained that Amendment 35 would step-
down the qualified capital expenditure [credit] to 10 percent
the middle of summer 2016 and would repeal it altogether summer
2017. He said the amendment reflects some urgency because of
the state's huge deficit, an issue addressed by many of his
amendments. For example, during four hours of the committee's
meeting time today, the state incurred another $1.6 million of
debt. Some companies in the industry have started to contract
and retrench, and it is appropriate for the state do the same
because the state cannot meet these obligations in this
unsustainable way. The governor's original bill was more
aggressive than Amendment 35, resulting in $200 million in
savings on the well lease expenditure and qualified capital
expenditure [credits]; so, it can be surmised that Amendment 35
would be less than that and would not achieve what the
administration hoped to achieve. He offered his belief that the
qualified capital expenditure [credits] have served their
purpose - they have stimulated production in Cook Inlet. He
allowed that everyone who testified that this would impact their
economics is right by definition. He said his other concern
with the QCE [credit] is that it has been stacked with NOL
credits and resulted in 45-65 percent State of Alaska support.
That was not necessarily fully anticipated by the previous
legislature and is the reason why he is moving this amendment.
8:11:29 PM
REPRESENTATIVE JOHNSON stated that the same arguments apply to
Amendment 35 as did Amendment 34 - the credits have done exactly
what they were supposed to do. Because he does not want to see
the Anchorage mayor on television regarding brownouts, he is
opposed to Amendment 35.
REPRESENTATIVE HERRON asked whether there are sunsets on these
two [credits].
REPRESENTATIVE JOSEPHSON replied he thinks the QCE [credit] will
sunset in 2022.
REPRESENTATIVE HERRON said he just wanted this on the record.
REPRESENTATIVE SEATON stated he supports Amendment 35 because he
is concerned about some of the earlier amendments as well as the
tax credits being paid out substantially in Cook Inlet for gas
production, which is fully supported by the price.
REPRESENTATIVE TARR said the aforementioned is why she has been
interested in making some modifications. While she does not
want to again experience the situation [of brownouts] in her
community, it was heard from the utilities that things are
pretty good and contracts are in place through 2023. By
providing a [legislative] working group in the bill, the
committee has acknowledged that there is an opportunity to
review and see what is still needed and that the legislature may
have accomplished what it hoped to. It is for that reason that
she supports Amendment 35.
REPRESENTATIVE OLSON noted that while the contracts may be in
place, he does not believe all the gas is yet in place through
2023.
REPRESENTATIVE JOSEPHSON said his memory of the testimony is
that it is either 70 or 75 percent covered through 2023, so
Representative Olson is right in that respect. The rest is sort
of behind the pipe, which may not satisfy everybody. He
recalled Mr. Armstrong [of Armstrong Oil & Gas Inc.] testifying
that this is the most favorable economic environment on the
planet. So, given the state's financial situation,
Representative Josephson said he would like to make it the
second most favorable and he is okay with that because the state
has other problems.
8:15:25 PM
REPRESENTATIVE JOHNSON maintained his objection to Amendment 35.
A roll call vote was taken. Representatives Tarr, Seaton, and
Josephson voted in favor of Amendment 35. Representatives
Herron, Chenault, Johnson, Olson, Talerico, and Nageak voted
against it. Therefore, Amendment 35 failed by a vote of 3-6.
8:16:11 PM
REPRESENTATIVE TARR moved to adopt Amendment 36, 29-GH2609\P.43,
Nauman/Shutts, 3/21/16, which read:
Page 9, line 11:
Delete "a new subsection"
Insert "new subsections"
Page 9, following line 21:
Insert a new subsection to read:
"(k) The percentage of a transferable tax credit
certificate issued under AS 43.55.023(d) or former
AS 43.55.023(m) or a production tax credit certificate
issued under AS 43.55.025(f) purchased by the
department may not exceed the percentage of resident
workers in the applicant's workforce in the state in
the preceding calendar year, including workers
employed by the applicant's contractors. An amount of
a credit not purchased because of application of this
subsection may be applied against the applicant's tax
liability under this chapter. In this subsection,
"resident worker" has the meaning given in
AS 43.40.092(b)."
REPRESENTATIVE OLSON objected to the amendment.
8:16:22 PM
REPRESENTATIVE TARR explained Amendment 36 relates to Alaska
hire, another of the provisions she liked in the original
version of HB 247. The language for Amendment 36 comes from
page 19, lines 27-31, and page 20, lines 1-3, of the original
bill. The legislature can never go wrong in encouraging more
Alaska hire, she said. The committee previously discussed the
complexity of how this provision would work, but this is
something the department can work through if there is a
potential challenge. If the state were to institute an income
tax, about $70 million would come to the state from out-of-state
[workers] employed in a variety of industries. This is also a
workforce development issue, she posited, because she sees it as
an incentive for international companies that are downsizing
their workforce around the world to do Alaska hire rather than
move employees cut from another location to Alaska.
Additionally, should the North Slope gasline project go forward,
this provision would help ensure an Alaska workforce ready to
work on that project.
8:19:24 PM
REPRESENTATIVE CHENAULT stated that while he thinks 100 percent
Alaska hire is a great goal, he does not think it will ever
happen. The amendment may have some constitutional issues on
how far the state can go with Alaska hire, he posited, because
any American has the constitutional right to go anywhere in the
U.S. to work. This is trying to interject social policy into a
tax bill and is not a wise investment for the state to do.
While he is a firm supporter of Alaska hire, something which he
has done throughout his business career, there are things in the
amendment that he thinks are problematic, such as having it
apply to subcontractors that bring up specialty contractors to
do work that Alaskans are not trained to do, although that is
not to say Alaskans cannot be trained as that is something he
would like to see done. The amendment would put more hurdles in
the way of what is wanted, which is investment in production.
Other industries in Alaska have a lower percentage of Alaska
hire than does the oil industry. In his 35 years of making a
living in the oil industry he has seen many outside contractors,
but he has also seen many Alaska contractors that have the
talent and ability to work Alaskans.
8:22:08 PM
REPRESENTATIVE SEATON pointed out that the state's education tax
credits are being used to educate and hire Alaska workers and
must be used within the state to promote local workforces. He
said this would be a great provision to also have on any tax
credits that the state gives to other industries. This is not
targeting the oil industry, it is saying that if dollars are
being paid out of the state treasury then there are certain
things the state has a right to expect and one of those things
is that those companies value Alaskan workers and skills with
something more than just the equivalency that they do as the
workforce. In other words, if there are two workers and there
is no difference in those workers, then that is not a good
situation for keeping Alaskans hired when there is workforce
reduction. A company benefitting from tax credits paid at a
higher rate by hiring Alaskans is a good thing. It would be a
constitutional problem if the state says a company has to hire
somebody, he said, but that is not the case if the state is
saying that a company qualifies for more of a tax credit payment
that is dependent upon whether the company is hiring Alaskans.
That is totally appropriate, it is coming out of the public
treasury, and Alaskans having jobs is a public benefit. He said
he supports Amendment 36 because it is only saying that Alaska's
treasury will reimburse based on the percentage. He added he
would not support the amendment if these tax credits were not
transferable to someone else, but they are. They can be sold to
anybody else that has a tax liability, so it is not limiting
what the company can do with those tax credits, it is only
directing purchase by the department and that is a public
benefit and provides a better enhancement for the Alaska
workforce.
8:24:54 PM
REPRESENTATIVE JOSEPHSON said he supports Amendment 36. Noting
he taught constitutional law for six years, he explained that an
important distinction is that the thing being exchanged here is
an entirely optional program to begin with. No one has a
constitutional right to a credit, it is a voluntary program, and
the program could be eliminated. That distinction is critical
and therefore is not a constitutional problem.
REPRESENTATIVE TARR concluded her explanation of Amendment 36.
She said she agrees with Representative Seaton and that the
committee has an opportunity today to think about how to use
this legislation to encourage more Alaska hire. She added that
she also appreciates Representative Josephson's comments because
she recalls DOR's testimony about working with the Department of
Law (DOL) to avoid any legal problems. A provision like this
amendment would give her the opportunity when talking with her
neighbors to say that this has a material value and that the
company only earns based on its Alaska hire. It would allow her
neighbors to conclude that the credit is a good investment
because it is about developing Alaska's economy and workforce.
8:27:19 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 36.
A roll call vote was taken. Representatives Josephson, Tarr,
and Seaton voted in favor of Amendment 36. Representatives
Herron, Chenault, Johnson, Olson, Talerico, and Nageak voted
against it. Therefore, Amendment 36 failed by a vote of 3-6.
8:28:07 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 37, labeled
29-GH2609\P.52, Nauman/Shutts, 3/21/16, which read:
Page 6, line 12, following "loss.":
Insert "Notwithstanding that a qualified capital
expenditure may be a deductible lease expenditure for
purposes of calculating the production tax value of
oil, gas, or oil and gas under AS 43.55.160(a), a
producer or explorer may not apply against the taxes
due under this chapter a credit under this subsection
in the same tax year that a producer or explorer
applies a credit under (a) of this section."
Page 9, line 11:
Delete "a new subsection"
Insert "new subsections"
Page 9, following line 21:
Insert a new subsection to read:
"(k) The department may not, in the same
calendar year, purchase both a transferable tax credit
certificate or a portion of a transferable tax credit
certificate issued as a result of a carried-forward
annual loss under AS 43.55.023(b) and a qualified
expenditure under AS 43.55.023(a)."
Page 18, line 20, following "APPLICABILITY.":
Insert "(a)"
Page 18, following line 21:
Insert a new subsection to read:
"(b) The limitation on the purchase of tax
credits by the Department of Revenue under
AS 43.55.023(b), as amended by sec. 12 of this Act,
and AS 43.55.028(k), added by sec. 17 of this Act,
applies to credit purchases from credit purchase
applications received on or after the effective date
of secs. 12 and 17 of this Act."
CO-CHAIR TALERICO objected to Amendment 37.
8:28:19 PM
REPRESENTATIVE JOSEPHSON explained Amendment 37 would disallow
the combination of a net operating loss with a qualified capital
expenditure or a well lease expenditure. The fundamental
problem, he said, is the "stackability phenomenon" of the
credits and the getting to 65 or 85 cents on the dollar. He
related that he sometimes stops himself to ask, "Why don't we
have an Alaska company that simply drills oil at 85 cents a
dollar?" That aside, he said the qualified capital expenditure
and well lease expenditure were implemented to reinvigorate the
Cook Inlet Basin, which has been accomplished and has been a
success. However, the result of the stacking is 45-65 percent
state support for development in Cook Inlet. Although the
committee substitute sees that problem, it does not in his view
address it as promptly as he would like given the fiscal crisis.
So, Amendment 37 would provide for an effective date in nine
months, January 1, 2017. The amendment would no longer allow an
expenditure credit stacked with a net operating loss and as a
consequence it would reduce the state's exposure. Reducing
stackability is a step toward the goal of reducing state outlay
and transitioning to a system that hopefully is largely a net
operating loss system.
8:30:41 PM
REPRESENTATIVE TARR supported Amendment 37, saying it is another
opportunity for some additional protections for the state.
REPRESENTATIVE JOHNSON said he is trying to envision what would
be happening if this provision were in place now while companies
are losing money. He said there are still people investing and
if this were in place now he is not sure there would be that
investment; this is keeping companies operating while they are
experiencing losses. The state is blessed to have some
companies that have vision and are continuing to invest even
though they are losing millions of dollars a day.
CO-CHAIR NAGEAK commented that incentives have been around for a
very long time in the rest of the U.S. Whenever something needs
to be done or built, incentives are given to people in different
companies. Incentives have been used since the U.S. was born.
So, incentives are nothing new for spurring investment. If it
was not for oil this state would not be this rich with the money
that has been put away for the future. This is the same for the
municipalities that are along the pipeline and they will
continue to be enriched through more investment during these
hard times. The companies are not making money here in Alaska
and given the current low oil prices he is surprised that
companies are still here and still out looking for more oil.
8:34:21 PM
REPRESENTATIVE JOSEPHSON concluded his explanation of the
amendment. He agreed with Co-Chair Nageak that oil has greatly
helped the state. While he is too young to remember the 1960s
very well, he said he thinks people were happy back then in a
different kind of way. However, in his mind's eye Amendment 37
is not about the North Slope, but about Cook Inlet. Of the $625
million in repurchasables, about $400 million was Cook Inlet.
Companies are making money in Cook Inlet and the state cannot
afford all of it, as much as it would like to. While it is true
that there are capital credits on the North Slope, his
understanding is that under Senate Bill 21 the plan was to use
more of a net operating loss and the gross value reduction (GVR)
for the new oil. He reiterated that he is offering Amendment 37
for Cook Inlet.
8:35:55 PM
REPRESENTATIVE JOHNSON maintained his objection to Amendment 37.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 37. Representatives Seaton, Herron,
Johnson, Olson, Talerico, and Nageak voted against it.
Therefore, Amendment 37 failed by a vote of 2-6.
8:37:02 PM
REPRESENTATIVE TARR moved to adopt Amendment 38, labeled 29-
GH2609\P.44, Nauman/Shutts, 3/21/16. [Amendment 38 is provided
at the end of the minutes on HB 247.]
REPRESENTATIVE OLSON objected to the amendment.
8:37:08 PM
REPRESENTATIVE TARR explained that Amendment 38 is related to
the gross value at the point of production and is the exact
language from the original version of HB 247, Section 31, page
21, lines 29-30. She said this was discussed in the PowerPoint
presentation entitled, "Additional Modeling and Scenario
Analysis - Part 1a," provided to the committee on 2/22-24/16.
Drawing attention to slide 50 which states that [under HB 247]
the gross value cannot go below zero, she said this means that
at current market prices of around $30 per barrel the
transportation costs must be $30 or less. Referring to slide 51
depicting Trans-Alaska Pipeline System (TAPS) tariffs and
pipeline tariffs for different units, she pointed out that these
transportation costs range from a low of $6.45 to a high of
$28.49 at Point Thomson. Turning to slide 52 she noted that
today's oil price has hovered around $38 a barrel, but pointed
out that if the price dropped to $30 the Point Thomson Unit
would have a negative gross value at a tariff of $28.49 plus a
marine transportation cost [of $3.37]. Amendment 38 would
prevent that gross value from going below zero. She explained
that for purposes of calculating the taxes on the entire
segment, the negative would be used to offset the positive in
another area and that could have a material impact. Bringing
attention to the example given on slide 52, she pointed out that
using the negative to offset positive values elsewhere would
result in a tax reduction of 35 percent of the difference
because the company would be able to apply the net operating
loss portion of that. While the state is not experiencing this
situation now, she said Amendment 38 would protect the state
should prices go lower.
8:40:17 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 38.
REPRESENTATIVE SEATON stated he is worried somewhat about this
issue because some areas in the state have very high credits and
companies might do a project that is far afield because they can
offset other tax from other places in their portfolio. The hit
would be to the state while it would be equalized within the
company. He posited that the price does not have to go down to
$30 a barrel, it just has to be that the costs incurred in the
field are large in respect to whatever the price is. The state
opens itself to additional losses that could be determined by
issues other than what is good for the state. Therefore, he
continued, Amendment 38 is a good amendment to ensure that the
calculation on the point of production value is not less than
zero to offset other developments.
REPRESENTATIVE JOHNSON said he finds it inconceivable that a
company would invest someplace that is marginal just to get a
tax break. These companies invest to pump and sell oil and to
make a profit and he does not believe that many companies view
tax credits as profit. Getting that oil to market is where the
profit is. Secondly, what is being talked about here is new
oil. Much of that is farther out from infrastructure and is the
oil that the state needs to develop now and that is what this
credit does. To take away that incentive to move beyond the
legacy fields and proven reserves would do the state a
disservice. He said he is therefore opposed to Amendment 38.
8:43:28 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 38 by
noting there is a distinction between gross value reduction (new
oil) versus gross value at the point of production. She said
Representative Seaton brought up the other potential example
relative to the development that is going on now. The one
circumstance that edges toward a situation like that would be
Point Thomson, but it is true about doing a development farther
out. Adopting Amendment 38 would avoid a level of vulnerability
to the state. While it has been stated repeatedly that changes
should not be made right now for companies that are investing,
what makes Amendment 38 different is that it is not a change
that would impact what someone is doing right now because the
price is at $38 and hopefully going up. If put in place now,
companies would have to make a decision based on knowing that
this was the policy in place. She surmised this was probably
not discussed during consideration of Senate Bill 21 because the
modeling was done for prices around $80 and so this would never
have been a part of the conversation. The amendment is planning
ahead and would give the companies the idea of needing to look
at that, think about the price window, and make a decision.
8:46:00 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 38.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 38. Representatives Olson,
Herron, Johnson, Talerico, and Nageak voted against it.
Therefore, Amendment 38 failed by a vote of 3-5.
8:46:51 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 39, labeled
29-GH2609\P.50, Shutts, 3/21/16, which read:
Page 9, line 8:
Delete "and"
Insert "[AND]"
Page 9, line 9, following "(5)":
Insert "during the calendar year preceding the
calendar year in which the application is made, the
applicant's revenue generated from the applicant's oil
and gas business, including the revenue of the
applicant's affiliates if the applicant is part of an
affiliated group, did not exceed $10,000,000,000; and
(6)"
REPRESENTATIVE OLSON objected to Amendment 39.
8:47:01 PM
REPRESENTATIVE JOSEPHSON explained Amendment 39. He related
that several legislators looked at the work of the director of
the Tax Division, his team, and the administration, and some
people wanted the administration to be of a reform mind more
than it was. But, when HB 247 was originally brought forth, he
could instantly see what he thought was intuitive wisdom about
some things and that is what Amendment 39 speaks to. The
administration made the case that there are companies in Alaska
that have global revenue exceeding $10 billion, an example being
the Italian energy company ENI. The State of Alaska's revenue
exceeds $1 billion this year, yet the state is paying ENI
reimbursable tax credits. If the overall discussion is to
incentivize, one might argue that more of an incentive would be
to not pay those and to instead require oil production and then
take it in the next year against liability. This is an example
of where he is sure that people sit in their board rooms in
Milan and say, "Geez, we can get tens of millions of dollars
paid back to us if we have a loss or we don't produce." But, he
continued, that is really not what is at issue for companies of
this size, and for that reason he is offering Amendment 38.
REPRESENTATIVE TARR said she supports Amendment 39 because a
good feature of the original bill was that it recognized the
difference between the balance sheets of a big company versus a
small company. However, that provision was not retained in
Version P, which treats all companies equally. The needs of
smaller companies have previously been recognized by the
legislature as being different than more well established
companies, and for this reason she supports Amendment 39.
8:50:00 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 39.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 39. Representatives
Johnson, Olson, Herron, Chenault, Talerico, and Nageak voted
against it. Therefore, Amendment 39 failed by a vote of 3-6.
8:50:42 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 40, labeled
29-GH2609\P.26, Nauman/Shutts, 3/19/16. [Amendment 40 is
provided at the end of the minutes on HB 247.]
REPRESENTATIVE OLSON objected to the amendment.
8:50:54 PM
REPRESENTATIVE JOSEPHSON explained Amendment 40 would provide a
four-year limit on the gross value reduction (GVR). He said he
is offering a four-year limit because he finds very compelling
the argument that things age. The GVR definition [under current
law] is incredibly generous, he continued. It is a three-
pronged disjunctive test, so only one element needs to be met.
The GVR starts in 2003 and goes as far as 2011. New oil should
not logically be new oil forever. Ultimately everything will be
new and everything will have an additional 20 percent discount.
This would be a savings. He pointed out that he took the very
document that Senate Bill 21 speaks to, the Oil and Gas
Competitiveness Review Board's first document. In the section
on peer states, the board says that North Dakota offers an oil
extraction tax (OET) for very low production volume wells and
incentives for horizontal drilling and each of these incentives
appears to last for 18 months. While the OET is not exactly
what the GVR is, it reminds him of that. Oklahoma gives
horizontal wells a reduction for 48 months, deep wells a
reduction for 48 months, and really deep wells beneath 17,500
feet a reduction for five years. Those were the only two states
in the document. The GVR needs to be reduced or at least
capped, he posited. Amendment 40 is designed to start its clock
now with an effective date of January 1, 2017, and everyone
would get four years and they would get that from the time of
production. The amendment does not say that those doing this
for the previous decade are out of luck, so the amendment is a
step-down and not a rug pulling.
8:54:08 PM
REPRESENTATIVE SEATON said he really thinks the GVR needs a term
limit on how long new oil is considered new oil. He noted that
his amendment offered five years and he prefers that, but he is
willing to support four years as well, because the state's
future liability is at risk.
REPRESENTATIVE TARR stated she supports Amendment 40 because the
conversation was about new oil and at some point four or five
years down the road she does not see how it can still qualify as
new. It is not a change with immediate impact because it still
has a four-year application after January 1, 2017.
REPRESENTATIVE JOHNSON argued that this is a fundamental change
to the tax structure. He said he thinks this was thought out
very clearly in recognizing that the future of Alaska and the
future of TAPS is new oil. He agreed it is generous but said
that without that new oil the state's future is bleak and he
does not want to do anything that would reduce that new oil.
The state is going to pay for what it does one way or the other.
It can be paid for in the future with reduced production or it
can be paid for today by keeping that production and preserving
that production for future generations. Regardless of whether
it is a step-down or a rug pulling, he is not inclined to do
anything that affects new oil because it is the state's
livelihood and its future.
8:56:42 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 40.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 40. Representatives
Chenault, Johnson, Olson, Herron, Talerico, and Nageak voted
against it. Therefore, Amendment 40 failed by a vote of 3-6.
8:57:29 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 41, labeled
29-GH2609\P.25, Shutts, 3/21/16. [Amendment 41 is provided at
the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE JOSEPHSON explained Amendment 41. He said
evidence from the administration is that repeal of the qualified
capital expenditure and well lease expenditure [credits] would
save the state $200 million per year. Amendment 41 would repeal
the well lease expenditure faster than does Version P. The
committee has heard there is some redundancy in what the lease
expenditure and the qualified capital expenditure cover and that
is an important feature. The purpose of both of them was to
incentivize gas production in Cook Inlet to secure energy supply
in Southcentral Alaska. While he lived through the entire
period of threatened brownouts and blackouts, he did not
personally go through any exercises but did see the television
spots. The renaissance had its effect, he continued, there is
now a profitable steady stream of natural gas in the Cook Inlet.
If these credits did in fact cause this gas development, they
have served their purpose and the well lease expenditure and
arguably the qualified capital expenditure could or should be
repealed. There is some duplication between the well lease
expenditure and the qualified capital expenditure. While
personally he would like to gradually reduce the well lease
expenditure, he is concerned about what is now a $4.1 billion
deficit, which on [3/20/16] was a $3.8 billion deficit. Next
year for the first time in Alaska history, the state will be
bringing in less total revenue from the oil industry, all
sources, except for the 25 percent of royalty that goes to the
permanent fund, than the state will be paying out in tax
credits. Given that gas is under pipe or under contract through
2023, the great imperative, he posited, is to eliminate the well
lease expenditure now or by July 1 [2016], and therefore he is
offering this amendment.
CO-CHAIR TALERICO opposed Amendment 41, saying it is still very
important to create a transitional period regardless of how
bleak the information. He said he does not want it to be bleak
in households, planning for continuing on with projects, or
planning for production. It is important to carefully navigate
through here with a scalpel, not a machete.
REPRESENTATIVE JOSEPHSON concluded explaining Amendment 41 by
stating that his worry about the state's fiscal future is why he
is offering these amendments.
9:01:21 PM
CO-CHAIR TALERICO maintained his objection to Amendment 41.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 41. Representatives Herron,
Chenault, Johnson, Olson, Seaton, Talerico, and Nageak voted
against it. Therefore, Amendment 41 failed by a vote of 2-7.
9:02:11 PM
REPRESENTATIVE JOSEPHSON moved to adopt Amendment 42, labeled
29-GH2609\P.3, Nauman/Shutts, 3/19/16. [Amendment 42 is
provided at the end of the minutes on HB 247.]
CO-CHAIR TALERICO objected to the amendment.
REPRESENTATIVE JOSEPHSON explained that Amendment 42 would
revive Section 17(b) of the original version of HB 247 and would
harden the floor for all purposes. He reported that the [fall
2015 Senate] working group concluded there may have been some
inadvertence in terms of whether the 4 percent was a floor that
could be gone beneath for purposes of deducting credits further
from that floor. It was the biggest cost saving feature by
Senator Giessel's December 1, 2015, draft report. The Senate
working group found that there was inadvertence in that there
was a misunderstanding probably because no one modeled prices
this low, which should be a lesson that every price should be
modeled. The credits would not be lost under Amendment 42, they
could be carried forward to a year of tax liability. So,
Amendment 42 would provide a hard floor of 4 percent that no
qualified capital expenditure [credit], well lease expenditure
[credit], net operating loss [credit], nontransferable tax
credit, or alternative tax credit can penetrate. The effective
date would be January 1, 2017. He offered his belief that the
only tax credit now that can pierce the 4 percent floor is the
sliding-scale per-barrel credit. The governor's fiscal note
[for the original bill] believed that this feature would save
the state $50 million. Amendment 42 is consistent with the
legislative intent, he said, and that is why he is offering it.
9:04:35 PM
CO-CHAIR TALERICO maintained his objection to Amendment 42.
A roll call vote was taken. Representatives Tarr, Seaton, and
Josephson voted in favor of Amendment 42. Representatives
Herron, Chenault, Johnson, Olson, Talerico, and Nageak voted
against it. Therefore, Amendment 42 failed by a vote of 3-6.
9:05:33 PM
REPRESENTATIVE TARR moved to adopt Amendment 43, labeled 29-
GH2609\P.46, Nauman, 3/21/16. [Amendment 43 is provided at the
end of the minutes on HB 247.]
REPRESENTATIVE HERRON objected to the amendment.
REPRESENTATIVE TARR explained that Amendment 43 is the original
version of the bill with the exception of the effective dates.
The effective date under the amendment would be July 1, 2016,
while one section in the original bill was retroactive to
January 1, 2016. The amendment has no retroactive provisions.
Prompting her to introduce Amendment 43, is her concern that
with just 26 days left [in the session, the legislature] does
not yet have a plan. The governor has put out a plan, and while
she does not like all of its provisions, it does stress the need
for thinking holistically and looking at a comprehensive
solution. This was the most substantial part of the governor's
plan with the $500 million associated with it, twice as much as
the income tax under the governor's plan minus the big changes
in the permanent fund. However, the "back of the napkin"
estimated fiscal impact looked at by the committee on [3/21/16]
was just $50 million. Given the legislature must put together a
plan that must now get to a $4.1 billion deficit solution, it is
hard for her to see where the other big ticket items will come
from. If it is not HB 247, then what? Adopting Amendment 43
would fill a current $500 million hole, she posited.
9:08:23 PM
REPRESENTATIVE JOSEPHSON said the Department of Revenue (DOR)
deserves a lot of credit for bringing the original version of
the bill before the committee. That bill was comprehensive and
designed to show real deference and respect, perhaps with the
exception of its proposed 1 percent increase, arguably 20
percent increase, in the gross production tax floor. The
original version of HB 247 generally said that Senate Bill 21 is
the law of the land and there are some excesses in the credits
and those have to be reined in. [The deficit] was $50 million
in 2007, it will be $800 million in FY 2018, an increase of
1,600 percent in a decade. Why that is sustainable he does not
know. If it were $200 million he would say the state could
afford this. While this is very important it just is not
affordable, he said, and therefore he supports Amendment 43.
CO-CHAIR TALERICO offered his appreciation to the administration
for bringing forth HB 247 and the administration's explanation
that everything brought forward was written in pencil and the
committee was to vet it. He said the bill was certainly vetted
by the committee over the course of 23 or 24 educational and
informational meetings. The bill that will be moved out of
committee is also written in pencil, because it will be heard in
other committees, the floor, and the other body. Therefore, it
is highly unlikely that whatever product is produced in this
committee is the end result. He said his opposition to
Amendment 43 is because the bill that the committee has worked
its way through will be turned over to others and those people
will also work very hard on it. The committee has produced a
lot of information and those other people will have the
opportunity to go through that information. He said he has been
very impressed that other members of the legislature can tell
him what this committee has been doing. He reiterated his
opposition to Amendment 43.
9:11:51 PM
REPRESENTATIVE SEATON said Amendment 43 looks at putting aside
all the work the committee has done. When a bill comes before a
committee, it becomes the committee's bill to work on and the
committee has worked on HB 247 very diligently. With all of the
amendments considered tonight, the committee has looked at
difference in philosophies, difference in perspective of where
there should and should not be cost savings, where to make sure
that industry is not impacted, and where the state's treasury is
protected. Given the aforementioned and that others will be
looking at the bill put forth by the committee, he said he does
not support Amendment 43.
REPRESENTATIVE TARR concluded her explanation of Amendment 43.
Offering her appreciation for Representative Seaton's and Co-
Chair Talerico's comments, she noted that this amendment was at
the end of her own list of amendments. She explained it was
more an opportunity to reflect back on the work that was done by
the committee. None of the four amendments adopted tonight had
a real financial impact. Her comments tonight are, in part, to
give some indication to the others who will be looking at the
bill as to where she is at. Given there are only 26 days left
to see how all the pieces are going to fit together, the
legislature is not as far along overall as she would like to be.
The bill was originally well thought out, she posited, and part
of an overall plan and is a lead that the legislature needs to
take. While the bill is written in pencil there is not any
other legislation, with the exception of permanent fund
proposals, moving through the process right now that would have
that kind of impact on the state's $4.1 billion debt.
9:15:19 PM
REPRESENTATIVE HERRON maintained his objection to Amendment 43.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 43. Representatives Herron,
Chenault, Johnson, Olson, Seaton, Talerico, and Nageak voted
against it. Therefore, Amendment 34 failed by a vote of 2-7.
9:16:22 PM
REPRESENTATIVE TARR moved to adopt Amendment 44, labeled 29-
GH2609\P.47, Nauman/Shutts, 3/21/16. [Amendment 44 is provided
at the end of the minutes on HB 247.]
REPRESENTATIVE HERRON objected to Amendment 44.
REPRESENTATIVE TARR explained Amendment 44. Noting it will look
familiar, she drew attention to page 29 of the amendment and
said the difference is the effective date of January 1, 2017.
Reiterating her concern about not having an overall plan, she
said she is offering the amendment so members would have in mind
that within the original structure of the bill this may have
been another opportunity. She recalled the administration's
testimony before the committee about having worked with the
Senate working group and industry folks in developing the
original proposal. Something that troubled people was the idea
of making changes effective July 1 for the state's fiscal year
because that would be disruptive mid-year for a tax calendar
year. Therefore, Amendment 44 would push the effective date to
January 1 of the next year.
REPRESENTATIVE HERRON maintained his objection to Amendment 44.
9:17:53 PM
REPRESENTATIVE JOHNSON said he takes exception to the statement
that was made during consideration of a previous amendment that
there is no fiscal impact with the CS. He maintained that there
will be great fiscal impact of the bill that is passed, and
while it is not going to be tomorrow or the effective date of
July 1 of any particular year, it is going to have a great
impact for future generations. Doing things in this legislation
that stifle production or take oil out of TAPS will cause
multiple years to restart an industry that is bleeding money.
That will have tremendous impact, probably not today but it will
in 10 years. The price will be paid for what is done and it can
either be paid now and preserve the production for future
generations or the money can be taken now and provide for this
generation and abandon future generations. He said he did not
come to the legislature to abandon future generations, or to
preserve the status quo, or to continue to fund what he thinks
is government that is a bit out of control. He came to make
this place better for his family, his children, and his
grandchildren. The legislation that the committee is going to
pass has tremendous financial impacts, he said. Whether
tomorrow or in 10 years, the bill will come due and he would
rather pay it today so that he is the one to suffer rather than
future generations.
REPRESENTATIVE JOSEPHSON agreed with Representative Johnson that
Amendment 44 would impact the oil and gas industry in both Cook
Inlet and the North Slope. Industry may decide to develop
elsewhere in some circumstances. But, he continued, he is also
worried about the $283 million cut by the legislature and the
job losses from that. It is also important that the impacts of
these credits be made more transparent. It is this guessing
game where the administration violates a law if it tells
legislators what is working. It is a bizarre system. One of
the PowerPoints presented to the committee showed that $900
million has been spent on Cook Inlet and $450 million of it did
not produce anything. He said he supports Amendment 44 because
it goes to the whole heart of the matter.
REPRESENTATIVE HERRON maintained his objection to Amendment 44.
9:21:43 PM
REPRESENTATIVE TARR concluded her explanation of Amendment 44.
She said if she thought Amendment 44 would in any way compromise
the future she would not have introduced it. Her concern, she
continued, is the potential for a recession today and people
leaving Alaska. Because she sees a more immediate sense of
urgency about that, and if it can be addressed today and quality
of life and essential state services maintained, as well as
investing in education to provide the well educated workforce
that is needed to have a thriving economy, then the state's
future will be sound. The current situation is a negative cash
flow for both the state and the companies. Keeping the state
afloat right now is the savings earned during the regime of
Alaska's Clear and Equitable Share [House Bill 2001, passed in
2007, Twenty-Fifth Alaska State Legislature] and the 2008 record
high price of about $140 a barrel. The state's partner
companies during that same time period were also earning
billions of dollars on an annual basis and just like the State
of Alaska had to save money for tough times. For example, the
publically posted annual profits for BP were $2 billion in 2008
and almost $2 billion in 2009; for ConocoPhillips it was $2.3
billion in 2008, $1.5 billion in 2009, and $1.7 billion in 2010.
The state's "savings spree" of $18 billion is what is going to
carry it through and there should be that same level of
expectation of the companies that had record profits during that
time. She expressed her concern that the burden be less
weighted on individual Alaskans in order to get to the future
that is wanted. She pointed out that similar concerns are
shared, but the pathways seen for getting there are different.
9:24:33 PM
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 44. Representatives Seaton, Herron,
Chenault, Johnson, Olson, Talerico, and Nageak voted against it.
Therefore, Amendment 44 failed by a vote of 2-7.
9:25:48 PM
REPRESENTATIVE TARR moved to adopt Amendment 45, labeled 29-
GH2609\P.57, Nauman/Shutts, 3/21/16. [Amendment 45 is provided
at the end of the minutes on HB 247.]
REPRESENTATIVE OLSON objected to the amendment.
REPRESENTATIVE JOHNSON objected to the amendment.
9:25:53 PM
REPRESENTATIVE TARR explained Amendment 45. She recalled that
the issue of confidentiality came up repeatedly during the
committee's conversations relative to the sections in the
original version of the bill. The committee heard concerns
about confidentiality from ExxonMobil Corporation and Alaska Oil
and Gas Association (AOGA), and she followed up with them
afterward regarding working on language. She related that she
requested an amendment [from Legislative Legal and Research
Services] using the confidentiality language that was put into
the final version of Senate Bill 138 [passed in 2014, Twenty-
Eighth Alaska State Legislature]. This language is in Section
24(b)(12)(B) on page 17 and states:
"the commissioner may share confidential information
obtained under this paragraph with members of the
legislature, their agents, and contractors on request
under confidentiality agreements, either in committees
held in executive session or individually;"
REPRESENTATIVE TARR pointed out that the aforementioned language
in Senate Bill 138 is, in turn, modeled off of language that was
included in the Alaska Gasline Inducement Act (AGIA) [HB 177,
passed in 2007, Twenty-Fifth Alaska State Legislature]. Thus,
she said, there was some consistency in these confidentiality
provisions.
REPRESENTATIVE TARR continued, explaining that the amendment she
requested [from Legislative Legal and Research Services] did not
show up. But, what did show up was some language that industry
had worked on and then forwarded to the co-chairs, which is what
is seen in Amendment 45. In addition to having those same type
of provisions, it is more explicit in the types of information
that can be shared. One major difference is that [the amendment
she had requested] did not have any civil penalties or fines
associated with it. However, the penalties and fines included
in Amendment 45 give the industry a higher level of comfort that
this important confidential tax information could be shared.
While she did not get to talk to [industry], she can imagine
that having two protective provisions would be better than one
from [industry's] perspective.
REPRESENTATIVE TARR stated that the tremendous challenge with
trying to figure out which opportunities to take advantage of is
not knowing well enough how they are working. She can look back
at last year and know $900 million was spent in the Cook Inlet,
and that $450 million led to production and $450 million did
not. For the North Slope, she believed, the expenditure was
more than $1.2 billion with a two-thirds split between what led
to production and what did not. Beyond that she has no
information and that makes it very difficult. Clearly what is
trying to be accomplished here is credit programs that
incentivize the right kind of behavior so there are no gaps in
exploration, development, or production. That is the intention
here and the expectation should be just like when reviewing gas
contracts and legislators have an opportunity to sign the
confidentiality agreement. She said she can be comfortable with
the penalties included in Amendment 45 because she can imagine
why industry wants protection of this important information.
9:30:19 PM
REPRESENTATIVE JOHNSON noted there are rules that say any
legislator can attend an executive session. He asked whether
there is the ability to prevent a person from attending an
executive session if the person has not signed a confidentiality
agreement but chooses to show up in an executive session.
EMILY NAUMAN, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, Alaska
State Legislature, replied that she does not know the answer to
that question. She said it is a very valid concern as Uniform
Rule 22(d) does prevent any member of the legislature from being
excluded from a legislative session. She said she personally
does not know the consequences of enacting a law that directly
conflicts with one of the Uniform Rules. She suggested Doug
Gardner be asked the question when he is in the office tomorrow.
REPRESENTATIVE JOHNSON responded that there is no tomorrow.
MS. NAUMAN apologized for not knowing the answer off the top of
her head, but added she would be happy to look into it.
9:31:55 PM
REPRESENTATIVE JOHNSON stated that he sees a real problem with
the aforementioned. Secondly, he said, he would like to know
the definition of "industry" when the statement is made that
"industry" supports the amendment.
REPRESENTATIVE TARR answered that [Senate Bill 138 and AGIA]
passed with this same language and there have not been any
challenges to that. She reread the language from Senate Bill
138 and said the language is very similar in nature with the
exception of having a penalty. She pointed out that the
executive session provision from the Uniform Rules was brought
to her attention today through a memorandum from Legislative
Legal and Research Services. She surmised committee members may
have seen the memorandum.
REPRESENTATIVE JOHNSON responded he has not seen the memorandum.
REPRESENTATIVE TARR, continuing, said this did not come up with
Senate Bill 138. She reiterated that that is the language she
had originally requested and that was because she had not heard
back from AOGA in her request to both ExxonMobil Corporation and
to AOGA for suggestions because they were the ones saying they
had trouble with what pieces of information would be released.
This would be a way of getting around that because it would not
be made public, it would only be made available to the
policymakers. Legislators went through the same thing under the
Stranded Gas Development Act [House Bill 16, passed in 2003,
Twenty-Third Alaska State Legislature], so there are three
instances where the legislature has used the same mechanism to
get at that information and there have not been any challenges.
Regarding "industry," she said she reached out to Kevin Jardell,
lobbyist for ExxonMobil Corporation. Mr. Jardell stated, and
this was echoed in committee, that AOGA would like to come
forward because AOGA works something through all of its industry
members to get some level of uniformity and acceptance of a
particular policy. She noted that this language was forwarded
to her as well as to Rena Delbridge, staff for Representative
Hawker.
9:34:30 PM
REPRESENTATIVE JOHNSON, in regard to the other three bills,
stated that just because the legislature did it once or three
times does not make it right. While ExxonMobil Corporation may
have said it is okay, that company does not represent the
industry and he believes others may have a different view. Not
every company is a member of AOGA, so he does not want to make
the blanket statement that industry approves of this. He said
he would like to hear the opinion of ConocoPhillips Alaska,
Inc., a company that is not a member of AOGA and that is a major
player on the North Slope.
MICHAEL HURLEY, Director, Government Relations and Community
Affairs, ConocoPhillips Alaska, Inc., testified that this
afternoon was the first he had seen this particular language and
it brought up two concerns for his company. The first being one
of process. The process laid out in this amendment is basically
a discussion between the Department of Revenue (DOR) and the
legislature. As laid out, there is no notice to the company.
So, the legislature could schedule the meeting tomorrow with DOR
and talk about all of ConocoPhillips's confidential data and tax
information and he would not know about it. He would not know
who was there, what was being talked about, what records were
being produced. The process just seems flawed to him in that it
could happen to any particular company and there are quite a few
companies that are not members of AOGA. Therefore, it was a
little disconcerting to have a process laid out where companies
would not even know what was going on or even that a meeting had
occurred.
9:37:19 PM
MR. HURLEY continued, saying the second issue that concerns his
company is why that meeting would occur. He has heard the
discussion about lack of transparency or information. In regard
to the examples talked about by Representative Tarr a few
minutes ago, would sitting down and looking at what tax credits
ConocoPhillips took in 2015 really tell legislators how to make
policy for the whole state going forward? He said he doubts it,
because it often takes years to mature and get to the point
where the company knows whether something is successful. For
example, if legislators had looked at BP's tax returns and
credits for the Badami oil field they would have thought BP had
a success. But everyone knows that did not play out. The
judgement of whether a tax credit program is or is not
successful is one that is made over a long period of time, not
by looking at a particular company's tax credits for the last
year, it is not the nature of the business.
MR. HURLEY stated it would concern him if legislators started
making decisions based on looking at a company's tax credit
usage and then trying to make policy that applies to all tax
credits. The IRS has very, very strict codes about how
confidential information with the IRS can be used. One of the
reasons the IRS does that, one of the reasons the IRS has very
strict rules, is because what the IRS does not want to see
happen is have the kind of tax credit process turned into a
political process where people sit around in an executive
session and decide who they do or do not like, and that they
want one company to have more credits and another less credits.
Starting to look into people's individual tax returns to see
what they did or did not do seems to be the road down which
people could go.
9:40:32 PM
REPRESENTATIVE JOSEPHSON said he respectfully has some concern
in regard to Mr. Hurley's testimony. The first issue raised was
that the industry would not know who attended [the executive
session]. As he reads the amendment he is not sure what
industry would do with that information anyway, because if
someone approached a legislator and said, "I don't know what you
heard, but let me tell you something," the legislator would have
to play dumb. The second point that a company would not know in
year one, two, or three, and while he does not know what the
retroactivity of the amendment is, he thinks the industry should
expect that with the state paying $800 million or more there
might be some constituents who are going to ask about that and
legislators could learn something. For example, it might be
found that an area near Teshekpuk Lake is just fruitless, there
is no oil to develop there, or that the west side of Cook Inlet
near Shelikof Strait is too far south and nothing bore fruit
there. He does not know, but he is very interested in knowing.
Stating respect for Mr. Hurley, he said he sensed it was being
said that legislators cannot sort it out or make good judgements
based on the information. That is important because legislators
are already making blanket judgements about what percentage of
QCE and whether it should be statewide and legislators are doing
this with very little knowledge. So, his response to Mr. Hurley
is, "Right back at you with great respect." Legislators are
already making blanket statements about what does and does not
work but while flying sort of blind.
REPRESENTATIVE JOSEPHSON continued. Addressing Amendment 45
itself, he said he has concerns only in that some legislators,
one example being Senator Berta Gardner, do not generally as a
principle sign confidentiality agreements because then she has
to "ring fence" in her own mind when she is talking to people.
All legislators do that to some degree, but there is that
censoring and a criminal penalty would make a person censor in a
hurry. Additionally, he thinks some constituents might call him
asking why he is privy to this information while the constituent
is not. But, if this is the best that can be gotten, it is
something, and no one has to sign the confidentiality agreement.
The process must be started of figuring out what is working, he
said, and therefore he supports the amendment.
9:43:50 PM
REPRESENTATIVE CHENAULT said he is not sure where he really
wants to go with this. He noted he has not been on this
committee for the last 10-14 years like some members have.
Those members get to go through this on a regular basis and
maybe things stick in their minds that do not stick in his. He
said if his memory is correct he does not think that the
Department of Law liked the provision that was in Senate Bill
138, and he is not sure that the provisions are all the same.
He asked whether the Department of Law has a position on
Amendment 45.
MARY HUNTER GRAMLING, Assistant Attorney General, Natural
Resources Section, Civil Division (Juneau), Department of Law
(DOL), responded that there are conflicting attorney general
opinions that are public on the issue of confidentiality
agreements in executive session on tax issues. She believed
that the current attorney general and Governor Walker's
administration overall are very much in favor of transparency in
government and just based on that policy she thinks they would
be opposed to executive sessions as a policy matter. There have
been conflicting legal issues on this and DOL has not published
a formal attorney general opinion on this issue with this
attorney general and so she cannot say anything more than that
she thinks as a general policy matter they would be opposed to
it. Even the most lenient of the attorney general opinions that
was in favor of executive sessions did say that there was risk
to the department and the employees when they appeared in
executive sessions, she continued. This statute is very
explicit, so it might help mitigate some of the risks because
this sort of statute was not in existence when those opinions
were drafted. However, as transparency is a hallmark of this
administration, she does not feel comfortable saying whether DOL
would support it other than noting that there is conflicting
attorney general opinions and Governor Walker and the attorney
general are very much in favor of transparency when possible.
9:46:46 PM
REPRESENTATIVE CHENAULT requested Ms. Delbridge to address the
statement that the language in ACES and Senate Bill 138 is
similar, because he does not remember this.
MS. DELBRIDGE responded she cannot recall off the top of her
head the specific terms of the AGIA provisions. She was able to
refresh herself on the Senate Bill 138 provisions and those are
in AS 38.05.020(B), which allowed the department to share
confidential information under a confidentiality agreement. It
did not require legislators to be meeting in some kind of
session committee format in order to receive that. It provided
for individual meetings or meetings outside of that framework
that might run into those conflicts with the Uniform Rule. That
was a slightly different context in the sense that that was
sharing informing that is held proprietary by a project and so,
she believed, the agreement was linked to another agreement with
a project to provide that access and in this instance it is an
entity providing access to confidential taxpayer information.
The language in Amendment 45 certainly is modeled after the
concept in Senate Bill 138, but it is slightly different, in
particular in Senate Bill 138 it allowed for legislators to make
sure that their agents, their consultants, staff, people they
felt important to be present for that information sharing, are
also there and Amendment 45 provides for that as well.
REPRESENTATIVE CHENAULT read aloud from Uniform Rule 22(d),
which states in its entirety:
The provisions of this rule may not be interpreted as
permitting the exclusion of a legislator from an
executive session, whether or not the legislator is a
member of the body that is meeting. A legislator not
a member of the body holding an executive session
shall, however, be subject to the same rules of
confidentiality and decorum as pertain to regular
members of the body.
REPRESENTATIVE CHENAULT surmised that "rules of confidentiality"
could be interpreted to mean the signing of a confidentiality
agreement.
9:49:56 PM
REPRESENTATIVE SEATON recalled that during AGIA he signed a
confidentiality agreement and went over to the room and found
stacks of books about compressors and other things of no meaning
to him, and that was the last confidentiality agreement he has
signed. He noted he has been in the legislature for quite a
while and gone through a number of these and the legislature has
not had a problem forming policy. The legislature sometimes
gets knocked because it wants to change something and is asked
whether a study has been done showing what the effect will be,
but the legislature has not cared because its job is to form
policy. The legislature looks at the best information it can to
see what might be the effect and consultants are brought in to
provide what is projected to be the effect. The effect will
never be known until the policy is done. He said he really
wants to see transparency, but when going down to the level of
looking at the data of individual taxpayers he is unsure how
legislators would use that because it is a broader scope that is
used. Legislators need to make policy for the state to the best
of their ability and he is not sure that Amendment 45 would give
legislators the information on which to make policy.
REPRESENTATIVE JOSEPHSON related he has received a text from
someone at ExxonMobil that seems to indicate AOGA approves of
this amendment but not necessarily ExxonMobil. He shared that
he was in a telephone conference with AOGA and this appears to
be the amendment that AOGA approved of. He qualified that he is
using the word "approved" broadly.
REPRESENTATIVE HERRON said he has an overabundance of caution
and will not support Amendment 45, but suggested that this
conversation should be further explored.
9:53:26 PM
REPRESENTATIVE TARR argued that Amendment 45 is one of the most
important amendments offered tonight. She disagreed with
Representative Seaton about the usefulness of this information.
Because she has taught at a university for 20 years she tends to
err on the side of more information and be a student as much as
possible to learn about things. Therefore, she would delve into
this information if she had the opportunity to. Her sense of
frustration is that in the original bill there were some very
limited provisions about releasing information and industry said
that was unacceptable. She tried to work around that and be
sensitive to any of the IRS limitations so as to not do anything
that would get anyone in trouble. She looked back at previous
work the committee has done and this was a big part of the
conversation about Senate Bill 138. She put in an amendment
that was lost somewhere and which she believed was sent to the
co-chairs. As a result of hearing from AOGA things are more
clearly delineated in Amendment 45 on page 2, subparagraphs (A),
(B), and (C). She offered her belief that this is language that
could be acceptable and that maintains that privacy but would
give legislators some access. This is really important
information for legislators to have and that could be very
instructive. There is always the opportunity to repeal a law if
it turns out to not be as helpful as was thought.
9:55:51 PM
REPRESENTATIVE TARR said right now she feels that her neighbors
are demanding to have more of this information. Right now this
bill does not provide any opportunities for some of that
information to be made public to them. However, it could give
them some level of comfort to know that she has the opportunity
to see that information. Some of the amendments she has offered
are opportunities to actually strengthen the work that is being
done. If, for example, over a multi-year basis she had had the
opportunity to be looking at this information she cannot say
today how that might influence what she is thinking, but it is
very possible that her understanding of something is not
correct. By seeing that information she would be able to
correct those errors in her own mind. She would rather err on
the side of having more information and to study things as much
as possible and to understand at the greatest level of detail
what the implications of the legislature's actions are.
Amendment 45 is a pretty big ask for legislators to feel
comfortable that there be a penalty associated with any
disclosure of that information. When trying to strike a balance
with competing ideas then sometimes everybody gives a little.
It would be her preference that penalty language not be included
in the amendment, but she is willing to give a little to go with
what the industry says it can be comfortable with. Equally this
should be supported. Legislators should do due diligence in
understanding how these provisions work. If the legislature was
going to consider gas contracts then legislators would probably
all sign confidentiality agreements so they could understand the
detailed provisions of those documents.
REPRESENTATIVE TARR further noted her appreciation for Governor
Walker's policy directive that transparency is key for his
administration. But, there are limitations to that, there is
not the opportunity to release this kind of information, it is
confidential taxpayer information. [Amendment 45] would provide
the opportunity to do that in a very limited scope for the
people who need to understand it and make the policy. It would
provide that information in a private way and it would be
legally prohibited from sharing outside of that. If that is the
best that can be done, then that is the best that can be done,
and she would ask committee members to support the amendment.
9:58:50 PM
REPRESENTATIVE JOHNSON maintained his objection to Amendment 45.
A roll call vote was taken. Representatives Josephson and Tarr
voted in favor of Amendment 45. Representatives Olson, Seaton,
Herron, Chenault, Johnson, Talerico, and Nageak voted against
it. Therefore, Amendment 45 failed by a vote of 2-7.
9:59:36 PM
The committee took an at-ease from 9:59 p.m. to 10:07 p.m.
10:07:56 PM
CO-CHAIR NAGEAK noted that Representative Seaton will offer a
new version of Amendment 4.
REPRESENTATIVE SEATON moved to adopt Amendment 4, labeled 29-
GH2609\P.59, Nauman/Shutts, 3/22/16, which read:
Page 8, line 18:
Delete "The"
Insert "Subject to the limitations in (k) of this
section, the [THE]"
Page 8, lines 22 - 24:
Delete "The department may not purchase a total
of more than $200,000,000 in tax credit certificates
from a person in a calendar year."
Page 8, line 31:
Delete "$200,000,000 limitations in this
subsection"
Insert "limitations in (k) of this section"
Page 9, line 11:
Delete "a new subsection"
Insert "new subsections"
Page 9, following line 21:
Insert a new subsection to read:
"(k) In a calendar year, the department may not
purchase tax credit certificates issued under this
chapter if the sum of the purchases exceeds
$50,000,000 a person or $200,000,000 a unit. If the
total of the credit purchases applied for under this
section and subject to the limitation in this
subsection exceeds $200,000,000 for a unit, the
department shall prorate the purchase of tax credit
certificates based on ownership interest in the unit.
When calculating a sum of purchases under this
subsection, the department shall include amounts used
to reduce an outstanding liability under (j) of this
section."
REPRESENTATIVE OLSON objected to the amendment.
10:08:24 PM
REPRESENTATIVE SEATON explained Amendment 4. He recounted that
the committee dealt with the subject of a $25 million limitation
on the net operating loss proposed in the original bill.
[Version P] changed that to $200 million. He pointed out the
difficulty of a large development in which there could be
multiple companies and the $200 million per company could run
the state into a very difficult problem of paying the credits it
would be obligated to pay. Amendment 4 would limit the
redemption in a tax year to $50 million per person, which means
company, and limits an aggregate redemption to $200 million for
each unit. He explained that a unit looks over a pool of oil,
it is a project, and is something that is definable. This
amendment recognizes the $200 million that the co-chairs
submitted in [Version P] but would get around the problem of
multiple companies coming in and being partners in that project
and the state suddenly having much more liability. Amendment 4
would not affect the earning of the tax credits, only the timing
of the cash redemption by the state. Amendment 4 would not
impact people using tax credits to offset against their tax
liability, so it would only be about the cash out of the
treasury.
REPRESENTATIVE SEATON continued his explanation of Amendment 4.
He recalled the theoretical project on the North Slope from Mr.
Armstrong's testimony [Armstrong Oil & Gas Inc.], which could
reach $800 million a year. He noted it is now known that today
the state does not have that kind of income. It could be that
next year the state will have zero net money from production tax
under the current law. Amendment 4 would give twice the
individual company redemption of the original bill and would
protect the state budget from volatile and unpredictable
liability. The committee has discussed this issue a number of
times trying to find a solution and doing it by the unit means
that the state would be protected against those outlier
conditions that could be very large. Representative Seaton
concluded his explanation of Amendment 4 by adding that it is
the solution that the co-chairs were trying to find in the $200
million solution and how to protect the state from potential
large liabilities, and it would double what the original version
of the bill brought forward for individual companies.
10:11:59 PM
REPRESENTATIVE OLSON maintained his objection to Amendment 4.
A roll call vote was taken. Representatives Seaton, Josephson,
and Tarr voted in favor of Amendment 4. Representatives
Johnson, Olson, Herron, Chenault, Talerico, and Nageak voted
against it. Therefore, Amendment 4 failed by a vote of 3-6.
10:12:55 PM
The committee took an at-ease from 10:12 p.m. to 10:15 p.m.
10:15:29 PM
CO-CHAIR TALERICO moved to report the CS for HB 247, Version 29-
GH2609\P, Shutts, 3/18/16, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE TARR objected for the purpose of discussion.
10:15:51 PM
REPRESENTATIVE TARR stated that the committee has had the
opportunity during the amendments to talk about the more
holistic view of what is currently going on in the state and how
this legislation might fit into it. She said she was hoping the
committee would produce a bill that she could support because
she feels it is one of the most important components of the only
fiscal plan that has been suggested to legislators so far by the
governor. She cannot support the bill in its current form
because other proposals are being considered and there just are
not that many options. There is a $4.1 billion deficit and very
few options for where that gap will be filled. She
characterized the current version of the bill as unrecognizable
relative to the bill's original version, and said that in many
ways the committee really worked on two different pieces of
legislation. The current version will not get the state on the
path to sustainability and that the state can afford. Children
are being told their education dollars have to be cut and senior
benefits are being cut because the state cannot afford
everything. She said she is shocked that the legislature would
move forward with proposals like that without sharing the
burden. She said she fears for the state.
10:17:49 PM
REPRESENTATIVE JOSEPHSON offered his appreciation for everything
done by the co-chairs, saying it has been appropriate in terms
of procedure and courtesies. He said he shares Representative
Tarr's concerns. A theme heard tonight is that there is a real
cause for alarm if the credits are not in place as they are.
But they could be even more generous, and so if the goal is to
incentivize then even more could be done. It was just 10 years
ago that the incentives were $53 million, now they are over $600
million and are projected to be $800 million. The Department of
Environmental Conservation (DEC) is a $20 million general fund
(GF) budget, so the state could do 25 DECs on these credits.
Next year the number grows. The increase is 1,600 percent since
2007. He said he thought that the Senate working group's work
and its recommendations of using a hard 4 percent floor would be
a common denominator, that that would be at least the
committee's own floor for the CS. He also thought that the
discussion of inadvertence, something talked about by enalytica,
would have been a source to say, "oh well this wasn't vetted
very well by the Senate Bill 21 committees because the economic
climate was so different."
REPRESENTATIVE JOSEPHSON recalled that earlier today it was
heard that the net operating loss (NOL) is designed to be
commensurate with the tax rate. He charged that that is not
true because the bill reduces the NOL and it is not commensurate
with the tax rate in Cook Inlet right now anyway, so the idea
that the net operating loss should match the tax rate just is
not true. He further recalled hearing earlier today that the
state wants industry to spend even when it is losing money.
There is evidence that that is absolutely true, but he thinks it
needs to be much less true. He is surprised that given that
next year the state is going to spend $825 million on this and
bring in $680 million, he would have thought that there would
have been real sense of urgency, like this is totally
unsustainable. With all of the aforementioned he has real
concern even though he realizes this is not the end of the road
for this bill unless it does not move. He expressed his
surprise that there is the feeling that the state must double
down on these credits when the industry itself is making
cutbacks.
10:20:58 PM
REPRESENTATIVE SEATON drew attention to the fiscal note [for the
original version of the bill] for component number 2894, which
is over $926 million for capitalizing the [oil and gas tax
credit] fund. He pointed out that this is not addressed in the
CS. Therefore, the fiscal note is just "hanging out there" and
he would suggest that to follow the bill and have the fiscal
note be appropriate to the bill the committee should zero out
that fiscal note and let the House Finance Committee address it
in the appropriate way. Previously in committee Representative
Hawker has found that when a fiscal note was not significantly
attached to the bill the committee has zeroed out the fiscal
note to let the House Finance Committee appropriately do it.
REPRESENTATIVE JOHNSON agreed with Representative Seaton.
Rather than a zero fiscal note he suggested the fiscal note be
indeterminate.
REPRESENTATIVE TARR thanked the co-chairs and their staff for
their good work.
10:23:22 PM
REPRESENTATIVE JOHNSON moved to adopt an indeterminate fiscal
note as opposed to the current fiscal note. There being no
objection, an indeterminate fiscal note was adopted to accompany
the committee substitute.
10:23:55 PM
The committee took a brief at-ease.
10:24:34 PM
REPRESENTATIVE JOHNSON clarified he meant for both fiscal notes
to be indeterminate, not just one.
CO-CHAIR TALERICO withdrew his original motion to report the CS
for HB 247, Version 29-GH2609\P, Shutts, 3/18/16, as amended,
out of committee with individual recommendations and the
accompanying fiscal notes.
10:25:00 PM
CO-CHAIR TALERICO moved to report the CS for HB 247, Version 29-
GH2609\P, Shutts, 3/18/16, as amended, out of committee with
individual recommendations and the amended indeterminate fiscal
notes.
REPRESENTATIVE TARR objected for the purpose of calling a vote.
A roll call vote was taken. Representatives Chenault, Johnson,
Olson, Seaton, Herron, Talerico, and Nageak voted in favor of
the motion to report the CS for HB 247, Version 29-GH2609\P,
Shutts, 3/18/16, as amended, out of committee with individual
recommendations and the amended indeterminate fiscal notes.
Representatives Tarr and Josephson voted against it. Therefore,
CSHB 247(RES) was reported out of the House Resources Standing
Committee by a vote of 7-2.
10:26:46 PM
The committee took an at-ease from 10:26 p.m. to 10:29 p.m.
10:29:54 PM
CO-CHAIR NAGEAK thanked the committee members and their staff
for their patience and hard work on HB 247.
AMENDMENTS to HB 247, VERSION 29-GH2609\P, Shutts, 3/18/16
Amendment 18, 29-GH2609\P.28, Nauman/Shutts, 3/21/16:
Page 5, line 8:
Delete "A"
Insert "Subject to the limitation in (q) of this
section, a [A]"
Page 7, line 23:
Delete "A"
Insert "Subject to the limitation in (q) of this
section, a [A]"
Page 8, following line 16:
Insert a new bill section to read:
"* Sec. 16. AS 43.55.023 is amended by adding a new
subsection to read:
(q) For a calendar year starting on or after
January 1, 2017, to qualify for a credit under this
section, a producer or explorer shall, by July 1 of
the year before the credit is expected to be claimed,
submit to the commissioner the total amount of
expenditures expected to be claimed in the next
calendar year. To receive a credit after January 1,
2017, the commissioner shall approve the amount under
this subsection. The commissioner, in consultation
with the commissioner of natural resources, may not
approve an amount under this subsection unless the
credit is necessary to make the activity of the
producer or explorer economically feasible. This
subsection does not apply to a credit under (b) of
this section."
Renumber the following bill sections accordingly.
Page 18, line 20:
Delete "16, and 17"
Insert "17, and 18"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 27:
Delete "18, 23, and 24"
Insert "19, 24, and 25"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 22"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 30"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 31 and 35"
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "19 - 26, 28, 30, 33, and 34"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 37 and 38"
Amendment 22, labeled 29-GH2609\P.38, Shutts, 3/21/16:
Page 7, line 14:
Delete "and (b) - (d) [(a) - (d)] of this
section"
Insert ", (b) - (d) [(a) - (d)] of this section,
and AS 43.55.028(e)"
Page 7, line 20, following "credit":
Insert "and may not be applied to reduce a
transferee's total tax liability under AS 43.55.011(e)
by more than $100,000,000 in a calendar year"
Page 8, following line 16:
Insert a new bill section to read:
"* Sec. 16. AS 43.55.025(h) is amended to read:
(h) Subject to the limitations in
AS 43.55.028(e), a [A] producer that purchases a
production tax credit certificate may apply the
credits against its production tax levied by
AS 43.55.011(e) for up to $100,000,000 of its
production tax liability in a calendar year.
Regardless of the price the producer paid for the
certificate, the producer may receive a credit against
its production tax liability for the full amount of
the credit, but for not more than the amount for which
the certificate is issued. A production tax credit
allowed under this section may not be applied more
than once."
Renumber the following bill sections accordingly.
Page 8, line 23:
Delete "$200,000,000"
Insert "$100,000,000"
Page 8, line 24, following "year":
Insert ". The amount by which a person has
reduced the person's production tax liability under
AS 43.55.011(e) by using transferable tax credit
certificates counts toward the $100,000,000
limitation"
Page 8, line 31:
Delete "$200,000,000"
Insert "$100,000,000"
Page 18, line 20:
Delete "16, and 17"
Insert "17, and 18"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 27:
Delete "18, 23, and 24"
Insert "19, 24, and 25"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 22"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 30"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 31 and 35"
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "19 - 26, 28, 30, 33, and 34"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 37 and 38"
Amendment 26, labeled 29-GH2609\P.40, Nauman/Shutts, 3/21/16:
Page 1, line 1, following "Act":
Insert "relating to confidential information
status and public record status of information in the
possession of the Department of Revenue;"
Page 2, following line 31:
Insert a new bill section to read:
"* Sec. 6. AS 40.25.100(a) is amended to read:
(a) Information in the possession of the
Department of Revenue that discloses the particulars
of the business or affairs of a taxpayer or other
person, including information under
AS 38.05.020(b)(11) that is subject to a
confidentiality agreement under AS 38.05.020(b)(12),
is not a matter of public record, except as provided
in AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or
for purposes of investigation and law enforcement. The
information shall be kept confidential except when its
production is required in an official investigation,
administrative adjudication under AS 43.05.405 -
43.05.499, or court proceeding. These restrictions do
not prohibit the publication of statistics presented
in a manner that prevents the identification of
particular reports and items, prohibit the publication
of tax lists showing the names of taxpayers who are
delinquent and relevant information that may assist in
the collection of delinquent taxes, or prohibit the
publication of records, proceedings, and decisions
under AS 43.05.405 - 43.05.499."
Renumber the following bill sections accordingly.
Page 3, following line 17:
Insert a new bill section to read:
"* Sec. 8. AS 43.05.230 is amended by adding a new
subsection to read:
(l) The following information for persons
claiming a credit under AS 43.55 is public:
(1) the name of each person claiming a
credit under AS 43.55;
(2) the aggregate amount of credits under
AS 43.55 claimed by the taxpayer in the calendar year,
except for the credit in AS 43.55.024(j); and
(3) a description of the taxpayer's
activities that generated the credits claimed under
AS 43.55."
Renumber the following bill sections accordingly.
Page 18, line 20:
Delete "Sections 7 - 9, 16, and 17"
Insert "Sections 9 - 11, 18, and 19"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 15, 16, 20, 25, and 26"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 23"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 31"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 32 and 36"
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 15, 16, 20 - 27, 29, 31, 34, and
35"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 38 and 39"
Amendment 28, labeled 29-GH2609\P.54, Nauman/Shutts, 3/21/16:
Page 8, following line 16:
Insert a new bill section to read:
"* Sec. 16. AS 43.55.023 is amended by adding a new
subsection to read:
(q) For the lease expenditures incurred toward a
credit under this section, a producer or explorer
shall
(1) agree, in writing, to the requirements
that an explorer must agree to under
AS 43.55.025(f)(2); and
(2) submit to the Department of Natural
Resources all data that an explorer must submit under
AS 43.55.025(f)(2)."
Renumber the following bill sections accordingly.
Page 18, line 20:
Delete "16, and 17"
Insert "17, and 18"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 27:
Delete "18, 23, and 24"
Insert "19, 24, and 25"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 22"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 30"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 31 and 35"
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "19 - 26, 28, 30, 33, and 34"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 37 and 38"
Amendment 30, labeled 29-GH2609\P.42, Shutts, 3/21/16:
Page 3, lines 22 - 24:
Delete ", [(1) THE CLAIMANT DOES NOT HAVE AN
OUTSTANDING LIABILITY TO THE STATE FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE; AND (2)]"
Insert "(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and (2)"
Page 4, lines 3 - 5:
Delete ", [(1) THE CLAIMANT DOES NOT HAVE AN
OUTSTANDING LIABILITY TO THE STATE FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE; AND (2)]"
Insert "(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and (2)"
Page 4, lines 15 - 17:
Delete ", [(1) THE CLAIMANT DOES NOT HAVE AN
OUTSTANDING LIABILITY TO THE STATE FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE; AND (2)]"
Insert "(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and (2)"
Page 17, following line 6:
Insert a new bill section to read:
"* Sec. 28. AS 43.99.950 is amended by adding a new
paragraph to read:
(3) "outstanding liability to the state"
means an amount of tax, interest, penalty, fee,
rental, royalty, or other charge for which the state
has issued a demand for payment that has not been paid
when due and, if contested, has not been finally
resolved against the state."
Renumber the following bill sections accordingly.
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 30"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 31 and 35"
Page 20, line 13:
Delete "29, 32, and 33"
Insert "30, 33, and 34"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 37 and 38"
Amendment 32, labeled 29-GH2609\P.53, Nauman/Shutts, 3/21/16:
Page 4, following line 20:
Insert a new bill section to read:
"* Sec. 10. 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 percent of
the gross value at the point of production; and
(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
[(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]."
Renumber the following bill sections accordingly.
Page 5, following line 6:
Insert new bill sections to read:
"* Sec. 12. 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)
[AS 43.55.011(f)(1) AND (2)] for the phrase "calendar
year for which the tax is due."
* Sec. 13. AS 43.55.020(i) is amended to read:
(i) Notwithstanding any contrary provision of
AS 43.05.225 or (g) or (h) of this section, if the
amount of a tax payment, including an installment
payment, due under (a)(1) - (5) [(4)] of this section
is affected by the retroactive application of a
regulation adopted under this chapter, the department
shall determine whether the retroactive application of
the regulation caused an underpayment or an
overpayment of the amount due and adjust the interest
due on the affected payment as follows:
(1) if an underpayment of the amount due
occurred, the department shall waive interest that
would otherwise accrue for the underpayment before the
first day of the second month following the month in
which the regulation became effective, if
(A) the department determines that the
producer's underpayment resulted because the
regulation was not in effect when the payment was due;
and
(B) the producer demonstrates that it made
a good faith estimate of its tax obligation in light
of the regulations then in effect when the payment was
due and paid the estimated tax;
(2) if an overpayment of the amount due
occurred and the department determines that the
producer's overpayment resulted because the regulation
was not in effect when the payment was due, the
obligation for a refund for the overpayment does not
begin to accrue interest earlier than the following,
as applicable:
(A) except as otherwise provided under (B)
of this paragraph, the first day of the second month
following the month in which the regulation became
effective;
(B) 90 days after an amended statement
under AS 43.55.030(a) and an application to request a
refund of production tax paid is filed, if the
overpayment was for a period for which an amended
statement under AS 43.55.030(a) was required to be
filed before the regulation became effective."
Renumber the following bill sections accordingly.
Page 18, line 20:
Delete "16, and 17"
Insert "19, and 20"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 32"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 16, 17, 21, 26, and 27"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 32"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 24"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 32"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 33 and 37"
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 16, 17, 21 - 28, 30, 32, 35, and
36"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 39 and 40"
Amendment 33, labeled 29-GH2609\P.27, Nauman/Shutts, 3/19/16:
Page 1, line 4, following "credit;":
Insert "relating to the minimum tax for certain
oil and gas production; relating to the minimum tax
calculation for monthly installment payments of
estimated tax;"
Page 5, following line 6:
Insert a new bill section to read:
"* Sec. 11. AS 43.55 is amended by adding a new
section to read:
Sec. 43.55.022. Limitations on tax credits. (a) A
tax credit or a fraction of a tax credit under
AS 43.55.023, 43.55.024, and 43.55.025 may not be
subtracted in calculating an installment payment of
estimated tax required under AS 43.55.020(a) if the
resulting amount of the installment payment would be
less than the amount in AS 43.55.020(a)(5)(B)(ii) or
(7)(A)(ii), as applicable.
(b) The total amount of tax credits under
AS 43.55.023, 43.55.024, and 43.55.025 that may be
applied against a tax levied by AS 43.55.011(e) for a
calendar year may not exceed the sum of the amount of
the tax credits or fractions of tax credits that are
allowed under (a) of this section to be subtracted in
calculating the installment payments of estimated tax
for each month in the calendar year."
Renumber the following bill sections accordingly.
Page 6, following line 22:
Insert a new bill section to read:
"* Sec. 14. AS 43.55.023(c) is amended to read:
(c) A credit or portion of a credit under this
section may not be used to reduce a person's tax
liability under AS 43.55.011(e) for any calendar year
below the amount calculated under AS 43.55.011(f)
[ZERO], and any unused credit or portion of a credit
not used under this subsection may be applied in a
later calendar year."
Renumber the following bill sections accordingly.
Page 8, following line 16:
Insert new bill sections to read:
"* Sec. 18. AS 43.55.024(g) is amended to read:
(g) A tax credit authorized by (c) of this
section may not be applied to reduce a producer's tax
liability for any calendar year under AS 43.55.011(e)
below the amount calculated under AS 43.55.011(f)
[ZERO].
* Sec. 19. AS 43.55.024(i) is amended to read:
(i) A producer may apply against the producer's
tax liability for the calendar year under
AS 43.55.011(e) a tax credit of $5 for each barrel of
oil taxable under AS 43.55.011(e) that meets one or
more of the criteria in AS 43.55.160(f) or (g) and
that is produced during a calendar year after
December 31, 2013. A tax credit authorized by this
subsection may not reduce a producer's tax liability
for a calendar year under AS 43.55.011(e) below the
amount calculated under AS 43.55.011(f) [ZERO].
* Sec. 20. AS 43.55.025(i) is amended to read:
(i) For a production tax credit under this
section,
(1) a credit may not be applied to reduce a
taxpayer's tax liability under AS 43.55.011(e) below
the amount calculated under AS 43.55.011(f) [ZERO] for
a calendar year; and
(2) an amount of the production tax credit
in excess of the amount that may be applied for a
calendar year under this subsection may be carried
forward and applied against the taxpayer's tax
liability under AS 43.55.011(e) in one or more later
calendar years."
Renumber the following bill sections accordingly.
Page 18, line 20, following "APPLICABILITY.":
Delete "Sections 7 - 9, 16, and 17"
Insert "(a) Sections 7 - 9, 21, and 22"
Page 18, following line 21:
Insert a new subsection to read:
"(b) The limitations on the use of tax credits
added in AS 43.55.022, added by sec. 11 of this Act,
AS 43.55.024(g) and (i), as amended by secs. 18 and 19
of this Act, and AS 43.55.025(i), as amended by sec.
20 of this Act, apply to credits applied to reduce a
tax liability for a tax year starting on or after the
effective date of secs. 11 and 18 - 20 of this Act."
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 34"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 15, 16, 23, 28, and 29"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 34"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 26"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 34"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 35 and 39"
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 15, 16, 23 - 30, 32, 34, 37, and
38"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 41 and 42"
Amendment 35, labeled 29-GH2609\P.7, Shutts, 3/19/16:
Page 5, lines 7 - 26:
Delete all material and insert:
"* Sec. 11. AS 43.55.023(a) is amended to read:
(a) A producer or explorer may take a tax credit
for a qualified capital expenditure as follows:
(1) notwithstanding that a qualified
capital expenditure may be a deductible lease
expenditure for purposes of calculating the production
tax value of oil and gas under AS 43.55.160(a), unless
a credit for that expenditure is taken under
AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or
AS 43.55.025, a producer or explorer that incurs a
qualified capital expenditure may also elect to apply
a tax credit against a tax levied by AS 43.55.011(e)
in the amount of
(A) 20 percent of an [THAT] expenditure
incurred before July 1, 2016;
(B) 10 percent of an expenditure incurred
on or after July 1, 2016;
(2) a producer or explorer may take a
credit for a qualified capital expenditure incurred in
connection with geological or geophysical exploration
or in connection with an exploration well only if the
producer or explorer
(A) agrees, in writing, to the applicable
provisions of AS 43.55.025(f)(2); and
(B) submits to the Department of Natural
Resources all data that would be required to be
submitted under AS 43.55.025(f)(2);
(3) a credit for a qualified capital
expenditure incurred to explore for, develop, or
produce oil or gas deposits located north of 68
degrees North latitude may be taken only if the
expenditure is incurred before January 1, 2014.
* Sec. 12. AS 43.55.023(a), as amended by sec. 11
of this Act, is amended to read:
(a) A producer or explorer may take a tax credit
for a qualified capital expenditure as follows:
(1) notwithstanding that a qualified
capital expenditure may be a deductible lease
expenditure for purposes of calculating the production
tax value of oil and gas under AS 43.55.160(a), unless
a credit for that expenditure is taken under
[AS 38.05.180(i), AS 41.09.010,] AS 43.20.043 [,] or
AS 43.55.025, a producer or explorer that incurs a
qualified capital expenditure may also elect to apply
a tax credit against a tax levied by AS 43.55.011(e)
in the amount of
(A) 20 percent of an expenditure incurred
before July 1, 2016;
(B) 10 percent of an expenditure incurred
on or after July 1, 2016;
(2) a producer or explorer may take a
credit for a qualified capital expenditure incurred in
connection with geological or geophysical exploration
or in connection with an exploration well only if the
producer or explorer
(A) agrees, in writing, to the applicable
provisions of AS 43.55.025(f)(2); and
(B) submits to the Department of Natural
Resources all data that would be required to be
submitted under AS 43.55.025(f)(2);
(3) a credit for a qualified capital
expenditure incurred to explore for, develop, or
produce oil or gas deposits located north of 68
degrees North latitude may be taken only if the
expenditure is incurred before January 1, 2014."
Renumber the following bill sections accordingly.
Page 8, following line 16:
Insert a new bill section to read:
"* Sec. 17. AS 43.55.023(l), as amended by sec. 16
of this Act, is amended to read:
(l) A producer or explorer may apply for a tax
credit for a well lease expenditure incurred in the
state south of 68 degrees North latitude after
June 30, 2010, as follows:
(1) notwithstanding that a well lease
expenditure incurred in the state south of 68 degrees
North latitude may be a deductible lease expenditure
for purposes of calculating the production tax value
of oil and gas under AS 43.55.160(a), unless a credit
for that expenditure is taken under [(a) OF THIS
SECTION,] AS 43.20.043, or AS 43.55.025, a producer or
explorer that incurs a well lease expenditure in the
state south of 68 degrees North latitude may elect to
apply a tax credit against a tax levied by
AS 43.55.011(e) in the amount of
(A) 40 percent of an expenditure incurred
before January 1, 2017;
(B) 30 percent of an expenditure incurred
on or after January 1, 2017, and before January 1,
2018;
(C) 20 percent of an expenditure incurred
on or after January 1, 2018;
(2) a producer or explorer may take a
credit for a well lease expenditure incurred in the
state south of 68 degrees North latitude in connection
with geological or geophysical exploration or in
connection with an exploration well only if the
producer or explorer
(A) agrees, in writing, to the applicable
provisions of AS 43.55.025(f)(2); and
(B) submits to the Department of Natural
Resources all data that would be required to be
submitted under AS 43.55.025(f)(2)."
Renumber the following bill sections accordingly.
Page 9, line 24:
Delete "(l) or under AS 43.55.023(b)"
Insert "under AS 43.55.023(b) or (l)"
Page 10, following line 3:
Insert a new bill section to read:
"* Sec. 21. AS 43.55.029(a), as amended by sec. 20
of this Act, is amended to read:
(a) An explorer or producer that has applied for
a production tax credit under former AS 43.55.023(a)
or (l) or under AS 43.55.023(b) or (l) or 43.55.025(a)
may make a present assignment of the production tax
credit certificate expected to be issued by the
department to a third-party assignee. The assignment
may be made either at the time the application is
filed with the department or not later than 30 days
after the date of filing with the department. Once a
notice of assignment in compliance with this section
is filed with the department, the assignment is
irrevocable and cannot be modified by the explorer or
producer without the written consent of the assignee
named in the assignment. If a production tax credit
certificate is issued to the explorer or producer, the
notice of assignment remains effective and shall be
filed with the department by the explorer or producer
together with any application for the department to
purchase the certificate under AS 43.55.028(e)."
Renumber the following bill sections accordingly.
Page 17, line 9:
Delete "43.55.023(l), 43.55.023(n)"
Page 17, following line 10:
Insert a new bill section to read:
"* Sec. 33. AS 43.55.023(l) and 43.55.023(n) are
repealed."
Page 18, line 20:
Delete "16, and 17"
Insert "18, and 19"
Page 18, lines 24 - 25:
Delete "AND WELL LEASE EXPENDITURES"
Page 18, line 25:
Delete ", (l), (n),"
Page 18, line 26:
Delete "sec. 29"
Insert "sec. 32"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 14, 15, 20, 26, and 27"
Page 18, line 28:
Delete "(1)"
Delete "sec. 29"
Insert "sec. 32"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 1:
Delete ";"
Insert "."
Page 19, lines 2 - 6:
Delete all material.
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 32"
Page 19, following line 10:
Insert a new bill section to read:
"* Sec. 37. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: WELL LEASE EXPENDITURES. (a)
Notwithstanding the repeal of AS 43.55.023(l) and (n)
by sec. 33 of this Act, and the amendment to
AS 43.55.029(a) by sec. 21 of this Act, a taxpayer who
incurs a well lease expenditure before the effective
date of sec. 33 of this Act that qualifies for a well
lease expenditure credit under AS 43.55.023(l) may
apply for a credit or transferable tax credit
certificate under AS 43.55.023 and assign the tax
credit under AS 43.55.029, as those sections read on
the day before the effective date of sec. 33 of this
Act.
(b) The Department of Revenue may continue to
apply and enforce AS 43.55.023 and 43.55.029, as those
sections read on the day before the effective date of
sec. 33 of this Act, for qualified capital
expenditures and well lease expenditures incurred
before the effective date of sec. 33 of this Act."
Renumber the following bill sections accordingly.
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 24"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 32"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 32"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 34 and 39"
Page 20, following line 12:
Insert a new bill section to read:
"* Sec. 42. Section 11 of this Act takes effect
July 1, 2016."
Renumber the following bill sections accordingly.
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 14, 15, 20, 22 - 28, 30, 32, 36,
and 38"
Page 20, lines 13 - 14:
Delete "January 1, 2022"
Insert "July 1, 2017"
Page 20, following line 14:
Insert a new bill section to read:
"* Sec. 44. Sections 21, 33, and 37 of this Act
take effect January 1, 2022."
Renumber the following bill section accordingly.
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 41 - 44"
Amendment 38, labeled 29-GH2609\P.44, Nauman/Shutts, 3/21/16:
Page 11, following line 15:
Insert a new bill section to read:
"* Sec. 21. AS 43.55.150 is amended by adding a new
subsection to read:
(d) The gross value at the point of production
may not be less than zero."
Renumber the following bill sections accordingly.
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 27:
Delete "23, and 24"
Insert "24, and 25"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 30"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 22"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 30"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 30"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 31 and 35"
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "18 - 20, 22 - 26, 28, 30, 33, and 34"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 37 and 38"
Amendment 40, labeled 29-GH2609\P.26, Nauman/Shutts, 3/19/16:
Page 11, following line 15:
Insert new bill sections to read:
"* Sec. 21. AS 43.55.160(f) is amended to read:
(f) On and after January 1, 2014, in the
calculation of an annual production tax value of a
producer under (a)(1)(A) or (h)(1) of this section,
the gross value at the point of production of oil or
gas produced from a lease or property north of 68
degrees North latitude meeting one or more of the
following criteria is reduced by 20 percent: (1) the
oil or gas is produced from a lease or property that
does not contain a lease that was within a unit on
January 1, 2003; (2) the oil or gas is produced from a
participating area established after December 31,
2011, that is within a unit formed under
AS 38.05.180(p) before January 1, 2003, if the
participating area does not contain a reservoir that
had previously been in a participating area
established before December 31, 2011; (3) the oil or
gas is produced from acreage that was added to an
existing participating area by the Department of
Natural Resources on and after January 1, 2014, and
the producer demonstrates to the department that the
volume of oil or gas produced is from acreage added to
an existing participating area. This subsection does
not apply to gas produced before 2022 that is used in
the state or to gas produced on and after January 1,
2022. For oil or gas produced after January 1, 2017,
the reduction under this subsection shall apply to oil
or gas produced from a lease or property for the first
four years after the commencement of production in
commercial quantities of oil or gas from that lease or
property. For oil or gas produced before January 1,
2017, the reduction under this subsection for a lease
or property shall expire January 1, 2021. A reduction
under this subsection may not reduce the gross value
at the point of production below zero. In this
subsection, "participating area" means a reservoir or
portion of a reservoir producing or contributing to
production as approved by the Department of Natural
Resources.
* Sec. 22. AS 43.55.160(g) is amended to read:
(g) On and after January 1, 2014, in addition to
the reduction under (f) of this section, in the
calculation of an annual production tax value of a
producer under (a)(1)(A) or (h)(1) of this section,
the gross value at the point of production of oil or
gas produced from a lease or property north of 68
degrees North latitude that does not contain a lease
that was within a unit on January 1, 2003, is reduced
by 10 percent if the oil or gas is produced from a
unit made up solely of leases that have a royalty
share of more than 12.5 percent in amount or value of
the production removed or sold from the lease as
determined under AS 38.05.180(f). This subsection does
not apply if the royalty obligation for one or more of
the leases in the unit has been reduced to 12.5
percent or less under AS 38.05.180(j) for all or part
of the calendar year for which the annual production
tax value is calculated. This subsection does not
apply to gas produced before 2022 that is used in the
state or to gas produced on and after January 1, 2022.
For oil or gas produced after January 1, 2017, the
reduction under this subsection shall apply to oil or
gas produced from a lease or property for the first
four years after the commencement of production in
commercial quantities of oil or gas from that lease or
property. For oil or gas produced before January 1,
2017, the reduction under this subsection for a lease
or property shall expire January 1, 2021. A reduction
under this subsection may not reduce the gross value
at the point of production below zero."
Renumber the following bill sections accordingly.
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 27:
Delete "23, and 24"
Insert "25, and 26"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 23"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 31"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 32 and 36"
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "18 - 20, 23 - 27, 29, 31, 34, and 35"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 38 and 39"
Amendment 41, labeled 29-GH2609\P.25, Shutts, 3/21/16:
Page 8, lines 5 - 7:
Delete ", and before January 1, 2018;
(C) 20 percent of an expenditure incurred
on or after January 1, 2018"
Page 9, line 22, through page 10, line 3:
Delete all material and insert:
"* Sec. 18. AS 43.55.029(a) is amended to read:
(a) An explorer or producer that has applied for
a production tax credit under former AS 43.55.023(l)
or AS 43.55.023(a) or [,] (b) [, OR (l)] or
43.55.025(a) may make a present assignment of the
production tax credit certificate expected to be
issued by the department to a third-party assignee.
The assignment may be made either at the time the
application is filed with the department or not later
than 30 days after the date of filing with the
department. Once a notice of assignment in compliance
with this section is filed with the department, the
assignment is irrevocable and cannot be modified by
the explorer or producer without the written consent
of the assignee named in the assignment. If a
production tax credit certificate is issued to the
explorer or producer, the notice of assignment remains
effective and shall be filed with the department by
the explorer or producer together with any application
for the department to purchase the certificate under
AS 43.55.028(e).
* Sec. 19. AS 43.55.029(a), as amended by sec. 18
of this Act, is amended to read:
(a) An explorer or producer that has applied for
a production tax credit under former AS 43.55.023(a)
or (l) [AS 43.55.023(l)] or AS 43.55.023(b)
[AS 43.55.023(a) OR (b)] or 43.55.025(a) may make a
present assignment of the production tax credit
certificate expected to be issued by the department to
a third-party assignee. The assignment may be made
either at the time the application is filed with the
department or not later than 30 days after the date of
filing with the department. Once a notice of
assignment in compliance with this section is filed
with the department, the assignment is irrevocable and
cannot be modified by the explorer or producer without
the written consent of the assignee named in the
assignment. If a production tax credit certificate is
issued to the explorer or producer, the notice of
assignment remains effective and shall be filed with
the department by the explorer or producer together
with any application for the department to purchase
the certificate under AS 43.55.028(e)."
Renumber the following bill sections accordingly.
Page 17, following line 8:
Insert a new bill section to read:
"* Sec. 30. AS 43.55.023(l) and 43.55.023(n) are
repealed."
Renumber the following bill sections accordingly.
Page 17, line 9:
Delete "43.55.023(l), 43.55.023(n),"
Page 18, lines 24 - 25:
Delete "AND WELL LEASE EXPENDITURES"
Page 18, line 25:
Delete ", (l), (n),"
Page 18, line 26:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 27:
Delete "18, 23, and 24"
Insert "19, 24, and 25"
Page 18, line 28:
Delete "(1)"
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 1:
Delete ";"
Insert "."
Page 19, lines 2 - 6:
Delete all material.
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 31"
Page 19, following line 10:
Insert a new bill section to read:
"* Sec. 35. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: WELL LEASE EXPENDITURES. (a)
Notwithstanding the repeal of AS 43.55.023(l) and (n)
by sec. 30 of this Act, and the amendment to
AS 43.55.029(a) by sec. 18 of this Act, a producer or
explorer who incurs a well lease expenditure before
the effective date of sec. 30 of this Act that
qualifies for a well lease expenditure credit under
AS 43.55.023(l) may apply for a credit or transferable
tax credit certificate under AS 43.55.023 and assign
the tax credit under AS 43.55.029, as those sections
read on the day before the effective date of sec. 30
of this Act.
(b) The Department of Revenue may continue to
apply and enforce AS 43.55.023 and 43.55.029, as those
sections read on the day before the effective date of
sec. 30 of this Act, for qualified capital
expenditures and well lease expenditures incurred
before the effective date of sec. 30 of this Act."
Renumber the following bill sections accordingly.
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 22"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 31"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 32 and 37"
Page 20, following line 12:
Insert a new bill section to read:
"* Sec. 40. Sections 18, 30, and 35 of this Act
take effect July 1, 2017."
Renumber the following bill sections accordingly.
Page 20, line 13:
Delete "18 - 25, 27, 29, 32, and 33"
Insert "19 - 26, 28, 31, 34, and 36"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 39 - 41"
Amendment 42, labeled 29-GH2609\P.3, Nauman/Shutts, 3/19/16:
Page 1, line 4, following "credit;":
Insert "relating to a limitation on the
application of tax credits; relating to the
calculation for monthly installment payments of
estimated tax;"
Page 5, following line 6:
Insert a new bill section to read:
"* Sec. 11. AS 43.55 is amended by adding a new
section to read:
Sec. 43.55.022. Limitations on tax credits. A tax
credit or a fraction of a tax credit under
AS 43.55.023, 43.55.024, and 43.55.025 may not be
subtracted in calculating an installment payment of
estimated tax required under AS 43.55.020(a) if the
resulting amount of the installment payment would be
less than the amount in AS 43.55.020(a)(5)(B)(ii) or
43.55.020(a)(7)(A)(ii), as applicable."
Renumber the following bill sections accordingly.
Page 6, following line 22:
Insert a new bill section to read:
"* Sec. 14. AS 43.55.023(c) is amended to read:
(c) A credit or portion of a credit under this
section may not be used to reduce a person's tax
liability under AS 43.55.011(e) for any calendar year
below the amount calculated under AS 43.55.011(f)
[ZERO], and any unused credit or portion of a credit
not used under this subsection may be applied in a
later calendar year."
Renumber the following bill sections accordingly.
Page 8, following line 16:
Insert new bill sections to read:
"* Sec. 18. AS 43.55.024(g) is amended to read:
(g) A tax credit authorized by (c) of this
section may not be applied to reduce a producer's tax
liability for any calendar year under AS 43.55.011(e)
below the amount calculated under AS 43.55.011(f)
[ZERO].
* Sec. 19. AS 43.55.024(i) is amended to read:
(i) A producer may apply against the producer's
tax liability for the calendar year under
AS 43.55.011(e) a tax credit of $5 for each barrel of
oil taxable under AS 43.55.011(e) that meets one or
more of the criteria in AS 43.55.160(f) or (g) and
that is produced during a calendar year after
December 31, 2013. A tax credit authorized by this
subsection may not reduce a producer's tax liability
for a calendar year under AS 43.55.011(e) below the
amount calculated under AS 43.55.011(f) [ZERO].
* Sec. 20. AS 43.55.025(i) is amended to read:
(i) For a production tax credit under this
section,
(1) a credit may not be applied to reduce a
taxpayer's tax liability under AS 43.55.011(e) below
the amount calculated under AS 43.55.011(f) [ZERO] for
a calendar year; and
(2) an amount of the production tax credit
in excess of the amount that may be applied for a
calendar year under this subsection may be carried
forward and applied against the taxpayer's tax
liability under AS 43.55.011(e) in one or more later
calendar years."
Renumber the following bill sections accordingly.
Page 18, line 20, following "APPLICABILITY.":
Insert "(a)"
Page 18, line 20:
Delete "16, and 17"
Insert "21, and 22"
Page 18, following line 21:
Insert a new subsection to read:
"(b) The limitations on the use of tax credits
added in AS 43.55.022, added by sec. 11 of this Act,
AS 43.55.024(g) and (i), as amended by secs. 18 and 19
of this Act, and AS 43.55.025(i), as amended by sec.
20 of this Act, apply to credits applied to reduce a
tax liability for a tax year starting on or after the
effective date of secs. 11 and 18 - 20 of this Act."
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 34"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 15, 16, 23, 28, and 29"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 34"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 26"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 34"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 34"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 35 and 39"
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 15, 16, 23 - 30, 32, 34, 37, and
38"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 41 and 42"
Amendment 43, labeled 29-GH2609\P.46, Nauman, 3/21/16:
Page 1, lines 1 - 7:
Delete all material and insert:
"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."
Page 1, line 9, through page 20, line 16:
Delete all material and insert:
"* Section 1. AS 38.05.036(a) is amended to read:
(a) The department may conduct audits regarding
royalty and net profits under oil and gas contracts,
agreements, or leases under this chapter and regarding
costs related to exploration licenses entered into
under AS 38.05.131 - 38.05.134 and exploration
incentive credits under this chapter [OR UNDER
AS 41.09]. For purposes of audit under this section,
(1) the department may examine the books,
papers, records, or memoranda of a person regarding
matters related to the audit; and
(2) the records and premises where a
business is conducted shall be open at all reasonable
times for inspection by the department.
* Sec. 2. AS 38.05.036(b) is amended to read:
(b) The Department of Revenue may obtain from
the department information relating to royalty and net
profits payments and to exploration incentive credits
under this chapter [OR UNDER AS 41.09], whether or not
that information is confidential. The Department of
Revenue may use the information in carrying out its
functions and responsibilities under AS 43, and shall
hold that information confidential to the extent
required by an agreement with the department or by
AS 38.05.035(a)(8) [, AS 41.09.010(d),] or
AS 43.05.230.
* Sec. 3. AS 38.05.036(c) is amended to read:
(c) The department may obtain from the
Department of Revenue all information obtained under
AS 43 relating to royalty and net profits and to
exploration incentive credits. The department may use
the information for purposes of carrying out its
responsibilities and functions under this chapter [AND
AS 41.09]. Information made available to the
department that was obtained under AS 43 is
confidential and subject to the provisions of
AS 43.05.230.
* Sec. 4. AS 38.05.036(f) is amended to read:
(f) Except as otherwise provided in this section
or in connection with official investigations or
proceedings of the department, it is unlawful for a
current or former officer, employee, or agent of the
state to divulge information obtained by the
department as a result of an audit under this section
that is required by an agreement with the department
or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be
kept confidential.
* Sec. 5. AS 38.05.036(g) is amended to read:
(g) Nothing in this section prohibits the
publication of statistics in a manner that maintains
the confidentiality of information to the extent
required by an agreement with the department or by
AS 38.05.035(a)(8) [OR AS 41.09.010(d)].
* Sec. 6. AS 40.25.100(a) is amended to read:
(a) Information in the possession of the
Department of Revenue that discloses the particulars
of the business or affairs of a taxpayer or other
person, including information under
AS 38.05.020(b)(11) that is subject to a
confidentiality agreement under AS 38.05.020(b)(12),
is not a matter of public record, except as provided
in AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or
for purposes of investigation and law enforcement. The
information shall be kept confidential except when its
production is required in an official investigation,
administrative adjudication under AS 43.05.405 -
43.05.499, or court proceeding. These restrictions do
not prohibit the publication of statistics presented
in a manner that prevents the identification of
particular reports and items, prohibit the publication
of tax lists showing the names of taxpayers who are
delinquent and relevant information that may assist in
the collection of delinquent taxes, or prohibit the
publication of records, proceedings, and decisions
under AS 43.05.405 - 43.05.499.
* Sec. 7. AS 43.05.225 is amended to read:
Sec. 43.05.225. Interest. Unless otherwise
provided,
(1) a delinquent tax under this title,
[(A) BEFORE JANUARY 1, 2014, BEARS INTEREST
IN EACH CALENDAR QUARTER AT THE RATE OF FIVE
PERCENTAGE POINTS ABOVE THE ANNUAL RATE CHARGED MEMBER
BANKS FOR ADVANCES BY THE 12TH FEDERAL RESERVE
DISTRICT AS OF THE FIRST DAY OF THAT CALENDAR QUARTER,
OR AT THE ANNUAL RATE OF 11 PERCENT, WHICHEVER IS
GREATER, COMPOUNDED QUARTERLY AS OF THE LAST DAY OF
THAT QUARTER; OR
(B) ON AND AFTER JANUARY 1, 2014,] bears
interest in each calendar quarter at the rate of seven
[THREE] percentage points above the annual rate
charged member banks for advances by the 12th Federal
Reserve District as of the first day of that calendar
quarter compounded quarterly as of the last day of
that quarter;
(2) the interest rate is 12 percent a year
for
(A) delinquent fees payable under
AS 05.15.095(c); and
(B) unclaimed property that is not timely
paid or delivered, as allowed by AS 34.45.470(a).
* Sec. 8. AS 43.05.230 is amended by adding a new
subsection to read:
(l) The name of each person claiming a credit
under AS 43.55, the aggregate amount of credits under
AS 43.55, except for the credit in AS 43.55.024(j),
claimed by the taxpayer in the calendar year, and a
description of the taxpayer's activities that
generated the credits claimed are public information.
* Sec. 9. AS 43.20.046(e) is amended to read:
(e) The department may use available money in
the oil and gas tax credit fund established in
AS 43.55.028 to make the refund applied for under (d)
of this section in whole or in part if the department
finds that (1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and (2) after
application of all available tax credits, the
claimant's total tax liability under this chapter for
the calendar year in which the claim is made is zero.
[IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" MEANS AN
AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED AN
ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED,
HAS NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S
FAVOR.]
* Sec. 10. AS 43.20.047(e) is amended to read:
(e) The department may use money available in
the oil and gas tax credit fund established in
AS 43.55.028 to make a refund or payment under (d) of
this section in whole or in part if the department
finds that
(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and
(2) after application of all available tax
credits, the claimant's total tax liability under this
chapter for the calendar year in which the claim is
made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT
TAX" MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT
HAS ISSUED AN ASSESSMENT THAT HAS NOT BEEN PAID AND,
IF CONTESTED, HAS NOT BEEN FINALLY RESOLVED IN THE
TAXPAYER'S FAVOR.]
* Sec. 11. AS 43.20.053(e) is amended to read:
(e) The department may use money available in
the oil and gas tax credit fund established in
AS 43.55.028 to make a refund or payment under (d) of
this section in whole or in part if the department
finds that
(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and
(2) after application of all available tax
credits, the claimant's total tax liability under this
chapter for the calendar year in which the claim is
made is zero.
* Sec. 12. AS 43.55.011(f) is repealed and
reenacted to read:
(f) The levy of tax under (e) of this section
for
(1) oil and gas produced 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 percent of the gross value at the point of
production; and
(2) 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.
* Sec. 13. 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) 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 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)(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."
* Sec. 14. AS 43.55.020(g) is repealed and
reenacted to read:
(g) Notwithstanding any contrary provision of
AS 43.05.225, an unpaid amount of an installment
payment required under (a)(3), (5), (6), or (7) of
this section that is not paid when due bears interest
(1) at the rate provided for an underpayment under 26
U.S.C. 6621 (Internal Revenue Code), as amended,
compounded daily, from the date the installment
payment is due until March 31 following the calendar
year of production; and (2) as provided for a
delinquent tax under AS 43.05.225 after that March 31,
interest accrued under (1) of this subsection that
remains unpaid after that March 31 is treated as an
addition to tax that bears interest under (2) of this
subsection, an unpaid amount of tax due under (a)(4)
of this section that is not paid when due bears
interest as provided for a delinquent tax under
AS 43.05.225.
* Sec. 15. AS 43.55.020(h) is amended to read:
(h) Notwithstanding any contrary provision of
AS 43.05.280,
(1) an overpayment of an installment
payment required under (a)(3) [(a)(1), (2), (3)], (5),
(6), or (7) of this section bears interest at the rate
provided for an overpayment under 26 U.S.C. 6621
(Internal Revenue Code), as amended, compounded daily,
from the later of the date the installment payment is
due or the date the overpayment is made, until the
earlier of
(A) the date it is refunded or is applied
to an underpayment; or
(B) March 31 following the calendar year of
production;
(2) except as provided under (1) of this
subsection, interest with respect to an overpayment is
allowed only on any net overpayment of the payments
required under (a) of this section that remains after
the later of March 31 following the calendar year of
production or the date that the statement required
under AS 43.55.030(a) is filed;
(3) interest is allowed under (2) of this
subsection only from a date that is 90 days after the
later of March 31 following the calendar year of
production or the date that the statement required
under AS 43.55.030(a) is filed; interest is not
allowed if the overpayment was refunded within the 90-
day period;
(4) interest under (2) and (3) of this
subsection is paid at the rate and in the manner
provided in AS 43.05.225(1).
* Sec. 16. AS 43.55.020(i) is amended to read:
(i) Notwithstanding any contrary provision of
AS 43.05.225 or (g) or (h) of this section, if the
amount of a tax payment, including an installment
payment, due under (a)(3) - (5) [(a)(1) - (4)] of this
section is affected by the retroactive application of
a regulation adopted under this chapter, the
department shall determine whether the retroactive
application of the regulation caused an underpayment
or an overpayment of the amount due and adjust the
interest due on the affected payment as follows:
(1) if an underpayment of the amount due
occurred, the department shall waive interest that
would otherwise accrue for the underpayment before the
first day of the second month following the month in
which the regulation became effective, if
(A) the department determines that the
producer's underpayment resulted because the
regulation was not in effect when the payment was due;
and
(B) the producer demonstrates that it made
a good faith estimate of its tax obligation in light
of the regulations then in effect when the payment was
due and paid the estimated tax;
(2) if an overpayment of the amount due
occurred and the department determines that the
producer's overpayment resulted because the regulation
was not in effect when the payment was due, the
obligation for a refund for the overpayment does not
begin to accrue interest earlier than the following,
as applicable:
(A) except as otherwise provided under (B)
of this paragraph, the first day of the second month
following the month in which the regulation became
effective;
(B) 90 days after an amended statement
under AS 43.55.030(a) and an application to request a
refund of production tax paid is filed, if the
overpayment was for a period for which an amended
statement under AS 43.55.030(a) was required to be
filed before the regulation became effective.
* Sec. 17. AS 43.55 is amended by adding a new
section to read:
Sec. 43.55.022. Limitations on tax credits. (a)
Notwithstanding any contrary provision of AS 43.55,
the application of tax credits under AS 43.55 is
subject to the limitations set out in this section.
(b) A tax credit or a fraction of a tax credit
under AS 43.55.023, 43.55.024, and 43.55.025 may not
be subtracted in calculating an installment payment of
estimated tax required under AS 43.55.020(a) if the
resulting amount of the installment payment would be
less than the amount in AS 43.55.020(a)(5)(B)(ii) or
43.55.020(a)(7)(A)(ii), as applicable.
(c) The total amount of tax credits under
AS 43.55.023, 43.55.024, and 43.55.025 that may be
applied against a tax levied by AS 43.55.011(e) for a
calendar year may not exceed the sum of the amount of
the tax credits or fractions of tax credits that are
allowed under (b) of this section to be subtracted in
calculating the installment payments of estimated tax
for each month in the calendar year.
* Sec. 18. AS 43.55.023(b) is amended to read:
(b) [BEFORE JANUARY 1, 2014, A PRODUCER OR
EXPLORER MAY ELECT TO TAKE A TAX CREDIT IN THE AMOUNT
OF 25 PERCENT OF A CARRIED-FORWARD ANNUAL LOSS. FOR
LEASE EXPENDITURES INCURRED ON AND AFTER JANUARY 1,
2014, AND BEFORE JANUARY 1, 2016, TO EXPLORE FOR,
DEVELOP, OR PRODUCE OIL OR GAS DEPOSITS LOCATED NORTH
OF 68 DEGREES NORTH LATITUDE, A PRODUCER OR EXPLORER
MAY ELECT TO TAKE A TAX CREDIT IN THE AMOUNT OF 45
PERCENT OF A CARRIED-FORWARD ANNUAL LOSS.] For lease
expenditures incurred on and after January 1, 2016, to
explore for, develop, or produce oil or gas deposits
located north of 68 degrees North latitude, a producer
or explorer may elect to take a tax credit in the
amount of 35 percent of a carried-forward annual loss.
For lease expenditures incurred on or after January 1,
2014, to explore for, develop, or produce oil or gas
deposits located south of 68 degrees North latitude, a
producer or explorer may elect to take a tax credit in
the amount of 25 percent of a carried-forward annual
loss. A credit under this subsection may be applied
against a tax levied by AS 43.55.011(e). For purposes
of this subsection, a carried-forward annual loss is
the amount of a producer's or explorer's adjusted
lease expenditures under AS 43.55.165 and 43.55.170
for a previous calendar year that was not deductible
in calculating production tax values for that calendar
year under AS 43.55.160. For the purpose of a credit
under this subsection, any reduction under
AS 43.55.160(f) or (g) is added back to the
calculation of production tax values for that calendar
year under AS 43.55.160 for the determination of a
carried-forward annual loss.
* Sec. 19. AS 43.55.023(c) is amended to read:
(c) A credit or portion of a credit under this
section may not be used to reduce a person's tax
liability under AS 43.55.011(e) for any calendar year
below the amount calculated under AS 43.55.011(f)
[ZERO], and any unused credit or portion of a credit
not used under this subsection may be applied in a
later calendar year. An unused credit or portion of a
credit may not be applied in a calendar year later
than the 10th calendar year in which the carried-
forward annual loss for which the credit is claimed
was incurred.
* Sec. 20. AS 43.55.023(d) is amended to read:
(d) A person that is entitled to take a tax
credit under this section that wishes to transfer the
unused credit to another person or obtain a cash
payment under AS 43.55.028 may apply to the department
for a transferable tax credit certificate. An
application under this subsection must be in a form
prescribed by the department and must include
supporting information and documentation that the
department reasonably requires. The department shall
grant or deny an application, or grant an application
as to a lesser amount than that claimed and deny it as
to the excess, not later than 120 days after the
latest of (1) March 31 of the year following the
calendar year in which the [QUALIFIED CAPITAL
EXPENDITURE OR] carried-forward annual loss for which
the credit is claimed was incurred; (2) the date the
statement required under AS 43.55.030(a) or (e) was
filed for the calendar year in which the [QUALIFIED
CAPITAL EXPENDITURE OR] carried-forward annual loss
for which the credit is claimed was incurred; or (3)
the date the application was received by the
department. If, based on the information then
available to it, the department is reasonably
satisfied that the applicant is entitled to a credit,
the department shall issue the applicant a
transferable tax credit certificate for the amount of
the credit. A certificate issued under this subsection
expires after 10 years from the calendar year in which
the carried-forward annual loss for which the credit
is claimed was incurred [DOES NOT EXPIRE].
* Sec. 21. AS 43.55.023(e) is amended to read:
(e) A person to which a transferable tax credit
certificate is issued under (d) of this section may
transfer the certificate to another person, and a
transferee may further transfer the certificate.
Subject to the limitations set out in (b) - (d) [(a) -
(d)] of this section, and notwithstanding any action
the department may take with respect to the applicant
under (g) of this section, the owner of a certificate
may apply the credit or a portion of the credit shown
on the certificate only against a tax levied by
AS 43.55.011(e). However, a credit shown on a
transferable tax credit certificate may not be applied
to reduce a transferee's total tax liability under
AS 43.55.011(e) for oil and gas produced during a
calendar year to less than 80 percent of the tax that
would otherwise be due without applying that credit.
Any portion of a credit not used under this subsection
may be applied in a later period.
* Sec. 22. AS 43.55.023 is amended by adding a new
section to read:
(q) A producer or explorer shall comply with the
notice and information provision requirements in
AS 43.55.025(f)(2) for the lease expenditures incurred
towards a credit under this section. The Department of
Natural Resources shall hold the confidential
information under AS 43.55.025(f)(2)(C). For a
producer or explorer required to comply with the
notice and information requirements of this section,
the Department of Natural Resources may publish the
name of the producer or explorer, the location of the
well or seismic exploration, and the date on which
information required to be submitted under this
section may be released.
* Sec. 23. AS 43.55.024(g) is amended to read:
(g) A tax credit authorized by (c) of this
section may not be applied to reduce a producer's tax
liability for any calendar year under AS 43.55.011(e)
below the amount calculated under AS 43.55.011(f)
[ZERO].
* Sec. 24. AS 43.55.024(i) is amended to read:
(i) A producer may apply against the producer's
tax liability for the calendar year under
AS 43.55.011(e) a tax credit of $5 for each barrel of
oil taxable under AS 43.55.011(e) that meets one or
more of the criteria in AS 43.55.160(f) or (g) and
that is produced during a calendar year after
December 31, 2013. A tax credit authorized by this
subsection may not reduce a producer's tax liability
for a calendar year under AS 43.55.011(e) below the
amount calculated under AS 43.55.011(f) [ZERO].
* Sec. 25. AS 43.55.025(i) is amended to read:
(i) For a production tax credit under this
section,
(1) a credit may not be applied to reduce a
taxpayer's tax liability under AS 43.55.011(e) below
the amount calculated under AS 43.55.011(f) [ZERO] for
a calendar year; and
(2) an amount of the production tax credit
in excess of the amount that may be applied for a
calendar year under this subsection may be carried
forward and applied against the taxpayer's tax
liability under AS 43.55.011(e) in one or more later
calendar years.
* Sec. 26. AS 43.55.028(e) is amended to read:
(e) The department, on the written application
of a person to whom a transferable tax credit
certificate has been issued under AS 43.55.023(d) or
former AS 43.55.023(m) or to whom a production tax
credit certificate has been issued under
AS 43.55.025(f), may use available money in the oil
and gas tax credit fund to purchase, in whole or in
part, the certificate if the department finds that
(1) the calendar year of the purchase is
not earlier than the first calendar year for which the
credit shown on the certificate would otherwise be
allowed to be applied against a tax;
(2) the applicant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE];
(3) the applicant's total tax liability
under AS 43.55.011(e), after application of all
available tax credits, for the calendar year in which
the application is made is zero;
(4) the applicant's average daily
production of oil and gas taxable under
AS 43.55.011(e) during the calendar year preceding the
calendar year in which the application is made was not
more than 50,000 BTU equivalent barrels; [AND]
(5) the applicant's revenues generated from
the applicant's oil and gas business, including the
revenues of the applicant's affiliates if the
applicant is part of an affiliated group, during the
calendar year preceding the calendar year in which the
application is made were less than $10,000,000,000;
(6) the amount expended for the purchase
and amounts previously purchased from the applicant
during the calendar year the sum of which would not
exceed $25,000,000; and
(7) the purchase is consistent with this
section and regulations adopted under this section.
* Sec. 27. AS 43.55.028 is amended by adding a new
subsections to read:
(j) The percentage of a transferable tax credit
certificate or a production tax credit certificate
purchased by the department may not exceed the
percentage of the applicant's workforce in the state
in the previous calendar year that were resident
workers. The applicant's workforce in the state
includes resident workers employed by the applicant's
contractors. An amount of a credit not purchased due
to application of this subsection may be applied
against the applicant's tax liability under this
chapter. In this subsection, "resident worker" has the
meaning given in AS 43.40.092(b).
* Sec. 28. AS 43.55.029(a) is amended to read:
(a) An explorer or producer that has applied for
a production tax credit under AS 43.55.023(b)
[AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may
make a present assignment of the production tax credit
certificate expected to be issued by the department to
a third-party assignee. The assignment may be made
either when [AT THE TIME] the application is filed
with the department or not later than 30 days after
the date of filing with the department. Once a notice
of assignment in compliance with this section is filed
with the department, the assignment is irrevocable and
cannot be modified by the explorer or producer without
the written consent of the assignee named in the
assignment. If a production tax credit certificate is
issued to the explorer or producer, the notice of
assignment remains effective and shall be filed with
the department by the explorer or producer together
with any application for the department to purchase
the certificate under AS 43.55.028(e).
* Sec. 29. AS 43.55.030(a) is amended to read:
(a) A producer that produces oil or gas from a
lease or property in the state during a calendar year,
whether or not any tax payment is due under
AS 43.55.020(a) for that oil or gas, shall file with
the department on March 31 of the following year a
statement, under oath, in a form prescribed by the
department, giving, with other information required,
the following:
(1) a description of each lease or property
from which oil or gas was produced, by name, legal
description, lease number, or accounting codes
assigned by the department;
(2) the names of the producer and, if
different, the person paying the tax, if any;
(3) the gross amount of oil and the gross
amount of gas produced from each lease or property,
separately identifying the gross amount of gas
produced from each oil and gas lease to which an
effective election under AS 43.55.014(a) applies, the
amount of gas delivered to the state under
AS 43.55.014(b), and the percentage of the gross
amount of oil and gas owned by the producer;
(4) the gross value at the point of
production of the oil and of the gas produced from
each lease or property owned by the producer and the
costs of transportation of the oil and gas;
(5) the name of the first purchaser and the
price received for the oil and for the gas, unless
relieved from this requirement in whole or in part by
the department;
(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;
(7) the production tax values of the oil
and gas under AS 43.55.160(a) or of the oil under
AS 43.55.160(h), as applicable;
(8) any claims for tax credits to be
applied; and
(9) calculations showing the amounts, if
any, that were or are due under AS 43.55.020(a) and
interest on any underpayment or overpayment.
* Sec. 30. AS 43.55.030(e) is amended to read:
(e) An explorer or producer that incurs a lease
expenditure under AS 43.55.165 or receives a payment
or credit under AS 43.55.170 during a calendar year
but does not produce oil or gas from a lease or
property in the state during the calendar year shall
file with the department, on March 31 of the following
year, a statement, under oath, in a form prescribed by
the department, giving, with other information
required, the following:
(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
(2) if the explorer or producer receives a
payment or credit under AS 43.55.170, calculations
showing whether the explorer or producer is liable for
a tax under AS 43.55.160(d) or 43.55.170(b) and, if
so, the amount.
* Sec. 31. AS 43.55.150 is amended by adding a new
subsection to read:
(d) The gross value at the point of production
may not be less than zero.
* Sec. 32. AS 43.55.165(a) is amended to read:
(a) For [EXCEPT AS PROVIDED IN (j) AND (k) OF
THIS SECTION, FOR] purposes of this chapter, a
producer's lease expenditures for a calendar year are
(1) costs, other than items listed in (e)
of this section, that are
(A) incurred by the producer during the
calendar year after March 31, 2006, to explore for,
develop, or produce oil or gas deposits located within
the producer's leases or properties in the state or,
in the case of land in which the producer does not own
an operating right, operating interest, or working
interest, to explore for oil or gas deposits within
other land in the state; and
(B) allowed by the department by
regulation, based on the department's determination
that the costs satisfy the following three
requirements:
(i) the costs must be incurred upstream of
the point of production of oil and gas;
(ii) the costs must be ordinary and
necessary costs of exploring for, developing, or
producing, as applicable, oil or gas deposits; and
(iii) the costs must be direct costs of
exploring for, developing, or producing, as
applicable, oil or gas deposits; and
(2) a reasonable allowance for that
calendar year, as determined under regulations adopted
by the department, for overhead expenses that are
directly related to exploring for, developing, or
producing, as applicable, the oil or gas deposits.
* Sec. 33. 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.
* Sec. 34. AS 43.55.165(f) is amended to read:
(f) For purposes of AS 43.55.023(b)
[AS 43.55.023(a) AND (b)] and only as to expenditures
incurred to explore for an oil or gas deposit located
within land in which an explorer does not own a
working interest, the term "producer" in this section
includes "explorer."
* Sec. 35. AS 43.55.170(c) is amended to read:
(c) For purposes of AS 43.55.023(b)
[AS 43.55.023(a) AND (b)] and only as to expenditures
incurred to explore for an oil or gas deposit located
within land in which an explorer does not own a
working interest, the term "producer" in this section
includes "explorer."
* Sec. 36. 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.
* Sec. 37. AS 43.55.895(b) is amended to read:
(b) A municipal entity subject to taxation
because of this section is eligible for [ALL] tax
credits proportionate to its production taxable under
AS 43.55.011(e). A municipal entity shall allocate its
lease expenditures in proportion to its production
taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO
THE SAME EXTENT AS ANY OTHER PRODUCER].
* Sec. 38. AS 43.55.900 is amended by adding 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
(i) 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
(ii) that has previously been placed in
service in the state; an expenditure to acquire an
asset is not excluded under this paragraph if not more
than an immaterial portion of the asset meets a
description under this paragraph; for purposes of this
subparagraph, "asset" includes geological,
geophysical, and well data and interpretations.
* Sec. 39. AS 43.99.950 is amended by adding a new
paragraph to read:
(3) "outstanding liability to the state"
means an amount of tax, interest, penalty, fee,
rental, royalty, or other charge for which the state
has issued a demand for payment that has not been paid
when due and, if contested, has not been finally
resolved against the state.
* Sec. 40. AS 38.05.180(i); AS 41.09.010,
41.09.020, 41.09.030, 41.09.090; AS 43.20.053(j)(4);
AS 43.55.011(m), 43.55.020(a)(1), 43.55.020(a)(2),
43.55.023(a), 43.55.023(l), 43.55.023(n), AS
43.55.023(o), 43.55.028(i), 43.55.075(d)(1),
43.55.165(j), and 43.55.165(k) are repealed.
* Sec. 41. The uncodified law of the State of
Alaska is amended by adding a new section to read:
APPLICABILITY. (a) Section 17 of this Act applies
to credits against the oil and gas production tax
levied by AS 43.55.011(e) for oil and gas produced on
and after July 1, 2016.
(b) Sections 8 - 11 and 26 - 28 of this Act, and
the repeal of AS 43.55.023(a) and (l) in sec. 40 of
this Act, apply to expenditures incurred on and after
July 1, 2016.
(c) Sections 12, 13, and 16 of this Act apply to
oil and gas produced on and after July 1, 2016.
(d) For the purpose of determining the last
calendar year that a credit or an unused portion of a
credit under AS 43.55.023(c) or credit certificate
under AS 43.55.023(d) may be carried forward due to
the limitations in AS 43.55.023(c) and (d), as amended
by secs. 19 and 20 of this Act,
(1) the carried-forward annual loss for a
tax credit under AS 43.55.023(c), for expenditures
incurred before July 1, 2016, is considered to have
been incurred on July 1, 2016;
(2) the carried-forward annual loss for a
tax credit certificate under AS 43.55.023(d), for
expenditures incurred before July 1, 2016, is
considered to have been incurred on the later of
July 1, 2016, or the date the tax credit certificate
is issued.
* Sec. 42. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: REGULATIONS. The Department of
Revenue and the Department of Natural Resources may
adopt regulations necessary to implement the changes
made by this Act. The regulations take effect under
AS 44.62 (Administrative Procedure Act), but not
before the effective date of the law implemented by
the regulation. The Department of Revenue shall adopt
regulations governing the use of tax credits under
AS 43.55 for a calendar year for which the applicable
tax credit provisions of AS 43.55 differ as between
parts of the year as a result of this Act.
* Sec. 43. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: RETROACTIVITY OF REGULATIONS.
Notwithstanding any contrary provision of
AS 44.62.240,
(1) if the Department of Revenue expressly
designates in a regulation that the regulation applies
retroactively, a regulation adopted by the Department
of Revenue to implement, interpret, make specific, or
otherwise carry out this Act may apply retroactively
to July 1, 2016, as applicable;
(2) a regulation adopted by the Department
of Natural Resources to implement, interpret, make
specific, or otherwise carry out statutory provisions
for the administration of oil and gas leases issued
under AS 38.05.180(f)(3)(B), (D), or (E), to the
extent the regulation relates to the treatment of oil
and gas production taxes in determining net profits
under those leases, may apply retroactively to July 1,
2016, as applicable, if the Department of Natural
Resources expressly designates in the regulation that
the regulation applies retroactively to one of those
dates.
* Sec. 44. Sections 17, 42, and 43 of this Act take
effect immediately under AS 01.10.070(c).
* Sec. 45. Except as provided in sec. 44 of this
Act, this Act takes effect July 1, 2016."
Amendment 44, labeled 29-GH2609\P.47, Nauman/Shutts, 3/21/16:
Page 1, lines 1 - 7:
Delete all material and insert:
""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.""
Page 1, line 9, through page 20, line 16:
Delete all material and insert:
"* Section 1. AS 38.05.036(a) is amended to read:
(a) The department may conduct audits regarding
royalty and net profits under oil and gas contracts,
agreements, or leases under this chapter and regarding
costs related to exploration licenses entered into
under AS 38.05.131 - 38.05.134 and exploration
incentive credits under this chapter [OR UNDER
AS 41.09]. For purposes of audit under this section,
(1) the department may examine the books,
papers, records, or memoranda of a person regarding
matters related to the audit; and
(2) the records and premises where a
business is conducted shall be open at all reasonable
times for inspection by the department.
* Sec. 2. AS 38.05.036(b) is amended to read:
(b) The Department of Revenue may obtain from the
department information relating to royalty and net
profits payments and to exploration incentive credits
under this chapter [OR UNDER AS 41.09], whether or not
that information is confidential. The Department of
Revenue may use the information in carrying out its
functions and responsibilities under AS 43, and shall
hold that information confidential to the extent
required by an agreement with the department or by
AS 38.05.035(a)(8) [, AS 41.09.010(d),] or
AS 43.05.230.
* Sec. 3. AS 38.05.036(c) is amended to read:
(c) The department may obtain from the Department
of Revenue all information obtained under AS 43
relating to royalty and net profits and to exploration
incentive credits. The department may use the
information for purposes of carrying out its
responsibilities and functions under this chapter [AND
AS 41.09]. Information made available to the
department that was obtained under AS 43 is
confidential and subject to the provisions of
AS 43.05.230.
* Sec. 4. AS 38.05.036(f) is amended to read:
(f) Except as otherwise provided in this section
or in connection with official investigations or
proceedings of the department, it is unlawful for a
current or former officer, employee, or agent of the
state to divulge information obtained by the
department as a result of an audit under this section
that is required by an agreement with the department
or by AS 38.05.035(a)(8) [OR AS 41.09.010(d)] to be
kept confidential.
* Sec. 5. AS 38.05.036(g) is amended to read:
(g) Nothing in this section prohibits the
publication of statistics in a manner that maintains
the confidentiality of information to the extent
required by an agreement with the department or by
AS 38.05.035(a)(8) [OR AS 41.09.010(d)].
* Sec. 6. AS 40.25.100(a) is amended to read:
(a) Information in the possession of the
Department of Revenue that discloses the particulars
of the business or affairs of a taxpayer or other
person, including information under
AS 38.05.020(b)(11) that is subject to a
confidentiality agreement under AS 38.05.020(b)(12),
is not a matter of public record, except as provided
in AS 43.05.230(i) - (l) [AS 43.05.230(i) OR (k)] or
for purposes of investigation and law enforcement. The
information shall be kept confidential except when its
production is required in an official investigation,
administrative adjudication under AS 43.05.405 -
43.05.499, or court proceeding. These restrictions do
not prohibit the publication of statistics presented
in a manner that prevents the identification of
particular reports and items, prohibit the publication
of tax lists showing the names of taxpayers who are
delinquent and relevant information that may assist in
the collection of delinquent taxes, or prohibit the
publication of records, proceedings, and decisions
under AS 43.05.405 - 43.05.499.
* Sec. 7. AS 43.05.225 is amended to read:
Sec. 43.05.225. Interest. Unless otherwise
provided,
(1) a delinquent tax under this title,
[(A) BEFORE JANUARY 1, 2014, BEARS INTEREST
IN EACH CALENDAR QUARTER AT THE RATE OF FIVE
PERCENTAGE POINTS ABOVE THE ANNUAL RATE CHARGED MEMBER
BANKS FOR ADVANCES BY THE 12TH FEDERAL RESERVE
DISTRICT AS OF THE FIRST DAY OF THAT CALENDAR QUARTER,
OR AT THE ANNUAL RATE OF 11 PERCENT, WHICHEVER IS
GREATER, COMPOUNDED QUARTERLY AS OF THE LAST DAY OF
THAT QUARTER; OR
(B) ON AND AFTER JANUARY 1, 2014,] bears
interest in each calendar quarter at the rate of seven
[THREE] percentage points above the annual rate
charged member banks for advances by the 12th Federal
Reserve District as of the first day of that calendar
quarter compounded quarterly as of the last day of
that quarter;
(2) the interest rate is 12 percent a year
for
(A) delinquent fees payable under
AS 05.15.095(c); and
(B) unclaimed property that is not timely
paid or delivered, as allowed by AS 34.45.470(a).
* Sec. 8. AS 43.05.230 is amended by adding a new
subsection to read:
(l) The name of each person claiming a credit
under AS 43.55, the aggregate amount of credits under
AS 43.55, except for the credit in AS 43.55.024(j),
claimed by the taxpayer in the calendar year, and a
description of the taxpayer's activities that
generated the credits claimed are public information.
* Sec. 9. AS 43.20.046(e) is amended to read:
(e) The department may use available money in the
oil and gas tax credit fund established in
AS 43.55.028 to make the refund applied for under (d)
of this section in whole or in part if the department
finds that (1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and (2) after
application of all available tax credits, the
claimant's total tax liability under this chapter for
the calendar year in which the claim is made is zero.
[IN THIS SUBSECTION, "UNPAID DELINQUENT TAX" MEANS AN
AMOUNT OF TAX FOR WHICH THE DEPARTMENT HAS ISSUED AN
ASSESSMENT THAT HAS NOT BEEN PAID AND, IF CONTESTED,
HAS NOT BEEN FINALLY RESOLVED IN THE TAXPAYER'S
FAVOR.]
* Sec. 10. AS 43.20.047(e) is amended to read:
(e) The department may use money available in the
oil and gas tax credit fund established in
AS 43.55.028 to make a refund or payment under (d) of
this section in whole or in part if the department
finds that
(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and
(2) after application of all available tax
credits, the claimant's total tax liability under this
chapter for the calendar year in which the claim is
made is zero. [IN THIS SUBSECTION, "UNPAID DELINQUENT
TAX" MEANS AN AMOUNT OF TAX FOR WHICH THE DEPARTMENT
HAS ISSUED AN ASSESSMENT THAT HAS NOT BEEN PAID AND,
IF CONTESTED, HAS NOT BEEN FINALLY RESOLVED IN THE
TAXPAYER'S FAVOR.]
* Sec. 11. AS 43.20.053(e) is amended to read:
(e) The department may use money available in the
oil and gas tax credit fund established in
AS 43.55.028 to make a refund or payment under (d) of
this section in whole or in part if the department
finds that
(1) the claimant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE]; and
(2) after application of all available tax
credits, the claimant's total tax liability under this
chapter for the calendar year in which the claim is
made is zero.
* Sec. 12. AS 43.55.011(f) is repealed and
reenacted to read:
(f) The levy of tax under (e) of this section for
(1) oil and gas produced 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 percent of the gross value at the point of
production; and
(2) 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.
* Sec. 13. 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) 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 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)(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."
* Sec. 14. AS 43.55.020(g) is repealed and
reenacted to read:
(g) Notwithstanding any contrary provision of
AS 43.05.225, an unpaid amount of an installment
payment required under (a)(3), (5), (6), or (7) of
this section that is not paid when due bears interest
(1) at the rate provided for an underpayment under 26
U.S.C. 6621 (Internal Revenue Code), as amended,
compounded daily, from the date the installment
payment is due until March 31 following the calendar
year of production; and (2) as provided for a
delinquent tax under AS 43.05.225 after that March 31,
interest accrued under (1) of this subsection that
remains unpaid after that March 31 is treated as an
addition to tax that bears interest under (2) of this
subsection, an unpaid amount of tax due under (a)(4)
of this section that is not paid when due bears
interest as provided for a delinquent tax under
AS 43.05.225.
* Sec. 15. AS 43.55.020(h) is amended to read:
(h) Notwithstanding any contrary provision of
AS 43.05.280,
(1) an overpayment of an installment payment
required under (a)(3) [(a)(1), (2), (3)], (5), (6), or
(7) of this section bears interest at the rate
provided for an overpayment under 26 U.S.C. 6621
(Internal Revenue Code), as amended, compounded daily,
from the later of the date the installment payment is
due or the date the overpayment is made, until the
earlier of
(A) the date it is refunded or is applied to
an underpayment; or
(B) March 31 following the calendar year of
production;
(2) except as provided under (1) of this
subsection, interest with respect to an overpayment is
allowed only on any net overpayment of the payments
required under (a) of this section that remains after
the later of March 31 following the calendar year of
production or the date that the statement required
under AS 43.55.030(a) is filed;
(3) interest is allowed under (2) of this
subsection only from a date that is 90 days after the
later of March 31 following the calendar year of
production or the date that the statement required
under AS 43.55.030(a) is filed; interest is not
allowed if the overpayment was refunded within the 90-
day period;
(4) interest under (2) and (3) of this
subsection is paid at the rate and in the manner
provided in AS 43.05.225(1).
* Sec. 16. AS 43.55.020(i) is amended to read:
(i) Notwithstanding any contrary provision of
AS 43.05.225 or (g) or (h) of this section, if the
amount of a tax payment, including an installment
payment, due under (a)(3) - (5) [(a)(1) - (4)] of this
section is affected by the retroactive application of
a regulation adopted under this chapter, the
department shall determine whether the retroactive
application of the regulation caused an underpayment
or an overpayment of the amount due and adjust the
interest due on the affected payment as follows:
(1) if an underpayment of the amount due
occurred, the department shall waive interest that
would otherwise accrue for the underpayment before the
first day of the second month following the month in
which the regulation became effective, if
(A) the department determines that the
producer's underpayment resulted because the
regulation was not in effect when the payment was due;
and
(B) the producer demonstrates that it made a
good faith estimate of its tax obligation in light of
the regulations then in effect when the payment was
due and paid the estimated tax;
(2) if an overpayment of the amount due
occurred and the department determines that the
producer's overpayment resulted because the regulation
was not in effect when the payment was due, the
obligation for a refund for the overpayment does not
begin to accrue interest earlier than the following,
as applicable:
(A) except as otherwise provided under (B)
of this paragraph, the first day of the second month
following the month in which the regulation became
effective;
(B) 90 days after an amended statement under
AS 43.55.030(a) and an application to request a refund
of production tax paid is filed, if the overpayment
was for a period for which an amended statement under
AS 43.55.030(a) was required to be filed before the
regulation became effective.
* Sec. 17. AS 43.55 is amended by adding a new
section to read:
Sec. 43.55.022. Limitations on tax credits. (a)
Notwithstanding any contrary provision of AS 43.55,
the application of tax credits under AS 43.55 is
subject to the limitations set out in this section.
(b) A tax credit or a fraction of a tax credit
under AS 43.55.023, 43.55.024, and 43.55.025 may not
be subtracted in calculating an installment payment of
estimated tax required under AS 43.55.020(a) if the
resulting amount of the installment payment would be
less than the amount in AS 43.55.020(a)(5)(B)(ii) or
43.55.020(a)(7)(A)(ii), as applicable.
(c) The total amount of tax credits under
AS 43.55.023, 43.55.024, and 43.55.025 that may be
applied against a tax levied by AS 43.55.011(e) for a
calendar year may not exceed the sum of the amount of
the tax credits or fractions of tax credits that are
allowed under (b) of this section to be subtracted in
calculating the installment payments of estimated tax
for each month in the calendar year.
* Sec. 18. AS 43.55.023(b) is amended to read:
(b) [BEFORE JANUARY 1, 2014, A PRODUCER OR
EXPLORER MAY ELECT TO TAKE A TAX CREDIT IN THE AMOUNT
OF 25 PERCENT OF A CARRIED-FORWARD ANNUAL LOSS. FOR
LEASE EXPENDITURES INCURRED ON AND AFTER JANUARY 1,
2014, AND BEFORE JANUARY 1, 2016, TO EXPLORE FOR,
DEVELOP, OR PRODUCE OIL OR GAS DEPOSITS LOCATED NORTH
OF 68 DEGREES NORTH LATITUDE, A PRODUCER OR EXPLORER
MAY ELECT TO TAKE A TAX CREDIT IN THE AMOUNT OF 45
PERCENT OF A CARRIED-FORWARD ANNUAL LOSS.] For lease
expenditures incurred on and after January 1, 2016, to
explore for, develop, or produce oil or gas deposits
located north of 68 degrees North latitude, a producer
or explorer may elect to take a tax credit in the
amount of 35 percent of a carried-forward annual loss.
For lease expenditures incurred on or after January 1,
2014, to explore for, develop, or produce oil or gas
deposits located south of 68 degrees North latitude, a
producer or explorer may elect to take a tax credit in
the amount of 25 percent of a carried-forward annual
loss. A credit under this subsection may be applied
against a tax levied by AS 43.55.011(e). For purposes
of this subsection, a carried-forward annual loss is
the amount of a producer's or explorer's adjusted
lease expenditures under AS 43.55.165 and 43.55.170
for a previous calendar year that was not deductible
in calculating production tax values for that calendar
year under AS 43.55.160. For the purpose of a credit
under this subsection, any reduction under
AS 43.55.160(f) or (g) is added back to the
calculation of production tax values for that calendar
year under AS 43.55.160 for the determination of a
carried-forward annual loss.
* Sec. 19. AS 43.55.023(c) is amended to read:
(c) A credit or portion of a credit under this
section may not be used to reduce a person's tax
liability under AS 43.55.011(e) for any calendar year
below the amount calculated under AS 43.55.011(f)
[ZERO], and any unused credit or portion of a credit
not used under this subsection may be applied in a
later calendar year. An unused credit or portion of a
credit may not be applied in a calendar year later
than the 10th calendar year in which the carried-
forward annual loss for which the credit is claimed
was incurred.
* Sec. 20. AS 43.55.023(d) is amended to read:
(d) A person that is entitled to take a tax
credit under this section that wishes to transfer the
unused credit to another person or obtain a cash
payment under AS 43.55.028 may apply to the department
for a transferable tax credit certificate. An
application under this subsection must be in a form
prescribed by the department and must include
supporting information and documentation that the
department reasonably requires. The department shall
grant or deny an application, or grant an application
as to a lesser amount than that claimed and deny it as
to the excess, not later than 120 days after the
latest of (1) March 31 of the year following the
calendar year in which the [QUALIFIED CAPITAL
EXPENDITURE OR] carried-forward annual loss for which
the credit is claimed was incurred; (2) the date the
statement required under AS 43.55.030(a) or (e) was
filed for the calendar year in which the [QUALIFIED
CAPITAL EXPENDITURE OR] carried-forward annual loss
for which the credit is claimed was incurred; or (3)
the date the application was received by the
department. If, based on the information then
available to it, the department is reasonably
satisfied that the applicant is entitled to a credit,
the department shall issue the applicant a
transferable tax credit certificate for the amount of
the credit. A certificate issued under this subsection
expires after 10 years from the calendar year in which
the carried-forward annual loss for which the credit
is claimed was incurred [DOES NOT EXPIRE].
* Sec. 21. AS 43.55.023(e) is amended to read:
(e) A person to which a transferable tax credit
certificate is issued under (d) of this section may
transfer the certificate to another person, and a
transferee may further transfer the certificate.
Subject to the limitations set out in (b) - (d) [(a) -
(d)] of this section, and notwithstanding any action
the department may take with respect to the applicant
under (g) of this section, the owner of a certificate
may apply the credit or a portion of the credit shown
on the certificate only against a tax levied by
AS 43.55.011(e). However, a credit shown on a
transferable tax credit certificate may not be applied
to reduce a transferee's total tax liability under
AS 43.55.011(e) for oil and gas produced during a
calendar year to less than 80 percent of the tax that
would otherwise be due without applying that credit.
Any portion of a credit not used under this subsection
may be applied in a later period.
* Sec. 22. AS 43.55.023 is amended by adding a new
section to read:
(q) A producer or explorer shall comply with the
notice and information provision requirements in
AS 43.55.025(f)(2) for the lease expenditures incurred
towards a credit under this section. The Department of
Natural Resources shall hold the confidential
information under AS 43.55.025(f)(2)(C). For a
producer or explorer required to comply with the
notice and information requirements of this section,
the Department of Natural Resources may publish the
name of the producer or explorer, the location of the
well or seismic exploration, and the date on which
information required to be submitted under this
section may be released.
* Sec. 23. AS 43.55.024(g) is amended to read:
(g) A tax credit authorized by (c) of this
section may not be applied to reduce a producer's tax
liability for any calendar year under AS 43.55.011(e)
below the amount calculated under AS 43.55.011(f)
[ZERO].
* Sec. 24. AS 43.55.024(i) is amended to read:
(i) A producer may apply against the producer's
tax liability for the calendar year under
AS 43.55.011(e) a tax credit of $5 for each barrel of
oil taxable under AS 43.55.011(e) that meets one or
more of the criteria in AS 43.55.160(f) or (g) and
that is produced during a calendar year after
December 31, 2013. A tax credit authorized by this
subsection may not reduce a producer's tax liability
for a calendar year under AS 43.55.011(e) below the
amount calculated under AS 43.55.011(f) [ZERO].
* Sec. 25. AS 43.55.025(i) is amended to read:
(i) For a production tax credit under this
section,
(1) a credit may not be applied to reduce a
taxpayer's tax liability under AS 43.55.011(e) below
the amount calculated under AS 43.55.011(f) [ZERO] for
a calendar year; and
(2) an amount of the production tax credit
in excess of the amount that may be applied for a
calendar year under this subsection may be carried
forward and applied against the taxpayer's tax
liability under AS 43.55.011(e) in one or more later
calendar years.
* Sec. 26. AS 43.55.028(e) is amended to read:
(e) The department, on the written application of
a person to whom a transferable tax credit certificate
has been issued under AS 43.55.023(d) or former
AS 43.55.023(m) or to whom a production tax credit
certificate has been issued under AS 43.55.025(f), may
use available money in the oil and gas tax credit fund
to purchase, in whole or in part, the certificate if
the department finds that
(1) the calendar year of the purchase is not
earlier than the first calendar year for which the
credit shown on the certificate would otherwise be
allowed to be applied against a tax;
(2) the applicant does not have an
outstanding liability to the state [FOR UNPAID
DELINQUENT TAXES UNDER THIS TITLE];
(3) the applicant's total tax liability
under AS 43.55.011(e), after application of all
available tax credits, for the calendar year in which
the application is made is zero;
(4) the applicant's average daily production
of oil and gas taxable under AS 43.55.011(e) during
the calendar year preceding the calendar year in which
the application is made was not more than 50,000 BTU
equivalent barrels; [AND]
(5) the applicant's revenues generated from
the applicant's oil and gas business, including the
revenues of the applicant's affiliates if the
applicant is part of an affiliated group, during the
calendar year preceding the calendar year in which the
application is made were less than $10,000,000,000;
(6) the amount expended for the purchase and
amounts previously purchased from the applicant during
the calendar year the sum of which would not exceed
$25,000,000; and
(7) the purchase is consistent with this
section and regulations adopted under this section.
* Sec. 27. AS 43.55.028 is amended by adding a new
subsections to read:
(j) The percentage of a transferable tax credit
certificate or a production tax credit certificate
purchased by the department may not exceed the
percentage of the applicant's workforce in the state
in the previous calendar year that were resident
workers. The applicant's workforce in the state
includes resident workers employed by the applicant's
contractors. An amount of a credit not purchased due
to application of this subsection may be applied
against the applicant's tax liability under this
chapter. In this subsection, "resident worker" has the
meaning given in AS 43.40.092(b).
* Sec. 28. AS 43.55.029(a) is amended to read:
(a) An explorer or producer that has applied for
a production tax credit under AS 43.55.023(b)
[AS 43.55.023(a), (b), OR (l)] or 43.55.025(a) may
make a present assignment of the production tax credit
certificate expected to be issued by the department to
a third-party assignee. The assignment may be made
either when [AT THE TIME] the application is filed
with the department or not later than 30 days after
the date of filing with the department. Once a notice
of assignment in compliance with this section is filed
with the department, the assignment is irrevocable and
cannot be modified by the explorer or producer without
the written consent of the assignee named in the
assignment. If a production tax credit certificate is
issued to the explorer or producer, the notice of
assignment remains effective and shall be filed with
the department by the explorer or producer together
with any application for the department to purchase
the certificate under AS 43.55.028(e).
* Sec. 29. AS 43.55.030(a) is amended to read:
(a) A producer that produces oil or gas from a
lease or property in the state during a calendar year,
whether or not any tax payment is due under
AS 43.55.020(a) for that oil or gas, shall file with
the department on March 31 of the following year a
statement, under oath, in a form prescribed by the
department, giving, with other information required,
the following:
(1) a description of each lease or property
from which oil or gas was produced, by name, legal
description, lease number, or accounting codes
assigned by the department;
(2) the names of the producer and, if
different, the person paying the tax, if any;
(3) the gross amount of oil and the gross
amount of gas produced from each lease or property,
separately identifying the gross amount of gas
produced from each oil and gas lease to which an
effective election under AS 43.55.014(a) applies, the
amount of gas delivered to the state under
AS 43.55.014(b), and the percentage of the gross
amount of oil and gas owned by the producer;
(4) the gross value at the point of
production of the oil and of the gas produced from
each lease or property owned by the producer and the
costs of transportation of the oil and gas;
(5) the name of the first purchaser and the
price received for the oil and for the gas, unless
relieved from this requirement in whole or in part by
the department;
(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;
(7) the production tax values of the oil and
gas under AS 43.55.160(a) or of the oil under
AS 43.55.160(h), as applicable;
(8) any claims for tax credits to be
applied; and
(9) calculations showing the amounts, if
any, that were or are due under AS 43.55.020(a) and
interest on any underpayment or overpayment.
* Sec. 30. AS 43.55.030(e) is amended to read:
(e) An explorer or producer that incurs a lease
expenditure under AS 43.55.165 or receives a payment
or credit under AS 43.55.170 during a calendar year
but does not produce oil or gas from a lease or
property in the state during the calendar year shall
file with the department, on March 31 of the following
year, a statement, under oath, in a form prescribed by
the department, giving, with other information
required, the following:
(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
(2) if the explorer or producer receives a
payment or credit under AS 43.55.170, calculations
showing whether the explorer or producer is liable for
a tax under AS 43.55.160(d) or 43.55.170(b) and, if
so, the amount.
* Sec. 31. AS 43.55.150 is amended by adding a new
subsection to read:
(d) The gross value at the point of production
may not be less than zero.
* Sec. 32. AS 43.55.165(a) is amended to read:
(a) For [EXCEPT AS PROVIDED IN (j) AND (k) OF
THIS SECTION, FOR] purposes of this chapter, a
producer's lease expenditures for a calendar year are
(1) costs, other than items listed in (e) of
this section, that are
(A) incurred by the producer during the
calendar year after March 31, 2006, to explore for,
develop, or produce oil or gas deposits located within
the producer's leases or properties in the state or,
in the case of land in which the producer does not own
an operating right, operating interest, or working
interest, to explore for oil or gas deposits within
other land in the state; and
(B) allowed by the department by regulation,
based on the department's determination that the costs
satisfy the following three requirements:
(i) the costs must be incurred upstream of
the point of production of oil and gas;
(ii) the costs must be ordinary and
necessary costs of exploring for, developing, or
producing, as applicable, oil or gas deposits; and
(iii) the costs must be direct costs of
exploring for, developing, or producing, as
applicable, oil or gas deposits; and
(2) a reasonable allowance for that calendar
year, as determined under regulations adopted by the
department, for overhead expenses that are directly
related to exploring for, developing, or producing, as
applicable, the oil or gas deposits.
* Sec. 33. 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.
* Sec. 34. AS 43.55.165(f) is amended to read:
(f) For purposes of AS 43.55.023(b)
[AS 43.55.023(a) AND (b)] and only as to expenditures
incurred to explore for an oil or gas deposit located
within land in which an explorer does not own a
working interest, the term "producer" in this section
includes "explorer."
* Sec. 35. AS 43.55.170(c) is amended to read:
(c) For purposes of AS 43.55.023(b)
[AS 43.55.023(a) AND (b)] and only as to expenditures
incurred to explore for an oil or gas deposit located
within land in which an explorer does not own a
working interest, the term "producer" in this section
includes "explorer."
* Sec. 36. 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.
* Sec. 37. AS 43.55.895(b) is amended to read:
(b) A municipal entity subject to taxation
because of this section is eligible for [ALL] tax
credits proportionate to its production taxable under
AS 43.55.011(e). A municipal entity shall allocate its
lease expenditures in proportion to its production
taxable under AS 43.55.011(e) [UNDER THIS CHAPTER TO
THE SAME EXTENT AS ANY OTHER PRODUCER].
* Sec. 38. AS 43.55.900 is amended by adding 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
(i) 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
(ii) that has previously been placed in
service in the state; an expenditure to acquire an
asset is not excluded under this paragraph if not more
than an immaterial portion of the asset meets a
description under this paragraph; for purposes of this
subparagraph, "asset" includes geological,
geophysical, and well data and interpretations.
* Sec. 39. AS 43.99.950 is amended by adding a new
paragraph to read:
(3) "outstanding liability to the state"
means an amount of tax, interest, penalty, fee,
rental, royalty, or other charge for which the state
has issued a demand for payment that has not been paid
when due and, if contested, has not been finally
resolved against the state.
* Sec. 40. AS 38.05.180(i); AS 41.09.010,
41.09.020, 41.09.030, 41.09.090; AS 43.20.053(j)(4);
AS 43.55.011(m), 43.55.020(a)(1), 43.55.020(a)(2),
43.55.023(a), 43.55.023(l), 43.55.023(n),
AS 43.55.023(o), 43.55.028(i), 43.55.075(d)(1),
43.55.165(j), and 43.55.165(k) are repealed.
* Sec. 41. The uncodified law of the State of
Alaska is amended by adding a new section to read:
APPLICABILITY. (a) Section 17 of this Act applies
to credits against the oil and gas production tax
levied by AS 43.55.011(e) for oil and gas produced on
and after January 1, 2017.
(b) Sections 8 - 11 and 26 - 28 of this Act, and
the repeal of AS 43.55.023(a) and (l) in sec. 40 of
this Act, apply to expenditures incurred on and after
January 1, 2017.
(c) Sections 12, 13, and 16 of this Act apply to
oil and gas produced on and after January 1, 2017.
(d) For the purpose of determining the last
calendar year that a credit or an unused portion of a
credit under AS 43.55.023(c) or credit certificate
under AS 43.55.023(d) may be carried forward due to
the limitations in AS 43.55.023(c) and (d), as amended
by secs. 19 and 20 of this Act,
(1) the carried-forward annual loss for a
tax credit under AS 43.55.023(c), for expenditures
incurred before January 1, 2017, is considered to have
been incurred on January 1, 2017;
(2) the carried-forward annual loss for a
tax credit certificate under AS 43.55.023(d), for
expenditures incurred before January 1, 2017, is
considered to have been incurred on January 1, 2017,
or the date the tax credit certificate is issued.
* Sec. 42. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: REGULATIONS. The Department of
Revenue and the Department of Natural Resources may
adopt regulations necessary to implement the changes
made by this Act. The regulations take effect under
AS 44.62 (Administrative Procedure Act), but not
before the effective date of the law implemented by
the regulation. The Department of Revenue shall adopt
regulations governing the use of tax credits under
AS 43.55 for a calendar year for which the applicable
tax credit provisions of AS 43.55 differ as between
parts of the year as a result of this Act.
* Sec. 43. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: RETROACTIVITY OF REGULATIONS.
Notwithstanding any contrary provision of
AS 44.62.240,
(1) if the Department of Revenue expressly
designates in a regulation that the regulation applies
retroactively, a regulation adopted by the Department
of Revenue to implement, interpret, make specific, or
otherwise carry out this Act may apply retroactively
to January 1, 2017, as applicable;
(2) a regulation adopted by the Department
of Natural Resources to implement, interpret, make
specific, or otherwise carry out statutory provisions
for the administration of oil and gas leases issued
under AS 38.05.180(f)(3)(B), (D), or (E), to the
extent the regulation relates to the treatment of oil
and gas production taxes in determining net profits
under those leases, may apply retroactively to
January 1, 2017, as applicable, if the Department of
Natural Resources expressly designates in the
regulation that the regulation applies retroactively
to one of those dates.
* Sec. 44. Sections 17, 42, and 43 of this Act take
effect immediately under AS 01.10.070(c).
* Sec. 45. Except as provided in sec. 44 of this
Act, this Act takes effect January 1, 2017."
Amendment 45, labeled 29-GH2609\P.57, Nauman/Shutts, 3/21/16:
Page 1, line 1, following "tax;":
Insert "relating to confidential tax information
in the possession of the Department of Revenue;"
Page 3, following line 17:
Insert new bill sections to read:
"* Sec. 7. AS 43.05.230(f) is amended to read:
(f) A wilful violation of the provisions of this
section or of a condition imposed under
AS 43.55.040(1)(B) is punishable by a fine of not more
than $5,000, or by imprisonment for not more than two
years, or by both. The penalty under this subsection
may be in addition to, and not in place of, an
applicable criminal sanction under state or federal
law.
* Sec. 8. AS 43.05.230 is amended by adding a new
subsection to read:
(l) The department may disclose confidential tax
information, documents, or other materials related to
a credit for oil and gas investment, exploration,
production, delivery, storage, or use against a tax
imposed under AS 43.20 or AS 43.55 to a legislator, an
agent of a legislator or a legislative committee, or a
contractor of a legislator or a legislative committee
if
(1) the information is disclosed during an
executive session of a committee hearing or an
executive session of a meeting of one house of the
legislature as a committee of the whole;
(2) only legislators, agents, and
contractors complying with the remainder of this
subsection are in attendance at the committee meeting;
(3) written information, documents, or
other materials are clearly labeled as confidential
tax information;
(4) the legislator, agent, or contractor
has executed an agreement with the department
(A) that acknowledges that tax information,
documents, and materials received under this
subsection are confidential by law;
(B) that acknowledges that it is illegal to
publicly disclose confidential tax information,
documents, or materials received under this subsection
unless the information is otherwise publicly
available; and
(C) in which the legislator, agent, or
contractor agrees not to
(i) disclose the information received
during the meeting or the contents of documents or
materials viewed during a committee meeting under this
section; and
(ii) remove any written information,
documents, or materials from the physical location of
the committee meeting."
Renumber the following bill sections accordingly.
Page 18, line 20:
Delete "Sections 7 - 9, 16, and 17"
Insert "Sections 9 - 11, 18, and 19"
Page 18, lines 25 - 26:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 27:
Delete "secs. 13, 14, 18, 23, and 24"
Insert "secs. 15, 16, 20, 25, and 26"
Page 18, line 28:
Delete "sec. 29"
Insert "sec. 31"
Page 18, line 31:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 2:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 5:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 8:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 10:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 14:
Delete "sec. 21"
Insert "sec. 23"
Page 19, line 15:
Delete "sec. 29"
Insert "sec. 31"
Page 19, line 17:
Delete "sec. 29"
Insert "sec. 31"
Page 20, line 12:
Delete "Sections 30 and 34"
Insert "Sections 32 and 36"
Page 20, line 13:
Delete "Sections 13, 14, 18 - 25, 27, 29, 32, and
33"
Insert "Sections 15, 16, 20 - 27, 29, 31, 34, and
35"
Page 20, line 15:
Delete "secs. 36 and 37"
Insert "secs. 38 and 39"
[End of amendments to HB 247, Version P; CSHB 247(RES) was
reported from the House Resources Standing Committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 247(RES), ver I.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver P - Amd#1 P.55 - Adopted with conceptual changes.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver P - Amd#2 - P.22 - Adopted.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver P - Amd#3 - P.13 - Adopted.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver P - Amd#24 - P.39 - Adopted.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver I - Fiscal Note-DOR-TAX-Fund Cap-3-22-16.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| CS HB 247(RES), ver I - Fiscal Note-DOR-TAX-3-22-16.pdf |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| HSE RES HB 247 - Oppose Communications - Doug Woodby 3.22.16.docx |
HRES 3/22/2016 6:00:00 PM |
HB 247 |
| HSE RES HB 247 Oppose - Gretchen Stoddard.docx |
HRES 3/22/2016 6:00:00 PM |
HB 247 |