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25th Legislature(2007-2008)

Bill Text 25th Legislature


00                             HOUSE BILL NO. 2001                                                                         
01 "An Act relating to the production tax on oil and gas and to conservation surcharges on                                 
02 oil; relating to the issuance of advisory bulletins and the disclosure of certain                                       
03 information relating to the production tax and the sharing between agencies of certain                                  
04 information relating to the production tax and to oil and gas or gas only leases;                                       
05 amending the State Personnel Act to place in the exempt service certain state oil and                                   
06 gas auditors and their immediate supervisors; establishing an oil and gas tax credit                                    
07 fund and authorizing payment from that fund; providing for retroactive application of                                   
08 certain statutory and regulatory provisions relating to the production tax on oil and gas                               
09 and conservation surcharges on oil; making conforming amendments; and providing                                         
10 for an effective date."                                                                                                 
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
12    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
01 to read:                                                                                                                
02       LEGISLATIVE INTENT. It is the intent of the legislature that AS 43.55.075(b),                                     
03 enacted by sec. 50 of this Act, confirm by clarification the long-standing interpretation of                            
04 AS 43.05.260 by the Department of Revenue relating to limitation of assessments for the                                 
05 production tax on oil and gas and conservation surcharges on oil.                                                       
06    * Sec. 2. AS 38.05.035(a) is amended to read:                                                                      
07            (a)  The director shall                                                                                      
08                 (1)  have general charge and supervision of the division and may                                        
09       exercise the powers specifically delegated to the director; the director may employ                           
10       and fix the compensation of assistants and employees necessary for the operations of                              
11       the division; the director [AND] is the certifying officer of the division, with the                          
12       consent of the commissioner, and may approve vouchers for disbursements of money                                  
13       appropriated to the division;                                                                                     
14                 (2)  manage, inspect, and control state land and improvements on it                                     
15       belonging to the state and under the jurisdiction of the division;                                                
16                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
17       commissioner;                                                                                                     
18                 (4)  prescribe application procedures and practices for the sale, lease,                                
19       or other disposition of available land, resources, property, or interest in them;                                 
20                 (5)  prescribe fees or service charges, with the consent of the                                         
21       commissioner, for any public service rendered;                                                                    
22                 (6)  under the conditions and limitations imposed by law and the                                        
23       commissioner, issue deeds, leases, or other conveyances disposing of available land,                          
24       resources, property, or any interests in them;                                                                
25                 (7)  have jurisdiction over state land, except that land acquired by the                                
26       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
27       departments or agencies succeeding to their respective functions through foreclosure                              
28       or default; to this end, the director possesses the powers and, with the approval of the                      
29       commissioner, shall perform the duties necessary to protect the state's rights and                                
30       interest in state land, including the taking of all necessary action to protect and                               
31       enforce the state's contractual or other property rights;                                                         
01                 (8)  [REPEALED                                                                                          
02                 (9)]  maintain the [SUCH] records [AS] the commissioner considers                                   
03       necessary, administer oaths, and do all things incidental to the authority imposed; the                           
04       following records and files shall be kept confidential upon request of the person                                 
05       supplying the information:                                                                                        
06                      (A)  the name of the person nominating or applying for the                                         
07            sale, lease, or other disposal of land by competitive bidding;                                               
08                      (B)  before the announced time of opening, the names of the                                        
09            bidders and the amounts of the bids;                                                                         
10                      (C)  all geological, geophysical, and engineering data supplied,                                   
11            whether or not concerned with the extraction or development of natural                                       
12            resources;                                                                                                   
13                      (D)  except as provided in AS 38.05.036, cost data and                                             
14            financial information submitted in support of applications, bonds, leases, and                               
15            similar items;                                                                                               
16                      (E)  applications for rights-of-way or easements;                                                  
17                      (F)  requests for information or applications by public agencies                                   
18            for land that [WHICH] is being considered for use for a public purpose;                                  
19                 (9) [(10)]  account for the fees, licenses, taxes, or other money                                   
20       received in the administration of this chapter including the sale or leasing of land,                             
21       identify their source, and promptly transmit them to the proper fiscal department after                           
22       crediting them to the proper fund; receipts from land application filing fees and                                 
23       charges for copies of maps and records shall be deposited immediately in the general                              
24       fund of the state by the director;                                                                                
25                 (10) [(11)]  select and employ or obtain at reasonable compensation                                 
26       cadastral, appraisal, or other professional personnel the director considers necessary                            
27       for the proper operation of the division;                                                                         
28                 (11) [(12)]  be the certifying agent of the state to select, accept, and                            
29       secure by whatever action is necessary in the name of the state, by deed, sale, gift,                             
30       devise, judgment, operation of law, or other means any land, of whatever nature or                                
31       interest, available to the state; and be the certifying agent of the state, to select,                            
01       accept, or secure by whatever action is necessary in the name of the state any land, or                           
02       title or interest to land available, granted, or subject to being transferred to the state                        
03       for any purpose;                                                                                                  
04                 (12)  on request, furnish records, files, and other information                                     
05       related to the administration of AS 38.05.180 to the Department of Revenue for                                
06       use in forecasting state revenue under or administering AS 43.55, whether or not                              
07       those records, files, and other information are required to be kept confidential                              
08       under (8) of this subsection; in the case of records, files, or other information                             
09       required to be kept confidential under (8) of this subsection, the Department of                              
10       Revenue shall maintain the confidentiality that the Department of Natural                                     
11       Resources is required to extend to records, files, and other information under (8)                            
12       of this subsection                                                                                            
13                 [(13)  REPEALED                                                                                         
14                 (14)  REPEALED].                                                                                        
15    * Sec. 3. AS 38.05.036(b) is amended to read:                                                                      
16            (b)  The Department of Revenue may obtain from the department information                                    
17       relating to royalty and net profits payments and to exploration incentive credits under                           
18       this chapter or under AS 41.09, whether or not that information is confidential. The                              
19       Department of Revenue may use the information in carrying out its functions and                                   
20       responsibilities under AS 43, and shall hold that information confidential to the extent                          
21       required by an agreement with the department or by AS 38.05.035(a)(8)                                         
22       [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230.                                                           
23    * Sec. 4. AS 38.05.036(f) is amended to read:                                                                      
24            (f)  Except as otherwise provided in this section or in connection with official                             
25       investigations or proceedings of the department, it is unlawful for a current or former                           
26       officer, employee, or agent of the state to divulge information obtained by the                                   
27       department as a result of an audit under this section that is required by an agreement                            
28       with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                          
29       AS 41.09.010(d) to be kept confidential.                                                                          
30    * Sec. 5. AS 38.05.036(g) is amended to read:                                                                      
31            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
01       that maintains the confidentiality of information to the extent required by an                                    
02       agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                
03       AS 41.09.010(d).                                                                                                  
04    * Sec. 6. AS 38.05.123(f) is amended to read:                                                                      
05            (f)  As part of the timber sale negotiations authorized by this section, the                                 
06       commissioner may require a prospective purchaser negotiating a timber sale contract                               
07       to submit financial and technical data that demonstrates that the requirements of this                            
08       section have been or will be met. Upon the prospective purchaser's request, the                                   
09       commissioner shall keep data provided by the purchaser confidential in accordance                                 
10       with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)].                                             
11    * Sec. 7. AS 38.05.133(e) is amended to read:                                                                      
12            (e)  The commissioner may make a written request to a prospective licensee                                   
13       for additional information on the prospective licensee's proposal. The commissioner                               
14       shall keep confidential information described in AS 38.05.035(a)(8)                                           
15       [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made                            
16       a written request that the information remain confidential.                                                       
17    * Sec. 8. AS 38.05.180(j) is amended to read:                                                                      
18            (j)  The commissioner                                                                                        
19                 (1)  may provide for modification of royalty on individual leases,                                      
20       leases unitized as described in (p) of this section, leases subject to an agreement                               
21       described in (s) or (t) of this section, or interests unitized under AS 31.05                                     
22                      (A)  to allow for production from an oil or gas field or pool if                                   
23                           (i)  the oil or gas field or pool has been sufficiently                                       
24                 delineated to the satisfaction of the commissioner;                                                     
25                           (ii)  the field or pool has not previously produced oil or                                    
26                 gas for sale; and                                                                                       
27                           (iii)  oil or gas production from the field or pool would                                     
28                 not otherwise be economically feasible;                                                                 
29                      (B)  to prolong the economic life of an oil or gas field or pool                                   
30            as per barrel or barrel equivalent costs increase or as the price of oil or gas                              
31            decreases, and the increase or decrease is sufficient to make future production                              
01            no longer economically feasible; or                                                                          
02                      (C)  to reestablish production of shut-in oil or gas that would                                    
03            not otherwise be economically feasible;                                                                      
04                 (2)  may not grant a royalty modification unless the lessee or lessees                                  
05       requesting the change make a clear and convincing showing that a modification of                                  
06       royalty meets the requirements of this subsection and is in the best interests of the                             
07       state;                                                                                                            
08                 (3)  shall provide for an increase or decrease or other modification of                                 
09       the state's royalty share by a sliding scale royalty or other mechanism that shall be                             
10       based on a change in the price of oil or gas and may also be based on other relevant                              
11       factors such as a change in production rate, projected ultimate recovery, development                             
12       costs, and operating costs;                                                                                       
13                 (4)  may not grant a royalty reduction for a field or pool                                              
14                      (A)  under (1)(A) of this subsection if the royalty modification                                   
15            for the field or pool would establish a royalty rate of less than five percent in                            
16            amount or value of the production removed or sold from a lease or leases                                     
17            covering the field or pool;                                                                                  
18                      (B)  under (1)(B) or (1)(C) of this subsection if the royalty                                      
19            modification for the field or pool would establish a royalty rate of less than                               
20            three percent in amount or value of the production removed or sold from a                                    
21            lease or leases covering the field or pool;                                                                  
22                 (5)  may not grant a royalty reduction under this subsection without                                    
23       including an explicit condition that the royalty reduction is not assignable without the                          
24       prior written approval, which may not be unreasonably withheld, by the                                            
25       commissioner; the commissioner shall, in the preliminary and final findings and                                   
26       determinations, set out the conditions under which the royalty reduction may be                                   
27       assigned;                                                                                                         
28                 (6)  shall require the lessee or lessees to submit, with the application                                
29       for the royalty reduction, financial and technical data that demonstrate that the                                 
30       requirements of this subsection are met; the commissioner                                                         
31                      (A)  may require disclosure of only the financial and technical                                    
01            data related to development, production, and transportation of oil and gas or                                
02            gas only from the field or pool that are reasonably available to the applicant;                              
03            and                                                                                                          
04                      (B)  shall keep the data confidential under AS 38.05.035(a)(8)                                 
05            [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application                              
06            for the royalty reduction; the confidential data may be disclosed by the                                     
07            commissioner to legislators and to the legislative auditor and as directed by                                
08            the chair or vice-chair of the Legislative Budget and Audit Committee to the                                 
09            director of the division of legislative finance, the permanent employees of                                  
10            their respective divisions who are responsible for evaluating a royalty                                      
11            reduction, and to agents or contractors of the legislative auditor or the                                    
12            legislative finance director who are engaged under contract to evaluate the                                  
13            royalty reduction, if they sign an appropriate confidentiality agreement;                                    
14                 (7)  may                                                                                                
15                      (A)  require the lessee or lessees making application for the                                      
16            royalty reduction under (1)(A) of this subsection to pay for the services of an                              
17            independent contractor, selected by the lessee or lessees from a list of                                     
18            qualified consultants compiled by the commissioner, to evaluate hydrocarbon                                  
19            development, production, transportation, and economics and to assist the                                     
20            commissioner in evaluating the application and financial and technical data;                                 
21            if, under this subparagraph, the commissioner requires payment for the                                       
22            services of an independent contractor, the total cost of the services to be paid                             
23            for by the lessee or lessees may not exceed $150,000 for each application, and                               
24            the commissioner shall determine the relevant scope of the work to be                                        
25            performed by the contractor; selection of an independent contractor under this                               
26            subparagraph is not subject to AS 36.30;                                                                     
27                      (B)  with the mutual consent of the lessee or lessees making                                       
28            application for the royalty reduction under (1)(B) or (1)(C) of this subsection,                             
29            request payment for the services of an independent contractor, selected from a                               
30            list of qualified consultants to evaluate hydrocarbon development, production,                               
31            transportation, and economics by the commissioner to assist the commissioner                                 
01            in evaluating the application and financial and technical data; if, under this                               
02            subparagraph, the commissioner requires payment for the services of an                                       
03            independent contractor, the total cost of the services that may be paid for by                               
04            the lessee or lessees may not exceed $150,000 for each application, and the                                  
05            commissioner shall determine the relevant scope of the work to be performed                                  
06            by the contractor; selection of an independent contractor under this                                         
07            subparagraph is not subject to AS 36.30;                                                                     
08                 (8)  shall make and publish a preliminary findings and determination                                    
09       on the royalty reduction application, give reasonable public notice of the preliminary                            
10       findings and determination, and invite public comment on the preliminary findings                                 
11       and determination during a 30-day period for receipt of public comment;                                           
12                 (9)  shall offer to appear before the Legislative Budget and Audit                                      
13       Committee, on a day that is not earlier than 10 days and not later than 20 days after                             
14       giving public notice under (8) of this subsection, to provide the committee a review of                           
15       the commissioner's preliminary findings and determination on the royalty reduction                                
16       application and administrative process; if the Legislative Budget and Audit                                       
17       Committee accepts the commissioner's offer, the committee shall give notice of the                                
18       committee's meeting to all members of the legislature;                                                            
19                 (10)  shall make copies of the preliminary findings and determination                                   
20       available to                                                                                                      
21                      (A)  the presiding officer of each house of the legislature;                                       
22                      (B)  the chairs of the legislature's standing committees on                                        
23            resources; and                                                                                               
24                      (C)  the chairs of the legislature's special committees on oil and                                 
25            gas, if any;                                                                                                 
26                 (11)  shall, within 30 days after the close of the public comment period                                
27       under (8) of this subsection,                                                                                     
28                      (A)  prepare a summary of the public response to the                                               
29            commissioner's preliminary findings and determination;                                                       
30                      (B)  make a final findings and determination; the                                                  
31            commissioner's final findings and determination prepared under this                                          
01            subparagraph regarding a royalty reduction is final and not appealable to the                                
02            court;                                                                                                       
03                      (C)  transmit a copy of the final findings and determination to                                    
04            the lessee;                                                                                                  
05                      (D)  with the applicant's consent, amend the applicant's lease or                                  
06            unitization agreement consistent with the commissioner's final decision; and                                 
07                      (E)  make copies of the final findings and determination                                           
08            available to each person who submitted comment under (8) of this subsection                                  
09            and who has filed a request for the copies;                                                                  
10                 (12)  is not limited by the provisions of AS 38.05.134(3) or (f) of this                                
11       section in the commissioner's determination under this subsection.                                                
12    * Sec. 9. AS 38.05.275(c) is amended to read:                                                                      
13            (c)  Subsection (b) of this section may not be construed to limit the director in                            
14       the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)].                               
15    * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read:                                              
16                 (42)  oil and gas auditors performing                                                                   
17                      (A)  production tax audits, and their immediate supervisors, in                                    
18            the Department of Revenue;                                                                                   
19                      (B)  royalty audits, including net profit share audits, and their                                  
20            immediate supervisors, in the Department of Natural Resources.                                               
21    * Sec. 11. AS 41.09.010(d) is amended to read:                                                                     
22            (d)  Data derived from drilling a stratigraphic test well or exploratory well that                           
23       is provided to the commissioner under (c)(3) of this section shall be kept confidential                           
24       for 24 months after receipt by the commissioner unless the owner of the well gives                                
25       written permission to the state to release the well data at an earlier date, and,                                 
26       notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24                                    
27       months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to                              
28       other data provided to the commissioner under (c)(3) of this section, except that the                             
29       commissioner, under appropriate confidentiality provisions and without preference or                              
30       discrimination, may display to all interested third parties, but may not distribute or                            
31       transfer in hard copy or electronic form, those data with respect to all land if the                              
01       commissioner determines that the limited disclosure is necessary to further the                                   
02       interest of the state in evaluating or developing its land.                                                       
03    * Sec. 12. AS 43.05.230(a) is amended to read:                                                                     
04            (a)  It is unlawful for a current or former officer, employee, or agent of the                               
05       state to divulge the amount of income or the particulars set out or disclosed in a report                         
06       or return made under this title, except                                                                           
07                 (1)  in connection with official investigations or proceedings of the                                   
08       department, whether judicial or administrative, involving taxes due under this title;                             
09                 (2)  in connection with official investigations or proceedings of the                                   
10       child support enforcement agency, whether judicial or administrative, involving child                             
11       support obligations imposed or imposable under AS 25 or AS 47;                                                    
12                 (3)  as provided in AS 38.05.036 pertaining to audit functions of the                                   
13       Department of Natural Resources;                                                                                  
14                 (4)  as provided in AS 43.05.405 - 43.05.499; and                                                       
15                 (5)  as otherwise provided in this section or AS 43.55.890.                                         
16    * Sec. 13. AS 43.05.230(h) is amended to read:                                                                     
17            (h)  The commissioner shall, upon request, furnish to the Department of                                      
18       Natural Resources copies of tax returns, reports, and other documents filed under                             
19       AS 43.55 or AS 43.65, and the Department of Revenue's determinations and                                      
20       workpapers under AS 43.55 and AS 43.65. The Department of Natural Resources                                   
21       shall maintain the confidentiality that the Department of Revenue is required to                                  
22       extend to the returns, reports, documents, determinations, and workpapers furnished                               
23       to the Department of Natural Resources under this subsection.                                                     
24    * Sec. 14. AS 43.05.260(a) is amended to read:                                                                     
25            (a)  Except as provided in (c) of this section, [AND] AS 43.20.200(b), and                           
26       AS 43.55.075, the amount of a tax imposed by this title must be assessed within three                         
27       years after the return was filed, whether or not a return was filed on or after the date                          
28       prescribed by law. If the tax is not assessed before the expiration of the applicable                         
29       [THREE-YEAR] period, proceedings may not be instituted in court for the collection                                
30       of the tax.                                                                                                       
31    * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read:                                                      
01            (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
02       produced each calendar year from each lease or property in the state, less any oil and                            
03       gas the ownership or right to which is exempt from taxation or constitutes a                                      
04       landowner's royalty interest. Except as otherwise provided under (f), (j), and (k) of                             
05       this section, the tax is equal to the production tax value of the taxable oil and gas as                          
06       calculated under AS 43.55.160 multiplied by the tax rate determined under (g) of this                             
07       section.                                                                                                          
08    * Sec. 16. AS 43.55.011(f) is repealed and reenacted to read:                                                      
09            (f)  The provisions of this subsection apply to oil and gas produced from each                               
10       lease or property within a unit or nonunitized reservoir from which 1,000,000,000                                 
11       BTU equivalent barrels of oil or gas have been cumulatively produced by the close of                              
12       the most recent calendar year and from which the average daily oil and gas                                        
13       production during the most recent calendar year exceeded 100,000 BTU equivalent                                   
14       barrels. Notwithstanding any contrary provision of law, a producer may not apply tax                              
15       credits to reduce its total tax liability under (e) of this section for oil and gas produced                      
16       from all leases or properties within the unit or nonunitized reservoir below 10 percent                           
17       of the total gross value at the point of production of that oil and gas. If the amount                            
18       calculated by multiplying the tax rate determined under (g) of this section times the                             
19       total production tax value of the oil and gas taxable under (e) of this section produced                          
20       from all of the producer's leases or properties within the unit or nonunitized reservoir                          
21       is less than 10 percent of the total gross value at the point of production of that oil and                       
22       gas, the tax levied by (e) of this section for that oil and gas is equal to 10 percent of                         
23       the total gross value at the point of production of that oil and gas.                                             
24    * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read:                                                      
25            (g)  The tax rate applied to the production tax value of oil and gas under (e) of                            
26       this section is 25 percent plus 0.20 percent times the price index for the calendar year                          
27       determined under (h) of this section. However, the tax rate calculated under this                                 
28       subsection may not be more than 50 percent.                                                                       
29    * Sec. 18. AS 43.55.011(h) is amended to read:                                                                     
30            (h)  For purposes of (g) of this section, the price index for a calendar year                            
31       [MONTH] is calculated by subtracting 30 [40] from the number that is equal to [THE                            
01       QUOTIENT OF] the total [MONTHLY] production tax value of the taxable oil and                                      
02       gas produced by the producer from all leases or properties in the state during that                           
03       calendar year [DURING THAT MONTH], as calculated under AS 43.55.160,                                          
04       divided by the total amount of that [THE TAXABLE] oil and gas [PRODUCED BY                                    
05       THE PRODUCER DURING THAT MONTH], in BTU equivalent barrels. However,                                              
06       a price index calculated under this subsection may not be less than zero.                                     
07    * Sec. 19. AS 43.55.011(j) is amended to read:                                                                     
08            (j)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)]                                
09       of this section for [ON] gas produced from a lease or property in the Cook Inlet                              
10       sedimentary basin may not exceed                                                                                  
11                 (1)  for a lease or property that first commenced commercial                                            
12       production of gas before April 1, 2006, the product obtained by multiplying (A) the                               
13       amount of taxable gas produced during the calendar year from the lease or property,                               
14       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
15       taxable gas produced from the lease or property for the 12-month period ending on                                 
16       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
17       the point of production of the taxable gas produced from the lease or property during                             
18       the 12-month period ending on March 31, 2006, by the total amount of that gas;                                    
19                 (2)  for a lease or property that first commences commercial                                            
20       production of gas after March 31, 2006, the product obtained by multiplying (A) the                               
21       amount of taxable gas produced during the calendar year from the lease or property,                               
22       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
23       taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin                            
24       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
25       value for gas delivered in the Cook Inlet area for the 12-month period ending                                     
26       March 31, 2006, as determined by the department under AS 43.55.020(f).                                            
27    * Sec. 20. AS 43.55.011(k) is amended to read:                                                                     
28            (k)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND                                     
29       (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet                         
30       sedimentary basin may not exceed                                                                                  
31                 (1)  for a lease or property that first commenced commercial                                            
01       production of oil before April 1, 2006, the product obtained by multiplying (A) the                               
02       amount of taxable oil produced during the calendar year from the lease or property,                               
03       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
04       taxable oil produced from the lease or property for the 12-month period ending on                                 
05       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
06       the point of production of the taxable oil produced from the lease or property during                             
07       the 12-month period ending on March 31, 2006, by the total amount of that oil;                                    
08                 (2)  for a lease or property that first commences commercial                                            
09       production of oil after March 31, 2006, the product obtained by multiplying (A) the                               
10       amount of taxable oil produced during the calendar year from the lease or property,                               
11       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
12       taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin                            
13       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
14       value for oil produced and delivered in the Cook Inlet area for the 12-month period                               
15       ending on March 31, 2006, as determined by the department under AS 43.55.020(f).                                  
16    * Sec. 21. AS 43.55.011(m) is amended to read:                                                                     
17            (m)  Notwithstanding any contrary provision of AS 38.05.180(i),                                              
18       AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under                                         
19       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are                                 
20       allocated to gas produced from leases or properties in the Cook Inlet sedimentary                                 
21       basin and that are available to be applied against a tax levied by (e) of this section for                    
22       [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin                                   
23       during a calendar year may be applied only against the tax levied by (e) of this section                          
24       for [ON] that gas. The amount by which the amount of tax credits that are allocated                           
25       to gas produced from leases or properties in the Cook Inlet sedimentary basin and that                            
26       the producer would otherwise be allowed to use for a later calendar year or transfer to                           
27       another person exceeds the amount of tax credits whose application would reduce the                               
28       tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the                        
29       amount of excess tax credits, and the excess tax credits are subject to the following:                            
30                 (1)  for each lease or property for which a limitation under (j) or (k) of                              
31       this section on the tax levied by (e) [AND (g)] of this section has the effect of                                 
01       reducing the producer's tax below the amount of tax that would be levied in the                                   
02       absence of that limitation, the producer shall calculate the amount of that reduction;                            
03                 (2)  the producer shall calculate the total of the reductions calculated                                
04       under (1) of this subsection for all affected leases or properties; however, for a                            
05       calendar year for which the producer has Cook Inlet excess adjusted lease                                     
06       expenditures under AS 43.55.160(h), the amount calculated under this                                          
07       paragraph is deemed to be                                                                                     
08                      (A)  zero, if the amount calculated under AS 43.55.160(i)(2)                                   
09            is greater than or equal to the amount calculated under                                                  
10            AS 43.55.160(i)(4);                                                                                      
11                      (B)  the remainder calculated by subtracting the amount                                        
12            calculated under AS 43.55.160(i)(2) from the amount calculated under                                     
13            AS 43.55.160(i)(4), if the amount calculated under AS 43.55.160(i)(2) is                                 
14            less than the amount calculated under AS 43.55.160(i)(4);                                                
15                 (3)  the producer shall reduce the amount of excess tax credits by the                                  
16       total calculated under (2) of this subsection, but not to less than zero;                                         
17                 (4)  any amount of excess tax credits remaining after reduction under                                   
18       (3) of this subsection may be used for a later calendar year, transferred to another                              
19       person, or applied against a tax levied for [ON] oil or gas produced from a lease or                          
20       property located anywhere in the state to the extent otherwise allowed under                                      
21       applicable law governing the tax credits.                                                                         
22    * Sec. 22. AS 43.55.020(a) is repealed and reenacted to read:                                                      
23            (a)  For a calendar year, a producer subject to tax under AS 43.55.011(e) or (i)                             
24       shall pay the tax as follows:                                                                                     
25                 (1)  an installment payment of the estimated tax levied by                                              
26       AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each                                
27       month of the calendar year on the last day of the following month; except as                                      
28       otherwise provided under (2) of this subsection, the amount of the installment                                    
29       payment is the sum of the following amounts, less 1/12 of the tax credits that are                                
30       allowed by law to be applied against the tax levied by AS 43.55.011(e) for the                                    
31       calendar year, but the amount of the installment payment may not be less than zero:                               
01                      (A)  for oil and gas produced from leases or properties in the                                     
02            state outside the Cook Inlet sedimentary basin other than leases or properties                               
03            subject to AS 43.55.011(f), the greater of                                                                   
04                           (i)  zero; or                                                                                 
05                           (ii)  25 percent of the remainder obtained by subtracting                                     
06                 1/12 of the producer's adjusted lease expenditures for the calendar year                                
07                 of production under AS 43.55.165 and 43.55.170 that are deductible                                      
08                 for the leases or properties under AS 43.55.160 from the gross value at                                 
09                 the point of production of the oil and gas produced from the leases or                                  
10                 properties during the month for which the installment payment is                                        
11                 calculated;                                                                                             
12                      (B)  for oil and gas produced from leases or properties subject                                    
13            to AS 43.55.011(f), the total for all units or nonunitized reservoirs of the                                 
14            amount for each unit or nonunitized reservoir that is the greatest of                                        
15                           (i)  zero;                                                                                    
16                           (ii)  10 percent of the gross value at the point of                                           
17                 production of the oil and gas produced from all leases or properties in                                 
18                 the unit or nonunitized reservoir; or                                                                   
19                           (iii)  25 percent of the remainder obtained by                                                
20                 subtracting 1/12 of the producer's adjusted lease expenditures for the                                  
21                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
22                 deductible for those leases or properties under AS 43.55.160 from the                                   
23                 gross value at the point of production of the oil and gas produced from                                 
24                 those leases or properties during the month for which the installment                                   
25                 payment is calculated;                                                                                  
26                      (C)  for oil and gas produced from each lease or property in the                                   
27            Cook Inlet sedimentary basin, the greater of                                                                 
28                           (i)  zero; or                                                                                 
29                           (ii)  25 percent of the remainder obtained by subtracting                                     
30                 1/12 of the producer's adjusted lease expenditures for the calendar year                                
31                 of production under AS 43.55.165 and 43.55.170 that are deductible                                      
01                 under AS 43.55.160 for oil or gas, respectively, produced from the                                      
02                 lease or property from the gross value at the point of production of the                                
03                 oil or gas, respectively, produced from the lease or property during the                                
04                 month for which the installment payment is calculated;                                                  
05                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
06       produced from a lease or property in the Cook Inlet sedimentary basin may not                                     
07       exceed the product obtained by carrying out the calculation set out in                                            
08       AS 43.55.011(j)(1) or (2), as applicable, for gas or set out in AS 43.55.011(k)(1) or                             
09       (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A), as                              
10       applicable, the amount of taxable gas produced during the month for the amount of                                 
11       taxable gas produced during the calendar year and substituting in                                                 
12       AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of taxable oil produced                                
13       during the month for the amount of taxable oil produced during the calendar year;                                 
14                 (3)  an installment payment of the estimated tax levied by                                              
15       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
16       on the last day of the following month; the amount of the installment payment is the                              
17       sum of                                                                                                            
18                      (A)  the applicable tax rate for oil provided under                                                
19            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
20            the oil taxable under AS 43.55.011(i) and produced from the lease or property                                
21            during the month; and                                                                                        
22                      (B)  the applicable tax rate for gas provided under                                                
23            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
24            the gas taxable under AS 43.55.011(i) and produced from the lease or property                                
25            during the month;                                                                                            
26                 (4)  any amount of tax levied by AS 43.55.011(e) and (i), net of any                                    
27       credits applied as allowed by law, that exceeds the total of the amounts due as                                   
28       installment payments of estimated tax is due on March 31 of the year following the                                
29       calendar year of production.                                                                                      
30    * Sec. 23. AS 43.55.020(d) is amended to read:                                                                     
31            (d)  In making settlement with the royalty owner for oil and gas that is taxable                             
01       under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable                                 
02       royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the                          
03       time the tax becomes due to the amount of the tax paid. If the total deductions of                                
04       installment payments of estimated tax for a calendar year exceed the actual tax for                               
05       that calendar year, the producer shall, before April 1 of the following year, refund the                          
06       excess to the royalty owner. Unless otherwise agreed between the producer and the                                 
07       royalty owner, the amount of the tax paid under AS 43.55.011(e) [AS 43.55.011(e) -                            
08       (g)] on taxable royalty oil and gas for a calendar year, other than oil and gas the                               
09       ownership or right to which constitutes a landowner's royalty interest, is considered to                          
10       be the gross value at the point of production of the taxable royalty oil and gas                                  
11       produced during the calendar year multiplied by a figure that is a quotient, in which                             
12                 (1)  the numerator is the producer's total tax liability under                                          
13       AS 43.55.011(e) [AS 43.55.011(e) - (g)] for the calendar year of production; and                              
14                 (2)  the denominator is the total gross value at the point of production                                
15       of the oil and gas taxable under AS 43.55.011(e) [AS 43.55.011(e) - (g)] produced by                          
16       the producer from all leases and properties in the state during the calendar year.                                
17    * Sec. 24. AS 43.55.020(g) is amended to read:                                                                     
18            (g)  Notwithstanding any contrary provision of AS 43.05.225, an unpaid                                       
19       amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this                           
20       section that is not paid when due bears interest (1) at the rate provided for an                                  
21       underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                            
22       compounded daily, from the date the installment payment is due until [THE]                                        
23       March 31 of the year following the calendar year of production [DESCRIBED IN                                  
24       AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after                               
25       that March 31. Interest accrued under (1) of this subsection that remains unpaid after                            
26       that March 31 is treated as an addition to tax that bears interest under (2) of this                              
27       subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is                         
28       not paid when due bears interest as provided for a delinquent tax under AS 43.05.225.                             
29    * Sec. 25. AS 43.55.020(h) is amended to read:                                                                     
30            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
31                 (1)  an overpayment of an installment payment required under (a)(1) -                             
01       (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment                     
02       under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from                                  
03       the later of the date the installment payment is due or the date the overpayment is                               
04       made, until the earlier of                                                                                        
05                      (A)  the date it is refunded or is applied to an underpayment; [,]                             
06            or                                                                                                           
07                      (B)  [THE] March 31 of the year following the calendar year                                    
08            of production [DESCRIBED IN AS 43.55.030(a)];                                                            
09                 (2)  except as provided under (1) of this subsection, interest with                                     
10       respect to an overpayment is allowed only on any net overpayment of the payments                                  
11       required under (a) of this section that remains after the later of [THE] March 31 of                          
12       the year following the calendar year of production [DESCRIBED IN                                              
13       AS 43.55.030(a)] or the date that the statement required under AS 43.55.030(a) is                                 
14       filed;                                                                                                            
15                 (3)  interest is allowed under (2) of this subsection only from a date                                  
16       that is 90 days after the later of [THE] March 31 of the year following the calendar                          
17       year of production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement                              
18       required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment                               
19       was refunded within the 90-day period;                                                                            
20                 (4)  interest under (2) and (3) of this subsection is paid at the rate and                              
21       in the manner provided in AS 43.05.225(1).                                                                        
22    * Sec. 26. AS 43.55.023(a) is amended to read:                                                                     
23            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
24       expenditure as follows:                                                                                           
25                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
26       deductible lease expenditure for purposes of calculating the production tax value of                              
27       oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                            
28       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or                                       
29       explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a                         
30       tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of                               
31       20 percent of that expenditure; however, not more than half of the tax credit may                             
01       be applied for a single calendar year;                                                                        
02                 (2)  a producer or explorer may take a credit for a qualified capital                                   
03       expenditure incurred in connection with geological or geophysical exploration or in                               
04       connection with an exploration well only if the producer or explorer [PROVIDES TO                                 
05       THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER                                                           
06       AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS                                                     
07       SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN                                                          
08       AGREEMENT]                                                                                                        
09                      (A)  agrees, in writing, to the applicable provisions of                                       
10            AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL                                                  
11            RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER                                                                 
12            COMPLETION OF THE GEOLOGICAL OR GEOPHYSICAL DATA                                                             
13            PROCESSING OR COMPLETION OF THE WELL, OR 30 DAYS AFTER                                                       
14            THE STATEMENT IS FILED, OF THE DATE OF COMPLETION AND TO                                                     
15            SUBMIT A REPORT TO THAT DEPARTMENT DESCRIBING THE                                                            
16            PROCESSING SEQUENCE AND PROVIDE A LIST OF DATA SETS                                                          
17            AVAILABLE];                                                                                                  
18                      (B)  if more than one explorer holds an interest in a well,                                    
19            obtains each explorer's written agreement that the explorer will not make                                
20            the request described in AS 43.55.025(f)(2)(D); and                                                      
21                      (C)  submits [TO PROVIDE] to the Department of Natural                                         
22            Resources all data that would be required to be submitted under                                          
23            AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A                                                 
24            REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND                                                             
25            REPORTS IDENTIFIED IN (A) OF THIS PARAGRAPH];                                                                
26                 (3)  a tax credit for a qualified capital expenditure to explore for,                               
27       develop, or produce oil or gas deposits located within a unit or nonunitized                                  
28       reservoir subject to AS 43.55.011(f) may not be applied against a tax for oil or                              
29       gas produced from a lease or property outside a unit or nonunitized reservoir                                 
30       subject to AS 43.55.011(f)                                                                                    
31                      [(C)  THAT, NOTWITHSTANDING ANY PROVISION OF                                                       
01            AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD                                                        
02            CONFIDENTIAL THE INFORMATION PROVIDED TO THAT                                                                
03            DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS                                                                 
04            FOLLOWING THE COMPLETION DATE, AFTER WHICH THE                                                               
05            DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION                                                            
06            AFTER 30 DAYS' PUBLIC NOTICE].                                                                             
07    * Sec. 27. AS 43.55.023(b) is amended to read:                                                                     
08            (b)  A producer or explorer may elect to take a tax credit in the amount of 25                           
09       [20] percent of a carried-forward annual loss. A credit under this subsection may be                              
10       applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this                             
11       subsection, except as limited by AS 43.55.160(h), a carried-forward annual loss is                            
12       the amount of a producer's or explorer's adjusted lease expenditures under                                        
13       AS 43.55.165 and 43.55.170 for a previous calendar year that was not deductible in                            
14       calculating production tax values for that calendar year under AS 43.55.160.                              
15       However, a carried-forward annual loss may not include an adjusted lease                                      
16       expenditure to explore for, develop, or produce oil or gas deposits located within                            
17       a unit or nonunitized reservoir subject to AS 43.55.011(f) [AS 43.55.160(b) AND                               
18       (e)].                                                                                                             
19    * Sec. 28. AS 43.55.023(d) is amended to read:                                                                     
20            (d)  A [EXCEPT AS LIMITED BY (i) OF THIS SECTION, A] person that is                                  
21       entitled to take a tax credit under this section, other than a tax credit described in                        
22       (a)(3) of this section, and that wishes to transfer the unused credit to another person                       
23       or obtain a cash payment under AS 43.55.028 may apply to the department for [A]                               
24       transferable tax credit certificates [CERTIFICATE]. An application under this                                 
25       subsection must be in a form prescribed by the department and must include                                        
26       supporting information and documentation that the department reasonably requires.                                 
27       The department shall grant or deny an application, or grant an application as to a                                
28       lesser amount than that claimed and deny it as to the excess, not later than 120 [60]                         
29       days after the latest of (1) March 31 of the year following the calendar year in which                            
30       the qualified capital expenditure or carried-forward annual loss for which the credit is                          
31       claimed was incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER                                                     
01       AS 43.55.030(a) TO FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE                                                  
02       YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED                                                           
03       CAPITAL EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR                                                           
04       WHICH THE CREDIT IS CLAIMED WAS INCURRED,] the date the statement                                                 
05       required under AS 43.55.030(a) or (e) was filed for the calendar year in which                            
06       the qualified capital expenditure or carried-forward annual loss for which the                                
07       credit is claimed was incurred; or (3) the date the application was received by the                           
08       department. If, based on the information then available to it, the department is                                  
09       reasonably satisfied that the applicant is entitled to a credit, the department shall issue                       
10       the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for                        
11       half of the amount of the credit. The credit shown on one of the two certificates is                      
12       available for immediate use. The credit shown on the second of the two                                        
13       certificates may not be applied against a tax for a calendar year earlier than the                            
14       calendar year following the calendar year in which the certificate is issued, and                             
15       the certificate must contain a conspicuous statement to that effect. A certificate                            
16       issued under this subsection does not expire.                                                                     
17    * Sec. 29. AS 43.55.023(e) is amended to read:                                                                     
18            (e)  A person to which a transferable tax credit certificate is issued under (d)                             
19       of this section may transfer the certificate to another person, and a transferee may                              
20       further transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)]                 
21       of this section, and notwithstanding any action the department may take with respect                              
22       to the applicant under (g) of this section, the owner of a certificate may apply the                              
23       credit or a portion of the credit shown on the certificate only against a tax levied by                       
24       [DUE UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax                                        
25       credit certificate may not be applied to reduce a transferee's total tax liability [DUE]                      
26       under AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less                            
27       than 80 percent of the tax that would otherwise be due without applying that credit.                              
28       Any portion of a credit not used under this subsection may be applied in a later                                  
29       period.                                                                                                           
30    * Sec. 30. AS 43.55.023(g) is amended to read:                                                                     
31            (g)  The issuance of a transferable tax credit certificate under (d) of this                                 
01       section or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under                                    
02       AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later                           
03       audit a tax credit claim to which the certificate relates or to adjust the claim if the                           
04       department determines, as a result of the audit, that the applicant was not entitled to                           
05       the amount of the credit for which the certificate was issued. The tax liability of the                           
06       applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the                                     
07       amount of the credit that exceeds that to which the applicant was entitled, or the                                
08       applicant's available valid outstanding credits applicable against the tax levied by                              
09       AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is                                   
10       increased under this subsection, the increase bears interest under AS 43.05.225 from                              
11       the date the transferable tax credit certificate was issued. For purposes of this                                 
12       subsection, an applicant that is an explorer is considered a producer subject to the tax                          
13       levied by AS 43.55.011(e).                                                                                        
14    * Sec. 31. AS 43.55.023 is amended by adding a new subsection to read:                                             
15            (l)  An entity that is exempt from taxation under this chapter may not apply                                 
16       for a transferable tax credit certificate.                                                                        
17    * Sec. 32. AS 43.55.024(a) is amended to read:                                                                     
18            (a)  For a calendar year for which a producer's tax liability under                                          
19       AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside                                
20       the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North                                   
21       latitude, exceeds zero before application of any credits under this chapter, a producer                           
22       that is qualified under (e) of this section may apply a tax credit against that liability of                      
23       not more than $6,000,000.                                                                                         
24    * Sec. 33. AS 43.55.024(c) is amended to read:                                                                     
25            (c)  For a calendar year for which a producer's tax liability under                                          
26       AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this                                
27       chapter, other than a credit under (a) of this section but after application of any credit                        
28       under (a) of this section, a producer that is qualified under (e) of this section and                             
29       whose average amount of oil and gas produced a day and taxable under                                              
30       AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may                                    
31       apply a tax credit under this subsection against that liability. A producer whose                                 
01       average amount of oil and gas produced a day and taxable under AS 43.55.011(e)                                    
02       [OR (f)] is                                                                                                       
03                 (1)  not more than 50,000 BTU equivalent barrels may apply a tax                                        
04       credit of not more than $12,000,000 for the calendar year;                                                        
05                 (2)  more than 50,000 and less than 100,000 BTU equivalent barrels                                      
06       may apply a tax credit of not more than $12,000,000 multiplied by the following                                   
07       fraction for the calendar year:                                                                                   
08                         1 - [2 X (AP - 50,000)]  100,000                                                               
09       where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR                                    
10       (f)], produced a day during the calendar year in BTU equivalent barrels.                                          
11    * Sec. 34. AS 43.55.024(e) is amended to read:                                                                     
12            (e)  On written application by a producer that includes any information the                                  
13       department may require, the department shall determine whether the producer                                       
14       qualifies for a calendar year under this section. To qualify under this section, a                                
15       producer must demonstrate that its operation in the state or its ownership of an                                  
16       interest in a lease or property in the state as a distinct producer would not result in the                       
17       division among multiple producer entities of any production tax liability under                                   
18       AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a                                  
19       single producer if the tax credit provisions of (a) or (c) of this section did not exist.                         
20    * Sec. 35. AS 43.55.024(g) is amended to read:                                                                     
21            (g)  A tax credit authorized by (c) of this section may not be applied to reduce                             
22       a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below                             
23       zero.                                                                                                             
24    * Sec. 36. AS 43.55.025(a) is amended to read:                                                                     
25            (a)  Subject to the terms and conditions of this section, a credit against the                               
26       production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for                                  
27       exploration expenditures that qualify under (b) of this section in an amount equal to                             
28       one of the following:                                                                                             
29                 (1)  20 percent of the total exploration expenditures that qualify only                                 
30       under (b) and (c) of this section;                                                                                
31                 (2)  20 percent of the total exploration expenditures [FOR WORK                                         
01       PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of                                        
02       this section;                                                                                                     
03                 (3)  40 percent of the total exploration expenditures that qualify under                                
04       (b), (c), and (d) of this section; or                                                                             
05                 (4)  40 percent of the total exploration expenditures that qualify only                                 
06       under (b) and (e) of this section.                                                                                
07    * Sec. 37. AS 43.55.025(b) is amended to read:                                                                     
08            (b)  To qualify for the production tax credit under (a) of this section, an                                  
09       exploration expenditure must be incurred for work performed [ON OR] after                                         
10       December 31, 2007 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN                                    
11       EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE                                                         
12       INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and                                                        
13                 (1)  may be for seismic or other geophysical exploration costs not                                  
14       connected with a specific well;                                                                                   
15                 (2)  if for an exploration well,                                                                        
16                      (A)  must be incurred by an explorer that holds an interest in                                     
17            the exploration well for which the production tax credit is claimed;                                         
18                      (B)  may be for either a [AN OIL OR GAS DISCOVERY]                                             
19            well that encounters an oil or gas deposit or a dry hole; [AND]                                          
20                      (C)  must be for a well that has been completed or                                             
21            abandoned at the time the explorer claims the tax credit under (f) of this                               
22            section; and                                                                                             
23                      (D)  must be for goods, services, or rentals of personal                                       
24            property reasonably required for the surface preparation, drilling, casing,                                  
25            cementing, and logging of an exploration well, and, in the case of a dry hole,                               
26            for the expenses required for abandonment if the well is abandoned within 18                                 
27            months after the date the well was spudded;                                                                  
28                 (3)  may not be for testing, stimulation, or completion costs;                                          
29       administration, supervision, engineering, or lease operating costs; geological or                                 
30       management costs; community relations or environmental costs; bonuses, taxes, or                                  
31       other payments to governments related to the well; costs arising from gross                                   
01       negligence or violation of health, safety, or environmental statutes or                                       
02       regulations; or other costs that are generally recognized as indirect costs or financing                      
03       costs; and                                                                                                        
04                 (4)  may not be incurred for an exploration well or seismic exploration                                 
05       that is included in a plan of exploration or a plan of development for any unit on                                
06       May 13, 2003.                                                                                                     
07    * Sec. 38. AS 43.55.025(c) is repealed and reenacted to read:                                                      
08            (c)  To be eligible for the 20 percent production tax credit authorized by (a)(1)                            
09       of this section or the 40 percent production tax credit authorized by (a)(3) of this                              
10       section, exploration expenditures must                                                                            
11                 (1)  qualify under (b) of this section; and                                                             
12                 (2)  be for an exploration well, subject to the following:                                              
13                      (A)  before spudding the well, (i) the explorer shall submit to                                    
14            the commissioner of natural resources the information necessary to determine                                 
15            whether the geological objective of the well is a potential oil or gas trap that is                          
16            distinctly separate from any trap that has been tested by a preexisting well;                                
17            and (ii) the commissioner of natural resources must make an affirmative                                      
18            determination on that question; the commissioner of natural resources shall                                  
19            decide whether to make that determination within 60 days after receiving all                                 
20            the necessary information from the explorer and based on the information                                     
21            received and on other information the commissioner of natural resources may                                  
22            consider relevant;                                                                                           
23                      (B)  for an exploration well other than a well to explore a Cook                                   
24            Inlet prospect, the well must be located and drilled in such a manner that the                               
25            bottom hole is located not less than three miles away from the bottom hole of                                
26            a preexisting well drilled for oil or gas, irrespective of whether the preexisting                           
27            well has been completed, suspended, or abandoned;                                                            
28                      (C)  after completion or abandonment of the exploration well,                                      
29            the commissioner of natural resources must determine that the well adequately                                
30            achieved the explorer's stated geological objective.                                                         
31    * Sec. 39. AS 43.55.025(f) is amended to read:                                                                     
01            (f)  For a production tax credit under this section,                                                         
02                 (1)  an explorer shall, in a form prescribed by the department and,                                 
03       except for a credit under (l) of this section, within six months of the completion of                         
04       the exploration activity, claim the credit and submit information sufficient to                                   
05       demonstrate to the department's satisfaction that the claimed exploration expenditures                            
06       qualify under this section;                                                                                       
07                 (2)  an explorer shall agree, in writing,                                                               
08                      (A)  to notify the Department of Natural Resources, within 30                                      
09            days after completion of seismic or geophysical data processing, completion                                  
10            of [A] well drilling, or filing of a claim for credit, whichever is the latest, for                      
11            which exploration costs are claimed, of the date of completion and submit a                                  
12            report to that department describing the processing sequence and providing a                                 
13            list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN                                        
14            EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES                                                       
15            FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE                                                         
16            MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN                                                          
17            ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS                                                       
18            SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION                                                        
19            NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES                                                          
20            TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT                                                        
21            THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE                                                                
22            EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL                                                          
23            RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE                                                                
24            SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE                                                              
25            EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60                                                          
26            DAYS;]                                                                                                       
27                      (B)  to provide to the Department of Natural Resources, within                                     
28            30 days after the date of a request, unless a longer period is provided by the                           
29            Department of Natural Resources, specific data sets, ancillary data, and                                 
30            reports identified in (A) of this paragraph; in this subparagraph,                                       
31                           (i)  a seismic or geophysical data set includes the                                       
01                 data for an entire seismic survey, irrespective of whether the                                      
02                 survey area covers nonstate land in addition to state land or land                                  
03                 in a unit in addition to land outside a unit;                                                       
04                           (ii)  well data include all derivative products, results,                                 
05                 and copies of data collected and data analyses for the well; well                                   
06                 logs; sample analyses; geophysical and velocity data including                                      
07                 vertical seismic profiles and check shot surveys; and tangible                                      
08                 material including, for each whole core collected, a lengthwise cut                                 
09                 slab that is at least 1/3 of the whole core volume, and                                             
10                 representative samples, as specified by the Department of Natural                                   
11                 Resources, of other gaseous, liquid, or solid material collected                                    
12                 from drilling or testing the well;                                                                  
13                      (C)  that, notwithstanding any provision of AS 38, information                                     
14            provided under this paragraph will be held confidential by the Department of                                 
15            Natural Resources                                                                                            
16                           (i)  in the case of well data, until the expiration of the                                
17                 24-month period of confidentiality described in AS 31.05.035(c),                                    
18                 without extension, after which the Department of Natural                                            
19                 Resources [FOR 10 YEARS FOLLOWING THE COMPLETION                                                    
20                 DATE, AT WHICH TIME THAT DEPARTMENT] will release the                                                   
21                 information after 30 days' public notice;                                                               
22                           (ii)  in the case of seismic or other geophysical data,                                   
23                 other than seismic data acquired by seismic exploration subject to                                  
24                 (l) of this section, for 10 years following the completion date, at                                 
25                 which time the Department of Natural Resources will release the                                     
26                 information after 30 days' public notice;                                                           
27                           (iii)  in the case of seismic data obtained by seismic                                    
28                 exploration subject to (l) of this section, only until the expiration of                            
29                 30 days' public notice issued on or after the date the production                                   
30                 tax credit certificates are issued under (5) of this subsection; and                                
31                      (D)  that, in the case of well data, the explorer will not make                                
01            a request under AS 31.05.035(c) that the commissioner of natural                                         
02            resources keep the data confidential for longer than the 24-month period                                 
03            of confidentiality described in AS 31.05.035(c);                                                         
04                 (3)  if more than one explorer holds an interest in a well or seismic                                   
05       exploration,                                                                                                      
06                      (A)  each explorer may claim an amount of credit that is                                       
07            proportional to the explorer's cost incurred;                                                                
08                      (B)  in the case of a well, each explorer holding an interest                                  
09            in the well shall agree, in writing, that the explorer will not make the                                 
10            request described in (2)(D) of this subsection;                                                          
11                 (4)  the department may exercise the full extent of its powers as though                                
12       the explorer were a taxpayer under this title, in order to verify that the claimed                                
13       expenditures are qualified exploration expenditures under this section; and                                       
14                 (5)  if the department is satisfied that the explorer's claimed                                         
15       expenditures are qualified under this section and that all data required to be                                
16       submitted under this section have been submitted, the department shall issue to the                           
17       explorer two [A] production tax credit certificates, each [CERTIFICATE] for half of                   
18       the amount of the credit to be allowed against production taxes levied by                                 
19       AS 43.55.011(e); the credit shown on one of the two certificates is available for                             
20       immediate use; the credit shown on the second of the two certificates may not be                              
21       applied against a tax for a calendar year earlier than the calendar year following                            
22       the calendar year in which the certificate is issued, and the certificate must                                
23       contain a conspicuous statement to that effect; notwithstanding any contrary                                  
24       provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is                               
25       not confidential:                                                                                             
26                      (A)  the explorer's name;                                                                      
27                      (B)  the date of the application;                                                              
28                      (C)  the location of the well or seismic exploration;                                          
29                      (D)  the date of the department's issuance of the certificate;                                 
30            and                                                                                                      
31                      (E)  the date on which the information required to be                                          
01            submitted under this section will be released [DUE UNDER                                                 
02            AS 43.55.011(e) OR (f)].                                                                                     
03    * Sec. 40. AS 43.55.025(g) is amended to read:                                                                     
04            (g)  An explorer, other than an entity that is exempt from taxation under                                
05       this chapter, may transfer, convey, or sell its production tax credit certificate to any                      
06       person, and any person who receives a production tax credit certificate may also                                  
07       transfer, convey, or sell the certificate.                                                                        
08    * Sec. 41. AS 43.55.025(h) is amended to read:                                                                     
09            (h)  A producer that purchases a production tax credit certificate may apply                                 
10       the credits against its production tax liability under AS 43.55.011(e) [OR (f)].                                  
11       Regardless of the price the producer paid for the certificate, the producer may receive                           
12       a credit against its production tax liability for the full amount of the credit, but for not                      
13       more than the amount for which the certificate is issued. A production tax credit                                 
14       allowed under this section may not be applied more than once.                                                     
15    * Sec. 42. AS 43.55.025(i) is repealed and reenacted to read:                                                      
16            (i)  For a production tax credit under this section,                                                         
17                 (1)  a credit may not be applied to reduce a taxpayer's tax liability                                   
18       under AS 43.55.011(e) below zero for a calendar year; and                                                         
19                 (2)  an amount of the production tax credit in excess of the amount that                                
20       may be applied for a calendar year under this subsection may be carried forward and                               
21       applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later                           
22       calendar years.                                                                                                   
23    * Sec. 43. AS 43.55.025(k) is amended by adding a new paragraph to read:                                           
24                 (4)  "preexisting well" means a well that was spudded more than 540                                     
25       days but less than 35 years before the date on which the exploration well to which it                             
26       is compared is spudded.                                                                                           
27    * Sec. 44. AS 43.55.025 is amended by adding a new subsection to read:                                             
28            (l)  Subject to the terms and conditions of this section, if a claim is filed under                          
29       (f)(1) of this section before January 1, 2016, a credit against the production tax levied                         
30       by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible                                   
31       expenditure under this subsection incurred for seismic exploration performed before                               
01       July 1, 2003. To be eligible under this subsection, an expenditure must                                           
02                 (1)  have been for seismic exploration that                                                             
03                      (A)  obtained data that the commissioner of natural resources                                      
04            considers to be in the best interest of the state to acquire for public                                      
05            distribution; and                                                                                            
06                      (B)  was conducted outside the boundaries of a production unit;                                    
07            however, the amount of the expenditure that is otherwise eligible under this                                 
08            section is reduced proportionately by the portion of the seismic exploration                                 
09            activity that crossed into a production unit; and                                                            
10                 (2)  qualify under (b)(3) of this section.                                                              
11    * Sec. 45. AS 43.55 is amended by adding a new section to read:                                                    
12            Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of                               
13       tax credit certificates. (a) The oil and gas tax credit fund is established as a separate                       
14       fund of the state. The purpose of the fund is to purchase certain transferable tax credit                         
15       certificates issued under AS 43.55.023 and certain production tax credit certificates                             
16       issued under AS 43.55.025.                                                                                        
17            (b)  The oil and gas tax credit fund consists of                                                             
18                 (1)  money appropriated to the fund, including any appropriation of the                                 
19       percentage provided under (c) of this section of all revenue from taxes levied by                                 
20       AS 43.55.011 that is not required to be deposited in the constitutional budget reserve                            
21       fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and                                 
22                 (2)  earnings on the fund.                                                                              
23            (c)  The applicable percentage for a fiscal year under (b)(1) of this section is                             
24       determined with reference to the average price or value forecast by the department for                            
25       Alaska North Slope oil sold or otherwise disposed of on the United States West Coast                              
26       during the fiscal year for which the appropriation of revenue from taxes levied by                                
27       AS 43.55.011 is made. If that forecast is                                                                         
28                 (1)  $60 a barrel or higher, the applicable percentage is 10 percent;                                   
29                 (2)  less than $60 a barrel, the applicable percentage is 15 percent.                                   
30            (d)  The department shall manage the fund.                                                                   
31            (e)  The department may, on the written application of the person to whom a                                  
01       transferable tax credit certificate has been issued under AS 43.55.023(d) or a                                    
02       production tax credit certificate has been issued under AS 43.55.025(f), use available                            
03       money in the oil and gas tax credit fund to purchase, in whole or in part, the                                    
04       certificate if the department finds that                                                                          
05                 (1)  the calendar year of the purchase is not earlier than the first                                    
06       calendar year for which the credit shown on the certificate would otherwise be                                    
07       allowed to be applied against a tax;                                                                              
08                 (2)  within 24 months after applying for the transferable tax credit                                    
09       certificate or filing a claim for the production tax credit certificate, the applicant                            
10       incurred a qualified capital expenditure or was the successful bidder on a bid                                    
11       submitted for a lease on state land under AS 38.05.180(f);                                                        
12                 (3)  the amount expended for the purchase would not exceed the total                                    
13       of qualified capital expenditures and successful bids described in (2) of this                                    
14       subsection that have not been the subject of a finding made under this paragraph for                              
15       purposes of a previous purchase of a certificate;                                                                 
16                 (4)  the applicant does not have an outstanding liability to the state for                              
17       unpaid delinquent taxes under this title;                                                                         
18                 (5)  the applicant's total tax liability under AS 43.55.011(e), after                                   
19       application of all available tax credits, for the calendar year in which the application                          
20       is made is zero;                                                                                                  
21                 (6)  the applicant's average amount of oil and gas taxable under                                        
22       AS 43.55.011(e) and produced each day during the calendar year preceding the                                      
23       calendar year in which the application is made was not more than 50,000 BTU                                       
24       equivalent barrels; and                                                                                           
25                 (7)  the purchase is consistent with this section and regulations adopted                               
26       under this section.                                                                                               
27            (f)  Money in the fund remaining at the end of a fiscal year does not lapse and                              
28       remains available for expenditure in successive fiscal years.                                                     
29            (g)  The department may adopt regulations to carry out the purposes of this                                  
30       section, including standards and procedures to allocate available money among                                     
31       applications for purchases the total amount of which exceeds the amount of available                              
01       money in the fund.                                                                                                
02            (h)  Nothing in this section creates a dedicated fund.                                                       
03            (i)  In this section, "qualified capital expenditure" has the meaning given in                               
04       AS 43.55.023.                                                                                                     
05    * Sec. 46. AS 43.55.030(a) is amended to read:                                                                     
06            (a)  A producer that produces oil or gas from a lease or property in the                                 
07       state during a calendar year, whether or not any tax payment is due under                                     
08       AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file                                 
09       with the department on March 31 of the following year [FOLLOWING THE                                          
10       CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under                                                    
11       oath, in a form prescribed by the department, giving, with other information required,                            
12       the following:                                                                                                    
13                 (1)  a description of each lease or property from which [THE] oil or                                
14       [AND] gas was [WERE] produced, by name, legal description, lease number, or                                   
15       accounting codes assigned by the department;                                                                      
16                 (2)  the names of the producer and, if different, the person paying the                             
17       tax, if any;                                                                                                  
18                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
19       each lease or property, and the percentage of the gross amount of oil and gas owned                               
20       by the [EACH] producer [FOR WHOM THE TAX IS PAID];                                                            
21                 (4)  the gross value at the point of production of the oil and of the gas                               
22       produced from each lease or property owned by the [EACH] producer and the costs                           
23       of transportation of the oil and gas [FOR WHOM THE TAX IS PAID];                                              
24                 (5)  the name of the first purchaser and the price received for the oil                                 
25       and for the gas, unless relieved from this requirement in whole or in part by the                                 
26       department; [AND]                                                                                                 
27                 (6)  the producer's qualified capital expenditures, as defined in                                   
28       AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS                                                    
29       CALCULATED] under AS 43.55.165, and adjustments or other payments or                                          
30       credits under AS 43.55.170;                                                                                   
31                 (7)  the production tax values of the oil and gas under                                             
01       AS 43.55.160;                                                                                                 
02                 (8)  any claims for tax credits to be applied; and                                                  
03                 (9)  calculations showing the amounts, if any, that were or are due                                 
04       under AS 43.55.020(a) and interest on any underpayment or overpayment                                         
05       [AS 43.55.160 - 43.55.170].                                                                                       
06    * Sec. 47. AS 43.55.030(d) is amended to read:                                                                     
07            (d)  Reports required under this section [BY OR ON BEHALF OF THE                                         
08       PRODUCER] are delinquent the first day following the day the report is due. The                               
09       person required to file the report is liable for a penalty, as determined by the                              
10       department under standards adopted in regulation by the department, of not                                    
11       more than $1,000 for each day the person fails to file the report at the time                                 
12       required. The penalty is in addition to the penalties in AS 43.05.220 and                                     
13       43.05.290 and is assessed, collected, and paid in the same manner as a tax                                    
14       deficiency under this title. In this subsection, "report" includes a statement.                               
15    * Sec. 48. AS 43.55.030 is amended by adding new subsections to read:                                              
16            (e)  An explorer or producer that incurs a lease expenditure under                                           
17       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
18       year but does not produce oil or gas from a lease or property in the state during the                             
19       calendar year shall file with the department on March 31 of the following year a                                
20       statement, under oath, in a form prescribed by the department, giving, with other                                 
21       information required, the following:                                                                              
22                 (1)  the producer's qualified capital expenditures, as defined in                                       
23       AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other                               
24       payments or credits under AS 43.55.170; and                                                                       
25                 (2)  if the explorer or producer receives a payment or credit under                                     
26       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
27       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
28            (f)  The department may require a producer, an explorer, or an operator of a                                 
29       lease or property to file monthly reports, as applicable, of                                                      
30                 (1)  the amounts and gross value at the point of production of oil and                                  
31       gas produced;                                                                                                     
01                 (2)  transportation costs of the oil and gas;                                                           
02                 (3)  any unscheduled interruption of, or reduction in the rate of, oil or                               
03       gas production;                                                                                                   
04                 (4)  lease expenditures and adjustments under AS 43.55.165 and                                          
05       43.55.170;                                                                                                        
06                 (5)  joint interest billings;                                                                           
07                 (6)  contracts for the sale or transportation of oil or gas;                                            
08                 (7)  information and calculations used in determining monthly                                           
09       installment payments of estimated tax under AS 43.55.020(a); and                                                  
10                 (8)  other records and information the department considers necessary                                   
11       for the administration of this chapter.                                                                           
12    * Sec. 49. AS 43.55.040 is amended to read:                                                                        
13            Sec. 43.55.040. Powers of Department of Revenue. Except as provided in                                     
14       AS 43.05.405 - 43.05.499, the department may                                                                      
15                 (1)  require a person engaged in production and the agent or employee                                   
16       of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil                         
17       or gas to furnish, whether by the filing of regular statements or reports or otherwise,                           
18       additional information that is considered by the department as necessary to compute                               
19       the amount of the tax; notwithstanding any contrary provision of law, the disclosure                              
20       of additional information under this paragraph to the producer obligated to pay the tax                           
21       does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information                                
22       under this paragraph that is otherwise required to be held confidential under                                     
23       AS 40.25.100(a) or AS 43.05.230(a), the department shall                                                          
24                      (A)  provide the person that furnished the information a                                           
25            reasonable opportunity to be heard regarding the proposed disclosure and the                                 
26            conditions to be imposed under (B) of this paragraph; and                                                    
27                      (B)  impose appropriate conditions limiting                                                        
28                           (i)  access to the information to those legal counsel,                                        
29                 consultants, employees, officers, and agents of the producer who have                                   
30                 a need to know that information for the purpose of determining or                                       
31                 contesting the producer's tax obligation; and                                                           
01                           (ii)  the use of the information to use for that purpose;                                     
02                 (2)  examine the books, records, and files of the [SUCH A] person;                                  
03                 (3)  conduct hearings and compel the attendance of witnesses and the                                    
04       production of books, records, and papers of any person; [AND]                                                     
05                 (4)  make an investigation or hold an inquiry that is considered                                        
06       necessary to a disclosure of the facts as to                                                                      
07                      (A)  the amount of production from any oil or gas location, or                                     
08            of a company or other producer of oil or gas; and                                                            
09                      (B)  the rendition of the oil and gas for taxing purposes;                                     
10                 (5)  require a producer, an explorer, or an operator of a lease or                                  
11       property to file reports and copies of records that the department considers                                  
12       necessary to forecast state revenue under this chapter; in the case of reports and                            
13       copies of records relating to proposed, expected, or approved unit expenditures                               
14       for a unit for which one or more working interest owners other than the                                       
15       operator have authority to approve unit expenditures, the required reports and                                
16       copies of records are limited to those reports or copies of records that constitute                           
17       or disclose communications between the operator and the working interest                                      
18       owners relating to unit budget matters; and                                                                   
19                 (6)  assess against a person required under this section to file a                                  
20       report, statement, or other document a penalty, as determined by the                                          
21       department under standards adopted in regulation by the department, of not                                    
22       more than $1,000 for each day the person fails to file the report, statement, or                              
23       other document at the time required; the penalty is in addition to the penalties in                           
24       AS 43.05.220 and 43.05.290 and is assessed, collected, and paid in the same                                   
25       manner as a tax deficiency under this title.                                                                  
26    * Sec. 50. AS 43.55 is amended by adding a new section to read:                                                    
27            Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except                                   
28       as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be                               
29       assessed within six years after the latest return was filed.                                                      
30            (b)  A decision of a regulatory agency, court, or other body with authority to                               
31       resolve disputes that results in a retroactive change to a lease expenditure, to an                               
01       adjustment to a lease expenditure, to costs of transportation, to sale price, to                                  
02       prevailing value, or to consideration of quality differentials relating to the                                    
03       commingling of oils has a corresponding effect, either an increase or decrease, as                                
04       applicable, on the production tax value of oil or gas or the amount or availability of a                          
05       tax credit as determined under this chapter. For purposes of this section, a change to a                          
06       lease expenditure includes a change in the categorization of a lease expenditure as a                             
07       qualified capital expenditure or as not a qualified capital expenditure. The producer                             
08       shall                                                                                                             
09                 (1)  within 60 days after the change, notify the department in writing;                                 
10       and                                                                                                               
11                 (2)  within 120 days after the change, file amended returns covering all                                
12       periods affected by the change, unless the department agrees otherwise or a stay is in                            
13       place that affects the filing or payment, regardless of the pendency of appeals of the                            
14       decision.                                                                                                         
15            (c)  If an alteration in or modification of a producer's federal income tax return                           
16       or a recomputation of the producer's federal income tax or determination of                                       
17       deficiency occurs that affects the amount of a tax imposed on the producer under this                             
18       chapter, the producer shall                                                                                       
19                 (1)  within 60 days after the final determination of the alteration,                                    
20       modification, recomputation, or deficiency, notify the department in writing; and                                 
21                 (2)  within 120 days after the final determination of the alteration,                                   
22       modification, recomputation, or deficiency, file amended returns covering all affected                            
23       periods.                                                                                                          
24            (d)  In this section,                                                                                        
25                 (1)  "qualified capital expenditure" has the meaning given in                                           
26       AS 43.55.023;                                                                                                     
27                 (2)  "return" includes a report, a statement, and an amended return,                                    
28       report, or statement.                                                                                             
29    * Sec. 51. AS 43.55.110 is amended by adding new subsections to read:                                              
30            (e)  The department may require that returns, statements, reports, notifications,                            
31       and applications filed under this chapter be filed electronically in a form and manner                            
01       approved or prescribed by the department.                                                                         
02            (f)  The department may require that payments required under this chapter be                                 
03       made electronically in a form and manner approved or prescribed by the department.                                
04            (g)  Notwithstanding AS 44.62, the department may issue, for the information                                 
05       and guidance of producers, explorers, and other interested persons, advisory bulletins                            
06       stating the department's interpretation of provisions of this chapter and of regulations                          
07       adopted under this chapter. Unless otherwise provided by the department by                                        
08       regulation, interpretations stated in the advisory bulletins are not binding on the                               
09       department or others.                                                                                             
10    * Sec. 52. AS 43.55.160(a) is repealed and reenacted to read:                                                      
11            (a)  Except as provided in (b) of this section, for purposes of this chapter, the                            
12       production tax value of the taxable                                                                               
13                 (1)  oil and gas produced during a calendar year from a lease or                                        
14       property in the state outside the Cook Inlet sedimentary basin is the amount                                      
15       calculated by deducting from the gross value at the point of production of the oil and                            
16       gas taxable under AS 43.55.011(e) and produced from the lease or property,                                        
17                      (A)  the producer's lease expenditures for the calendar year                                       
18            under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of                                        
19            exploring for, developing, or producing oil or gas deposits located within the                               
20            lease or property; and                                                                                       
21                      (B)  if the remainder calculated under (A) of this paragraph is                                    
22            greater than zero, the producer's lease expenditures for the calendar year under                             
23            AS 43.55.165, as adjusted under AS 43.55.170, that are allocated to the lease                                
24            or property under (e) - (g) of this section;                                                                 
25                 (2)  oil produced during a calendar year from a lease or property in the                                
26       Cook Inlet sedimentary basin is the amount calculated by deducting from the gross                                 
27       value at the point of production of the oil taxable under AS 43.55.011(e) and                                     
28       produced from the lease or property the producer's lease expenditures for the calendar                            
29       year under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of exploring                              
30       for, developing, or producing oil deposits located within the lease or property;                                  
31                 (3)  gas produced during a calendar year from a lease or property in the                                
01       Cook Inlet sedimentary basin is the amount calculated by deducting from the gross                                 
02       value at the point of production of the gas taxable under AS 43.55.011(e) and                                     
03       produced from the lease or property the producer's lease expenditures for the calendar                            
04       year under AS 43.55.165, as adjusted under AS 43.55.170, that are costs of exploring                              
05       for, developing, or producing gas deposits located within the lease or property.                                  
06    * Sec. 53. AS 43.55.160(b) is amended to read:                                                                     
07            (b)  A production tax value calculated under [(a) OF] this section may not be                                
08       less than zero.                                                                                                   
09    * Sec. 54. AS 43.55.160(e) is repealed and reenacted to read:                                                      
10            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
11       (1) would otherwise be deductible by a producer under (a)(1)(A) of this section in                                
12       calculating a production tax value under (a)(1) of this section of oil and gas produced                           
13       from a lease or property for a calendar year but whose deduction would cause the                                  
14       production tax value to be less than zero; (2) are the producer's costs incurred during                           
15       the calendar year of exploring for, developing, or producing oil or gas deposits                                  
16       located within the producer's leases or properties in the state outside the Cook Inlet                            
17       sedimentary basin that do not produce oil or gas during the calendar year; or (3) are                             
18       the producer's costs incurred during the calendar year of exploring for oil or gas                                
19       deposits located within land in the state outside the Cook Inlet sedimentary basin in                             
20       which the producer does not own an operating right, operating interest, or working                                
21       interest must be allocated to, and deducted in calculating the producer's production                              
22       tax value of the oil and gas produced during the calendar year from, the producer's                               
23       other leases or properties, in accordance with the provisions of (f) and (g) of this                              
24       section, to the extent consistent with (b) of this section. Other than for a lease or                             
25       property subject to AS 43.55.011(f) and except as otherwise provided under (h) of                                 
26       this section, any remaining adjusted lease expenditures in excess of what may be                                  
27       deducted consistent with (b) of this section may be used to establish a carried-forward                           
28       annual loss under AS 43.55.023(b).                                                                                
29    * Sec. 55. AS 43.55.160 is amended by adding new subsections to read:                                              
30            (f)  This subsection applies to adjusted lease expenditures required to be                                   
31       allocated under (e) of this section that are the producer's costs of exploring for,                               
01       developing, or producing oil or gas deposits located within the producer's leases or                              
02       properties that include land north of 68 degrees North latitude or are the producer's                             
03       costs of exploring for oil or gas deposits located within land in the state north of 68                           
04       degrees North latitude in which the producer does not own an operating right,                                     
05       operating interest, or working interest. To the extent consistent with (b) of this                                
06       section, adjusted lease expenditures under this subsection that are                                               
07                 (1)  not costs of exploring for, developing, or producing oil or gas                                    
08       deposits located within a lease or property subject to AS 43.55.011(f) must be                                    
09       allocated to one or more leases or properties from which the producer produces oil or                             
10       gas during the calendar year that include land north of 68 degrees North latitude;                                
11                 (2)  costs of exploring for, developing, or producing oil or gas deposits                               
12       located within a lease or property subject to AS 43.55.011(f) must be allocated to one                            
13       or more other leases or properties from which the producer produces oil or gas during                             
14       the calendar year that are within the same unit or overlie the same nonunitized                                   
15       reservoir.                                                                                                        
16            (g)  This subsection applies to adjusted lease expenditures required to be                                   
17       allocated under (e) of this section that are the producer's costs of exploring for,                               
18       developing, or producing oil or gas deposits located within the producer's leases or                              
19       properties outside the Cook Inlet sedimentary basin and no part of which is north of                              
20       68 degrees North latitude or are the producer's costs of exploring for oil or gas                                 
21       deposits located within land in the state outside the Cook Inlet sedimentary basin and                            
22       not north of 68 degrees North latitude in which the producer does not own an                                      
23       operating right, operating interest, or working interest. To the extent consistent with                           
24       (b) of this section, adjusted lease expenditures under this subsection must be allocated                          
25       to one or more leases or properties that are outside the Cook Inlet sedimentary basin                             
26       and no part of which is north of 68 degrees North latitude from which the producer                                
27       produces oil or gas during the calendar year.                                                                     
28            (h)  For purposes of this section, Cook Inlet excess adjusted lease                                          
29       expenditures for a calendar year are determined by adding (1) the adjusted lease                                  
30       expenditures that would otherwise be deductible by a producer in calculating                                      
31       production tax values under (a)(2) or (3) of this section for the calendar year but                               
01       whose deduction would cause a production tax value to be less than zero; (2) the                                  
02       adjusted lease expenditures that are the producer's costs incurred during the calendar                            
03       year of exploring for, developing, or producing oil or gas deposits located within the                            
04       producer's leases or properties in the Cook Inlet sedimentary basin from which no oil                             
05       or gas is produced during the calendar year; and (3) the adjusted lease expenditures                              
06       that are the producer's costs incurred during the calendar year of exploring for oil or                           
07       gas deposits located within land in the Cook Inlet sedimentary basin in which the                                 
08       producer does not own an operating right, operating interest, or working interest. For                            
09       a calendar year for which a limitation under AS 43.55.011(j) or (k) on the tax levied                             
10       by AS 43.55.011(e) would have the effect of reducing the producer's tax for oil or gas                            
11       produced from one or more leases or properties in the Cook Inlet sedimentary basin                                
12       below the amount of the tax that would be levied in the absence of that limitation, the                           
13       producer shall perform the calculations set out in (i) of this section. The amount, if                            
14       any, calculated under (i)(6) of this section is the only amount of Cook Inlet excess                              
15       adjusted lease expenditures that may be used to establish a carried-forward annual                                
16       loss under AS 43.55.023(b).                                                                                       
17            (i)  A producer subject to (h) of this section shall perform the following                                   
18       calculations:                                                                                                     
19                 (1)  calculate the total amount of Cook Inlet excess adjusted lease                                     
20       expenditures;                                                                                                     
21                 (2)  multiply that total amount by 25 percent;                                                          
22                 (3)  calculate for each lease or property the amount by which a                                         
23       limitation under AS 43.55.011(j) or (k) would reduce the amount of the producer's tax                             
24       levied by AS 43.55.011(e);                                                                                        
25                 (4)  calculate the total of the reductions calculated under (3) of this                                 
26       subsection for all affected leases or properties;                                                                 
27                 (5)  if the amount calculated under (2) of this subsection is greater than                              
28       the amount calculated under (4) of this subsection, subtract the latter from the former;                          
29       and                                                                                                               
30                 (6)  multiply the amount, if any, calculated under (5) of this subsection                               
31       by four.                                                                                                          
01    * Sec. 56. AS 43.55.165(a) is repealed and reenacted to read:                                                      
02            (a)  For purposes of this chapter, a producer's lease expenditures for a calendar                            
03       year are                                                                                                          
04                 (1)  costs, other than items listed in (e) of this section, that are                                    
05                      (A)  incurred by the producer during the calendar year after                                       
06            March 31, 2006, to explore for, develop, or produce oil or gas deposits located                              
07            within the producer's leases or properties in the state or, in the case of land in                           
08            which the producer does not own an operating right, operating interest, or                                   
09            working interest, to explore for oil or gas deposits within other land in the                                
10            state; and                                                                                                   
11                      (B)  allowed by the department by regulation, based on the                                         
12            department's determination that the costs satisfy the following three                                        
13            requirements:                                                                                                
14                           (i)  the costs must be incurred upstream of the point of                                      
15                 production of oil and gas;                                                                              
16                           (ii)  the costs must be ordinary and necessary costs of                                       
17                 exploring for, developing, or producing, as applicable, oil or gas                                      
18                 deposits; and                                                                                           
19                           (iii)  the costs must be direct costs of exploring for,                                       
20                 developing, or producing, as applicable, oil or gas deposits; and                                       
21                 (2)  a reasonable allowance for that calendar year, as determined under                                 
22       regulations adopted by the department, for overhead expenses that are directly related                            
23       to exploring for, developing, or producing, as applicable, the oil or gas deposits.                               
24    * Sec. 57. AS 43.55.165(b) is amended to read:                                                                     
25            (b)  For purposes of (a) of this section,                                                                    
26                 (1)  direct costs include                                                                               
27                      (A)  an expenditure, when incurred, to acquire an item if the                                      
28            acquisition cost is otherwise a direct cost, notwithstanding that the                                        
29            expenditure may be required to be capitalized rather than treated as an                                      
30            expense for financial accounting or federal income tax purposes;                                             
31                      (B)  payments of or in lieu of property taxes, sales and use                                       
01            taxes, motor fuel taxes, and excise taxes;                                                                   
02                      [(C)  A REASONABLE ALLOWANCE, AS DETERMINED                                                        
03            UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR                                                             
04            OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR,                                                         
05            DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED                                                        
06            WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;]                                                     
07                 (2)  an activity does not need to be physically located on, near, or                                    
08       within the premises of the lease or property within which an oil or gas deposit being                             
09       explored for, developed, or produced is located in order for the cost of the activity to                          
10       be a cost upstream of the point of production of the oil or gas;                                              
11                 (3)  in determining whether costs are lease expenditures, the                                       
12       department shall consider, among other factors, the                                                           
13                      (A)  typical industry practices and standards in the state                                     
14            that determine the costs, other than items listed in (e) of this section, that                           
15            an operator is allowed to bill a producer that is not the operator, under                                
16            unit operating agreements or similar operating agreements that were in                                   
17            effect before December 2, 2005, and were subject to negotiation with at                                  
18            least one producer with substantial bargaining power, other than the                                     
19            operator; and                                                                                            
20                      (B)  standards adopted by the Department of Natural                                            
21            Resources that determine the costs, other than items listed in (e) of this                               
22            section, that a lessee is allowed to deduct from revenue in calculating net                              
23            profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E).                                   
24    * Sec. 58. AS 43.55.165(e) is amended to read:                                                                     
25            (e)  For purposes of this section, lease expenditures do not include                                         
26                 (1)  depreciation, depletion, or amortization;                                                          
27                 (2)  oil or gas royalty payments, production payments, lease profit                                     
28       shares, or other payments or distributions of a share of oil or gas production, profit, or                        
29       revenue;                                                                                                          
30                 (3)  taxes based on or measured by net income;                                                          
31                 (4)  interest or other financing charges or costs of raising equity or                                  
01       debt capital;                                                                                                     
02                 (5)  acquisition costs for a lease or property or exploration license;                                  
03                 (6)  costs arising from fraud, wilful misconduct, [OR] gross                                            
04       negligence, violation of law, or failure to comply with an obligation under a lease,                          
05       permit, or license issued by the state or federal government;                                                 
06                 (7)  fines or penalties imposed by law;                                                                 
07                 (8)  costs of arbitration, litigation, or other dispute resolution activities                           
08       that involve the state or concern the rights or obligations among owners of interests                             
09       in, or rights to production from, one or more leases or properties or a unit;                                     
10                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
11       business entity or arrangement;                                                                                   
12                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
13       this paragraph does not apply to the costs of obtaining insurance or a surety bond                                
14       from a third-party insurer or surety;                                                                             
15                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
16                 (12)  for a transaction that is an internal transfer or is otherwise not an                             
17       arm's length transaction, expenditures incurred that are in excess of fair market value;                          
18                 (13)  an expenditure incurred to purchase an interest in any                                            
19       corporation, partnership, limited liability company, business trust, or any other                                 
20       business entity, whether or not the transaction is treated as an asset sale for federal                           
21       income tax purposes;                                                                                              
22                 (14)  a tax levied under AS 43.55.011;                                                                  
23                 (15)  [THE PORTION OF] costs incurred for dismantlement, removal,                                       
24       surrender, or abandonment of a facility, pipeline, well pad, platform, or other                                   
25       structure, or for the restoration of a lease, field, unit, area, tract of land, body of                       
26       water, or right-of-way in conjunction with dismantlement, removal, surrender, or                                  
27       abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS                                                   
28       OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A                                                    
29       RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                      
30       OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL                                                      
31       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
01       OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO                                                      
02       THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                         
03       OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL                                                     
04       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
05       OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR                                                         
06       MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT,                                                                   
07       REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under                                                 
08       this paragraph if the dismantlement, removal, surrender, or abandonment for which                                 
09       the cost is incurred is undertaken for the purpose of replacing, renovating, or                                   
10       improving the facility, pipeline, well pad, platform, or other structure; [FOR THE                                
11       PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS                                                      
12                      (A)  IN THE CASE OF OIL, ONE BARREL;                                                               
13                      (B)  IN THE CASE OF GAS, 6,000 CUBIC FEET;]                                                        
14                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
15       connection with any unpermitted release of oil or a hazardous substance and any                                   
16       liability for damages imposed on the producer or explorer for that unpermitted                                    
17       release; this paragraph does not apply to the cost of developing and maintaining an oil                           
18       discharge prevention and contingency plan under AS 46.04.030;                                                     
19                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
20       license under AS 38.05.132;                                                                                       
21                 (18)  that portion of expenditures, that would otherwise be qualified                                   
22       capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a                     
23       calendar year that are less than the product of $0.30 multiplied by the total taxable                             
24       production from each lease or property, in BTU equivalent barrels, during that                                    
25       calendar year, except that, when a portion of a calendar year is subject to this                                  
26       provision, the expenditures and volumes shall be prorated within that calendar year;                          
27                 (19)  costs incurred for repair, replacement, or deferred                                           
28       maintenance of a facility, a pipeline, a structure, or equipment, other than a well,                          
29       that results in or is undertaken in response to a failure, problem, or event that                             
30       results in an unscheduled interruption of, or reduction in the rate of, oil or gas                            
31       production; or costs incurred for repair, replacement, or deferred maintenance                                
01       of a facility, a pipeline, a structure, or equipment, other than a well, that is                              
02       undertaken in response to, or is otherwise associated with, an unpermitted                                    
03       release of a hazardous substance or of gas; however, costs under this paragraph                               
04       that would otherwise constitute lease expenditures under (a) of this section may                              
05       be treated as lease expenditures if the department determines that the repair or                              
06       replacement is solely necessitated by an act of war, by an unanticipated grave                                
07       natural disaster or other natural phenomenon of an exceptional, inevitable, and                               
08       irresistible character, the effects of which could not have been prevented or                                 
09       avoided by the exercise of due care or foresight, or by an intentional or negligent                           
10       act or omission of a third party, other than a party or its agents in privity of                              
11       contract with, or employed by, the producer or an operator acting for the                                     
12       producer, but only if the producer or operator, as applicable, exercised due care                             
13       in operating and maintaining the facility, pipeline, structure, or equipment, and                             
14       took reasonable precautions against the act or omission of the third party and                                
15       against the consequences of the act or omission; in this paragraph,                                           
16                      (A)  "costs incurred for repair, replacement, or deferred                                      
17            maintenance of a facility, a pipeline, a structure, or equipment" includes                               
18            costs to dismantle and remove the facility, pipeline, structure, or                                      
19            equipment that is being replaced;                                                                        
20                      (B)  "hazardous substance" has the meaning given in                                            
21            AS 46.03.826;                                                                                            
22                      (C)  "replacement" includes renovation or improvement;                                         
23                 (20)  costs incurred to construct, acquire, or operate a refinery or                                
24       crude oil topping plant, regardless of whether the products of the refinery or                                
25       topping plant are used in oil or gas exploration, development, or production                                  
26       operations; however, if a producer owns a refinery or crude oil topping plant                                 
27       that is located on or near the premises of the producer's lease or property in the                            
28       state and that processes the producer's oil produced from that lease or property                              
29       into a product that the producer uses in the operation of the lease or property in                            
30       drilling for or producing oil or gas, the producer's lease expenditures include the                           
31       amount calculated by subtracting from the fair market value of the product used                               
01       the prevailing value, as determined under AS 43.55.020(f), of the oil that is                                 
02       processed.                                                                                                  
03    * Sec. 59. AS 43.55.165(h) is amended to read:                                                                     
04            (h)  The department shall adopt regulations that provide for reasonable                                      
05       methods of allocating costs between oil and gas and between leases or properties in                               
06       those circumstances where an allocation of costs is required to determine [THE                                
07       DETERMINATION OF THE] lease expenditures that are costs of exploring for,                                     
08       developing, or producing oil deposits or costs of exploring for, developing, or                               
09       producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of                                
10       exploring for, developing, or producing oil or gas deposits located within                                    
11       [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or                                                     
12       properties [, REQUIRES AN ALLOCATION OF COSTS].                                                                   
13    * Sec. 60. AS 43.55.170(a) is amended to read:                                                                     
14            (a)  A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN                                                    
15       SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER                                                          
16       AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must                                  
17       be adjusted by subtracting payments or credits, other than tax credits, received by the                           
18       producer or by an operator acting for the producer for                                                            
19                 (1)  the use by another person of a production facility in which the                                    
20       producer has an ownership interest or the management by the producer of a                                         
21       production facility under a management agreement providing for the producer to                                    
22       receive a management fee;                                                                                         
23                 (2)  a reimbursement or similar payment that offsets the producer's                                     
24       lease expenditures, including an insurance recovery from a third-party insurer and a                              
25       payment from the state or federal government for reimbursement of the producer's                                  
26       upstream costs, including costs for gathering, separating, cleaning, dehydration,                                 
27       compressing, or other field handling associated with the production of oil or gas                                 
28       upstream of the point of production;                                                                              
29                 (3)  the sale or other transfer of                                                                      
30                      (A)  an asset, including geological, geophysical, or well data or                                  
31            interpretations, acquired by the producer as a result of a lease expenditure or                              
01            an expenditure that would be a lease expenditure if it were incurred after                                   
02            March 31, 2006; for purposes of this subparagraph,                                                           
03                           (i)  if a producer removes from the state, for use outside                                    
04                 the state, an asset described in this subparagraph, the value of the asset                              
05                 at the time it is removed is considered a payment received by the                                       
06                 producer for sale or transfer of the asset;                                                             
07                           (ii)  for a transaction that is an internal transfer or is                                    
08                 otherwise not an arm's length transaction, if the sale or transfer of the                               
09                 asset is made for less than fair market value, the amount subtracted                                    
10                 must be the fair market value; and                                                                      
11                      (B)  oil or gas                                                                                    
12                           (i)  that is not considered produced from a lease or                                          
13                 property under AS 43.55.020(e); and                                                                     
14                           (ii)  the cost of acquiring which is a lease expenditure                                      
15                 incurred by the person that acquires the oil or gas.                                                    
16    * Sec. 61. AS 43.55 is amended by adding a new section to article 4 to read:                                       
17            Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary                                
18       provision of AS 40.25.100, and regardless of whether the information is considered                                
19       under AS 43.05.230(e) to constitute statistics classified to prevent the identification of                        
20       particular returns or reports, the department may publish the following information                               
21       under this chapter, if aggregated among three or more producers or explorers,                                     
22       showing by month or calendar year and by lease or property, unit, or area of the state:                           
23                 (1)  the amount of oil or gas production;                                                               
24                 (2)  the amount of taxes levied under this chapter or paid under this                                   
25       chapter;                                                                                                          
26                 (3)  the effective tax rates under this chapter;                                                        
27                 (4)  the gross value of oil or gas at the point of production;                                          
28                 (5)  the transportation costs for oil or gas;                                                           
29                 (6)  qualified capital expenditures under AS 43.55.023(k);                                              
30                 (7)  exploration expenditures under AS 43.55.025;                                                       
31                 (8)  production tax values of oil or gas under AS 43.55.160;                                            
01                 (9)  lease expenditures under AS 43.55.165;                                                             
02                 (10)  adjustments to lease expenditures under AS 43.55.170;                                             
03                 (11)  tax credits applicable or potentially applicable against taxes                                    
04       levied by this chapter.                                                                                           
05    * Sec. 62. AS 43.55.900 is amended by adding new paragraphs to read:                                               
06                 (22)  "nonunitized reservoir" means a pool that is not wholly within a                                  
07       single unit;                                                                                                      
08                 (23)  "pool" has the meaning given in AS 31.05.170;                                                     
09                 (24)  "producer" means an owner of an operating right, operating                                        
10       interest, or working interest in a mineral interest in oil or gas;                                                
11                 (25)  "unit" means a group of tracts of land that is                                                    
12                      (A)  subject to a cooperative or a unit plan of development or                                     
13            operation that has been certified by the commissioner of natural resources                                   
14            under AS 38.05.180(p);                                                                                       
15                      (B)  subject to a cooperative or a unit plan of development or                                     
16            operation that has been certified by the United States Secretary of the Interior                             
17            under 30 U.S.C. 226(m);                                                                                      
18                      (C)  subject to an agreement of the owners of interests in the                                     
19            tracts of land to validly integrate their interests to provide for the unitized                              
20            management, development, and operation of the tracts of land as a unit, within                               
21            the meaning of AS 31.05.110(a); or                                                                           
22                      (D)  within the unit area of a unit created by order of the                                        
23            Alaska Oil and Gas Conservation Commission under AS 31.05.110(b).                                            
24    * Sec. 63. AS 43.55.023(f) is repealed.                                                                            
25    * Sec. 64. AS 43.55.165(c) and 43.55.165(d) are repealed.                                                          
26    * Sec. 65. AS 43.55.011(l), 43.55.023(i), and 43.55.160(c) are repealed.                                           
27    * Sec. 66. The uncodified law of the State of Alaska is amended by adding a new section to                         
28 read:                                                                                                                   
29       APPLICABILITY. (a) Sections 58, 60, and 64 of this Act apply to oil and gas                                       
30 produced after March 31, 2006.                                                                                          
31       (b)  Sections 15 - 25, 32 - 35, 41, 42, 44, 52 - 57, 59, and 65 of this Act apply to oil                          
01 and gas produced after December 31, 2007.                                                                               
02       (c)  Sections 26 - 29 of this Act apply to expenditures incurred after December 31,                               
03 2007, that are the basis of tax credits that may be claimed against taxes levied for oil and gas                        
04 produced after December 31, 2007.                                                                                       
05       (d)  Section 30 of this Act applies to transferable tax credit certificates issued under                          
06 AS 43.55.023(d), as amended by sec. 28 of this Act, and to transferable tax credit certificates                         
07 issued under AS 43.55.023(d), in effect before January 1, 2008, for which a cash refund has                             
08 not been issued under AS 43.55.023(f) before January 1, 2008.                                                           
09       (e)  Sections 36 - 39 and 43 of this Act apply to exploration expenditures incurred for                           
10 work performed after December 31, 2007, that are the basis of tax credits that may be                                   
11 claimed against taxes levied for oil and gas produced after December 31, 2007.                                          
12       (f)  Sections 46 and 48 of this Act apply to statements and reports under                                         
13 AS 43.55.030(a), as amended by sec. 46 of this Act, and AS 43.55.030(e) and (f), as added                               
14 by sec. 48 of this Act, required to be filed after December 31, 2007.                                                   
15       (g)  AS 43.55.075(a), enacted by sec. 50 of this Act, applies to any tax liability under                          
16 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260                               
17 had not expired before the effective date of secs. 14 and 50 of this Act.                                             
18    * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to                         
19 read:                                                                                                                   
20       TRANSITION: ASSIGNMENT OF OIL AND GAS AUDITORS IN THE                                                             
21 DEPARTMENT OF REVENUE AND DEPARTMENT OF NATURAL RESOURCES.                                                              
22 Notwithstanding any contrary provision of law, employees employed as oil and gas auditors                               
23 performing production tax audits or as their immediate supervisors in the Department of                                 
24 Revenue and employees employed as oil and gas auditors performing royalty audits,                                       
25 including net profit share audits, or as their immediate supervisors in the Department of                               
26 Natural Resources are assigned to the exempt service in accordance with AS 39.25.110(42),                               
27 added by sec. 10 of this Act, and may not be included in the general government or                                      
28 supervisory collective bargaining units of state employees except as provided in this section.                          
29 All oil and gas auditors performing production tax audits or royalty audits and their                                   
30 immediate supervisors hired before the effective date of sec. 10 of this Act have the option of                         
31 (1) continuing in the general government or supervisory collective bargaining units and being                           
01 subject to their respective collective bargaining agreements; or (2) being removed from those                           
02 bargaining units. Those employees have 90 days from the effective date of sec. 10 of this Act                           
03 to exercise the option to continue in the collective bargaining units. The option taken under                           
04 this section by the employee is irrevocable. The employees choosing to be removed from                                  
05 those bargaining units are removed after any notice period required by a collective                                     
06 bargaining agreement.                                                                                                   
07    * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to                         
08 read:                                                                                                                   
09       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
10 contrary provision of AS 44.62.240,                                                                                     
11            (1)  if the Department of Revenue expressly designates in the regulation that                                
12 the regulation applies retroactively to that date, a regulation adopted by the Department of                            
13 Revenue to implement, interpret, make specific, or otherwise carry out                                                  
14                 (A)  secs. 31, 58, 60, and 64 of this Act may apply retroactively to                                    
15       April 1, 2006;                                                                                                    
16                 (B)  secs. 15 - 30, 32 - 39, 41 - 46, 48, 52 - 57, 59, 63, and 65 of this                               
17       Act may apply retroactively to January 1, 2008;                                                                   
18            (2)  a regulation adopted by the Department of Natural Resources to                                          
19 implement, interpret, make specific, or otherwise carry out statutory provisions for the                                
20 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the                            
21 extent the regulation deals with the treatment of oil and gas production taxes in determining                           
22 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of                          
23 Natural Resources expressly designates in the regulation that the regulation applies                                    
24 retroactively to that date.                                                                                             
25    * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to                         
26 read:                                                                                                                   
27       TRANSITION: PENDING APPLICATIONS. (a) Notwithstanding a contrary                                                  
28 provision of law, if an application made under AS 43.55.023(d), in effect before January 1,                             
29 2008, has not been granted or denied by the Department of Revenue before January 1, 2008,                               
30 the application is subject to the time period for the Department of Revenue's decision on the                           
31 application provided in AS 43.55.023(d), as amended by sec. 28 of this Act.                                             
01       (b)  If an application made under AS 43.55.023(f) is received by the Department of                                
02 Revenue before January 1, 2008, and is still outstanding on that date, the application is                               
03 considered to be an application under AS 43.55.028, enacted by sec. 45 of this Act.                                     
04    * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to                         
05 read:                                                                                                                   
06       TRANSITION: REGULATIONS. The Department of Natural Resources and the                                              
07 Department of Revenue may proceed to adopt regulations to implement this Act. The                                       
08 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the                               
09 effective date of the law implemented by the regulation.                                                                
10    * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to                         
11 read:                                                                                                                   
12       RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 40 of                                                
13 this Act is retroactive to July 1, 2003.                                                                                
14       (b)  Sections 31, 58, 60, 64, 66(g), and 68 of this Act are retroactive to April 1, 2006.                         
15    * Sec. 72. Sections 15 - 30, 32 - 39, 41 - 46, 48, 52 - 57, 59, 63, and 65 of this Act take                        
16 effect January 1, 2008.                                                                                                 
17    * Sec. 73. Except as provided in sec. 72 of this Act, this Act takes effect immediately under                      
18 AS 01.10.070(c).                                                                                                        
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