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25th Legislature(2007-2008)

Bill Text 25th Legislature


00                      CS FOR HOUSE BILL NO. 2001(O&G)                                                                    
01 "An Act relating to the production tax on oil and gas and to conservation surcharges on                                 
02 oil; providing a limit on the amount of tax that may be levied on the production of                                     
03 certain gas that is produced outside of the Cook Inlet sedimentary basin and south of 68                                
04 degrees North latitude; relating to the sharing between agencies of certain information                                 
05 relating to the production tax and to oil and gas or gas only leases; expanding the                                     
06 period in which the Department of Revenue may assess the amount of oil and gas                                          
07 production tax and conservation surcharges; amending the State Personnel Act to place                                   
08 in the exempt service certain state oil and gas auditors and their immediate supervisors;                               
09 providing for retroactive application of certain statutory and regulatory provisions                                    
10 relating to the production tax on oil and gas and conservation surcharges on oil;                                       
11 making conforming amendments; and providing for an effective date."                                                     
12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
01    * Section 1. AS 38.05.035(a) is amended to read:                                                                   
02            (a)  The director shall                                                                                      
03                 (1)  have general charge and supervision of the division and may                                        
04       exercise the powers specifically delegated to the director; the director may employ                           
05       and fix the compensation of assistants and employees necessary for the operations of                              
06       the division; the director [AND] is the certifying officer of the division, with the                          
07       consent of the commissioner, and may approve vouchers for disbursements of money                                  
08       appropriated to the division;                                                                                     
09                 (2)  manage, inspect, and control state land and improvements on it                                     
10       belonging to the state and under the jurisdiction of the division;                                                
11                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
12       commissioner;                                                                                                     
13                 (4)  prescribe application procedures and practices for the sale, lease,                                
14       or other disposition of available land, resources, property, or interest in them;                                 
15                 (5)  prescribe fees or service charges, with the consent of the                                         
16       commissioner, for any public service rendered;                                                                    
17                 (6)  under the conditions and limitations imposed by law and the                                        
18       commissioner, issue deeds, leases, or other conveyances disposing of available land,                          
19       resources, property, or any interests in them;                                                                
20                 (7)  have jurisdiction over state land, except that land acquired by the                                
21       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
22       departments or agencies succeeding to their respective functions through foreclosure                              
23       or default; to this end, the director possesses the powers and, with the approval of the                      
24       commissioner, shall perform the duties necessary to protect the state's rights and                                
25       interest in state land, including the taking of all necessary action to protect and                               
26       enforce the state's contractual or other property rights;                                                         
27                 (8)  [REPEALED                                                                                          
28                 (9)]  maintain the [SUCH] records [AS] the commissioner considers                                   
29       necessary, administer oaths, and do all things incidental to the authority imposed; the                           
30       following records and files shall be kept confidential upon request of the person                                 
31       supplying the information:                                                                                        
01                      (A)  the name of the person nominating or applying for the                                         
02            sale, lease, or other disposal of land by competitive bidding;                                               
03                      (B)  before the announced time of opening, the names of the                                        
04            bidders and the amounts of the bids;                                                                         
05                      (C)  all geological, geophysical, and engineering data supplied,                                   
06            whether or not concerned with the extraction or development of natural                                       
07            resources;                                                                                                   
08                      (D)  except as provided in AS 38.05.036, cost data and                                             
09            financial information submitted in support of applications, bonds, leases, and                               
10            similar items;                                                                                               
11                      (E)  applications for rights-of-way or easements;                                                  
12                      (F)  requests for information or applications by public agencies                                   
13            for land that [WHICH] is being considered for use for a public purpose;                                  
14                 (9) [(10)]  account for the fees, licenses, taxes, or other money                                   
15       received in the administration of this chapter including the sale or leasing of land,                             
16       identify their source, and promptly transmit them to the proper fiscal department after                           
17       crediting them to the proper fund; receipts from land application filing fees and                                 
18       charges for copies of maps and records shall be deposited immediately in the general                              
19       fund of the state by the director;                                                                                
20                 (10) [(11)]  select and employ or obtain at reasonable compensation                                 
21       cadastral, appraisal, or other professional personnel the director considers necessary                            
22       for the proper operation of the division;                                                                         
23                 (11) [(12)]  be the certifying agent of the state to select, accept, and                            
24       secure by whatever action is necessary in the name of the state, by deed, sale, gift,                             
25       devise, judgment, operation of law, or other means any land, of whatever nature or                                
26       interest, available to the state; and be the certifying agent of the state, to select,                            
27       accept, or secure by whatever action is necessary in the name of the state any land, or                           
28       title or interest to land available, granted, or subject to being transferred to the state                        
29       for any purpose;                                                                                                  
30                 (12)  on request, furnish records, files, and other information                                     
31       related to the administration of AS 38.05.180 to the Department of Revenue for                                
01       use in forecasting state revenue under or administering AS 43.55, whether or not                              
02       those records, files, and other information are required to be kept confidential                              
03       under (8) of this subsection; in the case of records, files, or other information                             
04       required to be kept confidential under (8) of this subsection, the Department of                              
05       Revenue shall maintain the confidentiality that the Department of Natural                                     
06       Resources is required to extend to records, files, and other information under (8)                            
07       of this subsection                                                                                            
08                 [(13)  REPEALED                                                                                         
09                 (14)  REPEALED].                                                                                        
10    * Sec. 2. AS 38.05.036(b) is amended to read:                                                                      
11            (b)  The Department of Revenue may obtain from the department information                                    
12       relating to royalty and net profits payments and to exploration incentive credits under                           
13       this chapter or under AS 41.09, whether or not that information is confidential. The                              
14       Department of Revenue may use the information in carrying out its functions and                                   
15       responsibilities under AS 43, and shall hold that information confidential to the extent                          
16       required by an agreement with the department or by AS 38.05.035(a)(8)                                         
17       [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230.                                                           
18    * Sec. 3. AS 38.05.036(f) is amended to read:                                                                      
19            (f)  Except as otherwise provided in this section or in connection with official                             
20       investigations or proceedings of the department, it is unlawful for a current or former                           
21       officer, employee, or agent of the state to divulge information obtained by the                                   
22       department as a result of an audit under this section that is required by an agreement                            
23       with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                          
24       AS 41.09.010(d) to be kept confidential.                                                                          
25    * Sec. 4. AS 38.05.036(g) is amended to read:                                                                      
26            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
27       that maintains the confidentiality of information to the extent required by an                                    
28       agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                
29       AS 41.09.010(d).                                                                                                  
30    * Sec. 5. AS 38.05.123(f) is amended to read:                                                                      
31            (f)  As part of the timber sale negotiations authorized by this section, the                                 
01       commissioner may require a prospective purchaser negotiating a timber sale contract                               
02       to submit financial and technical data that demonstrates that the requirements of this                            
03       section have been or will be met. Upon the prospective purchaser's request, the                                   
04       commissioner shall keep data provided by the purchaser confidential in accordance                                 
05       with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)].                                             
06    * Sec. 6. AS 38.05.133(e) is amended to read:                                                                      
07            (e)  The commissioner may make a written request to a prospective licensee                                   
08       for additional information on the prospective licensee's proposal. The commissioner                               
09       shall keep confidential information described in AS 38.05.035(a)(8)                                           
10       [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made                            
11       a written request that the information remain confidential.                                                       
12    * Sec. 7. AS 38.05.180(j) is amended to read:                                                                      
13            (j)  The commissioner                                                                                        
14                 (1)  may provide for modification of royalty on individual leases,                                      
15       leases unitized as described in (p) of this section, leases subject to an agreement                               
16       described in (s) or (t) of this section, or interests unitized under AS 31.05                                     
17                      (A)  to allow for production from an oil or gas field or pool if                                   
18                           (i)  the oil or gas field or pool has been sufficiently                                       
19                 delineated to the satisfaction of the commissioner;                                                     
20                           (ii)  the field or pool has not previously produced oil or                                    
21                 gas for sale; and                                                                                       
22                           (iii)  oil or gas production from the field or pool would                                     
23                 not otherwise be economically feasible;                                                                 
24                      (B)  to prolong the economic life of an oil or gas field or pool                                   
25            as per barrel or barrel equivalent costs increase or as the price of oil or gas                              
26            decreases, and the increase or decrease is sufficient to make future production                              
27            no longer economically feasible; or                                                                          
28                      (C)  to reestablish production of shut-in oil or gas that would                                    
29            not otherwise be economically feasible;                                                                      
30                 (2)  may not grant a royalty modification unless the lessee or lessees                                  
31       requesting the change make a clear and convincing showing that a modification of                                  
01       royalty meets the requirements of this subsection and is in the best interests of the                             
02       state;                                                                                                            
03                 (3)  shall provide for an increase or decrease or other modification of                                 
04       the state's royalty share by a sliding scale royalty or other mechanism that shall be                             
05       based on a change in the price of oil or gas and may also be based on other relevant                              
06       factors such as a change in production rate, projected ultimate recovery, development                             
07       costs, and operating costs;                                                                                       
08                 (4)  may not grant a royalty reduction for a field or pool                                              
09                      (A)  under (1)(A) of this subsection if the royalty modification                                   
10            for the field or pool would establish a royalty rate of less than five percent in                            
11            amount or value of the production removed or sold from a lease or leases                                     
12            covering the field or pool;                                                                                  
13                      (B)  under (1)(B) or (1)(C) of this subsection if the royalty                                      
14            modification for the field or pool would establish a royalty rate of less than                               
15            three percent in amount or value of the production removed or sold from a                                    
16            lease or leases covering the field or pool;                                                                  
17                 (5)  may not grant a royalty reduction under this subsection without                                    
18       including an explicit condition that the royalty reduction is not assignable without the                          
19       prior written approval, which may not be unreasonably withheld, by the                                            
20       commissioner; the commissioner shall, in the preliminary and final findings and                                   
21       determinations, set out the conditions under which the royalty reduction may be                                   
22       assigned;                                                                                                         
23                 (6)  shall require the lessee or lessees to submit, with the application                                
24       for the royalty reduction, financial and technical data that demonstrate that the                                 
25       requirements of this subsection are met; the commissioner                                                         
26                      (A)  may require disclosure of only the financial and technical                                    
27            data related to development, production, and transportation of oil and gas or                                
28            gas only from the field or pool that are reasonably available to the applicant;                              
29            and                                                                                                          
30                      (B)  shall keep the data confidential under AS 38.05.035(a)(8)                                 
31            [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application                              
01            for the royalty reduction; the confidential data may be disclosed by the                                     
02            commissioner to legislators and to the legislative auditor and as directed by                                
03            the chair or vice-chair of the Legislative Budget and Audit Committee to the                                 
04            director of the division of legislative finance, the permanent employees of                                  
05            their respective divisions who are responsible for evaluating a royalty                                      
06            reduction, and to agents or contractors of the legislative auditor or the                                    
07            legislative finance director who are engaged under contract to evaluate the                                  
08            royalty reduction, if they sign an appropriate confidentiality agreement;                                    
09                 (7)  may                                                                                                
10                      (A)  require the lessee or lessees making application for the                                      
11            royalty reduction under (1)(A) of this subsection to pay for the services of an                              
12            independent contractor, selected by the lessee or lessees from a list of                                     
13            qualified consultants compiled by the commissioner, to evaluate hydrocarbon                                  
14            development, production, transportation, and economics and to assist the                                     
15            commissioner in evaluating the application and financial and technical data;                                 
16            if, under this subparagraph, the commissioner requires payment for the                                       
17            services of an independent contractor, the total cost of the services to be paid                             
18            for by the lessee or lessees may not exceed $150,000 for each application, and                               
19            the commissioner shall determine the relevant scope of the work to be                                        
20            performed by the contractor; selection of an independent contractor under this                               
21            subparagraph is not subject to AS 36.30;                                                                     
22                      (B)  with the mutual consent of the lessee or lessees making                                       
23            application for the royalty reduction under (1)(B) or (1)(C) of this subsection,                             
24            request payment for the services of an independent contractor, selected from a                               
25            list of qualified consultants to evaluate hydrocarbon development, production,                               
26            transportation, and economics by the commissioner to assist the commissioner                                 
27            in evaluating the application and financial and technical data; if, under this                               
28            subparagraph, the commissioner requires payment for the services of an                                       
29            independent contractor, the total cost of the services that may be paid for by                               
30            the lessee or lessees may not exceed $150,000 for each application, and the                                  
31            commissioner shall determine the relevant scope of the work to be performed                                  
01            by the contractor; selection of an independent contractor under this                                         
02            subparagraph is not subject to AS 36.30;                                                                     
03                 (8)  shall make and publish a preliminary findings and determination                                    
04       on the royalty reduction application, give reasonable public notice of the preliminary                            
05       findings and determination, and invite public comment on the preliminary findings                                 
06       and determination during a 30-day period for receipt of public comment;                                           
07                 (9)  shall offer to appear before the Legislative Budget and Audit                                      
08       Committee, on a day that is not earlier than 10 days and not later than 20 days after                             
09       giving public notice under (8) of this subsection, to provide the committee a review of                           
10       the commissioner's preliminary findings and determination on the royalty reduction                                
11       application and administrative process; if the Legislative Budget and Audit                                       
12       Committee accepts the commissioner's offer, the committee shall give notice of the                                
13       committee's meeting to all members of the legislature;                                                            
14                 (10)  shall make copies of the preliminary findings and determination                                   
15       available to                                                                                                      
16                      (A)  the presiding officer of each house of the legislature;                                       
17                      (B)  the chairs of the legislature's standing committees on                                        
18            resources; and                                                                                               
19                      (C)  the chairs of the legislature's special committees on oil and                                 
20            gas, if any;                                                                                                 
21                 (11)  shall, within 30 days after the close of the public comment period                                
22       under (8) of this subsection,                                                                                     
23                      (A)  prepare a summary of the public response to the                                               
24            commissioner's preliminary findings and determination;                                                       
25                      (B)  make a final findings and determination; the                                                  
26            commissioner's final findings and determination prepared under this                                          
27            subparagraph regarding a royalty reduction is final and not appealable to the                                
28            court;                                                                                                       
29                      (C)  transmit a copy of the final findings and determination to                                    
30            the lessee;                                                                                                  
31                      (D)  with the applicant's consent, amend the applicant's lease or                                  
01            unitization agreement consistent with the commissioner's final decision; and                                 
02                      (E)  make copies of the final findings and determination                                           
03            available to each person who submitted comment under (8) of this subsection                                  
04            and who has filed a request for the copies;                                                                  
05                 (12)  is not limited by the provisions of AS 38.05.134(3) or (f) of this                                
06       section in the commissioner's determination under this subsection.                                                
07    * Sec. 8. AS 38.05.275(c) is amended to read:                                                                      
08            (c)  Subsection (b) of this section may not be construed to limit the director in                            
09       the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)].                               
10    * Sec. 9. AS 39.25.110 is amended by adding a new paragraph to read:                                               
11                 (42)  oil and gas auditors performing                                                                   
12                      (A)  production tax audits, and their immediate supervisors, in                                    
13            the Department of Revenue;                                                                                   
14                      (B)  royalty audits, including net profit share audits, and their                                  
15            immediate supervisors, in the Department of Natural Resources.                                               
16    * Sec. 10. AS 41.09.010(d) is amended to read:                                                                     
17            (d)  Data derived from drilling a stratigraphic test well or exploratory well that                           
18       is provided to the commissioner under (c)(3) of this section shall be kept confidential                           
19       for 24 months after receipt by the commissioner unless the owner of the well gives                                
20       written permission to the state to release the well data at an earlier date, and,                                 
21       notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24                                    
22       months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to                              
23       other data provided to the commissioner under (c)(3) of this section, except that the                             
24       commissioner, under appropriate confidentiality provisions and without preference or                              
25       discrimination, may display to all interested third parties, but may not distribute or                            
26       transfer in hard copy or electronic form, those data with respect to all land if the                              
27       commissioner determines that the limited disclosure is necessary to further the                                   
28       interest of the state in evaluating or developing its land.                                                       
29    * Sec. 11. AS 43.05.230(a) is amended to read:                                                                     
30            (a)  It is unlawful for a current or former officer, employee, or agent of the                               
31       state to divulge the amount of income or the particulars set out or disclosed in a report                         
01       or return made under this title, except                                                                           
02                 (1)  in connection with official investigations or proceedings of the                                   
03       department, whether judicial or administrative, involving taxes due under this title;                             
04                 (2)  in connection with official investigations or proceedings of the                                   
05       child support enforcement agency, whether judicial or administrative, involving child                             
06       support obligations imposed or imposable under AS 25 or AS 47;                                                    
07                 (3)  as provided in AS 38.05.036 pertaining to audit functions of the                                   
08       Department of Natural Resources;                                                                                  
09                 (4)  as provided in AS 43.05.405 - 43.05.499; and                                                       
10                 (5)  as otherwise provided in this section or AS 43.55.890.                                         
11    * Sec. 12. AS 43.05.230(h) is amended to read:                                                                     
12            (h)  The commissioner shall, upon request, furnish to the Department of                                      
13       Natural Resources copies of tax returns, reports, and other documents filed under                             
14       AS 43.55 or AS 43.65, and the Department of Revenue's determinations and                                      
15       workpapers under those chapters. The Department of Natural Resources shall                                    
16       maintain the confidentiality that the Department of Revenue is required to extend to                              
17       the returns, reports, documents, determinations, and workpapers furnished to the                                  
18       Department of Natural Resources under this subsection.                                                            
19    * Sec. 13. AS 43.05.260(a) is amended to read:                                                                     
20            (a)  Except as provided in (c) of this section, [AND] AS 43.20.200(b), and                           
21       AS 43.55.075, the amount of a tax imposed by this title must be assessed within three                         
22       years after the return was filed, whether or not a return was filed on or after the date                          
23       prescribed by law. If the tax is not assessed before the expiration of the applicable                         
24       [THREE-YEAR] period, proceedings may not be instituted in court for the collection                                
25       of the tax.                                                                                                       
26    * Sec. 14. AS 43.55.011(j) is amended to read:                                                                     
27            (j)  For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of                       
28       this section on gas produced from a lease or property in the Cook Inlet sedimentary                               
29       basin may not exceed                                                                                              
30                 (1)  for a lease or property that first commenced commercial                                            
31       production of gas before April 1, 2006, the product obtained by multiplying (A) the                               
01       amount of taxable gas produced during the calendar year from the lease or property,                               
02       times (B) the average rate of tax that was imposed under this chapter on taxable gas                              
03       produced from the lease or property for the 12-month period ending on March 31,                                   
04       2006, times (C) the quotient obtained by dividing the total gross value at the point of                           
05       production of the taxable gas produced from the lease or property during the 12-                                  
06       month period ending on March 31, 2006, by the total amount of that gas;                                           
07                 (2)  for a lease or property that first commences commercial                                            
08       production of gas after March 31, 2006, the product obtained by multiplying (A) the                               
09       amount of taxable gas produced during the calendar year from the lease or property,                               
10       times (B) the average rate of tax that was imposed under this chapter on taxable gas                              
11       produced from all leases or properties in the Cook Inlet sedimentary basin for the 12-                            
12       month period ending on March 31, 2006, times (C) the average prevailing value for                                 
13       gas delivered in the Cook Inlet area for the 12-month period ending March 31, 2006,                               
14       as determined by the department under AS 43.55.020(f).                                                            
15    * Sec. 15. AS 43.55.011(k) is amended to read:                                                                     
16            (k)  For a calendar year before 2022, the total tax levied by (e) and (o) [(g)] of                       
17       this section on oil produced from a lease or property in the Cook Inlet sedimentary                               
18       basin may not exceed                                                                                              
19                 (1)  for a lease or property that first commenced commercial                                            
20       production of oil before April 1, 2006, the product obtained by multiplying (A) the                               
21       amount of taxable oil produced during the calendar year from the lease or property,                               
22       times (B) the average rate of tax that was imposed under this chapter on taxable oil                              
23       produced from the lease or property for the 12-month period ending on March 31,                                   
24       2006, times (C) the quotient obtained by dividing the total gross value at the point of                           
25       production of the taxable oil produced from the lease or property during the 12-month                             
26       period ending on March 31, 2006, by the total amount of that oil;                                                 
27                 (2)  for a lease or property that first commences commercial                                            
28       production of oil after March 31, 2006, the product obtained by multiplying (A) the                               
29       amount of taxable oil produced during the calendar year from the lease or property,                               
30       times (B) the average rate of tax that was imposed under this chapter on taxable oil                              
31       produced from all leases or properties in the Cook Inlet sedimentary basin for the 12-                            
01       month period ending on March 31, 2006, times (C) the average prevailing value for                                 
02       oil produced and delivered in the Cook Inlet area for the 12-month period ending on                               
03       March 31, 2006, as determined by the department under AS 43.55.020(f).                                            
04    * Sec. 16. AS 43.55.011(l) is amended to read:                                                                     
05                 (l)  When a limitation under (j) or (k) of this section on the tax levied                               
06       by (e) and (o) [(g)] of this section has the effect of reducing the producer's tax on oil                     
07       or gas produced from a lease or property below the amount of tax that would be                                    
08       levied in the absence of that limitation, the amount of the reduction is applied first                            
09       against the tax levied by (o) [(g)] of this section. However, that tax may not be                             
10       reduced below zero.                                                                                               
11    * Sec. 17. AS 43.55.011(m) is amended to read:                                                                     
12            (m)  Notwithstanding any contrary provision of AS 38.05.180(i),                                              
13       AS 41.09.010, AS 43.20.043, AS 43.55.024, or 43.55.025, tax credits under                                         
14       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, AS 43.55.024, and 43.55.025 that are                                 
15       allocated to gas produced from leases or properties in the Cook Inlet sedimentary                                 
16       basin and that are available to be applied against a tax levied by (e) of this section for                    
17       [ON] gas produced from leases or properties in the Cook Inlet sedimentary basin                                   
18       during a calendar year may be applied only against the tax levied by (e) of this section                          
19       for [ON] that gas. The amount by which the amount of tax credits that are allocated                           
20       to gas produced from leases or properties in the Cook Inlet sedimentary basin and that                            
21       the producer would otherwise be allowed to use for a later calendar year or transfer to                           
22       another person exceeds the amount of tax credits whose application would reduce the                               
23       tax levied by (e) of this section for [ON] that gas to zero, if any, is considered the                        
24       amount of excess tax credits, and the excess tax credits are subject to the following:                            
25                 (1)  for each lease or property for which a limitation under (j) or (k) of                              
26       this section on the tax levied by (e) and (o) [(g)] of this section has the effect of                         
27       reducing the producer's tax below the amount of tax that would be levied in the                                   
28       absence of that limitation, the producer shall calculate the amount of that reduction;                            
29                 (2)  the producer shall calculate the total of the reductions calculated                                
30       under (1) of this subsection for all affected leases or properties;                                               
31                 (3)  the producer shall reduce the amount of excess tax credits by the                                  
01       total calculated under (2) of this subsection, but not to less than zero;                                         
02                 (4)  any amount of excess tax credits remaining after reduction under                                   
03       (3) of this subsection may be used for a later calendar year, transferred to another                              
04       person, or applied against a tax levied for [ON] oil or gas produced from a lease or                          
05       property located anywhere in the state to the extent otherwise allowed under                                      
06       applicable law governing the tax credits.                                                                         
07    * Sec. 18. AS 43.55.011 is amended by adding new subsections to read:                                              
08            (o)  In addition to the tax levied under (e) of this section, for each month for                             
09       which the gross value at the point of production exceeds $50 a barrel, there is levied                            
10       on the producer of oil or gas a tax for all oil and gas produced that month from each                             
11       lease or property in the state, less any oil and gas the ownership or right to which is                           
12       exempt from taxation or constitutes a landowner's royalty interest. Except as                                     
13       otherwise provided under (j) and (k) of this section, the tax levied under this                                   
14       subsection is equal to the sum over all months of the calendar year of the amount                                 
15       calculated under this subsection. For each month for which this subsection applies,                               
16       the tax is equal to .225 percent of the monthly gross value at the point of production                            
17       of the taxable oil and gas multiplied by the number that represents the difference                                
18       between (1) the quotient of the total monthly gross value at the point of production of                           
19       the taxable oil and gas produced by the producer during that month divided by the                                 
20       amount of taxable oil and gas produced by the producer in BTU equivalent barrels,                                 
21       and (2) $50. The tax levied under this subsection may not be less than zero or more                               
22       than 25 percent of the gross value at the point of production of the taxable oil and gas.                         
23            (p)  For a calendar year before 2022, the tax levied by (e) and (o) of this                                  
24       section for gas produced from a lease or property that is outside of the Cook Inlet                               
25       sedimentary basin and no part of which is north of 68 degrees North latitude may not                              
26       exceed the product of the amount of taxable gas produced during the calendar year                                 
27       from the lease or property, multiplied by the average rate of tax imposed under this                              
28       chapter for taxable gas produced from all leases or properties in the Cook Inlet                                  
29       sedimentary basin, multiplied by the average prevailing value for gas delivered in the                            
30       Cook Inlet area for the 12-month period ending March 31, 2006, as determined by the                               
31       department under AS 43.55.020(f). This subsection applies only to gas produced from                               
01       a lease or property for which the start of regular deliveries of marketable gas is after                          
02       December 31, 2007.                                                                                                
03    * Sec. 19. AS 43.55.020(a) is amended to read:                                                                     
04            (a)  For a calendar year, a producer subject to tax under AS 43.55.011(e), (f),                              
05       [(g), OR] (i), or (o), and notwithstanding that a producer may be liable for the tax                          
06       under AS 43.55.011(f) rather than the tax under AS 43.55.011(e), shall pay the tax as                             
07       follows:                                                                                                          
08                 (1)  an installment payment of the estimated tax levied by                                              
09       AS 43.55.011(e) or (f), net of any tax credits applied as allowed by law, is due for                              
10       each month of the calendar year on the last day of the following month; the amount of                             
11       the installment payment is the sum of the amounts calculated under (2) and (3) of this                            
12       subsection, but not less than zero;                                                                               
13                 (2)  the first of the two amounts used to calculate the installment                                     
14       payment for a month under (1) of this subsection is equal to the remainder obtained                               
15       by subtracting                                                                                                    
16                      (A)  1/12 of the tax credits that are allowed by law to be                                         
17            applied against the tax levied by AS 43.55.011(e) for the calendar year; from                                
18                      (B)  the total of the monthly production values calculated                                         
19            under [IN THE MANNER PROVIDED IN] AS 43.55.160(a)(2) of all oil and                                      
20            gas taxable under AS 43.55.011(e) and produced by the producer from leases                                   
21            or properties in the state during the month, multiplied by 22.5 percent;                                     
22                 (3)  the second of the two amounts used to calculate the installment                                    
23       payment for a month under (1) of this subsection is the amount calculated for the                                 
24       month under AS 43.55.011(o) [AS 43.55.011(g)];                                                                
25                 (4)  an installment payment of the estimated tax levied by                                              
26       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
27       on the last day of the following month; the amount of the installment payment is the                              
28       sum of                                                                                                            
29                      (A)  the applicable percentage rate for oil provided under                                         
30            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
31            the oil taxable under AS 43.55.011(i) and produced from the lease or property                                
01            during the month; plus                                                                                       
02                      (B)  the applicable percentage rate for gas provided under                                         
03            AS 43.55.011(i), multiplied times the gross value at the point of production of                              
04            the gas taxable under AS 43.55.011(i) and produced from the lease or property                                
05            during the month;                                                                                            
06                 (5)  any amount of tax levied by AS 43.55.011(e), (f), (i), and (o)                                 
07       [AS 43.55.011(e) - (g) AND (i)], net of any credits applied as allowed by law, that                               
08       exceeds the total of the amounts due as installment payments of estimated tax is due                              
09       on March 31 of the year following the calendar year of production.                                                
10    * Sec. 20. AS 43.55.020(d) is amended to read:                                                                     
11            (d)  In making settlement with the royalty owner for oil and gas that is taxable                             
12       under AS 43.55.011, the producer may deduct the amount of the tax paid on taxable                                 
13       royalty oil and gas, or may deduct taxable royalty oil or gas equivalent in value at the                          
14       time the tax becomes due to the amount of the tax paid. If the total deductions of                                
15       installment payments of estimated tax for a calendar year exceed the actual tax for                               
16       that calendar year, the producer shall, before April 1 of the following year, refund the                          
17       excess to the royalty owner. Unless otherwise agreed between the producer and the                                 
18       royalty owner, the amount of the tax paid under AS 43.55.011(e), (f), and (o)                                 
19       [AS 43.55.011(e) - (g)] on taxable royalty oil and gas for a calendar year, other than                            
20       oil and gas the ownership or right to which constitutes a landowner's royalty interest,                           
21       is considered to be the gross value at the point of production of the taxable royalty oil                         
22       and gas produced during the calendar year multiplied by a figure that is a quotient, in                           
23       which                                                                                                             
24                 (1)  the numerator is the producer's total tax liability under                                          
25       AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)] for the calendar year of                                
26       production; and                                                                                                   
27                 (2)  the denominator is the total gross value at the point of production                                
28       of the oil and gas taxable under AS 43.55.011(e), (f), and (o) [AS 43.55.011(e) - (g)]                        
29       produced by the producer from all leases and properties in the state during the                                   
30       calendar year.                                                                                                    
31    * Sec. 21. AS 43.55.020(g) is amended to read:                                                                     
01            (g)  Notwithstanding any contrary provision of AS 43.05.225, an unpaid                                       
02       amount of an installment payment required under (a)(1) - (4) of this section that is not                          
03       paid when due bears interest (1) at the rate provided for an underpayment under 26                                
04       U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the date                                  
05       the installment payment is due until [THE] March 31 following the calendar year of                            
06       production [DESCRIBED IN AS 43.55.030(a)], and (2) as provided for a delinquent                               
07       tax under AS 43.05.225 after that March 31. Interest accrued under (1) of this                                    
08       subsection that remains unpaid after that March 31 is treated as an addition to tax that                          
09       bears interest under (2) of this subsection. An unpaid amount of tax due under (a)(5)                             
10       of this section that is not paid when due bears interest as provided for a delinquent tax                         
11       under AS 43.05.225.                                                                                               
12    * Sec. 22. AS 43.55.020(h) is amended to read:                                                                     
13            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
14                 (1)  an overpayment of an installment payment required under (a)(1) -                                   
15       (4) of this section bears interest at the rate provided for an overpayment under 26                               
16       U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from the later                                 
17       of the date the installment payment is due or the date the overpayment is made, until                             
18       the earlier of                                                                                                    
19                      (A)  the date it is refunded or is applied to an underpayment; [,]                             
20            or                                                                                                           
21                      (B)  [THE] March 31 following the calendar year of                                             
22            production [DESCRIBED IN AS 43.55.030(a)];                                                               
23                 (2)  except as provided under (1) of this subsection, interest with                                     
24       respect to an overpayment is allowed only on any net overpayment of the payments                                  
25       required under (a) of this section that remains after the later of [THE] March 31                                 
26       following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or                                   
27       the date that the statement required under AS 43.55.030(a) is filed;                                              
28                 (3)  interest is allowed under (2) of this subsection only from a date                                  
29       that is 90 days after the later of [THE] March 31 following the calendar year of                              
30       production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement                                      
31       required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment                               
01       was refunded within the 90-day period;                                                                            
02                 (4)  interest under (2) and (3) of this subsection is paid at the rate and                              
03       in the manner provided in AS 43.05.225(1).                                                                        
04    * Sec. 23. AS 43.55.023(d) is amended to read:                                                                     
05            (d)  Except as limited by (i) of this section, a person entitled to take a tax                               
06       credit under this section that wishes to transfer the unused credit to another person                             
07       may apply to the department for a transferable tax credit certificate. An application                             
08       under this subsection must be in a form prescribed by the department and must                                     
09       include supporting information and documentation that the department reasonably                                   
10       requires. The department shall grant or deny an application, or grant an application as                           
11       to a lesser amount than that claimed and deny it as to the excess, not later than 60                              
12       days after the latest of (1) March 31 of the year following the calendar year in which                            
13       the qualified capital expenditure or carried-forward annual loss for which the credit is                          
14       claimed was incurred; (2) if the applicant is required under AS 43.55.030(a) to file a                            
15       statement on or before March 31 of the year following the calendar year in which the                              
16       qualified capital expenditures or carried-forward annual loss for which the credit is                             
17       claimed was incurred, the date the statement required under AS 43.55.030(a) or (e)                            
18       was filed; or (3) the date the application was received by the department. If, based on                           
19       the information then available to it, the department is reasonably satisfied that the                             
20       applicant is entitled to a credit, the department shall issue the applicant a transferable                        
21       tax credit certificate for the amount of the credit. A certificate issued under this                              
22       subsection does not expire.                                                                                       
23    * Sec. 24. AS 43.55.023(i) is amended to read:                                                                     
24            (i)  For the purposes of this section,                                                                       
25                 (1)  a producer's or explorer's transitional investment expenditures are                                
26       the sum of the expenditures the producer or explorer incurred after March 31, 2003                            
27       [2001], and before April 1, 2006, that would be qualified capital expenditures if they                            
28       were incurred after March 31, 2006, less the sum of the payments or credits the                                   
29       producer or explorer received before April 1, 2006, for the sale or other transfer of                             
30       assets, including geological, geophysical, or well data or interpretations, acquired by                           
31       the producer or explorer as a result of expenditures the producer or explorer incurred                            
01       before April 1, 2006, that would be qualified capital expenditures, if they were                                  
02       incurred after March 31, 2006;                                                                                    
03                 (2)  a producer or explorer may elect to take a tax credit against a tax                                
04       due under AS 43.55.011(e) in the amount of 20 percent of the producer's or explorer's                             
05       transitional investment expenditures, but only to the extent that the amount does not                             
06       exceed 1/10 of the producer's or explorer's qualified capital expenditures that are                               
07       incurred during the calendar year for which the credit is taken;                                                  
08                 (3)  a producer or explorer may not take a tax credit for a transitional                                
09       investment expenditure                                                                                            
10                      (A)  for any calendar year after the later of                                                      
11                           (i)  2013; or                                                                                 
12                           (ii)  the sixth calendar year after the calendar year for                                     
13                 which the producer first applies a credit under this subsection against a                               
14                 tax due under AS 43.55.011(e), if the producer did not have                                             
15                 commercial production of oil or gas from a lease or property in the                                     
16                 state before April 1, 2006;                                                                             
17                      (B)  more than once; or                                                                            
18                      (C)  if a credit for that expenditure was taken under                                              
19            AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025;                                                
20                 (4)  notwithstanding (d), (e), and (g) of this section, a producer or                                   
21       explorer may not transfer a tax credit or obtain a transferable tax credit certificate for                        
22       a transitional investment expenditure.                                                                            
23    * Sec. 25. AS 43.55.023 is amended by adding a new subsection to read:                                             
24            (l)  A person that is exempt from taxation under this chapter may not apply for                              
25       a transferable tax credit certificate.                                                                            
26    * Sec. 26. AS 43.55.030(a) is amended to read:                                                                     
27            (a)  A producer that produces oil or gas from a lease or property in the                                 
28       state during a calendar year, whether or not any tax payment is due under                                     
29       AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file                                 
30       with the department on March 31 of the following year [FOLLOWING THE                                          
31       CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under                                                    
01       oath, in a form prescribed by the department, giving, with other information required,                            
02       the following:                                                                                                    
03                 (1)  a description of each lease or property from which [THE] oil or                                
04       [AND] gas was [WERE] produced, by name, legal description, lease number, or                                   
05       accounting codes assigned by the department;                                                                      
06                 (2)  the names of the producer and, if different, the person paying the                             
07       tax, if any;                                                                                                  
08                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
09       each lease or property, and the percentage of the gross amount of oil and gas owned                               
10       by the [EACH] producer [FOR WHOM THE TAX IS PAID];                                                            
11                 (4)  the gross value at the point of production of the oil and of the gas                               
12       produced from each lease or property owned by the [EACH] producer and the costs                           
13       of transportation of the oil and gas [FOR WHOM THE TAX IS PAID];                                              
14                 (5)  the name of the first purchaser and the price received for the oil                                 
15       and for the gas, unless relieved from this requirement in whole or in part by the                                 
16       department; [AND]                                                                                                 
17                 (6)  the producer's qualified capital expenditures, as defined in                                   
18       AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS                                                    
19       CALCULATED] under AS 43.55.165, and adjustments or other payments or                                          
20       credits under AS 43.55.170;                                                                                   
21                 (7)  the production tax values of the oil and gas under                                             
22       AS 43.55.160;                                                                                                 
23                 (8)  any claims for tax credits to be applied; and                                                  
24                 (9)  calculations showing the amounts, if any, that were or are due                                 
25       under AS 43.55.020(a) and interest on any underpayment or overpayment                                         
26       [AS 43.55.160 - 43.55.170].                                                                                       
27    * Sec. 27. AS 43.55.030 is amended by adding new subsections to read:                                              
28            (e)  An explorer or producer that incurs a lease expenditure under                                           
29       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
30       year but does not produce oil or gas from a lease or property in the state during the                             
31       calendar year shall file with the department on March 31 of the following year a                                
01       statement, under oath, in a form prescribed by the department, giving, with other                                 
02       information required, the following:                                                                              
03                 (1)  the producer's qualified capital expenditures, as defined in                                       
04       AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other                               
05       payments or credits under AS 43.55.170; and                                                                       
06                 (2)  if the explorer or producer receives a payment or credit under                                     
07       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
08       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
09            (f)  The department may require a producer, an explorer, or an operator of a                                 
10       lease or property to file monthly reports, as applicable, of                                                      
11                 (1)  the amounts and gross value at the point of production of oil and                                  
12       gas produced;                                                                                                     
13                 (2)  transportation costs of the oil and gas;                                                           
14                 (3)  any unscheduled interruption of, or reduction in the rate of, oil or                               
15       gas production;                                                                                                   
16                 (4)  lease expenditures and adjustments under AS 43.55.165 and                                          
17       43.55.170;                                                                                                        
18                 (5)  joint interest billings;                                                                           
19                 (6)  contracts for the sale or transportation of oil or gas;                                            
20                 (7)  information and calculations used in determining monthly                                           
21       installment payments of estimated tax under AS 43.55.020(a); and                                                  
22                 (8)  other records and information the department considers necessary                                   
23       for the administration of this chapter.                                                                           
24    * Sec. 28. AS 43.55.040 is amended to read:                                                                        
25            Sec. 43.55.040. Powers of Department of Revenue. Except as provided in                                     
26       AS 43.05.405 - 43.05.499, the department may                                                                      
27                 (1)  require a person engaged in production and the agent or employee                                   
28       of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil                         
29       or gas to furnish, whether by the filing of regular statements or reports or otherwise,                           
30       additional information that is considered by the department as necessary to compute                               
31       the amount of the tax; notwithstanding any contrary provision of law, the disclosure                              
01       of additional information under this paragraph to the producer obligated to pay the tax                           
02       does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information                                
03       under this paragraph that is otherwise required to be held confidential under                                     
04       AS 40.25.100(a) or AS 43.05.230(a), the department shall                                                          
05                      (A)  provide the person that furnished the information a                                           
06            reasonable opportunity to be heard regarding the proposed disclosure and the                                 
07            conditions to be imposed under (B) of this paragraph; and                                                    
08                      (B)  impose appropriate conditions limiting                                                        
09                           (i)  access to the information to those legal counsel,                                        
10                 consultants, employees, officers, and agents of the producer who have                                   
11                 a need to know that information for the purpose of determining or                                       
12                 contesting the producer's tax obligation; and                                                           
13                           (ii)  the use of the information to use for that purpose;                                     
14                 (2)  examine the books, records, and files of the [SUCH A] person;                                  
15                 (3)  conduct hearings and compel the attendance of witnesses and the                                    
16       production of books, records, and papers of any person; [AND]                                                     
17                 (4)  make an investigation or hold an inquiry that is considered                                        
18       necessary to a disclosure of the facts as to                                                                      
19                      (A)  the amount of production from any oil or gas location, or                                     
20            of a company or other producer of oil or gas; and                                                            
21                      (B)  the rendition of the oil and gas for taxing purposes; and                                 
22                 (5)  require a producer, an explorer, or an operator of a lease or                                  
23       property to file reports and copies of records that the department considers                                  
24       necessary to forecast state revenue under this chapter; in the case of reports and                            
25       copies of records relating to proposed, expected, or approved unit expenditures                               
26       for a unit for which one or more working interest owners other than the                                       
27       operator have authority to approve unit expenditures, the required reports and                                
28       copies of records are limited to those reports or copies of records that constitute                           
29       or disclose communications between the operator and the working interest                                      
30       owners relating to unit budget matters.                                                                       
31    * Sec. 29. AS 43.55 is amended by adding a new section to read:                                                    
01            Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except                                   
02       as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be                               
03       assessed within six years after the latest return was filed.                                                      
04            (b)  A decision of a regulatory agency, court, or other body with authority to                               
05       resolve disputes that results in a retroactive change to a lease expenditure, to an                               
06       adjustment to a lease expenditure, to costs of transportation, to sale price, to                                  
07       prevailing value, or to consideration of quality differentials relating to the                                    
08       commingling of oils has a corresponding effect, either an increase or decrease, as                                
09       applicable, on the production tax value of oil or gas or the amount or availability of a                          
10       tax credit as determined under this chapter. For purposes of this section, a change to a                          
11       lease expenditure includes a change in the categorization of a lease expenditure as a                             
12       qualified capital expenditure or as not a qualified capital expenditure. The producer                             
13       shall                                                                                                             
14                 (1)  within 60 days after the change, notify the department in writing;                                 
15       and                                                                                                               
16                 (2)  within 120 days after the change, file amended returns covering all                                
17       periods affected by the change, unless the department agrees otherwise or a stay is in                            
18       place that affects the filing or payment, regardless of the pendency of appeals of the                            
19       decision.                                                                                                         
20            (c)  If an alteration in or modification of a producer's federal income tax return                           
21       or a recomputation of the producer's federal income tax or determination of                                       
22       deficiency occurs that affects the amount of a tax imposed on the producer under this                             
23       chapter, the producer shall                                                                                       
24                 (1)  within 60 days after the final determination of the alteration,                                    
25       modification, recomputation, or deficiency, notify the department in writing; and                                 
26                 (2)  within 120 days after the final determination of the alteration,                                   
27       modification, recomputation, or deficiency, file amended returns covering all affected                            
28       periods.                                                                                                          
29            (d)  In this section,                                                                                        
30                 (1)  "qualified capital expenditure" has the meaning given in                                           
31       AS 43.55.023;                                                                                                     
01                 (2)  "return" includes a report, a statement, and an amended return,                                    
02       report, or statement.                                                                                             
03    * Sec. 30. AS 43.55.110 is amended by adding new subsections to read:                                              
04            (e)  The department may require that returns, statements, reports, notifications,                            
05       and applications filed under this chapter be filed electronically in a form and manner                            
06       approved or prescribed by the department.                                                                         
07            (f)  The department may require that payments required under this chapter be                                 
08       made electronically in a form and manner approved or prescribed by the department.                                
09            (g)  Notwithstanding AS 44.62, the department may issue, for the information                                 
10       and guidance of producers, explorers, and other interested persons, advisory bulletins                            
11       stating the department's interpretation of provisions of this chapter and of regulations                          
12       adopted under this chapter. Unless otherwise provided by the department by                                        
13       regulation, interpretations stated in the advisory bulletins are not binding on the                               
14       department or others.                                                                                             
15    * Sec. 31. AS 43.55.160(a) is amended to read:                                                                     
16            (a)  Except as provided in (b) of this section, for the purposes of                                          
17                 (1)  AS 43.55.011(e), the annual production tax value of the taxable                                    
18                      (A)  oil and gas produced during a calendar year from leases or                                    
19            properties in the state that include land north of 68 degrees North latitude is                              
20            the gross value at the point of production of the oil and gas taxable under                                  
21            AS 43.55.011(e) and produced by the producer from those leases or                                            
22            properties, less the producer's lease expenditures under AS 43.55.165 for the                                
23            calendar year applicable to the oil and gas produced by the producer from                                    
24            those leases or properties, as adjusted under AS 43.55.170;                                                  
25                      (B)  oil and gas produced during a calendar year from leases or                                    
26            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
27            which is north of 68 degrees North latitude, is the gross value at the point of                              
28            production of the oil and gas taxable under AS 43.55.011(e) and produced by                                  
29            the producer from those leases or properties, less the producer's lease                                      
30            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
31            and gas produced by the producer from those leases or properties, as adjusted                                
01            under AS 43.55.170;                                                                                          
02                      (C)  oil produced during a calendar year from a lease or                                           
03            property in the Cook Inlet sedimentary basin is the gross value at the point of                              
04            production of the oil taxable under AS 43.55.011(e) and produced by the                                      
05            producer from that lease or property, less the producer's lease expenditures                                 
06            under AS 43.55.165 for the calendar year applicable to the oil produced by the                               
07            producer from that lease or property, as adjusted under AS 43.55.170;                                        
08                      (D)  gas produced during a calendar year from a lease or                                           
09            property in the Cook Inlet sedimentary basin is the gross value at the point of                              
10            production of the gas taxable under AS 43.55.011(e) and produced by the                                      
11            producer from that lease or property, less the producer's lease expenditures                                 
12            under AS 43.55.165 for the calendar year applicable to the gas produced by                                   
13            the producer from that lease or property, as adjusted under AS 43.55.170;                                    
14                 (2)  AS 43.55.020(a)(2)(B) [AS 43.55.011(g)], the monthly production                                
15       tax value of the taxable                                                                                          
16                      (A)  oil and gas produced during a month from leases or                                            
17            properties in the state that include land north of 68 degrees North latitude is                              
18            the gross value at the point of production of the oil and gas taxable under                                  
19            AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those                                
20            leases or properties, less 1/12 of the producer's lease expenditures under                                   
21            AS 43.55.165 for the calendar year applicable to the oil and gas produced by                                 
22            the producer from those leases or properties, as adjusted under AS 43.55.170;                                
23                      (B)  oil and gas produced during a month from leases or                                            
24            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
25            which is north of 68 degrees North latitude, is the gross value at the point of                              
26            production of the oil and gas taxable under AS 43.55.011(e)                                              
27            [AS 43.55.011(g)] and produced by the producer from those leases or                                          
28            properties, less 1/12 of the producer's lease expenditures under AS 43.55.165                                
29            for the calendar year applicable to the oil and gas produced by the producer                                 
30            from those leases or properties, as adjusted under AS 43.55.170;                                             
31                      (C)  oil produced during a month from a lease or property in                                       
01            the Cook Inlet sedimentary basin is the gross value at the point of production                               
02            of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
03            the producer from that lease or property, less 1/12 of the producer's lease                                  
04            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
05            produced by the producer from that lease or property, as adjusted under                                      
06            AS 43.55.170;                                                                                                
07                      (D)  gas produced during a month from a lease or property in                                       
08            the Cook Inlet sedimentary basin is the gross value at the point of production                               
09            of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
10            the producer from that lease or property, less 1/12 of the producer's lease                                  
11            expenditures under AS 43.55.165 for the calendar year applicable to the gas                                  
12            produced by the producer from that lease or property, as adjusted under                                      
13            AS 43.55.170.                                                                                                
14    * Sec. 32. AS 43.55.165(a) is amended to read:                                                                     
15            (a)  Except as provided under (e) [(c) - (e)] of this section, for the purposes of                       
16       AS 43.55.160, a producer's lease expenditures for a calendar year are the ordinary and                            
17       necessary costs upstream of the point of production of oil and gas that are incurred                              
18       during the calendar year by the producer after March 31, 2006, and that are direct                                
19       costs of exploring for, developing, or producing oil or gas deposits located within the                           
20       producer's leases or properties in the state or, in the case of land in which the                                 
21       producer does not own a working interest, that are direct costs of exploring for oil or                           
22       gas deposits located within other land in the state. In determining whether costs are                             
23       lease expenditures, the department shall consider, among other factors,                                           
24                 (1)  the typical industry practices and standards in the state that                                     
25       determine the costs, other than items listed in (e) of this section, that an operator is                          
26       allowed to bill a working interest owner that is not the operator, under unit operating                           
27       agreements or similar operating agreements that were in effect before December 2,                                 
28       2005, and were subject to negotiation with at least one working interest owner with                               
29       substantial bargaining power, other than the operator; and                                                        
30                 (2)  the standards adopted by the Department of Natural Resources that                                  
31       determine the costs, other than items listed in (e) of this section, that a lessee is                             
01       allowed to deduct from revenue in calculating net profits under a lease issued under                              
02       AS 38.05.180(f)(3)(B), (D), or (E).                                                                               
03    * Sec. 33. AS 43.55.165(e) is amended to read:                                                                     
04            (e)  For purposes of this section, lease expenditures do not include                                         
05                 (1)  depreciation, depletion, or amortization;                                                          
06                 (2)  oil or gas royalty payments, production payments, lease profit                                     
07       shares, or other payments or distributions of a share of oil or gas production, profit, or                        
08       revenue;                                                                                                          
09                 (3)  taxes based on or measured by net income;                                                          
10                 (4)  interest or other financing charges or costs of raising equity or                                  
11       debt capital;                                                                                                     
12                 (5)  acquisition costs for a lease or property or exploration license;                                  
13                 (6)  costs arising from fraud, wilful misconduct, [OR] gross                                            
14       negligence, violation of law, or failure to comply with an obligation under a lease,                          
15       permit, or license issued by the state or federal government;                                                 
16                 (7)  fines or penalties imposed by law;                                                                 
17                 (8)  costs of arbitration, litigation, or other dispute resolution activities                           
18       that involve the state or concern the rights or obligations among owners of interests                             
19       in, or rights to production from, one or more leases or properties or a unit;                                     
20                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
21       business entity or arrangement;                                                                                   
22                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
23       this paragraph does not apply to the costs of obtaining insurance or a surety bond                                
24       from a third-party insurer or surety;                                                                             
25                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
26                 (12)  for a transaction that is an internal transfer or is otherwise not an                             
27       arm's length transaction, expenditures incurred that are in excess of fair market value;                          
28                 (13)  an expenditure incurred to purchase an interest in any                                            
29       corporation, partnership, limited liability company, business trust, or any other                                 
30       business entity, whether or not the transaction is treated as an asset sale for federal                           
31       income tax purposes;                                                                                              
01                 (14)  a tax levied under AS 43.55.011;                                                                  
02                 (15)  [THE PORTION OF] costs incurred for dismantlement, removal,                                       
03       surrender, or abandonment of a facility, pipeline, well pad, platform, or other                                   
04       structure, or for the restoration of a lease, field, unit, area, tract of land, body of                       
05       water, or right-of-way in conjunction with dismantlement, removal, surrender, or                                  
06       abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS                                                   
07       OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A                                                    
08       RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                      
09       OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL                                                      
10       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
11       OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO                                                      
12       THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                         
13       OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL                                                     
14       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
15       OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR                                                         
16       MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT,                                                                   
17       REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under                                                 
18       this paragraph if the dismantlement, removal, surrender, or abandonment for which                                 
19       the cost is incurred is undertaken for the purpose of replacing, renovating, or                                   
20       improving the facility, pipeline, well pad, platform, or other structure; [FOR THE                                
21       PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS                                                      
22                      (A)  IN THE CASE OF OIL, ONE BARREL;                                                               
23                      (B)  IN THE CASE OF GAS, 6,000 CUBIC FEET;]                                                        
24                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
25       connection with any unpermitted release of oil or a hazardous substance and any                                   
26       liability for damages imposed on the producer or explorer for that unpermitted                                    
27       release; this paragraph does not apply to the cost of developing and maintaining an oil                           
28       discharge prevention and contingency plan under AS 46.04.030;                                                     
29                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
30       license under AS 38.05.132;                                                                                       
31                 (18)  that portion of expenditures, that would otherwise be qualified                                   
01       capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a                     
02       calendar year that are less than the product of $0.30 multiplied by the total taxable                             
03       production from each lease or property, in BTU equivalent barrels, during that                                    
04       calendar year, except that, when a portion of a calendar year is subject to this                                  
05       provision, the expenditures and volumes shall be prorated within that calendar year;                          
06                 (19)  costs incurred for repair, replacement, or deferred                                           
07       maintenance of a facility, a pipeline, a structure, or equipment, other than a well,                          
08       that results in or is undertaken in response to a failure, problem, or event that                             
09       results in an unscheduled interruption of, or reduction in the rate of, oil or gas                            
10       production; or costs incurred for repair, replacement, or deferred maintenance                                
11       of a facility, a pipeline, a structure, or equipment, other than a well, that is                              
12       undertaken in response to, or is otherwise associated with, an unpermitted                                    
13       release of a hazardous substance or of gas; however, costs under this paragraph                               
14       that would otherwise constitute lease expenditures under (a) of this section may                              
15       be treated as lease expenditures if the department determines that the repair or                              
16       replacement is solely necessitated by an act of war, by an unanticipated grave                                
17       natural disaster or other natural phenomenon of an exceptional, inevitable, and                               
18       irresistible character, the effects of which could not have been prevented or                                 
19       avoided by the exercise of due care or foresight, or by an intentional or negligent                           
20       act or omission of a third party, other than a party or its agents in privity of                              
21       contract with, or employed by, the producer or an operator acting for the                                     
22       producer, but only if the producer or operator, as applicable, exercised due care                             
23       in operating and maintaining the facility, pipeline, structure, or equipment, and                             
24       took reasonable precautions against the act or omission of the third party and                                
25       against the consequences of the act or omission; in this paragraph,                                           
26                      (A)  "costs incurred for repair, replacement, or deferred                                      
27            maintenance of a facility, a pipeline, a structure, or equipment" includes                               
28            costs to dismantle and remove the facility, pipeline, structure, or                                      
29            equipment that is being replaced;                                                                        
30                      (B)  "hazardous substance" has the meaning given in                                            
31            AS 46.03.826;                                                                                            
01                      (C)  "replacement" includes renovation or improvement;                                         
02                 (20)  costs incurred to construct, acquire, or operate a refinery or                                
03       crude oil topping plant, regardless of whether the products of the refinery or                                
04       topping plant are used in oil or gas exploration, development, or production                                  
05       operations; however, if a producer owns a refinery or crude oil topping plant                                 
06       that is located on or near the premises of the producer's lease or property in the                            
07       state and that processes the producer's oil produced from that lease or property                              
08       into a product that the producer uses in the operation of the lease or property in                            
09       drilling for or producing oil or gas, the producer's lease expenditures include the                           
10       amount calculated by subtracting from the fair market value of the product used                               
11       the prevailing value, as determined under AS 43.55.020(f), of the oil that is                                 
12       processed.                                                                                                    
13    * Sec. 34. 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. 35. 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. 36. AS 43.55.900 is amended by adding new paragraphs to read:                                               
06                 (22)  "producer" means an owner of an operating right, operating                                        
07       interest, or working interest in a mineral interest in oil or gas;                                                
08                 (23)  "unit" means a group of tracts of land that is                                                    
09                      (A)  subject to a cooperative or a unit plan of development or                                     
10            operation that has been certified by the commissioner of natural resources                                   
11            under AS 38.05.180(p);                                                                                       
12                      (B)  subject to a cooperative or a unit plan of development or                                     
13            operation that has been certified by the United States Secretary of the Interior                             
14            under 30 U.S.C. 226(m);                                                                                      
15                      (C)  subject to an agreement of the owners of interests in the                                     
16            tracts of land to validly integrate their interests to provide for the unitized                              
17            management, development, and operation of the tracts of land as a unit, within                               
18            the meaning of AS 31.05.110(a); or                                                                           
19                      (D)  within the unit area of a unit created by order of the                                        
20            Alaska Oil and Gas Conservation Commission under AS 31.05.110(b).                                            
21    * Sec. 37. AS 43.55.165(c) and 43.55.165(d) are repealed.                                                          
22    * Sec. 38. AS 43.55.011(g), 43.55.011(h), and 43.55.160(c) are repealed.                                           
23    * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to                         
24 read:                                                                                                                   
25       APPLICABILITY. (a) Sections 24, 25, 32 - 34, and 37 of this Act apply to oil and                                  
26 gas produced after March 31, 2006.                                                                                      
27       (b)  Sections 14 - 20, 31, and 38 of this Act apply to oil and gas produced after                                 
28 December 31, 2007.                                                                                                      
29       (c)  Sections 26 and 27 of this Act apply to statements and reports under                                         
30 AS 43.55.030(a), as amended by sec. 26 of this Act, and AS 43.55.030(e) and (f), as added                               
31 by sec. 27 of this Act, required to be filed after December 31, 2007.                                                   
01       (d)  AS 43.55.075(a), enacted by sec. 29 of this Act, applies to any tax liability under                          
02 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260                               
03 had not expired before the effective date of secs. 13 and 29 of this Act.                                             
04    * Sec. 40. The uncodified law of the State of Alaska is amended by adding a new section to                         
05 read:                                                                                                                   
06       TRANSITION: ASSIGNMENT OF OIL AND GAS AUDITORS IN THE                                                             
07 DEPARTMENT OF REVENUE AND DEPARTMENT OF NATURAL RESOURCES.                                                              
08 Notwithstanding any contrary provision of law, employees employed as oil and gas auditors                               
09 performing production tax audits or as their immediate supervisors in the Department of                                 
10 Revenue and employees employed as oil and gas auditors performing royalty audits,                                       
11 including net profit share audits, or as their immediate supervisors in the Department of                               
12 Natural Resources are assigned to the exempt service in accordance with AS 39.25.110(42),                               
13 added by sec. 9 of this Act, and may not be included in the general government or                                       
14 supervisory collective bargaining units of state employees except as provided in this section.                          
15 All oil and gas auditors performing production tax audits or royalty audits and their                                   
16 immediate supervisors hired before the effective date of sec. 9 of this Act have the option of                          
17 (1) continuing in the general government or supervisory collective bargaining units and being                           
18 subject to their respective collective bargaining agreements; or (2) being removed from those                           
19 bargaining units. Those employees have 90 days from the effective date of sec. 9 of this Act                            
20 to exercise the option to continue in the collective bargaining units. The option taken under                           
21 this section by the employee is irrevocable. The employees choosing to be removed from                                  
22 those bargaining units are removed after any notice period required by a collective                                     
23 bargaining agreement.                                                                                                   
24    * Sec. 41. The uncodified law of the State of Alaska is amended by adding a new section to                         
25 read:                                                                                                                   
26       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
27 contrary provision of AS 44.62.240,                                                                                     
28            (1)  if the Department of Revenue expressly designates in the regulation that                                
29 the regulation applies retroactively to that date, a regulation adopted by the Department of                            
30 Revenue to implement, interpret, make specific, or otherwise carry out                                                  
31                 (A)  secs. 24, 25, 32 - 34, and 37 of this Act may apply retroactively to                               
01       April 1, 2006;                                                                                                    
02                 (B)  secs. 14 - 20, 26, 27, 31, and 38 of this Act may apply                                            
03       retroactively to January 1, 2008;                                                                                 
04            (2)  a regulation adopted by the Department of Natural Resources to                                          
05 implement, interpret, make specific, or otherwise carry out statutory provisions for the                                
06 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the                            
07 extent the regulation deals with the treatment of oil and gas production taxes in determining                           
08 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of                          
09 Natural Resources expressly designates in the regulation that the regulation applies                                    
10 retroactively to that date.                                                                                             
11    * Sec. 42. The uncodified law of the State of Alaska is amended by adding a new section to                         
12 read:                                                                                                                   
13       TRANSITION: REGULATIONS. The Department of Natural Resources and the                                              
14 Department of Revenue may proceed to adopt regulations to implement this Act. The                                       
15 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the                               
16 effective date of the law implemented by the regulation.                                                                
17    * Sec. 43. The uncodified law of the State of Alaska is amended by adding a new section to                         
18 read:                                                                                                                   
19       RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. Sections 24, 25,                                                 
20 32 - 34, and 37 of this Act are retroactive to April 1, 2006.                                                           
21    * Sec. 44. Sections 14 - 20, 26, 27, 31, and 38 of this Act take effect January 1, 2008.                           
22    * Sec. 45. Except as provided in sec. 44 of this Act, this Act takes effect immediately under                      
23 AS 01.10.070(c).                                                                                                        
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