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25th Legislature(2007-2008)

Bill Text 25th Legislature


00                SENATE CS FOR CS FOR HOUSE BILL NO. 2001(FIN)                                                            
01 "An Act relating to the production tax on oil and gas and to conservation surcharges on                                 
02 oil; relating to the sharing between agencies of certain information relating to the                                    
03 production tax and to oil and gas or gas only leases; expanding the period in which the                                 
04 Department of Revenue may assess the amount of oil and gas production tax and                                           
05 conservation surcharges; relating to state oil and gas audit masters; relating to oil and                               
06 gas auditors and certain oil and gas auditor supervisors; making conforming                                             
07 amendments; and providing for an effective date."                                                                       
08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
09    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
10 to read:                                                                                                                
11       LEGISLATIVE INTENT. (a) It is the intent of the legislature that AS 43.55.075(b),                                 
12 enacted by sec. 47 of this Act, confirm by clarification the long-standing interpretation of                            
13 AS 43.05.260 by the Department of Revenue relating to limitation of assessments for the                                 
01 production tax on oil and gas and conservation surcharges on oil.                                                       
02       (b)  It is the intent of the legislature that the amount of money received by the state as                        
03 a result of the retroactivity of certain provisions under sec. 68 of this Act that exceeds the                          
04 amount of money the state would have received if those provisions had not taken effect until                            
05 January 1, 2008, will be appropriated to the public education fund (AS 14.17.300).                                      
06       (c)  It is the intent of the legislature that the legislature will responsibly invest the                         
07 amounts received after December 31, 2007, as the result of the enactment of this Act that                               
08 exceed the amounts that would have been received under AS 43.55.011 - 43.55.180, as those                               
09 provisions read on June 30, 2007, as if those provisions had been applied after December 31,                            
10 2007, by making appropriations to the following:                                                                        
11            (1)  the public education fund (AS 14.17.300);                                                               
12            (2)  the budget reserve fund (art. IX, sec. 17, Constitution of the State of                                 
13 Alaska);                                                                                                                
14            (3)  to extinguish the amount of the employers' unfunded liability in the                                    
15 teachers' defined benefit retirement plan and the public employees' defined benefit retirement                          
16 plan;                                                                                                                   
17            (4)  the development and implementation of a long-range fiscal plan for the                                  
18 state; and                                                                                                              
19            (5)  for statewide energy needs of Alaskans to assist with rising energy costs.                              
20    * Sec. 2. AS 38.05.035(a) is amended to read:                                                                      
21            (a)  The director shall                                                                                      
22                 (1)  have general charge and supervision of the division and may                                        
23       exercise the powers specifically delegated to the director; the director may employ                           
24       and fix the compensation of assistants and employees necessary for the operations of                              
25       the division; the director [AND] is the certifying officer of the division, with the                          
26       consent of the commissioner, and may approve vouchers for disbursements of money                                  
27       appropriated to the division;                                                                                     
28                 (2)  manage, inspect, and control state land and improvements on it                                     
29       belonging to the state and under the jurisdiction of the division;                                                
30                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
31       commissioner;                                                                                                     
01                 (4)  prescribe application procedures and practices for the sale, lease,                                
02       or other disposition of available land, resources, property, or interest in them;                                 
03                 (5)  prescribe fees or service charges, with the consent of the                                         
04       commissioner, for any public service rendered;                                                                    
05                 (6)  under the conditions and limitations imposed by law and the                                        
06       commissioner, issue deeds, leases, or other conveyances disposing of available land,                          
07       resources, property, or any interests in them;                                                                
08                 (7)  have jurisdiction over state land, except that land acquired by the                                
09       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
10       departments or agencies succeeding to their respective functions through foreclosure                              
11       or default; to this end, the director possesses the powers and, with the approval of the                      
12       commissioner, shall perform the duties necessary to protect the state's rights and                                
13       interest in state land, including the taking of all necessary action to protect and                               
14       enforce the state's contractual or other property rights;                                                         
15                 (8)  [REPEALED                                                                                          
16                 (9)]  maintain the [SUCH] records [AS] the commissioner considers                                   
17       necessary, administer oaths, and do all things incidental to the authority imposed; the                           
18       following records and files shall be kept confidential upon request of the person                                 
19       supplying the information:                                                                                        
20                      (A)  the name of the person nominating or applying for the                                         
21            sale, lease, or other disposal of land by competitive bidding;                                               
22                      (B)  before the announced time of opening, the names of the                                        
23            bidders and the amounts of the bids;                                                                         
24                      (C)  all geological, geophysical, and engineering data supplied,                                   
25            whether or not concerned with the extraction or development of natural                                       
26            resources;                                                                                                   
27                      (D)  except as provided in AS 38.05.036, cost data and                                             
28            financial information submitted in support of applications, bonds, leases, and                               
29            similar items;                                                                                               
30                      (E)  applications for rights-of-way or easements;                                                  
31                      (F)  requests for information or applications by public agencies                                   
01            for land that [WHICH] is being considered for use for a public purpose;                                  
02                 (9) [(10)]  account for the fees, licenses, taxes, or other money                                   
03       received in the administration of this chapter including the sale or leasing of land,                             
04       identify their source, and promptly transmit them to the proper fiscal department after                           
05       crediting them to the proper fund; receipts from land application filing fees and                                 
06       charges for copies of maps and records shall be deposited immediately in the general                              
07       fund of the state by the director;                                                                                
08                 (10) [(11)]  select and employ or obtain at reasonable compensation                                 
09       cadastral, appraisal, or other professional personnel the director considers necessary                            
10       for the proper operation of the division;                                                                         
11                 (11) [(12)]  be the certifying agent of the state to select, accept, and                            
12       secure by whatever action is necessary in the name of the state, by deed, sale, gift,                             
13       devise, judgment, operation of law, or other means any land, of whatever nature or                                
14       interest, available to the state; and be the certifying agent of the state, to select,                            
15       accept, or secure by whatever action is necessary in the name of the state any land, or                           
16       title or interest to land available, granted, or subject to being transferred to the state                        
17       for any purpose;                                                                                                  
18                 (12)  on request, furnish records, files, and other information                                     
19       related to the administration of AS 38.05.180 to the Department of Revenue for                                
20       use in forecasting state revenue under or administering AS 43.55, whether or not                              
21       those records, files, and other information are required to be kept confidential                              
22       under (8) of this subsection; in the case of records, files, or other information                             
23       required to be kept confidential under (8) of this subsection, the Department of                              
24       Revenue shall maintain the confidentiality that the Department of Natural                                     
25       Resources is required to extend to records, files, and other information under (8)                            
26       of this subsection                                                                                            
27                 [(13)  REPEALED                                                                                         
28                 (14)  REPEALED].                                                                                        
29    * Sec. 3. AS 38.05.036(b) is amended to read:                                                                      
30            (b)  The Department of Revenue may obtain from the department information                                    
31       relating to royalty and net profits payments and to exploration incentive credits under                           
01       this chapter or under AS 41.09, whether or not that information is confidential. The                              
02       Department of Revenue may use the information in carrying out its functions and                                   
03       responsibilities under AS 43, and shall hold that information confidential to the extent                          
04       required by an agreement with the department or by AS 38.05.035(a)(8)                                         
05       [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230.                                                           
06    * Sec. 4. AS 38.05.036(f) is amended to read:                                                                      
07            (f)  Except as otherwise provided in this section or in connection with official                             
08       investigations or proceedings of the department, it is unlawful for a current or former                           
09       officer, employee, or agent of the state to divulge information obtained by the                                   
10       department as a result of an audit under this section that is required by an agreement                            
11       with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                          
12       AS 41.09.010(d) to be kept confidential.                                                                          
13    * Sec. 5. AS 38.05.036(g) is amended to read:                                                                      
14            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
15       that maintains the confidentiality of information to the extent required by an                                    
16       agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                
17       AS 41.09.010(d).                                                                                                  
18    * Sec. 6. AS 38.05.123(f) is amended to read:                                                                      
19            (f)  As part of the timber sale negotiations authorized by this section, the                                 
20       commissioner may require a prospective purchaser negotiating a timber sale contract                               
21       to submit financial and technical data that demonstrates that the requirements of this                            
22       section have been or will be met. Upon the prospective purchaser's request, the                                   
23       commissioner shall keep data provided by the purchaser confidential in accordance                                 
24       with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)].                                             
25    * Sec. 7. AS 38.05.133(e) is amended to read:                                                                      
26            (e)  The commissioner may make a written request to a prospective licensee                                   
27       for additional information on the prospective licensee's proposal. The commissioner                               
28       shall keep confidential information described in AS 38.05.035(a)(8)                                           
29       [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made                            
30       a written request that the information remain confidential.                                                       
31    * Sec. 8. AS 38.05.180(j) is amended to read:                                                                      
01            (j)  The commissioner                                                                                        
02                 (1)  may provide for modification of royalty on individual leases,                                      
03       leases unitized as described in (p) of this section, leases subject to an agreement                               
04       described in (s) or (t) of this section, or interests unitized under AS 31.05                                     
05                      (A)  to allow for production from an oil or gas field or pool if                                   
06                           (i)  the oil or gas field or pool has been sufficiently                                       
07                 delineated to the satisfaction of the commissioner;                                                     
08                           (ii)  the field or pool has not previously produced oil or                                    
09                 gas for sale; and                                                                                       
10                           (iii)  oil or gas production from the field or pool would                                     
11                 not otherwise be economically feasible;                                                                 
12                      (B)  to prolong the economic life of an oil or gas field or pool                                   
13            as per barrel or barrel equivalent costs increase or as the price of oil or gas                              
14            decreases, and the increase or decrease is sufficient to make future production                              
15            no longer economically feasible; or                                                                          
16                      (C)  to reestablish production of shut-in oil or gas that would                                    
17            not otherwise be economically feasible;                                                                      
18                 (2)  may not grant a royalty modification unless the lessee or lessees                                  
19       requesting the change make a clear and convincing showing that a modification of                                  
20       royalty meets the requirements of this subsection and is in the best interests of the                             
21       state;                                                                                                            
22                 (3)  shall provide for an increase or decrease or other modification of                                 
23       the state's royalty share by a sliding scale royalty or other mechanism that shall be                             
24       based on a change in the price of oil or gas and may also be based on other relevant                              
25       factors such as a change in production rate, projected ultimate recovery, development                             
26       costs, and operating costs;                                                                                       
27                 (4)  may not grant a royalty reduction for a field or pool                                              
28                      (A)  under (1)(A) of this subsection if the royalty modification                                   
29            for the field or pool would establish a royalty rate of less than five percent in                            
30            amount or value of the production removed or sold from a lease or leases                                     
31            covering the field or pool;                                                                                  
01                      (B)  under (1)(B) or (1)(C) of this subsection if the royalty                                      
02            modification for the field or pool would establish a royalty rate of less than                               
03            three percent in amount or value of the production removed or sold from a                                    
04            lease or leases covering the field or pool;                                                                  
05                 (5)  may not grant a royalty reduction under this subsection without                                    
06       including an explicit condition that the royalty reduction is not assignable without the                          
07       prior written approval, which may not be unreasonably withheld, by the                                            
08       commissioner; the commissioner shall, in the preliminary and final findings and                                   
09       determinations, set out the conditions under which the royalty reduction may be                                   
10       assigned;                                                                                                         
11                 (6)  shall require the lessee or lessees to submit, with the application                                
12       for the royalty reduction, financial and technical data that demonstrate that the                                 
13       requirements of this subsection are met; the commissioner                                                         
14                      (A)  may require disclosure of only the financial and technical                                    
15            data related to development, production, and transportation of oil and gas or                                
16            gas only from the field or pool that are reasonably available to the applicant;                              
17            and                                                                                                          
18                      (B)  shall keep the data confidential under AS 38.05.035(a)(8)                                 
19            [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application                              
20            for the royalty reduction; the confidential data may be disclosed by the                                     
21            commissioner to legislators and to the legislative auditor and as directed by                                
22            the chair or vice-chair of the Legislative Budget and Audit Committee to the                                 
23            director of the division of legislative finance, the permanent employees of                                  
24            their respective divisions who are responsible for evaluating a royalty                                      
25            reduction, and to agents or contractors of the legislative auditor or the                                    
26            legislative finance director who are engaged under contract to evaluate the                                  
27            royalty reduction, if they sign an appropriate confidentiality agreement;                                    
28                 (7)  may                                                                                                
29                      (A)  require the lessee or lessees making application for the                                      
30            royalty reduction under (1)(A) of this subsection to pay for the services of an                              
31            independent contractor, selected by the lessee or lessees from a list of                                     
01            qualified consultants compiled by the commissioner, to evaluate hydrocarbon                                  
02            development, production, transportation, and economics and to assist the                                     
03            commissioner in evaluating the application and financial and technical data;                                 
04            if, under this subparagraph, the commissioner requires payment for the                                       
05            services of an independent contractor, the total cost of the services to be paid                             
06            for by the lessee or lessees may not exceed $150,000 for each application, and                               
07            the commissioner shall determine the relevant scope of the work to be                                        
08            performed by the contractor; selection of an independent contractor under this                               
09            subparagraph is not subject to AS 36.30;                                                                     
10                      (B)  with the mutual consent of the lessee or lessees making                                       
11            application for the royalty reduction under (1)(B) or (1)(C) of this subsection,                             
12            request payment for the services of an independent contractor, selected from a                               
13            list of qualified consultants to evaluate hydrocarbon development, production,                               
14            transportation, and economics by the commissioner to assist the commissioner                                 
15            in evaluating the application and financial and technical data; if, under this                               
16            subparagraph, the commissioner requires payment for the services of an                                       
17            independent contractor, the total cost of the services that may be paid for by                               
18            the lessee or lessees may not exceed $150,000 for each application, and the                                  
19            commissioner shall determine the relevant scope of the work to be performed                                  
20            by the contractor; selection of an independent contractor under this                                         
21            subparagraph is not subject to AS 36.30;                                                                     
22                 (8)  shall make and publish a preliminary findings and determination                                    
23       on the royalty reduction application, give reasonable public notice of the preliminary                            
24       findings and determination, and invite public comment on the preliminary findings                                 
25       and determination during a 30-day period for receipt of public comment;                                           
26                 (9)  shall offer to appear before the Legislative Budget and Audit                                      
27       Committee, on a day that is not earlier than 10 days and not later than 20 days after                             
28       giving public notice under (8) of this subsection, to provide the committee a review of                           
29       the commissioner's preliminary findings and determination on the royalty reduction                                
30       application and administrative process; if the Legislative Budget and Audit                                       
31       Committee accepts the commissioner's offer, the committee shall give notice of the                                
01       committee's meeting to all members of the legislature;                                                            
02                 (10)  shall make copies of the preliminary findings and determination                                   
03       available to                                                                                                      
04                      (A)  the presiding officer of each house of the legislature;                                       
05                      (B)  the chairs of the legislature's standing committees on                                        
06            resources; and                                                                                               
07                      (C)  the chairs of the legislature's special committees on oil and                                 
08            gas, if any;                                                                                                 
09                 (11)  shall, within 30 days after the close of the public comment period                                
10       under (8) of this subsection,                                                                                     
11                      (A)  prepare a summary of the public response to the                                               
12            commissioner's preliminary findings and determination;                                                       
13                      (B)  make a final findings and determination; the                                                  
14            commissioner's final findings and determination prepared under this                                          
15            subparagraph regarding a royalty reduction is final and not appealable to the                                
16            court;                                                                                                       
17                      (C)  transmit a copy of the final findings and determination to                                    
18            the lessee;                                                                                                  
19                      (D)  with the applicant's consent, amend the applicant's lease or                                  
20            unitization agreement consistent with the commissioner's final decision; and                                 
21                      (E)  make copies of the final findings and determination                                           
22            available to each person who submitted comment under (8) of this subsection                                  
23            and who has filed a request for the copies;                                                                  
24                 (12)  is not limited by the provisions of AS 38.05.134(3) or (f) of this                                
25       section in the commissioner's determination under this subsection.                                                
26    * Sec. 9. AS 38.05.275(c) is amended to read:                                                                      
27            (c)  Subsection (b) of this section may not be construed to limit the director in                            
28       the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)].                               
29    * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read:                                              
30                 (42)  oil and gas audit masters employed in a professional capacity by                                  
31       the Department of Revenue and the Department of Natural Resources to collect oil                                  
01       and gas revenue by developing policy, conducting studies, drafting proposed                                       
02       regulations, enforcing regulations, and directing audits by oil and gas revenue                                   
03       auditors.                                                                                                       
04    * Sec. 11. AS 41.09.010(d) is amended to read:                                                                     
05            (d)  Data derived from drilling a stratigraphic test well or exploratory well that                           
06       is provided to the commissioner under (c)(3) of this section shall be kept confidential                           
07       for 24 months after receipt by the commissioner unless the owner of the well gives                                
08       written permission to the state to release the well data at an earlier date, and,                                 
09       notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24                                    
10       months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to                              
11       other data provided to the commissioner under (c)(3) of this section, except that the                             
12       commissioner, under appropriate confidentiality provisions and without preference or                              
13       discrimination, may display to all interested third parties, but may not distribute or                            
14       transfer in hard copy or electronic form, those data with respect to all land if the                              
15       commissioner determines that the limited disclosure is necessary to further the                                   
16       interest of the state in evaluating or developing its land.                                                       
17    * Sec. 12. AS 43.05.230(a) is amended to read:                                                                     
18            (a)  It is unlawful for a current or former officer, employee, or agent of the                               
19       state to divulge the amount of income or the particulars set out or disclosed in a report                         
20       or return made under this title, except                                                                           
21                 (1)  in connection with official investigations or proceedings of the                                   
22       department, whether judicial or administrative, involving taxes due under this title;                             
23                 (2)  in connection with official investigations or proceedings of the                                   
24       child support enforcement agency, whether judicial or administrative, involving child                             
25       support obligations imposed or imposable under AS 25 or AS 47;                                                    
26                 (3)  as provided in AS 38.05.036 pertaining to audit functions of the                                   
27       Department of Natural Resources;                                                                                  
28                 (4)  as provided in AS 43.05.405 - 43.05.499; and                                                       
29                 (5)  as otherwise provided in this section or AS 43.55.890.                                         
30    * Sec. 13. AS 43.05.230(h) is amended to read:                                                                     
31            (h)  The commissioner shall, upon request, furnish to the Department of                                      
01       Natural Resources copies of tax returns, reports, and other documents filed under                             
02       AS 43.55 or AS 43.65, and the Department of Revenue's determinations and                                      
03       workpapers under those chapters. The Department of Natural Resources shall                                    
04       maintain the confidentiality that the Department of Revenue is required to extend to                              
05       the returns, reports, documents, determinations, and workpapers furnished to the                                  
06       Department of Natural Resources under this subsection.                                                            
07    * Sec. 14. AS 43.05.260(a) is amended to read:                                                                     
08            (a)  Except as provided in (c) of this section, [AND] AS 43.20.200(b), and                           
09       AS 43.55.075, the amount of a tax imposed by this title must be assessed within three                         
10       years after the return was filed, whether or not a return was filed on or after the date                          
11       prescribed by law. If the tax is not assessed before the expiration of the applicable                         
12       [THREE-YEAR] period, proceedings may not be instituted in court for the collection                                
13       of the tax.                                                                                                       
14    * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read:                                                      
15            (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
16       produced each calendar year from each lease or property in the state, less any oil and                            
17       gas the ownership or right to which is exempt from taxation or constitutes a                                      
18       landowner's royalty interest. Except as otherwise provided under (f), (j), and (k) of                             
19       this section, the tax is equal to the sum, over all the months of the calendar year, of                           
20       the production tax value for the month of the taxable oil and gas as calculated under                             
21       AS 43.55.160 multiplied by the tax rate for the month determined under (g) of this                                
22       section.                                                                                                          
23    * Sec. 16. AS 43.55.011(f) is amended to read:                                                                     
24            (f)  The levy of tax under this section for [ON A PRODUCER OF] oil and gas                               
25       produced north of 68 degrees North latitude, other than oil and gas production                                
26       subject to (i) of this section, may not be less than                                                          
27                 (1)  four percent of the gross value at the point of production when the                                
28       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
29       West Coast during the calendar year for which the tax is due is more than $25;                                    
30                 (2)  three percent of the gross value at the point of production when the                               
31       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
01       West Coast during the calendar year for which the tax is due is over $20 but not over                             
02       $25;                                                                                                              
03                 (3)  two percent of the gross value at the point of production when the                                 
04       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
05       West Coast during the calendar year for which the tax is due is over $17.50 but not                               
06       over $20;                                                                                                         
07                 (4)  one percent of the gross value at the point of production when the                                 
08       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
09       West Coast during the calendar year for which the tax is due is over $15 but not over                             
10       $17.50; or                                                                                                        
11                 (5)  zero percent of the gross value at the point of production when the                                
12       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
13       West Coast during the calendar year for which the tax is due is $15 or less.                                      
14    * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read:                                                      
15            (g)  The tax rate applied to the monthly production tax value of oil and gas                                 
16       under (e) of this section for each month of the calendar year in which the tax is levied                          
17       is 25 percent plus, for each month for which the monthly average production tax                                   
18       value for each BTU equivalent barrel is more than                                                                 
19                 (1)  $30 but not more than $90, 0.4 percent multiplied by the number                                    
20       that represents the difference between the average production tax value for each BTU                              
21       equivalent barrel of the taxable oil and gas for that month and $30;                                              
22                 (2)  $90, the sum of 24 percent and the product of 0.1 percent                                          
23       multiplied by the number that represents the difference between the average                                       
24       production tax value for each BTU equivalent barrel of the taxable oil and gas for that                           
25       month and $90, except that the sum determined under this paragraph may not exceed                                 
26       50 percent.                                                                                                       
27    * Sec. 18. AS 43.55.011(j) is amended to read:                                                                     
28            (j)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)]                                
29       of this section for [ON] gas produced from a lease or property in the Cook Inlet                              
30       sedimentary basin may not exceed                                                                                  
31                 (1)  for a lease or property that first commenced commercial                                            
01       production of gas before April 1, 2006, the product obtained by multiplying (A) the                               
02       amount of taxable gas produced during the calendar year from the lease or property,                               
03       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
04       taxable gas produced from the lease or property for the 12-month period ending on                                 
05       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
06       the point of production of the taxable gas produced from the lease or property during                             
07       the 12-month period ending on March 31, 2006, by the total amount of that gas;                                    
08                 (2)  for a lease or property that first commences commercial                                            
09       production of gas after March 31, 2006, the product obtained by multiplying (A) the                               
10       amount of taxable gas produced during the calendar year from the lease or property,                               
11       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
12       taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin                            
13       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
14       value for gas delivered in the Cook Inlet area for the 12-month period ending                                     
15       March 31, 2006, as determined by the department under AS 43.55.020(f).                                            
16    * Sec. 19. AS 43.55.011(k) is amended to read:                                                                     
17            (k)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND                                     
18       (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet                         
19       sedimentary basin may not exceed                                                                                  
20                 (1)  for a lease or property that first commenced commercial                                            
21       production of oil before April 1, 2006, the product obtained by multiplying (A) the                               
22       amount of taxable oil produced during the calendar year from the lease or property,                               
23       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
24       taxable oil produced from the lease or property for the 12-month period ending on                                 
25       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
26       the point of production of the taxable oil produced from the lease or property during                             
27       the 12-month period ending on March 31, 2006, by the total amount of that oil;                                    
28                 (2)  for a lease or property that first commences commercial                                            
29       production of oil after March 31, 2006, the product obtained by multiplying (A) the                               
30       amount of taxable oil produced during the calendar year from the lease or property,                               
31       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
01       taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin                            
02       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
03       value for oil produced and delivered in the Cook Inlet area for the 12-month period                               
04       ending on March 31, 2006, as determined by the department under AS 43.55.020(f).                                  
05    * Sec. 20. AS 43.55.011(m) is repealed and reenacted:                                                              
06            (m)  Notwithstanding any contrary provision of AS 38.05.180(i),                                              
07       AS 41.09.010, AS 43.55.024, or 43.55.025, the department shall provide by                                         
08       regulation a method to ensure that for a calendar year for which a producer's tax                                 
09       liability is limited by AS 43.55.011(j) or (k), tax credits otherwise available under                             
10       AS 38.05.180(i), AS 41.09.010, AS 43.55.024, or 43.55.025 and allocated to oil or                                 
11       gas subject to the limitations in AS 43.55.011(j) and (k) are accounted for as though                             
12       the credits had been applied first against a tax liability calculated without regard to                           
13       the limitations under AS 43.55.011(j) and (k) so as to reduce the tax liability to the                            
14       maximum amount provided for under AS 43.55.011(j) for the production of gas or                                    
15       AS 43.55.011(k) for the production of oil. The regulation must provide for a                                      
16       reasonable method to allocate tax credits to oil or gas subject to AS 43.55.011(j) and                            
17       (k). Only the amount of a tax credit remaining after the accounting provided for under                            
18       this subsection may be used for a later calendar year, transferred to another person, or                          
19       applied against a tax levied on the production of oil or gas not subject to                                       
20       AS 43.55.011(j) or (k) to the extent otherwise allowed.                                                           
21    * Sec. 21. AS 43.55.020(a) is repealed and reenacted to read:                                                      
22            (a)  For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i)                              
23       shall pay the tax as follows:                                                                                     
24                 (1)  an installment payment of the estimated tax levied by                                              
25       AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each                                
26       month of the calendar year on the last day of the following month; except as                                      
27       otherwise provided under (2) of this subsection, the amount of the installment                                    
28       payment is the sum of the following amounts, less 1/12 of the tax credits that are                                
29       allowed by law to be applied against the tax levied by AS 43.55.011(e) for the                                    
30       calendar year, but the amount of the installment payment may not be less than zero:                               
31                      (A)  for oil and gas produced from leases or properties in the                                     
01            state outside the Cook Inlet sedimentary basin, other than leases or properties                              
02            subject to AS 43.55.011(f), the greater of                                                                   
03                           (i)  zero; or                                                                                 
04                           (ii)  the total tax rate for the month determined in                                          
05                 AS 43.55.011(g) multiplied by the remainder obtained by subtracting                                     
06                 1/12 of the producer's adjusted lease expenditures for the calendar year                                
07                 of production under AS 43.55.165 and 43.55.170 that are deductible                                      
08                 for the leases or properties under AS 43.55.160 from the gross value at                                 
09                 the point of production of the oil and gas produced from the leases or                                  
10                 properties during the month for which the installment payment is                                        
11                 calculated;                                                                                             
12                      (B)  for oil and gas produced from leases or properties subject                                    
13            to AS 43.55.011(f), the greatest of                                                                          
14                           (i)  zero;                                                                                    
15                           (ii)  zero percent, one percent, two percent, three                                           
16                 percent, or four percent, as applicable, of the gross value at the point of                             
17                 production of the oil and gas produced from all leases or properties                                    
18                 during the month for which the installment payment is calculated; or                                    
19                           (iii)  the total tax rate for the month determined in                                         
20                 AS 43.55.011(g) multiplied by the remainder obtained by subtracting                                     
21                 1/12 of the producer's adjusted lease expenditures for the calendar year                                
22                 of production under AS 43.55.165 and 43.55.170 that are deductible                                      
23                 for those leases or properties under AS 43.55.160 from the gross value                                  
24                 at the point of production of the oil and gas produced from those leases                                
25                 or properties during the month for which the installment payment is                                     
26                 calculated;                                                                                             
27                      (C)  for oil and gas produced from each lease or property                                          
28            subject to AS 43.55.011(j) or (k), the greater of                                                            
29                           (i)  zero; or                                                                                 
30                           (ii)  the total tax rate for the month determined in                                          
31                 AS 43.55.011(g) multiplied by the remainder obtained by subtracting                                     
01                 1/12 of the producer's adjusted lease expenditures for the calendar year                                
02                 of production under AS 43.55.165 and 43.55.170 that are deductible                                      
03                 under AS 43.55.160 for oil or gas, respectively, produced from the                                      
04                 lease or property from the gross value at the point of production of the                                
05                 oil or gas, respectively, produced from the lease or property during the                                
06                 month for which the installment payment is calculated;                                                  
07                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
08       produced from a lease or property subject to AS 43.55.011(j) or (k) may not exceed                                
09       the product obtained by carrying out the calculation set out in AS 43.55.011(j)(1) or                             
10       (2), as applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for                           
11       oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A), as applicable, the amount of                            
12       taxable gas produced during the month for the amount of taxable gas produced during                               
13       the calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable,                             
14       the amount of taxable oil produced during the month for the amount of taxable oil                                 
15       produced during the calendar year;                                                                                
16                 (3)  an installment payment of the estimated tax levied by                                              
17       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
18       on the last day of the following month; the amount of the installment payment is the                              
19       sum of                                                                                                            
20                      (A)  the applicable tax rate for oil provided under                                                
21            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
22            the oil taxable under AS 43.55.011(i) and produced from the lease or property                                
23            during the month; and                                                                                        
24                      (B)  the applicable tax rate for gas provided under                                                
25            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
26            the gas taxable under AS 43.55.011(i) and produced from the lease or property                                
27            during the month;                                                                                            
28                 (4)  any amount of tax levied by AS 43.55.011(e) or (i), net of any                                     
29       credits applied as allowed by law, that exceeds the total of the amounts due as                                   
30       installment payments of estimated tax is due on March 31 of the year following the                                
31       calendar year of production.                                                                                      
01    * Sec. 22. AS 43.55.020(g) is amended to read:                                                                     
02            (g)  Notwithstanding any contrary provision of AS 43.05.225, an unpaid                                       
03       amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this                           
04       section that is not paid when due bears interest (1) at the rate provided for an                                  
05       underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                            
06       compounded daily, from the date the installment payment is due until [THE]                                        
07       March 31 following the calendar year of production [DESCRIBED IN                                              
08       AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after                               
09       that March 31. Interest accrued under (1) of this subsection that remains unpaid after                            
10       that March 31 is treated as an addition to tax that bears interest under (2) of this                              
11       subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is                         
12       not paid when due bears interest as provided for a delinquent tax under AS 43.05.225.                             
13    * Sec. 23. AS 43.55.020(h) is amended to read:                                                                     
14            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
15                 (1)  an overpayment of an installment payment required under (a)(1) -                               
16       (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment                     
17       under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from                                  
18       the later of the date the installment payment is due or the date the overpayment is                               
19       made, until the earlier of                                                                                        
20                      (A)  the date it is refunded or is applied to an underpayment; [,]                             
21            or                                                                                                           
22                      (B)  [THE] March 31 following the calendar year of                                             
23            production [DESCRIBED IN AS 43.55.030(a)];                                                               
24                 (2)  except as provided under (1) of this subsection, interest with                                     
25       respect to an overpayment is allowed only on any net overpayment of the payments                                  
26       required under (a) of this section that remains after the later of [THE] March 31                                 
27       following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or                                   
28       the date that the statement required under AS 43.55.030(a) is filed;                                              
29                 (3)  interest is allowed under (2) of this subsection only from a date                                  
30       that is 90 days after the later of [THE] March 31 following the calendar year of                              
31       production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement                                      
01       required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment                               
02       was refunded within the 90-day period;                                                                            
03                 (4)  interest under (2) and (3) of this subsection is paid at the rate and                              
04       in the manner provided in AS 43.05.225(1).                                                                        
05    * Sec. 24. AS 43.55.023(a) is amended to read:                                                                     
06            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
07       expenditure as follows:                                                                                           
08                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
09       deductible lease expenditure for purposes of calculating the production tax value of                              
10       oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                            
11       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or                                       
12       explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a                         
13       tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of                               
14       20 percent of that expenditure; however, not more than half of the tax credit may                             
15       be applied for a single calendar year;                                                                        
16                 (2)  a producer or explorer may take a credit for a qualified capital                                   
17       expenditure incurred in connection with geological or geophysical exploration or in                               
18       connection with an exploration well only if the producer or explorer [PROVIDES TO                                 
19       THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER                                                           
20       AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS                                                     
21       SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN                                                          
22       AGREEMENT]                                                                                                        
23                      (A)  agrees, in writing, to the applicable provisions of                                       
24            AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL                                                  
25            RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER                                                                 
26            COMPLETION OF THE GEOLOGICAL OR GEOPHYSICAL DATA                                                             
27            PROCESSING OR COMPLETION OF THE WELL, OR 30 DAYS AFTER                                                       
28            THE STATEMENT IS FILED, OF THE DATE OF COMPLETION AND TO                                                     
29            SUBMIT A REPORT TO THAT DEPARTMENT DESCRIBING THE                                                            
30            PROCESSING SEQUENCE AND PROVIDE A LIST OF DATA SETS                                                          
31            AVAILABLE];                                                                                                  
01                      (B)  submits [TO PROVIDE] to the Department of Natural                                         
02            Resources all data that would be required to be submitted under                                          
03            AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A                                                 
04            REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND                                                             
05            REPORTS IDENTIFIED IN (A) OF THIS PARAGRAPH;                                                                 
06                      (C)  THAT, NOTWITHSTANDING ANY PROVISION OF                                                        
07            AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD                                                        
08            CONFIDENTIAL THE INFORMATION PROVIDED TO THAT                                                                
09            DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS                                                                 
10            FOLLOWING THE COMPLETION DATE, AFTER WHICH THE                                                               
11            DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION                                                            
12            AFTER 30 DAYS' PUBLIC NOTICE].                                                                             
13    * Sec. 25. AS 43.55.023(b) is amended to read:                                                                     
14            (b)  A producer or explorer may elect to take a tax credit in the amount of 25                           
15       [20] percent of a carried-forward annual loss. A credit under this subsection may be                              
16       applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this                             
17       subsection, a carried-forward annual loss is the amount of a producer's or explorer's                             
18       adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous                                       
19       calendar year that was not deductible in calculating production tax values for that                           
20       calendar year under AS 43.55.160 [AS 43.55.160(b) AND (e)].                                                   
21    * Sec. 26. AS 43.55.023(d) is amended to read:                                                                     
22            (d)  Except as limited by (i) of this section, a person that is entitled to take a                       
23       tax credit under this section that wishes to transfer the unused credit to another person                         
24       or obtain a cash payment may apply to the department for [A] transferable tax credit                          
25       certificates [CERTIFICATE]. An application under this subsection must be in a form                            
26       prescribed by the department and must include supporting information and                                          
27       documentation that the department reasonably requires. The department shall grant or                              
28       deny an application, or grant an application as to a lesser amount than that claimed                              
29       and deny it as to the excess, not later than 120 [60] days after the latest of (1)                            
30       March 31 of the year following the calendar year in which the qualified capital                                   
31       expenditure or carried-forward annual loss for which the credit is claimed was                                    
01       incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER AS 43.55.030(a) TO                                              
02       FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE YEAR                                                                
03       FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED CAPITAL                                                        
04       EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR WHICH THE                                                         
05       CREDIT IS CLAIMED WAS INCURRED,] the date the statement required under                                        
06       AS 43.55.030(a) or (e) was filed for the calendar year in which the qualified                             
07       capital expenditure or carried-forward annual loss for which the credit is                                    
08       claimed was incurred; or (3) the date the application was received by the                                     
09       department. If, based on the information then available to it, the department is                                  
10       reasonably satisfied that the applicant is entitled to a credit, the department shall issue                       
11       the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for                        
12       half of the amount of the credit. The credit shown on one of the two certificates is                      
13       available for immediate use. The credit shown on the second of the two                                        
14       certificates may not be applied against a tax for a calendar year earlier than the                            
15       calendar year following the calendar year in which the certificate is issued, and                             
16       the certificate must contain a conspicuous statement to that effect. A certificate                            
17       issued under this subsection does not expire.                                                                     
18    * Sec. 27. AS 43.55.023(e) is amended to read:                                                                     
19            (e)  A person to which a transferable tax credit certificate is issued under (d)                             
20       of this section may transfer the certificate to another person, and a transferee may                              
21       further transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)]                 
22       of this section, and notwithstanding any action the department may take with respect                              
23       to the applicant under (g) of this section, the owner of a certificate may apply the                              
24       credit or a portion of the credit shown on the certificate only against a tax levied by                       
25       [DUE UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax                                        
26       credit certificate may not be applied to reduce a transferee's total tax liability [DUE]                      
27       under AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less                            
28       than 80 percent of the tax that would otherwise be due without applying that credit.                              
29       Any portion of a credit not used under this subsection may be applied in a later                                  
30       period.                                                                                                           
31    * Sec. 28. AS 43.55.023(i) is amended to read:                                                                     
01            (i)  For the purposes of this section,                                                                       
02                 (1)  a producer's or explorer's transitional investment expenditures are                                
03       the sum of the expenditures the producer or explorer incurred after March 31, 2001,                               
04       and before April 1, 2006, that would be qualified capital expenditures if they were                               
05       incurred after March 31, 2006, less the sum of the payments or credits the producer or                            
06       explorer received before April 1, 2006, for the sale or other transfer of assets,                                 
07       including geological, geophysical, or well data or interpretations, acquired by the                               
08       producer or explorer as a result of expenditures the producer or explorer incurred                                
09       before April 1, 2006, that would be qualified capital expenditures, if they were                                  
10       incurred after March 31, 2006;                                                                                    
11                 (2)  a producer or explorer that did not have commercial production                                 
12       of oil or gas from a lease or property in the state before April 1, 2006, may elect                           
13       to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the                               
14       amount of 20 percent of the producer's or explorer's transitional investment                                      
15       expenditures, but only to the extent that the amount does not exceed 1/10 of the                                  
16       producer's or explorer's qualified capital expenditures that are incurred during the                              
17       calendar year for which the credit is taken;                                                                      
18                 (3)  a producer or explorer may not take a tax credit for a transitional                                
19       investment expenditure                                                                                            
20                      (A)  for any calendar year after [THE LATER OF                                                     
21                           (i)]  2013; [OR                                                                               
22                           (ii)  THE SIXTH CALENDAR YEAR AFTER THE                                                       
23                 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST                                                              
24                 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A                                                        
25                 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT                                                  
26                 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A                                                         
27                 LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;]                                                   
28                      (B)  more than once; or                                                                            
29                      (C)  if a credit for that expenditure was taken under                                              
30            AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025;                                                
31                 (4)  notwithstanding (d), (e), and (g) of this section, a producer or                                   
01       explorer may not transfer a tax credit or obtain a transferable tax credit certificate for                        
02       a transitional investment expenditure.                                                                            
03    * Sec. 29. AS 43.55.023 is amended by adding a new subsection to read:                                             
04            (l)  An entity that is exempt from taxation under this chapter may not apply                                 
05       for a transferable tax credit certificate.                                                                        
06    * Sec. 30. AS 43.55.024(a) is amended to read:                                                                     
07            (a)  For a calendar year for which a producer's tax liability under                                          
08       AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside                                
09       the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North                                   
10       latitude, exceeds zero before application of any credits under this chapter, a producer                           
11       that is qualified under (e) of this section may apply a tax credit against that liability of                      
12       not more than $6,000,000.                                                                                         
13    * Sec. 31. AS 43.55.024(c) is amended to read:                                                                     
14            (c)  For a calendar year for which a producer's tax liability under                                          
15       AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this                                
16       chapter, other than a credit under (a) of this section but after application of any credit                        
17       under (a) of this section, a producer that is qualified under (e) of this section and                             
18       whose average amount of oil and gas produced a day and taxable under                                              
19       AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may                                    
20       apply a tax credit under this subsection against that liability. A producer whose                                 
21       average amount of oil and gas produced a day and taxable under AS 43.55.011(e)                                    
22       [OR (f)] is                                                                                                       
23                 (1)  not more than 50,000 BTU equivalent barrels may apply a tax                                        
24       credit of not more than $12,000,000 for the calendar year;                                                        
25                 (2)  more than 50,000 and less than 100,000 BTU equivalent barrels                                      
26       may apply a tax credit of not more than $12,000,000 multiplied by the following                                   
27       fraction for the calendar year:                                                                                   
28                         1 - [2 X (AP - 50,000)]  100,000                                                               
29       where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR                                    
30       (f)], produced a day during the calendar year in BTU equivalent barrels.                                          
31    * Sec. 32. AS 43.55.024(e) is amended to read:                                                                     
01            (e)  On written application by a producer that includes any information the                                  
02       department may require, the department shall determine whether the producer                                       
03       qualifies for a calendar year under this section. To qualify under this section, a                                
04       producer must demonstrate that its operation in the state or its ownership of an                                  
05       interest in a lease or property in the state as a distinct producer would not result in the                       
06       division among multiple producer entities of any production tax liability under                                   
07       AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a                                  
08       single producer if the tax credit provisions of (a) or (c) of this section did not exist.                         
09    * Sec. 33. AS 43.55.024(g) is amended to read:                                                                     
10            (g)  A tax credit authorized by (c) of this section may not be applied to reduce                             
11       a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below                             
12       zero.                                                                                                             
13    * Sec. 34. AS 43.55.025(a) is amended to read:                                                                     
14            (a)  Subject to the terms and conditions of this section, a credit against the                               
15       production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for                                  
16       exploration expenditures that qualify under (b) of this section in an amount equal to                             
17       one of the following:                                                                                             
18                 (1)  30 [20] percent of the total exploration expenditures that qualify                             
19       only under (b) and (c) of this section;                                                                           
20                 (2)  30 [20] percent of the total exploration expenditures [FOR WORK                                
21       PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of                                        
22       this section;                                                                                                     
23                 (3)  40 percent of the total exploration expenditures that qualify under                                
24       (b), (c), and (d) of this section; or                                                                             
25                 (4)  40 percent of the total exploration expenditures that qualify only                                 
26       under (b) and (e) of this section.                                                                                
27    * Sec. 35. AS 43.55.025(b) is amended to read:                                                                     
28            (b)  To qualify for the production tax credit under (a) of this section, an                                  
29       exploration expenditure must be incurred for work performed [ON OR] after                                         
30       December 31, 2007 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN                                    
31       EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE                                                         
01       INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and                                                        
02                 (1)  may be for seismic or other geophysical exploration costs not                                  
03       connected with a specific well;                                                                                   
04                 (2)  if for an exploration well,                                                                        
05                      (A)  must be incurred by an explorer that holds an interest in                                     
06            the exploration well for which the production tax credit is claimed;                                         
07                      (B)  may be for either a [AN OIL OR GAS DISCOVERY]                                             
08            well that encounters an oil or gas deposit or a dry hole; [AND]                                          
09                      (C)  must be for a well that has been completed, suspended,                                    
10            or abandoned at the time the explorer claims the tax credit under (f) of                                 
11            this section; and                                                                                        
12                      (D)  must be for goods, services, or rentals of personal                                       
13            property reasonably required for the surface preparation, drilling, casing,                                  
14            cementing, and logging of an exploration well, and, in the case of a dry hole,                               
15            for the expenses required for abandonment if the well is abandoned within 18                                 
16            months after the date the well was spudded;                                                                  
17                 (3)  may not be for [TESTING, STIMULATION, OR COMPLETION                                                
18       COSTS;] administration, supervision, engineering, or lease operating costs;                                       
19       geological or management costs; community relations or environmental costs;                                       
20       bonuses, taxes, or other payments to governments related to the well; costs, including                        
21       repairs and replacements, arising from or associated with fraud, wilful                                       
22       misconduct, gross negligence, criminal negligence, or violation of law, including                             
23       a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs                           
24       that are generally recognized as indirect costs or financing costs; and                                           
25                 (4)  may not be incurred for an exploration well or seismic exploration                                 
26       that is included in a plan of exploration or a plan of development for any unit before                        
27       May 14, 2003 [ON MAY 13, 2003].                                                                               
28    * Sec. 36. AS 43.55.025(c) is repealed and reenacted to read:                                                      
29            (c)  To be eligible for the 30 percent production tax credit authorized by (a)(1)                            
30       of this section or the 40 percent production tax credit authorized by (a)(3) of this                              
31       section, exploration expenditures must                                                                            
01                 (1)  qualify under (b) of this section; and                                                             
02                 (2)  be for an exploration well, subject to the following:                                              
03                      (A)  before spudding the well,                                                                     
04                           (i)  the explorer shall submit to the commissioner of                                         
05                 natural resources the information necessary to determine whether the                                    
06                 geological objective of the well is a potential oil or gas trap that is                                 
07                 distinctly separate from any trap that has been tested by a preexisting                                 
08                 well; and                                                                                               
09                           (ii)  the commissioner of natural resources must make                                         
10                 an affirmative determination on that question; the commissioner of                                      
11                 natural resources shall decide whether to make that determination                                       
12                 within 60 days after receiving all the necessary information from the                                   
13                 explorer and based on the information received and on other                                             
14                 information the commissioner of natural resources may consider                                          
15                 relevant;                                                                                               
16                      (B)  for an exploration well other than a well to explore a Cook                                   
17            Inlet prospect, the well must be located and drilled in such a manner that the                               
18            bottom hole is located not less than three miles away from the bottom hole of                                
19            a preexisting well drilled for oil or gas, irrespective of whether the preexisting                           
20            well has been completed, suspended, or abandoned;                                                            
21                      (C)  after completion, suspension, or abandonment of the                                           
22            exploration well, the commissioner of natural resources must determine that                                  
23            the well adequately achieved the explorer's stated geological objective.                                     
24    * Sec. 37. AS 43.55.025(f) is amended to read:                                                                     
25            (f)  For a production tax credit under this section,                                                         
26                 (1)  an explorer shall, in a form prescribed by the department and,                                 
27       except for a credit under (l) of this section, within six months of the completion of                         
28       the exploration activity, claim the credit and submit information sufficient to                                   
29       demonstrate to the department's satisfaction that the claimed exploration expenditures                            
30       qualify under this section;                                                                                       
31                 (2)  an explorer shall agree, in writing,                                                               
01                      (A)  to notify the Department of Natural Resources, within 30                                      
02            days after completion of seismic or geophysical data processing, completion                                  
03            of [A] well drilling, or filing of a claim for credit, whichever is the latest, for                      
04            which exploration costs are claimed, of the date of completion and submit a                                  
05            report to that department describing the processing sequence and providing a                                 
06            list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN                                        
07            EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES                                                       
08            FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE                                                         
09            MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN                                                          
10            ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS                                                       
11            SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION                                                        
12            NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES                                                          
13            TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT                                                        
14            THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE                                                                
15            EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL                                                          
16            RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE                                                                
17            SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE                                                              
18            EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60                                                          
19            DAYS;]                                                                                                       
20                      (B)  to provide to the Department of Natural Resources, within                                     
21            30 days after the date of a request, unless a longer period is provided by the                           
22            Department of Natural Resources, specific data sets, ancillary data, and                                 
23            reports identified in (A) of this paragraph; in this subparagraph,                                       
24                           (i)  a seismic or geophysical data set includes the                                       
25                 data for an entire seismic survey, irrespective of whether the                                      
26                 survey area covers nonstate land in addition to state land or land                                  
27                 in a unit in addition to land outside a unit;                                                       
28                           (ii)  well data include all derivative products, results,                                 
29                 and copies of data collected and data analyses for the well; well                                   
30                 logs; sample analyses; geophysical and velocity data including                                      
31                 vertical seismic profiles and check shot surveys; and tangible                                      
01                 material including, for each whole core collected, a lengthwise cut                                 
02                 slab that is at least 1/3 of the whole core volume, and                                             
03                 representative samples, as specified by the Department of Natural                                   
04                 Resources, of other gaseous, liquid, or solid material collected                                    
05                 from drilling or testing the well;                                                                  
06                      (C)  that, notwithstanding any provision of AS 38, information                                     
07            provided under this paragraph will be held confidential by the Department of                                 
08            Natural Resources                                                                                            
09                           (i)  in the case of well data, until the expiration of the                                
10                 24-month period of confidentiality described in AS 31.05.035(c)                                     
11                 [FOR 10 YEARS FOLLOWING THE COMPLETION DATE], at                                                        
12                 which time the Department of Natural Resources [THAT                                                
13                 DEPARTMENT] will release the information after 30 days' public                                          
14                 notice unless, in the discretion of the commissioner of natural                                     
15                 resources, it is necessary to protect information relating to the                                   
16                 valuation of unleased acreage in the same vicinity, or unless the                                   
17                 well is on private land and the owner, including the lessor but not                                 
18                 the lessee, of the oil and gas resources has not given permission to                                
19                 release the well data;                                                                              
20                           (ii)  in the case of seismic or other geophysical data,                                   
21                 other than seismic data acquired by seismic exploration subject to                                  
22                 (l) of this section, for 10 years following the completion date, at                                 
23                 which time the Department of Natural Resources will release the                                     
24                 information after 30 days' public notice, except as to seismic or                                   
25                 other geophysical data acquired from private land, unless the                                       
26                 owner, including a lessor but not a lessee, of the oil and gas                                      
27                 resources in the private land gives permission to release the                                       
28                 seismic or other geophysical data associated with the private land;                                 
29                           (iii)  in the case of seismic data obtained by seismic                                    
30                 exploration subject to (l) of this section, only until the expiration of                            
31                 30 days' public notice issued on or after the date the production                                   
01                 tax credit certificate is issued under (5) of this subsection;                                    
02                 (3)  if more than one explorer holds an interest in a well or seismic                                   
03       exploration, each explorer may claim an amount of credit that is proportional to the                              
04       explorer's cost incurred;                                                                                         
05                 (4)  the department may exercise the full extent of its powers as though                                
06       the explorer were a taxpayer under this title, in order to verify that the claimed                                
07       expenditures are qualified exploration expenditures under this section; and                                       
08                 (5)  if the department is satisfied that the explorer's claimed                                         
09       expenditures are qualified under this section and that all data required to be                                
10       submitted under this section have been submitted, the department shall issue to the                           
11       explorer a production tax credit certificate for the amount of credit to be allowed                               
12       against production taxes levied by AS 43.55.011(e); notwithstanding any contrary                              
13       provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is                               
14       not confidential:                                                                                             
15                      (A)  the explorer's name;                                                                      
16                      (B)  the date of the application;                                                              
17                      (C)  the location of the well or seismic exploration;                                          
18                      (D)  the date of the department's issuance of the certificate;                                 
19            and                                                                                                      
20                      (E)  the date on which the information required to be                                          
21            submitted under this section will be released [DUE UNDER                                                 
22            AS 43.55.011(e) OR (f)].                                                                                     
23    * Sec. 38. AS 43.55.025(g) is amended to read:                                                                     
24            (g)  An explorer, other than an entity that is exempt from taxation under                                
25       this chapter, may transfer, convey, or sell its production tax credit certificate to any                      
26       person, and any person who receives a production tax credit certificate may also                                  
27       transfer, convey, or sell the certificate.                                                                        
28    * Sec. 39. AS 43.55.025(h) is amended to read:                                                                     
29            (h)  A producer that purchases a production tax credit certificate may apply                                 
30       the credits against its production tax levied by [LIABILITY UNDER]                                            
31       AS 43.55.011(e) [OR (f)]. Regardless of the price the producer paid for the                                       
01       certificate, the producer may receive a credit against its production tax liability for the                       
02       full amount of the credit, but for not more than the amount for which the certificate is                          
03       issued. A production tax credit allowed under this section may not be applied more                                
04       than once.                                                                                                        
05    * Sec. 40. AS 43.55.025(i) is repealed and reenacted to read:                                                      
06            (i)  For a production tax credit under this section,                                                         
07                 (1)  a credit may not be applied to reduce a taxpayer's tax liability                                   
08       under AS 43.55.011(e) below zero for a calendar year; and                                                         
09                 (2)  an amount of the production tax credit in excess of the amount that                                
10       may be applied for a calendar year under this subsection may be carried forward and                               
11       applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later                           
12       calendar years.                                                                                                   
13    * Sec. 41. AS 43.55.025(k) is amended by adding a new paragraph to read:                                           
14                 (4)  "preexisting well" means a well that was spudded more than 540                                     
15       days but less than 35 years before the date on which the exploration well to which it                             
16       is compared is spudded.                                                                                           
17    * Sec. 42. AS 43.55.025 is amended by adding a new subsection to read:                                             
18            (l)  Subject to the terms and conditions of this section, if a claim is filed under                          
19       (f)(1) of this section before January 1, 2016, a credit against the production tax levied                         
20       by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible                                   
21       expenditure under this subsection incurred for seismic exploration performed before                               
22       July 1, 2003. To be eligible under this subsection, an expenditure must                                           
23                 (1)  have been for seismic exploration that                                                             
24                      (A)  obtained data that the commissioner of natural resources                                      
25            considers to be in the best interest of the state to acquire for public                                      
26            distribution; and                                                                                            
27                      (B)  was conducted outside the boundaries of a production unit;                                    
28            however, the amount of the expenditure that is otherwise eligible under this                                 
29            section is reduced proportionately by the portion of the seismic exploration                                 
30            activity that crossed into a production unit; and                                                            
31                 (2)  qualify under (b)(3) of this section.                                                              
01    * Sec. 43. AS 43.55.030(a) is amended to read:                                                                     
02            (a)  A producer that produces oil or gas from a lease or property in the                                 
03       state during a calendar year, whether or not any tax payment is due under                                     
04       AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file                                 
05       with the department on March 31 of the following year [FOLLOWING THE                                          
06       CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under                                                    
07       oath, in a form prescribed by the department, giving, with other information required,                            
08       the following:                                                                                                    
09                 (1)  a description of each lease or property from which [THE] oil or                                
10       [AND] gas was [WERE] produced, by name, legal description, lease number, or                                   
11       accounting codes assigned by the department;                                                                      
12                 (2)  the names of the producer and, if different, the person paying the                             
13       tax, if any;                                                                                                  
14                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
15       each lease or property, and the percentage of the gross amount of oil and gas owned                               
16       by the [EACH] producer [FOR WHOM THE TAX IS PAID];                                                            
17                 (4)  the gross value at the point of production of the oil and of the gas                               
18       produced from each lease or property owned by the [EACH] producer and the costs                           
19       of transportation of the oil and gas [FOR WHOM THE TAX IS PAID];                                              
20                 (5)  the name of the first purchaser and the price received for the oil                                 
21       and for the gas, unless relieved from this requirement in whole or in part by the                                 
22       department; [AND]                                                                                                 
23                 (6)  the producer's qualified capital expenditures, as defined in                                   
24       AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS                                                    
25       CALCULATED] under AS 43.55.165, and adjustments or other payments or                                          
26       credits under AS 43.55.170;                                                                                   
27                 (7)  the production tax values of the oil and gas under                                             
28       AS 43.55.160;                                                                                                 
29                 (8)  any claims for tax credits to be applied; and                                                  
30                 (9)  calculations showing the amounts, if any, that were or are due                                 
31       under AS 43.55.020(a) and interest on any underpayment or overpayment                                         
01       [AS 43.55.160 - 43.55.170].                                                                                       
02    * Sec. 44. AS 43.55.030(d) is amended to read:                                                                     
03            (d)  Reports required under this section [BY OR ON BEHALF OF THE                                         
04       PRODUCER] are delinquent the first day following the day the report is due. The                               
05       person required to file the report is liable for a penalty, as determined by the                              
06       department under standards adopted in regulation by the department, of not                                    
07       more than $1,000 for each day the person fails to file the report at the time                                 
08       required. The penalty is in addition to the penalties in AS 43.05.220 and                                     
09       43.05.290 and is assessed, collected, and paid in the same manner as a tax                                    
10       deficiency under this title. In this subsection, "report" includes a statement.                               
11    * Sec. 45. AS 43.55.030 is amended by adding new subsections to read:                                              
12            (e)  An explorer or producer that incurs a lease expenditure under                                           
13       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
14       year but does not produce oil or gas from a lease or property in the state during the                             
15       calendar year shall file with the department on March 31 of the following year a                                
16       statement, under oath, in a form prescribed by the department, giving, with other                                 
17       information required, the following:                                                                              
18                 (1)  the producer's qualified capital expenditures, as defined in                                       
19       AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other                               
20       payments or credits under AS 43.55.170; and                                                                       
21                 (2)  if the explorer or producer receives a payment or credit under                                     
22       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
23       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
24            (f)  The department may require a producer, an explorer, or an operator of a                                 
25       lease or property to file monthly reports, as applicable, of                                                      
26                 (1)  the amounts and gross value at the point of production of oil and                                  
27       gas produced;                                                                                                     
28                 (2)  transportation costs of the oil and gas;                                                           
29                 (3)  any unscheduled interruption of, or reduction in the rate of, oil or                               
30       gas production;                                                                                                   
31                 (4)  lease expenditures and adjustments under AS 43.55.165 and                                          
01       43.55.170;                                                                                                        
02                 (5)  joint interest billings;                                                                           
03                 (6)  contracts for the sale or transportation of oil or gas;                                            
04                 (7)  information and calculations used in determining monthly                                           
05       installment payments of estimated tax under AS 43.55.020(a); and                                                  
06                 (8)  other records and information the department considers necessary                                   
07       for the administration of this chapter.                                                                           
08    * Sec. 46. AS 43.55.040 is amended to read:                                                                        
09            Sec. 43.55.040. Powers of Department of Revenue. Except as provided in                                     
10       AS 43.05.405 - 43.05.499, the department may                                                                      
11                 (1)  require a person engaged in production and the agent or employee                                   
12       of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil                         
13       or gas to furnish, whether by the filing of regular statements or reports or otherwise,                           
14       additional information that is considered by the department as necessary to compute                               
15       the amount of the tax; notwithstanding any contrary provision of law, the disclosure                              
16       of additional information under this paragraph to the producer obligated to pay the tax                           
17       does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information                                
18       under this paragraph that is otherwise required to be held confidential under                                     
19       AS 40.25.100(a) or AS 43.05.230(a), the department shall                                                          
20                      (A)  provide the person that furnished the information a                                           
21            reasonable opportunity to be heard regarding the proposed disclosure and the                                 
22            conditions to be imposed under (B) of this paragraph; and                                                    
23                      (B)  impose appropriate conditions limiting                                                        
24                           (i)  access to the information to those legal counsel,                                        
25                 consultants, employees, officers, and agents of the producer who have                                   
26                 a need to know that information for the purpose of determining or                                       
27                 contesting the producer's tax obligation; and                                                           
28                           (ii)  the use of the information to use for that purpose;                                     
29                 (2)  examine the books, records, and files of the [SUCH A] person;                                  
30                 (3)  conduct hearings and compel the attendance of witnesses and the                                    
31       production of books, records, and papers of any person; [AND]                                                     
01                 (4)  make an investigation or hold an inquiry that is considered                                        
02       necessary to a disclosure of the facts as to                                                                      
03                      (A)  the amount of production from any oil or gas location, or                                     
04            of a company or other producer of oil or gas; and                                                            
05                      (B)  the rendition of the oil and gas for taxing purposes;                                     
06                 (5)  require a producer, an explorer, or an operator of a lease or                                  
07       property to file reports and copies of records that the department considers                                  
08       necessary to forecast state revenue under this chapter; in the case of reports and                            
09       copies of records relating to proposed, expected, or approved unit expenditures                               
10       for a unit for which one or more working interest owners other than the                                       
11       operator have authority to approve unit expenditures, the required reports and                                
12       copies of records are limited to those reports or copies of records that constitute                           
13       or disclose communications between the operator and the working interest                                      
14       owners relating to unit budget matters;                                                                       
15                 (6)  require a producer that has an average total production in the                                 
16       state of more than 100,000 barrels a day for a calendar year to report the gross                              
17       value at the point of production of the producer's taxable oil and gas in the state                           
18       for a calendar year and the total amount of lease expenditures in the state for                               
19       that calendar year; and                                                                                       
20                 (7)  assess against a person required under this section to file a                                  
21       report, statement, or other document a penalty, as determined by the                                          
22       department under standards adopted in regulation by the department, of not                                    
23       more than $1,000 for each day the person fails to file the report, statement, or                              
24       other document after notice by the department; the penalty is in addition to any                              
25       penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid                               
26       in the same manner as a tax deficiency under this title; the penalty shall bear                               
27       interest at the rate specified under AS 43.05.225(1).                                                         
28    * Sec. 47. AS 43.55 is amended by adding a new section to read:                                                    
29            Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except                                   
30       as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be                               
31       assessed within four years after the latest return was filed.                                                     
01            (b)  A decision of a regulatory agency, court, or other body with authority to                               
02       resolve disputes that results in a retroactive change to a lease expenditure, to an                               
03       adjustment to a lease expenditure, to costs of transportation, to sale price, to                                  
04       prevailing value, or to consideration of quality differentials relating to the                                    
05       commingling of oils has a corresponding effect, either an increase or decrease, as                                
06       applicable, on the production tax value of oil or gas or the amount or availability of a                          
07       tax credit as determined under this chapter. For purposes of this section, a change to a                          
08       lease expenditure includes a change in the categorization of a lease expenditure as a                             
09       qualified capital expenditure or as not a qualified capital expenditure. The producer                             
10       shall                                                                                                             
11                 (1)  within 60 days after the change, notify the department in writing;                                 
12       and                                                                                                               
13                 (2)  within 120 days after the change, file amended returns covering all                                
14       periods affected by the change, unless the department agrees otherwise or a stay is in                            
15       place that affects the filing or payment, regardless of the pendency of appeals of the                            
16       decision.                                                                                                         
17            (c)  If an alteration in or modification of a producer's federal income tax return                           
18       or a recomputation of the producer's federal income tax or determination of                                       
19       deficiency occurs that affects the amount of a tax imposed on the producer under this                             
20       chapter, the producer shall                                                                                       
21                 (1)  within 60 days after the final determination of the alteration,                                    
22       modification, recomputation, or deficiency, notify the department in writing; and                                 
23                 (2)  within 120 days after the final determination of the alteration,                                   
24       modification, recomputation, or deficiency, file amended returns covering all affected                            
25       periods.                                                                                                          
26            (d)  In this section,                                                                                        
27                 (1)  "qualified capital expenditure" has the meaning given in                                           
28       AS 43.55.023;                                                                                                     
29                 (2)  "return" includes a report, a statement, and an amended return,                                    
30       report, or statement.                                                                                             
31    * Sec. 48. AS 43.55.110 is amended by adding new subsections to read:                                              
01            (e)  The department may require that returns, statements, reports, notifications,                            
02       and applications filed under this chapter be filed electronically in a form and manner                            
03       approved or prescribed by the department.                                                                         
04            (f)  The department may require that payments required under this chapter be                                 
05       made electronically in a form and manner approved or prescribed by the department.                                
06            (g)  Notwithstanding AS 44.62, the department may issue, for the information                                 
07       and guidance of producers, explorers, and other interested persons, advisory bulletins                            
08       stating the department's interpretation of provisions of this chapter and of regulations                          
09       adopted under this chapter. Unless otherwise provided by the department by                                        
10       regulation, interpretations stated in the advisory bulletins are not binding on the                               
11       department or others.                                                                                             
12            (h)  Subject to legislative appropriation, the department may compensate a                                   
13       person who provides information to the department about noncompliance with the                                    
14       provisions of this chapter by an explorer or a producer of oil or gas if that information                         
15       leads to the collection of additional taxes, penalties, or interest from the producer. The                        
16       amount of compensation under this subsection may not exceed the lesser of $500,000                                
17       or 10 percent of the additional tax, penalty, or interest collected as a result of the                            
18       information. A state employee or an agent of the state is not eligible for compensation                           
19       under this subsection.                                                                                            
20            (i)  A person who, under (h) of this section, provides, in bad faith, to the                                 
21       department erroneous information about noncompliance with the provisions of this                                  
22       chapter by an explorer or producer of oil or gas shall pay to the                                                 
23                 (1)  department all expenses related to the department's investigation                                  
24       of the alleged noncompliance; and                                                                                 
25                 (2)  explorer or producer about whom the noncompliance was alleged                                      
26       all expenses that are incurred by the explorer or producer relating to the department's                           
27       investigation of the alleged noncompliance.                                                                       
28    * Sec. 49. AS 43.55.150 is amended to read:                                                                        
29            Sec. 43.55.150. Determination of gross value at the point of production.                                   
30       (a) For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point of                                 
31       production is calculated using the actual [REASONABLE] costs of transportation of                             
01       the oil or gas [. THE REASONABLE COSTS OF TRANSPORTATION ARE THE                                                  
02       ACTUAL COSTS], except when the                                                                                    
03                 (1)  shipper [PARTIES TO THE TRANSPORTATION] of oil or gas                                          
04       is [ARE] affiliated with the transportation carrier or with a person that owns an                         
05       interest in the transportation facility;                                                                      
06                 (2)  contract for the transportation of oil or gas is not an arm's length                               
07       transaction [OR IS NOT REPRESENTATIVE OF THE MARKET VALUE OF                                                      
08       THAT TRANSPORTATION]; or [AND]                                                                                
09                 (3)  method or terms of transportation of oil or gas are [IS] not                               
10       reasonable in view of existing alternative [METHODS OF] transportation options.                               
11            (b)  If the department finds that a condition [THE CONDITIONS] in (a)(1),                                
12       (2), or [AND] (3) of this section is [ARE] present, the gross value at the point of                   
13       production is calculated using the actual costs of transportation, or the                                     
14       reasonable costs of transportation as determined under this subsection,                                       
15       whichever is lower. The [THE] department shall determine the reasonable costs of                              
16       transportation, using the fair market value of like transportation, the fair market value                         
17       of equally efficient and available alternative modes of transportation, or other                                  
18       reasonable methods. Transportation costs fixed by tariff rates that have been                                 
19       adjudicated as just and reasonable by [PROPERLY ON FILE WITH] the                                             
20       Regulatory Commission of Alaska or another [OTHER] regulatory agency and                                  
21       transportation costs in an arm's length transaction paid by parties not affiliated                            
22       with an owner of the method of transportation shall be considered prima facie                                 
23       reasonable.                                                                                                       
24            (c)  In determining the gross value of oil under [(a) OF] this section, the                                  
25       department may not allow as reasonable costs of transportation                                                    
26                 (1)  the amount of loss of or damage to, or of expense incurred due to                                  
27       the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense                          
28       is incurred in connection with a catastrophic oil discharge from the vessel into the                              
29       marine or inland waters of the state;                                                                             
30                 (2)  the incremental costs of transportation of the oil that are                                        
31       attributable to temporary use of or chartered or substituted service provided by                                  
01       another vessel due to the loss of or damage to a vessel regularly used to transport oil                           
02       and that are incurred in connection with a catastrophic oil discharge into the marine or                          
03       inland waters of the state; and                                                                                   
04                 (3)  the costs incurred to charter, contract, or hire vessels and                                       
05       equipment used to contain or clean up a catastrophic oil discharge.                                               
06    * Sec. 50. AS 43.55.160(a) is amended to read:                                                                     
07            (a)  Except as provided in (b) of this section, for the purposes of                                          
08                 (1)  AS 43.55.011(e), the annual production tax value of the taxable                                    
09                      (A)  oil and gas produced during a calendar year from leases or                                    
10            properties in the state that include land north of 68 degrees North latitude is                              
11            the gross value at the point of production of the oil and gas taxable under                                  
12            AS 43.55.011(e) and produced by the producer from those leases or                                            
13            properties, less the producer's lease expenditures under AS 43.55.165 for the                                
14            calendar year applicable to the oil and gas produced by the producer from                                    
15            those leases or properties, as adjusted under AS 43.55.170;                                                  
16                      (B)  oil and gas produced during a calendar year from leases or                                    
17            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
18            which is north of 68 degrees North latitude, is the gross value at the point of                              
19            production of the oil and gas taxable under AS 43.55.011(e) and produced by                                  
20            the producer from those leases or properties, less the producer's lease                                      
21            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
22            and gas produced by the producer from those leases or properties, as adjusted                                
23            under AS 43.55.170;                                                                                          
24                      (C)  oil produced during a calendar year from a lease or                                           
25            property in the Cook Inlet sedimentary basin is the gross value at the point of                              
26            production of the oil taxable under AS 43.55.011(e) and produced by the                                      
27            producer from that lease or property, less the producer's lease expenditures                                 
28            under AS 43.55.165 for the calendar year applicable to the oil produced by the                               
29            producer from that lease or property, as adjusted under AS 43.55.170;                                        
30                      (D)  gas produced during a calendar year from a lease or                                           
31            property in the Cook Inlet sedimentary basin is the gross value at the point of                              
01            production of the gas taxable under AS 43.55.011(e) and produced by the                                      
02            producer from that lease or property, less the producer's lease expenditures                                 
03            under AS 43.55.165 for the calendar year applicable to the gas produced by                                   
04            the producer from that lease or property, as adjusted under AS 43.55.170;                                    
05                 (2)  AS 43.55.011(g), the monthly production tax value of the taxable                                   
06                      (A)  oil and gas produced during a month from leases or                                            
07            properties in the state that include land north of 68 degrees North latitude is                              
08            the gross value at the point of production of the oil and gas taxable under                                  
09            AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those                                
10            leases or properties, less 1/12 of the producer's lease expenditures under                                   
11            AS 43.55.165 for the calendar year applicable to the oil and gas produced by                                 
12            the producer from those leases or properties, as adjusted under AS 43.55.170;                                
13                      (B)  oil and gas produced during a month from leases or                                            
14            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
15            which is north of 68 degrees North latitude, is the gross value at the point of                              
16            production of the oil and gas taxable under AS 43.55.011(e)                                              
17            [AS 43.55.011(g)] and produced by the producer from those leases or                                          
18            properties, less 1/12 of the producer's lease expenditures under AS 43.55.165                                
19            for the calendar year applicable to the oil and gas produced by the producer                                 
20            from those leases or properties, as adjusted under AS 43.55.170;                                             
21                      (C)  oil produced during a month from a lease or property in                                       
22            the Cook Inlet sedimentary basin is the gross value at the point of production                               
23            of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
24            the producer from that lease or property, less 1/12 of the producer's lease                                  
25            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
26            produced by the producer from that lease or property, as adjusted under                                      
27            AS 43.55.170;                                                                                                
28                      (D)  gas produced during a month from a lease or property in                                       
29            the Cook Inlet sedimentary basin is the gross value at the point of production                               
30            of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
31            the producer from that lease or property, less 1/12 of the producer's lease                                  
01            expenditures under AS 43.55.165 for the calendar year applicable to the gas                                  
02            produced by the producer from that lease or property, as adjusted under                                      
03            AS 43.55.170.                                                                                                
04    * Sec. 51. AS 43.55.160(b) is amended to read:                                                                     
05            (b)  A production tax value calculated under [(a) OF] this section may not be                                
06       less than zero.                                                                                                   
07    * Sec. 52. AS 43.55.160(e) is amended to read:                                                                     
08            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
09       would otherwise be deductible by a producer in a calendar year but whose deduction                                
10       would cause a [AN ANNUAL] production tax value calculated under (a)(1) of this                                
11       section of taxable oil or gas produced during the calendar year to be less than zero                              
12       may be used to establish a carried-forward annual loss under AS 43.55.023(b).                                     
13       However, the department shall provide by regulation a method to ensure that,                                  
14       for a period for which a producer's tax liability is limited by AS 43.55.011(j) or                            
15       (k), any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                    
16       would otherwise be deductible by a producer for that period but whose                                         
17       deduction would cause a production tax value calculated under (a)(1)(C) or (D)                                
18       of this section to be less than zero are accounted for as though the adjusted lease                           
19       expenditures had first been used as deductions in calculating the production tax                              
20       values of oil or gas subject to any of the limitations under AS 43.55.011(j) or (k)                           
21       that have positive production tax values so as to reduce the tax liability                                    
22       calculated without regard to the limitation to the maximum amount provided for                                
23       under the applicable provision of AS 43.55.011(j) or (k). Only the amount of                                  
24       those adjusted lease expenditures remaining after the accounting provided for                                 
25       under this subsection may be used to establish a carried-forward annual loss                                  
26       under AS 43.55.023(b). In this subsection, "producer" includes "explorer."                                    
27    * Sec. 53. AS 43.55.165(a) is amended to read:                                                                     
28            (a)  Except as provided under (c) and (e) [(c) - (e)] of this section, for the                           
29       purposes of AS 43.55.160, a producer's lease expenditures for a calendar year are the                             
30       ordinary and necessary costs upstream of the point of production of oil and gas that                              
31       are incurred during the calendar year by the producer after March 31, 2006, and that                              
01       are direct costs of exploring for, developing, or producing oil or gas deposits located                           
02       within the producer's leases or properties in the state or, in the case of land in which                          
03       the producer does not own a working interest, that are direct costs of exploring for oil                          
04       or gas deposits located within other land in the state. In determining whether costs are                          
05       lease expenditures, the department shall consider, among other factors,                                           
06                 (1)  the typical industry practices and standards in the state that                                     
07       determine the costs, other than items listed in (e) of this section, that an operator is                          
08       allowed to bill a working interest owner that is not the operator, under unit operating                           
09       agreements or similar operating agreements that were in effect before December 2,                                 
10       2005, and were subject to negotiation with at least one working interest owner with                               
11       substantial bargaining power, other than the operator; and                                                        
12                 (2)  the standards adopted by the Department of Natural Resources that                                  
13       determine the costs, other than items listed in (e) of this section, that a lessee is                             
14       allowed to deduct from revenue in calculating net profits under a lease issued under                              
15       AS 38.05.180(f)(3)(B), (D), or (E).                                                                               
16    * Sec. 54. AS 43.55.165(c) is repealed and reenacted to read:                                                      
17            (c)  Subject to (g) and (h) of this section, if the department finds that the                                
18       pertinent provisions of a unit operating agreement or similar operating agreement are                             
19       substantially consistent with the department's determinations and standards under (a)                             
20       and (b) of this section concerning whether costs are lease expenditures and, in                                   
21       addition, finds that at least one working interest owner party to the agreement, other                            
22       than the operator, with substantial incentive and ability to effectively audit billings                           
23       under the agreement, in fact is effectively auditing billings under the agreement, the                            
24       department may authorize or require a producer, subject to conditions prescribed                                  
25       under regulations adopted by the department, to treat as that portion of its lease                                
26       expenditures for a calendar year applicable to oil and gas produced from a lease or                               
27       property in the state only                                                                                        
28                 (1)  the costs, other than items listed in (e) of this section, that are                                
29       incurred by the operator during the calendar year and that                                                        
30                      (A)  are billed to the producer by the operator under the                                          
31            agreement to which that lease or property is subject and are either not disputed                             
01            by a working interest owner party to the agreement or are finally determined                                 
02            to be properly billable as a result of dispute resolution; or                                                
03                      (B)  for a producer that is the operator, would be billable to the                                 
04            producer by the operator in accordance with the terms of the agreement to                                    
05            which that lease or property is subject if the producer were not the operator;                               
06            and                                                                                                          
07                 (2)  a reasonable percentage, as determined under regulations adopted                                   
08       by the department, of the costs that are billed under (1) of this subsection as an                                
09       allowance for overhead expenses directly related to exploring for, developing, and                                
10       producing oil or gas deposits located within the lease or property.                                               
11    * Sec. 55. AS 43.55.165(e) is amended to read:                                                                     
12            (e)  For purposes of this section, lease expenditures do not include                                         
13                 (1)  depreciation, depletion, or amortization;                                                          
14                 (2)  oil or gas royalty payments, production payments, lease profit                                     
15       shares, or other payments or distributions of a share of oil or gas production, profit, or                        
16       revenue, except that a producer's lease expenditures applicable to oil and gas                                
17       produced from a lease issued under AS 38.05.180(f)(3)(B), (D), or (E) include the                             
18       share of net profit paid to the state under that lease;                                                       
19                 (3)  taxes based on or measured by net income;                                                          
20                 (4)  interest or other financing charges or costs of raising equity or                                  
21       debt capital;                                                                                                     
22                 (5)  acquisition costs for a lease or property or exploration license;                                  
23                 (6)  costs, including repairs and replacements, arising from or                                 
24       associated with fraud, wilful misconduct, [OR] gross negligence, criminal                                 
25       negligence, or violation of law, including a violation of 33 U.S.C. 1319(c)(1) or                             
26       1321(b)(3) (Clean Water Act);                                                                                 
27                 (7)  fines or penalties imposed by law;                                                                 
28                 (8)  costs of arbitration, litigation, or other dispute resolution activities                           
29       that involve the state or concern the rights or obligations among owners of interests                             
30       in, or rights to production from, one or more leases or properties or a unit;                                     
31                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
01       business entity or arrangement;                                                                                   
02                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
03       this paragraph does not apply to the costs of obtaining insurance or a surety bond                                
04       from a third-party insurer or surety;                                                                             
05                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
06                 (12)  for a transaction that is an internal transfer or is otherwise not an                             
07       arm's length transaction, expenditures incurred that are in excess of fair market value;                          
08                 (13)  an expenditure incurred to purchase an interest in any                                            
09       corporation, partnership, limited liability company, business trust, or any other                                 
10       business entity, whether or not the transaction is treated as an asset sale for federal                           
11       income tax purposes;                                                                                              
12                 (14)  a tax levied under AS 43.55.011;                                                                  
13                 (15)  [THE PORTION OF] costs incurred for dismantlement, removal,                                       
14       surrender, or abandonment of a facility, pipeline, well pad, platform, or other                                   
15       structure, or for the restoration of a lease, field, unit, area, tract of land, body of                       
16       water, or right-of-way in conjunction with dismantlement, removal, surrender, or                                  
17       abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS                                                   
18       OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A                                                    
19       RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                      
20       OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL                                                      
21       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
22       OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO                                                      
23       THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                         
24       OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL                                                     
25       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
26       OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR                                                         
27       MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT,                                                                   
28       REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under                                                 
29       this paragraph if the dismantlement, removal, surrender, or abandonment for which                                 
30       the cost is incurred is undertaken for the purpose of replacing, renovating, or                                   
31       improving the facility, pipeline, well pad, platform, or other structure; [FOR THE                                
01       PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS                                                      
02                      (A)  IN THE CASE OF OIL, ONE BARREL;                                                               
03                      (B)  IN THE CASE OF GAS, 6,000 CUBIC FEET;]                                                        
04                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
05       connection with any unpermitted release of oil or a hazardous substance and any                                   
06       liability for damages imposed on the producer or explorer for that unpermitted                                    
07       release; this paragraph does not apply to the cost of developing and maintaining an oil                           
08       discharge prevention and contingency plan under AS 46.04.030;                                                     
09                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
10       license under AS 38.05.132;                                                                                       
11                 (18)  that portion of expenditures, that would otherwise be qualified                                   
12       capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a                     
13       calendar year that are less than the product of $0.30 multiplied by the total taxable                             
14       production from each lease or property, in BTU equivalent barrels, during that                                    
15       calendar year, except that, when a portion of a calendar year is subject to this                                  
16       provision, the expenditures and volumes shall be prorated within that calendar year;                          
17                 (19)  costs incurred for repair, replacement, or deferred                                           
18       maintenance of a facility, a pipeline, a structure, or equipment, other than a well,                          
19       that results in or is undertaken in response to a failure, problem, or event that                             
20       results in an unscheduled interruption of, or reduction in the rate of, oil or gas                            
21       production; or costs incurred for repair, replacement, or deferred maintenance                                
22       of a facility, a pipeline, a structure, or equipment, other than a well, that is                              
23       undertaken in response to, or is otherwise associated with, an unpermitted                                    
24       release of a hazardous substance or of gas; however, costs under this paragraph                               
25       that would otherwise constitute lease expenditures under (a) and (b) of this                                  
26       section may be treated as lease expenditures if the department determines that                                
27       the repair or replacement is solely necessitated by an act of war, by an                                      
28       unanticipated grave natural disaster or other natural phenomenon of an                                        
29       exceptional, inevitable, and irresistible character, the effects of which could not                           
30       have been prevented or avoided by the exercise of due care or foresight, or by an                             
31       intentional or negligent act or omission of a third party, other than a party or its                          
01       agents in privity of contract with, or employed by, the producer or an operator                               
02       acting for the producer, but only if the producer or operator, as applicable,                                 
03       exercised due care in operating and maintaining the facility, pipeline, structure,                            
04       or equipment, and took reasonable precautions against the act or omission of the                              
05       third party and against the consequences of the act or omission; in this                                      
06       paragraph,                                                                                                    
07                      (A)  "costs incurred for repair, replacement, or deferred                                      
08            maintenance of a facility, a pipeline, a structure, or equipment" includes                               
09            costs to dismantle and remove the facility, pipeline, structure, or                                      
10            equipment that is being replaced;                                                                        
11                      (B)  "hazardous substance" has the meaning given in                                            
12            AS 46.03.826;                                                                                            
13                      (C)  "replacement" includes renovation or improvement;                                         
14                 (20)  costs incurred to construct, acquire, or operate a refinery or                                
15       crude oil topping plant, regardless of whether the products of the refinery or                                
16       topping plant are used in oil or gas exploration, development, or production                                  
17       operations; however, if a producer owns a refinery or crude oil topping plant                                 
18       that is located on or near the premises of the producer's lease or property in the                            
19       state and that processes the producer's oil produced from that lease or property                              
20       into a product that the producer uses in the operation of the lease or property in                            
21       drilling for or producing oil or gas, the producer's lease expenditures include the                           
22       amount calculated by subtracting from the fair market value of the product used                               
23       the prevailing value, as determined under AS 43.55.020(f), of the oil that is                                 
24       processed;                                                                                                    
25                 (21)  costs of lobbying, public relations, public relations                                         
26       advertising, or policy advocacy.                                                                            
27    * Sec. 56. AS 43.55.165(h) is amended to read:                                                                     
28            (h)  The department shall adopt regulations that provide for reasonable                                      
29       methods of allocating costs between oil and gas and between leases or properties in                               
30       those circumstances where an allocation of costs is required to determine [THE                                
31       DETERMINATION OF THE] lease expenditures that are costs of exploring for,                                     
01       developing, or producing oil deposits or costs of exploring for, developing, or                               
02       producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of                                
03       exploring for, developing, or producing oil or gas deposits located within                                    
04       [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or                                                     
05       properties [, REQUIRES AN ALLOCATION OF COSTS].                                                                   
06    * Sec. 57. AS 43.55.170(a) is amended to read:                                                                     
07            (a)  Unless the payment or credit has already been subtracted in calculating                                 
08       billable or billed costs under AS 43.55.165(c) [OR (d)], a producer's lease                                       
09       expenditures under AS 43.55.165 must be adjusted by subtracting payments or                                       
10       credits, other than tax credits, received by the producer or by an operator acting for                            
11       the producer for                                                                                                  
12                 (1)  the use by another person of a production facility in which the                                    
13       producer has an ownership interest or the management by the producer of a                                         
14       production facility under a management agreement providing for the producer to                                    
15       receive a management fee;                                                                                         
16                 (2)  a reimbursement or similar payment that offsets the producer's                                     
17       lease expenditures, including an insurance recovery from a third-party insurer and a                              
18       payment from the state or federal government for reimbursement of the producer's                                  
19       upstream costs, including costs for gathering, separating, cleaning, dehydration,                                 
20       compressing, or other field handling associated with the production of oil or gas                                 
21       upstream of the point of production;                                                                              
22                 (3)  the sale or other transfer of                                                                      
23                      (A)  an asset, including geological, geophysical, or well data or                                  
24            interpretations, acquired by the producer as a result of a lease expenditure or                              
25            an expenditure that would be a lease expenditure if it were incurred after                                   
26            March 31, 2006; for purposes of this subparagraph,                                                           
27                           (i)  if a producer removes from the state, for use outside                                    
28                 the state, an asset described in this subparagraph, the value of the asset                              
29                 at the time it is removed is considered a payment received by the                                       
30                 producer for sale or transfer of the asset;                                                             
31                           (ii)  for a transaction that is an internal transfer or is                                    
01                 otherwise not an arm's length transaction, if the sale or transfer of the                               
02                 asset is made for less than fair market value, the amount subtracted                                    
03                 must be the fair market value; and                                                                      
04                      (B)  oil or gas                                                                                    
05                           (i)  that is not considered produced from a lease or                                          
06                 property under AS 43.55.020(e); and                                                                     
07                           (ii)  the cost of acquiring which is a lease expenditure                                      
08                 incurred by the person that acquires the oil or gas.                                                    
09    * Sec. 58. AS 43.55 is amended by adding new sections to article 4 to read:                                        
10            Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary                                
11       provision of AS 40.25.100, and regardless of whether the information is considered                                
12       under AS 43.05.230(e) to constitute statistics classified to prevent the identification of                        
13       particular returns or reports, the department may publish the following information                               
14       under this chapter, if aggregated among three or more producers or explorers,                                     
15       showing by month or calendar year and by lease or property, unit, or area of the state:                           
16                 (1)  the amount of oil or gas production;                                                               
17                 (2)  the amount of taxes levied under this chapter or paid under this                                   
18       chapter;                                                                                                          
19                 (3)  the effective tax rates under this chapter;                                                        
20                 (4)  the gross value of oil or gas at the point of production;                                          
21                 (5)  the transportation costs for oil or gas;                                                           
22                 (6)  qualified capital expenditures, as defined in AS 43.55.023;                                        
23                 (7)  exploration expenditures under AS 43.55.025;                                                       
24                 (8)  production tax values of oil or gas under AS 43.55.160;                                            
25                 (9)  lease expenditures under AS 43.55.165;                                                             
26                 (10)  adjustments to lease expenditures under AS 43.55.170;                                             
27                 (11)  tax credits applicable or potentially applicable against taxes                                    
28       levied by this chapter.                                                                                           
29            Sec. 43.55.895. Applicability to municipal entities. (a) Notwithstanding                                   
30       AS 29.35.670(a) or other provision of law, a producer that is a municipal entity is                               
31       subject to taxation and payment of surcharges under this chapter for oil and gas that it                          
01       sells to another party.                                                                                           
02            (b)  A municipal entity subject to taxation because of this section is eligible                              
03       for all tax credits under this chapter to the same extent as any other producer.                                  
04            (c)  In this section, "municipal entity" means a municipality, municipally                                   
05       owned utility, public corporation of a municipality, or entity established by more than                           
06       one municipality.                                                                                                 
07    * Sec. 59. AS 43.55.900 is amended by adding new paragraphs to read:                                               
08                 (22)  "producer" means an owner of an operating right, operating                                        
09       interest, or working interest in a mineral interest in oil or gas;                                                
10                 (23)  "unit" means a group of tracts of land that is                                                    
11                      (A)  subject to a cooperative or a unit plan of development or                                     
12            operation that has been certified by the commissioner of natural resources                                   
13            under AS 38.05.180(p);                                                                                       
14                      (B)  subject to a cooperative or a unit plan of development or                                     
15            operation that has been certified by the United States Secretary of the Interior                             
16            under 30 U.S.C. 226(m);                                                                                      
17                      (C)  subject to an agreement of the owners of interests in the                                     
18            tracts of land to validly integrate their interests to provide for the unitized                              
19            management, development, and operation of the tracts of land as a unit, within                               
20            the meaning of AS 31.05.110(a); or                                                                           
21                      (D)  within the unit area of a unit created by order of the                                        
22            Alaska Oil and Gas Conservation Commission under AS 31.05.110(b).                                            
23    * Sec. 60. AS 43.55.011(h), 43.55.011(l), 43.55.011(n), 43.55.160(c), and 43.55.165(d) are                         
24 repealed.                                                                                                               
25    * Sec. 61. AS 39.25.110(42) is repealed December 31, 2011.                                                         
26    * Sec. 62. The uncodified law of the State of Alaska is amended by adding a new section to                         
27 read:                                                                                                                   
28       APPLICABILITY. (a) AS 43.55.165(e)(19), enacted by the amendment to                                               
29 AS 43.55.165(e) in sec. 55 of this Act, applies to expenditures after March 31, 2006.                                   
30       (b)  Except as provided in (a) of this section, secs. 15 - 27, 29 - 42, and 49 - 60 of this                       
31 Act apply to oil and gas produced after June 30, 2007.                                                                  
01       (c)  Sections 43 and 45 of this Act apply to statements and reports under                                         
02 AS 43.55.030(a), as amended by sec. 43 of this Act, and AS 43.55.030(e) and (f), as added                               
03 by sec. 45 of this Act, required to be filed after the effective date of secs. 43 and 45 of this                        
04 Act.                                                                                                                    
05       (d)  Sections 34 - 37, 39, and 41 of this Act apply to exploration expenditures                                   
06 incurred for work performed after December 31, 2007, that are the basis of tax credits that                             
07 may be claimed against taxes levied for oil and gas produced after December 31, 2007.                                   
08       (e)  AS 43.55.075(a), enacted by sec. 47 of this Act, applies to any tax liability under                          
09 AS 43.55 with respect to which the period of limitations on assessment under AS 43.05.260                               
10 had not expired before the effective date of secs. 14 and 47 of this Act.                                               
11       (f)  The penalty in AS 43.55.030(d), enacted by the amendment to AS 43.55.030(d) in                               
12 sec. 44 of this Act, applies to any report required to be filed after the effective date of sec. 44                     
13 of this Act that is not filed timely.                                                                                   
14       (g)  The penalty in AS 43.55.040(7), enacted by the amendment to AS 43.55.040 in                                  
15 sec. 46 of this Act, applies to any report, statement, or other document required to be filed                           
16 after the effective date of sec. 46 of this Act.                                                                        
17    * Sec. 63. The uncodified law of the State of Alaska is amended by adding a new section to                         
18 read:                                                                                                                   
19       OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE                                                           
20 INTENT. It is the intent of the legislature that the commissioner of administration shall cause                         
21 not more than four oil and gas revenue audit master positions to be created in the Department                           
22 of Revenue and not more than two oil and gas revenue audit master positions to be created in                            
23 the Department of natural Resources. Oil and gas revenue audit masters shall be employed in                             
24 a professional capacity to collect oil and gas revenue by developing policy, conducting                                 
25 studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and                          
26 gas auditors.                                                                                                           
27    * Sec. 64. The uncodified law of the State of Alaska is amended by adding a new section to                         
28 read:                                                                                                                   
29       OIL AND GAS AUDITORS; CLASSIFICATION AND PAY PLANS.                                                               
30 Notwithstanding AS 39.25.150(2), the Department of Administration shall develop and                                     
31 implement a distinct position classification plan and a distinct pay plan for oil and gas                               
01 auditors and their immediate supervisors, other than revenue audit masters, that perform                                
02            (1)  oil and gas tax audits in the Department of Revenue under the direction of                              
03 an oil and gas revenue audit master;                                                                                    
04            (2)  royalty audits, including net profit share audits, in the Department of                                 
05 Natural Resources under the direction of an oil and gas revenue audit master.                                           
06    * Sec. 65. The uncodified law of the State of Alaska is amended by adding a new section to                         
07 read:                                                                                                                   
08       TRANSITION: PAYMENT OF TAX. A person subject to tax under AS 43.55 that is                                        
09 required to make one or more installment payments of estimated tax or other payment of tax                              
10 under AS 43.55.020(a) during the period after March 31, 2006, and before the effective date                             
11 of sec. 21 of this Act, and under AS 43.55.020(a), as amended by sec. 21 of this Act, for the                           
12 production of oil or gas during a month after March 31, 2006, and before the effective date of                          
13 sec. 21 of this Act but that failed to pay the full amount of the installment payments or other                         
14 payment of tax required under AS 43.55 because of the retroactive application of                                        
15 AS 43.55.165(e)(19), as enacted in the amendment to AS 43.55.165(e) in sec. 55 of this Act,                             
16 that is retroactive to April 1, 2006, under sec. 68 of this Act, and the retroactive application                        
17 of secs. 15 - 27, 29 - 42, 49 - 54, 56 - 60, and that part of AS 43.55.165(e) in sec. 55 of this                        
18 Act under sec. 68 of this Act, shall pay before April 1, 2008, the balance of any tax due under                         
19 AS 43.55 for the period after March 31, 2006, and before the effective date of this section.                            
20    * Sec. 66. The uncodified law of the State of Alaska is amended by adding a new section to                         
21 read:                                                                                                                   
22       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
23 contrary provision of AS 44.62.240,                                                                                     
24            (1)  if the Department of Revenue expressly designates in the regulation that                                
25 the regulation applies retroactively to that date, a regulation adopted by the Department of                            
26 Revenue to implement, interpret, make specific, or otherwise carry out secs. 15 - 27, 29 - 42,                          
27 and 49 - 60 of this Act may apply retroactively to July 1, 2007, except that a regulation                               
28 adopted by the Department of Revenue to implement, interpret, make specific, or otherwise                               
29 carry out AS 43.55.165(e)(19), as enacted in the amendment to AS 43.55.165(e) in sec. 55 of                             
30 this Act, may apply retroactively to April 1, 2006;                                                                     
31            (2)  a regulation adopted by the Department of Natural Resources to                                          
01 implement, interpret, make specific, or otherwise carry out statutory provisions for the                                
02 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the                            
03 extent the regulation deals with the treatment of oil and gas production taxes in determining                           
04 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of                          
05 Natural Resources expressly designates in the regulation that the regulation applies                                    
06 retroactively to that date.                                                                                             
07    * Sec. 67. The uncodified law of the State of Alaska is amended by adding a new section to                         
08 read:                                                                                                                   
09       TRANSITION: REGULATIONS. The Department of Natural Resources and the                                              
10 Department of Revenue may proceed to adopt regulations to implement this Act. The                                       
11 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the                               
12 effective date of the law implemented by the regulation.                                                                
13    * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to                         
14 read:                                                                                                                   
15       RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Sections 29                                                  
16 and 38 of this Act are retroactive to July 1, 2003.                                                                     
17       (b)  AS 43.55.165(e)(19), enacted by the amendment to AS 43.55.165(e) in sec. 55 of                               
18 this Act, is retroactive to April 1, 2006.                                                                              
19       (c)  Except as provided in (b) of this section, secs. 15 - 27, 29 - 42, and 49 - 60 of this                       
20 Act are retroactive to July 1, 2007.                                                                                    
21    * Sec. 69. Section 28 of this Act takes effect January 1, 2008.                                                    
22    * Sec. 70. Except as provided in sec. 69 of this Act, this Act takes effect immediately under                      
23 AS 01.10.070(c).                                                                                                        
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