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25th Legislature(2007-2008)

Bill Text 25th Legislature


00              SENATE CS FOR CS FOR HOUSE BILL NO. 2001(FIN) am S                                                         
01 "An Act relating to the production tax on oil and gas and to conservation surcharges on                                 
02 oil; providing a limit on the amount of tax that may be levied on the production of                                     
03 certain gas that is produced outside of the Cook Inlet sedimentary basin; relating to the                               
04 sharing between agencies of certain information relating to the production tax and to                                   
05 oil and gas or gas only leases; expanding the period in which the Department of                                         
06 Revenue may assess the amount of oil and gas production tax and conservation                                            
07 surcharges; relating to state oil and gas audit masters; relating to oil and gas auditors                               
08 and certain oil and gas auditor supervisors; establishing an oil and gas tax credit fund                                
09 and authorizing payment from that fund; making conforming amendments; and                                               
10 providing for an effective date."                                                                                       
11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
12    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
01 to read:                                                                                                                
02       LEGISLATIVE INTENT. (a) It is the intent of the legislature that the provisions of                                
03 this Act will                                                                                                           
04            (1)  ensure a fair and equitable means of assessing and taxing Alaska's oil and                              
05 gas resources; and                                                                                                      
06            (2)  encourage the availability to Alaska's citizens of affordable gas produced,                             
07 transported, and consumed within the state as one step towards reasonable and equitable                                 
08 energy costs throughout Alaska.                                                                                         
09        (b) It is the intent of the legislature that AS 43.55.075(b), enacted by sec. 51 of this                         
10 Act, confirm by clarification the long-standing interpretation of AS 43.05.260 by the                                   
11 Department of Revenue relating to limitation of assessments for the production tax on oil and                           
12 gas and conservation surcharges on oil.                                                                                 
13       (c)  It is the intent of the legislature that the amount of money received by the state as                        
14 a result of the retroactivity of certain provisions under sec. 74 of this Act that exceeds the                          
15 amount of money the state would have received if those provisions had not taken effect until                            
16 January 1, 2008, will be appropriated to the public education fund (AS 14.17.300).                                      
17       (d)  It is the intent of the legislature that the legislature will responsibly invest the                         
18 amounts received after December 31, 2007, as the result of the enactment of this Act that                               
19 exceed the amounts that would have been received under AS 43.55.011 - 43.55.180, as those                               
20 provisions read on June 30, 2007, as if those provisions had been applied after December 31,                            
21 2007, by making appropriations to the following:                                                                        
22            (1)  the public education fund (AS 14.17.300);                                                               
23            (2)  the budget reserve fund (art. IX, sec. 17, Constitution of the State of                                 
24 Alaska);                                                                                                                
25            (3)  to extinguish the amount of the employers' unfunded liability in the                                    
26 teachers' defined benefit retirement plan and the public employees' defined benefit retirement                          
27 plan;                                                                                                                   
28            (4)  the development and implementation of a long-range fiscal plan for the                                  
29 state; and                                                                                                              
30            (5)  for statewide energy needs of Alaskans to assist with rising energy costs.                              
31    * Sec. 2. AS 38.05.035(a) is amended to read:                                                                      
01            (a)  The director shall                                                                                      
02                 (1)  have general charge and supervision of the division and may                                        
03       exercise the powers specifically delegated to the director; the director may employ                           
04       and fix the compensation of assistants and employees necessary for the operations of                              
05       the division; the director [AND] is the certifying officer of the division, with the                          
06       consent of the commissioner, and may approve vouchers for disbursements of money                                  
07       appropriated to the division;                                                                                     
08                 (2)  manage, inspect, and control state land and improvements on it                                     
09       belonging to the state and under the jurisdiction of the division;                                                
10                 (3)  execute laws, rules, regulations, and orders adopted by the                                        
11       commissioner;                                                                                                     
12                 (4)  prescribe application procedures and practices for the sale, lease,                                
13       or other disposition of available land, resources, property, or interest in them;                                 
14                 (5)  prescribe fees or service charges, with the consent of the                                         
15       commissioner, for any public service rendered;                                                                    
16                 (6)  under the conditions and limitations imposed by law and the                                        
17       commissioner, issue deeds, leases, or other conveyances disposing of available land,                          
18       resources, property, or any interests in them;                                                                
19                 (7)  have jurisdiction over state land, except that land acquired by the                                
20       Alaska World War II Veterans Board and the Agricultural Loan Board or the                                         
21       departments or agencies succeeding to their respective functions through foreclosure                              
22       or default; to this end, the director possesses the powers and, with the approval of the                      
23       commissioner, shall perform the duties necessary to protect the state's rights and                                
24       interest in state land, including the taking of all necessary action to protect and                               
25       enforce the state's contractual or other property rights;                                                         
26                 (8)  [REPEALED                                                                                          
27                 (9)]  maintain the [SUCH] records [AS] the commissioner considers                                   
28       necessary, administer oaths, and do all things incidental to the authority imposed; the                           
29       following records and files shall be kept confidential upon request of the person                                 
30       supplying the information:                                                                                        
31                      (A)  the name of the person nominating or applying for the                                         
01            sale, lease, or other disposal of land by competitive bidding;                                               
02                      (B)  before the announced time of opening, the names of the                                        
03            bidders and the amounts of the bids;                                                                         
04                      (C)  all geological, geophysical, and engineering data supplied,                                   
05            whether or not concerned with the extraction or development of natural                                       
06            resources;                                                                                                   
07                      (D)  except as provided in AS 38.05.036, cost data and                                             
08            financial information submitted in support of applications, bonds, leases, and                               
09            similar items;                                                                                               
10                      (E)  applications for rights-of-way or easements;                                                  
11                      (F)  requests for information or applications by public agencies                                   
12            for land that [WHICH] is being considered for use for a public purpose;                                  
13                 (9) [(10)]  account for the fees, licenses, taxes, or other money                                   
14       received in the administration of this chapter including the sale or leasing of land,                             
15       identify their source, and promptly transmit them to the proper fiscal department after                           
16       crediting them to the proper fund; receipts from land application filing fees and                                 
17       charges for copies of maps and records shall be deposited immediately in the general                              
18       fund of the state by the director;                                                                                
19                 (10) [(11)]  select and employ or obtain at reasonable compensation                                 
20       cadastral, appraisal, or other professional personnel the director considers necessary                            
21       for the proper operation of the division;                                                                         
22                 (11) [(12)]  be the certifying agent of the state to select, accept, and                            
23       secure by whatever action is necessary in the name of the state, by deed, sale, gift,                             
24       devise, judgment, operation of law, or other means any land, of whatever nature or                                
25       interest, available to the state; and be the certifying agent of the state, to select,                            
26       accept, or secure by whatever action is necessary in the name of the state any land, or                           
27       title or interest to land available, granted, or subject to being transferred to the state                        
28       for any purpose;                                                                                                  
29                 (12)  on request, furnish records, files, and other information                                     
30       related to the administration of AS 38.05.180 to the Department of Revenue for                                
31       use in forecasting state revenue under or administering AS 43.55, whether or not                              
01       those records, files, and other information are required to be kept confidential                              
02       under (8) of this subsection; in the case of records, files, or other information                             
03       required to be kept confidential under (8) of this subsection, the Department of                              
04       Revenue shall maintain the confidentiality that the Department of Natural                                     
05       Resources is required to extend to records, files, and other information under (8)                            
06       of this subsection                                                                                            
07                 [(13)  REPEALED                                                                                         
08                 (14)  REPEALED].                                                                                        
09    * Sec. 3. AS 38.05.036(b) is amended to read:                                                                      
10            (b)  The Department of Revenue may obtain from the department information                                    
11       relating to royalty and net profits payments and to exploration incentive credits under                           
12       this chapter or under AS 41.09, whether or not that information is confidential. The                              
13       Department of Revenue may use the information in carrying out its functions and                                   
14       responsibilities under AS 43, and shall hold that information confidential to the extent                          
15       required by an agreement with the department or by AS 38.05.035(a)(8)                                         
16       [AS 38.05.035(a)(9)], AS 41.09.010(d), or AS 43.05.230.                                                           
17    * Sec. 4. AS 38.05.036(f) is amended to read:                                                                      
18            (f)  Except as otherwise provided in this section or in connection with official                             
19       investigations or proceedings of the department, it is unlawful for a current or former                           
20       officer, employee, or agent of the state to divulge information obtained by the                                   
21       department as a result of an audit under this section that is required by an agreement                            
22       with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                          
23       AS 41.09.010(d) to be kept confidential.                                                                          
24    * Sec. 5. AS 38.05.036(g) is amended to read:                                                                      
25            (g)  Nothing in this section prohibits the publication of statistics in a manner                             
26       that maintains the confidentiality of information to the extent required by an                                    
27       agreement with the department or by AS 38.05.035(a)(8) [AS 38.05.035(a)(9)] or                                
28       AS 41.09.010(d).                                                                                                  
29    * Sec. 6. AS 38.05.123(f) is amended to read:                                                                      
30            (f)  As part of the timber sale negotiations authorized by this section, the                                 
31       commissioner may require a prospective purchaser negotiating a timber sale contract                               
01       to submit financial and technical data that demonstrates that the requirements of this                            
02       section have been or will be met. Upon the prospective purchaser's request, the                                   
03       commissioner shall keep data provided by the purchaser confidential in accordance                                 
04       with the requirements of AS 38.05.035(a)(8) [AS 38.05.035(a)(9)].                                             
05    * Sec. 7. AS 38.05.133(e) is amended to read:                                                                      
06            (e)  The commissioner may make a written request to a prospective licensee                                   
07       for additional information on the prospective licensee's proposal. The commissioner                               
08       shall keep confidential information described in AS 38.05.035(a)(8)                                           
09       [AS 38.05.035(a)(9)] that is voluntarily provided if the prospective licensee has made                            
10       a written request that the information remain confidential.                                                       
11    * Sec. 8. AS 38.05.180(j) is amended to read:                                                                      
12            (j)  The commissioner                                                                                        
13                 (1)  may provide for modification of royalty on individual leases,                                      
14       leases unitized as described in (p) of this section, leases subject to an agreement                               
15       described in (s) or (t) of this section, or interests unitized under AS 31.05                                     
16                      (A)  to allow for production from an oil or gas field or pool if                                   
17                           (i)  the oil or gas field or pool has been sufficiently                                       
18                 delineated to the satisfaction of the commissioner;                                                     
19                           (ii)  the field or pool has not previously produced oil or                                    
20                 gas for sale; and                                                                                       
21                           (iii)  oil or gas production from the field or pool would                                     
22                 not otherwise be economically feasible;                                                                 
23                      (B)  to prolong the economic life of an oil or gas field or pool                                   
24            as per barrel or barrel equivalent costs increase or as the price of oil or gas                              
25            decreases, and the increase or decrease is sufficient to make future production                              
26            no longer economically feasible; or                                                                          
27                      (C)  to reestablish production of shut-in oil or gas that would                                    
28            not otherwise be economically feasible;                                                                      
29                 (2)  may not grant a royalty modification unless the lessee or lessees                                  
30       requesting the change make a clear and convincing showing that a modification of                                  
31       royalty meets the requirements of this subsection and is in the best interests of the                             
01       state;                                                                                                            
02                 (3)  shall provide for an increase or decrease or other modification of                                 
03       the state's royalty share by a sliding scale royalty or other mechanism that shall be                             
04       based on a change in the price of oil or gas and may also be based on other relevant                              
05       factors such as a change in production rate, projected ultimate recovery, development                             
06       costs, and operating costs;                                                                                       
07                 (4)  may not grant a royalty reduction for a field or pool                                              
08                      (A)  under (1)(A) of this subsection if the royalty modification                                   
09            for the field or pool would establish a royalty rate of less than five percent in                            
10            amount or value of the production removed or sold from a lease or leases                                     
11            covering the field or pool;                                                                                  
12                      (B)  under (1)(B) or (1)(C) of this subsection if the royalty                                      
13            modification for the field or pool would establish a royalty rate of less than                               
14            three percent in amount or value of the production removed or sold from a                                    
15            lease or leases covering the field or pool;                                                                  
16                 (5)  may not grant a royalty reduction under this subsection without                                    
17       including an explicit condition that the royalty reduction is not assignable without the                          
18       prior written approval, which may not be unreasonably withheld, by the                                            
19       commissioner; the commissioner shall, in the preliminary and final findings and                                   
20       determinations, set out the conditions under which the royalty reduction may be                                   
21       assigned;                                                                                                         
22                 (6)  shall require the lessee or lessees to submit, with the application                                
23       for the royalty reduction, financial and technical data that demonstrate that the                                 
24       requirements of this subsection are met; the commissioner                                                         
25                      (A)  may require disclosure of only the financial and technical                                    
26            data related to development, production, and transportation of oil and gas or                                
27            gas only from the field or pool that are reasonably available to the applicant;                              
28            and                                                                                                          
29                      (B)  shall keep the data confidential under AS 38.05.035(a)(8)                                 
30            [AS 38.05.035(a)(9)] at the request of the lessee or lessees making application                              
31            for the royalty reduction; the confidential data may be disclosed by the                                     
01            commissioner to legislators and to the legislative auditor and as directed by                                
02            the chair or vice-chair of the Legislative Budget and Audit Committee to the                                 
03            director of the division of legislative finance, the permanent employees of                                  
04            their respective divisions who are responsible for evaluating a royalty                                      
05            reduction, and to agents or contractors of the legislative auditor or the                                    
06            legislative finance director who are engaged under contract to evaluate the                                  
07            royalty reduction, if they sign an appropriate confidentiality agreement;                                    
08                 (7)  may                                                                                                
09                      (A)  require the lessee or lessees making application for the                                      
10            royalty reduction under (1)(A) of this subsection to pay for the services of an                              
11            independent contractor, selected by the lessee or lessees from a list of                                     
12            qualified consultants compiled by the commissioner, to evaluate hydrocarbon                                  
13            development, production, transportation, and economics and to assist the                                     
14            commissioner in evaluating the application and financial and technical data;                                 
15            if, under this subparagraph, the commissioner requires payment for the                                       
16            services of an independent contractor, the total cost of the services to be paid                             
17            for by the lessee or lessees may not exceed $150,000 for each application, and                               
18            the commissioner shall determine the relevant scope of the work to be                                        
19            performed by the contractor; selection of an independent contractor under this                               
20            subparagraph is not subject to AS 36.30;                                                                     
21                      (B)  with the mutual consent of the lessee or lessees making                                       
22            application for the royalty reduction under (1)(B) or (1)(C) of this subsection,                             
23            request payment for the services of an independent contractor, selected from a                               
24            list of qualified consultants to evaluate hydrocarbon development, production,                               
25            transportation, and economics by the commissioner to assist the commissioner                                 
26            in evaluating the application and financial and technical data; if, under this                               
27            subparagraph, the commissioner requires payment for the services of an                                       
28            independent contractor, the total cost of the services that may be paid for by                               
29            the lessee or lessees may not exceed $150,000 for each application, and the                                  
30            commissioner shall determine the relevant scope of the work to be performed                                  
31            by the contractor; selection of an independent contractor under this                                         
01            subparagraph is not subject to AS 36.30;                                                                     
02                 (8)  shall make and publish a preliminary findings and determination                                    
03       on the royalty reduction application, give reasonable public notice of the preliminary                            
04       findings and determination, and invite public comment on the preliminary findings                                 
05       and determination during a 30-day period for receipt of public comment;                                           
06                 (9)  shall offer to appear before the Legislative Budget and Audit                                      
07       Committee, on a day that is not earlier than 10 days and not later than 20 days after                             
08       giving public notice under (8) of this subsection, to provide the committee a review of                           
09       the commissioner's preliminary findings and determination on the royalty reduction                                
10       application and administrative process; if the Legislative Budget and Audit                                       
11       Committee accepts the commissioner's offer, the committee shall give notice of the                                
12       committee's meeting to all members of the legislature;                                                            
13                 (10)  shall make copies of the preliminary findings and determination                                   
14       available to                                                                                                      
15                      (A)  the presiding officer of each house of the legislature;                                       
16                      (B)  the chairs of the legislature's standing committees on                                        
17            resources; and                                                                                               
18                      (C)  the chairs of the legislature's special committees on oil and                                 
19            gas, if any;                                                                                                 
20                 (11)  shall, within 30 days after the close of the public comment period                                
21       under (8) of this subsection,                                                                                     
22                      (A)  prepare a summary of the public response to the                                               
23            commissioner's preliminary findings and determination;                                                       
24                      (B)  make a final findings and determination; the                                                  
25            commissioner's final findings and determination prepared under this                                          
26            subparagraph regarding a royalty reduction is final and not appealable to the                                
27            court;                                                                                                       
28                      (C)  transmit a copy of the final findings and determination to                                    
29            the lessee;                                                                                                  
30                      (D)  with the applicant's consent, amend the applicant's lease or                                  
31            unitization agreement consistent with the commissioner's final decision; and                                 
01                      (E)  make copies of the final findings and determination                                           
02            available to each person who submitted comment under (8) of this subsection                                  
03            and who has filed a request for the copies;                                                                  
04                 (12)  is not limited by the provisions of AS 38.05.134(3) or (f) of this                                
05       section in the commissioner's determination under this subsection.                                                
06    * Sec. 9. AS 38.05.275(c) is amended to read:                                                                      
07            (c)  Subsection (b) of this section may not be construed to limit the director in                            
08       the exercise of authority granted by AS 38.05.035(a)(11) [AS 38.05.035(a)(12)].                               
09    * Sec. 10. AS 39.25.110 is amended by adding a new paragraph to read:                                              
10                 (42)  oil and gas audit masters employed in a professional capacity by                                  
11       the Department of Revenue and the Department of Natural Resources to collect oil                                  
12       and gas revenue by developing policy, conducting studies, drafting proposed                                       
13       regulations, enforcing regulations, and directing audits by oil and gas revenue                                   
14       auditors.                                                                                                       
15    * Sec. 11. AS 41.09.010(d) is amended to read:                                                                     
16            (d)  Data derived from drilling a stratigraphic test well or exploratory well that                           
17       is provided to the commissioner under (c)(3) of this section shall be kept confidential                           
18       for 24 months after receipt by the commissioner unless the owner of the well gives                                
19       written permission to the state to release the well data at an earlier date, and,                                 
20       notwithstanding AS 31.05.035(c), confidentiality may not be extended beyond 24                                    
21       months. The provisions of AS 38.05.035(a)(8)(C) [AS 38.05.035(a)(9)(C)] apply to                              
22       other data provided to the commissioner under (c)(3) of this section, except that the                             
23       commissioner, under appropriate confidentiality provisions and without preference or                              
24       discrimination, may display to all interested third parties, but may not distribute or                            
25       transfer in hard copy or electronic form, those data with respect to all land if the                              
26       commissioner determines that the limited disclosure is necessary to further the                                   
27       interest of the state in evaluating or developing its land.                                                       
28    * Sec. 12. AS 43.05.230(a) is amended to read:                                                                     
29            (a)  It is unlawful for a current or former officer, employee, or agent of the                               
30       state to divulge the amount of income or the particulars set out or disclosed in a report                         
31       or return made under this title, except                                                                           
01                 (1)  in connection with official investigations or proceedings of the                                   
02       department, whether judicial or administrative, involving taxes due under this title;                             
03                 (2)  in connection with official investigations or proceedings of the                                   
04       child support enforcement agency, whether judicial or administrative, involving child                             
05       support obligations imposed or imposable under AS 25 or AS 47;                                                    
06                 (3)  as provided in AS 38.05.036 pertaining to audit functions of the                                   
07       Department of Natural Resources;                                                                                  
08                 (4)  as provided in AS 43.05.405 - 43.05.499; and                                                       
09                 (5)  as otherwise provided in this section or AS 43.55.890.                                         
10    * Sec. 13. AS 43.05.230(h) is amended to read:                                                                     
11            (h)  The commissioner shall, upon request, furnish to the Department of                                      
12       Natural Resources copies of tax returns, reports, and other documents filed under                             
13       AS 43.55 or AS 43.65, and the Department of Revenue's determinations and                                      
14       workpapers under those chapters. The Department of Natural Resources shall                                    
15       maintain the confidentiality that the Department of Revenue is required to extend to                              
16       the returns, reports, documents, determinations, and workpapers furnished to the                                  
17       Department of Natural Resources under this subsection.                                                            
18    * Sec. 14. AS 43.05.260(a) is amended to read:                                                                     
19            (a)  Except as provided in (c) of this section, [AND] AS 43.20.200(b), and                           
20       AS 43.55.075, the amount of a tax imposed by this title must be assessed within three                         
21       years after the return was filed, whether or not a return was filed on or after the date                          
22       prescribed by law. If the tax is not assessed before the expiration of the applicable                         
23       [THREE-YEAR] period, proceedings may not be instituted in court for the collection                                
24       of the tax.                                                                                                       
25    * Sec. 15. AS 43.55.011(e) is repealed and reenacted to read:                                                      
26            (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
27       produced each calendar year from each lease or property in the state, less any oil and                            
28       gas the ownership or right to which is exempt from taxation or constitutes a                                      
29       landowner's royalty interest. Except as otherwise provided under (f), (j), (k), and (o)                           
30       of this section, the tax is equal to the sum of                                                                   
31                 (1)  the annual production tax value of the taxable oil and gas as                                      
01       calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and                                                 
02                 (2)  the sum, over all months of the calendar year, of the tax amounts                                  
03       determined under (g) of this section.                                                                             
04    * Sec. 16. AS 43.55.011(f) is amended to read:                                                                     
05            (f)  The levy of tax under this section for [ON A PRODUCER OF] oil and gas                               
06       produced north of 68 degrees North latitude, other than oil and gas production                                
07       subject to (i) of this section and gas subject to (o) of this section, may not be less                        
08       than                                                                                                              
09                 (1)  four percent of the gross value at the point of production when the                                
10       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
11       West Coast during the calendar year for which the tax is due is more than $25;                                    
12                 (2)  three percent of the gross value at the point of production when the                               
13       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
14       West Coast during the calendar year for which the tax is due is over $20 but not over                             
15       $25;                                                                                                              
16                 (3)  two percent of the gross value at the point of production when the                                 
17       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
18       West Coast during the calendar year for which the tax is due is over $17.50 but not                               
19       over $20;                                                                                                         
20                 (4)  one percent of the gross value at the point of production when the                                 
21       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
22       West Coast during the calendar year for which the tax is due is over $15 but not over                             
23       $17.50; or                                                                                                        
24                 (5)  zero percent of the gross value at the point of production when the                                
25       average price per barrel for Alaska North Slope crude oil for sale on the United States                           
26       West Coast during the calendar year for which the tax is due is $15 or less.                                      
27    * Sec. 17. AS 43.55.011(g) is repealed and reenacted to read:                                                      
28            (g)  For each month of the calendar year for which the producer's average                                    
29       monthly production tax value under AS 43.55.160(a)(2) per BTU equivalent barrel of                                
30       the taxable oil and gas is more than $30, the amount of tax for purposes of (e) of this                           
31       section is determined by multiplying the monthly production tax value of the taxable                              
01       oil and gas produced during the month by the tax rate calculated as follows:                                      
02                 (1)  if the producer's average monthly production tax value per BTU                                     
03       equivalent barrel of the taxable oil and gas for the month is not more than $92.50, the                           
04       tax rate is 0.4 percent multiplied by the number that represents the difference between                           
05       that average monthly production tax value per BTU equivalent barrel and $30; or                                   
06                 (2)  if the producer's average monthly production tax value per BTU                                     
07       equivalent barrel of the taxable oil and gas for the month is more than $92.50, the tax                           
08       rate is the sum of 25 percent and the product of 0.1 percent multiplied by the number                             
09       that represents the difference between the average monthly production tax value per                               
10       BTU equivalent barrel and $92.50, except that the sum determined under this                                       
11       paragraph may not exceed 50 percent.                                                                              
12    * Sec. 18. AS 43.55.011(j) is amended to read:                                                                     
13            (j)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND (g)]                                
14       of this section for [ON] gas produced from a lease or property in the Cook Inlet                              
15       sedimentary basin may not exceed                                                                                  
16                 (1)  for a lease or property that first commenced commercial                                            
17       production of gas before April 1, 2006, the product obtained by multiplying (A) the                               
18       amount of taxable gas produced during the calendar year from the lease or property,                               
19       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
20       taxable gas produced from the lease or property for the 12-month period ending on                                 
21       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
22       the point of production of the taxable gas produced from the lease or property during                             
23       the 12-month period ending on March 31, 2006, by the total amount of that gas;                                    
24                 (2)  for a lease or property that first commences commercial                                            
25       production of gas after March 31, 2006, the product obtained by multiplying (A) the                               
26       amount of taxable gas produced during the calendar year from the lease or property,                               
27       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
28       taxable gas produced from all leases or properties in the Cook Inlet sedimentary basin                            
29       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
30       value for gas delivered in the Cook Inlet area for the 12-month period ending                                     
31       March 31, 2006, as determined by the department under AS 43.55.020(f).                                            
01    * Sec. 19. AS 43.55.011(k) is amended to read:                                                                     
02            (k)  For a calendar year before 2022, the [TOTAL] tax levied by (e) [AND                                     
03       (g)] of this section for [ON] oil produced from a lease or property in the Cook Inlet                         
04       sedimentary basin may not exceed                                                                                  
05                 (1)  for a lease or property that first commenced commercial                                            
06       production of oil before April 1, 2006, the product obtained by multiplying (A) the                               
07       amount of taxable oil produced during the calendar year from the lease or property,                               
08       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
09       taxable oil produced from the lease or property for the 12-month period ending on                                 
10       March 31, 2006, times (C) the quotient obtained by dividing the total gross value at                              
11       the point of production of the taxable oil produced from the lease or property during                             
12       the 12-month period ending on March 31, 2006, by the total amount of that oil;                                    
13                 (2)  for a lease or property that first commences commercial                                            
14       production of oil after March 31, 2006, the product obtained by multiplying (A) the                               
15       amount of taxable oil produced during the calendar year from the lease or property,                               
16       times (B) the average rate of tax that was imposed under this chapter for [ON]                                
17       taxable oil produced from all leases or properties in the Cook Inlet sedimentary basin                            
18       for the 12-month period ending on March 31, 2006, times (C) the average prevailing                                
19       value for oil produced and delivered in the Cook Inlet area for the 12-month period                               
20       ending on March 31, 2006, as determined by the department under AS 43.55.020(f).                                  
21    * Sec. 20. AS 43.55.011(m) is repealed and reenacted:                                                              
22            (m)  Notwithstanding any contrary provision of AS 38.05.180(i),                                              
23       AS 41.09.010, AS 43.55.024, or 43.55.025, the department shall provide by                                         
24       regulation a method to ensure that for a calendar year for which a producer's tax                                 
25       liability is limited by AS 43.55.011(j), (k), or (o) tax credits otherwise available under                        
26       AS 38.05.180(i), AS 41.09.010, AS 43.55.024, or 43.55.025 and allocated to gas                                    
27       subject to the limitations in AS 43.55.011(j), (k), and (o) are accounted for as though                           
28       the credits had been applied first against a tax liability calculated without regard to                           
29       the limitations under AS 43.55.011(j), (k), and (o) so as to reduce the tax liability to                          
30       the maximum amount provided for under AS 43.55.011(j) or (o) for the production of                                
31       gas or AS 43.55.011(k) for the production of oil. The regulation must provide for a                               
01       reasonable method to allocate tax credits to gas subject to AS 43.55.011(j) and (o).                              
02       Only the amount of a tax credit remaining after the accounting provided for under this                            
03       subsection may be used for a later calendar year, transferred to another person, or                               
04       applied against a tax levied on the production of oil or gas not subject to                                       
05       AS 43.55.011(j), (k), or (o) to the extent otherwise allowed.                                                     
06    * Sec. 21. AS 43.55.011 is amended by adding a new subsection to read:                                             
07            (o)  Notwithstanding other provisions of this section, for a calendar year                                   
08       before 2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas                            
09       for gas produced from a lease or property outside the Cook Inlet sedimentary basin                                
10       and used in the state may not exceed the amount of tax for each 1,000 cubic feet of                               
11       gas that is determined under (j)(2) of this section.                                                              
12    * Sec. 22. AS 43.55.020(a) is repealed and reenacted to read:                                                      
13            (a)  For a calendar year, a producer subject to tax under AS 43.55.011(e) - (i)                              
14       shall pay the tax as follows:                                                                                     
15                 (1)  an installment payment of the estimated tax levied by                                              
16       AS 43.55.011(e), net of any tax credits applied as allowed by law, is due for each                                
17       month of the calendar year on the last day of the following month; except as                                      
18       otherwise provided under (2) of this subsection, the amount of the installment                                    
19       payment is the sum of the following amounts, less 1/12 of the tax credits that are                                
20       allowed by law to be applied against the tax levied by AS 43.55.011(e) for the                                    
21       calendar year, but the amount of the installment payment may not be less than zero:                               
22                      (A)  for oil and gas produced from leases or properties in the                                     
23            state outside the Cook Inlet sedimentary basin or not subject to                                             
24            AS 43.55.011(o), other than leases or properties subject to AS 43.55.011(f),                                 
25            the greater of                                                                                               
26                           (i)  zero; or                                                                                 
27                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
28                 the month under AS 43.55.011(g) multiplied by the remainder                                             
29                 obtained by subtracting 1/12 of the producer's adjusted lease                                           
30                 expenditures for the calendar year of production under AS 43.55.165                                     
31                 and 43.55.170 that are deductible for the leases or properties under                                    
01                 AS 43.55.160 from the gross value at the point of production of the oil                                 
02                 and gas produced from the leases or properties during the month for                                     
03                 which the installment payment is calculated;                                                            
04                      (B)  for oil and gas produced from leases or properties subject                                    
05            to AS 43.55.011(f), the greatest of                                                                          
06                           (i)  zero;                                                                                    
07                           (ii)  zero percent, one percent, two percent, three                                           
08                 percent, or four percent, as applicable, of the gross value at the point of                             
09                 production of the oil and gas produced from all leases or properties                                    
10                 during the month for which the installment payment is calculated; or                                    
11                           (iii)  the sum of 25 percent and the tax rate calculated                                      
12                 for the month under AS 43.55.011(g) multiplied by the remainder                                         
13                 obtained by subtracting 1/12 of the producer's adjusted lease                                           
14                 expenditures for the calendar year of production under AS 43.55.165                                     
15                 and 43.55.170 that are deductible for those leases or properties under                                  
16                 AS 43.55.160 from the gross value at the point of production of the oil                                 
17                 and gas produced from those leases or properties during the month for                                   
18                 which the installment payment is calculated;                                                            
19                      (C)  for oil and gas produced from each lease or property                                          
20            subject to AS 43.55.011(j), (k), or (o), the greater of                                                      
21                           (i)  zero; or                                                                                 
22                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
23                 the month under AS 43.55.011(g) multiplied by the remainder                                             
24                 obtained by subtracting 1/12 of the producer's adjusted lease                                           
25                 expenditures for the calendar year of production under AS 43.55.165                                     
26                 and 43.55.170 that are deductible under AS 43.55.160 for oil or gas,                                    
27                 respectively, produced from the lease or property from the gross value                                  
28                 at the point of production of the oil or gas, respectively, produced from                               
29                 the lease or property during the month for which the installment                                        
30                 payment is calculated;                                                                                  
31                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
01       produced from a lease or property subject to AS 43.55.011(j), (k), or (o) may not                                 
02       exceed the product obtained by carrying out the calculation set out in                                            
03       AS 43.55.011(j)(1) or (2) or 43.55.011(o), as applicable, for gas or set out in                                   
04       AS 43.55.011(k)(1) or (2), as applicable, for oil, but substituting in                                            
05       AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable, the amount of taxable                             
06       gas produced during the month for the amount of taxable gas produced during the                                   
07       calendar year and substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the                             
08       amount of taxable oil produced during the month for the amount of taxable oil                                     
09       produced during the calendar year;                                                                                
10                 (3)  an installment payment of the estimated tax levied by                                              
11       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
12       on the last day of the following month; the amount of the installment payment is the                              
13       sum of                                                                                                            
14                      (A)  the applicable tax rate for oil provided under                                                
15            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
16            the oil taxable under AS 43.55.011(i) and produced from the lease or property                                
17            during the month; and                                                                                        
18                      (B)  the applicable tax rate for gas provided under                                                
19            AS 43.55.011(i), multiplied by the gross value at the point of production of                                 
20            the gas taxable under AS 43.55.011(i) and produced from the lease or property                                
21            during the month;                                                                                            
22                 (4)  any amount of tax levied by AS 43.55.011(e) or (i), net of any                                     
23       credits applied as allowed by law, that exceeds the total of the amounts due as                                   
24       installment payments of estimated tax is due on March 31 of the year following the                                
25       calendar year of production.                                                                                      
26    * Sec. 23. AS 43.55.020(g) is amended to read:                                                                     
27            (g)  Notwithstanding any contrary provision of AS 43.05.225, an unpaid                                       
28       amount of an installment payment required under (a)(1) - (3) [(a)(1) - (4)] of this                           
29       section that is not paid when due bears interest (1) at the rate provided for an                                  
30       underpayment under 26 U.S.C. 6621 (Internal Revenue Code), as amended,                                            
31       compounded daily, from the date the installment payment is due until [THE]                                        
01       March 31 following the calendar year of production [DESCRIBED IN                                              
02       AS 43.55.030(a)], and (2) as provided for a delinquent tax under AS 43.05.225 after                               
03       that March 31. Interest accrued under (1) of this subsection that remains unpaid after                            
04       that March 31 is treated as an addition to tax that bears interest under (2) of this                              
05       subsection. An unpaid amount of tax due under (a)(4) [(a)(5)] of this section that is                         
06       not paid when due bears interest as provided for a delinquent tax under AS 43.05.225.                             
07    * Sec. 24. AS 43.55.020(h) is amended to read:                                                                     
08            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
09                 (1)  an overpayment of an installment payment required under (a)(1) -                               
10       (3) [(a)(1) - (4)] of this section bears interest at the rate provided for an overpayment                     
11       under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from                                  
12       the later of the date the installment payment is due or the date the overpayment is                               
13       made, until the earlier of                                                                                        
14                      (A)  the date it is refunded or is applied to an underpayment; [,]                             
15            or                                                                                                           
16                      (B)  [THE] March 31 following the calendar year of                                             
17            production [DESCRIBED IN AS 43.55.030(a)];                                                               
18                 (2)  except as provided under (1) of this subsection, interest with                                     
19       respect to an overpayment is allowed only on any net overpayment of the payments                                  
20       required under (a) of this section that remains after the later of [THE] March 31                                 
21       following the calendar year of production [DESCRIBED IN AS 43.55.030(a)] or                                   
22       the date that the statement required under AS 43.55.030(a) is filed;                                              
23                 (3)  interest is allowed under (2) of this subsection only from a date                                  
24       that is 90 days after the later of [THE] March 31 following the calendar year of                              
25       production [DESCRIBED IN AS 43.55.030(a)] or the date that the statement                                      
26       required under AS 43.55.030(a) is filed; interest is not allowed if the overpayment                               
27       was refunded within the 90-day period;                                                                            
28                 (4)  interest under (2) and (3) of this subsection is paid at the rate and                              
29       in the manner provided in AS 43.05.225(1).                                                                        
30    * Sec. 25. AS 43.55.023(a) is amended to read:                                                                     
31            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
01       expenditure as follows:                                                                                           
02                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
03       deductible lease expenditure for purposes of calculating the production tax value of                              
04       oil and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                            
05       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or                                       
06       explorer that incurs a qualified capital expenditure may also elect to apply [TAKE] a                         
07       tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in the amount of                               
08       20 percent of that expenditure; however, not more than half of the tax credit may                             
09       be applied for a single calendar year;                                                                        
10                 (2)  a producer or explorer may take a credit for a qualified capital                                   
11       expenditure incurred in connection with geological or geophysical exploration or in                               
12       connection with an exploration well only if the producer or explorer [PROVIDES TO                                 
13       THE DEPARTMENT, AS PART OF THE STATEMENT REQUIRED UNDER                                                           
14       AS 43.55.030(a) FOR THE CALENDAR YEAR FOR WHICH THE CREDIT IS                                                     
15       SOUGHT TO BE TAKEN, THE PRODUCER'S OR EXPLORER'S WRITTEN                                                          
16       AGREEMENT]                                                                                                        
17                      (A)  agrees, in writing, to the applicable provisions of                                       
18            AS 43.55.025(f)(2) [TO NOTIFY THE DEPARTMENT OF NATURAL                                                  
19            RESOURCES, BEFORE THE LATER OF 30 DAYS AFTER                                                                 
20            COMPLETION OF THE GEOLOGICAL OR GEOPHYSICAL DATA                                                             
21            PROCESSING OR COMPLETION OF THE WELL, OR 30 DAYS AFTER                                                       
22            THE STATEMENT IS FILED, OF THE DATE OF COMPLETION AND TO                                                     
23            SUBMIT A REPORT TO THAT DEPARTMENT DESCRIBING THE                                                            
24            PROCESSING SEQUENCE AND PROVIDE A LIST OF DATA SETS                                                          
25            AVAILABLE];                                                                                                  
26                      (B)  submits [TO PROVIDE] to the Department of Natural                                         
27            Resources all data that would be required to be submitted under                                          
28            AS 43.55.025(f)(2) [, WITHIN 30 DAYS AFTER THE DATE OF A                                                 
29            REQUEST, SPECIFIC DATA SETS, ANCILLARY DATA, AND                                                             
30            REPORTS IDENTIFIED IN (A) OF THIS PARAGRAPH;                                                                 
31                      (C)  THAT, NOTWITHSTANDING ANY PROVISION OF                                                        
01            AS 38, THE DEPARTMENT OF NATURAL RESOURCES SHALL HOLD                                                        
02            CONFIDENTIAL THE INFORMATION PROVIDED TO THAT                                                                
03            DEPARTMENT UNDER THIS PARAGRAPH FOR 10 YEARS                                                                 
04            FOLLOWING THE COMPLETION DATE, AFTER WHICH THE                                                               
05            DEPARTMENT SHALL PUBLICLY RELEASE THE INFORMATION                                                            
06            AFTER 30 DAYS' PUBLIC NOTICE].                                                                             
07    * Sec. 26. AS 43.55.023(b) is amended to read:                                                                     
08            (b)  A producer or explorer may elect to take a tax credit in the amount of 25                           
09       [20] percent of a carried-forward annual loss. A credit under this subsection may be                              
10       applied against a tax levied by [DUE UNDER] AS 43.55.011(e). For purposes of this                             
11       subsection, a carried-forward annual loss is the amount of a producer's or explorer's                             
12       adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a previous                                       
13       calendar year that was not deductible in calculating production tax values for that                           
14       calendar year under AS 43.55.160 [AS 43.55.160(b) AND (e)].                                                   
15    * Sec. 27. AS 43.55.023(d) is amended to read:                                                                     
16            (d)  Except as limited by (i) of this section, a person that is entitled to take a                       
17       tax credit under this section that wishes to transfer the unused credit to another person                         
18       or obtain a cash payment under AS 43.55.028 may apply to the department for [A]                               
19       transferable tax credit certificates [CERTIFICATE]. An application under this                                 
20       subsection must be in a form prescribed by the department and must include                                        
21       supporting information and documentation that the department reasonably requires.                                 
22       The department shall grant or deny an application, or grant an application as to a                                
23       lesser amount than that claimed and deny it as to the excess, not later than 120 [60]                         
24       days after the latest of (1) March 31 of the year following the calendar year in which                            
25       the qualified capital expenditure or carried-forward annual loss for which the credit is                          
26       claimed was incurred; (2) [IF THE APPLICANT IS REQUIRED UNDER                                                     
27       AS 43.55.030(a) TO FILE A STATEMENT ON OR BEFORE MARCH 31 OF THE                                                  
28       YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE QUALIFIED                                                           
29       CAPITAL EXPENDITURES OR CARRIED-FORWARD ANNUAL LOSS FOR                                                           
30       WHICH THE CREDIT IS CLAIMED WAS INCURRED,] the date the statement                                                 
31       required under AS 43.55.030(a) or (e) was filed for the calendar year in which                            
01       the qualified capital expenditure or carried-forward annual loss for which the                                
02       credit is claimed was incurred; or (3) the date the application was received by the                           
03       department. If, based on the information then available to it, the department is                                  
04       reasonably satisfied that the applicant is entitled to a credit, the department shall issue                       
05       the applicant two [A] transferable tax credit certificates, each [CERTIFICATE] for                        
06       half of the amount of the credit. The credit shown on one of the two certificates is                      
07       available for immediate use. The credit shown on the second of the two                                        
08       certificates may not be applied against a tax for a calendar year earlier than the                            
09       calendar year following the calendar year in which the certificate is issued, and                             
10       the certificate must contain a conspicuous statement to that effect. A certificate                            
11       issued under this subsection does not expire.                                                                     
12    * Sec. 28. AS 43.55.023(e) is amended to read:                                                                     
13            (e)  A person to which a transferable tax credit certificate is issued under (d)                             
14       of this section may transfer the certificate to another person, and a transferee may                              
15       further transfer the certificate. Subject to the limitations set out in (a) - (d) [(a) - (c)]                 
16       of this section, and notwithstanding any action the department may take with respect                              
17       to the applicant under (g) of this section, the owner of a certificate may apply the                              
18       credit or a portion of the credit shown on the certificate only against a tax levied by                       
19       [DUE UNDER] AS 43.55.011(e). However, a credit shown on a transferable tax                                        
20       credit certificate may not be applied to reduce a transferee's total tax liability [DUE]                      
21       under AS 43.55.011(e) for [ON] oil and gas produced during a calendar year to less                            
22       than 80 percent of the tax that would otherwise be due without applying that credit.                              
23       Any portion of a credit not used under this subsection may be applied in a later                                  
24       period.                                                                                                           
25    * Sec. 29. AS 43.55.023(g) is amended to read:                                                                     
26            (g)  The issuance of a transferable tax credit certificate under (d) of this                                 
27       section or the purchase of a certificate [ISSUANCE OF A CASH REFUND] under                                    
28       AS 43.55.028 [(f) OF THIS SECTION] does not limit the department's ability to later                           
29       audit a tax credit claim to which the certificate relates or to adjust the claim if the                           
30       department determines, as a result of the audit, that the applicant was not entitled to                           
31       the amount of the credit for which the certificate was issued.  The tax liability of the                          
01       applicant under AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the                                     
02       amount of the credit that exceeds that to which the applicant was entitled, or the                                
03       applicant's available valid outstanding credits applicable against the tax levied by                              
04       AS 43.55.011(e) are reduced by that amount. If the applicant's tax liability is                                   
05       increased under this subsection, the increase bears interest under AS 43.05.225 from                              
06       the date the transferable tax credit certificate was issued.  For purposes of this                                
07       subsection, an applicant that is an explorer is considered a producer subject to the tax                          
08       levied by AS 43.55.011(e).                                                                                        
09    * Sec. 30. AS 43.55.023(i) is amended to read:                                                                     
10            (i)  For the purposes of this section,                                                                       
11                 (1)  a producer's or explorer's transitional investment expenditures are                                
12       the sum of the expenditures the producer or explorer incurred after March 31, 2001,                               
13       and before April 1, 2006, that would be qualified capital expenditures if they were                               
14       incurred after March 31, 2006, less the sum of the payments or credits the producer or                            
15       explorer received before April 1, 2006, for the sale or other transfer of assets,                                 
16       including geological, geophysical, or well data or interpretations, acquired by the                               
17       producer or explorer as a result of expenditures the producer or explorer incurred                                
18       before April 1, 2006, that would be qualified capital expenditures, if they were                                  
19       incurred after March 31, 2006;                                                                                    
20                 (2)  a producer or explorer that did not have commercial production                                 
21       of oil or gas from a lease or property in the state before January 1, 2008, may                               
22       elect to take a tax credit against a tax levied by [DUE UNDER] AS 43.55.011(e) in                             
23       the amount of 20 percent of the producer's or explorer's transitional investment                                  
24       expenditures, but only to the extent that the amount does not exceed 1/10 of the                                  
25       producer's or explorer's qualified capital expenditures that were incurred after                              
26       March 31, 2006, and before January 1, 2008 [ARE INCURRED DURING THE                                           
27       CALENDAR YEAR FOR WHICH THE CREDIT IS TAKEN];                                                                     
28                 (3)  a producer or explorer may not take a tax credit for a transitional                                
29       investment expenditure                                                                                            
30                      (A)  for any calendar year after [THE LATER OF                                                     
31                           (i)]  2013; [OR                                                                               
01                           (ii)  THE SIXTH CALENDAR YEAR AFTER THE                                                       
02                 CALENDAR YEAR FOR WHICH THE PRODUCER FIRST                                                              
03                 APPLIES A CREDIT UNDER THIS SUBSECTION AGAINST A                                                        
04                 TAX DUE UNDER AS 43.55.011(e), IF THE PRODUCER DID NOT                                                  
05                 HAVE COMMERCIAL PRODUCTION OF OIL OR GAS FROM A                                                         
06                 LEASE OR PROPERTY IN THE STATE BEFORE APRIL 1, 2006;]                                                   
07                      (B)  more than once; or                                                                            
08                      (C)  if a credit for that expenditure was taken under                                              
09            AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025;                                                
10                 (4)  notwithstanding (d), (e), and (g) of this section, a producer or                                   
11       explorer may not transfer a tax credit or obtain a transferable tax credit certificate for                        
12       a transitional investment expenditure.                                                                            
13    * Sec. 31. AS 43.55.023 is amended by adding a new subsection to read:                                             
14            (l)  An entity that is exempt from taxation under this chapter may not apply                                 
15       for a transferable tax credit certificate.                                                                        
16    * Sec. 32. AS 43.55.024(a) is amended to read:                                                                     
17            (a)  For a calendar year for which a producer's tax liability under                                          
18       AS 43.55.011(e) [OR (f)] on oil and gas produced from leases or properties outside                                
19       the Cook Inlet sedimentary basin, no part of which is north of 68 degrees North                                   
20       latitude, exceeds zero before application of any credits under this chapter, a producer                           
21       that is qualified under (e) of this section may apply a tax credit against that liability of                      
22       not more than $6,000,000.                                                                                         
23    * Sec. 33. AS 43.55.024(c) is amended to read:                                                                     
24            (c)  For a calendar year for which a producer's tax liability under                                          
25       AS 43.55.011(e) [OR (f)] exceeds zero before application of any credits under this                                
26       chapter, other than a credit under (a) of this section but after application of any credit                        
27       under (a) of this section, a producer that is qualified under (e) of this section and                             
28       whose average amount of oil and gas produced a day and taxable under                                              
29       AS 43.55.011(e) [OR (f)] is less than 100,000 BTU equivalent barrels a day may                                    
30       apply a tax credit under this subsection against that liability. A producer whose                                 
31       average amount of oil and gas produced a day and taxable under AS 43.55.011(e)                                    
01       [OR (f)] is                                                                                                       
02                 (1)  not more than 50,000 BTU equivalent barrels may apply a tax                                        
03       credit of not more than $12,000,000 for the calendar year;                                                        
04                 (2)  more than 50,000 and less than 100,000 BTU equivalent barrels                                      
05       may apply a tax credit of not more than $12,000,000 multiplied by the following                                   
06       fraction for the calendar year:                                                                                   
07                         1 - [2 X (AP - 50,000)]  100,000                                                               
08       where AP = the average amount of oil and gas taxable under AS 43.55.011(e) [OR                                    
09       (f)], produced a day during the calendar year in BTU equivalent barrels.                                          
10    * Sec. 34. AS 43.55.024(e) is amended to read:                                                                     
11            (e)  On written application by a producer that includes any information the                                  
12       department may require, the department shall determine whether the producer                                       
13       qualifies for a calendar year under this section. To qualify under this section, a                                
14       producer must demonstrate that its operation in the state or its ownership of an                                  
15       interest in a lease or property in the state as a distinct producer would not result in the                       
16       division among multiple producer entities of any production tax liability under                                   
17       AS 43.55.011(e) [OR (f)] that reasonably would be expected to be attributed to a                                  
18       single producer if the tax credit provisions of (a) or (c) of this section did not exist.                         
19    * Sec. 35. AS 43.55.024(g) is amended to read:                                                                     
20            (g)  A tax credit authorized by (c) of this section may not be applied to reduce                             
21       a producer's tax liability for any calendar year under AS 43.55.011(e) [OR (f)] below                             
22       zero.                                                                                                             
23    * Sec. 36. AS 43.55.025(a) is amended to read:                                                                     
24            (a)  Subject to the terms and conditions of this section, a credit against the                               
25       production tax levied by [DUE UNDER] AS 43.55.011(e) [OR (f)] is allowed for                                  
26       exploration expenditures that qualify under (b) of this section in an amount equal to                             
27       one of the following:                                                                                             
28                 (1)  30 [20] percent of the total exploration expenditures that qualify                             
29       only under (b) and (c) of this section;                                                                           
30                 (2)  30 [20] percent of the total exploration expenditures [FOR WORK                                
31       PERFORMED BEFORE JULY 1, 2007, AND] that qualify only under (b) and (d) of                                        
01       this section;                                                                                                     
02                 (3)  40 percent of the total exploration expenditures that qualify under                                
03       (b), (c), and (d) of this section; or                                                                             
04                 (4)  40 percent of the total exploration expenditures that qualify only                                 
05       under (b) and (e) of this section.                                                                                
06    * Sec. 37. AS 43.55.025(b) is amended to read:                                                                     
07            (b)  To qualify for the production tax credit under (a) of this section, an                                  
08       exploration expenditure must be incurred for work performed [ON OR] after                                         
09       June 30, 2008 [JULY 1, 2003], and before July 1, 2016, [EXCEPT THAT AN                                        
10       EXPLORATION EXPENDITURE FOR A COOK INLET PROSPECT MUST BE                                                         
11       INCURRED FOR WORK PERFORMED ON OR AFTER JULY 1, 2005,] and                                                        
12                 (1)  may be for seismic or other geophysical exploration costs not                                  
13       connected with a specific well;                                                                                   
14                 (2)  if for an exploration well,                                                                        
15                      (A)  must be incurred by an explorer that holds an interest in                                     
16            the exploration well for which the production tax credit is claimed;                                         
17                      (B)  may be for either a [AN OIL OR GAS DISCOVERY]                                             
18            well that encounters an oil or gas deposit or a dry hole; [AND]                                          
19                      (C)  must be for a well that has been completed, suspended,                                    
20            or abandoned at the time the explorer claims the tax credit under (f) of                                 
21            this section; and                                                                                        
22                      (D)  must be for goods, services, or rentals of personal                                       
23            property reasonably required for the surface preparation, drilling, casing,                                  
24            cementing, and logging of an exploration well, and, in the case of a dry hole,                               
25            for the expenses required for abandonment if the well is abandoned within 18                                 
26            months after the date the well was spudded;                                                                  
27                 (3)  may not be for [TESTING, STIMULATION, OR COMPLETION                                                
28       COSTS;] administration, supervision, engineering, or lease operating costs;                                       
29       geological or management costs; community relations or environmental costs;                                       
30       bonuses, taxes, or other payments to governments related to the well; costs, including                        
31       repairs and replacements, arising from or associated with fraud, wilful                                       
01       misconduct, gross negligence, criminal negligence, or violation of law, including                             
02       a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or other costs                           
03       that are generally recognized as indirect costs or financing costs; and                                           
04                 (4)  may not be incurred for an exploration well or seismic exploration                                 
05       that is included in a plan of exploration or a plan of development for any unit before                        
06       May 14, 2003 [ON MAY 13, 2003].                                                                               
07    * Sec. 38. AS 43.55.025(c) is repealed and reenacted to read:                                                      
08            (c)  To be eligible for the 30 percent production tax credit authorized by (a)(1)                            
09       of this section or the 40 percent production tax credit authorized by (a)(3) of this                              
10       section, exploration expenditures must                                                                            
11                 (1)  qualify under (b) of this section; and                                                             
12                 (2)  be for an exploration well, subject to the following:                                              
13                      (A)  before the well is spudded,                                                                   
14                           (i)  the explorer shall submit to the commissioner of                                         
15                 natural resources the information necessary to determine whether the                                    
16                 geological objective of the well is a potential oil or gas trap that is                                 
17                 distinctly separate from any trap that has been tested by a preexisting                                 
18                 well;                                                                                                   
19                           (ii)  at the time of the submittal of information under (i)                                   
20                 of this subparagraph, the commissioner of natural resources may                                         
21                 request from the explorer that specific data sets, ancillary data, and                                  
22                 reports including all results, and copies of well data collected and data                               
23                 analyses for the well be provided to the Department of Natural                                          
24                 Resources upon completion of the drilling; in this sub-subparagraph,                                    
25                 well data include all analyses conducted on physical material, and well                                 
26                 logs collected from the well and sample analyses; testing geophysical                                   
27                 and velocity data including vertical seismic profiles and check shot                                    
28                 surveys; testing data and analyses; age data; geochemical analyses;                                     
29                 and access to tangible material; and                                                                    
30                           (iii)  the commissioner of natural resources must make                                        
31                 an affirmative determination as to whether the geological objective of                                  
01                 the well is a potential oil or gas trap that is distinctly separate from any                            
02                 trap that has been tested by a preexisting well and what information                                    
03                 under (ii) of this subparagraph must be submitted by the explorer after                                 
04                 completion, abandonment, or suspension under AS 31.05.030; the                                          
05                 commissioner of natural resources shall make that determination                                         
06                 within 60 days after receiving all the necessary information from the                                   
07                 explorer based on the information received and on other information                                     
08                 the commissioner of natural resources considers relevant;                                               
09                      (B)  for an exploration well other than a well to explore a Cook                                   
10            Inlet prospect, the well must be located and drilled in such a manner that the                               
11            bottom hole is located not less than three miles away from the bottom hole of                                
12            a preexisting well drilled for oil or gas, irrespective of whether the preexisting                           
13            well has been completed, suspended, or abandoned;                                                            
14                      (C)  after completion, suspension, or abandonment under                                            
15            AS 31.05.030 of the exploration well, the commissioner of natural resources                                  
16            must determine that the well was consistent with achieving the explorer's                                    
17            stated geological objective.                                                                                 
18    * Sec. 39. AS 43.55.025(d) is amended to read:                                                                     
19            (d)  To be eligible for the 30 [20] percent production tax credit authorized by                          
20       (a)(2) of this section or the 40 percent production tax credit authorized by (a)(3) of                            
21       this section, an exploration expenditure must                                                                     
22                 (1)  qualify under (b) of this section; and                                                             
23                 (2)  be for an exploration well that is located not less than 25 miles                                  
24       outside of the outer boundary, as delineated on July 1, 2003, of any unit that is under                           
25       a plan of development, except that for an exploration well for a Cook Inlet prospect to                           
26       qualify under this paragraph, the exploration well must be located not less than 10                               
27       miles outside the outer boundary, as delineated on July 1, 2003, of any unit that is                              
28       under a plan of development.                                                                                      
29    * Sec. 40. AS 43.55.025(f) is amended to read:                                                                     
30            (f)  For a production tax credit under this section,                                                         
31                 (1)  an explorer shall, in a form prescribed by the department and,                                 
01       except for a credit under (l) of this section, within six months of the completion of                         
02       the exploration activity, claim the credit and submit information sufficient to                                   
03       demonstrate to the department's satisfaction that the claimed exploration expenditures                            
04       qualify under this section; in addition, the explorer shall submit information                                
05       necessary for the commissioner of natural resources to evaluate the validity of                               
06       the explorer's compliance with the requirements of this section;                                              
07                 (2)  an explorer shall agree, in writing,                                                               
08                      (A)  to notify the Department of Natural Resources, within 30                                      
09            days after completion of seismic or geophysical data processing, completion                                  
10            of [A] well drilling, or filing of a claim for credit, whichever is the latest, for                      
11            which exploration costs are claimed, of the date of completion and submit a                                  
12            report to that department describing the processing sequence and providing a                                 
13            list of data sets available; [IF, UNDER (c)(2)(B) OF THIS SECTION, AN                                        
14            EXPLORER SUBMITS A CLAIM FOR A CREDIT FOR EXPENDITURES                                                       
15            FOR AN EXPLORATION WELL THAT IS LOCATED WITHIN THREE                                                         
16            MILES OF A WELL ALREADY DRILLED FOR OIL AND GAS, IN                                                          
17            ADDITION TO THE SUBMISSIONS REQUIRED UNDER (1) OF THIS                                                       
18            SUBSECTION, THE EXPLORER SHALL SUBMIT THE INFORMATION                                                        
19            NECESSARY FOR THE COMMISSIONER OF NATURAL RESOURCES                                                          
20            TO EVALUATE THE VALIDITY OF THE EXPLORER'S CLAIM THAT                                                        
21            THE WELL IS DIRECTED AT A DISTINCTLY SEPARATE                                                                
22            EXPLORATION TARGET, AND THE COMMISSIONER OF NATURAL                                                          
23            RESOURCES SHALL, UPON RECEIPT OF ALL EVIDENCE                                                                
24            SUFFICIENT FOR THE COMMISSIONER TO EVALUATE THE                                                              
25            EXPLORER'S CLAIM, MAKE THAT DETERMINATION WITHIN 60                                                          
26            DAYS;]                                                                                                       
27                      (B)  to provide to the Department of Natural Resources, within                                     
28            30 days after the date of a request, unless a longer period is provided by the                           
29            Department of Natural Resources, specific data sets, ancillary data, and                                 
30            reports identified in (A) of this paragraph; in this subparagraph,                                       
31                           (i)  a seismic or geophysical data set includes the                                       
01                 data for an entire seismic survey, irrespective of whether the                                      
02                 survey area covers nonstate land in addition to state land or land                                  
03                 in a unit in addition to land outside a unit;                                                       
04                           (ii)  well data include all analyses conducted on                                         
05                 physical material, and well logs collected from the well, results,                                  
06                 and copies of data collected and data analyses for the well,                                        
07                 including well logs; sample analyses; testing geophysical and                                       
08                 velocity data including seismic profiles and check shot surveys;                                    
09                 testing data and analyses; age data; geochemical analyses; and                                      
10                 tangible material;                                                                                  
11                      (C)  that, notwithstanding any provision of AS 38, information                                     
12            provided under this paragraph will be held confidential by the Department of                                 
13            Natural Resources                                                                                            
14                           (i)  in the case of well data, until the expiration of the                                
15                 24-month period of confidentiality described in AS 31.05.035(c)                                     
16                 [FOR 10 YEARS FOLLOWING THE COMPLETION DATE], at                                                        
17                 which time the Department of Natural Resources [THAT                                                
18                 DEPARTMENT] will release the information after 30 days' public                                          
19                 notice unless, in the discretion of the commissioner of natural                                     
20                 resources, it is necessary to protect information relating to the                                   
21                 valuation of unleased acreage in the same vicinity, or unless the                                   
22                 well is on private land and the owner, including the lessor but not                                 
23                 the lessee, of the oil and gas resources has not given permission to                                
24                 release the well data;                                                                              
25                           (ii)  in the case of seismic or other geophysical data,                                   
26                 other than seismic data acquired by seismic exploration subject to                                  
27                 (l) of this section, for 10 years following the completion date, at                                 
28                 which time the Department of Natural Resources will release the                                     
29                 information after 30 days' public notice, except as to seismic or                                   
30                 other geophysical data acquired from private land, unless the                                       
31                 owner, including a lessor but not a lessee, of the oil and gas                                      
01                 resources in the private land gives permission to release the                                       
02                 seismic or other geophysical data associated with the private land;                                 
03                           (iii)  in the case of seismic data obtained by seismic                                    
04                 exploration subject to (l) of this section, only until the expiration of                            
05                 30 days' public notice issued on or after the date the production                                   
06                 tax credit certificate is issued under (5) of this subsection;                                    
07                 (3)  if more than one explorer holds an interest in a well or seismic                                   
08       exploration, each explorer may claim an amount of credit that is proportional to the                              
09       explorer's cost incurred;                                                                                         
10                 (4)  the department may exercise the full extent of its powers as though                                
11       the explorer were a taxpayer under this title, in order to verify that the claimed                                
12       expenditures are qualified exploration expenditures under this section; and                                       
13                 (5)  if the department is satisfied that the explorer's claimed                                         
14       expenditures are qualified under this section and that all data required to be                                
15       submitted under this section have been submitted, the department shall issue to the                           
16       explorer a production tax credit certificate for the amount of credit to be allowed                               
17       against production taxes levied by AS 43.55.011(e); notwithstanding any contrary                              
18       provision of AS 38, AS 40.25.100, or AS 43.05.230, the following information is                               
19       not confidential:                                                                                             
20                      (A)  the explorer's name;                                                                      
21                      (B)  the date of the application;                                                              
22                      (C)  the location of the well or seismic exploration;                                          
23                      (D)  the date of the department's issuance of the certificate;                                 
24            and                                                                                                      
25                      (E)  the date on which the information required to be                                          
26            submitted under this section will be released [DUE UNDER                                                 
27            AS 43.55.011(e) OR (f)].                                                                                     
28    * Sec. 41. AS 43.55.025(g) is amended to read:                                                                     
29            (g)  An explorer, other than an entity that is exempt from taxation under                                
30       this chapter, may transfer, convey, or sell its production tax credit certificate to any                      
31       person, and any person who receives a production tax credit certificate may also                                  
01       transfer, convey, or sell the certificate.                                                                        
02    * Sec. 42. AS 43.55.025(h) is amended to read:                                                                     
03            (h)  A producer that purchases a production tax credit certificate may apply                                 
04       the credits against its production tax levied by [LIABILITY UNDER]                                            
05       AS 43.55.011(e) [OR (f)]. Regardless of the price the producer paid for the                                       
06       certificate, the producer may receive a credit against its production tax liability for the                       
07       full amount of the credit, but for not more than the amount for which the certificate is                          
08       issued. A production tax credit allowed under this section may not be applied more                                
09       than once.                                                                                                        
10    * Sec. 43. AS 43.55.025(i) is repealed and reenacted to read:                                                      
11            (i)  For a production tax credit under this section,                                                         
12                 (1)  a credit may not be applied to reduce a taxpayer's tax liability                                   
13       under AS 43.55.011(e) below zero for a calendar year; and                                                         
14                 (2)  an amount of the production tax credit in excess of the amount that                                
15       may be applied for a calendar year under this subsection may be carried forward and                               
16       applied against the taxpayer's tax liability under AS 43.55.011(e) in one or more later                           
17       calendar years.                                                                                                   
18    * Sec. 44. AS 43.55.025(k) is amended by adding a new paragraph to read:                                           
19                 (4)  "preexisting well" means a well that was spudded more than 540                                     
20       days but less than 35 years before the date on which the exploration well to which it                             
21       is compared is spudded.                                                                                           
22    * Sec. 45. AS 43.55.025 is amended by adding a new subsection to read:                                             
23            (l)  Subject to the terms and conditions of this section, if a claim is filed under                          
24       (f)(1) of this section before January 1, 2016, a credit against the production tax levied                         
25       by AS 43.55.011(e) is allowed in an amount equal to five percent of an eligible                                   
26       expenditure under this subsection incurred for seismic exploration performed before                               
27       July 1, 2003. To be eligible under this subsection, an expenditure must                                           
28                 (1)  have been for seismic exploration that                                                             
29                      (A)  obtained data that the commissioner of natural resources                                      
30            considers to be in the best interest of the state to acquire for public                                      
31            distribution; and                                                                                            
01                      (B)  was conducted outside the boundaries of a production unit;                                    
02            however, the amount of the expenditure that is otherwise eligible under this                                 
03            section is reduced proportionately by the portion of the seismic exploration                                 
04            activity that crossed into a production unit; and                                                            
05                 (2)  qualify under (b)(3) of this section.                                                              
06    * Sec. 46. AS 43.55 is amended by adding a new section to read:                                                    
07            Sec. 43.55.028. Oil and gas tax credit fund established; cash purchases of                               
08       tax credit certificates. (a) The oil and gas tax credit fund is established as a separate                       
09       fund of the state. The purpose of the fund is to purchase certain transferable tax credit                         
10       certificates issued under AS 43.55.023 and certain production tax credit certificates                             
11       issued under AS 43.55.025.                                                                                        
12            (b)  The oil and gas tax credit fund consists of                                                             
13                 (1)  money appropriated to the fund, including any appropriation of the                                 
14       percentage provided under (c) of this section of all revenue from taxes levied by                                 
15       AS 43.55.011 that is not required to be deposited in the constitutional budget reserve                            
16       fund established in art. IX, sec. 17(a), Constitution of the State of Alaska; and                                 
17                 (2)  earnings on the fund.                                                                              
18            (c)  The applicable percentage for a fiscal year under (b)(1) of this section is                             
19       determined with reference to the average price or value forecast by the department for                            
20       Alaska North Slope oil sold or otherwise disposed of on the United States West Coast                              
21       during the fiscal year for which the appropriation of revenue from taxes levied by                                
22       AS 43.55.011 is made. If that forecast is                                                                         
23                 (1)  $60 a barrel or higher, the applicable percentage is 10 percent;                                   
24                 (2)  less than $60 a barrel, the applicable percentage is 15 percent.                                   
25            (d)  The department shall manage the fund.                                                                   
26            (e)  The department, on the written application of the person to whom a                                      
27       transferable tax credit certificate has been issued under AS 43.55.023(d) or a                                    
28       production tax credit certificate has been issued under AS 43.55.025(f), may use                                  
29       available money in the oil and gas tax credit fund to purchase, in whole or in part, the                          
30       certificate if the department finds that                                                                          
31                 (1)  the calendar year of the purchase is not earlier than the first                                    
01       calendar year for which the credit shown on the certificate would otherwise be                                    
02       allowed to be applied against a tax;                                                                              
03                 (2)  within 24 months after applying for the transferable tax credit                                    
04       certificate or filing a claim for the production tax credit certificate, the applicant                            
05       incurred a qualified capital expenditure or was the successful bidder on a bid                                    
06       submitted for a lease on state land under AS 38.05.180(f);                                                        
07                 (3)  the amount expended for the purchase would not exceed the total                                    
08       of qualified capital expenditures and successful bids described in (2) of this                                    
09       subsection that have not been the subject of a finding made under this paragraph for                              
10       purposes of a previous purchase of a certificate;                                                                 
11                 (4)  the applicant does not have an outstanding liability to the state for                              
12       unpaid delinquent taxes under this title;                                                                         
13                 (5)  the applicant's total tax liability under AS 43.55.011(e), after                                   
14       application of all available tax credits, for the calendar year in which the application                          
15       is made is zero;                                                                                                  
16                 (6)  the applicant's average daily production of oil and gas taxable                                    
17       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
18       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
19                 (7)  the purchase is consistent with this section and regulations adopted                               
20       under this section.                                                                                               
21            (f)  Money in the fund remaining at the end of a fiscal year does not lapse and                              
22       remains available for expenditure in successive fiscal years.                                                     
23            (g)  The department may adopt regulations to carry out the purposes of this                                  
24       section, including standards and procedures to allocate available money among                                     
25       applications for purchases the total amount of which exceeds the amount of available                              
26       money in the fund.                                                                                                
27            (h)  Nothing in this section creates a dedicated fund.                                                       
28            (i)  In this section, "qualified capital expenditure" has the meaning given in                               
29       AS 43.55.023.                                                                                                     
30    * Sec. 47. AS 43.55.030(a) is amended to read:                                                                     
31            (a)  A producer that produces oil or gas from a lease or property in the                                 
01       state during a calendar year, whether or not any tax payment is due under                                     
02       AS 43.55.020(a) for that oil or gas, [THE PERSON PAYING THE TAX] shall file                                 
03       with the department on March 31 of the following year [FOLLOWING THE                                          
04       CALENDAR YEAR FOR WHICH THE TAX WAS LEVIED] a statement, under                                                    
05       oath, in a form prescribed by the department, giving, with other information required,                            
06       the following:                                                                                                    
07                 (1)  a description of each lease or property from which [THE] oil or                                
08       [AND] gas was [WERE] produced, by name, legal description, lease number, or                                   
09       accounting codes assigned by the department;                                                                      
10                 (2)  the names of the producer and, if different, the person paying the                             
11       tax, if any;                                                                                                  
12                 (3)  the gross amount of oil and the gross amount of gas produced from                                  
13       each lease or property, and the percentage of the gross amount of oil and gas owned                               
14       by the [EACH] producer [FOR WHOM THE TAX IS PAID];                                                            
15                 (4)  the gross value at the point of production of the oil and of the gas                               
16       produced from each lease or property owned by the [EACH] producer and the costs                           
17       of transportation of the oil and gas [FOR WHOM THE TAX IS PAID];                                              
18                 (5)  the name of the first purchaser and the price received for the oil                                 
19       and for the gas, unless relieved from this requirement in whole or in part by the                                 
20       department; [AND]                                                                                                 
21                 (6)  the producer's qualified capital expenditures, as defined in                                   
22       AS 43.55.023, other lease expenditures [AND ADJUSTMENTS AS                                                    
23       CALCULATED] under AS 43.55.165, and adjustments or other payments or                                          
24       credits under AS 43.55.170;                                                                                   
25                 (7)  the production tax values of the oil and gas under                                             
26       AS 43.55.160;                                                                                                 
27                 (8)  any claims for tax credits to be applied; and                                                  
28                 (9)  calculations showing the amounts, if any, that were or are due                                 
29       under AS 43.55.020(a) and interest on any underpayment or overpayment                                         
30       [AS 43.55.160 - 43.55.170].                                                                                       
31    * Sec. 48. AS 43.55.030(d) is amended to read:                                                                     
01            (d)  Reports required under this section [BY OR ON BEHALF OF THE                                         
02       PRODUCER] are delinquent the first day following the day the report is due. The                               
03       person required to file the report is liable for a penalty, as determined by the                              
04       department under standards adopted in regulation by the department, of not                                    
05       more than $1,000 for each day the person fails to file the report at the time                                 
06       required. The penalty is in addition to the penalties in AS 43.05.220 and                                     
07       43.05.290 and is assessed, collected, and paid in the same manner as a tax                                    
08       deficiency under this title. In this subsection, "report" includes a statement.                               
09    * Sec. 49. AS 43.55.030 is amended by adding new subsections to read:                                              
10            (e)  An explorer or producer that incurs a lease expenditure under                                           
11       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
12       year but does not produce oil or gas from a lease or property in the state during the                             
13       calendar year shall file with the department on March 31 of the following year a                                
14       statement, under oath, in a form prescribed by the department, giving, with other                                 
15       information required, the following:                                                                              
16                 (1)  the producer's qualified capital expenditures, as defined in                                       
17       AS 43.55.023, other lease expenditures under AS 43.55.165, and adjustments or other                               
18       payments or credits under AS 43.55.170; and                                                                       
19                 (2)  if the explorer or producer receives a payment or credit under                                     
20       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
21       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
22            (f)  The department may require a producer, an explorer, or an operator of a                                 
23       lease or property to file monthly reports, as applicable, of                                                      
24                 (1)  the amounts and gross value at the point of production of oil and                                  
25       gas produced;                                                                                                     
26                 (2)  transportation costs of the oil and gas;                                                           
27                 (3)  any unscheduled interruption of, or reduction in the rate of, oil or                               
28       gas production;                                                                                                   
29                 (4)  lease expenditures and adjustments under AS 43.55.165 and                                          
30       43.55.170;                                                                                                        
31                 (5)  joint interest billings;                                                                           
01                 (6)  contracts for the sale or transportation of oil or gas;                                            
02                 (7)  information and calculations used in determining monthly                                           
03       installment payments of estimated tax under AS 43.55.020(a); and                                                  
04                 (8)  other records and information the department considers necessary                                   
05       for the administration of this chapter.                                                                           
06    * Sec. 50. AS 43.55.040 is amended to read:                                                                        
07            Sec. 43.55.040. Powers of Department of Revenue. Except as provided in                                     
08       AS 43.05.405 - 43.05.499, the department may                                                                      
09                 (1)  require a person engaged in production and the agent or employee                                   
10       of the person, and the purchaser of oil or gas, or the owner of a royalty interest in oil                         
11       or gas to furnish, whether by the filing of regular statements or reports or otherwise,                           
12       additional information that is considered by the department as necessary to compute                               
13       the amount of the tax; notwithstanding any contrary provision of law, the disclosure                              
14       of additional information under this paragraph to the producer obligated to pay the tax                           
15       does not violate AS 40.25.100(a) or AS 43.05.230(a); before disclosing information                                
16       under this paragraph that is otherwise required to be held confidential under                                     
17       AS 40.25.100(a) or AS 43.05.230(a), the department shall                                                          
18                      (A)  provide the person that furnished the information a                                           
19            reasonable opportunity to be heard regarding the proposed disclosure and the                                 
20            conditions to be imposed under (B) of this paragraph; and                                                    
21                      (B)  impose appropriate conditions limiting                                                        
22                           (i)  access to the information to those legal counsel,                                        
23                 consultants, employees, officers, and agents of the producer who have                                   
24                 a need to know that information for the purpose of determining or                                       
25                 contesting the producer's tax obligation; and                                                           
26                           (ii)  the use of the information to use for that purpose;                                     
27                 (2)  examine the books, records, and files of the [SUCH A] person;                                  
28                 (3)  conduct hearings and compel the attendance of witnesses and the                                    
29       production of books, records, and papers of any person; [AND]                                                     
30                 (4)  make an investigation or hold an inquiry that is considered                                        
31       necessary to a disclosure of the facts as to                                                                      
01                      (A)  the amount of production from any oil or gas location, or                                     
02            of a company or other producer of oil or gas; and                                                            
03                      (B)  the rendition of the oil and gas for taxing purposes;                                     
04                 (5)  require a producer, an explorer, or an operator of a lease or                                  
05       property to file reports and copies of records that the department considers                                  
06       necessary to forecast state revenue under this chapter; in the case of reports and                            
07       copies of records relating to proposed, expected, or approved unit expenditures                               
08       for a unit for which one or more working interest owners other than the                                       
09       operator have authority to approve unit expenditures, the required reports and                                
10       copies of records are limited to those reports or copies of records that constitute                           
11       or disclose communications between the operator and the working interest                                      
12       owners relating to unit budget matters;                                                                       
13                 (6)  require a producer that has an average total production in the                                 
14       state of more than 100,000 barrels a day for a calendar year to report the gross                              
15       value at the point of production of the producer's taxable oil and gas in the state                           
16       for a calendar year and the total amount of lease expenditures in the state for                               
17       that calendar year; and                                                                                       
18                 (7)  assess against a person required under this section to file a                                  
19       report, statement, or other document a penalty, as determined by the                                          
20       department under standards adopted in regulation by the department, of not                                    
21       more than $1,000 for each day the person fails to file the report, statement, or                              
22       other document after notice by the department; the penalty is in addition to any                              
23       penalties under AS 43.05.220 and 43.05.290 and is assessed, collected, and paid                               
24       in the same manner as a tax deficiency under this title; the penalty shall bear                               
25       interest at the rate specified under AS 43.05.225(1).                                                         
26    * Sec. 51. AS 43.55 is amended by adding a new section to read:                                                    
27            Sec. 43.55.075. Limitation on assessment and amended returns. (a) Except                                   
28       as provided in AS 43.05.260(c), the amount of a tax imposed by this chapter must be                               
29       assessed within six years after the return was filed.                                                             
30            (b)  A decision of a regulatory agency, court, or other body with authority to                               
31       resolve disputes that results in a retroactive change to a lease expenditure, to an                               
01       adjustment to a lease expenditure, to costs of transportation, to sale price, to                                  
02       prevailing value, or to consideration of quality differentials relating to the                                    
03       commingling of oils has a corresponding effect, either an increase or decrease, as                                
04       applicable, on the production tax value of oil or gas or the amount or availability of a                          
05       tax credit as determined under this chapter. For purposes of this section, a change to a                          
06       lease expenditure includes a change in the categorization of a lease expenditure as a                             
07       qualified capital expenditure or as not a qualified capital expenditure. The producer                             
08       shall                                                                                                             
09                 (1)  within 60 days after the change, notify the department in writing;                                 
10       and                                                                                                               
11                 (2)  within 120 days after the change, file amended returns covering all                                
12       periods affected by the change, unless the department agrees otherwise or a stay is in                            
13       place that affects the filing or payment, regardless of the pendency of appeals of the                            
14       decision.                                                                                                         
15            (c)  If an alteration in or modification of a producer's federal income tax return                           
16       or a recomputation of the producer's federal income tax or determination of                                       
17       deficiency occurs that affects the amount of a tax imposed on the producer under this                             
18       chapter, the producer shall                                                                                       
19                 (1)  within 60 days after the final determination of the alteration,                                    
20       modification, recomputation, or deficiency, notify the department in writing; and                                 
21                 (2)  within 120 days after the final determination of the alteration,                                   
22       modification, recomputation, or deficiency, file amended returns covering all affected                            
23       periods.                                                                                                          
24            (d)  In this section,                                                                                        
25                 (1)  "qualified capital expenditure" has the meaning given in                                           
26       AS 43.55.023;                                                                                                     
27                 (2)  "return" includes a report, a statement, and an amended return,                                    
28       report, or statement.                                                                                             
29    * Sec. 52. AS 43.55.110 is amended by adding new subsections to read:                                              
30            (e)  The department may require that returns, statements, reports, notifications,                            
31       and applications filed under this chapter be filed electronically in a form and manner                            
01       approved or prescribed by the department.                                                                         
02            (f)  The department may require that payments required under this chapter be                                 
03       made electronically in a form and manner approved or prescribed by the department.                                
04            (g)  Notwithstanding AS 44.62, the department may issue, for the information                                 
05       and guidance of producers, explorers, and other interested persons, advisory bulletins                            
06       stating the department's interpretation of provisions of this chapter and of regulations                          
07       adopted under this chapter. Unless otherwise provided by the department by                                        
08       regulation, interpretations stated in the advisory bulletins are not binding on the                               
09       department or others.                                                                                             
10            (h)  Subject to legislative appropriation, the department may compensate a                                   
11       person who provides information to the department about noncompliance with the                                    
12       provisions of this chapter by an explorer or a producer of oil or gas if that information                         
13       leads to the collection of additional taxes, penalties, or interest from the producer. The                        
14       amount of compensation under this subsection may not exceed the lesser of $500,000                                
15       or 10 percent of the additional tax, penalty, or interest collected as a result of the                            
16       information. A state employee or an agent of the state is not eligible for compensation                           
17       under this subsection.                                                                                            
18            (i)  A person who, under (h) of this section, provides, in bad faith, to the                                 
19       department erroneous information about noncompliance with the provisions of this                                  
20       chapter by an explorer or producer of oil or gas shall pay to the                                                 
21                 (1)  department all expenses related to the department's investigation                                  
22       of the alleged noncompliance; and                                                                                 
23                 (2)  explorer or producer about whom the noncompliance was alleged                                      
24       all expenses that are incurred by the explorer or producer relating to the department's                           
25       investigation of the alleged noncompliance.                                                                       
26    * Sec. 53. AS 43.55.150 is amended to read:                                                                        
27            Sec. 43.55.150. Determination of gross value at the point of production.                                   
28       (a) For the purposes of AS 43.55.011 - 43.55.180, the gross value at the point of                                 
29       production is calculated using the actual [REASONABLE] costs of transportation of                             
30       the oil or gas [. THE REASONABLE COSTS OF TRANSPORTATION ARE THE                                                  
31       ACTUAL COSTS], except when the                                                                                    
01                 (1)  shipper [PARTIES TO THE TRANSPORTATION] of oil or gas                                          
02       is [ARE] affiliated with the transportation carrier or with a person that owns an                         
03       interest in the transportation facility;                                                                      
04                 (2)  contract for the transportation of oil or gas is not an arm's length                               
05       transaction [OR IS NOT REPRESENTATIVE OF THE MARKET VALUE OF                                                      
06       THAT TRANSPORTATION]; or [AND]                                                                                
07                 (3)  method or terms of transportation of oil or gas are [IS] not                               
08       reasonable in view of existing alternative [METHODS OF] transportation options.                               
09            (b)  If the department finds that a condition [THE CONDITIONS] in (a)(1),                                
10       (2), or [AND] (3) of this section is [ARE] present, the gross value at the point of                   
11       production is calculated using the actual costs of transportation, or the                                     
12       reasonable costs of transportation as determined under this subsection,                                       
13       whichever is lower. The [THE] department shall determine the reasonable costs of                              
14       transportation, using the fair market value of like transportation, the fair market value                         
15       of equally efficient and available alternative modes of transportation, or other                                  
16       reasonable methods. Transportation costs fixed by tariff rates that have been                                 
17       adjudicated as just and reasonable by [PROPERLY ON FILE WITH] the                                             
18       Regulatory Commission of Alaska or another [OTHER] regulatory agency and                                  
19       transportation costs in an arm's length transaction paid by parties not affiliated                            
20       with an owner of the method of transportation shall be considered prima facie                                 
21       reasonable.                                                                                                       
22            (c)  In determining the gross value of oil under [(a) OF] this section, the                                  
23       department may not allow as reasonable costs of transportation                                                    
24                 (1)  the amount of loss of or damage to, or of expense incurred due to                                  
25       the loss of or damage to, a vessel used to transport oil if the loss, damage, or expense                          
26       is incurred in connection with a catastrophic oil discharge from the vessel into the                              
27       marine or inland waters of the state;                                                                             
28                 (2)  the incremental costs of transportation of the oil that are                                        
29       attributable to temporary use of or chartered or substituted service provided by                                  
30       another vessel due to the loss of or damage to a vessel regularly used to transport oil                           
31       and that are incurred in connection with a catastrophic oil discharge into the marine or                          
01       inland waters of the state; and                                                                                   
02                 (3)  the costs incurred to charter, contract, or hire vessels and                                       
03       equipment used to contain or clean up a catastrophic oil discharge.                                               
04    * Sec. 54. AS 43.55.160(a) is amended to read:                                                                     
05            (a)  Except as provided in (b) of this section, for the purposes of                                          
06                 (1)  AS 43.55.011(e), the annual production tax value of the taxable                                    
07                      (A)  oil and gas produced during a calendar year from leases or                                    
08            properties in the state that include land north of 68 degrees North latitude is                              
09            the gross value at the point of production of the oil and gas taxable under                                  
10            AS 43.55.011(e) and produced by the producer from those leases or                                            
11            properties, less the producer's lease expenditures under AS 43.55.165 for the                                
12            calendar year applicable to the oil and gas produced by the producer from                                    
13            those leases or properties, as adjusted under AS 43.55.170; this                                         
14            subparagraph does not apply to gas subject to AS 43.55.011(o);                                           
15                      (B)  oil and gas produced during a calendar year from leases or                                    
16            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
17            which is north of 68 degrees North latitude, is the gross value at the point of                              
18            production of the oil and gas taxable under AS 43.55.011(e) and produced by                                  
19            the producer from those leases or properties, less the producer's lease                                      
20            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
21            and gas produced by the producer from those leases or properties, as adjusted                                
22            under AS 43.55.170; this subparagraph does not apply to gas subject to                                   
23            AS 43.55.011(o);                                                                                         
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                      (E)  gas produced during a calendar year from a lease or                                       
06            property outside the Cook Inlet sedimentary basin and used in the state is                               
07            the gross value at the point of production of that gas taxable under                                     
08            AS 43.55.011(e) and produced by the producer from that lease or                                          
09            property, less the producer's lease expenditures under AS 43.55.165 for                                  
10            the calendar year applicable to that gas produced by the producer from                                   
11            that lease or property, as adjusted under AS 43.55.170;                                                  
12                  (2)  AS 43.55.011(g), the monthly production tax value of the taxable                                  
13                      (A)  oil and gas produced during a month from leases or                                            
14            properties in the state that include land north of 68 degrees North latitude is                              
15            the gross value at the point of production of the oil and gas taxable under                                  
16            AS 43.55.011(e) [AS 43.55.011(g)] and produced by the producer from those                                
17            leases or properties, less 1/12 of the producer's lease expenditures under                                   
18            AS 43.55.165 for the calendar year applicable to the oil and gas produced by                                 
19            the producer from those leases or properties, as adjusted under AS 43.55.170;                                
20            this subparagraph does not apply to gas subject to AS 43.55.011(o);                                      
21                      (B)  oil and gas produced during a month from leases or                                            
22            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
23            which is north of 68 degrees North latitude, is the gross value at the point of                              
24            production of the oil and gas taxable under AS 43.55.011(e)                                              
25            [AS 43.55.011(g)] and produced by the producer from those leases or                                          
26            properties, less 1/12 of the producer's lease expenditures under AS 43.55.165                                
27            for the calendar year applicable to the oil and gas produced by the producer                                 
28            from those leases or properties, as adjusted under AS 43.55.170; this                                    
29            subparagraph does not apply to gas subject to AS 43.55.011(o);                                           
30                      (C)  oil produced during a month from a lease or property in                                       
31            the Cook Inlet sedimentary basin is the gross value at the point of production                               
01            of the oil taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
02            the producer from that lease or property, less 1/12 of the producer's lease                                  
03            expenditures under AS 43.55.165 for the calendar year applicable to the oil                                  
04            produced by the producer from that lease or property, as adjusted under                                      
05            AS 43.55.170;                                                                                                
06                      (D)  gas produced during a month from a lease or property in                                       
07            the Cook Inlet sedimentary basin is the gross value at the point of production                               
08            of the gas taxable under AS 43.55.011(e) [AS 43.55.011(g)] and produced by                               
09            the producer from that lease or property, less 1/12 of the producer's lease                                  
10            expenditures under AS 43.55.165 for the calendar year applicable to the gas                                  
11            produced by the producer from that lease or property, as adjusted under                                      
12            AS 43.55.170;                                                                                            
13                      (E)  gas produced during a month from a lease or property                                      
14            outside the Cook Inlet sedimentary basin and used in the state is the gross                              
15            value at the point of production of that gas taxable under AS 43.55.011(e)                               
16            and produced by the producer from that lease or property, less 1/12 of                                   
17            the producer's lease expenditures under AS 43.55.165 for the calendar                                    
18            year applicable to that gas produced by the producer from that lease or                                  
19            property, as adjusted under AS 43.55.170.                                                                
20    * Sec. 55. AS 43.55.160(b) is amended to read:                                                                     
21            (b)  A production tax value calculated under [(a) OF] this section may not be                                
22       less than zero.                                                                                                   
23    * Sec. 56. AS 43.55.160(c) is amended to read:                                                                     
24            (c)  Notwithstanding any contrary provision of AS 43.55.150, for purposes of                                 
25       calculating a monthly production tax value under (a)(2) of this section, the gross                                
26       value at the point of production of the oil and gas [TAXABLE UNDER                                                
27       AS 43.55.011(g)] is calculated under regulations adopted by the department that                                   
28       provide for using an appropriate monthly share of the producer's costs of                                         
29       transportation for the calendar year.                                                                             
30    * Sec. 57. AS 43.55.160(e) is amended to read:                                                                     
31            (e)  Any adjusted lease expenditures under AS 43.55.165 and 43.55.170 that                                   
01       would otherwise be deductible by a producer in a calendar year but whose deduction                                
02       would cause an annual production tax value calculated under (a)(1) of this section of                             
03       taxable oil or gas produced during the calendar year to be less than zero may be used                             
04       to establish a carried-forward annual loss under AS 43.55.023(b). However, the                                
05       department shall provide by regulation a method to ensure that, for a period for                              
06       which a producer's tax liability is limited by AS 43.55.011(j), (k), or (o), any                              
07       adjusted lease expenditures under AS 43.55.165 and 43.55.170 that would                                       
08       otherwise be deductible by a producer for that period but whose deduction                                     
09       would cause a production tax value calculated under (a)(1)(C), (D) or (E) of this                             
10       section to be less than zero are accounted for as though the adjusted lease                                   
11       expenditures had first been used as deductions in calculating the production tax                              
12       values of oil or gas subject to any of the limitations under AS 43.55.011(j), (k), or                         
13       (o) that have positive production tax values so as to reduce the tax liability                                
14       calculated without regard to the limitation to the maximum amount provided for                                
15       under the applicable provision of AS 43.55.011(j), (k), or (o). Only the amount of                            
16       those adjusted lease expenditures remaining after the accounting provided for                                 
17       under this subsection may be used to establish a carried-forward annual loss                                  
18       under AS 43.55.023(b). In this subsection, "producer" includes "explorer."                                    
19    * Sec. 58. AS 43.55.165(a) is repealed and reenacted to read:                                                      
20            (a)  Except as provided in (k) and (l) of this section, for purposes of this                                 
21       chapter, a producer's lease expenditures for a calendar year are                                                  
22                 (1)  costs, other than items listed in (e) of this section, that are                                    
23                      (A)  incurred by the producer during the calendar year after                                       
24            March 31, 2006, to explore for, develop, or produce oil or gas deposits located                              
25            within the producer's leases or properties in the state or, in the case of land in                           
26            which the producer does not own an operating right, operating interest, or                                   
27            working interest, to explore for oil or gas deposits within other land in the                                
28            state; and                                                                                                   
29                      (B)  allowed by the department by regulation, based on the                                         
30            department's determination that the costs satisfy the following three                                        
31            requirements:                                                                                                
01                           (i)  the costs must be incurred upstream of the point of                                      
02                 production of oil and gas;                                                                              
03                           (ii)  the costs must be ordinary and necessary costs of                                       
04                 exploring for, developing, or producing, as applicable, oil or gas                                      
05                 deposits; and                                                                                           
06                           (iii)  the costs must be direct costs of exploring for,                                       
07                 developing, or producing, as applicable, oil or gas deposits; and                                       
08                 (2)  a reasonable allowance for that calendar year, as determined under                                 
09       regulations adopted by the department, for overhead expenses that are directly related                            
10       to exploring for, developing, or producing, as applicable, the oil or gas deposits.                               
11    * Sec. 59. AS 43.55.165(b) is amended to read:                                                                     
12            (b)  For purposes of (a) of this section,                                                                    
13                 (1)  direct costs include                                                                               
14                      (A)  an expenditure, when incurred, to acquire an item if the                                      
15            acquisition cost is otherwise a direct cost, notwithstanding that the                                        
16            expenditure may be required to be capitalized rather than treated as an                                      
17            expense for financial accounting or federal income tax purposes;                                             
18                      (B)  payments of or in lieu of property taxes, sales and use                                       
19            taxes, motor fuel taxes, and excise taxes;                                                                   
20                      [(C)  A REASONABLE ALLOWANCE, AS DETERMINED                                                        
21            UNDER REGULATIONS ADOPTED BY THE DEPARTMENT, FOR                                                             
22            OVERHEAD EXPENSES DIRECTLY RELATED TO EXPLORING FOR,                                                         
23            DEVELOPING, AND PRODUCING OIL OR GAS DEPOSITS LOCATED                                                        
24            WITHIN LEASES OR PROPERTIES OR OTHER LAND IN THE STATE;]                                                     
25                 (2)  an activity does not need to be physically located on, near, or                                    
26       within the premises of the lease or property within which an oil or gas deposit being                             
27       explored for, developed, or produced is located in order for the cost of the activity to                          
28       be a cost upstream of the point of production of the oil or gas;                                              
29                 (3)  in determining whether costs are lease expenditures, the                                       
30       department may consider, among other factors, the                                                             
31                      (A)  typical industry practices and standards in the state                                     
01            that determine the costs, other than items listed in (e) of this section, that                           
02            an operator is allowed to bill a producer that is not the operator, under                                
03            unit operating agreements or similar operating agreements that were in                                   
04            effect before December 2, 2005, and were subject to negotiation with at                                  
05            least one producer with substantial bargaining power, other than the                                     
06            operator; and                                                                                            
07                      (B)  standards adopted by the Department of Natural                                            
08            Resources that determine the costs, other than items listed in (e) of this                               
09            section, that a lessee is allowed to deduct from revenue in calculating net                              
10            profits under a lease issued under AS 38.05.180(f)(3)(B), (D), or (E).                                   
11    * Sec. 60. 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 arising from fraud, wilful misconduct, [OR] gross                                            
24       negligence, violation of law, or failure to comply with an obligation under a lease,                          
25       permit, or license issued by the state or federal government;                                                 
26                 (7)  fines or penalties imposed by law;                                                                 
27                 (8)  costs of arbitration, litigation, or other dispute resolution activities                           
28       that involve the state or concern the rights or obligations among owners of interests                             
29       in, or rights to production from, one or more leases or properties or a unit;                                     
30                 (9)  costs incurred in organizing a partnership, joint venture, or other                                
31       business entity or arrangement;                                                                                   
01                 (10)  amounts paid to indemnify the state; the exclusion provided by                                    
02       this paragraph does not apply to the costs of obtaining insurance or a surety bond                                
03       from a third-party insurer or surety;                                                                             
04                 (11)  surcharges levied under AS 43.55.201 or 43.55.300;                                                
05                 (12)  an expenditure otherwise deductible under (b) of this section                                 
06       that is a result of [FOR A TRANSACTION THAT IS] an internal transfer, a                                   
07       transaction with an affiliate, or a transaction between related parties, or is                                
08       otherwise not an arm's length transaction, unless the producer establishes to the                             
09       satisfaction of the department that the amount of the expenditure does not                                    
10       exceed the [EXPENDITURES INCURRED THAT ARE IN EXCESS OF] fair                                                 
11       market value of the expenditure;                                                                              
12                 (13)  an expenditure incurred to purchase an interest in any                                            
13       corporation, partnership, limited liability company, business trust, or any other                                 
14       business entity, whether or not the transaction is treated as an asset sale for federal                           
15       income tax purposes;                                                                                              
16                 (14)  a tax levied under AS 43.55.011;                                                                  
17                 (15)  [THE PORTION OF] costs incurred for dismantlement, removal,                                       
18       surrender, or abandonment of a facility, pipeline, well pad, platform, or other                                   
19       structure, or for the restoration of a lease, field, unit, area, tract of land, body of                       
20       water, or right-of-way in conjunction with dismantlement, removal, surrender, or                                  
21       abandonment [, THAT IS ATTRIBUTABLE TO PRODUCTION OF OIL OR GAS                                                   
22       OCCURRING BEFORE APRIL 1, 2006; THE PORTION IS CALCULATED AS A                                                    
23       RATIO OF THE AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                      
24       OIL EQUIVALENT, ASSOCIATED WITH THE FACILITY, PIPELINE, WELL                                                      
25       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
26       OF WATER, OR RIGHT-OF-WAY OCCURRING BEFORE APRIL 1, 2006, TO                                                      
27       THE TOTAL AMOUNT OF OIL AND GAS PRODUCTION, IN BARRELS OF                                                         
28       OIL EQUIVALENT, ASSOCIATED WITH THAT FACILITY, PIPELINE, WELL                                                     
29       PAD, PLATFORM, OTHER STRUCTURE, LEASE, FIELD, UNIT, AREA, BODY                                                    
30       OF WATER, OR RIGHT-OF-WAY THROUGH THE END OF THE CALENDAR                                                         
31       MONTH BEFORE COMMENCEMENT OF THE DISMANTLEMENT,                                                                   
01       REMOVAL, SURRENDER, OR ABANDONMENT]; a cost is not excluded under                                                 
02       this paragraph if the dismantlement, removal, surrender, or abandonment for which                                 
03       the cost is incurred is undertaken for the purpose of replacing, renovating, or                                   
04       improving the facility, pipeline, well pad, platform, or other structure; [FOR THE                                
05       PURPOSES OF THIS PARAGRAPH, "BARREL OF OIL EQUIVALENT" MEANS                                                      
06                      (A)  IN THE CASE OF OIL, ONE BARREL;                                                               
07                      (B)  IN THE CASE OF GAS, 6,000 CUBIC FEET;]                                                        
08                 (16)  costs incurred for containment, control, cleanup, or removal in                                   
09       connection with any unpermitted release of oil or a hazardous substance and any                                   
10       liability for damages imposed on the producer or explorer for that unpermitted                                    
11       release; this paragraph does not apply to the cost of developing and maintaining an oil                           
12       discharge prevention and contingency plan under AS 46.04.030;                                                     
13                 (17)  costs incurred to satisfy a work commitment under an exploration                                  
14       license under AS 38.05.132;                                                                                       
15                 (18)  that portion of expenditures, that would otherwise be qualified                                   
16       capital expenditures, as defined in AS 43.55.023 [AS 43.55.023(k)], incurred during a                     
17       calendar year that are less than the product of $0.30 multiplied by the total taxable                             
18       production from each lease or property, in BTU equivalent barrels, during that                                    
19       calendar year, except that, when a portion of a calendar year is subject to this                                  
20       provision, the expenditures and volumes shall be prorated within that calendar year;                          
21                 (19)  costs incurred for repair, replacement, or deferred                                           
22       maintenance of a facility, a pipeline, a structure, or equipment, other than a well,                          
23       that results in or is undertaken in response to a failure, problem, or event that                             
24       results in an unscheduled interruption of, or reduction in the rate of, oil or gas                            
25       production; or costs incurred for repair, replacement, or deferred maintenance                                
26       of a facility, a pipeline, a structure, or equipment, other than a well, that is                              
27       undertaken in response to, or is otherwise associated with, an unpermitted                                    
28       release of a hazardous substance or of gas; however, costs under this paragraph                               
29       that would otherwise constitute lease expenditures under (a) and (b) of this                                  
30       section may be treated as lease expenditures if the department determines that                                
31       the repair or replacement is solely necessitated by an act of war, by an                                      
01       unanticipated grave natural disaster or other natural phenomenon of an                                        
02       exceptional, inevitable, and irresistible character, the effects of which could not                           
03       have been prevented or avoided by the exercise of due care or foresight, or by an                             
04       intentional or negligent act or omission of a third party, other than a party or its                          
05       agents in privity of contract with, or employed by, the producer or an operator                               
06       acting for the producer, but only if the producer or operator, as applicable,                                 
07       exercised due care in operating and maintaining the facility, pipeline, structure,                            
08       or equipment, and took reasonable precautions against the act or omission of the                              
09       third party and against the consequences of the act or omission; in this                                      
10       paragraph,                                                                                                    
11                      (A)  "costs incurred for repair, replacement, or deferred                                      
12            maintenance of a facility, a pipeline, a structure, or equipment" includes                               
13            costs to dismantle and remove the facility, pipeline, structure, or                                      
14            equipment that is being replaced;                                                                        
15                      (B)  "hazardous substance" has the meaning given in                                            
16            AS 46.03.826;                                                                                            
17                      (C)  "replacement" includes renovation or improvement;                                         
18                 (20)  costs incurred to construct, acquire, or operate a refinery or                                
19       crude oil topping plant, regardless of whether the products of the refinery or                                
20       topping plant are used in oil or gas exploration, development, or production                                  
21       operations; however, if a producer owns a refinery or crude oil topping plant                                 
22       that is located on or near the premises of the producer's lease or property in the                            
23       state and that processes the producer's oil produced from that lease or property                              
24       into a product that the producer uses in the operation of the lease or property in                            
25       drilling for or producing oil or gas, the producer's lease expenditures include the                           
26       amount calculated by subtracting from the fair market value of the product used                               
27       the prevailing value, as determined under AS 43.55.020(f), of the oil that is                                 
28       processed;                                                                                                    
29                 (21)  costs of lobbying, public relations, public relations                                         
30       advertising, or policy advocacy.                                                                            
31    * Sec. 61. AS 43.55.165(h) is amended to read:                                                                     
01            (h)  The department shall adopt regulations that provide for reasonable                                      
02       methods of allocating costs between oil and gas, between gas subject to                                       
03       AS 43.55.011(o) and other gas, and between leases or properties in those                                      
04       circumstances where an allocation of costs is required to determine [THE                                      
05       DETERMINATION OF THE] lease expenditures that are costs of exploring for,                                     
06       developing, or producing oil deposits or costs of exploring for, developing, or                               
07       producing gas deposits [APPLICABLE TO OIL OR TO GAS], or that are costs of                                
08       exploring for, developing, or producing oil or gas deposits located within                                    
09       [APPLICABLE TO OIL AND GAS PRODUCED FROM] different leases or                                                     
10       properties [, REQUIRES AN ALLOCATION OF COSTS].                                                                   
11    * Sec. 62. AS 43.55.165 is amended by adding new subsections to read:                                              
12            (k)  For purposes of AS 43.55.160, for a calendar year after 2006 and before                                 
13       2010, a producer's total lease expenditures, before adjustment under AS 43.55.170,                                
14       that are applicable to oil and gas produced by the producer from all leases or                                    
15       properties from which 1,000,000,000 BTU equivalent barrels of oil or gas have been                                
16       cumulatively produced by the close of 2006 and from which the average daily oil and                               
17       gas production during 2006 exceeded 100,000 BTU equivalent barrels as the unit                                    
18       boundaries were defined on January 1, 2007, are determined under this subsection                                  
19       and (l) of this section.  Except as otherwise provided under (l) of this section, the                             
20       producer's total lease expenditures, other than qualified capital expenditures, (1) for                           
21       calendar year 2007, are equal to the product of 1.37 multiplied by the total lease                                
22       expenditures for calendar year 2006, other than qualified capital expenditures, that are                          
23       applicable to oil and gas produced by the producer from all leases or properties within                           
24       the unit, as reported on the producer's statement under AS 43.55.030(a) for calendar                              
25       year 2006, and (2) for a calendar year after 2007, are equal to the product of 1.03                               
26       multiplied by the total lease expenditures, other than qualified capital expenditures,                            
27       determined for the previous calendar year under this subsection.  The producer's total                            
28       lease expenditures for a calendar year after 2006 that are applicable to oil and gas                              
29       produced by the producer from all leases or properties within a unit subject to this                              
30       subsection are the sum of the producer's qualified capital expenditures incurred                                  
31       during the calendar year that are applicable to that oil and gas plus the lease                                   
01       expenditures, other than qualified capital expenditures, that are applicable to that oil                          
02       and gas as determined under this subsection and (l) of this section. If a producer                                
03       whose lease expenditures for 2006 are used to determine lease expenditures for a later                            
04       calendar year under this subsection transfers an interest in an affected lease or                                 
05       property to a different producer or if the unit area of the applicable unit is changed                            
06       from the area as it existed on December 31, 2006, the transferee's lease expenditures                             
07       applicable to oil and gas produced by the transferee from the lease or property and a                             
08       producer's lease expenditures applicable to oil or gas produced from a lease or                                   
09       property within a unit area as it existed on December 31, 2006, continue to be                                    
10       determined under this subsection using those 2006 lease expenditures. In this                                     
11       subsection, "qualified capital expenditures" has the meaning given in AS 43.55.023.                               
12            (l)  If, after audit by the department of a producer's statement or amended                                  
13       statement under AS 43.55.030(a) for calendar year 2006, the department finally                                    
14       determines that the reported amount of total lease expenditures, other than qualified                             
15       capital expenditures, for calendar year 2006 applicable to oil and gas produced by the                            
16       producer from all leases or properties within a unit subject to (k) of this section                               
17       exceeds by more than 10 percent the actual amount of those lease expenditures, other                              
18       than qualified capital expenditures, the producer or transferee, as applicable, shall (1)                         
19       substitute the actual amount of those lease expenditures, other than qualified capital                            
20       expenditures, for purposes of the calculations set out in (k) of this section, and (2) file                       
21       amended statements for affected past tax periods within 60 days after the final                                   
22       determination. The commissioner may adjust the deduction applicable under (k) of                                  
23       this section on changes in unit boundaries.                                                                       
24    * Sec. 63. AS 43.55.170(a) is amended to read:                                                                     
25            (a)  A [UNLESS THE PAYMENT OR CREDIT HAS ALREADY BEEN                                                    
26       SUBTRACTED IN CALCULATING BILLABLE OR BILLED COSTS UNDER                                                          
27       AS 43.55.165(c) OR (d), A] producer's lease expenditures under AS 43.55.165 must                                  
28       be adjusted by subtracting payments or credits, other than tax credits, received by the                           
29       producer or by an operator acting for the producer for                                                            
30                 (1)  the use by another person of a production facility in which the                                    
31       producer has an ownership interest or the management by the producer of a                                         
01       production facility under a management agreement providing for the producer to                                    
02       receive a management fee;                                                                                         
03                 (2)  a reimbursement or similar payment that offsets the producer's                                     
04       lease expenditures, including an insurance recovery from a third-party insurer and a                              
05       payment from the state or federal government for reimbursement of the producer's                                  
06       upstream costs, including costs for gathering, separating, cleaning, dehydration,                                 
07       compressing, or other field handling associated with the production of oil or gas                                 
08       upstream of the point of production;                                                                              
09                 (3)  the sale or other transfer of                                                                      
10                      (A)  an asset, including geological, geophysical, or well data or                                  
11            interpretations, acquired by the producer as a result of a lease expenditure or                              
12            an expenditure that would be a lease expenditure if it were incurred after                                   
13            March 31, 2006; for purposes of this subparagraph,                                                           
14                           (i)  if a producer removes from the state, for use outside                                    
15                 the state, an asset described in this subparagraph, the value of the asset                              
16                 at the time it is removed is considered a payment received by the                                       
17                 producer for sale or transfer of the asset;                                                             
18                           (ii)  for a transaction that is an internal transfer or is                                    
19                 otherwise not an arm's length transaction, if the sale or transfer of the                               
20                 asset is made for less than fair market value, the amount subtracted                                    
21                 must be the fair market value; and                                                                      
22                      (B)  oil or gas                                                                                    
23                           (i)  that is not considered produced from a lease or                                          
24                 property under AS 43.55.020(e); and                                                                     
25                           (ii)  the cost of acquiring which is a lease expenditure                                      
26                 incurred by the person that acquires the oil or gas.                                                    
27    * Sec. 64. AS 43.55 is amended by adding new sections to article 4 to read:                                        
28            Sec. 43.55.890. Disclosure of tax information. Notwithstanding any contrary                                
29       provision of AS 40.25.100, and regardless of whether the information is considered                                
30       under AS 43.05.230(e) to constitute statistics classified to prevent the identification of                        
31       particular returns or reports, the department may publish the following information                               
01       under this chapter, if aggregated among three or more producers or explorers,                                     
02       showing by month or calendar year and by lease or property, unit, or area of the state:                           
03                 (1)  the amount of oil or gas production;                                                               
04                 (2)  the amount of taxes levied under this chapter or paid under this                                   
05       chapter;                                                                                                          
06                 (3)  the effective tax rates under this chapter;                                                        
07                 (4)  the gross value of oil or gas at the point of production;                                          
08                 (5)  the transportation costs for oil or gas;                                                           
09                 (6)  qualified capital expenditures, as defined in AS 43.55.023;                                        
10                 (7)  exploration expenditures under AS 43.55.025;                                                       
11                 (8)  production tax values of oil or gas under AS 43.55.160;                                            
12                 (9)  lease expenditures under AS 43.55.165;                                                             
13                 (10)  adjustments to lease expenditures under AS 43.55.170;                                             
14                 (11)  tax credits applicable or potentially applicable against taxes                                    
15       levied by this chapter.                                                                                           
16            Sec. 43.55.895. Applicability to municipal entities. (a) Notwithstanding                                   
17       AS 29.35.670(a) or other provision of law, a producer that is a municipal entity is                               
18       subject to taxation and payment of surcharges under this chapter for oil and gas that it                          
19       sells to another party.                                                                                           
20            (b)  A municipal entity subject to taxation because of this section is eligible                              
21       for all tax credits under this chapter to the same extent as any other producer.                                  
22            (c)  In this section, "municipal entity" means a municipality, municipally                                   
23       owned utility, public corporation of a municipality, or entity established by more than                           
24       one municipality.                                                                                                 
25    * Sec. 65. AS 43.55.900 is amended by adding new paragraphs to read:                                               
26                 (22)  "producer" means an owner of an operating right, operating                                        
27       interest, or working interest in a mineral interest in oil or gas;                                                
28                 (23)  "unit" means a group of tracts of land that is                                                    
29                      (A)  subject to a cooperative or a unit plan of development or                                     
30            operation that has been certified by the commissioner of natural resources                                   
31            under AS 38.05.180(p);                                                                                       
01                      (B)  subject to a cooperative or a unit plan of development or                                     
02            operation that has been certified by the United States Secretary of the Interior                             
03            under 30 U.S.C. 226(m);                                                                                      
04                      (C)  subject to an agreement of the owners of interests in the                                     
05            tracts of land to validly integrate their interests to provide for the unitized                              
06            management, development, and operation of the tracts of land as a unit, within                               
07            the meaning of AS 31.05.110(a); or                                                                           
08                      (D)  within the unit area of a unit created by order of the                                        
09            Alaska Oil and Gas Conservation Commission under AS 31.05.110(b);                                            
10                 (24) "used in the state" means delivered for consumption as fuel in the                                 
11       state, including as fuel consumed to generate electricity.                                                        
12    * Sec. 66. AS 43.55.011(h), 43.55.011(l), 43.55.011(n), 43.55.165(c), and 43.55.165(d) are                         
13 repealed.                                                                                                               
14    * Sec. 67. AS 43.55.023(f) is repealed.                                                                          
15    * Sec. 68. The uncodified law of the State of Alaska is amended by adding a new section to                         
16 read:                                                                                                                   
17       APPLICABILITY. (a) AS 43.55.075(a), enacted by sec. 51 of this Act, applies to any                                
18 tax liability under AS 43.55 for the production of oil and gas after December 31, 2006.                                 
19       (b)  If an application made under AS 43.55.023(f) is received by the Department of                                
20 Revenue before January 1, 2008, and is still outstanding on that date, the application is                               
21 considered to be an application under AS 43.55.028, enacted by sec. 46 of this Act.                                     
22    * Sec. 69. The uncodified law of the State of Alaska is amended by adding a new section to                         
23 read:                                                                                                                   
24       OIL AND GAS REVENUE AUDIT MASTER POSITIONS; LEGISLATIVE                                                           
25 INTENT. It is the intent of the legislature that the commissioner of administration shall cause                         
26 not more than four oil and gas revenue audit master positions to be created in the Department                           
27 of Revenue and not more than two oil and gas revenue audit master positions to be created in                            
28 the Department of natural Resources. Oil and gas revenue audit masters shall be employed in                             
29 a professional capacity to collect oil and gas revenue by developing policy, conducting                                 
30 studies, drafting proposed regulations, enforcing regulations, and directing audits by oil and                          
31 gas auditors.                                                                                                           
01    * Sec. 70. The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03       OIL AND GAS AUDITORS; CLASSIFICATION AND PAY PLANS.                                                               
04 Notwithstanding AS 39.25.150(2), the Department of Administration shall develop and                                     
05 implement a distinct position classification plan and a distinct pay plan for oil and gas                               
06 auditors and their immediate supervisors, other than revenue audit masters, that perform                                
07            (1)  oil and gas tax audits in the Department of Revenue under the direction of                              
08 an oil and gas revenue audit master;                                                                                    
09            (2)  royalty audits, including net profit share audits, in the Department of                                 
10 Natural Resources under the direction of an oil and gas revenue audit master.                                           
11    * Sec. 71. The uncodified law of the State of Alaska is amended by adding a new section to                         
12 read:                                                                                                                   
13       TRANSITION: PAYMENT OF TAX; FILING. (a) A person subject to tax under                                             
14 AS 43.55 that is required to make one or more installment payments of estimated tax or other                            
15 payment of tax under AS 43.55.020(a) during the period after March 31, 2006, and before the                             
16 effective date of sec. 22 of this Act, and under AS 43.55.020(a), as amended by sec. 22 of                              
17 this Act, for the production of oil or gas during a month after March 31, 2006, and before the                          
18 effective date of sec. 22 of this Act but that failed to pay the full amount of the installment                         
19 payments or other payment of tax required under AS 43.55 because of the retroactive                                     
20 application of AS 43.55.165(e)(6) and (19), as enacted in the amendment to AS 43.55.165(e)                              
21 in sec. 60 of this Act, that are retroactive to April 1, 2006, under sec. 74(b) of this Act, and                        
22 the retroactive application of secs. 15 - 28, 32 - 35, 53 - 61, and 63, 65, and 66, and that part                       
23 of AS 43.55.165(e) in sec. 60 of this Act under sec. 74(d) of this Act, shall pay before                                
24 April 1, 2008, the balance of any tax due under AS 43.55 for the period after March 31,                                 
25 2006, and before the effective date of this section.                                                                    
26       (b)  A person required to file a statement under AS 43.55.030(a), as amended by sec.                              
27 47 of this Act, or a statement under AS 43.55.030(e) or (f), as enacted by sec. 49 of this Act,                         
28 but that failed to file a statement required under AS 43.55 because of the retroactive                                  
29 application of secs. 47 and 49 of this Act under sec. 74(d) of this Act, shall file, before                             
30 April 1, 2008, any statement required to have been filed after June 30, 2007, and before the                            
31 effective date of this section.                                                                                         
01    * Sec. 72. The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03       TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any                                                     
04 contrary provision of AS 44.62.240,                                                                                     
05            (1)  if the Department of Revenue expressly designates in the regulation that                                
06 the regulation applies retroactively to that date, a regulation adopted by the Department of                            
07 Revenue to implement, interpret, make specific, or otherwise carry out secs. 15 - 28, 32 - 35,                          
08 53 - 61, and 63, 65, and 66, of this Act may apply retroactively to July 1, 2007, except that a                         
09 regulation adopted by the Department of Revenue to implement, interpret, make specific, or                              
10 otherwise carry out AS 43.55.165(e)(6) and (19), as enacted in the amendment to                                         
11 AS 43.55.165(e) in sec. 60 of this Act, may apply retroactively to April 1, 2006, and a                                 
12 regulation adopted by the Department of Revenue to implement, interpret, make specific, or                              
13 otherwise carry out AS 43.55.165(k) and (l), as enacted by sec. 62 of this Act, may apply                               
14 retroactively to January 1, 2007;                                                                                       
15            (2)  a regulation adopted by the Department of Natural Resources to                                          
16 implement, interpret, make specific, or otherwise carry out statutory provisions for the                                
17 administration of oil and gas leases issued under AS 38.05.180(f)(3)(B), (D), or (E), to the                            
18 extent the regulation deals with the treatment of oil and gas production taxes in determining                           
19 net profits under those leases, may apply retroactively to April 1, 2006, if the Department of                          
20 Natural Resources expressly designates in the regulation that the regulation applies                                    
21 retroactively to that date.                                                                                             
22    * Sec. 73. The uncodified law of the State of Alaska is amended by adding a new section to                         
23 read:                                                                                                                   
24       TRANSITION: REGULATIONS. The Department of Natural Resources and the                                              
25 Department of Revenue may proceed to adopt regulations to implement this Act. The                                       
26 regulations take effect under AS 44.62 (Administrative Procedure Act), but not before the                               
27 effective date of the law implemented by the regulation.  The department shall adopt                                    
28 regulations governing the use of tax credits under AS 43.55 for a calendar year for which the                           
29 applicable tax credit provisions of AS 43.55 differ as between parts of the year as a result of                         
30 the retroactive application of a provision of this Act.                                                                 
31    * Sec. 74. The uncodified law of the State of Alaska is amended by adding a new section to                         
01 read:                                                                                                                   
02       RETROACTIVITY OF CERTAIN PROVISIONS OF THIS ACT. (a) Section 41 of                                                
03 this Act, and AS 43.55.895, enacted by sec. 64 of this Act, are retroactive to July 1, 2003.                            
04       (b)  Section 31 of this Act and AS 43.55.165(e)(6) and(19), as amended and enacted                                
05 by the amendment to AS 43.55.165(e) in sec. 60 of this Act, are retroactive to April 1, 2006.                           
06       (c)  AS 43.55.165(k) and (l), enacted by sec. 62 of this Act, are retroactive to                                  
07 January 1, 2007.                                                                                                        
08       (d)  Except as provided in (b) and (c) of this section, secs. 15 - 28, 32 - 35, 53 - 61,                          
09 and 63, 65, and 66 of this Act are retroactive to July 1, 2007.                                                         
10    * Sec. 75. Sections 29, 30, 46, 67 of this Act take effect January 1, 2008.                                        
11    * Sec. 76. Sections 36 - 40 and 42 - 45 of this Act take effect July 1, 2008.                                      
12    * Sec. 77. Except as provided in secs. 75 and 76 of this Act, this Act takes effect                                
13 immediately under AS 01.10.070(c).                                                                                      
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