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25th Legislature(2007-2008)

Bill Text 25th Legislature


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