28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled SB 21                                                                                                          
01 Relating to the interest rate applicable to certain amounts due for fees, taxes, and payments                           
02 made and property delivered to the Department of Revenue; relating to appropriations from                               
03 taxes paid under the Alaska Net Income Tax Act; providing a tax credit against the                                      
04 corporation income tax for qualified oil and gas service industry expenditures; relating to the                         
05 oil and gas production tax rate; relating to gas used in the state; relating to monthly                                 
06 installment payments of the oil and gas production tax; relating to oil and gas production tax                          
07 credits for certain losses and expenditures; relating to oil and gas production tax credit                              
08 certificates; relating to nontransferable tax credits based on production; relating to the oil and                      
09 gas tax credit fund; relating to annual statements by producers and explorers; establishing an                          
10 Oil and Gas Competitiveness Review Board; relating to the determination of annual oil and                               
11 gas production tax value including adjustments based on a percentage of gross value at the                              
01 point of production from certain leases or properties; and making conforming amendments.                                
02                                                                                                                         
03                           _______________                                                                               
04    * Section 1. AS 29.60.850(b) is amended to read:                                                                   
05            (b)  Each fiscal year, the legislature may appropriate to the community revenue                              
06       sharing fund [AN AMOUNT EQUAL TO 20 PERCENT OF THE] money received by                                             
07       the state during the previous calendar year under AS 43.20.030(c) [AS 43.55.011(g)].                          
08       The amount may not exceed                                                                                         
09                 (1)  $60,000,000; or                                                                                    
10                 (2)  the amount that, when added to the fund balance on June 30 of the                                  
11       previous fiscal year, equals $180,000,000.                                                                        
12    * Sec. 2. AS 43.05.225 is amended to read:                                                                         
13            Sec. 43.05.225. Interest. Unless otherwise provided,                                                       
14                 (1)  a delinquent tax under this title,                                                             
15                      (A)  before January 1, 2014, [WHEN A TAX LEVIED IN                                             
16            THIS TITLE BECOMES DELINQUENT, IT] bears interest in each [A]                                          
17            calendar quarter at the rate of five percentage points above the annual rate                                 
18            charged member banks for advances by the 12th Federal Reserve District as of                                 
19            the first day of that calendar quarter, or at the annual rate of 11 percent,                                 
20            whichever is greater, compounded quarterly as of the last day of that quarter;                               
21            or                                                                                                       
22                      (B)  on and after January 1, 2014, bears interest in each                                      
23            calendar quarter at the rate of three percentage points above the annual                                 
24            rate charged member banks for advances by the 12th Federal Reserve                                       
25            District as of the first day of that calendar quarter;                                                   
26                 (2)  the interest rate is 12 percent a year for                                                         
27                      (A)  delinquent fees payable under AS 05.15.095(c); and                                            
28                      (B)  unclaimed property that is not timely paid or delivered, as                                   
29            allowed by AS 34.45.470(a).                                                                                  
30    * Sec. 3. AS 43.20 is amended by adding a new section to article 1 to read:                                        
01            Sec. 43.20.049. Qualified oil and gas service industry expenditure credit.                                 
02       (a) For a tax year beginning after December 31, 2013, a taxpayer may apply a credit                               
03       against the tax due under this chapter for a qualified oil and gas service industry                               
04       expenditure incurred in the state. The total amount of credit a taxpayer may receive in                           
05       a tax year may not exceed the lesser of 10 percent of qualified oil and gas service                               
06       industry expenditures incurred in the state during the tax year or $10,000,000.                                   
07            (b)  A taxpayer may not apply more than $10,000,000 in tax credits under this                                
08       section in a tax year. A tax credit or portion of a tax credit under this section may not                         
09       be used to reduce the taxpayer's tax liability under this chapter below zero. Any                                 
10       unused tax credit or portion of a tax credit under this section may be applied in later                           
11       tax years, except that any unused tax credit or portion of a tax credit may not be                                
12       carried forward for more than five tax years immediately following the tax year in                                
13       which the qualified oil and gas service industry expenditures were incurred.                                      
14            (c)  An expenditure that is the basis of the credit under this section may not be                            
15       the basis for                                                                                                     
16                 (1)  a deduction against the tax levied under this chapter;                                             
17                 (2)  a credit or deduction under another provision of this title; or                                    
18                 (3)  any federal credit claimed under this title.                                                       
19            (d)  Notwithstanding any contrary provision of AS 40.25.100(a) or                                            
20       AS 43.05.230(e), for a year that three or more taxpayers claim a tax credit under this                            
21       section, the department may publish the aggregated amount of tax credits claimed                                  
22       under this section and a description of the qualified oil and gas service industry                                
23       expenditures that were the basis for a tax credit under this section.                                             
24            (e)  In this section,                                                                                        
25                 (1)  "manufacture" means to perform substantial industrial operations in                                
26       the state to transform raw material into tangible personal property with a useful life of                         
27       three years or more for use in the exploration for, development of, or production of oil                          
28       or gas deposits;                                                                                                  
29                 (2)  "modification" means an adjustment, equipping, or other alteration                                 
30       to existing tangible personal property that has a useful life of three years or more and                          
31       is for use in the exploration for, development of, or production of oil or gas deposits;                          
01       "modification" does not include minor product alterations or inventory activities;                                
02                 (3)  "qualified oil and gas service industry expenditure" means an                                      
03       expenditure directly attributable to an in-state manufacture or in-state modification of                          
04       tangible personal property used in the exploration for, development of, or production                             
05       of oil or gas deposits, but does not include components or equipment used for or in the                           
06       process of that manufacturing or modification.                                                                    
07    * Sec. 4. AS 43.55.011(e) is amended to read:                                                                      
08            (e)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
09       produced each calendar year from each lease or property in the state, less any oil and                            
10       gas the ownership or right to which is exempt from taxation or constitutes a                                      
11       landowner's royalty interest. Except as otherwise provided under (f), (j), (k), (o), and                          
12       (p) of this section, [THE TAX IS EQUAL TO]                                                                        
13                 (1)  before January 1, 2014, the tax is equal to the sum of                                         
14                      (A)  the annual production tax value of the taxable oil and gas                                
15            as calculated under AS 43.55.160(a)(1) multiplied by 25 percent; and                                         
16                      (B) [(2)]  the sum, over all months of the calendar year, of the                               
17            tax amounts determined under (g) of this section;                                                        
18                 (2)  on and after January 1, 2014, the tax is equal to the annual                                   
19       production tax value of the taxable oil and gas as calculated under                                           
20       AS 43.55.160(a)(1) multiplied by 35 percent.                                                                  
21    * Sec. 5. AS 43.55.011(g) is amended to read:                                                                      
22            (g)  For each month of a [THE] calendar year before 2014 for which the                               
23       producer's average monthly production tax value under AS 43.55.160(a)(2) of a [PER]                           
24       BTU equivalent barrel of the taxable oil and gas is more than $30, the amount of tax                              
25       for purposes of (e)(1)(B) [(e)(2)] of this section is determined by multiplying the                           
26       monthly production tax value of the taxable oil and gas produced during the month by                              
27       the tax rate calculated as follows:                                                                               
28                 (1)  if the producer's average monthly production tax value of a [PER]                              
29       BTU equivalent barrel of the taxable oil and gas for the month is not more than                                   
30       $92.50, the tax rate is 0.4 percent multiplied by the number that represents the                                  
31       difference between that average monthly production tax value of a [PER] BTU                                   
01       equivalent barrel and $30; or                                                                                     
02                 (2)  if the producer's average monthly production tax value of a [PER]                              
03       BTU equivalent barrel of the taxable oil and gas for the month is more than $92.50,                               
04       the tax rate is the sum of 25 percent and the product of 0.1 percent multiplied by the                            
05       number that represents the difference between the average monthly production tax                                  
06       value of a [PER] BTU equivalent barrel and $92.50, except that the sum determined                             
07       under this paragraph may not exceed 50 percent.                                                                   
08    * Sec. 6. AS 43.55.011(i) is amended to read:                                                                      
09            (i)  There is levied on the producer of oil or gas a tax for all oil and gas                                 
10       produced each calendar year from each lease or property in the state the ownership or                             
11       right to which constitutes a landowner's royalty interest, except for oil and gas the                             
12       ownership or right to which is exempt from taxation. The provisions of this subsection                            
13       apply to a landowner's royalty interest as follows:                                                               
14                 (1)  the tax levied for oil is equal to five percent of the gross value at                              
15       the point of production of the oil;                                                                               
16                 (2)  the tax levied for gas is equal to 1.667 percent of the gross value at                             
17       the point of production of the gas;                                                                               
18                 (3)  if the department determines that, for purposes of reducing the                                    
19       producer's tax liability under (1) or (2) of this subsection, the producer has received or                        
20       will receive consideration from the royalty owner offsetting all or a part of the                                 
21       producer's royalty obligation, other than a deduction under AS 43.55.020 related to a                         
22       settlement with a royalty owner [AS 43.55.020(d)] of the amount of a tax paid, then,                          
23       notwithstanding (1) and (2) of this subsection, the tax is equal to 25 percent of the                             
24       gross value at the point of production of the oil and gas.                                                        
25    * Sec. 7. AS 43.55.011(o) is amended to read:                                                                      
26            (o)  Notwithstanding other provisions of this section, for a calendar year before                            
27       2022, the tax levied under (e) of this section for each 1,000 cubic feet of gas for gas                           
28       produced from a lease or property outside the Cook Inlet sedimentary basin and used                               
29       in the state, other than gas subject to (p) of this section, may not exceed the amount                        
30       of tax for each 1,000 cubic feet of gas that is determined under (j)(2) of this section.                          
31    * Sec. 8. AS 43.55.011(p) is amended to read:                                                                      
01            (p)  For the seven years immediately following the commencement of                                           
02       commercial production of oil or gas produced from leases or properties in the state                               
03       that are outside the Cook Inlet sedimentary basin and that do not include land located                            
04       north of 68 degrees North latitude, where that commercial production began after                                  
05       December 31, 2012, and before January 1, 2027 [2022], the levy of tax under (e) of                            
06       this section for oil and gas may not exceed four percent of the gross value at the point                          
07       of production.                                                                                                    
08    * Sec. 9. AS 43.55.020(a) is amended to read:                                                                      
09            (a)  For a calendar year, a producer subject to tax under AS 43.55.011                                   
10       [AS 43.55.011(e) - (i) OR (p)] shall pay the tax as follows:                                                      
11                 (1)  before January 1, 2014, an installment payment of the estimated                                
12       tax levied by AS 43.55.011(e), net of any tax credits applied as allowed by law, is due                           
13       for each month of the calendar year on the last day of the following month; except as                             
14       otherwise provided under (2) of this subsection, the amount of the installment payment                            
15       is the sum of the following amounts, less 1/12 of the tax credits that are allowed by                             
16       law to be applied against the tax levied by AS 43.55.011(e) for the calendar year, but                            
17       the amount of the installment payment may not be less than zero:                                                  
18                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                     
19            produced from leases or properties in the state outside the Cook Inlet                                       
20            sedimentary basin [BUT NOT SUBJECT TO AS 43.55.011(o) OR (p)], other                                         
21            than leases or properties subject to AS 43.55.011(f), the greater of                                         
22                           (i)  zero; or                                                                                 
23                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
24                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
25                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
26                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
27                 deductible for the oil and gas [LEASES OR PROPERTIES] under                                         
28                 AS 43.55.160 from the gross value at the point of production of the oil                                 
29                 and gas produced from the leases or properties during the month for                                     
30                 which the installment payment is calculated;                                                            
31                      (B)  for oil and gas produced from leases or properties subject                                    
01            to AS 43.55.011(f), the greatest of                                                                          
02                           (i)  zero;                                                                                    
03                           (ii)  zero percent, one percent, two percent, three                                           
04                 percent, or four percent, as applicable, of the gross value at the point of                             
05                 production of the oil and gas produced from the [ALL] leases or                                     
06                 properties during the month for which the installment payment is                                        
07                 calculated; or                                                                                          
08                           (iii)  the sum of 25 percent and the tax rate calculated for                                  
09                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
10                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
11                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
12                 deductible for the oil and gas [THOSE LEASES OR PROPERTIES]                                         
13                 under AS 43.55.160 from the gross value at the point of production of                                   
14                 the oil and gas produced from those leases or properties during the                                     
15                 month for which the installment payment is calculated;                                                  
16                      (C)  for oil or [AND] gas [PRODUCED FROM EACH LEASE                                            
17            OR PROPERTY] subject to AS 43.55.011(j), (k), or (o) [, OR (p)], for each                            
18            lease or property, the greater of                                                                        
19                           (i)  zero; or                                                                                 
20                           (ii)  the sum of 25 percent and the tax rate calculated for                                   
21                 the month under AS 43.55.011(g) multiplied by the remainder obtained                                    
22                 by subtracting 1/12 of the producer's adjusted lease expenditures for the                               
23                 calendar year of production under AS 43.55.165 and 43.55.170 that are                                   
24                 deductible under AS 43.55.160 for the oil or gas, respectively,                                     
25                 produced from the lease or property from the gross value at the point of                                
26                 production of the oil or gas, respectively, produced from the lease or                                  
27                 property during the month for which the installment payment is                                          
28                 calculated;                                                                                             
29                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                 
30                           (i)  the sum of 25 percent and the tax rate calculated                                    
31                 for the month under AS 43.55.011(g) multiplied by the remainder                                     
01                 obtained by subtracting 1/12 of the producer's adjusted lease                                       
02                 expenditures for the calendar year of production under                                              
03                 AS 43.55.165 and 43.55.170 that are deductible for the oil and gas                                  
04                 under AS 43.55.160 from the gross value at the point of production                                  
05                 of the oil and gas produced from the leases or properties during the                                
06                 month for which the installment payment is calculated, but not less                                 
07                 than zero; or                                                                                       
08                           (ii)  four percent of the gross value at the point of                                     
09                 production of the oil and gas produced from the leases or                                           
10                 properties during the month, but not less than zero;                                                
11                 (2)  an amount calculated under (1)(C) of this subsection for oil or gas                                
12       [PRODUCED FROM A LEASE OR PROPERTY                                                                                
13                      (A)]  subject to AS 43.55.011(j), (k), or (o) may not exceed the                                   
14            product obtained by carrying out the calculation set out in AS 43.55.011(j)(1)                               
15            or (2) or 43.55.011(o), as applicable, for gas or set out in AS 43.55.011(k)(1)                              
16            or (2), as applicable, for oil, but substituting in AS 43.55.011(j)(1)(A) or (2)(A)                          
17            or 43.55.011(o), as applicable, the amount of taxable gas produced during the                                
18            month for the amount of taxable gas produced during the calendar year and                                    
19            substituting in AS 43.55.011(k)(1)(A) or (2)(A), as applicable, the amount of                                
20            taxable oil produced during the month for the amount of taxable oil produced                                 
21            during the calendar year;                                                                                    
22                      [(B)  SUBJECT TO AS 43.55.011(p) MAY NOT EXCEED                                                    
23            FOUR PERCENT OF THE GROSS VALUE AT THE POINT OF                                                              
24            PRODUCTION OF THE OIL OR GAS;]                                                                               
25                 (3)  an installment payment of the estimated tax levied by                                              
26       AS 43.55.011(i) for each lease or property is due for each month of the calendar year                             
27       on the last day of the following month; the amount of the installment payment is the                              
28       sum of                                                                                                            
29                      (A)  the applicable tax rate for oil provided under                                                
30            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
31            oil taxable under AS 43.55.011(i) and produced from the lease or property                                    
01            during the month; and                                                                                        
02                      (B)  the applicable tax rate for gas provided under                                                
03            AS 43.55.011(i), multiplied by the gross value at the point of production of the                             
04            gas taxable under AS 43.55.011(i) and produced from the lease or property                                    
05            during the month;                                                                                            
06                 (4)  any amount of tax levied by AS 43.55.011 [AS 43.55.011(e) OR                                   
07       (i)], net of any credits applied as allowed by law, that exceeds the total of the amounts                         
08       due as installment payments of estimated tax is due on March 31 of the year following                             
09       the calendar year of production;                                                                              
10                 (5)  on and after January 1, 2014, an installment payment of the                                    
11       estimated tax levied by AS 43.55.011(e), net of any tax credits applied as allowed                            
12       by law, is due for each month of the calendar year on the last day of the following                           
13       month; except as otherwise provided under (6) of this subsection, the amount of                               
14       the installment payment is the sum of the following amounts, less 1/12 of the tax                             
15       credits that are allowed by law to be applied against the tax levied by                                       
16       AS 43.55.011(e) for the calendar year, but the amount of the installment payment                              
17       may not be less than zero:                                                                                    
18                      (A)  for oil and gas not subject to AS 43.55.011(o) or (p)                                     
19            produced from leases or properties in the state outside the Cook Inlet                                   
20            sedimentary basin, other than leases or properties subject to                                            
21            AS 43.55.011(f), the greater of                                                                          
22                           (i)  zero; or                                                                             
23                           (ii)  35 percent multiplied by the remainder obtained                                     
24                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
25                 for the calendar year of production under AS 43.55.165 and                                          
26                 43.55.170 that are deductible for the oil and gas under                                             
27                 AS 43.55.160 from the gross value at the point of production of the                                 
28                 oil and gas produced from the leases or properties during the                                       
29                 month for which the installment payment is calculated;                                              
30                      (B)  for oil and gas produced from leases or properties                                        
31            subject to AS 43.55.011(f), the greatest of                                                              
01                           (i)  zero;                                                                                
02                           (ii)  zero percent, one percent, two percent, three                                       
03                 percent, or four percent, as applicable, of the gross value at the                                  
04                 point of production of the oil and gas produced from the leases or                                  
05                 properties during the month for which the installment payment is                                    
06                 calculated; or                                                                                      
07                           (iii)  35 percent multiplied by the remainder obtained                                    
08                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
09                 for the calendar year of production under AS 43.55.165 and                                          
10                 43.55.170 that are deductible for the oil and gas under                                             
11                 AS 43.55.160 from the gross value at the point of production of the                                 
12                 oil and gas produced from those leases or properties during the                                     
13                 month for which the installment payment is calculated, except that,                                 
14                 for the purposes of this calculation, a reduction from the gross                                    
15                 value at the point of production may apply for oil and gas subject                                  
16                 to AS 43.55.160(f) or (g);                                                                          
17                      (C)  for oil or gas subject to AS 43.55.011(j), (k), or (o), for                               
18            each lease or property, the greater of                                                                   
19                           (i)  zero; or                                                                             
20                           (ii)  35 percent multiplied by the remainder obtained                                     
21                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
22                 for the calendar year of production under AS 43.55.165 and                                          
23                 43.55.170 that are deductible under AS 43.55.160 for the oil or gas,                                
24                 respectively, produced from the lease or property from the gross                                    
25                 value at the point of production of the oil or gas, respectively,                                   
26                 produced from the lease or property during the month for which                                      
27                 the installment payment is calculated;                                                              
28                      (D)  for oil and gas subject to AS 43.55.011(p), the lesser of                                 
29                           (i)  35 percent multiplied by the remainder obtained                                      
30                 by subtracting 1/12 of the producer's adjusted lease expenditures                                   
31                 for the calendar year of production under AS 43.55.165 and                                          
01                 43.55.170 that are deductible for the oil and gas under                                             
02                 AS 43.55.160 from the gross value at the point of production of the                                 
03                 oil and gas produced from the leases or properties during the                                       
04                 month for which the installment payment is calculated, but not less                                 
05                 than zero; or                                                                                       
06                           (ii)  four percent of the gross value at the point of                                     
07                 production of the oil and gas produced from the leases or                                           
08                 properties during the month, but not less than zero;                                                
09                 (6)  an amount calculated under (5)(C) of this subsection for oil or                                
10       gas subject to AS 43.55.011(j), (k), or (o) may not exceed the product obtained by                            
11       carrying out the calculation set out in AS 43.55.011(j)(1) or (2) or 43.55.011(o), as                         
12       applicable, for gas or set out in AS 43.55.011(k)(1) or (2), as applicable, for oil,                          
13       but substituting in AS 43.55.011(j)(1)(A) or (2)(A) or 43.55.011(o), as applicable,                           
14       the amount of taxable gas produced during the month for the amount of taxable                                 
15       gas produced during the calendar year and substituting in AS 43.55.011(k)(1)(A)                               
16       or (2)(A), as applicable, the amount of taxable oil produced during the month for                             
17       the amount of taxable oil produced during the calendar year.                                                  
18    * Sec. 10. AS 43.55.020(d) is amended to read:                                                                     
19            (d)  Before January 1, 2014, in [IN] making settlement with the royalty owner                            
20       for oil and gas that is taxable under AS 43.55.011, the producer may deduct the                                   
21       amount of the tax paid on taxable royalty oil and gas, or may deduct taxable royalty oil                          
22       or gas equivalent in value at the time the tax becomes due to the amount of the tax                               
23       paid. If the total deductions of installment payments of estimated tax for a calendar                             
24       year exceed the actual tax for that calendar year, the producer shall, before April 1 of                          
25       the following year, refund the excess to the royalty owner. Unless otherwise agreed                               
26       between the producer and the royalty owner, the amount of the tax paid under                                      
27       AS 43.55.011(e) - (g) on taxable royalty oil and gas for a calendar year, other than oil                          
28       and gas the ownership or right to which constitutes a landowner's royalty interest, is                            
29       considered to be the gross value at the point of production of the taxable royalty oil                            
30       and gas produced during the calendar year multiplied by a figure that is a quotient, in                           
31       which                                                                                                             
01                 (1)  the numerator is the producer's total tax liability under                                          
02       AS 43.55.011(e) - (g) for the calendar year of production; and                                                    
03                 (2)  the denominator is the total gross value at the point of production                                
04       of the oil and gas taxable under AS 43.55.011(e) - (g) produced by the producer from                              
05       all leases and properties in the state during the calendar year.                                                  
06    * Sec. 11. AS 43.55.020(g) is amended to read:                                                                     
07            (g)  Notwithstanding any contrary provision of AS 43.05.225,                                                 
08                 (1)  before January 1, 2014, an unpaid amount of an installment                                     
09       payment required under (a)(1) - (3) of this section that is not paid when due bears                               
10       interest (A) [(1)] at the rate provided for an underpayment under 26 U.S.C. 6621                              
11       (Internal Revenue Code), as amended, compounded daily, from the date the                                          
12       installment payment is due until March 31 following the calendar year of production,                              
13       and (B) [(2)] as provided for a delinquent tax under AS 43.05.225 after that March 31;                    
14       interest [. INTEREST] accrued under (A) [(1)] of this paragraph [SUBSECTION]                          
15       that remains unpaid after that March 31 is treated as an addition to tax that bears                               
16       interest under (B) [(2)] of this paragraph; an [SUBSECTION. AN] unpaid amount of                          
17       tax due under (a)(4) of this section that is not paid when due bears interest as provided                         
18       for a delinquent tax under AS 43.05.225;                                                                      
19                 (2)  on and after January 1, 2014, an unpaid amount of an                                           
20       installment payment required under (a)(3), (5), or (6) of this section that is not                            
21       paid when due bears interest (A) at the rate provided for an underpayment                                     
22       under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily,                                   
23       from the date the installment payment is due until March 31 following the                                     
24       calendar year of production, and (B) as provided for a delinquent tax under                                   
25       AS 43.05.225 after that March 31; interest accrued under (A) of this paragraph                                
26       that remains unpaid after that March 31 is treated as an addition to tax that                                 
27       bears interest under (B) of this paragraph; an unpaid amount of tax due under                                 
28       (a)(4) of this section that is not paid when due bears interest as provided for a                             
29       delinquent tax under AS 43.05.225.                                                                            
30    * Sec. 12. AS 43.55.020(h) is amended to read:                                                                     
31            (h)  Notwithstanding any contrary provision of AS 43.05.280,                                                 
01                 (1)  an overpayment of an installment payment required under (a)(1) -                                   
02       (3), (5) or (6) of this section bears interest at the rate provided for an overpayment                        
03       under 26 U.S.C. 6621 (Internal Revenue Code), as amended, compounded daily, from                                  
04       the later of the date the installment payment is due or the date the overpayment is                               
05       made, until the earlier of                                                                                        
06                      (A)  the date it is refunded or is applied to an underpayment; or                                  
07                      (B)  March 31 following the calendar year of production;                                           
08                 (2)  except as provided under (1) of this subsection, interest with                                     
09       respect to an overpayment is allowed only on any net overpayment of the payments                                  
10       required under (a) of this section that remains after the later of March 31 following the                         
11       calendar year of production or the date that the statement required under                                         
12       AS 43.55.030(a) is filed;                                                                                         
13                 (3)  interest is allowed under (2) of this subsection only from a date that                             
14       is 90 days after the later of March 31 following the calendar year of production or the                           
15       date that the statement required under AS 43.55.030(a) is filed; interest is not allowed                          
16       if the overpayment was refunded within the 90-day period;                                                         
17                 (4)  interest under (2) and (3) of this subsection is paid at the rate and in                           
18       the manner provided in AS 43.05.225(1).                                                                           
19    * Sec. 13. AS 43.55.020 is amended by adding a new subsection to read:                                             
20            (l)  On and after January 1, 2014, in making settlement with the royalty owner                               
21       for oil and gas that is taxable under AS 43.55.011, the producer may deduct the                                   
22       amount of the tax paid on taxable royalty oil and gas, or may deduct taxable royalty oil                          
23       or gas equivalent in value at the time the tax becomes due to the amount of the tax                               
24       paid. If the total deductions of installment payments of estimated tax for a calendar                             
25       year exceed the actual tax for that calendar year, the producer shall, before April 1 of                          
26       the following year, refund the excess to the royalty owner. Unless otherwise agreed                               
27       between the producer and the royalty owner, the amount of the tax paid under                                      
28       AS 43.55.011(e) on taxable royalty oil and gas for a calendar year, other than oil and                            
29       gas the ownership or right to which constitutes a landowner's royalty interest, is                                
30       considered to be the gross value at the point of production of the taxable royalty oil                            
31       and gas produced during the calendar year multiplied by a figure that is a quotient, in                           
01       which                                                                                                             
02                 (1)  the numerator is the producer's total tax liability under                                          
03       AS 43.55.011(e) for the calendar year of production; and                                                          
04                 (2)  the denominator is the total gross value at the point of production                                
05       of the oil and gas taxable under AS 43.55.011(e) produced by the producer from all                                
06       leases and properties in the state during the calendar year.                                                      
07    * Sec. 14. AS 43.55.023(a) is amended to read:                                                                     
08            (a)  A producer or explorer may take a tax credit for a qualified capital                                    
09       expenditure as follows:                                                                                           
10                 (1)  notwithstanding that a qualified capital expenditure may be a                                      
11       deductible lease expenditure for purposes of calculating the production tax value of oil                          
12       and gas under AS 43.55.160(a), unless a credit for that expenditure is taken under                                
13       AS 38.05.180(i), AS 41.09.010, AS 43.20.043, or AS 43.55.025, a producer or                                       
14       explorer that incurs a qualified capital expenditure may also elect to apply a tax credit                         
15       against a tax levied by AS 43.55.011(e) in the amount of 20 percent of that                                       
16       expenditure; [HOWEVER, NOT MORE THAN HALF OF THE TAX CREDIT MAY                                                   
17       BE APPLIED FOR A SINGLE CALENDAR YEAR;]                                                                           
18                 (2)  a producer or explorer may take a credit for a qualified capital                                   
19       expenditure incurred in connection with geological or geophysical exploration or in                               
20       connection with an exploration well only if the producer or explorer                                              
21                      (A)  agrees, in writing, to the applicable provisions of                                           
22            AS 43.55.025(f)(2); and                                                                                      
23                      (B)  submits to the Department of Natural Resources all data                                       
24            that would be required to be submitted under AS 43.55.025(f)(2);                                         
25                 (3)  a credit for a qualified capital expenditure incurred to explore                               
26       for, develop, or produce oil or gas deposits located north of 68 degrees North                                
27       latitude may be taken only if the expenditure is incurred before January 1, 2014.                             
28    * Sec. 15. AS 43.55.023(b) is amended to read:                                                                     
29            (b)  Before January 1, 2014, a [A] producer or explorer may elect to take a                              
30       tax credit in the amount of 25 percent of a carried-forward annual loss. For lease                            
31       expenditures incurred on and after January 1, 2014, and before January 1, 2016,                               
01       to explore for, develop, or produce oil or gas deposits located north of 68 degrees                           
02       North latitude, a producer or explorer may elect to take a tax credit in the                            
03       amount of 45 percent of a carried-forward annual loss. For lease expenditures                               
04       incurred on and after January 1, 2016, to explore for, develop, or produce oil or                             
05       gas deposits located north of 68 degrees North latitude, a producer or explorer                         
06       may elect to take a tax credit in the amount of 35 percent of a carried-forward                             
07       annual loss. For lease expenditures incurred on or after January 1, 2014, to                                  
08       explore for, develop, or produce oil or gas deposits located south of 68 degrees                              
09       North latitude, a producer or explorer may elect to take a tax credit in the                                  
10       amount of 25 percent of a carried-forward annual loss. A credit under this                                    
11       subsection may be applied against a tax levied by AS 43.55.011(e). For purposes of                                
12       this subsection, a carried-forward annual loss is the amount of a producer's or                                   
13       explorer's adjusted lease expenditures under AS 43.55.165 and 43.55.170 for a                                     
14       previous calendar year that was not deductible in calculating production tax values for                           
15       that calendar year under AS 43.55.160.                                                                            
16    * Sec. 16. AS 43.55.023(d) is amended to read:                                                                     
17            (d)  A [EXCEPT AS LIMITED BY (i) OF THIS SECTION, A] person that is                                      
18       entitled to take a tax credit under this section that wishes to transfer the unused credit                        
19       to another person or obtain a cash payment under AS 43.55.028 may apply to the                                    
20       department for a transferable tax credit certificate [CERTIFICATES]. An application                       
21       under this subsection must be in a form prescribed by the department and must include                             
22       supporting information and documentation that the department reasonably requires.                                 
23       The department shall grant or deny an application, or grant an application as to a lesser                         
24       amount than that claimed and deny it as to the excess, not later than 120 days after the                          
25       latest of (1) March 31 of the year following the calendar year in which the qualified                             
26       capital expenditure or carried-forward annual loss for which the credit is claimed was                            
27       incurred; (2) the date the statement required under AS 43.55.030(a) or (e) was filed for                          
28       the calendar year in which the qualified capital expenditure or carried-forward annual                            
29       loss for which the credit is claimed was incurred; or (3) the date the application was                            
30       received by the department. If, based on the information then available to it, the                                
31       department is reasonably satisfied that the applicant is entitled to a credit, the                                
01       department shall issue the applicant a [TWO] transferable tax credit certificate for                      
02       [CERTIFICATES, EACH FOR HALF OF] the amount of the credit. [THE CREDIT                                            
03       SHOWN ON ONE OF THE TWO CERTIFICATES IS AVAILABLE FOR                                                             
04       IMMEDIATE USE. THE CREDIT SHOWN ON THE SECOND OF THE TWO                                                          
05       CERTIFICATES MAY NOT BE APPLIED AGAINST A TAX FOR A CALENDAR                                                      
06       YEAR EARLIER THAN THE CALENDAR YEAR FOLLOWING THE                                                                 
07       CALENDAR YEAR IN WHICH THE CERTIFICATE IS ISSUED, AND THE                                                         
08       CERTIFICATE MUST CONTAIN A CONSPICUOUS STATEMENT TO THAT                                                          
09       EFFECT.] A certificate issued under this subsection does not expire.                                              
10    * Sec. 17. AS 43.55.023(g) is amended to read:                                                                     
11            (g)  The issuance of a transferable tax credit certificate under (d) of this                             
12       section or former (m) of this section or the purchase of a certificate under                              
13       AS 43.55.028 does not limit the department's ability to later audit a tax credit claim to                         
14       which the certificate relates or to adjust the claim if the department determines, as a                           
15       result of the audit, that the applicant was not entitled to the amount of the credit for                          
16       which the certificate was issued. The tax liability of the applicant under                                        
17       AS 43.55.011(e) and 43.55.017 - 43.55.180 is increased by the amount of the credit                                
18       that exceeds that to which the applicant was entitled, or the applicant's available valid                         
19       outstanding credits applicable against the tax levied by AS 43.55.011(e) are reduced                              
20       by that amount. If the applicant's tax liability is increased under this subsection, the                          
21       increase bears interest under AS 43.05.225 from the date the transferable tax credit                              
22       certificate was issued. For purposes of this subsection, an applicant that is an explorer                         
23       is considered a producer subject to the tax levied by AS 43.55.011(e).                                            
24    * Sec. 18. AS 43.55.023(n) is amended to read:                                                                     
25            (n)  For the purposes of (l) [AND (m)] of this section, a well lease expenditure                             
26       incurred in the state south of 68 degrees North latitude is a lease expenditure that is                           
27                 (1)  directly related to an exploration well, a stratigraphic test well, a                              
28       producing well, or an injection well other than a disposal well, located in the state                             
29       south of 68 degrees North latitude, if the expenditure is a qualified capital expenditure                         
30       and an intangible drilling and development cost authorized under 26 U.S.C. (Internal                              
31       Revenue Code), as amended, and 26 C.F.R. 1.612-4, regardless of the elections made                                
01       under 26 U.S.C. 263(c); in this paragraph, an expenditure directly related to a well                              
02       includes an expenditure for well sidetracking, well deepening, well completion or                                 
03       recompletion, or well workover, regardless of whether the well is or has been a                                   
04       producing well; or                                                                                                
05                 (2)  an expense for seismic work conducted within the boundaries of a                                   
06       production or exploration unit.                                                                                   
07    * Sec. 19. AS 43.55.023 is amended by adding a new subsection to read:                                             
08            (p)  Before January 1, 2014, the provisions of (d) of this section may be limited                            
09       by (i) of this section.                                                                                           
10    * Sec. 20. AS 43.55.024(e) is amended to read:                                                                     
11            (e)  On written application by a producer that includes any information the                                  
12       department may require, the department shall determine whether the producer                                       
13       qualifies for a calendar year under (a) and (c) of this section. To qualify under (a) and                 
14       (c) of this section, a producer must demonstrate that its operation in the state or its                       
15       ownership of an interest in a lease or property in the state as a distinct producer would                         
16       not result in the division among multiple producer entities of any production tax                                 
17       liability under AS 43.55.011(e) that reasonably would be expected to be attributed to a                           
18       single producer if the tax credit provisions of (a) or (c) of this section did not exist.                         
19    * Sec. 21. AS 43.55.024 is amended by adding new subsections to read:                                              
20            (i)  A producer may apply against the producer's tax liability for the calendar                              
21       year under AS 43.55.011(e) a tax credit of $5 for each barrel of oil taxable under                                
22       AS 43.55.011(e) that meets one or more of the criteria in AS 43.55.160(f) or (g) and                              
23       that is produced during a calendar year after December 31, 2013. A tax credit                                     
24       authorized by this subsection may not reduce a producer's tax liability for a calendar                            
25       year under AS 43.55.011(e) below zero.                                                                            
26            (j)  A producer may apply against the producer's tax liability for the calendar                              
27       year under AS 43.55.011(e) a tax credit in the amount specified in this subsection for                            
28       each barrel of oil taxable under AS 43.55.011(e) that does not meet any of the criteria                           
29       in AS 43.55.160(f) or (g) and that is produced during a calendar year after                                       
30       December 31, 2013, from leases or properties north of 68 degrees North latitude. A tax                            
31       credit under this subsection may not reduce a producer's tax liability for a calendar                             
01       year under AS 43.55.011(e) below the amount calculated under AS 43.55.011(f). The                                 
02       amount of the tax credit for a barrel of taxable oil subject to this subsection produced                          
03       during a month of the calendar year is                                                                            
04                 (1)  $8 for each barrel of taxable oil if the average gross value at the                                
05       point of production for the month is less than $80 a barrel;                                                      
06                 (2)  $7 for each barrel of taxable oil if the average gross value at the                                
07       point of production for the month is greater than or equal to $80 a barrel, but less than                         
08       $90 a barrel;                                                                                                     
09                 (3)  $6 for each barrel of taxable oil if the average gross value at the                                
10       point of production for the month is greater than or equal to $90 a barrel, but less than                         
11       $100 a barrel;                                                                                                    
12                 (4)  $5 for each barrel of taxable oil if the average gross value at the                                
13       point of production for the month is greater than or equal to $100 a barrel, but less                             
14       than $110 a barrel;                                                                                               
15                 (5)  $4 for each barrel of taxable oil if the average gross value at the                                
16       point of production for the month is greater than or equal to $110 a barrel, but less                             
17       than $120 a barrel;                                                                                               
18                 (6)  $3 for each barrel of taxable oil if the average gross value at the                                
19       point of production for the month is greater than or equal to $120 a barrel, but less                             
20       than $130 a barrel;                                                                                               
21                 (7)  $2 for each barrel of taxable oil if the average gross value at the                                
22       point of production for the month is greater than or equal to $130 a barrel, but less                             
23       than $140 a barrel;                                                                                               
24                 (8)  $1 for each barrel of taxable oil if the average gross value at the                                
25       point of production for the month is greater than or equal to $140 a barrel, but less                             
26       than $150 a barrel;                                                                                               
27                 (9)  zero if the average gross value at the point of production for the                                 
28       month is greater than or equal to $150 a barrel.                                                                  
29    * Sec. 22. AS 43.55.025(a) is amended to read:                                                                     
30            (a)  Subject to the terms and conditions of this section, a credit against the                               
31       production tax levied by AS 43.55.011(e) is allowed for exploration expenditures that                             
01       qualify under (b) of this section in an amount equal to one of the following:                                     
02                 (1)  30 percent of the total exploration expenditures that qualify only                                 
03       under (b) and (c) of this section;                                                                                
04                 (2)  30 percent of the total exploration expenditures that qualify only                                 
05       under (b) and (d) of this section;                                                                                
06                 (3)  40 percent of the total exploration expenditures that qualify under                                
07       (b), (c), and (d) of this section;                                                                                
08                 (4)  40 percent of the total exploration expenditures that qualify only                                 
09       under (b) and (e) of this section;                                                                                
10                 (5)  80, 90, or 100 percent, or a lesser amount described in (l) of this                                
11       section, of the total exploration expenditures described in (b)(1) and (2) of this section                        
12       and not excluded by (b)(3) and (4) of this section that qualify only under (l) of this                            
13       section;                                                                                                          
14                 (6)  the lesser of $25,000,000 or 80 percent of the total exploration                                   
15       drilling expenditures described in (m) of this section and that qualify under (b) and                             
16       (c)(1), (c)(2)(A), and (c)(2)(C) [(c)] of this section; or                                                    
17                 (7)  the lesser of $7,500,000 or 75 percent of the total seismic                                        
18       exploration expenditures described in (n) of this section and that qualify under (b) of                           
19       this section.                                                                                                     
20    * Sec. 23. AS 43.55.025(b) is amended to read:                                                                     
21            (b)  To qualify for the production tax credit under (a) of this section, an                                  
22       exploration expenditure must be incurred for work performed after June 30, 2008, and                              
23       before July 1, 2016, except that to qualify for the production tax credit under                               
24       (a)(1), (2), (3), or (4) of this section for exploration conducted outside of the Cook                        
25       Inlet sedimentary basin and south of 68 degrees North latitude, an exploration                                
26       expenditure must be incurred for work performed after June 30, 2008, and                                      
27       before January 1, 2022, and                                                                                   
28                 (1)  may be for seismic or other geophysical exploration costs not                                      
29       connected with a specific well;                                                                                   
30                 (2)  if for an exploration well,                                                                        
31                      (A)  must be incurred by an explorer that holds an interest in the                                 
01            exploration well for which the production tax credit is claimed;                                             
02                      (B)  may be for either a well that encounters an oil or gas                                        
03            deposit or a dry hole;                                                                                       
04                      (C)  must be for a well that has been completed, suspended, or                                     
05            abandoned at the time the explorer claims the tax credit under (f) of this                                   
06            section; and                                                                                                 
07                      (D)  must be for goods, services, or rentals of personal property                                  
08            reasonably required for the surface preparation, drilling, casing, cementing,                                
09            and logging of an exploration well, and, in the case of a dry hole, for the                                  
10            expenses required for abandonment if the well is abandoned within 18 months                                  
11            after the date the well was spudded;                                                                         
12                 (3)  may not be for administration, supervision, engineering, or lease                                  
13       operating costs; geological or management costs; community relations or                                           
14       environmental costs; bonuses, taxes, or other payments to governments related to the                              
15       well; costs, including repairs and replacements, arising from or associated with fraud,                           
16       wilful misconduct, gross negligence, criminal negligence, or violation of law,                                    
17       including a violation of 33 U.S.C. 1319(c)(1) or 1321(b)(3) (Clean Water Act); or                                 
18       other costs that are generally recognized as indirect costs or financing costs; and                               
19                 (4)  may not be incurred for an exploration well or seismic exploration                                 
20       that is included in a plan of exploration or a plan of development for any unit before                            
21       May 14, 2003.                                                                                                     
22    * Sec. 24. AS 43.55.025(m) is amended to read:                                                                     
23            (m)  The persons that drill the first four exploration wells in the state and                                
24       within the areas described in (o) of this section on state lands, private lands, or federal                       
25       onshore lands for the purpose of discovering oil or gas that penetrate and evaluate a                             
26       prospect in a basin described in (o) of this section are eligible for a credit under (a)(6)                       
27       of this section. A credit under this subsection may not be taken for more than two                                
28       exploration wells in a single area described in (o)(1) - (6) of this section. Exploration                         
29       expenditures eligible for the credit in this subsection must be incurred for work                                 
30       performed after June 1, 2012, and before July 1, 2016. A person planning to drill an                              
31       exploration well on private land and to apply for a credit under this subsection shall                            
01       obtain written consent from the owner of the oil and gas interest for the full public                             
02       release of all well data after the expiration of the confidentiality period applicable to                         
03       information collected under (f) of this section. The written consent of the owner of the                          
04       oil and gas interest must be submitted to the commissioner of natural resources before                            
05       approval of the proposed exploration well. In addition to the requirements in (c)(1),                         
06       (c)(2)(A), and (c)(2)(C) [(c)] of this section and submission of the written consent of                       
07       the owner of the oil and gas interest, a person planning to drill an exploration well                             
08       shall obtain approval from the commissioner of natural resources before the well is                               
09       spudded. The commissioner of natural resources shall make a written determination                                 
10       approving or rejecting an exploration well within 60 days after receiving the request                             
11       for approval or as soon as is practicable thereafter. Before approving the exploration                            
12       well, the commissioner of natural resources shall consider the following: the location                            
13       of the well; the proximity to a community in need of a local energy source; the                                   
14       proximity of existing infrastructure; the experience and safety record of the explorer in                         
15       conducting operations in remote or roadless areas; the projected cost schedule;                                   
16       whether seismic mapping and seismic data sufficiently identify a particular trap for                              
17       exploration; whether the targeted and planned depth and range are designed to                                     
18       penetrate and fully evaluate the hydrocarbon potential of the proposed prospect and                               
19       reach the level below which economic hydrocarbon reservoirs are likely to be found,                               
20       or reach 12,000 feet or more true vertical depth; and whether the exploration plan                                
21       provides for a full evaluation of the wellbore below surface casing to the depth of the                           
22       well. Whether the exploration well for which a credit is requested under this                                     
23       subsection is located within an area and a basin described under (o) of this section                              
24       shall be determined by the commissioner of natural resources and reported to the                                  
25       commissioner. A taxpayer that obtains a credit under this subsection may not claim a                              
26       tax credit under AS 43.55.023 or another provision in this section for the same                                   
27       exploration expenditure.                                                                                          
28    * Sec. 25. AS 43.55.028(e) is amended to read:                                                                     
29            (e)  The department, on the written application of a person to whom a                                        
30       transferable tax credit certificate has been issued under AS 43.55.023(d) or former                           
31       AS 43.55.023(m) [(m)] or to whom a production tax credit certificate has been issued                          
01       under AS 43.55.025(f), may use available money in the oil and gas tax credit fund to                              
02       purchase, in whole or in part, the certificate if the department finds that                                       
03                 (1)  the calendar year of the purchase is not earlier than the first                                    
04       calendar year for which the credit shown on the certificate would otherwise be allowed                            
05       to be applied against a tax;                                                                                      
06                 (2)  the applicant does not have an outstanding liability to the state for                              
07       unpaid delinquent taxes under this title;                                                                         
08                 (3)  the applicant's total tax liability under AS 43.55.011(e), after                                   
09       application of all available tax credits, for the calendar year in which the application is                       
10       made is zero;                                                                                                     
11                 (4)  the applicant's average daily production of oil and gas taxable                                    
12       under AS 43.55.011(e) during the calendar year preceding the calendar year in which                               
13       the application is made was not more than 50,000 BTU equivalent barrels; and                                      
14                 (5)  the purchase is consistent with this section and regulations adopted                               
15       under this section.                                                                                               
16    * Sec. 26. AS 43.55.028(g) is amended to read:                                                                     
17            (g)  The department may adopt regulations to carry out the purposes of this                                  
18       section, including standards and procedures to allocate available money among                                     
19       applications for purchases under this chapter and claims for refunds and payments                                 
20       under AS 43.20.046 or 43.20.047 when the total amount of the applications for                                     
21       purchase and claims for refund exceed the amount of available money in the fund. The                              
22       regulations adopted by the department may not, when allocating available money in                                 
23       the fund under this section, distinguish an application for the purchase of a credit                              
24       certificate issued under former AS 43.55.023(m) or a claim for a refund or payment                            
25       under AS 43.20.046 or 43.20.047.                                                                                  
26    * Sec. 27. AS 43.55.030(e) is amended to read:                                                                     
27            (e)  An explorer or producer that incurs a lease expenditure under                                           
28       AS 43.55.165 or receives a payment or credit under AS 43.55.170 during a calendar                                 
29       year but does not produce oil or gas from a lease or property in the state during the                             
30       calendar year shall file with the department, on March 31 of the following year, a                        
31       statement, under oath, in a form prescribed by the department, giving, with other                                 
01       information required, the following:                                                                              
02                 (1)  the explorer's or producer's qualified capital expenditures, as                                
03       defined in AS 43.55.023, other lease expenditures under AS 43.55.165, and                                         
04       adjustments or other payments or credits under AS 43.55.170; and                                                  
05                 (2)  if the explorer or producer receives a payment or credit under                                     
06       AS 43.55.170, calculations showing whether the explorer or producer is liable for a                               
07       tax under AS 43.55.160(d) or 43.55.170(b) and, if so, the amount.                                                 
08    * Sec. 28. AS 43.55.160(a) is amended to read:                                                                     
09            (a)  Except as provided in (b), (f), and (g) of this section, for the purposes of                        
10                 (1)  AS 43.55.011(e), the annual production tax value of [THE] taxable                                  
11       oil, gas, or oil and gas [SUBJECT TO THIS PARAGRAPH] produced during a                                            
12       calendar year in a category for which a separate annual production tax value is                               
13       required to be calculated under this paragraph is the gross value at the point of                             
14       production of that [THE] oil, gas, or oil and gas taxable under AS 43.55.011(e), less                         
15       the producer's lease expenditures under AS 43.55.165 for the calendar year applicable                             
16       to the oil, gas, or oil and gas in that category [, AS APPLICABLE,] produced by the                           
17       producer during the calendar year [FROM LEASES OR PROPERTIES], as adjusted                                    
18       under AS 43.55.170; a separate annual production tax value shall be calculated                                
19       for [THIS PARAGRAPH APPLIES TO]                                                                               
20                      (A)  oil and gas produced from leases or properties in the state                                   
21            that include land north of 68 degrees North latitude, other than gas produced                                
22            before 2022 and used in the state;                                                                           
23                      (B)  oil and gas produced from leases or properties in the state                                   
24            outside the Cook Inlet sedimentary basin, no part of which is north of 68                                    
25            degrees North latitude and that qualifies for a tax credit under                                         
26            AS 43.55.024(a) and (b); this subparagraph does not apply to [GAS]                                       
27                           (i)  gas produced before 2022 and used in the state; or                                   
28                           (ii)  oil and gas subject to AS 43.55.011(p);                                                 
29                      (C)  oil produced before 2022 from each [A] lease or property                                  
30            in the Cook Inlet sedimentary basin;                                                                         
31                      (D)  gas produced before 2022 from each [A] lease or property                                  
01            in the Cook Inlet sedimentary basin;                                                                         
02                      (E)  gas produced before 2022 from each [A] lease or property                                  
03            in the state outside the Cook Inlet sedimentary basin and used in the state,                             
04            other than gas subject to AS 43.55.011(p);                                                               
05                      (F)  oil and gas subject to AS 43.55.011(p) produced from                                          
06            leases or properties in the state;                                                                           
07                      (G)  oil and gas produced from leases or properties in the                                     
08            state [A LEASE OR PROPERTY] no part of which is north of 68 degrees                                      
09            North latitude, other than oil or gas described in (B), (C), (D), (E), or (F) of                             
10            this paragraph;                                                                                              
11                 (2)  AS 43.55.011(g), for oil and gas produced before January 1,                                    
12       2014, the monthly production tax value of the taxable                                                         
13                      (A)  oil and gas produced during a month from leases or                                            
14            properties in the state that include land north of 68 degrees North latitude is the                          
15            gross value at the point of production of the oil and gas taxable under                                      
16            AS 43.55.011(e) and produced by the producer from those leases or properties,                                
17            less 1/12 of the producer's lease expenditures under AS 43.55.165 for the                                    
18            calendar year applicable to the oil and gas produced by the producer from                                    
19            those leases or properties, as adjusted under AS 43.55.170; this subparagraph                                
20            does not apply to gas subject to AS 43.55.011(o);                                                            
21                      (B)  oil and gas produced during a month from leases or                                            
22            properties in the state outside the Cook Inlet sedimentary basin, no part of                                 
23            which is north of 68 degrees North latitude, is the gross value at the point of                              
24            production of the oil and gas taxable under AS 43.55.011(e) and produced by                                  
25            the producer from those leases or properties, less 1/12 of the producer's lease                              
26            expenditures under AS 43.55.165 for the calendar year applicable to the oil and                              
27            gas produced by the producer from those leases or properties, as adjusted under                              
28            AS 43.55.170; this subparagraph does not apply to gas subject to                                             
29            AS 43.55.011(o);                                                                                             
30                      (C)  oil produced during a month from a lease or property in the                                   
31            Cook Inlet sedimentary basin is the gross value at the point of production of                                
01            the oil taxable under AS 43.55.011(e) and produced by the producer from that                                 
02            lease or property, less 1/12 of the producer's lease expenditures under                                      
03            AS 43.55.165 for the calendar year applicable to the oil produced by the                                     
04            producer from that lease or property, as adjusted under AS 43.55.170;                                        
05                      (D)  gas produced during a month from a lease or property in                                       
06            the Cook Inlet sedimentary basin is the gross value at the point of production                               
07            of the gas taxable under AS 43.55.011(e) and produced by the producer from                                   
08            that lease or property, less 1/12 of the producer's lease expenditures under                                 
09            AS 43.55.165 for the calendar year applicable to the gas produced by the                                     
10            producer from that lease or property, as adjusted under AS 43.55.170;                                        
11                      (E)  gas produced during a month from a lease or property                                          
12            outside the Cook Inlet sedimentary basin and used in the state is the gross                                  
13            value at the point of production of that gas taxable under AS 43.55.011(e) and                               
14            produced by the producer from that lease or property, less 1/12 of the                                       
15            producer's lease expenditures under AS 43.55.165 for the calendar year                                       
16            applicable to that gas produced by the producer from that lease or property, as                              
17            adjusted under AS 43.55.170.                                                                                 
18    * Sec. 29. AS 43.55.160 is amended by adding new subsections to read:                                              
19            (f)  On and after January 1, 2014, in the calculation of an annual production tax                            
20       value of a producer under (a)(1) of this section, the gross value at the point of                                 
21       production of oil or gas produced from a lease or property north of 68 degrees North                              
22       latitude meeting one or more of the following criteria is reduced by 20 percent: (1) the                          
23       oil or gas is produced from a lease or property that does not contain a lease that was                            
24       within a unit on January 1, 2003; (2) the oil or gas is produced from a participating                             
25       area established after December 31, 2011, that is within a unit formed under                                      
26       AS 38.05.180(p) before January 1, 2003, if the participating area does not contain a                              
27       reservoir that had previously been in a participating area established before                                     
28       December 31, 2011; (3) the oil or gas is produced from acreage that was added to an                               
29       existing participating area by the Department of Natural Resources on and after                                   
30       January 1, 2014, and the producer demonstrates to the department that the volume of                               
31       oil or gas produced is from acreage added to an existing participating area. This                                 
01       subsection does not apply to gas produced before 2022 that is used in the state. A                                
02       reduction under this subsection may not reduce the gross value at the point of                                    
03       production below zero. In this subsection, "participating area" means a reservoir or                              
04       portion of a reservoir producing or contributing to production as approved by the                                 
05       Department of Natural Resources.                                                                                  
06            (g)  On and after January 1, 2014, in addition to the reduction under (f) of this                            
07       section, in the calculation of an annual production tax value of a producer under (a)(1)                          
08       of this section, the gross value at the point of production of oil or gas produced from a                         
09       lease or property that does not contain a lease that was within a unit on January 1,                              
10       2003, is reduced by 10 percent if the oil or gas is produced from a unit made up solely                           
11       of leases that have a royalty share of more than 12.5 percent in amount or value of the                           
12       production removed or sold from the lease as determined under AS 38.05.180(f). This                               
13       subsection does not apply if the royalty obligation for one or more of the leases in the                          
14       unit has been reduced to 12.5 percent or less under AS 38.05.180(j) for all or part of                            
15       the calendar year for which the annual production tax value is calculated. This                                   
16       subsection does not apply to gas produced before 2022 that is used in the state. A                                
17       reduction under this subsection may not reduce the gross value at the point of                                    
18       production below zero.                                                                                            
19    * Sec. 30. AS 43.56.160 is amended to read:                                                                        
20            Sec. 43.56.160. Interest and penalty. When the tax levied by AS 43.56.010(a)                               
21       becomes delinquent, a penalty of 10 percent shall be added. Before January 1, 2014,                           
22       interest [INTEREST] on the delinquent taxes, exclusive of penalty, shall be assessed                          
23       at a rate of eight percent a year. On and after January 1, 2014, interest on the                              
24       delinquent taxes, exclusive of penalty, shall be assessed at the rate specified in                            
25       AS 43.05.225.                                                                                                 
26    * Sec. 31. AS 43.98 is amended by adding new sections to read:                                                     
27              Article 2. Oil and Gas Competitiveness Review Board.                                                     
28            Sec. 43.98.040. Oil and Gas Competitiveness Review Board. (a) The Oil and                                  
29       Gas Competitiveness Review Board is established in the department.                                                
30            (b)  The board shall consist of 11 members as follows:                                                       
31                 (1)  two members nominated by the two leading nonprofit trade                                           
01       associations representing the oil and gas industry in the state and appointed by the                              
02       governor, with one member nominated by each association;                                                          
03                 (2)  the chair of the Alaska Oil and Gas Conservation Commission or                                     
04       the chair's designee;                                                                                             
05                 (3)  three members of the public appointed by the governor, including                                   
06       one member who is a petroleum engineer, one member who is a geologist, and one                                    
07       member who is a financial analyst;                                                                                
08                 (4)  the commissioner of environmental conservation or the                                              
09       commissioner's designee;                                                                                          
10                 (5)  the commissioner of natural resources or the commissioner's                                        
11       designee;                                                                                                         
12                 (6)  the commissioner of revenue or the commissioner's designee;                                        
13                 (7)  two members of the public who do not represent the oil and gas                                     
14       industry, appointed by the governor.                                                                              
15            (c)  The governor shall, every two years, designate one of the members as                                    
16       chair.                                                                                                            
17            (d)  Members of the board appointed under (b)(1), (3), and (7) of this section                               
18       serve for four years. An individual who has served on the board may be reappointed.                               
19            (e)  A vacancy on the board shall be filled in the manner of the original                                    
20       appointment.                                                                                                      
21            (f)  A member of the board may be removed and replaced at the discretion of                                  
22       the governor.                                                                                                     
23            (g)  The members of the board appointed under (b)(1), (3), and (7) of this                                   
24       section serve without compensation but shall receive per diem and travel expenses                                 
25       authorized for boards and commissions under AS 39.20.180.                                                         
26            (h)  The board may enter into contracts for professional services. The                                       
27       department shall provide staff for administrative support for the board.                                          
28            (i)  The board shall meet at least once in a calendar year.                                                  
29            Sec. 43.98.050. Duties. The duties of the board include the following:                                     
30                 (1)  establish and maintain a salient collection of information related to                              
31       oil and gas exploration, development, and production in the state and related to tax                              
01       structures, rates, and credits in other regions with oil and gas resources;                                       
02                 (2)  review historical, current, and potential levels of investment in the                              
03       state's oil and gas sector;                                                                                       
04                 (3)  identify factors that affect investment in oil and gas exploration,                                
05       development, and production in the state, including tax structure, rates, and credits;                            
06       royalty requirements; infrastructure; workforce availability; and regulatory                                      
07       requirements;                                                                                                     
08                 (4)  review the competitive position of the state to attract and maintain                               
09       investment in the oil and gas sector in the state as compared to the competitive                                  
10       position of other regions with oil and gas resources;                                                             
11                 (5)  in order to facilitate the work of the board, establish procedures to                              
12       accept and keep confidential information that is beneficial to the work of the board,                             
13       including the creation of a secure data room and confidentiality agreements to be                                 
14       signed by individuals having access to confidential information;                                                  
15                 (6)  make written findings and recommendations to the Alaska State                                      
16       Legislature before                                                                                                
17                      (A)  January 31, 2015, or as soon thereafter as practicable,                                       
18            regarding                                                                                                    
19                           (i)  changes to the state's regulatory environment and                                        
20                 permitting structure that would be conducive to encouraging increased                                   
21                 investment while protecting the interests of the people of the state and                                
22                 the environment;                                                                                        
23                           (ii)  the status of the oil and gas industry labor pool in                                    
24                 the state and the effectiveness of workforce development efforts by the                                 
25                 state;                                                                                                  
26                           (iii)  the status of the oil-and-gas-related infrastructure                                   
27                 of the state, including a description of infrastructure deficiencies; and                               
28                           (iv)  the competitiveness of the state's fiscal oil and gas                                   
29                 tax regime when compared to other regions of the world;                                                 
30                      (B)  January 31, 2021, or as soon thereafter as practicable,                                       
31            regarding                                                                                                    
01                           (i)  changes to the state's fiscal regime that would be                                       
02                 conducive to increased and ongoing long-term investment in and                                          
03                 development of the state's oil and gas resources;                                                       
04                           (ii)  alternative means for increasing the state's ability to                                 
05                 attract and maintain investment in and development of the state's oil                                   
06                 and gas resources; and                                                                                  
07                           (iii)  a review of the current effectiveness and future                                       
08                 value of any provisions of the state's oil and gas tax laws that are                                    
09                 expiring in the next five years.                                                                        
10            Sec. 43.98.060. Information to be provided to board. (a) The commissioner                                  
11       of natural resources, the commissioner of revenue, the commissioner of environmental                              
12       conservation, and other commissioners and state agencies that have responsibility for                             
13       and maintain information related to oil and gas investment and activity in the state                              
14       shall, at the request of the board, provide information required by the board to carry                            
15       out the duties described in AS 43.98.050.                                                                         
16            (b)  At the request of the board, and except for information that is confidential                            
17       under AS 40.25.100(a) or AS 43.05.230 and information required to be held                                         
18       confidential by the Alaska Oil and Gas Conservation Commission, a commissioner                                    
19       may disclose to the board information that is otherwise confidential after each member                            
20       of the board and each staff member for the board with access to the information signs                             
21       a confidentiality agreement prepared by the commissioner making the disclosure.                                   
22       Information that is confidential under AS 43.05.230 may not be disclosed to the board.                            
23            Sec. 43.98.070. Definition. In AS 43.98.040 - 43.98.070, "board" means the                                 
24       Oil and Gas Competitiveness Review Board.                                                                         
25    * Sec. 32. AS 43.55.023(m) is repealed.                                                                            
26    * Sec. 33. AS 43.55.020(d), 43.55.023(i), and 43.55.023(p) are repealed January 1, 2014.                           
27    * Sec. 34. AS 43.98.040, 43.98.050, 43.98.060, and 43.98.070 are repealed February 28,                             
28 2021.                                                                                                                   
29    * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to                         
30 read:                                                                                                                   
31       APPLICABILITY. (a) Section 7 of this Act and AS 43.55.160(a)(1)(E), as amended                                    
01 by sec. 28 of this Act, apply to oil and gas produced after December 31, 2012.                                          
02       (b)  AS 43.55.023(a)(1), as amended by sec. 14 of this Act, and secs. 16 - 19 of this                             
03 Act apply to expenditures incurred on and after January 1, 2013.                                                        
04    * Sec. 36. The uncodified law of the State of Alaska is amending by adding a new section to                        
05 read:                                                                                                                   
06       TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations                                          
07 to implement this Act. The regulations take effect under AS 44.62 (Administrative Procedure                             
08 Act), but not before the effective date of this Act.                                                                    
09    * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to                         
10 read:                                                                                                                   
11       TRANSITION: OIL AND GAS COMPETITIVENESS REVIEW BOARD. The                                                         
12 governor shall appoint the initial members of the Oil and Gas Competitiveness Review Board,                             
13 established in sec. 31 of this Act, before January 1, 2014. The initial terms of the members of                         
14 the board appointed under AS 43.98.040(b)(1), (3), and (7) shall be four years.                                         
15    * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to                         
16 read:                                                                                                                   
17       RETROACTIVITY. Sections 7, 16 - 19, 25, and 32 of this Act, AS 43.55.023(a)(1), as                                
18 amended by sec. 14 of this Act, and AS 43.55.160(a)(1)(E), as amended by sec. 28 of this                                
19 Act, are retroactive to January 1, 2013.                                                                                
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