43 CFR 3212.18 - What are the production incentives for leases?
You will receive a production incentive in the form of a temporary 50 percent reduction in your royalties under MMS regulations at 30 CFR 218.307 if:
(a) Your lease was in effect prior to August 8, 2005;
(b) You do not convert the royalty rates of your lease under § 3212.25;
(c) By August 7, 2011, production from or allocated to your lease is utilized for commercial production in a:
(1) New facility (see § 3212.22); or
(2) Qualified expansion project (see § 3212.21); and
(d) The production from your lease is used for the commercial generation of electricity.