11 AAC 82.700 - Taking royalty in-kind for royalty products other than oil, gas, or associated substances

Royalty products other than oil, gas, or associated substances taken in-kind as provided by AS 38.05.182 must be taken under the provision of the lease which reserves the royalty to the state. If no such provision is in the lease or in the regulations dealing with the products to be taken, all or any portion of the state's share will, at the option of the commissioner, be taken in-kind in accordance with the following:

(1) 90 days written notice will be given to each lessee of the state's election to take the royalty products in-kind; however, if the portion of the state's share to be taken in-kind exceeds 50 percent of the state's share, 180 days notice will be given;

(2) after taking has actually commenced, the amount to be taken in-kind will, in the commissioner's discretion, be increased or decreased from time to time by

(A) not more than 10 percent, upon 30 days written notice to each lessee of record;

(B) from 10 percent to 50 percent, upon 90 days written notice; and

(C) more than 50 percent, upon 180 days written notice; and

(3) the products must be delivered to the state or its designated purchaser free of charge at the point specified in the lease for determination of the value of the royalty product as if the product to be taken were to be paid in money rather than taken in-kind; the condition of the product must be the same as the non-royalty share at the point of taking; the lessee shall, if necessary, furnish safe storage for the royalty share free of charge for the same duration and in the same manner as storage is provided for the non-royalty share.

Notes

11 AAC 82.700

Eff. 9/5/74, Register 51; am 7/22/79, Register 71; am 7/19/86, Register 99; am 5/22/93, Register 126

Authority:AS 38.05.020

AS 38.05.145

AS 38.05.182