La. Admin. Code tit. 43 § I-1031

Current through Register Vol. 50, No. 6, June 20, 2024

Section I-1031 - State Wind Lease Electric Power Production Royalty Payment and Reporting

A. A state wind lease shall contain a provision permitting the state, at its option, to take in kind all or any part of the portion due it as royalty of any wind generated electric power produced from the leased premises. Unless the state elects to exercise this in kind option, which option is expressly reserved by the state and which is to be exercised by written notice by the state to the state wind lessee ("lessee") at any time and from time to time while a state wind lease is in effect and either prior or subsequent to acceptance by the state of royalties other than in kind, it being understood that nothing contained in a state wind lease shall ever be interpreted as limiting or waiving this option, the lessee shall pay to the state as electric power production royalty an amount that shall be no less than the minimum amount set by the State Mineral Board of the lessee's gross revenues. For the purposes of a state wind lease, gross revenues shall mean and include:

1. all gross receipts of lessee from the sale of electricity generated by lessee on the leased premises; provided, however, that if electricity is sold to a subsidiary or affiliate of lessee, then, and only then, the gross receipts from the sale of electricity under such contract shall be calculated using a sale price of not less than the arithmetical average of the prices paid by any purchaser or purchasers (including lessee or any subsidiary or affiliate of lessee) for electricity produced in Louisiana during the calendar year immediately preceding the year in which such electricity production from the leased premises occurs; plus

2. the greater of the gross proceeds received by either lessee or any subsidiary or affiliate of lessee from the sale of any credits, credit certificates or similar items such as those for greenhouse gas reduction, or the generation of green power, renewable energy or alternative energy, created by any governmental authority and generated by wind energy development on the lease; but specifically excluding any and all federal production tax credits, investment tax credits and any other tax credits which are or will be generated by wind energy development on the lease; plus

3. the greater of gross proceeds or other cash benefits received by either lessee or any subsidiary or affiliate of lessee in connection with or under or derived from any agreement, compromise, settlement, judgment or arrangement for or relating to the sale, use or other disposition of electricity generated or capable of being generated from the lease; plus

4. anything of value received by the state wind lessee in return for electricity.

B. All royalties accruing under a state wind lease (including those paid in kind) shall be without deduction for the cost of producing, interconnecting, transporting and otherwise making electric production available for sale or use at the delivery side of the substation.

C. Prior to the first royalty payment, lessee shall complete a payor notification form available from the Office of Mineral Resources. If the payor attributable to a state wind lease changes between payment dates without notification to the Office of Mineral Resources of the change and without submission of the current mailing address, telephone number, and email address for the new payor prior to the next payment, the new payor shall be subject to liquidated damages of $1,000. The State Mineral Board may waive all or any part of the liquidated damages based on a consideration of all factors bearing on the issue.

D. The first payment of royalty shall be made within 120 days following commencement of production of wind generated electric power from the leased premises. Thereafter, royalty shall be paid by the twenty-fifth of the second month following that in which wind generated electric power is produced. In the event any royalty payment is not correctly or timely made, lessee shall pay legal interest, until paid, on royalty owing under the terms of this lease commencing the date such royalty is due and payable, along with damages, attorney fees, and costs. The state may also seek dissolution of the lease.

E. A state wind lessee shall report royalty payments on the official royalty reporting form available from the Office of Mineral Resources. Payment shall accompany the official royalty reporting form. Payments equal to or less than $9,999 may be made by personal or business check. Payments greater than $9,999 shall be made by electronic wire transfer. In all cases, the payee shall be the Office of Mineral Resources.

F. A state wind lessee shall keep true, accurate and complete books, records, accounts, contracts and data sufficient to support and verify the calculation of all amounts due under the lease. The state or any representative of the state shall have the right at all reasonable times and upon the provision of reasonable notice, to inspect the books, accounts, contracts, records, and any other relevant data, in possession or control of lessee and pertaining to the production, transportation or sale of electricity produced from the lease premises, including, without limitation, statements, documents, records or other data, from third parties which verify price, value or quantity of electricity generated on the lease premises. Any such inspection and review shall take place at the office of lessee, unless another location is otherwise agreed to by the state and lessee.

G. Should a state wind lessee contest royalty payment or any form of payment under a state wind lease, including requests for recoupment of any alleged overpayment of royalty, or present any claim, dispute or question pertaining to the terms, conditions, obligations, and duties expressed or implied in a state wind lease, the Office of Mineral Resources may collect a fee of $35 per hour for each hour or portion thereof spent in verification of any such contest, claim, dispute, or question.

La. Admin. Code tit. 43, § I-1031

Promulgated by the Department of Natural Resources, Office of Mineral Resources, LR 34:268 (February 2008).

AUTHORITY NOTE: Promulgated in accordance with R.S. 41:1734.