Title 11 . Natural Resources

Chapter 85 . (No Regulations Filed)

Section 215. Lease terms

11 AAC 85.215. Lease terms

(a) In accordance with AS 38.05.150 , a lease is issued for an indeterminate period of time, subject to the conditions of diligent development and continued operation of the mine.

(b) The condition of diligent development is met if, upon review of the lease operations at least every 10 years, the commissioner finds that

(1) the leased area is producing coal in commercial quantities;

(2) the leased area is committed to a CMU as described in 11 AAC 85.270 and coal is being produced from the CMU in commercial quantities;

(3) the lessee is proceeding in good faith to develop the leased area by complying with the approved plan of exploration and development in (c) of this section; or

(4) the lessee has shown to the satisfaction of the commissioner that the development of a leased area in accordance with a plan of exploration and development under (c) of this section is delayed or interrupted by force majeure.

(c) Within one year after the issuance of a lease, the lessee shall submit to the commissioner a proposed plan of exploration and development which outlines a schedule, expenditures, and commitments for the exploration and development of the leased area. A proposed plan must be consistent with the estimated size of reserves and must be designed to bring the leased area into production within a reasonable period of time.

(d) Within 65 days after receipt of a proposed plan of exploration and development, the commissioner will issue a written decision which accepts or rejects the proposed plan, based on whether execution of the plan would satisfy the requirement of (b)(3) of this section. If the commissioner rejects a proposed plan, he will include the reasons for the rejection in the written decision and will, in his discretion, also include modifications which would qualify the proposed plan for acceptance. An accepted plan remains in effect until production commences or until the commissioner accepts a revision of the plan.

(e) Whenever it appears that actual exploration or development will significantly deviate from an accepted plan of exploration and development, the lessee shall submit a proposed revision of the plan.

(f) Within 65 days after receipt of a proposed revision of a plan of exploration and development, the commissioner will accept or reject the revised plan. If the revised plan is rejected, the commissioner will state his reasons for the rejection and will, in his discretion, propose modifications which would qualify the revised plan for acceptance.

(g) If operations are interrupted for more than 30 days, the lessee shall notify the commissioner. The commissioner will determine whether the interruption constitutes failure to comply with the condition of continued operation as defined in (i)(2) of this section.

(h) The commissioner will, in his discretion, and upon petition by the lessee, authorize payment by the lessee of an advance royalty instead of continued operation for any particular year.

(i) As used in this section

(1) "commercial quantities" means a quantity of coal sufficient to yield a return in excess of operating costs, even if exploration and development costs may never be repaid and the undertaking, considered as a whole, may ultimately result in a loss;

(2) "continued operation" means production of coal in commercial quantities, except when the operations under the lease are interrupted by force majeure;

(3) "force majeure" means war, riots, strikes, acts of God, unusually severe weather or any other cause beyond the lessee's reasonable ability to foresee or control, including delays caused by administrative or judicial decisions or lack of them, whether similar to those enumerated or not.

History: Eff. 6/18/82, Register 82; am 12/31/82, Register 84

Authority: AS 38.05.020

AS 38.05.145

AS 38.05.150