Section 11.83.700. Work commitment.

	(a)  If a work commitment is a condition of a lease, the terms of the work commitment will be specified in the notice of sale. The work commitment will state the minimum requirement for exploration and development on each lease. The lessee shall file reports with the commissioner substantiating adherence to the work commitment terms.  
	(b)  The commissioner will, in his or her discretion, alter or abrogate the terms of the work commitment if the lessee demonstrates to the satisfaction of the commissioner that the lease will be unproductive or uneconomic under the terms of the work commitment.  
	(c)  The commissioner will abrogate a work commitment if the lessee relinquishes the lease.  
	(d)  The commissioner will, in his or her discretion, grant a single waiver of any term of a work commitment imposed on a lease under (a) of this section for a period not to exceed two years if the commissioner makes a written finding that conditions preventing fulfillment of the work commitment were beyond the lessee's reasonable ability to foresee or control. The commissioner will consider the following factors when determining whether the conditions preventing fulfillment of the work commitment were beyond the lessee's reasonable ability to foresee or control:  
		(1) the lessee's statement of the conditions that prevented fulfillment of the work commitment;  
		(2) the lessee's explanation of how those conditions prevented fulfillment of the work commitment;  
		(3) the lessee's explanation of how and why the lessee did not foresee or failed to avoid the conditions that prevented fulfillment of the work commitment;  
		(4) the lessee's explanation of why the conditions that prevented fulfillment of the work commitment were beyond the lessee's reasonable control;  
		(5) the lessee's plans to remedy the conditions that prevented fulfillment of the work commitment during the initial term of the work commitment;  
		(6) the lessee's plans to fulfill the terms of the work commitment during the term of the waiver; and  
		(7) other relevant information.  
	(e)  The commissioner will, in his or her discretion, grant a single waiver of any term of a work commitment imposed on a lease under (a) of this section for a period not to exceed two years if the commissioner makes a written finding that the lessee has demonstrated, through good faith efforts, the intent and ability to fulfill the terms of the work commitment during the term of the waiver. The commissioner will consider the following factors when determining whether a lessee has demonstrated the intent and ability to fulfill the terms of a work commitment during the term of any waiver that may be granted:  
		(1) whether the lessee has undertaken appropriate actions to fulfill the work commitment, including but not limited to having acquired permits, materials, and financing necessary to fulfill the work commitment;  
		(2) reasons why fulfillment of the work commitment during the term of any waiver that may be granted is more likely than it was during the initial term of the work commitment;  
		(3) the lessee's specific plans and actions to be taken to fulfill the work commitment during the term of the waiver; and  
		(4) other relevant information.  
	(f)  The length of time for a waiver granted under (e) of this section will be based on the time determined by the commissioner to be needed for the lessee to take the specific actions planned by the lessee to fulfill the work commitment during the term of the waiver.  
	(g)  If a lessee fails to meet any term of work commitment by its due date, the lease will automatically terminate. In addition, any penalty provisions established by the commissioner in the work commitment stipulation or as a condition to any extension, alteration, or waiver will take effect immediately if the work commitment is not completed by its due date. For purposes of this subsection, the due date for a work commitment is its original due date under the work commitment stipulation to the lease, plus any additional time granted by extension, alteration, or waiver of the work commitment.  
	(h)  As a condition of waiver of any term of a minimum work commitment under (e) of this section, the commissioner will, in his or her discretion, require the lessee to post a performance bond or other security acceptable to the commissioner. The amount of the performance bond or other security, if required, will be set by the commissioner in an amount not to exceed $100,000 for each lease. The bond or other security will be released to the lessee upon fulfillment of the work commitment. If, before the end of the waiver period granted under (e) of this section, the commissioner agrees to alter or abrogate the terms of the work commitment under (b) or (c) of this section, part of the bond or other acceptable security will forfeit automatically to the state in proportion to the portion of the waiver period that has elapsed, unless forfeiture is waived by the commissioner. If the work commitment is not fulfilled by the end of the waiver period, the performance bond or other security will forfeit automatically to the state. The commissioner will, in his or her discretion, establish additional terms or penalties as a condition of waiver of a work commitment.  

Authorities

38.05.020;38.05.180

Notes

Reference

11 AAC 83.705

Authority

AS 38.05.020 AS 38.05.180

History

Eff. 11/9/79, Register 72; am 9/25/85, Register 95