27-240. State trust lands; production leases; renewals; indexed royalties

A. Notwithstanding any other law, the commissioner may renew an existing production lease without public auction if the commissioner determines all of the following:

1. The lessee is in compliance with the terms of the production lease.

2. The production lease is in production or a person will put the production lease in production within two years after the date of production lease renewal.

3. The renewal is for a term that is allowed by the laws of this state.

B. A production lease that the commissioner renews pursuant to this section shall provide for a royalty rate that is adjusted pursuant to a market-based indexing mechanism that the commissioner adopts. The indexing mechanism may include any of the following:

1. Producer price indices.

2. Regional or statewide construction aggregate price indices.

3. Other objective indicators that are recognized by the industry.

C. The commissioner shall review the indexed royalty rate for each renewed production lease not more than once every five years.