11 AAC 25.170 - Transportation contracts at arm's length

(a) If a lessee or an affiliate transports qualified gas under an arm's length contract, the transportation allowance used to determine the monthly value of the lessee's qualified gas must be the actual and reasonable costs incurred and paid by the lessee or an affiliate and not refunded to the lessee or the affiliate for transportation, less any costs disallowed under 11 AAC 25.060 - 11 AAC 25.090 or 11 AAC 25.160 - 11 AAC 25.220. To claim a transportation allowance under this section, the lessee shall demonstrate that the contract is arm's length.

(b) If the commissioner determines that the consideration set out in an arm's length contract exceeds the consideration actually transferred either directly or indirectly from the lessee or an affiliate to the transportation entity for the transportation, the commissioner may require that the transportation allowance be reduced or redetermined under 11 AAC 25.180 - 11 AAC 25.200.

(c) If the commissioner determines that the consideration paid under an arm's length transportation contract exceeds the reasonable value of the transportation because of misconduct by the contracting parties, or because the lessee breached a duty to the state to market the production for the mutual benefit of the lessee and the state, the commissioner may require that the transportation allowance be reduced or redetermined under 11 AAC 25.180 - 11 AAC 25.200.

Notes

11 AAC 25.170

Eff. 5/29/2010, Register 194

Authority:AS 38.05.020

AS 38.05.180

AS 43.90.310