§ 30:144 — Sale of royalties in-kind to small refiners

§144. Sale of royalties in-kind to small refiners
A. On or before December 31, 1979, the secretary of the Department of Conservation
and Energy shall submit to the State Mineral and Energy Board for implementation a
regulatory program for the sale or processing of in-kind crude oil royalties to refiners in the
state and procedures for the sale or processing, delivery, and use of royalty crude oil, which
at a minimum include the following:
(1) Provisions to assure that the sale shall not be made to any Louisiana refiner who
may not legally condition product sales upon the right of the State to exercise a right of first
refusal to any product refined from royalty crude and to give first priority to Louisiana
customers in the usual course of sale of end products. A "Louisiana refiner" shall be a
Louisiana business entity having its principal place of business in the state of Louisiana.
(2) Provisions which assure a first priority of available supply to refiners with
capability to refine typical South Louisiana light, sweet type crude, having a sulphur content
of five-tenths or less, and refiners with facilities for the distillation of methanol or ethanol,
suitable for blending with gasoline to produce a motor fuel, at least fifty percent of which
methanol or ethanol is to be derived from agricultural products produced in Louisiana.
(3) Provisions which assure that qualified refiners have adequate facilities to receive
crude by water, pipe, or truck and own or have contractual rights to adequate storage
facilities to assure continuity of operations.
(4) Provisions which assure the disclosure of all information relevant to a
determination that the refiner has a genuine need for a portion of the state's royalty crude.
(5) Provisions which limit the volume of royalty crude available to any one refiner
to no more than seventy-five hundred barrels per day.
(6) Provisions which assure that to the extent permitted by state or federal law the
state receives not less than the fair market value for the royalty crude.
(7) Provisions which condition any sales and/or processing upon the right of the state
to exercise a right of first refusal to any product refined from royalty crude, and which also
requires refiners to give first priority to Louisiana customers in the usual course of sale of
end products.
(8) Provisions which prohibit the exchange or resale of any royalty crude without
consent of the state and fix penalties of not less than ten thousand dollars per day of violation
thereof.
(9) Provisions for the assessment of a fee of not more than twenty cents per barrel
in the event of sales to cover costs of administration, and reasonable bond or other acceptable
financial assurance which will guarantee good and faithful performance of obligation by
small refiners.
(10) Such additional provisions as may be deemed necessary to protect the interests
of the state and assure a fair and equitable allocation of the state's royalty crude supply.
(11) Provisions which assure that no gasoline or diesel end product from such crude
shall be sold for the ultimate purpose of retail sale outside of the state of Louisiana.
B. Prior to submitting the program to the State Mineral and Energy Board for
implementation, the secretary shall present the proposed program to the House Committee
on Natural Resources and Environment and Senate Committee on Natural Resources,
meeting jointly, for approval thereof. Within thirty days after receipt of the program from
the secretary, the mineral board shall initiate rulemaking procedures thereon in compliance
with the Administrative Procedure Act, R.S. 49:950 et seq.
C. Notwithstanding the provisions of R.S. 30:142(F), public bidding shall not be
required for the sale and/or processing of royalty crude oil pursuant to this Section, so long
as price controls remain in effect; provided that in the event supplies of royalty crude remain
available after allocation of the seventy-five hundred barrel per day maximum allowed under
this Section to all interested refiners, the volumes so remaining shall be made available to
the refiners pursuant to public bidding therefor, contingent upon interruption of delivery of
such excess supply to accommodate any qualified refiner not receiving the maximum
allocation permitted herein and capable of taking delivery of additional volumes which are
available.

Legislative History

Added by Acts 1979, No. 592, §1; Acts 2008, No. 580, §2; Acts 2009, No. 196, §2, eff. July 1, 2009; Acts 2023, No. 150, §5, eff. Jan. 10, 2024.