(a) You do not owe minimum royalties for:

(1) Leases issued on or after August 8, 2005 (other than for leases issued in response to applications that were pending on that date for which no election is made under §3200.8(b)(1)); and

(2) Leases issued before August 8, 2005, for which an election is made under §3200.7(a)(2).

(b) For leases issued before August 8, 2005, for which no election is made under §3200.7(a)(2), and for leases issued in response to applications pending on that date for which no election is made under §3200.8(b)(1), you owe minimum royalty of $2.00 per acre (to be paid to MMS) when:

(1) You have not begun actual production following the BLM's determination that you have a well capable of commercial production; or

(2) The value of actual production is so low that royalty you would pay under the scheduled rate is less than $2.00 per acre (this applies to situations of no production, as long as the lease remains in effect).