Exempt royalty interests

1. A royalty interest in oil or gas is exempt from the gross production tax if the royalty interest is owned by any of the following entities and that entity's immunity from taxation has not been waived by the appropriate governmental authority: a. The federal government or an instrumentality of the federal government. b. The state of North Dakota or its political subdivisions. c. An organized Indian tribe, whose land cannot be alienated without consent of the federal government. 2. A royalty interest in production which is owned by a private or charitable organization, whether profit or nonprofit, is not exempt from the gross production tax. 3. For oil, the value of an exempt royalty interest is limited to the lesser of the following: a. The amount of any royalty payments made to the entities listed in subdivisions a, b, and c of subsection 1. b. The royalty percentage attributable to the entities listed in subdivisions a, b, and c of subsection 1 times the total amount reported as the gross value at the well. 4. For gas, the volume of an exempt royalty interest is the royalty interest percentage attributable to the entities listed in subdivisions a, b, and c of subsection 1 times the taxable volume of gas.