(b) Sales of materials under this section must be made at a representative regional sales price set by the commissioner under AS 38.05.550(d)(1) unless

1. (1) the director determines that it is in the best interests of the state to sell the materials at fair market value determined by an appraisal provided by the department;
2. (2) the applicant, at its own cost, elects to provide an appraisal, acceptable to the department, determining the fair market value of the materials to be sold; or
3. (3) the sale is to a state or federal agency or political subdivision under AS 38.05.810(a) and the material to be extracted and removed is used for public purposes; sales under this paragraph may be at a price less than appraised value as determined by the director.

(f) Notwithstanding (a) — (e) of this section, for the purpose of creating incentives for the development of peat as a source of heat or power, the director may negotiate the sale of peat to individuals, organized or unorganized communities, tribal governments, or private profit or nonprofit organizations. Under this subsection, the director may provide

1. (1) for personal use by an individual, not more than 200 cubic yards of peat a year at no cost;
2. (2) for commercial use, not more than 30,000 cubic yards of peat during a single 10-year period at no cost; or

3. (3) for commercial use requiring more than 30,000 cubic yards of peat, the amount required by the user during a 10-year period beginning when the user uses more than 30,000 yards of peat at the price of

   1. (A) 20 percent of the representative regional sales price determined by the director under AS 38.05.550(d)(1); or
   2. (B) 20 percent of the fair market value determined by an appraisal completed under AS 38.05.550(d)(2), if the applicant provides the appraisal at the applicant's expense and the appraisal is approved by the commissioner.