65A-6 - Mineral Leases
Title 65A > 65A-6
Sections (12)
65A-6-1 - Coal and mineral deposits reserved — Exceptions.
65A-6-1(1) Except as otherwise expressly provided by law, coal and mineral deposits in state-owned lands are reserved to the state. Each certificate of sale and patent issued shall contain such a reservation. The purchaser of any lands belonging to the state: acquires no right, title, or interest in coal or mineral deposits; and is subject to the conditions and limitations prescribed by law providing for the state and any person authorized by it to:
prospect or mine; remove the deposits; and occupy and use as much of the surface of the lands as may be required for any purpose reasonably incident to the mining and removal of the deposits. Improved farm lands acquired by the state through foreclosure proceedings or conveyed to the state by deed in satisfaction of farm loan mortgages may be sold by the state without mineral reservations. Coal and mineral deposits in state-owned lands may not be sold but may be leased on a rental and royalty basis. 65A-6-1(2) Except as otherwise prohibited by the Jones Act of January 25, 1927, 43 U.S.C. Sections 870-871, mineral interests in state-owned lands may be exchanged for mineral interests of comparable value or otherwise disposed of, if their retention would create a liability exceeding their value. 65A-6-1(3) Salts and other minerals in the waters of navigable lakes and streams are reserved to the state and may be sold by the division only upon a royalty basis. A contract for the recovery of salts or minerals from navigable waters shall be subject to the use of the waters for public purposes. Before a contract for the recovery of salts or minerals from navigable waters is executed, the applicant shall provide evidence that: an application for the appropriation of water for that purpose has been filed with the state engineer; and the application is pending or accepted in that office. 65A-6-1(4) Common varieties of sand, gravel, and cinders are not considered to be minerals under this section. Common varieties do not include deposits which are valuable because the deposit contains other materials giving it distinct and special value.
65A-6-2 - Mineral leases — Division to prescribe rules.
The division shall by rule prescribe: 65A-6-2(1) the term of the lease; 65A-6-2(2) the annual rental; 65A-6-2(3) subject to Section 65A-6-4, the amount of royalty in addition to or in lieu of rental; and 65A-6-2(4) the basis upon which the royalty shall be computed.
65A-6-3 - Applications for mineral leases — Compliance with business laws.
Applicants for mineral leases shall fully comply with all of the laws of the state as to qualification to do business within this state and must not be in default under any such laws during the pendency of the application and throughout the duration of the lease.
65A-6-4 - Mineral leases — Multiple leases on same land — Rentals and royalties — Lease terms — Great Salt Lake.
65A-6-4(1) As used in this section:“Great Salt Lake element or mineral” means:a rare earth element;a trace element or mineral; ora chemical compound that includes a rare earth element or trace element or mineral.”Operator” means, for purposes of provisions applicable to the extraction of a Great Salt Lake element or mineral, a person qualified to do business in the state who is pursuing the extraction of a Great Salt Lake element or mineral.”Rare earth element” is one of the following ores, minerals, or elements located in the brines or the sovereign lands of the Great Salt Lake:lanthanum;cerium;praseodymium;neodymium;samarium;europium;gadolinium;terbium;dysprosium;holmium;erbium;thulium;ytterbium;lutetium; andyttrium.”Trace element or mineral” means an element or mineral that is located in the brines or the sovereign lands of the Great Salt Lake that is not in production by July 1, 2020, and for which the state has not received a royalty payment by July 1, 2020. 65A-6-4(2) Mineral leases, including oil, gas, and hydrocarbon leases, may be issued for prospecting, exploring, developing, and producing minerals covering any portion of state lands or the reserved mineral interests of the state.Leases may be issued for different types of minerals on the same land.If leases are issued for different types of minerals on the same land, the leases shall include stipulations for simultaneous operations, except that for leases related to the Great Salt Lake the leases shall include stipulations for simultaneous operations that will not interfere with, impede, limit, or require changes to pre-existing rights.No more than one lease may be issued for the same resource on the same land.The division shall require a separate royalty agreement for extraction of Great Salt Lake elements or minerals from brines of the Great Salt Lake when:a mineral lease, a royalty agreement, or both that are in effect before the operator seeks to extract a particular Great Salt Lake element or mineral do not expressly include the right to extract the particular Great Salt Lake element or mineral; orthe proposed operation will use brines from the Great Salt Lake, but will not occupy sovereign lands for the direct production of Great Salt Lake elements or minerals other than for incidental structures such as pumps and intake and outflow pipelines. 65A-6-4(3) Each mineral lease issued by the division shall provide for an annual rental of not less than 100 per acre per year.However, a lease may provide for a rental credit, minimum rental, or minimum royalty upon commencement of production, as prescribed by rule. 65A-6-4(4) The primary term of a mineral lease may not exceed:20 years for oil shale and tar sands; and10 years for oil and gas and any other mineral. 65A-6-4(5) In addition to the requirements of Chapter 17, Part 3, Mineral or Element Extraction, and subject to the other provisions of this Subsection (5), for a mineral lease or royalty agreement involving the extraction of Great Salt Lake elements and minerals from brines in the Great Salt Lake, the division shall ensure that the following terms, as applicable, are included:an extraction operation or extraction method shall adhere to commercially viable technologies that minimize water depletion;a provision authorizing the division to curtail or limit Great Salt Lake element or mineral production at any time the condition of the Great Salt Lake reaches the emergency trigger, as defined in Section 65A-17-101;a provision authorizing the division to withdraw lands, operations, extraction methods, or technologies from Great Salt Lake element or mineral production or Great Salt Lake element or mineral operations; a provision allowing the division to require an existing operator to use commercially viable, innovative technologies to minimize water depletions caused by the planned mineral extraction as a condition of continued operations if the technology:has been successfully implemented on a commercial scale in similar circumstances;has been shown to be economically viable; andis reasonably compatible with the operator’s overall extraction process; anda provision that provides for the reductions of the following after the primary term of a mineral lease or royalty agreement:the acreage subject to the mineral lease by the acreage the operator does not use to extract a Great Salt Lake element or mineral during the primary term of the mineral lease under conditions that do not constitute waste, as defined in Section 65A-17-101; andthe volume of water that the operator may divert from the Great Salt Lake, by the volume of water that the operator does not use during the longer of the primary term of the mineral lease or seven years if the operator fails to use the volume of water for a beneficial use, except if the failure to use the volume of water is as a result of a reduction of water usage under Section 73-33-201 or is excused under Section 73-1-4.If under Subsection (5)(a)(iv) the division requires an existing operator to use a commercially viable, innovative technology, the division may not require use of a technology not yet proven to be commercially viable on the Great Salt Lake and may not require implementation of the technology to begin until after a reasonable period determined by the division that is at least five years but does not exceed seven years.If the volume of water that the operator may divert from the Great Salt Lake is reduced under Subsection (5)(a)(v), the division shall pursue a judicial action to declare all or a portion of the water right forfeited under Subsection 73-1-4(2).If the division secures the reduction under this Subsection (5)(c), the division shall petition the state engineer to order a reversal of the application approval in accordance with the terms of the reduction or forfeiture of the water right.Nothing in this Subsection (5) modifies or otherwise affects Section 73-1-4 or 73-3-30. 65A-6-4(6) Before issuing a royalty agreement under Subsection (2)(d), the division may require an operator to engage in a feasibility assessment and may issue a royalty agreement without compliance of Subsection (5)(a) if the agreement:has a term of 12 months or less; andrequires a minimum use of five acre-feet of brines from the Great Salt Lake during the term of the agreement.Subsection (6)(a)(ii) requiring a minimum use of five acre-feet of brines from the Great Salt Lake does not apply to an operator who filed an application with the division for a feasibility assessment before January 1, 2025.The division may make rules, in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for implementing this Subsection (6). 65A-6-4(7) Upon nomination from a prospective operator, the division shall by rule, made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, establish a royalty rate and calculation methodology for a Great Salt Lake element or mineral that:provides for a full and fair return to the state from the production of the Great Salt Lake element or mineral;is consistent with market royalty rates applicable to the production of the Great Salt Lake element or mineral or of the production of oil and gas;provides a base royalty rate;provides a reduced royalty rate from the royalty rate under Subsection (7)(a)(iii) if the royalty agreement:relates to a non-evaporative method of producing the Great Salt Lake element or mineral; orprovides an incentive to use commercially viable, innovative technology to minimize water depletion and evaporation as determined by the division; provides a reduced royalty rate from the royalty rate under Subsection (7)(a)(iii) if the prospective operator for the extraction of lithium demonstrates to the satisfaction of the division that the prospective operator has an agreement with a person who will process or manufacture a product in this state, exclusive of any primary or secondary lithium processing or manufacturing, using the lithium extracted by the prospective operator; andsubject to Subsection (7)(e), provides for a royalty rate that is based on the highest market value prevailing at the time of the sale or disposal of the following:the Great Salt Lake element or mineral; ora product the lessee produces from the Great Salt Lake element or mineral.Before entering into a royalty agreement permitting the extraction of Great Salt Lake elements or minerals, the operator shall:demonstrate the proposed operation’s commercial viability;certify before operation begins that the operator is not negatively impacting the biota or chemistry of the Great Salt Lake; andobtain the approval of the division and the Department of Environmental Quality that the certification supports a finding that the operation will not negatively impact the biota or chemistry of the Great Salt Lake.A new mineral lease for a Great Salt Lake element or mineral in production in the Great Salt Lake as of May 3, 2023, is subject to new royalty rates due to emergent technologies.An operator who as of July 1, 2020, had a mineral lease with the division but not a royalty agreement and who is subject to a severance tax under Subsection 59-5-202(5) shall pay a royalty under this section in addition to the severance tax.The royalty rate described in Subsection (7)(a)(vi) may not be reassessed during the primary term of an initial royalty agreement issued under this section, but may be reassessed upon the conclusion of the primary term. 65A-6-4(8) Except as provided in Subsection (8)(b), an operator who extracts a Great Salt Lake element or mineral from tailings from the production of Great Salt Lake elements or minerals from brines in the Great Salt Lake is subject to this section to the same extent as an operator producing a Great Salt Lake element or mineral from brines in the Great Salt Lake.An operator that, as of May 3, 2023, has an agreement to recover a Great Salt Lake element or mineral from existing tailings, discarded material, end-use products, or waste products produced from the evaporation and processing of Great Salt Lake brines is not subject to this section, except as to the payment of royalties set by the division under Subsection (7)(a). The division shall make rules, in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, regarding the issuance and termination of a royalty agreement for mineral extraction from tailings, discarded material, end-use products, or waste products produced from the evaporation and processing of Great Salt Lake brines.An operator that, as of May 3, 2023, has an underlying agreement to recover a Great Salt Lake element or mineral shall obtain an additional agreement for any additional Great Salt Lake element or mineral produced from the tailings, discarded material, end-use products, or waste products newly produced under the underlying agreement. The additional agreement is subject to this section. 65A-6-4(9) The division shall annually report to the Natural Resources, Agriculture, and Environmental Quality Appropriations Subcommittee regarding the amount of money collected under this section from royalties provided for in Subsection (7). 65A-6-4(10) In the issuance of royalty agreements for the extraction of lithium from the Great Salt Lake, the division shall prioritize applicants that do not use evaporative concentration of Great Salt Lake brines in any stage of the extractive process.The division may make rules, in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, creating a process for implementing this Subsection (10). 65A-6-4(11) Except in relationship to mineral leases related to the Great Salt Lake, the division shall make rules regarding the continuation of a mineral lease after the primary term has expired, which shall provide that a mineral lease shall continue so long as:the mineral covered by the lease is being produced in paying quantities from:the leased premises;lands pooled, communitized, or unitized with the leased premises; orlands constituting an approved mining or drilling unit with respect to the leased premises; orthe lessee is engaged in diligent operations, exploration, research, or development which is reasonably calculated to advance development or production of the mineral covered by the lease from:the leased premises;lands pooled, communitized, or unitized with the leased premises; orlands constituting an approved mining or drilling unit with respect to the leased premises; andthe lessee pays a minimum royalty. 65A-6-4(12) For the purposes of Subsection (11), diligent operations with respect to oil, gas, and other hydrocarbon leases may include cessation of operations not in excess of 90 days in duration. 65A-6-4(13) The division shall study and analyze each mineral lease and mineral royalty agreement issued on the Great Salt Lake and compare and evaluate whether the mineral leases and royalty agreements are representative of current market conditions. As part of this study, the division shall:make the following determinations for mineral leases:whether the entire surface area described within the mineral lease is being used; andwhether the annual lease payments are representative of current market conditions; andfor royalty agreements, perform studies and comparative analyses to determine whether the state is receiving royalty rates consistent with current market conditions.By no later than the 2023 November interim meeting, the division shall report the division’s findings of the study required by this Subsection (13) to the Natural Resources, Agriculture, and Environment Interim Committee. 65A-6-4(14) The division may make rules, in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for implementing this section. 65A-6-4(15) The provisions in this section related to extraction of a Great Salt Lake element or mineral under a mineral lease or royalty agreement apply to a mineral lease or royalty agreement in effect on May 1, 2024, and any mineral lease or royalty agreement entered into after May 1, 2024.
65A-6-5 - Division may withdraw lands from leasing — Mineral lease application procedures.
65A-6-5(1) The division may at any time withdraw state lands from leasing. 65A-6-5(2) Lands that are not encumbered by a current mineral lease for the same resource, a withdrawal order, or other division rule prohibiting the lease of the lands, shall be offered for lease as provided in this section. 65A-6-5(3) A notice of the land available for leasing shall be posted in the office of the division. The notice shall:
describe the land; indicate what mineral interest in each tract is available for leasing; and state the last date, which shall be no less than 15 days after the notice is posted, on which bids may be received. 65A-6-5(4) Applications for the lease of lands filed before the closing date stated in the notice shall be considered to be filed simultaneously. The applications shall be: submitted in sealed envelopes; and opened in the office of the division at 10:00 a.m. of the first business day following the last day on which bids may be received. Leases shall be awarded to the highest responsible, qualified bidder, in terms of the bonus paid in addition to the first year’s rental, who submitted a bid in the manner required. In cases of identical bids of successful bidders, the right to lease shall be determined by drawing. The drawing shall be held in public at the office of the division. 65A-6-5(5) At the discretion of the division, mineral leases may be offered at an oral public auction. The division may set a minimum bid for a public auction. 65A-6-5(6) The division may award a mineral lease without following the competitive bidding procedures specified in Subsections (3) and (4) or conducting an oral public auction, if the mineral lessee waives or relinquishes to the state a prior mining claim, mineral lease, or other right which in the opinion of the division might otherwise cloud the title to any of those lands. 65A-6-5(7) Following the awarding of a lease to a successful bidder, deposits, except filing fees, made by unsuccessful bidders shall be returned. 65A-6-5(8) Lands acquired through exchange from the federal government shall be subject to the vested rights of unpatented mining claimants under the Mining Law of 1872, as amended, and other federal vested rights, both surface and minerals. This provision does not prevent the state from negotiating the accommodation of vested rights through any method acceptable to the parties. 65A-6-5(9) The division may lease lands in the order in which applications are filed if:
the division offers newly acquired or existing state lands for lease for mineral purposes according to the procedures in Subsections (3) through (6) and the lands are not leased; or a period of time of one year or more has elapsed following: a revocation of a withdrawal; or the date an existing mineral lease is canceled, relinquished, surrendered, or for any reason terminated.
65A-6-6 - Mineral lease covenants.
Each mineral lease shall contain the following covenants: 65A-6-6(1) the lessee shall promptly pay any rent annually in advance; 65A-6-6(2) waste may not be committed on the land; 65A-6-6(3) the premises shall be surrendered at the expiration of the term; 65A-6-6(4) the lessee may not assign or sublet without the written authorization of the director; and 65A-6-6(5) where improvements have been placed on the land by any person other than the lessee, the lessee will allow the owner of the improvements to remove them within 90 days.
65A-6-7 - Mineral information to be furnished — Confidentiality.
65A-6-7(1) The division may require the lessee to furnish any information necessary to carry out the duties of this chapter, including geological and mine maps, well logs, and assays. 65A-6-7(2) Any information submitted to the division which the lessee and the division agree is of a proprietary nature shall be classified as protected and may not be released without written permission from the lessee.
65A-6-8 - Mineral leases — Cancellation — Use of surface land — Liability for damage.
65A-6-8(1) Upon violation by the lessee of any lawful provision in a mineral lease, the division may cancel the lease after 30 days’ notice by registered or certified return receipt mail, unless the lessee:
remedies the violation; rectifies the condition; or requests a hearing within: the 30 days; or any extension of time the division grants. 65A-6-8(2) A mineral lessee, subject to conditions required by the division, shall have: the right at all times to enter upon the leasehold for prospecting, exploring, developing, and producing minerals; and reasonable use of the surface. The lessee shall not injure, damage, or destroy the improvements of the surface owner or lessee. The lessee is liable to the surface owner or lessee for all damage to the surface of the land and improvements, except for reasonable use. 65A-6-8(3) Any mineral lessee may occupy as much of the surface of the leased land as may be required for all purposes reasonably incident to the exercise of lessee’s rights under the lease by:
securing the written consent or waiver of the surface owner or lessee; payment for the damage to the surface of the land and improvements to the surface owner or lessee where there is agreement as to the amount of the damage; or upon the execution of a good and sufficient bond to the state for the use and benefit of the surface owner or lessee of the land to secure the payment of damages as may be determined and fixed by agreement or in action brought upon the bond or undertaking in a court of competent jurisdiction against the principal and sureties of the bond. 65A-6-8(4) The bond required by Subsection (3)(c) shall be:
in a form and amount as prescribed by the division; and filed with the division.
65A-6-9 - Shut-in gas wells.
65A-6-9(1) Under a mineral lease for oil and gas, gas is considered to be produced in paying quantities from a shut-in gas well if the shut-in gas well is capable of producing gas in paying quantities, but the gas cannot be marketed at a reasonable price due to existing marketing or transportation conditions. 65A-6-9(2) The division shall make rules establishing: a minimum rental or minimum royalty for a shut-in gas well that is considered to be producing gas in paying quantities; and the basis upon which the minimum rental or minimum royalty shall be paid. The minimum rental or minimum royalty may not be less than twice the annual lease rental.
65A-6-10 - Unitization of mineral leases.
65A-6-10(1) Mineral lessees, upon prior written authorization from the division, may commit leased state lands to unit, cooperative, or other plans of development with other lands. 65A-6-10(2) The division may, with the consent of the mineral lessee, modify any term of a mineral lease for lands that are committed to a unit, cooperative, or other plan of development. 65A-6-10(3) Production allocated to leased state lands under the terms of a unit, cooperative, or other plan of development shall be considered produced from the leased lands whether or not the point of production is located on the leased state lands.
65A-6-11 - Land subject to a federal mineral lease.
65A-6-11(1) With respect to any tract of land in which the state acquires or has acquired any interest subject to an outstanding federal mineral lease or prospecting permit, the lessee or permittee may submit a petition seeking extension of the permit or lease or any other action as may be necessary to give to the lessee or permittee any and all rights, privileges, and benefits which the lessee or permittee would have had under the permit or lease had the state not acquired its interest in the tract. 65A-6-11(2) In consideration of the voluntary termination by the federal lessee or permittee of the lease or permit as it relates to that tract, the division may issue to that lessee or permittee a lease of the acquired tract or any portion of that tract for recovery of the same mineral substances upon terms that the lessee or permittee shall have all the rights, privileges, and benefits with reference to that tract which the lessee or permittee would have had by reason of the lease or permit from the United States had the state not acquired its interest in the tract.
65A-6-12 - Agreements for the administration of mineral leases by a federal agency.
65A-6-12(1) If the state has succeeded or will succeed to the position of the United States under a federal mineral or prospecting permit in which only a portion of the lands are subject to the permit, agreements may be entered into with the federal agency having jurisdiction over the remaining portion providing for the continued administration by that agency of the entire lease or permit or any lease pursuant to that permit. 65A-6-12(2) Consideration for continued administration of the federal agency may not exceed 10% of the revenue allocable to the state’s portion.