R652-20-1000. Rentals and Royalties

1. Rentals and Payment Provisions. The Division is obligated to receive full value for the resources leased to persons of profit. This obligation includes obtaining a fair rental for the lands being used for mineral extraction. (a) Minimum Rental rates are established in the Division fee schedule. The rental rate will be established within the terms of the mineral lease, and based on the use and fair market value of the leased state lands. Annual rental due dates shall be 30 days before the anniversary date of the effective date of the lease. (b) Any overpayment of advance rental occurring from mineral lease applicant's incorrect listing of acreage of lands described in the application may be credited toward the applicant's rental account. (c) Minimum annual rental on any mineral lease is $40. (d) The Division shall accept payments made by any party, but the acceptance of payments shall not be a recognition of any interest of the payee in the lease or royalty agreement. (e) No rental credits are allowed. 2. Royalty Provisions Royalty rates for production shall apply to all mineral leases and royalty agreements, as classified in Section R652-20-200, issued on or after the effective date of the applicable adjusted royalty rate. Mineral leases entered into before the effective date of adjusted royalty rates shall retain the royalty rate as specified in the lease agreement. (a) Royalty rates on substances under Classification 1 Oil, Gas and Hydrocarbons. TABLE 1(1) Oil 16-2/3% Gas 16-2/3% Sulfur 12-1/2% Other hydrocarbon substances 6-1/4% (1) Notwithstanding the terms of oil, gas, and hydrocarbon lease agreements, gas and natural gas liquid reports, and their required royalty payments, are required to be received by the Division on or before the last day of the second month succeeding the month of production. This extension of payment and reporting time for gas and NGL does not alter the payment and reporting time for oil and condensate royalty which must be received by the Division on or before the last day of the calendar month succeeding the month of production, as currently provided in the lease form. (b) Royalty rates on any element or mineral or resource in any form produced under Classification 2 Mineral-rich Brine shall follow the rate as prescribed elsewhere in rule except for lithium resources. Adjusted royalty rates are exclusive of Great Salt Lake Elements and Minerals. TABLE 2 Lithium 2-1/2 to 5% (1) (1) Lithium royalty scale: Mkt Price<=$15/kg 2.5%, Mkt Price<=$25/kg 3%, Mkt Price <=$35/kg 3.5%, Mkt Price<=$45/kg 4%, Mkt Price<=$55/kg 4.5%, Mkt Price>$55/kg 5% (c) Royalty rates on Classification 3 Industrial and Metallic Minerals shall follow the rates described in Table 3.1 and 3.2. TABLE 3.1 Potash and associated minerals 5% Phosphate 5% Magnesium 1-1/2% Salt (sodium chloride)(1) $0.50/dry ton Clay Minerals 5% Gypsum 5% Industrial Sands 5% Building Stone and Limestone 5% (except 2% for calcined lime) Volcanic Materials 5% Other Industrial Minerals 5% (1) Beginning January 1, 2001, the royalty rate per ton will be adjusted annually by the Producer Price Index for Industrial Commodities as provided under Subsection R652-20-1000(g) using 1997 as the base year. TABLE 3.2 Fissionable Met. Minerals 8% Non-Fissionable Met. Minerals 4% (d) Royalty rate for Classification 4 Geothermal Resources shall follow the rates described in Table 4. TABLE 4 Geothermal Direct-Power (first 5 years) 1-3/4% Geothermal Direct-Power (after 5 years) 3-1/2% Geothermal Steam 10% (e) Royalty rates for Classification 5 Other Energy Resources shall follow the rates described in Table 5. TABLE 5 Coal 8% Oil Shale(1) 5% Gilsonite (uintaite) 10% Asphaltic/Bituminous Sands(2) 7% (1) 5% during the first five years of production and increasing annually thereafter at the rate of 1% to a maximum of 12-1/2% (2) May be escalated after the first five years of production at the rate of 1% each year to a maximum of 12-1/2% (f) Royalty rates for Classification 6 Gemstones and Fossils shall follow the rates described in Table 6. TABLE 6 Gemstones (1) 10% Fossils(1) 10% (1) Requires payment of minimum annual rental of $5 per acre. (g) Effective January 1, 2001 or the date on which the royalty paid by a lessee reaches $0.50 per dry ton, whichever is later, the royalty rate for sodium chloride will be adjusted annually by the Producer Price Index for Industrial Commodities using the following formula: $.50 times the Producer Price Index for Industrial Commodities for the previous year divided by the Producer Price Index for Industrial Commodities for 1997. The adjusted royalty rate will be calculated, then rounded up to the third decimal place. If the previous year's Producer Price Index for Industrial Commodities is in preliminary form at the end of the first quarter, March 31, the lessee shall use the preliminary year end average for that quarter and then shall use the finalized year end average for the remainder of the year.