DAR File No. 27602

School and Institutional Trust Lands, Administration

R850-130

Materials Permits

NOTICE OF PROPOSED RULE

DAR File No.: 27602
Filed: 12/23/2004, 02:47
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being repealed in order to be able to join portions of Rule R850-20 and Rule R850-130 into commodity-specific rules that give better clarity to provisions managing these resources. (DAR NOTE: The proposed repeal of Rule R850-20 is under DAR No. 27611 in this issue.)

Summary of the rule or change:

This rule is being repealed in its entirety so that provisions of this section can be combined with provisions found in R850-20 to form commodity-specific rules (Rules R850-23 and R850-25) that are easier to understand and follow. (DAR NOTE: The proposed new rule of R850-23 in under DAR No. 27609 and the proposed new rule of R850-25 is under DAR No. 27606 in this issue.)

State statutory or constitutional authorization for this rule:

Subsections 53C-1-302(1)(a)(ii), 53C-2-201(1)(a), and 53C-4-101(1)

Anticipated cost or savings to:

the state budget:

It is not anticipated that the repeal of this rule will bring about any cost or savings to the State budget. However, this rule is being replaced with commodity-specific rules, some of which contain increases in the amount of minimum annual rental charged by the agency. It is anticipated that those proposed increases will bring some savings to the State budget to help offset the administrative costs of managing smaller leaseholds and permitted areas.

local governments:

It is not anticipated that the repeal of this rule will bring about any additional cost or savings to local government. This rule is being reformatted and reorganized into commodity-specific rules concurrent with this repeal, with no changes being made to how they affect local government.

other persons:

The repeal of this rule will not cause any additional cost or savings to other persons. However, the commodity-specific rules that replace this rule have the potential of increasing the amount paid in annual rental for leaseholds or permitted areas of less than 500 acres, due to the increase in minimum annual rental to $500 per year.

Compliance costs for affected persons:

There are no compliance costs for affected persons associated with the repeal of this rule. However, under the replacement rules which are commodity-specific, there are potential increased costs for lessees and permittees with leaseholds or permitted areas smaller than 500 acres, due to the increase in minimum annual rental to $500 per year.

Comments by the department head on the fiscal impact the rule may have on businesses:

Since the material in this rule will be re-promulgated in replacement rules concurrently with this action, it is not anticipated that there will be any fiscal impact from this action.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Thomas B. Faddies at the above address, by phone at 801-538-5150, by FAX at 801-355-0922, or by Internet E-mail at tomfaddies@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

02/14/2005

This rule may become effective on:

04/01/2005

Authorized by:

Kevin S. Carter, Director

RULE TEXT

R850. School and Institutional Trust Lands, Administration.

[R850-130. Materials Permits.

R850-130-100. Authorities.

This rule implements Sections 6, 8, 10, and 12 of the Utah Enabling Act, Articles X and XX of the Utah Constitution, Sections 53C-1-302(1)(a)(ii) and 53C-4-101(1) which authorize the Director of the School and Institutional Trust Lands Administration to prescribe agency objectives, standards and conditions for the issuance of materials permits and for conveyances for common varieties of sand, gravel, cinders, and similar materials on Trust Lands Administration lands and also for common varieties of clay or stone having primary value or use in building, construction or landscaping, including basalt, common clay, conglomerate, flagstone, gabbro, granite, lava aggregate, marble, onyx, quartzite, rhyolite, rip-rap, sandstone, serpentine, shale, slate, soapstone, trapstone, travertine, whether crushed, sized, dimensioned, or unprocessed providing, however, materials permits shall not include Limestone and no materials permit may be issued in conflict with the Mineral Lease Classifications under R850-20-200.

R850-130-150. Planning.

Pursuant to Section 53C-2-201(1)(a), this category of activity carries the following planning obligations beyond existing rule-based analysis and approval processes:

1. To the extent required by the Memorandum of Understanding between the State Planning Coordinator and the School and Institutional Trust Lands Administration , submit the proposal for review by the Resource Development Coordinating Committee (RDCC) if the proposed action may have a significant impact upon natural or cultural resources of the state;

2. Evaluation of and response to comments received through the RDCC process; and

3. Evaluation of and response to any comments received through the solicitation process conducted pursuant to R850-130-400(4)(a) or R850-130-400(4)(b).

R850-130-200. Materials Permits Issued on Trust Lands Administration Lands.

The agency may issue materials permits or may convey profits a prendre or similar interests on all Trust Lands Administration lands when the agency deems it consistent with agency land use plans and trust responsibilities.

The agency may issue materials permits when the sale of such materials would be exempt from sales tax under Subsection 59-12-104(2) or 59-12-104(28).

The agency may issue profits a prendre in all other instances using the procedures and provisions outlined in Sections R850-130-400, R850-130-500, R850-130-600, R850-130-1000, R850-130-1200, R850-130-1300 and R850-130-1500. The conveyance of a profit a prendre or similar interest in these materials will contain provisions to substantially conform to those found in Sections R850-130-300, R850-130-700, R850-130-800, and R850-130-900.

R850-130-300. Rentals and Royalties.

1. Rentals

(a) Rental rates shall be $10 per acre, or fractional part thereof, per annum.

(b) The minimum annual rental on material permits shall be determined periodically by the agency pursuant to board policy.

2. Royalty Rates and Provisions

(a) The agency shall charge full market value for all materials purchased under a materials permit. Market value shall be determined by the agency through analysis of the local market.

(b) The agency, pursuant to board policy, may annually establish minimum royalty rates for materials permits based on the type of material being removed.

(c) Royalty payments shall be remitted to the agency on a quarterly basis or on such other basis as may be required by the terms and conditions of the permit and shall be accompanied by an agency approved "Production and Settlement Transmittal Form".

R850-130-400. Application Procedures.

1. Application Filing

Applications for materials permits may be submitted to any office of the agency during office hours pursuant to R850-3.

(a) The director may approve applications for materials permits for common varieties of sand, gravel or cinders in accordance with the Bid Solicitation Process described in paragraph 2, below, subject to rule R850-130-1400, Over-the-Counter Sales.

(b) The director may approve applications for materials permits for common varieties of clay or stone in the order of filing providing:

i) the permit will not conflict with any existing mineral lease or materials permit on the same land,

ii) the School and Institutional Trust Lands Administration has determined the market value of the commodity to be extracted under the permit and the applicant agrees to pay such value, in addition to annual rental.

iii) the lands described within the permit application include not less than one quarter-quarter section, or one surveyed lot, and all lie within the same township.

iv) in the event two or more applications bear a time stamp showing that the applications were filed at the same time then a public drawing may be held to determine which applicant is awarded the permit, or all of the applications may be rejected and the director may solicit competing applications in accordance with the Bid Solicitation Process described in paragraph 2, below.

(c) The director may at any time offer lands for the issuance of a materials permit for common varieties of clay or stone in accordance with the Bid Solicitation Process, described in paragraph 2, below.

2. Bid Solicitation Processes

(a) In the absence of any valid materials permit application, or any existing mineral lease for the same commodity upon the same lands, the agency may offer for simultaneous bid material permits when exposing the site to the market could reasonably be expected to produce materials sales. A notice of lands available for simultaneous filing for materials permits shall be made in a manner to reasonably solicit simultaneous bid applications. Notices of simultaneous filing shall contain the procedure by which the agency shall award the permit.

(b) Upon acceptance of any materials permit application for common varieties of sand, gravel, or cinders the agency shall solicit competing applications through publication at least once a week for two consecutive weeks in one or more newspapers of general circulation in the county in which the permit is offered. At least 30 days prior to bid opening, certified notification will be sent to permittees of record, adjacent permittees/lessees, and adjacent landowners. Notices will also be posted in the local governmental administrative building or the county courthouse. Notification and advertising shall include the legal description of the parcel and any other information which may create interest in the parcel. The successful applicant shall bear the cost of the advertising.

(c) The agency shall allow all applicants at least 20 days from the date of mailing of notice, as evidenced by the certified mail posting receipt (Postal Service form 3800), within which to submit a sealed bid containing their proposal for the subject parcel. Competing bids will be evaluated using the criteria found in R850-30-500(2)(g), R850-80-500, and R850-90-200.

(d) If no competing applications involving sale, lease or exchanges are received by the deadline published pursuant to R850-130-400(4)(b), then the agency shall award the materials permit based on the following criteria:

i) amount of bonus bid.

ii) amount and rate of proposed materials extraction.

iii) other criteria and assurances of performances as the agency shall require by permit or advertise prior to bidding.

R850-130-500. Permit Execution.

The permit must be executed by the applicant and returned to the agency within 30 days from the date of applicant's receipt of the permit. Failure to execute and return the documents to the agency within the 30-day period may result in cancellation of the permit and the discharge of any obligation of the agency arising from the approval of the application.

R850-130-600. Terms of Materials Permits.

Materials permits issued under these rules shall normally be for a short duration, as specified in the terms and conditions of the permit, no longer than necessary to accomplish the extraction and removal of the materials subject to the sale, and accomplish any required reclamation work. In no event shall a materials permit continue for a period of longer than five years without readjustment in its terms and conditions, by the director, as may be determined to be in the best interest of the trust beneficiaries.

R850-130-700. Materials Permit Provisions.

Each materials permit shall contain provisions necessary to ensure responsible surface management including, but not limited to, the following provisions: The rights of the permittee; rights reserved to the permitter; the term of the permit; payment obligations; transfers of permit interest by permittee; permittee's responsibility for reclamation; terms and conditions of permit forfeiture; and protection of the Trust Lands Administration from liability from all actions of the permittee.

R850-130-800. Bonding Provisions.

1. Prior to the issuance of a materials permit, or for good cause shown at any time during the term of the materials permit, upon 30 days written notice, the applicant or permittee, as the case may be, may be required to post with the agency a bond in the form and amount as may be determined by the agency to assure compliance with all terms and conditions of the permit.

2. All bonds posted on materials permits may be used for payment of all monies, rentals, and royalties due to the agency, also for costs of reclamation and for compliance with all other terms and conditions of the permit, and rules pertaining to the permit. The bond shall be in effect even if the permittee has conveyed all or part of the permit interest to a sublessee, assignee, or subsequent operator until such time as the permittee fully satisfies the permit obligations, or until the bond is replaced with a new bond posted by the sublessee or assignee.

3. Bonds may be increased in reasonable amounts, at any time as the agency may decide, provided the agency first gives permittee 30 days written notice stating the increase and the reason(s) for such increase.

4. Bonds may be accepted in any of the following forms at the discretion of the agency:

(a) Surety bond with an approved corporate surety registered in Utah.

(b) Cash deposit. However, the Trust Lands Administration will not be responsible for any investment returns on cash deposits.

(c) Certificates of deposit in the name of "School and Institutional Trust Lands and permittee, c/o permittee's address", with an approved state or federally insured banking institution registered in Utah. Such certificate of deposit must have a maturity date no greater than 12 months, be automatically renewable, and be deposited with the agency, the permittee will be entitled to and receive the interest payments. All certificates of deposit must be endorsed by the permittee prior to acceptance by the director.

(d) Other forms of surety as may be acceptable to the agency.

R850-130-900. Insurance Requirements.

1. Prior to the issuance of a materials permit, the applicant may be required to obtain insurance of a type and in an amount acceptable to the agency. Proof of insurance shall be in the form of a certificate of insurance containing sufficient information to satisfy the agency that insurance provisions of the permit have been complied with.

2. Such insurance, if required, shall be placed with an insurer with a financial rating assigned by the Best Insurance Guide of A:X or higher, unless this requirement is waived in writing by the agency.

3. The agency shall retain the right to review the coverage, form, and amount of the insurance required at any time and to require permittee to obtain insurance sufficient in coverage, form, and amount to provide adequate protection upon 30 days written notice, proof of such insurance to be provided pursuant to R850-130-900(1).

R850-130-1000. Plans of Operation.

1. Prior to the commencement of any activity authorized by a materials permit the permittee shall be required to submit, for the director's approval, a plan of operations which shall include the following:

(a) A map or plat showing

i) the location and sequence of areas from which material is to be excavated;

ii) the location of any processing or stationary equipment or improvements which will be placed on the premises;

iii) transportation and access routes across the premises and adjacent properties;

iv) the location of any fuel storage tanks; and

v) the location of stockpile areas.

(b) Elevation drawings of the premises before and after the excavation of materials.

(c) Reclamation plans acceptable to the director, upon review by the School and Institutional Trust Lands Administration.

(d) Copy of any required notification of the proposed operation to the Utah Division of Oil, Gas and Mining and all other government agencies.

(e) Copy of notification of the proposed operation to the owner of the surface estate, owners of the mineral estate, and to all other parties having any valid existing lease or permit upon the same lands.

2. Within 60 days of receiving such plan of operation the School and Institutional Trust Lands Administration shall review the plan and request any additional information necessary to complete the review. The permittee shall not commence any operations which may disturb the lands until the Trust Lands Administration has reviewed the plan of operation submitted by the permittee and has given its written approval to the permittee for the commencement of such operations.

3. Each permittee holding a current materials permit shall within 30 days of each annual anniversary date of the issuance of the permit, submit to the Trust Lands Administration a report of all activities under the permit for the previous year. Such report shall include a description of new excavations and surface disturbances, the type and quantity of the materials produced and sold or stockpiled, a description of mined land reclamation work completed or in progress, and any other information requested by the Trust Lands Administration to reasonably monitor the permittee's operations under the permit.

R850-130-1050. Conduct of Operations and Compliance with Rules.

All exploration, mining or other operations performed under any materials permit, shall be performed in a good and workman-like manner to ensure the conservation of the materials deposits, all other deposits of common and uncommon varieties of mineral resources, and other natural resources upon the lands. Each permittee of a materials permit shall at all times take whatever measures are necessary to be in compliance with all applicable rules of any federal or state agency pursuant to the activities and operations of the permittee or operator upon the lands.

R850-130-1100. Existing Lease and Permit Conversion.

Existing mineral leases, sand and gravel leases and materials permits issued prior to the effective date of these rules and in good standing on such date shall continue for the term specified therein and shall be subject to the conditions and provisions contained therein; provided, however, the agency may allow such lessees/permittees to convert such existing leases or permits to the new permit, providing such conversion will not conflict with the valid existing rights of any other mineral lessee or materials permittee or owner upon the same lands.

R850-130-1200. Materials Permit Assignments.

1. A materials permit may be assigned to any person, firm, association, or corporation qualified under R850-3-200, provided that the assignments are approved by the agency; and no assignment is effective until approval is given. Any assignment made without such approval is void.

2. An assignment shall take effect the day of the approval of the assignment. On the effective date of any assignment, the assignee is bound by the terms of the permit to the same extent as if such assignee were the original grantee, any conditions in the assignment to the contrary notwithstanding.

3. An assignment must be a sufficient legal instrument, properly executed and acknowledged, and should clearly set forth the easement number, and land involved, and the name and address of the assignee.

4. An assignment shall be executed according to agency procedures.

R850-130-1300. Reclamation Requirements.

Following the completion of excavations, the agency shall require reclamation measures to stabilize and restore natural surface conditions. Reclamation measures will generally consist of, but not necessarily be limited to, sloping and stabilization of highwalls, contouring of slopes at a ratio not greater than three feet horizontal for each one foot vertical, stabilization of access roads or the closure of access roads as determined by the agency, replacement of natural topsoils, revegetation using a seed mixture and rate of application as may be specified by the agency, removal of all trash and debris, and the prompt removal of all equipment, buildings, and structures owned by the permittee or permittee's agents.

R850-130-1400. Over-the-Counter Sales.

Materials permits for common varieties of sand, gravel, or cinders may be issued on an "over-the-counter" basis in areas which have been designated by the director as open for such sales. The director may designate areas as open for such sales using any of the following criteria:

1. An existing pit which has not been fully reclaimed. Reclamation requirements for all or portions of existing pits may be waived by the director for the purpose of "over-the-counter" sales when the pit meets the remaining criteria.

2. Dry stream beds or similar sites where sand or gravel has accumulated, and the extraction of material will cause no degradation.

R850-130-1500. Termination of Materials Permit.

Any materials permit issued by the Trust Lands Administration on trust land may be terminated in whole or in part for failure to comply with any term or condition of the permit or applicable laws or rules. Upon determination by the director that a materials permit is subject to termination pursuant to the terms of the permit or applicable laws or rules, the director shall issue an appropriate instrument terminating the permit.

R850-130-1600. Collection of Sales Tax.

The agency shall require all permittees not exempt pursuant to Section 59-12-104 to remit sales taxes with the "Production and Settlement Transmittal Form" submitted pursuant to R850-130-300(2)(c).

KEY: administrative procedures, materials handling, permits

November 1, 2002

Notice of Continuation October 2, 2002

53C-1-302(1)(a)(ii)

53C-2-201(1)(a)

53C-4-101(1)]

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Thomas B. Faddies at the above address, by phone at 801-538-5150, by FAX at 801-355-0922, or by Internet E-mail at tomfaddies@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.