DAR File No. 28484

School and Institutional Trust Lands, Administration

R850-24-300

Failure of Agency's Title

NOTICE OF PROPOSED RULE

DAR File No.: 28484
Filed: 02/01/2006, 08:08
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for deleting Section R850-24-300 of this rule is to allow the director the flexibility to make a determination, on a case-by-case basis, if a refund of monies paid by an applicant, lessee, or permittee should be granted upon discovery of title failure.

Summary of the rule or change:

Section R850-24-300 states precisely when refunds can be given in the event of title failure. The deletion of this section would allow the director to evaluate, on a case-by-case basis, the merits of the individual circumstances and make a determination if a refund should be granted because of title failure. The director is given broad authority by statute to manage the trust assets for the benefit of the beneficiaries, and the deletion of this section would enable the agency to better "act in good faith" when the circumstances warrant a refund.

State statutory or constitutional authorization for this rule:

Subsections 53C-1-302(1)(a)(kk), 53C-2-201(1)(a), and 53C-2-402(1)

Anticipated cost or savings to:

the state budget:

It is anticipated that there could be a loss of revenues to the agency by refunding certain monies currently prohibited by rule. However, since the refunded money comes from revenues paid to the agency at the time of application, or during the term of the lease or permit on land for which title failed, the agency is only forfeiting revenues recently received and not losing anything from the existing budget. At worst, the agency would "break even" with what has been received compared to what is refunded.

local governments:

It is not anticipated that there would be either a cost or savings to local governments except in the case where they are the applicant, lessee, or permittee of a mineral lease or materials permit on lands where the agency's title failed. In that event, they would be entitled to request a refund of monies they had recently paid in good faith for the lease or permit. At worst, they would not be granted a refund and at best, they would be granted a full refund of monies paid.

other persons:

It is anticipated that there could be anywhere from no savings to substantial savings to other persons, depending on the granting of their request for a refund and the amount of refund granted. These savings would be due to the greater flexibility given the director to grant refunds which are currently prohibited by rule.

Compliance costs for affected persons:

The deletion of this section does not bring about any anticipated compliance costs for affected persons beyond what already exists in rule. The requirement for a written request for refund would still exist, but the director would have the flexibility to consider all surrounding circumstances, currently prohibited by rule.

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

The current rule absolutely restricts the agency from refunding certain fees in the rare event of failure of the state's title. This can lead to inequitable consequences with applicants, lessees or permittees. The proposed amendment would allow for discretion in making refunds to applicants, lessees, or permittees when appropriate. In general, this is favorable to business partners of the agency. Kevin S. Carter, Director

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:

03/17/2006

This rule may become effective on:

03/20/2006

Authorized by:

Kevin S. Carter, Director

RULE TEXT

R850. School and Institutional Trust Lands, Administration.

R850-24. General Provisions: Mineral and Material Resources, Mineral Leases and Material Permits.

[R850-24-300. Failure of Agency's Title.

Should an application be rejected or an existing mineral lease or material permit be terminated due to failure of the agency's title, then only rental paid for the year in which title failure is discovered shall be refunded. All other rentals and fees paid on the application, mineral lease, or material permit shall be forfeited to the agency.]

KEY: mineral leases, material permits, mineral resources, lease operations

Date of Enactment or Last Substantive Amendment: [June 1, 2005]March 20, 2006

Authorizing, and Implemented or Interpreted Law: 53C-1-302(1)(a)(ii); 53C-2-201(1)(a); 53C-2-402(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.