R850.  School and Institutional Trust Lands, Administration.
R850-27.  Geothermal Steam.
R850-27-100.  Definitions.
	1.  In addition to those applicable definitions in R850-24-175, the following definitions shall apply to this section:
	(a)  Lease:  a geothermal steam lease.
	(b)  Lessee:  a person or entity holding a record title interest in a geothermal steam lease.
	(c)  Shut-In Geothermal Well:  a geothermal well capable of producing in paying quantities, but which cannot be marketed at a reasonable price due to existing market conditions.

R850-27-200.  Geothermal Steam Lease Issuance.
	1.  The agency shall issue leases competitively, non-competitively or enter into joint ventures or other business arrangements for the leasing of geothermal steam resources only on lands where the agency owns both the surface and mineral rights.
	2.  A lease shall not be issued for a parcel less than a quarter-quarter section or surveyed lot unless approved by the director.
	3.  Leases shall be limited to no more than 640 acres or one section unless approved by the director.
	4.  Any lease may be terminated by the agency in whole or part upon lessee's failure to comply with any term or condition of the lease or applicable laws and rules.

R850-27-300.  Geothermal Steam Lease Provisions.
	1.  Rentals and Rental Credits.
	(a)  The director shall establish the rental rate, not less than $1.00 per acre per year, at the time the lease is offered.  The minimum annual rental on any lease shall not be less than $40.
	(b)  Rental payments shall be paid in advance each year on or before the lease anniversary date, unless otherwise stated in the lease.
	(c)  The rental payment for a lease year shall be credited against production royalties only as they accrue for that lease year, unless otherwise provided for in the lease.
	(d)  Any overpayment of advance rental occurring from the lease applicant's incorrect listing of acreage of lands described in the application shall be credited toward the applicant's rental account.
	(e)  The agency may accept rental payments made by any party, provided however, that the acceptance of such payment(s) shall not be deemed to be recognition of any interest of the payee in the lease.
	2.  Royalty Rate.
	(a)  The director shall establish the production royalty rate, not to be less than 10%, unless otherwise established by the director, at the time the lease is offered.
	3.  Primary Geothermal Steam Lease Term.
	(a)  The director shall establish the lease primary term, not to exceed ten (10) years, at the time the lease is offered.
	4.  Continuance of a Geothermal Steam Lease After Expiration of Primary Term.
	(a)  A lease shall be continued after the primary term has expired so long as:
	(i)  the leased substance is being produced in paying quantities from the leased premises, from lands pooled, communitized, or unitized with the leased premises or from an approved drilling unit with respect to the leased premises; or
	(b)  the agency determines that the lessee:
	(i)  is engaged in operations, exploration, or development which are diligent and are reasonably calculated to advance development or production of the leased substance from the leased premises, from lands pooled, communitized, or unitized with the leased premises, or lands constituting an approved drilling unit with respect to the leased premises (diligent operations may include cessation of operations not in excess of 90 days in duration), and
	(ii)  pays the annual minimum royalty set forth in the lease.
	5.  Readjustment.
	All geothermal leases shall contain a provision setting forth the agency's right to readjust the terms and provisions of the lease on a periodic basis, and such adjustment shall be made in accordance with R850-24-1000.
	6.  Unitization of Geothermal Leases.
	(a)  Lessees, upon prior written authorization of the director, may commit leased trust lands to unit, cooperative, or other plans of development with other lands.
	(b)  The director may, with the consent of the lessee, modify any term of a lease for lands that are committed to a unit, cooperative, or other plan of development.
	(c)  Production allocated to leased trust 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 trust lands.
	(d)  The term of all leases included in any cooperative or unit plan of geothermal steam development or operation in which the agency has joined, or shall hereafter join, shall be extended automatically for the term of the unit or cooperative agreement.  Rentals on leases so extended shall be at the rate specified in the lease, subject to change in rates at the discretion of the director or as may be prescribed in the terms of the lease.
	(e)  Any lease eliminated from any cooperative or unit plan of development or operation, or any such lease which is in effect at the termination of a cooperative or unit plan of development or operation, unless relinquished, shall continue in effect for the fixed term of the lease, or for two years after its elimination from the plan or agreement or the termination thereof, whichever is longer, and so long thereafter as the leased substances are produced in paying quantities.
	(f)  Rentals under such leases shall continue at the rate specified in the lease.
	7.  Shut-In Geothermal Wells Considered to be Producing in Paying Quantities
	(a)  The director shall establish the minimum rental, not to be less than $1.00 per acre per year nor more than twice the annual lease rental provided for in the lease, for a shut-in geothermal well.
	(b)  The director shall establish the minimum royalty, to be not less than 10% nor more than twice the annual lease rental provided for in the lease, for a shut-in geothermal well.
	(c)  The terms of the lease shall provide the basis upon which the minimum rental or minimum royalty is to be paid by the lessee for a shut-in geothermal well.
	(d)  The director may, at any time, require written verification from the lessee that a geothermal well qualifies as a shut-in geothermal well.
	8.  Other Lease Provisions.
	The agency may require, in addition to the lease provisions required by these rules, any other provisions to be included in the lease as it deems necessary.

R850-27-400.  Existing Geothermal Steam Lease Conversion.
	Existing leases issued prior to the effective date of these rules and in good standing on such date shall continue for the term specified in the lease and shall be subject to the terms and provisions contained in the lease.  The agency may, however, allow such lessees to convert such existing leases to the new lease, providing such conversion will not conflict with the valid existing rights of any other lessee or owner upon the same lands.

R850-27-500.  Geothermal Steam Lease Application Process.
	1.  Applications for leases, except in the case of competitive bid filing, are received for filing in the office of the agency during office hours.  Except as provided, all the applications received by personal delivery over the counter, shall be immediately stamped with the exact date and time of filing.  All applications presented for filing at the opening of the office for business on any business day shall be stamped received as of 8 a.m. on that day.  All applications received in the first delivery of the U.S. Mail of each business day shall be stamped received as of 8 a.m. on that day.  The time indicated on the time stamp is deemed the time of filing unless the agency determines that the application is materially deficient in any particular or particulars.  If an application is determined to be deficient, it will be returned to the applicant.
	2.  Except in cases of competitive bid filing, if two or more applications for the same lease contain identical bids and bear a time stamp showing the applications were filed at the same time, the agency will award the lease by public drawing or oral bidding.
	3.  Competitive Bid Filing.
	(a)  The minimum acceptable bid for competitive bid filing of applications for a lease shall be at least equal to the rental rate for the first year of the lease.
	(b)  Notices of the offering of lands for competitive bid filing will run for a period of not less than fifteen (15) consecutive days after the notice is posted in the agency's office.
	(c)  Where applicants wish to submit applications for competitive bid, such applications shall be submitted in separately sealed envelopes and marked for competitive bid filing.
	4.  If an application or any part thereof is rejected, any money tendered for rental for the rejected portion shall be refunded or credited.
	5.  Application Withdrawal.
	(a)  Should an applicant desire to withdraw his application, the applicant must submit a written request to the agency.  If the request is received prior to the time the agency approves the application, all money tendered by the applicant, except the filing fee, shall be refunded.  If the request is received after approval of the application, then, unless the applicant accepts the offered lease, all money tendered is forfeited to the agency, unless otherwise approved by the director, for good cause shown.
	(b)  Applicants desiring to withdraw an application which has been filed under the competitive bid filing rules above, must submit a written request to the agency.  If the request is received before sealed bids for rental have been opened, all money tendered by the applicant, except the filing fee, shall be refunded.  If the request is received after sealed bids for rental have been opened, and if the applicant is awarded the bid, then unless the applicant accepts the offered lease, all money tendered shall be forfeited to the agency, unless otherwise approved by the director for good cause shown.

R850-27-600.  Operations Notification and Plan.
	1.  At least 60 days prior to the commencement of any surface disturbance, drilling, or other operations, lessee shall submit a plan of operations to the agency in accordance with the terms and conditions required by the agency, as set forth in R850-24-700.  Under no circumstance shall the lessee commence operations without a plan of operation approved by the agency
	2.  The agency shall require the lessee to meet agency reclamation requirements as set forth in R850-24-700.

KEY:  geothermal steam, lease provisions, administrative procedures, plan of operations
Date of Enactment or Last Substantive Amendment:  April 1, 2005
Notice of Continuation:  April 1, 2015
Authorizing, and Implemented or Interpreted Law:  53C-1-302(1)(a)(ii); 53C-2-201(1)(a); 53C-2-402(1)