Section R652-20-1000 - Rentals and Royalties1. Rentals. 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) Rental rates are established in the Division fee schedule Rental due dates shall be on or before the annual anniversary date of the effective date of the lease, the effective date of the lease being the first day of the month following the date on which the lease is issued.(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 $20.(d) The division shall accept lease payments made by any party, but the acceptance of lease payments shall not be deemed to be a recognition of any interest of the payee in the lease.(e) Effective January 1, 2010, rental credits will be phased out over a four year period. For the calendar year beginning January 1, 2010, 75% of rentals due can be credited against royalties for those leases that allow rental credits. For the calendar year beginning January 1, 2011, 50% of rentals due can be credited against royalties for those leases that allow rental credits. For the calendar year beginning January 1, 2012, 25% of rentals can be credited against royalties for those leases that allow rental credits. Effective January 1, 2013, rental credits will no longer be allowed on any mineral leases.2. Royalty Provisions The following production royalty rates shall apply to all classified mineral leases, as listed in R652-20-200, issued on or after the effective date of the applicable adjusted royalty rate. Mineral leases entered into prior to the effective date of adjusted royalty rates shall retain the royalty rate as specified in the lease agreement.
(a) Royalty rates on substances under oil, gas, and hydrocarbon leases. TABLE |
Oil | 12-1/2% | - | Sulfur | 1 2 -1/2% |
Gas | 12-1/2% | - | Other hydrocarbon substances | 6-1/4%(1) |
(1) For leases that allow rental credits, the rental paid for the lease year shall be credited against production royalties as they accrue for that lease year, but not against advance or minimum royalties unless allowed by the mineral lease. (2) During the first ten years of production and increasing annually thereafter at the rate of 1% to a maximum of 16-2/3%. |
(b) Royalty rates on mineral commodities, coal, and solid hydrocarbons. TABLE | |
Coal | 8% | Phosphate | 5% |
Oil Shale (1) | 5% | Potash and Associated Minerals | 5% |
Asphaltic/Bituminous | | Gypsum | 5% |
Sands (2) | 7% | | |
Gilsonite | 10% | Clay | 5% |
Met. Minerals: | | Geothermal Resources | 10% |
Fissionable | 8% | Building Stone/Limestone | 5% |
Non-Fissionable | 4% | (except 2% for calcined lime Volcanic Materials | 5% |
Gemstone/Fossil(3) | 10% | Industrial sands | 5% |
Magnesium | 1-1/2% | | |
Salt (Sodium chloride) (4) $0.50/dry ton |
(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% per annum to maximum of 12-1/2%. (3) Requires payment of annual minimum royalty of $5 per acre. (4) Beginning January 1, 2001, the royalty rate per ton will be adjusted annually by the Producer Price Index for Industrial Commodities as provided under R652-20-1000(e) using 1997 as the base year. |
(c) 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.(d) Readjustment of salt royalties on royalty agreements negotiated before July 9, 1992. i) The division is obligated to receive full value for the public trust resources leased to persons for profit. This obligation includes obtaining a fair royalty for salt produced from the waters of Great Salt Lake. The division shall readjust the royalty rate for sodium chloride on all royalty agreements negotiated prior to July 9, 1992. The royalty rate will be readjusted in accordance with analysis done by the Utah Bureau of Economic and Business Research, Office of Energy and Resource Planning and division staff and with a rule change approved by the Board of State Lands and Forestry on July 9, 1992 to increase the royalty on salt from $0.10 per ton to a rate per ton approximately equivalent to three percent of gross value of dry salt. The division has determined this rate to be $0.50 per dry ton. The royalty rate shall be phased in as provided in Subsections (ii) and (iii). ii) Effective January 1, 1997, the royalty rate for sodium chloride shall be $0.20 per dry ton. Effective January 1, 1998 and on each January 1 thereafter, the royalty rate for sodium chloride shall be increased by the lesser of $0.10 per dry ton or $0.10 per dry ton times the percent of salt in brine by weight at the point of intake for each lessee divided by the percent of salt by weight derived from samples at sampling point LVG4 as measured by the Utah Geological Survey for the current year. The method for calculating the percent salt in brine from Utah Geological Survey and company data shall be determined by the division, but shall include a weighted average of samples taken at low and high water and of samples taken at different depths at the sampling point. The point of sampling for each producer shall be determined by the division after considering factors including the location of the intake canal, point of diversion for water rights, and placement of intake pumps. iii) The annual adjustment under Subsection(ii) shall continue until the royalty rate for a lessee is $0.50 per dry ton or an amount per ton as determined under Subsection (e), whichever is greater, at which time subsequent annual adjustments shall be determined in accordance with Subsection (e).(e) 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 current year divided by the Producer Price Index for Industrial Commodities for 1997.Utah Admin. Code R652-20-1000