Subd. 1. Rules for issuance of permits.

The department, with the approval of the executive council, shall adopt rules for the issuance of permits to prospect for gold, silver, copper, cobalt, coal, graphite, petroleum, sand, gravel, stone, natural gas, and all minerals, excepting iron ore, under the waters of any public lake or stream in the state, including that portion of boundary lakes and streams within the boundaries of the state, and for the issuance of leases for the mining and removal of such minerals upon such terms and conditions as such rules may prescribe.

Subd. 2. Scope of rules.

It shall be provided in such rules, among other things:

1. (1) No permit to prospect shall be issued for a period to exceed two years;
2. (2) Each permit shall authorize prospecting only within the area designated therein, which area shall not exceed the limitations upon size prescribed by the rules;
3. (3) At any time prior to the expiration of any such prospective permit, the holder thereof shall have the right to a lease giving the exclusive right to mine and remove the minerals specified in such permit within the area specified in the permit; provided, if the rules adopted hereunder shall permit or prescribe larger areas for permits than for leases, the permit holder shall designate the specific part of the area covered by the permit (not exceeding the limitations upon size of lease areas) upon which a lease is desired;
4. (4) Minimum rents and royalties, and the other terms, conditions, and covenants of all such leases shall be prescribed by such rules prior to the issuance of any permits hereunder; provided no rents or royalties shall be paid for muck and silt, or sand, or gravel removed under a lease or permit issued to any department of the state, any political subdivisions, the federal government, watershed district, drainage and conservancy district, drainage and flood control district, sanitary district of the state, or any port authority, if such materials are used for public purposes only, and are not resold to any private party; and provided further that no rents or royalties shall be charged for muck and silt, or sand, or gravel furnished to or taken by any department of the state or any political subdivision of the state, or any port authority, subsequent to July 1, 1958, and prior to the effective date of Laws 1961, chapter 336, if such materials were used for public purposes;
5. (5) No such lease shall be for a longer term than 50 years;
6. (6) All rents and royalties paid under such leases shall be paid to the state treasurer on the order of the commissioner of finance and shall be credited to the permanent school funds of the state;
7. (7) No minerals shall be removed under such permits until lease has been issued as provided by such rules, except that, with the approval of the commissioner, sufficient minerals or ore material may be removed for exploratory or assaying purposes;
8. (8) The grantee of such permit or lease, the assigns, representatives, and successors in interest of the grantee, may be required to secure riparian owners against damage from the use of such lease or permit.

Subd. 3. Issuance of permits.

The commissioner shall issue permits and leases in accordance with such rules.

Subd. 4. Recording of permits and leases.

All permits and leases, with the names and post office addresses of all parties having an interest, issued by the commissioner under authority of sections 93.08 to 93.12 and the rules adopted thereunder, before delivery, shall be duly recorded at length by the commissioner of finance in office record books to be provided and kept for that purpose, and a certificate of such record showing the date of record and the book and page thereof shall be endorsed on each such permit or lease.