1. 1. Preference Rights for Unleased Minerals--Any state mineral lessee who discovers any minerals on lands leased from the state of Utah which are not included within their lease shall have a preference right to a state mineral lease covering these unleased minerals, provided the unleased minerals at the time of discovery are not included within a mineral lease or mineral lease nomination of another party. The preference right lease is issued upon a lease form in current use by the state. The preference right lease is subject to the rental, royalty, and development requirements as provided in the lease form. The preference right shall not extend to any unleased minerals on state lands which have been withdrawn from mineral leasing. The preference right shall continue for a period of 60 days after the discovery of unleased minerals, provided the applicant notifies the Division within the ten days after the discovery and makes application to lease the unleased minerals within 60 days after the date of discovery.

2. 2. Lease Term Exclusion, Diligent Operations, Land-Blocking Lease Exclusion.

   1. (a) Definitions.

      1. (i) Lease Term is the contractual length granted to the lessee to perform mineral resource extraction.
      2. (ii) Operations is production that results in a net mineral royalty paid to the state or exploration with financial expenditure performed on or beneath the leased area or negotiation that results in an agreement with adjacent leaseholders to pool, communitize, or enter a joint operating agreement to develop the mineral estate as part of a larger extractive operation.
      3. (iii) Land-blocking is entering into a lease agreement with the Division with the intent to directly or indirectly prevent the development of the mineral estate, or reduce competition by securing mineral resource rights with no intent to develop the mineral estate, or speculative holding of acreage that is not actively being utilized.
   2. (b) If operations are being diligently pursued on the leased premises at the end of the primary term, including any valid extension of any lease with no production before the end of the primary term, the term of the lease may be extended for a term of length at the sole discretion of the Division. Upon written application by lessee and satisfactory showing of due diligence in prosecution of operations, at the sole discretion of the Division, an extension rider may be issued by the Division. Application for extension rider shall be filed by the lessee 30 days before expiration of the fixed term of any valid extension of the lease.
   3. (c) If operations are not being diligently pursued on the leased premises at the end of the primary term, and lessee does not enter negotiations with the Division at least 30 days before expiration of the primary term of any mineral lease, the lease expires under its own term.
   4. (d) Notwithstanding a valid mineral lease extension, or a negotiated extension with the Division in lieu of production, the Division requires that leased substances be produced in paying quantities by the end of the primary term. Diligent and continuous exploration, development, and production of the leased mineral resources shall be required. No land-blocking leases shall be allowed.

3. 3. Cultural, Paleontological, and Biological Resources--The Division may require the lessee to:

   1. (a) provide a cultural, paleontological or biological survey on lands encumbered by a mineral lease; and
   2. (b) be responsible for reasonable mitigative actions as specified by the Division. Surveys conducted in performance for another state or federal agency may be submitted to the Division when the survey is also required by the Division.
4. 4. Geologic Data--Lessee or operator shall keep a log of geologic data accumulated or acquired by lessee within the land area described in the lease. This log shall show the formations encountered and any other geologic information reasonably required by lessor and shall be available upon request by the Division. A copy of any logs, as well as any data related to exploration drill holes, shall be deposited with the Division upon termination of the lease.

5. 5. Assignments, Subleases and Overriding Royalties

   1. (a) Definitions

      1. (i) A total assignment is an assignment of undivided total interest.
      2. (ii) An interest assignment is an assignment of any working interest less than the undivided total, except overriding royalty interests.
      3. (iii) A partial assignment is an assignment of part of the lands in a lease and a segregation of the assigned lands into a separate lease.
   2. (b) Any lease may be assigned or subleased as to all or part of the acreage, to any person, firm, association, or corporation qualified to hold a state lease, provided, however, that all assignments and subleases are approved by the Division. No assignment or sublease is effective until approval is given. Any assignment or sublease made without approval is void.
   3. (c) Unless otherwise authorized by the Division, an assignment of a portion of a lease covering less than a quarter-quarter section, a surveyed lot, an assignment of a separate zone, or a separate deposit is not approved.
   4. (d) An assignment or sublease shall take effect the first day of the month following the approval of the assignment or sublease by the Division. The assignor or sublessor or surety, if any, shall continue to be responsible for performance of any obligations as if no assignment or sublease had been executed until the effective date of the assignment or sublease. After the effective date of any assignment of sublease, the assignee or sublessee is bound by the terms of the lease to the same extent as if the assignee or sublessee were the original lessee, any conditions in the assignment to the contrary notwithstanding.
   5. (e) A partial assignment of any lease shall segregate the assigned or retained portions thereof and, after the effective date, release or discharge the assignor from any obligation thereafter accruing with respect to the assigned lands. Segregated leases shall continue in full force and effect for the primary term of the original lease or as further extended pursuant to the terms of the lease.
   6. (f) An assignment or transfer of a lease, or interest, or of an overriding royalty must be a good and sufficient legal instrument, properly executed and acknowledged, and should clearly set forth the serial number of the lease, the land involved, and the name and address of the assignee, and the interest transferred. Any assignment, sublease, or overriding royalty shall be executed on the form provided by the Division.
   7. (g) An assignment must affect or concern only one lease or a portion thereof, except for good cause shown.

   8. (h) Any assignment which would create a cumulative overriding royalty in excess of the production royalty payable to the state as landowner of the state mineral lease will not be approved by the Division. Any agreement to create or any assignment creating overriding royalties or payments out of production removed or sold from the leased lands is subject to the Division, after notice and hearing, to require the proper parties thereto to suspend or modify the royalties or payments out of production in such a manner as may be reasonable when and during such period as they may constitute any undue economic burden upon the reasonable operations of this lease.

      1. (i) Assignment instructions are as follows:
      2. (ii) Prepare and execute the assignments in duplicate, complete with acknowledgments.
      3. (iii) Each copy of the assignment shall have attached thereto an acceptance of assignment executed by the assignee.
      4. (iv) All assignments forwarded to or deposited with the Division must be accompanied by the prescribed fee.
      5. (v) No assignment is effective until authorization by the Division on the assignment form provided by the Division.
6. 6. Lease Amendments--When the Division approves the amendment of existing mineral leases by substituting a new lease form for the existing forms, the amended lease will retain the effective date of the original lease.

7. 7. Events of Default---If a lessee violates any provision in a lease, the Division may cancel the mineral lease after 30 days' notice by registered or certified return receipt mail, unless the lessee:

   1. (a) Remedies the violation;
   2. (b) Rectifies the condition; or

   3. (c) Requests a hearing within:

      1. (i) the 30 days; or
      2. (ii) any extension of time the Division grants.

   4. (d) Examples of events of default may include:

      1. (i) Failure of lessee to provide an accounting of any payment, simultaneous with the payment, required under any agreement as it applies to any lease or royalty agreement, on the form approved by the Division.
      2. (ii) Failure of lessee to pay annual rent.
      3. (iii) Failure of lessee to pay a minimum royalty and show due diligence in operations outside of primary term.
      4. (iv) Failure to file with the Division, and obtain authorization from the Division, a name-change, assignment, or transfer of the lease before executing said action.

To affect the purposes of development of mineral resources owned by the state, the following provisions, terms and conditions shall apply to all mineral lessees or leases:

KEY: royalties, salt, primary term, administrative procedures

Date of Last Change: January 7, 2026

Notice of Continuation: March 2, 2022

Authorizing, and Implemented or Interpreted Law: 65A-6-2; 65A-6-4(3)