A.R.S. tit. 27 | Title 27 — Minerals, Oil and Gas

Chapter 1 State Agencies and Officers

Article 1 Arizona Geological Survey

§ 27-101 Definitions

In this article, unless the context otherwise requires:

"Aggregate" means cinder, crushed rock or stone, decomposed granite, gravel, pumice, pumicite and sand.
"Mineral resources" means all metallic, nonmetallic and energy resources, including aggregate, coal, oil, natural gas, geothermal resources, carbon dioxide and helium.
"Minerals" includes metals and metallic and nonmetallic minerals, except oil and gas.

§ 27-102 Arizona geological survey; state geologist; powers

A. The Arizona geological survey is established within the university of Arizona with offices located in proximity to the university of Arizona in Tucson. The state geologist shall administer the Arizona geological survey and shall serve at the pleasure of the Arizona board of regents. The state geologist shall be a graduate of an accredited institution and either registered as a geologist by the state board of technical registration or a trained geologist as defined in section 32-144 and shall be otherwise qualified by education and experience to direct the research and information functions of the Arizona geological survey.

B. The state geologist may:

Engage the services of faculty members or students, and shall have reasonable access to the data and other resources, of the university of Arizona or any other state university in this state to conduct or supervise research, experimentation or other related work of the Arizona geological survey.
Organize field expeditions to perform work for the Arizona geological survey using university students who are sufficiently advanced in their study of geology to be able to perform satisfactory work.
Establish and appoint an advisory board consisting of independent practicing geologists, university or college faculty, mining geologists and others who use and rely on data, information and other services of the Arizona geological survey.
Engage volunteer staff as necessary.

C. The expenses of the Arizona geological survey shall be paid by annual appropriation from the state general fund and as otherwise provided by this article.

§ 27-103 Objectives of Arizona geological survey

The objectives of the Arizona geological survey are to:

Serve as a primary source of geologic information in this state to enhance public understanding of the state's geologic character, geologic hazards and limitations and mining and mineral resources.
Inform, advise and assist the public in matters concerning the geological processes, materials and landscapes and the development and use of the mineral resources of this state.
Encourage the wise use of the lands and mineral resources of this state toward its development.
Provide technical advice and assistance in geology to other state and local governmental agencies engaged in projects in which the geologic setting, character or mineral resources of the state are involved.
Provide technical advice and assistance in geology to industry toward the wise development and use of the mineral and land resources of this state.

§ 27-104 Qualifications of employees; private activities relating to geological services prohibited

Qualifications of employees working with the Arizona geological survey shall be prescribed by the Arizona board of regents. Neither the state geologist nor any employee working with the Arizona geological survey shall:

Acquire a pecuniary interest in any mineral resources property in the state.
Act as broker or agent for any purchaser, owner or agent of mineral resources property, equipment or products.
Accept any commission or compensation for services rendered in connection with industry in this state.
Make an investigation or report on an individual Arizona deposit of mineral resources or metallurgical process other than pursuant to such employee's official duties.

§ 27-105 Immunity

Any claim or action against the Arizona geological survey, the state geologist or any other officer, employee or volunteer working with the geological survey in the person's official capacity must be brought against the state of Arizona and not against the geological survey, state geologist or officer, employee or volunteer individually.

§ 27-106 Duties of Arizona geological survey; mining, mineral and natural resources educational museum

A. Under the operation, management and authority of the university of Arizona, the Arizona geological survey shall:

Map and describe the bedrock and related geologic materials and processes in this state, as follows:

(a) Prepare geologic maps that show the distribution of rock formations and surficial materials at the surface and in the subsurface.

(b) Describe the character of rock and surficial materials, including their age, origin and physical and chemical properties.

(d) Map and characterize energy and mineral resources and identify areas that may have potential for future discoveries.

Provide objective, scientific information about the geologic character of this state as follows:

(a) Provide timely, courteous responses to requests for information, advice and assistance from the public.

(b) Maintain a computerized bibliographic database of maps and reports on the geology of this state that is accessible to the public.

(c) Maintain an internet website that includes information about the Arizona geological survey, products and services available and the geologic character of this state.

(d) Give lectures and talks, conduct workshops, lead field trips and provide information and assistance to public, educational and professional groups.

(e) Publish reports and other information, written in nontechnical terms, to inform those who are not trained in geology about the geologic character of this state.

Prepare all data files of known areas of earth fissures, produce maps of those areas with overlays showing affected counties, cities, towns, highways and streets and transmit the maps in printed and electronic format to the state real estate department for the purposes of providing public access to the earth fissure maps pursuant to this paragraph and section 32-2117. The Arizona geological survey shall provide any map to any member of the public in printed or electronic format on request. The following notice shall be displayed below each map:

Notice

The state of Arizona has made a reasonable effort to ensure the accuracy of this map when it was produced, but errors may be present and the state of Arizona does not guarantee its accuracy. The map supplements, and is not a substitute for, a professional inspection of property for defects and conditions.

Operate and maintain a central repository and a computerized database for reports, books, maps and other publications regarding the geology, mining and mineral resources and associated technologies. Such repository and database shall be available for the use of the public and may be located at or connected with the university of Arizona or another state university or agency of this state. All databases and other archival materials shall be maintained in a secure and retrievable format and at a location prescribed by the state geologist to protect and preserve information from damage or destruction.
Utilize the services and expertise of the universities of this state at the discretion of the state geologist.
Cooperate with local, county, state and federal agencies.
Provide quality mining data, evaluation and assistance relating to mining and mineral development to the legislature, federal, state and local governmental agencies and the public.
Serve as a source of mining information and data necessary or advisable to attain its objectives. The Arizona board of regents may establish reasonable fees for publications and other services of the Arizona geological survey.
Cooperate with the corporation commission in its investigations and administration of laws relating to the sale of mining securities.
Keep an annually updated database relating to existing mines in this state that would allow municipalities and counties to identify areas with mineral and aggregate mines for planning purposes required under sections 9-461.05 and 11-804.

B. In coordination with the mining, mineral and natural resources educational museum advisory council established by section 27-111, the university of Arizona shall operate and maintain a mining, mineral and natural resources educational museum as the state depository for collecting, cataloging and displaying mining, mineral and natural resources artifacts and specimens. In connection with the mining, mineral and natural resources educational museum, the university of Arizona may:

Promote the recognition and celebration of the historical, cultural, economic and social contributions to this state made by the mining, mineral and natural resources industries in this state, including the livestock and agricultural industries.
Apply for and accept grants, gifts, bequests of legacies of real or personal property, donations, including donations of time, services and materials, or any other contribution, financial or otherwise, for use in accordance with the direction of the donor or, in the absence of an express direction, as prescribed by the university of Arizona. Monies received pursuant to this paragraph shall be deposited in a separate mining, mineral and natural resources educational museum account in the geological survey fund established by section 27-107 to be used exclusively for the maintenance, restoration and operations of the mining, mineral and natural resources educational museum.
Accept from the federal or state government, any local government or any of their agencies restricted and unrestricted monies made available to this state for the mining, mineral and natural resources educational museum.
Establish and collect entrance fees to the mining, mineral and natural resources educational museum.
Operate a retail gift shop, including the acquisition, purchase and resale of mining, mineral and natural resources specimens and related items.
Employ a curator for the mining, mineral and natural resources educational museum who possesses knowledge or experience in natural resources and operating a museum.
Operate educational programming for the mining, mineral and natural resources educational museum.
Accept the services of volunteers and provide oversight for their activities.
Pay the necessary maintenance and operation expenses of the mining, mineral and natural resources educational museum.

C. The university of Arizona:

Under the advisement of the mining, mineral and natural resources educational museum advisory council, shall adopt a collections management policy that is consistent with national standards and best practices for museums in the United States established by a national association of museums.
Shall maintain the items, artifacts and other inventory received for display or storage, including equipment and outdoor displays.
In coordination with the mining, mineral and natural resources educational museum advisory council and pursuant to the standards and best practices adopted pursuant to paragraph 1 of this subsection, may sell or otherwise dispose of materials received for the mining, mineral and natural resources educational museum.
Shall operate, manage and maintain the mining, mineral and natural resources educational museum at the location where it is housed on August 9, 2017 consistent with this article.

§ 27-107 Powers and duties; fund

A. The university of Arizona shall:

Establish administrative functions and offices as necessary to achieve the purposes of this article.
Direct the work of the Arizona geological survey and the formulation of its program and policies.
Adopt rules as necessary to carry out the purposes of this article.

B. The state geologist or the geologist's designee, at any time, may enter the property and inspect wells drilled for oil, gas, geothermal resources, helium or carbon dioxide and shall control property, machinery and appliances necessary to gauge the wells.

C. The geological survey fund is established for the purposes provided in this article consisting of appropriations and all monies received pursuant to this article. Monies shall be separately accounted for and used as a continuing appropriation by the university of Arizona for the purposes provided from each source. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations. The fund includes a separate mining, mineral and natural resources educational museum account consisting of monies received pursuant to section 27-106, subsection B to be used exclusively for the maintenance and operations of the mining, mineral and natural resources educational museum.

§ 27-108 Publications; deposit

A. The Arizona board of regents, through the state geologist, may publish, in the form of bulletins, circulars, maps and other related series, or otherwise make available to state agencies, government officials, industry and the public the results of geological and related research and investigation undertaken by the Arizona geological survey. A publication shall not include any confidential information pursuant to section 27-522. The state geologist shall consult with the operator and obtain the approval of the scope of work for the publication before the state geologist releases any proposed publication pertaining to a project regulated by the oil and gas conservation commission.

B. The publications of the Arizona geological survey shall be printed as the university of Arizona determines and distributed or sold as the interests of this state or science demand. Money obtained by the sale of publications shall be deposited in the geological survey fund established by section 27-107 for printing further publications.

C. All materials collected, after having served the purpose of the Arizona geological survey, shall be made available to the universities, community colleges and high schools of this state.

§ 27-110 Trade secrets; confidentiality; definition

A. The Arizona board of regents may receive and accept geologic, engineering and feasibility studies and other economic and technical information that is considered a trade secret in the mineral industry.

B. Trade secret information obtained under this section is confidential and not subject to public disclosure.

C. For the purposes of this section, "trade secret" means information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasi-judicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosing the information is likely to cause substantial harm to the person's competitive position.

§ 27-111 Mining, mineral and natural resources educational museum advisory council; membership; duties; terms; compensation

A. The mining, mineral and natural resources educational museum advisory council is established consisting of the following members who, except for the members designated pursuant to paragraphs 1, 9, 10 and 11 of this subsection, are appointed by the governor:

The state geologist or the state geologist's designee.
One member representing the livestock industry.
Two members representing the mining industry.
One member representing the agriculture industry.
One member representing the tourism industry.
One member representing the timber industry.
One member who is knowledgeable in gems and minerals.
Two members representing the public.
One member of the house of representatives who is appointed by the speaker of the house of representatives.
One member of the senate who is appointed by the president of the senate.
One member who is knowledgeable in museum operations and management who is appointed by the president of the university of Arizona.

B. The advisory council shall:

Select a chairperson and vice-chairperson from among its members.
Hold regular meetings and additional meetings at the call of the chairperson or a majority of its members.
Provide advice to the university of Arizona regarding the mining, mineral and natural resources educational museum and assist in promoting the mission of the museum. The university of Arizona shall accept the recommendations of the advisory council if the state geologist finds them to be practicable and in the best interest of the mining, mineral and natural resources educational museum.
Establish a subcommittee to provide assistance and advice in the areas of educational programming, the hiring and retention of a curator and oversight of mineral collections. The advisory council may establish subcommittees to act in an advisory capacity on other matters relevant to the mining, mineral and natural resources educational museum and the advisory council's duties.

C. The initial members appointed pursuant to subsection A, paragraphs 2, 3, 4, 5, 6 and 7 of this section shall assign themselves by lot to three, four and five year terms of office. All subsequent members serve four-year terms of office. A member may continue to serve until the member's successor is appointed and assumes office.

D. Members of the advisory council are not eligible to receive compensation but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2. The advisory council is a public body for purposes of title 38, chapter 3, article 3.1.

§ 27-112 Mapping; inventory; aggregate resources

A. The Arizona geological survey shall establish a map and inventory of all known areas that contain aggregate resources and all existing aggregate mining facilities in this state according to county.

B. On request of the state mine inspector, the state geologist shall update the maps and inventories of the aggregate resources of this state and include areas of aggregate resources discovered since the previous publication.

Article 2 State Mine Inspector

§ 27-121 Qualifications of state mine inspector; affidavit; continuing education; deputy inspectors; salary; seal; immunity

A. The state mine inspector shall be a resident of this state at least two years before election, be at least thirty years of age and have been practically engaged in and acquainted with mines and mining in this state. The state mine inspector shall have at least eight years' experience, four or more of which have been in this state, consisting of direct operational or management experience with mining operations at a mine and shall have knowledge of the state and federal regulations involving the health and safety of mining employees.

B. Any person desiring to become a candidate for the office of state mine inspector shall sign an affidavit listing and attesting to the person's fulfillment of the qualifications of this section and shall file the affidavit with the nomination paper prescribed by section 16-311, 16-312 or 16-341.

C. For terms of office beginning in 2023 and after, the state mine inspector shall annually complete continuing education on state and federal mine safety and health regulations.

D. A person may not be the state mine inspector or a deputy inspector while serving as an employee, director or officer of a mining, milling or smelting company.

E. The state mine inspector and each deputy inspector shall devote full time to official duties.

F. The state mine inspector shall receive an annual salary pursuant to section 41-1904 and necessary traveling expenses when traveling in discharge of official duties.

G. The state mine inspector shall have a seal bearing the words "Mine Inspector, State of Arizona", which shall be affixed to official documents.

H. Any claim or action against the state mine inspector, deputy inspectors or the inspector's agents or employees in their official capacity as described in this title shall be brought against the state of Arizona and not against the state mine inspector, deputy inspector, agent or employee individually.

§ 27-122 Deputy inspectors

Subject to title 41, chapter 4, article 4, the state mine inspector may appoint and assign such deputy inspectors to perform the duties of the state mine inspector as prescribed by law. All deputies shall receive compensation as determined pursuant to section 38-611.

§ 27-123 Education and training fees

A. The state mine inspector may adopt and collect education and training fees for the purpose of training miners in this state.

B. The state mine inspector shall credit monies received for education and training purposes to the federal education and training fund, designated as the Arizona state mine inspector's account, to be used according to the federal state grant rules, as appropriate.

§ 27-124 Mine inspections required; powers of inspector

A. The mine inspector shall inspect, at least once every three months, every active underground mine in the state employing fifty or more persons, and at least once each year, every other mine. The inspector shall inspect the operation, conditions, safety appliances, machinery, equipment, sanitation and ventilation, the means of ingress and egress, the means taken to protect the lives, health and safety of the miners, the cause of accidents and deaths occurring at the mine, and the means taken to comply with the provisions of this title.

B. The mine inspector may enter and inspect any abandoned or inactive mine to determine whether any dangerous condition exists which may affect the health and safety of the general public.

C. The inspector at any time may enter, examine and inspect any mine or part of any mine and inspect any connected plant or equipment or any part of the workings of the mine.

D. The mine operator or designated representative shall accompany the inspector, without unreasonable delay, while conducting inspections.

§ 27-125 Inspection report

After every inspection the inspector shall fill out and leave with the operator a preliminary inspection report that lists the inspection party, the part of the operation inspected, the type of inspection and every violation of the state mining code observed during the inspection, but nothing contained in or omitted from the entry shall limit or affect the duty and obligation of the owner or operator of the property under this title. Within a reasonable length of time a typed copy of the inspection report shall be sent to the operator which shall be filed at the office of the operations. The report shall be available at all reasonable times.

§ 27-126 Annual report to governor

A. The mine inspector on March 31 each year shall make and file with the governor a statistical summary and report of the work during the year ending December 31. The report shall contain a statement showing the number of persons employed in each mine, and, separately, the number of persons employed above ground and under ground, the number and nature of fatal and serious accidents occurring in each mine, the number of inspections made, complaints filed, inquests attended, mines or mine workings ordered to be vacated, violations found, and other information deemed important, together with necessary or desirable recommendations.

B. Copies of the report shall be published and distributed at the expense of the state.

§ 27-127 Restrictions on divulging information by inspectors and employees; dismissal for violation

A. No inspector, deputy or employee shall make a report with respect to a mining property or prospect, except an official report to his superior officer or to the governor, nor shall he make public or reveal to any other person knowledge or information obtained by him in the exercise of his official duties concerning ore, ore bodies or values, of any mine or part thereof.

B. An inspector or deputy violating this section shall be dismissed from office.

§ 27-128 Inspection of mines; violation; classification

A. The state mine inspector or a deputy inspector shall inspect each mine in the state as frequently as necessary to determine whether any hazardous dust condition exists therein. There shall be a prompt inspection of any mine in which he or a deputy inspector has reason to believe a hazardous dust condition exists or with respect to which complaint of a hazardous dust condition has been made as provided in section 27-308. The mine inspector or a deputy inspector shall make recommendations to mine operators as to methods of reducing dust and whenever he finds a hazardous dust condition he shall notify the mine operator thereof. The notice shall be in writing and shall specify a reasonable time within which the dust condition must be remedied. The mine operator shall install within the time specified, and thereafter maintain and operate, dust prevention practices which remedy the hazardous dust condition.

B. If the dust prevention practices are not installed within the time specified in the notice or are not thereafter maintained, the state mine inspector or a deputy inspector shall forthwith order cessation of operations, except for necessary maintenance and repair work, in all parts of the mine in which hazardous dust conditions exist or are produced by operations until the condition is remedied. Written notice of the order shall be given the mine operator and any mine operator who thereafter knowingly fails to obey the order is guilty of a class 2 misdemeanor.

§ 27-129 Locating abandoned mines; public education; donor immunity

A. Subject to legislative appropriation, the state mine inspector shall establish a program to locate, inventory, classify and eliminate public safety hazards at abandoned mines as defined in section 27-301. The state mine inspector shall spend state appropriated monies to locate, inventory, classify and eliminate public safety hazards at abandoned mines on state land first and thereafter any public safety hazards at abandoned mines on land not owned by this state.

B. Using reasonable efforts, the state mine inspector shall attempt to notify in writing the owner, or other responsible party, of an abandoned mine at which a public safety hazard exists of the requirements of section 27-318 with respect to abandoned mines.

C. The state mine inspector may establish public education programs to recognize and avoid public safety hazards at abandoned mine sites.

D. To accomplish the purposes of this section, the state mine inspector may accept monies for deposit in the state general fund received from any source, including restricted or unrestricted federal funds, gifts and contributions from other governmental agencies, individuals, corporations or other organizations. The state shall separately account for monies that are received pursuant to this subsection and that are deposited in the state general fund.

E. The state mine inspector may enter into intergovernmental agreements with Indian tribes in the state to extend the abandoned mine program onto tribal lands.

F. The state mine inspector may accept in-kind donations of material, equipment or services to eliminate public safety hazards at an abandoned mine from any person, public entity or other legal entity.

G. A person, public entity or other legal entity who makes donations pursuant to this section or section 27-131 shall not be liable for damages in any civil action for any injury or death related to the elimination of public safety hazards at an abandoned mine unless the injury or death is a direct result of the intentional misconduct or gross negligence of the donor.

§ 27-131 Abandoned mines safety fund; annual report

A. Notwithstanding section 27-129, subsection D, the abandoned mines safety fund is established consisting of:

Gifts, grants and contributions specifically designated for the fund.
Monies that may be appropriated by the legislature to the fund to match the gifts, grants and contributions based on the preceding year's expenditure report required under subsection D of this section.

B. The state mine inspector shall administer the fund. Monies in the fund are exempt from lapsing pursuant to section 35-190.

C. Monies in the fund are continuously appropriated to the inspector to ensure public safety at abandoned mines on land owned by this state as provided by section 27-129. The inspector shall use monies in the fund to pay contractors for actual abatement costs to fill, fence or plug shafts and adits and not to pay administrative salaries and other costs. The inspector shall consult with the state land commissioner to identify and prioritize the abandoned mine sites on state lands to be considered for abatement.

D. Each year the inspector shall submit an annual report to the joint legislative budget committee on or before December 1 concerning the expenditure of monies from the fund and contributions to the fund during the preceding fiscal year. The report shall itemize each expense paid from the fund and shall describe the actions taken to ensure public safety.

Chapter 2 Mining Rights in Land

Article 1 Mining Locations

§ 27-201 Location of mining claim upon discovery of mineral in place

Upon discovery of mineral in place on the public domain of the United States the mineral may be located as a lode mining claim by the discoverer for himself, or for himself and others, or for others.

§ 27-202 Method of locating a lode claim; monument; location notice; amendments

A. Location of a lode claim shall be made by erecting on the surface on the centerline within the boundaries of the claim a conspicuous monument of stones not less than three feet in height, or an upright post securely fixed and projecting at least four feet above the ground, in or on which there shall be posted a location notice, signed by the name of the locator. The location notice shall contain:

The name of the claim located.
The name and address of the locator.
The date of the location.
The length and width of the claim in feet, and the distance in feet from the location monument to each end of the claim.
The general course of the claim.
The locality of the claim with reference to some natural object or permanent monument whereby the claim can be identified and, if known to the locator, the identification of the section, township and range in which the notice of location of the claim is posted.

B. Until the requirements of subsection A are complied with, no right of location is acquired.

C. The notice may be amended at any time and the monument changed to correspond with the amended location, but no change shall be made which will interfere with the rights of others. If such amendment changes the exterior boundaries of the claim, a new or amended map, plat or sketch shall be recorded pursuant to section 27-203 showing such change.

§ 27-203 Completing lode, placer or millsite locations; recording location notice; monumenting; map, plat or sketch requirements; abandonment of claims; recorder duties and fees

A. The locator of a lode, placer or millsite claim shall:

Cause to be recorded in the office of the county recorder of the county in which the claim is located an executed copy of the location notice to which notice shall be attached a map, plat or sketch of the claim, within ninety days from the time of the location. If the posted notice of location does not contain the section, township and range in which the notice is posted such information shall be added to the notice prior to recording pursuant to this section if the land has been surveyed. If the land has not been surveyed, the locator shall identify to the best of his ability the projected, protracted or extended section, township and range in which the notice of location of the claim is posted.
Monument the claim on the ground within ninety days from the time of the location so that its boundaries can be readily traced.

B. The map, plat or sketch required by subsection A shall be:

In legible form and not more than eight and one-half inches by fourteen inches.
On a scale of one inch equals not more than two thousand feet.
Based upon the performance of a survey performed commensurate with the abilities of the locator. It shall set forth the boundaries and position of the claim with such accuracy as would permit a reasonably knowledgeable person to find and identify the claim on the ground. The locator may show contiguous claims on the map, plat or sketch if the claim being located is clearly identified. Nothing contained in this section shall require a locator to employ a professional surveyor or engineer for the preparation of the map, plat or sketch required by this section.

C. The plat or map of any claim shall contain the following information:

The name of the claim.
Whether the claim is a lode, placer or millsite claim.
The locality of the claim with reference to the section, township and range in which the claim is located with a course and distance tie from a corner of the claim or contiguous group of claims to a monument of the public land survey if the land has been surveyed. If the land has not been surveyed, a corner of the claim or claim group shall be tied by course and distance to an established survey monument of a United States government agency or United States mineral monument. If no such monument can be found through the exercise of reasonable diligence, the map shall show the course and distance from one corner of the claim or claim group to some prominent natural objects or other permanent monuments described on such map.
The scale of the map.
The county in which the claim is situated.
A north arrow.
The type of corner and location monuments used.
Bearing and distance between corners.

D. If the claim is a placer or millsite claim with exterior limits conforming to legal subdivisions of the public survey, the map, plat or sketch shall give the legal description of the claim instead of the requirements of paragraphs 3 and 8 of subsection C.

E. Failure to do all the things within the times and at the places specified in subsections A, B, C and D shall be an abandonment of the claim, and all right and claim of the locator shall be forfeited.

F. The county recorder shall keep proper indices of mine location notices and maps by the cadastral subdivisions of the United States bureau of land management or general land office. The county recorder shall receive the fees prescribed in section 11-475 for recording a mine location notice and map, plat or sketch appended to such notice.

§ 27-204 Monumenting lode claims

The boundaries of a lode claim shall be monumented by six substantial posts projecting at least four feet above the surface of the ground, or by substantial stone monuments at least three feet high, one at each corner of the claim and one at the center of each end line of a lode claim. Substantial posts may be of any material as may be readily distinguished as monuments and shall be not less than one and one-half inches in cross section. Each monument erected by the locator shall be marked to identify the corner or end center of the claim or claims for which it was erected.

§ 27-205 Locating and monumenting placer and millsite claims

The locator of a placer mining or millsite claim shall locate the claim in the same manner as prescribed for a lode claim, except that:

The location notice shall be posted on a separate monument at one corner of the claim within the boundaries of the claim.
Only the corners or angle points of the claim must be monumented.

§ 27-206 Relocation

The relocation of a claim shall be made in the same manner as other locations. If the original location work of the claim being relocated included the recording of a map or plat pursuant to section 27-203, the locator may perform relocation work by resurveying or by verifying the accuracy of the boundaries and positions of the claim as shown on the map, plat or sketch of the claims and by recording a map, plat or sketch in the manner prescribed by section 27-203.

§ 27-208 Affidavit of annual work; affidavit of claim maintenance fee payment; fees

A. Before December 31 of any year in which the performance of annual labor or making improvements or the payment of claim maintenance fees on a mining claim is required, the person on whose behalf the work or improvement or payment was made, or the person's representative, knowing the facts, may make and record in the office of the county recorder of the county in which the claim is located an affidavit of annual work or an affidavit of claim maintenance fee payment.

B. The affidavit of annual work must state in substance the following:

State of Arizona, county of ____________________ ss: _________________________________, being duly sworn, deposes and says that: I am a citizen of the United States and at least eighteen years of age. I reside at ____________________, in _________________ county, Arizona. I am personally acquainted with the mining claim known as ___________________ mining claim, situated in _________________ mining district, ______________ county, Arizona, the location notice of which is recorded in the office of the county recorder of that county at [county recorder information]. Between the _____________ day of _______________, _________________, and the _______________ day of ___________________, ___________________, at least _________________________ dollars worth of work and improvements were done and performed on the claim, not including the location work of the claim. Such work and improvements were made by and at the expense of ___________________________, owners of the claim, for the purpose of complying with the laws of the United States pertaining to assessment or annual work, and _______________________________________ (here name the miners or persons who worked on the claim) were the persons who are employed by the owner and who labored on the claim, doing the work and improvements as follows: (Here describe the work done and add signature and verification.)

C. The affidavit of claim maintenance fee payment must state in substance the following:

D. The affidavit of annual work or the affidavit of claim maintenance fee payment when recorded shall be prima facie evidence of the performance of the labor or improvements or of claim maintenance fee payment. Any affidavit shall include, if known to the locator, the identification of the section, township and range in which the notice of location of the claim is posted.

E. When annual work or improvements or claim maintenance fee payment is done on one or more of a contiguous group of claims for the benefit of all, or wholly or partly outside of a contiguous group of claims for the benefit of all, all claims may be included in a single affidavit.

F. For each separate affidavit of annual work or affidavit of claim maintenance fee payment recorded, the county recorder, by the tenth day of each month, shall forward to the state treasurer for deposit in the state general fund four dollars of each total fee collected pursuant to section 11-475 during the previous month.

§ 27-209 Sufficiency of description of mining claims

In all actions, judgments, grants, or conveyances it shall be a sufficient description of a mining claim if the name of the claim, the district, county and state where it is located, and the book and page where the location notice thereof is recorded can be understood therefrom.

§ 27-210 Existing claims

A. The owner of an unpatented lode, placer or millsite claim existing on the effective date of this section may on or before October 21, 1980, file a map, plat or sketch of such claim conforming to the requirements of section 27-203, subsections B and C which shall also recite the book and page of recording of the location notice and any amendments to the location notice. The owner of a group of claims may file a single plat or map for any claims having the point of posting of the location notice within the same section of the public land survey system.

B. The county recorder shall receive as fees fifty cents per claim for recording such a map, plat or sketch under this section and shall index such claims by the name of the claim in the index of claims by cadastral subdivisions of the United States bureau of land management or general land office.

C. The recording of a claim in compliance with this section shall constitute constructive notice to the public of the position of such claim after the date of recording and shall constitute a rebuttable presumption that the claim was monumented on the ground so that its boundaries could be readily traced.

Article 2 Rights of Co-Owners

§ 27-221 Notice to delinquent co-owner to contribute share of annual labor expense or maintenance fees

A. When a co-owner gives a delinquent co-owner notice in writing or notice by publication to contribute his proportion of the expense of annual labor or maintenance fees as provided by the laws of the United States, an affidavit of the person giving the notice, stating the time, place, manner of service and by whom and upon whom the service was made, shall be attached to a true copy of the notice, and the notice and affidavit shall be recorded ninety days after giving the notice, or if the notice is given by publication in a newspaper, there shall be attached to a printed copy of the notice an affidavit of the editor or publisher of the paper, stating the date of each insertion of the notice therein, and when and where the newspaper was published during that time, and the affidavit and notice shall be recorded one hundred and eighty days after the first publication.

B. A true copy of the original notice and affidavit of service, or the records thereof, shall be prima facie evidence that the delinquent co-owner has failed or refused to contribute his proportion of the expenditure, and shall be prima facie evidence of service or publication of the notice, unless the writing or affidavit provided for in section 27-222 is of record.

§ 27-222 Acknowledgment of contribution by delinquent co-owner

A. If the delinquent co-owner, within the time required by the laws of the United States, contributes his proportion of the expenditures, the co-owner, who demanded contribution shall sign and deliver to the delinquent co-owner a written statement that the delinquent, naming him, has, within the time required, contributed his share of the expense for the year upon the claim, and further stating the district, county and state wherein the claim is located and the recording information where the location notice is recorded. The statement shall be recorded.

B. If the co-owner who demanded contribution fails to sign and deliver the statement to the delinquent co-owner within twenty days after contribution is made, he shall be liable to the delinquent for a penalty of one hundred dollars. The delinquent, with two disinterested persons having personal knowledge of the contribution, may make an affidavit setting forth the manner, amount, to whom and upon what mining claim or claims the contribution was made. The affidavit may be recorded, and shall be prima facie evidence of the contribution.

Article 3 Lease of State Lands for Mineral Claims

§ 27-231 Definition of mineral

In this article, unless the context otherwise requires, "mineral" means all metallic ore minerals and industrial minerals other than common variety minerals as defined in section 27-271.

§ 27-233 Preferred right to renew mineral lease; evaluation of geologic and economic evidence

A. Upon application to the state land commissioner, not less than thirty nor more than sixty days prior to the expiration of the lease, if the lessee of mineral lands is not delinquent in the payment of rental or royalty on the date of expiration of the lease, the lessee shall have a preferred right to renew the lease bearing even date with the expiration of the old lease for a term of twenty years. The commissioner may deny the renewal application for any reason listed in section 27-251, subsection B, paragraphs 1 through 5.

B. In determining whether the proposed mining activities would be in the best interest of the trust pursuant to section 27-251, subsection B, paragraph 2, the commissioner may require the lessee to provide geologic and economic evidence showing at least probable or indicated mineral resources, as that evidence is conventionally interpreted in the mineral industry. Evidence provided to the state land department under this subsection is a trade secret of the mineral industry and is confidential pursuant to section 27-274.

§ 27-234 Rent; royalty; appeal; interest; penalty; lien

A. Before issuing a mineral lease the state land commissioner shall establish the annual land rental for the mineral lease. The rental shall be based on an appraisal of the land that, for purposes of establishing the rent, shall not include the contributory value of mining. The annual rental:

Shall be at least the average rental assessed per acre by the states of Colorado, New Mexico and Utah. If a state assesses a range of rental rates rather than a single rental rate, the median of the range of rental rates assessed by that state shall be used in calculating the average under this paragraph.
Is payable in advance of executing the mineral lease agreement by the commissioner and at the beginning of each annual period thereafter.

B. In addition to the annual rental, a production royalty of at least two per cent is assessed against the gross value of all minerals produced and sold from the mineral lease. Where processing is performed after the mineral is extracted, the mineral shall be deemed produced and sold when the concentrate or cathode results from that processing. The royalty rate for each mineral lease shall be based on an appraisal of this state's interest as a lessor in the mineral and shall be established according to the appraisal standard prescribed by subsection C of this section. The gross value shall be based on the monthly average price of the mineral as quoted by the mineral commodities market and industry trade journals as determined by the commissioner and specified in the lease. If a mineral does not have a published price quotation, the gross value shall be based on an appraisal that establishes the fair market price of the mineral. The royalty shall not be based on any hedging or price protection arrangements that may be entered into by the lessee and any of these arrangements shall not be considered in any appraisal that established the fair market price of the mineral.

C. The commissioner shall appraise this state's interest as a lessor in the mineral according to standard appraisal methodology and, to the extent feasible, shall base the appraisal on market royalty rates. The appraisal shall be completed in order to determine whether a royalty rate greater than two per cent of the gross value is required in order to obtain a fair market value for this state's interests as a lessor in the mineral. The appraisal shall be completed before issuing a mineral lease, at the end of the first year of commercial production and again for each renewal of the lease. If, during the term of the lease, new minerals are produced and sold from the mineral lease, or changes in technology substantially affect the value of this state's interest as a lessor, the commissioner at that time may reappraise that interest and, if appropriate, adjust the royalty rate.

D. For mines existing on state lands on June 8, 1989, the royalty paid under this section shall not be less than the royalty which would have been paid under statutes in effect immediately before June 8, 1989.

E. The costs of all appraisals conducted under this section shall be assessed against the lessee and added to the amount due as rental under this section.

F. The department shall review all property tax assessment information relevant to the mineral lease. The department shall maintain that information on a confidential basis as prescribed by title 42, chapter 2, article 1.

G. Every mineral lease of state land shall require the lessee to make the following records available on an annual basis:

Itemized statements of mineral production.
Relevant tax records.
Additional relevant records pertinent to appraisal, compliance with the lease and mineral production deemed necessary by the commissioner.

H. The information obtained under subsection G, paragraph 2 of this section and any trade secrets are confidential. For purposes of this subsection, trade secrets are information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasi-judicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the person's competitive position.

I. Mineral lessees shall make monthly royalty payments based on the mineral production activity of the previous month.

J. Appeals of the appraisal decision of the commissioner may be taken pursuant to section 37-215 to the board of appeals, established by section 37-213, which shall affirm, modify or reverse the decision of the commissioner within one hundred eighty days. Except as provided in section 41-1092.08, subsection H, decisions of the board of appeals under this subsection are subject to judicial review pursuant to title 12, chapter 7, article 6. As a condition of the appeal, the lessee must continue to make all rental and royalty payments due based on the commissioner's final appraisal decision, and the court shall not stay the commissioner's decision, in whole or in part, pending a final disposition of the case. The state shall segregate rents and royalties paid while an appeal is pending and shall not distribute such monies to the state general fund or to the trust beneficiaries until the appeal is completed.

K. If a lessee fails to pay rent or royalty, including appraisal costs under subsection C of this section, on or before the date the payment is due, the amount due accrues interest at the rate and in the manner determined pursuant to section 42-1123. In addition, if it is determined that the failure to pay is not due to reasonable cause, a penalty of five per cent of the amount found to be remaining due shall be added to the rent or royalty for each month or fraction of a month elapsing between the due date and the date on which it is paid. The total penalty shall not exceed one-third of the rent or royalty remaining due. The penalty so added to the rent or royalty is due and payable on notice and demand from the commissioner.

L. If any rent, royalty, appraisal assessment, interest or penalty is not paid by the lessee when due, the unpaid amounts constitute a lien from the date the amounts become due on all property and rights to property that belong to the lessee and that are located on state land.

§ 27-235 Offering permits and leases at auction; terms of lease; financial security termination

A. The state land commissioner may offer mineral exploration permits or mineral leases at public auction, after advertising, for state lands on which a mineral exploration permit or mineral lease has been cancelled, terminated or not been renewed by the lessee or permittee, or may offer mineral exploration permits at public auction, after advertising, for state trust lands that have been closed by commissioner's order. The commissioner may establish by rule the procedure for conducting the auction, but bidding is limited to a cash bonus to be paid in full before the commissioner executes the permit or the lease documents. The land rental and royalty rate are not subject to bidding.

B. Every mineral lease of state lands shall be for a term of twenty years.

C. The lease shall confer the right:

To extract and ship minerals from the leased land located within planes drawn vertically downward through the exterior boundary lines of the leased land.
To use as much of the surface as required for purposes incident to mining.
Of ingress to and egress from other state lands, whether or not leased for purposes other than mining.

D. Every mineral lease of state lands shall provide for:

The development and use of the property according to the lessee's general mining plan approved by the commissioner.
The fencing of all shafts, exploration holes, adits, tunnels and other dangerous mine workings for the protection of public health and safety and livestock.
The construction of necessary improvements and installation of necessary machinery and equipment with the right to remove it upon expiration, termination or abandonment of the lease, if the lessee is not in default of the terms and conditions of the lease.
The right of the lessee and the lessee's assigns to transfer the lease.
Termination of the lease by the commissioner upon written notice specifically setting forth the default for which forfeiture is declared, and preserving the right to cure the default within a stated period of not less than thirty days.

E. If financial security is required under this subsection, it shall be in the form of a cash deposit, a certificate of deposit, a surety bond or any other form of financial assurance acceptable to the commissioner. On default, the commissioner may use the proceeds of the financial security for the purposes described in paragraph 1, 2 or 3 of this subsection. Financial security may be required in the following circumstances:

The commissioner may require financial security to guarantee the payment of all monies due under the lease as royalty to this state.
The commissioner shall require financial security in a reasonable amount to be fixed by the commissioner conditioned on the lessee's reclaiming the surface of the land described in the lease to a reasonable condition in accordance with the reclamation measures approved by the commissioner. The commissioner may enter into agreements pursuant to title 11, chapter 7, article 3 with the state mine inspector's office, the United States bureau of land management, the United States forest service and other agencies that manage public lands and take other appropriate measures to coordinate the review and approval of reclamation plans, including designating a lead agency for reclamation plan review and action. The commissioner shall avoid redundant, inconsistent or contradictory reclamation, inspection, administration, enforcement and financial assurance requirements unless such requirements are necessary as a result of the commissioner's trust obligations.
The commissioner shall require financial security conditioned on the lessee's prompt payment to the owner or lessee of the surface of the state land described in the lease, or across which the lessee exercises the right of ingress, for any loss to the owner or lessee from damage or destruction caused by the lessee or the lessee's agents or employees to grass, forage, crops or improvements on the land.

F. The lessee of any mineral lease who has met the applicable terms and conditions of the lease from the time of issuance to the time of termination, as determined by the commissioner, may terminate the lease at any time during its term by giving the commissioner thirty days' written notice of the termination.

§ 27-236 Suspension of royalty rights

The commissioner may, if he deems it in the interest of the state, subordinate the royalty rights of the state under this article, or suspend the operation thereof or of any lease executed under the provisions of this article, in favor of the United States or any agency thereof, for the purpose of facilitating extension of financial aid under the laws of the United States in the development or operation of any mine located upon state lands.

§ 27-237 Review by commissioner

All questions arising between a lessee and the commissioner under this article shall be subject to review as in other cases involving state lands, and the lessee's right to possess and operate the lease shall continue until the question is finally determined.

§ 27-238 Existing leases

Every mineral lease issued under this article and article 4 of this chapter which had not expired or been terminated by the department as of June 8, 1989 shall be in effect for the unexpired term for which it was granted. The state land commissioner shall set the rental and royalty according to the appraisal standards prescribed by section 27-234 for any mineral lease in effect on June 8, 1989 and that rental and royalty are effective as of December 10, 1987.

§ 27-239 Inspections, investigations and audits

A. The state land commissioner or the commissioner's authorized representative may enter, and the lessee shall maintain access to, the state land held under a mineral lease at reasonable times to inspect the workings, improvements and other facilities used to extract or sever minerals or common variety minerals, as defined in section 27-271, from state lands.

B. The commissioner or the commissioner's authorized representative may enter at reasonable times to:

Obtain factual data or access to records pertinent to mineral production and required to be kept under the terms of the lease.
Otherwise ascertain compliance with law and the terms of the lease.

C. Inspections, investigations and audits under subsection A shall be on reasonable notice to the lessee unless reasonable grounds exist to believe that notice would frustrate the enforcement of law or the terms of the lease. The commissioner may, and if required by law shall, apply for and obtain warrants for entry and inspection.

D. The commissioner may require a lessee to appear at reasonable times and on reasonable notice at the commissioner's office and produce such records and information as are specified in the notice to determine compliance with the terms of the lease.

E. The commissioner shall provide to the lessee a written report of each inspection, investigation and audit under this section.

F. Tax records and trade secrets, as defined in section 23-401, obtained under this section are confidential.

Article 4 Mineral Exploration Permits and Mineral Leases

§ 27-251 Application for mineral exploration permit

A. Any natural person over eighteen years of age and any other person qualified to transact business in this state may apply to the state land commissioner for a mineral exploration permit on the state land in one or more of the rectangular subdivisions of twenty acres, more or less, or lots, in any one section of the public land survey. Such application shall be in writing and signed by the applicant, or an authorized agent or attorney for the applicant, and shall contain the name and address of the applicant, a description according to the public land survey of the state land for which the applicant seeks a mineral exploration permit, and such other information as the commissioner may prescribe by rule. The application shall be filed with the state land department and shall be accompanied by payment to the department of a filing fee as prescribed pursuant to section 37-107. Each application meeting the requirements of this section shall be stamped by the department with the time and date it is filed with the department. The application shall have priority over any other application for a mineral exploration permit involving the same state land which may be filed with the department subsequent to such time and date, and such land shall be deemed withdrawn as long as the application is pending.

B. Not less than thirty days nor more than forty-five days from the filing of the application with the department, provided there is no prior application for a mineral exploration permit involving the same state land then pending before the department, or if such prior application is then pending but is subsequently cancelled, not more than thirty days after it is cancelled, the department shall mail to the applicant at the address shown on the application a written notice designating the state land that is described in the application and that, at the time the application was filed with the department, was open to application, the amount of rental required to be paid for the mineral exploration permit as herein provided, and whether a bond will be required under the provisions of section 27-255 as a condition to issuance of such permit. If, within thirty days after the mailing of such notice, the applicant pays to the department as rental for the permit the amount of two dollars per acre for each acre of state land designated in the notice and files with the department the bond, if any, required under section 27-255, and if the commissioner finds that issuing the permit is in the best interest of the trust, the commissioner shall issue to the applicant a mineral exploration permit for the state land designated in the notice. The commissioner may deny the application for any of the following reasons:

The application was not made in good faith.
The proposed exploration or possible future mining activities would not be the highest and best use of the trust lands.
The value and income potential of surrounding trust lands would be adversely affected and the benefit from proposed exploration and future mining activity cannot reasonably be expected to be greater than the diminished value to those surrounding trust lands.
The proposed operations would violate applicable state or federal law.
The commissioner determines that the proposed exploration activities or possible future mining activities will create a liability to the state greater than the income from the proposed operations.

C. During the period such mineral exploration permit is in effect no person except the permittee and the authorized agents and employees of the permittee shall be entitled to explore for minerals on the state land covered by the permit. If the applicant fails to make the payment or furnish the bond within the period of thirty days, the application shall be deemed cancelled and of no further effect.

§ 27-252 Terms of mineral exploration permit; definition

A. Every mineral exploration permit shall be for a term of one year from the date of issuance, subject to renewals as provided in this article for an aggregate of not to exceed five years from such date, and shall give to the permittee the rights, subject to the terms and conditions, as follows:

During the period the permit is in force and effect, the permittee shall have the exclusive right to explore for minerals within the state land covered by the permit and to apply for and obtain a mineral lease or leases to the land.
The permittee shall have those surface rights necessary for exploration for mineral on the state land covered by the permit, but may remove from the land only that amount of mineral required by the permittee for sampling, assay and metallurgical testing purposes.
The permittee shall have the right of ingress to and egress from the land covered by the permit across other state lands but only along routes first approved by the commissioner.
The permittee shall be liable to and shall compensate the owner and lessee of the surface of the state land covered by the permit, or across which the permittee exercises the right of ingress and egress, for any loss to such owner and lessee from damage or destruction caused by the permittee or the permittee's agents or employees to grasses, forage, crops or improvements upon such state land.
The permit shall terminate automatically as of the end of any annual period from and after the date of issuance unless during such annual period the permittee expended in exploration for valuable mineral deposits on the state land covered by the permit not less than the amount per acre provided in this article or paid to the department a sum equal thereto, and prior to expiration of such annual period shall have filed with the department an application for renewal for the ensuing annual period, and an affidavit showing such expenditure, together with such other proof in support thereof as the commissioner by rule may prescribe. The amount to be so expended or paid to the department during each of the first two annual periods in which such permit may be in effect shall be not less than ten dollars for each acre of state land covered by the permit at the commencement of such annual period, and the amount to be so expended or paid to the department during each of the last three annual periods in which such permit may be in effect shall be not less than twenty dollars for each acre of state land covered by the permit at the commencement of such annual period. Prior to termination of any such annual period, the permittee may, by instrument in writing filed with the department, release from the permit the acreage covered thereby and contained within one or more rectangular subdivisions of twenty acres, more or less, or lots, according to the lines of the public land surveys.
When a permittee has an interest in one or more contiguous properties for which he or she holds a mineral exploration permit, such permittee may group such permits and expend the sum required by this article under a common plan of development on one or more of the properties for the benefit of all if the total area of such contiguous property does not exceed three miles on a side.
Upon termination of the mineral exploration permit, other than by issuance of a mineral lease, the permittee shall submit to the department the following information, which shall not include any chemical analysis or other identification of minerals, concerning any drill holes or wells drilled on state land covered by the permit:

(a) Total depth.

(b) Lithologies and depths of lithologic boundaries encountered in the hole.

Drill hole information shall be confidential for one year after termination of the permit, and such period of confidentiality shall be extended for an additional year upon the request of the permittee.
Any expenditures in exploration for valuable mineral deposits made in excess of the requirements of this article during any annual period of the permit may be credited against expenditure requirements of successive annual periods of the permit.
In lieu of making expenditures in exploration, the permittee may elect to make a money payment of the amounts required for expenditures in exploration for valuable mineral deposits to the department.

B. Upon any partial or total relinquishment, or the cancellation or expiration of the permit other than by issuance of a mineral lease, the permittee shall fill any holes, ditches or other excavations, as may be required by the commissioner, and, as far as reasonably possible, reclaim the surface to its former condition.

C. As used in this article, "exploration" means activity conducted upon the state land covered by an exploration permit to determine the existence or nonexistence of a valuable mineral deposit, including but not limited to geological, geochemical or geophysical surveys conducted by qualified experts, and drilling, sampling and excavation, together with the costs of assay and metallurgical testing of samples from such land.

§ 27-253 Renewal of permit

The holder of an exploration permit may, prior to expiration of the annual period for which such permit was issued, or prior to expiration of the annual period for which such permit was renewed, file with the department an application for renewal of such permit for the ensuing annual period. No such application for renewal shall be filed, nor shall the permit be renewed, for more than four successive annual periods following expiration of the annual period for which such permit was issued. No rental shall be payable for the first annual period for which a permit may be renewed. The rental for each of the three subsequent annual periods following the first annual period for which a permit may be renewed shall be one dollar for each acre of state land for which the application for renewal is filed. Upon receipt by the department of the application for renewal, and the affidavit of expenditure of the required amount in exploration during the current annual period or a sum equal thereto, together with such other proof in support of such expenditure as the commissioner by regulation may prescribe, and payment to the department of the rental for the ensuing annual period, all prior to expiration of the current annual period, the commissioner shall issue a renewal of the permit for the ensuing annual period.

§ 27-254 Mineral lease

Following discovery of a valuable mineral deposit upon the state land covered by a mineral exploration permit within a rectangular subdivision of twenty acres, more or less, or lot, of the public land survey, the permittee may apply to the commissioner for a mineral lease upon the state land within such rectangular subdivision, or lot, and such land shall, for the purpose of the application and any mineral lease issued pursuant to such application, constitute a mineral claim without extralateral rights, and shall be deemed to have been located as of the date of filing the application for the mineral lease. Upon receipt of an application from the permittee for a mineral lease, and satisfactory proof of discovery of a valuable mineral deposit, the commissioner shall issue a mineral lease to the applicant for the mineral claim or claims covered by the application. From and after the date of issuance of a mineral lease, the mineral claim or claims covered by such mineral lease shall be deemed to be excluded from the exploration permit. Upon application to the commissioner, not less than thirty nor more than sixty days prior to the expiration of the lease, the lessee, if not delinquent in the payment of rental or royalty on the date of expiration of the lease, shall have a preferred right to renew the lease bearing even date with the expiration of the old lease for a term of twenty years.

§ 27-255 Bonds

A. The commissioner, in his discretion, may require the applicant for a mineral exploration permit, prior to issuance of such permit, to file with the commissioner a surety bond, in form and amount and with surety approved by the commissioner, conditioned upon the prompt payment to the owner and lessee of the surface of state land to be covered by the permit, or across which the permittee exercises the right of ingress or egress, for any loss to such owner or lessee from damage or destruction caused by the permittee or his or its agents or employees to grasses, forage, crops and improvements upon such state lands.

B. The commissioner may also require the permittee to furnish a bond, in a reasonable amount to be fixed by the commissioner, conditioned that the permittee will guarantee restoration of the surface of the land described in the mineral exploration permit to its former condition upon any partial or total relinquishment of such lands, or the cancellation or expiration of the permit other than by issuance of a mineral lease.

C. On default, the commissioner may use the proceeds of the bond for the purposes described in subsection A or B.

§ 27-256 Assignment

Any mineral exploration permit issued hereunder may be assigned in whole or in part by the permittee, but such assignment shall not become effective unless and until a copy thereof is filed with the department and is approved by the commissioner. The assignee shall succeed to all of the rights and shall be subject to obligations of the permittee under the mineral exploration permit.

Article 5 Lease of State Lands for Common Variety Minerals

§ 27-271 Definition of common variety minerals

For purposes of this article, "common variety minerals":

Includes deposits of petrified wood, stone, pumice, pumicite or cinders, decomposed granite, sand, gravel, boulders, common clay, fill dirt and waste rock.
Includes deposits that, although they may have value for use in trade, manufacturing and the construction, landscaping and decorative rock industries, do not possess a distinct, special economic value for those uses beyond the normal uses of those deposits.
Includes material used as road base material, riprap, ballast, borrow, fill, facing stone, landscaping or ornamental uses and other similar uses.
Does not include limestone suitable for use in producing cement, metallurgical or chemical grade limestone or gypsum.

§ 27-271.01 Inventory of trust land containing common mineral products, materials and property

The department shall maintain an inventory of lands suitable for lease or sale that are within the boundaries identified in section 37-312 and are located in a county of more than six hundred thousand persons according to the most recent United States decennial census. Persons applying for reclassification of land pursuant to section 37-312 shall be notified if the land has been identified by the department as land suitable for lease or sale.

§ 27-272 Common variety mineral leases; terms and conditions; rules

A. The state land department may dispose of common variety minerals at auction and may execute common variety mineral leases offered at auction for the severance, extraction or disposal of common variety minerals.

B. A lease shall be comprised of not more than one legal section of six hundred forty acres, more or less, or lot of the public land survey and shall provide for:

A term of not more than ten years unless the commissioner considers a longer term to be necessary, but in no event may the lease issue for a term longer than twenty years.
A rental based on a percentage of the appraised land value, payable before the commissioner executes the lease and at the beginning of each subsequent annual period.
The right of the lessee:

(a) To use as much of the surface of the premises as is reasonably necessary to extract, sever, temporarily store, remove and dispose of common variety minerals.

(b) To wash, screen, crush, sort or otherwise mechanically process.

(c) Of ingress to and egress from the premises across other state lands along designated routes approved by the department.

(d) To assign the lease, provided that such assignment shall not become effective until a copy of the lease is filed with the department and is approved by the commissioner as being in the best interests of the state.

Other terms and conditions as the department may deem for the best interests of the state and that are not in conflict with the enabling act, constitution and laws of this state.

C. The department shall establish in the lease the terms of the royalty to be paid for all common variety minerals severed or extracted from the leased land and disposed of by the lessee. The royalty rate shall be established by auction, but it shall be at least the minimum royalty established by the department based on the appraised value of the common variety minerals. The lease shall provide for:

Payment of a minimum annual royalty due and payable on the anniversary date of the lease. The minimum annual royalty shall be based on a minimum annual production rate and shall be applied as a credit to payment for common variety minerals extracted or severed from the land. Royalty for any common variety mineral extracted, severed or disposed of in excess of the minimum annual production is due and payable monthly, within thirty days after billing.
The application of minimum annual royalty payments as a credit for payment of common variety minerals for which payment must be made. Monies so advanced and not credited against payments for common variety minerals become the sole property of this state on termination or expiration of the agreement.

D. Common variety minerals are not subject to lease as provided by articles 3 and 4 of this chapter.

E. The department shall adopt rules necessary for the administration of this article.

§ 27-273 Performance and reclamation bonds

A. The commissioner may require the lessee to post a cash deposit, a certificate of deposit, a surety bond or any other form of financial assurance acceptable to the commissioner to guarantee the payment of all monies due under the lease as royalty to the state.

B. The commissioner shall require the lessee to furnish a cash deposit, a certificate of deposit, a surety bond or any other form of financial assurance acceptable to the commissioner, in a reasonable amount to be fixed by the commissioner, conditioned that the lessee will guarantee reclamation of the surface of the land described in the lease to a reasonable condition in accordance with good mining practices.

C. The commissioner shall also require the lessee to file with the department a cash deposit, a certificate of deposit, a surety bond or any other form of financial assurance acceptable to the commissioner, conditioned upon prompt payment to the owner or lessee of the surface of the state land covered by the lease, or across which the lessee exercises the right of ingress, for any loss to such owner or lessee from damage or destruction caused by the lessee or the lessee's agents or employees to grasses, forage, crops and improvements upon such lands.

D. On default, the commissioner may use the proceeds of the cash deposit, certificate of deposit, surety bond or other financial assurance for the purposes described in subsection A, B or C.

§ 27-274 Trade secrets; confidentiality; definition

A. For the proper administration of state land, the state land commissioner may require a lessee to submit relevant geologic, engineering and feasibility studies and other economic and technical information that is considered a trade secret in the mineral industry.

B. To evaluate the mineral potential of state trust land, the commissioner may use relevant geologic, engineering and feasibility studies and other economic and technical information that is considered a trade secret in the mineral industry.

C. Trade secret information obtained under this section is confidential.

D. For purposes of this section, "trade secret" means information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasi-judicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosing the information is likely to cause substantial harm to the person's competitive position.

§ 27-276 Enforcement

Leases issued and executed under this article are subject to the enforcement provisions prescribed by section 27-239.

Chapter 3 Operation of Mines

Article 1 General Provisions

§ 27-301 Definitions

In this chapter, unless the context otherwise requires:

"Abandoned mine" means a mine where mining operations have been permanently terminated or the operator has complied with section 27-303, subsection C or for which no owner, operator or other claimant of record can be located for a deserted mine site.
"Active mine" means a mining operation conducting mining activities on any lands.
"Claim" means the portion of mining ground held under federal and local law by one claimant or association, by virtue of one location and record. It includes mining claims and sites deemed abandoned under the federal land policy and management act of 1976 (P.L. 94-579; 90 Stat. 2743).
"Excavations" or "workings" means any or all parts of a mine excavated or being excavated, including shafts, tunnels, drifts, crosscuts, adits, entries, winzes, raises, stopes, open cuts, and all working places, whether abandoned or in use.
"Inactive mine" means a mining operation not conducting mining for more than six months or where mining operations have been temporarily suspended or the operator has complied with section 27-303, subsection C.
"Inspector" means the state mine inspector and except in article 7 of this chapter his deputies.
"Mill" means any ore mill, concentrator, sampling works, crushing, grinding or screening plant, appurtenant buildings, shops or storage or loading facility used at and in connection with any mine.
"Mine" means all lands containing excavations, underground passageways, shafts, tunnels and workings, structures, facilities, equipment, machines or other property including impoundments, retention dams, tailings and waste dumps, on the surface or underground, used in, to be used in or resulting from the work of extracting minerals or other materials, excluding hydrocarbons. Mine includes that portion of an operation which mixes rock, sand, gravel or similar materials with water and cement or with asphalt, provided that the operation is either physically connected to the mine or is so interdependent with the mine as to form one integral enterprise. Mine includes that portion of an operation that is being reclaimed pursuant to chapter 5 or 6 of this title.
"Miner" means a person who works in a mine.
"Mining" means those activities conducted to develop or extract materials from a mine including on-site transportation, concentrating, milling, leaching, smelting or other processing of ores or other materials. Mining includes mined land reclamation activities regulated pursuant to chapter 5 or 6 of this title.
"Open pit" means any mine operated on the surface of the earth, including quarries, but excluding sand and gravel operations.
"Operation" means a mine, mill, smelter, sand and gravel plant or pyrometallurgical or hydrometallurgical operation.
"Operator" means a natural person, corporation, partnership association, agent, governmental entity or other public or private organization or representative owning, controlling or managing a mine.
"Sand and gravel operation" means any operation the principal product of which is sand, gravel, pumice or any other common variety of material.
"Smelter" means any establishment used for the purpose of pyrometallurgical operations and appurtenant buildings, shops, facilities for the production of steam or electrical power, or equipment used in conjunction with any of the above.
"Surface mining" means mining conducted on the surface of the land including open pit, strip, dredging, quarrying, leaching, surface evaporation operations, reworking abandoned tailings and dumps and related activities.
"Underground mine" means a mine in which minerals or other material is extracted from beneath the surface by means of shafts, tunnels or other openings.

§ 27-302 Operations subject to chapter; enforcement by inspector; violation; classification

A. All operations shall be subject to the provisions of this chapter unless specifically exempted from a particular provision by its terms.

B. The inspector shall enforce this chapter at all operations.

C. Any operator or other person violating any provision of this chapter is guilty of a petty offense unless other penalties are specifically prescribed in this chapter.

§ 27-303 Notification to inspector of beginning or suspending operations

A. When mining operations are scheduled to begin at any mine, the operator, owner, agent or other authorized representative shall give written notice to the inspector prior to commencement of mining.

B. If operations do not commence within six months after the inspector receives the notice of commencement, the operation is considered to be suspended.

C. In the case of temporary suspension of operations, excluding labor disputes, exceeding six months or in the case of permanent termination of mining operations, the operator shall notify the inspector, in writing, before the suspension or termination date. All shafts, portals, adits or other openings shall be secured to prevent unauthorized entry and to protect public health and safety pursuant to section 27-318.

D. On notification of suspension or termination of mining operations, the inspector shall inspect the property to determine if adequate safety measures are being taken to protect the public.

§ 27-304 Operator responsibility

A. The operator shall conduct his operation with due regard to health and safety. No operator shall fail to provide or use such safety devices and safeguards as are reasonably necessary to protect the life, health and safety of his employees.

B. The operator, or some responsible person with authority appointed by him, shall be on duty at all times when employees are working. He shall be responsible for the safe performance of all work under him and for the safety of all employees.

C. The operator shall designate a person or persons to inspect as frequently as may be required by any rules or regulations for unsafe conditions and practices, defective equipment and materials, and where such conditions are found, to take appropriate corrective action.

D. The operator and his supervisory personnel shall enforce safety regulations and issue such orders as may be necessary to safeguard the life, health and safety of employees.

§ 27-305 Employee responsibility

Each employee shall make full use of all safeguards provided for his protection. Except for the purposes of repair, no employee or other person shall remove, displace, damage, destroy or carry off any safety device or safeguard furnished or provided, nor shall he interfere with the use thereof. No employee or other person shall interfere with the methods or processes adopted for the protection of employees, nor shall he fail or neglect to do anything reasonably necessary to protect the life, health and safety of himself and other employees.

§ 27-306 First aid; inspectors as qualified instructors

A. Every operation shall have adequate and proper first aid material as approved by the inspector which shall be available to all employees.

B. No employee or other person shall remove material from first aid boxes or kits at any time except for replacement or use in case of injury.

C. The state mine inspector and deputy mine inspectors shall be qualified first aid instructors, and shall provide instruction upon request.

§ 27-307 Notice to operator of dangerous condition; compliance; failure to comply as prima facie evidence of negligence; order to cease operations

A. If upon inspection it appears to the inspector that an operation from any cause is in a dangerous condition or its condition fails to comply with the requirements of law, the inspector shall at once serve written notice on the operator or the operator's agent in charge, stating in detail why the operation is dangerous or does not comply with law, specifying necessary changes to be made and setting a reasonable time within which to make them.

B. The operator shall promptly make the change and comply with the notice. In an action against a party notified as provided in subsection A for loss of life or bodily injuries by an employee subsequent to the notice and in consequence of the dangerous condition of the operation, a certified copy of the notice served by the inspector shall be prima facie evidence of the negligence of the operator.

C. If it appears to the inspector from a reexamination that the changes or compliances have not been made within the time specified in the notice, and that the operation is still in a condition dangerous to life or health, and in the opinion of the inspector it is necessary for the safety of the life or health of the employees that the operation be closed, the inspector shall promptly order cessation of the operation or part of the operation, and order that the employees not be permitted therein except to remedy the defects complained of until this chapter is complied with to the satisfaction of the inspector. The operator shall promptly obey the order.

D. Except as provided in section 41-1092.08, subsection H, if the operator considers the final order to be in excess of the inspector's authority or unreasonable, the operator may obtain judicial review of its validity or reasonableness pursuant to title 12, chapter 7, article 6.

§ 27-308 Complaint to inspector of dangerous conditions by employee; inspection

When the inspector receives a complaint in writing signed by a person employed in an operation, stating that the operation in which he is working or part of it is being operated contrary to law or is dangerous to the health or lives of persons employed therein, and setting forth when the danger was first observed, the inspector shall examine the operation as soon as possible. The name of the person making the complaint shall not be disclosed by the inspector unless permission is expressly granted by the person. The complaint shall be indexed and filed by the inspector.

§ 27-309 Reports of fatal accidents to inspector; investigation

A. When a fatal accident occurs in an operation, the operator shall give immediate notice thereof by telephone or facsimile transmission, and after investigation report the facts in writing to the inspector. The inspector, upon receipt of such notice shall instruct the operator as to preserving evidence of the accident. The inspector shall investigate and make a report which shall be filed in his office.

B. If the inspector concludes the facts warrant it, he shall cause a copy of his report and all papers in his possession relating thereto to be forwarded to the county attorney of the county in which the fatal accident occurred, with an accompanying statement of the inspector, describing in what particular he believes the law has been violated.

§ 27-310 Copy of law available for inspection

The operator or person in charge of an operation shall keep at all times in the office of the operation and in the timekeeper's office in an accessible place and subject to inspection by all workmen and other interested persons at least one printed copy of this chapter.

§ 27-311 Fire prevention and protection

Every operation where there appears to be any possibility of fire or serious hazards from fire shall provide sufficient fire protection. This shall include water supply with adequate pressure, fireplugs, hose and nozzles, and chemical, automatic chemical or water extinguishers, which shall be properly located to provide for the safety of all employees. All underground mines shall be equipped with adequate rescue equipment and the operators thereof shall provide proper training in its use to rescue crews.

§ 27-312 Safety equipment

A. All persons working in operations shall wear approved type head, foot and eye protection when in the work area and such other safety equipment as is designated by the operator.

B. Equipment placed in an operation for the purpose of safety shall not be removed by anyone nor utilized except for the purpose intended.

§ 27-313 Machinery

A. All moving parts of machinery to which workmen may be exposed shall be adequately guarded. Guards shall conform to the standards set forth in the rules.

B. A guard or safety device necessary for safe operation which has been removed from any machine shall be replaced before the machine is returned to productive operation.

§ 27-314 Electrical installations

All electrical equipment shall be so maintained as to reduce the accident hazard so far as is reasonably possible. Such electrical equipment shall be installed, maintained and used according to standards set forth in the rules.

§ 27-315 Unauthorized persons

No person whose entry has not been authorized by the operator shall be allowed in any operation.

§ 27-316 Intoxicating liquors and drugs

No intoxicating liquors or beverages and no narcotic drugs shall be permitted on any operation. No employee or other person under the influence of or believed to be under the influence of intoxicating liquors or narcotic drugs shall enter or be permitted to enter on any operation.

§ 27-317 Waste dumps and tailings areas; signs; violation; classification

In areas where waste dumps, subsidence areas or tailings areas border on inhabited or public places, the roads from such places leading into such areas shall be blocked off and danger signs shall be placed at intervals along the perimeter of the areas. Any person recklessly removing, destroying or defacing such signs or barriers is guilty of a petty offense as provided in section 27-302.

§ 27-318 Abandoned and inactive mines to be secured; inspector authority; violation; classification

A. Every mine operator or former mine operator or claimant who owns a mine or mining claim or possesses a mine or mining claim under lease, contract, permit or otherwise, who knowingly permits the existence on the premises of an abandoned or inactive mining shaft, portal, pit or other excavation which is dangerous to persons legally on the premises, who fails to cover, fence, fill or otherwise secure it and post warning signs, within sixty days of notification by the inspector and who fails to keep it so protected is guilty of a class 2 misdemeanor. If it is impossible or impracticable to comply with this subsection within the required sixty days, the operator may submit a written plan of action to the inspector which specifically outlines the measures that will be taken and the number of additional days necessary to comply with this section. In no case may the time extension granted by the inspector exceed an additional one hundred eighty days.

B. The inspector may enter on such land to inspect for dangerous conditions which may present a health and safety hazard to the public. If hazards exist, the inspector may erect warning signs across or near the entrance of any mine shaft, portal, pit or other mine opening prohibiting the entry of unauthorized persons or erect other protective devices as necessary.

C. If the mine operator cannot be located through reasonable efforts, the owner of record is the responsible party for the purposes of this section. If neither the mine operator or owner of record can be located through reasonable efforts, the inspector shall erect warning signs across or near the entrance of any mine shaft, portal, pit or other mine opening prohibiting entry of unauthorized persons or erect other protective devices as necessary.

D. A person who knowingly and without authority removes, destroys or tampers with any warning sign, covering, fencing or other protection placed on, around or over any shaft, portal or other excavation is guilty of a class 6 felony.

E. Any reasonable and necessary cost incurred by the state mine inspector pursuant to this section may be recovered in a civil action brought by the attorney general against any responsible party.

F. Inert material, as defined in section 49-701, including concrete, asphaltic pavement, brick, rock, gravel, sand, soil and metal if used as reinforcement in concrete and glass may be used as fill material for the closure of abandoned mines with final cover consisting of earthen material that is at least ten feet deep.

Article 2 Explosives and Blasting

§ 27-321 Explosives; records; inspection

A. Every person manufacturing, storing, selling, transferring or in any manner disposing of explosives or blasting agents, shall keep an accurate record of all such transactions and the date thereof, disclosing the amount of each explosive received, from whom received, when received, disposition made of the explosive with the amount thereof, and the name of the person to whom delivery was made, who shall receipt therefor.

B. The record shall at all times be open to inspection by the inspector or any peace officer engaged in investigating a crime.

§ 27-322 Explosives; marking; utilization and storage

A. All explosives or blasting agents sold in the state shall be marked with the date of manufacture in the manner prescribed by the inspector. The inspector shall have authority to designate types of explosives or blasting agents which may not be sold or used after twelve months from the date of manufacture.

B. The inspector may regulate and limit the amount of explosives or blasting agents stored or kept in general supply stores in mining camps or mining towns where there is no law governing storage thereof.

§ 27-323 Explosives; rules and regulations; access to operations

A. The inspector shall prescribe and promulgate rules in accordance with the provisions of this chapter pertaining to storing, transporting and using explosives and blasting agents in operations, including the character and location of magazines and other structures in which they are stored and the conditions under which they may be transported and designating types of explosives and blasting agents which shall not be stored or used in operations or portions of operations.

B. The inspector shall be accorded free access to any operation in or on which explosives or blasting agents are stored, for the purpose of determining whether magazines and storage facilities conform to law and the rules prescribed and to ascertain that life and property are not endangered by the storage thereof.

§ 27-324 Blasting

Before firing blasting charges, the blasting crew shall clear the vicinity surrounding the blast site of all personnel, make provision to guard all means of access to the area, and give warning in every direction from which access may be had to the place where blasting is being done. Misfire holes shall be reported to the mine foreman or the shift boss in charge at the locality of the holes.

§ 27-325 Use of tamping bar

No person shall, whether working for himself or in the employ of another, while loading or charging a hole with explosives, use or employ a metal tamping bar, nor shall any person allow or permit the use of a metal tamping bar while loading or charging a hole by employees under his management or direction.

Article 3 Hoists, Shafts and Underground Operations

§ 27-341 Escapement shafts

A. Every operator maintaining in a mine a vertical or incline shaft or an adit to a distance greater than one hundred feet and who has drifted a distance of two hundred feet or more and commenced to stope, shall provide and maintain to the hoisting shaft or opening through which men are let into or out of the mine, and where the ore is extracted, a separate escapement shaft, raise or opening, or an underground opening, or communication with another contiguous mine. If the contiguous mine is owned or operated by a different person, the right to use the outlet through the contiguous mine, in all cases when necessary, or in case of accident shall be secured and kept in use.

B. Where an escapement shaft or opening is not in existence at the time stoping is commenced, work upon an escapement shaft or opening shall be commenced as soon as stoping begins and diligently prosecuted until completed, and the escapement shaft, raise or opening shall be continued to and connected with the lowest workings in the mine in which mining operations are being conducted.

C. The escapement shaft or exit shall be of sufficient size to afford an easy passageway, and if it is a raise or shaft, shall be provided with substantial ladders from the deepest workings to the surface.

D. When the exit or outlet is not in a direct or continuous course, signboards plainly marked showing the direction to be taken shall be placed at each departure from the continuous course.

§ 27-342 Mine outlets

Every mine shall have at least two outlets to the surface except as otherwise provided in this article. The outlets shall not lead to the surface in the same house and shall not at any point be closer to one another than thirty feet. If two outlets of a mine or part of them do not belong to the same mine, the owners and the operators of the respective mines shall be responsible for the outlet or part of it in their respective mines, being kept in proper repair. Should any obstruction arise in an outlet, or anything occur in one of the mines to jeopardize the safety of the outlet, the occurrence shall be immediately reported to the operator of the other mine. If either of the two outlets or part of them is situated in an abandoned mine, the operators of the working mine shall be jointly and severally responsible for the proper maintenance and repair of the outlet.

§ 27-343 Structures over mine outlet

No structure shall be erected over an outlet of a mine except the headframe necessary for hoisting from a shaft and the hatch or door necessary for hoisting from a shaft and the hatch or door required to protect persons obligated to work at the top of a shaft from inclement weather, and if a house is required for this purpose the inspector may grant permission in writing for its construction. Such house shall be as small as possible and constructed of fire resistant material. Regular storage of flammable material inside, or within thirty feet of the house is prohibited.

§ 27-344 Timbering support

A. Minimum standards for proper timbering or other ground support of any working place shall be suitable to the conditions of the mining system. When necessary such standards shall be set by the inspector after consultation with the operator involved.

B. When any working place has dangerous or hazardous ground no work shall be done there except as shall be necessary to make the place secure and safe. If for any reason necessary timbers cannot be supplied immediately, all work done shall cease until such timbers can be supplied.

C. "Timber" as used in this section shall mean wood, steel, concrete, rock bolts, sand fill, rock fill or any other material or device used for bracing, supporting or restraining ground.

§ 27-345 Shelter areas

On every level of an underground mine where mechanical haulage is employed and in which there is not sufficient clearance for employees, unobstructed shelter areas in which employees can find safety from moving trains shall be provided at intervals of not more than two hundred feet.

§ 27-346 Ladder-ways

Every shaft, winze, raise or incline, of slope steeper than forty degrees from the horizontal, and deeper than forty feet, through which persons are obliged to travel, shall be equipped with a suitable ladder-way.

§ 27-347 Construction of ladder-ways

A. Permanent ladder-ways shall be strong and firmly fastened, and shall be kept in good repair.

B. In a vertical shaft the inspector may, in his discretion, by an order in writing, direct that the ladder be inclined at the most convenient angle which the space where the ladder is fixed allows, and every ladder shall have substantial platforms at intervals of not more than twenty feet. The platform shall be closely covered, with exception of an opening large enough to permit the passage of a human, and shall be arranged so that a person cannot fall from one ladder through the opening to the next ladder.

C. Ladder-ways shall be provided in shafts in the course of sinking them to within a distance from the bottom as will secure them from damage by blasting. From the end of the ladder-ways, portable ladders shall be extended to the bottom of the shaft.

§ 27-348 Shaft stations

Stations or levels shall have a passageway around the working shaft so that crossing over the hoisting compartments may be avoided. Sumps shall be securely covered. At shaft stations a gate or guard rail shall be provided and kept in place across the shaft, except when a cage, skip or bucket is being loaded, but may be temporarily removed for repairs or other operations if proper precaution is taken to prevent danger to persons. The top of the shaft shall be protected by a substantial gate or guard rail.

§ 27-349 Tracks and roadbeds; maintenance underground

When mechanical haulage is in an underground mine, the tracks, roadbeds, rails, joints, switches and frogs shall be constructed, installed, bonded and maintained in a manner consistent with the speed and type of haulage operation being conducted.

§ 27-350 Lights; trolley wires

A. Stationary lights which are approved by the inspector shall be provided during working hours at all stations in shafts during the time such shafts are in actual use, and at all stations in levels where hoisting or hauling is conducted by means of machinery, and at night at all working places on the surface.

B. Electric trolley wires shall be at least seven feet above the floor.

§ 27-351 Hoists; operator; indicator

A. No person addicted to intoxicating liquors or drugs, or under eighteen years of age shall be employed as a hoisting engineer.

B. All power hoisting machinery used in hoisting from or lowering employees and materials into mines, except for prospect shafts not exceeding three hundred feet in depth, shall be equipped with an indicator placed near and in clear view or hearing of the engineer. The indicator shall be in addition to marks on the rope, cable or drum.

C. It is unlawful to hoist or lower persons from or into a mine at a speed greater than fifteen hundred feet per minute, but the inspector may designate a lesser speed than fifteen hundred feet per minute in a shaft, if in his opinion a greater speed is unsafe, or a greater speed if in his opinion particular shafts and hoist conditions so warrant.

§ 27-352 Inspection and construction of hoists

A. Hoisting machinery, cables and sheaves shall be inspected once every twenty-four hours by a competent person appointed by the operator for that purpose, and the person making the inspection shall immediately report in writing to the operator all defects found.

B. Ropes or cables used for hoisting purposes shall be of approved quality and manufacture. In shafts and winzes over two hundred feet deep, wire ropes or cables only shall be used for hoisting purposes.

C. Head frames where persons are hoisted at a speed of over two hundred fifty feet per minute and where more than twenty-five persons are employed shall be constructed to allow at least twenty-five feet above the hoist landing stage in which the cage, skip or bucket can travel freely in case of an overwind.

§ 27-353 Safety cage and catches

A. It is unlawful for the operator of a mine to permit hoisting or lowering persons in a shaft deeper than three hundred feet except shafts in process of sinking, unless an iron-bonnetted safety cage equipped with gates at least five feet in height is used for hoisting and lowering the persons. Every cage or skip used for hoisting persons shall be provided with a safety catch of sufficient strength to hold the cage or skip with its maximum load at any point in the shaft in the event the hoisting cable breaks. The inspector shall require that cages and skips be equipped as required by this section and that on all cages the safety catches are kept well oiled and in good working condition.

B. In a shaft less than three hundred feet deep where no safety cage is used, and where cross-heads are used, platforms for employees to ride upon equipped with safety catches as required for cages and skips shall be provided.

C. Skips, the capacity of which exceeds five tons, running on steel guides in shafts designed primarily for the hoisting of rock, need not be equipped with safety catches. Such skips, however, shall be equipped with a platform and bonnet for the protection of the persons, who, as provided in this article, may legally ride the skips. Only persons engaged in shaft maintenance, pumpmen, skiptenders, supervisors and inspectors shall be permitted to be hoisted or lowered in such skips. No person, including those specifically mentioned in this paragraph, shall be permitted to ride a loaded skip.

§ 27-354 Cross-heads; buckets

A. Vertical shafts more than two hundred feet deep from which hoisting is done by a bucket shall be provided with suitable guides, and with the bucket a cross-head traveling upon the guides shall be provided. The height of the cross-head shall be at least one and one-half times its width. If the cross-head is a type not secured to the hoisting rope, a stopper of a design approved by the inspector shall be securely and rigidly fastened to the hoisting rope at a suitable point above the rim of the bucket. The number of persons permitted to ride on the deck of a cage, or, in or on a skip or bucket, shall be determined by the inspector and no more than that number shall be allowed to ride.

B. No persons shall ride upon a cage or in or on a skip or bucket when it is loaded with rock or ore, or when loaded with tools, timber, powder or other material, except for the purpose of assisting in passing it through the shaft.

§ 27-355 Hoisting tools and materials

A. When tools, timber or other materials are loaded or hoisted in the shaft, the ends, if projecting above the top of the bucket, skip or other vehicle, shall be securely fastened to the hoisting rope or to the upper part of the vehicle, and tools, timber or other materials loaded erectly upon a cage shall be securely lashed before they are hoisted or carried.

B. No cage, skip, bucket or other vehicle shall be lowered directly to the bottom of a shaft fifty feet or more in depth where persons are working, but shall be stopped at least fifteen feet above the bottom until the signal to lower further has been given by one of the persons at the bottom of the shaft.

§ 27-356 Protection from falling materials

A. Persons engaged in sinking a shaft in which regular hoisting from an upper level is going on, shall be protected from the danger of falling material by a suitable covering, with a sufficient opening left in the covering for the passage of the bucket or conveyance used in the sinking operation.

B. In shafts, winzes or raises where two or more crews are working, one crew above another, there shall be a bulkhead or other barrier between each two crews strong enough to stop tools or other material that may fall from the persons working above, and only the cage, skip or bucket compartment shall be left open.

C. Shafts or winzes shall have a bulkhead over the persons working in the bottom of the shaft or winze built of timber not less than six inches in thickness, not more than fifty feet above the bottom of the shaft or winze, to provide ample protection for the persons working in the bottom of the shaft or winze, and so constructed as not to shut off the air circulation. The cage, skip or bucket compartment only shall be left open. Shafts or winzes shall be cleaned down below the bulkhead after each blasting.

D. Windlasses and winzes shall be provided with a suitable plug or some other reliable device to prevent the bucket or other conveyance running back.

E. No open hook shall be used with a bucket in hoisting, but only some approved form of safety hook or shackle hook.

§ 27-357 Hoist release signal

A. At a mine where men are hoisted by mechanical means, a hoistman charged with the hoisting shall be kept on duty at the hoist at all times when men are underground, except as provided in subsection B.

B. The requirements of subsection A shall not apply to an automatic hoist equipped with the following devices:

A device which automatically cuts off the power to the hoist motor and sets the brakes when the hoist ropes of a winding-drum machine becomes slack, and safety dogs or devices on the cage which will stop the cage in the event of slack rope or a broken hoisting cable.
A governor which will prevent unsafe speeds and a device to set the brakes and stop the cage if the safe speed is exceeded.
Devices which will reduce the speed of the cage before the approximate stopping points so that it can be stopped properly.
A manually operated safety switch and other device by means of which the cage may be stopped, started or directed to another level or stopping point.
A call button located at each stop which, when actuated, will cause the cage to move to that stop providing the gates and gate switches are closed on all stations.
A magnetic brake which will stop the hoist motor and hold the cage in fixed position whenever the power applied to the hoist motor is removed or fails.
An opening or escape hatch in the cage and a shaft manway with ladders which may be reached from the cage.
A means of signaling or communicating from the cage to a designated place in the mine or on surface where a responsible person on duty can be notified in the event of an emergency.

C. An automatic hoist is one that does not require the attendance of a hoist engineer and in which the hoist cage and shaft are equipped with operating and safety devices which control the movement of the hoist from the cage and from all stations or levels.

§ 27-358 Signaling apparatus

A. Every shaft and each compartment thereof used for hoisting which exceeds fifty feet in depth, and not exempted in writing by the inspector, shall be provided with an efficient means of interchanging distinct and definite signals between the top of the shaft and the lowest level from which hoisting is being done, and the various intermediate levels for the time they are in use.

B. The signaling apparatus shall be either wire or cable actuating a bell, whistle, speaking tube, telephone, electric or electronic system, or two or more of them.

C. Only those employees and supervisors authorized by the operator shall be permitted to ring any shaft or station bells.

§ 27-359 Signal code

A. The following signal code shall be used in all mines:

1 bell, stop immediately if in motion.

1 bell, hoist muck, after preliminary signal for hoisting muck.

2 bells, lower.

3 bells, raise.

3 -1 bells, hoist men.

3 -2 bells, lower men.

4 bells, release cage, skip, or bucket to the hoistman.

5 bells, blasting or ready to shoot.

(a) The signal for blasting or ready to shoot is a caution signal and if the engineer is prepared to accept it he shall acknowledge by raising the bucket or cage a few feet then lowering it again.

(b) After accepting the signal for blasting or ready to shoot, the engineer shall be prepared to hoist men away from the blast as soon as any signal is given and shall accept no other signal in the meantime.

6 bells, air on or off.

7 bells, danger signal, followed by station signal, calls cage to that station, and such signal takes precedence over all other signals except an accepted blasting signal.

B. The following shall be station signals:

1 -2 bells, collar of shaft.

1 -3 bells, 1st level.

1 -4 bells, 2nd level.

1 -5 bells, 3rd level.

2 -1 bells, 4th level.

2 -2 bells, 5th level.

2 -3 bells, 6th level.

2 -4 bells, 7th level.

2 -5 bells, 8th level.

4 -1 bells, 9th level.

4 -2 bells, 10th level.

4 -3 bells, 11th level.

4 -4 bells, 12th level.

4 -5 bells, 13th level.

5 -1 bells, 14th level.

5 -2 bells, 15th level.

5 -3 bells, 16th level.

5 -4 bells, 17th level.

5 -5 bells, 18th level.

6 -1 bells, 19th level.

2 --1-2 bells, 20th level.

2 --1-3 bells, 21st level.

2 --1-4 bells, 22nd level.

2 --1-5 bells, 23rd level.

2 --2-1 bells, 24th level.

2 --2-2 bells, 25th level.

2 --2-3 bells, 26th level.

2 --2-4 bells, 27th level.

2 --2-5 bells, 28th level.

2 --4-1 bells, 29th level.

2 --4-2 bells, 30th level.

2 --4-3 bells, 31st level.

2 --4-4 bells, 32nd level.

2 --4-5 bells, 33rd level.

2 --5-1 bells, 34th level.

2 --5-2 bells, 35th level.

2 --5-3 bells, 36th level.

2 --5-4 bells, 37th level.

2 --5-5 bells, 38th level.

2 --6-1 bells, 39th level.

4 -1-2 bells, 40th level.

4 -1-3 bells, 41st level.

4 -1-4 bells, 42nd level.

4 -1-5 bells, 43rd level.

4 -2-1 bells, 44th level.

4 -2-2 bells, 45th level.

4 -2-3 bells, 46th level.

4 -2-4 bells, 47th level.

4 -2-5 bells, 48th level.

4 -4-1 bells, 49th level.

4 -4-2 bells, 50th level.

C. The station signal shall be given before the hoisting or lowering signal. If bells run slowly, move slowly.

D. The engineer shall not move a cage, skip or bucket unless he understands the signal.

E. One copy of the signal code provided for by this section shall be posted on the gallows frame on each mine, one at each station and one before the engineer.

F. Special signals may be used if they are easily distinguished by their sound, or otherwise, from the code provided for by this section, and do not interfere with it in any manner.

§ 27-360 Precautions against flooding

A. When advancing a drift, adit, level or incline toward a mine working that appears to be filled with water, a bore hole shall be kept at least twenty feet in advance of the breast of the drive and also, if necessary, in directions laterally from the course of the drive. The working place shall not exceed ten feet in width and further measures shall be taken which are deemed necessary by the inspector to obviate the danger of a sudden breaking through of water. No raise shall be allowed to approach within ten feet of a portion of a winze or a stope in which there is a dangerous accumulation of water, unless the winze or stope is first unwatered by bailing or pumping, or by means of a bore from the raise. When in the opinion of the inspector there is danger of a sudden inrush of water, additional raises, drifts or other workings shall be constructed as necessary to insure escape of persons from the lower workings. Places for the storage of water in mines shall be constructed to prevent leakage as far as possible and insure the safety of the persons working below them.

B. It is unlawful for an operator to impound water or keep water impounded within a mine in which persons are working below the water so impounded in a manner which endangers the safety of the persons unless the water is impounded by a dam or wall approved by the inspector.

§ 27-361 Common system of drainage; contribution of cost

A. When adjacent or contiguous mines, opened, developed and worked upon the same or upon separate lodes have a common ingress of water, or, by reason of subterranean communication of water, have a common drainage, the operators of the mines shall provide for disposal of their proportionate share of the drainage, or to prevent the water in the mine from flowing in or upon neighboring mines.

B. If an operator of such mines fails or neglects to provide for drainage, and by reason of failure or neglect the operator of an adjacent or contiguous mine is compelled to pump, drain or otherwise provide for the water flowing in from the other mine, the operator of the mine in default shall be liable for the proportion of the actual and necessary cost and expense of pumping, draining or otherwise providing for such water.

§ 27-362 Order for inspection

A. When an action is commenced to recover the costs and expenses of draining lodes or mines, the court shall grant an order allowing plaintiff to inspect the lodes or mines claimed to have been drained upon application and affidavit that the inspection is necessary for proper preparation of the action for trial.

B. The order shall designate the number of persons, not exceeding three besides plaintiff, to make the examination and they may cause the removal of rock, debris or other obstacles in a lode or vein when removal is shown necessary to a just determination of the claim.

§ 27-363 Danger signals; visitors

A. Owners or operators shall place warning signs or other warning notices at the entrance to working places deemed dangerous, and at the entrance to old or abandoned workings of active mines, and no person other than those authorized by the operator shall remove or go beyond a caution-board, warning sign or danger signal so placed.

B. Visitors shall not be allowed underground unless accompanied by the operator or his agent.

§ 27-364 Interfering with equipment

No person shall knowingly:

Injure or destroy any equipment or machinery of a mine, nor, unless authorized so to do, obstruct, open, close or change the position of a ventilation door, brattice, or airway, or handle or disturb any part of the machinery of the hoisting engine of the mine.
Open the door of a mine and neglect to close it.
Endanger the mine or those working therein.
Disobey a lawful order, or do a wilful act whereby the lives, safety or health of persons working in a mine, the security of a mine, or the machinery connected therewith, is endangered.

§ 27-365 Regulation of underground use of internal combustion engines

The underground use of any internal combustion engine is declared unlawful, unless after application filed with the inspector he approves the equipment for safe use in the type of underground work for which the application is filed and finds that the atmospheric conditions in the underground workings where the equipment is to be used are such that the operation of such equipment will not endanger the health or safety of any employee. If the application is approved by the inspector, the operation of the designated equipment shall be lawful only if and so long as it is operated and maintained in accordance with recommendations made public from time to time by the inspector, and only upon the condition that when air quality becomes unsafe operation of the equipment shall be stopped by the operator until air quality again becomes safe either by increasing ventilation or by correcting mechanical imperfections in the equipment, whichever is found to be the cause of the unsafe quality of the air.

§ 27-366 Maps of underground workings

When ordered by the inspector, the operator of every underground mine shall make and maintain a reasonably accurate map of the workings of the mine. At least once every six months or oftener if necessary, the operator shall make alterations or additions to the map showing excavations made since those last shown on the map. All parts of the mine which were worked or abandoned shall be clearly indicated and all underground workings shall be surveyed and mapped before they become inaccessible. The maps shall at all times be open to inspection by the inspector.

§ 27-367 Maintenance and use of loading equipment

Mucking machines, sorters and other loading devices shall be maintained and operated in a safe manner.

§ 27-368 Ventilation; condition of airways; testing

A. Every underground working place shall have a sufficient amount of ventilation for employees working in such place.

B. In any underground working place where there is danger of a serious fire, ventilation shall be controlled by mechanical means.

C. The air currents going into underground workings shall have sufficient volume and velocity to direct and carry away smoke and harmful gases from blasting and any other gases or dust which might contaminate the atmosphere.

D. Intake and exhaust airways in underground mines shall be maintained in good condition and free from obstruction.

E. When the atmosphere in any mine or part of a mine is known to contain or is suspected of containing any explosive or toxic gas, the operator shall test it before employees are allowed to work in such mine or part of such mine.

§ 27-369 Evacuation; procedure; routes

Every operator shall have a plan for orderly evacuation in the event of an emergency. Every evacuation route shall be designated by signs and kept open at all times.

§ 27-370 Stench warning

A. The operator shall maintain a suitable and sufficient stench warning that can be introduced into the compressed airlines in case of an emergency and reach all employees who might be working underground.

B. When the odor from a stench warning is detected by employees or other persons, they shall immediately leave their working place or other areas underground, give warning to other employees or persons in their vicinity, and follow the operator's evacuation procedure.

§ 27-371 Radon control

Concentrations of radon gas shall not exceed such amounts as may be set by the inspector.

§ 27-372 Uranium operations; testing for radon daughters

In all uranium operations the operator shall test regularly for radon daughter concentration and submit such records of testing as may be required to the inspector.

§ 27-373 Cap lamps

Permissible cap lamps shall be required in all underground mines where there is a potential hazard from gas.

Article 4 Prevention of Hazardous Dust and Gas Conditions

§ 27-411 Definitions

In this article, unless the context otherwise requires:

"Dust prevention practices" includes ventilation, suction or exhaust methods of removing dust, wet methods for settling dust, and the use of respirators when the condition or exposure is temporary or intermittent, and other means of removing or settling dust from mine air as approved by the state mine inspector.
A "hazardous dust or gas condition" shall exist when the breathing zone of an employee while engaged in the performance of his work contains higher concentration limits of toxic dust and fumes, mineral dusts, and gases than specified by the state mine inspector in the rules and regulations. Dust counts shall be determined in accordance with techniques prescribed by the inspector and shall be made when necessary.
"Respirators" means only those respirators approved by the United States bureau of mines or which may be approved hereafter by the United States bureau of mines and by the state mine inspector.
"Breathing zone", in the case of persons wearing respirators, is the air space created after the passage of air through the protective device.

§ 27-412 Dust control

A. Every operator shall do everything reasonably within his power to encourage good practices in the use of any appliances for allaying dust. Each employee shall use such devices as are furnished by the operator. Employees shall not be allowed to work in hazardous dust or gas concentrations without approved respiratory and eye protection.

B. In every operation where employees are exposed to hazardous dust conditions, some mechanical or other means which will alleviate this condition shall be used whenever and wherever practical.

C. In dry places where the operation of a power drill produces dust, such dust shall be controlled either by wet drilling, spraying, or approved dust catching devices.

Article 5 Open Pits

§ 27-421 Ingress and egress

The operator shall provide a safe means of ingress and egress at every open pit or any working place.

§ 27-422 Banks

A. Banks and benches shall be suitably trimmed in a manner consistent with the kind of rock or material, height of banks, and type of equipment being used.

B. The operator or a supervisor designated by him shall make a daily inspection of the faces and banks in the working area of any open pit and shall cause all dangerous material to be dislodged or otherwise made safe.

§ 27-423 Tracks, roadbeds and roadways

A. Tracks, roadbeds, rails, joints, switches and frogs on all haulageways shall be constructed, installed and maintained in a manner consistent with the speed and type of haulage operations being conducted.

B. Truck haulage roadways, including berms where necessary, shall be constructed and maintained with due regard for safety, in a manner consistent with the speed and type of haulage operations being conducted and the type of equipment being operated.

§ 27-424 Operation of heavy equipment

A. The operator shall insure that employees operating any heavy duty equipment such as a locomotive, crane, power shovel, truck, bulldozer, front end loader or scraper are qualified to operate such equipment.

B. Mobile heavy duty equipment shall be inspected regularly and maintained in a safe operating condition.

§ 27-425 Open pits; fencing or blocking

Those portions or places of open pits which border on inhabited places frequented by the public shall be fenced or otherwise blocked off.

Article 6 Aggregate Mining Operations

§ 27-441 Definitions

In this article, unless the context otherwise requires:

"Aggregate" means cinders, crushed rock or stone, decomposed granite, gravel, pumice, pumicite and sand.
"Aggregate mining" means clearing, covering or moving land using mechanized earth-moving equipment on privately owned property for aggregate development and production purposes, including ancillary aggregate finished product activities. Aggregate mining includes an operation that mixes or recycles rock, sand, gravel or similar aggregate materials with water and cement or with asphalt. Aggregate mining does not include surveying, seismic work, exploration or maintenance activities that create a de minimis land disturbance.
"Aggregate mining operation" or "operation" means property that is owned, operated or managed by the same person for mining aggregate and is located in an aggregate mining operations zoning district established pursuant to section 11-812. Property that is not contiguous but is in the same zoning district, that is owned, operated or managed by the same person and that is operated as a single aggregate mining complex is considered to be a single aggregate mining operation.
"Existing aggregate mining operation" means an aggregate mining operation that was in operation on or before the date the aggregate mining operations zoning district is established pursuant to section 11-812.
"Major modification" means a change in an approved community notice that is one or more of the following:

(a) An increase of more than twenty acres from that stated in the currently approved community notice for the aggregate mining operation.

(b) A new and significant type of aggregate mining that has never been conducted at the aggregate mining operation site.

(c) Substantive changes to the provisions of an approved community notice required by section 27-442, subsection C, paragraphs 4, 6, 8, 9 and 10.

"Minor modification" means a change in a community notice that is not a major modification.
"New aggregate mining operation" means an aggregate mining operation that begins operations after the date the aggregate mining operations zoning district is established pursuant to section 11-812.

§ 27-442 Aggregate mining operations; community notice; application

A. An owner or operator of an aggregate mining operation shall not conduct any aggregate mining until it has an approved community notice pursuant to section 27-445, except that an owner or operator of an existing aggregate mining operation may continue the operation if a community notice is filed as provided by subsection H of this section.

B. An owner or operator of an aggregate mining operation shall not undertake a major modification of an approved community notice until a major modification application is approved by the state mine inspector pursuant to section 27-445.

C. The owner or operator of a new aggregate mining operation shall file an application for a community notice with the inspector containing:

The name and mailing address of the aggregate mining operation.
The name and mailing address of the owner or operator of the operation.
The name, mailing address and telephone number of the designated community representative or representatives for the operation.
A statement describing the mining activities to be conducted at the operation.
The amount of acreage of the operation and a map showing the location of the major process facilities.
Each type of major equipment to be used in the operation.
The approximate date when the operation will start.
A description and location of access routes to be used to and from the operation site during normal hours and nonemergency conditions.
The normal operating hours of the operation to be maintained during nonemergency conditions, unless the inspector authorizes a temporary variance from normal operating hours.
A description of measures the owner or operator will use to moderate, to the extent economically practicable at the site, any adverse physical effects on the residential property owners who are notified pursuant to section 27-444.

D. An owner or operator who owns or leases the land of the operation may submit a joint application for a community notice with one or more lessees or sublessees who are also operating an aggregate mining operation on the same property. A joint application for a community notice must separately list the information required pursuant to subsection C of this section by each owner or operator of an aggregate mining operation. Owners or operators of aggregate mining operations who received approval for a joint application for a community notice may also file a joint application on that approved community notice for major and minor modifications.

E. The owner or operator may propose a major or minor modification by filing an application with the inspector containing the text of the community notice with the proposed changes noted in the text.

F. Within fourteen days after receiving an application for a community notice for a new aggregate mining operation or major modification, the inspector shall notify the applicant if the community notice application contains the information required by subsection C of this section or if the major modification application is complete pursuant to subsection E of this section. If the inspector fails to notify the applicant within fourteen days, the application is considered to be complete.

G. The owner or operator must file an application for a minor modification to an approved community notice with the state mine inspector. Minor modifications take effect on filing, unless a later effective date is designated in the application. Applications for minor modifications are not subject to sections 27-443, 27-444 and 27-445.

H. For purposes of having an approved community notice, within ninety days after an aggregate mining operations zoning district is established pursuant to section 11-812, the owner or operator of an existing aggregate mining operation must file with the state mine inspector a community notice, which is not subject to sections 27-443 and 27-444. The community notice shall contain all the information required by subsection C of this section, except paragraph 7, for its aggregate mining operation. Owners or operators of existing aggregate mining operations may submit a joint application for a community notice pursuant to subsection D of this section.

§ 27-443 Application fee; aggregate community notice fund

A. The inspector shall adopt by rule an application fee for a community notice for a new aggregate mining operation and for a major modification of an approved community notice. The state mine inspector shall collect an application fee established by rule from each owner or operator who applies pursuant to section 27-442 for a community notice for a new aggregate mining operation or for a major modification of an approved community notice. The inspector shall deposit, pursuant to sections 35-146 and 35-147, the monies collected from applicants in the aggregate community notice fund.

B. The aggregate community notice fund is established. The state mine inspector shall administer the fund. Monies in the fund are continuously appropriated to the state mine inspector for the purpose of processing community notice applications and to conduct public meetings pursuant to this article. On notice from the inspector, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund. Monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

§ 27-444 Community notice; public meeting

A. Within twenty-one days after the state mine inspector notifies an owner or operator of an aggregate mining operation that the application for a community notice for a new aggregate mining operation or a major modification for an approved community notice is complete, or within twenty-one days after the application is considered to be complete, the owner or operator shall send by certified mail a copy of the community notice:

To each residential property owner, as shown on the current property tax roll, within a one-half mile radius of the aggregate mining operation. The owner or operator shall submit the list of notified residential property owners to the inspector. The community notice shall include a statement that the property owner may request the state mine inspector to hold a public meeting and may submit written comments as provided by this section.
To the aggregate mining operations recommendation committee for the district in which the operation is located.
If the operation is located in a county in which a multi-county water conservation district is established pursuant to title 48, chapter 22, to the multi-county water conservation district.

B. If there is sufficient public interest, the inspector shall schedule and conduct a public meeting within forty-five days after the community notice for a new aggregate mining operation or major modification is filed with the inspector. The inspector shall give at least fifteen days' notice of the meeting by filing the notice in the office of the secretary of state and by mail to the residential property owners who requested the public meeting pursuant to subsection A, paragraph 1.

C. The inspector or an employee of the inspector shall conduct any public meeting on a community notice. The aggregate mining operation's designated representative shall attend and respond to questions relating to information in the community notice. If a notified residential property owner cannot attend the public meeting, the owner may submit written comments to the inspector before the meeting regarding the community notice. The inspector or the inspector’s employee and the aggregate mining operator’s designated representative shall receive and consider comments from persons attending the meeting and the written comments submitted before the meeting.

§ 27-445 Approval of community notice or major modification

A. The state mine inspector shall approve or disapprove a community notice for a new aggregate mining operation or major modification within sixty days after the notice is filed by the owner or operator of the aggregate mining operation.

B. The inspector shall approve the community notice for a new aggregate mining operation or a major modification if:

The notice filed with the inspector contains the information required by section 27-442, subsection C or the major modification filed with the inspector is complete pursuant to section 27-442, subsection E.
The fee prescribed in section 27-443 is paid.
The community notice or major modification filed with the inspector is mailed to property owners as required by section 27-444, subsection A.
The designated community representative attends and responds to questions if a public meeting is held pursuant to section 27-444, subsections B and C.

C. If the inspector disapproves a community notice or major modification, the inspector must include with the disapproval a written explanation stating the reasons for denial, including recommendations for correcting the unacceptable parts of the community notice or major modification.

D. Community notices for existing aggregate mining operations filed pursuant to section 27-442, subsection H are considered to be approved on submission to the inspector.

E. The owner or operator of any aggregate mining operation shall operate according to an approved original or modified community notice.

§ 27-446 Claims of deviation from an approved community notice

A. After a community notice is approved by the state mine inspector, a residential property owner who resides within one-half mile of the boundaries of the aggregate mining operation may submit a written complaint to the designated community representative that the operation has materially deviated from the approved community notice, specifying the community notice provision that is in question and the nature of the material deviation.

B. If the aggregate mining operation does not address the complaint to the satisfaction of the residential property owner within thirty days after receiving the complaint, the notified residential property owner may file the same complaint with the inspector with a statement that the aggregate mining operation has not addressed the complaint to the property owner's satisfaction.

C. In counties that have established an aggregate mining operations recommendation committee pursuant to section 11-812, the inspector shall request the committee to hear the complaint. The committee shall advise the inspector within thirty days in writing of its findings and recommendations regarding the complaint. The inspector shall render a decision on the complaint within thirty days after receiving the committee's recommendation. The inspector shall notify, in writing, the owner or operator of the aggregate mining operation, the complainant and the committee of the decision.

§ 27-447 Inspection and enforcement

A. The state mine inspector may enter and inspect any aggregate mining operation to determine compliance with an approved community notice.

B. If the inspector determines that a person is violating this article, an approved community notice or aggregate mining operations zoning district standards regulation adopted by a county and approved by the state mining inspector pursuant to section 11-812, the inspector may issue an order requiring compliance either immediately if the violation is causing an imminent and substantial danger to the public or within a stated period of time. A compliance order must state with reasonable specificity the nature of the community notice violation, a reasonable amount of time for compliance, if applicable, and the right to a hearing. The inspector shall transmit the compliance order to the alleged violator either by certified mail, return receipt requested, or by hand delivery. At the inspector's request, the attorney general may file an action to enforce orders issued under this section after the order becomes final. The action must be filed in the superior court in the county in which the alleged violation occurred or in which the inspector maintains an office.

C. The inspector may suspend, withdraw or revoke a community notice approval if the inspector determines that the aggregate mining operation is in violation of an approved community notice. Any action taken under this subsection must comply with the requirements of title 41, chapter 6, article 10 and section 41-1009, subsection E.

D. If the inspector has reason to believe that a person is violating this article or an approved community notice or aggregate mining operations zoning district standards regulation adopted by a county and approved by the inspector pursuant to section 11-812 or that a person is causing an imminent and substantial danger to the public safety, the inspector, through the attorney general, may request a temporary restraining order, a preliminary injunction or any other relief necessary to protect the public safety without regard to whether the person has requested a hearing. An action filed pursuant to this subsection must be brought in the superior court in the county in which the alleged violation occurred or in which the inspector maintains an office.

§ 27-448 Sand and gravel safety rules

A. All sand and gravel operations shall be conducted with due regard to safety. The inspector shall adopt rules to carry out the provisions of this section.

B. Article 5 of this chapter applies to sand and gravel operations.

Article 7 Rules and Regulations

§ 27-461 Definitions

In this article, unless the context otherwise requires:

"Inspector" means the state mine inspector.
"Interested parties" means all persons who have filed written notice with the inspector of their desire to receive the notices provided for in this article.

§ 27-462 Administration by inspector; rules and regulations

The inspector shall administer this chapter and may adopt rules reasonably necessary to effectuate the provisions of this chapter.

§ 27-463 Procedure

Except as provided in this article, in adopting rules, the inspector shall comply with the procedures set forth in title 41, chapter 6.

§ 27-464 Notice of proposed adoption of rule

At least twenty days prior to the adoption of any rule, copies of the notice filed with the secretary of state pursuant to section 41-1022 shall be mailed to all interested parties.

§ 27-469 Exceptions to rules and regulations

In cases where, in the opinion of the inspector, the enforcement of any order or rule would not materially increase the safety of employees and would cause undue hardship on an operator, exceptions may be made at the discretion of the inspector. To be effective such exceptions shall be in writing. Such exceptions can only be revoked after reasonable notice is given in writing to the operator concerned.

Chapter 4 Oil and Gas

Article 1 Production and Conservation

§ 27-501 Definitions

In this article, unless the context otherwise requires:

"Certificate of clearance" means a permit approved and issued or registered by the commission for transportation or delivery of oil, gas or oil and gas products.
"Certificate of compliance" means a certificate issued by the commission prior to connection of an oil or gas well with a pipeline, showing compliance with the conservation laws of this state and conservation rules and orders of the commission.
"Commission" or "commissioner" means the oil and gas conservation commission.
"Completed well" means a well that meets any of the following conditions:

(a) Has produced or is ready to produce new formation hydrocarbons or gases.

(b) Has been declared a dry hole or plugged and abandoned.

"Developed area" or "developed unit" means a drainage unit having a completed well capable of producing oil or gas in paying quantities.
"Drainage unit" or "drilling unit" means the maximum area in a pool which may be drained efficiently by one well to produce the reasonable maximum amount of recoverable oil or gas in the area.
"Field" means the general area which is or appears to be underlaid by not less than one pool, including underground reservoirs containing oil or gas, or both.
"Fund" means the state general fund.
"Gas" means natural gas, casinghead gas, all other hydrocarbons not defined as oil, carbon dioxide and helium or other substances of a gaseous nature. Natural gas and casinghead gas are further defined as follows:

(a) "Natural gas" means any combustible gas or vapor composed chiefly of hydrocarbons occurring in gaseous or vapor phase at initial reservoir conditions.

(b) "Casinghead gas" means any gas or vapor indigenous to an oil stratum and produced from such stratum with oil.

"Illegal oil" and "illegal gas" means oil or gas produced within the state from any well during any time in which the well has produced more than the amount allowed by law or any rule or order of the commission or the production of which causes waste.
"Illegal product" means any product derived, in whole or in part, from illegal oil or gas.
"Net drainage" means drainage not equalized by counterdrainage.
"Oil" means crude petroleum oil and all other hydrocarbons, regardless of gravity, which are produced at a well in liquid form by ordinary production methods and which are not the result of condensation of gas.
"Owner" means the person having the right to drill into, produce and appropriate production of oil or gas, or both, from a pool.
"Person" includes a corporation, association, partnership, receiver, trustee, guardian, executor, administrator, fiduciary or representative or any group acting as a unit and includes any department, agency or instrumentality of the state or any of its governmental subdivisions.
"Pool" means an underground reservoir containing a common accumulation of oil or gas, or both, and includes each zone of a general structure completely separated from any other zone in the structure.
"Producer" means the owner of a well capable of producing oil or gas.
"Product" means oil, gas or any product, by-product, mixture or blend of oil or gas.
"Royalty owner" means a person who possesses an interest in the production but who is not an owner.
"Waste" includes:

(a) Physical waste, as that term is generally understood in the oil and gas industry.

(b) The inefficient, excessive or improper use of or the unnecessary dissipation of reservoir energy.

(c) The locating, spacing, drilling, equipping, operating or producing of any oil or gas well or wells in a manner which causes or tends to cause reduction in the quantity of oil or gas ultimately recoverable from a pool under prudent and proper operations or which causes or tends to cause unnecessary or excessive surface loss or destruction of oil or gas.

(d) The inefficient storing of oil or gas.

(e) The production of oil or gas in excess of transportation or marketing facilities.

(f) The production of oil or gas when it is unprofitable to dispose of such production.

"Well" includes any hole drilled or spudded in for the purpose, with the intention or under the representation of penetrating oil or gas bearing strata or of penetrating any strata in search of stratigraphic data pertinent to the location of oil or gas bearing strata, whether or not in either case oil or gas is actually discovered, any hole used in connection with the underground storage of hydrocarbon substances, whether liquid or gaseous, any hole used in connection with a process to inject any substance for purposes of disposal or to increase recovery, any hole used for the purpose of secondary or tertiary recovery and any hole used for the purpose of pressure maintenance. The commission may, as it considers to be in the best interests of the state, determine that any hole drilled or spudded in shall be included within this definition to the extent necessary for the administration and enforcement of the rules required by section 27-516. The determination of the commission shall be final in any circumstance involving the question of purpose, intent or representation, except that the determination shall be subject to appeal as provided by section 27-520.

§ 27-502 Declaration of policy

A. It is the public policy of the state to:

Conserve the natural resources of oil and gas and products thereof.
Prevent waste of oil and gas resources.
Provide for protection and adjustment of correlative rights of owners of land wherein the natural resources lie and of owners and producers of oil and gas resources and products thereof, and of others interested therein.
Encourage development of natural resources of oil and gas and their products.
Encourage continuous and economic supply thereof and demand therefor.
Safeguard the health, property and public welfare of citizens of the state and other interested persons.
Promote all purposes indicated by the provisions of this article.

B. This article shall be administered by the oil and gas conservation commission.

C. The legislature finds and declares that oil and gas in commercial quantities have now been discovered and are being produced within this state.

§ 27-503 Waste of oil or gas prohibited; powers of commissioner to prevent waste

A. Waste of oil or gas is unlawful and is prohibited.

B. The commissioner shall make inquiries he deems proper to determine whether waste exists or is imminent. In the exercise of such power the commissioner may:

Collect data.
Make investigations and inspections.
Examine property, leases, papers, books and records, including drilling records and logs.
Examine, check, test and gauge oil and gas wells, tanks, refineries and modes of transportation.
Hold hearings.
Require keeping of records and making of reports.
Take action he deems necessary to enforce and effectuate the provisions of this article.

C. The commissioner may in order to prevent waste and avoid drilling unnecessary wells, permit the cycling of gas in any pool or portion thereof or the introduction of gas or other substance into an oil or gas reservoir for the purpose of repressuring the reservoir, maintaining pressure or carrying on secondary recovery operations of any type. The commissioner shall permit the pooling or integration of separate tracts when reasonably necessary in connection with the operations.

§ 27-504 Drilling units; rules and regulations; exceptions

A. For the prevention of waste, to protect and enforce the correlative rights of owners in a pool, and to avoid augmentation and accumulation of risks arising from drilling an excessive number of wells, or reduced recovery which might result from too small a number of wells, the commission shall, after a hearing, establish a drilling unit or units for each pool. The establishment of a unit for gas shall be limited to the production of gas.

B. Each well permitted to be drilled on a drilling unit shall be drilled under the applicable rules and regulations and in accordance with the applicable spacing pattern prescribed by the commission. Exceptions to the rules and spacing pattern may be granted where it is shown, after notice and hearing, that the unit is partly outside the pool or, for some other reason, a well so located on the unit would be non-productive. Exceptions permitting a proposed well to be drilled on an unorthodox location may be granted on the basis of topography or terrain without notice or hearing.

C. If an exception is granted, the commission shall take action which will offset any advantage which the person securing the exception may have over other producers by reason of drilling the well as an exception, and so that drainage from developed units to the tract with respect to which the exception is granted will be prevented or minimized, and the producer of the well drilled as an exception will be allowed to produce no more than a just and equitable share of the oil and gas in the pool.

§ 27-505 Pooling of interests

A. When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights therein and the right to share in the production therefrom may agree to pool their interests and develop their lands as a drilling unit. If the persons do not agree to pool their interests, the commissioner may, for prevention of waste, for protection of correlative rights, or to avoid drilling of unnecessary wells, enter an order pooling and integrating their interests for the development of their lands as a drilling unit. Orders effectuating such pooling shall be made after notice and hearing, and shall be upon terms and conditions which will afford the owner of each tract the opportunity to recover or receive his just and equitable share of the oil and gas in the pool without unnecessary expense. Operations incident to drilling a well upon any portion of a unit covered by a pooling order shall be deemed for all purposes to be the conduct of such operations upon each separately owned tract in the unit by the several owners thereof. The portion of the production allocated to the owner of each tract included in a drilling unit formed by a pooling order shall, when produced, be considered as if it had been produced from the tract by a well drilled thereon. If such pooling is effectuated, the cost of development and operation of the pooled unit chargeable by the operator to other interested owners shall be limited to the actual and reasonable expenditures required for that purpose, including a reasonable charge for supervision. As to owners who refuse to agree upon pooling, the order shall provide for reimbursement for costs chargeable to each such owner out of, and only out of, production from the unit belonging to such owner. In event of dispute relative to such costs, the commissioner shall upon notice to all interested parties and hearing thereon, determine the proper costs. Appeals may be taken from the determination as from any other order of the commissioner. If one or more of the owners drills and operates, or pays the expense of drilling and operating the well for the benefit of others, then, in addition to any other rights conferred by the pooling order, the owner or owners so drilling or operating shall have a lien on the share of production from the unit accruing to the interest of each of the other owners for the payment of his proportionate share of the expenses. All the oil and gas subject to the lien, or so much thereof as necessary, shall be marketed and sold by the creditor and the proceeds applied in payment of the expenses secured by the lien, with the balance if any payable to the debtor.

B. The commissioner shall, in all instances where a unit has been formed from lands or areas of more than one ownership, require the operator, upon request of an owner, but subject to the right of the operator to market production and collect the proceeds with respect to an owner in default, as provided in subsection A, to deliver to the owner or his assigns his proportionate share of the production from the well common to the drilling unit. The owner receiving his share shall provide at his own expense proper receptacles for the receipt and storage thereof.

C. If the persons owning and drilling or exercising other rights in separate tracts embraced within a drilling unit fail to agree upon the pooling of the tracts and drilling of a well on the unit, and if the commissioner is without authority to require pooling as provided by this section, then, subject to all other applicable provisions of this article, the owner of each tract embraced within the drilling unit may drill on his tract, but the allowable production from the tract shall be the proportion of the allowable production for the full drilling unit as the area of such separately owned tract bears to the full drilling unit.

D. An agreement for repressuring or pressure-maintenance operations, cycling or recycling operations, including extraction and separation of liquid hydrocarbons from natural gas in connection therewith, or for carrying on any other method of unit or cooperative development or operation of a field or pool or a part of either, is authorized and may be performed, and shall not be held or construed to violate any statutes of this state relating to trusts, monopolies or contracts and combinations in restraint of trade, if, after notice and a public hearing, the agreement is approved by the commissioner as being in the public interest, protective of correlative rights, and reasonably necessary to increase ultimate recovery or to prevent waste of oil or gas. The agreements shall bind only the persons who execute them, and their heirs, successors, assigns, and legal representatives.

§ 27-506 Regulation of drilling in pools; notice of sale, transfer or purchase

A. The commissioner shall, upon notice and hearing, regulate drilling and location of wells in any pool and the production therefrom to prevent reasonably avoidable net drainage from each developed unit so that each owner in a pool shall have the right and opportunity to recover his fair and equitable share of recoverable oil and gas in the pool.

B. A rule, regulation or order of the commissioner made under the provisions of this section shall not be of such effect as to:

Make it necessary for a producer from, or an owner of, a tract of land in a pool, in order to obtain his just and equitable share of the production of the pool, to drill and operate a well on the tract in addition to such wells as may without waste produce his share.
Occasion net drainage unless wells are drilled and operated on the tract in addition to such wells thereon as can without waste produce the tract's just and equitable share of the production of the pool.

C. Any owner of a well, any owner of land upon which a well is located, or any lessor or lessee of land upon which a well is located shall notify the commission, in writing and on such form as the commission may prescribe, of the sale, assignment, transfer, conveyance or exchange of such well, land or lease. Such notice shall be made within ten days of such sale, assignment, transfer, conveyance or exchange and shall contain:

The name and address of the person to whom sold, assigned, transferred, conveyed or exchanged.
The name and location of the well.
The date of the sale, assignment, transfer, conveyance or exchange.

D. Any person who acquires ownership or operation of any well, ownership of any land upon which a well is located or any lease rights to land on which a well is located, whether by purchase, assignment, transfer, conveyance, exchange or otherwise, shall, within ten days after acquiring such well, land or lease rights, notify the commission, in writing and on such form as the commission may prescribe, of his ownership or operation. Such notice shall contain:

The name and address of the person from whom acquired.
The name and location of the well.
The date of acquisition.
The date when operations are assumed or resumed by new owner.

§ 27-507.01 Common purchaser of crude oil and petroleum; duties; ratable taking; discrimination prohibited

A. Every person as defined in this article which may now, or hereafter, purchase crude oil or petroleum in this state, whether they be common carriers or affiliated with common carriers or not, shall be a common purchaser of such crude oil or petroleum, and shall purchase crude oil or petroleum offered it for purchase without discrimination in favor of one producer or person as against another in the same field. The question of justice or unreasonableness shall be determined by the commission, taking into consideration the production and age of the wells in respective fields and all other proper factors. It shall be unlawful for any common purchaser to discriminate between or against crude oil or petroleum of a similar kind or quality in favor of its own production, or production in which it may be directly or indirectly interested, either in whole or in part, but for the purpose of allocating the purchase of crude oil or petroleum to be marketed, such production shall be taken in like manner as that of any other person or producer and shall be taken in a ratable proportion that such production bears to the total production offered for the market in such field. The commission shall have the authority, however, to relieve any such common purchaser, after due notice and hearing, from the duty of purchasing crude oil or petroleum of inferior quality or grade.

B. It shall be the duty of the commission to enforce the provisions of this section and it shall have the power, after notice and hearing, to issue orders defining the conditions under which extensions of pipelines shall be made to connect wells, but no such order shall be made unless the commission finds that such extensions are reasonably required and economically justified. In issuing such orders the commission shall give specific consideration to the economic factors involved.

§ 27-508.01 Common purchaser of gas; duties; ratable taking; discrimination prohibited

A. Every person as defined in this article now or hereafter engaged in purchasing from one or more producers, gas produced from gas wells shall be a common purchaser thereof within each pool from which it purchases, and as such it shall purchase gas lawfully produced from gas wells with which its gas transportation facilities are connected in the pool and other gas lawfully produced within the pool and tendered to a point on its gas transportation facilities. Such purchases shall be made without unjust or unreasonable discrimination in favor of one producer against another in the price paid, the quantities purchased, the bases of measurement, or the gas transportation facilities afforded for gas of like quantity, quality, and pressure available from such wells. The question of justice or reasonableness shall be determined by the commission. In the event any such common purchaser is likewise a producer, he is prohibited to the same extent from discriminating in favor of himself on production from gas wells in which he has an interest, direct or indirect, either in whole or in part, as against other production from gas wells in the same pool. For the purposes of this section, reasonable differences in prices paid or facilities afforded, or both, shall not constitute unreasonable discrimination if such differences bear a fair relationship to differences in quality, quantity or pressure of the gas available, the depth of the producing formation, or to the relative lengths of time during which such gas will be available to the purchaser. The provisions of this section shall not apply to:

Any well or pools used for storage and withdrawal from storage of natural gas originally produced not in violation of this section or of the rules, regulations or orders of the commission.
Purchases of casinghead gas from oil wells.
Persons purchasing gas principally for use in operations for secondary recovery of oil or gas, or for pressure maintenance, or cycling, or gas lift operations.

B. If a person is unable to purchase all the gas offered, or whenever the requirement for natural gas produced in Arizona from any pool can be fulfilled only by the production of natural gas therefrom under conditions constituting waste, or whenever the commission finds and determines that the orderly development of, and production of natural gas from, any pool requires the exercise of its jurisdiction, then said person shall purchase gas ratably so as to take the gas in proportion to the allowables or allocations established by the commission from all the wells to which it is connected, but this shall not apply when a difference in their production results from the inability of a well to produce proportionately with other wells connected to the purchaser, and in the event allowables or allocations have not been established by the commission, then said person shall purchase gas ratably from all wells to which it is connected in a manner so as to prevent waste and protect correlative rights as defined in this article. Any common purchaser taking gas produced from gas wells from a pool shall take ratably in accordance with the allocation formula, as may be established by special field rules or statewide regulations of the commission.

C. Nothing in this section shall be construed or applied to require any person to purchase gas of a quality, pressure, or any other condition, by reason of which such gas cannot be economically and satisfactorily used by such purchaser by means of his gas transportation facilities then in service.

§ 27-509 Certificate of compliance

A. An owner or operator of an oil or gas well shall, before connecting with an oil or gas pipe line, secure from the commissioner a certificate showing compliance with the conservation laws of the state and the conservation rules, regulations and orders of the commissioner. No operator of a pipe line shall connect with a well until the owner or operator furnishes a certificate of compliance.

B. The commissioner may cancel a certificate of compliance issued under this section when it appears, after due notice and hearing, that the owner or operator of a well has violated or is violating an oil or gas conservation law of the state, or a rule, regulation or order of the commissioner promulgated thereunder. Upon notice from the commissioner to the operator of a pipe line connected to any such oil or gas well that the certificate of compliance has been cancelled, the operator of the pipe line shall disconnect from the well, and it shall be unlawful for the operator of the pipe line to transport oil or gas therefrom until a new certificate of compliance has been issued by the commissioner. The owner or operator of a well shall not produce oil or gas therefrom unless a certificate of compliance is in effect covering the well.

C. This section shall not be construed to prevent a temporary connection of not more than ten days' duration with a well in order to take care of production and prevent waste until opportunity has been given the owner or operator of the well to secure a certificate of compliance. If the certificate of compliance is not secured within the ten-day period, the well shall be shut in until such time as a certificate of compliance is secured.

§ 27-510 Certificate of clearance

A. The sale, purchase or acquisition, or the transportation, refining, processing or handling of illegal oil or gas or illegal product is unlawful, but until the commissioner provides for certificates of clearance or some other method affording an opportunity to determine whether a contemplated transaction involves illegal oil or gas or illegal product, no penalty shall be imposed except as provided by subsection B.

B. Penalties may be imposed for each transaction prohibited by this section when the person committing the prohibited transaction knows that illegal oil or gas or illegal product is involved in the transaction or when the person could have known or determined such fact by the exercise of reasonable diligence or from facts within his knowledge.

C. Penalties provided in this article shall apply, regardless of lack of actual notice or knowledge, to any sale, purchase or acquisition, and to transportation, refining, sale, purchase or handling in any way without a certificate of clearance of illegal oil and gas or illegal product, where administrative provision is made for identifying the character of the commodity as to its legality.

§ 27-511 Confiscation proceedings

A. Illegal oil and gas and illegal products shall be seized and sold as contraband. The sale shall not take place unless the court finds in a proceeding held as provided by this section, that the commodity involved is contraband.

B. If the commissioner believes that illegal oil or gas or illegal product is subject to seizure and sale, he shall, through the attorney general, bring a civil action in rem for that purpose in the superior court of the county in which the commodity is found, or the action may be maintained in connection with any action or cross action for injunction, or for penalty relating to any prohibited transaction involving illegal oil or gas or illegal product. Any interested person adversely affected by seizure and sale may intervene in the suit to protect his rights. The action shall proceed in the name of the state as plaintiff against the illegal oil or gas or illegal product as defendant, and no bond shall be required of plaintiff.

C. Upon filing of the complaint, the clerk of the court shall issue a summons directed to the sheriff of the county or to any person the court may authorize to serve process, requiring him to summon all persons interested in the illegal oil or gas or illegal product mentioned in the complaint to appear and answer within thirty days after issuance and service of summons. Such persons need not be named or otherwise identified. The summons shall contain the style and number of the suit and a brief statement of the nature of the action. It shall be served by posting one copy at the courthouse door of the county in which the commodity is alleged to be located and by posting another copy near the place where the commodity is located. Copies of the summons shall be posted not less than five days before the return day stated therein, and posting shall be deemed constructive possession of the commodity by the state. A copy of the summons shall be published once each week for three weeks in a newspaper published in the county where the suit is pending. No judgment shall be pronounced by a court condemning the commodity as contraband until five days from the last publication of the summons. Proof of service by the person authorized by the court to serve process shall be by affidavit of the person making the service and proof of service by the sheriff shall be by return as required by law with respect to service of process in civil actions.

D. When it appears by a verified pleading on the part of the plaintiff, or by affidavit, that grounds for the seizure and sale exist, the clerk, in addition to the summons, shall issue an order of seizure, which shall be signed by the clerk and bear the seal of the court. The order of seizure shall specifically describe the illegal oil or gas or illegal product so that it may be identified with reasonable certainty. It shall direct the sheriff to whom addressed to take into his actual or constructive custody the illegal oil or gas or illegal product described in the order, and hold the commodity subject to order of the court. The order of seizure shall be executed as a writ of attachment is executed. No bond shall be required before the issuance of the order of seizure, and the sheriff shall be responsible upon his official bond for the proper execution thereof.

E. The sheriff shall receive, for his service, a fee as in case of seizure of personal property, to be assessed as other costs in the cause.

§ 27-512 Sale of illegal oil or gas or illegal products

A. Sale and notice of sale of illegal oil or gas or illegal product seized under the authority of this article shall be in accordance with the laws of the state relating to the sale of personal property under execution. For his services at the sale the sheriff shall receive a fee and expenses in the amount and manner provided by law for sales of personal property, to be paid from the proceeds of the sale, to be fixed by the court ordering the sale.

B. The court may order that the commodity be sold in specified lots or portions, and at specified intervals. Title to the amount sold shall pass as of the date of the act which is found by the court to make the commodity contraband. The judgment shall provide for payment of the proceeds of the sale into the fund, after first deducting the costs of the proceedings and sale, and after paying to any royalty owner intervening as an interested party in the suit who has established title to the oil or gas royalty interest, the value of his interest in the oil or gas. The amount sold shall be treated as legal oil, legal gas or legal product in the hands of the purchaser, but the purchaser and the commodity shall be subject to all applicable laws, rules, regulations and orders with respect to further sale, purchase or acquisition, and with respect to the transportation, refining, processing or handling in any manner the commodity purchased.

C. The producer, owner, or other party contesting the validity of a seizure and having an interest in securing the release of the seized oil, gas or other product, may obtain the release thereof upon furnishing a bond made and executed by a corporate surety company duly qualified to do business in the state, in an amount double the current market value of the oil, gas or other product held under seizure. The bond shall be conditioned and approved in the same manner as a replevin bond.

D. Nothing in this article shall deny or abridge any action a royalty owner, lien holder or other claimant may have because of the forfeiture of the illegal oil or gas or illegal product, against the person whose act resulted in the forfeiture.

E. All illegal oil, gas, or other illegal product sold as provided in this section shall be sold as provided by law for the sale of personal property under execution.

§ 27-513 Permit to drill well

A person desiring to drill a well in search of oil or gas shall notify the commissioner on a form prescribed by the commissioner, and shall pay a fee of twenty-five dollars for each well. Upon receipt of notification and the fee, the commissioner shall promptly issue the person a permit to drill, unless drilling the well is contrary to law or to a rule, regulation or order of the commissioner. Drilling the well is prohibited until a permit to drill is obtained in accordance with the provisions of this section.

§ 27-513.01 Appointment by drilling permittee of attorney upon whom to serve process

A. The acceptance of a permit to drill under section 27-513 shall be deemed to constitute and be the appointment of the commission by the permittee as his true and lawful attorney upon whom may be served all legal process in an action against such permittee growing out of or in any way connected with said permittee's use, occupancy, or activities upon the drilling unit or tract of land under single ownership for which his permit shall have issued, including, but not limited to, liabilities to the state, debts contracted by such permittee for labor upon or materials furnished to his drilling site, and violations of the securities act of Arizona.

B. Service of process under subsection A of this section shall be made by leaving a copy of the summons and complaint and a fee of two dollars with any member, officer, or employee of the commission in the commission's office during office hours, and shall be deemed sufficient service upon the permittee if either of the following are complied with:

The plaintiff forthwith sends notice of such service and a copy of the summons and complaint by registered mail to the permittee defendant at the latest address for such permittee shown by records in the office of the commission, appends the defendant's return receipt and plaintiff's affidavit of compliance with this section to the original summons and files them with the court within such time as the court allows.
The plaintiff serves notice of such service and a copy of the summons and complaint upon defendant, if found without this state, by a duly constituted officer qualified to serve like process in the state or jurisdiction where the defendant is found, and files with the court within such time as the court allows, the officer's return showing that the notice, copy of the summons and complaint were served as provided by this section upon defendant.

C. The court in which the action is pending may order postponements necessary to afford defendant reasonable opportunity to defend the action.

D. The commission shall keep a record, which shall include the day and hour of service, of all process served upon it under this section.

E. The fee paid to the commission at the time of service shall be taxed as costs in the suit if plaintiff recovers, and shall be paid into the fund.

§ 27-514 Commission; appointment; terms; compensation

A. The oil and gas conservation commission is established in the department of environmental quality. The department of environmental quality shall provide staff support to the commission to administer this chapter.

B. The commission shall consist of the state land commissioner ex officio who shall have no vote, and five members to be appointed by the governor, not more than three of whom shall be of the same political party. The appointive members shall be United States citizens and shall have been residents of this state for not less than the five years immediately preceding their appointment. Three members of the commission shall constitute a quorum for the transaction of business.

C. Appointments shall be for a full term of five years and expire on the third Monday in January in the appropriate year.

D. Appointive members of the commission shall receive compensation as determined pursuant to section 38-611 for each day actually spent in the performance of official duties.

§ 27-515 Administration; powers of the commission; fees

A. The commission shall administer and enforce this article and other laws relating to conservation of oil and gas. The commission and administrative staff, at any time, may enter property and inspect wells drilled for oil or gas and well records, and shall control property, machinery and appliances necessary to gauge the wells.

B. The commission may:

Administer oaths to a witness in any hearing, investigation or proceeding held under this article or any other law relating to conservation of oil and gas.
Issue subpoenas requiring attendance and testimony of witnesses and production of books, papers and records deemed material or necessary, and direct service of subpoenas by a sheriff or other officer authorized by law to serve process.
Prescribe rules and do all acts necessary or advisable to carry out this article.
Collect fees to cover the costs of services, including reproduction of records or any portion of records and copies of rules. The monies collected are not subject to section 27-523 but shall be deposited, pursuant to sections 35-146 and 35-147, by the commission in the fund from which the expenditure was originally made.
Publish technical maps, cross sections and reports and sell these materials for fees that will cover the costs incurred in their preparation, reproduction and distribution.

C. The commission may enter into cooperative agreements with agencies of the United States government, with agencies of state or local government or with Indian tribes to protect the fresh water supplies of this state from contamination or pollution brought about by the drilling of any well or for any other purpose of this article.

D. The commission may apply for and accept gifts, devises and donations of books, well records, maps or other materials. All donated materials shall become public records.

E. Monies collected under subsection B, paragraph 5 of this section are not subject to section 27-523 but shall be deposited, pursuant to sections 35-146 and 35-147, in the permit administration fund established by section 49-455 and shall be used to prepare, reproduce and distribute further publications.

§ 27-516 Rules

A. The commission shall make rules and amend them as deemed necessary for the proper administration and enforcement of this article, including the following rules and orders:

Requiring the drilling, casing and plugging of wells in a manner to prevent:

(a) Escape of oil and gas from one stratum to another.

(b) Intrusion of water into an oil or gas stratum from a separate stratum.

(d) Waste.

Requiring reports showing the location of oil and gas wells and requiring filing of logs and drilling records within thirty days after drilling is completed for a well drilled for oil or gas.
Requiring a reasonable bond with good and sufficient surety conditioned on the performance of the duties prescribed in paragraphs 1 and 2 of this subsection including the obligation to plug each dry or abandoned well.
Preventing drowning by water of any stratum or part capable of producing oil or gas in paying quantities and preventing the premature and irregular encroachment of water which reduces or tends to reduce the total ultimate recovery of oil or gas from any pool.
Requiring the operation of wells with efficient gas-oil ratio and fixing the limits of such ratios.
Preventing blowouts, caving and seepage.
Preventing creation of unnecessary fire hazards.
Requiring identification of ownership of oil and gas wells, producing leases, refineries, tanks, plants, structures and storage and transportation equipment and facilities.
Regulating shooting, perforating and chemical treatment of wells.
Regulating gas cycling operations.
Regulating secondary recovery methods, including introduction of gas, air, water or any other substances into producing formations.
Regulating spacing of wells and establishing drilling units.
Limiting, allocating and apportioning production of oil and gas from a pool or field for prevention of waste, and allocating production between tracts of land under separate ownership in a pool on a fair and equitable basis so that each tract will be permitted to produce not more than its just and equitable share from such pool.
Preventing, so far as practicable, reasonably avoidable drainage from each developed unit, not equalized by counterdrainage.
Requiring a producer of oil or gas to submit for each oil or gas well operated, on a form prescribed by the commission, a monthly report of actual production from each oil or gas well. Such report shall be submitted on or before the twenty-fifth day of the next succeeding month.
Requiring persons making settlement with the owner of oil or gas interests to render statements to the owner showing the quantity and gravity purchased and the price per barrel of oil or the price per one thousand cubic feet of gas.
Requiring, either generally or in a particular area, a certificate of clearance for transportation or delivery of oil, gas or any product.
Requiring the applicant for a drilling permit, if the surface of the land is owned by another not in a contractual relationship with the applicant, to post bond in a reasonable sum with good and sufficient surety conditioned on payment of just compensation to the landowner for actual damages to the surface of or improvements on the land caused by the drilling permittee's operations.
Requiring all forms and reports requested by the commission to be submitted to the commission on or before the twentieth day of the next succeeding month for monthly reports or within twenty days following the completion of the action requiring the report, except as otherwise provided by the commission.
Requiring the permitting of all wells and the approval of all equipment and methods:

(a) To create or use existing storage space for the underground storage of hydrocarbon substances, whether liquid or gaseous.

(b) Used for the injection of any substance into geological strata for the purpose of pressure maintenance or for the purpose of increasing ultimate recovery.

(d) Used for the disposal of any substance.

B. No rule or order, or change, renewal or extension, except as otherwise provided by this article, shall, in the absence of an emergency, be made by the commission under the provisions of this article except after a public hearing of which not less than ten days' notice has been given. The public hearing shall be held at such time and place as may be prescribed by the commission, and any interested person shall be entitled to be heard. Notice shall be given by personal service, by publication or by United States mail addressed, postage prepaid, to the last known mailing address of the person or persons affected. The date of service shall be the date on which service was made in the case of personal service, the date of first publication in the case of notice by publication and the date of mailing in the case of notice by mailing. The notice shall issue in the name of the state, shall be signed by a member of the commission or its deputy, shall specify the style and number of the proceeding and the time and place of the hearing and shall briefly state the purpose of the proceeding. If the commission gives notice by personal service, such service may be made by an officer authorized to serve process or by the commission in the same manner as is provided by law for the service of process in civil actions in the courts of this state. Proof of service by the commission shall be by the affidavit of the commission or its authorized representative making personal service. If service is made by the sheriff, the proof of service shall be as required by law for service of process in civil actions. If the matter to be heard concerns the adoption, amendment or repeal of a rule of general applicability, notice shall be by publication.

C. If an emergency is found by the commission to exist, which in its judgment requires making, changing, renewing or extending a rule or order without first having a hearing, the emergency rule or order shall have the same validity as if a hearing had been held after due notice. The emergency rule or order shall remain in force for not to exceed thirty days from its effective date but shall expire when a rule or order with respect to the subject matter of the emergency rule or order becomes effective after due notice and hearing.

§ 27-517 Hearings; reporter; fees

A. Any interested person shall, by written request, have the right to have the commissioner call a hearing for the purpose of taking action in respect to any matter within the jurisdiction of the commissioner. Hearings shall be held at the time and place the commissioner directs, and any person having an interest in the subject matter of the hearing may appear and be heard. Upon receipt of the request, the commissioner shall promptly call a hearing, and, not more than thirty days thereafter shall take action with regard to the matter as he deems appropriate. The request for hearing shall be accompanied by a fee of fifty dollars.

B. The commissioner shall prescribe rules of order and procedure in hearings or other proceedings held under this article. The commissioner shall appoint a competent shorthand reporter to be present throughout all public hearings. The reporter shall be sworn by the commissioner faithfully to perform the duties of a reporter. The commissioner shall have the same control and authority over the reporter as the judge of the superior court exercises over a court reporter, and the duties of the reporter shall, insofar as applicable, be the same as those fixed by law for a court reporter.

C. As soon as possible following the hearing the commission shall bill the person requesting the hearing for the total cost of publication for the notices of such hearing and the total cost of the court reporter's fees less the original fifty dollar fee. The requesting party shall within ten days after receipt of the billing by the commission reimburse the commission the amount of money so billed or be subject to the penalties as prescribed in subsection A of section 27-527. The money so collected by the commission shall not be subject to section 27-523 but shall be deposited, pursuant to sections 35-146 and 35-147, by the commission in the fund from which the expenditure was originally made.

§ 27-519 Refusal to obey subpoena

A. If a person fails or refuses to comply with a subpoena issued by the commissioner, or if a witness refuses to testify or answer to a matter regarding which he may be lawfully interrogated, the judge of the superior court of the county where such person resides, if a resident of the state, or the judge of the superior court of the county in which the land or any part thereof lies out of which the controversy arises, if the person is not a resident of the state, may, on application of the commissioner, issue an attachment for such person and compel him to comply with the subpoena and appear before the commissioner and produce such documents and give testimony upon such matters as required.

B. The court may punish for contempt as in case of disobedience of a subpoena issued by the court, or for refusal to testify.

§ 27-520 Judicial review; procedures

A. Except as provided in subsection B of this section and section 41-1092.08, subsection H, any party aggrieved by any final action of the commission is entitled to judicial review pursuant to title 12, chapter 7, article 6.

B. An action involving a test of the validity of this article or a rule or order shall be advanced for trial and determined as expeditiously as possible, and no postponement or continuance shall be granted unless deemed imperative by the court.

§ 27-521 Duties of attorney general

The attorney general shall be attorney for the commissioner. The commissioner may in cases of emergency or in special cases, upon request of the attorney general, retain additional counsel to assist the attorney general, and for such purpose may expend funds available under this article.

§ 27-522 Records

A. All rules and orders made by the commission shall be in writing and entered in full in a book kept by the commission. The book shall be a public record open to inspection at all reasonable times during office hours. A copy of any rule, order or other document on file in the office of the commission and certified by the commission shall be received in evidence in all courts of the state with the same effect as the original.

B. Well logs, casing records, compiled data and other information shall be properly indexed and suitably recorded in the permanent records of the commission and shall be open to inspection by the public at all reasonable times during office hours. The well records of a well drilled in unproven territory shall not be subject to inspection for a period of one year after drilling is completed. The commission shall provide sixty days' notice to the operator before records become subject to inspection. At the operator's request, the commission shall extend the confidential period for not more than two years from the date of the request if the operator can provide credible evidence that disclosure of the information is likely to cause harm to the operator's competitive position. The director of water resources may inspect any well records at any time but shall keep confidential all information that is not subject to inspection as otherwise provided in this section.

§ 27-523 Deposit of monies; expenses

A. Monies collected by the commissioner under this article shall be deposited, pursuant to sections 35-146 and 35-147, in the fund.

B. Expenses incident to the administration of this article shall be paid from the fund, subject to legislative appropriation.

§ 27-524 Enforcement

A. When it appears that a person is violating or threatening to violate any provision of this article, or a rule, regulation or order made pursuant to this article, and such person fails or refuses, on notice by the commissioner, to desist from such violation or threat of violation, the commissioner may bring an action in the superior court where the offending person resides, or in the county in which violation is alleged to have occurred or is threatened, to restrain the person from continuing the violation or from carrying out a threat of violation.

B. The commissioner may without bond obtain a prohibitory or mandatory injunction, including a temporary restraining order and preliminary injunction, and, where appropriate, an injunction restraining defendant from moving or disposing of illegal oil or gas or illegal product. Upon filing the action, summons directed to such person may be delivered to the sheriff of any county in this state for service.

C. If the commissioner fails to bring action within ten days to enjoin a threatened or actual violation of any statute relating to conservation of oil and gas, or of any provision of this article, or a rule, regulation or order made pursuant to this article, any person or party in interest adversely affected by the threatened or actual violation who has notified the commissioner in writing thereof and requested the commissioner to file the action may bring the action in the superior court of any county in which the commissioner might have brought the action to prevent the threatened or actual violation. The commissioner shall be made a party to the action.

D. If the court orders that injunctive relief be granted, then the commissioner shall be substituted for the person who brought the action, and the injunction shall issue as if the commissioner had at all times been plaintiff.

E. The owner or operator is responsible for the full cost of plugging each dry or abandoned well. If the owner or operator fails to properly plug and abandon the well, the commission may:

Forfeit the bond and use the money for that purpose.
Sue the owner or operator for costs in excess of the amount of the bond and the owner or operator is liable for that amount.

§ 27-525 Injunctions and restraining orders

A. No temporary restraining order or injunction shall be granted against the commissioner or his agent, employee or representative to restrain enforcement of a statute relating to the conservation of oil and gas or any provision of this article, or rule, regulation or order made thereunder, except after notice to the commissioner and all other defendants, and a hearing thereon. At the hearing a restraining order or injunction shall not be granted unless it is shown that the act done or threatened is unlawful, or that the statute, or provision of this article, or rule, regulation or order complained of is invalid and, if enforced, will cause irreparable injury to plaintiff. An order granting temporary or injunctive relief shall state the nature and extent of the invalidity of the statute, rule, regulation or order complained of and shall contain a statement of the probable damage relied upon by the court as justifying temporary injunctive relief.

B. No temporary injunction or restraining order against the commissioner, or his agent, employee, or representative shall become effective until plaintiff executes a bond in an amount and conditioned as the court directs. The bond shall be made payable to the clerk of the court, shall be approved by the judge, and shall be for the use and benefit of all persons who may be injured by the acts done under the protection of the restraining order or injunction. Any action upon the bond by any person claiming injury shall be brought within not more than six months after the date of final determination of the validity, in whole or in part, of such statute, provision of this article, or rule, regulation or order, the enforcement of which was restrained or enjoined.

§ 27-526 Appeals

In an action brought under this article, or an action which involves any rule, regulation or order made under this article, any party to the action shall have the right to appeal from the superior court to the supreme court as provided by law or rules of court relating to appeals in civil actions.

§ 27-527 Violation; classification

A. Any person who violates any provision of this article, or any rule, regulation or order of the commission, is subject to a civil penalty of not more than one thousand dollars for each violation and for each day the violation continues.

B. Any person who, with the intent to evade this article, or any rule, regulation or order of the commission, knowingly makes or causes to be made a false entry in any application, report, record, account or memorandum required by this article or by any such rule, regulation or order, or who knowingly omits or causes to be omitted from any application, report, record, account or memorandum, full, true and correct entries as required by this article, or by any such rule, regulation or order, or who knowingly removes from this state, or destroys, mutilates, alters or falsifies any such application, record, account or memorandum or knowingly makes any false statement to the commission or any member, officer, or employee of the commission concerning any matter within the jurisdiction of the commission is guilty of a class 2 misdemeanor.

C. The penalties provided in this section shall be recoverable by action filed by the attorney general, in the name and on behalf of the state, in the superior court of the county in which the defendant resides, or in which any defendant resides if there are more than one defendant, or in the superior court of any county in which the violation occurred. The payment of any penalty shall not operate to legalize so that it is no longer contraband any oil, gas or product involved in the violation for which the penalty is imposed, and shall not relieve a person on whom the penalty is imposed from liability to any other person for damages arising out of the violation.

Article 1.1 Fieldwide Unitization

§ 27-531 Integration of interests and spacing units

A. To prevent or to assist in preventing waste, to insure a greater recovery of oil and gas, and to protect the correlative rights of persons owning interests in the tracts of lands affected, such persons may validly integrate their interests to provide for the unitized management, development and operation of such tracts of land as a unit. Where, however, such persons have not agreed to so integrate their interests, the commission, upon proper petition, after notice and hearing as provided in section 27-516 shall be vested with the jurisdiction and authority, and it shall be its duty to make and enforce such orders and do such things as may be necessary or proper to carry out and effectuate the purposes of this article.

B. The commission shall make an order providing for the unitized operation of a pool or part thereof if, after proper petition and notice and hearing it finds that:

The unitized management, operation and further development of a pool or portion thereof is reasonably necessary in order to effectively carry on pressure control, pressure-maintenance or repressuring operations, cycling operations, water flooding operations, or any combination thereof, or any other form of joint effort calculated to substantially increase the ultimate recovery of oil and gas from the pool; and
One or more of the unitized methods of operation as applied to such pool or portion thereof are feasible, will prevent waste and will, with reasonable probability, result in the increased recovery of substantially more oil and gas from the pool than would otherwise be recovered; and
The estimated additional cost, if any, of conducting such operations will not exceed the value of the additional oil and gas so recovered.

§ 27-532 Order; units and unit areas; plan of unitization

The order of the commission shall define the area of the pool or portion thereof to be included within the unit area and prescribe with reasonable detail the plan of unitization applicable thereto. Each unit and unit area shall be limited to all or a portion of a single pool. Only so much of a pool as has been defined and determined to be productive of oil and gas by actual drilling operations may be so included within the unit area. A unit may be created to embrace less than the whole of a pool only where it is shown by the evidence that the area to be so included within the unit area is of such size and shape as may be reasonably required for the successful and efficient conduct of the unitized method of operation for which the unit is created, and that the conduct thereof will have no material adverse effect upon the remainder of such pool. The plan of unitization for each such unit and unit area shall be one suited to the needs and requirements of the particular unit dependent upon the facts and conditions found to exist with respect thereto. In addition to such other terms, provisions, conditions and requirements found by the commission to be reasonably necessary or proper to effectuate or accomplish the purpose of this article, and subject to the further requirements hereof, each such plan of unitization shall contain fair, reasonable and equitable provisions for:

The efficient unitized management or control of the further development and operation of the unit area for the recovery of oil and gas from the pool affected. Under such a plan the actual operations within the unit area may be carried on in whole or in part by the unit itself, or by one or more of the lessees within the unit area as the unit operator subject to the supervision and direction of the unit, dependent upon what is most beneficial or expedient. The designation of the unit operator shall be by vote of the lessees in the unit in a manner provided in the plan of unitization and not by the commission.
The division of interest or formula for the apportionment and allocation of the unit production, among and to the several separately owned tracts within the unit area such as will reasonably permit persons otherwise entitled to share in or benefit by the production from such separately owned tracts to produce and receive, in lieu thereof, their fair, equitable and reasonable share of the unit production or other benefits thereof. A separately owned tract's fair, equitable, and reasonable share of the unit production shall be measured by the value of each such tract for oil and gas purposes and its contributing value to the unit in relation to like values of other tracts in the unit, taking into consideration acreage, the quantity of oil and gas recoverable therefrom, location on the structure, its probable productivity of oil and gas in the absence of unit operations, the burden of operations to which the tract will or is likely to be subjected, or so many of said factors, or such other pertinent engineering, geological or operating factors, as may be reasonably susceptible of determination. "Unit production" as that term is used in this article means and includes all oil and gas produced from a unit area from and after the effective date of the order of the commission creating the unit regardless of the well or tract within the unit area from which the same is produced.
The manner in which the unit and the further development and operation of the unit area shall or may be financed and the basis, terms and conditions on which the cost and expense thereof shall be apportioned among and assessed against the tracts and interest made chargeable therewith, including a detailed accounting procedure governing all charges and credits incident to such operations. Upon and subject to such terms and conditions as to time and rate of interest as may be fair to all concerned, reasonable provision shall be made in the plan of unitization for carrying or otherwise financing lessees who are unable to meet promptly their financial obligations in connection with the unit.
The procedure and basis upon which wells, equipment and other properties of the several lessees within the unit area are to be taken over and used for unit operations, including the method of arriving at the compensation therefor, or of otherwise proportionately equalizing or adjusting the investment of the several lessees in the project as of the effective date of unit operation.
The supervision and conduct of the unit operations, in respect to which each person shall have a vote with a value corresponding to the percentage of the costs of unit operations chargeable against the interest of such person.
The time when the plan of unitization shall become effective.
The time when and the conditions under which and the method by which the unit shall or may be dissolved and its affairs wound up.

§ 27-533 Ratification or approval of plan by lessees and owners

A. No order of the commission creating a unit and prescribing the plan of unitization applicable thereto shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved by lessees of record of not less than sixty-three per cent of the unit area affected thereby and by owners of record of not less than sixty-three per cent (exclusive of royalty interest owned by lessees or by subsidiaries of any lessee) of the normal one-eighth royalty interest in and to the unit area, and the commission has made a finding either in the order creating the unit or in a supplemental order that the plan of unitization has been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area. Where the plan of unitization has not been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area at the time the order creating the unit is made, the commission shall, upon petition and notice, hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area and shall, in respect to such hearings, make and enter a finding of its determination in such regard. In the event lessees and royalty owners, or either, owning the required percentage interest in and to the unit area have not so signed, ratified or approved the plan of unitization within a period of six months from and after the date on which the order creating the unit is made, the order creating the unit shall cease to be of further force and effect and shall be revoked by the commission.

B. An order providing for unit operations may be amended by an order made by the commission, in the same manner and subject to the same conditions as an original order providing for unit operations, provided:

If such an amendment affects only the rights and interests of the owners, the approval of the amendment by the royalty owners shall not be required.
No such order of amendment shall change the percentage for allocation of oil and gas as established for any separately owned tract by the original order, except with the consent of all persons owning interests in such tract.

C. The commission, by an order, may provide for the unit operation of a pool or a part thereof that embraces a unit area established by a previous order of the commission. Such order, in providing for the allocation of unit production, shall first treat the unit area previously established as a single tract, and the portion of the unit production so allocated thereto shall then be allocated among the separately owned tracts included in such previously established unit area in the same proportions as those specified in the previous order.

§ 27-534 Unlawful operation

From and after the effective date of an order of the commission creating a unit and prescribing the plan of unitization applicable thereto, the operation of any well producing from the pool or portion thereof within the unit area defined in the order by persons other than the unit or persons acting under its authority or except in the manner and to the extent provided in such plan of unitization shall be unlawful and is prohibited.

§ 27-535 Status and powers of unit; liability and expenses; lien

A. The obligation or liability of the lessees or other owners of the oil and gas rights in the several separately owned tracts for the payment of unit expense shall at all times be several and not joint or collective and in no event shall a lessee or other owner of the oil and gas rights in the separately owned tract be chargeable with, obligated or liable, directly or indirectly, for more than the amount apportioned, assessed or otherwise charged to his interest in such separately owned tract pursuant to the plan of unitization and then only to the extent of the lien provided for in this article.

B. Subject to such reasonable limitations as may be set out in the plan of unitization, the unit shall have a first and prior lien upon the leasehold estate and all other oil and gas rights (exclusive of one-eighth landowners' royalty interest) in and to each separately owned tract, the interest of the owners thereof in and to the unit production and all equipment in the possession of the unit, to secure the payment of the amount of the unit expense charged to and assessed against such separately owned tract. The interest of the lessee or other persons who by lease, contract or otherwise are obligated or responsible for the cost and expense of developing and operating a separately owned tract for oil and gas in the absence of unitization shall, however, be primarily responsible for and charged with any assessment for unit expense made against such tract and resort may be had to overriding royalties, oil and gas payments, royalty interests in excess of one-eighth of the production, or other interests which otherwise are not chargeable with such costs, only in the event the owner of the interest primarily responsible fails to pay such assessment or the production to the credit thereof, is insufficient for that purpose. In the event the owner of any royalty interest, overriding royalty, oil or gas payment, or any other interest which under the plan of unitization is not primarily responsible therefor pays in whole or in part the amount of an assessment for unit expense for the purpose of protecting such interest or the amount of the assessment in whole or in part is deducted from the unit production to the credit of such interest, the owner thereof shall to the extent of such payment or deduction be subrogated to all the rights of the unit with respect to the interest or interests primarily responsible for such assessment. A one-eighth part of the unit production allocated to each separately owned tract shall in all events be regarded as royalty to be distributed to and among, or the proceeds thereof paid to, the royalty owners free and clear of all unit expense and free of any lien therefor.

§ 27-536 Modification of property rights, leases and contracts; title to property; distribution of proceeds; delivery in kind; effect of operations; matters not affected

A. Property rights, leases, contracts and all other rights and obligations shall be regarded as amended and modified to the extent necessary to conform to the provisions and requirements of this article, and to any valid and applicable plan of unitization or order of the commission made and adopted pursuant hereto, but otherwise to remain in full force and effect. No division order or other contract relating to the sale or purchase of production from a separately owned tract shall be terminated by the order providing for unit operations, but shall remain in force and apply to oil and gas allocated to such tract until terminated in accordance with the provisions thereof.

B. Nothing contained in this article shall be construed to require a transfer to or vesting in the unit of title to the separately owned tracts or leases thereon within the unit area, other than the right to use and operate the same to the extent set out in the plan of unitization, nor shall the unit be regarded as owning the unit production. The unit production and the proceeds from the sale thereof shall be owned by the several persons to whom the same is allocated under the plan of unitization. All property, whether real or personal, which the unit may in any way acquire, hold or possess, shall not be acquired, held and possessed by the unit for its own account but shall be so acquired, held and possessed by the unit for the account and as agent of the several lessees and shall be the property of such lessees as their interests may appear under the plan of unitization, subject, however, to the right of the unit to the possession, management, use or disposal of the same in the proper conduct of its affairs, and subject to any lien the unit may have thereon to secure the payment of unit expense. Neither the unit production or proceeds of the sale thereof, nor the other receipts shall be treated, be regarded, or taxed as income or profits of the unit; but instead, all such receipts shall be the income of the several persons to whom or to whose credit the same are payable under the plan of unitization. To the extent the unit may receive or disburse said receipts it shall only do so as a common administrative agent of the persons to whom the same are payable.

C. The amount of the unit production allocated to each separately owned tract within the unit, and only that amount, regardless of the well or wells in the unit area from which it may be produced and regardless of whether it be more or less than the amount of the production from the well or wells, if any, on any such separately owned tract, shall for all intents, uses and purposes be regarded and considered as production from such separately owned tract, and except as may be otherwise authorized in this article, or in the plan of unitization approved by the commission, shall be distributed among or the proceeds thereof paid to the several persons entitled to share in the production from such separately owned tract in the same manner, in the same proportions, and upon the same conditions that they would have participated and shared in the production or proceeds thereof from such separately owned tract had not said unit been organized and with the same legal force and effect. If adequate provisions are made for the receipt thereof, the share of the unit production allocated to each separately owned tract shall be delivered in kind to the persons entitled thereto by virtue of ownership of oil and gas rights therein or by purchase from such owners subject to the rights of the unit to withhold and sell the same in payment of unit expense pursuant to the plan of unitization, and subject further to the call of the unit on such portions of the gas for operating purposes as may be provided in the plan of unitization.

D. Operations carried on under and in accordance with the plan of unitization shall be regarded and considered as a fulfillment of and compliance with all of the provisions, covenants and conditions, express or implied, of the several oil and gas leases upon lands included within the unit area, or other contracts pertaining to the development thereof insofar as said leases or other contracts may relate to the pool or portion thereof included in the unit area. Wells drilled or operated on any part of the unit area no matter where located shall for all purposes be regarded as wells drilled on each separately owned tract within such unit area.

E. Nothing in this article or in any plan of unitization shall be construed as increasing or decreasing the implied covenants of a lease in respect to a common source of supply or lands not included within the unit area of a unit.

§ 27-537 Enlargement of area; creation of new units; amendment of plan

The unit area of a unit may be enlarged to include adjoining portions of the same pool, including the unit area of another unit, and a new unit created for the unitized management, operation and further development of such enlarged unit area, or the plan of unitization may be otherwise amended, all in the same manner, upon the same conditions and subject to the same limitations as provided in this article with respect to the creation of a unit in the first instance; except that where the amendment to the plan of unitization relates only to the rights and obligations as between lessees the requirement that the same be signed, ratified and approved by royalty owners of record of not less than sixty-three per cent of the unit area shall have no application.

§ 27-538 Federal taxation

Any unit agreement approved by the commission shall contain language suggested by the internal revenue service under I.T. 3930 and I.T. 3948 so that owners in the unitized area will not be held taxable as a corporation.

§ 27-539 Validation of unit agreements

An agreement for the unit or cooperative development and operation of a field, pool, or part thereof, may be submitted to the commission for approval as being in the public interest or reasonably necessary to prevent waste. Such approval shall constitute a complete defense to any suit charging violation of any statute of the state relating to trusts and monopolies on account thereof or on account of operations conducted pursuant thereto. The failure to submit such an agreement to the commission for approval shall not for that reason imply or constitute evidence that the agreement or operations conducted pursuant thereto are in violation of laws relating to trusts and monopolies.

Article 2 Lease of State Lands for Oil and Gas

§ 27-551 Definitions

In this article, unless the context otherwise requires:

"Arizona refinery business" means a firm which markets in this state the product refined from royalty oil purchased under this article and which either owns and controls an oil refinery located within this state or is an Arizona corporation which owns an oil refinery in the United States located within one hundred miles of this state.
"Completion operations" means work performed in an oil or gas well after the well has been drilled to the point where the production string of casing is to be set, including setting the casing, perforating, artificial stimulation, production testing and equipping the well for production, all prior to the commencement of the actual production of oil or gas in paying quantities, or in the case of an injection or service well, prior to when the well is ready for use, or in the case of a dry hole, prior to when the well is plugged and abandoned.
"Department" means the state land department.
"Drilling operations" means any work or actual physical or mechanical operations undertaken or commenced in good faith for the purpose of bringing about the production of oil or gas in paying quantities, including the preparation of drill sites, followed diligently and in reasonable due course by the mobilization of a drilling rig and other necessary structures for the drilling of an oil or gas well and by actual drilling in the ground.
"Lease" means an oil and gas lease issued, extended or amended pursuant to the provisions of this article.
"Lessee" means the holder of an oil and gas lease issued pursuant to this article and includes any assignee of an original lessee.
"Oil and gas" and "oil or gas" includes oil, gas, other hydrocarbon substances, and helium or other substances of a gaseous nature.
"Produced" includes the words "procured and produced".
"Refinery charge stocks" means crude oil, liquid petroleum or gas condensate and blends of such products and all other products charged or chargeable to petroleum refinery facilities.
"Reworking operations" means work performed at any depth on a well after its initial completion in an effort to secure production where there has been none, or to restore production that has ceased or to increase production.
"Royalty oil" means crude oil, liquid petroleum products or gas condensates from wells or lease plants or a mixture of such products.
"State lands" means any land or any interest therein owned or held in trust or otherwise by the state, including but not limited to leased school or university lands.
"Surface lease" means a lease on the surface of any state land for grazing, agricultural, commercial or homesite purposes.
"Surface lessee" means the holder of a lease on the surface of any state land for grazing, agricultural, commercial or homesite purposes.

§ 27-552 Rules and regulations

The department may prescribe rules and regulations necessary and appropriate to carry out the purposes of this article.

§ 27-553 Leasing state lands for oil and gas

The department may lease state lands for oil and gas and issue oil and gas leases as provided in this article.

§ 27-554 Designation of known geological structures of producing oil and gas fields

A. The department shall from time to time determine and designate the known geological structures of producing oil and gas fields. The determinations and designations shall be published twice in a newspaper of general circulation in the state, the last publication to be not less than five days from the first date of publication. The determinations and designations shall become effective from the date of first publication. Until such a determination and designation is made by the department, all state lands shall be deemed located not within any known geological structure of a producing oil and gas field.

B. The department may refuse to lease any state lands for oil and gas when the lands are being used by the state or any state department for a state purpose.

§ 27-555 Lease of state lands not located within known geological structure of producing oil and gas field; application; lease extension; provisions of lease; withdrawal of lands from leasing

A. When state lands are not located within any known geological structure of a producing oil and gas field, as determined pursuant to section 27-554, the person making the first application for the lease shall be issued a lease covering the lands without competitive bidding.

B. The noncompetitive leases shall provide for the payment by the lessee of a royalty of twelve and one-half per cent of either:

The oil, gas and other hydrocarbons produced and saved from the leased premises.
At the option of the department, the market value of such products determined as follows:

(a) At the arm's length price prevailing on the day the product is run into a pipeline or otherwise removed from the leased premises if the production is being sold for an arm's length price.

(b) If an arm's length price is not available for the production, at the publicly available arm's length prices for sales of production of comparable type and quality, in generally comparable quantities, in the vicinity. For the purposes of this subdivision, "vicinity" means the smallest geographical local area containing sufficient data to establish an arm's length price.

(c) If an arm's length price is not available for the production and there are no publicly available arm's length prices for sales of production of comparable type and quality, in generally comparable quantities, in the vicinity, the department may establish market value through appraisal completed by an independent licensed appraiser that conforms with generally recognized appraisal methodologies. The appraisal is not binding on either the department or the lessee, but may serve as evidence of market value.

(d) If a price is determined under subdivision (b) or (c) and a price under a higher ranked alternative becomes available, the price determined under the higher ranked alternative shall be used. If a price is determined under subdivision (b) or (c) and the basis for determining that price is no longer available, the price determined under the next highest-ranking alternative that is available shall be used. If a price is determined by the lessees under subdivision (a), the department may require the lessee to certify that the price used is an arm's length price.

(e) For the purposes of this paragraph, "arm's length price" means a price negotiated between a willing buyer and a willing seller, where the buyer and seller are not affiliates and the seller is not receiving property or other noncash consideration as part of the transaction. For the purposes of this subdivision, "affiliate" means parties that are related by blood or marriage, or, in the case of entities, that are under direct or indirect common control or one of which controls the other.

C. Royalties, including shut-in gas royalties, reserved to the state on production from any state lands leased pursuant to this article and committed to a unit plan of development by virtue of a unit agreement shall be paid only on that portion of production allocated to such state lands or any part of the state lands, pursuant to the terms and conditions of the unit agreement.

D. The leases shall provide for the payment in advance of an annual rental of one dollar per acre per year for each year of the primary term of the lease. All leases shall provide for a minimum rental of forty dollars per year.

E. Each lease issued under this section shall be for a primary term of five years and as long thereafter as oil or gas is produced in paying quantities from the lands covered by the lease, except that:

If oil or gas is not being produced from the leased premises at the expiration of the primary term of the lease, the lessee shall have a right to an extension of the term of the lease for an additional term of five years and as long thereafter as oil or gas is produced in paying quantities from the leased premises by paying each year in advance double the rental payable during the primary term of the lease, except that the lessee will have no further right to any additional extension for successive terms. In the exercise of such right, the provisions of section 27-556 relating to sales made upon competitive bidding by sealed bid shall not apply in any case, but all such extensions shall be upon the terms and conditions contained in the original lease, except that the rental for the extended term shall be as provided in this paragraph, and except further that the rental for the extended term of any lease amended pursuant to subsection L of this section shall be as provided in that subsection.
If oil or gas is not being produced from the leased premises at the expiration of the primary term of the lease or any extension of the lease pursuant to paragraph 1, but the owner of the lease is diligently engaged in drilling, completion or reworking operations, the lease continues in force for a period of two years from the date on which the lease would have otherwise expired and as long thereafter as oil or gas is produced in paying quantities from the lands. If oil or gas is produced from any such well or any other well drilled during any two year extension, the lease shall continue in force after such two year extension as long as oil or gas is produced in paying quantities from the leased premises, except that rental requirements at the beginning of any lease extension shall be at the rate in existence at that time.
Oil or gas that is produced from any part of a unit in which state lands are included by virtue of a unit agreement and that is allocated to all or any part of such state lands pursuant to the terms and conditions of the unit agreement is deemed to be produced from the state lands or that part of the state lands to which the production is allocated.
If for any reason production of oil or gas from the leased lands ceases after the primary term or after extension of the lease, the lease shall not terminate if the lessee commences drilling, completion or reworking operations on the land within ninety days from cessation of production, and if drilling, completion or reworking operations are conducted with reasonable diligence, the lease shall remain in force as long thereafter as such drilling, completion or reworking operations are conducted or as long thereafter as oil or gas is produced in paying quantities from the leased lands, but in no event to extend beyond two years if production is not restored.

F. Each lease shall provide that the state's royalties shall be computed after deducting any oil or gas reasonably used in operations on the lease.

G. The leases shall contain other terms and provisions, not inconsistent with the provisions of this article or other laws of the state, as in the opinion of the department are for the best interest of the state. The lease shall not contain any provision for a premium, tax, fee or other assessment other than the application fees, rentals and royalties provided in statute. Application fees, rentals, royalties or other charges shall be based upon the application fees, rentals, royalties or other charges as provided in statute in effect at the time that the completed application is received by the department.

H. Not more than six miles square shall be included in any one lease. The lands shall be in as compact a body as possible but may include noncontiguous land within the six mile area. A discovery well capable of producing oil and gas in paying quantities will perpetuate a lease of not more than two thousand five hundred sixty acres which must be designated by the lessee within thirty days of completion of the well. The department shall adopt rules that will assure due diligence in the drilling of development wells to fully define the field.

I. Each lease shall provide that any combination, understanding or agreement entered into by the lessee, written, verbal or otherwise, for the purpose of delaying discovery or development of oil or gas is an illegal practice, and that upon legal determination thereof shall constitute grounds for cancellation of the lease. In the event of such an illegal practice, appropriate proceedings may be instituted by the attorney general against the lessee in the county in which the land or any part thereof is located. A cooperative or unit plan entered into pursuant to this article or any other conservation statute of this state shall not be held to violate this subsection or any other statute of this state prohibiting monopolies or acts, arrangements, contracts, combinations or conspiracies in restraint of trade or commerce on account of operations conducted under such a plan.

J. Applications for noncompetitive leases shall be in writing addressed to the department, shall contain a description of the lands sufficient to identify them and the name and address of the applicant and shall be accompanied by a filing fee and the rental payment for the first year. Each application shall be stamped when received by the department with a stamp showing the day and hour when received. If valid applications covering the same lands are filed simultaneously, the department shall offer the lease to the parties involved in the simultaneous applications by competitive bid, as follows:

The department shall issue a notice of the competitive bid containing a description of the land proposed to be leased and the time when the bids will be received and opened.
The department shall offer the lease to the highest qualified bidder submitting a sealed bid, on the basis of a cash bonus.
All bids, together with a certified check in the amount of the bonus bid, must be submitted to the department at the state capitol and shall be opened at the office of the department at the time specified.
If identical bids are received, within ten days of the opening of the bids the department shall request new bids from the submitters of the identical bids, and shall repeat the process until a high bidder is determined.
Before accepting any competitive bid for a lease under this subsection, the department shall establish to its satisfaction the responsibility of the bidder.
The department shall return all checks accompanying rejected bids.

K. The department may withdraw from leasing any specific area of land not located within any known geological structure of a producing oil and gas field when it appears that the withdrawal is in the interest of the state, but no lands shall be withdrawn by the department without the consent of a committee composed of the governor, who shall be chairman, the attorney general, and the dean of the college of mines of the university of Arizona. The committee shall consider the proposed withdrawal presented by the department and determine whether the withdrawal shall be permitted. The land, after being withdrawn from leasing, may again be offered for leasing at any time the department deems in the best interests of the state, subject to the advice and consent of the committee provided for in this section, and pursuant to notice as the committee deems necessary.

L. The owner of any state oil and gas lease issued by the department and maintained in good standing according to the terms and conditions of the lease and all applicable statutes and regulations shall have the right to elect at any time to have such lease amended to contain the same term and extension provisions and the same provisions relating to unit operations and unit agreements which have been or may be approved by the state land commissioner as are provided by law for state oil and gas leases upon filing a written notice of such election with the department. Upon such written notice to the department the lease term and extension provisions and the provisions relating to unit operations and unit agreements shall be deemed amended. The lease as amended shall include all other provisions, except those providing for rents, contained in the original lease and shall bear the same commencement date as the original lease. The lease as amended shall require the payment in advance of an annual rental of one dollar fifty cents per acre per year for each year of any extension of the lease beyond the primary term of the lease, except extensions of the primary term based upon the production of oil or gas.

§ 27-555.01 Extension of lease due to lack of transportation, processing facilities or market

A. When the owner of an oil and gas lease issued pursuant to this chapter has discovered oil or gas on the leased premises or on lands joined therewith in a cooperative or pooled unit, while the lease is in full force and effect, but is unable to produce oil or gas in paying quantities because of lack of transportation or processing facilities or a market for the oil or gas that would support production in paying quantities, each lease on which there is an oil or gas well or which is part of the cooperative or pooled unit shall be extended beyond the primary term, or any extension of the lease under section 27-555, subsection E, paragraph 1, from year to year, but not to exceed a period of five years, by payment of a shut-in oil or gas royalty of one dollar per acre for the first year, two dollars per acre for the second year and three dollars per acre for the third, fourth and fifth years, payable in advance annually on the anniversary date of the lease. If the payment is made it will be deemed that oil or gas is being procured and produced in paying quantities from the leased premises for such year.

B. To successfully assert shut-in status under subsection A of this section, the owner of the lease must:

Complete the well by installing and perforating production casing, by installing a production liner at reservoir depth or by other standard industry practices.
File a standard well completion report with the commission indicating an oil or gas discovery.
Submit to the department, not later than thirty days before the expiration of the lease, and at or before tendering the first year's shut-in royalties, a copy of the well completion report filed with the commission and the information described in either subdivision (a) or (b) of this paragraph. A well meeting either of the following criteria is considered to be capable of production in paying quantities for the purposes of this section:

(a) A calculation reasonably demonstrating that, as of the date of submission, the monthly proceeds of the well would be expected to exceed the well's monthly operating expenses, if transportation and processing facilities were present and a market existed. The owner may estimate monthly production based on well test results and any other data the owner considers helpful, estimate the monthly value of that production using approximate then-current pricing and estimate monthly operating expenses for the well based on recent history of comparable wells. Costs of drilling, completing and equipping the well shall not be considered in the calculation.

(b) Information satisfying any other alternate test that may be adopted by the department for demonstrating capability to produce in paying quantities, if transportation and processing facilities were present and a market existed.

C. If the department considers that the requirements of subsection B of this section have not been met, it has ninety days after receiving the submission required under subsection B, paragraph 3 of this section in which to deny shut-in status by appealable agency order, which must identify with reasonable particularity the basis for the determination that the requirements of subsection B of this section have not been met. The lease shall remain in effect pending final resolution, whether administrative, judicial or otherwise, as to whether the criteria in subsection B of this section have been met.

D. Subsection B of this section sets forth the full set of information that an owner of a lease must furnish the department with reasonable particularity before the expiration of the lease for which shut-in status is asserted. To assert shut-in status, further reviews or additional tests or audits shall not be conducted for the owner to be entitled to a lease extension pursuant to this section.

E. This section shall apply to existing oil and gas leases in good standing.

§ 27-556 Lease of state lands located within known geological structure of producing oil or gas field; sealed bids; call for bids; publication; lease extension; provisions of lease; acreage limitation

When state lands are located within a known geological structure of a producing oil or gas field, as determined pursuant to section 27-554, the lands shall be leased only by sealed bids, as follows:

Upon receipt of an application to lease any of such lands or whenever, in the opinion of the department, there is a demand for the purchase of leases of the lands, the department shall offer the tract or tracts for lease to the highest qualified bidder submitting a sealed bid, on the basis of a cash bonus.
The department shall publish a call for sealed bids twice in a newspaper of general circulation in the state, the last publication to be not less than fifteen days prior to the date fixed for opening the bids. All bids, together with a certified check in the amount of the bonus bid, shall be submitted to the department at the capitol, and opened at the office of the department at the time specified. On or before December 1 each year, the department shall designate by general order the newspaper in which the publications shall be made during the following calendar year. The successful bidder shall pay the cost of the publication and the reasonable expenses of the sale.
The publication shall contain a description of the land proposed to be leased, the time when the bids will be received and opened, the royalty to be demanded which the department shall fix prior to call for bids at not less than twelve and one-half per cent, and an annual rental to be demanded in the amount of one dollar per acre for each year.
The publication shall set forth the form of lease which the successful bidder will be required to execute. In lieu of publishing the form of lease in its entirety the publication may specify the form of lease by designating the form number of lease on file with the department, copies of which shall be furnished any person on request.
Royalties, including shut-in gas royalties, reserved to the state on production from any state lands leased pursuant to this article and committed to a unit plan of development by virtue of a unit agreement shall be paid only on that portion of production allocated to such state lands or any part of the state lands, pursuant to the terms and conditions of such unit agreement.
Each lease issued under this section shall be for a primary term of five years and as long thereafter as oil or gas is produced in paying quantities from the lands covered by the lease except that:

(a) If oil or gas is not being produced from the leased premises at the expiration of the primary term of the lease, but the owner of the lease is diligently engaged in drilling, completion or reworking operations, the lease continues in force for a period of two years from the date on which the lease would have otherwise expired and as long thereafter as oil or gas is produced in paying quantities from the lands. If oil or gas is produced from any such well or any other well drilled during any two year extension, the lease shall continue in force after such two year extension as long as oil or gas is produced in paying quantities from the leased premises.

(b) Oil or gas that is produced from any part of a unit in which state lands are included by virtue of a unit agreement and that is allocated to all or any part of such state lands pursuant to the terms and conditions of the unit agreement is deemed to be produced from the state lands or that part of the state lands to which the production is allocated.

(c) If for any reason production of oil or gas from the leased lands ceases after the primary term or any extension, the lease shall not terminate if the lessee commences drilling, completion or reworking operations on the land within ninety days from cessation of production, and if drilling, completion or reworking operations are conducted with reasonable diligence, the lease shall remain in force as long thereafter as such drilling, completion or reworking operations are conducted or as long thereafter as oil or gas is produced in paying quantities from the leased lands, but in no event to extend beyond two years if production is not restored.

The lease may contain other terms and provisions not inconsistent with the provisions of this article or other laws of the state, as in the opinion of the department are for the best interests of the state.
Each lease shall provide that the state's royalties shall be computed after deducting any oil or gas reasonably used in operations on the lease.
Each lease shall provide that any combination, understanding or agreement entered into by the lessee, written, verbal or otherwise, for the purpose of delaying the discovery or development of oil or gas is an illegal practice, and that upon legal determination thereof shall constitute grounds for cancellation of the lease. In the event of such an illegal practice, appropriate proceedings may be instituted by the attorney general against the lessee in the county in which the land, or any part thereof, is located. A cooperative or unit plan entered into pursuant to this article or any other conservation statute of this state shall not be held to violate this paragraph or any other statute of this state prohibiting monopolies or acts, arrangements, contracts, combinations or conspiracies in restraint of trade or commerce on account of operations conducted under such a plan.
The owner of any state oil and gas lease issued by the department and maintained in good standing according to the terms and conditions of the lease and all applicable statutes and regulations shall have the right to elect at any time to have such lease amended to contain the same term and extension provisions and the same provisions relating to unit operations and unit agreements which have been or may be approved by the state land commissioner as are provided by law for state oil and gas leases upon filing a written notice of such election with the department. Upon such written notice to the department the lease term and extension provisions and the provisions relating to unit operations and unit agreements shall be deemed amended. The lease as amended shall include all other provisions, except those providing for rents, contained in the original lease and shall bear the same commencement date as the original lease. The lease as amended shall require the payment in advance of an annual rental of one dollar and fifty cents per acre per year for each year of any extension of the lease beyond the primary term of the lease, except extensions of the primary term based upon the production of oil or gas.
Before offering any state lands for lease under sealed bids the department shall determine the tract or tracts into which the lands shall be divided for leasing purposes. Each tract shall contain not less than one quarter section of land and not more than two sections of land, but a tract containing less than one quarter section of land may be leased if the tract is segregated from other state lands not then subject to oil and gas lease. All tracts shall be in reasonably compact form.
The department shall reserve the right to reject any and all bids on each offer for lease and to again offer the tract or tracts for lease if the bids received are not acceptable to the department.
Before acceptance of any bid for a lease under this section, the department shall establish to its satisfaction the responsibility of the bidder.
The department shall return all checks accompanying rejected bids.

§ 27-557 Unit operations; unit agreements

A. Each lease issued under the provisions of this article shall provide that the lessee, insofar as its interest in the lease is affected, may join in cooperative or unit plans for the exploration, development and operation of oil and gas pools with the United States, its agencies and its or their lessees and permittees, or with private owners and persons holding oil and gas leases on private lands or on state lands.

B. Lessees under oil and gas leases issued by the department may, with the consent of the department, commit the state lands to unit, cooperative or other plans of exploration, development and operation with other state, federal, private or Indian lands.

C. The state land commissioner shall, not later than ten days after the date a proposed cooperative or unit plan for the exploration, development or operation of oil and gas pools is filed with the department, give notice in writing of such proposal to the oil and gas conservation commission, the bureau of geology and mineral technology and all holders of oil and gas leases on state lands to be included in the proposed cooperative or unit plan. Any interested person may, within ten days after the date of such notice, file a written protest with the department. Upon receipt of such a protest, the state land commissioner shall, not later than thirty days after receipt of the protest, hold a public hearing at the county seat of the county in which the state lands to be included in the proposed cooperative or unit plan are located. Notice of the public hearing shall be published three times in a newspaper of general circulation in the county, the last publication to be not less than ten days prior to the date of the hearing. The state land commissioner shall, not later than sixty days after the date the proposed cooperative or unit plan is filed with the department or, in the event of a protest and public hearing, not later than thirty days after the date of such public hearing, determine whether it is in the best interests of the state to commit state lands to the cooperative or unit plan as proposed or as modified. A proposed cooperative or unit plan may be modified in a manner agreeable to the state land commissioner and the proponent of the plan after such notice and public hearing as may be required by this subsection. Upon determination by the state land commissioner that it is in the best interests of the state to commit state lands to such cooperative or unit plan, the state land commissioner shall consent to and approve the cooperative or unit plan.

D. The execution by the authorized state officer of a cooperative plan or unit agreement is deemed to be an amendment of state leases committed to such plan or unit and has the effect of extending the term of the state leases included in the plan or agreement for the full period of time such plan or unit may remain in effect and of modifying such leases so as to conform the terms and conditions of the leases to the terms and conditions of the plan or unit but otherwise to remain in effect.

E. The agreements shall provide for the equitable division on an agreed basis of the oil and gas produced from the unit and for the extension of leases covering any part of the unit as long as drilling, completion or reworking operations are conducted anywhere on the unit or as long as oil or gas in paying quantities is produced from any part of the unit, but no such agreement shall relieve any operator from the obligation to develop reasonably the lands and leases as a whole committed thereto. When the agreements provide for returning gas to a formation underlying the unit, they may provide that no royalties are required to be paid on the gas returned.

F. Any lease issued under this article which is committed to a unit agreement embracing lands that are in part within and in part outside of the area covered by any such agreement shall be segregated into separate leases as to the lands committed and the lands not committed as of the effective date of unitization. Any such lease, as to the nonunitized portion, shall continue in force and effect for a period of time equal to the greater of the remainder of the original term of the lease or two years from the date of such segregation and as long thereafter as oil or gas is produced in paying quantities.

G. Any lease issued under this article which is in effect at the termination of any unit agreement to which such lease is committed, unless relinquished, shall continue in effect for a period of time equal to the greater of the remainder of the original term of the lease or two years from the termination of the unit agreement and as long thereafter as oil or gas is produced in paying quantities.

H. Notwithstanding any of the foregoing, no lease issued or amended pursuant to this article shall be extended for any term longer than as provided in article X, section 3 of the Constitution of the state of Arizona.

§ 27-558 Conservation laws

The development of oil and gas leases issued pursuant to this article shall be in accordance with the laws of the state relating to the conservation of oil and gas.

§ 27-559 Development of water for use in operations; taking over well which yields fresh water

A. A lessee shall have the right to develop water for use in its operations subject to the applicable laws of the state pertaining to drilling water wells and using water produced therefrom.

B. If any well drilled for oil or gas on a lease issued pursuant to this article fails to develop oil or gas in paying quantities but develops fresh water, the department shall have the option to take over the well if the lessee determines to abandon it as an oil or gas well upon payment by the department to the lessee of the reasonable value of the well casing and other materials necessary to be left in the well, and the lessee shall thereupon be relieved of all further obligations with respect to the well, its completion and abandonment.

§ 27-560 Surface use by lessee; liability for damages; bond; appraisal of damages; appeal

The lessee shall have the right to use as much of the surface of the lands as reasonably necessary for its operations under the lease. The lessee shall be liable for damage caused by it to the state's interest in the surface or to the interest of the surface lessee, if any, and may be required by the department at any time to execute a bond in a reasonable principal amount conditioned upon payment for all such damage. If the lessee and the surface lessee cannot agree on the amount of damage, it shall be appraised by the department or its agent. Appeal from the appraisal may be taken as provided in section 37-214.

§ 27-561 Assignment of lease; recording

A. In event of the assignment of a lease as to a segregated portion of the land covered thereby, the rentals payable thereunder shall be apportionable between the several leasehold owners ratably according to the surface area of each. Default in rental payment by one shall not affect the rights of other leasehold owners under the lease. If the lease is assigned in whole or in part, liability for the breach of any obligation under the lease shall rest exclusively upon the owner of the lease or the portion thereof who commits the breach.

B. All leases issued under the provisions of this article shall be assignable in whole or in part, but any assignment of a part of a lease shall cover not less than a quarter of a quarter section or the approximate equivalent thereof.

C. All assignments shall be on forms prescribed by the department and shall be filed with the department within ninety days from the date when made by depositing a duplicate executed original or a copy thereof certified by a notary public. The department shall retain in its files executed duplicate originals of all issued leases and of all assignments deposited with it. All leases and assignments shall be recorded, as other leases are recorded, in tract books kept for that purpose by the department.

D. All leases on file and all assignments filed with the department shall be constructive notice to all persons of the contents thereof.

§ 27-562 Surrender

A lessee may surrender any part or all of the lands covered by the lease at any time upon payment to the department of all amounts then due as to the lands surrendered, but no refund of any part of the cash consideration or rental theretofore paid shall be made to the lessee upon such surrender.

§ 27-563 Payment of noncompetitive lease royalties in kind or cash

Royalties payable to this state under section 27-555, subsection B are payable in kind or in cash at the option and demand of the department. The lessee shall pay royalties in cash unless the department elects to receive royalty oil in kind pursuant to this article. The commissioner shall base this determination on what is in the best interest of the trust.

§ 27-564 Receipt and sale of royalty oil

A. The department on its initiative and with the approval of the selection board may elect to receive royalty oil in kind from a lessee in lieu of a cash royalty, and the department may resell such royalty oil in the manner provided by the selection board.

B. An Arizona refinery business may request the department to elect to receive a quantity certain of royalty oil to be resold during a period of not less than one hundred eighty days by the department at a time contemporaneous with receipt of the royalty oil by the department. The department, on receipt of a due, proper and complete application by an Arizona refinery business, may, without approval of the selection board, elect to receive and sell such royalty oil pursuant to section 27-567.

§ 27-565 Application to purchase royalty oil

A. An Arizona refinery business may apply to the department to purchase royalty oil which the department elects to receive from a lessee. The application shall be filed not more than fifteen weeks nor less than thirteen weeks before the date of sale of the royalty oil by the department. The application shall be in the nature of a request and an offer to purchase which becomes irrevocable after the department sends notice of the election to the lessee as provided in section 27-566. The offer may be revoked by the applicant at any time before the date of sale upon the written agreement of the lessee and payment of all costs incurred by the department.

B. The application shall be in a form prescribed by the department containing the following information:

The full name and address of the applicant, the location of the refinery and a complete disclosure of the applicant's affiliation with any other petroleum refiner if such relationship exists.
The capacity of the refinery to be supplied with refinery oil and the amount, source and grade of all refinery oil currently available to the applicant by purchase.
The amount and grade of refinery oil which the applicant desires to purchase.
The field or fields which the applicant believes offer a potential source of refinery charge stocks due to quality, the proximity to the refinery and available transportation facilities which the applicant proposes to utilize.

C. The department shall examine each application. If the department finds that the application is incomplete, the department shall so advise the applicant within one week of the date that the application was filed with the department, and the applicant may amend the application within ten days. If the department finds the application to be complete, the department shall so advise the applicant within one week. If the department fails to provide the notice prescribed by this subsection, the application is deemed to be complete.

D. Upon approval of the application, the applicant shall file the bond or other assurances required by the department pursuant to section 27-570.

§ 27-566 Notice to lessee of election; storage

A. Not less than eleven weeks before the sale of royalty oil by the department, the department shall give the lessee written notice of the department's election to receive the quantity of royalty oil on the date specified by the department.

B. If the notice of election is pursuant to an application to purchase by an Arizona refining business, the quantity shall not be less than the amount applied for.

C. Written notice shall be served on the lessee at the lessee's business office address in this state on file with the department by certified mail or by personal service in the same manner as for a civil action in superior court. Service is deemed complete and notice given on the date of mailing the notice.

D. Upon receipt of the notice of election, the lessee shall immediately advise the department by certified mail of the location of the storage facility to which the lessee will deliver the royalty oil. The lessee shall deliver such quantity and quality at the time specified by the department into accessible storage and store it as the property of the department without storage cost to the department for not more than ten days after the date of sale. Within such time the lessee shall allow free and undisturbed access to the department's buyer to remove the stored royalty oil without cost to the buyer except for the costs of sale due to the department. For purposes of this section, "accessible storage" means whatever facilities are available to the lessee. Nothing in this section shall require the construction or maintenance by the lessee of additional facilities for the storage of or access to royalty oil.

E. Upon sale and payment by the buyer, the buyer is deemed to be the owner of the subject royalty oil for all purposes.

§ 27-567 Sales of royalty oil

A. The royalty oil which the department receives pursuant to an election under section 27-564 shall be offered for sale by the department at 10:00 a.m. on the date of delivery of the royalty oil to the department.

B. The application fee and procedure for sale shall be as prescribed by title 37, chapter 2 for the sales of state lands.

C. The department shall determine the quantity of royalty oil to be included in each sale, except that for a sale pursuant to an application by an Arizona refinery business, the quantity of each sale shall be the same quantity as applied for in each application.

D. The minimum sales price for the royalty oil shall be the fair market price for the royalty oil on the date of sale.

E. The highest and best bidder is the bidder who offers to pay the greatest amount of money for the royalty oil. If all bidders offer the same amount for the royalty oil, the Arizona refinery business which applied for the royalty oil shall be declared the highest and best bidder.

F. The department shall declare the highest and best bidder at the conclusion of the public auction. The commissioner may reject any or all bids offered for the royalty oil at the public auction prior to the acceptance of a final bid, if any, when the commissioner determines that such action is necessary to protect the trust. A person adversely affected by a decision may appeal the decision to the board of appeals as provided in section 37-215.

§ 27-568 Delivery of oil to purchaser

Royalty oil sold pursuant to section 27-567 shall be delivered to the buyer at the earliest time following the declaration of the highest and best bidder and payment to the department.

§ 27-569 Prohibitions on resale

Sale of royalty oil under this article is for processing or use in the purchaser's refineries but not for resale in kind. Agreements providing for the exchange of refinery charge stocks on a volume or equivalent value basis are not a resale in kind prohibited by this section. If an exchange agreement has been entered into or is contemplated with regard to royalty oil available for sale, full information relating to such fact shall be furnished to the department either at the time of filing applications to purchase royalty oil or with the submission of a bid.

§ 27-570 Bond and penalties; waiver

A. If the department requires a bond to guarantee performance by the buyer, the amount shall be based on the average price of royalty oil sold in this state during the preceding month. If no royalty oil was sold in this state during the preceding month, the amount of the bond shall be established by the commissioner based upon the prevailing market price for refinery charge stocks of similar composition sold in Arizona or in a surrounding state or states, or upon the national average sales price for such refinery charge stocks, whichever is greater.

B. The department may execute on the bond for all unpaid department costs and losses.

C. The department may waive the requirement for a bond on assurances made by the applicant satisfactory to the department.

§ 27-571 Inspecting well records; trade secrets; confidentiality; definition

A. The state land commissioner or the commissioner's agent may inspect any well records that are required to be filed with the oil and gas conservation commission but shall keep confidential all information that is not subject to inspection as provided by section 27-522.

B. For the proper administration of state land, the state land commissioner may require a lessee to submit relevant engineering and feasibility studies and other economic and technical information that is considered to be a trade secret in the oil and gas industry.

C. Trade secret information obtained under this section is confidential.

D. For purposes of this section, "trade secret" means information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasi-judicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosing the information is likely to cause substantial harm to the person's competitive position.

Article 3 Interstate Oil Compact

§ 27-601 Authorization to enter compact

The governor is authorized and directed, for and in the name of the state, to join with the other states in the interstate oil compact to conserve oil and gas, which was executed in the city of Dallas, Texas, on February 16, 1935, and is now on deposit with the United States department of state as extended, all with the consent of the Congress.

§ 27-602 Extension of expiration date

The governor is authorized, for and in the name of the state, to execute agreements for the further extension of the expiration date of the interstate compact to conserve oil and gas, and to determine if and when it is to the best interest of the state to withdraw from the compact following a sixty-day notice as provided by its terms. In the event of withdrawal, the governor may in his discretion effect the reentry of the state into the compact as provided in this article.

§ 27-603 Official representative

The governor shall be the official representative of the state on the interstate oil compact commission provided for in the compact, and shall exercise and perform for the state all the powers and duties as a member of the commission. The governor may appoint an assistant representative who shall act in his stead as the official representative of the state as a member of the commission. Such official representative, if not a state official, shall take the oath of office prescribed by law and file it with the secretary of state.

Article 4 Geothermal Resources

§ 27-651 Definitions

In this article, unless the context otherwise requires:

"Commission" means the oil and gas conservation commission.
"Completion" or "completed well" means a well that has produced or is capable of producing geothermal resources or has been determined to be a dry hole, temporarily abandoned or plugged and abandoned, or has been readied for other phases of exploitation.
"Department" means the state land department.
"Environment" means the sum total of all the external conditions which may act upon an organism or community, to influence its development or existence.
"Geothermal area" means the same general surface area which is underlain or reasonably appears to be underlain by one or more formations containing geothermal resources.
"Geothermal resources" means:

(a) All products of geothermal processes embracing indigenous steam, hot water and hot brines.

(b) Steam and other gases, hot water and hot brines resulting from water, other fluids or gas artificially introduced into geothermal formations.

(c) Heat or other associated energy found in geothermal formations, including any artificial stimulation or induction thereof.

(d) Any mineral or minerals, exclusive of fossil fuels and helium gas, which may be present in solution or in association with geothermal steam, water or brines.

"Lease" means a geothermal resources development lease issued for state lands pursuant to the provisions of this article.
"Lessee" means the holder of a lease or any assignee of an original lease or part thereof.
"Operator" means any person drilling, maintaining, operating, pumping or in control of any well, and includes the owner, when any well is or has been or is about to be operated or under the direction of the owner.
"Owner" means and includes the operator when any well is operated or has been operated or is about to be operated by any person other than the owner.
"Person" means and includes any individual, firm, association, corporation or any other group or combination acting as a unit.
"Waste" means any physical waste including, but not limited to, underground waste resulting from the inefficient, excessive or improper use or dissipation of reservoir energy or resulting from the location, spacing, drilling, equipping, operation or production of a geothermal resources well in such a manner that reduces or tends to reduce the ultimate economic recovery of the geothermal resources within a reservoir, and surface waste resulting from the inefficient storage or utilization of geothermal resources and the location, spacing, drilling, equipping, operation or production of a geothermal resources well in such a manner that causes or tends to cause the unnecessary or excessive surface loss or destruction of geothermal resources obtained or released from the reservoir.
"Well" means any well drilled in search of geothermal resources or any development well on lands in areas proved to be underlain by one or more formations containing geothermal resources or reasonably presumed to contain geothermal resources or any well drilled for information purposes, or any producing well or reentered abandoned well used for the injection of fluids into the geothermal formation or disposition of fluids into nongeothermal formations, or any well drilled for the purpose of stimulating the heat of a formation or for the creation of heat in a formation by nuclear or any other form of energy.

§ 27-652 Supervision by commission

A. The commission shall so supervise the drilling, operation, maintenance and abandonment of geothermal resource wells as to encourage the greatest ultimate economic recovery of geothermal resources, to prevent damage to and waste from underground geothermal reservoirs, to prevent damage to or contamination of any waters of the state or any formation productive or potentially productive of fossil fuels or helium gas, and to prevent the discharge of any fluids or gases or disposition of substances harmful to the environment by reason of drilling, operation, maintenance or abandonment of geothermal resource wells.

B. Any person engaged in the drilling of a well for geothermal resources underlying a usable groundwater aquifer shall case the bore hole in a watertight manner from the land surface to the geothermal producing zone or to a depth sufficient to prevent damage or contamination of the aquifer from the escape of geothermal resources from the bore hole. Materials and installation procedures for casing and sealing of the bore hole shall be in accordance with specifications and procedures approved by the commission.

C. Disposal of water or brines obtained from a geothermal well whether by ponding and evaporation, release to a watercourse or other means shall not damage or contaminate the underlying groundwater aquifer or pollute any stream, river or body of surface water. Construction and maintenance of all geothermal water and brine disposal systems and of the devices required to monitor quantity and quality of the waters and brines disposed of in each system shall be in accordance with specifications, procedures and regulations approved by the commission.

D. Whenever the commission finds that it would be in the interest of maintenance of the underground geothermal resource, prevention of subsidence of the land surface or maintenance of the quality of surface and other ground waters, the commission may require reinjection of the geothermal effluent or injection of other water supplies into the producing zones.

§ 27-653 Information; filing; confidentiality

The commission shall collect all information regarding all wells drilled in the state for geothermal resources and necessary for the purpose of supervision of such wells. All such data shall be filed in the commission office and, upon request of the operator, shall be kept confidential for a period of not more than one year after drilling is completed. All such data shall also be available to the director of water resources, who shall keep the information obtained confidential when such a request has been made of the commission by the operator.

§ 27-654 Drilling bond; amount; responsibility

A. The commission shall require every person who engages in the drilling, ownership or operation of a well, or the entering or deepening of an abandoned well, to file with the commission, on a form to be determined by the commission, a reasonable bond with good and sufficient security conditioned upon the performance of the duties required by this section and the duties upon abandonment, as approved by the commission, of the well in an amount to be determined by the commission.

B. In no case may the bond be less than five thousand dollars for each individual well or less than twenty-five thousand dollars for any number of wells.

C. The bond shall remain in full force and effect until all requirements of the commission have been satisfied or until otherwise released by the commission.

D. The owner or operator is responsible for the full cost of plugging each dry or abandoned well. If the owner or operator fails to properly plug and abandon the well, the commission may:

Forfeit the bond and use the money for that purpose.
Sue the owner or operator for costs in excess of the amount of the bond and the owner or operator is liable for that amount.

§ 27-655 Commission approval prior to operation; information; hearing

The commission shall have jurisdiction over any stimulation, induction or creation of a geothermal resource. Prior to any operation involving the stimulation, induction or creation of a geothermal resource, or any combination thereof, approval of the commission must be obtained. All information deemed necessary by the commission concerning such operations shall be submitted to the commission in such form as determined by the commission no later than thirty working days prior to a commission hearing to consider approval of said application. No application to stimulate, induct or create a geothermal resource will be approved by the commission except after notice and hearing as set forth in section 27-656.

§ 27-656 Rules and orders; hearing

A. The commission shall adopt rules necessary for the proper administration and enforcement of this article.

B. The commission shall comply with title 41, chapter 6 in adopting, modifying, renewing or extending rules under this article.

C. Any order, or change, renewal or extension of an order, except as otherwise provided by this article, shall be made in compliance with title 41, chapter 6, article 10.

D. If the commission makes a finding that an order is necessary as an emergency measure, the order may be made without first complying with the notice and hearing requirements prescribed by title 41, chapter 6, article 10. All affected persons shall be notified of the emergency order. If oral notice is given, it shall be followed by immediate written notice. The emergency order shall be valid for thirty days from its effective date. The effective date is the date affected persons receive the order by oral or written communication, whichever occurs first. The commission shall hold a hearing within ten days after the effective date of the emergency order. Unless otherwise provided in this section, the hearing shall be conducted in compliance with title 41, chapter 6, article 10. Any order made at the hearing shall expressly repeal the emergency order. For purposes of this subsection, "emergency" means a situation which requires an order without compliance with the notice provisions prescribed in title 41, chapter 6, article 10 because the order is necessary for immediate preservation of the public safety, welfare, natural resources or property and the notice and hearing requirements are impracticable.

§ 27-657 Agent for process

Every owner or operator of any well shall designate an agent who resides in this state upon whom may be served all orders, notices and processes of the commission or of any court of law. Every person so appointing an agent shall, within ten days after the termination of any such agency, notify the commission, in writing, of such termination, and unless operations are discontinued, shall appoint a new agent within such ten day period.

§ 27-658 Notice of sale or conveyance of well or land

A. The owner or operator of any well shall notify the commission in writing on such form as the commission may direct of the sale, assignment, transfer or conveyance or exchange by the owner or operator of such well and the land owned or leased upon which the well is located within ten days following such sale, assignment, transfer, conveyance or exchange. The notice shall contain:

The name and address of the person to whom such well was sold, assigned, transferred, conveyed or exchanged.
The name and location of the well.
The date of the sale, assignment, transfer, conveyance or exchange.

B. Every person who acquires ownership or operation of any well, whether by purchase, assignment, transfer, conveyance, exchange or otherwise, shall, within ten days after acquiring the well, notify the commission in writing of his ownership or operation and provide a bond as required by section 27-654. The notice shall contain:

The name and address of the person from whom the well was acquired.
The name and location of the well.
The date of acquisition.
The date when operations are assumed or resumed by the new owner.

§ 27-659 Application to drill

The owner or operator of any property, before commencing the drilling of a well or entering or deepening an abandoned well, shall file with the commission an application to drill, on a form prescribed by the commission, containing such information as may be required by the commission. Such application shall be accompanied by a fee of twenty-five dollars per well. All monies so received by the commission shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund.

§ 27-660 Safety requirements

Any person engaged in the drilling of a well for geothermal resources in an area wherein fluids, gases or steam under high pressure are known to exist, or any person drilling a well for geothermal resources in any area where pressures are not known, shall case in a watertight manner the borehole to a depth sufficient to protect against surface-cratering in the event of a blow out with pipe of adequate strength, and equip the well with a blow out preventor and other safety devices, in accordance with pipe and equipment specifications and procedures approved by the commission, and shall further exercise due caution in all drilling operations to prevent blow outs, explosions or fires.

§ 27-661 Drilling record; samples

The owner or operator of any well shall keep, or cause to be kept, a log, core record and drilling history, copies of which shall be filed with the commission no later than thirty days following the completion of drilling the well. A complete set of samples of the drill bit cuttings and cores, at intervals and in the manner specified by the commission, shall be furnished to the commission.

§ 27-662 Monthly report

The owner or operator of any well producing geothermal resources shall file with the commission on or before the twenty-fifth day of the next succeeding month a monthly producers report, setting forth the total production from each well and such other information as may be determined by the commission.

§ 27-663 Unlawful interference; classification

Any owner or operator or employee thereof who knowingly refuses to permit the commission to inspect a well or who knowingly hinders or delays enforcement of the provisions of this chapter, and every person, whether as principal agent, servant or employee, or otherwise, who violates or knowingly fails or refuses to comply with the provisions of this chapter, or who knowingly fails or refuses to furnish any reply or record or information which may be requested pursuant to the provisions of this chapter or who knowingly renders a false or fraudulent report, shall be guilty of a class 2 misdemeanor as set forth in section 27-527.

§ 27-664 Cooperative development agreements; unitization

Whenever the commission finds that it is in the interest of the protection of the geothermal resources of this state from unreasonable waste, the lessors, lessees, operators, owners or other persons holding or controlling royalty or other interest in separate properties within the same productive or prospectively productive geothermal area may, with the approval of the commission, enter into agreement for the purpose of bringing about the cooperation, development and operation of all or a portion of the geothermal resources area as a unit, or for the purpose of fixing the time, location and manner of drilling and operating of wells for the production of geothermal resources within such area or portion thereof. Any such agreement shall bind the successors and assigns of the parties thereto and shall be enforceable by the parties thereto by an action for a specific performance. No such agreement, when approved by the commission, shall be held to violate any of the statutes of this state prohibiting monopolies or acts, arrangements, agreements, contracts, combinations or conspiracies in restraint of trade or commerce. Property rights, leases, contracts and all other rights and obligations shall be regarded as amended and modified to the extent necessary to conform to the provisions and requirements of this section.

§ 27-665 Unitization; requirements

A. No order of the commission creating a unit and prescribing the plan of unitization applicable thereto shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved by the owner or lessees of record of not less than sixty-three per cent of the unit area affected thereby and by owners of record of not less than sixty-three per cent, exclusive of royalty interest owned by lessees or by subsidiaries of any lessee, of the royalty interest in and to the unit area, and the commission has made a finding either in the order creating the unit or in a supplemental order that the plan of unitization has been so signed, ratified or approved by the owner, lessees or royalty owners owning the required percentage interest in and to the unit area. Where the plan of unitization has not been so signed, ratified or approved by the owner, lessees or royalty owners owning the required percentage interest in and to the unit area at the time the order creating the unit is made, the commission shall, upon petition and notice, hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by owner, lessees or royalty owners owning the required percentage interest in and to the unit area and shall, in respect to such hearings, make and enter a finding of its determination in such regard. If the owner, lessees or royalty owners owning the required percentage interest in and to the unit area have not so signed, ratified or approved the plan of unitization within a period of six months from and after the date on which the order creating the unit is made, the order creating the unit shall cease to be of further force and effect and shall be revoked by the commission.

If such an amendment affects only the rights and interests of the owners, the approval of the amendment by the royalty owners shall not be required.
No such order of amendment shall change the percentage for allocation of geothermal resources as established for any separately owned tract by the original order, except with the consent of all persons owning interest in such tract.

§ 27-666 Pooling

A. When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights therein and the right to share in the production therefrom may agree to pool their interests and develop their lands as a drilling unit. If the persons do not agree to pool their interests, the commission may, upon application of one or more owners within the drilling unit in question and for prevention of waste, for protection of correlative rights, or to avoid drilling of unnecessary wells, enter an order pooling and integrating their interests for the development of their lands as a drilling unit. Orders effectuating such pooling shall be made after notice and hearing, and shall be upon terms and conditions which will afford the owner of each tract the opportunity to recover or receive his just and equitable share of the geothermal resources in the pool without unnecessary expense. Operations incident to drilling a well upon any portion of a unit covered by a pooling order shall be deemed for all purposes to be the conduct of such operations upon each separately owned tract in the unit by the several owners thereof. The portion of the production allocated to the owner of each tract included in a drilling unit formed by a pooling order shall, when produced, be considered as if it had been produced from the tract by a well drilled thereon. If such pooling is effectuated, the cost of development and operation of the pooled unit chargeable by the operator to other interested owners shall be limited to the actual and reasonable expenditures required for that purpose, including a reasonable charge for supervision. As to owners who refuse to agree upon pooling, the order shall provide for reimbursement for costs chargeable to each such owner out of, and only out of, production from the unit belonging to such owner. In event of dispute relative to such costs, the commission shall, upon notice to all interested parties and hearing thereon, determine the proper costs. Appeals may be taken from the determination as from any other order of the commission. If one or more of the owners drills and operates, or pays the expense of drilling and operating the well for the benefit of others, then, in addition to any other rights conferred by the pooling order, the owner or owners so drilling or operating shall have a lien on the share of production from the unit accruing to the interest of each of the other owners for the payment of his proportionate share of the expenses. All the geothermal production subject to the lien, or so much thereof as necessary, shall be marketed and sold by the creditor and the proceeds applied in payment of the expenses secured by the lien, with the balance if any payable to the debtor.

B. The commission shall, in all instances where a unit has been formed from lands or areas of more than one ownership, require the operator, upon request of an owner, but subject to the right of the operator to market production and collect the proceeds with respect to an owner in default, as provided in subsection A.

C. If the persons owning and drilling or exercising other rights in separate tracts embraced within a drilling unit fail to agree upon the pooling of the tracts and drilling of a well on the unit, and if the commission is without authority to require pooling as provided by this section, then, subject to all other applicable provisions of this article, the owner of each tract embraced within the drilling unit may drill on his tract, but the allowable production from the tract shall be the proportion of the allowable production for the full drilling unit as the area of such separately owned tract bears to the full drilling unit.

§ 27-667 Relationship of geothermal resources to water laws

A. Geothermal resources and their development shall be exempt from the water laws of this state unless either:

Such resources are commingled with surface waters or groundwaters of this state.
Such development causes impairment of or damage to the groundwater supply.

B. In the development of geothermal resources, any well drilled to obtain and use groundwater, as defined in section 45-101, shall be subject to the water laws of this state.

C. An operator shall notify the director of water resources of any well which is drilled or abandoned. The director may prescribe rules and regulations relating to the disposition of abandoned wells.

§ 27-668 Leasing state lands for development of geothermal resources

A. The department may lease state lands for the development of geothermal resources and sell geothermal resource leases as provided in this article.

B. The department may prescribe rules and regulations necessary and appropriate to carry out the purposes of this section and to protect the environment and provide for multiple, dominant or single use in the best interest of the state.

§ 27-669 Designation of known geothermal resource areas

The department may determine and designate the known geothermal resource areas. The determinations and designations shall be published twice in a newspaper of general circulation in this state, the last publication to be not less than five days from the first date of publication. The determinations and designations shall become effective from the date of first publication. Until such a determination and designation is made by the department, all state lands shall be deemed not located within any known geothermal resource area.

§ 27-670 Lease of state lands; application; call for bids; publication; withdrawal of lands from leasing

A. Applications for leases shall be in writing addressed to the department and shall contain a description of the lands sufficient to identify them, the name and address of the applicant and shall be accompanied by a filing fee of twenty-five dollars. Each application shall be stamped when received by the department with a stamp showing the day and hour when received.

B. Before offering any state lands for lease the department shall determine the tract or tracts into which the lands shall be divided for leasing purposes. All tracts shall be in reasonably compact form.

C. Upon receipt of an application to lease any state lands, the department shall offer the tract or tracts for lease to the highest and best bidder. The bidding shall be on the basis of highest first year's bonus to be paid to the department at the time of declaration of the highest and best bidder.

D. The department shall publish a call for bids in the same manner provided for the sale of state lands. On or before December 1 each year, the department shall designate by general order the newspaper at the capital in which the publications shall be made during the following calendar year. The successful bidder shall pay the cost of the publication and the reasonable expenses of the sale.

E. The publication shall contain a description of the land proposed to be leased, the time when the bids will be received, the royalty to be demanded which the department shall fix prior to call for bids and an annual rental to be demanded.

F. The publication shall set forth the form of lease which the successful bidder will be required to execute. In lieu of publishing the form of lease in its entirety the publication may specify the form of lease by designating the form number of the lease on file with the department, copies of which shall be furnished any person on request.

G. Each offer for lease shall reserve the right in the department to reject any and all bids and to again offer the tract or tracts for lease if the bids received are not acceptable to the department.

H. No bid may be accepted unless the bidder, or the bidder's disclosed principal, qualifies under the provisions of section 37-240, subsection B.

I. The department may withdraw from leasing any specific area of land if it appears that the withdrawal is in the interest of this state.

J. The department may refuse to lease any state lands for development of geothermal resources and may refuse to sell geothermal resource leases when such refusal is deemed by the department to be in the best interest of the state.

K. The department shall return all checks accompanying rejected bids.

§ 27-671 Provisions of lease

A. The leases shall provide for the payment by the lessee of a royalty of not less than twelve and one-half per cent of the gross value of the resource at the well head.

B. The leases shall provide for an annual rental of not less than one dollar per acre for each year that the lease is in effect.

C. The leases shall be for a primary term of ten years and as long thereafter as geothermal resources are procured and produced in paying quantities from the leased lands. The lease upon which drilling operations are being diligently prosecuted on the expiration date shall continue in effect for a period of two years and so long as geothermal resources are procured and produced in paying quantities from such lands.

D. The leases shall contain other terms and provisions, not inconsistent with the provisions of this article or other laws of this state, as in the opinion of the department are for the best interest of this state.

E. Not more than two thousand five hundred sixty acres of land shall be included in any one lease. The leased lands shall be in as compact a body as possible but may include noncontiguous land.

F. Each lease shall provide that any combination, understanding or agreement entered into by the lessee, written, verbal or otherwise, for the purpose of delaying discovery or development of geothermal resources is an illegal practice, and that upon legal determination of such practice shall constitute grounds for cancellation of the lease. Appropriate proceedings shall be instituted by the attorney general against the lessee in the county in which the land or any part of such land is located. The provisions of this section shall not apply to a unit plan or operation entered into under the provisions of this article or to any plan or operation authorized by any conservation law of this state.

§ 27-672 Unit operations; unit agreements

A. Each lease issued under the provisions of this article shall provide that the lessee, insofar as its interest is affected, may join, with the department's prior written approval, in cooperative or unit plans for the development and operation of geothermal resource pools with the United States, its agencies and its or their lessees and permittees and with private owners and persons holding geothermal resource leases on private lands or on state lands.

B. Upon determination by the department that it is in the best interests of the state to commit state lands to a cooperative or unit plan for the development and operation of geothermal resource pools, the department may, insofar as the state royalties may be affected thereby, join in and consent to any such plan on behalf of the state. The agreements shall provide for the equitable division on an agreed basis of the geothermal resource produced from the unit and for the extension of leases covering any part of the unit so long as geothermal resources in paying quantities are produced from any part of the unit. No such agreement shall relieve any operator from the obligation to develop reasonably the lands and leases as a whole nor shall such agreement relieve the lessee of the obligation to pay to the department the royalty provided for in the lease.

§ 27-673 Surface use by lessee; liability for damages; bond; appraisal of damages; appeal

The lessee shall have the right to use as much of the surface of the lands as reasonably necessary for its operations under the lease as determined by the department. The lessee shall be liable for damage caused by it to the state's interest in the surface and to the interest of the surface lessee, if any, and may be required by the department at any time to execute a bond in a reasonable principal amount to be released upon payment for all such damage and for reclamation of the surface. If the lessee and the surface lessee cannot agree on the amount of damage, it shall be appraised by the department or its agent. Appeal from the appraisal may be taken as provided in section 37-214.

§ 27-674 Assignment of lease; recording

A. In event of the assignment of a lease as to a segregated portion of the land, the rentals payable shall be apportioned between the portions according to the surface area of each. If the lease is assigned in whole or in part, liability for the breach of any obligation under the lease shall rest exclusively upon the owner of the lease or portion thereof who commits the breach.

B. All leases issued under the provisions of this article may be assignable in whole or in part. Assignments may not be made without the prior written approval of the department. The department may consider an application to assign a part of the lease in the same manner as if it were an original application to lease.

C. All assignments shall be on forms and made in the manner prescribed by the department. The department shall retain in its files executed duplicate originals of all issued leases and of all assignments. All leases and assignments shall be recorded, as other leases are recorded, in tract books kept for that purpose by the department.

D. All leases on file and all assignments filed with the department shall be constructive notice to all persons of their contents.

§ 27-675 Surrender

At the discretion of and upon prior written approval of the department, a lessee may surrender a portion of the lands covered by the lease at any time upon payment to the department of all amounts then due as to the lands surrendered, but no refund of any part of the cash consideration or rental paid shall be made to the lessee upon such surrender. The lessee may surrender all of the lands covered by the lease at any time upon payment to the department of all amounts then due as to the lands surrendered, but no refund of any part of the cash consideration or rental paid shall be made to the lessee upon such surrender.

§ 27-676 Enjoining violations

A. If it appears that a person is violating any provision of this article, or a rule or order made pursuant to this article, and the person fails or refuses, on notice by the commission, to desist from the violation, the commission may bring an action in superior court in the county where the offending person resides, or in the county in which the violation is alleged to have occurred, to restrain the person from continuing the violation.

B. The commission shall not be required to obtain a bond when bringing an action under this section.

C. An action under this section shall proceed pursuant to title 12, chapter 10, article 1.

§ 27-677 Violation; civil penalty

A. In any action brought pursuant to section 27-676 against a person who violates any provision of this article, or any rule or order of the commission, the court may impose a civil penalty of not more than one thousand dollars for each violation and for each day the violation continues.

B. In addition to any criminal penalties which may be imposed pursuant to section 27-663, the commission, through the attorney general, may bring an action in the superior court in the county where the violation occurred against any person who violates any provision of section 27-663 for imposition of a civil penalty of not more than one thousand dollars for each violation. Each day the violation continues shall constitute a separate violation for which a civil penalty may be imposed.

C. Civil penalties collected under this section shall be deposited in the state general fund.

Chapter 5 Mined Land Reclamation

Article 1 Administration

§ 27-901 Definitions

In this chapter, unless the context otherwise requires:

"Division" means the division of mined land reclamation in the office of the state mine inspector.
"Existing exploration operation" means an exploration operation that is ongoing as of July 1, 1996.
"Existing mining unit" means a mining unit, other than a new mining unit, that continued operations after January 1, 1986.
"Exploration operations" means activities that create surface disturbances outside a mining facility and that are conducted to determine the presence, location, extent, depth or grade of minerals, including constructing access roads and drill pads.
"Inactive mining unit" means a mining unit that has not been operated after January 1, 1986 and for which there is a current identifiable owner or operator other than the federal or state government.
"Inspector" means the state mine inspector.
"Maintenance" means an activity to preserve or repair the function of previously disturbed land, including grading roads, repairing berms or dams and dredging sedimentation basins.
"Mineral" means any metalliferous material extracted from the earth, including gold, silver, copper, molybdenum, zinc and lead and other materials that are used as feedstocks in producing metalliferous materials.
"Mining facility" means property that is owned, operated or managed by the same person to develop, mine, concentrate or leach minerals and associated mineral recovery activities but does not include smelting, refining, fabricating or other metal processing facilities and materials associated with those facilities. Property that is not contiguous but is within the same geographical area and operated as a single mining complex is considered to be a single mining facility.
"Mining unit" means an individual portion of a mining facility that encompasses one or more surface disturbances.
"New exploration operation" means an exploration operation that begins after the effective date of the initial rules adopted pursuant to this chapter.
"New mining unit" means a mining unit at which surface disturbances begin after the effective date of the initial rules adopted pursuant to this chapter.
"Reclamation" means measures that are taken on surface disturbances at exploration operations and mining units to achieve stability and safety consistent with post-mining land use objectives specified in the reclamation plan.
"Soil" means topsoil, suitable substrata or other plant growth media that will sustain vegetation.
"Stability" means the condition of land with respect to its erosion potential and ability to withstand seismic activity.
"Surface disturbance" means clearing, covering or moving land by means of mechanized earth-moving equipment for mineral exploration, development and production purposes but does not include surveying, assessment and location work, seismic work, maintenance and other such activities that create a de minimis disturbance.

§ 27-902 Division of mined land reclamation; coordination of programs and activities

A. The state mine inspector shall establish a division of mined land reclamation and employ staff who have the necessary and appropriate experience in mining and reclaiming mined lands.

B. This chapter does not replace or duplicate provisions of title 49 that regulate exploration and mining operations to protect public health and the environment.

C. The requirements of a reclamation plan under this chapter, a closure plan for the same mining unit required under title 49, chapter 2, article 3 and other provisions and requirements of title 49 and this title, including financial assurance requirements, shall not be redundant, inconsistent or contradictory. This chapter does not supersede the closure plan requirements of title 49, chapter 2, article 3.

§ 27-903 Exemption for state lands; agreements for coordination with other governmental agencies and landowners

A. This chapter does not apply to any activity that occurs on state land and that is regulated pursuant to chapter 2, article 3, 4 or 5 of this title.

B. The state mine inspector may enter into agreements pursuant to title 11, chapter 7, article 3 with the state land department, United States bureau of land management, United States forest service and other agencies that manage public lands and take other appropriate measures to coordinate the review and approval of reclamation plans, including designating a lead agency for reclamation plan review and action. The inspector shall avoid redundant, inconsistent or contradictory reclamation, inspection, administration, enforcement and financial assurance requirements.

§ 27-904 Rules; contributions

A. The state mine inspector shall adopt rules consistent with this chapter for the reclamation of surface disturbances at exploration operations and mining units and for the administration of this chapter.

B. To accomplish the purposes of this section, the state mine inspector may accept monies for deposit in the state general fund received from any source, including restricted or unrestricted federal funds, gifts and contributions from other governmental agencies, individuals, corporations or other organizations. The state shall separately account for monies received pursuant to this subsection that are deposited in the state general fund.

§ 27-905 Certificate of disclosure of violations; remedies; definition

A. The following persons shall file a certificate of disclosure with the division of mined land reclamation as prescribed by this section:

A person who is engaged in an activity subject to regulation under this chapter and who has been convicted of a felony involving laws related to mined land reclamation within the five year period immediately preceding execution of the certificate.
A person who is engaged in an activity subject to regulation under this chapter and who is or has been subject in any civil proceeding to an injunction, decree, judgment or permanent order of any state or federal court within the five year period immediately preceding the execution of the certificate that involved a violation of laws of that jurisdiction relating to mined land reclamation.

B. The certificate of disclosure prescribed by this section shall contain the following:

Identification of the person, including present full name, all prior names or aliases, full birth name, present house address and all prior addresses for the immediately preceding five year period, date and place of birth and social security number.
The nature and description of each conviction or judicial action, the date and place, the court and public agency involved, and the file or cause number of the case.
A written declaration that each signer swears to its contents under penalty of perjury.

C. The certificate of disclosure submitted on behalf of a corporation shall be executed by any two executive officers or directors of the corporation.

D. Initial certificates shall be delivered to the division within ninety days after the person first becomes subject to the disclosure requirements of this section. Certificates shall be filed annually thereafter within ninety days after the close of the person's fiscal year as reported on the initial certificate.

E. By February 1 of each year, the state mine inspector shall provide the attorney general with a list of all persons who were convicted of the crimes or who are the subject of the judicial actions described in subsection A of this section, as indicated from the certificates of disclosure filed during the preceding year.

F. In lieu of the certificate of disclosure prescribed by this section, a corporation may submit to the division copies of annual reports filed with the securities and exchange commission pursuant to section 13 or 15(d) of the securities exchange act of 1934 (15 United States Code section 78), commonly known as a "10-K form", within ninety days after filing the annual report. The initial submission shall include 10-K forms for the preceding five years.

G. A person who contributes information for a certificate of disclosure and who makes an untrue statement of material fact concerning the requirements of subsection B of this section or withholds any material fact concerning the requirements of subsection B of this section or a person who is obligated to file a certificate of disclosure and who fails to file the certificate is subject to section 27-1022, section 27-1024, subsections B and C and section 27-1025.

H. For purposes of this section, "person" means:

A natural person.
Any public or private corporation, its officers, directors, trustees, incorporators and persons who control or hold over ten per cent of the issued and outstanding common shares or ten per cent of any other proprietary, beneficial or membership interest in the corporation.
A partnership, including all general partners and limited partners who control a ten per cent or more beneficial interest in the partnership.
An association or society of persons.
A limited liability company including all members who have a ten per cent or more interest in the limited liability company.
The federal government and any of its departments or agencies.
This state and any of its agencies, departments, political subdivisions, counties, towns or municipal corporations.

Article 2 General Regulatory Provisions

§ 27-921 Surface disturbances created by new exploration operation or mining unit

Beginning April 1, 1997, an owner or operator of a new exploration operation or new mining unit shall not create a surface disturbance of more than five contiguous acres until a reclamation plan and financial assurance mechanism for the exploration operation or mining unit are approved by the state mine inspector or are otherwise authorized by this chapter.

§ 27-922 Surface disturbances created by existing exploration operation or mining unit; extension; continuing operations

A. An owner or operator of an existing exploration operation or existing mining unit with surface disturbances of more than five contiguous acres shall submit a reclamation plan to the state mine inspector by April 1, 1997.

B. An owner or operator may petition the inspector for an extension of time to submit a reclamation plan. The inspector shall grant the extension on a showing of good cause, including the need to coordinate the preparation and submission of a reclamation plan with an aquifer protection permit application under title 49, chapter 3, article 2 or with other permits and approvals required for the exploration operation or mining unit.

C. The owner or operator of an existing exploration operation or existing mining unit may continue operations, including creating surface disturbances, until the inspector takes final action on the reclamation plan and financial assurance mechanism.

D. The reclamation of surface disturbances created in whole or in part before July 17, 1994, the effective date of this chapter, and the initial rules adopted pursuant to this chapter may present special technical and economic constraints that are not encountered for new surface disturbances. The inspector shall consider the nature and extent of the existing surface disturbances, relevant site-specific circumstances and the technical and economic practicability of reclaiming such surface disturbances. The inspector shall not require the removal or relocation of existing mining units to satisfy the reclamation requirements of this chapter.

§ 27-923 Creating surface disturbances of five acres or less

A. Nothing in this chapter shall prevent an owner or operator of an exploration operation or mining unit from creating a surface disturbance of five contiguous acres or less.

B. From and after December 31, 1996, the state mine inspector may require either or both of the following in the case of a series of surface disturbances of five contiguous acres or less by the same owner or operator if the series of surface disturbances in aggregate constitute more than five acres:

A reclamation plan under article 3 or 4 of this chapter.
A financial assurance mechanism under article 5 of this chapter.

§ 27-924 Inactive mining units

A. At an inactive mining unit, the following are not subject to the requirements of this chapter:

Voluntary reclamation measures that are not required by federal or state law, regulation or permit.
Actions that are required to comply with other local, state or federal laws, regulations, permits, orders or decrees.
Maintenance activities.

B. Exploration operations and mineral development, mining, concentrating and leaching activities at an inactive mining unit are subject to the requirements of this chapter only with respect to new surface disturbances created by those operations and activities.

§ 27-925 Remedial response to emergencies and governmental orders

A. An owner or operator is not required to provide notice or obtain approval of a reclamation plan or financial assurance mechanism under this chapter before creating a surface disturbance pursuant to a remedial action in response to an emergency or to a government order to prevent or mitigate an actual or potential release of pollutants into the environment.

B. The owner or operator shall update the reclamation plan and financial assurance mechanism within six months after completing the emergency or remedial measure.

§ 27-926 Initiation, extension and completion of reclamation

A. Beginning April 1, 1997, if a surface disturbance cannot be practicably reclaimed concurrently with an exploration operation or at a mining unit, reclamation shall be initiated:

Within two years after completing the exploration operation or mining unit.
Within two years after cessation of mining activity.
As required by applicable federal law.

B. The state mine inspector shall extend the period in which to initiate reclamation under subsection A, with up to three subsequent five year extensions, if the owner or operator of an exploration operation or mining unit demonstrates a reasonable likelihood that the project or operation will resume, based on a consideration of factors, including:

The presence of additional mineralization of the commodity being mined or other commodities in commerce.
Historical fluctuations in the value of the commodity being mined or other commodities present if they can be mined using the same disturbances.
The design life of any beneficiation process components existing at a mining unit.

C. Once initiated, the final reclamation measures shall be performed as stated in the approved reclamation plan unless the exploration operation or mining unit is reactivated.

§ 27-927 Substantial changes to approved reclamation plan; fee

A. The state mine inspector must approve any substantial change to an approved reclamation plan as provided by this section before the change is implemented.

B. The owner or operator of the exploration operation or mining unit shall submit a notice of a proposed change to the inspector describing the purpose and scope of the proposed change and whether it constitutes a substantial change to the approved reclamation plan. If the inspector fails to respond within thirty days, the change is considered to be consistent with the operation's or unit's approved reclamation plan.

C. If the inspector determines that the change is substantial the inspector shall:

Notify the owner or operator of the decision within fifteen days after receiving the notice.
Require the owner or operator to submit an amendment to the plan for approval. The inspector shall approve or disapprove the amended plan within ninety days after receiving the amended plan.

D. The following changes are not considered to be substantial, and the owner or operator is required to file only an amendment to the reclamation plan and modify the financial assurance as necessary:

New surface disturbances that can be reclaimed in a manner that is substantially similar to the manner of reclamation included in the approved plan.
Changes in the specific techniques for reclamation, including the equipment used and the mixes of seeds and soils.
Changes in location, configuration or acreage of surface disturbances unless the changes substantially affect the reclamation measures stated in the reclamation plan.

E. Before implementing a substantial change in an approved reclamation plan, the owner or operator shall submit to the inspector a revised financial assurance mechanism to account for the substantial change.

F. If a surface disturbance is created on more than fifty acres of land that are not included in an initial reclamation plan, the owner or operator shall submit to the inspector a fee of not more than three dollars for each new acre of surface disturbance. This fee shall be submitted with either the notice of proposed change required in subsection B or with a plan amendment submitted pursuant to subsection D.

§ 27-928 Transferring an approved reclamation plan

A. A reclamation plan may be transferred from one person to another, by operation of law or otherwise, if the current owner or operator notifies the state mine inspector in writing before the transfer. The notice shall include:

The name, address, telephone number and statutory agent of the person to whom the plan will be transferred.
The effective date of the proposed transfer.
A proposed financial assurance mechanism.
Other information the inspector may determine to be necessary by rule.

B. The inspector may deny a transfer on determining that the proposed financial assurance mechanism does not comply with article 5 of this chapter or that the transferee is not capable of operating in compliance with this article, the rules adopted pursuant to this article or the conditions established in the plan. The inspector shall issue notice of and the reasons for the denial within fifteen days after receiving the proposed transfer. Except as provided in section 41-1092.08, subsection H, a final administrative denial of the plan transfer is subject to judicial review pursuant to title 12, chapter 7, article 6.

C. On receiving the approved financial assurance mechanism from the transferee the inspector shall release the financial assurance mechanism provided by the transferor.

§ 27-929 Notice of plan or substantial change

A. The state mine inspector shall give notice of a proposed reclamation plan or a substantial change to an approved reclamation plan once each week for two consecutive weeks in a newspaper of general circulation in the county or counties in which the exploration operation or mining unit is or will be located. If there is no such newspaper, the inspector shall give notice in a newspaper of general circulation that is published in an adjoining county.

B. The notice shall briefly describe the proposed reclamation plan or substantial change and state that any person who may be adversely affected by the plan or substantial change may:

File a written objection to the plan or substantial change within fifteen days after the last publication.
Request a public hearing.

C. An objection shall state the name and mailing address of the objector, be signed by the objector or the objector's agent or attorney and clearly state the reasons why the plan or substantial change should be denied. Grounds for objection are limited to whether the proposed plan or substantial change meets the criteria for approval in this chapter.

D. If there is sufficient public interest by persons who may be adversely affected by the plan or substantial change, the inspector may hold a public hearing in the county in which the exploration operation or mining unit is or will be located.

§ 27-930 Public disclosure of information; definition

A. The state mine inspector shall make available to the public any records, reports or information obtained or prepared by the inspector, unless a notice accompanying the information or any part of the information states that the information is a trade secret or is otherwise confidential to the party's competitive position.

B. If the inspector, on his own or following a request for disclosure, disagrees with the trade secret or confidential notice, the inspector may request the attorney general to seek a court order authorizing disclosure. If a court order is sought, the party shall be served with a copy of the court filing and has twenty business days from the date of service to request a hearing on whether a court order should be issued. The hearing shall be conducted in camera, and any order resulting from the hearing is appealable as provided by law. The inspector may not disclose the confidential information until a court order authorizing disclosure has been obtained and becomes final. The court may award costs of litigation including reasonable attorney and expert witness fees to the prevailing party.

C. The inspector shall make available to the public the following information obtained from any person pursuant to this chapter:

The name and address of any plan applicant.
The proposed post-mining land use or uses.
A general description of the proposed reclamation measures.

D. The inspector may disclose, with an accompanying confidentiality notice, any records, reports or information obtained by the inspector or employees of the division of mined land reclamation to:

Other state employees concerned with administering this chapter or if the records, reports or information is relevant to any administrative or judicial proceeding under this chapter.
Employees of the United States environmental protection agency if the information is necessary or required to administer and implement or comply with federal statutes or regulations.

E. For purposes of this section, "trade secret" means information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasi-judicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the person's competitive position.

§ 27-931 Variances

A. The state mine inspector, by rule or conditional order, may allow an owner or operator of an exploration operation or mining unit to vary from any rule adopted pursuant to this chapter or any requirement or condition of a reclamation plan issued pursuant to this chapter if the inspector finds that allowing the variance will not endanger public safety and will not be inconsistent with the criteria established in section 27-973.

B. The inspector may approve innovative reclamation or other measures proposed by the owner or operator that vary from the reclamation standards of this chapter, the financial assurance requirements under article 5 of this chapter or the rules adopted pursuant to this chapter after a public hearing and on a showing that the innovative or other measures can be reasonably expected to achieve the post-mining land use objectives stated in the reclamation plan.

§ 27-932 Coordination with other governmental agencies

A. The state mine inspector shall coordinate the review and approval of reclamation plans with the state land department, the United States bureau of land management, the United States forest service and other agencies that manage public lands on which exploration operations or mining facilities are located, within the respective jurisdictions, through memoranda of agreement or cooperative agreements that designate a lead agency for reclamation plan review and action. This coordination is intended to avoid duplication of efforts to inspect exploration operations and mining facilities and review and enforce reclamation plans. The memoranda of agreement shall also provide that no financial assurance may be required under this article that will duplicate financial assurances required under any other law or agreement.

B. If an exploration operation or a mining unit is located on land administered by a federal agency, an approved federal reclamation plan and a financial assurance mechanism for the federal land that are consistent with the requirements of this chapter supersede the requirements for a reclamation plan and financial assurance mechanism otherwise required by this chapter.

§ 27-933 Denials; appeals

The owner or operator of an exploration operation or mining unit may request a hearing on the state mine inspector's denial of a plan pursuant to title 41, chapter 6, article 10.

§ 27-934 Plan submission fee; accounting and appropriation of revenues

A. The state mine inspector shall assess and collect a one-time submission fee from the owner or operator of each exploration operation and mining unit at the time the owner or operator submits a plan under article 3 or 4 of this chapter.

B. For fiscal year 1996-1997 the submission fee is three dollars per acre of surface disturbance covered by the plan. Thereafter, the inspector may revise the amount of the submission fee each year based on the reasonable direct costs to process, review and approve or deny the plan, but the submission fee shall not exceed three dollars per acre of surface disturbance covered by the plan.

C. The inspector shall deposit, pursuant to sections 35-146 and 35-147, the revenues from the submission fee in the state general fund. The inspector shall submit the amount that is necessary to administer and enforce this chapter as a separate item in the inspector's budget request. The legislature's appropriation to the inspector shall include an amount sufficient to administer and enforce this chapter, including payments to consultants for services provided pursuant to section 27-935.

§ 27-935 Plan review and evaluation by private consultants

A. Subject to section 38-503 and other applicable statutes and rules, the state mine inspector may contract with a private consultant for the purpose of assisting the inspector in reviewing reclamation plans that are submitted under this chapter to determine whether the plans meet the criteria and requirements of this chapter and the rules adopted by the inspector.

B. The inspector shall pay the consultant for the services rendered from the inspector's appropriation under section 27-934.

Article 3 Exploration Operations Reclamation Plan

§ 27-951 Submission and contents of reclamation plan

A. Beginning April 1, 1997, a person who conducts exploration operations that will create more than five contiguous acres of surface disturbance shall submit a reclamation plan to the state mine inspector. The reclamation plan shall:

Identify the county or counties in which exploration operation will be conducted.
State the reclamation measures that will be taken to reclaim access roads, drill pads, drill holes, trenches and other exploration workings where the operator conducts exploration operations in this state.

B. An operator may submit a single reclamation plan covering all new and existing exploration operations in this state.

§ 27-952 Notice of complete, incomplete or denied plan

A. The state mine inspector shall notify the operator that a reclamation plan is administratively complete or incomplete within thirty days after receiving the plan.

B. If the inspector notifies the operator that a plan is incomplete or denied, the inspector shall include a written explanation stating the reasons for denial including recommendations for correcting incomplete or unacceptable parts of the plan consistent with the requirements of this chapter. The operator must refile the corrected plan within ninety days after notification that the previous plan was incomplete or denied or within a time frame mutually agreed on between the operator and the state mine inspector that would not materially affect the safety of employees or cause undue hardship on an operator.

§ 27-953 Approval; criteria

The state mine inspector shall approve a reclamation plan for exploration operations within sixty days after receiving a complete plan if the plan provides for the reclamation of surface disturbances at the exploration operations according to the following requirements, as applicable:

Exploration access roads that the operator constructs and that will not be part of a post-exploration use shall be reclaimed in a timely manner after the exploration is completed. If a governmental unit or agency will accept dedication or conveyance of an access road, reclamation is not required. Reclamation shall include removing culverts, restoring drainage to its general predisturbance configuration, ripping the road surface to reduce compaction and aid revegetation and controlling access of motorized vehicles to the reclaimed area.
Holes that are drilled for mineral exploration purposes, unless completed for water monitoring, withdrawal or other use, shall be plugged, sealed or capped promptly after their use is completed as prescribed by rule by the department of water resources and as necessary to ensure the safety of persons, domestic animals, livestock and machinery in the area.
Drill pads shall be reshaped promptly after completion of drilling to prevent erosion and to establish contours that are generally compatible with the adjacent areas or shall be ripped to reduce compaction and aid revegetation and, if appropriate, seeded to minimize erosion.
Mud pits that are used for drilling fluids and produced waters shall be reclaimed after hazardous substances are removed and disposed of, if necessary, and after they are sufficiently dry by reshaping to contours that are generally compatible with the adjacent areas. If it is appropriate to the area, suitable growth media shall be spread and seeded over the pit area.
Exploration trenches and pits shall be backfilled and reclaimed as soon as practicable as prescribed in the reclamation plan. If the trench or pit will remain open, measures shall be taken to stabilize the sides to address erosion control and to restrict access. Trench and pit reclamation shall include backfilling, reshaping to contours generally compatible with the adjacent areas and, if appropriate for the area, seeding to reestablish vegetation.
Areas that have been cleared by blading with mechanized equipment during exploration operations shall be reshaped after exploration is completed, unless used for a post-exploration use, to be generally compatible with the adjacent area. Compacted areas shall be ripped to aid revegetation.

§ 27-954 Beginning new exploration operations

New exploration operations may begin when both of the following occur:

The state mine inspector approves the reclamation plan for the exploration operations or ninety days after the inspector receives a reclamation plan if the inspector fails to notify the owner or operator that the plan submitted is incomplete or denied.
Financial assurance has been submitted to the inspector as required by article 5 of this chapter.

§ 27-955 Annual renewal

A reclamation plan for exploration operations is renewable annually on:

Modification of the plan to address types of surface disturbances that will be conducted during exploration operations but that have not been previously addressed in the reclamation plan.
Submission of any additional financial assurance, if necessary.

Article 4 Mining Unit Reclamation Plan

§ 27-971 Submission and contents of reclamation plan

A. Beginning July 1, 1996, an owner or operator may submit a single reclamation plan that covers multiple mining units of a mining facility.

B. The proposed reclamation plan shall include:

The names and addresses of the owner or operator and an individual who will be the regulatory contact.
A statement that the owner or operator assumes responsibility for the reclamation of surface disturbances that are attributable to the mining unit consistent with this chapter and the rules adopted pursuant to this chapter.
The current ownership and use of the land included in the mining unit.
The proposed post-mining use of the land.
A description of the mining unit and the proposed surface disturbances that will be created.
The existing and proposed final topography, including the final slopes of leach piles, overburden or low grade rock stockpiles and tailing piles.
A narrative description of roads that are proposed for the mining unit.
The acreage affected by each type of surface disturbance and a map of the mining unit area showing each surface disturbance. For previously undisturbed areas, the map shall identify any types of fish and wildlife habitats that will be disturbed.
The proposed reclamation measures that are necessary to achieve the post-mining land use including information concerning:

(a) The measures that will be taken to restrict public access to pits, adits, shafts and other surface features that may be a hazard to public safety.

(b) The measures that will be taken to address erosion control and stability.

(c) The measures that will be taken to address revegetation, conservation and the care and monitoring of revegetated areas as provided in this chapter.

(d) For surface disturbances where the proposed post-mining land use objective is designated as grazing, fish or wildlife habitat, forestry or recreation, the type of wildlife or fish habitat to be encouraged, including measures that will be taken to encourage that type of wildlife or fish habitat, and that those measures will not be incompatible with the fish or wildlife habitat on adjacent lands.

A proposed tentative schedule for beginning surface disturbances and beginning and completing the reclamation measures.
The estimated costs to perform each of the proposed reclamation measures for purposes of determining financial assurance requirements under article 5 of this chapter.

§ 27-972 Notice of complete, incomplete or denied plan

A. The state mine inspector shall notify the owner or operator that the plan is complete or incomplete within thirty days after receiving the plan.

B. The inspector shall approve or disapprove a plan for new mining units within one hundred twenty days after receiving a complete plan.

C. If the inspector notifies the owner or operator that a plan is incomplete or denied, the inspector shall include a written explanation stating the reasons for denial including recommendations for correcting incomplete or unacceptable parts of the plan consistent with the requirements of this chapter. The owner or operator must refile the corrected plan within ninety days after notification that the previous plan was incomplete or denied or within a time frame mutually agreed on between the owner or operator and the state mine inspector that would not materially affect the safety of employees or cause undue hardship on an owner or operator.

§ 27-973 Approval; criteria

A. The state mine inspector shall approve a reclamation plan for mining units if the plan provides for reclamation measures for surface disturbances that are:

Necessary to achieve a safe and stable condition suitable for the post-mining land use objectives stated in the reclamation plan.
Compatible with good engineering practices regarding erosion control and seismic activity for the applicable seismic zone.

B. In evaluating the reclamation plan, the inspector shall consider the technical and economic practicability of the proposed reclamation measures, taking into account the site-specific circumstances at the mining unit and the proposed post-mining land use objectives as stated in the reclamation plan, including:

Grazing and other agricultural land use objectives.
Developed water resources and water management projects.
Fish or wildlife habitat.
Forestry.
Historic preservation.
Industrial or commercial, including tourism.
Recreation.
Residential.
Scientific or educational.
Mining or remining, except that the proposed post-mining use of mining or remining does not relieve an owner or operator from complying with or implementing the reclamation plan requirements under this chapter.
Other appropriate post-mining land use objectives.

C. The post-mining land use objective stated in the reclamation plan need not be the same use of the land that existed before the mining facility was located on the site.

§ 27-974 Preservation and conservation of soil; exceptions

Before creating a surface disturbance that is stated to be reclaimed by revegetation pursuant to a new mining unit reclamation plan, the owner or operator shall conserve the soil as reasonably available from the area of disturbance to support the stated revegetation on that specific disturbance as necessary to achieve the post-mining land use objectives stated in the reclamation plan unless the owner or operator demonstrates one or more of the following factors:

There is insufficient soil to make recovery practicable.
Recovery of the soil is not practicable due to limitations of topography, thickness of soil or other physical, climactic or biological constraints.
Direct revegetation of the disturbance, with or without soil amendments, is reasonably expected to be successful.

§ 27-975 Features excluded from reclamation plan or allowed to remain following reclamation; public protection measures

A. A reclamation plan may exclude any provision for reclaiming open pits, rock faces or subsidence areas through backfilling or returning material to the open pit, rock face or subsidence area from which it was extracted if it is impracticable and if public access to the open pit, rock face or subsidence area, including any surrounding unstable areas or walls, is restricted by fencing or other institutional controls.

B. The following factors shall be considered in determining whether the reclamation of open pits, rock faces or subsidence areas is impracticable:

Cost to perform the reclamation.
Topography of the site.
Geology and stability of the site.
Time required to perform the reclamation.
Consumption of resources required to perform the reclamation.
Future access to mineral resources.

C. Buildings and other structures may remain after reclamation if adequate measures are taken to protect public safety.

§ 27-976 Beginning new mining units

Beginning April 1, 1997, new mining units may begin when both of the following occur:

The state mine inspector approves the reclamation plan for the mining unit, or one hundred fifty days after the inspector receives a reclamation plan if the inspector does not notify the owner or operator that the plan submitted is incomplete or denied.
Financial assurance has been submitted to the inspector as required by article 5 of this chapter.

Article 5 Financial Assurance

§ 27-991 Financial assurance requirements; form

A. Beginning April 1, 1997, as required by this chapter, owners and operators of exploration operations and mining units who create surface disturbances shall provide financial assurance mechanisms to the inspector as provided by this article.

B. Allowable financial assurance mechanisms for purposes of this article include any or a combination of the following:

Surety bond.
Certificate of deposit.
Trust fund with pay-in period.
Letter of credit.
Insurance policy.
Certificate of self-insurance.
Cash deposit with the state treasurer.
Evidence of ability to meet a corporate financial test or corporate guarantees as provided by 40 Code of Federal Regulations section 264.143(f).
Annuities.
Additional financial assurance mechanisms that are acceptable to the inspector.

§ 27-992 Mining unit or existing exploration operation

A. The owner or operator of an existing exploration operation or a new or existing mining unit shall transmit a financial assurance mechanism to the state mine inspector within sixty days after a reclamation plan is approved. The inspector shall take final action on the financial assurance mechanism within thirty days after it is received.

B. In determining the amount of financial assurance to be provided for an existing exploration operation or a new or existing mining unit, the inspector shall consider the costs of approved reclamation measures stated in the reclamation plan. In computing reclamation costs, the inspector shall assume that third parties will perform the reclamation measures. The inspector shall reduce the amount of the required financial assurance to the costs of the owner or operator performing the reclamation measures if the owner or operator can demonstrate sufficient financial ability to perform the necessary reclamation or if the owner or operator meets the financial assurance reduction criteria established by rule. Financial ability shall be established by one or more of the financial mechanisms described in 40 Code of Federal Regulations section 264.143(f).

C. Each financial assurance mechanism for an existing exploration or new or existing mining unit submitted to the inspector shall provide the amount in current dollars equal to the cost to:

Perform the approved reclamation measures stated in the reclamation plan on the area of surface disturbance.
Provide continued care and monitoring of the areas stated in the reclamation plan for revegetation for no more than three growing seasons without additional supplemental irrigation or other man-induced inputs after performing the reclamation measures unless the supplemental inputs are part of the post-mining land use. Notwithstanding this paragraph, revegetation efforts that are necessary to achieve the post-mining land use objective are considered adequate and complete if the owner or operator has taken reasonable measures to achieve vegetative success. Technical and economic practicability as it relates to site-specific conditions and the proposed post-mining land use shall be taken into account in making that determination.

D. The inspector shall adjust the amount of financial assurance every five years or more often as necessary to adjust for new areas of planned surface disturbances or inflation or to reflect changed costs resulting from substantial modifications of the reclamation plan.

§ 27-993 New exploration operation

A. Beginning April 1, 1997, the owner or operator of a new exploration operation shall furnish a financial assurance mechanism to the state mine inspector in an amount equivalent to two thousand dollars per acre of new surface disturbance, unless the inspector approves a cost estimate for an amount less than two thousand dollars per acre.

B. An owner or operator may provide a single financial assurance mechanism for all of its exploration operations conducted in this state.

§ 27-994 Duplication of financial assurance not required

Financial assurance is not required under this article that duplicates financial assurance that is required under other state or federal laws.

§ 27-995 Incremental financial assurance

An owner or operator may provide financial assurance under this article on an incremental basis for planned surface disturbances described in the reclamation plan.

§ 27-996 Release of financial assurance

A. An owner or operator may apply to the state mine inspector to release all or part of the financial assurance provided under this article. The application shall:

Describe the reclamation measures that have been performed.
Describe any surface disturbances included in the reclamation plan that have not been disturbed.
Contain an estimate of the costs of reclamation measures that have not been performed.

B. Within sixty days after receiving a complete application, the inspector shall release all or part of the financial assurance except for any amount that is necessary to perform the reclamation measures identified in the reclamation plan. After the reclamation measures have been performed, the remaining financial assurance shall be released, except that ten per cent shall be retained for the costs of care, monitoring and one reseeding, if necessary, for areas that have been revegetated. The inspector shall release the retained monies after a period of not more than three growing seasons after the supplemental management or other man-induced inputs have been finally removed or as otherwise provided in section 27-992, subsection B.

§ 27-997 Rules; release, forfeiture or exercise of financial assurance

A. The state mine inspector shall adopt rules for reviewing and acting on:

Applications to release all or part of the financial assurance under this article.
Forfeiture or exercise of the financial assurance on failure to implement a reclamation plan as required by this article.

B. The rules shall provide for written notice to all principals and sureties on the financial assurance and an opportunity for a hearing.

Article 6 Enforcement

§ 27-1021 Inspections

Beginning April 1, 1997, the state mine inspector may enter and inspect, during normal business hours, any exploration operation or mining facility that is subject to this chapter to determine compliance with this chapter. The inspector shall give the owner or operator the opportunity to have its representative accompany the inspector. Within thirty days after the date of the inspection, the division of mined land reclamation shall provide to the owner or operator a copy of any inspection report produced as a result of any inspection of the exploration operation or mining facility.

§ 27-1022 Compliance orders

A. Beginning April 1, 1997, if the state mine inspector determines that a person is violating this chapter, a rule adopted pursuant to this chapter or any condition of a reclamation plan approved pursuant to this chapter or is causing an imminent and substantial danger to the public safety, the inspector may issue an order requiring compliance either immediately or within a stated period of time.

B. A compliance order shall state with reasonable specificity the nature of the violation, a time for compliance, if applicable, and the right to a hearing.

C. The inspector shall transmit the compliance order to the alleged violator either by certified mail, return receipt requested, or by hand delivery.

D. At the inspector's request, the attorney general may file an action in superior court to enforce orders issued under this section after the order becomes final. The action shall be filed in superior court in the county in which the alleged violation occurred or in which the inspector maintains an office.

§ 27-1023 Enforcement action on reclamation plan approval

A. The state mine inspector may suspend, withdraw or revoke a reclamation plan approval if the inspector determines that the facility is in violation of any rule adopted pursuant to this chapter.

B. Any action taken under this section shall comply with the requirements of title 41, chapter 6, article 10.

§ 27-1024 Injunctive relief; civil penalties

A. Beginning April 1, 1997, if the state mine inspector has reason to believe that a person is violating this chapter or a rule adopted pursuant to this chapter or that a person is causing an imminent and substantial danger to the public safety, the inspector, through the attorney general, may request a temporary restraining order, a preliminary injunction, a permanent injunction or any other relief necessary to protect the public safety, without regard to whether the person has requested a hearing.

B. A person who violates this chapter or a rule, order or reclamation plan approval adopted or issued pursuant to this chapter is subject to a civil penalty of not more than one thousand dollars for each day of violation, not to exceed fifteen thousand dollars for each violation. At the inspector's request, the attorney general shall file an action in superior court to recover civil penalties as prescribed by this section.

C. An action filed under this section shall be brought in superior court in the county in which the alleged violation occurred or in which the inspector maintains an office.

§ 27-1025 Agency order; appeal

A. An order issued by the state mine inspector pursuant to this article is final unless the defendant requests a hearing pursuant to title 41, chapter 6, article 10 within thirty days after receiving the order.

B. Except as provided in section 41-1092.08, subsection H, a final agency order is subject to judicial review pursuant to title 12, chapter 7, article 6.

§ 27-1026 Violation; classification

A. Beginning April 1, 1997, an owner or operator of an exploration operation or mining unit shall not:

Cause a surface disturbance at an exploration operation or mining unit in violation of this chapter.
Fail or refuse to conduct reclamation according to the terms of a reclamation plan authorized by this chapter.

B. A person who violates this section is guilty of a class 2 misdemeanor.

Chapter 6 Aggregate Mined Land Reclamation

Article 1 Administration

§ 27-1201 Definitions

In this chapter, unless the context otherwise requires:

"Aggregate" has the same meaning prescribed in section 27-441.
"Aggregate mining" has the same meaning prescribed in section 27-441.
"Aggregate mining facility" means property that is owned, operated or managed by the same person for aggregate mining. Property that is not contiguous but is within the same geographical area and operated as a single aggregate mining complex is considered to be a single aggregate mining facility.
"Aggregate mining unit" means an individual portion of an aggregate mining facility that encompasses one or more surface disturbances.
"Division" means the division of mined land reclamation in the office of the state mine inspector.
"Existing aggregate mining unit" means an aggregate mining unit, other than a new aggregate mining unit, that continued operations after April 1, 1997.
"Existing exploration operation" means an exploration operation that is ongoing as of the effective date of the initial rules adopted by the inspector pursuant to this chapter.
"Exploration operations" means activities that create surface disturbances outside an aggregate mining facility and that are conducted to determine the presence, location, extent, depth or grade of aggregate, including constructing access roads and drill pads.
"Inactive aggregate mining unit" means an aggregate mining unit that has not been operated after April 1, 1997 and for which there is a current identifiable owner or operator other than the federal or state government.
"Inspector" means the state mine inspector.
"Maintenance" means an activity to preserve or repair the function of previously disturbed land, including grading roads, repairing berms or dams and dredging sedimentation basins.
"New aggregate mining unit" means an aggregate mining unit at which surface disturbances begin after the effective date of the initial rules adopted pursuant to this chapter.
"New exploration operation" means an exploration operation that begins after the effective date of the initial rules adopted pursuant to this chapter.
"Reclamation" means measures that are taken on surface disturbances at exploration operations and aggregate mining units to achieve stability and safety consistent with postaggregate mining land use objectives specified in the reclamation plan.
"Soil" means topsoil, suitable substrata or other plant growth media that will sustain vegetation.
"Stability" means the condition of land with respect to its erosion potential and ability to withstand seismic activity.
"Surface disturbance" means clearing, covering or moving land by means of mechanized earthmoving equipment for aggregate mining and exploration but does not include surveying, assessment and location work, seismic work, maintenance and other such activities that create a de minimis disturbance.

§ 27-1202 Coordination of programs and activities

A. The state mine inspector shall employ staff who have the necessary and appropriate experience in aggregate mining and reclaiming aggregate mined lands.

B. Except as provided by subsection C, the authority to administer aggregate mined land reclamation is conferred on the state mine inspector as provided in this chapter.

C. Subsection B of this section does not apply to a city or town that adopted an ordinance before January 1, 2005 requiring aggregate mined land reclamation. This section does not affect the legal status of nonconforming uses in a city or town.

D. The requirements of a reclamation plan under this chapter and a floodplain use regulation for the same aggregate mining unit or exploration operation, including any financial assurance requirements, shall not contradict or be redundant or inconsistent with the requirements of this chapter.

E. This chapter does not supersede the requirements of a county flood control district to maintain stability and the flood carrying capacity of the floodplain.

F. This chapter does not supersede the requirements of title 49 or any other applicable federal, state or local law.

§ 27-1203 Exemption for state lands; agreements for coordination with other governmental agencies and landowners

A. This chapter does not apply to any activity that occurs on state land and that is regulated pursuant to chapter 2, article 5 of this title.

B. The state mine inspector may enter into agreements pursuant to title 11, chapter 7, article 3 with the state land department, the United States bureau of land management, the United States forest service and other agencies that manage public lands and take other appropriate measures to coordinate the review and approval of reclamation plans, including designating a lead agency for reclamation plan review and action. The inspector shall avoid redundant, inconsistent or contradictory reclamation, inspection, administration, enforcement and financial assurance requirements.

§ 27-1203.01 Exemption for limited, intermittent-use projects

A. The regulatory and reclamation provisions of this chapter do not apply to an aggregate mining unit that is intermittently used for specific governmental projects if it meets all of the following conditions:

The aggregate mining unit consists of:

(a) A surface disturbance of not more than twenty contiguous acres.

(b) A single pit of not more than ten acres.

The aggregate mining unit is subject to the requirements of the clean water act (33 United States Code chapter 26).
The depth of excavation will not exceed twenty-five feet below the lowest existing surface elevation.
The aggregate material removed from the excavation is used solely for governmental projects and not for any private commercial purpose.
At the end of the specific project use, the unit will be reclaimed in a manner consistent with the requirements of the owner of the land and all safety conditions prescribed by law.

B. This section does not supersede the requirements of a flood control district to maintain the stability and the flood carrying capacity of the floodplain.

C. This section does not apply to aggregate mining units that are within the exterior boundaries of an incorporated city or town or that are in an unincorporated area of a county that is surrounded on all sides by one or more incorporated cities or towns.

§ 27-1204 Rules; contributions

A. The inspector shall adopt rules consistent with this chapter for the reclamation of surface disturbances at exploration operations and aggregate mining units and for the administration of this chapter.

B. To accomplish the purposes of this section, the inspector may accept monies for deposit in the aggregate mining reclamation fund received from the federal government or other governmental agencies. The state shall separately account for monies received pursuant to this subsection that are deposited in the aggregate mining reclamation fund.

§ 27-1205 Certificate of disclosure of violations; remedies; definition

A. The following persons shall file a certificate of disclosure with the division of mined land reclamation as prescribed by this section:

A person who is engaged in an activity subject to regulation under this chapter and who has been convicted of a felony involving laws related to mined land reclamation within the five year period immediately preceding execution of the certificate.
A person who is engaged in an activity subject to regulation under this chapter and who is or has been subject in any civil proceeding to an injunction, decree, judgment or permanent order of any state or federal court within the five year period immediately preceding the execution of the certificate that involved a violation of laws of that jurisdiction relating to mined land reclamation.

B. The certificate of disclosure prescribed by this section shall contain the following:

Identification of the person, including present full name, all prior names or aliases, full birth name, present house address and all prior addresses for the immediately preceding five year period, date and place of birth and social security number.
The nature and description of each conviction or judicial action, the date and place, the court and public agency involved and the file or cause number of the case.
A written declaration that each signer swears to its contents under penalty of perjury.

C. The certificate of disclosure submitted on behalf of a corporation shall be executed by any two executive officers or directors of the corporation.

F. Instead of the certificate of disclosure prescribed by this section, a corporation may submit to the division copies of annual reports filed with the securities and exchange commission pursuant to section 13 or 15(d) of the securities exchange act of 1934 (15 United States Code section 78), commonly known as a "10-K form", within ninety days after filing the annual report. The initial submission shall include 10-K forms for the preceding five years.

G. A person who contributes information for a certificate of disclosure and who makes an untrue statement of material fact concerning the requirements of subsection B of this section or withholds any material fact concerning the requirements of subsection B of this section or a person who is obligated to file a certificate of disclosure and who fails to file the certificate is subject to section 27-1322, section 27-1324, subsections B and C and section 27-1325.

H. For the purposes of this section, "person" means:

A natural person.
Any public or private corporation, its officers, directors, trustees, incorporators and persons who control or hold over ten per cent of the issued and outstanding common shares or ten per cent of any other proprietary, beneficial or membership interest in the corporation.
A partnership, including all general partners and limited partners who control a ten per cent or more beneficial interest in the partnership.
An association or society of persons.
A limited liability company including all members who have a ten per cent or more interest in the limited liability company.
The federal government and any of its departments or agencies.
This state and any of its agencies, departments, political subdivisions, counties, towns or municipal corporations.

Article 2 General Regulatory Provisions

§ 27-1221 Surface disturbances created by new exploration operation or aggregate mining unit

Beginning January 1, 2007, an owner or operator of a new exploration operation or new aggregate mining unit shall not create a surface disturbance of more than five contiguous acres until a reclamation plan and financial assurance mechanism for the exploration operation or aggregate mining unit are approved by the state mine inspector or are otherwise authorized by this chapter.

§ 27-1222 Surface disturbances created by existing exploration operation or aggregate mining unit; extension; continuing operations

A. An owner or operator of an existing exploration operation or existing aggregate mining unit with surface disturbances of more than five contiguous acres shall submit a reclamation plan to the state mine inspector on or before January 1, 2007.

B. An owner or operator may petition the inspector for an extension of time to submit a reclamation plan. The inspector shall grant the extension on a showing of good cause, including the need to coordinate the preparation and submission of a reclamation plan with other permits and approvals required for the exploration operation or aggregate mining unit.

C. The owner or operator of an existing exploration operation or existing aggregate mining unit may continue operations, including creating surface disturbances, until the inspector takes final action on the reclamation plan and financial assurance mechanism.

D. The reclamation of surface disturbances created in whole or in part before the effective date of this chapter and the initial rules adopted pursuant to this chapter may present special technical and economic constraints that are not encountered for new surface disturbances. The inspector shall consider the nature and extent of the existing surface disturbances, relevant site-specific circumstances and the technical and economic practicability of reclaiming such surface disturbances. The inspector shall not require the removal or relocation of existing aggregate mining units to satisfy the reclamation requirements of this chapter.

§ 27-1223 Creating surface disturbances of five acres or less

A. Nothing in this chapter shall prevent an owner or operator of an exploration operation or aggregate mining unit from creating a surface disturbance of five contiguous acres or less.

B. From and after December 31, 2006, the state mine inspector may require either or both of the following in the case of a series of surface disturbances of five contiguous acres or less by the same owner or operator if the series of surface disturbances in aggregate constitute more than five acres:

A reclamation plan under article 3 or 4 of this chapter.
A financial assurance mechanism under article 5 of this chapter.

§ 27-1224 Inactive aggregate mining units

A. At an inactive aggregate mining unit, the following are not subject to the requirements of this chapter:

Voluntary reclamation measures that are not required by federal or state law, regulation or permit.
Actions that are required to comply with other local, state or federal laws, regulations, permits, orders or decrees.
Maintenance activities.

B. Exploration operations and aggregate mining and other associated activities at an inactive aggregate mining unit are subject to the requirements of this chapter only with respect to new surface disturbances created by those operations and activities.

§ 27-1225 Remedial response to governmental orders

A. An owner or operator is not required to provide notice or obtain approval of a reclamation plan or financial assurance mechanism under this chapter before creating a surface disturbance pursuant to a remedial action in response to a government order to prevent or mitigate an actual or potential release of pollutants into the environment.

B. The owner or operator shall update the reclamation plan and financial assurance mechanism within six months after completing the emergency or remedial measure.

§ 27-1226 Initiation, extension and completion of reclamation

A. Beginning January 1, 2007, if a surface disturbance cannot be practicably reclaimed concurrently with an exploration operation or at an aggregate mining unit, reclamation shall be initiated:

Within one year after completing the exploration operation or aggregate mining unit.
Within one year after cessation of aggregate mining activity.
As required by applicable federal law.

B. The state mine inspector shall extend the period in which to initiate reclamation under subsection A, with up to three subsequent five year extensions, if the owner or operator of an exploration operation or aggregate mining unit demonstrates a reasonable likelihood that the project or operation will resume, based on a consideration of factors, including:

The presence of additional aggregate being mined or other commodities in commerce.
Historical fluctuations in the value of the commodity being mined or other commodities present if they can be mined using the same disturbances.
Changing market conditions and demand for the commodity being mined.
The design life of any process components existing at an aggregate mining unit.

C. Once initiated, the final reclamation measures shall be performed as stated in the approved reclamation plan unless the exploration operation or aggregate mining unit is reactivated.

§ 27-1227 Substantial changes to approved reclamation plan

A. The state mine inspector must approve any substantial change to an approved reclamation plan as provided by this section before the change is implemented.

B. The owner or operator of the exploration operation or aggregate mining unit shall submit a notice of a proposed change to the inspector describing the purpose and scope of the proposed change and whether it constitutes a substantial change to the approved reclamation plan. The inspector shall notify the owner or operator submitting a notice of a proposed change to an approved reclamation plan whether the proposed change constitutes a substantial change within fifteen days after receiving the notice.

C. If the inspector determines that the change is substantial, the inspector shall require the owner or operator to submit an amendment to the plan for approval. The inspector shall approve or disapprove the amended plan within ninety days after receiving the amended plan.

D. The inspector shall define substantial change by rule.

§ 27-1228 Transferring an approved reclamation plan

The name, address, telephone number and statutory agent of the person to whom the plan will be transferred.
The effective date of the proposed transfer.
A proposed financial assurance mechanism.
Other information the inspector may determine to be necessary by rule.

C. On receiving the approved financial assurance mechanism from the transferee the inspector shall release the financial assurance mechanism provided by the transferor.

§ 27-1229 Notice of plan or substantial change; new exploration operations; new aggregate mining units

A. The state mine inspector shall schedule and conduct a public meeting on a proposed reclamation plan for a new exploration operation or new aggregate mining unit or substantial change to an approved reclamation plan within forty-five days after receiving a proposed reclamation plan or a substantial change to an approved reclamation plan that the inspector deems to be complete. The inspector shall conduct the meeting in the county in which the exploration operation or aggregate mining unit is located.

B. The inspector shall give at least thirty days' notice of the meeting. The notice shall briefly describe the proposed reclamation plan or substantial change and shall designate where the plan or change may be accessed. The notice shall be:

Filed with the secretary of state.
Sent by first class mail to cities and counties located within five miles of the exploration operation or aggregate mining unit.
Sent by first class mail to the department of water resources, department of environmental quality, multi-county water conservation districts and agencies that own or manage lands on which the exploration operation or aggregate mining unit is located.
Sent by first class mail to property owners within one mile of an exploration operation or aggregate mining unit located in a county with a population of less than eight hundred thousand persons or within one-half mile of an exploration operation or aggregate mining unit located in any other county.
Posted in five conspicuous public locations within one mile of the exploration operation or aggregate mining unit.

C. The exploration operation's or aggregate mining unit's designated representative shall attend the public meeting and respond to questions that relate to information in the reclamation plan or substantial change.

D. If an interested party cannot attend the public meeting, that party may submit written comments to the inspector before the meeting regarding the reclamation plan or substantial change, and the inspector shall consider the written comments.

E. The inspector shall adopt rules to implement the provisions of this section.

§ 27-1230 Notice of plan for existing exploration operations and existing aggregate mining units

A. The inspector shall give notice of a proposed reclamation plan for an existing exploration operation or an existing aggregate mining unit. The notice shall be:

Filed with the secretary of state.
Sent by first class mail to cities and counties located within five miles of the existing exploration operation or the existing aggregate mining unit.
Sent by first class mail to the department of water resources, department of environmental quality, multi-county water conservation districts and agencies that own or manage lands on which the exploration operation or aggregate mining unit is located.
Sent by first class mail to property owners with property adjoining the exploration operation or aggregate mining unit.
Published once each week for two consecutive weeks in a newspaper of general circulation in the county or counties in which the exploration operation or aggregate mining unit is located. If there is no such newspaper, the inspector shall give notice in a newspaper of general circulation that is published in an adjoining county.
Posted in five conspicuous public locations within one mile of the exploration operation or aggregate mining unit.

B. The notice shall briefly describe the proposed reclamation plan and shall designate where the plan may be accessed. The notice shall state that any person who may be adversely affected by the plan may file written comments on the plan within fifteen days after the last publication and request a public meeting. If there is sufficient public interest by persons who may be adversely affected by the plan, the inspector shall hold a public meeting in the county in which the exploration operation or aggregate mining unit is located.

C. The exploration operation or mining unit's designated representative shall attend the public meeting and respond to questions that relate to information in the reclamation plan.

D. If an interested party cannot attend the public meeting, that party may submit written comments to the inspector before the meeting regarding the reclamation plan, and the inspector shall consider the written comments.

E. The inspector shall adopt rules to implement the provisions of this section.

§ 27-1231 Public disclosure of information; definition

B. If the inspector, on the inspector's initiative or following a request for disclosure, disagrees with the trade secret or confidential notice, the inspector may request the attorney general to seek a court order authorizing disclosure. If a court order is sought, the party shall be served with a copy of the court filing and has twenty business days from the date of service to request a hearing on whether a court order should be issued. The hearing shall be conducted in camera, and any order resulting from the hearing is appealable as provided by law. The inspector may not disclose the confidential information until a court order authorizing disclosure has been obtained and becomes final. The court may award costs of litigation, including reasonable attorney and expert witness fees, to the prevailing party.

C. The inspector shall make available to the public the following information obtained from any person pursuant to this chapter:

The name and address of any plan applicant.
The proposed postaggregate mining land use or uses.
A general description of the proposed reclamation measures.

D. The inspector may disclose, with an accompanying confidentiality notice, any records, reports or information obtained by the inspector or employees of the division of mined land reclamation to:

Other state employees concerned with administering this chapter or if the records, reports or information is relevant to any administrative or judicial proceeding under this chapter.
Employees of the United States environmental protection agency if the information is necessary or required to administer and implement or comply with federal statutes or regulations.

E. For the purposes of this section, "trade secret" means information to which all of the following apply:

A person has taken reasonable measures to protect the information from disclosure and the person intends to continue to take those measures.
The information is not and has not been reasonably obtainable by legitimate means by other persons without the person's consent, other than by governmental entities and other than in discovery based on a showing of special need in a judicial or quasijudicial proceeding.
A statute does not specifically require disclosure of the information to the public.
The person has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the person's competitive position.

§ 27-1232 Coordination with other governmental agencies

A. The state mine inspector shall coordinate the review and approval of reclamation plans with the state land department, the United States bureau of land management, the United States forest service and other agencies that own and manage public lands on which exploration operations or aggregate mining facilities are located, within the respective jurisdictions, through memoranda of agreement or cooperative agreements that designate a lead agency for reclamation plan review and action. This coordination is intended to avoid duplication of efforts to inspect exploration operations and aggregate mining facilities and review and enforce reclamation plans. The memoranda of agreement shall also provide that no financial assurance may be required under this article that will duplicate financial assurances required under any other law or agreement.

B. If an exploration operation or an aggregate mining unit is located on land administered by a federal agency, an approved federal reclamation plan and a financial assurance mechanism for the federal land that are consistent with the requirements of this chapter supersede the requirements for a reclamation plan and financial assurance mechanism otherwise required by this chapter.

§ 27-1233 Fees; plan submissions; substantial changes; aggregate mining reclamation fund

A. The state mine inspector may establish by rule a fee to be collected from the owner or operator of each exploration operation and aggregate mining unit at the time the owner or operator submits a plan under article 3 or 4 of this chapter or submits a substantial change to an approved plan pursuant to this article.

B. The aggregate mining reclamation fund is established consisting of fees collected pursuant to subsection A of this section and monies received pursuant to section 27-1204. The inspector shall administer the fund. Monies in the fund are subject to legislative appropriation and shall be used by the inspector to administer and enforce this chapter. On notice from the inspector, the state treasurer shall invest and divest monies in the fund as provided by section 35-313 and monies earned from investment shall be credited to the fund.

§ 27-1234 Plan review and evaluation by private consultants

B. The inspector shall pay the consultant for the services rendered from the inspector's appropriation under section 27-1233.

§ 27-1235 Appeals

A person may appeal a state mine inspector action taken pursuant to this chapter as provided in title 41, chapter 6, article 10.

§ 27-1236 Licensing time frames

Title 41, chapter 6, article 7.1 applies to this chapter.

§ 27-1237 Variances

The inspector, by rule or conditional order, may allow an owner or operator of an exploration operation or aggregate mining unit to vary from any rule adopted pursuant to this chapter or any requirement or condition of a reclamation plan issued pursuant to this chapter if the inspector finds that allowing the variance will not endanger public safety and will not be inconsistent with the objectives of the reclamation plan.

Article 3 Exploration Operations Reclamation Plan

§ 27-1251 Submission and contents of reclamation plan

A. Beginning January 1, 2007, a person who conducts exploration operations that will create more than five contiguous acres of surface disturbance shall submit a reclamation plan to the state mine inspector. The reclamation plan shall:

Identify the county or counties in which exploration operations will be conducted.
State the reclamation measures that will be taken to reclaim access roads, drill pads, drill holes, trenches and other exploration workings where the operator conducts exploration operations in this state.

B. An operator may submit a single reclamation plan covering all new and existing exploration operations in this state.

§ 27-1252 Notice of complete, incomplete or denied plan

A. The state mine inspector shall notify the operator that a reclamation plan is administratively complete or incomplete within thirty days after receiving the plan.

§ 27-1253 Approval; criteria

Exploration access roads that the operator constructs and that will not be part of a postexploration use shall be reclaimed in a timely manner after the exploration is completed. If a governmental unit or agency will accept dedication or conveyance of an access road, reclamation is not required. Reclamation shall include removing culverts, restoring drainage to its general predisturbance configuration, ripping the road surface to reduce compaction and aid revegetation and controlling access of motorized vehicles to the reclaimed area.
Holes that are drilled for aggregate exploration purposes, unless completed for water monitoring, withdrawal or other use, shall be plugged, sealed or capped promptly after their use is completed as prescribed by rule by the department of water resources and as necessary to ensure the safety of persons, domestic animals, livestock and machinery in the area.
Drill pads shall be reshaped promptly after completion of drilling to prevent erosion and to establish contours that are generally compatible with the adjacent areas or shall be ripped to reduce compaction and aid revegetation and, if appropriate, seeded to minimize erosion.
Mud pits that are used for drilling fluids and produced waters shall be reclaimed after hazardous substances are removed and disposed of, if necessary, and after they are sufficiently dry by reshaping to contours that are generally compatible with the adjacent areas. If it is appropriate to the area, suitable growth media shall be spread and seeded over the pit area.
Exploration trenches and pits shall be backfilled and reclaimed as soon as practicable as prescribed in the reclamation plan. If the trench or pit will remain open, measures shall be taken to stabilize the sides to address erosion control and to restrict access. Trench and pit reclamation shall include backfilling, reshaping to contours generally compatible with the adjacent areas and, if appropriate for the area, seeding to reestablish vegetation.
Areas that have been cleared by blading with mechanized equipment during exploration operations shall be reshaped after exploration is completed, unless used for a postexploration use, to be generally compatible with the adjacent area. Compacted areas shall be ripped to aid revegetation.

§ 27-1254 Beginning new exploration operations

New exploration operations may begin when both of the following occur:

The state mine inspector approves the reclamation plan for the exploration operations.
Financial assurance has been submitted to the inspector as required by article 5 of this chapter.

§ 27-1255 Annual renewal

A reclamation plan for exploration operations is renewable annually on:

Modification of the plan to address types of surface disturbances that will be conducted during exploration operations but that have not been previously addressed in the reclamation plan.
Submission of any additional financial assurance, if necessary.

Article 4 Aggregate Mining Unit Reclamation Plan

§ 27-1271 Submission and contents of reclamation plan

A. Beginning January 1, 2006, an owner or operator may submit a single reclamation plan that covers multiple aggregate mining units of an aggregate mining facility.

B. The proposed reclamation plan shall include:

The names and addresses of the owner or operator and an individual who will be the regulatory contact.
A statement that the owner or operator assumes responsibility for the reclamation of surface disturbances that are attributable to the aggregate mining unit consistent with this chapter and the rules adopted pursuant to this chapter.
The current ownership and use of the land included in the aggregate mining unit.
The proposed postaggregate mining use of the land.
A description of the aggregate mining unit and the proposed surface disturbances that will be created.
The existing and proposed final topography, including the final slopes or configuration of overburden or waste rock stockpiles and fine areas.
A narrative description of roads that are proposed for the aggregate mining unit.
The acreage affected by each type of surface disturbance and a map of the aggregate mining unit area showing each surface disturbance. For previously undisturbed areas, the map shall identify any types of fish and wildlife habitats that will be disturbed.
The proposed reclamation measures that are necessary to achieve the postaggregate mining land use, including information concerning:

(a) The measures that will be taken to restrict public access to pits and other surface features that may be a hazard to public safety.

(b) The measures that will be taken to address erosion control and stability.

(c) The measures that will be taken to address revegetation, conservation and the care and monitoring of revegetated areas as provided in this chapter.

(d) For surface disturbances for which the proposed postaggregate mining land use objective is designated as grazing, fish or wildlife habitat, forestry or recreation, the type of wildlife or fish habitat to be encouraged, including measures that will be taken to encourage that type of wildlife or fish habitat, and that those measures will not be incompatible with the fish or wildlife habitat on adjacent lands.

A proposed tentative schedule for beginning surface disturbances and beginning and completing the reclamation measures.
The estimated costs to perform each of the proposed reclamation measures for the purposes of determining financial assurance requirements under article 5 of this chapter.
The distance in feet and the direction from the closest existing occupied residential structures and aggregate mining facility. For the purposes of this paragraph, the distance shall be measured from the exterior of the occupied residential structure to the closest crest of excavation and includes any intermediate rights-of-way between the structure and proposed facility.
A statement that the owner or operator has provided a notice of the proposed reclamation plan to each residential property owner whose property is located within a one-half mile radius of the aggregate mining operation as shown on the current property tax roll. The notice shall include the name and contact information of the owner or operator's designated representative who will respond to questions regarding the proposed reclamation plan.

§ 27-1272 Notice of complete, incomplete or denied plan

A. The state mine inspector shall notify the owner or operator that the plan is complete or incomplete within thirty days after receiving the plan.

B. The inspector shall approve or disapprove a plan for new aggregate mining units within one hundred twenty days after receiving a complete plan.

C. If the inspector notifies the owner or operator that a plan is incomplete or denied, the inspector shall include a written explanation stating the reasons for denial, including recommendations for correcting incomplete or unacceptable parts of the plan consistent with the requirements of this chapter. The owner or operator must refile the corrected plan within ninety days after notification that the previous plan was incomplete or denied or within a time frame mutually agreed on between the owner or operator and the state mine inspector that would not materially affect the safety of employees or cause undue hardship on an owner or operator.

§ 27-1273 Approval; criteria

A. The inspector shall approve a reclamation plan for aggregate mining units if the plan provides for reclamation measures for surface disturbances that are:

Necessary to achieve a safe and stable condition suitable for the postaggregate mining land use objectives stated in the reclamation plan.
Compatible with good engineering practices regarding erosion control and seismic activity for the applicable seismic zone.

B. In evaluating the reclamation plan, the inspector shall consider the technical and economic practicability of the proposed reclamation measures, taking into account the site-specific circumstances at the aggregate mining unit and the proposed postaggregate mining land use objectives as stated in the reclamation plan, including:

Grazing and other agricultural land use objectives.
Developed water resources, water management projects and planned and existing underground water storage facilities.
Fish or wildlife habitat.
Forestry.
Historic preservation.
Industrial or commercial uses, including tourism.
Recreational uses.
Residential uses.
Scientific or educational uses.
Aggregate mining or remining, except that the proposed postaggregate mining use of aggregate mining or remining does not relieve an owner or operator from complying with or implementing the reclamation plan requirements under this chapter.
Water course channelization.
Other appropriate postaggregate mining land use objectives.

C. In evaluating the reclamation plan, the inspector may consider comments from the state geologist or any elected official.

D. The postaggregate mining land use objective stated in the reclamation plan need not be the same use of the land that existed before the aggregate mining facility was located on the site.

§ 27-1274 Preservation and conservation of soil; exceptions

Before creating a surface disturbance that is stated to be reclaimed by revegetation pursuant to a new aggregate mining unit reclamation plan, the owner or operator shall conserve the soil as reasonably available from the area of disturbance to support the stated revegetation on that specific disturbance as necessary to achieve the postaggregate mining land use objectives stated in the reclamation plan, unless the owner or operator demonstrates one or more of the following factors:

There is insufficient soil to make recovery practicable.
Recovery of the soil is not practicable due to limitations of topography, thickness of soil or other physical, climatic or biological constraints.
Direct revegetation of the disturbance, with or without soil amendments, is reasonably expected to be successful.

§ 27-1275 Features excluded from reclamation plan or allowed to remain following reclamation; public protection measures

B. The following factors shall be considered in determining whether the reclamation of open pits, rock faces or subsidence areas is impracticable:

Cost to perform the reclamation.
Topography of the site.
Geology and stability of the site.
Time required to perform the reclamation.
Consumption of resources required to perform the reclamation.
Future access to aggregate resources.
Regional or local hydrogeology.

C. Buildings and other structures may remain after reclamation if adequate measures are taken to protect public safety.

§ 27-1276 Beginning new aggregate mining units

Beginning January 1, 2007, new aggregate mining units may begin when both of the following occur:

The state mine inspector approves the reclamation plan for the aggregate mining unit.
Financial assurance has been submitted to the inspector as required by article 5 of this chapter.

§ 27-1277 Annual status report

A. Within sixty days after the anniversary date of approval of each reclamation plan the owner or operator shall submit to the division a status report for the preceding year.

B. The report shall be in a form prescribed by the state mine inspector and shall include:

The acreage of surface disturbance during the reporting year and the total acreage of surface disturbance at the mining facility.
The acreage of reclamation conducted during the reporting year and the total acreage of reclamation at the mining facility.
The status of the aggregate mining operation at the end of the reporting year.
Any change in the names and addresses of the owner, operator and the regulatory contact.

C. The inspector may request further information to supplement or clarify the report, but if the inspector does not respond within thirty days after receiving the report, it is considered to be accepted for the purposes of this section.

Article 5 Financial Assurance

§ 27-1291 Financial assurance requirements; form

A. On or before January 1, 2007, as required by this chapter, owners and operators of exploration operations and aggregate mining units who create surface disturbances shall provide financial assurance mechanisms to the inspector as provided by this article.

B. Allowable financial assurance mechanisms for purposes of this article include any or a combination of the following:

Surety bond.
Certificate of deposit.
Trust fund with pay-in period.
Letter of credit.
Insurance policy.
Certificate of self-insurance.
Cash deposit with the state treasurer.
Evidence of ability to meet a corporate financial test or corporate guarantees as provided by 40 Code of Federal Regulations section 264.143(f).
Annuities.
Bonding pools.
Additional financial assurance mechanisms that are acceptable to the inspector.

§ 27-1292 Aggregate mining unit or existing exploration operation

A. The owner or operator of an existing exploration operation or a new or existing aggregate mining unit shall transmit a financial assurance mechanism to the state mine inspector within sixty days after a reclamation plan is approved. The inspector shall take final action on the financial assurance mechanism within thirty days after it is received.

B. In determining the amount of financial assurance to be provided for an existing exploration operation or a new or existing aggregate mining unit, the inspector shall consider the costs of approved reclamation measures stated in the reclamation plan. In computing reclamation costs, the inspector shall assume that third parties will perform the reclamation measures. The inspector shall reduce the amount of the required financial assurance to the costs of the owner or operator performing the reclamation measures if the owner or operator can demonstrate sufficient financial ability to perform the necessary reclamation or if the owner or operator meets the financial assurance reduction criteria established by rule. Financial ability shall be established by one or more of the financial mechanisms described in 40 Code of Federal Regulations section 264.143(f).

C. Each financial assurance mechanism for an existing exploration or new or existing aggregate mining unit submitted to the inspector shall provide the amount in current dollars equal to the cost to:

Perform the approved reclamation measures stated in the reclamation plan on the area of surface disturbance.
Provide continued care and monitoring of the areas stated in the reclamation plan for revegetation for no more than three growing seasons without additional supplemental irrigation or other man-induced inputs after performing the reclamation measures unless the supplemental inputs are part of the postaggregate mining land use. Notwithstanding this paragraph, revegetation efforts that are necessary to achieve the postaggregate mining land use objective are considered adequate and complete if the owner or operator has taken reasonable measures to achieve vegetative success. Technical and economic practicability as it relates to site-specific conditions and the proposed postaggregate mining land use shall be taken into account in making that determination.

§ 27-1293 New exploration operation

A. Beginning January 1, 2007, the owner or operator of a new exploration operation shall furnish a financial assurance mechanism to the state mine inspector in an amount equivalent to two thousand dollars per acre of new surface disturbance, unless the inspector approves a cost estimate for an amount less than two thousand dollars per acre.

B. An owner or operator may provide a single financial assurance mechanism for all of its exploration operations conducted in this state.

§ 27-1294 Duplication of financial assurance not required

Financial assurance is not required under this article that duplicates financial assurance that is required under other local, state or federal laws. Evidence of financial assurance under this article that would be duplicated must be filed with the state mine inspector.

§ 27-1295 Incremental financial assurance

An owner or operator may provide financial assurance under this article on an incremental basis for planned surface disturbances described in the reclamation plan.

§ 27-1296 Release of financial assurance

A. An owner or operator may apply to the state mine inspector to release all or part of the financial assurance provided under this article. The application shall:

Describe the reclamation measures that have been performed.
Describe any surface disturbances proposed in the reclamation plan that have not been disturbed.
Contain an estimate of the costs of reclamation measures that have not been performed.

§ 27-1297 Rules; release, forfeiture or exercise of financial assurance

A. The state mine inspector shall adopt rules for:

Reviewing and acting on applications to release all or part of the financial assurance under this article.
Ensuring the implementation of the reclamation plan through forfeiture or exercise of the financial assurance on failure to implement the reclamation plan as required by this article.

B. The rules shall provide for written notice to all principals and sureties on the financial assurance and an opportunity for a hearing.

Article 6 Enforcement

§ 27-1321 Inspections

Beginning January 1, 2007, the state mine inspector may enter and inspect, during normal business hours, any exploration operation or aggregate mining facility that is subject to this chapter to determine compliance with this chapter. The inspector shall give the owner or operator the opportunity to have its representative accompany the inspector. Within thirty days after the date of the inspection, the division shall provide to the owner or operator a copy of any inspection report produced as a result of any inspection of the exploration operation or aggregate mining facility.

§ 27-1322 Compliance orders

A. Beginning January 1, 2007, if the state mine inspector determines that a person is violating this chapter, a rule adopted pursuant to this chapter or any condition of a reclamation plan approved pursuant to this chapter or is causing an imminent and substantial danger to the public safety, the inspector may issue an order requiring compliance either immediately or within a stated period of time.

B. A compliance order shall state with reasonable specificity the nature of the violation, a time for compliance, if applicable, and the right to a hearing.

C. The inspector shall transmit the compliance order to the alleged violator either by certified mail, return receipt requested, or by hand delivery.

§ 27-1323 Enforcement action on reclamation plan approval

A. The state mine inspector may suspend, withdraw or revoke a reclamation plan approval if the inspector determines that the facility is in violation of any rule adopted pursuant to this chapter.

B. Any action taken under this section shall comply with the requirements of title 41, chapter 6, article 10.

§ 27-1324 Injunctive relief; civil penalties

A. Beginning January 1, 2007, if the state mine inspector has reason to believe that a person is violating this chapter or a rule adopted pursuant to this chapter or that a person is causing an imminent and substantial danger to the public safety, the inspector, through the attorney general, may request a temporary restraining order, a preliminary injunction, a permanent injunction or any other relief necessary to protect the public safety, without regard to whether the person has requested a hearing.

C. An action filed under this section shall be brought in superior court in the county in which the alleged violation occurred or in which the inspector maintains an office.

§ 27-1325 Agency order; appeal

B. Except as provided in section 41-1092.08, subsection H, a final agency order is subject to judicial review pursuant to title 12, chapter 7, article 6.

§ 27-1326 Violation; classification

A. Beginning January 1, 2007, an owner or operator of an exploration operation or aggregate mining unit shall not:

Cause a surface disturbance at an exploration operation or aggregate mining unit in violation of this chapter.
Fail or refuse to conduct reclamation according to the terms of a reclamation plan authorized by this chapter.

B. A person who violates this section is guilty of a class 2 misdemeanor.

§ 27-1327 Procurement; aggregate materials; eligibility

Beginning January 1, 2008, a person is not eligible for consideration for award of contracts for the sale of aggregate pursuant to title 41, chapter 23 until that person has an approved reclamation plan pursuant to this chapter.