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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
continuation; state land department
Purpose
Continues, retroactive to July 1, 2026, the Arizona State Land Department (ASLD) for four years until July 1, 2030, and prescribes requirements relating to the leasing of state trust lands, duties of the ASLD and ASLD Commissioner (Commissioner), the implementation of the Auditor General's July 2025 performance audit and sunset review recommendations, public hearings, conceptual land use plans and five-year disposition plans.
Background
The ASLD must administer all laws relating to lands owned by, belonging to and under control of Arizona and have charge and control of all lands owned by Arizona, and timber, stone, gravel and other products of such lands (A.R.S. § 37-102). The ASLD Commissioner (Commissioner) must: 1) exercise and perform all powers and duties vested in or imposed on the ASLD and prescribe such rules as are necessary to discharge those duties; 2) make long-range plans for the future use of state lands in cooperation with other state agencies, local planning authorities and political subdivisions; 3) have the authority to lease for commercial purposes and sell all land owned or held in trust by Arizona; and 4) fulfill all other statutorily prescribed duties (A.R.S. § 37-132). The ASLD is responsible for adopting rules to prescribe the procedure, method and means for the sale of state lands. An ASLD representative must attend at the time and place fixed for the sale and proceed by first announcing information relevant to the sale sufficient to begin the bidding process, then calling for bids and finally, selling the lands for the highest and best bid (A.R.S. § 37-238).
The Commissioner must create conceptual land use plans for all urban
state trust land in Arizona and other state trust lands the Commissioner
considers to be appropriate and; 1) prioritize the creation of conceptual plans
to the extent possible to correlate with the rate of population growth in urban
areas and coincide with the production of municipal and county general plans;
2) consult with the city, town or county in which the land is located; and 3)
submit each plan and revision of the plan to the Urban Land Planning Oversight
Committee for Review. The conceptual plan is considered to be a state general
plan on approval by the Commissioner.
The Commissioner is responsible for creating five-year disposition plans for all state trust land in Arizona, based at a minimum on market demand and anticipated transportation and infrastructure availability. The Commissioner must: 1) review and update each plan each year as may be necessary; 2) consult with the city, town or county in which the land is located and with any regional planning organization; and 3) submit each plan and revision to the Urban Land Planning Oversight Committee to ensure conformity with the outlined conceptual land use plan (A.R.S. § 37-331.03).
The Senate Natural Resources Committee of Reference (COR) held a public meeting on Tuesday, January 20, 2026, to review the Auditor General's Performance Audit and Sunset Review Report, consider the ASLD's responses to the statutorily prescribed sunset factors and receive public testimony. The COR recommended that the ASLD be continued for four years, until July 1, 2030, with prescribed modifications and that the ASLD return to the Legislature with a report on the additional recommendations within two years. The ASLD terminates on July 1, 2026, unless continued by the Legislature (A.R.S. § 41-3026.05).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
ASLD
1. Continues, retroactive to July 1, 2026, the ASLD for four years until July 1, 2030.
2. Allows the ASLD Commissioner to renew an existing mineral or mineral materials lease without public auction if the ASLD Commissioner determines:
a) the lessee is in substantial compliance with the terms of the lease;
b) the renewal is in the best interest of the state land trust;
c) renewal is supported by a written finding by the ASLD Commissioner that the renewal is consistent with the ASLD Commissioner's fiduciary duties; and
d) the renewal is for a term that is allowed by the laws of Arizona.
3. Requires an existing mining or mineral materials lease that the ASLD Commissioner renews to provide for a royalty rate that is adjusted pursuant to a market-based indexing mechanism that the ASLD Commissioner adopts.
4. Allows the indexing mechanism to include:
a) producer price indices;
b) regional or statewide construction aggregate price; or
c) other objective indicators that are recognized by the industry.
5. Requires the ASLD, to the extent possible, to:
a) restrict the use of a lease or permit holdover provision to not more than 90 days;
b) for a lease renewal and special land use permit, approve any improvements that are customary in the lessee's or permittee's course of business or provide notice of expiration at least six months before the expiration of a lease renewal or special land use permit; and
c) restrict the use of special land use permits only to temporary land uses that do not have a dedicated land use lease or permit.
6. Stipulates that, if a lease is in holdover status and the holdover tenant submits a lease renewal application that the ASLD does not take action on within the 90 days after the lease expires, the lease is automatically renewed for 3 years and 90 days after the date of natural expiration.
7. Deems that an outlined lease that is automatically renewed due to the ASLD not taking action within 90 days, is in the best interest of the state trust.
8. Requires the ASLD, if it terminates a holdover tenant's lease, to provide immediate reimbursement for the fair market value, as determined by a third-party vendor, of any reasonable and customary improvements that the holdover tenant made to the state land.
9. Stipulates that, if a tenant submits an application for permission to construct or make an improvement to state lands and the ASLD does not take action on the application within 90 days after receipt, the application is automatically approved.
10. Deems that an outlined improvement that is automatically approved due to the ASLD not taking action within 90 days is in the best interest of the state.
11. Requires the ASLD, on conclusion of a lease renewal or special land use permit, to reimburse the lessee or permittee for the lessee's or permittee's improvements on state lands with monies from the state land trust.
12. Requires the outlined notice of expiration for the expiration of a lease renewal or special land use permit to include:
a) any proposed rental increase or proposed change to the terms and conditions of the lease renewal or special land use permit;
b) the intent of the ASLD to renew or terminate the lease or special land use permit; and
c) the justification for the ASLD Commissioners decision to renew or terminate the lease or permit.
13. Requires the ASLD, if the ASLD decides to not renew a lease or issue a special land use permit to include a statement that identifies the ASLD's determination of the highest and the best use of the state lands, subject to the lease or special land use permit.
14. Requires the outlined notice, if the state lands will not immediately generate revenue on the expiration of the lease or special land use permit, to include a statement identifying how long the ASLD estimates that the state lands will generate monies for the state land trust and why the ASLD believes foregoing the monies for the estimated time frame is in the best interest of the state lands trust.
15. Requires the ASLD Commissioner to provide a quarterly update of the activities of the ASLD and the actions that the ASLD is taking to improve the internal and administrative workings of the ASLD to the chairperson of the House of Representatives Natural Resources, Energy and Water Committee of Reference (COR), or its successor COR and the Senate Natural Resources COR, or its successor COR.
16. Requires rules adopted relating to the sale of state lands by the ASLD Commissioner's own initiative to establish a procedure and criteria that the ASLD Commissioner must use for determining whether to initiate the sale of state lands.
17. Requires the ASLD Commissioner to issue a written order approving each conceptual land use plan and conceptual land use plan revision for all urban state trust land in Arizona and other state trust lands the ASLD Commissioner considers to be appropriate.
18. Requires the ASLD Commissioner to post each conceptual land use plan, revision of conceptual land use plan and the ASLD Commissioner's written approval of each conceptual land use plan and plan revision on the ASLD's website.
19. Removes the requirement that the ASLD Commissioner submit each conceptual land use plan and revision plan to the Urban Land Planning Oversight Committee for review.
20. Specifies that on the ASLD Commissioner's approval of a conceptual land use plan, the plan, as applied to state lands that have not been annexed, as of the general effective date:
a) is the controlling land use designation for state lands; and
b) supersedes any conflicting county or municipal zoning.
21. Requires the Commissioner to:
a) create annual five-year disposition plans for all state trust land for each county;
b) post each five-year disposition plan, plan revision and each written order that adopts or approves a five-year disposition plan or plan revision on the ASLD's website;
c) ensure that each five-year disposition plan and plan revision conforms with the conceptual land use plan; and
d) issue a written order that approves and adopts each five-year disposition plan and plan revision.
22. Requires the Senate Natural Resources COR and the House Natural Resources, Energy and Water COR or their successor CORs, by July 1, 2028, to hold a public hearing during which the ASLD provides an update regarding its strategic plan.
23. Requires the Auditor General, by April 1, 2028, to notify the ASLD and the chairpersons of the Senate Natural Resources COR and the House Natural Resources, Energy and Water COR, or their successor CORs, of the requirement to hold a public hearing.
24. Requires the Commissioner, within two years after the general effective date, to:
a) complete the five-year disposition plans for state trust lands and update the conceptual land use plan for state trust lands;
b) adopt written policies and procedures for updating the five-year disposition plan every five years and the conceptual land use plan every ten years;
c) adopt written policies and procedures on how the ASLD will use the five-year disposition plans and the conceptual land use plan for determining whether state trust lands are or will be sent to public auction; and
d) provide a copy of the five-year disposition plans, the conceptual land use plan and the outlined policies and procedures to the President of the Senate and the Speaker of the House.
25. Repeals the requirements relating to the adoption of written policies and procedures on five-year disposition plans and conceptual land use plans on July 1, 2029.
Auditor General's Performance Audit and Sunset Review of the ASLD
26. Requires the Commissioner within two years after the general effective date, to implement all 51 recommendations in the Auditor General's July 2025 Performance Audit and Sunset Review of the ASLD.
27. Requires the Commissioner, until all of the Auditor General's recommendations are implemented, to meet with the Auditor General quarterly and report on the progress of the ASLD's implementation of the recommendations.
28. Requires the Auditor General to maintain a checklist of the recommendations and to update the checklist after each meeting consistent with the completion of any of the recommendations to the satisfaction of the Auditor General.
29. Allows the Auditor General to enter any premises, conduct any investigation or inspect any documents in possession of the ASLD to ensure the ASLD implements the recommendation to the Auditor Generals satisfaction.
30. Requires the Auditor General, each fiscal quarter, to provide an update on the current status of the recommendation checklist to each member of the Joint Legislative Audit Committee (JLAC) the Governor and the chairperson of the CORs that the President of the Senate and Speaker of the House tasks with oversight of the ASLD.
31. Requires the Auditor General, if the ASLD fails to implement the Auditor General's recommendations within two years after the general effective date to:
a) notify each member of JLAC, the Governor and the chairperson of the CORs that the President of the Senate and Speaker of the House tasks with oversight of the ASLD; and
b) request a special meeting of JLAC to evaluate potential remedies and future action.
32. Repeals the requirements relating to the implementation of the Auditor Generals recommendations to the ASLD on January 1, 2029.
Miscellaneous
33. Repeals the outlined public hearing requirements relating to the ASLD's strategic plan on January 1, 2029.
34. Contains a purpose statement and statements of legislative findings.
35. Becomes effective on the general effective date, with the retroactive provision as noted.
House Action
NREW 2/12/26 DPA 6-4-0-0
3rd Read 2/26/26 29-24-7
3rd Read* 3/3/26 32-24-3-0-1
*on reconsideration
Prepared by Senate Research
March 13, 2026
SB/hk