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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
state land use; highest; best
Purpose
Allows the Arizona State Land Commissioner (Commissioner) to renew an existing mineral or mineral materials lease without public auction if the Commissioner makes outlined determinations and prohibits the Arizona State Land Department (ASLD) from restricting the use of a holdover lease to more than 90 days. Extends the term for an exploration permit from one year to five years after the date of issuance and specifies that the exploration permit is eligible for a renewal for one additional five-year period.
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 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).
All state lands are subject to lease for a term of not more than 10 years for agricultural, commercial and homesite purposes, without advertising. The leases must be granted according to the Arizona Constitution, state law and ASLD rules. Leases may not be granted without an application and all applications for leases must be: 1) made upon forms prepared and furnished by the ASLD; 2) signed and sworn to by the applicant or their authorized agent or attorney; and 3) filed with the ASLD (A.R.S. § 37-281).
Any natural person over 18 years of age and any other person qualified to transact business in Arizona may apply to the Commissioner for an exploration permit on the state land in one or more of the rectangular subdivisions of 20 acres, more or less, or lots, in any one section of the public land survey (A.R.S. § 27-251). Every exploration permit must be for a term of one year from the date of issuance subject to renewals for an aggregate of up to five years from such date, and must give the permittee statutorily outlined rights subject to the terms and conditions of the exploration permit (A.R.S. § 27-252).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Leasing of State Lands for Mineral or Mineral Materials
1. Allows the Commissioner to renew an existing mineral or mineral materials lease without public auction if the Commissioner determines that:
a) the lessee is in substantial compliance with the terms of the lease;
b) renewal is in the best interest of the trust;
c) renewal is supported by written fiduciary findings; and
d) the renewal term is for a term that is authorized by state law.
2. Requires a renewed mineral or mineral materials lease to provide for a royalty rate that is adjusted using a market-based indexing mechanism adopted by the ASLD.
3. Allows the indexing mechanism to include producer price indices, regional or statewide construction aggregate price indices or other objective, industry-recognized market indicators.
4. Requires the Commissioner to review indexed royalty rates at intervals of not more than five years.
5. Prohibits the ASLD from requiring the holder of a valid mineral lease or common variety mineral lease of state lands that are located within the boundaries of a municipality to obtain a special land use permit, conditional use permit, development agreement, variance or other express authorization from the municipality as a condition of lease renewal.
6. Prohibits a municipality from requiring a person to obtain a special land use permit, conditional use permit, development agreement, variance or other express authorization for the use of state lands for mining, whether for common variety minerals or mineral claims, if the state lands were subject to a valid mineral lease, common variety mineral lease or holdover lease when the municipality annexed the state lands.
Exploration Permits
7. Extends the term for an exploration permit from one year to five years after the date of issuance.
8. Specifies that the exploration permit is eligible for a renewal for one additional five-year period for an aggregate of 10 years after the date of issuance.
9. Clarifies that, during the period the exploration permit is in force and effect, the permittee has the surface rights necessary for exploration on state land covered by the permit but may remove from the state land only that amount of mineral or common variety mineral that is required by the permittee for sampling, assay and metallurgical testing purposes.
10. Clarifies that the application for an exploration permit applies to state land that is reserved for statutorily outlined minerals.
11. Prohibits each exploration permit application on state land in one or more of the rectangular subdivisions of 20 acres, more or less, or lots, in any identified contiguous sections of the public land survey from exceeding more than nine sections of the public land survey.
12. Prohibits a common variety mineral exploration application from having priority over a mineral exploration application and from resulting in withdrawal of a mineral exploration application while the mineral exploration application is pending.
13. Removes the condition that the total area of contiguous property may not exceed three miles on a side for a permittee that has an interest in one or more contiguous properties that the permittee holds an exploration permit, to group such permits and expend the required sum under a common plan of development on one or more of the properties for the benefit of all.
14. Allows the holder of an exploration permit, within 60 days before the expiration of the initial five-year exploration permit period, to file with the ASLD an application for renewal of the exploration permit for the ensuing five-year period.
15. Prohibits an application for renewal from being filed or renewed for more than one additional five-year permit period after expiration of the initial five-year period that the permit was issued.
16. Increases the rental for each subsequent permit period for which a permit may be renewed from $1 to $2 for each acre of state land for which the application for renewal is filed.
17. Allows the Commissioner, in the Commissioner's discretion, to require an applicant for an exploration permit to file with the Commissioner a surety bond, as outlined, in conjunction with the issuance of the exploration permit, rather than prior to the issuance of the exploration permit.
18. Allows an exploration permit or common variety right of entry permit that the ASLD issued before the general effective date to, at the choice of the permittee:
a) continue in effect until the initial expiration stated in the existing exploration permit; or
b) be surrendered at any time before the initial expiration date stated in the exploration permit and remain subject to a replacement with a five-year permit period.
Miscellaneous
19. Requires the ASLD, to the extent possible, to restrict the use of a holdover lease to not more than 90 days.
20. Requires a holdover tenant whose lease is terminated by the ASLD to receive immediate reimbursement for the fair market value of any reasonable and customary improvements that the holdover tenant made to the state land.
21. Requires the ASLD, for a lease renewal and special land use permit and to the extent possible, to:
a) approve any improvements that are reasonable and customary in the lessee's or permittee's course of business; and
b) provide ample notice to a lessee or permittee before the termination of the lease or special land use permit.
22. Requires the ASLD, on conclusion of the lease or special land use permit, to reimburse the lessee or permittee for the improvements with monies from the state land trust.
23. Contains a statement of legislative findings.
24. Defines Commissioner, common variety mineral, mineral and state land.
25. Makes technical and conforming changes.
26. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Extends the term for an exploration permit from one year to five years after the date of issuance and specifies that the exploration permit is eligible for a renewal for one additional five-year period for an aggregate of 10 years after the date of issuance.
2. Increases the rental for each subsequent permit period for which a permit may be renewed from $1 to $2 for each acre of state land for which the application for renewal is filed.
3. Clarifies that, during the period the exploration permit is in force and effect, the permittee has the surface rights necessary for exploration on state land covered by the permit but may remove from the state land only that amount of mineral or common variety mineral that is required by the permittee for sampling, assay and metallurgical testing purposes.
4. Prohibits a municipality from requiring a person to obtain a special land use permit, conditional use permit, development agreement, variance or other express authorization for the use of state lands for mining, whether for common variety minerals or mineral claims, if the state lands were subject to a valid mineral lease, common variety mineral lease or holdover lease when the municipality annexed the state lands.
5. Allows an exploration permit or common variety right of entry permit that the ASLD issued before the general effective date to, at the choice of the permittee:
a) continue in effect until the initial expiration stated in the existing exploration permit; or
b) be surrendered at any time before the initial expiration date stated in the exploration permit and remain subject to a replacement with a five-year permit period.
6. Modifies requirements relating to exploration permits, mineral leases and common variety mineral leases.
7. Prohibits the ASLD from requiring the holder of a valid mineral lease or common variety mineral lease of state lands that are located within the boundaries of a municipality to obtain a special land use permit, conditional use permit, development agreement, variance or other express authorization from the municipality as a condition of lease renewal.
8. Prohibits a municipality from requiring a person to obtain a special land use permit, conditional use permit, development agreement, variance or other express authorization for the use of state lands for mining, whether for common variety minerals or mineral claims, if the state lands were subject to a valid mineral lease, common variety mineral lease or holdover lease when the municipality annexed the state lands.
9. Defines terms.
10. Makes technical and conforming changes.
House Action Senate Action
NREW 2/12/26 DPA 6-4-0-0 NR 3/24/26 DPA 5-3-0
3rd Read 2/26/26 30-23-7
3rd Read* 3/3/26 32-22-5-0-1
*on reconsideration
Prepared by Senate Research
March 30, 2026
SB/hk