House Bill 547 — Mineral leases

House Bill 547 — Mineral leases

by
Lindsay Atkinson
February 28, 2020
Lindsay Atkinson
February 28, 2020

Bill description: HB 547 would clarify existing provisions that allow the state to be the lessor in mineral leases.

Rating: 0

Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market? 

HB 547 provides clarity to existing provisions in state law that allow the state to rent out public land, under mineral leases, to private organizations that will mine it for minerals. Specifically, the bill clarifies elements involved in entering into and renewing a lease. 

The bill changes the standard term of a lease from 10 years to 20 years. Under current law, a lease can be extended if any one of a whole list of conditions is met. This bill would add three new conditions:

  • The lessee has paid to the state “a prepaid royalty no less than five dollars ($5.00) per acre per year”
  • The “lease is undergoing a regulatory approval process”
  • The lessee is renting the public land because they are working it and adjacent land in a single mining operation

(+1)

This bill also clarifies that, after a lease agreement is in place, no fees can be charged, other than royalties and rent. And no more than one lease will be issued for the same mineral on the same land.

(+1)

Does it create, expand, or enlarge any agency, board, program, function, or activity of government? Conversely, does it eliminate or curtail the size or scope of government? 

HB 547 allows the State Board of Land Commissioners complete discretion to determine the size of tracts of state land that will be rented out under mineral leases. Current law includes guidance from the Legislature that limits the size of rented land to 640 acres. This bill would eliminate such guidance and allow leases to be issued in “sizes as the board may deem fair.” 

(-1)

Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth? 

When the state rents out publicly owned land for mining, it is renting an asset that must be maintained by taxpayers. Businesses that take part in these mineral lease agreements can get wealthy from them, but they pay very little in royalties to the government for mining a natural resource that the state (that is, taxpayers) owns. 

This bill perpetuates this system of wealth redistribution by allowing larger parcels of land (more than 640 acres) to be rented out for longer (from 10 years to 20).

(-1)

Analyst’s Note: The practice of renting out state land for mining is allowed by the Idaho Constitution, in Article IX, Section 8, which states that “It shall be the duty of the state board of land commissioners to provide for the location, protection, sale or rental of all the lands heretofore, or which may hereafter be granted to or acquired by the state by or from the general government ... in such manner as will secure the maximum long term financial return to the institution to which granted or to the state if not specifically granted.”

Since this practice already exists in law, this rating simply analyzes the impact of these changes to mineral leases on state land.

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