No. 28482 (Amendment): R850-21-900. Failure of Agency's Title

DAR File No.: 28482
Filed: 02/01/2006, 08:07
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for deleting Section R850-21-900 of this rule is to allow the director the flexibility to make a determination, on a case-by-case basis, if a refund of monies paid by an applicant or lessee should be granted upon discovery of title failure.

 

Summary of the rule or change:

Section R850-21-900 states precisely when refunds can be given in the event of title failure. The deletion of this section would allow the director to evaluate, on a case-by-case basis, the merits of the individual circumstances and make a determination if a refund should be granted because of title failure. The director is given broad authority by statute to manage the trust assets for the benefit of the beneficiaries, and the deletion of this section would enable the agency to better "act in good faith" when the circumstances warrant a refund.

 

State statutory or constitutional authorization for this rule:

Subsection 53C-1-302(1)(a)(ii) and Title 53C, Chapter 2

 

Anticipated cost or savings to:

the state budget:

It is anticipated that there could be a loss of revenues to the agency in refunding certain monies currently prohibited by rule. However, since the refunded money comes from revenues that have been paid to the agency at the time of application or during the term of the lease on land for which title failed, the agency is only forfeiting revenues recently received and not losing anything from the existing budget. At worst, the agency would "break even" with what has been received and what is refunded.

 

local governments:

It is not anticipated that there would be either a cost or savings to local governments except perhaps in the case where they are the applicant or lessee of lands where the agency's title failed. In that event, they would be entitled to request a refund of monies they had recently paid in good faith for the lease. At worst, they would be entitled to no refund and at best, they would be granted a full refund of monies.

 

other persons:

It is anticipated that there could be anywhere from no savings to substantial savings to other persons, depending on the granting of their request for a refund of monies paid and the amount refunded. These savings would be based on the greater flexibility given the director to grant refunds currently prohibited by rule.

 

Compliance costs for affected persons:

The deletion of this section does not bring about any anticipated compliance costs for affected persons beyond what already exists in rule. The requirement for a written request for refund would still exist, but the director would have the flexibility to consider all surrounding circumstances currently prohibited by rule.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

The current rule absolutely restricts the agency from refunding certain fees in the rare event of failure of the state's title. This can lead to inequitable consequences with applicants or lessees. The proposed amendment would allow for discretion in making refunds to applicants or lessees when appropriate. In general, this is favorable to business partners of the agency. Kevin S. Carter, Director

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

School and Institutional Trust Lands
Administration
675 E 500 S
SALT LAKE CITY UT 84102-2818

 

Direct questions regarding this rule to:

LaVonne Garrison at the above address, by phone at 801-538-5100, by FAX at 801-355-0922, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/17/2006

 

This rule may become effective on:

03/20/2006

 

Authorized by:

Kevin S. Carter, Director

 

 

RULE TEXT

R850. School and Institutional Trust Lands, Administration.

R850-21. Oil, Gas and Hydrocarbon Resources.

[R850-21-900. Failure of Agency's Title.

Should it be found necessary to reject an application or to terminate an existing lease due to failure of the agency's title, then only the delay rental paid for the year in which title failure is discovered will be refunded. All other delay rentals and fees paid on the application or lease are forfeited to the agency. Should the agency discover its title failed prior to issuance of a lease offered for competitive bid, the bid amount for the rejected portion of the lands offered will be returned to the applicant but the filing fee will be retained by the agency.]

 

KEY: oil gas and hydrocarbons, administrative procedures, lease provisions, operations

Date of Enactment or Last Substantive Amendment: [June 1, 2005]March 20, 2006

Authorizing, and Implemented or Interpreted Law: 53C-1-302(1)(a)(ii); 53C-2 et seq.