Coal leases are acquired by lessees through the “Hard Rock” application process. Unleased parcels are available to be leased by the first qualified applicant. Applications are submitted to OSLI, along with the application fee, and are approved by the Board of Land Commissioners.
Rentals are due prior to the anniversary date of the lease. If rentals are not received on time, the lessee must pay rent and a late fee within 30 days or risk losing the lease. The rental schedule for Coal leases are is follows: $1 per acre for the first five years of the lease, $2 per acre for the second five years of the lease. If the lease is renewed after the initial 10 year lease, the rental stays at $2 per acre. The third 10 year renewal rental is $3 per acre, and the fourth renewal at $4 per acre. For more information regarding Coal lease rent, please refer to Board of Land Commissioners' Rules and Regulations, Chapter 19, Section 6.
Assignment of any interest within a lease must be approved by the Director of OSLI. The parties transferring interest in a lease are required to use the Hard Rock Lease Assignment Form, links to the instructions and form are listed below. For further information on transferring interest in an Coal lease, please refer to Rules and Regulations of the SBLC Chapter 19, Section 9 and Section 10.
Coal leases are not required to have lease bonding until operations (including exploration) commence on the leased area. Bonds may be either individual (in the form of corporate surety bond, cash bond, certified cashiers check, certificate of deposit, or non-revocable letter of credit) or a “Blanket Bond” covering all of the lessees coal leases with OSLI. For more information regarding Coal lease bonding, refer to Rules and Regulations of the SLBC Chapter 19, Section 12 and the OSLI Bonding Guide.
The Royalty Compliance Section assures timely and accurate payment of royalties in return for the removal of minerals from Trust Lands. In addition, this section serves over 400 oil, gas, coal, sand & gravel, and hard mineral companies by providing them with information for State reporting guidelines. The Section processes royalty and production reports to ensure the trust receives full and fair value for the mienrals that are extracted from State Trust Land.
The primary lease term for Coal leases is ten years and are renewalable. Renewable applications and application fees must be received before the expiration of the lease. Renewals are approved by the Board of Land Commisioners. Use the "Hard Rock" renewal form below when submitting renewal applications.
Although the State Coal Lease grants the right of ingress and egress related to the leased property; and, allow use of the surface as needed for operations, all mineral lessees are required to contact the surface lessee and negotiate Surface Impact Payments (SIP) as necessary. SIPs are intended to mitigate surface disturbance caused by mineral development. The surface impact payment process (contact and negotiation with surface lessee) is required before exploration and development activities can occur.
Use of State Land outside the bounds of the mineral lease require additional permitting. Long term additional permitting, such as disposal wells, on-lease facilities handling off-lease minerals, or communication towers require a Special Use Lease (SUL). Short term permits such as roads or reserve pits, access roads, or construction activities, a Temporary Use Permit (TUP) is issued. Although the mineral lease allows for ingress and egress related to the leased parcel, access routes across parcels that are not within the lease area are subject to TUP permitting. For more information on SUL's and TUP's please refer to the links below.
Easements are used by OSLI to permit permanent infrastructure such as pipelines, powerlines, and permanent roadways. For more information regarding easements, please refer to the links below.
Additional Agency Permitting
In addition to required permitting with OSLI, other State and Federal agencies may require further permitting associated with mineral lease development. Please review requirements with all applicable State and Federal Agencies. Below are links to agencies which may have additional permitting requirements associated with mineral development on State Trust Lands.
A lessee may relinquish a lease using the form below. If the lease being relinquished has not been developed, the lease is relinquished effective the day it is received by OSLI. If the lease being relinquished has been developed, the relinquishment will not be effective until the lands leased are reclaimed to an acceptable condition.
Coal leases may be terminated if a default of lease terms occurs. The lessee will receive a thirty (30) notice of the lease termination. If no response or remedy is received within that thirty days, the lease will terminate on the date the default occured.
Lease expiration occurs at the end of the primary term, extension of primary term, or renewed lease term on leases which have not been developed or are diligently pursuing production. Lease expiration is an automitic function of lease terms and no notice is provided to lessees of expiring leases.
Coal leases are required to maintained to be maintained in an ecologically prudent manner. When a lease is finally disposed of, reclamation of the disturbed areas must take place. Reclamation of the site is required to have vegetative composition and production similar to the surrounding rangeland and for the site to be physically stable. Surface compliance and reclamation inspections are performed by the Field Services Division (FSD) of OSLI.
Coal lessees are encouraged to contact OSLI when surface compliance issues may arise so that the situation can be handled in a timely manner. Reclamation planning with OSLI staff is suggested so that reclamation plans can be tailored to meet the expectations of OSLI, expediting the reclamation process. FSD contact information can be found on the Contact page.