H.B. 134 Enrolled

1

Corrected Version

2 SCHOOL AND INSTITUTIONAL TRUST
3 LANDS AMENDMENTS
4 2007 GENERAL SESSION
5 STATE OF UTAH
6 Chief Sponsor: John G. Mathis
7 Senate Sponsor: Darin G. Peterson
8 Cosponsors:
9 Kay L. McIffMichael E. NoelPatrick Painter 10
11 LONG TITLE
12 General Description:
13 This bill changes the distribution of mineral revenue generated from lands acquired by
14 the School and Institutional Trust Lands Administration from the federal government.
15 Highlighted Provisions:
16 This bill:
17 . defines terms;
18 . creates the Land Exchange Distribution Account;
19 . distributes the state's share of mineral revenues from school and institutional trust
20 lands to:
21 . the counties from which the revenue is generated;
22 . the counties where school and institutional trust lands were relinquished to the
23 United States;
24 . the Constitutional Defense Restricted Account;
25 . the Permanent Community Impact Fund;
26 . the State Board of Education;
27 . the Utah Geological Survey; and
28 . the Water Research Laboratory at Utah State University;
29 . designates how the state's share of mineral revenues from school and institutional

30 trust lands are to be used;
31 . eliminates the contributions of mineral revenue from school and institutional trust
32 lands to:
33 . the Rural Electronic Commerce Communications System Fund;
34 . the Rural Development Fund; and
35 . the Mineral Lease Account;
36 . changes how administrative costs are determined;
37 . provides for revenue generated on SITLA land exchanged with the federal
38 government;
39 . directs the Division of Finance to transfer the balance of the Rural Development
40 Fund and the Rural Electronic Commerce Communications System to the
41 Permanent Community Impact Fund when the funds are repealed;
42 . repeals provisions relating to the Rural Development Fund;
43 . repeals provisions relating to the Rural Electronic Commerce Communications
44 System Fund; and
45 . makes technical changes.
46 Monies Appropriated in this Bill:
47 None
48 Other Special Clauses:
49 This bill provides an effective date and a repeal date.
50 Utah Code Sections Affected:
51 AMENDS:
52 9-4-302, as last amended by Chapters 10 and 299, Laws of Utah 2000
53 9-4-303, as last amended by Chapter 175, Laws of Utah 2001
54 9-4-307, as last amended by Chapters 10 and 299, Laws of Utah 2000
55 9-15-102, as last amended by Chapter 256, Laws of Utah 2002
56 11-14-308, as last amended by Chapter 83, Laws of Utah 2006
57 53C-3-201, as last amended by Chapter 299, Laws of Utah 2000

58 53C-3-202, as last amended by Chapter 292, Laws of Utah 2002
59 59-21-1, as last amended by Chapter 299, Laws of Utah 2000
60 59-21-2, as last amended by Chapter 148, Laws of Utah 2005
61 63C-4-103, as last amended by Chapter 14, Laws of Utah 2006
62 ENACTS:
63 53C-3-203, Utah Code Annotated 1953
64 REPEALS:
65 9-14-101, as last amended by Chapter 18, Laws of Utah 2004
66 9-14-102, as last amended by Chapter 256, Laws of Utah 2002
67 9-14-103, as last amended by Chapter 176, Laws of Utah 2002
68 9-14-104, as last amended by Chapter 14, Laws of Utah 2006
69 9-14-105, as enacted by Chapter 368, Laws of Utah 1999
70 9-14-106, as enacted by Chapter 368, Laws of Utah 1999
71 9-15-101, as last amended by Chapter 18, Laws of Utah 2004
72 9-15-102, as last amended by Chapter 256, Laws of Utah 2002
73 9-15-103, as last amended by Chapter 176, Laws of Utah 2002
74 9-15-104, as last amended by Chapter 14, Laws of Utah 2006
75 9-15-105, as enacted by Chapter 368, Laws of Utah 1999
76 9-15-106, as enacted by Chapter 368, Laws of Utah 1999
77 Uncodified Material Affected:
78 ENACTS UNCODIFIED MATERIAL
79
80 Be it enacted by the Legislature of the state of Utah:
81 Section 1. Section 9-4-302 is amended to read:
82 9-4-302. Definitions.
83 As used in this part:
84 [(1) "Acquired lands" is as defined in Section 53C-3-201 .]
85 [(2) "Acquired mineral interests" is as defined in Section 53C-3-201 .]

86 [(3)] (1) "Bonus payments" means[: (a)] that portion of the bonus payments received
87 by the United States government under the Leasing Act paid to the state under Section 35 of
88 the Leasing Act, 30 U.S.C. Sec. 191, together with any interest that had accrued on those
89 payments[; or].
90 [(b) bonus payments collected by the School and Institutional Trust Lands
91 Administration created by Section 53C-1-201 from the lease of:]
92 [(i) minerals on acquired lands; or]
93 [(ii) acquired mineral interests.]
94 [(4)] (2) "Impact board" means the Permanent Community Impact Fund Board created
95 under Section 9-4-304 .
96 [(5)] (3) "Impact fund" means the Permanent Community Impact Fund established by
97 this chapter.
98 [(6)] (4) "Interlocal Agency" means a legal or administrative entity created by a
99 subdivision or combination of subdivisions under the authority of Title 11, Chapter 13,
100 Interlocal Cooperation Act.
101 [(7)] (5) "Leasing Act" means the Mineral Lands Leasing Act of 1920, 30 U.S.C. Sec.
102 181 et seq.
103 [(8)] (6) "Subdivision" means a county, city, town, county service area, special service
104 district, special improvement district, water conservancy district, water improvement district,
105 sewer improvement district, housing authority, building authority, school district, or public
106 postsecondary institution organized under the laws of this state.
107 Section 2. Section 9-4-303 is amended to read:
108 9-4-303. Impact fund -- Deposits and contents -- Use of fund monies.
109 (1) There is created an enterprise fund entitled the "Permanent Community Impact
110 Fund."
111 (2) The fund consists of:
112 (a) all amounts appropriated to the impact fund under Section 59-21-2 ;
113 (b) bonus payments deposited to the impact fund pursuant to Subsection 59-21-1 (2);

114 (c) [bonus payments deposited] all amounts appropriated to the impact fund [pursuant
115 to] under Section [ 53C-3-202 ] 53C-3-203 ;
116 (d) all amounts received for the repayment of loans made by the impact board under
117 this chapter; and
118 (e) all other monies appropriated or otherwise made available to the impact fund by the
119 Legislature.
120 (3) The state treasurer shall:
121 (a) invest the monies in the impact fund by following the procedures and requirements
122 of Title 51, Chapter 7, State Money Management Act; and
123 (b) deposit all interest or other earnings derived from those investments into the impact
124 fund.
125 (4) The amounts in the impact fund available for loans, grants, administrative costs, or
126 other purposes of this part shall be limited to that which the Legislature appropriates for these
127 purposes.
128 (5) Federal mineral lease revenue received by the state under the Leasing Act that is
129 deposited into the impact fund shall be used:
130 (a) in a manner consistent with:
131 (i) the Leasing Act; and
132 (ii) this part; and
133 (b) for loans, grants, or both to state agencies or subdivisions that are socially or
134 economically impacted by the leasing of minerals under the Leasing Act.
135 [(6) Mineral lease revenue collected by the School and Institutional Trust Lands
136 Administration from the lease of minerals on acquired lands or the lease of acquired mineral
137 interests that is deposited into the impact fund shall be used:]
138 [(a) in a manner consistent with this part; and]
139 [(b) for loans, grants, or both to state agencies or subdivisions socially or economically
140 impacted by the leasing of:]
141 [(i) minerals on acquired lands; or]

142 [(ii) acquired mineral interests.]
143 (6) The monies described in Subsection (2)(c) shall be used for grants to political
144 subdivisions of the state to mitigate the impacts resulting from the development or use of
145 school and institutional trust lands.
146 Section 3. Section 9-4-307 is amended to read:
147 9-4-307. Impact fund administered by impact board -- Eligibility for assistance --
148 Review by board -- Administration costs -- Annual report.
149 (1) (a) The impact board shall:
150 (i) administer the impact fund in a manner that will keep a portion of the impact fund
151 revolving;
152 (ii) determine provisions for repayment of loans; and
153 (iii) establish criteria for determining eligibility for assistance under this part.
154 (b) (i) Criteria for awarding loans or grants made from funds described in Subsection
155 9-4-303 (5) shall be consistent with Subsection 9-4-303 (5).
156 (ii) Criteria for awarding [loans or] grants made from funds described in Subsection
157 9-4-303 [(6)] (2)(c) shall be consistent with [Subsections] Subsection 9-4-303 (6) [and
158 9-4-305 (1)(a)].
159 (c) In order to receive assistance under this part, subdivisions and interlocal agencies
160 shall submit formal applications containing the information that the impact board requires.
161 (2) In determining eligibility for loans and grants under this part, the impact board shall
162 consider the following:
163 (a) the subdivision's or interlocal agency's current mineral lease production;
164 (b) the feasibility of the actual development of a resource that may impact the
165 subdivision or interlocal agency directly or indirectly;
166 (c) current taxes being paid by the subdivision's or interlocal agency's residents;
167 (d) the borrowing capacity of the subdivision or interlocal agency, its ability and
168 willingness to sell bonds or other securities in the open market, and its current and authorized
169 indebtedness;

170 (e) all possible additional sources of state and local revenue, including utility user
171 charges;
172 (f) the availability of federal assistance funds;
173 (g) probable growth of population due to actual or prospective natural resource
174 development in an area;
175 (h) existing public facilities and services;
176 (i) the extent of the expected direct or indirect impact upon public facilities and
177 services of the actual or prospective natural resource development in an area; and
178 (j) the extent of industry participation in an impact alleviation plan, either as specified
179 in Title 63, Chapter 51, Resource Development, or otherwise.
180 (3) The impact board may not fund any education project that could otherwise have
181 reasonably been funded by a school district through a program of annual budgeting, capital
182 budgeting, bonded indebtedness, or special assessments.
183 (4) The impact board may restructure all or part of the agency's or subdivision's
184 liability to repay loans for extenuating circumstances.
185 (5) The impact board shall:
186 (a) review the proposed uses of the impact fund for loans or grants before approving
187 them and may condition its approval on whatever assurances that the impact board considers to
188 be necessary to ensure that the proceeds of the loan or grant will be used in accordance with the
189 Leasing Act and this part; and
190 (b) ensure that each loan specifies the terms for repayment and is evidenced by general
191 obligation, special assessment, or revenue bonds, notes, or other obligations of the appropriate
192 subdivision or interlocal agency issued to the impact board under whatever authority for the
193 issuance of those bonds, notes, or obligations exists at the time of the loan.
194 (6) The impact board shall allocate from the impact fund to the department those funds
195 that are appropriated by the Legislature for the administration of the impact fund, but this
196 amount may not exceed 2% of the annual receipts to the impact fund.
197 (7) The department shall make an annual report to the Legislature concerning the

198 number and type of loans and grants made as well as a list of subdivisions and interlocal
199 agencies that received this assistance.
200 Section 4. Section 9-15-102 is amended to read:
201 9-15-102. Rural Electronic Commerce Communications System Fund -- Deposits
202 and contents -- Interest -- Administration.
203 (1) In order to preserve and promote communications systems, such as broadcast
204 television, in the rural areas of the state, there is created a restricted special revenue fund
205 entitled the "Rural Electronic Commerce Communications System Fund."
206 (2) The fund shall consist of:
207 (a) monies deposited to the fund under this chapter; and
208 [(b) monies deposited to the fund under Section 53C-3-202 ; and]
209 [(c)] (b) bond proceeds from the issuance and sale of revenue bonds authorized under
210 Subsection 9-15-104 (2).
211 (3) The fund shall earn interest, which shall be deposited in the fund.
212 (4) Any unallocated balance in the fund at the end of a fiscal year shall be nonlapsing.
213 (5) The division may use fund monies for administration of the fund, but not to exceed
214 2% of the annual receipts to the fund.
215 Section 5. Section 11-14-308 is amended to read:
216 11-14-308. Special service district bonds secured by federal mineral lease
217 payments -- Use of bond proceeds -- Bond resolution -- Nonimpairment of appropriation
218 formula -- Issuance of bonds.
219 (1) Special service districts may:
220 (a) issue bonds payable, in whole or in part, from federal mineral lease payments which
221 are to be deposited into the Mineral Lease Account under Section 59-21-1 and distributed to
222 special service districts under Subsection 59-21-2 [(3)](2)(h); or
223 (b) pledge all or any part of the mineral lease payments referred to in Subsection (1)(a)
224 as an additional source of payment for their general obligation bonds.
225 (2) The proceeds of these bonds may be used:

226 (a) to construct, repair, and maintain streets and roads;
227 (b) to fund any reserves and costs incidental to the issuance of the bonds and pay any
228 associated administrative costs; and
229 (c) for capital projects of the special service district.
230 (3) (a) The special service district board shall enact a resolution authorizing the
231 issuance of bonds which, until the bonds have been paid in full:
232 (i) shall be irrevocable; and
233 (ii) may not be amended in any manner that would:
234 (A) impair the rights of the bond holders; or
235 (B) jeopardize the timely payment of principal or interest when due.
236 (b) Notwithstanding any other provision of this chapter, the resolution may contain
237 covenants with the bond holder regarding:
238 (i) mineral lease payments, or their disposition;
239 (ii) the issuance of future bonds; or
240 (iii) other pertinent matters considered necessary by the governing body to:
241 (A) assure the marketability of the bonds; or
242 (B) insure the enforcement, collection, and proper application of mineral lease
243 payments.
244 (4) (a) Except as provided in Subsection (4)(b), the state may not alter, impair, or limit
245 the statutory appropriation formula provided in Subsection 59-21-2 [(3)](2)(h), in a manner that
246 reduces the amounts to be distributed to the special service district until the bonds and the
247 interest on the bonds are fully met and discharged. Each special service district may include
248 this pledge and undertaking of the state in these bonds.
249 (b) Nothing in this section:
250 (i) may preclude the alteration, impairment, or limitation of these bonds if adequate
251 provision is made by law for the protection of the bond holders; or
252 (ii) shall be construed:
253 (A) as a pledge guaranteeing the actual dollar amount ultimately received by individual

254 special service districts;
255 (B) to require the Department of Transportation to allocate the mineral lease payments
256 in a manner contrary to the general allocation method described in Subsection
257 59-21-2 [(3)](2)(h); or
258 (C) to limit the Department of Transportation in making rules or procedures allocating
259 mineral lease payments pursuant to Subsection 59-21-2 [(3)](2)(h).
260 (5) (a) The average annual installments of principal and interest on bonds to which
261 mineral lease payments have been pledged as the sole source of payment may not at any one
262 time exceed:
263 (i) 80% of the total mineral lease payments received by the issuing entity during the
264 fiscal year of the issuing entity immediately preceding the fiscal year in which the resolution
265 authorizing the issuance of bonds is adopted; or
266 (ii) if the bonds are issued during the first fiscal year the issuing entity is eligible to
267 receive funds, 60% of the amount estimated by the Department of Transportation to be
268 appropriated to the issuing entity in that fiscal year.
269 (b) The Department of Transportation shall not be liable for any loss or damage
270 resulting from reliance on the estimates.
271 (6) The final maturity date of the bonds may not exceed 15 years from the date of their
272 issuance.
273 (7) Bonds may not be issued under this section after December 31, 2010.
274 (8) Bonds which are payable solely from a special fund into which mineral lease
275 payments are deposited constitute a borrowing based solely upon the credit of the mineral lease
276 payments received or to be received by the special service district and do not constitute an
277 indebtedness or pledge of the general credit of the special service district or the state.
278 Section 6. Section 53C-3-201 is amended to read:
279 53C-3-201. Definitions.
280 As used in this part:
281 (1) "Acquired lands" means those lands acquired by the administration under the

282 agreement.
283 (2) "Acquired mineral interests" means mineral interests acquired by the administration
284 pursuant to Section 3(F), (K), (L), or (M) of the agreement.
285 (3) "Agreement" means the Agreement to Exchange Utah School Trust Lands Between
286 the State of Utah and the United States of America, signed May 8, 1998, as ratified by the Utah
287 School and Lands Exchange Act of 1998, Pub. L. No. 105-335.
288 (4) "Exchange" means any land or mineral interest exchange by the administration and
289 the United States of America after March 1, 2007.
290 (5) "Exchanged lands" means those lands acquired by the administration through an
291 exchange.
292 (6) "Exchanged mineral interests" means mineral interests acquired by the
293 administration through an exchange.
294 [(4)] (7) "Identified tracts" means the tracts identified in Section 3(F), (G), (J), (K), (L),
295 and (M) of the agreement, generally referred to as the Cottonwood Tract, Westridge Coal Tract,
296 Ferron Field, Mill Fork Tract, Dugout Canyon Tract, Muddy Tract, and North Horn Coal Tract.
297 [(5)] (8) "Subject mineral" means any mineral that is covered by the Mineral Lands
298 Leasing Act, 30 U.S.C. Sec. 181 et seq., as amended through May 3, 1999.
299 Section 7. Section 53C-3-202 is amended to read:
300 53C-3-202. Collection and distribution of revenues from federal land exchange
301 parcels.
302 (1) The director [is responsible for the collection of] shall collect all bonus payments,
303 rentals, and royalties from the lease of:
304 (a) minerals on acquired lands; [and]
305 (b) acquired mineral interests[.];
306 (c) minerals on exchanged lands; and
307 (d) exchanged mineral interests.
308 (2) The director shall:
309 (a) [except as provided in Subsections (3) and (4),] no later than the last day of the

310 second month following each calendar quarter, distribute all bonus payments received during
311 the calendar quarter from the lease of coal, oil and gas, and coalbed methane on the identified
312 tracts as follows:
313 (i) 50% to the United States; and
314 [(ii) 12.16% to the Permanent Community Impact Fund created in Section 9-4-303 ;]
315 [(iii) 20% to the Constitutional Defense Restricted Account created in Section
316 63C-4-103 ;]
317 [(iv) 15% to the Rural Electronic Commerce Communications System Fund created by
318 Section 9-15-102 ; and]
319 [(v) 2.84% to the Rural Development Fund created under Section 9-14-102 ; and]
320 (ii) 50% to the Land Exchange Distribution Account created in Section 53C-3-203 ;
321 (b) [except as provided in Subsections (3) and (4),] no later than the last day of the
322 second month following each calendar quarter, distribute all rentals and royalties received
323 during the calendar quarter from the lease of subject minerals on the acquired lands and the
324 lease of acquired mineral interests as follows:
325 (i) 50% to the Land Grant Management Fund created by Section 53C-3-101 ; and
326 [(ii) 39.5% to the Mineral Lease Account created by Subsection 59-21-2 (3);]
327 [(iii) 4.5% to the Constitutional Defense Restricted Account created by Section
328 63C-4-103 ;]
329 [(iv) 3.0% to the Rural Electronic Commerce Communications System Fund created by
330 Section 9-15-102 ; and]
331 [(v) 3.0% to the Rural Development Fund created by Section 9-14-102 .]
332 [(3) Notwithstanding Subsections (2)(a), (2)(b), and (4), if the distribution required by
333 Subsection (2)(a)(iii), (2)(b)(iii), or (4) would cause the balance of the Constitutional Defense
334 Restricted Account to exceed $2,000,000, the director shall distribute to the Permanent
335 Community Impact Fund an amount equal to the difference between:]
336 [(a) what the total balance of the Constitutional Defense Restricted Account would be
337 if, but for this Subsection (3), a distribution described in Subsection (2)(a)(iii), (2)(b)(iii), or (4)

338 was made; and]
339 [(b) $2,000,000.]
340 [(4) Notwithstanding Subsections (2)(a) and (b), and except as provided in Subsection
341 (3), for each fiscal year the director shall deposit:]
342 [(a) the first $750,000 of distributions required by Subsections (2)(a)(iv) and (2)(b)(iv)
343 into the Rural Electronic Commerce Communications System Fund; and]
344 [(b) any amounts exceeding the $750,000 described in Subsection (4)(a) that would be
345 distributed into the Rural Electronic Commerce Communications System Fund but for this
346 Subsection (4) into the Constitutional Defense Restricted Account.]
347 (ii) 50% to the Land Exchange Distribution Account created in Section 53C-3-203 ; and
348 (c) no later than the last day of the second month following each calendar quarter,
349 deposit the state's share of the mineral bonus, rental, and royalty revenue generated from the
350 lease of minerals on exchanged lands or exchanged mineral interests in the Land Exchange
351 Distribution Account created in Section 53C-3-203 .
352 [(5)] (3) (a) The director may retain up to 3% of the monies collected under Subsection
353 (1) to pay for administrative costs incurred under Subsection (1).
354 (b) The director may deduct administrative costs [may be deducted prior to] before the
355 distributions made under Subsections (2)(a) and (b).
356 (c) The director shall keep the administrative cost deductions in separate accounts.
357 (d) (i) For purposes of this section, administrative costs[: (A)] include:
358 [(I)] (A) direct costs incurred by the administration; and
359 [(II)] (B) out-of-pocket expenditures incurred by the administration that are directly
360 attributable to leasing or management of the acquired lands for subject minerals or acquired
361 mineral interests[; and].
362 [(B) shall be determined in a manner similar to that used by the federal government
363 pursuant to 30 U.S.C. Sec. 191(b).]
364 (ii) If the administration includes out-of-pocket expenditures under Subsection [(5)]
365 (3)(d)(i) in determining its costs, those expenditures may not be included in its general

366 calculation of direct costs.
367 (e) (i) At the end of each fiscal year, the director shall reconcile the amount actually
368 spent under Subsection [(5)] (3)(d) with the amount retained under Subsection [(5)] (3)(a).
369 (ii) The monies retained under Subsection [(5)] (3)(a) are nonlapsing.
370 Section 8. Section 53C-3-203 is enacted to read:
371 53C-3-203. Land Exchange Distribution Account.
372 (1) As used in this section, "account" means the Land Exchange Distribution Account
373 created in Subsection (2)(a).
374 (2) (a) There is created within the General Fund a restricted account known as the Land
375 Exchange Distribution Account.
376 (b) The account shall consist of all revenue deposited in the account as required by