HB2376 - 561R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 37-101, Arizona Revised Statutes, is amended to read:

START_STATUTE37-101. Definitions

In this title, unless the context otherwise requires:

1. "Agricultural lands" means lands which that are used or can be used principally for:

(a) Raising crops, fruits, grains and similar farm products.

(b) Algaculture. For the purposes of this subdivision, "algaculture" means the controlled propagation, growth and harvest of algae.

2. "Amortized value" means the value for improvements established pursuant to section 37-281.02, subsection G.

3. "Commercial lands" means lands which that can be used principally for business, institutional, religious, charitable, governmental or recreational purposes, or any general purpose other than agricultural, grazing, mining, oil, homesite or rights-of-way.

4. "Commissioner" means the state land commissioner.

5. "Community identity package" means a design theme, including such elements as architecture, landscape, lighting, street furniture, walls and signage.

6. "Department" means the state land department.

7. "Foreign entity":

(a) MEANS any of the following:

(i) a foreign government or a state-controlled enterprise of a foreign government.

(ii) a company or other entity that is headquartered in china, cuba, iran, north korea, russia, Saudi Arabia, syria or venezuela.

(iii) A company or other entity that is directly or indirectly held or controlled by the government of china, cuba, iran, north korea, russia, Saudi Arabia, syria or venezuela.

(iv) A company or other entity that is owned by or the majority of stock or other ownership interest of which is held or controlled by individuals who are citizens of china, cuba, iran, north korea, russia, Saudi Arabia, syria or venezuela.

(v) a company or other entity that is owned by or the majority of stock or other ownership interest of which is held or controlled by a company or entity described in item (ii), (iii) or (iv) of this subdivision.

(vi) an individual who is a citizen of china, cuba, iran, north korea, russia, Saudi Arabia, syria or venezuela.

(b) Does not include the United States government or its states, territories or possessions.

7. 8. "Grazing lands" means lands which that can be used only for the ranging of livestock.

8. 9. "Holding lease" means a commercial lease issued solely to grant a limited use leasehold interest in state land in anticipation of future development.

9. 10. "Homesite lands" means lands which that are suitable for residential purposes.

10. 11. "Improvements" means anything permanent in character which that is the result of labor or capital expended by the lessee or his the lessee's predecessors in interest on state land in its reclamation or development, and the appropriation of water thereon on that state land, and which that has enhanced the value of the land.

11. 12. "Infrastructure" means facilities or amenities, such as streets, utilities, landscaping and open space, which that are constructed or located on state lands and which that are intended to benefit more than the land on which they are immediately located by enhancing the development potential and value of the state lands impacted by the facility or amenities.

12. 13. "Leapfrog development" means the development of lands in a manner requiring the extension of public facilities and services from their existing terminal point through intervening undeveloped areas that are scheduled for development at a later time, according to the plans of the local governing body having jurisdiction for the area and which that is responsible for the provision of these facilities and services.

13. 14. "Leased school or university land" means school or university land for which a lease has been issued by the this state, or the territory of Arizona, under which the lessee retains rights.

14. 15. "Master developer" means a person who assumes, as a condition of a land disposition, the responsibilities prescribed by the department for infrastructure or community identity package amenities, or both, or for implementing a development plan containing a master plan area.

15. 16. "Participation contract" means a contract arising out of a sale together with other rights and obligations in trust lands whereby the department receives a share of the revenues generated by subsequent sales or leases.

16. 17. "Section of land" means an area of land consisting of six hundred forty acres.

17. 18. "State lands" means any land owned or held in trust, or otherwise, by the this state, including leased school or university land.

18. 19. "Sublease" means an agreement in which the lessee relinquishes control of the leased land to another party for the purposes authorized in the lease.

19. 20. "Urban lands" means any state lands which that are adjoining existing commercially or homesite developed lands and which that are either:

(a) Within the corporate boundaries of a city or town.

(b) Adjacent to the corporate boundaries of a city or town.

20. 21. "Urban sprawl" means the development of lands in a manner requiring the extension of public facilities and services on the periphery of an existing urbanized area where such extension is not provided for in the existing plans of the local governing body having the responsibility for the provision of these facilities and services to the lands in question. END_STATUTE

Sec. 2. Section 37-231, Arizona Revised Statutes, is amended to read:

START_STATUTE37-231. State lands subject to sale; rights reserved in lands sold; state lands not subject to sale; development agreements

A. All state lands, except as otherwise provided for in this title, including all improvements made or placed on or connected with state lands, shall be subject to appraisal and sale as provided in this title.

B. Any person over eighteen years of age is entitled to purchase any of the state lands except as provided in section 37-240.

C. All sales, grants, deeds or patents to any state lands sold between July 9, 1954 and March 18, 1968 shall be subject to and shall contain a reservation to the THIS state of an undivided one-sixteenth of all oil, gases and other hydrocarbon substances, coal or stone, metals, minerals, fossils and fertilizer of every name and description, together with all uranium, all thorium, or any other material which that is or may be determined by the laws of the this state or the United States or decisions of courts to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, subject to the following:

1. For the purpose of promoting the sale of state lands and the more active cooperation of the owner of the soil, and to facilitate the development of its mineral resources, the state constitutes the purchaser of the land its agent for the purposes specified in this section, and in consideration hereof, relinquishes to and vests in the purchaser of the state land an undivided fifteen-sixteenths of all oil, gas and the value thereof which may be upon ON or within any state land purchased after July 9, 1954 and before March 18, 1968.

2. The purchaser of the soil may sell or lease to any person, firm or corporation the oil and gas and other minerals which that may be on or in the land, upon on terms and conditions the purchaser and the owner deem best, subject to the provisions and reservations of this section, but the lessee or purchaser shall pay to the THIS state an undivided one-sixteenth of the mineral produced or the value of the mineral produced at the well or mine as determined by the state land department.

3. Upon On discovery of oil and gas in paying quantities on land adjoining state lands purchased under the authority of this section, the purchaser or the purchaser's lessee shall drill and produce all wells necessary to protect the land so purchased from drainage by wells on lands in which the this state has no royalty interest, or has a lesser royalty interest. If the purchaser or the purchaser's lessee fails to protect against such drainage, the this state, acting through the state land department, may, three months after demand therefor in writing by the state land department to such purchaser and the purchaser's lessee, MAY enter upon on such lands and drill all wells necessary to protect the this state against such drainage.

4. The interest reserved by the this state in any state lands sold may be committed to a drilling unit or cooperative or unit plans of development and operation of oil and gas pools with the United States, its agencies and its and their lessees and permittees, and with private owners and persons holding oil and gas leases on private lands or on state lands. The state land department may, insofar as the interest of the this state may be affected thereby, MAY join in and consent to any such plan on behalf of the this state. Such agreements shall provide for the equitable division on an agreed basis of the oil and gas produced from the unit, but no such agreement shall not relieve any operator from the obligation to develop reasonably the lands and leases as a whole committed thereto. The royalties to which the this state is entitled on production from land purchased under this section shall be computed only on that part of the production allocated to such tract. When the agreements made under this section provide for the return of gas to a formation underlying the unit, they may provide that no royalties are required to be paid on the gas so returned.

D. State lands known to contain oil, gases and other hydrocarbon substances, geothermal resources, coal or stone, metals, minerals, fossils and fertilizer of every name and description, in paying quantities, or uranium, thorium or any other material which that is or may be determined by the laws of the this state or the United States or BY decisions of court to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, and state lands adjoining lands upon on which there are producing oil, gas or geothermal wells or adjoining lands known to contain any of such substances in paying quantities, or uranium, thorium or any other material peculiarly essential to the production of fissionable materials, whether or not of commercial value, shall not be sold. The prohibition against sale shall not operate to prevent the sale of lands known to contain, in paying quantities, common variety minerals as defined in section 27-271 or to prevent the sale of lands where the this state does not own such substances, minerals or metals in the lands sought to be sold. The provisions of This subsection shall does not prohibit the sale of such lands located within the exterior boundaries of an incorporated city or town, in which case the commissioner may offer the land for sale, provided the land shall be used solely for a public purpose. Such land shall revert to the this state if it is used other than for a public purpose.

E. Notwithstanding the provisions of subsection C of this section, all state lands sold after March 18, 1968 shall be sold with the reservation that all oil, gas, other hydrocarbon substances, helium or other substances of a gaseous nature, geothermal resources, coal, metals, minerals, fossils, fertilizer of every name and description, together with all uranium, all thorium or any other material which that is or may be determined by the laws of the United States or of this state, or BY decisions of court, to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, and the exclusive right thereto, on, in, or under such land, shall be and remain and be reserved in and retained by the THIS state, regardless of any sale under this section and the issuance of any certificate of purchase to any purchaser of state lands pursuant to this section, provided, that the reservation shall not include common variety minerals as defined in section 27-271, subject to the following:

1. The state land department shall adopt rules providing for the protection of the patentee or contract purchaser of state lands, or their successors in interest, and the this state of Arizona, against damage to the lands, livestock, water, crops, or other tangible improvements on lands held by such patentee or contract purchaser, and suffered by reason of the use or occupation of such lands by lessees or permittees engaged in mining and oil, gas and geothermal resource exploration and development under leases or permits executed by the department. The state land department may, at any time, MAY require each of its lessees or permittees to execute a bond in a reasonable principal amount conditioned upon on payment for all such damages.

2. The mineral rights reserved to the this state in the lands sold shall be closed to entry and location as a mineral claim or claims, but the department may issue, upon on application, mineral exploration permits embracing the reserved mineral rights when such issuance is deemed in the best interest of the this state, provided that the surface owner or owners shall have the first right of refusal to acquire such mineral exploration permits. END_STATUTE

Sec. 3. Section 37-240, Arizona Revised Statutes, is amended to read:

START_STATUTE37-240. Limits on sales of state lands

A. No A person may not purchase more than six hundred forty acres of grazing land, or more than one hundred sixty acres of agricultural land.

B. No Sales, leases or subleases of state lands shall may not be made to corporations or associations not qualified to transact business in the THIS state.

C. Beginning From and after the effective date of this amendment to this section, sales of state lands may not be made to a foreign entity. END_STATUTE

Sec. 4. Title 37, chapter 2, article 4, Arizona Revised Statutes, is amended by adding section 37-292, to read:

START_STATUTE37-292. Prohibited leases or subleases of state lands

A. Leases or subleases of state lands may not be made to corporations or associations not qualified to transact business in this state.

B. Beginning from and after the effective date of this section, leases or subleases of state lands may not be made to a foreign entity. END_STATUTE