# Title 85 — University and School Lands, Board of

## Article 85-06 — Minerals Management

## Chapter 85-06-02 — Coal

### § 85-06-02-01. Prospecting permits.

A request for a prospecting permit is issued in accordance with chapter 85-04-04.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-08, 15-05-09
### § 85-06-02-02. Lands subject to coal lease.

A coal lease may be issued upon acreage not already under a coal lease as reflected in
department records. A coal lease is limited to a maximum of one quarter section, unless otherwise
authorized by the board.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-08, 15-05-09
### § 85-06-02-03. Application for coal lease.

A written application for a coal lease must include:
1. Legal description of the lands to be leased;
2. Proposed terms for the coal lease, including the bonus, length, delay rental, and royalty;
3. Documentation showing that the bonus, term, delay rental, and royalty being offered are
consistent with market rates; and
4. Nonrefundable application fee in an amount set by the board.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-08, 15-05-09

### § 85-06-02-04. Notice of coal leasing.

1. Upon receipt of an application for a coal lease and a determination by the board that the
application covers a tract the board is willing to lease, the department shall post on the
department's website a notice of the application for coal lease, any supporting documentation,
and instructions for submitting public comments. Comments must be received by the
department no later than five p.m. central standard time fourteen days after posting the notice
of the application for a coal lease to be considered. All comments must be in writing and
contain the following:
a. Name and address of the interested person;
b. Applicant's name and address;
c. The legal description of the proposed coal leased premises as shown on the posted
notice; and
d. A detailed statement as to whether the interested person supports or opposes the
issuance of the coal lease.
2. Those comments must be brought to the board along with the department's
recommendations.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09
### § 85-06-02-05. Negotiation of coal lease.

The department may negotiate with the applicant the terms and conditions of a coal lease the
department deems to be in the best interests of the trusts. If the board owns the surface estate of a
coal leased premises, compensation for the surface damage must be negotiated separately. The
applicant may propose modifications to the bonus, delay rental, royalty, or other terms of the coal lease
application. The board may refuse to enter a coal lease for any reason. The board may not issue the
coal lease until receipt of full payment of at least one year of delay rental, bonus payment, and any
applicable fees.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-05-10, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-04, 15-05-09, 15-05-10, 15-05-13
### § 85-06-02-06. Testing.

The department may require a lessee to conduct drilling tests on the coal leased premises prior to
the coal mining operations. If required, sufficient test holes must be drilled to outline the boundaries,
thickness, and depth of the coal deposit and estimate the quality, quantity, and type of coal located on
the coal leased premises. The lessee shall provide the department a map of the coal leased premises
showing the boundaries of the coal deposit and a written report estimating the thickness, depth, quality,
quantity, and type of coal. All test holes must be reclaimed to the satisfaction of the department at the
conclusion of testing. Failure to conduct drilling tests when required or failure to provide the required
documentation, may result in termination of the coal lease under section 85-06-02-08.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09

### § 85-06-02-07. Voluntary release.

To request a voluntary release of a coal lease, or portion of a coal leased premises, a lessee shall
submit a written request to the department utilizing the form available on the department's website and
all other documents requested by the department. Approval of a voluntary release is at the discretion of
the commissioner and the department shall notify the lessee in writing whether or not the voluntary
release is approved. All coal lease obligations must be current at the time the voluntary release is
approved. The lessee shall remain bound by the terms and conditions of the coal lease, board rules
and policies, and applicable laws, until the voluntary release is approved by the commissioner.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09
### § 85-06-02-08. Breach of coal lease.

1. A coal lease may be canceled for:
a. Nonpayment of any sum due under the coal lease;
b. Breach of any of the coal lease terms or conditions provided the cancellation does not
release lessee from liability for any sum due lessor or from any damages due to the
breach; or
c. Violation of the board rules and policies, and applicable laws.
2. Prior to cancellation of a coal lease, the department shall mail a notice of intention to cancel
the coal lease specifying the reason for cancellation to the lessee by mail requiring a signed
receipt at the address of the lessee as shown in the records of the department. If the notice of
intention to cancel is returned undeliverable or refused, the notice must be published in the
official newspaper of the county in which the coal leased premises is located.
3. A lessee may file with the commissioner a request for a waiver or a request for the
commissioner to review the notice of intention to cancel the coal lease, which must include a
statement of the specific grounds for the request. A request must be in writing and filed with
the commissioner within twenty days after the date of notice of intention to cancel the coal
lease is received or the date of publication. A request for a waiver or review is deemed filed
when personally delivered or when received by the department. The commissioner may waive
any breach except a breach of coal lease terms required under North Dakota Century Code,
or the commissioner may allow the lessee time to cure the breach. Any waiver is limited to the
particular breach waived and may not limit the board's right to cancel the coal lease for any
other breach.
4. If the lessee has not remedied the default within twenty days after receipt of a notice of
intention to cancel or the date of publication, the commissioner shall cancel the coal lease.
5. Cancellation of the coal lease does not release the lessee from liability for any sum due to the
board or from any damages from a breach of the coal lease.
6. Upon cancellation of the coal lease, the department shall file a satisfaction of coal lease with
the register of deeds' office in the county where the coal leased premises is located.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09

### § 85-06-02-09. Board review.

Within thirty days of a decision under these rules, an aggrieved party may request the
commissioner review the decision. The aggrieved party seeking review shall submit any information
required by the commissioner as part of this request. Within thirty days of the commissioner's review,
the aggrieved party may request board review and the commissioner shall recommend if board review
is warranted.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09
### § 85-06-02-10. Minimum delay rentals.

1. The minimum delay rental is five dollars per acre per year payable for as long as the coal
lease is in full force and effect.
2. The first year of delay rental must be paid upon the issuance of a coal lease. The delay rental
for each subsequent year of the coal lease is due and payable before the anniversary date of
the coal lease.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09, 15-05-10
### § 85-06-02-11. Royalty.

Royalties are due to the lessor for coal mined or saved from the coal leased premises. If any other
valuable substance is found or discovered during exploration or coal mining operations, the operator
must notify the department prior to extraction.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09, 15-05-10
### § 85-06-02-12. Assignments.

A lessee shall submit a written request to the department for an assignment of coal lease utilizing
the form available on the department's website. A request for assignment must include any documents
requested by the department. The lessee shall submit a coal lease assignment fee, in an amount set by
the board, to the department with the request. Approval of an assignment is at the discretion of the
commissioner and the department shall notify the lessee in writing whether or not the assignment is
approved. All coal lease obligations must be current at the time the assignment is approved. The lessee
remains bound by the terms and conditions of the coal lease, board rules and policies, and applicable
laws, until the assignment is approved by the commissioner. Upon approval of the assignment, the
assignee is bound by all the terms and conditions of the coal lease, board rules and policies, and
applicable laws. The assignor shall provide the department with a copy of the fully executed
assignment within thirty days from the approval.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09, 15-05-15

### § 85-06-02-13. Surface owner protection.

For a coal lease or prospecting permit for which the board is leasing or granting the right to explore
for coal and has no interest in the surface estate, the lessee or permittee shall comply with North
Dakota Century Code chapter 38-18.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09
### § 85-06-02-14. Financial obligation to reclaim.

The lessee shall pay the entire cost of reclamation necessitated by the coal mining operation.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09
### § 85-06-02-15. Reports of lessee - Delinquency penalty.

A statement and payment of royalty must be received by the department on or before the last day
of the month following the mining and removal of coal from the premises.
1. The royalty payment and reporting deadline may be extended by the commissioner upon
written request. An extension, if granted, only applies to future royalty payments and reporting.
2. Any sum, other than delay rentals, not paid when due is delinquent and is subject to a
delinquency penalty of one percent of the sum for each thirty-day period of delinquency or
fraction of delinquency period, unless a waiver is granted by the commissioner.
3. A lessee has thirty days from the date of the receipt of a notice of a penalty assessment to pay
the penalty or request a waiver.
a. A request for a waiver of the penalty must be in writing and provide the grounds for the
request.
b. The following factors may be considered when deciding to waive the penalty: the reason
for the late payment; the degree of control the payor had over the late payment; any
unusual or mitigating circumstances involved; the loss of interest earnings to the trust
involved; and any other relevant factors.
c. The commissioner, for good cause, may waive up to twenty-five thousand dollars of the
penalty initially sought. A request for penalty waiver in excess of twenty-five thousand
dollars must be presented to the board, with the commissioner's recommendation, for
review and decision.
d. A waiver of penalty does not constitute a waiver of the right to seek the full amount of the
penalty if the initial claim for royalty payment is not paid. If a claim for unpaid royalties
and penalties is settled and payment received, the amount of penalties not collected is
deemed waived.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09, 15-05-10
### § 85-06-02-16. Audit and examination.

1. The department may audit and examine any records, including:

a. Cuttings, cores, logs, mine plans, and estimated tonnage in place from any coal leased
premises;
b. Books, accounts, sales invoices, and receipts;
c. Contracts and other records pertaining to the production, transportation, sale, and
marketing of the coal produced from the coal leased premises; and
d. Documents supporting the cost of the coal mining operation used for calculating the price
per ton royalty.
2. The department shall serve by certified mail, a written request to the payor specifying the
documents requested.
3. After audit and examination of the records set forth in subsection 1, the department shall notify
the payor of the results, including the audit findings, any additional royalties due, the basis for
that determination, and the date by which a response to the findings is due. If an exact
amount of any delinquent royalties cannot be determined from the documents provided, the
department shall request the payor make appropriate adjustments.
4. A payor has sixty days from the date of the receipt of the audit findings to comply, respond to
the findings, or request commissioner review. A request for commissioner review must be
made in writing and include a statement of the reasons for disagreement with the audit
findings. If a payor fails to comply with the audit findings, respond to the findings, or request
commissioner review within sixty days, the coal lease is subject to cancellation under section
85-06-02-08.
History: Effective January 1, 2020.
General Authority: NDCC 15-05-05, 15-05-09, 15-05-10, 15-07-20, 15-08.1-06, 61-33-06
Law Implemented: NDCC 15-05-01, 15-05-09, 15-05-10
