from sale except upon a rental and royalty basis as herein provided, and the purchaser of any land belonging to the state shall acquire no right, title or interest in or to such deposits, and the right of such purchaser shall be subject to the reservation of all coal, oil, oil shale, gas, phosphate, sodium and other mineral deposits and to the conditions and limitations prescribed by law providing for the state and persons authorized by it to prospect for, mine, and remove such deposits and to occupy and use so much of the surface of said land as may be required for all purposes reasonably incident to the mining and removal of such deposits therefrom.

SEC. 2. RIGHT OF EXPLORATION. All lands belonging to the state of Idaho in which the mineral deposits, excepting oil and gas, are owned by the state, and which have not been located or leased in accordance with the terms of this act, are hereby declared to be free and open to exploration.

SEC. 3. MINING LOCATIONS ON STATE LANDS. Locations of mineral claims not exceeding 600 feet wide and 1500 feet long may be made upon lands belonging to the state of Idaho in which the mineral rights are reserved or belong to the state. The discoverer of a body of mineral, in either a lead, lode, ledge, deposit, vein or contact, shall immediately post conspicuously a notice declaring that he has made such discovery on the date attached to said notice. The locator shall be allowed 60 days from such date in which to perform assessment work by shaft or tunnel, which assessment work shall be at a cost of not less than $100 on each claim in each year; to set the corner posts of each claim; and to file a certificate of location with the state board of land commissioners. Said certificate shall designate the 40-acre tracts upon which the claims are located and shall be recorded in the office of said board, and an entry of such location shall be made upon the plat and tract books; such procedure shall empower the locator to retain possession of and operate said claim for a period of two years, at the end of which time he shall be required to take a lease upon such terms as may be agreed upon by the state board of land commissioners.

SEC. 4. OIL AND GAS PROSFECTING PERMITS. The state board of land commissioners may issue prospecting permits, which shall give the exclusive right, for a period of not exceeding two years, to prospect for oil or gas, upon not exceeding 640 acres of land wherein the deposits of oil or gas belong to the state and are not within any known geological structure of a producing oil or gas field, upon condition that the permittee shall begin drilling operations within six months from the date of the permit, and shall,

within one year from and after the date of the permit, drill one or more wells for oil or gas to a depth of not less than 500 feet each, unless valuable deposits of oil or gas shall be sooner discovered; and shall, within two years from date of the permit, drill for oil or gas to an aggregate depth of not less than 1500 feet, unless valuable deposits of oil or gas shall be sooner discovered. The state board of land commissioners may, if the board shall find that the permittee has been unable with the exercise of diligence to test the land in the time granted by the premit, extend any such permit for such time, not exceeding two years, and upon such conditions as the board shall prescribe.

Upon establishing to the satisfaction of the state board of land commissioners that valuable deposits of oil or gas have been discovered within the limits of the land embraced in any permit, the permittee shall be granted a lease for as much as 320 acres of said lands, if there be that number of acres within the permit. Such lease shall be for a term of five years upon a royalty of 121⁄2 per centum in amount or value of the production and the annual payment in advance of a rental of 25 cents per acre; the rental paid for any one year to be credited against the royalties as they accrue for that year, with a preferential right in the lessee to renew the same for successive periods of five years upon such reasonable terms and conditions as may be prescribed by the state board of land commissioners, unless otherwise provided by law at the time of the expiration of such periods. The permittee shall also be entitled to a preferential right to a lease for the remainder of the land in his prospecting permit at a royalty of not less than 20 per centum in amount or value of the production, and under such other conditions as are fixed for oil or gas leases in this act, the bonus and royalty to be determined by competitive bidding or fixed by such other method as the state board of land commissioners may by regulation prescribe; Provided, That the state board of land commissioners shall have the right to reject any and all bids.

SEC. 5. CANCELLATION OF PERMITS. The state board of land commissioners shall reserve and may exercise the authority to cancel any oil or gas prospecting permit upon failure by the permittee to exercise due diligence and care in the prosecution of the prospecting work in accordance with the terms and conditions stated in the permit, and shall insert in every such permit issued under the provisions of this act appropriate provisions for its cancellation by the board.

SEC. 6. LEASES OF MINERAL RIGHTS IN STATE LANDS. The state board of land commissioners may lease in tracts

not exceeding 640 acres in extent to any one person, firm or corporation for prospecting and mining purposes the deposits of coal, oil, oil shale, gas, phosphate, sodium or other minerals that may be contained in any portions of the unsold lands of the state or that may be contained in state lands sold with a reservation of mineral deposits, for such annual rental, not less than 25 cents per acre per annum, and for such royalty upon the product as the board may deem fair and in the interest of the state, except as otherwise provided in Section 4 of this act. The rental paid for any year shall be credited against the royalties as they accrue for that year.

All mineral leases shall be for a period of five years, upon condition that at the end of each five-year period succeeding the first day of the year in which the lease is issued the leaseholder shall be given a preferential right of renewal under such readjustment of terms and conditions as the board may determine to be necessary in the interest of the state.

Applications for mineral leases shall be made under oath in such form as the board may prescribe, and the applicant shall describe the land, indicate the annual rental and royalty offered by him, specify the particular mineral or minerals, and give such additional information as may be required by the rules and regulations of the board. If the applicant for a lease has previously filed a certificate of location, as provided in Section 3 of this act, upon any part of the land desired to be leased, such applicant shall be given a preferential right to the land covered by his location; Provided, That no lands upon which a mineral location has been duly made and recorded as provided in Section 3 of this act shall be leased for mining purposes during the two-year period to any applicant except the person having made such location.

SEC. 7. APPRAISAL OF IMPROVEMENTS. Should any one apply to lease for prospecting and mining purposes the deposits of coal, oil, oil shale, gas, phosphate, sodium or other minerals belonging to the state upon which improvements have been made, before the lease shall issue, to other than the owner of the improvements thereon, the applicant shall pay to the owner thereof the value of said improvements and shall file in the office of the state board of land commissioners a receipt showing that the price of said improvements, as agreed upon by the parties or fixed by appraisement under authority of the said board, has been paid to the owner thereof in full, or shall make satisfactory proof that he has tendered to such owner the price of said improvements so agreed upon or fixed by appraisement. The word

"improvements" within the meaning of this section and of Section 8 of this act shall be construed to mean the work performed in the development of the property, the estimated value of the mineral, gas or oil contained in the land, and all buildings, dwellings, mill machinery, mine machinery, trails, roads, and all equipment used, constructed and necessary for the operation of the mine, mill or plant.

SEC. 8. FORFEITURE OF IMPROVEMENTS. If any mineral lease has been cancelled for a period of one year and a new lease has not issued the improvements upon the property shall revert to and become the property of the state.

SEC. 9. FORFEITURE OF LEASES. All leases of mineral deposits shall be conditional upon payment of the rental in advance annually, and upon the payment of the royalty provided for in the lease, and such other provisions as may be provided by the board, and upon the violation of any of the conditions of the lease, the board may at its option, after 30 days' notice by registered mail, cancel the lease. Upon failure or refusal of the lessee to accept the readjustment of terms and conditions determined by the board of the end of any five-year period, such failure or refusal shall work a forfeiture of the preferential right of the lessee.

SEC. 10. RIGHTS AND LIABILITIES OF LESSEES. A lessee of valuable mineral deposits shall have the right at all times to enter upon the lands described in his lease for prospecting and mining, provided he shall not injure, damage, or destroy the improvements of the surface owner; and the lessee shall be liable to and shall compensate such owner for all damages to the surface of said land and improvements thereon.

Any such lessee may occupy so much of the surface of said land as may be required for all purposes reasonably incident to the mining and removal of the mineral deposits: first, upon securing the written consent or waiver of the surface owner; or, second, upon payment of the damages to the surface of said land and improvements thereon to the owner thereof where agreement may be had as to the amount thereof; or, third, in lieu of either of the foregoing provisions, upon the execution of a good and sufficient bond, or undertaking, to the state of Idaho, for the use and benefit of the owner of the land to secure the payment of such damages, as may be determined and fixed in an action brought upon the bond or undertaking in a court of competent jurisdiction against the principal and sureties thereon, such bond or undertaking to be in the form prescribed by and in accordance with the rules and regulations of the board and to be filed with and approved by the board.

Lessees of coal, oil, oil shale, gas, phosphate, sodium, or other mineral lands shall fully protect the rights of all agricultural and grazing leases which have been heretofore, or may be hereafter granted, by erecting and keeping closed gates in all fences which may be opened, and inclosing or keeping covered all shafts, holes or open cuts.

SEC. 11. INSPECTION BY BOARD. The state board of land commissioners shall cause inspection to be made by a competent person or persons of all mines or works operated under leases for the production of minerals as often as the board shall deem necessary in the interest of the state, and the board shall have the right at all times to inspect said mines or works.

SEC. 12. FORMS, RENTALS, ROYALTIES AND FEES. The board shall by rules and regulations prescribe the form of application, the form of lease, the amount of filing and recording fees, the annual rental, the amount of royalty, the basis upon which the royalty shall be computed, and such other details as it may deem necessary in the interest of the state, except as otherwise provided in this act.

SEC. 13. SALE OF STATE LANDS CONTAINING MINERAL DEPOSITS. Lands in which minerals are contained and the surface of which has a value for other purposes may be sold under the provisions of chapter 130 of the Compiled Statutes of Idaho relating to the sale of state lands, provided that in the sale of such lands there shall be reserved to the state all such deposits and that the right of the purchaser shall be subject to the conditions and limitations prescribed by law providing for the state or persons authorized by it to prospect for, mine and remove such deposits and to occupy and use so much of the surface of such land as may be required for all purposes reasonably incident to the mining and removal of such deposits therefrom.

SEC. 14. APPLICATION TO PURCHASE. All applications to purchase state lands approved subsequent to the passage of this act shall be subject to a reservation to the state of all coal, oil, oil shale, gas, phosphate, sodium, and other mineral deposits in said land and of the right of the state or persons authorized by it to prospect for, mine and remove the same as provided by law; and all certificates of purchase issued by the state shall contain such reservation.

SEC. 15. Section 2905 of the Compiled Statutes of Idaho is hereby amended to read as follows:

Section 2905. LEASES. The state board of land commissioners may lease any portion of the land of the state, at a rental of not less than 5 per cent per annum, on the valua