(A) The South Carolina State Fiscal Accountability Authority, upon review by the Joint Bond Review Committee as necessary, hereinafter referred to as the authority, is hereby designated as the State Agency with the authority, responsibility and power to lease all State lands to persons for the purpose of drilling for and producing oil and gas. The Department of Health and Environmental Control is hereby designated as the exclusive agent for the authority in selecting lands to be leased, administering the competitive bidding for leases, administering the leases, receiving and compiling comments from other state agencies concerning the desirability of leasing the state lands proposed for leasing and such other activities that pertain to oil and gas leases as may be included herein as responsibilities of the authority.
(B) Upon resolution adopted by a majority of the authority, the authority may lease any of those lands heretofore enumerated if the authority finds that the lease of the lands would not be detrimental to the State and its citizens and if the department recommends that a lease of the lands be granted. The Governor as chairman of the authority shall execute all oil and gas leases. The leases shall be filed in the county in which the land is situated as all other instruments conveying real estate are filed except leases of offshore lands shall be filed in the offices of the department as a public record. The department shall have the responsibility of administering all such leases for the authority.
(C) Any lease executed pursuant to this section shall be for a term of no more than five years unless substantial drilling operations have been commenced on the property in which case the lease shall be extended from year to year so long as substantial drilling operations continue unless the well drilled upon the leased property becomes a producing well, in which case the lease shall be extended from year to year for as long as production continues or the leased property has a known capacity to produce oil or gas and the production has been discontinued with the prior approval of the department under such terms as the department has prescribed. The leases granted pursuant to this section shall include no more than two thousand five hundred acres (1,000 hectares) but a person is not prohibited from holding a leasehold interest in more than two thousand five hundred acres (1,000 hectares) under two or more leases. The leases shall be granted under such terms and conditions as the authority shall deem to be in the best interest of the citizens of the State. However, no lease shall provide for a lesser royalty than one-sixth of the oil and gas produced from the leased property or one-sixth of the monetary value of such oil and gas at the wellhead.
(D) No property shall be leased except by sealed bid. The property shall be leased to the bidder submitting the bid which provides for the highest bonus payment. The bonus payment shall be in addition to any rental payments established by the department in the lease agreement and royalties provided for herein.
Any person desiring that a certain tract or tracts of property be submitted for bidding shall nominate such tract or tracts by so informing the department in accordance with the procedure for nominating established by the department.
If the department determines that the tract nominated as provided herein or upon its own motion determines that a tract should be submitted for bidding, it shall invite all interested persons to submit bids for leasing the designated tract. Invitations for bids shall be published in a newspaper of general circulation within the county or counties where the tract proposed to be leased is located and in a newspaper of statewide circulation, at least twenty-five days before the final date for submitting bids. Invitations for bids shall also be mailed twenty-five days before the final date of submitting bids to the last known address of all persons who have filed a statement in accordance with the procedure established by the department indicating a desire to bid upon tracts put up for leasing. The invitation to bids shall contain:
(1) a description, location and approximate acreage of the tract to be leased;
(2) the address to which the bids are to be submitted;
(3) the time and place at which the bids will be opened;
(4) the date and time by which the bids must be received;
(5) any special provisions of the lease or special rules and regulations promulgated by the department for the tract to be leased and
(6) any other matters that the department may deem pertinent.
The bids shall be opened publicly at the time and date prescribed by the department in the offices of the department by the person designated by the department to open bids. The department shall furnish to persons who request a copy of the lease agreement for the tract submitted for bidding. The lease of any tract shall be granted to the highest responsible bidder but the department and the authority may reject all bids when it determines that the public interest will be served thereby. The department and the authority must accept the most advantageous offer or reject all bids within twenty days from the date the bids were opened.
(E) All monies collected by the department and the authority as bonuses, rental payments or royalties shall be deposited with the State Treasurer in a special account and expended as the General Assembly may direct.
(F) Prior to the mailing and publication of invitations to bid, the department shall advise the appropriate State agencies by notice of the tract proposed to be submitted for bidding. The agencies wishing to comment on the desirability of leasing such tract shall do so within thirty days following receipt of the notice.
The department shall consider the comments of the agencies in determining the advisability of leasing the tract. If the department determines to lease the tract on which it has received unfavorable comment from the agencies, the department and authority shall require such special provisions in the lease agreement and promulgate such rules and regulations for each individual tract that is leased as may be necessary to safeguard against particular hazards or detrimental effects that may result from drilling oil or gas wells and the production of oil or gas on the tract.
In considering the special provisions, rules and regulations needed for a specific tract, the department and authority shall specifically include such provisions, rules and regulations shown by the commenting agency to be necessary (1) for the protection of the environment, (2) to minimize the detriment to aesthetics, (3) for the protection of the property rights of other persons and the public, (4) to avoid obstructing navigable streams, (5) to prevent interference with recreation, (6) to protect the public beaches, and (7) to maintain the quality of underground water.
The construction of drilling platforms in the Atlantic Ocean is permitted except that such drilling platforms shall not be located within one mile (1.6 kilometers) of the mean high water mark of any beach within the territorial jurisdiction of the State of South Carolina.
(G) The department is authorized to promulgate such rules and regulations as may be necessary to fulfill its duties set forth in this section and implement the provisions and purposes of this section.
(H)(a) Any person as defined herein who intends to construct a deep water port facility within the territorial jurisdiction of the State of South Carolina for the purpose of loading or unloading oil, gas or other products as defined by this chapter shall apply for and obtain a permit to construct such facility from the department prior to the commencement of construction.
(b) The department shall promulgate such rules and regulations to govern the construction of deep water port facilities as may be necessary (1) for the protection of the environment, (2) to minimize the detriment to aesthetics, (3) for the protection of the property rights of other persons and the public, (4) for the protection of the rights of the fishing industry, (5) for the protection of the recreational activities of the public, (6) to avoid obstructing shipping channels, (7) to protect the public beaches, and (8) in general, to protect the public interest and rights of the state and its industries. In promulgating such rules and regulations, the department shall take into consideration the comments of other state agencies concerning the potential hazards present in constructing deep water port facilities and shall follow the procedure set forth in Section 48-39-390(F) in soliciting and receiving the comments from such state agencies.
HISTORY: 1977 Act No. 179, Part 1, Section 20; 1993 Act No. 181, Section 1236.
Code Commissioner's Note
At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, Section 5(D)(1), effective July 1, 2015.