property conveyance; foreign entities; prohibition

HB2905 - 572R - I Ver

REFERENCE TITLE:
property conveyance; foreign entities; prohibition

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2905

Introduced by

Representative
Montenegro

AN
ACT

amending
title 33, chapter 4, article 4, Arizona Revised Statutes, by adding section 33-459;
amending sections 37-231 and 37-240, Arizona Revised Statutes;
relating to land sales.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Title 33, chapter 4, article 4,
Arizona Revised Statutes, is amended by adding section 33-459, to read:

START_STATUTE
33-459.

Conveyance to federally banned corporation; prohibition;
definition

A. Beginning from and after the
effective date of this section, land in this state may not be conveyed to a

federally banned corporation.

B. For the purposes of this section,
"federally banned corporation":

1. Means
a company banned by any of the following:

(
a
) The federal communications commission.

(
b
) The United States department of commerce.

(
c
) The cybersecurity and infrastructure security agency.

(
d
) The federal acquisition security council.

2. Includes
any agent or any other entity under significant control of a federally banned
corporation.

3. Does not include the United States
government or its states, territories or possessions.
END_STATUTE

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

START_STATUTE
37-231.

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

To promote
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

this
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

is
and
remain

remains
and
be

is

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

is
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_STATUTE
37-240.

Limits on sales of state lands; definition

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

federally banned corporation.

D. For the purposes of this section,
"federally banned corporation":

1. Means
a company banned by any of the following:

(
a
) The federal communications commission.

(
b
) The United States department of commerce.

(
c
) The cybersecurity and infrastructure security agency.

(
d
) The federal acquisition security council.

2. Includes
any agent or any other entity under significant control of a federally banned
corporation.

3. Does not include the United States
government or its states, territories or possessions.
END_STATUTE