SALT LAKE CITY — A tough new audit prepared for Utah legislative leaders finds taxpayers may not be getting all the money they're entitled to when it comes to mineral extraction on the Great Salt Lake, nor is the state exercising enough oversight of the companies taking those minerals.
The Legislative Auditor-General's report, released Tuesday, found that companies operating on the Great Salt Lake were sometimes paying different rates for the same minerals. Utah's Division of Forestry, Fire & State Lands was also not adequately tracking royalty payments, resulting in incorrect payments and missing documentation. The audit also claimed that the Division hasn't done enough to ensure compliance or track how much money is allocated to efforts to save the lake.
The audit was being presented to the Legislative Audit Subcommittee, a group made up entirely of Republican and Democratic legislative leadership.
In one instance, the Legislative Auditor-General found that varying rates for sodium chloride resulted in an annual deficit of about $832,000 due to the state. While the revenue losses may not have short-term impacts, auditors wrote that it could lead to long-term cumulative impacts.
"Currently, seven mineral extraction operators make royalty payments on five minerals, including sodium chloride, magnesium (pure and alloy), magnesium chloride, potassium sulfate, and lithium carbonate. We found that some mineral extraction operators have not been making correct royalty payments and that Division oversight can improve," the audit said.
The audit also dinged the Division for not exercising enough oversight of mineral extraction companies, suggesting it allowed too many self-reported deductions — as much as $112 million. There were also examples of operators not turning in their royalty reports leading to hundreds of thousands of dollars in lost money.
"Not necessarily that they couldn’t deduct... but it just needs to be better defined," said House Speaker Mike Schultz, R-Hooper.
This year, the Utah State Legislature passed a major bill that reworked how mineral extraction companies operate on the Great Salt Lake. It was run in response to the environmental crisis facing the lake, which dropped to a record low in 2022. Mineral extraction can be a water-intensive process and the bill, championed personally by Speaker Schultz sought to also ensure the state was fairly compensated for minerals taken from the lake while seeking to protect the lake's fragile ecosystem.
House Bill 453 allowed the Division to take action against mineral extraction companies that fail to adequately compensate the state for what's taken from the Great Salt Lake.
"Regulatory agencies such as FFSL understandably seek to balance enforcement with economic activity. Nevertheless, the Division should review its regulatory efforts to ensure that taxpayers are receiving all anticipated revenues for extracted minerals while promoting parity and equity among mineral extraction operators," the audit said.
The audit also urged Utah's Division of Forestry, Fire & State Lands to better track money it does get and how it benefits the Great Salt Lake.
"Because the minerals program is the primary source of revenue for managing Great Salt Lake resources, the Division should continue to determine where funds can be used to improve management and oversight on the Great Salt Lake," auditors wrote.
In a detailed response, Utah Division of Forestry, Fire & State Lands Director Jamie Barnes said she agreed with every single one of the Legislative Auditor-General's findings and would comply with any recommendations for improvement. It was disclosed in Tuesday's hearing that the agency sought the audit and much of the inaction was blamed on prior administrations.
"There’s some discrepancies and there’s some things that we need to fix and now those have been identified and now we can get to work on what we need to do better," Barnes told FOX 13 News following the hearing.
On Tuesday, legislative leaders did praise the direction the Division of Forestry, Fire & State Lands has taken in terms of protecting the lake and holding mineral extraction companies to account. Barnes said contracts are being renegotiated as a result of both legislation and this audit.
"It’s a different day on Great Salt Lake and everybody’s come to that conclusion. So we’re actively looking at what can be done differently," she said.
Read the full audit here:
This article is published through the Great Salt Lake Collaborative, a solutions journalism initiative that partners news, education and media organizations to help inform people about the plight of the Great Salt Lake—and what can be done to make a difference before it is too late. Read all of our stories at greatsaltlakenews.org.
