Mineral extraction on the Great Salt Lake: royalties, severance tax, the 2024 audit and Compass Minerals' voluntary agreement

Compass Minerals' Ogden facility, which its 10-K calls the largest sulfate of potash (SOP) and the largest solar salt production site in the Western Hemisphere, produces salt, SOP and magnesium chloride from Great Salt Lake brine. The 10-K states that the company pays a royalty to the State of Utah based on net revenues and gives current rates of 4.8% of gross revenues for SOP, 5% for magnesium chloride and $0.50/ton times the Producer Price Index for sodium chloride, with lease rent credited against royalties, and that it has 156,000 acre-feet of extraction rights from the north arm. Wurtsbaugh et al. attribute 13% of the lake basin's consumptive water use to lake water extraction for salt-pond mineral production; the Salt Lake Tribune wrote in 2024 that mineral companies "deplete about 7% of its water".

A performance audit by the Legislative Auditor General presented on 18 June 2024 covered seven operators that pay royalties on five minerals: sodium chloride, magnesium, magnesium chloride, potassium sulfate and lithium carbonate. Press accounts report that operators sometimes paid different rates for the same mineral; that one operator kept deducting storage costs, averaging $560,000 a year or $2.8 million over five years, after it stopped producing; that self-reported deductions totalled "as much as $112 million" over five years; and that the Division of Forestry, Fire and State Lands (FFSL) did not track or verify royalty reports. The sodium chloride shortfall is given as an annual deficit of about $832,000 by Fox 13 and as $832,000 over five years, over $166,000 annually, by the Salt Lake Tribune. FFSL director Jamie Barnes agreed with the findings and said many problems predated her tenure. The Tribune reported that the 2024 law HB 453 gives the division authority to use penalties and fines against underpaying companies.

HB 453 of 2024 ("Great Salt Lake Revisions") created tax incentives for extraction companies to reduce water use when the lake falls below 4,198 feet. Text of the 2026 bill HB 247 (5th substitute, 4 March 2026; the enrolled version was not opened) sets the severance tax for a Great Salt Lake extraction operator that is not party to a voluntary water agreement at 7.8% of taxable value, at 2.6% where it does not use evaporative concentration of brine, and for a party to a voluntary agreement at 2.6% when the lake was at or above 4,198 feet in the prior calendar year and no severance tax when it was below 4,198 feet. The Tribune reported that in exchange for the Compass agreement the company "will pay a lower severance tax"; the Utah Department of Natural Resources (DNR) release and Compass's statement mention no tax or royalty terms.

On 3 September 2024 FFSL and Compass Minerals announced a voluntary agreement. Compass states that it will donate non-production water rights totalling about 201,000 acre-feet per year, return nearly 65,000 acres of leasehold to FFSL for permanent conservation and accept caps on certain consumptive water rights tied to annual lake elevation; DNR describes it as the first voluntary agreement between the state and a major operator on the lake. Governor Spencer Cox said "The donation from Compass Minerals will ensure that water delivered to the Great Salt Lake will remain in the lake." KUER reported that Compass had already used less water than its rights allowed and that Ben Abbott of BYU said the donation may not translate into 200,000 acre-feet left in the lake. The Strike Team reported that Morton Salt agreed to forgo 54,000 acre-feet and that both companies agreed to stop all water use if the lake drops to 2022 levels. Compass's 10-K says its brine consumption "is reduced to 50% of our certificated water right for calendar year 2026", and that the 2026 plan is "well below this limit". Compass suspended its planned lithium project in November 2023, according to the Tribune. A Compass representative sits on the Great Salt Lake Watershed Enhancement Trust's council. The US Magnesium plant, another extractor, is the subject of a separate case.