(a) Every lessee of a mining lease granted under this chapter and every assignee thereof shall file with the board a bond, in a form and in an amount approved by the board, made payable to the State and which shall be conditioned upon the faithful performance by the lessee of all the requirements of this chapter and of the mining lease, and also conditioned upon the full payment by the lessee of all damages suffered by the occupiers hereinunder mentioned. If the State sells or leases its mineral rights on land which it or its predecessors in interest have granted or leased, or which it may hereafter sell or lease, and the land thereof including any crops or improvements is damaged by any mining or other incidental operations, including exploratory work, or by the failure of the lessee of the mining lease to properly restore the land after termination of the operations, the occupier shall be reimbursed the full extent of the damages caused by the mining operations of the lessee to be allocated between the lessee and the fee owner in accordance with the lease terms, if any.
(b) Nothing herein shall be construed to prevent the occupier from demanding and receiving rentals from the lessee of the mining lease or to forbid and prevent the occupier and the lessee from agreeing upon the amount of damages to be paid and the terms and conditions of payment. The occupier may in writing before or within thirty days after the public auction notify the board that the occupier elects to have the amount of damages and the amount of rentals to be paid as a result of the mining lease determined by arbitration with the successful bidder. In such event, the occupier shall notify the successful bidder of the occupier's election to arbitrate, and the arbitration shall proceed in accordance with chapter 658A. The arbitrators in fixing the amount of damages to be paid to the occupier shall award the occupier the amount which in their judgment shall fairly compensate the occupier for the damages the occupier may suffer to the occupier's crops or improvements or to the surface or condition of the occupier's land caused by the mining or other incidental operations, including exploratory work, and a reasonable rental for the use of the surface.
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