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New Mexico State Business Lease (3-NM-d)

Developers may pursue geothermal projects on state trust lands where the temperature of the extractable resource is less than 250 degrees Fahrenheit by obtaining a Business Lease from the New Mexico State Land Office (NMSLO). The Commissioner of Public Lands (Commissioner) oversees the distribution of Business Leases. Regulations pertaining to the Business Lease are found in N.M. Admin. Code part 2.9. NMSLO Information Packet for Business Lease.


State Business Lease Process

3-NM-d.1 to 3-NM-d.2 – Does the Developer Want to Conduct Exploration Activities?

Prior to applying for a Business Lease, developers may apply for a Right of Entry Permit:
3-NM-e
in order to conduct pre-application assessment activities, including non-invasive exploration activities on the land.

3-NM-d.3 – Application for Business Lease

N.M. Admin. Code section 19.2.9.9 outlines the basic requirements for a proper Business Lease application. A sample application is provided on page two of the NMSLO Information Packet for Business Lease. At a minimum, applications must identify the state trust land, include an appraisal of the land, and describe the proposed use for the land. In addition, applications must include a non-refundable $50 application fee.


3-NM-d.4 to 3-NM-d.5 – Review Application Materials for Completeness

The NMSLO reviews each application for completeness in the context of the particular tract(s) of land and proposed commercial use(s). As part of the review process, the Commissioner may require additional information and documentation from an applicant. Examples of supplemental information include a survey of the land, detailed development plan of the land, environmental analyses of the land, and cultural resource investigation of the land. The Commissioner may require further information in addition to the types listed. 19.2.9.10 NMAC.


3-NM-d.6 to 3-NM.d.7 – Review all Materials; Recommend Lease Conditions and Term

The Commissioner reviews all materials in a complete application and establishes terms and conditions in a Draft Business Lease that will manage the trust land in a commercially reasonable manner, provide for a secure return to the trust and protect trust land and resources thereon from waste. 19.2.9.12.C NMAC.


3-NM-d.8 – Does the Lease Term Exceed Five Years?

There are two types of Business Leases: bid and non-bid. A non-bid lease has a maximum term of five years. Thus, a designated lease term (determined by the Commissioner) greater than five years automatically activates the bid-lease process. Even where the proscribed lease term is less than five years, the Commissioner may opt out of negotiations with the applicant and offer the land at a bid-lease auction. 19.2.9.8.C NMAC. Furthermore, at any time prior to the execution of a Business Lease, the Commissioner may reject any application or bid and withhold from business leasing any state trust land. 19.2.9.8.E NMAC.


3-NM-d.9 to 3-NM-d.11 – Advertise Public Bid Lease

Prior to holding a public bid-lease auction, the NMSLO must publish notice of the sale once a week for ten consecutive weeks in a newspaper of general circulation published in Santa Fe, and in a newspaper of general circulation published nearest the offered land. 19.2.9.11B NMAC.

The NMSLO may conduct the public lease sale either by oral auction or sealed bidding. 19.2.9.11.G NMAC. To qualify as a bidder, prospective bidders must deposit, either before the auction or at such time as provided in the notice of lease sale, the costs of the lease sale and the first rental payment under the bid lease. 19.2.9.11.D NMAC. The Commissioner will award the Business Lease to the highest and best bidder, if awarded at all. 19.2.9.11.G NMAC. The Commissioner is not bound by quantitative bid amounts in selecting the highest and best bidder. In addition to offered bonus or rental amounts, the Commissioner may consider factors such as proposed uses of the trust land and qualifications of the bidders to develop the land in order to provide the trust with sustainable long-term returns. 19.2.9.11.H NMAC.

A successful bidder must deposit all amounts due for the lease sale no later than five business days after the auction and enter into the lease within 30 days of the auction. 19.2.9.11.I NMAC. However, the Commissioner may extend the 30 day requirement to a maximum of 120 days.


3-NM-d.12 – Furnish Payment

A developer may not take possession of the leased trust lands until furnishing all payments stipulated in the Business Lease within five business days of the auction, including an advanced annual rental installment. In addition, the developer must enter into the bid lease within 30 days. 19.2.9.12.A NMAC.


3-NM-d.13 to 3 NM-d.14 – Business Lease

Where the Commissioner proscribed a lease term of less than five years and chose not to offer the trust land for a bid lease sale, the NMSLO sends a Business Lease to the applicant outlining the terms, conditions and payment. A developer enters into the lease by signing and returning the lease documents to the NMSLO, along with all required fees. 19.2.9.12.B NMAC.




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