February 21, 2020
Ari Biernoff, General Counsel
NOTICE OF INTENT TO INITIATE RULEMAKING – BONDING ADEQUACY REVIEW AND UPDATE
Commissioner of Public Lands Stephanie Garcia Richard announces that the New Mexico State Land Office will initiate rulemaking proceedings to review and update bonding requirements for oil, gas and mining operations on New Mexico state trust lands. Current State Land Office bonding rules for oil and gas operations have not been adjusted since the 1970s. Those rules permit a business to post a single bond of only $25,000 to cover an unlimited number of leases, pipelines, and other infrastructure on state trust lands – but actual costs of reclamation and remediation range from a few thousand dollars to millions of dollars. Other state agencies, such as the Oil Conservation Division, have their own separate rules for bonding, but those bonds are required for different purposes and are not directed at protecting state trust lands.
Since State Land Office bond amounts were last adjusted nearly 50 years ago, the oil and gas industry has expanded dramatically, with a much greater density of operations. With more than 14,000 oil and gas wells and more than 1,400 active and abandoned mines on state trust lands, the State Land Office may be faced with millions of dollars in exposure if existing bonds are inadequate to cover actual remediation costs.
To address this serious risk, the State Land Office has secured funding to begin a comprehensive study of the adequacy of its bonding. Based on the findings of that independent study, agency analysis, and consultation with stakeholders, the State Land
Office will propose rule changes to ensure that bond requirements are consistent with on-the-ground remediation costs and market conditions.
Proposed rule changes will be published on the State Land Office website (www.nmstatelands.org) and the New Mexico Sunshine Portal (www.sunshineportalnm.com), and will be available in hard copy at the State Land Office central office building (310 Old Santa Fe Trail, Santa Fe, NM 87501) and at State Land Office district offices located throughout New Mexico (see www.nmstatelands.org/District_Offices.aspx for locations).
The Commissioner will invite written comments and public participation throughout the rulemaking process.