A. Application to lease.

1. (1) Applications for lease shall be submitted in duplicate upon forms prescribed by the commissioner and shall contain the following:

   1. (a) a nonrefundable application fee in the amount set forth in the schedule of fees;
   2. (b) a legal description of the location of the lands to be leased;
   3. (c) an approximation of the amount of material to be removed during the term of the lease;
   4. (d) the necessary surety;
   5. (e) the required rental payment as set forth in the rent schedule;
   6. (f) a signed and completed environmental questionnaire; and
   7. (g) a plat (prepared by the applicant or designated agents) which is drawn to scale showing the location of the area of the pit site or the area to be mined, if requested by the commissioner.

2. (2) When the estimated amount of material to be removed is in excess of 40,000 cubic yards, or upon the discretion of the commissioner, such lease may be issued by competitive bid upon the following procedure:

   1. (a) Advertisement. The commissioner shall advertise the sale through publication in a newspaper of general circulation in the area where the material is located, on the same day, once a week, for two consecutive weeks.
   2. (b) Notice. The notice of the sale by competitive bid shall also be posted in a conspicuous place at the state land office.

B. Mine operation plan and mine reclamation plan for a lease.

1. (1) For any lease where it is anticipated that the total surface area disturbed will exceed one acre, the lessee shall submit a mine operation plan and a mine reclamation plan to be approved by the commissioner prior to lease issuance.
2. (2) The operation plan shall include, but is not limited to, a plan for the orderly development of the reserves. The operation plan shall specify, if applicable, locations and methods of topsoil and overburden stockpiles, tailings disposal, dams or impoundments, slope stabilization methods, runoff diversions, solid and liquid waste disposal, spill reporting and cleanup, sediment control, security and access control, blasting, archaeological, and endangered species clearances, and other applicable information specific to the mining operation, including a list of all required federal and state permits. If the total area to be disturbed is greater than 10 acres, the mine operation plan shall be prepared by a registered professional engineer.
3. (3) The commissioner may require a hydrologic demonstration that groundwater will not be adversely impacted. The demonstration may include, if applicable, a plat and topographic map showing the location of the lease area in relation to governmental surveys, highways or roads giving access to the mine site, and watercourses, water wells and dwellings within one-half mile of the lease area; and geological/hydrologic evidence demonstrating that surface or subsurface activity will not degrade or otherwise impact ground or surface water. This evidence may include a geological/hydrological discussion of the area and the uppermost aquifer.
4. (4) The reclamation plan shall address reclamation of all areas disturbed by operations conducted on the lease. The reclamation plan shall consist of reclamation specifics and shall set out the schedule of implementation on a continuing basis during the life of the lease relative to operation, maintenance, contouring, water and sediment control, cleanup and reseeding. Reclamation shall be performed contemporaneously with mining wherever possible.
5. (5) Upon approval, the mine operation plan and the mine reclamation plan shall be incorporated in the lease by reference and the provisions of the approved plans shall be enforceable in the same manner as any other covenant of the lease.

D. Payment for minerals under lease.

1. (1) The purchase price to be assessed on mineral leases shall be based on market value, but, except as provided in Paragraphs (2) and (3) of Subsection D of 19.2.5.9 NMAC, shall be no less than those on the following schedule:

   1. (a) Gypsum, clay, sand, gravel, stone, shale, perlite, volcanic deposits

      Amount Minimum purchase price

      No Limit $ .55/loose cu. yd.

   2. (b) Borrow dirt

      Amount Minumum purchase price

      No Limit $ .40/loose cu. yd.

2. (2) For all leases for which the mineral extraction is projected to exceed 5000 cubic yards per year, the commissioner may require the lessee to install and utilize a scale, which has a valid certification from the New Mexico department of agriculture, to measure the amount of minerals mined. For such leases, the purchase price, by weight, shall not be less than the purchase price, by volume, specified in Paragraph (1) of Subsection D of 19.2.5.9 NMAC converted to purchase price, by weight. Factors used to convert volume to weight shall be specified by the commissioner and based on actual density measurements, if available, or, if such measurements are not available, on generally accepted scientific formulas.
3. (3) Upon the approval of the commissioner, any lessee not required to calculate purchase price by weight under Paragraph (2) of Subsection D of 19.2.5.9 NMAC may use such method to calculate purchase price.
4. (4) Purchase payments for mineral extraction on leases are to be made by the 20th day of each month following extraction.

E. Term of lease.

1. (1) The term of each lease shall be determined by the commissioner based upon such considerations as the length of time required by the applicant, the demand for the pit site, as well as other relevant factors. However, except as provided in Paragraph (2) of Subsection E of 19.2.5.9 NMAC, no lease shall be issued for longer than five years.
2. (2) Upon a showing by an applicant that a term greater than five years is necessary, the commissioner, in the commissioner’s discretion, may issue a lease for a term of five years and so long thereafter as annual production purchases or annual minimum production payments paid in lieu of actual production purchases exceed a minimum amount specified in the lease (but not less than fifty dollars ($50.00) per acre of the leased premises). The applicant must demonstrate that capital expenditures, both on and off the leased premises, needed to commence and sustain mine development, production and reclamation and/or processing plants or manufacturing facilities are so great that they cannot be recouped within five years with a reasonable and prudent mine production rate. In any lease issued under this paragraph, the commissioner shall include such rental, reclamation, and any other provisions as the commissioner deems are in the best interest of the trust, and shall specify the period of nonproduction which constitutes abandonment of the lease. Any lease issued under this paragraph shall contain a provision for redetermination of the purchase price and the amount of minimum production payments. The redetermination of the purchase price shall occur annually after the first year of the lease and the redetermination of the amount of minimum production payments shall occur annually after the 15th year of the lease. The redetermined purchase price and amount of minimum production payments shall equal the initial purchase price and amount of minimum production payments, respectively, multiplied by a fraction, the denominator of which is the published, producer price index for commodities, commodity category 13, non-metallic mineral products, existing on the date that the lease is issued and the numerator of which is the same index existing on the date of the redetermination.

F. Assignment, subleasing, and relinquishment of a lease.

1. (1) Except as provided in Paragraph (2) of Subsection F of 19.2.5.9 NMAC, no lease under this rule may be assigned or subleased. A lease in good standing may, with the approval of the commissioner and the payment of a fee set forth in the schedule of fees, be relinquished to the state of New Mexico. Relinquishment does not relieve the lessee of any obligations regarding reclamation, unless the commissioner determines that reclamation is not necessary or the duty to reclaim has been assigned and approved by the commissioner.
2. (2) Any lease issued under Paragraph (2) of Subsection E of 19.2.5.9 NMAC, and in good standing, may, with the written approval of the commissioner, upon such terms and conditions as may be required, and payment of a fee set forth in the schedule of fees, be assigned or sublet to third persons. However, no assignment of an undivided interest or any assignment or sublease of less than a legal subdivision shall be recognized or approved. Provided further, however, the record owner of any such lease may enter into any contract for the development of the leasehold premises or any portion thereof, or may create overriding royalties or obligations payable out of production, or enter into any other agreements with respect to the development of the leasehold premises or disposition of the production therefrom. It shall not be necessary for any such contracts, agreements or other instruments to be approved by the commissioner; but nothing herein shall relieve the record owner of such lease from complying with any of the terms or provisions thereof. All assignments shall be formally executed by the proper parties upon forms prescribed and furnished by the commissioner and shall recite, among other things, the consideration received for the assignment. Assignments shall be filed in triplicate in the office of the commissioner. The original copy of each assignment will be recorded and filed as a public record in the state land office and one copy will be returned to the assignee. Ordinarily, leases shall be transferred or assigned in the names of no more than two persons or legal entities.

H. Reservation of right to purchase production from a lease. The commissioner reserves a continuing option to purchase at any time and, from time to time, at the market price prevailing in the area on the date of the purchase, all or part of the minerals that may be produced from the lands embraced in all leases. The commissioner may waive this reservation by following the statutory procedure set out in Section 19-14-2 NMSA 1978, as amended.

[5/14/1999; 19.2.5.9 NMAC - Rn, 19 NMAC 3. SLO 5.9, 9/30/2002; A, 6/30/2016; A, 6/11/2019]