IPANM & SLO (October 3, 2025) – Prior to the 2025 Legislative Session, the State Land Commissioner threatened to raise state lease bonds if her Royalty Rate Increase bill bill wasn’t passed.

Well, the Royalty Rate Increase Bill did pass, and apparently the State Land Commissioner is proceeding with bonding increases anyway. This is not necessarily surprising. Earlier this summer, the Commissioner hinted that this rule was to be forthcoming.

This afternoon, the State Land Office released the following State Lease Bonding Increase Draft Rule, which calls for dramatic, across the board lease bond increases that will continue to disproportionately hurt independent producers:

FULL DRAFT LANGUAGE of SLO’s new, proposed Lease Bonding Rule

The SLO also has provided this summary draft for your review:

SLO Summary of new, proposed Lease Bonding Rule

Consistent with their track record, the State Land Office did not consult with industry regarding their proposal, and therefore, have not allowed industry to provide input on the impacts of this new rule on our operations up to this point.

However, in their message to IPANM today, the State Land Office writes, “While we are still finishing up our timeline for the rulemaking, please expect industry working group meetings to be held in Hobbs, Farmington and Santa Fe in mid-November.  We will have more information to share in the next couple of weeks regarding meeting locations and our overall timeline.”

Therefore, it would appear that opportunities will be forthcoming to provide feedback on what is currently drafted. It is uncertain whether any future industry input will be seriously considered for changes, as such after-the-fact input sessions have often been more “show” than substance. Nevertheless, IPANM will engage with the SLO with hopes to improve a very, very bad rule.