Meeting with Laura Riley, Deputy Land Commissioner, Kris McNeil, Assistant Land Commissioner 11/27/17 (Riley was the speaker in these notes).
LWVNM Members: Ann Coulston, Judy Williams, Barbara Calef)
Laura Riley is an economist, hired by Commissioner Dunn. Interesting points:
Game and Fish Department owns or manages ~1 million acres of land in the state.
Thomas Jefferson was responsible for the Ordinance of 1785, which established a survey system dividing the land into townships six miles on a side to be sub-divided into 36 sections of one square mile or 640 acres. Section 16 of each township was reserved to support the public schools. When New Mexico became a territory, two sections were put in trust for the schools and other beneficiaries; the Enabling Act added two more sections to the trust for a total of four sections.
The SLO is trying to consolidate the land through exchanges because of the mixed management problems that occur when there are multiple owners and conflicting goals, for instance, when there is trust land within a federal wilderness study area. The SLO can’t do anything with that land to produce income.
On the other hand, the small dispersed blocks are advantageous in some instances, e.g., the Facebook development, which allows the trust to gain some revenue for anything that crosses trust land, such as transmission lines.
The SLO is charged with conserving the trust lands for the future. This includes managing endangered species – plant and animal. By statute, lessees may utilize the surface for mineral development with “appropriate care.”
Siting is the province of the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department (EMNRD). The SLO is not allowed input regarding the siting of oil wells.
The oil and gas lease is statutory. (NM Chapter 19-10-4 1978). The statute sets out the expenses. Chapter 19 contains the statutes governing the SLO. Unfortunately, the law is written to allow producers to net out a lot of expenses before paying taxes and royalties. It would be more advantageous to the state of they were taxed at the wellhead or extraction point. However, the lease was written in 1978 and is fiercely protected by industry and industry-friendly legislators.
SLO Rule 21 governs exchanges. (I have a copy and can scan it. It says that it does not apply to exchanges with the US Dept. of the Interior or to governmental entities except if the commissioner decides to use it for a specific exchange.)
Production is reported to OCD, which pays the royalties to the SLO and the taxes to Tax and Rev. The SLO royalties go into the Land Grant Permanent Fund. SLO also collects fees for grazing, right-of-way and other recurring items, which are used to run the Office. The Department of Taxation and Revenue collects severance taxes and administers the Severance Tax Fund. Severance taxes are on mineral resources.
There is a technical communications problem: each department want to update their software in their own way, making data-sharing difficult. SLO wanted a reporting system that would create an audit trail for actual production. Unfortunately, the agencies are going different ways in creating upgraded data systems; they may not be compatible. SLO needs the OCD data, but they anticipate problems going forward. However, they are working with OCD on data sharing methods and mechanisms.
Reporting will be frustrating for producers; it’s not business-friendly. They must file in different formats for each agency.
Dunn developed an archaeology policy and an endangered species policy for the SLO.
The SLO has 10 exempt managers, meaning they are employed at the will of the commissioner. The rest of the employees are classified, giving continuity to the SLO.
The beneficiaries of the Land Grant Permanent Fund receive 5% of the fund annually, but the 5% is a “rolling average” of 5 years to keep the fund stable. If the disbursement rate is increased over 5%, the fund will not be able to maintain an equilibrium, and eventually the core capital will be eroded. Therefore, she is not in favor of taking out a higher percentage.
Regarding the transfer of Federal public lands: Riley does not want transfer of the surface land without the mineral rights; she says that would be a bad deal.