Committee advances substitute to raise royalty rate to 25% on targeted state land leases to boost school funding

Senate Bill 23 (committee substitute) would allow the State Land Office to set royalty rates up to 25% on leases in a defined high‑value area that includes parts of Lea and Eddy counties. Sponsors said the change would bring New Mexico’s state-land royalty policy closer to private-market practice and increase revenue available for public schools and other beneficiaries.

Supporters argued the substitute is limited to a small number of highly productive tracts and estimated substantial long‑term revenue gains. John Martinez of Conservation Voters New Mexico said the bill is “about making money to support our public schools and children across New Mexico.” Opponents from the Independent Petroleum Association said higher royalty rates risk locking out smaller independent operators in peripheral areas, which could reduce development and long-term production; Jim Winchester told the committee that several recent leases in near‑basin areas went unbid at current rates.

The substitute also added language clarifying that the commissioner may cancel leases only for failure or default to comply with lease covenants, and required the State Land Office to post the specific factor percentages used to calculate royalty recommendations while maintaining confidentiality for nominating companies. Land Office staff explained the nomination and scoring process and said parcel and scoring information is posted publicly; the company identity that nominates a parcel is kept confidential during the process to avoid signaling development strategy.

The Finance Committee approved the substitute and gave SB 23 a do-pass recommendation; the substitute motion passed and the committee approved the bill 6–3.

Actions at the meeting: committee adopted the substitute language and issued a due-pass recommendation on SB 23 (6–3). Committee discussion included presentations from the State Land Office, conservation groups and industry representatives.

What’s next: The substitute advances to further Senate consideration. Sponsors and the State Land Office will need to provide detailed parcel maps and fiscal estimates as the bill moves forward.