New Mexico State Land Office finalizes increased bonding requirements for oil and gas operators

The New Mexico State Land Office on Monday announced that it had finalized higher bonding requirements for oil and gas companies that lease state Trust lands. 

The rule goes into effect Monday, marking the end of a months-long process aimed at ensuring New Mexico taxpayers and the beneficiaries of state Trust lands do not bear the cost of oil and gas contamination or wastewater spills.

The rule increases the financial assurance levels for oil and gas operators for the first time in 40 years. The prior rule enabled operators to post between $10,000 and $25,000 to cover potentially hundreds of wells. 

Those “nominal” bonds, the State Land Office said in a news release Monday, “provided no real protection for damage to state lands,” because plugging a single abandoned well, for example, tends to cost at least $100,000. 

The new rule raises the minimum bond for oil and gas lessees to $150,000, an amount that can increase if a company has a demonstrated track record of failing to address spills or other regulatory violations, according to the State Land Office. 

“New Mexicans should never have to foot the bill to clean up messes on state lands,” New Mexico Commissioner of Public Lands Stephanie Garcia Richard, a Democratic lieutenant governor candidate in the Nov. 3 election, said in a statement. “This new rule puts much stronger financial assurances in place in the event there are unaddressed spills or a company goes belly-up and is unable to plug its wells.”

Industry groups including the New Mexico Oil and Gas Association and the Independent Petroleum Association of New Mexico previously announced their opposition to the rule during public hearings in May. The groups argued that the State Land Office does not have adequate authority to implement it. 

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Anticipating a lawsuit over the new bonding rule, the State Land Office on Monday filed a lawsuit in First Judicial District Court in Santa Fe seeking a judicial declaratory judgment affirming that the State Land Office, which manages mineral rights to more than 9 million surface acres statewide, has adequate authority to increase the bonding minimums. 

“We will not be intimidated by threats from oil and gas corporations to challenge my statutory and constitutional authority to do my job on behalf of New Mexicans,” Garcia Richard said in the statement. 

Even with the new bonding requirements, the state still faces a huge potential cost associated with plugging abandoned wells. The state Legislative Finance Committee in a 2025 report found that plugging an identified 1,400 wells could cost the state between $700 million and $1.6 billion.