New Mexico Administrative Code › Title 19 - NATURAL RESOURCES AND WILDLIFE › Chapter 2 - STATE TRUST LANDS PART 24 CULTURAL PROPERTIES PROTECTION › Part 6 - RELATING TO COAL LEASES ON STATE LAND › Section 19.2.6.26 - FORM OF LEASE

Current through Register Vol. 35, No. 13, July 16, 2024
Coal leases shall be of the following form and shall contain
				  the following provisions:
(SAMPLE ONLY)
NEW MEXICO STATE LAND OFFICE
COAL MINING LEASE
APPLICATION NO. ________________________ LEASE NO.
				  ___________________________
THIS AGREEMENT, dated this ___________ day of
				  ______________________________________, ______, made and entered into between
				  the STATE OF NEW MEXICO, acting by and through the undersigned, its
				  COMMISSIONER OF PUBLIC LANDS, hereinafter called the "lessor", and
				  ______________________________,
hereinafter called the "lessee".
WITNESSETH:
WHEREAS, lessee has filed in the New Mexico State Land Office
				  an application for a coal lease for the purpose of exploring for, mining,
				  developing, and producing coal upon the lands hereinafter described, and has
				  tendered _________________________________ ($ _______________ ), for the first
				  annual rental payment, together with the application fee as set forth in the
				  schedule of fees, and ________________ ($ _________ ), for a bonus;
NOW THEREFORE, in consideration of the above tender, receipt
				  of which is acknowledged, and the COVENANTS herein, lessor hereby grants, and
				  leases to lessee, exclusively, for the sole and only purpose of exploring for,
				  mining, developing, producing, and removing coal in, upon or under the
				  following described lands in _______________________ County, New Mexico:
together with the right to use so much of the surface as is
				  reasonably necessary to explore for, mine, develop, produce, and remove the
				  coal.
TO HAVE AND TO HOLD the said lands and privileges granted
				  hereunder for a primary term of five (5) years.
IN CONSIDERATION OF THE PREMISES, THE PARTIES COVENANT AND
				  AGREE AS FOLLOWS:
1. As royalty,
				lessee shall pay to lessor twelve and one-half percent (12 1/2%) of the
				proceeds received from the sale of all surface-mined coal or, at the option of
				the lessor, the market value thereof, and eight percent (8%) of the proceeds
				received from the sale of all underground-mined coal or, at the option of the
				lessor, the market value thereof. The royalty rate may be reduced by the lessor
				upon a showing by the lessee that the leases for non-state coal in the same
				logical mining unit provide for a lower rate or that the lands leased hereunder
				will be bypassed and not mined without a rate reduction. Such royalty is due in
				full on the last day of the month following the calendar month of sale and
				shall be reported to the lessor, together with such other information as may be
				required by the lessor, upon forms prescribed by the lessor. In the event of a
				dispute as to the amount of royalty due, the lessee shall assume the burden of
				proof in any court action arising out of such dispute.
2. As rental, lessee shall pay to lessor
				annually on or before each anniversary date of this lease the sum of five
				dollars ($5.00) per acre or fraction thereof, such rental payments to continue
				so long as this lease shall remain in force.
3. Lessee agrees to pay interest on
				delinquent royalty and rental payments at the rate of one percent (1%) per
				month, or fraction thereof, accruing from the date said payment becomes
				due.
4. If, at the end of the
				primary term, the lessee has submitted a mine plan, which is not subsequently
				disapproved by the lessor within three (3) months after submission, and the
				lessee has either incorporated the land leased hereunder with adjacent land
				into a logical mining unit or has shown to the satisfaction of the lessor that
				the adjacent land is federal land which has not been available for coal leasing
				but that the lessee has incurred substantial costs in developing the leased
				land, then this lease shall not expire at the end of the primary term but shall
				continue for a secondary term of an additional five (5) years.
5. If, at the end of the secondary term, the
				lessee is producing coal at an average annual rate of either one percent (1%)
				of the estimated recoverable reserves from the leased lands or one percent (1%)
				of the estimated recoverable reserves from the logical mining unit, then this
				lease shall not expire but shall continue as long as the one percent (1%)
				production is maintained. Provided, that, for purposes of determining if the
				one percent (1%) annual production has been maintained during any year after
				the end of the second (2nd) year following the beginning of production, the
				annual production averaged over the previous three (3) years, shall be used.
				For purposes of this paragraph, annual rates of production shall be measured
				from lease anniversary date to lease anniversary date.
6. In lieu of actual production at or after
				the end of the secondary term hereof, lessee may prevent the expiration of this
				lease by the timely payment of an advance royalty equal to the estimated
				royalty obligation which would be due if one percent (1%) of the recoverable
				reserves in the lands leased hereunder were produced. Payment of such advance
				royalty on or before a lease anniversary date will act to prevent the
				expiration of this lease until the next ensuing lease anniversary date;
				provided, that this lease shall not be extended for more than ten (10) years by
				payment of advance royalties. Any credit later taken in any month for advance
				royalties shall not exceed fifty percent (50%) of the actual production royalty
				due for that month.
7. The lessee,
				with the written approval of the lessor, may assign or sublet this lease in
				whole or in part; provided, however, that no assignment of an undivided
				interest nor any assignment or sublease of less than a legal subdivision shall
				be recognized or approved by the lessor. Provided further, however, the lessee
				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, and it shall not be necessary for any such contracts, agreements, or
				other instruments to be approved by the lessor; but nothing herein contained
				shall relieve the lessee from complying with any of the terms or provisions
				hereof.
8. Lessee, including
				lessee's heirs, assigns, agents, and contractors shall at lessee's own expense
				fully comply with and conform to accepted operational standards and practices
				in general use in the industry and all laws, regulations, rules, ordinances,
				and requirements of the city, county, state, federal authorities and agencies,
				in all matters and things affecting the premises and operations thereon which
				may be enacted or promulgated under the governmental police powers pertaining
				to the public health and welfare, including but not limited to conservation,
				reclamation, sanitation, aesthetics, pollution, cultural properties, fire, and
				ecology. Such agencies are not to be deemed third (3rd) party beneficiaries
				hereunder; however, this clause is enforceable by the lessor in the same manner
				as other covenants of this lease.
9. The lessor or lessor's authorized
				representative shall have the right to enter the leased lands for the purpose
				of measuring the cubical contents of every opening from which coal has been
				extracted and to otherwise inspect the leased lands to ensure that proper
				royalties have been paid. The lessor or lessor's representative shall have the
				right to inspect all records, books, or accounts pertaining to the mining,
				extraction, transportation, and marketing of coal produced from the leased
				lands and, at the request of the lessor, the lessee shall furnish contracts,
				reports, samples, logs, assays, or cores within reasonable bounds as the lessor
				may determine to be necessary to the proper administration of the leased lands
				and this lease. In addition, lessee shall furnish annually and at such other
				times as the lessor may require, plats, maps, or tracings, clearly and
				accurately showing all development work upon the leased lands, and other
				related information, with a report as to all buildings, structures, or other
				work placed in or upon the leased lands, and a statement as to the amount and
				grade of coal produced and sold.
10. The value of any unpaid royalty shall
				become a prior lien upon the production from the leased lands and the
				improvements situated thereon.
11.
				Before commencing excavation operations or development upon the leased lands,
				the lessee shall execute and file with the lessor a good and sufficient bond or
				other appropriate surety in an amount to be fixed at that time by the lessor
				and based upon the approved mine plan to:
A.
				Guarantee the performance of all covenants and obligations under this lease,
				including the obligation to pay royalties;
B. Ensure that all aspects of mining
				operations and reclamation operations are conducted in conformity with the mine
				permit issued by the Mining and Minerals Division of the Energy, Minerals and
				Natural Resources Department pursuant to the Surface Mining Act; and
C. Ensure compensation for damage to the
				surface or surface improvements in the absence of an agreement between the
				lessee and any surface owner.
A bond filed with the Mining and Minerals Division of the
				  Energy, Minerals and Natural Resources Department pursuant to the Surface
				  Mining Act will satisfy the requirements of Subsection B of this Paragraph
				  unless the lessor, in the lessor's discretion, determines that the bond filed
				  with the Mining and Minerals Division is insufficient. Any bond, filed with the
				  lessor pursuant to the provisions of this Paragraph, shall be released by the
				  lessor upon a showing that lessee has complied with the obligations as
				  specified in Subsections A, B, and C of this Paragraph.