Alternative energy and CCUS in New Mexico

by William E. “Bill” Hackett, CPL

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When it comes to practicing energy land management in a state with which you are unfamiliar, one must pay particular attention to how and what is required by licensing statute and/or regulation to legally carry out your work assignment as it relates to procuring rights to develop and produce energy involving the surface and mineral estate. Previous articles in this series have successfully addressed the desire of many AAPL members to be able to perform traditional roles of landwork in the emerging world of alternative energy and carbon capture, utilization and storage. I want to emphasize that it is of paramount importance that before you “step out of bounds,” please be sure that you — and your employer/client — have a clear understanding of the licensure landscape to successfully conduct your activities.1

For the past several years my firm has been involved in title research and reports involving mineral estate and leasehold ownership for projects of industrial solar development in multiple counties in New Mexico.2 As landmen know, the owners of the mineral estate — if severed from the surface estate — must be identified and approached for the purpose of negotiating and obtaining surface use and accommodation agreements prior to a title insurance underwriter issuing a title insurance policy with minerals coverage and/ or the lender permitting the project construction funding to occur.

More recently a new client approached me to not only identify prospective parcels for development but also to negotiate and contract for long-term surface leases with the owners. Fortunately for me I was able to receive good counsel from a fellow AAPL member — who is both a landman and a qualifying real estate broker in New Mexico — who I recruited to assist with site research. That counsel was to be sure that all contact with surface owner negotiation be attempted and accomplished by her as a qualifying real estate broker; otherwise I would be in violation of New Mexico licensure requirements. Subsequent communication with a New Mexico licensed real estate attorney confirmed the counsel given to me was spot on. My client company had never worked in New Mexico, and its corporate legal counsel was not familiar with New Mexico statutes for licensure of real estate brokers. This reputable community solar development firm has a successful track record in other states but had not been required to engage licensed individuals before.

Now down to the details. In New Mexico the code is clear that when dealing with matters of obtaining rights to either purchase or lease the surface rights, one must be in compliance with licensure under the 2021 New Mexico Statutes Chapter 61 — Professional and Occupational Licenses, Article 29 — Real Estate Brokers and Salesmen.

Let’s take a look at Section 61- 29-1 Prohibitions: “It is unlawful for a person to engage in the business or act in the capacity of real estate associate broker or qualifying broker within New Mexico without a license issued by the commission. A person who engages in the business or acts in the capacity of an associate broker or a qualifying broker in New Mexico, except as otherwise provided in Section 61-29-2 NMSA 1978, with or without a New Mexico real estate broker’s license, has thereby submitted to the jurisdiction of the state and to the administrative jurisdiction of the commission and is subject to all penalties and remedies available for a violation of any provision of Chapter 61, Article 29 NMSA 1978.”

To better understand permitted activities, let’s review Section 61- 29-2 Definitions and Exceptions, Section C (8), which is the provision of this Section that identifies where the exceptions do not apply: “persons who deal exclusively in mineral leases or the sale or purchase of mineral rights or royalties in any case in which the fee to the land or the surface rights are in no way involved in the transaction.”

Clearly, traditional activities of negotiating and obtaining mineral leases and the activities involved in negotiating the purchase and/or sale of mineral rights are excluded however, obtaining rights in the fee or surface rights does require valid licensure. Reputable companies providing traditional right of way services in New Mexico require their agents be licensees pursuant to New Mexico law. But land brokerages and individuals who are attempting to transition from traditional field landwork or even those in corporate positions must be aware of the potential liability if operating outside local law.

Another developing alternative energy source of power requires the rights to inject nonhydrocarbons into vacated pore space — geothermal and hydrogen generation and CCUS. In order to understand with whom negotiation should take place, let’s look beyond solar, wind and transmission and address pore space ownership. In New Mexico the pore space is considered to be part of the surface estate thus activities to obtain rights to inject or store in the vacated pore space must be negotiated with the surface owner — not the mineral estate owner or the mineral leasehold owner.

As of the date of this article, no case law has been identified whereby punishment or fines for those who violated licensure in the practice of alternative energy land management were exacted nor contracts deemed to be invalid or set aside. The enforcement arm of the New Mexico Real Estate Commission is severely understaffed and underfunded, which creates a void in being able to adequately and proactively oversee enforcement.

Bottomline for this article: If you choose to practice in New Mexico, please be sure that you are conforming with the necessary licensure requirements.

1. View real estate license requirements by state at com/real-estate- license-requirements-by-state-chart.
2. Read about activities requiring a New Mexico real estate license at com/academy/ lesson/new-mexico-real-estate-licenses-activities-exemptions.html#:~:text=Penalty%20 for%20Unlicensed%20Real%20Estate,and%2018%20months%20in%20jail.

ABOUT THE AUTHOR

William E. “Bill” Hackett, CPL, is managing member of WCM Resources LLC, Portal 2 Energy LLC and P2E Real Estate Services LLC, which is affiliated with Walt Arnold/SVN Commercial Real Estate Brokerage in Albuquerque, New Mexico. Hackett has served as AAPL director for both the San Juan Basin Landman’s Association and the New Mexico Landmen’s Association and is a past chairman of the Public Lands and Access Committee and the Legislative/ Regulatory Committee. For many years he chaired the Santa Fe Land Institute and Santa Fe Field Landman Seminar. Currently Hackett is a member of AAPL’s Governmental Affairs Committee and Strategic Planning Committee.

This article was originally published in the July/August 2024 issue of the Landman magazine. Reprinted with permission.