January 12, 2023

NM Supreme Court hears venue arguments in case regarding overlapping leases of state lands for cattle, wind energy

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The court battle over where to determine whether wind leases overlapping with a ranch owner’s grazing leases could impact his ability to raise cattle on state trust land reached the state Supreme Court. 

The Blanchard Corona Ranch first sued Commissioner of Public Lands Stephanie Garcia Richard in district court in Lincoln County, but Garcia Richard and her legal counsel say that Lincoln County is not the proper venue. The State Land Office then asked the New Mexico Supreme Court to find that the Lincoln County district court venue was improper. 

The New Mexico Supreme Court heard the arguments in the case on Wednesday, though no decision was made and there is no deadline for when the court must make a ruling.

If the state Supreme Court sides with the defendant’s arguments, a district court ruling that the Lincoln County venue was proper would be reversed.

“It’s basically a landlord telling a tenant ‘we’re going to issue a lease right on top of you and we don’t care what you say and we don’t have to follow our rules,’” Pete Domenici Jr., an attorney for Blanchard Corona Ranch, said. 

The Supreme Court justices were skeptical about the arguments in the case. Justice David Thomson said that state law and the lease contract may allow for wind energy to be developed on the land that the ranch owners are leasing. 

Thomson said the question is where the plaintiff gets to make their argument.

John Sullivan, an attorney with the State Land Office, said that suits against state officials must be filed either in Santa Fe or where the plaintiff resides. Because neither the ranch owners nor Garcia Richard live in Lincoln County, Sullivan said that filing the case in Lincoln County district court was improper.

Further complicating the plaintiff’s claims is the fact that the ranch has been sold. This was new information that the Supreme Court heard for the first time on Wednesday.

Domenici told the court that the plaintiffs have sold the property, which made justices question if the case is moot.

Justice Shannon Bacon pointed out that the plaintiff did not ask for money damages.

“You’re asking for declaratory relief that doesn’t affect your client at all?” Bacon said, adding that she thinks it is moot.

Domenici said his client feels as if they were “forced out of the game.”

He further argued that the state Supreme Court should rule on the proper venue to provide clarity.

Meanwhile, Sullivan said that the lease has not been reassigned so the plaintiff remains the lessee.

Sullivan said that the plaintiff has not moved to dismiss the case when they sold their ranch.

Blanchard Corona Ranch entered into a lease agreement with the State Land Office in 2019 for acreage in Lincoln County to graze cattle. The lease agreement allowed for the ranchers to graze their cattle on more than 3,000 acres of state trust land with an annual rental payment of less than $5,000, or $1.25 per acre. The lease expires in 2024.

The wind leases went into effect in 2020 and have a 55 year term. The rental payments begin at $2 per acre but increase to $12 per acre over the course of the term. The first five years of the lease term is to create a development plan and no wind turbines or infrastructure has been constructed.

The State Land Office argued that the ranch owners agreed in their contract that the same acreage could be leased for renewable energy development.

Garcia Richard issued two wind energy leases for lands overlapping with the acreage where the Blanchard Corona Ranch had a grazing lease. The ranch owners promptly filed suit.

The case reached the New Mexico Supreme Court in 2021.

The State Land Office argued that agricultural leases sometimes coincide with other leases, such as oil and gas leases. 

Most of the 6,200 oil and gas leases are on land included in an agricultural lease, Sullivan said. He further highlighted the roughly 20,000 easements related to energy development as well as the nearly 30 wind leases and 12 solar leases.

“When it comes to getting sued in state court in connection with all of this activity, the commissioner and the State Land Office want and need to know what the rules of the road are, including proper venue,” he said.

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