Can a New Mexico state agency sign the standard US Forest Service indemnity language for a special-use permit that lets it put a cell tower or other equipment on federal land?

Plain-English summary

New Mexico needs Forest Service permits to keep cell towers and other state equipment on national forest land. The standard federal special-use authorization requires the state to indemnify the United States for any loss arising from the state's use of the land. NMDOJ told USDA in 2004 that signing that boilerplate would violate Article IX, Section 8 of the New Mexico Constitution because it would create unlimited contingent debt across future fiscal years. The 2025 opinion confirms the 2004 position is unchanged and walks through what kind of indemnity the State can provide.

The proposed solution USDA and GSD negotiated has three parts. First, capped indemnity tied to the Tort Claims Act's liability limits. Second, a commercial general liability policy with the United States named as an additional insured for communications-use leases (like cell towers). Third, self-insurance through the State's public liability fund with the United States named for non-communications uses.

The AG approved parts one and two. The TCA-limited indemnity respects the legislative waiver of sovereign immunity. Naming the United States as an additional insured on a commercial policy does not violate either the Anti-Donation Clause (because the State is receiving lease consideration) or the Anti-Debt Clause (because the policy is paid by a commercial insurer, not the State).

The AG rejected part three. New Mexico's public liability fund is statutorily limited to covering state agencies and local public bodies. Adding the USDA as a named insured under that fund, especially for amounts beyond the TCA's caps, would expand state liability beyond the legislature's sovereign-immunity waiver. That requires legislative authorization, not just an agreement between two agencies.

What this means for you

If you are at GSD's Risk Management Division

You can write a CGL insurance policy for state communications-use leases (cell towers, repeaters) on Forest Service land, with the USDA named as an additional insured. The policy must be at the agreed-on limits ($1M per occurrence, $2M aggregate). That is the cleanest path for cell-tower leases.

You cannot bind the public liability fund to indemnify the USDA on non-communications uses. The opinion treats that as outside RMD's statutory authority. If a particular lease really requires it, the path is a legislative authorization for the fund to cover the United States, with appropriate appropriation.

If you administer state cell tower or radio infrastructure on federal land

Coordinate with GSD on getting CGL coverage in place before signing or renewing a Forest Service SUA. The lease can include the TCA-limited indemnity and the additional-insured status, both of which are now formally cleared by the AG. Build the insurance premium into your operating budget under Section 41-4-20(B).

If you are at a state agency that uses non-communications-use Forest Service land

This opinion blocks the easy path of using the State's self-insurance fund to satisfy the federal indemnity requirement. Either find a different SUA structure that USDA will accept (capped indemnity within TCA plus commercial coverage), seek legislative authority for the public liability fund to cover this category, or be prepared to do without the federal land use.

If you are a state legislator

If you want New Mexico to be able to use its self-insurance fund to satisfy the USDA's indemnity demand for non-communications-use SUAs, the path is statutory amendment. The opinion identifies the precise barrier: NMSA 1978, § 41-4-23 limits the public liability fund to coverage of state agencies and local public bodies, and naming the United States exceeds that scope. A legislative authorization, plus an appropriation, would resolve the issue.

If you are an attorney for a state agency or for a municipality

The opinion is also a roadmap for indemnity-clause review more broadly. The Anti-Debt Clause analysis (Henning v. Town of Hot Springs; Hamilton Test Systems v. City of Albuquerque) and the Anti-Donation Clause analysis (Village of Deming v. Hosdreg) apply to many state-and-municipal contracts, not just Forest Service SUAs. An open-ended indemnity that obligates general revenue across future years is constitutionally suspect. A capped indemnity tied to the TCA is generally fine. Commercial insurance (paid by an insurer, not by state appropriations) sidesteps the debt question.

Common questions

Q: Can the State sign the federal SUA indemnity language unmodified?
A: No. Open-ended indemnity creates contingent debt under Article IX, Section 8.

Q: How is the modified language different?
A: Three pieces: (1) indemnity capped at TCA limits, (2) commercial insurance with USDA as additional insured for communications uses, (3) self-insurance with USDA as additional insured for non-communications uses. The AG approved (1) and (2) but rejected (3) absent legislative authorization.

Q: Does naming USDA on a commercial policy violate the Anti-Donation Clause?
A: No. The State is receiving lease consideration in exchange for the lease and indemnity package. Under Village of Deming v. Hosdreg, an exchange of value is not a "donation."

Q: What's the TCA's liability limit?
A: NMSA 1978, § 41-4-19 sets the dollar caps. The Legislature has waived sovereign immunity only up to those amounts. State agencies cannot contractually expand that waiver.

Q: Can a state agency self-insure to cover federal liability?
A: Only within the statutory authority of the public liability fund. The fund covers state agencies and local public bodies but not third parties like the United States. A statute would have to authorize that expansion.

Q: Does this affect existing SUAs?
A: The opinion is forward-looking guidance. Existing SUAs should be reviewed for the same issues. If an existing SUA contains open-ended indemnity, it may be unenforceable under Article IX, Section 8 and worth renegotiating.

Background and statutory framework

The federal indemnity requirement is at 36 C.F.R. § 251.56(d)(1), which makes any SUA holder responsible for any injury, loss, or damage the United States suffers from the holder's use or occupancy.

Article IX, Section 8 of the New Mexico Constitution prohibits the State from contracting debt beyond the current fiscal year's revenue without legislative authorization. Henning v. Town of Hot Springs, 1939-NMSC-029, and City of Santa Fe v. First National Bank in Raton, 1937-NMSC-009, applied the analogous municipal provision (Article IX, Section 12) to indemnity. Hamilton Test Systems v. City of Albuquerque, 1985-NMSC-075, articulates the "obligation beyond current revenues" test. The Idaho AG reached the same conclusion under Idaho's analogous anti-debt clause (Idaho AG Op. 19-1).

The Anti-Donation Clause (Article IX, Section 14) does not apply when the State receives consideration. Village of Deming v. Hosdreg Co., 1956-NMSC-111; City of Raton v. Arkansas River Power Authority, 600 F. Supp. 2d 1130 (D.N.M. 2008); State ex rel. Office of the State Engineer v. Lewis, 2007-NMCA-008.

The Tort Claims Act, NMSA 1978, §§ 41-4-1 to -30, defines New Mexico's limited waiver of sovereign immunity. Section 41-4-19 sets liability caps. Section 41-4-20 authorizes RMD to obtain insurance subject to TCA limits. Section 41-4-23 establishes the public liability fund and limits its scope to state agencies and local public bodies. Section 41-4-28(A) authorizes coverage of liability arising under federal law within the TCA's framework.

The Legislature waived sovereign immunity for valid written contracts (Section 37-1-23) but only "within the limitations of the Tort Claims Act" for tort liability (Section 41-4-2).

Citations and references

Federal:
- 36 C.F.R. § 251.53; § 251.56(d)(1)

State Constitution:
- N.M. Const. art. IX, §§ 8, 12, 14

Statutes:
- NMSA 1978, §§ 41-4-1 to -30 (Tort Claims Act)
- NMSA 1978, § 37-1-23

Cases:
- Henning v. Town of Hot Springs, 1939-NMSC-029
- Hamilton Test Sys., Inc. v. City of Albuquerque, 1985-NMSC-075
- Village of Deming v. Hosdreg Co., 1956-NMSC-111

Other:
- N.M. Att'y Gen. Op. No. 00-04
- N.M. Att'y Gen. Advisory Letter to Rep. Janice E. Arnold-Jones (Jan. 20, 2010)
- Idaho Att'y Gen. Op. No. 19-1 (Sept. 30, 2019)

Source

• Landing page: https://nmdoj.gov/publication/opinion/2025-05-opinion-state-constitutional-restrictions-on-indemnification-agreements-with-the-united-states-department-of-agriculture/
• Original PDF: https://nmdoj.gov/wp-content/uploads/Attorney-General-Opinion-2025-05.pdf

Original opinion text

January 14, 2025
OPINION
OF
RAÚL TORREZ
Attorney General

Opinion No. 2025-05

To:

The Honorable Robert E. Doucette, Jr., Cabinet Secretary, NM General Services
Department

Re:

Attorney General Opinion – State Constitutional Restrictions on Indemnification
Agreements with the United States Department of Agriculture
Questions

1.
Has the Department of Justice (NMDOJ) changed its position stated in a 2004 letter to the
United States Department of Agriculture (USDA) regarding the authority of a state agency to
indemnify the United States from injury, loss, or damage it might suffer as a result of claims or
judgments caused by the state's use or occupancy of federal property under special use permits
issued by the United States Forest Service?
2.
May the Risk Management Division (RMD) of the General Services Department (GSD)
add the USDA as an additional insured for the statutory coverages provided to the Department of
Information Technology (DoIT) in connection with a lease of Forest Service real property used for
cell towers and related activity?
3.
Does naming the USDA as an additional insured violate the Anti-donation Clause of Article
IX, Section 14 of the New Mexico Constitution?
4.
Does naming the USDA as an additional insured create a "contingent liability" or an
"unlawful debt" under Article IX, Section 8 of the New Mexico Constitution?
5.
Does the proposed indemnity language and insurance coverage in the special use permit
related to the lease of Forest Service real property resolve the issues raised in the 2004 letter and
questions posed above?

Conclusions
1.
No. There has been no change in the law informing NMDOJ's position in its letter of 2004.
Article IX, Section 8 of the New Mexico Constitution prohibits a state agency from agreeing to
indemnify the United States by taking on a contingent liability of an unlimited amount.
2.
The USDA can be an additional insured on commercial liability insurance, but RMD has
no authority to name the USDA as a co-insured on a certificate of coverage under the public
liability fund.
3.
Naming the USDA as an additional insured does not violate the Anti-Donation Clause
when the State receives consideration in exchange for doing so.
4.
Naming the USDA as an additional insured does not violate Article IX, Section 8 of the
New Mexico Constitution provided that the insurance is authorized by the Legislatur.
5.
The USDA's proposed indemnity language and insurance coverage partially address the
issues raised in NMDOJ's 2004 letter in that indemnity is restricted to statutory limits in the Tort
Claims Act (the TCA) and state law does not prevent the State from purchasing commercial
liability insurance with the United States as a co-insured for permits issued for communications
uses. However, the proposed language in the special use authorization related to the lease of federal
forest lands for non-communications uses conflicts with the TCA by providing for tort liability
self-insurance by the State, and potential reimbursement to the United States, in an amount that
exceeds the liability limits of the TCA for which the Legislature has not waived sovereign
immunity.
Background
Under federal law, the United States Forest Service may grant leases or permits for the use of
national forest land through the issuance of a special use authorization (SUA). 36 C.F.R. § 251.53.
This includes leases issued to states to build communication systems. Id. As a condition of using
federal land, the holder of an SUA must "indemnify the United States for any and all injury, loss,
or damage, including fire suppression costs, the United States may suffer as a result of claims,
demands, losses, or judgments caused by the holder's use or occupancy." 36 C.F.R. § 251.56(d)(1).
In January 2004, NMDOJ issued a letter to the USDA in which NMDOJ concluded that state law
prevents New Mexico from agreeing to indemnify the United States as part of an SUA.
Specifically, NMDOJ determined that an indemnity clause in an SUA would violate the
prohibition against the State contracting a debt in Article IX, Section 8 of the New Mexico
Constitution. As stated in the letter, the State could not satisfy the indemnity requirement in federal
law by agreeing to "a contingent liability of an unlimited amount that may arise in future fiscal
years." The letter concluded by suggesting that the State and the Forest Service "negotiate
appropriate risk coverage, including insurance, in connection with the special use permits that will
adequately protect the United States without requiring the State of New Mexico to run afoul of the
State constitution."

Since the issuance of this letter, the USDA and GSD worked together on proposed solutions to the
indemnity problem. They ultimately agreed on modified language that would fulfill the indemnity
requirement of 36 C.F.R. § 251.56(d)(1) in three principal ways: (1) the State would agree to
indemnify the United States for tort liability associated with the State's use of National Forest
Service lands up to the liability limits in the Tort Claims Act, NMSA 1978, § 41-4-19 (2007); (2)
the State would acquire commercial general liability (CGL) insurance for communications use
leases with a minimum amount of coverage of $1 million per occurrence and $2 million in the
aggregate and with the United States named as an additional insured; and (3) the State would
provide for self-insurance for all SUAs issued for non-communications uses of Forest Service
lands with a minimum amount of coverage of $1 million per occurrence and with the United States
named as an additional insured. At the USDA's request, GSD sought NMDOJ's answer to the
questions posed above.
Analysis
I.

The 2004 Letter

GSD's first question asks whether NMDOJ's position has changed on indemnity under Article IX,
Section 8 of the New Mexico Constitution. The 2004 letter relied on established New Mexico
precedent interpreting Article IX, Section 8, Henning v. Town of Hot Springs, 1939-NMSC-029,
44 N.M. 321, and City of Santa Fe v. First National Bank in Raton, 1937-NMSC-009, 41 N.M.
130. These cases addressed municipal obligations under the analogous anti-debt provision for
municipalities, N.M. Const. art. IX, § 12, and held that "any agreement by which a municipality
obligates itself to pay out of tax revenues, and commits itself beyond revenues for the current fiscal
year, falls within the terms of the constitutional debt restriction." Hamilton Test Sys., Inc. v. City
of Albuquerque, 1985-NMSC-075, ¶ 9, 103 N.M. 226; see Montaño v. Gabaldon, 1989-NMSC-001, 108 N.M. 94. The 2004 letter also relied on an Attorney General opinion. See N.M. Att'y
Gen. Op. No. 00-04 (concluding that a contractual provision obligating a city to indemnify a
vendor against liabilities arising from the vendors breach of the contract or city's negligence
violated the constitutional restrictions on municipal indebtedness). There has been no change in
the law since the 2004 letter that would support a different interpretation of Article IX, Section 8.
See N.M. Att'y Gen. Advisory Letter to Rep. Janice E. Arnold-Jones (Jan. 20, 2010)
("Indemnification obligations that require, for satisfaction, resort to general taxation or general
revenues can run afoul of the 'debt' provisions of the constitution.").
An Idaho Attorney General opinion addressed the constitutional implications of indemnification
in the context of an SUA issued by the USDA.
An indemnification is a contractual promise to pay for and provide
a legal defense for a claim related to the contract and made against
another contracting party. In addition, an indemnification is a
promise to pay any costs arising from the claim, such as costs
imposed through a settlement or court judgement. When the promise
will be called is indefinite. An indemnification obligation can arise
during the current Idaho budget year or in a future budget year.

Idaho Att'y Gen. Op. No. 19-1 (Sept. 30, 2019). Under a similar anti-debt provision in the Idaho
Constitution, "an indemnification obligation in a state agency contract not funded by legislative
appropriation is void." Id. The 2004 NMDOJ letter properly concluded that Article IX, Section 8
prohibits the State from agreeing to a contingent liability of unlimited amounts for an indefinite
term.
II.

The United States as an Additional Insured

GSD's second through fourth questions focus on the statutory and constitutional implications of
naming the United States as an additional insured, both in a CGL insurance policy and with self-insurance. Indemnification is a contractual obligation, and the Legislature has waived sovereign
immunity for valid written contracts. NMSA 1978, § 37-1-23 (1976). For tort liability, however,
the Legislature has waived sovereign immunity only "within the limitations of the Tort Claims
Act." NMSA 1978, § 41-4-2 (1976). A state agency cannot contractually expand the Legislature's
restriction on state tort liability.
The first component of the proposed liability language from the USDA and GSD provides that the
State's indemnity obligation is subject to "the limits of liability" under the TCA. This proposed
language is therefore consistent with the Legislature's limited waiver of sovereign immunity under
Section 41-4-2 and complies with state law.
The second component of the proposed liability language provides for the State to purchase CGL
insurance and name the United States as an additional insured. Although liability insurance
purchased by the State must be "authorized by the Tort Claims Act," NMSA 1978, § 41-4-20(C)
(1981), the TCA authorizes RMD to purchase liability insurance for state agencies, NMSA 1978,
§ 41-4-23(B)(1) (2001), and the Legislature created a separate "insurance fund" for the purchase
of insurance for the state and its employees, NMSA 1978, § 41-4-22 (1977). The TCA does not
address the naming of an additional insured on a state insurance policy, but the TCA generally
applies to all risks "for which immunity has been waived" under the TCA. Section 41-4-20(A).
Naming an additional insured does not expose the State to any greater risk under the TCA and only
obligates the State to pay for insurance costs that must be budgeted under Section 41-4-20(B).
Further, the TCA provides for coverage of liability arising under the law of the United States.
NMSA 1978, § 41-4-28(A) (1986). It thus appears that there is no statutory prohibition against the
State naming the United States as an additional insured on a CGL insurance policy purchased to
satisfy the indemnity requirements of 36 C.F.R. § 251.56(d)(1).
Nor would doing so violate the Anti-Donation Clause of the New Mexico Constitution, N.M.
Const. art. IX, § 14. This Clause states as follows:

[n]either the state nor any county, school district or municipality,
except as otherwise provided in this constitution, shall directly or
indirectly lend or pledge its credit or make any donation to or in aid
of any person, association or public or private corporation or in aid
of any private enterprise for the construction of any railroad except
as provided in [this section].
We assume for purposes of this analysis that the Federal Government and its agencies, such as
USDA, are included within the Anti-Donation Clause. The term "donation," in the context of
Article IX, Section 14, does not apply when the State receives consideration for an expenditure.
The term has instead "been applied, in its ordinary sense and meaning, as a 'gift,' an allocation or
appropriation of something of value, without consideration to a 'person, association or public or
private corporation." Village of Deming v. Hosdreg Co., 1956-NMSC-111, ¶ 36, 62 N.M. 18, 28
(emphasis added) (holding that municipal bonds or the construction of buildings for sale or lease
to industries did not violate the Anti-Donation Clause); see City of Raton v. Ark. Riv. Power Auth.,
600 F. Supp. 2d 1130, 1161 (D.N.M. 2008) ("The Court does not believe that the Anti-Donation
Clause is implicated when there is true consideration—money exchanged for a real product.");
State ex rel. Off. of the State Eng'r v. Lewis, 2007-NMCA-008, ¶¶ 49-52, 141 N.M. 1 (determining
that the purchase of water rights did not violate the Clause because the State received value in
exchange for the spending). Here, the State proposes to lease land from the USDA for cell towers
and other infrastructure and would name the United States in an insurance policy in exchange for
this consideration. Therefore, this proposal, by including true consideration, would not implicate
the Anti-Donation Clause.
Naming the United States as an additional insured on a CGL insurance policy also does not
implicate the debt restriction in Article IX, Section 8. As discussed above, this provision prevents
the government from contracting a contingent debt of an unspecified amount through future fiscal
years. An insurance policy payable by a commercial insurance company is not a debt of the state.
Self-insurance, with the United States as a named insured, is the final component of the proposed
liability language from the USDA and GSD, and the self-insurance language would apply to an
SUA issued for non-communications uses. The TCA creates New Mexico's self-insurance system,
which the Legislature labeled the public liability fund. Section 41-4-23. Under the TCA, GSD
administers the fund through RMD, and RMD uses the fund to pay for insurance, to defend and
indemnify "any state agency or employee of a state agency or a local public body for any claim or
liability covered by a valid and current certificate of coverage to the limits of such certificate of
coverage," and to pay claims and judgments covered by a certificate of coverage. Section 41-4-23(B). In other words, the public liability fund covers all liability risks associated with the State's
limited waiver of sovereign immunity for tort claims, plus all liability risks created by the laws of
other states or the United States. It applies to the liability of governmental entities, meaning "the
state or any local public body." NMSA 1978, § 41-4-3(B) (2015).
The self-insurance proposal from the USDA and GSD conflicts with the TCA in at least two
respects. First, the proposal would go beyond the statutorily authorized indemnity for the state and
local public bodies to create indemnity for the United States as an additional named insured.
Second, this indemnity would exceed the maximum liability in the TCA and would not be
restricted to the limited waiver of liability in the TCA. These two departures from the TCA would
expand the State's liability risk beyond the Legislature's waiver of sovereign immunity. As a
result, the proposed self-insurance provision would violate New Mexico law and exceed GSD's
authority.
The Idaho Attorney General reached the same conclusion with respect to a similar self-insurance
proposal by the USDA. Idaho Att'y Gen. Op. No. 19-1 ("The retained risk program cannot insure
third parties, including the USDA."). To be valid under New Mexico law, the USDA's self-insurance proposal in excess of the liability limits of the TCA would require legislative
authorization.
Conclusion
NMDOJ's analysis of the anti-debt clause in Article IX, Section 8 has not changed since 2004.
NMDOJ has reviewed the proposed liability language and has determined that it is consistent with
New Mexico law with respect to indemnity subject to the limits of liability in the TCA and with
respect to naming the United States as an additional insured on a commercial general liability
insurance policy. However, the self-insurance provision in the proposal conflicts with the TCA
and would require legislative approval of the self-insurance.
Please note that this opinion is a public document and is not protected by the attorney-client
privilege. It will be published on our website and made available to the general public.

RAÚL TORREZ
ATTORNEY GENERAL

/s/ Lawrence M. Marcus
Lawrence M. Marcus
Assistant Solicitor General