Northern New Mexico Democrats propose fee increase, penalties on oil and gas companies

A pair of Democrat lawmakers sought to crack down on oil and gas industry pollution and abandoned wells via a bill introduced during the ongoing 2024 Legislative Session.

House Bill 133 would amend New Mexico’s Oil and Gas Act to increase required bonding payments oil companies pay to fund the cleanup of their wells should they go abandoned, while also driving up several other fees paid to extract fossil fuels in the state.

The bill was pre-filed ahead of the 30-day Legislative Session – which started on Jan. 16 – by sponsors Reps. Kristina Ortez (D-42) of Taos and Matthew McQueen (D-50) of Santa Fe, and was assigned to the House Energy, Environment and Natural Resources Committee where it was awaiting a hearing as of Monday.

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If passed, the bill would up the “blanket" bonding rate applied to all the wells owned by a company in New Mexico from $250,000 to $10 million, intended to better reflect the cost of full remediation.

The New Mexico Oil Conservation Division (OCD) estimated there to be about 1,700 “orphaned” wells in the state, abandoned by operators when they are deemed financially unviable.

That typically means the State is forced to pay for the work using public dollars. New Mexico also recently received federal grant funds to contract with companies to plug the wells and restore the environment around them.

The bill would also give the OCD authority to block future permits to oil and gas companies with a history of abandoning wells in New Mexico and violating the Oil and Gas Act.

A report from the Western Environmental Law Center said the average cost of a single well was about $100,000, meaning the cap of $250,000 for all a company’s wells was “inadequate,” the report read, to prevent taxpayer liability.

Civil penalties for such violations would also be increased, should the bill pass, from $2,500 per day of violation to $10,000 a day.

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If a violation is deemed to cause “significant environmental harm” or risk public health, the penalties would increase from $10,000 to $25,000 per day, and a cap of $200,000 in fines would be removed from state statutes, the bill read.

The bill would also increase fees paid when operators request a hearing before the OCD to debate violations from $500 to $1,500

Fees for applications to permit drilling would also be tripled from $500 to $1,500, under the bill, while language in the legislation also allowed the fees to be adjusted in the future in response to inflation and market conditions based on the consumer price index.

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HB 133 would also codify into law a policy enacted at the OCD in 2021, requiring oil and gas operators capture at least 98 percent of gas produced during extraction by 2026.

Another clause would add setbacks into state law, requiring oil and gas facilities including well pads, tank batteries and compressor stations be at least 2,250 feet from health and corrections facilities, homes and schools.

Another setback of 660 feet would be applied to facilities near streams, lakes, ponds or wetlands, and another 300 feet setback would be enacted for any other bodies of surface water, along with state parks, lands and critical habitats for endangered species.

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Tannis Fox, senior attorney with the Western Environmental Law Center said the bill would create a more just system of regulating oil and gas operations in New Mexico and criticized industry opponents of the measure as putting profits ahead of public safety.

“They’ve put corporate profits over the interests of New Mexicans who have suffered serious public health burdens from oil and gas pollution and harm to their lands and waters,” Fox said. “The least they can do is provide assurances that they’ll clean up their mess without burdening taxpayers and be a good neighbor to people and communities.”

As the lawmaking session began, trade group the New Mexico Oil and Gas Association (NMOGA) argued operators were already taking the needed steps to limit air pollution and pointed to increased state revenue from fossil fuels they said could be risked by legislation deemed unfriendly to extraction.

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NMOGA spokesman Frederick Bermudez said it was “safe to say” the industry was already capturing 95 percent of produced gas and “likely over” the 98 percent threshold that would be required by HB 133.

Meanwhile, oil and gas revenue accounted for much of New Mexico’s $3.5 billion in “new money” reported this year be state economists.

“The New Mexico oil and gas industry set record production in 2023, fueling the increase in the state’s revenue while meeting stringent environmental regulations intended to further protect public health and the environment, said NMOGA President Missi Currier in a statement.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.

This article originally appeared on Carlsbad Current-Argus: Northern New Mexico Democrats propose more fees, penalties to drill