An effort to modernize the oversight of New Mexico's petroleum industry took a significant step forward as a bill advanced past its first committee vetting at the state's legislature. The proposed legislation aims to update portions of the state's 1930s-era Oil and Gas Act, enabling regulators to keep pace with the industry's rapid growth and address concerns related to air pollution, spills, and the cleanup of equipment and abandoned wells.
The bill secured a 6-5 vote in favor from the lead House committee on natural resources, despite facing opposition from small and moderate-sized oil producers. However, the initiative received public endorsements from industry heavyweights Occidental Petroleum and EOG Resources, indicating support from influential players in the sector.
If enacted, the bill would introduce several measures to enhance oversight and accountability. It would increase financial assurances for well plugging and cleanups, ensuring that adequate funding is available for these crucial activities. Additionally, the legislation proposes raising administrative fees and penalties for regulatory violations, discouraging non-compliance. Regulators would also gain greater authority over the transfer of ownership of wells, a common occurrence when oil and natural gas output declines.
Representative Matthew McQueen of Galisteo, one of the bill's co-sponsors, emphasized the importance of implementing safeguards during a time of record oil production. He warned that failure to do so could result in the state being burdened with immense liabilities for orphaned wells. Drawing on past experiences, McQueen cited the uranium mining industry, which left a legacy of environmental damage that New Mexico is still grappling with today.
Although the bill does represent progress for oversight and accountability, environmentalists and community advocates expressed disappointment that original provisions establishing buffer zones around schools, residences, surface waters, and critical habitats were dropped from the legislation. However, they remain committed to pushing for the reinstatement of setback requirements. The State Land Office recently imposed its own buffer zone around schools.
Currently, the Democratic-led Legislature and governor are facing a lawsuit alleging that they have failed to meet constitutional provisions for protecting against oil and gas pollution. Frustrated residents living near oil wells and environmental groups have turned to the judiciary for relief, seeking compliance with a 'pollution control clause' of the New Mexico Constitution.
Gail Evans, an attorney with the Center for Biological Diversity and lead counsel in the lawsuit, expressed disappointment with the bill, stating that it fails to impose meaningful restrictions on the oil industry and neglects to protect frontline communities from ongoing toxic pollution.
Despite concerns raised by those disappointed with the bill's dropped provisions, Representative Nathan Small of Las Cruces expressed his support for advancing the amended bill. Small, who serves as the lead House budget negotiator, emphasized the importance of maintaining crucial fiscal protections.
Ahtza Chavez, executive director of NM Native Vote, a Native American environmental and social justice group, participated in the working groups on the bill. Chavez, while acknowledging the devastating elimination of setback requirements, pledged support for the amended legislation. She emphasized that communities have been left unprotected for too long and acknowledged the need for change.
Some specific provisions of the committee-endorsed bill include an increase in financial assurance for remediation of multiple wells from a maximum of $250,000 to $10 million. The cap on daily penalties for regulatory violations would increase from $2,500 to up to $25,000, with no cumulative limit.
Those opposing the bill, like Republican state Representative Larry Scott of Hobbs, express concerns that it poses an existential threat to small-scale oil and natural gas producers. Scott, who is also a petroleum-industry engineer, worries that the implementation of increased financial assurances and penalties could potentially force small operators out of business.
Interestingly, the proposed bill also expands the state's regulatory authority to anticipate a transition away from fossil fuel production. This expansion includes overseeing other types of well activity such as geothermal projects that harness underground heat for electricity generation and emerging underground systems of kinetic energy storage.
The advancement of this bill marks a significant milestone in the efforts to modernize the oversight of New Mexico's petroleum industry. While it has garnered support from industry giants and certain lawmakers, concerns from environmentalists and advocates for affected communities persist. The second vetting and subsequent steps in the legislature will determine the fate of this endeavor to enhance regulation and accountability in the state's thriving petroleum sector.
