HOUSE BILL 276
56th legislature - STATE OF NEW MEXICO - first session, 2023
Andrea Romero and Christine Chandler
RELATING TO THE ENVIRONMENT; AMENDING THE OIL AND GAS ACT; AUTHORIZING THE OIL CONSERVATION DIVISION OF THE ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT TO REQUIRE PROOF OF INSURANCE AND FISCAL SOLVENCY WHEN SUBMITTING A PERMIT APPLICATION; PROVIDING THAT A PERMIT APPLICATION MAY BE DENIED BASED ON POOR COMPLIANCE HISTORY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 70-2-12 NMSA 1978 (being Laws 1978, Chapter 71, Section 1, as amended) is amended to read:
"70-2-12. ENUMERATION OF POWERS.--
A. The [oil conservation] division [of the energy, minerals and natural resources department] may:
(1) collect data;
(2) make investigations and inspections;
(3) examine properties, leases, papers, books and records;
(4) examine, check, test and gauge oil and gas wells, tanks, plants, refineries and all means and modes of transportation and equipment;
(5) hold hearings;
(6) provide for the keeping of records and the making of reports and for the checking of the accuracy of the records and reports;
(7) limit and prorate production of crude petroleum oil or natural gas or both as provided in the Oil and Gas Act; [and]
(8) require either generally or in particular areas certificates of clearance or tenders in connection with the transportation of crude petroleum oil or natural gas or any products of either or both oil and products or both natural gas and products;
(9) require a person submitting a registration, change of ownership or permit application pursuant to the Oil and Gas Act to provide proof of sufficient environmental insurance coverage through a valid policy issued by a third-party insurance provider approved by the division;
(10) require a person submitting a registration, change of ownership or permit application pursuant to the Oil and Gas Act to demonstrate fiscal solvency; and
(11) require an applicant or operator to undergo a fiscal solvency review that is conducted by the division and funded by the applicant or operator.
B. The [oil conservation] division may make rules and orders for the purposes and with respect to the subject matter stated in this subsection:
(1) to require dry or abandoned wells to be plugged in a way so as to confine the crude petroleum oil, natural gas or water in the strata in which it is found and to prevent it from escaping into other strata; pursuant to Section 70-2-14 NMSA 1978, the division shall require financial assurance conditioned for the performance of the rules;
(2) to prevent crude petroleum oil, natural gas or water from escaping from strata in which it is found into other strata;
(3) to require reports showing locations of all oil or gas wells and for the filing of logs and drilling records or reports;
(4) to prevent the drowning by water of any stratum or part thereof capable of producing oil or gas or both oil and gas in paying quantities and to prevent the premature and irregular encroachment of water or any other kind of water encroachment that reduces or tends to reduce the total ultimate recovery of crude petroleum oil or gas or both oil and gas from any pool;
(5) to prevent fires;
(6) to prevent "blow-ups" and "caving" in the sense that the conditions indicated by such terms are generally understood in the oil and gas business;
(7) to require wells to be drilled, operated and produced in such manner as to prevent injury to neighboring leases or properties;
(8) to identify the ownership of oil or gas producing leases, properties, wells, tanks, refineries, pipelines, plants, structures and all transportation equipment and facilities;
(9) to require the operation of wells with efficient gas-oil ratios and to fix such ratios;
(10) to fix the spacing of wells;
(11) to determine whether a particular well or pool is a gas or oil well or a gas or oil pool, as the case may be, and from time to time to classify and reclassify wells and pools accordingly;
(12) to determine the limits of any pool producing crude petroleum oil or natural gas or both and from time to time redetermine the limits;
(13) to regulate the methods and devices employed for storage in this state of oil or natural gas or any product of either, including subsurface storage;
(14) to permit the injection of natural gas or of any other substance into any pool in this state for the purpose of repressuring, cycling, pressure maintenance, secondary or any other enhanced recovery operations;
(15) to regulate the disposition, handling, transport, storage, recycling, treatment and disposal of produced water during, or for reuse in, the exploration, drilling, production, treatment or refinement of oil or gas, including disposal by injection pursuant to authority delegated under the federal Safe Drinking Water Act, in a manner that protects public health, the environment and fresh water resources;
(16) to determine the limits of any area containing commercial potash deposits and from time to time redetermine the limits;
(17) to regulate and, where necessary, prohibit drilling or producing operations for oil or gas within any area containing commercial deposits of potash where the operations would have the effect unduly to reduce the total quantity of the commercial deposits of potash that may reasonably be recovered in commercial quantities or where the operations would interfere unduly with the orderly commercial development of the potash deposits;
(18) to spend the oil and gas reclamation fund and do all acts necessary and proper to plug dry and abandoned oil and gas wells and to restore and remediate abandoned well sites and associated production facilities in accordance with the provisions of the Oil and Gas Act, the rules adopted under that act and the Procurement Code, including disposing of salvageable equipment and material removed from oil and gas wells being plugged by the state;
(19) to make well price category determinations pursuant to the provisions of the federal Natural Gas Policy Act of 1978 or any successor act and, by regulation, to adopt fees for such determinations, which fees shall not exceed twenty-five dollars ($25.00) per filing. Such fees shall be credited to the account of the [oil conservation] division by the state treasurer and may be expended as authorized by the legislature;
(20) to regulate the construction and operation of oil treating plants and to require the posting of bonds for the reclamation of treating plant sites after cessation of operations;
(21) to regulate the disposition of nondomestic wastes resulting from the exploration, development, production or storage of crude oil or natural gas to protect public health and the environment; and
(22) to regulate the disposition of nondomestic wastes resulting from the oil field service industry, the transportation of crude oil or natural gas, the treatment of natural gas or the refinement of crude oil to protect public health and the environment, including administering the Water Quality Act as provided in Subsection E of Section 74-6-4 NMSA 1978."
SECTION 2. A new section of the Oil and Gas Act is enacted to read:
"[NEW MATERIAL] PERMITS--DENIAL, SUSPENSION AND REVOCATION FOR POOR COMPLIANCE HISTORY.--
A. An applicant for a permit pursuant to the Oil and Gas Act shall file a disclosure statement with the division with the information listed in Subsection B of this section on a form developed by the division. An existing permit holder shall provide such disclosure upon request by the division or commission.
B. The division may deny a permit application or revoke or suspend a permit issued pursuant to the Oil and Gas Act if, within the ten years immediately preceding the date of submission of the permit application or any time following the date of submission of the permit application, the applicant or permittee:
(1) has knowingly misrepresented a material fact in an application for a permit;
(2) has refused to disclose the information required by the provisions of the Oil and Gas Act;
(3) has been convicted in any court of any state or the United States of:
(a) a felony relating to environmental crime; or
(b) a crime defined by state or federal statute as involving or being in restraint of trade, price fixing, bribery or fraud;
(4) owned, constructed or operated an oil or gas operation or related infrastructure without a permit required by the Oil and Gas Act, a rule issued pursuant to that act or by any state or federal law, except when the unpermitted operation or infrastructure is discovered after acquisition in the course of a timely environmental audit authorized by division or commission policy;
(5) is out of compliance with a rule, permit or order issued under the Oil and Gas Act, including an order requiring corrective action;
(6) had a permit revoked or permanently suspended for cause under the environmental laws of any state or the United States;
(7) failed to provide proof of adequate environmental insurance coverage from a third-party insurance provider approved by the division; or
(8) failed to provide proof of fiscal solvency.
C. In making a finding under Subsection B of this section, the division or commission may consider aggravating and mitigating factors.
D. In making a finding under Paragraph (3), (4) or (5) of Subsection B of this section, the division or the commission may consider the compliance history of a person who is substantially affiliated with the applicant or permittee.
E. If an applicant or permittee whose permit application is being considered for denial or whose permit is being considered for revocation or suspension pursuant to Subsection A of this section has submitted a corrective action plan that satisfactorily demonstrates that the basis for permit denial, suspension or revocation shall be resolved and includes actions the applicant or permittee shall take to ensure future compliance, the secretary of energy, minerals and natural resources or the director of the division may, after public notice and an opportunity for the public to comment on the plan during a public comment period of at least thirty days, approve the plan in writing and allow the applicant or permittee to operate for a reasonable period of time.
F. No ruling shall be made on permit issuance, suspension or revocation without an opportunity for a public hearing at which all interested persons shall be given a reasonable chance to submit data, views or arguments orally or in writing and to examine witnesses testifying at the hearing; provided, however, that the division may, pursuant to Section 70-2-31 NMSA 1978, issue a temporary cessation order whenever the division determines that the violation is causing or will cause an imminent danger to public health or safety or a significant imminent environmental harm.
G. The authority to deny a permit application or revoke a permit under this section includes the authority to deny or revoke a registration, change of ownership or other authorization to operate under the Oil and Gas Act."
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