0001| SENATE BILL 245 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, | 0003| 1996 | 0004| INTRODUCED BY | 0005| TOM RUTHERFORD | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO ENERGY; AMENDING SECTIONS OF THE NMSA 1978 TO | 0013| PROVIDE FOR THE RESTORATION AND REMEDIATION OF ABANDONED WELL | 0014| SITES. | 0015| | 0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0017| Section 1. Section 7-30-4 NMSA 1978 (being Laws 1959, | 0018| Chapter 53, Section 4, as amended) is amended to read: | 0019| "7-30-4. OIL AND GAS CONSERVATION TAX LEVIED--COLLECTED BY | 0020| DEPARTMENT--RATE--INTEREST OWNER'S LIABILITY TO STATE--INDIAN | 0021| LIABILITY.-- | 0022| A. There is levied and shall be collected by the | 0023| department a tax on all products ~~[which]~~ that are severed | 0024| and sold. The measure and rate of the tax shall be nineteen | 0025| one-hundredths of one percent of the taxable value of sold | 0001| products. Every interest owner shall be liable for this tax to | 0002| the extent of the owner's interest in the value of such products | 0003| or to the extent of the owner's interest as may be measured by | 0004| the value of such products. ~~[Provided]~~ Any Indian tribe, | 0005| Indian pueblo or Indian shall be liable for this tax to the ex- | 0006| tent authorized or permitted by law. | 0007| B. In the event the unencumbered balance in the oil | 0008| and gas reclamation fund equals or exceeds one million dollars | 0009| ($1,000,000) for any one-month period computed after receipt of | 0010| the tax for that month, then the rate of the tax levied by this | 0011| section shall be eighteen one-hundredths of one percent | 0012| beginning with the first day of the second month following the | 0013| month in which the unencumbered balance equaled or exceeded one | 0014| million dollars ($1,000,000), and no funds collected by the tax | 0015| with respect to any period for which the rate is eighteen one-hundredths of one percent shall be distributed to the oil and | 0016| gas reclamation fund. After having been reduced to eighteen | 0017| one-hundredths of one percent, the rate of the tax imposed by | 0018| this section shall remain at that rate until the unencumbered | 0019| balance in the oil and gas reclamation fund is less than or | 0020| equal to ~~[five hundred thousand dollars ($500,000)]~~ eight | 0021| hundred thousand dollars ($800,000) for any one-month period | 0022| computed after receipt of the tax for that month, in which event | 0023| the rate of the tax levied by this section shall be increased to | 0024| nineteen one-hundredths of one percent beginning with the first | 0025| day of the second month following the month in which the | 0001| unencumbered balance ~~[equalled]~~ equaled or was less than | 0002| ~~[five hundred thousand dollars ($500,000)]~~ eight hundred | 0003| thousand dollars ($800,000), and the additional funds with re- | 0004| spect to any period for which the rate is nineteen one-hundredths of one percent shall be distributed to the oil and | 0005| gas reclamation fund in accordance with the provisions of the | 0006| Tax Administration Act. | 0007| C. The department shall notify taxpayers of any change | 0008| in the rate of tax imposed by this section." | 0009| Section 2. Section 70-2-12 NMSA 1978 (being Laws 1978, | 0010| Chapter 71, Section 1, as amended) is amended to read: | 0011| "70-2-12. ENUMERATION OF POWERS.-- | 0012| A. Included in the power given to the oil conservation | 0013| division of the energy, minerals and natural resources | 0014| department is the authority to collect data; to make | 0015| investigations and inspections; to examine properties, leases, | 0016| papers, books and records; to examine, check, test and gauge oil | 0017| and gas wells, tanks, plants, refineries and all means and modes | 0018| of transportation and equipment; to hold hearings; to provide | 0019| for the keeping of records and the making of reports and for the | 0020| checking of the accuracy of the records and reports; to limit | 0021| and prorate production of crude petroleum oil or natural gas or | 0022| both as provided in the Oil and Gas Act; to require either | 0023| generally or in particular areas certificates of clearance or | 0024| tenders in connection with the transportation of crude petroleum | 0025| oil or natural gas or any products of either or both oil and | 0001| products or both natural gas and products. | 0002| B. Apart from any authority, express or implied, | 0003| elsewhere given to or existing in the oil conservation division | 0004| by virtue of the Oil and Gas Act or the statutes of this state, | 0005| the division is authorized to make rules, regulations and orders | 0006| for the purposes and with respect to the subject matter stated | 0007| in this subsection: | 0008| (1) to require dry or abandoned wells to be | 0009| plugged in a way to confine the crude petroleum oil, natural gas | 0010| or water in the strata in which it is found and to prevent it | 0011| from escaping into other strata; the division shall require a | 0012| cash or surety bond in a sum not to exceed fifty thousand | 0013| dollars ($50,000) conditioned for the performance of such | 0014| regulations; | 0015| (2) to prevent crude petroleum oil, natural gas | 0016| or water from escaping from strata in which it is found into | 0017| other strata; | 0018| (3) to require reports showing locations of all | 0019| oil or gas wells and for the filing of logs and drilling records | 0020| or reports; | 0021| (4) to prevent the drowning by water of any | 0022| stratum or part thereof capable of producing oil or gas or both | 0023| oil and gas in paying quantities and to prevent the premature | 0024| and irregular encroachment of water or any other kind of water | 0025| encroachment ~~[which]~~ that reduces or tends to reduce the | 0001| total ultimate recovery of crude petroleum oil or gas or both | 0002| oil and gas from any pool; | 0003| (5) to prevent fires; | 0004| (6) to prevent "blow-ups" and "caving" in the | 0005| sense that the conditions indicated by such terms are generally | 0006| understood in the oil and gas business; | 0007| (7) to require wells to be drilled, operated and | 0008| produced in such manner as to prevent injury to neighboring | 0009| leases or properties; | 0010| (8) to identify the ownership of oil or gas | 0011| producing leases, properties, wells, tanks, refineries, | 0012| pipelines, plants, structures and all transportation equipment | 0013| and facilities; | 0014| (9) to require the operation of wells with | 0015| efficient gas-oil ratios and to fix such ratios; | 0016| (10) to fix the spacing of wells; | 0017| (11) to determine whether a particular well or | 0018| pool is a gas or oil well or a gas or oil pool, as the case may | 0019| be, and from time to time to classify and reclassify wells and | 0020| pools accordingly; | 0021| (12) to determine the limits of any pool | 0022| producing crude petroleum oil or natural gas or both and from | 0023| time to time redetermine the limits; | 0024| (13) to regulate the methods and devices employed | 0025| for storage in this state of oil or natural gas or any product | 0001| of either, including subsurface storage; | 0002| (14) to permit the injection of natural gas or of | 0003| any other substance into any pool in this state for the purpose | 0004| of repressuring, cycling, pressure maintenance, secondary or any | 0005| other enhanced recovery operations; | 0006| (15) to regulate the disposition of water | 0007| produced or used in connection with the drilling for or | 0008| producing of oil or gas or both and to direct surface or | 0009| subsurface disposal of the water in a manner that will afford | 0010| reasonable protection against contamination of fresh water | 0011| supplies designated by the state engineer; | 0012| (16) to determine the limits of any area | 0013| containing commercial potash deposits and from time to time | 0014| redetermine the limits; | 0015| (17) to regulate and, where necessary, prohibit | 0016| drilling or producing operations for oil or gas within any area | 0017| containing commercial deposits of potash where the operations | 0018| would have the effect unduly to reduce the total quantity of the | 0019| commercial deposits of potash which may reasonably be recovered | 0020| in commercial quantities or where the operations would interfere | 0021| unduly with the orderly commercial development of the potash | 0022| deposits; | 0023| (18) to spend the oil and gas reclamation fund | 0024| and do all acts necessary and proper to plug dry and abandoned | 0025| oil and gas wells and to restore and remediate abandoned well | 0001| sites and associated production facilities in accordance with | 0002| the provisions of the Oil and Gas Act, the rules and | 0003| regulations adopted under that act and the Procurement Code, | 0004| including disposing of salvageable equipment and material | 0005| removed from oil and gas wells being plugged by the state; | 0006| (19) to make well price category determinations | 0007| pursuant to the provisions of the Natural Gas Policy Act of 1978 | 0008| or any successor act and, by regulation, to adopt fees for such | 0009| determinations, which fees shall not exceed twenty-five dollars | 0010| ($25.00) per filing. Such fees shall be credited to the account | 0011| of the oil conservation division by the state treasurer and may | 0012| be expended as authorized by the legislature; | 0013| (20) to regulate the construction and operation | 0014| of oil treating plants and to require the posting of bonds for | 0015| the reclamation of treating plant sites after cessation of | 0016| operations; | 0017| (21) to regulate the disposition of nondomestic | 0018| wastes resulting from the exploration, development, production | 0019| or storage of crude oil or natural gas to protect public health | 0020| and the environment; and | 0021| (22) to regulate the disposition of nondomestic | 0022| wastes resulting from the oil field service industry, the | 0023| transportation of crude oil or natural gas, the treatment of | 0024| natural gas or the refinement of crude oil to protect public | 0025| health and the environment, including administering the Water | 0001| Quality Act as provided in Subsection E of Section 74-6-4 NMSA | 0002| 1978." | 0003| Section 3. Section 70-2-38 NMSA 1978 (being Laws 1977, | 0004| Chapter 237, Section 5, as amended) is amended to read: | 0005| "70-2-38. OIL AND GAS RECLAMATION FUND ADMINISTERED--PLUGGING WELLS ON FEDERAL LAND--RIGHT OF INDEMNIFICATION--ANNUAL | 0006| REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.-- | 0007| A. The oil and gas reclamation fund shall be | 0008| administered by the oil conservation division of the energy, | 0009| minerals and natural resources department. Expenditures from | 0010| the fund may be used by the director of the division for the | 0011| purpose of employing the necessary personnel to survey abandoned | 0012| wells, well sites and associated production facilities and to | 0013| prepare plans for the plugging of abandoned wells ~~[which]~~ | 0014| that have not been plugged or ~~[which]~~ that have been | 0015| improperly plugged and for the restoration and remediation of | 0016| abandoned well sites and associated production facilities that | 0017| have not been properly restored and remediated. The director, | 0018| as funds become available in the oil and gas reclamation fund, | 0019| shall reclaim and properly plug all abandoned wells and shall | 0020| restore and remediate abandoned well sites and associated | 0021| production facilities in accordance with the provisions of the | 0022| Oil and Gas Act and the rules and regulations promulgated | 0023| pursuant to that act. The division may order wells plugged and | 0024| well sites and associated production facilities restored and | 0025| remediated on federal lands on which there are no bonds running | 0001| to the benefit of the state in the same manner and in accordance | 0002| with the same procedure as with wells drilled on state and fee | 0003| land, including utilizing funds from the oil and gas reclamation | 0004| fund to pay the cost of plugging. When the costs of plugging a | 0005| well drilled on federal mineral leases or restoring and | 0006| remediating well sites and associated production facilities are | 0007| paid from the oil and gas reclamation fund, the division is | 0008| authorized to bring a suit against the operator or the owner of | 0009| the minerals under the tract, or both, in the district court of | 0010| the county in which the well is located for indemnification for | 0011| all costs incurred by the division in plugging the well or | 0012| restoring and remediating the well site and associated | 0013| production facilities. Any funds collected pursuant to a | 0014| judgment in a suit for indemnification brought under the Oil and | 0015| Gas Act shall be deposited in the oil and gas reclamation fund. | 0016| B. The director of the oil conservation division of | 0017| the energy, minerals and natural resources department shall | 0018| make an annual report to the secretary of energy, minerals and | 0019| natural resources, the governor and the legislature on the use | 0020| of the oil and gas reclamation fund. | 0021| C. All contracts for well plugging shall be entered | 0022| into in accordance with the provisions of the Procurement Code. | 0023| Any contractor employed by the ~~[division]~~ oil conservation | 0024| division of the energy, minerals and natural resources | 0025| department to plug a well is authorized to sell for salvage the | 0001| equipment and material ~~[which]~~ that is removed from the well | 0002| in plugging it." | 0003| - 10 - | 0004| | 0005| FORTY-SECOND LEGISLATURE | 0006| SECOND SESSION, 1996 | 0007| | 0008| | 0009| JANUARY 24, 1996 | 0010| | 0011| Mr. President: | 0012| | 0013| Your COMMITTEES' COMMITTEE, to whom has been referred | 0014| | 0015| SENATE BILL 245 | 0016| | 0017| has had it under consideration and finds same to be GERMANE, PURSUANT | 0018| TO CONSTITUTIONAL PROVISIONS, and thence referred to the | 0019| CONSERVATION COMMITTEE. | 0020| | 0021| Respectfully submitted, | 0022| | 0023| | 0024| | 0025| | 0001| __________________________________ | 0002| SENATOR MANNY M. ARAGON, Chairman | 0003| | 0004| | 0005| | 0006| Adopted_______________________ Not Adopted_______________________ | 0007| (Chief Clerk) (Chief Clerk) | 0008| | 0009| | 0010| Date ________________________ | 0011| | 0012| | 0013| | 0014| S0245CC1 | 0015| | 0016| FORTY-SECOND LEGISLATURE | 0017| SECOND SESSION, 1996 | 0018| | 0019| | 0020| February 6, 1996 | 0021| | 0022| Mr. President: | 0023| | 0024| Your CONSERVATIVE COMMITTEE, to whom has been referred | 0025| | 0001| SENATE BILL 245 | 0002| | 0003| has had it under consideration and reports same with recommendation that | 0004| it DO PASS, and thence referred to the FINANCE COMMITTEE. | 0005| | 0006| Respectfully submitted, | 0007| | 0008| | 0009| | 0010| __________________________________ | 0011| TOM R. BENAVIDES, Chairman | 0012| | 0013| | 0014| | 0015| Adopted_______________________ Not Adopted_______________________ | 0016| (Chief Clerk) (Chief Clerk) | 0017| | 0018| | 0019| Date ________________________ | 0020| | 0021| | 0022| The roll call vote was 5 For 0 Against | 0023| Yes: 5 | 0024| No: 0 | 0025| Excused: Rutherford, Tsosie, Vernon, Wray | 0001| Absent: 0 | 0002| | 0003| | 0004| SO245CO1 | 0005| | 0006| | 0007| | 0008| FORTY-SECOND LEGISLATURE SB 245/a | 0009| SECOND SESSION, 1996 | 0010| | 0011| | 0012| February 10, 1996 | 0013| | 0014| Mr. President: | 0015| | 0016| Your FINANCE COMMITTEE, to whom has been referred | 0017| | 0018| SENATE BILL 245 | 0019| | 0020| has had it under consideration and reports same with recommendation that | 0021| it DO PASS, amended as follows: | 0022| | 0023| 1. On page 2, line 20, remove the brackets and line-through. | 0024| | 0025| 2. On page 2, lines 20 and 21, strike the underscored language in | 0001| its entirety. | 0002| | 0003| 3. On page 3, lines 1 and 2, after "than" remove the brackets and | 0004| line-through. | 0005| | 0006| 4. On page 3, lines 2 and 3, strike the underscored language in | 0007| its entirely. | 0008| | 0009| | 0010| Respectfully submitted, | 0011| | 0012| | 0013| | 0014| __________________________________ | 0015| Ben D. Altamirano, Chairman | 0016| | 0017| | 0018| | 0019| Adopted_______________________ Not Adopted_______________________ | 0020| (Chief Clerk) (Chief Clerk) | 0021| | 0022| | 0023| Date ________________________ | 0024| | 0025| | 0001| | 0002| | 0003| | 0004| | 0005| | 0006| | 0007| The roll call vote was 9 For 0 Against | 0008| Yes: 9 | 0009| No: 0 | 0010| Excused: Duran, Ingle, Kidd, Kysar | 0011| Absent: None | 0012| | 0013| | 0014| S0245FC1 .112041.1 | 0015| | 0016| State of New Mexico | 0017| House of Representatives | 0018| | 0019| FORTY-SECOND LEGISLATURE | 0020| SECOND SESSION, 1996 | 0021| | 0022| | 0023| February 14, 1996 | 0024| | 0025| | 0001| Mr. Speaker: | 0002| | 0003| Your ENERGY AND NATURAL RESOURCES COMMITTEE, to whom | 0004| has been referred | 0005| | 0006| SENATE BILL 245, as amended | 0007| | 0008| has had it under consideration and reports same with | 0009| recommendation that it DO PASS. | 0010| | 0011| Respectfully submitted, | 0012| | 0013| | 0014| | 0015| | 0016| James Roger Madalena, Chairman | 0017| | 0018| | 0019| Adopted Not Adopted | 0020| (Chief Clerk) (Chief Clerk) | 0021| | 0022| Date | 0023| | 0024| The roll call vote was 6 For 0 Against | 0025| Yes: 6 | 0001| Excused: Knowles, Ryan, Wallach | 0002| Absent: Corley, Reyes | 0003| | 0004| | 0005| | 0006| S0245EN1 |