Fact Sheet: New Mexico Oil and Gas Act Amendments (HB 133)

House Bill 133 would amend the Oil and Gas Act to better protect the environment from oil and gas operations, better ensure that oil and gas companies properly clean up and reclaim oil and gas infrastructure, deter violations of the act by increasing civil penalties, and codify a 98% methane waste requirement into law to ensure the long-term viability of the state’s nationally leading methane rules promulgated in 2021.

According to Sidney Hill of the New Mexico Energy, Minerals and Natural Resources Department, the Oil and Gas Act “no longer contains all the tools necessary to oversee the current industry and ensure robust environment protection.”

Across New Mexico, approximately 1,700 orphaned and abandoned oil and gas wells also threaten our air, land, and water. Oil and gas operators provide the state bonds as financial assurance to fund plugging and cleanup of wells if a company goes out of business or abandons a site. The average cost to plug a single well is over $100,000, rendering the Oil and Gas Act’s existing maximum “blanket bond” cap of $250,000—which is applied even if a company owns hundreds of wells–wildly inadequate. This inadequate bonding level means that state taxpayers, not oil and gas companies, are left to fund cleanups of orphaned and abandoned wells.

Additionally, HB 133 protects against the growing orphaned and abandoned well problem by providing new authority for the state to block the transfer of oil and gas assets, when a company has a “significant history of noncompliance with the Oil and Gas Act or its rules” or the transferee seeking to acquire the assets “lacks sufficient financial capacity to manage liabilities associated with oil and gas wells or facilities.”

HB 133 would better protect New Mexico taxpayers and safeguard our air, land, and water by:

Increasing the cap on blanket bonds for well cleanup and plugging from $250,000 to $10 million,
Increasing civil penalties for violations from $2,500 per day to $10,000 per day, and increase the penalties for major violations from $10,000 per day to $25,000 per day,
Eliminating the $200,000 cap on total, cumulative civil penalties,
Updating administrative fees for the 21^st century and allowing future adjustments for inflation. The Oil Conservation Division would be allowed to apply those fees to transparency and enforcement,
Providing new authority for the state to block the transfer of oil and gas assets when the transferee presents a risk of abandonment.

Before HB 133 was heard by committee, a substitute bill was introduced that stripped out critically important setback provisions to protect public health and water. We support amending the substitute bill to re-insert these setbacks:

Requiring a minimum 2,250-foot setback of new industrial oil and gas extraction infrastructure from occupied homes, schools, health facilities, correctional facilities, multi-family residential buildings, and community colleges,
Requiring a minimum 660-foot setback of new oil and gas infrastructure from precious water resources such as perennial and intermittent streams, ponds, wetlands, and acequias,
Requiring a minimum 300-foot setback of new oil and gas infrastructure from surface waters not listed above, state parks, state game commission lands, and critical habitat for endangered species,
Providing the state Oil Conservation Division authority to strengthen setbacks based on scientific evidence, and
Allowing the state Oil Conservation Division to designate old wells within setback areas that have been inactive for two years as abandoned and order plugging of the well.

The setbacks would not apply to existing oil and gas infrastructure, Tribal allotted lands, or Tribal lands as a function of Native people’s sovereign authority over their own lands.

New Mexico does not have any setback protections for people or the environment, and these protections would mitigate the harm caused by the proximity of industrial-scale oil and gas production facilities to the places where people live, learn, and work.