Parties in the New Mexico Oil Conservation Commission (OCC) case to modernize oil and gas clean up and bonding rules filed their final post-hearing briefs on Friday, March 20, a key step as the OCC prepares to decide whether to update decades-old financial safeguards meant to prevent orphaned and abandoned wells.
“This case has made one thing very clear: New Mexicans expect oil and gas corporations to clean up the wells they drill and operate,” said Tannis Fox, senior attorney at the Western Environmental Law Center, who represents community and environmental organizations that filed the petition for new rules. “The Commission now has the opportunity to adopt smart, fair rules that protect our water, our communities, and our state budget while ensuring corporations meet the plugging and cleanup responsibilities they agreed to.”
Following weeks of hearings last fall, the OCC directed parties to negotiate areas of agreement where possible. Over the past several months, those negotiations have narrowed differences among stakeholders. The final rules proposed by the petitioners create a clear path for the OCC to adopt stronger safeguards to prevent oil and gas well abandonment.
Modernizing bonding requirements would better align financial assurances put up by oil and gas operators with the real cost of plugging wells, helping protect New Mexico families, drinking water, land and public funds.
New Mexico faces a growing unplugged well crisis with thousands of aging wells at risk of being abandoned without adequate cleanup funding. A June 2025 report from the Legislative Finance Committee estimates the state could have more than 5,000 abandoned wells and between $700 million and $1.6 billion in cleanup liabilities in the coming years. Strengthening the system will help prevent the orphaning of these wells in the first place and provide the state and the public with greater financial protection if the wells are orphaned.
“For many Diné families in the San Juan Basin, oil and gas wells sit close to our homes, our grazing lands and our critical water sources,” said Robyn Jackson, executive director of Diné C.A.R.E. “When wells are not properly cleaned up, they emit harmful pollution that threatens our air, our health and the land our communities depend on. Updating oil and gas rules helps ensure oil and gas corporations follow through on their responsibility to clean up wells so our communities are not left with the risks.”
“For communities like Carlsbad, we’ve seen firsthand what happens when corporations abandon oil and gas wells,” said Haley Jones with Citizens Caring for the Future. “These rules are about making sure corporations clean up their wells so our communities aren’t left with the bill or the risks to our health, our water and our land.”
“The system is broken when polluters can walk away from polluting oil and gas wells and leave taxpayers to clean up their mess,” said Andrew Forkes-Gudmundson, Senior Manager of State Policy at Earthworks, a party in the rulemaking. “The wells polluters leave behind can leak methane and health-harming toxics into people’s homes. Rules that prevent those harms and require that companies clean up the mess they made is simple common sense and common decency.”
“We need agencies that are funded to protect New Mexicans who stand to lose the most from abandoned or potentially orphaned wells,” said Camilla Feibelman, Director of the Sierra Club Rio Grande Chapter. “The industries doing business here must act as good neighbors, limit their impacts to our health, air and water, and provide the funding for clean up, up front.”
Why it matters:
When wells are not properly plugged at the end of their productive life, they can leak toxic chemicals into the air and groundwater, posing risks to public health, agriculture, wildlife and nearby communities. Abandoned wells are also a major source of methane pollution, a powerful greenhouse gas that accelerates climate change.
Under the current bonding system, oil and gas corporations can operate hundreds or even thousands of wells while posting only a small fraction of the money needed to plug them. When operators walk away from wells or declare bankruptcy, the cost of cleanup falls on the state.
Recent enforcement actions by the state, including a lawsuit filed by the New Mexico Attorney General alleging that operators used shell companies and bankruptcy to avoid cleanup responsibilities, underscore the risks when financial safeguards fail.
Bonding functions like a security deposit: Oil and gas corporations must set aside funds in advance to ensure wells are properly plugged and cleaned up when drilling ends.
What the proposed rules would do:
The rule changes under consideration would:
- Update bonding requirements to $150,000 per well for oil and gas wells at highest risk of abandonment – including low-producing and inactive wells – more closely aligning with the Oil Conservation Division’s actual plugging costs.
- Require operators with high-risk portfolios (more than 20 percent inactive wells) to post single-well bonding of $150,000 for all wells, reducing the risk that large portfolios of aging wells are left without adequate cleanup funds.
- Strengthen well transfer rules to prevent poorly funded or noncompliant operators from acquiring aging wells – a common pathway to well abandonment.
- Require the most marginal wells (producing fewer than 90 barrels of oil equivalent in 12 months) to demonstrate they still serve a useful purpose or properly plug them.
- Tighten rules for inactive wells by requiring operators to show wells will return to production in the future, preventing non-producing wells from lingering indefinitely without cleanup.
Broad public support:
New Mexicans across the state have voiced strong support for modernizing bonding rules.
- More than 900 written public comments support reform.
- Twenty-five elected officials from across New Mexico signed letters and gave public comment supporting stronger bonding requirements.
- Statewide polling shows 89 percent of New Mexicans support requiring oil and gas corporations to pay to clean up the wells they drill.
What’s next:
The OCC will now review the post-hearing briefs as it prepares to deliberate on potential updates to the state’s bonding rules.
Commissioners now have the opportunity to adopt modern safeguards that better reflect today’s cleanup costs and ensure oil and gas corporations are responsible for cleaning up the wells they operate.
Contacts:
Tannis Fox, Western Environmental Law Center, 505-629-0732, fox@westernlaw.org
Robyn Jackson, Diné C.A.R.E., 505-862-4433, robyn.jackson@dine-care.org
Andrew Forkes-Gudmundson, Earthworks, 507-421-9021, andrewfg@earthworks.org
Bill Rodgers, Sierra Club, Rio Grande Chapter, 330-881-9918, bill.rodgers@sierraclub.org
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