March 1, 2023

Oil and Gas Act reform clears first committee

Hannah Grover/NM Political Report

A pumpjack is pictured near Aztec, NM.

A bill attempting to reform New Mexico’s Oil and Gas Act passed its first committee, the Senate Conservation Committee, on a 6-3 vote on Tuesday.

The Oil and Gas Act became law in 1935 and many of those original provisions remain in place.

SB 418 reconstitutes the Oil Conservation Commission and requires that the Oil Conservation Division protects the public health and environment and promotes the public interest, health, safety and general welfare. It also requires “fair treatment and meaningful involvement of the public, including environmental justice communities,” according to the fiscal impact report. 

SB 418 also includes an environmental justice advisory council as well as single-well bonds for inactive or low-producing wells. These bonds would provide financial assurance that the wells will be remediated and bring those financial assurances more in line with actual costs.

Additionally, the bill would expand on the qualifications that the Oil Conservation Division director must possess. Currently, only people who have experience or expertise in petroleum engineering are eligible to serve as the OCD director.

Proponents say the bill is important to protect the health and well-being of the public, especially low-income communities and people of color.

Opponents say that the legislation would harm the oil and gas industry, which provides a large portion of the state’s budget. The New Mexico Oil and Gas Association argued that it is not the right time to pass legislation that might impose new restrictions on the extractive industries, citing the COVID pandemic and the war in Ukraine, which have contributed to high fossil fuel prices.

Sen. Leo Jaramillo, D-Española, took a strong stance on public health while being questioned by Sen. David Gallegos, R-Eunice.

“I think we’re hurting the golden goose,” Gallegos said as he argued that the oil and gas industry provides funding for education in New Mexico. 

Gallegos further said that the oil and gas industries have increased production by 40 percent despite new regulations and requirements that they are expected to meet.

“They’re hogtied, blindfolded, gagged and handcuffed, and they still produce money,” Gallegos said.

He then went on to ask “why would we be looking to hurt the industry that is providing for our students in education?”

Jaramillo replied that he would give all of his junior money as well as the money he has for capital outlay allocations if “that meant keeping the members of the Jicarilla (Apache) Nation safe” and the northern Rio Arriba County residents safe. He said he values their safety, health and welfare above any monetary value.

Portions of Rio Arriba County are within the San Juan Basin, which is one of the two oil and gas producing regions in New Mexico.
Tannis Fox, an attorney with the Western Environmental Law Center, served as an expert witness on the bill. WELC was involved in drafting the bill. 

“The point of this bill is not to hurt oil and gas and we don’t believe that it does,” she said. “The point is to bring balance, fair balance to the discussions around oil and gas.”

She said the bill would allow for environmental, health and environmental justice concerns to be considered during rulemaking procedures.

The bill heads next to the Senate Judiciary Committee, which is chaired by Sen. Joseph Cervantes, D-Las Cruces. 

Cervantes is also a member of the Senate Conservation Committee and he expressed some concerns about the definitions in the bill.

In one instance, he highlighted the correlative rights definition and described it as “the worst legal writing that I’ve experienced in my 23 years here.” 

He further called the definition “completely unintelligible and nonsensical.”

At the same time, he acknowledged that the definition is something that is already in statute.

“That’s existing language, I’ll grant you that. But we should try to do better,” Cervantes said.