SANTA FE — New Mexico would restore one agency's authority to impose administrative penalties against oil and natural gas well operators in connection with petroleum and wastewater spills, under a bill endorsed by a Senate panel on Thursday.
The Democrat-sponsored bill would allow the New Mexico Oil Conservation Division, which oversees oil and natural gas well permits and decommissioning, to apply penalties of up to $10,000 a day when aquifers are polluted or threatened by drilling operations, and lesser fines for other violations of the New Mexico Oil and Gas Act.
A 2009 state Supreme Court decision held that the New Mexico Oil Conservation Division was not authorized to assess administrative penalties and must pursue lawsuits and legal settlements, a process currently coordinated through the New Mexico Attorney General's Office. Annual fines averaged nearly $600,000 before the ruling. Four operators have been assessed $20,500 since June of last year through legal action.
The potential regulatory overhaul comes as major oil companies are showing renewed interest in Permian Basin deposits that stretch across southeastern New Mexico and West Texas. The area has seen a string of multi-billion dollar lease acquisitions in recent months.
The bill's sponsor, Sen. Richard Martinez, D-Española, said his proposal would ensure better protection of ground water with expectations that the federal government increasingly will defer to state enforcement authority under the administration of President Donald Trump.
Mike D'Antonio, government affairs director for the New Mexico Oil and Gas Association, told lawmakers that state oilfield regulators already have sufficient enforcement powers to restrict well permits and seize security bonds.
Carla Sontag, president of the New Mexico Business Coalition, cautioned against the legislation.
"I think this bill is a little bit much," she said. "I would really like to see New Mexico encourage the industry and not try to drive it out of the state. They are one of our biggest producers of revenue for our (state) budget."
Representatives from several environmental and civic groups lauded the proposal as an overdue precaution against well operators who flout the law.
Martinez said the bill would bring penalties closer in line with other oil-producing states and place enforcement more squarely in the hands of the state's technical experts. Civil penalties against well operators would come with the opportunity for a public hearing. The Oil Conservation Division would have to assemble an annual report on violations, penalties and spill investigations.
The Department of Energy, Minerals and Natural Resources that oversees the Oil Conservation Division said some wording in the bill is overly broad and could result higher penalties on each and every spill. It also said the ability to assess fines would significantly reduce agency enforcement expenses.
It was unclear if Republican Gov. Susana Martinez would support the bill if approved by the Democrat-controlled Legislature.
Weaknesses in current enforcement provisions were highlighted last year when out-of-state well operator for months ignored warnings from state regulators on spills and continued to operate wells after its authority was revoked.
The Oil Conservation Division eventually received authority from the attorney general to negotiate a settlement under threat of litigation with Siana Operating of Midland, Texas, to clean up spills at two clusters of wells outside Eunice, in the southeastern corner of New Mexico.
Fines of $10,500 have been assessed against the company. In related claims against Siana, the State Land Office has pursued much larger fees, cleanup costs and penalties.