Brine well funding advances through Legislature as session nears end

Adrian Hedden
Carlsbad Current-Argus
This sign warns drivers of the potential dangers of the brine well near the South Y.

Local officials and state lawmakers said they are confident the bulk of the funding needed to prevent the collapse of a massive brine well in southern Carlsbad will be garnered by the end of the State's 2018 legislative session Feb. 15.

Senate Bill 226 was passed on the Senate floor Thursday, aiming to generate $30 million for the Carlsbad Brine Well Remediation Fund, at $10 million per year from the State Road Fund. 

The bill was sponsored by Sen. Carroll Leavell (R-41) and Sen. John Arthur Smith (D-35).

The transfer will be achieved, if SB 226 is ultimately signed into law, by redirecting 4.15 percent of the State's vehicle excise tax, charged when purchasing cars or trucks, from the General Fund to the Road Fund.

The shift would start on July 1 if the bill passes. 

The Brine Well Fund will get $10 million annually for three fiscal years from the tax and then the revenue will go to the road fund.

That could mean $6.4 million a year going toward state roads, read a news release from the New Mexico Senate Republican Office.

It also means $30 million, coupled with $4 million each from Eddy County and the City of Carlsbad, would be available for remediating the brine well to prevent its collapse and subsequent sinkhole.

The backfill project was recently estimated to cost about $43 million, and officials are already looking to other smaller appropriations to make up the difference.

State House Rep. Cathrynn Brown (R-55)

Rep. Cathrynn Brown (R-55), who introduced a package of funding bills in the House identical to Leavell’s package that was defeated in a Senate committee on Jan. 25, is hoping some of her proposed sweeps can unlock the remaining $5 million.

She said House Bills 121, 123, 125 and 126 will go before the House Appropriations Committee in the coming days.

HB 121 and 126 have the best chance of getting passed, Brown said.

“It’s definitely a big push,” Brown said with six days left in the session. “We’re still working, and there’s a lot of activity behind the scenes to get the laws where we need them to be.”

If HB 121 is passed, it will send $2 million per year from the Oil and Gas Reclamation Fund to the Carlsbad Brine Well Remediation Fund, starting on July 1 of fiscal year 2019.

The annual contributions will continue, the bill reads, until Cabinet Secretary of the Energy, Minerals and Natural Resources Department, currently Ken McQueen, certifies that all remediation efforts and contract obligations are met.

Carlsbad Brine Well Authority designee John Heaton addresses the Radioactive and Hazardous Waste Legislative Committee Friday in Carlsbad. Heaton assured the committee that an emergency management plan was in place to respond to a collapse of the brine well.

The move was met with opposition from State Land Commissioner Aubrey Dunn who challenged if using the fund intended to fill abandoned oil wells was appropriate for the brine well.

He also questioned why the Oil Conservation Division, an arm of EMNRD, hadn’t remediated the well when it was first deemed unstable and decommissioned in 2008.

The former operator, I&W, since declared bankruptcy.

“The Oil and Gas Reclamation Fund is meant for oil and gas operations that go awry, not cleaning up salt mines,” Dunn said. “The Oil Conservation Division should have remediated this brine well 15 years ago and held the operator accountable, but they dropped the ball putting people in danger and public education funding at risk.” 

McQueen argued that a clause was added to the Reclamation Fund in 2010, allowing  the dollars to be used to remeidated "production facilities" related to brine production. 

"This has been in the law for a while, but the Commissioner fails to realize that in 2010 the Legislature specifically included brine production within the definition of production facilities," he said.

HB 126 could also provide up to $7.5 million in state funding from the oil and gas conservation tax, over fiscal years 2019 to 2021 at $2.5 million per year.

This bill would send to the remediation fund 2/19 of the net receipts attributable to the tax.

Brown said she is also working on drafting amendments to state statutes that would give the Carlsbad Brine Well Remediation Advisory police power and imminent domain capabilities, along with bonding capacity to oversee the project.   

“The existing state statute does not fit the brine well situation,” Brown said. “We want an expressed statement that will give those powers to the Authority.”

House Bill 2, the State’s appropriation bill, was passed in the House and is expected to be heard by the Senate Finance Committee.

A clause was added to HB 2 before it was passed by the House, Brown said, to appropriate another $3 million from the Oil and Gas Reclamation Fund.

Rep. Jim Townsend, left, Chair of the Carlsbad Brine Well Authority John Heaton greet Carlsbad residents and leaders Jan. 29 in Santa Fe during the annual Bat Brigade trip.

With SB 226 moving into the House, Brown said she is hopeful that it and the other smaller appropriations will be signed into law.

“Our spreadsheets are showing a shortfall for the first couple of years (of the project),” she said. “We’re hoping we can get those funding sources identified and secured.”

Chair of the Authority John Heaton said he’s spoken with members of the House and is optimistic SB 226 will continue to enjoy support from lawmakers as it likely moves to the House Appropriations Committee.

“I’m encouraged about 226,” Heaton said. “We’ve been talking to members. It seems like there is good support. I’m not sure what they’re going to do with those four other bills. We’ve got this other thing now (SB 226), that’s gaining some momentum.”

Heaton said $2 million could be garnered from legislators’ capital contributions, and another $3 million from the General Fund’s special appropriations clause, used for one-time contributions to certain projects across the state.

Negotiations with an awarded bidder for the contract to backfill the cavity are ongoing, Heaton said, and officials hoped to conclude by the end of February.

Members of the Carlsbad Brine Well Remediation Advisory Authority discuss funding for the project during a meeting, Jan. 10 at the Municipal Annex Building.

“We still don’t know what the bid may or may not be,” he said. “We won’t know until the contractor does all the research they need. We expected it would be done by now. I guess they’re going back and forth.”

Heaton and Brown encouraged Carlsbad residents to attend hearings and urged votes for the remediation efforts and needed funding.

“This is the time in the session where things move fast,” Heaton said. “We have less than a week, and this needs to be done.”

Brown suggested locals contact legislators for a final push for support to acquire the needed dollars.

“We need all the expressions of support,” she said. “I think it’s time for people to start calling committee members and telling them to support us. It’s time for people to start helping us cross the finish line.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.