The New Mexico Oil Conservation Division was granted the power to fine oil and gas companies Jan. 16, an ability it lost 11 years ago in a New Mexico Supreme Court ruling.
The New Mexico Oil Conservation Commission signed an order stating that the Division, a branch of the New Mexico Energy, Minerals and Natural Resources Department that regulates oil and gas activity, can now issue administrative penalties to oil and gas companies for violations of New Mexico’s Oil and Gas Act.
“Reinstating the Division’s authority to assess civil penalties gives us another tool in our toolbox to ensure that the oil and gas industry is acting responsibly in New Mexico,” Division Director Adrienne Sandoval said in a statement. “New Mexico is a great example of how industry can thrive while also being responsible, and this new rule is another step in the right direction to improving regulatory compliance and ensuring a level playing field for diligent operators.”
The Act governs the production of oil and gas in the state and includes provisions that deal with topics ranging from land ownership to labor to equipment to pipeline safety to waste. There are several ways to violate the Act—one example is failing to report a spill, while another is handling oil or gas in such a way that results in waste.
The Division has not had the ability to issue administrative penalties for the past 11 years, because of a 2009 Supreme Court ruling in a case called Marbob Energy Corporation vs. New Mexico Oil Conservation Commission.
“The [Oil Conservation Division] for 10 years now has been a cop without a ticket book,” said rancher and activist Don Schreiber, whose ranch is located on the San Juan Basin in Rio Arriba County.
The new rule is part of 2019 legislation, House Bill 546, a portion of which went into effect Jan. 1. Among other issues, the Bill requires amendment of the Oil and Gas Act and of the duties of the Division.
Fines that the Division may issue to companies begin at $2,500 per day and can reach up to $10,000 per day.
Robert McEntyre, spokesperson for the New Mexico Oil and Gas Association, which is a coalition of oil and gas companies, wrote in a Monday email that the Association supported the legislation and echoed Sandoval’s words about ensuring a level playing field in the industry.
“We support giving regulators reasonable tools to ensure a level playing field for all operators,” he said. “The oil and natural gas industry is one of the most highly-regulated in New Mexico, and the vast majority of New Mexico’s 60,000 active oil and gas wells are in compliance with the law.”
According to the U.S. Energy Information Administration, as of October 2019, New Mexico was the third most crude oil producing state in the United States. In 2018, New Mexico was the ninth most gas producing state.
The majority of New Mexico production occurs in the southeastern part of the state, in the Permian Basin, and the northwestern part of the state, in the San Juan Basin.
Environmentalists around the state have expressed support for the new rule.
“That is a remarkable advance,” Schreiber said. “It was a remarkable hole in environmental protection for New Mexico for the last 10 years. It is now a remarkable advance.”