CS/CS/HB 133 OIL & GAS ACT CHANGES

Rep Kristina Ortez

Actions: HPREF [2] HENRC/HJC-HENRC [4] DNP-CS/DP-HJC [6] DNP-CS/DP-T

Scheduled: Not Scheduled

 House Bill 133 (HB 133) amends the Oil and Gas Act by allowing the Oil Conservation Division of the Energy, Minerals and Natural Resources Department to regulate certain transfers of oil and gas wells and authorize the conversion of oil and gas wells for energy storage and geothermal development. It increases the amount of fees and financial assurance associated with operating oil and gas wells and increases civil penalties. SB  allows fees to be adjusted to account for inflation; requires the capture of ninety-eight percent of natural gas produced beginning in 2027; and provides for certain setbacks from oil and gas facilities. 
Committee Substitute
The House Energy, Environment and Natural Resources Committee introduced a substitute bill for HB 133 (HENRC CS/HB133) that amends the Oil and Gas Act by allowing the Oil Conservation Division of the Energy, Minerals and Natural Resources Department to regulate certain transfers of oil and gas wells and authorize the conversion of oil and gas wells for energy storage and geothermal development. It increases the amount of fees and the amount or type offinancial assurance associated with operating oil and gas wells and increases civil penalties. HENRC CS/HB133 allows fees to be adjusted to account for inflation; requires the capture of ninety-eight percent of natural gas produced beginning in 2027. 

 House Bill 133 (HB 133) amends Section 70-2-12 NMSA 1978 of the Oil and Gas Act (OGA) by allowing the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department (EMNRD) to regulate certain transfers of oil and gas wells and authorize the conversion of oil and gas wells for energy storage and geothermal development. 
HB 133 updates the financial assurance requirements in Section 70-2-14 NMSA 1978 to reflect the OCD’s new rule making authority, clarifies certain terms, and increases the blanket plugging financial assurance to not more than ten million dollars ($10,000,000) or a one-well plugging financial assurance in amounts determined sufficient to reasonably pay the cost of plugging the well. The director of the OCD, rather than the attorney general (AG), will now collect the forfeitures established in this section.  
In Section 70-2-31 NMSA 1978, HB 133 raises the civil penalties that can be assessed by a court, the OCD or the commission for noncompliance per day from two thousand five hundred dollars ($2,500) to ten thousand dollars ($10,000) per day. It removes the limitation on the dollar amount the OCD or commission could assess in penalties under this provision.
HB 133 amends Section 70-2-39 NMSA 1978 to allow for fee adjustments; to modify the purposes of the OCD Systems and Hearings Fund; and to allow for inflation beginning on 1 January 2027 and each subsequent 1 January. This bill trebles most application fees in this section  with the exception of a permit for a commercial surface waste management facility, landfill or land farm which remains at ten thousand dollars ($10,000) per facility It requires the OCD to post the fees in subsection A of this section by 1 November 2026 and each subsequent 1 November.
HB 133 allows the OCD Systems and Hearing Fund to be used to develop and modernize online data reporting and visualization systems and for equipment as well as technological upgrades that are necessary to support the efficient and transparent implementation and enforcement of the
OGA and allows it to be used to hire necessary information technology personnel. It defines consumer price index.
HB 133 creates new sections of the OGA that require operators to ensure that at least 98 percent of the natural gas produced or gathered at a facility will be captured in a calendar year with an exception for emergency use. It gives the OCD rule making power in this area and defines operator.
HB 133 requires setbacks from human and environmental receptors of a new well pad, production facility, tank battery, compressor station or gas plant beginning 1 July 2024 which range from three hundred (300) feet to two thousand two hundred feet. It establishes how distances are measured. 
It institutes a process and grounds for the commission’s consideration of an operator’s request for a deviation from these setbacks. It requires monthly inspections by the operator to identify any spills or releases, unless more frequent inspections are required by law, if a deviation is allowed. It grants the commission the authority to adopt rules to increase setback distances and identify additional resources that need this type of protection and to provide for administrative proceedings before the OCD for deviations from setbacks. HB 133 delineates circumstances under which the setbacks will not apply and allows for the declaration of certain wells within the setback area to be declared abandoned and implements an order to plug those wells after appropriate notice.  It defines correction facility; health facility; and state educational institution.
It makes technical changes throughout the bill. 

 The OCD does not explicitly have rules governing the transfer of oil and gas wells that have in the past lacked adequate financial assurances or were noncompliant.
The civil penalty fee is now two thousand five hundred dollars ($2,500); a civil penalty based on noncompliance with the time line in notice of violation is now ten thousand ($10,000)/day.
Fees for a non-federal and non-Indian permit is five hundred dollars ($500); certain administrative approvals are one hundred fifty dollars ($150); a fluid injection well permit, five hundred dollars ($500); request for administrative hearing, five hundred dollars ($500); and a request for continuance of administrative hearing, one hundred fifty dollars ($150). There is no provision for increasing penalties or fees due to inflation.
 

 2/1/2024
The House Judiciary Committee introduced a substitute bill for HENRC CS/HB133 (HJC CS/CS/HB 133) that amends Section 70-2-12 NMSA 1978 of the Oil and Gas Act (OGA) by allowing the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department (EMNRD) to regulate certain transfers of oil and gas wells and authorize the conversion of oil and gas wells for energy storage and geothermal development. 
HJC CS/CS/HB 133 updates the financial assurance requirements in Section 70-2-14 NMSA 1978 to reflect the OCD’s new rule making authority, clarifies certain terms, and creates three methods of complying with the new financial assurance requirements: A six-tiered system depending on number of wells and amount of production beginning at two hundred fifty thousand dollars ($250,000) for an operator with fewer than fifty wells and a total oil and gas production of fewer than one hundred thousand barrels of oil equivalent per year to ten million dollars ($10,000,000) for an operator with greater than five hundred wells and a total oil and gas production greater than one million two hundred fifty thousand barrels of oil equivalent per year; or a well plugging risk pool fee; or a one-well plugging financial assurance in a sufficient amount to cover the cost of plugging a well. It includes well counts based on counts of wells from wholly owned subsidiaries of the same corporate parent. Under the well-plugging risk pool alternative, the OCD may impose a non-refundable monthly fee on a per well basis on a subset of an operator’s wells at five hundred dollars ($500) per well. The fee is deposited into the Oil and Gas Reclamation Fund. The director of the OCD, rather than the attorney general (AG), will now collect the forfeitures established in this section.  
In Section 70-2-31 NMSA 1978, HJC CS/CS/HB 133 raises the civil penalties that can be assessed by a court, the OCD or the commission for noncompliance per day from two thousand five hundred dollars ($2,500) to ten thousand dollars ($10,000) per day. It increases the limitation on the dollar amount the OCD or commission could assess in penalties under this provision to three million six hundred fifty thousand dollars ($3,650,000) but does not impose this limitation on court awards.
HJC CS/CS/HB 133 amends Section 70-2-39 NMSA 1978 to allow for fee adjustments and to allow for inflation beginning on 1 January 2027 and each subsequent 1 January. Most application fees in this section trebled in cost with the exception of a permit for a commercial surface waste management facility, landfill or land farm which remains at ten thousand dollars ($10,000) per facility. It requires the OCD to post the fees in subsection A of this section by 1 November 2026 and each subsequent 1 November
HJC CS/CS/HB 133 modifies the OCD Systems and Hearings Fund so its purposes may include development and modernization of online data reporting and visualization systems and for equipment as well as technological upgrades that are necessary to support the efficient and transparent implementation and enforcement of the OGA. HJC CS/CS/HB 133 allows the fund to be used to hire necessary information technology personnel. It defines consumer price index.
HJC CS/CS/HB 133 creates new sections of the OGA that require operators to ensure that at least 98 percent of the natural gas produced or gathered at a facility will be captured in a calendar year with an exception for emergency use. It gives the OCD rule making power in this area and defines operator.


1/26/24
The House Energy, Environment and Natural Resources Committee introduced a substitute bill for HB 133 (HENRC CS/HB133) that amends Section 70-2-12 NMSA 1978 of the Oil and Gas Act (OGA) by allowing the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department (EMNRD) to regulate certain transfers of oil and gas wells and authorize the conversion of oil and gas wells for energy storage and geothermal development. 
HENRC CS/HB133 updates the financial assurance requirements in Section 70-2-14 NMSA 1978 to reflect the OCD’s new rule making authority, clarifies certain terms, and creates a system of financial assurance including a tiered blanket plugging financial assurance of not more than ten million dollars ($10,000,000); a one-well plugging financial assurance in amounts determined sufficient to reasonably pay the cost of plugging the well; or a well-plugging risk pool fee. The OCD may impose the latter non-refundable monthly fee on a per well basis on a subset of an operator’s wells at five hundred dollars ($500) per well. The fee is deposited into the Oil and Gas Reclamation Fund. The director of the OCD, rather than the attorney general (AG), will now collect the forfeitures established in this section.  
In Section 70-2-31 NMSA 1978, HENRC CS/HB133 raises the civil penalties that can be assessed by a court, the OCD or the commission for noncompliance per day from two thousand five hundred dollars ($2,500) to ten thousand dollars ($10,000) per day. It removes the limitation on the dollar amount the OCD or commission could assess in penalties under this provision.
HENRC CS/HB133 amends Section 70-2-39 NMSA 1978 to allow for fee adjustments and to allow for inflation beginning on 1 January 2027 and each subsequent 1 January. Most application fees in this section trebled in cost with the exception of a permit for a commercial surface waste management facility, landfill or land farm which remains at ten thousand dollars ($10,000) per facility It requires the OCD to post the fees in subsection A of this section by 1 November 2026 and each subsequent 1 November.
HENRC CS/HB133 modifies the OCD Systems and Hearings Fund so its purposes may include development and modernization of online data reporting and visualization systems and for equipment as well as technological upgrades that are necessary to support the efficient and transparent implementation and enforcement of the OGA. HENRC CS/HB133 allows the fund to be used to hire necessary information technology personnel. It defines consumer price index.
HENRC CS/HB133 creates new sections of the OGA that require operators to ensure that at least 98 percent of the natural gas produced or gathered at a facility will be captured in a calendar year with an exception for emergency use. It gives the OCD rule making power in this area and defines operator.