SB0307

SENATE BILL 307

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

Richard C. Martinez

AN ACT

RELATING TO OIL AND GAS; AMENDING AND ENACTING SECTIONS OF THE OIL AND GAS ACT CONCERNING POWERS OF THE OIL CONSERVATION COMMISSION AND THE OIL CONSERVATION DIVISION OF THE ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT; PROVIDING FOR CIVIL AND CRIMINAL PENALTIES; AMENDING AND ADDING DEFINITIONS USED IN THE OIL AND GAS ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 70-2-28 NMSA 1978 (being Laws 1935, Chapter 72, Section 19, as amended) is amended to read:

"70-2-28. ACTIONS FOR VIOLATIONS.--Whenever it [shall appear] appears that any person is violating or threatening to violate any statute of this state with respect to the conservation of oil and gas or both or any provision of [this] the Oil and Gas Act or any rule, [regulation or] order [made thereunder] or permit issued pursuant to that act, the division through the attorney general shall bring suit against [such] that person in the county of the residence of the defendant [or], in the county of the residence of any defendant, if there [be] is more than one defendant, or in the county where the violation is alleged to have occurred for penalties, if any are applicable, or in the first judicial district, and to restrain [such] the person from continuing [such] violation or from carrying out the threat of violation. In [such] the suit, the division may obtain injunctions, prohibitory and mandatory, including temporary restraining orders and temporary injunctions, as the facts may warrant, including, when appropriate, an injunction restraining any person from moving or disposing of illegal oil or illegal oil product or illegal gas or illegal gas product, and any or all such commodities or funds derived from the sale thereof may be ordered to be impounded or placed under the control of an agent appointed by the court if, in the judgment of the court, such action is advisable. The remedies provided by this section are

cumulative and do not limit any other rights or remedies of the

division or the commission with respect to any violation of the

Oil and Gas Act or of any rule, order or permit issued pursuant

to that act."

SECTION 2. Section 70-2-31 NMSA 1978 (being Laws 1981, Chapter 362, Section 1) is amended to read:

"70-2-31. VIOLATIONS OF THE OIL AND GAS ACT--PENALTIES.--

A. [Any] Except as provided in Subsection B of this

section, a person who [knowingly and willfully] violates any provision of the Oil and Gas Act or any provision of any rule [or], order or permit issued pursuant to that act shall be subject to a civil penalty of not more than one thousand dollars ($1,000) for each day of violation. [For purposes of this subsection, in the case of a continuing violation, each day of violation shall constitute a separate violation. The penalties provided in this subsection]

B. If a person violates any provision of the Oil

and Gas Act or any rule, order or permit issued pursuant to

that act, which violation is or causes an unauthorized

discharge of any contaminant that pollutes or threatens

to pollute water in excess of any state or federal water

quality standard, the civil penalty shall be not more than ten

thousand dollars ($10,000) for each violation or ten thousand

dollars ($10,000) for each day of a continuing violation;

provided, however, that this subsection shall apply only to

unauthorized discharges that are not subject to regulation and

penalties under the Water Quality Act.

C. The division or the commission may assess the

civil penalties provided in this section after notice and an

opportunity for a public hearing. In assessing the penalty,

the division or the commission may consider the seriousness of

the violation and any good-faith efforts to comply with the

applicable requirement.

D. A penalty not paid within thirty days after the

order assessing the penalty becomes final shall be recoverable by a civil suit filed by the attorney general in the name and on behalf of the commission or the division in the district court of the county in which the defendant resides or in which any defendant resides if there [be] is more than one defendant, [or] in the district court of any county in which the violation occurred or in the first judicial district; provided that, if any final order assessing a penalty is appealed pursuant to Section 70-2-25 NMSA 1978, the commission may seek recovery of the penalty by a counterclaim in that case. The payment of [such] the penalty shall not operate to legalize any illegal oil, illegal gas or illegal product involved in the violation for which the penalty is imposed or relieve a person on whom the penalty is imposed from liability to any other person for damages arising out of [such] the violation.

[B. It is unlawful, subject to a criminal penalty of a fine of not more than five thousand dollars ($5,000) or imprisonment for a term not exceeding three years or both such fine and imprisonment, for any person to knowingly and willfully:

(1) violate]

E. A person shall be guilty of a third degree

felony and sentenced pursuant to Section 31-18-15 NMSA 1978 if

the person knowingly violates any provision of the Oil and Gas Act or any rule, [regulation or order of the commission or the division] order or permit issued pursuant to that act [or

(2) do any of the following for the purpose of evading or violating the Oil and Gas Act or any rule, regulation or order of the commission or the division issued pursuant to that act:

(a) make] or if the person knowingly:

(1) makes or causes to be made any false entry or statement in a required form, report [required by the Oil and Gas Act or by any rule, regulation or order of the commission or division issued pursuant to that act;

(b) make or cause to be made any false entry in any record, account or memorandum required by the Oil and Gas Act or by any rule, regulation or order of the commission or division issued pursuant to that act;

(2) omits or [cause] causes to be omitted from [any such] a required form, report, record, account or memorandum full, true and correct entries; [or

(d) remove]

(3) removes from this state or [destroy, mutilate, alter or falsify any such] destroys, mutilates,

alters or falsifies a required form, report, record, account or memorandum; or

(4) aids or abets the commission of any act

described in this subsection.

[C.] F. For the purposes of Subsection [B] E of this section, each day of violation shall constitute a separate offense.

[D.] G. Any person who knowingly [and willfully] procures, counsels, [aides] aids or abets the commission of any act described in Subsection A or [B] E of this section shall be subject to the same penalties as are prescribed [therein] in those subsections."

SECTION 3. Section 70-2-33 NMSA 1978 (being Laws 1935, Chapter 72, Section 24, as amended) is amended to read:

"70-2-33. DEFINITIONS.--As used in the Oil and Gas Act:

A. "person" means:

(1) any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, joint venture, syndicate or other entity; or

(2) the United States or any agency or instrumentality thereof or the state or any political subdivision thereof;

B. "pool" means an underground reservoir containing a common accumulation of crude petroleum oil or natural gas or both. Each zone of a general structure, which zone is completely separate from any other zone in the structure, is covered by the word "pool" as used in the Oil and Gas Act. "Pool" is synonymous with "common source of supply" and with "common reservoir";

C. "field" means the general area that is underlaid or appears to be underlaid by at least one pool and also includes the underground reservoir or reservoirs containing the crude petroleum oil or natural gas or both. The words "field" and "pool" mean the same thing when only one underground reservoir is involved; however, "field", unlike "pool", may relate to two or more pools;

D. "product" means any commodity or thing made or manufactured from crude petroleum oil or natural gas and all derivatives of crude petroleum oil or natural gas, including refined crude oil, crude tops, topped crude, processed crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil, treated crude oil, fuel oil, residuum, gas oil, naphtha, distillate, gasoline, kerosene, benzine, wash oil, waste oil, lubricating oil and blends or mixtures of crude petroleum oil or natural gas or any derivative thereof;

E. "owner" means the person who has the right to drill into and to produce from any pool and to appropriate the production either for [himself] the person or for [himself] the person and another;

F. "producer" means the owner of a well capable of producing crude petroleum oil or natural gas or both in paying quantities;

G. "gas transportation facility" means a pipeline in operation serving gas wells for the transportation of natural gas or some other device or equipment in like operation whereby natural gas produced from gas wells connected therewith can be transported or used for consumption;

H. "correlative rights" means the opportunity afforded, so far as it is practicable to do so, to the owner of each property in a pool to produce without waste [his] the owner's just and equitable share of the crude petroleum oil or natural gas or both in the pool, being an amount, so far as can be practicably determined and so far as can be practicably obtained without waste, substantially in the proportion that the quantity of recoverable oil or gas or both under the property bears to the total recoverable crude petroleum oil or natural gas or both in the pool and, for such purpose, to use [his] the owner's just and equitable share of the reservoir energy;

I. "potash" means the naturally occurring bedded deposits of the salts of the element potassium;

J. "casinghead gas" means any gas or vapor or both indigenous to an oil stratum and produced from such stratum with oil, including any residue gas remaining after the processing of casinghead gas to remove its liquid components; [and]

K. "produced water" means water that is an incidental byproduct from drilling for or the production of crude petroleum oil and natural gas;

L. "commission" means the oil conservation

commission; and

M. "division" means the oil conservation division of the energy, minerals and natural resources department."

SECTION 4. A new section of the Oil and Gas Act is enacted to read:

"[NEW MATERIAL] REPORTING REQUIREMENT.--

A. No later than October 1 of each year, the division shall report to the legislature and to the governor:

(1) the number of violations that the division has investigated pursuant to the Oil and Gas Act during the

previous fiscal year;

(2) the total amount of penalties imposed by the division for violations pursuant to the Oil and Gas Act during the previous fiscal year;

(3) the total amount of penalties collected by the division for violations pursuant to the Oil and Gas Act during the previous fiscal year; and

(4) for each penalty assessed, the following information shall be provided:

(a) the name and location of the person penalized;

(b) the actual penalty assessed, including the number of days for which the penalty was assessed and the amount of the penalty per day of the violation;

(d) whether the violation was part of a pattern of violations by the same person;

(e) whether the violation was based on negligence or knowing or willful misconduct; and

(f) any other rationale used in determining the amount and duration of the penalty.

B. The annual report required pursuant to Subsection A of this section shall simultaneously be made available to the public, including on a website maintained by the division."

SECTION 5. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2017.

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