AN ACT
RELATING TO OIL AND GAS; PROVIDING FOR
DISTRIBUTIONS TO THE OIL AND GAS RECLAMATION FUND; PROVIDING FOR AN OIL AND GAS
CONSERVATION TAX RATE CONDITIONED ON THE BALANCE IN THE OIL AND GAS RECLAMATION
FUND; PROVIDING FOR ENERGY EDUCATION; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. Section 7-1-6.21 NMSA 1978 (being Laws 1985,
Chapter 65, Section 7, as amended) is amended to read:
"7-1-6.21. DISTRIBUTION TO OIL AND GAS RECLAMATION
FUND.--
A. With respect to any period for which the rate
of the tax imposed by Section 7-30-4 NMSA 1978 is nineteen-hundredths percent,
a distribution pursuant to Section 7‑1‑6.20 NMSA 1978 shall be made
to the oil and gas reclamation fund in the amount equal to two-nineteenths of
the net receipts attributable to the tax imposed under the Oil and Gas
Conservation Tax Act.
B. With respect to any period for which the rate
of the tax imposed by Section 7-30-4 NMSA 1978 is eighteen- hundredths percent,
a distribution pursuant to Section 7‑1‑6.20 NMSA 1978 shall be made
to the oil and gas reclamation fund in the amount equal to one-eighteenth of
the net receipts attributable to the tax imposed under the Oil and Gas
Conservation Tax Act."
Section 2. Section 7-30-4 NMSA 1978 (being Laws 1959,
Chapter 53, Section 4, as amended) is amended to read:
"7-30-4. OIL AND GAS CONSERVATION TAX
LEVIED--COLLECTED BY DEPARTMENT--RATE--INTEREST OWNER'S LIABILITY TO
STATE--INDIAN LIABILITY.--
A. There is levied and shall be collected by the
department a tax on all products that are severed and sold. Except as provided in Subsections B and C of
this section, the measure and rate of the tax shall be nineteen-hundredths
percent of the taxable value of sold products.
Every interest owner shall be liable for this tax to the extent of the
owner's interest in the value of the products or to the extent of the owner's
interest as may be measured by the value of the products. An Indian tribe, Indian pueblo or Indian
shall be liable for this tax to the extent authorized or permitted by law.
B. In the event the unencumbered balance in the
oil and gas reclamation fund equals or exceeds one million one hundred fifty
thousand dollars ($1,150,000) for any one-month period computed after receipt
of the tax for that month, the rate of the tax levied by this section shall be
eighteen-hundredths percent beginning with the first day of the second month
following the month in which the unencumbered balance equaled or exceeded one
million one hundred fifty thousand dollars ($1,150,000).
C. After having been reduced to
eighteen-hundredths percent, the rate of the tax imposed by this section shall
remain at that rate until the unencumbered balance in the oil and gas
reclamation fund is less than or equal to five hundred thousand dollars
($500,000) for any one-month period computed after receipt of the tax for that
month, in which event the rate of the tax levied by this section shall be
increased to nineteen-hundredths percent beginning with the first day of the
second month following the month in which the unencumbered balance equaled or
was less than five hundred thousand dollars ($500,000).
D. The department shall notify taxpayers of any
change in the rate of tax imposed by this section."
Section 3. Section 70-2-38 NMSA 1978 (being Laws 1977,
Chapter 237, Section 5, as amended) is amended to read:
"70-2-38. OIL AND GAS RECLAMATION FUND
ADMINISTERED--PLUGGING WELLS ON FEDERAL LAND--RIGHT OF INDEMNIFICATION--ANNUAL
REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.--
A. The oil and gas reclamation fund shall be
administered by the oil conservation division of the energy, minerals and
natural resources department.
Expenditures from the fund may be used by the director of the division
for the purposes of:
(1) employing the necessary personnel to survey
abandoned wells, well sites and associated production facilities and preparing
plans for the plugging of abandoned wells that have not been plugged or that
have been improperly plugged and for the restoration and remediation of
abandoned well sites and associated production facilities that have not been
properly restored and remediated; and
(2) supporting energy education throughout the
state in an amount not to exceed one hundred fifty thousand dollars ($150,000)
annually.
B. The director of the oil conservation division
of the energy, minerals and natural resources department, as funds become
available in the oil and gas reclamation fund, shall reclaim and properly plug
all abandoned wells and shall restore and remediate abandoned well sites and
associated production facilities in accordance with the provisions of the Oil
and Gas Act and the rules and regulations promulgated pursuant to that
act. The division may order wells
plugged and well sites and associated production facilities restored and
remediated on federal lands on which there are no bonds running to the benefit
of the state in the same manner and in accordance with the same procedure as
with wells drilled on state and fee land, including using funds from the oil
and gas reclamation fund to pay the cost of plugging. When the costs of plugging a well drilled on
federal mineral leases or restoring and remediating well sites and associated
production facilities are paid from the oil and gas reclamation fund, the
division is authorized to bring a suit against the operator or district court of the county in which the
well is located for indemnification for all costs incurred by the division in
plugging the well or restoring and remediating the well site and associated
production facilities. Any funds
collected pursuant to a judgment in a suit for indemnification brought under
the Oil and Gas Act shall be deposited in the oil and gas reclamation fund.
C. The director of the oil conservation division
of the energy, minerals and natural resources department shall make an annual
report to the secretary of energy, minerals and natural resources, the governor
and the legislature on the use of the oil and gas reclamation fund.
D. Contracts for plugging, reclamation and
energy education pursuant to this section shall be entered into in accordance
with the provisions of the Procurement Code.
A contractor employed by the oil conservation division of the energy,
minerals and natural resources department to plug a well is authorized to sell
for salvage the equipment and material that is removed from the well in
plugging it."
Section 4. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2003.
HB 321
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