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F I S C A L I M P A C T R E P O R T

SPONSOR Cheney

DATE TYPED 3/11/2005 HB HJM 106

SHORT TITLE Develop Landowner and Oil and Gas Industry Bill SB

ANALYST Aguilar

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: HB1015 and HM 34

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of Bill

House Joint Memorial 106 requests landowner representatives, the New Mexico Cattle Grower's

Association, the New Mexico Farm and Livestock Bureau, the New Mexico Association of Con-

servation Districts, the New Mexico Home Builders Association, the Realtors Association of

New Mexico, the New Mexico Oil and Gas Association and the Independent Petroleum Associa-

tion of New Mexico to meet and develop a bill on the subject of rights of surface and mineral

owners, prior to the 2006 legislative session.

Significant Issues

Under current law, an owner or lessee of minerals including oil and gas has a right to use so

much of the surface of the land overlying its minerals as may be necessary to explore for and

produce the minerals. The surface owner, absent a contrary agreement, is not entitled to any

compensation for loss of use of the portion of the surface reasonably necessary for mineral op-

erations, nor for any diminution in the value of the surface due to such operations. The mineral

House Joint Memorial 106 -- Page 2

producer is liable only for damages to the surface caused by its negligence, or by unreasonable or

excessive use of the surface. This rule of non-liability is mitigated to some degree by a require-

ment that an oil and gas producer conduct its operations in such manner as to reasonably ac-

commodate existing surface uses.

New Mexico law does not presently require prior notice of operations to the surface owner, or

require any security from the operator for damages that may accrue to the surface owner.

The memorial seeks an accommodation of competing interests of surface and mineral owners,

leading to the formation of a statutory solution for New Mexico to this persistent issue.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

This memorial deals with the same subject matter as HM34 and HB1015. HM34 calls for a fed-

eral approach to the split estate issue that would affect only federal lands. HB1015 would enact

a state law on the subject.

PA/yr