HOUSE BILL 530
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Thomas C. Taylor
AN ACT
RELATING TO NATURAL GAS PRODUCTION; PROHIBITING CERTAIN UNFAIR OR DISCRIMINATORY ACTS BY CERTAIN NATURAL GAS GATHERERS, PROCESSORS OR TREATERS; PROVIDING A COMPLAINT PROCEDURE FOR A HEARING BEFORE THE OIL CONSERVATION COMMISSION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Oil and Gas Act is enacted to read:
"[NEW MATERIAL] NATURAL GAS GATHERING, PROCESSING OR TREATING IN SAN JUAN BASIN--UNFAIR OR DISCRIMINATORY ACTS PROHIBITED--HEARING.--
A. Because of unique market conditions and competitive circumstances existing in the natural gas gathering, processing and treating industry in the San Juan basin, located in Rio Arriba, San Juan, Sandoval and McKinley counties, this section shall apply only to natural gas service providers operating in the San Juan basin as defined by the commission and shall not apply to natural gas service providers operating in the Permian basin or any other gas producing region of this state.
B. In order to prevent waste and protect correlative rights and in the best interests of conservation, no natural gas service provider shall charge any fee, engage in any practice or require any terms or conditions of service for natural gas gathering, processing or treating that are unfair or unduly discriminatory.
C. In order to prevent waste and protect correlative rights and in the best interests of conservation, no natural gas service provider shall unreasonably refuse to provide open access natural gas gathering, processing or treating, including the redelivery of natural gas to existing redelivery points, for a fee to any person seeking the service.
D. A person aggrieved by a violation of Subsection B or C of this section may file a complaint requesting a hearing on the matter with the commission. In the hearing, the burden of proof shall be upon the complainant. All expenses incurred by the commission in the proceedings shall be borne equally by the complainant and the respondent unless the commission, in its discretion, reallocates the expenses at the conclusion of the proceeding based upon its findings with respect to the merits of the respective positions of the parties.
E. Upon a complaint of a party aggrieved by an alleged violation of Subsection B of this section, if the commission finds that the fee, practice, term or condition complained of is unfair or unduly discriminatory, the commission may order an adjustment or elimination of the fee, practice, term or condition. In making its finding, the commission shall determine the fee, practice, term or condition that would result from arms-length bargaining in good faith in a competitive market between persons of equal bargaining power and shall consider all economically significant factors for the natural gas gathering, processing or treating that it determines to be relevant, including:
(1) the fees, practices, terms and conditions that the natural gas service provider has negotiated with the complainant and other customers for similar levels of service within the area that the commission determines to be relevant, taking into account the conditions and circumstances existing at the time of agreement;
(2) the fees, practices, terms and conditions provided to customers by other natural gas service providers for similar services within the area that the commission determines to be relevant, taking into account the conditions and circumstances existing at the time of agreement;
(3) the reasonable financial risks of operating the natural gas service provider's gathering, processing or treating facility;
(4) the reasonable capital, operating and maintenance costs of the facility; and
(5) such other factors that the commission determines to be relevant.
F. Upon a complaint of a party aggrieved by an alleged violation of Subsection C of this section, the commission may order the natural gas service provider to provide service to the complainant unless the commission finds that:
(1) the provision of the service would require an additional capital investment or incremental operating and maintenance costs by the natural gas service provider that the complainant is unwilling to pay on fair and reasonable terms;
(2) the provision of the service could reasonably be expected to result in material adverse effect on the environment, public safety or the service being provided to existing customers; or
(3) the natural gas does not meet minimum standards for quality and energy content or recoverable hydrocarbon content consistently applied to other gas connected to the natural gas service provider's facility.
G. Nothing in this section gives the commission the authority to set fees or require practices, terms and conditions of service computed on a utility rate of return basis or authority to otherwise regulate natural gas service providers in a manner similar to public utilities.
H. Nothing in this section authorizes the commission to abrogate the terms of an existing contract while the contract is in force and effect; provided that the commission may order the continuation of the terms and service of an existing contract for existing customers during the pendency of a complaint.
I. This section does not apply to wellhead purchases or natural gas producer-owned or -controlled field facilities that do not provide gathering, processing or treating services to third parties other than interest owners in wells connected to the field facilities, including pipelines that connect a well or wells to a central delivery point for onward carriage by a natural gas gatherer.
J. As used in this section:
(1) "natural gas gatherer" means a person offering to transport, for compensation, natural gas of third parties from a wellhead or central delivery point in New Mexico to a processing or treating facility or to the inlet of an interstate or intrastate pipeline;
(2) "natural gas processor" or "natural gas treater" means a person offering to process, for compensation, natural gas of third parties for the purpose of extracting natural gas liquids or removing carbon dioxide or other impurities from a natural gas stream; and
(3) "natural gas service provider" means a natural gas gatherer, a natural gas processor or a natural gas treater.
K. Proprietary or confidential business information and trade secrets obtained or received by the commission for use in resolving a complaint filed pursuant to this section shall be kept confidential and are not open to public inspection.
L. The commission shall promulgate such rules as are necessary to carry out the provisions of this section, including rules governing the procedure for filing complaints, conducting hearings, enforcing orders and protecting trade secrets and proprietary or confidential information used in determining or setting a fee, practice, term or condition applicable to a customer or natural gas service provider."
SECTION 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.
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