HOUSE BILL 335

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Brian F. Egolf and Michael S. Sanchez

AN ACT

RELATING TO OIL AND GAS; AMENDING AND ENACTING SECTIONS OF THE OIL AND GAS ACT TO ESTABLISH TESTING TO PROTECT WATER RESOURCES; PROVIDING REMEDIES FOR DAMAGES RESULTING FROM HYDRAULIC FRACTURING; DECLARING AN EMERGENCY.

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] HYDRAULIC FRACTURING.--

          A. Prior to conducting any hydraulic fracturing in the state for the purpose of extracting oil or natural gas or any other product or substance, an owner shall conduct for each proposed well a geologic and hydrologic assessment to establish the location of all surface waters and ground water within a two-thousand-meter radius of the well head to a depth of one thousand feet below the well's target depth and to evaluate the structural geology and any potential risks for ground water or surface water contamination that may result from the hydraulic fracturing or other drilling operations.

          B. As part of this assessment and prior to receiving any permit to drill, an owner shall conduct baseline water testing from the surface to a total depth of one thousand feet below the well's target depth of any surface and ground water resources within a two-thousand-meter radius of the bore hole of the proposed well, the results of which shall be included in the well permit application and made available for public inspection prior to drilling.

          C. The water testing required by this section shall include quantification of: 

                (1) pH;

                (2) specific conductance;

                (3) total dissolved solids;

                (4) dissolved gases, including methane, ethane and propane; 

                (5) alkalinity, including total bicarbonate and carbonate as CaCO3;

                (6) major anions bromide, chloride, fluoride,

sulfate, nitrate and nitrite as N phosphorus;

                (7) major cations calcium, iron, magnesium, manganese, potassium and sodium;

                (8) other elements, including barium, boron, selenium and strontium;

                (9) presence of bacteria, including iron related, sulfate reducing and slime forming;

                (10) total petroleum hydrocarbons and compounds, including benzene, toluene, ethylbenzene and xylenes; and

                (11) field observations such as odor, water color, sediment, bubbles and effervescence.

          D. Water testing shall be conducted before the drilling, during the drilling, one week after the conclusion of the hydraulic fracturing operation and six months post-well completion. An independent licensed professional engineer or other professional acceptable to the oil conservation division of the energy, minerals and natural resources department shall certify the test results to the division, paid for by the owner. All results shall be made available to the public on a web site to be provided by the division. All samples shall be maintained by the division at the expense of the owner for a period of three years from the date of the last test.

          E. Any statistically significant increase in the components listed in Subsection C of this section shall be presumed to have been caused by the hydraulic fracturing operation conducted, allowed or ordered by the owner or

another affiliated person, agent, employee or entity. This presumption may be rebutted in a court of law by clear and convincing evidence.

          F. A person claiming damage, including the state of New Mexico, shall commence an action to recover from the owner damages resulting from the hydraulic fracturing within three years of the date that the last water test sample results are published by the oil conservation division on its web site. Action shall be brought in the district court of the county in which injury is alleged to have occurred, where the claimant resides, in the county where the owner resides or in Santa Fe county. A prevailing plaintiff shall recover attorney fees and the costs to mitigate and remediate damages to surface water, ground water and other resources and other actual damages. A prevailing plaintiff may recover punitive damages. It shall be no defense that the owner has paid a bond to the oil conservation division in order to receive its permit.

          G. For the purposes of Subsections E and F of this section, "owner" shall include the owner and the owner's agents, employees, subcontractors, assigns, parent companies, parent partnerships, partners, associates and joint venture participants, all of whom shall be jointly and severally liable for damages arising under Subsection F of this section.

          H. The oil conservation division shall promulgate rules establishing bonding requirements for all wells on which hydraulic fracturing is planned, which shall be sufficient to pay all costs associated with remediating contamination to surface water and ground water caused by hydraulic fracturing."

     SECTION 2. 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. "hydraulic fracturing" means the process of injecting fluid into an oil- or natural-gas-bearing rock formation adjacent to the borehole of an oil or natural gas well for the purpose of either creating new fractures or expanding existing fractures to stimulate the flow into the well of oil or natural gas that would otherwise remain in the rock formation;

          [A.] B. "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.] C. "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.] D. "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.] E. "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.] F. "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.] G. "producer" means the owner of a well capable of producing oil or natural gas or both in paying quantities;

          [G.] H. "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.] I. "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 oil or 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 oil or 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.] J. "potash" means the naturally occurring bedded deposits of the salts of the element potassium;

          [J.] K. "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.] L. "produced water" means water that is an incidental byproduct from drilling for or the production of oil and gas."

     SECTION 3. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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