HOUSE ENERGY, ENVIRONMENT AND NATURAL RESOURCES
COMMITTEE SUBSTITUTE FOR
HOUSE BILL 546
54th legislature - STATE OF NEW MEXICO - first session, 2019
AN ACT
RELATING TO NATURAL RESOURCES; ENACTING THE FLUID OIL AND GAS WASTE ACT; ESTABLISHING RESPONSIBILITY FOR FLUID OIL AND GAS WASTE; ALLOWING THE USE OF TREATED OR RECYCLED FLUID OIL AND GAS WASTE; DECLARING CERTAIN CONTRACT PROVISIONS RELATING TO FLUID OIL AND GAS WASTE VOID AGAINST PUBLIC POLICY; MAKING CONFORMING TECHNICAL CHANGES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] SHORT TITLE.--Sections 1 through 6 of this act may be cited as the "Fluid Oil and Gas Waste Act"."
SECTION 2. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] DEFINITIONS.--As used in the Fluid Oil and Gas Waste Act:
A. "fluid oil and gas waste" means a fluid that arises out of or is incidental to the drilling for or production of hydrocarbons, including a fluid containing salt or other mineralized, suspended or dissolved substances, brine, hydraulic fracturing fluid, flowback water or produced water;
B. "fresh water" means surface or ground water below the land surface in a zone of saturation and does not include produced water; and
C. "operator" means a person authorized by the oil conservation division of the energy, minerals and natural resources department to engage in operations to drill, complete, rework, recomplete, plug back, sidetrack, operate or produce an oil or gas well."
SECTION 3. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] EXCLUSION.--The provisions of the Mine Dewatering Act shall not apply to fluid oil and gas waste."
SECTION 4. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] JURISDICTION.--It is the jurisdiction of:
A. the oil conservation division of the energy, minerals and natural resources department to regulate the disposition, treatment, recycling and reuse of fluid oil and gas waste, including use in the development or production of hydrocarbons, load construction or maintenance, or other construction, in the generation of electricity or in other industrial processes; and
B. the department of environment to regulate all other uses of fluid oil and gas waste."
SECTION 5. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] FLUID OIL AND GAS WASTE--TRANSFERRED FOR TREATMENT--SUBSEQUENT USE.--
A. Unless otherwise expressly provided by a contract, bill of sale or other legally binding document:
(1) all fluid oil and gas waste that is produced from an oil or gas well is the responsibility of and under the control of the working interest owner or operator of that oil or gas well. The working interest owner or operator shall have the right to take possession of the fluid oil and gas waste and to transfer, sell, convey, transport, recycle, treat or reuse the fluid oil and gas waste and obtain proceeds from any such uses. The operator of the oil and gas well that the fluid oil and gas waste is produced from shall handle the disposition, treatment, recycling or reuse of the fluid oil and gas waste as a reasonably prudent operator;
(2) when fluid oil and gas waste is transferred, sold or conveyed to a person who transports or takes possession of that waste, the transferred fluid oil and gas waste is considered to be the responsibility of and under the control of the person who takes possession of it until that person transfers the waste to another person. Upon transfer, the transferee shall have the right to take possession of the fluid oil and gas waste and to transfer, sell, convey, transport, recycle, treat or reuse the fluid oil and gas waste, and obtain proceeds from any such uses, and shall be liable for the use, treatment, recycling, reuse or disposition of the fluid oil and gas waste; and
(3) when a person who takes possession of fluid oil and gas waste for the purpose of recycling or treating the waste for a subsequent use transfers possession of the treated product or any treatment byproduct to another person for the purpose of subsequent disposal or use, the transferred product or byproduct is considered to be the responsibility of and under the control of the person to whom the product or byproduct is transferred. Upon transfer, the transferee shall have the right to take possession of the fluid oil and gas waste and to transfer, sell, convey, transport, recycle, treat or reuse the fluid oil and gas waste and obtain proceeds from any such uses, and shall be liable for the use, treatment, recycling, reuse or disposition of the fluid oil and gas waste, product or byproduct.
B. After fluid oil and gas waste is treated or recycled in compliance with state and federal law, the liability of the person in possession of the fluid oil and gas waste shall terminate.
C. Pursuant to Section 70-2-12.1 NMSA 1978, no permit or other approval from the state engineer is required for the disposition of fluid oil and gas waste. The disposition of fluid oil and gas waste, including disposition by use, is neither an appropriation of water for beneficial use nor a waste of water, and no water right shall be established by the disposition of fluid oil and gas waste."
SECTION 6. A new section of Chapter 70 NMSA 1978 is enacted to read:
"[NEW MATERIAL] VOID AS AGAINST PUBLIC POLICY--THROUGHPUT FEES--LIMITATIONS ON USE OF RECYCLED OR TREATED FLUID OIL AND GAS WASTE.--A provision of an agreement, covenant or promise, foreign or domestic, contained in, collateral to or affecting an agreement pertaining to a well for oil or gas or fluid oil and gas waste entered into on or after July 1, 2019 is against public policy and void to the extent it:
A. imposes throughput or other fees for the presence, transport or movement of fluid oil and gas waste if the agreement does not provide for the transport of the fluid oil and gas waste; or
B. requires fresh water to be purchased for oil and gas operations, or otherwise limits an operator's ability to use recycled or treated fluid oil and gas waste in oil and gas operations."
SECTION 7. Section 72-12A-1 NMSA 1978 (being Laws 1980, Chapter 148, Section 1) is amended to read:
"72-12A-1. SHORT TITLE.--[This act] Chapter 72, Article 12A NMSA 1978 may be cited as the "Mine Dewatering Act"."
SECTION 8. A new section of the Mine Dewatering Act is enacted to read:
"[NEW MATERIAL] FLUID OIL AND GAS WASTE.--The Mine Dewatering Act shall not apply to fluid oil and gas waste regulated pursuant to the Fluid Oil and Gas Waste Act."
SECTION 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.
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