0001| AN ACT | 0002| RELATING TO ENERGY; AMENDING SECTIONS OF THE NMSA 1978 TO PROVIDE | 0003| FOR THE RESTORATION AND REMEDIATION OF ABANDONED WELL SITES. | 0004| | 0005| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0006| Section 1. Section 7-30-4 NMSA 1978 (being Laws 1959, Chapter 53, Section 4, as | 0007| amended) is amended to read: | 0008| "7-30-4. OIL AND GAS CONSERVATION TAX LEVIED--COLLECTED BY DE- | 0009| PARTMENT--RATE--INTEREST OWNER'S LIABILITY TO STATE--INDIAN LIABIL- | 0010| ITY.-- | 0011| A. There is levied and shall be collected by the department a tax on all products | 0012| that are severed and sold. The measure and rate of the tax shall be nineteen one-hundredths of | 0013| one percent of the taxable value of sold products. Every interest owner shall be liable for this | 0014| tax to the extent of the owner's interest in the value of such products or to the extent of the | 0015| owner's interest as may be measured by the value of such products. Any Indian tribe, Indian | 0016| pueblo or Indian shall be liable for this tax to the extent authorized or permitted by law. | 0017| B. In the event the unencumbered balance in the oil and gas reclamation fund | 0018| equals or exceeds one million dollars ($1,000,000) for any one-month period computed after | 0019| receipt of the tax for that month, then the rate of the tax levied by this section shall be eighteen | 0020| one-hundredths of one percent beginning with the first day of the second month following the | 0021| month in which the unencumbered balance equaled or exceeded one million dollars | 0022| ($1,000,000), and no funds collected by the tax with respect to any period for which the rate is | 0023| eighteen one-hundredths of one percent shall be distributed to the oil and gas reclamation fund. | 0024| After having been reduced to eighteen one-hundredths of one percent, the rate of the tax | 0025| imposed by this section shall remain at that rate until the unencumbered balance in the oil and | 0001| gas reclamation fund is less than or equal to five hundred thousand dollars ($500,000) for any | 0002| one-month period computed after receipt of the tax for that month, in which event the rate of the | 0003| tax levied by this section shall be increased to nineteen one-hundredths of one percent beginning | 0004| with the first day of the second month following the month in which the unencumbered balance | 0005| equaled or was less than five hundred thousand dollars ($500,000), and the additional funds with | 0006| respect to any period for which the rate is nineteen one-hundredths of one percent shall be dis- | 0007| tributed to the oil and gas reclamation fund in accordance with the provisions of the Tax | 0008| Administration Act. | 0009| C. The department shall notify taxpayers of any change in the rate of tax imposed | 0010| by this section." | 0011| Section 2. Section 70-2-12 NMSA 1978 (being Laws 1978, Chapter 71, Section 1, as | 0012| amended) is amended to read: | 0013| "70-2-12. ENUMERATION OF POWERS.-- | 0014| A. Included in the power given to the oil conservation division of the energy, | 0015| minerals and natural resources department is the authority to collect data; to make investigations | 0016| and inspections; to examine properties, leases, papers, books and records; to examine, check, test | 0017| and gauge oil and gas wells, tanks, plants, refineries and all means and modes of transportation | 0018| and equipment; to hold hearings; to provide for the keeping of records and the making of reports | 0019| and for the checking of the accuracy of the records and reports; to limit and prorate production | 0020| of crude petroleum oil or natural gas or both as provided in the Oil and Gas Act; to require either | 0021| generally or in particular areas certificates of clearance or tenders in connection with the | 0022| transportation of crude petroleum oil or natural gas or any products of either or both oil and | 0023| products or both natural gas and products. | 0024| B. Apart from any authority, express or implied, elsewhere given to or existing in | 0025| the oil conservation division by virtue of the Oil and Gas Act or the statutes of this state, the | 0001| division is authorized to make rules, regulations and orders for the purposes and with respect to | 0002| the subject matter stated in this subsection: | 0003| (1) to require dry or abandoned wells to be plugged in a way to confine the | 0004| crude petroleum oil, natural gas or water in the strata in which it is found and to prevent it from | 0005| escaping into other strata; the division shall require a cash or surety bond in a sum not to exceed | 0006| fifty thousand dollars ($50,000) conditioned for the performance of such regulations; | 0007| (2) to prevent crude petroleum oil, natural gas or water from escaping from | 0008| strata in which it is found into other strata; | 0009| (3) to require reports showing locations of all oil or gas wells and for the | 0010| filing of logs and drilling records or reports; | 0011| (4) to prevent the drowning by water of any stratum or part thereof capable | 0012| of producing oil or gas or both oil and gas in paying quantities and to prevent the premature and | 0013| irregular encroachment of water or any other kind of water encroachment that reduces or tends | 0014| to reduce the total ultimate recovery of crude petroleum oil or gas or both oil and gas from any | 0015| pool; | 0016| (5) to prevent fires; | 0017| (6) to prevent "blow-ups" and "caving" in the sense that the conditions | 0018| indicated by such terms are generally understood in the oil and gas business; | 0019| (7) to require wells to be drilled, operated and produced in such manner as to | 0020| prevent injury to neighboring leases or properties; | 0021| (8) to identify the ownership of oil or gas producing leases, properties, wells, | 0022| tanks, refineries, pipelines, plants, structures and all transportation equipment and facilities; | 0023| (9) to require the operation of wells with efficient gas-oil ratios and to fix | 0024| such ratios; | 0025| (10) to fix the spacing of wells; | 0001| (11) to determine whether a particular well or pool is a gas or oil well or a | 0002| gas or oil pool, as the case may be, and from time to time to classify and reclassify wells and | 0003| pools accordingly; | 0004| (12) to determine the limits of any pool producing crude petroleum oil or | 0005| natural gas or both and from time to time redetermine the limits; | 0006| (13) to regulate the methods and devices employed for storage in this state of | 0007| oil or natural gas or any product of either, including subsurface storage; | 0008| (14) to permit the injection of natural gas or of any other substance into any | 0009| pool in this state for the purpose of repressuring, cycling, pressure maintenance, secondary or | 0010| any other enhanced recovery operations; | 0011| (15) to regulate the disposition of water produced or used in connection with | 0012| the drilling for or producing of oil or gas or both and to direct surface or subsurface disposal of | 0013| the water in a manner that will afford reasonable protection against contamination of fresh water | 0014| supplies designated by the state engineer; | 0015| (16) to determine the limits of any area containing commercial potash | 0016| deposits and from time to time redetermine the limits; | 0017| (17) to regulate and, where necessary, prohibit drilling or producing | 0018| operations for oil or gas within any area containing commercial deposits of potash where the | 0019| operations would have the effect unduly to reduce the total quantity of the commercial deposits | 0020| of potash which may reasonably be recovered in commercial quantities or where the operations | 0021| would interfere unduly with the orderly commercial development of the potash deposits; | 0022| (18) to spend the oil and gas reclamation fund and do all acts necessary and | 0023| proper to plug dry and abandoned oil and gas wells and to restore and remediate abandoned well | 0024| sites and associated production facilities in accordance with the provisions of the Oil and Gas | 0025| Act, the rules and regulations adopted under that act and the Procurement Code, including | 0001| disposing of salvageable equipment and material removed from oil and gas wells being plugged | 0002| by the state; | 0003| (19) to make well price category determinations pursuant to the provisions of | 0004| the Natural Gas Policy Act of 1978 or any successor act and, by regulation, to adopt fees for | 0005| such determinations, which fees shall not exceed twenty-five dollars ($25.00) per filing. Such | 0006| fees shall be credited to the account of the oil conservation division by the state treasurer and | 0007| may be expended as authorized by the legislature; | 0008| (20) to regulate the construction and operation of oil treating plants and to | 0009| require the posting of bonds for the reclamation of treating plant sites after cessation of | 0010| operations; | 0011| (21) to regulate the disposition of nondomestic wastes resulting from the | 0012| exploration, development, production or storage of crude oil or natural gas to protect public | 0013| health and the environment; and | 0014| (22) to regulate the disposition of nondomestic wastes resulting from the oil | 0015| field service industry, the transportation of crude oil or natural gas, the treatment of natural gas | 0016| or the refinement of crude oil to protect public health and the environment, including | 0017| administering the Water Quality Act as provided in Subsection E of Section 74-6-4 NMSA | 0018| 1978." | 0019| Section 3. Section 70-2-38 NMSA 1978 (being Laws 1977, Chapter 237, Section 5, as | 0020| amended) is amended to read: | 0021| "70-2-38. OIL AND GAS RECLAMATION FUND ADMINISTERED--PLUGGING | 0022| WELLS ON FEDERAL LAND--RIGHT OF INDEMNIFICATION--ANNUAL REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.-- | 0023| A. The oil and gas reclamation fund shall be administered by the oil conservation | 0024| division of the energy, minerals and natural resources department. Expenditures from the fund | 0025| may be used by the director of the division for the purpose of employing the necessary personnel | 0001| to survey abandoned wells, well sites and associated production facilities and to prepare plans | 0002| for the plugging of abandoned wells that have not been plugged or that have been improperly | 0003| plugged and for the restoration and remediation of abandoned well sites and associated | 0004| production facilities that have not been properly restored and remediated. The director, as funds | 0005| become available in the oil and gas reclamation fund, shall reclaim and properly plug all | 0006| abandoned wells and shall restore and remediate abandoned well sites and associated production | 0007| facilities in accordance with the provisions of the Oil and Gas Act and the rules and regulations | 0008| promulgated pursuant to that act. The division may order wells plugged and well sites and | 0009| associated production facilities restored and remediated on federal lands on which there are no | 0010| bonds running to the benefit of the state in the same manner and in accordance with the same | 0011| procedure as with wells drilled on state and fee land, including utilizing funds from the oil and | 0012| gas reclamation fund to pay the cost of plugging. When the costs of plugging a well drilled on | 0013| federal mineral leases or restoring and remediating well sites and associated production facilities | 0014| are paid from the oil and gas reclamation fund, the division is authorized to bring a suit against | 0015| the operator or the owner of the minerals under the tract, or both, in the district court of the | 0016| county in which the well is located for indemnification for all costs incurred by the division in | 0017| plugging the well or restoring and remediating the well site and associated production facilities. | 0018| Any funds collected pursuant to a judgment in a suit for indemnification brought under the Oil | 0019| and Gas Act shall be deposited in the oil and gas reclamation fund. | 0020| B. The director of the oil conservation division of the energy, minerals and natural | 0021| resources department shall make an annual report to the secretary of energy, minerals and | 0022| natural resources, the governor and the legislature on the use of the oil and gas reclamation fund. | 0023| C. All contracts for well plugging shall be entered into in accordance with | 0024| the provisions of the Procurement Code. Any contractor employed by the oil conservation | 0025| division of the energy, minerals and natural resources department to plug a well is | 0001| authorized to sell for salvage the equipment and material that is removed from the well in | 0002| plugging it." | 0003| |