44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO INDEMNIFICATION; AMENDING SECTION 56-7-2 NMSA 1978 (BEING LAWS 1971, CHAPTER 205, SECTION 1) TO EXPAND COVERAGE OF PROHIBITED INDEMNIFICATION ARRANGEMENTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 56-7-2 NMSA 1978 (being Laws 1971, Chapter 205, Section 1) is amended to read:

"56-7-2. OIL, GAS OR WATER WELLS AND MINERAL MINES--AGREEMENTS, COVENANTS AND PROMISES TO INDEMNIFY VOID.--

A. [Any] An agreement, covenant or promise contained in, collateral to or affecting [any] an agreement pertaining to [any] a well for oil, gas or water, or mine for [any] a mineral [which] that purports to indemnify the indemnitee against loss or liability for damages [for

(1) death or bodily injury to persons; or

(2) injury to property; or

(3) any other loss, damage or expense arising under either Paragraph (1) or (2) or both; or

(4) any combination of these] arising from the circumstances specified in Paragraphs (1), (2) or (3) of this subsection is against public policy and is void:

(1) the sole or concurrent negligence of the indemnitee or the agents or employees of the indemnitee [or any];

(2) the sole or concurrent negligence of an independent contractor who is directly responsible to the indemnitee [or from any]; or

(3) an accident [which] that occurs in operations carried on at the direction or under the supervision of the indemnitee [or], an employee or representative of the indemnitee or in accordance with methods and means specified by the indemnitee or employees or representatives of the indemnitee [is against public policy and is void and unenforceable. This provision shall not affect the validity of any insurance contract or any benefit conferred by the Workmen's Compensation Act].

B. As used in this section, "agreement pertaining to [any] a well for oil, gas or water, or mine for [any] a mineral" means [any agreement or understanding, written or oral] an agreement:

(1) concerning any operations related to drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, plugging or otherwise rendering services [in or] in connection with [any] a well drilled for the purpose of producing or disposing of oil, gas or other minerals or water [and designing, excavating, constructing, improving or otherwise];

(2) for rendering services [on or] in connection with [any] a mine shaft, drift or other structure intended for use in the exploration for or production of [any] a mineral [or an agreement]; or

(3) to perform [any] a portion of [any such] the work or services described in Paragraphs (1) or (2) of this subsection or [any] an act collateral thereto [including the furnishing or rental of equipment, incidental transportation and other goods and services furnished in connection with any such service or operation.

C. Nothing in this section shall deprive an owner of the surface estate of the right to secure an indemnity from any lessee, operator, contractor or other person conducting operations for the exploration or production of minerals on the owner's land].

C. A provision in an insurance contract naming a person as an additional insured or otherwise having the effect of imposing a duty of indemnification on the primary insured party that would, if it were a direct or collateral agreement described in Subsections A and B of this section, be void, is against public policy and void.

D. Except as provided in Subsections A through C of this section, nothing in this section:

(1) deprives an owner of the surface estate of the right to secure indemnity from a lessee, operator, contractor or other person conducting operations for the exploration of minerals on the owner's land; or

(2) affects the validity of a benefit conferred by the Workers' Compensation Act."