New Mexico governor wants to give regulators the ability to fine well operators

New Mexico’s Gov. Michelle Lujan Grishman wants to restore the ability of the state’s oilfield regulators to directly fine well operators who don’t properly maintain equipment or spill waste.

Her bill, authored by Democratic state Sen. Richard Martinez passed out of its first legislative committee this past week even though Republicans fought it.

The collection of fines against oilfield operators has ground to a near halt in the aftermath of a 2009 state Supreme Court decision that required the involvement of state prosecutors to assess penalties according to the Associated Press.

Possible fines would increase from $1,000 a day to $15,000 — and up to $25,000 against operators who flout compliance or court orders. It also would set up procedures for enforcement hearings and appeals.

Supporters say New Mexico has fallen behind energy-producing states such as Alaska, Texas and Colorado in providing effective oversight of active wells, plugged wells and waste cleanup.

“It’s not about unfairly penalizing the oil industry,” Martinez told a Senate panel on conservation. “It is about aggressively pursuing bad actors.”

Similar proposals have repeatedly stalled in the past decade. The political landscape for reform has shifted this year with election of a Democratic governor and land commissioner to oversee oil leases across extensive state trust lands and underground mineral rights.

Ryan Flynn, executive director of the New Mexico Oil and Gas Association, said the industry is willing to work with lawmakers as they develop some additional tools for state oilfield regulators.

He said the association disagrees with provisions that would apply strict liability to violations of the state Oil and Gas Act, regardless of whether a person knowingly or willfully violated the law.

“We are comfortable in working on a system that will allow the (state energy) agency to do more enforcement administratively, to not have to go to the courts,” he said.

The state is experiencing record-breaking oil production, propelled by exploration in the Permian Basin that straddles Texas and southeastern New Mexico.

Advocates for new enforcement procedures say the rush to tap newly confirmed reserves within the Permian Basin has overwhelmed oilfield regulators.

Newly appointed Energy, Minerals and Natural Resources Secretary Sarah Cottrell Propst is seeking funding for eight new employees at its Oil Conservation Division, including an environmental compliance attorney.

The hazards of the current oversight system are highlighted by sanctions against the Texas-based oilfield business Siana Operating over accusations it trespassed and spilled waste on state trust lands even as it fell behind on lease payments. It is unclear whether multimillion-dollar, court-ordered fines against the bankrupt company this year ever will be paid.

“Really what we’re talking about is getting the enforcement authority to write a ticket before it gets to that level,” said Ben Shelton, legislative director for Conservation Voters New Mexico.

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