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New oil-gas regulations head to governor

SANTA FE, N.M. — A bill outlining new rules dealing with violations by oil and gas operators and management of “produced,” or brackish, water is headed to Gov. Michelle Lujan Grisham’s desk.

A joint House and Senate conference committee voted 6-0 Friday morning to approve the legislation, and both chambers passed the bill in voice votes in the early afternoon.

Legislative approval follows weeks of negotiations among industry representatives, environmentalists and government officials on Senate Bill 186, sponsored by Sen. Richard Martinez, D-Española. That bill aimed to amend the state Oil and Gas Act to give the Oil Conservation Division authority to directly impose penalties on industry operators for violations rather than having to file suit in the courts. It also raised fines for violations for the first time since 1935.

Martinez, however, opted to add those measures as “friendly amendments” to House Bill 546 on wastewater management, allowing legislators to vote on a combined bill.

The governor considers it priority legislation, and support from cabinet officials was critical in moving the bill through the session, said Jon Goldstein, the Environmental Defense Fund’s regulatory and legislative affairs director.

“This bill is New Mexico’s first major oil and gas legislative reform in over decade,” Goldstein said in a statement. “Their leadership catalyzed these reforms and created a bill that all sides — industry and environmentalists, as well as Democrats and Republicans — support.”

Changes negotiated in the bill include:

n reducing proposed penalties from $15,000 per day for each violation to $2,500, and from $25,000 per day for noncompliance or incidents that cause serious human or environmental damage to $10,000

n reducing the total, accumulated-fine cap from $500,000 to $200,000, with the OCD required to file legal suits for anything above that amount

New Mexico Oil and Gas Association Executive Director Ryan Flynn said all sides gave a little.

“It’s a reasonable compromise,” Flynn said. “…We’re happy with the outcome.”

As for the provisions on wastewater, the bill clarifies operators’ ability to re-use water that comes out of oil and gas activities, known as “produced water.” That could lead to less fresh water use by industry, Goldstein said.

Five to seven barrels of produced water are generated for every barrel of oil produced, totaling more than 1 billion barrels of wastewater in 2018, according to the Energy, Minerals and Natural Resources Department.

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