Sen. Jaramillo introduces bill to modernize 1935 Oil & Gas Act

New Mexico Sen. Leo Jaramillo (D-5) of Rio Arriba County introduced the New Mexico Oil and Gas Justice and Reform Act (SB 418) to modernize the 1935 Oil and Gas Act. The bill, supported by a broad range of New Mexico community groups, aims to ensure that any development of oil and gas resources in the state accounts for public interest values. These values are, right now, absent from the 88-year-old act, which created and defines the Oil Conservation Division (OCD), the Oil Conservation Commission (OCC), and how they regulate the industry. The bill would charge OCD and the OCC with safeguarding the lives and interests of frontline communities, public health, and the environment alongside their present mandate to promote oil and gas development. It would also expand the OCC to include one member to represent the interests of frontline communities and one member dedicated to protecting the environment and public health.

“Reform of the Oil & Gas Act is long overdue. Indigenous and frontline communities who have been experiencing the brunt of oil and gas pollution need reprieve and public health safeguards, which this act will begin to reflect,” said Robyn Jackson, executive director of Diné Citizens Against Ruining Our Environment. “This bill contains measures we strongly support, including removing the cap on blanket bonds, making operators fully financially accountable, and the bill would finally establish an environmental justice advisory council.”

“Those of us living in the Permian Basin understand how badly this important legislation is needed,” said Kayley Shoup, community organizer with Citizens Caring for the Future. “Living in southeast New Mexico during the Permian oil boom often feels like being on a runaway train where multibillion dollar corporations and federal and state agencies have all the control.This legislation not only gives frontline communities a seat at the table, but also ensures state agencies such as the OCD have a mandate to protect citizens and our environment from pollution. This is crucial as we face down climate catastrophe for years to come. The world looks vastly different than it did in 1935, and it’s time our laws reflect that.” 

“Life has changed a great deal in New Mexico since the original Oil and Gas Act of 1935,” said Sister Joan Brown, executive director of Interfaith Power and Light New Mexico & El Paso. “Today, we are very aware that ethical and moral responsibility and the common good are essential if we are to live out the golden rule, to care for neighbors and God’s creation. In our complex world, we believe government and business have a growing responsibility to be good neighbors and welcome the opportunity to revise outdated rules to care for communities, creation, and the future.”

“When the Oil and Gas Act was passed in 1935, the only public interest at stake was development of the resource. Fast forward to 2023, and we know now that oil and gas contribute significantly to climate change, that pollution from oil and gas impacts public health, and that frontline communities, including communities of color and indigenous communities, are hit hardest,” said Tannis Fox, senior attorney at the Western Environmental Law Center. “It’s long past due that the Oil and Gas Act take account of the public interests at stake in today’s world. This bill would fill a critical need with reasonable, necessary reforms.”

The bill would also address bonding shortfalls by closing the “blanket bonding” ceiling that limits financial assurance for well plugging and cleanup to a maximum of $250,000 even if the operator owns hundreds of wells. The average cost to plug and reclaim a single well is more than $70,000—a cost unjustly paid by taxpayers when operators go out of business in part because of the blanket bonding maximum.

The bill would also allow the OCC and OCD to require setbacks of oil and gas infrastructure from structures like homes and schools to protect public health in frontline communities. A 2021 Environmental Defense Fund study found that over 35,000 New Mexicans live within 1,000 feet of a well regulated under the New Mexico Ozone Precursor Rule. Of those, 19,000 are people of color including over 5,800 Native Americans. The bill would also establish an advisory council to identify environmental injustice impacts and advise the OCC and OCD how to address those inequities.

To ensure accountability, the bill would lift the Oil and Gas Act’s cap on administrative civil penalties for violations at $200,000. No other major environmental statute in New Mexico caps civil penalties for ongoing violations, especially violations that result in environmental or public health harm. This cap is an anomaly enacted to benefit oil and gas special interests.

The bill would also guard against conflicts of interests among members by the OCC by requiring a one year cooling off period from being employed by the industry before serving on the OCC and an annual disclosure of income over $10,000 from the oil and gas industry for all members.

Lastly, the bill would lift the outdated restriction that the OCD director must be a licensed petroleum engineer or an expert in petroleum engineering. This restriction unnecessarily limits the eligibility for this position, in a day and age when the complexities demand regulatory expertise for the job, and unduly limits OCD leadership to oil and gas industry insiders with a high likelihood of conflicts of interest. The bill expands eligibility for the position to people with oil and gas industry regulatory expertise and who are knowledgeable about the environmental, health, and social implications of oil and gas extraction.

Other community statements:

“Frontline communities have waited years for their considerations to be heard. Sen. Jaramillo’s bill would create a framework for their voices to be heard by oil and gas regulators and would make important changes that make sense in 2023. Allowing the Oil Conservation Division to require that oil and gas wells be a safe distance from homes, schools, hospitals and the like would be a step toward justice and better public health. We are grateful for Sen. Jaramillo’s dedication to the health of all New Mexicans.” –Camilla Feibelman,  Sierra Club Rio Grande Chapter director

“Orphan wells can pollute our water, lower property values, and release methane—a powerful greenhouse gas. While Congress recently made a $4.7 billion investment in plugging existing orphan wells, we are grateful to Sen. Jaramillo for taking action to prevent future orphan wells—including more than 20,000 wells in New Mexico at elevated risk of orphaning in the absence of policy change. The New Mexico Oil and Gas Justice and Reform Act is an important piece of legislation that would ensure all oil and gas wells are plugged at the end of their useful life and with private dollars while also ensuring healthier outcomes for frontline communities.” –Adam Peltz, Environmental Defense Fund

“New Mexico is long overdue for this important legislation that aims to protect frontline communities and fight climate change, which is the number-one threat to our national parks. We strongly support this bill which includes measures that hold polluters accountable for previous damages while expanding agency capabilities, including the proposed environmental justice council.” –Emily Wolf, National Parks Conservation Association

“It’s time to make the New Mexico’s Oil and Gas Act more just and equitable and better at protecting New Mexico’s people and environment. There should be little disagreement that the oil and gas industry should be responsible for cleaning up their own mess, not New Mexico’s taxpayers. This bill would remove caps on blanket bonds for well clean up and move towards individual bonds for the highest risk wells. We are thankful for Senator Jaramillo’s efforts to bring this bill to life, and protect the health and welfare of the frontline communities most directly impacted by oil and gas extraction.” -Andrew Forkes-Gudmundson, Earthworks senior manager for state legislative and regulatory affairs

The groups’ fact sheet on the New Mexico Oil and Gas Justice and Reform Act is available here.