OIL & GAS CONSERVATION TAX ACT CHANGES

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AN ACT
RELATING TO THE OIL AND GAS RECLAMATION FUND; INCREASING THE
AMOUNT OF THE TAX IMPOSED PURSUANT TO THE OIL AND GAS
CONSERVATION TAX ACT DISTRIBUTED TO THE FUND; AMENDING HOW
MONEY IN THE FUND CAN BE USED; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6.21 NMSA 1978 (being Laws 1985,
Chapter 65, Section 7, as amended) is amended to read:
"7-1-6.21. DISTRIBUTION TO OIL AND GAS RECLAMATION
FUND.--A distribution pursuant to Section 7-1-6.20 NMSA 1978
shall be made to the oil and gas reclamation fund in an
amount equal to the following percentages of the net receipts
attributable to the tax imposed under the Oil and Gas
Conservation Tax Act:
A. beginning July 1, 2027 and prior to July 1,
2028, fifty percent;
B. beginning July 1, 2028 and prior to July 1,
2029, seventy-five percent;
C. beginning July 1, 2029 and prior to July 1,
2037, one hundred percent; and
D. beginning July 1, 2037, fifty percent."
SECTION 2. Section 70-2-37 NMSA 1978 (being Laws 1977,
Chapter 237, Section 4, as amended) is amended to read:
"70-2-37. OIL AND GAS RECLAMATION FUND CREATED--
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DISPOSITION OF FUND.--The "oil and gas reclamation fund" is
created as a nonreverting fund in the state treasury. In
addition to other sources, money in the fund may consist of
distributions, appropriations, gifts, grants and donations.
The energy, minerals and natural resources department shall
administer the fund, and money in the fund is appropriated to
that department for use by the division in carrying out the
provisions of Section 70-2-38 NMSA 1978."
SECTION 3. Section 70-2-38 NMSA 1978 (being Laws 1977,
Chapter 237, Section 5, as amended) is amended to read:
"70-2-38. OIL AND GAS RECLAMATION FUND ADMINISTERED--
PLUGGING WELLS ON FEDERAL LAND--RIGHT OF INDEMNIFICATION--
ANNUAL REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.--
A. Expenditures from the oil and gas reclamation
fund may be used by the director of the division for the
purposes of:
(1) employing the necessary personnel to
survey abandoned wells, well sites and associated production
facilities;
(2) preparing plans for administering and
performing the plugging of abandoned wells that have not been
plugged or that have been improperly plugged and for the
restoration and remediation of abandoned well sites and
associated production facilities that have not been properly
restored and remediated; and
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(3) beginning July 1, 2028, supporting
statewide education on general energy and the sources and
impacts of all energy-related emissions in an amount not to
exceed two hundred fifty thousand dollars ($250,000)
annually.
B. The director of the division, as funds become
available in the oil and gas reclamation fund, shall reclaim
and properly plug all abandoned wells and shall restore and
remediate abandoned well sites and associated production
facilities in accordance with the provisions of the Oil and
Gas Act and the rules and regulations promulgated pursuant to
that act. The division may order wells plugged and well
sites and associated production facilities restored and
remediated on federal lands on which there are no bonds
running to the benefit of the state in the same manner and in
accordance with the same procedure as with wells drilled on
state and fee land, including using funds from the oil and
gas reclamation fund to pay the cost of plugging. When the
costs of plugging a well or restoring and remediating well
sites and associated production facilities are paid from the
oil and gas reclamation fund, the division is authorized to
bring a suit against the operator or district court of the
county in which the well is located for indemnification for
all costs incurred by the division in plugging the well or
restoring and remediating the well site and associated
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production facilities. Any funds collected pursuant to a
judgment in a suit for indemnification brought under the Oil
and Gas Act shall be deposited in the oil and gas reclamation
fund.
C. The director of the division shall make an
annual report to the secretary of energy, minerals and
natural resources, the governor and the legislature on the
use of the oil and gas reclamation fund.
D. Contracts for plugging and reclamation and
energy education pursuant to this section shall be entered
into in accordance with the provisions of the Procurement
Code. A contractor employed by the division to plug a well
or restore or remediate a well site or associated production
facility is authorized to sell the equipment and material or
product that is removed from the well, site or facility and
to deduct the proceeds of the sales from the costs of
plugging, restoring or remediating.
E. As used in this section, "associated production
facilities" means those facilities used for, intended to be
used for or that have been used for the production,
treatment, transportation, storage or disposal of oil, gas,
brine, product or waste generated during oil and gas
operations or used in the production of oil and gas if that
facility is, has been or would have been subject to
regulation by the division or the commission pursuant to the
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Oil and Gas Act or the Water Quality Act."
SECTION 4. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2027.