Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR McQueen/Ortez
LAST UPDATED
ORIGINAL DATE 02/10/2025
SHORT TITLE Natural Gas Capture Requirements
BILL
NUMBER House Bill 258
ANALYST Gygi
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected EMNRD No fiscal impact No fiscal impact No fiscal impact
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to House Bill 257 and House Bill 259
Sources of Information
LFC Files
Agency Analysis Received From
Energy, Minerals and Natural Resources (EMNRD)
Agency Analysis was Solicited but Not Received From
Attorney General (NMAG) Department of Environment (NMED) Because of the short timeframe between the introduction of this bill and its first hearing, LFC has yet to receive analysis from all state agencies. This analysis could be updated if that analysis is
received.
SUMMARY
Synopsis of House Bill 258
House Bill (HB258) would add a new section to the Oil and Gas Act (Chapter 70 Article 2
NMSA 1978) to require operators to capture 98 percent of natural gas produced by their facilities
in a given year starting on January 1, 2027. The bill outlines exceptions for emergency releases,
beneficial use by the operator, venting for normal operation of pneumatic controllers and pumps,
and venting or flaring from an exploratory well. The bill authorizes the Oil Conservation
Division (OCD) to promulgate rules to meet this requirement.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
House Bill 258 – Page 2
FISCAL IMPLICATIONS
OCD is already implementing the same gas capture requirement in rule form so does not
anticipate foreseeable fiscal implications from implementation of this bill.
SIGNIFICANT ISSUES
HB258 sets New Mexico’s “Methane Waste Rule” in statute, providing necessary regulatory
stability for natural gas capture requirements in a rapidly developing oil and gas industry. OCD
notes that enacting the proposed amendments to the Oil and Gas Act will protect the general
guidelines of NMAC 19.15.27 and 19.15.28 NMAC and ensure future gas capture remains at
least at 98 percent. HB258 also expands the methane rule’s focus on oil wells to include
midstream operations. OCD states it will likely see improved performance of its enforcement and
regulatory duties as a result.
OCD notes the bill’s exemptions for pneumatic device emissions, emergencies, and beneficial
use are less restrictive than the current methane waste rule requirements.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB258 relates to House Bill 257, which places restrictions on oil and gas well transfers to
mitigate risk to the state, and House Bill 259, which increases penalties for violations of the Oil
and Gas Act and certain application fees.
The bill also relates to House Bill 133 introduced in 2024, which proposed to amend multiple
sections of the Oil and Gas Act, including the 98 percent natural gas capture requirement.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
There will not be a statutory requirement for 98 percent annual natural gas capture by operators,
but the methane rule will still be in effect.
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