underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
HOUSE BILL 403
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Mark B. Murphy and Meredith A. Dixon and Rod Montoya
and Elaine Sena Cortez and Jonathan A. Henry
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.
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. With respect to any period for which the rate of
the tax imposed by Section 7-30-4 NMSA 1978 is nineteen-
hundredths percent, 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 two-nineteenths of the net receipts
attributable to the tax imposed under the Oil and Gas
.230171.5 underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Conservation Tax Act.
B. With respect to any period for which the total
rate of the tax imposed on oil by Section 7-30-4 NMSA 1978 is
twenty-four hundredths percent ] 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 [nineteen and seven-
tenths percent of] the net receipts attributable to the tax
imposed under the Oil and Gas Conservation Tax Act."
SECTION 2. 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. The oil and gas reclamation fund shall be
administered by the oil conservation division of the energy,
minerals and natural resources department. Expenditures from
the fund [may] shall be used by the director of the division
only for the purposes [of ] provided by Subsection B of this
section.
B. The greater of forty million dollars
($40,000,000) or five percent of the average of the year-end
market values of the fund for the immediately preceding three
calendar years shall be dedicated for:
(1) employing the necessary personnel to
survey abandoned wells, well sites and associated production
.230171.5
- 2 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
facilities; and
(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
(2) supporting energy education throughout the
state in an amount not to exceed one hundred fifty thousand
dollars ($150,000) annually ].
[B.] C. The director of the oil conservation
division of the energy, minerals and natural resources
department, 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
.230171.5
- 3 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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
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.] D. The director of the oil conservation
division of the energy, minerals and natural resources
department 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.] E. Contracts for plugging, 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 oil conservation division of the
energy, minerals and natural resources department 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.
.230171.5
- 4 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
[E.] F. 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 oil conservation division of the energy, minerals and
natural resources department or the oil conservation commission
pursuant to the Oil and Gas Act or the Water Quality Act."
SECTION 3. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
- 5 -
.230171.5