New Mexico Lawmaker Faces Challenge In Strengthening Oil Regulation

Workers at a drilling rig outside Lovington, New Mexico.
Mónica Ortiz Uribe
By Mónica Ortiz Uribe
January 07, 2015

New Mexico's oil and gas industry is the goose that lays the golden egg. Before the recent drop in oil prices, the industry generated about 30 percent of the state's revenue.

The industry is also generous with political campaign contributions, and some in government are especially protective of it.

Every January, New Mexico lawmakers gather at the state capitol for the beginning of the legislative session. In 2013, state Rep. Gail Chasey of Albuquerque introduced a bill that would reform the state's Oil and Gas Act.

"I was really astounded to realize that the act had never been amended since it was passed in 1935," she said. "So I was pretty optimistic that people would think it was reasonable to try to upgrade the act." 

That didn't happen. The bill died in a floor vote in the House of Representatives.

"There was so much opposition," Chasey said. "Universal opposition, except for the environmental advocates."

The Oil Conservation Division, or OCD, is the agency that regulates New Mexico's oil and gas industry. After a 2009 lawsuit the OCD lost direct authority to fine operators who violate the Oil and Gas Act. The act covers hundreds of violations from a missing well sign to operating a well that's failed important safety tests.

Chasey's bill would have given the OCD the power to fine. Also it would've increased the fine amount from $1,000 a day to up to $10,000 a day.

"What we tried to do was make the Oil and Gas Act comparable to our other environmental laws like the Water Quality Act, the Hazardous Waste Act, the Air Quality Control Act," Chasey said.

But New Mexico's Energy, Minerals and Natural Resources Department, which OCD is a part of, opposed the bill. In a report to the legislature the agency stated it already had "sufficient measures in place" to enforce its regulations.

That report sealed the deal for Rep. Cathrynn Brown of Carlsbad. She voted against the bill.

Mónica Ortiz Uribe
An old pumping unit still in operation outside Hobbs, New Mexico.

"This just felt like a purely anti-oil and gas measure," Brown said. "Bottom line is, we don't want to hurt industry and we don't want to hurt our job situation."

Brown is among seven representatives whose districts host the heaviest drilling in the state. All seven voted against the bill. According to the nonpartisan National Institute on Money in State Politics, all seven also receive their biggest campaign contributions from the oil and gas industry.

One of those contributors is Mark Veteto. He owns an oil company based in Hobbs.  

“I know the perception is, 'We don't want any regulators. We want to be able to do what we want to do at the cheapest price. We don't give a damn if we spoil the water and dirty the trees. We’re gonna drill and go,'" he said.

But that’s not the case, Veteto said. New Mexico is his home; his grandchildren live in Hobbs. When he drills a well he adds extra cement around the casing to help prevent leaks. It’s an extra precaution not required by the state.

"Regulation is not a bad thing," he said. "It can be a good thing."

Bad operators, he said, give the whole industry a black eye. A weak regulatory agency only increases the chances that a bad operator will get away with unsafe practices. The fact that the OCD runs on outdated rules and limited authority is a concern for Veteto.

"I think there's need to be more teeth at the OCD level," he said. "I can't believe I'm admitting this publicly. But I do. I think that the OCD needs more authority and the legislature should probably recognize that need."

Following the rules does come at a cost to the industry. Veteto spends hundreds of thousands of dollars per well to comply with OCD rules. That makes operators, especially smaller companies, reluctant to support greater regulation. But Veteto says that needs to change.

“This industry should be leading the voice for what needs to be done," he said.

Meanwhile OCD struggles to enforce the rules, not only because of their limited authority, but also their shortage of inspectors.

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