Oil And Gas Regulation In New Mexico Outdated
Cattle frequently roam around oil production zones in southeast New Mexico.
Mónica Ortiz Uribe
January 05, 2015

Before the ongoing slide in oil prices began late this summer, oil-rich states around the country struggled to catch up with the rapidly growing industry. That struggle continues today. Shortages are everywhere, from hotels to schools to pizza delivery drivers.

The same goes for those in charge of policing the industry. In New Mexico, state inspectors are short staffed and use a rulebook that dates back to 1935. And a weak enforcement body can hurt both business and the environment.

Rancher Alisa Ogden always looks both ways before crossing a road. She leases land outside Carlsbad, N.M., for grazing while petroleum companies lease the mineral rights below.

"The speed limit out here is 25. But I'm the only one that goes less than that," she said.

Ogden is a fourth-generation rancher who lives in the house her grandparents built in 1938. When she's out checking her herd she wrangles with 18 wheelers and tanker trucks on a narrow dirt road. Collisions are almost inevitable.

"One time, one hit a cow so hard she was on her back with all four feet straight up in the air," she said.

Ogden has state and federal oil inspectors on her cell phone speed dial. A week rarely goes by without her making multiple calls to report trash, a busted gate, or other hazards. Ogden complains enforcement is lax.

"I don't think the fines are anywhere near what they ought to be," she said.

Fines are a hot topic when it comes to oil regulation in New Mexico. The state agency charged with policing the industry is the Oil Conservation Division (OCD). The OCD cannot directly issue fines for a whole host of violations under the state’s Oil and Gas Act — not even when it catches an operator breaking the rules.

"The only way to get such a penalty is for the Oil Conservation Division to refer a case to the attorney general's office," said Tannis Fox, a lawyer for the state attorney general's office. "Nobody can remember when that’s happened."

To issue a fine the OCD not only has to go to court, it must prove criminal intent. That calls for a higher burden of proof not required by any other environmental law in New Mexico. But that's not all.

"Under the Oil and Gas Act the penalty for a violation is a $1,000 a day," Fox said. "That amount was set in the 1930s."

It was 1935 to be exact, when the price of oil was 40 cents a barrel. A thousand dollars back then was equal to fining an operator 2,500 barrels of oil. Earlier this year, when oil prices were $100 a barrel, a $1,000 fine would have been equal to just 10 barrels of oil — a fine not worth an expensive court battle. It also pales in comparison to other fines.  

"The civil penalty for other types of violations in New Mexico like water quality, air quality, hazardous waste violations range between $10,000 a day to $25,000 a day," Fox said.

So how does this translate out in the field? Think of a police officer who can't ticket you for speeding.  

"It was sometimes a pretty strenuous exercise in futility," said Buddy Hill, a retired OCD inspector.

Hill spent 20 years with the agency. Now he lives modestly in the tiny town of Jal and enjoys fried green tomatoes and hash browns for dinner. His family won't drink the tap water. After what Hill saw in the field, they don't trust that it is safe.

"Sometimes you would find … failed wells that you knew had failed tests that were still in use," Hill said.

Failed wells can contaminate groundwater. In New Mexico one of the biggest examples occurred near Hobbs in the 1950s when an estimated 300,000 barrels of crude leaked into the Ogallala aquifer. Oil residue was still present when inspectors revisited the spill site 50 years later.

OCD inspectors do have other options beyond fines, but the process for punishing certain violations can sometimes drag on for months, even years. Hill said a couple times operators just laughed in his face.

"You could bark but you didn't have any teeth," he said. "Like an old junkyard dog out there, you know, with a short chain."

Three hundred miles away at OCD headquarters in Santa Fe, the agency's leaders say they are comfortable with the enforcement tools they have.

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