HB 403 — OIL & GAS FUND DISTRIBUTION & USES

HOUSE ENERGY, ENVIRONMENT AND NATURAL RESOURCES COMMITTEE SUBSTITUTE FOR HOUSE BILL 403 57TH LEGISLATURE -STATEOFNEWMEXICO- FIRST SESSION, 2025 INTRODUCED4 BY6 Mark8 B.10 AN ACT RELATING TO THE OIL AND GAS RECLAMATION FUND;

Murphy and Meredith A.

Dixon and Rod Montoya and Elaine Sena Cortez and Jonathan A.

Henry 7 9 AN ACT RELATING TO THE OIL AND GAS RECLAMATION FUND;

AMENDING HOW MONEY IN THE FUND CAN BE USED.USED;

MAKING AN APPROPRIATION.

With respect to any period for which the rate of a t m m 21 the tax imposed by Section 7-30-4 NMSA 1978 is nineteen- d r e 22 hundredths percent, a distribution pursuant to Section 7-1-6.20 c e s k 23 NMSA 1978 shall be made to the oil and gas reclamation fund in e a n b 24 an amount equal to two-nineteenths of the net receipts u [ attributable to the tax imposed under the Oil and Gas .230171.5.231187.2 HENRC/HB 403 Conservation Tax Act.

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 percentpercent] of]the following percentages of the net receipts attributable to the tax imposed under the Oil and Gas Conservation Tax Act."Act: SECTION 2.

Section(1) 70-2-38beginning NMSAJuly 19781, (being2025 Lawsand 1977,prior Chapterto 237,July Section1, 5,2026, asfifty amended)percent; is amended to read:

"70-2-38.(2) beginning July 1, 2026 and prior to July 1, 2027, seventy-five percent;

OILand AND(3) GASbeginning RECLAMATIONJuly FUND1, ADMINISTERED--2027, PLUGGINGone WELLShundred ONpercent." FEDERALSECTION LAND--RIGHT2. OF INDEMNIFICATION-- ANNUAL REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.-- A.

TheSection oil70-2-38 andNMSA gas1978 reclamation(being fundLaws shall1977, bee administeredt by17 theChapter oil237, conservationSection division5, ofas theamended) energy,is mineralsamended andto naturalread: resources department.

Expenditures from e t 17 the fund [may] shall be used by the director of the division w l n d 18 only"70-2-38. for the purposes [of] provided by Subsection B of this = = 19 a l section.

OIL AND GAS RECLAMATION FUND ADMINISTERED-- = = 19 PLUGGING WELLS ON FEDERAL LAND--RIGHT OF INDEMNIFICATION-- a l i a e r 20 B.ANNUAL REPORT--CONTRACTORS SELLING EQUIPMENT FOR SALVAGE.-- a t m m 21 A.

The greateroil ofand fortygas millionreclamation dollarsfund ashall tbe m m 21 ($40,000,000) or five percent of the average of the year-end d r e 22 marketadministered valuesby of the fundoil forconservation thedivision immediatelyof precedingthe threeenergy, c e s k 23 calendarminerals yearsand shallnatural beresources dedicateddepartment. for:

[Expenditures from e a n b 24 (1)the employingfund themay necessarybe personnelused toby uthe [director surveyof] abandonedMoney wells,in wellthe sitesfund andis associatedu production[ .230171.5appropriated -to 2the -division facilities;for the purposes of:

.231187.2 - 2 - HENRC/HB 403 (1) employing the necessary personnel to survey abandoned wells, well sites and associated production facilities;

[B.]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 e t 17 and remediate abandoned well sites and associated production w l n d 18 facilities in accordance with the e t 17 provisions of the Oil and Gas = = 19 Act and the rules and regulations wpromulgated lpursuant nto dthat 18a promulgatedl pursuanti toa thate r 20 act.

The division may order wells = = 19 a l plugged and well sites and associateda productiont facilitiesm im a21 eassociated rproduction 20facilities restored and remediated on d r e 22 federal lands on which there are no abonds trunning mto mthe 21c bondse runnings tok the23 benefit of the state in the same manner d r e 22 and in accordance with e a n b 24 the same procedure as with wells drilled c e s k 23 on state and fee land, u [ including using funds from the oil and egas areclamation nfund bto 24.231187.2 gas- reclamation3 fund- toHENRC/HB 403 pay the cost of plugging.

When the u [ costs of plugging a well or restoring and remediating well .230171.5 - 3 - 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.

[C.]C. D.

[D.]e E.t 17 D.

Contracts for plugging,plugging and reclamation and[and ew tl 17n d 18 energy educationeducation] pursuant to this section shall be entered into= w= l19 ninto d 18 in accordance with the provisions of the Procurement Code.

Aa =l =i 19 a le r 20 A contractor employed by the oil conservation division of the i a et rm 20m 21 energy, minerals and natural resources department to plug a ad tr me m22 21 well or restore or remediate a well site or associated dc r e 22s k 23 production facility is authorized to sell the equipment and c e sa kn 23b 24 material or product that is removed from the well, site or eu a[ n b 24 facility and to deduct the proceeds of the sales from the costs u.231187.2 [- 4 - HENRC/HB 403 of plugging, restoring or remediating.

.230171.5E. - 4 - [E.] F.

- 5 - 1516 e t 17 w l n d 18 = = 19 a l i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .230171.5.231187.2