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Committee approves higher civil penalties and fee indexing for oil and gas violations amid industry protest
Summary
The House Judiciary Committee advanced House Bill 259, which raises civil penalty caps and indexes certain oil and gas regulatory fees, after department officials said higher penalties are needed to deter serious noncompliance.
The House Judiciary Committee voted to recommend passage of House Bill 259, which would revise fines, penalties and fee indexing for Oil and Gas Act violations and related regulatory authorities.
Representative McQueen (sponsor) said the bill updates fees, fines and penalties to ensure they are sufficient to encourage compliance rather than become a predictable cost of doing business. Ben Shelton, general counsel at the Energy, Minerals and Natural Resources Department, told the committee that since the department regained administrative penalty authority in 2019 it has assessed roughly $29 million in administrative penalties but collected a small fraction; larger penalties are intended to prompt immediate corrective action rather than repeated violation.
Industry witnesses opposed the bill. Jim Winchester of the Independent Petroleum Association of New Mexico said the increases (which the sponsors amended in committee from larger initial caps) represent an "over tenfold" increase in some categories and could be excessive, particularly for smaller operators. The Permian Basin Petroleum Association and the New Mexico Oil and Gas Association also opposed the bill, raising concerns about regulatory certainty, the lack of transparent methodology for the increases and disproportionate impacts on small operators. The Greater Albuquerque Chamber of Commerce and other business groups urged a clearer evidentiary basis for the increases.
Committee members asked whether larger penalties would deter behavior and whether smaller operators would be disproportionately affected. Department witnesses said their enforcement goal is corrective compliance, not revenue, and that large penalties are rarely needed but are necessary where operators are unresponsive; the department said it negotiates settlements in many cases and does not intend to put small operators out of business.
After debate, the committee voted to give a "do pass" recommendation on the amended bill; the chair announced the committee’s action. Several members urged the department to provide clearer data linking penalty levels to enforcement outcomes and to continue outreach to industry on implementation.
