Bill to restore conservation-tax funding to oil-and-gas reclamation fund draws broad industry support and committee questions

Representatives on the House Energy, Environment and Natural Resources committee on Feb. 20 heard House Bill 403, which would direct a larger share of oil-and-gas conservation tax revenue into the state Reclamation Fund to finance well plugging, abandonment and surface reclamation.

Sponsor Representative Murphy told the committee the fund was created to pay for plugging and reclamation of wells when no responsible operator can be found and noted the conservation tax has been redirected into the general fund in past budget cycles. Murphy said restoring the fund’s dedicated revenue would allow the state to address orphaned wells more rapidly. Using figures discussed at the hearing, Murphy said the conservation tax is projected at roughly $143,000,000 in a recent fiscal estimate and that funneling a greater share back into reclamation could allow multi‑year buildup of principal for plugging work.

Industry groups including the New Mexico Oil and Gas Association, the Permian Basin Petroleum Association and the Independent Petroleum Association of New Mexico testified in strong support. Ashley Wagner of the Oil and Gas Association said the bill “rightfully refund[s] New Mexico's reclamation fund” and noted that industry already plugs many wells independently: "For every well plugged through the Reclamation Fund and federal dollars, New Mexico's oil and gas industry independently plugs 10," she said. Mike Miller (Permian Basin Petroleum Association) emphasized the bill would “ensure greater accountability in the restoration of abandoned well sites.”

Testimony from other witnesses and committee questions focused on adequate administrative capacity and per‑well cost estimates. Representative Montoya and others pressed about the number of orphaned wells and how quickly the division could spend additional funds; Murphy cited division figures of roughly 1,700 orphan or orphaned-status wells in the state and told the committee that large-scale contracting and staging could reduce per‑well plugging costs compared with some recent high estimates. Committee members also asked about the interaction with federal funding and whether this change would reduce other program grants; Murphy said federal funds (he referenced a recent $35,000,000 allocation) augment state activity and that stable state funding would not preclude use of federal money.

Several committee members raised fiscal questions about the bill’s recurring effect on the general fund. The sponsor agreed to work with Legislative Finance Committee staff and to refine bill language to address administrative spending caps and clarity about permitted uses so funds would be spent primarily on plugging and surface reclamation rather than administration alone.

Ending: The sponsor and committee agreed to roll the bill for additional drafting with LFC and agency staff; no committee vote was held on Feb. 20.