Panel delays bill that would let regulators limit transfers of declining oil-and-gas wells

Representative McQueen, chair of the House Energy, Environment & Natural Resources Committee, introduced House Bill 257, a proposal to give the Oil Conservation Division (OCD) rulemaking authority to limit or condition transfers of oil and gas wells to reduce the risk that marginal wells will be passed to operators without the resources to plug and remediate them.

Supporters told the committee the measure is intended to protect taxpayers and frontline communities from orphaned wells and the environmental and public-health harms they can cause. Marielle Nassy of New Energy Economy said the state already faces about 1,600 abandoned wells and an estimated cleanup price tag of "$8,000,000,000," and asked lawmakers to “give our agencies the needed tools to hold corporate polluters accountable for their mess.” Deborah Condit of the Environmental Defense Fund said abandonment and cleanup costs can reach about "$150,000 per well," and the bill would “provide examples of circumstances where the OCD can impose higher scrutiny on transfers to protect the public and the environment.”

Opponents from the oil and gas industry argued the measure creates unprecedented regulatory intrusion into private transactions and would chill sales that keep low‑producing wells online. Ashley Wagner, vice president of government affairs for the New Mexico Oil and Gas Association, said, “This bill assumes a small operator is a bad operator,” and warned regulators could be asked to perform intrusive financial reviews and that nondisclosure and timing concerns could jeopardize deals. Jim Winchester of the Independent Petroleum Association of New Mexico and other trade groups said the proposal could impose confidentiality and IPRA (public‑records) concerns and drive business to federal leases.

Ben Shelton, general counsel for the Energy, Minerals and Natural Resources Department, told the committee the authority is meant to be targeted and “does not represent a particularly sweeping change” in practice; it would allow the division to pursue what Shelton described as “low‑hanging fruit” — transfers where a well is likely to become an orphan because subsequent operators lack capacity to cap and plug. Shelton and Representative McQueen repeatedly framed the draft as a rulemaking authority that could be used to deny or condition transfers in cases tied to notices of violation, enforcement actions, noncompliance with methane capture rules, or evidence that a transferee lacks financial assurance.

Committee members pressed multiple technical and legal questions. Representative Murphy led detailed questioning about what documents the division could compel, how the agency would assess financial capacity and projected production, and whether compelled company records could become public under IPRA. Murphy asked whether OCD has the staff and expertise to perform financial analyses akin to an FTC‑style credit review; Shelton said the division’s current tools are “blunt instruments” but that the bill would allow the agency to solicit more information and then refine definitions in rulemaking. Representative Montoya and others expressed concern about subjective terms in the draft — for example, language that would require “adequate” financial assurance — and warned those terms could invite litigation or uneven application.

Witnesses also provided figures and background the committee cited in its deliberations: Lavrin Johnson of the Center for Biological Diversity said the state has more than 73,600 wells with about 3,200 inactive; Shelton described a state contract average cost to plug and abandon a well at roughly $125,000 (with larger environmental remediation projects running into the millions); and committee discussion noted that the Oil Conservation Fund collected roughly $137 million in one recent year but that only part of those funds had been used by the agency for plugging and reclamation in a given year.

Faced with continued concerns about the breadth of agency authority, potential impacts on small operators, and the scope of information the OCD might seek, the committee did not adopt a final decision on the bill. Chair McQueen said sponsors would address concerns and return the measure; the committee formally agreed to roll House Bill 257 for further work.

The sponsor and the agency said they plan to continue stakeholder engagement and to refine rulemaking details before returning the proposal to the committee for further consideration.