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Led by Oil and Gas Accountability Project,
the New Mexico Cattle Growers Association and the New Mexico
Environmental Law Center, the campaign for landowners rights
took center stage this year in the Roundhouse - New Mexico’s State Capitol in Santa Fe.
Sponsored by Representative Andy Nunez, the bill received the endorsement
of organizations including San Juan Citizens Alliance, Sierra Club
and the New Mexico Oil & Gas Association.
Because of the strong coalition, the support
of Governor Richardson and landowners and legislators across
the state, we negotiated from a position of strength with the
oil and gas industry to develop House Bill 827. While 827 is
not the same bill we started with in the 2005 session we held
to our bottom lines and came out with a bill now considered to
be the nation’s strongest legislation
protecting landowners facing oil and gas development.
For example, no other state requires: 1) The
breadth of information that must be supplied to landowners when
a company gives notice of oil and gas operations (the laundry
list of items to be included in surface use and compensation
agreements is unmatched); 2) the breadth of compensation for
damages and use (loss of agricultural production and income,
lost land value, lost use of and lost access to the surface owner’s
land and lost value of improvements caused by oil and gas operations);
3) and, the duty to reclaim.
Currently, companies in New Mexico are NOT required to have a
written agreement with a rancher or homeowner before they drill
an oil or gas well NOR are they required to pay for the use of
the land surface. The companies decide where to drill and where
to put the roads, tanks and pits; then they decide when to drill.
This legislation helps landowners protect their surface rights
and the value of their property. This surface use agreement and
compensation bill begins to restore the balance by ensuring that
the oil and gas company gives written notice to the landowner and
provides a written agreement (or posts a bond) before operations
can begin.
The Surface Owners Protection Act requires the oil and gas operator
to:
- Notify the surface owner 30 days prior to beginning any oil
and gas operations;
- Describe the proposed operations so that
the surface owner can evaluate the effects of the operations
on his/her property;
- Propose a surface use and compensation agreement
that addresses the timing, location and scope of operations and
an offer of compensation; the bill provides the elements that
should be included in the offer of compensation. The bill gives
the surface owner 20 days to accept, negotiate changes to, or
reject the agreement and offer. If no agreement is reached within
30 days, the bill allows the operator to post a surety bond of
$10,000 for the benefit of the surface owner, or a $25,000 statewide
blanket bond and then begin operations. The surface owner may
then file a legal claim for the use of the land and any damages.
Regarding bonding-on (when there is no agreement
between the landowner and oil company), the bill requires a company
to post either a $10,000 damages bond or a $25,000 statewide “blanket” bond
for all its wells. If the damages from one well exceeds the $25,000
amount in the blanket bond, the company must re-up its bond. Currently,
a company can come on a person’s property without posting
any bond amount at all. Companies are currently only required to
post a reclamation bond with the state for final plugging and abandonment.
If a New Mexican goes to court today to get damages from an oil
company, under common law, the burden of proof is on the landowner
to demonstrate that a company caused unreasonable damages. With
SOPA, it will be much easier to get compensation for damages because
you will not have to prove whether or not a company was reasonable
in its operations on your land. Companies will be required to pay
compensation for damages and use under SOPA.
Currently, landowners in New Mexico are afforded
no protection when companies want to conduct oil and gas operations
on their property. Landowners are at the mercy of the companies.
We acknowledge that there are landowners with existing oil and
gas that have developed reasonable agreements with operators.
Unfortunately, those with large landholdings and the financial
resources to hire good attorneys are the ones doing the best
in today’s climate – and
even some of those are still having a tough time. This bill will
level the playing field for all landowners - and those smaller
property owners - who tend to end up with the short end of the
stick.
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