Final Legislative Report

NEW MEXICO
LEGISLATIVE STATUS REPORT

The Second Regular Session of New Mexico's 45th
Legislature ended at noon on Thursday, February 14 (Valentine's Day?), and
the final disposition by the Legislature of the monitored bills that would
specifically affect our industry is as follows:

CS/H 165-Tribal Capital Improvements Tax Credit:
Introduced by Representative Ben Lujan, Dem., Dist. 46 (Santa Fe). A House
Taxation & Revenue Committee substitute bill received a "Do Pass," was
passed by the House and was sent to the Senate, where it was referred to but
withdrawn from the Senate Conservation and Finance Committees, passed by the
Senate and sent to the Governor. This substitute bill would provide that one
liable for the oil and gas emergency school tax on production from Jicarilla
Apache tribal land will have a credit each month equal to the lesser of the
tax that is exclusively dedicated to fund capital improvement projects on
the Jicarilla Apache tribal land (but not commercial buildings) imposed on
such production by the Jicarilla Apache Nation, or 0.7% of the taxable value
of such production. The burden of showing entitlement to this credit would
be on the taxpayer, who must furnish proof of payment of the Jicarilla
Apache tribal capital improvements tax.

HB 230-"Indian Country" Defined: Introduced by
Representative Leo C. Watchman, Jr., Dem., Dist. 9 (McKinley & San Juan).
Would broadly define "Indian country" under the New Mexico statutes. This
bill was referred to the House Rules & Order of Business Committee, where it
died.

HB 309-San Juan Oil and Gas Field Training Program:
Introduced by Representative Nick Tinnin, Rep., Dist. 1 (San Juan). Would
appropriate $300,000 to San Juan College for Fiscal Year 2003 and subsequent
years for an oil and gas field training program at the college that includes
certification and training for well, pipeline and drilling technicians and
field workers. This bill was received a "Do Pass" in the House Business &
Industry Committee and was sent to the House Appropriations & Finance
Committee, where it died.

CS/H 388-Tax Credit For Produced Water: Introduced
by Representative Robert W. Burpo, Rep., Dist. 23 (Bernalillo). A House
Business & Industry Committee substitute bill received a "Do Pass" and was
sent to the House Taxation & Revenue Committee, where, as amended, it
received a "Do Pass." It was passed by the House and sent to the Senate,
where it was referred to the Senate Finance Committee, where it received a
"Do Pass." Then, it was passed by the Senate and sent to the Governor. This
substitute bill, as amended, would provide that a refinery, natural gas
processor or person who operates an oil or gas well who produces water from
oil or gas drilling and production from a depth of 2,500 feet or more below
the surface or refining crude oil or processing natural gas may take an
income tax credit of $1,000 per acre-foot of produced water (not to exceed
$400,000 per year) if the party delivers the water to the Interstate Stream
Commission at the Pecos River in compliance with the New Mexico Water
Quality Act, to contribute to delivery obligations pursuant to the Pecos
River Compact, and subject to other conditions, and that the Interstate
Stream Commission shall indemnify the party from future liability.

HB 423-Additional Natural Gas Pipeline Systems
Study: Introduced by Representative Donald L Whitaker, Dem., Dist. 61 (Lea).
This bill is identical to SB 369, received a "Do Pass" in the House Energy &
Natural Resources Committee and was sent to the House Appropriations &
Finance Committee, where it died.

SB 16-Lea and Carlsbad Conservation District Study:
Introduced by Senator Carroll H. Leavell, Rep., Dist. 41 (Eddy & Lea). Would
appropriate $500,000 to New Mexico State University for Fiscal Year 2003 for
a study by the Lea and Carlsbad Soil and Water Conservation Districts of
issues related to the use of water produced by oil and gas exploration from
"deep underground." This bill was found germane by the Senate Committees'
Committee, received a "Do Pass" in the Senate Conservation Committee, and
was sent to the Senate Finance Committee, where it died.

SB 283-Tribal Capital Improvements Tax Credit:
Introduced by Senator Leonard Tsosie, Dem., Dist 37 (Dona Ana, Otero &
Sierra). This bill is identical to HB 165, was found germane by the Senate
Committees' Committee, and was sent to the Senate Indian & Cultural Affairs,
where it was withdrawn and sent directly to the Senate Finance Committee,
where it died.

SB 345-Well Workover Projects: Introduced by Senator
Leonard Lee Rawson, Rep., Dist. 37 (Dona Ana, Otero & Sierra). Would amend
the Natural Gas and Crude Oil Production Incentive Act to expand the
definition of "well workover project" to include the installation by the
operator of workover equipment that is intended to substantially increase
the life of the well and that has been approved and certified by the OCD,
which approval shall be granted if the OCD determines that the equipment
will substantially reduce operating costs, thereby increasing the life of
the well and its recoverable reserves. This bill was found germane by the
Senate Committees' Committee and sent to the Senate Conservation Committee,
where it received a "Do Pass" and was sent to the Senate Finance Committee,
where it received a "Do Pass," but it died in the Senate.

SB 369-Additional Natural Gas Pipeline Systems
Study: Also introduced by Senator Leavell. Would require the Legislative
Council to assign an Interim Committee to study the economic feasibility and
the costs and benefits of financing, constructing and operating a natural
gas pipeline to transport New Mexico natural gas to additional markets. This
bill was found germane by the Senate Committees' Committee and sent to the
Senate Conservation Committee, where it received a "Do Pass" and was sent to
the Senate Finance Committee, where it died.

HM 37-Pipeline Safety Program: Introduced by
Representative James Roger Madalena, Dem., Dist. 65 (Bernalillo, Cibola &
Sandoval). Would ask the Pipeline Safety Bureau of the Public Regulation
Commission to apply for funding from the federal Office of Pipeline Safety
in the Department of Transportation, for authority to carry out a safety
program on interstate gas or hazardous liquid pipeline facilities and to
become an agent of the federal Secretary of Transportation in regard to such
facilities issues, and work to protect the safety of New Mexico residents
and visitors by developing a rigorous pipeline safety program and taking
action to prevent future pipeline accidents. This memorial was referred to
the House Energy & Natural Resources Committee, where it received a "Do
Pass, and it was passed by the House.

HJM 17-Coordinated Oil & Gas Permitting Process:
Introduced by Representative Patricia A. Lundstrom, Dem., Dist. 5
(McKinley). Would request that the Department of Environment, the Oil
Conservation Division and the federal Bureau of Land Management cooperate in
the development of a coordinated permit process for oil and gas activities.
This memorial received a "Do Pass" in the House Energy & Natural Resources
and Business & Industry Committees, was passed by the House, and was sent to
the Senate, where it was referred to the Senate Conservation Committee,
withdrawn and died.

SJM 83-Treat Produced Water For Recycling: Also
introduced by Senator Leavell. Would request that the State Engineer, the
OCD, representatives of the oil and gas industry and the Department of
Environment jointly study the issues raised by the potential for treating
produced water so that it may be put to beneficial use and report their
findings and recommendations to the appropriate legislative committee by
December 1, 2002. This memorial was referred to the Senate Rules and
Conservation Committees, but it died in the former.

The Governor has until March 6 to either sign or
veto the bills that were sent to him by the Legislature.

Tom Nance
February 15, 2002