Shale Daily / NGI All News Access

New Mexico Court Halts Legal Appeals on 'Pit Rule'

A state district judge in New Mexico Tuesday handed the state's oil/gas industry an early new year's present, putting a halt to legal appeals of ongoing industry efforts to revise rules for handling drilling and production waste, the so-called "pit rule." An Oil Conservation Commission hearing on the industry efforts is now scheduled for Jan. 23 in Santa Fe.

The New Mexico Oil and Gas Association had asked for the legal appeals process to be stopped so the state commission could administratively deal with the issue of drilling/production waste for oil/gas producers.

An attorney for the nonprofit Environmental Law Center expressed disappointment in the district court action preventing legal appeals to unfold. A "change in the political climate" with a new governor since the start of last year was a factor in the ruling, according to law center attorney Eric Jantz.

Producers irritated environmental activists last fall when the oil/gas organization at the end of September took two steps aimed at revising a regulation established in 2008 for the handling of waste produced at drilling and production sites. The association alleges that the "pit rule" drives up costs and chases drilling rigs to other states (see Daily GPI, Oct. 7, 2011).

Environmentalists counter that oil and gas producers are trying to gut needed protections against groundwater contamination. Association officials contend that by modifying the rules when and if it can be done safely, more wells will be drilled, which means more positive economic stimulus. Jantz further argued that the administrative route ends up in what he thinks is an "endless cycle of rulemakings, appeals and then more rulemaking without ever having any real resolution."

The pit rule was initially established by the conservation commission under former Gov. Bill Richardson's administration in 2008, governing how the oil/gas producers around the state handle wastes from drilling operations in buried tanks, sumps, pits and closed-loop systems. Since then a more conservative Republican regime has been established in the state capital under Gov. Susana Martinez.

Last year the oil and gas association asked the state Oil Conservation Division to modify rules that regulate the handling of fluids in buried tanks, sumps, pits and closed-loop systems. The producer group filed a motion in state district court to stay action on a suit filed by the New Mexico Environmental Law Center.

A spokesperson for the oil/gas association, Wally Drangmeister, said the group was trying to "ease rules that are making us uncompetitive, but we're doing it in such a way that we still believe is protective of the environment." Drangmeister told the Associated Press in its report of the court action that the producers are not just tossing out the old rule.

Critics contend that the proposed changes by the association would eliminate almost all references in the state rules to closed-loop systems, which the oil/gas industry claims are expensive; the environmental groups counter that there is no hard data to back up that contention. There is also concern about changes in how low-chloride waste is handled and a provision allowing operators to make "reasonable estimates" about groundwater wells when specific information is lacking.

"There would still be cases where closed-loop systems would be required; we're not advocating eliminating them, but only when they are necessary for environmental protection," said the oil/gas industry spokesperson, noting that in the southeast part of the state the groundwater is located long distances away from the drilling.

Last year Steve Henke, president of the state oil and gas organization, said it is important to change the rule if New Mexico is going to get its rightful share of project investment that Henke claims has been going to other states. The changed rule will contribute to more drilling, job creation and economic stimulus for the state, the producers maintain.

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