New Mexico Oil Conservation Commission Adopts Rule Changes Concerning Produced Water

On September 3, 2020, the New Mexico Oil Conservation Commission adopted rules changes concerning produced water. See OCC Order No. R-21343-A (Sept. 3, 2020).

Under the Produced Water Act, signed into law in 2019, the Commission and the Oil Conservation Division of the Energy, Minerals and Natural Resources Department were given authority to regulate the disposition, handling, transport, storage, recycling, treatment and disposal of produced water during, or for reuse in, the exploration, drilling, production, treatment or refinement of oil and gas in a manner that protects public health, the environment, and fresh water resources. See NMSA 1978, § 70-2-12(B)(15).

On May 6, 2020, the Division filed an application to amend Rules 19.15.2, 19.15.16 and 19.15.34 NMAC to implement statutory additions and amendments to the Act related to the regulation of produced water.  On July 30 and 31, 2020, the Commission conducted a virtual public hearing on the proposed rule changes.

The Division’s proposed rule changes were intended to address and remedy inconsistencies within the related rules that resulted from the passage of the Produced Water Act, promote the reuse of produced water in the oil and gas industry and seek to collect data regarding total water use in the industry in order to support regulation and future rule changes. See OCC Order No. R-21343-A (Sept. 3, 2020), ¶ 14.  While the Act may authorize the Division to further regulate the use of produced water, this was not the initial intent of the Division when proposing these rule changes. See id., ¶ 18.  The Division has plans to propose future rule changes that would provide for further regulation, but the Division needs more data to inform future proposed rules. Id.

On September 3, 2020, the Commission approved proposed changes to Rules 19.15.2, 19.15.16 and 19.15.34 NMAC, which became effective October 13, 2020. See Final Rules Approved by the Commission.  The rule changes adopt the definition of produced water in the Oil and Gas Act, require a new Water Use Report, filed by operators of hydraulically fractured wells on forms C-103 or C-105, to ensure the Division begins collecting data related to the use of fresh water and produced water in the oil and gas industry, and eliminate the Division’s role in regulating the use of produced water in road construction or maintenance, or other construction, in the generation of electricity and in other industrial processes. See id.

The Produced Water Act also gave authority to the Water Quality Control Commission and the New Mexico Environment Department to regulate produced water outside of the oil and gas industry. See NMSA 1978, § 74-6-4(P).

On September 9, 2019, the Environment Department entered into a memorandum of understanding with New Mexico State University to create the produced water research consortium. See Memorandum of Understanding.  The consortium is intended to develop a framework to fill scientific and technical knowledge gaps necessary to establish regulations and policies for the treatment of produced water. See Environment Department Press Release (Sept. 12, 2019).  The Department has not yet made its draft rules available for public comment.

For our prior analysis on the passing of the Produced Water Act, please see “New Mexico Produced Water Act.