New Mexico Surface Owner Protection Act

Led by the Oil & Gas Accountability Project, the New Mexico Cattle Growers Association and the New Mexico Environmental Law Center, the New Mexico Surface Owner Protection Act was passed into law on March 8, 2007. 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.

While the final bill is not what was originally proposed in 2005, the final law is the nation's strongest landowner protection statute for those 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); and
3. The duty to reclaim.

Before this law, companies in New Mexico were NOT required to have a written agreement with a rancher or homeowner before they drill an oil or gas well. NOR were companies required to pay for the use of the land surface.

HOW THE SURFACE OWNERS PROTECTION ACT WORKS:

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. If the damages from one well exceeds the $25,000 amount in the blanket bond, the company must re-up its bond.

Before passage of this law, if a New Mexican went to court to get damages from an oil company, under common law, the burden of proof was on the landowner to demonstrate that a company caused unreasonable damages.

With the new law, it is much easier to get compensation for damages. The landowner no longer has to prove whether or not a company was reasonable in its operations on your land. Companies are now required to pay compensation for damages and use.

For More Information

• Surface Protection Bill Signed Into Law, by Deborah Baker, Associated Press.
   
  
• Text of the Surface Owners Protection Act