New Mexico Modernizes Oil, Gas Industry Bonding, Cleanup Rules, Now Among Nation’s Strongest

NM Oil Conservation Commission Vote Ensures Corporations Pay to Clean Up Wells

Organization Press Release – From The Western Environmental Law Center

Santa Fe, NM – The New Mexico Oil Conservation Commission voted moments ago to reform outdated oil and gas bonding and cleanup rules, adopting some of the strongest safeguards in the country to prevent orphan wells and ensure oil and gas corporations pay to clean up the wells they drill and operate.

“This decision comes down to the simple idea most New Mexicans agree on: If you drill it, you clean it,” said Tannis Fox, senior attorney at the Western Environmental Law Center. “After a thorough, evidence-based process, the Commission acted to protect our water, our communities, and our state budget – ensuring the public isn’t left paying for industry’s messes.”

The Commission’s decision followed months of hearings, expert testimony, legal briefing, and negotiations among parties. In its deliberations, the Commission largely affirmed the legal and evidentiary basis for modernizing New Mexico’s bonding system and adopted most of the reforms included in the parties’ negotiated agreement, including reaffirming that HB80 complements, but does not replace, a modernized bonding system.

Why It Matters

New Mexico faces between $700 million and $1.6 billion in current and near-future oil and gas well cleanup liabilities, according to state data, with nearly 700 wells already abandoned and more than 4,400 likely to be abandoned in the near term.

When wells are not properly plugged, they can leak methane and toxic chemicals into the air and groundwater, threatening the climate, public health, drinking water, agriculture, and nearby communities.

State data show the average cost to plug a well is approximately $163,000, yet outdated rules have allowed operators to post bonds for far less – leaving taxpayers exposed when corporations walk away or go bankrupt.

What the Rules Do

The updated rules:

• Update bonding requirements to $150,000 per well for oil and gas wells at highest risk of abandonment – including low-producing and inactive wells – more closely aligning with the Oil Conservation Division’s actual plugging costs.
• Require operators with high-risk portfolios – more than 20% inactive wells – to post single-well bonding of $150,000 for all their wells, reducing the risk that large portfolios of aging wells are left without adequate cleanup funds.
• Strengthen well transfer rules to prevent poorly funded or noncompliant operators from acquiring aging wells – a common pathway to well abandonment.
• Require the most marginal wells (producing fewer than 90 barrels of oil equivalent in 12 months) to demonstrate they still serve a useful purpose or properly plug them.
• Tighten rules for inactive wells by requiring operators to show wells will return to production in the future, preventing non-producing wells from lingering indefinitely without cleanup.

Frontline and Community Voices

“After more than a century of living with oil and gas operations and seeing the remnants of aging infrastructure across Diné communities in the San Juan Basin, our communities know what happens when corporations fail to clean up after themselves,” said Robyn Jackson, executive director of Diné C.A.R.E. “These stronger rules are an important step toward ensuring oil and gas corporations are responsible for protecting our water, air, lands, and communities.”

“New Mexicans have been clear: Corporations should clean up the wells they drill,” said Ahtza Chavez, chief executive officer at Naeva. “These rules move us closer to that standard by protecting our communities, our water, and making sure the public isn’t left paying for industry’s mess.”

“In Carlsbad, we’ve seen firsthand what happens when corporations don’t have the financial backing in place to fix problems they create,” said Haley Jones of Citizens Caring for the Future. “These rules are a practical step to make sure corporations clean up their wells so communities like ours aren’t left with the costs or the uncertainty.”

Broad Public Support

The decision reflects strong, statewide support:

• 89% of New Mexicans support requiring corporations to pay to clean up wells they drill
• 91% say industry should be financially responsible for cleanup
• 90% say protecting drinking water and public health is essential

Support spans political parties and regions across the state.

A Strong National Standard

With today’s vote, New Mexico establishes one of the strongest oil and gas regulatory systems in the nation to prevent orphan wells and ensure timely closure of inactive wells in the country, demonstrating that New Mexico is committed to protecting public health, safeguarding taxpayers, and requiring corporate responsibility.

Looking Ahead

The updated rules mark a major step toward preventing future abandoned wells and protecting New Mexico communities, land, air, and water. By requiring corporations to plan for cleanup upfront, the state reduces long-term environmental and financial risks. At its core, the decision reflects a simple principle: The people who drill and operate wells should be the ones who clean up.

In the coming weeks, the Oil Conservation Commission will issue a written Final Order and publish the rule in the New Mexico Register. Typically, rules become effective 30 days after publication in the Register.

Coalition Support

“Conservation Voters New Mexico Education Fund congratulates the frontline and fenceline communities who have been pushing for better bonding and other oil and gas industry rules for decades,” saidDoug Meiklejohn, water quality & land restoration advocate at CVNM Education Fund. “Hard-working New Mexicans and their families and communities are resilient–they deserve clean air, land, water, and good health. These new financial assurance rules are a significant victory that will help ensure oil and gas companies benefiting from our state’s resources will pay to clean up their mess.”

“Low-producing wells can actually be very high-polluting,” said Mandy Sackett, New Mexico lead campaigner for Earthworks. “I’ve documented emissions near schools, improperly functioning flares, and continuous leaks with zero accountability for harms to communities from Counselor to Carlsbad. The new rules make corporations that drill in New Mexico put real money toward cleanup, and that matters for every community I’ve worked in.”

“Orphaned oil and gas wells threaten public health and safety, the water we drink, and the climate,” said Adam Peltz, senior director and lead counsel for energy transition at Environmental Defense Fund. “Far too often, New Mexicans have been left to foot the bill for cleaning up after oil and gas companies, and the state faces billions of dollars in decommissioning risks from low- and non-producing wells. Today, New Mexico finalized reforms to right-size historically insufficient financial assurance, inactive well management and well transfer regulations in order to ensure all wells are plugged in a timely manner at the end of their useful life by their operators. We commend the state for its strong leadership on this critical issue.”

“All religious traditions believe caring for Earth is an ethical and moral responsibility. The oil and gas industry has a responsibility to Earth, our communities, health, and future generations. These state bonding rules are a small way to be responsible and address pollution and harm in favor of the sacredness of Life,” said Sister Joan Brown, community advocate at New Mexico and El Paso Interfaith Power and Light.

“New Mexico families deserve clean air and the assurance that corporations, not hardworking families, are responsible for cleaning up the wells they drill,” said Celerah Hewes on behalf of Moms Clean Air Force. “These stronger protections help safeguard children’s health, reduce harmful methane pollution, and ensure communities across our state are not left with the long-term costs and consequences of abandoned oil and gas wells.”

“When oil and gas companies walk away from cleanup obligations, the costs fall to taxpayers, putting stress on local governments and diverting public revenue away from schools, infrastructure, and essential services,” said Jessica Pace, program director at Western Leaders Network. “By modernizing the state’s bonding program, the Commission establishes New Mexico as a national leader, holds industry accountable for its own mess, and stands up for the natural resources that local elected officials and their communities rely on.”

“New Mexico is finally starting to align oil and gas bonding with the real-world costs and risks communities are already facing across the state,” said Rebecca Sobel, climate and health program director at WildEarth Guardians. “In 2025 alone, industry spilled over 38,000 times, releasing over 9.4 million gallons of toxic liquids across New Mexico. Stronger bonding matters because spills are active, recurring risks tied to aging infrastructure, repeat bad actors, and fracking waste contamination. Today’s vote moves New Mexico closer to a system where corporations, not the public, are responsible for the damage they create.”

The Western Environmental Law Center uses the power of the law to foster thriving, resilient western U.S. lands, waters, wildlife, and communities in the face of a changing climate.