SANTA FE, N.M. – A Santa Fe district court judge has awarded the State Land Office nearly $7.5 million in damages in a lawsuit against Texas-based oil and gas company Smith & Marr’s for contaminated oil sites on state lands, New Mexico Commissioner of Public Lands Stephanie Garcia Richard announced today. The State Land Office won an initial judgment in the case in May, and the judge has now decided the dollar amount that the State Land Office is owed. Smith & Marrs and some related companies operated a notoriously contaminated site called the San Mal Queen Unit, in Lea County around 20 miles from Lovington. The approximately $7.5 million damages award is based on an expert assessment by an environmental engineer of the cost of plugging five abandoned wells, removing leaking oil tanks, trashed buildings, and other abandoned infrastructure, and most significantly, remediating serious contamination caused by oil and wastewater spills.
The State Land Office brought the case against Smith & Marrs as part of its Accountability and Enforcement program, which Commissioner Garcia Richard launched in 2020 to hold companies responsible for the damage they cause to state lands. Since the program was launched, the State Land Office has compelled the responsible parties to plug over 560 chronically inactive oil and gas wells, entirely at the expense of those companies. These efforts have saved New Mexico’s taxpayers at least $56 million in cleanup costs. While the exact number of inactive wells fluctuates as additional wells go inactive, the State Land Office has accomplished the plugging of nearly half of the abandoned wells on state lands that have accumulated over the last several decades.
The State Land Office has filed around 30 lawsuits through the program, with most resolved through settlement but four resulting in significant monetary judgments in the State Land Office’s favor.
“What we are doing at the State Land Office has never been done before. We are telling private companies that they are responsible for cleaning up the messes they make, a concept my former third grade students fully understood,” said Commissioner Garcia Richard. “New Mexico’s taxpayers should not be on the hook for contamination caused by oil and gas companies, period. The State Land Office continues to earn record revenue from oil and gas development while we have implemented this program, proving that appropriate oversight is not a hindrance to making money for New Mexico’s schools, universities and hospitals.
Under the Accountability and Enforcement program, the State Land Office regularly reviews oil and gas operations that may pose a serious environmental threat to state lands. The specific measures developed by the Accountability and Enforcement Program, led by the State Land Office Legal Division and Environmental Compliance Office in collaboration with other key divisions, include:
- Plugging chronically inactive oil, gas, and disposal wells and reclaiming their sites
- Cleaning up spills of oil and wastewater, including remediation of legacy spills that have gone unaddressed for decades
- Removing abandoned equipment and infrastructure such as tanks and pipelines, and returning the lease lands to their original condition
- Recovering royalty payments for oil and gas production in trespass
The State Land Office generally contacts oil and gas producers first to give them an opportunity to plug inactive wells, remediate contamination, and take other measures that may be required on a voluntary basis. Lessees and operators that fail to meaningfully respond are subject to further enforcement, including litigation.
“Companies are starting to understand that if you do business on state lands in New Mexico, we’re going to make you follow the rules,” Commissioner Garcia Richard said. “At the same time, the state’s bonding levels for oil and gas development are way too low, so I will be launching a public rulemaking process to ensure New Mexicans are better protected financially from irresponsible actors in the future.”
The agency also reviews business leases, rights-of-way, salt water disposal easements, and other instruments covering a variety of industries for compliance. The Commissioner has also created the agency’s first-ever Environmental Compliance Office, which provides in-house expertise on remediation and reclamation issues on state lands throughout New Mexico.
Commissioner of Public Lands Stephanie Garcia Richard has overseen the New Mexico State Land Office since 2019. In that time the agency has raised more than $10 billion for New Mexico public schools, hospitals, and universities. Over 13 million acres of state trust land are leased for a variety of uses, including ranching and farming, renewable energy, business development, mineral development, and outdoor recreation. The State Land Office has a dual mandate to use state trust land to financially support vital public institutions, while simultaneously working to protect the land for future generations.
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