The draft ordinance that will govern oil and gas extraction in San Miguel County when enacted is getting another rewrite.
During a conference call with Los Angeles-based consultant Robert Freilich on Tuesday afternoon, San Miguel County Commissioners weighed in on the stiff ordinance being proposed.
Despite the tweaks requested, Commission Chairman Nicolas Leger praised the 111-page draft ordinance, calling it comprehensive and saying that it addresses what they requested.
"We’re well on our way,” he said.
Among the first items tackled was whether the proposed $15,000 application fee would be sufficient for the county to cover its costs of permitting and monitoring oil and gas operations. The county would have to start from scratch because it currently has no staff devoted to this task.
County Manager Les Montoya told commissioners that the county would likely have to hire two new people to process oil and gas drilling applications and another individual to inspect wells. He said the county would also have to contract with a hearing officer.
Commissioners agreed that the $15,000 application fee was too low and asked that it be increased to about $25,000.
That fee would be imposed on anyone applying for a permit to drill a new well.
Because oil and gas drilling hasn’t been done in the county in many years, commissioners also asked that the ordinance contain a provision that only exploratory wells be allowed during the first year the ordinance is in place. An exploratory well is drilled to determine whether there is oil and gas in a specific area. Once it’s determined that oil or gas is present, a production well is needed to actually extract the resource.
Besides limiting permitting during the first year to exploratory wells, the Commission also directed Freilich to cap the number of permits that will be issued during that first year. Exactly what that cap will end up being is still unclear.
The draft ordinance requires an applicant to submit a number of studies before any drilling can begin. But it also contains a provision that the individual or entity applying for an oil or gas drilling permit be required to cover the cost of a county consultant to review what is being submitted.
Commissioners want to keep that provision, but they stressed that the county needs to hire its own consultant.
Because water is so scarce in the county, the draft ordinance requires a water availability assessment report. The report would include an evaluation of water supply for the estimated life of the project, an assessment of available water supplies to determine if drillers can meet the demand associated with the project, identification of suppliers and an assessment identifying existing water rights. If water rights are insufficient, a plan would have to be submitted identifying alternatives.
Among the questions Freilich posed to the Commission is whether groundwater would be an acceptable source of water for drillers. Leger told Freilich that the consensus of commissioners is that groundwater should not be allowed, given how finite water is in the county.
The current draft of the ordinance would require that those engaging in oil and gas extraction pay hefty development fees to the county to offset increased infrastructure costs.
Freilich informed the Commission that those portions of the ordinance would need to be axed because of a recent U.S. Supreme Court decision that found that type of condition in exchange for development approval to be an unlawful taking of property and therefore unconstitutional. The case is Koontz v. St. Johns River Water Management District.
Freilich said there would be no required development fees in the next draft because of that court case.
Freilich plans to incorporate the changes to the draft ordinance within the next few days. During the Commission’s next meeting on Oct. 8, commissioners will again review the ordinance to determine whether there are any additional changes that are needed.
The Commission then plans to turn the draft ordinance over to its Planning and Zoning Commission for review. Any recommendations they have are to be submitted to the Commission by its Nov. 12 meeting. At that meeting, commissioners plan to formalize the ordinance.
Then in late November or early December, the Commission plans to hold hearings to get public input. Commissioners plan to vote on adopting the ordinance in December.
The county’s moratorium on oil and gas exploration expires on Dec. 13. That moratorium has been in place for nearly four years.
The Commission has been informed that the oil and gas industry is interested in the southeastern portion of the county, particularly the Trementina sub-basin of the Tucumcari basin.
Oil and gas drilling has been a controversial topic in San Miguel County and the city of Las Vegas in recent years. Some environmental activists have been pushing for an outright ban on oil an gas drilling in the county, while proponents of the industry have been pressuring county officials to allow extraction.
Activists argue that the dangers of oil and gas exploration, particularly fracking, are too high, given the water shortages in the area. Proponents, including members of Gov. Susana Martinez’s administration, point to the jobs and other economic benefits that drilling would bring to San Miguel County.
Commissioners announced five months ago that they had ruled out an outright ban on extraction, but they each voiced support for a strong ordinance that protects the water, land and well-being of the county’s residents.