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 & Marrs 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, located 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 responsible parties to plug over 560 chronically inactive oil and gas wells at their own expense. These efforts have saved New Mexico’s taxpayers at least $56 million in cleanup costs.
“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.”
Under this program, measures include plugging chronically inactive wells, cleaning up spills of oil and wastewater (including legacy spills), removing abandoned equipment and infrastructure such as tanks and pipelines, reclaiming sites to their original condition, and 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 or remediate contamination voluntarily. Lessees or operators who fail to respond meaningfully face further enforcement actions 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,” said Commissioner Garcia Richard. “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 future.”
The agency also reviews business leases, rights-of-way agreements for saltwater disposal easements among other instruments covering various industries for compliance. Additionally created under her tenure is an Environmental Compliance Office providing expertise on remediation issues throughout New Mexico's state lands.
Commissioner Stephanie Garcia Richard has overseen more than $10 billion raised by leasing over 13 million acres of state trust land since taking office in 2019—supporting public schools hospitals universities while protecting these lands future generations' benefit through balanced use policies like those underlined within this recent court ruling success story against Smith & Marrs.