Rio Arriba County is no longer being sued over its four-month moratorium on oil and gas drilling.

Approach Resources Inc. — the parent company of Approach Operating LLC — said in a statement Tuesday that it was withdrawing its lawsuit against the northwestern county.

The company — which owns the mineral-rights leases on 90,000 acres in Rio Arriba County — filed the suit that said the state, not individual counties, regulate the oil and gas industry.

The company said in a statement Tuesday that it was dropping the lawsuit because of Gov. Bill Richardson's decision to direct the state Oil Conservation Division to create new rules for parts of Rio Arriba County.

"In light of the Governor's directive, which confirms the authority for rulemaking in Eastern Rio Arriba County with the appropriate state agencies, Approach will withdraw its litigation ... against Rio Arriba County," the statement says. "The Company expects the state rulemaking to fully and finally resolve the conditions for prudent oil and gas development in Rio Arriba County. ... Approach has consistently maintained that responsibility for oil and gas regulation in this area belongs at the state level."

Though parts of Rio Arriba County are familiar with oil and gas development, the mountainous Tierra Amarilla area is not.

Rio Arriba County commissioners were prompted to pass the moratorium in April after new interest in drilling in the region raised concerns about contamination of watersheds that feed the Rio Chama and Rio Grande.

Like Santa Fe and Mora counties — both have passed moratoriums on oil and gas to prepare new regulations — Rio Arriba County approved its ban to look at ways it could further regulate the industry to protect the environment.

Santa Fe County's yearlong ban had been bolstered by a similar mandate from Richardson. Rio Arriba had been facing off with Approach without such support. On July 21, after Rio Arriba residents protested the discrepancy, Richardson directed the OCD to draft special rules to protect the watersheds in the Tierra Amarilla area.

While Approach has cast the governor's decision as an effort to make sure the proper agency handles oil and gas regulation, Rio Arriba County Commissioner Alfredo Montoya said he thinks the decision was one of many factors that weakened Approach's chance of winning its challenge against the county.

"The first thing I think we did, to their surprise, was we went to the OCD hearings and protested the permitting of the wells," Montoya said. "I think it started there, in that we presented an excellent case. The second thing is that Santa Fe County and the New Mexico Association of Counties filed an amicus brief that further strengthened our case, because then we weren't alone anymore."

The Oil Conservation Division also recently canceled one of Approach's permits to drill and pulled another eight for reconsideration.

Montoya said he was surprised Approach had filed the suit because the county originally had limited the moratorium to four months as a courtesy so the drilling company could get some work done on new wells before winter set in. "Then they turned around and sued us," he said.

Montoya said he's pleased with the turn things have taken, but said Rio Arriba may need to extend the moratorium to write new rules because the county has had to expend much of its limited resources on addressing the legal challenge.

He said Rio Arriba County is looking to Santa Fe County, La Plata County, Colo., and even Los Angeles in drafting its new regulations governing the oil and gas industry.

"We are committed to the protection of our water sources for our present and future generations of New Mexicans," Montoya said. "It's one of the most important things this county can do for a lot of New Mexicans ... a lot of the water that runs through (the Rio Chama and Rio Grande) rivers is born in our mountains here in Rio Arriba."

Santa Fe County also is in the process of writing new regulations to govern oil and gas development.

Exactly how much authority counties have to regulate the industry is a much-debated topic only recently being explored in New Mexico courts.

Contact Phaedra Haywood at 986-3068 or phaywood@sfnewmexican.com.