ALBUQUERQUE — A state district judge on Tuesday sided with New Mexico's oil and gas industry, putting on hold legal appeals related to efforts by the industry to revamp rules for handling drilling and production wastes.

The New Mexico Oil and Gas Association had asked for the appeals process to be halted so the state Oil Conservation Commission could tackle the so-called pit rule administratively.

The commission has scheduled a weeklong hearing later this month to address the industry's proposed changes to the rule, but environmentalists are seeking to stop the proceeding.

Eric Jantz, an attorney with the New Mexico Environmental Law Center, said he was disappointed the appellate process will not be able to unfold. Instead, he said the industry is taking advantage of a change in the political climate since the pit rule was first adopted by the commission.

"There's an administration change and they run back," he said of the industry. "The danger here is we end up on this endless cycle of rule-makings, appeals and then more rule-making without ever having any real resolution."

The pit rule was initially approved by the Oil Conservation Commission under former Gov. Bill Richardson's administration in 2008. The rule governs how oil and gas producers around the state handle wastes from drilling operations in buried tanks, sumps, pits and closed-loop systems.

The regulations are aimed at preventing wastes from seeping into groundwater, streams and arroyos.

The New Mexico Oil and Gas Association and the Independent Petroleum Association of New Mexico have both filed applications with the commission to amend the rule.

The industry maintains the proposed changes are designed to make oil and gas producers, especially small-scale operations, more competitive by bringing drilling costs that stem from the rule back in line with the costs of developing oil and gas in surrounding states.

"We're trying to ease the rules that are making us uncompetitive, but we're doing it in such a way that we still believe is protective of the environment. We're not just throwing out the old rule," said Wally Drangmeister, a spokesman for the oil and gas group.

The New Mexico Environmental Law Center, which is representing Earthworks' Oil and Gas Accountability Project in the legal proceedings, maintains that the changes would "significantly relax" parts of the pit rule.

Supporters of the rule say it's needed to protect human health and the environment from oil field waste.

"Groundwater and surface water is really the issue here and whether we want to sacrifice that for oil and gas profits," Jantz said. "If that's the policy debate we have, then let's have it."

Oil and gas producers, some state lawmakers and a task force appointed by Gov. Susana Martinez have backed regulatory changes to make the state more business-friendly. Industry supporters point to the more than $2 billion brought in during the 2010 fiscal year from oil and gas taxes, royalties and other revenues.

Whether the fate of the pit rule will affect the uptick in oil and gas activity in southeastern New Mexico remains unclear. Federal land managers processed about 800 permits to drill in New Mexico's portion of the Permian Basin, and several operators have plans to build new rigs, which the Bureau of Land Management expects will result in sustained development for at least the next two years.




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