The New Mexico Oil and Gas Association wants the state to substantially change its rule on how well drilling and production waste fluid are handled.

The so-called "pit rule," approved by the New Mexico Oil Conservation Commission in 2008, applies to thousands of oil and gas wells around the state. The requirements for handling fluids in buried tanks, sumps, pits and closed-loop systems were implemented to prevent from waste seeping out of waste pits and into groundwater or leaking into flowing streams and seasonal waterways such as arroyos.

However, the industry group on Friday appealed the rule to the Oil Conservation Division. The group simultaneously filed a motion asking District Court Judge Barbara Vigil to stay a court action the organization filed earlier.

Eric Jantz, lead attorney on the court case for the New Mexico Environmental Law Center, called the move unusual. In a decade at the law center, he said, he's only known one case in which an organization filed a court action and then separately sought to amend the same rule. "[The association] sees they have a very good shot under this administration and this commission of getting exactly what they want," Jantz said.

Steve Henke, executive director of the New Mexico Oil and Gas Association, was at an industry conference in Santa Fe and did not immediately respond to requests for comment.

Former Gov. Bill Richardson modified the rule in 2009 to reduce the financial impacts on industry.

The industry has continued to claim the rule increases drilling costs, especially for small-scale operations, and made New Mexico less desirable for drillers than adjoining states. A rotary rig count by Baker Hughes, which tracks wells, showed a dip in 2009, followed since by a steady increase in rig numbers.

The pit rule was among several environmental regulations that a task force appointed by Gov. Susana Martinez wanted axed or changed to make New Mexico more business-friendly.

The New Mexico Oil and Gas Association said the pit rule amendments will make New Mexico more competitive with surrounding states for hydrocarbon development while still protecting groundwater and the environment.

Jantz said his early reading of the proposed rule amendments pinpointed three big changes.

For one, he said, "the proposed amendments scrub almost any reference to closed-loop systems, including any requirement that there be any. They keep claiming closed-loop systems are expensive, but no one in the oil and gas industry has produced hard data that closed systems are more expensive than traditional pits."

Another change would be less stringent requirements regarding low-chloride waste near residences and waterways. Jantz said low-chloride waste has about as much salt as ocean water.

A third concern for Jantz is an amendment that would allow an operator lacking information about groundwater in a well site to make a "reasonable estimate" without testing. "That's important," he said, "because if a well owner claims their groundwater is contaminated, they won't have any data about the original groundwater quality before drilling started."

Among other changes the oil and gas industry is requesting:

• Cease to apply the pit rule to playas (dry lakes), ephemeral washes and arroyos where water doesn't flow year-round.

• Reduce the distance between groundwater and an allowed temporary waste-fluid pit from 50 feet to 25 feet for low-chloride waste.

• Entirely rework and replace requirements for closing waste-fluid pits, below-grade tanks and closed-loop systems.

An Oil Conservation Division hearing on the amendments is likely by year's end.

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.