Discussion draft of new Strategic Water Supply Act reveals plan is still a bailout for oil and gas industry

The Governor’s latest version of a "Strategic Water Supply Act," according to a December 3rd discussion draft, provides $75M in public funds to incentivize the creation of a treatment and reuse industry for the oil and gas industry’s liquid fracking waste, and is once again being marketed as a solution to a projected 25% water shortage expected in New Mexico by 2050. The real motivation for the Governor’s proposal: the oil and gas industry generated over 2 billion barrels of oilfield wastewater in 2023, and they are running out of low cost disposal options. The plan is a publicly funded bailout for a private industry that already reaps billions in profits. The Strategic Water Supply Act (SWS) endangers our health and our clean water sources, and fails to provide a meaningful solution to the very real water scarcity problem that New Mexico faces.

WHAT DOES THE NEW VERSION OF THE STRATEGIC WATER SUPPLY ACT DO?

1. It creates a Strategic Water Supply program and fund, and appropriates $75M to the fund for expenditures in FY 2026–2030 for the purpose of "reducing the state's reliance on freshwater resources" or "expanding water reuse opportunities." It also appropriates $29 million in fiscal year 2026 and subsequent years to the New Mexico Institute of Mining and Technology to characterize fresh and brackish water aquifers, and $4 million in fiscal year 2026 and subsequent years to the University of New Mexico for projects related to the Strategic Water Supply.

2. It levies a $0.05 fee per barrel of produced water from oil or gas wells, except for water reused or permitted for specific uses, to be deposited in the Strategic Water Supply Fund, which is projected to amount to $68M per year. The Oil Conservation Division is tasked with promulgating rules to facilitate reporting and accounting of each barrel of produced water for the purpose of imposing the fee.

3. It requires prior approval & public notice before drilling new brackish wells or recompleting existing ones.

4. It defines eligibility requirements for grants or contracts awarded from the Strategic Water Supply Fund, including compliance with "rules adopted by the water quality control commission" that have not yet been promulgated, financial assurances of an undefined amount or type for the life of the project, and a required community benefits and engagement plan that lacks specificity or standards. 

WHAT ARE THE PROBLEMS WITH THE GOVERNOR'S PLAN?

1. It endangers our existing ground and surface water by incentivizing and subsidizing produced water and brackish water reuse projects before scientific research provides the necessary information to prevent likely contamination of New Mexico’s ground and surface waters, land, and agriculture with excessive salt, radionuclides, and organic and inorganic toxins, including PFAS. These risks are not speculative. They have been raised repeatedly by scientific experts and regulators, and borne out by the experiences of other states where produced water reuse was authorized. Safe and effective treatment of produced water at the scale envisioned in this plan has not been proved feasible or safe, and water quality standards specific to such reuse projects have not been established because the research necessary to support establishment of such standards has not yet been conducted.

2. It ignores the very substantial environmental risks that brackish water reuse can pose, including land surface subsidence, saltwater intrusion into freshwater aquifers, decreased flow in rivers, contamination from residual constituents after treatment, and the extremely significant amount of energy necessary for brackish water treatment plants - hundreds of megawatts that will compromise our climate emission goals. The plan further ignores the important fact that brackish water aquifers are, by and large, a non-renewable resource.

3. It ignores the enormous and potentially extremely expensive issue of disposal necessary for the hazardous residual waste stream produced as an inevitable result of separating dissolved salts, hydrocarbons, heavy metals and toxic fracking fluids from brackish water and fracking waste during treatment. The discussion draft of the Strategic Water Supply Act does not even mention this concentrated and hazardous waste, which is likely to equal at least 20% of the 100,000 acre feet per year the plan will ostensibly produce. The question of costs associated with transport, proper disposal, and the very important question of who will be liable for any environmental or public health impacts of the likely spills and leaks related to transport and disposal of these significant volumes of hazardous waste go unaddressed.

4. It transfers significant liability for both environmental contamination and likely stranded assets from a private industry to the public. While the bill does include a requirement for financial assurances, that requirement is toothless. It does not specify the amount or the type of assurance required, an egregious lack of accountability given that the oil and gas industry is already responsible for abandoning thousands of wells drilled with inadequate financial assurances, and that enormously expensive produced water treatment projects in other states have repeatedly been shuttered after proving ineffective and uneconomic.

5. The Strategic Water Supply Act is not a serious solution to the issue of water scarcity and if passed, will result in significant opportunity costs for New Mexico. The plan ignores the significant risks to public health and the environment, residual waste disposal issues, liability, and excessive energy consumption posed by both produced and brackish water reuse schemes that render any public investments into this plan wasteful. Investment of public funds in this scheme detracts from the funding and attention necessary to properly implement the 2023 Water Security Planning Act, the 2019 Water Data Act, and the resources, staffing and modernization necessary to pursue the straightforward actions and investments that have already been identified as priorities to conserve water in New Mexico.

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We do agree that the oil and gas industry should pay a fee per barrel for all produced waste in New Mexico to fund the remediation of spills and the plugging of the more than 2000 abandoned wells that continue to threaten contamination of land and water, and to emit significant amounts of climate warming methane into the atmosphere. The oceans of hazardous waste produced by the oil and gas industry already poses a significant environmental risk and offloads remediation costs to the public. Spills of hazardous fracking waste take place daily, with more than 16,000 such spills reported between 2010 and 2024, of which at least 280 impacted ground or surface waters. Injection of waste via salt water disposal wells is inducing dangerous seismicity and literally gushing back up to the surface in the Permian, putting the health of area residents at risk from hydrogen sulfide, hydrocarbons, and other toxins, rendering affected properties worthless, and threatening clean water sources for surrounding communities. 

Together we have defeated the Governor’s previous iterations of the legislation in two prior years (2023 proposal for $500 million and 2024 proposal for $250 million). With your help we will again successfully oppose this dangerous bailout for the oil and gas industry by continuing to educate New Mexico legislators, organizing public comment, and working to support bills that invest public funds necessary to protect and conserve our water as we face increasing aridification as a result of oil and gas industry pollution.