Regulatory compliance is critical to the successful and sustainable operation of oil and gas projects, particularly in Texas and New Mexico, two of the most active producing states in the country. These two states, along with overlapping federal oversight, imposide a wide array of compliance responsibilities that can materially impact project timelines, costs, and risk profiles.
Thus, for oil and gas counsel, effective guidance hinges not just on understanding the rules, but on aligning operational decisions with regulatory realities, managing agency interactions, and anticipating areas of potential scrutiny and regulatory evolution.
Mapping State and Federal Frameworks
The first requirement for effective compliance is a detailed and current grasp of the overlapping state and federal frameworks that govern upstream activity.
1. Texas: The Railroad Commission of Texas (RRC) regulates virtually all drilling and production activity—well spacing, flaring, plugging, and more—under the Texas Natural Resources Code.
2. New Mexico: The Oil Conservation Division (OCD) oversees well spacing, pooling, produced water management, and, increasingly, emissions control. The OCD has also taken a leading role nationally in adopting methane reduction and gas capture rules.
3. Federal lands: Operators on federal lands must also answer to the Bureau of Land Management (BLM), Environmental Protection Agency (EPA), and the Office of Natural Resources Revenue (ONRR), each with its own permitting, reporting, and auditing regimes. These obligations often run concurrently with state oversight.
Even a single well may implicate multiple agencies, timelines, and reporting standards. The ability to proactively coordinate those obligations—rather than react to them—is essential to keeping operations efficient and compliant.
Navigating State and Federal Agencies
Understanding the letter of the law is one thing. Understanding how different agencies actually operate is another. Effective counsel helps clients and companies:
● Map Permitting Sequences. For example, an Application for Permit to Drill (APD) may be pending while OCD processes surface and spacing applications. Coordinating and mapping out these timelines avoids costly delays.
● Manage Audits and Inspections. The RRC and OCD regularly inspect wells for mechanical integrity and environmental compliance, while ONRR audits royalty reports. Preparedness and organized documentation are key to minimizing risk and keeping things moving forward without unnecessary hiccups.
● Interpret Agency Discretion. Regulatory decisions often turn on discretion – extensions, exceptions, or informal guidance. Understanding why agencies make certain decisions is critical to efficient problem-solving, and relationships and credibility with agencies can materially affect outcomes.
Staying Ahead of Regulatory Change
The rules are not static. Regulatory priorities in Texas, New Mexico, and Washington can evolve rapidly. Recent developments include:
● New Mexico’s gas capture rules impose strict limits on flaring and venting, requiring operators to demonstrate compliance through detailed reporting.
● EPA’s methane regulations are beginning to reshape emissions monitoring obligations for operators in both Texas and New Mexico.
● Texas’s evolving flare oversight, signaling tighter scrutiny around waste prevention.
Operators who can monitor and anticipate these types of changes are far better positioned than those forced to retrofit compliance after the fact.
Looking Ahead
Looking ahead, oil and gas operators face growing complexity:
● Rapid Regulatory Reform and Policy Shifts. Emissions standards, water disposal rules, and ESG reporting requirements continue to evolve. Compliance systems must be flexible and adaptable.
● Emerging Technologies. Produced water recycling, carbon capture, and direct lithium extraction present new regulatory questions. Legal advice is critical in aligning these technologies with existing (or non-existing) regulatory frameworks.
Conclusion
At RR&A, we work with oil and gas operators to build compliance strategies that are personalized and proactive. From RRC and OCD permitting to BLM and ONRR issues, we help our clients mitigate risk, reduce friction, an support long term success. For help with proactive and reactive regulatory compliance, reach out to RR&A today!
Miguel is a Junior Associate at R. Reese & Associates and part of the Transactions, Land, and Title Teams. To learn more about Miguel, visit his attorney page.
Disclaimer: The information and material on this website is general information about our practice and firm. This information does not offer specific legal advice and the use of this information does not create an attorney-client relationship with RR&A or any of its attorneys. The information on this website should not be used for legal advice, and persons should not act upon the information on this website without engaging professional legal counsel.
