I run crews out of Hobbs on both sides of the state line. What does my insurance need to handle?

Hobbs is a regulatory hub for the New Mexico side of the Permian.

• Oil Conservation Division, District I. OCD lists its Hobbs office at 1625 N. French Drive. OCD forms list that address as District I, with District II in Artesia.
• Workers' Compensation Administration. The WCA keeps a regional office in Hobbs at 2120 North Alto. The WCA says its regional offices are where employers reach the ombudsman and safety programs and pick up forms.

Geologically, the New Mexico Bureau of Geology describes the giant Hobbs field of Lea County as sitting on the Central Basin Platform, with Permian San Andres production. Its 2024 basement-to-surface model of Eddy and Lea counties covers three provinces: the Delaware Basin, the Northwest Shelf and the Central Basin Platform. A Hobbs yard can send crews to all three in the same week, plus Texas.

For the Texas side of the basin, see Permian Basin contractor insurance.

New Mexico requires workers' compensation for every employer with three or more workers, and for any business doing work licensed under the Construction Industries Licensing Act, whatever its size. Texas does not force most private employers to carry it. For a Hobbs company, the line between those two systems runs right through your crews.

A Lea County case shows how it plays out. In Franklin v. Geo. P. Livermore, Inc. (N.M. 1954), a driller came to a hand's home in Hobbs and hired him as a roughneck on a rig in Texas, about 15 miles from Hobbs and 7.5 miles from the state line. The crew lived in Hobbs and drove to the rig. He was hurt five days later. The insurer paid Texas benefits for 15 weeks, and he then sued in Lea County under New Mexico law. The New Mexico Supreme Court held he was covered by New Mexico's act because he was hired in New Mexico.

That case was decided under an older statute. Today's extraterritorial section, NMSA 52-1-64, covers an injury outside New Mexico where, for example, the employment is principally localized in New Mexico, or the hand works under a contract of hire made in New Mexico for work not principally localized in any state. The lesson is the same: where you hire and where the work is based can pull New Mexico law in, even for a Texas job.

What that means for your policy:

• List both Texas and New Mexico on your workers' compensation policy if you hire in Hobbs or send crews either way across the line.
• Check that your employers liability limits match what the MSA asks for in each state. See employers liability coverage.
• If you run as a Texas nonsubscriber from a Texas address but hire hands in Hobbs, talk to us before the next hire.

Many Hobbs contractors work under MSAs written in Houston or Midland with a Texas choice-of-law clause. New Mexico's oilfield anti-indemnity statute was amended with that in mind.

In 2003, the legislature rewrote NMSA 56-7-2(A) to reach "an agreement, covenant or promise, foreign or domestic," pertaining to a well "within New Mexico." For those wells, an indemnity is void to the extent it covers loss arising from:

1. the sole or concurrent negligence of the indemnitee or its agents or employees,
2. the sole or concurrent negligence of an independent contractor directly responsible to the indemnitee, or
3. an accident in operations carried on at the direction or under the supervision of the indemnitee or its people, or by methods and means they specify.

Subsection C adds that a requirement to name someone as an additional insured, to waive subrogation, or otherwise to impose an indemnity duty through insurance is also void if the same thing written as a direct indemnity would be.

So one MSA can behave two ways. On a Texas well, Texas Chapter 127 governs and insurance-supported indemnity can be enforceable within limits. On a Lea County well, New Mexico's statute can cut back the indemnity and the insurance requirements that support it. Your attorney decides how the contract reads. We make sure your policies, endorsements and certificates match what the contract can actually require in each state. See Texas oilfield anti-indemnity act and indemnity vs additional insured.

New Mexico's hydrogen sulfide rule, 19.15.11 NMAC, applies to anyone drilling, completing, working over or producing an oil or gas well, and to gathering and processing. Below 100 ppm H2S, no further action is required. At 100 ppm or more, the rule starts to bite, and several parts turn on how close the site is to people.

• Public areas and roads. A "potentially hazardous volume" exists if the 100 ppm radius of exposure reaches a public area, the 500 ppm radius reaches a public road, or the 100 ppm radius exceeds 3,000 feet. Public areas include homes, businesses, schools and parts of a town. That triggers a written contingency plan.
• Fencing. Well sites and unattended fixed facilities at 100 ppm or more must be fenced with locking gates when they are within a quarter mile of a public area.
• Workover and well servicing. Operations at 100 ppm or more need a detection sensing point as close to the wellbore as practical and a remote-controlled, H2S-rated well control system that works throughout the job.
• Training. People responsible for carrying out the contingency plan must be trained in H2S hazards, detection, personal protection and contingency procedures.
• Reporting. A release that activates the plan must be reported to OCD within four hours, with a full C-141 report within 15 days.

Around Hobbs, where wells and tank batteries sit close to homes and roads, these rules come up more often than out in open country. Operators will ask for your H2S training records. Your liability and pollution coverage should be checked for how they treat a gas release. See oilfield pollution liability and well servicing insurance.

Send these and we can tell you quickly where your program stands for Lea County work:

• The insurance and indemnity sections of each MSA, including the choice-of-law clause.
• Your current certificates and the declarations pages for workers' comp, GL, auto and umbrella.
• Your workers' comp information page, so we can see which states are listed.
• A note on where you hire, where your yard is, and roughly how your work splits between New Mexico and Texas.
• Any ISNetworld or Avetta rejection notice.

A licensed insurance specialist reviews it, explains what fits the contract and what does not, and tells you what to fix before the next job. Coverage is placed through a licensed Texas insurance agency. Request a review.