Working out of the Lea County seat: what should Lovington contractors watch in their insurance?

The New Mexico Association of Counties lists Lovington as the Lea County seat, with Hobbs as the largest city. Lea County was created in 1917 from parts of Eddy and Chaves counties. The county covers about 4,393 square miles and, by its own account, owns and maintains 1,300 miles of roads. The Lea County District Court is at 100 N. Love St. in Lovington, part of the Fifth Judicial District with Eddy and Chaves counties.

Why that matters for a contractor:

• County roads. With 1,300 miles of county road, a lot of your driving between town and location is likely on county-maintained road. Damage your loaded trucks do to a county road, culvert or cattle guard is a liability exposure. So is a wreck on a narrow road shared with farm and ranch traffic.
• Where suits land. Injury and property damage claims from Lea County work may be filed in the district court here. When an operator tenders a claim to you under the MSA, the indemnity and additional insured language gets tested in front of a New Mexico judge.

Your auto policy's liability limit and your umbrella are what stand between a county-road wreck and your balance sheet. See oilfield auto insurance and MCS-90 and oilfield umbrella insurance.

New Mexico has a special permit just for oilfield equipment haulers. NMSA 66-7-413.6, enacted in 2007, lets an "oilfield equipment transport vehicle" (a vehicle or trailer used exclusively to haul equipment or materials used in producing oil or gas) get a multiple-trip special permit. The area it covers is stated on the permit.

As enacted, the permit allows loads up to:

• 22 feet wide, 20 feet high and 110 feet long.
• A loaded gross vehicle weight under 140,000 pounds.
• "OVERSIZED LOAD" signs front and rear.
• A private escort and a route survey for overhead and width clearance on any load wider than 20 feet and higher than 18 feet.
• No travel on routes the Department of Transportation identifies as having deficient bridges. The owner or operator must carry the department's deficient bridge information, updated annually.

These are legal limits, not insurance terms. But a rig move under a permit still produces claims: a power line pulled down, a bridge strike, an escort vehicle hit. Make sure your auto policy schedules every power unit and trailer, your equipment floater covers the load in transit, and your GL covers damage to overhead lines and roadside property. See oilfield equipment insurance.

Lovington work leans toward older fields. A Southwest Petroleum Short Course case history describes the Lovington San Andres Pool as a 2,400-acre pool in central Lea County, about 10 miles northwest of Hobbs, developed as a waterflood. The New Mexico Bureau of Geology places the San Andres production at the nearby Hobbs field on the Central Basin Platform.

On the Northwest Shelf, the Yeso is another target. An AAPG abstract describes development of the Paddock and Blinebry members of the upper Yeso near Maljamar beginning in 2011.

Old waterfloods mean a lot of injection wells, flowlines, tank batteries and lease maintenance, plus produced water moving by pipe and truck. That kind of work produces steady, smaller claims: a flowline leak, a tank overflow, a fence or pasture damaged by a spill, an injury during routine maintenance. Make sure your pollution coverage responds to gradual leaks as well as sudden ones, and that your GL is not excluding the operator's flowlines as property in your care, custody or control. See roustabout company insurance, what is sudden and accidental pollution coverage and the care, custody and control exclusion.

New Mexico requires workers' compensation for employers with three or more workers, and for businesses doing work licensed under the Construction Industries Licensing Act regardless of size. Small Lovington outfits sometimes assume they are under the line. The WCA's own FAQ says the count is broader than many owners think:

• Part-time and seasonal workers count.
• Family members who are paid wages count.
• Owners can count. In a corporation or LLC, an executive officer who owns 10% or more is counted as an "executive employee." Partners in a limited partnership are counted.
• Opting out does not reduce the count. An owner or executive may elect to be excluded from coverage but still counts toward the three.

Employers subject to the act also pay a quarterly assessment fee on each covered employee working on the last working day of the quarter. The WCA lists it as $4.80, with $2.25 paid by the worker and $2.55 by the employer, filed with the Taxation and Revenue Department on Form WC-1. The WCA says employers who fall short of the coverage requirement are referred to its Employer Compliance Bureau for enforcement.

If you are close to three, get a WC policy with New Mexico on it before an operator or a claim forces the question. See what insurance does a new oilfield service company need.

Hauling produced water. New Mexico requires an approved Form C-133 to move produced water, drilling fluids or liquid oilfield waste off a lease by truck, with a copy in the vehicle (19.15.34.17 NMAC). OCD may deny it if your corporation or LLC is not registered with the New Mexico Secretary of State. The Taxation and Revenue Department also says anyone engaging in business in New Mexico must register with it.

Certificates and 56-7-2(C). New Mexico voids an additional insured requirement, a waiver of subrogation requirement, or any insurance provision that would impose an indemnity duty the statute forbids on a New Mexico well. Operators still send certificate requirements with blanket AI, primary and non-contributory wording and waivers. Your attorney decides what the MSA can enforce. We make sure the endorsements you carry match it and that your certificate does not promise more than the policy gives. See what is a blanket additional insured endorsement and what is a waiver of subrogation.

Send us:

• The MSA insurance and indemnity sections and the certificate requirements exhibit.
• Your current certificates and WC information page.
• Your equipment and vehicle schedules and any multiple-trip permits.
• Any ISNetworld or Avetta rejection notice.

A licensed insurance specialist reviews it and tells you what to fix. Coverage is placed through a licensed Texas insurance agency. Request a review.