Oil and gas frequently cross jurisdictional lines—such as those between counties or states—creating a complex commingling of state, local, and private interests left to the states to resolve independently through statutes and regulations. Historically, the federal government’s regulation of oil and gas was limited to leasing operations on federal and Indian lands, interstate transmission related to commerce, natural gas rates, emergencies related to war, imports, oil pricing, regulation of antitrust issues, allocation of manufacturing, and federal taxation. States retain all other powers, such as policing and imposition of taxes. State administrative processes only address local issues, while multistate correlative rights raise jurisdictional issues. The Compacts Clause, Article I, Section 10, Clause 3, of the U.S. Constitution, is one solution to creating uniform processes and remedies for interstate oil and gas extraction. However, a compact between states alters the type of judicial relief available and may not be in either state’s best interest. This Note follows an application for an interstate horizontal well between New Mexico and Texas and considers the implications of a proposed agreement between the states. Without some federal solution, interstate agreements will remain a cumbersome administrative process that will create a patchwork of oil and gas regulations that are difficult to administer or navigate. The novel challenges posed by the newly approved transboundary well also provide an opportunity for New Mexico and Texas to lead the nation in developing a new phase in oil and gas regulation.



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