In New Mexico’s Fast Legislative Session, Oil and Gas Fans Tap the Brakes
“You may clap now.”
With that, Rep. Javier Martínez, the speaker of the New Mexico House of Representatives, ushered Jan. 28, New Mexico Oil and Gas Day, into the record books. The measure passed in a unanimous consent vote of all of the state’s representatives — a process that didn’t allow for anyone to vote against it. The preceding 20 minutes of discussion were a Republican-led chorus of “Drill, baby, drill!” and pro-industry rhetoric. Just two Democrats spoke, one in hearty endorsement and the other with a carefully worded note of caution.
The memorial (defined as “a formal expression of legislative desire”) set the tone so far for the two-month session that ends March 22. As of Feb. 18, legislators had submitted 878 bills for debate, with two days to go before the session’s filing deadline. Of those, 19 bills deal directly with oil and gas production in the state. Essentially all other bills are affected indirectly by the industry that provides nearly a third of New Mexico’s annual — and once again record-breaking — operating budget.
In an overwhelmingly Democratic legislature, that makes for some unusual bedfellows.
Over the past few years, Reps. Nathan Small, D-Doña Ana, and Meredith Dixon, D-Bernalillo, and Sen. George Muñoz, D-Gallup, have risen to the tops of their respective chambers’ financial committees, where they set budgets for state agencies such as those that regulate oil and gas production. Small and Dixon also sit on the House Energy, Environment and Natural Resources Committee, where they get first crack at most legislation that would affect the industry. Together, the three Democrats regularly act as a brake on regulation. They also are among the top 10 recipients of oil and gas industry donations in state government.
Lucas Herndon, energy policy director with ProgressNow New Mexico, said his group struggles with this reality. “These leaders have carried and voted for some very important and bold policies over the years that have had meaningful impacts on New Mexico’s climate and environment,” he said. “But it is also true that many environmental bills have either been watered down or stalled completely in their committees by their votes in particular.”
During a hearing at the House Energy, Environment and Natural Resources Committee, Small argued against a bill that would change the mission statement of the Oil Conservation Division, the state’s primary industry enforcement agency. The bill would add human health and environmental considerations to the department’s mission of preventing oil and gas waste and preserving the rights of oil and gas lease owners. Small, who is also an organizer with the environmental group New Mexico Wild, said he worried that a future governor could use it to shut down oil and gas production because of how it accelerates climate change. The latest statewide greenhouse gas inventory showed that oil and gas production is the largest source of greenhouse gas emissions in the state.
Gail Evans, New Mexico climate director and senior attorney with the Center for Biological Diversity, joined bill sponsor Rep. Debra Sariñana, D-Bernalillo, to defend the bill. “If you’re saying that we can’t do oil and gas production in the state and protect public health and the environment, well, that’s a real concern,” she said in response to Small.
Small then launched into a long argument that the state’s continuing efforts at reducing carbon emissions can happen more quickly if the state doesn’t restrict production since that production pays for the state’s carbon reduction efforts, such as electric car incentives. And if New Mexico doesn’t produce oil and gas, somebody else will, he said.
He and Dixon voted against the bill and joined all of the Republicans on the committee to table the bill so it won’t be reintroduced this session.
“For years we’ve been told oil and gas is good for our kids because it funds our schools, completely ignoring that our kids are being poisoned at school and at home by oil and gas pollution,” Evans said later. “Now, we are being told that oil and gas is good for a renewable energy future because it’s going to fund our EVs, failing to mention that fossil fuels are driving the climate crisis. What will the next excuse be?”
Ennedith López, the policy campaign manager with the youth climate action group YUCCA (Youth United for Climate Crisis Action), spoke in favor of the bill at the hearing. “I did feel a sense of frustration when Nathan Small and Rep. Dixon essentially voted against the bill alongside the Republicans,” she said.
“The argument that the language on public health is too broad, or the argument that it’s not well defined, was really discouraging,” she said. “Those definitions have been made clear in other provisions involving oil and gas operations.”
She continued, “It just really seems as though there’s a lot more leverage given to the oil and gas industry and to their concerns.”
A few days later in the same committee, Small and Dixon shook up the initial hearing on a so-called “bad actors” bill that would give the Oil Conservation Division authority to block sales to people or companies that meet one of the following conditions:
They are under a notice of violation or enforcement action under the state’s Oil and Gas Act.
They are out of compliance with natural gas reporting requirements.
They don’t have adequate bonding to cover the plugging of abandoned wells.
They lack the financial capacity to manage other liabilities associated with the wells.
A version of the bill was proposed and voted down last year. Ben Shelton, the general counsel and acting deputy cabinet secretary of the Energy, Minerals and Natural Resources Department (which oversees the Oil Conservation Division), defended the bill and described its targets as “operators who probably shouldn’t have the wells they have now.”
Shelton said there are companies “that you can think of as being on life support with the division. We don’t think they should be adding more liability.”
In a separate hearing the same day, Shelton said thousands of wells across the state are at risk of being abandoned by their owners, and if that happens, “The liability to the state runs into the hundreds of millions of dollars.”
Rep. Matt McQueen, D-Gallisteo, the bill sponsor, said, “This isn’t a typical industry. … If a typical grocery store ends up shutting down, the state isn’t left holding the bag.” In 2023, the state was left holding the bag for 299 moribund wells from just one Texas-based company that is reimbursing New Mexico at a rate of $30,000 a month for up to 80 years to cover plugging and remediation costs that could top $30 million.
Committee Republicans united against the bill, citing possible litigation, though the New Mexico Attorney General’s office saw no significant issues in its assessment of the bill. The Republicans also expressed concern that company fiscal details could be subject to public records requests. Rep. Elaine Sena Cortez, R-Lea, representing a district in the middle of the oil-rich Permian Basin, said, “It just seems so vague.”
For his part, Small worried that taking wells out of production and plugging them could render them unfit to be used as either geothermal or carbon sequestration wells in the future. (One report suggested that existing oil or gas wells would likely be unsuitable for those uses in any case.) Even so, Shelton said that a plugged well with a clean site would be more appealing to a potential future user than an abandoned leaking well.
Small then said he thought the bill “maybe could use refinement.”
Dixon worried about a “lack of engagement” from small producers when creating the bill and talked of refining it in a way that both helps the agency and “that fits with the practical realities of industry.”
McQueen then asked to roll the bill forward, stalling the vote and allowing time to add changes.
On Tuesday, again in the same committee, McQueen and Shelton defended a separate bill that would increase both permitting fees and penalties at the Oil Conservation Division, fees that they said haven’t changed since the 1990s.
Jim Winchester, executive director of the Independent Petroleum Producers Association of New Mexico, summed up the industry’s position when he called the fees and penalties “beyond excessive” and a threat to the solvency of independent operators.
McQueen called his comments “absurd and, frankly, offensive.” Increased fees are needed to cover increasing costs of doing work, and if penalties aren’t large enough to deter companies from breaking the law, “they’re just fees,” he said.
McQueen accepted an amendment from Small that dropped the proposed penalty cap from $3.6 million to $2.6 million, even after Shelton said that Texas and other comparable states don’t cap penalties.
In the end, both Small and Dixon voted in favor of the bill, though Dixon threatened not to support it if she sees it again in the House Appropriations and Finance Committee without data to explain the needed increases.
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“I’m so excited to continue to be in partnership with and at the table with our remarkable oil and gas industry,” Small said. State budget increases from oil and gas revenues allow the state to “partner” with the industry on “the decarbonization story,” he said.
Small was talking at the Oil and Gas Day memorial on the House floor, where he received a round of applause.
Small and Dixon joined one other Democrat and 19 Republicans to sponsor the memorial, and the floor discussion was a celebration of the fiscal largesse of the industry to New Mexico’s state and local governments. Several legislators spoke of the hundreds of millions of dollars their counties have received as a result of oil and gas revenues. Several others spoke of how the industry supports — directly and indirectly — more than 100,000 New Mexico jobs.
A spokesperson for the House Republicans said those figures came from a report compiled by the New Mexico Tax Research Institute for the New Mexico Oil and Gas Association — the state’s biggest industry group. The institute is a nonprofit best known for providing similar reports for the association going back to at least 2014.
For the past several years, oil and gas revenues have been the largest portion of state budgets. But the state’s own employment numbers do not support the 100,000 jobs figure.
In December, 5,920 people worked in jobs directly connected to the oil and gas sector, including roustabouts, landmen and wellhead pumpers, according to data from the New Mexico Department of Workforce Solutions.
Economists use an employment multiplier to account for indirect jobs that depend on a primary job, and the independent Economic Policy Institute used data from the Federal Bureau of Labor Statistics to calculate an employment multiplier of 5.37 for oil and gas workers. That would mean the industry is responsible for 37,710 direct and indirect oil and gas jobs in New Mexico — roughly a third of what is written in the legislative memorial.
When asked, neither the New Mexico Oil and Gas Association nor the research institute provided a copy of their study to Capital & Main.
Back at the Oil and Gas Day celebration, newly elected Rep. Joseph Hernandez, D-Shiprock, told a different story of money and jobs. “I just also want to acknowledge the historical significance of this memorial,” he said and explained how the state’s first oil millionaire made his money from a well drilled more than a century ago near his family home on the Navajo Nation. “To this day my community lives with that legacy of the pipelines that are in our backyard,” he said.
“I just too want to bring up the important aspect of reclamation for these orphan and abandoned oil wells,” Hernandez said. He had heard that the same workforce that drills wells can clean them up, too. “We also need that for the reclamation part, to cap these oil and gas wells that are impacting our communities.”
Unlike with Small’s speech, no one clapped for Hernandez.
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