Enforcement of Oil and Gas Regulations Under Threat in New Mexico Legislature

As the 2023 New Mexico legislative session rolls up to its halfway point, the state’s volunteer legislators have reoriented themselves to the Roundhouse and caught up with where they left off at the end of the 2022 session. Over the last two weeks, the number and pace of hearings, as well as the number of bills filed, has jumped dramatically — and oil and gas issues began bubbling to the surface.

This is another record budget year for state government, and everyone has their hand out for some of the money sloshing around state coffers. Oil and gas revenues, depending on how you count, make up some 35%-40% of the total budget — courtesy of record high oil and gas production, coupled with continuing high energy prices. The sheer magnitude of that percentage, coupled with the unpredictable, rollercoaster nature of fossil fuel revenues, has legislators both excited at the near-term fiscal possibilities and nervous about a future when that money suddenly, inevitably shrinks.

Where do greenhouse gases come from?

But that’s not all. About 52% of all greenhouse gases emitted in New Mexico come not from consumers burning gas in cars or in furnaces to heat their homes, as is common in other states, but from oil and gas extraction operations themselves — operations that continue to increase in number. As the state suffers the effects of an ever-warming climate, reining in carbon pollution from its biggest industry is increasingly important for both state government and the planet going forward. Three factors in the physics of climate change make what New Mexico emits now more consequential than what has been emitted in the past. 

First, the CO2 concentration in the atmosphere is cumulative, because it takes decades for the gas to cycle back out. Warming lags behind the CO2 added, so rising temperatures generated by CO2 added today won’t show up for years. Second, New Mexico emits a lot of methane in the form of natural gas, which is more than 80 times more powerful than CO2 as a greenhouse gas. And third, ever more climate studies show that the timeframe to avert catastrophic change is quickly shrinking. Among the latest from December: James Hansen of Columbia University, whose previous work laid much of the groundwork for current climate science and prognostication, was lead author on a new paper that finds global warming already in the pipeline is greater than previously thought, making further carbon emissions all the more fraught and immediate carbon emission reductions all the more urgent. 

So if New Mexico is to meet its climate goals, at the very least it has to keep oil and natural gas — particularly natural gas — inside pipelines and out of the atmosphere where it forcefully adds to warming. 

In light of these priorities, a quartet of environmental groups worked together to write a trio of bills designed to reform how the oil and gas industry operates in New Mexico. The biggest of the three has not yet been presented to the Legislature but would constitute a major overhaul of the state’s bedrock Oil and Gas Act, originally written in 1935. It proposes a laundry list of changes large and small, shifting the act’s focus from simply protecting the state’s most valuable mineral resource to also include protections for the environment and human health and wellbeing. Tannis Fox, a senior attorney at the Western Environmental Law Center (WELC), helped draft all three bills and says the four groups met with Dylan Fuge, acting director of the Oil Conservation Division (OCD) and general counsel for parent agency the Energy, Minerals and Natural Resources Department (EMNRD), while drafting the bill and took agency worries over unfunded mandates into consideration while writing it. Through EMNRD spokesperson Sidney Hill, Fuge declined to answer questions about the process. But Fox says that she and the other lawyers fully discussed the bill with him and made changes based on his comments. “There’s no surprises,” she says. “Full transparency.”

The other two bills — one to weed out historical bad actors from oil and gas operations and another to allow citizen suits against law-breaking companies — were quickly killed in their first committee hearings. And because of the Legislature’s antiquated every-other-year schedule for general lawmaking, they are unlikely to be brought up again until 2025.

“Both bills’ failure to get out of committee is disappointing,” says Fox. “Both bills are well within established legal frameworks, making sure that the environment and public health are protected.” An interesting point in their failure is who voted against them — namely Democrats, including Rep. Nathan Small, widely seen as an environmental champion. In both cases, he didn’t just vote against the bills; he voted to table them, making it extremely unlikely either can be edited and resubmitted this session.

The bad actors bill would have amended the Oil and Gas Act in a manner similar to what was done with the state Air Quality Control Act in 2021. It would have kept people from receiving oil and gas development permits if they had ever been convicted of lying on permit applications, felony environmental crimes, price fixing, bribery or fraud convictions, operating oil or gas facilities without a permit, a history of violating New Mexico’s Oil and Gas Act or fiscal insolvency. During the hearing, Small said he was against the bill because it would increase the workload at an already underfunded and overworked OCD. In the end, three Democrats sided with the four Republicans on the House Energy, Environment and Natural Resources Committee to table the bill, keeping oil and gas development nominally open to people with a criminal history in the business or without the basic funds to safely conduct extraction operations. 

The citizens’ suit bill is similar to a provision in the federal Clean Air Act. It would have allowed people who were physically or economically injured by a company violating New Mexico’s air quality, water quality, solid waste or hazardous waste acts to sue, provided the state wasn’t already prosecuting them. Rep. Small worried the bill could hamper construction of power lines and renewable energy projects, while Republicans raised a string of hypothetical arguments about frivolous suits hampering businesses, all of which clearly irritated bill sponsor Rep. Matthew McQueen. “I’m frustrated because I think there’s fear-mongering going on,” he said.

“The environmental laws we have passed shouldn’t be aspirational; they should be enforced,” he said. “And if [state agencies] can’t enforce them, then we should allow the public to do it.”

Where’s the money?

Sarah Cottrell Propst, secretary of EMNRD and its subdivision OCD, and James Kenney, secretary of the New Mexico Environment Department (NMED), are the lead oil and gas enforcement officers for the state. Last week, both gave their initial budget presentations to House and Senate finance committees. 

Legislative budget negotiations and recommendations begin in the House, and in January, Speaker of the House Javier Martinez removed long-serving Rep. Patty Lundstrom as head of the House Finance Committee. This happened just after the House and Senate’s combined Legislative Finance Committee (chaired by Lundstrom) low-balled OCD’s and NMED’s oil and gas enforcement requests. Martinez tapped Small to replace Lundstrom, placing any enforcement funding increases squarely in his wheelhouse. 

Both department secretaries manage vast domains: for Cottrell Propst, everything from state parks to forest firefighting to oil and gas development; for Kenney, everything from marijuana dispensaries to septic tanks to oil and gas air pollution. OCD was “the most glaring omission in terms of additions to EMNRD’s budget,” Cottrell Propst says, following last week’s presentation to the Senate Finance Committee. “I’m optimistic they’ll add something back for OCD, but I’m not sure … how much they’ll do.”

In 2021, OCD implemented groundbreaking rules to keep natural gas in pipelines and out of the air through its Methane Waste Rule, but didn’t see a commensurate increase in enforcement funding. Such unfunded mandates are “something I’m concerned about,” Cottrell Propst says. Meanwhile, she’s also asking for more funding for wildland firefighters as wildfires increase because of climate change fueled in part by what comes out of the OCD end of her division. “Every single division that we have is working on climate change at some capacity,” she says. “So, yeah, we need more staff. We didn’t get what we asked for last year, and so far we’re not getting the recommendations this year,” she continues. “But I’m optimistic.”

NMED also faces increased responsibilities with less money. “Our portfolio has expanded, our budget has not,” Kenney says. “Our boat did not rise with the tide.” He says that NMED is $2.3 million below where it should be if its budget followed the overall state budget between 2011 and now. In particular, the Legislature’s budget recommendation this year cut funding for enforcement of air quality violations stemming from his agency’s landmark Ozone Precursor Rule, which pairs with OCD’s methane rule to keep gases in pipelines. “It does seem there’s some a la carte funding happening,“ he says.

“If your destination is to pass laws and never enforce them, then I guess we’re successful,” Kenney says. Nevertheless, following his presentation to the House Appropriations & Finance Committee last week, he says that he is “definitely optimistic” that there will be more funding for enforcement. 

And how much more are they asking for to fund oil and gas enforcement? About $3 million between the two agencies, in a $9.4 billion state budget. So while two out of three laws to police oil and gas operations have already died, largely over funding arguments, Small, the new finance committee chair, may hold this session’s key to future money with which to enforce laws already on the books in New Mexico.