Bill tightening oil and gas rules in New Mexico passes committee, opposed by industry

Reforms of New Mexico’s oil and gas regulations that would increase requirements to extract fossil fuels in the state were passed by a State Senate Committee, the bill’s first hurdle toward becoming law amid the 2023 Legislative Session.

Senate Bill 418 would make multiple amendments to New Mexico’s Oil and Gas Act, which governs the state’s leading industry centered mostly in the southeast Permian Basin region and credited with an about $3.5 billion funding surplus this year in the state budget.

SB 418, sponsored by Sen. Leo Jaramillo (D-5) was granted a “do pass” recommendation on a 6-3 vote by the Senate Conservation Committee on Tuesday and was sent to the Senate Judiciary Committee for a subsequent hearing.

More:Bill to block nuclear waste project in New Mexico gaining momentum in State House

After that, the bill would likely head to the Senate Floor to seek approval from the full chamber before moving on to the House enroute to the governor’s desk to become law.

If ultimately passed, SB 418 would add authority to the State’s main oil and gas compliance agency the Oil Conservation Division (OCD) and its rulemaking body the Oil Conservation Commission to allow the agencies to respond to environmental concerns, as opposed their present authorities to only prevent waste of natural resources.

The three-person Commission’s membership would be expanded, should SB 418 pass, to include representatives appointed by the Legislature from frontline communities dwelling near oil and gas operations.

More:New Mexico Senate considering bill to enshrine renewable energy development in state law

SB 418 would also allow the OCD to establish setbacks for oil and gas facilities operating near local communities.

The bill would also remove a cap of $250,000 on bonding fossil fuel companies pay for wells in the state to pay for remediation should the facilities become abandoned.

During the Senate Conservation Committee meeting where SB 418 was passed, Sen. David Gallegos (R-41) of Eunice, a supporter of the oil and gas industry in his southeast region of the state who voted against the bill, said SB 418 could raise costs for oil and gas and impede an industry he said was essential to the state’s economy.

More:New Mexico Senate passes bill to block nuclear waste project near Carlsbad and Hobbs

Despite tightening regulations in the last year, Gallegos argued the fossil fuel industry continued to generate billions of dollars in state revenue he said mostly went to New Mexico’s students and public schools.

He said much of that revenue comes from operations in his district and region, and the tougher requirements would hurt his constituents – people Gallegos said “overwhelmingly send money to Santa Fe.”

“I think we’re hurting the golden goose,” Gallegos said. “They’re hogtied, blindfolded, gagged and handcuffed, and they (oil and gas) still produce money for our state. Why would we be looking to hurt the industry that’s providing for our students and education?”

More:New Mexico bill seeks millions of dollars in fossil fuel tax credits for gas capture

Similar opposition to the bill was voiced during the meeting by local business leaders in the southeast region and industry supporters.

Jaramillo responded that he valued the health and safety of New Mexicans over “any monetary value.”

He said the oil and gas act was passed in 1935 when the only objective was to develop natural resources, and that the law should be updated to reflect growing environmental concerns tied to the industry.

More:Electric police cars? Bill would require 75% of state-owned vehicles be battery powered

“Fast forward to 2023, and now we know that oil and gas operations one: contribute significantly to climate change, two: threaten public health especially of those who live, work and play closest to oil and gas wells, and three: environmental justice (EJ) communities, communities of color, indigenous communities, those communities that get hit the hardest,” he said before the committee.

“Senate Bill 418 brings the Oil and Gas Act into the 21^st Century.”

Tannis Fox, attorney with the Western Environmental Law Center who served as Jaramillo’s expert witness during the hearing, responded to Gallegos contentions that the bill was not intended to “hurt” oil and gas, but create balanced discussions about the industry and its impacts on the environment.

She said no impacts to state revenue were anticipated, should SB 418 pass and that allowing the State to raise bonding requirements would actually increase state revenue by lowering its liability tied to abandoned wells.

“I don’t believe that this will have any impact on the state’s revenues, but it will broaden the discussion,” she said. “It will allow environmental, and health and EJ concerns to be taken into account in the rulemaking.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: Bill for tougher oil and gas rules passes New Mexico Senate committee