Oil boom feeds NM budget, but environmental agencies left wanting

A boom in the oil and gas industry helped deliver a record-breaking $8.5 billion budget to New Mexico this year. Despite the windfall, lawmakers declined to give needed funds to the agencies responsible for regulating the increased pollution that such booms create. The state’s two primary environmental agencies, the New Mexico Environment Department and the Energy, Minerals and Natural Resources Department, will both receive modest bumps to their budgets from the state’s general fund, but these will still fall about $9 million short of the amounts the agencies and the governor requested in the Executive Budget Recommendation. Both environment agencies are responsible for a growing amount of oversight, from enforcing pollution restrictions and food safety to mitigating wildfires and curbing impacts from climate change. Despite the increasing duties, the proposed spending plan for fiscal year 2023 calls for NMED’s budget to be nearly 5 percent lower when adjusted for inflation than it was in 2008; EMNRD’s budget is almost 13 percent lower.

Senate Finance Committee passes amended appropriation bill, reducing allocation to $478 million

The Senate Finance Committee approved an amended version of a bill to allocate some of the American Rescue Plan Act immediately to various agencies. The amendment to HB 2, which passed unanimously, removed $26 million appropriated for broadband and reduced the overall funding package to about $478 million. The vote of approval for the amended bill was unanimous and bipartisan. State Sens. Jacob Candelaria, I-Albuquerque, and Bobby Gonzales, D-Ranchos de Taos, were absent.

Senate committee hears discussion on $35 million of relief act money

The state Senate Finance Committee heard from two departments that will receive one-time funds of $35 million total if HB 2 passes. The state Senate Finance Committee did not take action on HB 2, as the bill still sits in the  House Appropriations and Finance Committee which originally intended to meet Wednesday to vote on the bill. But state Rep. and HAFC Chair Patricia Lundstrom, D-Gallup, said during the House floor meeting Wednesday that HAFC would not meet that day. Lundstrom said on Tuesday that HB 2 needed some language cleanup, and appeared to be willing to consider a new appropriation to help the state’s chile farmers with the red chile harvest. HB 2 appropriates the federal American Rescue Plan Act money of $1.1 billion into a contingency fund of the state’s general fund.

Committee discusses how to spend some of the $1.1 billion in federal aid

The House Appropriations and Finance Committee held a three-hour hearing on allocating some of the $1.1 billion in federal pandemic relief aid but will wait until Wednesday to vote on the bill. HB 2, a general appropriations bill, will enable the legislature to begin spending some of the federal American Rescue Plan Act money. The 2021 Legislature already allocated the federal relief funds, but Gov. Michelle Lujan Grisham line item vetoed that portion of the spending bill last spring. A group of state senators from both parties sued Lujan Grisham arguing that she did not have the authority to spend the money without the Legislature’s input and won their case in state Supreme Court this past fall. Related: NM high court: Legislature, not governor, has authority over federal COVID-19 funds

Once it passes and is signed by the governor, the federal money will transfer to a contingency fund within the general fund.

State seeks to reduce risk of abandoned mines

Last year in the area near Orogrande in Otero County, a motorcyclist was killed when he ended up in an abandoned mine, according to Jerry Schoeppner, the Mining and Minerals Division director for the New Mexico Energy, Minerals and Natural Resources Department. Abandoned hard rock mine sites throughout the state can create dangerous conditions for people and the environment, but the funding that the Mining and Minerals Division relies on to clean up these sites is limited and will expire in September. Additionally, the state does not know exactly how many mines are located in New Mexico. Schoeppner is hopeful that the funding will be reauthorized and that New Mexico could even possibly see an increase in funding. 

A $1 trillion federal infrastructure bill introduced in Congress this week would, if passed, ensure funding for the mine cleanup for the next 15 years. Additionally, it would provide the Abandoned Mine Reclamation Fund with about $11.3 billion, which would be divided between states and tribal nations.

NMED releases ozone precursor rules

Following concerns from members of the environmental community, the New Mexico Environment Department removed the exemptions from the oil and gas sector ozone precursor rule for stripper and marginal wells. The department released the ozone precursor rule Thursday and filed a petition with the Environmental Improvement Board to review it. A public hearing is anticipated this fall. If approved by the seven-member board, the rules would likely go into effect in early 2022. It is intended to work in conjunction with a methane waste rule that the Energy, Minerals and Natural Resources Department already finalized.

Officials say plugging orphaned wells protects public health and environment

At the end of their useful life, every oil and gas well must be plugged to prevent future contamination as the infrastructure ages and to return the site back to its original state. For the most part, this is done by the operator. However, sometimes bankruptcies lead to wells becoming orphaned, meaning there is no operator to plug them. 

Officials say these wells tend to not have had great maintenance and cleaning them up is important to protect both the environment and the health of nearby communities. Democratic Senator Ben Ray Luján says he plans to introduce legislation to clean up orphaned oil and gas wells. This comes as President Joe Biden’s American Jobs Plan calls for spending $16 billion to plug abandoned wells and mines.

Environmental advocates praise adoption of final methane waste rule

Mario Atencio, an activist from the Greater Chaco region of New Mexico, said the methane waste rule adopted by the Oil Conservation Commission on Thursday will set energy production in New Mexico on a path trending toward fairness. Atencio’s community in the Counselor Chapter of Navajo Nation is among the poorest in the state and, he said, it has long borne the impacts of oil and gas emissions. He is hopeful that the methane waste rule will significantly decrease emissions impacting his community. The Oil Conservation Commission, which falls under the state Energy, Minerals and Natural Resources Department, unanimously approved the final language of the new rule for venting and flaring of natural gas during its meeting and the commissioners expressed pride in the final language. 

The methane waste rule requires 98 percent of the methane from oil and gas operations to be captured by 2026, although it leaves the companies with the flexibility to use a variety of technology to meet those goals. Work on the methane waste rule began in 2019 following an executive order from Gov. Michelle Lujan Grisham.

State environmental regulators face thinner budgets amid pandemic and oil slump

New Mexico’s environmental and oil and gas regulators are facing budget cuts for the next fiscal year, as nine months of the COVID-19 pandemic and a significant downturn in the oil market has depleted the state’s budget. 

The budget reductions come after years of attrition in regulatory budgets under the Susana Martinez administration. The New Mexico Environment Department’s budget was cut by 32 percent between fiscal years (FY) 2012 and 2019, which was the last fiscal year budget passed by the legislature in 2018 before Martinez left office, according to a report released by the New Mexico Wilderness Alliance. The Energy, Minerals and Natural Resources Department (EMNRD) saw its budget drop roughly 24 percent under the Martinez administration between fiscal years 2012 and 2019. 

In Gov. Michelle Lujan Grisham’s first budget proposal for FY2020, NMED’s general fund increased 6 percent compared to FY2019, while EMNRD saw a 9 percent increase in fiscal year 2020 over 2019. The departments saw similar increases in the FY2021 budget. But some of that progress will be reversed as the state grapples with the fiscal ramifications of a nearly year-long public health emergency and an oil boom bust. 

NMED to cut back on some services

NMED submitted a $89.2 million budget request for fiscal year 2022.

Legislators say timing isn’t right for new methane rules amid budget crunch

Some state legislators are concerned about the possible revenue implications of a proposed rule aimed at reducing methane waste in oil and gas operations. The state’s Legislative Finance Committee, a committee made up of members of both the House and Senate that considers priorities for the state budget ahead of the January session, is gearing up for a tough year financially for the state after the COVID-19 pandemic and an unrelated but simultaneous bust in the oil market has ravished state coffers. 

“The state is in, in my terms, dire financial straits, because of income,” said Sen. Bill Burt, R-Alamogordo. “We are in a time right now where income to the state is down, oil and gas revenues are down. The timing sometimes is not always the best and so I think hopefully that will come into consideration before we finally apply these rules.”

The state’s Energy, Minerals and Natural Resources Department (EMNRD) proposed methane rule would require all oil and gas operators in the state to reduce their methane waste by a fixed amount every single year, starting in 2022, to reach the 98 percent gas capture rate by the end of 2026. 

RELATED: As methane rulemaking progresses, questions about exemptions linger

EMNRD Secretary Sarah Cottrell Propst told lawmakers during a recent Legislative Finance Committee meeting that the department’s proposal “will yield an additional $10 billion a year in revenue to the state for wasted resources” that would otherwise be lost. Cottrell Propst called the $10 billion a “low-end estimate.”

But several lawmakers on the committee worried the new regulations would threaten some of the state’s oil and gas operators during the downturn.