A visitor heading down NM-128 to Jal would be forgiven for believing there were more people driving pickups and equipment trucks on the congested state highway than living in the small oil patch town of just over 2,100 people. Jal is an old ranching community — JAL was the brand of the John A. Lynch herd, brought to the area by settlers in the early 1800s — but today, oil is its economic engine. And that engine is humming. New Mexico’s most recent oil and gas boom has filled Heaven in a Cup, a retro burgers-and-shake shack off Main Street, with hungry oil field workers. Encampments of RVs and campers have sprung up around town and the economic resurgence has helped refuel the tiny town that sits just across the border from Texas.
A special audit of the city of Jal found government officials in the southeastern New Mexico oil patch town gave “improper billings and adjustments” of more than $660,000 between 2008 and 2016. Those billings may violate New Mexico’s anti-donation clause, State Auditor Tim Keller concluded, which bars local and state governments from making donations to private individuals. The audit comes after NM Political Report and the Jal Record reported last September that city officials gave a local rancher a $1.2 million discount on commercial water use between August 2012 and April of 2014. At the same time, the city raised water rates on other customers. Jal officials also continued selling industrial water to the the Beckham Ranch, Inc., for six months after a ban on industrial water sales went into effect.
State Auditor Tim Keller recently designated the City of Jal for a special audit on the city’s water billing issues. The move comes two months after Keller’s office opened a case into an arrangement where the city in the southeastern New Mexico oil patch gave a local ranch a discount on utility water worth $1.2 million over a 25-month period between 2012 and 2014. NM Political Report, in partnership with the Jal Record, first reported on the city’s water deal with the Beckham Ranch in September. Related: State Auditor to investigate Jal water deal
In a Dec. 2 letter to Jal Mayor Cheryl Chance*, Keller writes the special audit will look at Jal’s “compliance with applicable laws, regulations, policies and and procedures with respect to water utility billing practices.”
Jal City Manager Bob Gallagher told NM Political Report that he is “extremely pleased” with the state auditor’s decision for the special audit and said he has been cooperating with Keller’s office on the matter for the past two months.
The State Auditor’s office is looking at an arrangement where the city of Jal provided a local ranch with a large discount on water, after a report earlier this week. The news comes after NM Political Report and The Jal Record reported on the credits that Beckham Ranch, Inc. received from the city of Jal. “The State Auditor’s Office has opened a case to conduct fact-finding into concerns that have been raised,” Deputy Chief of Staff Justine Freeman said in a statement. The city has been unable to produce a written record of the deal and city councilors don’t remember voting on the deal. Some don’t remember discussing the deal, while others, including the mayor, say the deal was discussed but no official decision was made.
This story was reported in partnership with the Jal Record, a weekly newspaper based in southeastern New Mexico. JAL—Like many areas in New Mexico, water is in short supply in this southeastern oil patch town of 2,500 people. In the past few years, city officials have tried to address the matter by limiting water use, including barring businesses from buying city water for industrial use in the summer of 2013. But between 2012 and 2014, the city gave one ranch an unusual perk—a more than $1 million discount on its water bills. On top of this, Jal continued to sell industrial water to Beckham Ranch, Inc. for six months after the ban went into effect.