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.
New Mexico Environment Department Secretary James Kenney said his department is working through hundreds of comments related to a proposed rule for regulating air pollution associated with oil and gas development.
“We received over 400 comments on our rule,” Kenney told state legislators during a recent committee meeting.
Last year, NMED and the state Energy, Minerals and Natural Resources Department (EMNRD) were tasked with developing new rules targeting methane emissions in the state resulting from oil and gas activity. While EMNRD’s rule addresses methane emissions directly, NMED’s draft rule instead targets volatile organic compounds (VOC) and nitrous oxide (NOx) emissions from oil and gas wells.
Both NMED and EMNRD released draft proposals for their respective rules in July for public comment, after a year of work by the state’s Methane Advisory Panel, which was composed of oil and gas representatives, environmental groups and other stakeholders. EMNRD released a finalized version of its rule in mid-October. On Nov. 4, the Oil Conservation Commission agreed to set a hearing for the finalized rule in January.
But NMED still has some work to do before it releases a finalized version of its rule, Kenney said.
The state Environmental Improvement Board heard arguments during a hearing on Thursday about air quality permits issued by the New Mexico Environment Department that an environmental group alleges are illegal.
WildEarth Guardians appealed four permits issued by NMED for oil and gas facilities in Eddy and Lea counties, where ozone levels now exceed the U.S. Environmental Protection Agency’s (EPA) National Ambient Air Quality Standards (NAAQS).
Ozone is the only pollutant under the NAAQS that is not directly emitted from any source. Instead, ozone is formed when volatile organic compounds (VOCs) and nitrous oxides (NOx) are exposed to sunlight and warmer temperatures. Summer months are usually when ozone levels reach their highest point. In addition to Lea and Eddy counties, ozone levels in five other counties in the state are at 95 percent of the NAAQ standard. Source: New Mexico Environment Department
NMED recently released draft rules targeting reductions in VOCs and NOx emissions at oil and gas facilities.
Cannon Air Force Base will pay a $251,000 “administrative fee” to the state in lieu of the $1.7 million fine that the New Mexico Environment Department (NMED) imposed on the Air Force earlier this year for alleged permit violations related to PFAS contamination.
PFAS, or per- and poly-fluoroalkyl substances, are toxic, human-manufactured chemicals that can move through groundwater and biological systems. Human exposure to PFAS increases the risk of testicular, kidney and thyroid cancers as well as other severe illnesses. The chemicals were used in firefighting foam in military bases across the country, including at Cannon and Holloman Air Force Bases, until 2016. The Air Force began investigating PFAS discharges across its installations in 2015, and the chemicals were detected in 2018 in groundwater at Cannon Air Force Base, located west of Clovis in Eastern New Mexico and at Holloman Air Force Base, located west of Alamogordo in Southern New Mexico. The pollutants have also been detected at several dairy farms and private wells that surround the bases.
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In January, NMED fined the Air Force $1.7 million for multiple violations of state law regarding PFAS chemicals at Cannon Air Force Base and issued an administrative compliance order to the Air Force for unlawfully discharging wastewater without a groundwater permit at Cannon Air Force Base since April 1, 2019, after the permit expired at the end of March.
At the time, NMED said it may assess penalties of up to $25,000 per day for “continued noncompliance.”
Last week, the Water Quality Control Commission approved a settlement agreement between NMED and the Air Force over the permit violations. The Air Force submitted its permit renewal documents on January 15, 2020, five days after the compliance order was issued.
The permit renewal has not yet been approved, but NMED and the Air Force reached a settlement agreement that allows the Air Force to continue operating and discharging effluent from its wastewater treatment facility in the meantime.
The two parties also agreed that the Air Force would pay an administrative fee of $250,947.60 to NMED instead of the $1.7 million fine, thereby resolving the compliance order “in compromise” and “to avoid further legal proceedings,” the settlement agreement states.
An NMED spokesperson confirmed that the $251,000 fee and settlement agreement is “entirely limited to the Department’s January 2020 administrative compliance order for violations of groundwater discharge permitting program requirements.” The settlement has no bearing on litigation between the state and the U.S. Department of Defense related to PFAS contamination at Cannon and Holloman Air Force Bases “caused by decades of use of PFAS-containing firefighting foams,” according to NMED.
RELATED: New Mexico joins multidistrict litigation against firefighting foam manufacturers for PFAS contamination
“Unfortunately, federal facilities in New Mexico have a history of disregarding state environmental laws,” said NMED Secretary James Kenney in a statement.
The New Mexico Environment Department (NMED) doesn’t have the authority to deny permits to companies for oil and gas facilities over concerns about impacts to already high levels of ozone in Eddy and Lea counties, according to an NMED spokesperson.
Ozone levels in Eddy and Lea counties are in violation of the U.S. Environmental Protection Agency’s (EPA) National Ambient Air Quality Standards (NAAQS), while ozone levels in five other counties in the state—concentrated in the state’s two oil and gas producing zones in the northwest and southeast—are at 95 percent of the NAAQ standard.
The environmental organization WildEarth Guardians has filed challenges against permits authorized by NMED, arguing that the department is violating state law by continuing to issue permits for new oil and gas facilities that will contribute to a growing air quality problem in the Permian Basin. WildEarth Guardians argued in its appeals that NMED approved three permits and one natural gas plant “without considering the cumulative impacts on air quality, and the subsequent impact on public health.”
State law holds that NMED “shall deny any application for a permit or permit revision” if, when considering emissions after controls, the permit activity “will cause or contribute to air contaminant levels in excess of any National Ambient Air Quality Standard or New Mexico ambient air quality standard.”
“It’s a pretty straightforward requirement, it says, if there’s a problem, don’t make it worse,” Jeremy Nichols, director of the climate and energy program at WildEarth Guardians, told NM Political Report.
RELATED: Worsening air quality in Permian Basin ‘cause for concern’
But NMED told NM Political Report that ozone levels are not always considered in permit approvals for oil and gas facilities.
Ozone is formed when volatile organic compounds (VOCs) and nitrous oxides (NOx) are exposed to sunlight and warmer temperatures. While oil and gas facilities are known sources of VOCs and NOx emissions, these ozone precursor pollutants are regulated differently than the other air contaminants that are considered in the NAAQS.
“These sources are classified as major or minor, depending on the amount of pollutants they emit (in tons per year),” NMED said in an email. Applications for permits for facilities that are identified as “major” sources of VOCs and NOx typically include air quality monitoring “to see how the emissions will impact ozone formation in the area where the source is located,” the Department said, but no modeling is done for minor sources on a facility-by-facility basis.
Instead, NMED said it uses “protocols and guidance developed by EPA to determine if emissions from these sources meet significance levels considered to contribute to ozone concentrations.”
Ozone formation modeling is more complex than modeling for other types of air contaminants, because ozone is not directly emitted, but rather is the result of chemical reactions related to VOCs and NOx emissions and sunlight.
Sufi Mustafa, Modeling and Emissions Inventory Unit Manager at NMED’s Air Quality Bureau, said ozone formation must be evaluated in relation to emission sources that are “hundreds of miles away” that could also be contributing to ozone formation in New Mexico, in his testimony submitted to the Environmental Improvement Board, which handles appeals of permit applications for NMED under the state’s Air Quality Control Act.
“Predicting an individual facility’s contribution to the ozone levels in a region is extremely difficult compared to the directly emitted pollutants,” Mustafa said in the testimony, adding that NMED’s modeling guidelines do not require source-specific ozone modeling for minor sources. “None of the sources whose permits are being challenged by [WildEarth Guardians] have emissions that meet those significance levels,” the department told NM Political Report.
The state of New Mexico has joined a multidistrict litigation against the manufacturers of the aqueous film-forming foams that were used in firefighting activities across the country and in Air Force Bases in New Mexico which led to groundwater contamination.
A U.S. judicial panel earlier this year flagged the state’s lawsuit against the U.S. Department of Defense over the contamination for inclusion in the multidistrict tort proceeding, which encompasses roughly 500 pending cases related to PFAS contamination. The litigation will be heard in a U.S. District Court in South Carolina. “That’s a recent development,” said Chris Atencio, Assistant General Counsel at the New Mexico Environment Department. “We’ve gone through that process and our case is now included in that. We’re working with our council, the Attorney General’s office and folks internally to try to evaluate the requirements of that process and how best to proceed.
The state’s public health order prompted by COVID-19 has stopped some monitoring on whether and how much Los Alamos National Laboratory is releasing radioactive materials, heavy metals, and toxic chemicals into the surrounding air and water. The Department of Energy Oversight Bureau with the New Mexico Environment Department tests air, water, vegetation, and wildlife for signs of legacy waste near LANL, but COVID-19 restrictions stopped that sample collection beginning March 13. The Bureau of Hazardous Waste monitors use, storage, and movement of radioactive and hazardous waste from the lab, including the project slowing the spread of chromium-6, a carcinogen, from lab property into the water supply for Los Alamos County and San Ildefonso Pueblo, and says that project was also put on hold. While answering written questions from the Concerned Citizens for Nuclear Safety, the LANL Legacy Cleanup Technical Working Group disclosed that N3B, which manages the legacy cleanup contract for the Department of Energy, Office of Environmental Management and Los Alamos Field Office, stopped collecting water samples in March. The state is working with LANL to develop guidelines on masks, gloves, and distance to resume sampling.
John Norris is worried about where he’s going to get water in the future. Norris is a rancher in southeast New Mexico, where he runs calf-cow and yearling operations.
“Our water comes from the Ogallala [aquifer]. We’re basically mining this water, whenever it’s gone our water source is going to be gone,” Norris said, adding that in drought years his fields dry up and the grass doesn’t grow.
“Water is the lifeblood of what we do. It’s very important to me to look for a new water source for the future to be sustainable,” he said. “Sometimes we need just a little bit of water to make it through.”
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There’s a chance Norris could someday use recycled produced water to help irrigate his ranchland.
Produced water is an abundant wastewater byproduct of oil and gas extraction activities, including fracking.
As state legislators convene in Santa Fe for a special session to tackle the budget, environmental groups are asking lawmakers to limit cuts to the state’s environmental regulatory agency budgets to 3 percent.
A group of 28 organizations, ranging from conservation and wildlife advocates to renewable energy proponents, sent a letter to members of the state Senate Finance Committee and the state House Financial Affairs Committee last week.
The New Mexico Environment Department (NMED) and the Energy, Minerals and Natural Resources Department (EMNRD) — the state’s two main environmental regulatory departments — each saw their respective budgets erode during the Susana Martinez administration.
NMED’s general fund 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. 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, which goes into effect on July 1 and will be amended during the special session due to the COVID-19 caused economic slowdown and dropping oil and gas prices.
“The 2021 budget saw about a 7 percent increase for those agencies from 2020,” said Ben Shelton, policy and political director at Conservation New Mexico, and who coordinated the letter. “What we’re trying to do is hold that reduction in increase as low as possible.”
While the recent budget increases are steps in the right direction, the departments’ budgets are still much lower than they were at the end of Gov. Bill Richardson’s administration in 2011.
“These guys got cuts in the Martinez administration where they got cut below what they needed to do the minimum of their jobs — particularly EMNRD,” Shelton said.
Both departments are suffering from high vacancy rates as a result. NMED has a 19 percent vacancy rate, with only seven inspectors in charge of monitoring 7,700 air emitting sources, two inspectors in charge of monitoring 700 groundwater sources, and seven inspectors for monitoring nearly 3,000 hazardous waste sources.
EMNRD’s Oil Conservation District (OCD), which regulates oil and gas activities in the state, had its budget decline 26 percent under the Martinez administration. The OCD is responsible for oil and gas regulatory activities ranging from permitting new wells, inspecting abandoned wells, ensuring compliance with permits, and enforcing the state’s oil and gas rules.
The state suspended the food service permits for two restaurants that defied the state’s public health order and allowed dine-in service. The state Environment Department made the announced Friday afternoon. The two restaurants are Jalisco Cafe in Silver City and Anaheim Jacks in Ruidoso. The department cited a portion of the Food Service and Sanitation Act that states, the department can suspend a license if “conditions within a food service establishment present a substantial danger of illness, serious physical harm or death to consumers who might patronize the food service establishment.”
The restaurants can appeal the decision. If the restaurants continue to serve food, the department warned that they could legally pursue civil penalties in state district court of $500 per person.