Santa Fe – House Republican lawmakers today added their voice to bipartisan opposition for Lujan Grisham’s proposed oil and gas restrictions that would substantially harm both the operations of New Mexico’s oil and gas industries and state and local government revenues. On September 20 and 21, the NM Environment Department is scheduled to present to the Environment Improvement Board these proposed industry restrictions. In a letter to NM Environment Department Secretary James Kenney, 23 Republican State Representatives expressed their concerns and joined the bipartisan leadership of the Legislative Finance Committee in calling for a substantial review of the economic and fiscal impacts in order to ensure these proposed regulations do not negatively impact New Mexico schools and other government functions with the expected reduction of revenue.
The economic research firm of John Dunham and Associates estimates these ozone rules could cause as many as 37 percent of current operating oil wells and 87 percent of operating natural gas wells to become uneconomical after accounting for increased regulatory costs. Those increased costs, according to the research firm, could total $3.2 billion in the first year and $3.8 billion over the course of the five years. In turn, the New Mexico Tax Research Institute estimates that the annual cost of this new proposed rule could cost state and local governments $730 million — $569 million would be lost in state revenue and a $160 million loss of revenues for local governments.
House Republican Caucus Chair Rebecca Dow had a stark perspective on Governor Lujan Grisham’s attempt to shut down the oil and gas industries, while also slashing the state’s operating budget, “The fact of the matter is NMED regulators are carrying forward the Governor’s progressive anti-oil and gas agenda to help her curry favor with her out-of-state donors, rather than assisting the people of New Mexico who depend upon the jobs and the economic activity the oil and gas industry provides for this state. Can you imagine the turmoil we would be in if we had to slash school budgets because political appointees, at the direction of the Governor, decided to shut down the one industry in New Mexico which generates nearly 45 percent of state revenues and provides economic opportunity for hundreds of thousands of New Mexicans?”
The Governor’s proposed regulations to reduce oil and gas operations would be a major blow to the oil and gas industry, especially the small and independent producers operating low-volume oil and gas wells across the state. While the proposed ozone rules contain a “small business exemption,” the language in the proposed rule is so restrictive that few, if any, small oil and gas producers would qualify. The House Republican letter calls on the NM Environment Department to modify the “small business exemption” in order to provide the regulatory relief these small producers need in order to keep their operations continuing.
“You cannot have it both ways. The out of touch progressives are both demanding more money for education while simultaneously shutting down the revenue source,” said State Representative Larry Scott (R-Hobbs). “This is what happens when politicians who have no sense of budgeting gain power- lots of rhetoric and glossy ideals but no substance or understanding of how the real world works. It is unfortunate that so-called progressives put their energy into destroying the industry that provides so much for our students and teachers without assessing the negative outcomes of their political gamesmanship.”
A copy of the House Republican letter is attached.