New Mexico faces a seminal moment in its relationship with the oil and gas industry as President Donald Trump vows to slash federal regulation, enforcement and funding. That leaves the state to grapple with a fraught and expensive question: Will New Mexico pick up the slack in policing an industry that generates more than a third of the state budget, but also more than a third of its climate-warming pollution?
In addition, the state’s current 60-day legislative session may well mark the final time legislators will debate these weighty issues during Democratic Gov. Michelle Lujan Grisham’s final term as governor. Next year’s one-month session is devoted to the state budget, and later that year, voters will elect a new governor.
Lujan Grisham kickstarted the state’s current fight against climate-warming greenhouse gas emissions when she took office in 2019, and a set of bills to turn those goals into law is again back at the Legislature.
This session could be the last chance to get those laws passed for the foreseeable future for another reason: Since 1986, New Mexicans have chosen new governors from the opposing party. With that history as a guide, the next resident of the governor’s mansion could well be a Republican, and the state’s conservative party has wholeheartedly thrown itself behind Trump’s “Drill, baby, drill!” agenda.
New Mexico rose to become the second-largest oil producer and fourth-biggest natural gas producer in the country during Lujan Grisham’s tenure. But as oil production leapt more than 560% in the past decade, funding for the agencies that monitor and regulate the industry hasn’t kept pace. For the past few years, the New Mexico Environment Department has partnered with the U.S. Environmental Protection Agency on enforcement sweeps and with the U.S. Department of Justice on handing down penalties. Both efforts are likely to end in the second Trump administration.
“We will not be able to rely on EPA’s support to protect air quality and public health,” said Erik Schlenker-Goodrich, the executive director of the Western Environmental Law Center. “The Legislature will certainly need to step up.”
This session, New Mexico’s legislators have lined up a raft of bills to clamp down on the industry. But history shows, those bills will likely have a hard time passing the Democratic-controlled Legislature. Part of the timidity is driven by money: Oil and gas revenues will comprise about 35% of the general fund budget for the upcoming year, according to the Legislative Finance Committee. In addition, New Mexico’s political landscape is one of the few in the country where political donations from the oil and gas industry are spread broadly between political parties.
So far, legislators have proposed bills that will reinforce and expand what has already been done to reduce the state’s climate footprint and protect air quality and health in the state. Some of the bills are returning for second or third attempts at passage; others are brand new.
Mimi Stewart, president pro tem of the state Senate, filed the “Clear Horizons and Greenhouse Gas Emissions” bill to codify Gov. Lujan Grisham’s goal of a 45% reduction in greenhouse gas emissions by 2030 compared to 2005 levels — part of the governor’s third executive order upon taking office in 2019.
The bill, an update to the state’s Environmental Improvement Act, would establish statewide greenhouse gas emission limits and create mechanisms to monitor and inventory those emissions. The bill places the power to regulate emissions with the state’s Environmental Improvement Board and sets aside $3 million annually for the New Mexico Environment Department to administer the new program. It singles out methane emissions from the oil and gas industry because of their particularly powerful climate warming potential.
The bill passed its first hearing Jan. 28, but not before coming under heavy fire from industry lobbyists and Republican senators on the committee. Jim Winchester, the executive director of the Independent Petroleum Association of New Mexico, said the bill would harm “the basic necessities of life.” A lobbyist from the Permian Basin Petroleum Association made an unexpected argument, calling the bill both “underfunded and overly ambitious.” And Republican Sen. Larry Scott said the bill “will make us a Third World.”
Stewart batted away the criticisms. At one point, during a discursive question about the bill’s fiscal impact, Scott asked her to define gross domestic product. “No,” she said. “I’m sure you know what it is.”
In earlier comments, Stewart said the bill sets goals that some oil and gas producers in the state have already pledged to reach. “New Mexico has fallen behind in achieving our emissions goals,” she said. “An updated, enforceable plan is needed to address this gap.” Two supporting bills would provide mechanisms and community investments to support the act, she said.
Rep. Debra Sariñana of Albuquerque has filed three bills to regulate how oil and gas producers can operate in New Mexico. “We have an industry that’s just not doing what they’re supposed to,” she said. “So we need to do something to help them figure out how to follow the rules.”
One bill would create one-mile buffer zones around schools where new wells cannot be drilled. A similar bill proposed in the last session was shot down before it even left the gate, victim of a legislative requirement that bills proposed during the short, 30-day sessions of even-numbered years deal, in some way, with the state budget.
Sariñana’s second bill would change the Oil Conservation Division’s mission statement to require consideration of human health and the environment in all of its work. Currently its mission is to conserve oil and gas, reduce waste in the production stream, protect the rights of oil and gas owners and regulate waste disposal from production. It passed its first committee hearing 6-3 on Jan. 30.
The third bill — prompted in part by reporting in Capital & Main — would limit the number of new facilities in counties that exceed national clean air standards. The bill is squarely aimed at pollution in Eddy and Lea counties, both in the Permian Basin and home to some of the state’s worst air pollution. For years, air in that corner of the state has exceeded national ozone standards, but the EPA hasn’t acted to reduce it. If it had, the result could have throttled new production.
But after Trump’s election and promise to deregulate the oil and gas industry, that possibility likely died.
“We have to dig in and tell the industry, ‘You can’t keep doing this to New Mexicans,’” Sariñana said. “And if it means we have to stop or pause new wells, that’s what we have to do.”
Gov. Lujan Grisham’s office said she is working with the Energy, Minerals and Natural Resources Department on an update to the 1935 Oil and Gas Act. It will be the third session in a row that a version has been floated to update the state’s bedrock Oil and Gas Act, which covers most aspects of how the two fossil fuels are produced in the state and hasn’t had major facelifts since the 1980s and 1990s, when the industry looked far different than today. Sidney Hill, public information officer for the Energy, Minerals and Natural Resources Department, said the bill will be similar to one proposed in the last session, but will not include setback requirements (like those in Sariñana’s bill), freshwater use limitations or bonding increases to cover the costs of plugging wells abandoned by their owners.
In addition, Lujan Grisham is pushing to get her Strategic Water Supply initiative funded and running. Rep. Susan Herrera has agreed to carry the bill.
The project would buy treated water pulled from deep brackish aquifers or wastewater from oil and gas production and sell it to commercial users such as solar panel manufacturers or hydrogen producers.
One red flag for environmental groups is that the plan proposal is heavy on oil and gas wastewater treatment, which could end up with the state indirectly paying the oil and gas industry for their highly toxic effluent. Currently, oil and gas companies generally pay to have the waste reinjected in deep wells, but that has led to a rising number of earthquakes across the Permian Basin.
Last session, Lujan Grisham unsuccessfully asked for $200 million for the project. This year’s bill seeks $75 million, and a 5-cent fee for every barrel of produced water created during oil and gas production. Schlenker-Goodrich, the Western Environmental Law Center executive director, echoed other environmentalists’ concerns when he called the program a “boondoggle fossil fuel project.”
On the revenues front, Rep. Matthew McQueen has refiled a bill to increase the royalties paid by producers on state lands to match those paid on private lands. Co-sponsors include Sen. Liz Stefanics and the powerful head of the Legislative Finance Committee, Sen. George Muñoz. Last year McQueen called it “nuts” that the state charges less than neighboring private landowners do for extracted oil and gas. The bill failed to advance in the final days of the session.
McQueen also filed a bill to amend the state constitution to replace the annual rotating one-month, two-month legislative schedule with annual 45-day sessions, an effort to smooth out a legislative process that stifles debate every other year. In addition, it would remove the restriction on even-year sessions to consider only budget matters. Those two updates would allow major regulations — for example, on the oil and gas industry — to be debated annually instead of biannually. If passed, the measure would have to be ratified by voters in the next election. It passed its first committee hearing Jan 29.
Asked about the array of possible new regulations lining up at the Legislature, Missi Currier, president and CEO of the New Mexico Oil and Gas Association, the largest industry association in the state, said her group supports Lujan Grisham’s Strategic Water Supply plan and reform of the reclamation fund that pays to plug abandoned wells, but didn’t directly address the other bills.
“Our industry has made significant strides in reducing emissions through advanced technologies and science-forward practices,” Currier said. “We support efforts that build on these successes.” She said that any new laws or rules “should be balanced and consider the economic impact to the state and environment” and “ensure business is able to grow and succeed in New Mexico’s political and regulatory environments.”
Sariñana said that in her position with the House finance committee, she sits between two representatives who echo Trump’s “Drill, baby, drill!” mantra. And she said another reminds her, “You don’t complain about spending the money” from oil and gas revenues. But, she said, those legislators “don’t see the big picture on what it’s doing to the country, and the world, and the communities, and the kids.”
Lujan Grisham’s 2019 executive order to reduce the state’s greenhouse gas emissions lies behind much of this legislation and the reasons for the order couldn’t be clearer. Again in 2024, climate change — fed by burning fossil fuels — warmed and dried the state while making rainstorms less frequent but more powerful. In June, lightning ignited drought-withered forests surrounding Ruidoso, New Mexico, and the fires torched thousands of acres and chunks of the town. A few weeks later, torrential rains on the burn scars fed flash floods that wiped out more of the town. Then, over a few hours on Oct. 19, a record 6 inches of rain fell 74 miles away on Roswell, New Mexico, triggering deadly flash floods.
“You cannot watch the fires and floods in Roswell and Ruidoso and L.A. and not know something is seriously wrong,” said Camilla Feibelman, director of the Sierra Club Rio Grande Chapter.
This story was published by journalism nonprofit Capital & Main, which reports on economic, environmental and social issues in the West. capitalandmain.com
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