Oil and gas companies could be paying more to operate in New Mexico as the state sought to increase fees to pay for more staff it said it needed for proper oversight of the industry.
The New Mexico Environment Department (NMED) petitioned its governing Environmental Improvement Board (EIB) to raise several fees companies pay, with a hearing before the board requested in June. The move would increase revenue to the NMED’s Air Quality Bureau the agency said it needed to enforce air quality rules in the state.
Higher fees would also better prepare NMED for a potential designation of “non-attainment” of federal air quality standards being considered by the U.S. Environmental Protection Agency, said Cabinet Secretary James Kenney. The EPA was considering the designation, which would deem the entire Permian Basin – in New Mexico and Texas – in violation of the Clean Air Act’s standards for ground-level ozone, or smog, concentrations.
The higher ozone levels in southeast New Mexico were believed the direct result of expanded oil and gas operations, according to the NMED, and a non-attainment designation would lead to more and deeper inspections of oil and gas facilities which could slow the permitting process.
Kenney said the higher fees were appropriate given New Mexico’s growing economy driven by a booming fossil fuel industry.
The proposal stipulated an increase of annual criteria pollution fees from $38.47 per ton to $81 a ton. Filing fees for new construction permits would also be raised from $500 to $2,000 under the proposal, while permit fees would be anchored to the consumer price index to allow them to increase with inflation.
More: Oil and gas leases blocked on Permian Basin state land most likely to produce fossil fuel
NMED also sought authority to allow electronic bill and payment methods via the proposal. Small business exemptions would remain in effect if the proposal was approved.
The agency estimated the updated fees would generate $35.8 million in added revenue for the Air Quality Bureau, compared to the about $8.8 million it presently receives from the present fee rates.
“Air permit fees are insufficient to hire and retain staff given New Mexico’s growing economy,” he said upon issuing the proposal to the EIB. “This proposal will allow us to decrease permit timeframes, increase our compliance efforts, and overall improve air quality.”
Frederick Bermudez, spokesman for the New Mexico Oil and Gas Association said the higher fees would raise costs for operators in New Mexico, but could also lead to more efficient regulation at NMED which he said could also be beneficial to the industry.
“NMED’s proposal to increase its air quality permit fees places additional costs on oil and gas companies,” Bermudez said in an emailed statement.
“While understanding that extra costs can always negatively impact companies doing business in New Mexico, there may be benefit of NMED using this increased revenue to modernize and streamline its application processes and operate at appropriate staffing levels to gain needed efficiencies.”
More: Gov. Lujan Grisham vetoes tax exemption for small oil and gas wells in New Mexico
Kenney blamed cuts to New Mexico’s air quality programs during the previous administration of former-Gov. Susana Martinez leaving the NMED unable to properly fund itself amid increase oil and gas production. Kenney said NMED staff was properly funded by the Legislature this year but still insufficient to fully oversee the industry.
He estimated the industry was about 50 percent compliant with state air pollution rules.
“Money was taken out of our air quality program, the records of compliance issues under the Martinez administration are hard for us to reconstruct,” Kenney said in an interview. “We’re going to continue to ramp up our air program by increasing fees.”
More: 2023 a growth year for companies throughout the Permian Basin
NMED Environmental Protection Division Director said Michelle Miano said more oil companies are coming to New Mexico to cash in on the Permian Basin’s growth, and the higher rates will allow the agency better serve permittees.
“There is a lot of excitement about new business coming to New Mexico,” Miano said. “These fee structure updates provide the resources we need to serve applicants effectively and provide a level playing field for businesses throughout the state.”
A public hearing was planned by NMED for March 20 to give more insight on the proposal, and a public comment portal will be open when the EIB agrees to the June hearing.
More: $375M in two deals sees Enterprise Products Partners increase Permian oil and gas presence
In its petition, the Bureau argued oil and gas accounted for 80 percent of its permits with construction permits filed by the industry growing from 34 to 794 permits between 2012 and 2023 – a 2,235 percent growth. An average of 84 new permits are received a year, read the proposal.
The higher volume of permits also came amid tougher federal and state air pollution requirements, the proposal read, necessitating a larger workload and thus more staff.
For about 1,975 facilities, the NMED reported it had seven inspectors and three employees in its compliance reporting section. The agency warned that if a federal non-attainment designation was instituted operators could face longer wait times for permitting and more stringent federal regulatory burdens.
“With the increase in permitted facilities, largely due to oil and gas production, the Bureau’s compliance effort to ensure all of the permitted facilities are meeting state and federal air quality requirements to prevent non-attainment status designations are inadequate,” the proposal read.
“Without the proper staff levels to conduct this work, all permitted facilities – whether compliant or not – face further regulatory oversight if a non-attainment designation occurs.”
Adrian Hedden can be reached at 575-628-5516, [email protected] or @AdrianHedden on the social media platform X.
This article originally appeared on Carlsbad Current-Argus: Oil and gas fees could be raised to fund more oversight in New Mexico
EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email [email protected] Follow our WhatsApp verified Channel
