New Mexico halts some oil-field lease sales in standoff over royalty rates in Permian Basin - By Morgan Lee, Associated Press
New Mexico's State Land Office will withhold lease sales indefinitely on its most promising tracts for oil and natural gas development in the Permian Basin as it seeks approval by the state Legislature to increase top-tier royalty rates, Land Commissioner Stephanie Garcia Richard said Thursday.
Bills have repeatedly stalled in the Democratic-led Legislature, including this year, that would raise New Mexico's top royalty rate for oil and gas development from 20% to 25%. Proponents of the change say neighboring Texas already charges up to 25% on state trust land amid intense competition to drill in the Permian Basin that overlaps southeastern New Mexico and parts of western Texas.
In New Mexico, royalty payments from oil and gas development are deposited in a multibillion-dollar investment trust that benefits public schools, universities and hospitals.
"I am a fiduciary on behalf of the school kids," Garcia Richard said. "It's my job to make them the most money possible, and leasing these tracts below market rate means that school kids are subsidizing the oil and gas activity."
New Mexico Oil and Gas Association CEO Missi Currier said the disagreement between the Legislature and the State Land Office threatens to penalize petroleum producers and public beneficiaries as new leases are sidelined.
She said in a statement that current combined royalties and other taxes in New Mexico are comparable to surrounding states, though the association hasn't taken a formal position on proposed royalty rate increases in recent years.
Garcia Richard estimates the state would miss out on billions of dollars in income and investment returns over the lifetime of future leases if royalties stay capped at 20%.
The accountability and budget office of the Legislature says a 25% royalty rate cap would increase annual revenues by $50 million to $75 million.
Up to six leases will be left out of monthly lease bidding in March, a small portion of overall sales. The Legislature's next regular session convenes in January 2025.
Garcia Richard, a Democrat elected to a second term in 2022, acknowledged that the state will miss out on smaller, one-time bonus payments while some lease sales are suspended.
She compared the decision to delay some lease sales to a homeowner delaying sale during a downturn in the market for real estate.
"The larger amount in the long term, to me, is worth it," she said.
___
This story has been corrected to show that Garcia Richard was reelected in 2022, not 2020.
New Mexico man dies of the plague – By Mia Casas, KUNM News
A man from Lincoln County has been reported dead after hospitalization for the plague.
The New Mexico Department of Health announced Friday that this is the first human case of plague in New Mexico since 2021 in Torrance County.
The bacterial disease is most commonly spread by rodents through fleas. Pets who hunt outside can catch these fleas and bring them home to their humans.
People can be infected by flea bites or direct contact with an infected rodent, dead or alive.
Symptoms in humans can look like lymph node swelling in the groin, armpit or neck, accompanied by fever, chills, headache and weakness.
Furry friends have similar signs. They will develop a fever, stop eating and show signs of exhaustion. Their lymph nodes can also swell around the jaw.
To prevent contracting plague, NMDOH recommends staying away from any sick or dead rodents and keeping pets from hunting. Pets that hunt should use flea control recommended by their vet. The health department also suggests cleaning up areas near homes where rodents might live – like brush piles or abandoned vehicles — and not leaving pet food outside where rodents can get into it.
The department is doing an environmental assessment of the surrounding area of the man’s death to account for any risk remaining.
NM Gas Co., advocacy groups reach agreement in rate case – By Hannah Grover, New Mexico Political Report
New Mexico Gas Co. has reached a potential agreement with various consumer and environmental advocacy groups to gain their support for a rate increase that is pending before the New Mexico Public Regulation Commission.
While an agreement has been reached, it still requires the PRC’s approval.
“We appreciate the spirit of collaboration that all parties brought to the table in reaching the settlement,” Tim Korte, a spokesman for NM Gas Co., said in an emailed statement. “The company is committed to implementing the terms of the settlement as agreed to when it is approved by the PRC.”
The state’s largest gas utility filed the request for a rate increase in September. In that request, the company asked to increase its revenues by nearly $49 million. That increase in revenues would come through higher rates.
Korte said the original request for an additional $48.97 million annually from customers was to pay for upgrades and improvements to gas delivery infrastructure. Many of those investments are required “to keep pace with federal and state reliability and safety regulations,” he said. Additionally, NM Gas Co. is replacing its customer billing and account information system and faces increasing operating expenses.
NM Gas Co. agreed to reduce the amount that it is requesting in additional revenues to $30 million annually. The rate increase would still go into effect in October.
The company also asked for a higher return on equity, which determines how much investors recoup. Nationally, the return on equity typically ranges from 9 percent to 11 percent. New Mexico Gas Co. requested a 10.5 percent return on equity.
Under the agreement reached last week with the intervening parties, the gas company has agreed to just under 9.4 percent return on equity and a reduction in the rate increase.
One of the things that reduces the size of the rate increase is that New Mexico Gas Co. is no longer asking for a regulatory asset for expenses related to fees charged by third-parties to process credit card payments, nor is it asking for a regulatory asset to cover expenses related to its application to build, own and operate a liquified natural gas storage facility in Rio Rancho.
Regulatory assets are essentially a cost that utility regulators allow companies to pay off expenses over a period of time through rates.
According to New Energy Economy, which is one of the advocacy groups that has agreed to the settlement, the regulatory asset for the LNG facility application would have cost ratepayers around $10 million.
NEE Executive Director Mariel Nanasi said the gas company has also agreed to change its notice, which the advocacy group argued was misleading because the usage it showed as an example of what a rate increase might look like was lower than most customers consume during winter months.
In its notice, NM Gas Co. assumed the average customer uses 53 therms of gas. Under that scenario, the original proposal would have resulted in a $6.70 per month increase for average customers, which is about 11.2 percent.
However, Korte explained, customers who are not on budget billing—which allows them to pay the same amount every month based on their annual average usage—would see higher dollar impacts in the winter when usage increases and lower impacts in the summer.
Still looking at a 53 therm per month average use, the new agreement would result in a 7.1 percent increase in customer bills rather than 11.2 percent. The summer impact would be a 6.3 percent increase while the winter bill impact would be 7.3 percent.
Korte said a customer on budget billing using an average of 53 therms per month would see a bill increase of $4.21 monthly.
The agreement outlines what future notices must state, including breaking it down to summer month impacts for customers using 10 therms and winter month impacts for customers using 100 therms as well as those using 150 therms in the winter. The notice must include percentage increase as well as current rate and future rate.
Nanasi said the gas company has also agreed to keep the access fee that all customers must pay at $12.40 rather than raising it to $15.50 per month. An increase in the access fee would have disproportionate impacts to low-income ratepayers, Nanasi said.
The rate increase comes amid a push to decarbonize, including incentives for electrification and for heat pumps.
But, Korte said, NM Gas Co. continues to see “modest customer growth and continuing demand for natural gas across our service territory.”
Nanasi said that if humanity is going to survive, gas should be phased out and only used in extreme circumstances. This is because gas contributes to climate change.
Should that phase out of natural gas occur, she said, “maybe the gas company will exist, or maybe it won’t. Maybe it’ll transform itself into another kind of company.”
Nanasi said she hopes that as the transition occurs, it happens in a way that doesn’t leave low-income communities behind or result in bills so high that customers struggle to pay them.
Korte said NM Gas Co. has an obligation to provide natural gas to customers when they need it.
“We see an ongoing role for natural gas, especially for space heating, as part of our state’s long-term energy strategy, including decarbonization,” he said.
Governor signs several advanced energy bills - Bryce Dix, KUNM News
New Mexico is now one of only four states in the nation to enact a “clean fuel standard.”
Governor Michelle Lujan Grisham signed several advanced clean energy bills earlier this week.
The legislation –HB41 – invests in infrastructure with the goal of reducing emissions from the transportation sector.
Specifically, the law allows producers and importers of low-carbon transportation fuels to generate clean fuel credits. They would then sell these credits to producers and importers of high-carbon transportation fuels.
New Mexico Environment Secretary James Kenney said the program will “reward” the importation and production of clean fuels.
The Governor’s office claims the standards will result in at least 1,600 full-time jobs, generate $470 million in wages, and attract $240 million in capital investment to New Mexico.
Other states that have adopted similar laws, like Oregon and California, have seen the standards spur innovation andinvestment in the push for decarbonization.
The next step will be a process with the state’sEnvironmental Improvement Board to draft rules governing the new clean fuel market.
Among other notable pieces of legislation, Gov. Lujan Grisham signedHB 91, kickstarting the state’s exploration of geothermal energy sources.
While usually not economically feasible,advanced geothermal energy projects are starting to show promise in the Southwest.
Environmental groups cheer Gov’s veto of tax credit for small oil and gas wells - Patrick Lohmann, Source New Mexico
Operators of small oil and gas wells in New Mexico won’t receive a tax exemption on fossil fuels they extract, thanks to a veto from Gov. Michelle Lujan Grisham in the catch-all tax package approved last month by the Legislature.
Excising the exemption for “stripper” wells was the governor’s lone veto in a 149-page tax package sent to her by lawmakers. Under state law, “stripper” wells are those that have an average daily production of fewer than 10 barrels of oil or less than 60,000 cubic feet of natural gas.
A coalition of29 environmental groups, including the Western Environmental Law Center, called it an “unnecessary and unsound tax giveaway” to polluters and thanked the governor for vetoing it. The New Mexico State Land Office, led by Commissioner Stephanie Garcia Richard, also posted to social media in favor of the veto, saying it “would have given millions in tax breaks to billion-dollar oil and gas companies to clean up their own messes.”
The provision would have allowed operators of those wells, so long as they produced fewer than 1,000 barrels of oil a day, to be excluded from the state severance tax. The intent was that producers would use money saved on taxes to make investments in reducing the venting and flaring of natural gas.
The exemption started as Senate Bill 64, titled “Severance Tax Exemption for Certain Projects” and sponsored by Sen. Ron Griggs (R-Alamogordo).
The tax credit, if approved, would mean a $9.7 million reduction in taxes each year for at least the next four years, according to an analysis by the nonpartisan Legislative Finance Committee.
There were over 27,000 active “stripper” oil and natural gas wells operating in New Mexico in 2021, according to the LFC. That’s over 20% of all active wells in the state, but they produced less than 1.5% of oil and less than 6% of natural gas statewide that year.
The LFC analysis also warned that the legislation could spur wells that would otherwise be shut off to actually continue operations, plus create future financial liability for the state.
Lujan Grisham, in her message striking the 20-page exemption program from the tax bill, said she was skeptical the exemption would be adequately targeted to small operators and “work counter to my Administration’s climate change goals.”
However, the governor asked lawmakers to take another crack at the policy for the next legislative session.
NM Gov. largely accepts Legislature’s spending plans as veto deadline passes - By Patrick Lohmann and Danielle Prokop,Source New Mexico
New Mexico Gov. Michelle Lujan Grisham kept her veto pen mostly sheathed this year when it came to signing off on the Legislature’s plan to spend $10.2 billion dollars and make infrastructure investments.
Wednesday at noon marked the deadline for the governor to approve, modify or reject the state budget and other legislation passed in the 30-day session that wrapped up last month. All told, she signed 69 bills, including the budget, capital outlay bill and tax package, with relatively minor revisions. She vetoed one bill outright and pocket-vetoed another.
The lack of vetoes this year is much different than last year’s veto deadline day. The governor gutted the tax package and vetoed 35 bills in 2023. Twenty-one of those vetoed bills were “pocket vetoed,” meaning they were sent to the desk, but not signed within 20 days.
“I want to thank New Mexicans for their input during the budget process, as well as state lawmakers for sending this carefully considered bill to my desk,” the governor said in a news release after she signed the budget and capital outlay bill, which funds long-term projects and is primarily for new construction and infrastructure.
Lawmakers and the governor have touted the record budget and new laws as historic due to their big investments in housing, shrewd use of an oil and gas revenue windfall and major spending on road maintenance and repairs, among other things.
Lujan Grisham also signed several bills aiming to improve public safety, increase criminal penalties and limit the spread of gun violence. She has said she’s still considering whether to call a special legislative session to do more to address crime, however.
Below are more details on what revisions, if any, the governor made to bills that spend money:
THE BUDGET
The governor signed the $10.21 billion budget on Wednesday. It’s a 6.8% increase over last year, a slight reduction in spending growth that lawmakers said takes heed of economists’ projections of a slowdown in oil and gas tax and royalty revenue in the Permian Basin.
The budget keeps reserves at 32.5%, a “near-record high,” according to the governor’s office. Lawmakers rolled out new programs this year that invest much of a $3 billion surplus into trust funds or endowments meant to keep revenues stable amid the boom-bust cycle of oil and gas.
The governor released 10 pages of line-item vetoes for the state’s spending plan, but there are few cuts to any particular expenses. The language the governor crossed out mostly relates to requirements that officials across state agencies report the results of programs funded in the budget or that adds additional restrictions.
“I have vetoed parts of the General Appropriations Act that impermissibly attempt to create substantive law,” the governor wrote in her veto message, as well as “reporting or other requirements that do not exist in substantive law.”
Those types of policies contained in the budget, she said, citing a 1988 state Supreme Court opinion, should be enacted via the legislative process, not in the budget.
One line item she removed on those grounds would have required money appropriated to the state public education department not be used to require school districts to meet for 180 days a year. That was a bipartisan amendment added to the budget on the House floor, and the Senate kept it in.
Some other reporting requirements the governor nixed related to 16 pilot projects that will cost taxpayers $216 million over the next three years. Those projects range in cost from $1.5 million, including for suicide prevention training, to $60 million, which will pay tuition and fees for students getting workforce training classes at some state colleges.
Rep. Nathan Small (D-Las Cruces), chair of the House Appropriations and Finance Committee, sponsored legislation creating the fund for these three-year pilot programs, saying the Legislature had a key role in evaluating whether those programs are successful and worthy of more funding later.
Reached Wednesday evening, Small said he did not think the governor’s vetoes threaten the Legislature’s oversight of the programs.
Lawmakers “are still going to be rigorously focused on transparency, accountability, and implementation for these programs, so that we can ensure they are effective and our taxpayer dollars are being well spent,” Small said in a text message.
CAPITAL OUTLAY
The governor vetoed $557,000 – or .04% – of the Legislature’s $1.5 billion capital outlay spending bill, which funds construction projects, infrastructure, equipment, and other multi-year investments.
She said several of the projects lack proper planning or are not ready to move forward. She also vetoed projects cheaper than $10,000, saying those could be funded elsewhere.
The bill also spends $71 million on statewide colleges and universities, $45 million on local courts, $44 million on jails and prisons and $39 million on water projects, and more.
Some projects the governor vetoed include $80,000 for a pedestrian walkway in the Santa Fe botanical garden, $100,000 for a portable building at Guadalupe Montessori school in Silver City and $200,000 for parks in central Albuquerque.
This year, thanks to the influx of new money, the Legislature is paying the entire capital budget with cash, instead of borrowing for it.
POCKET VETOES
Unlike last year’s veto frenzy, just two bills failed to get the governor’s signature this year, according to a Source New Mexico review of the governor ‘s and New Mexico Secretary of State websites.
One, Senate Bill 217, would have added $82 million to the state’s severance tax permanent fund, a reserve fund financed with taxes on oil and gas extraction. Lujan Grisham said she was not convinced the bill, sponsored by retiring Sen. Nancy Rodriguez (D-Santa Fe), is “necessary” at this time.
“It is important we continue to save for the future; and we have been doing a lot of good work in this area, the results of which I would like to see more fully realized before making additional distributions,” the governor said in her veto message.
Another bill was pocket-vetoed. That bill, sponsored by Sen. Leo Jaramillo (D-Española) initially would have allocated $35 million for law enforcement training and recruitment. But it was introduced late in the session, and a Senate committee nixed the spending from the bill before sending it on.
New Mexico ranks last when it comes to education. Will a mandatory 180 days in the classroom help? - By Susan Montoya Bryan, Associated Press
New Mexico has adopted a new rule mandating that school calendars consist of at least 180 days, with top state officials saying Thursday that the goal is to get students more learning time in the classroom and improve academic outcomes.
Public Education Secretary Arsenio Romero told reporters the change is just one of many things his agency is implementing as it works to pull New Mexico up from the bottom of national education rankings. He pointed to structured literacy programs in kindergarten and earlier grades, technical education and internship opportunities for older students and summer programs that can help keep students on track.
"We've been the last and the worst performing state in the union. We know that this isn't reflective of who we are, and we're going to do everything we can to challenge and change that," he said. "This is about what's doing what's right for kids, even if it's hard."
Consideration of the 180-day proposal began last year, spurring much opposition from teacher unions and Republican lawmakers who voiced concerns about everything from districts losing local control to teachers having to work longer hours and more days.
Many of the complaints centered on the ability of districts — particularly those in rural areas —- to retain four-day weeks.
Romero said the feedback and the debates had over the last few months helped to make what he described as a stronger rule, noting that there's flexibility that will allow for four-day weeks as long as districts can show increases in academic performance.
Reaching that bar might be difficult for many schools given the results of last spring's standardized testing. The results showed just 38% of tested students were proficient in reading, marking a slight uptick from the previous year. Statewide math proficiency was stagnant at 24%.
The results prompted a letter from Romero to districts calling for more accountability throughout the state's education system.
New Mexico passed legislation in 2023 increasing the number of hours students needed to be in school from roughly 1,000 hours to 1,140 hours. The change meant several districts around the state had to lengthen the school day or add more days to meet the requirement. The legislation also allowed space for professional development for teachers within a normal school day.
Republican legislative leaders were among those to send letter to the state Public Education Department about their concerns over the 180-day requirement. They argued that the rule would circumvent the intention of the legislation to add instructional time and would further burden districts.
Sen. Crystal Brantley, a Republican who represents rural areas in southern New Mexico, said the adoption of the rule comes as a surprise given the pushback from school administrators, teachers and legislators on both sides of the aisle.
"My local superintendents are still combing through the details, but based on my early conversations with them, significant issues and questions remain," she told The Associated Press. "I believe those best suited to make these decisions are those closest to the students, and as such, I will continue to oppose efforts by PED to seize more control from our school boards and administrators."
The Public Education Department said the new rule will be in effect for the school year that begins this fall.
Senate passes bill to compensate Americans exposed to radiation by the government - By Mary Clare Jalonick and Jim Salter, Associated Press
The Senate has passed legislation that would compensate Americans
The Senate passed legislation Thursday that would compensate Americans exposed to radiation by the government by renewing a law initially passed more than three decades ago.
The bill by Sens. Josh Hawley, R-Mo., and Ben Ray Lujan, D-N.M., would expand the Radiation Exposure Compensation Act to include more people who believe that exposure caused their illnesses. While some Republicans have balked at the cost — an estimated $50 billion, according to Hawley's office — the senators have argued that the government is at fault and should step up.
Hawley stood outside the Senate before the vote with advocates for the legislation, several of whom have been diagnosed with cancers or who have family members who have been diagnosed. He said it's "hard to look them in the eye" and say they were poisoned by their government, "but we're not going to be there for you."
The bill passed the Senate 69-30, with 20 Republicans and all but two Democrats voting in favor. But its prospects in the House are uncertain.
Uranium processing in the St. Louis area played a pivotal role in developing the nuclear weapons that helped bring an end to World War II and provided a key defense during the Cold War. But eight decades later, the region is still dealing with contamination at several sites.
In July, an investigation published by The Associated Press, The Missouri Independent and MuckRock showed that the federal government and companies responsible for nuclear bomb production and atomic waste storage sites in the St. Louis area were aware of health risks, spills, improperly stored contaminants and other problems but often ignored them.
While it is difficult to prove definitively that the waste caused residents' illnesses, the advocates argue that there is more than enough evidence that it has sickened people in the area.
"I am a two-time breast cancer survivor," said Missouri state Rep. Chantelle Nickson-Clark, a Democrat who represents Florissant, an area that sits along the creek that was contaminated by nuclear waste in the 1960s. "I lost my mother to breast cancer, an aunt to breast cancer. Two cousins that are breast cancer survivors, a nephew that had a cancerous brain tumor and other genetic mutation deficiencies in my family. I'm here to represent a community that has been underserved, undervalued, underrepresented and unheard."
President Joe Biden signed an executive order in 2022 extending RECA for two years, but it expires in June. Hawley's bill would extend the law for five years and expand coverage to include people in Missouri as well as Idaho, Montana, Colorado, Tennessee, Kentucky, Alaska and Guam.
The White House indicated Wednesday that Biden would sign the legislation.
"The President believes we have a solemn obligation to address toxic exposure, especially among those who have been placed in harm's way by the government's actions," the White House said in a statement.
Others worried about the cost. The taxpayer advocacy group Committee for a Responsible Federal Budget said that the legislation should include budget offsets to pay for it.
Advocates have been fighting for years to expand the program to include more sites in the U.S. In New Mexico, residents in the communities surrounding the area where the first atomic bomb was detonated in 1945 — the top-secret Manhattan Project — were not warned of the radiological dangers and didn't realize that an atomic blast was the source of the ash that was raining down upon them. That included families who lived off the land — growing crops, raising livestock and getting their drinking water from cisterns.
Tina Cordova, a cancer survivor and founder of a group of New Mexico downwinders, talked about the wave of momentum for expanding the compensation program that has been building since "Oppenheimer," a film about the development of the first atomic bomb, premiered last year.
"You know, we are ground zero," she said. "We're where it all started. The origins of the whole nuclear program are in New Mexico, and we were the first people exposed to radiation as a result of an atomic bomb and to be left out for 79 years is just truly unacceptable."
Cordova has had many family members and friends die of cancer over the years. Thursday marked the 11th anniversary of her father's death, and she said she was thankful to be in Washington to celebrate the vote.
"People have been waiting for justice for far too long, and it's just simply time to do the right thing," she said.
The vote was a rare up-or-down roll call on standalone legislation as Congress is busy trying to fund the government. Senate Majority Leader Chuck Schumer, D-N.Y., announced that he would put the bill on the Senate floor last week amid negotiations on the spending package.
Hawley would not say if he had threatened to hold up the spending bill over his legislation, which was included in a massive defense bill last year but stripped out at the last minute. But he said he had pledged to use "every tool at his disposal" to get the bill passed.
Persuading the GOP-led House to take up and pass the legislation could be more difficult. Rep. Cori Bush, D-Mo., is among those pushing for the measure.
In St. Louis, nuclear waste stored near Lambert Airport made its way into Coldwater Creek in the 1960s. Many people who live near the meandering creek believe the contamination is responsible for cancers and other illnesses, though experts say connecting radiation exposure to illness is complicated. Cancer concerns also have been raised by people in nearby St. Charles County, Missouri, where uranium was processed and a large quarry became contaminated, resulting in a Superfund cleanup.
In 2022, a St. Louis County grade school closed amid worries that contamination from Coldwater Creek got onto the playground and inside the building. The Army Corps of Engineers announced this week that it is testing a few homes near the creek after high radiation levels were found in their backyards.
After the report by AP and the other news agencies last year, Hawley introduced an amendment to the annual defense bill that would have extended the law. It also would have provided health care coverage and compensation to so-called "downwinders" exposed to radiation during weapons testing in several new regions, as well as to people in Missouri who were exposed to the nuclear waste. But it was removed during negotiations with the House.
Advocates for the bill who traveled to Washington for the vote said it represents hope for them and their families as they have been burdened with medical costs.
Christen Commuso, who works for the advocacy group Missouri Coalition for the Environment, said she has dealt with many health issues, including thyroid cancer, and has had to at times ration her care because it is so costly.
"It's not about putting money in my pocket," Commuso said. "It's about providing me the ability to get the care that I deserve and need."
___
Associated Press writer Susan Montoya contributed from Albuquerque, N.M. Salter reported from O'Fallon, Mo.