by Julie Anderson
Oil and gas issues continue to garner attention among Permian Basin lawmakers in both Texas and New Mexico, meaning industry advocates have been hard at work advising against problem legislation and lending support to bills with positive intent.
New Mexico: 56th Legislature Enters Home Stretch
With adjournment around the corner on March 18, legislators in the Land of Enchantment are wrapping up their 60-day session.
The majority of the worrisome industry-related bills did not advance out of committee, confirmed Stephen M. Robertson, executive vice president of the Permian Basin Petroleum Association (PBPA).
“There are still several proposals out there alive and trying to make their way to the governor’s desk,” Robertson reported. These includen the following:
Clean Fuel Standard
Once again, New Mexico is considering putting in place new fuel standards for gasoline, diesel, and other fuels. Last week, House Energy, Environment, and Natural Resources Committee members debated House Bill 426 (HB 426), one of two clean fuel standard bills offered up this session. This version would let New Mexico’s Environmental Improvement Board set rules related to the carbon intensity of transportation fuels and enforce a statewide clean fuel standard.
“New Mexico is not the first state to attempt to go down such a path, as states like California, Arizona, and Oregon already have similar programs in place,” Robertson noted. Proponents claim that the bill would push investor-owned electric utilities to invest in electric vehicle infrastructure and transportation projects.
In particular, the bill would require companies to invest in “disproportionately impacted” communities, such as low income communities. However, it was pointed out by opponents of the bill that the low income communities in the state would be those communities most disproportionately impacted by such new standards.
New Mexico State Rep. James G. Townsend argued that the bill “does not protect those peoples’ standard of living.” Townsend also said that he believed the bill would increase the state’s gasoline cost, resulting in an increase of cost not just for personal travel, but also for the cost of goods, leading to a disproportionate impact on lower income residents in the state. As evidence, Townsend pointed to the price of gas in Arizona and California; on average, California gasoline prices were $1.00-plus more per gallon than prices in New Mexico in 2022.
When it came time to vote on a “do pass” motion for HB 426, the committee was split down party lines with the Democrats voting in favor, Robertson reported. The bill will now be heard in the House Government, Elections, and Indian Affairs Committee.
Oil and Gas Emission Reduction Tax Credit
House Bill 350 (HB 350), if passed, would be a positive bill for industry and was recently heard in House Energy, Robertson shared. HB 350 calls for a $12,000 tax credit on purchase of Vapor Recovery Units to assist with waste prevention compliance in well upgrades. HB 350 successfully passed through House Energy with bipartisan support. The effort now goes to House Tax for further consideration.
Oil & Gas Act Changes
Senate Bill 418 (SB 418) was originally scheduled to be heard on Feb. 23 in Senate Conservation. As of press time, the hearing was still pending. This effort, credited to the Western Environmental Law Center, would make major changes to both the Oil Conservation Division and Oil Conservation Commission.
PBPA President Ben Shepperd stated the following in the Santa Fe New Mexican: “As the State Legislature’s own Fiscal Impact Report notes, SB 418 ‘makes sweeping changes to the Oil and Gas Act.’ It will undo all of the efforts that industry and environmental groups have negotiated in good faith over the last five years, including agreements on financial assurance in 2018 (Senate Bill 189) and penalties in 2019 (House Bill 546). SB 418 is the wrong policy for New Mexico’s future.”
“The PBPA stands with a strong coalition in opposition to this bill and will continue to work with our partners in Santa Fe to educate members of the committee on the detrimental impact this bill could have on the industry and the state,” Robertson emphasized.
88th Texas Legislature Picks Up Pace
The bill filing deadline in the Lone Star State is March 10. As of press time, 2,833 House bills had been filed along with 1,203 Senate bills.
“Between now [Feb. 28] and March 10, we can likely expect to see that number balloon to 4,600-plus House bills and 2,200 Senate bills, which means we expect some 3,000 bills to be filed in the next 11 days,” said Michael Lozano, PBPA director of Government Affairs.
“The PBPA will stay very busy monitoring each and every one of these bills to determine impact to ensure that we can continue to safely and responsibly develop natural resources in the Permian Basin,” Lozano stated.
House Committee Assignments
The February Capitol Update include the latest on Senate committees. On day 30 of the ongoing 140-day session, Texas House Speaker Dade Phelan announced the committee assignments for all House members.
Committees of particular interest to the oil and gas industry include:
House Appropriations Committee
- Chair: Greg Bonnen
- Vice Chair: Mary González
Energy Resources Committee
- Chair: Craig Goldman
- Vice Chair: Eddie Morales Jr.
Land & Resources Management Committee
- Chair: DeWayne Burns
- Vice Chair: Glenn Rogers
Environmental Regulations Committee
- Chair: Brooks Landgraf
- Vice Chair: R.D. “Bobby” Guerra
To view the full list of committee assignments, go to https://house.texas.gov/_media/pdf/88RAssignmentsByCommittee.pdf.
The State Budget
The Texas House and Texas Senate have presented their versions of the state budget in House Bill 1 (HB 1) and Senate Bill 1 (SB 1).
“HB 1 and SB 1 represent important opportunities to ensure that the Railroad Commission and Texas Commission on Environmental Quality are fully funded,” Lozano observed. “The PBPA fully supports efforts to fund these vital agencies because of the experts in permitting and inspection that these agencies require and our industry requires. Our industry is best served with thorough and swift permitting or inspections. An agency that lacks personnel, or is unable to keep skilled experts, will create hindrances for our members as they work to expend their private capital, create jobs, and produce the necessary oil and gas that America and our allies need.”
The PBPA also fully supports efforts to reinvest the significant tax revenue that oil and gas creates back into the Permian Basin, Lozano emphasized, and this includes former Speaker Tom Craddick’s GROW bill.
Rep. Tom Craddick has introduced a resolution in the Texas House of Representatives to put state money generated by oil and gas exploration back into the Permian Basin and other energy-producing hotbeds. House Joint House Resolution 27 (HJR 27) would create the Generate Recurring Oil Wealth (GROW) for Texas Fund.
Texas Legislature Online describes the resolution as follows: “Proposing a constitutional amendment providing for the creation of and use of money in the GROW Texas fund and allocating certain general revenues to that fund, the economic stabilization fund, and the state highway fund,” https://capitol.texas.gov/.
According to a press release from Craddick’s office, a portion of HJR 27 funds would be redirected back to where they originally came from to make improvements to upgrade roads and invest in infrastructure.
“Texas’ energy-producing regions continue to generate the funds needed to support all Texans,” Craddick observed. “GROW gives some of that funding back to communities during the times they need it most. It allows these communities to continue to grow and build their infrastructure if needed. This bill would be a huge step forward for all of Texas.”
The fund does not collect or levy taxes, but it does safeguard existing government revenues paid through oil and gas settlement taxes for specific reinvestments in the Texas oil field. The money could be used for roads, education, broadband, law enforcement, and many other needs in these energy communities. As of press time, the resolution and its enabling legislation, House Bill 1392, had not yet been referred to committee.
Once the March 10 filing deadline passes, the legislative pace will pick up once again with committee referrals and hearings.
For more information on the PBPA and the Texas and New Mexico legislatures, go to www.pbpa.info.
Julie Anderson is the editor of County Progress Magazine and she is past editor of Permian Basin Oil and Gas Magazine.