by Julie Anderson
The closing hours of the 57th Session of the New Mexico Legislature found oil and gas advocates engaging in an intense effort to protect the industry from proposals that would have increased regulations and costs for operators, many with little to no benefit to the people or environment of New Mexico, let alone the industry.
Governor’s Perspective
During its 60-day session, the legislature passed 194 bills out of 1,182 introduced, addressing issues from economic development and health care to education and water security, as summarized by the office of Gov. Michelle Lujan Grisham. Lawmakers passed a $10.8 billion recurring budget that includes funding for state employee pay raises and sets aside 30 percent in reserves.
Grisham cited other legislative accomplishments, including the passage of bills supporting child welfare, economic development, and water security. House Bill 137, tracked by the Permian Basin Petroleum Association (PBPA) as detailed below, establishes the Strategic Water Supply Program.
According to Grisham, the purpose of the program is “to conserve New Mexico’s limited freshwater resources by promoting the treatment and use of brackish water, or naturally occurring underground salty water. By utilizing this largely untapped water supply for manufacturing and clean energy development, the bill supports economic growth while preserving water supplies for other uses.”
“This legislation will provide every community with access to a stable freshwater supply at a lower cost,” said Senate bill sponsor Sen. George K. Muñoz. “It’s a win-win proposition.”
As with dozens of other bills proposed by New Mexico lawmakers, the PBPA saw concerning language in the water bill and responded accordingly.
PBPA Perspective – Playing Defense
“From the beginning, this session was a roller coaster for the oil and gas industry,” summarized PBPA Executive Vice President Stephen Robertson.
During week one, proposals presented in multiple committee hearings including House Energy, Senate Conservation, House Agriculture & Water, Senate Finance, and House Health & Human Services, addressed increased regulations and costs for operators.
Unfortunately, several of these proposals advanced out of committees in the early weeks gained momentum, and set the stage for months of playing defense.
Down to the Wire
One last-minute legislative proposal, filed at the 11th hour on Feb. 20, became a focal point for PBPA and other industry and business advocates until the session’s final day.
House Bill 548, the Oil & Gas Equalization Tax Act, was sponsored by Rep. Nathan Small, chair of House Appropriations & Finance, and Rep. Meredith Dixon, vice chair of House Appropriations & Finance. As originally proposed, H.B. 548 would have added an additional 0.85 percent privilege tax to the existing 3.15 percent severance tax on crude oil, effectively increasing the rate by nearly 27 percent, Robertson detailed.
The bill quickly passed through House Energy and House Tax & Revenue before being incorporated into H.B. 14, an omnibus tax bill, which was passed by the House with roughly one week remaining in the session.
“The Senate Tax, Business, and Transportation hearing for H.B. 14 was contentious, with strong arguments against, including H.B. 548 in the omnibus tax effort,” Robertson reported. While amendments were made to H.B. 548—reducing the crude oil severance tax rate to 3.43 percent and the natural gas severance tax rate from 4 percent to 3.9 percent—these changes still did not satisfy industry concerns.
“Ultimately, however, H.B. 14, as amended, received a ‘Do Pass’ recommendation from the committee, leaving little time for industry advocates to push back before the end of session,” Robertson stated.
With last-minute discussions with the governor’s office and Senate leadership having borne fruit, H.B. 14 was amended on the Senate floor to remove the H.B. 548 language, effectively eliminating all proposed severance tax increases on the oil and gas industry. When the amended H.B. 14 returned to the House, the chamber refused to concur with the Senate’s changes, sending the bill to a conference committee with just two days left in the session. No final agreement was reached, and both H.B. 14 and H.B. 548 died when the New Mexico Legislature adjourned sine die.
H.B. 548 and H.B. 14 were just two of more than 60 bills and resolutions tracked by PBPA during the session. Nearly two dozen other bills required the same engagement and advocacy from the PBPA and like partners, Robertson said. Most of the legislation that would have been detrimental to the industry did not pass.
From Bills to Laws
The following legislation did make it through to the governor’s desk:
- S.B. 21 – Pollutant Discharge Elimination System Act (Sen. Peter Wirth, Senate Majority Floor Leader)
- S.B. 23 – Oil & Gas Royalty Rate Changes (Sen. George Muñoz, Senate Finance Chairman)
- H.B. 137 – Strategic Water Supply Act (Rep. Susan Herrera)
- H.B. 140 – “Hazardous Waste Constituent” Definition (Rep. Christine Chandler)
- H.B. 361 – Energy, Minerals & Natural Resources Department Conversion of Certain Wells (Rep. Andrea Romero)
Fortunately, while the original versions of S.B. 21, H.B. 137, and H.B. 140 contained concerning language for the oil and gas industry, amendments made throughout the legislative process removed the most problematic provisions, Robertson reported.
The final version of S.B. 23, which establishes a royalty range of 20 percent to 25 percent for State Land Office (SLO) leases in the Permian Basin, also includes a provision aimed at protecting existing leases, Robertson explained. This provision prevents the SLO from canceling leases “except upon failure or default of the lessee to comply with any of the provisions or covenants within the lease.” This session marked the fourth attempt in the past five sessions by the SLO to raise the ceiling for royalty rates on leases.
“PBPA remained neutral on the issue but expressed concern that the SLO might cancel existing leases to impose the new royalty rate,” Robertson recounted. “The added provision should at least make such actions more difficult.
H.B. 361 allows the Energy, Minerals & Natural Resources Department to authorize the conversion of oil or gas wells into facilities that support energy storage or geothermal energy development, Robertson observed. Repurposed wells will not be classified as inactive or abandoned unless they cease operations for 12 consecutive months.
“While this bill does not directly impact oil and gas development, it may present an opportunity for operators looking for alternatives to plugging and abandoning low-producing wells,” Robertson noted.
“Our success in opposing harmful legislation and policy changes this session would not have been possible without our members, the broader oil and gas advocacy community, including the New Mexico Oil and Gas Association and the Independent Petroleum Association of New Mexico, and the efforts of industry supporters in the House, Senate, and governor’s office,” Robertson shared. “We deeply appreciate everyone who helped us stay on track throughout this legislative roller coaster.”
Robertson also offered special thanks to PBPA’s New Mexico Legislative Committee Chair Patrick Killen and New Mexico lobbyist Mike Miller, “both of whom worked tirelessly to keep our efforts on course.”
Texas Legislature
The 89th Session of the Texas Legislature has now passed the halfway mark. When the March 14 60-day bill filing deadline passed, a total of 8,898 bills and joint resolutions had been filed. The regular session will run through June 2.
“PBPA continues to work diligently to support legislation that promotes the safe and responsible development of the natural resources found in the Permian Basin,” Robertson emphasized. “At the same time, we vehemently oppose bills that threaten the prosperity the Permian Basin generates for Texas, America, and our allies abroad.”
The PBPA will continue to monitor budget appropriations for the Railroad Commission of Texas in its efforts to address abandoned wells, the Public Utility Commission in its work to promptly permit transmission lines for the Permian Basin, and the Texas Commission on Environmental Quality in its crucial role of promoting the beneficial reuse of treated produced water, Robertson stated.
Other Texas issues include addressing oilfield theft and efforts to strengthen the Railroad Commission’s role in coordinating response with the industry, the Department of Public Safety’s efforts to organize law enforcement and investigate criminal activity, and the laws that prosecute the organized criminal elements plaguing oil and gas operators across the state.
The PBPA hosts in-person meetings every Tuesday at 10 a.m. in Austin, along with a virtual option, to discuss legislative progress.
Next month’s legislative update will include a status report of specific proposed legislation.
For more information, go to www.pbpa.info.
Related: Legislative Update March 2025
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