FARMINGTON — A resolution Farmington city councilors will vote on Tuesday night supports proposed state legislation that would cut oil and gas drilling royalties to governments that pass laws or regulations restricting the industry.
"There are counties around the state that have made it difficult, and if not impossible, to operate oil and gas exploration in their county," said state Sen. William Sharer. He authored a 2010 bill with similar language that failed. Farmington's proposed resolution supports that 2010 bill and all similar bills.
New Mexico collects taxes on oil, gas and other natural resources extracted from the ground. These are called "severance taxes," and they pay off severance tax bonds, which are issued for state-wide capital projects.
Sharer said his 2010 bill targeted counties that enact ordinances and regulations so "onerous" they prohibit local drilling.
In the past three years, Farmington received more than $2.7 million from severance tax bonds for its new animal shelter, Administrative Services Director Andy Mason said. But if Farmington banned or heavily regulated local drilling, Sharer's bill would have prevented the city from receiving those funds.
"The point of that bill is you ought to participate or at least be open to participating in making that money (if you benefit from it)," he said.
Councilor Jason Sandel, who is Aztec Well Service's executive vice president, requested the city's legal department draft the resolution supporting Sharer's bill and other similar bills, and council unanimously supported the request.
Environmentalists question the legislation, however.
When asked if his bill could discourage counties receiving severance tax bonds from regulating oil and gas corporations, Sharer said, "There's thousands of regulations on oil and gas companies, but some counties have banned things that make sense."
The oil and gas industry is clean and safe, he said. "It's only crazy people from the east and left coast that hate it," he said.
According to a draft of Farmington's resolution, more local governments since 2010 have enacted more restrictions on drilling, and the "need has increased to educate these entities that they are affecting the state's economy and state revenues."
The resolution states local governments need to encourage the oil and gas industry to sustain a "thriving" state economy.
But Mike Eisenfeld, San Juan Citizen's Alliance staff organizer, said Farmington councilors need to ensure their constituents know why the resolution is being proposed before it's adopted. San Juan Citizen's Alliance mission statement says the group campaigns to protect the water, air, land and character of the San Juan Basin.
"I would question whether they're overstepping their authority here, with getting into another county's business," he said, referring to Mora County and its ban in 2013 on hydraulic fracturing.
He said Farmington should spend more time ensuring they are receiving proper tax and money from the oil and gas companies.
"Why are they getting involved with Mora County?," he said.