5 key takeaways from Carlsbad business leaders' annual trip to Santa Fe

Adrian Hedden
Carlsbad Current-Argus

Business leaders from across Eddy County traveled to Santa Fe this week for the Carlsbad Chamber of Commerce’s annual lobbying trip to meet with state policy makers and express the unique needs and impact of southeast New Mexico.

Known as the Bat Brigade, the group talked with New Mexico cabinet secretaries about the regulation of oil and gas – the region’s main economic driver – along with public education, roads and the environment.

The two-day trip ran from Monday to Tuesday, with cabinet secretary meetings on the first day followed by a meeting with New Mexico Gov. Michelle Lujan Grisham at the Roundhouse.

Keep up to date on New Mexico politics. Subscribe to the Carlsbad Current-Argus.

Here are the main takeaways from the 2020 Bat Brigade trip.

Southeast powering policy priorities

Lujan Grisham made it clear in her meeting with the Bat Brigade that revenue from oil and gas, mostly produced in the southeast region, was the primary funder for her ambitious plans for increased spending on education and public health.

The State reported a budget surplus of about $1.2 billion in 2019, mostly credited to the recent boom in oil and gas operations.

Initiatives such as offering free college to New Mexico students, a $400 million plan to offer universal childcare and efforts to increase behavioral health and addiction treatment were all made possible by the profits gained from extraction, Grisham said.

“The goal is to have the kind of economy where we’re saving money, we’re investing money wisely and we can have universal childcare and universal early childhood education. That’s a game changer,” she said during the Bat Brigade meeting.

“Not every community has the ability to help us figure it out or to share resources like we are in the Permian so that we can leverage money in a better way.”

More:New Mexico Gov. Michelle Lujan Grisham: Permian Basin oil and gas a main driver for policy

Oilfield road repairs see increased funding

In a meeting with New Mexico Cabinet Secretary of Transportation Michael Sandoval, Eddy County got some good news.

Sandoval pointed to numerous road projects in the southeast that were receiving millions in state funds.

U.S. Highway 285 would be rebuilt from the Texas State Line to Loving, he said, at a cost of about $130 million, along with increasing lanes on U.S. 128 and State Road 31.

Since Eddy County generates a large portion of state revenue, Sandoval said more of that money should go to the region to support the industry.

“We want to support oil and gas,” he said to the Eddy County leaders. “Your county is one of the main reasons we have this money. We want to try to bring in as much money as we can to go to local infrastructure. Some of that would definitely go to southeast New Mexico.”

More:NMDOT: Permian Basin oilfield roads receive millions in state funds, projects underway

Oil and gas industry weary of new taxes

The Bat Brigade kicked off its Monday meetings with a trip to the New Mexico Oil and Gas Association to meet with Executive Director Ryan Flynn.

The group discussed House Bill 117, which would expand lodger’s tax to include RV parks known as “man camps.”

Flynn criticized the bill as a tax increase on the industry that he said already makes significant investments in local communities throughout the Permian basin.

He said that while oil and gas production remained steady, the price per barrel has seen some notable declines in recent weeks making operators hesitant about supporting purported tax increases.   

It’s a big tax increase on the industry. I think we’re going to have a tough time with that. We’re producing at high levels, but we’re in a volume game,” Flynn said.

“I think we’re trying to figure out how that bill will affect our service industry. Especially our services companies are going to get hit the most.”

More:Carlsbad leaders demand state support as community struggles to adapt to oil and gas boom

Regulators struggle with low staffing

The final meeting on Monday saw the Bat Brigade meet with the Energy, Minerals and Natural Resources Department (EMNRD), and its compliance agency the Oil Conservation Division.

Todd Leahy, EMNRD deputy secretary that the agency was continued to see a high vacancy rate, leading to challenges with maintaining inspection rates, enforcing state law and issuing permits to operators.

He said the Department was operating at 23 percent staff vacancy rate but has seen some improvement in recent years.

“There’s a huge staffing need here,” Leahy said. “You guys are producing all this stuff, and it’s getting caught up in all this bureaucracy. Those jobs are hard to fill, especially in your region because we’re competing with oil and gas jobs.”

NMED increases penalties for environmental violations

Cabinet Secretary of the Environment James Kenney said fines for regulatory violations related to issues such as sewage and gas emissions could increase to up to $5,000 per violation per day.

He said the State’s crackdown was in response to the extraction boom, as numerous studies conducted by the New Mexico Environment Department showed hundreds of violations in the Carlsbad area and Permian Basin.

“The penalty does not necessarily get compliance, but it has to be that compliance is the cheaper option,” Kenney said. “Our biggest problem is not homeowner septic. Our biggest problem is that it is so much cheaper to ignore us and violate.”

More news from Santa Fe:

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.