Bill passes to spend $13M, create new division to shift New Mexico away from oil and gas

A new state agency to shift New Mexico away from its dependence on oil and gas would be created should a bill advancing through the legislature pass into law.

House Bill 188 would create an Economic Transition Division within the State’s Economic Development Department (EDD) and appropriate a total of about $13.4 million to fund the division and provide support for local communities during economic transition.

A transition away from economic dependence on fossil fuels could directly impact communities like Carlsbad and Hobbs in the southeast Permian Basin region where most of New Mexico’s oil and gas is produced.

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That industry was credited with typically providing a third of the state’s budget, and a recent $3.5 billion revenue surplus at the State was attributed to recent growth in oil production.

New Mexico is second in the nation in oil, following only Texas with which it shares the Permian, and usually in the top 10 states for natural gas.

When the market for oil and gas is strong, New Mexico reaps windfalls of revenue that can fund public services like schools and roads, but when the market trends downward some lawmakers worried it exposes the state to economic depression.

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Policies like the Energy Transition Act, a signature piece of legislation of Gov. Michelle Lujan Grisham that she signed in 2019, set benchmarks for the state ending in 100 percent carbon-free energy by 2045.

HB 188 was introduced as an effort to advance that goal, sponsored by Rep. Angelica Rubio (D-35) of Dona Ana County, along with a group of Democrat cosponsors from around the state.

It passed the House Government, Elections and Indian Affairs Committee Feb. 3 on a 6-3 vote along party lines with all three GOP members voting against it. HB 188 was sent to the House Appropriations and Finance Committee for further consideration.

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Opponents argued the oil and gas industry was central to New Mexico’s economy and should be supported by policy to the benefit of the state’s bottom line.

The bill would add a seventh division to the EDD, tasked with developing policies and programs to support communities impacted by the transition, including apprenticeships to retrain workers from extraction or electricity generation facilities.

That Division would administer the funds and create a statewide Economic Transition Action Plan by the end of 2024, identifying sources of funding, potential projects and regions to target that are “disproportionately” affected by the transition, the bill read.

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The legislation would also expand membership Sustainable Economy Task Force, which already included several cabinet-level state agencies, adding representatives from organizations that operate apprenticeship programs, worker organizations and higher education workforce development programs.

Appropriations in the bill were $885,000 to the EDD to establish the new division, along with $2.5 million to support community engagement activities by the Task Force and $10 million to the fund for community programs and state assistance.

The funds would not revert to the general fund if unspent at the end of any fiscal year.

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During HB 188’s first hearing, Rubio argued the legislation was needed for a “just transition” in New Mexico to a more diverse economy and less-pollutive forms of energy.

She grew up in Lake Arthur about 10 minutes from Artesia in the southeast region, and said she knew well the impacts of fluctuating oil and gas markets on the economies of frontline communities.

Angelica Rubio
Angelica Rubio

“A lot of my family and friends are still very much directly or indirectly impacted by the highs and the lows of the oil and gas industry,” Rubio said. “This work is very, very important.”

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“Net zero” initiatives like the Energy Transition Act necessitated state policy to avoid economic harm to extraction-based communities, read an analysis of the bill published by Legislative Finance Committee (LFC) citing a report from the United Nations.

The report pointed to the closure of the San Juan Generating Station, of which the City of Farmington held a 5 percent ownership, which cost the city $70 million and 450 jobs.

“According to a policy paper on renewable energy transmission published by the United Nations, transitioning workers away from extractive industries is one of the biggest obstacles facing “net zero” initiatives, such as that mandated by the Energy Transition Act,” the LFC analysis read.

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Support for the measure came from Power 4 New Mexico, a coalition of statewide environmental groups that help draft HB 188 and argued it was needed policy to successful transition New Mexico away from fossil fuels.

“Not only does working for extractive industries have significant and devastating impacts on the health of workers, but also on our families,” said Gladys Saucedo, community organizer from Somos un Pueblo Unido in Hobbs, and member of the coalition.

“Our state has reaped the benefits of our hard work and now it's time to reinvest in our communities through the Economic Transition Act.”

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

This article originally appeared on Carlsbad Current-Argus: Bill to shift New Mexico away from oil and gas passes first committee