A growing number of top Democratic policymakers from around the country are voicing opposition to the Biden administration’s orders to place an indefinite moratorium on new permitting and leasing for oil and natural gas development on federal lands.
Concern over these orders, which were announced shortly after Inauguration Day, has been especially strong in New Mexico, the state that accounts for 57 percent of oil and 31 percent of natural gas on federal lands. As the biggest state for production on federal lands, this development generated $1.5 billion in state tax revenue in fiscal year 2020 and a ban could cost tens of thousands of jobs.
Interior Secretary nominee Rep. Deb Haaland (D-N.M.), who has previously been an outspoken opponent of production on federal lands, acknowledged the critical economic and budgetary role it plays during her confirmation hearing with the U.S. Senate Energy & Natural Resources Committee at the end of February. Under questioning from Senators, Rep. Haaland even said:
“It’s a pause. It’s not going to be a permanent thing where we are restricting all these things from something.”
Shortly after that hearing, another top Democrat, New Mexico Governor Michelle Lujan Grisham, voiced concerns that development would simply move across the Permian Basin to Texas, where production is largely on private lands that are unaffected by the orders. A statement from Lujan Grisham’s office read:
“Yes, the governor and administration are concerned the federal policy could lead to energy companies leaving for other states like Texas, particularly because New Mexico’s regulatory environment is part of our balanced approach to climate and energy policies that Texas lacks. Companies or rigs that might leave here for Texas presents a two-fold issue in that it’s injurious to our revenue in the short-term and would seem to run counter to the federal intention of ensuring the kind of enhanced regulation that New Mexico has in place and a state like Texas does not.” (emphasis added)
Indeed, forecasts about productions shifts are widely shared as the Dallas Fed reported:
“[W]e estimate that by the end of 2025, the Permian will produce between 230,000 and 490,000 barrels per day less than if drilling activity continued at its current pace. As a result, production and employment across the basin will gradually shift from federal lands in New Mexico to private and state lands in New Mexico and Texas, with wide-ranging economic implications for the region.”
New Mexico’s U.S. Senators, Martin Heinrich (D) and Ben Ray Luján (D), wrote a letter to Gina McCarthy, President Biden’s National Climate Advisor, urging the administration to quickly wrap up the review of production on federal lands and end the moratorium:
“An extended and indefinite suspension would have significant impacts on our workforce and state funding for education and creates unnecessary uncertainty for New Mexico’s state and local tax revenue. We oppose an indefinite federal ban on oil and gas leasing, and we urge the administration to complete its review and resume responsible leasing as soon as possible.” (emphasis added)
The two senators also wrote to Acting Interior Secretary Scott de la Vega asking for clarity on the federal oil and gas permitting order issued January 21:
“We have heard concerns from our constituents that the requirement for assistant secretary approval of routine authorizations may be extended indefinitely. Any extension beyond the current 60-day period would have significant consequences for ongoing activities on public land in New Mexico that require routine authorizations from bureaus within the Department of Interior. Such authorizations, including rights-of-way and sundry notices, are typically approved by career agency employees in New Mexico; while a temporary review period at the beginning of the new administration is reasonable, a longer shift of this authority to political appointees in Washington would have a negative impact on New Mexico’s economy and revenues.” (emphasis added)
New Mexico State Senator George Muñoz (D), who chairs the state’s finance committee, told the Wall Street Journal that he’s worried about the effects on revenue and jobs the orders would have. In a letter, Sen. Muñoz urged the president to issue New Mexico an immediate waiver, explaining:
“If New Mexico is not granted a waiver from this new drilling moratorium, conservative estimates predict we will see at least a $300 million decline in state revenues from oil and gas production in 2022 and a $400 million decline in 2023.”
Meanwhile, Sarah Cottrell Propst, the Cabinet Secretary of the New Mexico Energy, Minerals and Natural Resources Department, wrote to the Biden administration that not only has she “seen rigs depart New Mexico for Texas simply because of the uncertainty caused by the Order,” but also that she is concerned that delays on pipeline infrastructure could result in more flaring in the Permian:
“Specifically, right of way approvals are critical to ensure that new wells will have takeaway capacity for their natural gas and not be forced to vent or flare. In addition, right of way approvals are needed for lay-flat pipelines which transport water to and from well sites during completions activity. These lay-flat pipelines facilitate the reuse of produced water in completions operations, which takes pressure off New Mexico’s precious freshwater resources for use in oil and gas operations.” (emphasis added)
But it’s not just in New Mexico where top Democratic elected officials are expressing concern over the federal lands orders. On March 1, the Western Governors Association, led by Govs. Kate Brown (D-Ore.) and Brad Little (R-Idaho) and representing 19 states – including New Mexico – and three U.S. territories, sent a letter to President Biden lamenting the lack of communication between the administration and states over energy policy. The letter states:
“We respectfully request that Western Governors also be consulted during the Secretary’s review. Western Governors’ Association (WGA) Policy Resolution 2021-01, Strengthening the State-Federal Relationship, describes Western Governors’ views on the importance of fostering a good faith partnership between states and the federal government, noting that it ‘will result in more efficient, economic, effective, and durable policy, benefiting the Governors’ and the federal government’s shared constituents and resulting in a nation that is stronger, more resilient, and more united.’ Such a partnership, however, requires federal agencies to engage with states in ‘early, meaningful, substantive, and ongoing consultation in the development of federal policies that affect states,’ as stated in the resolution.”
Gov. John Bel Edwards (D-La.) also sent a letter to President Biden outlining the impacts the federal lands orders would have on production on the Gulf of Mexico, which affects the state’s costal restoration efforts:
“I urge you to keep in mind that our ability to address Louisiana’s climate related challenges, improve our structural resilience to catastrophic weather events, combat coastal land loss, and reduce our carbon footprint relies heavily on sustainable and predictable oil and gas production in the Gulf of Mexico.
Oil and natural gas development on federal lands is a critical source of revenue for states across the country, and particular in the West. And as the recent influx of letters from Democratic policymakers across the country demonstrates, the risk that the federal lands orders pose to state budgets, critical services like education, jobs and energy security is a concern across the aisle and political affiliations.
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