A New Mexico environmental group could sue the U.S. Environmental Protection Agency over rising ozone levels in the Permian Basin region on the southeast corner of the state.
Multiple counties in the oil-rich region were recently found to have ground-level ozone concentrations in the air of more than the National Ambient Air Quality Standard (NAAQS) via air monitoring from the New Mexico Environment Department.
Ozone, a cancer-causing air pollutant, is created when volatile organic compounds (VOCs) interact with sunlight.
Analysts believed oil and gas operations were a major source of VOCs emissions, and NMED recently began developing stronger regulations to address such ozone precursors released by the industry.
But in the meantime, Santa Fe-based WildEarth Guardians argued the heightened levels of ozone in the southeast region should trigger federal action by listing the area under an ozone non-attainment designation.
This could impose additional environmental requirements such as added air quality studies and reporting for oil and gas facilities in the area or installations known to add pollutants into the air.
WildEarth Guardians last week filed a petition and intent to sue to the EPA, asserting the agency should placed such a designation on the Permian Basin region, or the group would file a lawsuit within six months if no action is taken.
Jeremy Nichols, climate and energy program director at WildEarth Guardians said group hopes to compel the federal government to immediately impose stronger restrictions on oil and gas operators ahead of the State of New Mexico finalizing its tougher regulations.
“Despite the Biden administration’s promises to put public health first, the oil and gas industry is getting a free ride to pollute the Permian Basin and undermine clean air,” he said. “The Environmental Protection Agency needs to stop dragging its feet and start helping people.”
Along with placing federal restrictions on the region due to its air quality concerns, WildEarth Guardians also called on the EPA to sanction the State of New Mexico under the federal Clean Air Act for alleged inaction on air pollution.
“While the Environmental Protection Agency drags its feet, clean air and people continue to suffer,” Nichols said. “This delay isn’t just unacceptable, it’s illegal and we aim to compel the Agency to follow through with its basic commitment to protecting air quality.”
State of New Mexico spars with oil and gas over ozone rules
NMED planned to present its ozone rules before the Environmental Improvement during a public meeting starting Sept. 20 where the board could vote to approve the rules.
If implemented, the rules would require oil and gas companies to conduct leak detection at least month, repair leaks within 15 days, maintain records of compliance and report all emissions to the state.
NMED estimated the rules, which would apply specifically to counties known to have ozone levels above the NAAQS limit of 70 parts per billion (ppb), would reduce emissions from the oil and gas sector by about 260 million pounds per year.
But that could cost the oil and gas industry billions, per a report from the New Mexico Legislative Finance Committee (LFC), and lawmakers warned NMED its rules could harm the fossil fuel industry – one of New Mexico’s stronger economic drivers.
In an Aug. 25 letter from the LFC to NMED Cabinet Secretary James Kenney, the committee cited an analysis by economic research firm John Dunham and Associated commissioned by industry trade group the New Mexico Oil and Gas Association (NMOGA).
The report estimated NMED’s regulations would cost oil and gas operators $3.2 billion in its first year, and another $3.8 billion over the next five years.
If enacted, the analysis estimated the rules would leave 37 percent operating oil wells and 87 percent of natural gas wells uneconomical because of higher compliance costs.
This could mean a 12.9 percent decline in oil production and another 22.8 percent drop in natural gas production in New Mexico, per the report, and cost the state up to 3,217 industry jobs.
Lawmakers also pointed to an impact analysis from the New Mexico Tax Research Institute, using NMOGA’s study, that showed the proposed rule would cost state and local governments a total of $730 million – $569 million to the State and $160 million to local governments.
“The Legislative Finance Committee is concerned about the potential fiscal impact of the rules as written on the state’s oil and gas industry, particularly on small and independent producers operating low-volume oil and gas wells in New Mexico,” the letter read.
Kenney responded on Sept. 1 to the LFC’s letter arguing it was the NMED’s statutory requirement to address rising ozone levels under the New Mexico Air Quality Control Act.
He said the State was unable to “meaningfully” address ozone concentrations in previous administrations and recently embarked on the ozone rulemaking with support from Gov. Michelle Lujan Grisham and the New Mexico Legislature.
He said that if the State does not enact strong regulations to reduce ozone levels, the EPA was likely to step in and impose federal restrictions.
Both the federal and state government were aware of “widespread” violations of current air quality regulations by the oil and gas industry, Kenney said, in both of the state’s oil and gas-producing regions: the southeast Permian Basin and northwest San Juan Basin.
“It is a fact that ozone levels are rising in New Mexico due in part to oil and gas operations, and that several monitors, including in Eddy County, are registering concentrations far in excess of the federal standard,” read Kenney’s letter.
“In addition, the U.S. Environmental Protection Agency and (NMED) continue to identify widespread non-compliance with air quality requirements across New Mexico’s San Juan and Permian Basins which further aggravates our rising ozone concentrations.”
The oil and gas industry, represented by multiple trade groups, would be able to present its economic concerns during the Environmental Improvement Board meeting later this month, Kenney said, but he criticized NMOG’s study as “flawed.”
“This process will ensure that all aspects of the proposed rule and its impacts on the State are fully developed and presented to the Board in a comprehensive and transparent manner,” Kenney wrote.
“Given the process and considerations outlined above, the Board will not rely on a single, deeply flawed economic study conducted and paid for by the regulated community, and I ask that Legislative Finance Committee not do so either.”
Adrian Hedden can be reached at 575-618-7631, firstname.lastname@example.org or @AdrianHedden on Twitter.