Yesterday afternoon, after a long and difficult hearing, HB 366 passed the House Judiciary Committee on a 7-5 party line vote. Industry owes a debt of gratitude to Majority Leader Nate Gentry for sponsoring this difficult but very important bill for IPANM and for our industry. Representative Gentry has done a significant amount of research and he knows the preemption issues. Even with vocal opposition from the minority members and citizens in the audience, Rep Gentry has been an unbelievably strong advocate for industry. Although we will most likely get HB 366 through the House, the fight will continue to get the bill through the Senate and Rep. Gentry is willing to continue working on our behalf.

If you have the time, please send Representative Gentry a note to say thank you and to indicate your support for HB 366. His email is natefornm@gmail.com and his address is 3716 Andrew Drive NE Albuquerque NM 87110; his Office phone at the Capitol is 505-986-4776.

I would also like to thank all the industry folks who were present and spoke in support of the bill. We had strong representation from industry, the State Land Office, UNM, landowners and the business community. Thank you for taking the time to come to the hearing to support HB 366.

In addition, Chairman Cook, Representatives Pacheco, Brown, McMillan, Dines and Adkins voted with Representative Gentry in support of the bill today. Chairman Strickler, Representatives David Gallegos, Maestas-Barnes, Scott and Townsend must also receive thanks for voting in favor of HB 366 in House Energy late last week. Representatives Ezzell, Crowder, Rehm, Montoya and Wooley have also co-sponsored the bill thereby indicating their support for the bill.

The next step in the process is to get HB 366 across the House floor which I expect will result in a full three hour debate. It is my hope that we will have the opportunity for a hearing on the House Floor this weekend. (Please see attached to this email a list of House members.) As an industry, we need to contact as many House members and Senators as possible to indicate our support for the bill. We also need to have our mineral owners contact those house members to support the bill on the grounds that their property interests are being impacted by over-reaching counties who should not be able to regulate oil and gas issues. I will also contact the numerous beneficiaries of the Land Grant Permanent Fund to ask them to contact House members and Senators.

Today was an exciting day at the NM Legislature for IPANM members and our industry. It is truly a pleasure to work in this new proactive environment and to work cooperatively with other industry representatives and the business community. But we cannot do it without the support of our legislators here in Santa Fe. Please take the time to contact them.

Due to confusion that has arisen from my previous email on S. 2440, I have been asked to clarify that IPANM takes no position on this bill.

You will recall that S. 2440 relates to BLM permitting fees and is sponsored by Senator Udall. S.2440 passed the Senate on unanimous consent last week and is scheduled for a vote in the House after the recess. Because we have IPANM members who support the bill and others who do not, IPANM does not have a formal position on the legislation. However, IPAA, WEA and NMOGA are in support of the bill.

I have also been asked by Senator Udall’s office to clarify that should S. 2440 pass the House, that the increased BLM fee is to be distributed as follows: The current funding of the BLM pilot offices comes from rentals. Those funds will continue to go to the Secretary of the DOI with no limit on her authority to distribute to fit the agency needs. The funds generated from the fees will go to a separate account than the revenue from the rentals. The pilot offices and permitting efforts are to be funded with the APD fees. The Santa Fe Office will receive a reimbursement value of 75% of the fees generated by the New Mexico pilot offices.
–Karin Foster

Late last night S. 2440, the BLM Permit Processing Improvement Act of 2014, passed the Senate. Both NM Senators Udall and Heinrich have released press releases highlighting their efforts on behalf of industry. S. 2440 would expand and maintain the Pilot Program implemented under the 2005 Energy Policy Act. It increases APD fees to $9500 per application from the current $6500 rate. The bill would require that 25% of the fees collected by the local offices would remain with those offices and that the fee would remain at the $9500 level for 10 years. This bill was drafted at the behest of several larger companies seeking to limit the rapidly increasing fees imposed by the BLM. In a 2014 report, the BLM claimed that once the provisions of the 2005 Energy Policy Act expired in 2015, that they intended to increase the fees to at least $12,000 with no limit on increasing the fees annually. To pay for the program, the bill reduces the interest rate and reimbursements to industry from 3% to 2% while maintaining the penalty interest rate on underpayments and assessments on industry at 3%.

Several IPANM member companies have raised concerns about the bill stating: The real problem at BLM is their internal process and priorities – namely they spend more time preparing for potential lawsuits from environmentalists than processing APDs. Since industry returns to the federal government between $40 – $66 for every $1 they spend on administration, maybe what Congress needs to do is review how this agency spends its funds instead of continually increasing fees. In addition, it is interesting to note that while the BLM claims they need additional funding, that in their budget request this year they did not even ask for additional funding for APD administration – the increases requested were for enforcement. Which raises the final point – this bill states the funding is to be used for ‘permit processing operations’ this does not ensure the pilot offices will even use the money for processing actual APDs. As drafted, the bill would allow BLM to use these funds for more NEPA, EIS, climate change and RMP studies which staff persons at BLM have claimed are all part of the APD process.

Senator Udall’s Office expects the bill to be passéd by the House after the mid-term elections.

Udall, Barrasso Hail Senate Passage of Bill to Streamline BLM Energy Permits
WASHINGTON – Today, U.S. Sens. Tom Udall (D-N.M.) and John Barrasso (R-WY) announced that the Senate passed their bipartisan bill to extend a pilot program that has helped the Bureau of Land Management (BLM) balance complex demands, including oil and gas permitting and environmental management, in New Mexico, Wyoming and other parts of the West. The BLM Permit Processing Improvement Act of 2014, which passed the Senate by unanimous consent, permanently extends a pilot program from the Energy Policy Act of 2005 that was designed to help the agency deal with a backlog of permit applications while balancing other duties. The program, which also established a dedicated fund, has helped streamline operations in BLM field offices in Farmington and Carlsbad, N.M., and Rawlins and Buffalo, WY, among others.

“This is a great step forward for our BLM offices in Carlsbad and Farmington to ensure they will have the necessary resources to balance the complex demands of oil and gas permitting and environmental management,” Udall said. “Oil and gas production is critical to New Mexico’s economy and for our children’s education, and I thank Senator Barrasso, Senator Heinrich, and all of our cosponsors on both sides of the aisle for their commitment to keeping this program going. I am hopeful the House will act quickly to give the BLM and industry the certainty they need to produce for New Mexico.”

“Today’s vote is great news for Wyoming and other Rocky Mountain states who want to decrease permitting backlogs and increase oil and gas production on federal lands,” said Barrasso. “Thanks to Senator Tom Udall and our bipartisan group of cosponsors for teaming up to help advance this critical legislation. Our bill will give local BLM offices the resources they desperately need to ensure oil and gas permits are processed in a timely manner. Now it’s time for the House to act so we can get this bill signed into law as soon as possible.”

Funding for the pilot program is set to expire in 2015. The senators’ bill permanently reauthorizes the Permit Processing Improvement Fund, and provides the Interior Secretary with greater flexibility to designate new pilot offices and proactively allocate resources based on shifting oil and gas production trends. Additionally, the bill revises the fee structure, and directs the proceeds to be retained by the BLM to support oil and gas permitting operations.

The Permit Processing Improvement Fund provides approximately $18 million each year for the Secretary of Interior to distribute to pilot offices for reinvestment in additional staff and resources to help improve efficiency, and support BLM’s diverse responsibilities, such as mineral leasing permits and wildlife and range conservation. The bill improves upon this program by providing the secretary with the flexibility to designate new project offices in response to shifts in industry demand while directing the BLM to consider public industry reports to reallocate resources more proactively. In order to pay for the extension of the pilot program, the Udall-Barrasso bill adjusts the interest rate that industry receives on overpayment of oil and gas royalties.

In addition to permanently reauthorizing the pilot program, the bill sets a $9,500 fee, to take effect 2016, for applications for permits to drill (APDs). The BLM will retain the funding, which the bill locks in through 2026, to support the agency’s base oil and gas permitting operations. Additionally, the bill prohibits the Secretary from raising this fee through a rulemaking, though the fee is indexed for inflation. The legislation further requires that at least 75 percent of funds to be distributed to the state offices where they were collected, and gives BLM the flexibility to allocate the remaining funds.

The bill has been endorsed by the Independent Petroleum Association of America, American Petroleum Institute, Western Energy Alliance, Western Governors’ Association, U.S. Oil and Gas Association, and countless municipalities, trade associations, and oil and gas companies. In a July 29 hearing before the Senate Energy and Natural Resources Committee, the Western Energy Alliance, Concho Resources, Campbell County (Wyoming) Board of Commissioners, and Bureau of Land Management all testified in strong support.

The bill is cosponsored by Sens. Martin Heinrich (D-N.M.); Heidi Heitkamp (D-N.D.); John Hoeven (R-N.D.); Mike Enzi (R-WY); Mark Udall (D-CO); Dean Heller (R-NV); John Walsh (D-MT); James Inhofe (R-OK); Jon Tester (D-MT); Mike Lee (R-UT); Orrin Hatch (R-UT); and Michael Bennet (D-CO).