President Joe Biden was expected to sign the $739 billion Inflation Reduction Act (IRA) Tuesday, making national investments in climate change initiatives like reducing air pollution emissions from oil and gas, while incentivizing broader use of renewable energy like wind and solar.
The bill, a reconciliation from the blocked Build Back Better Act, a signature piece of legislation pushed by Biden last year, could also open more federal public lands – onshore and offshore – to oil and gas drilling, a sticking point for environmental groups in New Mexico and around the country.
New Mexico is second in the nation among oil-producing states, following only neighboring Texas with which is shares the Permian Basin – the U.S.’ most active fossil fuel region.
But most of Texas’ extraction operations are on private land, while more than half of New Mexico’s is federal and could be heavily impacted by government policy.
Opponents of tighter restrictions on oil and gas operations, such as emission controls, worried they could impede an industry that provides more than a third of New Mexico’s revenue.
New Mexico’s Democrat congresspeople, U.S. Sens. Martin Heinrich and Ben Ray Lujan, and U.S. Reps. Melanie Stansbury and Teresa Leger Fernandez voted for the bill when it came before their respective chambers, touting it as needed action in addressing climate change.
But the state’s loan Republican in Congress, Rep. Yvette Herrell – who represents New Mexico’s southern Second Congressional District encompassing the Permian Basin region to the southeast – was the state’s sole vote against the bill.
She said the Act would raise taxes and energy costs for Americans, and was critical of provisions she said would increase U.S. reliance on foreign oil and gas imports.
Herrell called on congressional leaders to support her Protecting our Wealth of Energy Resources (POWER) Act introduced in 2021 to block the President’s authority to institute any halt on new oil and gas leases.
This was in response to such an action implemented by Biden’s administration in January 2021, which prevented new oil and gas leases on federal land as the Interior Department revised its fossil fuel policies.
The halt was struck down by a federal judge in Louisiana and Interior’s Bureau of Land Management resumed lease sales this year.
“If Joe Biden and (House Speaker) Nancy Pelosi actually want to help struggling families, they could unleash American energy independence by passing my POWER Act,” Herrell said on Tuesday. “Or they could simply stop subsidizing luxury electric cars for wealthy people using taxpayer dollars.
“But I’m afraid we won’t see sane economic and fiscal policies in Washington until voters demand a change of leadership.”
The bill also included language to hire more employees at the Internal Revenue Service to provide more oversight on taxpayers while increasing corporate taxes that could be paid by energy companies, an inclusion Herrell said would further increase costs for Americans.
She said Congress should pass the Prohibiting IRS Financial Surveillance Act which would prohibit a federal agency from requiring banks and financial institutions report their customers’ financial information.
“I was proud to vote against the Democrats’ new tax and spending spree, because it will increase inflation through hundreds of billions in deficit spending and Green New Deal handouts for the rich,” Herrell said.
“This legislation raises taxes on middle class families, breaking Joe Biden’s campaign promise, and hires an army of 87,000 IRS agents to audit and monitor American taxpayers. The one thing it doesn’t do is fight inflation.”
But environmental groups said it was worth protecting the environment and preventing further aridification of New Mexico, a form of climate change, in a year when the state saw its two-biggest wildfires in history burn hundreds of thousands of acres.
Demis Foster, executive director of Conservation Voters New Mexico said the bill’s goal of reducing carbon emissions nationwide by 40 percent by 2030 was “critical” but must be followed by additional actions from Congress to transition the nation away from oil and gas.
Foster said climate change was driven by fossil fuels, which had already damaged New Mexico’s environment and imperiled other industries like agriculture.
“The impact of the climate crisis has been front and center for New Mexico families for years: drought, wildfire, increasing storm intensity, decreasing crop yields, and the resulting impacts on our economy,” Foster said.
“The passage of the IRA represents a substantial renewed investment to curb the worst impacts of climate, while resourcing solutions that will provide a more diversified and sustainable economy for states like New Mexico.”
Santa Fe-based WildEarth Guardians Executive Director John Horning said that while the bill could bring some improvement to federal environmental policy, it was problematic in its support of the fossil fuel industry.
He said Congress was poised to enact policy, under the Biden administration and Democrat control of the U.S. House and Senate, that could result in meaningful action on pollution from oil and gas and other sectors of American industry.
“Yet when given a chance, they allowed the good in this bill to be watered-down by provisions that prop-up polluters and expand fossil fuel leasing on public lands,” Horning said. “This is at a time when Indigenous and frontline communities have been calling for no new leasing to protect the air, the water, and the health and livelihoods of local communities.”
Oil and gas trade groups, like their supporters in the Republican Party, came out against the Inflation Reduction Act expressing similar sentiments that the bill’s efforts to cut emissions would raise energy costs.
The New Mexico Oil and Gas Association, New Mexico Business Coalition and the Permian Basin Petroleum Association signed on to a letter, along with groups around the country, sent by the American Petroleum Institute (API) to U.S. House leaders ahead of its passage of the bill, calling on lawmakers to reconsider the increased regulations and taxes that could effect fossil fuel companies.
The Institute also argued the bill failed to address the industry’s desire to “reform” oil and gas permitting to speed up the process operators must follow to begin drilling and producing fossil fuels.
The group argued the nation was facing declines in its gross domestic product (GDP), along with energy supply constraints, pointing to a nationwide 40 percent increase in energy costs in the last year.
The API chided IRA provisions that would impose a new corporate minimum tax, and taxes on crude oil and natural gas production.
“We share the goal of addressing climate change, as evidenced in the policies we support and in the actions that we take every day,” the letter read. “However, the considerable tax increases and new government spending in the IRA amount to the wrong policies at the wrong time.”
Adrian Hedden can be reached at 575-628-5516, [email protected] or @AdrianHedden on Twitter.