Understanding the State Land Commissioner’s Oil & Gas Holdout

If you aren’t completely familiar with the ins and outs of the New Mexico State Land Office, you have company. It plays a significant role in state revenue by generating hundreds of millions of dollars every year for the state’s public schools, universities and hospitals. I personally ran myself through a crash course on the office over the last few weeks, after a recent decision from Land Commissioner Stephanie Garcia Richard started flooding local headlines.

Earlier this month, Garcia Richard announced she was withholding oil and gas leases on the state’s most valuable tracts. The move prompted predictable criticism from the New Mexico Oil and Gas Association and some state Republicans. They want those tracts tapped, like right now. But Garcia Richard says her decision to hold off until royalty rates are hiked will net the office’s beneficiaries (schools and hospitals) hundreds of millions of dollars more than if drilling began today.

If that leaves you scratching your head through questions like, “Why doesn’t the commissioner raise the rate herself?” or, “Couldn’t she issue one-year leases at the current rate and hike it up next year once the Legislature signs off?” again, you’re not alone. But, during my interview with Garcia Richard, she answers every one of my conceptual questions and thoroughly explains how she came to what is clearly a decision that took quite a bit of consideration.

In fact, I don’t think it’s a stretch to say she’s been thinking about it since 2019. That’s the first time her office urged lawmakers to raise the state’s oil and gas royalty rate, something only they can change. That year, and every year since, rate increases have failed somewhere along their way through the Roundhouse. This year’s proposal hit a roadblock in the Senate Finance Committee. The only question of mine she couldn’t answer was why bills to take more money from oil and gas companies and give it to schools and hospitals have failed each of the last five years.

But, in accepting that a rate increase is not in her direct control, she says she took the action she could. In her mind, sitting on those resources for now is the right decision for her office’s beneficiaries and New Mexico’s voters — the only two groups to whom she’s beholden.

Oil and gas companies make their decisions based on their bottom line. And Garcia Richard says she’s taking up that same mentality, which she explained to me during our interview. “We live in a capitalist system… but when a public official has greed on behalf of public-school kids, somehow that’s not acceptable?”

I’m not going to tell you what to think about the commissioner’s decision, but at the very least, make sure you understand exactly how she came to it before you draw your conclusion.

– Lou DiVizio Senior Producer