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Disclosure rules unclear for commissioners set to decide on O&G wastewater rules

The Roundhouse in Santa Fe in December 2021 Shaun Griswold/Source NM
State ethics and elections officials were unsure if they enforced portions of the disclosure requirements

Changes for rules around New Mexico’s oil and gas wastewater are under consideration, but questions about how the people responsible for adopting those rules – specifically their personal business dealings – have taken the debate into murky waters.

Concerns raised by environmental groups before the hearings said failures to add financial disclosures and declare alleged conflicts of interest threatens a potential decision about a contentious proposal to expand uses for oil and gas wastewater.

The Water Quality Control Commission (WQCC) is responsible for the fate of the proposal and its members said they’ve followed the law to declare conflicts of interest.

State ethics and elections officials, who oversee financial disclosures, said there isn’t a formal opinion, or were unsure if they enforced portions of the disclosure requirements for the board.

That issue brought more eyes and scrutiny on the twelve-members sitting on the commission and if their role in shaping water policy is impacted by personal work they do with the industries seeking a new way to make money with produced water.

And now, it’s unclear what, if any, process is in place to give the public an answer.

Commissioners said the rules around disclosure are unclear and our questions posed to state entities don’t lay out strict disclosure rules, but leave it to some discretion of board members.

Produced water rose to the fore in the 2024 legislative session when Gov. Michelle Lujan Grisham unveiled a policy to use half a billion dollars to purchase brackish – salty waters from deep aquifers – and oil and gas wastewater for treatment and use in other parts of the state.

The plan was proposed as a means to address climate-crisis fueled water shortages desiccating the Southwest.

The proposal ultimately failed, but it ignited opposition around efforts to expand uses for oil and gas wastewater. Environmental and Indigenous groups say the plans offer ‘a bailout’ to the oil and gas industry, and pose unknown threats, because of the nature and lack of research on chemicals and contaminants in produced water.

Now, a lot of eyes are on the Water Quality Control Commission because of an effort championed by the state’s top environmental officials to put forward initial rules for reusing the wastewater in pilot projects.

The rule-making process will stretch into the summer, with another round of hearings scheduled for July 1 to July 5, with a break for the holiday, and the potential for one last witness scheduled in August.

What happened at the first meeting?

The first order of business for the board last week was attempting to address environmental groups’ concerns submitted in the hearings on May 10 that brought up late or missing financial disclosures and purported conflicts of interest.

A motion filed by three conservation and environment nonprofits requested the board to close the proceedings and reopen them, saying a previous vote was “unlawful and void.”

The motion stated that the board had improperly voted to start proceedings on the produced water rule, without filing any financial disclosure filings, writing that “if ignored, would create a serious issue of appeal for any party dissatisfied with the outcome of the rulemaking.”

Bruce Thomson, a former civil engineer and chair of the commission, said attorneys for the commission recommended the board members individually state whether they had conflicts.

Eleven of commissioners affirmed they had no conflicts that are financial, personal or perceived. Only one member, Toby Velasquez, recused himself from the proceedings to a personal conflict.

After that, Thomson took the floor before starting the hearing.

“New Mexico is a small state, which is one of the nice things about it, many of us know each other,” Thomson said. “But I think it’s worth getting on the record that we don’t have any conflicts that might influence our participating in these deliberations”

The issue later resurfaced in the chat of the WebX meeting. Posts to the chat from Maine-based muckraker and blogger Bruce Wetherbee and Melissa Troutman, the climate and energy advocate from WildEarth Guardians, raised disclosure issues.

Both Wetherbee and Troutman asked if the commission would address the motion seeking a cancellation and refilling of the hearings, and additional information about one of the businesses, Houston-based Select Energy Services.

Troutman posted at 9:55 a.m., in response to Troutman’s question: “Similarly, can the commissioners clarify how Krista McWilliams can claim no conflict of interest as Engineering Operations Manager of the oil and gas company Logos Resources LLC?”

Minutes after Troutman’s question, a message appeared, saying the “chat was disabled at 9:57 by host or co-host.”

Wetherbee, in a phone call with Source New Mexico said he did not feel there were any issues with the chat outage, because the chat was later turned back on for additional parts of the hearing.

“I didn’t take it that we were being shut off,” he said, adding that he felt it could be ascribed to a technical error.

Wetherbee, who operates the blog The CANDLE, said he hoped the conversation would go beyond just the statements made by commissioners.

“There needs to be some explanation, the public deserves to know where these folks, who are going to make a ruling on something so important, where their guidance is coming from,” Wetherbee said.

In the meeting, Chris Dodd, an attorney representing the nonprofit New Energy Economy, asked hearing officer Felicia Orth if there would be a determination on the environmental groups’ motion to stop the proceedings.

Thomson said he considered the matter closed, saying the board did not need to make a further “jurisdictional determination.”

“I’m going to let the record stand that if all of the commissioners have stated they don’t have a conflict and leave it at that,” he said.

Addressing additional calls for disclosure

In the chat, McWilliams was called out directly to potentially recuse herself due to her role as co-chief operating officer at LOGOS Resources, an oil and gas company based in Farmington.

McWilliams’ husband, Jay Paul, was a former member of the New Mexico Oil and Gas Association, which is now a party in the hearings on produced water. He was listed as a board member starting in 2017 through 2021 tax filings, but is no longer on the board, according to the New Mexico Oil and Gas Association 2022 tax documents.

Jay Paul is currently the Chief Executive Officer of LOGOS Resources II, which includes LOGOS Energy.

The Financial Disclosure Act, a state law, only requires board members confirmed by the state senate to file Financial Disclosure paperwork with the secretary of state.

However, there is another provision in the Water Quality Act which says WQCC members must file a disclosure if they make a certain amount of income based on industries that they oversee.

According to the law, members must disclose, before taking action on the commission if they make more than 10% of their income “directly or indirectly from permit holders or applicants for permits required under the Water Quality Act.”

McWilliams, told Source NM that she has no conflict of interests, and does not meet the state laws for additional disclosure reporting to the Secretary of State.

“No, neither LOGOS Energy or LOGOS Operating LLC are discharge permit holders or applicants,” she wrote in an emailed response.

McWilliams said that she does not meet the threshold for additional disclosure.

Confusion abounds

But narrowing down who the rules apply to on the commission isn’t cut and dry. In an email, Thomson said he filed a disclosure, but said the guidelines are “not at all clear” of who it applies to.

“I was appointed as an at-large member by the Governor, my appointment did not require Senate confirmation. Thus, it is not clear whether I had to file a disclosure. I filed one just to be safe,” he wrote.

When asked about the motion filed by environmental groups, the chair said he did not have the expertise for an opinion of its merit.

“I’m an engineer, not a lawyer,” Thomson wrote in an email.

Thomson said attorneys for the WQCC spent “a considerable amount of time” on the issues in the two weeks prior to the hearings, and characterized the summary of conclusions that the objection was not supported by law or regulation.

Thompson directed Source NM to the Secretary of State’s office on additional questions on financial disclosures.

Commissioners on the WQCC are not automatically required to file financial disclosure statements since they are not confirmed by the state senate, said Alex Curtas, the spokesperson for the Secretary of State’s office.

However, Curtas said he could not answer questions about financial disclosure provision in state water law, nor clarify who a permit holder or applicant was.

“Regarding your other questions about the Water Quality Act, we are not the administrators of that Act – it is probably the NM Environment Department,” Curtas wrote.

The New Mexico Ethics Commission, who jointly oversees financial disclosure issues alongside the New Mexico Secretary of State’s office, said they didn’t have much official guidance, because they’ve never been sought out for a formal, binding opinion.

The state law requiring disclosure from WQCC board members, would have to be determined by each individual board member, said Jane Kirkpatrick, the spokesperson for the ethics commission.

Source NM is an independent, nonprofit news organization that shines a light on governments, policies and public officials.