Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Scott
/Townsend/Gallegos/Ezzell
LAST UPDATED
ORIGINAL DATE 2/21/2025
SHORT TITLE
Air Qualit
y Control Act Civil Penalties
BILL
NUMBER Senate Bill 391
ANALYST Davidson
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Air
Quality
Act Civil
Penalties
Revenue
Up to
($20,000)
Up to
($20,000)
Up to
($20,000)
Up to
($20,000)
Recurring General Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
New Mexico Environment Department (NMED) New Mexico Attorney General (NMAG)
SUMMARY
Synopsis of Senate Bill 391
Senate Bill 391 amends sections of the Air Quality Control Act relating to civil penalties
regarding noncompliance with or violation provisions of the act. The bill would amend the
statute such that self-reported violations are not subject to civil penalties. The bill would also
exclude violations due to a “mishap” or mechanical malfunction when the permittee can
demonstrate they are taking the appropriate action to remedy the mishap or malfunction.
The effective date of this bill is July 1st, 2025.
FISCAL IMPLICATIONS
Analysis from the New Mexico Environment Department (NMED) notes Senate Bill 391 would
eliminate the agency’s ability to collect civil penalties for “any reported violations.” Currently,
NMED assesses civil penalties against non-compliant entities and then deposits the penalty
amount into the general fund. In the previous year, NMED’s Air Quality Bureau (ABQ)
collected and deposited $20 million into the general fund from civil penalties related to
noncompliance. If implemented, the bill would eliminate this fluctuating revenue. Senate Bill 391 – Page 2
SIGNIFICANT ISSUES
Health. While there is currently no universal consensus on recommending a specific setback
distance to protect citizens, proximity to oil and gas production has been associated with health
risks.
1
Oil and gas production produces varying levels of methane, particulate matter, nitrogen
oxide, and other chemicals compounds to be released into the air.
2
These chemicals from fossil
fuel production have been linked to increased risk of asthma, lung diseases, and mortality, with
the risk of these diseases generally found to be increasing with closer proximity to production
centers that produce air pollutants.
In their annual network review, the New Mexico Environment Department’s Air Quality Bureau
reported Eddy and Lea counties have some of the worst air quality in the state. Both counties
were in the 95th-100th percentile of national levels for ozone and in the 95th-100th percentile of
state levels for particulate matter.
3
Both pollutants are linked to asthma, heart disease, and
preterm births. Research is being conducted in the Permian Basin is being conducted to identify
sources and locations of pollutants. Preliminary results show proximity to oil and gas production
is likely the cause of higher pollutant levels in the region.
4
Agency Analysis. Analysis from NMED notes Senate Bill 391 has the potential to place the
state at a disadvantage regarding enforcement of its Air Quality Control Act:
The ability to pay provision in the Air Quality Bureau Civil Penalty Policy (“Policy”)
penalizes those entities that have the fiscal resources to pay higher penalties, while
protecting smaller entities from outsized penalties, in an effort to deter non-compliance
with state laws, regulations and permit conditions. Moreover, entities with more fiscal
resources generally, by extension, have more resources to invest in compliance assurance
in ways that smaller entities might not. As the U.S. Environmental Protection Agency and
U.S. Department of Justice similarly use the ability to pay consideration in their penalty
calculations, SB391 would place New Mexico at a disadvantage in enforcement cases.
NMED analysis points to the current requirement that entities report excess emissions to the
agency; excess emissions are generally not subject to penalty mitigation or reduction. Further, in
most cases excess emissions violations for facilities are occurring year after year without the
facility immediately fixing the issue which is causing the repeated violations. NMED raises
concerns Senate Bill 391 would remove the ability for the agency to have penalties for these
violations and could impede reporting, both options the agency uses as corrective action
measures.
Currently, NMED already has rules in place which require entities who self-report excess
emissions to provide an affirmative defense, which includes malfunctions emergency provisions.
If a self-reporting entity does provide an affirmative defense, NMED will investigate what
caused the excess emissions to determine if the defense is applicable. Additionally, major source
or large facilities are required to document deviations from their permits and the governing
1
Yu-Fei Xing, Impact of PM2.5 on human respiratory system, NCBI, NLM.gov, Jill Johnston, Impact of upstream
oil extraction and environmental public health: a review of evidence, NCBI, NLM.gov
2
U.S. Energy Information Administration, Oil and Petroleum Production Yearly Statistics, EIA.gov
3
Air Quality Bureau, New Mexico Air Quality Bureau Annual Network Review 2024, env.nmed.gov/air-quality
4
National Library of Medicine, International Journal of Environmental Research and Public Health, NCBI,
NLM.gov Senate Bill 391 – Page 3
regulations semi-annually. NMED analysis notes the bill has the potential to effectively disallow
any penalties for these major sources as long as they report semi-annually, rather than reporting
more promptly as is required in current statute. NMED analysis raises concerns the bill could
impact the state’s air quality by reducing the incentive to comply with air quality regulations.
Analysis from the New Mexico Attorney General (NMAG) notes that state law and Air Quality
Bureau policy surrounding regulation of emissions are in line with the federal standards set by
the U.S. Environmental Protection Agency (EPA). NMAG analysis notes the bill would
eliminate specific factors from NMED’s Air Quality Bureau regarding regulation and would
create conflict with the state’s enforcement of EPA standards and enforcement of the federal
Clean Air Act.
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