NM environmental board takes issue with conflict allegations while considering emission rules

NM enviro panel rebuts conflict-of-interest claims

SANTA FE, N.M. — The chairwoman of the state’s Environmental Improvement Board took issue Tuesday with allegations that some members of the panel have a conflict of interest in considering a state proposal for the regulations of greenhouse gas emissions.

Gay Dillingham addressed the allegations after a break in a hearing on the state’s cap-and-trade proposal, which would give companies economic incentives to reduce carbon emissions. She told the crowd — mostly experts and lawyers for the state Environment Department, electric utilities and industry groups — that the seven-member board is made up of people with diverse experience and integrity and that none stands to gain financially from the outcome of the case.

“I see these proceedings as very educational. It’s a difficult matter and I think all of us are listening very intently, and to say that any of our votes are predetermined, I take offense to that,” Dillingham said.

Her comments came during the second day of a two-week hearing on the state Environment Department’s petition for new regulations, which would impact polluters such as electric generating stations, refineries and natural gas processing plants.

There have been rumblings for months about the connections some board members have to environmental interests. The board sought to put an end to the claims Tuesday when it asked the audience whether anyone thought there was a conflict. There was no response and the hearing resumed.

Under the state’s proposal, New Mexico would be able to participate in a regional cap-and-trade program with other states and Canadian provinces. The state would not implement the program unless there were sufficient greenhouse gas allowances to make trading efficient and cost-effective.

The proposal also includes a sunset provision if the federal government were to implement its own program.

Critics contend the proposal would devastate New Mexico’s economy, but state officials argued it’s imperative to control emissions to limit the potential impacts of climate change on New Mexico.

“This is another example, I think, of industry overreacting to commonsense regulation. We’ve really thought this through and put a lot of cost-control measures into it,” said Jim Norton, director of the Environment Department’s Environmental Protection Division.

Economists testifying for the state predicted through modeling that the proposed cap-and-trade plan would have a small economic impact on New Mexico. Depending on the different variables used for each scenario tested, they said the state could see an increase of about 2,500 jobs or a loss of up to 3,100 jobs by 2020.

“This is not going to turn the way of life upside down,” economist Adam Rose testified, saying the numbers were statistically minute when considering overall job and population growth.

On cross-examination, the economists acknowledged their models included assumptions that complimentary polices such as clean car regulations, and energy efficiency and renewable energy standards, would be implemented along with the cap-and-trade program.

They theorized that electric prices wouldn’t rise if emissions were capped because demand would be reduced due to higher efficiency. They also pointed out that under the plan, polluters wouldn’t have to pay for the initial emissions allowances they receive, meaning any competitive disadvantage versus other states would be reduced.

Under most of the scenarios, the economists said utility customers would actually see decreases in their electric rates.

They also noted that their models did not account for any impacts the plan would have on public health.

Attorneys for Public Service Company of New Mexico and Tri-State Generation and Transmission Association questioned the accuracy of the economists’ models, prompting a motion to limit questioning to keep the hearing moving ahead.

Tauna Szymanski, an attorney for Tri-State, defended her questions.

“The economics is perhaps the most essential point of this rule-making. It’s a really critical factor for the board to consider,” she said.

Board member Frank Simms agreed, saying economics is at “the heart of what we’re being asked to decide.”

The board did side with the department by granting a motion to strike testimony from one expert who was scheduled to speak on behalf of the Coalition of Arizona/New Mexico Counties for Stable Economic Growth, which opposes the state’s plan. The department argued the witness misrepresented himself and lacked credentials to testify.

Board members have more than 6,000 pages of documents to review. A decision could be reached in late October or early November.

Aside from the state proposal, the board is also considering a petition from the environmental group New Energy Economy that aims to curb greenhouse gas emissions from the state’s largest polluters, including coal-fired power plants and the oil and gas industry.