Community letter to BLM

San Juan County Community Impact Letter re. BLM Onshore Orders 1

April 18, 2016 U.S. Department of the Interior Bureau of Land Management Mail Stop 2134 LM 1849 C St., NW Washington, DC 20240

To Whom it May Concern: We, the undersigned organizations, employees and citizens of San Juan County, are asking for your help with several matters of vital concern for the collective economic wellbeing of our communities and respective organizations and their thousands of employees and families. As you know, oil and gas production is a major driver of San Juan County’s economy. The oil and gas industry, along with its associated direct and indirect jobs and tax revenue streams fund major portions of the budgets of our local governments, community college and public schools. Although San Juan County’s economic development leadership team is laboring mightily to lessen our region’s dependence on carbon energy, there simply are no other economic base activities available in the interim to replace the jobs and tax revenues that come from oil and gas activity. As you also know, the oil and natural gas industry in New Mexico has fallen on very tough times due to record low prices. Oil prices have declined from over $100 per barrel in July 2014 to the mid $30’s or less today. Natural gas prices have been extremely low for years and recent prices approaching $1.50 per MCF are downright frightening. Compounding the industry’s and community’s pain associated with low commodity prices is San Juan County’s geographic isolation from major commodity market centers. Oil and natural gas produced in the San Juan Basin face far higher transportation costs to market. This effectively reduces a producer’s realized prices by 10 to 30 percent below published spot prices.


The oil and gas industry in northwest New Mexico is literally fighting for its life.

First came a substantial reduction in drilling activity. On August 20, 2007 there were 43 drilling rigs active in the basin with each rig directly and indirectly employing 100. These drill rigs were dedicated to expanding the productive capacity of the San Juan Basin’s abundant supply of natural gas. Today there are just one or two rigs operating – both of which are working to develop the nascent Mancos oil shale play. Aztec Well Service alone has 10 rigs parked in its yard – each one (when operating) employing directly or indirectly 100 people. Additionally, on August 20, 2007 there were 126 completion and workover rigs operating in the basin. Today there just 20 such rigs working.

The next shoe to drop has been substantial capital spending cutbacks and

thousands of layoffs.

Capital spending associated with drilling is practically zero compared with 2007 and producers, service and equipment companies have laid off thousands of workers with great paying jobs simply to keep existing wells operating in such an incredibly low-price environment.

These cuts, in turn, have substantially contributed to Farmington acquiring the dubious distinction of having the nation’s highest unemployment growth in 2015 of all U.S. Metropolitan Statistical Areas. In spite of these painful cuts by area oil and gas producers and service companies, our community is now experiencing the additional sting of corporate and personal bankruptcies.

In the current low price environment, 25% of San Juan Basin’s 20,000 gas

wells are cash flow negative at $2.00 per MCF prices. (Natural gas closed at $1.70 on April 6, 2016.) Another 12.5% of the 20,000 total wells would become cash flow negative with the addition of just a modest $5,000 per year in operating cost increases. Frankly, large numbers of operating wells in the San Juan Basin are at risk of premature closure. Fewer wells mean even fewer jobs, less production and lower tax and royalty revenues to Federal, State of New Mexico and local governments and agencies – including all of the undersigned below.

Potential implementation of an abundant and onerous array of new rules

and regulations proposed by the Bureau of Land Management (BLM) are quite likely to be the industry’s tipping point.


When taken together, the plethora of new rules and regulations would add a profound and significant risk to the financial viability of a substantial portion of San Juan County’s oil and gas industry. In their current form, these rules would add significant capital and operating costs to an already struggling industry. The result will be accelerated closure of wells beyond what is already occurring naturally due to the stresses of low prices.

The bottom line to San Juan County and Your Constituents . . . Once a well is closed, plugged and abandoned, future employment and tax benefits of production (once prices recover) are lost forever. Ill-advised regulatory actions which add just $5,000 of annualized operating costs threaten to permanently and substantially shrink our regional economy – even at the very time we labor to diversify our economic base. This is a “one-two” gut punch to our local economy you can help prevent from happening! New Mexico’s overall economy, as you know and are concerned about, continues to struggle with one of the nation’s highest unemployment rates and a shrinking population. We are one of only a few states still reeling from the impacts of the massive economic downturn of a few years ago. The additional damage to the oil and gas industry that will occur from implementation of the BLM’s proposed regulations (in their current form) threatens to not only put the northwest region of New Mexico into a state of long-term and potentially permanent economic decline, it also threatens to hamstring the State of New Mexico’s budget for years to come. The BLM’s proposed regulations (Onshore Orders 3, 4, 5 and 9) are of particular importance and potential negative impact to all of New Mexico and its economic vitality! Some 63% of New Mexico’s natural gas production and 54% of oil production originates from federal mineral leases. Compounding the magnitude of the regulatory impact is the State’s checkerboard land ownership status and the industry’s integrated nature of operations. BLM rules (both existing and proposed), therefore, effectively impact almost all industry activity regardless of whether that activity occurs on Federal, State or privately held land. At stake is a significant share of the $901 million of the 2015 federal mineral royalties collected from oil and gas production in New Mexico and the $432 million of that total revenue shared with the State to the benefit of the employees and citizens served by the undersigned below.


Accordingly, the balance of this letter reflects the organizational, community and personal impacts on the undersigned . . . San Juan County The BLM regulations, as proposed, would be catastrophic to San Juan County’s already difficult budgetary crisis. The potential loss of up to 7,500 wells represents a revenue loss of 13% in county oil and gas taxes on top of the 47.6% decline already experienced since 2009. Furthermore, San Juan County will also incur additional losses of Gross Receipts Taxes indirectly effected by these regulations. These revenue losses would be further compounded by the loss of an estimated 9,000 jobs associated with the closed wells. County leadership has no choice in how we would respond. Reduced revenues and the requirement for a balanced budget mean we must embark on cuts in essential services. These cuts include, but would not be limited to, reductions in social service programs, law enforcement, fire and emergency response and critical reductions to our most vulnerable populations including indigent healthcare services and senior care center operations. Conclusively, if implemented in their present form and timing, the new BLM regulations will trigger the need for additional federal assistance to a state that already requires one of the nation’s largest federal subsidies. City of Farmington Passage of the proposed BLM regulations and the associated potential closure of between 25 to 38 percent of the natural gas wells in our service territory will have undeniable and adverse implications for the City of Farmington. The state of our community’s economy is only beginning to be reflected in the GRT amounts received. The February 2016 Gross Receipts Taxes received by the City were 20.79% less than the same month last year. Although Farmington does not directly receive large amounts of GRT directly from the production of natural gas and oil, the benefit is derived from a large population of residents employed in the oil and gas industry. These benefits are received in the form of other tax sectors such as: retail, construction, manufacturing, healthcare, and various professional services. All of these sectors are negatively affected by any losses in the Oil & Gas Sector. As a result of the FY2010 recession, city budgets were significantly cut and remain so. If revenue continues to decline, City Council and City Administration will only have three (3) options available: (1) to cut services to the citizens; (2) to raise taxes; or (3) a combination of cutting services and raising taxes.


City of Aztec Since the collapse of oil prices in 2014, oil and gas operations in the San Juan Basin have substantially decreased which in turn has caused a loss of capital investments in new exploration, reduced job opportunities, new direct and indirect revenue generation in San Juan County and new energy production in the region. The proposed BLM regulations, and the timing of those regulations, place additional burden on a struggling industry further impacting jobs, private and public sector services, and family well-being. The developments also adversely impact the City of Aztec. Gross receipt tax (GRT) revenues, 59% of the City of Aztec General Fund, are used to provide public services in the form of law and fire protection, public library and senior center, parks and recreation, street maintenance and planning. The contraction of the oil and gas industry has resulted in a 17% reduction in GRT, or $600,000, for the current fiscal year (July 2015 to March 2016) compared to the same period one year ago. As a result, the City has reduced its capital expenditures and non-essential purchases and delayed filling vacant positions; however, if this rate of decline continues, the City will have no choice but to reduce services resulting in the loss of services available for the public, City dollars spent in local businesses and a loss of jobs within the City. The City also provides electric, water, wastewater and solid waste services to its citizens. The loss of jobs and relocations in our community reduces utility revenues and increases uncollectible utility accounts. Empty properties place additional burden on law enforcement and code enforcement to maintain a safe community and do not communicate a prosperous and viable community to visitors and investors. While an increase in tax and utility rates could potentially reduce some of the impact for the City, these increases would directly and negatively impact a population struggling with reduced personal income and job availability. We ask you thoughtfully consider the real and negative implications of the additional regulatory burden to a core component of our community’s economic base at this time and in their present form. City of Bloomfield The Bureau of Land Management’s four proposed regulations, in conjunction with the dramatic slowdown in our region’s oil and gas operations due to falling oil and natural gas prices, will result in a major, negative impact on the City of Bloomfield’s economic viability. They will affect not only the City’s governmental revenues, but also the jobs of local residents and the revenues of its local businesses.


This impact is already being felt. A recent, federal study of 387 metropolitan statistical areas (MSA) across the country showed that the Farmington MSA had the largest increase in unemployment (5.2% to 7.3%, or an increase of 2.1%) from December, 2014 to December, 2015. A sampling of these impacts is as follows: The City’s budget is heavily dependent on revenues from the gross receipts tax (GRT), which businesses, including oil and gas businesses, pay. This tax generates approximately 75% of the General Fund’s revenues. The City recently reduced expenditures in its current budget by $450,000 as a result of reduced GRT revenues, and will continue to monitor these revenues on a monthly basis in anticipation of the need for further budgetary reductions. To date, the City has postponed several important infrastructure projects, left three employee positions unfilled, and reduced various departmental, operating expenses. At this point in the City’s fiscal year, current GRT revenues are running $88,000 below 2014 levels. If further, budgetary cuts are needed, these could result in layoffs affecting our 110 full-time employees, salary reductions, the elimination of part-time and seasonal employee positions, the reduction or elimination of benefits, the curtailment or elimination of basic, municipal services to residents and businesses, and/or a combination of these options. The City is home to a number of natural gas processing plants (ConocoPhillips, Williams, Enterprise Products Operating, L.P., TransWestern Pipeline). As these proposed rules reduce the supply of natural gas on which these plants depend, it will result in the continuing loss of jobs, and could ultimately impact the property tax revenues that the City derives from these facilities. The impacts discussed above have a cascading effect. In addition to these plants, the City serves as home to a number of oilfield service firms and businesses, such as Wagner Equipment Company (Caterpillar), that provide services and equipment to the oil and gas industry. These firms will also be negatively impacted by these proposed rules. Although the City is heavily reliant on oil and gas-related firms, it does have some, commercial/retail development. This development, however, is not large enough to buffer the City from dramatic changes in the oil and gas industry. As oil and gas firms reduce production and lay off employees, the sales of these retail/commercial businesses, and thus their viability, are also impacted. The development of small, start-up businesses, which are the backbone of smaller towns like Bloomfield, is also curtailed.


In addition to general services provided by the City (police, fire, public works, parks and recreation, planning and zoning, etc.), the City’s water and wastewater operations are also negatively impacted. As jobs disappear in the oil and gas industry and residents leave the region, this translates into fewer customers and less revenues for the City’s utilities at a time when these revenues are critical to the financing of major, necessary improvements to these systems. Town of Kirtland The Town of Kirtland is strongly opposed to implementing the proposed BLM Onshore Orders 3, 4, 5 and 9 in their present form at this time. If passed as they stand and in the time frame proposed, the indirect effect will be the loss of jobs, businesses and the loss of employees who live in our town. These new proposed BLM rules are another way to drive the cost of energy higher and higher for a population that will be directly impacted by the "new" rates that will follow. We have many people who live below the poverty level in our town already. Who will listen to them after these changes have been made? Who will champion their cause? With the combined loss of energy sector jobs and revenues in the coal industry, now combined with oil & natural gas, the domino effect is huge in our county, and it will drive a struggling economy even further into turmoil. It will hurt the cities and county that provide necessary services to the very people who are losing their jobs. How do you explain the need to raise taxes to people who are unemployed in order to pay for these services? These new rules will certainly bring about change. It will bring about the need for more government services which the local governments will not be able to afford nor the citizens who call this area home. These are real societal costs that need to be considered by the BLM and you as you proceed. Four Corners Economic Development The adoption of BLM rules as presented will result in the closure of at least 7,500 operating wells in the San Juan Basin. This number represents approximately 9,000 jobs or approximately 17% of the workforce in San Juan County, NM. This community already has the highest unemployment growth rate for any MSA in the country, and the additional loss of 9,000 jobs will cause unemployment to rise to over 20% and make it the worst unemployment in the nation. Four Corners Economic Development is the voice of business in the community and speaks to a number of efforts in the area to diverse the economic base away from oil and gas. However, these efforts cannot be brought to bear fast enough to overcome unemployment of this magnitude. Revenues for all businesses in the county have already


decreased nearly 18% year over year from 2014 to 2015 and the community simply cannot overcome a tsunami of job losses, the loss of local school funding and the loss of municipal entity funding. The resultant decrease in education outcomes and community services would further exacerbate the lack of non-oil and gas competitive advantages. City of Farmington Electric Utility (FEUS) Passage of the above-referenced BLM oil and gas regulations as proposed would be very painful for FEUS and its customers in San Juan and Rio Arriba Counties. About 39% of the municipally owned FEUS electricity sales are attributable to large industrial customers. All of FEUS’ industrial sales are directly associated with the oil and natural gas production industry. Industrial sales revenue for FY2015 were approximately $42 million. Alarmingly, FEUS industrial sales to natural gas customers has been declining over the last 3-6 months given the historic low prices for natural gas. FEUS management has conducted research into the correlation of electricity sales and natural gas prices dating back to the year 2013. The correlation is quite strong and, as natural gas prices have fallen, indexed electricity sales have fallen at equal or greater rates. If a conservative 20% of our industrial kilowatt hour sales were to disappear as a result of the implementation of the proposed BLM rules and the associated permanent closure of natural gas wells, there would have to be a shift of the costs associated with assets amongst fewer remaining customers including our residents and small businesses. Reduction of 20% of the system’s industrial load would mean a reduction of $8.3 million of electric revenue. Our low regional electricity prices are a key aspect of our communities’ economic diversification plan. Raising electricity prices to customers as a result of diminished industrial sales works counter to this shared critical community objective of economic diversification. San Juan County’s State of New Mexico Legislative Delegation The San Juan County legislative delegation respectfully requests that the New Mexico congressional delegation represent the State's interest and request that the federal government reevaluate the overall economic impact of the United States Bureau of Land Management's proposed Oil and Gas Onshore Orders 3, 4, 5 and 9. The proposed federal Onshore Orders 3, 4, 5 & 9 rule changes have not been properly vetted to consider the economic impact to the State of the New Mexico, tribal interests and the funding of the education system.


The nonpartisan New Mexico Tax Research Institute released a study entitled "Fiscal Impacts of Oil and Natural Gas Production in New Mexico" and, according to the study, thirty-one and one-half (31.5%) percent of New Mexico's general fund revenues were attributed to the oil and natural gas industry for fiscal year 2013. In the fiscal year 2014 update to the study, the percentage increased to thirty-five (35%) percent. The New Mexico general fund is the primary source of funding for the operation costs of the public schools and higher education, in addition to state public welfare programs, environmental protection, tourism support, state-led economic development efforts and many other functions of state government. In view of the industry’s contribution to funding essential State services and given the significant challenges the oil and natural gas industry is facing, it is critically important that the federal government step back and take into account the full economic and societal impacts of new industry regulations. Otherwise, there will likely be numerous negative implications for your constituents in San Juan County and New Mexico and ours. Aztec Chamber of Commerce Our Aztec Chamber Members are experiencing the negative effects of the existing oil and gas prices at their lowest in many years. If the proposed adoption of the BLM rules comes to pass, up to 9,000 jobs in our community could be lost, and this decision will cripple businesses, families, and the quality of life not just in Aztec, New Mexico but in the Four Corners. Most important, our children will be greatly affected. These regulations will create a domino effect as families begin to move out of state to seek jobs outside of New Mexico causing schools to be emptied, therefore causing an abundance of teacher layoffs, and the closing of schools. On a broader level, it will impact funds for public schools and community health centers, which are seeing their budgets constrained just when their services are needed the most by our children, youth and families. Stressors such as job loss, home foreclosure or loss in family savings will place strain on parental relationships and on the family as a whole. For already low-income families, the shock may be even more severe with basic needs such as food security, healthcare and shelter going unmet. Higher poverty is associated with increased rates of family conflict, child neglect and abuse, and intimate partner violence. Children and youth are particularly vulnerable as they undergo critical developmental transitions, for example, graduating from high school. Adolescents at this stage may be forced to postpone their plans for higher education and instead seek increasingly scarce jobs in order to contribute to the household economy. All of these changes can have profound and lasting effects on the mental health of our children and youth, often


causing problems in terms of anxiety, lowered self-esteem and other emotional/behavioral difficulties. Additionally, these regulations in turn will create a negative impact on all industries (medical, manufacturing, tourism, financial and legal services, banking, food and beverage, city and county services, etc.) in the Four Corners moving them to no longer become revenue and tax generators. Our towns will suffer. As the Aztec Chamber of Commerce, we are a voice and advocates for business and businessmen and women who are making every attempt to stay afloat during this economic downturn. Every small town Chamber and City would entertain dealing with issues pertaining to overcrowding, service increases, roads and highways, etc. Instead, the Chamber, the City of Aztec, and surrounding areas are seeking creative ways to help businesses to hold on and to diversify during this struggling economy. The businesses in Aztec, New Mexico are the fabric of our community and our country. We speak for all businesses, and are requesting that the proposed regulations be reevaluated. The Chamber needs healthy businesses to continue what we do for the community and the citizens of Aztec. Bloomfield Chamber of Commerce The City of Bloomfield, like many municipalities that depend on oil and gas to provide needed revenues for the city’s budget, is facing financial crisis, due to the collapse of the oil and gas prices and the associated economic slowdown in the industry. With major companies doing massive layoffs and cutbacks because of the low oil prices, families are moving out of our community to find work elsewhere. Losing the much needed revenues from the industry is difficult enough, but when families are forced to move out of town, paychecks that helped keep local businesses successful are gone as well. The BLM’s proposed regulations (Onshore Orders 3, 4, 5, and 9) will negatively impact Bloomfield and all of the northwest region of New Mexico. Bloomfield is a small community, attempting to create an alternative economic base through retail, small businesses, tourism and industry. Without the oil and gas industry and the revenues it provides, businesses in our community will struggle and, sadly, be forced to close. The Bloomfield Chamber of Commerce strongly urges our honorable Senators and Congressman to oppose the new set of BLM regulations. The San Juan Basin has long been a leader in the oil and gas industry and has provided much of the revenue to the State of New Mexico with oil and gas revenues. Without those revenues, our schools, our local


businesses and our communities will be forced to reduce the services that provide the exceptional quality of life the City of Bloomfield has been proud of. Please use your voice to oppose these regulations. As communities, school districts and responsible citizens, we ask you to help us keep New Mexico prosperous and a place where people come for the quality of life and the jobs we have available. Farmington Chamber of Commerce The Farmington Chamber of Commerce represents 530 businesses in San Juan County. Each one of these businesses has a tie to the oil and gas industry in a direct or indirect way. San Juan County businesses are currently experiencing the negative effects from the low prices of oil and natural gas. The passage of the proposed BLM regulations and the associated potential closure of between 25 to 38 percent of the natural gas wells will have an even greater devastating effect on the local businesses. If these businesses continue to lose revenue, they will be forced to close their doors leaving gap in services or goods provided by these businesses. In return people will start spending on-line or going to other communities to purchase goods and services. The dollars spent on-line provide no direct benefit to the community through retail revenues or local tax dollars. The tax dollars that are collected from these business pay for services like quality roads, water lines, and sewer services. Furthermore, as the tax base decreases, municipal governments must consider ways to react which usually mean a reduction of work force and/or raising of taxes. This is a burden on everyone and is not something that new businesses looking to invest in a community want to deal with. Kirtland Chamber of Commerce The Kirtland Chamber of Commerce is the newest chamber in San Juan County. We will be celebrating our first year in April. Our goal is to support and encourage businesses and community well-being in the Lower Valley region of San Juan County. We host monthly business meetings and invariably the topic of discussion turns to how to promote our businesses and local economy. Even though our annual membership cost is the lowest in San Juan County, we frequently hear new prospects say that either they cannot afford the $100 annual membership cost or that they fear that they will not be in business throughout the next year. Both statements are a signal to our leadership team that businesses are struggling in the current economy.


Given that our San Juan County economy is dependent on the health of the energy industries in general and oil and gas production largely, the Kirtland Chamber of Commerce, asks that any government rules, regulations and determinations that could unnecessarily impede our San Juan County and New Mexico economies be amended, delayed or permanently stopped. San Juan College San Juan College is the third largest community college in the state and according to our latest fact book, serves nearly 17,500 students annually. We are also second in the nation out of all 1200 community colleges for producing Native American graduates. As a community college, we are not only responsible to educate our students and see that they succeed in their educational goals and in the workforce, we also have a responsibility to see that our community succeeds. We play a key role in the economic prosperity of the region – and this is not a responsibility that we take lightly. It is well known that educational attainment is directly correlated to income earning potential and is one of the primary mechanisms to increase economic prosperity in our communities. San Juan College is dedicated to our students’ and our community’s success. Through education, we enhance individuals’ lives. We work extremely closely with our industry partners to provide the training that enables people to obtain the jobs they need to provide for their families. This goes beyond providing opportunities to learn a new skill or embark on a career. It is about helping students realize their dreams. The BLM methane rules will have a tremendous impact on the local economy and on our ability to serve our students and our community. Unfortunately, our community, county, and state are all facing serious economic challenges that could potentially have a profound detrimental effect on our future generations. Our state’s budget and our college’s state appropriation are heavily dependent on taxes derived from oil and gas. Last year, almost 50% of our college budgetary resources came from state appropriations and local oil and gas production taxes. In fiscal year 2012, San Juan College’s oil and gas production tax revenue was $4.39 million; in the current fiscal year, we expect to generate only $1.8 million in oil and gas production tax revenue, a sharp decline of 59% in four years. In the coming fiscal year, we face a cut in our state appropriations of over $600,000. Such decreases in our budgetary resources severely hamper our ability to serve our students and our community.


Aztec Municipal School District Aztec Municipal School District is, as are all school districts in the State of New Mexico, highly dependent on state equalization (SEG) funding – much of which is derived from oil and gas revenue. Additionally, taxes imposed on oil and gas production have a direct impact on capital improvement and debt service funding streams. Any reduction in oil and gas production impact this tax funding stream and has a direct impact on the quality of education we can provide to our students. Funding levels impact teacher recruitment, student/teacher ratios, and the ability to maintain and improve school facilities. Also, any reduction in the revenue generated from the oil and gas industry result in the debt service burden being shifted to local property owners by the imposing of a higher debt service mill levy. This additional tax burden along with the potential loss of employment will dramatically impact the financial security of the families in the Aztec Municipal School District. A projected 13% reduction in oil and gas revenue will result in a loss of approximately $474,000 used for capital improvements and debt service at the Aztec Municipal School District. Bloomfield Municipal School District Bloomfield School District and the State of New Mexico are very dependent on the revenue generated by the Oil and Gas Industry. The district has already experienced a decline in student enrollment (estimated decline of 40 students and more coming at the end of the school year) as a result of families relocating in search of other jobs. The Bloomfield School District has also experienced an increase in the free and reduced lunch percentages averaging over 75% of the student population eligible (associated with the poverty levels related to layoffs in the area) as of the January 2016 count. These increases in free and reduced lunch percentages are due to the economic decline and reduction in the oil and gas production where families are struggling to pay for lunches for their children. The families and schools would suffer if additional, taxes and regulations were imposed on oil and gas production resulting in companies choosing not to drill or produce in the San Juan County area. The oil and gas revenue impacts the tax funding stream for school districts and has a direct impact on the quality of education we are able to provide to our students through the state funding formula. We are not in a position to withstand additional cuts in our funding. If there is a reduction in funding in the future Bloomfield School District will be faced with having to make difficult decisions of reducing their teaching and support staff resulting in the elimination of good paying jobs in our community.


Farmington Municipal School District The yearlong slide in oil and natural gas prices and now the emerging threat of economically disruptive BLM regulations has and is generating serious negative economic impacts. Falling gas and oil production royalties and industry job losses have also spurred an educational and financial crisis for the Farmington Municipal School District (FMS). For example, the loss of industry jobs has this year resulted in an enrollment decrease of 150 students in the district in just one year's time – reversing a ten-year trend of continuous growth. While the loss of 150 students may seem small to some; for FMS, this represents just over $900,000 in reduced state support. More students are expected to withdraw at the end of the current year as families seek the certainty of long-term employment elsewhere. As such, the uncertainty of an economic upturn anytime soon continues to disrupt the lives of families, impacts the educational future of students throughout the Farmington community and jeopardizes state funding to schools. The enrollment drop, coupled with the economic uncertainty across the state, resulted in FMS’ decision to reduce the School Year 2017 Operational Budget from $78 million to $74 million - a drop of $4 million. Because the vast majority of our budget is dedicated to teachers and support staff, this reduction necessitated the elimination of 40-50 good paying jobs. There is added concern within FMS and its leadership team that industry job losses and the associated household spending it represents will result in further decreases to Gross Receipt Taxes collected by the state as well as a continuing decline in industry related ad valorem funding. All of these funding pressures combine to greatly harm FMS’ financial future as well as reduce the school district's capacity to provide high-quality educational programming. This all points to a death-spiral that leads to even more draconian cuts to staff and programs. Now comes news that additional damage and hardship could happen to Farmington families through more job losses and FMS’ ability to fully fund the educational process due to the implementation of the BLM’s proposed regulations (Onshore Orders 3, 4, 5 and 9). If implemented, FMS has genuine concern that as many as 9,000 workers in the Four Corners region could be impacted. As superintendent of Farmington Municipal Schools, it would be my hope that our Congressional delegation will take the time to thoughtfully consider how these regulations will negatively impact the lives and education of so many in the Farmington community.


San Juan United Way and Its Member Agencies San Juan United Way and our Partner Agencies have seen an increase in client service requests as well as a loss in fund raising. The Oil & Gas Industry has been very generous to nonprofits in San Juan County over the years and that loss is deeply felt. Our recent campaign declined to a level of 10 or more years ago. Through our Information & Referral program, Helpline, we are receiving more and more requests for assistance to avoid eviction and requests for assistance in paying utility bills. Changes to regulations that would result on additional pressure to the industry should be approached in a thoughtful and reasonable manner. Conclusion In closing, as a community we would welcome any opportunities for additional engagement as it relates to achieving a fair and equitable balance between the economic impacts of the proposed rules as they relate to a location like San Juan County and the BLM’s intended outcomes of the regulations. In the interim, we respectfully ask you to carefully evaluate and consider the numerous and high-dollar adverse impacts that the proposed BLM regulations will have on our communities, organizations and quality of life. We believe that when you thoughtfully consider these rules (as proposed) in light of a “dollars and cents, real people and real jobs” perspective, the costs of implementing the host of new BLM regulations at this time and in their present form vastly exceeds any potential benefits. Sincerely,

Rob Mayes

Interim CEO, Sally Burbridge

City Manager,


cc The Honorable U.S. Senator Tom Udall 531 Hart Senate Office Building Washington, D.C. 20510 The Honorable U.S. Senator Martin Heinrich 531 Hart Senate Office Building Washington, D.C. 20510 The Honorable U.S. Congressman Ben Ray Lujan 2446 Rayburn HOB Washington, D.C. 20515 General Public Signatures (Included as Appendix A) Appendix B: City of Farmington Resolution No. 2016-1585 Appendix C: San Juan County Resolution No. 15-16-45

Documents

Community letter to BLM