NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC Files

Energy, Minerals and Natural Resources Department bill analysis

SUMMARY

Synopsis of House Floor Amendment #1

The House Floor Amendment #1 to House Bill 770 would require all agencies involved in this pipeline study to consult with the legislature before acting on any recommendations.

Synopsis of Bill

House Bill 770 would direct three agencies-the Energy, Minerals and Natural Resources, the Highway and Transportation, and the Economic Development departments-to study the feasibility of constructing a natural gas pipeline in New Mexico. The pipeline would be used to transport New Mexico-produced gas to additional markets throughout the state.

Significant Issues

The study will be conducted annually. If the results indicate a need for the pipeline, EMNRD will consult with the Highway, the Highway Commission, and the Economic Development departments to identify financing alternatives for the construction of the pipeline. If after six months, a private entity has not pledged to construct and operate the pipeline, a financing mechanism would be identified for construction. In fact, the pipeline would be classified a transportation system, eligible for proceeds from the sale of transportation bonds. The bill would earmark revenues from the pipeline to pay back the bonds. EMNRD would be the lead agency for construction and operation of the pipeline.

Pursuant to Laws 1996 Chapter 7, the Economic Development department contracted for a feasibility study for a natural gas pipeline. The result was that at that time the pipeline would not be economic for an operator. Economically, a private company is concerned primarily that New Mexico has sufficient production and has a large enough market for the natural gas. EMNRD, through its Office of Interstate Natural Gas Markets has contracted to study production projections and pipeline capacity within the state.

FISCAL IMPLICATIONS

House Bill 770 does not contain an appropriation. According to EMNRD, it would need additional funding and one FTE to perform the feasibility study.

MV/njw