HOUSE BILL 311

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Nathan P. Small

 

 

 

 

 

AN ACT

RELATING TO WATER; ENACTING THE RECLAIMED WATER ACT; PROVIDING A PROCESS FOR CREATION OF RECLAIMED WATER AUTHORITIES; PROVIDING POWERS AND DUTIES OF AN AUTHORITY; PROVIDING FOR THE USE, SALE, PROVISION AND CERTIFICATION OF RECLAIMED WATER.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Reclaimed Water Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Reclaimed Water Act:

          A. "authority" means a reclaimed water authority established pursuant to the Reclaimed Water Act;

          B. "board" means a reclaimed water authority's board of directors;

          C. "certified reclaimed water" means reclaimed water that is certified by the water quality control commission or the commission's delegate to indicate the water has been treated to a sufficient quality that it is no longer regulated as wastewater;

          D. "county" means a county of any classification;

          E. "customer" means a person or entity that purchases reclaimed water;

          F. "department" means the economic development department;

          G. "jurisdiction" means the area:

                (1) governed by a municipality or a county that has established an authority; and

                (2) that is covered by the actions of an authority;

          H. "municipality" means an incorporated city, village or town;

          I. "participating member" means a customer, reclaimed water producer, reclaimed water wholesaler or retail water supplier that chooses to participate in work overseen by an authority;

          J. "reclaimed water" means any type of water, regardless of the source and including wastewater that has been treated mechanically or chemically, that can be used once it meets water quality standards issued by the state;

          K. "reclaimed water authority" means a newly created nonprofit organization authorized pursuant to the Reclaimed Water Act;

          L. "reclaimed water producer" means an entity that operates a water treatment facility that produces or generates reclaimed water, including midstream operators, desalination plant operators and municipal wastewater treatment facilities;          M. "reclaimed water wholesaler" means an entity that transports or distributes reclaimed water to customers or suppliers; and

          N. "retail water supplier" means an entity that provides retail water service, including a private water company, a public agency or a municipality or county.

     SECTION 3. [NEW MATERIAL] RECLAIMED WATER AUTHORITY--AUTHORIZATION TO CREATE.--

          A. In response to a request from a municipality or a county, the department may authorize a municipality or county to create a reclaimed water authority to work with communities in the authority's jurisdiction to promote the use of reclaimed water.

          B. A county's or municipality's request pursuant to this section shall include:

                (1) the name of the person submitting the request;

                (2) the name of the county or municipality requesting authorization to create an authority;

                (3) the names and addresses of all persons who are proposed to serve on the authority's board of directors;

                (4) the names and addresses of the persons who are proposed to serve as the authority's officers;

                (5) the authority's proposed business plan;

                (6) the proposed sources and volumes of reclaimed water that would be within the authority's jurisdiction; and

                (7) the area that would be within the authority's jurisdiction.

          C. A request may be denied if the requester fails to provide any of the information required pursuant to Subsection B of this section.

          D. The department shall approve or deny a request within sixty days from the date the request is submitted to the department. 

     SECTION 4. [NEW MATERIAL] ORGANIZATION--BOARD OF DIRECTORS--APPOINTMENT.--

          A. Once approved by the department, an authority may be organized as a nonprofit corporation in accordance with the Nonprofit Corporation Act and the Reclaimed Water Act. The authority shall file all documents required by the secretary of state and by state law in relation to the authority's organization as a nonprofit corporation and authority.

          B. An authority shall be governed by a board of directors. A board shall consist of at least six members, five of whom are voting members, as follows:

                (1) the secretary of economic development or the secretary's designee, who shall serve as an advisor to the board and not as a voting member; and

                (2) the following voting members appointed by the mayor or governing body of the municipality or county in the authority's jurisdiction:

                     (a) one economic development professional;

                     (b) at least one professional who has worked for a reclaimed water producer;

                     (c) at least one professional who has worked for a reclaimed water wholesaler;

                     (d) one member who has worked with or for a water retailer; and

                     (e) at least one professional with experience in environmental studies or environmental protection work.

          C. Upon creation of an authority, three members shall be appointed to initial terms of two years and three members shall be appointed to initial terms of one year. Thereafter, members of the board shall be appointed to terms of two years. When a vacancy occurs in any of the voting member positions, the position shall be filled in accordance with the provisions of Subsection B of this section.

          D. A board shall:

                (1) appoint a chair;

                (2) elect other officers as the board deems necessary;

                (3) adopt bylaws for the board, in accordance with the provisions of the Nonprofit Corporation Act, to govern the conduct of the board in the performance of its duties; and

                (4) hire or appoint a president who shall be the chief administrative officer of the authority and be responsible for its operations.

     SECTION 5. [NEW MATERIAL] AUTHORITY POWERS AND DUTIES.--

          A. An authority shall have the powers conferred upon a domestic nonprofit corporation by the Nonprofit Corporation Act and, pursuant to the Reclaimed Water Act, the authority may:

                (1) sue and be sued in the authority's corporate name;

                (2) seek and work with vendors, customers or participants who sell, give, purchase, take or provide funding;

                (3) apply for and obtain federal and state funding and loans;

                (4) purchase, take, store, receive, acquire, own, hold, dispose of, use and otherwise deal in and with property, including intangible personal property, intellectual property, technological innovations and reclaimed or untreated water;

                (5) operate and maintain lawfully permitted water treatment facilities, desalination plants, laboratories, water transportation equipment and vehicles and water storage equipment and facilities;

                (6) develop and implement water quality management plans;

                (7) oversee public health and safety programs applicable to participating members within the authority's jurisdiction;

                (8) provide technical support and consultation services to industries, municipalities and counties regarding water treatment;

                (9) sell, convey, pledge, exchange, transfer or otherwise dispose of the authority's assets and properties for consideration and upon terms and conditions the authority shall determine;

                (10) incur liabilities or borrow money at rates of interest the authority may determine;

                (11) issue and collect fees and assessments;

                (12) execute all contracts and other instruments the board deems necessary in the exercise of the powers and duties provided in the Reclaimed Water Act;

                (13) invest and reinvest the authority's funds and receive and administer grants, contracts and private gifts;

                (14) conduct activities and operations to exercise the powers provided in the Reclaimed Water Act;

                (15) employ, set compensation for and prescribe duties of officers and employees as the authority deems necessary;

                (16) enter into agreements with insurance carriers to insure against any loss in connection with the authority's operations;

                (17) authorize retirement programs and other benefits for officers and employees of the board;

                (18) engage in research and development activities to improve water and wastewater treatment technologies and processes;

                (19) make grants to promote reclaimed water use;

                (20) engage in community outreach and educational programs to raise awareness about water conservation, pollution prevention and the importance of environmental stewardship; and

                (21) perform inspections of reclaimed water; inspect water quality; and assess fees, penalties and fines against reclaimed water producers, reclaimed water wholesalers, and retail water suppliers conducting business with a reclaimed water authority.

          B. Pursuant to policies established by an authority's board of directors and as directed by the board's president, an authority shall:

                (1) establish relationships with reclaimed water producers, reclaimed water wholesalers and customers throughout New Mexico to encourage the responsible use of reclaimed water;

                (2) foster and promote uses for reclaimed water that support the development of new industries and the diversification of the state's economy;

                (3) foster relationships among reclaimed water producers, reclaimed water wholesalers and customers;

                (4) work for communities within the authority's jurisdiction to recruit businesses and jobs related to the treatment, desalination and purification of reclaimed water;

                (5) develop policies and standards for the authority that promote the use of reclaimed water and frameworks for shared infrastructure projects for reclaimed water;

                (6) perform all actions required of an authority pursuant to the Reclaimed Water Act;

                (7) provide quarterly reports of the authority's activities to the department and the department of environment; and

                (8) adopt policies and procedures to allow reclaimed water producers, reclaimed water wholesalers, retail water suppliers and customers to join an authority's membership.

     SECTION 6. [NEW MATERIAL] MEMBERSHIP OF AN AUTHORITY.--Reclaimed water producers, reclaimed water wholesalers, retail water suppliers and customers who choose to become members of a reclaimed water authority shall be subject to the policies and procedures adopted by the reclaimed water authority.

     SECTION 7. [NEW MATERIAL] INFRASTRUCTURE AND FACILITIES.--Upon a majority vote of a board and an authority's participating members, the authority may:

          A. construct and operate facilities and infrastructure; and

          B. contract with third parties to allow the authority or its contractors to take possession of and acquire, store, transport, sell or dispose of reclaimed water in accordance with applicable state law.

     SECTION 8. [NEW MATERIAL] APPLICATION OF OTHER LAW.--

          A. A reclaimed water authority shall be subject to all applicable laws and rules governing:

                (1) water rights;

                (2) transportation and handling of water; and

                (3) water quality, including rules issued by the energy, minerals and natural resources department, the office of the state engineer and the department of environment.

          B. The use of reclaimed water by an authority shall not impair any existing water rights.

          C. An authority is separate and apart from the state and shall not be deemed an agency, public body or political subdivision of the state for purposes of application of law relating to personnel, procurement of goods and services, gross receipts tax, disposition or acquisition of property, capital outlays or per diem and mileage.

          D. An authority and its board shall be subject to the Open Meetings Act and the Inspection of Public Records Act; provided, however, that information obtained by the authority or its board related to pricing may be designated and marked as confidential by the party that submits the information, and if the pricing information is designated and marked confidential, the pricing information shall not be subject to inspection pursuant to the Inspection of Public Records Act.

          E. An authority or a board and the authority's or board's officers, directors and employees shall be granted immunity from liability for any tort as provided in the Tort Claims Act and may enter into agreements with insurance carriers to insure against a loss in connection with the authority's operations even though the loss may be included among losses covered by the risk management fund of New Mexico. A director, the president or another officer shall not be personally liable for any damages resulting from:

                (1) any negligent act or omission of an employee of the authority or board;

                (2) any negligent act or omission of another director or officer of the authority or board; or

                (3) any action taken as a director or officer or a failure to take any action as a director or officer unless the director or officer has breached or failed to perform the duties of the director's or officer's office and the breach or failure to perform constitutes willful misconduct or recklessness.

     SECTION 9. [NEW MATERIAL] IDENTIFICATION OF RECLAIMED WATER MARKETS--RETAIL WATER SUPPLIERS--DUTIES.--

          A. An authority shall identify:

                (1) within the authority's jurisdiction:

                     (a) potential uses for reclaimed water; and

                     (b) potential customers for reclaimed water service; and

                (2) within a reasonable time from the date the authority is organized, potential sources of reclaimed water.

          B. If a municipality or county has not established an authority, a retail water supplier that serves the area in which the municipality or community is located shall identify:

                (1) within the supplier's service area:

                     (a) potential uses for reclaimed water; and

                     (b) potential customers for reclaimed water service; and

                (2) potential sources of reclaimed water.

          C. Reclaimed water producers and reclaimed water wholesalers may identify potential uses for reclaimed water and assist a retail water supplier in identifying potential customers for reclaimed water service within the supplier's service area. Information obtained pursuant to this subsection shall be disclosed to the department within thirty days of the discovery of the information.

          D. Information obtained by an authority or a retail water supplier pursuant to this section shall be disclosed to the department within thirty days of the discovery of the information.

     SECTION 10. [NEW MATERIAL] OVERSIGHT BY A RECLAIMED WATER AUTHORITY.--

          A. An authority shall help facilitate communication among customers, reclaimed water producers, reclaimed water wholesalers and retail water suppliers within the authority's jurisdiction.

          B. An authority may:

                (1) assist with negotiation of commercial transactions among the parties listed in Subsection A of this section and may serve as a mediator in those negotiations;

                (2) upon request of a participating member, assist with establishing rates for reclaimed water with respect to transactions that occur within the authority's jurisdiction and in areas that are not overseen by the public regulation commission; and

                (3) with a majority vote from its board of directors and participating members, issue policies and procedures that allow for inspections of reclaimed water or create policies and procedures governing the handling, storage, transportation or disposal of reclaimed water.

          C. The water quality control commission may authorize an authority to:

                (1) establish water quality standards no less stringent than water standards already established by the commission;

                (2) oversee enforcement of standards established pursuant to this subsection; and

                (3) oversee water quality for reclaimed water located within the jurisdiction of the authority.

     SECTION 11. [NEW MATERIAL] DETERMINATIONS OF AVAILABILITY OF RECLAIMED WATER.--

          A. Upon request of a customer, retail water supplier, reclaimed water producer or reclaimed water wholesaler, the department shall provide for the requester's inspection any information submitted to the department pursuant to Section 9 of the Reclaimed Water Act.

          B. A retail water supplier or customer that has identified a potential use or potential customer pursuant to Section 9 of the Reclaimed Water Act may request that the authority help facilitate an agreement for reclaimed water supply.

          C. A reclaimed water producer or reclaimed water wholesaler that, pursuant to Section 9 of the Reclaimed Water Act, has identified a potential use or potential customer that is within the service territory or jurisdiction of a retail water supplier or customer may, in writing, request a retail water supplier or customer to enter into an agreement to provide reclaimed water to the potential customer. If the retail water supplier or customer has not responded to the request to enter into an agreement within thirty days, the reclaimed water producer or reclaimed water wholesaler may request that the authority assist with facilitating an agreement.

          D. An authority shall post and update at least quarterly a list of retail water suppliers, customers, reclaimed water producers and reclaimed water wholesalers within the authority's jurisdiction that have expressed interest in providing or using reclaimed water.

     SECTION 12. [NEW MATERIAL] AGREEMENTS TO PROVIDE RECLAIMED WATER.--

          A. A retail water supplier that receives a request from a customer pursuant to Subsection C of Section 11 of the Reclaimed Water Act shall enter into an agreement to provide reclaimed water if it is available or can be made available to the supplier for sale to the customer; provided, however, that the supplier may delegate this obligation to a reclaimed water producer or a reclaimed water wholesaler in a written agreement between the supplier and the producer or wholesaler.

          B. If a reclaimed water producer or a reclaimed water wholesaler provides a customer of a retail water supplier with a written statement that the producer or wholesaler is able to and will provide reclaimed water to the retailer, the retail water supplier shall, within one hundred twenty days from the date on which the retail water supplier receives the written statement from the customer by certified mail, return receipt requested, submit a written offer to the customer that includes rates and conditions pursuant to Subsection C of Section 13 of the Reclaimed Water Act.

          C. If an authority makes a determination that there is available reclaimed water to serve a customer of a retail water supplier, the retail water supplier, not later than one hundred twenty days from the date on which the retail water supplier receives a copy of that determination from the customer by certified mail, return receipt requested, shall submit a written offer to the customer.

     SECTION 13. [NEW MATERIAL] RECLAIMED WATER RATES--PARTIES NOT REGULATED BY THE PUBLIC REGULATION COMMISSION.--

          A. The price charged per barrel of reclaimed water sold shall be reported to a designated official appointed by the authority in the jurisdiction in which it was sold or to the department, if there is no authority in the jurisdiction, within sixty days following the sale. The report shall be made using a form approved by the authority or the department.

          B. The rates and conditions for reclaimed water service shall be established by contract between a retail water supplier and its customer.

          C. A contract executed as provided in Subsection B of this section shall include:

                (1) the source of the reclaimed water;

                (2) treatment and transportation costs for the water;

                (3) the method of conveying the reclaimed water;

                (4) a schedule for delivery of the reclaimed water;

                (5) the terms of service;

                (6) the rate for the reclaimed water, including the per-unit cost for that water; and

                (7) the costs necessary to provide service and the basis for determining those costs.

          D. This section does not apply to reclaimed water services or reclaimed water service rates established before July 31, 2025 or any amendments to those rates for the duration of the contract pursuant to which those rates were established.

     SECTION 14. [NEW MATERIAL] RECLAIMED WATER RATES--SUPPLIERS REGULATED BY THE PUBLIC REGULATION COMMISSION.--

          A. This section applies only to a retail water supplier that is regulated by the public regulation commission.

          B. A regulated water utility may request the public regulation commission to establish the rate or rates for the delivery of reclaimed water, with the objective of providing, where practicable, a reasonable economic incentive for a customer to purchase reclaimed water in place of other water sources.

          C. When setting rates in accordance with Subsection B of this section, the public regulation commission shall set rates with primary consideration given to enabling retail water suppliers to promote the sale of reclaimed water in a manner that allows for reclaimed water activities to increase within the state.

     SECTION 15. [NEW MATERIAL] CERTIFIED RECLAIMED WATER.--

          A. There shall be no requirement that reclaimed water be certified.

          B. Any person may submit a request to the water quality control commission to adopt standards and procedures for the certification of reclaimed water.

          C. Upon receipt of a request provided for in Subsection B of this section, following an opportunity for notice and hearing, the water quality control commission shall issue standards and procedures for the certification of reclaimed water. The standards and procedures shall ensure that certified reclaimed water is in sufficient condition to no longer require oversight or regulation necessary for wastewater or produced water.

          D. When a batch of reclaimed water is shown to meet the standards established by the water quality control commission for certified reclaimed water, the reclaimed water will no longer be subject to state laws and rules applicable to wastewater or produced water.

          E. The duties of the water quality control commission described in this section are in addition to the powers and duties described in the Water Quality Act and shall apply to reclaimed water generally and not only circumstances that involve the discharge of water.

     SECTION 16. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.

- 19 -