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F I S C A L I M P A C T R E P O R T

SPONSOR Begaye

DATE TYPED 3/8/05

HB 126/aHAGC/aHAFC

SHORT TITLE Indian Rights Water Settlement Fund

SB

ANALYST Aguilar

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$0.1

Indeterminate Recurring

Indian Water

Rights Settlement

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Senate Bill 172

Relates to House Bill 415 and House Bill 14

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

SUMMARY

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee amendment to House Bill 126 strikes the ap-

propriation contained therein and makes a technical correction to language.

Synopsis of HAGC Amendment

The House Agriculture and Water Resources Committee amendment to House Bill 126 changes

language triggering State Engineer actions notifying the Legislature of the amount necessary to

meet the state’s portion of an Indian water rights settlement from “congressional funding” to

“congressional authorization”. The amendment also makes technical correction to language.

HB 126/aHAGC makes an appropriation of $10 million dollars to the Interstate Stream Commis-

sion for implementing Indian water rights settlements.

House Bill 126/aHAGC/aHAFC -- Page 2

FISCAL IMPLICATIONS

The House Agriculture and Water Resources Committee amendment to House Bill 126 appropri-

ates $10 million dollars from the general fund to the Interstate Stream Commission for the pur-

pose of implementing Indian water rights settlement. Any unexpended or unencumbered balance

remaining at the end of a fiscal year shall not revert to the general fund.

This bill provides for a continuing appropriation. The LFC is concerned with including continu-

ing appropriation language in the statutory provisions.

Synopsis of Original Bill

House Bill 126 creates the Indian Water Rights Settlement Fund within the state reserves, pro-

vides for legislative approval of Indian water rights settlements and requires a status report from

the Interstate Stream Commission by November 15 of each year.

Significant Issues

HB 126 provides that upon congressional funding of the federal share of an Indian water right

settlement the State Engineer would inform the legislature of the state’s share and request ap-

proval of the settlement. Upon legislative approval, the Interstater Stream Commission would be

able to expend money from the Indian Water Rights Settlement fund to implement the settle-

ment.

The LFC in the interim has expressed concern that the settlement process does not include the

legislature until after congressional approval of such settlements. The LFC seemed to view this

as a problem that could prove critical to a settlement’s successful implementation.

The state engineer agrees and notes the terms of such settlements typically provide for the con-

struction of infrastructure projects and the acquisition of water rights to augment the existing

supply of water. Many times this process begins many years after congressional approval of a

settlement. At present, the state is not able to assure the settlement parties and congress that the

legislature both approves of the settlement and guarantees that state funds will be made available

on the schedule required by the settlement. This is due to the lack of a process for obtaining leg-

islative approval under existing law until funding for the state’s shares of costs is requested from

the legislature. At present, the only way to obtain legislative approval and commitment to the

implementation of a settlement is for the legislature to make the necessary appropriations years

after congress has approved the settlement. The LFC has pointed out that it is possible that the

parties and congress will discover that their settlement cannot be implemented when years later

the legislature does not fund the state’s share of the costs, either because it does not approve of

the settlement, or because no funds are available to make the requisite appropriations at the time

required by the settlement.

The state engineer has worked to address the legislature’s suggestion the legislature be included

in the settlement process early enough to ensure that the settlement process proceeds in a manner

consistent with the legislature’s intent. This bill proposes to provide the parties and congress

with a statement of the legislature’s approval so that they may proceed accordingly before a set-

tlement is submitted to congress. It also provides the legislature with the option of setting aside

House Bill 126/aHAGC/aHAFC -- Page 3

the state’s funds over a number of years to complement its existing authority to make lump sum

appropriations.

PERFORMANCE IMPLICATIONS

House Bill 126 will enhance the effectiveness of the state in negotiating settlements, since the

state will pursue only those settlements receiving legislative approval

FISCAL IMPLICATIONS

HB 126 does not identify a source or sources of revenue for the fund.

ADMINISTRATIVE IMPLICATIONS

Some additional administrative burden would accrue to the ISC that relates to the ISC’s admini-

stration and supervision of the projects being funded by the state. The ISC’s role in reporting to

the legislature and in administering the fund is intended to provide the legislature with oversight

by an agency with the expertise to assure the prudent and legal expenditure of the funds ex-

pended under this act.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Duplicates Senate Bill 172

Relates to House Bill 415 and House Bill 14

TECHNICAL ISSUES

The State Engineer recommends the following changes for consideration by the legislature.

Page 1, line 18: after with word “congressional” insert “authorization of”

[Explanation: Under section B of this act, the state engineer informs the legislature of the set-

tlement terms prior to congress’ authorization of and commitment to fund the settlement. Upon

congressional authorization, the legislature needs to be informed as quickly as possible of that

action and of any substantive changes required by congress to the terms of the settlement. The

state engineer therefore proposes this amendment to ensure that the legislature is informed in a

timely fashion of any congressional authorization and of the expected state contribution. Since

congressional funding of Indian water right settlements typically lags behind congressional au-

thorization, without this amendment the legislature might not be notified in a timely manner of

the expected state contribution to a settlement.]

Page 1, line 22: after the word “Upon” strike “approval of a settlement by”

[Explanation: This act contemplates that there will be legislative approval both prior to and im-

mediately after action by congress. A joint resolution approving the ISC expenditure of funds

would be the penultimate legislative act. The ultimate legislative act would be to appropriate the

funds necessary to fully implement the terms of a settlement.]

Page 3, line 7: strike “that have been” and insert in lieu thereof “as”

House Bill 126/aHAGC/aHAFC -- Page 4

[Explanation: This amendment is intended to clarify that the expenditures from the fund are to

be consistent with the amount approved by the legislature, and to foreclose an interpretation that

fund expenditures can vary from the amount actually approved as long as they are expended to

implement a settlement approved by the legislature. This amendment recognizes and attempts to

maintain the legislative check over agency expenditures.]

PA/yr:njw