Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may also be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR King

DATE TYPED 3/6/05

HB 500

SHORT TITLE Critical Management Area Domestic Wells

SB

ANALYST Aguilar

APPROPRIATION

Appropriation Contained Estimated Additional Impact

FY05

FY06

FY05

FY06

Recurring

or Non-Rec

Fund

Affected

NFI

Indeterminate Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 451

Conflicts with HB 285, SB 120

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

New Mexico Environment Department (NMED)

New Mexico Department of Agriculture (NMDA

Attorney General’s Office (AGO)

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of Bill

House Bill 500 provides the State Engineer authority to designate critical management areas

(CMA) by special order under certain conditions. Within these critical management areas, the

state engineer will have the authority to limit domestic well permits to no less than one-half of an

acre foot per year unless an applicant discontinues use of an existing permitted well from within

the critical management area or transfers a water right. Further, the State Engineer is directed to

treat all domestic well applications in the same manner within each critical management area.

The bill also provides that in certain specified circumstances, persons required to transfer water

rights pursuant to the new law may be exempted from the public notice requirements including

those cases where the State Engineer determines that the change will not impair existing water

rights, be contrary to the conservation of water or be detrimental to the public welfare.

HB 500 declares and emergency.

House Bill 500 -- Page 2

Significant Issues

The state engineer reports the importance of limiting depletions within declared critical man-

agement areas and notes HB 500 does not require water rights transfers to be from within the

CMA. Transfers of water rights from areas outside of the designated CMA will not be effective

in controlling declines in the aquifer’s water level, because allowing the transfer (change in point

of diversion) of an existing water right into a new domestic well does not physically bring addi-

tional water into the affected aquifer.

HB 500 restricts the authority of the state engineer to limit the amount of water appropriated

from each domestic well to no less than one-half of an acre-foot per year per household unless

the applicant transfers an existing water right to the well. The Office of the State Engineer notes

in certain areas of the state, wells may have to be restricted to amounts less than the proposed

one-half acre-foot per year depending on aquifer or stream shortages.

While the popular notion is domestic wells are depleting aquifers at a rapid rate, the State Engi-

neer notes studies performed indicate domestic wells are having a much more significant impact

on the depletion of interstate streams. Individually, domestic wells have a relatively small impact

but the collective impact is a growing concern. With domestic wells continuing to be a popular

source of water, it is expected the combined impacts will increase with time.

At present, the Office of the State Engineer processes over six thousand domestic well applica-

tions annually with each well authorized to produce 3 acre feet of water. Although the state engi-

neer’s office conservatively estimates the average diversion of each well at .25 acre feet per well,

total authorized production could reach 18,000 acre feet per year if all users pumped to capacity.

This is an extraordinary situation, however the impact is clear.

PERFORMANCE IMPLICATIONS

Provisions of HB 500 will allow the Office of the State Engineer to further meet constitutional

mandates.

FISCAL IMPLICATIONS

The State Engineer notes it processes an average of 6000 domestic well applications annually.

Requiring the transfer of water rights for domestic wells would require additional FTEs, the level

of which will depend on the degree to which the state engineer will exercise the provisions of the

bill and available funding. The agency notes an indeterminate but potentially significant fiscal

impact as a result.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

HB500 is the companion bill to Senate Bill 451 (HB500). HB500 is also related to Senate Bill

120 (SB120) and House Bill 285 (HB285).

SB120 and HB285 allow the State Engineer to deny a domestic well permit if the well is located

in a critical management area unless an applicant obtains an individual water right. If an indi-

vidual water right is required, the applicant must obtain an existing water right from within the

critical management area and change the place or purpose of use of the water. HB500 replaces

House Bill 500 -- Page 3

the ability of the State Engineer to deny a domestic well permit in a critical management area

with the ability to limit the use of the domestic well to one-half acre-foot of water unless an ap-

plicant transfers existing water rights from within the critical management area to the new loca-

tion, or the applicant discontinues the use of and caps an existing, permitted domestic well in that

critical management area.

HB500 also differs from SB120 and HB285 in that it adds language requiring the State Engineer

to review a critical management area designation every 5 years to ascertain whether the critical

management area continues to meet the criteria for designation.

TECHNICAL ISSUES

The Environment Department suggests the addition of the following language for consideration

by the Legislature:

Page 7, line 7, insert a new section.

The State Engineer may deny a permit for a domestic well in a critical management area where

the department of environment determines that the proposed well would be located within the

bounds of a body of contaminated ground water that is the subject of federal, state, or local regu-

lation for the purpose of investigation and/or remediation to achieve water quality standards.

The Office of the State Engineer suggests the following amendments for consideration by the

legislature:

Page 5, strike lines 22–24 and insert in lieu thereof: “notify persons on the list that new, revised

or proposed regulations are available and may be requested from the state engineer. Such

charges as will defray the expense incurred in preparation of copies and mailing shall be paid by

the requestor.”.

Comment: Sending copies automatically to a list of individuals may be an unnecessary expense.

Page 7 strike lines 16–19 and insert in lieu thereof: “Water rights transferred pursuant to this

section shall retain the priority date of the transferred water right and are transferable to a new

location or purpose of use subject to the provisions of Chapter 72 NMSA 1978.”.

Comment: The reference to “water rights obtained” is unclear.

OTHER SUBSTANTIVE ISSUES

Ground water is a precious resource in New Mexico. Approximately 90 percent of New Mexi-

can’s rely on ground water for their drinking water needs. The Environment Department notes

once the resource is contaminated it is no longer usable, and extremely expensive, time consum-

ing and often difficult to clean up. The ability of the State Engineer to deny a domestic well per-

mit if the ground water in the area is contaminated is a crucial authority the State Engineer needs

to augment the New Mexico Environment Department in protecting the public health of well

owners from polluted water supplies.

PA/yr