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 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 Lujan, B

DATE TYPED 03/04/05 HB 1084

SHORT TITLE Pecos River Compact Obligations

SB

ANALYST Ford

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$12,000.0

Non-recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HCO 437, SCO 834

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

SUMMARY

Synopsis of Bill

House Bill 1084 appropriates $12 million from the general fund to the interstate stream commis-

sion for the purpose of complying with New Mexico’s obligations under the Pecos River Com-

pact. The appropriation is contingent upon a determination that local governments have appro-

priated or otherwise committed $60 million for the same purpose. The appropriations is also

contingent on the approval by the state board of finance (after review by the water trust board) of

a plan prepared and adopted by the interstate stream commission describing the proposed expen-

ditures.

The appropriation is for expenditure in FY 05 through 07.

Significant Issues

The OSE provides helpful background on this issue:

House Bill 1084 -- Page 2

“The U.S. Supreme Court, in Texas v. New Mexico, found New Mexico to be in non-

compliance with the Pecos River Compact and levied a $14 million fine to address historic

non-compliance through under-delivery of approximately 10,000 acre-feet per year from 1950

through 1983. The court further mandated that New Mexico take necessary measures to com-

ply with the compact in the future. The consequences to New Mexico of non-compliance in the

future can be severe and can include involuntary curtailment of water uses in the Pecos River

Basin as a result of strict priority administration or the United States Supreme Court river mas-

ter taking over the administration of the Pecos River.

“Since the U.S. Supreme Court Decree in 1988, New Mexico has expended nearly $35 million

for acquisition of water and water rights to stay in compliance with the compact.

“In 2002, the interstate stream commission working with local water users developed a consen-

sus plan for long-term compliance with the compact. The 2002 legislature concurred with the

plan, appropriated $36.5 million and included a restriction that the funds can be expended only

after an agreement was reached regarding the adjudication of the Carlsbad Project water rights.

A settlement was reached regarding the Carlsbad Project water rights in March 2003.

“Since then, the interstate stream commission has been implementing the consensus plan as re-

quired by the settlement. The implementation of the long-term plan will not only help New

Mexico comply with the compact on a permanent basis but also will resolve a long-standing

water rights adjudication dispute between Pecos Valley Artesian Water Conservancy District

and Carlsbad Irrigation District, will increase water supply to Carlsbad Irrigation District and

will drastically reduce the likelihood of a priority call that shuts off water uses.

“The approximate cost of fully implementing the consensus plan is about $90 million. Consid-

ering the previous appropriation of $36.5 million, an additional $53.5 million is required to

complete the implementation of the consensus plan and effectuate the settlement. The appro-

priations under this bill and in other requests made by the agency will contribute toward set-

tlement implementation.”

FISCAL IMPLICATIONS

The appropriation of $12 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY 07 shall revert to

the general fund.

ADMINISTRATIVE IMPLICATIONS

OSE indicates that it will be able to administer the funding with its existing staff resources.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Capital Outlay Request 437 request would appropriate $10 million for the same purpose.

Senate Capital Outlay Request 834 requests a $10 million appropriation and a $30 million ap-

propriation for this purpose.

House Bill 1084 -- Page 3

TECHNICAL ISSUES

The bill calls for expenditure of funds in FY 05 but there is no emergency clause in the bill. An

emergency measure would allow the appropriation to be made earlier in FY 05.

OTHER SUBSTANTIVE ISSUES

The OSE writes: “The settlement implementation deadline has been extended until August 2006.

The interstate stream commission needs $30 million in FY06 to effectuate the settlement. If the

interstate stream commission cannot make that commitment, the settlement may fail. At this

point, there is no agreement or assurance from the local governments that they will commit $60

million as required under this bill. In fact, even if the local governments are willing to make

such a commitment, it is very unlikely that they would be able to appropriate or otherwise com-

mit the funding by August 2006. Therefore, funding from this bill will not be available before the

settlement deadline of August 2006. Additionally, as of July 1, 2004, the pending land and wa-

ter rights offers received in response to the interstate stream commission’s request for bids are no

longer binding on potential sellers. Therefore, if potential sellers withdraw their offers, the

minimum acreages necessary to effectuate the settlement may no longer be available at the cur-

rent price levels.”

EF/lg