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

SPONSOR Rawson

DATE TYPED 3/2/05

HB

SHORT TITLE Terminate Pipeline Safety Inspection Funds

SB 722

ANALYST Hanika-Ortiz

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$0.1

Recurring General Fund

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($200.0)

Recurring Pipeline Safety Fund

Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Energy, Minerals and Natural Resources Department (EMNRD)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

SB 722 repeals two sections adopted during the 2004 session that created the “pipeline safety

fund” to enhance the staffing and training of the Pipeline Safety Bureau of the Public Regulation

Commission and fund the inspection of interstate and intrastate pipelines through the imposition

of “safety fees” on the transportation of oil and gas.

Significant Issues

SB722 would eliminate all sources of funding for pipeline safety inspections and enforcement,

and for enforcement of the New Mexico Excavation Damage Prevention Law.

Senate Bill 722-- Page 2

PERFORMANCE IMPLICATIONS

If alternate funding is not provided, that may affect the ability of the Bureau to carry out the

Pipeline Safety Act’s provisions.

FISCAL IMPLICATIONS

SB 722 eliminates all sources of funding for pipeline safety inspections and enforcement, and for

enforcement of the New Mexico Excavation Damage Prevention Law. Current balance in the

Fund is $18.7 thousand. In FY05, $200.0 has already been budgeted and transferred to the PRC

general operating fund for current year expenditures.

The PRC reports without state funding, no federal funds will be received to conduct the program.

The State will lose its certifications for natural gas and hazardous liquid safety programs contrib-

uting to a public safety issue. Alternatively, the State could provide matching funds through the

general fund for the federal match. This was the practice before the provisions of the Pipeline

Safety Fund creation.

The Pipeline Safety Bureau will no longer be able to impose “safety fees” and will no longer

have the Pipeline Safety Fund to carry out the Pipeline Safety Act’s provisions.

Safety fees for the transportation of gas are not to exceed $2 dollars per domestic service line;

$35 dollars per commercial service line; $35 per mile of line for the transportation of gas subject

to inspection, with a minimum assessment of $400 dollars; and $100 per master meter, direct

sales lateral or liquefied petroleum gas system; and for the transportation of oil, $35 dollars per

mile of transmission line subject to inspection, with a minimum assessment of $400 dollars.

ADMINISTRATIVE ISSUES

The Commission conducts a public review of fees collected and payments made from the fund

and provides a summary to the Legislative Finance Committee and the Department of Finance

and Administration annually. Based upon its findings, the Commission adjusts the annual fee

rates in order to collect only the amount estimated to be necessary to carry out the provisions of

the Pipeline Safety Act.

TECHNICAL ISSUES

It is not clear if the money in the fund reverts back to the general fund once the sections that cre-

ated the fund are repealed.

ALTERNATIVES

The PRC notes the State could provide funds (general fund) for the federal match. This was the

practice before the provisions of the Pipeline Safety Fund creation.

Senate Bill 722-- Page 3

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The Pipeline Safety Bureau will retain the pipeline safety fund as a source of funding for the in-

spection of interstate and intrastate pipelines.

AHO/lg