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F I S C A L I M P A C T R E P O R T
SPONSOR Fidel
DATE TYPED 2/21/05
HB
SHORT TITLE Belen Mesa Road Asbestos Abatement
SB 858
ANALYST Hadwiger
APPROPRIATION
(in $000s)
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
$451.1
Non-Recurring General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to HB558, SB514
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Finance and Administration (DFA)
Department of Environment (NMED)
SUMMARY
Synopsis of Bill
Senate Bill 858 appropriates $451,112 from the general fund to the Department of Finance and
Administration (DFA) in FY05 and FY06 to assist the City of Belen in the abatement of asbestos
contamination on Mesa Road. The bill contains an emergency clause.
Significant Issues
According to DFA, in October 2004, Albuquerque Asphalt hit an abandoned cement water line
while performing contract work on Mesa Road located in the City of Belen. In such an event, a
project typically would be halted for environmental assessment. In this case, the contractor
crushed the material and spread the shards in a 2,400-foot trench. A construction employee
noted that the pipe contained asbestos and reported it to the Environmental Protection Agency.
The project immediately was halted and clean-up of the crushed material was performed at a to-
tal cost of $420,000. Clean-up was completed on December 28, 2004. The City of Belen is
seeking funding to pay the environmental consultants and remediation contractor for the work.
pg_0002
Senate Bill 858 -- Page 2
Albuquerque Asphalt and other contractors involved in the road project have performance bonds
that may pay for the remediation work, but the City of Belen advises that a settlement could take
twelve months or longer to finalize.
FISCAL IMPLICATIONS
The appropriation of $451,112 contained in this bill is a non-recurring expense to the general
fund. Any unexpended or unencumbered balance remaining at the end of FY06 would revert to
the general fund.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Relates to HB558, SB514.
TECHNICAL ISSUES
DFA identified two technical questions:
1.
The appropriation covers remediation expenditures in FY06 whereas the actual remedia-
tion expenditures took place in FY05. It may be advisable to amend the bill to include
FY05 and FY06.
2.
If a settlement is reached to cover part or all of the remediation work, the residual balance
of the appropriation could be used for hazardous cleanup on other areas of Mesa Road in
FY06.
OTHER SUBSTANTIVE ISSUES
Both NMED and DFA were concerned that SB858 might set a precedent for state reimbursement
of local costs for asbestos or other hazardous waste remediation. NMED was further concerned
that, if the appropriation passes, municipalities, even as the generator of such asbestos wastes,
will not suffer enforcement action, penalties, or even the routine expense of abatement, but con-
tractors may be subject to such penalties.
ALTERNATIVES
NMED noted that the City of Belen should utilize provisions in its construction contract, bond-
ing, other insurance-related options, and/or litigation with its contractor(s) to recoup funding for
the emergency asbestos abatement. The City can apply for a Rural Infrastructure Program (RIP)
loan from NMED to meet their immediate needs until the conflict is resolved with the contrac-
tor(s).
The Board of Finance approved a $145,000 loan to Belen in December for this purpose, to be
repaid from a settlement with the contractor. If additional funds are required until the settlement
is complete, it might be possible to seek additional funds from that source as other Board of Fi-
nance loans are repaid.
POSSIBLE QUESTIONS
1.
What is the status of the settlement with Albuquerque Asphalt.
pg_0003
Senate Bill 858 -- Page 3
2.
Would this appropriation be reimbursed to the state if the settlement with the contractor
assumes all of the costs of this remediation.
3.
Will a state appropriation encourage a settlement with the contractor that places more or
all of the responsibility for remediation upon Belen and the State of New Mexico.
DH/lg