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

SPONSOR Smith

DATE TYPED 3/8/2005 HB

SHORT TITLE Critical Management Area Domestic Wells

SB 451

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 HB 500

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

Senate Bill 451 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.

SB 451 declares and emergency.

Senate Bill 451 -- Page 2

Significant Issues

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

agement areas and notes SB 451 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.

SB 451 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 ap-

plicant 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 SB 451 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

SB 451 is the duplicate bill to HB 500. HB500 is also related to Senate Bill 120 and House Bill

285.

SB 120 and HB 285 allow the State Engineer to deny a domestic well permit if the well is lo-

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

individual 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. SB 451 re-

Senate Bill 451 -- Page 3

places 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

applicant transfers existing water rights from within the critical management area to the new lo-

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

that critical management area.

SB 451 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