Committee Substitute for SB0407COS

SENATE CONSERVATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 407

47th legislature - STATE OF NEW MEXICO - second session, 2006

AN ACT

RELATING TO CONSERVATION; ENACTING THE LAND, WILDLIFE AND CLEAN ENERGY ACT; PROVIDING FOR DISTRIBUTION OF PROCEEDS FROM THE OIL AND GAS CONSERVATION TAX; CREATING A BOARD; CREATING FUNDS; AUTHORIZING THE ISSUANCE OF BONDS; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 11 of this act may cited as the "Land, Wildlife and Clean Energy Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Land, Wildlife and Clean Energy Act:

A. "authority" means the New Mexico finance authority;

B. "board" means the land, wildlife and clean energy board;

C. "clean energy development project" means a project that increases:

(1) energy efficiency;

(2) the conservation of energy; or

(3) the production of energy using biomass, geothermal, hydrogen, solar or wind power;

D. "conservation project" means preservation, rehabilitation, restoration or management activities directed at natural areas, working farms or ranches, wildlife or its habitats, outdoor recreation areas and trails, forests or watersheds or other ecologically damaged lands;

E. "department" means the energy, minerals and natural resources department;

F. "director" means the director of the board;

G. "Indian tribe" means a federally recognized Indian nation, tribe or pueblo located wholly or partially in New Mexico; a governmental unit or wholly owned enterprise of such an Indian nation, tribe or pueblo; and a consortium of those Indian tribes, nations, pueblos or entities;

H. "public or private clean energy agency" means a governmental body or a private not-for-profit charitable corporation or trust authorized to do business in New Mexico that has tax-exempt status under the federal Internal Revenue Code of 1986;

I. "public or private conservation agency" means a governmental body or a private not-for-profit charitable corporation or trust authorized to do business in New Mexico that has tax-exempt status as a public charity under the federal Internal Revenue Code of 1986, and the power to acquire, hold or maintain land or interests in land; and

J. "qualified entity" means a state agency, political subdivision of the state, Indian tribe, school district, state educational institution named in Article 12, Section 11 of the constitution of New Mexico and a public or private conservation or clean energy development agency.

Section 3. [NEW MATERIAL] LAND, WILDLIFE AND CLEAN ENERGY BOARD CREATED--APPOINTMENTS--TERMS.--

A. The "land, wildlife and clean energy board" is created and is administratively attached to the department.

B. The board consists of fourteen members as follows:

(1) the secretary of energy, minerals and natural resources or the secretary's designee;

(2) the director of the New Mexico department of agriculture or the director's designee;

(3) the director of the department of game and fish or the director's designee;

(4) the state engineer or the state engineer's designee; and

(5) ten public members appointed by the governor with the advice and consent of the senate, with one representative from each of the following occupations, interests or activities:

(a) wind, solar or biomass energy;

(b) energy conservation and efficiency;

(d) municipalities and counties;

(e) natural area protection;

(f) wildlife management and conservation;

(g) tribal land conservation;

(h) community land grants and acequias;

(i) livestock or dairy production; provided that the representative's primary occupation is raising livestock or in dairy production; and

(j) hunting or fishing.

C. Appointed members of the board shall serve staggered terms of four years; provided that at the time of making the first appointments, the governor shall designate one-half of the appointed board members' first terms as being two years and one-half of the members' first terms as being for four years so that the term of no more than seven appointed members' terms will expire at the same time. The governor shall appoint the chair of the board. A vacancy on the board shall be filled for the remainder of the term of that appointee. Appointed members of the board shall receive reimbursement for expenses incurred in the performance of their duties pursuant to the Per Diem and Mileage Act and shall receive no other compensation, perquisite or allowance.

Section 4. [NEW MATERIAL] LAND, WILDLIFE AND CLEAN ENERGY BOARD--POWERS--DUTIES.--

A. The board shall employ a director, who shall hire personnel, not to exceed five full-time employees or the equivalent, and contract for services necessary to carry out the purposes of the Land, Wildlife and Clean Energy Act. The director shall develop and implement plans and a budget as directed by the board. The department shall be reimbursed for costs incurred for any administrative support provided to the board and the director. The board shall have an independent audit of the board's finances conducted annually.

B. The board shall promulgate rules for the management of board-funded projects; to govern the application and selection process for projects; to ensure adequate public notice of proposed actions; to provide certification requirements of projects to be funded; and to otherwise guide the work of the board and carry out the provisions of the Land, Wildlife and Clean Energy Act.

C. For the purposes of this section, "adequate public notice" means at a minimum mailing notice of approved projects to landowners adjacent to the geographic boundaries of a conservation project and publishing notice in each county in which a project is to be located.

D. The board shall evaluate each project using criteria that shall include at least the following:

(1) the fund leveraging potential of the project;

(2) the impacts of the project, including benefits or avoidance of waste;

(3) the expertise of the proponent of the project in conducting conservation or clean energy development projects; and

(4) the potential of the project to increase collaboration.

E. The board may fund projects that:

(1) maintain an appropriate balance in the funding of conservation projects and clean energy development projects over time;

(2) conserve land or wildlife or increase clean energy development;

(3) support private ownership of working farms and ranches;

(4) assist private landowners in conservation of land and wildlife;

(5) will directly receive financial or in-kind support from existing or new public or private programs to protect open space and habitat, provide for recreational opportunities, including hunting or fishing, or increase clean energy development;

(6) conserve land and water in association with ecosystem or natural area protection or habitat enhancement;

(7) leverage other public or private investment in land, wildlife and clean energy development projects, including allowing local governments to match funding by adopting open space and agriculture protection policies; or

(8) improve public access to land, water, wildlife and open space and recreation opportunities, including hunting and fishing.

F. Projects involving acquisition of land or water rights shall respect private property rights with a preference for leaving land and water rights in private ownership subject to negotiated easements to ensure public benefit.

G. The board may:

(1) administer the land, wildlife and clean energy fund and make grants and loans from the fund for projects authorized by the Land, Wildlife and Clean Energy Act;

(2) acquire and manage, or assign management of, whole or partial interests in land or water rights, including easements;

(3) make grants or loans to or otherwise contract with qualified entities for qualified conservation projects and clean energy development projects;

(4) fund wildlife management projects;

(5) request the authority to issue conservation bonds or clean energy bonds to finance eligible conservation projects or clean energy development projects;

(6) apply for, accept and expend funds from private and public sources; and

(7) enter into contracts or agreements with qualified entities as necessary to achieve the purposes of the Land, Wildlife and Clean Energy Act.

H. The board shall meet at least quarterly, review proposed conservation projects and clean energy development projects and, in consultation with the director, select those projects to be financed with money from the land, wildlife and clean energy fund or with the proceeds of bonds issued by the authority for those purposes.

I. The board shall issue an annual report to the legislature and the governor that includes:

(1) a list and description of each project funded that year and the status of any other ongoing projects;

(2) a summary of the board's revenues and expenses, including a combined balance sheet and statement of revenue, expenditures and changes in the balances of the fund;

(3) the independent auditor's report or letter;

(4) a summary of the board's five-year strategy for carrying out the purposes of the Land, Wildlife and Clean Energy Act;

(5) information on how qualified entities may apply for funding of eligible projects; and

(6) an evaluation of the social, economic and ecological effects of its program.

Section 5. [NEW MATERIAL] CONSERVATION PROJECTS--LIMITATIONS.--

A. Land or water rights shall not be acquired for conservation or clean energy projects through condemnation or the exercise of the power of eminent domain.

B. Money in the land, wildlife and clean energy fund shall not be used to acquire water rights that:

(1) are served by or owned by an acequia or community ditch established pursuant to Chapter 73, Article 2 or 3 NMSA 1978 unless the water rights are acquired by an acequia or community ditch;

(2) are served by an irrigation district established pursuant to Chapter 73, Article 10 NMSA 1978 or a conservancy district established pursuant to Chapter 73, Article 14 NMSA 1978, except through contractual arrangement with the district board of directors or as a special water users association established pursuant to Chapter 73, Article 10 NMSA 1978;

(3) are not purchased or leased from willing sellers or lessors;

(4) will result in an increase in net depletions in the affected river or basin that will create cumulative adverse impacts on existing water users, delivery systems or compact obligations;

(5) cost more than the appraised market value to purchase or lease based upon the best available information and considering the seniority and the consistent, historic beneficial use of the water rights;

(6) do not have sufficient seniority and consistent, historic beneficial use to effectively contribute to the purposes of the Land, Wildlife and Clean Energy Act;

(7) have not been adjudicated or licensed by the state engineer or do not comply with all state engineer rules governing surface and ground water transfer applications or clearly conflict with the state water plan;

(8) will be used to authorize the exportation of water from one surface drainage basin or declared underground water basin to another; or

(9) will, upon cessation of use, increase depletions to a river or an underground water basin.

C. Water rights purchased with money from the land, wildlife and clean energy fund or the proceeds of bonds issued pursuant to the Land, Wildlife and Clean Energy Act shall not be sold to the United States.

D. A conservation project that includes the purchase of land or an interest in land with a public or private conservation agency shall, to the extent required by law, require that title to the land or interest in land be held by the state or a political subdivision of the state, or by the public or private conservation agency and the state, or political subdivision of the state, as cotenants with an undivided interest in the land or interest in the land. If the public or private conservation agency fails to perform its management, monitoring or enforcement duties as they relate to a conservation project, the ownership interest of any land or interest in land purchased with state funds for that project shall revert to the state.

E. Conservation projects that reduce the taxable land base of a political subdivision shall provide compensation to the affected political subdivision.

Section 6. [NEW MATERIAL] LAND, WILDLIFE AND CLEAN ENERGY FUND--CREATION--USE.--

A. The "land, wildlife and clean energy fund" is created in the state treasury and shall consist of distributions made to the fund from the conservation and clean energy bonding fund; gifts, grants and donations; other revenue credited to the fund; and income from investment of the fund. Balances in the fund at the end of a fiscal year shall not revert to the general fund. The fund shall be administered by the department.

B. Money in the land, wildlife and clean energy fund is appropriated to the board to make loans or grants to, or otherwise contract with, qualified entities for conservation projects and clean energy development projects as authorized by the Land, Wildlife and Clean Energy Act and for expenses necessary to carry out the provisions of that act. Disbursements from the fund shall be made upon warrants drawn by the secretary of finance and administration pursuant to vouchers signed by the chair of the board or the chair's authorized representative.

Section 7. [NEW MATERIAL] CONSERVATION AND CLEAN ENERGY BONDING FUND--CREATED--PLEDGE OF MONEY IN THE FUND--DISTRIBUTION.--

A. The "conservation and clean energy bonding fund" is created as a special fund within the authority. The fund shall be administered by the authority as a special account. The fund shall consist of oil and gas conservation tax revenues distributed to the fund by law; appropriations by the legislature to carry out the purposes of the Land, Wildlife and Clean Energy Act; and any other public or private money dedicated to the fund. Earnings of the fund shall be credited to the fund. Balances in the fund at the end of any fiscal year shall remain in the fund, except as provided in this section.

B. Money in the conservation and clean energy bonding fund shall be pledged irrevocably by the authority for the payment of principal and interest on conservation bonds and clean energy bonds issued pursuant to the Land, Wildlife and Clean Energy Act. Money in the fund is appropriated to the authority for the purposes of paying debt service, including redemption premiums, on the bonds and expenses incurred in the issuance, payment and administration of the bonds.

C. On the last day of January and July of each year, the authority shall estimate the amount needed to make debt service payments on the bonds issued pursuant to the Land, Wildlife and Clean Energy Act, plus the amount that may be needed for any required reserves, administrative expenses or obligations coming due during the next twelve months from the fund, and distribute to the land, wildlife and clean energy fund any balance in the conservation and clean energy bonding fund above the estimated amounts; provided that if there are no bonds issued or outstanding, then distributions from the oil and gas conservation tax shall be transferred to the land, wildlife and clean energy fund upon receipt by the authority.

D. The bonds issued pursuant to the Land, Wildlife and Clean Energy Act shall be payable solely from the fund or such other special funds as may be provided by law and do not create an obligation or indebtedness of the state within the meaning of any constitutional provision. A breach of any contractual obligation incurred pursuant to the Land, Wildlife and Clean Energy Act shall not impose a pecuniary liability or a charge upon the general credit or taxing power of the state, and the bonds are not general obligations for which the state's full faith and credit is pledged.

E. The state pledges that the conservation and clean energy bonding fund shall be used only for the purposes specified in this section and shall first be pledged to pay the debt service on the bonds issued pursuant to the Land, Wildlife and Clean Energy Act. The state further pledges that any law authorizing the distribution of taxes or other revenues to the fund or authorizing expenditures from the fund shall not be amended or repealed or otherwise modified so as to impair the bonds to which the fund is dedicated as provided in this section.

Section 8. [NEW MATERIAL] CONSERVATION BONDS AND CLEAN ENERGY BONDS AUTHORIZED.--

A. The authority is authorized to issue and sell from time to time bonds, known as "conservation bonds" or "clean energy bonds", at the request of the board and in compliance with the Land, Wildlife and Clean Energy Act and the New Mexico Finance Authority Act for the purpose of financing conservation projects or clean energy development projects when the board has certified the need for the bonds.

B. The net proceeds from the bonds are appropriated to the board for the purpose of financing conservation projects and clean energy development projects pursuant to the Land, Wildlife and Clean Energy Act.

C. Each series of bonds shall be issued pursuant to the provisions of the New Mexico Finance Authority Act, except as otherwise provided in the Land, Wildlife and Clean Energy Act.

D. The authority may additionally secure the bonds issued pursuant to this section by a pledge on the money in the public project revolving fund as determined by the authority.

E. The authority may purchase bonds issued pursuant to this section with money in the public project revolving fund pursuant to the provisions of Section 6-21-6 NMSA 1978.

Section 9. [NEW MATERIAL] LAND, WILDLIFE AND CLEAN ENERGY ACT IS FULL AUTHORITY FOR ISSUANCE OF BONDS--BONDS ARE LEGAL INVESTMENTS.--

A. The Land, Wildlife and Clean Energy Act and the New Mexico Finance Authority Act shall, without reference to any other act of the legislature, be full authority for the issuance and sale of conservation bonds and clean energy bonds, which bonds shall have all the qualities of investment securities under the Uniform Commercial Code and shall not be invalid for any irregularity or defect or be contestable in the hands of bona fide purchasers or holders thereof for value.

B. Conservation bonds and clean energy bonds are legal investments for any person or board charged with the investment of any public funds and are acceptable as security for any deposit of public money.

Section 10. [NEW MATERIAL] BONDS TAX EXEMPT.--All conservation bonds and clean energy bonds shall be exempt from taxation by the state or any of its political subdivisions.

Section 11. [NEW MATERIAL] THIRD-PARTY ENFORCEMENT

LIMIT--NOTICE OF TRANSFER OF PROPERTY.--

A. No person shall have a third-party enforcement right pertaining to a conveyance made pursuant to the Land, Wildlife and Clean Energy Act, except against the state or a political subdivision of the state.

B. No land or interest in real property acquired under the Land, Wildlife and Clean Energy Act may be transferred to a third party without prior legal notice to the person from whom the property was acquired.

Section 12. Section 7-1-6.21 NMSA 1978 (being Laws 1985, Chapter 65, Section 7, as amended) is amended to read:

"7-1-6.21. DISTRIBUTION TO OIL AND GAS RECLAMATION FUND, CONSERVATION AND CLEAN ENERGY BONDING FUND AND THE OIL CONSERVATION DIVISION OF THE ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT.--

A. With respect to any period for which the rate of the tax imposed by Section 7-30-4 NMSA 1978 is nineteen-hundredths percent, a distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the oil and gas reclamation fund in the amount equal to two-nineteenths of the net receipts attributable to the tax imposed under the Oil and Gas Conservation Tax Act.

B. With respect to any period for which the rate of the tax imposed by Section 7-30-4 NMSA 1978 is eighteen- hundredths percent, a distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the oil and gas reclamation fund in the amount equal to one-eighteenth of the net receipts attributable to the tax imposed under the Oil and Gas Conservation Tax Act.

C. A distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the conservation and clean energy bonding fund in an amount equal to one-half of the net receipts attributable to the tax imposed by the Oil and Gas Conservation Tax Act.

D. A distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the oil conservation division of the energy, minerals and natural resources department in an amount equal to one thirty-eighth of the net receipts attributable to the tax imposed by the Oil and Gas Conservation Tax Act to fund the inspection and enforcement activities of the division as authorized by law."

Section 13. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2006.

- 18 -