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

SPONSOR Moore

ORIGINAL DATE

LAST UPDATED

2/13/2006

HB 298

SHORT TITLE Liquefied Petroleum Gas Worker Liability

SB

ANALYST McSherry

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY06

FY07

FY08 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

NFI

NFI

NFI Recurring General

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Regulation and Licensing Department (RLD)

SUMMARY

Synopsis of Bill

House Bill 298, “

Liquefied Petroleum Gas Worker Liability,” proposes create a new section of the Liq-

uefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) Act.

The new section, “Liability Limited” would:

1.

Limit liability for liquefied petroleum gas salespersons, suppliers, handlers or transmitters in the

case that:

a.

Damage was caused by alterations, repairs, or modification which was performed without

the knowledge of the seller, supplier, handler or transporter.

b.

Damage caused by use of an LPG appliance or equipment for purposes or in a manner

other than the intended purposes.

2.

Restrict persons who follow procedures established by the national fir protection association from

being found “grossly negligent” or “willful and wanton.”

Since the underlying LPG and CNG Act does not define the terms “equipment” and “appli-

ance, they take on their ordinary dictionary meanings.

House Bill 298 – Page

2

FISCAL IMPLICATIONS

There are no known fiscal impacts which could result from this Bill’s enactment.

SIGNIFICANT ISSUES

The Attorney General’s Office cites the following concerns:

1.

Because the bill uses the phrase “knowledge and consent”, it would protect a retail seller,

supplier, handler or transporter of LPG that knew, or had reason to know, that an altera-

tion, modification or repair had been accomplished in a manner likely to cause injury,

damage or loss but without that defendant’s consent. Thus, the retail seller, supplier,

handler or transporter, having given no consent, would have no liability for selling, sup-

plying, handling or transporting of liquefied petroleum gas to an injured party even

though it was aware of the dangerous potential for injury to the consumer.

2.

The provisions relating to the use of LPG equipment or appliances would codify the evi-

dentiary basis for a “reasonable” expectation.

3.

The clause relating to “gross negligence” and “willful and wanton” creates an unrebut-

table presumption as a matter of law upon the showing of compliance with the National

Fire Protection Association’s standards without regard to the facts of a given situation. A

rebuttable presumption with the high standard of clear and convincing evidence would al-

low for unusual situations not foreseen in the drafting of this legislation and still provide

the protections sought.

ALTERNATIVES

AGO proposes the following amendments:

1.

Proposed section A.(1): “the alteration, modification or repair of an liquid petroleum gas

appliance if the modification or repair was done without the knowledge and consent of

the liquid petroleum gas seller, supplier, handler or transporter; or”

2.

Proposed section B: “Unless shown otherwise by clear and convincing evidence, Aa

person who follows the procedures established by the standards of the national fire pro-

tection association as promulgated in rules by the commission pursuant to Section 70-5-5

NMSA 1978 shall not be deemed to be:

“(1) grossly negligent; or

“(2) willful and wanton.”

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

RLD asserts that whether or not the bill is passed, it will have no impact on CID or the LP Gas

Bureau. However, the agency asserts that there is a national trend toward enacting this kind of

legislation for the purpose of limiting liability of LP gas professionals with respect to law suits

for damage resulting from user error or negligence. The Department further asserts that if New

Mexico does not pass this bill, this limitation on liability will not be afforded to LP gas licensees

who are compliant with the applicable legal standards governing their work, and who have had

no control over the cause of the damage.

House Bill 298 – Page

3

POSSIBLE QUESTIONS

1.

Is there a trend of LP licensees being found liable in cases in which LPG equipment and

appliances are used for unintended purposes.

2.

Is there a trend of LP licensees being found liable for damage caused by unknown re-

pairs, alteration or modifications.

EM/yr