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

SPONSOR Vigil

ORIGINAL DATE

LAST UPDATED

2-1-2006

HB 643

SHORT TITLE Natural Gas Pipeline Condemnation

SB

ANALYST Dearing

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

*NFI

*Please See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance & Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 643 provides for the municipal condemnation of natural gas facilities and amends two

acts -- the Public Utilities Act, Sections 3-23-1 NMSA 1978 and the Gas Utility Act, Sections 3-

25-1 NMSA 1978. Essentially, the amendments create more instances in which municipalities

are permitted to condemn natural gas facilities and therefore simplifies this process.

FISCAL IMPLICATIONS

At the State level, this bill would have a minimal fiscal impact which would arise due to the ne-

cessity to amend existing statutes and software in various state agencies. Additionally, there

could be increased costs to the judiciary due to an overall increase in civil actions, via lawsuits

for injunctions of condemnation proceedings.

SIGNIFICANT ISSUES

House Bill 643 enhances Section 3-23-3 NMSA 1978 to include more exemptions to the provi-

sions concerning specified actions and conditions prior to the condemnation of natural gas facili-

ties conducted by municipalities. As currently written, Section 3-23-3 NMSA 1978 stipulates

House Bill 643 – Page

2

conditions and provisions for the acquisition and financing of such utilities, pursuant to the issu-

ance and sale of revenue bonds (Section 3-23-3 § a.) 1 & 2 NMSA 1978), requiring an appraisal

or other valuation mechanism; or engineer’s estimate in instances where new facilities are cre-

ated. Section 3-23-3 § b.) stipulates that no revenue bonds can be issued until all contractual

elements of the securities’ issuance are established by the Public Regulatory Commission.

Lastly, as currently written, Section 3-23-3 § c.) NMSA 1978 provides exemptions to these prior

sections ( a & b ) in the event that a condemnation by a municipality having a population in ex-

cess of 25,000 according to the 1990 federal decennial census of electricity, sewage and water

facilities.

Enactment of this legislation would have the effect of constructing a new Section 3-23-3 § d.)

NMSA 1978 such that the exemptions to the previously mentioned sections, (a & b) would be ex-

panded to those condemnations of natural gas facilities by municipalities, provided that the mu-

nicipality has owned and operated a municipal natural gas facility for a period of more than ten

years.

Section 3-25-2 NMSA 1978, Gas or Geothermal Utility—Authorization to Acquire—Charges, as

currently written specifies that where satisfactory natural gas supplies are not privately supplied

in sufficient quantity, a municipality may acquire and operate natural gas and geothermal energy

facilities to allow distribution of heat or natural gas.

Enactment of this legislation would have the effect of amending Section 3-25-2 such that the en-

acted version would remove the sufficiency of service clause, and construct a clause such that

municipalities may additionally, by ordinance, maintain, contract for and condemn for use as a

municipal utility, natural gas and geothermal facilities, regardless of private ownership, and in-

cludes language specifying applicability to transportation of gas & heat, in addition to distribu-

tion. Enactment of legislation includes language to specifically include pipelines within appli-

cable facilities.

Section 3-25-4 NMSA 1978, Financing Acquisition of Gas or Geothermal Utility, as currently

written specifies the requirements regarding issuance of bonds for financing the acquisition of

these facilities to include provisions found in Sections 3-30-5; 3-30-8; and 3-31-1 through 3-31-

12 NMSA 1978 and includes exceptions found in Section 3-23-4 NMSA 1978.

Enactment of this legislation would have the effect of amending Section 3-25-4 NMSA 1978 to

expand the aforementioned requirements of bond issuance to include the condemnation of such

facilities. Enactment of legislation includes language to specifically include pipelines within

applicable facilities.

Section 3-25-5 NMSA 1978, Gas or Geothermal Utility—Eminent Domain Power—Procedure,

as currently written, allows for the exercise of eminent domain powers within or without munici-

pal boundaries for the acquisition of such facilities or an interest in such facilities for the location

of or for the extension of the such facilities. Additionally, as written, this section stipulates that

actions enabling the condemnation for acquisitions of facilities are in accordance with the Emi-

nent Domain Code.

Enactment of this legislation would have the effect of amending Section 3-25-5 NMSA 1978, such

that the provisions of this section apply to condemnation of those facilities, regardless of private

ownership. Enactment of legislation includes language to specifically include pipelines within

House Bill 643 – Page

3

applicable facilities.

Additionally, there are several linguistic changes proposed throughout the aforementioned stat-

utes. Lastly, the effective date of the provisions of this act would take effect immediately, as this

is determined to be an emergency.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to SB 389

SB 389 is essentially the same legislation, with the exception that the intent of the senate bill

does not include natural gas and geothermal pipelines.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Failure to enact would result in status quo with respect to when and how a municipality can con-

demn or exercise the power of eminent domain for the purpose of acquiring natural gas or geo-

thermal utilities.

PD/mt