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

SPONSOR Bandy

ORIGINAL DATE

LAST UPDATED

3/02/07

3/8/07 HM 57/aHENRC

SHORT TITLE Federal Mineral Lands Leasing Act Compliance

SB

ANALYST Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals & Natural Resources (EMNRD)

SUMMARY

Synopsis of HENRC Amendment

The House Energy & Natural Resources amendment removes language stating the State currently

is not in compliance with the provisions of the federal Mineral Lands Leasing

Act and replaces it

with language stating that a question has arisen as to whether the state is complying with federal

law in its distribution of money received pursuant to the federal Mineral Lands Leasing Act.

The same result occurs in the second and third part of the amendment when language stating the

State is out of compliance with the federal Mineral Lands Leasing Act is changed to language

stating that the legislature wants to ensure state compliance the federal Mineral Lands Leasing

Act.

Synopsis of Original Bill

House Memorial 57 requests the appropriate interim legislative committee review the State's

compliance with the provisions of the federal Mineral Lands Leasing Act and use of revenue

accruing to the State pursuant to that act.

The committee should develop and propose legislation to the 2008 regular legislative that will

House Memorial 57/aHENRC– Page

2

bring the State into compliance the federal Mineral Lands Leasing Act.

FISCAL IMPLICATIONS

The memorial has no direct fiscal implications. However, its potential fiscal implications may be

quite substantial. These revenues are currently contributing to the support of public education. If

it were determined to be necessary to reallocate funds derived from royalties on mineral

production from federal lands to other uses than those to which such funds are now allocated,

activities currently funded from this source would have to be curtailed or discontinued, or,

alternatively, other sources of funding would have to be found to support such activities.

Since the amount of funds that the State receives from this source was approximately

$574,000,000 last year. The potential impacts are also substantial if the state is, in fact, not in

compliance.

SIGNIFICANT ISSUES

Title 30, Section 191 of the federal Mineral Lands Leasing Act requires the treasury of the

United States to distribute to New Mexico 50 % of the money received from sales, bonuses and

royalties collected under the Federal Oil and Gas Royalty Management Act and the federal

Geothermal Steam Act attributable to lands and mineral deposits in the state.

Title 30, Section 191 of the federal Mineral Lands Leasing Act states that the money paid to the

state is to be used by the state and its political subdivisions as by the legislature, giving priority

to those subdivisions of the state socially or economically impacted by development of minerals

leased under that act for planning, for construction and maintenance of public facilities and for

the provision of public service.

Currently the state gives no priority or consideration to those political subdivisions of the state

affected by the development of minerals leased under the federal Mineral Lands Leasing Act as

required by that act.

The fact that the state is not in compliance with federal law has already resulted in the state being

sued.

DW/mt