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

SPONSOR Adair

ORIGINAL DATE

LAST UPDATED

2/1/08

HB

SHORT TITLE Oil Conservation Division Oversight Committee

SB 505

ANALYST Cox

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$26.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Department of Energy, Minerals & Natural Resources (EMNRD)

SUMMARY

Synopsis of Bill

Senate Bill 505 contemplates creating the Oil Conservation Division Oversight Committee. Thus

this newly requested Committee will have an ‘oversight function’ relating to the New Mexico

Energy, Minerals and Natural Resources Department, their Oil Conservation Division

specifically.

This Bill deals carries an ‘emergency’ clause, and requests immediate action.

FISCAL IMPLICATIONS

Senate Bill 505 requests an immediate appropriation of $26,000 from the General Fund for the

remainder of FY 2008 and then FY 2009 for the Legislative Council Services to form the Oil

Conservation Division Oversight Committee, and fund its operations.

Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2009 shall revert

to the General Fund.

Senate Bill 505 – Page

2

SIGNIFICANT ISSUES

AGO notes:

Depending upon how this responsibility is interpreted and administered, involvement by the

committee in the operations of that division might implicate Article III, Section 1 of the New

Mexico Constitution, commonly referred to as the “Separation of Powers Clause", since the

Division is part of the Executive Branch of state government

EMNRD notes:

The directive that the committee makes recommendations "relating to the adoption of rules" is

unclear. Recommendations relating to changes in rulemaking procedures, or in the scope of

OCD's rulemaking powers as provided in the statutes, is an accepted legislative function. If,

however, the committee is being directed to control the adoption (or amendment) of particular

rules, this could infringe upon the constitutional requirement (Article III, Section 1) for

separation of powers between the legislative and executive branches. Delegation of rulemaking

authority to executive agencies enables those agencies to utilize their specialized expertise in

formulating detailed rules. To the extent that the legislature becomes involved in prescribing

details of agency rules, it fails to utilize agency expertise and bypasses the established

procedures for agency rulemaking.

This Bill states that there will be an appointment of twelve (12) commission members made by

the Legislative Council services (LCS).

This Committee will be composed as follows:

3 – House Majority party

3 – House Minority Party

3 – Senate Majority Party

3 – Senate Minority party

The Committee will function until December 21, 2012.

After developing a ‘work plan and budget the Committee’s business will be to:

•

Examine the Statutes, Constitutional provisions and Rules governing the Oil

Conservation division of the Energy, Minerals and Natural Resources Department.

•

Monitor and oversee the OCD as it administers New Mexico's oil, gas and geothermal

resources and as it applies internally developed rules and regulatory oversight.

•

Review issues that affect the State's oil conservation, including emissions, oil extraction

and compliance with federal statutes and rules and policies created by the OCD and other

State agencies.

•

Notify the OCD when this Committee has determined that rules promulgated by the OCD

exceed NM Statutory authority or contradict NM Statutes.

•

Make recommendations to the Legislature relating to the adoption of rules or policies of

the OCD and for proposed legislation, if any recommendations are found to be necessary.

Senate Bill 505 – Page

3

This Committee is requested to regularly receive testimony from:

•

the Secretaries of Energy, Minerals and Natural Resources; Economic Development; and

Environment Departments;

•

staff members of the OCD;

•

representatives of and persons involved in oil and gas exploration;

•

persons concerned with issues related to the duties of the oil conservation division; and

•

other persons as appropriate

EMNRD notes:

The directive that the committee “notify the division when the committee has determined that

rules promulgated by the division exceed statutory authority or contradict statutes" may also

infringe upon the separation of powers provision of the Constitution. Interpretation of statutes

and rules and determining the existence of any conflict between the two is the function of the

judicial branch. Existing statutes and judicial precedent provide procedures for judicial review

of administrative rules, including those of the OCD. Admonitions on this subject by a legislative

committee would not be binding, and could conflict with binding judicial determinations.

Additionally, EMNRD states:

If the amendment is adopted and the Legislature inserts itself into the rulemaking process, the

roles of the other branches are diminished and perhaps rendered meaningless. If the Legislature

or a legislative committee, can reject or modify a proposed rule for whatever reason, then the

process by which the agency obtains public comments on a rule and reaches a decision based on

a record becomes moot. Likewise, the role of the Judicial Branch becomes confused or perhaps

impossible if the Legislature changes or rejects a rule. The courts will have no record and not

standard against which to judge the Legislature’s decision on the rule. Thus, the Legislature will

have usurped the power of both the Executive and the Judicial Branches.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

This bill is identical to SB 394 except: (a) it has a $26,000 appropriation to the Council Service

and (b) an emergency clause.

HB 125. This bill is largely identical to House Bill 125 except for:

HB 125

HB 394

Committee life

2011

2012

Membership

10

12

Chair

Council service appoints

Senate Pro Tempore is temporary

chair

Veto Power

Members of both bodies have to

approve all actions

Minimum membership

Must be at least 1 member from

each party

Division oversight

Reviews how Division applies its

own rules

Division oversight II

Will notify Division if Division rules

exceed statutory authority

Testimony

Certain cabinet secretaries

Certain cabinet secretaries &

Division staff & public involved in

the oil and gas matters

PRC/bb