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

 

 

SPONSOR:

Jennings

 

DATE TYPED:

02/05/02

 

HB

 

 

SHORT TITLE:

Purchase Pecos River Water Rights

 

SB

343

 

 

ANALYST:

Chabot

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY02

FY03

FY02

FY03

 

 

$24,000.0

 

 

 

Non-Recurring

General Fund

 

Relates to SB 107, SB 267, SB 291, SB 341, HB 20, HB 140, HB 225 and HB274

 

SOURCES OF INFORMATION

 

LFC Files

New Mexico Finance Authority

Office of the State Engineer (OSE)

State Investment Council

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 343 appropriates $24,000.0 from the general fund to Interstate Stream Commission (ISC) for the purpose of retiring water rights along the Pecos river basin and taking other actions that would effectively aid New Mexico in compliance with the United States Supreme Court amended decree in Texas v. New Mexico.  In addition, the bill extends the time period to spend $12,000.0 appropriated in 1998 from the Irrigation Works Construction Fund (IWCF) for purchase of water rights along the Pecos and $500.0 also appropriated in 1998 from IWCF for preparing a long-term strategy for the state’s permanent compliance with the Pecos River Compact until the end of fiscal year 2004.

 

     Significant Issues

 

The state is obligated to meet compact water delivery requirements to Texas and is under a United States Supreme Court decree since 1988 to do so.  The state has been able to meet these requirements; however, it has been barely able to do.  The River Master will issue an accounting by May 2002 for calendar year 2001.  The state expects that they will meet the requirement but will have used all reserves in doing so.  OSE states that water depletions in the Pecos river basin must be reduced or water flow increased in order to meet the compact requirements.  If the state defaults in its compact delivery requirements, OSE will be obligated to management the river through priority administration causing a major economic impact on southeastern New Mexico.  A 1993 study estimated that impact to be approximately $236 million.  A more in-depth discussion of Pecos River Compact issues is found at attachment 1.

 

The ISC convened an ad hoc committee of local representatives from the lower Pecos valley irrigation districts, municipalities, and industries for the purpose of developing a plan to restore balance to the river and ensure that New Mexico can meet its interstate compact delivery requirements to Texas.  On January 16, 2002, the committee issued a resolution outlining their plan that addressed both the immediate needs to meet state line flows and the long term need to bring the river into balance.  Part of that plan was for OSE and ISC to protect water rights, purchase water rights and take other measures to reduce use or increase wet water in the river.  This bill would implement the purchase of water rights.

 

FISCAL IMPLICATIONS

 

The appropriation of $24,000.0 contained in this bill is a non-recurring expense to the general fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2003 shall revert to the general fund.  The 1998 appropriation to the Interstate Stream Commission from the Irrigation Works Construction is extended until the end of fiscal year 2004.  Approximately $4 million is remaining in this appropriation.

 

ADMINISTRATIVE IMPLICATIONS

 

OSE states that implementation of large scale purchases required by Section 2 will increase the workload of the ISC considerably requiring an additional, temporary FTE and retaining a contractor to facilitate the water rights purchases.

 

OTHER SUBSTANTIVE ISSUES

 

The New Mexico Constitution provides for priority administration on New Mexico waters; however, the ad hoc Pecos River Basin Committee states that this would have unacceptable consequences and would be inefficient.  This has resulted in eight bills being introduced to find and fund alternative solutions to meeting Pecos River Interstate Compact delivery requirements.  The Legislature should consider convening a committee in the interim to address water law in New Mexico and make recommendations for changes if necessary.

 

POSSIBLE QUESTIONS

 

1.      Has the ad hoc Pecos River Basin Committee identified potential water rights available for purchase ?

2.      If water rights are not available for purchase, what other alternative exist for reducing water use from the river ?

3.      The alternative to purchasing water rights would be for OSE to administer the river by priority, does OSE have a workable plan to do so ?

 

Attachment

            Pecos River Compact

GAC/njw

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