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

SPONSOR Cervantes

ORIGINAL DATE

LAST UPDATED

2/5/06

HB 740

SHORT TITLE Interstate Water Conflict Legal Expenses

SB

ANALYST Medina

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$4,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 586

Conflicts with SB 402 and SB 403

Relates to Reauthorizations for expenditure in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer (OSE)

Office of the Attorney General (AGO)

Environment Department (NMED)

SUMMARY

Synopsis of Bill

House Bill 740 appropriates $4,000.0 from the general fund to the Office of the Attorney Gen-

eral to facilitate cooperative agreements involving the Office of the State Engineer, the Interstate

Stream Commission or the Department of Environment, and for legal and technical expenses re-

lated to interstate water conflicts pursuant to the Río Grande Compact and the Colorado River

Compact.

FISCAL IMPLICATIONS

The appropriation of $4,000.0 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall not re-

vert to the general fund.

House Bill 740 – Page 2

SIGNIFICANT ISSUES

According to NMED, the agency is conducting, through a Joint Powers Agreement (JPA) with

the Office of the Attorney General, water quality evaluations for both ground water and surface

water along the Lower Río Grande, including the assemblage of historical water-quality data and

implementation of a water quality sampling program. The JPA currently funds 3.25 FTEs and

contractual services to operate the program.

The General Appropriation Act of 2006 (HAFC Substitute for House Bill 2) provides for exten-

sion of the initial lower Río Grande appropriation to continue data collection and analysis activi-

ties, while HB 740 provides funding to address emerging issues that have been identified by

those studies, such as the need for salinity controls. (See Relationship)

The Office of the Attorney General presents the following significant issues:

Colorado River Compact: Over the last year tensions and overt threats of litigation have

greatly increased between the seven states along the Colorado River basin—Colorado,

New Mexico, Wyoming, Utah, California, Arizona, and Nevada. The crisis has devel-

oped because of increased water usage by the Lower Basin states---California, Nevada

and Arizona--and the aggressive actions taken by those states to force the Upper Basin

states, including New Mexico, to deliver more water to the Lower Basin states. These ac-

tions potentially threaten San Juan River water users in New Mexico, San Juan-Chama

water users on the Río Grande, and the State of New Mexico’s water rights settlement

with the Navajo Nation. If litigation ensues, the State of New Mexico will need to re-

spond immediately and strongly. The AGO, the ISC and the OSE have been involved in

negotiations with representatives of the six other basin states in an effort to avoid litiga-

tion. However, it is unclear whether a negotiated settlement will be possible.

Río Grande Compact: The Lower Río Grande Basin extends from Elephant Butte Res-

ervoir to the Texas state line. Water issues in the Basin have been contentious, with both

the State of Texas and the City of El Paso suing the State of New Mexico at different

times over the last 75 years. Rapid population growth in the region, particularly in Texas

and Mexico, is increasing the demand on the area’s limited water resources, a problem

that has been greatly exacerbated by several years of ongoing drought.

Since 2001, the Texas Legislature has authorized a standing appropriation of $10.35 mil-

lion dollars to the Texas Attorney General to “vigorously represent the State of Texas in

all litigation involving water rights disputes with the State of New Mexico, including but

not limited to issues relating to the Elephant Butte Reservoir.” Texas has threatened liti-

gation over the quality and quantities of its Río Grande water deliveries, claiming it is not

receiving its share of Río Grande Project water. In response, New Mexico has worked to

protect its water entitlement by gaining a better understanding of the Basin’s hydrology

and putting the tools in place to quantify and administer water use in the Basin. Much of

this effort has been funded through a special appropriation by the legislature (See Rela-

tionship). That legislation directed the Office of the Attorney General (AGO) to enter into

cooperative agreements with the Office of the State Engineer (OSE), the Interstate

Stream Commission (ISC) and the Environment Department (NMED) for preparing to

defend New Mexico against the Texas litigation threat. With that appropriation the

AGO, OSE, ISC and NMED and have taken a proactive approach to the problem. Work-

House Bill 740 – Page 3

ing together, the agencies have established a multi-agency, inter-disciplinary effort aimed

at understanding and addressing the legal and technical issues confronting New Mexico.

All of these efforts are intended to minimize the likelihood of New Mexico ending up in

interstate litigation in the U.S. Supreme Court, as occurred on the Pecos River. Such liti-

gation is extremely costly and could result in a loss of sovereignty over the State’s water

and its water management decisions.

This bill will provide funding to address issues that have emerged as a result of the ongo-

ing work funded under N.M. Laws 2002, 1

st

E.S., Ch. 4 §5(8). For instance, if a recently-

proposed Mexican water well field is developed, it will likely reduce both the quantity

and quality of water that is available to New Mexico to meet its compact delivery obliga-

tion to Texas. New Mexico needs to drill and equip monitor wells so that it can attribute

the reduced quantities and qualities of water to the Mexican pumping, rather than to New

Mexico’s actions. Also, because Texas has threatened to sue New Mexico over water

quality, New Mexico need to promote the creation of an interstate-international salinity

control forum, patterned after the successful Colorado River Salinity Control Forum,

which was established to address similar salinity problems on the Colorado River.

Given the continued drought, it is imperative that the AGO, the OSE, ISC and NMED

continue their close collaboration on these very critical interstate water issues.

RELATIONSHIP

The following reauthorizations for expenditure of funds by the Attorney General for Texas water

litigation are included in the 2006 General Appropriation Act:

•

The period of time for expending the four million nine hundred ninety thousand dollars

($4,990,000) appropriated from the general fund in Subsection 8 of Section 5 of Chapter

4 of Laws 2002 (1st E.S.) for the attorney general to enter into cooperative agreements

with the state engineer, interstate stream commission and New Mexico department of en-

vironment in preparing for potential litigation with Texas on water issues is extended

through fiscal year 2007, for the same purpose.

•

The peRíod of time for expending the three million dollars ($3,000,000) appropriated

from the general fund operating reserve in Subsection 9 of Section 5 of Chapter 4 of

Laws 2002 (1st E.S.) contingent on certification by the attorney general to the state board

of finance that the appropriation made in Subsection 8 of Section 5 of Chapter 4 of Laws

2002 (1st E.S.) has been expended and additional funds are required to prepare for poten-

tial litigation with Texas on water issues contingent on the state board of finance certify-

ing the need is extended through fiscal year 2007, for the same purpose.

CONFLICT

This bill conflicts with Senate Bills 402 and 403, which provide funding to address emerging is-

sues in the Lower Río Grande. Senate Bill 402 and this bill both provide funding to address

emerging issues in the Lower Río Grande. Senate Bill 402 provides funding to the Interstate

Stream Commission (ISC) for specific technical work, including salinity control and potential

effects of Mexican groundwater pumping. However, in contrast to the related extension con-

House Bill 740 – Page 4

tained in the General Appropriation Act (HAFC Substitute for House Bill 2), which appropriates

money to the AGO and directs the AGO to enter into cooperative agreements with the OSE, ISC,

and NMED, Senate Bill 402 appropriates money solely to the ISC and makes no reference to the

other state agencies that have worked collaboratively under the 2002 appropriation and are es-

sential to the ongoing effort.

Senate Bill 403 provides $1 million “to prepare (for) litigation on disputes over the Colorado

river and the Colorado River Compact.”

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

According to the AGO, OSE and NMED, if this bill is not enacted and litigation is commenced

this year under either the Colorado River Compact or the Río Grande Compact, the State of New

Mexico will not have the necessary resources to defend the interests of the state and its water us-

ers in the litigation. Furthermore, New Mexico will lack the capacity to develop an inter-

state/international salinity control forum on the Lower Río Grande Basin, and it will have limited

resources for administering its water resources in the Lower Río Grande Basin and the Colorado

River Basin.

DXM/yr