Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Jennings

ORIGINAL DATE

LAST UPDATED

2-11-06

HB

SHORT TITLE Pecos River Settlement Water Rights

SB 577

ANALYST Woods

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NFI

$18,000.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB377 and HB121

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the State Engineer-Interstate Stream Commission (OSE)

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

Senate Bill 577 seeks to appropriate $18,000,000 from the general fund to the interstate stream

commission for expenditure in fiscal year 2007 and subsequent fiscal years to acquire water

rights on the Pecos River pursuant to the Pecos River Water Rights Adjudication Settlement.

Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert

to the general

SIGNIFICANT ISSUES

The Office of the State Engineer-Interstate Stream Commission (OSE) indicates that the State of

New Mexico reached a settlement agreement with Carlsbad Irrigation District (CID), Pecos Val-

ley Artesian Conservancy District (PVACD) and the U.S. Bureau of Reclamation to settle long-

standing water rights adjudication dispute and to put in place a long-term plan to permanently

comply with the Pecos River Compact and the U.S. Supreme Court’s Amended Decree. The full

Senate Bill 577 – Page

2

implementation of the settlement agreement, which includes among other things, purchase and

retirement of 18,000 acres of water rights and the development of a 20,000 AFY capacity aug-

mentation well field, costs about $96 million. So far, the New Mexico Interstate Stream Com-

mission (NMISC) has about $48.5 million of previously appropriated money and needs an addi-

tional $48 million for full settlement implementation. $18 million is needed for work to be com-

pleted to meet settlement minimums and an additional $30 million for full implementation. The

successful implementation of the settlement agreement will provide significant economic and

water management benefits to New Mexico.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to SB377 and HB121.

TECHNICAL ISSUES

OSE notes the following technical considerations:

•

Statutes authorizing the purchase of water rights for the Pecos Settlement re-

quire the state to also buy the lands to which the water rights are appurtenant to.

Therefore, the bill should allow for the purchase of land to which the water

rights are appurtenant to in addition to water rights.

•

Augmentation well fields are an integral component of the Pecos Settlement

and the appropriation must be available to also develop augmentation well

fields.

OTHER SUBSTANTIVE ISSUES

OSE indicates that substantial progress toward satisfying conditions precedent for the implemen-

tation of the settlement has already been achieved with funds received thus far. Approximately

5,000 acres of land with water rights have already been purchased.

Development of the augmentation well field is under way. As of January 2006, a total of $2.4

million has been expended on augmentation well field development. Two pipelines were con-

structed in the Roswell Basin to deliver ISC owned and leased water to the Pecos in the winter

months. As part of our main augmentation well field construction, four artesian wells and a

nested piezometer set have been drilled in the South Seven Rivers Area, a minimum of six more

wells needs to be drilled.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

OSE suggests that if funding is not available to continue the Settlement implementation, the Set-

tlement may fail. This may leave strict priority administration as the only means to remedy a net

water delivery shortfall after having already expended nearly 50 percent of the cost of full im-

plementation. Priority administration will be costly, difficult and highly contentious. It will re-

quire significant expenditures for administration, enforcement and litigation with unpredictable

and potentially disastrous results for Pecos water users and the state of New Mexico.

Senate Bill 577 – Page

3

AMENDMENTS

OSE suggests the following amendments:

1. Line 18: insert after acquire “land and”

2. Line 19: change “Pecos river pursuant” to “Pecos river and to develop augmen-

tation well fields and to take other actions necessary pursuant”

MW/mt