2/22/25
The House Energy, Environment and Natural Resources Committee introduced a committee substitute for CS/HB 137 HAAWC (CS/CS HB 137 HENRC) that enacts the Strategic Water Supply Act and creates the Strategic Water Supply Program. Dependent on the availability of funds, it authorizes the Department of Environment (NMED) and the Office of the State Engineer (OSE) to enter into contracts and award grants for eligible projects involving treated brackish water that reduce the state's reliance on fresh water resources. It contains definitions for brackish water; produced water; public entity; and treated brackish water. The definition for brackish water clearly states that brackish water is not produced water. It limits the contracts’ durations to twenty years, including extensions and renewals. 
CS/CS HB 137 HENRC specifies eligibility requirements for a Program contract including compliance with extensive regulatory and permit requirements to protect water rights, conservation of water within the state, public welfare, public health and environment; In addition, it requires certain financial assurances running to the benefit of the state with any forfeitures deposited in the Strategic Water Supply Program Fund; a clear demonstration that the project will advance the state’s goal of reducing reliance on fresh water sources; and submission of a specific, actionable and measurable community benefits plan. The agency awarding a Program contract will publish the community benefits plan to the agency’s website. It requires the NMED or the OSE when issuing a request for proposal for a Program contract to comply with the State-Tribal Collaboration Act, where applicable, and to consult with the secretary of economic development.
CS/CS HB 137 HENRC limits Program grants to public entities or federally recognized Indian nations, tribes, or pueblos and establishes criteria for the award of a grant including state engineer’s approval that it advances  the exploration, production or treatment of brackish water; compliance with extensive regulatory and permit requirements to protect water rights, conservation of water within the state, public welfare, public health and environment; and a clear demonstration that the project will advance state, tribal or local economic development goals in accordance with the purpose of the Act.
CS/CS HB 137 HENRC requires the NMED or the OSE to notify the State Investment Council about new Program contracts or grants and any opportunity for public input within two business days of the date the NMED or the OSE published the new contract, grant or public input opportunity.
CS/CS HB 137 HENRC establishes the Strategic Water Supply Program Fund that the NMED will administer. Monies in the fund will be appropriated to the NMED or the OSE for the purpose of administering the Strategic Water Supply Program.
It provides notice requirements in Section 72-12-26 NMSA 1978 before a person drills wells or recompletes existing wells to appropriate waters including a determination by the OSE that the use of water in the notice will not impair existing water rights, be contrary to the conservation of water within the state or be detrimental to the public welfare.
CS/CS HB 137 HENRC appropriates the following:
•	Seventy-five million dollars ($75,000,000) from the General Fund (GF) to Strategic Water Supply Program Fund for expenditure for Fiscal Year (FY) 2026 and subsequent FYs for the purposes of that Fund. Any unexpended or unencumbered balance remaining at the end of FY 2026 will not revert to the GF.
•	Twenty-eight million seven hundred fifty thousand dollars ($28,750,000) from the General Fund (GF) to the New Mexico Institute of Mining and Technology (NMIMT) for expenditure for Fiscal Years (FY) 2026 through 2028 for aquifer monitoring and improved ground water characterization. Any unexpended or unencumbered balance remaining at the end of FY 2028 will revert to the GF.
•	Four million dollars ($4,000,000) from the General Fund (GF) to New Mexico State University (NMSU) for expenditure for Fiscal Years (FY) 2026 through 2028 for innovation, research, monitoring, support and development of technology associated with potential projects for a Strategic Water Supply Program grant or contract. Any unexpended or unencumbered balance remaining at the end of FY 2028 will revert to the GF.


2/12/25
The House Agriculture, Acequias and Water Resources Committee introduced a committee substitute for HB 137 (CS/HB 137 HAAWC). It enacts the Strategic Water Supply Act with the goals of reducing the state’s reliance on fresh water sources or expanding water reuse opportunities. It contains definitions for deep brackish water; per- or polyfluoroalkyl substance; produced water; public entity; treated deep brackish water; and treated produced water. It establishes a Strategic Water Supply Program (Program) that supports eligible projects involving treated deep brackish water or treated produced water.
Under this Program, CS/HB 137 HAAWC authorizes the Department of Environment (NMED) the Energy, Minerals and Natural Resources Department (EMNRD) and the Office of the State Engineer (OSE) to enter into contracts and award grants for projects that support the Program’s goals. It limits the contracts’ durations to twenty years, including extensions and renewals.
CS/HB 137 HAAWC specifies eligibility requirements for a Program contract including certain types of financial assurance and submitting a specific, actionable and measurable community benefits plan. It specifies the parameters of a project to be eligible for a grant under the Program including being approved by the OSE as advancing the exploration, production or treatment of deep brackish water in New Mexico and being administered by or in partnership with a public entity and that entity will be the grant recipient. The agency awarding the grant or contract must publish the community benefits plan on its website. CS/HB 137 HAAWC requires agency compliance with the State-Tribal Collaboration Act, where applicable, and consultation with the secretary of economic development when preparing a request for proposal (RFP).
CS/HB 137 HAAWC requires the agency evaluating a grant or contract under the Program to evaluate its limitations on greenhouse gas emissions. It bans contracts under the Program from being awarded for the production of treated produced water with an exception if it meets Water Quality Act’s uses for treated produced water and the rules adopted by the Water Quality Control Commission. It also prohibits a contract under the Program for treatment of produced water from downhole operations containing intentionally added per- or polyfluoroalkyl substance; or use of treated produced water for drinking water or agricultural activities.
CS/HB 137 HAAWC requires the agency awarding a Strategic Water Supply contract for the production of treated produced water to establish contractor disclosures in a form, frequency and manner specified by the awarding agency. It dictates the minimum information required to obtain these contracts including location of any oil or gas wells; a description of the oil or gas activity generating the produced water; each chemical ingredient and additive; the chemical abstracts service number for each chemical and other data on the produced water the awarding agency finds relevant.
CS/HB 137 HAAWC establishes the Strategic Water Supply Program Fund that the NMED will administer. Monies in the fund will be appropriated to the NMED, the EMNRD and OSE for the purpose of administering the Program or for certain accounting and reporting of barrels of produced water. The head of each of these agencies/departments signs off on any expenditure from the fund
CS/HB 137 HAAWC amends Section 7-1-2 NMSA 1978 to include the produced water fee as a tax under the Tax Administration Act and Section 7-1-8.8 NMSA 1978 to allow reporting to the secretary of energy, minerals and natural resources concerning information on return produced water fees and to facilitate identifying delinquent or noncompliant taxpayers of this fee. 
It allows the Oil and Gas Division (OCD) of the EMNRD to require reporting and accounting of each barrel of produced water in order to impose the fee in Section 70-2-12 NMSA 1978
CS/HB 137 HAAWC adds new material to the Produced Water Act (Section 70-13-6 NMSA 1978) that imposes a three-cent ($.03) fee on barrels of produced water from oil or gas wells, with some exceptions, beginning ninety days after the effective date of this section and lasting for ten years after that date. It orders the Oil and Gas Division (OCD) of the EMNRD to require reporting and accounting of each barrel of produced water in order to impose the fee in Section 70-13-6 NMSA 1978 and specifies certain time frames and processes for reporting and payment. The money from these fees is deposited into the Strategic Water Supply Program Fund
It provides notice requirements in Section 72-12-26 NMSA 1978 before a person drills wells or recompletes existing wells to appropriate waters including a determination by the OSE that the use of water in the notice will not impair existing water rights, be contrary to the conservation of water within the state or be detrimental to the public welfare.
CS/HB 137 HAAWC appropriates the following:
•	Seventy-five million dollars ($75,000,000) from the General Fund (GF) to Strategic Water Supply Program Fund for expenditure for Fiscal Year (FY) 2026 and subsequent FYs for the purposes of awarding contracts or grants to those eligible projects involving deep brackish water. Any unexpended or unencumbered balance remaining at the end of FY 2026 will not revert to the GF.
•	Twenty-eight million seven hundred fifty thousand dollars ($28,750,000) from the General Fund (GF) to the New Mexico Institute of Mining and Technology (NMIMT) for expenditure for Fiscal Years (FY) 2026 through 2028 for aquifer monitoring and improved ground water characterization. Any unexpended or unencumbered balance remaining at the end of FY 2028 will revert to the GF.
•	Four million dollars ($4,000,000) from the General Fund (GF) to New Mexico State University for expenditure for Fiscal Years (FY) 2026 through 2028 for innovation, research, monitoring, support and development of technology associated with potential projects for a strategic water supply program grant or contract. Any unexpended or unencumbered balance remaining at the end of FY 2028 will revert to the GF.
CS/HB 137 HAAWC establishes a contingent effective date for Section 10 (Produced Water Act, Fees—Regulations and reporting) dependent on the WQCC’s adoption of rules for the production of treated produced water and requires the chair of the WQCC to notify New Mexico Compilation Commission, the director of the Legislative Council Service, the secretary of taxation and revenue and the director of the OCD of the EMNMRD of the effective date for the implementation of Section 10 .