Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Brown
LAST UPDATED
ORIGINAL DATE 2/14/2025
SHORT TITLE
Protests for Replacement Wells
BILL
NUMBER House Bill 356
ANALYST Davidson
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
OSE
No fiscal
impact
$50 $50 $100 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Office of the State Engineer (OSE)
Agency Analysis was Solicited but Not Received From
New Mexico Attorney General
Agency Declined to Respond
New Mexico Environment Department
Energy, Minerals and Natural Resources Department
SUMMARY
Synopsis of House Bill 356
House Bill 356 (HB356) amends Section 72-12-22 NMSA 1978 by removing the ability to
protest an application for a replacement groundwater well within 100 feet of the original well.
The bill makes further stylistic changes to the state’s current statute regarding replacement wells.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
Analysis from the Office of the State Engineer (OSE) notes the due to the rarity of protests of
replacement wells and how small a portion of the agency’s workload well protests comprise, it is
unlikely implementation of the bill will increase agency workload or require additional funding.
In the event there is a deluge in the replacement groundwater well protests, LFC analysis
estimates the agency may potentially need additional funds for contract work to accommodate
the workload. House Bill 356 – Page 2
SIGNIFICANT ISSUES
The state’s current statute regarding replacement wells provides, if in an emergency, the owner
of a groundwater right may drill a replacement well and begin using water from the new well
even before the owner applies to the State Engineer for the replacement well. The statute
stipulates this is only allowed if the well is within 100 feet of the original well and is drilled into
the same, and only the same, underground aquifer.
The current statute allows people who believe they are harmed by the drilling and use of these
replacement wells cannot prohibit the drilling or the use of these new wells. The only recourse is
file an administrative protests to recover any possible damages.
Analysis from OSE notes:
Under current law, however, protests themselves do not prevent these new wells from
being used during the pendency of the administrative hearing. Therefore, there is not
much reason for another party to protest a replacement well. As a result, such protests are
rare (although they do occur). The grounds for a protest are as follows: 1) that the new
well does not meet the terms of the statute; 2) that the new well would impair an existing
well; or 3) that the new well would be contrary to the conservation of water within the
state or detrimental to the public welfare of the state.
OSE emphasizes the rarity of a replacement well being located close enough to the original well
to have any significant hydrological effects beyond the original well. While there are some cases
where a replacement well may be drilled closer to a neighboring property than to an existing well
leading to impairment, the more likely issue is whether the statute requirements for a
replacement well are met.
Analysis from OSE further notes House Bill 356 would prevent protests of replacement wells
from challenging the underground source into which the replacement well was drilled. The
agency asserts that there could be legitimate disputes regarding whether a deepened well is in the
same underground stream, channel, artisan basin, reservoir, or lake as the original well and, if
due to the age of the well, documentation may not exist to show which underground water source
the well is tapping.
AD/rl/SR