The Strategic Water Supply Act establishes a comprehensive framework to reduce New Mexico's dependence on fresh water and enhance water reuse initiatives. It creates the Strategic Water Supply Program, enabling the Department of Environment, the Energy, Minerals and Natural Resources Department, and the Office of the State Engineer to contract and grant funds for projects utilizing treated brackish or produced water. To finance these efforts, a five-cent fee per barrel of produced water from oil and gas wells will be implemented, with proceeds directed to the Strategic Water Supply Program Fund. The Act sets forth eligibility criteria for funding, including adherence to environmental standards and the submission of community benefits plans.

Additionally, the Act amends existing laws to incorporate the produced water fee as a tax under the Tax Administration Act and allows for the sharing of confidential tax information among state agencies for compliance purposes. It mandates the oil conservation division to create rules for the reporting and accounting of produced water, ensuring oversight. The bill allocates $75 million to the Strategic Water Supply Program Fund for fiscal year 2026 and beyond, with further appropriations for aquifer monitoring and technology development at educational institutions. It also updates the short title of relevant sections to the "Produced Water Act" and introduces new notification requirements for drilling activities to support water rights and conservation efforts.

Statutes affected:
introduced version: 7-1-2, 7-1-8.8, 70-2-12, 70-13-1, 72-12-26