[Senate Report 105-18]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 53
105th Congress                                                   Report
                                 SENATE

 1st Session                                                     105-18
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        NEW MEXICO STATEHOOD AND ENABLING ACT AMENDMENTS OF 1997

                                _______
                                

                  May 15, 1997.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 430]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 430) to amend the Act of June 20, 1910, 
to protect the permanent trust funds of the State of New Mexico 
from erosion due to inflation and modify the basis on which 
distributions are made from those funds, having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                         Purpose of the Measure

    The purpose of S. 430 is to provide the consent of the 
United States to certain amendments made by the State of New 
Mexico to its Constitution relating to investments in and 
expenditures from the permanent fund of the State for schools 
and to make the necessary amendments to the Enabling Act for 
the Admission of the State of New Mexico (Act of June 20, 1910, 
36 Stat. 557) to accommodate the changes to the New Mexico 
Constitution.

                          Background and Need

    The Federal Government has generally provided a series of 
benefits to new States as part of the admissions process. In 
the case of 30 States, those benefits included the grant of 
lands. New Mexico received slightly over 3 million acres for a 
variety of purposes, including, among other purposes, 
retirement of the Territorial debt and maintenance of hospitals 
and schools. In addition, New Mexico received 5 percent of the 
proceeds of the sale of public lands for the support of public 
schools.
    Section 2 of the Enabling Act required New Mexico to agree 
to all the limitations that accompanied the various grants and 
prohibited any Constitutional amendment without the consent of 
Congress. Among the limitations are restrictions on investments 
and requirements to disburse the income from the permanent 
funds. In 1957 the Enabling Act was amended to delete a 
requirement that a separate fund be established for each 
purpose for which grants were made and that all moneys must be 
invested in ``safe interest-bearing securities''. That change 
enabled New Mexico to invest in corporate stocks, but did not 
specify how distribution would be handled from returns. Since 
dividends on stocks are generally lower than interest on bonds, 
maintenance of annual payments limited investment in stocks. 
The effect was to diminish the real value of the corpus of the 
permanent fund.
    In 1995 a Permanent Funds Study Committee released a report 
on the portfolio of the permanent fund and recommended a series 
of amendments to the State Constitution to provide for greater 
flexibility and broader diversification of the investments in 
order to preserve the corpus of the fund against inflation and 
maintain the income stream for the beneficiaries. The new 
method would still be more conservative than that used by many 
educational institutions. At the present time, New Mexico has 
58 percent of its investment in domestic bonds while the 
average for all public endowments is 28 percent and for those 
with more than $400 million, only 18 percent. The new 
distribution method was approved by 68 percent of the voters in 
the 1996 general election as a Constitutional amendment and the 
1997 State legislature has revised pertinent investment 
statutes. In order for those actions to take effect, however, 
Congress must amend the Enabling Act and consent to the 
amendments.

                          Legislative History

    S. 430 was introduced on March 12, 1997 by Senators 
Domenici and Bingaman and referred to the Committee on Energy 
and Natural Resources. A companion measure, H.R. 1051, was 
introduced the same day in the House of Representatives and 
referred to the Resources Committee. A hearing was held by the 
Committee on S. 430 on May 5, 1997. At the business meeting on 
May 14, 1997, the Committee on Energy and Natural Resources 
ordered S. 430 favorably reported, without amendment, by a 
unanimous voice vote of a quorum present.

           Committee Recommendations and Tabulation of Votes

    The Committee on Energy and Natural Resources, in open 
business session on May 14, 1997, by a unanimous voice vote of 
a quorum present, recommends that the Senate pass S. 430 
without amendment.

                      Section-by-Section Analysis

    The provisions of the legislation are self-explanatory. 
Subsection (a) provides a short title. Subsection (b) amends 
sections 7, 9, and 10 of the Enabling Act to conform with the 
Constitutional amendments adopted by the voters in New Mexico. 
Subsection (c) provides an express consent of Congress to the 
amendments made by the State of New Mexico to its Constitution

                   Cost and Budgetary Considerations

    An estimate of the cost of this measure has been requested 
from the Congressional Budget Office, but has not been received 
as of the date of filing of this report. When the estimate is 
received, the Chairman will have it printed in the 
Congressional Record for the advice of the Senate. No 
authorizations are contained in this measure, therefore the 
Committee does not believe that there are any costs to the 
Federal Government associated with enactment of this 
legislation. Similarly, this legislation approves amendments to 
the New Mexico Constitution and makes necessary changes to 
Federal law to permit those amendments to go into effect. 
Therefore the Committee does not believe that there are any 
unfunded mandates contained in this measure.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 430. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 430, as ordered reported.

                        Executive Communications

    The pertinent legislative report received by the Committee 
from the Department of the Interior setting forth Executive 
agency recommendations relating to S. 430 is set forth below:

                   U.S. Department of the Interior,
                                   Office of the Secretary,
                                       Washington, DC, May 2, 1997.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: As requested, we have reviewed S. 430, a 
bill to amend the Act of June 20, 1910 to protect the permanent 
trust funds of the State of New Mexico from erosion due to 
inflation and modify the basis on which distributions are made 
from those funds.
    S. 430 relates entirely to New Mexico's use of its funds. 
We have no involvement in that process and no comments on or 
objections to the bill.
    The Office of Management and Budget has advised that there 
is no objection to the submission of this letter from the 
standpoint of the Administration's program.
            Sincerely,
                                                Jane Lyder,
                                               Legislative Counsel.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 430, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

            ACT OF JUNE 20, 1910 (36 STAT. 557, CHAPTER 310)

    CHAP. 310.--An Act To enable the people of New Mexico to form a 
constitution and state government and be admitted into the Union on an 
  equal footing with the original States; and to enable the people of 
  Arizona to form a constitution and state government and be admitted 
      into the Union on an equal footing with the original States

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That the 
qualified electors of the Territory of New Mexico are hereby 
authorized to vote for and choose delegates to form a 
constitutional convention for said Territory for the purpose of 
framing a constitution for the proposed State of New Mexico. 
Said convention shall consist of one hundred delegates;
          * * * * * * *
    Sec. 7. That in lieu of the grant of land for purposes of 
internal improvements made to new States by the eighth section 
of the Act of September fourth, eighteen hundred and forty-one, 
and in lieu of the swamp-land grant made by the Act of 
September twenty-eighth, eighteen hundred and fifty, and 
section twenty-four hundred and seventy-nine of the Revised 
Statutes, and in lieu of the grant of thirty thousand acres of 
each Senator and Representative in Congress, made by the Act of 
July second, eighteen hundred and sixty-two; Twelfth Statutes 
at Large, page five hundred and three, which grants are hereby 
declared not to extend to the said State, and in lieu of the 
grant of saline lands heretofore made to the Territory of New 
Mexico for university purposes by section three of the Act of 
June twenty-first, eighteen hundred and ninety-eight, which is 
hereby repealed, except to the extent of such approved 
selections of such saline lands as may have been made by said 
Territory prior to the passage of this Act, the following 
grants of lands are hereby made, to wit:
    For university purposes, two hundred thousand acres; for 
legislative, executive, and judicial public buildings 
heretofore erected in said Territory or to be hereafter erected 
in the proposed State, and for the payment of the bonds 
heretofore or hereafter issued therefor, one hundred thousand 
acres; for insane asylums, one hundred thousand acres; for 
penitentiaries, one hundred thousand acres; for schools and 
asylums for the deaf, dumb, and the blind, one hundred thousand 
acres; for miners' hospitals for disabled miners, fifty 
thousand acres; for normal schools, two hundred thousand acres; 
for state charitable, penal, and reformatory institutions, one 
hundred thousand acres; for agricultural and mechanical 
colleges, one hundred and fifty thousand acres; and the 
national appropriation heretofore annually paid for the 
agricultural and mechanical college to said Territory shall, 
until further order of Congress, continue to be paid to said 
State for the use of said institution; for school of mines, one 
hundred and fifty thousand acres; for military institutes, one 
hundred thousand acres; and for the payment of the bonds and 
accrued interest thereon issued by Grant and Santa Fe Counties, 
New Mexico, which said bonds were validated, approved, and 
conformed by Act of Congress of January sixteenth, eighteen 
hundred and ninety-seven (Twenty-ninth statutes, page four 
hundred and eighty-seven), one million acres: Provided, That if 
there shall remain any of the one million acres of land so 
granted, or of the proceeds of the sale or lease thereof, or 
rents, issues, or profits therefrom, after the payment of said 
debts, such remainder of lands and the proceeds of sales 
thereof shall be added to and become a part of the permanent 
school fund of said State, [the income therefrom only to be 
used] distributions from which shall be made in accordance with 
the first paragraph of section 10 and shall be used for the 
maintenance of the common schools of said State.
    Sec. 8. That the schools, colleges, and universities 
provided for in this Act shall forever remain under the 
exclusive control of the said State, and no part of the 
proceeds arising from the sale or disposal of any lands granted 
herein for educational purposes shall be used for the support 
of any sectarian or denominational school, college, or 
university.
    Sec. 9. That five per centum of the proceeds of sales of 
public lands lying within said State, which shall be sold by 
the United States subsequent to the admission of said State 
into the Union, after deducting all the expenses incident to 
such sales, shall be paid to the said State to be used as a 
permanent inviolable fund, [the interest of which only shall be 
expended] distributions from which shall be made in accordance 
with the first paragraph of section 10 and shall be expended 
for the support of the common schools within said State.
    Sec. 10. That it is hereby declared that all lands hereby 
granted, including those which, having been heretofore granted 
to the said Territory, are hereby expressly transferred and 
confirmed to the said State, shall be by the said State held in 
trust, to be disposed of in whole or in part only in manner as 
herein provided and for the several objects specified in the 
respective granting and confirmatory provisions, and that the 
natural products and money proceeds of any of said lands shall 
be subject to the same trusts as the lands producing the same 
The trust funds, including all interest, dividends, other 
income, and appreciation in the market value of assets of the 
funds shall be prudently invested on a total rate of return 
basis. Distributions from the trust funds shall be made as 
provided in Article 12, Section 7 of the Constitution of the 
State of New Mexico.
          * * * * * * *