[Senate Report 117-186]
[From the U.S. Government Publishing Office]


                                                     Calendar No. 537
117th Congress      }                              {       Report
                                 SENATE
 2d Session         }                              {       117-186

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        CONSENT TO STATE OF NEW MEXICO CONSTITUTIONAL AMENDMENT

                                _______
                                

                October 18, 2022.--Ordered to be printed

 Filed, under authority of the order of the Senate of October 14, 2022

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 3404]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 3404), to provide the consent of Congress 
to an amendment to the Constitution of the State of New Mexico, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                PURPOSE

    The purpose of S. 3404 is to provide the consent of 
Congress to an amendment to the Constitution of the State of 
New Mexico.

                          BACKGROUND AND NEED

    The New Mexico-Arizona Enabling Act of 1910 enabled New 
Mexico and Arizona to become states.\1\ Like the enabling acts 
of most states admitted to the Union since 1802,\2\ the 
Enabling Act of 1910 granted New Mexico and Arizona large 
tracts of federal land for the support of public schools and 
other public institutions. Unlike most other enabling acts, 
however, the 1910 Act imposed more restrictive conditions on 
how the two states could use their school lands and the funds 
derived from them.\3\
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    \1\Act of June 20, 1910, 36 Stat. 557. Sections 1-18 provided for 
New Mexico; sections 19-35 provided for Arizona.
    \2\See Andrus v. Utah, 446 U.S. 500, 506 (1980).
    \3\See Pierce v. Ducey, 2018 U.S. Dist. LEXIS 49426 at 9-13 (D. Az. 
2018) vacated on other grounds, 965 F.3d. 1085 (9th Cir. 2020); 1991 
N.M. AG LEXIS 5, p. 4, n. 2 (1991) (opinion of N.M. Attorney General 
Tom Udall); S. Rept. 61-454 at 18-21 (1910).
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    Between the Ferguson Act of 1898\4\ and sections 6 and 7 of 
the Enabling Act of 1910,\5\ Congress granted New Mexico over 
13 million acres of federal land.\6\ Section 10 of the Enabling 
Act requires that all the lands and any funds derived from them 
be held in trust and managed in accordance with the conditions 
set forth in section 10. Section 10 further provides that any 
disposition of the lands or money derived from the lands for 
any other purpose is a breach of trust.\7\ Section 2(9) 
requires that the State of New Mexico and its people consent to 
the provisions of the Enabling Act concerning the school lands, 
that the conditions be incorporated in the State's 
constitution, and that the conditions not be changed without 
the approval of the voters and the consent of Congress.\8\
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    \4\The Ferguson Act of June 21, 1898, 30 Stat. 484, granted the 
Territory of New Mexico two square miles (sections 16 and 36) in every 
township (36 square miles) ``for the support of common schools.''
    \5\Section 6 of the Enabling Act granted New Mexico an additional 
two square miles (sections 2 and 32) in every township ``for the 
support of common schools.'' 36 Stat. 561-562. Section 7 granted New 
Mexico additional lands for colleges, universities, and other public 
institutions. 36 Stat. 562-563.
    \6\136 Cong. Rec. 21,234 (daily ed. Aug. 1, 1990) (statement of 
Sen. Domenici).
    \7\36 Stat. 563; Ervien v. United States, 251 U.S. 41, 47 (1919); 
New Mexico ex rel. Interstate Stream Commission v. Reynolds, 71 N.M. 
389, 397 (1963).
    \8\36 Stat. 560; New Mexico ex rel. Interstate Stream Commission v. 
Reynolds, 71 N.M. at 397.
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    The State of New Mexico gave its consent to these 
conditions when it adopted its Constitution in 1911. Article 
12, section 2 of the Constitution established a ``permanent 
school fund,'' which consists of the proceeds from the sale of 
the school lands and earnings from investment of the fund. 
Article 12, section 7 governs how the permanent school fund is 
invested and distributed. Article 19, section 4 requires the 
voters to approve any amendment to the school lands provisions 
in Article 21. Article 21, section 9 gave the State's consent 
to the school lands provisions of the Enabling Act. Article 21, 
section 10 prohibits any change in these provisions without the 
consent of Congress.
    In March 2021, both houses of the New Mexico Legislature 
passed a joint resolution, H.J. Res. 1. Section 1 of the joint 
resolution proposes an amendment in the nature of a substitute 
to Article 12, section 7 of the State's Constitution. As it now 
stands, section 7 governs the investment and distribution of 
the permanent school fund. It provides for annual distributions 
of five percent of the market value of the fund for the 
preceding five years and an additional distribution of half of 
one percent of the market value of the fund for the preceding 
five years. The proposed substitute increases the additional 
distribution from half of one percent to one and a quarter 
percent, and it provides that 60 percent of the additional 
distribution be used for early childhood education.
    Section 2 of H.J. Res. 1 requires the resolution be 
submitted to the voters at the November 8, 2022, general 
election. Section 3 provides that the provision of the part of 
the additional fund to early childhood education shall not 
become effective without the consent of Congress.
    S. 3404 provides the consent of Congress to the amendment 
to the Article 12, section 7 of the Constitution of New Mexico 
proposed by H.J. Res. 1.

                          LEGISLATIVE HISTORY

    S. 3404 was introduced by Senators Heinrich and Lujan on 
December 15, 2021. The Subcommittee on Public Lands, Forests, 
and Mining held a hearing on the bill on June 7, 2022. 
Representative Stansbury introduced a companion measure, H.R. 
6289, in the House of Representatives on December 14, 2021. No 
further action has been taken on H.R. 6289.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in an 
open business session on July 21, 2022, by a voice vote of a 
quorum present, recommends that the Senate pass S. 3404.

                                SUMMARY

    S. 3404 gives the consent of Congress for the amendment to 
the Constitution of New Mexico proposed by House Resolution 1 
of the 55th Legislature of the State of New Mexico, First 
Session, 2021. The amendment is a complete substitute for 
article 12, section 7 of its Constitution. The substitute will 
increase the annual distributions from the permanent school 
fund from 5.5 to 6.25 percent of the prior 5-year fund balance, 
raise the threshold for suspending the additional distributions 
if the prior 5-year fund balance is less than $17 billion 
rather than $10 billion, and earmark 60 percent of the 
additional distribution for early childhood education. The use 
of funds for early childhood education is a new use.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office.

		[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    S. 3404 would provide federal approval for the State of New 
Mexico to use the Land Grant Permanent Fund to invest in early 
childhood education, as approved by the state legislature. The 
Land Grant Permanent Fund is funded by royalties generated by 
developing natural resources on 13 million acres granted to the 
state at its incorporation in 1912 and income earned from 
investing those amounts.
    Because the amounts in that fund are owned by the state, 
CBO estimates that enacting S. 3404 would have no effect on the 
federal budget.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was reviewed H. Samuel Papenfuss, Deputy 
Director of Budget Analysis.

                      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. 3404. 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. 3404, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 3404, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        EXECUTIVE COMMUNICATIONS

    Because S. 3404 provides for the consent of Congress to a 
State Constitutional amendment, the Committee did not request 
Executive Agency views on the bill.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill as ordered 
reported.

                                APPENDIX


                           A JOINT RESOLUTION


PROPOSING AN AMENDMENT TO ARTICLE 12, SECTION 7 OF THE CONSTITUTION OF 
   NEW MEXICO TO PROVIDE FOR ADDITIONAL ANNUAL DISTRIBUTIONS OF THE 
PERMANENT SCHOOL FUND FOR ENHANCED INSTRUCTION FOR STUDENTS AT RISK OF 
  FAILURE, EXTENDING THE SCHOOL YEAR, TEACHER COMPENSATION AND EARLY 
CHILDHOOD EDUCATION; REQUIRING CONGRESSIONAL APPROVAL FOR DISTRIBUTIONS 
                     FOR EARLY CHILDHOOD EDUCATION

    BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW 
MEXICO:
    SECTION 1. It is proposed to amend Article 12, Section 7 of 
the constitution of New Mexico to read:
          ``A. As used in this section, ``land grant permanent 
        funds'' means the permanent school fund described in 
        Article 12, Section 2 of this constitution and all 
        other permanent funds derived from lands granted or 
        confirmed to the state by the act of congress of June 
        20, 1910, entitled ``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.''.
          B. The land grant permanent funds shall be invested 
        by the state investment officer in accordance with 
        policy rules promulgated by the state investment 
        council.
          C. In making investments, the state investment 
        officer, under the supervision of the state investment 
        council, shall invest and manage the land grant 
        permanent funds in accordance with the Uniform Prudent 
        Investor Act.
          D. The legislature may establish criteria for 
        investing the land grant permanent funds if the 
        criteria are enacted by a three-fourths' vote of the 
        members elected to each house, but investment of the 
        land grant permanent funds is subject to the following 
        restrictions:
                  (1) not more than sixty-five percent of the 
                book value of the land grant permanent funds 
                shall be invested at any given time in 
                corporate stocks;
                  (2) not more than ten percent of the voting 
                stock of a corporation shall be held; and
                  (3) stocks eligible for purchase shall be 
                restricted to those stocks of businesses listed 
                upon a national stock exchange or included in a 
                nationally recognized list of stocks.
          E. All additions to the land grant permanent funds 
        and all earnings, including interest, dividends and 
        capital gains from investment of the land grant 
        permanent funds shall be credited to the land grant 
        permanent funds.
          F. The annual distributions from the land grant 
        permanent funds to the beneficiaries specified in the 
        Ferguson Act and the Enabling Act shall be five percent 
        of the average of the year-end market values of the 
        land grant permanent funds for the immediately 
        preceding five calendar years.
          G. In addition to the annual distributions made 
        pursuant to Subsection F of this section, unless 
        suspended pursuant to Subsection J of this section, an 
        annual distribution of one and one-fourth percent of 
        the average of the year-end market value of the 
        permanent school fund for the immediately preceding 
        five calendar years shall be made as provided in 
        Subsection H of this section; provided that the 
        additional distribution shall not be made in any fiscal 
        year if the average of the year-end market values of 
        the land grant permanent funds for the immediately 
        preceding five calendar years is less than seventeen 
        billion dollars ($17,000,000,000).
          H. Unless suspended pursuant to Subsection G or J of 
        this section, the additional distribution from the 
        permanent school fund provided for in Subsection G of 
        this section shall be as follows and as provided by 
        law:
                  (1) forty percent of the additional 
                distribution shall be for the public school 
                permanent fund beneficiary for enhanced 
                instruction for students at risk of failure, 
                extending the school year and public school 
                teacher compensation; and
                  (2) sixty percent of the additional 
                distribution shall be for the provision of 
                early childhood education.
          I. As used in this section, ``early childhood 
        education'' means nonsectarian and nondenominational 
        education for children until they are eligible for 
        kindergarten.
          J. The legislature, by a three-fifths' vote of the 
        members elected to each house, may suspend any 
        additional distribution provided for in Subsection G of 
        this section.''
    SECTION 2. The amendment proposed by this resolution shall 
be submitted to the people for their approval or rejection at 
the next general election or at any special election prior to 
that date that may be called for that purpose.
    SECTION 3. The distribution provided for in Paragraph (2) 
of Subsection H of Section 7 of Article 12 of the constitution 
of New Mexico shall not become effective without the consent of 
congress.

                                  [all]