NMAGO 00-04.

• Case Date: November 01, 2000
• Court: New Mexico

New Mexico Attorney General Opinions 2000. NMAGO 00-04. November 1, 2000OPINION OF Opinion No. 00-04PATRICIA A. MADRID Attorney General BY: Elizabeth A. GlennAssistant Attorney General TO: The Honorable Pauline B. EisenstadtState Senator P.O. Box 658 Corrales, New Mexico 87048 QUESTION:Does a contract giving the Pepsi-Cola Company ("Pepsi") the exclusive right to sell its beverage products on the premises of the City of Rio Rancho raise any constitutional issues, including the prohibition against exclusive franchises and privileges set forth in Article IV, Section 26 of the New Mexico Constitution? CONCLUSION: The contract probably is permissible under Article IV, Section 26. However, a provision of the contract under which the City of Rio Rancho agrees to indemnify Pepsi against certain liabilities likely is unconstitutional and unenforceable under the municipal debt restrictions of Article IX, Section 12 of the state constitution. FACTS: Pepsi and the City of Rio Rancho have entered into a Beverage Contract that gives Pepsi the exclusive right to sell its beverage products on City premises, including athletic facilities and concession stands and the grounds, parking lots and vending areas of City buildings. We understand that the Contract was awarded after competitive bidding pursuant to the Procurement Code (NMSA 1978, §§ 13-1-28 to -199). The Contract has a term of eight years. See Beverage Contract, § 2. At the end of the term, the parties may agree to extend the Contract by mutual agreement. Id.(fn3) In exchange for the exclusive right to sell its beverage products on City premises, Pepsi has agreed to pay the City an annual exclusive rights fee, specified commissions and at least $3,000.00 worth of free product annually. Id. § 5. ANALYSIS: Exclusive Right to Sell Soft Drinks Because it purports to grant Pepsi the exclusive right to sell its beverage products on City premises and in City facilities, the Beverage Contract raises an issue under Article IV, Section 26 of the New Mexico Constitution. That provision, in pertinent part, states that "no exclusive right, franchise, privilege or immunity shall be granted by the legislature or any municipality in this state." See also N.M. Const. art. IV, § 24 (prohibiting the legislature from passing "local or special laws ... granting to any corporation, association or individual ... any special or exclusive privilege, immunity or franchise..."). Article IV, Section 26 and similar provisions in other states' constitutions are intended to ensure that any rights, franchises or privileges granted by the state or a...