Summary
of Bounds v. New Mexico
New
Mexico Supreme Court
Decided July
25, 2013
Jesse J.
Richardson, Jr.
Tiffany
Dowell
Disclosure:
Jesse J. Richardson, Jr. and Tiffany Dowell authored and filed a “friend of
court” brief in the Supreme Court of New Mexico in this case on behalf of
seventeen clients, supporting the position of the State Engineer.
Introduction
On July 25, 2013, the Supreme Court of New Mexico
released its much awaited
decision in Bounds
v. State of New Mexico. Bounds, a farmer with senior water rights,
challenged the legality of the domestic well statute (DWS). The DWS requires
the State Engineer to issue a permit for domestic water wells when an
application is filed, without any further analysis or consideration. In short,
the court found that the DWS does not violate the prior appropriation doctrine
or the due process clause of the New Mexico Constitution. This summary briefly
discusses the main points in the court’s decision.
As Applied v. Facial
Before delving into the case itself, one must
understand the distinction between “as applied” and “facial” legal challenges.
Most cases involve “as applied” challenges. In these cases, the complaining
party acknowledges that the law is generally valid, but asserts that as applied
to their particular situation, the law violates either the state or U.S.
Constitution, or another law that takes legal precedence. In deciding an “as
applied” challenge, court look at the specific facts of the case before it.
“Facial” challenges argue that the law itself “on
its face”, without looking at a particular situation, violates the state or
U.S. Constitution or a superior law. Facial challenges are rare and very
difficult to win, since these challenges are only upheld if there are no
circumstances under which the law could be constitutionally applied.
Here, Bounds brought a facial challenge. The court found, in a unanimous decision, that
the statute was facially constitutional. However, the court added an unusual
twist. Instead of merely finding the statute facially constitutional, the court
further analyzed the case assuming application of the statute in a fully
appropriated and fully adjudicated basin. This addition is powerful. Going
forward, it is likely that for anyone to successfully challenge the statute in
an as applied situation, they will be required to show actual impairment,
regardless of the overall status of water allocation in the basis.
Prior Appropriation and the Bounds Case
This case involves interpretation of the prior
appropriation doctrine. This doctrine is used by most Western states to
allocate water during times of scarcity. In essence, prior appropriation means
“first in time, first in right”. The first person that establishes a regular
use of water for a beneficial purpose has first priority for that water. The
second person has second priority, and so forth. During times of scarcity,
water is allocated to the most senior users, each in their full amounts, until
no more water is left. If water runs out
before a junior user’s share is given, he or she receives no water.
Facts and Background
Bounds is a rancher and farmer in the Mimbres Basin in
southwestern New Mexico. The basin is fully appropriated and adjudicated. This
means that all of the water in the basin has been allocated to users and the
order of priority has been established. Bounds and the New Mexico Farm and
Livestock Bureau filed this lawsuit, claiming that the DWS, which requires the State
Engineer to issue a permit for a domestic well for anyone requesting one, is
unconstitutional. The lawsuit claimed several constitutional violations, but
the only claims considered in the Supreme Court of New Mexico are claims that
the DWS violates the prior appropriation doctrine and the due process clause of
the New Mexico Constitution. In its most
basic form, Bounds’ argument was that if the Mimbres Basin was fully
appropriated, all water in the basin is allocated to an existing user. No
excess water exists for new users. When the State Engineer grants domestic well
permits, as he is required to do, the domestic well users harm his rights as a
senior water user by taking his water, even though the new users are less
senior. In essence, the Bounds argued that the domestic well users are “butting
in line”.
Bounds
could not show impairment (that the issuance of domestic well permits reduced
the amount of water that he received under his senior water right), so the case
proceeded as a facial challenge. The District Court ruled in favor of Bounds.
On appeal, the New Mexico Court of Appeals reversed, finding that the DWS did
not violate the prior appropriation doctrine or the due process clause. Bounds
and the New Mexico Farm and Livestock Bureau appealed to the Supreme Court of
New Mexico. Oral arguments were held in October of 2011.
Supreme
Court of New Mexico Decision
Download Bounds_Decision_SupCt_25July2013
Introduction
The Supreme Court considered two issues on appeal. First,
the court addressed whether the DWS “creates an impermissible exception” to the
prior appropriation doctrine in New Mexico because the State Engineer must
issue the permit when requested, regardless of whether unappropriated water is
available. The second issue involved the question of whether the failure to
provide notice to and opportunity to be heard PRIOR to issuance of a domestic
well permit violates due process rights.
Does the DWS
Violate the Prior Appropriation Doctrine?
As to the first issue, Bounds claimed that since the Mimbres
Basin is closed, no water exists to appropriate. Therefore, issuance of a domestic
well permit must infringe upon existing senior water rights in the basin in
violation of prior appropriation. The
prior appropriation doctrine is part of the New Mexico Constitution, which
provides that “priority of appropriation shall give the better right.”
When a Constitutional challenge is mounted, the court will
uphold a statute “unless [the court is] satisfied beyond all reasonable doubt
that the Legislature went outside the bounds fixed by the Constitution in
enacting the challenged legislation” (Slip Opinion ¶ 11). The court relied
heavily on Mathers v. Texaco, Inc., 77 N.M. 239, 245-46, 421 P.2d 771,
776-77 (1966), a case cited only by the Water Systems Council brief, and the
ruling in Mathers that impairment
cannot be assumed, but must be shown as a matter of fact in each particular
case.
The Court found that language in Article XVI, Section 2 of
the New Mexico Constitution —“[p]riority of appropriation shall give the better
right”— describes how water should be allocated in times of shortage, not to
how one acquires a water right or to a particular permitting procedure” (Slip Opinion ¶¶ 26-27). On the other hand,
domestic well permits are administered
in exactly the same manner as other water rights. All water rights in the state
are conditioned on the availability of water, including rights under the DWS
(Slip Opinion ¶ 31). Thus, although
domestic wells may be administered in a different procedural manner, the water
from these wells remains subject to the prior appropriation doctrine.
In reaching this conclusion, the court recognized another
point that the Water System Council brief focused on-- that “exempt well” is a
misnomer. “Today, domestic well permits are more regulated and integrated into
the administrative system than ever before” (Slip Opinion ¶ 32). Domestic wells are not exempt from permitting
or regulation, they are merely excused from certain onerous requirements of the
permitting process under New Mexico law.
The court also explained that a host of options are
available to a senior water user who is able to show actual impairment,
including a priority call, requesting curtailment of domestic wells by the
State Engineer, creation of domestic well management areas, or by bringing “as
applied” legal challenges. The court
also pointed to legislative and administrative action that has already been
taken to protect senior water rights holders from domestic wells, including
regulations restricting the amount of water allowed to be taken from a domestic
well to 1 acre foot/year and new legislation preventing issues surrounding
subdivision developers utilizing domestic wells. These limitations are discussed more fully
below.
In summary, the court found that “[t]he Legislature codified
this simpler permitting process as a policy choice, something that the New
Mexico Constitution generally empowers our Legislature to do” See N.M.
Constitution art. XVI, § 2 (“[U]nappropriated water . . . [is] subject to
appropriation for beneficial use, in accordance with the laws of the state.”
(emphasis added)) (Slip Opinion¶ 40). Therefore, the DWS statute does not
violate the prior appropriation doctrine.
Does the DWS
Violate Due Process?
The court quickly dismissed the notion that the DWS violates
due process rights. Due process rights only exist where a person has been
deprived of property. Bounds was unable to show that the DWS impaired his water
rights. Therefore, no due process right existed here (Slip Opinion ¶ 52).
Caveats to the Court’s Decision
As mentioned above, the court emphasized the plethora of laws
and regulations that give the State Engineer authority to limit domestic wells.
By regulation, the State Engineer has already reduced the default maximum
allowable diversion from three acre-feet to one acre-foot per year and per well
per household. See 19.27.5.9(D)(1) NMAC (Slip Opinion ¶ 33). Regulations
also provide for the creation of “Domestic Well Management Areas,” (Slip
Opinion ¶ 34). Domestic wells are “subject to curtailment by priority
administration as implemented by the state engineer or a court.”
19.27.5.13(B)(11) NMAC (Slip Opinion ¶ 35).
“The drilling of the well and amount and uses of water
permitted are subject to such limitations as may be imposed by the courts or by
lawful municipal and county ordinances which are more restrictive than the conditions
of this permit and applicable state engineer regulations.” 19.27.5.13(B)(6) NMAC
(Slip Opinion ¶ 38). Senior users also may make a priority call against junior
users if actual impairment or impending impairment is shown. In that situation,
an as-applied challenge to the statute can also be made (Slip Opinion ¶ 45)
In addition, the court recognized two recent legislative
enactments. The first requires “either State Engineer approval of sufficient water or proof of
water rights acquired by means other than a domestic well permit, before a subdivision plat may
be approved if water rights have been severed from the land upon which the subdivision will
sit” (NMSA 1978, Section 3-20-9.1; Slip Opinion ¶ 42). This statute appears to
address the “double-dipping” problem, where a landowner strips the property of
water rights, then develops the property using exempt wells.
Another legislative action, an amendment to NMSA 1978,
Section 47-6-11.2,“requires proof of service from a water provider and
approval from the State Engineer, or a right to use water other than by a domestic well, for any
subdivision of ‘ten or more parcels,any one of which is two acres or less,’ before the
subdivision can be approved” (Slip Opinion ¶ 43). This provision prevents dense
developments that rely on exempt wells.
Finally, the court addressed a portion of the Court of
Appeals’ opinion that had caused quite a stir in the water law community.
Namely, the statement that “[t]he Constitution’s priority doctrine establishes a broad priority principle,
nothing more” (See Bounds v. New Mexico, 2011-NMCA-011, ¶ 37). The Supreme
Court opined that that statement “goes too far” and that the priority doctrine
is more than just an “aspiration, subject to legislative whim” (Slip Opinion ¶ 47).
Conclusions
The Supreme Court of New Mexico unanimously ruled that the
DWS does not violate the prior appropriation and does not violate due process
rights. Further, the statute is constitutional even when applied in a fully
appropriated, fully adjudicated basin.
In our opinion, future litigation over the DWS in New Mexico
is unlikely. Challengers face the difficult, if not impossible, task of proving
impairment by a single domestic well pumping a small amount of groundwater. The
huge cost of litigation, along with the long odds on prevailing, will shift the
focus to the legislature and the State Engineer’s Office. The result may also
discourage litigation on exempt wells in other states.
In other states, like Washington and Montana, the battle has already shifted to
the legislature and the regulators. In Bounds, the court made a point of
essentially transferring these matters to the Legislature and State Engineer in
New Mexico. “We urge our Legislature to be diligent in the exercise of its
constitutional authority over—and responsibility for—the appropriation process.
We equally urge the State Engineer to fulfill its superintending responsibility
by applying priority administration for the protection of senior water users.
Our courts remain available, based upon sufficient evidence, to intervene in
appropriate cases to ensure that “priority of appropriation shall give the
better right.” (Slip Opinion ¶ 46).
One should also consider the recent regulatory and
legislative changes in New Mexico that vitiated many of the largest concerns
with respect to exempt domestic wells. The amount of water allowed to be used
was reduced from 3 afy to 1 afy, the problem of “double dipping” was addressed
and the State Engineer was granted extensive authority to further regulate
exempt wells in many situations.
The Supreme Court of New Mexico recognized, as the writers
here have said before, that “exempt well” is a misnomer. Most states impose
extensive regulation on exempt wells, but regulation that is less burdensome
than the regulation imposed on other water withdrawals. As in most states, the
court also reaffirmed that domestic wells are not “exempt” from priority, but
merely administered in a different way.
The unusual decision of the court to consider some facts in
addressing a facial challenge strengthened the result for the owners of
domestic wells. However, the court made clear that domestic wells remain
subject to regulation and subject to priority. In conclusion, a unanimous,
powerful decision, tempered by caveats that the domestic wells in New Mexico
are far from “exempt”.
resources despite the fact that most of the world’s freshwater supplies are underground, that over 300 transboundary aquifers have been mapped, and that over 50% of the world’s population relies on groundwater for drinking water. In Contesting Hidden Waters, the author describes the principal differences between surface water and groundwater disputes.
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