New Mexico Copper Corporation has been fighting in the courts since 2014 to have 7,500 acre feet a year of claimed water rights legitimized so it can reopen the Copper Flat Mine just outside Hillsboro. A recent ruling by the New Mexico Court of Appeals reversed a lower adjudication court decision not to award the mining company more than 1,000 acre feet a year from “miscellaneous wells.” The Nov. 19 appellate court ruling sent a “mandate” to the lower court to reconsider its decision.
The court fight started in the water rights adjudication court for the Lower Rio Grande Basin, which resides in the Third Judicial District Court in Las Cruces. The adjudication court handed down a decision in 2018 that limited NMCC’s water rights to about 900 acre feet a year. NMCC appealed. The Albuquerque–based appellate court not only confirmed the 900 acre feet award, but also reversed the adjudication court’s decision that about 1,000 acre feet a year had been “abandoned.”
NMCC has claimed in New Mexico Mining and Minerals Division filings that it will need 6,100 acre feet a year for 12 years to extract all the mineable copper from the site. However, its court filings indicate that it can get by with as little as 2,400 acre feet a year. These filings state that the company intends to follow the same operating plan envisioned in 1982 by the mine’s one-time owners, Quintana Minerals Corporation. Quintana, with a silent partner, gave the enterprise the legal name “Copper Flat Project.” Quintana’s plan stated that between 2,400 and 4,000 acre feet of water a year would be needed to operate the mine.
If the adjudication court follows the path laid out by the appellate court in the latter’s 75-page ruling, it may award NMCC enough water to meet its minimum needs to reopen the mine. The appellate court loosely interpreted case laws in order to excuse more than 40 years of nonuse of water at Copper Flat. Its ruling ordered the lower court to reconsider the question of abandonment. “On remand,” the ruling stated, “the adjudication court should determine the extent of Appellant’s vested rights—if any—tied to the miscellaneous wells.”
The basis of all New Mexico water law is that water belongs to the people of the state and a water right is earned and maintained by continuously putting it to beneficial use; otherwise, the right reverts to the people.
THE RUNUP TO THE RULING
Copper Flat Mine is located about six miles from Hillsboro and 12 miles from the Rio Grande-fed reservoir of Caballo Lake. Fifteen Hillsboro residents, Ted Turner Ranch Properties, owners of the Ladder Ranch adjacent to the mine, the New Mexico Pecan Growers and the Hillsboro Mutual Domestic Water Consumers were NMCC’s opponents in the adjudication case. The Hillsboro residents and Turner Ranch Properties have been parties in the appeals case. They have spent a lot of money in the last seven years—private money—on fighting what could be considered a statewide issue of public concern: NMCC’s proposed massive use of scarce water.
NMCC bought the Copper Flat Mine from Hydro Resources Corporation in 2009. As the Sun has previously reported, in 2011, NMCC declared a right to 7,578 acre feet of water a year with the New Mexico Office of the State Engineer, administrators of water rights and usage. The previous year NMCC had purchased an option to buy an unguaranteed 6,462 acre feet of water a year from William J. Frost and Harris Gray, who had bought Quintana’s water rights after that company went bankrupt. The amount was the estimated maximum of “four production wells” on the mine site. NMCC also declared the rights to 1,116 acre feet a year of ground water from 17 “auxiliary wells” that are on mine site. Frost and Gray have since been NMCC’s litigation partners in the lower and appellate court cases.
Seventy-five hundred acre feet a year is an enormous amount of water—about six times what the City of Truth or Consequences uses in a year to serve a population of nearly 6,000. Twenty-four hundred acre feet a year is about twice the city’s annual consumption.
The Bureau of Land Management’s Environmental Impact Statement on NMCC’s operating plan projected that depletion of the Rio Grande from the mine’s groundwater pumping would peak at the end of the envisioned 12 years of mining and it would take 100 years for the Rio Grande to recover. (Read the Sun’s reporting on the EIS here.)
In addition, if the Copper Flat were permitted to reopen, the mining operation would create a tailings pit of polluted water that will have to be monitored forever to prevent leaks damaging to the Lower Rio Grande Basin watershed in general and nearby Animas Creek in particular. Much of the water cities and farmers use can be returned to the aquifer with or without treatment, but water used to extract copper is non-returnable. Tailings and leftover water go into a pit, dammed to prevent leakage, with the poisonous mixture left to evaporate into the air over time. A 2015 National Parks Service study found that tailings dams must be able to stand for “perpetuity” or “10,000 years.” There are about 3,500 engineered tailings dams around the world, and about three fail every two years, according to the NPS. This catastrophic prospect was another motivation for the costly but persistent legal opposition to the mine marshalled by the area’s residents, ranchers and growers.
The appellate court dealt harshly with NMCC’s opponents: Turner Ranch Properties and the “Hillsboro cadre,” the term employed by the court to speak ill of the residents of Hillsboro who have united to defend their water supply. According to the Oxford Dictionary, “cadre” is a “group of activists in a communist or other revolutionary organization.”
Not only did the court disparage the mine opponents’ arguments in its ruling, it went far beyond evaluating the merits of the arguments presented by the litigants. The panel of three appellate judges searched for and presented case law that would allow for the most liberal water-use award to NMCC. Its remand order signaled to the lower court that it may have been too miserly in its ruling.
Two of three appellate judges were “pro tempore,” literally, judges brought in “for the time being.” Judge Pro Tempore Michael Bustamante retired from the New Mexico Court of Appeals in 2016 after serving since 1994. Judge Pro Tempore Richard Bosson retired from the New Mexico Supreme Court in 2015 after serving since 2002. From 1994 to 2002 Bosson served on the New Mexico Court of Appeals.
The third judge, New Mexico Court of Appeals Chief Justice J. Miles Hanisee, was appointed to his seat in 2011 by Governor Susana Martinez. Hanisee lost the 2012 election to retain his seat, but Martinez appointed him again to replace a retiring judge. He won the 2014 election to retain the seat and went on to win the 2018 election for a full eight-year term.
Judge Pro Tempore Bustamante wrote the ruling, which Hanisee and Bosson confirmed.
THE COMPLEXITIES OF THE CASE
Because NMCC’s and Frost and Gray’s claimed water rights straddle the establishment in 1982 of the Lower Rio Grande Basin by the State Engineer, their claims fall into two categories.
The first category is “vested,” or water that can be claimed because it has been put to beneficial use. NMCC and Frost and Gray argue that about 2,300 acre feet of their claimed water rights has been used dating back to 1931 through 1983.
The second category is based on case law derived from a 1961 New Mexico Supreme Court case, State of New Mexico, ex rel., State Engineer v. Mendenhall. The “Mendenhall Doctrine” established rights to water never used before the basin was “declared” and brought under the State Engineer’s control, provided that certain conditions were met.
Mendenhall requires that water claimants had a pre-basin plan for its use and pursued the plan with diligence, as evidenced by drilling wells or constructing other infrastructure to divert the water. The “doctrine” protects private investment in the development of beneficial water use.
The pre-basin plan in this case is the Copper Flat Mine, a project that the courts have verified dates back to 1974, eight years before the declaration of the Lower Rio Grande Water Basin in September 1982.
The Copper Flat Mine has had a string of owners. NMCC and Frost and Gray had to provide evidence that they and prior owners continuously pursued the same water-use plan from around 1974 to the present day in order to retain their Mendenhall claims to nearly 5,200 acre feet a year.
The adjudication and appellate courts both determined that Quintana Minerals Corporation broke with the plan. After operating Copper Flat Mine for a mere three months and pumping about 860 acre feet of water from four main production wells, Quintana suspended operations in 1982 and declared bankruptcy. Its lender, the Canadian Imperial Bank of Commerce, took over ownership and operation of the mine. The bank sold off all movable assets and covered what was left with dirt at the direction of the Bureau of Land Management’s closure requirements. In 1987 Quintana and the bank wrote a letter to the New Mexico Environment Improvement Board that “Cooper Flat Property is permanently closed and will not be restarted.” Both the adjudication court and appellate court cited this statment in their fact finding.
Canadian Imperial Bank sold the claimed water rights—with no guarantees—to Frost and Gray in 1987. The adjudication court and appellate court agreed the Mendenhall water rights claims had been “severed” from the Copper Flat Mine or project (in other words, the “plan”) at that time. Thus, all 5,200 acre feet a year of Mendenhall water rights claims were “extinguished,” both courts agreed, leaving nearly 2,300 acre feet a year of vested water rights still to be proven.
The adjudication court ruled that NMCC had vested water rights to about 900 acre feet a year, an amount equivalent to most of the water pumped from the four production wells by Quintana in 1982. To keep vested water rights current, the claimant must continuously put the water to beneficial use, unless a valid excuse is affirmed by the courts.
The adjudication court excused the 40-year gap for not using the 900 acre feet, stating: “The economic, financial, and logistical difficulties of CFP [Copper Flat Project] and the legal challenges of Frost and Gray excuse the long period of nonuse of the vested water right.” The “legal challenges” referred to a seven-year court case between Frost and Gray and Hydro Resources, which concluded with the Frost and Gray’s winning quiet title to their water claims in 2008.
THE APPELLATE COURT’S REASONING
The appellate court noted that the adjudication court did not similarly excuse the 40-year gap in the use of water from the mine’s “miscellaneous wells.” NMCC and Frost and Gray claimed, without much documentation, that previous owners had used 1,400 or more acre feet of water per year from seven miscellaneous wells from 1931 to 1983. Without providing any findings of fact or explaining its reasoning, the adjudication court simply ruled NMCC and Frost and Gray had “abandoned” the miscellaneous wells.
The appellate court pointed out that, if the nonuse of the production wells was excused, then the same reasoning should apply to the miscellaneous wells.
The appellate court’s ruling offers guidelines for the adjudication court’s reconsideration of the question of “abandonment” by pointing to Colorado case law. It cited a Colorado Supreme Court case that greatly expanded the sorts of excuses for not putting water to beneficial use that the State of Colorado will accept as valid. East Twin Lakes Ditches & Water Works, Inc. v. Board of County Commissioners of Lake County (Colorado, 2003) catalogues factors the Colorado court considered to be indicative of an intent not to abandon a water right:
• repairs and maintenance of structures
• attempts to put the water to beneficial use
• active diversion records and non-appearance of the water rights on the state engineer’s abandonment list
• diligent efforts to sell water rights
• filing documents to protect, change or preserve the rights
• leasing the water rights
• economic or legal obstacles to exercising the water rights
“We agree with Colorado’s approach to the issue [of abandonment],” the appellant court stated. “The pattern of Colorado’s cases is that abandonment will be found if the user can be said to have done nothing to use water or protect facilities over extended periods of time.”
“However haltingly, Frost and Gray sought to revive the Mine and protect the vested rights they purchased from CFP [Copper Flat Project],” the appellate court concluded.
In their attempt to counter NMCC’s and Frost and Gray’s vested water rights claims in the appellate court, the Hillsboro group cited New Mexico state law 72-5-28, which states that the State Engineer may claim a water right is “forfeit” if the water is not put to beneficial use for four years. The law’s four-year timeframe has been used as a guide for determining unacceptable periods of nonuse and to argue a “presumption of abandonment.”
Hillsboro set up the argument that a presumption of abandonment could be applied to NMCC and Frost and Gray’s water rights claims by comparing the four-year limit to the 40 years of nonuse at Copper Flat. After such a long period of nonuse, Hillsboro cited New Mexico case law to argue that NMCC and Frost and Gray are burdened with providing a valid excuse. The case law cited by Hillsboro and Turner requires that nonuse must be “beyond the control” of water rights claimants to be acceptable. NMCC and Frost and Gray, Hillsboro argued, had offered no such evidence to the adjudication court, as required; therefore, the claimants were not entitled to the adjudication court’s award of 900 acre feet a year, let alone rights to water from the miscellaneous wells.
The appellant court admonished the Hillsboro group for citing New Mexico’s water-forfeiture law, stating that the State Engineer would have had to declare NMCC’s and Frost and Gray’s water rights forfeit in order for the law to apply to the case. The court also refuted the argument that NMCC and Frost and Gray had not offered a valid excuse. Hillsboro and Turner had provided case citations that stated financial difficulty, legal entanglements and long lead times to set up mining operations were not acceptable excuses for nonuse of water. The appellate court found the expansive provisions of the Colorado court case more persuasive.
The appellant court gave short shrift to Turner’s other court citations, acerbically stating they didn’t apply.
In a final blow to NMCC’s opponents, the appellate court stated: “To the extent that Turner and Hillsboro cadre argue the facts at all, their arguments are simply requests for us to reweigh the evidence.”
THE UPSHOT
Given the upper court’s ruling and remand to the lower court, it appears that NMCC may be awarded more water. The ruling includes a log for the seven miscellaneous wells that only firmly documents usage of 128 acre feet of water. However, water claims are often based on the pumping capacity of the wells, a metric that could be used by the adjudication court to determine how much, if any, “vested” water rights are to be awarded. Beyond its right to 900 acre feet a year confirmed by the lower and upper courts, NMCC needs an award of only an additional 1,500 acre feet a year to meet its minimum operating requirement of 2,400 acre feet per year to open the mine.
Holding aside the pending remand decision by the adjudication court, NMCC has another avenue for gaining more water rights. The company has applied to lease 2,400 acre feet a year from a Santa Theresa water rights owner. About 70 parties have protested the application, and the administrative hearing division of the Office of the State Engineer will settle the dispute at a hearing scheduled for September 2022. As the Sun has previously reported, the hearing will force the State Engineer to definitively determine whether 2,400 acre feet a year are available to be pumped at the mine and, if so, whether that use would be illegally detrimental to the rights of the protesting water users.