Putting water to beneficial use is the cornerstone of water law, as enshrined in the New Mexico Constitution, and NMCC has 37 years of non-use it must explain in order to keep the water it’s claiming.
The water rights the mine is seeking have been tangled up in the state’s water rights adjudication court since 2014. The Third Judicial District Court is handling adjudication for the Lower Rio Grande River Basin, in which the mine is located.
The New Mexico Courts website describes adjudication as, “a legal proceeding to determine the priority, amount of water and other elements of each water right in the Lower Rio Grande River Basin.”
The Lower Rio Grande River Basin was declared by the state in September 1982 and adjudication began in 1996. It will be many years before adjudication is complete.
“Any water right claimant in the basin may object to the water right of another claimant,” the court website states.
In the case of New Mexico Copper Corporation, it declared 7,578 acre feet a year of ground water with the Office of the State Engineer in 2011. NMCC was in the process of purchasing, through an option agreement, 6,462 acre feet a year from William Frost and Harris Gray for $1.5 million, which it completed in recent years. That amount was the estimated maximum of “four production wells” on the mine site. NMCC also declared 1,116 acre feet a year of ground water from 17 “auxiliary wells” that are onsite, also based on an estimate of their maximum yearly production.
In 2014, Lower Rio Grande River Basin claimants filed a joint motion asking the adjudication court to make NMCC’s and Frost and Gray’s water claims a “stream system issue,” as allowed under a court rule. The claimants were 15 Hillsboro residents, Tuner Ranch Properties, the New Mexico Pecan Growers and the Hillsboro Mutual Domestic Water Consumers Association.
The adjudication court responded by ordering an “expedited inter se” proceeding to determine NMCC’s and Frost and Gray’s water rights. Usually the adjudication court works out basin-wide issues with the state and then goes into “inter se” cases or objections among water claimants within the basin. In this case, the State’s arguments, as presented by the Office of the State Engineer, as well as the objecting claimants’ arguments would be heard together to determine NMCC’s and Frost and Gray’s water rights.
After four years of court proceedings, District Court Judge James Wechsler ruled Feb. 28, 2018 that New Mexico Copper Corporation and Frost and Gray have about 900 acre feet of water a year.
The mine needs to withdraw about 6,100 acre feet a year of ground water to mine at the level it is proposing. To put that water use in scale, it’s about three times what Silver City uses at 2,270 acre feet a year, with a population of nearly 9,700 people.
NMCC and Frost and Gray appealed the adjudication court’s decision, as did the Hillsboro claimants and Turner Ranch Properties. For a year and a half briefs and answers have been submitted. At this point the parties await the assignment of three Santa Fe appellate judges to preside over the case.
In the interest of simplification and brevity, this article will concentrate on adjudication-court errors NMCC and Frost and Gray claim in their appeal and Hillsboro’s answer to their arguments, which capture the core issues.
Most of NMCC and Frost and Gray’s claims of court errors center on the adjudication court’s rejection of their argument that the “Mendenhall Doctrine” applies to the case.
Mendenhall deals with pre-basin-declaration water use. All of the wells at Copper Flat Mine were drilled before the Office of the State Engineer declared the Lower Rio Grande River Basin in September 1982.
Mendenhall is meant to protect pre-basin water users’ investments, to allow them to complete projects begun before the basin was declared.
Under Mendenhall, to gain the privilege of continuing to develop water use post-basin declaration, all the pre-basin and post-basin water claimants must show due diligence in using the water for the original project, Copper Flat Mine in this case. If the chain of diligence is broken, the water may revert back to the original owners, the people of New Mexico, to ensure there are no water hoarders or water speculators and all water is put to beneficial use, according to the argument developed by Hillsboro.
The only excuses for not putting water to beneficial use are circumstances beyond the water claimant’s control.
The adjudication court found that Menden hall did not apply because the mine project was developed and then abandoned at the end of seven years, which occurred before the water basin was declared.
One of the first owners, Copper Flat Partners, started drilling production wells for mining in 1975, the beginning of the project. The only time it used water for mining was over four months ending July 1982, using about 900 acre feet. The company then abandoned the project and its creditor, a Canadian bank, took over the property and water-use claims.
No water for the mining project has since been put to beneficial use in the 37 years following.
NMCC and Frost and Gray insist Mendenhall does apply, that the mine owners have exercised due diligence but have been stymied by permitting processes, the fluctuations of the world copper market and the time needed to get a mine into operation.
They claim the adjudication court should have focused on Copper Flat Partners’ and the bank’s sale of the water to Frost and Gray, who always “intended” to use the water for mining. Frost and Gray bought the 6,462 acre feet claimed for the four production wells in 1987 for $20,000, with no guarantee of water rights. The sale did not include the wells.
Without much explanation, the court excused Frost and Gray for not putting the water to beneficial use, evidently accepting evidence they had been tied up in court for seven of the 32 years of ownership. Legal and “logistical” difficulties were recognized as beyond their control. The court found Frost and Gray owned about 900 acre feet a year of the 6,462 acre feet claimed, because it had been put to beneficial use by a prior owner.
The remaining nearly 5,600 acre feet a year of water associated with the four production wells were deemed “extinguished” by the court. The water had not been put to beneficial use and was never intended to be used for mining (the original project) in the future.
The court based this finding on factual evidence. Copper Flat Partners and the bank sold all the equipment, took down all the buildings, and only left the underground pipes because they were asked not to disturb the earth by the Bureau of Land Management. As part of the BLM reclamation process, Copper Flat Partners and the bank advertised the water claim could not be “economically” used at the site. They then tried to sell the water claim to the City of Las Cruces, submitting an application to the Office of the State Engineer for the water’s change of use and location. The city declined, but the adjudication court said the application indicated lack of due diligence.
NMCC and Gray and Frost say the court erred in finding a creditor—the bank—can sever the right to develop water from subsequent owners under Mendenhall. They also argue the water right claimed was not recognized by the state and couldn’t be transferred legally, therefore the application should be deemed a “legal nullity,” and “as if it never happened.”
Hillsboro answered Mendenhall does not apply, the beginning and end of the mining project predate the declaration of the water basin.
In addition, the appellate court’s level of review, Hillsboro points out, is whether the evidence is sufficient to support the conclusions of the lower court, not whether it should have come to a different conclusion, and there is plenty of evidence.
Hillsboro’s answer to NMCC also alludes to its argument in its own appeal of the adjudication court’s decision. It argues Judge Wechsler was wrong to assume Copper Flat Partners had any water rights to sell Frost and Gray in 1987. By then it had been five years since the mine used 900 acre feet of water. The right to claim past beneficial use, let alone develop more water use was “extinguished,” Hillsboro says, when Copper Flat Partners rolled up the carpet for mining at that location.
The adjudication court also found the 1,116 acre feet a year associated with the 17 auxiliary wells were abandoned because no water had been put to beneficial use since the early 1980s and that use didn’t relate to mining.
NMCC and Gray and Frost argue the adjudication court erred in finding abandonment because it put up no evidence to prove the intent to abandon and intent is a necessary legal component.
Hillsboro answers that after a “reasonable” time of no beneficial use, usually four years, the burden of proof shifts to the claimant, NMCC and Gray and Frost. The only evidence they put up was declaring the wells as auxiliary to the production wells, a paper claim that does not overcome the actual 40 or so years of non-use.
If the appellate court finds NMCC and Gray and Frost have any vested water rights, Hillsboro argues, it would “open wide the door to recognizing the unfulfilled dreams of all pre-basin water project failures,” with unused or abandoned water as still viable for appropriation. Such a decision, “would damage all water administration in the state of New Mexico and make a mockery of the adjudication process.”