STATE News:
SANTA FE — The state Supreme Court ruled today a potash company legally abandoned nearly all of its water rights in the Pecos River in New Mexico by not using the water for decades. The Court unanimously determined that Intrepid Potash, Inc. failed to put most of its water rights to “beneficial use” since closing a potash refinery near Loving in southeastern New Mexico in the early 1970s. The justices affirmed a decision of the state Court of Appeals that Intrepid had abandoned all but the rights to 150 acre-feet per year of water in the river.
New Mexico water law requires those who acquire a right to a particular amount of water to put that water to a continuing beneficial use.
In an opinion by Justice C. Shannon Bacon, the Court clarified a legal test to determine whether water rights have been abandoned. The justices also adopted an “anti-speculation doctrine” for state water law that prevents a person from holding water rights without using them in hopes they can be sold, leased, or transferred in the future.
“Because the desire of a water rights holder only to use the water later, when it is financially profitable, is the antithesis of beneficial use and is not an excuse for nonuse sufficient to rebut the presumption of abandonment, we affirm the Court of Appeals’ conclusion that Intrepid’s speculation ‘supported an intent to abandon rather than an intent to use the water,”’ the Court wrote.
Starting in the 1930s for the operation of a potash mine and refinery, Intrepid acquired rights to 34,315 acre-feet per year of water from the Pecos River for nonconsumptive use and 19,836 acre-feet per year for consumptive use. The company diverted a maximum of about 5,800 acre feet per year in the early 1960s. An acre-foot is nearly 326,000 gallons of water and represents the amount of water needed to cover an acre of land one foot deep.
After closing the Loving refinery, Intrepid dismantled the water diversion structures. Its efforts to negotiate transfers of the water rights resulted in only one agreement with another company to divert up to 150 acre-feet per year. Intrepid did not use its rights to river water for a new refinery built closer to its potash mine and instead relied on groundwater.
From 1978 through 2017, Intrepid applied for and received 25 extensions of time from the Office of the State Engineer to put its water rights to a beneficial use. A legal challenge arose after Intrepid sought to change the purpose of some of its water rights. A state district court concluded that Intrepid had abandoned and forfeited all but 150 acre-feet per year of its Pecos River water rights. Intrepid appealed and the Court of Appeals affirmed its decision.
The case went next to the Supreme Court, and Intrepid argued there was no clear and convincing evidence of an intention by the company to abandon its water rights. The Court disagreed and pointed to evidence in the district court proceeding, including that Intrepid allowed its water diversion structures to fall into disrepair and made no improvements for more than four decades.
The justices clarified the framework for New Mexico courts to evaluate evidence of possible abandonment, explaining that “it is at the discretion of the trial court to weigh the evidence of facts or conditions excusing nonuse along with actions or inactions demonstrating the water rights holder did not intend to abandon their water rights.”
In Intrepid’s case, the district court determined that during the decades the company obtained extensions of time for its water rights “it did not undertake efforts to put the water to beneficial use, rather it was only attempting to delay its use,” the Court wrote.
