The 10th Annual Assembly

Adjudication: Curse or Salvation

Saturday, June 10, 2006

Dane Smith Hall, UNM

What Is Adjudication? MRG Status?

DL Sanders, Chief Counsel

NM Office of the State Engineer

Lucy Moore, facilitator: DL Sanders is Chief Counsel to the State Engineer, and Director of the Litigation and Adjudication Program. In that role, he has responsibility for the prosecution of all New Mexico water rights adjudications, and provides counsel to the State Engineer on all matters of his duties to supervise and administer the water rights of New Mexico. DL graduated from Sandia High in ’75 and from UNM Law School in ’85. Welcome DL, and thanks.

DL Sanders: Lucy didn’t mention that we are neighbors. I always like to make that disclaimer, right out of the gate. Also, you notice, I didn’t go to college: I just went to high school and Law School. No. I went to college out of state, but we don’t have to talk about that.

One thing that’s good about these kinds of groups—the Assembly, the Dialogue, and we had a great conference up in Santa Fe last year called H2O or something—but, what people want to know is, “What kind of New Mexico do you want to live in?” That’s a political-social question, and we’re sort of the machine behind it. Whenever laws come along, we’re responsible for executing them, and in theory, we reflect what the legislature intends for the state to look like. It’s your job to vote the people in to get the kind of New Mexico you want. In 1907, the kind of New Mexico they wanted was economic development. In the western United States [there is] a limited amount of water, and if you want economic development, you have to have water. If you’re going to make an investment you want that water source to be reliable; hence came the Prior Appropriation doctrine.

On March 19, 1907, the Territorial Water Code was enacted and became the law of the Territory of New Mexico. So on March 19, 2007, we will have had one hundred years of what I’d like to refer to as very efficient water administration. I said I’d like to refer to it that way, but I’m not sure we’ve been as successful as we should have been, but we’re trying harder.

The ‘purpose of adjudication…’ I love this subject. This discussion has been all over the board, and I can honestly say that my office has been largely responsible for some of the misimpressions, or poorly stated reasons behind adjudication. I’ll get to the point and attribute this in a moment, but let’s go back and look at 1907. The Water Code appears to have three purposes in mind. The first one was: you have a Territory, you have a State Engineer, and all water rights from that point forward can only be developed through an action by the State Engineer. That was it—the only way. However, you had all these pre-existing water rights, and the Constitution and the Water Code went out of their way to say we don’t want to forego those rights or deprive these folks of any right. We’ll recognize them as being valid. We want to bring them all into one administrative scheme, and how we propose to do that is we’ll have these things called ‘adjudications.’ The adjudications will also be able to serve two other purposes. One is, we’ll be able to evaluate the demand on the existing supply of water, and then we can define whether or not we should build new reservoirs and where it’s appropriate to build new reservoirs because there’s available unappropriated water to put in those reservoirs. The other thing is we can facilitate the administration of water rights.

Now, one of the things that is important about the unappropriated water is that in 1902, the Bureau of Reclamation Act was passed, and a guy named Bien [?] who worked for the Bureau created a standard code for water rights administration, for adopting a prior appropriation system. Most of the western states have adopted some form of that. That’s the tie-in to that provision that says ‘Let’s figure out…’ If we’re going to have the Bureau of Reclamation come in here and help us build dams, before they’re willing to do so, they have to follow state law, so you need to know what water is available. They don’t want to make this investment unless water is available to support the construction of these reservoirs. The other act was this unified system of bringing old rights, pre-1907s—that’s the way we refer to them—and all subsequent permitted and licensed rights into one system. If you look at the Act of 1907, the purpose of it in my view—and I think it’s the current view of all, at least in my staff—is that the code expected, say, Colorado, to get out and adjudicate the rights in 1907 and it would all be done. Then from that point forward, you wouldn’t have these massive ongoing adjudications. It would all be done by the Engineer, because he has licensing power. People talk about the State Engineer adjudicating rights—he doesn’t adjudicate them, but he does have the very same powers in a quasi-judicial capacity. He can go out and look at your rights under statute and say, have you done your works, the works are in place; we know by the fact of your date of application your intent to appropriate; we know about how much water you put to beneficial use; where your points of diversion are, and places of use—that’s your water right, and we can define that. The State Engineer has that authority.

The original Act also provided that—and this is probably why adjudication didn’t get going—because the original Act provided, until 1965, that as he went along, the State Engineer would assess the cost of adjudicating everybody’s right based upon the amount of acre-feet that they were adjudicated. So it kind of cut two ways: you want a thousand acre-feet Mr. Turner? Are you willing to pay for that amount? So the point is, you paid as you went, and once you were done with the water rights on a stream, you could administer them. Section 58 of the 1907 Code provided that before the rights were adjudicated on a stream, you couldn’t appoint a water master. [First] adjudicate, [then] appoint a water master. The law also provided that those who received the most water also paid the most for the water master, because they’re the ones making the most off having the water available.

For whatever reason, most of these laws are not widely followed. Certainly if you look at the old—and by the way, I’ve been at the State Engineer [office] since 1990; I studied under Em Hall, Chuck DuMars, and Al Utton, who were at that time probably three of the five or six premier water lawyers and professors in the country. Al has since passed on, Chuck’s no longer at the Law School, and Em’s retiring…well, actually, Em’s kind of come to work for me on contract to do a history of the Middle Rio Grande, and I’ll get to that also—but I think what happened is the law wasn’t followed because the State Engineer, as engineers are inclined to do, they think they can solve all the world’s problems. Certainly they have a better claim on that than the rest of us, maybe because they actually make things and everything around us is actually a function of engineering. It is my belief that you could never have anticipated in 1907 that you would have Pueblo claims, federal reserve claims, endangered species claims, clean water claims—it was not anticipated that these complexities would bog down the process and make the distribution of water all the more difficult than when it had just been allocated among users. So. By not getting them done in 1907 and dragging them out to this point, we’ve created a morass of problems for ourselves. Among them, how are you ever going to get around to administering water? The prior appropriation system means nothing if you can’t use your priority, bottom line. Janet Jarratt talks about it all the time. So the issue is, how do you give meaning to the prior appropriation system before adjudication, if adjudication is required in a state that has been remiss and slow in funding these things and getting them done?

In 1941, the legislature, as a result of litigation that occurred over the Rio Costilla in Northern New Mexico—which starts in Colorado, runs into New Mexico, goes back into Colorado, and finally empties into the Rio Grande in New Mexico…a very convoluted system of administration—anyway the rights to that river were involved in litigation in Colorado. What the New Mexico State Engineer wanted to do was come in and regulate a Colorado group who wanted to build a reservoir in New Mexico, and say, “You’re required not only to get a permit to build the reservoir, but also to appropriate water.” This was filed in Federal District Court in Colorado, and the 10th Circuit ruled, “Mr. Engineer, they are merely taking their share of water that Colorado users are entitled to and have already previously developed. That’s not subject to your regulation, even if they’re taking it out of New Mexico.” So basically they said New Mexico didn’t have any jurisdiction over the water rights owned in Colorado, even though the point of diversion was in New Mexico. And then the court went on to opine, “We also question whether the New Mexico State Engineer has authority over the construction of the reservoir, of the dam itself.” In response to this, and the case was ‘McClure,’ the Legislature did a bunch of things. They re-wrote a lot of the Code, and they did it to be more efficient. That’s one thing not to be forgotten: this Code has been evolving for one hundred years, in response to lots of public input, such as yourselves, to try and match up the Code to what New Mexico looked like, and where they wanted it to go. So it kind of evolved to create the New Mexico we’re in today. So. The first thing that happened in 1941 was the statute that required water rights to be adjudicated before the appointment of a water master was repealed. No longer is that a requirement. Why have we continued to argue this all these years? Very unclear to me. It would be a greater benefit and much more efficient if they had been done, but they hadn’t been done, and the legislature recognized this in response to McClure, which was filed in 1938, I think, and was still pending in the 10th Circuit. So in ‘41 or ‘42, they enacted a statute that said, “State Engineer, if New Mexico streams are involved in litigation in a another state, you take control of that river and administer the water in that river.” They could not have asked him to do that if he first had to go and adjudicate in the event the rights weren’t adjudicated. In our view that’s the first step. Adjudications are absolutely necessary, they serve a certain utility, but there are instances where you’re going to have to go in and administer before they’re completed, and when those instances occur (we’ve described this one) then, State Engineer, you’ve got to do it.

In 2001, the legislature again came along and said, “Well we see now, sixty-plus years later, we still haven’t gotten adjudications done…” We know the system is what I refer to as ‘fully appropriated,’ and a fully appropriated system means we’re not giving out any new water rights. ‘Over allocation’ means that in any point in time, we’re taking more water than New Mexico is entitled to in a compact, annual supply sense. If you only get water one in one hundred years, you can have a water right, but because your priority comes as a priority date [?] you’re always the last person, you may be the last person to take it. Availability of supply is a defense against forfeiture and abandonment. That’s why we don’t say we’re over appropriated or over allocated, we just simply say the appropriations are done and there’s no more water to appropriate, and as a junior priority, you are very suspect as to whether or not you’re allowed to get water. That’s how the system works, and that’s how it is that water rights that are 1907 or earlier are very valuable, and water rights that are post 1953 or later, or post Compact, are very suspect in terms of reliability and therefore the value of those rights are much less.

Anyway, in 2001 the legislature said, ‘undertake administration, State Engineer, because adjudications are taking too long, and do it by promulgating regulations, which we have done and are currently being challenged on. I have my brief that we’re filing on either Monday or ten days later, depending upon how it looks today. It’s about sixty pages long and it kind of recounts why we can do this.

But the departure from our past representations, particularly what people would argue have been our past representations as argued in the Pecos Valley Artesian Conservancy District v. State Engineer in 1984—that’s not to say that adjudications—they continue to be important for this reason: what you have are the Pueblo rights and federal reserve rights. Under the McCarrin Act, you can only adjudicate the rights of the tribes and Pueblos and the United States if you have a comprehensive adjudication, and only upon completion of that adjudication can you administer their water rights. So as things have evolved over time, their original purposes, things that were [exempted?] to be put aside in 1941 to complete the adjudication have come back, and you need to complete them in order to exercise jurisdiction over both the tribes and Pueblos. We could argue that the United States acts as if the McCarrin Act never was passed. The tribes and Pueblos, I think, have a better argument than the United States about their sovereignty, and in this state, we tend to try to endeavor to avoid that question, about who has the particular exercise of the administration of water rights, by reaching agreement with the tribes and Pueblos on how their rights will be administered within the boundaries of the reservation. If we can do that, we defer to the Pueblo and tribes administration within the bounds of the Pueblo, and we exercise jurisdiction outside of them. To date, we’ve gotten—we haven’t really done it yet. The Navajo have been remarkably agreeable and understanding. We’ve done a good job of working with them. I think in Aamodt we have one of the most complex and convoluted efforts to achieve this process. If it works, it’ll be a miracle, but the fact that we could agree on anything I think speaks as to the miracle itself.

So, for those two reasons, we have to continue with the adjudication process But we do believe the legislature was right—we do have to step in and administer water rights and that’s why we’re doing our Active Water Resource Management regulations. It’s not by any coincidence or happenstance that we just happen to have our AWRM and our district-specific regulations for implementation of either—on the Pecos for example, we have a big settlement, and we spent a hundred million dollars trying to bring that river back into balance—that our regulations for that river reflect the terms of the settlement so that the watermaster can enforce the settlement. On the Lower Rio Grande, we have our second biggest—well, it’s currently our biggest [since] we’re almost done in the Pecos— and moving into the Lower Rio Grande, we are going to make our regulations public on June 28th to the Lower Rio Grande water Users Association. We’re going to bring out our Active Water Resource Administration regulations for priority administration. It’s not a coincidence, as I say. It’s purposeful that they are filed in the same—that we are pursuing administration in the same place that we’re moving our adjudications. We have moved our resources to focus on those adjudications that are long pending in the first instance, but we’ve expanded our resources and really focused on those adjudications that are critical to compact administration, and that’s talking about the San Juan, the Lower Rio Grande and the Pecos, and we’ve made tremendous progress. And I’ll tell you why we have. I’ve been Chief Counsel since 2001. In July 2001, we went from having a staff of about thirteen total—and there were only seven when I came, in 1990—we went to about twenty-six. We brought in the Hydrologic Survey under my bureau in 2000. We expanded that in 2002. Now we have eighty people just doing adjudications in my program. Turns out I [have] the biggest program in the State Engineer Office.

This has served two very good benefits, the first being you have staff—historically what would happen with the State Engineer is we also represented the Interstate Stream Commission. Those duties have largely been given over to the Interstate Stream Commission who now have five lawyers, and the Attorney General, which under Patsy Madrid, brought in Steve Farris and two other of our lawyers—they’re largely responsible for handling any litigation, direct litigation over Interstate rivers. ISC staff provides support to them. We provide technical support and water law support, but in this program at the State Engineer, we are essentially responsible for all water right actions on applications and adjudications.