Carlsbad Irrigation Dist. v. D'Antonio

• Court: New Mexico Court of Appeals
• Decided: October 18, 2023
• Status: Unpublished

Opinion

The slip opinion is the first version of an opinion released by the Clerk of the Court of Appeals. Once an opinion is selected for publication by the Court, it is assigned a vendor-neutral citation by the Clerk of the Court for compliance with Rule 23-112 NMRA, authenticated and formally published. The slip opinion may contain deviations from the formal authenticated opinion.

1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

2 Opinion Number: _____________

3 Filing Date: October 18, 2023

4 No. A-1-CA-39378 and No. A-1-CA-40372 5 (consolidated for purpose of opinion)

6 CARLSBAD IRRIGATION DISTRICT 7 and OTIS MUTUAL DOMESTIC WATER 8 CONSUMERS & SEWAGE WORKS 9 ASSOCIATION,

10 Petitioners-Appellees,

11 v.

12 JOHN D’ANTONIO, NEW MEXICO 13 STATE ENGINEER,

14 Respondent-Appellee,

15 and

16 INTREPID POTASH -- NEW MEXICO, 17 LLC; SELECT ENERGY SERVICES, LLC; 18 HENRY MCDONALD; and INTREPID 19 POTASH, INC.,

20 Movants-in-Intervention-Appellants.

21 APPEALS FROM THE DISTRICT COURT OF EDDY COUNTY 22 Raymond L. Romero, District Court Judge 1 consolidated with

2 STATE OF NEW MEXICO ex rel. OFFICE 3 OF THE STATE ENGINEER; NEW MEXICO 4 INTERSTATE STREAM COMMISSION; 5 PECOS VALLEY ARTESIAN CONSERVANCY 6 DISTRICT; CARLSBAD IRRIGATION 7 DISTRICT; OTIS MUTUAL DOMESTIC 8 WATER CONSUMERS & SEWAGE WORK 9 ASSOCIATION; FORT SUMNER IRRIGATION 10 DISTRICT; CITY OF ROSWELL; EOG; and 11 “YATES ENTITIES,”

12 Plaintiffs-Appellees,

13 v.

14 INTREPID POTASH, INC. and INTREPID 15 POTASH-NEW MEXICO, LLC,

16 Defendants-Appellants.

17 APPEAL FROM THE DISTRICT COURT OF CHAVES COUNTY 18 James J. Wechsler, District Court Judge, Pro Tempore

19 Martin, Dugan & Martin 20 Kenneth D. Dugan 21 W.T. Martin, Jr. 22 Carlsbad, NM

23 for Petitioners-Appellees (No. A-1-CA-39378)

24 A. Nathaniel Chakeres, General Counsel, Special Assistant Attorney General 25 Richard A. Allen, Deputy General Counsel, Special Assistant Attorney General 26 Simi Jain, Managing Attorney, Special Assistant Attorney General 27 Richard O’Neal, Attorney, Special Assistant Attorney General 28 Santa Fe, NM 1 L. Christopher Lindeen Attorney at Law LLC 2 L. Christopher Lindeen 3 Santa Fe, NM

4 for Respondent-Appellee (No. A-1-CA-39378)

5 Rodey, Dickason, Sloan, Akin & Robb, P.A. 6 Edward Ricco 7 Albuquerque, NM

8 Law & Resource Planning Associates 9 Charles T. DuMars 10 Tanya L. Scott 11 Lacy A. Daniel 12 Albuquerque, NM

13 for Appellants Intrepid Potash-New Mexico, LLC and Intrepid Potash, Inc. 14 (No. A-1-CA-39378)

15 Taylor & McCaleb, P.A. 16 Elizabeth Newlin Taylor 17 Jolene L. McCaleb 18 Corrales, NM

19 for Appellant Select Energy Services, LLC (No. A-1-CA-39378)

20 Tabor & Byers, LLP 21 Cas Tabor 22 Carlsbad, NM

23 for Appellant Henry McDonald (No. A-1-CA-39378)

24 A. Nathaniel Chakeres, General Counsel, Special Assistant Attorney General 25 Richard A. Allen, Deputy General Counsel, Special Assistant Attorney General 26 Kelly Brooks Smith, Deputy General Counsel, Special Assistant Attorney General 27 Edward Bagley, Managing Attorney, Special Assistant Attorney General 28 Paul Bossert, Special Assistant Attorney General 29 Patricia Estrella, Special Assistant Attorney General 30 Owen Kellum, Special Assistant Attorney General 31 Santa Fe, NM 1 Ann M. Carter, Special Assistant Attorney General 2 Santa Fe, NM

3 L. Christopher Lindeen Attorney at Law LLC 4 L. Christopher Lindeen, Special Assistant Attorney General 5 Santa Fe, NM

6 for Appellee New Mexico State Engineer (No. A-1-CA-40372)

7 Christopher D. Shaw 8 Nicholas R. Rossi 9 Santa Fe, NM

10 Stein & Brockmann, PA 11 Jay F. Stein 12 Santa Fe, NM

13 for Appellee New Mexico Interstate Stream Commission

14 Hennighausen & Olsen 15 A.J. Olsen 16 Roswell, NM

17 for Appellee Pecos Valley Artesian Conservancy District

18 Martin, Dugan & Martin 19 Kenneth D. Dugan 20 W.T. Martin, Jr. 21 Carlsbad, NM

22 for Plaintiffs-Appellees Carlsbad Irrigation District and Otis Mutual Domestic 23 Water Consumers and Sewage Work Association (No. A-1-CA-40372)

24 Utton & Kery, P.A. 25 John Utton 26 Santa Fe, NM

27 for Appellee Fort Sumner Irrigation District 1 Lucas Williams 2 Drew Cloutier 3 Roswell, NM

4 for Appellees City of Roswell and Yates Entities

5 Law & Resource Planning Associates 6 Charles T. DuMars 7 Tanya L. Scott 8 Lacy A. Daniel 9 Albuquerque, NM

10 Peifer, Hanson, Mullins & Baker, P.A. 11 Charles R. Peifer 12 Mark T. Baker 13 Matthew E. Jackson 14 Albuquerque, NM

15 for Appellants Intrepid Potash, Inc. and Intrepid Potash-New Mexico, LLC (No. A- 16 1-CA-40372) 1 OPINION

2 BOGARDUS, Judge.

3 {1} This opinion consolidates two appeals—State ex rel. Office of the State

4 Engineer v. Intrepid Potash, Inc., A-1-CA-40372 (Case 1) and Carlsbad Irrigation

5 District v. D’Antonio, A-1-CA-39378 (Case 2)—which stem from the same

6 underlying proceedings, involve various of the same parties, and the conclusion of

7 Case 1 moots the issue presented in Case 2. See Rule 12-317(B) NMRA (providing

8 appellate courts the discretion to consolidate appeals). Appellants Intrepid Potash,

9 Inc., and Intrepid Potash-New Mexico, LLC are the parties appealing in both cases.

10 The New Mexico Office of the State Engineer (OSE), the New Mexico Interstate

11 Stream Commission (ISC), Pecos Valley Artesian Conservancy District, Otis

12 Mutual Domestic Water Consumers and Sewage Works Association, Fort Sumner

13 Irrigation District, City of Roswell, EOG, and Yates Entities filed objections to the

14 relevant proceeding in Case 1, and this opinion refers to them collectively as

15 Appellees. In Case 2, Carlsbad Irrigation District and Otis Mutual Domestic Water

16 Consumers & Sewage Works Association protested Appellants’ relevant

17 application; this opinion refers to these two parties as it relates to Case 2 as

18 Objectors. We affirm the district court’s conclusion in Case 1 that Appellants lost

19 the pertinent water rights; accordingly, Appellants did not possess any water rights

20 interest to protect in Case 2—mooting that issue. 1 {2} Case 1 arises from an expedited inter se proceeding to adjudicate water rights

2 claims under Rule 1-071.2(B) NMRA. After a full trial, the district court concluded

3 that Appellants, through their predecessors, forfeited all Pecos River water rights in

4 excess of 5,813.6 acre-feet per year and abandoned all but 150 acre-feet per year of

5 the remaining water rights. Appellants argue that the district court (1) deprived

6 Appellants of due process in adjudicating its water rights forfeited under NMSA

7 1953, Section 75-5-26 (1941, amended 1967, Vol. 11, 1967 Pocket Supp.) (the pre-

8 1965 forfeiture statute); (2) erred in concluding that Appellants forfeited the water

9 rights; and (3) inappropriately held that Appellants abandoned the remaining water

10 rights deemed lost to them. We reject Appellants’ arguments and affirm the district

11 court.

12 {3} In Case 2, Appellants appeal the district court’s denial of their joint motion to

13 intervene and their subsequent motion for reconsideration in the writ of mandamus

14 action filed by Objectors against John D’Antonio, the New Mexico State Engineer.

15 Appellants argue that the district court erred in denying their joint motion to

16 intervene because the mandamus action threatened their water rights interest.

17 However, because we affirm the district court’s conclusion in Case 1 that Appellants

18 forfeited or abandoned the pertinent water rights, the issue of whether the district

19 court erred in denying Appellants’ motion to intervene is moot and we decline to

20 address it. See Crutchfield v. N.M. Dep’t of Tax’n & Revenue, 2005-NMCA-022,

2 1 ¶ 36, 137 N.M. 26, 106 P.3d 1273 (“A reviewing court generally does not decide

2 academic or moot questions.”). Thus, we dismiss the issue presented in Case 2.

3 BACKGROUND

4 {4} These consolidated appeals arise from Appellants’ attempt to modify the point

5 of diversion of water rights that had been dormant for decades. We first provide a

6 factual background of the events leading to the district court’s conclusion that

7 Appellants forfeited or abandoned all but 150 acre-feet per year of their water rights.

8 Next, we provide the procedural background that underpins the district court’s denial

9 of Appellants’ motion to intervene.

10 Factual Background

11 {5} Beginning in 1931, Appellants developed an operation to mine and refine

12 potash in Southeastern New Mexico. As part of the operation, Appellants completed

13 a refinery in Loving, New Mexico (the Loving Refinery) and began acquiring water

14 rights. In total, the OSE granted Appellants approximately 34,315 acre-feet per year

15 of water rights in the Pecos River for nonconsumptive use and 19,836 acre-feet per

16 year for consumptive use. The granted water rights appropriated Pecos River water

17 from the same diversion point, Harroun Dam into the Harroun Canal, and for the

18 same beneficial use, industrial use at the Loving Refinery.

19 {6} The Loving Refinery used a crystallization process that involved the

20 separation of potassium crystal by heating of the ore. Appellants used the Pecos

3 1 River water to cool the heated ore and to sluice undissolved salts to the Laguna

2 Grande for disposal. The water used to cool the ore was substantially for

3 nonconsumptive use because it returned to the Harroun Canal or the Pecos River.

4 Conversely, the water used to sluice undissolved salts was for consumptive use, as

5 the Laguna Grande had no outlet to return the water. In 1948, Appellants installed

6 cooling towers at the Loving Refinery, which enabled the recirculation of cooling

7 water and obviated the need to use Pecos River water for cooling. Thereafter,

8 essentially 100 percent of the water diverted into the Loving Refinery was

9 consumptively used.

10 {7} In 1958, the potash industry experienced economic difficulties with

11 overproduction, increased costs, increased foreign competition, and lower prices.

12 Nevertheless, Appellants experienced peak production and made significant

13 investments in their operations during the late 1950s and early 1960s. The Loving

14 Refinery’s improvement and expansion did not significantly increase water demand;

15 instead, water use directly corresponded to the level of production.

16 {8} As Appellants’ production steadily increased, they continued to

17 consumptively use water to sluice undissolved salts. The maximum water Appellants

18 consumed was 5,813.6 acre-feet in 1963. The surface water in the Pecos River was

19 sufficient to supply that amount in times of drought. Even during general declines in

20 available surface water supply, the Loving Refinery’s operations were not

4 1 constrained. Furthermore, because Appellants had sufficient water to meet their

2 demands, Appellants did not have the need to use the approved storage or

3 supplemental wells as a means to alleviate any variability in water supply.

4 Appellants’ location upstream and the lack of priority calls from downstream

5 irrigators allowed Appellants to divert all the water they needed. Ultimately,

6 Appellants had the right to use all the water flowing in the Harroun Canal.

7 {9} By the late 1950s, the grade of the ore mined by Appellants began to decline,

8 even as production increased. This lower grade ore required higher quality water to

9 process; leading to Appellants filing an application with the OSE for a permit to drill

10 wells in the Ogallala Aquifer shallow water basin in the Lea County Basin

11 (Caprock). The OSE appropriated 3,500 acre-feet per year of Caprock water rights

12 that Appellants used in a new flotation refinery intended to process the lower-grade

13 ore. Appellants, however, could have used the original Pecos River water at the new

14 refinery, but decided to forgo the costs associated with such use and opted to rely on

15 Caprock water. Over time, continuing operations in the Loving Refinery at the same

16 time Appellants were expanding the new refinery became uneconomical. In 1973,

17 Appellants decided to shut down the Loving Refinery, and dismantled it. Caprock

18 water replaced all need and use of the Pecos River water.

19 {10} Appellants understood that their water rights would be subject to forfeiture if

20 they were not put to beneficial use. Consequently, Appellants discussed transfer of

5 1 the water rights with multiple entities, but ultimately only reached one agreement.

2 The sole agreement was to allow the United Salt Corporation to divert up to 150

3 acre-feet per year from the Pecos River. In 1978, Appellants began filing

4 applications for extensions of time to put the water rights to beneficial use,

5 referencing insufficient water availability as the reason for seeking the extensions.

6 Appellants received twenty-five extensions of time to put the water to beneficial use

7 from 1978 through 2017. The extensions of time did not include the amount of the

8 water rights for which an extension was granted, did not include a finding that the

9 extensions were made in public interest, and were not statements as to the viability

10 of the water rights. Appellants continued referencing the lack of sufficient water to

11 satisfy their needs as the reason for the extensions. At that point, however,

12 Appellants did not have the ability to put the water rights to beneficial use because

13 they had dismantled the Loving Refinery.

14 {11} In 1991, the OSE informed Appellants that “no further extension of time will

15 be granted unless a diligent effort has been made to apply water to beneficial use.”

16 The following year OSE granted the extension only because Appellants began water

17 rights assignment negotiations with the ISC. In 1995, Appellants and the ISC entered

18 into a cooperative water conservation agreement through December 31, 2001.

19 Appellants assigned their Pecos River water rights, except the 150 acre-feet per year

20 delivered to United Salt Corporation, to the ISC. The agreement, however, was not

6 1 for the beneficial use of the water rights because it was for the continued nonuse of

2 water. ISC entered into the agreement because Appellants’ assignment “could

3 provide reasonable assurance that the water rights will not be used in the near future,

4 which if use were resumed, would negatively impact the effects of rights acquired

5 elsewhere.” ISC paid a nominal amount of approximately 7 cents per acre-foot

6 knowing that Appellants were not exercising their water rights. For the same reasons,

7 ISC declined to acknowledge the validity of Appellants’ water rights or to renew the

8 agreement when it expired.

9 {12} In 2001, the ISC formed the ad hoc Pecos River Basin Committee—which

10 included Appellants—to develop collaborative solutions between water users to

11 ensure long-term compliance with the Pecos River Compact. The committee held

12 meetings with representatives from various water user groups, resulting in the 2003

13 Pecos Settlement Agreement (the Settlement Agreement). In 2003, the ISC issued

14 its Pecos River Adjudication Settlement Negotiations: Model Evaluation of

15 Proposed Settlement Terms—Final Report (the Final Report). The Final Report

16 noted that the Settlement Agreement did not include diversion for Appellants

17 because their water rights were unused and a continued zero diversion was assumed.

18 The Settlement Agreement was incorporated into the partial final decree in State ex

19 rel. Office of State Engineer v. Lewis, 2007-NMCA-008, 141 N.M. 1, 150 P.3d 375.

20 The Lewis court provided Appellants notice and the opportunity to object to the

7 1 Settlement Agreement or the partial final decree; Appellants did not object. Id. ¶¶

2 15-16.

3 {13} Beginning in 2016, Appellants made improvements to the diversion

4 infrastructure and filed applications to change the purpose of use for some of the

5 water rights—these applications are discussed in detail in the procedural background

6 below. Multiple parties protested the applications, triggering an administrative

7 hearing before the OSE. On February 20, 2019, while discovery was underway,

8 some parties to the administrative proceeding filed a complaint in district court

9 seeking an expedited inter se adjudication of Appellants’ claimed water rights. The

10 parties agreed to the expedited inter se adjudication and a stay in the administrative

11 proceeding. The scope of the inter se proceeding was set to be the “issue of whether

12 any of [Appellants’ w]ater [r]ights [c]laims have been lost to forfeiture or

13 abandonment.”

14 {14} Trial for the inter se proceeding took place December 8 through 18, 2020. On

15 August 17, 2021, the district court issued its findings of fact and conclusions of law.

16 On September 17, 2021, before the district court had entered a partial final judgment

17 in this matter, this Court issued its decision in State ex rel. Office of State Engineer

18 v. Elephant Butte Irrigation District, 2021-NMCA-066, 499 P.3d 690 (hereinafter

19 Gray). On September 27, 2021, the district court invited the parties to file

20 supplemental briefs “addressing the impact of Gray on [its previously issued

8 1 f]indings of [f]act[] and [c]onclusions of [l]aw.” After the parties filed their

2 supplemental briefs, the district court issued amended findings of fact and

3 conclusions of law on December 17, 2021, determining that Appellants forfeited or

4 abandoned all water rights except 150 acre-feet per year. The first appeal followed.

5 Procedural Background

6 {15} As mentioned above, in 2017 Appellants filed seven applications to change

7 the point of diversion along with the place and purpose of use for 6,883 acre-feet per

8 year of water rights. Pending the final determination of the applications, the OSE

9 granted Appellants a preliminary authorization to use the water rights at the proposed

10 move-to location for the purposes requested. After the preliminary authorizations,

11 Appellants published notice of the applications and Objectors protested each

12 application. Objectors further filed a petition for alternative and peremptory writs of

13 mandamus seeking that the OSE suspend or cancel the preliminary authorizations.

14 {16} The petition for writ of mandamus included only the OSE as a defendant,

15 excluding Appellants. Consequently, Appellants filed a joint motion to intervene in

16 the proceeding, which the district court denied. Thereafter, the district court issued

17 the peremptory writ of mandamus, requiring the OSE to withdraw and cancel the

18 preliminary authorizations. Appellants timely appealed the denial of their joint

19 motion to intervene and the OSE appealed the peremptory writ of mandamus.

9 1 Further, the parties petitioned for a writ of superintending control to our Supreme

2 Court on both issues. This Court and our Supreme Court consolidated the cases.

3 {17} This Court certified the parties’ appeals to our Supreme Court. Moreover, our

4 Supreme Court stayed further proceedings for the corresponding cases in this Court,

5 pending the disposition of the petitions for writ of superintending control. While the

6 petitions for writ of superintending control were pending, partial judgment in the

7 expedited inter se proceeding discussed above was entered, which declared

8 Appellants’ water rights to have been forfeited and abandoned. Accordingly, our

9 Supreme Court declared that the district court’s forfeiture and abandonment

10 adjudication of Appellants’ water rights “render[ed] the requests for extraordinary

11 relief in these consolidated proceedings functionally moot.” Our Supreme Court

12 denied the writs for superintending control and lifted the stay for the corresponding

13 cases in this Court.

14 {18} Returning to this Court, the parties stipulated to dismiss the OSE’s appeal and

15 Objectors filed a motion to dismiss Appellants’ appeal based on mootness and/or

16 standing. This Court ordered that Objectors’ motion to dismiss be held in abeyance

17 pending full briefing on the issues. We now consider the arguments.

10 1 DISCUSSION

2 I. The District Court Did Not Deprive Appellants of Due Process

3 {19} “Claims involving the denial of procedural due process are questions of law,

4 which we review de novo.” Cordova v. LeMaster, 2004-NMSC-026, ¶ 10, 136 N.M.

5 217, 96 P.3d 778. Appellants argue that the district court’s forfeiture adjudication

6 under the pre-1965 statute violated their due process rights because the statute does

7 not provide a notice or opportunity to be heard, and the time between the purported

8 forfeiture and the trial was too long to provide a “meaningful opportunity to be

9 heard.” Appellees respond that the complaint and motion put Appellants on notice,

10 and that the trial afforded Appellants sufficient opportunity to be heard. 1 We agree

11 with Appellees and explain.

12 {20} We begin by providing a brief discussion on the law of forfeiture, which is a

13 penalty for the failure of a water owner to put the water to beneficial use. State ex

14 rel. Off. of State Eng’r v. Romero, 2022-NMSC-022, ¶ 21, 521 P.3d 56. Before 1965,

1 Appellees further argue that Appellants failed to preserve the due process issue. Appellants, however, invoked a ruling on the due process claim in their requested findings of fact and conclusions of law, and the closing brief. See In re Norwest Bank of N.M., N.A., 2003-NMCA-128, ¶ 10 134 N.M. 516, 80 P.3d 98 (holding that a party’s submission of findings of fact and conclusions of law to the trial court was sufficient for preservation). Accordingly, Appellants’ due process is preserved. See Benz v. Town Ctr. Land, LLC, 2013-NMCA-111, ¶ 24, 314 P.3d 688 (“To preserve an issue for review on appeal, it must appear that appellant fairly invoked a ruling of the trial court on the same grounds argued in the appellate court.” (internal quotation marks and citation omitted)).

11 1 the forfeiture statute provided that water rights that had not been beneficially used

2 for a period of four years would be forfeited as an operation of law. Section 75-5-26

3 (1941). In 1965, the Legislature amended the statute to require the OSE to provide a

4 notice and a declaration of nonuse one year before a forfeiture adjudication. NMSA

5 1953, § 75-11-8(A) (1965, amended 1967, Vol. 11, 1967 Pocket Supp.). This one-

6 year notice requirement, however, does “not apply to water which has reverted to

7 the public by operation of law prior to June 1, 1965.” Id. Accordingly, we must

8 consider whether the district court violated Appellants’ due process rights by

9 concluding that Appellants forfeited its water rights decades ago under the pre-1965

10 statute that does not require notice.

11 {21} Similar to the Fourteenth Amendment of the United States Constitution,

12 Article II, Section 18 of the New Mexico Constitution states that “no person shall be

13 deprived of life, liberty or property without due process of law.” The present case

14 implicates procedural due process, which “requires the government to give notice

15 and an opportunity to be heard before depriving an individual of liberty or property.”

16 Bounds v. State ex rel. D’Antonio, 2013-NMSC-037, ¶ 50, 306 P.3d 457 (alteration,

17 internal quotation marks, and citation omitted). “[A] property interest in an

18 adjudicated water right would be entitled to due process protections, if subjected to

19 deprivation.” Id. ¶ 51. Therefore, we must consider “how much process is due to

20 avoid an erroneous deprivation, given the varying interests of the parties and the

12 1 particular procedures used.” See Starko, Inc. v. Gallegos, 2006-NMCA-085, ¶ 18,

2 140 N.M. 136, 140 P.3d 1085. There are three factors to consider in determining

3 what procedures are required:

4 First, the private interest that will be affected by the official action; 5 second, the risk of an erroneous deprivation of such interest through the 6 procedures used, and the probable value, if any, of additional or 7 substitute procedural safeguards; and finally, the Government’s 8 interest, including the function involved and the fiscal and 9 administrative burdens that the additional or substitute procedural 10 requirement would entail.

11 Bd. of Educ. of Carlsbad Mun. Schs. v. Harrell, 1994-NMSC-096, ¶ 23, 118 N.M.

12 470, 882 P.2d 511 (quoting Mathews v. Eldridge, 424 U.S. 319, 335 (1976)).

13 Balancing these factors, we conclude that Appellants fail to persuade us that the

14 expedited inter se proceeding was insufficient to afford Appellants due process. See

15 Hall v. City of Carlsbad, 2023-NMCA-042, ¶ 5, 531 P.3d 642 (“On appeal, there is

16 a presumption of correctness in the rulings and decisions of the district court, and

17 the party claiming error must clearly show error.” (internal quotation marks and

18 citation omitted)).

19 {22} The procedure used properly safeguarded the vested water rights, which are

20 Appellants’ protected property rights. See Walker v. United States, 2007-NMSC-

21 038, ¶ 27, 142 N.M. 45, 162 P.3d 882 (asserting that a vested water right is a

22 “separate protected property right”). An expedited inter se proceeding “allows a final

23 determination of water rights to be made prior to the general inter se phase of the

13 1 general adjudication.” Gray, 2021-NMCA-066, ¶ 3. Rule 1-071.2(B) governs

2 expedited inter se proceedings and requires that all claimants of the water rights be

3 given notice. The intricate nature of inter se water cases can lead to flexibility in the

4 limits of due process. See State ex rel. State Eng’r v. United States, 2018-NMCA-

5 053, ¶ 37, 425 P.3d 723 (“As this case illustrates, inter se water cases can involve

6 thousands of potential claimants, and the limits of due process notice therefore

7 require flexibility in this context.”); see also Harrell, 1994-NMSC-096, ¶ 23 (“Due

8 process considerations are flexible; the circumstances of the case determine the

9 requirements.”). “The New Mexico statutory inter se water procedure is specifically

10 designed to allow the [OSE] to fairly allocate water to all users of a particular

11 stream.” State ex rel. State Eng’r, 2018-NMCA-053, ¶ 34. This allocation must be

12 premised on the underlying principles of New Mexico water law.

13 {23} In New Mexico, water rights are both established and exercised by

14 beneficial use, which forms “the basis, the measure and the limit of the right to the

15 use of water.” N.M. Const. art. XVI, § 3; State ex rel. Off. of State Eng’r v. United

16 States, 2013-NMCA-023, ¶ 20, 296 P.3d 1217. “[F]orfeiture is an essential

17 enforcement mechanism for Article XVI’s beneficial use provision.” Romero, 2022-

18 NMSC-022, ¶ 14. This enforcement mechanism requires the adjudicator to consider

19 the retrospective use of water rights and determine whether the water owner failed

20 to beneficially use the water for four consecutive years. This retrospective process

14 1 advances the policy of our constitution and statutes promoting that “the waters [of

2 New Mexico are] made to do the greatest good to the greatest number. This [concept

3 rests] on the theory that the continuance of the title to a water right is based upon

4 continuing beneficial use.” State ex rel. Reynolds v. S. Springs Co., 1969-NMSC-

5 023, ¶ 9, 80 N.M. 144, 452 P.2d 478. Accordingly, the government’s interest in

6 adjudicating water rights is substantial. See Harrell, 1994-NMSC-096, ¶ 23 (listing

7 the government interest as a factor to determine whether a plaintiff’s due process

8 rights have been violated).

9 {24} Appellants contend that forfeiture adjudications under the pre-1965 statute

10 may lead to difficulty gathering evidence for trial due to the passage of time and that

11 a more timely proceeding is required to reduce the risk of erroneous deprivation.

12 Appellants, however, identify no additional or substitute procedural safeguards that

13 would permit retrospective enforcement of the pre-1965 forfeiture statute as the

14 Legislature intended. See NMSA 1978, § 72-12-8(A) (2002) (prescribing that the

15 one-year notice requirement, however, does “not apply to water that has reverted to

16 the public by operation of law prior to June 1, 1965”); see also Harrell, 1994-

17 NMSC-096, ¶ 23 (listing the “probable value, if any, of additional or substitute

18 procedural safeguards” as a factor to determine if a plaintiff’s due process rights

19 have been violated (internal quotation marks and citation omitted)).

15 1 {25} Moreover, the procedures delineated in current statutes and regulations

2 afford sufficient due process. NMSA 1978, Section 72-4-17 (1965), provides a

3 process for the determination of water rights and requires all claimants to the water

4 rights be made parties to the suit. As discussed above, Rule 1-071.2(B) allows the

5 courts to conduct these water rights suits as expedited inter se proceedings and

6 requires that all parties be given notice of the proceeding. In this case, Appellants

7 agreed to the expedited inter se proceeding after notice was provided pursuant to the

8 rule. Further, the district court provided Appellants an opportunity to be heard by

9 allowing Appellants to proffer evidence regarding its use of the water rights.

10 Appellants fail to argue that there is a risk of an erroneous deprivation of its water

11 rights after the trial—admitting “it is difficult to determine what evidence might have

12 been available to defend”—and thus fail to demonstrate that there is a reasonable

13 likelihood that the outcome might have been different with additional evidence. See

14 State v. Neal, 2007-NMCA-086, ¶ 42, 142 N.M. 487, 167 P.3d 935 (“[I]n order to

15 establish a violation of due process, a [party] must show prejudice.”). Accordingly,

16 we conclude that although water rights are a private interest that may be affected by

17 official action, there are no additional or substitute procedural safeguards to enforce

18 the pre-1965 forfeiture state, the government’s interest in upholding the

19 constitutionality of the proceeding is substantial, and Appellants fail to demonstrate

20 a risk of erroneous deprivation. See Harrell, 1994-NMSC-096, ¶ 23.

16 1 {26} Furthermore, we decline Appellants’ invitation to “follow Sturgeon [v.

2 Brooks, 281 P.2d 675 (Wyo. 1955)] and [to conclude] that a forfeiture action must

3 be timely, particularly where, as here, a party seeking forfeiture knew of the water

4 rights at issue.” In Sturgeon, the Wyoming Supreme Court held that the defendant

5 had not forfeited the water rights to a reservoir that the defendant had not used for

6 fifteen years, despite Wyoming’s forfeiture statute requiring that after five years of

7 nonbeneficial use water rights shall be considered abandoned and forfeited. 281 P.2d

8 at 683-85. We disagree with Appellants’ reliance on Sturgeon for several reasons.

9 {27} The Sturgeon court did not consider due process in its analysis, see id., the

10 Wyoming law operated differently, see id. at 683, and the Wyoming court focused

11 not on the passage of time but on whether public policy required the court to construe

12 the forfeiture statute to deprive the defendant of its water rights. See id. at 685. The

13 Sturgeon court also considered the defendant’s significant post-abandonment

14 investment in the water rights and the plaintiff’s explicit recognition of the

15 defendant’s rights. See id. at 684 (acknowledging that “if the action for forfeiture

16 had been brought before [the defendant] put the reservoir again into use, the court

17 would have been justified, if not constrained, to declare a forfeiture” and

18 highlighting that the plaintiff “acknowledged, recognized and acquiesced in the fact

19 that [the defendant] owned the reservoir and the prior rights therein”). Based on these

20 facts, the court concluded that it would be “difficult to perceive that [the defendant]

17 1 would be dealt with equitably by now holding that his [water] rights were forfeited.”

2 Id.

3 {28} Appellants contend that the two cases are similarly situated by the long delays

4 and the knowledge by the party seeking the forfeiture that the water user might lay

5 claim to the water rights. However, the delay was only a corollary fact in Sturgeon’s

6 analysis instead of a determinative factor and the general knowledge that a party

7 may lay claim to water rights is not equivalent to the “acknowledged” and

8 “recognized” acquiescence to the ownership of water rights that was present in

9 Sturgeon. See id. Accordingly, we do not find Sturgeon instructive.

10 {29} Similarly, Appellants’ reliance on State v. Henry Don S., 1990-NMCA-029,

11 ¶ 5, 109 N.M. 777, 790 P.2d 1058, to argue that “this Court has held that self-

12 executing penal provisions violate due process” is inappropriate. Appellants suggest

13 that the self-executing penal provision in Henry Don S. is similar to the pre-1965

14 forfeiture statute because “forfeiture is punitive or penal in nature.” The Henry Don

15 S. Court, however, invalidated the self-executing provision because the provision

16 circumvented statutory procedural requirements. See id. ¶ 6. Henry Don S. does not

17 discuss due process and is therefore not relevant to our analysis.

18 {30} Considering due process requirements, New Mexico’s principles of water law,

19 the expedited inter se proceeding, and the parties’ arguments, we conclude that the

20 district court did not deprive Appellants of their due process rights.

18 1 II. The District Court Did Not Err in Its Forfeiture Adjudication

2 {31} We review the district court’s determination that Appellants forfeited their

3 water rights for substantial evidence. See State ex rel. Martinez v. McDermett, 1995-

4 NMCA-060, ¶ 16, 120 N.M. 327, 901 P.2d 745 (examining the record “to determine

5 whether there was sufficient evidence for the district court to have found that there

6 was no forfeiture and abandonment”). Appellants argue that the district court “failed

7 to apply the clear and convincing evidentiary standard in determining forfeiture” and

8 therefore the “conclusion was in error.” Appellees provide two responses to

9 Appellants’ argument: first, “[t]he burden of proof for forfeiture cases has always

10 been a preponderance of the evidence,” and second, the evidence supporting the

11 forfeiture ruling was sufficient under both a preponderance and a clear and

12 convincing standard. We ultimately agree with Appellees’ second response—

13 applying the substantial evidence standard of review, the evidence is sufficient to

14 satisfy either a preponderance or clear and convincing evidence burden.

15 {32} The pre-1965 forfeiture statute prescribed that if a water rights owner failed

16 to beneficially use all or any part of the water for a period of four years, the unused

17 water reverted back to the public. Section 75-5-26 (1941). “Provided, however, that

18 forfeiture shall not necessarily occur if circumstances beyond the control of the

19 owner have caused nonuse.” Id.

19 1 {33} The district court concluded that “[b]y 1953, and no later than 1964, all

2 nonconsumptive water rights issued to [Appellants’] predecessors were forfeited by

3 operation of law” and that “[a]ll of [Appellants’] Pecos River water rights in excess

4 of 5,813.6 [acre-feet per year] were forfeited by operation of law after 1963.”

5 Resolving all disputed facts in favor of Appellees, indulging all reasonable

6 inferences in support of the district court’s decision, and disregarding all evidence

7 and inferences to the contrary, we hold that there is substantial evidence to support

8 forfeiture. See McDermett, 1995-NMCA-060, ¶ 16.

9 {34} We first consider the forfeiture of nonconsumptive water rights. Appellants

10 beneficially used their nonconsumptive water rights through the cooling mechanism

11 at the Loving Refinery. The district court concluded, however, that in 1948

12 Appellants stopped beneficially using the nonconsumptive water rights and

13 thereafter forfeited those rights. Looking at the evidence in the light most favorable

14 to the district court’s conclusion, there is sufficient evidence to meet the clear and

15 convincing standard. See id. A witness testified that after the installations of cooling

16 towers, Appellants did not need the Pecos River water that it had used for cooling

17 ore at the Loving Refinery; this was a major change because “that [cooling] was the

18 primary use of water in the [Loving] refinery.” Moreover, an expert witness testified

19 that there is nothing to suggest that Appellants used its nonconsumptive water rights

20 after 1948. Another expert witness further testified that the nonconsumptive use at

20 1 the Loving Refinery ceased to exist in 1948. This testimony supports the district

2 court’s conclusion that after Appellants installed the cooling towers in 1948, it no

3 longer beneficially used its nonconsumptive water rights, triggering forfeiture as an

4 operation of law four years later.

5 {35} Next, we consider whether there is substantial evidence to support the

6 conclusion that Appellants forfeited the remaining water rights after 1963.

7 Appellants provided a water master report listing the metered annual diversions for

8 the Loving Refinery from 1955 to 1973. The report shows that the maximum water

9 diverted was 5,813.6 acre-feet in 1963. Appellants did not beneficially use water in

10 excess of 5,813.6 at any point after 1963. Appellants do not specifically challenge

11 these findings by the district court. Instead, Appellants request that this Court

12 reconsider the evidence at trial and determine that the evidence did not “instantly

13 tilt[] the scales in the affirmative when weighed against the evidence in opposition

14 and the fact-finder’s mind is left with an abiding conviction that the evidence is true.”

15 This we cannot do. See Las Cruces Pro. Fire Fighters v. City of Las Cruces, 1997-

16 NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177 (asserting that “we will not reweigh

17 the evidence nor substitute our judgment for that of the fact[-]finder”). Instead, we

18 take into account that Appellants argue for the clear and convincing evidence as the

19 heightened burden of proof and use the established standard of review to determine

20 whether the evidence is sufficient. See Powers v. Miller, 1999-NMCA-080, ¶ 14,

21 1 127 N.M. 496, 984 P.2d 177 (“When a party is required to prove a matter by clear

2 and convincing evidence, our review on appeal takes this heightened standard of

3 proof into account.”).

4 {36} On appeal we must disregard all evidence and inferences contrary to the

5 district court’s forfeiture decision. See McDermett, 1995-NMCA-060, ¶ 16.

6 Accordingly, we reject Appellants’ invitation to engage in fact-finding by

7 determining whether the district court “adopted the view least favorable to

8 [Appellants]” when confronted with conflicting expert testimony, or “weighed

9 competing evidence in favor of forfeiture.” We further disregard all evidence

10 presented by Appellants that provide statements from the OSE that the rights had not

11 been lost through nonuse. See id. ¶ 19. We refuse to reweigh the evidence and

12 conclude that there is substantial evidence to meet a preponderance or clear and

13 convincing standard of proof. See Las Cruces Pro. Fire Fighters, 1997-NMCA-044,

14 ¶ 12 (“[W]e will not reweigh the evidence nor substitute our judgment for that of the

15 fact[-]finder.”). Consequently, because there is substantial evidence to support the

16 conclusion that there was a nonuse period of at least four years for nonconsumptive

17 and consumptive use water rights, we must determine whether the record supports

18 that no circumstances beyond Appellants’ control excused the nonuse. See § 75-5-

19 26 (1941) (prescribing that “forfeiture shall not necessarily occur if circumstances

20 beyond the control of the owner have caused nonuse”). We conclude it does.

22 1 {37} Appellants argue that insufficient water, adverse economic factors, and low

2 quality of ore excuse the nonuse. The record, however, provides substantial evidence

3 to support the district court’s conclusion that external factors did not cause the

4 nonuse and that Appellants “could have put additional Pecos River water to

5 beneficial use through diligent efforts but elected not to do so.” Expert witnesses for

6 both parties testified that there was sufficient available water to supply maximum

7 demand of the Loving Refinery. Specifically, Dr. Barroll testified that the surface

8 water in the Pecos River was sufficient to supply a total of 19,836 acre-feet per

9 year—three-fold the maximum amount used—every month from 1955 to 1963.

10 Comparatively, the maximum amount of water consumed by Appellants between

11 1955 and 1964 was the 5,813.6 acre-feet consumed in 1963.

12 {38} Moreover, we can reasonably infer that Appellants did not have insufficient

13 water based on their failure to use storage and supplemental groundwater wells

14 available in case of water shortages. See McDermett, 1995-NMCA-060, ¶ 16 (“We

15 . . . indulge all reasonable inferences in support of the verdict.” (alteration, internal

16 quotation marks, and citation omitted)). Appellants’ first application for a permit to

17 appropriate water stated that they intended to construct water storage “to provide

18 against any possible temporary shortage for any cause whatever and at any time

19 during the year.” Similarly, the OSE granted Appellants a permit to “appropriate

23 1 shallow groundwater to supplement [their] existing rights under [their l]icenses.” In

2 both circumstances, however, Appellants never used the intended backstops.

3 {39} Appellants abandoned the planned storage reservoir and never used the

4 supplemental well. Appellants contend that the district court failed to provide

5 citation for its conclusion that the failure to use the storage reservoir and

6 supplemental well supported a finding that the Pecos River water supply was

7 sufficient to meet the water demands. As stated above, on appeal we “indulge all

8 reasonable inferences in support of the verdict.” Id. (alteration, internal quotation

9 marks, and citation omitted). The district court found, and Appellants fail to

10 challenge, that “[s]torage is one of the most important ways by which a surface water

11 user can protect itself from a variable surface water supply,” and that

12 “[s]upplemental groundwater wells are also a recognized method of addressing a

13 variable surface water supply.” An unchallenged finding of the district court is

14 binding on appeal. Stueber v. Pickard, 1991-NMSC-082, ¶ 9, 112 N.M. 489, 816

15 P.2d 1111. Therefore, the purpose of these water depositories and Appellants’

16 nonuse lead to the reasonable inference that Appellants had no need for them because

17 the water supply was sufficient.

18 {40} Further, neither adverse economic factors nor the quality of the ore excuse

19 Appellants’ nonuse. Evidence demonstrates that notwithstanding the increased

20 competition in the potash industry, in 1958 Appellants increased production and had

24 1 the highest deliveries in company history by 1959. Moreover, beginning in 1954,

2 Appellants consistently reinvested in its operations and an expert witness testified

3 that similar companies do not make large investments unless there is a positive

4 outlook for the finances and materials. This evidence leads to the reasonable

5 inference that adverse economic factors did not cause Appellants’ lack of beneficial

6 use of its water rights. Similarly, although the quality of ore began to decline,

7 Appellants increased their high-grade reserves through purchases, additional core

8 drilling, and development of special mining techniques that permitted the extraction

9 of previously inaccessible ore. Simply put, the quality of the ore was not the reason

10 for Appellants’ failure to use its water rights.

11 {41} Appellants lastly argue that “the clearest indication that the [district] court

12 failed to apply a clear and convincing standard is that it could not state with precision

13 when any forfeiture occurred.” Appellants, however, do not develop this argument

14 and fail to cite authority for the proposition that failure to provide exact dates

15 necessarily means that the clear and convincing standard is not met. See Headley v.

16 Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d 1076

17 (declining to consider an undeveloped argument); Curry v. Great Nw. Ins. Co., 2014-

18 NMCA-031, ¶ 28, 320 P.3d 482 (“Where a party cites no authority to support an

19 argument, we may assume no such authority exists.”). Moreover, we disagree with

20 Appellants’ characterization of the dates provided by the district court. The district

25 1 court specifically concluded Appellants forfeited their nonconsumptive water rights

2 four years after the installation of the cooling towers. Similarly, the district court

3 concluded that Appellants forfeited their consumptive water rights in excess of

4 5,813.6 acre-feet after 1963, presumptively four years after its maximum use. The

5 evidence discussed above supports the forfeiture dates the district court provided.

6 We conclude that the record sufficiently supports the conclusions reached by the

7 district court.

8 III. The District Court Did Not Err in the Abandonment Adjudication

9 {42} We consider whether the district court properly concluded that Appellees

10 proved that Appellants abandoned the remaining water rights beyond the 150 acre-

11 feet per year by clear and convincing evidence. See Gray, 2021-NMCA-066, ¶ 104

12 (“[T]he burden is placed on the party asserting abandonment to provide proof by

13 clear and convincing evidence.”). We review the record for substantial evidence

14 supporting the district court’s conclusion. See id. ¶ 117 (using substantial evidence

15 as the standard of review). “Substantial evidence is such relevant evidence that a

16 reasonable mind would find adequate to support a conclusion.” State ex rel. King v.

17 B & B Inv. Grp., Inc., 2014-NMSC-024, ¶ 12, 329 P.3d 658 (internal quotation marks

18 and citation omitted). “In reviewing a record, we indulge every presumption in favor

19 of the correctness of the findings, conclusions, and judgment of the district court.”

20 Gray, 2021-NMCA-066, ¶117 (alteration, internal quotation marks, and citation

26 1 omitted). Appellants argue that the district court’s “findings establish that

2 [Appellants] had engaged in conduct incompatible with an intent to abandon.”

3 Appellees respond that Appellants failed to rebut the presumption of abandonment

4 established by the nonuse. As we explain, we agree with Appellees.

5 {43} We begin by discussing the law of abandonment. “Abandonment requires the

6 confluence of both intention and act. Mere nonuse[sic] is not in itself an

7 abandonment. The intention of the party is always a controlling consideration.

8 Nonuse is competent evidence on the question of abandonment and if continued for

9 an unreasonable period of time may create a presumption of intention to abandon,

10 though this presumption is not conclusive” Id. ¶ 104 (alterations, omission, internal

11 quotation marks, and citation omitted). Water right users can rebut this presumption

12 by providing sufficient evidence of their intent not to abandon. See id. ¶ 111. Intent

13 can be established either expressly or implicitly. S. Springs Co., 1969-NMSC-023,

14 ¶ 12. “[B]ecause the matter involves questions of subjective intent, the question is

15 peculiarly within the province of a [district] court to determine from all the facts and

16 circumstances of each particular case whether abandonment has or has not taken

17 place.” Gray, 2021-NMCA-066, ¶ 104 (internal quotation marks and citation

18 omitted).

19 {44} A valid excuse for nonuse may rebut the presumption of abandonment

20 because such circumstances conform to the acknowledged purpose of our water

27 1 laws. “Beneficial use shall be the basis, the measure and the limit of the right to the

2 use of water.” N.M. Const. art. XVI, § 3. “That provision captures the purpose of

3 our water laws, which is to encourage use and discourage nonuse or waste.” Romero,

4 2022-NMSC-022, ¶ 12 (internal quotation marks and citation omitted). The

5 beneficial use of water forms the basis for the right of an appropriator to take water.

6 See Gray, 2012-NMCA-066, ¶ 103. “The right to continue using water depends on

7 the continued use of the water.” Id. Accordingly, “an intention to abandon may be

8 inferred in the absence of proof of some fact or condition excusing such nonuse.”

9 S. Springs Co., 1969-NMSC-023, ¶ 22 (internal quotation marks and citation

10 omitted). This fact or condition cannot be merely an expression of desire or hope to

11 retain the water rights. See id. ¶ 21. If the water rights user cannot present a valid

12 excuse, they must rebut the presumption with additional evidence of an intent not to

13 abandon. See Gray, 2021-NMCA-066, ¶ 111. To help the district courts determine

14 whether the appropriator rebuts the presumption, this Court referenced a seven-

15 factor framework 2 where “[t]he pattern that emerges . . . is that abandonment will be

16 found if the user can be said to have done nothing to use water or protect facilities

2 The factors are: “(1) repair and maintenance of structures; (2) attempts to put the water to beneficial use; (3) active diversion records and non-appearance of the water right on the state engineer’s abandonment list; (4) diligent efforts to sell the water rights; (5) filing documents to protect, change, or preserve the right; (6) leasing the water right; and (7) economic or legal obstacles to exercising the water right.” Id. ¶ 111 (alterations, internal quotation marks, and citation omitted).

28 1 over extended periods of time.” Id. ¶ 112. This framework provides guidance

2 without replacing the established concepts of abandonment. See id. ¶ 106 (explaining

3 that New Mexico’s jurisprudence on abandonment does not differ from the general

4 ideas discussed by this Court). Having provided a summary of abandonment law,

5 we now turn to Appellants’ arguments.

6 {45} Appellants insist the district court misapplied “Gray’s mandate requiring that

7 abandonment rest on a finding of intent instead of a failure to ‘excuse nonuse.’” We

8 disagree. The district court properly considered whether Appellants provided

9 evidence of an excuse; such evidence may have been sufficient to rebut the

10 presumption, but is not necessary. See Chavez v. Gutierrez, 1950-NMSC-004, ¶ 8,

11 54 N.M. 76, 213 P.2d 597 (rejecting an abandonment argument because the failure

12 to use the water was beyond the user’s control); N.M. Prods. Co. v. N.M. Power Co.,

13 1937-NMSC-048, ¶ 22, 42 N.M. 311, 77 P.2d 634 (holding that the user could not

14 be held to have intended to not use water when it did not reach its ditch because all

15 of the water had been diverted upstream). Instead of finding a valid excuse

16 preempting the exception, however, the district court concluded that Appellants were

17 speculators, which as we explain, supported an intent to abandon rather than an intent

18 to use the water. See Gray, 2021-NMCA-066, ¶ 104 (noting that if the district court

19 determines a user is a speculator, the district court may exercise its discretion to

20 require greater evidence of intent not to abandon).

29 1 {46} In cases where water users are speculators, intent not to abandon must be

2 based on intent to actually apply water to beneficial use. See N.M. Const. art. XVI,

3 § 3 (“Beneficial use shall be the basis, the measure and the limit of the right to the

4 use of water.”). Speculators are water rights owners who do not beneficially use the

5 water rights and provide “merely expressions of desire or hope” to use the water

6 rights at an undefined point when it is financially profitable. See S. Springs Co.,

7 1969-NMSC-023, ¶ 21 (internal quotation marks and citation omitted). Such

8 speculative behavior is not a valid excuse for the nonuse. Id. Appellants argue that

9 the district court misapplied Gray by dismissing permissible evidence in its favor as

10 “speculative conduct.” In Gray, however, the district court explicitly refused to find

11 that the water rights owners were speculators, found that the users presented

12 evidence of a valid excuse for the nonuse, and offered further evidence of the intent

13 not to abandon. 2021-NMCA-066, ¶¶ 100, 117. Here, the district court found that

14 Appellants were speculators, that they did not provide evidence of a valid excuse,

15 and that they did not provide sufficient evidence of an intent not to abandon. As a

16 result, consistent with Gray, the district court found that evidence of speculation

17 satisfied the general principle that “abandonment will be found if the user can be

18 said to have done nothing to use water or protect facilities over extended periods of

19 time.” Id. ¶ 112.

30 1 {47} Out-of-state case law that New Mexico courts have relied on supports the

2 conclusion that evidence of not wanting to lose the water rights solely for financial

3 reasons is insufficient for speculators to rebut the presumption of abandonment.

4 Colorado’s approach, which we find instructive on abandonment law, see id. ¶ 113

5 (“We agree with Colorado’s approach to the issue.”), establishes that a desire to

6 simply keep water rights “divorced from any intent to apply the water to beneficial

7 use, is insufficient to overcome the inference of abandonment that arose from

8 decades of nonuse.” Protest of McKenna, 2015 CO 23, ¶ 27, 346 P.3d 35. Similarly,

9 in Public Utility District v. State Department of Ecology, 51 P.3d 744 (2002) (en

10 banc), which this Court cited favorably in Gray, 2021-NMCA-006, ¶ 113, the

11 Washington Supreme Court highlighted the difference between consistent attempts

12 to beneficially use the water and passively waiting for economic opportunities. Pub.

13 Util. Dist., 51 P.3d at 756 (“The [d]istrict engaged in repeated, and ongoing attempts

14 to come up with a feasible hydroelectric project. It did not simply wait until

15 economic conditions improved or future events occurred that provided uses for

16 water.”). Accordingly, we consider the district court’s conclusion that Appellants

17 were speculators and established no excuse for nonuse, along with the other

18 evidence, to determine if substantial evidence supports the district court’s conclusion

19 that Appellants abandoned their water rights.

31 1 {48} Clear and convincing evidence demonstrates an intent to abandon. See Gray,

2 2021-NMCA-066, ¶ 112 (”[A]bandonment will be found if the user can be said to

3 have done nothing to use water or protect facilities over extended periods of time.”).

4 Appellants argue only that it rebutted the presumption of abandonment and does not

5 contend that its nonuse of the water rights did not give rise to a presumption of

6 abandonment or that it failed to present evidence to excuse the nonuse. An

7 unchallenged finding of the district court is binding on appeal. See Stueber, 1991-

8 NMSC-082, ¶ 9. Therefore, we review the record for substantial evidence to support

9 the result that Appellants failed to rebut the presumption of abandonment. See Las

10 Cruces Pro. Fire Fighters, 1997-NMCA-044, ¶ 12 (“The question is not whether

11 substantial evidence exists to support the opposite result, but rather whether such

12 evidence supports the result reached.”).

13 {49} Indulging all presumptions in support of the district court’s decision, as we

14 must, we find that Appellants failed to rebut the presumption of abandonment under

15 the Gray framework. See 2021-NMCA-066, ¶ 117. “[A]bandonment will be found

16 if the user can be said to have done nothing to use water or protect facilities over

17 extended periods of time.” Id. ¶ 112. As we explain, substantial evidence

18 demonstrates that Appellants did not make repairs or maintain the structure to use

19 the Pecos River water or sufficiently attempt to beneficially use the water. The OSE

20 appropriated Appellants’ water rights for industrial use at the Loving Refinery.

32 1 Internal memorandum demonstrates that Appellants were aware that shutting down

2 the Loving Refinery would halt beneficial use of the water rights, as the water rights

3 would become “non-productive asset[s].” Nevertheless, in June 1973 Appellants

4 shut down the Loving Refinery and did not make further significant efforts to put

5 the water right to beneficial use. Evidence demonstrates that Appellants did not

6 intend to continue using the water rights. To the contrary, Appellants decided to

7 dismantle the Loving Refinery and considered the water rights point of use

8 abandoned. Further, witnesses testified to the disrepair of the infrastructure at the

9 point of use demonstrating the lack of repairs by Appellants and their intent to

10 abandon their use.

11 {50} Moreover, the district court took judicial notice that Appellants did not object

12 to the Settlement Agreement. The Settlement Agreement was entered into by water

13 users to develop collaborative solutions that would ensure the long-term compliance

14 with the Pecos River Compact. The parties that entered into the Settlement

15 Agreement allocated zero diversion to Appellants because they assumed the water

16 rights had been purchased or abandoned. The Settlement Agreement was

17 incorporated into the partial final decree in Lewis, 2007-NMCA-008. The

18 adjudicating court provided all interested persons to the water rights potentially

19 affected by the partial final decree, including Appellants, notice of the opportunity

20 to object to the Settlement Agreement or the partial final decree. See id. ¶¶ 15-16.

33 1 To reiterate, Appellants did not object. The intent of the Settlement Agreement was

2 for the ISC to purchase all the valid water rights from Avalon Dam to the state line

3 to ensure state line deliveries. Testimony demonstrates that parties to the Settlement

4 Agreement would not have entered into it if they had believed that Appellants did

5 not intend to abandon their water rights; such a claim would have made state line

6 deliveries impossible. Failure to object to such a significant and consequential

7 development to the water rights in the Pecos River stream system is evidence that

8 supports the district court’s conclusion that Appellants had abandoned their water

9 rights.

10 {51} Similarly, reports presented to the district court demonstrate that Appellants

11 failed to establish a “record of diligent efforts in pursuing [their] rights,” supporting

12 the district court’s abandonment determination. Although Appellants maintain that

13 they “acted diligently to preserve its water rights by seeking and obtaining

14 extensions of time” and that discussions to transfer the water rights to third parties

15 rebutted the abandonment presumption, we must disregard all evidence contrary to

16 the district court’s conclusion. See McDermett, 1995-NMCA-060, ¶ 16. And in any

17 event, beneficial use of the water rights never resumed despite extensions or transfer

18 efforts afforded to or undertaken by Appellants.

19 {52} Our review of the record reveals that, indulging all permissible inferences in

20 favor of the district court’s decision, the only diligent effort by Appellants to transfer

34 1 the water rights was to the United Salt Corporation. Accordingly, there is substantial

2 evidence to support the district court’s conclusion that Appellants abandoned the

3 remaining water rights, except for 150 acre-feet per year.

4 IV. The Issue of Whether the District Court Erred in Denying Appellants’ 5 Joint Motion to Intervene is Moot

6 {53} Because we affirm the district court’s conclusion that Appellants lost the

7 pertinent water rights, we must now consider whether there is live controversy in

8 Case 1 that this Court can resolve. In its motion to dismiss the appeal, Objectors

9 argue that the district court’s forfeiture and abandonment adjudication of Appellants’

10 water rights “renders any further action by the . . . Appellants herein absolutely

11 moot.” Appellants respond that (1) Objectors failed to “inform this Court that the

12 [forfeiture and abandonment] adjudication ha[d] been appealed”; (2) that there is a

13 continuing impact, regardless of the adjudication; and (3) that exceptions to

14 mootness apply. Considering that we affirm the district court’s forfeiture and

15 abandonment adjudication of Appellants’ water rights, we agree with Objectors and

16 reject Appellants’ first argument. Turning to Appellants’ second and third argument,

17 we conclude that the issue is moot.

18 {54} In general, we dismiss an appeal when the issues in the case have become

19 moot. Howell v. Heim, 1994-NMSC-103, ¶ 7, 118 N.M. 500, 882 P.2d 541. “A case

20 is moot when no actual controversy exists, and the court cannot grant actual relief.”

21 Gunaji v. Macias, 2001-NMSC-028, ¶ 9, 130 N.M. 734, 31 P.3d 1008 (internal

35 1 quotation marks and citations omitted). Here, no actual controversy exists because

2 this Court’s decision to affirm the forfeiture and abandonment adjudication

3 dispossesses Appellants of all pertinent water rights. Without valid water rights,

4 Appellants cannot apply to change the point of diversion or the place and purpose of

5 use of the water. See NMSA 1978, § 72-5-24 (1985) (prescribing that only an

6 “appropriator of water . . . may change the place of diversion, storage or use”).

7 Without valid applications, there is no basis for the preliminary authorizations

8 notwithstanding whether Objectors properly omitted Appellants as defendants in

9 their petition for writ of mandamus. See NMSA 1978, §§ 72-6-2 to -3 (1967, as

10 amended through 2019) (prescribing that only owners of valid water rights may lease

11 use of the water). Consequently, a ruling reversing the district court’s denial of the

12 motion to intervene would not grant Appellants any actual relief. See Leonard v.

13 Payday Pro./Bio-Cal Comp., 2008-NMCA-034, ¶ 9, 143 N.M. 637, 179 P.3d 1245

14 (holding that the appeal was moot where this Court could not provide the appellant

15 with any actual relief). We next turn to Appellants’ arguments that an exception to

16 the doctrine of mootness applies.

17 {55} New Mexico “courts recognize two exceptions to the prohibition on deciding

18 moot cases: cases which present issues of substantial public interest, and cases which

19 are capable of repetition yet evade review.” Republican Party of N.M. v. N.M. Tax’n

36 1 & Revenue Dep’t, 2012-NMSC-026, ¶ 10, 283 P.3d 853 (internal quotation marks

2 and citation omitted). We conclude that neither exception applies here.

3 {56} “A case presents an issue of substantial public interest if it involves a

4 constitutional question or affects a fundamental right such as voting.” Id. In this case,

5 the district court’s denial of Appellants’ motion to intervene does not affect an

6 interest or fundamental right because Appellants no longer have an ownership

7 interest in the water rights. Therefore, denial of Appellants’ motion to intervene does

8 not rise to the substantial public interest necessary to merit consideration. See id.

9 Furthermore, the district court based its denial of the motion to intervene on its

10 conclusion that the OSE adequately represented Appellants’ interest as prescribed in

11 Rule 1-024(A)(2) NMRA. This conclusion is a factual question where we afford “a

12 good deal of discretion” to the district court. See In re Termination of Parental Rights

13 of Melvin B., Sr., 1989-NMCA-078, ¶ 8, 109 N.M. 18, 780 P.2d 1165. Consequently,

14 we agree with Appellees that the ultimate question of whether the OSE adequately

15 represented the Appellants’ interest is a factually intense issue that does not present

16 a substantial public interest. Moreover, Appellants fail to identify “a concern with

17 [the] consistent mishandling of processes” that would result in this issue rising to the

18 level of a substantial public interest. See Bernalillo Cnty. Health Care Corp. v. N.M.

19 Pub. Regul. Comm’n, 2014-NMSC-008, ¶ 14 319 P.3d 1284 (“In addition we are

20 concerned with the consistent mishandling of processes by the [c]ommission and it

37 1 is therefore in the public’s interest that we clarify the limits of the [c]ommission’s

2 power to grant businesses the authority to transport persons.”). Accordingly, we

3 conclude that whether the district court erred in denying the motion to intervene is

4 not an issue of substantial public interest.

5 {57} Next, while inappropriately denying a motion to intervene is no doubt capable

6 of repetition, we disagree with Appellants that the issue will evade review.

7 Appellants argue that in the context of a petition for writ of mandamus to compel

8 withdrawal of a preliminary approval, the issue of whether a district court

9 inappropriately denied a motion to intervene will no longer be active once the OSE

10 decides the underlying water applications. In this case, however, the forfeiture and

11 abandonment adjudication rendered the issue moot, not the OSE’s application

12 decision. Appeal is available for parties in the future who are denied an opportunity

13 to intervene and maintain their water rights, regardless of the OSE’s ultimate

14 decision. See Apodaca v. Town of Tome Land Grant, 1974-NMSC-026, 86 N.M.

15 132, 520 P.2d 552 (explaining an order denying a motion to intervene is appealable

16 only if the district court has abused its discretion). Based on the foregoing, we

17 conclude that the issue is moot and neither of the two exceptions apply

18 CONCLUSION

19 {58} For the foregoing reasons, we affirm Case 1. Because Case 2 is moot, no

20 further action is necessary.

38 1 {59} IT IS SO ORDERED.

2 _____________________________ 3 KRISTINA BOGARDUS, Judge

4 WE CONCUR:

5 ____________________________ 6 J. MILES HANISEE, Judge

7 ___________________________ 8 MEGAN P. DUFFY, Judge