HOUSE JUDICIARY COMMITTEE SUBSTITUTE FOR
HOUSE BILL 121
56th legislature - STATE OF NEW MEXICO - first session, 2023
AN ACT
RELATING TO WATER; CLARIFYING THAT A LEASE OF WATER UNDER A WATER RIGHT AND SUBSEQUENT USE OF THAT WATER SHALL NOT TAKE EFFECT UNTIL AFTER THE APPLICATION HAS BEEN APPROVED IN ACCORDANCE WITH LAW; MAKING A TECHNICAL CROSS-REFERENCE CORRECTION; ESTABLISHING EXPEDITED HEARINGS AND FINAL RULINGS FOR EXPEDITED TEMPORARY LEASES; PROVIDING A JULY 1, 2025 EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 72-2-20 NMSA 1978 (being Laws 2019, Chapter 88, Section 1) is amended to read:
"72-2-20. NOTICE OF APPLICATIONS--ONLINE POSTING--NOTICE BY PUBLICATION--OBJECTIONS.--When notice of an application is required to be provided pursuant to Section 72-5-4, 72-5A-5, 72-6-6, 72-6-6.1, 72-12-3 or 72-12B-1 NMSA 1978:
A. if the state engineer determines that notice of an application shall be published, the state engineer shall post, within forty-five days for an application for an expedited temporary lease unless the application is defective as to form or incomplete or the applicant seeks to amend the application for the expedited temporary lease after acceptance, in which case the forty-five-day period to post the notice of an expedited temporary lease shall run from the date a corrected or amended application is filed, electronically on the state engineer's website a notice that contains the essential facts of the application, the name of the newspaper in which the applicant will be required to publish notice, the contact information for the state engineer district office where the application and supporting documentation are located and the date by which objections or protests may be filed, which shall be seventy days after the date of electronic posting on the state engineer's website;
B. within five days of posting electronic notice on the state engineer's website, the state engineer shall issue instructions to the applicant to publish notice of the application in a form and in the newspaper prescribed by the state engineer once a week for three consecutive weeks and requiring that the last date of publication shall be no less than ten days prior to the date by which objections or protests may be filed with the state engineer. The newspaper shall be one that is published and distributed in each county affected by the diversion and in each county where the water will be or has been put to beneficial use, or if there is no such newspaper, then the newspaper shall be one of general circulation in the stream system;
C. the applicant shall file with the state engineer proof of publication as required within twenty days after the date of the last publication. In case of failure to file satisfactory proof of publication within the time required, the date of the application shall be the date of receipt of proofs of publication in proper form; and
D. if the last of the three consecutive weekly publications does not occur within sixty days of the date the state engineer electronically posts the notice on the state engineer's website, the applicant shall request that the state engineer prepare a new notice and electronically post the notice as prescribed in Subsection A of this section and issue new instructions for newspaper publication as prescribed in Subsection B of this section."
SECTION 2. Section 72-6-3 NMSA 1978 (being Laws 1967, Chapter 100, Section 3, as amended) is amended to read:
"72-6-3. OWNER MAY LEASE USE OF WATER.--
A. An owner may lease, including under an expedited temporary lease, to any person all or any part of the water use due the owner under the owner's water right, and the owner's water right shall not be affected by the lease of the use. The use to which the owner is entitled under the owner's right shall, during the exercise of the lease or expedited temporary lease, be reduced by the amount of water so leased. Upon termination of the lease or expedited temporary lease, the water use and location of use subject to the lease or expedited temporary lease shall revert to the owner's original use and location of use.
B. After the application is made, notice and opportunity for a hearing are provided and the application is approved in accordance with Sections 72-6-4 through 72-6-6.1 NMSA 1978, the lease or expedited temporary lease may be effective for immediate use of water or may be effective for future use of the water covered by the lease or expedited temporary lease; however, the lease or expedited temporary lease shall not be effective to cumulate water from year to year or to substantially enlarge the use of the water in such manner that it would injure other water users. The lease or expedited temporary lease shall not toll any forfeiture of water rights for nonuse, and the owner shall not, by reason of the lease, escape the forfeiture for nonuse prescribed by law; provided, however, that the state engineer shall notify both the owner and the lessee of declaration of nonuser as provided in Sections 72-5-28 and 72-12-8 NMSA 1978. The initial or any renewal term of a lease of water use shall not exceed ten years, except as provided in Subsections C and [D] E of this section.
C. A water use may be leased, except under an expedited temporary lease, for forty years by municipalities, counties, state universities, special water users' associations, public utilities supplying water to municipalities or counties and member-owned community water systems as lessee and shall be entitled to the protection of the forty-year water use planning period as provided in Section 72-1-9 NMSA 1978.
D. A water use deriving from an acequia or community ditch organized pursuant to Chapter 73, Article 2 or 3 NMSA 1978, whether owned by a water right owner under the acequia or community ditch or by the acequia or community ditch, may be leased for a term not to exceed ten years; provided that pursuant to the rules or bylaws duly adopted by its members, an acequia or community ditch may require that any water use lease of a water right served by the acequia or community ditch, or any water use lease in which a water right is moved into and then served by the acequia or community ditch, shall be subject to approval by the commissioners of the acequia or community ditch in accordance with the procedures for approval of changes in point of diversion or place or purpose of use as provided in Subsection E of Section 73-2-21 NMSA 1978 and Sections 72-5-24.1 and 73-3-4.1 NMSA 1978; and further provided that a lease of a water right served by an acequia or community ditch shall be subject to the prohibition on expedited temporary water leases set forth in Subsection B of Section 72-6-6.1 NMSA 1978.
E. A water use due under an adjudicated water right secured to a pueblo pursuant to the settlement agreements approved in Title 5 and Title 6 of the federal Claims Resolution Act of 2010, P.L. No. 111-291, Sections 501-626, or in the partial final judgments and decrees entered pursuant to those settlement agreements, may be leased for a term, including all renewals, not to exceed the term specifically authorized in that act; provided that this subsection shall not apply to any water use due under any state-law based water rights acquired by a pueblo or by the United States on behalf of a pueblo."
SECTION 3. Section 72-6-4 NMSA 1978 (being Laws 1967, Chapter 100, Section 4) is amended to read:
"72-6-4. LESSEE'S APPLICATION.--Prior to [his] the use of [such] the water under a lease or an expedited temporary lease, the lessee shall apply to the state engineer requesting approval for the use and location of use to which [such] the water will be put. The state engineer shall prescribe the form of [such] the application and may require any information pertinent to the matter."
SECTION 4. Section 72-6-5 NMSA 1978 (being Laws 1967, Chapter 100, Section 5, as amended) is amended to read:
"72-6-5. APPROVAL.--
A. The state engineer shall approve [the] an application for a lease if the applicant has reasonably shown that [his] the applicant's proposed use and location of use is a beneficial use and:
(1) will not impair any existing right to a greater degree than [such] the right is, or would be, impaired by the continued use and location of use by the owner; and
(2) will not be contrary to the conservation of water within the state or detrimental to the public welfare of the state.
B. In the case of annual allotments of project water leased to a special water users' association from an irrigation district organized pursuant to Chapter 73, Article 10 NMSA 1978, if the state engineer determines that the proposed changes in place and purpose of use and point of diversion comply with the rules established pursuant to Subsection G of Section 73-10-48 NMSA 1978, the board of directors of the irrigation district may approve the application in accordance with the provisions of Section 73-10-48 NMSA 1978."
SECTION 5. Section 72-6-6 NMSA 1978 (being Laws 1967, Chapter 100, Section 6, as amended) is amended to read:
"72-6-6. APPLICATION--NOTICE--PROTEST--HEARING--EXPEDITED HEARING AND RULING PROCESS.--
A. Upon the filing of an application [by a lessee] for a lease or an expedited temporary lease, the state engineer shall proceed in accordance with the provisions of Section [1 of this 2019 act] 72-2-20 NMSA 1978 regarding notice of the application.
B. Any owner who believes the owner's water rights will be adversely affected by the granting of the application for a lease or an expedited temporary lease may file a protest. The protest shall be specific as to how the granting of the application will adversely affect the owner's water rights. A person who objects that the granting of an application will be contrary to the conservation of water within the state or detrimental to the public welfare of the state and who shows that the objector will be substantially and specifically affected by the granting of the application for a lease or an expedited temporary lease shall have standing to file a protest. The state and any of its branches, agencies, departments, boards, instrumentalities and institutions and a political subdivision of the state and any of its agencies, instrumentalities and institutions shall have standing to file a protest. The protest shall be filed in writing with the state engineer and a copy sent to the applicant by certified mail.
C. If a protest is timely filed, the state engineer shall hold a hearing on the granting of the application for a lease or an expedited temporary lease, and the applicant and protestants shall be notified by the state engineer as to the date and place of the hearing.
D. If no [objections] protests are filed, the state engineer may grant the application for a lease or an expedited temporary lease without hearing. If no [objections] protests are filed and the state engineer denies the application, the state engineer shall hold a hearing if requested to do so by the applicant. The request shall be filed with the state engineer within ten days after the denial of the application.
E. If the state engineer grants the application for a lease or an expedited temporary lease but allows the [applicant to use less water than the amount of water the owner would be allowed to] use of less water than was sought in the application, the state engineer shall hold a hearing on the matter if requested to do so by the applicant. The request shall be filed with the state engineer within ten days after the granting of the application.
F. An application for an expedited temporary lease shall be subject to an expedited hearing and ruling process. If a protest is filed to an application for an expedited temporary lease or a hearing is requested within ten days after the denial of the application or the granting of an application that allows the use of less water than was sought in the application, the state engineer shall hold a hearing no earlier than sixty days and no later than eighty days from the deadline to file a protest, unless all parties consent to a different hearing date. The state engineer shall make a final ruling within one hundred days from the deadline to file a protest. In a hearing on an expedited temporary lease, the applicant shall retain the burden of proving that the proposed use and location of use is a beneficial use and will not impair any existing right to a greater degree than the right is, or would be, impaired by the continued use and location of use by the owner and will not be contrary to the conservation of water within the state or detrimental to the public welfare of the state. The state engineer shall determine the appropriate manner and location of an expedited hearing and may adopt rules to carry out the expedited hearing and ruling process.
G. Nothing in this section shall prevent an applicant from filing an application for a non-expedited lease concurrently with, or subsequent to, the filing of an application for an expedited temporary lease; provided that the application for a non-expedited lease shall not be subject to the procedures set forth in Subsection F of this section.
[F.] H. In a hearing before the state engineer, a full record and transcript of the proceeding shall be kept by the state engineer.
[G.] I. The provisions of this section do not apply to leases approved pursuant to Section 73-10-48 NMSA 1978."
SECTION 6. A new Section 72-6-6.1 NMSA 1978 is enacted to read:
"72-6-6.1. [NEW MATERIAL] EXPEDITED TEMPORARY LEASES--APPLICATIONS--APPROVAL--HYDROLOGIC GUIDELINES.--
A. The state engineer may approve an application for an expedited temporary lease if the application:
(1) is for the lease of an existing surface water right in an amount not in excess of fifty acre-feet of water per year consumptive use and not for a period in excess of one year following approval of the application;
(2) is for the lease of an existing ground water right in an amount not in excess of one hundred twenty-five acre-feet of water per year consumptive use and not for a period in excess of two years following approval of the application;
(3) includes an analysis by the applicant that shows that:
(a) the application meets the hydrologic guidelines established by the state engineer; and
(b) the proposed use and location of use is a beneficial use and will not impair any existing right to a greater degree than the right is, or would be, impaired by the continued use and location of use by the owner and will not be contrary to the conservation of water within the state or detrimental to the public welfare of the state; and
(4) is for a water basin or water use area for which the state engineer has developed hydrologic guidelines for temporary expedited leases.
B. This section shall not apply to and no application for an expedited temporary lease shall be made for a water right that is served by an acequia or community ditch association organized pursuant to Chapter 73, Article 2 or 3 NMSA 1978, or an irrigation district organized pursuant to Chapter 73, Article 10 NMSA 1978.
C. An applicant for a temporary expedited lease may submit concurrent applications that seek to divert water from the same move-to point of diversion, and the applications shall be considered a single application for the purposes of calculating the limits on the total amount of water to be leased as provided in Subsection A of this section.
D. After the expiration of a temporary expedited lease approved under this section, no temporary expedited lease shall be approved for the same move-to point of diversion for one year after the expiration of the lease; provided that a non-expedited lease approved by the state engineer may be exercised immediately following the expiration of an expedited temporary lease.
E. The state engineer's acceptance of an application for an expedited temporary lease for filing does not carry the presumption that the proposed use and location of use is a beneficial use and will not impair any existing right to a greater degree than the right is, or would be, impaired by the continued use and location of use by the owner and will not be contrary to the conservation of water within the state or detrimental to the public welfare of the state.
F. The state engineer may develop hydrologic guidelines for water basins and water use areas where, in the state engineer's judgment, there is significant demand for expedited temporary leases; provided that nothing in this subsection shall obligate the state engineer to develop hydrologic guidelines for a particular water basin or water use area. The state engineer shall not be obligated to develop hydrologic guidelines unless sufficient funding is appropriated for that purpose. The guidelines shall explain the hydrologic model or models used to evaluate expedited temporary lease applications and describe the types of leases eligible for consideration for expedited approval. The guidelines shall be no less protective of existing water rights and interstate compact requirements than the models and criteria used in evaluating non-expedited lease applications. The draft guidelines shall be published on the state engineer's website, and any person may submit comments on the guidelines to the state engineer. After a ninety-day comment period, the state engineer shall publish and maintain the final guidelines on the state engineer's website. The state engineer may modify the final guidelines at any time by posting the modified guidelines on the state engineer's website and holding a ninety-day comment period in the same manner as draft guidelines are finalized pursuant to this subsection.
G. Nothing in this section shall be construed as prohibiting the owner of a water right for irrigation purposes from making changes to or reallocations of the water right to other places of use for irrigation purposes in an expedited manner or without formal proceedings before the state engineer as authorized by law."
SECTION 7. APPLICABILITY.--The provisions of this act apply to an application for a lease of water filed by a lessee with the state engineer on or after July 1, 2025.
SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.
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