Title: Water Allocation Under the Appropriation Doctrine In The Lea County Underground Basin of New Mexico including a Comment on Symposium paper, Economic Factors in the Study of Water Use by Nathaniel Wollman
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Title: Water Allocation Under the Appropriation Doctrine In The Lea County Underground Basin of New Mexico including a Comment on Symposium paper, Economic Factors in the Study of Water Use by Nathaniel Wollman
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Abstract: Richard Hamann's Collection - Water Allocation Under the Appropriation Doctrine In The Lea County Underground Basin of New Mexico including a Comment on Symposium paper, Economic Factors in the Study of Water Use by Nathaniel Wollman
General Note: Box 12, Folder 11 ( Conservation Foundation - Symposium Papers on Water Allocation in Eastern U. S. - 1956 ), Item 55
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A Contribution On

WATER ALLOCATION UNDER THE APPROPRIATION DOCTRINE
IN TEE LEA COUNTY UNDERGROUND BASIN OF NEW MEXICO


including a Comment on Symposium paper, Economic
Factors in the Study of Water Use by Nathaniel Wollman




by Charles D. Harris
Special Assistant Attorney General
New Mexico State Engineer Office











to the

Symposium on the Law of Water Allocation in the Eastern
United States

Cosmos Club, Washington, D. C., October 4-6, 1956

under the sponsorship of

THE CONSERVATION FOUNDATION









WATER ALLOCATION UNDER THE APPROPRIATION DOCTRINE
IN THE LEA COUNTY UNDERGROUND BASIN OF NEW MEXICO

By: Charles D. Harris



Shortly after the passage of New Mexico underground water la2 the Lea

County Underground Water Basin was delineated by order of the state engineer dated

August 21, 1931. The boundaries of the basin were extended by the order of the

state engineer on October 1, 1951.2 As presently constituted, the Lea County

Underground Basin comprises 2,183 sections of land in the South High Plains,and is

situated in Lea, Eddy and Chaves Counties, New Mexico.3 The eastern boundary of

the Lea County Basin extends for some 45 miles along the boundary line between

Texas and New Mexico.

Subsequent to World War II, there was a tremendous increase in irriga-

tion in Lea County and by the end of 1948 permits were granted authorizing irriga-

tion of approximately 104,993 acres of land, largely concentrated in 20 townships
4
of eastern Lea County. On December 29, 1948, the state engineer entered an order

closing the Lea County Basin to further appropriations of water.5 After 1948, it

was found that the permits concentrated in the 20 townships mentioned above would

result in depleting the supply of water under those townships and yet there would

be other areas in Lea County with underlying water which could not be effectively

utilized by the then existing permits. Several court suits were initiated, in which

the parties had appealed from the decision of the state engineer denying additional

appropriations. The parties in these suits sought by court action to overrule the

administrative decisions.

The two most important cases were those of Lawrence vs. State Engineer,

Lea County Cause No. 9979 and Cooper vs. State Engineer, Lea County Cause No. 9565.

As a result of this litigation, the State Engineer directed J. C. Yates, a hydrolo-

gist and engineer in the Office of the State Engineer, to make an extensive investi-

gation and report on the water supply and hydrography of the Lea County Underground
ii,


`~"--~-~II^---- ~-------~~~--II












Water Basin. Just as important as the scientific work Mr. Yates was asked to per-

form, was the fact that he was charged with the responsibility of choosing adminis-

trative procedures for water irrigation in Lea County. In his report referred to

above, he stated:

"Preliminary isopachous map of the saturated thickness of
the water bearing formations recently prepared by the U. S.
Geological Survey, Ground Water Branch, indicates, assuming a
storage coefficient of 0.20, some 26,400,000 acre-feet of
water in storage. An average recharge of j inch of water per
year over the presently delineated basin would amount to some
29,000 acre-feet of annual replenishment and some must be ac-
countable as flow south eastward across the New Mexico-Texas
state line. Present authorized irrigation plus some of the
major non-irrigational uses may be expected to prove about
96,000 acres of equivalent irrigational right. Assuming a
period of 60 years to theoretically dewater the basin and dis-
regarding recharge, it is found that same 218,750 acre feet of
water annually is available for appropriation in 58 of the 71
townships of the basin."

In order to understand Mr. Yates' preliminary statement, it is necessary

to describe some of the hydrographical factors affecting the Lea County Basin. For

this purpose we might adopt the statement by H. E. Thomas.6

"The Lea County ground-water basin. Practically all
ground water pumped in Lea County comes from the Ogallala
formation of Pliocene age. This formation is composed chiefly
of stream-deposited sediments, including sand, silt, gravel,
clay and secondary caliche; it is unconsolidated or weakly
consolidated and has a maximum thickness of 300 feet and an
average thickness of about 175 feet. R. S. Cave aptly quoted
an early geologist's description of the Ogallala as 'homogen-
eous in its heterogeneity.' It was deposited upon an eroded
surface having a relief of probably more than 50 feet and is
generally underlain by Triassic red beds, although Cretaceous
shales underlie the Ogallala in places. The Ogallala is the
surficial formation in most of the High Plains in Lea County,
but thin deposits of wind-blown or slope-wash material lie
upon it in places. About 60 per cent of Lea County, which
includes some lands beyond the boundaries of the High Plains,
is 'scab land' unsuitable for agriculture."

It is interesting to note that Thomas' comments on Lea County were written

prior to the final determination of the court cases mentioned above. He does point

out a summary of the ultimate administration of the basin by the state engineer and

states:7


_I ~_











"Accordingly, the State Engineer extended the boundaries
of the declared basin to include the entire ground-water reser-
voir in the Ogallala formation in Lea County and set 40 years
as a minimum period for depletion of the reservoir. Applica-
tions for new wells are now approved in townships where existing
Swells would not unwater the formation within that period, and
encouragement is given to transfer of rights from areas of more
concentrated pumpage into those relatively undeveloped townships.
Thus the factor of area has become a criterion in appropriative
water rights in Lea County, for new wells can be drilled only in
the parts of the reservoir where the water could not be extract-
ed by wells under prior permits." (Emphasis ours.)

The above quotation is the best summary of the present policy of Lea County

Basin that we have ever seen. The procedure set up by the state engineer was approv-

ed by the court in the Lawrence and Cooper cases, supra. In the decision of the

court rendered in the Lawrence case, the court stated:

"8. That subsequent to the first hearing of these cases,
the state engineer has developed a formula based upon the depth
to the bottom of the water-bearing sands and the depth from the
* surface to the top of the water-bearing sands and has composed
the average saturated thickness of the water-bearing sands in
the Lea County Basin and most particularly over the lands in-
volved in these cases. That the calculations of the engineer
based upon said formula are reasonable and have a substantive
evidenciary value.***
1 "9.***Under the formula of the State Engineer there is
sufficient unappropriated water to grant all of the applications
of the applicant Lawrence without the impairment of the rights
of any prior appropriator within the Lea County Underground
Water Basin.
"10. In calculating how much water was available in each
4 township, the State Engineer assumed that with the present rate
of pumping water in storage in the basin would be depleted in 60
years but that there would be some water that could not be re-
covered and under the formula adopted by the state engineer the
practical life of the basin under the information now available
is 40 years.
"At the time of the filing of all of the applications by
Lawrence, there was then and is now in such basin and in the
immediate area of said lands, unappropriated waters in quantites
more than sufficient to grant all of said applications and that
said appropriations would not then have impaired and would not
now impair existing water rights from said underground basin.*m*"

It can thus be seen that the Court in these cases found that there was

no violation of New Mexico laws of prior appropriation in the manner in which the

Lea County Basin is administered. There has been no attack on the method of ad-


_I_ ____ _1~1~1~












ministering the Lea County Underground Basin and, therefore, the New Mexico Suprene

Court has not had an opportunity to rule upon this invasion of the prior appropri-

ations. However, there was one case that did arise involving Lea County subse-

quent to the cases referred to above. This was the case of State vs. Alexander,

which involved an action for declaratory judgment by the State Engineer requesting

the court to determine the order of priority of various applicants for the un-

appropriated waters of Lea County. The supreme court pointed out that the basin

had been closed on December 28, 1948 to further appropriations; that the defendant,

Troy Collier, had filed an application on April 16, 1953. The court then stated:

"Subsequently, on December 31, 1952, the engineer ascertained
there were additional unappropriated waters in the particular town-
ship of 2,905 acre feet, issued and published an order to that ef-
fect. Meanwhile, on April 16, 1952, Collier filed application
No. L-1424 for a permit to appropriate 480 acre feet per annum
for irrigation. Admittedly, prior applications not involved here
will, at the consumptive use rate employed by the engineer, so
exhaust the available water that there will remain only enough to
grant either the Collier or the application of appellee Young,
subsequently filed, but not both.***"

The Court thereupon concluded that Collier was entitled to priority and

directed the trial court to enter an order awarding Collier's application priority

over that of Young. Although this case directly involved the administrative

procedure set up for Lea County there was no direct challenge of the State En-

gineer's administration as such. Both the trial court and the supreme court

evidently assumed that the administrative procedure was legally correct.

Yet, many observers have questioned the propriety under New Mexico law

of the state engineer defining appropriated rights to a finite quantity of water

subject to eventual exhaustion within a feasible time. Observers point to the

language of the United States Supreme Court9 where that Court attempted to define

what is meant by an appropriated right as follows:

"To appropriate water means to take and divert a specific
quantity of water therefrom and to put it to beneficial use in
accordance with the laws of the state where such water is found
and by so doing to acquire a right under such laws, a vested


~I~ _~I_












right to take and divert from the same source and to use
and consume the same quantity of water annually forever."

In the Lea County Basin, however, there is no possibility of granting an

appropriated right in perpetuity. In its natural condition, the water level of the

Lea County Basin was in a state of equilibrium. The amount of natural discharge

over any given period of years was exactly the same as the amount of recharge. With

minor fluctuations the water table remained static. When artificial discharge by

means of pumps was superimposed upon the rate of discharge occurring naturally, the

water table had to decline. All hydrologists point out that it is theoretically

possible to drain the basin by the use of only a few pumps acting as artificial

discharges. To put this another way, it is calculated that the annual rate of re-

charge or replenishment to the Lea County Basin is 29,000 acre feet per annum and

the natural discharge is also 29,000 acre feet per annum. When wells are drilled

into the aquifer and water is withdrawn by artificial means, there is no appraisable

decrease in the natural discharge. For all practical purposes all of the water that

is withdrawn by artificial means creates a loss of water in storage to the same

extent that the water is withdrawn. Thomas stated the maximum thusly:10

"*** Under a mining economy, some of the water is removed from
storage under the land and although the stored quantity in some
reservoirs may be large, it is nevertheless a finite quantity and
subject to eventual exhaustion."

This is a simple proposition but it is a very difficult thing for most

lay people to understand. In order to make clear the meaning of mining economy

in ground water, an analogy to oil extraction might be used. Nature is continuously

manufacturing more oil but yet most people realize that the extraction of oil is a

mining proposition and that eventually any oil well will extract all of the oil in

the land immediately underlying the pumping plant regardless of how large the given

reservoir of oil may be. This is also true of water. There is no actual or social

benefits to the public in a reservoir of water lying unused under the surface of the

land. To utilize the water, it must be extracted; that is, it must be mined. By


!~ t i f, i


_I~ __ _









-6-


doing so the reservoir must be depleted in underground basins such as Lea County.

Armed with this knowledge, Mr. Yates of the State Engineer's office worked

out a formula whereby water rights in that basin could be utilized. The criteria

for the formula included among other things:

(1) The administration of water rights must be pursuant to the
law of prior appropriation.
(2) Maximum protection must be given to the holders of existing
rights,
(3) There could be no utilization f the water without mining
of the water and eventual depletion of the basin.
(4) The administrative program should be defined in such a way
as to have the most favorable hydrological pattern of with-
drawal possible under the framework of New Mexico law.

Mr. Yates was instructed to set up a program for allocation that would al-

low the greatest amount of extraction of water with the least amount of waste. Mr.

Yates described the formula adopted by the State Engineer as follows:11

"The predicted effects have been computed by the Theis non-
equilibrium formula using T equals 100,000, S equals 0.20 and t
equals 40. Each township is assumed to have one well pumping
in the center of each 9 square mile area. The computed effects
in the pumping township and surrounding townships were adjusted
to unity. The storage depletion is proportional to the diversion
rate. One acre-foot per acre of irrigational right was used to
distribute base rights. Average storage depletion per year is
then the base right effect multiplied by the net duty of 2J acre
feet per annum."

It can thus be seen that the formula worked out for Lea County is not a

complete innovation of the law of natural resources. It is similar in many ways

to the orders of oil and gas authorities of several states in their spacing re-

quirements for oil and gas wells. Oil and gas authorities are sometime called oil

and gas conservation commissions and their spacing requirements for oil wells are

predicated on the proposition of conservation. In all the states, minerals, includ-

ing oil and gas, are private property and if the oil and gas administrative author-

ities can work up spacing requirements for the purposes of conservation, then it

would seem that this would be good precedence whereby almost any state could pro-

mulgate regulations for spacing of water wells in order to conserve this resource.


____llsl____lll____IC___-------








-7-


We would take issue with those that would say that the Lea County adminis-

tration is contrary to the idea of prior appropriation. We submit that this type

of administration falls within the very spirit of the doctrine of appropriation.

On this point we would quote from the New Mexico Supreme Court:12

"We are here considering 'artesian basins, reservoirs or
lakes, the boundaries of which may be reasonably ascertained by
scientific investigations or surface indications.' Such bodies
of subterranean water are the principal resource of the locali-
ties where they occur. Their employment to the best economic
advantage is important to the state. According to the 'correla-
tive rights' doctrine, each overlying owner would have the same
right-the right to use whenever he saw fit. The right does not
arise from an appropriation to beneficial use, which develops the
resources.of the state. It is not lost or impaired by nonuse.
Regardless of the improvements and investments of the pioneers,
later comers or later developers may claim their rights. The
exercise of those rights which have been in abeyance will fre-
quently destroy or impair existing improvements, and may so
reduce the rights of all that none are longer of practical value
and that the whole district is reduced to a condition of non-
productiveness. The preventative for such unfortunate and un-
economic results is found in the recognition of the superior
rights of prior appropriators. Invested capital and improvements
are thus protected. New appropriations may thus be made only
from a supply not already in beneficial use. Nonuse involves
forfeiture. A great natural public resource is thus both
utilized and conserved." (Emphasis ours)

This pronoucement by New Mexico Supreme Court was in 1929 before the courts

had the benefit of more recent hydrologic investigations and scientific determinations.

It would appear that the New Mexico Supreme Court at the time of Yeo vs.

Tweedy, was thinking along the same lines as the United States Supreme Court when

th federal court said that the right to appropriate was the right to use forever.

We now know that this natural public resource in many instances cannot be used and

at the same time preserved, if it is meant by preserved that it can be used in

perpetuity. The most that the administrator can hope for is to eliminate waste. We

submit that the State Engineer of New Mexico has used a realistic and hardheaded

approach to the problem, utilizing every technological aid available to his office.

In this manner, it is hoped that the greatest quantity of water possible can be

extracted from the Lea County Basin in such a manner that there will be a minimum











residue that cannot be utilized through known extraction methods.

The state engineer's formula was worked up on a theoretical life of 60

years for the Lea County Basin which would, in reality, mean a practical life of 40

years based upon present calculations. It is realized by the administrator that at

the end of 40 years there will be a considerable quantity of water which it will be

economically unfeasible to pump for irrigation purposes. It is hoped that this

residue will be sufficient for domestic uses for an indefinite period of time.

This carries with it a burden upon the users who will attempt to extract the water

after 40 years, of paying the additional pumping costs. The local economy will have

to pay the price of using the water in just exactly the same way that any other

mining economy must pay the cost.

It is necessary for the public of Lea County to realize that, as in any

mining economy, within a foreseeable future, the product or resource on which the

economy is based will no longer be present. The administrator has the responsibil-

ity within the spirit of his delegated powers to inform the public of this matter.

If the doctrine of appropriation has any justification at all for the change in the

western states within the common law theory of water, it is that the prior appropri-

ation theory affords greater flexibility to the economy of the state. Therefore, we

submit that it is within the spirit and not contrary to any letter of the law of

appropriation to administer the waters in a flexible manner in order to meet the

demands of modern conditions and local situations. We submit that it is a basic

premise of the law of appropriation that the fundamental scientific information

based upon the latest hydrologic investigations be considered by those who administer

the water law. If the doctrine of appropriation does not have this degree of

flexibility, it cannot long survive.

The law of appropriation does not define or give any guidepost as to what

the administrator should or should not do when confronted with a situation such as

that that exists in Lea County. Thus, the state engineer was forced to interpret


__











the word "appropriate" in line with the facts of the particular basin. He could not

interpret the word as it had been used in artesian basins or as it had been used

upon surface streams. In the later cases, the classical approach has been to inter-

pret the word "appropriate" to mean something equivalent to the amount of replenish-

ment to the source of water; that is, under the pronouncement of the United States

Supreme Court, only so much water could be appropriated from a particular source as

is replenishing that source by natural means less the remaining natural discharge

from that source.

As a practical matter, perhaps this classical approach has never been used

in the West. I would be willing to venture a challenge that there is no ground

water basin in the western states that does not have more appropriations from a

source of water than it has replenishment frcm the same source. Webster's definition

of appropriation, as far as here pertinent, is:

"The act of setting apart or assigning to a particular use
or person in exclusion of all others. Application to a special
use or purpose as of money to carry on some object.

In the Lea County Basin the administrator used the word in a sense of allocation.

He has allowed so much appropriation as is reasonable with regard to the protection

of those who have prior rights. Thus, it is apparent that the determination of

whether there is water to be appropriated requires in essence the balancing or ad-

justing of the rights of all parties involved. To the state engineer falls the duty

of determining a balance of the rights of the applicant, other priority users of

water from the common source and of the public generally, in whom title to the

economic source is vested. This is true regardless of the conditions surrounding

the source of the water or the particular facts involved. It is his duty to obtain

the maximum benefits to the public from a particular source of water, while at the

same time safeguarding the rights of other users of the water. This duty he must

carry out under the provisions of the law in the line of the facts as determined by

him.

CL b____ ______ i_____________-- n_____________________________ i ~ __


___1_111____1__11__1____ll











In considering whether or not the administration of water law in New Mexico


is violative of the theory of appropriation, the general law governing rules and

regulations of a public administrative body should be pointed out. This rule was

set up by Corpus Juris Secundum:13
"In passing on the validity of administrative rules and regu-
lations, the only concern of the court is to ascertain whether the
will of the legislature has been obeyed. Thus the Court should
consider such rules and regulations in the light of the evil which
the statute under which they are promulgated seeks to eliminate or
control.
"***Moreover an administrative rule or regulation must be
clearly illegal, or plainly or palpably inconsistent with law, or
clearly in conflict with a statute relative to the same subject
matter, such as the statute it seeks to implement, in order for
the court to declare it void on such ground.
"It is only where an administrative rule or regulation is
completely without rational basis, or where it is wholly, clearly,
or palpably arbitrary, that the court will say that it is in-
valid for such reason."

In further justification of the standards set up by the state engineer in

Lea County, I would quote the rule from American Jurisprudence as follows:4

"An administrative agency having power to grant a privi-
lege under certain circumstances may adopt a standard as an
interpretation of the powers bestowed upon it, and the court
may declare such standard invalid only in the event that it
is so lacking in reason for its promulgation that it is es-
sentially arbitrary."

We have already shown that the doctrine of appropriation was adopted be-

cause it gives greater flexibility to n on of the West. The factors that

gave life to the doctrine of appropriation and the exigencies that made it impera-

tive are forcibly stated in the Utah case of Willey v. Decker15:

"Jhthr r jot it is a beneficent rule, it is the lineal
raw e -f the. -Wcn Ahen, g e
most energetic and enterprising classes of the East, that
enormous tide of emigration poured into the West, this was
found an arid land, which could be utilized as an agricultural
country, or made valuable for its gold, only by the use of its
streams of water. The new inhabitants were without law, but
they quickly recognized that each man should not be a law unto
himself. Accustomed, as they had been, to obedience to the
laws they had helped to make, as the settlements increased to
such numbers as justified organization, they established their
local customs and rules for their government in the use of the


~~1_ 1___1__1__








-11-


water and land. They found a new condition of things. The
use of water to which they had been accustomed, and the laws
concerning it, had no application here, The demand for water
they found greater than the supply, as is the unfortunate fact
still all over this arid region. Instead of attempting to di-
vide it among all, thus making it unprofitable to any, or in-
stead of applying the common-law riparian doctrine to which
they had been accustomed, they disregarded the traditions of
the past, and established as the only rule suitable to their
situation that of prior appropriation: This did not mean that
the first appropriator could take what he pleased, but what he
actually needed, and could proper use itout waste. Thus
was established the local custom, which pervaded the entire
West and became the basis of the laws we have today on the
subject." (Emphasis ours.)

It can thus be seen that the law of prior appropriation did not spring

full grown like Venus from the head of Jupiter. Nor was it adopted to be the final

definitive rule as were the Ten Commandments given Moses on Mount Sinai. Every

court has pointed out that one of the important factors in the adoption of the

appropriation doctrine was its flexibility.

Social welfare is implicit in the doctrine. This is seen in the phrases

"beneficial use is the measure, the basis and the limit of the right", "waste will

be enjoined" and "non-use involves forfeiture." This is the flexibility that is

still inherent in the law.

The modern day administrators are concerned with getting court definitions

of what is meant by beneficial use and what degree of waste will be enjoined. As

far as I am aware, there has never been a definitive ruling on beneficial use. It

still remains to be determined that beneficial use means beneficial to society or

beneficial to the individual user. Nor would we know exactly how much waste will

be allowed. We do know that all appropriations of water involve some waste. Cer-

tainly, there is a great deal of waste in the use of earthen reservoirs, earthen

canals and earthen ditches. There is no doubt that the legislature, the courts and

the administrators of water will became more and more. strict about the definition

of waste as shortages increase.

There was a suggestion in the paper presented by Dr. Wollman, and prepared








-12-


for this symposium, that--"Circumstances may compel the states to go so far as to

reacquire all water rights, and with these in hand to create a corporation designed

to sell water to all users, just as a municipal water company now does; its opera-

tions would parallel even more closely that of a privately operated state-wide gas

or electric utility. The state water corporation and its subsidiaries would prob-

ably acquire all pertinent physical structures, including those privately owned,

and would be responsible for all new capital investment in water resource projects.

* *By being itself in possession of all capital structures as well as title to

water, the water corporation could operate with maximum flexibility in the public

interest."

This is a proposition with which I cannot agree. It would appear that

Dr. Wollman has not fully considered the legal prohibitions, at least in New Mexico,

against such change in the water law. Article XVI, Sec. 2 of the New Mexico Con-

stitution provides that "the unappropriated water of every stream is hereby declared

to belong to the public and to be subject to appropriation for beneficial use and

that the priority of the application shall give the better right."

In my opinion, the acquisition of the water rights by a state-owned cor-

poration would require an amendment to the state constitution and, I am sure, this

would also be necessary in all of the other western states. There is an even more

far-reaching obstacle to the state owning all water rights and that is the due

process clause of the Fourteenth Amendment to the federal constitution. In New

Mexico, constitutional provisions and legislative enabling enactments would be

necessary to acquire the water rights and, even so, it is doubtful if the rights

could be acquired without condemnation proceedings or the provisions would fall under

the ban of taking the property without due process of law. This would require a

great revolution indeed in the law of eminent domain.

Dr. Wollman suggests further--"Some users could be subsidized; others might

be charged what the traffic would bear. The price and investment policy followed by









-13-


the corporation would reflect certain of the larger objectives of federal, state,

and local government: whether and to what extent government should participate in

economic developmental and control activities." This suggestion would certainly

violate every known concept of the appropriation doctrine and would certainly require

changes in the constitutional government of New Mexico, and perhaps changes in the

federal constitution. I am here concerned with the legal objections but I feel ob-

ligated to point out that such a proposal would mean possibly even more intransigent

objections politically.

Dr. Wollman has pointed out that water dominates the entire economy of

the arid states such as New Mexico and the query could be raised as to whether there

would be any necessity for the nationalization of any other natural resource once

the water resources are owned by the state, State ownership of water, under the

control of the state-owned corporation, would place the control of all the capital

in the state at the mercy of the bureaucrats to plan, manage and direct the activi-

ties of the state-owned corporation. I would warrant that Dr. Wollman would be the

first to agree that socialization of water resources would naturally require the

socialization of all other resources. For what value would it be to the owner of

any capital assets to own land, machinery, etc., if he were at the mercy of the

owners of the water rights?

Under the alternative suggested by Dr. Wollman, there certainly could not

be competition at the market place for water since under his theory some water users

could be subsidized and others charged what the market would bear. Under Dr. Woll-

man's theory, the query could be raised also as to whether some property could actu-

ally be liquidated by the refusal of the state-owned corporation to furnish water.

We feel that these are legitimate questions or objections that can be

directed to the idea of state ownership of water. I doubt that Dr. Wollman realizes

the far-reaching consequences of his proposals. We respectfully submit, however,

that the law of water rights can expand and grow with a growing national economy


__1___1__111_____1_______ ~_~










under our traditional system of law.

We feel that the Lea County administration shows that there can be greater

flexibility in the law of appropriation, coupled with the classic balancing of pow-

ers between the administrator, the legislature and the courts. This does not mean

that there are not grave and weighty deficiencies in the law. There are many prob-

lems that remain to be solved. Dr. Wollman has aptly pointed out that there should

be greater flexibility in the transfer of water rights from one use to another,

We take exception to his comments that the doctrine of appropriation al-

lows only "by relatively indirect incorporation into the price system, (mainly by

sale of land rather than water), of how these rights can be transferred from one

user to another." The legislative code of New Mexico expressly provides for the

transfer of water rights without the sale of land.16 The statute on this point

says "all or any part of said right may be severed from said land, and simultane-

ously transferred, and become appurtenant to other land, or may be transferred for

other purposes, without losing priority of right." As a matter of fact, a consid-

erable amount of the time of the state engineer's staff is spent on transfers of

water rights. Day by day there are more and more water rights being transferred from

agricultural to industrial uses.

Dr. Wollman states:

"State law, at least that of New Mexico, seems favorable
to shifts in water from one use or place to another, if econo-
mic arguments support such change; yet in practice, except for
requests by governmental units, the owner of a right to surface
water is likely to be enjoined from any shift in use."

We do not know upon what data or information Dr Wollman based this statement. Our

own observation would be that such is not the practice.

In his discussion of the free market system of water allocation, Dr.

Wollman states:
"Yet the implication of such procedure is not always made
clear by its proponents: to the extent that a free-market sys-
tem is followed, incomes will be redistributed in accordance
with the relative scarcities of resources. Those who hold title
to water would gain a windfall analogous to those who profit by
the rise in urban land values."


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I am not an economist and may be on doubtful scholastic ground in taking exception

with the learned doctor on this point but I would express the opinion that the

situation is not at all analogous to those who benefit in the rise of urban land

values. A holder of urban land is required to do nothing other than pay the taxes,

whereas those who hold water rights do so under the clear mandate of the law that

the water rights be used and that the non-use of water rights involves forfeiture.

Furthermore, owners of urban land have a scarce product peculiar to the local area,

where the holders of water rights must compete in the national economy. There can

be no windfall profits to a farmer in the Mesilla Valley who owns a water right when

he has to compete on the cotton market with farmers of the Mississippi Delta. This,

of course, is disregarding cotton subsidies.

Certainly, a manufacturer in New Mexico who owns a water right would have

no windfall profits except to the extent that he would have an advantage in shipping

costs over a manufacturer in Massachusetts. As a practical matter, and from a

layman point of view, it would seem to me that until there is a tremendous increase

in population in the arid West, the manufacturer would have to overcome the dis-

advantage of the cost of appropriating water plus the increased cost of transporta-

tion. Where is the windfall profits?

Of course, it might be considered that the holder of a water right, which

is admittedly a scarce commodity, could sell it for domestic or municipal consumpt-

ion and thus would not have to compete in the national economy but this would over-

look the fact that a municipality has the right of eminent domain to acquire munici-

pal water. As long as the economy of one area is nationally competitive and the

areas of scarce water supply must compete with areas of plentiful water supply, I am

unable to see how there could be too much windfall profits. That is not to say,

however, that water rights are not valuable, as they certainly are. Nevertheless,

from a practical viewpoint and beinr intimately acquainted with the problem, I could

cite several examples where farmers have appropriated water and applied it on land,











which without the water had small value, and, after having filed proof of applica-

tion of water to beneficial use, have been unable to sell the land and the water

right for the cost of perfecting the water right. Where is the windfall profits?

Dr. Wollman concludes his paper by stating:

"There is ample precedent within the American economy for
much more control by government over the use of water than is
now being exercised. We have commonly tolerated encroachment
upon property rights or interference with free market processes
whenever failure to do so would clearly jeopardize the public
interest. As the shortage of water mounts in intensity, we
are likely to put more faith in administrative control as it is
exercised by politically constituted bodies than in the market
responses of those who hold property rights in water."

I can find little quarrel with this statement. I have been intimately

connected with administrative law and, as a veteran of many battles and numerous

law suits and as a proponent of administrative control, I believe I am justified in

stating that the type of control suggested by Dr. Wollman will be bitterly fought

in the arena of court litigation and from political platforms. I sincerely doubt

that the public would allow this much administrative control. It is easy to en-

vision phrases such as "power-mad bureaucracy" and "power corrupts and absolute

power corrupts absolutely."

I believe that the alternative is to work for greater flexibility in the

doctrine of prior appropriation. There needs, possibly, to be more flexibility to

encourage transfers of water rights from agriculture to industry. There should be

greater imagination in the allocation of water. There probably will be greater

restrictions against waste and certainly there will be more efficient techniques to

conserve water. The people of the West will allow themselves to be more and more

controlled in the use of water but I doubt that they will allow themselves to be

controlled absolutely.


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-17-


INDEX TO FOOTNOTES

1. N. M. Laws, 1931 Ch. 131, Sec. 75-11-1, et seq. MMSA 1953.

2. Manual of Rules and Regulations of Underground Waters, State Engineer, New Mexico.

3. Yates Water Supply Lea County Underground Water Basin, New Mexico State
Engineer's Unpublished Report, p. 1

4. Yates, supra.

5. Rules and Regulations, upra.

6. Thomas Water _Rihts in Areas of Ground-Water Mining Geological Survey Circular
347, p. 10.

7. Thomas Geological Survey Circular 347, p. 12, supra.

8. State vs. Alexander, 59 HM 478, 286 P. 2d 322 (1955)

9. Arizona vs. California, 283 U. S. 423 (1931)

10. Thomas Geological Survey Circular 347, p. 10, supra.

11. Yates Water Supply of Lea County Underground Water Basin, supra., p. 2

12. Yeo vs. Tweedy, 34 NM 611, 28 P. 970 (1929)

13. 73 C.J.S., Public Administrative Bodies and Procedures, 104, p. 424.

14. 42 Am. Jur., Public Administrative Law, 93, p. 421

15. Willey vs. Decker, 73 Pac. 210

16. 75-5-21, 22, NMSA, .193


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