ELR Citation: ELR 20259
No(s). 80-730 HB (D.N.M. Aug 3, 1984)

The court holds that a New Mexico statute setting conditions on the export of groundwater is facially consistent with the Commerce Clause to the extent that the conditions do not discriminate against out-of-state users more than is necessary to protect the vital interests of New Mexicans in time of extreme shortage. The court first rejects plaintiff's claim that a provision in the statute allowing groundwater exports only if they are consistent with conservation within the state and not detrimental to the public welfare of New Mexico residents bars all exports. The court rules that on its face, the provision applies evenhandedly to in-state and out-of-state users.

That the statute refers to consistency with the public welfare of New Mexico residents does not create an impermissible bias against exports; the Supreme Court has held that a state may give a limited preference to its own residents in the allocation of groundwater, so long as that preference does not serve solely to protect local economic interests. The Supreme Court also held that a state may favor its citizens in time of shortage. The court rules that, though such favoritism must not place unreasonable burdens on interstate commerce, it may be legislated before a shortage arises and does not make a statute like New Mexico's unconstitutional on its face. The court names several factors to be used in determining whether the preference is unreasonable, but that will have to await specific application of the statute.

The court also rejects plaintiff's argument that the statute's definition of public welfare incorporates an unconstitutional bias in favor of New Mexico commercial interests. The statute was passed in response to the court's decision, 13 ELR 20755, holding the prior statute unconstitutional because of its ban on exports to protect New Mexico economic interests. The evidence does not demonstrate, and the court declines to infer, that the New Mexico Legislature intended to resurrect the illegal definition of public welfare. The court rules that the conservation criterion in the New Mexico statute is not inherently unconstitutional. The Supreme Court has held that groundwater is a special category of natural resource that states may conserve to a limited extent within their boundaries for the use of their own citizens.

The court next upholds a provision listing six factors the New Mexico State Engineer must consider in deciding whether to grant an application to export groundwater. The factors concern issues that have to be resolved to determine whether there is a shortage of water in the area from which the water will be taken and how strong the need is for the imports in the other state, both questions that must be answered to determine whether restrictions on exports pass constitutional muster.

Turning to provisions imposing the conservation and public welfare criteria on other interstate uses of ground and surface water, the court first rules that plaintiffs lack standing to challenge restrictions on appropriations of ground or surface water from undeclared basins or from supplemental wells, since plaintiffs have no applications pending for such transfers. The court rules that the New Mexico statute unconstitutionally imposes conservation and public welfare constraints on domestic wells and transfers of water rights in the interstate but not intrastate context. The distinction discriminates against interstate commerce on its face and is therefore subject to strict scrutiny. This disparate treatment does not serve a legitimate local purpose since it could bar interstate transfers that would be less damaging to the public welfare and conservation than would in-state uses that New Mexico could not bar. The court rules that the state is barred from considering the six factors relating to conservation and public welfare in reviewing applications for interstate transfers and export of water from domestic wells.

The court also invalidates a bill placing a two-year moratorium on new appropriations of groundwater from the area in dispute. The reasons given for the moratorium mask an intent to block interstate transfers. The court rules that this discriminatory purpose renders the law unconstitutional even though the impact of the moratorium falls evenly on New Mexico and out-of-state users. The court also reenters its findings from the earlier decision on an interstate compact and state constitutional matters, which are not moot because they might otherwise have to be relitigated.

Counsel for Plaintiffs
Harry M. Reasoner, Charles L. Berry
Vinson & Elkins
First City Tower, Houston TX 77002
(713) 651-2222

James L. Gallagher
Scott, Hulse, Marshall & Fueille
11th Floor, El Paso National Bank Bldg., El Paso TX 79901
(915) 533-2493

Counsel for Defendants
Ralph Wm. Richards
Weinbrenner, Richards, Paulowsky & Sandenaw
Suite 707, First National Tower, Las Cruses NM 88004
(505) 524-8624