Amicus Curiae Brief — Texas v. New Mexico (No. 141)

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FILED

{GURL JUN = 9 26:

RECUR No. 141, Original ful

AND eee eee a OFFICE OF THE CLERK

BRIEFS

In The

Supreme Court of the Anited States

STATE OF TEXAS,

Plaintiff

V.

STATE OF NEW MEXICO and

STATE OF COLORADO,

Defendants.

¢

On Exceptions to the First Interim

Report of the Special Master

¢

CITY OF LAS CRUCES’ AMICUS CURIAE

BRIEF IN SUPPORT OF STATE OF

NEW MEXICO’S EXCEPTIONS TO THE FIRST

INTERIM REPORT OF THE SPECIAL MASTER

°

JAY F. STEIN, EsqQ.* JENNIFER VEGA-BROWN, ESQ.

JAMES C, BROCKMANN, ESQ. MARCIA B. DRIGGERS, Esq.

STEIN & BROCKMANN, P.A. City OF LAS CRUCES

P.O. Box 2067 City Attorney’s Office

Santa Fe, NM 87504-2067 P.O. Box 20000

(505) 983-3880 Las Cruces, NM 88004-9002

jfstein@newmexicowaterlaw.com

*Counsel of Record

Counsel for Amicus Curiae

City of Las Cruces

COCKLE LEGAL BRIEFS (800) 225-6964

TABLE OF CONTENTS

Page

Re Se BAA 6 OM es bin icsccsciccnceseccnssscesesss il

INTEREST OF AMICUS CURIAE...................4.. 2

naa sion sak dchdanpononeinedenen 4

Be IE MPa cvcncccssccssacevccscatecssane 4

B.. “T ee MI FIG oasis ecccecsccsnccscccceess 6

3. Lower Rio Grande Adjudication ................ 6

4. First Interim Report of the Special Master .... 12

SUMMARY OF ARGUMENT ....................:.cceeeees 13

PN cil ad oc na icactindulnnloeininialteaihaasdeiibaanindtides 15

POINT I: THE FIRST INTERIM REPORT EX-

CEEDS THE SCOPE OF RULE 12(b)(6) TO

THE DETRIMENT OF LAS CRUCBG.............. 15

POINT II: THE SPECIAL MASTER FAILED TO

CONSIDER TEXAS’ PREVIOUS LAWSUITS

CIES REED BEEP GRUNONIT EIT sve rcccceessceecensccsensenscsevoess 21

POINT III: THE SPECIAL MASTER’S RECOM-

MENDATION THAT THE UNITED STATES

PARTICIPATE PURSUANT TO 28 U.S.C.

§ 1251(b)(2) CREATES A CONFLICT WITH

THE STREAM SYSTEM ADJUDICATION ..... 29

I cikecicedanssasbnscovmcavuisinixdosaseadliniinecss 37

11

TABLE OF AUTHORITIES

Page

CASES

Arizona v. San Carlos Apache Tribe, 463 U.S. 545

Scie pintininthaticoasieicinistacsaduilediainehaiiiemppenaaadinnlacsanads 33, 35

Bell Atlantic Corp. v. Twombly, 550 U.S. 544

RNR Car aE SRS 2 2ST be DESI ARLES AP Sone 17

City of El Paso ex rel. Public Service Board uv.

Reynolds, 563 F. Supp. 379 (D.N.M. 1983) ....... 26, 27

Colorado River Conservation District v. United

States, 424 U.S. 800 (1976)..............cccescoecceesees passim

Elephant Butte Irrigation Dist. v. Regents of

N.M. State Univ., 1993-NMCA-009, 115 N.M.

I a cchamenomniionbecel 8

Erickson v. Pardus, 551 U.S. 89 (2007).................00008 18

Hinderlider v. La Plata River & Cherry Creek

Ditch Co., 304 U.S. 92 (1938) ................ce000. 20, 29, 30

In re Rockefeller Ctr. Props. Sec. Litig., 184 F.3d

EERE A esos Nee 16

Kelley v. Carlsbad Irr. Dist., 76 N.M. 466, 415

RIESE a tN meeps eaten Ry ey ary 10

Kerotest Mfg. Co. v. C-O-Two Fire Equipment

ie SE IIE ciieen snncseasddnsdideuneucsinistentonsses 34

Krijn v. Pogue Simone Real Estate Co., 896 F.2d

gE eevee enone nn nee EOP 16

Martin Marietta Corp. v. International Telecom-

munications Satellite Org., 991 F.2d 94 (4th

TR aR he SPA AIS TN ir cei EPs 18

ill

TABLE OF AUTHORITIES — Continued

Page

Nebraska v. Wyoming, 325 U.S. 665 (1945)................ 27

Nebraska v. Wyoming, 507 US. 584 (1993).... 14, 27, 28, 29

Ohio v. Kentucky, 410 U.S. 641 (1973).............cccceeeeee 29

State ex rel. Reynolds v. King, 63 N.M. 425, 321

a ars a ai lacs 10

State of New Mexico ex rel. State Engineer v.

Elephant Butte Irrigation Dist., et al., No.

CV-96-888 (3d Jud. Dist. filed Sept. 24,

AGRO 4, 7, 8, 11, 32

Texas v. New Mexico, No. 9, Original, 344 U.S.

II ics sci tiiccasicnssssleniciepeibannadeiiibaasnbiaasbintdmeadiadioes passim

Texas & New Mexico v. Colorado, No. 29, Origi-

Se Ge ERIE weccncntvevcssccccccccsinssenses passim

Texas v. New Mexico, 352 U.S. 991 (1957).................. 25

Texas v. New Mexico, 482 U.S. 124 (1987).................. 18

Tri-State Generation & Transmission Ass’n, Inc.

v. D’Antonio, 2012-NMSC-039, 289 P.3d 1232 ....... 12

United States v. Bluewater-Toltec Irr. Dist., 580

F.Supp. 1434 (10th Cir. 1984) ................csssssesseesseces 33

United States v. City of Las Cruces et al., 289

ee ee Ce Ny i icscdecccsinctvencpencsenenensennts 8, 32

United States v. District Court of Eagle, Colo.,

a apdcidinivvgsin’ 36

United States v. Haga, 276 Fed. 41 (1921)................. 10

United States v. Nevada and California, 412 U.S.

EES ARIE EM RB Ci tense cea aos AROSE 32

1V

TABLE OF AUTHORITIES — Continued

Page

Washington v. Oregon, 297 U.S. 517 (1936).....13, 14, 27

West Virginia ex rel. Dyer v. Sims, 341 U.S. 22

| ROGER SENSE EA ee nee Dn mks REDE ea 18

Yassan v. J.P. Morgan Chase & Co.,'708 F.3d 963

I ana oy ca pcceesealicaa eed eiteridedands 15

STATUTES

I ag cca tel ciliated 32

I cian lees passim

McCarran Amendment, 43 U.S.C. § 666 (1952).....passim

NMSA 1978, § 72-1-9 (1988) .............cccssccoeccccecessseceeeees 2

NMSA 1978, §§ 72-4-13 through 72-4-19

Sn detshiikiatsdienmcaiibiaetigdidiiasiiiasntadeniaieamnes 6, 7, 11, 30

Reclamation Act of 1902, §§ 2 and 8, 32 Stat. 388......6, 9

RULES

I es Ma Ie MI ciniicccsonssrindasctecennecsiedndiie 15, 18, 20

T_T A Ree ee eee Lew ee emer 15

ERE Re Rg COREE et ce iat ET IRD 1

Vv

TABLE OF AUTHORITIES —- Continued

OTHER AUTHORITIES

2 JAMES WM. Moors, et al., MOORE’S FEDERAL

PRACTICE, § 12.34[1)}{a] (8d ed. 2017) .........00.......

2 JAMES WM. MOorE, et al., MOORE’S FEDERAL

PRACTICE § 12.34[2] (8d ed. 2017)...........0.0.0.0....

2 JAMES WM. MOORE, et al., MOORE’S FEDERAL

PRACTICE § 12.34[3][a] (8d ed. 2017)..................

2 JAMES WM. MOorE, et al., MOORE’S FEDERAL

PRACTICE § 12.34[3][b] (8d ed. 2017)..................

Conflict on the Rio Grande: Water and the Law,

1879-1939, Littlefield, D.L. (Univ. of Calif.

Press 2008)... ps

Laws of the Territory of New Mexico 1905, ch.

eee iiincsenstnsexcinocetericnamutenbaghiamnaamianna dala

Laws of the Territory of New Mexico 1907, ch.

Order (1) Granting Summary Judgment Re-

garding the Amounts of Water; (2) Denying

Summary Judgment Regarding Priority Date;

(3) Denying Summary Judgment to the Pre-

1906 Claimants; and (4) Setting a Scheduling

Conference, State of New Mexico ex rel. State

Engineer v. Elephant Butte Irrigation District,

et al., No. CV-96-888 (3d Jud. Dist.) filed Feb.

BU, MEEE cccvusssevensinnnsosiaininessdianiacstenianinninnttninetat den

Page

vi

TABLE OF AUTHORITIES — Continued

Page

Order Granting the State’s Motion to Dismiss

the United States’ Claims to Groundwater

and Denying the United States’ Motion for

Summary Judgment, State of New Mexico ex

rel. State Engineer v. Elephant Butte Irriga-

tion Dist., et al., No. CV-96-888 (3d Jud. Dist.)

a ceupnineononscd 8, 9-11

Regional Planning Part VI - The Rio Grande

Joint Investigation in the Upper Rio Grande

Basin in Colorado, New Mexico, and Texas,

SS Et 2

Resolution of the Rio Grande Compact Commis-

I MPI, BID ccc cccccceccncccscccctecsecesss sesce: 5

Rio Grande Compact, Act of May 31, 1939. ch.

a ssuademenccecens passim

S.Rep. No. 755, 82d Cong., Ist Sess. (1951) ............... 35

1

No. 141, Original

«

Iu The

Supreme Court of the Anited States

.

STATE OF TEXAS,

Plaintiff

v.

STATE OF NEW MEXICO and

STATE OF COLORADO,

Defendants.

:

CITY OF LAS CRUCES’ AMICUS CURIAE

BRIEF IN SUPPORT OF STATE OF

NEW MEXICO’S EXCEPTIONS TO THE FIRST

INTERIM REPORT OF THE SPECIAL MASTER

¢

The City of Las Cruces (“City” or “Las Cruces”)

submits this amicus curiae brief in support of the State

of New Mexico’s Exceptions to the First Interim Report

of the Special Master and Brief in Support dated June

9, 2017 (“New Mexico’s Brief on Exceptions to the First

Interim Report”), pursuant to Sup. Ct. R. 37.4.! The

City brings to the Court’s attention issues not raised

1 The City of Las Cruces is an incorporated New Mexico mu-

nicipality. While the City can file an amicus brief as of right pur-

suant to Sup. Ct. R. 37.4 as a “city, county, town, or similar entity,”

it nonetheless provided notice to all parties of its intent to file an

amicus curiae brief.

2

in New Mexico’s Brief on Exceptions to the First In-

terim Report.’

¢

INTEREST OF AMICUS CURIAE

Las Cruces is the second largest city in New Mex-

ico and is located south of Elephant Butte Reservoir.

The City was founded in the mid-1800s, the first set-

tlers having arrived in 1839, led by Don Jose Costales.

See Regional Planning Part VI - The Rio Grande Joint

Investigation in the Upper Rio Grande Basin in Colo-

rado, New Mexico, and Texas, 1936-37 at 72 (1938). The

emerging community received its first water supply

from the Acequia Madre de Las Cruces around 1849.

Las Cruces transitioned to groundwater wells more

than a century ago. Today the City is responsible for

providing a potable water supply to more than 100,000

people. Las Cruces is one of the fastest growing munic-

ipalities in the western United States and its popula-

tion is expected to exceed 150,000 by 2050. The City’s

water supply comes solely from groundwater wells lo-

cated in the Lower Rio Grande Underground Water

Basin. Pursuant to state law, Las Cruces is entitled to

have a forty-year water supply. See NMSA 1978, § 72-

1-9 (1985).

2 The City supports the Special Master’s recommended de-

nial of Elephant Butte Irrigation District’s Motion to Intervene

and El Paso County Water Improvement District No. 1’s Motion

to Intervene. See First Interim Report at 237-77.

3

Texas’ Complaint alleges that the 1938 Rio

Grande Compact was premised on the “understanding”

that Texas bargained for a “1938 condition” of the Rio

Grande that incorporated the Rio Grande Project. In

Texas’ view, this renders post-1938 depletions of the

river Compact violations. The underlying premise of

the United States’ Complaint in Intervention is that

groundwater in storage in the Lower Rio Grande is

“Project Supply” for the Rio Grande Project, not public

water of the State, thereby obligating water users in

New Mexico to obtain federal contracts despite decades

of exercising state-based water rights under state per-

mits and Declarations. In recommending denial of New

Mexico’s Motion to Dismiss Texas’ Complaint, the Spe-

cial Master adopts Texas’ theory that the Compact re-

quired state line deliveries under a “1938 condition.”

Moreover, although he recommended granting New

Mexico’s Motion to Dismiss the United States’ Com-

plaint in Intervention, he nonetheless recommended

that the United States remain a party to pursue fed-

eral Reclamation law claims pursuant to the Court’s

discretionary, non-exclusive original jurisdiction pur-

suant to 28 U.S.C. § 1251(b)(2).

There are significant adverse consequences to Las

Cruces from the Special Master’s recommendations in

the First Interim Report. In short, he recommends a de

facto apportionment of the Lower Rio Grande that: 1)

requires specific state line deliveries that ignore Las

Cruces’ historical and present water use and locks Las

Cruces and New Mexico into 1938 water use condi-

tions; 2) divests New Mexico of jurisdiction over

4

surface water and groundwater in the Lower Rio

Grande; 3) places Las Cruces’ state-based groundwater

rights in jeopardy by requiring the City to obtain water

supply contracts from the United States decades after

its state-based rights were perfected by application to

beneficial use; and 4) creates confusion as to the status

of the general stream system adjudication styled State

of New Mexico ex rel. State Engineer v. Elephant Butte

Irrigation District et al., No. CV-96-888 (3d Jud. Dist.

filed Sept. 24, 1996), where the City’s and the United

States’ rights are being determined.*

€

BACKGROUND

1. Rio Grande Compact.

The Rio Grande rises in the San Luis Valley in Col-

orado, flows southward into New Mexico, and then into

Texas. The river was apportioned among the states of

Colorado, New Mexico, and Texas by the Rio Grande

Compact of 1938. See Rio Grande Compact, Act of May

31, 1939, ch. 155, 53 Stat. 785 (“Rio Grande Compact”

or “Compact”). Colorado is obligated to deliver a per-

centage of the recorded inflow at the Colorado-New

° If the recommendations in the First Interim Report are

adopted, a 1938 condition would also apply in Texas above

Ft. Quitman as well as in New Mexico; the United States would

also administer all surface water and groundwater in Texas above

Ft. Quitman; groundwater users above Ft. Quitman, including the

City of El Paso, would have to obtain water supply contracts from

the United States; and any Texas-based water rights set forth in

its adjudication would be at risk of being null and void.

5

Mexico state line under Article III of the Rio Grande

Compact. This delivery obligation is measured by a

gaging station at Lobatos, Colorado, near the state line.

In New Mexico, the Rio Grande flows through the

state into Elephant Butte Reservoir located approxi-

mately 100 miles north of the New Mexico-Texas state

line. Article IV of the Rio Grande Compact, as

amended, specifies New Mexico’s delivery obligation as

being into Elephant Butte Reservoir and is determined

as a percentage of the inflow recorded at a gaging sta-

tion at Otowi, New Mexico. The Resolution adopted at

the Compact Commission meeting on February 14-16,

1949, changed New Mexico’s point of delivery from San

Marcial to Elephant Butte Reservoir, and revised the

measurement of deliveries in Article IV.

The Rio Grande is administered as three separate

stream systems in New Mexico. The Upper Rio Grande

extends from the Colorado-New Mexico state line to

Otowi Gage. The Middle Rio Grande is situated be-

tween the Otowi Gage and Elephant Butte Reservoir,

and the Lower Rio Grande stretches from the outlet

works of Elephant Butte Reservoir to the New Mexico-

Texas state line.

Prior to either the Rio Grande Project or the Rio

Grande Compact, Las Cruces initiated and maintained

a municipal water supply for a growing city.

6

2. The Rio Grande Project.

Pursuant to the Reclamation Act, the United

States initiated the acquisition of surface water rights

for the Rio Grande Project by filing Notices of Intent to

Appropriate with the New Mexico Territorial Engineer

in 1906 and 1908. See Reclamation Act of 1902, $§ 2

and 8, 32 Stat. 388; see also Laws of the Territory of

New Mexico 1905, ch. 102, § 22 and Laws of the Terri-

tory of New Mexico 1907, ch. 49, § 40. The Notices of

Intent sought to reserve then-unappropriated surface

waters upstream of Elephant Butte Reservoir for stor-

age in Elephant Butte Reservoir for use in the Rio

Grande Project. New Mexico’s delivery obligation into

Elephant Butte Reservoir is governed by Article IV of

the Rio Grande Compact.

Once released from Elephant Butte Reservoir,

Project surface water is allocated between Elephant

Butte Irrigation District (““EBID”), located in New

Mexico, and El Paso County Water Improvement Dis-

trict No. 1 (“EP No. 1”), located in Texas. Ever since the

Rio Grande Compact has been entered, Rio Grande

Project water released from Elephant Butte Reservoir

has been governed and administered by a combination

of contracts and state and federal law.

3. Lower Rio Grande Adjudication.

A general stream system adjudication in New

Mexico is a special statutory proceeding set forth at

N.M. Stat. §§ 72-4-13 through 72-4-19 (1907). An

7

adjudication decree filed pursuant to N.M. Stat. § 72-

4-19 must declare the following:

... as to the water right adjudged to each

party, the priority, amount, purpose, periods

and place of use, and as to water used for irri-

gation, except as otherwise provided in this

article, the specific tracts of land to which it

shall be appurtenant, together with such

other conditions as may be necessary to define

the right and its priority.

The Lower Rio Grande Adjudication (“LRG Adjudica-

tion”) was initiated in the 1980s and began in earnest

in the 1990s in state district court in New Mexico. See

State of New Mexico ex rel. State Engineer v. Elephant

Butte Irrigation Dist., et al., No. CV-96-888 (3d Jud.

Dist. filed Sept. 24, 1996). The LRG Adjudication in-

cludes many claimants of surface water and ground-

water rights between Elephant Butte Reservoir and

the New Mexico-Texas state line, including all constit-

uents of EBID that use surface water. All claimants to

water rights within a stream system must be joined to

ensure due process.

Las Cruces has a two-fold interest in the LRG Ad-

judication. First, the City seeks judicial recognition of

its water rights to supply its municipal needs. Second,

Las Cruces must be prepared to challenge inter se

other defendants’ water right claims that may infringe

on the City’s water use. The City’s interest is only

served if all water rights claimants (indispensable

parties) are present and joined to a decree for post-

adjudication administration.

8

Despite its opposition, the United States was

joined to the LRG Adjudication pursuant to the McCar-

ran Amendment, 43 U.S.C. § 666 (1952), for the deter-

mination of its interest in the Rio Grande Project. See

Elephant Butte Irrigation Dist. v. Regents of N.M. State

Univ., 1993-NMCA-009, 115 N.M 229, 849 P.2d 372;

United States v. City of Las Cruces et al., 289 F.3d 1170

(10th Cir. 2002). The judicial determination of the

United States’ Rio Grande Project rights is now com-

plete. The LRG Adjudication Court has quantified the

United States’ Rio Grande Project right to store, re-

lease, and divert surface water at specified down-

stream points of diversion.* The Court determined the

Rio Grande Project priority date following a two-week

trial in September of 2015 and briefing and oral argu-

ment in September of 2016.

Importantly, the LRG Adjudication Court has also

held that groundwater is not part of Rio Grande Pro-

ject water supply.® The Court correctly recognized that

* See Order (1) Granting Summary Judgment Regarding the

Amounts of Water; (2) Denying Summary Judgment Regarding

Priority Date; (3) Denying Summary Judgment to the Pre-1906

Claimants; and (4) Setting a Scheduling Conference, State of New

Mexico ex rel. State Engineer v. Elephant Butte Irrigation District,

et al., No. CV-96-888 (3d Jud. Dist.) filed Feb. 17, 2014.

®° The LRG Adjudication Court held that “New Mexico law...

controls the determination of the source or sources of water for

the Project.” See Order Granting the State’s Motion to Dismiss

the United States’ Claims to Groundwater and Denying the

United States’ Motion for Summary Judgment, State of New Mex-

ico ex rel. State Engineer v. Elephant Butte Irrigation Dist., et al.,

No. CV-96-888 (3d Jud. Dist.) filed Aug. 16, 2012 at 4. It found

that “[t]he points of diversion constructed by the United States

9

the Project water supply originates upstream of Ele-

phant Butte Reservoir based upon the United States

obtaining its water rights under state law as set forth

in the Reclamation Act of 1902. Combined with that

holding, the LRG Adjudication Court also found that

return flows and seepage are necessary to meet Project

deliveries downstream of Elephant Butte Reservoir.

The Court stated:

The Project relies upon reuse of water in

order to execute the Project’s purposes of stor-

ing, releasing, and delivering the waters of the

Rio Grande for irrigation in New Mexico and

Texas and fulfill the United States’ treaty ob-

ligation to Mexico. In this regard, it is a typi-

cal reclamation project. The parties do not

appear to dispute that reuse of Project water

is an inherent component of the Project oper-

ation, as the Project delivers an annual aver-

age of 930,000 acre-feet from an annual

release of roughly 790,000 of water stored in

Project reservoirs.

Ide explains that seepage and return

flows from a federal reclamation project that

are captured and reused may be identified as

project water:

and utilized for the Project, coupled with the notices describing

the water to be appropriated as water from the Rio Grande and

its tributaries, indicate that the United States has established a

right to surface water under New Mexico law... .” Id. at 6 (em-

phasis added).

10

Nor is it essential to his control that

the appropriator maintain continu-

ous actual possession of such water.

So long as he does not abandon it or

forfeit it by failure to use, he may as-

sert his rights. It is not necessary

that he confine it upon his own land

or convey it in an artificial conduit. It

is requisite, of course, that he be able

to identify it; but, subject to that lim-

itation, he may conduct it through

natural channels and may even com-

mingle it or suffer it to commingle

with other waters.

263 U.S. at 506 (quoting United States v.

Haga, 276 Fed. 41, 43 (1921)). The reclama-

tion project water at issue in Jde had been ap-

plied to irrigation uses and, after migrating

downstream, emerged as seepage to create

surface flow that was still identifiable as pro-

ject water. Under New Mexico law, “[w]hen an

artificial or natural flow of surface water,

through percolation, seepage or otherwise,

reaches an underground reservoir and

thereby loses its identity as surface water,

such waters become public under the provi-

sions of [Section 72-12-1] and are subject to

appropriation in accordance with applicable

statutes.” Kelley v. Carlsbad Irr. Dist., 76 N.M.

466, 472, 415 P.2d 849, 853 (1966); See also

State ex rel. Reynolds v. King, 63 N.M. 425,

428, 321 P.2d 200, 201 (1958).

11

Determining whether Project water re-

tain its identity as Project water is a condi-

tion-specific and technical inquiry. The scope

of the adjudication, in contrast, is more lim-

ited, focusing on defining the elements of the

right. NMSA 1978, § 72-4-19 (1907) (stating

that an adjudication decree shall “declare, as

to the water right adjudged to each party, the

priority, amount, purpose, periods and place of

use, and as to water used for irrigation, except

as otherwise provided in this article, the spe-

cific tracts of land to which it shall be appur-

tenant, together with such other conditions as

may be necessary to define the right and its

priority”). The Court leaves the determination

of whether Project water retains its identifi-

cation to administrative proceedings con-

ducted before the State Engineer.

See Order Granting the State’s Motion to Dismiss the

United States’ Claims to Groundwater and Denying

the United States’ Motion for Summary Judgment,

State of New Mexico ex rel. State Engineer v. Elephant

Butte Irrigation Dist., et al., No. CV-96-888 (3d Jud.

Dist.) filed Aug. 16, 2012 at 6-7. The LRG Adjudication

Court’s analysis and ruling with respect to return

flows and seepage is consistent with federal Reclama-

tion project operations across the western United

States.

The City of El Paso, which takes a portion of EP

No. 1’s water for municipal use, is a party to the LRG

Adjudication and EP No. 1 has been an active amicus

12

curiae, filing briefs and presenting oral arguments in

that case.®

While a final adjudication decree will ultimately

be utilized for administration of all interrelated sur-

face water and groundwater rights in the Lower Rio

Grande, the New Mexico Supreme Court has upheld

the authority of the State Engineer to administer wa-

ter rights without a final adjudication decree pursuant

to Active Water Resource Management Regulations.

See Tri-State Generation & Transmission Ass’n, Inc. v.

D’Antonio, 2012-NMSC-039, 289 P.3d 1232.

4. First Interim Report of the Special Master.

The First Interim Report of the Special Master

was issued on February 9, 2017 (“First Interim Re-

port”). The Special Master recommended denial of

New Mexico’s Motion to Dismiss Texas’ Complaint

and the granting of New Mexico’s Motion to Dismiss

the United States’ Complaint in Intervention. He rec-

ommended that the United States nevertheless be

granted leave to participate pursuant to 28 U.S.C.

§ 1251(bX2) under the Court’s discretionary, non-

exclusive original jurisdiction to pursue claims under

federal Reclamation law, but not Compact claims. The

First Interim Report adopted Texas’ contention that

the apportionment by the Rio Grande Compact was

completed at the New Mexico-Texas state line, not 100

® El Paso, supported by EP No. 1, moved twice to stay pro-

ceedings in the LRG Adjudication. Both motions were denied. The

issue is now moot.

13

miles to the north at Elephant Butte Reservoir as ex-

pressed in Article IV of the Compact and as adminis-

tered by the Rio Grande Compact Commission. The

First Interim Report was prefaced by 187 pages of

Compact history containing numerous extrinsic ar-

chival and secondary sources.

The State of New Mexico moved to dismiss Texas’

Complaint and the United States’ Complaint in Inter-

vention on April 30, 2014. A draft report was circulated

by the Special Master on July 1, 2016. More than 60

pages of comments were received, including those from

the City of Las Cruces.

+

SUMMARY OF ARGUMENT

In recommending denial of New Mexico’s Motion

to Dismiss Texas’ Complaint, the Special Master erred

in three respects. First, he undertook independent fact

finding from extrinsic evidence to reach findings and

conclusions on the merits that extend far beyond a mo-

tion to dismiss. The Special Master’s exhaustive re-

search into original and secondary documents was

conducted and his conclusions reached without proper

participation from the parties, viz., no answer, counter-

claim, cross-claims, discovery, or evidence at trial. His

conclusions were rendered despite the express terms of

the Rio Grande Compact and Compact administration

to the contrary since 1939.

Second, he failed to address precedent that Texas’

claims were barred by acquiescence. Cf Washington v.

14

Oregon, 297 U.S. 517 (1936); Nebraska v. Wyoming, 507

U.S. 584 (1993). Previous actions filed by Texas seeking

relief relating to Rio Grande Compact interpretation

and administration failed to raise the issues now

raised by Texas regarding diversions below Elephant

Butte Dam.

Third, with respect to the United States’ Com-

plaint in Intervention, he recommended a misapplica-

tion of 28 U.S.C. § 1251(b)(2) to keep the United States

a party despite finding that the United States’ Com-

plaint does not implicate the Rio Grande Compact. The

United States’ claims to the Rio Grande Project have

been determined in an alternative forum. This recom-

mendation contravenes the Colorado River abstention

doctrine and creates a conflict with the state LRG Ad-

judication proceedings. See Colorado River Conserva-

tion District v. United States, 424 U.S. 800 (1976).

Moreover, if the United States is allowed to pursue

federal Reclamation claims, as recommended by the

Special Master, including that parties have taken Pro-

ject water without a contract, it would be a denial of

due process if the affected surface and groundwater

users such as Las Cruces were not a party to the liti-

gation. If the Court accepts the Special Master’s rec-

ommendation that the United States be allowed to

pursue federal Reclamation claims in the Court’s dis-

cretionary, non-exclusive original jurisdiction, Las

Cruces and other LRG water users will have to con-

sider intervention, because they are the real parties-

in-interest against whom federal Reclamation contract

claims are being asserted.

15

The more judicious approach is for the Court to

grant New Mexico’s Motion to Dismiss the United

States’ Complaint in Intervention.

6

ARGUMENT

POINT I

THE FIRST INTERIM REPORT

EXCEEDS THE SCOPE OF RULE 12(b)(6)

TO THE DETRIMENT OF LAS CRUCES

Under Fed. R. Civ. P. 12(b)(6): “[iJn deciding

whether to dismiss, the court may consider only the

facts alleged in the pleadings, documents attached as

exhibits or incorporated by reference in the pleadings,

and matters of which the judge may take judicial no-

tice.”’ 2 JAMES WM. Moors, et al., MOORE’S FEDERAL

PRACTICE § 12.34[2] (3d ed. 2017); see, e.g., Yassan v. J.P.

Morgan Chase & Co., 708 F.3d 963 (7th Cir. 2013). Typ-

ically, “once the court decides to accept ‘matters outside

the pleadings’, the motion will be treated as one for

summary judgment and disposed of as provided in

Rule 56.” 2 JAMES WM. MoorE, et al., MOORE’S FEDERAL

PRACTICE § 12.34[3]}[a] (8d ed. 2017). The purpose of

this is to ensure that “‘all parties’ are ‘given a reason-

able opportunity to present material that is pertinent,’

to a Rule 56 summary judgment motion.” 2 JAMES WM.

Moorg, et al., MOORE’S FEDERAL PRACTICE § 12.34[3] [b]

7 Pursuant to Sup. Ct. Rule 17.2 for Procedure in an Original

Action, “[t]he form of pleadings and motions prescribed by the

Federal Rules of Civil Procedure is followed.” Ibid.

16

(3d ed. 2017). This provides “that the court must make

sure that the parties know that the court is consider-

ing rendering a summary judgment in the matter. In

addition, the court must give the parties a fair oppor

tunity, a reasonable amount of time, to assemble sum-

mary judgment affidavits and other supporting and

opposing materials and present them to the court.” Jd.;

In re Rockefeller Ctr. Props. Sec. Litig., 184 F.3d 280,

287-89 (3d Cir. 1999); Krijn v. Pogue Simone Real Es-

tate Co., 896 F.2d 687 (2d Cir. 1990).

A significant issue has been created with New

Mexico’s Motions to Dismiss Texas’ Complaint and the

United States’ Complaint in Intervention because the

Special Master has sua sponte gone extensively beyond

the pleadings to resolve the motion to dismiss. The par-

ties were not provided notice that the Special Master

was going to resolve many of the issues on the merits,

viz., converting the motion to dismiss into a motion for

summary judgment, and therefore, did not have a rea-

sonable opportunity to respond with their own evi-

dence given the gravity of the Special Master's

recommendations on the merits of the case. The result

is a confusing procedural posture of the case beyond

recommending that a sufficient claim has been stated

to proceed to trial.

The Special Master conducted his own exhaus-

tive research into primary archival materials from

various archives and other document repositories and

secondary swurces related to the Rio Grande Compact.

See First Interim Report at 9-187. For example, the

Special Master’s assistant traveled to Austin, Texas, to

17

collect and review “archival original source docu-

ments,” and spent hundreds of hours researching and

analyzing primary and secondary source materials be-

yond what was in the parties’ pleadings.® The topics re-

searched by the Special Master include evidence from

the Compact negotiations, Compact negotiators’ in-

tent, and Compact administration, with documents

that include law review articles and other secondary

sources such as Douglas R. Littlefield’s treatise enti-

tled Conflict on the Rio Grande: Water and the Law,

1879-1939 (Univ. of Calif. Press 2008). The historical

documents include materiais provided by the Special

Master on a DVD and other source material cited in

the Table of Authorities of the First Interim Report.

The historical research and analysis set forth in

the First Interim Report went significantly beyond

“background” or providing “historical context” to the

Rio Grande Compact. First Interim Report at 8, 193.

Instead, a review of the First Interim Report reveals

that the Special Master relied on and cited his own in-

dependent research as authority in reaching decisions

on the merits rather than simply determining whether

Texas’ Complaint states a “plausible” claim upon

which relief can be granted. Jd. at 203-17. A complaint

must “state a claim to relief that is plausible on its

face.” See Bell Atlantic Corp. v. Twombly, 550 U.S. 544

8 See Special Master’s petitions for fees filed with the Court.

That the Special Master went to Austin, Texas, to conduct ar-

chival research, but not New Mexico or other locations, creates a

question of whether the research was complete.

18

(2007). This applies to the factual allegations of a com-

plaint. It requires “some minimal factual exposition

sufficient to state a claim that is ‘plausible on its face’

in order to survive a motion to dismiss.” 2 JAMES WM.

MOookgE, et al., MOORE’S FEDERAL PRACTICE, § 12.34[1][a]

(3d ed. 2017). Under Rule 12(b)(6), the Court must ac-

cept the plaintiff’s factual allegation as true. See Er-

ickson v. Pardus, 551 US. 89, 94 (2007). See First

Interim Report at 187-237.

Pursuant to Rule 12(b)(6), the only issue before

the Special Master was whether there was a plausible

claim upon which relief could be granted. Compact in-

terpretation can be governed by contract law. See Teves

v. New Mexico, 482 U.S. 124, 128 (1987): West Virginia

ex rel. Dyer v. Sims, 341 U.S. 22, 28 (1951). Any ambi-

suities in a contract that is the subjcct of a claim pre-

vent dismissal on a motion for failure to state a claim.

See Martin Marietta Corp. v. International Telecommu-

nications Satellite Org., 991 F.2d 94, 97 (4th Cir. 1992)

(“the construction of ambiguous contract provisions is

a factual determination that precludes dismissal on a

motion for failure to state a claim.”).

In this case, the Special Master went far beyond

what was essential to resolve New Mexico’s Motions to

Dismiss. Without an answer, counterclaims, cross-

claims, discovery, and evidence at trial that could be

marshalled and vetted by the parties, the First Interim

Report went to the merits. Premature findings include

that: 1) “the plain text of Article IV of the 1938 Com-

pact requires New Mexico to relinquish control and do-

minion over the water it deposits in Elephant Butte

19

Reservoir” (First Interim Report at 197); 2) “the equi-

table appointment achieved by the 1938 Compact com-

mits the water New Mexico delivers to Elephant Butte

Reservoir to the Rio Grande Project; that water is not

subject to appropriation or distribution under New

Mexico state law” (id. at 211); 3) “New Mexico... may

not divert or intercept water it is required to deliver

pursuant to the 1938 Compact to Elephant Butte Res-

ervoir after that water is released from the Reservoir

by Reclamation for deliveries pursuant to the admin-

istration of the Rio Grande Project (id. at 213); 4) water

released from Elephant Butte Reservoir “has been

committed by compact to the Rio Grande Project for

delivery to Texas, Mexico, and lower New Mexico, and

that dedication takes priority over all other appropria-

tions granted by New Mexico” (id. at 213); 5) “New

Mexico . . . relinquished its own rights to the water it

delivers in Elephant Butte Reservoir, allocating the

rights to that water instead to the Rio Grande Project

to irrigation lands in Texas and lower New Mexico” (id.

at 216); and 6) the United States can pursue “federal

reclamation law claims” under the Court’s discretion-

ary, non-exclusive original jurisdiction pursuant to

§1251(b)(2) based upon its allegation that all surface

water and groundwater below Elephant Butte Reser-

voir is Project water and no one can divert surface and

groundwater without a federal contract (id. at 231-34).

On what should have been a narrow ruling on a

motion to dismiss, without taking evidence from the

parties related to the history of the Rio Grande Com-

pact, its historical operation and administration in

20

Colorado, New Mexico and Texas, and the states’ pre-

vious actions under the Compact, including related lit-

igation of the Rio Grande Compact, the Special Master

has made extreme rulings that go to the merits that

result in: 1) taking the unambiguous Article IV of the

Compact which defines New Mexico’s deliveries into

Elephant Butte Reservoir and turning it into a state

line delivery obligation based upon 1938 conditions, ail

of which turns on the Special Master’s interpretation

of “deliver”; and 2) giving the United States control

over all groundwater and surface water in the Lower

Rio Grande, usurping New Mexico’s jurisdiction over

these water resources within its borders. These conclu-

sions significantly undermine the State’s responsibil-

ity to administer, and the stakeholders’ opportunity to

interact with the State administration. See Hinder-

lider v. La Plata River & Cherry Creek Ditch Co., 304

U.S. 92 (1938).

Because the parties did not have the opportunity

to review or respond to the evidence the Special Master

independently collected and analyzed, ine! ding proce-

dural protection if the evidence was taken at trial

pursuant to the Federal Rules of Evidence, they have

been denied due process. The Special Master should

have made a narrow ruling on the Rule 12(b)(6) mo-

tions and fleshed out the evidence at trial. For these

reasons, the First Interim Report should be rejected.

21

POINT I

THE SPECIAL MASTER FAILED

TO CONSIDER TEXAS’ PREVIOUS

LAWSUITS ON THE RIO GRANDE

In its Complaint, Texas asserts that it entered into

the Rio Grande Compact under the premise that the

Rio Grande Project’s allocations to Texas were recog-

nized and protected by the Rio Grande Compact. Texas’

Complaint at 7 11. Moreover, Texas claimed that it as-

sumed that New Mexico would not allow Rio Grande

Project water allocated by the United States to Texas

to be intercepted above the Texas state line for use in

New Mexico. Id.

In subsequent paragraphs of the Complaint, Texas

links the actual apportionment provisions of Articles

III and IV to the Rio Grande Project. See Texas’ Com-

plaint at J 12, 13.

In relevant part, | 18 states:

New Mexico’s actions have reduced Texas’ wa-

ter supplies and the apportionment of water

it is entitled to from the Rio Grande Project

and under the Rio Grande Compact. The Rio

Grande Compact is predicated on the under-

standing that delivery of water at the New

Mexico-Texas state line would not be subject

to additional depletions beyond those that

were occurring at the time the Rio Grande

Compact was executed. New Mexico, through

the actions of its officers, agents and political

subdivisions, has increasingly allowed the di-

version of surface water, and has allowed and

22

authorized the extraction of water from be-

neath the ground, downstream of Elephant

Butte Dam, by individuals or entities within

New Mexico for use within New Mexico. The

excess diversion of Rio Grande surface water

and the hydrologically connected under-

ground water downstream of Elephant Butte

Reservoir adversely affects the delivery of wa-

ter that is intended for use within the Rio

Grande Project in Texas.

See Texas’ Complaint at { 18.

None of these paragraphs identify an amount of

water that Texas claims it has been shorted. None

identify the period of record over which the alleged

shortfalls occurred. These issues are basic to under-

standing the vulnerability of New Mexico interests to

Texas’ allegations.

The Special Master has an exhaustive exposition

of the “background” or “context” to the Compact. First

Interim Report at 9-187. Importantly, it does not con-

tain a description of the two lawsuits filed by Texas in

1951 and 1967, beyond one cursory mention of them,

where Texas made allegations of injury under the

Compact, but without reference to or allegations of de-

pletions of releases below Elephant Butte Dam. Texas’

putative case and the Special Master’s description of

background ignores the history of Compact admin-

istration and of two previous actions filed by Texas. See

Texas v. New Mexico, No. 9, Original, 344 U.S. 906

(1952); Texas & New Mexico v. Colorado, No. 29, Origi-

nal, 389 U.S. 1000 (1967).

23

Compact administration can be divided into five

periods: (i) 1939-1942; (ii) 1942-1985; (iii) 1985-1995;

(iv) 1995-present; and (v) 2008-present. They corre-

spond to the following:

¢ The period of 1939-1942 is the period in

which Compact procedures were estab-

lished and the first “actual spill” occurred

in 1942.

e The second period from 1942-1985 was a

period in which the two upstream states

of Colorado and New Mexico amassed

large accrued debits. Two lawsuits were

filed: (i) Texas v. New Mexico, No. 9,

Original, in which Texas claimed Com-

pact violations against New Mexico based

on New Mexico’s storage practices in El

Vado Reservoir, which Texas claimed

were contrary to Articles VII and VIII of

the Rio Grande Compact; and (ii) New

Mexico and Texas v. Colorado, No. 29,

Original, in which New Mexico and Texas

challenged Colorado’s accrued debit as a

violation of Article VI when it reached

nearly one million acre-feet.

¢ The third period of record, 1985-1995,

was a period in which there were actual

spills of usable water in 1985, 1986, 1987,

1988, 1994 (not a spill of usable water),

and 1995.

¢ The fourth period of record from 1995 to

the present has been a period in which

New Mexico has enjoyed credit status.

24

¢ The fifth period of record, which overlaps

the fourth, relates to administration un-

der the 2008 Operating Agreement in

which New Mexico has received much

less than 57% of the surface water than

was originally allocated.

In 1951, Texas sought leave to file a Complaint

in Texas v. New Mexico, No. 9, Original, 344 U.S. 906

(1952), Texas claimed that unless its rights under the

Compact were enforced “defendants will continue to

wrongfully store, divert, and use waters of the Rio

Grande in violation of the rights of the State of Texas

and its citizens under said Compact... .” Texas Com-

plaint at J X in No. 9, Original. Suit was filed when

New Mexico’s accrued debit reached 263,100 acre-feet

on January 1, 1951. Jd. at { VI. This was based on al-

leged storage of water in excess of accrued debits pur-

suant to Art. VII of the Compact. Texas sought an

injunction restraining New Mexico from storing water

in El Vado Reservoir, or any other post-1929 upstream

reservoir, when there was less than 400,000 acre-feet

of water in project storage in Elephant Butte Reservoir,

and that New Mexico and the Middle Rio Grande Con-

servancy District (““MRGCD”) be enjoined from divert-

ing native water when its accrued debits were more

than 200,000 acre-feet. Jd. Both Texas and New Mexico

pled that New Mexico’s delivery obligation was into E]l-

ephant Butte Reservoir. New Mexico pled:

The compact provides that New Mexico make

certain deliveries at the San Marcial gaging

station located some 165 miles northerly from

25

the Texas-New Mexico boundary. Water so de-

livered at the San Marcial gaging station is

utilized for the satisfaction of the interna-

tional obiigation of the United States to de-

liver water at Juarez, Mexico, and to satisfy

contract obligations of the United States

Bureau of Reclamation to deliver water for

the irrigation of some 86,000 acres of land in

the Elephant Butte Irrigation District in New

Mexico and the irrigation of some 64,000

acres of land in El Paso County Water

Improvement District No. 1 in Texas. The

obligation of New Mexico to deliver and the

right of Texas to receive water at the Texas-

New Mexico boundary line has never been

defined in any way.

See New Mexico Answer at 7 3. Texas alleged that

“(t]he supply of water required by the Compact to be

delivered by New Mexico into Elephant Butte Reser-

voir ... has been seriously diminished... .” Texas’

Complaint in No. 9, Original, at J VII.

The case was dismissed because of the failure of

Texas to join the United States as an indispensable

party given its fiduciary obligation to New Mexico

tribal communities on the Middle Rio Grande with

storage rights in El Vado Reservoir. See Texas v. New

Mexico, 352 U.S. 991 (1957).

Significantly, Texas made no claim as to the deple-

tion of releases below Elephant Butte Reservoir in that

case. No parties were placed on notice that Texas suf-

fered injury by diversions below Elephant Butte Res-

ervoir in the 1948-1951 period of record, and therefore

26

Las Cruces’ development of its well field north of the

New Mexico-Texas state line continued through the

state process.

Dismissal of Texas v. New Mexico, No. 9, Original,

was followed by years of accounting debits by New

Mexico and Colorado. In 1967, after Colorado’s accrued

debit had reached 939,900 acre-feet (New Mexico’s ac-

crued debit in 1965 was 420,000 acre-feet), Texas,

joined by New Mexico, filed suit against Colorado. Col-

orado’s Counterclaim referenced Elephant Butte Res-

ervoir as the point where New Mexico’s delivery

obligation was established. See Colorado Counterclaim

in No. 29, Original, { IV.

On April 17, 1969, the states signed a Joint Motion

for Continuance. On April 19, the United States filed a

Motion for Relief seeking leave for the United States

to intervene.

On July 2, 1985, the Rio Grande Compact Commis-

sion determined that “pursuant to the May 13, 1985

agreement an actual spill of usable water, as defined

by Article I of the Rio Grande Compact, had occurred

on June 13, 1985, and that all previously accrued water

debits of Colorado and New Mexico were cancelled.”

Accordingly, the three states moved to dismiss the

1969 case. No allegations were made with respect to

depletions of releases from Elephant Butte Reservoir.

The City continued development of its well field.°

® City of El Paso ex rel. Public Service Board v. Reynolds, 563

F. Supp. 379 (D.N.M. 1983) construed the Rio Grande Compact to

27

Having pled causes of action under the Rio Grande

Compact twice, omitting any allegations of depletions

below Elephant Butte Reservoir, Texas is barred by ac-

quiesence from relitigating issues which could have

been pled in No. 9, Original, or No. 29, Original, and

imposing injunctions on the river which limit Las

Cruces’ groundwater rights. Texas has acquiesced in

the development of the City well field.

Supreme Court precedent in Washington v. Ore-

gon, 297 U.S. 517 (1936), provides authority on laches

in interstate law. In Washington v. Oregon, the division

of the interstate waters of the Walla Walla River be-

tween Oregon and Washington was affected by a pro-

tracted period of non-use, and delay in building

infrastructure by Gardena Farms in Washington, an ir-

rigation district in that state. A principle extracted by

the Court was that enjoining possessory interests that

had been enjoyed for half a century created an unpass-

able burden of proof on the plaintiff.

A similar issue was raised in Nebraska v. Wyo-

ming, 507 U.S. 584 (1993). That case was an original

action brought by the State of Nebraska to enforce the

1945 North Platte Decree issued in Nebraska v. Wyo-

ming, 325 U.S. 665 (1945). An issue in the case con-

cerned the Inland Lakes which consist of four-off

channel reservoirs served by the Interstate Canal,

which diverts from the North Platte River at Whelan,

“not apportion any specified amount of water to Texas below Ele-

phant Butte” and require New Mexico’s deliveries at Elephant

Butte Reservoir, not the state line. 563 at 385.

28

Wyoming. Both the Inland Lakes and the Interstate

Canal are part of the North Platte Project, a series of

reservoirs and canals operated by the Bureau of Rec-

lamation and spanning two states, i.e., Wyoming and

Nebraska, even as the Rio Grande Project spans the

states of New Mexico and Texas. It was undisputed

that since 1913 the Bureau of Reclamation had di-

verted water through the Interstate Canal for storage

in the Inland Lakes during non irrigation months for

release to Nebraska water uses during the irrigation

season. The Inland Lakes had always been operated

with a December 6, 1904, priority date that Wyoming

recognized for other components of the North Platte

Project. However, an issue arose because the Bureau of

Reclamation had never obtained separate Wyoming

storage permits for the Iniaed Lakes.

In that original action, Nebraska and the United

States moved for summary judgment “seeking deter-

minations that the decree entitles the Bureau to con-

tinue its longstanding diversion and storage practices

and that the Inland Lakes have a priority date of De-

cember 6, 1904.” See Nebraska v. Wyoming, 507 US.

589, 594 (1993). The Special Master recommended

granting the motions for summary judgment of Ne-

braska and the United States ruling “[t]hat the Bureau

lacks a separate Wyoming permit for the Inland Lakes

... is immaterial because the question of the Inland

Lakes’ priority was determined in the original proceed-

ings.” Id. at 594. The Court also reasoned that “even if

the issue was not previously determined, we would

29

agree with the Special Master that Wyoming’s argu-

ments are foreclosed by its post decree acquiescence.”

Cf Ohio v. Kentucky, 410 U.S. 641, 648 (1973) (“[P]ro-

ceedings under this Court’s original jurisdiction are

basically equitable in nature, and a claim not techni-

cally precluded nonetheless may be foreclosed by ac-

quiescence”) (citations omitted)) 507 U.S. at 595.

In the instant case, the Nebraska v. Wyoming cri-

terion of a previous determination of the issue has

been satisfied.

POINT II

THE SPECIAL MASTER’S RECOMMENDATION

THAT THE UNITED STATES PARTICIPATE

PURSUANT TO 28 U.S.C. § 1251(b)(2)

CREATES A CONFLICT WITH THE

STREAM SYSTEM ADJUDICATION

The state adjudication is critical because the

Special Master misinterprets Hinderlider v. La Plata

River & Cherry Creek Ditch Co., 304 U.S. 92 (1938).

The Special Master suggests that because the Rio

Grande Project is the vehicle by which the states

agreed upon an interstate allocation of water as be-

tween them, it somehow cloaks those water rights with

a special status that removes them from state jurisdic-

tion or administration, including priority enforcement.

See First Interim Report at 211-17. Hinderlider does

not stand for the proposition that a corpus of water

that is the subject on an interstate compact or an eq-

uitable appointment is not subject to state jurisdiction

30

or administration. Instead, that case stands for the

proposition that a state court decree cannot confer a

right in the waters of an interstate stream in excess of

the state’s equitable share. Hinderlider, 304 U.S. at

102. In other words, while each upstream state to an

interstate water compact or equitable apportionment

has an obligation to provide water to the downstream

state, how it complies with that interstate obligation is

entirely within the upstream state’s discretion. The

upstream state does not lose jurisdiction over some

subset of its appropriators who obtained their water

rights under state law simply because of the existence

of an interstate compact or equitable apportionment.

Accordingly, because New Mexico is charged with

meeting its interstate water obligations to Texas under

the Rio Grande Compact, it is essential for New Mexico

to complete its LRG Adjudication so it can administer

intrastate water rights among all its water users to

comply with the Compact.

Accordingly, the Special Master’s treatment of the

United States creates a practical problem for stake-

holders like Las Cruces who are engaged in the LRG

Adjudication to quantify their water rights. The adju-

dication pending in state court serves to determine the

rights of stakeholders in the Lower Rio Grande. See

NMSA 1978, § 72-4-13 et seq. (1907). It also provides

for inter se challenges among defendants. The “re-

moval” of the federal claims to the Supreme Court un-

der 28 U.S.C. § 1251(b)(2) excludes the stakeholders,

and leaves the adjudication of the United States’ inter-

est, which is now complete, in question.

31

The Special Master recommended granting New

Mexico’s Motion to Dismiss the United States’ Com-

plaint in Intervention on the grounds that the United

States did not assert “violations [which] have the effect

of undermining [its own] apportionment [of water].”

First Interim Report at 231. The Special Master found

that “[t}he 1938 Compact apportions no water to the

United States; therefore, the United States cannot

state a claim under the Compact against New Mexico.”

Id.

The United States’ Complaint in Intervention at

{ 13 alleged that “New Mexico has allowed the diver-

sion of surface and the pumping of groundwater that

is hydrologically connected to the Rio Grande down-

stream of Elephant Butte Reservoir by water users

who either do not have contracts with the Secretary [of

the Interior] or are using water in excess of contracted

amounts.” Id. at 217. The Special Master characterized

the United States’ Complaint as seeking “declaratory

and injunctive relief, asking the Court: (i) to declare

that New Mexico, as a party to the 1938 Compact, may

not permit parties not in privity with the Bureau of

Reclamation, as well as Rio Grande Project beneficiar-

ies in New Mexico, to interrupt or interfere with deliv-

ery of water from the Rio Grande Project; and (ii) to

enjoin New Mexico from permitting such interception

and interference.” Jd. at 218. The United States’ Com-

plaint in Intervention effectively asserts a claim to the

groundwater in storage in the Lower Rio Grande.

The Special Master recommended that “[dlespite

the fact that the United States is prohibited as a

32

non-signatory to the 1938 Compact from asserting

claims under that compact, it nevertheless has stated

a plausible claim against New Mexico under federal

reclamation law:... .” Id. at 231. Having found that be-

cause the United States has not stated a cause of ac-

tion under the Rio Grande Compact “its claims cannot

be properly resolved by the Supreme Court pursuant

to its original and exclusive jurisdiction, which is re-

served for resolution of ‘controversies between two or

more states.’ 28 U.S.C. § 1251(a).” Id. at 232-33. He

recommended the Court exercise its non-exclusive

original jurisdiction under 28 U.S.C. § 1251(b)(2). His

basis for doing so is that the United States’ interest

involves “more than ‘competing claims to water within

a single State,’ over which the Court has expressed re-

luctance to exercise its original jurisdiction,” citing

United States v. Nevada and California, 412 U.S. 534,

538 (1973). Id. at 235.

However, the United States’ “Project claims” have

been presented and determined in State of New Mexico

ex rel. State Engineer v. Elephant Butte Irrigation Dist.,

et al., No. CV-96-888 (3d Jud. Dist. filed Sept. 24, 1996).

This includes its claim to groundwater, amount of wa-

ter, purpose and place of use, and priority date. Having

been properly joined to the State court proceedings by

the McCarran Amendment, the determination of the

United States’ interest is factual and binding. See

United States v. City of Las Cruces et al., 289 F.3d 1170

(10th Cir. 2002). The Special Master’s recommendation

creates the problem of relitigating the issues already

determined in state court without the participation by

33

other water users like Las Cruces. In such circum-

stances, the Court has frequently abstained.

In Colorado River Water Conservation District v.

United States, 424 U.S. 800 (1976), the Supreme Court

recognized that despite the “virtually unflagging obli-

gation” of the federal courts to exercise jurisdiction

vested by the Congress, the federal courts should defer

to concurrent state court proceedings if certain criteria

are satisfied. 424 U.S. at 817. Indeed, the general prop-

osition that a federal court has a virtually unflagging

obligation to exercise its federal jurisdiction, “gives

substantially less guidance to the court in water rights

litigation than might otherwise be the case because a

water rights adjudication is a ‘virtually unique type of

proceeding’ and the McCarran Amendment is a ‘virtu-

ally unique federal statute.’” United States v. Blue-

water-Toltec Irr. Dist., 580 F.Supp. 1434, 1443 (10th Cir.

1984) (citing Arizona v. San Carlos Apache Tribe, 463

U.S. 545, 571 (1983)).

In Colorado River, the United States brought suit

in federal district court against some 1,000 water right

claimants, seeking the declaration of its rights to wa-

ters in certain rivers and their tributaries within Col-

orado. 424 U.S. at 805. A water rights adjudication was

already pending in Colorado state court when the fed-

eral proceeding was initiated. That adjudication was

being conducted pursuant to a comprehensive statu-

tory scheme enacted by the Colorado legislature for the

adjudication of all water right claims in the state. The

United States was subsequently joined in the state

34

court adjudication pursuant to the McCarran Amend-

ment.’° Several defendants and intervenors in the fed-

eral proceeding then sought dismissal of the federal

proceeding. The Court held that, although dismissal of

the federal district court case in favor of the pending

state court adjudication was not appropriate on tradi-

tional abstention grounds, dismissal of the district

court proceeding was, nonetheless, appropriate out of

“considerations of [wJise judicial administration, giving

regard to conservation of judicial resources and compre-

hensive disposition of litigation.” 424 U.S. at 817 (citing

Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342

U.S. 180, 183 (1952)).

By far the most important factor counseling for

abstention by the Colorado River Court was the

McCarran Amendment, and the policies underlying

the Amendment. 424 U.S. at 819-20. The McCarran

Amendment expressly waives the sovereign immunity

of the United States and allows joinder of the United

States in the state courts in controversies involving the

adjudication of rights to the use of water under state

law. 43 U.S.C. § 666(a). The Amendment is clear evi-

dence of congressional deference to the state courts for

the adjudication of the water rights of all claimants,

including federal claimants. The Senate Report on the

McCarran Amendment observed:

1° In contrast to Colorado River where the United States was

not joined in the state court adjudication until after the federal

action was filed, here, the United States has been a party to the

state court adjudication in the Lower Rio Grande from the very

beginning.

35

In the administration of and the adjudication

of water rights under State law the State

Courts are vested with the jurisdiction neces-

sary for the proper and efficient disposition

thereof, and by reason of the interlocking of

adjudicated rights on any stream system, any

order or action affecting one right affects all

such rights. Accordingly all water users on a

stream, in practically every case, are inter-

ested and necessary parties to any court

proceedings. It is apparent that if any water

user claiming to hold such right by reason of

the ownership thereof by the United States or

any of its departments is permitted to claim

immunity from suit in, or orders of, a State

court, such claims could materially interfere

with the lawful and equitable use of water for

beneficial use by the other water users who

are amenable to and bound by the decrees and

orders of the State courts.

S.Rep. No. 755, 82d Cong., Ist Sess. 4-5 (1951), cited in

Colorado River, 424 U.S. at 811. In addition to mani-

festing a clear deference to the states in the admin-

istration and adjudication of water rights, the Senate

Report emphasizes Congress’ recognition of the inter-

dependence of all water rights claims in a stream sys-

tem, and the risk of inconsistent decrees unless the

United States is amenable to suit in the states’ courts

and bound by their decrees. The Court has interpreted

the McCarran Amendment broadly and has repeatedly

refused to narrow its applicability where adjudications

of a river system are concerned. See, e.g., Arizona v. San

36

Carlos Apache Tribe, 463 U.S. 545, 570 (1983) (McCar-

ran Amendment waives Indian sovereign immunity in

all states); Colorado River, 424 U.S. at 811 (waiver ap-

plies to adjudication of federal reserved water rights

held by the United States in trust for Indians); United

States v. District Court of Eagle, Colo., 401 U.S. 520, 524

(1971) (McCarran Amendment is “all-inclusive,” and

applies to federal reserved water rights appurtenant to

national forest lands).

The Court’s chief concern in Colorado River was

with the avoidance of piecemeal adjudication of water

rights in a river system. 424 U.S. at 819. The Court ex-

plained that this concern also underlies the rule which

requires that jurisdiction be yielded to the court which

first acquires control of property. The concern is with

the potential for inconsistent dispositions of property

through multiple litigations. Jd. at 819. That concern

18:

heightened with respect to water rights, the

relationships among which are highly inter-

dependent. Indeed, we have recognized that

actions seeking the allocation of water essen-

tially involve the disposition of property and

are best conducted in unified proceedings. [ci-

tation omitted]. The consent to jurisdiction

given by the McCarran Amendment bespeaks

a policy that recognizes the availability of

comprehensive state systems for adjudication

of water rights as the means for achieving

these goals.

37

The concern identified by the Court in Colorado

River would be raised by accepting the Special Mas-

ter’s recommendation here. Not only would duplicative

proceedings result, but indispensable parties could be

excluded. Perhaps most importantly, the United States

would be given leave to become the administrator of

water rights in the Lower Rio Grande if it prevailed in

its contention that contracts were required of ground-

water users in the basin. See United States’ Complaint

in Intervention at {J 12, 13, and Prayer for Relief. If

the United States were to prevail, the circumstance

sought to be avoided by the McCarran Amendment and

Colorado River abstention would arise through an al-

ternative permitting process by federal contract that

supplants vested state rights and administration — ex-

actly what Colorado River sought to preclude.

7

CONCLUSION

The Special Master’s extensive research into ex-

trinsic materials, viz., primary and secondary sources

documents gathered from various record collections

and archives, went significantly beyond what was in

the parties’ pleadings and beyond documents with

which judicial notice could be taken. Compounding the

issue, the Special Master cites those documents, not as

“background,” but in his analysis and recommenda-

tions on the merits regarding Rio Grande Compact in-

terpretation. The record in this regard should not, and

cannot, be created without the parties’ ability to par-

ticipate as is typically done in the development of a

38

case through answers, counterclaims, cross-claims, dis-

covery, and trial, where evidence can be marshalled

and vetted. In making his recommendations, the Spe-

cial Master has not considered or addressed important

case law and legal principles, such as the previous liti-

gation in Texas v. New Mexico, No. 9, Original, Texas v.

New Mexico, No. 29, Original, and that claims can be

barred by latches and acquiesce. Accordingly, his rec-

ommendations go too far into deciding the merits and

are premature.

Finally, by recommending that the United States

be allowed to pursue federal Reclamation claims, but

not Compact claims, in this case pursuant to the

Court’s discretionary, non-exclusive original jurisdic-

tion, the Special Master has created a potential conflict

with the LRG Adjudication directly contrary to the

Colorado River abstention doctrine which is so preva-

lent in western water law. For these reasons, the Court

should reject the First Interim Report and grant New

Mexico’s Motion to Dismiss the United States’ Com-

plaint in Intervention.

Respectfully submitted,

JAY F. STEIN, EsaQ.*

JAMES C. BROCKMANN, ESQ.

STEIN & BROCKMANN, P.A.

P.O. Box 2067

Santa Fe, NM 87504-2067

(505) 983-3880

jfstein@newmexicowaterlaw.com

*Counsel of Record

39

JENNIFER VEGA-BROWN, ESQ.

MaArCcIA B. DRIGGERS, Esq.

City oF LAS CRUCES

City Attorney’s Office

P.O. Box 20000

Las Cruces, NM 88004-9002

Counsel for Amicus Curiae

City of Las Cruces