AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

Intrepid Potash, Inc. and its predecessors held water rights in the Pecos River for industrial use at a refinery in Loving, New Mexico. Over time, the refinery's operations changed, and the water rights were not used for their licensed purpose. Intrepid dismantled the refinery and attempted to sell or lease the water rights, but these efforts were largely unsuccessful. The Office of the State Engineer and other entities challenged Intrepid's continued claim to these water rights, arguing they had been abandoned due to nonuse (paras 3-10).

Procedural History

• District Court, December 2020: The court found that Intrepid had abandoned all but 150 acre-feet per year of its Pecos River water rights due to nonuse and intent to abandon (paras 12-13).
• Court of Appeals, 2024-NMCA-024: The court affirmed the district court's decision, concluding that Intrepid had abandoned its water rights and engaged in speculation (para 13).

Parties' Submissions

• Petitioners (Intrepid Potash, Inc.): Argued that the lower courts confused abandonment with forfeiture and that their actions demonstrated an intent not to abandon the water rights. They contended that the Gray seven-factor test should apply and that their efforts to sell or lease the rights and file extensions demonstrated intent to preserve the rights (paras 14, 36-38).
• Respondents (Office of the State Engineer, et al.): Argued that Intrepid's nonuse of the water rights for an extended period constituted abandonment and that their actions were speculative, not indicative of intent to use the water beneficially (paras 14, 51-52).

Legal Issues

• Whether the district court and Court of Appeals erred in concluding that Intrepid abandoned its water rights.
• Whether the Gray seven-factor test should apply to determine abandonment.
• Whether Intrepid's actions constituted speculation, contrary to the doctrines of beneficial use and prior appropriation.

Disposition

• The Supreme Court of New Mexico affirmed the Court of Appeals' decision that Intrepid abandoned its water rights and that their actions were speculative (para 56).

Reasons

Per Bacon J. (Thomson C.J., Vigil, Vargas, and Zamora JJ. concurring):

The Court held that the constitutional mandate of beneficial use underpins water rights in New Mexico. The South Springs test for abandonment, which requires intent to abandon and nonuse for an unreasonable period, was correctly applied by the lower courts. Intrepid's actions, such as filing extensions and attempting to sell or lease the rights, were insufficient to rebut the presumption of abandonment. The Court clarified that speculation is inconsistent with beneficial use and adopted the anti-speculation doctrine, emphasizing that water rights must be applied to beneficial use, not held for future economic opportunities (paras 14-55).