Tri-State Generation & Transmission Ass'n, Inc. v. D'Antonio

289 P.3d 1232

2012 NMSC 039

TRI–STATE GENERATION AND TRANSMISSION ASSOCIATION, INC., Plaintiff–Respondent and Cross–Petitioner,

v.John D'ANTONIO, Jr., New Mexico State Engineer, Defendant–Petitioner and Cross–Respondent.

No. 32,704.

Supreme Court of New Mexico.

Nov. 1, 2012.

Gary K. King, Attorney General, Stephen Robert Farris, Assistant Attorney General, Sarah A. Bond, Assistant Attorney General, D.L. Sanders, Special Assistant Attorney General, Santa Fe, NM, for Petitioner and Cross–Respondent.

Rodey, Dickason, Sloan, Akin & Robb, P.A., Sunny J. Nixon, Thomas A. Outler, Santa Fe, NM, Richard Allan Simms, Mesa, AZ, for Respondent and Cross–Petitioner.

Hennighausen & Olsen, L.L.P., Arnold J. Olsen, Alvin F. Jones, Roswell, NM, for Amicus Curiae Pecos Valley Artesian Conservancy District.

Law Office of Steven L. Hernandez, PC, Steven L. Hernandez, Las Cruces, NM, Law Office of Beverly Singleman, Beverly J. Singleman, Mesilla Park, NM, for Amici Curiae Elephant Butte Irrigation District and Carlsbad Irrigation District.

Peters Law Firm, LLC, Lee E. Peters, Las Cruces, NM, for Amicus Curiae New Mexico Cattle Growers Association.

OPINION

DANIELS, Justice.

{1} This case calls upon us to determine whether NMSA 1978, Section 72–2–9.1 (2003), provided a constitutional delegation of authority for the Office of the State Engineer to adopt new regulations to administer water resources according to administrative interim priority determinations based on a number of factors. The district court and Court of Appeals concluded that it did not and that the State Engineer's lawful authority to supervise water allocations can be exercised only on the basis of licenses issued by the State Engineer and adjudications in court.

{2} We reverse and hold that the Legislature delegated lawful authority to the State Engineer to promulgate the challenged water administration regulations. We also hold that the regulations are not unconstitutional on separation of powers, due process, or vagueness grounds.

I. BACKGROUND

{3} In 2003, the New Mexico Legislature enacted Section 72–2–9.1 to address a legislative concern that

the adjudication process is slow, the need for water administration is urgent, compliance with interstate compacts is imperative and the state engineer has authority to administer water allocations in accordance with the water rights priorities recorded with or declared or otherwise available to the state engineer.

See § 72–2–9.1(A); accord 2003 N.M. Laws, ch. 63, § 1.A. To address these concerns, the Legislature directed the State Engineer to

adopt rules for priority administration to ensure that authority is exercised:

(1) so as not to interfere with a future or pending adjudication;

(2) so as to create no impairment of water rights, other than what is required to enforce priorities; and

(3) so as to create no increased depletions.

See § 72–2–9.1(B); accord 2003 N.M. Laws, ch. 63, § 1.B.

{4} In response, the State Engineer developed the Active Water Resource Management regulations (AWRM), 19.25.13.1–.50 NMAC (12/30/2004). See 19.25.13.6 NMAC (“[AWRM] fulfill[s] the mandates of Section 72–2–9.1 NMSA, requiring the state engineer to adopt rules for priority administration.”).

{5} Under AWRM, the State Engineer identifies water districts in need of management and appoints a water master to manage these districts. See 19.25.13.12 NMAC (creating water master districts); 19.25.13.15(B) NMAC (appointing water masters); see also 19.25.13.16 NMAC (providing for the general authority of a water master). The water master evaluates the available water supply in the district and then manages that supply according to users' priority dates, which necessarily involves denying water to junior users in favor of senior users when the supply is insufficient. See 19.25.13.17(H) NMAC (providing for the administration of water deliveries based on priority).

{6} In order to carry out this interim priority management, AWRM establishes “administrable water rights.” See 19.25.13.16(B) NMAC (providing authority to the water master to implement the administration of water in accordance with administrable water rights); see also 19.25.13.7(B) NMAC (defining an “administrable water right” as a “water right or right to impound, store or release water, the elements of which have been determined by a court of competent jurisdiction or determined on an interim basis by the state engineer under these rules and regulations”). The State Engineer determines the elements of each user's administrable water right, including its priority date, using a hierarchy of the best available evidence, in the following order: (A) a final decree from an adjudication, (B) a subfile order from an adjudication, (C) an offer of judgment from an adjudication, (D) a hydrographic survey, (E) a license issued by the State Engineer, (F) a permit issued by the State Engineer, and (G) a determination by the State Engineer using “the best available evidence” of historic, beneficial use. See 19.25.13.27(A)-(G) NMAC. Once determined, a district's priority dates are published and are subject to appeal. See 19.25.13.27 NMAC.

{7} Tri–State Generation and Transmission Association, Inc., an electric power cooperative that holds water rights, filed a district court action challenging the regulations on statutory interpretation, separation of powers, due process, and vagueness grounds. The district court struck down portions of AWRM as unconstitutional, finding that Section 72–2–9.1 violated Article III, Section 1 of the New Mexico Constitution because the Legislature did not provide any meaningful standard by which the State Engineer could determine and enforce priorities. In order to construe Section 72–2–9.1 as constitutional, the district court adopted Tri–State's position that the State Engineer's only source of authority for priority administration was the century-old statute relating to licenses and adjudications, NMSA 1978, Section 72–2–9 (1907): “The state engineer shall have the supervision of the apportionment of water in this state according to the licenses issued by him and his predecessors and the adjudications of the courts.” Accordingly, the district court limited the types of evidence the State Engineer could consider under AWRM in determining administrable water rights to final decrees, subfile orders, and offers of judgment, all resulting from the adjudication process, 19.25.13.27(A)-(C) NMAC, and to licenses issued by the State Engineer, 19.25.13.27(E) NMAC, concluding that the remaining types of evidence in 19.25.13.27(D) & (F)-(G) NMAC were unconstitutional. The district court also concluded that the appeal procedures for priority determinations were too slow to provide adequate due process and violated state constitutional guarantees that water priorities be determined by inter se ^FN1 adjudications.

{8} The Court of Appeals affirmed the district court in part, holding that the Legislature granted no new authority in Section 72–2–9.1 for the State Engineer to adopt the challenged regulations. Tri–State Generation & Transmission Ass'n, Inc. v. D'Antonio, 2011–NMCA–015, ¶¶ 29–30, 35, 149 N.M. 394, 249 P.3d 932 (“[E]ven if the Legislature had intended that the State Engineer adopt a regulation such as 19.25.13.27 NMAC [to administer priorities beyond licenses and adjudications], the Legislature did not provide the statutory framework for the State Engineer to do so, and the regulation unconstitutionally exceeds the State Engineer's authority.”). The Court of Appeals differed from the district court and held that subfile orders, 19.25.13.27(B) NMAC, and offers of judgment, 19.25.13.27(C) NMAC, could not be considered. See Tri–State, 2011–NMCA–015, ¶¶ 30, 32, 149 N.M. 394, 249 P.3d 932 (“We clarify that the State Engineer has the statutory authority to consider adjudication decrees and its own licenses, but not subfile orders or offers of judgment filed in an adjudication.”).

{9} The Court of Appeals reversed as speculative the district court's ruling on due process. See id. ¶ 36 (“[W]e consider it speculative to address issues of due process when the regulations not only have not yet been applied but also, based on our holding, will not be applied in their current form.”); see also id. ¶¶ 21–22 (recognizing due process protections within licensing and adjudications).

{10} We granted both the State Engineer's petition and Tri–State's cross petition for writs of certiorari to review the decisions below.

II. STANDARD OF REVIEW

[1] {11} We review questions of statutory and constitutional interpretation de novo. See N.M. Bd. of Veterinary Med. v. Riegger, 2007–NMSC–044, ¶¶ 11, 27, 142 N.M. 248, 164 P.3d 947.

III. DISCUSSION

A. AWRM Does Not Violate Constitutional Separation of Powers Principles.

{12} Tri–State argues that AWRM violates constitutional separation of powers principles because the Legislature did not provide new authority for the State Engineer to adopt AWRM and, even if the Legislature attempted to grant such authority, AWRM impermissibly usurps the power of the judiciary to oversee the determination of water priorities by adjudication. For the reasons that follow, we disagree with both positions.

1. Section 72–2–9.1 Provided New Regulatory Authority to the State Engineer.

[2] [3] [4] {13} We first address whether Section 72–2–9.1 authorized the State Engineer to adopt AWRM. “Agencies are created by statute, and limited to the power and authority expressly granted or necessarily implied by those statutes.” Qwest Corp. v. N.M. Pub. Regulation Comm'n, 2006–NMSC–042, ¶ 20, 140 N.M. 440, 143 P.3d 478. Separation of powers principles are violated when “an administrative agency goes beyond the existing New Mexico statutes or case law it is charged with administering and claims the authority to modify this existing law or to create new law on its own.” State ex rel. Sandel v. N.M. Pub. Util. Comm'n, 1999–NMSC–019, ¶ 12, 127 N.M. 272, 980 P.2d 55.

{14} The parties disagree as to what the Legislature...