E MATTER OF THE APPLICATION BY ) Hearing No, 09-096

AUGUSTIN PLAINS RANCH, LLC FOR )

PERMIT TO APPROPRIATE GROUNDWATER ) OSE File No. RG-89943
IN THE RIO GRANDE UNDERGROUND )
WATER BASIN OF NEW MEXICO )
APPLICANTS RESPONSE
TO MOTIONS TO DISMISS
MONTGOMERY & ANDREWS, P.A.
John B. Draper
Jeffrey J. Wechsler
Lara Katz
P0 Box 2307
Santa Fe, New Mexico 87504-2307
(505) 982-3873
Attorneys for Augustin Plains Ranch, LLC
 3
I. The Augustin Project 3
II. The Original Application 3
Ill. The Amended Application 3
IV. Hearing Procedures 5
Argument 6
I. Standard of Decision 6
II. The Application Satisfies All Statutory and Regulatory Requirements 7
A. The Applicable Statutes and Regulations 7
B. The Appilcation Meets the Statutory and Regulatory Requirements 9
C. The State Engineer Has Already Determined that the Application
Is Complete 12
D. All other Determinations Are to Be Made After the Evidentiary
Hearing 13
E. The Remaining Arguments are Formalistic and Without Merit 17
Ill. Public Policy Favors Consideration of the Augustin Project on its Merits 19
A. The State Engineer Lacks Authority to Dismiss the Application at
This State as Contrary to Public Policy 19
B. Consideration of the Augustin Project on it Merits is in the Public
Interest 21
IV. Protestants Were Provided with Sufficient Notice 24
31
 188 P.3d 1222 28
Albuquerque Nati Bank v. Albuquerque Ranch Estates, Inc., 99 N.M. 95,
654 P.2d 548 (1982) 27
Bennett v. City Council for City of Las Cruces, 1 999-NMCA-01 5, 126 N.M. 619,
973 P.2d 871 19, 22
Bogan v. Sandoval Planning Comm’n, 119 N.M. 334, 890 P.2d 395 (1994) 11,28
Bombach, 105 N.M. 627, 735 P.2d 1133 26
City of Thornton v. BUou Irrigation Co., 926 P.2d 1 (Cob. 1996) 14
Colorado River Water Conservation Dist.v. Vidler Tunnel Water Co., 594 P.2d 566
(Cob. 1979) 15
Derringerv. Turney, 2001-NMCA-075, 131 N.M. 40, 33 P.3d 40,cert denied,
131 N.M. 64, 33 P.3d 284 (2001) 9
Envtl. Improvement Div. v. Aguayo, 99 N.M. 497, 660 P.2d 587 (1983) &
Garduno v. Pueblo do Nambe, 57 N.M. 598, 261 P.2d 441 (1953) 26
Green Valley Mobile Home Park v. Mulvaney, 1996-NMSC-037, 121 N.M. 817,
918P.2d1317 27
Hanson v. Tumey, 2004-NMCA-069, 136 N.M. 1, 94 P.3d 1 29
Hawthorne v. City of Santa Fe, 88 N.M. 123, 537 P.2d 1385 (1975) 27
In re Application of PNM Elec. Seris., 1998-NMSC-017, 125 N.M. 302,
961 P.2d 147 20
th1
1
( 0
Jicarilla Apache Tribe v. United States, 657 F.2d 1126, Cir. 1981) 15
Rummel v. Edgemont Realty Partners, Ltd., 116 N.M. 23,
859 P.2d 491 (Ct. App. 1993) 6
Schodde v. Twin Falls Land & Water Co., 224 U.S. 107 (1912) 15
State ex rel. Martinez v. City of Las Vegas, 2004-NMSC-009, 135 N.M. 375,
89 P.3d 47 16
State ex rel. Martinez v. McDermitt, 120 N.M. 327, 901 P.2d 745
(Ct. App 1995) 29
Transamerica Ins. Co. v. Sydow, 97 N.M. 51, 636 P.2d 322 (Ct. App 1981) 18, 22
Tn-State Generation and Transmission Assn, Inc. v. D’Anfonio,
201 1-NMCA-01 5, P.3d 2010 WL 5860416
, 20
Tur!eyv.Furman, 16 N.M. 253, 114 P. 278 (1911) 15
Yeo v. Tweedy, 34 N.M. 611, 286 P. 970 (1929) 29
Young & Norton v. Hinderlider, 15 N.M. 666, 110 P. 1045 (1910) 15
NEW MEXICO STATUTES AND RULES
NMSA1978,4-1-1 to-2 11
NMSA19784-23-1 11
NMSA19784-26-1 11
NMSA19784-26-1 11
t4IiAS.R 1978 §72—12—3(i*)(2) .10
NMSA 1978 §72-12-3(A)(3) .10
NMSA 1978 §72—12—3(A)(4) 10
NMSR 1978 §72—12’3(kX5)...... 11
NIbISk 1978 §72—12—3(A)(6) 11
NIiISk 1978 §72—12—3(C) 8
NMS 1978 §72—12—3(0) 24
NMS 1978 §72—12—3(E) 8
NMSA 1978 §‘72.12.3(1) 4 ....e 8
19.27.49 NMAC 11
19.27.1.11 NI4C 10
19.27.1.12 NMC 24
19.27.1.15 NhiPC 9
Rule 1-012(B)(6), New Mexico Rules of CMI Procedure 6
 WATER BASIN OF NEW MEXICO )
APPLICANT’S RESPONSE
TO MOTIONS TO DISMISS
Comes now Applicant Augustin Plains Ranch, LLC (“Applicant” or “Augustin”) in the
above-styled proceedings and submits its consolidated response in opposition to the
Motion to Dismiss Application filed by protestants represented by the New Mexico
Environmental Law Center (“NMELC Protestants”), the Middle Rio Grande Conservancy
District’s (MRGCD’s) Motion to Dismiss Application for Permit to Appropriate Underground
Water, and the motion filed by protestants represented by Ron Shortes (“Shortes
Protestants”) (the NMELC Protestants, the MRGCD and the Shortes Protestants are
collectively referred to as the “Protestants”) (the three motions and briefs in support are
collectively referred to as the “Motions to Dismiss” or “Motions”).
INTRODUCTION
The Motions to Dismiss raise a fundamental issue regarding whether the prior
appropriation doctrine is sufficiently flexible to allow the State Engineer to consider and
evaluate an innovative project on its merits. The Augustin Project seeks to appropriate a
new supply of water for irrigation on its Ranch, and provide a new, and much needed,
supply of water to the Middle Rio Grande. The Application was made on the form provided
by the State Engineer, meets the statutory and regulatory criteria for such applications, and
to, availability of water, feasibility, beneficial use, nonimpairment, the public welfare, and
conservation of water.
Despite the contentions of the Protestants, the issue presented in these Motions is
not whether the State Engineer will grant a permit after determining on the evidence at
hearing that the Application is speculative — he will not, Nor is there a question as to
whether it will be necessary for Applicant to establish beneficial use within a reasonable
period of time after the permit is granted — it will. Rather, the issue presented is whether
an applicant is required to meet its burden on the face of the application itself.
By seeking dismissal of the Application before any evidence is collected or
presented, and before the project is considered on its merits, Protestants suggest that an
application must contain all of the information necessary to establish that it should be
granted. That cannot be the rule. As discussed in more detail below, the Motions to
Dismiss should be denied because (1) the Application satisfies all statutory and regulatory
requirements; (2) public policy favors consideration of the Application on its merits; (3)
the Protestants were provided with adequate notice; and (4) the land to be irrigated is
properly described.
provide a new source of water to an area of the State that is in need. The Augustin Project
has the potential to support the New Mexico Water Plan by (1) helping to ensure that water
is available for the continued economic vitality of the State; (2) ensuring an adequate water
supply; (3) developing the water resources in New Mexico at no cost to the State; (4) and
providing for habitat preservation.
II. The Original Application
2. On October 12, 2007, Applicant filed an Application for Permit to
Appropriate Underground Water (“Original Application”), OSE File No. RG-89943, with the
Office of the State Engineer (“OSE”).
3. On November 5, 2007, the OSE determined that the Original Application
“conform {ed} to the requirements of the statutes and rules and regulations of the state
engineer.” 19.27.1.11 NMAC. Accordingly, the OSE prepared and issued notices for
publication.
4. Applicant properly published the notices in the El Defensor Chieftain, the
Mountain Mail, the Silver City Press and Independent the Santa Fe New Mexican, the
Albuquerque Journal, the Valencia County News-Bulletin and The Herald as required by
statute. Affidavits of Publication were filed with the OSE Water Rights Division (“WRD”).
5. Over 400 parties protested the Original Application.
III. The Amended Application
3
property and for designated uses in the Application. The Application sets forth two
proposed places of use of the water: (1) within the exterior boundaries of Augustin Plans
Ranch as described on Attachment B and depicted on in the Ranch boundary map; and (2):
within areas of Catron, Sierra, Socorro, Valencia, Bernalillo, Sandoval, and Santa Fe counties
located within the geographic boundaries of the Rio Grande Basin. One of the uses
contemplated by the Application is the construction of a pipeline to provide water to
growing communities in the Middle Rio Grande.
8. Prior to accepting the Application, the OSE inquired from Applicant
regarding the location of irrigation associated with the Application. On June 26, 2008,
Applicant specified that the irrigation associated with the Application would be limited to
the water necessary to irrigate 120 acres in specified quarter sections. More specifically,
Applicant specified that “the irrigation will be limited to 120 acres within a 1,290 foot
radius of each of the 37 well locations listed on Attachment A to the [Application]” for a
total of 4,440 acres.
9. The OSE determined that the Application “conform[ed] to the requirements
of the statutes and rules and regulations of the state engineer.” 19.27.1.11 NMAC.
Accordingly, the OSE prepared and issued notices for publication.
4
 Valencia County News-Bulletin and The Herald as required by statute. Affidavits of
Publication were filed with the WRD.
11. Approximately 900 parties protested the Application.
12. In reliance on the acceptance of the Application by the OSE, Applicant
initiated steps to establish and develop its Application. Applicant expended significant
money and resources drilling a test hole and a production well, beginning the necessary
hydrologic analysis, and preparing for hearing.
13. On April 27, 2010, the State Engineer issued an order docketing the
application.
14. On September 27, 2010, before Applicant was prepared to proceed to
hearing on its Application, the OSE sue sponte set a scheduling conference.
15. The scheduling conference was held on November 9, 2010. Over 150
protestants appeared.
16. On November 29, 2010, the Hearing Officer issued a Scheduling Order. The
Scheduling Order provides for an initial evidentiary hearing on the feasibility of plan to be
held prior to a hearing on the statutory criteria.
17. On February 11, 2011, Protestants filed their Motions, seeking to dismiss the
Application before any evidence is collected or presented, and before the project is
considered on its merits.
should be the same as that applied by courts to motions to dismiss under Rule 1-012(B)(6)
of the New Mexico Rules of Civil Procedura A motion to dismiss under Rule 12(83(6) tests
the legal sufficiency of a complaint and Is properly granted only “when It appears that
plaintiff can neither recover nor obtain relief under any state of facts provable under the
daim.” HnvtL Improvement Dlv. v. Aguayo, 99 N.M. 497,499,660 P.2d 587, 589 (1983). A
court deciding a Rule 12(83(6) motion looks only at the facial validity of the complaint
accepting all well-pleaded facts as true. Pursuant to that rule, Protestants bear the burden
of establishing that there is no set of facts under which Applicant could proceed to hearing.
See Rummel v. Edgemont Realty Partners, LtcL, 116 N.M. 23,25,859 P.2d 491,493 (Ct App.
1993) (“A compliant is subject to dismissal under Rule 1e012(B)(6) only If under no state of
facts provable thereunder would a plaintiffbe entitled to relief. .. 9.
Applications to appropriate groundwater are authorized by statute
1 and It is the
relevant statutory provisions, as well as the OSE regulations Implementing those
provisIons that dictate the information required to constitute a facially valid application.
When applied to an application to appropriate groundwater, the Rule 12(B)(6) standard
requires that the State Engineer assume that all the facts stated in the application are true
and ask whether the application satisfies the statutory requirements. With respect to the
Instant Application, the State Engineer must assume that the Applicant Intends to, can, and
will drill thirty-seven wells in the locations identified In the application, appropriate 54,000
6
that are situated within the geographic boundaries of the Rio Grande Basin. Only if, after
assuming all of these facts as true, the State Engineer determines that the Application fails
to otherwise comply with the statutory criteria, can the Application be dismissed. As
discussed below, the Application meets the statutory requirements, and thus is not
properly dismissed at this stage in the proceedings.
II. The Application Satisfies All Statutory and Regulatory Requirements
A. The Applicable Statutes and Regulations
NMSA 1978, § 72-123 governs applications for use of underground water, and
requires that an application set forth the following information:
(1) the particular underground stream, channel, artesian basin, reservoir or
lake from which water will be appropriated;
(2) the beneficial use to which the water will be applied;
(3) the location of the proposed well;
(4) the name of the owner of the land on which the well will be located;
(5) the amount of water applied for;
(6) the place of the use for which the water is desired;
(7) if the use is for irrigation, the description of the land to be irrigated and
the name of the owner of the land.
7
to the requirements of the statutes and rules and regulations of the state engineer.”
19.27.1.11 NMAC. Under these regulations, the OSE will return an application that is
“defective as to form or fail[s] to comply with the rules and regulations,” with a statement
indicating what changes are required. After being notified of the required changes, the
applicant is then given thirty (30) days to refile the application and the OSE will process it
with the same priority date as the original filing date. Id. Upon receipt of an application
that “conforms to the requirements of the statutes and regulations,” the OSE prepares and
issues a notice for publication, the applicant publishes the notice, and the time for filing
objections begins. 19.27.1.12 NMAC.
After expiration of the time for filing objections, the statute authorizes the State
Engineer to take one of the following actions: (1) if no objections have been filed, the State
Engineer may grant the application if he makes the requisite findings, to be discussed
shortly; (2) if objections or protests have been filed, he may deny the application without a
hearing or may order that a hearing be held. NMSA 1978, § 72-12-3(E) and (F). If the
State Engineer denies the application without a hearing, he is still required to hold a
hearing if the applicant so requests. See NMSA 1978, § 72-2-16 (requiring hearing before
appeal and providing that “[i]f, without holding a hearing, the state engineer enters a
decision, acts or refuses to act, any person aggrieved by the decision, act or refusal to act, is
entitled to a hearing, if a request for a hearing is made in writing within thirty days after
8
 Following a hearing on the application, or the expiration of the time for filing
objections if the application is not protested, the State Engineer shall determine whether:
(1) there exist unappropriated waters in the underground stream, channel, artesian basin,
reservoir or lake; (2) the proposed appropriation would impair existing water rights from
the source; (3) the proposed appropriation is contrary to conservation of water within the
state; and (4) the proposed appropriation is not detrimental to the public welfare of the
state. NMSA 1978, § 72-12-3(E). If he finds that there are unappropriated waters and that
the proposed appropriation will not impair existing rights, is not contrary to conservation
of water, and is not detrimental to public welfare, the State Engineer shall grant the
application and issue the permit. Id.
B. The Application Meets the Statutory and Regulatory Requirements
The Application in this case satisfied the statutory criteria set forth in Section 72-12-
3(A) for a valid application to appropriate groundwater as follows:
1. The Underground Basin
Subsection 72-12-3(A)(1) requires that an application specify the particular
underground basin from which the water will be appropriated. The Application meets this
requirement by identifying the aquifer under the Ranch as the underground basin from
which the water will be appropriated.
2. Beneficial Use
9
environmental, recreational, subdivision, replacement and augmentation. There is no
prohibition on identifying multiple beneficial uses in an application. The Application meets
this statutory criterion,
3. Location of Wells
Subsection 72-12-3(A)(3) requires that an application specify the location of the
proposed well. The State Engineer’s regulations require that the well locations be
described to the nearest forty (40) acre subdivision. 19.27.1.11 NMAC. Attachment A to
the Application identifies thirty-seven (37) well locations by quarter section, latitude, and
longitude. The Application also provides a map showing the precise location of each
proposed well within Applicant’s property. The well-location information satisfies the
statutory and regulatory requirements.
4. Owner of the Land
Subsection 72-12-3 (A) (4) requires that an application give the name of the owner of
the land on which the well will be located. The Application clearly shows that all of the
proposed thirty-seven wells will be located on Applicant’s property. This statutory
criterion is therefore satisfied.
5. Amount of Water
10
 Subsection 72-12-3(A)(6) requires that an application identify the place of use for
which the water is desired, Attachment B states that the proposed places of use are the
Ranch, and areas within Catron, Sierra, Socorro, Valencia, Bernalillo, Sandoval and Santa Fe
counties that are situated within the geographic boundaries of the Rio Grande Basin. The
legal description of Applicant’s property by subdivision is provided, as well as a boundary
map of the property.
With respect to the other places of use identified, the Application specifies part of
seven counties in New Mexico, out of 32 counties existing throughout the State. Each of
these counties is defined by statute, and each statute describes the respective county by
legal subdivision. See NMSA 1978, § 4-1-1 to -2 (Bernalillo County),l 4-23-1 (Sandoval
County), 4-26-1 (Santa Fe County). 4-2-1 (Catron County); 4-27-1 (Sierra County); 4-28-1
(Socorro County); 4-32-1 (Valencia County). Likewise, the Rio Grande Basin is defined and
specifically described in the State Engineer regulations. See 19.27.49 NMAC. Those
regulations provide maps showing the Rio Grande Basin in each of the three counties
identified in the Applications, complete with a township and range description.
Thus, the descriptions of the locations provided in the Applications are a short-hand
description of the township and range where the water will be used. In New Mexico, notice
is sufficient where a reasonable inquiry would reveal the pertinent facts. See Bogan v.
The township and range description for Bernalillo County is found in the Compiler’s notes, See NMSA
1978, § 4-1-1 at Compiler’s notes.
11
 The proposed places of use are sufficiently identified to comply with the
requirements of the statute and regulations.
7. The Land to be Irrigated.
Finally, Subsection 72-12-3(7) provides that, if the proposed use is for irrigation, the
application must describe the land to be irrigated and give the name of the owner of the
land. The Application states that the water intended for irrigation use will be used on
Applicant’s Ranch, the description of which is discussed above. The Application further
specifies that such water will be used for irrigation on 120 acres within a 1,290 foot radius
of each of the thirty-seven well locations listed on Attachment A to the Application. It is
difficult to imagine how the Application could be more specific in this regard, and the
statutory criterion is more than adequately met.
C. The State Engineer Has Already Determined that the Application is
Complete
That the Application met the requisite statutory and regulatory criteria is evidenced
by the OSE’s acceptance of the Application and issuance of a notice for publication. 1f as the
Protestants allege, the Application were defective, the OSE would have been required to
reject it and to notify the Applicant of the deficiencies. The OSE would have then had to
allow Applicant thirty (30) days to correct those deficiencies and refile the application.
Indeed, the Application already went through this very process, when, after Applicant
submitted its Amended Application, the State Engineer requested further information
12
that the Application was complete. Believing its priority date was secured, Applicant
proceeded to invest significant resources in pursuing its Application and preparing for
hearing.
Having accepted the application, issued the notice for publication, and commenced
the hearing, the USE cannot reverse course and dismiss the Application as incomplete or
facially invalid. Applicant has already expended significant resources, and a matter of years
has elapsed since the original filing. If the USE dismissed the Application at this stage, it
would run afoul of its own regulations, depriving Applicant of the chance to correct its
Application and still maintain the priority date of the original filing.
D. The Statutes Require All Other Determinations to Be Made After the
Evidentiary Hearing
Protestants urge the OSE to dismiss the Application as vague and speculative
because it identifies multiple beneficial uses and places of use without specifying the
quantity of water that will be used for each beneficial use, and the specific place for each
use, See MRGCD Motion at p. 4. However, neither the statute nor the regulations require
the degree of specificity claimed by the Protestants. The Protestants essentially argue that
the information provided in an application should be sufficiently specific to allow the USE
to make the requisite findings for issuance of a permit — i.e., whether the proposed
appropriation will impair other rights, is contrary to conservation, or detrimental to public
welfare - on the face of the application itself See, e.g., MRGCD Motion at p. 4 (stating that
13
the State Engineer must determine whether the proposed appropriation will impair other
rights, is contrary to conservation, or is detrimental to public welfare, and the Application
is not specific enough for the State Engineer to “rationally evaluate” these criteria).
However, that is simply not the process established by the statute.
The application functions to initiate the process, and must be specific enough only to
give notice to those who could potentially be affected by the appropriation. It is through
the hearing process that evidence is presented as to whether and how the amount of water
sought will be put to beneficial use, and it is upon that evidence that the State Engineer
makes the necessary findings. In fact, in this very proceeding the State Engineer has set up
a procedure to determine whether the Applicant’s plan for developing the water and
putting it to use is feasible. See Scheduling Order at p. 4-5. Thus, even the State Engineer
recognizes that his evaluation is not to be based solely on the face of the Application, but
rather on evidence adduced through the hearing process.
NMELC Protestants make a separate, but related, argument that the Application
must be denied on its face because it seeks to monopolize a water supply for speculative
purposes. In support of this argument, NMELC Protestants rely on several cases declining
to allow or recognize appropriations that were found to rest on a speculative intent to sell
water. This principle has come to be known as the “anti-speculation doctrine.” See City of
Thornton v. Bijou Irrigation Co., 926 P.2d 1, 67 (Cob. 1996). However, all but one of the
14
upon stipulated facts); Young & Norton v. Hinderlider, 15 N.M. 666, 110 P. 1045 (1910)
(appeal to the Supreme Court after evidentiary hearings held before territorial engineer
and the board of water commissioners, and appeal on stipulated facts before the district
court);Millheiser v. Long, 10 N.M. 99, 61 P. 111 (1900) (appeal after trial and judgment in
suit to quiet title to water rights); Jicarilla Apache Tribe v. United States, 657 F.2d 1126,
1131-32 (10th Cir. 1981) (discussing the issues on appeal following trial before district
court); Colorado River Water Conservation Dist. v. Vidler Tunnel Water Co., 594 P.2d 566,
567-569 (Cob. 1979) (discussing evidence considered by the trial court which entered
conditional water storage decree). The other case involved a complaint that was dismissed
on the purely legal ground that Idaho law did not grant a right “to appropriate the current
of the river so as to render it impossible for others to apply the otherwise unappropriated
waters . * . to beneficial uses.” Schodde v. Twin Falls Land & Water Co., 224 U.S. 107, 117
(1912). None of the cited cases stands for the proposition that an application seeking to
appropriate large amounts of water must be summarily denied as demonstrating
speculative intent prior to the taking of evidence regarding the proposed appropriation.
For example, in Colorado v. Southwestern Colorado Water Conservation District, 671
P.2d 1294 (Cob. 1983) (overruled by statute on other grounds, see Humphrey v.
Southwestern Development Co., 734 P.2d 637, 640 n. 2 (Cob. 1987)), the Colorado Supreme
Court considered an analogous case. In that case, the water judge had dismissed an
15
applies to the present case. To dismiss the Applications at this stage of the proceedings
would be untimely.
Nor does the New Mexico Supreme Court’s rejection of the pueblo water rights
doctrine in State ex reL Martinez v. City of Las Vegas, 2004-NMSC-009, 135 N.M. 375, 89
P.3d 47, have any relevance to the validity of the Application. The pueblo water rights
doctrine was dismantled because it allowed an ever-expanding water right, unlinked to
beneficial use. See Id. at ¶ Nothing in the Martinez case, however, suggests that an
application to appropriate large amounts of water must be categorically rejected as
demonstrating a speculative intent to apply such water to beneficial use. Whether the
Applicant can and will put the entire amount requested in the Application to beneficial use
is a matter to be established during the evidentiary phase of these proceedings; it is not a
question that can be answered on the face of the Application.
The hearing process is designed to allow Applicant make the required showing that
it can and will beneficially use the amount sought in its Application. It is through the
presentation of evidence that the necessary facts will be elicited to allow a determination
whether the Application should be granted. If Applicant can establish that it can put the
entire amount requested in the Application to beneficial use and that the appropriation
otherwise meets the criteria for approval, then Applicant will be entitled to a permit for an
appropriation in that amount.
16
either granting a permit for the amount requested or rejecting the entire application;
rather, he can grant a permit for less than the amount requested in the application, and/or
include conditions in the permit. The hearing process allows the State Engineer to view all
the evidence and tailor the permit accordingly.
E. The Remaining Arguments are Formalistic and Without Merit
The NMELC Protestants claim that the Application violates the State Engineer’s
regulations because it designates multiple beneficial uses and multiple well locations.
NMELC Motion at p. 7-8. They state that a separate application must be filed for each
proposed well location and use. This hyper-technical argument elevates form over
function and stands in direct contradiction to the longstanding practice of the State
Engineer. The State Engineer routinely accepts applications that designate multiple
beneficial uses and/or multiple well locations. To require a single application for each
beneficial use and each separate well would severely compromise administrative flexibility
and efficiency, and would create particularly serious problems for certain types of
applicants such as municipalities. There is no principled reason to require multiple
applications rather than a single application containing the requisite information. The
purpose of the statute is to ensure that notice is provided to potential protestants, and that
purpose has been served.
17
120 acres within a 1,290 foot radius of each of the 37 well locations listed on Attachment A
of the Amended Application.” See NMELC Motion, Exh. 2. The NMELC Protestants state
that this email demonstrates that Applicant is not committing to irrigate its own lands, but
rather is merely seeking an option to do so. This argument is premised on an obvious
misinterpretation of the phrase “to the extent that the applied-for water will be used for
irrigation “ The NMELC Protestants apparently read that phrase to mean that the
applied-for water would be used to irrigate the specified lands only in the event that the
applied for water was used for irrigation. However, a just as plausible interpretation of
that phrase — and indeed, what the email was intended to convey — is that the amount of
applied-for water sought to for irrigation use would be used on the specified lands. In fact,
the email cited by the NMELC Protestants was sent in response to an inquiry by those same
protestants regarding what lands would be irrigated. Thus, the Application clearly
identifies the lands that will be irrigated by that portion of the applied-for water sought for
irrigation use.
The State Engineer should reject these formalistic arguments and allow Applicant to
present evidence in support of its Application. New Mexico law favors determination of
disputes on their merits rather than on blind compliance with procedural rules. See, e.g.,
Transamerica Ins. Co. v. Sydow, 97 N.M. 51, 54, 636 P.2d 322, 325 (Ct. App. 1981) (New
Mexico courts “require that the rights of litigants be determined by an adjudication on the
18
 The Application sets forth the elements required by the statute and Is therefore
facially complete. Applicant should be allowed the opportunity to put on evidence In
support of the facts claimed in its Application. Dismissal at this stage would be premature,
would exceed the State Engineers statutory authority and would violate the procedures
structured by the statute and OSE regulations.
ilL Public Policy Pavon Consideration of the Augustin Project on Its Merits
A. The State Ragineer Lacks Authority to Dismiss the Application at this Stage
as Contrary to Public Policy
MRGCD argues that the Application should be denied because It would be “contra
ry
to sound public policy to make a determination regarding impairment conservation
or
water, or public welfare based upon [an] application which lacks any sqrt of specifi
city.”
MRGCD Motion at 119. In support of this argument, MRGCD points to the State Engineer’s
recent decision in Consolidated OSE Hearing Nos. 09086,09487,09088, 09089, and 09-
090, denying the applications filed by Berrendo LLC seeking to move existing water rights
from the Fort Sumner area to the Middle Rio Grande. In his Order Denying Applications,
the State Engineer found that the Berrendo applications were “so vague and overbroad that
the effects of granting them [could not] be reasonably evaluated.” Berrendo Order, finding
no. 18. The State Engineer further held that the applications lacked specificity as to the
purpose of use of water at the move-to location and the actual end-user of water.
Id.,
finding no. 13. Based on these findings, the State Engineer summarily dismissed
the
19
 Application In this proceeding as contrary to public policy. But the State Engineer lacks
authority to deny an application that otherwise meets the statutory requirements on the
basis of public policy. The Berrendo applications were mistakenly denied, and the State
Engineer should decline to make a similar mistake In these proceedings.
As an administrative body created by statute, the OSE’s authority is derived from the
statutes ft administers, and is thus “limited to the power and authority that is expressly
granted and necessarily implied by statuta” In re Application of PNM Elec. Sen’s, 1998-
NMSC-017,1 10,125 N.M. 302,961 P.2d 147. In this case, the statute that governs the form
that an application to appropriate groundwater takes is Section 72-12-3. That section sets
forth a list of elements that must be included in an application; there Is no “catch all”
provision in this list granting the State Engineer general authority to summarily reject an
application as “contrary to public policy.” Nor can such general authority be read Into the
statute as the list provided is exclusive, and does not allow for other considerations
rn
come Into play. Thus, the scope of the State Engineer’s authority to accept or reject an
application to appropriate groundwater Is defined in Its entirety by Section 72-12-3, and
the State Engineer cannot impose requirements for such applications beyond what is
provided in that statuta To do so would infringe on the authority of the Legislature, as the
body that grants authority to the OSE, and would violate separation of powers. See 7W-
State Generation and Transmission Ass’n, Inc. v. DMntonlo, 2011-NMCA-015, P.3d
17, —
20
the Application. Dismissal at this stage would be premature, would exceed the State
Engineer’s statutory authority and would violate the procedures structured by the statute
and OSE regulations.
I3 Consideration of the Augustin Project on its Merits is in the Public
Interest
As discussed above, the State Engineer lacks the authority to dismiss an application
on public policy grounds prior to hearing. Rather, the statute and regulations define the
information required on an application to appropriate groundwater. Because the
Application satisfied the statutory criteria and was accepted by the State Engineer, this
matter must now proceed to hearing. Even if it were a valid consideration at this stage,
however, sound public policy favors consideration of the Augustin Project on its merits.
New Mexico is an arid state currently experiencing a long-term drought. In fact,
New Mexico is facing a severe water shortage this very summer. Water shortages, in turn,
are a limiting influence on the State’s economy and growth. The Middle Rio Grande is both
the economic center of the State and New Mexico’s fastest-growing area. Approximately 60
percent of the State’s population resides in the Middle Rio Grande, and, as shown by data
from the recent Census, is continuing to increase.
Few places in New Mexico have unallocated surface or groundwater available for
new uses, and the potential for obtaining new supplies through infrastructure development
is limited. Moreover, the 1919 Rio Grande Drainage Report estimates that there were
21
surface water to be transferred for offsetting purposes. That leaves a relatively small
amount of water available for transfer in the Middle Rio Grande to satisfy the needs of a
growing population. However, that water is currently being used for other purposes. In
short, growth has outpaced the availability of water in New Mexico.
The result is competition for a limited supply of available water. This competition
leads to rapidly increasing prices Moreover, the Middle Rio Grande is faced with
increasing pressures to convert agricultural water use to urban use, as well as difficulties in
meeting the State’s Compact obligations.
Given the conflicting realities of limited availability of water and expanding
populations in New Mexico, it is particularly important for the State Engineer to evaluate
innovative and non-conventional projects on their merits for three reasons. First, New
Mexico law favors determination of disputes on their merits rather than on blind
compliance with alleged technical deficiencies. See, e.g., Transamerica Ins. Co. v. Sydow, 97
N.M. 51, 54, 636 P.2d 322, 325 (Ct. App. 1981) (New Mexico courts “require that the rights
of litigants be determined by an adjudication on the merits rather than upon the
technicalities of procedure and form”); Bennett v. City Council for City of Las Cruces, 1999-
NMCA-015, ¶ 7, 126 N.M. 619, 973 P.2d 871 (“Our Supreme Court has held that ‘substantial
compliance’ with notice and publication is sufficient to satisfy statutory requirements”).
This is particularly true in the present matter where granting the Motions would result in
22
 statutory criteria for a new appropriation.
Second, public policy favors allowing applications to be considered on their merits
because it is in the public interest to enable growth and economic development. Indeed,
the Governor of New Mexico has recently refocused on the necessity of considering the
impact of agency decisions on New Mexico businesses. There is always opposition to
innovative projects from groups or individuals intent on clinging to the status quo. But the
State cannot be paralyzed by those interests For example, there was stiff opposition to the
San Juan Chama project when it was originally proposed. Fortunately for the State, the
project overcame the opposition, because that water has become essential to New Mexico.
Third, the opposition need not be concerned about the impact of the Augustin
Project on their rights because the laws governing new appropriations requires Applicant
to establish that the Application will not cause impairment, will not be detrimental to the
public welfare, and will not be detrimental to conservation. NMSA 1978, § 72-12-3. But
that showing can only be made at a hearing. Moreover, the Augustin Project has the
potential to provide a new and important source of water to the Middle Rio Grande.
Because it is a potential new source, that water would not be converted from existing
agriculture, and it should help alleviate the market-driven high prices. And because it is a
privately funded project, the State would not be responsible for the cost of infrastructure.
23
 For its next argument, Protestants argue that Applicant failed to provide
“meaningful notice.” NMELC Motion at 11-12. Section 72-12-3(D) sets forth the notice
requirements for applications to appropriate groundwater, providing in pertinent part as
follows:
Upon the filing of an application, the state engineer shall cause to be
published in a newspaper that is published and distributed in the county
where the well will be located and in each county where the water will be or
has been put to beneficial use or where other water rights may be affected, or
if there is no such newspaper, then in some newspaper of general circulation
in the county in which the well will be located, at least once a week for three
consecutive weeks, a notice that the application has been filed and that
objections to the granting of the application may be filed within ten days
after the last publication of the notice.
Likewise, OSE regulations provide:
Upon receipt of an acceptable application the state engineer shall prepare
and issue a notice for publication and shall send it to the applicant with
instructions that it be published weekly for 3 consecutive weeks in a
newspaper of general circulation within the county in which the well is to be
drilled.
19.27.1.12 NMAC.
As described above, Applicant followed these procedures, publishing notice of the
Application in newspapers distributed in all counties where the wells are to be located,
where the water will be put to beneficial use, or where other water rights may be affected.
The notice specified the location of the wells, the place of use, and identifies the types of
uses to which the water will be applied.
24
 the State Engineer routinely approved groundwater appropriations that would impact
surface flows, so long as the applicant agreed to subsequently retire unidentified surface
rights. In a 1994 opinion, the Attorney General opined that this policy was unlawful. The
issue that the Attorney General found with respect to the dedications program was not that
the information being supplied regarding rights to be retired was too vague or speculative;
rather, the State Engineer was not requiring any information with regard to those rights.
See 1994 WL 721625, *4*5 (N.M.A.Gj. In other words, the problem was not applications
that otherwise set forth the elements required by the statute but were still somehow
“contrary to public policy.” Instead, the problem was that, with respect to the rights to be
retired in the future, none of the statutory elements had to be specified. The program was
found invalid because the State Engineer was accepting and granting such applications in
the absence of the information required by statute. See Id. at *4 (“[Sjince the public notice
describes only the new permit application and not the surface water rights to be retired,
the public is never notified of a key part of the transaction and cannot meaningfully
participate in the process.”). In contrast, the Application in this case, and thus the notice,
contains the information required by the statute and was sufficient to give notice to
potentially affected water right holders. The reasoning behind the Attorney General’s
invalidation of the State Engineer’s former dedication program simply does not apply in
this case.
25
 participants in this hearing. Contrary to their insufficient notice argum
ent, the Protestants
received notice of the Application which was sufficient to allow
them to file protests. They
are now parties to this proceeding and will have the opportunity
to conduct discovery,
challenge the evidence submitted by Applicant, and present any
contradictory evidence
they may have.
Courts in New Mexico have made it clear that “it is a long-standing
policy in New
Mexico that the rights of the litigants should be determined on the
merits of the case rather
than upon technicalities of procedure and form.” Bombach, 105 N.M.
at 627, 735 P.2d at
1133. For example, in Bombach, the New Mexico Supreme Court rejecte
d the appellant’s
argument that notice under a lease provision was insufficient because
it was not technically
correct. Id. The court explained “[i]t is a somewhat ludicrous asserti
on to make, when one
files [a pleading], and appears for hearing, that he has not been properly served
. Any defect
in service was waived.” See also Garduno i,’. Pueblo de Nambe, 57 N.M. 598, 600, 261 P.2d
441 (1953 (“As to the insufficiency of service, the question no longer
exists by reason of the
answer of [the defendant] and its general appearance in and litigation
of the controversy.”).
This same reasoning applies in the present case. As evidenced by their
participation, Protestants had actual notice of the Application. Thus,
the purpose of the
notice required by statute was satisfied. See Johnson v. State Oil Conser
vation Comm’n,
1999-NMSC-021, ¶f 29-30, 127 N.M. 120, 978 P.2d 327 (concluding that the
26
the intent of the legislature and analyze whether this intent would be frustrated by
anything less than strict compliance.”); Albuquerque Nat7 Bank v. Albuquerque Ranch
Estates, Inc., 99 N.M. 95, 103-04, 654 P.2d 548, 556-57 (1982; rejected on other grounds by
J.R. Hale Contracting Co., Inc. v. United N.M. Bank at Albuquerque, 110 N.M. 712, 799 P.2d
581 (1990; Hawthorne v. City ofSanta Fe, 88 N.M. 123, 124, 537 P.2d 1385 (1975).
For example, in Hawthorne v. City ofSanta Fe, 88 N.M. 123, 124, 537 P.2d 1385, 1386
(1975), the New Mexico Supreme Court addressed an objection to compliance with a
statutory notice provision where the objector had not received notice as provided in the
statute, but had nonetheless participated in the process. The court rejected the argument
that “failure to give notice in strict compliance” with the statute was reversible error. Id.
Instead, the Court reasoned that the purpose of the notice “is to apprise interested parties
of the hearing” so that they may participate. Id. Because the objector had actual knowledge
of the hearing, the court found that there was “substantial compliance” with the statute in
question.
That same reasoning applies in the present case. Applicant contends that the notice
that was provided was in strict compliance with the Underground Waters Act. If, however,
the Hearing Officer finds otherwise, then Protestants nonetheless had actual notice of the
Applications, and have filed their protest. As in Hawthorne, the purpose of the notice
provisions in the Underground Waters Act is to ensure that water rights owners can
27
 341, 890 P.2d 395, 402 (1994). Protestants cannot reasonably argue that they did not
receive notice of the Application, and they cannot reasonably argue that they have been
deprived of due process at this stage of the proceedings.
Finally, to the extent that Protestants argue that the due process rights of other non-
protestants have been violated, Protestants lacks standing to raise such a claim. See, e.g.,
ACLU of N.M. v. City of Albuquerque, 2008-NMSC-045, ¶[ 34-35, 144 N.M. 471, 188 P.3d
1222 (upholding the Court of Appeals’ dismissal of a due process claim based on lack of
standing); see also Id. ¶ 19 (declining to do away with the injury in fact requirement).
Protestants will have every opportunity to present evidence and at the hearing in
this matter. In light of the actual notice received, the Hearing Officer should decline
Protestants invitation to dismiss the Application at this premature date.
V. The Application is Consistent With the Doctrine of Prior Appropriation
NMELC Protestants argue that the Application should be dismissed because it is not
based on beneficial use. Contrary to the NMELC Protestants’ argument, however, the
Application is consistent with the doctrine of appropriation. Under that doctrine, beneficial
use need not be established until a reasonable time after a permit is granted.
Priority is one of the most basic components of a water right. See N.M. Const., art.
XVI, § 2 (“Priority of appropriation shall give the better right). For rights initiated after
1907, priority is established as of the time of filing of the application to appropriate water.
28
water right is a process that takes a period of time,” and protects the appropriator’s
investment by preserving his priority while he constructs the works and takes the steps
necessary to divert the water and put it to beneficial use. Id. at ¶ 81; see also Yeo v. Tweedy,
34 N.M. 611, 614, 286 P. 970, 971 (1929J (rejecting application of “correlative rights
doctrine” to appropriation of groundwater in favor of prior appropriation doctrine under
which “[ijnvested capital and improvements are thus protected.”).
The doctrine further acknowledges that perfecting an appropriation may require
certain preliminary work and development before actual beneficial use can occur. See, e.g.,
State ex rel. Martinez v. McDermitt, 120 N.M. 327, 330, 901 P.2d 745, 748 (Ct. App. 1995)
(holding that defendant met burden to prove priority date related back to the beginning of
physical acts to take and use water, “even though the beneficial use did not occur until
some time after the drilling of the well or the laying out and digging of irrigation ditches”).
Thus, under New Mexico law, an applicant need not establish proof of beneficial use until
after the permit is issued. See Snow v. Abalos, 18 N.M. 681, 140 P. 1044, 1048 (1914) (“The
intention to apply to beneficial use, the diversion works, and the actual diversion of the
water necessarily all precede the application of the water to the use intended . .
.
In this case, Applicant reasonably relied upon the OSE’s acceptance of the
Application, and therefore the setting of a priority for the applied-for appropriation, by
diligently completing the preliminary work in order to meet its statutory burden.
29
VI. Even if the Standard Advocated by Protestants Applies, Dismissal of the Entire
Application Would Be Inappropriate
While Applicant maintains that the standard advocated by Protestants for
evaluating the facial validity of an application to appropriate groundwater is far too strict
than what is allowed under the relevant statutes and regulations, if the State Engineer
determines that this standard should apply, then that part of the application seeking
irrigation rights on Applicant’s ranch should not be dismissed. As discussed previously, the
State Engineer is not bound by the amount requested in an application, and can issue a
permit for less than that amount.
The Application specifies the locations of thirty-seven wells on Applicant’s property.
With respect to the water sought for irrigation use on Augustin Ranch, Applicant specified
twelve quarter sections, stating that that irrigation will be limited to 120 acres in each of
those quarter sections. Applicant further described the specific place of use for irrigation
as 120 acres within a 1,290 foot radius of each of the 37 well locations listed on
Attachment A to [the Application].” Contrary to the NMELC Protestants’ assertion, this
description is more than sufficient to apprise the OSE and other water rights holders in the
area of where the irrigation rights will become appurtenant. Nor is there any difficulty
discerning who will own the applied-for irrigation rights. The Application states that
irrigation use will occur on lands owned by Applicant. This information is precisely what
is required by Section 72-12-3 (“if the use is for irrigation, [the application shall designate]
30
 With respect to water sought for irrigation, the Application identifies a particular
place for a particular type of beneficial use, and is more than sufficient to apprise the OSE
and other water rights owners of the elements necessary to evaluate the Application.
Therefore, this portion of the Application should be allowed to proceed to hearing, even if
the OSE denies the remainder.
CONCLUSION
For the foregoing reasons, the Motions to Dismiss should be denied.
Respectfully submitted,
MONTGOMERY & ANDREWS, PA.
By
JoSfli(’9’raper
JeffrejJ Wechsler
Lara Katz
P0 Box 2307
Santa Fe, New Mexico 87504-2307
(505) 982-3873
Attorneys for Augustin Plains Ranch, LLC
31
 CERTIFICATE OF SERVICE FOR
APPLICANT’S CONSOLIDATED RESPONSE
TO MOTIONS TO DISMISS APPLICATION
The undersigned hereby certifies that a true and correct copy of the
Augustin Plains Ranch LLC’s Statement In Support of Applicant’s Second
Proposed Scheduling Order was placed in the U.S. Mail to all parties of record,
all as shown on the OSE website, www.ose.state.nm.us, this 15th day of April,
2011.
Respectfully submitted,
Jeffrey J. Wechsler
P0 Box 2307
Santa Fe, New Mexico 87504-2307
(505) 982-3873
Attorneys for Augustin Plains Ranch, LLC
(00230294-I