Background

New Mexico historically used a decentralized system of prior appropriation for surface water and groundwater. As the 20th century progressed and a growing population increased strain upon the state’s water resources, the Legislature gave more centralized control to the State Engineer by layering an administrative regime to regulate water on top of the common law prior appropriation foundation.  Surface water was developed before groundwater in New Mexico, so the Legislature first passed a surface water code, granting the State Engineer control over all surface waters in Colorado.  As groundwater use increased, the Legislature passed a groundwater code, granting the State Engineer control over certain groundwater basins.1  Thus, both surface water and groundwater are subject to prior appropriation and controlled by the State Engineer; however, there are some administrative differences in regulation between the two.  Notably, contrary to many other Western states, New Mexico's laws recognize the long-known hydrological reality of interconnection between groundwater and surface water.2

Groundwater accounts for about 50% of the state's total freshwater use.3 Approximately 80% of groundwater withdrawn is used for agriculture.4 New Mexico groundwater is important for domestic consumption, accounting for about 100% of individual household water use and 75% of municipal supplies.5

Summary of the Law

New Mexico groundwater rights are governed by the doctrine of prior appropriation, which serves as the default legal framework of groundwater regulation in the state. However, overlaying this foundation is a series of groundwater basins subject to the administrative jurisdiction of the State Engineer.

Special Permitting Area—Declared Groundwater Basins: In New Mexico, the State Engineer has permitting authority over all of the states groundwater basins. The State Engineer was granted permitting authority only over declared underground basins, or basins with "reasonably ascertainable boundaries," and over time, every part of the state has been declared part of an underground basin.6 This happened gradually: the final basin was declared in 2005, and there are a total of 108 groundwater basins and extensions of preexisting basins that have been declared since 1931.7 Therefore, despite the differing geographical areas and dates of declaration of basins, all groundwater in New Mexico is subject to the jurisdiction of the State Engineer.

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Law and Practice

Although groundwater regulation is located in a different section of New Mexico's Water Code than is surface water, New Mexico courts have long recognized that the two are part of the same overall system for prior appropriation purposes, such that a groundwater pumper cannot impact the water rights of a senior surface water diverter. Because both sources of water are regulated by the State Engineer, and both are governed under the doctrine of prior appropriation—circumstances that are absent in states with different rules for groundwater than they have for surface water—there is more of an administrative capacity to recognize this hydrological overlap. The two systems have some administrative differences in regulation, but the core legal rights are the same, with the older right having the better claim when a dispute arises. The primary practical consequence of the law's recognizing the interconnection between groundwater and surface water is that because all surface waters in the state have been fully appropriated, proposed groundwater withdrawals having an adverse effect on surface rights will be denied by the State Engineer unless the adverse effect can be offset.8