June 8, 2026- David Maley v. John D’Antonio, Jr., No. A-1-CA-39034

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Court of Appeals of New Mexico Filed 6/8/2026 11:09 AM
Mark Reynolds
1 2 Opinion Number: 3 Filing Date: June 8, 2026 4 No. A-1-CA-39034 5 DAVID MALEY, 6 Petitioner-Appellee, 7 V. 8 JOHN D'ANTONIO, JR., P.E., New Mexico State Engineer, 9 10 Respondent-Appellant. 11 12 13 Martin, Dugan & Martin Kenneth D. Dugan Carlsbad, NM 14 15 16 for Appellee 17 Office of the State Engineer 18 Gregory C. Ridgley, General Counsel 19 Nathaniel Chakeres, Special Assistant Attorney General 20 Maureen C. Dolan, Special Assistant Attorney General 21 L. Christopher Lindeen, Special Assistant Attorney General
APPEAL FROM THE DISTRICT COURT OF EDDY COUNTY Raymond L. Romero, District Court Judge
22 Santa Fe, NM 23 24 Chandler, AZ
Simi Jain, Special Assistant Attorney General

—

4

Abramowitz and Franks
Martha C. Franks
Santa Fe, NM

for Appellant

OPINION	1
BUSTAMANTE, Judge, sitting by designation.	2
{1} 	Appellee David Maley (Maley) applied for a permit to repair three wells	3
located on property he owned. The Office of the State Engineer (the OSE) granted	4
the permits, but placed substantial limits on Maley’s ability to draw water from the	5
wells. Aggrieved, Maley asked for a hearing on the limitations pursuant to 19.25.2.9	6
NMAC. In the course of the administrative proceeding, the Hearing Examiner	7
granted the OSE’s Water Rights Division’s (the WRD) motion for summary	8
judgment, ruling that Maley’s claimed water right “is not valid and existing and has	9
otherwise been abandoned.” The state engineer accepted the Hearing Examiner’s	10
order and denied Maley’s application. On de novo appeal, the district court ruled	11
that the OSE did not have the authority to “adjudicate” Maley’s claimed water right	12
and declared the OSE’s decision “void ab initio.”	13
{2} 	The OSE appeals on two grounds. First, the OSE argues that the district court	14
should not have entertained the jurisdictional argument made by Maley because	15
Maley failed to exhaust his administrative remedies and/or failed to preserve the	16
issue of the OSE’s authority. We reject this argument.	17
{3} 	The OSE’s more substantive argument presents a narrow issue of first	18
impression in New Mexico’s water law jurisprudence: In the course of processing a	19
permit application seeking permission to repair old wells, may the State Engineer	20

2
consider and rule on whether a declared water right is invalid and/or abandoned? We	1
conclude that the OSE does have such authority in the circumstances presented here,	2
and, thus reverse the district court’s contrary ruling.	3
BACKGROUND	4
{4} 	In October 2014, Maley and his wife were deeded property in Eddy County	5
consisting of the surface rights to portions of eight sections of land, plus federal and	6
state grazing allotments, and “all Water Rights or claims to Water Rights, whether	7
declared or otherwise, including . . . all Water Rights which may be found in State	8
Engineer OSE File Nos. C-1351, C-1351-X, and C-1351-X-2.”1 In August 2016,	9
Maley simultaneously filed OSE “Change of Ownership” forms and applications for	10
a permit to “repair and/or deepen well” for each of the Files noted in the deed. The	11
OSE accepted the notice of change of ownership with the proviso that “acceptance	12
by the [OSE] does not constitute a validation of the rights claimed.”	13
{5} 	Following a review of its records, the OSE approved the applications for	14
repair, but allowed water production from the wells for testing purposes only, and	15
specifically provided that “[n]o water shall be appropriated and beneficially used	16
under this permit.” In accordance with NMSA 1978, Section 72-2-16 (2015), Maley	17
requested a hearing pursuant to 19.25.2.9 NMAC. In the course of the hearing	18
process, the WRD of the OSE filed a motion for summary judgment arguing that its	19
1 We refer to the three collectively as “the Files.”

3
records “rebut all claims that any water right existed from [the] claimed wells.” In	1
the alternative, the motion asserted that if any water rights existed at the time certain	2
1966 declarations were filed, they had been abandoned by Maley’s predecessors.	3
{6} 	The WRD’s memorandum in support of its motion attached materials from	4
the OSE’s records, beginning with an aerial surveillance report from May 1964—	5
apparently prompted by the OSE’s Declaration of the Carlsbad Underground Water	6
Basin. The report noted no development in the area covered by the Declaration	7
except for the Brantley and Ross farms. Maley’s property is not within the	8
boundaries of those farms.	9
{7} 	The OSE next attached the Declarations of Owner of Underground Water	10
Rights filed in November 1966 by the then-owner of the property, Marlin J. Wiggins.	11
The “base declaration” for the Files stated that water “had not been used last 2 years	12
since I acquired this place.” The declaration also noted that the wells had been	13
seriously damaged by floods in the summer of 1966, such that “it was impossible to	14
identify exactly the location.” 2 The declarations filed by Wiggins included an	15
affidavit signed by Joe Johns stating that he had seen crops irrigated on the parcels	16
by two wells and a spring “during the crop seasons of 1938 to the present.” Staff	17
recommended that Wiggins’ declarations for the Files be accepted for filing even	18
2 The record includes a change of ownership form noting a transfer of all of
the water rights to a Charles Clanton in March 1968. There is no further mention of
Mr. Clanton in the record filed with this Court.

4
though it concluded that there was “nothing submitted to substantiate the claim to	1
3[-]acre feet per acre per annum.” The declarations were accepted with the	2
disclaimer that the “filing of these declarations does not in any way indicate	3
affirmation of the State Engineer of the statements contained therein.”	4
{8} 	The last entry by OSE staff regarding the Files prior to Maley’s filings reflects	5
a field check done in June 1969. That report notes that the property is “covered with	6
a salt or marsh type of grass” and that there is no indication of any irrigation system.	7
Further, “[o]f the two dug wells one is caving in and both are unused and in poor	8
condition.” There was apparently no activity in the Files from 1969 until Maley’s	9
filings in 2016.	10
{9} 	Maley’s applications to repair the wells prompted the OSE to conduct a review	11
of the Files and other information in its possession. The OSE also conducted a field	12
check in October 2016. The OSE’s review was summarized in a memorandum of	13
recommendation issued in December 2016. The summary noted that the field check	14
revealed no active cultivation through plowing or planting and no evidence of any	15
method of water diversion for man-made application of water for irrigation. The	16
OSE engineer in charge of the review concluded that no beneficial diversion and use	17
of water under the original claims could be substantiated. As a result, the engineer	18
recommended that the application to repair the wells be approved only with a	19
condition that the wells could not be utilized until a permit was issued to transfer	20

5
valid existing water rights to the wells, or a permit to draw water from the wells was	1
issued.	2
{10} 	Maley admitted all of the uncontested facts listed in the WRD’s motion for	3
summary judgment, and did not provide any factual information tending to show	4
that any beneficial use of water had occurred in the fifty years following the filing	5
of Wiggins’ declaration of water rights. After oral argument on the motion, the	6
Hearing Examiner entered his order granting the WRD’s motion for summary	7
judgment, and the State Engineer accepted and adopted the order. Maley timely	8
appealed the order to the district court pursuant to NMSA 1978, Section 72-7-1	9
(1971).	10
{11} 	Maley’s first pleading in the district court did not include any mention of the	11
OSE’s authority to deal with the question of the validity of Maley’s declared water	12
right. Following the entry of appearance of new counsel, Maley filed a motion for	13
summary judgment asserting for the first time that the OSE did not have the authority	14
to consider or rule on the issue of abandonment. Maley phrased the question as	15
follows: “Does the OSE have authority to rule a declared water right is no longer	16
valid due to abandonment when the water rights owner has not requested to move or	17
change the water right?” Notably, Maley’s prayer for relief was broader than the	18
issue he framed. Maley also requested a declaration that the OSE could not condition	19
any permits it granted to prevent appropriation of water under the Files. Maley also	20

6
requested a ruling that the declarations of water rights in the Files remain valid and	1
must be recognized by the OSE “until and unless it files an appropriate abandonment	2
or forfeiture proceeding in a court of competent jurisdiction and procures a judgment	3
adjudicating the right to be invalid.”	4
{12} 	The district court partially granted the motion. Relying on language from	5
Public Service Co. v. Reynolds, 1960-NMSC-137, ¶ 28, 68 N.M. 54, 358 P.2d 621,	6
the district court ruled that the OSE’s decision to limit Maley’s ability to use water	7
from the Files was “an adjudication of [Maley]’s water rights, and is void ab initio.”	8
The district court declined to rule on what water rights, if any, Maley has in the Files	9
because “that question [was] not before [it].” See id. ¶ 30. The OSE timely appealed	10
to this Court.	11
DISCUSSION	12
I. 	The District Court Did Not Err in Entertaining the Jurisdictional Issue	13
{13} 	It is undisputed that Maley did not raise the issue of the OSE’s power—or	14
authority—to 	consider 	and 	rule 	on 	the 	issue 	of 	abandonment 	during 	the	15
administrative proceedings before the OSE. The Hearing Examiner entered two	16
scheduling orders in the matter—one in July 2017 and another in March 2018,	17
following a failed mediation effort. Both orders provided a statement of issues to be	18
litigated that included, “Whether the claimed water right is valid.” Maley posed no	19
objection to inclusion of the issue in the scheduling order. And, Maley did not raise	20

7
any objection to the OSE’s authority to litigate the abandonment issue in his	1
response to the WRD’s motion for summary judgment on that very issue. As noted	2
above, the issue was first raised in Maley’s motion for summary judgment in the	3
district court.	4
{14} 	The OSE argues that Maley’s failure to assert the question of authority during	5
the administrative hearing prevents him from first doing so in the district court	6
appeal. The OSE first asserts that Maley failed to exhaust his administrative	7
remedies, but then also frames its argument as a matter of waiver. The OSE relies	8
heavily on our Supreme Court’s opinion in Lion’s Gate Water v. D’Antonio, to argue	9
that applicants may not raise issues on appeal that they failed to raise in the	10
administrative hearing. See 2009-NMSC-057, ¶¶ 24-30, 147 N.M 523, 226 P.3d 622.	11
Given that jurisdiction in this context necessarily presents a question of law, our	12
review is de novo. See id. ¶ 18.	13
{15} 	The OSE’s reliance on Lion’s Gate Water for its position on this aspect of the	14
case before us is inapt. In Lion’s Gate Water, the eponymous applicant filed an	15
application for a permit to draw new water from the Gila River. Id. ¶ 3. In	16
recognition of a series of court decrees and factual findings dating to at least 1960,	17
the OSE determined that there was no unappropriated water available and summarily	18
rejected Lion’s Gate’s applications pursuant to NMSA 1978, Section 72-5-7 (1985).	19
Lion’s Gate Water, 2009-NMSC-057, ¶ 7. There followed a years-long battle	20

8
between the OSE and Lion’s Gate concerning the scope of the administrative hearing	1
it had requested. Id. ¶¶ 8-16. The OSE eventually held a hearing, but limited the	2
issue it would consider to whether “unappropriated water does exist.” Id. ¶ 11	3
(internal quotation marks omitted). Lion’s Gate argued that the OSE was required to	4
consider all of the issues listed in NMSA 1978, Section 72-5-6 (1985). The OSE	5
refused to expand the scope of the hearing and eventually secured summary	6
judgment on the issue of unavailability of water. Lion’s Gate Water, 2009-NMSC-	7
057, ¶ 13. On appeal, the district court found that the OSE had erred in limiting the	8
scope of its hearing. Notably, the district court also decided that it had “jurisdiction	9
to hear all matters either presented or which might have been presented to the [s]tate	10
[e]ngineer as well as new evidence developed since the administrative hearing.” Id.	11
¶ 15 (alteration and internal quotation marks omitted).	12
{16} 	Our Supreme Court reversed the district court, rejecting Lion’s Gate’s	13
argument that the Section 72-7-1(E) provision that appeals from the OSE “shall be	14
de novo as cases originally docketed in the district court” meant that the district court	15
could treat the case as an original action. Lion’s Gate Water, 2009-NMSC-057, ¶ 28	16
(internal quotation marks and citation omitted). The Court noted that accepting	17
Lion’s 	Gate’s 	argument 	would 	“render 	much 	of 	the 	water 	code 	and 	the	18
administrative and remedial process it lays out superfluous.” Id. The Court refused	19
to supplant the broad powers given the OSE in the water code to administer “a	20

9
complete and exclusive means to acquire water rights.” Id. ¶ 24. Specifically, it held	1
that once the OSE found that no water was available, it was prohibited from holding	2
a Section 72-5-6 hearing to consider the secondary issues of conservation of water	3
and the public welfare. Since the OSE could not consider the secondary issues,	4
neither could the district court. Lion’s Gate Water, 2009-NMSC-057, ¶ 29.	5
{17} 	That analytical rationale does not apply in this case. In Lion’s Gate Water, the	6
OSE was faulted by the applicant for refusing to expand the scope of a Section 72-	7
5-6 hearing beyond a dispositive threshold determination. Here, the OSE did nearly	8
the opposite, something that—to our knowledge—it had never done before: seek and	9
enter an unsolicited ruling that an applicant’s “claimed water right is not valid and	10
existing and has otherwise been abandoned” in the course of its administrative	11
review of permit applications. The difference is not semantic. Lion’s Gate Water	12
involved OSE activities explicitly addressed—and limited—in the Water Code.	13
Here, we are required to examine a novel OSE action that is not explicitly mentioned	14
in the Water Code. By itself, that circumstance evokes a question about the OSE’s	15
authority—or power—to decide the issue of abandonment in the first instance. The	16
simple question presented by the facts at hand is whether it can.	17
{18} 	This Court recently reaffirmed that “as creatures of statutory creation,	18
administrative agencies are limited to exercising only that power and authority	19
expressly granted to them by statute or necessarily implied by statute.” Concerned	20

10
Citizens for Nuclear Safety v. N.M. Water Quality Control Comm’n, 2026-NMCA-	1
021, ¶ 22, 584 P.3d 1115. In Concerned Citizens, we also noted that administrative	2
agencies have the authority to “‘examine facts and make a finding’” as to their own	3
jurisdiction. 2026-NMCA-021, ¶ 22 (quoting Cibas v. N.M. Energy, Mins. & Nat’l.	4
Res. Dep’t., 1995-NMCA-046, ¶ 17, 120 N.M. 127, 898 P.2d 1265). Had Maley	5
challenged the OSE’s authority to undertake the abandonment analysis in the course	6
of the permit hearing, the OSE would have had to address it as a matter of subject	7
matter jurisdiction. And, of course, the district court would have had the same issue	8
brought to it. The OSE admits as much in its brief in chief when it states, “Had Maley	9
argued 	before 	the 	[OSE] 	that 	the 	[OSE] 	lacked 	the 	authority 	to 	make 	an	10
administrative determination of Maley’s water rights the [OSE] would have had the	11
opportunity to address the question. If the [OSE] had agreed with Maley’s argument,	12
the condition now on appeal would not have been imposed. Even if the [OSE] had	13
not granted Maley his requested relief, the [d]istrict [c]ourt would have had the	14
benefit of the [OSE]’s expertise on the question of what constitutes a water rights	15
adjudication.”	16
{19} 	Maley did not raise the jurisdictional challenge during the OSE’s permit	17
hearing. That failure, though, does not prevent him from raising it on de novo appeal.	18
The OSE attempts to limit the issue presented before it to the no-beneficial-use	19
permit condition it originally imposed. But the broader question of the OSE’s	20

11
authority to decide the abandonment issue cannot be avoided. As such, Maley’s	1
failure to raise the issue during the administrative hearing is not fatal to his	2
arguments on appeal. See Allred v. N.M. Dep’t of Transp., 2017-NMCA-019, ¶ 20,	3
388 P.3d 998.	4
II. 	The OSE Has the Authority to Decide the Issue of Validity in the Course	5
of Permit-Related Administrative Hearings	6
{20} 	On appeal, the OSE emphasizes that the Water Code gives it “broad powers	7
to administer the waters of the [S]tate” and that by necessary implication, it has the	8
power to make administrative determinations regarding the validity and extent of	9
claimed water rights. The OSE also argues that the statutory provisions for stream-	10
wide judicial adjudication of water rights are not in direct conflict with its	11
administrative powers and duties and do not preclude it from addressing issues of	12
the existence or validity of water rights in the normal course of its permit review	13
work. See NMSA 1978, §§ 72-4-13 to -19 (1907, as amended through 1982).	14
Generally speaking, the OSE argues that the question of validity—in particular	15
abandonment—is not required to be determined by the courts; it can take the	16
proverbial “first crack” at the issue in appropriate circumstances, subject of course	17
to ordinary review.	18
{21} 	In response, Maley argues that validity can only be determined by the courts.	19
Maley relies primarily on Supreme Court opinions for his position, in particular	20
Public Serv. Co. v. Reynolds, 1960-NMSC-137, 68 N.M. 54, 358 P.2d 621. Maley	21

12
in effect argues that, in this context, the term “adjudication” has a narrow and	1
accepted meaning that limits decisions about the validity of water rights to the courts,	2
perforce depriving the OSE of the power—or jurisdiction—to decide such issues in	3
the first instance.	4
{22} 	Though both parties tend to paint their positions with too broad a brush, we	5
conclude that the OSE’s arguments are closer to the mark. Maley does not cite any	6
provision in the Water Code or in the New Mexico Constitution that specifically	7
precludes the OSE from considering the issue of validity in the course of its	8
administrative tasks. See Tri-State Generation & Transmission Ass’n v. D’Antonio,	9
2012-NMSC-039, ¶ 27, 289 P.3d 1232 (quoting with approval this Court’s statement	10
that “[t]he New Mexico Constitution contains nothing to indicate that determination	11
of the elements of a water right is consigned exclusively to the judicial branch”).	12
The same observation can be made with regard to the lack of any statutory or	13
constitutional provision consigning the issue of validity exclusively to the courts. If	14
there is no legislative source for preclusion, we must decide if court opinions	15
preclude OSE action. We start by examining the duties and authority of the OSE.	16
A. 	The OSE’s Explicit and Implied Authority	17
{23} 	Our New Mexico Supreme Court has stated that “[i]t is . . . a fundamental	18
principle of administrative law that the authority of [an] agency is not limited to	19
those powers expressly granted by statute, but includes, also, all powers that may	20

13
fairly be implied therefrom.” Winston v. N.M. State Police Bd., 1969-NMSC-066,	1
¶ 3, 80 N.M. 310, 454 P.2d 967 (citing United States v. Pennsylvania R.R. Co., 323	2
U.S. 612 (1945) and Morrow v. Clayton, 326 F.2d 36 (10th Cir. 1963)); see Howell	3
v. Heim, 1994-NMSC-103, ¶ 8, 118 N.M. 500, 882 P.2d 541.	4
{24} 	That commonplace proposition has been applied in cases involving the Water	5
Code and the OSE. Perhaps the clearest early example is City of Albuquerque v.	6
Reynolds, 1962-NMSC-173, 71 N.M. 428, 379 P.2d 73. In that case, the City filed	7
four separate applications for permits to draw underground water from the Rio	8
Grande underground water basin. Id. ¶¶ 2, 3, 21. After a hearing, the OSE found that	9
even though there were unappropriated waters in the underground basin, granting	10
the permits would impair existing water rights to the surface waters of the Rio	11
Grande and that steps would be required to offset such adverse effects. Id. ¶¶ 2-3.	12
The City refused to take the measures the OSE suggested. Id. ¶¶ 2, 21. The OSE thus	13
denied the City’s permits.	14
{25} 	On appeal to the district court and in its arguments to our Supreme Court, the	15
City argued that the OSE did not have the “power and authority” to interrelate	16
surface and underground waters when it considered the permit request, nor could it	17
require the City to reduce or retire surface water as an offset. Id. ¶ 22 (internal	18
quotation marks omitted). The City asserted that the statutes describing the	19
permitting process did not interrelate surface and underground waters and did not	20

14
otherwise give the OSE the ability to do so. Id. ¶ 24. The Supreme Court rejected	1
the City’s arguments, noting that the OSE had the same general supervisory	2
authority over surface and underground waters, and, thus, the OSE could address the	3
substantive rights in both sources in the same administrative proceeding if it found	4
that they were interrelated. Id. ¶ 28. The Court in essence held that the OSE had the	5
implied authority to respond to the physical reality that the waters sought to be	6
appropriated by the City were intertwined and, thus, it could impose conditions that	7
were protective of senior surface water users even though the application before it	8
nominally involved only underground waters. Id. ¶¶ 30-32.	9
{26} 	Our Supreme Court’s most sweeping statement came in response to the City’s	10
argument that the OSE could not require the retirement of Rio Grande surface rights	11
because the OSE had “no jurisdiction over the fully appropriated water of the Rio	12
Grande because the rights in this river system have not been adjudicated.” Id. ¶ 46.	13
The Court dismissed the “alleged ‘jurisdictional’ question” by noting the OSE had	14
not adjudicated anything, and had “merely undertaken . . . to perform the duties	15
which devolve upon [it] under [NMSA 1953, Sections] 75-2-1, 75-11-1, and 75-11-	16
3.” Id. We note that the current NMSA 1978, Section 72-2-1 (1982) is essentially	17
identical to the 1953 compilation version. It must, then, be accurate to say that the	18
OSE has a similar—if not broader—scope of implied authority today.	19

15
{27} 	Our Supreme Court’s most recent statements regarding the breadth of the	1
OSE’s implied administrative authority are arguably even more expansive than those	2
discussed above. In Lion’s Gate Water, the Court was at pains to point out that the	3
general 	purpose 	of 	the 	Water 	Code, 	especially 	with 	regard 	to 	water 	rights	4
applications, is to give the OSE broad powers to “manage those applications through	5
an exclusive and comprehensive administrative process that maximizes resources	6
through its efficiency, while seeking to protect the rights and interests of water rights	7
applicants.” 2009-NMSC-057, ¶ 24. After reciting the numerous sections of the	8
Water Code that guide the OSE’s work, the Court concluded that they “clearly	9
express the Legislature’s intent that the water code and the administrative process it	10
describes provide a complete and exclusive means to acquire water rights.” Id.	11
{28} 	In Tri-State, our Supreme Court echoed and expanded on its Lion’s Gate	12
Water discussion of OSE administrative authority. In Tri-State, the Court held that	13
NMSA 1978, Section 72-2-9.1 (2003)—enacted in 2003—granted new powers to	14
the OSE to administer and manage priority disputes prior to completion of inter se	15
court adjudications. Tri-State Generation & Transmission Ass’n, 2012-NMSC-039,	16
¶ 26. As part of its analysis, the Court noted that giving the OSE power to administer	17
priority issues outside of a judicial inter se action did not interfere with the validity	18
of ongoing court actions and did not run afoul of any constitutional separation of	19
powers limitations. Id. ¶¶ 32-33. Citing Lion’s Gate Water specifically, the Court	20

16
also noted that, in line with the Legislature’s delegation to the OSE of the	1
“complicated and difficult task of managing New Mexico’s scarce water resources,”	2
the OSE had historically, of necessity, been involved with administering water based	3
on priority determinations for years. Tri-State Generation & Transmission Ass’n,	4
2012-NMSC-039, ¶ 34. (citing Templeton v. Pecos Valley Artesian Conservancy	5
Dist., 1958-NMSC-131, ¶¶ 44-46, 65 N.M. 59, 332 P.2d 465, as an example).	6
{29} 	A slightly different aspect of the OSE’s broad administrative and regulatory	7
power is found in Carangelo v. Albuquerque-Bernalillo County Water Utility	8
Authority, 2014-NMCA-032, 320 P.3d 492. In Carangelo, the water authority filed	9
a request for permission to divert surface waters from the Rio Grande to aid in its	10
plan to build a new drinking water facility. The request asserted that the surface	11
waters were needed to allow full use of waters being transported from its San Juan	12
Diversion Project. The water authority asserted that none of the diverted water would	13
be consumed or used for any purpose other than increasing the flow of water to the	14
new facility. The water authority was clear that it was not seeking any new	15
appropriation. See id. ¶¶ 9-12. Some protestors argued that the OSE did not have	16
“jurisdiction” over the application because it did not fit into or rely on any statutory	17
grant of power to the OSE. This Court rejected the argument, relying on the broad	18
scope of the OSE’s responsibilities under Section 72-2-1. Carangelo, 2014-NMCA-	19
032, ¶¶ 17, 21, 24. In essence, this Court made the practical choice to recognize that	20

17
the OSE had a role in reviewing the massive diversion of Rio Grande water	1
suggested even though it would not be required to approve any new appropriations,	2
consider the impact of the water shuffle on other users, or consider its impact on	3
conservation.	4
{30} 	Eldorado Utilities, Inc. v. D’Antonio, 2005-NMCA-041, 137 N.M. 268, 110	5
P.3d 76, presents another example of the OSE’s power in dealing with claims to	6
water rights. In Eldorado Utilities, Inc., a private water utility attempted to file	7
amended declarations for wells it had been operating for some twenty-six years. The	8
utility asserted that it had discovered new information that indicated its first	9
declarations were inaccurate. The new declarations used new wording for the uses	10
of the water and greatly increased the declared usage. See id. ¶ 4. The OSE refused	11
to accept the filing. The issue was whether the OSE could exercise any discretion	12
under NMSA 1978, Section 72-12-5 (1931). This Court held that, in light of the	13
broad powers granted it to implement and enforce the Water Code, the OSE had the	14
discretion to refuse the amendment because material in its own files provided a	15
sufficient base of knowledge from which it could conclude that the “rights asserted	16
therein were not vested, as contemplated by Section 72-12-5.” Eldorado Utilities,	17
Inc., 2005-NMCA-041, ¶¶ 12-13.	18
{31} 	The case most closely akin to the issue in this matter is Hanson v. Turney,	19
2004-NMCA-069, 136 N.M. 1, 94 P.3d 1. There, the plaintiff had acquired two	20

18
permits to appropriate water for irrigation purposes. Id. ¶ 3. The plaintiff drilled two	1
wells, but never put any water to beneficial use. Sometime later, the plaintiff filed	2
applications under NMSA 1978, Section 72-12-7(A) (1985), seeking a change to	3
subdivision use. The OSE denied the change of use applications because no water	4
had been put to use under the original permits. Hanson, 2004-NMCA-069, ¶ 3. This	5
Court’s analysis turned on whether the plaintiff was the “owner of a water right”	6
within the meaning of Section 72-12-7(A). We concluded that she was not because	7
putting water to beneficial use is a mandatory prerequisite to the maturation and	8
acquisition of a water rights. A permit is but a first step in the process. Hanson, 2004-	9
NMCA-069, ¶¶ 8-10.	10
{32} 	Our Courts’ approach to the implied authority of the OSE applies neatly to the	11
factual circumstance in this case. Maley filed for permits to repair the wells on the	12
property in accordance with 19.27.1.39 NMAC. There is no question that the OSE	13
has the authority under Section 72-2-1 and NMSA 1978, Section 72-2-8 (1967) to	14
require a permit before repair work on wells could be performed. Upon receipt of	15
the applications and review of the Files, the OSE would have necessarily noted that:	16
(1) the first declaration of water rights filed in 1966 disclosed that the owner had not	17
drawn from the wells on the property since 1964; (2) the wells were heavily damaged	18
by a flood in 1966; (3) the OSE field check in 1967 prompted by the declaration	19
revealed no evidence of recent cultivation, irrigation, or works for irrigation; (4) the	20

19
declaration was accepted with the proviso that the OSE was not affirming the	1
accuracy of the statements made in the declarations; (5) a change of ownership filed	2
in 1968, but there was no evidence of use of water connected with it; (6) the Files	3
had lain fallow since a field check in 1969; and (7) there had likely been no beneficial	4
use of water since 1964.	5
{33} 	In sum, the Files reflected a likely fifty-two year gap of beneficial use of water	6
from the wells sought to be repaired. It beggars the imagination to think that the OSE	7
would not have felt a duty to investigate the actual situation on the ground as it	8
processed the applications. The Files on their face revealed questions about the	9
validity of the declared rights, and raised red flags about the abandonment of any	10
rights that might have been in effect in 1964. The OSE’s field checks in response to	11
the applications confirmed that there had likely not been any beneficial use for fifty-	12
two years or more. Presumably, the OSE knew that New Mexico appellate courts	13
have upheld findings of abandonment related to periods of unreasonably long nonuse	14
ranging from twenty-four to forty-three years. See State ex rel. Office of State Eng’r	15
v. Intrepid Potash, Inc., 2025-NMSC-040, ¶¶ 33, 47, 580 P.3d 130.3 Fifty-two years	16
is a materially longer time. Failure by the OSE to react to the issue of validity would	17
have allowed Maley to draw water he potentially did not own from a fully	18
3 We note that Maley did not refute the OSE’s investigations or factual
findings.

20
appropriated basin. Such an outcome would obviously be detrimental to the public	1
welfare of the state and contrary to the conservation of water.	2
{34} 	In light of these facts, it is clear from the case law surveyed above that the	3
OSE would at the least have the implied authority to deny the applications outright,	4
or to grant them with the initial conditions it actually imposed pending further	5
investigation. The OSE in this instance went further and pursued a ruling from the	6
Hearing Examiner that the water rights connected to the Files were not valid. The	7
question then becomes whether there are any overriding limitations preventing the	8
OSE from seeking a determination as to validity of the rights in the course of its	9
administrative hearing.	10
B. 	New Mexico Case Law Does Not Prevent the OSE from Addressing the	11
Validity of Claimed Water Rights in the Court of its Administrative	12
Hearing Process	13
{35} 	Maley argues that the OSE lacked authority to “unilaterally” limit his declared	14
water rights. Stated more broadly, Maley asserts that the OSE has no power to	15
“adjudicate” the elements of water rights because that power belongs solely to the	16
courts. Maley relies primarily on our Supreme Court’s opinion in Reynolds, 1960-	17
NMSC-137.4 There, the Public Service Company filed an application for a permit to	18
4 Maley also cites to State ex rel. Reynolds v. Rio Rancho Estates, Inc., 1981-
NMSC-017, 95 N.M. 560, 624 P.2d 502. Rio Rancho Estates, Inc. is distinguishable.
It turned on the application and completion of Mendenhall rights under development
by a municipality. The Court simply held that it was too early in the Mendenhall

21
drill a well changing the point of diversion of a portion of its underground water	1
rights to ensure that it would have enough water to supplement its surface rights in	2
times of drought. The Public Service Company’s underground rights were a	3
combination of pre-1907 and OSE permitted waters. Id. ¶ 9. The OSE granted the	4
application with the condition that the total amount appropriated in any year should	5
not exceed 5,040-acre feet. The OSE imposed the limit even though it had also found	6
that the diversion proposed would not impact the rights of other users “or any other	7
existing rights to the use of the public waters.” Id. ¶ 23. The district court affirmed	8
the OSE’s order. See id. ¶ 6.	9
{36} 	On appeal to our Supreme Court, the Public Service Company argued that the	10
OSE “had no authority in this proceeding to place any limitation” on its underground	11
rights. Id. ¶ 17. By “this proceeding” the Public Service Company meant its request	12
to change the point of diversion. The Public Service Company emphasized that it	13
was not attempting to make new appropriations or to increase its claimed rights. Id.	14
¶¶ 20, 23, 27. As such the extent of it water rights were not implicated by its request.	15
Our Supreme Court concluded that by limiting the Public Service Company’s	16
appropriation the OSE “did, in effect, adjudicate, or attempt to adjudicate, [the	17
process to limit the municipality’s right to develop its rights as the city grew. Rio
Rancho Estates, Inc., 1981-NMSC-017, ¶¶ 13-16.

22
company’s] claimed water rights . . . . This [the OSE] had no authority to do.” Id.	1
¶ 28.	2
{37} 	In the factual context of Reynolds, our Supreme Court was correct. First, the	3
OSE’s 	action 	in 	limiting 	the 	Public 	Service 	Company’s 	appropriation 	was	4
premature. The permit request did not raise any issues of increased usage or claimed	5
rights. And, the OSE found that there was no impairment to any other users’ rights.	6
Thus, there was simply no need to address how much water the company might be	7
able to draw or claim in the future. Second, as the OSE notes, the limit placed on the	8
production from the wells had the effect of rendering all of the declared underground	9
water rights merely supplemental to the Public Service Company’s surface rights	10
even though the extent and nature of the underground rights were not the subject of	11
the application.	12
{38} 	Third, and most importantly, a predictable effect of the limit would be to	13
short-circuit the proceedings in any stream-wide or basin-wide adjudication that	14
might be brought in the future under Sections 72-4-13 through -19—or their	15
predecessor provisions. A major aspect of system-wide judicial adjudications is the	16
gathering of as many parties as possible with claims to water rights in one	17
proceeding, thus allowing all parties the opportunity to prove their rights and protect	18
them from potential competing claims. As the Public Service company noted in	19
Reynolds, it did not know the actual extent of its underground rights at the time its	20

23
application was processed because no one’s rights had been fixed in a statutory	1
judicial proceeding. 1960-NMSC-137, ¶ 22. It did know that it was not asking to	2
expand its claims beyond those already on file with the OSE. The limit the OSE	3
imposed would tend to fix its rights—in isolation—before the judicial procedure	4
occurred. That might later work to its advantage or to its disadvantage, and might	5
work to the advantage or disadvantage of other claimants. Either scenario would	6
reduce the value and accuracy of the system-wide judicial action. All of these factors	7
support the decision in Reynolds.	8
{39} 	But Maley overstates the meaning and effect of the Reynolds holding. Maley	9
argues that the OSE does not have authority to engage in any decision making that	10
effects the nature or extent of declared water rights in the absence of a request to	11
change or move a right. We presume that the OSE generally does not preemptively	12
canvass its files looking for opportunities to challenge user rights. It reacts to matters	13
brought to its attention during the permitting process. Once brought to its attention,	14
however, the OSE must have the power to react to information in its own files as it	15
exercises its general supervisory powers over the waters of the State. See § 72-2-1.	16
The cases detailed above reflect instances in which the OSE has exercised that	17
power.	18
{40} 	Hanson—which Maley does not discuss in his briefing—exemplifies the	19
process. 2004-NMCA-069. As stated, in Hanson the applicant sought to change from	20

24
irrigation to subdivision use. Id. ¶ 1. The difficulty with her request did not lie in the	1
proposed change. There is no indication that the change of use affected any aspect	2
of the claimed right other than the final destination of the water. The problem was	3
that the applicant had not put any water to beneficial use, and as a result there was	4
no “water right” to be changed. Id. ¶¶ 1, 9-13. The same analysis applies here. The	5
OSE’s files contained information strongly suggesting that whatever rights Maley	6
and his predecessors might have claimed had been abandoned due to the passage of	7
time.	8
{41} 	Moreover, Maley is simply incorrect when he argues that his application to	9
repair the wells did not raise any issues that could bring into question the validity of	10
his declared rights. The request to repair the wells obviously implied that the wells	11
would be used to draw water after repair. Maley argues that he has the right to	12
appropriate water until a court decides he cannot. Appropriating water after a fifty-	13
two year hiatus must, as a practical matter, constitute a “change” sufficient to support	14
the OSE’s consideration of the validity of the declared rights. A declaration of water	15
rights provides prima facie evidence of the claimed right, but New Mexico courts	16
have recognized that the OSE has the authority to rebut presumptions created by pre-	17
1907 declarations. State ex rel. Martinez v. Lewis, 1994-NMCA-100, ¶ 9, 118 N.M.	18
446, 882 P.2d 37. The same must hold true for pre-basin declarations such as	19
Maley’s.	20

25
C. 	Resort to the System-Wide Procedures of NMSA 1978, Section 72-4-17	1
(1959) is Not Required in These Circumstances	2
{42} 	As explained above, there is nothing in the Water Code or in New Mexico’s	3
water law jurisprudence that explicitly prevents the OSE from addressing the issue	4
of the validity of Maley’s claimed right as it did. Maley’s assertion that the OSE’s	5
authority stops at the shore of Section 72-4-17, because all questions as to the	6
validity of water rights can only be dealt with by the courts is insupportable. The	7
question remains whether there are prudential reasons why we should reject the	8
OSE’s actions in this case. We conclude that there are none.	9
{43} 	First, as we noted above, the major aim of Section 72-4-17 actions is to	10
provide global relief and clarity to water users drawing from the same stream or	11
basin system. The opportunity to balance the competing claims of users with regard	12
to usage and priority dates is obviously important. The potential impact of a ruling	13
with system-wide effect is not appropriately left to the OSE’s administrative process	14
alone. The potential due process effects of such a ruling on nonparties is reason	15
enough to limit the OSE’s ability to act. An example of this concern is found in our	16
Supreme Court’s opinion Reynolds, cited above. There, the City argued that it was	17
the owner of the pueblo water right of the original Pueblo de Albuquerque. Reynolds,	18
1962-NMSC-173, ¶ 1. The OSE argued that it did not have the “jurisdiction to	19
adjudicate” the City’s pueblo rights claim. Id. ¶ 8. The Supreme Court agreed, noting	20
that a decision by the OSE on the matter would affect all other appropriators of the	21

26
Rio Grande and underground waters without notice of any kind to them. Such a	1
result would obviously be anathema to them, and the Court summarily dismissed the	2
argument. Id. ¶¶ 11-13.	3
{44} 	In contrast, there are no other users who might be affected by the OSE’s	4
administrative proceedings addressing the validity of Maley’s rights. The issue is of	5
concern only to him, and its resolution does not depend on anything except his ability	6
to provide evidence of beneficial use during the fifty-two year period prior to his	7
application for a permit. The OSE is frankly best suited to conduct the initial inquiry	8
and decide the issue in the first instance. There is no need to resort to the statutory	9
process.	10
{45} 	Neither are there any due process implications to allowing the issue to be	11
addressed initially in the OSE’s administrative process. First enacted in 1965, the	12
OSE’s hearing process has been in place for sixty years. See NMSA 1978, § 72-2-	13
12 (1965). The procedures outlined in the OSE’s regulations appear to be in order	14
and comprehensive. See 19.25.2 NMAC (11/1/1966 as amended through 8/30/2013).	15
In any event, Maley has not challenged the fairness or propriety of the OSE’s hearing	16
procedures. Perhaps most important is the de novo appellate process available under	17
NMSA 1978, Sections 72-7-1 to -3 (1907, as amended through 1971). Maley—and	18
others in the same position—have the right to have the courts review the OSE’s	19
rulings anew. It is difficult to perceive any prejudice to Maley in allowing the OSE	20

27
to rule first when its ruling is subject to review with no deference to the OSE’s	1
decision. As Maley has requested, the courts will have the final say in his case.	2
{46} 	Finally, we recognize that abandonment is a common law action. Intrepid	3
Potash, Inc., 2025-NMSC-040, ¶¶ 21-23. That fact by itself does not counsel, much	4
less compel, a conclusion that the issue should be considered only by the courts. The	5
OSE as an entity has decades of experience dealing with the entire range of issues	6
affecting the validity of water rights, including the concept of abandonment. And,	7
again, all OSE rulings are subject to de novo review on appeal.	8
CONCLUSION	9
{47} 	For the reasons explained above, we reverse the judgment of the district court	10
and remand for further proceedings consistent with this opinion.	11
{48} 	IT IS SO ORDERED.	12
____________________________________	13
MICHAEL D. BUSTAMANTE, Judge	14
Retired, sitting by designation.
WE CONCUR:	15
_________________________	16
J. MILES HANISEE, Judge	17
_________________________	18
MEGAN P. DUFFY, Judge	19