Casitas and Bounds: Two Cases That Could Change the Landscape of Groundwater Rights

Two recent court decisions may dramatically impact groundwater rights in the United States.  In Bounds v. New Mexico, CV-2006-166, County of Grant, Sixth Judicial Circuit (New Mexico, July 10, 2008), the Grant County Circuit Court struck down a state law that exempted domestic water wells from prior appropriation rules.  New Mexico Code § 72-12-1.1 states that the Office of the State Engineer “shall” issue domestic well permits and that domestic well applications are exempt from the notice and hearing requirements applicable to all other groundwater applications.

 The court found that New Mexico Code § 72-12-1.1 lacks any due process requirements to protect senior water rights from out of priority review of domestic well applications and is therefore unconstitutional.  The ruling has been appealed.

 In Casitas Municipal Water District v. United States, 543 F.3d 1276 (2008), the United States Court of Appeals for the Federal Circuit found that a required diversion of surface water pursuant to the Endangered Species Act amounted to a physical taking.  This finding means that these types of claims would be analyzed under a test that is much easier for landowners and water rights holders than the regulatory takings test.  Casitas conceded that it would not prevail under the regulatory takings test. This case likely applies to groundwater also.
The United States filed a motion to rehear, but the court rejected the motion.  Casitas Municipal Water District v. United States, 556 F.3d 1329 (2009).  The United States is presently considering whether to appeal to the United States Supreme Court.
Taken together, these cases, depending upon the outcomes, could dramatically alter groundwater rights in the United States.  The economic and legal consequences will be profound regardless of the ultimate outcomes.