A. The state engineer shall approve the application if the applicant has reasonably shown that his proposed use and location of use is a beneficial use and:

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(1)     will not impair any existing right to a greater degree than such right is, or would be, impaired by the continued use and location of use by the owner; and

(2)     will not be contrary to the conservation of water within the state or detrimental to the public welfare of the state.

B. In the case of annual allotments of project water leased to a special water users’ association from an irrigation district organized pursuant to N.M. Stat. Ann. Chapter 73, Article 10, if the state engineer determines that the proposed changes in place and purpose of use and point of diversion comply with the rules established pursuant to Subsection G of Section 73-10-48 N.M. Stat. Ann., the board of directors of the irrigation district may approve the application in accordance with the provisions of Section 73-10- 48 NMSA 1978.