A. As used in this section:

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(1)     “annual allotment of project water” means that portion of the pro rata share of water, determined by the irrigation district to be available to assessed acreage within the district each year, for which an adjudication subfile order has been entered or an offer of judgment has been irrevocably accepted by the landowner and the state;

(2)     “irrigation district” means an irrigation district organized pursuant to N.M. Stat. Ann. Chapter 73, Article 10; and

(3)     “public utility” means a utility that supplies water to municipalities or counties.

B. A municipality, county, state university, member-owned community water system or public utility within New Mexico may establish a “special water users’ association” to lease the use of water from landowners in an irrigation district if:

(1)     the municipality, county, state university, member-owned community water system or public utility supplies or proposes to supply water for municipal and industrial uses, at least a portion of which is supplied to persons within the boundaries of an irrigation district; and

(2)     the irrigation district and the state engineer approve of the establishment of the association.

C. The interstate stream commission may establish a special water users’ association with the approval of the irrigation district.

D. A special water users’ association may lease the use of the annual allotment of project water directly from a member of the irrigation district or through the irrigation district. The association shall appear as record owner of lands from which water is leased during the term of the lease on the irrigation district’s assessment rolls for the purpose of irrigation district annual assessments, levies, tolls, charges and other fees for annual allotments of project water leased by the association, which shall be paid by the association to the irrigation district during the term of the lease.

E. The irrigation district may:

(1)     consolidate assessments of district members leasing to a special water users’ association and assess the association for the total assessed acreage of those district members;

(2)     coordinate the delivery of leased annual allotments of project water to the association;

(3)     make assessments and levies on lands with appurtenant water rights within the association;

(4)     charge reasonable administrative fees to the association; and

(5)     adopt rules to carry out the provisions of this section.

F. An irrigation district may approve a lease of an annual allotment of project water by a special water users’ association for:

(1)     a change in the place of use or point of diversion of the leased water within or without the boundaries of the district; or

(2)     a change in the purpose of use of the leased water within or without the boundaries of the district for:

(a) a water treatment plant to supply water for municipal and industrial uses;

or

(b) the purpose of meeting interstate compact delivery requirements of project water to Texas.

G. The state engineer shall adopt rules establishing criteria governing changes in place or purpose of use or point of diversion of annual allotments of project water for determining the areas of use and purposes of use of water leased by a special water users’ association. The rules shall ensure that the proposed changes will be a beneficial use, will not result in an increase in net depletions of water, will not impair existing water rights, are not contrary to the conservation of water within the state and are not detrimental to the public welfare of the state.

H. The special water users’ association shall submit to the state engineer on a form prescribed by the state engineer all information required to determine whether the association and its proposed changes in place and purpose of use and point of diversion of water are in compliance with the state engineer’s rules. If the state engineer determines that the proposed changes are in conformity with the rules, the association shall be notified and the state engineer shall publish, in a newspaper of general circulation in the county in which the changes are located at least once a week for three consecutive weeks, the application and notice that the proposed changes in place and purpose of use and point of diversion conform to the state engineer’s rules. Objections by a person owning water rights within the district’s boundaries and whose water rights may be impaired by the state engineer’s decision may be filed with the state engineer and served by certified mail within ten days after the last publication of the notice. The state engineer shall issue a decision in answer to an objection within thirty days of the filing of the objection. The protestant may appeal that decision directly to the district court within thirty days of notice by certified mail of the state engineer’s decision. Appeals to the district court shall be limited to review of whether the state engineer’s decision was made in accordance with the rules, and a jury trial shall not be allowed. Once the state engineer’s approval of the application is final, the irrigation district may then approve the changes authorized in Subsection F of this section pursuant to the irrigation district approval process described in Subsection I of this section.

I. The board of directors of the irrigation district shall publish notice at least once a week for three consecutive weeks, in a newspaper of general circulation published within the county where the office of the irrigation district is located, of the board’s intention to consider a resolution to allow the lease of the use of annual allotments of project water. The notice shall indicate the owners and location of lands from which annual allotments of project water will be leased and any change in point of diversion, place or purpose of use of that water and the period of the lease. The board may approve the lease if it finds it to be in the best interest of the district. Members of the district whose water rights may be affected by the lease may protest at the meeting at which the resolution is being considered. The board shall take formal action upon the resolution and shall give notice to all protestants of the board’s decision. A protestant may appeal to the district court from any action taken by the board upon the resolution. An appeal shall be filed with the court and notice served on the parties within ten days of receipt of notice of the board’s adoption or rejection of the resolution. The appeal shall be on the record of the hearing before the irrigation district board and a right of trial by jury shall not be allowed.