This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff, a greenhouse operator, used hot water from wells on its property to heat its greenhouses. The water, heated by geothermal sources, was discharged after use. The Plaintiff claimed ownership of the geothermal resources under its property, while the United States asserted ownership of these resources as reserved minerals under the Stock-Raising Homestead Act. The Plaintiff sought to avoid paying royalties to the United States for using the geothermal heat (paras 2-5).
Procedural History
- Rosette Inc. v. United States (Rosette I), 141 F.3d 1394 (10th Cir. 1998): The Tenth Circuit held that the Plaintiff's exclusive remedy for challenging ownership of geothermal resources was under the Quiet Title Act, but the claim was barred by the Act's 12-year statute of limitations (para 7).
- Rosette Inc. v. United States (Rosette II), 64 F. Supp. 2d 1116 (D.N.M. 1999): The federal district court ruled that geothermal resources were reserved minerals under the Stock-Raising Homestead Act and belonged to the United States (paras 8-9).
- Rosette Inc. v. United States (Rosette III), 277 F.3d 1222 (10th Cir. 2002): The Tenth Circuit affirmed that geothermal resources are minerals reserved to the United States and that the Plaintiff must pay royalties for their use (para 9).
Parties' Submissions
- Plaintiff: Argued that New Mexico law governs its water rights, including the hot water used for heating greenhouses, and that water below 250°F is not a geothermal resource under state law. Claimed the district court had jurisdiction to adjudicate water rights and that federal law does not preempt state law in this context (paras 13-14).
- Defendant (United States): Asserted that the district court lacked jurisdiction to determine ownership of geothermal resources, as such claims must be brought under the Quiet Title Act. Argued that the Plaintiff's claims were barred by res judicata and collateral estoppel and that federal law governs geothermal resources, preempting state law (para 14).
Legal Issues
- Did the state district court have jurisdiction to determine ownership of geothermal resources claimed by the United States?
- Were the Plaintiff's claims barred by res judicata and collateral estoppel?
- Did the Plaintiff's claims fail on the merits under federal law, including the Stock-Raising Homestead Act and the Geothermal Steam Act?
- Does New Mexico's Section 71-5-2.1 exempt the Plaintiff from paying royalties for geothermal resources?
Disposition
- The Court of Appeals of New Mexico affirmed the district court's grant of summary judgment in favor of the United States and the dismissal of the Plaintiff's petition for adjudication of water rights (paras 74-76).
Reasons
Per Pickard J. (Alarid and Wechsler JJ. concurring):
Jurisdiction: The district court lacked jurisdiction to determine ownership of geothermal resources because such claims must be brought under the Quiet Title Act, which grants exclusive jurisdiction to federal courts. The McCarran Amendment does not waive sovereign immunity for claims challenging federal ownership of mineral interests (paras 17-29).
Res Judicata and Collateral Estoppel: The Plaintiff's claims were barred by res judicata and collateral estoppel. The federal courts had already determined that the geothermal resources were reserved minerals owned by the United States, and the Plaintiff could not relitigate these issues in state court (paras 30-44).
Merits under Federal Law: The Plaintiff's claims failed under the Stock-Raising Homestead Act and the Geothermal Steam Act. Federal law defines geothermal resources broadly, including heat conveyed by water, and requires royalty payments for their use. The Plaintiff's water rights do not include the right to use geothermal heat as a mineral interest (paras 45-58).
Section 71-5-2.1: The Court rejected the Plaintiff's argument that New Mexico law exempts water below 250°F from being a geothermal resource. The statute applies only to state-owned geothermal resources and does not alter federal law. The Supremacy Clause prohibits states from modifying federal law, and the Plaintiff remains obligated to pay royalties under the Geothermal Steam Act (paras 59-73).
The Court concluded that the Plaintiff's claims lacked merit and affirmed the district court's rulings (paras 74-76).