Village of Logan v. Eastern New Mexico Water Utility Authority

The Village of Logan (village) (plaintiff), located in Quay County, was authorized to enact local land-use zoning regulations promoting the health and safety of village residents. Landowners needed to apply for special-use permits to use their land in ways contrary to the applicable zoning designation. Eastern New Mexico Water Utility Authority (ENMWUA) (defendant) was a state agency created by the New Mexico legislature to develop a water delivery system for the local governments within its geographic authority, including the village. ENMWUA acquired Lot 11 in the village, which was zoned residential, and applied for and received a special-use permit to build a water intake structure on Lot 11. ENMWUA then determined it needed additional space and seized neighboring Lot 12 through its statutory eminent-domain powers. ENMWUA did not apply for a special-use permit on Lot 12. The village sued ENMWUA in district court seeking an injunction and a declaratory judgment that ENMWUA was subject to the village’s zoning regulations. ENMWUA countered, arguing it was immune from the village’s zoning regulations because it was a state agency. At trial, because the village and ENMWUA were sovereign equals, the village argued that the court should apply the balancing-of-interests test. ENMWUA argued instead for the statutory-guidance test, which would ensure legislative intent was preserved. The district court applied the statutory-guidance test and held that the New Mexico legislature intended ENMWUA to be immune from the village’s zoning laws. The village appealed.