McCutcheon defends against water theft allegations

Did Republican Sen. Steve McCutcheon, R-Carlsbad, steal water and try to hide it? Did Rep. Larry Scott, R-Hobbs, who is challenging McCutcheon for the N.M. Senate seat, do something similar?

In a come-out-swinging campaign for the Senate District 42 race, water has taken center stage and left McCutcheon defending himself over allegations he sought to circumvent New Mexico regulations to improperly permit a water well and then steal water from New Mexico.

An anti-McCutcheon campaign page funded by Scott’s campaign — www.realstevemccutcheon.com — includes photographs of documents about the water well in question, with a laundry list of allegations against McCutcheon.

“Steven McCutcheon is under a cease and desist order from the state for brazenly stealing drinking water from Carlsbad and Eddy County, and selling it at an enormous profit,” the website leads off after stating: “Steven McCutcheon is not who he pretends to be.”

The News-Sun reached out to the Office of the State Engineer and obtained documents concerning the well in question.

In an email response to the News-Sun, Maggie Fitzgerald, spokeswoman for the state engineer’s office, said McCutcheon was never issued an official court ordered cease and desist. Instead, she said he was issued a letter asking him to stop the water sales. The Aug. 30, 2023, letter regarding “Illegal diversion of water” from OSE states the “Permit holder Steven McCutcheon must immediately cease and desist water sales…” from the well in question and submit a plan or face legal action.

“The OSE did not issue a cease and desist order,” Fitzgerald said. “When the Water Rights staff became aware of the unpermitted use and contacted the permittee about the issue, he undertook the necessary steps to properly permit the activity.”

Had the water sales continued, Fitzgerald said the office would have started a formal cease and desist legal proceeding.

McCutcheon filed a permit to drill a new well for three acres of water rights a year in March 2023, according to OSE documents.

By August of 2023 it was learned by OSE staff the well, which was initially permitted to be used for livestock watering, was being used for commercial water sales.

“This was the fastest way to get the permit — not to mention free,” the website states of McCutcheon applying for the well as a livestock well.

But Fitzgerald said filing well permits such as for drinking or livestock are the same and not quicker one way or the other.

“Obtaining a permit for a livestock well is the same process as a permit for domestic use or drinking and sanitary use,” Fitzgerald said. “All three uses are permitted under the 72-12-1 statute.”

McCutcheon said he has never hidden the fact he was out of compliance and misused the well’s water.

He said the information was published last year on the State Engineer’s website and in the Carlsbad Current Argus newspaper when he filed for a change of use permit on the well.

“Yeah, I screwed up on that,” McCutcheon said, “but we were never trying to hide anything or not make it right. I feel like our good faith in trying to get this right is being overlooked.”

McCutcheon said he did not realize the well was not in compliance, and when he learned of it, he immediately set about correcting it.

Fitzgerald said McCutcheon applied for a change of use permit for the well at the end of August and the correct permit was issued by the OSE by Sept. 7.

Among the documents provided to the News-Sun is a series of letters, the last dated Dec. 14, 2023 concerning the illegal diversion of an estimated 65,000 barrels of water from the well designated for livestock watering to commercial sales.

The well, according to the documents, was permitted for three acre-feet a year of water withdraw and an estimated 8.41 acre-feet as pulled and sold commercially.

“Because McCutcheon never put a meter on the well, as is required by law, the state has to take his word for how much water he stole,” the campaign website claims.

Fitzgerald said the livestock well did not require a meter.

“Drinking and sanitary wells and commercial wells do require a meter,” Fitzgerald said. “The permittee (McCutcheon) installed a meter on the well to track the commercial sales. The information from the meter is how the OSE calculated the amount of water to be repaid. The well is now permitted with a drinking and sanitary purpose of use and does have a meter.”

The campaign website also claims McCutcheon has yet to pay back the water, but Fitzgerald said the repayment is in the works.

“The permittee has a pending application to transfer a water right to the well for the double repayment of water and also to permit the well for commercial use,” she said.

She said repaying the water is a lengthy process that requires transferring the prerequisite amount of water from another well owned by McCutcheon, in essence requiring him to use that much less water over the next year.

“He knew the laws about water. That’s how he knew how to steal it,” the website accuses, citing McCutcheon was appointed to the Brine Water Authority Commission by Gov. Michelle Lujan Grisham in 2020.

McCutcheon said working with the state engineer’s office has been a lengthy process and said he was unaware the original permit was filed incorrectly as a livestock-use permit.

“I had assumed everything was good and in compliance,” he said, adding he owns multiple water rights and commercial water sales locations, relying on a water rights specialist to file the paperwork accordingly. “Honestly, it was I had assumed everything was right with the other water rights we had, but it just wasn’t.”

The state’s documents do list a third party acting as an agent on behalf of McCutcheon.

McCutcheon added the attack pieces and website have blown the issue out of proportion and do not take into account the intricacies of dealing with state regulatory agencies.

“I am just appalled at their behavior,” he said. “We have tried to be extremely transparent through this whole deal. When you are working with the regulatory bodies, you end up out of compliance sometime. I was out of compliance. We will make it right. It is really being blown out of proportion. They are accusing me of pre-mediated criminal behavior.

“It is a complete farce.”

While McCutcheon said he is appalled by the hit pieces against him, he has not sat idly by, instead firing back on a Facebook ad.

“My opponent has had 10 such state violations and while his attacks are hypocritical, I think he also knows how heavy the regulatory hand in NM can be,” the ad states. “Anyone in the oil and gas business understands this too.”

The News-Sun reached out to McCutcheon to seek clarification on the allegation Scott also violated water permitting laws, but did not receive a response.

Fitzgerald said the OSE has no records to back up McCutcheon’s claims.
“We do not have any records of past violations for Larry Scott or Lynx Petroleum (the oilfield company in which Scott is a principal partner),” she said.

Scott said he’s never had any kind of water violation levied against him by any state agency.

“… He has misrepresented my voting record. He is now misrepresenting my business record,” Scott said. “I have never been issued a cease and desist order. I have never had a fine levered against my company for anything.”