Q: What law pertains, Neighbor changed flow of storm water by blocking arroyo and thus causing damage to road and dwellings
A: The first question you have to answer is whether New Mexico treats an "arroyo" as a "watercourse" or as a mere "drainway" for precipitation. Most states disallow blockage of a "watercourse" (bed, banks and reasonably consistent source of water) unless permitted (e.g. right to build a dam). Permission is often a right ancillary to a water appropriation (the right to take water). If the arroyo is not a "watercourse" and/or the blocking party is not implementing a granted appropriation such that this is merely unauthorized diversion of storm water, retain local counsel to identify New Mexico's applicable surface water rules. Throughout the U.S. there are 3 common-law rules regulating surface water: "The Common Enemy Doctrine"; "The Natural Flow Rule"; and "The Reasonable Use Rule (or Doctrine)." That which a person can or cannot do turns on which of those rules the forum state is currently applying. Note that "The Reasonable Use Rule" is the newest of these rules so check recent cases. Older cases may no longer be controlling.
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