Robin Silver, M.D.; United States of America, U.S. Department of the Interior, Bureau of Land Management; and Patricia Gerrodette, Plaintiffs/Appellees,
v.
Pueblo Del Sol Water Company, an Arizona corporation; Thomas Buschatzke, in his official capacity as Director of the Arizona Department of Water Resources; Arizona Department of Water Resources, an agency of the State of Arizona, Defendants/Appellants.
Appeal
from the Superior Court in Maricopa County The Honorable
Crane McClennen, Judge Nos. LC2013-000264 LC2013-000271
LC2013-000272
Opinion
of the Court of Appeals, Division One 241 Ariz. 131 (App.
2016) VACATED
Timothy M. Hogan, Arizona Center for Law in the Public
Interest, Phoenix; and Heidi J. McIntosh (argued),
Earthjustice, Denver, CO, Attorneys for Robin Silver, M.D.
F.
Patrick Barry, Katherine W. Hazard (argued), United States
Department of Justice, Washington, DC, Attorneys for United
States of America, U.S. Department of the Interior, Bureau of
Land Management
Daniel
J. Adelman, Arizona Center for Law in the Public Interest,
Phoenix; and Joy E. Herr-Cardillo, University of Arizona,
James E. Rogers College of Law, Tucson, Attorneys for
Patricia Gerrodette
William P. Sullivan (argued), Law Offices of William P.
Sullivan P.L.L.C., Phoenix, Attorneys for Pueblo Del Sol
Water Company
Kenneth C. Slowinski, Nicole D. Klobas, Janet L. Miller
(argued), Arizona Department of Water Resources, Phoenix,
Attorneys for Thomas Buschatzke and Arizona Department of
Water Resources
Jesse
Richardson, Jr., Law Offices of Jesse J. Richardson, Jr.,
Morgantown, WV; and L. William Staudenmaier, Snell &
Wilmer L.L.P., Phoenix, Attorneys for Amicus Curiae Water
Systems Council
JUSTICE LOPEZ authored the opinion of the Court, in which
VICE CHIEF JUSTICE BRUTINEL, and JUSTICES TIMMER and GOULD
joined. CHIEF JUSTICE BALES and JUSTICE BOLICK authored
separate opinions concurring in part and dissenting in part,
in which JUSTICE PELANDER joined. JUSTICE PELANDER issued an
opinion concurring in the partially dissenting opinions of
CHIEF JUSTICE BALES and JUSTICE BOLICK.
OPINION
LOPEZ,
JUSTICE
¶1
The issue in this case is whether the Arizona Department of
Water Resources ("ADWR") is required to consider
unquantified federal reserved water rights when it determines
whether a developer has an adequate water supply for purposes
of A.R.S. § 45-108. We hold that the statute does not
require ADWR to do so.
I.
FACTS AND PROCEDURAL HISTORY
¶2
This case arises out of a 2013 adequate water supply
designation by ADWR approving Pueblo Del Sol Water
Company's ("Pueblo") application to supply
water to a proposed development in Cochise County. Pueblo was
formed in 1972 and received a Certificate of Convenience and
Necessity ("CC&N") from the Arizona Corporation
Commission ("Commission") that year. Pueblo's
service area covers approximately 4800 acres of land in
Cochise County. Castle & Cooke, Inc., which owns Pueblo,
seeks to build a mixed-use development called
"Tribute," which would include about 7000
commercial and residential units near Sierra Vista. The
proposed development site is located approximately five miles
from the San Pedro River and is outside a statutory active
management area ("AMA"). See A.R.S. §
45-411(A) (identifying Arizona's AM As).
¶3
In 1988, Congress established the San Pedro Riparian National
Conservation Area ("SPRNCA") and delegated
management of SPRNCA to the Secretary of the Interior.
See 16 U.S.C. § 460xx-1(a). The Bureau of Land
Management ("BLM") manages national conservation
areas, including SPRNCA, on behalf of the U.S. Department of
the Interior. Congress also created an accompanying federal
reserved water right to fulfill SPRNCA's conservation
purpose and ordered the Secretary of the Interior to
"file a claim for the quantification of such rights in
an appropriate stream adjudication." Id. §
460xx-1(d). The right has a priority date of November 18,
1988, for purposes of establishing the federal
government's priority in the seniority system that
governs competing appropriation rights. Id. In
addition to its federal reserved water right, SPRNCA has a
1985 state certificate-based surface water right and other
pending state-based applications. SPRNCA's federal
reserved water right will eventually be quantified in the
Gila River General Stream Adjudication (the "Gila
Adjudication") but remains unquantified after nearly
thirty years of litigation.
¶4
Pueblo, which plans to provide the vast majority of
Tribute's water services, calculated that it would need
to increase its annual groundwater pumping from about 1430
acre-feet to 4870 acre-feet to meet Tribute's needs. When
Pueblo applied to ADWR for an adequate water supply
designation, BLM, Robin Silver, and Patricia Gerrodette
(collectively, "Plaintiffs") objected pursuant to
A.R.S. § 45-108.01(B). ADWR then issued a draft decision
and order finding that Pueblo's application satisfied the
"adequate water supply" requirements under A.R.S.
§ 45-108(I) by showing that water would be
"continuously, legally and physically available" to
satisfy Tribute's water needs "for at least one
hundred years" and that Pueblo possesses "financial
capability" to construct necessary water facilities.
Plaintiffs appealed, arguing, among other things, that the
increase in Pueblo's groundwater pumping would affect the
flow of the San Pedro River and would therefore conflict with
BLM's federal reserved water right.
¶5
The administrative law judge ("ALJ") agreed with
ADWR, concluding that Pueblo met its burden of demonstrating
that water would be continuously, legally, and physically
available. ADWR then issued an order affirming the ALJ's
decision. Plaintiffs filed complaints for judicial review,
which the superior court consolidated, but did not challenge
the ALJ and ADWR's finding that Pueblo met the physical
availability requirement.
¶6
The superior court vacated ADWR's decision, ruling that
the agency erred in concluding that Pueblo's water supply
is "legally available." The court reasoned that
ADWR was required to consider potential and existing legal
claims that may affect the availability of the water supply,
including BLM's unquantified federal water right. The
court also awarded Silver and Gerrodette attorney fees under
A.R.S. § 12-348 and the private attorney general
doctrine.
¶7
The court of appeals vacated the superior court's
decision and remanded the matter to ADWR. Silver v.
Pueblo Del Sol Water Co., 241 Ariz. 131, 134
¶¶ 4-5 (App. 2016). The court held that the
superior court erred in requiring ADWR to consider BLM's
unquantified water right under ADWR's legal availability
regulation, Arizona Administrative Code R12-15-718, and found
that regulation consistent with A.R.S. § 45-108(I).
Id. at 141-42 ¶¶ 36-37. However, the court
also concluded that, pursuant to ADWR's physical
availability regulation, A.A.C. R12-15-716, ADWR "must
use its knowledge and expertise" and apply its
"educated eye as to what the Gila Adjudication may
eventually determine to be BLM's water right" to
consider the impact of BLM's unquantified water right on
Pueblo's water supply. Id. at 143-44 ¶ 42.
¶8
All parties filed petitions for review in this Court. We
granted review because whether ADWR is required to consider
unquantified federal reserved water rights when determining
the adequacy of developers' water supplies presents an
issue of statewide importance. We have jurisdiction under
article 6, section 5(3) of the Arizona Constitution and
A.R.S. § 12-120.24.
II.
STANDARD OF REVIEW
¶9
We review issues of statutory interpretation de novo, Ariz.
Water Co. v. Ariz. Dep't of Water Res., 208
Ariz. 147, 151 ¶ 16 (2004), but will defer to an
agency's factual findings unless they are
"arbitrary, capricious, or . . . an abuse of
discretion," J. W. Hancock Enters., Inc. v.
Registrar of Contractors, 126 Ariz. 511, 513 (1980).
III.
ARIZONA WATER LAW AND THE FEDERAL RESERVED WATER RIGHTS
DOCTRINE
¶10
"Arizona law distinguishes groundwater from surface
water, even though such waters may be hydrologically
connected." Davis v. Agua Sierra Res., L.L.C.,
220 Ariz. 108, 110 ¶ 10 (2009). The doctrine of prior
appropriation governs surface water, including its subflow.
Id. at 110 ¶ 10, 112 ¶ 19. Prior
appropriation is "a seniority system determined by the
date on which the user initially puts water to a beneficial
use." In re Gen. Adjudication of All Rights to Use
Water in Gila River Sys. & Source (Gila V), 201
Ariz. 307, 310 ¶ 4 (2001). Senior rights-holders are
entitled to use their entire water allotments before junior
rights-holders receive any water. Id.
¶11
Groundwater, by contrast, is not subject to prior
appropriation, but is instead "governed by the
traditional common law notion that water percolating
generally through the soil belongs to the overlying
landowner, as limited by the doctrine of reasonable
use." In re Gen. Adjudication of All Rights to Use
Water in Gila River Sys. & Source (Gila II), 175
Ariz. 382, 386 (1993). "The doctrine of reasonable use
permits an overlying landowner to capture as much groundwater
as can reasonably be used upon the overlying land and
relieves the landowner from liability for a resulting
diminution of another landowner's water supply."
In re Gen. Adjudication of All Rights to Use Water in
Gila River Sys. & Source (Gila III), 195 Ariz. 411,
415 ¶ 7 n.3 (1999) (citing Bristor v. Cheatham,
75 Ariz. 227, 237-38 (1953)). Our legislature has codified
the right of overlying landowners to "[w]ithdraw and use
groundwater for reasonable and beneficial use" in areas
outside AMAs. A.R.S. § 45-453(1). AMAs are subject to
the more stringent "assured water supply"
regulations, see A.R.S. § 45-576, whereas
non-AMA areas are subject to "adequate water
supply" requirements, see § 45-108(A),
(I).
¶12
Although surface water and groundwater are governed by
different legal regimes in Arizona, both are subject to the
federal reserved water rights doctrine. See Gila
III, 195 Ariz. at 420 ¶ 31 (holding that the
federal reserved water rights doctrine applies to groundwater
in addition to surface water). Under that doctrine, when the
federal government creates a federal reservation of public
land, it also reserves "only that amount of water
necessary to fulfill the purpose of the reservation, no
more." Cappaert v. United States, 426 U.S. 128,
141 (1976). Determining the purpose of a reservation and
"the waters necessary to accomplish that purpose are
inevitably fact-intensive inquiries that must be made on a
reservation-by-reservation basis," Gila III,
195 Ariz. at 420 ¶ 31 (citing United States v. New
Mexico, 438 U.S. 696, 700 (1978)), and we construe
federal reserved water rights narrowly due to their
"disruptive effect in prior appropriation
jurisdictions," In re Gen. Adjudication of All
Rights to Use Water in Gila River Sys. & Source, 231
Ariz. 8, 13 ¶ 16 (2012).
¶13
The federal reserved water rights doctrine applies to
groundwater, but only "where other waters are inadequate
to accomplish the purpose of a reservation." Gila
III, 195 Ariz. at 420 ¶ 31; see also Agua
Caliente Band of Cahuilla Indians v. Coachella Valley Water
Dist., 849 F.3d 1262, 1271 (9th Cir. 2017). If a federal
reserved water right is infringed by groundwater pumping, the
federal government may obtain an injunction. See Gila
III, 195 Ariz. at 422 ¶ 38 (citing
Cappaert, 426 U.S. at 141). But any injunction that
issues must "be appropriately tailored to [the
reservation's] minimal need," and we do not apply
"a zero-impact standard of protection for federal
reserved rights." Id. Thus, the federal
reserved water rights doctrine effectively modifies the
doctrine of reasonable use, as codified in § 45-453,
because it restricts an overlying landowner's right to
pump groundwater to the extent required "to preserve the
waters necessary to accomplish the purpose of [a federal]
reservation." See Gila III, 195 Ariz. at 421-22
¶¶ 34-38.
¶14
Another regulation on the use of water in Arizona is the
adequate water supply designation process. Under A.R.S.
§ 11-823(A), a county, at its option, may require a
developer to obtain an adequate water supply designation from
ADWR before approving a new subdivision.[1] The director of
ADWR ("Director") is charged with determining
"whether there is an adequate water supply for the
subdivision." § 45-108(B). Section 45-108(I)
provides a two-part definition of "adequate water
supply." First, it means that "[s]ufficient
groundwater, surface water or effluent of adequate quality
will be continuously, legally and physically available to
satisfy the water needs of the proposed use for at least one
hundred years." § 45-108(I)(1). Second, it requires
a developer to demonstrate that it has "[t]he financial
capability . . . to construct the water facilities necessary
to make the supply of water available for the proposed
use." § 45-108(I)(2).
¶15
We consider in this case ADWR's regulations defining
physical and legal availability. With the background of
Arizona water law in mind, we turn first to the physical
availability regulation.
IV.
PHYSICAL AVAILABILITY
¶16
We agree with all parties that the court of appeals erred in
directing ADWR to consider BLM's unquantified federal
reserved water right under ADWR's physical availability
regulation. We interpret agency regulations according to
principles of statutory construction. Home Depot USA,
Inc. v. Ariz. Dep't of Revenue, 230 Ariz. 498, 501
¶ 10 (App. 2012). Accordingly, if a statutorily
authorized regulation is unambiguous, "we apply it
without further analysis." Glazer v. State, 237
Ariz. 160, 163 ¶ 12 (2015).
¶17
ADWR's physical availability regulation, A.A.C.
R12-15-716, requires an applicant for an adequate water
supply designation to submit a hydrologic study to the
Director that "accurately describes the hydrology of the
affected area." Id. R12-15-716(B). The
Director, in turn, "shall determine" that
groundwater is physically available if two requirements are
met. Id. First, the groundwater must be withdrawn
"from wells owned by the applicant or the proposed
municipal provider that are located within the service area
of the applicant or the proposed municipal provider."
Id. R12-15-716(B)(1)(a). Second, the groundwater
must be "withdrawn from depths that do not exceed the
applicable maximum 100-year depth-to-static water
level." Id. R12-15-716(B)(2). Here, the
applicable 100-year depth-to-static water level is "1200
feet below land surface" because the Tribute development
site is not located in an AMA and Tribute will not be a dry
lot development. See id.; see also id.
R12-15-701(36) (defining "[d]ry lot development" as
"a development or subdivision without a central water
distribution system"). Most relevant to the court of
appeals' holding is the regulation's requirement that
the Director consider, in calculating the projected 100-year
depth-to-static water level, "[t]he projected declines
[in the water level] caused by existing uses."
Id. R12-15-716(B)(3)(b); see also Silver,
241 Ariz. at 142 ¶ 39.
¶18
As Plaintiffs concede, Pueblo satisfies both prongs of the
physical availability regulation. Pueblo's wells are
located within its service area, which satisfies the first
prong. The uncontested evidence from Pueblo's hydrologic
model satisfies the second prong. The model shows that the
development's groundwater will be withdrawn from a
depth-to-static level of no greater than 650 feet after 100
years of pumping-well within the 1200-foot limit of A.A.C.
R12-15-716(B)(2).
¶19
Although BLM did not challenge ADWR's physical
availability finding in the superior court, the court of
appeals relied on the "existing uses" language in
A.A.C. R12-15-716(B)(3)(b) to require ADWR to consider
BLM's unquantified federal reserved water right.
Silver, 241 Ariz. at 142 ¶ 39. It reasoned that
"[t]he water supporting [SPRNCA] is . . . an
'existing use'" that ADWR must consider in
making its physical availability determination. Id.
But by ordering ADWR to assess the impact of "projected
declines" in groundwater supply caused by Pueblo's
pumping on BLM's "existing use," the court of
appeals misconstrued the physical availability regulation.
¶20
On its face, the regulation requires ADWR to do the converse.
Namely, it requires the agency to measure the impact of
"existing uses" on groundwater supply available for
an applicant, not the impact of the applicant's proposed
groundwater use on "existing uses." See
A.A.C. R12-15-716(B)(3)(b). The regulation operates to ensure
that enough groundwater is physically available in the
aquifer to meet the needs of the applicant, after accounting
for declines in supply "caused by existing uses."
See id. The regulation is not a mechanism for
considering potential legal disputes between groundwater
users. Because Pueblo indisputably satisfies both prongs of
the physical availability regulation, the court of appeals
erred in requiring ADWR to consider BLM's unquantified
federal reserved water right as part of the physical
availability analysis.
V.
LEGAL AVAILABILITY
¶21
Plaintiffs and our dissenting colleagues contend that
ADWR's legal availability regulation, A.A.C. R12-15-718,
is unenforceable because it is inconsistent with §
45-108(I). We disagree. Section 45-108(I) requires, in part,
that a proposed development's water supply be legally
available "to satisfy the water needs of the proposed
use for at least one hundred years," which Plaintiffs
and the dissents view as meaning the agency must consider
unquantified federal reserved water rights. A.A.C. R12-15-718
provides that a private water company (such as Pueblo) has a
"legally available" supply of groundwater when it
possesses a CC&N. See id. R12-15-718(B)(3)(a),
(C).
¶22
"Our primary goal in interpreting statutes is to
effectuate the legislature's intent" as expressed in
the statute's text. Rasor v. Nw. Hosp., LLC, 243
Ariz. 160, 164 ¶ 20 (2017). If a statute is unambiguous,
"we apply it without further analysis."
Glazer, 237 Ariz. at 163 ¶ 12. If a statute is
ambiguous, we may consider secondary tools of statutory
construction, including the prior-construction canon of
statutory interpretation. Cf. Moore v. Chilson, 26
Ariz. 244, 254 (1924) (recognizing the prior-construction
canon); see also In re Marriage of Friedman &
Roels, 244 Ariz. 111, 115 ¶ 14, 116 ¶ 20
(2018) (applying the prior-construction canon). According to
that canon, "[i]f a statute uses words or phrases that
have already received . . . uniform construction by . . . a
responsible administrative agency, they are to be understood
according to that construction." Antonin Scalia &
Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts 322 (2012). The canon applies whenever the
"administrative interpretation antedates the
[legislative] enactment" because in such cases,
"[t]he term has acquired . . . a technical legal
sense," apart from its ordinary meaning, "that
should be given effect." Id. at 324; see
also Fed. Deposit Ins. Corp. v. Phila. Gear Corp., 476
U.S. 426, 437 (1986) ("When the statute giving rise to
the longstanding [agency] interpretation has been reenacted
without pertinent change, the 'congressional failure to
revise or repeal the agency's interpretation is
persuasive evidence that the interpretation is the one
intended by Congress.'" (quoting NLRB v. Bell
Aerospace, 416 U.S. 267, 275 (1974))); Bell
Aerospace, 416 U.S. at 274-75 ("[A] court may
accord great weight to the longstanding interpretation placed
on a statute by an agency charged with its
administration.").
¶23
Here, the term "legally available" is ambiguous
concerning consideration of unquantified federal reserved
water rights. In fact, the statutory scheme is silent on the
issue. It does not mention federal reserved water rights at
all, nor does it define "legally available." It is
also not apparent from the term's plain language that it
encompasses unquantified water rights that cannot be enforced
now (or possibly ever) to enjoin a developer's
groundwater pumping. "Legally available" could be
interpreted as requiring ADWR to consider every conceivable
water right that might someday affect a prospective
developer's right to pump groundwater. Alternatively, it
could mean that ADWR is only required to consider conflicting
rights that are presently enforceable, or that a developer
has a right to pump groundwater pursuant to the reasonable
use doctrine. In other words, "legally available"
is a broad phrase that could be interpreted in myriad ways.
Indeed, it is a textbook example of a term that is
"[c]apable of being understood in either of two or more
possible senses" or "[u]ncertain as regards course
or outcome" -the dictionary definitions of
"ambiguous." Ambiguous, Webster's
Second New International Dictionary 81 (1949).
¶24
Chief Justice Bales' dissent hinges on the premise that
"legally available" is unambiguous and requires
ADWR to consider unquantified federal reserved water rights.
He reasons that "[i]f the legislature had meant that a
CC&N alone could establish 'legal availability,'
it could have easily said so." Infra ΒΆ 54.
However, the legislature could have also said that "ADWR
shall consider unquantified federal reserved water rights in
making its legal availability ...