384 P.3d 814 (Ariz.App. Div. 1 2016), 1 CA-CV 14-0811, Silver v. Pueblo Del Sol Water Co.

Docket Nº:1 CA-CV 14-0811
Citation:384 P.3d 814, 241 Ariz. 131
Opinion Judge:Jon W. Thompson, Presiding Judge.
Party Name:ROBIN SILVER, M.D.; UNITED STATES OF AMERICA, U.S. DEPARTMENT OF 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,...
Attorney:For Silver, Plaintiff/Appellee: Heidi J. McIntosh (pro hac vice), Cynthia Christine Tuell, Earthjustice, Denver, Colorado. For United States of America et al., Plaintiff/Appellee: John L. Smeltzer, R. Lee Leininger, Katherine J. Barton (pro hac vice), U.S. Department of Justice Environment & Natu...
Judge Panel:Presiding Judge Jon W. Thompson delivered the opinion of the Court, in which Judge Maurice Portley (Retired) and Judge Patricia K. Norris joined.
Case Date:November 08, 2016
Court:Court of Appeals of Arizona
 
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Page 814

384 P.3d 814 (Ariz.App. Div. 1 2016)

241 Ariz. 131

ROBIN SILVER, M.D.; UNITED STATES OF AMERICA, U.S. DEPARTMENT OF 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

No. 1 CA-CV 14-0811

Court of Appeals of Arizona, First Division

November 8, 2016

Page 815

Appeal from the Superior Court in Maricopa County. No. LC2013-000264-001. LC2013-000271-001. LC2013-000272-001 (Consolidated). The Honorable Crane McClennan, Judge, Retired.

For Silver, Plaintiff/Appellee: Heidi J. McIntosh (pro hac vice), Cynthia Christine Tuell, Earthjustice, Denver, Colorado.

For United States of America et al., Plaintiff/Appellee: John L. Smeltzer, R. Lee Leininger, Katherine J. Barton (pro hac vice), U.S. Department of Justice Environment & Natural Resources Division, Washington, D.C.

For Patricia Gerrodette, Plaintiff/Appellee: Joy Herr-Cardillo, Timothy M. Hogan, And David McDevitt, Arizona Center for Law in the Public Interest, Phoenix.

For Pueblo, Defendant/Appellant: William P. Sullivan, Law Office of William P. Sullivan, P.L.L.C., Phoenix.

For ADWR et al., Defendant/Appellant: Kenneth C. Slowinski, Nicole D. Klobas, Janet L. Miller, Arizona Department of Water Resources, Phoenix.

For Leshy and Glennon, Amicus Curiae: Bruce A. Burke, Law Office of Bruce A. Burke, P.C., Tuscon.

For Water Systems Council, Amicus Curiae: Jesse Richardson, Jr. (pro hac vice) And Snell & Wilmer, L.L.P., Phoenix, L. William Staudenmaier, Law Offices of Jesse J. Richardson Jr., Morgantown, West Virginia.

For Freeport Minerals Corporation, Amicus Curiae: Sean T. Hood, Rhett A. Billingsley, Fennemore Craig, P.C., Phoenix.

Presiding Judge Jon W. Thompson delivered the opinion of the Court, in which Judge Maurice Portley (Retired) and Judge Patricia K. Norris joined.

OPINION

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[241 Ariz. 133] Jon W. Thompson, Presiding Judge.

[¶1] This is an Adequate Water Supply Designation (AWSD or Designation) case. We are asked to decide whether the superior court erred by reversing the decision of the Arizona Department of Water Resources (ADWR or Department) approving the application by Pueblo Del Sol Water Company (Pueblo) to allow its development in Cochise County to proceed. We are also asked to decide whether the Department erred by not considering the unquantified federal water rights reserved to the United States Department of the Interior, Bureau of Land Management (BLM). Finally, we are asked to determine whether the court erred by awarding the individual plaintiffs, Robin Silver, M.D., and Patricia Gerrodette, attorneys' fees.

[¶2] By statute, " Adequate Water" is " [s]ufficient groundwater, surface water or effluent of adequate quality [that] will be continuously, legally and physically available to satisfy the water needs for the proposed use for at least one hundred years" and requires that the proposed user has demonstrated the " financial capability . . . to construct the water facilities necessary to make the supply of water available for the proposed use, including a delivery system and any storage facilities or treatment works." Ariz. Rev. Stat. (A.R.S.) § 45-108(I) (2009) (emphasis added).

[¶3] At issue is whether ADWR was required to consider the unquantified federal water rights of BLM in determining whether such water was statutorily available to Pueblo. Specifically, BLM asserts the Department erred in its " legally available" analysis. BLM and the individual plaintiffs (collectively, unless

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[241 Ariz. 134] identified separately, Plaintiffs) additionally argue Pueblo's proposed pumping will eventually interfere with the San Pedro Riparian National Conservation Area's (Conservation Area) water rights.

[¶4] We uphold the Department's interpretation of " legally available," as outlined in its regulation R12-15-7181, finding the Department's interpretation serves a valid purpose in the context of the entire application process. The Department's AWSD process, when taken as a whole, adequately considers whether sufficient water will be continuously, legally, and physically available to satisfy the needs of the proposed user for at least one hundred years and insures that the proposed user has the financial capability to construct, store, and deliver that supply of water. See A.R.S. § 45-108(I). Nevertheless, as we also explain, during the regulatory process, the Department must consider BLM's unquantified federal water rights in determining whether Pueblo has demonstrated the availability of " adequate water" under A.R.S. § 45-108. Accordingly, we vacate the superior court's judgment in favor of Plaintiffs.

[¶5] Further, we remand this matter back to the Department. On remand the Department shall give educated consideration to the unquantified priority federal reserved water rights of BLM, until such amount is quantified in the General Stream Adjudication for the Gila River System and Source (Gila Adjudication). After the quantification in the Gila Adjudication, the quantified amount must be included in the AWSD process. The Department is not required to consider separately the potential impact of proposed pumping on area streams or the San Pedro River. Further, ADWR is not required to consider the potential impact of proposed pumping on either the San Pedro Riparian National Conservation Area or on the Conservation Area's water right. We also vacate the $155,861.50 in attorneys' fees awarded to Plaintiffs Silver and Gerrodette.

FACTUAL AND PROCEDURAL HISTORY

A. San Pedro Riparian National Conservation Area

[¶6] The San Pedro River flows from northern Mexico through southeastern Arizona for approximately 130 miles until it joins with the Gila River at Winkelman, Arizona. The San Pedro River is one of the few remaining free-flowing and undammed rivers in the desert southwest and it is home to diverse flora and fauna.2 The town of Sierra Vista, the military installation Fort Huachuca, and most of the Conservation Area are located within the Sierra Vista Subwatershed.

[¶7] In 1988, the United States Congress designated approximately 36 miles of the San Pedro River basin as a national conservation area. At the same time, Congress created a federal water reserve right for the Conservation Area " in a quantity sufficient to fulfill the purpose" of protecting " the riparian area and the aquatic, wildlife, archeological, paleontological, scientific, cultural, educational, and recreational resources of the public lands surrounding the San Pedro River." 16 U.S.C. § § 460xx, (a), -1(d); Arizona-Idaho Conservation Act of 1988, Pub. L. No. 100-696, 102 Stat. 4571.

[¶8] The Department of the Interior, through BLM, is mandated to manage the Conservation Area, and in 1989 BLM asserted a water rights claim in the Gila Adjudication.[3] At this time, the Gila Adjudication has been active for approximately 40 years. ADWR is a technical advisor in the Gila Adjudication.

[¶9] Since 1989 BLM has filed three amended federal statements of claim for the Conservation Area that cover the full range of surface water and groundwater. The Conservation Area has both a 1988 priority reserved federal water right and a 1985 state certificate-based water right (CWR No. 33-90103),

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[241 Ariz. 135] as well as two or more state-based pending applications.

[¶10] BLM's federal reserved rights will be quantified in the Gila Adjudication. See Pub. L. 100-696. The Gila Adjudication has exclusive jurisdiction to adjudicate the conflicting claims and water rights. In re the Gen. Adjudication of all Rights to Use Water in the Gila River Sys. & Source (Gila III), 195 Ariz. 411, 416, ¶ 12, 989 P.2d 739, 744 (1999) (holding federal reserved water rights could be invoked to protect groundwater from diversion) (citing to the McCarran Amendment, 43 U.S.C. § 666(a)).

[¶11] As explained below, calculating BLM's water rights is not a straightforward mathematical equation. BLM's asserted federal and state water rights do not cover the exact same geographic area. BLM's water right claims do not serve identical purposes or claim identical water sources. Finally, importantly, BLM's federal claim and state water volume claims are not identical.

B. Pueblo Del Sol's Application

[¶12] Pueblo is a private water company.4 Pueblo's service area covers more than 4,000 acres and is located, variously, 4.5 to 5 miles from the San Pedro River. In June 2011, Pueblo filed an application for an AWSD through the year 2032. Such a designation would allow Pueblo to pump groundwater for the Tribute Master Planned...

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