West Maricopa Combine, Inc. v. ADWR

Decision Date05 June 2001
Docket NumberNo. 1 CA-CV 00-0086.,1 CA-CV 00-0086.
Citation200 Ariz. 400,26 P.3d 1171
PartiesWEST MARICOPA COMBINE, INC., an Arizona corporation, Plaintiff-Appellant, v. ARIZONA DEPARTMENT OF WATER RESOURCES; Rita Pearson, in her capacity as the Director of the Arizona Department of Water Resources; 10K L.L.C., an Arizona limited liability company; and The Town of Buckeye, a municipal corporation, Defendants-Appellees.
CourtArizona Court of Appeals

Martinez & Curtis, P.C., By William P. Sullivan, Phoenix, Attorneys for Appellant.

Arizona Department of Water Resources Legal Division, By Michael J. Pearce, Chief Counsel, W. Patrick Schiffer and Charles L. Cahoy, Phoenix, Attorneys for Appellee Arizona Department of Water Resources and Rita Pearson.

Mack & Herold, P.C., By Richard H. Herold, and Richard V. Mack, Phoenix, Attorneys for Appellee 10K, L.L.C.

OPINION

THOMPSON, Judge

¶ 1 At issue is whether Arizona Revised Statutes Annotated (A.R.S.) § 45-173 (1994 & Supp.2000) authorizes West Maricopa Combine's (WMC) use of the Hassayampa riverbed to move Central Arizona Project (CAP) water through private property over the property owners' objection. Both the superior court and the Arizona Department of Water Resources (ADWR) found that the private property owners' real property rights trumped WMC's right to access CAP water via the Hassayampa riverbed. Based on Arizona's longstanding policy encouraging the full use of scarce water resources and the plain language of A.R.S. § 45-173, we reverse. We hold that the consent of streambed owners is not required before WMC may make beneficial use of an existing natural watercourse to move its appropriated water and for water storage purposes pursuant to A.R.S. § 45-811.01 (1994 & Supp. 2000).

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 WMC is an Arizona corporation and the sole shareholder of four corporations providing domestic water to Arizonans. Since 1987, WMC has held a subcontract allowing it the use of CAP water but has had no method of taking or storing that water.

¶ 3 CAP water runs from the Hoover Dam through much of Arizona. WMC proposes accessing the CAP at a location near the Hassayampa River. At that point, WMC will take its allotted apportionment of the CAP water and transfer it, via a water turn-out pipe, to the Hassayampa riverbed. From there the water will flow downstream and eventually soak into the ground. The water will replenish the natural aquifer and WMC, by virtue of its permit, will draw the groundwater from the aquifer through its downstream wells without exceeding its current groundwater allowance.

¶ 4 In furtherance of this plan, WMC applied to ADWR for a managed underground water storage facility permit pursuant to A.R.S. § 45-811.01 in July 1995.1 ADWR found that WMC's permit application was "complete and correct" and provided public notice of WMC's application pursuant to A.R.S. § 45-871.01 (1994 & Supp.2000). Four objections to the application were filed with ADWR, including objections by 10K L.L.C. (10K) and the Town of Buckeye (the town).2 The proposed permit would allow WMC to move CAP water through six miles of Hassayampa riverbed; approximately one and one-half miles of that riverbed runs through 10K's property. 10K adamantly protested any use of "10K's land" by WMC.

¶ 5 WMC filed an amended application for a permit after attempting to address some of the objections, including 10K's original protest, by moving the turn-out location. Subsequently, ADWR denied the objections and issued a conditional permit to WMC.3

¶ 6 10K and the town filed notices of appeal and requested a hearing before the Office of Administrative Hearings. A pre-hearing conference was held before an administrative law judge. 10K argued that WMC had no right to locate an underground storage facility in 10K's portion of the Hassayampa riverbed. 10K asserted that its private property rights were protected by A.R.S. § 45-814.01(H) (1994) and that the Arizona Legislature by virtue of A.R.S. § 37-1129.01 (1993) had disclaimed any ownership of the riverbed. The administrative law judge was persuaded by these arguments and issued an order recommending the denial of WMC's permit and denying any further hearings.

¶ 7 On February 5, 1999, Director of ADWR Rita Pearson issued a decision of the director adopting the administrative law judge's recommendation and rescinding WMC's permit. WMC filed a motion for rehearing and review. Director Pearson denied WMC's motion.

¶ 8 WMC next filed a complaint against ADWR in superior court under the Administrative Review Act, A.R.S. §§ 12-901, 914 (1992 & Supp.2000), claiming ADWR's decision to rescind WMC's permit was "arbitrary, capricious, contrary to law and invalid...." 10K and the town were also named defendants. 10K filed a motion for summary judgment. Again, 10K argued that the 10K section of the Hassayampa riverbed was its private property pursuant to A.R.S. § 37-1129.01 and that those property rights could not be disturbed under A.R.S. § 45-814.01. ADWR supported 10K's motion for summary judgment.

¶ 9 After oral argument, the superior court granted summary judgment against WMC. The superior court found that the decision of ADWR was "not contrary to law, not arbitrary or capricious nor an abuse of discretion...." 10K failed to include a request for attorneys' fees in the form of judgment submitted to and entered by Judge Schneider. WMC filed a timely notice of appeal. We have jurisdiction.

ISSUE RAISED ON APPEAL

¶ 10 Did the trial court err in affirming ADWR's recission of WMC's managed underground storage facility permit on the basis that WMC did not have the consent of property owner 10K?

STANDARD OF REVIEW

¶ 11 This court accepts an agency's factual findings unless they are arbitrary, capricious, or an abuse of discretion. See Rice v. Arizona Dept. of Economic Sec., 183 Ariz. 199, 201, 901 P.2d 1242, 1244 (App. 1995)

. An administrative agency's statutory interpretation, however, is reviewed de novo. See Brodsky v. Phoenix P.D. Ret. Sys. Bd., 183 Ariz. 92, 95, 900 P.2d 1228, 1231 (App. 1995). Thus, we independently review ADWR's statutory analysis of A.R.S. §§ 45-173 and 814.01(H) in the issuance of an underground water storage permit.

ANALYSIS

¶ 12 The legislature created a method for persons to apply for an underground storage facility permit. See A.R.S. § 45-811.01. Section 45-811.01 outlines five criteria to be considered in the grant of an underground storage facility permit. A.R.S. § 45-811.01(C)(1)-(5). The consent of private property owners is not mentioned.

¶ 13 Nevertheless, 10K argues that "[t]he essence of private property is the right to exclude others," including the right to exclude water from running through the natural riverbed traversing 10K's Arizona property. It argues that this right prevents WMC from locating an underground storage facility in the Hassayampa. 10K persuaded both the superior court and ADWR that any "invasion" of its real property was strictly prohibited by A.R.S. § 45-814.01(H).

¶ 14 Arizona is an arid desert and we have a policy predating statehood that encourages the full and beneficial use of scarce water resources. See, e.g., A.R.S. § 45-173. For the following reasons, we reverse and order that summary judgment be entered in favor of WMC. We begin our analysis with the plain language of A.R.S. § 45-173 and the historical context of that statute, and end by addressing 10K's arguments.

I. A.R.S. § 45-173 EXPLICITLY AUTHORIZES USE OF A NATURAL WATERWAY TO CARRY THE WATER OF ANOTHER

¶ 15 At issue is whether A.R.S. § 45-173 authorizes WMC's use of the Hassayampa riverbed to move water downstream. 10K argues that A.R.S. § 45-173 does not give WMC the right to "use 10K's real property" to run water down the naturally existing Hassayampa riverbed. We disagree.

¶ 16 Section 45-173 is titled "Use of natural waterway to carry water of another or for other water projects" and states in relevant part:

Although the waters which naturally flow in the natural channel of a stream have been previously appropriated and put to beneficial use by others, the channel may be used to carry water of another or used for the location of an underground storage facility ... if such use can be made without diminishing the quantity of water which naturally flows therein the use of which has been appropriated.

A.R.S. § 45-173(A)(emphasis added). A stream is:

a watercourse having a source and terminus, banks and channel, through which waters flow, at least periodically.... [It] does not lose its character as a watercourse even though it may break up and disappear.... [A] continuous flow of water is not necessary to constitute a stream and its waters stream waters.

S. Pac. Co. v. Proebstel, 61 Ariz. 412, 418, 150 P.2d 81, 83 (1944); see also Neal v. Hunt, 112 Ariz. 307, 311, 541 P.2d 559, 563 (1975)

.

¶ 17 The facts relevant to the application of this statute to this case are basically undisputed. It is undisputed that the Hassayampa is a natural watercourse. It is undisputed that WMC has rights to CAP water. There is no evidence disputing either 10K's ownership of the land or that the Hassayampa runs through it. There is no allegation that 10K has any rights to water flowing from either the CAP or the Hassayampa. There is no assertion that WMC's proposal would impair prior appropriators of this generally dry riverbed. Further, there is no dispute that WMC's proposed use is a beneficial use of the water. See A.R.S. § 45-151(B).

¶ 18 The plain language of A.R.S. § 45-173 specifically contemplates that private property be used to carry "water of another or used for the location of an underground storage facility." We are obligated to follow A.R.S. § 45-173. See Carden v. Golden Eagle Ins. Co., 190 Ariz. 295, 297, 947 P.2d 869, 871 (App.1997)

(citing Lowing v. Allstate Ins. Co., 176 Ariz. 101, 103, 859 P.2d 724, 726 (1993) (best way to give effect to the legislative intent is to follow the clear and unequivocal...

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