ALJDEC decisions subject to certification as final

20A-SW002-DWR · Department of Water Resources · 2021-08-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Decision of Director to Deny Amended Application to Partially Sever and Transfer Salt River Project Agricultural Improvement and Power District's Statement of Claim of Right No. 36-105209

No. 20A-SW002-DWR

ADMINISTRATIVE LAW JUDGE

DECISION

Pending before the Office of Administrative Hearings is Salt River Project’s (SRP) Motion for Summary Judgment or Motion in Limine to Exclude Evidence or Argument RE Matters Extrinsic to A.R.S. § 45-172(A) (Motion for Summary Judgment).

In the Motion for Summary Judgment, SRP argued that, pursuant to Arizona Supreme Court’s precedent, the authority of Arizona Department of Water Resources (ADWR or the Department) “to deny a properly filed application for the severance and transfer of water rights is defined by the ‘limitations and conditions’ set forth in § 45-172(A).” SRP argued that ADWR exceeded its authority when it denied the application to sever and transfer existing water rights because A.R.S. § 45-172(A) does not include ADWR’s stated grounds for the denial that “the quantity of surface water [SRP] proposed to sever and transfer for the purposes of wildlife cannot be put to beneficial use, which is the measure and limit to the use of surface water under A.R.S. § 45-142(B) [sic].” SRP asserted that because “beneficial use” is not included in A.R.S. § 45-172(A), ADWR could not invoke “beneficial use” to justify the denial.

In its response to the Motion for Summary Judgment, ADWR argued that there were genuine issues of material fact at issue in this matter and that “SRP did not sustain its burden of proving that the quantity of water proposed to be severed and transferred would be put to beneficial use at the new place of use, which . . . is required by [A.R.S. §] 45-172(A).”

/ / / /

Background

On or about January 7, 2003, SPR acquired property known as the Black Farm Preserve (Black Farm). On or about May 20, 2004, SRP filed Statement of Claim of Right No. 36-105209 (Statement of Claim) with the Department. Under the Statement of Claim, SRP claimed a right to divert and beneficially use up to 1,692.5 acre-feet per annum (AFA) of appropriable water from Aravaipa Creek, a tributary to the San Pedro River, within the San Pedro River Watershed for the irrigation of 107.80 acres of land.

The priority dates of first beneficial use claimed in the Statement of Claim were December 28, 1865, for the irrigation of 101.20 acres of land and January 1, 1969, for the irrigation of 6.60 acres of land.

The water rights asserted in the Statement of Claim were not appurtenant to lands within the exterior boundaries of any irrigation district, agricultural improvement district, or users’ association for purposes of A.R.S. § 45-172(A)(4).

On or about September 30, 2005, SRP filed an application (Application) with the Department to sever and transfer the Statement of Claim pursuant to A.R.S. § 45-172.

In compliance with A.R.S. § 45-172(A)(5), SRP provided evidence that on May 5, 2005, the governing body of the San Carlos Irrigation and Drainage District consented to the Application. SRP complied with the requirements of A.R.S. § 45-172(A)(5).

The Application sought to sever and transfer 1,692.5 AFA from irrigation use to an instream flow use on Aravaipa Creek. SRP stated it would stop pumping water from the Well, to use the water for an instream flow use within the reach of Aravaipa Creek flowing through the Black Farm Preserve for the beneficial use of wildlife; specifically, for the Southwestern Willow Flycatcher and the Yellow-Billed Cuckoo.

Under A.R.S. § 45-172(A), a water right may be severed and transferred to the State or its political subdivision for wildlife purposes. SRP is a political subdivision of the State; therefore, the Application fell within the scope of A.R.S. § 45-172(A).

The proposed place of use for the 1,692.5 AFA of water to be severed and transferred in the Application is the reach of Aravaipa Creek that flows through the northern portion of the Black Farm Preserve.

The Application proposed monthly distributions of the 1,692.5 AFA of water to be severed and transferred. The monthly distributions were based on evapotranspiration maps in Reference Evapotranspiration Estimates for Arizona, Technical Bulletin 266, Muluneh Yitayew (Technical Bulletin 266).

On or about August 30, 2006, the Department deemed the Application administratively complete.

By letters dated November 29, 2006 (First Amendment) and May 13, 2011 (Second Amendment), SRP amended the Application.

The First Amendment amended the Application to reflect a partial severance and transfer. The First Amendment indicated that the water right for 6.6 irrigated acres would stay with the land to which it was appurtenant. SRP reduced the quantity of water, and associated irrigated acres, to be severed and transferred from 1,692.5 AFA for the irrigation of 107.80 acres, to 1,588.8 AFA for the irrigation of 101.2 acres.

The Second Amendment amended the proposed place of use listed in the Application to include only the reach of Aravaipa Creek that runs through the northern portion of the Black Farm Preserve property. The Second Amendment included a reduction in historically irrigated land from 101.2 acres to 90.43 acres due to acres lost to flooding. SRP reduced the quantity of water to be severed and transferred from 1,588.8 AFA to 1,419.7 AFA.

The Second Amendment proposed monthly distributions of the 1,419.7 AFA of water to be severed and transferred. The monthly distributions were based on Technical Bulletin 266 and are as follows: January 39.8 AF, February 55.4 AF, March 82.3 AF, April 127.8 AF, May 180.3 AF, June 222.9 AF, July 207.3 AF, August 167.5 AF, September 146.2 AF, October 95.1 AF, November 61.0 AF and December 34.1 AF.

In response to the Department’s October 29, 2010 request for additional information, including an explanation as to how the flow of Aravaipa Creek will be augmented for the benefit for wildlife, SRP stated, among other things: “By eliminating the diversion of water from Aravaipa Creek, or more recently from its subflow, for the irrigation of more than 90 acres of land [ ] through the severance and transfer, hydrologic conditions within the subflow zone will likely improve over time, which in turn is expected to support the establishment and maintenance of riparian vegetation.”

In 2013, ADWR provided public notice of SRP’s amended application pursuant to A.R.S. § 45-172(A)(7). Several objections were filed, and ADWR stayed further action on the Second Amended Application at SRP’s request. By 2018, each of the objections had been withdrawn by agreement, subject to certain conditions.

In 2019, SRP provided surface flow and groundwater level data to ADWR in support of its Second Amended Application.

On August 3, 2020, the Director issued the Decision and Order (Decision) denying the Application, as amended, because SRP did not sustain its burden of proving water could be put to beneficial use for wildlife purposes after the transfer of its claimed water right to the new place of use.

In the Decision, the Director found that the quantity of water claimed in the Application, as amended, did not exceed SRP’s vested rights at the time of the severance and transfer pursuant to A.R.S. § 45-172(A)(2). The Director also determined that the priority date for the water rights asserted in the Statement of Claim is December 28, 1865. The Director further found that the water rights asserted in the Statement of Claim were lawfully perfected under the laws of the Territory of Arizona as required in A.R.S. § 45-172(A)(3) and the proposed severance and transfer of Claim No. 36-105209 did not interfere with vested or existing rights under A.R.S. § 45-172(A)(2).

In 2020, SRP filed a Notice of Appeal, and in 2021 filed its Motion for Summary Judgment contending the Director lacked authority to deny SRP’s Second Amended Application on beneficial use grounds.

Statutes

A.R.S. § 45-141(B) provides that “[b]eneficial use shall be the basis, measure and limit to the use of water.”

A.R.S. § 45-151 provides, in pertinent part, as follows:

A. Any person, the state of Arizona or a political subdivision thereof may appropriate unappropriated water for domestic, municipal, irrigation, stock watering, water power, recreation, wildlife, including fish, nonrecoverable water storage pursuant to section 45-833.01 or mining uses, for his personal use or for delivery to consumers. The person, the state of Arizona or a political subdivision thereof first appropriating the water shall have the better right.

B. To effect the beneficial use, the person, the state of Arizona or a political subdivision thereof appropriating the water may construct and maintain reservoirs, storage facilities pursuant to chapter 3.1 of this title, dams, canals, ditches, flumes and other necessary waterways.

A.R.S. § 45-172 provides, in pertinent part, as follows:

A. A water right may be severed from the land to which it is appurtenant or from the site of its use if for other than irrigation purposes and with the consent and approval of the owner of such right may be transferred for use for irrigation of agricultural lands or for municipal, stock watering, power and mining purposes and to the state or its political subdivisions for use for recreation and wildlife purposes, including fish, without losing priority theretofore established, subject to the following limitations and conditions:

1. Except as otherwise provided in this section no such severance or transfer shall be made unless approved by the director, and the approval of the director shall prescribe the conditions of the approval.

2. Vested or existing rights to the use of water shall not be affected, infringed upon nor interfered with, and in no event shall the water diverted or used after the transfer of such rights exceed the vested rights existing at the time of such severance and transfer, and the director shall by order so define and limit the amount of water to be diverted or used annually subsequent to such transfer.

Arizona Department of Water Resources v. McClennen

The Arizona Supreme Court decision in McClennan is particularly applicable to the instant matter. As the Department argued to the Court and the Court concluded, A.R.S. § 45-172 “identifies the only ground on which ADWR can deny a properly filed application to sever and transfer a water right.”

In its analysis, the Court considered numerous arguments like those presented by the Department here. In McClennan, Mohave County, as an interested person, filed an objection to the proposed severance and transfer.

Mohave County argued that the Department had authority under A.R.S. § 45-153(A) to deny applications for appropriation of water if, among other things, the proposed use would be “against the interests and welfare of the public.” Mohave County urged that the Department was similarly authorized to deny an application for severance and transfer if the proposed use would be against the interest and welfare of the public.

The Court concluded that A.R.S. § 45-153(A) was not applicable because it applied to initial appropriations of water, which were not at issue. “That the legislature directed ADWR to consider the public interest in § 45-153(A) but omitted any such directive in § 45-172 itself suggests that the latter statute more narrowly defines ADWR’s authority in reviewing applications for severance and transfer.”

Similarly, the Department in the instant matter argued that because A.R.S. § 45-141(B) and A.R.S. § 45-151(A) and (B) limits water usage to “beneficial use” and maintained that there is no water right without beneficial use in Arizona, any application under A.R.S. § 45-172 must establish a beneficial use for the proposed severance and transfer.

As in McClennan, it is notable that the Arizona legislature included “beneficial use” as a requirement for an appropriation of a water right in A.R.S. § 45-141(B) and A.R.S. § 45-151(A) and (B), but did not include “beneficial use” as a requirement for severances and transfers in A.R.S. § 45-172(A). Further, A.R.S. § 45-172(A) did not explicitly include in any of the subsections a requirement that the severance and transfer must be for a beneficial use. To paraphrase the Court in McClennan, that the legislature directed the Department to consider the beneficial use in A.R.S. § 45-141(B) and A.R.S. § 45-151(A) and (B) but omitted any such directive in § 45-172 itself suggests that the latter statute more narrowly defines the Department’s authority in reviewing applications for severance and transfer.

In McClennan, Mohave County also noted that A.R.S. § 45-172(A) states that a water right “may be severed . . . and . . . transferred” and argued that the use of “may” suggested that the Department had discretion to deny a severance and transfer application for reasons other than those identified in A.R.S. § 45-172(A). The Court in McClennan concluded that “[w]hen read in context however, ‘may’ is more plausibly understood as referring to the ability to sever and transfer the right . . . rather than defining ADWR’s authority in reviewing applications.” The Court also noted that “[t]o interpret ‘may’ as affording ADWR broad discretion to deny or condition applications for reasons other than those set forth in § 45-172(A) would effectively ignore the limiting language that appears in the same sentence.”

In the instant matter, the Department asserted that, because A.R.S. § 45-172(A)(1) and (2) requires that the Director approve of a severance and transfer and the approval must “prescribe the conditions of the approval” and “define and limit the amount of water to be diverted or used annually subsequent to such transfer,” the Director may limit the amount of water to be diverted and condition the approval on the water being used for beneficial uses.

Just as the Court considered the argument in McClennan, accepting the Department’s argument that the Director is empowered to unilaterally prescribe the conditions of the approval would effectively gut the rest of the requirements of A.R.S. § 45-172.

Conclusion

While there may be some genuine issues of certain facts involved in the global matter, the relevant inquiry to address the Motion for Summary Judgment is whether the Decision issued by the Department was in conformity with the statute applicable to applications to sever and transfer. To that end, the only question is the basis of the Decision.

There is no dispute that the Decision was based on SRP’s failure to establish “beneficial use” in connection with its Application, as amended. However, as set forth above, “beneficial use” is not a proper basis for the denial of an application to sever and transfer.

This is not to say that the Department may not have had an appropriate reason under the statute to deny the Application, but merely that the appropriate reason was not stated in the Decision. Accordingly,

IT IS RECOMMENDED granting the Motion for Summary Judgment and vacating the matter from the calendar of the Office of Administrative Hearings.

IT IS FURTHER RECOMMENDED denying all other pending motions as moot at this time including those portions of the Motion for Summary Judgment not involving the analysis set forth above, i.e., an order that the Department reverse its denial and approve the Application, as amended; an order for attorneys’ fees; and an order limited the evidence to be presented at the hearing in this matter.

IT IS ORDERED remanding this matter to the Department for further action.

-54864001

001

-137160-45720000Done this day, August 30, 2021.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Thomas Buschatzke , Director

Department of Water Resources

-54864001

001

-137160-45720000