Robin Silver v. Pueblo Del Sol Water Co
423 P.3d 348 (2018)
Rule of Law:
Arizona's 'adequate water supply' statute, A.R.S. § 45-108, does not require the Arizona Department of Water Resources (ADWR) to consider unquantified federal reserved water rights when determining if a developer's proposed water supply is 'legally available' for 100 years.
Facts:
- Castle & Cooke, Inc., which owns Pueblo Del Sol Water Company ('Pueblo'), sought to build a large mixed-use development called 'Tribute' near the San Pedro River in Cochise County, an area outside a statutory active management area.
- In 1988, Congress established the San Pedro Riparian National Conservation Area ('SPRNCA') and created an accompanying federal reserved water right with a priority date of November 18, 1988, to fulfill the area's conservation purpose.
- The exact amount of the SPRNCA's federal water right remains unquantified, pending the outcome of the long-running Gila River General Stream Adjudication.
- To supply the proposed Tribute development, Pueblo calculated it would need to increase its annual groundwater pumping from approximately 1430 acre-feet to 4870 acre-feet.
- Pueblo applied to the Arizona Department of Water Resources ('ADWR') for an 'adequate water supply' designation, a prerequisite for development approval in Cochise County.
- The Bureau of Land Management ('BLM'), which manages the SPRNCA, and other environmental advocates objected to the application, arguing the increased pumping would conflict with the SPRNCA's senior, albeit unquantified, federal water right.
Procedural Posture:
- The Bureau of Land Management (BLM), Robin Silver, and Patricia Gerrodette ('Plaintiffs') objected to Pueblo's 'adequate water supply' application before the ADWR.
- ADWR issued a decision approving the application, which was affirmed by an Administrative Law Judge (ALJ).
- Plaintiffs filed for judicial review in the superior court (trial court), which consolidated the cases.
- The superior court vacated ADWR's decision, ruling that the agency was required to consider the BLM's unquantified federal water right.
- Pueblo and ADWR appealed to the Arizona Court of Appeals (intermediate appellate court).
- The court of appeals vacated the superior court's decision, holding that ADWR did not have to consider the right under the 'legal availability' analysis but did have to consider it under the 'physical availability' analysis.
- All parties filed petitions for review, which the Arizona Supreme Court granted.
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Issue:
Does Arizona's 'adequate water supply' statute, A.R.S. § 45-108, require the Arizona Department of Water Resources (ADWR) to consider unquantified federal reserved water rights when determining if a developer's water supply is 'legally available'?
Opinions:
Majority - Lopez
No, Arizona’s 'adequate water supply' statute does not require the ADWR to consider unquantified federal reserved water rights when determining legal availability. The statutory term 'legally available' is ambiguous because the statute does not define it or mention federal reserved rights. Under the prior-construction canon, when the legislature amended the statute in 2007 to include the term 'legally available,' it implicitly adopted ADWR's long-standing regulatory definition, which equates legal availability for a private water company with possessing a Certificate of Convenience and Necessity (CC&N). Requiring ADWR to consider unquantified rights would force the agency to engage in improper speculation about the outcomes of complex and prolonged litigation. This interpretation aligns with precedent from Gila III, which held that seeking injunctive relief based on unquantified rights is 'premature,' and correctly balances the statute's goals of consumer protection and economic development.
Dissenting - Bales
Yes, the statute requires ADWR to consider unquantified federal reserved water rights. The plain meaning of 'legally available' is not ambiguous and necessarily includes an analysis of whether the water can be used without violating senior water rights, such as those held by the federal government for the SPRNCA. The majority's interpretation renders the 'legally available' requirement meaningless surplusage, as the CC&N is already a separate legal requirement for water companies. This approach undermines the statute's core consumer protection purpose by allowing ADWR to ignore a known, significant legal risk to the future water supply. ADWR has the necessary expertise to analyze this risk, which is no more speculative than other 100-year projections it is already required to make.
Dissenting - Bolick
Yes, the statute's command to determine legal availability requires consideration of such rights. The majority's interpretation violates the surplusage canon by rendering the 'legally available' provision pointless. The agency's regulation, which requires only a Certificate of Convenience and Necessity (CC&N), is substantively meaningless for determining water availability, as a CC&N is issued by an agency with no jurisdiction over water and involves no analysis of water supply. The statute's clear purpose is to protect consumers by ensuring an independent, good-faith analysis of future water availability, a purpose the majority's decision thwarts by creating a 'hole in the middle' of an otherwise robust statutory scheme.
Analysis:
This decision significantly narrows the scope of the 'legal availability' analysis required for water adequacy designations outside of Arizona's Active Management Areas. By deferring to a pre-existing agency rule under the prior-construction canon, the court prioritizes administrative certainty and facilitates development, even where potential senior water rights conflicts exist. The ruling effectively shifts the risk of future water curtailment from developers at the permitting stage to future homeowners, who may purchase property with a state-certified 'adequate' water supply that is later legally restricted. This precedent solidifies that agencies are not required to speculate on the outcomes of unresolved, complex litigation unless a statute explicitly mandates it, thereby limiting the role of 'unquantified' rights in regulatory proceedings.
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