Opposition Brief — Phelps Dodge Corp. v. United States

Supreme Comm, U.S

{ FILES

APR 10 2001

No. 00-1464

In The

Supreme Court of the United States

¢

PHELPS DODGE CORPORATION and

ARIZONA PUBLIC SERVICE COMPANY,

Petitioners,

THE UNITED STATES, et al.,

Respondents.

*

On Petition For Writ Of Certiorari

To The Supreme Court

Of The State Of Arizona

¢

RESPONSE OF ASARCO INCORPORATED

IN SUPPORT OF PETITION

FOR WRIT OF CERTIORARI

e

LAUREN J. CASTER

Counsel of Record

TiMOTHY BERG

THERESA Dwyer

FENNEMORE CRAIG, P.C.

3003 North Central Avenue,

Suite 2600

Phoenix, Arizona 85012-2913

(602) 916-5000

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

my

y,

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QUESTION PRESENTED

Did the Supreme Court of Arizona effect a taking of

private property without just compensation in violation

of the Fifth and Fourteenth Amendments to the Constitu-

tion of the United States, by declaring that there is “ ‘no

legally recognized property right in potential, future

groundwater use,’” when Arizona statutes and that

court’s prior decisions establish the existence of such a

property right?

ii

PARTIES TO THE PROCEEDINGS

Respondent ASARCO Incorporated (“ASARCO”)

~ supplements the Petition for Writ of Certiorari’s descrip-

tion of the Parties to the Proceedings to add that it is a

claimant in the adjudication below in the Maricopa

County Superior Court concerning water rights in the

Gila River System and Source. ASARCO filed claims for a

variety of water rights in the Gila River Adjudication,

including claims to Type 1 and Type 2 grandfathered

groundwater rights recognized and defined under Ari-

zona Revised Statutes (“A.R.S.”) § 45-463 and § 45-464.

1 ASARCO has lodged examples of its Statements of

Claimant for Type 1 and Type 2 grandfathered groundwater

rights with the Clerk of the Court, and respectfully asks this

Court to take judicial notice of these documents. Lodging of

Respondent ASARCO Incorporated, Exhibit A. ASARCO filed

these Statements of Claimant with the Arizona Department of

Water Resources pursuant to A.R.S. § 45-254. Filing of a

statement of claimant is the mechanism by which water users

assert water right claims in the Gila River Adjudication.

ASARCO’s Statements of Claimant constitute records of the

Arizona Department of Water Resources, and are matters of

record in the case below.

Courts may take judicial notice of the records and reports of

administrative bodies. See, e.g., Massachusetts v. Westcott, 431

U.S. 322, 323 n.2 (1977); Barron v. Reich, 13 F.3d 1370, 1377 (9th

Cir. 1994); cf. Fed. Rule Evid. 201(b). Moreover, matters of record

in the case are a proper subject for judicial notice. See United

States v. Rey, 811 F.2d 1453, 1457 n.5 (11th Cir.), cert. denied, 484

U.S. 830 (1987). Accordingly, this Court may take judicial notice

of the ASARCO’s Statements of Claimant.

iii

CORPORATE DISCLOSURE

ASARCO, a New Jersey corporation,is—a—wholly

owned subsidiary of Grupo Mexico S.A. de C.V. This

disclosure is made pursuant to Rule 29(6), Rules of the

Supreme Court of the United States.

iv

TABLE OF CONTENTS

Page

QUESTION PRESENTED............. ica aaa ee ee

PARTIES TO THE PROCEEDINGS ...............-. ii

CORPORATE DISCLOSURE: . ....2...52...5054.4. iii

TAMEG CR CII iain vce hsdpa iv

TARE OF AIRS... ee v

Sravuies WANN 8 es 1

STATEMENT OF THE CASE...............00-.000: 1

SUMMARY OF ARGUMENT.............0-.-0000e- 1

Pn RRS ee NE EES Miers ne er 3

I. ARIZONA STATUTES RECOGNIZE THAT

FUTURE GROUNDWATER USE IS A VESTED

eg 8g er rere rer eer 3

II. THE OPINION BELOW, TAKEN LITERALLY,

WOULD REVOKE STATUTORY PROPERTY

RIGHTS AND EFFECT A TAKING IN VIOLA-

TION OF THE FIFTH AND FOURTEENTH

AMEE S -ovccccscccsceressesteesxess 7

Ill. THE OPINION BELOW, READ LITERALLY,

WOULD EFFECT A TAKING OF VESTED

RIGHTS RECOGNIZED IN PRIOR JUDICIAL

oe OUT RS EU T ET EE PEL eo SLT eter ess 11

SAORI Nb anes Catvetaenentsadaedasepiduaens 14

Vv

TABLE OF AUTHORITIES

Page

Cases dis

Barron v. Reich, 13 F.3d 1370 (9th Cir. 1994) .......... ii

Board of Regents of State Colleges v. Roth, 408 U.S.

it ) DER ER EC OEE Ee ee ore ret Cy Ee Pere yr eee 7

Bonelli Cattle Co. v. Arizona, 414 U.S. 313 (1973) ...... 8

Bott v. Commission of Natural Resources, 327 N.W.2d

Poe CU BOEDs akan sakicasnaeacsenpenwsaarees 10, 11

Bristor v. Cheatham, 255 P.2d 173 (Ariz. 1953) ..6, 9, 10, 12

Cherry v. Steiner, 716 F.2d 687 (9th Cir. 1983), cert.

Gemind, 466 US. Fl (UDGG) «a o.c ain 5004 ck bdendaeass 8

Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226

(RPE cards cad Sad pon sales eae seakkeasbaaue bxsaaereks 7

Cortaro Water Users’ Ass’n v. Steiner, 714 P.2d 836

(Ariz. App. 1985), approved on this ground and

rev'd on other grounds, 714 P.2d 807 (Ariz. 1986) ...3, 5

Farmers Investment Company v. Bettwy, 558 P.2d 14

a . , | Baer eM Myf pLOb NG UIP Reve ree aenD 11

Hughes v. Washington, 389 U.S. 290 (1967) ............ 8

In re General Adjudication of All Rights to Use Water

in Gila River Sys. & Source, 857 P.2d 1236 (Ariz.

FOWADA 0 8 no 04c0 chndenn ances awe oir eee epeneas 42; 13

In re General Adjudication of All Rights to Use Water

in the Gila River Sys. & Source, 9 P.3d 1069 (Ariz.

i ETP TOE e rte Pree ee ee ee roe ree ee

In ve Crpety, 32 FSG 235 GAGS. AO ao osha cc ncexiacs 13

Jarvis v. State Land Dept., 479 P.2d 169 (Ariz. 1970),

modified on other grounds, 550 P.2d 227 (Ariz.

SPP aia caken oN dean vba ad oe ayaa LAe ao 12

vi

TABLE OF AUTHORITIES - Continued

Page

Massachusetts v. Westcott, 431 U.S. 322 (1977).........ii

McKinley v. Reilly, 393 P.2d 268 (Ariz. 1964), appeal

dismissed, 381 U.S. 276 (1965) .........--2eeeeeeees 13

Oregon ex rel. State Land Bd. v. Corvallis Sand &

Gravel Co., 429 US. S63 (9B77) oc cscccccccscecsccess 8

Reynolds v. State of Georgia, 640 F.2d 702 (5th Cir.),

cert. Gented, Ge US. GED CHGS) oo ccvetidzccsccchsas 8

Ricks Exploration Co. v. Oklahoma Water Resources

Bd., G95 P.2G GB CORR. 19GG). oo cccccccsassccwecess 4

Robinson v. Ariyoshi, 441 F. Supp. 559 (D. Haw.

1977), aff'd in part, vacated in part, 753 F.2d 1468

(Sts Che, 10GB c cc cccvccenvvaeevesvadserecdesniekes 8

Robinson v. Ariyoshi, 887 F.2d 215 (9th Cir. 1989)...... y

Russell v. Texas Co., 238 F.2d 636 (9th Cir. 1956)...... 4

San Carlos Apache Tribe v. Superior Court, 972 P.2d

879 Gicks, TODD) 0 ccsezsccenecssuccuustvidusnseanaes 3

Sotomura v. County of Hawaii, 460 F. Supp. 473 (D.

Baw. 1976) .<ccccccosssscecegyssagnsaeaaauuasteenes 9

Sun Oil Co. v. Whitaker, 483 S.W.2d 808 (Tex. 1972) ..... 4

Town of Chino Valley v. City of Prescott, 638 P.2d

8526 (Amie. BOGE ooo dscccccisinnscbasvabuant 3, 12, 13

Town of Chino Valley v. State Land Dept., 580 P.2d

TOG CARR. TOFD cc crecccicccecnvadeccevscnen 11-12, 13

Unit Petroleum Co. v. Oklahoma Water Resources Bd.,

O06 Fa Tare Ces BPO once cacucaseabetsibacecos 4

United States v. Rey, 811 F.2d 1453 (11th Cir.), cert.

Genial, Gis UB. Gee Case o's 006wkessseesdibtveenss ii

Vii

TABLE OF AUTHORITIES —- Continued

Page

- Washington Legal Foundation v. Legal Foundation of =

Washington, 236 F.3d 1097 (9th Cir. 2001)........... 8

Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449

Gh BP ED No csvadesscosnaededacraaadeabiaesaed 7

Williamson County Regional Planning Comm'n v.

Hamilton Bank, 473 U.S. 172 (1985) ..........ccce0e 9

CONSTITUTIONS

Fifth and Fourteenth Amendments, Constitution

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STATUTES

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TABLE OF AUTHORITIES - Continued

Page

RULES

ta: i Ds, GE i ce ex deetass id iehen caaiessates ii

Rule 29(6), Rules of the Supreme Court of the

SE IEE. < kn. cus cub ids cack eewksbuncsetasneeas iii

OTHER

4 E. Kuntz, A Treatise On The Law Of Oil And Gas

SN CUE 5 6.56 6x0 does cduampennssasbeensedinn 4

RESPONDENT’S BRIEF IN SUPPORT

ASARCO respectfully responds in support of the

Petition for Writ of Certiorari submitted by Phelps Dodge

Corporation and Arizona Public Service Company (“Peti-

tion”). This response addresses the argument commenc-

ing at page 19 of the Petition. While the Petition poses a

single “Question Presented” under which all of its argu-

ments are subsumed, ASARCO sets forth a second “Ques-

tion Presented” that articulates more precisely the issue

on which this response focuses.

+

STATUTES INVOLVED

See Fifth and Fourteenth Amendments, Constitution

of the United States; Arizona Revised Statutes § 45-401 et

seq.

STATEMENT OF THE CASE

ASARCO adopts the Statement of the Case set forth

in the Petition.

SUMMARY OF ARGUMENT

ASARCO files this response to address a single state-

ment in Paragraph 47 of the opinion of the Supreme

Court of the State of Arizona in In re General Adjudication

of All Rights to Use Water in the Gila River Sys. & Source, 9

P.3d 1069 (Ariz. 2000) (“Opinion Below”). There the

Arizona Supreme Court declared that “landowners have

‘no legally recognized property right in potential, future

groundwater use.’” 9 P.3d at 1083. The court made no

distinction between the continuation of existing ground-

water uses into the future and the commencement of new

groundwater uses in the future. In either case, the state-

ment is contrary to Arizona law and a taking of property

without just compensation.

Arizona statutes define the right to use groundwater.

For those users or potential users coming within the

statutes’ terms, those rights include the right to continue

existing groundwater uses into the future and the right to

initiate new groundwater uses in the future. If taken

literally, the Arizona Supreme Court’s statement would

extinguish property rights recognized and vested by stat-

ute. This in and of itself is a taking in violation of the

Fifth and Fourteenth Amendments.

Moreover, the Opinion Below directly contradicts

prior decisions of the Arizona Supreme Court recogniz-

ing the existence of a vested property right in future

groundwater use. These decisions induced extensive

reliance on groundwater by Arizona’s municipal water

providers, industries and farms over many years. The

court cannot simply rule this property out of existence

without triggering the just compensation guaranty of the

Constitution of the United States.

2

v

TE ALAN EI,

3

oo

ARGUMENT

I. Arizona Statutes Recognize That Future Groundwa-

ter Use Is A Vested Property Right.

L

Arizona statutes recognize a vested property right? in

the potential, future use of groundwater. The Legislature

enacted the Groundwater Management Act in 1980

(“Act”). 1980 Ariz. Sess. Laws 4th Spec. Sess., Ch. 1; see

also, Town of Chino Valley v. City of Prescott, 638 P.2d 1324

(Ariz. 1981) (“Chino Valley II”). The Act “may well be the

most ambitious legislation ever enacted by the Arizona

Legislature and the most comprehensive water code in

the United States.” Cortaro Water Users’ Ass’n v. Steiner,

714 P.2d 836, 838 (Ariz. App. 1985), approved on this ground

and rev'd on other grounds, 714 P.2d 807, 808 (Ariz. 1986)

(footnote omitted).

The Act imposes different rules governing the use of

groundwater depending upon whether the water is with-

drawn from wells within areas designated as active man-

agement areas or irrigation non-expansion areas, or from

those areas not so designated. The Act most closely regu-

lates the use of groundwater within active management

areas. It aliows the withdrawal of water from wells

equipped with small capacity pumps, subject to certain

restrictions. A.R.S. § 45-454. The Act also directs that a

2 The Arizona Supreme Court defined a “vested right” as

one thai “is actually assertable as a legal cause of action or

defense or is so substantially relied upon that retroactive

divestiture would be manifestly unjust.” San Carlos Apache Tribe

v. Superior Court, 972 P.2d 179, 189 (Ariz. 1999).

person engaged in or proposing to engage in the extrac-

tion and processing of minerals “shall be issued” a de-

watering permit for the beneficial use of the land for

mineral extraction, for metallurgical processing and for

compliance with applicable environmental controls,

A.R.S. § 45-513(A), and a permit to withdraw groundwa-

ter in the required amount if the statutory conditions are

satisfied. A.R.S. § 45-514(A).3 Such a person may recover

water from beneath tailings ponds without a permit.

A.R.S. § 45-513(B).4 The director of the Arizona Depart-

ment of Water Resources “shall issue” a permit to with-

draw groundwater for general industrial use under

defined circumstances. A.R.S. § 45-515(A). A city, town or

private water company “shall have the right to withdraw

and transport groundwater within its service area for the

benefit of landowners and residents within its service

area, and the landowners and residents are entitled to use

the groundwater delivered” under the terms specified.

A.R.S. § 45-492(A). An Arizona court has recognized that

3 These statutes ensure that within active management

areas, the right of the mineral estate owner to use that amount of

water necessary for the exploitation of minerals would remain

intact. This right is an incident of mineral ownership. Russell v.

Texas Co., 238 F.2d 636, 644 (9th Cir. 1956), cert. denied, 354 U.S.

938 (1957); Unit Petroleum Co. v. Oklahoma Water Resources Bd.,

898 P.2d 1275, 1277-78 (Okla. 1995); Ricks Exploration Co. v.

Oklahoma Water Resources Bd., 695 P.2d 498, 503-05 & nn.19 & 25

(Okla. 1984); Sun Oil Co. v. Whitaker, 483 S.W.2d 808, 810-11 (Tex.

1972); 4 E. Kuntz, A Treatise on the Law of Oil and Gas § 50.2(b) at

275 (1990). This right to water derives from a legal regime

outside traditional water law.

4 A.R.S. § 45-513(B) was added in 1985. See 1985 Ariz. Sess.

Laws Ist Reg. Sess., Ch. 323, § 7.

NE NEN IS me .

this statute created a “right.” Cortaro, 714 P.2d at 838, 839.

None of the entitlements created by these statutes pre-

sumes a preexisting use of groundwater.

There can be no serious doubt that if the director of

the Arizona Department of Water Resources refused to

issue a permit as required by the statutes cited above or

contested groundwater use sanctioned by those statutes,

the groundwater user could assert the statutes as a basis

for a cause of action or defense. Under the standard

articulated by the Arizona Supreme Court, these statutes

create vested property rights. See n. 2 above.

The Act recognized and “grandfathered” groundwa-

ter uses existing in an active management area on the

date the active management area was created:

In an active management area, a person

who was legally withdrawing and using

groundwater as of the date of the designation of

the active management area or who owns land

legally entitled to be irrigated with groundwater

as determined pursuant to this article has the

right to withdraw or receive and use groundwater as

determined by the director pursuant to this arti-

cle.

A.R.S. § 45-462(A) (emphasis added). The rights associ-

ated with these existing uses are classified as Type 1 non-

irrigation grandfathered rights associated with retired

irrigated land, A.R.S. § 45-463; Type 2 non-irrigation

grandfathered rights not associated with retired irrigated

land, A.R.S. § 45-464; and irrigation grandfathered rights,

A.R.S § 45-465. These grandfathered rights entitle the

holder to use groundwater now and in the future. The

Type 2 grandfathered groundwater right is especially

flexible because it is not appurtenant to particular land.

A.R.S. § 45-464. It can be leased, A.R.S. § 45-464(G), or

sold, A.R.S. § 45-474, subject to certain restrictions. There

is no statutory provision for abandonment or forfeiture of

Type 2 rights, so their future vitality does not depend on

their current use. Type 2 rights authorize the use of .

substantial amounts of groundwater in Arizona’s active |

management areas.°

For those parts of the state not designated active

management areas or irrigation non-expansion areas, the

Groundwater Management Act codified the doctrine of

reasonable use, A.R.S. § 45-453, a doctrine previously

adopted by the Arizona courts. See, e.g., Bristor v. Cheat-

ham, 255 P.2d 173, 178-179 (Ariz. 1953). Section 45-453(1)

5 Type 2 grandfathered groundwater rights permit the use

of more than 200,000 acre feet of groundwater per year. See

Second Management Plan (1990-2000) for Phoenix Active

Management Area at 169 (100,717 acre feet per year of Type 2

rights); Second Management Plan (1990-2000) for Pinal Active

Management Area at 149 (10,998 acre feet per year of Type 2

rights); Second Management Plan (1990-2000) for Tucson Active

Management Area at 139 (91,374 acre feet per year of Type 2

rights); and Second Management Plan (1990-2900) for Prescott

Active Management Area at 112 (3,935 acre feet per year of Type

2 rights). ASARCO has lodged excerpts of these Management

Plans with the Clerk of this Court and respectfully asks this

Court to take judicial notice of these documents. Lodging of

Respondent ASARCO Incorporated, Exhibit B.

The Arizona Department of Water Resources prepared

these Management Plans at the Legislature’s direction. A.R.S.

§ 45-563. As explained in note 1 above, courts may take judicial

notice of the records and reports of administrative bodies.

Accordingly, this Court may take judicial notice of the

Management Plans.

a rs ee

permits the withdrawal and use of groundwater “for

reasonable and beneficial use” subject to restrictions on

the transportation of groundwater. This authorization is

not limited to those who already are using groundwater

or who already own a well.

Arizona statutes therefore create vested rights both

to continue existing groundwater uses and to commence

groundwater uses in the future so long as those uses

comply with statutory requirements.

II. The Opinion Below, Taken Literally, Would Revoke

Statutory Property Rights and Effect a Taking in

Violation of The Fifth and Fourteenth Amend-

ments.

The Fifth Amendment, made applicable to the States

through the Fourteenth Amendment, Chicago, B. & Q.R.

Co. v. Chicago, 166 U.S. 226, 239 (1897), provides that

“private property” shall not “be taken for public use,

without just compensation.” Because the Constitution

protects rather than creates property interests, the exis-

tence of a property interest is determined by reference to

“existing rules or understandings that stem from an inde-

pendent source such as state law.” Board of Regents of State

Colleges v. Roth, 408 U.S. 564, 577 (1972).

This Court has acknowledged that state courts are

subject to the prohibition against uncompensated takings,

as is any other branch of state government. See Webb's

Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 163-164

(1980) (“Neither the Florida Legislature by statute, nor

the Florida courts by judicial decree, may accomplish the

result the county seeks simply by recharacterizing the

principal as ‘public money’ because it is held temporarily

by the court.”); Hughes v. Washington, 389 U.S. 290,

296-297 (1967) (Stewart, J., concurring) (Justice Stewart’s

concurrence in Hughes was later cited with approval in

Bonelli Cattle Co. v. Arizona, 414 U.S. 313, 331 (1973),

overruled on other grounds, Oregon ex rel. State Land Bd. v.

Corvallis Sand & Gravel Co., 429 U.S. 363 (1977).).

Other federal courts® have overturned state court

actions that resulted in property rights being taken with-

out just compensation. In Washington Legal Foundation v.

Legal Foundation of Washington, 236 F.3d 1097 (9th Cir.

2001), the court found that the interest generated by

IOLTA pooled trust accounts was the property of the

clients whose money was deposited into trust, and that

the state court’s appropriation of that interest for public

purposes was a taking entitling these clients to just com-

pensation under the Fifth Amendment. 236 F.3d at 1115.

In Robinson v. Ariyoshi, 441 F. Supp. 559, 585 (D. Haw.

1977), aff'd in part, vacated in part, 753 F.2d 1468, 1475 (9th

6 In still other instances, federal courts have agreed that a

judicial decision can take property without compensation, but

have held that there was no taking on the facts presented, or

declined to hear the dispute on jurisdictional grounds. Cherry v.

Steiner, 716 F.2d 687, 692 (9th Cir. 1983) (no unpredictable

change in the law), cert. denied, 466 U.S. 931 (1984); Reynolds v.

State of Georgia, 640 F.2d 702, 705 (5th Cir.) (holding no

jurisdiction in lower federal courts to review the

constitutionality of state decisions), cert. denied, 454 U.S. 865

(1981).

7. mae me eR

Cir. 1985),” the district court held that a Hawaii Supreme

Court opinion had unconstitutionally deprived property

owners of their water rights by radically changing prior

Hawaiian water law. Likewise, in Sotomura v. County of

Hawaii, 460 F. Supp. 473, 482-483 (D. Haw. 1978), a district

court held that a decision of the Hawaii Supreme Court

had unconstitutionally changed the line dividing private

and public beach amounting to a taking of private prop-

erty.

The Arizona Supreme Court itself declined to alter

the rule of law governing a landowner’s right to with-

draw and use groundwater out of concern for impairment

of a vested property right. In Bristor, supra, the court

stated:

[Djeparture [from the common law doctrine of

reasonable use] is not permitted for the reason

that we might think the rule to be fallacious and

anomalous. Whether we should for any other

reason, after approximately fifty years’ operation

under an announced rule, depart therefrom

depends upon many questions, the most impor-

tant of which is the protection of property rights

acquired upon the faith of this court’s announce-

ment of law.

7 This Court vacated the judgment in Robinson and

remanded for further consideration in light of its decision in

Williamson County Regional Planning Comm'n v. Hamilton Bank,

473 U.S. 172 (1985). On remand, the Court of Appeals held that

the constitutional challenge was premature because the

plaintiffs had not exhausted their administrative remedies. See

Robinson v. Ariyoshi, 887 F.2d 215 (9th Cir. 1989).

10

It is generally so well known that we take

judicial notice that, with faith in the foregoing

declaration and assurance of this court, many

and large investments have been made in the

development of ground waters. Under these cir-

cumstances the court’s announcement of the

rule becomes a rule of property, and rights

acquired thereunder should not be disturbed

“unless the law is such as to leave the court no

alternative,” [citation omitted]; and when a

decision does become a rule of property, the

rights acquired thereunder are entitled to pro-

tection under the law as declared.

255 P.2d at 175. The court refused to abandon the doctrine

of reasonable use as the rule governing groundwater use.

Id. at 177.

The Arizona court was not alone in recognizing the

need to protect vested property rights. The Michigan

Supreme Court, in Bott v. Commission of Natural Resources,

327 N.W.2d 838 (Mich. 1982), reversed imposition of a

new test for determining whether waters were navigable,

in part because of the “unfairness of eliminating a prop-

erty right without compensation.” 327 N.W.2d at 849. The

Bott court acknowledged that past judicial decisions

establishing “rules of property” induce extensive

reliance. Id.

The justification for this rule is not to be

found in rigid fidelity to precedent, but con-

science. The judiciary must accept responsibility

for its actions. Judicial “rules of property” create

value, and the passage of time induces a belief

in their stability that generates commitments of

human energy and capital.

ee

Taal

11

The proposed changes in law would not

have a purely theoretical effect... .

Id.

The Arizona Supreme Court effected a taking of

vested rights to groundwater in the Opinion Below. With

the sweeping statement challenged here, the court

appears to extinguish statutory rights to future ground-

water use previously discussed. Courts may interpret a

statute or declare it unconstitutional, but the Arizona

Supreme Court did neither in making the statement chal-

lenged here. It cannot simply rule that valid, statute-

based property interests no longer exist.

III. The Opinion Below, Read Literally, Would Effect A

Taking Of Vested Rights Recognized In Prior Judi-

cial Decisions.

Arizona courts have long-recognized that the right to

future groundwater use is a vested property right. Prior

to the adoption of the Groundwater Management Act, the

Arizona Supreme Court held that a landowner’s right to

withdraw and use groundwater is a property right enti-

tled to protection:

At the outset it must be conceded that the

interests which petitioners seek to protect are

property rights. We recognized in Farmers

Investment Company v. Bettwy, supra [558 P.2d 14

(Ariz. 1976)], that the doctrine of reasonable use

as judicially determined in Arizona had become

a rule of property and was entitled to protection

as such.

12

Town of Chino Valley v. State Land Dept., 580 P.2d 704, 709

(Ariz. 1978) (“Chino Valley I”).

Similar declarations are found in other Arizona

Supreme Court decisions both before and after Chino

Valley I. See, e.g., Bristor, 255 P.2d at 175; Jarvis v. State

Land Dept., 479 P.2d 169, 172-73 (Ariz. 1970), modified on

other grounds, 550 P.2d 227 (Ariz. 1976). In Jarvis, the court

observed that “[t]he right to exhaust the common supply

by transporting water for use off the lands from which

they are pumped is a rule of law controlled by the doc-

trine of reasonable use and protected by the constitution

of the state as a right in property.” 479 P.2d at 172-73.

The Arizona Supreme Court further acknowledged

that having recognized property rights to groundwater

use, it must preserve these rights. In Chino Valley II, the

court quoted from Bristor and Jarvis and declared:

The statements in Bristor and Jarvis do not

mean that rights to the use of groundwaters

cannot be modified prospectively by the Legis-

lature. They only mean that courts will adhere

to an announced rule to protect rights acquired

under it and that if any change in the law is

necessary, it should be made by the Legislature.

638 P.2d at 1327 (emphasis added).

Until the pronouncement challenged in this response,

the court below was reticent to change existing law

where, as here, “the prospective effect of change

threatens important vested rights and may affect every

Arizonan’s well-being.” In re General Adjudication of All

Rights to Use Water in Gila River Sys. & Source, 857 P.2d

13

1236, 1243 (Ariz. 1993). It concluded that any modifica-

tion of the right to withdraw and use groundwater

required an exercise of the police power. Chino Valley II,

638 P.2d at 1329-30. The police power resides with the

legislative branch of Arizona government, not with its

courts. McKinley v. Reilly, 393 P.2d 268, 270 (Ariz. 1964),

appeal dismissed, 381 U.S. 276 (1965); In re Creasy, 12 P.3d

214, 219 (Ariz. 2000) (Martone, J., concurring).

A court “may change judge-made law” under certain

circumstances, In re General Adjudication of All Rights to

Use Water in Gila River Sys. & Source, 857 P.2d at 1243. By

the Arizona Supreme Court’s own admission, it may not

do so when its own prior holdings have created a “rule of

property.” Chino Valley I, 580 P.2d at 709; Chino Valley II,

638 P.2d at 1327-1330.

The court’s declaration that there is “ ‘no legally rec-

ognized property right in potential, future groundwater

use’ ” appears to be a sudden and unpredictable change

in law established by its own decisions, and is therefore a

taking of property rights already existing under state law.

*

Looked > ea apm

14

CONCLUSION

Based on the foregoing reasons, the Court should

grant the writ.

Respectfully submitted,

LauREN J. CASTER

Counsel of Record

TimotHy BERG

THERESA DwyeR

FENNEMORE CRAIG, P.C.

3003 North Central Avenue

Suite 2600

Phoenix, AZ 85012-2913

(602) 916-5000

Attorneys for ASARCO Incorporated

App. 1

U.S. Const. Amendment V

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury, except in cases arising in the

land or naval forces, or in the Militia, when in actual

service in time of War or public danger; nor shall any

person be subject for the same offence to be twice put in

jeopardy of life or limb; nor shall be compelled in any

criminal case to be a witness against himself, nor be

deprived of life, liberty, or property, without due process

of law; nor shall private property be taken for public use,

without just compensation.

d Se

U.S. Const. Amendment XIV

| Section 1. All persons born or naturalized in the United

: States, and subject to the jurisdiction thereof, are citizens

| of the United States and of the State wherein they reside.

No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

| United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal pro-

tection of the laws.

Section 2. Representatives shall be apportioned among

the several States according to their respective numbers,

counting the whole number of persons in each State,

excluding Indians not taxed. But when the right to voie at

any election for the choice of electors for President and

Vice President of the United States, Representatives in

ae Pe ee a ene ee eee

App. 2

Congress, the Executive and Judicial officers of a State, or

the members of the Legislature thereof, is denied to any

of the male inhabitants of such State, being twenty-one

years of age, and citizens of the United States, or in any

way abridged, except for participation in rebellion, or

other crime, the basis of representation therein shall be

reduced in the proportion which the number of such male_

citizens shall bear to the whole number of male citizens

twenty-one years of age in such State.

Section 3. No person shall be a Senator or Representa-

tive in Congress, or elector of President and Vice Presi-

dent, or hold any office, civil or military, under the

United States, or under any State, who, having previously

taken an oath, as a member of Congress, or as an officer

of the United States, or as a member of any State legisla-

ture, or as an executive or judicial officer of any State, to

support the Constitution of the United States, shall have

engaged in insurrection or rebellion against the same, or

given aid or comfort to the enemies thereof. But Congress

may by a vote of two-thirds of each House, remove such

disability.

Section 4. The validity of the public debt of the United

States, authorized by law, including debts incurred for

payment of pensions and bounties for services in sup-

pressing insurrection or rebellion, shall not be ques-

tioned. But neither the United States nor any State shall

assume or pay any debt or obligation incurred in aid of

insurrection or rebellion against the United States, or any

claim for the loss or emancipation of any slave; but all

such debts, obligations and claims shall be held illegal

and void.

App. 3

Section 5. The Congress shall have power to enforce, by

appropriate legislation, the provisions of this article.

App. 4

Ariz. Rev. Stat. 45-254. Statement of claimant; filing;

information to be included; verification; failure to file;

fees

A. Each potential claimant who is served shall present

in writing the particulars of his claim on the court-

approved statement of claimant form and shall file the

statement of claimant form with the court within ninety

days of the date of service, unless otherwise ordered by

the court. The court may extend the time for good cause.

A duplicate of each statement of claimant shall be made

available by the clerk of the court to the director.

B. The statement of claimant form may be filed by a

person on behalf of its members or users and shall consti-

tute the required filing of its members or users.

C. The statements of claimant shall include the follow-

ing information, where appropriate:

1. The name and mailing address of the potential claim-

ant.

2. The name of the specific river, stream, tributary, wash

or other source from which the right to divert or make

use of water is claimed.

3. The quantities of water and the periods of time dur-

ing the year for which use is claimed.

4. If distributing works are used or required, the date of

beginning and completion of construction or of enlarge-

ments and the dimensions of the ditch as originally con-

structed and as enlarged.

5. If the use is for irrigation, the amount of land

reclaimed the first year and in subsequent years, and the

App. 5

amount and general location of the land, the character of

the soil and the kind of crops cultivated.

6. The legal description of the point or points of diver-

sion and place of use of the waters to the nearest forty-

acre tract or by other appropriate description and such

map or plat showing the relative points of diversion and

place of use as may be required.

7. The purpose and extent of use.

8. The time of the initiation of the right and the date

when water was first used for beneficial purposes for the

various amounts and times claimed in paragraph 3 of this

subsection.

9. The legal basis for the claim.

D. The statement of claimant shall be verified by the

claimant or the person authorized to file as provided in

subsection B of this section.

E. After the date by which statements of claimant are

required to be filed as set forth in the summons or in an

order of the court, the filing of a statement of claimant or

an amendment is permitted under the following circum-

stances:

1. At any time up to ninety days before the publication

of the director’s final report pursuant to section 45-256,

subsection B for a subwatershed or federal reservation

within the river system and source, a person may file a

statement of claimant or an amendment to a statement of

claimant with the director without leave of the court.

2. After the expiration of the ninety day period pre-

scribed by paragraph 1 of this subsection and before the

App. 6

conclusion of hearings by the master for a subwatershed

or federal reservation within the river system and source,

a person may assert a claim for a water use within the

subwatershed or federal reservation without leave of the

court by filing the original of the statement of claimant or

amended statement of claimant with the director and a

notice of filing with the court. After the conclusion of

hearings on an existing claim, an amendment to that

existing statement of claimant may only be permitted as

prescribed by paragraph 3 of this subsection. If a state-

ment of claimant or an amendment to a statement of

claimant is filed after the expiration of the ninety day

period and except as provided in section 45-258, other

parties may object to the elements of the claim or

amended claim.

3. After the master has completed hearings on a sub-

watershed or federal reservation within the river system

and source and has filed a report with the court for the

entire subwatershed or federal reservation pursuant to

section 45-257, a person may not assert a late claim for a

water right within that subwatershed or reservation as a

matter of right. A person may request the court’s permis-

sion to intervene in the adjudication and file a statement

of claimant with the director. The court may grant the

motion if it finds that the intervention would not unduly

delay or prejudice the adjudication of the rights of the

original parties. An amendment to an existing statement

of claimant after the filing of the master’s report for the

entire subwatershed or federal reservation is permitted

only by leave of the court in its discretion and on motion

of the party seeking an amendment. Except as provided

in section 45-258, other parties may object to the elements

App. 7

of a claim or an amended claim filed pursuant to this

paragraph.

F. On entry of the final decree pursuant to section

45-257, any potential claimant who is properly served

and who failed to file a statement of claimant as pre-

scribed by this article for any water right or whose

motion for permissive intervention was finally denied by

the court is barred and estopped from subsequently

asserting any right that was previously acquired on the

river system and source and that was not included in a

statement of claimant and forfeits any rights to the use of

water in the river system and source that were not

included in a properly filed statement of claimant.

G. On the effective date of this amendment to this sec-

tion, all statements of claimant previously filed in an

adjudication pending under this article are deemed to be

timely filed. An objection to the timeliness of any state-

ment of claimant that was filed before the effective date

of this section in an adjudication pending under this

article is not permitted.

H. The fee for filing a statement of claimant by an

individual is twenty dollars and by a corporation, munic-

ipal corporation, the state or any political subdivision, an

association or partnership is two cents for every acre-foot

of water claimed, or twenty dollars, whichever is greater.

The director shall review the statements of claimant and

the amount of fees paid as to each and report to the court

or master the sufficiency of the fees paid with respect to

each statement of claimant. A claim shall not be consid-

ered by the court or the master unless all fees with

respect to such claim have been fully paid in accordance

App. 8 —

with the provisions of this article. Fees shall not be

imposed upon any Indian tribe, community or allottee

personally appearing in the general adjudication to assert

claims to water.

Ariz. Rev. Stat. 45-453. Groundwater rights and uses in

areas outside active management areas; amounts; trans-

portation; irrigation non-expansion areas

In areas outside of active management areas, a person

may:

1. Withdraw and use groundwater for reasonable and

beneficial use, except as provided in article 8.1 of this

chapter.

2. Transport groundwater pursuant to articles 8 and 8.1

of this chapter.

3. Use groundwater for irrigation purposes within the

exterior boundaries of an irrigation non-expansion area

only pursuant to article 3 of this chapter.

Ariz. Rev. Stat. 45-454. Exemption of small non-irriga-

tion wells; definitions

A. Withdrawals of groundwater for non-irrigation uses

from wells having a pump with a maximum capacity of

not more than thirty-five gallons per minute which were

drilled before April 28, 1983 or which were drilled after

April 28, 1983 pursuant to a notice of intention to drill

ee ee

TT i

a ee

App. 9

which was on file with the department on such date are

exempt from the provisions of this chapter, except that:

1. Wells drilled before June 12, 1980 which are not aban-

doned or capped or wells which were not completed on

June 12, 1980 but for which a notice of intention to drill

was on file with the Arizona water commission on such

date are subject to subsections F, G and H of this section

and must be registered pursuant to section 45-593. If two

or more wells in an active management area are exempt

under this paragraph and are used to serve the same non-

irrigation use at the same location, the aggregate quantity

of groundwater withdrawn from the wells shall not

exceed fifty-six acre-feet per year.

2. Wells drilled between June 12, 1980 and April 28,

1983, except as provided in paragraph 1 of this subsec-

tion, and wells drilled after April 28, 1983 pursuant to a

notice of intention to drill which was on file with the

department on April 28, 1983 are subject to subsections C,

E, F and G of this section.

B. Withdrawals of groundwater for non-irrigation uses

from wells having a pump with a maximum capacity of

not more than thirty-five gallons per minute drilled on or

after April 28, 1983, except wells drilled after April 28,

1983 pursuant to a notice of intention to drill which was

on file with the department on such date, are exempt

from the provisions of this chapter, except that:

1. Such wells are subject to subsections C through G of

this section.

2. In an active management area, other than a subse-

quent active management area designated for a portion of

App. 10

a groundwater basin in the regional aquifer systems of

northern Arizona, withdrawals of groundwater from

such wells for non-irrigation uses other than domestic

purposes and stock watering shall not exceed ten acre-

feet per year.

3. Ina subsequent active management area that is desig-

nated for a portion of a groundwater basin in the regional.

aquifer systems of northern Arizona, groundwater with-

drawn from such wells may be used only for domestic

purposes and stock watering.

C. A person shall file a notice of intention to drill with

the director pursuant to section 45-596 before drilling an

exempt well or causing an exempt well to be drilled.

D. The registered well owner shall file a completion

report pursuant to section 45-600, subsection B.

E. In an active management area only one exempt well

may be drilled or used to serve the same non-irrigation

use at the same location, except that a person may drill or

use a second exempt well to serve the same non-irriga-

tion use at the same location if the director determines

that all of the following apply:

1. Because of its location, the first exempt well is not

capable of consistently producing more than three gallons

per minute of groundwater when equipped with a pump

with a maximum capacity of thirty-five gallons per min-

ute.

2. The second exempt well is located on the same parcel

of land as the first exempt well, the parcel of land is at

least one acre in size, all groundwater withdrawn from

App. 11

both exempt wells is used on that parcel of land and there

are no other exempt wells on that parcel of land.

3. Combined withdrawals from both wells do not

exceed five acre-feet per year.

4. If the second exempt well is drilled after January 1,

2000, the county health authority for the county in which

the well is located or any other local health authority that

controls the, installation of septic tanks or sewer systems

in the county has approved the location of the well in

writing after physically inspecting the well site.

5. Use of two wells for the same non-irrigation use at

the same location is not contrary to the health and wel-

fare of the public.

F. An exempt well is subject to sections 45-594 and

45-595. |

G. Groundwater withdrawn from an exempt well may

be transported only pursuant to the provisions of articles

8 and 8.1 of this chapter.

H. A person who owns land from which exempt with-

drawals were being made as of the date of the designa-

tion of the active management area is not eligible for a

certificate of grandfathered right for a type 2 non-irriga-

tion use for such withdrawals.

I. In this section:

1. “Domestic purposes” means uses related to the sup-

ply, service and activities of households and private resi-

dences and includes the application of water to less than

two acres of land to produce plants or parts of plants for

App. 12

sale or human consumption, or for use as feed for live-

stock, range livestock or poultry, as such terms are

defined in section 3-1201.

2. “Stock watering” means the watering of livestock,

range livestock or poultry, as such terms are defined in

section 3-1201.

Ariz. Rev. Stat. 45-462. Grandfathered groundwater

rights; persons included; certificate of exemption

amount is legal use

A. In an active management area, a person who was

legally withdrawing and using groundwater as of the

date of the designation of the active management area or

who owns land legally entitled to be irrigated with

groundwater as determined pursuant to this article has

the right to withdraw or receive and use groundwater as

determined by the director pursuant to this article.

B. For purposes of determining grandfathered rights

pursuant to this article, a groundwater use shall not be

determined to be illegal merely because the groundwater

legally withdrawn is or has been transported.

C. The amount of groundwater use described by an

application for a certificate of exemption is recognized as

a legal use for purposes of determining grandfathered

rights pursuant to section 45-464, subject to any modifica-

tion as a result of a finding on appeal of a factual mistake

by the state land department or Arizona water commis-

sion in computing the amount of the authorized with-

drawal.

App. 13

D. The right to withdraw or receive and use groundwa-

ter pursuant to this article is a grandfathered right. There

are three categories of grandfathered rights as follows:

1. Non-irrigation grandfathered rights associated with

retired irrigated land as determined pursuant to sections

45-463, 45-469 and 45-472.

2. Non-irrigation grandfathered rights not associated

with retired irrigated land as determined pursuant to

section 45-464.

3. Irrigation grandfathered rights as determined pur-

suant to section 45-465.

Ariz. Rev. Stat. 45-463. Type 1 non-irrigation grand-

fathered right associated with retired irrigated land;

appurtenancy; ownership

A. In an initial active management area, a person who

owns land which was legally entitled to be irrigated with

groundwater and who retired such land from irrigation

after January 1, 1965 but prior to the date of the designa-

tion of the active management area in anticipation of a

non-irrigation use has the right to withdraw from or

receive for such land three acre-feet of groundwater per

acre per year upon showing that:

1. The land has been held under the same ownership

since it was retired.

2. A development plan for the proposed non-irrigation

use existed at the time the land was retired.

App. 14

B. In a subsequent active management area, a person

who owns land which was legally entitled to be irrig 1ted

with groundwater and retires such land from irrigation

prior to the date of the designation of the active manage-

ment «rea in anticipation of a non-irrigation use has the

right to withdraw from or receive for such land the lesser

of three acre-feet of groundwater per acre per year or the

average annual amount of groundwater which was used

per acre during the five years preceding the time the land

was retired upon showing that:

1. The land has been held under the same ownership

since it was retired.

2. A development plan for the proposed non-irrigation

use existed at the time the land was retired and is filed

with the director within ninety days after the active man-

agement area is designated.

C. The development plan requirements of this section

are deemed fulfilled if the land retired from irrigation has

been described in an application for a certificate of

exemption or if the land retired from irrigation is owned

in conjunction with non-irrigation uses existing or for

which substantial capital commitments have been

incurred for the non-irrigation development of such land

as of the date of the designation of the active manage-

ment area.

D. The right to withdraw or receive groundwater pur-

suant to this section is a non-irrigation grandfathered

right associated with retired irrigated land, or a type 1

non-irrigation grandfathered right.

App. 15

E. A type 1 non-irrigation grandfathered right is appur-

tenant to the acre of retired irrigated land associated with

the right, is owned by the owner of the land to which the

right is appurtenant and may be leased with the land.

F. At the request of a city or town in the Tucson active

management area that holds a type 1 non-irrigation

grandfathered right under subsection A of this section,

the director, in determining whether to designate or

redesignate the city or town as having an assured water

supply pursuant to section 45-576, shall include four and

one-half acre-feet of groundwater for each acre of retired

irrigated land to which the right is appurtenant, multi-

plied by the number of years between the year of retire-

ment and the year of the request, minus the quantity of

groundwater withdrawn from the land between June 12,

1980 and the year of the request, except that:

1. No groundwater may be included for any acre of

retired irrigated land for any year after the land is devel-

oped for any municipal or industrial use.

2. The amount of groundwater that is included under

this subsection shall not exceed four and one-half acre-

feet for each acre of retired irrigated land to which the

right is appurtenant multiplied by the number of years

between the year of retirement and December 31, 2025

minus the quantity of groundwater withdrawn from the

land between June 12, 1980 and December 31, 2025.

3. The net amount of groundwater included under this

subsection shall not exceed two million acre-feet.

4. The city or town, before making the request of the

director, shall extinguish any irrigation grandfathered

ee

App. 16

rights or type 1 non-irrigation grandfathered rights held

by the city or town and appurtenant to land acquired or

contracted for by the city or town after June 12, 1980 in

the same sub-basin.

G. In determining whether to designate a city or town

as having an assured water supply pursuant to section

45-576, the director shall not consider the exercise of the

right to withdraw groundwater under subsection F of this

section to be the withdrawal of groundwater available

from natural or artificial groundwater recharge.

Ariz. Rev. Stat. 45-464. Type 2 non-irrigation grand-

fathered right not associated with retired irrigated land;

determination of amount; definition; ownership

A. In an active management area, a person who owns

land from which groundwater was being legally with-

drawn and used for a non-irrigation purpose as of the

date of the designation of the active management area

has the right to withdraw annually:

1. If the person holds a certificate of exemption, the

greater of:

(a) The amount of groundwater established in proceed-

ings on the application for certificate of exemption, sub-

ject to any modification as a result of a finding on appeal

of a factual mistake by the state land department or

Arizona water commission in computing the amount of

the authorized withdrawal, less the amount of any right

obtained by the person pursuant to section 45-463.

App. 17

(b) The maximum amount of groundwater legally with-

drawn from such land and used by the person in any one

of the five years preceding the date of the designation of

the active management area, less the amount of any right

obtained by the person pursuant to section 45-463.

2. If the person does not hold a certificate of exemption,

the maximum amount of groundwater legally withdrawn

from such land and used by the person withdrawing the

groundwater in any one of the five years preceding the

date of the designation of the active management area,

less the amount of any right obtained pursuant to section

45-463 by the person withdrawing groundwater from

such land which has not been subtracted by the person

withdrawing the groundwater in calculating the amount

of another right pursuant to this section.

B. If the calculation in subsection A of this section

results in an amount greater than zero, that amount is a

grandfathered right in addition to any right obtained

pursuant to section 45-463.

C. For the purposes of this section, “person” includes:

1. A city, town or private water company which owns

land outside of the service area of such city, town or

private water company from which groundwater was

being legally withdrawn for a non-irrigation use as of the

date of the designation of the active management area.

2. A city, town or private water company withdrawing

groundwater from within its service area pursuant to a

certificate of exemption.

3. Any other non-irrigation user.

aaa

App. 18

D. Ifa person has been using groundwater for less than

one year during the twelve months immediately preced-

- ing the date of the designation of the active management

area, the amount of the grandfathered right pursuant to

this section is the annual amount determined by the

director to be reasonable for a full year to meet the

requirements for a facility owned by such person in exis-

tence as of the date of the designation of the active

management area.

E. Ifa person has received a certificate of environmental

compatibility pursuant to title 40, chapter 2, article 6.2 for .

the construction of an electrical generating facility within

a subsequent active management area for which expendi-

tures or financial commitments for land acquisition,

water development, materials, construction or engineer-

ing in excess of five hundred thousand dollars have been

made before the date of the notice of the initiation of

designation procedures or the call for the election for the

area, the amount of the grandfathered right pursuant to

this section is the annual amount determined by the

director to be reasonable to meet the operational require-

ments for the facility for a full year.

F. The right to withdraw groundwater pursuant to this

section is a non-irrigation grandfathered right not associ-

ated with retired irrigated land, or a type 2 non-irrigation

grandfathered right.

G. A type 2 non-irrigation grandfathered right may be

leased. Except as provided in subsection H of this section,

the owner or lessee of a type 2 non-irrigation grand-

fathered right may withdraw groundwater pursuant to

the right only from a location within the same active

App. 19

management area in which the certificate of grand-

fathered right is issued.

H. Beginning July 1, 1994, the holder of a type 2 non-

irrigation grandfathered right issued in the Tucson active

management area prior to July 1, 1994, may withdraw

groundwater pursuant to the right only from a location

within the same active management area in which the

well or wells listed on the certificate of grandfathered

right on July i, 1994, are located. If no well is listed on the

certificate of grandfathered right on July 1, 1994, the

holder of the right may withdraw groundwater pursuant

to the right only from a location within the same active

management area in which the land from which the origi-

nating withdrawals were made is located. For purposes

of this subsection, the term “originating withdrawals”

means the withdrawals of groundwater on which the

issuance of a type 2 non-irrigation grandfathered right

was based.

I. If the user of a type 2 non-irrigation grandfathered

right is different from the owner of the right, either the

owner, or the user of the right on behalf of the owner,

may apply for a certificate of grandfathered right pur-

suant to section 45-476.

Ariz..Rev. Stat. 45-465. Irrigation grandfathered right;

determination of acres entitled to and amount; appurte-

nancy

A. In an active management area, a person who owns

land which was legally irrigated in whole or in part with

App. 20

groundwater at any time during the five years preceding

January 1, 1980 for initial active management areas or the

date of the notice of the initiation of designation pro-

cedures or the call for the election for subsequent active

management areas, which is capable of being irrigated

and which has not been retired from irrigation for a non-

irrigation use pursuant to section 45-463 or 45-469 has the

right to use groundwater for the irrigation of such land as

determined pursuant to subsection B of this section.

B. The director shall compute the maximum amount of

groundwater which may be used pursuant to this section

as follows:

1. Determine the farm units, as defined in section

45-402, within the active management area.

2. Determine the irrigation water duty, as defined in

section 45-402, for each farm unit in an active manage-

ment area, pursuant to sections 45-564 through 45-568.

3. Determine the water duty acres for each farm within

the farm unit. The water duty acres are the highest

number of acres in the farm, taking land rotation into

account, which were legally irrigated during any one

year in the five years preceding January 1, 1980 for initial

active management areas or the date of the notice of the

initiation of designation procedures or the call for the

election for subsequent active management areas.

4. Determine the irrigation acres for each farm within

the farm unit. The irrigation acres are the acres in the

farm which were legally irrigated at any time during the

five years preceding January 1, 1980 for initial active

App. 21

management areas or the date of the notice of the initia-

tion of designation procedures or the call for the election

for subsequent active management areas, which are capa-

ble of being irrigated and which have not been retired

from irrigation for a non-irrigation use pursuant to sec-

tion 45-463 or 45-469.

5. Multiply the water duty acres for each farm within

the farm unit by the irrigation water duty for the farm

unit and divide that amount by the number of irrigation

acres in the farm. The result shall be the maximum

amount of groundwater which may be used per year for

the irrigation of each irrigation acre in the farm. If the

farm is located in an active management area other than

the Santa Cruz active management area and is irrigated

solely with groundwater, the- amount of groundwater

used by the farm for irrigation shall be accounted for

pursuant to section 45-467, subsection C. If a farm is

located in an active management area other than the

Santa Cruz active management area and is irrigated with

a combination of surface water and groundwater, the

amount of groundwater used by the farm for irrigation

shall be accounted for pursuant to section 45-467, subsec-

tion D. If a farm is located in the Santa Cruz active

management area, the amount of water, other than stored

water, withdrawn from a well and used by the farm for

irrigation purposes shall be accounted for pursuant to

section 45-467, subsection E or F.

C. The right to use groundwater pursuant to this section

for the irrigation of an irrigation acre is an irrigation

grandfathered right and is appurtenant to that acre. An

irrigation grandfathered right is owned by the owner of

eae

the land to which it is appurtenant and may be leased for

an irrigation use with the land to which it is appurtenant.

App. 22

D. A person who owns or leases irrigation acres may

use the total amount of groundwater allowed by the

irrigation grandfathered right for such acres for the irri-

gation of all or a portion of such acres.

E. If the irrigation water duty for the farm unit in which

an irrigation acre is located is reduced by the director

pursuant to article 9 of this chapter, the amount of

groundwater which may be used for the irrigation of

such acre pursuant to the irrigation grandfathered right

under this section is reduced accordingly.

F. For purposes of this chapter, the amount of ground-

water which may be used or is used is the amount of

groundwater withdrawn by the groundwater user, mea-

sured at the point of withdrawal, and the amount of

groundwater received by the groundwater user from an

irrigation district or other source.

Ariz. Rev. Stat. 45-474. Conveyance of type 2 non-irri-

gation grandfathered right; amount.

A. The owner of a type 2 non-irrigation grandfathered

right may convey the right for any non-irrigation use,

except that:

1. A type 2 non-irrigation grandfathered right that is

used for purposes of mineral extraction or processing

may be conveyed only for a mineral extraction or pro-

cessing use.

App. 23

2. A type 2 non-irrigation grandfathered right that is

used for purposes of electrical energy generation may be

conveyed only for an electrical energy generation use.

3. A type 2 non-irrigation grandfathered right in a sub-

sequent active management area that is used for purposes

of demonstrating and providing an assured water supply

pursuant to section 45-576 in an initial active manage-

ment area may be conveyed only for the same use and

only with the approval of the director. The director shall

not withhold approval of a conveyance under this para-

graph if the right is no longer needed to provide the

assured water supply that it was used to demonstrate.

B. A type 2 non-irrigation grandfathered right may not

be conveyed for an irrigation use.

C. If a type 2 non-irrigation grandfathered right is con-

veyed, the full amount of the right is conveyed.

Ariz. Rev. Stat. 45-492. Withdrawals by cities, towns

and private water companies within service areas; con-

tract to supply groundwater

A. Except as provided in subsection D of this section, in

an active management area, a city, town or private water

company shall have the right to withdraw and transport

groundwater within its service area for the benefit of

landowners and residents within its service area, and the

landowners and residents are entitled to use the ground-

water delivered, subject to:

App. 24

1. The provisions of articles 8 and 8.1 of this chapter

relating to transportation of groundwater.

2. Conservation requirements developed by the director

pursuant to article 9 of this chapter.

B. Claims of landowners to irrigation grandfathered.

rights or type 1 or 2 non-irrigation grandfathered rights

shall be subject to the provisions of article 5 of this

chapter.

C. A city, town or private water company may contract

to supply groundwater to a city, town or private water

company in the same active management area if it is

consistent with the management plan for the active man-

agement area and section 45-576 and is approved by the

director.

D. In an active management area, a city, town or private

water company whose service area has qualified as a

member service area under title 48, chapter 22, or as a

water district member service area under title 48, chapter

28, has the right to withdraw and transport groundwater

within its service area for the benefit of landowners and

residents within its service area, and the landowners and

residents are entitled to use the groundwater delivered,

subject to the provisions of subsection A of this section

and, to the extent the groundwater delivered is consid-

ered excess groundwater as defined and used in title 48,

chapter 22 or 28, as applicable, subject to the payment by

the city, town or private water company of the replenish-

ment tax levied from time to time by a conservation

district under title 48, chapter 22, or a water district

under title 48, chapter 28, whichever is applicable. A city,

town or private water company shall be deemed to have

App. 25

failed to pay the replenishment tax only if the conserva-

tion district or the water district provides notice to the

department of a delinquency in the payment of the

replenishment tax pursuant to section 48-3781, subsection

G or section 48-4982, subsection G, as applicable.

Ariz. Rev. Stat. 45-513. Dewatering permit; definition;

priorities for use of groundwater; conditions on direc-

tor; duration of permit

A. Except as provided in subsection F of this section, a

person who is engaged in or proposes to engage in the

extraction and processing of minerals shall be issued a

dewatering permit for the beneficial use of the land for

mineral extraction, for metallurgical processing and for

compliance with applicable environmental controls. For

purposes of this section, “dewatering” means the with-

drawal of groundwater from pits, from in, under and

around ore bodies in proximity to pits and from under-

ground workings. Dewatering does not include process

water and tailing water recovered from or pumped from

beneath tailing ponds.

B. A person who is engaged in or proposes to engage in

the extraction and processing of minerals may recover

from or pump from beneath tailing ponds process water

and tailing water without obtaining a permit under this

article, if that water is recycled into the extraction or

metallurgical process or is withdrawn to comply with

applicable environmental controls. Such a person may not

drill or cause to be drilled a well for the purpose of

pumping or recovering process water or tailing water

App. 26

from beneath tailing ponds for recycling into the extrac-

tion or metallurgical process without first filing a notice

of intention to drill under section 45-596.

C. Groundwater withdrawn pursuant to a dewatering

permit shall be used in the following order of priority:

1. To meet mineral extraction, metallurgical processing

and environmental control requirements of the permittee.

2. To a city, town, private water company or farm and

any other person whose respective ability to withdraw

groundwater has been adversely affected by a dewatering

permit. Such water shall be equitably allocated by the

director without costs but subject to the conditions set

forth in subsection D of this section among such persons

adversely affected by such dewatering. A person who

receives an allocation of water under this paragraph shall

reduce his groundwater withdrawals by the amount of

water he receives under this paragraph. A person receiv-

ing water under this paragraph does not thereby forfeit

or abandon his right to withdraw groundwater.

3. For municipal, commercial, domestic and industrial

needs of communities and residential areas directly

related to the mineral extraction and metallurgical pro-

cessing operation of the permittee.

4. To irrigate land owned or controlled by the permittee

which is entitled to the use of groundwater for irrigation.

5. To the director for such distribution as will best

achieve the goals and purposes of the management plan

for the active management area.

6. For such other legal purpose as the permittee elects.

App. 27

D. Groundwater made available to the director for dis-

tribution or allocation under this section is subject to the

following conditions:

1. The permittee shall deliver the groundwater to the

boundary of his property but shall not be obligated to

deliver it further.

2. The permittee shall not be required to treat the chemi-

cal quality of the groundwater for distribution or alloca-

tion.

3. The permittee shall not be required to make the

groundwater available if dewatering ceases, or if all or

any portion of the groundwater is needed for a purpose

having a higher priority as specified in subsection C of

this section.

4. The person actually using the groundwater distrib-

uted or allocated by the director shall be responsible for

paying any withdrawal fees required under section

45-611.

5. If the director sells water, proceeds shall be applied as

follows:

(a) To cover costs, if any, of the director in delivering

water to other users.

(b) To cover the permittee’s cost in transporting water to

the boundary of his property.

(c) To the active management area for general purposes

as determined by the director.

E. A permit issued pursuant to this section shall be

granted for a period of up to fifty years, subject to

App. 28

renewal under the same criteria used in granting the

original permit.

F. Beginning January 1 of the calendar year following

the year in which a groundwater replenishment district is

required to submit its preliminary plan pursuant to sec-

tion 45-576.02, subsection A, paragraph 1, and except for

an application to renew a dewatering permit, on receiv-

ing a permit application the director shall not issue a

permit for a well in the district unless at the time the

application for the permit is filed:

1. The director has determined that the district’s plan

for operation is consistent with achieving the manage-

ment goal, according to section 45-576.03, subsection E,

and the designation has not expired.

2. The master replenishment account, as established in

section 45-858.01, does not have a debit balance in an

amount in excess of the amount allowed under section

45-576.01, subsection A, paragraph 3.

Ariz. Rev. Stat. 45-514. Mineral extraction and metal-

lurgical processing permit; conditions for issuance;

duration of permit

A. Except as provided in subsection D of this section, a

person who is engaged in or proposes to engage in the

extraction and processing of minerals shall be issued a

permit to withdraw groundwater in the required amount,

if all of the following apply:

App. 29

1. The amount of groundwater available for mineral

extraction, metallurgical processing and compliance with

applicable environmental controls under a dewatering

permit is insufficient.

2. Uncommitted municipal and industrial central Ari-

zona project water is not available at the point where the

operator’s wellhead or distribution system would other-

wise be, at a cost which does not exceed the current

municipal and industrial central Arizona project delivery

rates.

3. Other surface water of adequate quality or effluent of

adequate quality is not available at the point where the

operator’s wellhead or distribution system would other-

wise be, at a cost, including treatment costs, which does

not exceed by twenty-five per cent the cost the operator

would otherwise incur in withdrawing groundwater.

4. The applicant does not own or lease type 2 non-

irrigation grandfathered rights originally based on with-

drawals of groundwater for the extraction or processing

of minerals that the applicant is not using or leasing and

that can be used at the proposed location without impos-

ing an unreasonable economic burden on the applicant.

B. A permit issued pursuant to this section shall be

granted for a period of up to fifty years, subject to

renewal under the same criteria used in granting the

original permit.

C. If, during the duration of a mineral extraction and

metallurgical processing permit, the director determines

App. 30

that uncommitted municipal and industrial central Ari-

zona project water is available or surface water of ade-

quate quality or effluent of adequate quality is available

to the permittee at a cost comparable to groundwater, the

director may require the permittee to use such water in

lieu of groundwater.

D. Beginning January 1 of the calendar year following

the year in which a groundwater replenishment district is

required to submit its preliminary plan pursuant to sec-

tion 45-576.02, subsection A, paragraph 1, and except for

an application to renew a mineral extraction and metal-

lurgical processing permit, on receiving a permit applica-

tion the director shall not issue a permit for a well in the

district unless at the time the application is filed:

1. The director has determined that the district’s plan

for operation is consistent with achieving the manage-

ment goal, according to section 45-576.03, subsection E,

and the designation has not expired.

2. The master replenishment account, as established in

section 45-858.01, does not have a debit balance in an

amount in excess of the amount allowed under section

45-576.01, subsection A, paragraph 3.

45-515.

App. 31

Ariz. Rev. Stat. 45-515. General industrial use permits;

conditions for issuance; duration of permit

A. Except as provided in subsection D of this section,

the director shall issue a permit to withdraw groundwa-

ter from a point outside of the exterior boundaries of the

service area of a city, town or private water company for

a general industrial use outside of the exterior bound-

aries of such service area if the director determines that

all of the following apply:

1. Uncommitted municipal and industrial central Ari-

zona project water is not available at the point where the

operator’s wellhead or distribution system would other-

wise be, at a cost which does not exceed the current

municipal and industrial central Arizona project rates.

2. Other surface water of adequate quality or effluent of

adequate quality is not available at the point where the

operator’s wellhead or distribution system would other-

wise be, at a cost, including treatment costs, which does

not exceed by twenty-five per cent the cost the operator

would otherwise incur in withdrawing groundwater.

3. Irrigation grandfathered rights appurtenant to acres

of land in reasonable proximity to the intended general

industrial use are not available for purchase at a reason-

able price or cannot be acquired by eminent domain and

the applicant does not own or lease grandfathered rights

that the applicant is not using or leasing, that may be

used for the intended general industrial use and that can

be used for the intended general industrial use without

imposing an unreasonable economic burden on the appli-

cant.

App. 32

4. The intended general industrial use, if located within

three miles of the exterior boundaries of thé service area

of a city, town or private water company, has been denied.

service by the city, town or private water company at the

customary rate in the customary manner. The require-

ment of this paragraph does not apply to an expanded

animal industry use.

5. The management plan for the active management

area can be adjusted to accommodate the intended gen-

eral industrial use consistent with the achievement of the

management goal for the active management area.

6. There is an assured water supply for the intended use

at the intended point of withdrawal. The director may

waive this requirement if the director is unable to deter-

mine if there is an assured water supply because of

hydrogeologic conditions underlying the point of with-

drawal. For purposes of this section, “assured water sup-

ply” means that sufficient groundwater of adequate

quality will be available to the applicant to satisfy the

projected general industrial use for the duration of the

permit.

7. If anew well or replacement well at a new location is

to be constructed, a permit for the well has been issued

pursuant to section 45-599.

B. A permit issued pursuant to this section shall be

granted for a period of up to fifty years, subject to

renewal under the same criteria used in granting the

original permit.

C. If, during the life of the permit, the director deter-

mines that uncommitted municipal and industrial central

App. 33

Arizona project water is available or other water or efflu-

ent of adequate quality is available at a cost comparable

to groundwater, the director may require the permittee to

use such water in lieu of groundwater.

D. Beginning January 1 of the calendar year following

the year in which a groundwater replenishment district is

required to submit its preliminary plan pursuant to sec-

tion 45-576.02, subsection A, paragraph 1, and except for

an application to renew a general industrial use permit,

on receiving a permit application the director shall not

issue a permit for a well in the district unless at the time

the application is filed:

1. The director has determined that the district’s plan .

for operation is consistent with achieving the manage-

ment goal, according to section 45-576.03, subsection E,

and the designation has not expired.

2. The master replenishment account, as established in

section 45-676, does not have a debit balance in an

amount in excess of the amount allowed under section

45-576.01, paragraph 3.

Ariz. Rev. Stat. 45-563. Management plans in active

management areas; management periods; general provi-

sions

A. The director shall develop a management plan for

each initial active management area for each of five man-

agement periods pursuant to the guidelines prescribed in

sections 45-564 through 45-568 and shall adopt the plans

only after public hearings held pursuant to sections

App. 34

45-570 and 45-571. The plans shall include a continuing

mandatory conservation program for all persons with-

drawing, distributing or receiving groundwater designed

to achieve reductions in withdrawals of groundwater.

B. The director shall develop a management plan for the

Santa Cruz active management area for the third, fourth

and fifth management periods pursuant to the guidelines

prescribed in sections 45-566, 45-566.01, 45-567, 45-567.01,

45-568 and 45-568.01 and shall adopt the plans only after

public hearings held pursuant to sections 45-570 and

45-571. The plans shall include a continuing mandatory

conservation program designed to achieve the manage-

ment goal of the active management area for all persons

withdrawing water, other than stored water, from a well

and all persons distributing or receiving water, other than

stored water, from a well. The plans shall also include

criteria for the location of new wells and replacement

wells in new locations consistent with the management

goal of the active management area.