Az Water Co v. Az Dept of Water Resources

SUPREME COURT OF ARIZONA
En Banc
ARIZONA WATER COMPANY, an ) Arizona Supreme Court
Arizona corporation, ) No. CV-03-0321-PR
)
Plaintiff-Appellee ) Court of Appeals
Cross-Appellant, ) Division One
) No. 1 CA-CV 02-0276
v. )
)
ARIZONA DEPARTMENT OF WATER ) Maricopa County
RESOURCES, H.R. GUENTHER, in his ) Superior Court
capacity as Director of the ) Nos. CV 90-001840
Arizona Department of Water ) CV 99-008015
Resources, )
)
Defendants-Appellants )
Cross-Appellees, ) O P I N I O N
)
ARIZONA CORPORATION COMMISSION, )
)
Intervenor-Appellee. )
)
__________________________________)
Appeal from the Superior Court in Maricopa County
The Honorable Roger W. Kaufman, Judge
VACATED AND REMANDED
Opinion of the Court of Appeals, Division One
205 Ariz. 532, 73 P.3d 1267AFFIRMED IN PART, VACATED IN PART
ARIZONA DEPARTMENT OF WATER RESOURCES Phoenix
By: W. Patrick Schiffer
Kenneth C. Slowinski
Nicole D. Swindle
Attorneys for Defendants-Appellants/Cross-Appellees
Arizona Department of Water Resources
FENNEMORE CRAIG Phoenix
By: Timothy Berg
Norman D. James
Thomas R. Wilmoth
Attorneys for Plaintiff-Appellee/Cross-Appellant
Arizona Water Company
SALMON LEWIS & WELDON PLC Phoenix
By: M. Byron Lewis
Lisa M. McKnight
Attorneys for Amici Curiae
Salt River Valley Water Users’ Association and
Salt River Project Agricultural Improvement and Power District
H U R W I T Z, Justice
¶1 The issue in this case is whether the 1990-2000
management plan adopted by the Arizona Department of Water
Resources (“ADWR” or the “Department”) for the Phoenix active
management area violated the Arizona Groundwater Code (the
“Code”). We conclude that ADWR was statutorily authorized to
promulgate those portions of the management plan in which per
capita conservation requirements were directly imposed on water
providers, but was not mandated by the Code to impose
conservation requirements directly on all “end users.” We also
conclude ADWR may consider a provider’s use of Central Arizona
Project (“CAP”) water in calculating that provider’s total
annual per capita water use.
2
I.
A.
¶2 The Groundwater Code, Ariz. Rev. Stat. (“A.R.S.”) §§
45-401 to -704 (2003 & Supp. 2003), was originally enacted as
part of the Groundwater Management Act of 1980, 1980 Ariz. Sess.
Laws, 4th Spec. Sess., ch. 1. In adopting the Code, the
legislature found “that the people of Arizona are dependent in
whole or in part upon groundwater basins for their water supply
and that in many basins and sub-basins withdrawal of groundwater
is greatly in excess of the safe annual yield.” A.R.S. § 45-
401(A). The legislature further found that these withdrawals
were “threatening to destroy the economy of certain areas of
this state and [were] threatening to do substantial injury to
the general economy and welfare of this state and its citizens.”
Id.
¶3 The Code was designed to protect the state’s economy
and welfare, and to “provide a framework for the comprehensive
management and regulation of the withdrawal, transportation,
use, conservation and conveyance of rights to use the
groundwater in this state.” A.R.S. § 45-401(B). Responsibility
for these critical matters was placed in the hands of ADWR,
A.R.S. § 45-102(A) (2003), headed by a Director, A.R.S. § 45-
102(B), with sweeping “general control and supervision” of
groundwater, A.R.S. § 45-103(B) (2003).
3
¶4 The Groundwater Code established four initial “active
management areas” (“AMAs”). A.R.S. § 45-411(A).1 ADWR was
required to adopt five successive conservation management plans
for each AMA, one for each decade beginning in 1980.2 A.R.S. §
45-563(A). For the Tucson, Phoenix, and Prescott AMAs, the
Code’s “management goal” was to establish “safe-yield,” a
balance between the amount of groundwater withdrawn and the
amount naturally and artificially recharged, A.R.S. § 45-
561(12), by no later than 2025. A.R.S. § 45-562(A).3
¶5 The Groundwater Code required, as part of the first
management plan for the Tucson, Phoenix, and Prescott AMAs, that
the Director establish “[a] conservation program for all non-
1
The four original AMAs were the Tucson, Phoenix,
Prescott, and Pinal AMAs. A.R.S. § 45-411(A). In 1994, the
legislature created the Santa Cruz AMA from a portion of the
Tucson AMA. A.R.S. § 45-411.03(A).
2
The first four management plans apply, respectively,
to the four decades between 1980 and 2020. A.R.S. §§ 45-564
(first plan), -565 (second plan), -566 (third plan), -567
(fourth plan). The fifth management plan will apply between
2020 and 2025. A.R.S. § 45-568.
3
For the Pinal AMA, the “management goal” was “to allow
development of non-irrigation uses as provided in this chapter
and to preserve existing agricultural economies . . . for as
long as feasible, consistent with the necessity to preserve
future water supplies for non-irrigation uses.” A.R.S. § 45-
562(B). For the Santa Cruz AMA, the “management goal” was to
“maintain a safe-yield condition . . . and to prevent local
water tables from experiencing long-term declines.” A.R.S. §
45-562(C).
4
irrigation uses of groundwater.”4 A.R.S. § 45-564(A)(2). For
municipal uses,5 the initial plans were to require “reasonable
reductions in per capita use and such other conservation
measures as may be appropriate for individual users.” Id. For
the second management period, the Director was required to
“[e]stablish additional conservation requirements for all non-
irrigation uses of groundwater.” A.R.S. § 45-565(A)(2). With
respect to municipal uses, the second plan “shall require
additional reasonable reductions in per capita use to those
required in the first management period and use of such other
conservation measures as may be appropriate for individual
users.” Id.
¶6 The Department’s primary method of implementing the
Code’s conservation requirements has been the “Total Gallons Per
4
“Non-irrigation use” is defined by the Code, for all
but the Santa Cruz AMA, as “a use of groundwater other than an
irrigation use.” A.R.S. § 45-402(28)(a). “Irrigation use” is
defined generally as the use of groundwater to produce plants
for various agricultural purposes. A.R.S. § 45-402(23)(a).
5
“Municipal use” is defined as
all non-irrigation uses of water supplied by a city,
town, private water company or irrigation district,
except for uses of water, other than Colorado river
water, released for beneficial use from storage,
diversion or distribution facilities to avoid spilling
that would otherwise occur due to uncontrolled surface
water inflows that exceed facility capacity.
A.R.S. § 45-561(11).
5
Capita Per Day” (“GPCD”) programs in the management plans.
These programs limit the total quantity of water a provider may
deliver to its customers each year.6 This approach places the
principal burden of achieving reductions in groundwater use on
water providers, who are charged in ADWR’s management plans with
reducing their total GPCD during each management period. While
the second management plan (“SMP”) for the Phoenix AMA directly
regulates groundwater usage by some high-volume end users, the
Phoenix SMP does not impose per capita conservation requirements
directly on all end users.7
B.
¶7 Arizona Water Company (“AWC”) is a private water
company operating in the Phoenix AMA. See A.R.S. § 45-
402(30)(a) (defining “[p]rivate water company”). Because AWC
supplies groundwater for non-irrigation use, it is also
classified under the Groundwater Code as a municipal provider.
See A.R.S. § 45-561(10) (defining “[m]unicipal provider”). In
1988, AWC filed administrative petitions with ADWR seeking
6
The total annual quantity of water a provider can
deliver to its customers is obtained by multiplying the
provider’s GPCD (set by ADWR in the management plan) by the
company’s service area population by the number of days in the
year.
7
The end users subject to direct regulation in the
Phoenix SMP include turf-related facilities (parks, golf courses
and common areas of housing developments), publicly owned
rights-of-way, and new large cooling users.
6
review and rehearing of the Director’s order adopting the
Phoenix SMP. The Director denied relief. In 1990, AWC filed
suit in superior court seeking judicial review of the Director’s
decision.
¶8 AWC’s complaint alleged that the SMP violated the
Groundwater Code because it did not impose conservation
regulations directly on AWC’s end users. The complaint also
challenged various other provisions in the SMP applicable to
AWC’s water utility companies. Shortly after the complaint was
filed, AWC applied to ADWR for administrative review of the GPCD
requirements imposed upon several of its water utilities,
including its Apache Junction system. The superior court action
was stayed pending the Director’s review of AWC’s administrative
applications. AWC and ADWR eventually resolved all disputes
except those pertaining to the Apache Junction system. The
Apache Junction system remained out of compliance with the GPCD
requirements of the SMP because of rapidly increasing
nonresidential uses of water, primarily by golf courses, without
proportionate increases in the population served by the utility.8
8
When the SMP was promulgated in 1989, the Apache
Junction system pumped 2400 acre feet of groundwater, and served
a population of 20,557. In 1997, the population of the system
had increased by about fifty percent, but the use of groundwater
had increased sixty-three percent to 3920 acre feet.
7
¶9 After the parties’ failure to resolve the dispute over
the Apache Junction system, an administrative law judge
conducted a hearing and recommended a recalculation of the
Apache Junction GPCD based on updated population estimates.
Even after the recalculation, however, the Apache Junction
system was still not in compliance with the SMP, and the judge
recommended denial of AWC’s other requests for relief. In 1999,
the Director adopted the recommended decision of the
administrative law judge, with minor modifications. AWC then
filed suit in superior court seeking review of the 1999
decision, and the court consolidated this suit with the pending
1990 action.
¶10 AWC’s superior court complaints alleged that the GPCD
mandates in the SMP conflicted with requirements imposed by the
Arizona Corporation Commission under AWC’s certificates of
necessity and convenience to serve customers in the Apache
Junction area. The superior court therefore requested the
Commission to intervene. The Commission did so and argued that
ADWR had no authority to tell a water utility subject to
Commission regulation which customers it could or could not
serve. Despite its legal position, the Commission saw no
present irreconcilable conflict between it and ADWR with respect
to AWC’s situation, and suggested that because it had worked
collaboratively with “sister state agencies” in the past when
8
issues of overlapping regulation were presented, it was
confident that it would be able to work with ADWR should a
conflict arise in the future.
¶11 In 2002, the superior court entered a judgment holding
that the SMP was unenforceable “because it fails to address
water utilization by end users.”9 The court remanded the case to
ADWR with directions to adopt an amended plan, and forbade the
Department from enforcing the GPCD requirement for the AWC
Apache Junction system “[u]ntil such deficiencies are
corrected.”
C.
¶12 ADWR appealed, and in a 2-1 opinion, the court of
appeals affirmed the superior court judgment insofar as it held
the SMP invalid for failure to impose conservation requirements
on end users. Ariz. Water Co. v. Ariz. Dep’t of Water Res., 205
Ariz. 532, 73 P.3d 1267 (App. 2003). The majority acknowledged
that “there is no specific statutory provision by which the
legislature definitively ordered the Department to create and
impose conservation measures for end users.” Id. at 537 ¶ 18,
9
At the time of the trial court’s decision in 2002, the
SMP, which covered the decade from 1990 to 2000, had long since
expired. The issues raised in this case are not moot, however,
because ADWR’s third management plan is virtually identical in
all relevant respects to the SMP and AWC currently has an action
pending in superior court challenging that plan. See Ariz.
Water Co. v. Ariz. Dep’t of Water Res., 205 Ariz. 532, 535 ¶ 8
n.1, 73 P.3d 1267, 1270 n.1 (App. 2003).
9
73 P.3d at 1272. Nonetheless, citing various provisions of the
Groundwater Code, the majority below “develop[ed] a firm
conviction that the legislature intended just that.” Id. The
majority concluded that
common sense dictates that if one is assigned the duty
of conserving a limited resource like groundwater, one
needs the authority, and one must assume the
corresponding responsibility, to manage the resource
throughout its entire cycle, from extraction to
transportation to consumption and even recharge. And
if the manager is to obtain the desired conservation
result, all those participating in the cycle must be
managed directly in regard to their conservation
responsibility, including the customer who uses the
groundwater and not just the provider who extracts,
transports, and delivers it to him.
Id.¶13 Judge Irvine dissented from this conclusion. He
relied primarily on A.R.S. § 45-565(A)(2), which requires the
SMP to include for municipal uses “additional reasonable
reductions in per capita use to those required in the first
management period and use of such other conservation measures as
may be appropriate for individual users.” 205 Ariz. at 547 ¶
78, 73 P.3d at 1282 (Irvine, J., concurring in part and
dissenting in part). Judge Irvine read this language as
authorizing the Department to impose conservation requirements
directly on end users, but not mandating such direct regulation.
Id. at 547-48 ¶¶ 76-80, 73 P.3d at 1282-83. He also parted
company with the majority on its “common sense” view of the
10
Code, arguing that it was not obvious that direct regulation of
all end users was sensible policy, and that in any event the
legislature had left such decisions to the Director’s
discretion. Id. at 548 ¶¶ 81-82, 73 P.3d at 1283.
¶14 Although it concluded that management plans must
regulate end users, the majority below declined to decide
whether the Groundwater Code gave ADWR authority to impose
conservation requirements directly on providers even in the
presence of comprehensive regulation of end users, finding that
AWC had not raised the issue. Id. at 538 ¶ 27, 73 P.3d at 1273.
Judge Irvine, however, concluded that AWC had raised this issue,
and explained in detail his view that the legislature had
authorized ADWR to impose conservation requirements directly on
providers. Id. at 544-46 ¶¶ 60-73, 73 P.3d at 1279-81(concurring and dissenting opinion). The majority noted in
dictum that “if we believed Arizona Water had properly raised
the issue, we would respond to Arizona Water’s contention
precisely as has our dissenting colleague.” Id. at 538 ¶ 27, 73
P.3d at 1273.
¶15 Finally, the court of appeals turned to an issue
“presented to the superior court but not decided by it”: whether
ADWR “is authorized to include Central Arizona Project water
used by a provider in determining that provider’s compliance
with its total GPCD requirements.” Id. at 536 ¶ 13, 73 P.3d at
11
1271. The court unanimously concluded that the Groundwater Code
authorized ADWR to consider use of CAP water in determining a
provider’s compliance with the GPCD. Id. at 541-43 ¶¶ 47-52, 73
P.3d at 1276-78; id. at 543 ¶ 58, 73 P.3d at 1278 (concurring
and dissenting opinion).
¶16 ADWR petitioned this court for review of the opinion
below insofar as it vacated the SMP for failure sufficiently to
regulate end users. AWC cross-petitioned for review on the CAP
water issue. We granted review of both petitions because of the
statewide importance of the issues presented. We have
jurisdiction pursuant to Article 6, Section 5(3) of the Arizona
Constitution, Arizona Rule of Civil Appellate Procedure 23, and
A.R.S. § 12-120.24 (2003). Because the case involves issues of
statutory interpretation, our review is de novo. Bilke v.
State, 206 Ariz. 462, 464 ¶ 10, 80 P.3d 269, 271 (2003).
II.
¶17 This case presents three related issues of statutory
interpretation. First, we must determine whether the
Groundwater Code authorizes ADWR to impose GPCD requirements
directly on municipal providers such as AWC. If we conclude
that ADWR has that statutory authority, we must next decide
whether the Code requires that the Director, as a prerequisite
for imposing such GPCD requirements, must also impose
conservation requirements directly on all end users. Finally,
12
if we conclude that ADWR can impose GPCD requirements directly
on AWC, we must also decide whether the Code permits ADWR to
consider CAP water use in determining whether AWC has exceeded
the mandated GPCD.
A.
¶18 AWC first argues that the Code provides no authority
for ADWR to impose GPCD requirements directly on municipal
providers.10 The argument is grounded on A.R.S. § 45-565(A)(2),
which provides that the SMP “shall require additional reasonable
reductions in per capita use to those required in the first
management period and use of such other conservation measures as
may be appropriate for individual users.” See also A.R.S. § 45-
564(A)(2) (containing parallel language applicable to the first
management plan). AWC contends that because the statute refers
to per capita “use,” it confers upon ADWR no authority to impose
GPCD requirements on providers, as opposed to end users, of
groundwater. Rather, AWC contends, municipal providers may only
be regulated under A.R.S. § 45-565(A)(5), which requires the
10
We agree with Judge Irvine that AWC properly raised
this issue in the court of appeals. Ariz. Water Co., 205 Ariz.
at 544 ¶¶ 60-61, 73 P.3d at 1279 (concurring and dissenting
opinion). In any event, because this court can affirm the
superior court’s judgment on any basis supported by the record,
AWC may raise this argument here. See Cross v. Cross, 94 Ariz.
28, 31, 381 P.2d 573, 575 (1963) (noting that this court “will
consider any legal theory within the issues and supported by the
evidence which tends to support and sustain the judgment of the
trial court”).
13
Director to impose “additional economically reasonable
conservation requirements” on private water companies, but does
not refer expressly to per capita use reductions.
¶19 The premise of AWC’s argument is that a municipal
provider does not “use” groundwater. However, the language of
the Code is directly to the contrary. Section 45-565.01(A)
requires management plans to make available to municipal
providers an alternative “non-per capita conservation program”
(“NPCCP”). Before the Director can grant the provider’s
application to participate in certain NPCCPs, he must make “a
preliminary determination that the municipal provider’s
projected groundwater use is consistent with achieving the
management goal of the active management area.” A.R.S. § 45-
565.01(E)(3) (governing applications for programs established
under § 45-565.01(C)(5)) (emphasis added); see also A.R.S. § 45-
565.01(E)(4) (containing similar language with respect to
applications for programs established under § 45-565.01(C)(6)).
The legislature thus plainly contemplated that a municipal
provider’s transfer of groundwater to end users can itself be a
“use” of that groundwater.
¶20 More significantly, the statute governing NPCCPs makes
plain that the legislature intended that ADWR have the authority
under A.R.S. § 45-565(A)(2) to impose GPCD requirements directly
on municipal providers. Section 45-565.01(H) states that a
14
municipal provider who has filed an NPCCP application “shall
comply with the per capita conservation requirements established
under § 45-565, subsection A, paragraph 2 until the director
approves the application.” The same statute provides that after
the application is approved, “the provider is exempt from the
per capita conservation requirements prescribed under § 45-565,
subsection A, paragraph 2.” This language conclusively
demonstrates that the legislature contemplated that GPCD
requirements could be imposed directly on municipal providers.
It would make no sense otherwise to offer NPCCP programs, which
are designed as alternatives to otherwise applicable GPCD
requirements, to municipal providers. Indeed, because NPCCP
programs are only available to municipal providers, and not to
individual end users, § 45-565.01(H) would be entirely
superfluous if municipal providers were not subject to GPCD
requirements in the first place.
B.
¶21 AWC next argues that before ADWR can impose GPCD
requirements on a municipal provider, it must also impose
conservation requirements directly on the provider’s end users.
This is the issue that divided the court below.
¶22 We start from the premise, candidly acknowledged both
by AWC and the majority below, “that there is no specific
statutory provision by which the legislature definitively
15
ordered the Department to create and impose conservation
measures for end users.” Ariz. Water Co., 205 Ariz. at 537 ¶
18, 73 P.3d at 1272. Nonetheless, the court of appeals, based
on its review of certain provisions of the Code, “develop[ed] a
firm conviction that the legislature intended just that.” Id.Our reading of the Code leads us to the opposite conclusion. We
hold that while the Code authorizes ADWR to impose conservation
requirements directly on end users, it does not require that the
Director always do so, or that he must impose requirements
directly on all end users.
¶23 The first provision of the Code cited by the majority
below, A.R.S. § 45-492(A)(2), simply provides that “a city, town
or private water company shall have the right to withdraw and
transport groundwater,” and the “landowners and residents” may
use groundwater delivered to them, “subject to . . .
[c]onservation requirements developed by the director pursuant
to article 9 of this chapter [A.R.S. §§ 45-561 to -578].” This
statute does not mandate that these conservation requirements be
imposed directly on end users; instead, it merely requires that
groundwater use in an AMA be subject to whatever conservation
requirements the Director promulgates under article 9.
¶24 AWC also relies on A.R.S. § 45-563(A). Section 45-
563(A) generally requires the Director to promulgate management
plans for each AMA for the five management periods, and provides
16
that “[t]he plans shall include a continuing mandatory
conservation program for all persons withdrawing, distributing
or receiving groundwater designed to achieve reductions in
withdrawals of groundwater.” Notably, this statute does not
require the Director to promulgate separate programs for each of
these groups. Instead, it mandates that each plan include such
a program. The fact that the onus for complying with the GPCD
program falls primarily on providers surely does not render it
anything other than a “mandatory conservation program” under §
45-563(A). And, because the GPCD definitively limits the amount
of groundwater that end users in an AMA may receive, it is also
surely a “program for all persons . . . receiving groundwater,”
as contemplated by the statute.
¶25 As did the majority below, AWC places primary reliance
on the parallel provisions of A.R.S. §§ 45-564(A)(2) and
-565(A)(2), which govern the first and second management plans.
Section 45-564(A)(2) requires that the first plan contain a
conservation program, which with respect to municipal uses
“shall require reasonable reductions in per capita use and such
other conservation measures as may be appropriate for individual
users.” Section 45-565(A)(2) provides that for municipal uses
the second plan “shall require additional reasonable reductions
in per capita use to those required in the first management
period and use of such other conservation measures as may be
17
appropriate for individual users.” AWC argues that these
subsections mandate that the SMP include conservation measures
imposed directly on individual users.
¶26 AWC’s reading of these provisions is flawed. The
final clause of each statute requires only that the plan include
“such other conservation measures as may be appropriate for
individual users.” This clause does not require the imposition
of conservation measures on end users. Instead, the statute
tells the Director to impose only such measures “as may be
appropriate,” leaving open the possibility that he may conclude
that no such measures, or only limited ones, are appropriate.
Thus, any purported requirement for mandatory conservation
requirements on all end users must necessarily come from the
previous clause of each statute, which provides that the program
developed by the Director for municipal uses “shall require
reasonable reductions in per capita use,” A.R.S. § 45-564(A)(2),
or “additional reasonable reductions in per capita use to those
required in the first management period,” A.R.S. § 45-565(A)(2).
¶27 However, neither of these provisions states that the
portion of the plan requiring “reasonable reductions in per
capita use” must be imposed directly on end users. Rather, the
statutes each provide that the “program shall require” such
reductions. A.R.S. §§ 45-564(A)(2) (emphasis added), -565(A)(2)
(same). The GPCD program in the Phoenix SMP meets that
18
statutory requirement. It requires reductions in per capita
use, even if the requirement is achieved through direct
regulation of AWC’s spigot, rather than through individualized
regulation of each user’s faucet.
¶28 AWC also suggests that §§ 45-564(A)(2) and -565(A)(2)
only pertain to regulation of end users, and that the
requirement in each statute for plans requiring “reasonable
reductions in per capita use” must therefore necessarily require
imposition of such measures on end users. But this reading
effectively rewrites the statutory scheme. For example, § 45-
565(A)(2) provides that for municipal uses, “the program shall
require additional reasonable reductions in per capita use . . .
and use of such other conservation measures as may be
appropriate for individual users.” AWC reads the statute as if
it instead provided that “the program shall require for
individual users additional reductions in per capita use . . .
and use of such other conservation measures as may be
appropriate.” But such a reading would mean that § 45-565(A)(2)
provided no basis for imposing GPCD requirements on anyone but
individual users. As we have noted above, A.R.S. § 45-565.01(H)
effectively dooms any such argument, by stating that a municipal
provider who applies for an NPCCP is not exempted from “per
capita conservation requirements established under § 45-565,
subsection A, paragraph 2” until the application is approved.
19
This statute necessarily assumes that § 45-565(A)(2) is not
limited to authorizing the imposition of conservation
requirements on individual users.
¶29 In short, the express language of the Code does not
support the conclusion reached below that the SMP must include
mandatory conservation requirements imposed directly on end
users. Indeed, the majority of the court of appeals effectively
conceded as much, suggesting instead that “common sense dictates
that if one is assigned the duty of conserving a limited
resource like groundwater, one needs the authority, and must
assume the corresponding responsibility, to manage the resource
throughout its entire cycle.” Ariz. Water Co., 205 Ariz. at537 ¶ 18, 73 P.3d at 1272. The court of appeals therefore held
that the statute required management of groundwater use by end
users, because “legislative enactments [must] be given a
sensible construction.” Id. ¶ 19. While the legislature could
have sensibly reached the conclusion that direct regulation of
all end users was necessary, it also could have sensibly
concluded that the goal of achieving per capita reductions in
groundwater use could be most effectively served by leaving to
the discretion of the expert Director of ADWR the decision about
whether GPCD requirements should be imposed directly on a
relatively small number of providers, rather than on hundreds of
thousands of end users. “Common sense” could lead to either
20
conclusion, and thus provides no basis for concluding that the
statute must have envisioned direct regulation of end users.
¶30 In circumstances like these, in which the legislature
has not spoken definitively to the issue at hand, “considerable
weight should be accorded to an executive department’s
construction of a statutory scheme it is entrusted to
administer.” Chevron, U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 844 (1984). In such cases, “a
court may not substitute its own construction of a statutory
provision for a reasonable interpretation made by the
administrator of an agency.” Id. ADWR has consistently
interpreted the Code as allowing it to impose GPCD requirements
directly on providers without also imposing conservation
requirements directly on all end users, and that interpretation
should be given great weight in the absence of clear statutory
guidance to the contrary. See Long v. Dick, 87 Ariz. 25, 29,
347 P.2d 581, 584 (1959) (holding that although administrative
interpretation of statutes is not binding on the court, the
court will accept an administrative body’s interpretation when
there is “[a]cquiescence in meaning over long periods of time”
so long as the interpretation is not “manifestly erroneous”).
¶31 Indeed, ADWR is “precisely the type of agency to which
deference should presumptively be afforded.” Fed. Election
Comm’n v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 37
21
(1981). The legislature mandated that the Director be an expert
in the field. See A.R.S. § 45-102(D) (requiring that the
Director “be experienced and competent in water resources
management and conservation, and . . . have proven
administrative ability”). In light of that expertise, the
legislature gave the Director, known colloquially as the “water
czar,” Desmond D. Connall, Jr., A History of the Arizona
Groundwater Management Act, 1982 Ariz. St. L.J. 313, 333, broad
powers to achieve groundwater conservation. See A.R.S. § 45-
103(B) (vesting in the Director “general control and
supervision” of state groundwater). In cases like this, in
which the statutory language is admittedly not dispositive,11 the
Director’s expert interpretation deserves considerable deference
by the judiciary, and should not be overturned simply because
judges find a greater “sensibility quotient,” Ariz. Water Co.,
205 Ariz. at 537 ¶ 19, 73 P.3d at 1272, in an alternative
interpretation of the statute.
¶32 In arguing against the Director’s interpretation, AWC
contends that the legislature could not have intended that
municipal providers be required to comply with GPCD requirements
without also providing them with tools to enforce cooperation by
11
See Ariz. Water Co., 205 Ariz. at 538 ¶ 26, 73 P.3d at
1273 (“[W]e must agree with the Department that the legislature
did not expressly order inclusion of end-user conservation
measures in the Department’s management plans . . . .”).
22
end users. But the legislature could have rationally concluded
that the Director was in the best position to decide whether
direct regulation of end users in any particular plan was
necessary to achievement of per capita conservation goals. In
certain circumstances, such direct regulation may be the most
efficient method of achieving the desired reduction of
groundwater use. In others, “imposing conservation requirements
on all end users who receive groundwater may do little to reduce
total groundwater use,” and “[t]he resources devoted to creating
and enforcing individual conservation requirements may be more
effectively utilized in other ways.” Id. at 548 ¶ 82, 73 P.3d
at 1283 (concurring and dissenting opinion).
¶33 As Judge Irvine noted, “whether it is sensible to
regulate end users is simply not addressed by the record before
us and is completely beyond our expertise.” Id. at 547 ¶ 77, 73
P.3d at 1282. Our job is statutory construction, and for the
reasons set forth above, we hold that the Code left the decision
about whether to require direct regulation of groundwater users
to the discretion of the expert “water czar.”
¶34 Our conclusion is buttressed by the fact that neither
AWC nor the courts below could articulate precisely what sort of
regulation of end users would suffice under their view of the
statute. The trial judge, after rejecting the SMP for its
failure to regulate end users directly, stated he did not think
23
that the Code required regulation of “each user or necessarily
even for each category of user, but in some way we have to meet
the statutory mandate of having something in a plan that
addresses the problem with an end user.” Id. at 549 ¶ 84, 73
P.3d at 1284 (concurring and dissenting opinion) (quoting
transcript of trial court proceedings). But the SMP at issue
here did impose conservation requirements directly on some end
users, see supra n.7, and the superior court failed to indicate
how much more direct regulation was needed in order to comply
with the Code. The majority below provided no greater guidance
as to what the Code required, simply directing the Department to
“return to the management plan drawing board” to “devise
appropriate conservation measures for its management plan that
include end users.” Id. at 538 ¶ 26, 73 P.3d at 1273. Because
even AWC concedes that “faucet-by-faucet” regulation of end
users is not required by the Code, and because the SMP at issue
does regulate some end users directly, it is not clear what
“appropriate conservation measures” the court of appeals
believes are mandated by the Code.12
12
As Judge Irvine observed:
Arizona Water does not argue that the specific end
user measures adopted by the Department are not
“appropriate.” If it made such an argument courts
would have a statutory basis upon which to review the
actions of the Department. The trial court's order
here, however, merely tells the Department to again
24
¶35 In short, we conclude, as did the dissenting judge
below, that while the Code requires the SMP to provide for
reductions in per capita use of groundwater, the management plan
need only impose such conservation measures that the Director
concludes are “appropriate” directly on individual users.
A.R.S. § 45-565(A)(2). The Director thus had the facial
statutory authority to promulgate an SMP that did not impose
conservation measures directly on all of AWC’s end users.13
_______________________________
exercise its discretion to develop a management plan,
but to do it better. Its inability to be more
specific is strong evidence that the language of the
statute simply does not support its ruling.
Ariz. Water Co., 205 Ariz. at 549 ¶ 86, 73 P.3d at 1284(concurring and dissenting opinion).
13
AWC also argues, as it did below, that imposing
responsibility on municipal providers to limit GPCD places
providers in an impossible regulatory conflict between ADWR and
the Corporation Commission because a public service corporation
cannot unilaterally refuse to serve or curtail service to
customers in its service area. See A.R.S. § 40-321(B) (2001)
(requiring public service corporations to render service “upon
proper demand and tender of rates”). While arguing in the court
of appeals that ADWR did not have the authority to tell AWC
which customers it must serve or how much each customer could
receive, the Commission took the position that there was no
necessary conflict between its position and ADWR’s GPCD
requirements, noting that “there is nothing to prevent Arizona
Water from asking the Commission to allow it to curtail service
in appropriate circumstances.” Ariz. Water Co., 205 Ariz. at539 ¶ 28, 73 P.3d at 1274. The court of appeals thus refused to
address AWC’s arguments on this point. Id. at 538, 73 P.3d at
1273; id. at 544 ¶ 59, 73 P.3d at 1279 (concurring and
dissenting opinion). We agree. This case presents “no
inevitable conflict between the jurisdictions of the Department
and the Commission” and there is no need to today “address a
25
C.
¶36 For each municipal provider such as AWC, ADWR
establishes a GPCD in the applicable management plan. In
analyzing compliance with the GPCD program, ADWR analyzes the
provider’s water use under the “stacking” method. Under this
method,
the Department first counts against the provider’s
total GPCD requirement, all water used by a water
provider during the year, except for spillwater and
effluent that is not recovered effluent. Although
water used by the provider during the year from such
sources is counted when determining the provider’s
compliance with its total GPCD requirement,
groundwater is counted last. If the provider is
determined to be out of compliance with its total GPCD
requirement, the provider is out of compliance only to
the extent by which the amount of groundwater used
exceeds the provider’s total GPCD requirement.
Ariz. Mun. Water Users Ass’n v. Ariz. Dep’t of Water Res., 181
Ariz. 136, 139-40, 888 P.2d 1323, 1326-27 (App. 1994) (“Water
Users”) (footnote omitted). Under this method, a provider who
uses no groundwater is always in compliance with its GPCD, no
matter how much water it uses from other sources. A provider
who uses only groundwater is limited to the amount specified by
the GPCD. For providers using some combination of water sources
including groundwater, ADWR will calculate the provider’s total
water use (excluding spillwater and non-recovered effluent), and
_______________________________
speculative conflict.” Id. at 544 ¶ 59, 73 P.3d at 1279(concurring and dissenting opinion).
26
in the event of any excess over the GPCD, will consider the
provider out of compliance with the management plan only to the
extent the excess is attributable to groundwater.
¶37 AWC uses a combination of CAP water and groundwater to
serve its Apache Junction customers. Because the total amount
of water used from these two sources exceeds the applicable GPCD
limitations, ADWR has determined that AWC is out of compliance
with the SMP. As such, AWC is subject to various enforcement
actions and penalties. See A.R.S. §§ 45-634 to -636.
¶38 AWC contends that ADWR’s counting of CAP water in its
“stacking” method is not authorized by the Code and is contrary
to the Groundwater Act’s general policy of limiting groundwater
use. See A.R.S. § 45-107(C) (2003) (providing that the Director
does not have authority to limit rights of various individuals
and entities to contract with the secretary of interior for
delivery of CAP water). The court of appeals unanimously
rejected this argument. Ariz. Water Co., 205 Ariz. at 541-43 ¶¶
47-52, 73 P.3d at 1276-78; id. at 543 ¶ 58, 73 P.3d at 1278(concurring and dissenting opinion).
¶39 AWC’s argument starts from the premise that the Code
only authorizes ADWR to adopt conservation programs for “all
non-irrigation uses of groundwater.” A.R.S. §§ 45-564(A)(2)
(governing first management plan), -565(A)(2) (containing
identical language with respect to second plan). Because CAP
27
water is not groundwater as defined in A.R.S. § 45-101(5) (2003)
(“water under the surface of the earth”), AWC contends that ADWR
cannot count CAP water in determining whether a provider has
complied with the GPCD, which is plainly a conservation program.
See A.R.S. § 45-402(28)(a) (defining “[n]on-irrigation use” as
“a use of groundwater other than an irrigation use”).
¶40 The Code is not as clear on the subject as AWC claims.
The same sections cited by AWC, after providing that the
Director may establish conservation programs for “all non-
irrigation uses of groundwater,” go on to require “[f]or
municipal uses” that management plans include “reasonable
reductions in per capita use.” A.R.S. §§ 45-564(A)(2),
-565(A)(2). In turn, A.R.S. § 45-561(11) defines “[m]unicipal
use” as
all non-irrigation uses of water supplied by a city,
town, private water company or irrigation district,
except for uses of water, other than Colorado river
water, released for beneficial use from storage,
diversion or distribution facilities to avoid spilling
that would otherwise occur due to uncontrolled surface
water inflows that exceed facility capacity.
¶41 Several things are noteworthy about § 45-561(11).
First, it occurs in the same article as §§ 45-564 and -565, and
requires use of its definitions in that article “unless context
otherwise requires.” A.R.S. § 45-561. Second, § 45-561(11)
defines “[m]unicipal use” as extending to “all non-irrigation
uses of water.” (Emphasis added.) If the legislature meant to
28
limit “municipal use” to “non-irrigation uses of groundwater,”
it could have done so without adding the phrase “of water,”
because A.R.S. § 45-402(28)(a) already defined “[n]on-irrigation
use” as “a use of groundwater other than an irrigation use.”
(Emphasis added.) The use of the term “of water” thus suggests
a broader scope for “municipal use” other than just use of
groundwater. Moreover, the balance of § 45-561(11) plainly
includes use of Colorado River water within the definition of
“municipal use.”14
¶42 Given § 45-561(11), AWC’s argument must necessarily be
that “context otherwise requires” that the term “municipal uses”
in §§ 45-564(A)(2) and -565(A)(2) be interpreted as “municipal
uses of groundwater.” Put differently, AWC must be arguing that
the first sentence of each subsection, which generally requires
ADWR to establish “conservation requirements for all non-
irrigation uses of groundwater,” provides the necessary
14
In 1990, the predecessor of § 45-561(11) (then
numbered § 45-561(6)) was amended to add the phrase “except for
uses of water, other than Colorado river water, released from
storage facilities into a surface water distribution system to
avoid spilling.” 1990 Ariz. Sess. Laws, ch. 71, § 3. As the
court in Water Users pointed out, “if the term ‘water’ used in
the original definition of ‘municipal use’ was limited to
groundwater, the legislature would have had no reason to amend
the definition of ‘municipal use’ to expressly exclude
spillwater, a form of surface water.” 181 Ariz. at 142, 888
P.2d at 1329. Water Users therefore concluded that the
legislature meant, in defining municipal use, to include all
other sources of water not specifically excluded. Id. at 142-
43, 888 P.2d at 1329-30.
29
“context” for concluding that the requirement in the second
sentence that ADWR adopt conservation programs for “municipal
uses” was only to such “uses” of groundwater.
¶43 There are two problems with such an argument. First,
if the legislature really meant to limit the term “municipal
uses” in §§ 45-564(A)(2) and -565(A)(2) to such uses of
groundwater, it could have said so expressly. See Water Users,
181 Ariz. at 142, 888 P.2d at 1329 (noting that throughout the
Code the legislature used the term “water” when it meant to
“refer to water from all sources,” versus its use of
“groundwater” or “surface water” when it intended to
“distinguish between different sources of water”). Second, this
argument requires that we interpret the third sentence of each
subsection, which mandates conservation requirements for
“industrial uses,” to be limited to industrial uses of
“groundwater.” But such an interpretation flies in the face of
the definition of “[i]ndustrial use” in § 45-561(5) as “a non-
irrigation use of water not supplied by a city, town or private
water company.” (Emphasis added.)
¶44 In addressing a similar issue, the court of appeals
concluded in Water Users that the term “municipal uses” in § 45-
565(A)(2) should be interpreted, consistent with its definition
in § 45-561(11), as including all sources of water, including
recovered effluent. 181 Ariz. at 142-43, 888 P.2d at 1329-30.
30
Water Users therefore concluded that recovered effluent could be
counted under the “stacking” method in determining a municipal
provider’s compliance with its GPCD requirements. We reach the
same conclusion as to CAP water.
¶45 Moreover, even if we were to accept AWC’s contention
that CAP water is not included in the phrase “municipal uses” in
§ 45-565(A)(2), we would still reach the same result. The
“stacking” method does not restrict a municipal provider’s use
of CAP water; any provider may use as much CAP water as it
wishes. Rather, ADWR simply takes use of CAP water and other
surface water into account when determining the GPCD compliance
of those providers who also use groundwater. Because the
groundwater is counted last, the Department restricts only the
use of that groundwater through the “stacking” method. See
Water Users, 181 Ariz. at 141, 888 P.2d at 1328 (concluding that
even if ADWR had no authority to regulate effluent, counting
recovered effluent under the “stacking” method “regulates only
groundwater usage,” because non-compliance is measured not by
how much effluent was used, but “only to the extent which
groundwater use exceeds a provider’s total GPCD requirement”).
III.
¶46 For the reasons above, we conclude (a) that ADWR has
the statutory authority to impose GPCD requirements on municipal
providers; (b) that the Code does not mandate that ADWR impose
31
conservation requirements on all end users before imposing GPCD
requirements on municipal providers; and (c) that ADWR may,
under its “stacking” method, consider use of CAP water in
determining GPCD compliance.
¶47 These holdings do not dispose entirely of AWC’s
claims. Section 45-565(A)(2) authorizes only requirements for
“reasonable reductions in per capita use.” (Emphasis added.)
AWC argued during the administrative proceedings below that the
GPCD for its Apache Junction water utility was not reasonable,
in light of various particular circumstances of that utility.
The agency rejected this argument. The superior court did not
reach this claim, however, finding the SMP facially invalid for
failure to impose direct regulation on all end users. Because
it affirmed the judgment of the superior court, the court of
appeals also did not reach the issue. Given that the courts
below did not address AWC’s argument that the GPCD was
unreasonable as applied to the Apache Junction utility, we
decline in the first instance to address that fact-intensive
issue, but instead remand this case to the superior court for
such other proceedings as may be necessary.
32
¶48 The opinion of the court of appeals is affirmed in
part and vacated in part, and the judgment of the superior court
is vacated. This case is remanded to the superior court for
further proceedings consistent with this opinion.
Andrew D. Hurwitz, Justice
CONCURRING:
_
Charles E. Jones, Chief Justice
____________________________________
Ruth V. McGregor, Vice Chief Justice
_
Rebecca White Berch, Justice
_
Michael D. Ryan, Justice
33