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Janet L. Miller (Ronald) (Bar No. 011963) Nicole D. Klobas (Bar No. 021350) Arizona Department of Water Resources 3550 N. Central Avenue Phoenix, Arizona 85012 Telephone: (602) 771-8472 Fax: (602) 771-8686 jlronald@azwater.gov ndklobas@azwater.gov

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of the Decision of the Director to Grant the Salt River Valley Water Users’ Association’s Amended Applications Nos. E-11, R-30, R-45, R46, R-71, R-72, A-135 and A-136 for Permits to Store and Beneficially Use Water on the Salt and Verde Rivers and Issue Permits Nos. 33-11, 33-97001, 33-97002, 33-97003, 33-97004 and 33-97005

No. 13A-SW001-DWR DWR’S RESPONSE BRIEF Hon. Thomas Shedden Administrative Law Judge

Pursuant to Case Management Order No. 14, the Arizona Department of Water

Resources (“DWR”) hereby submits its Brief in Response to the Closing Arguments, and

the Proposed Findings of Fact and Conclusions of Law filed by the Lower Gila Water

Users (“LGWU”).1 DWR contends that the position of the LGWU (“LGWU”) is not

supported by the facts or the law.

1 The LGWU consist of the following three entities: (1) the Paloma Irrigation and Drainage District and landowners who hold water rights (“PIDD”), (2) the Enterprise Ranch (owned by Vanderbilt Farms, L.L.C., Irvine Land Company, L.L.C. and Rezzonico Ranches, L.L.C.) (“Enterprise”), and (3) the Arlington Canal Company and landowners who hold water rights (“Arlington”). DWR-136.

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In their closing papers, the LGWU advanced several arguments in opposition to

the above-captioned amended applications (“Amended Applications”) filed by the Salt

River Valley Water Users’ Association (“SRVWUA”). In this brief, DWR responds to the

LGWU arguments by reference to the 19 issues listed in the Notice of Hearing as

follows: Issue No. 1 (page 2), Issue No. 2 (page 11), Issue No. 3 (page 12), Issue No. 4

(page 13), Issue No. 5 (page 14), Issue No. 6 (page 17), Issue No. 7 (page 19), Issue

No. 8 (page 24), Issue No. 9 (page 26), Issue No. 10 (page 27), Issue No. 11 (page 28),

Issue No. 12 (page 33), Issue No. 13 (page 36), Issue No. 14 (page 38), Issue No. 15

(page 39), Issue No. 16 (page 39), Issue No. 17 (page 41), Issue No. 18 (page 42), and

Issue No. 19 (page 42).

ARGUMENT

I. THE LGWU FAILED TO PROVE THAT GRANTING THE AMENDED APPLICATIONS WOULD CONFLICT WITH VESTED WATER RIGHTS (Issue No. 1).2

A. DWR made a proper determination that granting the Amended Applications would not conflict with the water rights asserted by the LGWU.

Contrary to the LGWU arguments, DWR made a proper determination that

granting the Amended Applications would not conflict with the vested water rights

asserted by the LGWU. This determination was supported by substantial evidence, and

was not “merely a ministerial or perfunctory review” as alleged by the LGWU in its

closing brief (p. 35).

There were several factors that were considered by DWR. Dr. Johnson, a

witness for DWR, testified that DWR considered the distance between the Granite Reef

dam, where the SRVWUA diverts water from its reservoirs for delivery to certain lands,

and the downstream Gillespie dam site where the LGWU diverts water from the Gila

2 Parenthetical references in this format are to the issues listed in the Notice of Hearing.

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River. The Granite Reef dam is located below the confluence of the Salt and Verde

Rivers, and the Gillespie dam site is located downstream of the confluence of the Salt

and Gila Rivers. The distance between these diversion points is approximately 74 river

miles.3

Dr. Johnson testified that DWR considered the hydrologic complexities that

existed over these 74 miles along both the Salt and Gila Rivers. Upstream of Gillespie

Dam on both the Salt and Gila Rivers, water has been put to beneficial use not only by

SRVWUA, but also by many other water users. In addition, there are several sources of

water upstream of Gillespie Dam from tributary flows, return flows, subflow, effluent and

groundwater.4 During the hearing, Mr. Ten Eyck and Mr. Hallin, witnesses for the

SRVWUA, and Dr. King, a witness for the LGWU, acknowledged the complexity of this

system due to the multiple water sources and water demands upstream of Gillespie

Dam.5

It was also significant to DWR that the LGWU did not provide any evidence of a

conflict with their alleged vested water rights in their protest to the applications or their

notice of appeal. Even though the LGWU provided almost 50 pages of argument in its

protest and notice of appeal, they did not include any hydrologic information or other

evidence to support their contention that there would be a conflict with their alleged

vested water rights if the Amended Applications were granted.6 Rather the protest made

a general allegation without any explanation or supporting data, even though the

3 TR III at 730-51, 972 (Johnson); TR VIII at 2085 (Ten Eyck). References in this format are to the transcript volume, page and witness. 4 TR I at 730-51 (Johnson).TR I at 741-43, 750-51 (Johnson). 5 TR VII at 1845, 1853, 1855-1910 (Hallin); TR VIII at 1928-1969 (Hallin); TR VIII at 2076 (Ten Eyck), TR VIII at 2081, 2111-2114 (Ten Eyck),TR XII at 3073-35 (King). 6 DWR-76 to -78; TR III at 729-30 (Johnson); TR IV at 1021-22 (Logan); TR V at 1228 (Logan).

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reservoirs had been in place for over 60 years and the LGWU were in a position to

establish whether there had been adverse impacts on their alleged water rights.7

Although the LGWU provided information that they believe established that they

have vested water rights to the Gila River, they did not provide any evidence of conflict

with those rights, either from the operation of reservoirs on the Salt and Verde Rivers for

close to 70 years, or from the granting of the Amended Applications. However, as

explained by Dr. Johnson, evidence of vested rights is not what DWR considers, but

whether the approval of the applications would conflict with whatever rights the LGWU

may have.8 The LGWU conceded that DWR does not have jurisdiction to determine the

nature, extent and relative priority of the LGWU alleged water rights, which are

determinations that must be made by the Gila River Adjudication court. See Argument

XVIII, infra.

Furthermore, even if the LGWU had senior water rights, those rights would be

protected under the doctrine of prior appropriation. As part of the administration of water

rights under the prior appropriation doctrine, the holders of senior water rights are

entitled to have their rights satisfied before the holders of junior water rights.9 Under

A.R.S. § 45-151(A), the person first appropriating the water has the better right. The

senior water rights asserted by the LGWU are protected under this prior appropriation

system and the LGWU did not contend otherwise.

During questioning by counsel for the LGWU, Dr. Johnson testified that a conflict

could be established with a senior water right holder nonetheless, for example, if

upstream reservoirs were constructed with no outlet features, or in close proximity to the

7 TR III at 730 (Johnson), TR IV at 990 (Johnson). 8 TR IV at 969 (Johnson). 9 TR II at 744-48 (Johnson), TR IV at 972 (Johnson).

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point of diversion of a senior water right holder.10 It is undisputed that those facts were

not present in this case.

Contrary to the assertions by the LGWU, DWR did examine whether granting the

Amended Applications would conflict with the LGWU water rights as required by A.R.S. §

45-153, and DWR concluded that there would be none.11 The LGWU did not prove

otherwise.

B. The LGWU failed to prove that granting the Amended Applications would conflict with their vested water rights.

The LGWU assert that there was “uncontested” evidence that granting the

Amended Applications would conflict with their water rights.12 This argument ignores the

testimony of Mr. Ten Eyck, a witness for SRVWUA, who analyzed the ability of the

LGWU to take water from the Gila River. Because the system was very complicated,

with “tens of thousands of water rights or claims to water rights,” as well as multiple

sources of water upstream of Gillespie Dam, Mr. Ten Eyck examined what had been

happening historically.13

Mr. Ten Eyck determined that the amount of water available for diversion at the

Gillespie Dam over the last 10 years is very similar to the amount of water that was

available in the 1920s.14 The Gillespie Dam failed in 1993 and no longer stores water.15

Diversions are made by pumps that divert water from the Gila River into the Gila Bend

canal.16 Between 1946 and 2010, the Gila Bend Canal did not take all of the water that

was available to it. 17 According to Mr. Ten Eyck, the flow regime at Gillespie Dam in the

10 TR II at 288-89 (Johnson), TR IV at 972 (Johnson). 11 TR IV at 972 (Johnson). 12 Closing Brief at 89. 13 TR VIII at 2075-76 (Ten Eyck); TR VIII at 2081, 2111-2114 (Ten Eyck). 14 TR VIII at 2077 (Ten Eyck). 15 TR VIII at 2096 (Ten Eyck). 16 TR VIII at 2095-96 (Ten Eyck). 17 TR VIII at 2209, 2241, 2244 (Ten Eyck).

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1920s is probably not that different than the flow regime at Gillespie Dam now, with low

flows at the peak of the irrigation season.18

Based on his analysis, Mr. Ten Eyck determined that water rights of Arlington,

which diverts water upstream of the Gillespie Dam, and Enterprise have been fully

satisfied and they have received the water to which they are entitled.19 Arlington’s

diversions create subflow and return flow to satisfy the diversion requirements for

Paloma Ranch20 and Enterprise.21 Due to a lack of data, Mr. Ten Eyck’s analysis of the

availability of water to Arlington was based on his knowledge of a settlement that allows

Arlington Canal Company to claim monetary payments from SRVWUA when sufficient

water is not available, and his understanding that no such payments have been

demanded.22

Mr. Ten Eyck’s analysis of the availability of water to Enterprise Ranch and

Paloma Ranch was based on historical flow data in the Gillespie Dam area.23 Based on

an analysis of daily and annual data published by the United States Geological Survey,

Mr. Ten Eyck determined that Enterprise Ranch has consistently diverted 10 cubic-feet

per second (“cfs”) of water and Enterprise’s water rights have been fully satisfied.24

Based on a comparison of the flow data during the time period from 1990 to 2010

to the flow data from the first 20 years of operations at the Gila Bend Canal, Mr. Ten

Eyck determined that the canal could still divert about 80,000 acre-feet per year.25 Mr.

Ten Eyck testified that he had assumed a 300 cfs demand at Gillespie Dam each day

18 TR XIV at 3543, 3546 (Ten Eyck). 19 TR VIII at 2077-78, 2082 (Ten Eyck). 20 TR XIV at 3445 (Utz). 21 TR VIII at 2087-88 (Ten Eyck). 22 TR VIII at 2077-78 (Ten Eyck), TR IX at 2250 (Ten Eyck). 23 TR VIII at 2121 (Ten Eyck). 24 TR IX at 2250 (Ten Eyck). 25 TR IX at 2247 (Ten Eyck).

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and that any flows over 300 cfs were not available to satisfy demands at Gillespie

Dam.26 Mr. Ten Eyck also testified that he used daily flows where available to calculate

the average annual flow, and used averages to calculate decades for summary

purposes.27

Furthermore, in Mr. Ten Eyck’s opinion, analyzing the spills at Granite Reef Dam

would not be instructive because there are many sources of flow between Granite Reef

Dam and Gillespie Dam.28 In the year 2000, there were no spills at Granite Reef Dam,

but there was water available at Gillespie Dam nonetheless.29

Mr. Ten Eyck concluded that there has been no negative impact on the LWGU

according to his data, and it is as likely that they were positively impacted over the last

90 years of operation of the reservoirs on the Salt and Verde Rivers.30 Even if these

reservoirs had not been in place, the flow rates between Granite Reef Dam and Gillespie

Dam likely would not have been affected.31

Dr. King, a witness for the LGWU, testified concerning the availability of water at

Gillespie Dam for the LWGU, but Dr. King’s analyses were based on unsupported

assumptions and incomplete information. Dr. King disagreed with Mr. Ten Eyck’s

conclusions, but he did not disagree with his underlying data that showed that there is

80,000 acre-feet per year on average flowing past Gillespie Dam.32 Dr. King testified

that he reviewed Mr. Ten Eyck’s testimony, Exhibit SR-237, and monthly flow records

below Granite Reef Dam from December 1912 through 2010.33

26 TR XIV at 3540, 3542 (Ten Eyck). 27 TR XIV at 3542 (Ten Eyck). 28 TR XIV at 3587 (Ten Eyck). 29 TR XIV at 3563 (Ten Eyck). 30 TR XIV at 3571, 3601 (Ten Eyck). 31 TR XIV at 3607-08 (Ten Eyck). 32 TR XII at 2962 (King). 33 TR XII at 2947-49 (King).

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Dr. King believed that the diversions at the Gillespie Dam site were supply-limited,

based on an assumption that the water users would have taken more when their canals

were running at full capacity, although he admitted that he did not know what the actual

demand was at those times, and he acknowledged that the diverters at the Gillespie

Dam face supply limitations due to the nature of their pumping system.34 Mr. Ten Eyck

also had noted that there were supply limitations because the LGWU systems do not

include storage, and while the current pumping system may be economical, a diversion

dam would be more efficient.35

Dr. King further admitted that he could not identify any time or day when the water

users at the Gillespie Dam site or Enterprise Canal were ready, willing and able to divert

but had no water available.36 Dr. King did not analyze whether the lack of water at

Gillespie Dam was caused by the dams that are the subject of the Amended Applications

or by natural conditions.37 Dr. King also did not analyze the impacts of other diverters

between Granite Reef Dam and Gillespie Dam, phreatophytes, or evapotranspiration.38

Dr. King admitted that the Gila River and Salt River system between the site of

Gillespie Dam and Granite Reef dam was very complicated and would require significant

resources to evaluate, which he had not done.39 Depending on the condition of the river,

he further admitted that spills at Granite Reef dam might not make it to Gillespie Dam,40

and although he had done several statistical analyses on the available data, not all of

them supported his ultimate conclusions in the case.41

34 TR XII at 3006-08 (King),TR XII at 3039-3040 (King), TR XII at 3080 (King). 35 TR IX at 2292-93 (Ten Eyck),TR XIV at 3540 (Ten Eyck). 36 TR XII at 3020 (King). 37 TR XII at 3037 (King). 38 TR XII at 3076-77 (King). 39 TR XII at 3073-35 (King). 40 TR XII at 3071 (King). 41 TR XII at 3042 (King).

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Clearly, the LWGU did not prove that granting the Amended Applications would

conflict with their alleged vested water rights. The evidence was overwhelmingly to the

contrary.

C. DWR was not required to conduct a hydrologic study of the Salt and Verde River systems to determine whether there would be a conflict with the LGWU water rights if the Amended Applications were granted.

Dr. Johnson testified that it was not necessary for DWR to conduct a hydrologic

study or rely on a model to determine whether there would be a conflict with the LGWU

asserted water rights due to the granting of the Amended Applications because all of the

reservoirs have been in place for over 60 years. Models are helpful to predict future

impacts of proposed actions when there is no empirical evidence. Here, any conflicts

with the LGWU water rights already would be apparent.42 Models are simplified

representations of reality. In this case, no new storage will be taking place that has not

already occurred for at least the last 65 to 70 years, and the beneficial uses are not

going to change based on the issuance of these permits. As aptly stated by Dr.

Johnson, “You don’t need to develop a predictive model in this case as to what would

happen. You already know what’s going to happen already has happened.”43

In any event, hydrologic studies have already been done on the Salt River at

Roosevelt Dam that demonstrate that granting the Amended Applications would not

conflict with the LGWU asserted water rights. The LGWU introduced into evidence a

copy of a decision and order of the Director of DWR dated April 10, 1996, describing

those studies.44 The Director’s decision and order related to certain storage and

beneficial use permits granted to various cities for beneficial uses, and to the Bureau of

42 TR III at 730 (Johnson). 43 TR IV at 990 (Johnson). 44 LG 97.

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Reclamation (“BOR”) to store flood flows and beneficially use water for recreation, fish

and wildlife purposes in the additional conservation space behind Roosevelt Dam,

referred to as Modified Roosevelt.45 Paloma Ranch and Arlington were protestants in

that matter.46 Based on the results of a model constructed by the BOR, the Director

found that the “impact, if any, on downstream surface water rights holders from the

anticipated operation of the AACC [Additional Active Conservation Capacity] is not

material.”47 As part of this decision, the Director rejected the results of the model that

had been commissioned by Paloma Ranch from Bookman-Edmonston Engineering and

found that it was “not a representative model to show the effects of the AACC on

downstream surface water rights holders.”48

The BOR model was used to establish the impacts of the operations of the AACC

on downstream water users on the Salt and Gila Rivers.49 Based on a 39-year period of

record from 1950 through 1988, the model indicated that without the AACC, 11,018,407

acre-feet would have flowed past Gillespie Dam unused during that time, and with the

AAC, 9,518,914 acre-feet would still have flowed past Gillespie Dam unused during that

time.50 The results of the BOR model indicate that there were significant flows past

Gillespie Dam even before Modified Roosevelt was constructed at a time when the

reservoirs on the Salt and Verde Rivers had been in operation for decades.

Moreover, the Director found that the capture of flood flows by Modified Roosevelt

would increase the potential for recharge downstream. The Director stated:

The ability of Modified Roosevelt Dam to capture large volumes of flood flows and release that water at relatively slow rates will increase the

45 LG 97 at 4-6. 46 Id. at 8. 47 Id. at 19. 48 Id. 17, 19. 49 Id. at 15. 50 Id. at 16-17.

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potential for recharge downstream from Granite Reef Diversion Dam and will help to mitigate any reduction in recharge in the western Salt River Valley that might result from the operation of the AACC.

LG-97 at 20. Releases from the reservoirs constructed on the Salt and Verde Rivers

would have a similar result to the benefit of downstream water users.

In this case, the LGWU did not dispute the Director’s findings in the Modified

Roosevelt decision and did not offer any hydrologic studies as Paloma Ranch had done

in the Modified Roosevelt case. The Director’s findings in Modified Roosevelt support

DWR’s determination that granting the Amended Applications would not conflict with the

LGWU asserted water rights.

The LGWU failed to prove that granting the Amended Applications would conflict

with their vested water rights. The LGWU did not satisfy their burden of proof on this

issue.51

II. THE LGWU FAILED TO PROVE THAT GRANTING THE AMENDED APPLICATIONS WOULD BE A MENACE TO PUBLIC SAFETY (Issue No. 2).

The dams and reservoirs that were constructed on the Salt and Verde Rivers as

part of the Salt River federal reclamation project do not create a menace to public safety,

but instead serve a public safety purpose. Not only do these reservoirs store water that

is put to beneficial use, but they also provide for flood control in the event of heavy

precipitation and run-off events. DWR properly determined that granting the Amended

Applications is in the interest of public safety.

Initially, the LGWU maintained in their protest (which was incorporated into their

notice of appeal) that granting the Amended Applications would be a menace to public

safety because releases from the dams could cause water to overtop the banks of the

51 LGWU’s burden of proof is discussed in Argument XI, infra.

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Gila River, resulting in damage to property and injury to persons.52 Later during the

course of the hearing in this matter, the LGWU stipulated that “their notice of appeal of

ADWR’s decision did not include issues relating to the safety of SRVWUA’s dams or any

other safety issues associated with the related infrastructure.”53

Instead, the LGWU now argue in their closing papers that granting the Amended

Applications would be a menace to public safety because “they undermine Arizona’s

existing laws, regulations, and procedures in a material manner.”54 That assertion

appears to be an attempt by the LGWU to make an argument where none exists. The

LGWU’s contention has nothing to do with “public safety” as those words are used in

A.R.S. § 45-153(A). The LGWU have failed to carry their burden of proof on this issue.

III. THE LGWU FAILED TO PROVE THAT GRANTING THE AMENDED APPLICATIONS WOULD BE AGAINST THE INTEREST AND WELFARE OF THE PUBLIC (Issue No. 3).

DWR properly determined that granting the Amended Applications would serve

the public interest and welfare. The water stored in the reservoirs on the Salt and Verde

Rivers has been put to beneficial use at the dam sites for hydropower and non-

consumptive purposes including recreation, fish and wildlife, as well as within the Salt

River Reservoir District and three Indian reservations for several other beneficial uses

recognized by A.R.S. § 45-151. Dr. August, who testified on behalf of SRVWUA,

provided ample evidence of how these dams and reservoirs served the interest and

welfare of the public.55 Even Dr. DuMars, who appeared on behalf of the LGWU,

testified that, “Having these reservoirs in place on the Salt and Verde Rivers is a very

52 DWR-76 at 20, DWR-136 at 5. 53 “Stipulation Regarding Scope of Issue No. 2” filed December 5, 2013. 54 LGWU Closing Brief at 84, LGWU Proposed Findings of Fact and Conclusions of Law at 85. 55 TR VII at 1605, 1651 (August)

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good thing, there’s no doubt about that. Reservoirs can do wonderful things for stream

flow.”56

In their closing papers, the LGWU claimed that granting the Amended

Applications would be against the interests and welfare of the public for several

reasons.57 These reasons are addressed as separate issues in the arguments below.

IV. THE LGWU FAILED TO PROVE THAT THE AMENDED APPLICATIONS WERE UNLAWFULLY BASED ON THE RIPARIAN DOCTRINE (Issue 4).

Under A.R.S. § 45-151(A), the person who first appropriates water for a beneficial

use has the better right. Contrary to the LGWU’s arguments, the Amended Applications

were filed pursuant to this doctrine of prior appropriation.

The LGWU appear to argue that granting the Amended Applications based on the

maximum quantity of water that was put to beneficial use means that the riparian

doctrine was applied instead of the prior appropriation doctrine, on the false premise that

the maximum quantity of water is based on system capacity and not how much water

was actually beneficially used.58 Although the LGWU correctly note that the common

law doctrine of riparian water rights does not have any force or effect in Arizona,59 they

do not explain why they believe that the riparian doctrine has been implicated. The fact

that the Amended Applications seek to appropriate water for specified beneficial uses in

certain quantities in and of itself establishes that they were based on the prior

appropriation doctrine. The LGWU’s apparently have a disagreement with the method

for quantifying those beneficial uses, which is addressed in Argument VIII, infra.

56 TR XI at 2792 (DuMars). 57 LGWU Proposed Findings of Fact and Conclusions of Law at 85-89. 58 LGWU Proposed Findings of Fact and Conclusions of Law at 89. 59 Ariz. Const. Art. XVII, § 1.

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At the hearing, counsel for the LGWU also appeared to argue that the riparian

doctrine had been applied because the amount of storage authorized by the draft

permits was greater than the beneficial use amount.60 Ms. Logan testified that it is

common practice to issue permits with storage amounts greater than diversionary

beneficial use amounts to allow for losses due to evaporation, seepage and silting.61

Although the storage of water per se is not a beneficial use, 62 under A.R.S. § 45-151(B)

reservoirs may be constructed and maintained to effect a beneficial use. Also see

Argument X, infra.

The LGWU did not provide any authority to support their arguments regarding

DWR’s alleged use of the riparian doctrine to quantify beneficial uses in the draft

permits. The LGWU failed to satisfy their burden of proof on this issue.

V. THE LGWU FAILED TO PROVE THAT GRANTING THE AMENDED APPLICATIONS WOULD CREATE FLOATING WATER RIGHTS (Issue No. 5).

The LGWU contend that granting the Amended Applications would create floating

rights because each type of beneficial use described in the draft permits is not tied to a

specific place of use. The LGWU are mistaken. Where, as here, the water is being put

to use within a defined area for delivery to customers, issuing a permit for multiple

beneficial uses within that area does not create floating rights.

DWR attached six draft permits to the July 19, 2013 letter that granted the

Amended Applications (“Decision Letter”).63 Each of the draft permits includes the

following six categories of information: (1) a listing of the amended applications on which

each permit is based; (2) the beneficial uses, amounts and period of use; (3) the location

60 TR III at 539 (Hendricks). 61 TR IV at 1016 (Logan). 62 TR I at 236 (Johnson). 63 DWR 131 at 11-52.

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of the points of diversion; (4) the location of the places of use; (5) the authorized amount

of water storage in the reservoir; and (6) the original filing dates of the applications.

In each of the draft permits, the uses, amounts and periods of use are described

as follows:

904,982 acre-feet per year of stored water within the Salt River Project collectively released from Roosevelt Lake, Apache Lake, Canyon Lake, Saguaro Lake, Horseshoe Reservoir, and Bartlett Reservoir for domestic, municipal, irrigation, stock watering, recreation, wildlife, including fish, and mining uses; and from Roosevelt Lake, Apache Lake, Canyon Lake and Saguaro Lake for water power.

According to Dr. Johnson, this quantity is the total quantity that may be used under all of

the permits as a combined total, and not under each permit as separate amounts that

are additive.64 Dr. Johnson also clarified that the releases from Roosevelt Lake do not

include water stored in Modified Roosevelt.65 In each of the draft permits, the places of

use include the location of the reservoir where the water will be stored, the Salt River

Reservoir District boundaries, the Salt River Pima-Maricopa Indian Reservation, the Gila

River Indian Reservation, and the Fort McDowell Indian Reservation.66 These locations

are depicted on maps attached to each draft permit.

Where, as here, water is being put to use within a defined area for delivery to

customers, it is DWR’s practice to issue a permit for multiple beneficial uses that may be

used throughout the places of use. To do otherwise would not be feasible given the

manner in which uses evolve over time within those areas.67 Ms. Logan also testified

that permits for uses within municipal service areas are not separated by the type of use,

because “it’s almost impossible to break up the uses for each beneficial use.”68 There is

64 TR III at 544 (Johnson), TR IV at 855, 857 (Johnson), TR V at 1165 (Logan). 65 TR IV at 981-82 (Johnson). 66 DWR-131 at 12, 23, 29, 35, 41, 47. 67 TR I at 139-41 (Johnson); TR IV at 928-30 (Johnson). 68 TR V at 1099 (Logan).

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precedent for this approach. As noted by SRVWUA in correspondence with DWR, the

permit issued to the Central Arizona Water Conservation District (“CAWCD”) to

appropriate water stored at New Waddell dam included several beneficial uses for

CAWCD’s entire service area.69

In support of their argument that the draft permits would create floating rights, the

LGWU relied on certain case law that is either misquoted or inapposite. At page 76 of its

closing brief, the LGWU cited Salt River Valley Water Users’ Assn v. Kovacovich, 3 Ariz.

App. 28, 30, 411 P.2d 201, 203 (App. 1966) as authority for language quoted at the top

of page 77 of its closing brief. The quoted language does not appear anywhere in that

case. Furthermore, that case does not mention floating rights. In the Kovacovich case

at the pages cited by the LGWU, the Arizona Court of Appeals (not the Arizona Supreme

Court as referred to by the LGWU) held that the doctrine of beneficial use precluded the

use of additional water gained by water conservation practices from being used on lands

other than those to which the water was originally appurtenant.

The LGWU appear to have confused the Kovacovich case with the Tattersfield

case, which they also cite. In Tattersfield v. Putnam, 45 Ariz. 156, 168, 41 P.2d 228, 233

(1935), the Arizona Supreme Court quoted with approval from Slosser v. Salt River

Valley Canal Co., 7 Ariz. 376, 65 P. 332, 334 (1901), where the Court stated that “a

water right, to be effective, must be attached to and pertain to a particular tract of land,

and is in no sense a ‘floating’ right.” The Tattersfield case involved a dispute over who

had water rights to irrigate certain land. The Court held that the appropriator of a right to

use water for irrigation must be the “owner or possessor of land which is susceptible of

irrigation.” 45 Ariz. at 171, 41 P.2d at 234.

69 DWR-39, TR 137-41 (Johnson), SR-134, TR III at 706-07 (Johnson).

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Under the draft permits here, SRVWUA will be delivering water to customers

including municipalities and others who own or possess certain lands within the Salt

River Reservoir District and the Salt River Pima-Maricopa, Gila River and Fort McDowell

Indian Reservations. Pursuant to A.R.S. § 45-151(A), water may be appropriated for

personal use or “for delivery to customers.” The beneficial uses to which the delivered

water may be put under the draft permits are appurtenant to the lands described therein,

and do not “float” as argued by the LGWU.

Without explanation, the LGWU also contend that floating water rights are

prohibited by section 8 of the Reclamation Act of 1902. 70 Section 8 states:

That nothing in this Act shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation, or any vested right acquired thereunder, and the Secretary of the Interior, in carrying out the provisions of this Act, shall proceed in conformity with such laws, and nothing herein shall in any way affect any right of any State or of the Federal Government or of any landowner, appropriator, or user of water in, to, or from any interstate stream or the waters thereof: Provided, That the rìght of the use of water acquired under the provisions of this Act shall be appurtenant to the land irrigated, and beneficial use shall be the basis, the measure, and the limit of the right.

The LGWU’s reliance on this provision is misplaced. This language indicates that state

water laws are not affected by the provisions of the Reclamation Act, and that any water

rights “acquired under the provisions of this Act” must comply with the appurtenancy and

beneficial use doctrines. (Emphasis added.) This case does not involve the acquisition

of water rights under the Reclamation Act, but rather the Amended Applications seek

permits under state law, which are also based on the appurtenancy and beneficial use

doctrines.

70 LG-100 at 3.

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The LGWU did not prove that granting the Amended Applications would result in

floating water rights. The LGWU failed to satisfy their burden of proof on this issue.

VI. THE LGWU FAILED TO PROVE THAT GRANTING THE AMENDED APPLICATIONS WOULD CIRCUMVENT THE SEVERANCE AND TRANSFER REQUIREMENTS OF A.R.S. § 45-172 (Issue No. 6).

In its protest and notice of appeal, the LGWU contend that granting the Amended

Applications circumvents the severance and transfer requirements of A.R.S. § 45-172.

As a result, the LGWU maintain that they have been deprived of certain rights to object

to the Amended Applications. The LGWU’s arguments must fail for two basic reasons.

First, the provisions of A.R.S. § 45-172 do not apply to amendments to applications for

permits to appropriate, and second, the LGWU have been given the opportunity to object

to the Amended Applications as is evident by their participation in this proceeding.

The provisions of A.R.S. § 45-172 only apply to the transfer of perfected water

rights, not applications. A.R.S. § 45-172(A)(3) states:

The water rights sought to be transferred shall have been lawfully perfected under the laws of the territory or the state of Arizona and shall not thereafter been forfeited or abandoned.

(Emphasis added.) The language of this statute is unambiguous and must be given is

clear meaning.

Pursuant to A.R.S. § 45-162(A), a water right is perfected when a certificate of

water right is issued. The SRVWUA has taken the first step by filing the Amended

Applications for permits pursuant to A.R.S. § 45-153. At this time, the SRVWUA has not

perfected any water rights under the Public Water Code, but has taken the first step by

filing applications for permits to appropriate and store water.

Nonetheless, in their closing brief (pp. 28, 63), the LGWU continue to argue that

the SRVWUA was required to file a severance and transfer application under A.R.S. §

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45-172 whenever there were changes in beneficial use. As discussed above, this is not

a valid argument. Likewise, it is not valid to argue that the SRVWUA was required to file

a change in use application under A.R.S. § 45-156(B) to track the changes in use over

time as the LGWU also claim in their closing brief. Also, because this argument was not

raised in their protest, DWR contends that it is not properly before the ALJ. See A.R.S. §

41-1092.03(B). Without waiving this contention, DWR addresses this issue below.

The LGWU’s position is not well-founded. A.R.S. § 45-156(B) only applies to

water that has already been appropriated. Section 156(B) states in pertinent part:

Except as otherwise prescribed by this section, a change in the use of water appropriated for domestic, municipal or irrigation uses shall not be made without approval of the director.

(Emphasis added.) Because SRVWUA does not have a certificate of water right, it has

not yet appropriated water under the Public Water Code. See A.R.S. § 45-162. Thus,

the clear language of A.R.S. § 45-156(B) does not apply.

The LGWU failed to prove that either A.R.S. § 45-172 or § 45-156(B) applied in

this case. The LGWU failed to satisfy their burden of proof on this issue.

VII. THE LGWU FAILED TO PROVE THAT THE AMENDED APPLICATIONS VIOLATED A.R.S. § 45-154 (Issue No. 7).

DWR properly processed the Amended Applications. The original applications

were filed in 1920 and 1921 for permits to store water as part of the Salt River

reclamation project, and to put that stored water to beneficial use. After the original

applications were filed, six reservoirs were constructed on the Salt and Verde Rivers,

which in part replaced some of the original features. On March 1, 2010, SRVWUA filed

the Amended Applications to conform to the locations of the dams and reservoirs that

were actually constructed as part of the Salt River Project and the beneficial uses to

which the stored water was being put. These amendments were described in detail by

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Dr. Johnson, who also prepared a chart that described both the original and Amended

Applications.71 Consistent with prior practice concerning other applications, DWR

properly processed the amendments to the original applications.

It is DWR’s practice to allow applications to be amended on a case-by-case

basis.72 A factor in this case was that the total quantity of water to be stored under the

Amended Applications, in the amount of 1,959,422 acre-feet, was less than the quantity

to be stored under the original applications.73 The combined reservoir capacity included

in amended application R-30 for Mormon Flat Dam (Canyon Lake) and Horseshoe Dam

(Apache Lake) was less than the original application for just Mormon Flat Dam alone.74

Furthermore, contrary to the assertions made the LGWU in their closing brief (pp.

36-38), there is precedent for allowing amendments to the permit applications. Ms.

Logan testified that she personally had processed several amendments to other

applications, and she had brought those amendments to the attention of upper

management, which included Dr. Johnson beginning in 2009.75 As noted by SRVWUA

in a letter to DWR, the application for the permit to store water at New Waddell dam had

been amended three times over a 30-year period due to changes within that federal

reclamation project.76 The original application had been filed to construct Orme Dam on

the Salt River at the present site of the Granite Reef diversion dam, but instead New

Waddell Dam was constructed on the Agua Fria River and additional conservation

capacity was created at Roosevelt Dam for Modified Roosevelt (see Argument I,

71 DWR-31, TR I at 108-09 (Johnson), TR IV at 797 to 834 (Johnson). 72 TR II at 302 (Johnson), TR III at 633 (Johnson), TR V at 1075 (Logan); TR IV at 1011 (Logan). 73 TR I at 150 (Johnson),TR III at 766 (Johnson). 74 TR I at 127 (Johnson). 75 TR I at 64 (Johnson), TR IV at 1013 (Logan), TR V at 1074 (Logan). 76 DWR-35; TR I at 119-125 (Johnson); TR III at 692-704 (Johnson).

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supra).77 Dr. Johnson testified that he was aware of the amendments to the Orme Dam

application and he relied on that precedent.78

Dr. Johnson also testified that DWR had reviewed various documents related to

the history of the Salt River Project and how it evolved over time.79 These documents

indicated that changes were contemplated shortly after the original applications had

been filed because certain features had become infeasible. Dr. Johnson, who has a

doctorate degree in civil engineering with expertise in dam safety and construction,80

testified that is it common for plans involving dam construction to change. Dr Johnson

stated:

I mean if you think back to the time that we’re talking about here, these were large unsurveyed lands and these were reconnaissance level investigations, trying to identify what would potentially be feasible sites. And it’s more common than not, as you transition from a reconnaissance level study into more of a design study, that you’ll find factors that make what you thought were potentially feasible locations to not be as feasible as you thought. And when you do that, you then tend to, you know, have to move things around. And a system like this is a series of facilities that work together as a larger system, so you make a change in the location of one of the component parts and it has a rippling effect that then require you to make other changes as well. I would say it’s more common to make these kind of changes than it is to not have to make them.

(Emphasis added.)81

In their notice of appeal and in their closing papers, the LGWU maintained that

that there is no statutory authority for amending a permit application and that A.R.S. §

45-154 only authorized corrections, but not amendments. Although this issue was

included in the notice of hearing because it had been raised in the LGWU notice of

77 TR XIV at 3647-3653 (Miller). 78 TR I at 249 (Johnson). 79 TR I at 86, 175-76, 180, 186-89 (Johnson). 80 TR I at 63-65 (Johnson) 81 TR I at 181-82 (Johnson).

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appeal, DWR contends that it is not properly before the ALJ in this case. See A.R.S. §

41-1092.03(B). However, without waiving this contention, DWR addresses this issue

below.

The arguments advanced by the LGWU are not persuasive. A.R.S. § 45-154

states:

If the application is defective it shall be returned for correction or completion, with the date of and reasons for returning it endorsed on the application and a record made of applications returned. The application shall not lose priority of filing because of defects if the application is corrected, completed and refilled with the director within sixty days after its return to the applicant, or within such further time as the director may, by an order of record, allow.

(Emphasis added.) No evidence was presented that the original applications had been

determined to be defective or returned to the applicant for correction, with the exception

of R-30, which is discussed below. Also, to the extent that A.R.S. § 45-154 applies,

DWR has interpreted the word “corrected” to include amendments.82 This interpretation

is consistent with actions taken by DWR’s predecessors (the State Water Commissioner

and State Land Department) whose official records indicate that amendments to several

applications have been processed in the past.83 The language of A.R.S. § 45-154 is

basically the same as the language in the 1919 Public Water Code. See Laws 1919,

Ch. 164, § 7.

The only evidence that DWR was able to locate regarding any action taken on the

original applications consists of correspondence and other documents that DWR found

in the application files maintained by the State Water Commissioner and the State Land

Department.84 There is no indication in these documents that the original applications

were returned to the applicants, other than application R-30, which appears to have

82 TR 1 at 167 (Johnson), TR III at 552 (Johnson). 83 See e.g. TR III at 650, 658 (Johnson). 84 TR I at 101 (Johnson); DWR-9 to -26, -140.

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been corrected and re-filed because it was later assigned.85 The remaining applications

either were not processed for unstated reasons, or were marked as cancelled. All of the

original applications are in DWR’s files, including those that were marked “cancelled”.86

The “cancelled” applications are discussed in Argument XII, infra.

In an effort to establish that the original applications were defective, the LGWU for

the first time at the hearing and then in their closing papers contend that the requisite

maps had not been filed with the original applications and that the necessary fees had

not been paid.87 DWR contends that this argument is not properly before the ALJ

because it was not raised by the LGWU in their protest. See A.R.S. § 41-1092.03(B).

Without waiving this contention, DWR addresses this argument below.

Contrary to the LGWU’s assertions, there is evidence that maps were filed with

the original applications. A map dated October 1910 was located in the file for the

original E-11 application that depicts the locations of the proposed dam sites and the

boundaries of the Salt River Reservoir District as they existed on February 9, 1903.88

Ms. Logan testified that there may have been other maps filed as well that could have

been misplaced, lost or destroyed. Because the old maps were quite large and were

made of mylar and cloth, they were kept separately by DWR’s predecessors.89 In

addition, a letter State Land Department letter dated February 7, 1945 indicates that fees

had been paid for all of the original applications, with the exception of R-30, which was

not mentioned.90 Also see Applications R-45, R-46, A-135 and A-136.91 The status of

application R-30 is discussed above.

85 TR I at 221-223 (Johnson), TR III at 630-631 (Johnson). 86 TR V at 1189-90(Logan), TR V at 1230 (Logan.) 87 LGWU Closing Brief at 66, 72, 86. 88 DWR-9, TR I at 84 (Johnson). 89 TR IV at 1014-15 (Logan). 90 DWR-23. 91 DWR 2-5, LG-21, TR 623-27 (Johnson).

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The LGWU did not prove that the Amended Applications were processed in

violation of A.R.S. § 45-154, and this issue was not properly before the ALJ. The LGWU

did not satisfy their burden of proof on this issue.

VIII. LGWU FAILED TO PROVE THAT THE BENEFICIAL USES INCLUDED IN THE DRAFT PERMITS WERE NOT AUTHORIZED BY A.R.S. § 45-151 (Issue No. 8).

The beneficial uses listed in the draft permits include domestic, municipal,

irrigation, stock watering, recreation, wildlife, including fish, mining uses and water

power. Each of the beneficial uses is authorized by A.R.S. § 45-151(A).

Moreover, contrary to the arguments of the LGWU in their protest, the draft

permits are consistent with the beneficial uses doctrine, which states that beneficial use

is the “basis, measure and limit to the use of water.” See A.R.S. § 45-141(B). The draft

permits specify the quantity of water to be stored in each reservoir, the total quantity of

water to be put to beneficial use, and the places of use.

In their closing papers the LGWU contend that the beneficial uses included in the

Amended Applications should be limited to those beneficial uses that were authorized

when the original applications were filed and should not relate back to 1920 and 1921.92

The LGWU claim that they would be prejudiced by relating all of the beneficial uses back

to the application filing date, but they provided no evidence of such prejudice. See

Argument I, infra.

The beneficial uses authorized under the 1919 Public Water Code include those

that were included in the draft permits pursuant to A.R.S. § 45-151 with the exception of

wildlife, including fish, which were added in 1941, and recreation, which was added in

1962. See Laws 1919, Ch. 34, § 7; Laws 1941, Ch. 84; and Laws 1962, Ch. 113, § 1.

However, these are non-consumptive in situ uses which by their very nature do not

92 LGWU Closing Brief at 76, LGWU Proposed Findings of Fact and Conclusions of Law at 93.

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prejudice other water users. It was appropriate to include these beneficial uses in the

Amended Applications with a priority date based on the filing date of the applications.

See A.R.S. § 45-162(B). This issue is discussed further in Argument XIV, infra.

The LGWU also apparently contend that beneficial uses should not be included in

the Amended Applications R-30, R-45, R-46, R-71 and R-72 because those applications

did not seek appropriative rights, as indicated by the use of the letter “R” in their

application numbers. The premise of the LGWU is unfounded. Ms. Logan testified that

permits based on “R” applications have included both storage and appropriative rights.93

Dr. Johnson testified that after 1972, the numbering system was changed and all

applications receive a prefix of “33” regardless of whether a storage right or an

appropriative right is being sought.94 Ms. Logan testified that the current numbering

system was used for the draft permits, but the original application numbers were not

changed.95 This had the added advantage of consolidating the Amended Applications

that related to a particular reservoir into one draft permit.96

The LGWU also contend that the amount of water to be appropriated for

beneficial use under the draft permits should not have been based on the maximum

quantity of water historically used. The LGWU ignore the clear language of A.R.S. § 45-

141(B), which states that “[b]eneficial use shall be the basis, measure and limit to the

use of water.” In order to establish beneficial use, the SRVWUA reviewed its surface

water records between 1950 and 2008, which was the available period or record for the

combined storage facilities, and calculated that the maximum historical use of stored

93 TR IV at 1010 (Logan); TR V at 1072 (Logan), TR V at 1082. 94 TR I at 168 (Johnson). 95 TR V at 1207-08 (Logan). 96 TR V at 1148 (Logan).

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water for member and Townsite Lands occurred in 1969 with a total of 904,982 acre-

feet.97 This is the quantity that was included in the draft permits.

The LGWU did not prove that the beneficial uses included in the draft permits

were not authorized by A.R.S. § 45-151. The LGWU failed to satisfy their burden of

proof on this issue.

IX. THE LGWU FAILED TO PROVE THAT DWR DID NOT HAVE AUTHORITY TO ISSUE DRAFT PERMITS FOR RESERVOIRS THAT HAVE ALREADY BEEN CONSTRUCTED AT LOCATIONS AND FOR BENEFICIAL USES THAT DIFFER FROM THE ORIGINAL APPLICATIONS AS PART OF A FEDERAL RECLAMATION PROJECT (Issue No. 9).

Pursuant to A.R.S. §§ 45-153(A) and 161(D), the draft permits authorize

SRVWUA to put 904,982 acres feet of stored water within the Salt River Project to

beneficial use, which is less than the total amount of water to be stored.98 The draft

permits only include those beneficial uses listed in A.R.S. § 45-151 for use at the specific

locations that are described and depicted on maps attached to each draft permit. The

points of diversion also are described with particularity in each of the draft permits, as

well as the application dates filed for each reservoir.

Both Dr. Johnson and Ms. Logan testified that it has been the practice of DWR

and its predecessors to grant permit applications even after construction of the

impoundment and diversion works has been completed, and examples of those permits

were described.99 In particular, the decision and order granting permits for Modified

Roosevelt indicates that construction already was underway.100 Similarly, the permit

issued to the CAWCD for appropriative uses of water stored at New Waddell dam

97 DWR 43 at 3. 98 TR I at 149-50 (Johnson). 99 TR I at 644, 651, 664, 700-01 (Johnson); TR V at 1080 (Logan). 100 LG-97 at 6.

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indicated that construction already had been completed.101 Both Modified Roosevelt and

New Waddell were features of a federal reclamation project as were the dams and

reservoirs constructed under the Amended Applications.

Nonetheless, in their notice of appeal and their closing papers, the LGWU argue

that there is no process for granting permit applications after the dams and reservoirs

have been constructed because the predecessor to A.R.S. § 45-160 required

construction to be commenced within one year “after approval of the application.”

Because this issue was not raised in the LGWU Protest, it was not properly before the

ALJ. See A.R.S. § 41-1092.03(B). In addition, even if this argument had been properly

raised, A.R.S. § 45-160 by its own terms did not apply because the applications neither

had been approved nor rejected at the time of construction.

The LGWU did not prove that DWR did not have authority to issue draft permits

for reservoirs that have already been constructed at locations and for beneficial uses

that differ from the original applications as part of a federal reclamation project. The

LGWU failed to satisfy their burden of proof on this issue.

X. THE LGWU FAILED TO PROVE THAT THE AUTHORIZED AMOUNT OF WATER IN STORAGE FOR EACH RESERVOIR SHOULD NOT INCLUDE CONTINUOUS FILLS (Issue No. 10).

The draft permits provide for continuous or multiple fills of each reservoir. This is

consistent with the traditional operation of reservoirs in Arizona, which allows water to be

captured whenever there is space available in the storage facility, regardless of the

timing of the inflow.102 Continuous fills were authorized in BOR’s storage permit for both

Modified Roosevelt and New Waddell.103

101 SR-134 at 4, TR III at 707 (Johnson). 102 LG-97 at 13. 103 LG-97 at 24, TR III at 701-02, 708 (Johnson).

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Nonetheless, the LGWU claim that continuous fills should not be included in the

draft permits because they were not authorized in 1920 and 1921 when the original

applications were filed. Assuming arguendo that the Amended Applications were

subject to the 1919 Public Water Code, just because the statutes at time were silent

does not mean that the continuous fills could not be included in the Amended

Applications. See Argument XIV, infra regarding the application of the 1919 Public

Water Code to the Amended Applications.

The LGWU failed to prove that the authorized amount of water in storage for each

reservoir should not include continuous fills. The LGWU did not satisfy their burden of

proof on this issue.

XI. THE LGWU FAILED TO PROVE THAT THEY WERE DENIED PROCEDURAL DUE PROCESS (Issue No. 11).

This matter came before the Office of Administrative Hearings (“OAH”) on the

LGWU’s appeal of DWR’s decision to grant the Amended Applications. Between March

1, 1994 and March 1, 2010, the SRVWUA submitted draft amendments to the eight

original applications previously filed in 1920 and 1921 to conform to the actual features

that had been constructed as part of the Salt River Project.104 The final amendments

were filed with DWR on March 1, 2010.

Public notice of the Amended Applications was provided by publication in three

newspapers and by posting at the reservoir sites.105 Thereafter, several protests were

filed to the Amended Applications, including by the LGWU, to which the SRVWUA

responded.106

104 DWR-32 to -45. 105 DWR-47 to -65. 106 DWR -81 to -101, -104 to -116.

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Upon review of the Amended Applications, the protests, SRVWUA’s responses

and analysis by DWR staff, DWR issued its Decision Letter on July 19, 2013.107 In the

Decision Letter, DWR indicated that the decision was an appealable agency action and

enclosed a description of the right to appeal and notice of appeal form, which described

the limitation imposed by A.R.S. § 41-1092.03 on arguments that could be raised. DWR-

131, LG-89 at 11. Copies of the draft permits that DWR proposed to issue were

attached to the Decision Letter.

On August 19, 2013, the LGWU filed a notice of appeal of the Decision Letter

(that incorporated the arguments raised in their protest) and requested a hearing before

OAH. DWR filed a notice of hearing that listed 19 issues based on the notice of appeal

filed by the LGWU. A 15-day hearing was held between October 2013 and February

2014.

Clearly this process afforded the LGWU procedural due process. They were

provided with notice and an opportunity to be heard, which they exercised. The LGWU,

however, contend otherwise.

Hearing. The LGWU contend they were denied due process because a hearing

was not held before DWR issued its Decision Letter. In support of this argument, the

LGWU rely on A.R.S. § 45-153(A) which states: “An administrative hearing may be held

before the director’s decision on the application if the director deems a hearing

necessary.” (Emphasis added.) This language is discretionary.

Under the Administrative Procedures Act, a hearing may be held either before or

after the Director’s decision, as either a contested case or an appealable agency action.

Under A.R.S. § 45-114(A), if an administrative hearing is held before the DWR makes a

decision, then the administrative proceeding is a contested case. If an administrative

107 DWR-131.

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hearing is not held before the Director’s decision, as here, the Director’s decision is an

appealable agency action.108 See Administrative Procedures Act, A.R.S. §§ 41-1092 et

seq. (Title 41, Chapter 6, Article 10) and A.R.S. §§ 45-114 and 153(D).

Under A.R.S. § 41-1092.08 (A) of the Administrative Procedures Act, a protestant

such as the LGWU may obtain a hearing before OAH on an appealable agency action,

Pursuant to A.R.S. § 41-1092.08(B), the ALJ’s decision is sent to DWR where the

Director may accept, reject or modify it. The decision of the Director is the final

administrative decision, and is subject to judicial review. See A.R.S. § 41-1092.08(F),

(H).

In this case, the LGWU received notice of the Amended Applications and filed a

protest. Thereafter, the LGWU received a copy of the Decision Letter by certified mail

and filed a timely notice of appeal in which the LGWU requested a hearing.109 During

the 15-day administrative hearing, the LGWU were represented by counsel who

presented evidence and cross-examined witnesses. Upon receipt of the ALJ’s decision,

the Director of DWR will issue a final administrative decision that will then be subject to

judicial review. There is no question that the LGWU have been afforded procedural due

process.

Burden of Proof Because a hearing was not held before DWR issued the

Decision Letter, the LGWU contend that they were denied due process because the

burden of proof was unfairly shifted from the applicant to the protestant. The burden of

proof is described in the rules of proceeding before OAH. Under A.A.C. R2-19-119, the

LGWU had the burden of proof at the administrative hearing, and the standard of proof

was a preponderance of the evidence. Because the LGWU were asserting a “claim,

108 See TR III at 759-60 (Johnson). 109 DWR-132 at 7, DWR-136.

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right or entitlement,” they had the burden of proof, which did not per se deny them

procedural due process.

Notice. The LGWU maintain that they were denied due process because the

original applications were not noticed when filed and the LGWU were denied the

opportunity to cross examine witnesses at that time. However, the LGWU do not dispute

that they were provided with public notice after the applications were amended or that

they had, and exercised, the opportunity to cross examine witnesses during the 15-day

hearing in this case. Also, it should be noted that DWR was not required by statute to

provide notice of the filing of the applications under the 1919 Public Water Code, and

there are no such requirements under the current statutes.110 However, DWR as a

matter of practice does provide notice and the opportunity for protests to be filed.111

There is no basis for the LGWU to complain that they were denied due process.

Ex parte communications. The LGWU argue that they were denied due process

because SRVWUA had ex parte communications with DWR before the Decision Letter

issued. In support of their position, the LGWU cite State ex rel. Corbin v. Arizona Corp.

Comm'n, 143 Ariz. 219, 226, 693 P.2d 362, 369 (App. 1984). The LGWU’s reliance on

this case is misplaced.

In the Corbin case, the Court held that there was a denial of due process due to

ex-parte communications between the decision-maker and one of the parties to the

controversy after the hearing had concluded. Those facts do not exist in this case.

Here, the communications complained of occurred while the Amended Applications were

being processed, and the communications were between SRVWUA and DWR, not

between SRVWUA and the Director of DWR, who will make the final decision on the

110 TR V at 1164 (Logan). 111 TR IV at 839, 843 (Johnson).

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Amended Applications. 112 See A.R.S. § 41-1092.08(F). The Corbin case, as well as the

other cases cited in the LGWU’s closing brief (pp. 93-96), do not support LGWU’s

argument for similar reasons.

Furthermore, the communications with the SRVWUA were part of DWR’s general

application processing practice, which encourages the exchange of information with the

applicant. Before a permit application is submitted, it is DWR’s practice to confer with

the applicant about DWR’s requirements and respond to questions.113 It is also DWR’s

practice to provide the applicant with copies of the public notices and draft permits to

ensure accuracy and completeness.114 DWR provides notice of the application even

though there may be certain issues in debate, which DWR resolves before the permit

issues.115

Consistent with its practice, DWR communicated with the SRVWUA concerning

SRVWUA’s proposed amendments, identified certain issues, requested additional

information, and provided drafts of the public notices and the permits to SRVWUA

through a series of meetings, letters and emails, which resulted in corrections and

revisions.116 In addition, DWR provided copies of the protests to SRVWUA, and copies

of SRVWUA’s response to the protests to the protestants.117 However, DWR did not

provide SRVWUA with a copy of the Decision Letter before it was issued, or discuss its

contents with the SRVWUA after that time.118

112 TR V at 1193 (Logan). 113 TR IV at 977-978 (Johnson). 114 TR I at 113, 133, 150 (Johnson), TR II at 497-502 (Johnson), TR III at 722-24 (Johnson). 115 TR V at 1186-87 (Logan). 116 DWR 28-30, 32-46, 125-128; TR I at 103-105, 112-153, 163-170 (Johnson); TR III at 678 (Johnson)’ TR V at 1187 (Logan). 117 DWR 81-101, 106 to 116, 121; TR I at 157-161 (Johnson). 118 TR IV at 793 (Johnson)

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“Cancelled” Applications. The LGWU claim that they were denied due process

because DWR reinstated applications that were marked cancelled. This issue is

discussed in Argument XII, infra.

The LGWU did not prove that they were denied procedural due process in this

case. The LGWU did not satisfy their burden of proof on this issue.

XII. LGWU FAILED TO PROVE THAT THE APPLICATIONS LISTED AS “CANCELLED” HAD BEEN VALIDLY CANCELLED (Issue 12).

Of the eight original applications filed in 1920 and 1921, there were five

applications that were listed as “cancelled” in the black ledger that contains official

records concerning surface water rights. This black ledger or “Black Book” contains

historical records of actions taken on applications for permits to appropriate water by the

State Water Commissioner and the State Land Department, DWR’s predecessors.

DWR properly determined that the cancellations were not valid. DWR also properly

determined that it had authority to reinstate these applications consistent with past

practice even if the original applications had been properly cancelled.

The applications that were listed as cancelled in the Black Book include R-30, R-

45, R-46, A-135 and A-136.119 Nothing in the application files indicates that Applications

R-71, R-72 or E-11 were marked cancelled.120

Application R-30 was marked “cancelled” with a note dated January 1, 1927, that

stated, “For the reason that the Salt River Valley Water Users’ Association have built the

Mormon Flat Reservoir.” Applications R-45, R-46, A-135 and A-136 were marked with

the single word “cancelled” apparently sometime after 1945, but no reasons were stated.

DWR searched historical documents related to these applications, including letters that

dated back to the 1920’s, but did not find any information in the Black Book or elsewhere

119 DWR 140. 120 DWR-29 and 30, TR I at 104-05 (Johnson).

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explaining the reasons for marking these applications as cancelled (other than R-30), or

whether SRVWUA had been contacted or was otherwise aware of these notations.121

The letters in DWR’s administrative record are the only letters that could be located.122

In 1994, SRVWUA sent DWR a letter requesting that the applications marked

cancelled be reactivated.123 With that letter, the SRVWUA submitted its first set of

proposed amendments to the eight original applications.124

The LGWU maintain that granting the Amended Applications is against the

interests and welfare of the public because some of the original applications were

cancelled. Although some of the original applications were marked “cancelled,” the

LGWU did not present any evidence, and DWR found none, that established that (1) a

final decision had been made to cancel the applications, (2) SRVWUA’s due process

rights to be informed of any such decision had been satisfied, or (3) SRVWUA’s due

process rights to have an opportunity to seek review of any such decision had been

satisfied.125 Absent this evidence, DWR determined that the purported “cancellations”

were not legally effective and that the applications should be reinstated.

Dr. Johnson testified that decisions on whether to reinstate or reactivate an

application are made on a case-by-case basis depending on the particular facts

involved, including whether the applicant received notice of the cancellation and had an

opportunity to appeal.126 It is also important whether the application form itself still exists

121 DWR 9-26, 140; DWR-1 at 1 (R-30), TR I at 69, 72 (Johnson); DWR-2 at 5 (R-45), TR I at 72, 97-101 (Johnson); DWR-3 at 9 (R-46), TR I at 79, 97-101 (Johnson); DWR-4 at 5 (A-135); TR I at 80, 97-101 (Johnson); DWR-5 at 5 (A-136), TR. I at 81, 97-101 (Johnson). 122 TR 1 at 101 (Johnson). 123 DWR-30, TR I at 105-06 (Johnson). 124 DWR-30. 125 LG-45 at 3, TR III at 525-27 (Johnson); TR I at 210-211 (Johnson). 126 TR IV at 912, 914, 917-18 (Johnson); TR V at 1153 (Logan).

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and has not been destroyed, as was the case with many of the older applications.127 All

of the eight original applications are still in DWR’s files.128 DWR does not withdraw

applications or deem applications withdrawn without notice to the applicant and an

opportunity for the applicant to respond.129 In addition, it is significant that DWR’s

predecessors had reinstated cancelled applications. In the Black Book there were

several notations indicating that applications had been cancelled and then reinstated.130

Given these circumstances, DWR properly determined that the applications marked

“cancelled” should be reinstated.

In support of their argument otherwise, in their closing brief (p. 67) the LGWU

maintain that applications R-30, R-45, R-46, A-135 and A-136 should have been

deemed cancelled because they were not pursued with reasonable diligence. The

cases cited by the LGWU for this proposition are inapposite. Here construction of the

dams and reservoirs on the Salt and Verde Rivers were completed in a reasonable

amount of time and the stored water has been put to beneficial use for decades. Dr.

Johnson testified that that it would not have been feasible to construct the dams on the

Salt and Verde Rivers any faster due to the construction techniques, materials, and labor

force that were available at that time.131 The LGWU’s argument regarding lack of due

diligence is not supported by the facts.

The LGWU further maintain that all of the original applications should have been

automatically cancelled because maps had not been provided in 120 days as required

by rules adopted by the State Land Department in 1953.132 DWR contends that this

127 TR V at 1155-57 (Logan). 128 TR V at 1189-90, 1230 (Logan) 129 TR II at 403 (Johnson), TR III at 622 (Johnson). 130 DWR 140 at 182-86; TR. I at 205, 213 (Johnson);TR III at 564, 572, 581, 589, 594, 600, 602, 606, 650, and 651 (Johnson). 131 TR I at 190-91, 413 (Johnson). 132 LG-29 at 16.

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issue is not properly before the ALJ because it was not raised in the LGWU’s protest.

See A.R.S. § 41-1092.03(B). Without waiving this contention, DWR addresses the issue

here. The 1953 rules have no possible relevance in this case. They were not in effect at

either the time the original applications were filed or when the Amended Applications

were filed. Furthermore, as discussed further in Argument VII, supra, contrary to

LGWU’s assertions otherwise, there is evidence that the required maps were submitted

in 1920 and 1921 when the original applications were filed.

The LGWU failed to prove that the applications marked as “cancelled” were

validly cancelled, and that DWR lacked authority to reinstate those applications at the

request of SRVWUA. The LGWU failed to satisfy their burden of proof on this issue.

XIII. THE LGWU FAILED TO PROVE THAT THE PRIORITY DATES FOR THE DRAFT PERMITS SHOULD NOT BE BASED ON THE DATE OF FILING AS REQUIRED BY A.R.S. § 45-162(B) (Issue No. 13).

In both their Protest and Notice of Appeal, the LGWU maintained that the priority

dates for the Amended Applications should be based on the date of construction or the

dates that the water was first put to beneficial use, not the dates of the filing of the

original applications. There is clear statutory language to the contrary. A.R.S. § 45-

162(B) states that the “right acquired by the appropriation shall date from filing the

application with the director.” Accordingly, DWR included the application filing dates in

the draft permits.133

Furthermore, the relation back of the applications to the date of filing does not

prejudice the LGWU. See Argument I, supra. This is an important factor that was

considered in the Decision and Order granting the BOR a permit to store water at New

133 TR V at 1130 (Logan).

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Waddell dam with a priority date based on the date of filing of the original application for

a different dam at a different location.134

Although the LGWU acknowledge in their closing papers that the BOR’s storage

permit related back to the date of the filing of the original application, they point out that

the appropriative right permit for the CAWCD did not relate back to that date but to the

date that CAWCD filed a separate application at a later time. Those facts are different

than those in this case. Here, the SRVWUA filed applications in 1920 and 1921 for

permits to both store and appropriate water for beneficial use. See Argument VIII, supra.

The LGWU also appear to argue that it would be inconsistent with A.R.S. § 45-

162(B) to require a certificated water right for power to be renewed after 40 years, but

allow applications that were filed more than 40 years ago to be reinstated. This is a

faulty argument. A.R.S. § 45-162(B) applies to “certificates for the right to the use of

water for power development,” which are subject to a preferred right of renewal. The

Amended Applications were not filed for certificates of water right, but for permits to store

and appropriate water. The priority dates for these permits have nothing to do with

renewals of certificates of water right for power development.

With respect to A.R.S. §45-162(B), the LGWU also note that it was amended in

1995 to add language providing that “delays in the processing or granting of an

application to appropriate or an application for a permit to construct or enlarge a

reservoir do not affect the validity of the appropriation or the date of priority assigned to

the appropriative right” and that the Supreme Court found this language unconstitutional.

The LGWU fail to acknowledge that the Arizona Supreme Court held that this new

language did not change anything, but if it did, then is it did so retroactively. The Court

stated:

134 LG 97 at 4, 25, 26.

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Section 45-162(B) provides that a delay by the Department of Water Resources (DWR) in processing a water right application does not affect priority. As we read the old and new versions of the statue, the priority date under both is the application’s filing date. If this new provision changes anything at all, it does so retroactively.

San Carlos Apache Tribe v. Superior Court, 193 Ariz. 195, 206, 972 P.2d 179, 190

(1999) (emphasis added).

The LGWU failed to prove that the priority dates for the permits issued under the

Amended Applications should not be based on the filing date of the original applications

as required by A.R.S. § 45-162(B). The LGWU failed to satisfy their burden of proof.

XIV. THE LGWU FAILED TO PROVE THAT DWR UNLAWFULLY APPLIED THE SURFACE WATER CODE RETROACTIVELY BY USING THE APPLICATION FILING DATES AS REQUIRED BY A.R.S. § 45-162(B) (Issue No. 14).

Contrary to the assertions by LGWU, DWR reviewed and processed the

Amended Applications based on the statutes in effect at the time that the Amended

Applications were submitted, not retroactively to the time when the original applications

were filed even though DWR included the filing dates of the original applications in the

draft permits pursuant to A.R.S. § 45-162(B). In any event, the current statutes are

essentially the same as they were in 1919 when the Public Water Code was adopted, in

those respects that are relevant to the Amended Applications.

In their closing papers, the LGWU note that the 1919 Public Water Code did not

list recreation, fish and wildlife purposes as beneficial uses. DWR submits that including

those beneficial uses in the draft permits did not prejudice the LWGU. See Argument

VIII, supra. However, the LGWU claim in their closing brief (p. 61) that including these

non-consumptive uses in the draft permits for use at the reservoir sites will incentivize

the SRVWUA to not release water for downstream uses, but they presented no evidence

that SRVWUA has ever done so. The LGWU’s argument is groundless. The SRVWUA

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must continue to release water from its reservoirs to generate power and to provide

water to their member and Townsite lands in the Salt River Reservoir District, as well as

on three Indian Reservations for a variety of beneficial uses.

During the hearing, the LGWU argued that A.R.S. § 45-172, which authorizes

severances and transfers, was different than its predecessor in the 1919 Public Water

Code at Laws 1919, Ch. 164, § 48. Although there are differences, they are not relevant

to this proceeding because SRVWUA’s water rights under the Amended Applications

have not yet vested. See Argument VI, supra.

Likewise, the differences noted by the LGWU between the A.R.S. § 45-161, which

governs applications for reservoir permits, and its predecessor in the 1919 Public Water

Code, Laws 1919, Ch. 164, § 12 are not meaningful here. There is nothing in the 1919

Public Water Code that prohibits the same entity from holding both a primary and a

secondary permit, as currently authorized by A.R.S. § 45-161.

The LGWU failed to prove that DWR unlawfully applied provisions of the surface

water code retroactively by using the application filing dates as required by A.R.S. § 45-

162(b). The LGWU failed to satisfy their burden of proof on this issue.

XV. WHETHER DWR PROPERLY DETERMINED THAT IT DOES NOT HAVE AUTHORITY TO DETERMINE WHETHER GRANTING THE AMENDED APPLICATIONS WOULD RESULT IN AN UNLAWFUL TAKING OF APPELLANTS’ ALLEGED PROPERTY RIGHTS (Issue No. 15)

In their Proposed Findings of Fact and Conclusions of Law (p. 99), the LGWU

withdrew this issue.

XVI. THE LGWU FAILED TO PROVE THAT THE AMENDED APPLICATIONS SHOULD BE DENIED DUE TO THE OVER-APPROPRIATION OF THE GILA RIVER SYSTEM AND SOURCE, INCLUDING THE SALT AND VERDE RIVERS (Issue No. 16).

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In essence, the LGWU contend that DWR was required to determine the amount

of unappropriated water in the Salt and Verde Rivers before DWR determined that the

Amended Applications should be granted. This argument ignores the requirements of

A.R.S. § 45-153(A), which do not require such a determination. This statute states:

The director shall approve applications made in proper form for the appropriation of water for a beneficial use, but when the application or the proposed use conflicts with vested rights, is a menace to public safety, or is against the interests and welfare of the public, the application shall be rejected.

Where as here, the language of a statute is unambiguous, it must be given its clear

meaning.

The LGWU ignore the clear language of A.R.S. § 45-153(A) and instead rely on

language in A.R.S. § 45-151(A) that states that “unappropriated” water is subject to

appropriation. However, that language does not mean that a determination must be

made that unappropriated water is actually available before a permit to appropriate may

be issued. As explained by Dr. Johnson, because water rights are limited by the quantity

of water that is available, it is not necessary to determine the amount that is

unappropriated.135 Also, during the hearing, Dr. DuMars, a witness for the LGWU

admitted that he was not aware of any requirement in Arizona law that such a

determination be made, whereas in New Mexico such a requirement is explicitly set forth

in statute.136

Under the prior appropriation doctrine, a water user is entitled to receive water

based the priority of the water right, and in times of shortage there may not be sufficient

supplies of water for all water rights holders. Whether the Gila River System is over-

appropriated is a matter for the Gila River Adjudication Court, which has declined to do

135 TR 1 at 489 (Johnson). 136 TR XIII at 3159-3162 (DuMars).

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decide the matter. By order dated January 16, 2004, the Gila River adjudication court

denied motions for summary judgment that sought a declaration that the Gila River

System was fully appropriated.137

In their closing papers, the LGWU contend that the Amended Applications should

not be granted because Granite Reef Dam diverts “virtually all the usable water.”138 As

discussed in Argument I, supra, whether such diversions occur at Granite Reef dam are

not predictive of whether water will be available for the LGWU at Gillespie Dam.

The LGWU failed to prove that that the amended applications should be denied

due to the alleged over-appropriation of the Gila River system and source, including the

Salt and Verde rivers. The LGWU did not satisfy their burden of proof.

XVII. THE LGWU FAILED TO PROVE THAT DWR DOES NOT HAVE AUTHORITY TO ISSUE PERMITS INDEPENDENT OF THE GILA RIVER ADJUDICATION (Issue No. 17).

On the one hand, the LGWU claim that DWR should examine LGWU’s water

rights as part of DWR’s analysis of whether there will be a conflict with the LGWU’s

water rights if the Amended Applications were granted. On the other hand, the LGWU

claim that DWR cannot make such a determination because it is the exclusive province

of the Gila River Adjudication Court to do so.

By making the latter argument, the LGWU fail to recognize that DWR’s authority

under A.R.S. § 45-153 is separate and apart from that exercised by the Gila River

Adjudication Court to determine the nature, extent and relative priority of water rights

under A.R.S. §§ 45-251 et seq. Even though the Gila River Adjudication Court has

exclusive jurisdiction over those issues, DWR properly exercised its separate authority

under A.R.S. § 45-153 to determine that the proposed water uses under the Amended

137 https://www.superiorcourt.maricopa.gov/SuperiorCourt/GeneralStreamAdjudication 138 LGWU Proposed Findings of Fact and Conclusions of Law at 88.

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Applications would not conflict with the water rights asserted by the LGWU. See

Argument I, supra. As noted by the Arizona Court of Appeals, “[A]rizona’s water code

provides separately for water rights adjudication, and for water usage management,

which is meant to regulate water usage.” Yavapai-Apache Nation v. Fabritz-Whitney,

227 Ariz. 499, 503-04, 260 P.3d 299, 303-04 (App. 2011). The LGWU has failed to

satisfy its burden of proof on this issue.

XVIII. THE LGWU CONCEDED THAT DWR DOES NOT HAVE JURISDICTION TO DETERMINE THE NATURE, EXTENT AND RELATIVE PRIORITY OF THE APPELLANTS’ WATER RIGHTS IN THIS PROCEEDING (Issue No. 18).

In their notice of appeal, as well as during the hearing and in their closing papers,

the LGWU conceded that DWR does not jurisdiction to determine the nature, extent and

relative priority of the LGWU’s water rights.139 DWR has no jurisdiction to determine the

relative rights of the LGWU and those that SRVWUA may have. SRVWUA v. Norviel, 29

Ariz. 360, 375-76, 214 P. 503, 508 (1925), reh’g denied, SRVWU v. Norviel, 29 Ariz.

499, 242 P. 1013 (1926). But this exactly what the LGWU argued that DWR should do

in order to determine a conflict with their vested water rights. The LGWU are mistaken.

See Argument I, supra.

XIX. THE LGWU FAILED TO PROVE THAT THE SRVWUA IS NOT A PROPER APPROPRIATOR UNDER A.R.S. § 45-151 (Issue No. 19).

In their closing papers, the LGWU maintain that granting the Amended

Applications is against the interests and welfare of the public because the SRVWUA

139 DWR-136 at 7, TR I at 61 (Hendricks); LGWU Proposed Findings of Fact and Conclusions of Law at 101;

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delivers the water to others for their beneficial use.140 This argument ignores the clear

language of A.R.S § 45-151(A). This statute states that water may be appropriated “for

[the applicant’s] personal use or for delivery to consumers.”

In this case, the Amended Applications filed by the SRVWUA seek to appropriate

water in part for its own use for hydropower and other non-consumptive uses at their

reservoirs, but also for delivery to its customers who own or possess land at the other

places of use. See Argument V, supra. There is precedent for granting a permit to

appropriate water for delivery to customers. The Director granted a permit to the

CAWCD for delivery of water to its customers within CAWCD’s service area,141 and

granted several cities permits to appropriate water stored in Modified Roosevelt for the

delivery of water to customers within their service areas.142

LGWU claims, however, that the permits to store water at the reservoirs on the

Salt and Verde Rivers should be issued to the BOR, and not the SRVWUA. Because

the LGWU did not raise this issue in their protest, DWR contends that it is not properly

before the ALJ. See A.R.S. § 41-1092.03(B). Without waiving its contention, DWR

addresses this issue here.

Dr. Johnson testified that he had reviewed the 1917 contract between the United

States and the SRVWUA, and certain reports known as HAER reports, which stands for

“Historic American Engineering Record” that had been prepared for the reservoirs that

had been constructed on the Salt and Verde Rivers143 These documents indicate that

although the United States owns the dams, the reservoirs are operated by the

140 LGWU Closing Brief at 76; LGWU Proposed Findings of Fact and Conclusions of Law at 102. In their notice of appeal, the LGWU also argued that the SRVWUA is not a proper appropriator under A.R.S. § 45-161. DWR-136 at 14. The LGWU apparently have dropped this argument. 141 SR-302 at 24,TR III at 707 (Johnson). 142 LG-97 at 24, 25-27. 143 DWR 142-145, TR I at 186-189 (Johnson).

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SRVWUA.144 DWR also considered that BOR had withdrawn the four statements of

claimant that it had filed in the Gila adjudication for the reservoirs by letter dated 1993,

and the BOR did not file a protest to the Amended Applications.145 Under these

circumstances, it would be appropriate for SRVWUA to be granted a permit to store

water in the reservoirs constructed on the Salt and Verde Rivers.

The LGWU failed to prove that the SRVWUA is not a proper appropriator under

A.R.S. § 45-151. The LGWU did not satisfy their burden of proof on this issue

CONCLUSION

The LGWU failed to satisfy their burden of proof on the issues noticed for hearing,

so their appeal must be denied. DWR’s decision to grant the Amended Applications

should be upheld by the ALJ.

DATED this 23rd day of June, 2014

ARIZONA DEPARTMENT OF WATER RESOURCES s/ Janet L. Miller Janet L. Miller (Ronald), Deputy Counsel Nicole D. Klobas, Deputy Counsel Electronically filed and served via https://portal.azoah.com/oedf this 23rd day of June, 2014. s/ Janet L. Miller

144 DWR 10, TR III at 684 (Johnson) 145 DWR-27, TR I at 102-03 (Johnson).