Arizona Department of Water Resources v. McClennen – 11/12/201

November 19, 2015

Arizona Supreme Court holds that Arizona Department of Water Resources may deny an application to sever and transfer a water right only for the reasons provided in A.R.S. § 45-172(A), the statute governing transfer of water rights.

In Arizona, a water right “may be severed from the land to which it is appurtenant” and transferred for other uses.  A.R.S. § 45-172(A).  A party’s ability to sever and transfer a water right is subject to statutory limitations and conditions, including the approval of the Director of the Arizona Department of Water Resources (“the Department”).  Id. § 45-172(A)(1)–(7).  Once an application to sever and transfer a water right is filed, “interested persons” may file related objections with the Department.

Freeport Minerals Corporation filed applications with the Department to sever and transfer water rights appurtenant to land located in Mohave County.  Mohave County then filed objections with the Department, alleging that approving Freeport’s application might negatively affect the County’s water supply and County residents’ tax burdens.  It also alleged that the severance and transfer would generally go against the public interest.  The Department decided that it was not authorized to deny the application on those grounds, and the County appealed the Department’s decision.

The Arizona Supreme Court determined that the severance and transfer of a water right is a “licensing decision” that cannot be based “on a licensing requirement or condition that is not specifically authorized by statute.”  Because Mohave County did not allege that Freeport’s application violated any of the limitations or conditions defined in the applicable statutes, the Court affirmed the Department’s conclusion that it lacked authority to deny the application on the grounds the County alleged.

The Arizona Supreme Court then held that the County was not an “interested person” entitled to file objections to the application because, read in context, the phrase “interested person” is most reasonably interpreted as identifying individuals with an interest that is protected by the water transfer statute.

Chief Justice Bales authored the opinion; Vice Chief Justice Pelander, and Justices Brutinel, Timmer, and Berch (Retired) joined.