Arizona Supreme Court Holds That Federal Water Rights Were Not Impliedly Reserved on Lands Granted by the United States Government to the State of Arizona to Support Educational and Other Public Institutions.

The amount of surface water available in Arizona is insufficient to meet all needs, which has led to litigation over water rights spanning several decades.  In Arizona, rights to surface water and sub-flow are governed by the doctrine of prior appropriation, meaning the first to divert water and put it to beneficial use has priority over later diverters.  The federal government, however, can reserve water rights on its lands in certain circumstances, and those rights may have priority over other rights by operation of federal law based on the date of the establishment of the federal reservation.

In 1850, when Congress established the New Mexico Territory, which at the time included Arizona, it reserved township sections sixteen and thirty-six to fund schools.  Four years later, Congress reserved land equal to two townships for the establishment of a university.  In 1863, when Congress separated the Arizona Territory from the New Mexico Territory, it gave these land grants to Arizona plus another grant of seventy-two sections for the support of a university.  In 1910, Congress passed the Arizona-New Mexico Enabling Act, which confirmed the prior land grants and also granted sections two and thirty-two in every township to support common schools.  It also made bulk grants of land for other public institutions.  Because some of the granted sections had been preempted by settlement, Indian reservations, or other purposes, Arizona was able to select lands to replace the preempted lands.  Arizona acquired a fee interest in the granted lands, which at statehood totaled almost eleven million acres.  The state currently manages about 9.2 million acres (“State Trust Lands”).

The ongoing water litigation concerning the Little Colorado River and Gila River involves 14,000 and 82,000 claims respectively.  The State moved for partial summary judgment to recognize federal reserved water rights for the State Trust Lands.  The superior court denied the motion, concluding that the reserved water rights doctrine is applicable to the State Trust Lands.

The Supreme Court affirmed on interlocutory review.  First, the Court agreed with other courts that have faced this question that the doctrine of federal reserved water rights should be construed narrowly because of the doctrine’s disruptive effect in prior-adjudication jurisdictions.  Thus, federal water rights are impliedly reserved only to the extent they are necessary to accomplish the primary purpose of the reservation.  The doctrine does not extend to a reservation’s secondary purposes.

The Court also agreed with a New Mexico court that had considered a similar issue that the applicable acts of Congress did not withdraw or reserve federal rights sufficiently to create implied federal reserved water rights.  Withdrawal is segregation of land as an initial step in dedicating the lands for a specific purpose.  Withdrawn lands have restraints on alienation.  The State Trust Lands were not withdrawn because, before they were surveyed, they had not been withdrawn from the public domain and because the Enabling Act authorized sale of the Trust Lands.  Likewise, the Trust Lands were not reserved for a federal purpose.  Reservation must be for a specific public use, and that use must be federal for the doctrine of federal implied water rights to apply.  Although the Trust Lands were granted for a public purpose, they were not granted for a federal purpose.

The Court also noted that Congress knew how to reserve land for a federal purpose when it intended to do so, and rejected the State’s arguments that Congress had shown such intent in its grants of the State Trust Lands.

Justice Pelander authored the opinion; Justices Berch and Brutinel and Judge Winthrop concurred.