Az Water Co v. Az Dept of Water Resources

• Court: Arizona Supreme Court
• Decided: June 14, 2004
• Status: Published

Opinion

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 1267

AFFIRMED 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45-401 to -704 (2003 & Supp. 2003), was originally enacted as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.

¶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.

¶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

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.

¶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 . . .

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. at

537 ¶ 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. at 539 ¶ 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