The Arizona Supreme Court on Wednesday rebuffed efforts by the state to lay claim to water rights tied to its 9.3 million acres of trust land.
In a ruling with wide implications, the justices unanimously rejected arguments by attorneys for the state that when the federal government gave the land to Arizona in 1912 to hold in trust, it also provided "reserved'' water rights for that property. Instead, the court said the state's rights are no different -- and no better -- than others.
Robert Glennon, a professor of law at the University of Arizona, said what makes that ruling significant is that if the justices had accepted the state's arguments, it would have caused havoc.
"They want water, retroactively, for 9 million acres of land,'' he said. "Just think of how disruptive that would be, both to claims of some tribes and also to the existing cities and farms and mines that are using water.''
And Glennon, author of several books including the 2009 "Unquenchable: America's Water Crisis and What to Do About It,'' said the implications of giving the state title to all that water would have put many other users at the back of the line.
"There wouldn't have been much left,'' he said. "It would have been a staggering amount of water.''
The high court, in its ruling, also brushed aside claims by attorneys for the state that denying the water rights would somehow damage the whole purpose of the federal government giving all that land to the state: to support public schools and other government functions.
"The state has not argued that, without federal reserved water rights, the state trust lands will become worthless or incapable of producing a fund to support their designated beneficiaries,'' wrote Justice John Pelander for the court. "Indeed, state trust lands have without such rights produced revenue for a century.''
Vanessa Hickman, the deputy state land commissioner, conceded the point.
In the 2011 fiscal year, the most recent figures available, the state sold nearly 5,600 acres, generating $104 million, even in a depressed real estate market. By comparison, five years earlier, before the real estate bubble went bust, the state generated nearly $375 million in sales from the sale of just 3,426 acres.
But Hickman said there's much more money to be had, which is why the state is not giving up.
All those sales were of pure land, with no water rights. She figures that if state's remaining property suddenly comes with water, it will bring far more at auction.
"We all know as more land is sold and more land is put into production, we all know how much more valuable access to water becomes,'' she said. And that, in turn, means far more cash for public schools and others who are beneficiaries of the trust.
Hickman said while the justices rejected the state's contention about reserved water rights, attorneys for her agency will now pursue other legal theories that might ultimately result in the courts upholding a claim for water.
When Arizona became a state in 1912, the federal government gave it nearly 11 million acres. The purpose was to have the state lease the land or, in some cases, sell it outright, with proceeds benefitting mainly public education but also everything from prisons to universities.
About 9.3 million acres remain.
The legal questions arose because there have been court fights dating back to the 1970s over who is entitled to water rights in the Colorado and Gila River watersheds.
In Arizona, Pelander explained, the ability to tap surface water from steams as well as sub flow is governed by the doctrine of "prior appropriation.'' That means the first person to divert the water and put it to beneficial use, like farming or drinking water, has priority over those who come later.
Pelander acknowledged, though, there are circumstances where the federal government can reserve water rights on its lands, as it has done for some tribes and national parks. Those rights, he said, remain whether the claimed water was actually put to use at the time.
"And those rights have priority by operation of law,'' he said, meaning they would trump the claims of others.
Attorneys for the state argued that when the federal government gave Arizona the land, it also gave the state those "reserved'' water rights associated with all that acreage.
But Pelander said Congress apparently intended to transfer only the land -- and was aware that the property was worth less without water rights. He said federal lawmakers addressed that by doubling the amount of trust land provided.
"Congress intended to compensate for the relatively low value of land granted to Arizona by augmenting the amount of land granted, not by reserving federal water rights for those lands,'' Pelander wrote.
Hickman said some other legal options for seeking water rights remain open to the state despite Wednesday's ruling.
One involves Arizona staking its claim to at least some of the water under that "prior appropriation'' theory, with the state arguing that it was using the water running through the trust lands ahead of others.
She agreed the state never pursued its claims before, suggesting it wasn't a priority until now.
"Perhaps 100 years ago people weren't focused on water as much as they are today,'' she said. "We understand what great value this could bring to the trust to have water associated with all of our land.''