IN THE

SUPREME COURT OF THE STATE OF ARIZONA

ARIZONA DEPARTMENT OF WATER RESOURCES, AN AGENCY OF THE STATE OF 

ARIZONA; FREEPORT MINERALS CORPORATION, A DELAWARE CORPORATION,

Petitioners,

v.

HON. CRANE MCCLENNEN, JUDGE OF THE SUPERIOR COURT OF THE STATE OF 

ARIZONA, IN AND FOR THE COUNTY OF MARICOPA,

Respondent,

MOHAVE COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF ARIZONA,

Real Party in Interest.

No. CV-15-0223-SA

Filed November 12, 2015

Special Action from the Superior Court in Maricopa County

The Honorable Crane McClennen, Judge

No. LC2014-000624

VACATED AND REMANDED

COUNSEL:

Kenneth C. Slowinski, Janet L. Miller (argued), Jennifer Heim, Arizona 

Department of Water Resources, Phoenix, Attorneys for Arizona 

Department of Water Resources

L. William Staudenmaier (argued), Snell & Wilmer, Phoenix; and Timothy 

Berg, Sean T. Hood, Rhett A. Billingsley, Fennemore Craig, P.C., Phoenix, 

Attorneys for Freeport Minerals Corporation

John F. Munger, Adriane J. Hofmeyr (argued), Robert J. Metli, Lawrence V. 

Robertson, Jr., Munger Chadwick, P.L.C., Tucson, Attorneys for Mohave 

County

Mark Brnovich, Arizona Attorney General, John R. Lopez IV, Solicitor 

General, Theresa M. Craig, Assistant Attorney General, Phoenix, Attorneys 

for Amicus Curiae Arizona State Land Department
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

2

Mark Brnovich, Arizona Attorney General, John R. Lopez IV, Solicitor 

General, James F. Odenkirk, Assistant Attorney General, Phoenix, 

Attorneys for Amicus Curiae Arizona State Game and Fish Department

David K. Wilhelmsen, Lance B. Payette, Favour & Wilhelmsen, PLLC, 

Prescott, Attorneys for Amicus Curiae Hualapai Tribe

Jay Johnson, David Johnson, Central Arizona Project, Phoenix, Attorneys 

for Amicus Curiae Central Arizona Water Conservation District

John B. Weldon, Jr., Lisa M. McKnight, Salmon Lewis & Weldon PLC, 

Phoenix, Attorneys for Amicus Curiae Salt River Project Agricultural 

Improvement and Power District

Jeffrey W. Crockett, Crockett Law Group PLLC, Phoenix, Attorneys for 

Amici Curiae La Paz County and the Arizona Association of Counties

CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE

CHIEF JUSTICE PELANDER, and JUSTICES BRUTINEL, TIMMER, and 

BERCH (RETIRED) joined.

CHIEF JUSTICE BALES, opinion of the Court:

¶1 Under Arizona law, a right to use surface water may be 

acquired by appropriation. This right may be severed from the land to 

which it is appurtenant and, subject to the approval of the Director of the 

Arizona Department of Water Resources (“ADWR”) and other conditions 

listed in A.R.S. § 45-172, may be transferred without losing its priority. 

“Interested persons” may file objections with ADWR to a proposed 

severance and transfer, and they may seek judicial review if ADWR grants

approval over their objections.

¶2 We hold that § 45-172 identifies the only grounds on which 

ADWR can deny a properly filed application to sever and transfer a water 

right. We further hold that the “interested persons” entitled to object to a 

proposed severance and transfer are limited to those with interests 

protected by § 45-172. In this case, ADWR properly denied objections filed 

by Mohave County because the County did not allege any violation of 

conditions specified in the statute and did not qualify as an “interested 

person.”
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

3

I.

¶3 In 2010, Freeport Minerals Corporation (“Freeport”) filed 

applications with ADWR to transfer water rights appurtenant to land 

within Planet Ranch in Mohave County along the Bill Williams River 

corridor. The applications sought to sever water rights from Planet Ranch 

and transfer them to a wellfield near Wikieup, which in turn would be used 

at the Bagdad Mining Complex in Yavapai County for mining and 

municipal uses, and to other areas within Planet Ranch for use in the Lower 

Colorado River Multi-Species Conservation Program. No water would be 

physically moved from Planet Ranch to the Bagdad Mining Complex. The 

transfers instead concern the “right” to use water for certain purposes 

“without losing priority theretofore established.” A.R.S. § 45-172(A).

¶4 Approval of these applications is a requirement of settlement 

agreements between Freeport, the Department of the Interior (“DOI”), the 

Arizona Game and Fish Department, and the Hualapai Tribe. Congress 

approved the settlement agreements in the Bill Williams River Water Rights 

Settlement Act of 2014, Pub. L. No. 113-223, 128 Stat. 2096-2110 (2014)

(“Act”). The Act will expire on December 31, 2015, if certain conditions are 

not met, including issuance by December 15, 2015, of a final non-appealable 

decision to grant Freeport’s severance and transfer applications. Freeport, 

DOI, and the Tribe may jointly agree to extend the deadlines.

¶5 As required by A.R.S. § 45-172(A)(7), ADWR published notice 

of Freeport’s severance and transfer applications in newspapers circulated 

in Mohave County. The notice stated that “any interested person” could

file written objections. Mohave County filed objections with ADWR, 

alleging that approving the applications might negatively affect “an already 

strained water supply” and increase tax burdens on County residents. The 

County also argued that the proposed severance and transfer would be 

against the public interest.

¶6 ADWR eventually rejected the County’s objections. In an 

appealable agency action, ADWR found that the County had not identified 

any water rights held by the County that would be affected by granting the 

applications and that ADWR was not authorized to deny the applications 

on the grounds that they are against the public interest or might result in 

an increased tax burden on Mohave County residents. After an 

administrative appeal, an Administrative Law Judge (“ALJ”) rejected the 
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

4

County’s arguments and concluded that the County failed to assert any 

legally valid objection under § 45-172. Because none of the County’s 

objections were based on the “limitations and conditions” enumerated in 

§ 45-172(A), the ALJ determined that ADWR lacked authority to deny 

Freeport’s applications. ADWR accepted the ALJ’s decision as its final 

decision in November 2014.

¶7 In December 2014, the County filed an appeal in superior 

court. In June 2015, the superior court vacated ADWR’s final decision. The 

court, without explaining its decision, ruled that ADWR’s decision was

contrary to law, arbitrary and capricious, and an abuse of discretion.

¶8 ADWR and Freeport filed an appeal with the Arizona Court 

of Appeals and then moved to transfer the appeal to this Court. Given the 

approaching December 15 deadline for a final non-appealable decision on 

the applications, Freeport and ADWR also filed a petition for special action 

in this Court.

¶9 Because the case presents a legal issue of first impression and 

statewide importance, and a final decision may be necessary before 

December 15, we accepted special action jurisdiction. By separate order, we 

grant the motion by ADWR and Freeport to transfer the pending appeal to 

this Court, and we dismiss that appeal as moot in light of today’s opinion.

II.

A.

¶10 Arizona law provides that the surface waters of the state 

“belong to the people and are subject to appropriation and beneficial use as 

provided [in chapter 1 of A.R.S. title 45].” A.R.S. § 45-141. Cf. 

Davis v. Agua Sierra Resources, L.L.C., 220 Ariz. 108, 110 ¶ 10, 203 P.3d 506, 

508 (2009) (discussing how Arizona law distinguishes surface water from 

groundwater). Generally, the “person . . . first appropriating the water shall 

have the better right.” A.R.S. § 45-151(A). Applications for the 

appropriation of water are submitted to ADWR, which is directed to reject 

an application if it “or the proposed use conflicts with vested rights, is a 

menace to public safety, or is against the interests and welfare of the 

public.” A.R.S. § 45-153(A).
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

5

¶11 A water right is protected in various ways, see, e.g., § 45-

151(D) (providing that a right “shall not be diminished, impaired or 

otherwise affected because other water is or may be available to the 

appropriator”); § 45-172(A)(2) (providing that transfers of water rights shall 

not affect, infringe upon, or interfere with “vested or existing rights”); see 

also Adams v. Salt River Valley Water Users’ Ass’n, 53 Ariz. 374, 387–89 P.2d 

1060, 1066 (1939) (describing water rights). Such rights, however, cease to 

exist, “and the water shall revert to the public and shall again be subject to 

appropriation,” if the owner of the right fails to use the appropriated water 

for five successive years. § 45-141(C).

¶12 The transfer of water rights is addressed in A.R.S. § 45-172(A), 

which provides:

A. A water right may be severed from the land to which 

it is appurtenant . . . and may be transferred for use . . . 

without losing priority theretofore established, subject 

to the following limitations and conditions:

1. [N]o such severance and transfer shall be made 

unless approved by the director [of ADWR].

2. Vested or existing rights to the use of water shall 

not be affected, infringed upon, nor interfered 

with [by the proposed severance and 

transfer] . . . .

3. The water rights sought to be transferred shall 

have been lawfully perfected . . . and shall not 

have thereafter been forfeited or abandoned. . . .

7. An application for severance and transfer of a 

water right shall be filed with the director. The 

director shall give notice of the application by 

publication . . . in a newspaper of general 

circulation in the county or counties in which 

the watershed or drainage area is located. The 

notice shall state that any interested person may 

file written objections to the proposed severance 

and transfer with the director within thirty days 

after the last publication of the notice.

(emphasis added).
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

6

¶13 Resolving this case requires us to decide if ADWR can deny a 

properly filed application for reasons other than those identified in § 45-172 

and if Mohave County is an “interested person” entitled to file objections 

to the proposed transfers.

B.

¶14 In construing statutes, we seek to give effect to the 

Legislature’s intent. J.D. v. Hegyi, 236 Ariz. 39, 40 ¶ 6, 335 P.3d 1118, 1119 

(2014). By its terms, § 45-172(A) provides that water rights may be severed 

and transferred “with the consent of the owner,” and “without losing 

priority theretofore established, subject to the following limitations and 

conditions.” Subsections (1) through (7) specify various limits or conditions 

on transfers, such as a directive that ADWR “shall by order . . . define and 

limit the amount of water to be diverted or used annually” to ensure that 

the transfer does not affect vested or existing rights. A.R.S. § 45-172(A)(2).

¶15 Moreover, ADWR’s review of an application for the 

severance and transfer of water rights is a “licensing decision” as that 

phrase is defined in A.R.S. §§ 41-1001(12) and (13). Section 41-1030(B) 

prohibits ADWR from basing a licensing decision “in whole or in part on a 

licensing requirement or condition that is not specifically authorized by 

statute.” The parties do not dispute this point.

¶16 Mohave County does not contend that the proposed transfers

violate any of the limitations and conditions specified in § 45-172. Instead, 

the County argues that this statute and others allow ADWR to consider 

other factors, such as whether a transfer is contrary to the public interest. 

This argument, however, is not supported by the language of § 45-172 or 

the other statutes identified by the County.

¶17 The County notes that § 45-172(A) states that a water right

“may be severed . . . and . . . transferred,” and argues that use of the 

conditional “may” suggests that ADWR has discretion to deny a transfer 

application for reasons other than those identified in § 45-172(A). When 

read in context, however, “may” is more plausibly understood as referring 

to the ability to sever and transfer the right, cf. Davis, 220 Ariz. at 110 ¶ 10, 

203 P.3d at 508 (holding that groundwater rights are not severable), rather 

than defining ADWR’s authority in reviewing applications. The word 
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

7

“may” at the beginning of § 45-172(A) is followed by the explicit statement 

that transfers are “subject to the following limitations and conditions.”

¶18 Under § 45-172(A)(1), water rights generally cannot be 

severed and transferred “unless approved by [ADWR]” and such approval 

“shall prescribe the conditions of the approval.” To interpret “may” as 

affording ADWR broad discretion to deny or condition applications for 

reasons other than those set forth in § 45-172(A) would effectively ignore 

the limiting language that appears in the same sentence.

¶19 The County identifies two other statutes in arguing that 

ADWR can deny applications for reasons not specified in § 45-172(A). 

Section 45-141(A), the County notes, states that surface waters “belong to 

the public.” That statement, however, is qualified by the recognition that 

such waters “are subject to appropriation and use as provided in this 

chapter,” § 45-141(A). Once appropriated pursuant to the relevant statutes, 

a water right belongs to its owner, with the prospect that the water may 

“revert” to the public if the right is forfeited or abandoned, § 45-141(C). In 

its objections, the County did not allege any abandonment or forfeiture of 

water rights. That surface waters generally belong to the public does not 

expand ADWR’s authority to deny – or restrict the owner’s right to effect –

the severance and transfer of an existing water right under § 45-172.

¶20 The County also points to ADWR’s authority under § 45-

153(A) to deny applications for the appropriation of water if, among other 

things, the proposed use would be “against the interests and welfare of the 

public.” Section 45-153(A) is inapposite, however, because it applies to 

initial appropriations of water, which are not at issue here. It does not 

address ADWR’s authority in reviewing applications for the severance and 

transfer of existing water rights. That the legislature directed ADWR to 

consider the public interest in § 45-153(A) but omitted any such directive in 

§ 45-172 itself suggests that the latter statute more narrowly defines 

ADWR’s authority in reviewing applications for severance and transfer. See 

Lewis v. Debord, 238 Ariz. 28, 31-32 ¶ 11, 356 P.3d 314, 317-18 (2015) 

(declining to construe statute as impliedly including a requirement 

expressly stated in related statutes).

¶21 The County is likewise unconvincing in arguing that the 

proposed transfers should be treated as de facto new appropriations 

because they involve “a new location with different geography, geology, 
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

8

rainfall, and neighbors.” Accepting this argument would displace § 45-

172(A), which recognizes that the transfer of a water right involves its use 

in a new location, and also takes into account certain aspects of the existing 

and proposed location, §§ 45-172(A)(4)-(6) (discussing transfers of rights 

either from within or into boundaries of irrigation districts, agricultural 

improvement districts, or water users’ associations), and impacts on certain 

“neighbors,” § 45-172(A)(2) (providing that severance and transfer shall not 

affect other vested or existing water rights).

¶22 In short, ADWR’s authority to deny a properly filed 

application for the severance and transfer of water rights is defined by the 

“limitations and conditions” set forth in § 45-172(A). Accordingly, ADWR 

did not abuse its discretion, act arbitrarily or capriciously, or act contrary to 

law in denying the County’s objections to the proposed transfers, when

those objections did not identify any violation of § 45-172(A).

C.

¶23 The scope of ADWR’s authority to deny an application for 

severance and transfer is related to the second question we address: who 

qualifies as “any interested person” entitled to file objections to an 

application under § 45-172(A)(7)?

¶24 The phrase “any interested person” is ambiguous because it 

is not statutorily defined and is subject to more than one reasonable 

meaning. See State ex rel. Montgomery v. Harris (Shilgevorkyan), 234 Ariz. 343, 

345 ¶ 12, 322 P.3d 160, 162 (2014). We therefore must rely on other tools of 

statutory construction in resolving the ambiguity to give effect to the 

legislature’s intent. See id. at 345 ¶ 13, 322 P.3d at 162.

¶25 The County argues that “interested” generally means having 

an interest in or concern about something, as its objections to the 

applications reflect, and thus it is an “interested person” authorized to file 

objections. But this argument effectively renders the word “interested” 

meaningless, as it would result in reading the statute as saying that any 

person may file objections if so inclined. It also ignores the fact that 

statutory words cannot be construed in isolation from their context. See

Lewis, 238 Ariz. at 28 ¶ 16, 356 P.3d at 318.
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

9

¶26 It is a “fundamental principle of statutory construction (and,

indeed, of language itself) that the meaning of a word cannot be determined 

in isolation, but must be drawn from the context in which it is used.” Deal 

v. United States, 508 U.S. 129, 132 (1993). The relevant phrase here is “any 

interested person” and it is used in a statute identifying those who may file 

objections to applications to sever and transfer water rights. The 

combination of “interested” with “person” means that the words must be 

interpreted together. As the Supreme Court has noted in a similar context, 

“two words together may assume a more particular meaning than those 

words in isolation.” FCC v. AT&T Inc., 562 U.S. 397, 404–06 (2011) (refusing 

to interpret “personal privacy” based on meaning of “personal” in 

isolation). For example, we “understand a golden cup to be a cup made of 

or resembling gold. . . . A golden opportunity is one not to be missed.” Id.

at 406.

¶27 Read in context, the phrase “any interested person” is most 

reasonably understood as referring to any person who has an “interest” that 

is protected by § 45-172 and that may be affected by the proposed transfer. 

Under this reading, for example, persons with “vested or existing rights to 

the use of water” could object to an application on the grounds that it would 

interfere with their rights. The County acknowledges that it has no such 

rights. Similarly, persons could object to an application if their consent was 

required but not obtained for a proposed severance and transfer. See § 45-

172(A)(6). Without intending to exhaustively list those who may qualify as 

“interested persons,” we also think such persons would include those who 

contend that an application concerns a right that has been abandoned or 

forfeited and the objecting party has an interest in appropriating the water 

from the public domain. See A.R.S. §§ 45-172(A)(3); 45-141(C). But the 

County made no such allegation in its objections before ADWR.

¶28 The County makes several other arguments for a broader 

interpretation of the phrase “any interested person,” but we find them 

unconvincing. First, the County argues that because § 45-172(A)(7) requires 

that notice of an application be published in the county or counties where 

the watershed or drainage is located, the phrase “interested person” must 

encompass more than just those who have existing water rights, as a notice 

could be more narrowly targeted to such persons. This argument fails 

because requiring public notice about pending applications is not 

inconsistent with limiting objections to those who have interests protected 

by § 45-172(A), and the latter group is not necessarily limited only to those 
ADWR V. MCCLENNEN (MOHAVE CO.)

Opinion of the Court

10

who currently hold permits or certificates issued by ADWR under § 45-

151(E).

¶29 Relying on general standing principles, the County also 

asserts that it has alleged the applications will cause it an “injury” and 

therefore it is an “interested person” under § 45-172(A)(7). The County 

argues that granting the applications could “have a negative effect on water 

supplies in the area” or increase the tax burden on County residents by 

increasing the amount of government-owned, untaxed land in the County. 

These alleged injuries are disputed. But more importantly, the County’s 

argument incorrectly conflates standing, which is a prudential doctrine by 

which courts eschew deciding issues when the plaintiff fails to allege a 

sufficient injury, see e.g., Bennett v. Napolitano, 206 Ariz. 520, 524 ¶ 16, 81 

P.3d 311, 315 (2003), with the question of who is statutorily authorized, as 

an “interested person,” to file objections in an ADWR administrative 

proceeding under § 45-172(A).

¶30 The County cites A.R.S. § 11-269.09(A) for the proposition that 

ADWR must consult and coordinate with the County before deciding on 

the applications. This statute, however, generally provides that a county 

shall “demand by any lawful means” that the federal or state government 

“coordinate” with the County before enforcing a “law, regulation, plan or 

policy” that is stricter than those of the County itself. A.R.S. § 11-69.09(A). 

This statute does not apply here.

¶31 The County also cites A.R.S. § 11-804 as support for its claim 

that it is “statutorily obligated to plan for and protect water resources in 

Mohave County.” Section 11-804 requires counties to develop 

comprehensive plans generally intended to guide development. A.R.S. 

§ 11-804(A). Plans for counties with a population exceeding 125,000, like 

Mohave County, must include “[p]lanning for water resources that 

addresses the known legally and physically available surface water, 

groundwater, and effluent supplies.” Id. at § 11-804(B)(3)(a). This statute, 

however, does not purport to give the County any authority over the 

severance and transfer of water rights. Nor do the planning obligations 

otherwise create any right on the part of the County that is recognized or 

protected by § 45-172.

¶32 Finally, the County argues that § 45-172(A) should be applied 

liberally to “promote the ends of justice,” noting the Court adopted this 
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Opinion of the Court

11

approach in construing the phrase “party beneficially interested” in 

Arizona’s mandamus statute. See A.R.S. § 12-2021; Armer v. Superior Court, 

112 Ariz. 478, 480, 543 P.2d 1107, 1109 (1975). But the County does not 

convincingly explain why the phrase “party beneficially interested” should 

be considered synonymous with the phrase “any interested person.” The 

mandamus statute reflects the Legislature’s desire to broadly afford 

standing on members of the public to bring lawsuits to compel officials to 

perform their “public duties.” See Armer, 112 Ariz. at 480, 543 P.2d at 1109. 

In contrast, the phrase “any interested person” in § 45-172(A)(7) has nothing 

to do with satisfying standing to file a lawsuit. Rather, it allows certain 

persons to file objections to an application for severance and transfer of 

water rights being considered by ADWR.

¶33 For the reasons noted, we construe the phrase “any interested 

person” in § 45-172(A)(7) as referring to persons who allege that they have 

an interest that is protected by that statute and that would be affected by 

the application for severance and transfer. Because Mohave County has 

identified no such interest, ADWR correctly concluded that the County is 

not an “interested person” entitled to file objections to the applications here.

III.

¶34 Under A.R.S. § 45-172(A), “any interested person” may file 

objections to severance and transfer applications on the grounds that they 

violate the “limitations and conditions” of that statute. Mohave County 

does not qualify as an “interested person” and it has not challenged the 

applications as contrary to any of the requirements of § 45-172(A). ADWR 

did not err in denying the County’s objections.

¶35 We vacate the judgment of the superior court and affirm 

ADWR’s final decision, which is not subject to further appeal. In the 

superior court and before this Court, ADWR requested an award of 

attorney fees pursuant to A.R.S. § 12-348.01. Because ADWR is the 

successful party, we grant the request but remand the case to the superior 

court for a determination of the amount of the award and other proceedings 

consistent with this opinion.