NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

HV & CANAL LLC, Plaintiff/Appellant,

v.

ARIZONA DEPARTMENT OF TRANSPORTATION, et al., 

Defendants/Appellees.

No. 1 CA-CV 22-0771

Appeal from the Superior Court in Maricopa County

No. CV2019-009886

The Honorable Katherine Cooper, Judge

AFFIRMED

COUNSEL

Berry Riddell LLC, Scottsdale

By Jeffrey D. Gross, Martin A. Aronson

Counsel for Plaintiff/Appellant

Arizona Attorney General’s Office, Phoenix

By Michelle Burton, Joe Acosta, Jr. 

Counsel for Defendants/Appellees

FILED 2-13-2024
HV & CANAL v. ADOT, et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Jennifer B. Campbell delivered the decision of the Court, 

in which Judge Kent E. Cattani and Judge Anni Hill Foster joined.

C A M P B E L L, Judge:

¶1 A.R.S. § 41-1030(B) authorizes agencies to impose licensing 

requirements or conditions only when “specifically authorized” by statute 

or rule. Here, we hold that A.A.C. R17-3-506 and other regulations 

specifically authorized the Arizona Department of Transportation (ADOT) 

to condition an encroachment permit on the applicant, HV & Canal LLC 

(HVC), building and paying for a right-hand-turn lane into its property. We 

also hold that, even if the condition was a taking within the meaning of the 

Fifth Amendment, it was not unconstitutional. We affirm the superior 

court’s entry of judgment for ADOT. 

BACKGROUND

¶2 This case involves a nine-acre parcel of commercial property

(the Property) abutting State Route 179 near Sedona. For decades, the 

Property was used as an outlet mall with one main access point from the 

state route authorized under an ADOT encroachment permit. 

¶3 Beginning in 2008, ADOT undertook a major improvement 

project on the state route. The project included the addition of a roundabout

preceding the access to the Property, as well as a raised median in the center 

of the roadway eliminating all left-hand turns in and out of the Property. 

Though the changes increased right-hand turns into the Property, ADOT 

did not install a right-hand-turn lane at the access point as part of the 

improvements.

¶4 Nine years later, an HVC affiliate bought the Property

intending to replace the northernmost retail buildings with a hotel. The

project proceeded with the county approving a lot split, issuing building 

permits, and granting certificates of occupancy. A third-party company 

now owns and operates a hotel on the northern three-acre lot, and HVC 

operates retail space on the remaining six acres. 

¶5 The redevelopment of the Property did not change its 

state-route access point. But HVC had to seek a new encroachment permit 
HV & CANAL v. ADOT, et al.

Decision of the Court

3

under ADOT regulations, which require a new application upon changed 

ownership or use. See A.A.C. R17-3-502(D), R17-3-504(C)(9). As part of that 

process, ADOT required a traffic-impact analysis to assess the need for a 

right-hand-turn lane. The engineer who completed the analysis concluded

that though ADOT’s internal guidelines—which ADOT concedes are not 

regulations or rules—would require a right-hand-turn lane, “[d]ue to the 

decrease in trips generated by the proposed development and the minimal 

improvement of the LOS [Level of Service] delay [that a right-hand-turn 

lane would provide], it is recommended that the SR 179 geometry remain 

unchanged.” (Emphasis added.) But ADOT rejected the engineer’s 

conclusion in favor of following its guidelines. ADOT indicated that the 

guidelines represent current safety standards, and that though ADOT does 

not require landowners to make improvements each time safety standards 

are updated, current standards are applied when a new encroachment 

permit is requested. ADOT therefore conditioned the issuance of HVC’s

requested encroachment permit on HVC building a right-hand-turn lane at 

its expense.

¶6 HVC sued ADOT for declaratory and mandamus relief. The 

superior court denied the parties’ cross-motions for summary judgment.

This court and later the supreme court declined to decide HVC’s requests 

for special-action relief. The matter proceeded to a bench trial. The superior 

court determined that the permit condition was both statutorily authorized 

and constitutionally proportional to the impact of the Property’s 

redevelopment. The superior court therefore ruled in favor of ADOT and 

entered judgment accordingly. HVC appealed. 

DISCUSSION

I. Statutory Authority

¶7 HVC first contends that ADOT acted in violation of statute. 

ADOT, created by and operating under the authority granted by the 

legislature, has exclusive control and jurisdiction over state routes and is 

charged with their operation and maintenance. A.R.S. § 28-332(A), (B)(3).

ADOT must administer all maintenance and construction work on state 

routes and may “[e]xercise other powers necessary to carry out the work of 

the division and perform other duties prescribed by law for the division.” 

A.R.S. § 28-7053(A)(2), (D)(2); A.R.S. § 28-6922(A), (B)(6); A.A.C. R17-3-505. 

ADOT’s director “shall exercise complete and exclusive operational control 

and jurisdiction over the use of state highways and routes and adopt rules 

regarding the use as the director deems necessary to prevent the abuse and 
HV & CANAL v. ADOT, et al.

Decision of the Court

4

unauthorized use of these highways and routes,” and to promote other 

goals, including “[p]ublic safety and convenience.” A.R.S. §§ 28-7045, -366.

¶8 ADOT’s authority is limited to what is statutorily permitted. 

See A.R.S. §§ 28-331 (establishing ADOT), 41-1001(1) (defining agencies); 

Facilitec, Inc. v. Hibbs, 206 Ariz. 486, 488, ¶ 10 (2003) (holding that because 

agencies are creatures of statute, they have no powers beyond those 

delegated by the legislature). ADOT’s director may allow encroachments 

after considering their impact on traffic safety and other factors. A.A.C. 

R17-3-506. 

¶9 Here, we address whether ADOT exceeded its statutory

authority by conditioning HVC’s encroachment permit on HVC 

constructing and paying for a right-hand-turn lane.

1We review all relevant 

statutes and regulations de novo, Libra Group, Inc. v. State, 167 Ariz. 176, 179 

(App. 1991), interpreting them in accordance with their plain language by 

giving effect to each sentence and word, Home Depot USA, Inc. v. Ariz. Dep’t 

of Revenue, 230 Ariz. 498, 500, ¶ 10 (App. 2012).

¶10 When dealing with state agencies, the legislature sought to 

ensure the public would enjoy “fair and open” regulation by adopting a 

Regulatory Bill of Rights in A.R.S. § 41-1001.01. Subsection (A)(7) of that 

statute prohibits state agencies from basing licensing decisions in whole or 

in part on conditions or requirements “not specifically authorized by 

statute, rule or state tribal gaming compact as provided in § 41-1030, 

subsection B.” A.R.S. § 41-1030(B) was first adopted in 1995 and was 

modified to its current form three years later, at the same time the 

Regulatory Bill of Rights was put into place. See 1995 Ariz. Sess. Laws, ch. 

251, § 5 (1st Reg. Sess.) (adding first sentence of current subsection but using 

term “expressly authorized”); 1998 Ariz. Sess. Laws, ch. 57, § 36 (2d Reg. 

Sess.) (replacing “expressly authorized” with “specifically authorized” in 

first sentence and adding second sentence); 1998 Ariz. Sess. Laws, ch. 57, 

§ 18 (2d Reg. Sess.) (enacting A.R.S. § 41-1001.01). A.R.S. § 41-1030(B)

provides:

1 The parties do not dispute that the Property’s access point encroaches 

on the state route within the meaning of A.R.S. § 28-7053(E), that the 

Property’s changed ownership and use required HVC to seek a new 

encroachment permit under A.A.C. R17-3-502(D) and R17-3-504(C)(9), and 

that A.R.S. § 41-1030(B) applied to ADOT’s permit-issuance decision as an 

agency making a licensing decision within the meanings of A.R.S. 

§ 41-1001(1), (13), and (15).
HV & CANAL v. ADOT, et al.

Decision of the Court

5

An agency shall not base a licensing decision in whole or in 

part on a licensing requirement or condition that is not 

specifically authorized by statute, rule or state tribal gaming 

compact. A general grant of authority in statute does not 

constitute a basis for imposing a licensing requirement or 

condition unless a rule is made pursuant to that general grant 

of authority that specifically authorizes the requirement or 

condition.

(Emphases added.)

¶11 Given A.R.S. §§ 41-1001.01(A)(7) and -1030(B), we must 

determine whether ADOT was given a “specific” or “general” grant of 

authority by the legislature. 

A. General Versus Specific Grant of Authority

¶12 To begin, we consider the difference between “specific” and 

“general” grants of authority. We are unaware of any case law defining the 

difference between the two grants of authority in the context of A.R.S.

§§ 41-1001.01(A)(7) and -1030(B), but we find guidance in case law

predating those statutes.

2

¶13 Several cases have distinguished “general” from “specific”

authority. In Gardenhire v. State, our supreme court characterized an 

ordinance authorizing a town “[t]o do all other acts, and prescribe all other 

regulations, which may be necessary or expedient for the prevention or 

suppression of disease” as a “sweeping grant of power,” while 

characterizing other ordinances authorizing the adoption of enumerated 

disease-prevention measures as giving “specific authority” that did not 

preclude alternative action under the general ordinance. 26 Ariz. 14, 17–18 

(1923). In Merrick v. Rottman, by contrast, this court concluded that a 

legislative act’s expression of particular “specific enforcement powers” for 

an agency precluded any implied power to take alternative actions despite 

a statute giving the agency a “general grant of authority” to administer and 

ensure compliance with the act. 135 Ariz. 594, 598 (App. 1983).

¶14 We also note that our supreme court has drawn similar 

distinctions between “general” and “express” authority, defining express 

authority as that which is “given in direct terms, definitely and explicitly,” 

2 We do not rely on ADOT’s citation to Sullivan v. Planning Board of Acton, 

645 N.E.2d 703 (Mass. Ct. App. 1995), because we find ample direction in 

the Arizona cases. 
HV & CANAL v. ADOT, et al.

Decision of the Court

6

and which “confers powers to do a particular thing set forth and declared 

exactly, plainly and directly with well defined limits”—rather than

“authority that is general, implied, or not directly stated or given.” City of 

Flagstaff v. Assoc. Dairy Prods. Co., 75 Ariz. 254, 257 (1953) (citations omitted). 

A.R.S. § 41-1030(B) referred to “expressly authorized” instead of 

“specifically authorized” until 1998, when that statute’s second sentence 

and A.R.S. § 41-1001.01(A)(7) were added. See 1998 Ariz. Sess. Laws, ch. 57, 

§§ 18, 36 (2d Reg. Sess.). We do not presume that the changed language 

disrupted the meaning because to do so would be to ignore the statutes’ 

express purpose, as confirmed by the other concurrent amendments. See 

State v. Lammie, 164 Ariz. 377, 379 (App. 1990) (“While it is true that when 

the legislature amends statutory language, it is presumed that it intends to 

make a change in existing law, a statutory amendment ought not to be 

interpreted so broadly as to destroy the entire objective of the statutory 

scheme.”). 

¶15 Relying on the foregoing and the statutory goal of ensuring 

fair and open regulation,

3 we hold that, in the context of A.R.S. 

§§ 41-1001.01(A)(7) and -1030(B), a “general grant of authority” exists 

where the agency is given broad discretion to determine how it will act,

while a “specific authoriz[ation]” exists where the agency may choose from

a menu of possible actions.

B. ADOT’s Specific Grant of Authority

¶16 We next decide whether ADOT was specifically authorized 

by statute or rule to condition HVC’s encroachment permit on the applicant 

building and paying for a right-hand-turn lane. We hold that though no 

statute specifically authorized ADOT’s action, ADOT appropriately 

enacted rules under its general statutory authority (see supra at ¶¶ 8–9) that 

did provide specific authority: A.A.C. R17-3-504 to -507.

¶17 A.A.C. R17-3-505 and -506 provide that ADOT may impose 

permit conditions after reviewing documentation “to analyze the proposed 

encroachment’s impact on the state highway and right-of-way.” A.A.C. 

R17-3-507(C)–(D) provides that ADOT will approve permits only where the 

applicant agrees to comply with those conditions. A.A.C. R17-3-504(c) 

provides that the applicant “[a]ssume[s] all legal liability and financial 

responsibility for the encroachment activity for the duration of the permit.” 

3 ADOT’s adoption of regulations requires public notice and a hearing 

process under Title 41, Chapter 6, Article 3 of the Arizona Revised Statutes.
HV & CANAL v. ADOT, et al.

Decision of the Court

7

(Emphasis added.) Most important here is A.A.C. R17-3-506, which 

provides:

C. An encroachment permit consists of the materials submitted 

by an applicant under R17-3-504 and R17-3-505, and 

additional requirements from the Department as described in 

subsection (B). An encroachment permit will list in detail the 

requirements with which the permittee shall comply in order 

to perform the requested encroaching activity. Others are 

specific to a particular encroachment activity.

D. The Department shall set encroachment permit requirements 

to:

1. Maintain the integrity of the Department’s right-ofway and transportation facilities;

2. Mitigate the risk to traffic safety; 

3. Improve traffic movement, efficiency, and capacity;

4. Mitigate adverse drainage on state property or 

abutting property affecting state property; 

5. Mitigate environmental impacts; Mitigate 

maintenance costs to transportation facilities;

6. Mitigate potential liability for the Department or the 

state; and

7. Mitigate potential harms to national or state security.

E. By accepting an encroachment permit, a permittee agrees to 

the requirements described in the permit. If the permittee 

disagrees with the requirements, the permittee shall return

the permit immediately to the District Office.

By its terms, A.A.C. R6-3-506 does not create sweeping powers, but rather 

limits ADOT’s authority to the imposition of requirements that serve the

listed goals. To be sure, the regulation does not list every potential 

mechanism that ADOT may employ to achieve the stated goals. But

requiring it to do so would be inefficient and impracticable given that each 

permit application implicates a myriad of unique variables. See Ariz. Corp. 

Comm’n v. Palm Springs Utility Corp., 24 Ariz. App. 124, 128–29 (1975) 

(observing that specialized case-by-case orders not expressly or impliedly 
HV & CANAL v. ADOT, et al.

Decision of the Court

8

prohibited by statute promoted statute’s effective administration). Because 

ADOT is limited to selecting mechanisms that promote the enumerated 

goals, we conclude that the regulation confers specific rather than general 

authority.

¶18 The requirements that ADOT imposed on HVC receiving an 

encroachment permit fell squarely within the bounds of the specific 

authority codified in A.A.C. R17-3-504 to -507 consistent with ADOT’s 

general statutory powers. The regulations authorize ADOT to impose 

conditions that mitigate traffic-safety risks, mitigate potential liability for 

ADOT and the state, and improve traffic movement, efficiency, and 

capacity. A.A.C. R17-3-506(B)(2), (3), (7). A condition requiring the 

applicant to create a right-hand-turn lane is directed to those purposes. And

A.A.C R17-3-504(c) allows the cost of construction of this traffic safety 

feature to be apportioned to the applicant. Based on the statutory authority 

granted ADOT by the legislature and the regulations adopted by the 

agency, we find the requirements imposed for the issuance of the 

encroachment permit to be duly authorized and not violative of A.R.S. 

§§ 41-1001.01(A)(7) or -1030(B).

II. Constitutionality

¶19 HVC next contends that the right-hand-turn-lane condition—

which a HVC representative estimated would cost the company at least 

$150,000—was an unconstitutional taking. 

¶20 The Fifth Amendment, which applies to the states through the 

Fourteenth Amendment, provides that private property shall not be taken 

for public use without just compensation. U.S. Const. amends. V, XIV. Land 

is taken within the meaning of the Fifth Amendment when it is physically 

appropriated or when the owner is deprived of beneficial use. Lucas v. South 

Carolina Coastal Council, 505 U.S. 1003, 1015–16 (1994). A taking also occurs 

when the government demands a fee in lieu of a physical invasion. Koontz 

v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 612 (2013). In the context 

of land use and development permits, whether there is an unconstitutional 

taking is determined under the “Nollan/Dolan test.” Id. at 595, 604 (referring 

to Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City 

of Tigard, 512 U.S. 374 (1994)); see also Am. Furniture Warehouse Co. v. Town of 

Gilbert, 245 Ariz. 156, 160, ¶ 17 (App. 2018). The Nollan/Dolan test applies 

when the government makes case-specific adjudicative decisions

implicating any form of taking. Home Builders Ass’n of Cent. Ariz. v. City of 

Scottsdale, 187 Ariz. 479, 486 (1997); Am. Furniture Warehouse, 245 Ariz. at 

163, ¶ 27. Under this test, the Fifth Amendment is not violated “so long as 
HV & CANAL v. ADOT, et al.

Decision of the Court

9

there is a ‘nexus’ and ‘rough proportionality’ between the property [or 

monetary exaction] that the government demands and the social costs of 

the applicant’s proposal.” Koontz, 570 U.S. at 605–06. “Rough 

proportionality” does not require a precise mathematical calculation, but 

“the [government] must make some sort of individualized determination 

that the required dedication [or monetary exaction] is related both in nature 

and extent to the impact of the proposed development.” Dolan, 512 U.S. at 

391; see also Transamerica Title Ins. Co. v. City of Tucson, 23 Ariz. App. 385, 

386, 390–91 (1975) (pre-Nollan/Dolan test case finding an unconstitutional 

taking where city conditioned rezoning on dedication of land for additional 

right-of-way but there was no evidence the rezoning would cause 

appreciable extra burden).

¶21 Assuming without deciding that the condition here 

implicated application of the Nollan/Dolan test,4 we find no error in the 

superior court’s determination that the test was satisfied. On the date HVC

submitted its permit application, the conditions—specifically, the righthand-turn-only access to the Property immediately following a roundabout 

out of which non-turning vehicles may be accelerating—justified 

installation of a right-hand-turn lane under ADOT’s internal guidelines 

regardless of the Property’s re-development. Given the foregoing, there 

was a nexus between safety and traffic concerns and the requirement that 

HVC install a right-hand-turn lane. The requirement was not only 

statutorily authorized, but also was related in nature and extent to the 

proposed encroachment’s impact. 

¶22 We are troubled by ADOT’s role in creating the problematic 

conditions by changing the roadway in 2008 without simultaneously 

building (at state expense) a right-hand-turn lane into the Property. We also 

are troubled by ADOT’s representations at oral argument on appeal that it 

may at any time revoke an encroachment permit and require the landowner 

to assume the burden of updated safety guidelines made applicable by 

ADOT’s own conduct. But because a new permit was required here upon

4 ADOT relies on Third & Catalina Assocs. v. City of Phoenix, 182 Ariz. 203 

(App. 1994), to argue that the Nollan/Dolan test does not apply. In that case, 

we upheld the constitutionality of a city ordinance requiring a property 

owner to retrofit an existing high-rise building with a sprinkler system. Id. 

at 205, 210. We held that the financial outlay required for compliance was 

not an unconstitutional taking, noting that the property was not being 

pressed into public service and that the city was acting to protect human 

life within the scope of its police power. Id. at 208–09. 
HV & CANAL v. ADOT, et al.

Decision of the Court

10

the change of ownership and use, ADOT was entitled to impose the 

updated safety regulations and require the construction of a right-handturn lane. Therefore, we cannot say that ADOT acted beyond the scope of 

its statutory authority or the constitution by requiring HVC to shoulder the 

responsibility of its proposed encroachment’s impact when it applied for 

the new permit. 

CONCLUSION

¶23 We affirm the judgment for ADOT for the reasons set forth 

above. We deny HVC’s request for attorneys’ fees under A.R.S. §§ 12-2030 

and 41-1030.