Case Name: ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Salt River Project Agricultural Improvement & Power District, a political subdivision and an agricultural improvement district of the State of Arizona; Salt River Valley Water Users' Association, an Arizona corporation; City of Phoenix, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Southern California Public Power Authority, a California Public joint powers agency; M-S-R Power Agency, a California joint powers agency; and the Department of Water and Power of the City of Los Angeles, a California municipal corporation, Defendants/Plaintiffs/Other Indispensable Parties-Appellees, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants; ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, Defendants-Plaintiffs Cross Appellants, and Southern California Edison Company; Public Service Company of New Mexico; El Paso Electric Company; Department of Water and Power of the City of Los Angeles; and Southern California Public Power Authority, Defendants, Cross Appellants, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants, Cross Appellees; A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs-Appellants, v. CITY OF PHOENIX, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Arizona Public Service Company, an Arizona corporation; Salt River Project Agricultural Improvement and Power District, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency; M-S-R Public Power Agency, a California joint powers agency, Defendants-Appellees; ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency, Defendants, Cross-Appellants, v. A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs, Cross-Appellees
Court: Arizona Supreme Court
Jurisdiction: Arizona
Decision Date: 1989-04-17
Citations: 160 Ariz. 429
Docket Number: No. CV-86-0634-T
Parties: ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Salt River Project Agricultural Improvement & Power District, a political subdivision and an agricultural improvement district of the State of Arizona; Salt River Valley Water Users’ Association, an Arizona corporation; City of Phoenix, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Southern California Public Power Authority, a California Public joint powers agency; M-S-R Power Agency, a California joint powers agency; and the Department of Water and Power of the City of Los Angeles, a California municipal corporation, Defendants/Plaintiffs/Other Indispensable Parties-Appellees, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants. ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, Defendants-Plaintiffs Cross Appellants, and Southern California Edison Company; Public Service Company of New Mexico; El Paso Electric Company; Department of Water and Power of the City of Los Angeles; and Southern California Public Power Authority, Defendants, Cross Appellants, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants, Cross Appellees. A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs-Appellants, v. CITY OF PHOENIX, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Arizona Public Service Company, an Arizona corporation; Salt River Project Agricultural Improvement and Power District, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency; M-S-R Public Power Agency, a California joint powers agency, Defendants-Appellees. ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency, Defendants, Cross-Appellants, v. A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs, Cross-Appellees.
Judges: FELDMAN, V.C.J., CAMERON, J., and LACAGNINA, Court of Appeals Judge, concur.
Reporter: Arizona Reports
Volume: 160
Pages: 429–453

Head Matter:
773 P.2d 988
ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Salt River Project Agricultural Improvement & Power District, a political subdivision and an agricultural improvement district of the State of Arizona; Salt River Valley Water Users’ Association, an Arizona corporation; City of Phoenix, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Southern California Public Power Authority, a California Public joint powers agency; M-S-R Power Agency, a California joint powers agency; and the Department of Water and Power of the City of Los Angeles, a California municipal corporation, Defendants/Plaintiffs/Other Indispensable Parties-Appellees, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants. ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, Defendants-Plaintiffs Cross Appellants, and Southern California Edison Company; Public Service Company of New Mexico; El Paso Electric Company; Department of Water and Power of the City of Los Angeles; and Southern California Public Power Authority, Defendants, Cross Appellants, v. John F. LONG; John F. Long Homes, Inc., an Arizona corporation; and John F. Long Properties, Inc., an Arizona corporation, Defendants-Appellants, Cross Appellees. A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs-Appellants, v. CITY OF PHOENIX, an Arizona municipal corporation; City of Glendale, an Arizona municipal corporation; City of Scottsdale, an Arizona municipal corporation; City of Tempe, an Arizona municipal corporation; City of Mesa, an Arizona municipal corporation; Town of Youngtown, an Arizona municipal corporation; City of Tolleson, an Arizona municipal corporation; Arizona Public Service Company, an Arizona corporation; Salt River Project Agricultural Improvement and Power District, an Arizona municipal corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency; M-S-R Public Power Agency, a California joint powers agency, Defendants-Appellees. ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Southern California Edison Company, a California corporation; Public Service Company of New Mexico, a New Mexico corporation; El Paso Electric Company, a Texas corporation; Department of Water and Power of the City of Los Angeles, a California municipal corporation; Southern California Public Power Authority, a California joint powers agency, Defendants, Cross-Appellants, v. A TUMBLING T RANCHES, an Arizona partnership; William T. Gladden and Nicole L. Gladden, husband and wife; David L. Gladden and Sharon M. Gladden, husband and wife, Plaintiffs, Cross-Appellees.
No. CV-86-0634-T.
Supreme Court of Arizona, En Banc.
April 17, 1989.
Reconsideration Denied June 9, 1989.
Jennings, Strouss & Salmon by John B. Weldon, Jr., Stephen E. Crofton and M. Byron Lewis, Phoenix, Kevin J. Worthen, Brigham Young Law School, Provo, Utah, for defendants/plaintiffs/Other Indispens able parties/appellees Salt River Project Agricultural Improvement & Power Dist., Salt River Valley Water Users’ Ass’n.
Bill Stephens & Associates by Bill Stephens, William H. Anger and Karen L. Tarr, Phoenix, for defendants/plaintiffs/appellees Cities of Phoenix, Glendale, Scottsdale, Tempe, Mesa, Youngtown and Tolleson.
Streich, Lang, Weeks & Cardón, P.A. by William S. Hawgood, II, Marcia Horn Yavitiz, Paula G. Kirby and Dale E. Pontius, Phoenix, for defendants/appellants/crossappellees John F. Long, John F. Long Homes and John F. Long Properties.
Lewis and Roca by Tom Galbraith, Jessica H. Youle and Janet Napolitano, Robbins & Green, P.A. by Robert H. Green and Brian Imbornoni, Douglas C. Nelson, P.C. by Douglas C. Nelson, Phoenix, for plaintiffs/appellants/cross-appellees A Tumbling T Ranches, William T. Gladden, David L. Gladden, Nicole L. Gladden and Sharon M. Gladden.
Snell & Wilmer by Warren E. Platt, Robert B. Hoffman and Martha E. Gibbs, Phoenix, for defendants/appellees/cross-appellants Arizona Public Service, Dep’t of Water & Power of Los Angeles; El Paso Elec. Co., Public Service Co. of New Mexico, Southern California Edison Co., Southern California Public Power Authority.
Frederick S. Dean, Tucson City Atty. by Loretta Humphrey, Tucson, for amicus curiae.
Fennemore, Craig by James W. Johnson, Bryan, Cave, McPheeters & McRoberts by Kathleen Ferris, Arizona Dept, of Water Resources by Elizabeth A. Rieke, Chief Counsel and Scot C. Stirling, Chief Litigator, Phoenix, for amicus curiae Arizona Dept, of Water Resources.

Opinion:
HOWARD, Court of Appeals Judge.
I. THE ISSUES
This case involves the sale by appellee Cities to the appellee Utilities of sewage effluent. Two questions are posed: (1) Can the Cities contract to sell sewage effluent for use on lands other than those involved in the original appropriation? And (2) once the Cities dump sewage effluent into a stream and such effluent is appropriated by downstream users, must the Cities continue such dumping ad infinitum? We answer the first question in the affirmative and the second in the negative.
The Utilities have also filed a cross-appeal regarding certain language used by the trial court in its judgment. In view of our disposition and our holdings in this opinion, the cross-appeal is moot.
II. RECUSAL ISSUE
While this appeal is limited to state water law issues, the Longs previously attacked the contracts involved here on municipal law grounds in the case of City of Phoenix v. Long, 158 Ariz. 59, 761 P.2d 133 (App.1988). In that case the trial court entered summary judgment and Division Two of the Court of Appeals affirmed the ruling on appeal. Because two of the judges of Division Two, who participated in that case, including the author of this opinion, are also sitting as Supreme Court justices in this appeal, and because a petition for review of City of Phoenix v. Long, supra, had been filed and was pending before the Supreme Court at the time oral argument was heard in this case, the Longs filed a motion suggesting that the Division Two judges should recuse themselves. Pri- or to oral argument this court, in conference, considered the Longs' motion and unanimously rejected it because the issues involved in City of Phoenix v. Long, supra, (whether the City could make a contract that would be binding for that length of time and whether the contracts were invalid for failure to comply with competitive bidding requirements) are not involved here. The reason that Justices Gordon and Holohan recused themselves is set forth in the order which is reproduced in the appendix.
III. FACTS
A. The Contracts
This litigation concerns two contracts for the sale of sewage effluent. The first was entered into in 1973 when the Utilities were planning a nuclear power project to be located in Arizona (Palo Verde). Because the Utilities were required to secure an adequate supply of water for the construction and operation of the plant, they contracted with the Cities (except the City of Tolleson) to purchase an option to obtain sewage effluent once the various units of the power plant began operation. The agreement was structured as four options, one for each of the originally planned Palo Verde generators, totalling 140,000 acre feet per year. The agreement terminates four years after the exercise of the fourth option, which is exercisable until December 31, 1999. The Utilities exercised the first two options in February and December 1982 for a total of 70,000 acre feet. As a result of the deletion of the fourth reactor and changes in the design of the cooling systems for the remaining reactors, Palo Verde's water needs under current plans appear to be in the range of 64,050 acre feet per year.
The Utilities entered into a second agreement for the purchase of sewage effluent with the City of Tolleson approximately eight years later, in 1981. Under that agreement Tolleson has committed to the Utilities an additional 9,282 acre feet of sewage effluent from its treatment plant. The sewage effluent is transported by pipeline to approximately 50 miles west of Phoenix for use as a cooling agent at the Utilities' Palo Verde Nuclear Generating Station. As indicated in City of Phoenix v. Long, supra, since entering into the effluent purchase contracts, the Utilities have spent some $290,000,000 to construct both a pipeline for the delivery of effluent from the treatment plants to the Palo Verde site, and a plant to further treat the effluent so that it can be used as a coolant.
B. The Parties
A Tumbling T Ranches owns the Enterprise Ranch, located on the Gila River approximately 20 miles southwest of Buckeye, Arizona. The Salt River is an upstream tributary of the Gila. It is alleged that much of the irrigation water used on the Enterprise Ranch is obtained from diversion of Gila River stream flow under decreed appropriative rights adjudicated and established in 1958. A Tumbling T asserts that in recent years most of the water diverted to satisfy its appropriative rights has been treated sewage effluent discharge by the Cities (except Tolleson) from the Cities' municipal treatment plants located on the Salt River at 23rd Avenue and 91st Avenue, above the confluence of the Salt and Gila Rivers. A smaller part of treated effluent also allegedly has been contributed by Tolleson's plant.
The Gladdens own the Hassayampa Ranch, located approximately 10 miles southwest of Buckeye. The ranch straddles the Hassayampa River above its confluence with the Gila. The Hassayampa Ranch's irrigation water allegedly comes from stream water diverted by the Buckeye Irrigation Company based on appropriative rights adjudicated in 1917. Again, it is asserted that most of the water supplied by the Buckeye Irrigation Company for its use on the Hassayampa Ranch has been treated sewage effluent discharged by the Cities from the 23rd Avenue and 91st Avenue plants and from Tolleson's treatment plant.
Because of the location of the system utilized to effect delivery of effluent from the Cities to the Utilities, the effluent is no longer discharged into the stream for appropriation by the ranches. Any return after use by the Utilities is made downstream from the ranches.
John F. Long and two of his corporations, John F. Long Homes, Inc. and John F. Long Properties, Inc., are also parties to this appeal. The Longs do not profess to own any junior appropriative water rights that would be damaged by the sale of sew age effluent but are major developers of residential commercial real property in the Phoenix area.
The parties agree that sewage effluent that the Cities treat at their treatment plants originates from a combination of both ground and stream water. The water is distributed by the Cities to the various individual industrial users within their service areas. The stream water comes from the Salt and Verde Rivers, and is initially distributed to the Cities' water filtration plants by the Salt River Valley Users' Association (the Association). The Association was organized in 1903 to finance, operate, and maintain a federal reclamation project (the Salt River Reclamation Project). The appropriative rights of the lands receiving water from the Association were adjudicated in 1910.
The Association delivers water to the Cities under various domestic water agreements. These agreements generally provide that as lands go out of cultivation, the Cities, rather than individual landowners, pay the Association the annual assessment for urban acreage which is no longer irrigated. In turn, the water appurtenant to this urban acreage is delivered by the Association to the Cities' various water filtration plants. Under these agreements, the Cities receive this water as agents for the landowners and deliver it to the land to which it is appurtenant. The Cities receiving water from the Association under the domestic water agreements include Phoenix, Glendale, Scottsdale, Tempe and Mesa.
Thus, the appropriative rights through which the Cities receive the stream water component of their municipal water requirements have generally originated as irrigation rights. However, once the waters have been introduced into the Cities' water systems, there is no indication in the record that the use of the water is limited to any specific lot or homeowner's parcel to which the right was originally appurtenant. Rather, the water becomes part of each city's water supply as a whole, to be used by the city's customers in accordance with the water use policies adopted by that city. Thus, while we have not been advised that these water rights have been changed from irrigation rights to rights for municipal purposes, it is apparent that they must be treated as such. As characterized by one of the parties in its brief filed in this appeal, the water rights have, through custom, been converted to municipal uses. But see A.R.S. § 45-172.
IV. THE PROCEEDINGS IN THE TRIAL COURT
This litigation involves two separately filed actions which were later consolidated by order of the trial court. Eventually both the A Tumbling T parties and the Longs filed motions for summary judgment. After responses and the filing of cross-motions for summary judgment by the Cities, Arizona Public Service, and the Salt River Project, the trial judge issued a minute entry decision granting summary judgment in favor of the Cities and Utilities on the ground that the effluent which is the subject of the sales contracts is not subject to regulation under the surface water or groundwater laws of the State of Arizona and that the contracts were therefore not void. We affirm the decision of the trial court but not entirely on the same grounds.
V. THE CONTENTIONS OF THE PARTIES
The Longs argue that the sale of the groundwater component of the sewage effluent is invalid because the performance of the effluent contracts would violate statutory restrictions on this transportation of groundwater. See A.R.S. § 45-541 to 45-545. They contend that the groundwater element of the effluent must be put to reasonable and beneficial reuse for the benefit of the land from which it was withdrawn, and, if reuse is not possible, the effluent must be returned to the common supply, by discharging it into a stream and allowing it to percolate into the ground.
The A Tumbling T parties argue that allowing the Cities to sell appropriable water that is not consumed by the Cities' beneficial use departs from a basic premise of Arizona law governing appropriable surface waters. Citing A.R.S. § 45-141(A), they urge that appropriable surface waters belong to the public, and that the Cities by their appropriation do not gain ownership of the appropriated waters so as to give them a right to sell the unconsumed effluent. Rather, it is urged that the Cities have only the right to the use of the water, limited by the purpose for which the appropriation was made. See A.R.S. § 45-141(A); Adams v. Salt River Water Users Association, 53 Ariz. 374, 89 P.2d 1060 (1939); Slosser v. Salt River Canal Company, 7 Ariz. 376, 65 Pac. 332 (1901); Salt River Valley Users Association v. Kovacovich, 3 Ariz.App. 28, 411 P.2d 201 (App.1966), and that any unused surface water must be returned to the river bed.
The Cities and Utilities argue that effluent is water which has essentially lost its character as either ground or surface water and becomes the property of the entity which has expended funds to create it. The Cities and Utilities further argued that they are the owners of the effluent and may dispose of their property in any way they see fit.
The Department of Water Resources has filed an amicus brief in which it agrees with both A Tumbling T and the Longs.
VI. THE LAW
A. The Validity of the Contracts
In order to decide this issue we find it unnecessary to categorize sewage effluent as being either surface water, groundwater, or both. Until such time as it is returned to the ground as either groundwater or surface water, it is nothing more than sewage effluent, which was described in City of Phoenix v. Long, supra, as "a noxious bi-product of the treatment of sewage which the cities must dispose of without endangering the public health and without violating any federal or state pollution laws." 158 Ariz. at 63, 761 P.2d at 137. More importantly, our statutes define effluent separately from either ground or surface water. See A.R.S. § 45-402(6). Nor does case law support the proposition that effluent can be broken down into separate components of surface and groundwater. A Tumbling T cites Pulaski Irrigation Ditch Co. v. City of Trinidad, 70 Colo. 565, 203 P. 681 (1922), an en banc decision in which two justices dissented and one did not participate. We are not persuaded by the analysis of that case. There the city had purified the sewage and was selling it. The court recognized that when the situation is such that the city cannot turn the sewage into the stream without causing a health hazard, the city must find some other way of disposing it. But, once the city purifies it, the water must be returned to the stream because the water element of the sewage always belongs to the public. It is not clear from the decision what the state of purity of the water was. In the case sub judice the water has been treated, but not puri and the discharge of such sewage effluent into a stream is subject to control by the state and federal governments. See A.R.S. § 49-201 et seq.
We find the analysis in Wyoming Hereford Ranch v. Hammond Packing Company, 33 Wyo. 14, 236 P. 764 (1925), a case in which the issues are on all fours with ours, more persuasive. In discussing the validity of the city's contractual disposition of its sewage effluent, the court stated:
It is well known that the disposition of sewage is one of the important problems that embarrass municipalities. In order to dispose of it without injury to others, a city may often be confronted with the necessity of choosing between several different plans, and in the selection of the plan to be followed we think it should be permitted to exercise a wide discre tion. In determining how it will make proper disposition of that which may be termed a potential nuisance, we think the city should not be hampered by a rule that would always require the sewage to be treated as waste or surplus waters. Sewage is something which the city has on its hands, and which must be disposed of in such a way that it will not cause damage to others. It would often be considered the height of efficiency if it could be disposed of in some other manner than by discharging it into a stream. Even in this state, where the conservation of water for irrigation is so important, we would not care to hold that in disposing of sewage the city could not adopt some means that would completely consume it. It might, we think, be diverted to waste places, or to any chosen place where it would not become a nuisance, without any consideration of the demands of water users who might be benefitted by its disposition in some other manner. In providing such a place, the city might acquire the right to discharge the sewage on the lands of any person willing to suffer such a use of his lands, and we see no reason why this right might not be gained by the city in consideration of the landowner's right to use or dispose of the sewage in any lawful way.
236 P. at 772. The Wyoming court held that the sale by Cheyenne of sewage effluent that was discharged directly into the buyer's ditch was valid, but that portion of the effluent that was discharged into a creek was public water subject to appropriation. However, the court did not discuss whether the City of Cheyenne was obliged to continue dumping part of its sewage into the creek in order to satisfy the needs of the plaintiff.
We hold that the Cities can put its sewage effluent to any reasonable use that it sees fit. This will allow municipalities to maximize their use of appropriated water and dispose of sewage effluent in an economically feasible manner. It also provides a degree of flexibility that is essential to a city's ability to meet federal and state environmental and health standards.
B. Statutory Regulations
We agree with the trial judge's conclusion that sewage effluent is not subject to regulation under the Surface Water Code or the Groundwater Code. The 1980 Groundwater Code defines "effluent" as "water which, after being withdrawn as groundwater or diverted as surface water, has been used for domestic, municipal or industrial purposes and which is available for reuse for any purpose, whether or not the water has been treated to improve its quality." A.R.S. § 45-402. We agree with the trial judge that one can only conclude by this definition that effluent is something other than groundwater or surface water.
Another indication that the legislature considered effluent to be something other than groundwater or surface water is A.R. S. § 45-514 and 45-515, which provide that permits for groundwater may be conditioned upon the availability of either effluent or surface water. Furthermore, the legislature has expressly authorized more municipal entities to dispose of effluent by sales, see A.R.S. § 45-494(2)(c), without suggesting that such effluent is either surface water or groundwater.
Further, "effluent" is not defined in the chapter of the code dealing with surface water; the chapter does define surface water ("waters . subject to appropriation") in a manner that does exclude effluent until it is "flowing in streams ." or standing "on the surface." A.R.S. § 45-141(A).
Finally, the legislature has enacted numerous statutes regulating effluent from a health standpoint. See A.R.S. § 36-132 et seq. and A.R.S. § 49-201 et seq. There is nothing in these statutes indicating an in tent to also regulate effluent under the Surface Water Code or the Groundwater Code.
We concede that given the importance of water management in Arizona, one would expect that the legislature would not adopt a comprehensive code covering management of water resources without also regulating the use of effluent. Yet the revised code on water resources (A.R.S. Title 45) contains no explicit regulation of the use or management of effluent. Neither does it contain any clear definitional section that would embrace effluent under either the surface water or groundwater articles.
Of course, each of the parties and amici in this case is able to find some indication in Title 45 of what the legislature must have meant. We find it almost impossible to believe, however, that if the legislature had intended to manage, restrict or regulate the use of municipal effluent, it would not have done so explicitly by adopting a regulatory statute or at least including effluent within the definition of groundwater (see A.R.S. § 45-101(4)) or of the type of water subject to appropriation (see A.R.S. § 45-141(A)).
Absent any explicit undertaking by the legislature, the parties' submittals regarding construction of the extant statutes are actually invitations to create a regulatory system for effluent by judicial decision. We decline that invitation for several reasons. There is no body of case law dealing with rights to and the use of effluent. Research by counsel and the court has produced, at best, two or three outdated cases dealing with rights to the type of effluent with which this case is concerned. Principles that have evolved from cases dealing with runoff from a miner's sluice or a homesteader's irrigation ditch are not necessarily relevant to determining the rights to or management of effluent from the municipal sewer systems of all the cities in a valley populated by several million people. Further, in "ordinary" tort or contract cases, we build on a body of case law — the trial and error experience of generations of our predecessors. We occasionally adjust, modify, or advance a bit by announcing a new rule to which society may gradually adjust or which may be further regulated or in some cases actually repealed by the legislature. Regulation of water use, however, especially in a desert state, does not lend itself to case-by-case definition. In this field, we not only confer private rights and interests but deal in the very survival of our society and its economy. Simply put, there is not enough water to go around. All must compromise and some must sacrifice. Definition of those boundaries is peculiarly a function for the legislature. It is plainly not a judicial task. Accordingly, we must look to the legislature to enact the laws they deem appropriate for wise use and management of what may be a valuable water resource for Arizona.
C. Ownership of Effluent
We do not agree with the contention of the Cities and Utilities that the Cities own the sewage effluent. In Arizona, being a desert state, water is a precious commodity. One does not own water in Arizona. One only has the right to put it to beneficial use. This applies to both surface water, see A.R.S. § 45-151(A) and (B), and groundwater. See Town of Chino Valley v. City of Prescott, 131 Ariz. 78, 638 P.2d 1324 (1981). Thus the legislature has the right to control the use of sewage effluent. It has not restricted its use and, until it does, the Cities have the right to enter into contracts as they have done here.
Nor is the effluent "developed" water. "Developed" waters are not public waters, and generally are not subject to prior appropriation. See Fourzan v. Curtis, 43 Ariz. 140, 29 P.2d 722 (1934). As applied to water in a stream system, "developed" water is that which has been added to the supply of a natural stream and which never would have come into the particular stream system in the absence of the effort of the developers. See Southeastern Colorado Water Conservancy District v. Shelton Farms, Inc., 187 Colo. 181, 529 P.2d 1321 (1974). Since a return of the effluent to the stream bed would not increase the flow of the water above that before it was diverted, the effluent is not developed water.
D. Must the Cities Continue Dumping Sewage Effluent In Order to Satisfy the Needs of Downstream Users?
We start with A.R.S. § 45-141(A) which states:
The waters of all sources, flowing in streams, canyons, ravines or other natural channels, or in definite underground channels, whether perennial or intermittent, flood, waste or surplus water, and of lakes, ponds and springs on the surface, belong to the public and are subject to appropriation and beneficial use as provided in this chapter.
(Emphasis added.) A.R.S. § 45-151(A) provides that "[t]he person or the State of Arizona or a political subivision thereof first appropriating the water shall have the better right."
Can a downstream user appropriate the sewage effluent component of water under A.R.S. § 45-141(A)? We hold that he can. The statute speaks of water "of all sources." It does not matter where the water came from. Once it is in one of the geological or topographical features enumerated by the statute it is subject to appropriation. See Wyoming Hereford Ranch v. Hammond Packing Company, supra. The trial court was therefore incorrect in concluding that effluent was not subject to appropriation under the laws pertaining to surface waters.
But does this mean that the Cities must continue to discharge sewage effluent into the river to satisfy the needs of these appropriators? Certainly there are no statutes which require the Cities to do so. The ramifications of such a doctrine are alarming. For example, if we follow the path urged by A Tumbling T and the Longs, the Cities would be unable to change the location of its point of discharge without risking a lawsuit.
Sewage effluent is water that is left over after having been put to use. A.R.S. § 45-402(6). Regardless of whether the water used to treat sewage was originally groundwater or surface water, the water remaining after treatment is waste water. Reynolds v. City of Roswell, 99 N.M. 84, 654 P.2d 537 (1982).
Two early Arizona cases dealt with the appropriation of waste waters. In Lambeye v. Garcia, 18 Ariz. 178, 157 Pac. 977 (1916) and Wedgworth v. Wedgworth, 20 Ariz. 518, 181 Pac. 952 (1919), this court considered issues relating to rights that might be obtained by subsequent users of irrigation waste waters (sometimes also referred to as "surplus" water in both decisions). Neither Lambeye nor Wedgworth involved an appropriator's right to divert and use waste waters from a natural channel. Instead, the waste water had been captured and used by a subsequent user who had no appropriative rights before it had returned to a natural channel. On these facts we held that the waste water was not subject to appropriation and that the subsequent user could obtain no vested rights in it. We noted that one who captures waste water may not insist that the initial appropriator continue to waste his irrigation water and, accordingly, that the supply of waste water could be discontinued or withdrawn at any time.
Our holdings in Lambeye and Wedgworth were codified shortly thereafter by an amendment of the Arizona statute governing surface waters so as to reflect that "waste or surplus waters" were subject to appropriation only when flowing in a natural channel. See 1921 Ariz.Sess.Laws, ch. 64 § 1. We do not believe that the amendment of A.R.S. § 45-141(A), considered in conjunction with 45-151(A), has changed the conclusion that we reached in Lambeye and Wedgworth concerning the right of the initial appropriator to discontinue or withdraw his waste. The very nature of waste water requires the application of different rules governing the rights of the junior appropriator. Waste water exists only as long as there is waste. No appropriator can compel any other appropriator to continue the waste of water which benefits the former. If the senior appropriator, through scientific and technical advances, can utilize his water so that none is wasted, no other appropriator can complain. See Reynolds v. City of Roswell, supra; Bower v. Big Horn Canal Association, 77 Wyo. 80, 307 P.2d 593 (1957). The junior appropriator, using waste water, "takes his chance" on continued flow. Thayer v. Rawlins, 594 P.2d 951 (Wyo.1979). To hold otherwise and require the Cities to continue to discharge effluent would deprive the Cities of their ability to dispose of effluent in the most economically and environmentally sound manner, as discussed above. Moreover, such a holding would be contrary to the spirit and purpose of Arizona water law, which is to promote the beneficial use of water and to eliminate waste of this precious resource.
We therefore hold that the Cities may discontinue the discharge of sewage effluent without violating the rights of those persons or entities which have previously appropriated it. The right to appropriate effluent comes into existence only when and if that effluent flows in the geological structures described in A.R.S. § 45-141(A). Because the "producer" of the effluent is a senior appropriator, those who have appropriated the effluent gain no right to compel continued discharge.
E. Abandonment of the Right to Use the Water
One more area of our statutory scheme relative to surface waters must be covered. Did the Cities abandon the effluent by previously dumping it into the river bed? A.R.S. § 45-141(C) states:
When the owner of a right to the use of water ceases or fails to use the water appropriated for five successive years, the right to the use shall cease, and the water shall revert to the public and shall again be subject to appropriation.
(Emphasis added.) A.R.S. § 45-188 provides:
Any person entitled to divert or withdraw public waters of the state through an appropriation authorized under § 45-151, court decree, previous possession or continued beneficial use who abandons the use thereof, or who voluntarily fails, without sufficient cause, to beneficially use all or any part of the right to withdraw for any period of five successive years shall relinquish such right or portion thereof. The rights relinquished shall revert to the state, and the waters affected by such rights shall become available for appropriation to the extent they are not lawfully claimed or used by existing appropriators.
(Emphasis added.) These statutes apply when an appropriator fails to withdraw some or all of the water to which he is entitled. That is not the case here.
CONCLUSION
In summary, we hold that the effluent in question is neither groundwater nor surface water. Whether diverted by appropriation or withdrawn from the ground, after use by the municipalities the water loses its original character as groundwater or surface water and becomes, instead, just what the statute describes — effluent. See A.R.S. § 45-402(6). The Cities' expenditure of tens if not hundreds of millions of dollars for sewer lines, purification plants and equipment does not transform the water and change it back into groundwater or surface water. It remains effluent.
Neither the statutes dealing with groundwater nor those dealing with appropriation of surface water control or regulate the Cities' use or disposition of effluent. Thus, the Cities are free to contract for the disposition of that effluent and the utilities, having purchased the right to use the effluent, may continue to use it.
However, while effluent is neither groundwater nor surface water, it is certainly water. In this state, the constitution having abolished the riparian doctrine, see Ariz. Const, art. 17, § 1, neither stream nor groundwater is private property free from regulation. Those who lawfully appropriate or withdraw water have only the right to use it in accordance with the law. The legislature is free to regulate or control the use and disposition of effluent. We invite its attention to that need.
Thus, the downstream appropriators such as A Tumbling T have limited rights as against the Cities. So long as the Cities choose to dispose of the effluent by discharge into the stream bed, the effluent becomes and is water "flowing in a stream" and under A.R.S. § 45-141 is subject to appropriation by downstream users. As between such appropriators, first in point of time is first in right under A.R.S. § 45-151(A), and A Tumbling T may well have appropriative rights as against any other junior appropriators. However, such downstream appropriators cannot force the Cities to continue to discharge the effluent at the same point in the stream or in the stream at all. The Cities may thus change the location of their sewer lines and of their water purification and treatment plants or dispose of their effluent in some other manner without violating any obligation or duty owed to the downstream appropriators.
We therefore affirm the judgment of the trial court.
FELDMAN, V.C.J., CAMERON, J., and LACAGNINA, Court of Appeals Judge, concur.
APPENDIX
(Order Entered by the Supreme Court on December 29, 1987)
1. Subsequent to argument in this case, Justice William A. Holohan received an inheritance of shares of stock in one of the corporate parties. He informed the Court of this and has now confirmed the information by memorandum dated December 8, 1987. The information from Justice Holohan caused Chief Justice Frank X. Gordon, Jr. to reassess his participation in the case because he also owns, in his own name and in his name as custodian for his grandchildren, a small amount of stock in the corporate parent of one of the corporate parties.
2. The Code of Judicial Conduct provides two separate tests for judicial disqualification as the result of financial interest. The first test is contained in Canon 3(C)(1)(c) of the Arizona Code of Judicial Conduct, which provides that a judge shall recuse himself when he "has a financial interest . in a party to the proceeding." Subsection 3(C)(3)(c) defines "financial interest" as "ownership of a legal or equitable interest of substance." Such an "interest of substance" consists of any interest in a closely held corporation and in a publicly held corporation is an "interest, the value of which is likely to be increased or decreased to any material extent by the outcome of the litigation." Id., subsection 3(C)(3)(d).
The second test for disqualification as the result of financial involvement is contained in Canon 3(C)(1)(c), which provides that a judge shall disqualify himself when he or she owns an interest that "could be substantially affected by the outcome of the proceeding."
3. In addition, A.R.S. § 38-503(B) requires public officers, including judges, to disqualify themselves in any matter in which they have a "substantial interest." This is defined as any interest "other than a remote interest." See A.R.S. § 38-502(11). With regard to stock interests, a "remote interest" is defined as a holding of "less than three per cent" of the corporation's stock, providing the dividends or other payments made to the judge by the corporation do not exceed five percent of the judge's total annual income. A.R.S. § 38-502(10)(e).
4. The Court has always taken the position that the more stringent requirements of the Code of Judicial Conduct must be applied as the test for disqualification. However, the Court has also noted that the test adopted by our Code of Judicial Conduct is different from and not as stringent as the standard applicable to federal judges by virtue of 28 U.S.C. § 455, which requires disqualification where the judge has "ownership of a legal or equitable interest, however small" in a party to the litigation. Id. § 455(b)(4). See also Frank, Commentary on Disqualification, 1972 UTAH L.REV. 377, 384. The federal rule, which is "draconian" in its results, has been severely criticized. See Nevels, Bias and Interest: Should They Lead to Dissimilar Results in Judicial Qualification Practice?, 27 ARIZ.L.REV. 171 (1985).
5. Noting the difference between the federal rule and the state rule, members of this Court have in the past sat on or participated in cases even though they owned small amounts of stock in publicly held corporate parties, so long as their interests could not have been substantially affected by the outcome of the case and so long as the value of their stock could not have been increased or decreased to any material extent by the result of the case. Cases of this sort have usually been those involving the routine business operations of a corporate party.
The nature of the instant case is quite different from routine business operations. It is quite possible that a corporate party to this case might be substantially affected by the outcome or that the value of a judge's share in a corporate party might be increased or decreased to some material extent by the result of this case. Therefore, both Justice Holohan and Chief Justice Gordon have recused themselves and will not participate further in the decision of this matter.
Judge Donald F. Froeb, who also participated in the case at the time of oral argument, previously notified the Court that one of his relatives had taken employment with a party connected to the case and that, as a result, he felt he must also recuse himself. Further, Justice Moeller was the trial judge who heard the case at the trial court level.
In light of the foregoing, therefore,
IT IS ORDERED that pursuant to art. 6, § 3 of the Arizona Constitution, Chief Judge L. Ray Haire of Division One of the Court of Appeals and Chief Judge Michael A. Lacagnina and Judge Lawrence Howard of Division Two of the Court of Appeals are designated to sit on the case and participate in the decision.
IT IS FURTHER ORDERED that the case will be rescheduled for oral argument at the earliest possible date.
Dated this 29th day of December, 1987.
. To date, no Arizona case has discussed judicial disqualification because of a judge's possible financial interest in the litigation. Believing that the court's policy on that issue should be on record, we take this opportunity to publish in ' the appendix the "recusal order," which not only explains the reasons for recusal but, more importantly, the standards this court applies.
. The A Tumbling T parties have filed a motion to dismiss the Longs' appeal of stream water issues, contending that the Longs lack standing in that regard. At the time of oral argument, we denied the motion. In view of our disposition, we will not address it further in this opinion.
. The possible clash between concepts of western water law and the directives of environmental protection statutes was noted in the case of Thayer v. City of Rawlins, 594 P.2d 951 (Wyo. 1979).
. See also Reynolds v. City of Roswell, 99 N.M. 84, 654 P.2d 537 (1982).
. Although the effluent is neither groundwater nor surface water, the common law requires, absent any legislative directive to the contrary, that even effluent be put to a reasonable use if it is not returned to the stream bed.