Opinion ID: 2637690
Heading Depth: 1
Heading Rank: 5

Heading: asarco

Text: ¶ 40 ASARCO is a successor in interest to Kennecott Copper Corporation, which was a party to the Globe Equity Decree. The Decree allows ASARCO to withdraw up to 16,221 AFY from the Gila River mainstem. ¶ 41 ASARCO first argues the GRIC settlement agreement breaches the 1977 Water Rights Settlement and Exchange Agreement (1977 Agreement), in which ASARCO agreed that it would either pay for or provide an equivalent amount of CAP water to GRIC in exchange for any water diverted from the Gila River. The 1977 Agreement also gives ASARCO priority over Gila River water received in exchange for CAP water. ¶ 42 This contract claim falls outside the scope of review allowed by the Special Order. See Gila River VII, 217 Ariz. at 280 ¶ 17, 173 P.3d at 444. Moreover, the 1977 Agreement (¶ 35) states that all actions for the enforcement. . . of this AGREEMENT shall be brought in courts of the United States. Thus, if the GRIC settlement causes a breach of the 1977 Agreement, ASARCO may assert its rights under that agreement in federal court. ¶ 43 ASARCO next asserts that it is materially injured because the settlement, through the operation of A.R.S. § 45-257(B)(1), improperly extends the reach of the Globe Equity Decree to Gila River tributaries. Specifically, the settlement agreement provides that GRIC shall have the right to 653,500 AFY from several water sources, including a variable quantity of water diverted pursuant to GRIC's Globe Equity Decree rights with time immemorial priority. ASARCO contends that users of the San Pedro River are now arguably bound by GRIC's time immemorial priority on that tributary, even though the relative priority of rights must still be determined in the adjudication. ¶ 44 ASARCO's claims to the San Pedro are unaffected. [T]he [Globe Equity] Decree adjudicated only claims to the Gila River mainstem and not to its tributaries. The Decree therefore has no preclusive effect as to the tributaries. Gila River VI, 212 Ariz. at 76 ¶ 38, 127 P.3d at 894. ASARCO remains free to assert its claim of senior rights to the San Pedro River when the relative water rights of that tributary are determined in the general stream adjudication. [17] ¶ 45 ASARCO further contends the settlement agreement's safe harbor provisions deny it equal protection and confer special benefits to GRIC in violation of the Arizona Constitution. Specifically, ASARCO asserts the Upper Gila River Watershed Maintenance Program, described below, uses state legislation to implement protections against certain new water uses and to regulate existing uses, but permits the settling parties to decide independently who benefits from these protections. ASARCO claims that, were it not expressly excluded by name in the agreement, it would have qualified for protection under the safe harbor provisions. ¶ 46 The adjudication court, however, correctly declined to address ASARCO's safe-harbor argument as outside the scope of the Special Order. Gila River VII, 217 Ariz. at 280 ¶ 17, 173 P.3d at 444. ASARCO's claim is flawed for other reasons. In the settlement agreement, ¶ 26.8.1, the settling parties agreed to establish the Upper Gila River Watershed Maintenance Program (Program). The Program was enacted by the legislature, codified in A.R.S. §§ 45-2601 to 45-2654, and created the Gila River Maintenance Area. Subject to specified exceptions, the Program prohibits the construction of new dams, the enlargement of existing dams, and new irrigation of lands within this area. [18] A.R.S. §§ 45-2631, 45-2641; Assessment at 3-14. The Program applies to all persons who contemplate performing any of these acts in the maintenance area. ¶ 47 As discussed above, the settlement agreement's safe harbor provisions restrict the ability of GRIC, the San Carlos Irrigation & Drainage District, and the United States to challenge, object to, or call on specified users provided they meet certain conditions and the Program remains in effect. Agreement ¶¶ 26.8.1, 26.8.2.1, 26.8.2.3; Assessment at 3-14 to 3-15. The specified users primarily consist of those persons, entities, corporations, or municipal corporations [and their successors] . . . in the Gila River Watershed above Ashurst-Hayden Diversion Dam . . ., [whose] Diversion is not specifically authorized by the Globe Equity Decree. Agreement ¶ 2.124B. ASARCO and some others are expressly excluded from this definition. Id. ¶ 48 Although the Program was enacted by the legislature, the safe harbor provisions were not statutorily prescribed but rather are merely part of the settlement agreement among the parties. The settling parties were entitled within their agreement to treat certain water users differently based on their past relationship with them. See Goodman v. Newzona Inv. Co., 101 Ariz. 470, 474, 421 P.2d 318, 322 (1966) ([E]quity respects and upholds the fundamental right of the individual to complete freedom to contract or decline to do so, as he conceives to be for his best interests, so long as his contract is not illegal or against public policy. (quoting McCall v. Carlson, 63 Nev. 390, 172 P.2d 171, 187-88 (1946))). ASARCO differs from the water users who qualified for the safe harbor because it is a party to the Globe Equity Decree, is in a contractual relationship with a settling party (the 1977 Agreement), and was in the process of negotiating another exchange agreement with GRIC. [19] Regardless of its treatment within the settlement agreement, ASARCO remains subject to the statutory provisions of the Program, as do all other entities in the region. Therefore, the agreement neither violates ASARCO's equal protection rights nor confers special benefits to GRIC. ¶ 49 ASARCO also argues that the safe harbor provisions confer benefits on GRIC that are qualitatively greater than it would otherwise have been able to prove at trial. Specifically, ASARCO claims that the safe harbor provisions provide GRIC with selective call in that GRIC, unlike other downstream appropriators, can pick and choose which upstream users will be called to fulfill its senior water rights. ¶ 50 Again, the determination whether an Indian tribe has received more water than it could have established at trial is limited to consideration of water quantity. Thus, as with the Apache Tribes' quality-related arguments, we conclude that qualitative factors pertaining to water rights accorded to GRIC under the settlement are outside the Special Order's scope of review. Thus, ASARCO's objection is without merit. ¶ 51 Finally, ASARCO contends it is materially injured because the agreement's safe harbor provisions increase the risk of rebound call. A rebound call occurs when an upstream user increases its water use, thereby decreasing the flow to a downstream user, which in turn causes the downstream user to call on other upstream users for water who had not caused its depletion. ¶ 52 This argument is premature and speculative, as ASARCO did not present any evidence that the settlement agreement has caused an increased incidence of such calls. In any event, if the safe harbor provisions result in GRIC increasing the calls on ASARCO, ASARCO can assert in federal court its Globe Equity Decree rights to Gila River water. In addition, although GRIC must refrain from calling on certain qualified junior users under those provisions, ASARCO can still call on such users in accordance with its higher priority rights.