HAIRE, Court of Appeals Judge, concurring in part and dissenting in part:

To a large extent, I concur in the result reached by the majority, but not in the legal analysis that the majority uses to arrive in that result. My major disagreement with the result reached by the majority concerns surface water issues resulting from the Cities' historical practice of discharging effluent into the Salt River Channel. I would hold that the right to dispose of sewage effluent by sale is included within the concept of full beneficial use of surface water and is not precluded by Arizona's surface water or groundwater codes, and that therefore the subject contracts do not violate Arizona groundwater or surface water law. However, I would further hold that a city's surface water appropriative rights could be diminished if the city has failed to make full consumptive use of the appropriated water for five successive years as provided by A.R.S. §§ 45-141(C) and 45-188. Accordingly, I would reverse the judgment entered by the trial court and remand this matter for further consideration of the surface water abandonment issues.

Much of my disagreement with the majority occurs as a result of a difference in approach to the issues presented in this appeal. The majority focuses on the end product rather than on the rights gained and the limitations imposed on the Cities by reason of their initial appropriations. Without question, Arizona's surface water code governs those appropriations, and subjects them to the prior appropriation and beneficial use doctrines. Since the water when taken is subject to beneficial use limitations, the real issue becomes whether, consistent with beneficial use limitations, the water components of the sewage effluent can be sold by the Cities. The majority fails to resolve this basic issue, but rather focuses on the end product, sewage effluent, and treats it without regard to the principles governing the use and disposition of the effluent's groundwater and surface water components. From this premise the majority then concludes that effluent is not subject to regulation under Arizona's groundwater and surface water codes.

Because I am convinced that many of the legal conclusions reached by the majority are accordingly erroneous, I have set forth in some detail the legal analysis that supports the conclusions I have reached in this appeal.

CHARACTERIZATION OF THE FLUID COMPONENTS OF SEWAGE EFFLUENT

In determining the legal rights of the parties relating to the sewage effluent that is the subject of this litigation, initial consideration must be given to the different classifications of water that contribute to the fluid content of the effluent. The principal contributions are from two sources — appropriable surface waters and groundwaters. The majority concludes that, whether diverted by appropriation or withdrawn from the ground, the water loses its original character after use by the cities and becomes instead, just effluent. For the following reasons I disagree.

In this dissent, I use the terms "appropriable surface waters", "surface water" and "stream water" interchangeably, to describe the limited types of waters that are subject to prior appropriation and the doctrine of beneficial use under Arizona law, pursuant to A.R.S. § 45-141(A):

"A. 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."

The term "groundwater" is used in this dissent in the same sense as used in Arizona's Groundwater Management Act of 1980, as defined in A.R.S. § 45-101(4):

"4. `Groundwater' means water under the surface of the earth regardless of the geologic structure in which it is standing or moving. Groundwater does not include water flowing in underground streams with ascertainable beds and banks."

In prior Arizona decisional law, groundwater is generally referred to as "percolating" water and is not subject to the doctrine of prior appropriation. See Bristor v. Cheatham, 75 Ariz. 227, 255 P.2d 173 (1953).

It is apparent from the provisions of A.R.S. § 45-141(A) that in Arizona not all waters appearing on the surface are subject to appropriation. See, e.g., Fourzan v. Curtis, 43 Ariz. 140, 29 P.2d 722 (1934) (developed spring waters are not subject to appropriation); Espil Sheep Company v. Black Bill Doney Parks Water Users' Association, 16 Ariz. App. 201, 492 P.2d 450 (1972) (diffused surface waters are not subject to appropriation). With this premise in mind, the Cities and Utilities have urged that because sewage effluent is not among the appropriable waters specifically described in § 45-141(A), the effluent must be considered as privately owned and not subject to the limitations on use and disposition imposed by the beneficial use and prior appropriation doctrines. They initially contend that sewage effluent should be perceived as something separate and apart from the groundwater and surface water components from which it originates and, accordingly, that the rights of the parties should not be determined by the application of principles derived from surface or groundwater law. The majority apparently accepts this contention. I would reject it.

First, a fundamental premise of Arizona water law is that water is characterized as surface water, groundwater or otherwise at the time of its capture and retains that character until it is either returned to the stream (or some other surface water source) or percolates into the ground. In my opinion, surface water diverted for irrigation purposes does not lose its character as surface water once it is diverted from a stream. Rather, it continues to be surface water, fully subject to prior appropriation and beneficial use limitations governing surface water rights. Similarly, upon the withdrawal of groundwater and the flow thereof into a pipeline or canal for transportation to its place of initial use, the water remains groundwater for the purposes of Arizona's groundwater code, subject to such limitations as that code places upon the withdrawal and disposition of groundwater. To hold otherwise would render Arizona's surface water and groundwater codes meaningless.

Notwithstanding these fundamental principles, the Cities and Utilities contend that the surface water and groundwater introduced into the Cities' water systems is totally consumed by the uses to which it is put, and that sewage effluent ceases to be surface or groundwater, but rather "originates" anew and is "produced" by the Cities at their treatment plants. From this premise they conclude that the sewage effluent falls within water law concepts applying to "developed" water, which is generally not subject to the doctrine of prior appropriation. See Fourzan v. Curtis, 43 Ariz. 140, 29 P.2d 722 (1934); R. Clark, 1 Waters and Water Rights, § 3.2, p. 27.

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 developer. See R.J.A. Inc., v. Water Users Association of District No. 6, 690 P.2d 823 (Colo. 1984); Southeastern Colorado Water Conservancy District v. Shelton Farms, Inc., 529 P.2d 1321, 187 Colo. 181 (1974) (distinguishing between salvaged waters and developed waters). The principles relating to developed water are also applicable to water imported into the stream system from another stream system. See Thayer v. City of Rawlins, 594 P.2d 951 (Wyo. 1979); City and County of Denver v. Fulton Irrigating Ditch Company, 179 Colo. 47, 506 P.2d 144 (1972).

The contention that sewage effluent is developed water has been considered by the Colorado Supreme Court in Pulaski Irrigation Ditch Company v. City of Trinidad, 70 Colo. 565, 203 P. 681 (1922). In rejecting that contention, the Colorado court pointed out that the water content of sewage effluent exists as fully as before it was used, and that when purified, it remains the same element that was originally diverted. The court then noted that, since the return of this water to the stream system would not increase the flow above what it was before the water was diverted, the fluid content of the effluent could not be considered as developed water. The Pulaski court's definition of "developed water" is uniformly recognized in cases dealing with the prior appropriation doctrine. See R. Clark, 1 Waters and Water Rights, § 3.2, p. 27.

Although I disagree with the conclusions reached by the Pulaski court concerning limitations on the use and disposition of sewage effluent, I agree with its conclusion that sewage effluent cannot be characterized as developed water.

Thus, in this case, to the extent that stream water constitutes a component of the Cities' sewage effluent, that component cannot be considered as newly created or developed water, since its return to the river would not add to the water of the stream system over and beyond what it would have been if that stream water had not been diverted. As to the groundwater component of the sewage effluent, although I do not consider it to be water "developed" in the sense that it has been newly created at the Cities' effluent treatment facilities, it does constitute developed water when it is discharged into the stream system in the sense that, because it was never diverted from the stream system in the first instance, its discharge into the system would increase the waters of the system over and beyond what they otherwise would have been. The concept that the groundwater component of sewage effluent discharged into the Salt River constitutes developed stream water, and the effect of applying that concept to define the rights of the parties to this litigation, will be addressed in more detail later in this dissent.

Summarizing, I would reject the contention that the fluid content of sewage effluent is something newly created rather than being a combination of groundwater and surface water. In my opinion, if the contracts for the sale of the Cities' sewage effluent are to be upheld, it must be on the basis that under the laws of this state governing appropriative rights, beneficial use, and groundwater management, the sale of the surface and groundwater components of the sewage effluent is not precluded.

SALE OF THE GROUNDWATER COMPONENT OF THE SEWAGE EFFLUENT

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 the transportation of groundwater. See A.R.S. §§ 45-541 to -545. They contend that 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 or by allowing it to percolate into the ground. The Department of Water Resources has filed an amicus curiae brief supporting this position.

A Tumbling T Ranches and the Gladdens (A Tumbling T parties) find nothing per se illegal about the reuse or sale of the groundwater-derived portion of the Cities' effluent and claim no ownership interest therein. They urge, however, that insofar as the Cities are unable to identify and segregate out the groundwater component of the effluent, they must continue to discharge the commingled waters into the Salt River.

Also appearing as amicus curiae is the city of Tucson, which argues that even though the groundwater component of effluent remains groundwater after passing through a municipal wastewater collection and treatment system, the groundwater code does not purport to limit the subsequent reuse or other disposition of groundwater. To support this argument, Tucson contends that, unlike appropriable surface water, groundwater is private property, which, once lawfully reduced to possession — i.e., having been withdrawn for use in compliance with the groundwater code — may be reused or otherwise disposed of without further regard to the groundwater code.

The trial court, adopting the position advanced by the Cities and the Utilities, held that effluent (including both the groundwater and surface water components) is not subject to regulation under Arizona surface water or groundwater laws. The court's conclusion was based upon the following observations: (1) the groundwater code's definition of effluent and provisions for the use of effluent or surface water as a substitute for groundwater imply that the legislature assumed or intended that effluent was something other than groundwater or surface water; (2) the legislature has enacted statutes that regulate sewage effluent from a health standpoint and has expressly authorized non-municipal entities to dispose of sewage effluent, including by sale, all without indicating that effluent is also to be subject to regulation under the groundwater and surface water codes; and (3) legislative recognition of effluent as a valuable water resource, coupled with the comprehensiveness of the groundwater code, suggests that if the legislature had intended to subject effluent to regulation, it would have said so.

Although I find some merit in the trial court's observations concerning groundwater, I do not believe that the legislature intended that the groundwater component of effluent be completely free from regulation under the groundwater code. For example, I see no reason to suppose that A.R.S. § 45-452(A), which prohibits the use of "any water" for the irrigation of new acreage in active management areas, does not prohibit such use of the groundwater component of effluent to the same degree as any other type of water. Nevertheless, I agree with the result reached by the trial court as to the groundwater component of sewage effluent and I would hold that the Groundwater Management Act's transportation restrictions apply only to the initial use for which groundwater is withdrawn. Once groundwater has been lawfully withdrawn and used, any resulting groundwater effluent may be disposed of without regard to those restrictions.

Like the trial court, I begin my analysis with the groundwater code's definition of 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(6). The trial court considered this definition to be evidence that the legislature intended or assumed that effluent is something other than either groundwater or surface water.

In this dissent, I have previously noted that in my opinion the nature of water as groundwater or surface water is established when it is diverted or withdrawn from the common supply, and that use alone cannot change the nature of the water. Although I agree with the trial judge's ultimate conclusion that the groundwater code does not preclude the sale of groundwater effluent, I see nothing in the groundwater code's definition of effluent which indicates a legislative intent that effluent is no longer to be considered as groundwater, surface water or a combination of both. First, I note that the definition is limited to the use of the word "effluent" in the groundwater code. When considered in that context, it is apparent that the definition was included because subsequent sections of the groundwater code encourage the use of effluent, whether composed of groundwater, surface water, or a combination of both, over new groundwater withdrawals. The definition was necessary to identify with precision the lower-quality types of groundwater and surface water which must be utilized before consideration is given to new groundwater withdrawals.

The use of such lower-quality surface and groundwater is preferred if it "is available." I assume that the word "available" was used in both a physical and a legal sense. I find it difficult to imply from this definition a legislative intent to diminish the impact of surface water code provisions that would otherwise govern the legal "availability" of surface water. In this regard, I note that A.R.S. § 45-451(B) expressly provides: "This chapter [groundwater code] shall not be construed to affect decreed and appropriative water rights [surface water rights]."

However, notwithstanding my failure to agree with the trial judge's finding of a legislative intent to treat effluent without regard to the nature of its component water parts, I find no legislative intent in the groundwater code to subject the reuse or other disposition of groundwater effluent to the same restrictions that govern the groundwater's initial withdrawal and first use. Ample support for this conclusion can be found in those sections of the groundwater code that refer specifically to effluent.

For example, A.R.S. §§ 45-514 and -515 condition the issuance of groundwater withdrawal permits for mineral extraction and general industrial use, respectively, upon the lack of available surface water or effluent of adequate quality. The groundwater code thus encourages the use of effluent (as well as available waters from other sources) in place of new groundwater withdrawals. In addition, A.R.S. §§ 45-494(2)(c) and -495(2)(b) provide that certain irrigation districts, which may withdraw, deliver, and distribute only limited amounts of newly withdrawn groundwater for irrigation within their service areas, may also contract to purchase, deliver, and distribute unspecified quantities of surface water and effluent for the same purpose. These provisions relating to the preferred use of effluent by irrigation districts and the mining industry demonstrate an intent to allow municipalities to sell and transport available effluent for use in locations which ordinarily would not be within their service areas.

I agree with the Long parties that the foregoing statutes express legislative recognition of effluent as an important water resource. However, I cannot accept the assertion that, by encouraging the use of effluent as a "substitute" for new groundwater withdrawals, these sections evidence a legislative intent to "equate" used groundwater with groundwater in situ and to subject both to identical restrictions. To the contrary, the groundwater code repeatedly reveals a preference for the reuse of groundwater, permitting reuse under circumstances where new groundwater withdrawals would be prohibited.

Furthermore, I note that even where the legislature has seen fit to subject the all-inclusive category of "water" to the groundwater code's transportation restrictions, it has specifically excluded effluent from those restrictions. See A.R.S. § 45-494.01(B) (limiting the amount of water that may be transported annually to acreage added to the service area of an irrigation district). In sum, I have found nothing in the groundwater code even to suggest that its transportation restrictions were meant to apply to any portion of the Cities' sewage effluent.

My final concern in this area is whether the Cities, by reason of their historical practices, are in any way obligated to continue to discharge their used groundwater into the Salt River for the benefit of downstream appropriators. The A Tumbling T parties concede that they have no vested ownership right in the groundwater portion of the Cities' sewage effluent, acknowledging the principle that unlike surface water, which is publicly owned even after diversion by an appropriator, groundwater becomes the property of whoever legally extracts it from beneath the ground. See Collier v. Arizona Department of Water Resources, 150 Ariz. 195, 722 P.2d 363 (App. 1986); Town of Chino Valley v. City of Prescott, 131 Ariz. 78, 638 P.2d 1324 (1981).

The above-cited cases do imply that groundwater becomes private property once it is legally withdrawn. However, I do not rely on a private ownership concept to determine the rights of the parties in this case. While the groundwater portion of the Cities' effluent becomes stream water after it is discharged into the Salt River, it constitutes "developed" or "imported" stream water. Downstream users may not require the developers (the Cities) of developed water to continue to discharge it into the stream system. See City and County of Denver v. Fulton Irrigating Ditch Company, 179 Colo. 47, 506 P.2d 144 (1972); Thayer v. City of Rawlins, 594 P.2d 951 (Wyo. 1979). Therefore, no appropriative rights against the Cities can result from the Cities' historical discharge of groundwater effluent into the Salt River.

Consequently, the A Tumbling T parties' only possible claim to the Cities' used groundwater is based upon the suggestion that tracing the Cities' effluent back to its several sources would be virtually impossible. In fact, the Utilities did complain in their cross-motion for summary judgment that such a task would require a herculean effort.

In order to preserve a claim to developed water, a person who has allowed that water to be commingled with appropriable public water must be able to identify that portion of the water that he claims is not subject to appropriation. See, e.g., Herriman Irr. Co. v. Butterfield Min. Co., 19 Utah 453, 57 P. 537, 540 (1899); City and County of Denver v. Fulton Irrigating Ditch Company, 179 Colo. 47, 506 P.2d 144 (1972). The A Tumbling T parties argue, therefore, that to the extent that the Cities' effluent cannot be traced to its various sources, rights in the commingled waters must be defined according to stream water principles. I agree.

The groundwater portion of the Cities' effluent, however, should be traceable to its source. Case law supports the proposition that effluent can be broken down according to its constituent water components. However, it is not necessary to identify the particular particles of water by origin. As the Colorado Supreme Court stated in Fulton:

"With the question of quality not involved, we accept Denver's argument that water is fungible or is to be treated the same as a fungible article. The particles of water do not have to be identified as coming from Western Colorado, but rather water, whether or not contained in effluent, can be divided volumetrically. A percentage of the effluent discharged by the Metro plant can be considered as imported water." 506 P.2d at 150.

The Cities are statutorily obligated to account for the amounts of surface water and groundwater delivered to their municipal customers. See A.R.S. § 45-468. The proportion of the water that was withdrawn as groundwater would provide an adequate measure of the groundwater component of the effluent.

I conclude that the sale of the groundwater component of the Cities' sewage effluent is valid under Arizona law and is not subject to regulation under Arizona's Groundwater Management Act. I next consider the validity of the contractual provisions for the sale of the surface water component of the sewage effluent.

THE SALE OF THE SURFACE WATER COMPONENT OF THE SEWAGE EFFLUENT

As previously stated, the trial judge in his minute entry decision concluded that the surface water component of sewage effluent was not subject to regulation under Arizona's surface water laws. Admittedly, no statutory provisions or prior Arizona decisions expressly state that sewage effluent is, or is not, subject to Arizona's surface water code. I have previously discussed and rejected the trial judge's holding that the groundwater code's definition of effluent for the purposes of the groundwater code implied a legislative intent to exempt surface water effluent entirely from limitations imposed on the ownership and use of surface water by Arizona's surface water code. The trial judge also based his decision upon an examination of several statutes that indicate that effluent may be purchased and sold. He observed that these statutes do not expressly indicate that such purchase or sale would be subject to the administrative procedures and statutory limitations generally applicable to changes in use or the place of use of water rights acquired under existing Arizona law.

The Longs and the A Tumbling T parties both strongly disagree with the trial judge's analysis of these statutory provisions. In particular, they contend that the trial judge erred when he referred to statutes regulating effluent from a health standpoint and then stated that nothing in these statutes indicates an intent to also regulate effluent under the groundwater or surface water codes. I agree with their contentions and find several provisions in the health code indicating that the Department of Health's regulatory powers pertaining to effluent were not intended to supplant this state's law regulating surface and groundwater rights. Thus, A.R.S. § 36-1869 directs the department of health services to "confer and cooperate with the director of water resources in the formulation of plans relative to the quality and safety of the waters of this state." A much more direct expression of the legislature's intent is found in A.R.S. § 36-1857(B), which indicates that laws passed for the purpose of controlling pollution cannot be used for the purpose of defeating appropriative rights:

"B. In administering this article . . . the council shall:

"1. Not require any present or future appropriator or user of water to divert, cease diverting, exchange, cease exchanging, store, cease storing, or release any water for the purpose of controlling pollution in the waters of this state."

Similarly, see A.R.S. § 36-1859(C):

"C. In issuing any permit or formulating any rule or regulation the director shall be guided by the principle what waters of the state are put to beneficial use within the state and become return flows to the waters of the state and are subsequently reused and that such permits, rules and regulations shall not diminish the water available for such beneficial uses nor deprive the state of such water."

For these reasons, I disagree with the trial judge's conclusion that these statutory provisions indicate a legislative intent to exempt the appropriable water component of sewage effluent from principles that would otherwise govern the appropriation and use of surface water. However, I acknowledge that several Arizona statutes demonstrate a legislative recognition of the concept that sewage effluent may be sold, and in this dissent I have previously noted my conclusion that Arizona's groundwater code does not impose limitations on the sale of the groundwater component of the effluent. I now consider the extent of the limitations that the surface water code's doctrines of beneficial use and prior appropriation impose on the sale of the surface water component of sewage effluent.

The A Tumbling T parties argue that the trial judge's decision 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 only have 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 Valley Water Users' Association, 53 Ariz. 374, 89 P.2d 1060 (1939); Slosser v. Salt River Val. Canal Company, 7 Ariz. 376, 65 P. 332 (1901); Salt River Valley Water Users' Association v. Kovacovich, 3 Ariz. App. 28, 411 P.2d 201 (1966). In this connection, the A Tumbling T parties point to A.R.S. § 45-141(B), which limits the right of an appropriator: "Beneficial use shall be the basis, measure and limit to the use of water."

In my opinion the concept that appropriated waters are "owned" by the public rather than by the appropriator is valid only as a shorthand method of expressing the limitations that the doctrine of beneficial use generally imposes upon the rights of an appropriator. At times, the concept is of little practical significance. A more accurate statement would be that the appropriator's ownership of appropriated water does not include the full bundle of rights normally associated with ownership. Thus, as stated by this court in City of Phoenix v. State of Arizona, 53 Ariz. 28, 85 P.2d 56 (1938):

"It is a recognized principle that public water, or water subject to appropriation under our laws, does not belong to the appropriator in the sense that he may do with it what he pleases or what the owner of property may generally do. But it is also recognized that the use of such water is subject to ownership and sale. Brewster v. Salt River Valley Water Users' Assn., 27 Ariz. 23, 229 P. 929. If the city cannot dispose of the water by furnishing it to its patrons or consumers, then it cannot make the appropriation for that is the major reason for the appropriation. Its appropriation is valid and it can certainly sell its use for all or any purposes to which it may lawfully be put." 53 Ariz. at 33, 85 P.2d 56.

Other illustrations indicating that appropriated surface water even though not "owned," can be sold are plentiful. Thus the manufacturer of ice for wholesale or retail sale purposes obviously sells the water content of the ice (or its use to the point of total consumption). Likewise, water is the principal item (by quantity) sold by the beverage industry or a distiller of water. The principle to be derived from this court's above-quoted pronouncement in City of Phoenix and from the foregoing illustrations is that nothing inherent in the doctrine of prior appropriation or beneficial use precludes the disposition by sale of public water that has been validly appropriated. Rather, to the extent that such a limitation might be present in any specific case, its existence results from the doctrine of beneficial use, that is, the restrictions imposed upon the rights of the appropriator by reason of the purpose for which the appropriation was made.

When viewed from this perspective, the real issue in this appeal concerns the limits that the doctrine of beneficial use imposes upon the disposition of sewage effluent by the Cities. If the disposition of sewage effluent by sale cannot be considered to be within the concept of beneficial use of water appropriated by a municipality, the trial judge's decision as to the surface water component of the effluent must be reversed. On the other hand, if it is determined that beneficial use of appropriated water might include the disposition of sewage effluent by sale, then one further question must be addressed: whether the Cities might have lost or abandoned a portion of their appropriative right by historically discharging their surface water effluent into the Salt River, where it may have become subject to the claims of downstream appropriators.

Although the doctrine of beneficial use is adopted in A.R.S. § 45-141(B) as the "basis, measure and limit to the use of [appropriable surface] water," Arizona, unlike some jurisdictions, has not attempted to provide a statutory standard for guidance in determining what specific practices might be permitted as part of the use which forms the basis of the appropriation. I note that A.R.S. § 45-151(A) sets forth a statutory list of permitted uses, but this list does little to illuminate the details as to what might constitute permitted practices within the limits of the appropriation for the permitted use.

Beneficial use is at best a vague legal concept, the boundaries of which are difficult to define. See generally, Hutchins, Water Rights in the Nineteen Western States 8-20, 522-46 (1971); Trelease, The Concept of Reasonable Beneficial Use in the Law of Surface Streams, 12 Wyo. Law Journal 1 (1957). As previously noted, the Alaska legislature has defined beneficial use. That definition incorporates some general concerns, usually expressed in the case law, as follows: beneficial use is "any use of water that is reasonable and beneficial to the appropriator, and at the same time is consistent with the interests of the public in the best utilization of water supply." What constitutes a beneficial use necessarily depends on the circumstances of each case. City and County of Denver v. Sheriff, 105 Colo. 193, 96 P.2d 836 (1939). Of course, to the extent that express statutory guidance exists, the courts must abide by the terms of the statute. In the absence of statutory guidance, the details of what specific practices are permitted within the broad parameters of statutorily authorized uses must be determined by the courts. Since the doctrines of beneficial use and prior appropriation are concepts which in their inception reflected the social and economic values placed on various uses of water in a largely undeveloped and arid west, any decision made by this court should also necessarily reflect these same values.

The courts in other prior appropriation jurisdictions have reached inconsistent results when faced with questions involving the beneficial use by a municipality of its appropriated water insofar as concerns the use and disposition of sewage effluent. Thus, in Wyoming Hereford Ranch v. Hammond Packing Co., 236 P. 764 (Wyo. 1925), the court considered whether the city of Cheyenne's "full beneficial use" of appropriated water included the right to sell the city's sewage effluent to the defendant in that case. The city had previously released part of the effluent directly into a ditch on the defendant's land and part into a creek from which the plaintiff's appropriated water was diverted. 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 discretion. In determining how it will make a 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 benefited 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.

Accordingly, the Wyoming court upheld the sale by Cheyenne of the sewage effluent that was discharged directly into the buyer's ditch. However, as to that portion of the effluent that was discharged into the creek, the court held that these waters had again become public waters subject to appropriation, stating:

"The full, beneficial use of the waters that have become a part of the sewage may, because of the necessity of disposing of the sewage, require that such water, a part of the sewage, be consumed, or so diverted that it does not again become a part of the waters of the stream. But the sewage deposited in Crow creek is not consumed, and is not so diverted. It becomes mingled with the waters of the stream, and, as is conceded, the water content of the sewer increases the volume of water in the stream suitable for irrigation. The city's right to the beneficial use of the water has been fully enjoyed, and the water has been returned to the stream where it is susceptible of further beneficial use by other appropriators. This further use must be had under state control by those who have acquired rights under the state laws." 236 P. at 773.

The Colorado Supreme Court reached a contrary result in Pulaski Irrigation Ditch Co. v. City of Trinidad, 70 Colo. 565, 203 P. 681 (1922). In early times the city of Trinidad had discharged its sewage effluent directly into the Las Animas river. Eventually, the district court enjoined this practice, and the city then discharged the sewage into settling pits constructed on land adjoining the river. From these settling pits, a considerable part of the water content of the sewage then seeped or ran back into the river and became a part of the supply for appropriations below the point of discharge. Several years later, the city decided to build two water purification plants and, upon their completion, proposed to sell the effluent to its co-defendant, Model Land and Irrigation Company. The downstream appropriators sought to enjoin this proposed sale. In reversing the trial court's judgment in favor of the city, the Colorado Supreme Court rejected the city's contention that the sewage effluent was developed water, and held that the city could not sell the treated effluent, but rather must return it to the stream.

In its discussion, the Pulaski court emphasized that it was dealing with a fact situation in which the city was voluntarily purifying its effluent, thereby producing effluent which could be returned to the river. The court indicated that a different method of effluent treatment might well result in a total consumption of the effluent (e.g., evaporation), and suggested that the court's "return to the river" doctrine might not then be applicable. However, nothing in the opinion indicates a retreat from the court's position that in no event could the purified effluent be sold.

A decision of the Supreme Court of New Mexico further demonstrates the difficulties that the courts have had in resolving questions concerning water rights and the disposition of municipal sewage effluent. In Reynolds v. City of Roswell, 99 N.M. 84, 654 P.2d 537 (1982), the city had applied for a permit to change the place of use of groundwater, which is subject to appropriation under New Mexico law. Historically, the city had sold part of its effluent to a golf club, had sold another part to some farmers, and had discharged the remainder into the Hondo river. Upon the granting of the permit for a change of the place of use, the state engineer attached conditions which basically required the city to continue to dispose of its sewage effluent as it had in the past. Although the opinion is to some extent unclear, it appears that the city, at some future time, intended to reuse its effluent within its own municipal water system. It therefore objected to the conditions imposed by the state engineer.

The Reynolds decision is in the first instance unusual in that it presents a situation in which the city had historically sold a portion of its effluent, and that historical practice was not questioned. The issue presented concerned the city's future intention to discontinue disposing of its effluent by discharge or otherwise than by its own consumptive use and reuse. The New Mexico court first found that the sewage effluent came within a statutory definition of "artificial surface waters", and thus were "primarily private and subject to beneficial use by the owner or developer thereof." As a consequence, the conditions imposed by the state engineer were held to be improper. However, not being entirely satisfied with the statutory basis of its opinion, the court further noted that, based upon cases from other jurisdictions, its conclusion was supported by strong policy considerations. The "strong policy considerations" which the New Mexico court embraced were those stated by the Wyoming Supreme Court in Wyoming Hereford Ranch v. Hammond Packing Company, previously discussed in this dissent. In this connection, I note that water law commentators have recognized a tendency of the courts to sometimes be more lenient in applying beneficial use concepts to municipalities than they might otherwise be in considering the rights of private individuals. See, 12 Land and Water Law Review, 431, 438 (1977).

In my opinion, the Wyoming court's decision is sound and in accord with the policy considerations reflected in Arizona's legislative enactments. I would uphold the validity of the contracts for the sale of the surface water component of the effluent, not on the basis that the water content of the effluent is not subject to the surface water code, but rather on the basis that the right to the full beneficial use of appropriated water by a municipality includes the right to dispose of sewage effluent in any lawful manner, including by sale. Such a holding would allow municipalities to maximize their use of appropriated water and to dispose of sewage effluent in an economically feasible manner. Likewise, such a holding would be consistent with our legislature's expressed preference for the use of effluent as opposed to new groundwater withdrawals, and would encourage the best utilization of Arizona's dwindling groundwater supply. Finally, a degree of flexibility would be provided that is essential to a city's ability to meet federal and state environmental and health standards.

Although I base my conclusions on an entirely different legal basis, I therefore agree with the majority to the extent that the majority holds that the Cities may lawfully contract for the sale of sewage effluent without complying with statutory provisions regulating the change of use or place of use of surface or groundwater rights. My holding, however, would not be as broad as that embodied in either the majority's or the trial court's decision.

First, I have noted that in my opinion the water component of sewage effluent retains its identity as surface water, groundwater or a mixture of both, in accordance with the initial characterization of its components. Second, although I would hold that the right to dispose of sewage effluent by sale is included within the concept of full beneficial use, I would also hold that this right or a portion thereof may be lost if the city fails to make full use of the appropriated water for five successive years as provided by A.R.S. §§ 45-141(C) and 45-188. In my opinion these statutory provisions have potential application to the rights involved in this litigation. The burden is on the downstream appropriators to show that this loss has occurred, and any conclusion in that regard would have to await further development of the facts in the trial court.

The majority disagrees, and holds that the Cities' historical practice of discharging effluent into the Salt River Channel where it became available to downstream appropriators could not constitute an abandonment under A.R.S. §§ 45-141(A) and 45-188 of any portion of the Cities' prior appropriative rights because

"These statutes apply when an appropriator fails to use the water. That is not the case here. The Cities did use the water which was appropriated."

This conclusion by the majority fails to recognize the distinction between uses of water which are almost totally consumptive of the water used, and those uses which result in a lesser consumption. By way of background, in my analysis of this issue I have assumed that the irrigation rights from which the Cities' rights have evolved were almost totally consumptive in nature. Thus, when the change was made from an irrigation use to a municipal use, the Cities would have been entitled to continue a use which would likewise have been almost totally consumptive in nature. However, the Cities did not do so. Rather their initial consumptive use was considerably less than total. They returned to the river a substantial part of the waters initially diverted. Under well established western water law principles, this lack of total consumptive use could subject the Cities to a loss of the right to later resume a total consumptive use. This loss would occur if the lack of total consumptive use was continued for the statutory abandonment period. As stated by a noted water authority:

"Where, after use by a prior appropriator, water is discharged into a stream for the purpose of drainage or as a convenient method of disposing of it, . . . it works an abandonment of such water, and the water thus discharged becomes a part of the natural stream, and is subject to reappropriation and to the same rights as the water naturally flowing therein, and can not afterward be taken out by the original appropriator to the injury of other rights which have attached and vested to it. The authorities hold that in all cases where water formerly appropriated, or which has been under the control of any person, is permitted to flow down the natural channel of a stream below the point of diversion of the appropriator, . . . it works an immediate and express abandonment of all the water permitted so to escape; and subsequent appropriators can not be deprived of their rights in and to this water appropriated by them by an attempt upon the part of the first appropriator to shut off their supply by enlarging the amount diverted by him, or by any changes in the place or manner of use, which would injure the rights of such subsequent appropriators to the continuous flow of the stream as it was at the time that they made their appropriations."

Kinney, Irrigation and Water Rights, Vol. 2, Second Edition, § 1114.

By statute, abandonment does not occur in Arizona unless the failure to use continues for five years. As applied to this case, if abandonment has occurred, the Cities would continue to have the right to withdraw and make normal use of their full appropriation, but would not be entitled to increase their consumptive use by discontinuing the discharge of the abandoned portion of their appropriative rights into the Salt River Channel.

For the foregoing reasons, I do not accept the majority's conclusion that Arizona's abandonment statutes have no potential application to the Cities' plans to change their method of disposition of effluent and to discontinue the discharge of the effluent into the channel of the Salt River.

Likewise, my conclusions on the abandonment issue would necessarily require a rejection of the argument that through the application of irrigation waste water principles the Cities could at any time discontinue the discharge of effluent into the river, thereby defeating the rights that downstream appropriators might have previously acquired in water abandoned by the Cities pursuant to A.R.S. §§ 45-141(C) and 45-188. See City of Boulder v. Boulder and Left Hand Ditch Company, 192 Colo. 219, 557 P.2d 1182 (1976); Metropolitan Denver Sewage Disposal District No. 1 v. Farmers Reservoir and Irrigation Company, 179 Colo. 36, 499 P.2d 1190 (1972).

In Lambeye v. Garcia, 18 Ariz. 178, 157 P. 977 (1916) and Wedgworth v. Wedgworth, 20 Ariz. 518, 181 P. 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 use waste waters diverted from a natural channel. Instead, the waste water had been captured and used by a subsequent user before the waste water 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 such waste water may not insist that the initial appropriator continue to use his irrigation water and, accordingly, that the supply of waste water could be discontinued or withdrawn at any time.

Shortly after our holdings in Lambeye and Wedgworth, the Arizona statute governing appropriable waters was amended so as to reflect that even though "waste or surplus waters" were not subject to appropriation prior to reaching a stream or natural channel, such waters would become subject to appropriation once they reached a stream or other natural channel. See Laws 1921, Ch. 64, § 1 (A.R.S. § 45-141(A)). In my opinion, this amendment effectively limited our holdings in Lambeye and Wedgworth to situations involving an attempted appropriation of waste waters before their return to a natural channel.

I find nothing in Wedgworth and Lambeye, or other Arizona law to support the conclusion that where the holder of an established water right has abandoned part of his right to make a totally consumptive use of his appropriated water, he may thereafter increase his consumptive use to the detriment of downstream users who may have acquired appropriative rights in the unconsumed water.

The majority recognizes that the 1921 amendment to A.R.S. § 45-141(A) makes waste or surplus waters appropriable by downstream users when these waters are flowing in a natural channel. However, in the majority's view, the downstream appropriator would gain rights only against other downstream users, and not against the Cities. In other words, under the majority's view the downstream users could not require the Cities to continue the discharge of its unconsumed water into the river. I agree that initially no rights against the Cities could be obtained by the downstream users of the discharged waters. However, it appears clear to me that if the discharge by the Cities were to continue for the statutory period so as to constitute an abandonment by the Cities of their right to increase the consumptive use of their appropriated water, then the appropriative rights obtained pursuant to A.R.S. § 45-141(A) by a downstream appropriator would be enforceable against the Cities as well as other subsequent downstream users.

CONCLUSION

For the reasons stated in this dissent, I would reverse the judgment entered by the trial court and remand for further consideration of the surface water abandonment issues. In view of my conclusion that the contracts for the sale of the sewage effluent do not per se violate Arizona groundwater or surface water law, injunctive relief would not be appropriate except to the extent that the A Tumbling T parties could show that they have obtained appropriative rights based on the historical discharge of the effluent into the river, and that the performance of the contracts would lessen that historical discharge so as to leave them with insufficient water to satisfy those rights.