Environmental groups sue Hobbs, state water agency over development near San Pedro River

Environmental groups on Thursday sued Gov. Katie Hobbs and the state water resources director, demanding that they review and revoke the water certificate of a proposed commercial and residential project in Sierra Vista that the groups say imperils the San Pedro River.

The project of nearly 7,000 homes is stalled after the developer, Castle and Cook Inc., pulled out late last year. If it were built, the Center for Biological Diversity and San Pedro 100 argued in the lawsuit, it would diminish the San Pedro River's flow, hurting critical habitat for wildlife.

The groups sued Hobbs and Arizona Department of Water Resources Director Thomas Buschatzke for failing to review the 100-year designation of adequate water supply given to Pueblo del Sol Water Company for the project known as Tribute. That certificate of adequacy was issued over 10 years ago but was contested from the start .

Congress designated a section of the San Pedro River as a federal conservation area 36 years ago. The riparian area is a refuge for biodiversity in the arid Southwest and draws national interest to protect this remnant of river life. The designation gave the Bureau of Land Management power to claim water rights to protect the river and its biodiversity.

Conservation groups said regulators knew once the river's water rights were quantified, it would impact certificates of water adequacy for new development. The water department issued a water certificate anyway and said it could revoke the permission later if Pueblo del Sol's pumping violated water rights.

Both the development company, Castle and Cooke, and Pueblo del Sol are owned by billionaire David H. Murdock, who has other two housing developments in Sierra Vista.

"(Pueblo del Sol wells) are already stealing water that belongs to the San Pedro River National Conservation Area," said Robin Silver, co-founder of the Center for Biological Diversity, who is leading the lawsuit.

Water law maintains a "first in time, first in right" doctrine, which means that water users who came after the conservation area was created have less priority.

A judge last year quantified how much water the conservation area was entitled to, giving conservation groups and federal agencies a tool to demand reduced groundwater pumping from newer users.

Tribute does not have a century-worth of water if the state accounts for the river's rights, the lawsuit asserts.

"ADWR has the responsibility to review those certificates when the conditions change," Silver said. That change happened a year ago with the water rights quantification, and he wants to force the water department and the governor to act.

Less than two months ago, the groups filed a similar lawsuit against Hobbs and Buschatzke for failing to consider an Active Management Area, stringent groundwater regulation , in the Upper San Pedro River basin.

Hobbs' office said they are closely reviewing the filing and actively monitoring the San Pedro River basin.

The state water agency said it would not comment on pending litigation.

Imperiled waterway: Environmental groups seek groundwater protections around Arizona's San Pedro River

An abandoned project

The ambitious development project in Sierra Vista is already facing an uncertain future.

The city approved it in 2006, but after nearly 20 years of planning, Castle and Cooke never broke ground. Last year, the developer announced it was pulling out of the project permanently.

The announcement came not long after a judge quantified the conservation area's water rights, but the company said its decision was financial and that it would focus its investment on California and Hawaii projects.

Tribute's development plan, east of State Route 92 and about 5 miles from the river included a maximum of 6,959 single- and multi-family units, plus offices, shopping stores, and community parks. The city also identified potential land plots for a fire and police station, and a branch library, according to a 2014 development plan. None of these improvements have been built yet.

There are already potential buyers for the project, City Manager Charles Potucek told The Republic.

The developer said it would stop its operations in Sierra Vista and at some point "divest all Arizona assets," according to a city news release . Last month, the city acquired the Pueblo Del Sol golf course from the developer in exchange for forgiving a $609,711 debt.

Whoever buys Tribute could inherit an "immensely valuable" certificate of adequate water supply for the project, said Silver.

The project could also face legal challenges—and litigation costs—to prove that pumping would not interfere with the river water rights and that there is 100 years' worth of water.

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Many users and a dragging legal case

The quantified water rights of the conservation area will definitely affect the housing market, said Rhett Larson, a professor of water law and senior research fellow with the Kyl Center for Water Policy at Arizona State University.

The court order that quantified the conservation area's water rights was not challenged by the January 2024 deadline. BLM filed for a decree, which is the last step to assert the water right.

But it could still be hard to enforce. Other users' water rights have not been quantified or given a priority, said Larson. The San Pedro River adjudication is a small piece in a much larger legal case that seeks to adjudicate water rights to the Gila River and its tributaries.

While many water users began pumping groundwater after the 1988 conservation area was declared, there are others that have higher seniority. The U.S. Army's Fort Huachuca, which has been the target of Center for Biological Diversity lawsuits for years, was built in 1877 during the campaign against Chiricahua Apaches.

Silver recognized the Fort has seniority over the conservation area's water rights, but he added they also have to abide by the Endangered Species Act. "So even though they have senior rights in Fort Huachuca, they can't continue to suck the river dry," he said.

But there is a long list of water users, in the Upper San Pedro River basin and other Arizona rivers, whose water rights have not been quantified or given a priority. This could create more legal issues down the road.

"This case is a really good example of why the state of Arizona needs to invest in expediting and finishing the general stream adjudications," Larson said.

"Because as long as they go on, it's difficult for us to know who owns which water rights, and it's difficult for us to protect our water supplies because there is so much uncertainty."

Clara Migoya covers agriculture and water issues for The Arizona Republic and azcentral. Send tips or questions to clara.migoya@arizonarepublic.com .

This article originally appeared on Arizona Republic: Environmental groups sue Hobbs, state water agency over development near San Pedro River