Who Really Owns The Water?

Now that water has been found in Pine, the battle over who can use it begins


Over the past two years, the faucets of the Rimside Grill have run dry.

There is no water for toilets, coffee or cooking.


There's more to the story:
Story 1: Water found in Pine. Friday, Oct. 6
Story 2: Who really owns the water? Today
Story 3: What happens now? Friday, Oct. 20

And when it happens, everything else dries up -- business stops and the customers drift away.

"Nothing works without water," said restaurant owner Tamara Logsdon.

Pipe breakage in Pine's water system leaves Logsdon and other community members high and dry.

And since most of Pine's water is trucked in, Logsdon pays nearly $600 a month for water that isn't always flowing.

But that won't happen in the future -- at least not if local resident Ray Pugel, who tapped into a prodigious water source in early September -- the Milk Ranch well -- can find a way to share it with Pine.

"What we have been pushing for is the community to own the water," Pugel said.

Hydrogeologist Mike Ploughe found that the 1,045-foot well could produce more than 300 gallons per minute with a sustained pump rate of 120 to 180 gallons per minute.

That could solve some of Pine's water shortages -- an area currently under water restrictions and a connection moratorium imposed by the Arizona Corporation Commission (ACC).

In a perfect world, the Milk Ranch well could end that moratorium.

But creating a water delivery system isn't easy, especially when a local utility holds a regulated monopoly on the service area.

The Pine Water Co., owned by Robert Hardcastle and parent corporation Brooke Utilities, controls the water system with its CC&N.

The Certificate of Convenience and Necessity (CC&N) is a state-issued permit that defines the territory and terms under which a utility can operate. The ACC regulates the activity of for-profit utility companies by setting rates, issuing CC&Ns and imposing moratoria.

CC&Ns also prevent other entities from offering utility services in the same area -- a law which complicates Arizona's water code.

Technically, Pugel and Robert Randall own the water underneath their land and have authorization from the Arizona Department of Water Resources to drill. But since they're restricted by the Pine Water Co.'s service area and the moratorium, they can't supply water to their other properties or to other residents in the area.

"I got a letter from (Hardcastle) saying that he can't serve me," Pugel said. "He won't let me out of his CC&Ns, but he won't supply me water."

Pugel filed a complaint in July 2006 with the ACC to withdraw his land from Pine Water Co.'s service area.

Hardcastle responded with a motion that disputes Pugel's claim.

Hardcastle did not respond to specific questions from the Payson Roundup, but the company did release this statement:

"Brooke Utilities, Inc. is always interested in any excess water made available in Pine. We would be happy to enter negotiations with any developer or well owner that could provide excess water to the community of Pine. We have no information about specific wells and their ability to produce, it would be wrong of us to speculate."

But Pugel isn't the first person in Pine and Strawberry to tangle with Hardcastle over water ownership. Strawberry Hollow resident Loren Peterson spent $125,000 defending himself in court against Pine Water Co.

Peterson filed a claim similar to Pugel's with the ACC about five years ago.

He said Hardcastle refused to provide him with water -- because of a then-moratorium on connections. So, Peterson searched for his own water and founded the Strawberry Hollow Water Improvement District (SHWID).

To form a new district -- a taxing entity not under the jurisdiction of the ACC -- Peterson followed a two-step process.

In 2000, Strawberry Hollow was in the Pine-Strawberry Water Improvement District. In order to have access to water from other sources, area residents had to get out of that arrangement.

Then, the Gila County Board of Supervisors had to approve Peterson's request to form a new district.

But Hardcastle said Peterson formed the new district illegally and sued Peterson for it, claiming a loss of potential income generated by the 72-unit Strawberry Hollow subdivision.

After years of fighting, Pine Water Co. settled with Peterson for $6,914 in damages.

Meanwhile, Peterson went looking for more water.

"We started doing studies and found out that if we wanted to get more water, we'd have to drill a deep well in Pine," Peterson said.

To supplement Strawberry Hollow's current system -- which can pump up to 1,000 gallons a minute for two hours -- Peterson set out to secure a certified 100-year adequate water supply.

After drilling a difficult 1,320 feet below the surface, breaking through a deep clay layer called an aquitard, and investing $250,000, Peterson found water.

"We sealed off the upper aquifer because we didn't want to let that water run into the deep aquifers," he said.

Now, Pugel and Randall face the same legal challenges and a prevailing local attitude that water doesn't exist in Pine.

Milk Ranch well water comes from a regional aquifer that extends throughout Rim Country, Ploughe said.

Ploughe, a registered hydrogeologist, has studied the physical makeup of the area's geology for years. He found Peterson's water and the Milk Ranch well by studying aerial photos, topographical maps and geologic data.

"People don't want to see Pine grow," he said. "That's why they haven't found water and a private water company hasn't invested in infrastructure."

Based on a conservative estimate, Ploughe said the Milk Ranch well could serve 300 homes a day.

And that's why the Pine-Strawberry Water Improvement District is considering the Milk Ranch well as a possible long-term water solution.

Another option, chairman of the board's water development committee Wes Suhr said, is contracting with Hardcastle to drill a separate well, at a reported cost of $300,000 to the district. The exploration is expected on an area called the K2 site.

"The board is interested in finding new water as fast as possible and as cost-effectively as possible," Suhr said. "We're dealing with alternatives. The board is looking into the needs of the whole district and not just special interests."

PSWID will hold a meeting at 6:30 p.m. Oct. 19 in the Pine Cultural Hall.

For now, Pugel said he'll continue to pursue the Pine Water Co. and its CC&N while finding a taker for his water -- a solution that won't come too soon for Rimside owner, Logsdon.

"We are very excited he got to that water," she said. "It's very enlightening."

See related story:

Water found in Pine (Oct. 6)

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