Sec 37-321.01. Rights to water used on state land; definition

A. A permit or certificate for the right to use water on state land for stock watering or stockpond purposes, or for domestic use on a ranch or farm, shall be issued in the name of the state of Arizona except as follows:

1. If the place of use is located on state land, but the point of diversion is located on patented land, the certificate or permit shall be issued to the owner of the patented land.

2. If the place of use is located on state land, but the point of diversion is located on land owned by the United States, the permit or certificate shall be issued to the lessee of the state land.

3. If the water right was perfected under the law applicable at the time that the right was initiated by the lessee or its predecessors in interest for use on land that was owned by the United States before that land was designated for transfer to the state of Arizona, the certificate or permit shall be issued to the lessee of the state land.

B. The commissioner and the person or persons asserting that a permit or certificate should be issued as prescribed by this section may stipulate as to the ownership of a water right. The stipulation or agreement shall be accepted by the department of water resources.

C. An application for a certificate to appropriate water for use on state land as provided in subsection A of this section shall not be approved nor shall a permit or certificate be issued pursuant to this section by the director of the department of water resources, until the commissioner has been given the opportunity to review and object to the permit or certificate. Section 45-164, subsection C applies to any objections made pursuant to this subsection.

D. No person shall have any legal interest in or the right to lease state land based solely upon ownership of a water right acquired or confirmed under this section or section 45-257, subsection D.

E. No water right for stock watering or stockpond purposes, or for domestic uses on a ranch or farm that is acquired by a lessee pursuant to subsection A, paragraph 3 of this section, may be severed from its place of use on state land and transferred for use on other land without prior written consent of the commissioner. The commissioner may withhold consent if the commissioner finds that the use of state land for grazing purposes is dependent upon the water right that is proposed to be transferred. A lessee's successor in interest or the state shall pay compensation to a lessee of state land who is entitled to a domestic, stock watering or stockpond water right pursuant to subsection A, paragraph 3 of this section, if the lessee is denied reasonable use of the water right because of a refusal by the commissioner to consent to the severance and transfer of the right from its place of use on state land. Compensation shall be determined by appraisal and may be reviewed by the state board of appeals by the procedure for appraising improvements on state land. On payment of the compensation, the department of water resources shall reissue the water right in the name of the person or entity making the payment.

F. For purposes of this section, "certificate" includes certificates issued pursuant to title 45, chapter 1, article 5 or article 10.