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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
Colorado River drought contingency amendments
Purpose
An emergency measure that makes various changes to the management of water supplies, eligibility for and exchange of long-term storage credits, and groundwater fees collected in certain localities. Establishes new funds and appropriates $5 million in FY 2019 for groundwater and irrigation efficiency projects and $30 million in FY 2020 for system conservation.
Background
Arizona Water Management
Arizona's water supplies consist of groundwater, reclaimed water (also known as effluent), and surface water, including Colorado River water and in‑state rivers. The Arizona Department of Water Resources (ADWR) administers the 1980 Groundwater Management Act (Code), which established a comprehensive management framework to address groundwater rights, groundwater overdraft and conservation. The Code: 1) created Active Management Areas (AMAs) in geographic areas where groundwater depletion was most severe; 2) established a goal of safe yield for certain AMAs; 3) required ADWR to develop a series of five sequential management plans for each AMA, beginning in 1980 and extending through 2025; 4) required new subdivisions to demonstrate that a 100-year assured water supply is available to support the development; and 5) outlined conservation requirements for various users.
Arizona Water Banking Authority (AWBA)
The AWBA stores unused Colorado River water in the ground to be used in times of shortage. Storing the water underground firms municipal and industrial water supplies, helps fulfill Arizona's water management objectives and provides an opportunity to store water for the settlement of water rights claims by Indian communities.
Water That Cannot Be Used Directly (WaterBUD)
Water that cannot be used directly is water the storer cannot reasonably put to a direct use, use without first storing the water in an aquifer, during the calendar year, which includes: 1) Central Arizona Project (CAP) water in excess of a municipality's withdrawn mined groundwater in the AMA during a calendar year; 2) excess deficit groundwater withdrawn in the AMA by a municipality with an assured water supply; 3) CAP water stored in an AMA in excess of withdrawn groundwater during the calendar year for a storer in an AMA that is not a municipality; 4) CAP water stored in an AMA by an agricultural improvement district for use of certain electrical generating facilities; 5) surface water made available by certain dams; 6) AWBA-acquired water delivered through the CAP; and 7) until 2025, stored effluent in certain situations (A.R.S. § 45-852.01).
Long-term Storage Credits
Current statute
directs the Director of ADWR to establish a long-term storage account for each
holder of long-term storage credits, divided according to where water is stored
for each AMA, irrigation non-expansion area, groundwater basin or groundwater
subbasin. Permitted stored water qualifies for a long-term storage credit of 95
percent of the recoverable amount if the water:
1) cannot be used directly; 2) was stored at a storage facility within an AMA that
either would not have been naturally recharged within that AMA or was effluent
stored at an underground storage facility designated as able to add value to a
national park, national monument or state park that could have been used or
disposed of by other means than discharge into the stream; and 3) was not
annually recovered (A.R.S.
§ 45-852.01).
Managed Recharge
A managed underground storage facility is a permitted underground storage facility that is designed and managed to utilize the natural channel of a stream to store water underground pursuant to an underground storage facility through artificial and controlled releases of water other than surface water naturally present in the stream (A.R.S. § 45-802.01).
ADWR must issue a permit for a person to operate an underground storage facility. Current statute allows a person to recover 50 percent of the recoverable amount of effluent stored in a calendar year at a managed underground storage facility that was not designated as a facility that could add value to a national park, national monument or state park. If the storer recovers less than 50 percent of recoverable effluent stored during the calendar year, the difference is credited to the storer's long-term storage account (A.R.S. § 45‑851.01)
Groundwater Withdrawal Fees
Current statute outlines groundwater withdrawal fees, which are charged by ADWR to the person withdrawing groundwater per acre-foot of withdrawn water. Fee amounts differ by AMA. Currently, the statutory maximum groundwater withdrawal fee in the Pinal AMA of $5 per acre‑foot of groundwater that is withdrawn and beneficially used is set by the Director of ADWR, of which not more than $2.50 per acre-foot per year is for Arizona water banking purposes, including replenishment of Gila River Indian Community water settlements (A.R.S. § 45-611).
Appropriations
S.B. 1227 contains an appropriation of $5 million from the state General Fund to the Temporary Groundwater and Irrigation Efficiency Projects Fund in FY 2019 and an appropriation of $30 million from the state General Fund to the Arizona System Conservation Fund in FY 2020.
Provisions
System Conservation Funding
1. Establishes the Arizona System Conservation Fund (System Conservation Fund) consisting of legislative appropriations, grants and public and private contributions. The System Conservation Fund is administered by the Director of ADWR.
2. Appropriates $30 million from the state General Fund in FY 2020 to the System Conservation Fund and exempts the appropriation from lapsing.
3. Allows the Director of ADWR to expend monies from the System Conservation Fund to contract with Colorado River water users in Arizona who are entitled to Colorado River water under Arizona v. California to forgo water deliveries or diversions for the purpose of creating system conservation. Exempts contracts from the Arizona Procurement Code.
4. Requires system conservation created through the use of the System Conservation Fund to provide for Colorado River water to be conserved in Lake Mead through a verified reduction in existing consumptive use in order to decrease the likelihood of lake elevations dropping to levels that could result in reductions to Arizona's Colorado River allocation. Requires system conservation to be created for the benefit of the Colorado River system and not for the benefit of any individual Colorado River water user.
5. Requires the Director of ADWR to submit an annual report on July 1, beginning in 2021, to the President of the Senate and the Speaker of the House of Representatives describing expenditures made from the System Conservation Fund during the previous fiscal year and the volume of water conserved in Lake Mead.
6. Directs the State Treasurer to invest and divest monies in the System Conservation Fund on notice from the Director of ADWR and credits monies earned from investment to the System Conservation Fund.
7. Specifies that monies in the System Conservation Fund are continuously appropriated and exempt from lapsing.
8. Repeals the System Conservation Fund on April 1, 2027.
Groundwater and Irrigation Efficiency Project Funding
9. Establishes the Temporary Groundwater and Irrigation Efficiency Projects Fund (Efficiency Projects Fund) consisting of legislative appropriations, groundwater withdrawal fees collected in the Pinal AMA, grants from federal agencies, and monies deposited by irrigation districts in the Pinal AMA and the Harquahala Irrigation Non-expansion Area. The Efficiency Projects Fund is administered by the Director of ADWR.
10. Appropriates $5 million from the state General Fund in FY 2019 to the Efficiency Projects Fund.
11. Designates Efficiency Projects Fund monies for projects for the construction and rehabilitation of wells and related infrastructure for the withdrawal and efficient delivery of groundwater by irrigation districts in the Pinal Active Management Area and the Harquahala Irrigation Non‑expansion Area.
12. Allows the Director of ADWR to grant monies from the Efficiency Projects Fund to irrigation districts in the Pinal AMA and the Harquahala Irrigation District for groundwater and irrigation efficiency projects and allows the Director of ADWR to give preference to wells and related infrastructure used to recover stored water when granting monies.
13. Exempts groundwater and irrigation efficiency project grants made to the Pinal AMA and the Harquahala Irrigation District from the Arizona Procurement Code and statute governing the solicitation and award of grants.
14. Replaces, for calendar years 2020 through 2026, the portion of groundwater withdrawal fee collected in the Pinal AMA for Arizona water banking purposes with a fee of not more than $2.50 per acre-foot per year for groundwater and irrigation efficiency projects deposited into the Efficiency Projects Fund.
15. Limits the use of deposited groundwater withdrawal fee monies collected in the Pinal AMA for groundwater and irrigation efficiency projects to constructing and rehabilitating wells and related infrastructure by irrigation districts in the Pinal AMA.
16. Allows the Director of ADWR to accept and deposit monies, grants, gifts, contributions and devises to assist in carrying out groundwater and irrigation projects in the Efficiency Projects Fund and prohibits monies from reverting to the state General Fund at the end of the fiscal year.
17. Requires the Director of ADWR to submit an annual report before December 31 to the Speaker of the House of Representatives and the President of the Senate describing Efficiency Projects Fund activities of ADWR for the preceding fiscal year and accounting for Efficiency Projects Fund expenditures used to finance construction and rehabilitation of wells and related infrastructure by irrigation districts in the Pinal AMA and the Harquahala Irrigation Non‑expansion Area.
18. Directs the State Treasurer to invest and divest monies in the Efficiency Projects Fund on notice from the Director of ADWR and credits monies earned from investment to the Efficiency Projects Fund.
19. Requires Efficiency Project Fund monies to be held in trust and prohibits legislative appropriation or transfer of monies to meet obligations of the state General Fund. Specifies monies in the Efficiency Projects Fund through June 30, 2027, are exempt from lapsing.
20. Requires distribution of monies remaining in the Efficiency Projects Fund on June 30, 2027, to the Efficiency Projects Fund contributors by December 31, 2027, proportionate to the monies deposited by each contributor. Requires the remaining portion of monies deposited from groundwater withdrawal fees in the Pinal AMA to be deposited into the Arizona Water Banking Fund and used for water banking purposes in the Pinal AMA.
21. Repeals the Efficiency Projects Fund on April 1, 2028.
Effluent
22. Allows a storer of effluent to recover 95 percent of the recoverable amount of effluent stored for a calendar year in an existing effluent managed underground storage facility that has not been designated as a facility that could add value to a national park, national monument or state park. Specifies that if a storer recovers less than 95 percent of the recoverable amount, the difference is credited to the storer's long-term storage account to the extent the stored water is eligible for credit.
23. Allows long-term storage credits accrued at an existing effluent managed underground storage facility after the enactment of this legislation to demonstrate an assured water supply or an adequate water supply.
24. Defines an existing effluent managed underground storage facility as a managed underground storage facility that meets one of the following conditions:
a) the facility operates on a storage facility permit for effluent storage issued before January 1, 2019;
b) the facility operates on a renewed or modified storage facility permit issued after January 1, 2019 if the original storage facility permit authorizing effluent storage was issued before January 1, 2019;
c) the facility operates on a storage facility permit issued after January 1, 2019, at a location permitted before January 1, 2019, to store effluent; or
d) the facility operates on a storage facility permit authorizing effluent storage issued after January 1, 2019, and the application for the permit was on file with the Director of ADWR before January 1, 2019.
Water that Cannot Be Used Directly
25. Allows permitted water stored at a storage facility to be credited to a long-term storage account if the Director of ADWR determines the water was stored in a groundwater savings facility and the storage provides a water management benefit to the AMA where the water was stored.
26. Repeals the sunset date of 2025 for storage of the following to qualify as water that cannot be used directly:
a) effluent;
b) water from outside the AMA is located that otherwise would not have reached the AMA where the storage facility is located without the efforts of the storer;
c) water from outside the groundwater basin that would not have reached the groundwater basin where the storage facility is located without the efforts of the storer; and
d) water that is delivered through the Central Arizona Project that is acquired by the AWBA.
Exchange of AWBA Credits
27. As session law, allows the AWBA, on or before December 31, 2019, to enter into agreements to exchange long-term storage credits accrued or purchased in one AMA with groundwater withdrawal fee monies collected in Tucson, Phoenix or Pinal AMAs for long-term storage credits held by a person in another AMA if the Director of ADWR determines the exchange:
a) is beneficial to water management in Arizona; and
b) will not substantially impair the AWBA's ability to meet the Arizona's Indian firming obligations.
28. Allows the AWBA to distribute or extinguish long-term storage credits obtained by exchange for the benefit of any AMA, rather than only for the benefit of the AMA where the groundwater withdrawal fee monies were collected.
29. Exempts an exchange of long-term storage credits from any ADWR fee for assignment of long‑term storage credits.
30. Prohibits the term of any AWBA credit exchange agreement from extending beyond December 31, 2026.
31. Repeals the authority for the AWBA to exchange credits on January 1, 2031.
Miscellaneous
32. Contains a legislative intent clause.
33. Contains a severability clause.
34. Makes technical and conforming changes.
35. Becomes effective on signature of the Governor, if the emergency clause is enacted.
Prepared by Senate Research
January 29, 2019
KN/gs