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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
AMENDED
environment; budget reconciliation; 2021-2022
Purpose
Makes statutory and session law changes relating to the environment necessary to implement the FY 2022 state budget.
Background
The Arizona Constitution prohibits substantive law from being included in the general appropriations, capital outlay appropriations and supplemental appropriations bills. However, it is often necessary to make statutory and session law changes to effectuate the budget. Thus, separate bills called budget reconciliation bills (BRBs) are introduced to enact these provisions. Because BRBs contain substantive law changes, the Arizona Constitution provides that they become effective on the general effective date, unless an emergency clause is enacted.
S.B. 1822 contains the budget reconciliation provisions for changes relating to the environment.
Provisions
Drought Mitigation (Retroactive to July 1, 2021)
1. Establishes the Drought Mitigation Board (Board) to evaluate and approve funding requests for drought mitigation water supply and conservation projects, and consisting of the following members:
a) two members from a combination of Maricopa, Pinal and Pima counties, one of whom is appointed by the Governor and one of whom is appointed by the President of the Senate (President);
b) one member from Mohave, La Paz or Yuma county who is appointed by the Speaker of the House of Representatives (Speaker);
c) one member from Graham, Greenlee, Cochise or Santa Cruz county who is appointed by the Speaker;
d) one member from Yavapai or Gila county who is appointed by the President;
e) one member from Coconino, Navajo or Apache county who is appointed by the Governor;
f) the Director of the Arizona Department of Water Resources (ADWR) or the Director's designee;
g) the President, as a non-voting advisory member;
h) the Speaker, as a non-voting advisory member; and
i) the State Land Commissioner, as a non-voting advisory member.
2. Requires the appointed members of the Board to have a strong background in Arizona water issues and to serve five-year terms of offices beginning and ending on the third Monday in January.
3. Establishes the Drought Mitigation Revolving Fund (Revolving Fund), maintained in perpetuity and administered by Board, consisting of:
a) legislative appropriations;
b) federal monies received for drought mitigation purposes;
c) monies received as loan repayments, interest and penalties;
d) interest and other investment income; and
e) gifts, grants and donations received for drought mitigation from any public or private source.
4. Declares that the Legislature:
a) finds that many regions in Arizona lack access to sustainable water supplies to meet long-term water demands and need financial assistance to develop water supply and conservation projects; and
b) intends that the Revolving Fund be used to provide financial assistance for water supply and conservation projects.
5. Authorizes the use of monies in the Revolving Fund solely for the following purposes:
a) for ADWR to award grants to facilitate the forbearance of water deliveries that would avoid reductions in Arizona’s Colorado River supplies;
b) for the State Land Department to apply for grants to support the ability to make the best use of water resources associated with State Trust Land, in alignment with trust responsibilities, to maximize benefits for the beneficiaries and Arizona’s future;
c) for the Board to make low-cost, long-term loans for planning, designing, constructing or financing water supply development projects to import water supplies into Arizona, with priority given to applicants who demonstrate the largest statewide benefit; and
d) for the Board to pay Revolving Fund administration costs.
6. Directs the Board to evaluate and approve funding requests made on the Revolving Fund for drought mitigation projects that substantially improve sustainable water supplies to meet Arizona's long-term water demand.
7. Prohibits the use of Revolving Fund monies:
a) for financial assistance for the transfer of a mainstream Colorado River entitlement water or water right away from an area near the Colorado River; and
b) from being used to supplant or take the place of any existing forbearance contract for water storage in Lake Mead.
8. Directs the Board to:
a) adopt written policies, procedures and guidelines for standards of conduct, including a gift policy, for members, officers and employees of the Board;
b) keep and maintain a complete and accurate record of all Board proceedings;
c) operate on the state fiscal year;
d) cause an annual audit by October 31 of the Revolving Fund conducted by an independent certified public accountant;
e) immediately upon completion of the annual audit, file a certified copy with the Auditor General;
f) prescribe a simplified form and procedure to apply for and approve drought mitigation assistance;
g) establish criteria for awarding assistance, including requirements for local participation in project costs, if deemed advisable;
h) determine the other and priority of drought mitigation projects based on the merits of the application compared to the existing water supplies of the water provider;
i) review each application received based on its merits and inform the application of the Board’s determination within 90 days after receipt of a complete and correct application;
j) notify an applicant whose application is not approved and the state with reasons for the denial;
k) condition an application approval on assurances deemed necessary to ensure that the applicant will use the financial assistance according to the law and the terms of the application; and
l) use monies in the Revolving Fund to finance the project upon application approval.
9. Allows an entity in compliance with any applicable requirements to apply to the Board for and accept and incur indebtedness as a result of a loan or any other financial assistance from the Revolving Fund for conservation and water supply development purposes.
10. Requires the State Land Department, for the use of grant monies from the Revolving Fund, to obtain a hydrological study of groundwater availability of the Butler Valley Groundwater Basin before developing any infrastructure for the basin under a State Land Department grant.
11. Authorizes the Auditor General to make further audits and examinations as necessary of the Revolving Fund, in addition to the required annual audit, and to take appropriate audit or examination action.
12. Considers the required annual audit of the Revolving Fund sufficient if the Auditor General takes no further action within 30 days of the filing of the audit.
13. Directs the State Treasurer to:
a) on notice from the Board, invest and divest monies in the Revolving Fund
b) credit monies earned from investment to the Revolving Fund; and
c) on notice of the Board and the State Treasurer from the Director of ADWR or their designee, pay incurred expenses and credits earned investment monies to the Revolving Fund.
14. Directs the Board to elect a chairperson from among the appointed members and authorizes the chairperson to appoint subcommittees as necessary.
15. Requires prospective Board appointees to, before appointment, submit a full set of fingerprints to the appointing entity for the purpose of a state and federal criminal records check and authorizes the Department of Public Safety to exchange the fingerprint data with the Federal Bureau of Investigation.
16. Subjects the Board and any subcommittees to statutes governing conflicts of interest and Open Meeting Law except that:
a) the Board and any subcommittees are authorized to meet in executive session, in addition to current statutory authorizations for any public body to meet in executive session, to discuss potential water supply or conservation project opportunities and strategies that, if made public, could potentially harm the applicant’s, potential applicant’s or the state’s competitive position; and
b) activities and events held in public for the purpose of announcing water supply or conservation projects are not public meetings.
17. Declares a quorum, for purposes of an official meeting of the Board for conducting business, to consist of a majority of the voting members and must include the chairperson, and requires the affirmative vote of a majority of the members present at an official meeting in order for the Board to take official action.
18. Authorizes the Board to request assistance from representatives of state agencies, directs state agencies to cooperate with requests and make pertinent data available, and requires ADWR to provide clerical and administrative support and technical assistance to the Board.
19. Specifies that an entity that applies for and accepts a loan or other financial assistance for drought mitigation is not precluded from applying for and accepting any other statutorily authorized loans or financial assistance.
20. Allows loans made by the Board for drought mitigation projects to be secured by providing linked deposit guarantees through third-party lenders by depositing monies with the lender on conditional terms approved by the Board, at a rate of return approved by the Board and the State Treasurer, and by giving the lender recourse against past-due loan repayments.
21. Specifies that Board members serve without compensation but are eligible for reimbursement of expenses from the Revolving Fund through ADWR.
22. Specifies that monies in the Revolving Fund are continuously appropriated and exempt from lapsing.
23. Exempts grants made from the Revolving Fund from statutory competitive grant solicitation requirements.
24. Defines terms.
25. Terminates the Board on July 1, 2031, and repeals the Board, Revolving Fund and related statutes on January 1, 2032.
ADWR
26. Authorizes the Arizona Water Protection Fund Commission to grant up to $336,000 of unobligated monies in the Arizona Water Protection Fund in FY 2022 to ADWR to pay for AWDR’s FY 2022 administrative costs.
Water Supply Development Revolving Fund
27. Adds, to authorized uses of the Water Supply Development Revolving Fund, conducting water supply studies.
Arizona Navigable Stream Adjudication Commission (ANSAC)
28. Continues to include legal fees as an authorized use in FY 2022 of Arizona Water Banking Fund monies appropriated to ANSAC.
Water Quality Assurance Revolving Fund (WQARF)
29. Continues to cap the FY 2022 state General Fund (state GF) appropriation to WQARF at $15 million.
Arizona Department of Environmental Quality (ADEQ)
30. Authorizes ADEQ, in FY 2022, to use up to $6,531,000, from the Underground Storage Tank Revolving Fund for:
a) ADEQ administrative costs; and
b) remediating sewage discharge issues in Naco, Arizona and other Arizona border areas.
31. Directs the Director of ADEQ, for FY 2022, to charge emissions testing fees for tests conducted in area A that do not exceed the fees charged in FY 2021.
32. Exempts ADEQ from rulemaking requirements until July 1, 2022, to establish FY 2022 emissions testing fees.
Arizona State Land Department
33. Increases, from $500,000 to $5,000,000, the maximum amount of monies in the Due Diligence Fund that are exempt from lapsing before excess monies revert to the state GF.
Department of Forestry and Fire Management (DFFM)
34. Adds purchasing equipment to allowable uses for the FY 2020 appropriation to DFFM for distribution to the Mount Lemmon Fire District and extends, from December 31, 2021, to December 31, 2022, the date remaining unexpended and unencumbered monies from the appropriation revert to the state GF.
35. Directs the State Forester, subject to legislative appropriation, to process and pay claims to a fire district with a population of less than 5,000 persons for expenses incurred in responding to emergency medical service calls on federal lands as follows:
a) the fire district must submit an itemized claim for payment within 90 days after the emergency medical services response; and
b) the State Forester must complete the processing of the claim and pay the fire district within 30 days after receiving a complete and correct claim for payment.
36. Includes in the definition of expenses, for the purposes of payment of claims for emergency medical services on federal lands, personnel costs for personnel that directly respond to an emergency medical services call, fuel costs, costs for medical supplies and other related costs as determined by the State Forester, and specifies that the definition of expenses does not include regulated emergency medical services.
Arizona State Parks Board
37. Establishes the Arizona State Parks Store Fund, administered by the Arizona State Parks Board, consisting of monies deposited pursuant to a fee schedule for goods and services determined by the Arizona State Parks Board.
38. Subjects monies in the Arizona State Parks Store Fund to legislative appropriation and requires monies in the Arizona State Parks Store Fund to be used by the Arizona State Parks Board to operate and maintain gift shops.
39. Exempts monies in the Arizona State Parks Store Fund from lapsing and reverts monies in the fund in excess of $1,250,000 at the end of a fiscal year to the State Parks Revenue Fund.
Miscellaneous
40. Makes technical changes.
41. Contains a purpose statement.
42. Becomes effective on the general effective date, with retroactive provisions as noted.
Amendments Adopted by Committee of the Whole
1. Reverts the maximum allowable state GF liability incurred by the State Forester for wildland fire suppression and other unplanned all-risk emergency liabilities to the current statutory cap.
2. Removes the authorization for an entity receiving financial assistance from the Drought Mitigation Revolving Fund to additionally apply for grants, staff assistance or technical assistance from the fund for planning and designing a water supply development project.
3. Makes conforming changes.
Senate Action
APPROP 5/25/21 DP 6-4-1
Prepared by Senate Research
June 22, 2021
KN/gs