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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
ENACTED
AMENDED
FACT SHEET FOR S.B. 1611/H.B. 2298
physical availability exemption credit; groundwater
(NOW: groundwater savings credit; ADWR)
Purpose
Allows a person that owns land within the Phoenix or Pinal active management areas (AMAs) that may be legally irrigated with groundwater pursuant to an irrigation grandfathered right (IGFR) to apply to the Director of the Arizona Department of Water Resources (ADWR) to permanently relinquish all of the IGFR in exchange for groundwater savings credits.
Background
A person who proposes to offer subdivided lands for sale or lease in an AMA must apply for and obtain a certificate from the Director of ADWR before presenting the plat for approval to the city, town or county in which the land is located and before filing with the State Real Estate Commissioner a notice of intention to offer such land for sale or lease. An assured water supply means that: 1) sufficient groundwater, surface water or effluent of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least 100 years; 2) the projected groundwater use is consistent with the management plan and achievement of the management goal for the AMA; and 3) the financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed use, including a delivery system and any storage facilities or treatment works (A.R.S. § 45-576).
In an AMA, a person who owns land which was legally irrigated in whole or in part with groundwater at any time during the five years preceding the date of the notice of the initiation of designation procedures or the call for the election for subsequent AMA, which is capable of being irrigated and which has not been retired from irrigation for a non-irrigation use has the right to use groundwater for the irrigation of such land (A.R.S. § 45-465).
For each AMA in which member lands or member service areas for a multi-county water conservation district are or may be located, the multi-county water conservation district must replenish groundwater in an amount equal to the groundwater replenishment obligation for that AMA. A parcel of member land that is included in the service area of a municipal provider that is a member service area and that has been designated as having an assured water supply has no further parcel replenishment obligation. Additionally, if a parcel of member land is included in the service area of a municipal provider that is not a member service area but has been designated as having an assured water supply, the parcel of member land has no parcel replenishment obligation and the multi-county water conservation district has no groundwater replenishment obligation attributable to that parcel of member land for as long as the designation remains in effect (A.R.S. § 48-3771).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Groundwater Savings Program
1. Allows a person that owns land within the Phoenix or Pinal AMAs that may be legally irrigated with groundwater pursuant to an IGFR to apply to the Director of ADWR to permanently relinquish all of the IGFR in exchange for groundwater savings credits.
2. Requires the Director of ADWR to approve the application if the following conditions apply:
a) the person's use of the IGFR complies with outlined requirements and the applicable management plan;
b) for each IGFR that is relinquished, the Director of ADWR determines that the land to which the IGFR is appurtenant has been legally irrigated with groundwater in at least three of the preceding five years;
c) the person has filed all statutorily required reports relating to groundwater pumping, transportation and use for the last five years;
d) the person does not maintain a negative balance in the person's flexibility account; and
e) ADWR has not issued a certificate of assured water supply for the acres associated with the relinquishment.
3. Requires the Director of ADWR to quantify groundwater savings credits in acre-feet by multiplying the acres associated with the relinquishment by the following conservation multiplier:
a) in the Phoenix AMA, 150; and
b) in the Pinal AMA, 100.
4. Prohibits a person from receiving groundwater savings credits for a volume of water that exceeds 60 times the mean amount of groundwater used annually pursuant to the IGFR in the three years with the highest use during the five years preceding an application to permanently relinquish the IGFR.
5. Requires the mean amount of groundwater used annually, if a person applies to relinquish an IGFR after conveyance of an IGFR, to be determined using a proportionate share of the total amounts of groundwater used annually pursuant to any IGFR appurtenant to the land included in the IGFR that the person has applied to relinquish in the years used to satisfy the outlined requirements.
6. Requires the Director of ADWR to identify the following when issuing groundwater savings credits:
a) the amount of calculated groundwater savings credits;
b) the number and location of the acres associated with the relinquishment;
c) the wells that have been used to serve land to which the IGFR is appurtenant; and
d) the owner of the acres associated with the relinquishment at the time of the relinquishment that holds the groundwater savings credits.
7. Requires the Director of ADWR to determine whether the outlined criteria relating to the applicants demonstration that groundwater or stored water recovered outside of the area of impact of storage can be withdrawn to serve the proposed use for 100 years without exceeding the depth of the aquifer or whether the applicable depth-to-static water level limit of the AMA would be satisfied.
8. Requires the outlined determination to be applied to an assured water supply application that is submitted to ADWR within two years after the date the groundwater savings credit is issued and to remain valid until the Director of ADWR makes a final decision on the assured water supply application.
a) the acres associated with the relinquishment and the location of the proposed use associated with the groundwater savings credits are or will be within the service area of a municipal provider that is designated as having an assured water supply or that has applied for a designation of assured water supply;
b) the applicant proposes to withdraw groundwater or stored water recovered outside of the area of impact of storage associated with the groundwater savings credits from one or more of the following locations:
i. any well that was used to serve land to which the IGFR is appurtenant;
ii. any well that is located within one mile of any well that was used to serve land to which the IGFR is appurtenant;
iii. any well that is located on the acres associated with the relinquishment; or
iv. any well that is located within one mile of the acres associated with the relinquishment;
c) the applicant demonstrates that groundwater or stored water recovered outside the area of impact of storage can be withdrawn to serve the proposed use for 100 years without exceeding the depth of the aquifer or the applicable depth-to-static water level limit of the AMA, whichever is less; and
d) the applicant submits evidence to ADWR that the water used pursuant to the groundwater savings program will not be used on any of the following:
i. turf that is not located in a recreational use area or other space that is regularly used for stormwater management or for civic, community or other recreational purposes, including playgrounds, sports fields, cemeteries or schoolyards;
ii. water parks; or
iii. decorative water features, including lakes, ponds or lagoons.
10. Prohibits the outlined authorization for an applicant to rely on the Director of ADWR's determination or most recent assured water supply projection from applying if more than 40 percent of the water used during the period used in the Director of ADWR's most recent assured water supply projection by land to which the IGFR is appurtenant was in lieu water.
11. Requires the volume of groundwater or stored water recovered outside of the area of impact of storage associated with the amount of groundwater savings credits calculated for the purposes of an application of an assured water supply that proposes to rely on groundwater savings credits, to be exempt from the requirement to demonstrate that the groundwater or stored water recovered outside of the area of impact of storage is physically available if the following apply;
a) the proposed use associated with the groundwater savings credits is on the acres associated with the relinquishment or on land that is located within one mile of the exterior boundary of the acres associated with the relinquishment;
b) the applicant proposes to withdraw groundwater or stored water recovered outside the area of impact of storage associated with the groundwater savings credits from one or more of the following locations;
i. any well that was used to serve land to which the IGFR is appurtenant;
ii. any well that is located within one mile of any well that was used to serve land to which the IGFR is appurtenant;
iii. any well that is located on the acres associated with the relinquishment; or
iv. any well that is located within one mile of the acres associated with the relinquishment;
c) the applicant demonstrates that groundwater or stored water recovered outside of the area of impact of storage can be withdrawn to serve the proposed use for 100 years without exceeding the depth of the aquifer or the applicable depth-to-static water level limit of the AMA, whichever is less; and
d) the applicant submits evidence to ADWR that the water used pursuant to the groundwater savings program will not be used on any of the following:
i. turf that is not located in a recreational use area or other space that is regularly used for stormwater management or for civic, community or other recreational purposes, including playgrounds, sports fields, cemeteries or schoolyards;
ii. water parks; or
iii. decorative water features, including lakes, ponds or lagoons.
12. Stipulates for the purposes of the outlined demonstrations:
a) that the Director of ADWR may not consider other withdrawals that exceed the depth of the aquifer or the applicable depth-to-static water level during the 100-year period;
b) for withdrawals located within one mile of any well that was used to serve land to which the outlined IGFR is appurtenant, the applicant may rely on the Director of ADWR's determination, if applicable, or on the Director of ADWR's most recent assured water supply projection to satisfy the requirement; and
c) the applicant must update the Director of ADWR's most recent assured water supply projection only to make reasonable modifications to the locations or rates of the withdrawals to reflect the changes that result from the proposed use.
13. Determines that the outlined depth-to-static water level limits during the 100-year period are as follows:
a) in the Phoenix AMA, 1,000 feet below land surface; or
b) in the Pinal AMA, 1,100 feet below land surface.
14. Allows an applicant that applies for a certificate of assured water supply, by December 31, 2030, to rely on groundwater savings credits pledged to the certificate of assured water supply that is issued based on that application.
15. Prohibits an applicant from pledging groundwater savings credits to an application for a certificate of assured water supply that is submitted on January 1, 2031.
16. Requires the Director of ADWR, before the Director issues a groundwater savings credit, to:
a) notify the holder of the IGFR in writing of ADWR's preliminary recommendations regarding the outlined items that the Director of ADWR must identify; and
b) request written confirmation that the holder of the IGFR would like to proceed with relinquishment.
17. Requires the Director of ADWR, on receipt of confirmation that the applicant would like to relinquish the IGFR, to issue groundwater savings credits.
18. Allows a person that holds a groundwater savings credit to assign the person's credits to the subsequent owner of the acres associated with the relinquishment.
19. Allows a person that holds groundwater savings credits to pledge the credits to an assured water supply application that proposes to rely on credits.
20. Stipulates that after the Director of ADWR issues a certificate of assured water supply based on groundwater savings credits, the service area of a designated provider is extended to include the subdivision for which a certificate of assured water supply was issued.
21. Requires the remaining groundwater savings credits associated with the certificate of assured water supply, if a municipal provider that serves land associated with the relinquishment becomes a designated provider or if the service area of a designated provider is extended to include the subdivision for which a certificate of assured water supply was issued, to be used to support the designation.
22. Requires the Director of ADWR to adopt rules by June 30, 2026, through expedited rulemaking to set licensing time frames to issue groundwater savings credits and develop a summary process to apply groundwater savings credits to designations of assured water supply.
23. Requires the Director of ADWR to find that any volume of groundwater or stored water recovered outside the area of impact of storage that is subject to groundwater savings credits or outlined rules adopted by the Director of ADWR and pledged to an application for a certificate or designation of assured water supply is exempt from the physical availability requirement for an assured water supply.
24. Stipulates that the outlined findings of the Director of ADWR does not exempt:
a) any volume of groundwater or stored water recovered outside the area of impact of storage that is subject to groundwater savings credits from any requirement for an assured water supply other than the physical availability requirement; or
b) a water supply to be stored underground from the requirement to demonstrate that the supply will be physically available for storage.
25. Repeals the groundwater savings program and prohibits the Director of ADWR from issuing new groundwater savings credits on January 1, 2036.
Groundwater Savings Program for the Tucson AMA
26. Allows the Director of ADWR to adopt rules to implement the groundwater savings program for the Tucson AMA that include an applicable conversion multiplier and necessary parameters to ensure groundwater savings in the Tucson AMA, if the Director of ADWR determines that:
a) groundwater withdrawals in the Tucson AMA over a period of 100 years will exceed the depth-to-static water level of 1,000 feet or the depth of the aquifer, whichever is less;
b) a groundwater savings program established in the Tucson AMA would reduce groundwater use over the next 100 years; and
c) expanding the program to include the Tucson AMA would be in the best interest of that AMA and of a conservation district.
Extension of the Groundwater Savings Program
27. Requires the Director of ADWR by, December 31, 2035, to establish a groundwater savings program through rulemaking to administer the groundwater savings credits.
28. Requires the Director of ADWR, by December 31, 2033, to determine whether extending the groundwater savings program is in the best interest of each AMA.
29. Requires the Director of ADWR, if the Director determines that extending the groundwater savings program is in the best interest of an AMA, to include provisions in the expedited rulemaking for the issuance of new groundwater savings credits in the AMA for an additional 10 years.
30. Requires the Director, in making the outlined determinations on extending the groundwater savings program, to consider:
a) the use of groundwater savings credits;
b) the groundwater savings under the program;
c) the impact of the program on a multi-county water conservation district;
d) whether a multi-county water conservation district has acquired new supplies to meet its replenishment obligation since the establishment of the program;
e) whether certificates of assured water supply that relied on groundwater savings credits have been incorporated into designations of assured water supply;
f) the replenishment of groundwater withdrawals that are associated with groundwater savings credits, as well as the use of groundwater allowances and extinguishment credits;
g) the amount of development that has occurred using groundwater savings credits pledged to certificates of assured water supply that is not located within the exterior boundaries of the acres associated with relinquishment under the program; and
h) any other information the Director of ADWR deems relevant.
Municipalities
31. Stipulates that, on acres associated with the relinquishment and areas within one mile of the acres associated with the relinquishment that use groundwater, the following prohibitions apply:
a) a municipal provider or association may not use the groundwater or stored water recovered outside the area of impact of storage for the following:
i. application to turf that is not located in a recreational use area or other space that is regularly used for stormwater management or for civic, community or recreational purposes, including playgrounds, sports fields, cemeteries or schoolyards;
ii. water parks; or
iii. decorative water features, including lakes, ponds or lagoons; and
b) an association may not adopt or enforce the following:
i. minimum turf requirements for turf that is not located in a recreational use area or other space that is regularly used for stormwater management or for civic, community or recreational purposes, including playgrounds, sports fields, cemeteries or schoolyards; or
ii. requirements for the installation, filling or refilling of water parks or decorative water features, including lakes, ponds or lagoons.
32. Adds, to the conditions that allow the legislative body of a municipality to require by ordinance that land areas within a subdivision be reserved for parks, recreational facilities, school sites and fire stations, a stipulation that if groundwater savings credits have been pledged to a certificate of assured water supply for a subdivision, a municipality may not condition final approval of the subdivision plat upon inclusion of a school site within the subdivision plat unless:
a) the municipality pledges to the certificate of assured water supply, a volume of water that is equal to the probable water use on the school site as determined by the Director of ADWR;
b) the water pledged by a municipality meets all requirements for inclusion as an assured water supply; and
c) the municipality does not require an applicant for final plat approval to procure or provide monies to procure water that is required to be pledged by a municipality.
33. Prohibits a municipality that is located within an initial active management area from adopting or enforcing any code, ordinance, rule, regulation, standard, stipulation or other requirement that directly or indirectly requires the following in a subdivision where groundwater savings credits have been pledged to a certificate of assured water supply:
a)
a minimum number of trees, except
for trees included on the low-water-use and
drought-tolerant plant list that is published by ADWR for the current
management plan for the initial AMA;
b) a minimum size for trees or shrubs;
c) a minimum percentage of irrigated ground cover;
d) a minimum amount of turf;
e) an area for active open space that exceeds the greater of 10 percent of the gross acres within the subdivision, or what is required for retention;
f) rights-of-way that require landscaping on more than 20 percent of the cross section; or
g) construction or maintenance of water parks and decorative features, including lakes, ponds or lagoons.
46. Prohibits a municipality, in a subdivision where groundwater savings credits have been pledged to a certificate of assured water supply, from:
a) increasing lot sizes or reducing lot yield once zoning is approved; or
b) increasing the size of a right-of-way required as of the general effective date for the purpose of additional landscape area.
47. Prohibits a municipality that is located in an initial AMA from adopting or enforcing any requirement that establishes, directly or indirectly, the following:
a) minimum turf requirements, except for functional turf requirements that are associated with public recreational use areas or other public spaces that are regularly used for civic, community or recreational purposes, including playgrounds, sports fields, cemeteries, schoolyards and stormwater management, but not including stormwater drainage areas that are located in subdivisions; or
b) the installation of plants that are not included on the low-water-use and drought-tolerant plant list that is published by ADWR for the current management plan in the initial AMA.
Reporting Requirements
48. Requires the Director of ADWR, by December 31, 2029, to submit a report to the President of the Senate, the Speaker of the House of Representatives (House) , the Chairperson of the Senate Natural Resources Committee, or its successor committee and the Chairperson of the House Natural Resources, Energy and Water Committee, or its successor committee, on the progress of the groundwater savings program to the extent the outlined information is reasonably ascertainable.
49. Requires the Director of ADWR, by December 31, 2033, to submit a report to the President of the Senate, the Speaker of the House, the Chairperson of the Senate Natural Resources Committee, or its successor committee and the Chairperson of the House Natural Resources, Energy and Water Committee, or its successor committee on the progress of the groundwater savings program.
50. Requires the outlined 2033 report on the progress of the groundwater savings program to, at a minimum, contain a summary of the Director of ADWR's findings and state the Director of ADWR's determination of whether issuing new groundwater savings credits is in the best interest of each AMA.
51. Requires the Director of ADWR to consult with a multi-county water conservation district before making the outlined determination and submitting the outlined report.
52. Deems that the Director of ADWR maintains final decision-making authority over the outlined determination and contents of the outlined report.
Miscellaneous
51. Outlines statutory requirements that govern administrative proceedings, rehearing or review and judicial review of final decisions of the Director of ADWR.
52. Modifies the calculation used by multi-county water conservation districts for determining a reserve target.
53. Stipulates that stored water recovered outside the area of impact does not include long-term storage credits issued to the Arizona Water Banking Authority or held by the Arizona Water Banking Authority at any time.
54. Declares that the efficient use of water is a matter of statewide concern.
55. Defines municipal provider, acres associated with relinquishment, subdivision and well.
56. Contains a statement of Legislative findings and intent.
57. Makes technical and conforming changes.
58. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Removes the conversion, replenishment and withdrawal requirements for a person who receives a physical availability exemption credit in the Phoenix, Pinal and Tucson AMAs.
2. Renames physical availability exemption credits as groundwater savings credits.
3. Allows a person that owns land within the Phoenix or Pinal AMAs, rather than the Phoenix, Pinal and Tucson AMAs, that may be legally irrigated with groundwater pursuant to an IGFR to permanently relinquish all of the IGFR in exchange for groundwater savings credits if outlined conditions apply.
4. Adds to the conditions that allow an outlined person to relinquish an IGFR in exchange for a groundwater savings credit.
5. Requires the Director of ADWR to adopt rules by December 31, 2025, through expedited rulemaking to set licensing time frames to issue groundwater savings credits and develop a summary process to apply groundwater savings credits to designations of assured water supply.
6. Requires the Director of ADWR to quantify groundwater savings credits in acre-feet by multiplying the acres associated with the relinquishment by the following conservation multiplier:
c) in the Phoenix, 150; and
d) in the Pinal AMA, 100.
7. Prohibits a person from receiving groundwater savings credits for a volume of water that exceeds 60 times the mean amount of groundwater used annually pursuant to the IGFR in the three years with the highest use during the five years preceding an application to permanently relinquish the IGFR.
8. Adds to the requirements and conditions for a volume of groundwater associated with a groundwater savings credit to be exempt from the requirement to demonstrate that the groundwater is physically available.
9. Requires the Director of ADWR, when issuing groundwater savings credits, to identify the amount of groundwater savings credits, rather than the volume of groundwater that may be withdrawn and used and the corresponding replenishment obligation.
10. Requires the Director of ADWR, by December 31, 2033, to determine whether extending the outlined groundwater savings program is in the best interest of each AMA.
11. Allows a person that holds groundwater savings credits to pledge the credits to an assured water supply application that proposes to rely on credits.
12. Allows an applicant that applies for a certificate of assured water supply by December 31, 2030, to rely on groundwater savings credits pledged to the certificate of assured water supply that is issued based on that application.
13. Requires the Director of ADWR, upon application to the Director by the current owner of the acres associated with the relinquishment, to restore a relinquished IGFR and rescind all issued groundwater savings credits if the groundwater savings credits have not been pledged to a certificate of assured water supply or a designation of assured water supply.
14. Allows a person that holds a groundwater savings credit to assign the person's credits to the subsequent owner of the acres associated with the relinquishment.
15. Prescribes prohibitions on acres associated with the outlined relinquishment and areas within one mile of the acres associated with the outlined relinquishment that use groundwater.
16. Stipulates that after the Director of ADWR issues a certificate of assured water supply based on groundwater savings credits the service area of a designated provider is extended to include the subdivision for which a certificate of assured water supply was issued.
17. Requires the Director of ADWR, if the Director of ADWR determines that extending the outlined groundwater savings program is in the best interest of each AMA, to include provisions in the regular rulemaking for the issuance of new groundwater savings credits in the AMA for an additional 10 years.
18. Repeals the groundwater savings program on January 1, 2036.
19. Requires the Director of ADWR by December 31, 2035, to establish a program through regular rulemaking to administer groundwater savings credits consistent with the outlined groundwater savings program.
20. Allows the Director of ADWR to adopt outlined rules to implement the groundwater savings program for the Tucson AMA that include an applicable conversion multiplier and necessary parameters to ensure groundwater savings in the Tucson AMA if the Director of ADWR determines that outlined conditions apply.
21. Prohibits a municipality that is located within an initial active management area from adopting or enforcing outlined codes, ordinances, rules, regulations, standards, stipulations or other requirements in a subdivision where groundwater savings credits have been pledged to a certificate of assured water supply.
22. Prohibits a municipality, in a subdivision where groundwater savings credits have been pledged to a certificate of assured water supply, from:
c) increasing lot sizes or reducing lot yield once zoning is approved; or
d) increasing the size of a right-of-way required as of the general effective date for the purpose of additional landscape area.
23. Adds, to the conditions that allow the legislative body of a municipality to require by ordinance that land areas within a subdivision be reserved for parks, recreational facilities, school sites and fire stations, that if groundwater savings credits have been pledged to a certificate of assured water supply for a subdivision, a municipality may not condition final approval of the subdivision plat upon inclusion of a school site within the subdivision plat unless outlined requirements are met.
24. Declares that the efficient use of water is a matter of statewide concern.
25. Outlines reporting requirements for ADWR.
26. Adds a statement of legislative findings and intent.
Senate Action House Action
NR 2/18/25 DP 4-3-1 NREW 2/20/25 DPA/SE 5-3-0-2
3rd Read 6/19/25 26-4-0 3rd Read 6/23/2025 35-20-5-0
(S.B. 1611 was substituted for H.B. 2298
on 3rd Read)
Signed by the Governor 6/30/25
Chapter 252
Prepared by Senate Research
July 1, 2025
SB/ci