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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
water banking; annual report; posting
(NOW: groundwater savings credits; irrigation)
As passed by the Senate, S.B. 1335 required the Arizona Water Banking Authority Commission to post a copy of its annual report on the Commission's website.
The House of Representatives adopted a strike-everything amendment that does the following:
Purpose
Allows the holder of groundwater savings credits (GSCs) to continue irrigating the land in accordance with the irrigation grandfathered right (IGFR) for a period of no more than two years after the date of issuance of the GSCs.
Background
In an initial active management area (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 January 1, 1980, 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. The right to use groundwater for the irrigation of an irrigation acre is an IGFR and is appurtenant to that acre (A.R.S. § 45-465).
A person that
holds an IGFR within the Phoenix or Pinal AMA may apply to the Director of the
Arizona Department of Water Resources (ADWR) to permanently relinquish all the
IGFR in exchange for GSCs, if statutorily outlined requirements are met. A
person that holds GSCs may assign the GSCs to the subsequent owner of the acres
associated with the relinquishment, or may pledge the credits to an assured
water supply application that proposes to rely on the GSCs to demonstrate
physical water availability for an assured water supply certificate (A.R.S.
§ 45-465.05).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows a person that applies to relinquish an IGFR in exchange for GSCs to accompany the application with a request that the Director of ADWR issue a temporary permit to irrigate with groundwater.
2. Requires the Director of ADWR, on relinquishment of the IGFR and only if a request accompanies the application to relinquish an IGFR, to issue the holder of the GSC a temporary permit to irrigate with groundwater.
3. Authorizes the holder of a temporary permit to irrigate with groundwater to use groundwater for irrigation on the land that qualified as irrigation acres under the relinquished IGFR, as if the right had not been relinquished, subject to the following:
a) all requirements and limitations of the Arizona Groundwater Code and of the relinquished IGFR that would apply as if the right had not been relinquished;
b) the applicable management goal and the applicable management plan for the AMA where the lands to which the relinquished IGFR was appurtenant are located, as if the right had not been relinquished;
c) a farm that is authorized to use groundwater pursuant to a temporary permit to irrigate with groundwater may not maintain a flexibility account except that if the amount of groundwater used to irrigate the farm in an accounting period exceeds the amount of the current irrigation water duty for the farm multiplied by the water duty acres in the farm, the holder of the temporary permit to irrigate with groundwater may obtain credits registered to the flexibility account of another farm;
d) the temporary permit to irrigate with groundwater may be leased for an irrigation use with the land that is entitled to be irrigated under the temporary permit;
e) the temporary permit to irrigate with groundwater terminates two years after the Director of ADWR issues the GSC unless one of the following occurs earlier, which immediately terminates the temporary permit to irrigate with groundwater:
i. the relinquished IGFR is restored;
ii. the associated GSCs are pledged to a certificate of assured water supply or designation of assured water supply and the certificate is issued or the designation is issued or modified to include the GSCs.
iii. a person who proposes to offer subdivided lands for sale or lease on land that is entitled to be irrigated under the temporary permit obtains a written commitment of water service for the proposed subdivision from a designated provider; or
iv. the acres associated with the relinquishment qualify as member land of a multi-county water conservation district; and
f) for the purposes of the statutory requirements relating to the storage of water, water that a person delivers pursuant to a temporary permit to irrigate with groundwater is classified as water delivered to the relinquished IGFR to determine the annual or long-term storage credits a permit holder may accrue pursuant to a groundwater savings facility permit.
4. Requires the Director of ADWR, when quantifying GSCs and making the determination as to whether an applicant for GSCs 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, to apply in the Directors determinations, a notice of intent to pledge GSCs to a designation of assured water supply that a person submits within two years after the date the GSCs are issued.
5. Requires the outlined determination to remain valid until the Director of ADWR makes a final decision on the application to modify a designation of assured water supply.
6. Stipulates that the holder of GSCs may only continue to irrigate the land consistent with a temporary permit to irrigate with groundwater that the Director of ADWR issues.
7. Makes technical and conforming changes.
8. Becomes effective date on the general effective date.
Amendments Adopted by the House of Representatives
· Adopted the strike-everything amendment relating to GSCs.
House Action
NREW 3/24/26 DPA/SE 5-4-0-1
3rd Read 6/11/26 32-25-3
Prepared by Senate Research
June 19, 2026
SB/hk