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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
VETOED
brackish groundwater recovery program
Purpose
Establishes the Brackish Groundwater Recovery Program Fund (Fund). Requires the Water Infrastructure Finance Authority (WIFA) to administer the Brackish Groundwater Recovery Program and establish minimum criteria for choosing and evaluating outlined projects. Allows monies and other assets in the Long-Term Water Augmentation Fund (LTWAF) to be used for developing one or more brackish groundwater recovery projects that create new sources of potable water within the boundaries of Arizona.
Background
WIFA is an independent state authority established to help meet Arizona's existing and future water needs. In 2022, the Legislature expanded the powers and duties of WIFA and restructured state-funded WIFA funds to expand fund eligibility and fund purposes (Laws 2022, Ch. 366). These purposes include developing or facilitating water conservation, reuse and augmentation projects. WIFA may accomplish its purpose individually, through collaboration or by partnering with public or private entities (A.R.S. § 49-1205).
The LTWAF, administered by WIFA, consists of statutorily outlined
monies, gifts, grants donations, interest and legislative appropriations.
Monies and other assets in the LTWAF may be used to: 1) fund water supply
development projects that import water from outside the boundaries of Arizona;
2) purchase imported water or rights to imported water; 3) acquire or construct
water-related facilities in Arizona to convey or deliver imported water within
Arizona; 4) conduct investigations, including performing environmental or other
reviews; 5) contract for water needs assessments; 6) provide financial
assistance to eligible entities for the purposes of financing or refinancing
water supply development projects within Arizona, including projects for
conservation through reducing existing water use or more efficient uses of
existing water supplies; 7) guarantee debt obligations of eligible entities
that are issued or incurred to finance or refinance water supply development
projects within Arizona or providing credit enhancements in connection with
these debt obligations; and 8) pay the costs to administer the LTWAF (A.R.S.
§ 49-1302
and 49-1303).
It is generally understood that brackish groundwater is water that has a greater dissolved-solids content that occurs in freshwater, but not as much as seawater. Desalination is the process of removing salts and other minerals from water, making it suitable for human consumption, irrigation or industrial uses (U.S. Department of Energy and U.S. Geological Survey).
There is no anticipated fiscal impact to the state General Fund (state GF) associated with this legislation.
Provisions
1. Establishes the Fund, administered by WIFA, consisting of:
a) monies appropriated by the Legislature;
b) monies received from the U.S. Government for any allowable purpose of the Brackish Groundwater Recovery Program;
c) monies received as loan repayments, interest, administrative fees and penalties;
d) monies from any lawful activity of WIFA, including public-private partnership agreements relating to water supply development projects;
e) interest and other income received from investing monies in the Fund; and
f) gifts, grants and donations received from any public or private source for the purposes of the Fund.
2. Requires Fund monies to be used to provide matching dollars for the development and construction of qualifying brackish groundwater recovery and desalination projects within Arizona but outside the boundaries of an initial active management area.
3. Prohibits WIFA from awarding more than $1 per $3 of total capital expenditures per qualifying project.
4. Prohibits more than one qualifying project from being awarded monies per request for proposals.
5. Prohibits WIFA from granting Fund monies without first issuing a request for proposals to develop and construct a qualifying brackish groundwater recovery and desalination project.
6. Requires WIFA to evaluate proposals that are submitted in response to the request for proposals and select a winning project for issuing matching dollars based on the outlined criteria for brackish groundwater recovery and desalination projects.
7. Requires WIFA, within a time frame WIFA determines following the award of monies, to grant monies pursuant to the Fund contingent on the execution of proposed projects and expenditure of capital costs.
8. Requires WIFA, in consultation with ADWR, to establish the minimum:
a) information that a qualifying bidder must include with a proposed project to be considered for evaluation;
b) criteria that WIFA will use to evaluate the feasibility and viability of qualifying projects submitted in response to a request for proposals and to select a winning project;
c) criteria that a bidder must satisfy to qualify for participation in the program and to submit proposals in response to a request for proposals; and
d) criteria that WIFA will use to evaluate the technical, financial and managerial capabilities of a qualifying bidder that submits a proposal in response to a request for proposals.
9. Requires the minimum information from a qualifying bidder with a proposed project to include:
a) design and engineering studies or reports;
b) site location, right-of-way and land ownership information;
c) depth-to-water, salinity levels and other hydrological information;
d) withdrawal permit and groundwater rights and access information;
e) the method of brackish groundwater recovery, treatment and desalination;
f) the method of desalination brine disposal;
g) the total volume of brackish groundwater expected to be desalinated;
h) the total project capacity and expected output;
i) the proximity to likely offtakers and the proposed method of transportation or delivery of treated brackish groundwater to the offtakers in the basin; and
j) the total estimated capital cost for the project.
10. Requires the minimum criteria to evaluate feasibility and viability of qualifying projects include:
a) the cost-effectiveness of the project;
b) the reliability and long-term security of the water supply to be developed through the project;
c) the impact to the regional aquifer and local water users from the project's brackish groundwater withdrawals;
d) the impacts to the regional aquifer and local water users from the project's brine disposal; and
e) comments from water users, local residents and affected jurisdictions.
11. Allows monies and other assets in the LTWAF to be used for developing one or more brackish groundwater recovery projects that create new sources of potable water within the boundaries of Arizona.
12. Prohibits monies in the Fund from being appropriated or transferred by the Legislature to fund the general operations of Arizona or to otherwise meet the obligations of the state GF unless approved by a three-fourths vote of the members of each house of the Legislature.
13. Caps the percentage of monies in the Fund that may be used to cover staffing and administrative costs at 10 percent.
14. Requires all monies deposited in the Fund to be held in trust.
15. Requires WIFA to establish as many other accounts and subaccounts as required to administer the Fund.
16. Requires the State Treasurer, on notice from WIFA, to:
a) invest and divest monies in the Fund; and
b) credit monies earned from investment to the Fund.
17. Specifies that monies in the Fund are continuously appropriated and are exempt from lapsing.
18. Makes technical changes.
19. Becomes effective on the general effective date.
Governor's Veto Message
The Governor indicates in her veto message that H.B. 2055 diverts funding intended to develop new water sources for Arizona's future to groundwater extraction proposals that are currently eligible for other funding programs.