SUMMARY OF
By Hugh Holub
Attorney at
Law
7 Placita de Anza
(520) 841-2278
Email: HughHolub@msn.com
I. SURFACE
WATER LAW
Surface water rights are regulated pursuant to
A.R.S. 45-141 through 167. A surface water right is appurtenant to a specific
parcel of land, but the point of diversion can be changed and the uses can be
changed through administrative proceedings before ADWR.
The amount of water available under a surface water
right is subject to climatic variability and prior right appropriations. The
doctrine of "prior appropriation" applies to surface water, which
basically means first in time is first in right.
The right to the use of surface water must be
maintained at a minimum of every 5 years, with few exceptions. If the use is
not made over a 5 year period (unless the use was not made through no fault of
the owner) the right reverts back to the state.
Surface waters, so long as they are not used in
conjunction with groundwater supplies, are limited in use solely by the total
quantity of the right, and actual availability of the water, and priority.
All surface water rights in the
II.
GROUNDWATER
Under
Outside of AMAs there are
no groundwater rights per se. The doctrine of "reasonable use"
applies. It is only in AMAs where groundwater rights
are quantified and regulated.
In an AMA, groundwater rights and uses are highly
regulated due to a long history of groundwater overdrafts (the pumping out of
groundwater in greater quantities than replenished by natural recharge). ARS
45-101.
There are several types of groundwater rights:
(A)
IRRIGATION GRANDFATHERED GROUNDWATER RIGHTS
There
are two types of groundwater rights associated with irrigation: Irrigation
Grandfathered Groundwater Rights and Type 1 Non-irrigation Grandfathered
Groundwater Rights.
(1) Irrigation Grandfathered Groundwater
Rights (IGRs) are appurtenant to irrigated lands. The
amount of an IGR is based on the "irrigation duty acres" times the
"irrigation water duty". Thus, a parcel of land with 100
"irrigation duty acres" and an "irrigation water duty" of
5.0 acre feet per acre, will have an IGR of 500 acre
feet. The amount of an IGR decreases
over time as the ADWR revises the irrigation water duty with each Management
Plan. An IGR can only be used for irrigation purposes on the "irrigation
duty acres".
(2)
The owner of an IGR may covert its IGR irrigation rights to a Type 1
Non-irrigation Grandfathered Groundwater Right (called a Type 1 Right). The
Type 1 Right is either 3 acre feet per "irrigation duty acre" or the
actual "irrigation water duty" per acre, whichever is less. A.R.S.
45-469. Thus, if a farm had 100 acres of "irrigation water duty" land
with a 5 acre foot per acre "irrigation water duty" it would convert
to a Type 1 Right at 3 acre feet per acre, or a total of 300 acre feet per
annum of Type 1 Rights. A Type 1 Right can be used on the appurtenant land, or
used off the appurtenant land so long as it is withdrawn from the
appurtenant land.
To
convert the IGR to a Type 1 right, the applicant must show a plan for the use
of the converted right pursuant to A.R.S. 45-573.
The
amount of the IGR and/or the Type 1 Right can be obtained from the Arizona
Department of Water Resources. Certificates for these water rights are issued
by ADWR.
(B) SERVICE AREA GROUNDWATER RIGHTS
Service
Area groundwater withdrawal rights are created pursuant to A.R.S. 45-491
through 498 and relate to groundwater rights and uses within "service
areas" of cities and towns as defined in A.R.S. 45-402 (26) and for
"private water companies" as defined in A.R.S. 45-402 (25).
A
Service Area Right includes the right for the removal of any absolute
volumetric limitation upon the amount of groundwater that may be withdrawn from
these wells for the benefit of landowners and residents with the Service Area,
subject to whatever conservation requirements may be imposed under the
Management Plan(s) prescribed by A.R.S. 45-561 through 576. A "Service
Area" is where a utility has an operating distribution system.
A
Service Area Right allows the owner to increase the amount of groundwater
withdrawn, and to install larger pumps on the wells consistent with applicable
rules and regulations, to serve increased water demands. New Service Area Right
wells can be drilled within the "Service Area" as defined by ADWR.
This
is a very unique groundwater right in that it is the only increasing
right to withdraw groundwater permitted in an Active Management Area.
Typically cities and private water companies
have Service Area rights.
(C)
TYPE 2 RIGHTS
There
are two kinds of Type 2 Non-irrigation Grandfathered Groundwater Rights, both
of which are associated with groundwater uses that existed prior to 1980
for non-irrigation purposes. These are:
(a)
Type 2 Unrestricted: This Type 2 Right is typically associated with
wells serving dairies, trailer parks, industries, guest ranches, and other
commercial uses. This right my be transferred anywhere
in the same AMA.
(b)
Type 2 Mining, Sand and Gravel: This Type 2 Right is associated with
mining and sand and gravel operations, and may be transferred and used anywhere
in the same AMA only for mining and/or sand and gravel uses.
A
Type 2 Right is a personal property right in that it can float, and is not
necessarily appurtenant to a parcel of land at the point of sale.
(D) PERMIT RIGHTS
There
are a number of Groundwater Withdrawal Permit options available pursuant to
A.R.S. 45-511 et.seq. for dewatering, mineral extraction, industrial uses, poor
quality groundwater removal, hydrologic testing, etc. ADWR grants Industrial
Use permits for specific uses where alternative sources of water are not
available.
(E)
MANAGEMENT PLAN REQUIREMENTS
Municipalities
and private water companies who pump groundwater for municipal use are subject
to increasingly stringent water conservation requirements imposed through a
succession of Management Plans adopted every 10 years, measured by Gallons Per
Capita Per Day (GPCD). Arizona is into its Second
Management Plan phase (1990 through 2000), and GPCD requirements for municipal
water use have been set for all municipal utilities and private water companies
in the state's AMAs. ARS 45-561 to 45-578.
A
key element of the state's groundwater laws for AMAs
is the designation of a goal for each AMA. The Tucson AMA's goal is to
achieve "safe yield" by the year 2025, meaning that no more
groundwater can be pumped and used than is naturally or artificially
replenished. ARS 45-562. Presently municipal users alone in the Tucson AMA pump
and use more groundwater than is naturally replenished.
A
companion element of the state's groundwater laws is that no new subdivisions
are allowed in an AMA unless proof is made that the new subdivision will have a
100 year assured supply of water (called the Assured Water Supply provision).
ARS 45-576.
In
1995, the Arizona Department of Water Resources (ADWR) revised its rules
governing proof of a 100 year assured water supply, aimed at reducing the
amount of mined groundwater a water utility or new subdivision can count for
purposes of such proof. The argument was that it is inconsistent with the goal
of "safe yield" in the TAMA to permit further municipal growth in
Arizona AMAs dependent on mined groundwater.
III. STATUTORY
ASSURED WATER SUPPLY REQUIREMENTS
ARS
45-576 and resulting policies and rules establish requirements for new
subdivision development in an Active Management Area. As a condition of
approving a new subdivision plat, a water supply sufficient for 100 years must
be proven to the satisfaction of the Arizona Department of Water Resources
(ADWR).
An
"assured water supply" means:
"1.
Sufficient groundwater or surface water of adequate quality will be
continuously available to satisfy the water needs of the proposed use for at
least one hundred years.
"2.
The projected water use is consistent with the management plan and achievement
of the management goal for the active management area; and
"3.
The financial capability has been demonstrated to construct the delivery system
and any treatment works necessary to make the supply of water available for the
proposed use. ARS 45-576 (L)."
There
are two terms used on the context of the Assured Water Supply requirement--a
Certificate of Assured Water Supply, and a designation of an assured water
supply.
A Certificate
of Assured Water Supply is a document issued to a developer for its project and
represents both a determination of hydrologic water availability and
proof of the financial capability required under the code.
Cities,
towns and water companies do not get certificates of assured water
supply from ADWR. Instead, the service areas of water utilities are Designated as having a hydrologic supply based on
proof provided by the utility. Within the 100 year designated assured water
supply area, an individual developer can gain its Certificate of Assured Water
Supply by showing ADWR its project is within a designated area, and that there
is an agreement whereby the water facilities will be paid for and constructed
(typically a main extension agreement) to meet the financial capability
requirement.
The
Assured Water Supply requirement only applies to the approval of new
subdivisions. Thus new utility customers can be added to a water utility
system provided that their development did not involve approval of a
subdivision plat.
A
primary goal of the new proposed Assured Water Supply rules is to reduce
reliance on mined groundwater for urban growth.
IV. ASSURED
WATER SUPPLY RULES
The
goal of ADWR in its new Assured Water Supply Rules is to require the applicant
for a designation or certificate of assured water supply to prove it has a 100
year assured water supply based on using renewable sources of water.
There are four renewable sources of water:
(A)
(B)
Surface waters.
(C)
Effluent (direct reuse).
(D)
Recharge Credits (through underground storage and recovery project, indirect
recharge, or in the case of
The reasoning for this approach is an attempt to
reconcile the Management Plan goal for the TAMA ("safe yield" meaning
no more groundwater is withdrawn than is naturally or artificially replenished)
with the Assured Water Supply requirement of the 1980 Groundwater Management
Act (requiring proof of a 100 year assured water supply for new subdivisions).
The new Assured Water Supply Rules are divided into
five criteria:
(1)
Physical Availability.(R12-15-703) This means that sufficient quantities of
water must be continuously available to satisfy the water demand of the
development (or city) for 100 years. This element has a hydrologic component, a
continuous availability component, and a legal rights component.
The
maximum allowable depth to groundwater permitted under the new rules is 1,000
feet for the TAMA. However, the actual mining of groundwater is limited by the
new rules to a complex formula of allowable mining and required replacement. A
utility could theoretically continue to use mined groundwater, provided the resulting depth
to groundwater in 100 years would not exceed 1,000 feet, and also
provided that some sort of "payback" mechanism was in place to
replace that mined groundwater. Any developer or water utility seeking to
continue to pump groundwater, even with a "payback" mechanism (such
as recharge) would have to prove the hydrologic availability of the groundwater
within the 1,000 foot limitation.
If
surface water is proposed as an element of the Assured Water Supply, the volume
of that surface water that could be counted would be 120% of the firm yield of
the source unless alternative supplies were available. Flows would be based on
a minimum of 20 years of record. The seniority of the appropriative right is a
major factor in this determination.
If
CAP water is proposed as an element of the Assured Water Supply, 100% of the
subcontract amount would count if the applicant has a nondeclining,
long-term municipal and industrial CAP subcontract.
If
effluent is to be used to prove an Assured Water Supply (meaning the effluent
would actually be treated and reused), ADWR would analyze the current or
projected production of effluent, the applicant's ability to treat that
effluent, and the demand for the effluent.
If
recharge credits are to be used, ADWR would look at the existence of a contract
to obtain the water, the likelihood that the water will be physically
available, the applicant's financial capability to purchase the water, the
presence of an existing underground storage and recovery project (including an
indirect recharge project) and the existence of all required permits.
Another
element of Physical Availability is "Continuous Availability". This
means that evidence must be provided showing adequate storage, delivery and
treatment works for the proposed supply. The variability of surface water
and/or effluent would also be considered.
A
final element of Physical Availability is "Legal Availability". That
means the applicant must show it has the legal rights to the water it is
claiming for Assured Water Supply proof.
(2)
Water Quality. (R12-15-704) The water relied on for the projected growth
must be of sufficient quality to be actually used.
The
Water Quality aspect of proving an Assured Water Supply relates to the physical
quality of the water. Contaminated groundwater, for example, could not be used
to prove an Assured Water Supply, unless it was to be treated to potability standards.
(3)
Consistency With Management Plan Goal.(R12-15-705)
The purpose of this element is to quantify (and limit) the volume of
mined groundwater that can be pumped and used for Assured Water Supply proof
purposes.
ADWR
has proposed a highly complex means to ratchet down groundwater reliance for
new urban growth, focused on water uses as opposed to water rights.
The
first component is a Groundwater Allocation Formula.
Under
this approach, a water provider would be allocated 30 years of mined groundwater based on a
determined amount of groundwater at the beginning point of the Assured Water
Supply decision and phased down to zero in 30 years. The total quantity of
groundwater identified through this formula could be used over the course of
the 100 year period.
Assuming,
for discussion purposes, an applicant could show 1,000 acre feet of mined
groundwater in year one, the applicant would get roughly 15,000 acre feet of
mined groundwater allocated for assured water supply purposes for the 30 year
period, or an average of 150 acre feet of groundwater per year for the 100 year
period.
ADWR
also proposes an "incidental recharge credit" adding a small quantity
of groundwater use for an Assured Water Supply.
ADWR
further proposes "credits" for retiring IGRs
at the rate of 1.5 acre foot per irrigated duty acre times the number of years
between when the farm is retired and the year 2025. Thus if an applicant bought
a farm with 1,000 acres of irrigation duty land with IGR rights and retired it
in 1996, the applicant could claim 1,500 acre feet of groundwater times 29
years or a total of 43,500 acre feet of minable
groundwater. Over a 100 year period this would allow 435 acre feet of
groundwater per year to be mined.
Type
2 Rights can also be "retired" for credits.
Consistency
with the Management Plan goals can also be obtained through a combination of
proof of physical availability of groundwater plus joining the Central Arizona
Groundwater Replenishment District (CAGRD). More about the
CAGRD later.
(4)
Consistency With Management Plan. (R12-15-706)
The purpose of this requirement is to link projected water use within new
developments with conservation mandates of the Management Plans.
This
element requires the applicant to be in compliance with its current Management
Plan conservation requirement. Thus if the applicant is in violation of its
Management Plan requirements, it would not be eligible to gain an Assured Water
Supply.
(5)
Financial Capability. (R12-15-707) This requirement relates to proof of
the financial capability of the applicant to construct the water delivery
system and any treatment works required for the proposed use. This element
details the types of financial assurances that would be available to prove the
financial capability to construct and operate the water supply system.
V. OTHER
ASSURED WATER SUPPLY RULES ELEMENTS
(A)
Redesignation: If a city, town or private
water company had an existing Designation of Assured Water Supply, that
city, town or private water company was required to reapply for a new
designation (the "redesignation") within
180 days of the effective date of the new rules (August 7, 1995).
(B)
Financial Proof: Developers are required to meet similar financial
assurance requirements as cities and counties apply for approvals of
subdivision plats. Cities are required to show bonding capacity sufficient to
build the water system to serve the projected growth. Proof for a new
development being connected to a city, town or private water company system can
be made by bond, letter of credit, or payment of cash to construct the required water system.
(C) Gila Adjudication
Issues: All surface water rights in the