SB1511 - 532R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 45-462, Arizona Revised Statutes, is amended to read:

START_STATUTE45-462. Grandfathered groundwater rights; persons included; certificate of exemption amount is legal use; extinguishment

A. In an active management area, a person who was legally withdrawing and using groundwater as of the date of the designation of the active management area or who owns land legally entitled to be irrigated with groundwater as determined pursuant to this article has the right to withdraw or receive and use groundwater as determined by the director pursuant to this article.

B. For purposes of determining grandfathered rights pursuant to this article, a groundwater use shall not be determined to be illegal merely because the groundwater legally withdrawn is or has been transported.

C. The amount of groundwater use described by an applicaton application for a certificate of exemption is recognized as a legal use for purposes of determining grandfathered rights pursuant to section 45‑464, subject to any modification as a result of a finding on appeal of a factual mistake by the state land department or Arizona water commission in computing the amount of the authorized withdrawal.

D. The right to withdraw or receive and use groundwater pursuant to this article is a grandfathered right. There are three categories of grandfathered rights as follows:

1. Non-irrigation grandfathered rights associated with retired irrigated land as determined pursuant to sections 45‑463, 45‑469 and 45‑472.

2. Non-irrigation grandfathered rights not associated with retired irrigated land as determined pursuant to section 45‑464.

3. Irrigation grandfathered rights as determined pursuant to section 45‑465.

E. Notwithstanding any other statute or rule, in the pinal active management area until December 31, 2021:

1. THE DIRECTOR SHALL CALCULATE THE INITIAL VOLUME OF EXTINGUISHMENT CREDITS FOR THE EXTINGUISHMENT OF A GRANDFATHERED RIGHT AS FOLLOWS:

(a) FOR THE EXTINGUISHMENT OF A TYPE 2 NON-IRRIGATION GRANDFATHERED RIGHT, MULTIPLY THE NUMBER OF ACRE-FEET INDICATED ON THE CERTIFICATE OF GRANDFATHERED RIGHT BY one hundred.

(b) FOR THE EXTINGUISHMENT OF ALL OR PART OF AN IRRIGATION GRANDFATHERED RIGHT, OR ALL OR PART OF A TYPE 1 NON-IRRIGATION GRANDFATHERED RIGHT, MULTIPLY 1.5 ACRE-FEET BY THE NUMBER OF IRRIGATION ACRES ASSOCIATED WITH THE EXTINGUISHED IRRIGATION GRANDFATHERED RIGHT OR THE NUMBER OF ACRES TO WHICH THE EXTINGUISHED TYPE 1 NON-IRRIGATION GRANDFATHERED RIGHT IS APPURTENANT, AND THEN MULTIPLY THAT PRODUCT BY one hundred, EXCEPT THAT:

(i) IF ONLY A PORTION OF AN IRRIGATION GRANDFATHERED RIGHT OR A TYPE 1 NON-IRRIGATION GRANDFATHERED RIGHT IS EXTINGUISHED, ONLY THOSE ACRES ASSOCIATED WITH THE PORTION OF THE RIGHT THAT IS EXTINGUISHED SHALL BE INCLUDED IN THE CALCULATION.

(ii) IF AN EXTINGUISHED IRRIGATION GRANDFATHERED RIGHT HAS A DEBIT BALANCE IN THE CORRESPONDING FLEXIBILITY ACCOUNT ESTABLISHED pursuant to section 45-467, THE DIRECTOR SHALL SUBTRACT THE AMOUNT OF THE DEBIT FROM THE AMOUNT OF THE EXTINGUISHMENT CREDITS.

2. FOR GRANDFATHERED RIGHTS EXTINGUISHED from and AFTER August 31, 2018, IF THE AMOUNT OF THE EXTINGUISHMENT CREDITS REMAINING UNUSED ON THE SIXTH, ELEVENTH, SIXTEENTH OR TWENTY-FIRST ANNIVERSARY OF THE DATE OF EXTINGUISHMENT IS GREATER THAN AN AMOUNT CALCULATED BY MULTIPLYING THE INITIAL VOLUME OF EXTINGUISHMENT CREDITS BY THE APPLICABLE PERCENTAGE ESTABLISHED IN THIS subseCTION, THE AMOUNT OF UNUSED CREDITS SHALL BE REDUCED TO AN AMOUNT CALCULATED BY MULTIPLYING THE INITIAL VOLUME OF EXTINGUISHMENT CREDITS BY THE APPLICABLE PERCENTAGE.

3. FOR THE PURPOSES OF DETERMINING THE REDUCTION IN THE AMOUNT OF UNUSED CREDITS AS PROVIDED IN paragraph 2 of this sUBSECTION, THE APPLICABLE PERCENTAGES are AS FOLLOWS:

(a) FOR CREDITS REMAINING ON THE SIXTH ANNIVERSARY OF THE DATE OF EXTINGUISHMENT, SEVENTY-five PERCENT.

(b) FOR CREDITS REMAINING ON THE ELEVENTH ANNIVERSARY OF THE DATE OF EXTINGUISHMENT, fifty PERCENT.

(d) FOR CREDITS REMAINING ON THE TWENTY-FIRST ANNIVERSARY OF THE DATE OF EXTINGUISHMENT, zero PERCENT.

4. FOR the PURPOSES OF paragraph 2 of this SUBSECTION, THE AMOUNT OF EXTINGUISHMENT CREDITS REMAINING UNUSED ON THE ANNIVERSARY OF THE DATE OF EXTINGUISHMENT OF A GRANDFATHERED RIGHT SHALL BE THE INITIAL VOLUME OF EXTINGUISHMENT CREDITS ISSUED FOR THE EXTINGUISHMENT OF THE RIGHT, reduced by both of the following:

(a) THE AMOUNT OF ANY OF THE EXTINGUISHMENT CREDITS PREVIOUSLY PLEDGED TO A CERTIFICATE OF ASSURED WATER SUPPLY OR DESIGNATION OF ASSURED WATER SUPPLY PURSUANT TO rules adopted by the director AND REPORTED TO THE DEPARTMENT AS HAVING BEEN USED.

(b) The amount of any previous reductions made to the extinguishment credits pursuant to paragraph 2 of this subsection.

5. The groundwater allowance for a certificate of assured water supply is as follows:

(a) For an application for a certificate filed before September 1, 2018, multiply the annual estimated water demand for the proposed subdivision by ten.

(b) For an application for a certificate filed on or after September 1, 2018, multiply the annual estimated water demand for the proposed subdivision by zero.

6. Not later than January 1, 2019, the director of water resources shall adopt rules to calculate extinguishment credits in the pinal active management area consistent with this section. For this purpose, the director is exempt from the rulemaking requirements of title 41, chapter 6, except that the director shall file a notice of exempt rulemaking with the secretary of state who shall publish the rules in the Arizona administrative register and the Arizona administrative code. The rules shall have an immediate effective date.

F. Notwithstanding any other statute or rule, in the Pinal active management area the director shall recalculate the amount of groundwater AVAILABLE for use in the active management area for purposes of determining an assured water supply.END_STATUTE