HB2647 - 562R

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

Section 1. Title 45, chapter 2, article 5, Arizona Revised Statutes, is amended by adding section 45-465.05, to read:

START_STATUTE45-465.05. Permanent retirement of irrigation grandfathered right for non-irrigation; physical availability credit; assured water supply; definition

A. A person who owns land that may be legally irrigated with groundwater pursuant to an irrigation grandfathered right and that is located within an active management area may permanently retire the land from irrigation in anticipation of a future non-irrigation use and retain a physical availability credit.

b. a physical AVAILABILITY credit may be used to withdraw from or receive for the land subject to irrigation the amount of groundwater calculated pursuant to subsection C of this section for a non-irrigation use if all of the following apply:

1. The land has been actively farmed in three of the last seven calendar years and is permanently retired from irrigation use pursuant to this section.

2. The new non-irrigation use of water remains appurtenant to the original irrigation acres described in the certificate of grandfathered right or portion thereof retired under this section.

3. The water is delivered by a municipal provider within an active management area pursuant to a contract that requires the municipal provider to deliver at least the same quantity of water available under this section to the retired original irrigation acres and to withdraw any groundwater that is part of the delivery from within its service area.

C. The amount of GROUNDWATER that may be withdrawn or RECEIVED annually per acre PURSUANT to this section shall be the lesser of the following:

1. The current maximum amount of groundwater that may be used PURSUANT to the irrigation grandfathered right for the acre at the time it is retired PURSUANT to section 45-465, subsection b.

2. three acre-feet multiplied by the water duty acres in the farm or portion thereof in which the right is appurtenant divided by the number of irrigation acres in the farm or portion thereof.

D. A physical availability credit to withdraw or receive the amount of groundwater calculated in subsection c of this section must be used on the original irrigation acres. If the amount of water calculated in subsection c of this section is more than needed to meet the water demand on the original IRRIGATION acres, the balance of the physical availability credit may be used anywhere within the municipal provider's service area. For the purposes of this subsection, The balance of the physical availability credit is the difference between the amount of water calculated in subsection C of this section and the water demand for use on the original irrigation acres.

e. in determining whether to issue a certificate of assured water supply or to designate or redesignate a municipal provider As having an assured water supply PURSUANT to section 45-576, The director shall:

1. include the amount of groundwater that may be withdrawn and used annually pursuant to subsection c of this SECTION.

2. include the amount of groundwater that may be withdrawn under subsection C of this section Based on the reduction in water use resulting from the transition from an irrigation use to a non-irrigation use and, based on that reduction, find that groundwater used pursuant to this section meets the physical availability requirements to demonstrate an assured water supply in accordance with section 45-576, subsection n, paragraph 1 and rules adopted pursuant to section 45-576.

3. find that the projected use of the groundwater that is determined to be available for assured water supply PURPOSES under paragraph 2 of this subsection meets the consistency with achievement of the management goal requirements to demonstrate an assured water supply PURSUANT to section 45-576, subsection n, paragraph 2 and rules adopted pursuant to section 45-576.

f. Section 45-114, subsections A and B govern administrative proceedings, rehearing or review and judicial review of final decisions of the director under this section.

G. For the purposes of this section, "MUNICIPAL provider" has the same meaning prescribed in section 45-561.END_STATUTE

Sec. 2. Section 45-576, Arizona Revised Statutes, is amended to read:

START_STATUTE45-576. Certificate of assured water supply; designated cities, towns and private water companies; exemptions; definition

A. Except as provided in subsections G and J of this section, a person who proposes to offer subdivided lands, as defined in section 32-2101, for sale or lease in an active management area shall apply for and obtain a certificate of assured water supply from the director before presenting the plat for approval to the city, town or county in which the land is located, where such is required, and before filing with the state real estate commissioner a notice of intention to offer such lands for sale or lease, pursuant to section 32-2181, unless the subdivider has obtained a written commitment of water service for the subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section.

B. Except as provided in subsections G and J of this section, a city, town or county may approve a subdivision plat only if the subdivider has obtained a certificate of assured water supply from the director or the subdivider has obtained a written commitment of water service for the subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section. The city, town or county shall note on the face of the approved plat that a certificate of assured water supply has been submitted with the plat or that the subdivider has obtained a written commitment of water service for the proposed subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section.

C. Except as provided in subsections G and J of this section, the state real estate commissioner may issue a public report authorizing the sale or lease of subdivided lands only on compliance with either of the following:

1. The subdivider, owner or agent has paid any activation fee required under section 48-3772, subsection A, paragraph 7 and any replenishment reserve fee required under section 48-3774.01, subsection A, paragraph 2 and has obtained a certificate of assured water supply from the director.

2. The subdivider has obtained a written commitment of water service for the lands from a city, town or private water company designated as having an assured water supply pursuant to this section and the subdivider, owner or agent has paid any activation fee required under section 48-3772, subsection A, paragraph 7.

D. The director shall designate private water companies in active management areas that have an assured water supply. If a city or town acquires a private water company that has contracted for central Arizona project water, the city or town shall assume the private water company's contract for central Arizona project water.

E. The director shall designate cities and towns in active management areas where an assured water supply exists. If a city or town has entered into a contract for central Arizona project water, the city or town is deemed to continue to have an assured water supply until December 31, 1997. Commencing on January 1, 1998, the determination that the city or town has an assured water supply is subject to review by the director and the director may determine that a city or town does not have an assured water supply.

F. The director shall notify the mayors of all cities and towns in active management areas and the chairmen of the boards of supervisors of counties in which active management areas are located of the cities, towns and private water companies designated as having an assured water supply and any modification of that designation within thirty days of after the designation or modification. If the service area of the city, town or private water company has qualified as a member service area pursuant to title 48, chapter 22, article 4, the director shall also notify the conservation district of the designation or modification and shall report the projected average annual replenishment obligation for the member service area based on the projected and committed average annual demand for water within the service area during the effective term of the designation or modification subject to any limitation in an agreement between the conservation district and the city, town or private water company. For each city, town or private water company that qualified as a member service area under title 48, chapter 22 and that was designated as having an assured water supply before January 1, 2004, the director shall report to the conservation district on or before January 1, 2005 the projected average annual replenishment obligation based on the projected and committed average annual demand for water within the service area during the effective term of the designation subject to any limitation in an agreement between the conservation district and the city, town or private water company. Persons proposing to offer subdivided lands served by those designated cities, towns and private water companies for sale or lease are exempt from applying for and obtaining a certificate of assured water supply.

G. This section does not apply in the case of the sale of lands for developments that are subject to a mineral extraction and metallurgical processing permit or an industrial use permit pursuant to sections 45-514 and 45-515.

H. The director shall adopt rules to carry out the purposes of this section. On or before January 1, 2008, The rules shall provide for a reduction in water demand for an application for a designation of assured water supply or a certificate of assured water supply if a gray water reuse system will be installed that meets the requirements of the rules adopted by the department of environmental quality for gray water systems and if the application is for a certificate of assured water supply, the land for which the certificate is sought must qualify as a member land in a conservation district pursuant to title 48, chapter 22, article 4. For the purposes of this subsection, "gray water" has the same meaning prescribed in section 49-201.

I. If the director designates a municipal provider as having an assured water supply under this section and the designation lapses or otherwise terminates while the municipal provider's service area is a member service area of a conservation district, the municipal provider or its successor shall continue to comply with the consistency with management goal requirements in the rules adopted by the director under subsection H of this section as if the designation was still in effect with respect to the municipal provider's designation uses. When determining compliance by the municipal provider or its successor with the consistency with management goal requirements in the rules, the director shall consider only water delivered by the municipal provider or its successor to the municipal provider's designation uses. A person is the successor of a municipal provider if the person commences water service to uses that were previously designation uses of the municipal provider. Any groundwater delivered by the municipal provider or its successor to the municipal provider's designation uses in excess of the amount allowed under the consistency with management goal requirements in the rules shall be considered excess groundwater for purposes of title 48, chapter 22. For the purposes of this subsection, "designation uses" means all water uses served by a municipal provider on the date the municipal provider's designation of assured water supply lapses or otherwise terminates and all recorded lots within the municipal provider's service area that were not being served by the municipal provider on that date but that received final plat approval from a city, town or county on or before that date. Designation uses do not include industrial uses served by an irrigation district under section 45-497.

J. Subsections A, B and C of this section do not apply to a person who proposes to offer subdivided land for sale or lease in an active management area if all the following apply:

1. The director issued a certificate of assured water supply for the land to a previous owner of the land and the certificate was classified as a type A certificate under rules adopted by the director pursuant to subsection H of this section.

2. The director has not revoked the certificate of assured water supply described in paragraph 1 of this subsection, and proceedings to revoke the certificate are not pending before the department or a court. The department shall post on its website a list of all certificates of assured water supply that have been revoked or for which proceedings are pending before the department or a court.

3. The plat submitted to the department in the application for the certificate of assured water supply described in paragraph 1 of this subsection has not changed.

4. Water service is currently available to each lot within the subdivided land and the water provider listed on the certificate of assured water supply described in paragraph 1 of this subsection has not changed.

5. The subdivided land qualifies as a member land under title 48, chapter 22 and the subdivider has paid any activation fee required under section 48-3772, subsection A, paragraph 7 and any replenishment reserve fee required under section 48-3774.01, subsection A, paragraph 2.

6. The plat is submitted for approval to a city, town or county that is listed on the department's website as a qualified platting authority.

K. Subsection J of this section does not affect the assignment of a certificate of assured water supply as prescribed by section 45-579.

L. On or before December 31, 2023, the director shall study and submit to the governor, president of the senate and speaker of the house of representatives a report on whether and how a person that seeks a building permit for six or more residences within an active management area, without regard to any proposed lease term for those residences, should apply for and obtain a certificate of assured water supply from the director before presenting the permit application for approval to the county in which the land is located, unless the applicant has obtained a written commitment of water service for the residences from a city, town or private water company designated as having an assured water supply pursuant to this section.

m. For the purposes of this section and rules ADOPTED PURSUANT to this section, the director shall find that:

1. the amount of groundwater calculated PURSUANT to section 45-465.05, subsection c is physically available for assured water supply purposes in accordance with subsection n, paragraph 1 of this section.

2. the PROJECTED use of groundwater that is determined to be available for assured water supply purposes pursuant to section 45-465.05, subsection e, PARAGRAPH 2 is Consistent with achievement of the management goal in accordance with subsection n, paragraph 2 of this section.

M. n. For the purposes of this section, "assured water supply" means all of the following:

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 one hundred years. Beginning January 1 of the calendar year following the year in which a groundwater replenishment district is required to submit its preliminary plan pursuant to section 45-576.02, subsection A, paragraph 1, with respect to an applicant that is a member of the district, "sufficient groundwater" for the purposes of this paragraph means that the proposed groundwater withdrawals that the applicant will cause over a period of one hundred years will be of adequate quality and will not exceed, in combination with other withdrawals from land in the replenishment district, a depth to water of one thousand feet or the depth of the bottom of the aquifer, whichever is less. In determining depth to water for the purposes of this paragraph, the director shall consider the combination of:

(a) The existing rate of decline.

(b) The proposed withdrawals.

(c) The expected water requirements of all recorded lots that are not yet served water and that are located in the service area of a municipal provider.

2. The projected groundwater use is consistent with the management plan and achievement of the management goal for the active management area.

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. The director may accept evidence of the construction assurances required by section 9-463.01, 11-823 11-822 or 32-2181 to satisfy this requirement. END_STATUTE