Water is Arizona’s lifeblood. Consider the findings in a recent report produced by the L. Williams Seidman Research Institute at the ASU W.P. Carey School of Business. The report estimates that without Colorado River water, the gross state product in Arizona would drop by over $185 billion in a year and more than 2 million jobs would be lost. Arizona has a relative abundance of groundwater in some locations, very scarce water resources in others. Arizona groundwater supplies have been augmented in some areas by recharge / replenishment– mostly water banked though the Arizona Water Banking Authority.

There are two basic types of water law in Arizona – Surface Water and Groundwater. Arizona water law is far too complex to cover here – issues and questions should be directed to competent legal counsel. What follows is a general overview of water regulation associated with Groundwater in Arizona to provide a basic frame of reference.

If you have a question about water use or rights, or about water rights or entitlements associated with a specific property, you should consult with competent legal counsel. There are some very good water law attorneys in Arizona and the West.

Land buyers should take the necessary steps to understand what water rights if any are appurtenant to a tract of land they are acquiring – and ensure that any and all water rights appurtenant to a property being acquired will transfer with the land on conveyance. Water rights can make a meaningful value contribution to Arizona land. In some cases transfers will require filings and processes with the Arizona Department of Water Resources. Some cases involving surface water may require filing with the relevant adjudication court. Water right transfers can take some time and effort – but it is important that they are done properly.

The 1980 Arizona Groundwater Code addressed the need to manage the state’s groundwater resources to support the rapidly growing population.

The Code requires:

• Establishment of a program of groundwater rights and permits.
• A provision prohibiting irrigation of new agricultural lands within AMAs.
• Preparation of a series of five water management plans for each AMA creating conservation targets and other water management criteria.
• Development of a program requiring developers to demonstrate a 100-year assured water supply for new development / growth.
• A requirement to quantify water pumped from all large wells.
• A program for annual water withdrawal and use reporting.

Areas with heavy reliance on groundwater were identified and designated as Active Management Areas (AMAs). There are five AMAs in Arizona - Prescott, Phoenix, Pinal, Tucson, and Santa Cruz. These areas are subject to regulation – as defined in the Groundwater Code. The AMAs carry out programs tailored to their specific areas to achieve these goals.

Prescott AMA Yavapai County Area: ~ 485 square miles Contains 2 sub-basins 3 million Acre-Feet (AF) of groundwater in storage 20,000 AF of annual water use Phoenix AMA Maricopa County Area: ~ 5,600 square miles Consists of 7 sub-basins ~ 287,000 acres of farmland Over 2 million AF of annual water use Pinal AMA Pinal County Area: ~ 4,000 square miles Contains 5 sub-basins 260,000 acres of non-Indian farmland Over 800,000 AF of non-Indian annual water use Tucson AMA Pima County Area: ~ 3,800 square miles Contains 2 sub-basins Over 300,000 AF of annual water use Santa Cruz AMA Santa Cruz County Area: ~ 750 square miles Consists of 1 sub-basin Over 20,000 AF of annual water use

AMAs and irrigation districts in Arizona and the Harquahala INA

The four AMAs include ~ 80% of Arizona's population and ~ 70% of the state's groundwater overdraft.

The Groundwater Management Act also established two Irrigation Non-Expansion Areas the Joseph City and Douglas INAs.  The Harquahala INA was subsequently established in 1981. The Phoenix AMA manages the Joseph City and Harquahala INAs.

Active Management Areas include mandatory conservation programs for anyone withdrawing, distributing or receiving groundwater designed to achieve reductions in withdrawals of groundwater. INAs are not as regulated as AMAs, but they do have restrictions related to increasing the number of irrigated acres.

Following are the larger irrigation districts within Arizona’s Active Management Areas. If you are buying or selling irrigated or formerly irrigated land in one of these districts you should take care to address the issue of water rights in any conveyance.

• Arlington Canal Company
• Buckeye Water Conservation and Drainage District
• Central Arizona Irrigation and Drainage District
• Chandler Heights Citrus Irrigation District
• Chino Valley Irrigation District
• Cortaro-Marana Water Users Association
• Hohokam Irrigation District
• Maricopa - Stanfield Irrigation and Drainage District
• New Magma Irrigation and Drainage District
• Roosevelt Irrigation District
• Roosevelt Water Conservation District
• Saint Johns Irrigation District
• Salt River Valley Water Users Association
• San Carlos Irrigation and Drainage District
• San Tan Irrigation District

 

There are three types of rights known as "grandfathered rights" – which derive from historic individual use:

Irrigation grandfathered rights,
Type 1 non-irrigation grandfathered rights, and
Type 2 non-irrigation grandfathered rights.

An Irrigation grandfathered right (IGR) is the right to irrigate land that had been irrigated with groundwater between 1975 and 1980. Land without an Irrigation grandfathered right may not be irrigated with groundwater. The amount of an IGR is based on irrigation duty acres multiplied by the irrigation water duty. So a tract of land with 160 irrigation duty acres and an irrigation water duty of 4 acre feet of water per acre has an IGR of 640 acre feet of water. An Irrigation grandfathered right defines the amount of groundwater that may be used.  Irrigation grandfathered rights may not be sold apart from the land to which they are appurtenant.

A Type 1 right is created when land is permanently retired from agriculture and converted to a non-irrigation use – residential development for example. The type 1 right is either 3 acre feet per irrigation duty acre retired or the actual irrigation water duty per acre – whichever is less. Like an Irrigation grandfathered right, a Type 1 right may only  be conveyed only with the appurtenant land. The maximum amount of groundwater that may be pumped each year using a Type 1 right is three acre feet per acre.

A Type 2 right may only be used for non-irrigation purposes. The right is based on historical withdrawal of groundwater for a non-irrigation use and equals the maximum amount pumped in any one year between 1975 and 1980. An example of non-irrigation use would be use in the processes for a manufacturing or industrial facility.

Type 2 rights are more flexible (marketable) because they may be sold separately from the original land or well. A Type 2 right may entitle the owner (with ADWR approval) to withdraw groundwater from a new location within the same AMA. Type 2 rights may be leased and it is possible to lease only a portion of the right. However, if a Type 2 right is sold the conveyance must include the entire right.
There are two types of Type 2 water rights – 1) an unrestricted Type 2 right – which may be used for a variety of purposes from manufacturing and industrial facilities to dairies. With ADWR approval an unrestricted Type 2 right may be transferred for use in another location within the same AMA. 2) a Type 2 right restricted to mining including sand and gravel / construction aggregates. This Type 2 right may also be relocated within the same AMA with ADWR approval – but may only be used for purposes of mineral extraction and processing (typically construction aggregate operations).
Also worth noting are Withdrawal Permits and Service Area Rights. Withdrawal permits may allow new withdrawals of groundwater for non-irrigation uses within AMAs. There are eight types of withdrawal permits covering various groundwater uses ranging from general industrial use to poor-quality groundwater withdrawals. Service Area Rights are the source of domestic water for most Arizonans. Service area rights are used by municipalities, private water companies, and irrigation districts in order to pump groundwater to serve their customers.

In an AMA, developers must demonstrate an assured supply of water to ADWR before the land may be marketed. In order to receive an assured water supply certificate from ADWR, a developer must prove that:

1. There is sufficient quantity and quality of water available to sustain the proposed development for 100 years;

2. The proposed use is consistent with the management plan in effect at the time and achievement of the AMA management goal(s) – doesn’t obstruct achieving safe yield;

3. The entity that will provide the water has the necessary financial capability to construct the water delivery and treatment systems necessary to serve the proposed development;
Alternatively, the developer can locate the proposed development within the service area of a city, town, or private water company with a Designation of Assured Water Supply from ADWR.

If the subdivision will be served by a designated provider, the developer need only obtain written commitment of service from the water provider. In 1995, ADWR adopted new Assured Water Supply Rules, primarily to support the groundwater management goals. The rules require new developments to be sustained predominantly by renewable supplies, such as surface water (including effluent / tertiary water and Colorado River water delivered by the Central Arizona Project).

The Groundwater Replenishment District: The Central Arizona Groundwater Replenishment District (CAGRD) was established in 1993 by the state legislature to serve as a groundwater replenishment authority for its members. It provides a method for property owners and water providers to demonstrate a 100-year assured water supply under Arizona law by agreeing to have the CAGRD recharge amounts of groundwater that are over the limits established by the assured water supply rules. The CAGRD is operated by the Central Arizona Water Conservation District (CAWCD), which also oversees the Central Arizona Project. It is governed by the 15-member CAWCD Board of Directors but is a separate legal and financial entity from the CAWCD. The CAGRD includes the three AMAs within Phoenix, Tucson and Pinal County.

Extinguishment credits are generated when a grandfathered groundwater right is extinguished.  The extinguished right can never be used again; however, the credits generated can be pledged to a Certificate of Assured Water Supply or Designation of Assured Water Supply to help meet the consistency with management goal requirement. This criterion must be met in order to obtain the Certificate or Designation of Assured Water Supply.  Extinguishment credits are not the only way to prove consistency with management goal, but they are helpful in doing so (see also CAGRD membership).  Essentially, the credits offset groundwater use by the proposed subdivision.

These are dynamic times for water related issues in Arizona and the western states. The region will continue to explore new approaches and mechanisms to address water supplies and requirements in the years to come. It is likely that new accords will need to be reached both within and between the Colorado River Lower and Upper Basin states. Additional agreements with Mexico regarding Colorado River water may also be on the horizon.

The long-term the trend will likely be continued migration of water and water rights / entitlements from agriculture to urban uses. There is ample precedent in recent decades – water leased from farms in the Palo Verde Irrigation District in Blythe to the Metropolitan Water District (Los Angeles metro area); water from farms in the Imperial Irrigation District to the San Diego Water Users; and dir ect land purchases which idled irrigated acreage to supply water for urban uses – water from former farmland in the Avra Valley used by the City of Tucson.

I expect to see continued implementation of water efficient irrigation technologies on acreage that remains in agricultural production and fallowing or rotational fallowing of irrigated farmland in certain area to make more water available for urban / municipal uses.

Sometimes meaningful opportunities can be found in challenging situations. If you need water for a project in Arizona, you would like to invest in Arizona water rights, or if you have water rights you are considering leasing or selling let’s explore the possibilities. Info@StrategicSiting.com

In the meantime, let’s pray for more rain and snow in the Colorado River Basin states.