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CENTRAL ARIZONA PROJECTPublic Policy CommitteeMarch 7, 2019 9:00 AM

Central Arizona Project23636 N. 7th StreetPhoenix, ArizonaBoard Room

FINAL AGENDATimes shown are approximate. Some items may take more or less time than scheduled, or the President

may grant requests to hear items in an order other than shown.

1. Consideration of Action to Approve the Minutes of the February 7, 2019 Public Policy Committee Cesare

2. Report on State Issues that Could Affect CAP and Possible Consideration of a Recommendation thatthe Board Take Action on State Issues that Could Impact CAP including but not limited to HB2586 (Leadership and Public Trust: Relationships Other Stakeholders^) Gray

3. Report on Federal Issues that Could Affect CAP and Possible Consideration of a Recommendationthat the Board Take Action on Federal Issues that Could Impact CAP (Leadership and Public Trust:Relationships Other Stakeholders^) Gray

4. Public Comment5. Adjourn

^ Linkage to 2016 CAWCD Board of Directors Strategic Plan.

CENTRAL ARIZONA WATER CONSERVATION DISTRICT

Public Policy Committee February 7, 2019

A special meeting of the Public Policy Committee ("Committee") of the Central Arizona Water Conservation District’s ("CAP" or "CAWCD") Board of Directors was called to order by Chairwoman Karen Cesare on February 7, 2019 at 9:12 a.m. The meeting was held at the Central Arizona Project, 23636 North Seventh Street, Phoenix, Arizona, in the Board Room Committee members present were Karen Cesare, Pima County; Lisa Atkins, Maricopa County; Jim Hartdegen, Pinal County; and Heather Macre, Maricopa County,

Staff members present were Ted Cooke, General Manager, Jay Johnson, General Counsel; Bridget Schwartz-Manock, Director of Public Affairs; Jeff Gray, Legislative Affairs Manager; Jennifer Miller, Board Support Specialist; and Jessika Rodriguez, Executive Secretary.

1. CONSIDERATION OF ACTION TO APPROVE THE MINUTES OF THE JANUARY 3, 2019

PUBLIC POLICY COMMITTEE AND THE JANUARY 24, 2019 SPECIAL PUBLIC POLICY COMMITTEE - CESARE On a motion (Board Member Macre) and second (Board Member Hartdegen), approved the minutes of the January 3, 2019 Committee meeting and the January 24, 2019 Special Committee meeting.

Voting yes: Cesare, Atkins, Hartdegen, Macre

2. REPORT ON STATE ISSUES THAT COULD AFFECT CAP AND POSSIBLE CONSIDERATION OF A RECOMMENDATION THAT THE BOARD TAKE ACTION ON STATE ISSUES THAT COULD IMPACT CAP (LEADERSHIP AND PUBLIC TRUST: RELATIONSHIPS - OTHER STAKEHOLDERS^) - GRAY

Mr. Gray, Legislative Affairs Manager, provided an overview of the Governor’s State of the State address, a timeline for the release of the Executive Budget and the upcoming legislative session.

Mr. Gray discussed the Governors FY2020 budget requesting $65.914M for ADWR, which includes a $37M increase for the Drought Contingency Plan (DCP). He said $250k is requested for the Arizona Water Protection Fund.

Mr. Gray reported on the status of the following bills:

• HB2013 - $1M appropriation to the Arizona Water Protection Fund • SB1227 / HB2545 –Authorization for the AWBA to exchange existing LTSCs between

AMAs; LTSC transfer fee waiver. Limited repeal of “WaterBUD.” General Fund appropriation of $7 million; $2M from ADWR DCP funds; repurposing Pinal withdrawal fee for groundwater infrastructure in Pinal AMA; General Fund appropriation of $30 million; ADWR authority to act as

Public Policy Committee February 7, 2019 Page 2

the fiscal agent for NGO contributions. $2M from ADWR DCP funds to the Augmentation and Conservation Assistance Fund at ADWR for conservation grants in AMAs for conservation of groundwater. ADWR report to Legislature on DCP agreements.

• SJR1001/ HJR2002 – Resolution to authorize the ADWR Director to sign the Interstate DCP Agreements on behalf of the state of Arizona with specific stipulations.

Mr. Gray presented on the following bills:

• HB2434, introduced by State Representative Cobb. The bill allows for an irrigation and water conservation district located in a county that has formed a county water authority is prohibited from transferring fourth priority Colorado River water that is subject to the Boulder Canyon Project Act to a location outside the counties in Arizona that border the Colorado River.

• HB2468, also introduced by State Representative Cobb. This bill is a requirement of ADWR to adopt an emergency rule to implement policies to provide for the review and advice of the Director on any negotiation or contract that affects the allocation and use of main stream Colorado River water or the allocation and use of Colorado River water delivered through the Central Arizona Project.

• HB2586, introduced by State Representative Cook. This addresses assured water supply issues in Pinal County, as well as makes changes to statutes related to the CAGRD.

• SB1541, introduced by State Representative Borrelli. This bill allows for an irrigation and water conservation district established in a county with more than 200,000 persons and that has a Colorado River boundary, defines land or real property as all real property regardless of use or designation and applies to instances in which holding ownership or evidence of title is required for: voting or holding office in a District; or signing a formation, dissolution, boundary change or recall petition or any other District function.

3. REPORT ON FEDERAL ISSUES THAT COULD AFFECT CAP AND POSSIBLE CONSIDERATION OF A RECOMMENDATION THAT THE BOARD TAKE ACTION ON FEDERAL ISSUES THAT COULD IMPACT CAP (LEADERSHIP AND PUBLIC TRUST: RELATIONSHIPS - OTHER STAKEHOLDERS^) - GRAY Mr. Gray gave an overview of the newly appointed committees, highlighting the position of members of Arizona’s congressional delegation. He discussed the impact of the Federal shutdown and the temporary agreement to fund the Federal Government until February 15.

Mr. Gray provided a summary of S.47, Natural Resources Management Act, and also provided an update on the timing of Federal rulemaking relating to the Waters of the US (WOTUS).

Chairwoman Cesare mentioned DCP requires congressional approval and requested the status.

Mr. Cooke advised Chairwoman Cesare, and members of the committee, that there have been discussions with the seven basin states, including the Bureau of Reclamation, relating to timing and a possible letter to congressional offices.

Public Policy Committee February 7, 2019 Page 3

4. PUBLIC COMMENT No Public Comment.

5. ADJOURN There being no further business to come before the Committee, the meeting adjourned at 9:35 am. _____________________________________ Karen Cesare Chair

623-869-2333 | From Tucson 520-579-0046 | Fax 623-869-2332 | CentralArizonaProject.com

Agenda Number 2.

CONTACT: Bridget [email protected]

Jeff [email protected]

MEETING DATE: Thursday, March 7, 2019

AGENDA ITEM: Report on State Issues that Could Affect CAP and Possible Consideration of a Recommendation that the Board Take Action on State Issues that Could Impact CAP including but not limited to HB 2586 (Leadership and Public Trust: Relationships - Other Stakeholders^) - Gray

RECOMMENDATION: See attached document and proposed staff recommendations.

FISCAL IMPLICATIONS: No

Impact on Budget: None

Additional spending authority requested: None

Impact on Reserves: None

Impact on Rates: None

LINKAGE TO STRATEGIC PLAN, POLICY, STATUTE OR GUIDING PRINCIPLE: CAWCD 2016 Board of Directors Strategic Plan

• Leadership & Public Trust: Relationships – Improve relationships with customers and stakeholders• Leadership & Public Trust: CAP Board Leadership – Equip Board members to effectively represent CAP and its positions• Water Supply: Optimize reliability and sustainability of CAP water supply

PREVIOUS BOARD ACTION/ACTIVITY:November 1, 2018 Public Policy Committee previewed and discussed the draft proposed 2019 State

Legislative Agenda.December 6, 2018 Board adopted 2019 State Legislative Agenda.January 3, 2019 Board adopted a position of support for HB 2013 (Appropriation; Arizona Water

Protection Fun)January 24, 2019 Board adopted a position of support on the DCP Joint Resolution. February 7, 2019 Public Policy Committee discussed 2019 Legislative issues.

ISSUE SUMMARY/DESCRIPTION:This report describes CAP's State Legislative Agenda and provides an update on those issues. In addition, this update reports on and requests guidance on bills being considered by the State Legislature.

See attached documents and issue description.

SUGGESTED MOTION:I move that the Board adopt a position on the following pending state legislation of interest to CAP: (staff recommendation in parenthesis) HB 2586 water supplies; groundwater replenishment credits (MONITOR)

ATTACHMENTS:1. State-Legislative-Issues-Update2. State PowerPoint Meeting March 73. H.2586 NATURAL RESOURCES ENERGY WATER

Legislative Affairswww.CentralArizonaProject.com623-869-2425

[1]

February 27, 2019

State UpdateFebruary 27 marks the 45th day of the legislative session. There were a total of 1,289 bills and 96 memorials/resolutions introduced by respective deadlines in each house (this number will rise slightly once budget bills are introduced later in session). To date, the Governor has signed 6 and vetoed 1. The last day for bills to be heard in committee in their house of origin was February 22, except for bills that have also been assigned to the Appropriations committees, which get one additional week. As is custom, non-Appropriations committee hearings are cancelled the week after committee hearing deadlines (“change-over” week) to allow the House and Senate to process bills through Caucus, Committee of the Whole (COW), and 3rd Read. This usually results in long floor sessions given the large volume of bills. Committee hearings for bills in opposite houses will likely resume as soon as March 4.

There has been little public movement on the state budget to date. With the passage of the DCP legislative package, attention at the Legislature has turned to other issues such as tax conformity, regulation of the “car-sharing” industry, charter schools and education funding.

The following State Legislative Issues Update outlines the status of the Board-approved 2019 Legislative Agenda, as well as other relevant state issues. Legislative Affairs staff comes before the Public Policy Committee on a regular basis to seek guidance and direction on these and other proposed legislation and rules that may arise during the year.

Central Arizona Project Authorities and OperationsCAP Position: Monitor legislative and regulatory efforts that could impact CAP’s contractual authorities or directly impact CAP water supplies and operations.

No update to report at this time.

Colorado River Water SupplyCAP Position: Support the Lower Basin Drought Contingency Plan (DCP), including state legislative authorization for the Arizona Department of Water Resources to enter into the DCP agreements with other necessary Arizona and interstate parties. Continue to cooperate with Federal, State, Tribal and other stakeholders to support conservation efforts that protect water elevations in Lake Mead.


[2]

HB2590 groundwater irrigation efficiency fund; appropriation (s/e amendment) – Rep. Cook• Appropriates $20M from the state general fund in fiscal year 2019-2020 to the temporary

Groundwater and Irrigation Efficiency Projects Fund at ADWR. All monies unencumbered on Dec. 31, 2021 revert to the state general fund.

Passed House NREW on Feb 19, but failed to pass House Appropriations on Feb 25.

Arizona Water ResourcesCAP Position: Continue to collaborate with elected officials and stakeholders on efforts to address in-state and interstate water resources issues. Monitor legislative efforts that encourage in-state water conservation and augmentation activities.


Multi-Species Conservation Program (MSCP) FundingCAP Position: Support the Arizona Game and Fish Department's efforts to collect and maintain revenues sufficient to continue its annual contribution toward the costs of the MSCP. Monitor legislative and executive proposals that impact dedicated annual state funding of the MSCP.


Funding of State Water Agencies and CommissionsCAP Position: Support the efforts of the Arizona Department of Water Resources and the Arizona Water Protection Fund Commission to secure sufficient state General Fund appropriations in order to carry out statutory functions. Monitor legislative actions that propose to use funds available to the Arizona Water Banking Authority Commission for other purposes.

HB2013 appropriation; Arizona water protection fund would appropriate $1,000,000 to the Arizona Water Protection Fund in FY 2020.The bill passed the House by a vote of 60-0 on Feb 11 and was assigned to Senate Appropriations, and Water & Agriculture Committees. CAP Position: SUPPORT


[3]

Central Arizona Groundwater Replenishment District (CAGRD)CAP Position: Monitor any proposed CAGRD-related legislation to ensure its operations are not adversely impacted. Promote awareness of CAGRD’s statutory functions, operations, and funding to inform lawmakers of its critical contribution to Arizona’s water management and economic development.

Four bills were introduced that would have had a direct or indirect impact to the CAGRD. Three of the four were not heard in committee by the deadline and the fourth has since been amended to remove most of the CAGRD-related provisions.HB2586 water supplies; groundwater replenishment; credits (s/e amendment) – Rep. Cook The bill provides for extension of an Assured Water Supply (AWS) analysis in the Pinal AMA if

certain conditions are met, as well as outlines new factors to be considered in the AWS model. As introduced, the bill also contained a number of CAGRD-related provisions. A strike-everything amendment was adopted in House Natural Resources, Energy and Water on Feb 19 retaining the Pinal AMA section of the bill and removing all but one CAGRD provision to clarify the 100-year reserve target calculation.

CAP Recommended Position on HB2586: MONITOR.

Bills not heard in committee by deadline:

HB2434 Colorado river transfer; limitation – Rep. Cobb Prohibits an irrigation and water conservation district located in a county that has formed a

county water authority from transferring fourth priority Colorado River water that is subject to the Boulder Canyon Project Act to a location outside the counties in Arizona that border the Colorado River.

HB2468 Colorado river transfer; emergency rulemaking – Rep. Cobb Requires ADWR to adopt an emergency rule to implement policies to provide for the review

and advice of the Director on any negotiation or contract that affects the allocation and use of main stream Colorado River water or the allocation and use of Colorado River water delivered through the Central Arizona Project.

SB1541 irrigation districts; qualified electors; definitions – Sen. Borrelli For an irrigation and water conservation district established in a county with more than

200,000 persons and that has a Colorado River boundary, defines land or real property as all real property regardless of use or designation and applies to instances in which holding ownership or evidence of title is required for: voting or holding office in a District; or signing a formation, dissolution, boundary change or recall petition or any other District function.


[4]

Agency RulemakingCAP Position: Continue to monitor state rulemaking and implementation related to energy, air quality, water quality and other issues that may affect CAP operations.


If you have any questions or would like more information regarding any of the issues contained in this report, please contact CAP Legislative Affairs at 623-869-2425.

1

State Legislative Update

Public Policy CommitteeMarch 7, 2019

Jeff GrayLegislative Affairs Manager

State Update

• 1,289 bills and 96 memorials/resolutions introduced by deadline.

• The last day for bills to be heard in committee in their house of origin was February 22, except for bills that have also been assigned to the Appropriations committees, which get one additional week.

• House and Senate are processing bills through Committee of the Whole (COW) and 3rd Read.

• Committee hearings for bills in opposite houses may begin as soon as March 4.

2

Arizona Water Protection Fund

• Rep. Gail Griffin introduced HB2013, a bill that would appropriate $1,000,000 to the Fund.

• HB2013 passed the House by a vote of 60-0 on Feb 11 and was assigned to Senate Appropriations, and Water & Agriculture.

• CAP Position: SUPPORT

Colorado River Water Supply► Support the Lower Basin Drought Contingency Plan (DCP), including state legislative authorization for the Arizona Department of Water Resources to enter into the DCP agreements with other necessary Arizona and interstate parties. ► Continue to cooperate with Federal, State, Tribal and other stakeholders to support conservation efforts that protect water elevations in Lake Mead.

HB2590 groundwater irrigation efficiency fund; appropriation (s/e amendment) – Rep. Cook• Appropriates $20M from the state general fund in fiscal year

2019-2020 to the temporary Groundwater and Irrigation Efficiency Projects Fund at ADWR. All monies unencumbered on Dec. 31, 2021 revert to the state general fund.

Passed House NREW on Feb 19, but failed to pass House Appropriations on Feb 25.

3

Central Arizona Groundwater Replenishment District (CAGRD)

► Monitor any proposed CAGRD-related legislation to ensure its operations are not adversely impacted. ► Promote awareness of CAGRD’s statutory functions, operations, and funding to inform lawmakers of its critical contribution to Arizona’s water management and economic development.

HB2586 water supplies; groundwater replenishment; credits(s/e amendment) – Rep. Cook• The bill provides for extension of an Assured Water Supply

(AWS) analysis in the Pinal AMA if certain conditions are met, as well as outlines new factors to be considered in the AWS model.

• As introduced, the bill also contained a number of CAGRD-related provisions. A strike-everything amendment was adopted to the bill in House Natural Resources, Energy and Water on Feb 19 leaving the Pinal AMA section of the bill and removing all but one CAGRD provision to clarify the 100yr reserve target calculation.

CAP Recommended Position on HB2586: MONITOR.

Central Arizona Groundwater Replenishment District (CAGRD)

► Monitor any proposed CAGRD-related legislation to ensure its operations are not adversely impacted. ► Promote awareness of CAGRD’s statutory functions, operations, and funding to inform lawmakers of its critical contribution to Arizona’s water management and economic development.

Not heard in committee by deadline

• HB2434 Colorado river transfer; limitation (Rep. Cobb)

• HB2468 Colorado river transfer; emergency rulemaking (Rep. Cobb)

• SB1541 irrigation districts; qualified electors; definitions (Sen. Borrelli)

4

Other Bills

HB2111 s/e water adequacy provision; rescission• Status: Passed House Caucus Feb 25

HB2467 s/e committees; west basin water users• Status: Passed House NREW Feb 19

HB2475 water use; criminal penalty; wells• Status: Passed House Caucus Feb 25

HB2476 surface water forfeiture; repeal• Held in House NREW Feb 19

HB2477 adjudication statutes; unconstitutional provisions; repeal• Status: Passed House Caucus Feb 25

HB2609 Harquahala non-expansion area; groundwater transfer• Status: Passed House Caucus Feb 25

HCM2004 reserved water rights; exclusion• Status: Passed House Caucus Feb 25

HCR2001 s/e Navajo generating station• Status: Passed House Caucus Feb 26

HCR2019 s/e support; water management policies• Status: Passed House Caucus Feb 25

KNOWYOURWATER

Questions?CentralArizonaProject.com ~ CAGRD.com

Fifty-fourth Legislature First Regular Session

COMMITTEE ON NATURAL RESOURCES, ENERGY & WATER

HOUSE OF REPRESENTATIVES AMENDMENTS TO H.B. 2586

(Reference to printed bill)

Strike everything after the enacting clause and insert: 1

"Section 1. Section 45-576, Arizona Revised Statutes, is amended to 2

read: 3

45-576. Certificate of assured water supply; designated 4

cities, towns and private water companies; 5

exemptions; definition 6

A. Except as provided in subsections G and J of this section, a 7

person who proposes to offer subdivided lands, as defined in section 8

32-2101, for sale or lease in an active management area shall apply for and 9

obtain a certificate of assured water supply from the director prior to 10

BEFORE presenting the plat for approval to the city, town or county in 11

which the land is located, where such is required, and prior to BEFORE 12

filing with the state real estate commissioner a notice of intention to 13

offer such lands for sale or lease, pursuant to section 32-2181, unless the 14

subdivider has obtained a written commitment of water service for the 15

subdivision from a city, town or private water company designated as having 16

an assured water supply pursuant to this section. 17

B. Except as provided in subsections G and J of this section, a 18

city, town or county may approve a subdivision plat only if the subdivider 19

has obtained a certificate of assured water supply from the director or the 20

subdivider has obtained a written commitment of water service for the 21

subdivision from a city, town or private water company designated as having 22

an assured water supply pursuant to this section. The city, town or county 23

House Amendments to H.B. 2586

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shall note on the face of the approved plat that a certificate of assured 1

water supply has been submitted with the plat or that the subdivider has 2

obtained a written commitment of water service for the proposed subdivision 3

from a city, town or private water company designated as having an assured 4

water supply pursuant to this section. 5

C. Except as provided in subsections G and J of this section, the 6

state real estate commissioner may issue a public report authorizing the 7

sale or lease of subdivided lands only on compliance with either of the 8

following: 9

1. The subdivider, owner or agent has paid any activation fee 10

required under section 48-3772, subsection A, paragraph 7 and any 11

replenishment reserve fee required under section 48-3774.01, subsection A, 12

paragraph 2 and has obtained a certificate of assured water supply from the 13

director. 14

2. The subdivider has obtained a written commitment of water service 15

for the lands from a city, town or private water company designated as 16

having an assured water supply pursuant to this section and the subdivider, 17

owner or agent has paid any activation fee required under section 48-3772, 18

subsection A, paragraph 7. 19

D. The director shall designate private water companies in active 20

management areas that have an assured water supply. If a city or town 21

acquires a private water company that has contracted for central Arizona 22

project water, the city or town shall assume the private water company's 23

contract for central Arizona project water. 24

E. The director shall designate cities and towns in active 25

management areas where an assured water supply exists. If a city or town 26

has entered into a contract for central Arizona project water, the city or 27

town is deemed to continue to have an assured water supply until December 28

31, 1997. Commencing on January 1, 1998, the determination that the city 29

or town has an assured water supply is subject to review by the director 30

and the director may determine that a city or town does not have an assured 31

water supply. 32


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F. The director shall notify the mayors of all cities and towns in 1

active management areas and the chairmen of the boards of supervisors of 2

counties in which active management areas are located of the cities, towns 3

and private water companies designated as having an assured water supply 4

and any modification of that designation within thirty days of the 5

designation or modification. If the service area of the city, town or 6

private water company has qualified as a member service area pursuant to 7

title 48, chapter 22, article 4, the director shall also notify the 8

conservation district of the designation or modification and shall report 9

the projected average annual replenishment obligation for the member 10

service area based on the projected and committed average annual demand for 11

water within the service area during the effective term of the designation 12

or modification subject to any limitation in an agreement between the 13

conservation district and the city, town or private water company. For 14

each city, town or private water company that qualified as a member service 15

area under title 48, chapter 22 and was designated as having an assured 16

water supply before January 1, 2004, the director shall report to the 17

conservation district on or before January 1, 2005 the projected average 18

annual replenishment obligation based on the projected and committed 19

average annual demand for water within the service area during the 20

effective term of the designation subject to any limitation in an agreement 21

between the conservation district and the city, town or private water 22

company. Persons proposing to offer subdivided lands served by those 23

designated cities, towns and private water companies for sale or lease are 24

exempt from applying for and obtaining a certificate of assured water 25

supply. 26

G. This section does not apply in the case of the sale of lands for 27

developments that are subject to a mineral extraction and processing permit 28

or an industrial use permit pursuant to sections 45-514 and 45-515. 29

H. The director shall adopt rules to carry out the purposes of this 30

section. On or before January 1, 2008, the rules shall provide for a 31

reduction in water demand for an application for a designation of assured 32


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water supply or a certificate of assured water supply if a gray water reuse 1

system will be installed that meets the requirements of the rules adopted 2

by the department of environmental quality for gray water systems and if 3

the application is for a certificate of assured water supply, the land for 4

which the certificate is sought must qualify as a member land in a 5

conservation district pursuant to title 48, chapter 22, article 4. For the 6

purposes of this subsection, "gray water" has the same meaning prescribed 7

in section 49-201. 8

I. If the director designates a municipal provider as having an 9

assured water supply under this section and the designation lapses or 10

otherwise terminates while the municipal provider's service area is a 11

member service area of a conservation district, the municipal provider or 12

its successor shall continue to comply with the consistency with management 13

goal requirements in the rules adopted by the director under subsection H 14

of this section as if the designation was still in effect with respect to 15

the municipal provider's designation uses. When determining compliance by 16

the municipal provider or its successor with the consistency with 17

management goal requirements in the rules, the director shall consider only 18

water delivered by the municipal provider or its successor to the municipal 19

provider's designation uses. A person is the successor of a municipal 20

provider if the person commences water service to uses that were previously 21

designation uses of the municipal provider. Any groundwater delivered by 22

the municipal provider or its successor to the municipal provider's 23

designation uses in excess of the amount allowed under the consistency with 24

management goal requirements in the rules shall be considered excess 25

groundwater for purposes of title 48, chapter 22. For the purposes of this 26

subsection, "designation uses" means all water uses served by a municipal 27

provider on the date the municipal provider's designation of assured water 28

supply lapses or otherwise terminates and all recorded lots within the 29

municipal provider's service area that were not being served by the 30

municipal provider on that date but that received final plat approval from 31

a city, town or county on or before that date. Designation uses do not 32


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include industrial uses served by an irrigation district under section 1

45-497. 2

J. Subsections A, B and C of this section do not apply to a person 3

who proposes to offer subdivided land for sale or lease in an active 4

management area if all the following apply: 5

1. The director issued a certificate of assured water supply for the 6

land to a previous owner of the land and the certificate was classified as 7

a type a certificate under rules adopted by the director pursuant to 8

subsection H of this section. 9

2. The director has not revoked the certificate of assured water 10

supply described in paragraph 1 of this subsection, and proceedings to 11

revoke the certificate are not pending before the department or a court. 12

The department shall post on its website a list of all certificates of 13

assured water supply that have been revoked or for which proceedings are 14

pending before the department or a court. 15

3. The plat submitted to the department in the application for the 16

certificate of assured water supply described in paragraph 1 of this 17

subsection has not changed. 18

4. Water service is currently available to each lot within the 19

subdivided land and the water provider listed on the certificate of assured 20

water supply described in paragraph 1 of this subsection has not changed. 21

5. The subdivided land qualifies as a member land under title 48, 22

chapter 22 and the subdivider has paid any activation fee required under 23

section 48-3772, subsection A, paragraph 7 and any replenishment reserve 24

fee required under section 48-3774.01, subsection A, paragraph 2. 25

6. The plat is submitted for approval to a city, town or county that 26

is listed on the department's website as a qualified platting authority. 27

K. Subsection J of this section does not affect the assignment of a 28

certificate of assured water supply as prescribed by section 45-579. 29

L. FOR LAND LOCATED IN THE PINAL ACTIVE MANAGEMENT AREA, THE INITIAL 30

TERM OF AN ANALYSIS OF ASSURED WATER SUPPLY ISSUED BY THE DIRECTOR IS TEN 31

YEARS. A HOLDER OF AN ANALYSIS OF ASSURED WATER SUPPLY PERTAINING TO LAND 32


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LOCATED IN THE PINAL ACTIVE MANAGEMENT AREA MAY APPLY TO EXTEND THE 1

ANALYSIS BEFORE THE EXPIRATION DATE OF THE ANALYSIS. EXCEPT AS PROVIDED IN 2

SUBSECTION M OF THIS SECTION, THE DIRECTOR SHALL EXTEND THE ANALYSIS FOR AN 3

ADDITIONAL FIVE YEARS IF MATERIAL PROGRESS IN THE DEVELOPMENT OF THE LAND 4

DESCRIBED IN THE ANALYSIS HAS OCCURRED AT ANY TIME DURING THE CURRENT 5

ANALYSIS PERIOD. EACH ANALYSIS EXTENSION COMMENCES ON THE DATE THE 6

ANALYSIS OF ASSURED WATER SUPPLY WOULD HAVE OTHERWISE EXPIRED. FOR ANY 7

ANALYSIS UNDER THIS SUBSECTION: 8

1. FOR THE FIRST AND SECOND RENEWAL TERMS, THE DIRECTOR SHALL ACCEPT 9

ANY ONE OF THE FOLLOWING ACTIONS AS CONSTITUTING MATERIAL PROGRESS IN THE 10

DEVELOPMENT OF LAND, AND FOR THE THIRD AND LATER RENEWAL TERMS, THE 11

DIRECTOR SHALL ACCEPT ANY TWO OF THE FOLLOWING ACTIONS AS CONSTITUTING 12

MATERIAL PROGRESS IN THE DEVELOPMENT OF LAND: 13

(a) A CITY, TOWN OR COUNTY HAVING JURISDICTION HAS APPROVED THE 14

ZONING FOR OR ISSUED A USE PERMIT FOR THE LAND DESCRIBED IN THE ANALYSIS. 15

(b) A CITY, TOWN OR COUNTY HAVING JURISDICTION HAS APPROVED A MAJOR 16

AMENDMENT TO A ZONING OR USE APPROVAL FOR THE LAND DESCRIBED IN THE 17

ANALYSIS. A MAJOR AMENDMENT TO A ZONING APPROVAL IS AN AMENDMENT THAT 18

REQUIRES A HEARING AND NOTICE OF HEARING PURSUANT TO SECTION 9-462.04, 19

SUBSECTION A, PARAGRAPHS 4 AND 5 OR SECTION 11-813, SUBSECTION E, 20

PARAGRAPHS 1 AND 2, AS APPLICABLE. 21

(c) A PERSON OR ENTITY AND A CITY, TOWN OR COUNTY HAVING 22

JURISDICTION HAVE ENTERED INTO A DEVELOPMENT AGREEMENT PERTAINING TO THE 23

LAND DESCRIBED IN THE ANALYSIS. 24

(d) A PERSON OR ENTITY HAS INSTALLED WATER, SEWER, ROADWAY OR 25

DRAINAGE INFRASTRUCTURE TO PROVIDE SERVICE TO NOT LESS THAN A SUBSTANTIAL 26

PORTION OF THE LAND DESCRIBED IN THE ANALYSIS. 27

(e) THE DEPARTMENT OF ENVIRONMENTAL QUALITY OR A COUNTY HAVING 28

JURISDICTION HAS ISSUED AN APPROVAL TO CONSTRUCT OR APPROVAL OF 29

CONSTRUCTION FOR WATER INFRASTRUCTURE TO PROVIDE SERVICE TO NOT LESS THAN A 30

SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN THE ANALYSIS. 31


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(f) A PERSON OR ENTITY HAS INSTALLED WELLS THAT ARE ADEQUATE TO 1

SATISFY THE ESTIMATED WATER DEMAND ASSOCIATED WITH NOT LESS THAN A 2

SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN THE ANALYSIS. 3

(g) A FEDERAL, STATE OR LOCAL GOVERNING BODY HAVING JURISDICTION HAS 4

ISSUED A PERMIT OR LICENSE THAT IS NECESSARY TO DEVELOP LAND AND THAT 5

APPLIES TO NOT LESS THAN A SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN THE 6

ANALYSIS. 7

(h) A PERSON OR ENTITY AND A CITY, TOWN OR PRIVATE WATER COMPANY 8

HAVE ENTERED INTO AN AGREEMENT FOR WATER SERVICE TO NOT LESS THAN A 9

SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN THE ANALYSIS AND THE AGREEMENT 10

INCLUDES WATER INFRASTRUCTURE CONSTRUCTION REQUIREMENTS. 11

(i) THE DEPARTMENT HAS ISSUED A CERTIFICATE OF ASSURED WATER SUPPLY 12

FOR NOT LESS THAN A SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN THE 13

ANALYSIS. 14

(j) A PERSON OR ENTITY HAS COMPLETED A MASTER WATER, MASTER 15

WASTEWATER OR MASTER DRAINAGE PLAN FOR NOT LESS THAN A SUBSTANTIAL PORTION 16

OF THE LAND DESCRIBED IN THE ANALYSIS AND HAS FILED THE PLAN WITH A LOCAL 17

GOVERNING BODY HAVING JURISDICTION OR WITH A PRIVATE WATER COMPANY OR 18

PRIVATE SEWER COMPANY THAT IS OBLIGATED TO PROVIDE UTILITY SERVICE TO THE 19

LAND DESCRIBED IN THE ANALYSIS. 20

(k) A PERSON OR ENTITY HAS COMPLETED ANY OF THE FOLLOWING SURVEYS OR 21

REPORTS FOR NOT LESS THAN A SUBSTANTIAL PORTION OF THE LAND DESCRIBED IN 22

THE ANALYSIS AND HAS FILED THE SURVEY OR REPORT WITH A LOCAL GOVERNING BODY 23

HAVING JURISDICTION: 24

(i) ENVIRONMENTAL STUDY. 25

(ii) ENGINEERING SURVEY. 26

(iii) ARCHEOLOGICAL SURVEY. 27

(iv) TRAFFIC IMPACT ANALYSIS. 28

(v) GEOTECHNICAL SURVEY. 29

(vi) ECONOMIC IMPACT ANALYSIS. 30

(vii) LAND SURVEY. 31


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2. AN APPLICANT FOR AN EXTENSION OF AN ANALYSIS MAY RELY ON THE 1

OCCURRENCE OF AN ACTION PRESCRIBED IN PARAGRAPH 1, SUBDIVISIONS (d) THROUGH 2

(k) OF THIS SUBSECTION AS PROOF OF MATERIAL PROGRESS IN THE DEVELOPMENT OF 3

THE LAND IN MULTIPLE EXTENSION APPLICATIONS IF, FOR EACH EXTENSION 4

APPLICATION, THE PRESCRIBED ACTION HAS OCCURRED FOR A DIFFERENT SUBSTANTIAL 5

PORTION OF THE LAND. 6

3. FOR THE PURPOSES OF THIS SUBSECTION: 7

(a) "CURRENT ANALYSIS PERIOD" MEANS, FOR A FIRST APPLICATION TO 8

EXTEND AN ANALYSIS, THE INITIAL TEN-YEAR ANALYSIS PERIOD AND, FOR A SECOND 9

AND ANY LATER APPLICATION TO EXTEND AN ANALYSIS, EITHER THE FIVE-YEAR 10

EXTENSION PERIOD OR THE FIFTEEN-YEAR EXTENSION PERIOD IN EFFECT AT THE TIME 11

AN APPLICANT FILES AN APPLICATION TO EXTEND THE ANALYSIS OF ASSURED WATER 12

SUPPLY. 13

(b) "SUBSTANTIAL PORTION OF THE LAND" MEANS THE LESSER OF ONE 14

HUNDRED SIXTY ACRES OR ONE-QUARTER OF THE DEVELOPABLE LAND DESCRIBED IN THE 15

ANALYSIS. 16

M. WHEN CONSIDERING AN APPLICATION TO EXTEND AN ANALYSIS OF ASSURED 17

WATER SUPPLY, THE DIRECTOR SHALL EXTEND THE ANALYSIS FOR AN ADDITIONAL 18

FIFTEEN YEARS IF BOTH OF THE FOLLOWING HAVE OCCURRED: 19

1. THE DEPARTMENT HAS ISSUED CERTIFICATES OF ASSURED WATER SUPPLY 20

FOR SUBDIVIDED LANDS FOR THE LAND DESCRIBED IN THE ANALYSIS AND EITHER THE 21

SUBDIVIDED LANDS CUMULATIVELY INCLUDE NOT LESS THAN FIFTY PERCENT OF THE 22

LAND THAT IS SUITABLE FOR DEVELOPMENT AND THAT IS DESCRIBED IN THE ANALYSIS 23

OR THE SUBDIVIDED LANDS INCLUDE A CUMULATIVE NUMBER OF RESIDENTIAL LOTS 24

THAT CONSTITUTE NOT LESS THAN FIFTY PERCENT OF THE NUMBER OF RESIDENTIAL 25

LOTS DESCRIBED IN THE ANALYSIS. 26

2. THE IMPROVED AND SOLD LOTS AT THE LAND DESCRIBED IN THE ANALYSIS 27

CUMULATIVELY INCLUDE NOT LESS THAN TWENTY-FIVE PERCENT OF THE LAND THAT IS 28

SUITABLE FOR DEVELOPMENT AND THAT IS DESCRIBED IN THE ANALYSIS OR THE 29

NUMBER OF THE IMPROVED AND SOLD RESIDENTIAL LOTS AT THE LAND DESCRIBED IN 30

THE ANALYSIS IS NOT LESS THAN TWENTY-FIVE PERCENT OF THE NUMBER OF 31

RESIDENTIAL LOTS DESCRIBED IN THE ANALYSIS. A LOT IS DEEMED TO BE IMPROVED 32


-9-

AND SOLD FOR THE PURPOSES OF THIS PARAGRAPH WHEN A BUILDING HAS BEEN 1

CONSTRUCTED ON THE LOT AND THE LOT HAS BEEN SOLD IN AN ARMS' LENGTH 2

TRANSACTION. 3

L. N. For the purposes of this section, "assured water supply" means 4

all of the following: 5

1. Sufficient groundwater, surface water or effluent of adequate 6

quality will be continuously available to satisfy the water needs of the 7

proposed use for at least one hundred years. Beginning January 1 of the 8

calendar year following the year in which a groundwater replenishment 9

district is required to submit its preliminary plan pursuant to section 10

45-576.02, subsection A, paragraph 1, with respect to an applicant that is 11

a member of the district, "sufficient groundwater" for the purposes of this 12

paragraph means that the proposed groundwater withdrawals that the 13

applicant will cause over a period of one hundred years will be of adequate 14

quality and will not exceed, in combination with other withdrawals from 15

land in the replenishment district, a depth to water of one thousand feet 16

or the depth of the bottom of the aquifer, whichever is less. In 17

determining depth to water for the purposes of this paragraph, the director 18

shall consider the combination of: 19

(a) The existing rate of decline PROJECTED WITHDRAWALS BY EXISTING 20

GROUNDWATER USERS, INCLUDING EXPECTED CHANGES IN FUTURE WITHDRAWAL PATTERNS 21

CAUSED BY: 22

(i) THE EXPECTED PRODUCTION, REUSE, OR RECHARGE OF EFFLUENT. 23

(ii) REASONABLY ANTICIPATED CHANGES IN AGRICULTURAL WATER USE OR 24

IRRIGATED ACREAGE, WHICH THE DIRECTOR SHALL DETERMINE IN CONSULTATION WITH 25

IRRIGATION DISTRICTS OR IRRIGATION GRANDFATHERED RIGHT HOLDERS. 26

(iii) OTHER FACTORS REASONABLY DETERMINED BY THE DIRECTOR TO AFFECT 27

FUTURE WITHDRAWALS BY EXISTING GROUNDWATER USERS. 28

(b) The proposed withdrawals. 29

(c) The expected water requirements of all recorded lots that are 30

not yet served water and that are located in the service area of a 31

municipal provider. 32


-10-

(d) IF THE PROPOSED USE IS WITHIN THE PHOENIX, PINAL OR TUCSON 1

ACTIVE MANAGEMENT AREAS, THE EFFECTS OF EXPECTED GROUNDWATER REPLENISHMENT 2

BY A CONSERVATION DISTRICT UNDER TITLE 48, CHAPTER 22, ARTICLE 4 WITHIN THE 3

APPLICABLE ACTIVE MANAGEMENT AREA, EXCEPT THAT THE DIRECTOR SHALL NOT 4

CONSIDER THAT EXPECTED GROUNDWATER REPLENISHMENT WHEN BOTH OF THE FOLLOWING 5

APPLY: 6

(i) THE DIRECTOR DETERMINES WHETHER TO DESIGNATE OR MAINTAIN THE 7

DESIGNATION OF A CITY, TOWN OR PRIVATE WATER COMPANY AS HAVING AN ASSURED 8

WATER SUPPLY. 9

(ii) THE SERVICE AREA OF THAT CITY, TOWN OR PRIVATE WATER COMPANY 10

DOES NOT QUALIFY AS A MEMBER SERVICE AREA OF A CONSERVATION DISTRICT 11

PURSUANT TO TITLE 48, CHAPTER 22, ARTICLE 4. 12

2. The projected groundwater use is consistent with the management 13

plan and achievement of the management goal for the active management area. 14

3. The financial capability has been demonstrated to construct the 15

water facilities necessary to make the supply of water available for the 16

proposed use, including a delivery system and any storage facilities or 17

treatment works. The director may accept evidence of the construction 18

assurances required by section 9-463.01, 11-823 or 32-2181 to satisfy this 19

requirement. 20

Sec. 2. Section 48-3772, Arizona Revised Statutes, is amended to 21

read: 22

48-3772. Duties and powers of district regarding replenishment 23

A. The district shall: 24

1. Establish annually the costs and expenses to replenish 25

groundwater pursuant to this article with respect to all parcels of member 26

lands and all member service areas located in each active management area, 27

including capital expenses, debt service expenses, the operation, 28

maintenance, replacement and administrative costs and expenses of the 29

district, replenishment reserve costs and expenses as provided in 30

subsection E of this section and reasonable reserves. Separate 31

calculations of costs and expenses shall be made for each active management 32


-11-

area in which member lands or member service areas are located and for each 1

membership category. Costs and expenses attributed by the district to 2

contract replenishment obligations shall not be included in these 3

calculations. 4

2. Provide for the payment of all costs and expenses to replenish 5

groundwater pursuant to this chapter and the payment of operation, 6

maintenance, replacement and administrative costs and expenses and debt 7

service expenses of the district. 8

3. Levy an annual replenishment assessment against each parcel of 9

member land pursuant to section 48-3778 and an annual replenishment tax 10

against each municipal provider that has a member service area pursuant to 11

section 48-3781 to pay the district's costs and expenses as established 12

pursuant to paragraph 1 of this subsection. 13

4. Levy a contract replenishment tax against municipal providers 14

that are parties to contracts authorized under subsection B, paragraph 9 of 15

this section to pay the district's costs and expenses to replenish 16

groundwater based on contract replenishment obligations. 17

5. Establish and maintain reserve accounts in amounts as may be 18

deemed necessary to perform the district's obligations under this article. 19

6. Fulfill all obligations under resolutions adopted pursuant to 20

subsection B, paragraph 10 of this section. 21

7. Levy an activation fee as follows: 22

(a) For subdivisions within member lands and member service areas 23

that are enrolled before May 6, 2004 and that had not been issued a public 24

report before August 12, 2005, the district shall levy a one-time 25

activation fee against each housing unit to be constructed within the 26

subdivision. 27

(b) For subdivisions within member lands and member service areas 28

that are enrolled on or after May 6, 2004, the district shall levy a one-29

time ONETIME activation fee against each housing unit to be constructed 30

within the subdivision. 31


-12-

(c) The activation fee shall be paid to the district according to 1

either of the following schedules, whichever the subdivider elects: 2

(i) Paid in full before issuance of a public report for each real 3

estate subdivision identified in subdivision (a) or (b) of this paragraph. 4

(ii) One-half paid before issuance of a public report for each real 5

estate subdivision identified in subdivision (a) or (b) of this paragraph 6

and the remaining amount paid no later than one year after the issuance of 7

the public report. The total amount of the activation fee must be the 8

amount of the activation fee in effect at the time of the initial payment. 9

Payment of the initial one-half of the activation fee pursuant to this item 10

constitutes sufficient payment of applicable fees for notice of intent to 11

subdivide as prescribed in section 32-2181, subsection C and for issuance 12

of a public report as prescribed in section 32-2183, subsection G and 13

section 45-576, subsection C, except that on failure to pay the remaining 14

amount, the commissioner shall suspend the public report for that 15

subdivision pursuant to section 32-2183. 16

(d) The activation fee shall be established annually by the 17

district. The amount of the activation fee to be paid to the district under 18

subdivision (c) of this paragraph must be the amount of the activation fee 19

in effect at the time of payment. Revenues from the activation fee 20

together with revenues from other sources that are legally available to the 21

district for those uses shall be used by the district to acquire, lease or 22

exchange water or water rights and develop infrastructure necessary for the 23

district to perform its replenishment obligations. 24

8. For any year, set all of its rates and charges associated with 25

the acquisition, lease or exchange of water or water rights and development 26

of infrastructure necessary for the district to perform its replenishment 27

obligations, other than the annual membership dues established pursuant to 28

section 48-3779, so that the total projected revenues from revenue sources 29

other than the annual membership dues, that are legally available to the 30

district in that year to pay costs associated with the acquisition, lease 31

or exchange of water or water rights and development of infrastructure 32


-13-

necessary for the district to perform its replenishment obligations, shall 1

be at least three times the total projected revenues from the annual 2

membership dues in that year. For the purposes of this paragraph, costs 3

associated with the acquisition, lease or exchange of water or water rights 4

do not include the annual costs associated with delivery of water for 5

replenishment purposes. 6

B. The district may: 7

1. Acquire, develop, construct, operate, maintain, replace and 8

acquire permits for water storage, storage facilities and recovery wells 9

for replenishment purposes. 10

2. Acquire, transport, hold, exchange, own, lease, store or 11

replenish water, except groundwater withdrawn from an active management 12

area, subject to the provisions of title 45, for the benefit of member 13

lands and member service areas. 14

3. Acquire, hold, exchange, own, lease, retire or dispose of water 15

rights for the benefit of member lands and member service areas. 16

4. Require municipal providers to provide such information, in such 17

form and within the time limits prescribed by the district, as may be 18

necessary to carry out the purpose of this chapter. 19

5. Levy and collect assessments, fees, charges, taxes and other 20

revenues as are provided in this chapter for the financing of replenishment 21

activities. 22

6. Contract for or perform feasibility studies of water storage, 23

storage facilities and recovery wells for replenishment purposes. 24

7. Acquire real and personal property for water storage, storage 25

facilities and recovery wells for replenishment purposes by purchase, 26

lease, donation, dedication, exchange or other lawful means. 27

8. Use any facilities and any excess storage capacity of any state 28

demonstration projects undertaken pursuant to title 45, chapter 3.1 for 29

water storage for replenishment purposes. 30

9. Subject to subsection G of this section, contract with any 31

municipal provider having a member service area to replenish groundwater on 32


-14-

behalf of the municipal provider and with respect to the member service 1

area in an amount in excess of the sum of the service area replenishment 2

obligations applicable to the member service area for all years in which 3

the district has not completed the replenishment of the groundwater 4

replenishment obligation for the member service area. 5

10. Adopt resolutions granting water availability status to a member 6

service area of a city, town or private water company and committing to 7

replenish a specified average annual volume of water in a location where 8

the city, town or private water company may physically access the water for 9

service to its customers, if all of the following apply: 10

(a) The district has reviewed its requirements for transportation of 11

central Arizona project water, its contracts, subcontracts, letter 12

agreements, excess water contracts, and other contractual obligations and 13

its member service area and member land requirements and has determined 14

that the district can meet those obligations and that capacity remains in 15

the central Arizona project to meet the obligations undertaken through the 16

resolution. 17

(b) The resolution acknowledges that the commitment to replenish the 18

specified average annual volume of water in the location cited in the 19

resolution shall be a permanent obligation of the district, unless one of 20

the following applies: 21

(i) A permanent substitute supply of water is found for the city, 22

town or private water company and the substitution is approved by the 23

director of water resources, thus terminating the water availability status 24

of the member service area. 25

(ii) The requirements of section 45-576.07, subsection A are not 26

met, and thus the director of water resources does not issue an order 27

granting or maintaining the city, town or private water company as having 28

an assured water supply based in whole or in part on section 45-576.07. If 29

no order is issued within two years of the district adopting the 30

resolution, the resolution may be repealed, and the district shall be 31

relieved of all obligations under the resolution. 32


-15-

(c) The average annual volume of water specified in the resolution, 1

when added to the average annual volume of water specified in all other 2

resolutions adopted pursuant to this paragraph, does not exceed twenty 3

thousand acre-feet. 4

(d) The district has entered into an agreement with the city, town 5

or private water company under which the city, town or private water 6

company will hold for the district's future use, and provide to the 7

district when needed, sufficient water to meet the obligations undertaken 8

by the district through the resolution. 9

(e) The district determines that the obligations undertaken by the 10

district through the resolution will not increase annual replenishment 11

assessment rates or costs to central Arizona project contract and 12

subcontract holders and its member service areas and member lands. 13

(f) The director of water resources has found, pursuant to section 14

45-576.07, subsection H, that the district has the capability to grant 15

water availability status to member service areas. 16

11. Provide in resolutions adopted pursuant to paragraph 10 of this 17

subsection that the district may fulfill its obligations under the 18

resolution in any year by directly delivering to the city, town or private 19

water company the water that otherwise would have been replenished pursuant 20

to the resolution, if all of the following apply: 21

(a) The district has reviewed its requirements for transportation of 22

central Arizona project water, its contracts, subcontracts, letter 23

agreements, excess water contracts, and other contractual 24

obligations, AND its member service area and member land requirements and 25

has determined that the district can meet those obligations and that 26

capacity remains in the central Arizona project to make direct deliveries 27

pursuant to this paragraph. 28

(b) The district determines that the delivery will not increase 29

annual replenishment assessment rates or costs to central Arizona project 30

contract and subcontract holders, its member service area and member lands. 31


-16-

12. Enter into agreements with a city, town or private water company 1

that will have water made available to it through a resolution adopted 2

pursuant to paragraph 10 of this subsection and under which the city, town 3

or private water company compensates the district for the costs and fair 4

value of the water supply provided by the district. 5

13. Issue revenue bonds pursuant to article 3 of this chapter to 6

fund the costs and expenses of the district for the acquisition, lease or 7

exchange of water or water rights and the development of infrastructure 8

necessary for the district to perform its replenishment obligations subject 9

to the following: 10

(a) The principal of, interest and premiums, if any, on revenue 11

bonds issued pursuant to article 3 of this chapter to acquire, lease or 12

exchange water or water rights and develop infrastructure necessary for the 13

district to perform its replenishment obligations are not payable from any 14

revenues of the district other than revenues generated or collected 15

pursuant to this article that are legally available to the district for 16

those purposes and revenues from the investment of the proceeds of the 17

bonds. 18

(b) The district may not use the proceeds of the bonds to acquire or 19

lease: 20

(i) Groundwater, as defined in section 45-101, except as expressly 21

authorized in sections 45-547, 45-553 and 45-554. 22

(ii) Surface water, as defined in section 45-101, that is the 23

subject of a general adjudication pursuant to title 45, chapter 1, article 24

9. 25

(c) Nothing in subdivision (b) of this paragraph prohibits DOES NOT 26

PROHIBIT the district from acquiring or leasing central Arizona project 27

water. 28

14. Except as provided in section 48-3780.01, subsection B, in 29

addition to any other assessments, fees, charges or taxes levied and 30

collected under this chapter, or under any declaration, contract or 31

agreement entered into under this chapter, charge annual dues for 32


-17-

membership pursuant to section 48-3779 against each parcel of member land 1

and each municipal provider that has a member service area. 2

C. The functions of the district under subsection B, paragraph 1 of 3

this section may be performed on behalf of the district by other persons 4

under contract with the district. 5

D. The capital costs of the facilities of any state demonstration 6

projects used by the district pursuant to subsection B, paragraph 8 of this 7

section shall not be included in the capital costs and expenses established 8

by the district under subsection A, paragraph 1 of this section. 9

E. The district shall establish and maintain a replenishment reserve 10

as follows: 11

1. The district shall calculate a reserve target for each of the 12

three active management areas within the district and shall identify the 13

reserve target in the plan of operation prepared pursuant to section 14

45-576.02. The reserve target for each active management area shall be 15

calculated as follows: 16

(a) Establish FOR EACH ACTIVE MANAGEMENT AREA, ADD TOGETHER the 17

projected one hundred year replenishment obligation for each active 18

management area OF THE ONE HUNDRED YEARS FOLLOWING SUBMISSION OF THE PLAN 19

OF OPERATION. For the purposes of this subdivision, each active management 20

area's projected one hundred year replenishment obligation does not include 21

replenishment obligations under resolutions adopted pursuant to subsection 22

B, paragraph 10 of this section or replenishment obligations for category 2 23

member lands. 24

(b) Subtract from the SUM OF THE active management area's projected 25

one hundred year replenishment obligation OVER THE ONE HUNDRED YEAR PERIOD 26

AND the sum of the following volumes of water derived from sources 27

identified in the plan as water that the district plans to use to meet its 28

replenishment obligations for that active management area: 29

(i) The annual volume of each nondeclining, long-term municipal and 30

industrial subcontract for central Arizona project water multiplied by one 31

hundred. 32


-18-

(ii) The annual volume of water under leases or contracts that can 1

be made physically and legally available to the district consistent with 2

the rules adopted pursuant to section 45-576, subsection H, multiplied by 3

the number of years, not to exceed one hundred, in which the water is to be 4

made available to the district. The water need not be continuously 5

available to be included in this item. A lease or contract shall not be 6

considered under this item if the water to be made available under the 7

lease or contract is for a term of less than twenty years. 8

(iii) The total volume of groundwater that the district plans to 9

transport to the active management area during the next one hundred years 10

as allowed by title 45, chapter 2, article 8.1. 11

(iv) The total volume of all sources of water not identified in 12

items (i), (ii) or (iii) of this subdivision that will not be held by the 13

district under a lease or contract. Volumes to be included under this item 14

must be consistent with the rules adopted by the director pursuant to 15

section 45-576, subsection H. 16

(c) Multiply the result from subdivision (b) of this paragraph by 17

twenty per cent PERCENT. The result is the reserve target for the active 18

management area. 19

2. The reserve target for an active management area may be adjusted 20

by the district, subject to the approval of the director of water 21

resources, based on changes in either of the following: 22

(a) The active management area's projected one hundred year 23

replenishment obligation. 24

(b) The volumes of water identified in the plan of operation 25

prepared pursuant to section 45-576.02 as water that the district plans to 26

use to meet its replenishment obligations for that active management area. 27

3. The district shall include a replenishment reserve charge in the 28

annual replenishment assessment levied against all parcels of category 1 29

member land as provided in section 48-3774.01 and in the annual 30

replenishment tax levied against all municipal providers that have member 31

service areas as provided in section 48-3780.01. The replenishment reserve 32


-19-

charge for each active management area is established annually by the 1

district based on the reserve target for that active management area. 2

4. The district shall levy a replenishment reserve fee against 3

category 1 member lands pursuant to section 48-3774.01 and against member 4

service areas pursuant to section 48-3780.01. For category 1 member lands 5

the fee is equal to twice the applicable replenishment reserve charge 6

multiplied by the total projected average annual replenishment obligation 7

for the member lands as reported by the director of water resources 8

pursuant to section 45-578, subsection F. For member service areas the fee 9

is equal to twice the applicable replenishment reserve charge multiplied by 10

the excess groundwater increment. With the approval of the district and 11

the director of water resources, long-term storage credits as defined in 12

section 45-802.01 may be assigned to the district's replenishment reserve 13

subaccount in lieu of paying the replenishment reserve fee. 14

5. The district shall use replenishment reserve charges and 15

replenishment reserve fees collected within each active management area 16

together with all interest earned on the charges and fees to store water in 17

that active management area in advance of groundwater replenishment 18

obligations for the purpose of developing long-term storage credits as 19

defined in section 45-802.01 that shall be credited to the replenishment 20

reserve subaccount for that active management area as provided in section 21

45-859.01. 22

6. Beginning on January 1, 2030 or earlier, on approval of the 23

director of water resources pursuant to section 45-859.01, subsection K, 24

the district may transfer credits from a replenishment reserve subaccount 25

to a conservation district account as provided in section 45-859.01, 26

SUBSECTION F to satisfy its groundwater replenishment obligations. 27

7. If the district transfers credits from the replenishment reserve 28

subaccount for an active management area pursuant to section 45-859.01, 29

subsection E, the district shall include in the annual replenishment 30

assessment levied against all parcels of category 1 member land in that 31

active management area and, except as provided in section 48-3780.01, 32


-20-

subsection B, in the annual replenishment tax levied against all municipal 1

providers that have member service areas in that active management area a 2

reserve replacement component to fund the replacement of the transferred 3

credits. The district shall use all monies from the reserve replacement 4

component collected within an active management area together with all 5

interest earned on the monies to develop long-term storage credits as 6

defined in section 45-802.01 within that active management area to be 7

credited to the replenishment reserve subaccount for that active management 8

area as provided in section 45-859.01. 9

8. For the purposes of establishing and maintaining the 10

replenishment reserve, the district shall have access to excess central 11

Arizona project water equivalent to but no NOT more than the access the 12

Arizona water banking authority has for the purposes specified in section 13

45-2401, subsection H, paragraph 2. 14

F. Groundwater replenished by the district pursuant to a contract to 15

replenish groundwater under subsection B, paragraph 9 of this section shall 16

not be credited to a replenishment reserve subaccount established under 17

section 45-859.01. 18

G. The district shall not enter into a contract authorized under 19

subsection B, paragraph 9 of this section unless the district has 20

determined that the contract will not adversely affect the district's 21

ability to fulfill its obligations under this chapter. For each contract 22

entered into under subsection B, paragraph 9 of this section, the district 23

shall perform its contract replenishment obligations in the active 24

management area in which the service area of the municipal provider that is 25

the party to the contract is located. 26

H. If the district replenishes groundwater on behalf of a municipal 27

provider pursuant to a contract to replenish groundwater under subsection 28

B, paragraph 9 of this section, the amount of groundwater so replenished 29

shall be a replenishment credit to the municipal provider that may be 30

applied by the municipal provider on notice to the district to reduce the 31


-21-

service area replenishment obligations applicable to the municipal 1

provider. 2

I. In the Phoenix active management area, the district, to the 3

extent reasonably feasible, shall replenish groundwater in the east portion 4

of the active management area and in the west portion of the active 5

management area in the approximate proportion that the groundwater 6

replenishment obligation attributable in a particular year to member lands 7

and member service areas located in the east portion of the active 8

management area bears to the groundwater replenishment obligation 9

attributable in that year to member lands and member service areas located 10

in the west portion of the active management area. For the purposes of 11

this subsection, the boundary between the east Salt river valley subbasin 12

and the west Salt river valley subbasin is the boundary between the east 13

and west portions of the active management area. 14

J. The costs and expenses charged by the district to an active 15

management area water district established under chapter 28 of this title 16

for delivery of surplus central Arizona project water to such active 17

management area water district for replenishment purposes shall not exceed 18

the costs and expenses for delivery of such water that are or would be 19

included by the district in the costs and expenses of replenishment for 20

member lands and member service areas within the active management area in 21

which such active management area water district is situated." 22

Amend title to conform 23

And, as so amended, it do pass

GAIL GRIFFIN CHAIRMAN

2586NATURAL RESOURCES ENERGY WATER 02/19/2019 06:01 PM H: ra


[1]

February 27, 2019

Federal Update Appropriations Deal Averts a ShutdownThe 116th Congress managed to avoid a government shutdown that would have occurred in mid-February by passing a deal to fund the federal government. On February 15, 2019, President Trump signed a deal to fund the federal government and declared a national emergency to provide additional funding for a border wall. The bipartisan spending bill includes $1.4 billion for border barriers, below the $5.7 billion that the president had initially requested. President Trump said he would bridge the gap through executive actions and funding for military construction and drug-countering efforts but will not redirect federal disaster aid. A coalition of sixteen states, not including Arizona, have mounted legal challenges against the emergency declaration on the grounds that it diverts funds from other high priority needs. The lawsuit raises questions over congressional control of spending, the scope of emergency powers granted to the president, and the role of courts in these kinds of disputes.

Department of Interior and Environmental Protection Agency FundingThe U.S. Department of Interior (DOI) and the U.S. Environmental Protection Agency (EPA) had been operating on short-term funding authority while a final budget agreement was reached. Included in the budget agreement was a small increase in overall discretionary funding appropriations for these two agencies. The total package constituted $35.6 billion for covered agencies, an increase of $300 million for FY 2018. DOI received approximately $13 billion in discretionary funds which is $95.2 million less than FY2018, but an increase of $2.43 billion in what was requested by the White House. The Interior’s Fish and Wildlife Service saw the biggest decrease from FY2018. EPA received $8.6 billion, remaining flat with FY2018 funding. However, the EPA funding countered the White House’s requests for significant cuts to EPA programs to the tune of $1.87 billion.

Department of Interior and Environmental Protection Agency StaffingPresident Trump announced that David Bernhardt will be nominated as Secretary of the Interior. The nomination process is likely to take several months. Bernhardt is currently the Acting Secretary following the resignation of Secretary Zinke. The President also announced the nomination of Daniel Jorjani as Solicitor of the Interior. Jorjani is currently the Principal Deputy Solicitor.The Senate Environment and Public Works Committee advanced the nomination of Andrew Wheeler to be Administrator of the EPA on February 5, 2019. Wheeler is currently Acting Administrator of the EPA following the departure of former Administrator Scott Pruitt. Before the February recess, Senate Majority Leader Mitch McConnell filed for cloture on Wheeler’s nomination setting up a vote for the week of February 25.


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The following Federal Legislative Issues Update outlines the status of the Board-approved 2019 Legislative Agenda, as well as other relevant federal issues. Legislative Affairs staff comes before the Public Policy Committee on a regular basis to seek guidance and direction on these and other proposed legislation and rules that may arise during the year.

Colorado River Water SupplyCAP Position: Support the Lower Basin Drought Contingency Plan (DCP), including legislation that directs the Secretary of the Interior to implement the DCP. Continue to cooperate with Federal, State, Tribal, and other stakeholders to mitigate potential impacts on the CAP water supply and support water conservation and augmentation activities, such as the Pilot System Conservation Program, desalination, weather modification, and water reuse and recycling programs, as well as other programs. Continue to support the operation of the Yuma Desalting Plant or suitable alternatives to reduce system losses.

S. 47 Natural Resources Management ActOn February 12, the Senate passed S. 47, the Natural Resources Management Act, a broad public lands package that combined over 100 bills that were introduced last Congress related broadly to federal land management. The House followed suit and passed the bill under a suspension of the rules on February 26, sending the bill to the President.

The bill was sponsored by Senate Energy and Natural Resources Chairman Lisa Murkowski (R-AK). Title VIII of the omnibus lands bill deals with water and power and includes a provision on title transfer for Bureau of Reclamation facilities, as well as an extension of authorization for endangered fish programs. An amendment in the nature of a substitute that passed the Senate added two additional provisions of interest, language amending authorization for the Bureau of Reclamation’s Watersmart program to clarify the eligibility of Indian tribes and a section on Bureau of Reclamation Transparency that requires the Bureau of Reclamation to prepare reports for Congress related to the status of assets including information about major repair and rehabilitation needs.

Cybersecurity CAP Position: Monitor legislative efforts to address cybersecurity and potential threats to critical infrastructure and vital computer systems.



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Central Arizona Project Water Infrastructure CAP Position: Monitor proposals by the Executive and Congress to provide financing opportunities to modernize U.S. infrastructure and determine possible opportunities for CAP.

Recent comments by both parties and the President indicate that there is interest in working on a comprehensive infrastructure package. Although the President was successful in getting some streamlined permitting processes enacted for infrastructure projects last year, his $1-trillion infrastructure package largely did not gain enough momentum over the past two years despite its high profile.

At a February 13, 2019 Senate Commerce Committee hearing on infrastructure needs in the U.S., lawmakers stressed bipartisan cooperation in putting together a comprehensive package. The panel of witnesses endorsed a gas tax increase and exploring long-term user or vehicle miles traveled fees. However, Sen. Mike Lee (R-UT) argued that a gas tax hike would regressively hurt the poor and middle class, and Sen. Cory Gardner (R-CO) inquired about alternatives to this option. Both parties expressed concerns about transportation safety and congestion, but no agreements about the best way to fund long-term investments were made. After the hearing, Chair Roger Wicker (R-MS) expressed uncertainty about the future of infrastructure legislation, stating that he doesn’t know if an infrastructure bill will pass this year.

Energy LegislationCAP Position: Monitor legislative efforts that may impact CAP operations, including CAP’s ability to secure affordable energy and ensure reliable transmission delivery. Continue efforts to engage elected officials, stakeholders, and governmental agencies regarding federal activities that affect the Navajo Generating Station.

Green New DealAlexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) released a draft nonbinding resolution this week that outlined the policy goals of the “Green New Deal.” The resolution contains five core goals of the policy which include achieving net-zero GHG emissions, job creation, sustainable industry and infrastructure investment, environmental stewardship for future generations, and environmental justice for marginalized groups. The resolution remains vague on how these goals should be realized within the 10-year timeframe referenced in the resolution. Support and opposition of the nonbinding resolution is drawn along party lines. Senate Majority Leader Mitch McConnell (R-KY) announced that he will put S.Res.59, the Senate resolution outlining the Green New Deal, on the legislative calendar. The vote could potentially occur in the coming two weeks. A vote on the resolution would require Senators to go on record regarding their stance on the Green New Deal. The companion House


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resolution, H.Res.109, has been introduced however, House Democratic leadership has not scheduled the measure for a vote.

Water Quality and Salinity IssuesCAP Position: Monitor water quality issues impacting the Colorado River that may affect CAP operations. Support the activities of the Colorado River Basin Salinity Control Forum, including efforts to secure adequate funding and improve water management.Support the efforts of the Lower Colorado River Water Quality Partnership to address water quality issues of the Colorado River.


Indian Water Rights Settlements CAP Position: Continue to collaborate with Arizona Tribes and other stakeholders on issues related to resolving water rights claims. Continue to support legislation necessary and appropriate to enact the Hualapai Tribe water rights settlement.


Federal RulemakingCAP Position: Continue to monitor federal rulemaking and implementation related to energy, air quality, water quality, and other issues that may affect CAP operations.

On December 11, the EPA and the U.S. Army Corps of Engineers released a new proposed “waters of the U.S” (WOTUS) rule to replace the 2015 WOTUS rule that was promulgated by the previous administration. The rule proposes a new regulatory definition for WOTUS for the purpose of determining whether they are jurisdictional waters under the Clean Water Act (CWA). The proposed WOTUS rule under the Trump Administration would seem to adopt a narrower scope for what is considered a WOTUS by excluding all ephemeral waters and doing away with the concept of “significant nexus,” which referred to the hydrological connectivity to jurisdictional waters.

According to the released rule, the agencies are proposing definitions “in simple, understandable, and implementable terms to reflect the ordinary meaning of the statutory term, as well as to adhere to Constitutional and statutory limitations, the policies of the CWA,


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and case law, and to meet the needs of regulatory agencies and the regulated community.” In this regard, jurisdictional “waters of the U.S.” would be those waters that are typically associated with the term WOTUS, such as oceans, rivers, streams, lakes, and traditionally navigable waters, including tributaries of those waters.

The new rule would also define other key terms such as tributaries and ditches. The proposed definition of “tributary” would include rivers and streams that contribute perennial or intermittent flow to traditional navigable waters, but would exclude ephemeral flows or dry channels. This position is consistent with the Rapanos plurality’s position in 2006 (Rapanos v. United States).

A new category under the WOTUS definition is created for ditches and similar artificial features. In this rule, irrigation ditches and other artificial channels, including canals, generally do not appear to be considered jurisdictional waters, with some exceptions. This is in contrast with the 2015 rule that included man-made features such as ditches and canals in the definition of tributaries.

The agencies are seeking public comment on all aspects of the proposed definition, including “whether it would strike the proper balance between the regulatory authority of the Federal government and States, meets its obligation to provide fair notice to members of the regulated community, and adheres to the overall structure and function of the CWA by ensuring the protection of the nation’s waters.” The proposed rule was published in the Federal Register on February 14, 2019 and comments are due within 60 days of the publication date.

If you have any questions or would like more information regarding any of the issues contained in this report, please contact CAP Legislative Affairs at 623-869-2425.

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Federal Legislative Update

Public Policy CommitteeMarch 7, 2019

Jeff GrayLegislative Affairs Manager

Federal Update

• On February 15, 2019, President Trump signed a deal to fund the federal government and declared a national emergency to provide additional funding for a border wall. The bipartisan spending bill includes $1.4 billion for border barriers, far below the $5.7 billion that the president had initially requested.

• A coalition of sixteen states, not including Arizona, have mounted legal challenges against the emergency declaration on the grounds that it diverts funds from other high priority needs.

• The lawsuit raises questions over congressional control of spending, the scope of emergency powers granted to the president, and the role of courts in these kinds of disputes.

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Federal Update Dept of Interior & EPA Funding

• Included in the budget agreement passed on February 14, 2019, was a small increase in overall discretionary funding appropriations for the Dept of Interior (DOI) and the Environmental Protection Agency (EPA).

• The total package constituted $35.6 billion for covered agencies, an increase of $300 million for FY 2018. DOI received approximately $13 billion in discretionary funds which is $95.2 million less than FY2018, but an increase of $2.43 billion in what was requested by the White House. Interior’s Fish and Wildlife Service saw the biggest decrease from FY2018. EPA received $8.6 billion, remaining flat with FY2018 funding.

• The EPA funding exceeded the White House’s requests for significant cuts to EPA programs by $1.87 billion.

Colorado River Water Supply► Support the Lower Basin Drought Contingency Plan (DCP), including legislation that directs the Secretary of the Interior to implement the DCP. ► Continue to cooperate with Federal, State, Tribal, and other stakeholders to mitigate potential impacts on the CAP water supply and support water conservation and augmentation activities, such as the Pilot System Conservation Program, desalination, weather modification, and water reuse and recycling programs, as well as other programs. ► Continue to support the operation of the Yuma Desalting Plant or suitable alternatives to reduce system losses.

S.47 Natural Resources Management Act• Omnibus public lands bill introduced in the Senate by Committee on

Energy and Natural Resources Chair Lisa Murkowski (R-AK). • Passed the Senate on February 12 and the House on February 26. • Includes Title VIII on Water and Power with notable provisions:

Title Transfer authority for the Bureau of Reclamation. Extends authorization for appropriations for endangered fish

programs. Clarifies eligibility of Indian Tribes for Watersmart grants. Reclamation Transparency provision requires reports to Congress

on assets.

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