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Arizona Department of Water Resources
www.water.az.gov

LEGISLATIVE IMPLEMENTATION PLAN

47th Legislature, 1st Regular Session 2005

TABLE OF CONTENTS
BILLS PAGE #

HB 2174 Assured Water Supply; Fund; Committee ...................................................................... 3 HB 2277 Water Providers; Community System Plans ................................................................. 10 HB 2643 Lower Colorado River; Conservation ........................................................................... 25 HB 2720 Water; General Industrial Use Permits.......................................................................... 43 HB 2728 Arizona Water Settlements Act..................................................................................... 47 SB 1190 New Exempt Wells; Restrictions; Exemptions.............................................................. 98 SB 1235 Water; CAGRD Omnibus ............................................................................................ 111 SB 1318 Omnibus; Flood Control .............................................................................................. 159 SB 1336 Rural Water Legislative Study Committee .................................................................. 174 SB 1522 Environmental Protections; Budget ............................................................................. 179

ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2174 Assured Water Supply; Fund; Committee 47th Legislature, 1st Regular Session (2005)

BILL NUMBER: SHORT TITLE: PRIME SPONSOR:

HB 2174, Chapter 217 Assured Water Supply; Fund; Committee Representative: O'Halleran

BILL SUMMARY: HB 2174 contains the following provisions: Establishes an Assured and Adequate Water Supply Administration Fund. The Fund consists of the fees that are paid to the Arizona Department of Water Resources (ADWR) for applications relating to adequate and assured water supplies. States that the Fund monies are to be used for the costs and expenses incurred by ADWR when determining and declaring adequate and assured water supplies. The monies are subject to appropriation and are to be used by ADWR for the Adequate and Assured Water Supply Program. Requires ADWR to administer the Fund. Requires the Fund to be on a separate account on the books of ADWR. Exempts monies in the Fund from the lapsing of appropriations. Requires the State Treasurer to invest and divest monies in the Fund on notice from the Director of ADWR. All monies earned from investment will be credited to the Fund. Requires the Director to conduct a review of the Assured and Adequate Water Supply Rules in the Arizona Administrative Code for the purpose of making the application process more efficient. Requires the Director to submit a written report on the Director's recommendations to the Governor, the President of the Senate and the Speaker of the House of Representatives on or before December 15, 2005.

Requires the Director to file a Notice of Proposed Rule Change by January 1, 2006, to initiate rulemaking proceedings according to the recommendations identified by the Director. Requires the Director to appoint an advisory committee to assist the Director in identifying statutory or rule changes to make the application process more efficient. Requires the advisory committee to include subdividers and water providers or their representatives.

SIGNIFICANCE TO AGENCY: ADWR lacks the resources to adequately staff the Assured and Adequate Water Supply Program. In the last six years, the workload in the program has grown significantly while ADWR's resources have declined. Since processing Assured and Adequate Water Supply applications is critical to the State's development industry, ADWR has drawn substantial resources from other water management programs, undermining the effectiveness of those programs. Even with the reassignment of staff, the processing time is lengthening and ADWR has been unable to adequately monitor and enforce the program. The inadequate level of monitoring has led to several short-term development moratoriums that could have been avoided. Based on current and projected development trends, the number of applications is expected to continue to increase. ADWR believes that the Assured and Adequate Water Supply Program should be partly or fully self-supporting to enable it to function more effectively. ADWR would use these fees to support the staff and administration of the Assured and Adequate Water Supply Program. ADWR currently transmits the fees for Assured and Adequate Water Supply applications to the General Fund. HB 2174 allows ADWR to retain these fees to help to offset the costs of the program. REQUIRED OUTCOMES: Rule Rule changes are anticipated. The Stakeholders Group will identify specific rules that will require modification. Legislation Legislation is anticipated. Based on preliminary discussions, ADWR may not have the authority to change certain rules without statutory authority. The Stakeholders Group will identify specific statutes that will require amendments. Substantive Policy Preliminary discussions indicate that some aspects of the application process may be modified without a rule or statutory change. ADWR may be able to address these issue through a substantive policy change or by modifying internal processes administratively. The Stakeholders Group will identify processes and issues to help to improve program efficiency.

ACTIONS REQUIRED: 1. ADWR staff will meet internally to identify processes within the Assured Water Supply Program that can be eliminated or modified to improve the efficiency of the program, without jeopardizing the integrity of the Assured Water Supply Program. 2. ADWR staff will develop an outline of the issues identified by ADWR staff that will help to improve the efficiency of the Assured and Adequate Water Supply Program and discuss issues with the Director. 3. Open a rule making docket and publish notice of the docket opening with the Secretary of State. 4. ADWR staff makes recommendations to the Director regarding the composition of the Stakeholders Group that must include representatives of subdividers and water providers. 5. Director appoints group and sends a letter the week of May 9 confirming appointments to members of the Stakeholders Group. 6. An advance e-mail to Stakeholders to hold a date for the first meeting of the Stakeholders Group which will be scheduled sometime during the week of May 23 will also be sent the week of May 9. 7. Agendas and background material will be sent the week of May 16 (approximately one week before the meeting). 8. The Stakeholders Group will hold its first meeting the week of May 23. 9. At the first meeting, Stakeholders will begin discussion of opportunities for improved efficiency. 10. The structure and number of meetings will be determined, based on the discussion at the first meeting of the Stakeholders Group. 11. Finalize recommendations for rule changes, statutory changes and administrative changes by first week in July and begin drafting the recommendations report. 12. Review a summary of the Stakeholders recommendations with Water Legislation Stakeholders Group the first week in August. 13. Submit legislative proposals to Governor's Office by August 15. 14. Provide draft rules and statutory language for review the first week in September.

15. Receive comments during the month of September. 16. Incorporate comments by the end of October. 17. Send out final draft in early November. 18. Secure legislative sponsor and open file with Legislative Council by November 15. 19. Incorporate final comments. 20. Submit final report of proposed statutory changes to the Governor, Speaker of the House and President of the Senate by December 15. 21. File a notice of proposed rule-making with the Secretary of State by January 1, 2006. DIVISION STAFF SUPPORT REQUIRED: Director's Office/Legislative Liaison Office of Legal Services Hydrology Division Active Management Areas Assured and Adequate Water Supply

TIMELINE: 2005 May o Conduct internal discussions regarding program efficiency o Appoint Stakeholders Advisory Committee o Develop materials for first meeting o Convene first Stakeholders meeting o Determine process structure June o Stakeholders meet and develop recommendations (# of meetings TBA) July o Finalize recommendations first week in July August o Review recommendations with Water Legislation Stakeholders Group first week in August September o Provide draft rules and amendments for review o Move to new office o Receive comments on recommendations 6

2006

October o Incorporate comments November o Send out drafts for final review December o Finalize rule package

January 1, 2006 o File notice of proposed rule making with the Secretary of State

Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 217 ----------------------------HOUSE BILL 2174 -----------------------------

AN ACT AMENDING TITLE 45, CHAPTER 2, ARTICLE 9, ARIZONA REVISED STATUTES, BY ADDING SECTION 45-580; RELATING TO WATER MANAGEMENT. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Title 45, chapter 2, article 9, Arizona Revised Statutes, is amended by adding section 45-580, to read: 45-580. Assured and adequate water supply administration fund; purpose A. THE ASSURED AND ADEQUATE WATER SUPPLY ADMINISTRATION FUND IS ESTABLISHED CONSISTING OF THE FEES THAT ARE PAID TO THE DEPARTMENT FOR APPLICATIONS RELATING TO ADEQUATE AND ASSURED WATER SUPPLY PURSUANT TO SECTIONS 45-108, 45-576 AND 45-579 AND THAT ARE ESTABLISHED BY THE DIRECTOR PURSUANT TO SECTION 45-113, SUBSECTION B. THE DEPARTMENT SHALL ADMINISTER THE FUND. MONIES IN THE FUND ARE SUBJECT TO APPROPRIATION AND SHALL BE USED BY THE DEPARTMENT FOR THE COSTS AND EXPENSES OF THE DEPARTMENT IN ADMINISTERING SECTIONS 45-108, 45-576 AND 45-579. B. THE DIRECTOR SHALL DEPOSIT, PURSUANT TO SECTIONS 35-146 AND 35-147, ALL FEES RECEIVED PURSUANT TO SUBSECTION A OF THIS SECTION IN THE FUND. THE FUND SHALL BE A SEPARATE ACCOUNT ON THE BOOKS OF THE DEPARTMENT. MONIES REMAINING IN THE FUND AT THE END OF THE FISCAL YEAR REMAIN IN THE FUND AND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO THE LAPSING OF APPROPRIATIONS. ON NOTICE FROM THE DIRECTOR, THE STATE TREASURER SHALL INVEST AND DIVEST MONIES IN THE FUND AS PROVIDED BY SECTION 35-313, AND MONIES EARNED FROM INVESTMENT SHALL BE CREDITED TO THE FUND. Sec. 2. Review of assured and adequate water supply program; advisory committee A. The director of the department of water resources shall conduct a review of the assured and adequate water supply rules in title 12, chapter 15, article 7, Arizona administrative code for the purpose of identifying statutory or rule changes that would make the application processes under those rules more efficient. The director shall

submit a written report of the director's recommendations for any statutory changes to the governor, the president of the senate and the speaker of the house of representatives on or before December 15, 2005. No later than January 1, 2006, the director shall file a notice of proposed rule making with the secretary of state pursuant to section 41-1022, Arizona Revised Statutes, for the purpose of initiating the rule making proceeding to make any rule changes identified by the director under this subsection that are not dependent on proposed statutory amendments. B. The director shall appoint an advisory committee to assist the director in identifying the statutory or rule changes described in subsection A of this section. The advisory committee shall include representatives of subdividers and water providers. The members of the committee shall serve at the pleasure of the director and are not eligible to receive compensation. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005.

ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2277 Water Providers; Community System Plans 47th Legislature, 1st Regular Session (2005)

BILL NUMBER: SHORT TITLE: PRIME SPONSORS:

HB 2277, Chapter 223 Water Providers; Community System Plans Representatives: Hershberger Landrum Taylor O'Halleran

BILL SUMMARY: HB 2277 contains the following provisions: Definition of Water System Defines community water system as a public water system that serves at least 15 service connections used by year-round residents or that regularly serves at least 25 year-round residents. A public water system is one that provides water for human consumption (A.R.S. 49-325). Defines large community water system as a community water system that serves water to more than 1,850 persons. Defines small community water system as a community water system that does not qualify as a large community water system. Water Plan Requires all community water systems to submit: o A water supply plan that describes their sources of water, service area, transmission system facilities, monthly system production data, historic demand for the past five years and projected demands for the next five, 10 and 20 years. o A drought preparedness plan that includes drought and emergency response strategies, a plan of action to respond to water shortage conditions and provisions to inform and educate the public. o A water conservation plan that may include measures to control lost or unaccounted for water, consideration of water rate structures that encourage efficient use of water 10

[as set by the community water system's governing body and subject to approval by the Arizona Corporation Commission (ACC)] and information and education on conserving water. Clarifies that the requirement for a water supply plan only includes community water systems and not water used for hard rock mining or metallurgical processes. Requires large community water systems to submit plans to the Director of ADWR by January 1, 2007 and small community water systems by January 1, 2008. Small community water systems (whether filing alone or jointly) may be given an extension by the Director if a request is submitted at least 90 days prior to the deadline. Exempts a small municipal provider from the requirement to submit a water conservation plan if the provider does the following: o Petitions the Director of the Arizona Department of Water Resources (ADWR) before January 1, 2007. o Shows that under reasonable growth projections they will be regulated as a large municipal water provider by January 1, 2012. Authorizes two or more water providers serving the same area to coordinate their efforts and submit a joint plan. The deadline for submitting a joint plan is the same as for small community water systems. Requires updates to the plans every five years. The Director is required to review the plans to determine if they are in compliance. Provides for disclosure of non-compliance to the governing body in the service area if a water provider does not comply within sixty days of a written notice from the Director regarding failure to submit a water conservation plan. Exempts a water system from submitting a water supply plan if the system has been designated as having an Assured Water Supply. The system still must submit a drought preparedness plan and a water conservation plan. States that water systems do not have to resubmit any information required by this legislation if it is already on file with ADWR. Requires the Director to prepare, and make available, forms for small water systems to complete and submit as their water plan. The Director must also develop a guidance document to assist community water systems in preparing a water system plan. Records and Annual Report of Water Use Requires an annual report of water use from each water provider that includes information, if known, regarding sources of water, quantity of water pumped or diverted, 11

well registration numbers, how the water was used, number of customers served and information on storage facilities. For large community water systems the report must also include a map of the service area and distribution system. Exempts community water systems located inside Active Management Areas (AMAs) from duplicate reporting requirements. Requires the Director to prepare blank forms and distribute them on a timely schedule and cooperate with the ACC and the Arizona Department of Environmental Quality (ADEQ) to facilitate the reporting of similar or identical information

SIGNIFICANCE TO AGENCY: Requiring communities to develop water supply plans, drought plans and conservation plans is an important step toward improving our ability to effectively manage our water resources, both at the state and local levels. The three key components of the legislation and the implications for water management are listed below. Water Supply Plan Increase public awareness of water supplies at the state and local levels. Provide much needed data regarding our state's water supplies and water infrastructure. Describe existing local water supplies. Enable us to target our data collection in those areas that need the most support. Improve our ability to plan for our future water infrastructure needs so that we will have the resources available. Drought Preparedness Plan Increase public awareness on local drought conditions and potential local responses. Improve drought planning to identify and mitigate drought conditions in the early stages to reduce the need for more costly and intrusive emergency response measures. Assure that our communities will be prepared to meet our citizens water needs in times of water shortage. Provide local flexibility to: o Establish drought and emergency response stages to enable local communities to implement response measures. o Develop a plan of action to respond to drought or water shortage conditions. o Develop procedures for the enforcement of mandatory water use restrictions for residential and non-residential uses. Recognize that extraordinary hardships could result as a result of the plan and provide for variances in such cases. Water Conservation Plan Ensure consistent, statewide conservation practices by all water users.

Increase the efficiency of the water system to reduce potential drought-impacts or other water supply deficiencies Encourage consumer water conservation efforts. Provide an opportunity for local community residents to actively participate in safeguarding water supplies to sustain the economic viability of their community.

REQUIRED OUTCOMES: Rule No rule changes are anticipated at this time. Legislation Two issues may require legislative action: o Limit public access to the service area maps for security purposes. o Clarify reporting requirements related to effluent. Substantive Policy Preliminary discussions indicate that some aspects of the reporting and planning processes may need to be addressed without additional rule or statutory changes. ADWR will be able to address these issue through internal processes administratively.

ACTIONS REQUIRED: 1. Coordinate development of reporting requirements with ADEQ and the ACC to ensure reporting requirements and planning processes are not overly duplicative; use existing ACC/ADEQ reporting formats to the extent possible. 2. Develop annual report forms, review processes, and databases to track reporting. 3. Develop Water System Plan Guidance Document and a small system planning form in consultation with ADEQ, ACC and community water systems. 4. Develop internal review processes for plans. 5. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Hydrology Division Active Management Areas Assured and Adequate Water Supply Office of Statewide Planning 13

TIMELINE: 2005 May o Meet with ACC and ADEQ to review reporting requirements for those agencies compared to requirements of HB2277. Need to determine how we will move forward, either a separate report or adding information needed to the reports currently submitted. o Meet with ACC and ADEQ to review planning requirements for those agencies compared to requirements of HB2277. Develop a form for small community water systems to complete as their Water System Plans based on this discussion. o Work with ACC and ADEQ to develop mailing list. June o Meet with stakeholders to review requirements and deadlines for annual reporting. o Contact all community water systems detailing planning and annual reporting requirements. o Draft the form for small community water systems to complete as their Water System Plans. Request review and comment by ACC and ADEQ. o Coordinate with ACC regarding plan implementation for private water companies. o Begin preparation of the Water System Plan Guidance Document to assist community water systems in preparing the water system plan. July o Continue stakeholder meetings to review requirements and deadlines. August o Finalize annual report for review of ACC and ADEQ. o Coordinate development of Annual Reports with ADWR IT staff, considering input by ACC and ADEQ. o Continue stakeholder meetings to review annual report requirements and deadlines. o Conduct public workshops to solicit input from cities and towns, private water companies and irrigation districts that qualify as community water systems regarding the draft Water System Plan Guidance Document and the Small Community Water System Plan form. o Revise Water System Plan Guidance Document and the Small Community Water System Plan form per local community input. o Convene additional workshops, if necessary, to finalize the Guidance Document and Water System Plan form. September o Develop database for input of annual report information. o Begin planning November workshops to inform communities about monitoring and reporting requirements for the following calendar year. November

o Conduct workshops to inform communities about monitoring and reporting requirements for the following calendar year. December o Conduct workshops to review with Communities regarding requirements for Water System Plan and provide Water System Plan Guidance Document. o Distribute Water System Plan Guidance Document.

2006 January through October o Continue stakeholder meetings to review annual reporting requirements and deadlines. o Develop internal guidance documents for review of Water System Plans. February o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan. o Provide assistance, as needed, to community water systems. o Conduct workshops to continue to assist with Water Plan development. March April May o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan. Provide assistance as needed to both Large and Small Community Water Systems. o Continue to conduct workshops to assist water systems. June July August o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan and continue to provide assistance ti community water systems. o Continue workshops. September October November o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan and continue to provide assistance to water systems. o Continue workshops. December o Prepare for Annual Report mailing.

2007

January o Deadline for Large Community Water System Plans. 15

2008

o Coordinate Annual Report form mailing with ACC report mailing. o Assist communities with reporting requirements. February o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance, as needed. o Continue workshops. March April May o Annual Reports due. o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and continue assistance. o Continue workshops. June July August o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance as needed. o Continue workshops to provide assistance. September November o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance as needed o Continue workshops. December

January o Deadline for Small Community Water System Plans. o Continue to assist small utilities.

Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 223 ----------------------------HOUSE BILL 2277 -----------------------------

AN ACT AMENDING TITLE 45, CHAPTER 1, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 13; RELATING TO COMMUNITY WATER SYSTEMS. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Title 45, chapter 1, Arizona Revised Statutes, is amended by adding article 13, to read: ARTICLE 13. COMMUNITY WATER SYSTEM PLANNING AND REPORTING REQUIREMENTS 45-330. Definition IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES: 1. "COMMUNITY WATER SYSTEM" MEANS A PUBLIC WATER SYSTEM THAT SERVES AT LEAST FIFTEEN SERVICE CONNECTIONS USED BY YEAR-ROUND RESIDENTS OF THE AREA SERVED BY THE SYSTEM OR THAT REGULARLY SERVES AT LEAST TWENTY-FIVE YEAR-ROUND RESIDENTS OF THE AREA SERVED BY THE SYSTEM. A PERSON IS A YEAR-ROUND RESIDENT OF THE AREA SERVED BY A SYSTEM IF THE PERSON'S PRIMARY RESIDENCE IS SERVED WATER BY THAT SYSTEM. 2. "LARGE COMMUNITY WATER SYSTEM" MEANS A COMMUNITY WATER SYSTEM THAT SERVES WATER TO MORE THAN ONE THOUSAND EIGHT HUNDRED FIFTY PERSONS. 3. "PUBLIC WATER SYSTEM" MEANS AN ENTITY THAT DISTRIBUTES OR SELLS WATER AND THAT QUALIFIES AS A PUBLIC WATER SYSTEM UNDER SECTION 49-352, SUBSECTION B. 4. "SMALL COMMUNITY WATER SYSTEM" MEANS A COMMUNITY WATER SYSTEM THAT DOES NOT QUALIFY AS A LARGE COMMUNITY WATER SYSTEM. 45-331. Water plan A. EXCEPT AS PROVIDED IN SUBSECTIONS D AND E OF THIS SECTION, BY THE DATES SPECIFIED IN SUBSECTIONS B OR C OF THIS SECTION, EACH COMMUNITY WATER SYSTEM SHALL PREPARE AND SUBMIT TO THE DIRECTOR A SYSTEM WATER PLAN THAT INCLUDES THE FOLLOWING COMPONENTS:

1. A WATER SUPPLY PLAN. 2. A DROUGHT PREPAREDNESS PLAN. 3. A WATER CONSERVATION PLAN. B. EXCEPT AS PROVIDED IN SUBSECTION C OF THIS SECTION, A LARGE COMMUNITY WATER SYSTEM SHALL SUBMIT ITS FIRST SYSTEM WATER PLAN TO THE DIRECTOR ON OR BEFORE JANUARY 1, 2007, AND SHALL SUBMIT AN UPDATED PLAN WITHIN SIX MONTHS PRIOR TO JANUARY 1 OF EVERY FIFTH CALENDAR YEAR THEREAFTER. A SMALL COMMUNITY WATER SYSTEM SHALL SUBMIT ITS FIRST SYSTEM WATER PLAN TO THE DIRECTOR ON OR BEFORE JANUARY 1, 2008, AND SHALL SUBMIT AN UPDATED PLAN WITHIN SIX MONTHS PRIOR TO JANUARY 1 OF EVERY FIFTH CALENDAR YEAR THEREAFTER. FOR A SMALL COMMUNITY WATER SYSTEM THAT SUBMITS ITS REQUEST TO THE DIRECTOR AT LEAST NINETY DAYS BEFORE THE FILING DEADLINE, THE DIRECTOR MAY EXTEND THE TIME FOR FILING THE FIRST WATER SYSTEM PLAN. IF A COMMUNITY WATER SYSTEM REVISES ITS SYSTEM WATER PLAN AFTER SUBMITTING THE PLAN TO THE DIRECTOR, THE COMMUNITY WATER SYSTEM SHALL SUBMIT THE REVISED PLAN TO THE DIRECTOR WITHIN SIXTY DAYS FROM THE DATE OF REVISION. C. IF MORE THAN ONE COMMUNITY WATER SYSTEM SERVES WATER TO RESIDENTS WITHIN A CITY OR TOWN, TWO OR MORE OF THE COMMUNITY WATER SYSTEMS SERVING WATER TO RESIDENTS WITHIN THAT CITY OR TOWN MAY COORDINATE THEIR EFFORTS IN PREPARING THE PLANS REQUIRED BY THIS SECTION AND MAY SUBMIT A JOINT PLAN THAT CONTAINS THE INFORMATION REQUIRED IN THIS SECTION FOR THAT PORTION OF THE COMMUNITY SUPPLIED BY THE COMMUNITY WATER SYSTEMS INSTEAD OF SUBMITTING INDIVIDUAL WATER SYSTEM PLANS. COMMUNITY WATER SYSTEMS THAT SUBMIT A JOINT PLAN PURSUANT TO THIS SUBSECTION SHALL SUBMIT THE PLAN TO THE DIRECTOR BY THE DATE ON WHICH A SMALL COMMUNITY WATER SYSTEM IS REQUIRED TO SUBMIT ITS SYSTEM WATER PLAN UNDER SUBSECTION B OF THIS SECTION. THE DIRECTOR MAY EXTEND THE TIME FOR FILING THE FIRST WATER SYSTEM PLAN FOR A JOINT PLAN THAT INCLUDES A SMALL COMMUNITY WATER SYSTEM IF THE REQUEST IS RECEIVED NINETY DAYS BEFORE THE FILING DEADLINE. D. A COMMUNITY WATER SYSTEM THAT HAS BEEN DESIGNATED AS HAVING AN ASSURED WATER SUPPLY PURSUANT TO SECTION 45-576 IS EXEMPT FROM THE REQUIREMENT TO SUBMIT A WATER SUPPLY PLAN UNDER THIS SECTION. E. A COMMUNITY WATER SYSTEM REGULATED AS A LARGE MUNICIPAL PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE IS EXEMPT FROM THE REQUIREMENT TO SUBMIT A WATER CONSERVATION PLAN UNDER THIS SECTION. THE DIRECTOR SHALL EXEMPT A COMMUNITY WATER SYSTEM REGULATED AS A SMALL MUNICIPAL

PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE FROM THE REQUIREMENT TO SUBMIT A WATER CONSERVATION PLAN UNDER THIS SECTION IF THE COMMUNITY WATER SYSTEM: 1. PETITIONS THE DIRECTOR FOR AN EXEMPTION PRIOR TO JANUARY 1, 2007. 2. DEMONSTRATES, UNDER REASONABLE GROWTH PROJECTIONS, THAT IT WILL BE REGULATED AS A LARGE MUNICIPAL PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE PRIOR TO JANUARY 1, 2012. F. A COMMUNITY WATER SYSTEM THAT HAS PREVIOUSLY SUBMITTED INFORMATION REQUIRED BY THIS SECTION TO THE DIRECTOR MAY MAKE A WRITTEN REQUEST TO THE DIRECTOR TO BE EXEMPTED FROM THE REQUIREMENT TO SUBMIT THE INFORMATION IN ITS SYSTEM WATER PLAN. THE DIRECTOR SHALL GRANT THE EXEMPTION IF THE DIRECTOR DETERMINES THAT THE INFORMATION IS ALREADY ON FILE WITH THE DEPARTMENT. G. THE DIRECTOR SHALL REVIEW A SYSTEM WATER PLAN, INCLUDING A REVISED PLAN, SUBMITTED BY A COMMUNITY WATER SYSTEM PURSUANT TO SUBSECTION B OF THIS SECTION AND SHALL NOTIFY THE COMMUNITY WATER SYSTEM IN WRITING AS TO WHETHER THE PLAN COMPLIES WITH THIS SECTION. IF THE DIRECTOR DETERMINES THAT THE PLAN DOES NOT COMPLY WITH THIS SECTION, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THAT DETERMINATION TO THE COMMUNITY WATER SYSTEM AND GIVE THE COMMUNITY WATER SYSTEM AT LEAST ONE HUNDRED TWENTY DAYS TO MAKE REVISIONS OR ADDITIONS AS ARE NECESSARY TO BRING THE PLAN INTO COMPLIANCE. IF THE COMMUNITY WATER SYSTEM DOES NOT BRING THE PLAN INTO COMPLIANCE BY THE DATE SPECIFIED IN THE NOTICE, THE DIRECTOR SHALL PROVIDE NOTICE OF THE NONCOMPLIANCE TO THE GOVERNING BODIES OF THE CITIES, TOWNS AND COUNTIES LOCATED WITHIN THE SERVICE AREA OF THE COMMUNITY WATER SYSTEM. IF THE DIRECTOR DETERMINES THAT THE PLAN IS IN COMPLIANCE WITH THIS SECTION BUT THAT CHANGES WOULD IMPROVE THE PLAN, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE CHANGES TO THE COMMUNITY WATER SYSTEM BUT THE WATER SYSTEM SHALL NOT BE REQUIRED TO MAKE THE CHANGES. H. THE WATER SUPPLY PLAN SHALL EVALUATE THE WATER SUPPLY NEEDS IN THE SERVICE AREA AND PROPOSE A STRATEGY TO MEET IDENTIFIED NEEDS. THE PLAN SHALL INCLUDE: 1. A LIST AND DESCRIPTION OF SERVICE AREA LANDS, SOURCES OF SUPPLY, INCLUDING EMERGENCY SOURCES, WELL REGISTRATION NUMBERS AND WATER LEVELS AT THE WELL SITES, IF KNOWN, AND STORAGE AND TREATMENT FACILITIES. THE LIST SHALL NOT INCLUDE WATER LEVELS AT WELL SITES THAT ARE SOURCES OF

SUPPLY FOR HARD ROCK MINING OR METALLURGICAL PROCESSING OR INDUSTRIAL USES RELATED TO HARD ROCK MINING OR METALLURGICAL PROCESSING. 2. A MAP AND DESCRIPTION OF EXISTING TRANSMISSION AND DISTRIBUTION FACILITIES, UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45-498. FOR A SMALL COMMUNITY WATER SYSTEM A MAP IS NOT REQUIRED. 3. A DESCRIPTION OF MONTHLY SYSTEM PRODUCTION DATA CATEGORIZED BY THE SYSTEM'S SOURCES OF SUPPLY AND, FOR SYSTEMS THAT USE METERS TO MEASURE WITHDRAWALS AND DIVERSIONS, A SUMMARY OF SYSTEM AVERAGE DAILY DEMANDS, MAXIMUM MONTHLY DEMANDS AND AN ESTIMATE OF PEAK DAY DEMANDS FOR THE PAST FIVE YEARS. 4. A LIST, DESCRIPTION AND MAP OF EXISTING INTERCONNECTIONS UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45-498, AND THE QUANTITIES OF WATER SOLD TO OR PURCHASED FROM OTHER WATER SYSTEMS DURING THE PREVIOUS FIVE YEARS, UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45632. FOR A SMALL COMMUNITY WATER SYSTEM A MAP IS NOT REQUIRED. 5. AN ANALYSIS OF PRESENT AND FUTURE WATER SUPPLY DEMANDS FOR THE NEXT FIVE, TEN AND TWENTY YEARS. I. THE DROUGHT PREPAREDNESS PLAN SHALL BE DESIGNED TO MEET THE SPECIFIC NEEDS OF THE WATER SYSTEM FOR WHICH IT APPLIES AND SHALL INCLUDE: 1. THE NAME, ADDRESS AND TELEPHONE NUMBER OF THE COMMUNITY WATER SYSTEM AND THE NAMES OF THE OFFICERS OR OTHER PERSONS RESPONSIBLE FOR DIRECTING OPERATIONS DURING A WATER SHORTAGE EMERGENCY. 2. DROUGHT OR EMERGENCY RESPONSE STAGES PROVIDING FOR THE IMPLEMENTATION OF MEASURES IN RESPONSE TO REDUCTION IN AVAILABLE WATER SUPPLY DUE TO DROUGHT OR INFRASTRUCTURE FAILURE. 3. A PLAN OF ACTION THAT THE COMMUNITY WATER SYSTEM WILL TAKE TO RESPOND TO DROUGHT OR WATER SHORTAGE CONDITIONS, INCLUDING: (a) PROVISIONS TO ACTIVELY INFORM THE PUBLIC OF THE WATER SUPPLY SHORTAGE AND A PROGRAM FOR CONTINUED EDUCATION AND INFORMATION REGARDING IMPLEMENTATION OF THE DROUGHT PREPAREDNESS PLAN. (b) DEVELOPMENT OF EMERGENCY SUPPLIES, WHICH MAY INCLUDE IDENTIFICATION OF EMERGENCY OR REDUNDANT FACILITIES TO WITHDRAW, DIVERT OR TRANSPORT SUBSTITUTE SUPPLIES OF THE SAME OR OTHER TYPES OF WATER. (c) SPECIFIC WATER SUPPLY OR WATER DEMAND MANAGEMENT MEASURES FOR EACH STAGE OF DROUGHT OR WATER SHORTAGE CONDITIONS, SUBJECT TO APPROVAL BY THE CORPORATION COMMISSION IF THE COMMUNITY WATER SYSTEM IS A PUBLIC

SERVICE CORPORATION. THIS REQUIREMENT MAY BE MET BY PROVIDING A CURTAILMENT TARIFF ON FILE WITH THE CORPORATION COMMISSION. J. THE WATER CONSERVATION PLAN SHALL BE DESIGNED TO INCREASE THE EFFICIENCY OF THE WATER SYSTEM, REDUCE WASTE AND ENCOURAGE CONSUMER WATER CONSERVATION EFFORTS. THE WATER CONSERVATION PLAN SHALL BE DESIGNED TO MEET THE SPECIFIC NEEDS OF THE COMMUNITY WATER SYSTEM AND SHALL INCLUDE BOTH DEMAND AND SUPPLY MANAGEMENT MEASURES INCLUDING THE FOLLOWING: 1. FEASIBLE MEASURES THAT MAY BE IMPLEMENTED TO DETERMINE AND CONTROL LOST AND UNACCOUNTED FOR WATER. 2. CONSIDERATION OF WATER RATE STRUCTURES THAT ENCOURAGE EFFICIENT USE OF WATER, AS SET BY THE COMMUNITY WATER SYSTEM'S GOVERNING BODY, SUBJECT TO APPROVAL BY THE CORPORATION COMMISSION IF THE COMMUNITY WATER SYSTEM IS A PUBLIC SERVICE CORPORATION. 3. A CONTINUING CONSERVATION EDUCATION PROGRAM CONTAINING PROVISIONS TO ACTIVELY INFORM THE PUBLIC OF DROUGHT CONDITIONS AND INFORMATION REGARDING CONSERVATION MEASURES TO REDUCE VULNERABILITY FROM DROUGHT CONDITIONS, INCLUDING: (a) CURTAILMENT OF NONESSENTIAL WATER USES. (b) AFFORDABLE EFFICIENCY TECHNOLOGIES FOR INDOOR AND OUTDOOR USE. (c) REBATE AND RETROFIT PROGRAMS FOR INDOOR AND OUTDOOR USES. (d) REUSE AND RECYCLING PROGRAMS. K. THE WATER CONSERVATION PLAN SHALL BE IMPLEMENTED BY THE COMMUNITY WATER SYSTEM WITHIN TWELVE MONTHS AFTER RECEIVING WRITTEN NOTIFICATION FROM THE DIRECTOR THAT THE PLAN COMPLIES WITH THIS SECTION. FOR A COMMUNITY WATER SYSTEM THAT RECEIVES A NOTICE PURSUANT TO SUBSECTION G OF THIS SECTION THAT THE WATER CONSERVATION PLAN DOES NOT COMPLY WITH THIS SECTION, THE WATER CONSERVATION PLAN SHALL BE IMPLEMENTED WITHIN TWELVE MONTHS AFTER THE EXPIRATION OF THE DATE BY WHICH THE SYSTEM IS REQUIRED TO MAKE REVISIONS OR ADDITIONS TO THE PLAN TO BRING IT INTO COMPLIANCE, AS SPECIFIED IN THE NOTICE GIVEN TO THE SYSTEM UNDER SUBSECTION G OF THIS SECTION. L. THE DIRECTOR SHALL PREPARE FORMS THAT SMALL COMMUNITY WATER SYSTEMS MAY COMPLETE AND SUBMIT AS THEIR SYSTEM WATER PLAN UNDER THIS SECTION. THE DIRECTOR SHALL DISTRIBUTE THE FORMS ON A TIMELY SCHEDULE AND FURNISH THEM UPON REQUEST. FAILURE TO RECEIVE OR OBTAIN A FORM DOES NOT RELIEVE ANY COMMUNITY WATER SYSTEM FROM THE REQUIREMENT TO FILE A SYSTEM WATER

PLAN BY THE DATE PRESCRIBED IN SUBSECTIONS B OR C OF THIS SECTION. THE DIRECTOR OF WATER RESOURCES SHALL COORDINATE WITH THE CORPORATION COMMISSION AND THE DIRECTOR OF ENVIRONMENTAL QUALITY IN ESTABLISHING THE FORM TO FACILITATE THE REPORTING OF SIMILAR OR IDENTICAL INFORMATION TO THE DEPARTMENT OF WATER RESOURCES AND THE CORPORATION COMMISSION OR TO THE DEPARTMENT OF WATER RESOURCES AND THE DEPARTMENT OF ENVIRONMENTAL QUALITY. M. THE DIRECTOR SHALL PREPARE A GUIDANCE DOCUMENT TO ASSIST COMMUNITY WATER SYSTEMS IN PREPARING THE WATER SYSTEM PLAN. THE DIRECTOR SHALL COOPERATE WITH CITIES AND TOWNS, PRIVATE WATER COMPANIES AND IRRIGATION DISTRICTS THAT ARE COMMUNITY WATER SYSTEMS IN DEVELOPING THE GUIDANCE DOCUMENT AND THE FORM DESCRIBED IN SUBSECTION L OF THIS SECTION. 45-332. Records and annual report of water use; penalty A. EACH COMMUNITY WATER SYSTEM THAT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION AND THAT USES METERS TO MEASURE WATER WITHDRAWALS AND DIVERSIONS SHALL MAINTAIN CURRENT, COMPLETE, TRUE AND CORRECT RECORDS OF ITS WITHDRAWALS, DIVERSIONS AND DELIVERIES OF WATER IN THE FORM AS PRESCRIBED BY THE DIRECTOR. EACH COMMUNITY WATER SYSTEM THAT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION AND THAT DOES NOT USE METERS TO MEASURE WATER WITHDRAWALS AND DIVERSIONS SHALL MAINTAIN RECORDS OF THE ESTIMATED AMOUNT OF ITS WITHDRAWALS, DIVERSIONS AND DELIVERIES OF WATER IN THE FORM AS PRESCRIBED BY THE DIRECTOR. B. AN ANNUAL REPORT SHALL BE FILED WITH THE DIRECTOR BY EACH COMMUNITY WATER SYSTEM. A COMMUNITY WATER SYSTEM IS EXEMPT FROM THE REPORTING REQUIREMENTS IN THIS SECTION IF IT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER SECTION 45-632. C. A COMMUNITY WATER SYSTEM REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION SHALL REPORT THE FOLLOWING INFORMATION: 1. IF WATER WAS PUMPED OR DIVERTED BY THE COMMUNITY WATER SYSTEM DURING THE YEAR: (a) THE QUANTITY OF WATER PUMPED OR DIVERTED AND THE WELL REGISTRATION NUMBERS OF ANY WELLS USED TO PUMP OR DIVERT THE WATER. COMMUNITY WATER SYSTEMS THAT DO NOT USE METERS TO MEASURE WATER PUMPED OR DIVERTED SHALL ESTIMATE THE QUANTITY OF WATER PUMPED OR DIVERTED. (b) THE NUMBER OF CUSTOMERS TO WHOM THE COMMUNITY WATER SYSTEM DELIVERED WATER DURING THE YEAR.

(c) AN IDENTIFICATION OF THE NUMBER OF STORAGE FACILITIES AND THE STORAGE CAPACITY OF EACH FACILITY. 2. IF WATER WAS RECEIVED BY THE COMMUNITY WATER SYSTEM FROM ANOTHER PERSON DURING THE YEAR: (a) THE NAME OF THE PERSON FROM WHOM THE WATER WAS OBTAINED. (b) IF THE WATER WAS PUMPED OR DIVERTED, THE REGISTRATION NUMBERS OF ANY WELLS USED TO PUMP OR DIVERT THE WATER, IF KNOWN. (c) THE QUANTITY OF WATER RECEIVED DURING THE YEAR. (d) THE NUMBER OF CUSTOMERS TO WHOM THE COMMUNITY WATER SYSTEM DELIVERED WATER DURING THE YEAR. (e) AN IDENTIFICATION OF THE NUMBER OF STORAGE FACILITIES AND THE STORAGE CAPACITY OF EACH FACILITY. 3. IF EFFLUENT THAT IS GENERATED FROM A WASTEWATER TREATMENT FACILITY WAS USED OR RECEIVED BY THE COMMUNITY WATER SYSTEM DURING THE YEAR, THE ESTIMATED QUANTITY OF EFFLUENT GENERATED FROM THE WASTEWATER TREATMENT FACILITY DURING THE YEAR, THE ESTIMATED QUANTITY OF EFFLUENT USED DIRECTLY FROM THE WASTEWATER TREATMENT FACILITY DURING THE YEAR AND THE SPECIFIC USES TO WHICH THE EFFLUENT WAS APPLIED DURING THE YEAR. D. COMMUNITY WATER SYSTEMS REQUIRED TO FILE ANNUAL REPORTS UNDER THIS SECTION SHALL MAINTAIN A CURRENT MAP CLEARLY DELINEATING ITS SERVICE AREA AND DISTRIBUTION SYSTEM. E. THE RECORDS AND REPORTS REQUIRED TO BE KEPT AND FILED UNDER THIS SECTION SHALL BE IN THE FORM AS THE DIRECTOR PRESCRIBES. THE DIRECTOR SHALL PREPARE BLANK FORMS AND DISTRIBUTE THEM ON A TIMELY SCHEDULE AND FURNISH THEM UPON REQUEST. FAILURE TO RECEIVE OR OBTAIN THE FORMS DOES NOT RELIEVE ANY PERSON FROM KEEPING THE REQUIRED RECORDS OR MAKING ANY REQUIRED REPORT. THE DIRECTOR SHALL COOPERATE WITH CITIES AND TOWNS, PRIVATE WATER COMPANIES AND IRRIGATION DISTRICTS THAT ARE COMMUNITY WATER SYSTEMS IN ESTABLISHING THE FORM OF THE RECORDS AND REPORTS TO BE KEPT AND FILED BY THEM. THE DIRECTOR OF WATER RESOURCES SHALL COORDINATE WITH THE CORPORATION COMMISSION AND THE DIRECTOR OF ENVIRONMENTAL QUALITY IN ESTABLISHING THE FORM OF THE REPORTS REQUIRED TO BE FILED BY THIS SECTION TO FACILITATE THE REPORTING OF SIMILAR OR IDENTICAL INFORMATION TO THE DEPARTMENT OF WATER RESOURCES AND THE CORPORATION COMMISSION OR TO THE DEPARTMENT OF WATER RESOURCES AND THE DEPARTMENT OF ENVIRONMENTAL QUALITY.

F. IF A COMMUNITY WATER SYSTEM FAILS TO TIMELY FILE THE REPORT PRESCRIBED BY THIS SECTION, THE DIRECTOR SHALL PROVIDE A WRITTEN NOTICE TO THE WATER SYSTEM THAT REQUIRES COMPLIANCE WITHIN SIXTY DAYS OF THE DATE OF THE NOTICE. IF THE WATER SYSTEM DOES NOT COMPLY WITHIN THE SIXTY DAY PERIOD, THE DIRECTOR SHALL PROVIDE NOTICE OF THAT NONCOMPLIANCE TO THE GOVERNING BODIES OF THE CITIES, TOWNS AND COUNTIES LOCATED WITHIN THE SERVICE AREA OF THE WATER SYSTEM. G. A VIOLATION OF THIS ARTICLE DOES NOT CONSTITUTE A VIOLATION OF CHAPTER 2 OF THIS TITLE. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005.

ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2643 Lower Colorado River; Conservation 47th Legislature, 1st Regular Session (2005)

BILL NUMBER: SHORT TITLE: PRIME SPONSORS:

HB 2643, Chapter 78 Lower Colorado River; Conservation Representatives: Bee Miranda O'Halleran Robson J Weiers

BILL SUMMARY: HB 2643 contains the following provisions: Administration Authorizes the Arizona Game and Fish Commission (Commission), the Arizona Department of Water Resources (ADWR) and the Central Arizona Water Conservation District (CAWCD) to enter into agreements with the federal government and other parties for participation in the Lower Colorado River Multi Species Conservation Program (MSCP). Specifies that the agreements may designate private financial institutions as fiscal agents or trustees for the collection and management of the MSCP monies. Establishes that the monies collected for the MSCP may include appropriations from the legislature; additional watercraft registration fees; surcharges on Arizona Colorado River special use permits; Colorado River water use fees; gifts, grants and donations from public or private sources; and payments by any person under any agreement to fund the MSCP. Fee Assessments and Collections Allows the Commission to assess additional motorized watercraft registration fees that are collected solely for the purpose of funding the MSCP.

Requires the revenues from the registration of motorized watercraft to be deposited in a watercraft registration fee clearing account. The State Treasurer distributes all monies collected from motorized watercraft registration (except those collected specifically for the MSCP) into the Watercraft Licensing Fund. The State Treasurer deposits monies collected specifically for the MSCP into an account that is used solely for the MSCP. Allows the Commission to impose and collect surcharges on special use permits used on the Colorado River. The Commission determines the amount and the surcharges may only be used for the MSCP. The monies collected must be put into a Colorado River special use permit clearing account that is paid into a MSCP account on a monthly basis by the State Treasurer. Allows ADWR to assess and collect annual fees from each person in Arizona who diverts and consumptively uses water from the mainstream of the Colorado River. These monies must be put into the Colorado River water use fee clearing account, which is paid monthly into an account solely used for the MSCP. The Director must set these fees by July 1 of each year for the following program year. Requires that, in setting fees, the Director must consider: o The consumptive use by the person being assessed during that program year. o The payment obligations that apply to similar water users under agreements to fund the MSCP. o The amount of monies needed to fund the MSCP for that year. o The amount of monies from other sources that are expected to be available to fund the MSCP for that year.

Allows the Director to establish classes of water users in to assign graduated fee rates to the respective classes. Requires the Director to consider the date of any contract or right to use Colorado River water and the type of water used when assigning fee rates. States that the Director must give written notice of the fees within thirty days after the fees are established for a program year. Requires the Director to record a statement of fees for the following year in the Department's records and transmit a copy of the statement to the State Treasurer. Establishes the fee calculation method for the consumptive use of Colorado River water. The fee is calculated by multiplying the applicable annual fee for the program year by the consumptive use for the person for the program year. Allows the Director to reduce the amount of a person's annual fee by the value of any services or tangible assets (including land or water) accepted by the federal government as a contribution to the MSCP. The Director also may reduce the amount of a person's

annual fee by amounts paid or to be paid during the program year by the person under agreements with the CAWCD. Requires the Director to provide a notice and comment period and consult with representatives of the water users before setting the Colorado River water use fee. Requires the Director to give written notice of the amount of the fee that is assessed for the consumptive use of Colorado River water no later than August 15 before the beginning of a program year. A person who is assessed a fee (including registration fees and annual water use fees) must pay the fee within 45 days of receiving written notice of the fee amount. Authorizes the Director to assess a penalty of 10 percent of the unpaid fee for each month or portion of a month that a fee is delinquent. The total penalty may not exceed 60 percent of the unpaid fee. An action to recover the penalties must be brought in the Superior Court in Maricopa County. All penalties collected will be deposited in the Colorado River water use fee clearing account. Clarifies that anyone who has entered into agreements with CAWCD for Colorado River water use does not have to pay a Colorado River water use fee if they are in compliance with the agreements. Central Arizona Water Conservation District Allows the CAWCD Board to enter into agreements with state agencies, the federal government and any other person who participates in the MSCP. Authorizes CAWCD to manage the funds collected for the MSCP or to designate a private financial institution or the State Treasurer as a fiscal agent. Also applies to collection, investment and distribution of monies. Clarifies that monies collected for the MSCP can only be used for activities and administrative costs relating to the MSCP. Definitions Defines consumptive use as a water user's total use that is recorded in the final accounting for the most recent calendar year. Defines final accounting as the United States Bureau of Reclamation's final compilation of records of Colorado River diversions, return flows and consumptive uses for the year. Defines Lower Colorado River Multispecies Conservation Program as the cooperative effort to provide the basis for compliance with the Endangered Species Act of 1973. The cooperative effort is among government agencies, political subdivisions of the states of

Arizona, California and Nevada, and public and private parties with a common interest in the water and resources of the Lower Colorado River. Defines program year as the 12-month period between October 1st and the following September 30th.

SIGNIFICANCE TO AGENCY: The purpose of this program is to provide for the incidental take of endangered species along the Colorado River and limit our State's liability to assure that Arizona's water and power supplies are protected. The basic strategy is to implement a coordinated, comprehensive, conservation program to benefit the species in order to address the impacts of ongoing operations and maintenance and those associated with future water transfers. This program would thus assist Arizona in managing drought impacts in the future. REQUIRED OUTCOMES: Rule No rule changes are anticipated. Legislation Legislation may be required to make technical corrections. Substantive Policy No substantive policies are anticipated.

ACTIONS REQUIRED: 1. Determine entities subject to the fee based on Article V Accounting Report. Note that parties to "Lower Colorado River Multi-Species Conservation Program, Arizona Trust Indenture and Joint Payment Agreement" (Trust Indenture Agreement) are not subject to the fees. 2. Determine if water use by entities subject to the fee is reported under a party to the Trust Indenture Agreement in coordination with those parties 3. Colorado River Management Section drafts courtesy letter for Director advising entities subject to fee that they will receive notice in May 06 of fee proposal to be paid on calendar 05 water use. Fee the same as provided for in Trust Indenture Agreement, ie. $0.25/ac-ft. 4. Director requests that State Treasurer establish "Colorado River Water Use Fee Clearing Account."

5. Director publishes notice of proposed fee in early May 1, 2006 providing 30 day comment period. Fee the same as provided for in Trust Indenture Agreement, ie. $0.25/ac-ft. 6. Director consults with entities to be assessed fee, providing two week notice if hearing held. 7. Director sets fee by July 1, 2006, for entities subject to the fee, considering factors in 45334 (A). 8. Director provides written notice to entities subject to the fee within 30 days of setting fee (the rate) per 45-334 (A)(6). 9. Director provides written notice of total amount of the fee by August 15 before the beginning of the program year per 45-334(B). 10. Director deposits fees collected in "Colorado River Water Use Fee Clearing Account" at State Treasurer. 11. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Water Management Support

TIMELINE: 2005 May June July o Colorado River Management Section initiates determination of entities subject to the fee. o Colorado River Management Section initiates determination if water use by entities subject to the fee is reported under a party to the Trust Indenture Agreement in coordination with those parties. o Colorado River Management Section drafts courtesy letter advising entities subject to fee that they will receive notice in May 2006 of fee proposal to be paid on calendar 2005 water use. o Director requests that State Treasurer establish "Colorado River Water Use Fee Clearing Account."

2006

August September October November December

January February March April May o Director publishes notice of proposed fee in early May 1, 2006 providing 30-day comment period. o Director consults with entities to be assessed the fee, providing a two-week notice if hearing held. (May or June meeting) June o Director to set fee by July 1, 2006, for entities subject to the fee, considering factors in 45-334 (A). July o Director provides written notice to entities subject to the fee within 30 days of setting fee (the rate) per 45-334 (A)(6). August o Director provides written notice of total amount of the fee by August 1 for calendar year 2005 water use. September o Fees due September 15 from contract holders o Fees deposited by ADWR in "Colorado River Water Use Fee Clearing Account." o State Treasurer deposits fees collected in J.P. Morgan Chase account. October o Money available Oct 1 for draw by Reclamation from J.P. Morgan Chase account November December

House Engrossed -------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 -------------------------CHAPTER 78 -------------------------HOUSE BILL 2643 --------------------------

AN ACT AMENDING SECTIONS 5-321, 5-323, 17-231, 17-345 AND 48-3712, ARIZONA REVISED STATUTES; AMENDING TITLE 45, CHAPTER 1, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 13; AMENDING TITLE 48, CHAPTER 22, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 48-3713.03; RELATING TO THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 5-321, Arizona Revised Statutes, is amended to read: 5-321. Numbering; registration fees; license tax; repeal of registration; penalty; procedures A. The owner of each motorized watercraft requiring numbering by this state shall file an application for a registration number with the department, or its agent, on forms approved by the department. Except as provided by rule adopted by the commission, the application shall be signed by the owner of the motorized watercraft and shall be accompanied by a registration fee and a license tax levied at the following rates: 1. For a resident owner, defined as a person who owns a boat for which registration is required and who is required to and does register motor vehicles owned by the person in this state or, if no motor vehicle is owned by the person owning the boat, the person is a resident as defined by section 28-2001, a registration fee of four dollars and a license tax of forty-five cents per foot of length or fraction thereof of each watercraft up to and including eighteen feet and sixty-eight cents per foot of length for each foot or fraction thereof over eighteen feet except as provided in section 5-322. 2. For a nonresident owner, defined as any person who owns a boat for which registration is required and who is not a resident owner as defined by this section, a registration fee of twenty dollars and a license tax of two dollars ninety cents per foot of length or fraction thereof of each watercraft up to and including eighteen feet and five

dollars fifty cents per foot of length for each foot or fraction thereof over eighteen feet except as provided in section 5-322. B. The length of the motorized watercraft shall be measured from the most forward part of the bow excluding the bowsprit or jibboom, over the centerline to the rearmost part of the transom excluding sheer, outboard motor, rudder, handles or other attachments. C. THE COMMISSION MAY ASSESS AN ADDITIONAL REGISTRATION FEE, TO BE COLLECTED AT THE SAME TIME AND IN THE SAME MANNER AS THE REGISTRATION FEE IMPOSED BY SUBSECTION A, PARAGRAPH 1 OR 2 OF THIS SECTION. THE AMOUNT OF THE ADDITIONAL FEE SHALL BE DETERMINED BY THE COMMISSION AND MAY BE IMPOSED IN DIFFERENT AMOUNTS WITH RESPECT TO RESIDENT AND NONRESIDENT OWNERS. AN ADDITIONAL REGISTRATION FEE UNDER THIS SUBSECTION IS TO BE USED SOLELY FOR THE PURPOSE OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03. D. Upon receipt of the application in approved form WITH THE APPLICABLE FEES AND LICENSE TAX, the department or its agent shall enter the application on the records of its office and issue to the applicant two current annual decals and a certificate of number stating the number issued to the watercraft and the name and address of the owner. The owner shall display the assigned number and the current annual decals in such manner as may be prescribed by rules of the commission. The number and decals shall be maintained in legible condition. The certificate of number or commission approved proof of valid certificate of number, except as provided in section 5-371, shall be available at all times for inspection by a peace officer whenever the watercraft is in operation. No number issued by another state or the United States coast guard, unless granted exemption or exception pursuant to this chapter, shall be displayed on the watercraft. C. E. No motorized watercraft shall be purchased, sold or otherwise transferred without assignment by the owner of the current numbering certificate or other documentation as may be prescribed by rules of the commission. Within fifteen days after such transfer, the person to whom such transfer is made shall make application to the department to have the motorized watercraft registered in the person's name by the department, for which the department shall charge a transfer fee of four dollars. The department shall not issue or transfer a numbering certificate for a motorized watercraft to a person who is subject to the use tax under title 42, chapter 5, article 4 unless the applicable tax has been paid as shown by a receipt from the collecting officer. Persons doing business as marine dealers and licensed as such by this state are not required to register in their name any watercraft in their possession that may be offered for resale.

D. F. In the event of the loss or destruction of the certificate of number or annual decal, the department shall issue a duplicate to the owner upon payment of a fee of two dollars. E. G. The department may issue any certificate of number directly or may authorize any person to act as agent for the issuance of the certificate of number in conformity with this chapter and with any rules of the commission. An agent that contracts with the commission to renew certificates of number by telecommunication may impose additional fees for their THE services as provided in the contract. F. H. The owner shall furnish to the department notice of the transfer of all or any part of the owner's interest other than the creation of a security interest in a motorized watercraft numbered in this state pursuant to the provisions of this chapter or of the destruction or abandonment of such watercraft within fifteen days. Such transfer, destruction or abandonment shall terminate the certificate of number of such watercraft, except that in the case of a transfer of a part interest which does not affect the owner's right to operate such watercraft, the transfer shall not terminate the certificate of number. G. I. Any holder of a certificate of number shall notify the department within fifteen days if the holder's address no longer conforms to the address appearing on the certificate and shall, as a part of such notification, furnish the department with the holder's new address. The commission may provide in its rules for the surrender of the certificate bearing the former address and its replacement with a certificate bearing the new address or the alteration of an outstanding certificate to show the new address of the holder. H. J. On renewal of any motorized watercraft registration that has not been renewed by the current expiration date, the department shall assess a penalty unless the watercraft ownership has been transferred and the watercraft was not registered subsequent to the expiration date. The commission shall establish the penalty which shall not exceed fifteen dollars. If more than twelve months have lapsed since the expiration date of the last registration or renewal the penalty and back fees are waived. Sec. 2. Section 5-323, Arizona Revised Statutes, is amended to read: 5-323. Disposition of fees A. REVENUES FROM the registration fees received under this chapter for the numbering of watercraft shall be deposited, pursuant to sections 35-146 and 35-147, in A FUND DESIGNATED AS THE WATERCRAFT REGISTRATION FEE CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DEPARTMENT, THE STATE TREASURER SHALL DISTRIBUTE THE MONIES IN THE CLEARING ACCOUNT AS FOLLOWS:

1. PAY ALL REVENUES COLLECTED FROM THE REGISTRATION FEES COLLECTED PURSUANT TO SECTION 5-321, SUBSECTION A, PARAGRAPHS 1 AND 2 TO a special fund to be known as the watercraft licensing fund. Such THE WATERCRAFT LICENSING fund is to be used by the department for administering and enforcing the provisions of this chapter and providing an information and education program relating to boating and boating safety. 2. PAY ALL REVENUES COLLECTED FROM ANY ADDITIONAL REGISTRATION FEES COLLECTED PURSUANT TO SECTION 5-321, SUBSECTION C TO AN ACCOUNT DESIGNATED BY A MULTI-COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. B. Each month monies received from the license taxes imposed under section 5-321 in the amount of forty-five per cent of such revenues shall be transferred to the watercraft licensing fund. Such monies are subject to legislative appropriation. C. Each month monies received from the license taxes imposed under section 5-321 in the amount of fifty-five per cent of such revenues shall be deposited by the Arizona game and fish department as follows: 1. Fifteen per cent to the state lake improvement fund to be used as prescribed by section 5-382. 2. Eighty-five per cent to the law enforcement and boating safety fund to be used as prescribed by section 5-383. Sec. 3. Section 17-231, Arizona Revised Statutes, is amended to read: 17-231. General powers and duties of the commission A. The commission shall: 1. Make rules and establish services it deems necessary to carry out the provisions and purposes of this title. 2. Establish broad policies and long-range programs for the management, preservation and harvest of wildlife. 3. Establish hunting, trapping and fishing rules and prescribe the manner and methods which may be used in taking wildlife. 4. Be responsible for the enforcement of laws for the protection of wildlife. 5. Prescribe grades, qualifications and salary schedules for department employees. 6. Provide for the assembling and distribution of information to the public relating to wildlife and activities of the department. 7. Prescribe rules for the expenditure, by or under the control of the director, of all funds arising from appropriation, licenses, gifts or other sources.

8. Exercise such powers and duties necessary to carry out fully the provisions of this title and in general exercise powers and duties which relate to adopting and carrying out policies of the department and control of its financial affairs. 9. Prescribe procedures for use of department personnel, facilities, equipment, supplies and other resources in assisting search or rescue operations on request of the director of the division of emergency management. 10. Cooperate with the Arizona-Mexico commission in the governor's office and with researchers at universities in this state to collect data and conduct projects in the United States and Mexico on issues that are within the scope of the department's duties and that relate to quality of life, trade and economic development in this state in a manner that will help the Arizona-Mexico commission to assess and enhance the economic competitiveness of this state and of the Arizona-Mexico region. B. The commission may: 1. Conduct investigations, inquiries or hearings in the performance of its powers and duties. 2. Establish game management units or refuges for the preservation and management of wildlife. 3. Construct and operate game farms, fish hatcheries, fishing lakes or other facilities for or relating to the preservation or propagation of wildlife. 4. Expend funds to provide training in the safe handling and use of firearms and safe hunting practices. 5. Remove or permit to be removed from public or private waters fish which hinder or prevent propagation of game or food fish and dispose of such fish in such manner as it may designate. 6. Purchase, sell or barter wildlife for the purpose of stocking public or private lands and waters and take at any time in any manner wildlife for research, propagation and restocking purposes or for use at a game farm or fish hatchery and declare wildlife salable when in the public interest or the interest of conservation. 7. Enter into agreements with the federal government, with other states or political subdivisions of the state and with private organizations for the construction and operation of facilities and for management studies, measures or procedures for or relating to the preservation and propagation of wildlife and expend funds for carrying out such agreements. 8. Prescribe rules for the sale, trade, importation, exportation or possession of wildlife. 9. Expend monies for the purpose of producing publications relating to wildlife and activities of the department for sale to the public and establish the price to be paid for annual subscriptions and single copies of such publications. All monies received from

the sale of such publications shall be deposited in the game and fish publications revolving fund. 10. Contract with any person or entity to design and produce artwork on terms which, in the commission's judgment, will produce an original and valuable work of art relating to wildlife or wildlife habitat. 11. Sell or distribute the artwork authorized under paragraph 10 of this subsection on such terms and for such price as it deems acceptable. 12. Consider the adverse and beneficial short-term and long-term economic impacts on resource dependent communities, small businesses and the state of Arizona, of policies and programs for the management, preservation and harvest of wildlife by holding a public hearing to receive and consider written comments and public testimony from interested persons. C. The commission shall confer and coordinate with the director of water resources with respect to the commission's activities, plans and negotiations relating to water development and use, restoration projects under the restoration acts pursuant to the provisions of chapter 4, article 1 of this title, where water development and use are involved, the abatement of pollution injurious to wildlife and in the formulation of fish and wildlife aspects of the director of water resources' plans to develop and utilize water resources of the state and shall have jurisdiction over fish and wildlife resources and fish and wildlife activities of projects constructed for the state under or pursuant to the jurisdiction of the director of water resources. D. THE COMMISSION MAY ENTER INTO ONE OR MORE AGREEMENTS WITH A MULTICOUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03, INCLUDING THE COLLECTION AND PAYMENT OF ANY MONIES AUTHORIZED BY LAW FOR THE PURPOSES OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. Sec. 4. Section 17-345, Arizona Revised Statutes, is amended to read: 17-345. Surcharges; purposes In addition to any other fees, the commission may IMPOSE AND collect: 1. A surcharge of up to two dollars on a class A, B, C, D, F, G, H or I license and on a trout stamp. Monies collected pursuant to this section PARAGRAPH shall be segregated from other fees and deposited in the conservation development fund. 2. SURCHARGES ON ARIZONA-COLORADO RIVER SPECIAL USE PERMITS, CALIFORNIACOLORADO RIVER SPECIAL USE PERMITS AND NEVADA-COLORADO RIVER SPECIAL USE PERMITS ISSUED IN THIS STATE AS PROVIDED BY SECTIONS 17-342, 17-343 AND 17-344. THE AMOUNT OF THE SURCHARGES SHALL BE DETERMINED BY THE

COMMISSION. A SURCHARGE UNDER THIS PARAGRAPH IS TO BE USED SOLELY FOR THE PURPOSE OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03. ANY MONIES COLLECTED PURSUANT TO THIS PARAGRAPH SHALL BE SEGREGATED FROM OTHER REVENUES AND DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35-147, IN A FUND DESIGNATED AS THE COLORADO RIVER SPECIAL USE PERMIT CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DEPARTMENT, THE STATE TREASURER SHALL PAY ALL OF THE MONIES IN THE CLEARING ACCOUNT TO AN ACCOUNT DESIGNATED BY A MULTICOUNTY COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. Sec. 5. Title 45, chapter 1, Arizona Revised Statutes, is amended by adding article 13, to read: ARTICLE 13. COLORADO RIVER WATER USE FEE 45-331. Definitions IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES: 1. "CONSUMPTIVE USE" MEANS, FOR ANY WATER USER FOR ANY PROGRAM YEAR, THE CONSUMPTIVE USE AS RECORDED IN THE FINAL ACCOUNTING FOR THE MOST RECENT CALENDAR YEAR FOR WHICH A FINAL ACCOUNTING IS AVAILABLE, OR IF NONE IS RECORDED, THE AMOUNT OF DIVERSIONS SO RECORDED. 2. "FINAL ACCOUNTING" MEANS, FOR ANY CALENDAR YEAR, THE UNITED STATES BUREAU OF RECLAMATION'S FINAL COMPILATION OF RECORDS OF COLORADO RIVER DIVERSIONS, RETURN FLOWS AND CONSUMPTIVE USES FOR THE YEAR, COMPILED PURSUANT TO ARTICLE V(B) OF THE DECREE OF THE UNITED STATES SUPREME COURT IN ARIZONA V. CALIFORNIA, 376 U.S. 340 (1964). 3. "LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM" OR "PROGRAM" MEANS THE COOPERATIVE EFFORT AMONG AGENCIES OF THE FEDERAL GOVERNMENT AND AGENCIES AND POLITICAL SUBDIVISIONS OF THE STATES OF ARIZONA, CALIFORNIA AND NEVADA AND OTHER LOCAL PUBLIC AND PRIVATE PARTIES WITH A COMMON INTEREST IN THE WATER AND RELATED RESOURCES OF THE LOWER COLORADO RIVER, INCLUDING THE HISTORIC FLOODPLAIN AND RESERVOIRS TO THE FULL POOL ELEVATIONS, TO PROVIDE THE BASIS FOR COMPLIANCE WITH SECTIONS 7 AND 10(a)(1)(B) OF THE ENDANGERED SPECIES ACT OF 1973 (P.L. 93-205; 87 STAT. 884; 16 UNITED STATES CODE SECTIONS 1536 AND 1539.)

4. "PROGRAM YEAR" MEANS THE TWELVE MONTH PERIOD BEGINNING OCTOBER 1 OF ANY CALENDAR YEAR AND ENDING SEPTEMBER 30 OF THE FOLLOWING CALENDAR YEAR. 45-332. Cooperation in lower Colorado river multispecies conservation program ON BEHALF OF THE DEPARTMENT, THE DIRECTOR MAY ENTER INTO ONE OR MORE AGREEMENTS WITH A MULTI-COUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM, INCLUDING THE COLLECTION OF ONE OR MORE FEES UNDER THIS ARTICLE FOR PURPOSES OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. 45-333. Colorado river water use fee; purpose A. THE DIRECTOR MAY ASSESS AND COLLECT ANNUAL COLORADO RIVER WATER USE FEES FROM EACH PERSON WHO DIVERTS AND CONSUMPTIVELY USES WATER IN THIS STATE FROM THE MAINSTREAM OF THE COLORADO RIVER AS RECORDED IN THE FINAL ACCOUNTING. THIS FEE DOES NOT APPLY TO PERSONS WHO HAVE ENTERED INTO, AND ARE IN COMPLIANCE WITH, AGREEMENTS WITH A MULTI-COUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM WITH RESPECT TO THE USE OF COLORADO RIVER WATER. B. THE DIRECTOR SHALL SET THE AMOUNT OF A FEE UNDER THIS SECTION EACH YEAR ACCORDING TO THE GUIDELINES IN SECTION 45-334. C. ANY MONIES COLLECTED PURSUANT TO THIS SECTION SHALL BE SEGREGATED FROM OTHER REVENUES AND DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35147, IN A FUND DESIGNATED AS THE COLORADO RIVER WATER USE FEE CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DIRECTOR, THE STATE TREASURER SHALL PAY ALL OF THE MONIES IN THE CLEARING ACCOUNT TO AN ACCOUNT DESIGNATED BY A MULTI-COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. 45-334. Setting Colorado river water use fee A. IN SETTING COLORADO RIVER WATER USE FEES UNDER THIS ARTICLE: 1. NOT LATER THAN JULY 1 OF EACH YEAR, THE DIRECTOR SHALL SET THE COLORADO RIVER WATER USE FEES FOR THE FOLLOWING PROGRAM YEAR. THE DIRECTOR SHALL CONSIDER THE FOLLOWING IN SETTING THE AMOUNT OF THE FEES: (a) THE CONSUMPTIVE USE FOR THAT PROGRAM YEAR BY THE PERSONS TO WHOM THE FEE WILL BE ASSESSED.

(b) THE PAYMENT OBLIGATIONS THAT APPLY TO SIMILAR WATER USERS UNDER AGREEMENTS TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. (c) THE AMOUNT OF MONIES NECESSARY TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM FOR THAT PROGRAM YEAR. (d) THE AMOUNT OF MONIES EXPECTED TO BE AVAILABLE TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM DURING THE PROGRAM YEAR FROM OTHER SOURCES. 2. THE DIRECTOR MAY ESTABLISH CLASSES OF WATER USERS FOR THE PURPOSE OF ASSIGNING GRADUATED FEE RATES TO THE RESPECTIVE CLASSES. 3. THE DIRECTOR SHALL CONSIDER THE DATE OF ANY CONTRACT OR OTHER RIGHT TO USE COLORADO RIVER WATER AND THE TYPE OF WATER USE WHEN ASSIGNING FEE RATES. 4. THE DIRECTOR SHALL ENTER IN THE DEPARTMENT'S RECORDS A STATEMENT OF THE FEES FOR THE FOLLOWING PROGRAM YEAR AND TRANSMIT A COPY OF THE STATEMENT TO THE STATE TREASURER. 5. BEFORE SETTING THE FEES, THE DIRECTOR SHALL CONSULT WITH REPRESENTATIVES OF THE WATER USERS WHICH WILL BE ASSESSED FOR THE FEES. THE DIRECTOR SHALL PUBLISH NOTICE OF THE FEES AND PROVIDE A COMMENT PERIOD OF AT LEAST THIRTY DAYS BEFORE SETTING THE FINAL FEE AMOUNTS. 6. WITHIN THIRTY DAYS AFTER THE DIRECTOR SETS FEES FOR A PROGRAM YEAR, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE FEES TO EACH PERSON WITH CONSUMPTIVE USE. 7. THE DIRECTOR SHALL CALCULATE THE TOTAL AMOUNT OF THE FEE THAT A PERSON MUST PAY FOR THE CONSUMPTIVE USE OF COLORADO RIVER WATER FOR A PROGRAM YEAR BY MULTIPLYING THE APPLICABLE ANNUAL FEE FOR THAT PROGRAM YEAR BY THE CONSUMPTIVE USE FOR THE PERSON FOR THE PROGRAM YEAR. THE DIRECTOR MAY REDUCE THE AMOUNT OF A PERSON'S FEE BY THE VALUE OF ANY SERVICES OR TANGIBLE ASSETS, INCLUDING LAND OR WATER, CONTRIBUTED BY THE PERSON TO, AND ACCEPTED BY, THE FEDERAL GOVERNMENT FOR USE IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. B. THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE TOTAL AMOUNT OF THE FEE THAT A PERSON MUST PAY UNDER THIS SECTION NO LATER THAN AUGUST 15 BEFORE THE BEGINNING OF THE PROGRAM YEAR. 45-335. Payment of fee; penalty for delinquency A. IF THE DIRECTOR ASSESSES A FEE PURSUANT TO THIS ARTICLE IN ANY YEAR, A PERSON TO WHOM THE FEE IS ASSESSED MUST PAY THE FEE WITHIN FORTY-FIVE

DAYS AFTER THE PERSON RECEIVES WRITTEN NOTICE OF THE TOTAL AMOUNT OF THE FEE FROM THE DIRECTOR. B. IF A PERSON FAILS TO PAY THE FEE WHEN DUE, THE DIRECTOR MAY ASSESS AND COLLECT A PENALTY OF TEN PER CENT OF THE UNPAID FEE, WITHOUT COMPOUNDING, FOR EACH MONTH OR PORTION OF A MONTH THAT THE FEE IS DELINQUENT. THE TOTAL PENALTY ASSESSED SHALL NOT EXCEED SIXTY PER CENT OF THE UNPAID FEE. AN ACTION TO RECOVER PENALTIES UNDER THIS SUBSECTION SHALL BE BROUGHT IN THE SUPERIOR COURT IN MARICOPA COUNTY. ANY PENALTIES COLLECTED SHALL BE DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35-147, IN THE COLORADO RIVER WATER USE FEE CLEARING ACCOUNT ESTABLISHED PURSUANT TO SECTION 45-333. Sec. 6. Section 48-3712, Arizona Revised Statutes, is amended to read: 48-3712. Powers and duties of the board A. The board shall: 1. Manage and conduct the affairs and business of the district. 2. Make and execute all necessary contracts and other instruments which shall be signed by the president or, in his THE PRESIDENT'S absence, by another member of the board designated for that purpose, and attested by the secretary. 3. Establish bylaws and rules for the governing of the board and for the functions of the district, as provided in title 41. 4. Perform all acts necessary to carry out the purposes of this chapter. 5. Except as provided in subsection C of this section and in sections 48-3713.03, 483715.01, 48-3715.03, 48-3715.05, 48-3772 and 48-3773, require that all funds received on behalf of the district shall be deposited, pursuant to sections 35-146 and 35-147, in a special fund established by the state to be expended at the direction of the board to effectuate the provisions and purposes of this chapter. On notice from the board, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund. 6. Adopt an ordinance or ordinances to establish a revenue bonding program that pledges to bond repayment any monies received or to be received by the district from any source except ad valorem tax revenues, replenishment assessment revenues and replenishment tax generated under article 4 of this chapter. 7. Employ such agents, engineers, attorneys and employees not readily available from existing state agencies. B. The board may: 1. Accept grants, gifts or donations of money or other property from any source which may be expended for any purpose consistent with the provisions of this chapter.

C. 2. The board may Establish a revolving fund for the purpose of defraying the costs and expenses of the district. Sec. 7. Title 48, chapter 22, article 1, Arizona Revised Statutes, is amended by adding section 48-3713.03, to read: 48-3713.03. Lower Colorado river multispecies conservation program; definition A. THE BOARD MAY ENTER INTO AGREEMENTS WITH THIS STATE, AN AGENCY OR POLITICAL SUBDIVISION OF THIS STATE, THE FEDERAL GOVERNMENT, AN AGENCY OF THE FEDERAL GOVERNMENT AND ANY OTHER PERSON FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER THIS SECTION, INCLUDING THE PAYMENT, COLLECTION, MANAGEMENT, INVESTMENT AND DISTRIBUTION OF MONIES FOR THE PROGRAM. B. THE AGREEMENTS MAY DESIGNATE THE STATE TREASURER OR PRIVATE FINANCIAL INSTITUTIONS AS FISCAL AGENTS OR TRUSTEES FOR COLLECTION, MANAGEMENT, INVESTMENT AND DISTRIBUTION OF MONIES FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. C. MONIES COLLECTED FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM SHALL BE USED ONLY FOR ACTIVITIES AND ADMINISTRATIVE COSTS DIRECTLY RELATED TO THE MULTISPECIES CONSERVATION PROGRAM AND MAY INCLUDE: 1. MONIES APPROPRIATED BY THE LEGISLATURE. 2. ADDITIONAL WATERCRAFT REGISTRATION FEES, IF ASSESSED PURSUANT TO SECTION 5-321, SUBSECTION C. 3. SURCHARGES ON ARIZONA-COLORADO RIVER SPECIAL USE PERMITS, CALIFORNIACOLORADO RIVER SPECIAL USE PERMITS AND NEVADA-COLORADO RIVER SPECIAL USE PERMITS, IF IMPOSED PURSUANT TO SECTION 17-345, PARAGRAPH 2. 4. COLORADO RIVER WATER USE FEES, IF ASSESSED PURSUANT TO SECTION 45-333. 5. GIFTS, GRANTS AND DONATIONS FROM ANY PUBLIC OR PRIVATE SOURCES. 6. PAYMENTS BY ANY PERSON UNDER ANY AGREEMENT TO FUND ALL OR PART OF THE PROGRAM. D. FOR THE PURPOSES OF THIS SECTION, "LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM" OR "PROGRAM" MEANS THE COOPERATIVE EFFORT AMONG AGENCIES OF THE FEDERAL GOVERNMENT AND AGENCIES AND POLITICAL SUBDIVISIONS OF THE STATES OF ARIZONA, CALIFORNIA AND NEVADA AND OTHER LOCAL PUBLIC AND PRIVATE PARTIES WITH A COMMON INTEREST IN THE WATER AND RELATED RESOURCES OF THE LOWER COLORADO RIVER, INCLUDING THE HISTORIC FLOODPLAIN AND RESERVOIRS TO THE FULL POOL ELEVATIONS, TO PROVIDE THE BASIS FOR COMPLIANCE WITH SECTIONS 7 AND 10(a)(1)(B) OF THE ENDANGERED

SPECIES ACT OF 1973 (P.L. 93-205; 87 STAT. 884; 16 UNITED STATES CODE SECTIONS 1536 AND 1539). APPROVED BY THE GOVERNOR APRIL 13, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 13, 2005.

ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2720 Water; General Industrial Use Permits 47th Legislature, 1st Regular Session (2005)

BILL NUMBER: SHORT TITLE: PRIME SPONSOR:

HB 2720, Chapter 236 Water; General Industrial Use Permits Representative: Boone

BILL SUMMARY: HB 2720 repeals Laws 2002, Chapter 72, which authorized ADWR to extend the term of a general industrial use permit for up to seven years, and replaces it with another session law that extends the dates by which certain conditions must occur. For example, a water exchange contract, which is one of the necessary conditions for a water use permit to be granted, must be signed by January 1, 2007 (Previously January 1, 2002). SIGNIFICANCE TO AGENCY: HB 2720 will help to better utilize Central Arizona Project water in the Sun City Area. The area is experiencing subsidence due to the overpumping of groundwater. HB 2720 will help the area to move off of groundwater and on to a renewable supply. REQUIRED OUTCOMES: Rule No rule changes are needed to implement the legislation. Legislation No legislative changes are needed to implement the legislation. Substantive Policy No substantive policies are needed to implement the legislation.

ACTIONS REQUIRED: No agency action is needed to implement the legislation.

DIVISION STAFF SUPPORT REQUIRED: Active Management Areas, generally; no specific staff support is required for this legislation

TIMELINE: No timeline for action is required.

House Engrossed -------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 -------------------------CHAPTER 236 -------------------------HOUSE BILL 2720 --------------------------

AN ACT REPEALING LAWS 2002, CHAPTER 72; RELATING TO GENERAL INDUSTRIAL USE PERMITS. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Repeal Laws 2002, chapter 72 is repealed. Sec. 2. General industrial use permit; extension; conditions; termination A. Notwithstanding section 45-515, Arizona Revised Statutes, the department of water resources shall extend the term of a general industrial use permit issued in the Phoenix active management area for up to seven years after the date the permit would otherwise expire as provided in subsection B of this section if all of the following apply: 1. The general industrial use permit would otherwise expire on or before August 5, 2005 and cannot be renewed under section 45-515, Arizona Revised Statutes, because the site of the general industrial use is now located within the exterior boundaries of a private water company. 2. During the term of the extension, all wells from which groundwater is withdrawn pursuant to the general industrial use permit are located within the service area of the private water company and the private water company has agreed in writing that the term of the general industrial use permit may be extended for up to seven years under terms prescribed by this section. 3. The general industrial use permit is the subject of a water exchange contract, as defined in section 45-1001, Arizona Revised Statutes, to which all of the following apply: (a) The water exchange contract was entered into before January 1, 2007 for the exchange of central Arizona project water between a holder of a municipal and industrial central Arizona project subcontract and the holder of the general industrial use permit.

(b) The holders of the general industrial use permits have agreed in the water exchange contract to exchange groundwater pursuant to one or more general industrial use permits and the total amount of those permits is less than two thousand acre-feet. (c) The central Arizona project water received by the holder of the general industrial use permit will replace groundwater for use on one or more golf courses owned by the permit holders. B. A general industrial use permit described in subsection A of this section shall be extended for an additional seven years after the date the permit would have otherwise expired except that the extension shall terminate four years after the date on which the general industrial use permit would have otherwise expired if within that four-year period construction on a pipeline for transporting central Arizona project water to the permit holder's golf courses has not substantially commenced. Sec. 3. Purpose The purpose of this act is to facilitate the replacement of groundwater use on golf courses with the use of central Arizona project water by allowing general industrial use permits issued under section 45-515, Arizona Revised Statutes, in the Phoenix active management area to be extended for up to seven years after the date the permits would have otherwise expired, if the permits cannot be renewed because the location of the use is now within the exterior boundaries of a private water company and if the permits will be used to exchange groundwater for central Arizona project water that will be used on a golf course. This exception to the requirements of section 45-515, Arizona Revised Statutes, will give the general industrial use permit holders additional time to secure a replacement withdrawal right to exchange for the central Arizona project water or make other arrangements to continue receiving the central Arizona project water for use on the golf courses. It is further intended that the extension of the general industrial use permit duration for the maximum seven years is dependent on timely progress toward completion of the water delivery infrastructure that will transport the central Arizona project water to the golf course. Sec. 4. Repeal Sections 2 and 3 of this act are repealed on August 1, 2012. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005.

ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2728 Arizona Water Settlements Act 47th Legislature, 1st Regular Session (2005)

BILL NUMBER: SHORT TITLE: PRIME SPONSORS:

HB 2728, Chapter 143 Arizona Water Settlements Act Representatives: J. Allen Brown Chase Mason Nelson O'Halleran Prezelski Robson J. Weiers Flake Bennett

Senators:

BILL SUMMARY: HB 2728 institutes programs, fees and other requirements for meeting the state's obligation pertaining to the water settlements of the Gila River Indian Community (GRIC) and San Xavier Reservation. Gila River Indian Community Water Settlement Program Establishes five groundwater protection zones along the southern boundary of the Gila River Indian Reservation (Eastern Protection Zone North; Eastern Protection Zone South; Western Municipal and Industrial Protection Zone; Western Municipal Protection Zone; and Central Protection Zone). If groundwater withdrawals exceed a certain limit in those areas, the State's obligation to replenish the water is triggered. Prohibits transportation away from the Eastern and Western Protection Zones if the transportation is for a non-irrigation use. Certain exemptions apply for grandfathered uses; if the water is replenished or replaced within a certain time; or if specific storage and transportation limitations apply.

Establishes conservation requirements for the Central Protection Zone that are no less restrictive than those established in the Management Plan for the Pinal Active Management Area (AMA). Requires the Arizona Water Banking Authority (AWBA) to acquire sufficient water supplies to meet the replenishment obligations of the State, using monies appropriated from the State General Fund. To the extent General Fund monies are not available, the AWBA may use groundwater withdrawal fees, collected in the Pinal AMA and already committed for Arizona Water Banking Authority purposes, to establish the Southside Replenishment Bank for the GRIC. Establishes the Southside Replenishment Bank for the GRIC and requires the AWBA to bank at least 1,000 acre feet of water per year until the balance in the GRIC account reaches 15,000 acre feet. There will be no cost to the GRIC. The AWBA is required to maintain a balance in the Southside Replenishment Bank of at least 5,000 acre feet. The AWBA is not required to deliver more than 11 percent of the annual water delivery in any single month. Requires the AWBA to maintain an accounting system that keeps longterm storage credits developed for GRIC separate from other longterm storage credits. Establishes a funding mechanism for replenishment by authorizing use of appropriated funds, and if no appropriations are available use of a groundwater withdrawal fee of up to $2.50 per acre foot. The fee will continue to be collected in the Pinal AMA and is currently used for water banking activities in Pinal AMA as well as replenishment obligations for the GRIC. Outlines the method to calculate the amount of any replenishment obligation. Withdrawals for municipal and industrial uses that exceed two acre feet in the Western zones and 2.33 acre feet in the eastern zones trigger a replenishment obligation. Withdrawals for irrigation uses are calculated based on the farm's flexibility account and irrigation water duty established by the Arizona Department of Water Resources (ADWR). A water company that withdraws water from an Eastern Protection Zone and transports the water for municipal uses outside the Eastern Protection Zones triggers a replenishment obligation if the amount exceeds 1,275 acre feet for the year. Specific time limits apply to replenishment. A person may incur an individual replenishment obligation if groundwater is withdrawn that exceeds a certain volume. The AWBA must send written notice of the obligation to the person specifying the amount, the cost of replenishment, and the manner in which the person may satisfy the obligation. The Director of ADWR is required to provide written notice of the potential for an individual who withdraws groundwater in the Eastern or Western Protection Zones to incur a replenishment obligation. Establishes a Gila River Maintenance Area and prohibits construction of new dams or enlarging existing dams within the area. Provides exemptions for flood control 48

structures, stockponds, replacement dams, and impoundments for certain mining activities, industrial facilities, and effluent. Prohibits irrigation of land within the Maintenance Area if the land was not irrigated between January 1, 2000 and the general effective date of HB 2728. Provides exemptions for lands that are irrigated with a surface water right that is earlier than the general effective date for HB 2728; if irrigation is allowed under other settlement agreements or decrees; or if the land is located in Cochise County. Authorizes ADWR to enforce the provisions of the Gila River Indian Community Water Settlement Program. Enforcement measures include inspections; investigations, audits, cease and desist orders, hearings, injunctive relief and civil and criminal penalties. San Xavier Reservation Water Settlement Program Requires ADWR to analyze the impacts that a proposed new well will have on water levels at the San Xavier Reservation boundaries. If the analysis shows water levels will decline 10 feet or more in the first five years, the permit to drill shall be denied. Prohibits new well(s) within two miles of the San Xavier Reservation boundary if the combined capacity of all well(s) is 500 gallons per minute or more. Provides an exception if a hydrologic study shows that the water level at the proposed well site is declining at an average rate of two feet per year; that water levels will not exceed a specific rate of decline over a five year period, or if the Nation provides written consent to drilling the well. This provision does not apply to recovery wells drilled to recover water stored at an underground storage facility located within one mile of the recovery well. Requires the Director of ADWR to provide written notice and a copy of an application to drill a well within two miles of the San Xavier Reservation boundary. If the Nation files a written objection to the application, the Director shall schedule an administrative hearing on the objection. Procedures and timelines for decisions are outlined. Water Firming Program Requires the Director of ADWR to develop a water firming program to ensure that nonIndian agricultural priority (NIA priority) Central Arizona Project (CAP) water that has been reallocated to Arizona Indian tribes pursuant to the federally enacted Arizona Water Settlements Act (PL 108-451) is delivered during times of shortage at the same priority as municipal and industrial CAP water. The reallocation provides 15,000 acre feet of NIA priority CAP water to the GRIC and 8,724 acre feet of NIA priority CAP water to other Arizona Indian tribes. Requires the Director to work with the United States Secretary of Interior to firm the federal obligation of 28,200 acre feet of NIA priority CAP water reallocated to the

Tohono O'odham Nation as provided in the Arizona Water Settlements Act (PL 108451). Establishes the Arizona Water Firming Program Study Commission consisting of members appointed by the ADWR Director who represent at least eight specific entities. This Commission will study options for a water firming program that will satisfy the requirements of the Arizona Water Settlements Act and identify appropriate mechanisms to accomplish the goal. An interim report is due to the Legislature by November 1, 2005 and a final report is due January 6, 2006. The Commission is repealed on June 1, 2006. Other provisions Requires the State to cooperate with the GRIC to acquire a specific parcel of land located within the exterior boundaries of the Community's reservation. Specifies that state action shall be taken in accordance with Arizona law. Provides a conditional enactment for certain sections of HB 2728, based on final approval by the Secretary of the Interior, and notice in the Federal Register that all components of the Arizona Water Settlement Act. If final approval is not obtained by December 31, 2010, the sections will not take effect and Title 45, Chapter 15 will be repealed. The conditional enactments are for sections related to the Gila River Maintenance Area and Impact Zones; for restrictions on new dams and new irrigated lands; enforcement provisions; and the water firming program.

SIGNIFICANCE TO AGENCY: Provides an important step in the final enforceability of the Arizona Water Settlements Act. It also provides the Department with additional tools to maintain water supplies in certain areas of the state. REQUIRED OUTCOMES: Rule No new rules are needed and no existing rule needs to be amended. Legislation Legislation and or funding may be need as a result of the Indian Firming Study Commission review and recommendations. The Department is also reviewing HB 2728 to see if technical amendments should be recommended for the next legislative session. Substantive Policy No new substantive policy statements are needed.

ACTIONS REQUIRED: 1. The Director must develop a water firming program to firm 15,000 acre feet of NIA priority water for the Gila River Indian Community and 8,724 acre feet of NIA priority water for future Indian settlements. The Director has appointed the Indian Firming Study Commission. See attached list of Commission members and staff, and work plan. Commission will make a final report to the Director and the Legislature with recommendations of any needed legislative authority, and a plan for the firming program by January 6, 2006. 2. Gila River Maintenance Area. To accomplish the prohibition of new storage reservoirs in the Area, and prohibition of new irrigation from impact zones within the Area, the Department will have to take several steps: (a) Repository of maps of the Gila River Maintenance Area and notice to public. (b) Remote sensing survey of existing irrigation in the Gila River Maintenance Area. (c) Modify applications for construction or enlargement of dams to be consistent with prohibition provisions. (d) Modify NOI forms for Gila River Maintenance Area to incorporate questions concerning (i) whether the proposed well will be used for irrigation, and (ii) notice that if the proposed well is in or near an impact zone of certain forms to be filed with the Gila River Indian Community. 3. Southside Protection Program. The replenishment obligation is given to the Arizona Water Banking Authority, however, the Department is responsible for the Southside Protection Program, to accomplish the restrictions of the Southside Protection Program the Department will have to take several steps: (a) Repository of maps of the Southside Protection Zones and notice to public. (b) Survey and documentation of all municipal and industrial groundwater uses in the Zones. (c) Modify NOI forms in Southside Protection Zones to incorporate notice of the replenishment obligations. (d) Modify Annual Reports for groundwater users within the Southside Protection Zones to provide the Department with adequate information to make calculations for replenishment obligations of the AWBA. 4. San Xavier Protection Program. The Department will need to modify NOI forms in the Tucson AMA to give notice to the public of the new requirements for well spacing analysis near the San Xavier Reservation. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Hydrology Division Active Management Areas

Assured and Adequate Water Supply Program Recharge Office of Statewide Planning Arizona Water Banking Authority NOI Unit Office of Engineering

TIMELINE: 2005 May o Firming - First meeting of the Indian Firming Study Commission (review objectives and background). Staff complete model runs for identification of the firming volume. June o Meeting with GIS and Legal over remote sensing availability and costs for Gila River Management Area baseline. Meeting with Pinal AMA on Southside Protection Program. Meeting with Assured Water Supply on Southside Protection Program. o Firming Meeting with Bureau of reclamation to discuss State's role in "assisting" the Feds with their firming obligation. Study Commission Meeting Define Shortage and Quantify volume of water needed to offset projected shortages to NIA water for the next 100 years. Identify alternative methods for firming water. July o Meeting with GRIC over Gila River Management Area baseline. Meeting with Tucson AMA on San Xavier Groundwater Protection Program. Meeting with NOI group about changes to conform to settlement programs in Pinal AMA, Tucson AMA, and upper Gila River area. o Firming ADWR staff develop additional information on each solution element identified by Study Commission including: cost/funding source, identification of supply required to meet the firming obligation, identification of water supply available to meet the firming obligation, hydrologic feasibility, legal feasibility, and potential partnerships. August o Meeting with Office of Engineering over Gila River Management Area to modify dam permit forms. Remote sensing activities begin. o Firming Meeting of the Firming Study Commission. Present expanded solution elements (work identified in July). Identify ranking criteria for ranking solution elements. Staff to rank elements based on criteria. Develop outline for Interim Report. September

o Firming Develop Interim Report and present Draft to Study Commission. Study Commission Meetings (2) to discuss ranked solution elements and begin defining recommendations and review Draft Interim Report. October o Firming Finalize Interim Report. Develop outline for Final Report for Study Commission review. Study Commission Meeting to discuss recommendations, to identify preferred mechanism, and review Interim Report. Staff to identify appropriate statutory and regulatory provisions that are necessary to fully implement the recommendations being discussed. November o Meeting with GRIC Gila River Management Area GIS baseline created from remote sensing. o Firming Submit Interim Report to the Legislature. Study Commission Meeting to finalize recommendations and review Draft Final Report. Staff to continue to develop necessary statutory and regulatory provisions and agreements. December o Finalize Gila River Management Area GIS baseline. Finalize NOI form changes. Finalize dam permit forms. o Firming Review and complete Final Report (no meeting unless necessary to complete report or other issues). Complete necessary statutory and regulatory provisions and agreements.

2006 January o Finalize annual report changes for Pinal AMA for Southside Protection Program. o Submit Final Report of the Firming Commission to the Legislature.

Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 143 ----------------------------HOUSE BILL 2728 -----------------------------

AN ACT AMENDING SECTIONS 45-611 AND 45-841.01, ARIZONA REVISED STATUTES; AMENDING SECTION 45-841.01, ARIZONA REVISED STATUTES, AS AMENDED BY THIS ACT; AMENDING SECTIONS 45-2423, 45-2425 AND 45-2457, ARIZONA REVISED STATUTES; AMENDING TITLE 45, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 15; AMENDING TITLE 45, CHAPTER 15, ARTICLE 1, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT, BY ADDING SECTIONS 45-2602 AND 45-2604; AMENDING TITLE 45, CHAPTER 15, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT, BY ADDING ARTICLES 2, 3 AND 6; AMENDING TITLE 45, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 16; PROVIDING FOR THE DELAYED CONDITIONAL REPEAL OF TITLE 45, CHAPTER 15, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT; RELATING TO WATERS; PROVIDING FOR CONDITIONAL ENACTMENT. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 45-611, Arizona Revised Statutes, is amended to read: 45-611. Groundwater withdrawal fee; amounts and purposes of fee; exception A. Except as provided in subsection B of this section, the director shall levy and collect an annual groundwater withdrawal fee from each person withdrawing groundwater in the Prescott active management area or the person who owns the right to withdraw the groundwater, in an amount not to exceed five dollars per acre-foot of groundwater withdrawn and beneficially used. The director shall levy and collect an annual withdrawal fee from each person withdrawing water, other than stored water, from a well in the Santa Cruz active management area or the person who owns the right to withdraw the water, in an amount not to exceed five dollars per acre-foot of water, other than stored water, that is withdrawn and beneficially used. For purposes of this article, the annual withdrawal fee levied and collected in the Santa Cruz active management area shall be considered a groundwater withdrawal fee. The actual amount of the fee levied and collected by the director pursuant to this subsection shall be set by the director as follows:

1. For administration and enforcement of this chapter, an amount not less than fifty cents and not greater than one dollar per acre-foot per year. The initial fee for administration and enforcement shall be levied as soon as practicable after the active management area is established. 2. For augmentation of the water supply of the active management area, conservation assistance to water users within the active management area and monitoring and assessing water availability within the active management area, an amount not greater than two dollars per acre-foot per year. 3. For purchasing and retiring grandfathered rights, an amount not greater than two dollars per acre-foot per year. The initial fee for purchasing and retiring grandfathered rights shall be levied in the first year in which the director develops and implements a program for the purchase and retirement of grandfathered rights as part of the management plan for the active management area, but not earlier than January 1, 2006. The director may not levy a fee under this paragraph on a district member of a groundwater replenishment district that withdraws groundwater in the district for a non-irrigation use in the district. B. A person, other than an irrigation district, who withdraws groundwater in an active management area from a non-exempt well for use pursuant to an irrigation grandfathered right that is appurtenant to ten or fewer irrigation acres and the person who owns the right to withdraw the groundwater are exempt from the groundwater withdrawal fee requirements of subsections A and C of this section for those withdrawals unless the irrigation acres are part of an integrated farming operation. C. Except as provided in section 45-411.01, subsection C and subsection B of this section, the director shall levy and collect an annual groundwater withdrawal fee from each person who withdraws groundwater in the Tucson, Phoenix and Pinal active management areas or the person who owns the right to withdraw the groundwater, in an amount of not more than five dollars per acre-foot of groundwater withdrawn and beneficially used. The director shall set the actual amount of the fee as follows: 1. IN THE TUCSON AND PHOENIX ACTIVE MANAGEMENT AREAS, beginning in 2017, for administration and enforcement of this chapter, an amount of at least fifty cents but not more than one dollar per acre-foot per year. IN THE PINAL ACTIVE MANAGEMENT AREA, BEGINNING IN 2017, FOR ADMINISTRATION AND ENFORCEMENT OF THIS CHAPTER, AN AMOUNT OF NOT MORE THAN ONE DOLLAR PER ACRE-FOOT PER YEAR. 2. Through 2016, for augmentation of the water supply of the active management area, conservation assistance to water users within the active management area and monitoring and assessing water availability within the active management area, an amount of not more than fifty cents per acre-foot per year, and after 2016, an amount

of not more than two dollars per acre-foot per year. If a permanent board of directors of an active management area water district assumes office under section 48-4831, the fee for augmentation under this paragraph shall not be levied in that active management area. 3. IN THE TUCSON AND PHOENIX ACTIVE MANAGEMENT AREAS, through 2016, for Arizona water banking purposes, the amount of two dollars fifty cents per acre-foot per year, except that for groundwater withdrawn pursuant to irrigation grandfathered rights within the Pinal active management area to the extent those rights are used to irrigate lands outside of the service area of an irrigation district, the amount of seventy-five cents per acre-foot of groundwater withdrawn in 1997, and a cumulating additional twenty-five cents per acre-foot each year thereafter, to a maximum of two dollars fifty cents per acre-foot per year. IN THE PINAL ACTIVE MANAGEMENT AREA, THROUGH 2016, FOR ARIZONA WATER BANKING PURPOSES, INCLUDING REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, THE AMOUNT OF TWO DOLLARS FIFTY CENTS PER ACRE-FOOT PER YEAR AND, BEGINNING IN 2017, FOR ARIZONA WATER BANKING PURPOSES, INCLUDING REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, AN AMOUNT OF NOT MORE THAN TWO DOLLARS FIFTY CENTS PER ACREFOOT PER YEAR. 4. For purchasing and retiring grandfathered rights, an amount of not more than two dollars per acre-foot per year. The initial fee for purchasing and retiring grandfathered rights shall be levied in the first year in which the director develops and implements a program for the purchase and retirement of grandfathered rights as part of the management plan for the active management area, but not earlier than January 1, 2006. The director may not levy a fee pursuant to this paragraph on a district member of a groundwater replenishment district that withdraws groundwater in the district for non-irrigation use in the district. Sec. 2. Section 45-841.01, Arizona Revised Statutes, is amended to read: 45-841.01. Accrual of long-term storage credits; Indian water rights settlements A. To further the implementation of Indian water rights settlements in this state, an Indian community may accrue long-term storage credits as prescribed by this section. B. This section applies only to the settlement of a water rights claim by a federally recognized Indian community in this state if the settlement provides for off-reservation storage of its central Arizona project water and only after the settlement results in a dismissal with prejudice of a class action claim that has been pending in the United States district court for more than five years. C. Before accruing any long-term storage credits under this section, both of the following conditions apply:

1. A party seeking to participate in the accrual of long-term storage credits under this section shall file written notice with the director that the requirements of subsection B of this section have been met. 2. The director shall find that the requirements of subsection B of this section have been met. D. Before accruing any long-term storage credits under this section, a party seeking to participate in the accrual of long-term storage credits under this section shall file with the director all of the following information: 1. A written notice of the parties' PARTY'S intent to begin the delivery of central Arizona project water that was made IS available to the Indian community by the water rights settlement to the holder of grandfathered groundwater rights in an active management area. 2. A sworn statement by the holder of the grandfathered groundwater rights that the holder will use the water delivered off of Indian community lands on a gallon-for-gallon substitute basis instead of groundwater that otherwise would have been pumped pursuant to the grandfathered groundwater rights from within an active management area. 3. A listing and description of the grandfathered groundwater rights that will not be exercised by the holder because of the delivery of the water that is delivered by the Indian community. 4. A hydrologic report assessing the effect of nonexercise of grandfathered groundwater rights under this section on any underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal for the grandfathered groundwater rights. E. The director shall review the hydrologic report filed pursuant to subsection D, paragraph 4 of this section and shall make such modifications to the state demonstration project's underground storage facility permit as the director deems appropriate. F. If the director determines that the parties have complied with subsection D of this section, the Indian community may begin accruing long-term storage credits for the delivery of central Arizona project WATER to the holder of the grandfathered groundwater rights, but only if the following apply: 1. By March 31 of each year, the holder of the grandfathered groundwater rights files an annual report with the director for the preceding calendar year. The annual report shall include the following information: (a) The total quantity of water received from the Indian community during the year for use by the holder under this section.

(b) A listing of those grandfathered groundwater rights that were not exercised during the year by the holder because of the receipt of central Arizona project water delivered by the Indian community. (c) Such other information as the director may reasonably require. 2. The director finds that the water reported as received by the grandfathered groundwater right holder was used on a gallon-for-gallon substitute basis for groundwater. 3. The Indian community has offered to sell the Arizona water banking authority ten per cent of any long-term storage credits accruable by the Indian community under this section at a price per acre-foot at the time of sale equal to the authority's cost of delivering and storing water at an underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal of any of the grandfathered groundwater rights identified in the list filed with the director pursuant to subsection D, paragraph 3 of this section, except that any credits purchased pursuant to such offer may not be recovered within five miles of the exterior reservation boundary of the Indian community. G. The water that is received under this section by the holder of the grandfathered groundwater right is deemed to be groundwater for all purposes of chapter 2 of this title as if the holder had withdrawn it from a well. The holder is responsible for all records, reports and fees required by chapter 2 of this title relating to the water received. H. The director shall establish a long-term storage account for the Indian community in accordance with section 45-852.01 and each year shall credit to that long-term storage account ninety-five per cent of the water received by the holder of the grandfathered groundwater right during the preceding year that meets the requirements of subsection F of this section. I. Long-term storage credits accrued pursuant to this section may be used or assigned in any manner that is consistent with this chapter. J. The maximum amount of long-term storage credits that may be accrued by an Indian community under this section in any year is ten thousand acre-feet. Sec. 3. Section 45-841.01, Arizona Revised Statutes, as amended by this act, is amended to read: 45-841.01. Accrual of long-term storage credits; Indian water rights settlements A. To further the implementation of Indian water rights settlements in this state, an Indian community may accrue long-term storage credits as prescribed by this section. B. This section applies only to the settlement of a water rights claim by a federally recognized Indian community in this state if the settlement provides for off-reservation

storage of its central Arizona project water and only after the settlement results in a dismissal with prejudice of a class action claim that has been pending in the United States district court for more than five years. C. Before accruing any long-term storage credits under this section, both of the following conditions apply: 1. A party seeking to participate in the accrual of long-term storage credits under this section shall file written notice with the director that the requirements of subsection B of this section have been met. 2. The director shall find that the requirements of subsection B of this section have been met. D. Before accruing any long-term storage credits under this section, a party seeking to participate in the accrual of long-term storage credits under this section shall file with the director all of the following information: 1. A written notice of the party's PARTIES' intent to begin the delivery of central Arizona project water that is WAS MADE available to the Indian community BY THE WATER RIGHTS SETTLEMENT to the holder of grandfathered groundwater rights in an active management area. 2. A sworn statement by the holder of the grandfathered groundwater rights that the holder will use the water delivered off of Indian community lands on a gallon-for-gallon substitute basis instead of groundwater that otherwise would have been pumped pursuant to the grandfathered groundwater rights from within an active management area. 3. A listing and description of the grandfathered groundwater rights that will not be exercised by the holder because of the delivery of the water that is delivered by the Indian community. 4. A hydrologic report assessing the effect of nonexercise of grandfathered groundwater rights under this section on any underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal for the grandfathered groundwater rights. E. The director shall review the hydrologic report filed pursuant to subsection D, paragraph 4 of this section and shall make such modifications to the state demonstration project's underground storage facility permit as the director deems appropriate. F. If the director determines that the parties have complied with subsection D of this section, the Indian community may begin accruing long-term storage credits for the delivery of central Arizona project water to the holder of the grandfathered groundwater rights, but only if the following apply:

1. By March 31 of each year, the holder of the grandfathered groundwater rights files an annual report with the director for the preceding calendar year. The annual report shall include the following information: (a) The total quantity of water received from the Indian community during the year for use by the holder under this section. (b) A listing of those grandfathered groundwater rights that were not exercised during the year by the holder because of the receipt of central Arizona project water delivered by the Indian community. (c) Such other information as the director may reasonably require. 2. The director finds that the water reported as received by the grandfathered groundwater right holder was used on a gallon-for-gallon substitute basis for groundwater. 3. The Indian community has offered to sell the Arizona water banking authority ten per cent of any long-term storage credits accruable by the Indian community under this section at a price per acre-foot at the time of sale equal to the authority's cost of delivering and storing water at an underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal of any of the grandfathered groundwater rights identified in the list filed with the director pursuant to subsection D, paragraph 3 of this section, except that any credits purchased pursuant to such offer may not be recovered within five miles of the exterior reservation boundary of the Indian community. G. The water that is received under this section by the holder of the grandfathered groundwater right is deemed to be groundwater for all purposes of chapter 2 of this title as if the holder had withdrawn it from a well. The holder is responsible for all records, reports and fees required by chapter 2 of this title relating to the water received. H. The director shall establish a long-term storage account for the Indian community in accordance with section 45-852.01 and each year shall credit to that long-term storage account ninety-five per cent of the water received by the holder of the grandfathered groundwater right during the preceding year that meets the requirements of subsection F of this section. I. Long-term storage credits accrued pursuant to this section may be used or assigned in any manner that is consistent with this chapter. J. The maximum amount of long-term storage credits that may be accrued by an Indian community under this section in any year is ten thousand acre-feet. Sec. 4. Section 45-2423, Arizona Revised Statutes, is amended to read: 45-2423. Powers and duties of authority

A. The authority, acting through its commission, shall: 1. Administer the Arizona water banking fund in accordance with this chapter. 2. Coordinate its staffing needs with the director and CAWCD. 3. Coordinate the storage of water and distribution and extinguishment of long-term storage credits with the director in accordance with this chapter and the water management objectives set forth in chapter 2 of this title. 4. Coordinate with CAWCD for the purchase, delivery and storage of Colorado river water delivered through the central Arizona project in accordance with this chapter. 5. Coordinate and confer with state agencies, municipal corporations, special districts, authorities, other political subdivisions, private entities, Indian communities and the United States on matters within their jurisdiction relating to the policy and purposes of this chapter. 6. Determine, on an annual basis, the quantity of Colorado river water to be stored by the authority and where that storage will occur. 7. Account for, hold and distribute or extinguish long-term storage credits in accordance with this chapter. 8. Comply with all aspects of chapter 3.1 of this title. 9. PERFORM THE AUTHORITY'S REPLENISHMENT RESPONSIBILITIES UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE WITH MONIES APPROPRIATED FROM THE STATE GENERAL FUND BY THE LEGISLATURE FOR THAT PURPOSE AND TO THE EXTENT THAT MONIES APPROPRIATED BY THE LEGISLATURE FOR THAT PURPOSE ARE NOT AVAILABLE, WITH MONIES COLLECTED IN THE PINAL ACTIVE MANAGEMENT AREA PURSUANT TO SECTION 45-611, SUBSECTION C, PARAGRAPH 3. 9. 10. Adopt an official seal for the authentication of its records, decisions and resolutions. 10. 11. Keep the minutes of its meetings and all records, reports and other information relating to its work and programs in permanent form, systematically indexed and filed. B. The authority, acting through its commission, may: 1. Apply for and hold water storage permits. 2. Accrue, exchange, assign, lend and hold long-term storage credits in accordance with this chapter. 3. Exchange Colorado river water for any type of water in accordance with chapter 4 of this title. 4. Enter into water banking services agreements. 5. Charge fees for water banking services.

6. Apply for and hold any water quality permit required for water storage by the department of environmental quality under title 49, chapter 2, article 3 or by federal law. 7. Make and execute all contracts, including intergovernmental agreements pursuant to title 11, chapter 7, article 3, that shall be signed by the chairperson, or in the chairperson's absence the vice-chairperson, and attested by the secretary, necessary to: (a) Obtain for storage Colorado river water delivered through the central Arizona project. Agreements by which the authority obtains Colorado river water are exempt from the requirements of title 41, chapter 23. (b) Obtain effluent for storage but only after the authority has stored all available excess Central Arizona project water or when central Arizona project water is otherwise unavailable or undeliverable. (c) Affiliate water storage permits held by the authority with storage facility permits. (d) Store Colorado river water at permitted storage facilities. (e) Distribute long-term storage credits earned by the authority to make water available to municipal and industrial users of Colorado river water in this state that are inside or outside of the CAWCD service area, in accordance with the provisions of this chapter. (f) Store Colorado river water in Arizona on behalf of appropriately authorized agencies in California and Nevada. (g) Cause a decrease in Arizona diversions from the Colorado river, ensuring that Arizona will use less than its full entitlement to Colorado river water in years in which California and Nevada agencies are contractually authorized to call on the water stored on their behalf by the authority. (h) Distribute long-term storage credits earned by the authority on behalf of agencies in California and Nevada to Colorado river water users in Arizona to use in place of Colorado river water that would have otherwise been used by those Arizona users. (i) REPLENISH WATER PURSUANT TO CHAPTER 15, ARTICLE 3 OF THIS TITLE, INCLUDING ENTERING INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE GILA RIVER INDIAN COMMUNITY PURSUANT TO SECTION 45-2624. 8. Sue and be sued. 9. Perform all other acts necessary for the authority to carry out its purposes, powers and duties in accordance with this chapter. 10. Submit a request for a general fund appropriation to the legislature each year. A request shall be accompanied by a budget detailing how the appropriation would be used and justifying the need for the appropriation.

11. Form temporary committees as deemed necessary by the authority to provide the authority with advice on issues identified by the authority. Advisory committees may consist of members of the public selected by the authority, members of the authority and authority staff. 12. Purchase long-term storage credits accrued by an Indian community pursuant to section 45-841.01, provided such long-term storage credits are distributed or extinguished in accordance with the rules of operation specified in section 45-2457 for the funds used by the authority to purchase the credits. Sec. 5. Section 45-2425, Arizona Revised Statutes, is amended to read: 45-2425. Arizona water banking fund A. The Arizona water banking fund is established and shall include subaccounts based on funding sources. The authority shall administer the banking fund in accordance with this chapter. B. The banking fund consists of all of the following: 1. Monies appropriated from the state general fund by the legislature FOR WATER BANKING PURPOSES OTHER THAN REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE. 2. MONIES APPROPRIATED FROM THE STATE GENERAL FUND BY THE LEGISLATURE FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE. 2. 3. Reimbursement for the distribution of long-term storage credits, collected by the authority in accordance with section 45-2457, subsection B, paragraph 2. 3. 4. Monies paid to the authority by the recipients of in lieu water at a groundwater savings facility, in accordance with section 45-2455, subsection C. 4. 5. Monies collected in accordance with section 45-611, subsection C, paragraph 3. 5. 6. Monies deposited in the banking fund in accordance with section 48-3715.03, subsection B. 6. 7. Monies paid to the authority by agencies that have entered into interstate water banking agreements with the authority in accordance with section 45-2471. 7. 8. Monies paid to the authority by persons and Indian communities in this state that have entered into water banking services agreements with the authority in accordance with section 45-2458. C. In addition to the monies prescribed in this section, the authority may accept any gifts, grants or donations and deposit those monies in the banking fund. D. Monies in the banking fund are exempt from lapsing under section 35-190. On notice from the authority, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the banking fund.

E. The authority may use the banking fund to pay all reasonable expenses incurred in carrying out its duties and responsibilities in accordance with this chapter. Sec. 6. Section 45-2457, Arizona Revised Statutes, is amended to read: 45-2457. Accounting; rules of operation A. The authority shall develop an accounting system for the long-term storage credits accrued by the authority. The accounting system shall be designed to allow the authority to determine which funding source of the banking fund paid for each longterm storage credit accrued by the authority. B. The authority shall operate in accordance with all of the following rules of operation: 1. The authority shall reserve a reasonable number of long-term storage credits accrued with general fund appropriations, OTHER THAN GENERAL FUND APPROPRIATIONS FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, for the benefit of municipal and industrial users of Colorado river water in this state that are outside of the service area of CAWCD. 2. The authority may distribute long-term storage credits accrued with general fund appropriations, OTHER THAN GENERAL FUND APPROPRIATIONS FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, for both of the following: (a) To make water available to a municipal and industrial user of Colorado river water in this state that is outside of the service area of CAWCD, if both of the following apply: (i) The municipal and industrial user would otherwise suffer a water shortage. The authority may distribute long-term credits to the extent reasonably necessary to offset the water shortage. (ii) The authority collects reimbursement for the cost to the authority of replacing the long-term storage credits distributed. The authority may replace the long-term storage credits in any year it deems appropriate but shall use good faith efforts to replace the long-term storage credits at a reasonable cost to the person who is responsible for reimbursing the authority for the credits distributed. (b) To make water available to CAWCD to the extent necessary for CAWCD to meet the demands of its municipal and industrial subcontra

Object Description

Rating
TITLE	Legislative implementation plan
CREATOR	Arizona. Dept. of Water Resources.
SUBJECT	Water rights--Arizona; Water--Pollution--Law and legislation--Arizona; Water quality--Arizona;
Browse Topic	Land and resources
DESCRIPTION	This title contains one or more publications.
Language	English
Publisher	Arizona. Dept. of Water Resources.
Material Collection	State Documents
Acquisition Note	http://www.water.az.gov/dwr/Content/Find_by_Category/About_ADWR/default.htm
Source Identifier	WR 1.3:L 33/
Location	124076449
REPOSITORY	Arizona State Library, Archives and Public Records--Law and Research Library.

Description

TITLE	Legislative implementation plan
Browse Topic	Land and resources
DESCRIPTION	182 pages (PDF version). File size: 675.81 KB. "47th Legislature, 1st Regular Session 2005"--Cover.
TYPE	Text
Acquisition Note	Publication or link to publication sent to reports@lib.az.us
RIGHTS MANAGEMENT	Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution.
DATE ORIGINAL	[200-]
Time Period	2000s (2000-2009)
ORIGINAL FORMAT	Born Digital
Source Identifier	WR 1.3:L 33/2005
DIGITAL IDENTIFIER	Legislative_Implementation_Plan_2005.pdf
DIGITAL FORMAT	PDF (Portable Document Format)
REPOSITORY	Arizona State Library, Archives and Public Records--Law and Research Library.
File Size	675.896 KB
Full Text	Arizona Department of Water Resources www.water.az.gov LEGISLATIVE IMPLEMENTATION PLAN 47th Legislature, 1st Regular Session 2005 TABLE OF CONTENTS BILLS PAGE # HB 2174 Assured Water Supply; Fund; Committee ...................................................................... 3 HB 2277 Water Providers; Community System Plans ................................................................. 10 HB 2643 Lower Colorado River; Conservation ........................................................................... 25 HB 2720 Water; General Industrial Use Permits.......................................................................... 43 HB 2728 Arizona Water Settlements Act..................................................................................... 47 SB 1190 New Exempt Wells; Restrictions; Exemptions.............................................................. 98 SB 1235 Water; CAGRD Omnibus ............................................................................................ 111 SB 1318 Omnibus; Flood Control .............................................................................................. 159 SB 1336 Rural Water Legislative Study Committee .................................................................. 174 SB 1522 Environmental Protections; Budget ............................................................................. 179 2 ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2174 Assured Water Supply; Fund; Committee 47th Legislature, 1st Regular Session (2005) BILL NUMBER: SHORT TITLE: PRIME SPONSOR: HB 2174, Chapter 217 Assured Water Supply; Fund; Committee Representative: O'Halleran BILL SUMMARY: HB 2174 contains the following provisions: Establishes an Assured and Adequate Water Supply Administration Fund. The Fund consists of the fees that are paid to the Arizona Department of Water Resources (ADWR) for applications relating to adequate and assured water supplies. States that the Fund monies are to be used for the costs and expenses incurred by ADWR when determining and declaring adequate and assured water supplies. The monies are subject to appropriation and are to be used by ADWR for the Adequate and Assured Water Supply Program. Requires ADWR to administer the Fund. Requires the Fund to be on a separate account on the books of ADWR. Exempts monies in the Fund from the lapsing of appropriations. Requires the State Treasurer to invest and divest monies in the Fund on notice from the Director of ADWR. All monies earned from investment will be credited to the Fund. Requires the Director to conduct a review of the Assured and Adequate Water Supply Rules in the Arizona Administrative Code for the purpose of making the application process more efficient. Requires the Director to submit a written report on the Director's recommendations to the Governor, the President of the Senate and the Speaker of the House of Representatives on or before December 15, 2005. 3 Requires the Director to file a Notice of Proposed Rule Change by January 1, 2006, to initiate rulemaking proceedings according to the recommendations identified by the Director. Requires the Director to appoint an advisory committee to assist the Director in identifying statutory or rule changes to make the application process more efficient. Requires the advisory committee to include subdividers and water providers or their representatives. SIGNIFICANCE TO AGENCY: ADWR lacks the resources to adequately staff the Assured and Adequate Water Supply Program. In the last six years, the workload in the program has grown significantly while ADWR's resources have declined. Since processing Assured and Adequate Water Supply applications is critical to the State's development industry, ADWR has drawn substantial resources from other water management programs, undermining the effectiveness of those programs. Even with the reassignment of staff, the processing time is lengthening and ADWR has been unable to adequately monitor and enforce the program. The inadequate level of monitoring has led to several short-term development moratoriums that could have been avoided. Based on current and projected development trends, the number of applications is expected to continue to increase. ADWR believes that the Assured and Adequate Water Supply Program should be partly or fully self-supporting to enable it to function more effectively. ADWR would use these fees to support the staff and administration of the Assured and Adequate Water Supply Program. ADWR currently transmits the fees for Assured and Adequate Water Supply applications to the General Fund. HB 2174 allows ADWR to retain these fees to help to offset the costs of the program. REQUIRED OUTCOMES: Rule Rule changes are anticipated. The Stakeholders Group will identify specific rules that will require modification. Legislation Legislation is anticipated. Based on preliminary discussions, ADWR may not have the authority to change certain rules without statutory authority. The Stakeholders Group will identify specific statutes that will require amendments. Substantive Policy Preliminary discussions indicate that some aspects of the application process may be modified without a rule or statutory change. ADWR may be able to address these issue through a substantive policy change or by modifying internal processes administratively. The Stakeholders Group will identify processes and issues to help to improve program efficiency. 4 ACTIONS REQUIRED: 1. ADWR staff will meet internally to identify processes within the Assured Water Supply Program that can be eliminated or modified to improve the efficiency of the program, without jeopardizing the integrity of the Assured Water Supply Program. 2. ADWR staff will develop an outline of the issues identified by ADWR staff that will help to improve the efficiency of the Assured and Adequate Water Supply Program and discuss issues with the Director. 3. Open a rule making docket and publish notice of the docket opening with the Secretary of State. 4. ADWR staff makes recommendations to the Director regarding the composition of the Stakeholders Group that must include representatives of subdividers and water providers. 5. Director appoints group and sends a letter the week of May 9 confirming appointments to members of the Stakeholders Group. 6. An advance e-mail to Stakeholders to hold a date for the first meeting of the Stakeholders Group which will be scheduled sometime during the week of May 23 will also be sent the week of May 9. 7. Agendas and background material will be sent the week of May 16 (approximately one week before the meeting). 8. The Stakeholders Group will hold its first meeting the week of May 23. 9. At the first meeting, Stakeholders will begin discussion of opportunities for improved efficiency. 10. The structure and number of meetings will be determined, based on the discussion at the first meeting of the Stakeholders Group. 11. Finalize recommendations for rule changes, statutory changes and administrative changes by first week in July and begin drafting the recommendations report. 12. Review a summary of the Stakeholders recommendations with Water Legislation Stakeholders Group the first week in August. 13. Submit legislative proposals to Governor's Office by August 15. 14. Provide draft rules and statutory language for review the first week in September. 5 15. Receive comments during the month of September. 16. Incorporate comments by the end of October. 17. Send out final draft in early November. 18. Secure legislative sponsor and open file with Legislative Council by November 15. 19. Incorporate final comments. 20. Submit final report of proposed statutory changes to the Governor, Speaker of the House and President of the Senate by December 15. 21. File a notice of proposed rule-making with the Secretary of State by January 1, 2006. DIVISION STAFF SUPPORT REQUIRED: Director's Office/Legislative Liaison Office of Legal Services Hydrology Division Active Management Areas Assured and Adequate Water Supply TIMELINE: 2005 May o Conduct internal discussions regarding program efficiency o Appoint Stakeholders Advisory Committee o Develop materials for first meeting o Convene first Stakeholders meeting o Determine process structure June o Stakeholders meet and develop recommendations (# of meetings TBA) July o Finalize recommendations first week in July August o Review recommendations with Water Legislation Stakeholders Group first week in August September o Provide draft rules and amendments for review o Move to new office o Receive comments on recommendations 6 2006 October o Incorporate comments November o Send out drafts for final review December o Finalize rule package January 1, 2006 o File notice of proposed rule making with the Secretary of State 7 Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 217 ----------------------------HOUSE BILL 2174 ----------------------------- AN ACT AMENDING TITLE 45, CHAPTER 2, ARTICLE 9, ARIZONA REVISED STATUTES, BY ADDING SECTION 45-580; RELATING TO WATER MANAGEMENT. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Title 45, chapter 2, article 9, Arizona Revised Statutes, is amended by adding section 45-580, to read: 45-580. Assured and adequate water supply administration fund; purpose A. THE ASSURED AND ADEQUATE WATER SUPPLY ADMINISTRATION FUND IS ESTABLISHED CONSISTING OF THE FEES THAT ARE PAID TO THE DEPARTMENT FOR APPLICATIONS RELATING TO ADEQUATE AND ASSURED WATER SUPPLY PURSUANT TO SECTIONS 45-108, 45-576 AND 45-579 AND THAT ARE ESTABLISHED BY THE DIRECTOR PURSUANT TO SECTION 45-113, SUBSECTION B. THE DEPARTMENT SHALL ADMINISTER THE FUND. MONIES IN THE FUND ARE SUBJECT TO APPROPRIATION AND SHALL BE USED BY THE DEPARTMENT FOR THE COSTS AND EXPENSES OF THE DEPARTMENT IN ADMINISTERING SECTIONS 45-108, 45-576 AND 45-579. B. THE DIRECTOR SHALL DEPOSIT, PURSUANT TO SECTIONS 35-146 AND 35-147, ALL FEES RECEIVED PURSUANT TO SUBSECTION A OF THIS SECTION IN THE FUND. THE FUND SHALL BE A SEPARATE ACCOUNT ON THE BOOKS OF THE DEPARTMENT. MONIES REMAINING IN THE FUND AT THE END OF THE FISCAL YEAR REMAIN IN THE FUND AND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO THE LAPSING OF APPROPRIATIONS. ON NOTICE FROM THE DIRECTOR, THE STATE TREASURER SHALL INVEST AND DIVEST MONIES IN THE FUND AS PROVIDED BY SECTION 35-313, AND MONIES EARNED FROM INVESTMENT SHALL BE CREDITED TO THE FUND. Sec. 2. Review of assured and adequate water supply program; advisory committee A. The director of the department of water resources shall conduct a review of the assured and adequate water supply rules in title 12, chapter 15, article 7, Arizona administrative code for the purpose of identifying statutory or rule changes that would make the application processes under those rules more efficient. The director shall 8 submit a written report of the director's recommendations for any statutory changes to the governor, the president of the senate and the speaker of the house of representatives on or before December 15, 2005. No later than January 1, 2006, the director shall file a notice of proposed rule making with the secretary of state pursuant to section 41-1022, Arizona Revised Statutes, for the purpose of initiating the rule making proceeding to make any rule changes identified by the director under this subsection that are not dependent on proposed statutory amendments. B. The director shall appoint an advisory committee to assist the director in identifying the statutory or rule changes described in subsection A of this section. The advisory committee shall include representatives of subdividers and water providers. The members of the committee shall serve at the pleasure of the director and are not eligible to receive compensation. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005. 9 ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2277 Water Providers; Community System Plans 47th Legislature, 1st Regular Session (2005) BILL NUMBER: SHORT TITLE: PRIME SPONSORS: HB 2277, Chapter 223 Water Providers; Community System Plans Representatives: Hershberger Landrum Taylor O'Halleran BILL SUMMARY: HB 2277 contains the following provisions: Definition of Water System Defines community water system as a public water system that serves at least 15 service connections used by year-round residents or that regularly serves at least 25 year-round residents. A public water system is one that provides water for human consumption (A.R.S. 49-325). Defines large community water system as a community water system that serves water to more than 1,850 persons. Defines small community water system as a community water system that does not qualify as a large community water system. Water Plan Requires all community water systems to submit: o A water supply plan that describes their sources of water, service area, transmission system facilities, monthly system production data, historic demand for the past five years and projected demands for the next five, 10 and 20 years. o A drought preparedness plan that includes drought and emergency response strategies, a plan of action to respond to water shortage conditions and provisions to inform and educate the public. o A water conservation plan that may include measures to control lost or unaccounted for water, consideration of water rate structures that encourage efficient use of water 10 [as set by the community water system's governing body and subject to approval by the Arizona Corporation Commission (ACC)] and information and education on conserving water. Clarifies that the requirement for a water supply plan only includes community water systems and not water used for hard rock mining or metallurgical processes. Requires large community water systems to submit plans to the Director of ADWR by January 1, 2007 and small community water systems by January 1, 2008. Small community water systems (whether filing alone or jointly) may be given an extension by the Director if a request is submitted at least 90 days prior to the deadline. Exempts a small municipal provider from the requirement to submit a water conservation plan if the provider does the following: o Petitions the Director of the Arizona Department of Water Resources (ADWR) before January 1, 2007. o Shows that under reasonable growth projections they will be regulated as a large municipal water provider by January 1, 2012. Authorizes two or more water providers serving the same area to coordinate their efforts and submit a joint plan. The deadline for submitting a joint plan is the same as for small community water systems. Requires updates to the plans every five years. The Director is required to review the plans to determine if they are in compliance. Provides for disclosure of non-compliance to the governing body in the service area if a water provider does not comply within sixty days of a written notice from the Director regarding failure to submit a water conservation plan. Exempts a water system from submitting a water supply plan if the system has been designated as having an Assured Water Supply. The system still must submit a drought preparedness plan and a water conservation plan. States that water systems do not have to resubmit any information required by this legislation if it is already on file with ADWR. Requires the Director to prepare, and make available, forms for small water systems to complete and submit as their water plan. The Director must also develop a guidance document to assist community water systems in preparing a water system plan. Records and Annual Report of Water Use Requires an annual report of water use from each water provider that includes information, if known, regarding sources of water, quantity of water pumped or diverted, 11 well registration numbers, how the water was used, number of customers served and information on storage facilities. For large community water systems the report must also include a map of the service area and distribution system. Exempts community water systems located inside Active Management Areas (AMAs) from duplicate reporting requirements. Requires the Director to prepare blank forms and distribute them on a timely schedule and cooperate with the ACC and the Arizona Department of Environmental Quality (ADEQ) to facilitate the reporting of similar or identical information SIGNIFICANCE TO AGENCY: Requiring communities to develop water supply plans, drought plans and conservation plans is an important step toward improving our ability to effectively manage our water resources, both at the state and local levels. The three key components of the legislation and the implications for water management are listed below. Water Supply Plan Increase public awareness of water supplies at the state and local levels. Provide much needed data regarding our state's water supplies and water infrastructure. Describe existing local water supplies. Enable us to target our data collection in those areas that need the most support. Improve our ability to plan for our future water infrastructure needs so that we will have the resources available. Drought Preparedness Plan Increase public awareness on local drought conditions and potential local responses. Improve drought planning to identify and mitigate drought conditions in the early stages to reduce the need for more costly and intrusive emergency response measures. Assure that our communities will be prepared to meet our citizens water needs in times of water shortage. Provide local flexibility to: o Establish drought and emergency response stages to enable local communities to implement response measures. o Develop a plan of action to respond to drought or water shortage conditions. o Develop procedures for the enforcement of mandatory water use restrictions for residential and non-residential uses. Recognize that extraordinary hardships could result as a result of the plan and provide for variances in such cases. Water Conservation Plan Ensure consistent, statewide conservation practices by all water users. 12 Increase the efficiency of the water system to reduce potential drought-impacts or other water supply deficiencies Encourage consumer water conservation efforts. Provide an opportunity for local community residents to actively participate in safeguarding water supplies to sustain the economic viability of their community. REQUIRED OUTCOMES: Rule No rule changes are anticipated at this time. Legislation Two issues may require legislative action: o Limit public access to the service area maps for security purposes. o Clarify reporting requirements related to effluent. Substantive Policy Preliminary discussions indicate that some aspects of the reporting and planning processes may need to be addressed without additional rule or statutory changes. ADWR will be able to address these issue through internal processes administratively. ACTIONS REQUIRED: 1. Coordinate development of reporting requirements with ADEQ and the ACC to ensure reporting requirements and planning processes are not overly duplicative; use existing ACC/ADEQ reporting formats to the extent possible. 2. Develop annual report forms, review processes, and databases to track reporting. 3. Develop Water System Plan Guidance Document and a small system planning form in consultation with ADEQ, ACC and community water systems. 4. Develop internal review processes for plans. 5. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Hydrology Division Active Management Areas Assured and Adequate Water Supply Office of Statewide Planning 13 TIMELINE: 2005 May o Meet with ACC and ADEQ to review reporting requirements for those agencies compared to requirements of HB2277. Need to determine how we will move forward, either a separate report or adding information needed to the reports currently submitted. o Meet with ACC and ADEQ to review planning requirements for those agencies compared to requirements of HB2277. Develop a form for small community water systems to complete as their Water System Plans based on this discussion. o Work with ACC and ADEQ to develop mailing list. June o Meet with stakeholders to review requirements and deadlines for annual reporting. o Contact all community water systems detailing planning and annual reporting requirements. o Draft the form for small community water systems to complete as their Water System Plans. Request review and comment by ACC and ADEQ. o Coordinate with ACC regarding plan implementation for private water companies. o Begin preparation of the Water System Plan Guidance Document to assist community water systems in preparing the water system plan. July o Continue stakeholder meetings to review requirements and deadlines. August o Finalize annual report for review of ACC and ADEQ. o Coordinate development of Annual Reports with ADWR IT staff, considering input by ACC and ADEQ. o Continue stakeholder meetings to review annual report requirements and deadlines. o Conduct public workshops to solicit input from cities and towns, private water companies and irrigation districts that qualify as community water systems regarding the draft Water System Plan Guidance Document and the Small Community Water System Plan form. o Revise Water System Plan Guidance Document and the Small Community Water System Plan form per local community input. o Convene additional workshops, if necessary, to finalize the Guidance Document and Water System Plan form. September o Develop database for input of annual report information. o Begin planning November workshops to inform communities about monitoring and reporting requirements for the following calendar year. November 14 o Conduct workshops to inform communities about monitoring and reporting requirements for the following calendar year. December o Conduct workshops to review with Communities regarding requirements for Water System Plan and provide Water System Plan Guidance Document. o Distribute Water System Plan Guidance Document. 2006 January through October o Continue stakeholder meetings to review annual reporting requirements and deadlines. o Develop internal guidance documents for review of Water System Plans. February o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan. o Provide assistance, as needed, to community water systems. o Conduct workshops to continue to assist with Water Plan development. March April May o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan. Provide assistance as needed to both Large and Small Community Water Systems. o Continue to conduct workshops to assist water systems. June July August o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan and continue to provide assistance ti community water systems. o Continue workshops. September October November o Send Quarterly reminders to Large Community Water Systems of upcoming January 1, 2007 deadline for Initial Plan and continue to provide assistance to water systems. o Continue workshops. December o Prepare for Annual Report mailing. 2007 January o Deadline for Large Community Water System Plans. 15 2008 o Coordinate Annual Report form mailing with ACC report mailing. o Assist communities with reporting requirements. February o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance, as needed. o Continue workshops. March April May o Annual Reports due. o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and continue assistance. o Continue workshops. June July August o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance as needed. o Continue workshops to provide assistance. September November o Send quarterly reminders to Small Community Water Systems of upcoming January 1, 2008 deadline for Initial Plan and provide assistance as needed o Continue workshops. December January o Deadline for Small Community Water System Plans. o Continue to assist small utilities. 16 Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 223 ----------------------------HOUSE BILL 2277 ----------------------------- AN ACT AMENDING TITLE 45, CHAPTER 1, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 13; RELATING TO COMMUNITY WATER SYSTEMS. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Title 45, chapter 1, Arizona Revised Statutes, is amended by adding article 13, to read: ARTICLE 13. COMMUNITY WATER SYSTEM PLANNING AND REPORTING REQUIREMENTS 45-330. Definition IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES: 1. "COMMUNITY WATER SYSTEM" MEANS A PUBLIC WATER SYSTEM THAT SERVES AT LEAST FIFTEEN SERVICE CONNECTIONS USED BY YEAR-ROUND RESIDENTS OF THE AREA SERVED BY THE SYSTEM OR THAT REGULARLY SERVES AT LEAST TWENTY-FIVE YEAR-ROUND RESIDENTS OF THE AREA SERVED BY THE SYSTEM. A PERSON IS A YEAR-ROUND RESIDENT OF THE AREA SERVED BY A SYSTEM IF THE PERSON'S PRIMARY RESIDENCE IS SERVED WATER BY THAT SYSTEM. 2. "LARGE COMMUNITY WATER SYSTEM" MEANS A COMMUNITY WATER SYSTEM THAT SERVES WATER TO MORE THAN ONE THOUSAND EIGHT HUNDRED FIFTY PERSONS. 3. "PUBLIC WATER SYSTEM" MEANS AN ENTITY THAT DISTRIBUTES OR SELLS WATER AND THAT QUALIFIES AS A PUBLIC WATER SYSTEM UNDER SECTION 49-352, SUBSECTION B. 4. "SMALL COMMUNITY WATER SYSTEM" MEANS A COMMUNITY WATER SYSTEM THAT DOES NOT QUALIFY AS A LARGE COMMUNITY WATER SYSTEM. 45-331. Water plan A. EXCEPT AS PROVIDED IN SUBSECTIONS D AND E OF THIS SECTION, BY THE DATES SPECIFIED IN SUBSECTIONS B OR C OF THIS SECTION, EACH COMMUNITY WATER SYSTEM SHALL PREPARE AND SUBMIT TO THE DIRECTOR A SYSTEM WATER PLAN THAT INCLUDES THE FOLLOWING COMPONENTS: 17 1. A WATER SUPPLY PLAN. 2. A DROUGHT PREPAREDNESS PLAN. 3. A WATER CONSERVATION PLAN. B. EXCEPT AS PROVIDED IN SUBSECTION C OF THIS SECTION, A LARGE COMMUNITY WATER SYSTEM SHALL SUBMIT ITS FIRST SYSTEM WATER PLAN TO THE DIRECTOR ON OR BEFORE JANUARY 1, 2007, AND SHALL SUBMIT AN UPDATED PLAN WITHIN SIX MONTHS PRIOR TO JANUARY 1 OF EVERY FIFTH CALENDAR YEAR THEREAFTER. A SMALL COMMUNITY WATER SYSTEM SHALL SUBMIT ITS FIRST SYSTEM WATER PLAN TO THE DIRECTOR ON OR BEFORE JANUARY 1, 2008, AND SHALL SUBMIT AN UPDATED PLAN WITHIN SIX MONTHS PRIOR TO JANUARY 1 OF EVERY FIFTH CALENDAR YEAR THEREAFTER. FOR A SMALL COMMUNITY WATER SYSTEM THAT SUBMITS ITS REQUEST TO THE DIRECTOR AT LEAST NINETY DAYS BEFORE THE FILING DEADLINE, THE DIRECTOR MAY EXTEND THE TIME FOR FILING THE FIRST WATER SYSTEM PLAN. IF A COMMUNITY WATER SYSTEM REVISES ITS SYSTEM WATER PLAN AFTER SUBMITTING THE PLAN TO THE DIRECTOR, THE COMMUNITY WATER SYSTEM SHALL SUBMIT THE REVISED PLAN TO THE DIRECTOR WITHIN SIXTY DAYS FROM THE DATE OF REVISION. C. IF MORE THAN ONE COMMUNITY WATER SYSTEM SERVES WATER TO RESIDENTS WITHIN A CITY OR TOWN, TWO OR MORE OF THE COMMUNITY WATER SYSTEMS SERVING WATER TO RESIDENTS WITHIN THAT CITY OR TOWN MAY COORDINATE THEIR EFFORTS IN PREPARING THE PLANS REQUIRED BY THIS SECTION AND MAY SUBMIT A JOINT PLAN THAT CONTAINS THE INFORMATION REQUIRED IN THIS SECTION FOR THAT PORTION OF THE COMMUNITY SUPPLIED BY THE COMMUNITY WATER SYSTEMS INSTEAD OF SUBMITTING INDIVIDUAL WATER SYSTEM PLANS. COMMUNITY WATER SYSTEMS THAT SUBMIT A JOINT PLAN PURSUANT TO THIS SUBSECTION SHALL SUBMIT THE PLAN TO THE DIRECTOR BY THE DATE ON WHICH A SMALL COMMUNITY WATER SYSTEM IS REQUIRED TO SUBMIT ITS SYSTEM WATER PLAN UNDER SUBSECTION B OF THIS SECTION. THE DIRECTOR MAY EXTEND THE TIME FOR FILING THE FIRST WATER SYSTEM PLAN FOR A JOINT PLAN THAT INCLUDES A SMALL COMMUNITY WATER SYSTEM IF THE REQUEST IS RECEIVED NINETY DAYS BEFORE THE FILING DEADLINE. D. A COMMUNITY WATER SYSTEM THAT HAS BEEN DESIGNATED AS HAVING AN ASSURED WATER SUPPLY PURSUANT TO SECTION 45-576 IS EXEMPT FROM THE REQUIREMENT TO SUBMIT A WATER SUPPLY PLAN UNDER THIS SECTION. E. A COMMUNITY WATER SYSTEM REGULATED AS A LARGE MUNICIPAL PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE IS EXEMPT FROM THE REQUIREMENT TO SUBMIT A WATER CONSERVATION PLAN UNDER THIS SECTION. THE DIRECTOR SHALL EXEMPT A COMMUNITY WATER SYSTEM REGULATED AS A SMALL MUNICIPAL 18 PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE FROM THE REQUIREMENT TO SUBMIT A WATER CONSERVATION PLAN UNDER THIS SECTION IF THE COMMUNITY WATER SYSTEM: 1. PETITIONS THE DIRECTOR FOR AN EXEMPTION PRIOR TO JANUARY 1, 2007. 2. DEMONSTRATES, UNDER REASONABLE GROWTH PROJECTIONS, THAT IT WILL BE REGULATED AS A LARGE MUNICIPAL PROVIDER UNDER CHAPTER 2, ARTICLE 9 OF THIS TITLE PRIOR TO JANUARY 1, 2012. F. A COMMUNITY WATER SYSTEM THAT HAS PREVIOUSLY SUBMITTED INFORMATION REQUIRED BY THIS SECTION TO THE DIRECTOR MAY MAKE A WRITTEN REQUEST TO THE DIRECTOR TO BE EXEMPTED FROM THE REQUIREMENT TO SUBMIT THE INFORMATION IN ITS SYSTEM WATER PLAN. THE DIRECTOR SHALL GRANT THE EXEMPTION IF THE DIRECTOR DETERMINES THAT THE INFORMATION IS ALREADY ON FILE WITH THE DEPARTMENT. G. THE DIRECTOR SHALL REVIEW A SYSTEM WATER PLAN, INCLUDING A REVISED PLAN, SUBMITTED BY A COMMUNITY WATER SYSTEM PURSUANT TO SUBSECTION B OF THIS SECTION AND SHALL NOTIFY THE COMMUNITY WATER SYSTEM IN WRITING AS TO WHETHER THE PLAN COMPLIES WITH THIS SECTION. IF THE DIRECTOR DETERMINES THAT THE PLAN DOES NOT COMPLY WITH THIS SECTION, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THAT DETERMINATION TO THE COMMUNITY WATER SYSTEM AND GIVE THE COMMUNITY WATER SYSTEM AT LEAST ONE HUNDRED TWENTY DAYS TO MAKE REVISIONS OR ADDITIONS AS ARE NECESSARY TO BRING THE PLAN INTO COMPLIANCE. IF THE COMMUNITY WATER SYSTEM DOES NOT BRING THE PLAN INTO COMPLIANCE BY THE DATE SPECIFIED IN THE NOTICE, THE DIRECTOR SHALL PROVIDE NOTICE OF THE NONCOMPLIANCE TO THE GOVERNING BODIES OF THE CITIES, TOWNS AND COUNTIES LOCATED WITHIN THE SERVICE AREA OF THE COMMUNITY WATER SYSTEM. IF THE DIRECTOR DETERMINES THAT THE PLAN IS IN COMPLIANCE WITH THIS SECTION BUT THAT CHANGES WOULD IMPROVE THE PLAN, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE CHANGES TO THE COMMUNITY WATER SYSTEM BUT THE WATER SYSTEM SHALL NOT BE REQUIRED TO MAKE THE CHANGES. H. THE WATER SUPPLY PLAN SHALL EVALUATE THE WATER SUPPLY NEEDS IN THE SERVICE AREA AND PROPOSE A STRATEGY TO MEET IDENTIFIED NEEDS. THE PLAN SHALL INCLUDE: 1. A LIST AND DESCRIPTION OF SERVICE AREA LANDS, SOURCES OF SUPPLY, INCLUDING EMERGENCY SOURCES, WELL REGISTRATION NUMBERS AND WATER LEVELS AT THE WELL SITES, IF KNOWN, AND STORAGE AND TREATMENT FACILITIES. THE LIST SHALL NOT INCLUDE WATER LEVELS AT WELL SITES THAT ARE SOURCES OF 19 SUPPLY FOR HARD ROCK MINING OR METALLURGICAL PROCESSING OR INDUSTRIAL USES RELATED TO HARD ROCK MINING OR METALLURGICAL PROCESSING. 2. A MAP AND DESCRIPTION OF EXISTING TRANSMISSION AND DISTRIBUTION FACILITIES, UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45-498. FOR A SMALL COMMUNITY WATER SYSTEM A MAP IS NOT REQUIRED. 3. A DESCRIPTION OF MONTHLY SYSTEM PRODUCTION DATA CATEGORIZED BY THE SYSTEM'S SOURCES OF SUPPLY AND, FOR SYSTEMS THAT USE METERS TO MEASURE WITHDRAWALS AND DIVERSIONS, A SUMMARY OF SYSTEM AVERAGE DAILY DEMANDS, MAXIMUM MONTHLY DEMANDS AND AN ESTIMATE OF PEAK DAY DEMANDS FOR THE PAST FIVE YEARS. 4. A LIST, DESCRIPTION AND MAP OF EXISTING INTERCONNECTIONS UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45-498, AND THE QUANTITIES OF WATER SOLD TO OR PURCHASED FROM OTHER WATER SYSTEMS DURING THE PREVIOUS FIVE YEARS, UNLESS PREVIOUSLY PROVIDED PURSUANT TO SECTION 45632. FOR A SMALL COMMUNITY WATER SYSTEM A MAP IS NOT REQUIRED. 5. AN ANALYSIS OF PRESENT AND FUTURE WATER SUPPLY DEMANDS FOR THE NEXT FIVE, TEN AND TWENTY YEARS. I. THE DROUGHT PREPAREDNESS PLAN SHALL BE DESIGNED TO MEET THE SPECIFIC NEEDS OF THE WATER SYSTEM FOR WHICH IT APPLIES AND SHALL INCLUDE: 1. THE NAME, ADDRESS AND TELEPHONE NUMBER OF THE COMMUNITY WATER SYSTEM AND THE NAMES OF THE OFFICERS OR OTHER PERSONS RESPONSIBLE FOR DIRECTING OPERATIONS DURING A WATER SHORTAGE EMERGENCY. 2. DROUGHT OR EMERGENCY RESPONSE STAGES PROVIDING FOR THE IMPLEMENTATION OF MEASURES IN RESPONSE TO REDUCTION IN AVAILABLE WATER SUPPLY DUE TO DROUGHT OR INFRASTRUCTURE FAILURE. 3. A PLAN OF ACTION THAT THE COMMUNITY WATER SYSTEM WILL TAKE TO RESPOND TO DROUGHT OR WATER SHORTAGE CONDITIONS, INCLUDING: (a) PROVISIONS TO ACTIVELY INFORM THE PUBLIC OF THE WATER SUPPLY SHORTAGE AND A PROGRAM FOR CONTINUED EDUCATION AND INFORMATION REGARDING IMPLEMENTATION OF THE DROUGHT PREPAREDNESS PLAN. (b) DEVELOPMENT OF EMERGENCY SUPPLIES, WHICH MAY INCLUDE IDENTIFICATION OF EMERGENCY OR REDUNDANT FACILITIES TO WITHDRAW, DIVERT OR TRANSPORT SUBSTITUTE SUPPLIES OF THE SAME OR OTHER TYPES OF WATER. (c) SPECIFIC WATER SUPPLY OR WATER DEMAND MANAGEMENT MEASURES FOR EACH STAGE OF DROUGHT OR WATER SHORTAGE CONDITIONS, SUBJECT TO APPROVAL BY THE CORPORATION COMMISSION IF THE COMMUNITY WATER SYSTEM IS A PUBLIC 20 SERVICE CORPORATION. THIS REQUIREMENT MAY BE MET BY PROVIDING A CURTAILMENT TARIFF ON FILE WITH THE CORPORATION COMMISSION. J. THE WATER CONSERVATION PLAN SHALL BE DESIGNED TO INCREASE THE EFFICIENCY OF THE WATER SYSTEM, REDUCE WASTE AND ENCOURAGE CONSUMER WATER CONSERVATION EFFORTS. THE WATER CONSERVATION PLAN SHALL BE DESIGNED TO MEET THE SPECIFIC NEEDS OF THE COMMUNITY WATER SYSTEM AND SHALL INCLUDE BOTH DEMAND AND SUPPLY MANAGEMENT MEASURES INCLUDING THE FOLLOWING: 1. FEASIBLE MEASURES THAT MAY BE IMPLEMENTED TO DETERMINE AND CONTROL LOST AND UNACCOUNTED FOR WATER. 2. CONSIDERATION OF WATER RATE STRUCTURES THAT ENCOURAGE EFFICIENT USE OF WATER, AS SET BY THE COMMUNITY WATER SYSTEM'S GOVERNING BODY, SUBJECT TO APPROVAL BY THE CORPORATION COMMISSION IF THE COMMUNITY WATER SYSTEM IS A PUBLIC SERVICE CORPORATION. 3. A CONTINUING CONSERVATION EDUCATION PROGRAM CONTAINING PROVISIONS TO ACTIVELY INFORM THE PUBLIC OF DROUGHT CONDITIONS AND INFORMATION REGARDING CONSERVATION MEASURES TO REDUCE VULNERABILITY FROM DROUGHT CONDITIONS, INCLUDING: (a) CURTAILMENT OF NONESSENTIAL WATER USES. (b) AFFORDABLE EFFICIENCY TECHNOLOGIES FOR INDOOR AND OUTDOOR USE. (c) REBATE AND RETROFIT PROGRAMS FOR INDOOR AND OUTDOOR USES. (d) REUSE AND RECYCLING PROGRAMS. K. THE WATER CONSERVATION PLAN SHALL BE IMPLEMENTED BY THE COMMUNITY WATER SYSTEM WITHIN TWELVE MONTHS AFTER RECEIVING WRITTEN NOTIFICATION FROM THE DIRECTOR THAT THE PLAN COMPLIES WITH THIS SECTION. FOR A COMMUNITY WATER SYSTEM THAT RECEIVES A NOTICE PURSUANT TO SUBSECTION G OF THIS SECTION THAT THE WATER CONSERVATION PLAN DOES NOT COMPLY WITH THIS SECTION, THE WATER CONSERVATION PLAN SHALL BE IMPLEMENTED WITHIN TWELVE MONTHS AFTER THE EXPIRATION OF THE DATE BY WHICH THE SYSTEM IS REQUIRED TO MAKE REVISIONS OR ADDITIONS TO THE PLAN TO BRING IT INTO COMPLIANCE, AS SPECIFIED IN THE NOTICE GIVEN TO THE SYSTEM UNDER SUBSECTION G OF THIS SECTION. L. THE DIRECTOR SHALL PREPARE FORMS THAT SMALL COMMUNITY WATER SYSTEMS MAY COMPLETE AND SUBMIT AS THEIR SYSTEM WATER PLAN UNDER THIS SECTION. THE DIRECTOR SHALL DISTRIBUTE THE FORMS ON A TIMELY SCHEDULE AND FURNISH THEM UPON REQUEST. FAILURE TO RECEIVE OR OBTAIN A FORM DOES NOT RELIEVE ANY COMMUNITY WATER SYSTEM FROM THE REQUIREMENT TO FILE A SYSTEM WATER 21 PLAN BY THE DATE PRESCRIBED IN SUBSECTIONS B OR C OF THIS SECTION. THE DIRECTOR OF WATER RESOURCES SHALL COORDINATE WITH THE CORPORATION COMMISSION AND THE DIRECTOR OF ENVIRONMENTAL QUALITY IN ESTABLISHING THE FORM TO FACILITATE THE REPORTING OF SIMILAR OR IDENTICAL INFORMATION TO THE DEPARTMENT OF WATER RESOURCES AND THE CORPORATION COMMISSION OR TO THE DEPARTMENT OF WATER RESOURCES AND THE DEPARTMENT OF ENVIRONMENTAL QUALITY. M. THE DIRECTOR SHALL PREPARE A GUIDANCE DOCUMENT TO ASSIST COMMUNITY WATER SYSTEMS IN PREPARING THE WATER SYSTEM PLAN. THE DIRECTOR SHALL COOPERATE WITH CITIES AND TOWNS, PRIVATE WATER COMPANIES AND IRRIGATION DISTRICTS THAT ARE COMMUNITY WATER SYSTEMS IN DEVELOPING THE GUIDANCE DOCUMENT AND THE FORM DESCRIBED IN SUBSECTION L OF THIS SECTION. 45-332. Records and annual report of water use; penalty A. EACH COMMUNITY WATER SYSTEM THAT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION AND THAT USES METERS TO MEASURE WATER WITHDRAWALS AND DIVERSIONS SHALL MAINTAIN CURRENT, COMPLETE, TRUE AND CORRECT RECORDS OF ITS WITHDRAWALS, DIVERSIONS AND DELIVERIES OF WATER IN THE FORM AS PRESCRIBED BY THE DIRECTOR. EACH COMMUNITY WATER SYSTEM THAT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION AND THAT DOES NOT USE METERS TO MEASURE WATER WITHDRAWALS AND DIVERSIONS SHALL MAINTAIN RECORDS OF THE ESTIMATED AMOUNT OF ITS WITHDRAWALS, DIVERSIONS AND DELIVERIES OF WATER IN THE FORM AS PRESCRIBED BY THE DIRECTOR. B. AN ANNUAL REPORT SHALL BE FILED WITH THE DIRECTOR BY EACH COMMUNITY WATER SYSTEM. A COMMUNITY WATER SYSTEM IS EXEMPT FROM THE REPORTING REQUIREMENTS IN THIS SECTION IF IT IS REQUIRED TO FILE AN ANNUAL REPORT UNDER SECTION 45-632. C. A COMMUNITY WATER SYSTEM REQUIRED TO FILE AN ANNUAL REPORT UNDER THIS SECTION SHALL REPORT THE FOLLOWING INFORMATION: 1. IF WATER WAS PUMPED OR DIVERTED BY THE COMMUNITY WATER SYSTEM DURING THE YEAR: (a) THE QUANTITY OF WATER PUMPED OR DIVERTED AND THE WELL REGISTRATION NUMBERS OF ANY WELLS USED TO PUMP OR DIVERT THE WATER. COMMUNITY WATER SYSTEMS THAT DO NOT USE METERS TO MEASURE WATER PUMPED OR DIVERTED SHALL ESTIMATE THE QUANTITY OF WATER PUMPED OR DIVERTED. (b) THE NUMBER OF CUSTOMERS TO WHOM THE COMMUNITY WATER SYSTEM DELIVERED WATER DURING THE YEAR. 22 (c) AN IDENTIFICATION OF THE NUMBER OF STORAGE FACILITIES AND THE STORAGE CAPACITY OF EACH FACILITY. 2. IF WATER WAS RECEIVED BY THE COMMUNITY WATER SYSTEM FROM ANOTHER PERSON DURING THE YEAR: (a) THE NAME OF THE PERSON FROM WHOM THE WATER WAS OBTAINED. (b) IF THE WATER WAS PUMPED OR DIVERTED, THE REGISTRATION NUMBERS OF ANY WELLS USED TO PUMP OR DIVERT THE WATER, IF KNOWN. (c) THE QUANTITY OF WATER RECEIVED DURING THE YEAR. (d) THE NUMBER OF CUSTOMERS TO WHOM THE COMMUNITY WATER SYSTEM DELIVERED WATER DURING THE YEAR. (e) AN IDENTIFICATION OF THE NUMBER OF STORAGE FACILITIES AND THE STORAGE CAPACITY OF EACH FACILITY. 3. IF EFFLUENT THAT IS GENERATED FROM A WASTEWATER TREATMENT FACILITY WAS USED OR RECEIVED BY THE COMMUNITY WATER SYSTEM DURING THE YEAR, THE ESTIMATED QUANTITY OF EFFLUENT GENERATED FROM THE WASTEWATER TREATMENT FACILITY DURING THE YEAR, THE ESTIMATED QUANTITY OF EFFLUENT USED DIRECTLY FROM THE WASTEWATER TREATMENT FACILITY DURING THE YEAR AND THE SPECIFIC USES TO WHICH THE EFFLUENT WAS APPLIED DURING THE YEAR. D. COMMUNITY WATER SYSTEMS REQUIRED TO FILE ANNUAL REPORTS UNDER THIS SECTION SHALL MAINTAIN A CURRENT MAP CLEARLY DELINEATING ITS SERVICE AREA AND DISTRIBUTION SYSTEM. E. THE RECORDS AND REPORTS REQUIRED TO BE KEPT AND FILED UNDER THIS SECTION SHALL BE IN THE FORM AS THE DIRECTOR PRESCRIBES. THE DIRECTOR SHALL PREPARE BLANK FORMS AND DISTRIBUTE THEM ON A TIMELY SCHEDULE AND FURNISH THEM UPON REQUEST. FAILURE TO RECEIVE OR OBTAIN THE FORMS DOES NOT RELIEVE ANY PERSON FROM KEEPING THE REQUIRED RECORDS OR MAKING ANY REQUIRED REPORT. THE DIRECTOR SHALL COOPERATE WITH CITIES AND TOWNS, PRIVATE WATER COMPANIES AND IRRIGATION DISTRICTS THAT ARE COMMUNITY WATER SYSTEMS IN ESTABLISHING THE FORM OF THE RECORDS AND REPORTS TO BE KEPT AND FILED BY THEM. THE DIRECTOR OF WATER RESOURCES SHALL COORDINATE WITH THE CORPORATION COMMISSION AND THE DIRECTOR OF ENVIRONMENTAL QUALITY IN ESTABLISHING THE FORM OF THE REPORTS REQUIRED TO BE FILED BY THIS SECTION TO FACILITATE THE REPORTING OF SIMILAR OR IDENTICAL INFORMATION TO THE DEPARTMENT OF WATER RESOURCES AND THE CORPORATION COMMISSION OR TO THE DEPARTMENT OF WATER RESOURCES AND THE DEPARTMENT OF ENVIRONMENTAL QUALITY. 23 F. IF A COMMUNITY WATER SYSTEM FAILS TO TIMELY FILE THE REPORT PRESCRIBED BY THIS SECTION, THE DIRECTOR SHALL PROVIDE A WRITTEN NOTICE TO THE WATER SYSTEM THAT REQUIRES COMPLIANCE WITHIN SIXTY DAYS OF THE DATE OF THE NOTICE. IF THE WATER SYSTEM DOES NOT COMPLY WITHIN THE SIXTY DAY PERIOD, THE DIRECTOR SHALL PROVIDE NOTICE OF THAT NONCOMPLIANCE TO THE GOVERNING BODIES OF THE CITIES, TOWNS AND COUNTIES LOCATED WITHIN THE SERVICE AREA OF THE WATER SYSTEM. G. A VIOLATION OF THIS ARTICLE DOES NOT CONSTITUTE A VIOLATION OF CHAPTER 2 OF THIS TITLE. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005. 24 ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2643 Lower Colorado River; Conservation 47th Legislature, 1st Regular Session (2005) BILL NUMBER: SHORT TITLE: PRIME SPONSORS: HB 2643, Chapter 78 Lower Colorado River; Conservation Representatives: Bee Miranda O'Halleran Robson J Weiers BILL SUMMARY: HB 2643 contains the following provisions: Administration Authorizes the Arizona Game and Fish Commission (Commission), the Arizona Department of Water Resources (ADWR) and the Central Arizona Water Conservation District (CAWCD) to enter into agreements with the federal government and other parties for participation in the Lower Colorado River Multi Species Conservation Program (MSCP). Specifies that the agreements may designate private financial institutions as fiscal agents or trustees for the collection and management of the MSCP monies. Establishes that the monies collected for the MSCP may include appropriations from the legislature; additional watercraft registration fees; surcharges on Arizona Colorado River special use permits; Colorado River water use fees; gifts, grants and donations from public or private sources; and payments by any person under any agreement to fund the MSCP. Fee Assessments and Collections Allows the Commission to assess additional motorized watercraft registration fees that are collected solely for the purpose of funding the MSCP. 25 Requires the revenues from the registration of motorized watercraft to be deposited in a watercraft registration fee clearing account. The State Treasurer distributes all monies collected from motorized watercraft registration (except those collected specifically for the MSCP) into the Watercraft Licensing Fund. The State Treasurer deposits monies collected specifically for the MSCP into an account that is used solely for the MSCP. Allows the Commission to impose and collect surcharges on special use permits used on the Colorado River. The Commission determines the amount and the surcharges may only be used for the MSCP. The monies collected must be put into a Colorado River special use permit clearing account that is paid into a MSCP account on a monthly basis by the State Treasurer. Allows ADWR to assess and collect annual fees from each person in Arizona who diverts and consumptively uses water from the mainstream of the Colorado River. These monies must be put into the Colorado River water use fee clearing account, which is paid monthly into an account solely used for the MSCP. The Director must set these fees by July 1 of each year for the following program year. Requires that, in setting fees, the Director must consider: o The consumptive use by the person being assessed during that program year. o The payment obligations that apply to similar water users under agreements to fund the MSCP. o The amount of monies needed to fund the MSCP for that year. o The amount of monies from other sources that are expected to be available to fund the MSCP for that year. Allows the Director to establish classes of water users in to assign graduated fee rates to the respective classes. Requires the Director to consider the date of any contract or right to use Colorado River water and the type of water used when assigning fee rates. States that the Director must give written notice of the fees within thirty days after the fees are established for a program year. Requires the Director to record a statement of fees for the following year in the Department's records and transmit a copy of the statement to the State Treasurer. Establishes the fee calculation method for the consumptive use of Colorado River water. The fee is calculated by multiplying the applicable annual fee for the program year by the consumptive use for the person for the program year. Allows the Director to reduce the amount of a person's annual fee by the value of any services or tangible assets (including land or water) accepted by the federal government as a contribution to the MSCP. The Director also may reduce the amount of a person's 26 annual fee by amounts paid or to be paid during the program year by the person under agreements with the CAWCD. Requires the Director to provide a notice and comment period and consult with representatives of the water users before setting the Colorado River water use fee. Requires the Director to give written notice of the amount of the fee that is assessed for the consumptive use of Colorado River water no later than August 15 before the beginning of a program year. A person who is assessed a fee (including registration fees and annual water use fees) must pay the fee within 45 days of receiving written notice of the fee amount. Authorizes the Director to assess a penalty of 10 percent of the unpaid fee for each month or portion of a month that a fee is delinquent. The total penalty may not exceed 60 percent of the unpaid fee. An action to recover the penalties must be brought in the Superior Court in Maricopa County. All penalties collected will be deposited in the Colorado River water use fee clearing account. Clarifies that anyone who has entered into agreements with CAWCD for Colorado River water use does not have to pay a Colorado River water use fee if they are in compliance with the agreements. Central Arizona Water Conservation District Allows the CAWCD Board to enter into agreements with state agencies, the federal government and any other person who participates in the MSCP. Authorizes CAWCD to manage the funds collected for the MSCP or to designate a private financial institution or the State Treasurer as a fiscal agent. Also applies to collection, investment and distribution of monies. Clarifies that monies collected for the MSCP can only be used for activities and administrative costs relating to the MSCP. Definitions Defines consumptive use as a water user's total use that is recorded in the final accounting for the most recent calendar year. Defines final accounting as the United States Bureau of Reclamation's final compilation of records of Colorado River diversions, return flows and consumptive uses for the year. Defines Lower Colorado River Multispecies Conservation Program as the cooperative effort to provide the basis for compliance with the Endangered Species Act of 1973. The cooperative effort is among government agencies, political subdivisions of the states of 27 Arizona, California and Nevada, and public and private parties with a common interest in the water and resources of the Lower Colorado River. Defines program year as the 12-month period between October 1st and the following September 30th. SIGNIFICANCE TO AGENCY: The purpose of this program is to provide for the incidental take of endangered species along the Colorado River and limit our State's liability to assure that Arizona's water and power supplies are protected. The basic strategy is to implement a coordinated, comprehensive, conservation program to benefit the species in order to address the impacts of ongoing operations and maintenance and those associated with future water transfers. This program would thus assist Arizona in managing drought impacts in the future. REQUIRED OUTCOMES: Rule No rule changes are anticipated. Legislation Legislation may be required to make technical corrections. Substantive Policy No substantive policies are anticipated. ACTIONS REQUIRED: 1. Determine entities subject to the fee based on Article V Accounting Report. Note that parties to "Lower Colorado River Multi-Species Conservation Program, Arizona Trust Indenture and Joint Payment Agreement" (Trust Indenture Agreement) are not subject to the fees. 2. Determine if water use by entities subject to the fee is reported under a party to the Trust Indenture Agreement in coordination with those parties 3. Colorado River Management Section drafts courtesy letter for Director advising entities subject to fee that they will receive notice in May 06 of fee proposal to be paid on calendar 05 water use. Fee the same as provided for in Trust Indenture Agreement, ie. $0.25/ac-ft. 4. Director requests that State Treasurer establish "Colorado River Water Use Fee Clearing Account." 28 5. Director publishes notice of proposed fee in early May 1, 2006 providing 30 day comment period. Fee the same as provided for in Trust Indenture Agreement, ie. $0.25/ac-ft. 6. Director consults with entities to be assessed fee, providing two week notice if hearing held. 7. Director sets fee by July 1, 2006, for entities subject to the fee, considering factors in 45334 (A). 8. Director provides written notice to entities subject to the fee within 30 days of setting fee (the rate) per 45-334 (A)(6). 9. Director provides written notice of total amount of the fee by August 15 before the beginning of the program year per 45-334(B). 10. Director deposits fees collected in "Colorado River Water Use Fee Clearing Account" at State Treasurer. 11. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Water Management Support TIMELINE: 2005 May June July o Colorado River Management Section initiates determination of entities subject to the fee. o Colorado River Management Section initiates determination if water use by entities subject to the fee is reported under a party to the Trust Indenture Agreement in coordination with those parties. o Colorado River Management Section drafts courtesy letter advising entities subject to fee that they will receive notice in May 2006 of fee proposal to be paid on calendar 2005 water use. o Director requests that State Treasurer establish "Colorado River Water Use Fee Clearing Account." 29 2006 August September October November December January February March April May o Director publishes notice of proposed fee in early May 1, 2006 providing 30-day comment period. o Director consults with entities to be assessed the fee, providing a two-week notice if hearing held. (May or June meeting) June o Director to set fee by July 1, 2006, for entities subject to the fee, considering factors in 45-334 (A). July o Director provides written notice to entities subject to the fee within 30 days of setting fee (the rate) per 45-334 (A)(6). August o Director provides written notice of total amount of the fee by August 1 for calendar year 2005 water use. September o Fees due September 15 from contract holders o Fees deposited by ADWR in "Colorado River Water Use Fee Clearing Account." o State Treasurer deposits fees collected in J.P. Morgan Chase account. October o Money available Oct 1 for draw by Reclamation from J.P. Morgan Chase account November December 30 House Engrossed -------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 -------------------------CHAPTER 78 -------------------------HOUSE BILL 2643 -------------------------- AN ACT AMENDING SECTIONS 5-321, 5-323, 17-231, 17-345 AND 48-3712, ARIZONA REVISED STATUTES; AMENDING TITLE 45, CHAPTER 1, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 13; AMENDING TITLE 48, CHAPTER 22, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 48-3713.03; RELATING TO THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 5-321, Arizona Revised Statutes, is amended to read: 5-321. Numbering; registration fees; license tax; repeal of registration; penalty; procedures A. The owner of each motorized watercraft requiring numbering by this state shall file an application for a registration number with the department, or its agent, on forms approved by the department. Except as provided by rule adopted by the commission, the application shall be signed by the owner of the motorized watercraft and shall be accompanied by a registration fee and a license tax levied at the following rates: 1. For a resident owner, defined as a person who owns a boat for which registration is required and who is required to and does register motor vehicles owned by the person in this state or, if no motor vehicle is owned by the person owning the boat, the person is a resident as defined by section 28-2001, a registration fee of four dollars and a license tax of forty-five cents per foot of length or fraction thereof of each watercraft up to and including eighteen feet and sixty-eight cents per foot of length for each foot or fraction thereof over eighteen feet except as provided in section 5-322. 2. For a nonresident owner, defined as any person who owns a boat for which registration is required and who is not a resident owner as defined by this section, a registration fee of twenty dollars and a license tax of two dollars ninety cents per foot of length or fraction thereof of each watercraft up to and including eighteen feet and five 31 dollars fifty cents per foot of length for each foot or fraction thereof over eighteen feet except as provided in section 5-322. B. The length of the motorized watercraft shall be measured from the most forward part of the bow excluding the bowsprit or jibboom, over the centerline to the rearmost part of the transom excluding sheer, outboard motor, rudder, handles or other attachments. C. THE COMMISSION MAY ASSESS AN ADDITIONAL REGISTRATION FEE, TO BE COLLECTED AT THE SAME TIME AND IN THE SAME MANNER AS THE REGISTRATION FEE IMPOSED BY SUBSECTION A, PARAGRAPH 1 OR 2 OF THIS SECTION. THE AMOUNT OF THE ADDITIONAL FEE SHALL BE DETERMINED BY THE COMMISSION AND MAY BE IMPOSED IN DIFFERENT AMOUNTS WITH RESPECT TO RESIDENT AND NONRESIDENT OWNERS. AN ADDITIONAL REGISTRATION FEE UNDER THIS SUBSECTION IS TO BE USED SOLELY FOR THE PURPOSE OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03. D. Upon receipt of the application in approved form WITH THE APPLICABLE FEES AND LICENSE TAX, the department or its agent shall enter the application on the records of its office and issue to the applicant two current annual decals and a certificate of number stating the number issued to the watercraft and the name and address of the owner. The owner shall display the assigned number and the current annual decals in such manner as may be prescribed by rules of the commission. The number and decals shall be maintained in legible condition. The certificate of number or commission approved proof of valid certificate of number, except as provided in section 5-371, shall be available at all times for inspection by a peace officer whenever the watercraft is in operation. No number issued by another state or the United States coast guard, unless granted exemption or exception pursuant to this chapter, shall be displayed on the watercraft. C. E. No motorized watercraft shall be purchased, sold or otherwise transferred without assignment by the owner of the current numbering certificate or other documentation as may be prescribed by rules of the commission. Within fifteen days after such transfer, the person to whom such transfer is made shall make application to the department to have the motorized watercraft registered in the person's name by the department, for which the department shall charge a transfer fee of four dollars. The department shall not issue or transfer a numbering certificate for a motorized watercraft to a person who is subject to the use tax under title 42, chapter 5, article 4 unless the applicable tax has been paid as shown by a receipt from the collecting officer. Persons doing business as marine dealers and licensed as such by this state are not required to register in their name any watercraft in their possession that may be offered for resale. 32 D. F. In the event of the loss or destruction of the certificate of number or annual decal, the department shall issue a duplicate to the owner upon payment of a fee of two dollars. E. G. The department may issue any certificate of number directly or may authorize any person to act as agent for the issuance of the certificate of number in conformity with this chapter and with any rules of the commission. An agent that contracts with the commission to renew certificates of number by telecommunication may impose additional fees for their THE services as provided in the contract. F. H. The owner shall furnish to the department notice of the transfer of all or any part of the owner's interest other than the creation of a security interest in a motorized watercraft numbered in this state pursuant to the provisions of this chapter or of the destruction or abandonment of such watercraft within fifteen days. Such transfer, destruction or abandonment shall terminate the certificate of number of such watercraft, except that in the case of a transfer of a part interest which does not affect the owner's right to operate such watercraft, the transfer shall not terminate the certificate of number. G. I. Any holder of a certificate of number shall notify the department within fifteen days if the holder's address no longer conforms to the address appearing on the certificate and shall, as a part of such notification, furnish the department with the holder's new address. The commission may provide in its rules for the surrender of the certificate bearing the former address and its replacement with a certificate bearing the new address or the alteration of an outstanding certificate to show the new address of the holder. H. J. On renewal of any motorized watercraft registration that has not been renewed by the current expiration date, the department shall assess a penalty unless the watercraft ownership has been transferred and the watercraft was not registered subsequent to the expiration date. The commission shall establish the penalty which shall not exceed fifteen dollars. If more than twelve months have lapsed since the expiration date of the last registration or renewal the penalty and back fees are waived. Sec. 2. Section 5-323, Arizona Revised Statutes, is amended to read: 5-323. Disposition of fees A. REVENUES FROM the registration fees received under this chapter for the numbering of watercraft shall be deposited, pursuant to sections 35-146 and 35-147, in A FUND DESIGNATED AS THE WATERCRAFT REGISTRATION FEE CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DEPARTMENT, THE STATE TREASURER SHALL DISTRIBUTE THE MONIES IN THE CLEARING ACCOUNT AS FOLLOWS: 33 1. PAY ALL REVENUES COLLECTED FROM THE REGISTRATION FEES COLLECTED PURSUANT TO SECTION 5-321, SUBSECTION A, PARAGRAPHS 1 AND 2 TO a special fund to be known as the watercraft licensing fund. Such THE WATERCRAFT LICENSING fund is to be used by the department for administering and enforcing the provisions of this chapter and providing an information and education program relating to boating and boating safety. 2. PAY ALL REVENUES COLLECTED FROM ANY ADDITIONAL REGISTRATION FEES COLLECTED PURSUANT TO SECTION 5-321, SUBSECTION C TO AN ACCOUNT DESIGNATED BY A MULTI-COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. B. Each month monies received from the license taxes imposed under section 5-321 in the amount of forty-five per cent of such revenues shall be transferred to the watercraft licensing fund. Such monies are subject to legislative appropriation. C. Each month monies received from the license taxes imposed under section 5-321 in the amount of fifty-five per cent of such revenues shall be deposited by the Arizona game and fish department as follows: 1. Fifteen per cent to the state lake improvement fund to be used as prescribed by section 5-382. 2. Eighty-five per cent to the law enforcement and boating safety fund to be used as prescribed by section 5-383. Sec. 3. Section 17-231, Arizona Revised Statutes, is amended to read: 17-231. General powers and duties of the commission A. The commission shall: 1. Make rules and establish services it deems necessary to carry out the provisions and purposes of this title. 2. Establish broad policies and long-range programs for the management, preservation and harvest of wildlife. 3. Establish hunting, trapping and fishing rules and prescribe the manner and methods which may be used in taking wildlife. 4. Be responsible for the enforcement of laws for the protection of wildlife. 5. Prescribe grades, qualifications and salary schedules for department employees. 6. Provide for the assembling and distribution of information to the public relating to wildlife and activities of the department. 7. Prescribe rules for the expenditure, by or under the control of the director, of all funds arising from appropriation, licenses, gifts or other sources. 34 8. Exercise such powers and duties necessary to carry out fully the provisions of this title and in general exercise powers and duties which relate to adopting and carrying out policies of the department and control of its financial affairs. 9. Prescribe procedures for use of department personnel, facilities, equipment, supplies and other resources in assisting search or rescue operations on request of the director of the division of emergency management. 10. Cooperate with the Arizona-Mexico commission in the governor's office and with researchers at universities in this state to collect data and conduct projects in the United States and Mexico on issues that are within the scope of the department's duties and that relate to quality of life, trade and economic development in this state in a manner that will help the Arizona-Mexico commission to assess and enhance the economic competitiveness of this state and of the Arizona-Mexico region. B. The commission may: 1. Conduct investigations, inquiries or hearings in the performance of its powers and duties. 2. Establish game management units or refuges for the preservation and management of wildlife. 3. Construct and operate game farms, fish hatcheries, fishing lakes or other facilities for or relating to the preservation or propagation of wildlife. 4. Expend funds to provide training in the safe handling and use of firearms and safe hunting practices. 5. Remove or permit to be removed from public or private waters fish which hinder or prevent propagation of game or food fish and dispose of such fish in such manner as it may designate. 6. Purchase, sell or barter wildlife for the purpose of stocking public or private lands and waters and take at any time in any manner wildlife for research, propagation and restocking purposes or for use at a game farm or fish hatchery and declare wildlife salable when in the public interest or the interest of conservation. 7. Enter into agreements with the federal government, with other states or political subdivisions of the state and with private organizations for the construction and operation of facilities and for management studies, measures or procedures for or relating to the preservation and propagation of wildlife and expend funds for carrying out such agreements. 8. Prescribe rules for the sale, trade, importation, exportation or possession of wildlife. 9. Expend monies for the purpose of producing publications relating to wildlife and activities of the department for sale to the public and establish the price to be paid for annual subscriptions and single copies of such publications. All monies received from 35 the sale of such publications shall be deposited in the game and fish publications revolving fund. 10. Contract with any person or entity to design and produce artwork on terms which, in the commission's judgment, will produce an original and valuable work of art relating to wildlife or wildlife habitat. 11. Sell or distribute the artwork authorized under paragraph 10 of this subsection on such terms and for such price as it deems acceptable. 12. Consider the adverse and beneficial short-term and long-term economic impacts on resource dependent communities, small businesses and the state of Arizona, of policies and programs for the management, preservation and harvest of wildlife by holding a public hearing to receive and consider written comments and public testimony from interested persons. C. The commission shall confer and coordinate with the director of water resources with respect to the commission's activities, plans and negotiations relating to water development and use, restoration projects under the restoration acts pursuant to the provisions of chapter 4, article 1 of this title, where water development and use are involved, the abatement of pollution injurious to wildlife and in the formulation of fish and wildlife aspects of the director of water resources' plans to develop and utilize water resources of the state and shall have jurisdiction over fish and wildlife resources and fish and wildlife activities of projects constructed for the state under or pursuant to the jurisdiction of the director of water resources. D. THE COMMISSION MAY ENTER INTO ONE OR MORE AGREEMENTS WITH A MULTICOUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03, INCLUDING THE COLLECTION AND PAYMENT OF ANY MONIES AUTHORIZED BY LAW FOR THE PURPOSES OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. Sec. 4. Section 17-345, Arizona Revised Statutes, is amended to read: 17-345. Surcharges; purposes In addition to any other fees, the commission may IMPOSE AND collect: 1. A surcharge of up to two dollars on a class A, B, C, D, F, G, H or I license and on a trout stamp. Monies collected pursuant to this section PARAGRAPH shall be segregated from other fees and deposited in the conservation development fund. 2. SURCHARGES ON ARIZONA-COLORADO RIVER SPECIAL USE PERMITS, CALIFORNIACOLORADO RIVER SPECIAL USE PERMITS AND NEVADA-COLORADO RIVER SPECIAL USE PERMITS ISSUED IN THIS STATE AS PROVIDED BY SECTIONS 17-342, 17-343 AND 17-344. THE AMOUNT OF THE SURCHARGES SHALL BE DETERMINED BY THE 36 COMMISSION. A SURCHARGE UNDER THIS PARAGRAPH IS TO BE USED SOLELY FOR THE PURPOSE OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER SECTION 48-3713.03. ANY MONIES COLLECTED PURSUANT TO THIS PARAGRAPH SHALL BE SEGREGATED FROM OTHER REVENUES AND DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35-147, IN A FUND DESIGNATED AS THE COLORADO RIVER SPECIAL USE PERMIT CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DEPARTMENT, THE STATE TREASURER SHALL PAY ALL OF THE MONIES IN THE CLEARING ACCOUNT TO AN ACCOUNT DESIGNATED BY A MULTICOUNTY COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. Sec. 5. Title 45, chapter 1, Arizona Revised Statutes, is amended by adding article 13, to read: ARTICLE 13. COLORADO RIVER WATER USE FEE 45-331. Definitions IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES: 1. "CONSUMPTIVE USE" MEANS, FOR ANY WATER USER FOR ANY PROGRAM YEAR, THE CONSUMPTIVE USE AS RECORDED IN THE FINAL ACCOUNTING FOR THE MOST RECENT CALENDAR YEAR FOR WHICH A FINAL ACCOUNTING IS AVAILABLE, OR IF NONE IS RECORDED, THE AMOUNT OF DIVERSIONS SO RECORDED. 2. "FINAL ACCOUNTING" MEANS, FOR ANY CALENDAR YEAR, THE UNITED STATES BUREAU OF RECLAMATION'S FINAL COMPILATION OF RECORDS OF COLORADO RIVER DIVERSIONS, RETURN FLOWS AND CONSUMPTIVE USES FOR THE YEAR, COMPILED PURSUANT TO ARTICLE V(B) OF THE DECREE OF THE UNITED STATES SUPREME COURT IN ARIZONA V. CALIFORNIA, 376 U.S. 340 (1964). 3. "LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM" OR "PROGRAM" MEANS THE COOPERATIVE EFFORT AMONG AGENCIES OF THE FEDERAL GOVERNMENT AND AGENCIES AND POLITICAL SUBDIVISIONS OF THE STATES OF ARIZONA, CALIFORNIA AND NEVADA AND OTHER LOCAL PUBLIC AND PRIVATE PARTIES WITH A COMMON INTEREST IN THE WATER AND RELATED RESOURCES OF THE LOWER COLORADO RIVER, INCLUDING THE HISTORIC FLOODPLAIN AND RESERVOIRS TO THE FULL POOL ELEVATIONS, TO PROVIDE THE BASIS FOR COMPLIANCE WITH SECTIONS 7 AND 10(a)(1)(B) OF THE ENDANGERED SPECIES ACT OF 1973 (P.L. 93-205; 87 STAT. 884; 16 UNITED STATES CODE SECTIONS 1536 AND 1539.) 37 4. "PROGRAM YEAR" MEANS THE TWELVE MONTH PERIOD BEGINNING OCTOBER 1 OF ANY CALENDAR YEAR AND ENDING SEPTEMBER 30 OF THE FOLLOWING CALENDAR YEAR. 45-332. Cooperation in lower Colorado river multispecies conservation program ON BEHALF OF THE DEPARTMENT, THE DIRECTOR MAY ENTER INTO ONE OR MORE AGREEMENTS WITH A MULTI-COUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM, INCLUDING THE COLLECTION OF ONE OR MORE FEES UNDER THIS ARTICLE FOR PURPOSES OF THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. 45-333. Colorado river water use fee; purpose A. THE DIRECTOR MAY ASSESS AND COLLECT ANNUAL COLORADO RIVER WATER USE FEES FROM EACH PERSON WHO DIVERTS AND CONSUMPTIVELY USES WATER IN THIS STATE FROM THE MAINSTREAM OF THE COLORADO RIVER AS RECORDED IN THE FINAL ACCOUNTING. THIS FEE DOES NOT APPLY TO PERSONS WHO HAVE ENTERED INTO, AND ARE IN COMPLIANCE WITH, AGREEMENTS WITH A MULTI-COUNTY WATER CONSERVATION DISTRICT AND OTHER PARTIES FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM WITH RESPECT TO THE USE OF COLORADO RIVER WATER. B. THE DIRECTOR SHALL SET THE AMOUNT OF A FEE UNDER THIS SECTION EACH YEAR ACCORDING TO THE GUIDELINES IN SECTION 45-334. C. ANY MONIES COLLECTED PURSUANT TO THIS SECTION SHALL BE SEGREGATED FROM OTHER REVENUES AND DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35147, IN A FUND DESIGNATED AS THE COLORADO RIVER WATER USE FEE CLEARING ACCOUNT. EACH MONTH, ON NOTIFICATION BY THE DIRECTOR, THE STATE TREASURER SHALL PAY ALL OF THE MONIES IN THE CLEARING ACCOUNT TO AN ACCOUNT DESIGNATED BY A MULTI-COUNTY WATER CONSERVATION DISTRICT ESTABLISHED UNDER TITLE 48, CHAPTER 22 TO BE USED SOLELY FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM AND FOR NO OTHER PURPOSE. 45-334. Setting Colorado river water use fee A. IN SETTING COLORADO RIVER WATER USE FEES UNDER THIS ARTICLE: 1. NOT LATER THAN JULY 1 OF EACH YEAR, THE DIRECTOR SHALL SET THE COLORADO RIVER WATER USE FEES FOR THE FOLLOWING PROGRAM YEAR. THE DIRECTOR SHALL CONSIDER THE FOLLOWING IN SETTING THE AMOUNT OF THE FEES: (a) THE CONSUMPTIVE USE FOR THAT PROGRAM YEAR BY THE PERSONS TO WHOM THE FEE WILL BE ASSESSED. 38 (b) THE PAYMENT OBLIGATIONS THAT APPLY TO SIMILAR WATER USERS UNDER AGREEMENTS TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. (c) THE AMOUNT OF MONIES NECESSARY TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM FOR THAT PROGRAM YEAR. (d) THE AMOUNT OF MONIES EXPECTED TO BE AVAILABLE TO FUND THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM DURING THE PROGRAM YEAR FROM OTHER SOURCES. 2. THE DIRECTOR MAY ESTABLISH CLASSES OF WATER USERS FOR THE PURPOSE OF ASSIGNING GRADUATED FEE RATES TO THE RESPECTIVE CLASSES. 3. THE DIRECTOR SHALL CONSIDER THE DATE OF ANY CONTRACT OR OTHER RIGHT TO USE COLORADO RIVER WATER AND THE TYPE OF WATER USE WHEN ASSIGNING FEE RATES. 4. THE DIRECTOR SHALL ENTER IN THE DEPARTMENT'S RECORDS A STATEMENT OF THE FEES FOR THE FOLLOWING PROGRAM YEAR AND TRANSMIT A COPY OF THE STATEMENT TO THE STATE TREASURER. 5. BEFORE SETTING THE FEES, THE DIRECTOR SHALL CONSULT WITH REPRESENTATIVES OF THE WATER USERS WHICH WILL BE ASSESSED FOR THE FEES. THE DIRECTOR SHALL PUBLISH NOTICE OF THE FEES AND PROVIDE A COMMENT PERIOD OF AT LEAST THIRTY DAYS BEFORE SETTING THE FINAL FEE AMOUNTS. 6. WITHIN THIRTY DAYS AFTER THE DIRECTOR SETS FEES FOR A PROGRAM YEAR, THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE FEES TO EACH PERSON WITH CONSUMPTIVE USE. 7. THE DIRECTOR SHALL CALCULATE THE TOTAL AMOUNT OF THE FEE THAT A PERSON MUST PAY FOR THE CONSUMPTIVE USE OF COLORADO RIVER WATER FOR A PROGRAM YEAR BY MULTIPLYING THE APPLICABLE ANNUAL FEE FOR THAT PROGRAM YEAR BY THE CONSUMPTIVE USE FOR THE PERSON FOR THE PROGRAM YEAR. THE DIRECTOR MAY REDUCE THE AMOUNT OF A PERSON'S FEE BY THE VALUE OF ANY SERVICES OR TANGIBLE ASSETS, INCLUDING LAND OR WATER, CONTRIBUTED BY THE PERSON TO, AND ACCEPTED BY, THE FEDERAL GOVERNMENT FOR USE IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. B. THE DIRECTOR SHALL GIVE WRITTEN NOTICE OF THE TOTAL AMOUNT OF THE FEE THAT A PERSON MUST PAY UNDER THIS SECTION NO LATER THAN AUGUST 15 BEFORE THE BEGINNING OF THE PROGRAM YEAR. 45-335. Payment of fee; penalty for delinquency A. IF THE DIRECTOR ASSESSES A FEE PURSUANT TO THIS ARTICLE IN ANY YEAR, A PERSON TO WHOM THE FEE IS ASSESSED MUST PAY THE FEE WITHIN FORTY-FIVE 39 DAYS AFTER THE PERSON RECEIVES WRITTEN NOTICE OF THE TOTAL AMOUNT OF THE FEE FROM THE DIRECTOR. B. IF A PERSON FAILS TO PAY THE FEE WHEN DUE, THE DIRECTOR MAY ASSESS AND COLLECT A PENALTY OF TEN PER CENT OF THE UNPAID FEE, WITHOUT COMPOUNDING, FOR EACH MONTH OR PORTION OF A MONTH THAT THE FEE IS DELINQUENT. THE TOTAL PENALTY ASSESSED SHALL NOT EXCEED SIXTY PER CENT OF THE UNPAID FEE. AN ACTION TO RECOVER PENALTIES UNDER THIS SUBSECTION SHALL BE BROUGHT IN THE SUPERIOR COURT IN MARICOPA COUNTY. ANY PENALTIES COLLECTED SHALL BE DEPOSITED, PURSUANT TO SECTIONS 35-146 AND 35-147, IN THE COLORADO RIVER WATER USE FEE CLEARING ACCOUNT ESTABLISHED PURSUANT TO SECTION 45-333. Sec. 6. Section 48-3712, Arizona Revised Statutes, is amended to read: 48-3712. Powers and duties of the board A. The board shall: 1. Manage and conduct the affairs and business of the district. 2. Make and execute all necessary contracts and other instruments which shall be signed by the president or, in his THE PRESIDENT'S absence, by another member of the board designated for that purpose, and attested by the secretary. 3. Establish bylaws and rules for the governing of the board and for the functions of the district, as provided in title 41. 4. Perform all acts necessary to carry out the purposes of this chapter. 5. Except as provided in subsection C of this section and in sections 48-3713.03, 483715.01, 48-3715.03, 48-3715.05, 48-3772 and 48-3773, require that all funds received on behalf of the district shall be deposited, pursuant to sections 35-146 and 35-147, in a special fund established by the state to be expended at the direction of the board to effectuate the provisions and purposes of this chapter. On notice from the board, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund. 6. Adopt an ordinance or ordinances to establish a revenue bonding program that pledges to bond repayment any monies received or to be received by the district from any source except ad valorem tax revenues, replenishment assessment revenues and replenishment tax generated under article 4 of this chapter. 7. Employ such agents, engineers, attorneys and employees not readily available from existing state agencies. B. The board may: 1. Accept grants, gifts or donations of money or other property from any source which may be expended for any purpose consistent with the provisions of this chapter. 40 C. 2. The board may Establish a revolving fund for the purpose of defraying the costs and expenses of the district. Sec. 7. Title 48, chapter 22, article 1, Arizona Revised Statutes, is amended by adding section 48-3713.03, to read: 48-3713.03. Lower Colorado river multispecies conservation program; definition A. THE BOARD MAY ENTER INTO AGREEMENTS WITH THIS STATE, AN AGENCY OR POLITICAL SUBDIVISION OF THIS STATE, THE FEDERAL GOVERNMENT, AN AGENCY OF THE FEDERAL GOVERNMENT AND ANY OTHER PERSON FOR PARTICIPATION IN THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM UNDER THIS SECTION, INCLUDING THE PAYMENT, COLLECTION, MANAGEMENT, INVESTMENT AND DISTRIBUTION OF MONIES FOR THE PROGRAM. B. THE AGREEMENTS MAY DESIGNATE THE STATE TREASURER OR PRIVATE FINANCIAL INSTITUTIONS AS FISCAL AGENTS OR TRUSTEES FOR COLLECTION, MANAGEMENT, INVESTMENT AND DISTRIBUTION OF MONIES FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM. C. MONIES COLLECTED FOR THE LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM SHALL BE USED ONLY FOR ACTIVITIES AND ADMINISTRATIVE COSTS DIRECTLY RELATED TO THE MULTISPECIES CONSERVATION PROGRAM AND MAY INCLUDE: 1. MONIES APPROPRIATED BY THE LEGISLATURE. 2. ADDITIONAL WATERCRAFT REGISTRATION FEES, IF ASSESSED PURSUANT TO SECTION 5-321, SUBSECTION C. 3. SURCHARGES ON ARIZONA-COLORADO RIVER SPECIAL USE PERMITS, CALIFORNIACOLORADO RIVER SPECIAL USE PERMITS AND NEVADA-COLORADO RIVER SPECIAL USE PERMITS, IF IMPOSED PURSUANT TO SECTION 17-345, PARAGRAPH 2. 4. COLORADO RIVER WATER USE FEES, IF ASSESSED PURSUANT TO SECTION 45-333. 5. GIFTS, GRANTS AND DONATIONS FROM ANY PUBLIC OR PRIVATE SOURCES. 6. PAYMENTS BY ANY PERSON UNDER ANY AGREEMENT TO FUND ALL OR PART OF THE PROGRAM. D. FOR THE PURPOSES OF THIS SECTION, "LOWER COLORADO RIVER MULTISPECIES CONSERVATION PROGRAM" OR "PROGRAM" MEANS THE COOPERATIVE EFFORT AMONG AGENCIES OF THE FEDERAL GOVERNMENT AND AGENCIES AND POLITICAL SUBDIVISIONS OF THE STATES OF ARIZONA, CALIFORNIA AND NEVADA AND OTHER LOCAL PUBLIC AND PRIVATE PARTIES WITH A COMMON INTEREST IN THE WATER AND RELATED RESOURCES OF THE LOWER COLORADO RIVER, INCLUDING THE HISTORIC FLOODPLAIN AND RESERVOIRS TO THE FULL POOL ELEVATIONS, TO PROVIDE THE BASIS FOR COMPLIANCE WITH SECTIONS 7 AND 10(a)(1)(B) OF THE ENDANGERED 41 SPECIES ACT OF 1973 (P.L. 93-205; 87 STAT. 884; 16 UNITED STATES CODE SECTIONS 1536 AND 1539). APPROVED BY THE GOVERNOR APRIL 13, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 13, 2005. 42 ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2720 Water; General Industrial Use Permits 47th Legislature, 1st Regular Session (2005) BILL NUMBER: SHORT TITLE: PRIME SPONSOR: HB 2720, Chapter 236 Water; General Industrial Use Permits Representative: Boone BILL SUMMARY: HB 2720 repeals Laws 2002, Chapter 72, which authorized ADWR to extend the term of a general industrial use permit for up to seven years, and replaces it with another session law that extends the dates by which certain conditions must occur. For example, a water exchange contract, which is one of the necessary conditions for a water use permit to be granted, must be signed by January 1, 2007 (Previously January 1, 2002). SIGNIFICANCE TO AGENCY: HB 2720 will help to better utilize Central Arizona Project water in the Sun City Area. The area is experiencing subsidence due to the overpumping of groundwater. HB 2720 will help the area to move off of groundwater and on to a renewable supply. REQUIRED OUTCOMES: Rule No rule changes are needed to implement the legislation. Legislation No legislative changes are needed to implement the legislation. Substantive Policy No substantive policies are needed to implement the legislation. ACTIONS REQUIRED: No agency action is needed to implement the legislation. 43 DIVISION STAFF SUPPORT REQUIRED: Active Management Areas, generally; no specific staff support is required for this legislation TIMELINE: No timeline for action is required. 44 House Engrossed -------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 -------------------------CHAPTER 236 -------------------------HOUSE BILL 2720 -------------------------- AN ACT REPEALING LAWS 2002, CHAPTER 72; RELATING TO GENERAL INDUSTRIAL USE PERMITS. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Repeal Laws 2002, chapter 72 is repealed. Sec. 2. General industrial use permit; extension; conditions; termination A. Notwithstanding section 45-515, Arizona Revised Statutes, the department of water resources shall extend the term of a general industrial use permit issued in the Phoenix active management area for up to seven years after the date the permit would otherwise expire as provided in subsection B of this section if all of the following apply: 1. The general industrial use permit would otherwise expire on or before August 5, 2005 and cannot be renewed under section 45-515, Arizona Revised Statutes, because the site of the general industrial use is now located within the exterior boundaries of a private water company. 2. During the term of the extension, all wells from which groundwater is withdrawn pursuant to the general industrial use permit are located within the service area of the private water company and the private water company has agreed in writing that the term of the general industrial use permit may be extended for up to seven years under terms prescribed by this section. 3. The general industrial use permit is the subject of a water exchange contract, as defined in section 45-1001, Arizona Revised Statutes, to which all of the following apply: (a) The water exchange contract was entered into before January 1, 2007 for the exchange of central Arizona project water between a holder of a municipal and industrial central Arizona project subcontract and the holder of the general industrial use permit. 45 (b) The holders of the general industrial use permits have agreed in the water exchange contract to exchange groundwater pursuant to one or more general industrial use permits and the total amount of those permits is less than two thousand acre-feet. (c) The central Arizona project water received by the holder of the general industrial use permit will replace groundwater for use on one or more golf courses owned by the permit holders. B. A general industrial use permit described in subsection A of this section shall be extended for an additional seven years after the date the permit would have otherwise expired except that the extension shall terminate four years after the date on which the general industrial use permit would have otherwise expired if within that four-year period construction on a pipeline for transporting central Arizona project water to the permit holder's golf courses has not substantially commenced. Sec. 3. Purpose The purpose of this act is to facilitate the replacement of groundwater use on golf courses with the use of central Arizona project water by allowing general industrial use permits issued under section 45-515, Arizona Revised Statutes, in the Phoenix active management area to be extended for up to seven years after the date the permits would have otherwise expired, if the permits cannot be renewed because the location of the use is now within the exterior boundaries of a private water company and if the permits will be used to exchange groundwater for central Arizona project water that will be used on a golf course. This exception to the requirements of section 45-515, Arizona Revised Statutes, will give the general industrial use permit holders additional time to secure a replacement withdrawal right to exchange for the central Arizona project water or make other arrangements to continue receiving the central Arizona project water for use on the golf courses. It is further intended that the extension of the general industrial use permit duration for the maximum seven years is dependent on timely progress toward completion of the water delivery infrastructure that will transport the central Arizona project water to the golf course. Sec. 4. Repeal Sections 2 and 3 of this act are repealed on August 1, 2012. APPROVED BY THE GOVERNOR APRIL 25, 2005. FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 25, 2005. 46 ARIZONA DEPARTMENT OF WATER RESOURCES LEGISLATIVE IMPLEMENTATION PLAN HB 2728 Arizona Water Settlements Act 47th Legislature, 1st Regular Session (2005) BILL NUMBER: SHORT TITLE: PRIME SPONSORS: HB 2728, Chapter 143 Arizona Water Settlements Act Representatives: J. Allen Brown Chase Mason Nelson O'Halleran Prezelski Robson J. Weiers Flake Bennett Senators: BILL SUMMARY: HB 2728 institutes programs, fees and other requirements for meeting the state's obligation pertaining to the water settlements of the Gila River Indian Community (GRIC) and San Xavier Reservation. Gila River Indian Community Water Settlement Program Establishes five groundwater protection zones along the southern boundary of the Gila River Indian Reservation (Eastern Protection Zone North; Eastern Protection Zone South; Western Municipal and Industrial Protection Zone; Western Municipal Protection Zone; and Central Protection Zone). If groundwater withdrawals exceed a certain limit in those areas, the State's obligation to replenish the water is triggered. Prohibits transportation away from the Eastern and Western Protection Zones if the transportation is for a non-irrigation use. Certain exemptions apply for grandfathered uses; if the water is replenished or replaced within a certain time; or if specific storage and transportation limitations apply. 47 Establishes conservation requirements for the Central Protection Zone that are no less restrictive than those established in the Management Plan for the Pinal Active Management Area (AMA). Requires the Arizona Water Banking Authority (AWBA) to acquire sufficient water supplies to meet the replenishment obligations of the State, using monies appropriated from the State General Fund. To the extent General Fund monies are not available, the AWBA may use groundwater withdrawal fees, collected in the Pinal AMA and already committed for Arizona Water Banking Authority purposes, to establish the Southside Replenishment Bank for the GRIC. Establishes the Southside Replenishment Bank for the GRIC and requires the AWBA to bank at least 1,000 acre feet of water per year until the balance in the GRIC account reaches 15,000 acre feet. There will be no cost to the GRIC. The AWBA is required to maintain a balance in the Southside Replenishment Bank of at least 5,000 acre feet. The AWBA is not required to deliver more than 11 percent of the annual water delivery in any single month. Requires the AWBA to maintain an accounting system that keeps longterm storage credits developed for GRIC separate from other longterm storage credits. Establishes a funding mechanism for replenishment by authorizing use of appropriated funds, and if no appropriations are available use of a groundwater withdrawal fee of up to $2.50 per acre foot. The fee will continue to be collected in the Pinal AMA and is currently used for water banking activities in Pinal AMA as well as replenishment obligations for the GRIC. Outlines the method to calculate the amount of any replenishment obligation. Withdrawals for municipal and industrial uses that exceed two acre feet in the Western zones and 2.33 acre feet in the eastern zones trigger a replenishment obligation. Withdrawals for irrigation uses are calculated based on the farm's flexibility account and irrigation water duty established by the Arizona Department of Water Resources (ADWR). A water company that withdraws water from an Eastern Protection Zone and transports the water for municipal uses outside the Eastern Protection Zones triggers a replenishment obligation if the amount exceeds 1,275 acre feet for the year. Specific time limits apply to replenishment. A person may incur an individual replenishment obligation if groundwater is withdrawn that exceeds a certain volume. The AWBA must send written notice of the obligation to the person specifying the amount, the cost of replenishment, and the manner in which the person may satisfy the obligation. The Director of ADWR is required to provide written notice of the potential for an individual who withdraws groundwater in the Eastern or Western Protection Zones to incur a replenishment obligation. Establishes a Gila River Maintenance Area and prohibits construction of new dams or enlarging existing dams within the area. Provides exemptions for flood control 48 structures, stockponds, replacement dams, and impoundments for certain mining activities, industrial facilities, and effluent. Prohibits irrigation of land within the Maintenance Area if the land was not irrigated between January 1, 2000 and the general effective date of HB 2728. Provides exemptions for lands that are irrigated with a surface water right that is earlier than the general effective date for HB 2728; if irrigation is allowed under other settlement agreements or decrees; or if the land is located in Cochise County. Authorizes ADWR to enforce the provisions of the Gila River Indian Community Water Settlement Program. Enforcement measures include inspections; investigations, audits, cease and desist orders, hearings, injunctive relief and civil and criminal penalties. San Xavier Reservation Water Settlement Program Requires ADWR to analyze the impacts that a proposed new well will have on water levels at the San Xavier Reservation boundaries. If the analysis shows water levels will decline 10 feet or more in the first five years, the permit to drill shall be denied. Prohibits new well(s) within two miles of the San Xavier Reservation boundary if the combined capacity of all well(s) is 500 gallons per minute or more. Provides an exception if a hydrologic study shows that the water level at the proposed well site is declining at an average rate of two feet per year; that water levels will not exceed a specific rate of decline over a five year period, or if the Nation provides written consent to drilling the well. This provision does not apply to recovery wells drilled to recover water stored at an underground storage facility located within one mile of the recovery well. Requires the Director of ADWR to provide written notice and a copy of an application to drill a well within two miles of the San Xavier Reservation boundary. If the Nation files a written objection to the application, the Director shall schedule an administrative hearing on the objection. Procedures and timelines for decisions are outlined. Water Firming Program Requires the Director of ADWR to develop a water firming program to ensure that nonIndian agricultural priority (NIA priority) Central Arizona Project (CAP) water that has been reallocated to Arizona Indian tribes pursuant to the federally enacted Arizona Water Settlements Act (PL 108-451) is delivered during times of shortage at the same priority as municipal and industrial CAP water. The reallocation provides 15,000 acre feet of NIA priority CAP water to the GRIC and 8,724 acre feet of NIA priority CAP water to other Arizona Indian tribes. Requires the Director to work with the United States Secretary of Interior to firm the federal obligation of 28,200 acre feet of NIA priority CAP water reallocated to the 49 Tohono O'odham Nation as provided in the Arizona Water Settlements Act (PL 108451). Establishes the Arizona Water Firming Program Study Commission consisting of members appointed by the ADWR Director who represent at least eight specific entities. This Commission will study options for a water firming program that will satisfy the requirements of the Arizona Water Settlements Act and identify appropriate mechanisms to accomplish the goal. An interim report is due to the Legislature by November 1, 2005 and a final report is due January 6, 2006. The Commission is repealed on June 1, 2006. Other provisions Requires the State to cooperate with the GRIC to acquire a specific parcel of land located within the exterior boundaries of the Community's reservation. Specifies that state action shall be taken in accordance with Arizona law. Provides a conditional enactment for certain sections of HB 2728, based on final approval by the Secretary of the Interior, and notice in the Federal Register that all components of the Arizona Water Settlement Act. If final approval is not obtained by December 31, 2010, the sections will not take effect and Title 45, Chapter 15 will be repealed. The conditional enactments are for sections related to the Gila River Maintenance Area and Impact Zones; for restrictions on new dams and new irrigated lands; enforcement provisions; and the water firming program. SIGNIFICANCE TO AGENCY: Provides an important step in the final enforceability of the Arizona Water Settlements Act. It also provides the Department with additional tools to maintain water supplies in certain areas of the state. REQUIRED OUTCOMES: Rule No new rules are needed and no existing rule needs to be amended. Legislation Legislation and or funding may be need as a result of the Indian Firming Study Commission review and recommendations. The Department is also reviewing HB 2728 to see if technical amendments should be recommended for the next legislative session. Substantive Policy No new substantive policy statements are needed. 50 ACTIONS REQUIRED: 1. The Director must develop a water firming program to firm 15,000 acre feet of NIA priority water for the Gila River Indian Community and 8,724 acre feet of NIA priority water for future Indian settlements. The Director has appointed the Indian Firming Study Commission. See attached list of Commission members and staff, and work plan. Commission will make a final report to the Director and the Legislature with recommendations of any needed legislative authority, and a plan for the firming program by January 6, 2006. 2. Gila River Maintenance Area. To accomplish the prohibition of new storage reservoirs in the Area, and prohibition of new irrigation from impact zones within the Area, the Department will have to take several steps: (a) Repository of maps of the Gila River Maintenance Area and notice to public. (b) Remote sensing survey of existing irrigation in the Gila River Maintenance Area. (c) Modify applications for construction or enlargement of dams to be consistent with prohibition provisions. (d) Modify NOI forms for Gila River Maintenance Area to incorporate questions concerning (i) whether the proposed well will be used for irrigation, and (ii) notice that if the proposed well is in or near an impact zone of certain forms to be filed with the Gila River Indian Community. 3. Southside Protection Program. The replenishment obligation is given to the Arizona Water Banking Authority, however, the Department is responsible for the Southside Protection Program, to accomplish the restrictions of the Southside Protection Program the Department will have to take several steps: (a) Repository of maps of the Southside Protection Zones and notice to public. (b) Survey and documentation of all municipal and industrial groundwater uses in the Zones. (c) Modify NOI forms in Southside Protection Zones to incorporate notice of the replenishment obligations. (d) Modify Annual Reports for groundwater users within the Southside Protection Zones to provide the Department with adequate information to make calculations for replenishment obligations of the AWBA. 4. San Xavier Protection Program. The Department will need to modify NOI forms in the Tucson AMA to give notice to the public of the new requirements for well spacing analysis near the San Xavier Reservation. DIVISION STAFF SUPPORT REQUIRED: Director's Office Office of Legal Services Hydrology Division Active Management Areas 51 Assured and Adequate Water Supply Program Recharge Office of Statewide Planning Arizona Water Banking Authority NOI Unit Office of Engineering TIMELINE: 2005 May o Firming - First meeting of the Indian Firming Study Commission (review objectives and background). Staff complete model runs for identification of the firming volume. June o Meeting with GIS and Legal over remote sensing availability and costs for Gila River Management Area baseline. Meeting with Pinal AMA on Southside Protection Program. Meeting with Assured Water Supply on Southside Protection Program. o Firming Meeting with Bureau of reclamation to discuss State's role in "assisting" the Feds with their firming obligation. Study Commission Meeting Define Shortage and Quantify volume of water needed to offset projected shortages to NIA water for the next 100 years. Identify alternative methods for firming water. July o Meeting with GRIC over Gila River Management Area baseline. Meeting with Tucson AMA on San Xavier Groundwater Protection Program. Meeting with NOI group about changes to conform to settlement programs in Pinal AMA, Tucson AMA, and upper Gila River area. o Firming ADWR staff develop additional information on each solution element identified by Study Commission including: cost/funding source, identification of supply required to meet the firming obligation, identification of water supply available to meet the firming obligation, hydrologic feasibility, legal feasibility, and potential partnerships. August o Meeting with Office of Engineering over Gila River Management Area to modify dam permit forms. Remote sensing activities begin. o Firming Meeting of the Firming Study Commission. Present expanded solution elements (work identified in July). Identify ranking criteria for ranking solution elements. Staff to rank elements based on criteria. Develop outline for Interim Report. September 52 o Firming Develop Interim Report and present Draft to Study Commission. Study Commission Meetings (2) to discuss ranked solution elements and begin defining recommendations and review Draft Interim Report. October o Firming Finalize Interim Report. Develop outline for Final Report for Study Commission review. Study Commission Meeting to discuss recommendations, to identify preferred mechanism, and review Interim Report. Staff to identify appropriate statutory and regulatory provisions that are necessary to fully implement the recommendations being discussed. November o Meeting with GRIC Gila River Management Area GIS baseline created from remote sensing. o Firming Submit Interim Report to the Legislature. Study Commission Meeting to finalize recommendations and review Draft Final Report. Staff to continue to develop necessary statutory and regulatory provisions and agreements. December o Finalize Gila River Management Area GIS baseline. Finalize NOI form changes. Finalize dam permit forms. o Firming Review and complete Final Report (no meeting unless necessary to complete report or other issues). Complete necessary statutory and regulatory provisions and agreements. 2006 January o Finalize annual report changes for Pinal AMA for Southside Protection Program. o Submit Final Report of the Firming Commission to the Legislature. 53 Senate Engrossed House Bill ----------------------------State of Arizona House of Representatives Forty-seventh Legislature First Regular Session 2005 ----------------------------CHAPTER 143 ----------------------------HOUSE BILL 2728 ----------------------------- AN ACT AMENDING SECTIONS 45-611 AND 45-841.01, ARIZONA REVISED STATUTES; AMENDING SECTION 45-841.01, ARIZONA REVISED STATUTES, AS AMENDED BY THIS ACT; AMENDING SECTIONS 45-2423, 45-2425 AND 45-2457, ARIZONA REVISED STATUTES; AMENDING TITLE 45, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 15; AMENDING TITLE 45, CHAPTER 15, ARTICLE 1, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT, BY ADDING SECTIONS 45-2602 AND 45-2604; AMENDING TITLE 45, CHAPTER 15, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT, BY ADDING ARTICLES 2, 3 AND 6; AMENDING TITLE 45, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 16; PROVIDING FOR THE DELAYED CONDITIONAL REPEAL OF TITLE 45, CHAPTER 15, ARIZONA REVISED STATUTES, AS ADDED BY THIS ACT; RELATING TO WATERS; PROVIDING FOR CONDITIONAL ENACTMENT. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 45-611, Arizona Revised Statutes, is amended to read: 45-611. Groundwater withdrawal fee; amounts and purposes of fee; exception A. Except as provided in subsection B of this section, the director shall levy and collect an annual groundwater withdrawal fee from each person withdrawing groundwater in the Prescott active management area or the person who owns the right to withdraw the groundwater, in an amount not to exceed five dollars per acre-foot of groundwater withdrawn and beneficially used. The director shall levy and collect an annual withdrawal fee from each person withdrawing water, other than stored water, from a well in the Santa Cruz active management area or the person who owns the right to withdraw the water, in an amount not to exceed five dollars per acre-foot of water, other than stored water, that is withdrawn and beneficially used. For purposes of this article, the annual withdrawal fee levied and collected in the Santa Cruz active management area shall be considered a groundwater withdrawal fee. The actual amount of the fee levied and collected by the director pursuant to this subsection shall be set by the director as follows: 54 1. For administration and enforcement of this chapter, an amount not less than fifty cents and not greater than one dollar per acre-foot per year. The initial fee for administration and enforcement shall be levied as soon as practicable after the active management area is established. 2. For augmentation of the water supply of the active management area, conservation assistance to water users within the active management area and monitoring and assessing water availability within the active management area, an amount not greater than two dollars per acre-foot per year. 3. For purchasing and retiring grandfathered rights, an amount not greater than two dollars per acre-foot per year. The initial fee for purchasing and retiring grandfathered rights shall be levied in the first year in which the director develops and implements a program for the purchase and retirement of grandfathered rights as part of the management plan for the active management area, but not earlier than January 1, 2006. The director may not levy a fee under this paragraph on a district member of a groundwater replenishment district that withdraws groundwater in the district for a non-irrigation use in the district. B. A person, other than an irrigation district, who withdraws groundwater in an active management area from a non-exempt well for use pursuant to an irrigation grandfathered right that is appurtenant to ten or fewer irrigation acres and the person who owns the right to withdraw the groundwater are exempt from the groundwater withdrawal fee requirements of subsections A and C of this section for those withdrawals unless the irrigation acres are part of an integrated farming operation. C. Except as provided in section 45-411.01, subsection C and subsection B of this section, the director shall levy and collect an annual groundwater withdrawal fee from each person who withdraws groundwater in the Tucson, Phoenix and Pinal active management areas or the person who owns the right to withdraw the groundwater, in an amount of not more than five dollars per acre-foot of groundwater withdrawn and beneficially used. The director shall set the actual amount of the fee as follows: 1. IN THE TUCSON AND PHOENIX ACTIVE MANAGEMENT AREAS, beginning in 2017, for administration and enforcement of this chapter, an amount of at least fifty cents but not more than one dollar per acre-foot per year. IN THE PINAL ACTIVE MANAGEMENT AREA, BEGINNING IN 2017, FOR ADMINISTRATION AND ENFORCEMENT OF THIS CHAPTER, AN AMOUNT OF NOT MORE THAN ONE DOLLAR PER ACRE-FOOT PER YEAR. 2. Through 2016, for augmentation of the water supply of the active management area, conservation assistance to water users within the active management area and monitoring and assessing water availability within the active management area, an amount of not more than fifty cents per acre-foot per year, and after 2016, an amount 55 of not more than two dollars per acre-foot per year. If a permanent board of directors of an active management area water district assumes office under section 48-4831, the fee for augmentation under this paragraph shall not be levied in that active management area. 3. IN THE TUCSON AND PHOENIX ACTIVE MANAGEMENT AREAS, through 2016, for Arizona water banking purposes, the amount of two dollars fifty cents per acre-foot per year, except that for groundwater withdrawn pursuant to irrigation grandfathered rights within the Pinal active management area to the extent those rights are used to irrigate lands outside of the service area of an irrigation district, the amount of seventy-five cents per acre-foot of groundwater withdrawn in 1997, and a cumulating additional twenty-five cents per acre-foot each year thereafter, to a maximum of two dollars fifty cents per acre-foot per year. IN THE PINAL ACTIVE MANAGEMENT AREA, THROUGH 2016, FOR ARIZONA WATER BANKING PURPOSES, INCLUDING REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, THE AMOUNT OF TWO DOLLARS FIFTY CENTS PER ACRE-FOOT PER YEAR AND, BEGINNING IN 2017, FOR ARIZONA WATER BANKING PURPOSES, INCLUDING REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, AN AMOUNT OF NOT MORE THAN TWO DOLLARS FIFTY CENTS PER ACREFOOT PER YEAR. 4. For purchasing and retiring grandfathered rights, an amount of not more than two dollars per acre-foot per year. The initial fee for purchasing and retiring grandfathered rights shall be levied in the first year in which the director develops and implements a program for the purchase and retirement of grandfathered rights as part of the management plan for the active management area, but not earlier than January 1, 2006. The director may not levy a fee pursuant to this paragraph on a district member of a groundwater replenishment district that withdraws groundwater in the district for non-irrigation use in the district. Sec. 2. Section 45-841.01, Arizona Revised Statutes, is amended to read: 45-841.01. Accrual of long-term storage credits; Indian water rights settlements A. To further the implementation of Indian water rights settlements in this state, an Indian community may accrue long-term storage credits as prescribed by this section. B. This section applies only to the settlement of a water rights claim by a federally recognized Indian community in this state if the settlement provides for off-reservation storage of its central Arizona project water and only after the settlement results in a dismissal with prejudice of a class action claim that has been pending in the United States district court for more than five years. C. Before accruing any long-term storage credits under this section, both of the following conditions apply: 56 1. A party seeking to participate in the accrual of long-term storage credits under this section shall file written notice with the director that the requirements of subsection B of this section have been met. 2. The director shall find that the requirements of subsection B of this section have been met. D. Before accruing any long-term storage credits under this section, a party seeking to participate in the accrual of long-term storage credits under this section shall file with the director all of the following information: 1. A written notice of the parties' PARTY'S intent to begin the delivery of central Arizona project water that was made IS available to the Indian community by the water rights settlement to the holder of grandfathered groundwater rights in an active management area. 2. A sworn statement by the holder of the grandfathered groundwater rights that the holder will use the water delivered off of Indian community lands on a gallon-for-gallon substitute basis instead of groundwater that otherwise would have been pumped pursuant to the grandfathered groundwater rights from within an active management area. 3. A listing and description of the grandfathered groundwater rights that will not be exercised by the holder because of the delivery of the water that is delivered by the Indian community. 4. A hydrologic report assessing the effect of nonexercise of grandfathered groundwater rights under this section on any underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal for the grandfathered groundwater rights. E. The director shall review the hydrologic report filed pursuant to subsection D, paragraph 4 of this section and shall make such modifications to the state demonstration project's underground storage facility permit as the director deems appropriate. F. If the director determines that the parties have complied with subsection D of this section, the Indian community may begin accruing long-term storage credits for the delivery of central Arizona project WATER to the holder of the grandfathered groundwater rights, but only if the following apply: 1. By March 31 of each year, the holder of the grandfathered groundwater rights files an annual report with the director for the preceding calendar year. The annual report shall include the following information: (a) The total quantity of water received from the Indian community during the year for use by the holder under this section. 57 (b) A listing of those grandfathered groundwater rights that were not exercised during the year by the holder because of the receipt of central Arizona project water delivered by the Indian community. (c) Such other information as the director may reasonably require. 2. The director finds that the water reported as received by the grandfathered groundwater right holder was used on a gallon-for-gallon substitute basis for groundwater. 3. The Indian community has offered to sell the Arizona water banking authority ten per cent of any long-term storage credits accruable by the Indian community under this section at a price per acre-foot at the time of sale equal to the authority's cost of delivering and storing water at an underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal of any of the grandfathered groundwater rights identified in the list filed with the director pursuant to subsection D, paragraph 3 of this section, except that any credits purchased pursuant to such offer may not be recovered within five miles of the exterior reservation boundary of the Indian community. G. The water that is received under this section by the holder of the grandfathered groundwater right is deemed to be groundwater for all purposes of chapter 2 of this title as if the holder had withdrawn it from a well. The holder is responsible for all records, reports and fees required by chapter 2 of this title relating to the water received. H. The director shall establish a long-term storage account for the Indian community in accordance with section 45-852.01 and each year shall credit to that long-term storage account ninety-five per cent of the water received by the holder of the grandfathered groundwater right during the preceding year that meets the requirements of subsection F of this section. I. Long-term storage credits accrued pursuant to this section may be used or assigned in any manner that is consistent with this chapter. J. The maximum amount of long-term storage credits that may be accrued by an Indian community under this section in any year is ten thousand acre-feet. Sec. 3. Section 45-841.01, Arizona Revised Statutes, as amended by this act, is amended to read: 45-841.01. Accrual of long-term storage credits; Indian water rights settlements A. To further the implementation of Indian water rights settlements in this state, an Indian community may accrue long-term storage credits as prescribed by this section. B. This section applies only to the settlement of a water rights claim by a federally recognized Indian community in this state if the settlement provides for off-reservation 58 storage of its central Arizona project water and only after the settlement results in a dismissal with prejudice of a class action claim that has been pending in the United States district court for more than five years. C. Before accruing any long-term storage credits under this section, both of the following conditions apply: 1. A party seeking to participate in the accrual of long-term storage credits under this section shall file written notice with the director that the requirements of subsection B of this section have been met. 2. The director shall find that the requirements of subsection B of this section have been met. D. Before accruing any long-term storage credits under this section, a party seeking to participate in the accrual of long-term storage credits under this section shall file with the director all of the following information: 1. A written notice of the party's PARTIES' intent to begin the delivery of central Arizona project water that is WAS MADE available to the Indian community BY THE WATER RIGHTS SETTLEMENT to the holder of grandfathered groundwater rights in an active management area. 2. A sworn statement by the holder of the grandfathered groundwater rights that the holder will use the water delivered off of Indian community lands on a gallon-for-gallon substitute basis instead of groundwater that otherwise would have been pumped pursuant to the grandfathered groundwater rights from within an active management area. 3. A listing and description of the grandfathered groundwater rights that will not be exercised by the holder because of the delivery of the water that is delivered by the Indian community. 4. A hydrologic report assessing the effect of nonexercise of grandfathered groundwater rights under this section on any underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal for the grandfathered groundwater rights. E. The director shall review the hydrologic report filed pursuant to subsection D, paragraph 4 of this section and shall make such modifications to the state demonstration project's underground storage facility permit as the director deems appropriate. F. If the director determines that the parties have complied with subsection D of this section, the Indian community may begin accruing long-term storage credits for the delivery of central Arizona project water to the holder of the grandfathered groundwater rights, but only if the following apply: 59 1. By March 31 of each year, the holder of the grandfathered groundwater rights files an annual report with the director for the preceding calendar year. The annual report shall include the following information: (a) The total quantity of water received from the Indian community during the year for use by the holder under this section. (b) A listing of those grandfathered groundwater rights that were not exercised during the year by the holder because of the receipt of central Arizona project water delivered by the Indian community. (c) Such other information as the director may reasonably require. 2. The director finds that the water reported as received by the grandfathered groundwater right holder was used on a gallon-for-gallon substitute basis for groundwater. 3. The Indian community has offered to sell the Arizona water banking authority ten per cent of any long-term storage credits accruable by the Indian community under this section at a price per acre-foot at the time of sale equal to the authority's cost of delivering and storing water at an underground storage facility that was constructed as a state demonstration project and that is located within ten miles of the point of withdrawal of any of the grandfathered groundwater rights identified in the list filed with the director pursuant to subsection D, paragraph 3 of this section, except that any credits purchased pursuant to such offer may not be recovered within five miles of the exterior reservation boundary of the Indian community. G. The water that is received under this section by the holder of the grandfathered groundwater right is deemed to be groundwater for all purposes of chapter 2 of this title as if the holder had withdrawn it from a well. The holder is responsible for all records, reports and fees required by chapter 2 of this title relating to the water received. H. The director shall establish a long-term storage account for the Indian community in accordance with section 45-852.01 and each year shall credit to that long-term storage account ninety-five per cent of the water received by the holder of the grandfathered groundwater right during the preceding year that meets the requirements of subsection F of this section. I. Long-term storage credits accrued pursuant to this section may be used or assigned in any manner that is consistent with this chapter. J. The maximum amount of long-term storage credits that may be accrued by an Indian community under this section in any year is ten thousand acre-feet. Sec. 4. Section 45-2423, Arizona Revised Statutes, is amended to read: 45-2423. Powers and duties of authority 60 A. The authority, acting through its commission, shall: 1. Administer the Arizona water banking fund in accordance with this chapter. 2. Coordinate its staffing needs with the director and CAWCD. 3. Coordinate the storage of water and distribution and extinguishment of long-term storage credits with the director in accordance with this chapter and the water management objectives set forth in chapter 2 of this title. 4. Coordinate with CAWCD for the purchase, delivery and storage of Colorado river water delivered through the central Arizona project in accordance with this chapter. 5. Coordinate and confer with state agencies, municipal corporations, special districts, authorities, other political subdivisions, private entities, Indian communities and the United States on matters within their jurisdiction relating to the policy and purposes of this chapter. 6. Determine, on an annual basis, the quantity of Colorado river water to be stored by the authority and where that storage will occur. 7. Account for, hold and distribute or extinguish long-term storage credits in accordance with this chapter. 8. Comply with all aspects of chapter 3.1 of this title. 9. PERFORM THE AUTHORITY'S REPLENISHMENT RESPONSIBILITIES UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE WITH MONIES APPROPRIATED FROM THE STATE GENERAL FUND BY THE LEGISLATURE FOR THAT PURPOSE AND TO THE EXTENT THAT MONIES APPROPRIATED BY THE LEGISLATURE FOR THAT PURPOSE ARE NOT AVAILABLE, WITH MONIES COLLECTED IN THE PINAL ACTIVE MANAGEMENT AREA PURSUANT TO SECTION 45-611, SUBSECTION C, PARAGRAPH 3. 9. 10. Adopt an official seal for the authentication of its records, decisions and resolutions. 10. 11. Keep the minutes of its meetings and all records, reports and other information relating to its work and programs in permanent form, systematically indexed and filed. B. The authority, acting through its commission, may: 1. Apply for and hold water storage permits. 2. Accrue, exchange, assign, lend and hold long-term storage credits in accordance with this chapter. 3. Exchange Colorado river water for any type of water in accordance with chapter 4 of this title. 4. Enter into water banking services agreements. 5. Charge fees for water banking services. 61 6. Apply for and hold any water quality permit required for water storage by the department of environmental quality under title 49, chapter 2, article 3 or by federal law. 7. Make and execute all contracts, including intergovernmental agreements pursuant to title 11, chapter 7, article 3, that shall be signed by the chairperson, or in the chairperson's absence the vice-chairperson, and attested by the secretary, necessary to: (a) Obtain for storage Colorado river water delivered through the central Arizona project. Agreements by which the authority obtains Colorado river water are exempt from the requirements of title 41, chapter 23. (b) Obtain effluent for storage but only after the authority has stored all available excess Central Arizona project water or when central Arizona project water is otherwise unavailable or undeliverable. (c) Affiliate water storage permits held by the authority with storage facility permits. (d) Store Colorado river water at permitted storage facilities. (e) Distribute long-term storage credits earned by the authority to make water available to municipal and industrial users of Colorado river water in this state that are inside or outside of the CAWCD service area, in accordance with the provisions of this chapter. (f) Store Colorado river water in Arizona on behalf of appropriately authorized agencies in California and Nevada. (g) Cause a decrease in Arizona diversions from the Colorado river, ensuring that Arizona will use less than its full entitlement to Colorado river water in years in which California and Nevada agencies are contractually authorized to call on the water stored on their behalf by the authority. (h) Distribute long-term storage credits earned by the authority on behalf of agencies in California and Nevada to Colorado river water users in Arizona to use in place of Colorado river water that would have otherwise been used by those Arizona users. (i) REPLENISH WATER PURSUANT TO CHAPTER 15, ARTICLE 3 OF THIS TITLE, INCLUDING ENTERING INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE GILA RIVER INDIAN COMMUNITY PURSUANT TO SECTION 45-2624. 8. Sue and be sued. 9. Perform all other acts necessary for the authority to carry out its purposes, powers and duties in accordance with this chapter. 10. Submit a request for a general fund appropriation to the legislature each year. A request shall be accompanied by a budget detailing how the appropriation would be used and justifying the need for the appropriation. 62 11. Form temporary committees as deemed necessary by the authority to provide the authority with advice on issues identified by the authority. Advisory committees may consist of members of the public selected by the authority, members of the authority and authority staff. 12. Purchase long-term storage credits accrued by an Indian community pursuant to section 45-841.01, provided such long-term storage credits are distributed or extinguished in accordance with the rules of operation specified in section 45-2457 for the funds used by the authority to purchase the credits. Sec. 5. Section 45-2425, Arizona Revised Statutes, is amended to read: 45-2425. Arizona water banking fund A. The Arizona water banking fund is established and shall include subaccounts based on funding sources. The authority shall administer the banking fund in accordance with this chapter. B. The banking fund consists of all of the following: 1. Monies appropriated from the state general fund by the legislature FOR WATER BANKING PURPOSES OTHER THAN REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE. 2. MONIES APPROPRIATED FROM THE STATE GENERAL FUND BY THE LEGISLATURE FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE. 2. 3. Reimbursement for the distribution of long-term storage credits, collected by the authority in accordance with section 45-2457, subsection B, paragraph 2. 3. 4. Monies paid to the authority by the recipients of in lieu water at a groundwater savings facility, in accordance with section 45-2455, subsection C. 4. 5. Monies collected in accordance with section 45-611, subsection C, paragraph 3. 5. 6. Monies deposited in the banking fund in accordance with section 48-3715.03, subsection B. 6. 7. Monies paid to the authority by agencies that have entered into interstate water banking agreements with the authority in accordance with section 45-2471. 7. 8. Monies paid to the authority by persons and Indian communities in this state that have entered into water banking services agreements with the authority in accordance with section 45-2458. C. In addition to the monies prescribed in this section, the authority may accept any gifts, grants or donations and deposit those monies in the banking fund. D. Monies in the banking fund are exempt from lapsing under section 35-190. On notice from the authority, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the banking fund. 63 E. The authority may use the banking fund to pay all reasonable expenses incurred in carrying out its duties and responsibilities in accordance with this chapter. Sec. 6. Section 45-2457, Arizona Revised Statutes, is amended to read: 45-2457. Accounting; rules of operation A. The authority shall develop an accounting system for the long-term storage credits accrued by the authority. The accounting system shall be designed to allow the authority to determine which funding source of the banking fund paid for each longterm storage credit accrued by the authority. B. The authority shall operate in accordance with all of the following rules of operation: 1. The authority shall reserve a reasonable number of long-term storage credits accrued with general fund appropriations, OTHER THAN GENERAL FUND APPROPRIATIONS FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, for the benefit of municipal and industrial users of Colorado river water in this state that are outside of the service area of CAWCD. 2. The authority may distribute long-term storage credits accrued with general fund appropriations, OTHER THAN GENERAL FUND APPROPRIATIONS FOR REPLENISHMENT UNDER CHAPTER 15, ARTICLE 3 OF THIS TITLE, for both of the following: (a) To make water available to a municipal and industrial user of Colorado river water in this state that is outside of the service area of CAWCD, if both of the following apply: (i) The municipal and industrial user would otherwise suffer a water shortage. The authority may distribute long-term credits to the extent reasonably necessary to offset the water shortage. (ii) The authority collects reimbursement for the cost to the authority of replacing the long-term storage credits distributed. The authority may replace the long-term storage credits in any year it deems appropriate but shall use good faith efforts to replace the long-term storage credits at a reasonable cost to the person who is responsible for reimbursing the authority for the credits distributed. (b) To make water available to CAWCD to the extent necessary for CAWCD to meet the demands of its municipal and industrial subcontra

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