assured water supply; commingling

HB2026 - 572R - H Ver

House Engrossed

assured water supply;
commingling

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2026

AN
ACT

Amending section 45-576, Arizona
Revised Statutes; RELATING to groundwater.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 45-576, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-576.

Certificates of assured water supply; designated cities, towns
and private water companies; exemptions; rules; definition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

M. For the purposes of this section, the director
shall find that any volume of groundwater or stored water recovered outside the
area of impact of storage that is subject to groundwater savings credits issued
pursuant to section 45-465.05 or rules adopted by the director pursuant
to section 45-465.05, subsection L and pledged to an application for a
certificate or designation of assured water supply is exempt from the physical
availability requirement for an assured water supply. This
subsection does not exempt:

1. Any volume of groundwater or stored water
recovered outside the area of impact of storage that is subject to groundwater
savings credits from any requirement for an assured water supply other than the
physical availability requirement.

2. A water supply to be stored underground from the
requirement to demonstrate that the supply will be physically available for
storage.

n. For the purposes of determining
whether sufficient groundwater, surface water or effluent of adequate quality
will be continuously available to satisfy the water needs of the proposed use,
the director may consider only the proposed source or sources of the supply
dedicated to the proposed use regardless of whether the water is distributed
through a water delivery system that is commingled with other sources of water
supply.

N.

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

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

(a) The existing rate of decline.

(b) The proposed withdrawals.

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

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

3. The financial capability has been demonstrated to
construct the water facilities necessary to make the supply of water available
for the proposed use, including a delivery system and any storage facilities or
treatment works. The director may accept evidence of the
construction assurances required by section 9-463.01, 11-822 or 32-2181
to satisfy this requirement.
END_STATUTE