watershed health; survey; use

SB1386 - 572R - I Ver

REFERENCE TITLE:
watershed health; survey; use

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1386

Introduced by

Senator
Sundareshan

AN
ACT

amending sections 45-101, 45-105, 45-151,
45-152.01 and 45-172, Arizona Revised Statutes; relating to waters.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 45-101, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-101.

Definitions

In this title, unless the context otherwise requires:

1. "Appropriator" means the person or
persons initiating or perfecting the right to use appropriable water based on
state law, or the person's successor or successors in interest.

2. "Department" means the department of
water resources.

3. "Director" means the director of water
resources, who is also the director of the department.

4. "Effluent" means water that has been
collected in a sanitary sewer for subsequent treatment in a facility that is
regulated pursuant to title 49, chapter 2. Such water remains
effluent until it acquires the characteristics of groundwater or surface water.

5. "Groundwater"
:

(
a
)
Means
water under the surface of the earth regardless of the geologic structure in
which
it

the water
is standing or
moving.
Groundwater

(
b
)
Does
not include water flowing in underground streams with ascertainable beds and
banks.

6. "Interstate stream" means any stream
constituting or flowing along the exterior boundaries of this state, and any
tributary originating in another state or foreign country and flowing into or
through this state.

7. "Riparian area"
:

(
a
)
Means
a geographically delineated area with distinct resource values
,

that is characterized by deep-rooted plant species that depend on having roots
in the water table or its capillary zone and that occurs within or adjacent to
a natural perennial or intermittent stream channel or within or adjacent to a
lake, pond or marsh bed maintained primarily by natural water
sources.
Riparian area

(
b
)
Does
not include areas in or adjacent to ephemeral stream channels, artificially
created stockponds, man-made storage reservoirs constructed primarily for
conservation or regulatory storage, municipal and industrial ponds or man-made
water transportation, distribution, off-stream storage and collection systems.

8. "Sanitary sewer" means any pipe or
other enclosed conduit that carries, among other substances, any water-carried
wastes from the human body from residences, commercial buildings, industrial
plants or institutions.

9. "Surface water" means the waters of all
sources, flowing in streams, canyons, ravines or other natural channels, or in
definite underground channels, whether perennial or intermittent, floodwater,
wastewater or surplus water, and of lakes, ponds and springs on the
surface. For the purposes of administering this title, surface water
is deemed to include central Arizona project water.

10. "Watershed health uses"
means water that is conserved in a natural watercourse and not otherwise used
and that supports the attributes of watershed health for an individual
watershed as prescribed in the report required by section 45-105, subsection B.

END_STATUTE

Sec. 2. Section 45-105, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-105.

Powers and duties of director

A. The director may:

1. Formulate plans and develop programs for the
practical and economical development, management, conservation and use of
surface water, groundwater and the watersheds in this state, including the
management of water quantity and quality.

2. Investigate works, plans or proposals pertaining
to surface water and groundwater, including management of watersheds, and
acquire, preserve, publish and disseminate related information the director
deems advisable.

3. Collect and investigate information on and
prepare and devise means and plans for the development, conservation and use of
all waterways, watersheds, surface water, groundwater and groundwater basins in
this state and of all related matters and subjects, including irrigation,
drainage, water quality maintenance, regulation of flow, diversion of running
streams adapted for development in cooperating with the United States or by
this state independently, flood control, use of water power, prevention of soil
waste and storage, conservation and development of water for every useful
purpose.

4. Measure, survey and investigate the water
resources of this state and their potential development and cooperate and
contract with agencies of the United States for such purposes.

5. Acquire, hold and dispose of property, including
land, rights-of-way, water and water rights, as necessary or
convenient for the performance of the groundwater and water quality management
functions of the department.

6. Acquire, other than by condemnation, construct,
improve, maintain and operate early warning systems for flood control purposes
and works for the recovery, storage, treatment and delivery of water.

7. Accept grants, gifts or donations of money or
other property from any source, which may be used for any purpose consistent
with this title. All property acquired by the director is public
property and is subject to the same tax exemptions, rights and privileges
granted to municipalities, public agencies and other public entities.

8. Enter into an interagency contract or agreement
with any public agency pursuant to title 11, chapter 7, article 3 and contract,
act jointly or cooperate with any person to carry out the purposes of this
title.

9. Prosecute and defend all rights, claims and
privileges of this state respecting interstate streams.

10. Initiate and participate in conferences,
conventions or hearings, including congressional hearings, court hearings or
hearings of other competent judicial or quasi-judicial departments,
agencies or organizations, and negotiate and cooperate with agencies of the
United States or of any state or government and represent this state concerning
matters within the department's jurisdiction.

11. Apply for and hold permits and licenses from the
United States or any agency of the United States for reservoirs, dam sites and
rights-of-way.

12. Receive and review all reports, proposed
contracts and agreements from and with the United States or any agencies, other
states or governments or their representatives and recommend to the governor
and the legislature action to be taken on such reports, proposed contracts and
agreements. The director shall take action on such reports, if
authorized by law, and review and coordinate the preparation of formal comments
of this state on both the preliminary and final reports relating to water
resource development of the United States army corps of engineers, the United
States secretary of the interior and the United States secretary of
agriculture, as provided for in the flood control act of 1944 (58 Stat. 887; 33
United States Code section 701-1).

13. Contract with any person for imported water or
for the acquisition of water rights or rights to withdraw, divert or use
surface water or groundwater as necessary for the performance of the
groundwater management functions of the director prescribed by chapter 2 of
this title.� If water becomes available under any contract executed under this
paragraph, the director may contract with any person for its delivery or
exchange for any other water available.

14. Recommend to the administrative heads of
agencies, boards and commissions of this state, and political subdivisions of
this state, rules to promote and protect the rights and interests of this state
and its inhabitants in any matter relating to the surface water and groundwater
in this state.

15. Conduct feasibility studies and remedial
investigations relating to groundwater quality and enter into contracts and
cooperative agreements under section 104 of the comprehensive environmental
response, compensation, and liability act of 1980 (P.L. 96-510) to
conduct such studies and investigations.

16. Dispose informally by stipulation, agreed
settlement, consent order or alternative means of dispute resolution, including
arbitration, if the parties and director agree, or by default of any case in
which a hearing before the director is required or allowed by law.

17. Cooperate and coordinate with the appropriate
governmental entities in Mexico regarding water planning in areas near the
border between Mexico and Arizona and for the exchange of relevant hydrological
information.

B. The director shall:

1. Exercise and perform all powers and duties vested
in or imposed on the department and adopt and issue rules necessary to carry
out the purposes of this title.

2. Administer all laws relating to groundwater, as
provided in this title.

3. Be responsible for the supervision and control of
reservoirs and dams of this state and, when deemed necessary, conduct
investigations to determine whether the existing or anticipated condition of
any dam or reservoir in this state is or may become a menace to life and
property.

4. Coordinate and confer with and may contract with:

(a) The Arizona power authority, the game and fish
commission, the state land department, the Arizona outdoor recreation
coordinating commission, the Arizona commerce authority, the department of
health services, active management area water authorities or districts and
political subdivisions of this state with respect to matters within their
jurisdiction relating to surface water and groundwater and the development of
state water plans.

(b) The department of environmental quality with
respect to title 49, chapter 2 for its assistance in the development of state
water plans.

(c) The department of environmental quality
regarding water plans, water resource planning, water management, wells, water
rights and permits, and other appropriate provisions of this title pertaining
to remedial investigations, feasibility studies, site prioritization, selection
of remedies and implementation of the water quality assurance revolving fund
program pursuant to title 49, chapter 2, article 5.

(d) The department of environmental quality
regarding coordination of databases that are necessary for activities conducted
pursuant to title 49, chapter 2, article 5.

5. Cooperate with the Arizona power authority in the
performance of the duties and functions of the authority.

6. Maintain a permanent public depository for
existing and future records of stream flow, groundwater levels and water
quality and other data relating to surface water and groundwater.

7. Maintain a public docket of all matters before
the department that may be subject to judicial review pursuant to this title.

8. Investigate and take appropriate action on any
complaints alleging withdrawals, diversions, impoundments or uses of surface
water or groundwater that may violate this title or the rules adopted pursuant
to this title.

9. Adopt an official seal for the authentication of
records, orders, rules and other official documents and actions.

10. Provide staff support to the Arizona water
protection fund commission established by chapter 12 of this title.

11. Exercise and perform all powers and duties
invested in the chairperson of the Arizona water banking authority commission
as prescribed by chapter 14 of this title.

12. Provide staff support to the Arizona water
banking authority established by chapter 14 of this title.

13. In the year following each regular general
election, present information to the committees with jurisdiction over water
issues in the house of representatives and the senate.� A written report is not
required but the presentation shall include information concerning the
following:

(a) The current status of the water supply in this
state and any likely changes in that status.

(b) Issues of regional and local drought effects,
short-term and long-term drought management efforts and the
adequacy of drought preparation throughout the state.

(c) The status of current water conservation
programs in this state.

(d) The current state of each active management area
and the level of progress toward management goals in each active management
area.

(e) Issues affecting management of the Colorado
river and the reliability of this state's two million eight hundred thousand
acre-foot allocation of Colorado river water, including the status of
water supplies in and issues related to the Colorado river basin states and
Mexico.

(f) The status of any pending or likely litigation
regarding surface water adjudications or other water-related litigation
and the potential impacts on this state's water supplies.

(g) The status of Indian water rights settlements
and related negotiations that affect this state.

(h) Other matters related to the reliability of this
state's water supplies, the responsibilities of the department and the adequacy
of the department's and other entities' resources to meet this state's water
management needs.

14.
Not later than December 1, 2023
and
On or before December 1 of each year
thereafter
,
prepare and issue a water supply and demand assessment for at least six of the
fifty-one groundwater basins established pursuant to section 45-403. The
director shall ensure that a water supply and demand assessment is completed
for all groundwater basins and initial active management areas at least once
every five years. The director may contract with outside entities to
perform some or all of the assessments and those outside entities shall be
identified in the assessment.

15. on or before December 31 every
three years after the initial preliminary survey, issue a report that includes
an assessment of the overall health of each watershed in this state.� Any
agency or political subdivision of this state that has information relevant to
developing the survey and report prescribed by this paragraph, including the
determinations, assessments and recommendations prescribed by this paragraph,
shall cooperate with the director and shall timely provide information requested
by the director. The assessment of the overall health of each
watershed in this state shall be based on an evaluation of the following
attributes of the watershed:

(
a
) Hydrology.

(
b
) Landscape
condition.

(
c
) Habitat
condition.

(
d
) Geomorphology.

(
e
) Water quality.

(
f
) Biological
condition, including the biodiversity of PLANTS, animals and aquatic species.

(
g
) Threats to
or vulnerabilities of the watershed that impact the attributes prescribed by
this paragraph.

END_STATUTE

Sec. 3. Section 45-151, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-151.

Right of appropriation; permitted uses; water rights in
stockponds

A. Any person,
the
this
state
of Arizona
or a political
subdivision
thereof
of this state

may appropriate unappropriated water for domestic, municipal, irrigation, stock
watering, water power, recreation, wildlife, including fish, nonrecoverable
water storage pursuant to section 45-833.01
,

or
mining uses
or watershed health uses
,
for
his
personal use or for delivery to
consumers. The person,
the
this

state
of Arizona
or a political subdivision
thereof
of this state
first appropriating the water shall have the
better right.

B. To effect the beneficial use, the person,
the
this
state
of Arizona

or a political subdivision
thereof
of this
state
appropriating the water may construct and maintain reservoirs,
storage facilities pursuant to chapter 3.1 of this title, dams, canals,
ditches, flumes and other necessary waterways
or use existing
waterways
.

C. A water right in a stockpond, certified pursuant
to article 10 of this chapter, shall be recognized as if such water had been
appropriated pursuant to this article.
END_STATUTE

Sec. 4. Section 45-152.01, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-152.01.

Instream flow applications; process; definition

A. In addition to the information prescribed in
section 45-152, any person, including the United States, this state or a
municipality, who files an instream flow application after
the
effective date of this

section

August 2, 2012
shall comply with the following:

1. The applicant shall submit at least five years of
streamflow measurement data to support the proposed beneficial use
,
which shall be submitted at the time the application is
filed.� The director shall not accept for filing an instream flow application
that is not accompanied by at least five years of continuous streamflow
measurement data. The streamflow data submitted shall consist of
gauged on-site measurements of available water flow from the area in
which the claimed beneficial use occurs.

2. The instream flow application shall describe the
proposed beneficial use and shall specify both of the following:

(a) The amount of streamflow required for the
proposed beneficial use.

(b) The availability of the requested flows during
claimed periods of beneficial use.

B. Applications that are submitted after
the effective date of this section
August 2, 2012

shall be rejected if the application does not comply with this section.

C. This section does not apply to
applications for a permit to make an appropriation of water for watershed
health uses under section 45-152.

C.

D.
For
the purposes of this section, "instream flow application" means an
application for a permit to make an appropriation of water for purposes of
recreation or wildlife, including fish, in a specific stream reach without
diverting the water from the stream.
END_STATUTE

Sec. 5. Section 45-172, Arizona Revised
Statutes, is amended to read:

START_STATUTE
45-172.

Transfer of water rights; application; limitations; required
consent

A. A water right may be severed from the land to
which it is appurtenant or from the site of its use if for other than
irrigation purposes and with the consent and approval of the owner of such
right may be transferred for use for irrigation of agricultural lands or for
municipal,
watershed health,
stock watering, power and
mining purposes and to the state or its political subdivisions for use for
recreation and wildlife purposes, including fish, without losing priority
theretofore established, subject to the following limitations and conditions:

1. Except as otherwise provided in this section no
such severance or transfer shall be made unless approved by the director, and
the approval of the director shall prescribe the conditions of the approval.

2. Vested or existing rights to the use of water
shall not be affected, infringed
upon nor

on
or
interfered with, and in no event shall the water diverted or used
after the transfer of such rights exceed the vested rights existing at the time
of such severance and transfer, and the director shall by order so define and
limit the amount of water to be diverted or used annually subsequent to such
transfer.

3. The water rights sought to be transferred shall
have been lawfully perfected under the laws of the territory or the state of
Arizona and shall not have thereafter been forfeited or abandoned.

4. No such severance or transfer of water rights
shall be permitted or allowed from lands within the exterior boundaries of any
irrigation district, agricultural improvement district or water users'
association without first having obtained the written consent and approval of
such irrigation district, agricultural improvement district or water users'
association.

5. No right to the use of water on or from any
watershed or drainage area
which

that
supplies
or contributes water for the irrigation of lands within an irrigation district,
agricultural improvement district or water users' association shall be severed
or transferred without the consent of the governing body of such irrigation
district, agricultural improvement district or water users'
association. All proposed applications for the severance and
transfer of a right to use water of or from any watershed or drainage area
which

that
supplies or contributes water
for the irrigation of lands within any irrigation district, agricultural
improvement district or water users' association shall be submitted to the
governing body of such irrigation district, agricultural improvement district
or water users' association
prior to

before

the filing of such application with the director. Within
forty-five days after the receipt of the application such governing body
shall reject or approve the proposed application. Failure of such
governing body to approve or reject the proposed application within forty-five
days after receipt shall constitute approval of the proposed application by
such governing body. No application for the severance or transfer of
a right to the use of water of or from any watershed or drainage area
which

that
supplies or contributes water
for the irrigation of lands within any irrigation district, agricultural
improvement district or water users' association shall be accepted for filing
by the director unless accompanied by the written consent of the governing body
of such irrigation district, agricultural improvement district or water users'
association to the proposed application or by satisfactory evidence that such
governing body failed to either accept or reject the proposed application
within forty-five days after receipt by such governing body.

6. A severance and transfer of an irrigation water
right appurtenant to lands within the boundaries of an irrigation district to
other lands within the boundaries of the same irrigation district for
agricultural use may be accomplished by the exclusion of lands to which a water
right is appurtenant from within the boundaries of an irrigation district, and
the inclusion in lieu of other lands within the boundaries of such irrigation
district. Such severance and transfer of a water right shall require
the consent of only the irrigation district within which the affected lands are
situated and of the owners of the lands affected by the severance and
transfer. No proceedings before
nor

or
approval by the director shall be required to accomplish
such severance and transfer.

7. An application for severance and transfer of a
water right shall be filed with the director. The director shall
give notice of the application by publication once a week for three successive
weeks in a newspaper of general circulation in the county or counties in which
the watershed or drainage area is located. The notice shall state
that any interested person may file written objections to the proposed
severance and transfer with the director within thirty days after the last
publication of the notice. In appropriate cases, including cases in
which an objection has been filed, an administrative hearing may be held before
the director's decision on the application if the director deems a hearing
necessary.

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

Sec. 6.
Survey of status
of waters of this state; definitions; delayed repeal

A. The director of water
resources shall:

1. Establish a set of
standard measures, using the best available science, to define ecological water
needs in this state. The standard measures established by the
director of water resources shall include criteria for examining the
relationship between ecological water needs, groundwater withdrawal and surface
water appropriations in this state.

2. On or before December
31, 2026, publish a preliminary survey of the status of the waters of this
state, including the following:

(a) A watershed by
watershed description of the waters of this state, including an assessment of
the overall health of the watershed as prescribed by section 45-105,
subsection B, Arizona Revised Statutes, as amended by this act.

(b) A description of each
subwatershed in which there is insufficient water to satisfy the ecological
water needs that are identified as prescribed in paragraph 1 of this
subsection.

(c) A determination of the
appropriate methods and steps that are necessary to monitor, maintain, improve
and restore the ecosystems of each watershed.

(d) A recommendation of any
statutory changes that are needed to facilitate actions supporting the
ecological water needs of this state.

3. Provide for notice and
comment of the preliminary survey by:

(a) Posting on the
department of water resources' website the preliminary survey prescribed by
paragraph 2 of this subsection, copies of all notices required by section
41-1022, Arizona Revised Statutes, and all proposed rulemakings.

(b) Notifying
by first class mail, fax or email each person who has made a timely request to
the department of water resources for notification of the preliminary survey
prescribed by paragraph 2 of this subsection or for notification of all proposed
rulemakings under section 41-1022, Arizona Revised Statutes.

(c) Holding an open meeting
and taking public comment not sooner than sixty days after the department of
water resources provides notification under subdivisions (a) and (b) of this
paragraph.

(d) Responding in writing
to all public comments, whether received at the hearing or otherwise, that are
received by a date announced by the director of water resources in the initial
notice.

4. Post the final survey
and responses to all public comments received on the department of water
resources' website for a period of not less than six months.

B. Any agency or political
subdivision of this state that has information relevant to developing the
survey, the determinations and the recommendations prescribed by this section
shall cooperate with the director of water resources and shall timely provide
information requested pursuant to this section by the director of water
resources.

C. For the purposes of this
section:

1. "Ecological water
needs" means water that is sufficient to sustain freshwater ecosystems,
including riparian areas, the wildlife habitat and human livelihoods and well-being
that depend on those ecosystems.

2. "Groundwater"
has the same meaning prescribed in section 45-101, Arizona Revised Statutes, as
amended by this act.

3. "Surface
water" has the same meaning prescribed in section 45-101, Arizona
Revised Statutes, as amended by this act.

D. This section is repealed
from and after September 30, 2028.