State of Arizona
DEPARTMENT OF WATER
RESOURCES ANNUAL REPORT

FY 2009-2010

ADWR’S OPERATIONS
In 1980, the Arizona Department of Water Resources (ADWR) was created to
ensure dependable long-term water supplies for Arizona's growing communities.1
ADWR succeeded the “authority, powers, duties and responsibilities of the
Arizona Water Commission and the State Water Engineer relating to surface
water, groundwater and dams and reservoirs.” A.R.S. § 45-103(A). The Director
of ADWR “has general control and supervision of surface water, its appropriation
and distribution, and of groundwater to the extent provided by this title, except
distribution of water reserved to special officers appointed by courts under
existing judgments or decrees.” A.R.S. § 45-103(B).
To carry out its statutory responsibilities, ADWR administers state water laws
(except those related to water quality), explores methods of augmenting water
supplies to meet future demands, and works to develop public policies that
promote conservation and equitable distribution of water. ADWR oversees the
use of surface and groundwater resources under state jurisdiction and negotiates
with external political entities to protect and augment Arizona's water supply.
Groundwater Management
To address groundwater depletion in the state's most populous areas, the state
Legislature enacted the Groundwater Code in 1980 and directed ADWR to
implement its provisions. The goal of the Code is twofold: 1) to control severe
groundwater depletion and 2) to provide the means for allocating Arizona's limited
groundwater resources to most effectively meet the state's changing water needs.
This effort to manage Arizona's groundwater resources was so progressive that in
1986 the Code was named one of the ten most innovative programs in state and
local government by the Ford Foundation and Harvard University. When granting
the award, it was noted that no other state had attempted to manage its water
resources so comprehensively. Accordingly, Arizona built consensus around its
policy and then followed through to make it work in practice.
Active Management Areas
Areas where groundwater depletion is most severe are designated as Active
Management Areas (AMAs). There are five AMAs: Prescott, Phoenix, Pinal,
Tucson, and Santa Cruz. These areas are subject to regulation pursuant to the
Groundwater Code. In the Phoenix, Prescott, and Tucson AMAs, the management
goal is to achieve safe-yield by the year 2025. Safe-yield is accomplished when
no more groundwater is being withdrawn than is being annually replaced. In the
1

This year, the Legislature approved ADWR’s continuation for ten years, the third time ADWR has been
continued since its inception in 1980. See Laws 2010, Chapter 15.

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Pinal AMA, where the economy is primarily agricultural, the management goal is
to preserve that economy for as long as feasible, while considering the need to
preserve groundwater for future non-irrigation uses. The goal of the Santa Cruz
AMA is to maintain its current safe-yield status and prevent local water tables
from experiencing long-term decline. Each AMA carries out its programs in a
manner consistent with these goals while considering and incorporating the unique
character of each AMA and its water users.
Management Plans
Management plans reflect the evolution of the Groundwater Code, moving the
AMAs toward their long-term water management goals. Management plans are
required for each AMA for five sequential management periods extending from
1980 through 2025. ADWR is in the initial stages of formulating the Fourth
Management Plan, scheduled for adoption by 2012. The provisions of the Fourth
Management Plan will be in effect through 2020.
Assured and Adequate Water Supply Programs
The Groundwater Code established requirements to ensure that water supplies are
adequate to meet the long-term needs of new development. The Assured Water
Supply Program requires developers of new subdivisions within AMAs to
demonstrate that sufficient water supplies of adequate quality are physically,
continuously and legally available for 100 years and that any groundwater use is
consistent with the AMA’s management plan and management goal. Rules
associated with this program promote the use of renewable supplies, such as
effluent and water delivered via the Central Arizona Project (CAP), as a
component of an assured water supply.
For areas outside AMAs, the Adequate Water Supply Program requires that the
developer inform potential buyers of the water availability for the property, but
does not prevent the sale of property when a 100-year supply is not available
unless the city, town or county in which the property is located has adopted a
mandatory water adequacy ordinance. Requirements under these programs serve
to protect consumers from the sale of subdivided land that lacks an available longterm source of water.
Recharge Programs
The recharge program allows injection or infiltration of surface water or treated
wastewater into an aquifer for storage. Through the recharge program, surplus
renewable water supplies can be stored for use in the future or as a means of
treating renewable supplies for annual use.
Regional Planning

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ADWR conducts regional water resource planning. Regional planning efforts
include technical studies of local areas and assistance in projecting future water
demands. ADWR produces the Arizona Water Atlas, an extensive inquiry into the
state's water status, to assist long-term planning.
Rural Water Initiative
ADWR participates in or facilitates 17 Rural Watershed Groups that represent
water interests outside AMAs. ADWR provides technical and policy advice and
assistance to these groups several times per year. In some cases, ADWR attends
multiple meetings per month for the groups. The activities of the different Rural
Water Groups vary greatly from group to group. In areas such as the Upper San
Pedro (Sierra Vista area), Coconino Plateau (Flagstaff and surrounding areas),
Verde River (Cottonwood to Camp Verde), Yuma, Bullhead City and Lake
Havasu City, and Mogollon Rim (Payson and surrounding areas), significant water
resources planning and development is either proposed or underway to meet the
water supply needs of the area. Through their efforts, significant changes in water
law and programs have been made in the last four years. ADWR has a Special
Line Item Appropriation that is used to fund personnel and water resources
investigations to assist the local communities with long-term planning and
management programs.
Surface Water Management
ADWR's surface water activities are focused in three areas: Adjudications,
Colorado River Management, and Dam Safety and Flood Mitigation.
Adjudications
The State of Arizona is conducting general stream adjudications of water rights in
two major portions of the state: the Gila and Little Colorado River systems and
water sources. Adjudications are judicial proceedings in the State Superior Court
for Maricopa and Apache Counties to determine the nature, extent and relative
priority of the water rights of all persons in each river system and source. This
includes water and claims to surface water based upon state law and federal law.
ADWR's role in the process is to provide both administrative and technical
assistance to the State Superior Court.
Colorado River Management
Renewable water supplies of the Colorado River serve seven states, several Indian
tribes and Mexico. ADWR strives to promote, protect, and comprehensively
manage Arizona's apportionment of 2.8 million acre-feet annually of Colorado
River water. This apportionment includes Arizona's water supply for future
growth and is critical to the state's water management policies.

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Dam Safety and Flood Mitigation
ADWR is responsible for the supervision of non-federal dams to reduce potential
loss of life and damage to property; the management of the statewide flood
warning system; assisting communities that participate in the National Flood
Insurance Program; and establishing State Standards for Floodplain Management.
Water Rights Administration
Groundwater
In AMAs, groundwater pumping from a non-exempt well requires a groundwater
right or withdrawal authority from ADWR. State law assesses withdrawal fees
and requires annual groundwater withdrawal and use reports to be filed for
pumping from non-exempt wells within AMAs. Exempt wells (non-irrigation
wells having a maximum pumping capacity of 35 gpm or less) are not subject to
these requirements. Groundwater use outside AMAs is not regulated and does not
require a water right. However, drilling a well anywhere in the state requires that
a Notice of Intent to Drill be filed with ADWR and also requires the well to be
constructed in compliance with ADWR’s minimum well construction standards.
Surface Water
Surface water is subject to the "doctrine of prior appropriation," meaning that the
first person to put the water to beneficial and reasonable use has a right superior to
later appropriations. Rights to use surface water are designated through a
permitting process at ADWR. Surface water permits may be used to support
claims in the adjudication process. ADWR maintains records related to water
rights in both computer and physical files, which are available to the public.
Hydrology Support
ADWR hydrologists serve as the technical arm of ADWR, collecting and
analyzing statewide water resource data and maintaining the state's Groundwater
Site Inventory (GWSI) database. Hydrologic conditions are calculated and
analyzed in preparing reports in response to legislative and judicial requests,
public inquiries and water management planning efforts. ADWR hydrologists are
often assigned to work on the scientific components of specific research projects
and are also consulted in making determinations on permit applications.
Additionally, the state Legislature has supported ADWR efforts to obtain more
groundwater data around the state through the Automated Monitoring Initiative.
This groundwater data collection effort relies on satellite technology to obtain
water level measurements in areas of the state where groundwater information is
lacking.
Water Bank
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In 1996, the Legislature created the Arizona Water Banking Authority (AWBA).
By storing surplus Colorado River water in central and southern Arizona, AWBA
helps safeguard against future shortages on the Colorado River and assists in
meeting the state's groundwater management goals. ADWR provides staff support
to AWBA. AWBA is a separate agency from ADWR.
Water Protection Fund
ADWR also provides staff support for the Arizona Water Protection Fund
Commission, which was created by the Legislature to preserve and enhance flows
in rivers and streams and their associated riparian habitats. The fifteen
commission members reflect a wide range of interests, including representatives
from municipal, agricultural and industrial water users as well as from
environmental organizations.
BUDGET & REORGANIZATION
The FY 2010-2011 budget enacted during the 2010 legislative session presents
particularly difficult challenges to ADWR. The total ADWR state General Fund
appropriation for FY 2010-2011 is $7,360,300. The total appropriation is
restricted to special line items as follows:
Operating lump sum appropriation
Adjudication support
Assured and adequate water supply
administration
Rural water studies
Conservation and drought program
Automated groundwater monitoring
TOTAL:

$2,259,100
1,256,200
1,839,100
1,173,700
409,900
422,300
$7,360,300

The rest of ADWR’s budget will consist of revenue from fees. In 2009, the
Governor’s Office challenged ADWR to work with stakeholders to develop a
funding strategy to provide ADWR with a new, consistent revenue source by FY
2012-2013 rather than relying on the state tax revenue appropriated from the state
General Fund. Increasing fees for those programs that provide services to
customers is part of the solution ADWR developed with stakeholders. The budget
reconciliation bill for environment and natural resource agencies, HB 2007 (7th
Special Session), authorizes the director of ADWR to increase fees for services in
FY 2010-2011, with a revenue cap set at $5,662,900. ADWR projects revenue
from fees in FY 2010-2011 will be approximately $2,000,000. As part of the
Governor’s funding strategy, ADWR is working toward making the fee increases
6

adopted pursuant to HB 2007 permanent. A strategy for funding ADWR’s nonfee based programs that are critical to the State, such as Colorado River
management, adjudications and regional planning, is currently under development
to operate these programs without state General Fund appropriations.
The FY 2010-2011 general fund appropriation of $7,360,300 is a 66% reduction
from the previous fiscal year and a 78% reduction since FY 2007-2008.
Consequently, the actual staffing level has been reduced by approximately 110
FTEs since January 2010 and 138 FTEs since FY 2007-2008.
Fiscal Year
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011

General Fund Appropriation
$18,796,600
$20,789,700
$22,763,100
$21,401,600 [$9,769,300 Water Bank In Lieu of GF]
$16,879,800
$7,360,300

Actual FTEs
227
239
236
235
157
97

These reductions have forced ADWR to critically analyze the way it does business
and to reorganize in a way that provides much greater efficiency.
ADWR senior staff initiated a review of the agency’s organizational structure in
early January 2010 in response to several conditions, namely:
a substantial reduction in the number of employees within the agency as a
result of current and projected budget reductions and a recognition that an
imbalance of supervisor/managers to staff now existed;
a belief that a review was in order to sharpen focus on the key challenges
facing the agency in the next 5 years; and
to determine if organization improvement through organizational
restructuring could spur increased effectiveness and efficiency in the
agency’s delivery of programs and services.
ADWR began its review of the agency’s organizational structure by first looking
at the organizational structure of the water resources agencies in these western
states: New Mexico, Nevada, California, Utah, Colorado, Wyoming, Montana,
Oregon and Washington. While no two states have a similar organizational
structure, and no two states have the same water resource challenges, some
common ideas emerged from this review.
Support functions such as finance, budget, human resources and
information technology align well together in a single grouping.
Surface water programs and groundwater programs are separate.

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Common grouping of operational functions, technical functions,
permitting/water rights functions, and interstate and international water
management functions across all states’ organizations, but in different
combinations and emphases reflective of each state’s individual priorities
and challenges.
Next, ADWR senior staff met over a period of several days to identify programs
across the agency, where primary responsibility resided and where supporting
activity occurred. From there, programs were prioritized and focus turned to
streamlining the number of “touches” each program received from other areas. A
literature review of the relevant public administration scholarship revealed
common guidance relative to organizational design in public entities: design
should focus on how work is organized and what the objectives are to be
accomplished; and organizations that share closely related missions/activities
should be administered by the same agency/organization.
Finally, ADWR senior staff met to assess strengths and weaknesses between two
organizational models, one consisting of centralized services and one that
decentralized services. At that time, it was noted that ADWR operated in a hybrid
model, where the Adjudications group, Colorado River management and the
Surface Water Division maintained within their organizations all the resources
required to implement their programs, including hydrologists, engineers and GIS
resources, and thus served as a decentralized services model; and the Water
Management and Hydrology divisions operated under a centralized system where
the Hydrology Division maintained all the technical staff and resources required to
support the Water Management division’s permitting and compliance activities.
It became clear that an organizational modification was needed to meet the
objectives of becoming more efficient and effective, more responsive, and to
flatten the organizational structure.
ADWR senior staff determined that the issues of organizational priority going
forward include:
•
Program accountability
•
Efficiency in communication and working together
•
Providing a single point of contact for the regulated community
•
Clear program objectives for employee accountability
•
Consistency in our approach
•
Maximizing our resources
Based on these priorities, and the research and conversations that occurred,
continuing a kind of hybrid model of centralized/decentralized services was
deemed appropriate with some key changes that follow:
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Water Management
The permitting programs where Water Management is the process “owner”
should hold all the resources required to complete the permit, under a single
management structure. This will meet our priority goals of improving
program accountability, improving efficiency and communication,
providing a single point of contact for the regulated community,
consistency in our approach and maximizing our resources. Moreover,
combining some of the permitting programs that are related into a single
managed section will provide greater opportunities to leverage those
resources, while reducing the number of managers. The technical hydrology
resources that historically provided permitting support historically currently
number eight (8) FTE including a manager and a supervisor. Prior to the
reorganization, the number of Water Management permitting staff,
including managers and supervisors was nine (9) FTE. For comparison
purposes, the ADEQ APP permitting program, which is similar in
complexity to the Assured and Adequate Water Supply program, employs a
permitting project manager to hydrology ratio of 2:1; that is for every 2
permitting project managers, there is one hydrology resource assigned.
Prior to the reorganization, ADWR was staffed in a 1:1 ratio of hydrology
resources to Water Management permitting resources. Based on this
analysis, the recommendation was made to merge the Recharge permitting
unit with the Assured and Adequate Water Supply permitting unit. Transfer
four (4) hydrology resources from the Water Resources Section to the new
Permitting section, consolidated under a single manager.
Create a new section for WELLS that includes NOI permitting, compliance
with standards, water quality, and customer outreach. This change was
accomplished by transferring one hydrology resource to the new section,
and transferring responsibility and accountability for serving as liaison to
ADEQ WQARF Board. Assign a new manager for this expanded function.
Ensure that all customer calls and messages are routed to this section for
enhanced service.
Issues related to water sustainability and efficiency is common within
AMAs and statewide. To strengthen the Department’s water sustainability
efforts and leverage resources, these functions should be consolidated
within a single organization. It was recommended to transfer the
Community Water Planning programs and its three (3) FTEs to Water
Management.
All other Water Management activities with AMAs and Data Management
remain the same.
Surface Water

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Technical resources within the division can be consolidated within a single
unit. It was recommended to align existing technical resources into a single
Engineering unit to provide support for permitting, floodplain management,
environmental program and Adjudication activities. Transfer one (1)
hydrology resource to new unit.
Consolidate Adjudication technical support within the Surface Water
Division. It was recommended to transfer Adjudication Section FTE to
Surface Water Division.
Surface water activities related to instream flow as well as growing
requirements to understand and participate in an array of environmental
resource programs and activities demand focus. It was recommended to
create a new environmental program function to work on instream flow
program as well as environmental programs where ADWR participates in
and provides technical support on the Colorado River, such as the
LCRMSCP and Glen Canyon Adaptive Management Program. Secure
funding from outside sources for two (2) FTEs.
All other activities related to floodplain management and permitting remain
the same.
Hydrology and Water Resources Investigations
The existing division was a mixture of highly specialized activities such as
groundwater modeling and geophysical surveying; permitting support;
water quality support; and field services such as water level sweeps,
monitoring investigations and water level changes. Recommendations made
and implemented included the elimination the Water Resources Section that
provided permitting support. with transfers of four (4) FTE to the Water
Management Division to conduct permitting support activities in line with
the 2:1 ratio employed by the APP permitting program. Other changes
made included the transfer of one (1) FTE to Surface Water for support
activities with permitting and adjudication work, and the transfer one (1)
FTE to the newly formed Wells and Permits Unit of the Water Management
Section. Two (2) FTE were reassigned within this division.
With permitting support occurring within the permitting program, the
Hydrology division will be able to focus its activities on water resource
investigations. The ADWR Strategic Workplan was modified to reflect the
change in focus toward moving water resources investigations forward.
With a new focus on water resources investigations, the division needed to
adjust its focus to serving as a clearing house for water resource
investigations that have taken place or are underway throughout the state,
analyzing the results and synthesizing the information in a way that is
helpful to establishing a framework for future water demand and supply
scenarios throughout Arizona. Supporting the new focus on water resources

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investigations, the division has been supplemented with “boots on the
ground” planning resources that will coordinate with local groups,
including existing watershed partnerships, other water resource
organizations and the universities. Melding these two functions will allow
for a more effective and efficient way to move forward on a state water
framework, among other needs. Moreover, aligning planning resources
geographically will allow for greater focus and accountability for results.
Based on these resource needs a Regional Planning Unit was created with
two senior planners (2) FTE from the former Statewide Planning Group and
one senior hydrologist reassigned from permit support duties to provide
technical support. One planner FTE will function as water planning
program manager for the northern part of the state and one planner FTE
will serve as water planning program manager for the southern part of the
state.
Colorado River Management
While the majority of the work in this group is dedicated to Colorado River
programs and activities, the focus is broadening to include all of Arizona’s
interstate and international rivers. Recommendation: Change the name of
this group to Interstate and International Waters. Include Arizona/Mexico
Commission, Border Governors, Trans-Boundary Aquifer and other
activities that span states and the nation of Mexico in this section.
Due to the nature of existing and projected workload, more resources are
required. Recommendation: Transfer one (1) hydrology FTE to this section
to support these activities. Transfer responsibility for managing the triorganizational contract with the AZ/MX Commission resource to this
section.
Administrative Support
Continue consolidation of financial services, general services and
information technology in this unit.
Legal Division
All legal resources continue to remain consolidated in this division.
Additional responsibility for agency compliance should reside here. It was
recommended to transfer one (1) FTE from Water Management to Legal to
serve as ADWR Compliance Coordinator.
Cross-Cutting Teams
Three overarching activities require formal, structured cross-cutting teams to
ensure effective and efficient communication and achievement of agency goals
and objectives. They are: Planning; Data Management; and Compliance. Once this
reorganization is finalized, agency charters for these cross-cutting teams will be
11

developed, with the expectation that they will meet at least quarterly to
communicate activities, projects and issues.
ACCOMPLISHMENTS IN FY 2009-2010
Water Management Division
Blue Ribbon Panel on Water Sustainability
Following Governor Jan Brewer’s commitment to collaboration on water resource
issues, ADWR Director Herb Guenther, Arizona Corporation Commission (ACC)
Chairman Kris Mayes, and Arizona Department of Environmental Quality
(ADEQ) Director Ben Grumbles (collectively the Executive) have initiated a
statewide effort aimed at improving the long term sustainability of Arizona’s
water supplies through increased conservation and recycling.
A Blue Ribbon Panel on Water sustainability (Panel) was formed to identify and
overcome obstacles to increased water sustainability. The Panel has been
challenged to provide advice to ADWR, ADEQ and the ACC on the technical,
legal, and policy aspects of promoting recycling of wastewater, gray water,
industrial process water, and storm water. While there are many opportunities to
increase water conservation and recycling, an early priority of the Panel has been a
focus on wastewater reuse through detailed examinations of water quality,
regulatory impediments, infrastructure requirements and public perception
challenges that could limit the increased use of this important water supply.
Membership on the Panel was designed to facilitate discussions between Arizona
stakeholders involved in identifying regulatory impediments and drafting new
strategies to advance water conservation and increase the use of recycled waters.
In December of 2009, the Executive identified and requested members to
participate in this effort based on their knowledge and leadership in Arizona water
issues. The Panel membership is composed of 40 members representing large and
small cities, counties, agriculture, industry, Indian Tribes, environmental interests,
Arizona universities, legislative leaders, and other leaders in Arizona water issues.
Four meetings have been held to date, designed to bring the Panel together to build
a common understanding of the issues facing Arizona and the challenges of
developing recycled water strategies and increasing water conservation efforts
across the State.
Modified Non-Per Capita Program
The Modified Non-Per Capita Conservation Program (Modified NPCCP), a
performance-based program developed in conjunction with stakeholders from all
Active Management Areas (AMAs), became effective in May 2008. All large
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municipal water providers located in AMAs that do not have a Designation of
Assured Water Supply are required to participate in the program; participation is
optional for designated providers.
The Modified NPCCP requires participating providers to implement water
conservation measures that result in water use efficiency in their services areas. A
water provider regulated under the program must implement a required Public
Education Program and choose one or more additional Best Management Practices
(BMPs) based on its size, as defined by its total number of water service
connections. The 53 BMPs are divided into seven categories: 1) Public
Awareness, 2) Education and Training, 3) Outreach Services, 4) Physical System
Evaluation and Improvements, 5) Ordinances, Conditions of Service, Tariffs, 6)
Rebates/Incentives, and 7) Research/Innovation.
Pursuant to the second modification to the Third Management Plan, the Director
established an advisory committee to assist in evaluating the effectiveness of the
program. The main focus was the review of materials, forms, and other resources
developed for the program. Future meetings will focus on plans for program
evaluation.
In June 2008, providers required to participate in the program were noticed that
regulation under the program would begin in January 2010, and that Provider
Profiles were due July 1, 2009. AMA staff established internal procedures for the
review, approval, response and documentation of the Provider Profiles received.
All providers in the program received approval letters prior to 90 day deadline
(September 30, 2009).
A Conservation Efforts Report will be due each year on March 31 and will be used
on an annual basis to determine a provider’s compliance under the Modified
NPCCP.
To date, 43 providers have entered the program from the five AMAs:
22 from Phoenix AMA
11 from Tucson AMA
5 from Pinal AMA
3 from Santa Cruz AMA
2 from Prescott AMA
Assured and Adequate Water Supply
Over the last year and a half, ADWR has been engaged in an internal review of the
Assured and Adequate Water Supply Rules and its Substantive Policy Statement
on the requirements for Hydrologic Studies Demonstrating Physical Availability
of Groundwater for Assured and Adequate Water Supply Applications. The
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purpose of this review was to improve efficiency and increase understanding of
the requirements for hydrologic studies by identifying areas of the current rules
and policy statement that needed clarification or modification. The result of that
review is a set of proposed modifications to the rules and policy statement that can
be viewed on the ADWR website at: http://www.azwater.gov.
Surface Water Division
Rehabilitation of Deficient Dams
ADWR is overseeing rehabilitation projects at twelve deficient dams. Two of the
projects are made possible through grants from the Dam Repair Fund. Eastern
Arizona College is recipient of a grant being used to fund the design for the safe
removal of Cook Reservoir Dam in Graham County. The Silver Creek Flood
Protection District is recipient of a grant being used to fund the design for
rehabilitation of Millet Swale Dam in Navajo County. ADWR is working closely
with the Flood Control District of Maricopa and Magma Flood Control District in
Pinal County to expedite review and processing of three construction permit
applications in order to secure millions of dollars in time-sensitive federal funding.
ADWR is leading a multi-agency statewide study updating rainfall storm data
used for design and rehabilitation of dams. Results of the study will be used to
improve understanding of public risk and reduce necessary rehabilitation costs by
an estimated $25 to $50 million over the next ten years. Cost-sharing partners
include Maricopa County, Arizona Game and Fish Department, the USDA Natural
Resources Conservation Service and the DHS Federal Emergency Management
Agency.
Continued Assistance to the General Stream Adjudications
ADWR completed several important reports and analyses requested by the
Superior Court and Special Master, including:
Published a final catalog of non-exempt registered wells in the Eastern
Little Colorado River (LCR) basin. The catalog was a condition of the
Zuni Indian Water Rights Settlement. The LCR adjudication court will use
the catalog to administer the settlement decree.
In preparation of a final Hopi Hydrographic Survey Report (HSR) for the
LCR adjudication court, completed responses to comments on the
preliminary HSR related to historical topics, crop consumptive use, claimed
irrigated lands and available surface water supplies.
Completed an assessment of historic floodplain migration in the San Pedro
River Watershed. The assessment was performed in response to objections
filed on ADWR's June 2009 subflow zone delineation report for the Gila
River adjudication court.

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Published an analysis of land ownership changes within the San Pedro
Riparian Conservation Area (SPRNCA). The analysis was requested by the
Special Master to the Gila River adjudication and will be used to resolve
federal reserved right claims filed for SPRNCA by the Bureau of Land
Management.
Establishment of Surface Water Rights Stakeholder Working Group
ADWR performed an internal review of the Surface Water Rights Permitting
Program. The purpose of the review was to improve efficiency and effectiveness
of the program. Among other items, the review identified the lack of procedural
rules and specific policy decisions as primary obstacles to the timely processing of
surface water right filings and claims. As a result, ADWR established a
stakeholder working group to provide a forum for receiving input on pending
policy decisions and the need for procedural rules. In May 2010, ADWR provided
draft procedural and submittal concepts to the working group for review and has
received numerous comments. The group will continue to meet to receive
stakeholder feedback on both procedural and substantive policy issues.
Hydrology Division
Groundwater Modeling
The Groundwater Modeling Section completed major studies and published
reports on:
The update and calibration of the SRV groundwater flow model (final
report)
Risk analysis of pumping impacts in the Santa Cruz AMA (final report)
Phoenix AMA municipal water provider AWS redesignation modeling
(draft report)
Field Services
The Basic Data Unit conducted several groundwater basin water level sweeps and
published Water Level Change Map Series reports for:
The Upper San Pedro basin
The Big Chino Sub-basin
The Verde Valley basin
McMullen Valley basin
The Geophysics and Survey Unit completed several gravity and subsidence studies
and published reports and maps on:
Gravity Survey with Depth-to-Bedrock and Preliminary Groundwater
Storage Estimates for the Hualapai Valley Groundwater Basin, Mohave
County, Az.

15

17 land subsidence maps for various subsidence prone areas throughout the
state using Synthetic-Aperature Radar Inferometry (INSAR).
Colorado River Management
Shortage Sharing and Water Management Agreement with Mexico
The Department continued its work with Mexico and the Basin States through the
International Boundary and Water Commission (IBWC) on a shortage sharing and
water management agreement. The agreement is proposed as a Minute to the 1944
Treaty with Mexico and would address shortage sharing between the two countries
and would create the framework for development of bi-national water
augmentation projects. Mr. Edward Drusina was sworn into office as the new U.S.
Commissioner of the IBWC on January 19, 2010, and he has quickly engaged on
the Treaty amendment issues. In April 2010, Mexico suffered extensive damage
to its water delivery infrastructure and farmland as the result of a major
earthquake. Commissioner Drusina and his counterpart, Mexican Commissioner
Salmon have expressed the interest of both federal governments to move quickly
to adopt a Treaty amendment including earthquake-related water management
provisions.
Colorado River Basin Water Supply and Demand Study
In September 2009, the seven Colorado River Basin States obtained a $1 million
federal grant to conduct a two-year study of future Colorado River water supply
and demand imbalances using a downscaled climate model. The study will
characterize water supply and demand imbalances through 2060, and identify
potential strategies to address imbalances including modification of reservoir
operating criteria, facilities modifications or development, water conservation and
water supply enhancement programs. The Department has been working with the
Central Arizona Project and Colorado River water users throughout the state on
developing water demand projections for the state of Arizona.
SUGGESTED LEGISLATION
Issue 1: Reduction of Groundwater Reliance in the Five AMAs
The Groundwater Code establishes a goal of safe-yield by 2025 for the Prescott,
Phoenix, and Tucson AMAs. Safe-yield is accomplished when no more
groundwater is withdrawn from the aquifer than is annually replaced. Although
Arizona law has set a goal of achieving safe-yield by 2025 for groundwater
supplies in the State’s most severely depleted areas, groundwater depletion is
likely to continue past that date under the current regulatory structure. The
consequence of not achieving safe-yield will be to threaten the long-term

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availability of water supplies for existing homes, industries and communities in
AMAs.
Pursuant to A.R.S. §§ 45-562 through 45-568.02, ADWR is required to adopt a
series of five groundwater management plans for each AMA to be implemented in
sequence from 1980 through 2025. ADWR is currently initializing the Fourth
Management Plan, which it anticipates implementing in 2012. The Code mandates
the inclusion of progressively more restrictive groundwater conservation
requirements and methods to supplement groundwater supplies from one
management period to the next. The Code is specific as to what programs must be
included in each sequential management plan and ADWR has met the statutory
mandates requiring the establishment of a water rights system and the continuing
development and refinement of mandatory conservation requirements for
industrial, municipal, and agricultural water users.
Although the management plans prepared by ADWR comply with the Code’s
mandated water management goals, ADWR acknowledged as early as 1994 in its
Arizona Water Resources Assessment that the mandatory conservation
requirements contained in the plans may not be sufficient to reduce groundwater
use to safe-yield levels in AMAs. In addition, the Phoenix AMA Third
Management Plan, which was adopted in December 1999, acknowledged that,
“[a]lthough safe-yield is an attainable goal, it is apparent that sufficient progress
has not been made toward this goal, nor have the statutory and institutional
structures to succeed been fully established.” Further, the Tucson AMA Third
Management Plan states, “[t]here are structural weaknesses in certain portions of
the Groundwater Code…because few of the Code provisions are tied directly to
achieving the [safe-yield] goal.”
Both the Phoenix AMA and Tucson AMA Third Management Plans discuss
alternative approaches or programs that should be evaluated to assist AMAs in
their efforts to achieve the safe-yield goal. Possible programs or options to
address water management problems include: incentives for groundwater recharge
into the aquifer and use of renewable resources, greater restrictions on new
groundwater pumping, and addressing the cost disparities between groundwater
and renewable supplies. In 2000, a Governor’s Water Management Commission
(Commission) was created to study these issues and make recommendations. The
Commission was made up largely of entities with a direct interest in how the
regulations affect their water use. Although the Commission recommended a
number of statutory changes to help achieve the safe-yield goal, only a handful of
the Commission’s recommendations were ultimately adopted into law.
The following are the primary reasons that safe-yield will not be achieved under
the current statutes:
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 ADWR has limited ability to reduce grandfathered groundwater use – The
Groundwater Code created several types of grandfathered rights, depending
on the historic groundwater use, and established methods for determining
the amount of groundwater associated with each grandfathered right. The
majority of these grandfathered groundwater rights are associated with the
agricultural and industrial sectors. While the Groundwater Code, through
the management plan conservation requirements, allows ADWR to require
grandfathered right holders to implement reasonable conservation measures
designed to reduce their groundwater use, the Code does not give ADWR
authority to significantly reduce the amount of groundwater associated with
each grandfathered right. Furthermore, the Groundwater Code does not
give ADWR authority to require grandfathered rights holders to eventually
convert from groundwater to renewable water sources.
 Agricultural flexibility credits allow carryover to future years – The
Groundwater Code established a flexibility account for agricultural
groundwater users within AMAs that allows them to accrue credits for
unused groundwater entitlements and carry the credits over for use in the
future. Any portion of an agricultural user’s annual irrigation groundwater
entitlement that is not used during the year is added to the user’s credit
balance. An agricultural user can accrue an indefinite amount of
groundwater credits in its flexibility accounts, as the Groundwater Code
does not establish a maximum credit balance. Additionally, with certain
restrictions, an agricultural user can transfer the credits earned during a year
to another agricultural user in the same AMA. An agricultural user with
credits in its flexibility account can use the credits to exceed its annual
groundwater allotment as established in the management plan. The credits
accrued by agricultural users have essentially created a lien against the
groundwater supply that if used in the future could increase groundwater
depletion and further hamper the AMAs’ ability to achieve safe-yield. In
2007, agricultural flexibility credits in the Prescott, Phoenix, and Tucson
AMAs totaled more that 6.8 million acre feet, or more than 6.5 times the
total groundwater consumption for these AMAs in the same year. The
agricultural sector in the Phoenix AMA already has enough accrued credits
to supply all agricultural water needs in that AMA until at least 2013.
 Groundwater withdrawal permits increase the amount of groundwater
that may be withdrawn in an AMA – In addition to grandfathered rights,
the Groundwater Code created groundwater withdrawal permits that allow
persons without a grandfathered right to pump groundwater in an AMA for
the following purposes: (1) to drain land for agricultural production or
building stabilization; (2) for the withdrawal of poor quality water; (3) for
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hydrologic testing; (4) for generating emergency electrical energy; (5) for
mineral extraction and processing; and (6) for general industrial uses.
ADWR is required by statute to issue permits for mineral extraction and
industrial uses for terms of up to 50 years if the permit applicant meets
certain criteria. ADWR is further required to renew these permits for as
long as the applicant continues to meet the statutory criteria. In 2007,
groundwater withdrawal permits allowed 15,691 acre feet of groundwater
to be used in the Phoenix, Prescott and Tucson AMAs, although only 4,527
acre feet of groundwater, or 29 percent of the allowance, were actually
used.
Issue 2: Ensuring Long-Term Water Supplies for Future Generations
One of ADWR’s most important roles is securing water supplies for future
generations. As such, when the Groundwater Code was adopted in 1980, it
changed the water adequacy requirements for new subdivisions within AMAs by
requiring a developer of subdivided land in an AMA to obtain a determination of a
100-year assured water supply from ADWR before the plat for the subdivision
can be recorded and a public report can be issued by the Arizona Department of
Real Estate (“ADRE”). A.R.S. § 45-576. In order to obtain a determination of
assured water supply, the developer must demonstrate that a water supply of
adequate quality is physically, continuously and legally available for 100 years,
that the developer has financial capability to construct any necessary delivery and
treatment facilities, and that any groundwater use is consistent with the
management plan and management goal of the AMA. Areas outside AMAs are
not subject to the assured water supply requirements, but remain subject to the
adequacy provisions of A.R.S. § 45-108.
Limited consumer protections in areas outside of AMAs provide residents with
less assurance of a future water supply than residents within AMAs. Consumer
protection is weaker in two ways. First, outside AMAs, only the first purchaser of
a new subdivision lot must receive notification of the sufficiency of the water
supply. Within AMAs, new subdivisions must have a sufficient water supply
before any lots are sold. Second, well spacing is regulated in AMAs but is not
regulated in areas outside AMAs. Thus, outside AMAs, new large wells may be
drilled near a well serving a subdivision, causing the subdivision well to go dry.
The limited consumer protections in areas outside AMAs raise several concerns
regarding the water supply on which those homeowners rely:
 Need for more assurance of sufficient water – The adequate water supply
provisions, applicable outside AMAs, require ADWR to issue a report on
the sufficiency of the water supply, but do not prohibit the development or
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sale of subdivision lots in the absence of sufficient water. If ADWR
determines that the water supply is insufficient, the developer is required
only to notify potential buyers by displaying the water supply information
in promotional materials and subdivision lot sales contracts. Only the
original purchaser is entitled to notification regarding the water supply, as
there is no requirement that the water supply information be disclosed to
purchasers when the subdivision lot is resold. As mentioned above, this
contrasts with the assured water supply provisions applicable within
AMAs, which prohibit the development or sale of subdivisions that do not
have a sufficient 100-year water supply, thereby protecting consumers from
purchasing a subdivision lot with insufficient water to meet their needs.
In 2007, SB 1575 was enacted to address the inequity between the two sets
of requirements in response to recommendations from the Statewide Water
Advisory Group (SWAG). SB 1575 amended the subdivision laws to
authorize cities, towns and counties outside AMAs to require developers
within their jurisdictions to demonstrate a 100-year adequate water supply
before platting and selling lots. A county may adopt such a requirement
only upon the unanimous vote of the board of supervisors. To date, only
Cochise County, Yuma County, the Town of Patagonia, and the City of
Cottonwood have adopted such requirements. All other areas of the state
outside AMAs are still regulated under the original adequacy provisions.
The Department of Economic Security projects that by 2025 there will be
approximately 1,570,600 additional people living outside AMAs. As only
the original purchaser of a subdivision lot outside AMAs receives
information regarding the sufficiency of the water supply, subsequent
purchasers may not know that the water supply is insufficient. A partial
solution would be to require ADWR’s water supply determination to be
recorded with the County Recorder’s Office. While this would not require
that subsequent purchasers receive notification regarding the sufficiency of
the water supply, it would provide notification during a title search.
ADWR recommends that the Legislature consider enacting a law to require
that subdivision developers record with the appropriate County Recorder’s
Office ADWR’s determination of the sufficiency of the subdivision’s water
supply.
However, even if increased notification of the sufficiency of the water
supply is legislated in the future, under the adequate water supply program,
subdividers outside AMAs are allowed to develop and sell new
subdivisions that do not have sufficient water. This affects not only the
purchasers of lots within the new development, but could also result in the
depletion of the water upon which existing residents rely. To provide
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greater protection, ADWR recommends that the Legislature consider
amending A.R.S. § 45-576 to extend the assured water supply provisions
outside AMAs. If the assured water supply provisions were extended
outside AMAs, there would be no need to require developers to record
ADWR’s determination of the sufficiency of the water supply.
 Well spacing and impact is unregulated – ADWR is not authorized to
regulate the spacing between wells or the impact that a new well will have
on existing wells outside AMAs. The Groundwater Code requires filing a
notice of intent to drill a well outside an AMA, but does not require
minimum spacing between wells, or prohibit new wells that will deplete the
water supply of existing wells. In contrast, within AMAs, the Groundwater
Code requires ADWR to adopt rules that prevent new wells from causing
unreasonably increasing damage to surrounding land or other water users.
With certain limited exceptions, ADWR’s rules prohibit drilling new wells
within an AMA if the proposed well will excessively decrease the water
supply of an existing well.
As growth occurs outside AMAs without renewable water supplies, most
new residents will drill wells to obtain groundwater. If additional wells
deplete the water supply, new homeowners, existing residents,
municipalities, and industry will be affected. Consequently, ADWR
recommends that the Legislature consider amending A.R.S. § 45-598 to
give the Department authority to authorize ADWR to establish well spacing
requirements outside AMAs.
Issue 3: Surface Water Permitting
ADWR lacks authority to bring administrative enforcement actions for violations
of the state’s surface water laws, manage the use of surface water resources
pursuant to water rights or claims, or resolve disputes between surface water users.
When ADWR receives a complaint that a person is violating the surface water
laws, it attempts to persuade the violator to comply. If that fails, ADWR requests
the County Attorney or the Attorney General to investigate and take proper
enforcement action. Certain violations of the surface water laws have been
classified as class 2 or 3 misdemeanors and may be prosecuted by local law
enforcement agencies, the county attorney or the Attorney General. See A.R.S. §§
45-112 and 45-190. In some cases, the public is frustrated by ADWR’s inability
to resolve surface water complaints.
CONCLUSION

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The primary mission of ADWR is to ensure an adequate quantity and quality of
water for Arizona’s future. Challenges to providing a sustainable water supply are
numerous. By 2025, when the Code requires key management goals to be met, the
projected population of the State will exceed 6 million within the AMAs and 1.8
million in the rest of the State. This represents a 280 percent population increase
in the AMAs alone since 1980. Competition for water throughout the Southwest
continues to increase as neighboring states experience similar rates of growth;
Arizona must continue to be vigilant to protect its water rights, particularly its
rights to Colorado River water. It is essential that our State continue to play a
prominent role in Colorado River water supply, operations and allocation issues.
Arizona’s water is also used or claimed by a number of Indian tribes whose legal
rights to quantities of water currently are the subject of settlement negotiations or
litigation as part of the adjudication of water rights within the State. The outcome
of these proposed settlements and settlement negotiations will significantly impact
the State’s water budget. In addition to water supply needs for human use,
environmental protection issues are of substantial concern and may affect
Arizona’s future water supply availability.
The water needs of Arizona’s rural areas, where few renewable supply options
exist, are becoming urgent. The Statewide Water Advisory Group formed in 2006
has provided valuable information from a broad spectrum of stakeholders and
helped develop new programs for meeting water needs statewide. The Statewide
Planning Commission formed by HB 2661 (2010) and appointed by Director
Guenther continues that critical work, this time with even greater focus on meeting
the water needs in rural Arizona.
Substantial progress has been made within central Arizona in moving toward a
sustainable water future, and with the new laws passed by the Legislature, in rural
Arizona as well. ADWR’s long-term view of water management needs has served
the State well.

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