Background

Arizona has some of the most limited water supplies in the country. Its minimal surface flows led to early groundwater exploitation, with overdraft beginning as early as the 1930s.1 The state has always treated ground and surface sources under distinct rules: surface water is public property subject to appropriation, whereas percolating groundwater historically, and typically, is subject to reasonable use.2 Arizona has struggled with this divergent legal treatment, and has yet to find a workable way to distinguish appropriable surface water from percolating groundwater.3 For decades, the state tried, virtually unsuccessfully, to manage the overdraft this bifurcation permitted.4 Finally in 1980, Arizona abandoned reasonable use in significant areas of the state for a statutory regime spelled out in the Groundwater Management Act (GMA).5 In seeking to control overdraft, allocate groundwater, and augment supplies, the GMA reflected a major shift in the state's approach to water not as private property, but as a public good to be managed for all.6 Today, Arizona groundwater law consists of a unique structure governing distinct areas.

Arizona's climate presents intense challenges for water management, particularly in the dense and continually growing areas around Phoenix and Tucson. Because the state typically receives less than 15 inches of rain per year,7 groundwater accounts for about 40% of the state's total freshwater use.8 Approximately 65% of groundwater withdrawn is used for agriculture.9 Arizona groundwater is important for domestic consumption, accounting for about 100% of individual household water use and 48% of municipal supplies.10

Summary of the Law

The Arizona Department of Water Resources (ADWR) manages allocation of the state's water.11 The applicable groundwater laws depend on the location of the water at issue, be it within areas designated under the GMA or without those areas.

Outside areas designated under the GMA, Arizona continues to follow the doctrine of reasonable use with only minimal licensing and registration requirements.12 Reasonable use allows overlying landowners to use as much percolating groundwater as may be put to reasonable and beneficial use on their overlying land.13 A landowner may exceed his/her fair share of water without facing liability to other landowners.14 However, a landowner is liable if his intentional and harmful use of water is unreasonable with respect to another landowner.15  As such, reasonable use creates a rule of capture regime among overlying landowners. The only major program administered in these areas is the Adequate Water Supply program, which is effectively a consumer advisory program requiring developers who cannot prove water supplies will be available for 100 years to disclose that fact to potential buyers.16

Areas designated under the GMA face different requirements. Key provisions of the GMA do the following:17 1) establish a program for groundwater rights and permits within Active Management Areas (AMAs),18 2) prohibit new irrigation in AMAs,19 3) require water management plans with conservation measures for each AMA,20 4) establish an Assured Water Supply Program requiring developers in AMAs demonstrate a 100-year assured water supply for new growth,21 5) require metering of all wells pumping more than 35 gallons per minute,22 and 6) require water use reporting. 23

Special Permitting Area – Active Management Areas: The majority of the GMA's provisions apply to the five AMAs concentrated around Phoenix, Tucson, and agricultural area in between.24 The GMA permits the state to designate additional AMAs if justified by groundwater extractions.25 Each AMA is managed to achieve a specific goals.26 Generally, four of the AMAs seek to achieve safe yield, while one is managed for planned depletion to preserve agricultural economies as long as feasible.27 The GMA also set up irrigation non-expansion areas, which are less intensively managed than AMAs, and limit irrigation to land irrigated in the years prior to designation.28

With some exceptions, current water rights in the AMAs were grandfathered based on irrigation and non-irrigation uses in the years prior to the GMA's enactment. Grandfathered rights based on previous irrigation may not be used apart from the land on which they originated.29  There are two types of non-irrigation grandfathered rights: type 1 and type 2.30  Type 1 rights are associated with retired irrigated land, while type 2 rights are not.31  Type 2 non-irrigation grandfathered rights may be used apart from the originating land, so long as they are used within the same AMA.32 Each of these grandfathered rights must be quantified by the state to remain valid.33 Other legal groundwater uses in AMAs include service area rights, withdrawal permits, and exempt wells.34 Service area rights permit cities, towns, companies, and irrigation districts to serve customers within their area.35 Withdrawal permits may be issued under specific conditions for non-irrigation uses when no other supplies are available.36 Finally, wells pumping less than 35 gallons per minute for non-irrigation purposes are exempt from permitting and metering requirements.37 Unlike grandfathered rights, these other legal uses are allowed to expand.38

One of the most stringent requirements imposed in AMAs is the Assured Water Supply Program.39 To comply, a developer must demonstrate a 100-year assured water supply for a new subdivision by obtaining either 1) a Certificate of Assured Water Supply if it can meet certain criteria, or 2) a commitment of service from a water provider that has been designated as having adequate supply.40 The program requires renewable water supplies be used to meet large portions of a new development's water.41 In central Arizona, users can meet assured water requirements by contracting with the Central Arizona Groundwater Replenishment District to replenish mined groundwater.42 The District has largely fulfilled these contracts by storing excess Colorado River water from the Central Arizona Project.43 The Water Banking Authority may also store unused Colorado River water underground for future use and drought protection.44 This recharge supports the AMAs management goals because 5% of recharged water must remain underground.45

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Law and Practice

Arizona's complex mix of common law and statutory/regulatory requirements allows the state to actively manage groundwater essential to the state's way of life. In 2007, over 70 percent of the state's overdraft occurred in the AMAs, where the state wisely deploys the most stringent withdrawal requirements.46 However, as growth continues to occur beyond the boundaries of the current AMAs, it may be crucial for the state to expand its areas of aggressive management.

Moreover, there is reason to believe success in the AMAs has been mixed. Collective withdrawals from exempt wells may be impacting aquifers in AMAs, but without metering, the severity of this impact is unknown.47 Further, conservation measures in grandfathered irrigation rights is deemed by some to be only marginally effective, because credits granted to each right were set too high, giving farmers more water than they actually need to irrigate and undermining conservation incentives created through periodic allocation reductions.48 Additionally, while the Assured Water Supplies Program is generally considered to successfully tie growth to available supplies, dispersed and smaller residential developments have been built to avoid triggering its requirements and take advantage of exempt well allowances.49 Finally, as drought persists in the Colorado River Basin, Arizona may see cutbacks in its Colorado River allocation, reducing supplies available for aquifer recharge.50 Nonetheless, the state's advanced groundwater regime does much to equip the state with the tools it will need to continue meeting its water needs while simultaneously addressing groundwater overdraft.