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Megadrought: Why the Feds are Restricting Water to Western States

transfer of water right arizona

On August 16th the federal government announced water allocation reductions to Arizona and Nevada, restricting their access to water from the Colorado River. Arizona will need to reduce its Colorado River water usage by 21%, while Nevada will need to reduce its usage by 8%. The restrictions came after the Interior Department gave Western states 60 days to develop a new plan for Colorado River water allocation, as the amount of water in the river drops to record lows. It’s one of many significant ways that climate change is reshaping life in the country and across the globe (Mexico is also impacted by Colorado River levels).

From record-setting heatwaves to unprecedented wildfires and storms, new and undeniable evidence of the climate crisis seems to appear in our newsfeeds daily . While we have seen communities around the world ravaged by natural disasters, the water crisis is especially worrying. 

While some Americans don’t have reliable clean water, many others are faced with worsening drought conditions. Odds are you’ve heard about the drought impacting the western half of the country; after all, these conditions, in part, have turned states like California into tinderboxes. But even the East Coast has seen less precipitation in recent years. And it’s no longer just a dry spell that we can ignore. In fact, experts have deemed this pressing threat a “megadrought.” 

Of course, the term megadrought isn’t new, but it may be the first time many of us are hearing — or paying attention to — the phrase. So, what separates a megadrought from a “normal” period of drought? And, perhaps most importantly, what can we do about it? 

What Are Megadroughts?

Droughts are defined by less-than-average rainfall for a period of a few weeks, months, or, in some cases, years. During drought conditions, streams and rivers recede; water levels in lakes and reservoirs drop. “If dry weather persists and water-supply problems develop,” United States Geological Survey (USGS) notes, “the dry period can become a drought.” 

Over time, the lack of precipitation creates even more problems. Think of the Dust Bowl, for example; the drought-stricken plains couldn’t sustain crops and, without anything but dirt and dust to blow around, the severe winds blew topsoil as far east as New York City and caused many folks living on the Great Plains to develop “dust pneumonia.”

transfer of water right arizona

All of this said, if droughts equate to dry weather that persists over time, then, following that logic, megadroughts are extensive dry periods, meaning that the extreme dryness associated with megadroughts persists for decades . “Within that period there may be occasional better, wet, years, but the respite is brief,” The New York Times reports. “The dryness soon returns and drought maintains its long-term grip.”

According to Smithsonian Magazine , only four major megadroughts have previously occurred in the American West over the last 1,200 years. Reportedly, the first megadrought occurred during the 800s, and was followed by similar periods of extensive and extreme dryness in the mid-11oos, 1200s and 1500s. If history is any guide, we’re due for another megadrought. However, since the late 1800s — which is when the Industrial Revolution kicked into full gear — our impact on the planet has led to a megadrought that may have even more devastating and lasting consequences. 

The Current Crisis

Like megadroughts of the past, the current one overtaking the western United States — and much of the Southwest, in particular — was driven partly by natural changes and fluctuations, but there’s no denying that human contributions to climate change have exacerbated the problem. “Global warming has pushed what would have been a moderate drought in southwestern North America into megadrought territory,” a 2020 study published in Science notes. (For this project, researchers studied the rings of ancient trees to understand the past climate of western America — though soil moisture, among other indicators, also played a part.)

Jason Smerdon, a paleoclimatologist at Columbia University’s Lamont Doherty Earth Observatory and a co-author of the aforementioned study, spoke to Smithsonian Magazine about his findings. Notably, Smerdon believes that the drought we’re experiencing today would’ve been bad, but nowhere near rivaling the “heavyweight droughts” that occurred during the Medieval Era. Unfortunately,  anthropogenic global warming has made this period of drought incredibly severe — and a rival to those severe droughts of the past. 

transfer of water right arizona

“No matter which way you slice it, the clear indication is that the current drought ranks right up there with the worst in more than a thousand years,” Smerdon tells Smithsonian Magazine , “and there’s a human influence on this of at least 30 percent and possibly as much as 50 percent in terms of its severity.” In Arizona, California, Colorado, Nevada, New Mexico and Utah, the drought has lasted two decades, becoming more of a fact of life than anything else for the folks who live there. 

However, that doesn’t mean we should (continue to) be complacent. “The magnitude of future droughts in North America and elsewhere will depend greatly on future rates of anthropogenic greenhouse gas emissions globally,” the study in Science concludes. “The effects of future droughts on humans will be further dependent on sustainable resource use because buffering mechanisms such as ground water and reservoir storage are at risk of being depleted during dry times.” 

The Megadrought’s Impact on Our Planet

Evidence suggests that the megadroughts drastically changed life for those who lived through them. As reported by Smithsonian Magazine, for example, during the 12th century the Anasazi people left their cliff dwellings in Chaco Canyon, and according to scholars, this event is linked to the megadrought. That is, people abandoned their homes to search for reliable sources of water. 

And the impacts of decades-long droughts reach far beyond dusty farmland and shrinking waterlines. A few hundred years later, the worst drought within the last 1,200 years may have contributed to untold loss of life in Mexico when the deadly cocoliztli epidemic killed nearly half of the Indigenous population. 

Of course, European colonizers invading the the area was the primary cause of the epidemic since they brought the disease to the Indigenous communities in Mexico. But spread of disease is also affected by environmental context. In an effort to show how drought conditions can exacerbate community health conditions, a  recent study asserts that “rodent hosts” carrying the disease were actually “aggravated by extreme drought conditions.” Clearly, intense periods of drought can have an untold impact on our communities — in so many different ways.

transfer of water right arizona

Smerdon says we’ve been susceptible to megadroughts before, but not of this severity. In 2016, the same researchers involved in the aforementioned Science study modeled the possibility of a megadrought lasting over 35 years. Their findings showed there’s a 90% probability of a megadrought occurring, and, to make matters worse, they posit that if climate change continues at its current pace the megadrought would likely occur before 2100. 

Moreover, their latest research states that the period of drought between 2000 and 2018 was the second driest of all 19-year periods in the last 1,200 years. “[L]ooking at the data since 2000,” Smerdon says, “they’re definitely suggesting that we are currently on a megadrought trajectory.” Other experts take issue with the term “trajectory,” noting that we’re already entering the megadrought’s grasp . In fact these same experts note that 26% of the western U.S. is in “exceptional drought status,” and a staggering 96% is experiencing some kind of drought conditions. 

When Will the Drought Conditions End?

Of course, climate science is both ever-changing and complex. Some readers may recall the buzz surrounding recent La Niña conditions, which occur when the Pacific Ocean cools and pushes storms north, thus increasing the likelihood of drought conditions in the American West. In contrast, warm-water El Niño conditions allow for precipitation to reach the American West, providing relief from drought. While these alternating conditions pose a more natural means of ending a period of drought (or, at least, regulating patterns), our planet’s rising temperatures make the impact (and occurrence) of these oceanic and atmospheric phenomenon less certain. 

transfer of water right arizona

When asked by On Point ‘s Meghna Chakrabarti if the so-called “aridification” of the American West would ever end, guest Brad Udall, senior water and climate research scientist at Colorado State University and the Colorado Water Institute, answered rather bluntly, saying, “No, it’s a new state, unfortunately.” Udall went on to say that although we may experience some breaks — that is, wet periods — the long-term trends will be “warming and drying.”

The very use of the term aridification is cause for alarm. While drought is temporary, aridification indicates something more permanent — a “new normal” of sorts. At the time of this writing, Lake Mead and Lake Powell, the biggest reservoirs in the U.S., were reported to be at 26% and 27% full , respectively. With droughts gripping the Pacific Northwest, the Southwest, and California — the state’s Lake Oroville was reported to be at critically low levels . It’s clear that the impacts of these severe, dry conditions are far-reaching and interwoven. 

Is the Aridification of the American West the “New Normal”? 

So, if the ongoing aridification of the American West isn’t going to end , how can we navigate these conditions? Mitigation is likely the only course of preventative maintenance. For example, according to the National Drought Mitigation Center , we “can save more than 100 gallons of water a month” by turning off the faucet while brushing our teeth.

Taking a more environmentally-minded approach to life can’t hurt, but individual actions aren’t the only thing we need to focus on. While using aluminum straws and composting are great , it’s clear that much of the needed change — or, at least, mitigation strategies — lie in policy-making. “That has been the approach to water management in the United States for more than a century… [W]e have been sort of enamored with the idea that we can engineer our way out of [this] problem,” On Point host Chakrabarti asserts later on in the episode. “And now we have a situation where that sort of thinking and, therefore, policy-making has not caught up with the environmental and climatic realities of the West.”

transfer of water right arizona

Now more than ever, making sound decisions around water use is essential. Since 2007, Arizona, New Mexico, Colorado, California, Utah, Wyoming and Nevada have been operating under a set of guidelines that manages a key resource in the American West: the Colorado River. In 2026, all the current guidelines and plans governing the use of this resource will expire, meaning that the time is now for thoughtful discussions about water management — and, hopefully, discussions that will take Indigenous activists, Water Protectors , leaders and communities into account.

Want to take action? Support and donate to organizations aiming to not just fight climate change, but promote climate justice as well, like Earthjustice . Moreover, prioritize Indigenous activists and Indigenous-led organizations that are leading the fight to preserve our water sources and land, including: 

  • Sunrise Movement
  • Indigenous Climate Action
  • Indigenous Environmental Network
  • Lakota People’s Law Project

Of course, there are many, many other essential organizations , so, as always, be sure to seek out local groups in your community in addition to those with a more national reach. 


transfer of water right arizona

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2005 Arizona Revised Statutes - Revised Statutes §45-176  Transfer of water rights; water rights settlement; limitation; required consent

Disclaimer: These codes may not be the most recent version. Arizona may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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By Hugh Holub Attorney at Law

October, 2009


Surface water rights are regulated pursuant to A.R.S. 45-141 through 167. A surface water right is appurtenant to a specific parcel of land, but the point of diversion can be changed and the uses can be changed through administrative proceedings before ADWR.

The amount of water available under a surface water right is subject to climatic variability and prior right appropriations. The doctrine of "prior appropriation" applies to surface water, which basically means first in time is first in right.

The right to the use of surface water must be maintained at a minimum of every 5 years, with few exceptions. If the use is not made over a 5 year period (unless the use was not made through no fault of the owner) the right reverts back to the state.

Surface waters, so long as they are not used in conjunction with groundwater supplies, are limited in use solely by the total quantity of the right, and actual availability of the water, and priority.

All surface water rights in the Gila River Basin are subject to a pending adjudication before the Superior Court of the State of Arizona, and claims for water rights filed by the Gila River Indian Tribe against all water rights holders and claimants in the Gila River Basin. As the adjudication and Indian claim are still in the initial stages of determination, no decision or opinion can be rendered as to the potential impact of the adjudication or Indian claim on this, or any other surface water right in the Gila River Basin. Groundwater rights may also be subject to the Gila Adjudication.


Under Arizona law the state is divided between areas called Active Management Areas (AMA) and areas which are not yet designated for Active Management. The Santa Cruz River Basin and the Avra/Altar Basin (encompassing the Avra Valley, Tucson, Green Valley and, Marana) are located within the Tucson Active Management Area (TAMA). ARS 45-411 to 421. Pinal County, Maricopa County, the area around Prescott, and Santa Cruz County are also in Active Management Areas. A map of the state’s AMA follows.

Outside of AMAs there are no groundwater rights per se. The doctrine of "reasonable use" applies. It is only in AMAs where groundwater rights are quantified and regulated.

In an AMA, groundwater rights and uses are highly regulated due to a long history of groundwater overdrafts (the pumping out of groundwater in greater quantities than replenished by natural recharge). ARS 45-101.

There are several types of groundwater rights:


There are two types of groundwater rights associated with irrigation: Irrigation Grandfathered Groundwater Rights and Type 1 Non-irrigation Grandfathered Groundwater Rights.

(1) Irrigation Grandfathered Groundwater Rights (IGRs) are appurtenant to irrigated lands. The amount of an IGR is based on the "irrigation duty acres" times the "irrigation water duty". Thus, a parcel of land with 100 "irrigation duty acres" and an "irrigation water duty" of 5.0 acre feet per acre, will have an IGR of 500 acre feet. The amount of an IGR decreases over time as the ADWR revises the irrigation water duty with each Management Plan. An IGR can only be used for irrigation purposes on the "irrigation duty acres".

(2) The owner of an IGR may covert its IGR irrigation rights to a Type 1 Non-irrigation Grandfathered Groundwater Right (called a Type 1 Right). The Type 1 Right is either 3 acre feet per "irrigation duty acre" or the actual "irrigation water duty" per acre, whichever is less. A.R.S. 45-469. Thus, if a farm had 100 acres of "irrigation water duty" land with a 5 acre foot per acre "irrigation water duty" it would convert to a Type 1 Right at 3 acre feet per acre, or a total of 300 acre feet per annum of Type 1 Rights. A Type 1 Right can be used on the appurtenant land, or used off the appurtenant land so long as it is withdrawn from the appurtenant land.

To convert the IGR to a Type 1 right, the applicant must show a plan for the use of the converted right pursuant to A.R.S. 45-573.

The amount of the IGR and/or the Type 1 Right can be obtained from the Arizona Department of Water Resources. Certificates for these water rights are issued by ADWR.


Service Area groundwater withdrawal rights are created pursuant to A.R.S. 45-491 through 498 and relate to groundwater rights and uses within "service areas" of cities and towns as defined in A.R.S. 45-402 (26) and for "private water companies" as defined in A.R.S. 45-402 (25).

A Service Area Right includes the right for the removal of any absolute volumetric limitation upon the amount of groundwater that may be withdrawn from these wells for the benefit of landowners and residents with the Service Area, subject to whatever conservation requirements may be imposed under the Management Plan(s) prescribed by A.R.S. 45-561 through 576. A "Service Area" is where a utility has an operating distribution system.

A Service Area Right allows the owner to increase the amount of groundwater withdrawn, and to install larger pumps on the wells consistent with applicable rules and regulations, to serve increased water demands. New Service Area Right wells can be drilled within the "Service Area" as defined by ADWR.

This is a very unique groundwater right in that it is the only increasing right to withdraw groundwater permitted in an Active Management Area.

Typically cities and private water companies have Service Area rights.


There are two kinds of Type 2 Non-irrigation Grandfathered Groundwater Rights, both of which are associated with groundwater uses that existed prior to 1980 for non-irrigation purposes. These are:

(a) Type 2 Unrestricted: This Type 2 Right is typically associated with wells serving dairies, trailer parks, industries, guest ranches, and other commercial uses. This right my be transferred anywhere in the same AMA.

(b) Type 2 Mining, Sand and Gravel: This Type 2 Right is associated with mining and sand and gravel operations, and may be transferred and used anywhere in the same AMA only for mining and/or sand and gravel uses.

A Type 2 Right is a personal property right in that it can float, and is not necessarily appurtenant to a parcel of land at the point of sale.


There are a number of Groundwater Withdrawal Permit options available pursuant to A.R.S. 45-511 et.seq. for dewatering, mineral extraction, industrial uses, poor quality groundwater removal, hydrologic testing, etc. ADWR grants Industrial Use permits for specific uses where alternative sources of water are not available.


Municipalities and private water companies who pump groundwater for municipal use are subject to increasingly stringent water conservation requirements imposed through a succession of Management Plans adopted every 10 years, measured by Gallons Per Capita Per Day (GPCD). Arizona is into its Third Management Plan phase (2000 through 2010), and GPCD requirements for municipal water use have been set for all municipal utilities and private water companies in the state's AMAs. ARS 45-561 to 45-578.

A key element of the state's groundwater laws for AMAs is the designation of a goal for each AMA. The Tucson AMA's goal is to achieve "safe yield" by the year 2025, meaning that no more groundwater can be pumped and used than is naturally or artificially replenished. ARS 45-562. Presently municipal users alone in the Tucson AMA pump and use more groundwater than is naturally replenished.

The Santa Cruz Active Management Area has a significantly different goal. It’s goal is to maintain safe yield and to prevent any long term declines in local water tables.

A companion element of the state's groundwater laws is that no new subdivisions are allowed in an AMA unless proof is made that the new subdivision will have a 100 year assured supply of water (called the Assured Water Supply provision). ARS 45-576.

In 1995, the Arizona Department of Water Resources (ADWR) revised its rules governing proof of a 100 year assured water supply, aimed at reducing the amount of mined groundwater a water utility or new subdivision can count for purposes of such proof. The argument was that it is inconsistent with the goal of "safe yield" in the TAMA to permit further municipal growth in Arizona AMAs dependent on mined groundwater.


ARS 45-576 and resulting policies and rules establish requirements for new subdivision development in an Active Management Area. As a condition of approving a new subdivision plat, a water supply sufficient for 100 years must be proven to the satisfaction of the Arizona Department of Water Resources (ADWR).

An "assured water supply" means:

1. Sufficient groundwater or surface water of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least one hundred years.

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

3. The financial capability has been demonstrated to construct the delivery system and any treatment works necessary to make the supply of water available for the proposed use. ARS 45-576 (L).

There are two terms used on the context of the Assured Water Supply requirement—a Certificate of Assured Water Supply, and a designation of an assured water supply.

A Certificate of Assured Water Supply is a document issued to a developer for its project and represents both a determination of hydrologic water availability and proof of the financial capability required under the code.

Cities, towns and water companies do not get certificates of assured water supply from ADWR. Instead, the service areas of water utilities are Designated as having a hydrologic supply based on proof provided by the utility. Within the 100 year designated assured water supply area, an individual developer can gain its Certificate of Assured Water Supply by showing ADWR its project is within a designated area, and that there is an agreement whereby the water facilities will be paid for and constructed (typically a main extension agreement) to meet the financial capability requirement.

The Assured Water Supply requirement only applies to the approval of new subdivisions. Thus new utility customers can be added to a water utility system provided that their development did not involve approval of a subdivision plat.

A primary goal of the new proposed Assured Water Supply rules is to reduce reliance on mined groundwater for urban growth.


The goal of ADWR in its new Assured Water Supply Rules is to require the applicant for a designation or certificate of assured water supply to prove it has a 100 year assured water supply based on using renewable sources of water. There are four renewable sources of water:

(A) Central Arizona Project ( CAP).

(B) Surface waters.

(C) Effluent (direct reuse).

(D) Recharge Credits (through underground storage and recovery project, indirect recharge, or in the case of Nogales, instream recharge).

The reasoning for this approach is an attempt to reconcile the Management Plan goal for the TAMA ("safe yield" meaning no more groundwater is withdrawn than is naturally or artificially replenished) with the Assured Water Supply requirement of the 1980 Groundwater Management Act (requiring proof of a 100 year assured water supply for new subdivisions).

The Assured Water Supply Rules are divided into five criteria:

(1) Physical Availability.(R12-15-703) This means that sufficient quantities of water must be continuously available to satisfy the water demand of the development (or city) for 100 years. This element has a hydrologic component, a continuous availability component, and a legal rights component.

The maximum allowable depth to groundwater permitted under the new rules is 1,000 feet for the TAMA. However, the actual mining of groundwater is limited by the new rules to a complex formula of allowable mining and required replacement. A utility could theoretically continue to use mined groundwater, provided the resulting depth to groundwater in 100 years would not exceed 1,000 feet in the Tucson AMA, and also provided that some sort of "payback" mechanism was in place to replace that mined groundwater. Any developer or water utility seeking to continue to pump groundwater, even with a "payback" mechanism (such as recharge) would have to prove the hydrologic availability of the groundwater within the 1,000 foot limitation.

The 1,000 foot criteria is not used in the Santa Cruz AMA.

If surface water is proposed as an element of the Assured Water Supply, the volume of that surface water that could be counted would be 120% of the firm yield of the source unless alternative supplies were available. Flows would be based on a minimum of 20 years of record. The seniority of the appropriative right is a major factor in this determination.

If CAP water is proposed as an element of the Assured Water Supply, 100% of the subcontract amount would count if the applicant has a nondeclining, long-term municipal and industrial CAP subcontract.

If effluent is to be used to prove an Assured Water Supply (meaning the effluent would actually be treated and reused), ADWR would analyze the current or projected production of effluent, the applicant's ability to treat that effluent, and the demand for the effluent.

If recharge credits are to be used, ADWR would look at the existence of a contract to obtain the water, the likelihood that the water will be physically available, the applicant's financial capability to purchase the water, the presence of an existing underground storage and recovery project (including an indirect recharge project) and the existence of all required permits.

Another element of Physical Availability is "Continuous Availability". This means that evidence must be provided showing adequate storage, delivery and treatment works for the proposed supply. The variability of surface water and/or effluent would also be considered.

A final element of Physical Availability is "Legal Availability". That means the applicant must show it has the legal rights to the water it is claiming for Assured Water Supply proof.

(2) Water Quality. (R12-15-704) The water relied on for the projected growth must be of sufficient quality to be actually used.

The Water Quality aspect of proving an Assured Water Supply relates to the physical quality of the water. Contaminated groundwater, for example, could not be used to prove an Assured Water Supply, unless it was to be treated to potability standards.

(3) Consistency With Management Plan Goal.(R12-15-705) The purpose of this element is to quantify ( and limit) the volume of mined groundwater that can be pumped and used for Assured Water Supply proof purposes.

ADWR has proposed a highly complex means to ratchet down groundwater reliance for new urban growth, focused on water uses as opposed to water rights.

The first component is a Groundwater Allocation Formula.

Under this approach, a water provider would be allocated 30 years of mined groundwater based on a determined amount of groundwater at the beginning point of the Assured Water Supply decision and phased down to zero in 30 years. The total quantity of groundwater identified through this formula could be used over the course of the 100 year period.

Assuming, for discussion purposes, an applicant could show 1,000 acre feet of mined groundwater in year one, the applicant would get roughly 15,000 acre feet of mined groundwater allocated for assured water supply purposes for the 30 year period, or an average of 150 acre feet of groundwater per year for the 100 year period.

ADWR also proposes an "incidental recharge credit" adding a small quantity of groundwater use for an Assured Water Supply.

ADWR further proposes "credits" for retiring IGRs at the rate of 1.5 acre foot per irrigated duty acre times the number of years between when the farm is retired and the year 2025. Thus if an applicant bought a farm with 1,000 acres of irrigation duty land with IGR rights and retired it in 1996, the applicant could claim 1,500 acre feet of groundwater times 29 years or a total of 43,500 acre feet of mineable groundwater. Over a 100 year period this would allow 435 acre feet of groundwater per year to be mined.

Type 2 Rights can also be "retired" for credits.

Consistency with the Management Plan goals can also be obtained through a combination of proof of physical availability of groundwater plus joining the Central Arizona Groundwater Replenishment District (CAGRD). More about the CAGRD later.

(4) Consistency With Management Plan. (R12-15-706) The purpose of this requirement is to link projected water use within new developments with conservation mandates of the Management Plans.

This element requires the applicant to be in compliance with its current Management Plan conservation requirement. Thus if the applicant is in violation of its Management Plan requirements, it would not be eligible to gain an Assured Water Supply.

(5) Financial Capability. (R12-15-707) This requirement relates to proof of the financial capability of the applicant to construct the water delivery system and any treatment works required for the proposed use. This element details the types of financial assurances that would be available to prove the financial capability to construct and operate the water supply system.


(A) Redesignation: Every 10 years a city, town or private water company that has had an existing Designation of Assured Water Supply must reapply for a new designation (the "redesignation")..

(B) Financial Proof: Developers are required to meet similar financial assurance requirements as cities and counties apply for approvals of subdivision plats. Cities are required to show bonding capacity sufficient to build the water system to serve the projected growth. Proof for a new development being connected to a city, town or private water company system can be made by bond, letter of credit, or payment of cash to construct the required water system.

(C) Gila Adjudication Issues: All surface water rights in the Gila River Basin are subject to a pending adjudication before the Superior Court of the State of Arizona, and claims for water rights filed by the Gila River Indian Tribe against all water rights holders and claimants in the Gila River Basin. As the adjudication and Indian claim are still in the initial stages of determination, no decision or opinion can be rendered as to the potential impact of the adjudication or Indian claim on this, or any other surface water right in the Gila River Basin.

Private Water Law

A blog about water resources and law, arizona supreme court clarifies water transfer rules.

   Posted on November 18, 2015 by Wes Strickland

   Leave a Comment

transfer of water right arizona

The Arizona Supreme Court has issued an important decision regarding water transfers and who may participate as an “interested party” in administrative proceedings before the Arizona Department of Water Resources  (ADWR). The decision was issued on November 12, 2015 in the case of Arizona Department of Water Resources v. McClennen , No. CV-15-0223-SA, which is a dispute between Freeport Minerals Corporation and officials within Mohave County over water on Planet Ranch. That ranch has been the subject of multiple water transfer proposals since the 1980s, and for a time was owned by the City of Scottsdale for that purpose, before it was sold to Freeport in 2008.

In 2010, Freeport filed applications with ADWR to transfer surface water rights that had historically been used on Planet Ranch in Mohave County for use at the Bagdad Mining Complex in Yavapai County, which is adjacent to Mohave County on the east. A portion of the water rights would also be used within Mohave County to support the Lower Colorado River Multi-Species Conservation Program . Mohave County filed objections with ADWR, alleging that the transfer might negatively affect residents of the County and would be against the public interest.

ADWR rejected the County’s objections, concluding that Mohave County had no standing to participate in the proceeding since it did not hold any water rights or other interest that is protected under the water transfers statute, found in Arizona Revised Statutes § 45-172 . The County appealed that ruling, which led to last week’s decision by the Supreme Court.

The court held that § 45-172 allows ADWR to consider a limited set of factors when determining whether to approve a transfer of surface water rights. The statute requires that the water rights proposed for transfer “shall have been lawfully perfected … and shall not have thereafter been forfeited or abandoned,” and “vested or existing rights to the use of water shall not be affected, infringed upon, nor interfered with” by the transfer. Mohave County did not allege any violation of those standards by the proposed transfer from Planet Ranch, and did not hold any vested water rights itself. Therefore, the court held that the County had not raised any arguments that needed to be considered by ADWR, and the agency did not need to allow the County to participate in the proceeding.

Mohave County argued that a water transfer should be subject to a discretionary public interest test, like that imposed on new appropriations of water. Arizona Revised Statutes § 45-153  allows ADWR to reject a proposed appropriation if the use would be “against the interests and welfare of the public.” The Supreme Court held, however, that the public interest test only applies to new appropriations of water and not to water transfers, since that language appears nowhere in § 45-172. That is consistent with the concept that water rights, once formed, are property rights that can be used or transferred by the owner without ongoing oversight from ADWR, as long as the use does not infringe on the rights of other water users.

The Supreme Court used the factors to be considered by ADWR as the basis for interpreting who may be an “interested person” that can file objections against a water transfer. The term is not defined in the statute, so the court looked to the purpose of objections. The court held that in this context, the phrase “interested person” should mean a person who has an interest protected by § 45-172, i.e., an owner of a vested water right that could be affected by the transfer. Since the County did not fall within that definition, the court ruled that the County had no standing to file an objection, and ADWR was correct in rejecting its participation.

In essence, Mojave County objected to the Planet Ranch water transfer based on the general interest of its citizens, rather than any special interest in the water rights at issue. Water in Arizona is owned and allocated by the state through ADWR, and the Supreme Court denied the attempt by Mohave County to insert itself into that process without a demonstrable interest in water rights. The decision is favorable for water rights holders, since it rejected the argument that ADWR should apply a public interest test to all water transfers. Instead, the Supreme Court affirmed that once an initial appropriation has been made, the resulting water rights constitute legal entitlements that can be freely used and transferred by the owner, in the absence of concrete harm to other water users.

Of course, whether opposing the water transfer would actually be in the interest of Mojave County citizens is debatable, but the political process resulted in County elected officials determining that they should object to the transfer. The Supreme Court’s decision represents a victory of water law over politics, at least temporarily in this matter. Water management often comes down to popular opinions and politics in its most base form, so it is refreshing to see a court applying the law objectively, rather than trying to divine the political currents.

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 Category: Arizona , Water markets/transfers    

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Arizona Water Rights – The Copper State’s Water Rights System

Dec 1, 2020 | Blog , Water Rights

Arizona Water Rights - The Copper State's Water Rights System

Part of our Water Rights Guide

Arizona is one of the driest states in the U.S., with a high risk of drought and abnormally dry conditions across most of its land area. Even so, Arizona maintains a diverse – and growing – agricultural sector that accounts for up to $23.3 billion in annual revenue. According to a guide to irrigated agriculture from the University of Arizona:

“Arizona provides at least two of the three prerequisites for producing crops: ample sunshine [and] high-quality soils…. Although the desert lacks sufficient rainfall to grow most crops, Arizona’s rivers have supported agriculture for thousands of years, and aquifers in Arizona’s desert valleys hold vast quantities of groundwater.”

Additionally, the director of the Arizona Department of Agriculture (AZDA) explains that , despite its natural limitations, “Arizona acknowledged the water situation decades ago and planned for growth and protected its water resources.” This means that Arizona is heavily reliant on irrigation infrastructure and primarily relies on water from two main sources: the Colorado River, and groundwater reserves. In this article, we’ll take a deep dive into Arizona’s water rights situation, including how you can look up existing water rights and purchase additional rights for agriculture.

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Background on Water Rights in Arizona

The Arizona Department of Water Resources reports that the percentage of Arizona’s total water use that goes into agriculture is 68 percent – similar to other regions. But irrigation isn’t just about keeping crops hydrated. According to the University of Arizona analysis, “it is also used to flush accumulated salts from the soil, to increase humidity and lower temperature surrounding crops, and to protect crops from frost.” In short, improving irrigation practices in agriculture will be key to maintaining Arizona’s agricultural economy, as well as shoring up the nation’s food supply .

Water Rights Regulations

Arizona regulates surface water rights based on the doctrine of prior appropriation . This means that the first person to claim a “beneficial use” of the water has the senior right to it. The Surface Water Permitting Unit handles most surface water permits, except for those along the Lower Colorado River, which is governed by an interstate compact. Groundwater is regulated under the Groundwater Management Act (GMA), which was passed in 1980. It designated the regions that are most dependent on groundwater as Active Management Areas (AMAs). These must adhere to conservation and reporting requirements in order to balance the needs of water users going forward.

Irrigation Rights

There are several other designations that determine which water rights are available in each region. Irrigation Non-Expansion Areas are those without sufficient groundwater resources to ensure a reliable supply. Irrigating new land in an INA is prohibited in order to prioritize land that is currently being farmed. Only land that has been irrigated within the five years before the designation can still be used for agriculture. Some parcels of land may have an Irrigation Grandfathered Right (IGFR), which is granted to lands that were irrigated between 1975 and 1979.

Additional Considerations

Arizona has several systems in place for managing its water resources.

These include:

  • Irrigation Districts, which are municipal corporations that distribute water
  • Underground Water Storage, Savings, and Replenishment Program, which provides long-term storage credits (LTSC) in return for conserving water
  • The Groundwater Permitting and Wells Unit, which maintains a registry of all groundwater wells
  • The Central Arizona Project, which manages Arizona’s allocations from the Colorado River, totaling 2.8 million acre-feet each year

Arizona also maintains a Drought Contingency Plan in conjunction with other states that depend on the Colorado River. According to one news report , “Without the new plan in place, existing rules would leave Arizona looking at deep water cutbacks in the coming years. The negotiated rules will leave fewer water users exposed to risk and will help those most affected weather smaller cutbacks.”

How to Confirm a Water Right is Valid

Arizona has a fairly robust system for managing its water resources through AZDWR , which is a step in the right direction when it comes to dealing with water stress in the years ahead. Still, these complex regulations can make it difficult to determine exactly which rights are attached to a piece of land and whether they’re valid for agricultural use.

Remember, some regions have been designated as Irrigation Non-Expansion Areas, so even if groundwater is available on the property, it may not be legal to use. Additionally, junior water rights holders may find themselves facing cutbacks during dry years, as senior rights holders are first in line for limited allocations.

It’s important to get a complete picture of a parcel’s water rights and land-use history in order to determine its overall water risk. Soon, you’ll be able to research existing permits in Arizona using AQUAOSO’s Water Security Platform , which aggregates data from multiple sources in an easy-to-use interface.

You’ll be able to see the boundaries of Active Management Areas, find extensive per-parcel information of land, and more .

How to Find and Purchase Arizona Water Rights

In addition to the Arizona Water Banking Authority , which provides long-term credits for unused water rights, Arizona allows for the private transfer of groundwater rights. It’s the second most active market after California, with a total of 484,000 acre-feet ($69 million) transferred in 2015, most of them in the form of short-term leases rather than sales.

However, finding and trading water rights isn’t a straightforward process. In most states, there are no centralized systems in place to facilitate sales so, in many instances, buyers and sellers have to find each other and negotiate a price themselves. Some regions have begun rolling out smart water markets , which use modern technologies to facilitate transactions.

New water technologies will go a long way toward determining the true price of water and encouraging growers to allocate water resources where they’re needed most.

With watershed maps, water rights information, and water risk data all rolled into one, you can use our rapidly-expanding  Water Security Platform to look up water rights and use it to inform your land deals and agricultural investments. While it’s not a transactional marketplace, AQUAOSO is a great example of what these kinds of new technologies and tools could look like.

How to Present a Water Rights Analysis

A report by Ceres found that 77% of the companies they researched factored water risk into their financial filings, but that overall, “food companies need to do more, both faster and more boldly, to meet the challenges posed by the global water crisis, protect their bottom lines and return value to investors.” In drought-prone states like Arizona, water risk is business risk.

You can use water risk data to provide actionable information to lenders and investors.

  • Before presenting a land deal, loan officers can research the water rights of the property to ensure that they’re valid and that the water source is reliable.
  • Credit officers can bring their water rights analysis to meetings with regulators, to demonstrate that any water risk concerns have been considered and addressed.
  • Senior managers can present the analysis to the bank’s board or to investors, pricing water risk directly into the value of the loan.

The true value of water is hard to pin down, but as water scarcity becomes even more of an issue in the American Southwest, getting the full picture of a region’s water risk will allow you to make better land deals and wiser investments. Ultimately, this helps stakeholders at every step of the supply chain – from growers to food distributors – become more resilient and less vulnerable to unforeseen weather events.

You can read our Water Rights Guide to learn more about state-by-state water rights systems and how understanding them benefits your bottom line .

The Bottom Line

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