Central Arizona is facing potentially dramatic shortages of Colorado River supplies which will mean more groundwater depletion and less water available for aquifer replenishment. These developments have brought the Central Arizona Groundwater Replenishment District and its 2025 Plan of Operation into sharp focus.
The Kyl Center’s 2019 report highlighted the risks of continuing to use CAGRD as a mechanism for growth in central Arizona. Following, we cover the six years since that report was published.
Kyl Center for Water Policy at Morrison Institute
Authors: Kathleen Ferris, Senior Fellow; Sarah Porter, Director; Kathryn Sorensen, Director of Research
Pressure point: The CAGRD 2025 Plan of Operation
Protection of groundwater in central Arizona is at a crossroads. For three decades, suburban and exurban growth in central Arizona have relied on a clever work-around—a replenishment program—designed to enable groundwaterdependent development while still attempting to uphold the region’s long-term water sustainability goals.
Now central Arizona is facing potentially dramatic shortages of Colorado River supplies, which will mean more groundwater depletion and less water available for aquifer replenishment. These developments have brought the Central Arizona Groundwater Replenishment District and its 2025 Plan of Operation into sharp focus.
A lot hinges on CAGRD’s 2025 Plan.
Background
Beginning in the 1930s and continuing through the 1970’s, central Arizona experienced rapid and significant groundwater depletion by farms, cities and industries. In 1980, Arizona adopted its much-lauded Groundwater Management Act, which established Active Management Areas (AMAs) in the state’s most populous areas and for the Phoenix and Tucson AMAs set a goal of “safe yield,” directing that groundwater withdrawals should roughly equal natural and artificial recharge by the year 2025. The Act further established the Arizona Department of Water Resources (ADWR), prohibited the sale within the AMAs of subdivision lots that lack a 100-year assured water supply and directed the Department to develop rules to establish and maintain the assured water supply program.
The initial version of the assured water supply rules would have required housing growth to occur almost exclusively on renewable water supplies (river water and reclaimed water) to prevent the further depletion of groundwater. In effect, the proposed rules would have prevented subdivision development in parts of the AMAs that had no access to renewable supplies—where the only water supply was non-renewing groundwater.1 In response to pressure from developers and others who desired growth in those areas, in 1993 the Legislature enacted a work-around, creating the Central Arizona Groundwater Replenishment District (CAGRD) and allowing groundwater to be an assured water supply on the condition that CAGRD replenish “excess groundwater” use.2
When CAGRD was created, central Arizona was looking for creative ways to use its seemingly abundant new water supply made available by the soon-to-be-completed Central Arizona Project (CAP), and the enablement of a path for development in areas that lacked renewable water supplies was regarded as politically necessary to clear the way for the adoption of rigorous assured water supply rules. But in the years to follow, enrollment in CAGRD would grow far beyond expectations. As of December 2024, CAGRD has enabled the development of over 311,000 housing lots on lands that have no water supply other than non-renewable groundwater and whatever reclaimed wastewater the houses generate.
1 In Arizona, groundwater was stored underground over many thousands of years and is not annually renewed by natural precipitation at any significant rate, making it a finite water supply.
2 “Excess groundwater” is defined as an amount of groundwater delivered in a calendar year beyond what is consistent with the management goal of the AMA. A.R.S. §48-3701.7.
The Kyl Center’s 2019 report The Elusive Concept of an Assured Water Supply: The Role of CAGRD and Replenishment3 highlighted the risks of continuing to use CAGRD as a mechanism for growth in central Arizona. In the six years since The Elusive Concept was published, much has happened:
• In 2022, the first ever shortages of Colorado River water arrived, resulting in cuts to Colorado River water delivered through the Central Arizona Project. Deeper cuts are anticipated under greater Colorado River shortages in the future.
• In 2023, ADWR released its Phoenix AMA groundwater model4 which demonstrated that if all the pumping occurs as authorized over the 100-year period modeled, some groundwater users’ wells will dry up. A 2019 groundwater model for the Pinal AMA forecasted a similar future. As a result of the models’ predicting this unmet demand, ADWR has stopped issuing new determinations of an assured water supply based on groundwater in both the Phoenix and Pinal AMAs, effectively halting the permitting of new subdivisions reliant on the CAGRD work-around.
• In 2024, ADWR adopted rules to establish an “Alternative Path to Designation of a 100-year Assured Water Supply,” a program that allows participating municipal water providers to accommodate groundwater-reliant growth while developing renewable supplies.
• In 2025, legislation was introduced to allow the retirement of farm land with irrigation grandfathered pumping rights in exchange for credits that can be pledged to an application for an assured water supply. ADWR also began a stakeholder process to explore potential new rules for the retirement of grandfathered rights to pump groundwater for agricultural use in exchange for credits that would allow a municipal water provider pump groundwater to serve new subdivisions and other customers.
3 Kathleen Ferris & Sarah Porter, The Elusive Concept of an Assured Water Supply: The Role of CAGRD and Replenishment, Kyl Center for Water Policy at ASU Morrison Institute, Fall 2019, https://morrisoninstitute.asu.edu/sites/default/files/kyl_center_elusive_concept_101619.docx.pdf.
4 Arizona Department of Water Resources, Phoenix AMA Groundwater Supply Updates, 2024, https://www.azwater.gov/phoenix-ama-groundwater-supply-updates.
Central Arizona Project aqueduct. Source: American Society of Civil Engineers.
The Proposed 2025 Plan of Operation
Today, over 311,000 groundwater reliant lots are enrolled in CAGRD5 and the Proposed 2025 Plan of Operation
Subdivisions in the Phoenix AMA. Source: Michael Schiffer.
The 2025 Plan identifies 77,141 acre-feet per year in CAGRD’s current portfolio, but as discussed below half of those supplies are likely to be cut year after year—and some of those supplies will not become available to CAGRD as long as any there are any cuts to CAP’s lower priority Non-Indian Agricultural (NIA) pool.
In October 2024, the CAP Board voted to approve the 2025 Plan and it was submitted to ADWR on December 30, 2024. In late February, Arizona Department of Water Resources Director Tom Buschatzke returned the plan requesting that CAGRD remove all NIA supplies from its analysis.
The impact of Colorado River shortage
The 2025 Plan reinforces one of the most significant findings of The Elusive Concept—that ensuring sufficient water supplies for aquifer replenishment will be a major challenge.
CAGRD has legal access to CAP water through its long-term M&I contract, its contract for NIA priority water, leases and exchanges of CAP water with the Gila River Indian Community and annual contracts for excess CAP water, which was available in a year when it wasn’t being used by others with senior rights.6
5 This includes approximately 90,000 enrolled lots that have yet to be built.
6 Colorado River water delivered via the CAP has different priorities. From lowest to highest the priorities are excess, NIA, municipal and industrial (M&I) alongside Indian, and Priority 3. During shortages on the Colorado River, deliveries through the CAP are cut in this order until the higher priority demands are met or there is no water to deliver.
CAGRD Colorado River Water Deliveries 1999-2024
The Director’s Role in the Plan of Operation
By law, every ten years, CAGRD must submit a plan of operation for approval by the Director of ADWR. The plan must include an estimate of CAGRD’s current and projected replenishment obligations for the next 20 years for current members and an estimate of projected replenishment obligations for the next 100 years for current and potential members. The plan must also include a description of the water resources that CAGRD “plans” to use for replenishment during the next 20 years and the water resources that are “potentially available” for replenishment during the subsequent 80 years.
Once a proposed plan of operation is submitted, the Director must determine if the Plan is “complete,” and, if so, hold a public hearing to determine whether the plan is consistent with achieving the management goals of the Phoenix, Pinal and Tucson AMAs.
Through 2020, CAGRD was meeting much of its replenishment obligations with excess CAP water. However, excess CAP water has not been available since Arizona’s entry into the Drought Contingency Plan with California and Nevada under which the three states agreed to use less Colorado River water to mitigate precipitous reservoir declines in Lake Mead. Since the Colorado River is overallocated, has experienced more than twenty years of intense drought and may be experiencing permanently diminishing flows,7 there is no reasonable expectation that excess CAP water will be available in the foreseeable future.
The Director must decide the plan is consistent with achieving a management goal if, among other things:
• CAGRD has identified (1) sufficient water supplies to meet its replenishment obligations for current members during the 20 calendar years following submission of the plan, and (2) additional water supplies “potentially available” for the projected replenishment obligations for the 100 calendar years following submission of the plan for current members and potential members.
• CAGRD has identified sufficient capacity at storage facilities and projects to be used for replenishment during the 20 years following submission of the plan.
• CAGRD has made a reasonable estimate of its projected replenishment obligations for the 100 years following submission of the plan.
If after approving a plan of operation the Director determines that there has been an unexpected increase in CAGRD’s replenishment obligations or an unexpected decrease in water to meet those obligations, the Director can require CAGRD to submit a revised plan within one year. Following a hearing on the revised plan, if the Director determines that the plan is no longer consistent with the management goal, CAGRD has 60 days to satisfy the Director’s concerns. If it fails to do so, the determination that the plan is consistent with the management goal expires.
7 Coleman Cornelius, Rapid Decline: Scientist describes impacts of climate change on the Colorado River and its 40 million users, STATE, February 13, 2023, https://magazine.csusystem.edu/2023/02/13/rapid-decline.
If a plan is no longer consistent with the management goal of an AMA, all Designations in that AMA based on CAGRD membership expire and no additional land in that AMA may become a member of CAGRD.
Cuts to NIA Priority and M&I Priority
When there isn’t enough NIA priority water available to meet all NIA demands, NIA priority water is cut proportionally among all holders of contracts to water in the pool based on the amount of this water used in the last non-shortage year. In 2022, the Secretary of the Interior declared the first-ever shortage on the Colorado River. Because CAGRD’s use of its own contract for NIA priority water in the last non-shortage year (2021) was zero, until the next non-shortage year the proportion of the NIA priority pool of water it can receive through its own contract during shortages is also therefore zero. CAGRD will not gain access to its own contract for NIA priority water so long as the Colorado River remains in shortage8 and will not gain full access to it until a non-shortage year in which all NIA demands are fully met. If and when this occurs, CAGRD will have the chance to show its “last non-shortage year” usage as its full contract amount. Through the 2019 Drought Contingency Plan, holders of this “2021 NIA Assignment” and other NIA priority water receive “Mitigation Water”9 in varying amounts through 2025. There is no mitigation for cuts to NIA priority water beyond 2025.
CAGRD also has access to additional NIA priority water via a 25-year lease with the Gila River Indian Community for some of the Community’s NIA priority water. The terms of the lease with the Gila River Indian Community indicate that the leased water is cut in proportion to the amount the Community’s NIA priority water is cut. Since NIA priority water is the second lowest priority CAP water in central Arizona (behind excess), the reasonable expectation is that little of this lease water will be available in the foreseeable future.
CAGRD has a modest amount of M&I priority water—an allocation of 6,426 acre-feet. Although the shortages in 2022 through 2025 were not deep enough to cut into the M&I and Indian priority pools of water, it is reasonable to expect that future shortages will be deep enough to impact these supplies. However, CAGRD has entered into an innovative lease agreement with the Gila River Indian Community for 15,000 acre-feet of Colorado River water over the next 25 years that is equivalent to M&I priority water, which helps to bolster CAGRD’s CAP supplies.
Access to NIA priority CAP water is also at risk. Following a 2014 recommendation by the Director of ADWR, CAGRD received an allocation of 18,185 acre-feet of NIA priority water. However, CAGRD’s contract for this water was not finalized until 2021. In 2022, the Secretary of the Interior declared the first-ever shortage on the Colorado River, and as a result CAGRD’s NIA priority water pursuant to this contract was not made available.
The 2025 Plan recognizes that excess CAP water will no longer be available—a “huge change from the 2015 plan”10—and further acknowledges that NIA priority CAP water is “subject to reduction under any shortage condition.”11 In summary, CAGRD’s ability to rely on Colorado River water to meet replenishment obligations in the future has significantly diminished.
8 There is a chance that CAGRD can receive some of its NIA priority water during shortage under conditions in which the demands of those who have access to NIA priority water that was put to use prior to 2022 are filled first.
9 Mitigation Water is water that can be made up of different legal flavors of Colorado River water, most likely Intentionally Created Surplus water held by the Central Arizona Water Conservation District.
10 Central Arizona Project Board of Directors, Board of Directors Meeting, October 10, 2024, https://cap-az.granicus.com/player/clip/941?redirect=true.
11 Central Arizona Groundwater Replenishment District, 2025 CAGRD Plan of Operation, December 18, 2024, https://library.cap-az.com/cagrd/documents/2025-CAGRD-Final-PlanOfOperations.pdf, at 46.
CAGRD Colorado River Deliveries over Time (AF)
Data from CAWCD annual delivery reports.12 Mitigation water will no longer be available after 2025.
Nevertheless, the 2025 Plan approved by the CAP board and submitted to ADWR included nearly 39,000 acre-feet of NIA priority water in CAGRD’s current water supply portfolio. The Director of ADWR has since notified CAGRD that it must remove NIA priority water as a supply available for replenishment, stating:
“ [T]he Department will not assume that NIA priority CAP water will be available in any appreciable quantity or frequency to be considered for the 2025 plan of operation. This determination is consistent with the Department’s determination that NIA priority CAP water will not be available for purposes of any pending assured water supply determination.”13
The remaining 21,426 acre-feet of CAP supplies in CAGRD’s current portfolio include 6,426 acre-feet per year of M&I priority water and a 25-year exchange with the Gila River Indian Community of long-term storage credits for 15,000 acre-feet per year of the Community’s Indian priority CAP water. At this point in the negotiations over new operating guidelines for the Colorado River system, there is no clarity regarding how much water will be available for the M&I and Indian pools, and all CAP supplies are subject to potential reduction.
12 2025 deliveries are expected deliveries.
13 Thomas Buschatzke, Re: 2025 CAGRD Plan of Operation Insufficient Information, Letter to Laura Grignano, February 28, 2025, https://library.cap-az.com/cagrd/documents/2025-02-28-ADWR-Request-for-information-CAGRD-2025-Plan-of-Op.pdf.
Since 2009, CAGRD has acquired a total of 957,787 AF of Long-Term Storage Credits (LTSCs).14 LTSCs can be debited to meet CAGRD’s replenishment obligations and they can also be accumulated to build up CAGRD’s replenishment reserve:
“ The purpose of the Replenishment Reserve is to help ensure that CAGRD will be able to meet its replenishment obligation and to enhance rate stability. During periods of water supply shortage or infrastructure failure, CAGRD may use LTSCs from the Replenishment Reserve to offset its replenishment obligation rather than purchasing spot market water. Water purchased on the spot market is likely to be more costly during shortage or outage conditions.”15
The 2025 Plan proposes to debit LTSCs if NIA priority CAP water is not available.
“ Because NIA water makes up more than half of current CAGRD supplies, replenishment obligations would need to be met with an alternative supply. The loss of NIA water could be met with significant numbers of LTSCs from CAGRD’s LTSC accounts.…However, if additional supplies can be acquired to firm the CAP NIA supplies in the portfolio, these LTSCs can be preserved and used to meet short-term needs under extraordinary shortages.”16
If CAGRD uses LTSCs to meet its replenishment obligation, the stored water would remain underground and be accounted as a credit against the district’s replenishment obligation in a given year, while the LTSCs would also be deducted from CAGRD’s account, reducing the availability of such credits in the future.
If additional supplies cannot be acquired, CAGRD might need to use as much as 777,000 acre-feet of its LTSCs, 80% of its credits, in place of NIA priority water. Looming CAP shortages mean that opportunities to accrue LTSCs by storing CAP water underground will be limited. Moreover, future cuts to CAP supplies could be even deeper, creating even more uncertainty and greater reliance on existing LTSCs.
14 LTSCs are earned by storing unused CAP water, surface water or treated wastewater underground or by delivering such supplies to an entity (usually an irrigation district) that has the right to pump groundwater. Such an entity uses the delivered water instead of pumping groundwater, thus “saving” a like amount of groundwater. More information about LTSCs and the Arizona LTSC account balances is available on the Kyl Center’s Arizona Water Blueprint LTSC Dashboard at https://storymaps.arcgis.com/stories/61c95c2245e549fbb51fb94e7e0070bb.
15 Central Arizona Groundwater Replenishment District, 2023 Annual Operations Report, August 28, 2024, https://library.cap-az.com/cagrd/documents/2023-Annual-Operations-Report.pdf, at 15.
16 CAGRD, supra note 11, at 51.
Projected Availability of CAP Water for CAGRD under Colorado River Shortage Conditions (AF)
Acre-feet available for annual delivery in the CAP canal
Estimates from Kyl Center for Water Policy Arizona Colorado River Visualization Enterprise.
Options for new water supplies
The 2025 Plan lists several alternative water supplies that CAGRD could seek to acquire, including effluent (treated wastewater), additional exchanges or leases of Colorado River water, acquisition of mainstem Colorado River water rights, imported groundwater, Verde River water and desalinated water.17 Except for effluent, none of these supplies is currently available. And while other supplies may become available in the future, CAGRD will face stiff competition for them from cities and other water users. In addition, developing any of these supplies entails substantial obstacles:
• Effluent has become an extremely valuable water supply and the vast majority of municipal water providers that generate effluent intend to fully utilize it for recharge and direct reuse.18
• Transfers of mainstem Colorado River entitlements are highly controversial as users on the river fight for the preservation of economies built on that water supply. CAGRD might be able to lease Colorado River water from the Colorado River Indian Tribes if that water becomes available.
17 Id., at 54-57.
18 See, e.g., Taylor Seely, Phoenix to build multibillion dollar purification plant to make wastewater drinkable by 2030, Arizona Republic, April 12, 2023, https://www.azcentral.com/story/news/local/phoenix/2023/04/12/exclusive-phoenix-to-make-wastewater-drinkable-on-mass-scale-by-2030/70101091007/; Tony Davis, Tucson plans to build toilet-to-tap-water plant with US funds, Arizona Daily Star, January 6, 2025, https://tucson.com/news/local/ government-politics/tucson-plans-to-build-toilet-to-tap-water-plant-with-us-funds/article_3a801458-cc70-11ef-99af-4fef7d073087.html; Tom Scanlon, City Council approves ’recycled water’ plan, Scottsdale Progress, August 30, 2024, https://www.scottsdale.org/city_news/city-council-approves-recycled-water-plan/article_a29ae928-6596-11ef-8aad-179f42869565.html.
• Under state law, groundwater may be transported into central Arizona from the Harquahala Irrigation Non-Expansion Area (INA) and the Butler Valley and McMullen Valley basins. The cities of Scottsdale and Buckeye and the Town of Queen Creek have purchased land in the Harquahala INA with the intent of transporting groundwater to the Phoenix AMA. Others, such as EPCOR, a private water company, are hoping to gain access to some of the INA’s groundwater. However, the cost to acquire, treat and transport this water are significant and ADWR has not yet approved any application to transport groundwater from the INA.
• Verde River water would be made available by raising the height of Bartlett Dam. The Salt River Project (SRP) is leading the effort with the Bureau of Reclamation to complete a feasibility study of this proposal. SRP and 21 partners (including CAGRD, Phoenix AMA cities and Tribes) are funding the effort. Congress would have to approve the project, which is expected to cost around $1 billion and take 10-15 years to complete.19 The 2025 Plan estimates a maximum yield allocation of 12,850 acre-feet per year; however, in a report to the CAGRD and Underground Storage Committee, CAGRD states that its capacity allocation in the reservoir would be 4,725 acre-feet.20
• The 2025 Plan states that high-cost desalinated water (from outside of Arizona or the Yuma area where saline groundwater is pumped to prevent crop damage) would be considered only after “lower-cost opportunities are exhausted.”21 Currently, there are no desalination projects under construction or even pending.
The challenges CAGRD faces in acquiring new water supplies loom even larger in view of the fact that ADWR has instructed that NIA priority CAP water supplies cannot be included in pending applications for an assured water supply. Nearly all of the cities in the Phoenix AMA have applications pending before ADWR to modify their Designations of Assured Water Supply, which expire at the end of 2025. Seven of these Designations currently include a combined total of nearly 50,000 acre-feet of NIA water that will have to be replaced going forward. Additionally, nine other municipal providers have signed contracts for over 13,000 acre-feet of NIA priority CAP water that will not be available, leaving them in search of replacement supplies as well.
In 2022, a Committee of Governor Ducey’s Water Augmentation, Innovation and Conservation Council reported:
“ [T]he quantity and accessibility of renewable supplies realistically available in the future are as uncertain for CAGRD as for other water users. Fewer available water supplies for acquisition will likely lead to increased competition among the CAGRD and other entities seeking additional supplies for future use, including large industrial users and municipal and private water utilities.… The difficulties of acquiring these supplies beyond 2025 are compounded by the current complexities and contention surrounding the transfer of Colorado River water from the river to Central Arizona. Opposition from on-river interests to these Colorado River mainstem transfers and the increasing cost of such water supplies may also have an impact on future CAGRD acquisition activities.” 22
That warning is even more relevant today.
19 Salt River Project, Verde Reservoirs Sediment Mitigation Project, https://www.srpnet.com/grid-water-management/water-management/lakes/bartlett-dam-project#4.
20 CAGRD and Underground Storage Committee, Discussion and Consideration of Action to Recommend the Board Approve an Increase to the Non-Federal Partner Cost-Share for the Bartlett Dam Feasibility Study, October 24, 2024, https://capaz.portal.civicclerk.com/event/413/files/attachment/5571.
21 CAGRD, supra note 11, at 56.
22 Governor’s Water Augmentation, Innovation and Conservation Council Post-2025 AMAs Committee, Issue Brief #5 CAGRD Replenishment and Water Supplies, ADWR, March 5, 2021, https://www.azwater.gov/sites/default/files/2022-08/Issue%20Brief%20-%20CAGRD%20-%20Final.pdf.
Compounding factors
In June 2023, ADWR released the findings of its updated groundwater flow model for the Phoenix AMA predicting an “unmet demand” for groundwater based on a one-hundred-year demand model. ADWR had previously released a groundwater flow model for the Pinal AMA that also projected unmet demand. Unmet demand is a term of art that describes the potential for groundwater users’ wells to dry up (leaving their demand—their future needs for groundwater—unmet). Consequently, after over three decades of issuing assured water supply determinations for new groundwater-reliant subdivisions, ADWR halted this practice in the Phoenix and Pinal AMAs, finding that the areas had “reached the anticipated limits of growth on groundwater supplies.”23 That determination paused new housing projects in the far east and west suburbs of Phoenix and in much of Pinal County.24
The 2025 Plan of Operation notes that enrollment in CAGRD “has been profoundly affected by the constraints on physical availability of groundwater in the Phoenix and Pinal AMAs”25 and CAGRD anticipates no new member land enrollments in those AMAs.26 Consequently, CAGRD’s projected replenishment obligations have decreased. The 2015 Plan of Operation projected an annual replenishment obligation by 2034 of 86,900 acre-feet per year, increasing to 113,000 acre-feet per year in 2114.27 But in the 2025 Plan, those numbers have been reduced to 68,100 acre-feet per year by 2045 and 80,500 acre-feet per year in 2124,28 in part because CAGRD projects that recent amendments to ADWR’s assured water supply rules will lower its potential overall replenishment obligation.
However, other potential programs and lawsuits challenging ADWR’s groundwater flow models could substantially increase CAGRD’s replenishment obligations despite the uncertainty of future water supplies to meet these obligations.
23 Governor’s Water Policy Council Assured Water Supply Committee, Assured Water Supply Committee, June 27, 2023, https://www.azwater.gov/sites/default/files/adwr_meetings_docs/20230627_AWS_Comm_Meeting.pdf, at 12.
24 See e.g., Kyl Center for Water Policy, New Phoenix AMA Model Shows Limits of Groundwater as an Assured Water Supply, ASU Morrison Institute, June 2023, https://morrisoninstitute.asu.edu/sites/default/files/kyl_center_phoenix_ama_groundwater_model_explainer_062023.pdf; Arizona Department of Water Resources, 2019 Pinal Model and 100-year Assured Water Supply Projection Technical Memorandum, October 11, 2019, https://infoshare.azwater.gov/docushare/dsweb/Get/Document-11793/2019_Pinal_Model_and_100-Year_AWS_Projection-Technical_Memorandum.pdf; Arizona Department of Water Resources, ADWR Answers Representative Cook’s Questions, House Ad Hoc Committee on Groundwater Supply in Pinal County, October 11, 2019, https://new.azwater.gov/sites/default/files/20191008_ADWR_Answers_to_Representative_Cook_Questions.pdf.
25 CAGRD, supra note 11, at 44.
26 Id
27 Central Arizona Water Conservation District, Central Arizona Groundwater Replenishment District 2015 Plan of Operation, December 29, 2014, https://library.cap-az.com/cagrd/documents/2015-CAGRD-Plan-of-Operation.pdf, at 3-7.
28 CAGRD, supra note 11, at 43.
Alternative Designation of an Assured Water Supply (ADAWS)
In late 2024, ADWR amended its assured water supply rules to create an alternative path for a municipal water provider in the Phoenix or Pinal AMA to obtain a Designation of Assured Water Supply (ADAWS) that would allow the provider to serve new subdivisions with groundwater. Under the amended rules, an ADAWS provider must be a member service area of CAGRD and all of its groundwater pumping—including for existing CAGRD member land homes—must be consistent with the management goal of the AMA. Significantly, the rules mandate that an ADAWS provider must reduce its reliance on groundwater by 25% of each New Alternative Water Supply it acquires. A New Alternative Water Supply may not be groundwater withdrawn in an AMA.
Five prospective ADAWS candidates (Buckeye, Queen Creek, EPCOR-Agua Fria, Arizona Water Company Apache Junction and Arizona Water Company Pinal Valley) serve a majority of CAGRD’s existing member land homes.29 CAGRD’s 2025 Plan assumes that these water providers will apply for and receive an ADAWS resulting in a reduction in CAGRD’s replenishment obligations. According to the 2025 Plan:
“ If an ADAWS provider did not grow past the 10-year 2025 Plan period, and did not acquire any additional alternative supplies, the CAGRD obligation would increase over time and would ultimately be larger than would have occurred as an undesignated provider, particularly as the groundwater allowance was exhausted. However, if the provider continued to grow in the subsequent decades, the provider would need to acquire additional alternative supplies to
29 Id., at 36.
Earthmoving for new subdivisions in the far west Phoenix AMA. Source: Michael Schiffer.
increase the overall volume of the designation and would have to dedicate a portion of the alternative supply to reducing reliance on groundwater.…That additional alternative supply diminishes the potential reliance on CAGRD replenishment, including the portion of groundwater demand incurred during the 10-year 2025 Plan period. Although somewhat counter-intuitive, the faster an ADAWS provider grows, the quicker the CAGRD obligation diminishes as that provider acquires alternative supplies.”30
However, it is not yet clear that all of these providers will receive an ADAWS and failure of any of them to acquire an ADAWS could require revisions to the 2025 Plan. Moreover, as the 2025 Plan points out, failure of an ADAWS provider to grow could well increase CAGRD’s replenishment obligations past the 10-year 2025 Plan period.
The ADAWS Rules
The Assured Water Supply Committee of the Governor’s Water Policy Council was asked to develop recommendations for changes to the Assured Water Supply Program, while “ensuring that future growth is not reliant on mined groundwater.”31 Based on Committee recommendations, ADWR developed amendments to the assured water supply rules to provide a path for water providers to obtain an Alternative Designation of Assured Water Supply (ADAWS) under which the water provider could grow incrementally on alternative supplies while reducing groundwater mining.32
The rule changes were effective on November 25, 202433 and allow an undesignated water provider to apply for a Designation if it includes in its application a “new alternative water supply,” which could be surface water, treated wastewater or groundwater withdrawn from outside of the AMA. As in traditional Designations, the water provider will receive a “groundwater allowance”—an amount of groundwater that is deemed consistent with the management goal of the AMA and does not need to be replenished. A new alternative supply may be added periodically to the water provider’s portfolio if the supply is physically, continuously and legally available, and of adequate quality, and the provider demonstrates the financial capability to construct the necessary delivery, storage and treatment works in a timely manner.
Importantly, the amount of groundwater determined by ADWR to be physically available to the ADAWS provider will be reduced by 25% of each new alternative water supply acquired by the provider in order to benefit the aquifer. Because of this 25% offset, ADWR projects that groundwater pumping by the ADAWS provider will result in reductions of its overall groundwater use over 100 years. Yet, once a housing subdivision is built it cannot be unbuilt, and if the water provider does not follow through on promises to develop a new alternative water supply along with the infrastructure to deliver it, there is no recourse for the aquifer. In this sense, the ADAWS is a loan from the aquifer with no collateral.
30 Id., at 39.
31 Governor’s Water Policy Council, Governor’s Water Policy Council, ADWR, May 17, 2023, https://www.azwater.gov/sites/default/files/adwr_meetings_docs/GWPC_Meeting_PowerPoint_Final.pdf, at 13.
32 Governor’s Water Policy Council Assured Water Supply Committee, Assured Water Supply Committee, September 27, 2023, https://www.azwater.gov/sites/default/files/2023-11/20230927_AWS_Comm_Presentation.pdf, at 26.
33 Governor’s Regulatory Review Council, Certificate of Approval of Final Rules, October 7, 2024, https://www.azwater.gov/sites/default/files/2024-11/2024_11-25_Notice_of_FinalRulemaking-web.pdf.
Converting agricultural use of groundwater to urban use
While the ADAWS program could reduce CAGRD’s potential replenishment obligations, another initiative currently being evaluated could add significantly to those obligations. ADWR has initiated an informal stakeholder process to guide the development of possible new rules for an assured water supply “Ag-to-Urban” program. Ag-to-Urban legislation has also been introduced, but it differs from ADWR’s concepts.34
Under this program as currently envisioned by ADWR, the owner of land with Irrigation Grandfathered Rights and a recent history of irrigation with groundwater in the Phoenix or Pinal AMA could retire that land from irrigation in exchange for “physical availability conservation credits.” The credits could be used to show physical availability of groundwater for purposes of a Designation of Assured Water Supply.35 Any use of groundwater as part of this program must be made consistent with the management goal through replenishment by CAGRD or the use of groundwater allowances or extinguishment credits.
34 ARIZ. STATE LEGISLATURE, 2025 Fifty-seventh Legislature-First Regular Session, Senate Bill 1611, https://www.azleg.gov/legtext/57leg/1R/bills/SB1611P.pdf.
35 Arizona Department of Water Resources, Ag-to-Urban Informal Stakeholder Meeting, February 26, 2025, https://www.azwater.gov/sites/default/files/2025-02/02.26.25%20%20Informal%20Stakeholder%20Meeting%20Presentation.pdf.
Farm land adjacent to subdivision in the west Phoenix AMA. Source: Michael Schiffer.
Although still in the works, the program is intended to reduce groundwater use and create a “net benefit” for the aquifer. In the Phoenix AMA, ADWR has identified 28,500 eligible acres within the planning areas of water providers with existing and potential Designations and calculated the potential groundwater savings over 100 years at 9.35 million acre-feet. The numbers are even higher for the Pinal AMA: 104,600 eligible acres and a potential groundwater savings over 100 years of 4.29 million acre-feet.36
However, the program could substantially escalate CAGRD’s replenishment obligations. CAGRD staff have preliminarily analyzed the potential impacts of such a program on the 2025 Plan of Operation. At the low end, CAGRD’s replenishment obligation could increase by 5,000 acre-feet by 2044, while at the high end, the obligation could increase by 30,000 acre-feet.37
ADWR’s AG-to-Urban proposal
As outlined by ADWR, an Ag-to-Urban program would include the following elements:
• The program would apply to acres of land in the Phoenix and Pinal AMAs with Irrigation Grandfathered Rights (IGFRs) that have been irrigated with groundwater in any 3 of the 5 prior years prior to relinquishment.
• The acres must not have a negative flex account balance (that allows more groundwater to be used in one year if less is used in the future), must have up-to-date annual reports with ADWR for the previous 5 years, and must be compliant with management plan conservation requirements.
• The acres must not be subject to an existing Certificate of Assured Water Supply.
• The owner of eligible acres may voluntarily relinquish IGFRs in exchange for Physical Availability Conservation Credits. Credits do not create a new groundwater withdrawal right. The amount of the credit would be 1 acre-foot per eligible acre multiplied by 100 in the Phoenix AMA and 0.7 acre-feet per eligible acre multiplied by 100 in the Pinal AMA.
• Credit owners may pledge the credits to a Designation of Assured Water Supply to meet physical availability requirements. All other assured water supply requirements continue to apply.
• The designated provider must demonstrate that any water use on the retired irrigated land will be served by the provider and accounted for as part of its Designation demands.
• 100% of groundwater use by the designated provider must be consistent with the management goal under current rules through replenishment, or the use of groundwater allowances or extinguishment credits.
• Conservation measures would be required for water use on the retired land, including a prohibition on non-functional turf, water parks, lakes, ponds and decorative features.
• The program would be evaluated after ten years and could be terminated.
36 Id
37 CAGRD & US Committee, Report on Proposed Legislation and Rulemaking Processes that Could Impact CAGRD, February 20, 2025, https://capaz.portal.civicclerk.com/event/443/files/attachment/5783, at 8.
Legislation and lawsuits
On behalf of the Homebuilders Association of Central Arizona, the Goldwater Institute has filed a lawsuit seeking to enjoin ADWR from using its groundwater flow model for the Phoenix AMA as a basis for refusing to issue new Certificates of Assured Water Supply. The Homebuilders want to force ADWR to issue Certificates for subdivisions in the AMA that are covered by previously-issued Analyses of Assured Water Supply or Physical Availability Determinations.38 Currently working its way through the legislature, Senate Bill 1114 would reach the same result by requiring ADWR to accept previously-issued Analyses and Physical Availability Determinations as meeting the physical availability requirements for a Certificate of Assured Water Supply.39
In a nutshell, the lawsuit claims that ADWR’s finding of unmet demand in the Phoenix AMA is an unlawful rule that is not authorized by statute. ADWR counters that unmet demand is simply a term of art long used to describe the assured water supply program’s groundwater protections. ADWR first adopted the Assured Water Supply Rules in 1995 at the direction of the Legislature40 and substantially amended them in 2006. Among other things, the rules implement the requirements for demonstrating an assured water supply, including that the water in question be physically available.41 ADWR notes that, “The 2006 rulemaking involved extensive public participation and comment, including 19 informal meetings held to solicit public input and two informal comment periods before the formal comment period.”42
If successful, SB 1114 and/or the Homebuilders’ lawsuit would impose replenishment obligations on CAGRD that would be very difficult to meet. CAGRD staff calculate that the total annual potential new groundwater use under Analyses in the Phoenix AMA is about 231,000 acre-feet and about 95,000 acre-feet for Analyses in the Pinal AMA.43 If ADWR is required by the Legislature or a court to issue Certificates for subdivisions covered by all of these Analyses, CAGRD would eventually be required to replenish nearly all of the groundwater pumped to serve these subdivisions. The Board of Directors for CAGRD has taken a position of opposition to SB 1114.44
38 An Analysis of Assured Water Supply is usually issued for a master-planned community to generally quantify the amount of groundwater physically available to the community. A subdivision within that master-planned community must later apply for a Certificate of Assured Water Supply for that specific subdivision and may rely on the analysis to show that groundwater is physically availability unless ADWR determines the supply is no longer physically available. In other words, an Analysis is not a guarantee that groundwater will be physically available in the future. A Physical Availability Determination is a finding by ADWR that a volume of water is physically available for a development, but the determination does not reserve any water for purposes of obtaining a Certificate of Assured Water Supply.
39 ARIZ. STATE LEGISLATURE, 2025 Fifty-seventh Legislature-First Regular Session, Senate Bill 1114, https://www.azleg.gov/legtext/57leg/1R/bills/SB1114S.pdf.
40 State of Arizona, Session laws 1993 Volume 2, Forty-First Legislature, 1st Regular Session, Chapter 200 § 2, https://azmemory.azlibrary.gov/nodes/view/20977.
41 Ariz. Admin. Code § R12-15-716.
42 Hon. Scott Blaney, Motion to Dismiss: Home Builders Association of Central Arizona vs. Arizona Department of Water Resources, Superior Court of the State of Arizona, March 28, 2025, https://infoshare.azwater.gov/docushare/dsweb/Get/Document-101160/2025_03_28_ADWR_Motion_to_Dismiss.pdf, at 5.
43 CAGRD & US Committee, supra note 37, at 9.
44 Regular Meeting of the Board of Directors, March 6, 2025, https://capaz.portal.civicclerk.com/event/445/files/agenda/8875.
Conclusion
If Arizona has learned anything since The Elusive Concept was published it is that the next decade will be nothing like the last. Colorado River shortages are already impacting CAGRD. NIA priority CAP supplies are already short, and the Director of ADWR has notified the district that it may not rely on this water in the 2025 Plan of Operation. Potentially even worse, the rules that dictate the level of cuts central Arizona experiences during Colorado River shortages expire at the end of 2026, and no agreement on new rules has been reached. Because of all this, uncertainty regarding the availability of Colorado River water supplies in the future is off the charts.
As of December 2024, 311,000 housing lots are member lands of CAGRD and CAGRD expects its replenishment obligation to increase to over 68,000 acre-feet per year by 2045. If it cannot acquire new water supplies, CAGRD will need to draw upon its long-term storage credits to meet more than half of its replenishment obligations over the next 20 years. Given the depth of anticipated Colorado River shortages, these one-time credits will likely never be replaced. Acquiring new water supplies for replenishment will also be a challenge since CAGRD will be competing with other entities seeking additional supplies, including large industrial users and municipal and private water utilities.
Some of the “solutions” for helping homebuilders move forward with subdivisions using groundwater, such as ADAWS, are being promoted as a bridge to permanent, renewable water supplies.45 But the strength of this bridge will not be fully evident for decades when we will know if it has benefited the aquifer or not. Meanwhile, anxious to move forward with master planned communities, homebuilders want to force ADWR to grant them Certificates of Assured Water Supply that would allow vast amounts of groundwater to be pumped—amounts that may be impossible to replenish.
Central Arizona is by no means out of land that can be developed.46 And the region is not in danger of “running out of water.” But the push to expand groundwater pumping despite the clear warnings of the last decade effectively puts off investments in renewable water supplies—and the infrastructure to deliver them—that will ensure long-term water security.
At the same time, the CAGRD Plan of Operation is at risk. If the Director of ADWR determines that the Plan is not consistent with the management goal of the Phoenix, Pinal or Tucson AMA, all Designations of Assured Water Supply for municipal water providers in that AMA based on membership in CAGRD will expire.47
45 Tom Buschatzke, I won’t let lawyers tear down Arizona water protections without a fight, AZ Central, February 16, 2025, https://www.azcentral.com/story/opinion/op-ed/2025/02/16/goldwater-lawsuit-arizona-groundwater-management-act/78461914007/.
46 According to ADWR, 52,000 acres of undeveloped land in the Phoenix AMA and 96,000 acres in the Pinal AMA have Certificates of Assured Water Supply. (ADWR, supra note 35). According to the Arizona Municipal Water Users Association, there are 185,350 acres of developable land within the services areas of its ten member cities, Phoenix AMA water providers that have designations of assured water supply. (Warren Tenney, Don’t Mortgage Our Future by Weakening Assured Water Supply Requirements, AMWUA Blog, November 21, 2023, https://www.amwua.org/blog/dont-mortgage-our-future-by-weakening-assured-water-supply-requirements).
47 As of December 31, 2023, there were 23 water providers who were members of CAGRD, including nine in the Phoenix AMA.
A Designation of Assured Water Supply requires the municipal provider to demonstrate that it has a 100-year water supply for all of the uses it serves. If a municipal provider’s Designation expires, it could not provide water to new subdivisions, but it would be free to increase groundwater pumping to serve new industrial and commercial uses. That outcome would undo years of progress Arizona has achieved to assure homeowners as well as businesses and industries that it is serious about securing the water supplies needed for a robust economy and consumer protection.
At this moment of uncertainty and risk for central Arizona’s water supplies, does planning for increased water demand by “betting on the come” make sense?48
48 Tony Davis, Arizona’s water system for suburban growth heads toward ‘train wreck,’ Babbitt says, Arizona Daily Star, January 26, 2020, https://tucson.com/ news/local/arizonas-water-system-for-suburban-growth-heads-toward-train-wreck-babbitt-says/article_ee1b84b9-7977-5ebc-8bd7-17f17833fc48.html (quoting former Arizona House Speaker Bowers “that those who buy land or homes in areas served by the [groundwater replenishment] district ‘are betting on the come.’”).
City of Phoenix. Source: Michael Schiffer.
As technology advances and the value of new water supplies increases, there may be additional sources that could be developed for use by CAGRD to meet its replenishment obligations. The viability of treating salt water and other poor-quality water continues to improve each year. As advances in this technology are made, CAGRD will explore opportunities to participate with others in projects to develop new supplies either directly or through cooperative exchange agreements.
Appendix A—CAGRD water supply inventory through the decades
4.3.7 Summary of Water Supply Inventory
Table E-2 in Appendix E provides a detailed inve ntory of supplies that are potentially available for acquisition by CAGRD. This inventory is summarized in Table 4.1 below.
2004 Plan of Operation
Summary of Water Supply Inventory
TABLE 4.1
Summary of Water Supply Inventory
Potentially
* Based on im plementation of the Arizona W ater Settlement Agreement
32 Importation of groundwater from any of these basins will require compliance with a number of statutory restrictions and limitations, as well as negotiated agreements with the owners of existing lands to which groundwater rights are appurtenant.
CAGRD Plan of Operation Submitted Draft – 11/8/04 47
Previous studies have suggested that between 14,000 and 40,000 AF per year of saline groundwater could be pumped and treated from these two areas to provide additional water supplies in the future.
Plan of Operation
AVAI LA BLE WAT E R S U PPL IE S
Water Supplies 2015-2114
AMA, Tucson AMA, Harquahala INA
Phoenix AMA, Pinal AMA, Tucson AMA
All Contracts, Subcontracts, and Unallocated Supplies
Consistent with previous Plans of Operation, CAGRD interprets the term “plans to use” as including water resources that are currently available and likely to be used to meet CAGRD’s replenishment obligation during the 20 years following the submittal of the 2025 Plan to ADWR. This includes those water supplies that are already within CAGRD’s current water supply portfolio and water supplies that CAGRD could acquire. CAGRD intends to pursue the development of additional water supplies and, to the extent that willing-seller/willing-buyer agreements are negotiated with the holders of such water supplies, CAGRD plans to use these newly acquired supplies to assist in meeting its replenishment obligation over the next 20 years.
The water resources CAGRD plans to use during the period from 2025 through 2044 include: 1) CAGRD’s existing entitlements to 77,141 acre-feet of annual, long-term water supplies (to the extent they are available in any given year), and 2) a mix of supplies from the inventory of available water supplies identified in Table 4.3 as being available during the next 20 years. These supply acquisitions will occur according to need (firming existing supplies or meeting new obligations) and the principles identified for the water supply acquisition program in Section 4.5.1. Firming supplies could include LTSCs, CAP supplies less impacted by shortage, effluent, Colorado River supplies, imported groundwater, Verde River water, or water from future desalination projects.
Table 4.3 identifies ample long-term water supplies projected to be available over the next 20 years to meet CAGRD’s likely needs for firming or new obligations.
Morrison Institute for Public Policy was established in 1982. An Arizona State University resource, Morrison Institute utilizes nonpartisan research, analysis, polling and public dialogue to examine critical state and regional issues. Morrison Institute is part of the ASU Watts College of Public Service and Community Solutions.
