A. For the third management period, 2000 to 2010, the director shall promulgate a management plan for each initial active management area not later than January 1, 1998. The director:

1. Except as provided in Section 45-411.01, subsection A and Section 45-563.02, subsection B, shall establish in each plan a new irrigation water duty for each farm unit to be reached by the end of the third management period and may establish one or more intermediate water duties to be reached at specified intervals during the third management period. Except as provided in subsection D of this section, the irrigation water duty or intermediate water duties for the third management period shall be calculated as the quantity of water reasonably required to irrigate the crops historically grown in the farm unit and shall be computed by dividing the total irrigation requirement per acre of those crops by an irrigation efficiency of eighty per cent, except that a lower irrigation efficiency may be used for a farm unit or portion of a farm unit determined by the director to have limiting soils or excessive slopes and for a farm unit where orchard crops were historically grown and continue to be grown. After computing the irrigation water duty or intermediate water duties for the third management period, the director may adjust the highest twenty-five per cent of the water duties within an area of similar farming conditions by reducing each water duty in an amount up to ten per cent, except that in making the adjustment, no water duty may be reduced to an amount less than the greater of the following:

(a) The highest water duty within the lowest seventy-five per cent of the water duties computed within the area of similar farming conditions for the third management period.

(b) A water duty computed for the farm unit under this paragraph using an irrigation efficiency of eighty per cent.

2. Shall establish in each plan, except the plan for the Santa Cruz active management area, additional conservation requirements for all non-irrigation uses of groundwater to be achieved by the end of the third management period and may establish intermediate conservation requirements to be achieved at specified intervals during the third management period. In the plan for the Santa Cruz active management area, the director shall establish additional conservation requirements for all non-irrigation uses of water, other than stored water, withdrawn from a well to be achieved by the end of the third management period and may establish intermediate conservation requirements to be achieved at specified intervals during the third management period. For municipal uses, except as provided in Section 45-566.01 and paragraphs 3 and 4 of this subsection, the program in each plan shall require additional reasonable reductions in per capita use to those required in the second management period and use of such other conservation measures as may be appropriate for individual users. For industrial uses, including industrial uses within the exterior boundaries of the service area of a city, town, private water company or irrigation district, the program in each plan shall require the use of or establish conservation requirements based on the use of the latest commercially available conservation technology consistent with reasonable economic return.

3. Shall establish in each plan conservation or rate of use requirements for deliveries of untreated water by large untreated water providers based on the use of the latest commercially available conservation technology consistent with reasonable economic return.

4. Shall establish in each plan reasonable conservation requirements for small municipal providers.

5. Except as provided in Section 45-411.01, subsection B, shall establish in each plan, except the plan for the Santa Cruz active management area, additional economically reasonable conservation requirements for the distribution of groundwater by cities, towns, private water companies and irrigation districts within their service areas. In the plan for the Santa Cruz active management area, the director shall establish additional economically reasonable conservation requirements for the distribution of water, other than stored water, withdrawn from wells, for cities, towns, private water companies and irrigation districts within their service areas.

6. Shall include in each plan a program for additional augmentation of the water supply of the active management area, if feasible, including incentives for artificial groundwater recharge.

7. Shall, in cooperation with the department of environmental quality, include in each plan an assessment of groundwater quality in the active management area and any proposed program for groundwater quality protection. Any such program shall be submitted to the legislature for any necessary enabling legislation or coordination with existing programs of the department of environmental quality.

8. Shall include in each plan a program for conservation assistance to water users within the active management area.

9. May include in each plan a program for the purchase and retirement of grandfathered rights by the department to begin no earlier than January 1, 2006.

10. Shall establish in the plan for an active management area in which a groundwater replenishment district is located the historic annual net natural recharge for the groundwater replenishment district, computed by determining the net natural recharge, as defined by section 48-4401, for the groundwater basin beneath the district during calendar years 1967 through 1996 and dividing the result by thirty.

11. Shall include in the plan for the Santa Cruz active management area criteria for the location of new wells and replacement wells in new locations consistent with the management goal of the active management area.

12. Shall include in the plan for the Santa Cruz active management area an evaluation of the potential impact of the plan on the Tucson active management area.

13. Shall include in the plans for the Tucson, Phoenix and Pinal active management areas recommendations to the Arizona water banking authority regarding all of the following:

(a) Whether additional water storage in the active management area would help to achieve the management goal for the active management area.

(b) Where additional water storage in the active management area would be most useful to achieve the management goal for the active management area.

(c) Whether extinguishment of long-term storage credits accrued or to be accrued by the Arizona water banking authority would help to achieve the management goal for the active management area.

B. Within thirty days after the management plan for the third management period is adopted, the director shall give written notice in the manner and to the persons prescribed in section 45-565, subsection B. Two years before the compliance date specified in the management plan for any irrigation water duty, intermediate water duty, conservation requirement or intermediate conservation requirement, the director shall give additional written notice by first class mail to the last known addresses of the persons prescribed in section 45-565, subsection B.

C. Except for a person who has obtained a variance under section 45-574 or who is exempt from irrigation water duties under Section 45-563.02, subsection A, all persons notified pursuant to subsection B of this section shall comply with the applicable irrigation water duty or conservation requirements for the third management period not later than January 1, 2010 and shall remain in compliance until the compliance date for any applicable irrigation water duty or conservation requirements established in the management plan for the fourth management period. If intermediate water duties or intermediate conservation requirements have been established, a person to whom those water duties or conservation requirements apply shall comply with the intermediate water duties or conservation requirements not later than the compliance date specified in the management plan unless the person obtains a variance pursuant to section 45-574 or is exempt from intermediate water duties under Section 45-563.02, subsection A. A person who obtains a variance under section 45-574 shall comply with the applicable irrigation water duty or conservation requirements by the date specified in the variance and shall remain in compliance until the subsequent compliance date for any applicable irrigation water duty or conservation requirements established in the management plan for the third management period or, if that management plan does not establish any applicable subsequent compliance date, until the applicable compliance date established in the management plan for the fourth management period.

D. A person who is entitled to use groundwater pursuant to an irrigation grandfathered right may apply to the director at any time during the management period for an exemption from the irrigation water duties established pursuant to subsection A, paragraph 1 of this section. The director shall grant the exemption if the person demonstrates to the director’s satisfaction that granting the exemption is consistent with achieving the management goal of the active management area and that one of the following applies:

1. Withdrawal of groundwater pursuant to the irrigation grandfathered right during the management period will intercept the groundwater that would otherwise flow out of and be lost to the active management area within the next fifteen years without entering another active management area.

2. Withdrawal of groundwater pursuant to the irrigation grandfathered right during the management period will prevent encroachment of a rising depth to groundwater level that will cause waterlogging problems within the next fifteen years.