The state's water agency says it won't endorse a proposed lease of Colorado River water from Quartzsite.
The small town in La Paz County has an annual allocation of 1,070 acre-feet of river water. But it doesn't have a way to get the water from the river about 20 miles away.
The Central Arizona Water Conservation District has proposed leasing it for up to 50 years to replenish groundwater around Phoenix and Tucson.
The district and Quartzsite sought a recommendation from the Arizona Department of Water Resources.
Department director Tom Buschatzke says it won't support the lease because Quartzsite hasn't put the water to beneficial use.
The conservation district says the decision is disappointing.
The lease still can be submitted to the U.S. Department of the Interior for a final say.