>

Not surprising, given California's reliance on it for its agricultural operations.
Who has senior rights to the water? >

Who cares? We can't leave other states dry just because of seniority. California is terrible at managing its water supply. >

Meanwhile Arizona is growing crops and creating cities in the literal desert. >

Bad choice building a city in Arizona, but the city is already there. Upper basin states have cut their water usage essentially in half because they never actually got their full allotment anyway. Nevada's share is tiny (300k water acres) and Arizona is already outlawing tons of water intensive lawns and crops. 
Sure. Arizona can do better. But you will never reach the target without California reining in its agricultural sector. Those guys don't know how to manage water and they don't care to because its cheap for them. >

Yeah, true. Nevada also has a state of the art water recycling system which should be replicated in CA beyond just OC. >

And yet we're shutting down the Diablo Canyon nuclear facility, which is (besides producing power) the most productive water desalination plant in the state.
WTF, California!  You'd think we'd want to increase our domestic water production, not turn it off!