The legal battle over Arizona’s groundwater regulations took center stage in court again on Friday, as the Homebuilders Association of Central Arizona continues to challenge the state’s recent actions. At the heart of the case is a significant report from Governor Katie Hobbs’ administration revealing unexpectedly low groundwater levels in the Phoenix area, prompting a halt to new housing developments in specific regions.
The contentious report, released in 2023, led the Arizona Department of Water Resources (ADWR) to cease issuing essential certificates to developers in areas like Buckeye and Queen Creek. These certificates are crucial for proceeding with new housing projects in these locales.
Claiming overreach, the homebuilders argue that ADWR exceeded its authority by stopping the issuance of these permits without proper rulemaking. They are seeking to have the department’s rules invalidated, asserting that the actions amount to unauthorized rule creation.
ADWR, however, defends its actions, stating that the measures were necessary to ensure water security for both new and existing developments. Agency officials emphasize that ignoring scientific data could jeopardize groundwater resources statewide.
Support for ADWR’s stance comes from entities like the Salt River Project, the city of Chandler, and the Arizona Municipal Water Users Association, all of which have sided with the department in this legal dispute.
Within Arizona’s Active Management Areas (AMAs), including the Phoenix metro area, developers must demonstrate a 100-year water supply to obtain building permits for subdivisions. This requirement, established under the 1980 Groundwater Management Act, aims to conserve the state’s groundwater resources.
The 2023 decision marks a notable shift in policy enforcement, with ADWR taking unprecedented action based on hydrology reports, a move that has sparked criticism from GOP lawmakers and developers who accuse Governor Hobbs of hindering growth.
Central to the legal arguments is whether ADWR’s actions constitute new rulemaking. Maricopa County Superior Court Judge Scott Blaney questioned, “Isn’t updating the modeling the way you did the creation of a new rule?” ADWR maintains that its approach is grounded in applying new data to existing regulations, not inventing new ones.
The homebuilders contend that their industry is unduly targeted, as other construction projects like multifamily homes and data centers are not subject to the same stringent water supply verification. They argue that residential subdivisions account for a relatively small portion of water usage compared to agriculture.
Katherine Davis-Young/KJZZ
ADWR’s attempt to have the lawsuit dismissed was unsuccessful last year. During court proceedings, attorney Jenny Winkler, representing Chandler and other entities, argued that the homebuilders are disputing the logical enforcement of water protection measures based on the report’s findings. She criticized their expectation for the department to “ignore reality.”
Winkler emphasized that issuing water certificates without considering actual groundwater conditions would render those certificates ineffective, undermining “certainty and stability” for millions of current homeowners.
Judge Blaney is anticipated to deliver a summary judgment on the matter within 60 days, a decision that could significantly impact Arizona’s water management policies.
The assured water supply system, a cornerstone of the state’s groundwater management since its inception, faces scrutiny as circumstances such as Colorado River supply cuts and the recent report challenge its assumptions.
Additionally, the homebuilders are engaged in a second legal confrontation with ADWR over a new rule allowing developments in groundwater-depleted areas, which they argue imposes undue burdens on them. This rule, part of the Alternative Path to Designation of an Assured Water Supply (ADAWS), was established in late 2024.
