By Katharine Greer, Law Clerk | Rose Law Group Reporter
On Thursday, June 1st, the Arizona Department of Water Resources announced that the State will no longer approve new Certificates of Assured Water Supply within the Phoenix Active Management Area. Developments with existing Certificates or Designations of Assured Water Supply may continue and the State will not revoke Certificates already issued.
How does the Department have the authority to make this decision? In 1980, Governor Bruce Babbitt signed the Arizona Groundwater Management Act. The Act had three primary goals: (1) to control severe overdraft of groundwater; (2) to provide a system to allocate the state’s groundwater resources; and (3) to augment Arizona’s groundwater through supply development. To accomplish these goals, the Act set up three levels of water management. The lowest level of water management includes statewide general provisions. The next level applies to Irrigation Non-Expansion Areas (INAs) and the highest level of management is applied to Active Management Areas (AMAs) where groundwater overdraft is the most severe. The boundaries of these levels of management are determined by groundwater basins and sub-basins. At this time, there are six AMAs: Phoenix, Pinal, Prescott, Tucson, Santa Cruz, and Douglas. These areas include approximately 80% of Arizona’s population and 70% of the state’s groundwater overdraft, and so have the most comprehensive provisions.
The provision most relevant to the Department’s recent decision concerns the Assured Water Supply Rules. In an AMA, anyone who offers subdivided land for sale or lease must demonstrate an assured supply of water before the land may be marketed to the public. This rule only affects subdivisions, defined as developments of six or more parcels. The Department will issue an assured water supply certificate if the developer demonstrates that the proposed development will be sustained by the available water for 100 years. For those developments with five parcels or less, the developer must display a water availability report or if unavailable, must advertise that no report has been created and the availability of the water is unknown. Therefore, the Department’s new policy of indefinitely withholding certificates of assured water supply affects only those developers hoping to build subdivisions with six parcels or more.
The decision to limit certificates is motivated by the latest study of groundwater conditions across the Phoenix metropolitan area. The results show that over a period of 100 years, 4% of the demand for groundwater in the region will not be met without further action. On Thursday, Governor Hobbs emphasized that despite this data, “What the model ultimately shows is that our water future is secure: the Assured Water Supply Program is working. Water supplies for homeowners and businesses are protected. Growth has been planned for and will continue. My message to Arizonans is this: we are not out of water, and we will not be running out of water because, as we have done so many times before, we will tackle the water challenges we face with integrity and transparency.” The national media coverage surrounding the announcement has been much less optimistic. The message communicated is two-fold: (1) Arizona is out of water; and (2) Phoenix and the surrounding areas will not see any future development. While there is cause for concern about water generally, the report is not as dire as it may seem. First, Arizona is not out of water. The Department’s model completely ignores any future retirement of farm lands or the inclusion of innovative water conservation efforts. This model also assumes that every certificate of assured water supply issued is being utilized from day one of the 100-year-long study period, which certainly is not the case. It’s true that the
Southwest is having a water crisis, but it is an overreaction to say the State is out of time and out of water. Second, Maricopa County will continue to see growth. How do we know this? Because we have seen this before. In 2021, the Department refused to approve any new applications seeking to use groundwater within the Pinal Active Management Area. Despite this apparent “block” to growth and development, Pinal County was again crowned the fastest-growing county in Arizona this past year. The number of housing units in Pinal County grew by an estimated 3.5% from 2021-2022. We have clear evidence that this limitation on certificates of assured water supply does not spell doom for housing developers. In fact, Buckeye reported that the certificates that it has already received from the State will support 20-25 years of growth. 10,000 ready-to-build lots in Queen Creek and 80,000 homes in Phoenix have already received their certificates of assured water supply. In addition, all industrial development will be unaffected by the limitation.
Some press has painted a picture of despair and ruin, but it’s important to stay rooted in the facts. For the foreseeable future, the Department will not be issuing new certificates of assured water supply to those developers whose subdivisions rely solely on groundwater in the Phoenix AMA. Developers have other options because water providers have diverse water supplies and not all of them are solely reliant on groundwater. Maricopa County will continue to grow and prosper as evidenced by Pinal County. Arizona may have a limited water supply, but the best and brightest will continue to innovate and find renewable sources of water for future development and growth.
