By Madelaine Braggs | Rose Law Group Reporter
A Maricopa County Superior Court judge has allowed a lawsuit to proceed challenging the Arizona Department of Water Resources’ (ADWR) recent approach to groundwater regulation, a decision that could have significant implications for how water is allocated in the state’s fastest-growing region.
Riley Snow, Chairman of Rose Law Group’s Water Law Department, reacted by saying, “This ruling is an early but significant win for [Home Builders Association of Central Arizona]. Meeting current and ongoing housing demands in Maricopa County will require the best hydrologic data and sound administrative rules, which are most effectively achieved through public participation and stakeholder input. We need to approach assured water supply demands with a scalpel, not a broad brush, as ADWR did in this case.”
In a ruling issued this month, the court denied a motion by state water officials to dismiss a case brought by the Home Builders Association of Central Arizona, which argues that the department effectively imposed new, sweeping groundwater rules without following required administrative procedures. The dispute centers on how the state determines whether developers can demonstrate a legally required 100-year assured water supply before subdividing land in the Phoenix Active Management Area, one of Arizona’s most tightly regulated groundwater regions.
At issue is the department’s reliance on an updated regional groundwater model released in late 2024. Based on that model, regulators adopted an interpretation that if groundwater shortfalls or excessive well depths are projected anywhere within the broader model area, then groundwater is deemed unavailable across the entire region—even for individual projects that might otherwise meet site-specific requirements. Builders contend that this shift transformed a historically project-by-project analysis into an area-wide prohibition, effectively freezing new residential development in large parts of Maricopa County.
The court agreed that the plaintiffs had plausibly alleged that the agency’s approach amounted to new “rules” under Arizona’s Administrative Procedure Act, which generally requires public notice, comment, and formal adoption. Judge Scott A. Blaney found that existing statutes and regulations emphasize evaluating water availability for a proposed use at a specific location, and that the broader standards now being applied were not clearly authorized by law or adopted through required rulemaking. The ruling does not decide the ultimate legality of the policy, but it allows the challenge to move forward.
Beyond its legal significance, the case highlights the growing tension between groundwater conservation and Arizona’s long-term growth strategy. The Phoenix region continues to attract new residents and investment, while state officials face increasing pressure to ensure that water use remains sustainable in a hotter, drier climate. How regulators balance regional hydrologic modeling with site-specific planning will shape not only housing production, but also the pace and location of future development.
For now, the ruling underscores a broader policy question confronting water-stressed states: whether major shifts in resource allocation should occur through administrative reinterpretation or through a more transparent process that gives cities, builders, and water providers greater certainty as they plan for the decades ahead.
