Judge halts new Arizona groundwater-saving program

On Tuesday, Judge Scott Blaney of Maricopa County tossed out a rule that established an ADWR program allowing cities and other water providers to approve new development in areas the state believes are short of groundwater if they replace 25% of the groundwater they use with an alternative water supply.

This follows Blaney's April ruling that overturned ADWR's 2023 decision to stop allowing new homes to be built in much of the Phoenix area that rely on groundwater.

In both cases, Blaney ruled that the state agency exceeded its legal authority, as spelled out in the 1980 Groundwater Management Act and subsequent regulations.

More specifically, his latest ruling concluded the state program conflicts with the 1980 law's requirement that subdivision developers prove that "water will be continuously available to satisfy the water needs of the proposed use for at least one hundred years."

The state rule that set up this program conflicts with the state law by essentially requiring that an applicant seeking to prove an assured water supply "show an additional 25% of water, beyond the projected needs of the proposed use," Blaney wrote.

This ruling actually marked the third time this year that Blaney ruled against an effort by ADWR to limit groundwater pumping. In January, he overturned a state decision to create an Irrigation Non-Expansion Area in the Hualapai Valley in Mohave County in the state's northwest corner. In such areas, no new irrigation is allowed.

Blaney's latest decision was sharply criticized by Arizona Gov. Katie Hobbs' office and by two longtime Arizona State University water experts, law professor Rhett Larson and water researcher and former ADWR director Kathleen Ferris.

A Hobbs spokesman, Christian Slater, told Capitol Media Services the ruling could shut down housing development and raise housing prices. The state will appeal this ruling, he said.

ADWR has already said it will appeal Blaney's earlier ruling overturning its ban on new subdivisions relying on groundwater.

Larson said the new ruling's interpretation of the scope of existing state water laws is far too limited, and he noted that the state rule that created this program was enacted after significant public discussion. Ferris said the decision will reduce development in the Phoenix area's booming West Valley because the program was created to allow some developments to proceed despite limited groundwater supplies.

Blaney asserts that ADWR’s rule "requires a developer to show a water supply in excess of the developer’s proposed use. This is a misreading of the rule," Ferris said. 

"The rule applies only to water providers seeking a designation of assured water supply — not to developers. It allows a water provider (city, town or private water company) to obtain a designation based on groundwater if the provider obtains a new alternative supply to offset 25% of its groundwater pumping," Ferris said.

Hailing the new ruling was Andrew Gould, lawyer for a homebuilders group that had filed suit to overturn the state rule that created this program. "You can’t just write a rule that you don’t have authority to write. You have to follow the law," he said. 

Gould, who represents the Home Builders Association of Central Arizona, said the homebuilders support water conservation, and, before filing this lawsuit, met "for months" with ADWR officials to try to work out a compromise for the program.

"They support the mission of ADWR, but only when it’s consistent with the law," Gould said. "If ADWR thinks that its statutory authority needs to be changed, they need to go to the Legislature and address it."

At the heart of the lawsuit is the 1980 Groundwater Code.

It created "active management areas'' where groundwater supply is a concern. That, in turn, led to the requirement that developers show they have a 100-year supply.

Most developers can obtain that simply by having a contract with a municipal or private water company that has its own certificate of an assured water supply. But that doesn't work in areas where that is not an option, meaning developers have had to provide their own proof.

In 2023, ADWR released a study, based on its computer modeling, showing that the broader Phoenix area lacks enough groundwater to meet all demands expected to occur over the next 100 years.

That resulted in a moratorium on new state certificates for new subdivisions in areas where developers depended on them to be able to build. It didn't affect other parts of the Phoenix area where cities and private water companies had already been formally designated by ADWR as having an assured supply.

That ruling shut down development in large swaths of Maricopa County that had been expected to see hundreds of thousands of new homes built over the coming decades. The resulting protests from developers led the state agency, under pressure from the governor, to come up with rules for an "alternative designation of a 100-year water supply.'' It allows affected cities and private water companies to get designations of an assured water supply.

That allows developers to meet the legal requirements — and get building permits — if they can identify sufficient alternative sources of water, which can include effluent, surface water, allocations from the Central Arizona Project and water transported from elsewhere. It does not rely on scarce groundwater.

But developers strongly objected to the program's requirement for cities and water companies gaining such designations to reduce groundwater use by 25%. They called it a water tax.

"As you know from the court’s ruling, that isn’t in the statute," said Gould, a former Arizona Supreme Court justice. "They rewrote the statute with the rules. The court struck down the rules because there was no specific delegation from the Legislature for them.

"It's an example of executive overreach and a violation of separation of powers," Gould said.

But ASU water researcher Kathryn Sorensen sees this ruling as another in a list of examples of "special interests" trying to chip away at the provisions of the 1980 groundwater law.

"It's because they are difficult and expensive to meet. For the most part developers prefer to develop on the cheapest water available and that’s groundwater," Sorensen said.

"Whether this ruling stands or not, this has been the trajectory," she said. "We accomplished this amazing piece of legislation in 1980. Ever since then, there’s been pressure to lower the bar."