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Attorneys with the Goldwater Institute are scheduled to appear in Maricopa County Superior Court at 10 a.m. Friday for a hearing in their lawsuit challenging water policy changes implemented by the administration of Katie Hobbs.
The case, filed in January 2025 on behalf of the Home Builders Association of Central Arizona, contests new requirements adopted by the Arizona Department of Water Resources (ADWR) affecting groundwater supply determinations in parts of Maricopa County.
The Goldwater Institute said the policy changes have halted approvals for new housing developments in certain areas of the Phoenix metropolitan region, including portions of Queen Creek and Buckeye.
Under Arizona law, homebuilders in designated Active Management Areas must obtain a certificate demonstrating a 100-year assured water supply before beginning construction.
Goldwater’s lawsuit challenges a policy change announced by ADWR in November 2024. It contends that the department adopted a new framework based on what it describes as “unmet demand,” which it says is not referenced in Arizona statute.
Goldwater penned a letter to the ADWR one month later, urging the agency to reconsider its “AMA Wide Unmet Demand Rule,” asserting that the new rule was in violation of the law, having been imposed without legislative approval or via the required rulemaking process.
Attorneys for the public policy organization argue that the department effectively created a new regulatory standard without going through Arizona’s formal administrative procedures. They claim the shift has injected uncertainty into the housing market, particularly in fast-growing suburban communities already grappling with affordability challenges.
ADWR has defended its authority to interpret and apply groundwater modeling within the state’s assured water supply program. The department has not publicly characterized the policy as a formal rulemaking.
The Maricopa County Superior Court previously denied ADWR’s motion to dismiss the case, allowing the lawsuit to proceed. That decision set the stage for Friday’s hearing, where attorneys for Goldwater are expected to ask Judge Scott Blaney to enter judgment in favor of the Home Builders Association of Central Arizona.
The case is being heard at the Maricopa County Superior Court, East Building, located at 101 W. Jefferson Street in Phoenix.
If the court sides with the plaintiffs, the ruling could reopen stalled development applications and clarify the limits of ADWR’s regulatory authority. A decision in favor of the state, however, would reinforce the agency’s discretion in managing groundwater projections within Active Management Areas.
In a statement, Goldwater Institute Vice President for Litigation Jon Riches said: “Decisions on vital statewide concerns like the availability of affordable housing and the responsible stewardship of our natural resources should be made through a transparent, democratic process—not imposed by executive fiat.”
The case underscores a broader tension in Arizona between water conservation policies and rapid population growth. With Maricopa County continuing to attract new residents and businesses, the outcome could influence how state agencies balance resource management with housing demand for years to come.
No ruling is expected at the time of the hearing, but the court’s eventual decision may have significant implications for builders, homebuyers and local governments across the Phoenix metropolitan area.
Originally reported by Matthew Holloway in AZ Free News.
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