By Matthew Holloway |
Maricopa County Superior Court Judge Scott Blaney ruled Tuesday that the Arizona Department of Water Resources (ADWR) did not comply with state law when implementing a policy that restricted residential development in parts of Maricopa County.
In the order, the court found the agency “did not comply” with Arizona law in adopting the challenged requirements and declared the policy invalid.
The policy, commonly referred to as the “Unmet Demand” approach, was used by ADWR in evaluating whether proposed developments could meet the state’s requirement to demonstrate a 100-year assured water supply in the Phoenix Active Management Area.
Arizona law requires developers in designated areas to obtain a certificate of assured water supply demonstrating access to sufficient groundwater or other supplies for 100 years before construction can proceed.
According to the lawsuit, ADWR’s application of an “Unmet Demand” standard required consideration of projected groundwater demand across the broader management area rather than focusing on the water supply available to an individual development.
The court rejected the agency’s justification for the policy, stating that its interpretation of the law “lacks merit.”
The case was filed in January 2025 by the Goldwater Institute on behalf of the Home Builders Association of Central Arizona, challenging the policy’s legality under state administrative procedures.
In a statement following the ruling, Goldwater Institute Vice President for Legal Affairs Timothy Sandefur said the court’s decision invalidated the agency’s approach to regulating development under the policy.
He explained, “The reality is that although Phoenix is a desert, there’s plenty of water to serve the needs of development. Yet the ‘Unmet Demand Rule’ transformed overnight how home building could work in Maricopa County—restricting construction at a time in which the limited supplies of residences have caused housing prices to soar. And that was illegal, because the Department had no power to adopt the ‘Unmet Demand Rule’ in the first place.”
He added, “State law sets forth a process for creating new rules, and the Department didn’t bother trying to comply with those processes. Instead, it claimed that it had simply discovered somehow that this was what the law required all along.”
The challenged policy had affected development planning in portions of the Phoenix metropolitan area, including Buckeye and Queen Creek, where groundwater availability determinations are required for new subdivisions, according to court filings and statements in the case.
Sandefur called the ruling “a crucial victory for Arizonans, not just in Phoenix but throughout the state, who might well have been on the Department’s target list had it been allowed to get away with redefining the rules in this way.”
He added, “The case is also a reminder of the dangerous power that the pervasive ‘administrative state’ wields over our daily lives—as unelected and unaccountable bureaucracies exert authority over every detail of construction, business, and property ownership, to cite just a few examples. The only solution to the arbitrariness and lawlessness of these agencies is to rein in their power—and for courts to ensure that they obey the law.”
The court’s ruling focused on whether ADWR followed the procedures required under Arizona law to implement new regulatory requirements. The order concluded that the agency did not follow those procedures in adopting the “Unmet Demand Rule” approach.
In a statement to Capitol Media, a Department of Water Resources spokesman said the agency intends to appeal Judge Blaney’s ruling, stating, “Although there is no final judgment yet, the Arizona Department of Water Resources intends to challenge the decision once it is final.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
