By Staff Reporter |
The housing moratorium crippling new construction in the Valley imposed by Gov. Katie Hobbs’ administration may not go on for much longer.
The Maricopa County Superior Court struck down the moratorium on Tuesday in Home Builders Association of Central Arizona v. Arizona Department of Water Resources, et al.
Under Hobbs, the Arizona Department of Water Resources (ADWR) issued new groundwater regulations rolled out in November 2024 dubbed the “Unmet Demand Rule” and the “Depth-to Water Rule.”
Per the court, these rules went impermissibly beyond the longstanding obligation for builders outlined in Arizona law, which required assurance of sufficient groundwater supply in order for each development to take place (100 years’ worth).
ADWR imposed the rules based on a groundwater model claiming that unmet demand and exceedance of the 1,000-foot depth-to-water limit existed throughout Phoenix. In other words, their regulations meant a developer seeking a certificate for one subdivision had to answer not just for their development area, but for the water status of the entire Valley. This resulted in ADWR’s indefinite suspension on granting certificates to any developers.
The consequence of these regulations brought new home construction to a halt throughout Maricopa County. The Home Builders Association of Central Arizona (HBACA), a trade association for the residential construction and development industry, challenged ADWR’s authority to impose new rules.
ADWR attempted to style the Unmet Demand Rule as a new implementation of an old rule, but the Maricopa Superior Court Judge Scott Blaney rejected that view as an undoing of the necessary limitations of administrative agency powers.
“‘To permit this would neuter all statutory limits on agency rule-making[,]’” stated Blaney in his ruling, quoting HBACA’s argument.
Blaney also found that ADWR didn’t follow state law on agency rulemaking under the Administrative Procedures Act. Blaney invalidated both rules.
“ADWR acted unlawfully by implementing two agency rules without first complying with the mandatory provisions of the APA[,]” wrote Blaney.
The Arizona Free Enterprise Club (AFEC) called the court ruling a win and criticized ADWR’s model justifying the overturned regulations as flawed.
“The Maricopa County Superior Court has struck down the Hobbs Administration’s attempt to impose a sweeping housing moratorium based on its flawed water model — a stinging loss for Katie Hobbs and a ruling that the state failed to follow proper legal procedures,” stated AFEC. “This is a major victory for transparency, accountability, and Arizona homeowners.”
Jonathan Riches, vice president for litigation and general counsel for the Goldwater Institute, represented the Home Builders Association of Central Arizona. Goldwater Institute’s vice president for legal affairs, Timothy Sandefur, hailed the ruling as a necessary check on an administrative state attempting to impose greater burdens than that which the law requires.
“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,” said Sandefur. “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.”
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