The federal government expects Arizona to do more to conserve its water in the ongoing Colorado River supply crisis while other basin states face far lower restrictions.
Arizona’s elected leaders responded that the state has done more than its fair share to conserve water throughout this historic multi-decade drought, and that they would not accept this federal directive. They indicated that they may challenge the directive in court.
The Final Environmental Impact Statement on Colorado River operations, released by the Bureau of Reclamation on Friday, would require Arizonans to cut water usage by up to 77% in 2027 and 2028.
Arizona, California, and Nevada had proposed water usage reductions that would have reduced Arizona’s supply by about 31%, but the federal government rejected that proposal.
The Arizona Department of Water Resources (ADWR) said the federal decision would “devastate” Arizonans and the state’s economy. ADWR criticized the federal framework for not including reductions to the Upper Basin or sufficient use of water in those upper reservoirs.
The Colorado River Basin provides drinking water and power for more than 40 million people, and irrigation water for more than five million acres of agricultural land. A 26-year drought has reduced the basin to historically low runoff and reservoir levels.
Arizona, California, and Nevada rely on water from the Lower Basin, while Colorado, Utah, Wyoming, and New Mexico rely on the Upper Basin.
Gov. Katie Hobbs expressed hope that the Department of the Interior (DOI) would still accept the Lower Basin alternative plan, but acknowledged the federal restrictions contained “unacceptable options” that included having Arizona take on the majority of water cutbacks, which Hobbs called “draconian.”
As Rep. Andy Biggs (AZ-05), Republican nominee for governor, mentioned in his appeal to Congress for Colorado River emergency funding, Hobbs cited Arizona’s unique position as a power player in the agricultural and defense industries.
“Arizona provides the agricultural produce, critical minerals, weapons defense systems and cutting-edge semiconductors that feed America, protect America and fuel America’s high-tech economy. No other state in the Colorado River basin can say the same,” said Hobbs.
The DOI has been unsuccessful in its attempts the past six years to reach consensus with Arizona and the six other basin states concerning long-term operational guidelines. The lack of consensus didn’t stop the federal release of the environmental impact statement, since current operational guidelines expire this year and the government must begin new operations on October 1 of this year.
Danny Seiden, President and CEO of the Arizona Chamber of Commerce & Industry, condemned the DOI decision as placing a “deeply disproportionate burden on Arizona” while failing to provide a cohesive conservation solution for all basin states. Seiden said they would stand alongside state leaders to demand a fairer decision.
“[A] plan that imposes severe, enforceable reductions on Arizona while shielding senior users and allowing other states to avoid comparable mandatory commitments is neither fair nor sustainable,” said Seiden. “Arizona will do its part, as it always has, but we will not accept being treated as the system’s default shock absorber. Any sustainable path forward must recognize Arizona’s conservation record, protect the investments our state has already made, and require measurable contributions from the entire Colorado River Basin.”
Rep. Teresa Martinez, an LD16 Republican whose constituents also hail from Pinal and Pima counties, questioned who in Arizona would be expected to cut water usage, and who would be given the better end of the deal.
Martinez said the federal government is forcing communities and farmers to bail out those beginning to feel the effects of the water crisis.
“Pinal County farmers already lost their Colorado River water. That happened years ago. They took the hit without a bailout, without fanfare, and without much sympathy from anybody,” said Martinez. “Rural Arizona cannot keep being treated like the first place to cut and the last place anyone thinks about.”
Martinez said she plans to speak with LD16 community leaders, especially those within the agriculture industry, to gauge the anticipated impact of this latest decision.
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The U.S. Department of Agriculture has issued two drought disaster designations covering several Arizona counties, making eligible farm operators in affected areas able to seek emergency loan assistance through the Farm Service Agency.
The designations name multiple Arizona counties as primary or contiguous natural disaster areas because of drought conditions, according to an announcement from Rep. Eli Crane’s office. The first designation, issued June 29, named Coconino and Maricopa counties as primary natural disaster areas. Gila, La Paz, Mohave, Navajo, Pima, Pinal, Yavapai, and Yuma counties were listed as contiguous counties.
In a post to X on Wednesday, Crane wrote, “The @USDA’s drought designations give our farmers and ranchers access to meaningful financial support during a difficult period. I appreciate @SecRollins and her team for recognizing the seriousness of these conditions and taking action.”
The @USDA’s drought designations give our farmers and ranchers access to meaningful financial support during a difficult period.
A second designation elevated Gila, Pinal, and Yuma counties to primary status. Coconino, Graham, La Paz, Maricopa, Navajo, Pima, and Yavapai counties were listed as contiguous counties under the second designation.
The determinations were made under 7 CFR 759.5(a), which provides for Secretarial disaster area designations when any portion of a county experiences D3, or extreme drought, or higher during the growing season, or D2, or severe drought, for at least eight consecutive weeks during the growing season of affected crops.
The Arizona Department of Water Resources says the U.S. Drought Monitor is the official record for federal drought relief claims. The department’s drought status page said Arizona’s Drought Monitoring Technical Committee advises U.S. Drought Monitor authors on current drought conditions in the state using precipitation, streamflow, drought indices, and impact data.
ADWR’s May drought status summary reported that severe short-term drought had advanced in Mohave, Coconino, Navajo, Gila, Maricopa, and Yavapai counties, covering 60% of the state, while extreme short-term drought expanded in Apache County. The department’s long-term drought update for January through March said Arizona experienced the hottest and 28th driest January-to-March period on record, as well as the hottest and 27th driest four-year period from April 2022 through March 2026.
Crane said the designations will give agricultural producers in affected counties access to federal assistance after years of drought pressure in rural Arizona.
“For years, rural Arizonans have faced worsening drought conditions without adequate federal assistance,” Crane said. “These designations finally give our farmers and ranchers access to meaningful financial support and help our producers during a difficult period.”
Crane thanked Agriculture Secretary Rollins and the USDA for recognizing the drought conditions and urged eligible applicants to work with their local Farm Service Agency office to determine whether low-interest loans could help offset recent losses.
Under Section 321(a) of the Consolidated Farm and Rural Development Act, USDA may extend disaster designations beyond counties that meet the drought criteria directly by naming neighboring counties as contiguous disaster areas. Crane’s office said both primary and contiguous classifications make farm operators eligible to be considered for FSA emergency loan assistance.
The FSA stated that emergency loans may be used to replace essential items such as equipment or livestock, reorganize a farming operation, or refinance certain debts. The agency reviews loan applications based on the extent of losses, available security, and repayment ability.
Farmers and ranchers in the affected counties have eight months from the date of their county’s listing to apply. Crane’s office said applicants should contact their local FSA office for help with the application process and required documentation.
Applicants with questions may also email FPAC.BC.Congressional@usda.gov and reference disaster designation number 2026N00000369 for the June 29 announcement or 2026N00000419 for the Monday announcement.
The Arizona Department of Water Resources (ADWR) exceeded its authority under state law, the Maricopa County Superior Court ruled Monday.
The court determined in an under advisement ruling in this ongoing case that, again, ADWR lacked authority under state law to impose a new obligation on home developers to secure additional water supply.
The Home Builders Association of Central Arizona and Arizona Senate President Warren Petersen (R-LD14) have challenged this and other ADWR policies initiated at the behest of Gov. Katie Hobbs.
Maricopa County Superior Court Judge Scott Blaney said this additional requirement by ADWR went beyond what state law required. Per Blaney, the law only requires developers to show 100 years of continuous availability of water sufficient to satisfy water needs for the use proposed by the developer.
State law limited ADWR to two pathways: either developers could obtain a certificate of assured water supply from ADWR or they could obtain a commitment of service from a municipal provider such as a city, town, or private company with an ADWR assurance of water supply designation.
However, under a new rule pushed by the Hobbs administration, R12-15-710(H), ADWR limited developers to a third, new pathway for assured water supply designation. This pathway involved a newly created category of water availability ADWR called “New Alternative Water Supplies,” and required developers to secure an additional 25% of this new category beyond their proposed usage needs.
The ADWR changes under Hobbs resulted in what effectively became a housing moratorium. New building progress in the Valley ground to a halt.
Blaney ruled ADWR lacked the authority to create this third, new pathway. He declared that the plain language of the statute only requires a 100-year guarantee of water needs satisfaction.
“The Legislature created two paths to establish an assured water supply to develop a subdivision: obtain a certificate; or obtain a designation,” said Blaney. “Through the implementation of its moratorium and its nearly simultaneous promulgation of a rule that demands more water than the statute requires, ADWR has in effect attempted to rewrite the governing statute at the agency level.”
Blaney also rejected ADWR’s argument that this third pathway was a voluntary, alternative path out of several for developers. He sided with the developer’s assessment that ADWR had unlawfully restricted developers to a single pathway.
The court ruling on Monday blocked ADWR from enforcing the rule.
In April, the Maricopa County Superior Court struck down ADWR’s housing moratorium articulated in several rules pertaining to unmet water demand and depth-to-water limits.
Similar to this most recent ruling, Blaney found that ADWR sought to break necessary limitations on administrative agency powers and had unlawfully implemented two agency rules without following the Administrative Procedures Act.
AZ Free Newsreported last month that the ADWR-spurred housing moratorium may put taxpayers on the hook for more than $1 billion, due to ongoing and potential future builder compensation claims.
ADWR plans to appeal pending the final ruling.
When Hobbs took office, she formed a Water Policy Council to overhaul the state’s approach to groundwater management. Two committees were formed, one of which addressed assured water supply.
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For decades, Arizona has been a national model for how to responsibly manage and develop water resources. As a result, our state has enjoyed years of economic growth while welcoming millions of new residents to live and work here.
Then, Governor Katie Hobbs came along.
In 2023, the Hobbs administration imposed sweeping new water rules that effectively halted new home construction across much of the Valley, under the guise that it was needed to “save water.”
Now, a court has struck down the policy, ruling that state regulators ignored the law when creating the rules behind it. But the fallout from this disastrous decision is only beginning. And Arizona taxpayers could soon be forced to pay more than $1 billion for the damage.
Arizona Is Not Running Out of Water
Despite the alarmist rhetoric coming from Hobbs and the Arizona Department of Water Resources (ADWR), our state is not running out of water.
In fact, our state uses less water today than it did in 1990—even though our population has doubled to more than 7 million residents. That’s not a typo. Over the past three decades, Arizona has welcomed millions of new residents while reducing total water consumption.
How is that possible? Through better water management, technological advancements in conservation and reuse, and the gradual conversion of agricultural land to residential development. The result is a system that has allowed Arizona to grow responsibly while protecting its long-term water supply.
But instead of building on this successful model, Hobbs declared a sweeping housing moratorium—halting new single-family housing construction across much of the Phoenix metropolitan area.
A Manufactured Crisis With Real Consequences
In addition to destroying billions in economic activity and further exacerbating the housing shortage crisis, Hobbs’ moratorium created a number of additional problems…
Gov. Katie Hobbs’ overruled housing moratorium could leave taxpayers on the hook for more than $1 billion in compensation to builders.
The housing moratorium was a result of the Arizona Department of Water Resources’ (ADWR) indefinite suspension of developer certificates throughout the Valley based on new groundwater regulations imposed under Hobbs in 2024.
For decades, state law required developers to prove 100 years of assured water supply for their developments. Once Hobbs took office, ADWR imposed new regulations that expanded developers’ duty to prove assured water supply beyond their development into the surrounding water management area.
The Home Builders Association of Central Arizona (HBACA) sued ADWR over the regulations last January, represented by the Goldwater Institute. Last month, the Maricopa County Superior Court sided with HBACA and struck down the moratorium. Judge Scott Blaney found that ADWR violated Arizona law on the extent of its powers and on agency rulemaking.
ADWR plans to appeal the ruling.
A former ADWR director and one of the leading policymakers behind the legacy rule on assured water supply (the 1980 Groundwater Management Act) spoke out against the superior court ruling.
Kathleen Ferris, now an Arizona State University (ASU) senior research fellow with the Kyl Center for Water Policy, told KJZZ last month that ADWR was justified in its rulemaking because it had discovered that Phoenix-area groundwater was more interconnected than understood previously.
Whether that court ruling will stand on appeal or no, taxpayers will likely be on the hook for hundreds of millions — perhaps over a billion — in builder compensation claims filed under the Private Property Rights Protection Act, enacted under Proposition 207.
Prop 207 entitles property owners to just compensation for any land use laws’ impact on the use, division, sale, or possession of their property that reduces its fair market value.
One such Prop 207 claim is already underway.
Last September, developers Buckeye Tartesso and Buckeye Tartesso II filed a claim demanding over $320 million in compensation for lost value due to the ADWR rule. That figure, however, reflected only a low estimate which the developers felt they could accept as a settlement.
“[This figure] incorporates a number of conservative assumptions, and the [developers] expect that actual, proven damages would be significantly higher,” read the demand letter. “This demand is an offer of settlement, in the nature of a compromise, and the [developers] reserve the right to seek additional or different damages if litigation is necessary.”
ADWR prevented the developers from obtaining a certificate of assured water source for the Tartesso development in the city of Buckeye, which spanned over 12,800 acres. As a consequence, they were prohibited from subdividing or selling lots on that property.
The Goldwater Institute filed the claim on behalf of the developers.
Should all builders file similar claims, taxpayers could be on the hook for over $1 billion in compensation payments at a time when the state is already struggling with budget woes.
Gov. Hobbs inherited a budget surplus of over $2.5 billion from her predecessor, Republican governor Doug Ducey. After two years in office, the budget plunged to a $1.4 billion deficit: a near-180 on the state’s fiscal health.
The latest figures reflect a slightly better status, though still nowhere near in the black: a deficit of over $300 million, according to Rep. David Schweikert (R-AZ-06).
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