A groundwater fee provision backed by Rep. Chris Lopez (R-LD16) has been included in Arizona’s FY2027 budget, extending Pinal County agricultural water fee relief through 2030 and giving irrigation districts additional time to use funds for groundwater and irrigation efficiency projects.
The provision is part of HB 4159, the environment budget reconciliation bill signed by Gov. Katie Hobbs on June 13 and enacted as Chapter 131 of the 2026 session laws. The law amended state groundwater statutes by extending the period during which no groundwater withdrawal fee is levied in the Pinal Active Management Area (AMA) for Arizona water banking purposes from 2026 to 2030. It also extends through 2030 the $ 2.50-per-acre-foot annual fee cap for groundwater and irrigation efficiency projects in the Pinal AMA.
Lopez introduced the policy earlier in the session as HB 2827. The introduced version listed Lopez as the primary sponsor, with Reps. Gail Griffin (R-LD19), Teresa Martinez (R-LD16), Michele Peña (R-LD23), and James Taylor (R-LD29) also listed as sponsors.
Pinal County farmers are getting needed relief and long-term certainty.
Thanks to Rep. Chris Lopez (@lopezforarizona), the FY2027 budget extends key pump tax relief through 2030, allowing farmers and irrigation districts in the Pinal Active Management Area to keep and reinvest… pic.twitter.com/bNKzMFxHpZ
— Arizona House Republicans (@AZHouseGOP) July 7, 2026
Lopez serves as vice chair of the House Natural Resources, Energy & Water Committee and represents Legislative District 16, which includes portions of Pinal and Pima counties.
The Temporary Groundwater and Irrigation Efficiency Projects Fund provides money for projects tied to construction and rehabilitation of wells and related infrastructure for qualified irrigation districts in the Phoenix AMA, Pinal AMA, and Harquahala Irrigation Non-Expansion Area. Under Chapter 131, groundwater withdrawal fees collected in the Pinal AMA for groundwater and irrigation efficiency projects are deposited into the fund and used solely to construct and rehabilitate wells and related infrastructure in the Pinal AMA.
The law also extends the distribution schedule for unencumbered fund money. The previous June 30, 2027, deadline for distributing remaining funds to contributors is moved to June 30, 2032, with proportional distribution by Dec. 31, 2032. The repeal date for the Temporary Groundwater and Irrigation Efficiency Projects Fund is extended from March 31, 2028, to March 31, 2033. HB 4159 also extends the repeal date for the Arizona System Conservation Fund from March 31, 2027, to March 31, 2031.
Lopez said that, with ongoing Colorado River negotiations, the extension was needed to “provide stability for irrigation districts” preparing for reduced Colorado River water. He also said the measure helps “keep Pinal money in Pinal” and allows irrigation districts to upgrade wells and switch from open canals to closed-pipe systems, which he said conserves water by reducing evaporative losses.
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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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.”
In 1952, Republican Governor J. Howard Pyle appointed a 24-member Underground Water Commission to recommend a new groundwater framework for Arizona. Every member was a farmer or rancher— people who lived and worked on the land and relied on groundwater to survive.
After nine months of work and thirteen public comment sessions, the Commission issued a 172-pagereportrecommending that the Legislature adopt “correlative rights” as the new groundwater law for the state, calling it the fairest and most equitable way to apportion subterranean rights among adjoining landowners on the surface.
Farmers agreed. One testified: “The principle of correlative rights gets closer to solving the problem than any water code.” Another said that courts should eventually recognize that landowners should own the groundwater beneath their land, so long as it does not harm others—like the ad coelum doctrine and “no harm” principle described in Part 1.
Yet, the Legislature failed to act. With Democrats holding 15 of 19 Senate seats and 50 of 80 House seats, lawmakers left the issue to the courts, which rejected correlative rights in favor of “beneficial use,” leaving landowners with no legal means to protect or conserve their supplies.
It didn’t have to be this way.
We can restore private property rights to groundwater
In 1953, the Arizona Supreme Court rejected correlative rights not because the Court thought it was unfair, but rather because the Court believed it was technologically infeasible, saying: “Apportionment of subterranean percolating water between adjacent landowners is often, if not always, impossible.”
Today, that excuse no longer applies. Advances in groundwater modelling have made quantifying and allocating rights to subsurface water completely possible—especially in Arizona’s alluvial fill basins like Willcox, McMullen Valley, and the Big Chino, where the tragedy of the commons is already unfolding.
In 2011, for example, the Arizona Water Resources Development Commission issued a statewideassessment, finding that the Willcox, McMullen, and Big Chino basins contained approximately 42 million, 14 million, and 10 million acre-feet (AF) of groundwater, respectively, to a depth of 1,200 feet, providing critical data that demonstrates that implementing correlative rights is entirely feasible.
Since it’s been over seventy years since we’ve meaningfully considered correlative rights, many residents today have likely never heard of this term and would naturally have questions about how it would work, how it would benefit them, and how it would help advance our shared goals of conservation.
Here’s how it would work—using Willcox as an example
Once a basin is closed to new pumping, the groundwater is quantified and allocated to landowners based on the number of acres they own. With 42 million AF underground and about 1.2 million acres on the surface, each landowner in Willcox would receive about 35 AF per acre as a one-time “lump sum.”
For a 4-acre parcel (the minimum lot size in Cochise County), a landowner would receive 140 AF. A 160-acre quarter section would receive 5,600 AF, and a full 640-acre section would get 22,400 AF. This is similar to the proportional share-based approach utilized in oil and gas regulation.
It is also similar to the approach utilized in Arizona’s transportation basins, like Harquahala, McMullen Valley, Butler Valley, and the Big Chino. In Harquahala, the formula is 6 AF/acre annually. More acres mean more rights.
For municipal providers, lump sums would be allocated based on the acres they serve. A larger service area means a larger groundwater allocation. When residents interconnect, their allocations would transfer to the provider—allowing the provider to manage their supplies on their behalf.
State trust lands would also receive allocations, which lessees would be entitled to use through their leases. The more acres leased, the more groundwater available. In transportation basins that have large amounts of state trust land, cities would know exactly how many acres they’d need to lease to secure an assured water supply.
Additionally, landowners would be credited a proportional share of the annual natural recharge. A person owning one percent of the acres would receive one percent of the natural recharge.
Over time, these credits would add up. After five years, a person earning 0.2 AF/year would acquire a full acre-foot, while a resident with 28 acres would earn enough water annually to meet all of their household needs from recharge alone, allowing them to live off their recharge without touching their lump sum.
For lump sums, a minimum 4-acre lot would provide enough water to last 424 years. Adding recharge makes supplies last even longer. Additionally, increased recharge from proactive investments would be credited to the investor, incentivizing the development of new recharge projects.
Because the basin is closed to new pumping, existing landowners would be protected against subsequent users, like prior appropriation but without the complications. Additionally, because rights are transferable within the same basin, economic growth is still possible. Newcomers can enter, but only if they purchase land or water rights from existing users first.
To enforce all this, annual reporting requirements would be implemented, ensuring that no one pumps more than his or her fair share. Meanwhile, minimum well spacing requirements would be implemented to help ensure an even distribution across the basin, reducing impacts to existing well-owners.
Well monitoring has been a controversial issue in the past, largely because it has been seen as the camel’s nose under the tent for greater bureaucratic control. Here, however, users get certificated private property rights that can never be revoked and thus more, not less, freedom in exchange for their trouble.
For residential well owners, shared infrastructure is already possible through the adoption of water districts. A shared well drilled to 1,200 feet can provide greater long-term security than 100 wells drilled to 120 feet—allowing each landowner to access their full supply but at a substantially reduced cost.
Lastly, there would be no “safe yield” requirement. While states like California have applied correlative rights to only annual recharge, this model would not work in Arizona. In fact, the 1952 Underground Water Commission specifically rejected the California model, noting it would not provide enough water in our arid climate.
Instead, a hybrid approach is required, one that allocates rights to both the subterranean resource and the annual recharge, thereby maximizing the amount of water granted to each landowner and ensuring that every drop is accurately accounted for. That is the approach described here.
Your water, your choice
The most intriguing aspect of correlative rights is that, once the groundwater has been allocated, it’s yours to keep—permanently. If you don’t use it, there’s no risk of loss; it will still be there 10, 20, or 100 years into the future.
This stands in stark contrast to the current free-for-all described in Part 2, where leaving groundwater in the basin simply leaves more for someone else to take. Because there’s no forfeiture, landowners are free to use, conserve, lease, or transfer their water within the same basin as they see fit. The choice is theirs.
For farmers, this creates new incentives. A 160-acre farm with a center pivot may have enough water to last several years, while others may need to scale back, shift to less water-intensive crops, or acquire additional rights from others. Commercial farming is still possible, but only if land and groundwater use align, encouraging open space and land conservation.
Thus, the motivation to conserve is simple: when the property is yours, you—and you alone—are responsible for maintaining it. Once an allocation is gone, it’s gone for good, forcing users to make tough decisions and encouraging wise use. That’s the power of private property: when you own it, you protect it.
Turning water into wealth
For many rural residents, correlative rights would instantly turn an uncertain water future into a secure financial asset, creating real value that can provide both long-term water security and financial independence.
With a single AF selling at roughly $400 today, a 40-acre parcel would suddenly hold $560,000 in water value—plus an additional recharge credit worth about $200 a year, acting like an annual dividend. For someone living on a fixed income, that’s transformative.
A 160-acre quarter section would receive $2,240,000 in water value, plus $800 in annual credits, while a 640-acre full section would sit on nearly $9 million and receive $3,000 in annual recharge credits.
With outright ownership, landowners could monetize their allocations or borrow against them without pumping a single drop. Here, water is not a commodity—it’s a currency: the currency of your future, allowing rural residents to build real equity and generational wealth.
The question is: what would you do with your share?
Correlative rights can save our aquifers, farmers, and ranchers—it’s time to adopt them
For over seventy years, Arizona tried top-down bureaucratic approaches to addressing the tragedy of the commons in groundwater—but to no avail. As discussed in Part 3, what Arizona needs now is the only solution that we haven’t tried but should have adopted when rural farmers and ranchers recommended it in 1952: correlative rights.
By closing our alluvial-fill basins to outsiders who seek to pump them dry for short-term profit at the expense of others, and restoring private property rights to the groundwater beneath our feet through correlative rights, we can unlock millions of dollars’ worth of groundwater that will last thousands of years and finally give landowners the legal right and incentive to protect and conserve their supplies for themselves and future generations.
The Legislature can act. As the Arizona Supreme Court itself said in 1953: “If any change in the law is necessary, it should be made by the Legislature,” including the power to “invest” groundwater with the “character” and “attributes” of “private ownership.”
The moment to act has arrived. Imminent cutbacks to our Colorado River supply mean that our state can no longer afford the inefficiency of centralized bureaucratic control over our most precious resource. It’s time to end top-down bureaucratic control, give private property rights to groundwater back to the people, and fix a generations-old mistake.
From harvesting timber in national forests to grazing cattle on the open range, our nation has faced many tragedies of the commons over the years. Whether hunting big game in the wild or extracting oil and gas from underground reservoirs, each example presented our leaders with the same, fundamental issue: if nobody owns it, everyone will overuse it.
For rural Arizona, groundwater is no different. As explained in Part 2, Arizona’s groundwater challenges are a tragedy of the commons, stemming from the fact that groundwater is a finite resource with multiple landowners on the surface, any one of whom can tap into the common supply.
How we approach this tragedy moving forward will determine not only the health of the aquifers but also the future of our rural communities. While some proposals have been offered to date, none have been sufficient to earn legislative support, and most have been wrong for our state.
To get it right, we must consider the approaches that have been taken in other contexts to see which have worked and which have not, allowing us to determine which could be the best fit for groundwater.
The socialist approach views self-interest as the problem. It seeks to control human behavior through mandates, permits, and fees. Whether renewable energy standards for climate, catch limits for fisheries, or sustained yield mandates for national forests, all prioritize resource preservation through government control—maintaining communal ownership and regulating beneficial use through bureaucrats who decide who can use what, when, and how much.
The property-based approach, on the other hand, views communal ownership as the problem. It seeks to eliminate the tragedy by establishing private property rights to the resource, allocating individual shares and allowing users to manage and conserve their own supplies, limited only by the fundamental principles of private property rights, such as the “no harm” principle and “right to exclude.”
Mining claims have operated on “first in time, first in right,” and grazing allotments grant exclusive rights to leaseholders, thereby reducing conflicts among users and making individuals responsible for their own supplies.
To address rural groundwater, Arizona leaders must decide which of these approaches they will take.
Socialist options don’t work
Quod nullius est, est domini regis. It means: “What is the property of no one, belongs to the king.”
In 1976, after the Arizona Supreme Court declared groundwater a public resource, the Court said: “The legislature has the authority to determine which groundwater uses are most important to the general welfare and to allocate the state’s groundwater resources accordingly.”
This statement illustrates the truth about communal ownership: if no one owns the resource, then the government has absolute authority to act as king over its use. This is why the Arizona Department of Water Resources frequently reminds landowners that their right to use water is only “usufruct” to the land they own: meaning they don’t own the groundwater itself, the state does.
Like wild animals in Old England, communal resources belonged to the Crown—hunters could only hunt when, where, and how the king said they could. Those systems, like today’s socialist groundwater regimes, treat resources as communal property controlled by government fiat.
Such approaches typically fail because they lead to higher scarcity, higher prices, and worse outcomes for the resource itself. The federal government’s centralized control over national forests, for example, has produced catastrophic wildfires, endangered protected species, and restricted affordable timber.
In Arizona, the infamous “management area” is the hallmark socialist approach to groundwater— including 1948 “Critical Management Areas” and 1980 “Active Management Areas.”
According to Dean E. Peterson and Larry L. Deason in Arizona’s Groundwater Problem & Proposed Legislation, the 1948 Critical Management Areas “did not adopt any of the basic principles of water law,” but rather were an “exercise of the general police power of the state” through centralized restrictions.
In 1980, Arizona doubled down on its socialist approach with the Groundwater Management Act, establishing “Active Management Areas” that centralized control into the Arizona Department of Water Resources. This gave the agency near-absolute power over groundwater in AMAs, allowing its director to effectively act as king over the common supply.
In both cases, users rushed to drill before grandfathering deadlines, and corporate and municipal users entrenched their historical pumping, distorting market incentives. After 40 years, the 1980 Act has failed to achieve “safe yield” in most AMAs.
Despite their clear failures, proponents today continue to argue that Arizona should “finish what was started” with the 1948 and 1980 groundwater acts by expanding socialist-style control statewide through “Rural Groundwater Management Areas” and “Local Groundwater Stewardship Areas.”
These proposals must be rejected, as they would only impose new bureaucracies, tax personal groundwater withdrawals, and mandate volumetric reductions while maintaining the same communal ownership model that led to the tragedy in the first place.
Property-based solutions are best
Meum et tuum. It means: “What’s mine is mine, and what’s yours is yours.”
According to John Locke in his Second Treatise on Government, the role of government is not to seek to control human behavior, but rather to protect private property by using the limited power of government to quantify and secure individual rights, prevent takings, support transferability, and uphold the “no harm” principle and biblical golden rule between and among property owners.
Rather than mandating conservation through coercion, property-based systems embrace human nature and seek to harness the power of self-interest to guide the invisible hand toward voluntary conservation.
History has proven that this approach works. When socialist mandates in American fisheries led to overfishing, policymakers switched to property-based catch shares and individual transferable quotas, which restored fish populations.
When hunters arrived in the New World, they rejected the Old English system and adopted the North American Model of Wildlife Conservation, which includes transferable hunting permits, helping to maintain healthy wildlife populations while providing a fair system of access.
Even “adopt a highway” programs harness self-interest to address trash and litter on public highways, granting exclusive naming and advertising rights to private parties in exchange for maintenance.
Overall, individual ownership protects scarce resources better than bureaucratic control because direct ownership creases individual responsibility. Where individuals are given ownership and responsibility, conservation increases because what belongs to someone is protected by someone.
Arizona needs correlative rights
To solve Arizona’s groundwater tragedy, we must remove it from communal ownership and apply a property-based approach. One solution designed specifically for finite underground resources like groundwater is “correlative rights.”
Derived from oil and gas law in resource-rich states like Texas, Oklahoma, and Nebraska, correlative rights allocate proportional shares of the resource to adjoining landowners on the surface, based on the amount of land they own. If a person owns five percent of the surface, then they own five percent of the oil and gas below, plain and simple. This is consistent with the ad coelum doctrine described in Part 1.
In many of these resource-rich states, policymakers have already adopted correlative rights for groundwater. In Texas, for example, the Edwards Aquifer Authority uses correlative rights to allocate groundwater. In Nebraska, natural resource districts administer correlative rights.
Because allocations are treated as real property, users are free to trade their shares among themselves within the same basin—allowing market forces, rather than government bureaucracy, to dictate the most efficient use of limited resources.
This is why correlative rights have been such an effective way to prevent the tragedy of the commons in finite underground resources to date. As a proven, property-based framework rooted in America’s traditional values, correlative rights are the right approach for Arizona.
It’s time to restore private property rights to groundwater
When the Arizona Supreme Court enshrined “communal ownership” into law, it likened groundwater to a wild animal, saying it was “free to roam as [it] please[d]” and the “property of no one” until “captured.”
In so doing, it wrongfully embraced the Old English model that Americans rejected and failed to follow the American path that utilizes private property rights to advance the public good. This must be undone.
To address the tragedy of the commons in Arizona, we must recognize the harms of communal ownership and reject the socialist schemes that seek to maintain it. Only by restoring private property rights to groundwater through the adoption of correlative rights can Arizona finally address the tragedy and allow landowners to protect and conserve the supplies beneath their feet.
It’s time that Arizona leaders consider a new approach to groundwater supplies. As Arizona Justice Duke Cameron wrote in 1976: “The time has come to consider again the doctrine of correlative rights.”
