- A Maricopa County judge invalidated two groundwater rules on April 21, 2026.
- The rules had stopped many new housing projects in the Phoenix area.
- The court found the state did not follow required rulemaking procedures.
- Officials must now go through a formal public process before enforcing similar rules.
Tuesday, April 28, 2026 — A Maricopa County Superior Court judge issued a significant ruling on April 21, 2026,
striking down two groundwater policies used by the Arizona Department of Water Resources. The decision, issued in Home Builders Association of Central Arizona v. Arizona Department of Water Resources, et al., affects how new housing developments are reviewed across the Phoenix area and could shape future water regulation in the state.
At the center of the case were two policies often referred to as the “Unmet Demand Rule” and the “Depth-to-Water Rule.” These policies changed how the state evaluated whether enough groundwater exists for new housing.
How Arizona’s Water Rules Normally Work.
Arizona has long required developers to prove they have enough water before building homes in certain regulated areas known as Active Management Areas.
Under the existing system, a developer must show that water will be available for at least 100 years for a specific project. This is typically done through detailed hydrologic studies tied to wells serving that development.
If the developer meets these requirements, the state is generally required to approve the project.
What Changed With the New Policies.
In 2024, the Arizona Department of Water Resources updated a regional groundwater model for the Phoenix Active Management Area.
Based on that model, the agency began applying a broader approach. Instead of looking at each project individually, the department evaluated groundwater availability across the entire region.
Under this approach:
- If groundwater shortages were projected anywhere in the region, it could affect approvals everywhere.
- If water levels were expected to drop too deep in one area, it could block development across the region.
This shift effectively turned a local review process into a region-wide standard.
Impact on Development.
According to court records, this new approach led to a halt in issuing key approvals needed for new housing projects.
Developers reported that applications were still being reviewed, but approvals were not being granted.
The result was a slowdown or pause in new home construction across large parts of Maricopa County.
Why the Court Ruled Against the State.
The court did not decide whether the policies themselves were good or bad.
Instead, the ruling focused on how the policies were created.
Arizona law requires state agencies to follow a formal rulemaking process. This includes public notice, transparency, and an opportunity for input.
The court found that the Department of Water Resources created and applied new rules without following those required steps.
In the ruling, the judge stated that the agency was using “criteria when reviewing applications that did not previously exist while claiming that it is still applying the existing rules.”
Because of that, the court declared both policies invalid and barred the agency from using them.
What Happens Next.
The ruling does not prevent Arizona from adopting similar groundwater policies in the future.
However, it requires the state to follow the proper legal process before doing so.
That process includes public participation and formal adoption of rules under the Arizona Administrative Procedure Act.
Until then, the department cannot rely on the invalidated policies when reviewing development applications.
A Broader Debate Continues.
The case highlights an ongoing tension in Arizona.
On one side is the need to manage limited groundwater in a fast-growing desert region.
On the other is the need for clear, lawful procedures when setting rules that affect housing, property rights, and economic growth.
The court’s decision leaves those larger questions unresolved, but it reinforces that changes to water policy must follow established legal steps.
