Arizona can’t stop homebuilding while policy ruling is appealed

Key Points:

• The state water department in 2023 rejected new homebuilding permits in areas without a 100-year assured groundwater supply

• A judge struck down this policy, saying the officials did not follow proper procedures for changing rules

• The state has appealed the ruling, but the judge will not grant a stay in his decision while that case is heard

PHOENIX — A judge won’t back down — even temporarily — from his ruling that state water officials acted illegally in changing the rules for home builders.

In a new order, Maricopa County Superior Court Judge Scott Blaney rejected claims by Bo Dul, an attorney for the Department of Water Resources, that the ruling against a policy to prevent new home construction in areas without a 100-year water supply was likely to be overturned on appeal.

The judge was no more sympathetic to Dul’s arguments that homebuyers will suffer “irreparable damage” if the agency cannot enforce the rule that he invalidated.

“That is the exact harm the Groundwater Management Act was designed to prevent,” Dul wrote.

Blaney was not impressed.

“The defendants’ concerns are not consistent with the facts,” the judge wrote in his new order. He said all his ruling does is require DWR to use the rules that were in place back in 2023 to determine where homes can and cannot be built.

The new order most immediately affects efforts by developers to build homes in some communities on the edge of the Phoenix area. But there are broader implications going forward.

The order reaffirms Blaney’s conclusion that DWR is not free to make what he considered to be a significant change in the rules about where residential development can occur without going through the legal process, one that requires public hearings and other input. That effectively puts the agency on notice that it should not make any future efforts to bypass the rule-making process when it decides where homes can be built in all areas of the state under its purview.

It was that change in policy that led the Homebuilders Association of Central Arizona to sue — and to Blaney’s ruling earlier this year finding the change was illegally enacted because it was unilateral and did not go through public hearings.

In her latest filings, Dul told Blaney he should delay his decision and leave the policy in place — and the limits on construction — while DWR seeks review at the Court of Appeals.

She said the agency did nothing wrong, saying despite his ruling it did not amount to a change in the rules.

Dul said DWR has always been required to consider the effect on “all existing users” of groundwater throughout the basin and not just at the specific site.

Anyway, Dul said, the 2023 change came after “improved modeling” showed that groundwater supplies in the basin already were overallocated. And she said further studies showed there were areas where that 1,000-foot rule to access water could not be met.

“An agency does not ‘change’ its rule by considering updated technology and data,” Dul told Blaney.

Attorney Sean Hood, representing the homebuilders, said that is misstating the issue. He said Blaney’s earlier ruling does not require DWR to disregard updated data.

What it does do, Hood said, is tell the agency it can’t simply decide that a development in one area can’t be built simply because DWR decided — without making formal rules — that it was now going to consider the availability of water anywhere in the basin.

He also rejected the agency’s contention that it will be forced to issue certificates for development where there is no assured water supply.

“It simply cannot do so by applying the unlawful AMA-wide rules,” Hood said.