Goldwater Takes Legal Action Against Hobbs Over Controversial Water Rule Endangering Arizona Housing

By Matthew Holloway |

Arizona Governor Katie Hobbs is under legal scrutiny as the Goldwater Institute, representing the Home Builders Association of Central Arizona, has filed a lawsuit against her administration. This action is described by Goldwater as potentially one of the most egregious bureaucratic overreaches in the state’s history.

The lawsuit, announced on Wednesday, contends that Hobbs’s administration is implementing “illegal actions” that could exacerbate Arizona’s housing crisis. The central issue revolves around a new certification requirement in parts of Maricopa County, which mandates that homebuilders must demonstrate a 100-year groundwater supply while also addressing a controversial standard referred to as “unmet demand.”

The term “unmet demand” does not currently exist in Arizona law, according to Stacy Skankey from Goldwater. She explained that this rule requires builders to show adequate groundwater supply not just at their development site but across the entire water management area. If any part of this area faces a projected groundwater shortage, the Department of Water Resources (ADWR) claims that insufficient groundwater exists across the Valley.

In December, Goldwater urged ADWR to rethink its new regulations, asserting that the implementation of the so-called “AMA Wide Unmet Demand Rule” violated legal protocols, as it was enacted without legislative approval or necessary rulemaking processes.

ADWR defines unmet demand as a situation where the model cannot accommodate all pumping demands, resulting in a shortfall or deficit. Such a scenario arises when there isn’t enough saturated aquifer to fulfill the demand or when the depth to water exceeds parameters set after a century of simulated pumping.

The primary concern is that the state’s modeling is inadequate for reliable demand predictions, leading to the conclusion that new housing developments may be hindered based on flawed simulations. In a joint op-ed, Jackson Moll, CEO of the Home Builders Association of Central Arizona, and Jon Riches, Vice President for Litigation at Goldwater, highlighted how the current model alters expectations for developers who have historically contributed to water sustainability by replenishing groundwater.

Riches stated, “Decisions regarding critical issues like affordable housing and the management of natural resources should stem from a transparent, democratic process rather than being dictated by executive order.” Moll emphasized the damaging implications of what he called Hobbs’ misleading assertion regarding groundwater shortages, which he argues threatens to deteriorate housing affordability in a state already grappling with significant challenges in this area.

Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest updates, or contact him via email for tips or information.