Breaking News: Recent Rulings Put ADWR’s Groundwater Authority to the Test

Recent Rulings Put ADWR’s Groundwater Authority to the Test

Authored by Attorney Sean F. Krieg

Over the past several weeks, three Superior Court cases have brought a quiet but consequential question into focus: How far does the Arizona Administrative Procedure Act (APA) reach into the Arizona Department of Water Resources’ (ADWR) groundwater decisions?  For anyone who plans, builds, finances, or is responsible for approving groundwater-dependent projects, the answer is starting to matter a great deal.

Two of these cases invalidated ADWR rules for the state’s assured water supply program.  The other vacated ADWR’s designation of an Irrigation Non-Expansion Area (INA) in the Hualapai Groundwater Basin.  All three sharply limit the Department’s regulatory authority under the 1980 Groundwater Management Act.

The Two Assured Water Supply Rulings

The Home Builders Association of Central Arizona (HBACA) brought two challenges to ADWR rules; both landed this spring.

In the first, HBACA v. ADWR (No. CV2025-002623), the court considered two standards supporting ADWR’s position that the Phoenix Active Management Area (AMA) lacks sufficient groundwater to support new groundwater-based determinations.  On April 21, 2026, the court ruled that these two standards (the “unmet demand” and “depth-to-water” standards) were rules ADWR had adopted without going through the APA’s rulemaking process.  Accordingly, the court invalidated the standards and enjoined ADWR from relying on them when reviewing assured water supply applications.  But this defect is procedural, so ADWR could theoretically re-adopt the same rules by following APA procedures.

In the second case, also captioned HBACA v. ADWR (No. CV2025-008701), the court went further.  On June 8, 2026, it invalidated A.A.C. R12-15-710(H), a 2024 rule that underpins ADWR’s Alternative Path to Designation of Assured Water Supply (ADAWS) rule.   ADAWS was designed to let water providers in the Phoenix and Pinal AMAs obtain a 100-year designation despite the groundwater shortfall.  To do so, a provider had to incorporate new alternative water supplies like effluent or Colorado River water, as well as secure an additional increment of that supply—a requirement HBACA characterized as a “water tax.”  The court held that this requirement conflicts with A.R.S. § 45-576, which ties an assured water supply only to the “water needs of the proposed use.”  This was significant because ADWR’s position regarding groundwater in the Phoenix and Pinal AMAs meant that ADAWS had become the principal path to designation.

Neither ruling is appealable yet.  But when they are, ADWR is likely to appeal and may seek a stay.  This means that their practical effect will be sorted out in the coming weeks.

The INA Designation

The third case raises similar questions in a different setting.  In Opal Investments, LLC v. ADWR (now on appeal as 1 CA-SA 26-0147), the Court of Appeals is weighing whether an INA designation—here, ADWR’s designation of the Hualapai Valley Groundwater Basin in Mohave County—is a “rule” within the meaning of the APA.  In January 2026, the Superior Court held that it was and vacated the designation.  The Court of Appeals granted ADWR special-action review, and amici (including Mohave County, the State of Arizona, and the Environmental Defense Fund) have lined up to support the Department.  Oral argument is currently set for August 25, 2026.

Why It Matters

The common thread is the APA’s expanding role as the battleground for ADWR’s regulatory authority.  In one case, the Department was chastised for adopting a rule that conflicts with statute.  In the others, ADWR was told that it should have used rulemaking procedures when it did not.  All three impede the Department’s ability to restrict groundwater-reliant development.

For public entities, water providers, and private developers, the near-term reality is uncertainty.  The analytical framework and alternative-designation route that many projects relied on are off the table for now.  Final judgments, appeals, and possible stays will determine for how long.  But the courts’ answer to what makes an ADWR action a “rule” may matter most.  That standard could shape not only these disputes but the next generation of groundwater decisions across Arizona.

This article was written by G&B Attorney Sean F. Krieg

You can reach Sean directly at 602-256-4499

SKrieg@GBLaw.com

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