As Arizona grapples with rapid growth and a changing climate, long-standing groundwater regulations are being tested in courtrooms, boardrooms and booming desert suburbs.
Developers and regulators are locked in a deepening dispute over how to manage the state’s finite water supplies — with the future of real estate, agriculture and sustainability hanging in the balance.
“When the Groundwater Management Act was passed in 1980, it really focused on the urban areas,” said Rita Maguire, an attorney and former director of the Arizona Department of Water Resources. “It was the five major population centers for the state. So places outside of what we call active management areas were essentially unregulated.”
Even within AMAs, the law draws important distinctions between homes built within the boundaries of a designated municipal water provider and those built just beyond.
Cities like Phoenix must prove every 15 years that they can meet water demands for the next century — but developers building just outside those boundaries only need to prove it once, Maguire said.
“When you’re talking about a developer who builds outside of a designated service area and gets a certificate of assured water supply, it’s a snapshot,” she said. “At that point in time, they had a 100-year assured water supply. Going forward, they don’t have to have further proof.
“They’re done. They sell their homes and they’re on their way to develop another subdivision.”
Assured supply requirements under fire
That 100-year rule — widely considered one of the most rigorous groundwater standards in the nation — is now at the heart of a legal fight.
In 2023, the Arizona Department of Water Resources released a new groundwater model showing that key growth communities like Buckeye and Queen Creek no longer have enough groundwater to support new subdivisions over the long term.
The model effectively halted new, for-sale housing outside of designated municipal providers in those areas.
Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Central Arizona, sharply criticized the model.
“We think it’s significantly flawed, inaccurate and has been misrepresented,” said Kamps. “The consequences are that you can no longer grow any homes for sale outside designated providers. And the two biggest communities impacted by that are Buckeye and Queen Creek, the fastest growing communities in the valley, and [the] most affordable housing market in the valley all have been shut down.”
The builders’ association filed a lawsuit earlier this year challenging the department’s findings and accusing the state of singling out the for-sale housing market while allowing other sectors — such as industry and rental housing — to continue using groundwater with fewer constraints.
“There are eight to nine projects that are currently stalled because of the groundwater model,” Kamps said. “And due to that, there’s been in excess of $3 billion invested in the ground solely for houses.
“We have plans for over 200,000 lots in northern Buckeye and that’s been challenging, to say the least.”
Differing views
Maguire argues that the 100-year requirement is a cornerstone of water sustainability and consumer protection.
“I think that the 100-year assured water supply is really important consumer protection,” she said. “Frankly, it could be longer — 100 years goes by pretty quickly.”
She also highlighted the difference between renewable water — such as surface water from the Colorado River — and groundwater, which can take centuries to recharge.
“You pump that water out, it isn’t immediately replenished,” she said. “It takes hundreds of years, millennia, to restore an aquifer.”
Kamps countered that the law now penalizes industries that replenish aquifers through programs like the Central Arizona Groundwater Replenishment District.
“If you replenish your groundwater, you can’t grow. But if you mine groundwater — which is what commercial and industrial users do — that’s okay,” he said. “It’s upside down.”
“No single for-sale home”
The dispute has put a spotlight on one of the fastest-growing regions in the country.
Communities like Buckeye and Queen Creek have become magnets for families priced out of central Phoenix — but many of those areas fall outside designated water provider zones.
“Right now, you can build data centers and chip factories as far as the eye can see, but you can’t build one single for-sale home,” Kamps said. “That’s not protecting the aquifer — that’s shutting down housing.”
He pointed to large industrial users like the Taiwan Semiconductor Manufacturing Company plant in Phoenix, which he said uses between 30,000 and 35,000 acre-feet of water annually — equivalent to more than 100,000 homes.
“Housing uses far less water than agriculture and actually reduces ag pumping,” Kamps said. “We need to be at the table — because right now, the system is broken.”
Maguire said occasional confusion over water availability is exacerbated by homebuyers coming to the state who may not understand Arizona’s complex system of water rights and regulation.
“If there’s a misconception, it would only be to the extent that you’re not aware that there is some risk associated with the long term availability of groundwater supplies across the state,” she said. “That’s why we adopted the various regulatory programs to try to put in place more protection.
“Certainly if you have Colorado River water, that’s a better source of supply.”
Science, lawsuits, political pressure
The builders’ lawsuit also challenges the state’s use of hydrologic modeling to determine water availability.
Developers commissioned an independent environmental firm to produce their own groundwater model for the Phoenix basin, which, according to records, offered significantly more optimistic projections for the region’s aquifers.
Kamps said it’s common for developers to submit independent hydrology reports — sometimes at the state’s request.
“It’s very common for the Department to say, ‘Hey, we need more hydrology at your site.’ We go out, examine X, Y and Z, and provide that information,” he said. “No different than what’s being done here.”
But Maguire suggested that technical arguments may mask deeper legal and political tensions.
“There are places where we’re running low on groundwater,” she said. “In fact, we’re hitting the legal boundaries for access to groundwater, and they are denying applications for a certificate of assured water supply. That creates political pressure to revisit that regulatory program.”
Eyes on the Colorado River
Looking ahead, both Maguire and Kamps said that Arizona’s role in regional negotiations over the Colorado River will be critical.
New water-sharing guidelines are being developed to replace the current framework, which expires in 2026.
“The states and the feds are sitting down and trying to come up with a new paradigm for how to operate,” said Maguire, “primarily Lake Powell and Glen Canyon Dam, and Lake Mead and Hoover Dam. How much water is released when it’s released? What are the conditions for releases?”
She noted that 22 Native American tribes in Arizona — many of whom rely on Colorado River water — are also part of the negotiations.
“You’ve got a lot of folks watching and trying to ensure that they have a secure water supply post-2026,” Maguire said.
Kamps said the homebuilding industry should have a voice in those discussions as well.
“Well, guess what they’re doing with the Colorado River,” he said. “They’re renegotiating so nobody can offer up any water to our builders to finish these projects. It’s not because of any ill will. It’s just like they don’t know if they’re going to have the water next year, so the consequence is there is no water available for us to move these projects forward.”
A statewide reckoning
The debate over groundwater in Arizona is more than a clash between developers and regulators — it reflects a broader reckoning over how the state will grow in an era of rising temperatures and tightening water supplies.
Despite the complexity of the issues, Maguire sees growing public understanding as a hopeful sign.
“The press is doing a pretty good job of covering these water issues,” she said. “They’re very complicated, but I think overall, the public’s pretty well educated and certainly has the resources available to understand what the political leaders and the business leaders are trying to do to ensure that there’s a secure water supply.”
But as legal battles unfold and reservoirs dwindle, Arizona faces difficult decisions about what — and whom — its water laws are really built to protect.
“What (regulators) are saying, and what the deficiency letters have said that we’ve received is, ‘You may actually have 100 years worth of water at the location of your site, but a well may go dry in Queen Creek, and you need to resolve that,’” Kamps said. “That is a new policy position out of the department that’s never been done before, and that’s one of the issues we’re we’re discussing in court.”
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