On March 10, Arizona House Speaker Steve Montenegro announced that the Arizona House of Representatives, in partnership with the Home Builders Association of Central Arizona (HBACA) and the Arizona Senate, filed a lawsuit against the Arizona Department of Water Resources (ADWR) over its Alternative Path to Designation of Assured Water Supply (ADAWS) regulation, alleging it is an “unlawful groundwater tax.”
Under state law, a home developer in the Valley must prove that the project has enough water to last 100 years. This can be done through different sources, such as groundwater, surface water or reclaimed water.
Tom Buschatzke, director of ADWR, explains that the groundwater model used by the agency shows that all supplies have been designated for the next 100 years.
“If we were to allocate new water, it would suck water away from people who already have it,” he continues. “[ADAWS] is much sounder water policy, allowing for more sustainable growth and is cheaper than requiring [developers] to go out and find 100% renewable non-groundwater supplies.”
Through ADAWS, the allotment of groundwater is approved but contingent on the developer securing an additional 25% of renewable non-groundwater supplies as an offset.
“We give them a jumpstart by providing a groundwater allowance, and then we get that groundwater back and then some by having that 25% requirement,” Buschatzke explains.
READ MORE: TSMC Arizona: A look inside the $165 billion site
Andrew Gould, an attorney representing HBACA, argues that the ADAWS path requires developers to secure 33.3% more water than necessary.
“Let’s say there’s a developer who wants to secure 150 acre-feet of water for a subdivision,” he explains. “Under this new rule, they have to take not only 150 acre-feet for their use, but another 25% for other uses, meaning they have to come up with 200 acre-feet. That amounts to four thirds, or 33%.”
As a result, Gould says that the additional costs for water will be passed to home purchasers, impacting affordability.
The lawsuit also alleges that ADWR did not go through the proper steps to create ADAWS.
“All rules must go through [Governor’s Regulatory Review Council, or GRCC],” Gould says. “To pass a new regulation, you have to assess the economic impact it will have. ADWR didn’t commission an economic study that correlated with this 33% water tax. They just arrived at a number they felt was a good conservation number and built a rule around it.”
Because of the additional water requirements, Gould says that ADAWS unlawfully changes the statutory language to require developers to compensate for historical uses of others.
MORE NEWS: Meet the panelists for 2025 AZRE Forum: 5-year forecast
“It says 100 years assured water supply for the proposed use — that’s the law,” Gould continues. “I’m not questioning anybody’s motives here about why they wanted to get the result they did. But our constitution has procedural safeguards and limits on authority. I’m saying that ADWR created a rule they don’t have the authority to create. If you want to impose a 33% water tax, you have to go through the legislature.”
Buschatzke denies that ADWR did not meet the requirements for promulgating the ADAWS regulation, adding that the agency went through the GRCC process, which included creating the appropriate economic analysis and seeking stakeholder input. He also disagrees that the rule requires developers to compensate for the water uses of others.
“We’re giving an allocation of new groundwater despite that a physical availability test cannot be met, so we’re expecting that to be made up on the back end,” he says. “We are always confident that our analysis of the law and that the technical pieces attached to the implementation of a rule are defensible in the courtroom. We don’t just go about willy nilly saying, ‘Let’s take a shot and maybe lose in front of a judge.’ We painstakingly go through the process so that we’re comfortable defending the decision if and when a lawsuit occurs.”
