On April 21, 2026, Maricopa County Superior Court Judge Scott A. Blaney ruled that a key housing restriction imposed by Gov. Katie Hobbs’ administration was adopted illegally, preventing the state from using the policy to halt new home development in parts of Maricopa County.

In the under-advisement ruling, Blaney found that the Arizona Department of Water Resources (ADWR) unlawfully created and enforced two agency Active Management Area (AMA) rules — the “AMA-Wide Unmet Demand Rule” and the “AMA-Wide Depth-to-Water Rule” — without complying with the Arizona Administrative Procedure Act. He ordered that the newly adopted rules be declared invalid and that ADWR be barred from relying on them when reviewing water supply applications.

The dispute arose after the ADWR stopped issuing certificates for new housing developments that rely solely on groundwater, following new data allegedly showing stress in parts of the Phoenix Active Management Area. Builders argued that the agency had effectively imposed a valley-wide housing moratorium by shifting from the standard project-specific review process to an area-wide standard that was never authorized. Blaney agreed.

In his ruling, the judge wrote that it is “beyond dispute” that the two AMA-wide standards “implement law and policy,” making them rules subject to the APA. He also rejected ADWR’s argument that it was merely applying existing law in a different way, writing that the agency was using criteria that “did not previously exist” while claiming to be applying the old rules.

The lawsuit was brought by the Home Builders Association of Central Arizona (HBACA), whose members include subdivision developers in the Phoenix AMA. The court said HBACA was entitled to judgment as a matter of law on claims that ADWR acted unlawfully by implementing the two rules without first following mandatory rulemaking procedures.

However, his ruling does not settle Arizona’s broader water-policy fight. Blaney said the court did not need to decide whether the substance of the new restrictions might ultimately be lawful, only that ADWR could not impose them the way it did. The Hobbs administration plans to challenge the decision after the final judgment is entered.