Senate committee recommends 2-year continuation for Governor's Regulatory Review Council after audit, amid dispute over water‑rules process

The Senate Government Committee of Reference voted 4–3 on a recommendation to continue the Governor's Regulatory Review Council (GURC) for two years, after hearing a sunset review by the Auditor General and extended questioning about GURC's handling of a contentious Department of Water Resources (DWR) rulemaking.

Auditor General staff summarized the review, saying the audit found weaknesses in GURC's tracking of rule and five‑year review requests, failures to send two statutorily required 90‑day notices for five‑year reports, delays in completing some five‑year reviews, and executive‑session recordings that lacked required information. "The council lacked a formal process to track the receipt, completion, and timeliness of these reviews," Jeff Gove, Performance Audit Division Director, told the committee, and contractor Sjoberg Avishing Consulting presented the full audit results.

Nicole Dyer, director at Sjoberg Avishing Consulting, told senators the audit identified that between 2021 and 2023 GURC received an estimated 175 proposed rule‑making packages and reviewed 192 five‑year review reports. The audit reported GURC completed rule reviews well within the 120‑day statutory window on average but that 25 of the 192 five‑year reviews (13%) took longer than 120 days, ranging from 124 to 488 days. Dyer said the council agreed with the report's six recommendations and had already taken some steps to address them.

GURC Chair Jessica Klein, who is also general counsel at the Arizona Department of Administration (ADOA), told the committee the council implemented written tracking and metrics in August 2024 to monitor statutory deadlines and that staff conducted a root‑cause analysis after auditors found two missing 90‑day notices. "When we found that there were two notices that were not sent ... the first thing I asked GURC staff to do was to perform a full audit," Klein said, adding the council had updated its procedures and executive‑session script in April 2024 and would provide documentation to the committee if requested.

Much of the committee's questioning shifted to a separate but related area: how GURC reviewed and approved a wide‑ranging DWR rulemaking related to alternative assured water supply designations. Several senators pressed Klein about whether GURC independently verifies statutory authority beyond the statute text supplied by an agency, and whether the governor's office or executive staff had pressured or lobbied council members about the package. Klein said GURC staff and council members review the full rule‑making packet and, in that case, sought and received legal advice before voting.

Committee members repeatedly asked Klein whether the DWR rule amounted to a new "25% groundwater tax," a characterization used by members of the committee during the hearing; Klein said she did not consider the rule a tax and that legal advice she reviewed supported GURC's authority to approve the package. "I was satisfied after that additional review and after going back through the materials," Klein said about her vote on the DWR package. Litigation over that DWR rule was referenced during the hearing and was ongoing at the time of the committee meeting.

Senators also questioned GURC's process for taking formal votes. The chair and other senators raised concerns that GURC approved the DWR package during a meeting that had been noticed as a study session; some committee members and prior GURC members told the committee they do not recall votes routinely occurring in study sessions. Klein said the action had been noticed on the agenda as possible action and that staff had advised the practice was not unusual in past operations.

After debate, the committee moved to recommend continuation of GURC for two years with modifications to be determined in the continuation legislation. The committee chair said the vote to recommend continuation passed 4–3. The motion language on the record initially said continuation "until 01/2027," while the chair later read the continuation date as "07/01/2027;" the committee made a record of modifications to be returned to the chair and asked GURC for additional documentation, including past instances when votes were taken during study sessions. The Auditor General staff said a six‑month follow‑up review would verify the council implemented the audit recommendations.

The committee's recommendation will be transmitted to the full Senate and any authorizing continuation legislation will reflect the modifications the committee requested. The committee chair said he would hold the bill in rules until GURC provides examples and records the committee requested related to voting during study sessions and to the council's historical practices.

(Administrative, procedural and timing details, and direct quotations in this article are drawn from the committee hearing transcript and statements on the record.)