Although I take no position regarding the JZ Knight lawsuit, proof of ability to provide water should be a burden that developers need to meet before a city or county can approve a plan. That should be done by either proving that wells can be drilled or by a certificate from a water provider that supplies will meet demand.
I developed many parcels in a different state, and always had to prove water before getting final approval from the local agency. It is common sense. To do otherwise is unfair to prospective buyers of the parcels to be developed.