Anyways, in a nutshell, if they are threatening action, you could formally appeal in writing to the HOA Board and cite the current drought conditions we are experiencing here in Austin and in Texas. Maybe they will give a little, especially if your neighbors's lawn are in the same condition.
If your lawn is still alive, first thing is to water it deeply on your watering days- in the morning or in the late evening. If alive, you'll notice a difference in a few days. If dead, the lawn has to be replaced. However, with our current water restrictions, you will not be able to water enough to get the new lawn established without getting another violation. So use that to plead your case to the HOA if needed.

People in neighborhoods around mine are getting letters right now for the same thing, but they are just standard procedure letters from the contracted deed enforcement company. The HOA president himself has said they are not threatening letters. Maybe this is your case?

If you can water twice a week there should have been no problems keeping the grass green.

So it's completely dead? can i plant seeds or something?

I water mine once a week and it looks like this. There is some green color variation but I'm not worried about it.

Sorry to hear about your lawn, but to reestablish it now from sod or seed is going to take more water than it would have to keep it alive this summer. It's one thing if you aren't allowed to water, but if it's available, then you have the right to use it and should do so.

My wife and I were having a discussion the other day about maintaining our lawn (watering) vs replacing it when the drought is over. Looking at our recent water bill- it's high, but I figure that it still will be a lot cheaper to water it through this drought than to replace 10,000 sf of grass after it dies, plus, the water to get the new grass established. It's a catch 22, and it sucks to waste the water, but it's cheaper than letting my grass die.

Hopefully his HOA will understand the requirement to re-establish his lawn and will allow him to to either wait until we are out of the drought, or allow him to do something like native beds.