Arizona to cancel leases allowing Saudi-owned farm access to state’s groundwater

FILE - Arizona Democratic Gov. Katie Hobbs speaks as she gives the State of the State address, Jan. 9, 2023, at the Arizona Capitol in Phoenix. Hobbs said her administration was terminating land leases that for years have given a Saudi-owned farm nearly unfettered access to pump groundwater in the parched southwestern state. (AP Photo/Ross D. Franklin, File)

WASHINGTON — Arizona governor Katie Hobbs said this week her administration is terminating state land leases that for years have given a Saudi-owned farm nearly unfettered access to pump groundwater in the dry southwestern state.

On Monday, Hobbs, a Democrat, said the state had canceled Fondomonte Arizona’s lease in western Arizona’s Butler Valley and would not renew three other leases up for renewal there next year.


An investigation by the governor’s office found that the foreign-owned farm had violated some of its lease terms.

Hobbs called it unacceptable that the farm “continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease.”

Fondomonte Arizona, a subsidiary of Saudi dairy giant Almarai Co., grows alfalfa in Arizona that feeds livestock in the water-stressed Gulf kingdom.

Through a spokesperson, Fondomonte said it would appeal the governor’s decision to terminate its 640-acre (259-hectare) lease in Butler Valley. Altogether, Fondomonte farmed about 3,500 acres (1,416 hectares) in the rugged desert area west of Phoenix.

Fondomonte raised eyebrows when in 2014 it purchased nearly 10,000 acres (4,047 hectares) of land for $47.5 million about 20 miles (32 kilometers) away from Butler Valley in Vicksburg, Arizona. Since then, worsening drought in Arizona has brought renewed attention to the company’s water use and the broader issues of foreign-owned farms and groundwater pumping.

The violations the governor’s office detailed relate to the company’s storage of hazardous materials, among other issues. On Monday, Hobbs’ office said that Fondomonte was notified of the violations in 2016, but an investigation in August found the company had not fixed the problem seven years later. That gave Arizona’s State Land Department grounds to terminate the lease.

The Arizona governor’s office said the State Land Department decided not to renew three other leases the company had in Butler Valley due to the “excessive amounts of water being pumped from the land — free of charge.”

The department manages land owned by Arizona, which in Fondomonte’s case, had been leased to the company. Butler Valley’s groundwater is especially important because of state law that in theory allows for it to be pumped elsewhere. That makes its water of interest to cities like Phoenix, also dealing with water supply-related stress and a fast-growing population.

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