AZ Central – The Arizona Republic
Arizona AG, governor candidates call for Saudi Arabian water leases investigation
Rob O’Dell, Arizona Republic – August 30, 2022
Democratic attorney general candidate Kris Mayes is calling to investigate and potentially cancel the leases the State Land Department signed with a Saudi Arabian company that is pumping from Phoenix’s backup water supply in western Arizona.
Mayes is also calling for the Saudi Arabian company to pay the state approximately $38 million for using the water in La Paz County, which sits in a basin that could be tapped as future water source for the Phoenix metro area.
Mayes says the lease should be put on hold while they are investigated because they potentially violate the Arizona Constitution in two ways: they could violate the gift clause as well as a clause that requires state land and its products to be appraised and offered at their true value.
In June, The Arizona Republic reported that the State Land Department had given a sweet deal to a Saudi Arabian company called Fondomonte to farm areas in Butler Valley near Bouse and grow alfalfa and ship it back to the Middle East to feed its cows.
Fondomonte pays only $25 per acre annually, which is about one-sixth of the market price for farm land in that area, according to experts interviewed by The Republic as well as the state’s own mass appraisal for areas in and around Butler Valley.
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In addition, the water that is being pumped by Fondomonte is located in what’s called a transfer basin, meaning water sucked from the ground can be shipped to areas of the state where groundwater is regulated. That makes the water underneath the desert in Butler Valley extremely valuable.
State Land Department employees said the water being pumped from the ground could be worth as much as $4 million annually. But Fondomonte is paying just $86,000 annually to lease the land.
After The Republic investigation was published, former Gov. Bruce Babbitt called for Gov. Doug Ducey and Attorney General Mark Brnovich to force Fondomonte to pay the state as much as $38 million for the water pumped out of the Butler Valley basin over the past seven years.
Money generated from the rental and sale of state land is earmarked to help fund K-12 education.
“One of the most egregious aspects of this water giveaway is that it is shortchanging our schools and our kids,” Mayes said. “We need to be maximizing the amount of money that our schools receive from state trust land and the water beneath it.”
Mayes held a press conference about the issue this month and discussed it at length in an interview with The Republic.
“I think most Arizonans find it shocking that our government is giving the state’s water away to a Saudi corporation at a time of extreme drought,” Mayes said. “This Saudi water lease is a flat out scandal and our current governor and attorney general allowed it happen on their watch.”
Mayes is not the only candidate for top public offices in Arizona calling for the leases to be terminated when contacted by The Republic.
Republican gubernatorial candidate Kari Lake wants to cancel the leases as well, said communications director Ross Trumble.
“We want to terminate the Fondomonte lease and will examine all existing leases to ensure Arizona’s water and natural resources primarily benefit Arizonans, not overseas corporations,” Trumble said in statement.
The State Land Department is overseen by Ducey, who appointed current Land Commissioner Lisa Atkins. Both have declined to talk about the leases.
Katie Hobbs, the Democratic candidate for governor, has criticized the leases several times calling them “sweetheart deals” and said she would “protect Arizona’s water resources from corrupt actors.”
This week, the Hobbs campaign said the leases need to reflect the market and not be sweetheart deals for foreign and special interests. She also said in a statement that Arizona’s Groundwater Management Act needs to be updated to give rural areas more tools for regulating groundwater pumping.
She stopped short of calling for the leases to be canceled or investigated.
Mayes’s opponent in the attorney general’s race, Republican Abe Hamadeh, said in a statement that “government should not be subsidizing private industry, especially when it involves private or foreign entities freely accessing and capitalizing off our natural resources.”
He said the government has a duty to show private entities and foreign governments that Arizona is not for sale.
“I generally believe the attorney general should not be invalidating or overturning lawful contracts with private entities,” he said. “However, I have a growing concern that the agency tasked to care for our state land has been involved in recent controversies related to undervalued public land auctions and now the Saudi groundwater land deal threatening Arizona’s precious water supply.”
Mayes said the state can’t afford water deals like the one with Fondomonte.
“Arizonans deserve and attorney general who will be a watchdog over things like this,” she said. “I call for a cessation of these leases, an audit of the leases, and an investigation into this particular lease. … This is a particularly terrible place for the state to be engaging in this kind of behavior.”