LA PAZ COUNTY, Ariz. — The overseas company sucking water out of the Arizona ground will no longer be able to do so, according to an announcement from Gov. Katie Hobbs on Monday citing a default on the company's lease.
Hobbs said the State Land Department has terminated one of Fondomonte Arizona LLC’s four Butler Valley leases and also gave notice the State would not renew the company’s three other leases in the Valley when they expire in February 2024.
Fondomonte is a subsidiary of Almarai, which is one of the largest dairy suppliers in the Middle East.
Fondomonte and Almarai grow alfalfa in Arizona, cut it, bale it and truck it to port. Then it's shipped back to Saudi Arabia to feed Almarai's dairy cows.
VERSIÓN EN ESPAÑOL: Arizona termina contrato que permitía a Arabia Saudita obtener agua del estado
Almarai does this at farms in various locations around the world. Spending money to bring food from halfway around the world to its cows. The company does this for a very specific reason; growing alfalfa is illegal in Saudi Arabia.
It uses too much water.
“I’m not afraid to do what my predecessors refused to do—hold people accountable, maximize value for the state land trust, and protect Arizona’s water future,” Hobbs said in a news release. “It’s unacceptable that Fondomonte has continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease. I’m proud my administration has taken swift action to hold defaulting high volume water users accountable and bring an end to these leases. And moving forward, I will continue to do everything in my power to protect Arizona’s water so we can continue to sustainably grow for generations to come."
In November 2016, Fondomonte was notified it needed to cure numerous defaults under its Butler Valley leases, including "a failure to include secondary containment structures on its fuel and Diesel Exhaust Fluid storage units," the news release said.
In mid-August of this year, an inspection found that Fondomonte had not corrected the default after nearly seven years. The significant default of their lease reportedly gives the department grounds to terminate the lease.
The department also determined renewing the three remaining Butler Valley leases "is not in the best interest of the Trust’s beneficiaries due to excessive amounts of water being pumped from the land—free of charge."
Arizona Attorney General Kris Mayes ran on the promise of challenging the state's lease agreement with Fondomonte.
She called Monday's announcement "a good step in the right direction for the future of Arizona."
"I have never seen anything this egregious by state government in my life," Mayes told 12News back in January.
In a statement Monday, Mayes said she commended Hobbs for taking action against Fondomonte's default.
"The Arizona Attorney General's Office worked closely with Governor Hobbs' administration on these inspections, which confirmed what we have suspected – Fondomonte has been in violation of its leases for many years," he statement reads. "And while today's announcement is commendable, it should have been taken by state government much earlier. The failure to act sooner underscores the need for greater oversight and accountability in the management of our state's most vital resource."
Mayes said the leases should never have been signed in the first place.
"The decision by the prior administration to allow foreign corporations to stick straws in the ground and pump unlimited amounts of groundwater to export alfalfa is scandalous," she said.
Fondomonte released the following statement after the announcement:
"While Fondomonte is reviewing the notifications received from Gov. Hobbs and the Arizona State Land Department, we believe the state is mistaken that the company is in breach of its lease. Fondomonte will work with the governor’s office to highlight these factual errors. Fondomonte is adhering to all the conditions of the lease, and thus we have done everything required of us under these conditions.
As for the other leases the state intends to not renew, this would set a dangerous precedent for all farmers on state land leases, including being extremely costly to the state and Arizona taxpayers. Fondomonte will explore all avenues to ensure there is no discrimination or unfair treatment.
We have been in discussions with the Governor’s office and we will continue to work with Gov. Hobbs and the state to resolve groundwater matters and misinformation."
Water Wars
Catch up on the latest news and stories surrounding Arizona’s water crisis on the 12News YouTube channel. Subscribe today.