Saudi company Fondomonte halts some Arizona groundwater pumping operations in La Paz County

Gov. Katie Hobbs announced this week a controversial Saudi Arabian company was no longer using groundwater reserves on some of its rented state land in western Arizona.

Hobbs and the Arizona State Land Department last year announced they would cancel or not renew Fondomonte Arizona's four leases on state trust land in the Butler Valley, a groundwater basin that is designated as a possible future water supply for metro Phoenix.

She said this week, that inspections of that land as of Feb. 15 showed Fondomonte was no longer using irrigation and that "Fondomonte has begun taking steps to vacate the property."

"Today is the start of a new chapter for Arizona’s water future," Hobbs said in a statement. "I’m not afraid to hold people accountable, maximize value for the state land trust, and protect Arizona’s water security."

How Fondomonte is responding

Fondomonte is one of the largest renters of state trust land for agriculture. According to an audit earlier this year, Fondomonte also farms and uses groundwater on 2,682 acres of state land elsewhere La Paz County, near Vicksburg. The company is appealing the Hobbs administration's termination of its four leases up the road near Bouse.

In a statement, Fondomonte confirmed it had stopped farming at the Butler Valley properties in compliance with the State Land Department action.

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"The company remains committed to working with the state to resolve outstanding issues as it removes its equipment and infrastructure in accordance with the terms of the lease," the statement reads.

Fondomonte is based in Saudi Arabia, which has its own water woes. It leases land here to grow alfalfa. It exports the crop to feed the kingdom's dairy cows.

When Fondomonte's issues became a problem

Its leases in the Butler Valley became a pressing political issue after The Arizona Republic highlighted rates well below market value that shortchanged programs like public education. The leases also allowed the company to pump groundwater unchecked from the possible future water source.

Focus on Fondomonte has raised questions, and prompted a critical audit, about state land leasing policies and rates, as well as monitoring and regulation of groundwater in the desert state more generally. That scrutiny also comes as lawmakers of both major parties have sought to address water issues amid a historic drought and decreasing supply from the Colorado River.

Private companies lease roughly 153,000 acres of state trust land around Arizona, often for farming and cattle grazing. The land itself was dedicated to fund public purposes when Arizona became a state, and there are about nine million acres remaining of trust land. The profits from leases or sales of the land generate revenue for state services, like K-12 education.

Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669.

This article originally appeared on Arizona Republic: Fondomonte halts pumping Arizona groundwater in Butler Valley