Amid an enduring megadrought, Arizona's management of its parched resources is now under the microscope. A recent audit has unearthed that the Arizona State Land Department may have shortchanged the state by millions by letting Saudi-owned farming company Fondomonte score dirt-cheap deals on public land, all while tapping into invaluable groundwater reserves to grow and ship alfalfa overseas.
The deal caught flak as locals in La Paz County noticed their wells going dry and community concerns about aquifer sustainability surged, according to 12News. The audit by Arizona's Auditor General highlighted that between 2020 and 2023, Fondomonte was charged roughly $634,000 in rent, a figure that pales in comparison to what could have been over double that rate based on a neglected 2018 market study.
Moreover, despite the agricultural leases covering over 6,600 acres and the state's dependency on trust land revenue for funding public institutions such as schools, no extra charges were levied for the extensive groundwater use which, per the auditor's report, is valued between $1.2 and $2.5 million yearly. In a statement sent to The Washington Post, a Fondomonte spokesperson defended the company's adherence to the department's pricing, stating, "The State Land Department sets the price of the leases for every leaseholder. Fondomonte followed the department's rules and regulations for each lease."
The audit also shed light on missed opportunities for Arizona to collect additional revenue. In 2023, the state purportedly failed to amass over $3 million due to incorrectly set lease charges, according to the auditors. In response, a State Land Department spokesperson assured, "We appreciate the work the Auditor General and her team put into this audit. We take the findings seriously and will strive to correct the issues." The water usage, crucial to Fondomonte's farming operations, previously sparked concern resulting in a 2016 notice requesting the company to monitor and report its consumption. However, this requirement mysteriously vanished when new lease terms were set.
Arizona Governor Katie Hobbs has criticized the prior administration, vocally taking a stance against these "cheap leases" and vowing to "continue working to right the wrongs" in order to protect the interests of beneficiaries like public schools. Her administration's actions included terminating one of Fondomonte's leases last October, with plans not to renew three others set to expire in February 2024.
