No one sold Arizona’s water to Saudi Arabia. What actually happened is that the Arizona State Land Department leased thousands of acres of state trust land in La Paz County to Fondomonte Arizona, LLC, a subsidiary of the Saudi dairy giant Almarai, and those leases let the company pump groundwater beneath the land for free. The water left the state in the form of alfalfa shipped overseas to feed Saudi dairy cattle. The arrangement was legal because the land sat in a rural basin that Arizona’s groundwater law barely regulates.
Who Fondomonte Is and Who Leased Them the Land
Fondomonte Arizona, LLC is a subsidiary of Almarai Co., one of the largest dairy companies in the Middle East. Its Arizona operations grew alfalfa, a water-intensive crop, for export to feed Almarai’s livestock back home. The company held five state trust land leases in La Paz County: four in the Butler Valley Basin covering about 3,520 acres, and a fifth of roughly 3,088 acres in the Ranegras Plain Basin.1Arizona Public Media. Saudi Company Quits Pumping in Butler Valley Basin, but Still Has Other Land Holdings
The lessor was the Arizona State Land Department, which manages about 9.2 million acres of state trust land. Under Arizona’s constitution, the department’s job is to generate revenue from those lands for designated beneficiaries, and K-12 public education is the largest. That revenue mandate drove the department’s willingness to lease the land for agriculture even as the water costs to the surrounding basin mounted.
How the Deal Worked
A lot of the public outrage has framed this as a water sale, but the mechanism was a land lease. Fondomonte paid rent for state trust acreage. Nothing in the lease charged the company anything for the groundwater it pumped out from under that acreage, required it to meter withdrawals, or capped how much it could take.2Arizona Auditor General. Special Audit of the Arizona State Land Department
The rent itself was well below market. A 2024 special audit by Arizona’s Auditor General found that for calendar year 2023, the department was charging Fondomonte and other agricultural tenants in the affected farm areas just $25 to $30 per acre. A 2018 market study had put fair rates at $125 to $175 per acre. Fondomonte was paying roughly 80 percent below the market rate estimated five years earlier, for land whose real value to the company lay in the aquifer underneath it.2Arizona Auditor General. Special Audit of the Arizona State Land Department
Why Unlimited Pumping Was Legal
The reason this was lawful comes down to a gap in Arizona’s 1980 Groundwater Management Act. The Act created Active Management Areas (AMAs) in the state’s most populated and water-stressed regions, including Phoenix, Tucson, and Prescott. Inside an AMA, groundwater users need permits, pumping is metered, and conservation requirements apply.
Butler Valley and the rest of La Paz County sit outside any AMA. In those rural basins the Act did very little. Landowners and lessees could drill wells with basic permits and extract essentially unlimited groundwater, with no requirement to measure withdrawals, no annual cap, and no mechanism for the state to step in when a basin began to decline. Fondomonte’s operations fit cleanly inside that framework.
Why a Saudi Company Came to Arizona for Alfalfa
Saudi Arabia used to grow its own alfalfa, but the practice drained the country’s limited aquifers. After depleting its groundwater at an unsustainable rate, the kingdom banned domestic alfalfa production. Companies like Almarai then went looking abroad. Arizona offered good growing conditions, cheap state trust land, and completely unregulated groundwater outside the AMAs.
Alfalfa in the desert takes staggering amounts of water. U.S. Geological Survey figures cited for Butler Valley put the crop’s needs at roughly 6.4 acre-feet of water per acre per year. Across the roughly 3,500 acres Fondomonte leased in Butler Valley, that works out to an estimated 22,400 acre-feet pumped annually. One acre-foot is about 326,000 gallons, enough to supply two to three average households for a year.
What the Pumping Did to Butler Valley
Butler Valley is a remote, groundwater-dependent basin in western Arizona, fed by a basin-fill alluvium aquifer. The basin holds an estimated 6.5 million acre-feet of water to a depth of 1,200 feet, but that supply is not infinite. Years of large-scale agricultural pumping lowered groundwater levels and contributed to land subsidence, where the ground surface sinks as the aquifer compresses beneath it.
Local residents felt the effects directly. Domestic wells that once produced reliably began to struggle or go dry. Subsidence damages roads, foundations, and other infrastructure, and once it happens the aquifer’s storage capacity is permanently reduced. Butler Valley is also designated a “transportation basin,” meaning its groundwater can legally be moved to other parts of the state, which raises the stakes of long-term depletion further.
What Arizona Has Done About It
Governor Hobbs Ended the Butler Valley Leases
Governor Katie Hobbs acted on October 2, 2023. After directing the State Land Department to inspect Fondomonte’s leased properties, inspectors found the company had been in significant default on its lease terms since 2016, having failed to install secondary containment on its fuel and Diesel Exhaust Fluid storage. The default had been flagged in November 2016 and was still uncorrected at a mid-August 2023 inspection, nearly seven years later.3Office of the Arizona Governor. Governor Katie Hobbs Terminates Fondomonte Lease, Announces Non-Renewal of Additional Leases
The State Land Department terminated one of the four Butler Valley leases for the uncured default and announced it would not renew the other three when they expired in early 2024. Hobbs said it was unacceptable that the company “continued to pump unchecked amounts of groundwater out of our state while in clear default on their lease.”3Office of the Arizona Governor. Governor Katie Hobbs Terminates Fondomonte Lease, Announces Non-Renewal of Additional Leases By February 15, 2024, the department confirmed Fondomonte was no longer irrigating on any of its Butler Valley leases and had begun vacating the property.4Office of the Arizona Governor. Governor Katie Hobbs Announces Fondomonte Officially No Longer Irrigating on Butler Valley Leases
Attorney General Mayes Sued Over the Ranegras Plain Lease
Attorney General Kris Mayes filed suit against Fondomonte in December 2024, alleging that the company’s excessive groundwater pumping in the Ranegras Plain Basin violated Arizona’s public nuisance law. The complaint targeted the company’s remaining state lease and alleged that the pumping threatened public health, safety, and infrastructure in surrounding La Paz County communities.5Arizona Attorney General’s Office. Attorney General Mayes Sues Fondomonte for Violating Public Nuisance Law Through Excessive Groundwater Pumping
Under Arizona Revised Statutes ยง 13-2917, a public nuisance includes any activity that injures health, obstructs the use of property, or interferes with the comfortable enjoyment of life or property by a community. The statute makes knowingly maintaining a public nuisance a class 2 misdemeanor and, more importantly here, authorizes the Attorney General to bring an action in superior court to abate, enjoin, and prevent the nuisance.6Arizona Legislature. Arizona Revised Statutes 13-2917 – Public Nuisance; Abatement; Classification
The Ranegras Plain Became a New AMA
On January 9, 2026, the Director of the Arizona Department of Water Resources issued a formal order designating the Ranegras Plain Groundwater Basin as a new Active Management Area. That brings the basin under the regulatory framework that had been missing: permits, conservation requirements, and state oversight of groundwater use.7Arizona Attorney General’s Office. Attorney General Mayes Continues Lawsuit Against Fondomonte for Violating Public Nuisance Law Through Excessive Groundwater Pumping
When an AMA is established, existing groundwater users ordinarily receive “grandfathered rights” to keep pumping at historic levels. The Attorney General’s supplemental brief argues that if Fondomonte is found to have been unlawfully pumping by causing a public nuisance, the company may be ineligible for those grandfathered rights. The nuisance case and the AMA designation are being pressed together for that reason.7Arizona Attorney General’s Office. Attorney General Mayes Continues Lawsuit Against Fondomonte for Violating Public Nuisance Law Through Excessive Groundwater Pumping
What’s Still Unresolved
Ending the Butler Valley leases did not end Fondomonte’s Arizona operations. The company also owns private land in La Paz County, and Arizona law allows private landowners outside regulated areas to drill wells with proper permitting and pump without limits. Hobbs acknowledged publicly that current laws could not stop companies from pumping on private land. Reports indicated Fondomonte received a permit for a new well on its private property and appeared to be expanding, with “now hiring” banners posted at its facilities.
The Ranegras Plain lawsuit is still moving through the courts, and whether the state’s tools prove sufficient to actually curb pumping there remains open. The protections that stopped the worst of the Butler Valley damage came from state-level action rather than federal law: a governor willing to enforce lease terms, an attorney general willing to use public nuisance law, and a water department willing to designate a new AMA.