This was originally posted on October 2, 2023.

After Inspections, Hobbs Administration Determines Fondomonte Defaulted on Lease

Phoenix, AZ– Today, Governor Katie Hobbs announced that the State Land Department has terminated one of Fondomonte Arizona, LLC’s four Butler Valley leases and simultaneously delivered notice that the State would not renew the company’s three other leases in the valley when they expire in February of 2024. After the Governor directed the State Land Department to conduct inspections of the leased property as part of a broader round of inspections of the largest state trust land leases, it was found that Fondomonte is in significant ongoing default of its lease dating back to 2016.

“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,” said Governor Katie Hobbs. “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 given notice and an opportunity 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. During an inspection in mid-August of this year, it was determined that Fondomonte had not corrected the default after nearly seven years. This significant default of their lease gives the Department grounds to terminate the lease.

Additionally, the Department has determined that 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. Butler Valley holds unique value to the Trust as one of Arizona’s five water “transportation basins” in which groundwater is allowed under state law to be conveyed to other parts of the state. It is the only groundwater transportation basin that is predominantly controlled by state or federal land managers.

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