A recent development surrounding a Saudi Arabian company’s groundwater pumping leases under state land has raised concerns due to its hiring of a new lobbyist with ties to Arizona Governor Katie Hobbs’ campaign adviser. The foreign company, Fondomonte, entered into a contract with Chad Guzman and his firm, Signal Peak Consulting. Guzman is the sole member of Signal Peak and is also involved in managing a lobbying firm called Fillmore Strategy, alongside Joe Wolf, Hobbs’ senior adviser.
Both Guzman’s and Wolf’s companies share the same address in state business registration records. Despite being closely associated with Hobbs, Wolf stated that he is no longer receiving payments from the governor’s campaign. Signal Peak Consulting was hired approximately two months ago, according to Matthew Benson, a partner at political firm Veridus and spokesperson for Fondomonte. The scrutiny of Fondomonte’s below-market-rate leases of state land led to increased attention, and Signal Peak was only recently registered as a lobbyist for Fondomonte.
Both Wolf and Benson denied any involvement of Wolf in Fondomonte’s affairs, as the company conducts business with state land and water departments under Hobbs’ control. However, questions remain about how Wolf maintains a separation between his shared business with Guzman and Guzman’s consulting clients, which include Fondomonte. Wolf stated that he has no ties to the Saudi company and dismissed the matter as insignificant.
Guzman, on the other hand, has not responded to inquiries seeking comment. According to Benson, the decision to hire Guzman and Signal Peak Consulting was based on Guzman’s expertise and extensive experience in natural resources and water issues. Benson himself was hired by Fondomonte to handle strategic communications.
Fondomonte’s leases of state land, which allow them to pump unlimited amounts of water, were brought to light by The Arizona Republic last year. The company secured leases under a prior administration, with one lease in the Butler Valley near Bouse costing only $25 per acre, a fraction of the market rate. Fondomonte uses the land to grow alfalfa for export to the Middle East, relying on groundwater from a transfer basin that could potentially serve as a future water supply for the Phoenix area. This controversy has arisen amidst a severe megadrought in the West, with areas like Rio Verde Foothills exemplifying the region’s water scarcity.
Governor Hobbs criticized these leases during her campaign and in her first State of the State speech. The issue became a non-partisan concern during the 2022 election cycle, with candidates from various parties criticizing what they perceived as favorable deals for Fondomonte. Hobbs’ administration is currently studying approaches for transportation basin leases and aims to prioritize Arizona’s interests. However, they declined to comment on the connection between Guzman and Wolf or a recent article in the Washington Post suggesting that Hobbs’ staff recommended not renewing Fondomonte’s leases, set to expire next year.
Under Hobbs’ purview, the state Department of Water Resources halted two well-drilling permits for Fondomonte earlier this year, and in May, paused lease renewals and applications for state-owned land in basins like Butler Valley.
Fondomonte has hired notable Arizona political figures as lobbyists, including Jordan Rose, founder of Rose Law Group, and former Congressman John Shadegg. The company intends to leverage their expertise on water issues to communicate with officials regarding its operations and the significance of agriculture, particularly alfalfa, to the state’s economy.
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