Saudi Arabian company pumping Ariz. groundwater hires partner of Gov. Hobbs' top adviser

A Saudi Arabian company at the center of controversy over leases allowing it to pump groundwater under state land recently hired a new lobbyist: The business partner of Arizona Gov. Katie Hobbs’ top campaign adviser.

Fondomonte, the foreign company, inked a contract with Chad Guzman and his firm, Signal Peak Consulting. Guzman is the sole member of Signal Peak, according to Arizona business records, which show he also co-manages a lobbying firm called Fillmore Strategy with Hobbs’ senior adviser to her campaign, Joe Wolf.

Both companies list the same address on state business registration records. Wolf is close with Hobbs and serves as her spokesman for campaign-related issues, but said he has stopped receiving payments from the governor's campaign.

Signal Peak was hired about two months ago, according to Matthew Benson, a partner at the political firm Veridus and a spokesperson for Fondomonte. The company hired Benson earlier this month, as scrutiny of its below-market-rate leases of state land has intensified. Signal Peak was not registered as a lobbyist for Fondomonte on state-required reports until Wednesday, however.

Arizona's groundwater supplies: Arizona blocks Saudi company from drilling 2 more wells on state land

Benson and Wolf said Wolf was not involved with Fondomonte, which does business with state land and water departments under Hobbs' control.

Wolf did not respond to a question about how he kept his shared business with Guzman separate from Guzman’s consulting clients, including Fondomonte. He said he had no ties to the Saudi company.

“Given I’ve never had a contract, been paid by Fondomonte or provided consultation, I’d say this is a nothingburger," Wolf said. “Chad's extensive experience over the years makes him a valuable asset to any client and he maintains a separate and solely owned consulting practice, of which I am not involved.”

Guzman did not return two messages seeking comment. Benson said the contract with Guzman came about due to Guzman’s work history.

“Chad and his firm — Signal Peak Consulting — were a natural choice, as he has spent his career working on natural resources issues and has extensive knowledge in the area of water,” Benson said. Benson said he was hired to do “strategic communications" for Fondomonte.

Guzman previously worked several years as a lobbyist for Arizona Public Service Co., the state’s largest electric company, and Epcor, the private water company that serves several cities in Arizona, according to state lobbying records. Wolf also has done consulting work for APS, which donated over $360,000 to the governor’s inauguration events earlier this year.

How Fondomonte got the OK to pump Arizona water

The Arizona State Land Department’s leases to Fondomonte and other private companies that are allowed to pump unlimited amounts of water were revealed by The Arizona Republic last year.

Fondomonte agreed, under a prior administration, to lease state land in the Butler Valley near Bouse for $25 an acre, roughly one-fifth of the market price for farmland there. Fondomonte grows alfalfa to ship back to the Middle East to feed dairy cows, drawing on water from a groundwater transfer basin that could serve as a future water supply for the Phoenix area.

The controversy has unfolded as the West is amid a megadrought, with communities like Rio Verde Foothills serving as national symbols of the area’s water scarcity.

Hobbs criticized the leases on the campaign trail and in her first State of the State speech as governor. The issue transcended partisanship during the 2022 election cycle, with candidates across party lines critiquing what they viewed as sweetheart deals.

New water rights and improvement: What to know about Buckeye's new budget

Hobbs' spokesperson, Christian Slater, said the administration is “studying approaches for transportation basin leases and will administer them in a comprehensive way that puts Arizona interests firsts.” He declined to comment on the connection between Guzman and Wolf or a July 16 article in the Washington Post that said Hobbs' staff recommended not renewing Fondomonte’s leases, which are set to expire next year.

The state Department of Water Resources, under Hobbs’ purview, stopped two well-drilling permits for Fondomonte earlier this year, though the company has other existing wells, and in May paused lease renewals and applications for state-owned land in basins such as Butler Valley.

“Gov. Hobbs has always fought for accountability from special interests pumping Arizona’s water," Slater said. “She will continue to have a comprehensive and aggressive approach to managing our state’s water resources to ensure that Arizona’s water supplies are protected and well managed for generations to come.”

Fondomonte had already hired two prominent politicos in Arizona as lobbyists, including Jordan Rose, the founder of Rose Law Group, who has a background in land and water use and helped with GOP Gov. Doug Ducey’s inauguration and transition into office in 2014.

Former Congressman John Shadegg, a Republican, also is lobbying for Fondomonte. Benson said Fondomonte will “utilize his expertise on water issues in communicating with officials regarding Fondomonte’s operations and the importance of agriculture — and alfalfa, in particular — to our economy.”

Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669. Follow her on Twitter @sbarchenger.

This article originally appeared on Arizona Republic: Fondomonte hires business partner of adviser to Ariz. Gov. Katie Hobbs