When controversial Las Vegas developer Jim Rhodes abandoned plans for a sprawling community near the northwestern Arizona city of Kingman nearly two decades ago, the vast swaths of land he’d purchased were mostly surrounded by open desert.
Instead of walking away from his investment, Rhodes applied for a group of industrial-scale agriculture wells that could reach the largely untapped groundwater in the Hualapai Valley Basin.
The move alarmed some Mohave County leaders, who saw an emerging challenge for the region’s water supply.
“We knew that something was going on. We knew that we needed to do something,” recalled former state Rep. Regina Cobb, R-Kingman, who started coordinating with local officials to study the impacts of high-volume pumping.
Nearly a decade of county pleas for regulation and failed legislation followed, as state lawmakers repeatedly blocked efforts to give rural communities more control over their groundwater. County leaders have since observed a wave of out-of-state agribusiness sweep into the Hualapai Valley Basin.
Today, more than 99% of the cropland in the basin is owned or controlled by out-of-state farming operations or investment funds, the Arizona Center for Investigative Reporting found through a monthslong analysis of parcel data, well applications and corporation documents.
More than half of the basin’s cultivated land is tied to California-registered companies, which collectively farm close to 13,000 acres. Many of the remaining farms are hidden behind chains of shell companies registered in states from Nevada to Illinois and Delaware, making it difficult to trace who owns them or where the profits go, AZCIR found.
Among the biggest operators is Hualapai Valley Farm LLC, successor to the Rhodes project, which controls 31% of the basin’s cultivated land primarily designated for agriculture—the most of any single company. The farm is managed by Barings LLC, a global investment firm that oversees nearly a half a trillion dollars in assets. Its partners include Al Dahra, a multinational corporation headquartered in the United Arab Emirates that is partly owned by Abu Dhabi’s sovereign wealth fund.
Overall, investors have poured millions into deep industrial wells and water-intensive nut orchards, betting on Arizona’s unregulated aquifers to keep profits flowing. Local officials and residents warn that those returns won’t stay in Mohave County, though, while the costs of depletion will.
“It almost operates like a de facto transfer basin,” County Supervisor Travis Lingenfelter told AZCIR. “They’re not transferring the water directly, but they’re exporting out crops that have used just billions and billions and billions of (gallons of) rural groundwater.”
AZCIR’s analysis confirmed the wells are getting deeper, with some capable of extracting up to 3,500 gallons per minute and reaching nearly twice as far as those drilled before 2014. The basin is now losing water faster than it’s being replenished, to the tune of 50,000 acre-feet each year. Young nut orchards, which cover more than 40% of cultivated acres, will draw even more groundwater as they mature, meaning the full impact on the basin’s aquifers has yet to be felt.
This rapid expansion of industrial agriculture is happening largely outside of local residents’ control, raising questions about what, if anything, the community gains.
“Is it all money going out of state? Are we collecting any taxes from them? Does Mohave County get it?” asked Herbert Verville, a Kingman retiree. “I think people really don’t know that aspect of it, and that adds to some of the confusion or resentment. I’d say more resentment.”
Photo by Christopher Lomahquahu | AZCIR
The surge of corporate agriculture that began moving into the Hualapai Basin in 2014 was no coincidence.
After California passed strict groundwater rules that year—and neighboring Nevada prioritized established users over new well applicants—investors started looking for looser rules elsewhere. The valley north of Kingman became a prime target.
Local officials hoped the state’s landmark 1980 Groundwater Management Act, or GMA, would provide at least some protection. The law established two main tools to manage groundwater: Active Management Areas (AMAs), which favor retiring farmland for housing, and Irrigation Non-Expansion Areas (INAs), which limit future expansion of irrigated land but don’t cap the amount of groundwater pumping.
The GMA gave Arizona Department of Water Resources officials the power to apply similar restrictions anywhere local groundwater conditions reached critical thresholds. But for more than 40 years, that authority went virtually unused, leaving rural basins like Hualapai Valley without meaningful oversight.
After years of inaction from the state, Mohave County and the city of Kingman in 2017 partnered with the U.S. Geological Survey to study local groundwater depletion. The three-year project, funded by local taxpayers, cost more than $400,000.
County officials hoped the data would help make their case for stronger protections in the Hualapai Valley Basin. Twice before, ADWR had rejected requests to designate the area an Irrigation Non-Expansion Area, citing insufficient evidence of depletion. State law requires proof that a basin is already being substantially overdrawn, not just at risk, before such restrictions can be approved.
Backed by fresh USGS data confirming the basin’s vulnerability, the county tried again in 2022, finally securing the INA designation. By then, nearly 200 new well applications had been approved around Kingman, AZCIR found.
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Some residents felt an INA wouldn’t go far enough to address existing overdraft, contending that only an AMA’s stronger regulatory authority could adequately protect the aquifer and local property values. But county supervisors said they viewed the AMA framework, designed for urban areas, as handing control to state regulators in Phoenix and risking a halt to development in a rural basin with few water alternatives.
The INA designation is ultimately an “imperfect tool,” according to Luke Mournian, Mohave County’s chief financial officer. Beyond failing to cap groundwater pumping, it exempted properties that had already made “substantial capital investments” in wells or irrigation systems. And because the penalty for failing to report annual water use tops out at just $150, there’s minimal incentive for major operators to comply.
As of Oct. 28, every farm pursuing a capital investment exemption was tied to out-of-state owners, according to an AZCIR review of applications. One operation connected to Canadian investors sought to more than double its irrigated acreage, to 1,400-plus acres. With additional applications still pending, the total impact on future groundwater use remains unclear.
Photo by Christopher Lomahquahu | AZCIR
Mohave County’s options to respond remain limited. A 2010 state law bars counties from imposing land-use restrictions on farming operations bigger than five acres, even when those operations threaten local water supplies.
Without authority to review large farms for water or land-use impacts, rural counties like Mohave have little choice but to watch their only water source decline as outside interests profit. Ending the agricultural exemption wouldn’t stop farming, officials say, but it would restore balance and give local governments equal oversight over all key land uses.
State-level efforts to grant rural communities greater control over groundwater have repeatedly stalled since 2017, including this year, when the latest version of the Rural Groundwater Management Act failed to pass.
The proposal—which had bipartisan support, including from Gov. Katie Hobbs—aimed to protect rural water supplies from industrial and out-of-state agricultural interests while keeping farming viable. It would have created locally led Rural Groundwater Management Areas to address aquifer depletion and safeguard groundwater for residents.
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“I thought we had some common ground,” said state Sen. Priya Sundareshan, D-Tucson, noting that talks between Republicans and Democrats began to fall apart in April after earlier signs of bipartisan cooperation. She said the breakdown has left small family farms and rural residents stuck with the status quo and few protections.
“What we’ve seen in the last decade or two is, the word has gotten out that there’s no rules in rural Arizona,” Sundareshan said. “So now you see that big business coming in and really just exploiting the lack of rules, to the detriment of the individual residents and even the small family farms.”
Going forward, Mohave officials are working with a coalition of rural counties urging lawmakers to create new tools and a framework for managing rural groundwater.
Part of the challenge, Lingenfelter said, is educating urban lawmakers who often assume rural economies revolve entirely around farming. While some communities are heavily agricultural, others depend on tourism, manufacturing, logistics or health care, and policies that work in one place may not fit another.
Locally based councils would ensure policy is shaped by residents with first-hand knowledge of regional challenges, economies and water resources, he said.
Luis Vega, a geologist who has long monitored Kingman’s groundwater, echoed that point, urging policymakers to draw on local expertise. He said any strategy that excludes those who live within the basin from groundwater modeling will only delay the inevitable.
“The bottom line is, we’re going to run out of water,” he said.
Photo by Christopher Lomahquahu | AZCIR
At the southern end of the basin, where Kingman’s municipal wells draw from the same aquifer as corporate farms, the risks are imminent. Local leaders warn that industrial-scale pumping is putting direct pressure on the city’s water supply.
According to the county’s groundwater depletion model, the basin faces a projected 100-year deficit, with groundwater levels falling below 1,200 feet within a century. At that point, officials say, the cost of reaching the aquifer could become prohibitive.
Before 2014, wells in the basin averaged about 765 feet deep. Since then, the average depth has reached more than 900 feet. Many of the newest industrial wells tunnel much further, including one stretching nearly 1,800 feet underground, data analyzed by AZCIR shows.
“We need to step in and be proactive about not letting it get to a point of public health crisis, where you have foundations cracking and people’s wells going dry and water rates significantly escalating to the point where people won’t be able to afford them,” Lingenfelter said.
County officials say the growing concentration of nut orchards, particularly pistachios, is further exacerbating the threat. Once mature, the trees will require enormous and sustained water supplies, according to Scott Holtry, the county’s development services director.
Nut farmers operating in the basin, however, emphasize that they’re following the law—and, in many cases, working to use water more efficiently. Jeff Duarte, CEO of Peacock Nuts LLC, said his company relies on precision irrigation systems that have cut overall use dramatically on its 5,000-plus acres of nut orchards.
Because Arizona generally allows unrestricted pumping on farmland across the Hualapai basin, even the most efficient farmers can accelerate long-term depletion. Scaling up operations may appear excessive to residents, but for farmers working within the law, it often makes sound business sense, according to Sarah Porter, director of the Kyl Center for Water Policy at Arizona State University.
“The people who are doing the farming are rational people who are thinking through their economic futures,” Porter said. “I think there are plenty of farmers in the state of Arizona who simply don’t think (more) groundwater regulation is going to be better for them.”
Ultimately, the debate over regulation may come up against a more basic constraint—the geology of the basin itself. Though Vega said wells could likely reach deeper reserves, much of that water would be brackish and costly to treat.
Existing efforts to replenish the aquifer through a series of retention and detention basins will depend heavily on rainfall, a limited and unpredictable resource amid the ongoing drought. Vega said he doubts recharge will ever be a viable long-term solution, meaning residents could face a future where the only groundwater left is too salty or expensive to use.
“(With) groundwater, you can’t build a fence around it. You can’t block its movement like you could a river,” he said. “Really, the only thing you can do is limit the amount of water that gets pumped. And that’s where the problem is.”
For Kingman residents like Verville, who has watched the landscape north of the city transform from desert to orchards, the consequences are impossible to ignore. He stays informed on the developing groundwater situation, worried about what depletion will mean for future generations.
“My concern about what’s going on right now is not how (these issues) affect me directly, but my son and my grandchildren,” Verville said. “What’s going to happen with them?”
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