Groundwater Wars

Amy Scott: Kingman Arizona has an old school vibe. The city of around 35,000 is in northwestern Arizona. About an hour’s drive from the Nevada border. Route 66 runs through the heart of downtown.

Nat King Cole Trio: “(Get Your Kicks on) Route 66” (1946)

Amy Scott: Retro neon signs advertised motels and diners, and an annual classic car festival draws people from all over.

Jamie Stehly: They come you know to Kingman to see Route 66 is a straight shot from Las Vegas to the Grand Canyon.

Amy Scott: Jamie Stehly grew up in Kingman, she’s serving her second term on the city council while running a landscaping business with her husband. She’s petite with long brown hair, a former cheerleader who was also on the student council back in high school.

Jamie Stehly: It was a really great little small town when I was a kid, a lot of people live had lived here forever, you know, so I can remember going to the grocery store with my mom. And it would take forever to get out of there because she knew everybody and we had to stop and talk.

Amy Scott: Today Jamie is raising two daughters of her own.  That’s one of the reasons why I ran for city council.

Jamie Stehly: I wanted to help work on issues that would create a town where my daughters could go to college and there was a lot of opportunity for them to come back. A lot of rural cities are seeing our young people move away and they’re not coming back because there aren’t the jobs here. We want to see generation after generation to continue to live here.

Amy Scott: Jamie wants her kids to have a future in Kingman the way she and her husband did. He’s from Kingman too. So it was a little unsettling. When about 10 years ago, they started noticing changes.

Jamie Stehly: It really happened overnight, farms popping up in the desert. Nobody would have ever imagined that farms would locate here. I mean, if you had talked about that 20 years ago, you would have been laughed out of the room.

Amy Scott: Kingman is hot with summer highs in the upper 90s and dry the regencies just five to 10 inches of rain a year on average. But there they were huge tracts of green sprouting from the desert floor. First it was fields of alfalfa.

Jamie Stehly: So there’s tall grass out where there used to be a dry lake bed. It’s just insane.

Amy Scott: And later on rows upon rows of pistachio trees and almond trees. At first Jamie was baffled.

Jamie Stehly: You just know that it does not that does not belong here. It isn’t right.

Amy Scott: And then she grew alarmed.

Jamie Stehly: We realized that our water from our aquifer, which is our only water source of drinking water source for for our city was being depleted at a very rapid rate. She soon learned that four times as much water was coming out of the aquifer compared to what was going back in.

Amy Scott: She started hearing about wells north of town running dry. One family she knows packed up and sold.

Jamie Stehly: When their personal wells started to run dry. They, they bailed. And that’s really the big picture. That’s what we’re talking about is what happens to our town when we start to run out of water.

Amy Scott: So, Jamie and other local leaders decided to do something about it. Something that would divide the town in order to save it.

Jamie Stehly: It’s not just Kingman Arizona, everybody’s going to start finding themselves in a battle for drinking water.

INTRO

Amy Scott: I’m Amy Scott, welcome to How We Survive a podcast from Marketplace about people navigating solutions to a changing climate. This is episode 4: The Groundwater Wars. The last few episodes, we’ve been talking about the Colorado River who has rights and who doesn’t. How negotiations will reshape the American West. Kingman relies entirely on groundwater. And if that runs dry, local leaders worry it’ll become a ghost town. So officials in this rural conservative place pursued an unexpected solution. They asked the state to intervene and pass strict regulations to protect groundwater, something that hasn’t been done in Arizona in 40 years. This week. We bring you the story of a community battling over the water in its aquifer.

James Jones: This is government overreach.

Randy Perry: You got to have some kind of controls.

Mike Bradley: You guys are basically killing the American dream here in Mojave County.

Amy Scott: The illusive forces fighting back. Before we get into that battle, I want to take you north of Kingman to one of those farms Jamie Stehly was so alarmed by.

Rocky Dhaliwal: This is also the airport here too.

Amy Scott: Rocky Dhaliwal is driving me northeast on route 66 to his farm outside Kingman. He’s wearing jeans and work boots and a blue dress shirt tucked in. From the road, the valley stretches for miles toward the distant peacock mountains. The flatland is dotted with cactus, yucca and mesquite until we pull off onto a dirt road.  Are these your little baby trees out here?

Rocky Dhaliwal: Yes. Those are newly planted pistachio trees. newly planted I mean a year old.

Amy Scott: The desert gives way to tidy rows of pistachio trees almost as far as the eye can see.  It takes a while to be able to harvest right?

Rocky Dhaliwal: Yeah, about seven years before we get the first harvest and but 10 years before they mature.

Amy Scott: Wow. It takes a while for that work to pay off.

Rocky Dhaliwal: It does. It’s a big big capital investment. And before we get those returns on that. We started with absolutely nothing. You know, my family came to this country with $8 in their pocket. So their main goal was for us to get education.

Amy Scott: Rocky farms about 2400 acres outside Kingman and has more land he hopes to develop. Rocky comes from a long line of farmers going back five or six generations. He named his business Moga Agri Industries after Moga the town in India where he’s from his family emigrated to the US in the 1970s. His dad died when Rocky was just 11. To help support the family. He worked nights and weekends at the local 711 While going to high school during the day. Rocky achieved the family dream. He went to college became a dentist he still practices a bit, but about 14 years ago he went back to the family business. So how did you go from being a dentist to being a farmer or was farming and then Dentistry.

Rocky Dhaliwal: Farming was always in the blood, right?

Amy Scott: He started farming in California’s Central Valley.

Rocky Dhaliwal: We started growing the nuts. Then we started moved into processing. Then we started moving into marketing. So now we are kind of vertically integrated into the nuts.

Amy Scott: Then a severe drought hit the region from 2012 to 2015. California experienced the driest four years in more than a century of record keeping. Farmers lost billions of dollars to lower crop yields and higher groundwater pumping costs. And Rocky started looking at other options.

Amy Scott: Some people might wonder like why farm in the desert? It’s pretty dry.

Rocky Dhaliwal: You know, the reason we started looking outside California was not this last drought but the previous drought there. And for us there it was getting very expensive to grow crops and knots in California. We came up to Mojave County we studied this area for many years. We put a lot of time, effort money into it. And we found that this is one of the places that we could go nuts.

Amy Scott: Rocky says pistachio are desert trees and do well in places with dry hot summers and cool winters when the trees go dormant. There’s also plenty of sunshine. Land was cheaper, and there were no limits on pumping groundwater. Growing nuts in the desert takes a lot of water. Rocky says one acre of pistachios uses at least two and a half acre feet of water per year enough to supply about seven households. When we visited in June, some of Rocky’s trees were actually getting too much water. We get out of the car to see a large pool spreading across the dry fields.  Yeah, over here the ground is cracked. So dry it is there’s a little mini Lake Havasu forming on your farmland. Rocky suspects a leak from off his property. He’s surprisingly calm considering he lost about 30 acres of pistachio trees. Today he’s meeting up with a drone operator to investigate.

Rocky Dhaliwal: Clear. He’s gonna fly the drone. They’re kind of follow this leak. We just want to see where it is and so we can just get that corrected.

Amy Scott: We later confirmed the water is intentional discharge from a city wastewater treatment plant that flows through a wash on Rocky’s property and seeps into the aquifer. Rocky says he’s careful with water pumping groundwater is a big expense. Years ago he switched from traditional flood irrigation which wastes a ton of water to more efficient drip irrigation.

Rocky Dhaliwal: We are conserving anywhere from 20 to maybe even 35% of the water. We use all the latest technology that comes in because every drop counts for us.

Amy Scott: And all of this water comes from the Hualapai Valley groundwater basin. The basin that local officials say can’t sustain all this farming.

Travis Lengenfelter: Over the last 10 years where we had really very small amount of agriculture in the Kingman area. It’s blown up.

Amy Scott: Travis Lengenfelter is a Mojave County Supervisor. Kingman is the county seat. He’s been leading the fight to protect the groundwater.

Travis Lengenfelter: We’ve had these Middle Eastern farms move in we’ve had these central California farms move in

Amy Scott: One company from the UAE Al Dahra ACX owns 16,000 acres through its Hualapai Valley Farm. Another called Peacock Nuts owns 7500 acres. According to the Arizona Republic peacock is a consortium of farmers from California and Nevada and overseas investors. Travis says A recent study by the US geological survey found that since all these farms moved in, the groundwater has been depleting.

Travis Lengenfelter: 10,000 acre feet estimated going in as far as recharge every year, 44,000 acre feet was being pumped out every year. And this is as of October 2022.

Amy Scott: That’s a 34,000 acre foot deficit per year. Travis says 60% of the water coming out of the aquifer is used by farms.

Travis Lengenfelter: If you do the math, that’s billions of gallons of groundwater that is very difficult to replenish.

Amy Scott: And if farming continued growing at its recent pace.

Travis Lengenfelter: The southern part of the basin was going to be in trouble in about 40 years time.

Amy Scott: That means the city of Kingman would have to drill new, much deeper wells for urban use, it would cost 10s of millions of dollars, and it would fall completely on local residents,

Travis Lengenfelter: The city of Kingman citizens would have by far the highest water rates in the whole state. And this area isn’t the most affluent. A lot of people wouldn’t be able to afford it, they simply wouldn’t be able to afford it. And the scary part is is there is no plan B we don’t have river water. We don’t have a secondary water supply.

Amy Scott: Kingman is just 30 miles east of the Colorado River. But diverting the water over the mountains into the city would have been expensive. So the city actually sold its rights to the river in the 90s; a mistake some say in hindsight.

Travis Lengenfelter: So very easily it could turn into a public health crisis where people are not being able to afford water. Doesn’t matter what else we do. Everything else is predicated on the fact that we’re assuming we have water certainty.

Amy Scott: This surprised me. But until recently, there were almost no regulations protecting groundwater in this part of rural Arizona.

Travis Lengenfelter: You can drill as many wells as you want. You can pump as much water as you want. You don’t have to report it to anybody. It doesn’t matter if you harm negatively your neighbor’s wells if you make your neighbor’s wells go dry or if you affect their water supply.

Jamie Stehly: 85% of the state is just the Wild West still and you can do whatever you want. As long as it’s your land, you can you can put a straw in and start withdrawing.

Amy Scott: Councilwoman Jamie Stehly again, around 2016. City and county leaders realized this was a disaster in the making.

Jamie Stehly: We had to stop the expansion of these corporate farms that are just withdrawing all of our drinking water because we don’t have any other options once that is depleted.

Amy Scott: But stopping it wasn’t going to be easy. Kingman is a conservative town in the reddest County in Arizona Mojave County, where suspicion of government runs deep. So local leaders pursued a solution that might seem surprising here. They asked the state to step in and impose tough regulations on groundwater use. The State Department of Water Resources declined twice saying there wasn’t enough evidence to support regulations. But in the spring of 2022, in the midst of extreme drought conditions and an updated model showing a higher risk of groundwater depletion. officials had a change of heart and said they’d consider restricting irrigation. The move set off a firestorm.

James Jones: This is government overreach in violation of your oath of office.

Amy Scott: The state held two public meetings packed with concerned citizens, some vehemently opposed to the regulations.

Mike Bradley: You guys are basically killing the American dream here in Mojave County.

James Jones: We the people have a God given rights of land and the water underneath that land without regulations.

Becky Gross: I can’t understand why everyone is attacking agriculture.

Amy Scott: Others wanted the state to step in and stop big corporate farms from draining the aquifer.

Senator Sonny Borelli: We all know what locusts do. They will strip resources and then they’re gone. And what’s left is what we have is dried up crops.

Randy Perry: All we hear is drought, drought, drought, you’re allowing these wells just to go goofy, you got to have some kind of controls.

Amy Scott: And last year, the state finally agreed it designated the Hualapai Valley groundwater basin as an irrigation non expansion area, or is a a jargony name with big consequences.

Jamie Stehly: I hate using that term, because no one knows what it means.

Amy Scott: What it means is that the Hualapai Valley is off limits for any new irrigation. Farmers who are already here can keep farming but they can’t expand. And no new farms can move in.  So when it finally got approved, what was your reaction?

Jamie Stehly: Oh my gosh, I was so relieved. I mean, I was so really we, my own family we were talking about okay, if this doesn’t get approved this time, it might be time for us to talk about selling our business selling our house and moving somewhere that had a better water source.

Amy Scott: Farmers naturally objected. They say officials have overstated the danger to the aquifer claiming there’s plenty of water to go around. And they point out the industry creates local jobs and tax revenue.

Jamie Stehly: It’s a heated argument because there’s a lot of money at stake for these corporations that are farming here. The farms are very powerful. So they have their group that’s fighting back and trying to sow seeds of doubt.

Amy Scott: The regulations have pitted neighbors against neighbors, longtime residents against newcomers, farmers and ranchers against elected officials.

Jamie Stehly: It pains me to take a stance on an issue that makes you anti farming Yeah, how can you be against like I like to eat? No. But that’s really where you’re at. And and so they’re what they’re growing is not is not supporting our community we’re not, we’re not seeing the fruits of of our resources that are going into it. In fact, some of the things that are being produced are going out of the country even so, they are growing crops that are being exported to other countries that don’t want to use their water to to grow these items. So in that in that is almost mind blowing, that we’re allowing that to happen.

Amy Scott: There’s some context here. The Kingman fight comes in the midst of the recent uproar over a large Saudi farm that grows alfalfa a few hours drive south of Kingman, to ship back home to feed cattle. Saudi Arabia banned alfalfa farming a few years ago to protect its own water. Al Dahra. The UAE company farming near Kingman is also a big exporter of alfalfa for animal feed. Though Al Dahra told the Arizona Republic it no longer grows alfalfa in the Hualapai Valley, one of the people leading the charge to restrict irrigation in the Valley. County Supervisor Travis Lengenfelter, is in the farming business himself. His family owns a small vineyard, they sell grapes to a large wine producer.  So your a farmer and you have your grapes, what do you say to farmers who’ve bought land planning to develop it, and now can’t and are kind of holding the bag?

Travis Lengenfelter: I’ve had some of the corporate farmers actually sort of give me similar questions. And what I tell them is, and they probably don’t like this answer, but so if you’re in business, I don’t care what sort of a business it is. You have to do your research, because there’s always going to be a certain level of risk when it comes to doing business. So I’m sorry if they if they purchased, you know, but unfortunately, you know, we can’t allow the problem to get any worse than it already is. We also, you know, have a few more acres that we could expand. But we’re not going to do that because it’s just you know, sign of the times we just can’t do that right now.

Amy Scott: And this is where a small-town politics get personal. Travis’s family actually sold farmland to Rocky Dhaliwal, the pistachio farmer, farmland that the new rules say Rocky cannot develop.

Amy Scott: Did you sell some land to that farm? Did you own the adjacent land?

Travis Lengenfelter: I didn’t, I had a family member who basically became the trustee of the property after my grandfather passed away. And he and my aunts decided to sell property to them. I didn’t have any, any say in that at all. I’ve actually told him, you know, in a personal conversation that, you know, I disagreed with him selling to that entity, but I didn’t have any control over that.

Amy Scott: For Rocky, the new regulations have threatened the future of his business, he estimates 30 to 40% of his land is still undeveloped, he had plans to expand his operation and even build a pistachio processing plant. Now those plans are on hold.

Rocky Dhaliwal: The investments that we’ve made, there we are, we make contracts to drill wells, we’ve had signed contracts to have the pistachio trees delivered to us, which when the INA got past there, got put on hold, we cannot do that. We are halfway in the middle of everything. And all sudden this got thrown into us that we cannot farm anymore.

Amy Scott: So what do you do, do you I imagine it is hard to sell that land if no one else can farm it?

Rocky Dhaliwal: Right now. Nobody wants to buy that land there, you cannot sell it. So we have basically can’t do anything with that land.

Amy Scott: He’s considering building housing on some of the land, only pumping water for farming is restricted. That’s one reason farmers oppose the INA. That doesn’t apply to housing or industry. But it’s not just farmers who oppose the new regulations. John Gall is a real estate developer and investor he’s working with Rocky on plans for his undeveloped land. But he says that might be hard to do under the new rules to in this part of rural Arizona developers don’t have to prove they have a 100 year supply of water in order to build but they do have to disclose to the public if they don’t have an adequate supply.

John Gall: As an investor, would I want to invest millions of dollars or 10s of millions of dollars into a community where that’s not certain? No, I wouldn’t. You know, in these uncertain economic times, we’re looking for sustainable, I guess, low risk investments. And in this area right now, we’re in an environment where we’re not sure what’s going to happen in the future. And I don’t think the city or the county contemplated that they just wanted to stop agriculture because it wasn’t what they want.

Amy Scott: John says he thinks there’s something else underlying this whole debate.

John Gall: Kind of attitude in the Kingman community that we don’t want outsiders here we want we want our own people, a small town kind of attitude.

Amy Scott: Now some of these outsiders are fighting to undo the groundwater protections. That’s after the break. I want to tell you a little more about how farms started popping up in this hot dry part of Arizona in the first place. Because it’s kind of a wild tale that has to do with a controversial Las Vegas housing developer named Jim Rhodes. He didn’t respond to our requests for an interview. But a colorful 2014 profile in the Las Vegas Sun described him as somewhat jittery and rubbery limbed. A guy who quote smokes Marlboros, drinks Redbull and pleads ignorance or gives conflicting details about his own business. Rhodes had developed some big Master Plan communities and golf courses in the Las Vegas area. And in the early 2000s, he turned his sights to the Kingman area less than two hours away. John Gall was there. He was a development consultant for Jim Rhodes this company, given how remote this part of Mojave County is, it seems kind of hard to believe now, but John says during the housing boom developers thought it was a prime spot for growth.

John Gall: It would be a 90-minute commute, and they thought that this area will become a suburb of Las Vegas.

Amy Scott: Jim Rhodes this company bought up tons of land about 80,000 acres for $300 million, according to The Las Vegas Sun, and started making plans to build about 250,000 homes. But we all know what happened next.

John Gall: What happened was the course of the economy in the 2008 financial crisis when the great recession occurred, all those hopes were were dashed.

Amy Scott: The housing market tanked. Jim Rhodes never got further than building four model homes, and his dreams of building a city from scratch turned to dust. So the developer found another way to use the land.

John Gall: He struck upon the idea of farming. And when that happened at first, the community had no concerns there were no water concerns, there were no issues. But as farming started to grow, individuals like Rocky Dahliwal started to come and look at the areas and alternatives to California to grow crops. And the community became fearful that that would take all their groundwater.

Amy Scott: So Jim Rhodes ushered in a new kind of farming into the desert of Mojave County. Huge operations of thirsty crops like alfalfa and nuts, and his legacies still haunts Mojave County and threatens to undo the new groundwater protections. Let me explain. As far as we can tell, Jim Rhodes isn’t farming in the Hualapai Valley anymore. His farming venture Kingman Farms filed for bankruptcy in 2018. A new crop of owners have taken over, including Al Dahra, that UAE company we told you about, and another called Opal Investments. Now Opal, along with another firm called Steff Investments is suing to reverse the new regulations restricting groundwater pumping. County Supervisor Travis Lengenfelter, hasn’t had much luck finding out who’s behind Opal & Steff.

Travis Lengenfelter: One of them is, I believe, in Nevada, LLC, and one of them is a Utah LLC. But I can’t find any information on these guys. They’re really shrouded. I mean, I can’t find really who it is at all.

Amy Scott: We contacted the Arizona Department of Water Resources. That’s the State Department the investors are suing. What can you tell us about these two parties behind this lawsuit? Steff Investments and Opal Investments?

Tom Buschatzke: Not much.

Amy Scott: That’s director Tom Buschatzke. Not much because you can’t or because they’re-

Tom Buschatzke: No because I don’t want to comment on ongoing litigation.

Amy Scott: It was Tom’s decision to create the INA and he stands by it.

Tom Buschatzke: We were certainly I’m very careful to in my mind follow along and have a defensible outcome in terms of my decision to create that irrigation non-expansion area.

Amy Scott: After a lot of calls and emails we finally reached Opal and Steff’s lawyer Adriane Hofmeyr. Adriane’s a Tucson based lawyer representing Opal and Steff in their appeal of the state’s decision to create the INA.

Amy Scott: So who who’s behind Opal and Steph investments? Who are your clients?

Adriane Hofmeyr: They are two guys.

Amy Scott: Guys named Ezra Nilson and Bob Evans.

Adriane Hofmeyr: They are not farmers. They were lenders to the farming entities that owned this acreage up in northern Mojave County.

Amy Scott: That farming entity again is the company owned by Jim Rhodes, the controversial Las Vegas housing developer. So Opal and Steff were lenders to Rhodes company Kingman Farms Ventures. And when Cayman farms went bankrupt, she says they foreclosed on the property. Property the new regulations make a lot less valuable.

Adriane Hofmeyr: They didn’t intend to be owners of this land. And it feels like they’ve got caught in the crossfire of the Mojave County Board of Supervisors not liking the original owner of the land.

Amy Scott: According to public records, Opal owns about 10,000 acres of land in Mojave County north of Kingman. If farming is off the table. Adriane says they’ve considered putting solar panels on the land. But Mojave County just put a temporary moratorium on new solar farms. Officials say to allow more time to study their impacts.

Adriane Hofmeyr: The Mojave County Board of Supervisors seem to be doing a lot in its power to ensure that this land becomes valueless.

Amy Scott: Opal and Steff filed their notice of appeal at the beginning of this year. They argued the INA unfairly targets one industry farming.

Adriane Hofmeyr: We totally agree that groundwater needs to be protected. But the way that this INA has been created, it is limiting one group of people’s right to use water for the benefit of another.

Amy Scott: They also claim that the state’s decision was based on overly dire projections that didn’t take into account Steff’s farmers have taken to irrigate more efficiently, or actual rates of groundwater withdrawal.

Adriane Hofmeyr: These farmers don’t want to run out of water. They do everything in their power not to run out of water. And the study that ADWR relied on with these future projections didn’t take any of that into account.

Amy Scott: If there are challenges successful did could undo the regulations Jamie Stehly and local leaders fought so hard to convince the state to impose.

Jamie Stehly: I am nervous, but I do believe that if we could convince the a ADWR to give the INA that a judge will also be able to look at that scientific data. And I mean, it’s clear cut, there’s no question that it’s a problem. So I have hope and faith that the judge will do the right thing.

Amy Scott: For now, the new groundwater regulations stand. They’ve been in place since late 2022. They’ve stopped new farms from moving in and pumping out more groundwater. So in some ways, a total success for leaders like Jamie. But in other ways, the regulations have just frozen in time, a problem that’s already underway.

Jamie Stehly: I think anybody that’s familiar with this issue would tell you that the INA was just a first step. Because the you know, the data shows it’s not enough.

Amy Scott: According to the official projections, there’s still a groundwater deficit a gap of 34,000 acre feet per year, more solutions are needed. And in fact, the city and county are working to recharge the groundwater by capturing more rainwater and treating wastewater and injecting it underground. They’re also investing in conservation programs to use less water in the first place. Jamie Stehly hopes all of these things will preserve her rural desert town for her daughters, and for generations to come.  That’s it for this episode. Next week, we visit a community that actually experienced the fate that local leaders in Kingman are so concerned about.

Leigh Harris: I have to promise me to not think untoward of us because we’ve been literally camping in this house for six months now, with no real running water.

OUTRO

Amy Scott: Thanks for listening, and if you like what you hear, you can leave us a review or share with a friend. It all really helps us. How We Survive is hosted by me, Amy Scott, Senior Producer, Caitlin Esch and I wrote this episode. Our producers are: Hayley Hershman, Lina Fansa and Courtney Bergsieker. Help this season from Peter Balonon-Rosen and Sophia Paliza-Carre and Marketplace reporter Savannah Maher. Our editor is Jasmine Romero. Sound design and original music by Chris Julin and audio engineering by Brian Allison. Special thanks to our colleagues at APM Research Lab and Jon Gordon and Betsy Streisand. Our theme music is by Wonderly. Bridget Bodnar is director of podcasts. Francesca Levy is Executive Director. Neal Scarbrough is Vice President & General Manager of Marketplace.