Hobbs vetoes Republican measure to wrangle Mayes' use of nuisance laws

Gov. Katie Hobbs has vetoed a bill that sought to clip the legal wings of Democratic Attorney General Kris Mayes, with one Republican legislator even calling her a "bully" for how she is pursuing companies over their groundwater pumping.

The Democratic Hobbs announced her veto along with a sweeping list of other legislative actions shortly after noon on Monday.

In a letter to House Speaker Steve Montenegro, Hobbs gave this reasoning for vetoing HB 2167: “I will not curtail a tool that is used to protect Arizonans from bad actors.”

The bill approved by both the House and Senate would have allowed those who believe they have been damaged by an improper "nuisance" or "consumer fraud" lawsuit to sue the attorney general for damages — everything from legal fees to lost profits and even a reduction in the value of the business.

Rep. Lupe Diaz (R-Benson) said what’s contained in his bill should be enough to restrain any overly anxious attorney general from going after businesses using that nuisance claim.

Mayes, however, said she is acting to protect residents from corporations that take advantage of the fact that state lawmakers have failed to regulate groundwater pumping in rural areas. Those nuisance laws, she said, provide the only legal avenue for relief.

HB 2167 actually was one of three measures filed by Diaz. He contends Mayes is acting improperly in using public nuisance laws to go after companies over the amount of groundwater they are pumping.

Diaz is also behind a second measure that would make the attorney general automatically guilty of defamation if she filed a public nuisance lawsuit that not only lacked merit, but that she knew about it and publicized it.

A third measure would prohibit an attorney general from filing a nuisance action unless she first had the permission of the county board of supervisors.

So far, only HB 2167 cleared both the House and Senate — that is, before it was vetoed by Hobbs on Monday.

How it started

Two years ago, Mayes filed a public nuisance lawsuit against a Saudi company to force it to stop "excessively pumping groundwater" at its western Arizona alfalfa operations and force the company to set aside funds to compensate neighbors it has damaged.

Mayes is using a largely untested legal theory that the actions of Fondomonte have created a "public nuisance" by pumping so much water it has dried up the wells of nearby neighbors and resulted in subsidence of the land around Vicksburg in La Paz County.

Because that case is still pending, any new legislation would not affect it.

Since that time, however, Mayes used the threat of a similar lawsuit to force Riverview LLP — a Minnesota company that owns two large dairies in the Willcox basin — to take 2,000 acres of farmland out of production and set aside $11 million for well drilling and water access for affected residents in Cochise County's Sulphur Springs Valley.

By doing so, Mayes has suggested she might use the same nuisance law to go after others who are withdrawing large quantities of groundwater in rural areas where there now are few, if any, state restrictions.

"People are not trusting government today," Diaz said of his legislation. "This will help to be able to bring some accountability and some comfort to those that may be feeling like Big Brother is coming against them."

But he made it clear that his aim was narrow: to rein in the use of nuisance laws by Mayes and any future attorney general.

"I think that will help them think twice about pursuing these and putting the public in a position of having to defend themselves in court and spend all that money doing that," Diaz said.

Lawmakers react

Rep. Teresa Martinez (R-Casa Grande) had a simpler explanation for her support of curbing Mayes' power.

"I hate a bully," Martinez said.

But Rep. Mariana Sandoval (D-Goodyear) said she sees the legislation through a different lens.

"This is a thinly veiled attempt to intimidate the attorney general and shield powerful foreign corporations like Fondomonte and Riverview from accountability for draining Arizona's scarce groundwater," Sandoval said.

Rep. Stephanie Stahl Hamilton (D-Tucson) said she, too, isn't buying Diaz' argument that he is attempting to shield common people from the abuses of large government, especially when it comes to Mayes using the public nuisance law. That is the one option the attorney general says she has to deal with excessive groundwater pumping in rural areas.

"When I think about standing up for the little guy, and I think about who the little guy is in the state, I can't discount the stories that I've heard of people who go to turn on their tap water and there's no water there," Stahl Hamilton said. "I cannot discount the stories I've heard of foundations cracking, thus eliminating any kind of equity in home ownership, and I absolutely think that our attorney general is listening to the little guy in this case and is paving a way forward."

State regulation lacking

All that goes to the regulation — or lack thereof — of groundwater pumping in rural areas.

Major urban areas are located within "active management areas," where pumping is monitored and regulated. There also are "irrigation non-expansion areas" with certain limits.

Pumping pretty much everywhere else is ungoverned. And efforts by some local officials in rural counties to force better oversight have so far gone unheeded.

Mayes noted that gap in the law when filing suit against Fondomonte, which came here to grow alfalfa to feed dairy cattle in Saudi Arabia, where such farming is not allowed.

"Fondomonte is taking advantage of Arizona's failure to protect its precious groundwater resources," she said.

All that goes to her decision to use the tool Mayes says she has: the public nuisance provision in the state criminal code. She said that fits the definition because Fondomonte's operations are harming its neighbors.

Mayes wants a court order enjoining the "excessive" pumping of groundwater. Her lawsuit doesn't define that in actual terms. But Mayes said that in 2023 alone, Fondomonte used about 31,196 acre-feet of water — more than 10 billion gallons — considered enough to serve about 93,000 single-family homes.

She also wants Fondomonte to set up an "abatement fund" to reimburse others who have been affected.

Legal considerations

Among the issues that Maricopa County Superior Court Judge Scott Minder has to decide is whether any of this fits within nuisance laws.

There really is no precedent.

The only known use of the law in a situation like this came earlier in Mayes' tenure, when she used it to go after a company's plan to mine rock and gravel on a 25-acre parcel it owned in a neighborhood in a rural area near Chino Valley. The site was within 100 feet of homes.

When the state mine inspector said he had no authority to block the plan, Mayes cited nuisance laws and got a court to issue a preliminary injunction.

There never was a final ruling on whether the mine was a nuisance or whether the nuisance law applies. The lawsuit went away when someone else bought the land and mining plans were abandoned.

It is the future use of those nuisance laws, Diaz said, he wants to restrain.

He said Mayes or any other attorney general legally still could pursue nuisance claims. But Diaz said his HB 2167 set the stage for someone to be able to fight such a claim and recover damages.

That kind of law, he said, might have resulted in a different outcome in what happened with Riverview. Diaz does not dispute that there are people in the Willcox area who found their wells were drying up, but he says most went down between 100 and 300 feet. Riverview, he said, was drawing from a different layer in the aquifer at 1,200 feet.

"And then she comes in and threatens that she's going to take them to court,” Diaz said.

The company never admitted it was part of the problem. But Diaz said that, under threat from Mayes, it decided it was better to settle and pay the $11 million than risk the same kind of litigation as Fondomonte.

Under his measure, he said, a company could fight the attorney general with a better chance of recovering not just its legal fees, which is typical in many civil cases, but also any other damages it might incur like lost sales, lost profits and loss in business value.

But Sen. Lauren Kuby (D-Tempe) said it's not like Mayes was simply out looking for someone to sue.

"In the Riverview case, the Willcox basin residents were faced with drying wells," Kuby said. "They called upon her office after years of heavy pumping by a large dairy."

And that, Kuby said, is what led to the settlement to provide $11 million and fallow 2,000 acres.

"This is a concrete fix for a real, ongoing harm," she said.

Kuby said that's precisely what's wrong with HB 2167. And Hobbs agreed.

"It would tie the hands one official, our attorney general, who can act and is acting when communities raise the alarm across our state," Kuby said. "Riverview shows the model: When harm is real and urgent, the AG must be able to act decisively."

Diaz, however, said not everything — including wells drying up — requires intervention by the attorney general.

"We have been in an almost close to a 30-year drought now," he said. "With that comes a lot of things that we are not prepared for, but we also are a very creative people."

Consider, he said, people in his southeast Arizona district whose wells have run dry.

"They have bought tanks,” Diaz said. “They transfer their water, and they continue to move on.”

He said there are government programs designed to help rural communities build or improve drinking water systems.

Diaz also brushes aside claims that Mayes intervened because rural residents want that.

"We are creative people and we get around these things," Diaz said.

Consider, he said, an acquaintance who has lived in the area a long time with water trucked into her property every week "so that she can do the laundry and shower and all that kind of stuff."

"Yeah, they have to watch a little bit of their water use," Diaz said. "But they trade that off because they like to live in rural Arizona."

But what of those who sought intervention by Mayes?

"The ones that are complaining the most are the ones that are coming in from California," he said.

Mayes, for her part, says Diaz is ignoring the reality of the situation – and why she believes that what Diaz is trying to do is harmful.

"Hundreds of residents in Cochise County came out to my town hall to beg for help because their wells were going dry and the land was cracking open around their homes and no one in power was doing anything to protect them," she said.

"This year, we got them help while the legislature has gone another session without doing anything to protect rural groundwater. It's outrageous that, instead of doing their jobs, Republican lawmakers want to punish me for doing mine."