0:00

Let me introduce you to James Harper. He's

0:02

an engineer, a startup founder, a

0:05

pioneer of Silicon Valley, who helped

0:07

make the texting what it is today. He says, you

0:10

know, we are not playing games. He

0:13

also happens to be one of the most damaging

0:16

nuclear spies of the entire

0:18

Cold War. I'm sharing the story of

0:21

a world of spying that few have ever

0:23

really known about. Until now. Sky

0:26

Valley, out now from Project

0:28

Brazen.

0:49

Today,

0:57

we're talking about something so essential

1:00

to daily living that for this man,

1:02

it's more precious than gold. Gold

1:04

is worth quite a bit. Water

1:06

is worth more than gold if you don't have it. Wayne

1:10

Wade is a retired industrial electrician.

1:13

He's worked in mines, gas plants, and oil

1:15

fields. And after his kids grew up, he

1:18

and his wife settled in La

1:19

Paz County, Western Arizona. They

1:22

fell in love with the desert. We

1:24

have to be here year-round to see

1:27

the seasons. And when the plants

1:29

bloom, it's just something you

1:31

don't get anyplace else. But

1:33

then the water level in their well started

1:36

dropping each year, forcing

1:38

them to go deeper into the earth. It

1:41

was expensive, tens of thousands

1:44

of dollars. At the same time, industrial

1:47

mega farms were moving into their community

1:49

and growing crops to send overseas.

1:52

I was raised on a farm. I'm

1:54

not against farming, but we

1:56

need to take care of it too. You know, it needs

1:59

to be taken care of.

3:59

investigation, that one exposed

4:02

that these foreign mega farms were

4:04

actually using up Arizona water to

4:07

grow crops and ship them overseas.

4:10

People like Wayne Wade were outraged

4:12

and that outrage from the locals has only

4:14

gotten more intense.

4:16

I wanted to know who decided it was okay

4:19

for places like La Paz to lose

4:21

control of their water supply. It

4:23

turns out this scramble for water is

4:26

also about a scramble for profit.

4:28

And because I know you, I know that

4:30

that means you've been following the money.

4:32

Yeah, that's right. And some of this information,

4:35

like the people who are financing some of these deals,

4:37

has been hidden away until now. It's

4:41

a crucial part of the story and we're gonna get

4:43

to it later in the show. But to understand

4:45

what Nate's gonna tell you, we need to rewind

4:48

a little bit.

4:49

We need to go back several years

4:51

to when this investigation started. Here's

4:54

Nate's first journey in the Arizona desert

4:56

where he was joined by Reveal's former producer

4:59

and my friend, Ike Shreesconderaja.

5:02

I see white sands with

5:04

some scrubbing bushes in the desert.

5:08

And I don't know, Ike, what is it? Like 115

5:11

degrees right now? It is sweltering

5:14

hot. And just

5:16

beyond that scrub grass is a

5:19

gigantic hay field.

5:24

And just beyond that are

5:27

rows and rows and rows of processed

5:31

golden stacks of hay.

5:34

Like an entire city of hay.

5:39

How does this make sense?

5:49

We're driving with Charlie Hovranek in his jacked-up

5:51

GMC truck with huge tires. Charlie

5:54

is a real estate agent, farm consultant,

5:56

and the kind of guy you want showing you around the desert.

5:59

Anybody want to... A

6:00

bottle of water, I got cold water in that ice chest

6:02

there. We pull up in front of a farm outside

6:04

Vicksburg, Arizona. And you're looking

6:07

at hundreds of thousands of

6:09

tons of hay waiting

6:12

for export. It looks like the Fort

6:15

Knox of stacked hay. And

6:17

all of that is going to be exported to

6:20

Saudi Arabia. Saudi Arabia's

6:22

largest dairy company, Al Marai,

6:25

bought 15 square miles of

6:27

land in the Arizona desert and converted

6:29

it

6:30

into hay fields. Let

6:32

that sink in for a minute. A dairy

6:34

based in one desert is growing hay

6:37

halfway around the world in another

6:39

desert. And they're able to do it because

6:41

of groundwater. Lots of it. We

6:46

pull over next to an electric groundwater

6:49

pump. That's the sound of that electric

6:51

motor turning. It runs a turbine

6:53

pump down below that lifts the water up. It

6:56

looks like an oversized fire hydrant

6:58

sitting on top of a 12-inch

7:00

metal pipe that goes straight down

7:03

hundreds of feet to the aquifer below.

7:05

Sixteen to 1700 gallons a minute. The

7:09

pumps, which are scattered across

7:11

the fields, are running night and day. So

7:14

over the course of a year, in an

7:16

area that normally only gets five

7:18

inches of rain, they pump up 10

7:21

feet of water onto the land. We

7:24

are basically mining ancient

7:26

water. This is water that was probably

7:29

part of an ancient sea

7:32

or seepage from rainstorms

7:34

and accumulation of water over the eons

7:37

of time. Very productive ground

7:39

once you've got the water for it. By

7:42

buying the land instead of just purchasing

7:44

the hay, Al Marai can better

7:46

control

7:46

its prices. And this is

7:48

the most productive ground in the country for growing

7:51

hay. Unlike in Iowa

7:53

or Nebraska with their idle winters, in

7:55

the Arizona desert, you can grow hay

7:58

all year long.

8:00

you have the water. Where we're at now

8:02

is outside of any kind of groundwater pumping

8:04

regulations, so they're able to pump as

8:07

much as they can get.

8:08

Abby York is a land

8:10

use expert at Arizona State University.

8:13

She met us at Al Marais.

8:15

I asked Abby if the groundwater here might

8:17

run out one day. There's definitely concern

8:19

that within a 50 years, few decades,

8:22

that water levels will have dropped significantly.

8:25

So if you look at some of the policy reports

8:27

from the state, that's what they're indicating.

8:29

That means within

8:32

a generation or two, this part of Arizona

8:35

could go dry. And the Saudis'

8:37

hay operation just accelerates

8:39

this problem.

8:41

Arizona's groundwater law from 1980

8:44

limits pumping in big cities like

8:46

Phoenix. But in many rural

8:48

areas, like La Paz County, water

8:51

use is not regulated. And

8:53

this is where Al Marais has moved

8:56

in.

8:56

There's no way that we can change

8:58

how they're using this land. If

9:00

there were problems, it would be very difficult to

9:03

stop. Yeah, so the decisions are wherever

9:05

the corporate headquarters are in this case, in

9:08

another country.

9:08

If I'm understanding you correctly,

9:11

the local land use here, the local

9:13

decisions on how much water to use is

9:15

actually being made in Riyadh.

9:17

Yeah, so, right.

9:21

We were really surprised by this, that

9:23

in the middle of a drought, an executive

9:25

halfway around the world is making decisions

9:28

that might deplete the aquifers here.

9:30

We wondered if people were flipping out about

9:33

this. So we went to Kirby's Country

9:35

Market, just a few miles from the Saudi farm,

9:38

and we asked locals if they cared that

9:40

the Saudis were buying land here. No,

9:42

if whoever they could sell it to, I mean, they're

9:44

welcome to sell it to whoever they want. If I knew

9:46

exactly where it's gone, that could make

9:49

a difference to me. Wouldn't make a difference

9:51

if it was going to Saudi Arabia. No,

9:53

wouldn't make any difference to me. If it was going to

9:55

Saudi Arabia, that'd be fine. No,

9:58

no, no, no.

9:59

Don't bother me then. They

10:02

gotta make money. That's how they're

10:04

gonna make money. That's what they're for. Are you at all

10:06

concerned about water? Well, I worry

10:08

about losing water, yeah, because water

10:10

tables go down every year. And

10:13

we're afraid we're gonna run out of water here, one

10:15

of these days.

10:16

Saudi Arabia knows what happens if you

10:18

farm the desert too long. About 30

10:21

years ago, the Saudis began digging deep

10:23

under the sand for something other than oil.

10:26

You'll bring in enough dollars and

10:28

find enough water, and you'll grow

10:31

the desert green until either

10:34

the dollars become scarce or

10:36

the water runs out. That's Elie

10:38

Elhaj. He's a former CEO

10:41

of a major Saudi bank. He also

10:43

wrote a critical report about Saudi

10:45

Arabia's foray into agriculture. He

10:48

called it, Camels don't fly, deserts

10:50

don't bloom. There's no magic

10:52

in turning the desert

10:55

green. With the groundwater, Saudi

10:57

Arabia became an agricultural powerhouse.

11:00

The Saudi desert became the sixth

11:03

largest exporter

11:05

of wheat in the world.

11:07

Elie says exporting crops

11:09

like wheat and hay is the same

11:11

thing as exporting water. Agricultural

11:14

goods are encapsulation of

11:17

water, virtual water.

11:21

So why would a country with so little

11:23

water become the world's sixth biggest

11:25

exporter of wheat? Well,

11:30

frankly, it's crazy. And

11:32

time really proved that it was

11:35

an insane decision.

11:37

Saudi

11:40

Arabia has nearly run out of groundwater,

11:43

and dairy companies like Al Marae have

11:45

been told to begin growing nearly all

11:48

their hay in other places like

11:50

Sudan, Ethiopia, Argentina,

11:53

and Arizona. All

11:55

of it will get shipped back home to feed

11:57

their dairy cows.

11:59

to Al Marais and the Saudi government for comment

12:02

on our story, but they declined. Bottom

12:05

line is that the current generation

12:08

sucked the aquifers dry

12:11

to deny future generations of

12:13

their rightful endowment.

12:16

Saudi Arabia isn't the only one running low

12:18

on water. Other countries, like China

12:20

and India, are discovering they don't have enough

12:22

farm water to meet growing demands either. And

12:25

like the Saudis, they're looking overseas,

12:27

putting increased strain on the world's water.

12:32

As Nate and I were driving away from the

12:34

Saudi farm, we noticed another big

12:37

farm along the road, the name of it,

12:39

Al Dara. It appears to be another

12:42

Middle Eastern company has come out here

12:44

and has started up a huge other hay operation.

12:47

We pulled in where we saw a line

12:49

of semis all being filled with hay.

12:52

So we climbed up to a truck driver's window

12:54

to talk. That makes it a lot easier for us. Thank

12:57

you. I never get to see in sundries. This

13:00

18-wheeler was being loaded with 44,000 pounds

13:02

of hay, and he

13:04

told us it was going to a shipping port in California,

13:07

and from there, onto China. We

13:10

went inside the small office and met Nathan

13:12

Melton, the farm's manager. Nathan

13:15

has deep roots here. His family farmed

13:17

in Arizona

13:17

for generations, growing melons,

13:20

cotton, and other crops. You know, I'm

13:22

not in the family business no more. This is all

13:24

corporate farming now. This is different.

13:27

How long ago did the folks start leasing this land? We've

13:30

been here two years now. And

13:33

who do they lease it from? It's

13:35

IFC. It's a big

13:38

corporation out of North Carolina.

13:41

Corporations are tapping into free and

13:43

unregulated water supplies in rural counties

13:45

like La Paz and growing crops

13:47

that are shipped halfway around the

13:50

world. You know, if we were going to say

13:52

we were going to ship hay overseas, back

13:54

then you would have laughed. Now

13:56

it's what we do and makes money. You

13:58

know, a lot's changed over here.

13:59

for the last 10, 15 years.

14:05

That story was from Nate Halverson and Akshri Skandarajah.

14:09

In a moment, Nate follows the money flowing

14:11

into the International Farming Corporation.

14:14

It's a billion dollar investment firm

14:16

with some surprising investors. And

14:19

then you start connecting the dots on some

14:21

of this stuff and you start thinking, oh my God, I

14:23

can't make this up.

14:25

That's coming up next on Reveal.

14:31

Support for Reveal comes from Odoo. What is Odoo? Well,

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Odoo is an all-in-one management

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software with apps for every business need. Odoo

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when you think about business, So when

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you think about business, think Odoo.

15:01

To learn more, visit odoo.com slash

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reveal. That's O-D-O-O.com

15:06

slash reveal.

15:10

I know, I know it's hard. You wait

15:12

all week for this podcast and then it's

15:15

over and you find yourself wanting more.

15:17

Let me make a recommendation.

15:21

The Reveal Newsletter. It goes behind

15:23

the scenes into how we make and

15:25

report these stories. Subscribe

15:27

now at revealnews.org slash

15:29

newsletter. From

15:38

the Center for Investigative Reporting and PRX,

15:41

this is Reveal, I'm Al Etzi. Reveal's

15:46

Nate Halverson has been investigating the

15:48

global battle for water. Water

15:50

we drink, water we use to grow crops,

15:53

and water that in many parts of the

15:55

world is disappearing. Like

15:57

in Arizona, where in 2015,

15:58

Nate found corporate

16:01

mega farms were moving into the desert

16:04

and pumping out massive amounts of

16:06

water from the state's endangered aquifers

16:08

to grow hay.

16:09

Nathan Halvorson is the first reporter

16:12

to break this story in the national press. A dairy

16:14

company based in a country known for its huge

16:16

oil supplies is after something even more

16:18

precious in Arizona, water.

16:20

There is no cost for the water being

16:22

pumped from the wells or restrictions

16:25

on how much they use. Media coverage

16:27

at the time was focused on Al Marai. The

16:30

dairy company from Saudi Arabia that

16:32

quickly became one of the biggest water

16:34

users in the state. The people

16:37

of La Paz County where all this was happening,

16:39

they were getting angry.

16:41

I know that there's areas

16:43

that are being farmed now that were not

16:45

farmland two years ago. Large,

16:47

large tracks, miles and miles of

16:49

green that wasn't there two years ago. How

16:52

is that possible?

16:53

This tape is from a meeting in La Paz

16:55

with members from the state's water department. The

16:58

haul was packed and tense with

17:01

armed sheriff's deputies keeping close watch.

17:04

You're saying it's perfectly legal for

17:06

these people to come in here, drain the

17:09

aquifer and the local people

17:11

have to redrill their wells that

17:13

they've lived there for years.

17:14

We got to move on. But yes,

17:16

it is it they're not breaking the law. People

17:20

told the officials more and more wells

17:22

were running dry and they were blaming

17:25

the new mega farms. Holly Irwin,

17:28

a county supervisor tried to empathize

17:30

and respond to what she was hearing.

17:32

I feel your pain. I want

17:34

conservation measures put in place so

17:36

we can all grow as a community.

17:39

Where you guys can stay here and so

17:42

can they. But we need to do something

17:44

and something's got to give.

17:45

This meeting was

17:47

in 2017 and as the reality

17:50

of the situation sank in, it motivated

17:53

Holly, a Republican, to do something

17:55

she'd never done before.

17:56

Take political action on an environmental

17:59

issue. to save the aquifers and

18:01

save the rural way of life here

18:03

in the desert. And in the process,

18:06

she found out what's happening here goes

18:09

way beyond Al Marai.

18:11

This is where Nate picks up the story.

18:14

This spring, I went to visit Holly in

18:16

La Paz County. She came here 29 years

18:19

ago to raise a family. We love the whole

18:22

rural Western atmosphere of Arizona

18:26

and enjoy the river and all

18:28

of the outdoor activities that comes with

18:30

it.

18:32

One of her favorites, off-roading

18:34

with the family on four-wheelers through hundreds

18:37

of miles of rocky trails. She's

18:39

shown me videos.

18:41

You just have open desert or we can

18:43

take trails that'll take us through mountain passes

18:45

and canyons and stuff

18:47

like that. You can just, it's amazing. You can

18:50

just keep going

18:50

for miles. Holly's been

18:52

barreling over hills and through ditches

18:54

since her dad bought her a mini bike at age 10.

18:58

Today, it's just a way to

19:00

let off steam.

19:03

Here mama go. How's my mama?

19:06

It's called decompressing. From

19:10

dealing with all of the stress with the water issues

19:13

that we've had here in La Paz County.

19:16

Holly was elected county supervisor here

19:18

in 2008. But ever since

19:20

that Saudi Hays story came out, the water

19:22

issue has consumed her working life.

19:25

And she wants to take me out into the desert, not

19:27

on her ATV, but in her government

19:29

issued SUV so I can see what's

19:32

been happening since our original story

19:34

several years ago.

19:36

At first, the desert doesn't look much different.

19:38

It's still got its postcard beauty. But

19:41

then abruptly, it all changes.

19:43

The hay, specifically alfalfa

19:46

hay. Now we're back into the alfalfa, as

19:48

you can see.

19:49

This is all alfalfa. It's depressing.

19:52

It really is. This is the Saudi farm. This is the Saudi farm.

19:55

Wanted to take you by here so you can see how

19:57

much it's changed. The

19:59

fields now cover. over far more land

20:01

and there's clusters of giant hay

20:04

barns scattered across miles of land.

20:07

Those didn't exist last time I was here. Holy

20:10

cow, these are hay trucks. And look, they're

20:11

all waiting in line to get in. Those are

20:14

semi trucks that have two trailers behind

20:16

them and there are 30 of them. So that's

20:18

like 60 semi trailers just

20:20

covered in hay.

20:21

I told you, right? Arizona

20:24

is now exporting nearly 100 times

20:26

as much hay compared to a decade ago. Hay

20:29

brings in a lot of money. It's one

20:31

of the most valuable crops in the U.S. Arizona

20:35

doesn't track hay exports or their impact

20:37

on water, but some researchers at the University

20:39

of Arizona did just that. And

20:42

they estimate that in Arizona, the

20:44

water used to grow exported hay

20:46

is now equivalent to the water used

20:48

by roughly a million people in

20:50

Phoenix. As

20:52

we drive on, you can see the impact. There's

20:55

a little church whose well went dry and

20:57

a trailer park also with water problems.

21:01

And then we pull over just next to some desert

21:03

homes just past one of the encroaching

21:06

farm fields.

21:07

So what's happening to people out here is domestic wells,

21:09

these people that have retired out here. Okay, so if you look out

21:11

here, I know this family that live out

21:13

here and they've had to replace their well twice.

21:17

Oh, not just once,

21:17

but twice. How much is that? Anywhere

21:20

from 25 to 35,000. That's

21:22

a lot for retirees. It is. It's

21:24

a lot. Not

21:26

even the government knows how much water

21:28

is left in these aquifers. Holly

21:31

keeps asking the state's water department

21:33

to conduct a hydrologic study, but

21:36

they keep ignoring her. And it's

21:38

an important study because it's the only

21:40

way to know for sure how much water

21:43

is being used, how much is left,

21:45

and how long until it goes kaput.

21:50

La Paz County is not a wealthy

21:52

community. The average individual

21:54

income here is 26,000 a year.

21:57

Many folks are retirees from working

21:59

classes. and lots of residents live

22:02

in mobile homes and trailer parks or out

22:04

on the open desert. Holly

22:07

says it's this lack of wealth that makes

22:09

the community more vulnerable to having its

22:11

groundwater grabbed.

22:13

She wanted to know when all this got

22:15

started and who was behind it.

22:19

So she gets the idea to start digging

22:21

into dusty old county records in search

22:23

of answers, and she

22:26

leads me into her office to show me. Holly, this is so

22:28

many boxes and so many documents. This

22:30

is a gold mine. I

22:34

had to go back to what we call it

22:36

the dungeon, but you know, where we keep historical

22:39

boxes and documents and stuff like that. The

22:41

dungeon. The dungeon

22:43

and pulled boxes, and I went back to

22:45

the creation of our county.

22:46

Wow. When was that? That

22:49

was in 1982, which I fully believe that we were created

22:51

for that sole purpose. What purpose?

22:55

For water. The dungeon

22:57

is a place to mine not gold or oil, but

22:59

water. And in the past, it was the

23:01

big cities coming here for the water. It's

23:04

an old story, going back nearly 40

23:06

years. That's when Phoenix

23:08

comes calling in 1986.

23:11

The city purchased about 20 square miles

23:13

of farmland so that they could have access

23:16

to the water below. Phoenix

23:18

wanted it as a backup water supply

23:20

for the future, and its plan was

23:22

to eventually pump up the water and

23:24

transfer it through a canal to the city.

23:28

You start watching City of Phoenix buy property,

23:30

Scottsdale buy property, and

23:33

you have cities buying property solely

23:35

for the purpose of water.

23:37

These deals were controversial at the

23:39

time because rural communities like

23:41

La Paz felt their water was being grabbed

23:44

by the big cities. But at

23:46

the end of the day, this was water destined

23:48

to stay in the state as a public

23:50

water supply. That changes

23:53

in 2012 when Phoenix does an about

23:55

face and sells its own backup water.

23:58

It says it doesn't need water.

23:59

need the groundwater anymore, and it will be too

24:02

expensive to transport.

24:05

Here's the thing that I find striking. Back

24:08

in the 80s, people recognized literally

24:10

the time right now when they were going to need the water.

24:12

Right. And that was almost 40 years ago. It's

24:15

like they were psychic. But

24:17

somewhere along the way,

24:18

they lost track that

24:21

they wanted this water for the people

24:23

of Arizona and they started selling

24:25

it. Right. This

24:30

is where the International Farming Corporation

24:33

enters the picture. Remember, IFC

24:35

is that multi-billion dollar investment

24:38

company we heard about earlier. IFC

24:41

buys the land from the city of Phoenix. Then

24:43

it gets to work drilling bigger, deeper

24:46

wells to tap into all that precious

24:48

groundwater so it can then lease

24:50

some of the land to the farming

24:52

company, Aldara. Now, stay

24:55

with me here. This isn't the Saudi

24:57

owned farm. This is the other big

25:00

hay producer in La Paz County, Aldara

25:03

from the United Arab Emirates. What

25:05

this all means is that Phoenix's

25:08

once public water supply is

25:10

no longer staying in Arizona. It's

25:12

being shipped overseas in the

25:15

form of hay.

25:19

I want to hear firsthand what this all

25:21

means for the residents living next to the IFC

25:23

farm. So I go visit

25:25

Mary Goodman. Mary moved

25:27

out here about 25 years ago

25:30

after retiring from her nursing job in

25:32

the Los Angeles area.

25:33

This is a triple wide and

25:36

we put it in in 2005, did all the work ourselves. Mary

25:40

and her husband Bill came out to the desert because

25:42

it was beautiful. And because

25:44

like for a lot of people, this is a place where

25:46

you can afford to live on your pensions

25:48

and savings. This mobile home in

25:50

the desert, it was their dream retirement.

25:53

We've put our money,

25:56

our lives, our

25:58

sweat and blood.

25:59

So we've got everything

26:02

the way we want it. He has a nice

26:04

workshop and I've got my plants.

26:07

It's our life. It's their

26:09

life, but the water table is dropping

26:12

every year. Some of their neighbors wells

26:14

have already gone dry. And

26:16

IFC, it just keeps drilling

26:18

deeper. Now it's down to 1,500 feet.

26:21

If you had to drill your well 1,000 or 1,500 feet,

26:25

could you all afford to? No

26:28

way.

26:29

Not at $30 a foot. We

26:31

couldn't afford it. It's a race

26:34

for the water and they can't keep up. Mary

26:36

worries that their well could run out of water before,

26:39

well, before they die. I'm 75 and

26:43

my husband's 12 years older than I am. You

26:45

know, it's like we're getting up towards the end of stuff

26:48

here, folks. I

26:50

just get really nervous. Do we just stay

26:53

here and maybe take comfort and

26:55

we'll be dead before we run out of water?

26:58

Because we can't live here without

27:00

water. Last year, a state

27:03

test near the Goodmans found the water

27:05

was dropping about five feet per

27:07

year. And at that rate, the

27:09

Goodmans might only have another 10 years

27:12

of water in their well. And

27:14

they say nobody from the state is out

27:16

here helping folks as their wells

27:18

go dry. We're kind of like

27:21

the ugly redheaded stepchild

27:23

out here, maybe. Nobody seems

27:25

to care. You feel powerless.

27:27

I mean, you live in a place where they

27:30

can give your water away. Mary's

27:33

hit on an important point. What's

27:36

happening here goes way deeper than

27:38

corporate mega farms. It's about

27:40

the Arizona water policies that

27:42

attracted these companies in the first place.

27:45

So I go to Arizona State University

27:47

to see a lawyer named Sarah Porter. I'm

27:50

Sarah Porter, director of the Kyle

27:52

Center for Water Policy at ASU's

27:54

Morrison Institute for Public Policy.

27:57

Sarah and I talk nitty gritty about

27:59

the Arizona. Groundwater Management Act. It's

28:01

legislation from the 1980s that governs

28:04

much of what happens with Arizona's water today.

28:07

It was a fight to get the law passed. Cities,

28:10

agriculture, and mining companies were all competing

28:12

for what they wanted it to say.

28:15

Ultimately, groundwater ends

28:17

up being regulated in urban areas like

28:19

Phoenix, but not in rural areas

28:21

like La Paz. They essentially

28:23

remain free-for-alls.

28:25

This lack of regulation created

28:27

a business opportunity for farm investors

28:30

to come in from around the world.

28:32

I have a newspaper ad that I clipped

28:35

and it's a color ad and

28:37

it says water problems come

28:39

to Arizona. We have unregulated

28:41

water.

28:41

Yeah, that's, yeah. Sarah

28:43

now sits on Arizona Governor Katie

28:46

Hobbs' Water Policy Council, which

28:48

was created earlier this year to tackle the

28:50

issue of groundwater in rural areas. She

28:53

says if state lawmakers aren't going to rein

28:55

this in, they should at least be upfront

28:57

about what's happening.

28:58

If it's going to be the policy of

29:00

the state to allow landowners

29:03

to mine out all of the

29:05

groundwater in an aquifer, then

29:08

we should also talk about having

29:11

better public consumer

29:13

protections. We need to make sure that people don't

29:16

buy, you know, invest their treasure in

29:19

their own little acreage and then

29:21

discover that

29:22

a giant industrial-scale agricultural

29:25

operation has moved in next door and

29:27

is going to be causing their wells to

29:29

go dry.

29:30

But that's already happening in places like La

29:32

Paz. I also think we have to live

29:34

with the possibility that it

29:37

may be the choice of some rural areas

29:39

to simply manage their groundwater in

29:41

a way that I think we could

29:43

call unsustainable and use

29:46

up all the water in their aquifers. That may be

29:49

the will of some rural areas. But

29:51

I talked to like supervisors in those counties

29:54

like Holly Irwin. Yeah. And she says

29:56

she doesn't have the power to stop

29:58

people from pumping her water.

29:59

She doesn't. And one of the big problems

30:02

is that once the big water user is there,

30:05

it is much, much harder to solve

30:07

the problem.

30:07

So what happens to people in La Paz

30:09

County? The

30:12

reality is that the

30:15

water demand is the water

30:17

demand. So the people's wells

30:19

are going to go dry and that's the future? It could

30:21

be.

30:22

It could be. Yeah, that's the reality.

30:24

We're really talking about an existential

30:26

situation for some of those places.

30:28

Existential, meaning they're

30:30

going to lose their well and they're going to lose their life savings. Yeah,

30:33

no water, no town.

30:39

The people in La Paz, do you

30:41

envision they're going to get compensated when the

30:43

value of their... No, I don't think so. They're

30:46

just going to lose their life savings and that's that?

30:48

Yeah, or whatever they wind

30:51

up doing. Maybe someone will discover

30:53

an ore body where they are, I

30:55

don't know. A groundwater supply

30:58

in an unregulated rural area of

31:00

Arizona is a low value

31:03

water supply. So it's buyer beware.

31:05

It is. That's

31:08

really what we live with. It's buyer beware,

31:11

but let's keep everything in proportion. I

31:13

don't know what the population of La Paz County is off

31:15

the top of my head, but

31:16

you know, it's like 30,000. La

31:20

Paz is less than that, 16,000 people.

31:25

You know, part of public journalism is

31:27

standing up for the folks that don't have the power. Yeah, yeah. And

31:31

I hear what you're saying that is a small percentage of the population. Yeah,

31:33

it doesn't diminish their experience

31:36

that

31:36

there aren't very many of them. They

31:39

never should have relied on that water. It's not their fault

31:42

that they did, but

31:45

they were relying on a water

31:47

supply that they didn't have

31:49

a right to.

31:52

You're going to tell me that they don't have a

31:54

right to have water in their homes. Families

31:57

have invested over generations to

31:59

be.

31:59

here. It makes me angry, extremely

32:03

angry.

32:05

I've come back to meet with Holly at our office

32:07

in La Paz. She's frustrated

32:10

by the idea that this is just the

32:12

way it is. And also by

32:14

the inability of Arizona's lawmakers

32:16

to protect water. What she wants

32:19

is the state to determine how much water is

32:21

left in the aquifers and give

32:23

her some local control to monitor

32:26

and set limits if necessary. She

32:28

thinks this is the only way to slow

32:30

the global scramble for water and

32:33

the profit-driven water market

32:35

it's

32:35

created. You're literally

32:37

fighting money. That's what you're doing. You're fighting

32:40

the rich people. And Holly isn't just

32:42

fighting rich corporations. In

32:44

my reporting, I uncovered something startling.

32:47

The Arizona government itself

32:50

is investing in these mega farms in the western

32:52

United States.

32:53

I found that the Arizona State

32:55

retirement system gave $175 million

32:59

to the International Farming Corporation,

33:01

which then used some of the money for

33:04

the mega farm in La Paz County.

33:08

This raises a key question. How

33:11

much did the state know about

33:13

exactly where its investment money was

33:15

going? I'm wondering if we can go over to the county

33:17

recorder's office because people

33:19

have to file deeds of trust. If

33:22

there's like a mortgage or, you know,

33:25

who gave them the money to buy the land? I mean,

33:27

we can walk over there if you want and see. So

33:29

we head over to the recorder's office where land

33:31

sales and mortgage records are kept. Here

33:34

is our recorder's office. Is

33:38

there a way that we can look

33:40

up an LLC? Yeah. We

33:43

find a computer terminal and start searching.

33:48

At first, it looks like a bust. Yeah,

33:51

Holly, this looks kind of looking like a dead

33:53

end. I can't. There's no, I mean,

33:55

we can see that the year that they bought it, which

33:58

is what we knew.

33:59

and they bought it from the city of Phoenix. And

34:04

there's easements and sort of mechanical

34:07

stuff, but there's nothing in all

34:10

of these records, and there's 56 documents.

34:13

Oh, wow. Yeah. But there's nothing

34:16

that shows... Wait

34:19

a minute. What's

34:22

this? Arizona

34:25

State... Pull that up. That's

34:28

not your pension fund?

34:29

Yes. Holly

34:31

and I are seeing this document for the first

34:33

time.

34:34

It shows that state retirement fund managers

34:37

knew specifically that part of their investment

34:39

in IFC would be used

34:41

for the mega farm here in La Paz, the

34:44

one that's next to the Goodman's home. The

34:46

document even says that if IFC

34:49

were to ever sell its land in La Paz,

34:52

the retirement system wanted the right

34:54

to make the first offer to buy it. And

34:57

it was all about making money. Oh,

34:59

my God. Oh, my God. Wow.

35:02

That's wild. I don't know why

35:05

our state retirement would have any part of

35:07

any land deal. Your pension fund

35:10

is the money behind this massive

35:12

deal that bought the

35:14

Phoenix of Arizona's backup water supply

35:17

and is now shipping it overseas in the form of hay.

35:22

Holly and I leave the recorder's office, and

35:25

I tell her I'm going to Phoenix to see if I can

35:27

get answers from state officials about why

35:29

any of this makes sense. Is there anything

35:32

you really want me to try to dig out? You really want

35:34

to know? I want to know why they're investing

35:36

our pensions, money that

35:38

we've worked hard for, only to

35:40

have

35:41

companies utilize the water and

35:43

shipping it overseas. How does that make you

35:45

feel? It makes me angry. It's unbelievable

35:48

that the state can do that with our retirement

35:50

fund. You know, I've been fighting for years

35:52

to keep the water here, and it's just

35:55

frustrating everywhere you look around. You

35:57

know that this water is being depleted and...

35:59

office being shipped overseas.

36:06

When we come back, Nate digs deeper

36:08

into those pension fund investments and

36:10

finds out they go way beyond Arizona.

36:13

It is bonkers, right?

36:16

If it was a movie, you wouldn't believe

36:18

it. Next on Reveal.

36:33

Hi, my name is Michael Montgomery and

36:35

I'm a producer and reporter here at

36:37

Reveal. Reveal is a non-profit

36:39

news organization and we depend on

36:42

support from our listeners. Donate

36:44

today at revealnews.org slash

36:47

donate. Thank you so much.

36:50

From the Center for Investigative Reporting

36:53

and PRX, this is Reveal.

36:56

I'm Al Ledsen.

36:57

Our reporter, Nate Halverson, is investigating

37:00

an investment firm that's been fueling

37:02

the rise of a corporate mega farm

37:04

in the parched western Arizona desert. The

37:07

International Farming Corporation is one

37:09

of the largest private landowners in

37:11

the rural desert community of La Paz.

37:14

And Nate discovered that one of IFC's

37:16

big investors is the state of Arizona's

37:19

own retirement system. You know,

37:21

school teachers, state workers, city

37:24

and university employees. They're

37:26

all connected to the water

37:27

crisis in La Paz. And

37:29

Nate's come to Phoenix to try and get answers.

37:32

His first stop, the Arizona State Attorney

37:35

General's office.

37:36

Hello. Hi. How are

37:38

you? You must be Nate. Yeah, Chris, thanks for taking

37:41

the time. Nice to meet you. I meet Chris Mays at her office

37:43

in downtown Phoenix. The

37:45

walls are lined with photos and mementos

37:47

from her career as a newspaper reporter

37:49

and attorney. In 2022,

37:52

Mays, a Democrat, narrowly

37:54

won election as the state's top law

37:56

enforcement officer. Her campaign

37:58

was about voting rights.

38:00

public safety, and water.

38:02

If there's one thing Arizona depends

38:05

on, it's water. That's why I

38:07

was outraged when I heard that Arizona

38:09

is giving our water to a Saudi

38:11

Arabian-owned farm to grow

38:13

crops for export back to the Middle

38:16

East. For free.

38:18

Maize tells me she used

38:20

the mega farm owned by the Saudi Arabian

38:22

company in her election campaign to

38:25

highlight the absurdities of state water

38:27

policies. This is a story

38:30

at bottom about

38:33

the neglect and negligence

38:36

of state government over

38:39

a number of years. That's why

38:41

so many Arizonans say,

38:45

are you kidding me? Why

38:47

are we allowing a Saudi-owned corporation

38:50

to stick a straw on the ground and suck

38:53

so much of our water out and send alfalfa

38:55

back to Saudi Arabia and not charge

38:57

them a dime for the water? It

39:00

is bonkers. If

39:02

it was a movie,

39:03

you wouldn't believe it. The

39:05

water crisis and how it's impacting

39:07

rural communities touches Maize at

39:10

a personal level. I grew up

39:12

in western Arizona.

39:13

My family

39:15

and I would often go to

39:17

a place called the Santa Maria River, which

39:20

is barely a river anymore because

39:23

of drought and climate change. But

39:26

I love western Arizona.

39:29

I pull out some of the documents

39:31

I've uncovered about who's funding IFC.

39:33

I don't know what you found, but

39:36

knowing you, you found something.

39:38

If you look here on page 77 of the

39:40

report, I was

39:43

able to definitively show that state

39:45

pension fund money went into

39:47

lands being leased by another Middle Eastern

39:50

company that's shipping, growing the

39:52

alfalfa and shipping it overseas to China,

39:54

the Middle East, anywhere, presumably, that'll pay

39:56

top dollar for it. Is this the Emirati

39:59

farm? Oh my God. And

40:01

so that is... Can I have a pen? May

40:03

squints her eyes and starts taking notes.

40:06

This isn't the Saudi-owned farm that she campaigned

40:09

against. This is the farm

40:11

company from the United Arab Emirates. The

40:13

Emirati farm is actually

40:16

state pension fund money. State pension fund

40:18

money? So all of you are presumably pension

40:20

fund

40:21

money. Correct. We're all in that pension fund,

40:23

yes. I mean, as individuals, every

40:25

state employee is, yeah. So

40:27

the state employee money has gone into

40:30

exporting the state's water.

40:32

I think Arizonans are going to

40:34

be outraged about

40:36

this. It just exacerbates

40:39

an already terrible situation

40:41

and shows, again, the

40:43

abject failure

40:46

of our government to protect our people

40:48

and to protect our future as

40:50

an Arizonan and as the

40:53

attorney general. It was obviously

40:56

really shocking and

41:00

hard to believe, but

41:02

in a way, maybe not, given what's going

41:05

on in the past. I ask

41:07

May's if it's a conflict of interest

41:09

that state employees who are in charge of

41:11

managing the aquifers are also

41:14

financially benefiting from letting IFC

41:17

pump as much water as it wants in La Paz

41:19

County.

41:19

That's a tough one. I think I'll not

41:22

comment on that because then you really need to think it through

41:24

and we really need to get to the bottom of it.

41:26

And obviously your reporting is going to kickstart

41:28

that process. May's tells

41:30

me the state can't keep making

41:33

these mistakes with its water. Water

41:35

in Arizona is life. Our

41:38

very survival as a state

41:40

depends on our doing better

41:43

when it comes to water.

41:45

I share with May's the doomsday scenario

41:47

for La Paz County that I'd heard from

41:50

Sarah Porter of the governor's water council.

41:52

wells

42:00

and their home value because there's no value in their

42:02

home once they lose their wells. And that's

42:04

what it is. I'm sorry. No, that's

42:06

not the case. In many cases,

42:09

these communities well

42:11

predate these farms

42:14

as a state. We have to act with urgency

42:16

because people are actively being harmed.

42:19

There are farmers, small farmers

42:21

and cattle ranchers whose wells have

42:23

gone dry. There's a trailer

42:26

park that apparently has had its

42:28

well go dry and all

42:30

because of the deep water

42:34

farming that's

42:35

going on in this area. And that's

42:37

just not okay. What can you do about it as

42:39

attorney general? Well, I'm attacking it from

42:42

pretty much every angle that I

42:44

can within the boundaries of my authority.

42:47

Mays has tried to stop the Saudi owned farm

42:49

from expanding, but so far

42:52

she's only managed to revoke two well

42:54

permits because of improper paperwork.

42:57

She's also called on the state's water

42:59

agency to fulfill its mandate and

43:01

assess how much water is left in

43:03

rural aquifers. They still haven't

43:06

done it.

43:06

You know Holly or when the county supervisor? Yes, very

43:09

well. Holly has been asking for

43:11

that hydrologic study for eight

43:13

years since the Saudi story came out. Yeah,

43:15

it is outrageous.

43:16

It is begging

43:20

for a hydrological study. I

43:23

mean, this is one of the greatest

43:25

scandals in the history

43:27

of Arizona. Mays says

43:30

lawmakers need to pass legislation

43:32

to reform the state's water laws.

43:35

And if they don't, she's even proposing

43:37

going around them.

43:38

We have an obligation to protect

43:40

all Arizonans, whether

43:42

it's a ballot initiative in the next year

43:44

or two, or it's a lawsuit

43:47

by me, we are going to

43:49

get this done.

43:53

It doesn't matter what you are, you should be able

43:56

to work the issue and

43:58

leave the politics behind. you

44:00

and get to some solutions. Holly

44:03

Irwin, the Republican County Supervisor

44:05

from La Paz, has forged close

44:07

ties with Chris Mays and other powerful Democrats.

44:11

Mays calls her the Aaron Brockovich

44:13

of water in Arizona. That

44:15

growing bipartisanship gives Holly

44:17

some hope that her desert community can

44:20

survive.

44:20

It's an emotional roller coaster. Some days

44:22

you want to give up. Some days I cry,

44:25

you know, and just to turn around

44:27

and to get up and fight another day.

44:31

I hate being told no. I mean, that's

44:33

one of my biggest things is I hate, I hate

44:35

being told there's no solution.

44:37

I

44:39

want to talk to the executives at the International

44:41

Farming Corporation to ask them

44:44

about what's happening in La Paz because

44:46

the company's trademark pledge is to quote,

44:49

leave the land better than we found

44:51

it. And that's not what I'm hearing

44:53

is happening from the Goodmans or from

44:55

Holly or from the Attorney General. So

44:58

I call IFC executives, leave

45:00

the messages and emails.

45:02

Eventually, their PR firm reaches

45:05

out. Yeah, hi Jenna, this is Nate Helverson

45:07

with Reveal. I'm

45:09

out here in Arizona and I'm working on a story.

45:12

We speak for five minutes and she says

45:14

she'll get back to me.

45:16

A few days later, I get the answer. Executives

45:19

won't talk to me. Instead,

45:21

the rep sends me an email saying that IFC

45:24

complies with state water laws, uses

45:27

advanced irrigation systems and

45:29

is committed to the long term success

45:31

of the local agricultural communities.

45:34

And the statement acknowledged a need to balance

45:36

water availability with demand. Next,

45:41

I reach out to the Arizona State retirement

45:43

system. I request an interview

45:46

with executive director Paul Mattson.

45:48

I even go to his offices in Phoenix. Hey,

45:51

good morning. I'm

45:54

a journalist with the Center for Investigative

45:56

Reporting and I've been emailing with... Again,

45:58

no interview.

46:00

One of the things I wanted to ask was

46:03

whether the state retirement system considers

46:05

the impact of their investments

46:07

on rural communities like La Paz.

46:10

A spokesperson did send me an email that

46:12

boils down to this. Arizona's

46:15

retirement system has a mandate

46:17

of quote maximizing returns

46:20

within prudent risk.

46:23

And this particular investment was an

46:25

alternative to the stock market that

46:28

they say would perform well even during

46:30

high inflation.

46:32

The retirement system wouldn't say how much

46:34

it made off the fund due to quote confidentiality

46:37

provisions but it did say IFC

46:39

was cashing out the fund and

46:42

within a year the state's investment would

46:44

be down to zero.

46:48

Even without interviews there

46:50

are other ways to get insights into IFC.

46:54

I get my hands on an IFC

46:56

prospectus, a highly detailed

46:58

document intended for its investors

47:01

and in it IFC spells

47:04

out its vision. Company executives

47:06

see water as essential to

47:08

making money. As water gets

47:10

more scarce in places like Southern California

47:13

and Arizona they say controlling

47:16

those limited supplies will drive

47:18

profits.

47:19

It's almost like the crisis the West is

47:21

going through the heat waves,

47:23

the droughts, the falling

47:26

level of the Colorado River.

47:28

They're almost like selling points

47:30

to investors, opportunities for

47:32

making a profit and

47:34

I don't have to go far to find other places

47:37

where IFC bought up land. This

47:43

past spring I drove west along

47:46

Interstate 10 to where the sparkling

47:48

emerald green Colorado River narrows.

47:51

A bridge takes me across the state line and

47:53

into another desert town Blythe,

47:56

California. 150 years

47:58

ago

47:59

Blythe hit the jackpot when it comes to

48:02

water rights. In 1877, it was the first place

48:04

in the U.S.

48:07

to be granted a legal right to Colorado

48:09

River water. And because of that,

48:11

it's at the front of the line, so that before

48:14

L.A. or Phoenix get their water, Blythe

48:17

takes all it wants. This

48:19

teeny town gets more water than

48:22

the entire state of Nevada.

48:24

And just like in La Paz,

48:26

big farming investors have moved in. About 10

48:30

years ago, IFC came here again,

48:32

backed by the state of Arizona's retirement

48:35

fund. We're pulling

48:37

up and this looks just like Arizona.

48:47

This hay is stacked so tall that if

48:49

they collapse, I would 100% die. The hay

48:52

is probably two stories

48:54

tall. Just

48:57

before I got here, IFC sold this

48:59

land to another investment firm, this

49:02

one from New York. IFC

49:04

is also planning to sell their property in

49:06

La Paz and had it listed for

49:08

three times what they paid for it. This

49:11

is their model for making money. They

49:13

buy the land, rent it to a farming

49:15

company for several years, and then

49:17

sell. If all goes well,

49:20

the retirement fund gets a good payout.

49:22

IFC moves on, the next company

49:25

takes over, and in this case, continues

49:28

to grow hay. Lots of hay, this

49:30

time instead of with groundwater, they're

49:32

growing it with Colorado River water, which

49:35

has wound its way all the way down

49:37

from the Rocky Mountains, through the

49:39

Grand Canyon, through the desert to

49:41

get here. Flocks

49:44

of starlings are roosting on a giant

49:46

tree. The land

49:47

around me is flat, with green

49:49

squares of alfalfa crisscrossed

49:52

by narrow dirt roads. Alfalfa

49:54

is bringing in big bucks, and

49:57

a lot of the hay in this area is for export.

49:59

As I sit

50:02

here and stare at this effectively

50:04

virtual water, I know that someone's going

50:06

to come and start stacking it up onto

50:09

an 18-wheeler. I've seen so many 18-wheelers

50:13

packed with hay, which is then going

50:15

to slowly make its way halfway around

50:17

the world to places where water

50:19

has also become a huge issue. This

50:25

global grab for water, driven by

50:27

countries like Saudi Arabia and the United Arab

50:29

Emirates, is now being funded

50:31

by pension funds across the

50:33

U.S., not just Arizona's. It's

50:36

retirement money for New York City teachers,

50:39

union workers from California and

50:41

Michigan, even Carnegie

50:43

Hall, all invested in land

50:45

deals here in the arid West. It's

50:48

big business, so long as

50:50

there's water.

51:00

That was Reveals Nate Halverson. Our

51:02

new documentary film, The Grab, features

51:04

more of Nate's reporting on the scramble

51:07

for food and water resources, not

51:09

just in Arizona, but around the globe.

51:12

To find out more about the documentary, visit

51:14

thegrabfilm.com.

51:17

Michael Montgomery was the lead producer for this

51:19

week's show. He had help from Ike Shreeves

51:21

Khanderaja. Cynthia Rodriguez was the

51:24

editor. Special thanks to Gabriella Calperthwaite,

51:27

Joe Bill Munoz, Mallory Newman,

51:29

Amanda Pike, David Richer, Emma

51:31

Schwartz, Yin-Wu Shi, Deborah

51:33

Sousa Silva, Jonathan Ingalls,

51:35

Davis Kuhn, and to Impact Partners.

51:38

Nikki Frick is our fact checker. Victoria Baranetsky

51:40

is our general counsel. Our production managers

51:43

are the Wonder Twins, Zulema Cobb

51:45

and Stephen, my brother from another mother Rascone.

51:47

Score and sound design by the dynamic

51:50

duo Jay Breezy, Mr. Jim Briggs, and Fernando,

51:52

my man Yo Arruda. Our post-production

51:55

team this week also includes Claire

51:57

C. Note Mullin. Our CEO is Robert

51:59

Rosenthal. Our COO is Maria

52:01

Feldman. Our interim executive producers

52:03

are Taki Telenides and Brett Meyers. Our

52:06

theme music is by Kamarato, Lightning.

52:08

Support for Reveals provided by the Riva and

52:10

David Logan Foundation, the Ford Foundation,

52:13

the John Dee and Catherine T. MacArthur Foundation,

52:15

the Jonathan Logan Family Foundation, the

52:17

Robert Wood Johnson Foundation, the Park Foundation,

52:20

and the Hellman Foundation. Reveal is

52:22

a co-production of the Center for Investigative Reporting

52:25

and PRX. I'm Al Letzen,

52:27

and remember, there is always more

52:29

to

52:29

the story.