Gov. Katie Hobbs and the Arizona State Land Department have moved to terminate state land leases held by AgTech LLC and related entities, citing lease violations and operations outside the company’s permitted agricultural scope.
The action applies only to AgTech’s leases on Arizona State Trust Land. The State Land Department said it does not determine whether AgTech may continue operating on private property.
The department said AgTech’s leases were reviewed after years of inspections, direct engagement and formal compliance reviews. AgTech delivered about $150,000 annually across all of its leases, according to the department, which said the company’s other commercial activities on agricultural leases limited its ability to maximize the value of state trust land.
“Continuing to lease trust land to a non-compliant operator directly contradicts that duty,” the department said in response to questions.
The department characterized the decision as a matter of lease enforcement, not a determination on statewide biosolids policy. It said AgTech failed to maintain substantial compliance and that renewing the leases could result in continued harm to state trust land.
AgTech disputed the department’s account and said its legal counsel is reviewing the decision and preparing an appeal.
“A quick read of the renewal denial letters shows that the Arizona State Land Department has violated the due process provisions of its own leases and the statutory protections granted under the Regulatory Bill of Rights,” the company said in a statement.
AgTech said the department issued no prior allegations of noncompliance before denying the lease renewals, as required by the leases and state law. The company also said the Arizona Department of Environmental Quality had not identified concerns related to its permit, application rates, nuisance conditions or environmental impacts.
The State Land Department said four of AgTech’s five leases had been in “holdover” status while the agency reviewed renewal applications. The department said the timing of the decision was related to Senate Bill 1336, passed during the 2026 legislative session. The law established new limits on how long a lease may remain in holdover status and required the department to make a prompt determination.
AgTech said the decision could affect nearly 100 jobs and the families supported by those positions in Yuma County, which it described as having an unemployment rate as much as three times the state average.
The company also said alternatives to applying biosolids to agricultural land can cost two to five times more, with those costs potentially passed on to residents and ratepayers.
AgTech defended land application of biosolids as a widely used agricultural practice. The company said about 60% of biosolids generated nationally are recycled as an agricultural amendment in 48 states. It also cited the U.S. Environmental Protection Agency’s position that biosolids land application can improve soil health, sequester carbon and reduce demand for nonrenewable resources such as phosphorus.
The State Land Department said AgTech’s interim occupancy may continue through Dec. 11, 2026. The leases will expire on that date, and the company will no longer have the right to occupy the state land.
AgTech will then have 90 days to remove physical property from the land, according to the department. The leases contain standard reclamation provisions, and the department plans to conduct an environmental review to determine whether remediation is needed.
The department said it could not yet determine what specific cleanup or corrective actions AgTech may be responsible for.
AgTech may appeal the decision and request a hearing by submitting written notice to the state land commissioner within 30 days of Sept. 10, 2026, under Arizona law.
The department said it had no information indicating that water contamination occurred. It referred questions about potential contamination to the Arizona Department of Environmental Quality, which regulates the issue.
AgTech said it would continue working to provide service to its customers and protect its employees while pursuing legal options.
The 2026 legislation also created a legislative biosolids study committee to review the use of biosolids in Arizona and consider statewide policies. The State Land Department said it plans to participate in the committee’s work.
The lease termination does not establish a statewide ban on biosolids use. Any broader changes would be considered separately through the Legislature’s biosolids study process.
