The suspect, who had planned to carry out an Islamic State-inspired attack on a Taylor Swift concert in Vienna, faces up to 20 years in prison if convicted.
"The Guthrie family are victims plain and simple," said Pima County Sherriff Chris Nanos, who said all family members have been cooperative in the investigation.
"The decision could lead to the dispossession of Palestinians of their property and risks expanding unlawful Israeli control over land in the area," Guterres wrote in a statement on X.
The absence of such a law places "every Israeli citizen, at home and abroad, under a real threat of abduction," argued Finance Minister Bezalel Smotrich.