Friday, May 11, 2007

Investigation could impact copper, water deals

The FBI investigation into a land deal involving Arizona Congressman Rick Renzi could affect the Resolution copper mine and water resources in the Upper San Pedro Basin, with further domino-like impacts.

The Arizona Daily Star last month reported that:

“a 480-acre retired farm on the San Pedro River, …could also threaten the future of Fort Huachuca, officials say. There are concerns that the farm — the critical property in two failed land swaps aimed at protecting the San Pedro — could now be put back into agricultural use, jeopardizing efforts to balance water use in the region, which in turn could force cutbacks or even closure of the fort. … Critics say the first failed swap benefited James Sandlin, a friend and former business partner of Renzi's.”

“Because of its closeness to the San Pedro and the amount of water the retired farmland once used, the Sandlin property is crucial to the river and, in turn, neighboring Fort Huachuca, which is under court order to cut water consumption in and around the river.

“The fort’s future and the future of the San Pedro are inextricably linked,” said Col. Jonathan Hunter, the fort’s garrison commander.”

Bill Hess of the Sierra Vista Herald/Review wrote yesterday that, “The land involved in the swap has been put back on the market. [emphasis added] Some believe that if it is sold to a developer or to an agricultural business, water will again be pumped to the detriment of the river and the partnership’s goal of finding ways to conserve water."

The Herald reports that the water deficit in the Upper San Pedro Basin - the difference between what is being pumped from the aquifer and what is being recharged – is 10,800 acre-feet, instead of the previously measured 7,700 acre-feet, according to the U.S. Geological Survey. The higher number is due to better quality measurements.

This double whammy will make it harder to meet the region's water goals.

Another twist on these complex deals is a recent Wall Street Journal story that described the land deal role in the Resolution copper mine:

“North America's largest copper lode is believed to be buried more than a mile beneath Apache Leap, the stark red cliffs that loom above this storied Old West town about an hour east of Phoenix. Resolution Copper Co., a joint venture between Rio Tinto and BHP Billiton, wants to mine it. But first it needs Congress to approve a federal land exchange, under which Resolution would swap 5,000 acres of private land for 3,000 acres of public land near its planned mine.

In exchange for supporting the bill, the local congressman, Rick Renzi, a Republican, insisted on something in return: He wanted Resolution to buy, as part of the land swap, a 480-acre alfalfa field near his hometown of Sierra Vista, according to documents and people involved in the deal.

Resolution executives refused. For starters, they thought the land was overpriced, people close to the deal say. More troubling, they discovered it was owned by Mr. Renzi's former business partner, these people say.

Resolution wasn't the only party troubled by the congressman's demands. His chief of staff resigned and began cooperating secretly with the Federal Bureau of Investigation, according to witnesses and others close to the case. The FBI began a preliminary inquiry that was first reported in October, just before Mr. Renzi was elected to a third term.”

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