OFFICE OF THE SECRETARY

FOR IMMEDIATE RELEASE: May 21, 1997

Stephanie Hanna (O) 202/208-6416

Secretary of the Interior Bruce Babbitt announced that, following days of marathon negotiation sessions, the San Carlos Apache Tribe has reached a favorable settlement with Phelps Dodge Corporation over use of the Tribe’s water and the ownership of a pumping station and pipeline located on reservation lands.

“This is truly a landmark settlement that has resolved decades of dispute and the potential for lengthy, contentious court battles,” Secretary Babbitt said. “The ceaseless hours of effort put in by our negotiating team during the past few weeks should send a strong signal that the Clinton Administration will fight hard for fair resolution to these long-standing Indian water rights disputes.”

The terms of the settlement announced today will be included as part of Congress’ 1997 Supplemental/Rescission bill providing emergency flood funding and disaster relief that is now in conference. Congressman Jim Kolbe (R-AZ) will add to his amendment in the House-passed version of the bill to include the exact settlement terms and language agreed upon by both the Tribe and Phelps Dodge. The settlement will become law when President Clinton is able to sign the Congressional emergency funding legislation into law.

“Although it is not strictly necessary to have Congressional legislation on all aspects of this settlement, it is helpful to have the exact terms set in law so that there is no incentive to derail any aspect of this complex agreement during the 18-month implementation process,” Babbitt explained.

Under the settlement terms, Phelps Dodge employees will vacate the San Carlos Apache Reservation and abandon the pump station, pipeline and a disputed right-of-way on Reservation lands by July 23, 1997. At that time, the Interior Department’s Bureau of Reclamation will operate the pump station and pipeline during an interim period of up to 18 months and will provide an agreed-upon amount of water to Phelps Dodge for operation of its Morenci copper mine. Phelps Dodge will pay the Tribe $25,000 per month for use of Reservation lands and will pay all costs associated with Bureau of Reclamation interim operations so that no costs from the settlement are borne by U.S. taxpayers.

When the Bureau of Reclamation has had appropriate time to train members of the Tribe to maintain and operate the pump station and pipeline, Phelps Dodge will surrender its interest in all facilities and electrical transmission lines on Reservation lands and will no longer divert water from the Black River into the pipeline system or pump groundwater adjacent toReservation lands. Instead, the San Carlos Apache will lease about 14,000 acre feet of water to Phelps Dodge that will result in payments to the Tribe of about $1 million per year in charges for the water and distribution system. In addition, Phelps Dodge will provide an initial cash payment for the lease of $5 million, and will pay all costs associated with the operation, maintenance and replacement of the pump station and pipeline facilities from which the mine benefits.

The Tribe will also agree under the settlement to dismiss a damage claim recently brought against Phelps Dodge in Tribal Court, while reserving the right to seek legal recourse for past damages against Phelps Dodge in federal court if necessary in the future.

The San Carlos Apache Tribe has asked that most of the income derived from the settlement and the lease to be held in trust for members of the Tribe in the future. In addition, the agreement makes possible the full implementation of the 1992 San Carlos Settlement Act, under which the Tribe will receive a $41 million trust fund and the right to market significant amounts of water. The 1992 Act would have expired at the end of June had the new agreement not been reached.

“All parties to this settlement are winners and all are to be commended for having stuck it out through hundreds of hours of difficult and contentious negotiations,” Babbitt said. “The biggest winners are the San Carlos Apaches, their children and their grandchildren.”

“The Tribe has now established a new and long-term business relationship with Phelps Dodge, under which the Tribe will deliver water needed for the Morenci mine and neighboring towns at a fair price that fully compensates the Tribe for this service. At the same time, the San Carlos Apaches will now have full control over their Tribal lands and resources,” he continued. “Everyone who negotiated this agreement deserves a great deal of credit for accomplishing significant achievements under extraordinary pressure.”

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