Water, a precious commodity, becomes a sound investment for senators and their families

By Jennifer Yachnin | 06/15/2015 07:20 AM EDT

Drill deep enough into annual financial disclosures filed by members of Congress — beyond the mutual funds and the oil stocks and checking accounts — and eventually you’ll hit blue gold: groundwater in arid Western states.

Drill deep enough into annual financial disclosures filed by members of Congress — beyond the mutual funds and the oil stocks and checking accounts — and eventually you’ll hit blue gold: groundwater in arid Western states.

According to an E&E Daily review of personal financial reports filed by senators last month, at least two lawmakers disclose familial investments in land that also includes groundwater access, a potentially precious commodity in drought-stricken states.

The reports also show that another dozen Senate lawmakers or their spouses — and likely more in the House, which is set to release lawmakers’ financial reports today — also hold investments in municipal bonds aimed at shoring up water infrastructure in assorted jurisdictions across the nation.


Although the annual financial disclosures do not require lawmakers to give exact details about their finances, excluding assets like vacation homes that don’t generate income and federal retirement accounts, the reports do offer a broad view about the financial interests of lawmakers.

The reports include assets like stocks and bonds or investment properties as well as liabilities such as home mortgage debt and student loans. Those items are valued only in wide-ranging categories, such as $1,000 to $15,000 or $5 million to $25 million, and include only assets owned during the previous calendar year.

The most recent reports cover 2014.

According to the latest report, at least three senators reported owning property in Arizona, including two tracts for which well permits have been filed in recent years.

Arizona Sen. John McCain (R) reported that his wife, Cindy McCain, is the owner of Wild River LLC, which owns undeveloped land in Yavapai County north of Phoenix as well as a residence and guest house in the same area.

The investment, which generates no income, has a minimum value of $596,000. McCain’s office did not respond to a request for more information about the asset or its use.

Documents filed with the Arizona Department of Water Resources show that Cindy McCain, who heads one of the nation’s largest Anheuser-Busch beer distributors, filed a permit for a new well in 2014. The 30-gallon-per-minute well is listed as being for domestic use only, and not for irrigation or livestock.

Susanna Eden, assistant director at the Water Resources Research Center at the University of Arizona, explained that while groundwater regulations in the state limit usage in the five populated regions of Arizona — centered on Prescott, Phoenix, Pinal, Tucson and Santa Cruz — landowners are able to drill elsewhere merely by filing an "intention to drill" form.

"In the rest of the state, the groundwater law is based on reasonable use," said Eden, who discussed water law in the state generally. "All you have to do to pump groundwater in the rest of the state is be able to find the groundwater."

The land for which McCain filed for a new well is north of the Phoenix-based Active Management Area, as the restricted water zones are called, and did not require an exemption.

Sen. Dianne Feinstein (D-Calif.) likewise reported an asset owned by her spouse, investor Richard Blum, that claims a relatively new well in Arizona’s southeastern corner.

Documents filed with the Arizona Department of Water Resources show that BBA Foresight LLC — which counts former Interior Secretary Bruce Babbitt, a former Arizona governor, among its managers — permitted a well in Cochise County in 2008.

The 700-gallon-per-minute well, which is not located in a water-restricted area, was constructed to provide water to the Rain Valley Ranch development, a residential neighborhood.

The well’s construction prompted significant criticism at the time from local residents, who raised concerns that the commercial well would drain both the Upper San Pedro River Basin as well as smaller private wells.

Babbitt addressed concerns in interviews at the time, telling the Sierra Vista Herald that the 700-foot depth would alleviate any conflicts.

"We hired a hydrologist to help us with the project. We’ve gone deep enough so as not to impact local wells," Babbitt told the newspaper in 2009.

Feinstein reported that her husband’s share in the development is valued at "more than $1 million" — a special category reserved for assets owned solely by a lawmaker’s spouse or child — and earned between $2,500 and $5,000 in rental income in 2014.

The senator’s office declined to discuss any additional details about the investment — a spokesman said the office did not have any information about Blum’s finances and noted that Feinstein’s assets are contained in a blind trust — but a 2008 Arizona Daily Star report said the 5,000-acre development, purchased by an investor group for $35 million, was planned to include 1,600 homes.

Playing the bond market

Numerous senators or their families — financial disclosure is available for all but about one-fifth of the chamber’s members, who have until August to file reports — also posted investments in municipal bonds supporting water and sewer infrastructure across the nation.

Among the largest investors is Lynne Heller, spouse of Nevada Sen. Dean Heller (R). Heller reported that his wife owns between $245,000 and $600,000 in municipal bonds. The assets are included in the Brombach Family Limited Partnership, in which Lynne Heller claims a 20 percent stake.

Those investments include at least a $100,000 investment in the San Diego County Water Authority, which earned between $5,000 and $15,000 in interest last year.

Other Heller family investments include the California Department of Water Resources, Metropolitan Water District of Southern California and the Mesa Water District.

Ohio Sen. Rob Portman (R) reported that he owns several municipal bonds related to water infrastructure, including between $100,000 and $250,000 in the Ohio Water Development Authority. That investment earned him $5,000 to $1,500 in interest last year.

Portman also owns a $50,000 to $100,000 bond in the Clark County Water Reclamation District in Nevada and another $15,000 to $50,000 bond for the Cleveland Water Department.

Tennessee Sen. Lamar Alexander (R) reported that his spouse owns between $165,00 and $350,000 in municipal bonds for various home-state water projects; Wyoming Sen. Mike Enzi (R) reported that he and his wife jointly own between $2,000 and $30,000 in municipal bonds for water projects in his state; and Alabama Sen. Jeff Sessions (R) reported owning at least $31,000 in bonds for water projects in his state.