The Arizona Daily Star reported Tuesday that work on the planned virtual fences along Arizona's border with Mexico came to a halt because the Department of Homeland Security needs Interior Department permission to use land for constructing the surveillance towers.

Barry Morrissey, spokesman for U.S. Customs and Border Protection, said without permission to use the land, officials suspended the project, for which Boeing Co. (NYSE:BA) is the lead contractor.

Construction for the first phase of the project, dubbed Tucson West, was set to begin on July 15.

The project called for the construction of 45 new surveillance towers and the upgrade of 12 existing ones to create a virtual fence along 81 miles of Arizona's border between Sasabe and a point south of Sierra Vista.

The second phase, Ajo-1, calls for 11 surveillance towers in Southwestern Arizona, including seven on the Organ Pipe Cactus National Monument.