February 10, 2012

Opposition Forms Against Sending Desert Water To The OC

Cadiz Valley water project geographic footprint. (ESA)
Mark Gutglueck
San Bernardino County Sentinel

Belated opposition is hurriedly forming to a plan that would pump an average of 50,000 acre-feet of water per year out of the aquifer in San Bernardino County’s eastern Mojave Desert and convey it in a pipeline to Riverside, Orange and Los Angeles counties to replenish the water supply there.

The Santa Margarita Water District, which services an area that is more than 200 miles from the Cadiz Valley, is the lead agency for what is called The Cadiz Valley Conservation, Recovery and Storage Project. As the lead agency, the Santa Margarita Water District, the second largest water district in Orange County, will oversee the California Environmental Quality Act (CEQA) review process for the project.

Santa Margarita will work with the Cadiz Land Company in the proposed undertaking, which is a modified version of the Cadiz Water Project floated by Cadiz Land and the Metropolitan Water District more than a decade ago. The original project called for the Cadiz Land Company pumping water from the Colorado River during wet years, storing it in an underground aquifer beneath the Cadiz Valley, and selling as much as 60,000 acre-feet of the native groundwater and Colorado River water mix to the Metropolitan Water District (MWD) in Los Angeles during dry years. That proposal was ultimately rejected by the Metropolitan Water District’s board of directors after conservationists raised concerns over possible environmental damage. The MWD’s rejection of the project led to expensive litigation between the Cadiz Land Company and the MWD.

The concept lay dormant for six years but in 2008, the Cadiz Land Company, also known as Cadiz, Inc., revived the plan in modified form, emphasizing less the drawing of water from the Colorado River and instead proposing to obtain much of the water from sources feeding the area’s dry lakes that are subject to evaporation. The revived project was given a tentative budget of $536.25 million and is to entail the sinking of 34 wells into the desert and construction of a 44-mile pipeline along a railroad right-of-way until it meets up with the aqueduct that carries Colorado River water to the Los Angeles and Orange County metropolitan areas.

Through the arrangement with the Cadiz Land Company, the Santa Margarita Water District will receive the lion’s share of the water. In addition, Cadiz, Inc. has entered into agreements with Three Valleys Water District, which provides water to the Pomona Valley, Walnut Valley, and Eastern San Gabriel Valley; the Golden State Water Company, which serves several communities in Southern California, including Claremont; Suburban Water Systems, which serves Covina, West Covina and La Mirada; and the Jurupa Community Services District, which serves Mira Loma in Riverside County.

The Cadiz Valley is located just south of the Marble Mountains and northeast of the Sheep Hole Mountains near the National Trails Highway. Cadiz is home to a former railroad stop along the Santa Fe line, 17 miles east of Amboy and 70 miles from Needles.

The public hearings related to the Cadiz Valley Conservation, Recovery and Storage Project were held in Yucca Valley, which is 85 miles from Cadiz, and in Rancho Santa Margarita, which is 217 miles from Cadiz. Many of those directly impacted by the project, including the Bolo Station Water Company, which serves the Cadiz Valley and the property immediately adjoining that of the Cadiz Land Company, was not provided notice of the hearings.

Among those at the forefront of the movement to oppose the Cadiz Valley Conservation, Recovery and Storage Project is former Needles city councilwoman Ruth Musser-Lopez, who was previously employed as a Bureau of Land Management Archaeologist assigned to the California Desert District and was active in opposing the Cadiz Water Project in its first incarnation.

Musser-Lopez decried the project as one that would confiscate a vital and rare resource from the desert region. She said the Cadiz Land Company and the Santa Margarita Water District had formed an unholy alliance of a rapacious corporation and a quasi-governmental agency that was abusing the approval and environmental certification processes to violate the rights of the region’s residents, and depriving future generations of desert dwellers of access to water.

Both the Santa Margarita Water District and the Cadiz Land Company have represented the project as one that is aimed at “conservation” of water otherwise lost to evaporation. A major selling point is that the project will represent a $138 million boon to the East Mojave’s economy that will directly or indirectly create 2,090 jobs for four years, involving $53 million in wages or salaries to workers or proprietorships involved in building the pipeline and other elements of the project.

Musser-Lopez, however, charged that “the Cadiz Land Company and the Santa Margarita Water District are promising the residents of the desert a short term gain in the form of temporary construction jobs in exchange for this huge long term detriment. What this project is about is having water taken from San Bernardino County’s desert to be used in Orange County. Why should we allow a small company to utilize that water resource elsewhere?”

Musser-Lopez found particular fault with the manner in which the public hearing process for the project was conducted. She said those with the greatest stake in the region’s water supply were practically excluded from participation in the approval process when the hearings were conducted in Joshua Tree and in Santa Margarita at locations far removed from the Cadiz Valley and its residents and land owners.

She further suggested that utilizing the Santa Margarita Water District as the lead agency on the project was a violation of both the California Constitution, the California Code of Regulations and the California Environmental Equality Act. In particular, she cited 14 CCR § 15051 (b) of the California Administrative Code which states, “If the project is to be carried out by a nongovernmental person or entity, the lead agency shall be the public agency with the greatest responsibility for supervising or approving the project as a whole. The lead agency will normally be the agency with general governmental powers, such as a city or county, rather than an agency with a single or limited purpose such as an air pollution control district or a district which will provide a public service or public utility to the project.”

Musser-Lopez told the Sentinel, “This law is binding. I believe this is grounds for an injunction.”

Accordingly, Musser-Lopez lodged a complaint with the San Bernardino County district attorney’s office’s public integrity unit as well as with the San Bernardino County grand jury, alleging “the public was misled to believe that they would get a real hearing with regard to the content of the environmental impact report as the California Environmental Quality Act provides for,”according to a draft of the grand jury complaint acquired by the Sentinel. In that complaint, Musser-Lopez makes much of the consideration that the logical and legal lead agency on the project, San Bernardino County, had been bypassed.

At a hearing for the project held in Joshua Tree on February 1, 2012, Lopez-Musser notes in the draft grand jury complaint, the Santa Margarita Water District’s “chief engineer who was running the meeting made a statement on the record that San Bernardino County authorized the Santa Margarita Water District to be the lead on the California Environmental Quality Act document. If this is true, I did not see this stated in the environmental impact report. There are many people who would like to know when the supervisors made this decision and in what forum.”

Musser-Lopez cited “the unreasonable burden of travel expense to attend meetings 200 and 85 miles from the project site” in her complaint to the district attorney’s office’s public integrity unit.

Moreover, Musser-Lopez alleged, allowing the Santa Margarita Water District (SMWD), the jurisdiction of which does not include the Cadiz Valley nor any portion of San Bernardino County, to serve as the lead agency and oversee the compliance of the project with the California Environmental Quality Act, including processing and accepting the environmental impact statements and reports with regard to the project, is improper and a conflict of interest that was an outright corruption of the process.

“Since its jurisdiction is in Orange County, the SMWD inappropriately misidentified itself as the ‘lead agency’ on the project when the lead agency is obviously San Bernardino County, since our own elected county supervisors have the most authority to approve or disapprove a project which is totally encompassed within the county of San Bernardino,” Lopez-Musser said. “How does being a potential customer of Cadiz Water make SMWD a ‘participant’ in the Cadiz Corporation Project which would justify an Orange County water district being in a position to certify an EIR [environmental impact report] in San Bernardino County? There are lots of potential customers, including San Bernardino County water districts. Interestingly, the Metropolitan Water District, which was originally involved in the project, is not identified as a participant in the project and their Colorado River canal absolutely is a necessary component of the project, making the MWD a key agency on this project. Citizens of San Bernardino did not elect the SMWD board or vote on the formation of their district. SMWD has no right to come up here and try to shove this project down our throats after we already defeated it once.”

Furthermore, Musser-Lopez charged, “They are withholding evidence from the EIR. They are saying the desert’s aquifers are not a complex hydrological system and that the water table is not connected to the springs up above and that the water tables are not connected. There is no evidence to back that. The water tables are connected and there are fissures in the bedrock and granite separating them. What is done to one aquifer impacts the adjacent water tables. It is rightfully San Bernardino County who should be the lead agency and the county planning department should be the lead in the preparation of the environmental impact report.”

Musser-Lopez was highly critical of supervisor Brad Mitzelfelt, in whose First District the Cadiz Valley is located.

“He completely abrogated his responsibility as our county’s representative,” she said. “It was absolutely shameful. At those hearings there was no one from San Bernardino County representing us. They left it entirely up to water district officials from Orange County to run the show and dictate how our water is going to be used and where.”

Mitzelfelt has not dwelled on the environmental aspect of the project. His only public pronouncement with regard to the plan was to hail it as one that would provide “an immediate infusion of economic stimulus" to the Eastern Mojave.

Since Mitzelfelt was appointed to the board of supervisors in 2007, the Cadiz Land Company has been one of his major political backers, having contributed a total of $48,100 to his campaign fund.

  • On March 13, 2007, the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $10,000.
  • On June 30, 2007 the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $12,500.
  • On November 20, 2007 Cadiz, Inc. gave the Committee to Elect Brad Mitzelfelt $5,000.
  • On June 18, 2008 the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $5,000.
  • On October 30, 2008, Cadiz, Inc. gave the Committee to Elect Brad Mitzelfelt $5,000.
  • On May 14, 2009 the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $4,000.
  • On July 30, 2009 Cadiz, Inc. gave the Committee to Elect Brad Mitzelfelt $1,000.
  • On April 12, 2010, the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $1,600.
  • On October 6, 2010 Cadiz, Inc. gave the Committee to Elect Brad Mitzelfelt $1,500.
  • On December 10, 2010 the Cadiz Land Company gave the Committee to Elect Brad Mitzelfelt $2,500.

The Cadiz Land Company’s heavy political activity appears aimed at propounding its water resource and water rights accumulation agenda. Ostensibly, the company has represented itself as an agricultural concern, for which the accumulation of water rights was an ancillary aspect. But the company has not been able to sustain itself as an agricultural operation for well over a decade. Beginning in 1986, the company established vineyards, growing organic table grapes exclusively. In 1989, the vineyards were augmented with an organic citrus grove. Seasonal crops, including melons, peppers, squash, asparagus and beans are grown on the Cadiz ranch. The Cadiz Land Company owns, or has options on, 45,000 acres, which, according to the company’s website, are “underlain by high quality groundwater resources.” Roughly 9,600 acres of that property is zoned for agricultural use. In the environmental impact report for the the water plan, reference is made to “approximately 1,600 acres of active agricultural lands” serviced by “seven groundwater production wells located in the central portion of the Cadiz Property that supply irrigation water for the existing agricultural operation.” According to the company’s website, however, the farming concern has yet to grow beyond the 500-acre footprint that was established more than two decades ago.

Despite the fact that since 1993 the company has been celebrating the Cadiz Ranch as “the largest agricultural operation in San Bernardino County,” it has not had a profitable year at least since 1999, and sustained losses exceeding $50 million since 2007. The company’s lenders have propped it up through regular periodic infusions of cash.

In 2008, when the company publicly announced that it was looking to revive the water conservation project, it lost $16 million. At that point, the company’s operating capital had dwindled to $4.3 million. The following year, the company again turned to its longtime lender, L.C. Capital Master Fund, Ltd., for an additional $10 million in operating capital. L.C. Capital agreed to provide that money, and another $5 million the following year.

In 2010, the company continued to operate at a considerable loss, although the company continued to issue stock, and stockholders recouped an annual 4 percent return. Nevertheless, the company courted controversy when its board of directors voted to increase chief executive officer Keith Brackpool’s compensation by 210 percent for fiscal year 2010 and chief financial officer Timothy Shaheen’s compensation by 149 percent.

On June 2, 2011, a majority of the company’s shareholders expressed their disapproval, voting against the company’s 2010 CEO and top executive compensation increases.

In July 2011, San Diego-based Robbins Umeda LLP, a shareholder rights litigation firm, commenced an investigation into possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Cadiz, Inc.

The outcome of that investigation has not been publicly revealed, though it appears that L.C. Capital Master Fund, Ltd. may have lost faith in the company. More recently, Altima Partners, a privately held hedge fund company in England, has emerged as a major investor, having zoomed to being the third largest shareholder in Cadiz, just behind Water Asset Management, which lists as the second largest stockholder in Cadiz. Two months ago, Cadiz saw yet another $11 million infusion of funds, as Water Asset Management provided Cadiz with $5 million and Altima Partners put up another $6 million.

These investors have been brought in, and have so far stayed the course, not because of a belief in the company’s potential as an agricultural concern, but because of representations that the company is on the cusp of transforming itself into a major producer and purveyor of water. Company officials and Santa Margarita Water District officials have openly maintained that they will have unfettered access to the Cadiz Valley’s groundwater and have hinted that they will eventually obtain access to Colorado River Water at Lake Mead.

Questions exist, however, as to whether the company has the right to draft the water it is looking to market to the Santa Margarita Water District, Three Valleys Water District, Golden State Water Company, Suburban Water Systems, and the Jurupa Community Services District as participants in the Cadiz Valley Conservation, Recovery and Storage Project, let alone draft water in the quantities some of the company’s investors have been led to believe the company will secure in the future.

Under the auspices of the Cadiz Valley Conservation, Recovery and Storage Project, Cadiz Land is projecting pumping 50,000 acre-feet of water from the aquifer in wet years.

An acre-foot is equal to the amount of water that would cover an acre to the depth of one foot, i.e., 43,560 cubic feet, or 325,851.43 gallons, approximately the amount of water used by a typical household comprised of four people in a metropolitan area over the course of a year.

While water rights have yet to be adjudicated in that portion of the East Mojave, the Cadiz Land Company under the law pertaining to water use in the state of California would not be able to assert a right to pump any more water than it has established a pattern of using over a several year period in all of its operations. Information on the amount of water being used at the Cadiz Ranch is not publicly available. Agricultural experts, however, have told the Sentinel that under the climactic conditions prevailing in the Cadiz Valley for the type of farming operation there, a 500-acre ranch is not likely to use more than 2,000 acre-feet of water per year on average.

According to charts, formulas and calculation provided to the Sentinel by Dr. Charles Burt of the Irrigation Training and Research Center with the Agricultural Department at California Polytechnic University at San Luis Obisbo, a 500-acre farming operation in the East Mojave combining equal parts of grapes, melons, tomatoes squash and peppers would consume 1,965.2 acre-feet of water per year if sprinkler irrigation were used.

“It depends on the crops you grow, but for what you are talking about that would be a ballpark figure,” Burt said.

Cadiz Land Company officials have privately said they are utilizing closer to 5,000 acre-feet of water per year.

According to the company, the project will proceed.

“The Cadiz Valley Water Conservation, Recovery and Storage Project is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and a state-of-the-art groundwater protection program, the project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply without adversely impacting the aquifer system or the desert environment,” according to a company statement. “The total quantity of groundwater to be recovered and conveyed to project participants will not exceed a long-term annual average of 50,000 acre-feet per year.”

According to Cadiz, Inc., the project is an environmentally responsible one that should not alarm environmentalists or local land owners.

“The water project will be implemented in two phases,” the company stated. “As part of the first phase of the project, wells would be constructed on our Cadiz Valley property to actively manage the aquifer system and minimize loss of groundwater. The project wellfield will capture and conserve water that is naturally flowing into the system every year and recover water that is moving toward the dry lakes and would otherwise be lost to salt contamination and eventual evaporation. The wellfield will change the hydraulic gradient by pulling water back from its natural downward flow. Safe, established groundwater management techniques will be employed by the project operators to ensure the project is operated without causing harm to the local environment.

“The recovered groundwater would be conveyed to participating water providers from the water project area via a 43-mile pipeline to the Colorado River Aqueduct for delivery throughout the region,” the company statement continues. “The pipeline will be buried underground within an active railroad right-of-way that crosses the project area and the aqueduct. Participating water providers will also have the option to decrease or forego their water delivery in certain years, such as wet years, and carry it over to future years when it may be needed. This carry-over water would be stored in the aquifer system at the project area.”

The company statement hinted at Cadiz, Inc.’s future intention of securing drafting rights from the Colorado River.

“A second phase of the water project would make available up to one million acre-feet of groundwater storage space in the aquifer system for water imported to the project area,” according to the corporate statement. “Under the imported water storage component, water from the Colorado River or potentially the State Water Project could be conveyed to recharge basins on our property in wet years to percolate into the aquifer system, where it would be held in storage. In dry years, previously stored water would be returned to the Colorado River Aqueduct via the conveyance pipeline.”

The corporate statement makes no mention of the possibility of directing Colorado River Water stored in the Cadiz aquifer to the Los Angeles County and Orange County metropolitan area.

In its references to the water project, the Santa Margarita Water District referred to it as one that will draw upon “a potential new water source from a large, renewable aquifer located in the eastern Mojave Desert in San Bernardino County. If implemented, the Cadiz Project would diversify SMWD’s water portfolio and help drought-proof the district to ensure its water demands are met regardless of the state’s supply.”

Both Cadiz, Inc. and the Santa Margarita Water District have succeeded in having the public input period relating to the project closed down as of February 13. As more of those to be impacted by the project have become aware of it, they are seeking, like Musser-Lopez, to revamp the terms of the approval and CEQA processes, and removing Santa Margarita Water District as the lead agency on the project.

“I'm one of over 1,100 property owners in the Fenner watershed that has never been directly informed that the Cadiz project could impact my groundwater,” said Chris Ervin. “I have a well on my Round Valley property, as do many of my neighbors. The purpose of Cadiz's pumping is to induce water from the high country--where our properties are located--to flow downhill to refill the Cadiz Dry Lake aquifer. We are therefore concerned the Cadiz water project may affect the quantity and/or quality of our groundwater upon which we depend in the desert.”

Leigh Adams, who maintains a residence in the Los Angeles County community of Altadena but is also a desert landowner with property in Rimrock above Pioneertown, considers herself a desert stakeholder. She harvests storm water on both her desert property and her Altadena area property.

“I am vehemently opposed to the Cadiz project,” she told the Sentinel. “It is water piracy, a vile theft from desert wildlife and human beings. The concept of water evaporating being “wasted water” is simply ludicrous! This is a lousy idea. Orange County has lush lawns and swimming pools that are thirsty for water. Let Santa Margarita use the money they propose for this project for education of home and business owners around the topic of conservation. Fifty percent of the water in our communities is used for watering lawns. We buy water from other areas to replace the water we’ve allowed to run off into storm drains and gutters. When those areas, the Sacramento Delta, the Colorado River, Owens Valley, run out of water, we propose to steal it from somewhere else. Reprehensible!”

David Fick, of Joshua Tree, said that he was highly skeptical of the project in its present form. “Going back ten to 12 years ago, it was a water banking scheme to put water in and out of the aquifer and this time they are just going to be taking water out. The proponents of the project say there is 32,000 acre-feet of natural recharge into the basin, but they have not proven that and I do not think that is the case.”

Fick said removing that much water from an already parched environment was not a good idea.
“The desert flora depend on the humidity in the air,” Fick said. “The vast majority of moisture in the desert comes from the dew point, which becomes available to the plants as condensation. When the night temperature drops the air’s moisture-holding capabilities, down comes the life-giving water and it is that cycle which waters the plant life. Removing 50,000 acre-feet of water will have a devastating effect on the Joshua Trees and the desert ecosystem altogether.”

Paul Collett, who with his brother owns 40 acres with a well near Bolo Station, which is west of Cadiz and overlies the same aquifer, called the project “a down and out illegal use of our water. This is a violation of our water rights. The Cadiz Company has an entitlement to some of that water but it belongs to all of us out here, including the Bureau of Land Management. To take that water and sell it to somebody that far away is more than a violation of the law. It’s an abomination. The supervisors should know better than to allow Cadiz Land to draw water from everybody and sell it to Orange County for their profit. It is astounding that it has gone this far. Nobody that I know of along the National Trails Highway – Route 66 – was notified of any meetings or the intent to take our water. All of a sudden, we do not have any assurance that the water table we use and which the landowners along this highway depend on for their livelihoods will have water in the future. Something is drastically wrong here.”

Seth Shteir of Joshua Tree is the field representative for the California desert office of the National Parks Conservation Association. He said he had “concerns about the potential impact of this project on ground water resources, air quality, the desert’s ecosystems and the future of the Mojave National Reserve. There are shortcomings in the EIR. It is a document almost 3,000 pages long that raises more questions than it answers. What will the long term effects of this project be on federally designated wilderness areas and what will it be on the Mojave Preserve? How will this project impact regional ground water resources? What will be the effects on air quality? The association raised funds and hired our own hydrologist to look into and examine the Cadiz Company’s claims because we believe their EIR modeling is flawed. Cadiz is claiming the recharge into the Cadiz Valley is 32,500 acre-feet annually, which is greater than the combined recharge in the stream flow of the Big Pine-to Bishop area in the Eastern Sierra Nevadas. Our hydrologist has looked at that issue and thinks the recharge is more around 14,000 acre-feet per year in terms of the closed basin’s desert watershed. Because the modeling is flawed, it is difficult to assess the impacts of the project. It is also difficult to assess those impacts because of the scope and magnitude of the project.

The opposition to the project includes one of Orange County’s leading citizens, former Huntington Beach mayor Debbie Cook.

“This is one of the most outrageous proposals I have seen in my 25 years as an environmental activist,” Cook said. “That in this day and age a private developer would come in and extract groundwater from an ecologically sensitive desert aquifer without any kind of recharge is unbelievable. That a water agency from the coastal area is going that far inland to take water out of the desert, as if the desert has no need for the water, makes no sense. What entitles them to pull that water out of the ground and sell it elsewhere?”

“The EIR has numerous flaws,” Cook continued. “Their recent statements at the hearing in Joshua Tree make it clear they have no intent to do recharge. The EIR makes it clear they will not do recharge and that they are interested only in pulling water out of the aquifer and will never achieve phase two, which they have left for some future unknown entity to do.”

Musser-Lopez said, ““What entitles one small, barely break-even farm, Cadiz, currently using only 2,000 to 5,000 acre-feet of water per year for their operations, the right to sell 50,000 to 75,000 acre-feet per year of San Bernardino County’s water at a fluctuating price of $300 to $700 per acre-foot, for a potential profit of $15 million to $50 million per year? Cadiz claims that they are entitled to this massive amount of groundwater based on the harebrained idea that a small amount of water evaporating on a desert dry lake, after a seldom rain, is a waste of water, and that this small amount of evaporation justifies Cadiz Corporation to take all the groundwater before it has a chance to reach a spot where it might evaporate. Demonstrating the unsound reasoning behind this scheme, Cadiz also proposes to reclaim excess water during wet years by putting it back in the very place they say water is being wasted by evaporation.”

Ervin, Adams, Fick, Collett, Shteir, Cook and Musser-Lopez said they are resolved to a complete reexamination of the project under different terms. “We want to move the hearing process out from under an Orange County quasi-governmental entity to before the San Bernardino County Board of Supervisors,” Musser-Lopez said. “We want individuals who represent us and who are answerable to us as part of the elective process to make this decision. We want to ensure an environmental review process that will not exclude data relevant to the conservation of the desert’s most precious resource and we want to have included in the environmental impact report by reference all of the data that was presented with regard to this project ten years ago, when it was rejected.”

Collectively, the project opponents are requesting a 90-day extension of the deadline for public input on the project.

Judie Panneton, a spokeswoman with the California Water Control Board in Sacramento, told the Sentinel, “Regarding the groundwater component of the Cadiz Valley Water Conservation, Recovery, and Storage project, based on the staff’s initial review, it does not appear that it is subject to the permitting authority of the State Water Board, Division of Water Rights. According to current law, the State Water Board does not have authority to issue permits for diversion of percolating groundwater. In certain areas when groundwater is pumped, it may be subject to regulation by a local entity, like the county or a groundwater management district, even if you do not need a water right permit. The law does require that anyone annually extracting more than 25 acre-feet of groundwater within the counties of San Bernardino, Ventura, Riverside, or Los Angeles to file an annual report of their extraction with either the State Water Board or a local groundwater agency.”