December 21, 2012

County’s Legal Costs Near $1 Million for Cadiz

SMWD to pay legal costs for 9 lawsuits and counting...

San Bernardino County

The county of San Bernardino has sustained over $675,000 in outside legal costs and is on the brink of running up another quarter of a million dollars in lawyers’ fees as a consequence of its acquiescence in the Santa Margarita Water District’s approval of the so-called Cadiz Valley Water Conservation, Recovery and Storage Project.

All of that money will be recovered from those involved in the project, county officials said.

The Cadiz Valley water project upon completion will extract an average of 50,000 acre-feet of water from the East Mojave Desert and convey it via pipeline to Orange and Los Angeles counties for use there. The Santa Margarita Water District, which lies some 217 miles from the Cadiz Valley, assumed lead agency status on the project, which is an undertaking of Los Angeles-based Cadiz, Inc. The Santa Margarita Water District gave approval of the project, including signing off on an environmental impact statement, in July.

San Bernardino County contemplated but in March ultimately elected against challenging Orange County-based Santa Margarita’s assumption of that lead agency status on the project and instead on May 1 entered into a memorandum of understanding with that district and Cadiz, Inc. and its corporate entities, including the Fenner Valley Mutual Water Company, allowing Santa Margarita to oversee the environmental impact report for the project and conduct the public hearings related to project approval. On October 1, the San Bernardino County Board of Supervisors gave approval to a groundwater monitoring plan to facilitate completion of the project.

As a consequence of the project, San Bernardino County, Santa Margarita and Cadiz, Inc. have been named as defendants in nine separate lawsuits challenging the project’s approval. The county, on March 27, hired the San Francisco-based law firm of Downey Brand to assist county counsel in responding to any lawsuits it contemplated might be triggered by the project at what was then said to be a not-to-exceed cost of $449,322. Within four months, however, those funds had been exhausted and on July 24, the board authorized a $250,000 amendment to the Downey Brand contract, increasing the amount to $699,332. Legal billings to the county by Downey Brand have now eaten up that funding, and this week, county land use services director Christine Kelly asked the board to give approval for the expenditure of another $250,000 to cover continuing legal costs, pushing the Downey Brand contract to $949,332.

Delaware Tetra Technologies, Inc., which operates a salt mining operation in the Cadiz and Fenner Valleys, has filed four suits, each based on separate causes of action and differing applications of the law against the county, Santa Margarita and Cadiz, Inc., on May 25 in San Bernardino County Superior Court, on June 13 in Orange County Superior Court, on August 28 in Orange County Superior Court and on October 30 in San Bernardino County Superior Court.

On August 28, the Colorado River Branch of the Archaeological Heritage Association filed suit in U.S. District Court in Los Angeles against the county of San Bernardino, Cadiz, Inc., Santa Margarita Water District, the U.S. Department of the Interior, its secretary Ken Salazar, and the Bureau of Land Management over Santa Margarita’s approval of the project.

On August 31, the Center for Biological Diversity filed suit against the county, Cadiz, Inc. and Santa Margarita in San Bernardino County Superior Court.
On August 31, a group, Citizens and Ratepayers Opposing Water Nonsense, filed suit against the Santa Margarita Water District, the county of San Bernardino and Cadiz, Inc. in Orange County Superior Court.

Another lawsuit naming the county, Briones vs. Santa Margarita Water District, was filed in San Bernardino County Superior Court on August 31. And the Center for Biological Diversity filed a second lawsuit against the county and the other defendants in San Bernardino County Superior Court on November 1. In several of the lawsuits, the adequacy of the environmental certification of the project is under attack. San Bernardino County’s abdication of its land use and environmental oversight authority is also a recurrent issue in the lawsuits.

According to the memorandum of understanding the county entered into, Cadiz, Inc. and the Santa Margarita Water District are to reimburse the county for any of its legal costs relating to the project. According to county spokesman David Wert, “The county has received $650,000 in reimbursements, $135,000 from the Santa Margarita Water District and $515,000 from Cadiz, Inc.”

Wert said, “The county has incurred legal costs [related to the Cadiz water project] of $675,994.02 to date.”

An issue in the lawsuit brought by Citizens and Ratepayers Opposing Water Nonsense pertains to the Santa Margarita Water District’s assumption of the financial liability of other parties involved with the project approval. Opponents of the project have questioned whether Cadiz, Inc., an agricultural and landholding company which has not shown a profit for more than 13 years, will be able to sustain itself in the face of mounting legal challenges to the project. Those inveighing against the project not on environmental grounds but financial ones have questioned who will assume the company’s liabilities if it folds or declares bankruptcy.

Land use services director Christine Kelly stated, “The county of San Bernardino is to be reimbursed by Santa Margarita Water District, Cadiz, Inc., and Fenner Valley Mutual Water Company for all claims, liabilities, damages, or costs arising from or relating to any administrative or judicial action brought by any third party against the county, its agents, officers, or employees, that may arise from or be related to the county’s approval of the memorandum of understanding and the groundwater management, monitoring and mitigation plan.”