Feinstein fumes as Trump team waives environmental review for Mojave water project

Scott Slater, CEO of the Cadiz water project, stands near a basin at the project site near Needles, California, Slater and Cadiz have recently gotten a big boost by a Trump administration decision that relieves the project of a federal environmental review requirement. (Noaki Schwartz AP)

BY STUART LEAVENWORTH
Sacramento Bee

WASHINGTON -- The Trump administration has handed a big boost to a private water venture in Southern California, angering California’s senior senator, Democrat Dianne Feinstein, who said the decision could “destroy pristine public land” in the Mojave Desert.

In a little-noticed memorandum issued last month, the Department of Interior’s Bureau of Land Management effectively relieved the Cadiz water project of the requirement to undergo a federal environmental review, which the company had sought to avoid. The decision greatly boosts the prospects for Cadiz, which wants to tap water from under the Mojave and sell it to thirsty water districts in Southern California.

“The detrimental impact this project would have on the California desert is irreversible,” Feinstein said in a statement. “Rather than allow a proper environmental review, the Trump administration wants to open the door for a private company to exploit a natural desert aquifer and destroy pristine public land purely for profit.”

Cadiz responded that its project has undergone multiple environmental reviews, including a California Environmental Quality Act review that survived court challenges.

Feinstein’s “opposition has done a disservice to thousands of Californians who will benefit from this public-private partnership – a project which will deliver new, reliable water without any adverse environmental impacts,” Cadiz CEO Scott Slater said in a statement.

As noted in a Feb. 8 story by McClatchy, Cadiz has seen its fortunes rise since Trump was elected. Its stock price has more than doubled since Trump’s victory, apparently because investors believe the venture will fare better now than it did when Barack Obama was in office. Slater, the company’s CEO, is a water lawyer affiliated with the Denver-based firm Brownstein, Hyatt, Farber, Schreck, an influential lobbying force in Washington.

One remaining hurdle for Cadiz is building a 43-mile pipeline necessary for shipping its water to potential customers. Prior to 2015, Cadiz assumed it could use an existing railroad right-of-way for the pipeline and do so without a costly and time-consuming federal review. Yet two years ago, the California office of the U.S. Bureau of Land Management reversed a 2009 determination and required Cadiz to seek a permit to build the pipeline.

Over the last two years, Cadiz has been lobbying Congress to overturn the BLM decision and pass legislation that would relieve it and other companies of permitting requirements on railroad right of ways. On March 1, two California lawmakers – Democrat Tony Cardenas and Republican Tom McClintock – joined 16 other congressional representatives in a letter to Interior Secretary Ryan Zinke, asking him to rescind the BLM decision and relieve the project of a federal review.

In a March 29 memorandum, Zinke’s Interior Department did just that, rescinding the 2015 decision signed by Timothy Spisak, acting assistant director for BLM’s Division of Energy, Minerals, and Realty Management.

Feinstein is the author of the 1994 California Desert Protection Act, which established the Death Valley and Joshua Tree national parks and the Mojave National Preserve. She has long opposed Cadiz, which has struggled for 15 years to get traction on different versions of its water project.

Feinstein points to analyses by the National Park Service and U.S. Geological Survey to argue that Cadiz would withdraw more water – 50,000 acre feet each year – than nature could provide to recharge the desert aquifer.

“The Trump administration has once again put corporate profits ahead of the public’s interest,” Feinstein said in her statement. “In a blatant attempt to muscle the Cadiz water project through, the administration is completely undermining federal oversight of railroad rights-of-way.”

Cadiz rejects those claims, asserting that more recent analyzes have found that the company’s proposed groundwater withdrawals pose no threat to the desert’s flora and faunta.

“Senator Feinstein regrettably relies on outdated, 17-year old data inconsistent with presently known facts as foundation to oppose a project which will safely and sustainably create new water for 400,000 people, has broad bipartisan community support, will generate 5,900 new jobs, and will drive nearly $1 billion in economic growth,” Slater said late Tuesday.

Feinstein, who sits on the Senate Appropriations Committee, has used her position before to block Cadiz and other developments she has deemed detrimental to the Mojave Desert. Whether she can again is not clear, but she pledged Tuesday to “fight this latest effort to push the Cadiz water project through.”

Trump administration boosts huge Mojave Desert water-pumping project

Environmentalists say the Cadiz project would rob the desert of the water that plants and wildlife need to survive.

A pumping station designed to help Cadiz project researchers understand how quickly water seeps into the earth is shown in this June 2015 file photo. (JOSHUA SUDOCK, STAFF FILE PHOTO)

By DAVID DANELSKI
Riverside Press-Enterprise

The Trump administration has removed a major roadblock to plans by a Santa Monica company to pump ancient groundwater from below the Mojave Desert and sell it to urban areas of Southern California.

The federal Bureau of Land Management has rescinded a 2015 administrative finding that Cadiz, Inc. needed to obtain a federal right of way permit and thus had to complete comprehensive environmental studies before it could build a water pipeline within 43 miles of railroad right of way owned by the Arizona & California Railroad.

The move follows a January decision by the Trump transition team to put Cadiz on a list of priority infrastructure projects, and a state appellate court’s rejection last year of a lawsuit filed by environmental groups challenging the project.

The $225 million Cadiz Valley Water Conservation, Recovery and Storage Project still needs approval from the powerful Metropolitan Water District to use the Colorado River Aqueduct to ferry the water to urban Southern California.

Cadiz company officials said in statement that they are pleased with the Trump administration’s decision. The statement said they have always believed “the BLM’s 2015 evaluation was contrary to law and policy.”

In 2008, Cadiz entered into a lease agreement with the railroad company to build a pipeline in between the wells it owns in the Mojave Desert area, west of Needles and south of Interstate 40, to the Colorado River, using the railroad’s right of way over federal land.

From the river area, the water could be ferried to urban Southern California using the aqueduct and reservoir system operated by the Metropolitan Water District.

“Our discussions are continuing about what would be required before they can put water in the Colorado River Aqueduct,” said water district spokesman Bob Muir.

In 2002, the water district’s board voted down an earlier version of the Cadiz project that also needed to use the aqueduct.
The project is staunchly opposed by environmental and desert advocates, who say it would rob the desert of the water that plants and wildlife need to survive.

“Many of the springs and seeps are going to dry up because of groundwater extraction,” said Ileene Anderson, a biologist with the Center for Biological Diversity.

She is particularly concerned that the pumping would harm the Mojave National Preserve and recently created Mojave Trails National Preserve [sic].

Sen. Dianne Feinstein, D-Calif., said in a statement that the new administration was muscling through the project without proper reviews. Feinstein is an ardent desert supporter who authored the California Desert Protection Act that created the preserve and other protections more than 20 years ago.

“The Trump administration wants to open the door for a private company to exploit a natural desert aquifer and destroy pristine public land purely for profit,” her statement said.

“The administration is completely undermining federal oversight of railroad rights-of-way. “

California water venture tied to Trump sees prospects rise after years of setbacks

BY STUART LEAVENWORTH
Sacramento Bee

WASHINGTON -- Until Donald Trump won the presidency, prospects looked bleak for Cadiz, a California company that has struggled for years to secure federal permits to transform Mojave Desert groundwater into liquid gold.

With the change of administration, a new day is dawning. In December, the National Governors Association circulated a preliminary list of infrastructure projects provided by the Trump transition team, and Cadiz’s was on the list. The company’s stock price rose on that news, part of a trend that has seen Cadiz’s valuation more than double – to roughly $14 a share – since the election.

Cadiz has worked hard to raise its profile among consultants compiling lists of possible infrastructure projects, says Scott Slater, CEO for the company.

But what has really helped Cadiz is its deep connections to Washington. Slater is part of a Denver law firm – Brownstein, Hyatt, Farber, Schreck – whose attorneys have long lobbied the Interior Department, with some serving inside of it. One of those is Brownstein’s David Bernhardt, who served as Interior’s solicitor during George W. Bush’s presidency, helped Trump during the transition and is a candidate to return to Interior in a top job. He’s also been a lobbyist for the powerful Westlands Water District in California’s Central Valley.

In an interview, Slater said Cadiz still faced hurdles but the project’s future looked brighter than it did a few months ago. “The dynamics have changed,” said Slater, noting that Republicans now control the White House in addition to both houses of Congress.

Slater and his law firm have a lot riding on Cadiz’s success. According to an SEC filing last year, the Brownstein firm stands to earn 200,000 shares of Cadiz stock if the company meets milestones for completing the project and selling water. Brownstein has already earned 200,000 shares for its involvement with the company — a stock portfolio that is sure to appreciate in value if Cadiz can overcome permitting obstacles.

Numerous businesses are hoping to cash in on Trump’s interest in infrastructure. Two weeks ago, McClatchy was the first to report on a list of infrastructure projects that, according to the National Governors Association, the Trump transition team had given the group. Cadiz’s was one of two private California water projects on the list; the other was a desalination project south of Los Angeles.

While Trump is a supporter of traditional public works – touting the need for “new roads, highways, bridges, airports, tunnels and railways” during his inaugural address – fiscal hawks and some GOP leaders are leery of new federal funding for infrastructure. That political calculus has created openings for private infrastructure projects seeking regulatory relief, especially if they have connections. Cadiz’s project falls into both of those categories.

The brainchild of a British financier, Keith Brackpool, Cadiz is a publicly traded company with a stock price that has gyrated for a decade and a half. The company owns 45,000 acres in the Mojave Desert, where it hopes to extract water from an aquifer to sell to thirsty water districts in Southern California.

Fifteen years ago, the company’s stock price approached $200 a share, in part because Brackpool was close to then-Gov. Gray Davis of California, and investors apparently assumed that Cadiz had the political juice to make its project a reality. Yet Cadiz ran into opposition from the Metropolitan Water District of Southern California, which started questioning the company’s financial resources, and also from environmentalists, who feared the project could further dry up the Mojave, a national preserve. By 2011, Cadiz’s stock price had dropped below $10.

That’s when Slater came aboard. An expert in California water law, he became president of Cadiz in 2011 and rose to become CEO two years later. Through Slater’s Brownstein firm and other firms, Cadiz also stepped up its advocacy efforts on Capitol Hill, spending $3.4 million in lobbying from 2011 to 2016, according to a tabulation by the Center for Responsive Politics.

Slater has helped the company win several legal victories. In 2016, California’s 4th District Court of Appeal upheld six lower-court decisions in favor of Cadiz, putting to rest further state court litigation against the company’s environmental impact report.

Yet the company remains blocked by an unexpected 2015 Interior Department decision. That year, the California office of the U.S. Bureau of Land Management, an Interior agency, reversed a 2009 determination that the Cadiz project needed no federal permits. Cadiz had long believed that it could use an existing railroad right of way to build a 43-mile pipeline to transfer its water to potential buyers, and do so without a federal permit.

The BLM ruling opened up the possibility of an uncertain multi-year federal review, frightening potential investors and sending the company’s stock price down to the $4 range.

Slater said in an interview that Cadiz was urging the new administration to rescind the BLM decision, “accelerating our path by removing some of the underbrush.” Cadiz also wants Congress to pass legislation to make clear its intent on how the BLM should handle decisions involving railroad rights of way. The issue is of concern to legislators outside of California, said Slater, because the 2015 BLM decision potentially could affect use of all railroad rights of way in the West.

Matt Lee-Ashley, a former Interior Department official, said that what Cadiz was doing was typical during a White House transition. “Anytime an administration turns over, anyone who had a project with an unfavorable ruling will try to make another run at it,” said Lee-Ashley, who worked in Interior during the Obama administration and now is public lands director at the Center for American Progress, a liberal advocacy group.

Yet even though Cadiz has new friends in a Trump administration, it may not be enough to counter the company’s most formidable foe: U.S. Sen. Dianne Feinstein, the California Democrat who wrote the Desert Protection Act of 1994 and has long been the Mojave’s guardian. She has the ear of ranchers and conservationists who fear that Cadiz’s pumping project could damage the desert’s range lands and ecosystems.

Cadiz disputes those claims, arguing that it will be withdrawing only water – enough to supply 100,000 homes yearly – that would otherwise evaporate from lake beds in the desert. So far, however, Cadiz has been unable to win over California’s senior senator, who succeeded this year in persuading President Barack Obama to create three new national monuments in the Mojave, totaling more than 1.3 million acres.

Things could also get complicated if David Bernhardt, Slater’s colleague at the Brownstein firm, takes a top job at Interior. Brownstein’s 250 lawyers represent scores of clients, and the firm runs a political action committee that has given more than $513,000 to federal candidates and members of Congress since 2014.

According to a recent report in Energy and Environmental News, Bernhardt is a front-runner to serve as deputy to Ryan Zinke, a Montana congressman who is Trump’s interior secretary nominee.

Late last year, Bernhardt withdrew his registration as a lobbyist. If he moved back to Interior, Bernhardt would have to recuse himself from Interior issues involving his former clients, including Westlands.

But it’s less clear whether he’d have to recuse himself from matters involving other Brownstein clients, of which there are many. Attempts by McClatchy to obtain White House clarification were unsuccessful.

Also unclear is how Cadiz’s project ended up on a list of “emergency and national security priority projects” distributed to the National Governors Association and reported by McClatchy. Slater suspects that Cadiz rose on someone’s radar after he made several presentations at infrastructure conferences last year, including one hosted by CG/LA Infrastructure Inc., a national consulting firm. CG/LA is headed by Norman F. Anderson, an infrastructure expert who has ties to Dan Slane, a real estate developer from Ohio who has been helping the Trump administration with transition work.

Anderson couldn’t be reached for comment, but in a telephone interview on Tuesday, Slane said he had met with Cadiz’s CEO and thought it had a worthy project.

“That’s one where they just need some help from us on the permitting side,” said Slane, adding that he thought the Trump administration “could help with expediting permitting.”

The Pipeline and the Short Seller

Emails show a federal regulator shared non-public information with an investor.

Water gushes into a pilot spreading basin on Cadiz Inc. property in California's Mojave Desert in 2002. (PHOTO: ZUMA PRESS)

OPINION
Wall Street Journal

Trust in Washington has hit a historic low, and one reason is the sense that government regulators favor some people over others. Consider an email trail that reveals how a federal employee shared inside information about regulatory approval with a short seller.

The emails concern a water pipeline in California that is stuck in regulatory limbo. The story begins in 1998, when the Los Angeles-based land management company Cadiz Inc. began plans to develop a groundwater bank on private land overlying a watershed in the Mojave Desert. Cadiz proposed building an underground pipeline along the Arizona & California Railroad’s right-of-way to transport 50,000 acre-feet of water annually to Southern California.

The Department of Interior’s longstanding policy allowed railroads to run power, telephone and fiber optics lines along their rights-of-way without a federal permit, thus expediting environmental review. However, in November 2011, after Cadiz had modified its plan to reduce environmental opposition, Interior at the insistence of California Sen. Dianne Feinstein revised its policy to limit the use of railroad rights-of-way granted in 1875 to “activities that derive from or further a railroad purpose.”

The Cadiz pipeline was the only project subject to the new rules. Cadiz spent several years and $12 million reconfiguring the pipeline to “further a railroad purpose,” proposing the likes of hydro-turbines, power safety systems and automated fire suppression. None of Cadiz’s compromises satisfied regulators.

On Oct. 2, 2015, the Bureau of Land Management (BLM) informed congressional staff—who tipped off Cadiz—of an imminent adverse ruling. A letter circulated by the bureau noted that the pipeline “does not derive from or further a railroad purpose” because the fire suppression system was “an uncommon industry practice,” among other complaints. The kicker was that the ruling could not be appealed because it “is not a final agency decision.” Thus the pipeline would have to undergo a formal environmental review. Ms. Feinstein has attached riders to every Interior appropriations bill since 2008 barring a review.

Within a week of the BLM ruling, Cadiz’s stock plummeted 65%. Yet one Cadiz investor had inside information that could have allowed him to make a killing. Emails obtained through a Freedom of Information Act request by Cadiz reveal that BLM realty specialist Erik Pignata (who oversaw the Cadiz review from the Sacramento bureau) shared non-public information with Cadiz investor Thomas McGannon of Whetstone Capital Advisors. Cadiz provided the emails to us.

***

Whetstone, based in Mission Woods, Kansas, describes itself as “a value oriented long/short investment fund.” Mr. McGannon told the Kansas City Business Journal in May 2014 that “when we put a short into the Whetstone portfolio, it’s because we’ve done research on a specific company and think that for one reason or another the value of that company is declining and the stock price is likely to decline over time as well.” That strategy would certainly fit with Mr. McGannon’s research into Cadiz with the help of the BLM’s Mr. Pignata.

Mr. McGannon declined to say if or how he traded Cadiz shares and sent us this statement: “Our research over a five year period led us to believe that there was an investment opportunity presented by Cadiz’s stated business plan, which appeared contrary to information that was publicly available. We did not seek nor obtain any material non-public information regarding the Cadiz Water Project.”

Yet the emails suggest that Mr. McGannon sure was interested in regulatory decisions about Cadiz. The Pignata-McGannon email trail that we’ve seen begins with Mr. McGannon following up on a FOIA request in September 2014 soliciting information about the bureau’s review. Mr. Pignata referred documents related to the request to the bureau’s FOIA officer. This should have closed their communication since government employees aren’t supposed to disclose non-public information to third parties outside of the FOIA process that could benefit private interests.

***

Mr. McGannon continued to probe Mr. Pignata about the project’s regulatory prospects. “Does the green line go through BLM lands?” Mr. McGannon asked in a Sept. 9, 2014 email, referring to a map of the Cadiz project. “I was mostly just curious if an alternate route along the green line would require BLM approval.” Mr. Pignata responded later that day that the alternative route “almost certainly” does.

On Feb. 19, 2015, Mr. McGannon inquired if there has been “any movement on the project discussions since we last spoke?” Mr. Pignata replied: “No, we are formulating our evaluation with DOI legal staff.” The emails suggest the two chatted repeatedly over the phone.

On June 4 Mr. McGannon emailed “great to catch up” along with a link to a blog post “Strong Sell On Project Failure, Insider Enrichment, And Bankruptcy, Price Target $0” that eviscerated Cadiz. On September 23 Mr. McGannon asked if there was “any news likely this week?” Mr. Pignata replied: “I have a briefing w/ the almost-highest people in my agency tomorrow . . . No pressure or anything.” Mr. McGannon cheered him on: “You got it man!”

A week later, Mr. McGannon inquired into when an adverse ruling would be finalized: “Wont [sic] it be great when I don’t bother you anymore.” Mr. Pignata replied: “I have a feeling Cadiz, Inc. isn’t going anywhere . . . so you’ll get to keep bugging me.” Several of Mr. Pignata’s emails suggest an animus toward the Cadiz project.

On October 1, Mr. Pignata assured his hedge-fund pen pal that the BLM determination would “for sure” be “signed tomorrow.” Mr. McGannon rejoiced: “Maybe one of these days ill [sic] get to buy you a beer or something as a thank you.” BLM made its ruling the next day.

Cadiz disclosed on October 5 that it had been briefed by a congressional office that an adverse ruling might be imminent. The company says the bureau did not respond to its email requests for confirmation. Cadiz’s share price tumbled by nearly two-thirds. A short seller who bet against the stock and had advance knowledge of the outcome could have made significant gains.

There are numerous chronological gaps in the emails between Messrs. Pignata and McGannon, which suggests there may be more documents the government hasn’t turned over. Mr. Pignata declined comment beyond an email saying he had complied with the FOIA request. A spokesperson for the Bureau of Land Management says the agency recently became aware of the Pignata-McGannon communications and has referred the matter to the Department of Interior’s Office of the Inspector General.

House Oversight Committee Chairman Jason Chaffetz has sent a letter to the Bureau of Land Management soliciting more information about the correspondence. The bureau should explain whether Mr. Pignata’s communications comport with a 1990 executive order forbidding government employees from improperly using non-public government information to further a private interest.

Forget it, Jake: It's Cadiz

The entrance to the Cadiz property | Photo: Chris Clarke

Emily Green
KCET.com

Commentary: Just when it seems that a water grab with the shorthand name of “Cadiz” can’t get any stranger, it can. In May, an appellate court in Orange County affirmed that a suburban water company in Orange County is the rightful municipal steward for a privately run groundwater mining operation 200 miles away in the Mojave, and that its central purpose of exporting desert water for sale to Southern California cities qualifies as “conservation.”

The court might as well have told us that, yes, it's checked, the wolf in the bonnet is our grandmother.

If there is good news in the down-is-up and up-is-down world of what is now known as the "Cadiz Valley Conservation, Recovery and Storage Project," it’s that late last year, public land managers rejected the speculators’ claim to exemption from federal environmental review. Adding to this, an edgy blog run by hedge fund managers argues the company is on the brink of collapse. Those bloggers say they’re “shorting” Cadiz, market speak for betting on its collapse. In the course of what is now Cadiz’s 22-year-bid for water, not a drop has been exported from the desert, but millions of dollars raised by the company still flowed back to the founder — who can now be found running the racetrack at Santa Anita Park.

My, what sharp teeth he has.

It's fitting, somehow, that for many years the public face of Cadiz was a British bon vivant with a history of hoarding politicians so compulsively that House of Cards might reject the script for a Cadiz episode as too improbable. Various accounts in the Wall Street Journal, New York Times and London Guardian have Keith Brackpool arriving in the US while still in his twenties in 1988 or '89, as head of the North American operations of a British food multinational Albert Fisher PLC. Big title, short tenure. Brackpool quit in 1992 after it was discovered that he had what the Guardian described as a multi-million dollar share in a direct competitor. It wasn't just any competitor, either, but a subsidiary of Polly Peck, Britain's answer to Enron.

It was all completely innocent according to representatives for Fisher, but the CEO who sent Brackpool to the US soon lost his job and the company that had once been a profitable if modest British greengrocery firm became the very poster company for 80s overexpansion. As Fisher reversed trajectory into a decade-long plummet toward bankruptcy, its share price reportedly dropping from roughly $2 to 4 cents, Brackpool turned west, toward California, lured by rumors of an ocean of untapped groundwater roughly 180 miles east of Los Angeles in California’s Mojave Desert. What one of his company's annual reports would soon describe as a mother lode of water lying in a 1,400-square-mile "horseshoe-shaped mountainous catchment area known as the Cadiz Valley" had already attracted speculators, but no one with Brackpool's brio and recklessness.

Sure enough, NASA satellite images did suggest that water briefly pooled in the Cadiz Valley during scant winter rains. Moreover, as was long understood by hydrologists and pretty much anyone familiar with the place, the ground underneath the Mojave can indeed be full of water. Only pressure from desert aquifers keeps the Mojave's seeps and springs flowing. And these startling fonts of water in such a dry place support such an astonishing array of plants and animals that in the early 1990s, almost simultaneously as Brackpool began buying acres in the Cadiz Valley, Senator Dianne Feinstein shepherded the California Desert Protection Act through Congress and to Bill Clinton’s desk. This act created the Mojave National Preserve, granting greater legal protection to the plants and animals very near Brackpool's horseshoe.

Wait a second. He was growing grapes for the prince?

Cadiz's water right was agricultural, so Brackpool’s young company began leasing a small patch of its holdings in the Mojave to citrus and table grape operation. Then, to the amazement of onlookers, it bought up the biggest ag operation in Riverside County. The New York Times described Cadiz's purchase of Sun World International farms and packing operations as a “mouse-swallowing-the-elephant sort of deal.”

The acquisition gave him such unlikely ag-cred that, in 1999, Brackpool was in talks with a Saudi royal, Alwaleed Bin Talal, about Cadiz running a grape farm in Egypt’s Nile delta. Behind lavish showmanship, however, nothing had changed from 1996, when, after the New York Times observed that Cadiz's farm side lost money, Brackpool replied, “The real long-term play is water."

Only the location of the Cadiz Valley, 40 miles from the Colorado River Aqueduct, made a "long play" plausible. To get his water to the canal operated by the Metropolitan Water District of Southern California and carrying Southern California's municipal water supply from the Colorado River to cities such as Los Angeles, Brackpool needed two key things: A pipeline to carry water from his wells and clearance to blend that water with the rest of the water in the aqueduct.

By 2000, environmental impact reviews were in process for what had evolved on the drawing board into plans for The Cadiz Valley Groundwater Storage Project. The pump-and-dump logic of getting water out of the ground and into the So Cal municipal supply was still the heart of the project, but the scope had come to include a savings bank side. Under this, Metropolitan could wheel in any surplus it might have from the Colorado, infiltrate it into Cadiz ground where it would be safe from evaporation, then pull it out when needed. This “aquifer storage and recovery” side was intensely fashionable at the time, and would give the project a high conservation-value sheen as it approached environmental review.

Because Cadiz’s pipeline would cross Department of Interior land, the project triggered not only state but also federal scrutiny. Metropolitan would be the lead agency for the state review, the Bureau of Land Management lead for the federal environmental impact statement. Federal participation meant Cadiz sustainability claims would be reviewed by the best desert hydrologists in the country, the US Geological Survey.

The local water might kill you and there's not enough of it.

Among the USGS observations about Cadiz’s storage and export project as proposed to Metropolitan: Mojave groundwater is prone to high levels of the carcinogen Chromium VI. Beyond a now "Erin Brockovich"-sized question suddenly hanging over the idea that a Cadiz Valley was a good place to store drinking water, the USGS suspected that it could take 15 times longer than Cadiz claimed for desert rains to replenish the groundwater the company pumped.

Pumping too much groundwater too fast might dry out the springs of what, since 1994, had become part of America's revered National Park system. The USGS proffered a pumping plan that would protect the Mojave National Preserve, but this time Metropolitan balked. What if damage from pumping was detected before it had even paid off the tens of millions it would cost to build Brackpool’s pipeline?

This is the juncture when friends with influence should have helped Keith Brackpool. Nobody greased more palms than Cadiz. Gray Davis received hundreds of thousands of dollars and rides in airplanes. Former speaker of the Assembly Antonio Villaraigosa got tens of thousands, and Cadiz never neglected the bottomless wants of San Bernardino County Supervisors. But when Cadiz needed their clout the most, there was the LA Times giving over its premier slot, the Sunday Report, to diagramming his generosity.

In 2002, Metropolitan left Cadiz at the altar.

Cadiz scrambled for new financing as Sun World went bankrupt. So much for growing grapes for the prince. As if to reassure shareholders, Cadiz filed a breach of promise suit against Metropolitan that would cost the water district’s ratepayers another $1 million. A pincer movement attempt to take over Met from within by seating an ally as general manager failed. The “long play” looked played out when up popped Susan Kennedy, a former Public Utilities Commissioner whom Cadiz had paid $10,000 a month for “consulting” the previous year.

Behold Arnold Schwarzenegger's new chief of staff.

With Kennedy’s help and ex-officio endorsements of the project from the governor, Cadiz stock roared back on the NASDAQ.

"I miss that English guy."

-- KPCC radio host Larry Mantle, after interviewing Keith Brackpool's replacement, lawyer Scott Slater, for the first time.

Bruised by yet more LA Times articles dwelling on his cash trails to politicians and even a guilty plea for security trading fraud back in London, Brackpool became a silent chairman. Late in 2008, a disarmingly boyish-looking water lawyer named Scott Slater stepped forward as the face of Cadiz 2.0.

The new, Slater-era strategy: don't argue with the USGS about safe yield estimates. Rather, lock them out. Then repeat unchallenged rent-a-science that Cadiz had paid private consultants to put on charts and graphs. This went, roughly, Cadiz pumps will not harm the basin. Nay, they’ll be good for it, yes good for it! Cadiz will capture water that would otherwise just evaporate!

Moreover, this time around, the company would be running a pipeline to the aqueduct along a railroad easement held by the Arizona & California Railroad and would not need a federal right of way, or to waste taxpayer money on a federal environmental review. Rather than frame it as Cadiz ducking the best expert scrutiny, the company emphasized efficiency. Think of all the money that Cadiz could save the taxpayer by eliminating US Geological Survey review! As for a new state environmental review, there was no getting around it. Cadiz needed a new lead public agency for to get its water into municipal infrastructure. Replacing the former “lead agency” Metropolitan would be tough. If the largest water wholesaler outside of Reclamation thought the project too expensive and fraught, who could replace it?

San Bernardino County was the obvious lead agency. It’s home to the Cadiz Valley and its supervisors were already well lubed with campaign donations by the company. A Cadiz press release even flirted with the notion. Only Slater knows if he passed on the County because he sensed a coming public corruption scandal that would embroil the county assessor and two supes and put a stink over all of California east of Interstate 5. For whatever reason, Slater kept looking.

Huntington Beach-based environment lawyer Debbie Cook thinks she knows how Cadiz ultimately lighted on Santa Margarita Water District, a south Orange County water company serving 150,000 people compared to Metropolitan’s 19 million. It was led by one of Slater’s cronies, she argued in a scathing Voice of OC commentary. With generous help from Slater’s team, the Santa Margarita Water District conducted a new environmental impact report, reviewed the report, then certified the report. And so it became lead agency of a water project 200 miles away with no other qualification to tackle a project of this scope other than its general manager knew Scott Slater. As icing, an Orange County judge affirmed the water district’s standing as lead agency in May.

Put my 401K on No Regrets in the third.

Slater and Cadiz were on a roll until April 2015, when a little known hedge fund blog called Seeking Alpha argued that federal review was inevitable and put a “strong sell” on Cadiz. So began a shareholder lawsuit against Cadiz. Call it ankle biting by a pseudonymous blogger, or insight by the rare, sharp financial analyst who does his or her homework. Either way, six months later, Seeking Alpha was proved right about one thing: The Bureau of Land Management wrote Cadiz rejecting the railroad gambit. The Santa Margarita self-certification under state review would not be enough. The project would have to undergo a federal review if Cadiz wanted to run a pipeline across federal land. Then, last February, the screws tightened yet again when the president declared yet more land around Cadiz to be part of a new Mojave Trails National Monument.

After issuing an indignant barrage of tweets condemning the BLM decision, then marshaling a stage army of outraged congressional reps, Slater is currently circling in protest mode. Time will tell if he can muster some kind of congressional exemption or if he’ll sue the federal government. Whatever he does, again it’s hail Mary time for Cadiz as Seeking Alpha doubled down on its junk rating, calling the company “worth $0 intrinsically.”

If Cadiz goes bankrupt, the shareholders already made poorer by repeated stock dilutions may be hit hard. (Cue to check where any mutual funds might have parked your 401K). But, as far as the directors stand, going bust could scarcely happen to a bunch of richer, better remunerated players. Seeking Alpha calculates that over the years more than $47 million of hundreds of millions raised for the company went to compensating insiders. Brackpool came out of the shadows after parlaying a 2009 appointment by Schwarzenegger to California Horse Racing Board into part ownership and a management post at Santa Anita Park in LA County. He’s now most often found in the sports pages commenting, say, on a recent redesign of the “Chandelier Room.”

One of the major companies buying up Cadiz debt is a Wall Street investment firm Water Asset Management. A ProPublica profile earlier this year found it systematically buying up agricultural water rights around the West to redirect the flows to cities. This is chastening for anyone who imagines that a Cadiz bankruptcy alone would protect the Mojave National Preserve from dewatering by the project, or keep the Cadiz Valley’s Chromium VI out of public drinking water.

“Let's say Cadiz does go bankrupt,” said one of three analysts interviewed on the condition of anonymity for this piece. “What’s to stop Water Asset Management from hiring Scott Slater? Or what's to stop President Trump from appointing Scott Slater Secretary of the Interior?”

Forget it, Jake. It’s Cadiz.

Trying to Get Water to California but Torpedoed by Regulators

The Obama administration and Dianne Feinstein keep blocking a private project to aid the still-parched state.

Well water bubbles into a pilot pool in Cadiz, Calif, in 2002. (AP)

By ALLYSIA FINLEY
Wall Street Journal

Although El Niño has increased the snowpack in the Sierra Nevadas, the Golden State’s historic drought isn’t over. Yet the Obama administration has decided to block a privately financed project that could supply water to 400,000 Californians, even though the project has been approved by an alphabet soup of state and local agencies. The result will be to trap vast amounts of a precious resource beneath the Mojave Desert. Is water the new fossil fuel?

This tale of political and regulatory obstructionism begins in 1998, when Cadiz Inc., a Los Angeles-based company, developed plans for a groundwater bank and well-field on 70 square miles of private land overlying the base of the Mojave’s massive Fenner Valley and Orange Blossom Wash watersheds. Over centuries the aquifers there have amassed as much as 34 million acre feet of water, enough to sustain all of California’s households for several years.

However, tens of thousands of acre feet percolate into salty dry lakes and evaporate each year. Cadiz proposed capturing and exporting the groundwater to Southern California residents. The Cadiz Valley Water Conservation, Recovery and Storage Project could also help store occasional excess flows from the Colorado River that would otherwise drain to the Pacific Ocean.

Water experts such as those at the Public Policy Institute of California have recommended using groundwater banks to recharge aquifers during wet years and expand the state’s storage capacity. Relative to dams, storing water underground reduces evaporation and environmental harm.

None of this mattered to various green lobbies and California Sen. Dianne Feinstein, who complained that the water project would deplete mountain springs and harm wildlife. But environmental reviews by hydrogeologists confirm that the nearest spring—located 11 miles away and 1,000 feet above the aquifer—would not be affected. Nor would fauna, which don’t rely on groundwater. After an exhaustive review, the U.S. Interior Department approved the project in 2002, but Sen. Feinstein maintained her opposition.

Cadiz sought to assuage her in 2008 by reducing the planned annual water exports to 50,000 acre-feet from 150,000. It also negotiated to use the Arizona & California Railroad’s (ARZC) right of way to build a 43-mile underground pipeline to the Colorado River Aqueduct (which feeds water to Southern California). But a few days after Cadiz announced its agreement with ARZC, Ms. Feinstein launched another attack, demanding that the Interior Department “conduct a detailed analysis” of “permissible uses” of railroad rights of way.

The department’s long-standing policy allowed railroads without federal permitting to run power, telephone and fiber optic lines on their rights of way, streamlining environmental review for public works, including wind and solar farms. But in 2011, Interior revised its policy to limit railroad rights of way that were granted in 1875—such as ARZC’s—to “activities that derive from or further a railroad purpose.”

Curiously, the new rules apply only to projects like the Cadiz pipeline. Telephone wires and fiber optic lines, maintenance yards and “related improvements,” could be permitted “on a case-by-case basis” if they helped the railroad operate.

Cadiz would go on to spend $12 million on capital improvements to benefit the railroad, such as a maintenance access road, turbines to power safety equipment and information systems, as well as state-of-the-art automated fire suppression. No matter. Last October the Bureau of Land Management ruled that the Cadiz pipeline “does not derive from or further a railroad purpose.” The innovative fire-suppression system “is an uncommon industry practice,” the agency caviled, and the “origin of the access road is to support the non-railroad purpose of water conveyance.” Building the pipeline without authorization, it warned, “could result in the BLM instituting trespass proceedings.”

The BLM added that its ruling cannot be appealed because “it is not a final agency decision.” A final decision would require a formal regulatory review. But Ms. Feinstein has attached riders to every Interior Department spending bill since 2008 that bar the agency from reviewing Cadiz.

Amid this regulatory hustle, a California state appellate court last month heard six challenges to the project, all of which had been rejected by a trial court two years ago. In 2012, the Santa Margarita Water District’s final environmental impact report noted that the project’s only significant effects would be temporary dust from construction and the hazard of population and employment growth from a larger water supply, which has driven opposition from green groups. While trumpeting the BLM’s decision in October, the Center for Biological Diversity complained that the Cadiz project would “increase urban sprawl in coastal Southern California.”

So the water storage project, long overdue, remains stuck in regulatory purgatory. Without a Hail Mary attempt by Congress to unplug the Obama water blockage, thirsty Californians can only pray for a Republican president who views economic development as a blessing rather than curse.

Cadiz chief to tackle desert water transfer project roadblock

Scott Slater, president and CEO of Cadiz Inc. explains the company's position that they believe the groundwater they would harvest would be lost to evaporation if left to its natural processes. (Jay Calderon/The Desert Sun)

By Jim Steinberg
San Bernardino Sun

LOS ANGELES – The CEO for embattled Cadiz Inc. has a plan to keep alive a controversial project to transfer ancient groundwater in a remote part of San Bernardino County’s Mojave Desert to parts of Orange County and other locations, where it could serve as many as 400,000 people.

In an interview late last week, Cadiz CEO Scott Slater said he would be seeking a review of the decision by the U.S. Bureau of Land Management to reject Cadiz’s proposed use of an 1875 railway right-of-way to build a critical 43-mile pipeline from the Fenner Valley — about 40 miles northeast of Twentynine Palms — to the Colorado River Aqueduct, where it could be delivered to future customers.

If that fails, he will take his battle to court, he said.

“This is pure politics,” said Slater, who is considered by many to be an expert in groundwater law and water policy.

According to a letter from the BLM, the proposed use of the railroad right-of-way for the pipeline is outside the scope of the Arizona and California Railroad’s use of right-of-way grants held under the General Railroad Right-of-Way Act of March 3, 1875.

The letter to Cadiz warns that “proceeding with new activities or continued activities ... without authorization from the BLM could result in the BLM instituting trespass proceedings.”

The ARZC, as the short-line railroad is called, has agreed to let Cadiz use its right-of-way. The railroad moves primarily petroleum across its 190 miles of track.

As part of its water project, Cadiz planned to build fire-suppression and power-generation capabilities for the railroad.

“BLM has determined that the project does not derive or further a railroad purpose,” said the letter signed by James Kenna, California BLM director, who has since retired.

For that reason, in order for the pipeline to proceed along the right-of-way, the BLM must approve that use. And for that to happen, a full federal environmental review must be completed.

Slater called the BLM’s decision an “outrage” that ignores key precedent set forth in a memorandum written in November 2011 by the top attorney for the Department of Interior, which liberalizes the definition of railroad purpose to mean that BLM permission is not needed if the purpose benefits the railroad in some way.

“Every American should be infuriated” at the way the BLM has deliberately ignored the evolution, determined by a top federal lawyer, of a law written more than 100 years before, said Slater, who is author of “California Water Law and Policy,” a two-volume treatise, and has taught law and graduate classes at Pepperdine University, UC Santa Barbara and the University of Western Australia, He also revised the water code for Western Australia.

On the other hand, David Lamfrom, director of the California Desert and Wildlife Program for the National Parks Conservation Service, said: “The Bureau of Land Management’s decision is supported law, policy and common sense and prevents a clear attempt by Cadiz Inc. to create a loophole to avoid federal review.

“The BLM has a responsibility to all Americans to fully understand the impacts this project proposes on public lands, including impacts on our water resources and national parks. This decision opens the door for good science and objective decision-makers to participate.”

Also agreeing with the BLM decision is Sen. Dianne Feinstein, D-Calif.

“I remain concerned the Cadiz project could damage the Mojave Desert beyond repair,” she said in a statement, “and believe the BLM decision to deny the right-of-way is the right one.”

“We need to use water more responsibly, not less, and the Cadiz project is a bad idea,” said Feinstein, who is attempting to include the Cadiz Valley in her proposed Mojave Trails National Monument, one of three proposed for the region.

Rep. Ken Calvert, R-Corona, said, “I have looked at the Cadiz Water Project carefully and I believe it has merit. ... I have concerns about what kind of precedent this sets for railroads across the country and the ability of an agency to deny historically protected property rights.”

Calvert is chairman of the House Interior and Environmental Appropriations Subcommittee.

The project has been approved by the San Bernardino County Board of Supervisors.

When asked about the BLM decision, 1st District Supervisor Robert A. Lovingood said, “The BLM decision will be a roadblock for the project. But this is a matter between the BLM and the company. ...”

For the past eight years, Feinstein has attached a rider to the legislation that funds the Department of the Interior, the umbrella agency for the BLM, that effectively blocks the Cadiz Valley aquifer from being drained, her office said.

Last week, Cadiz said it found out about the BLM decision through a third party.

Before the decision, Cadiz had been saying it and its public agency partner, the Santa Margarita Water District in Orange County, were on track to begin construction of the pipeline this year or early next year.

BLM decision sets back Cadiz plan to sell Mojave groundwater

The Fenner Basin, about half of which lies in the Mojave National Preserve. Cadiz Inc. hopes to sell groundwater from the Mojave Desert to Southern California users. (Katie Falkenberg)

Bettina Boxall
Los Angeles Times

Cadiz Inc.'s plans to sell Mojave Desert groundwater to Southern California communities have hit a major federal roadblock.

In a long-awaited decision, the U.S. Bureau of Land Management says Cadiz cannot use an existing railroad right-of-way for a new water pipeline that would carry supplies from the project's proposed well field to the Colorado River Aqueduct.

By using the railroad right-of-way, Cadiz had hoped to escape federal environmental review of the 43-mile pipeline, one of the project's most expensive components.

But in a letter to Cadiz on Friday, BLM's California director informed the company that it needs U.S. approval for a separate pipeline right-of-way over federal land. That would trigger review under federal environmental law, a potentially lengthy and costly process that could impose new conditions on the project.

Cadiz has acknowledged that over the long term, the project will extract more groundwater than is replenished by nature. And federal scientists have expressed concern that the operation could dry up springs vital to wildlife on the nearby Mojave National Preserve and other public lands.

"The BLM has the responsibility to objectively apply the law using the best available information to determine what rights were conveyed to the railroad under a 19th century law," BLM State Director Jim Kenna said in a statement. "Because the proposed pipeline is not within the rights conveyed to the railroad, a separate BLM authorization is necessary."

In a further complication for Cadiz, project opponent Sen. Dianne Feinstein (D-Calif.) has for years added a rider to the federal budget barring the BLM from spending money on anything related to the groundwater project. A spokesman for Feinstein said the provision "will be in there again." As long as the rider is in effect, the BLM won't have the funds to review a pipeline application.

"I remain concerned the Cadiz project could damage the Mojave Desert beyond repair and believe the BLM decision to deny the right-of-way is the right one," Feinstein said in a statement. "I'll continue to work through the Appropriations Committee to block any additional attempts to draw down this aquifer. We need to use water more responsibly, not less, and the Cadiz project is a bad idea."

In a response sent to the BLM director in Washington, Cadiz President Scott Slater on Monday argued that the agency was misinterpreting an Interior Department solicitor's opinion and should rescind the determination.

"We're disappointed the BLM decided to take a political path," Slater said in an interview. "They wholly ignore the solicitor's opinion."

The decision is technically an "administrative determination" that cannot be appealed. But Slater, a well-known water attorney, said the company would "consider all legal remedies," including a federal lawsuit. "We'll press on," he added.

Cadiz, founded by Keith Brackpool, wants to pump enough groundwater from beneath its land in the Mojave Desert to supply 100,000 homes a year and sell it to urban California at prices that could, over the project's 50-year-life, reap $1 billion to $2 billion in revenue.

The project was approved by San Bernardino County and the company has so far prevailed in environmental lawsuits challenging the proposal under state law. But opponents are appealing those rulings. And desert advocates complain the project will profit by mining groundwater that flows from beneath adjacent public lands.

"The company was trying to exploit what amounts to a loophole to avoid having to go through a more rigorous environmental review," said David Lamfrom, California desert program director for the National Parks Conservation Assn., one of a number of conservation groups fighting the project.

The BLM decision was years in the making. It hinges on a 2011 opinion by the Interior Department solicitor that railroads cannot authorize activities in their federal right-of-ways "that bear no relationship to the construction or operation of a railroad."

Cadiz argued that the water pipeline would further the purpose of the Arizona and California Railroad by providing water for fighting trestle fires and for a planned tourist steam train, as well as create additional access to the rail line.

The BLM found otherwise. "Conveyance of water for public consumption is not a railroad purpose because the activity itself is not necessary for the construction or operation of a railroad, and the origin of the activity itself is a non-railroad purpose," the agency stated in a summary document.

Project pumping desert water for O.C. to begin next year

Cadiz Valley Water Project

BY TOMOYA SHIMURA
Orange County Register

Construction for a project that will pump drinking water from a Mojave Desert aquifer and pipe it to south Orange County is slated to begin early next year.

Los Angeles-based Cadiz Inc. plans to install wells to capture water from the natural aquifer that lies beneath 70 square miles of remote valley east of Twentynine Palms. The private developer which owns the land would also build an underground 43-mile pipeline along railroad right-of-way to the Colorado River Aqueduct, which delivers water to Southern California residents.

Once built, Cadiz plans to lease the facilities to a joint powers authority created by the Santa Margarita Water District, which will oversee day-to-day operation of the well and pipeline.

Santa Margarita hopes the project will reduce the district’s reliance on the wholesaler Metropolitan Water District, from which Santa Margarita buys 85 percent of its water. The MWD has increased water prices over the last two decades.

The well would pump some 16 billion gallons of water a year, and Santa Margarita plans to purchase about 20 percent of its water supply from the project. The district serves 165,000 people in Coto de Caza, Ladera Ranch, Rancho Santa Margarita and parts of Mission Viejo and San Clemente.

However, the Cadiz Valley Water Conservation, Recovery and Storage Project has met resistance from a coalition of environmental groups, who argue the project would dry up desert springs and hurt vegetation and wildlife habitat.

The groups filed lawsuits after the project was approved by Santa Margarita’s board and San Bernardino County supervisors in 2012.

The plaintiffs claimed that Santa Margarita, not in the area the project will affect, shouldn’t have been the lead agency to oversee environmental reviews for Cadiz. They also said San Bernardino County violated its desert groundwater ordinance by approving the project.

Orange County Superior Court Judge Gail Andler shot down the lawsuits last year, stating that the plaintiffs had failed to prove the project would violate state environmental laws.

The Center for Biological Diversity, Sierra Club and San Bernardino Valley Audubon Society then appealed the decision to the state’s Fourth Appellate District in Santa Ana and filed their opening briefs in April.

“All cases were resoundingly denied in superior court, and we stand by that record and we think everything will be upheld by the court of appeals,” Cadiz spokeswoman Courtney Degener said.

The company is waiting for the MWD board to approve moving Cadiz water through its aqueduct later this summer and plans to start construction at the beginning of next year, she said. Cadiz is expected to spend $225 to $275 million on construction.

In addition to Santa Margarita, Cadiz has entered into agreements with the following water providers interested in buying water from the project, Degener said. They include: Three Valleys Municipal Water District, Jurupa Community Services District, Golden State Water Company, Suburban Water Systems, California Water Service Company, Lake Arrowhead Community Services District and San Luis Water District.

Plans unveiled for Mojave Desert tourist train, museum

As part of its plan to mine underground water supplies, Los Angeles-based Cadiz Inc. is proposing a tourist steam engine, museum and cultural center in the Mojave Desert.

BY JANET ZIMMERMAN
Press Enterprise

Cadiz Inc., the Los Angeles-based company proposing a water mining operation in the Mojave Desert, released plans Friday, Sept. 20, for steam train excursions and a museum, but environmentalists called it a ploy to avoid federal review of its groundwater pumping project.

The Cadiz Valley Water Conservation, Recovery and Storage Project would extract groundwater from beneath 45,000 acres that Cadiz owns south of the Marble Mountains, 40 miles east of Twentynine Palms. The area lies between the Mojave National Preserve and Joshua Tree National Park in eastern San Bernardino County.

Environmental groups have filed lawsuits to block the $225 million development, which would provide water for about 400,000 people served by six water districts throughout California, including Jurupa Community Services District in Riverside County.

The pipeline would run along 43 miles of track owned by the Arizona & California Railroad Co. Because part of the railroad right-of-way crosses federal lands, environmentalists say the project is subject to federal review under the National Environmental Policy Act, which would evaluate environmental impacts.

Sen. Dianne Feinstein, D-California, and Rep. Paul Cook, R-Yucca Valley, have called for a federal review of the project and questioned its impacts on the Mojave National Preserve.

To avoid a government evaluation, the Department of the Interior requires that the pipeline along the right-of-way must have a direct impact on the rail system.

On Friday, Cadiz announced its agreement with the railroad to use its tracks. As part of the agreement, Cadiz will provide water from the project to power the trains, wash dirty freight cars run by Arizona & California, and supply fire hydrants along 35 wooden railroad trestles, Cadiz President Scott Slater said.

Seth Shteir California desert senior representative for the National Parks Conservation Association, accused Cadiz of concocting the tourist train idea to avoid scrutiny by the U.S. Geological Survey of its inflated recharge rates in the ancient aquifer.

Cadiz plans to pump an average of 50,000 acre-feet per year – more than 16 billion gallons – from beneath the remote valley.

In environmental documents, Cadiz says the recharge rate is 32,500 acre-feet per year, but independent estimates have placed recharge at 2,000 to 10,000 acre-feet per year.

The National Park Service has said the project would likely drain surrounding springs that supply water for wildlife.

Slater said an earlier version of the pumping project, which was larger and more impactful, already cleared federal study. The previous version crossed open public lands, but this one was intentionally placed on an active railroad right-of-way to avoid environmental impacts.

“What they’re looking for is duplicative. They’re interested in shopping until they can get somebody who agrees with them,” Slater said.

The company said the Cadiz Southeastern Railway would also draw in tourist dollars with a depot-style museum and cultural center on the Cadiz property that would include information on the local desert and railroad history. Slater wants to make it a destination.

One of the steam engines would be locomotive 3751, built in 1927 and housed at California Steel Industries in Fontana. The restored engine is owned by the San Bernardino Railroad Historical Society. Cadiz is also negotiating to buy two engines and rail cars that can be opened up to provide star gazing, Slater said.

“The steam train is an original fixture of the Cadiz area - an important historical asset intimately connected to the local culture – and offers a rewarding way to invest locally and promote the unique desert environment,” Slater said in a statement. “As a 30-year member of the Mojave Desert community, we have long appreciated the area’s majesty and appeal and are proud to diversify our business with this exciting new venture.”

The Cadiz railroad would operate on existing tracks on a portion of the Arizona & California Railroad Co. between Parker, Ariz. and Cadiz, with water stops in the California desert communities of Milligan, Chubbuck, Rice and Vidal.

The Mojave Desert Route, off historic Route 66, “provides sweeping views of the vast desert wilderness, mountainous terrain and the Colorado River,” the company said.

Brad Ovitt, a senior vice president for Genesee & Wyoming Inc. in Darien, Conn., which owns the Arizona & California railroad, said the track-sharing deal is a first in this region for his company. Terms of the agreement are confidential.

Desert pipeline would send water to Inland Valley

Environmental documents for certifying the project expected to be ready within weeks

By Andrew Edwards
Inland Valley Daily Bulletin

Water providers serving the Inland Valley and other Southern California areas may be able to draw from a new source of water sufficient to supply 100,000 households if plans for a Mojave Desert pipeline pass environmental muster.

The Cadiz Co., headquartered in downtown Los Angeles, wants to build a 42-mile pipeline to carry water from a remote desert aquifer in the Cadiz Valley to the Colorado River Aqueduct to be delivered to the Los Angeles basin.

The Claremont-based Three Valleys Municipal Water District and the San Dimas-based Golden State Water Co. are poised to be among the agencies receiving water from the pipeline, if it is actually built.

"We're always looking for water in other places in case the big earthquake hits," Three Valleys board President Bob Kuhn said.

Three Valleys wholesales water to providers serving customers in east Los Angeles County communities, including Pomona and Claremont.

Kuhn said Three Valleys has an option agreement to buy the water if the project is approved.

Environmental documents for the Cadiz pipeline have yet to be released, although a spokeswoman for the water agency charged with certifying the project said this week they are expected to be ready for review within the next few weeks.

"We're still looking at releasing the draft environmental impact report sometime," said Michelle Miller, spokeswoman for the Santa Margarita Water District.

The Santa Margarita Water District serves south Orange County and has been designated as the lead agency for the project. Its board will be responsible for reviewing and deciding whether to approve Cadiz Co.'s environmental report.

The project could create the equivalent of 745 full-time jobs, according to a consultant.

The Cadiz Co. owns 35,000 acres in the Cadiz Valley, roughly 11 miles southeast of Amboy, once a stopping point for Route 66 travelers.

Cadiz and Bristol dry lakes - and the aquifer that lies below the desert surface - can be found in Cadiz Valley. The landowners currently use the water for lemon groves, vineyards and other crops grown on their Mojave Desert property.

But if Cadiz Co.'s proposal becomes a reality, the company would build a 42-mile pipeline along an existing railroad right-of-way to a place called Rice, near Highway 62, east of Twentynine Palms.

"Why do it? It's sort of like asking, `Why conserve?" said Cadiz Co. President and General Counsel Scott Slater.

The projected construction cost approaches $278 million over a two-year period.

The work could create the equivalent of 593 full-time jobs for those directly working on the pipeline and an additional 152 jobs at businesses supporting Cadiz Co., according to a forecast from Redlands-based economist John Husing, who focuses on the Inland Empire.

"I would guess they (the new hires) would be living in the Victor Valley or Barstow, given where the facility is," Husing said.

The project's $258.5 million second phase would require the construction of a parallel pipeline to recharge, or store excess Colorado River water in the Cadiz Valley aquifer.

Cadiz Co. hired Husing at a $10,000 commission to prepare an economic impact report for the project.

The firm's executives have yet to release the proposal's draft environmental impact report. It is set to be released this summer.

Water From A Stone?

Cadiz Valley. Southern California's newest source of water? (Photo by Chris Clarke)

Commentary by Chris Clarke
KCET

As Southern California's population grows and water is in ever shorter supply, one Orange County water district is looking to an odd source for more water: the middle of the Mojave Desert.

The Santa Margarita Water District, which provides water services to 150,000 residents and businesses in Mission Viejo, Rancho Santa Margarita and adjacent unincorporated areas, is putting together a proposal to import up to 50,000 acre-feet of water into Coastal Southern California each year from the Cadiz Valley, a wind-swept desert valley between Twenty-Nine Palms and Needles. The district plans to release a draft Environmental Impact Review on the project for public comment in late July.

That EIR will almost certainly be scrutinized line-by-line by desert protection activists, some of whom are calling this "the project that would not die."

Santa Margarita's partners in the venture are Cadiz Inc, which owns about 34,000 acres in the Cadiz and Fenner valleys in San Bernardino County, and four other Southern California water companies: Three Valleys Municipal Water District, Golden State Water Company, Jurupa Community Services District and Suburban Water Systems.

Cadiz Inc.'s land lies atop a large aquifer -- an underground reservoir which Cadiz's consultants say may hold between 17 and 34 million acre-feet of water, most of it laid down during the Ice Age. In the project's first stage Cadiz would build 44 miles of pipeline from wells on its property along a railroad right of way to the Colorado River Aqueduct west of the town of Rice. From there the water would head to the Greater Los Angeles Area, and the appropriate amounts apportioned to participating water districts.

Cadiz's selling point for the project is that the water it pumps from the aquifer would otherwise be lost to evaporation. In the words of the company's website,

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 the Cadiz Valley that is currently lost to evaporation at nearby dry lakes. Through the active management of the aquifer system, the Project will create a new, sustainable water supply for Project participants without adversely impacting the aquifer system or the desert environment.

The second stage of the project will involve building a second pipeline to pump "surplus" Colorado River water to the Cadiz Valley, where it would be emptied into "recharge basins" and allowed to percolate into the aquifer, to be pumped out again in dry years. Cadiz states that this phase could provide evaporation-proofed storage of up to a million acre-feet of water, a tempting proposal for Southern California water managers.

If this all gives you a sense of déjà vu, there's a reason for that: this project is a near-copy of one pushed a decade ago by Cadiz in tandem with the Metropolitan Water District. That proposal basically contained the same elements: pumping of aquifer water and storage of the occasional Colorado surplus, and an assertion that the developers could sustainably remove 50,000 acre-feet of water from the aquifer.

Environmentalists shredded that old proposal. Independent hydrologists countered Cadiz's claims about the amount of water the aquifer could spare each year, with one saying:

the estimate of annual recharge used in the Draft EIR/EIS is an order of magnitude too high--it is probably only 5,000-6,000 ac-ft/yr... once development has proceeded for a period of several decades simply stopping the pumping of native groundwater, as implied in the Supplemental EIR/EIR, will not halt the adverse environmental impacts--in other words, the groundwater system once perturbed has sufficient persistence that adverse impacts will persist well beyond 100 years, even though the project is stopped after 50 year or earlier.
Other geologists alleged Cadiz had inflated the sustainable yield of water by a factor of 15.

Drawing down the aquifer would degrade habitat in a number of surrounding protected areas, others pointed out, including the aquifer's headwaters in the Mojave National Preserve, with significant impacts to bighorn sheep, desert tortoise, and animals dependent on the area's small springs. What's more, the older version of the project would have run its pipeline to the aqueduct not along the railroad, but directly through the Iron Mountains, a relatively pristine bit of desert habitat.

Water pollution was also a concern. Not only would pumping saltier water from the Colorado into the aquifer permanently alter the valley's groundwater quality, but the aquifer was found to contain significant amounts of hexavalent Chromium, the same toxic chemical responsible for the public health issues in Hinckley that launched Erin Brockovich's rise to prominence.

For a time in 2001, it looked to desert environmentalists as though the fix was in. Cadiz's controversial founder Keith Brackpool was cozy with California politicos ranging from Gray Davis and Schwarzenegger to Antonio Villaraigosa, a close friend of Brackpool's. Nonetheless, MWD backed out on the deal in 2002, perhaps due to that year's being the dryest year on record for the Colorado River. Why invest millions in a partnership to store surplus water if there is no surplus?

Aside from the alignment of the "conveyance pipeline," the only real difference between the old plan and Cadiz 2.0 would seem to be the claim that any water pumped from the aquifer would have been lost to surface evaporation. This, along with Cadiz's other environmental claims, will likely be scrutinized closely once the draft EIR is available later this summer.

The stakes are rather high. Aquifers can collapse if overdrawn, causing the land to subside and permanently reducing the aquifer's future capacity. A few years of excessive pumping could permanently damage thousands of square miles of the wild Mojave.

Cadiz Valley desert water-storage plan renewed

By DAVID DANELSKI
The Press-Enterprise

The owners of remote desert land have revived a $200 million plan to store water underground to send to Southern California in dry times, although the region's major water agency rejected the idea six years ago.

Cadiz Inc., owner of land and water rights in the Cadiz Valley about 40 miles east of Twentynine Palms, has secured a 99-year lease to use railroad right-of-way for a 42-mile pipeline connecting to the Colorado River Aqueduct, said Richard Stoddard, chief executive officer of a sister company, Cadiz Real Estate LLC, in a telephone interview.

Water would be diverted from the aqueduct into the Cadiz pipeline and injected into the ground for storage in an aquifer beneath the company's land. When needed, the water would be returned to the aqueduct and could meet the needs of an estimated 1.2 million people in Southern California, the company contends.

Cadiz Inc.'s announcement surprised officials at Metropolitan Water District of Southern California, the major buyer and distributor of water in the region.

The district, which built and operates the 242-mile Colorado River Aqueduct that Cadiz wants to use, rejected a similar proposal in 2002 amid environmentalists' opposition and concerns about costs. In addition, the Colorado River didn't have surplus water to fill the Cadiz aquifer, district officials said.

"We don't have any plans to proceed with the (Cadiz) project, and they haven't discussed their new approach with us," said Timothy F. Brick, Metropolitan's board chairman.

Metropolitan would have less involvement this time around, said Courtney Dedener, Cadiz investor relations manager. The previous deal would have made the water district a partner in the project, and the two entities would have jointly built the pipeline to the Cadiz Valley. Now, the company plans to build the pipeline without the water district and charge clients for water storage.

Aqueduct Rights

Cadiz Inc. owns 44,000 acres of land and related groundwater rights in the Cadiz, Fenner and Piute valleys of eastern San Bernardino County. It grows grape and citrus crops.

Stoddard said the company has been talking with several water providers that have rights or potential rights to water in the aqueduct and could benefit from the company's storage project.

California's "water-wheeling" laws give water providers the right to move supplies through the aqueduct, Stoddard said. The laws are similar to rules that allow various telephone companies to use the same transmission lines, he said.

Metropolitan spokesman Bob Muir said the district has not seen a proposal from the Cadiz company. To access the aqueduct, capacity must be available, he said.

The Cadiz clients also would have to pay access and stewardship fees, he said.

Fern Steiner, San Diego County Water Authority chairwoman, said the Cadiz venture possibly could be used to store Colorado River water the agency purchases from the Imperial Irrigation District.

"Our board should look at the Cadiz project," she said. "We should explore all possibilities to find new water sources."

Stoddard said he expects the pipeline to be operating in about three years, allowing 18 months for environmental reviews under the purview of the San Bernardino County planning agency.

It would take roughly the same amount of time to build the pipeline, he said.

Environmental Concerns

In 2001 and 2002, environmentalists who opposed the project said they feared that pumping from the Cadiz Valley would deplete natural groundwater that feeds area springs. The springs and groundwater are necessary to sustain desert bighorn sheep and various plants and other wildlife, they said.

Terry Wold, conservation coordinator for the Sierra Club's Inland chapter, said the group will continue to oppose the pipeline and storage project.

Wold said that besides concern about the springs, she is worried about contaminating the pure native groundwater with the saltier Colorado River water.

Elden Hughes, of Joshua Tree, former chairman of the environmental group's desert committee, said the environment would be damaged by construction of large-scale pumping stations.

"It they want to suck the aquifer dry, we will do our damndest to stop them," Hughes said.

Club members will write letters, lobby elected officials and, if necessary, sue to stop the project, he said.

Stoddard said native groundwater would be used but that levels would be carefully tracked to ensure the environment is protected.

He added that using the Arizona & California Railroad Co. right-of-way would be less damaging to the environment than the previous plan that routed the pipeline across public land overseen by the federal Bureau of Land Management.

"The more this project is examined, the more environmentally benign it becomes," Stoddard said.