Cadiz Water Project Hit With Another Setback

The Cadiz Water Project this week encountered further difficulty, as a potential Los Angeles County recipient of the groundwater the company hopes to draft from the aquifer beneath the Eastern Mojave Desert balked at agreeing to purchase the water at what the purveyor said would be a “negotiated” price.
Though the Cadiz Corporation issued a statement to investors that the decision was “not material” to the project’s viability, David Lamfrom of the National Parks Conservation Association told the Sentinel that the Tuesday vote was “really important” as any and all purchase agreements send a clear signal to the Metropolitan Water District with regard to its decision to accept or reject conveyance of the water in its privately owned canal – the California Aqueduct that passes 44 miles from Cadiz’s proposed well fields.
Cadiz, Inc. maintains it is committed to completing what was originally slated to be a $536.25 million project and says it has customers lined up to purchase all of the water it intends to obtain from a desert aquifer in a remote area of San Bernardino County. Nevertheless, environmental and legal challenges to the program have so far prevented the company from moving ahead with water extraction, and increased project costs and future development commitments have escalated to more than $1 billion, endangering investors’ capital, even as questions are emerging about whether the company will be able to market the water at prices that will justify past, current and future outlays to keep the project viable.
With standing room only, one speaker after another filed to the public speaker’s podium before the board dais in the Upper San Gabriel Valley Water District’s meeting chambers Tuesday night, recommending against the district entering into an agreement with Cadiz, Inc. to purchase water on terms that were not yet fully specified. Several suggested that the expense of water delivery and its treatment would be cost prohibitive. Environmental and political activists, including Peter Muller, the deputy state director from U.S. Senator Dianne Feinstein’s office, California State Senate District 16 Candidate Ruth Musser-Lopez, Chris Clark of the National Parks Conservation Association headquarters in Joshua Tree, as well as representatives from the Sierra Club and its ‘Desert Committee,’ the Native Plant Society, the Center for Biological Diversity, the California League of Conservation Voters, the Wilderness Coalition, and the group Indivisible, provided a litany of reasons supporting their contention that the project is not viable. These included assertions of “Cadiz’s conflicting science” with that of the United States Geological Survey, which has expressed concerns over the depletion of the East Mojave aquifer and what project opponents have said are Cadiz Inc.’s “unsupportable projections” of the rate of water recharge into the water table, land subsidence and the destruction of the desert’s ecotone and artesian springs upon which wildlife depend.
Also impacting on the water district’s willingness to embrace Cadiz, Inc. as a water supplier was a statement made on Tuesday night by one of the district’s five board members, Bryan Urias, who said lobbyists “hired by the Cadiz Corporation” attempted to engage in improper “quid pro quo” arrangements that may have run “afoul of the law” to influence his vote. He said that they made a “barrage” of “offers” which included commitments of thousands of dollars in support of his election campaign in return for his agreement to sign the letter as well as promises that whatever he wanted, they would “make it happen.” Simultaneously, Urias said, Cadiz’s consultants made threats to the effect that if he did not support the purchase agreement, the company would run someone against him in the next election, and supply that opponent with thousands of dollars.
Urias characterized the effort by Cadiz as “heavy-handed tactics” which were “not only ineffective to the point of verging on being counter-productive, but to the extent it has appeared to offer me some form of pecuniary gain as a quid pro quo in exchange for my vote, it may be illegal.”
Cadiz, Inc. issued public denials of what Urias said, maintaining it had “conducted a prompt investigation of employees, consultants, electronic and telephone records,” turning up “no evidence of the alleged activity.” Any such overtures to Urias were not authorized by Cadiz, Inc., a spokeswoman said, offering an assurance the company maintains strict compliance “with all legal and ethical standards when we engage public officials.”
Beginning in the late 1980s, what was then known as the Cadiz Land Company, which had been created by Ted Dutton and Keith Brackpool, sunk a single well in the Cadiz Valley in the Eastern Mojave Desert and initiated an organic farming operation there growing tomatoes, peppers, melons, grapes and citrus. Though at no time throughout its existence did the Cadiz farming operation operate at a profit, it was able to make an assertion, based upon the irrigation of the crops at the Cadiz farm, to water rights from the Cadiz/Fenner aquifer.
The Cadiz Land Company in the late 1990s sought to interest the Metropolitan Water District in a proposal to convey up to 1.5 million acre-feet of what was referenced as “surplus” Colorado River water to the Cadiz Valley and “store” that water by pumping it into the water table and then extracting the water and conveying it to Greater Los Angeles during “dry years.” Ultimately, however, the Metropolitan Water District rejected that proposal.
In 2012, the Cadiz Land Company, which had been renamed Cadiz, Inc., provided then-San Bernardino County Supervisor Brad Mitzelfelt with $48,100 in political donations to finesse him and his board colleagues into allowing the board of directors of the Santa Margarita Water District in Orange County, located 217 miles away from the Cadiz Valley, to carry out the environmental certification and approval of a controversial water extraction project in the East Mojave. Cadiz, Inc. contrived to have the Santa Margarita Water District, which serves the affluent Orange County communities of Rancho Santa Margarita, Mission Viejo, Coto de Caza, Las Flores, Ladera Ranch and Talega, oversee the environmental impact report for the project, despite the consideration that the water district was to be the largest consumer of the 75,000 acre feet of water the company was proposing to draft annually from the project’s 34 wells which were to be sunk in the Cadiz and Fenner valleys.
The unorthodox approval process for the plan to draft billions of gallons of water from the  East Mojave Desert’s pristine aquifer for use in Los Angeles and Orange counties, utilizing a governmental entity more than 200 miles removed from the property to be impacted which simultaneously had a financial and operational interest in the project, fueled questions about the integrity and legitimacy of the environmental certification of the project. Ultimately, those questions formed the basis of eleven lawsuits which kept Cadiz, Inc. tied up in court for years. Though the company was able to prevail in most of those suits, which it succeeded in having removed to Orange County Superior Court, appeals on those suits are yet proceeding, even as Cadiz, Inc. is hoping to at last put those challenges behind it and get on with the project. With investors becoming increasingly nervous, the company wants to line up purchasers for the water so it can begin generating revenue to satisfy its stockholders.
The Upper San Gabriel Valley Water District serves Hacienda Heights, La Puente, Bassett, Valinda, West Covina, Covina, the City of Industry, South El Monte, El Monte, Baldwin Park, Irwindale, Azusa, Glendora, Bradbury, Monrovia, Temple City, San Gabriel, Rosemead and South Pasadena. When the district’s board of directors this week took up a proposal to execute a non-binding letter of intent with Cadiz, Inc. laying out a purchase and sale agreement for water to be made available from the East Mojave, Cadiz, Inc. and its president and CEO, Scott Slater, were hoping to be able to use that signed letter as further demonstration to stockholders and prospective investors that the company will be able to perform as projected, selling the water it is angling to withdraw from the desert over the next several decades at a consistent and considerable profit.
During public comments before the board, Ruth Musser-Lopez, who is running for the California senate seat in the district where Cadiz is located, implored the board not to approve the purchase agreement, stating that “Every time a ‘San Gabriel’ water district comes along and votes favorably for the project, there is a sharp upward blip on the Cadiz stock price,” which she said further enabled Cadiz in pursuing what she said is an environmentally damaging theft of water from the East Mojave Desert, which will cripple that area of California economically and developmentally for the next several generations.
Slater, after walking a gauntlet of project opponents, told the water board that the Cadiz project would provide the district with a reliable source of water. He contradicted claims by some of those opposing the district’s adoption of the letter of intent suggesting there is a problem with the quality of the water to be drawn from the Mojave Desert. He said the Metropolitan Water District would not allow the water to be imported through its system if the water had unacceptable amounts of contaminants in it.
Slater was supported by members of the Pipefitters Union, whose members stand to gain employment in assisting with the construction of the conveyance system for the water from the Cadiz Valley to the Metropolitan Water District’s aqueduct.
Peter Muller spoke on behalf of Feinstein, a longtime opponent of the Cadiz Water Project. He said that the project would exploit fragile aquifers which are encircled by the National Trails National Monument. He said the East Mojave was a habitat for several unique species that would be threatened by Cadiz, Inc.’s “unsustainable” water extractions. The water to be withdrawn, Muller said, is ten times the natural water recharge to the region through rainfall. Furthermore, he said, the California Lands Commission owns the land across which the pipeline Cadiz, Inc. wants to build, such that the company does not have the necessary land rights to legally transport the water.
Ilene Anderson, with the Center for Biological Diversity, said scores of scientists attuned to the ecological challenges in the desert had come out against the project put forth by Cadiz, Inc’s corporate predecessor two decades ago. “It was a bad idea years ago and it is still bad,” she said.
Ultimately, the water board rejected signing the letter of intent to purchase, with three voting outright against it and two members abstaining. Dr. Anthony R. Fellow said he would not support the project out of respect for Senator Feinstein’s knowledge of the situation. Voting against the project, Alfonso “Al” Contreras talked about the unknown costs of water conveyance, utilities, detoxification and the need to preserve jobs locally, referring to the California “Water Fix” project which would supply both water and “many jobs,” he said. Urias refused to support it. Board member Charles M. Trevino said the project had been vetted multiple times and he supported the idea of all water source options being on the table, but ultimately he abstained from voting along with the board’s chairman, Ed Chavez, who said he would not vote on it until he physically visited the project site.

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