For the last three years a politically well-connected Los Angeles Company has made what seemed a steady and inevitable march toward being able to extract billions of gallons of ancient and pristine water lying in the aquifers of the East Mojave Desert, which it could then sell for use in urban Orange County, Los Angeles County and Riverside counties.
Now, however, the federal government has said it will require an exhaustive environmental impact report with regard to a crucial element of the project that the project’s opponents say carries with it the prospect of derailing the undertaking altogether.
Officially referred to as the Cadiz Valley Conservation, Recovery and Storage Project, the enterprise is a proposal by Los Angeles-based Cadiz, Inc. to sink 34 wells into the desert on property owned by the company. Those wells are designed to draw water from the aquifers beneath both the Cadiz and Fenner valleys and then convey that water into a 44-mile long pipeline to be constructed along a railroad right-of-way until it meets up with the aqueduct that carries Colorado River water to the Los Angeles and Orange County metropolitan areas.
The project was approved by the Santa Margarita Water District on the evening of July 31, 2012, providing Cadiz, Inc., also known as the Cadiz Land Company, with permission to pump an average of 50,000 acre-feet of water per year out of the aquifers in San Bernardino County’s Eastern Mojave Desert and sell it to water districts, companies and other public and private purveyors of water in Riverside, Orange, and Los Angeles counties to replenish the water supply there.
The Santa Margarita Water District, the second largest water district in Orange County that serves an area more than 200 miles from the Cadiz Valley, was the lead agency for the project, overseeing the California Environmental Quality Act (CEQA) review process for the project’s permitting.
Cadiz, Inc. intends to sell the extracted water to the Santa Margarita Water District; Three Valleys Water District, which provides water to the Pomona Valley, Walnut Valley, and Eastern San Gabriel Valley; the Golden State Water Company, which serves several communities in Southern California, including Claremont; Suburban Water Systems, which serves Covina, West Covina and La Mirada; and the Jurupa Community Services District, which serves Mira Loma in Riverside County.
Initially, San Bernardino County officials contemplated contesting the highly unusual arrangement of having the Santa Margarita Water District, which has a stake in the project and is located 216 miles from the Cadiz Valley, act as the lead governmental agency on the project, which included providing the project with environmental certification. Ultimately, however, the San Bernardino County Board of Supervisors acceded to the Santa Margarita Water District’s assumption of lead agency authority over the project application and environmental certification and entered into a memorandum of understanding with Cadiz, Inc. and the Santa Margarita Water District that gave the county limited power to second-guess the district’s decision on the environmental certification and compliance with its own ground water management ordinance as well as requiring that Cadiz, Inc. defray the cost of any legal action taken by parties against the project or in reaction to its impacts. The project garnered considerable opposition, particularly in San Bernardino County and the East Mojave Desert, where the Cadiz Valley is located.
The late John Goss, a former assistant administrative officer with San Bernardino County who had worked for 18 months drafting the county’s desert groundwater management ordinance before it was adopted in 2002, was among those opposing the project. He said the memorandum of understanding between the county, Cadiz, Inc. and Santa Margarita Water District had been entered into before a groundwater management plan for the Cadiz project was adopted, violating the terms of the 2002 ordinance.
A total of twelve lawsuits contesting multiple aspects of the project were filed, including four by Delaware Tetra Technologies, Inc., which operates a salt mining operation in the Cadiz and Fenner Valleys; a federal lawsuit by the Colorado River Branch of the Archaeological Heritage Association filed 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; two suits by the Center for Biological Diversity against the county, Cadiz, Inc. and Santa Margarita in San Bernardino County Superior Court; one by Citizens and Ratepayers Opposing Water Nonsense, and one filed by Rodorigo Briones against the Santa Margarita Water District in San Bernardino County Superior Court.
The lawsuits alleged that the project will drain the aquifer in both the Cadiz Valley and nearby Fenner Valley, wreaking environmental harm, that the approval process for the project which allowed a water district in Orange County more than 200 miles from the project area to serve as the lead agency for the project and oversee its environmental certification violated state and federal environmental laws, that the county of San Bernardino failed to abide by its own desert groundwater management plan in approving the project, that the environmental impact report for the project was inadequate, that approval of the project violated provisions of both the National Historic Preservation Act and the Federal Land Policy and Management Act, that the Bureau of Land Management failed to conduct a proper review of the cultural and environmental impacts of the project; that the extraction of the water will interfere with salt mining and other pre-existing industrial operations in the area, and other issues.
Three of the cases, those involving plaintiffs Archaeological Heritage Association, Santa Margarita Citizens and Ratepayers Opposing Water Nonsense, and Rodrigo Briones, were dismissed in 2012 and 2013.
Because of an overlap in plaintiffs, the remaining cases were consolidated into six, all of which were transferred into the court of Orange County Superior Court Judge Gail Andler, who heard all of the lawsuits together in a trail that took place over twelve days in December 2013, and January and February 2014.
In the course of the proceedings, Andler put on the record a statement that seemed to support the collective plaintiffs’ contention that the project had not been given a fair and adequate evaluation by an unbiased lead agency. “The court finds that the Santa Margarita Water District should not have been designated the lead agency for the project. The California Environmental Quality Act’s underpinnings of accountability and stewardship support the conclusion that the county should have instead served as the lead agency. The county was in the best position to objectively balance the benefits and risks of the project rather than the purchaser of the water.”
Nevertheless, Andler ultimately, on May 1, 2014, issued a ruling denying the petitions filed in all six remaining actions. Andler’s ruling affirmed the county’s approval of the Groundwater Management, Monitoring and Mitigation Plan and the memorandum of understanding. Notices of appeal were filed in all six cases and those cases are now pending in the Fourth Appellate District.
In the meantime, Cadiz, Inc. steeled itself against the challenge, engaging in some backroom politicking to sponge the bells of several influential politicians who had previously gone on record against the energetic desert water siphoning plan. In 2012, then San Bernardino County Supervisor Neil Derry had been the lone member of the board of supervisors to oppose the county surrendering lead agency status with regard to the project to the Santa Margarita Water District and he alone among his colleagues opposed entering into the memorandum of understanding with Cadiz, Inc. and the Santa Margarita Water District and ratifying the subsequent ground water management plan that went with the deal. But in 2014, the Laborers Local 783, a supporter of the Cadiz Project, retained the services of the public relations firm Desmond & Louis, with whom Derry had hired on as a senior vice president of public affairs in 2013, after he left the board of supervisors. Derry has since spoken favorably of the project.
In June 2013, Congressman Paul Cook (R-Yucca Valley) called for a federal review of the Cadiz Valley Water Project. “Professional independent reviews have called into question the 32,500 acre-feet per year recharge rate Cadiz Inc. claims will naturally occur,” Cook wrote in a letter to Interior Secretary Sally Jewell, asserting, “There are serious doubts about the validity of the previous environmental studies, specifically the draft environmental impact statement. This project must be examined thoroughly before it moves forward.”
Last year, however, after Cadiz, Inc. lobbyists went to work on Cook, the congressman, citing a review of the hydrology in the area which he said found the project sustainable in terms of water recharge rates and avoiding adverse effect on top soil, made a 180 degree reversal, recommending in a September 2014 letter to Jewel against any further environmental review of the project.
Cadiz, Inc.’s position was fortified further when this summer eleven amicus curiae briefs from the American Groundwater Trust, the Association of California Water Agencies, the Building Industry Legal Defense Foundation, the Building Industry Association of the Bay Area, the California Building Industry Association, the California Business Property Association, the California Chamber of Commerce, the California Association of Sanitation Agencies, the California State Association of Counties, the Property & Environment Research Center and the Southern California District Council of Laborers in support of the project were filed with the court.
Indeed, Cadiz, Inc. was looking beyond the pending appeal, informing its investors of the actual launching of the well-sinking and construction of the water pipeline as soon as the anticipated rejection of the appeal clears the appellate court. But on October 6, the seeming blindingly bright future of the company dimmed considerably when the Bureau of Land Management gave notification to both Cadiz, Inc. and the Santa Margarita Water District that it will require a full environmental review of the groundwater pumping plan.
A key provision of the Cadiz plan was that the company would place its water pipeline along the right-of-way for a rail line running through the desert. It was the company’s position that use of the right-of-way for that purpose obviated the need for a comprehensive environmental review, both of the pipeline and the project itself.
But that approach was upended when the Bureau of Land Management (BLM) ordered Cadiz, Inc. to complete a full environmental impact report with regard to the water conveyance system before proceeding.
Environmentalists and others who have actively and passively opposed the Cadiz project applauded the BLM decision.
“The BLM is making the right call in requiring a full environmental analysis of this high-impact project,” said Ileene Anderson, a scientist with the Center for Biological Diversity. “This shortsighted water grab would rob some of California’s rarest species of the water they need to survive and increase urban sprawl in coastal Southern California — all while depleting precious public-trust water resources.”
In addition, Aruna Prabhala, a staff attorney at the Center for Biolgoical Diversity said, “Throughout the environmental review and approval process, there was failure to follow the law and a disregard for accountability to San Bernardino residents and fragile desert resources. Our lawsuits are targeted at protecting the public’s water resources and ensuring that San Bernardino County’s groundwater-protection laws are fully enforced.”
Accompanying the report of the BLM’s requirement, the price of Cadiz stock, which was already slipping from its high point of $14, had tumbled to below $3 this week, triggering a cacophony of celebration among project opponents, who hailed the sharp downward trend as the death knell of the company.
This week, Scott Slater, an attorney specializing in water issues who is now Cadiz, Inc.’s president and chief executive officer, told the Sentinel the recent developments may delay the project but that predictions of the company’s demise or the discontinuation of the water diversion plan are overblown.
“The state director of the Bureau of Land Management in his letter, or guidance determination, has opined that our proposed pipeline, which will convey water for municipal use in addition to furthering railroad purposes, is outside the scope of the Arizona & California Railroad’s right-of-way,” Slater said. “We disagree with these findings and believe it is irreconcilable with federal law and policy. The letter does not ‘require a full environmental impact statement;’ rather it says that if we plan to construct we should apply for a new right-of-way permit application for the pipeline and that would be subject to federal environmental review. If we were to file, we believe any federal environmental review would be limited to the construction of the pipeline across Bureau of Land Management land.”
Slater continued, “The pipeline has already been thoroughly scrutinized under the California Environmental Quality Act, the nation’s most stringent environmental law, and found not to cause a single unmitigated environmental impact. The Bureau of Land Management can rely upon the exhaustive California Environmental Quality Act analysis in the processing of any right-of-way application.”
Slater said reports of the company’s pending dissolution are wishful projections by the Cadiz Water Project’s opponents.
“We were disappointed in the Bureau of Land Management’s guidance determination and the manner in which it was made but it is not the end of the company or the project,” he said. “We believe the determination is contrary to federal law and policy, sets a terrible precedent for the infrastructure industry, and will be rescinded. Importantly, the guidance determination is not final and allows for reconsideration. We can file a right-of-way application immediately over the Arizona & California Railroad route. Only federal review of a proposal to ‘store water underground’ is prohibited by the ‘Feinstein Rider,’ not our conservation and supply program. Therefore, if we choose to, the project can apply for a federal right-of-way permit limited to the conveyance of the conserved groundwater today. The Bureau of Land Management already approved a right-of-way for a larger more impactful pipeline from Cadiz to the Colorado River Aqueduct in 2002. We therefore remain confident we will receive a federal permit if that were required. In fact, we can find no reason it would not be granted.”
Slater’s reference to the Feinstein Rider relates to legislative augmentation Senator Dianne Feinstein (D-California) has for years added to the federal budget barring the Bureau of Land Management from spending money on anything related to the Cadiz project.
“Related to the company,” Slater said, “we continue to be in good financial standing. We are in compliance with all debt covenants and have no payments due until March 2016. We also have cash on hand to implement the business strategy. We are confident we can refinance and extend our debt covenants prior to their due date if necessary.”
Slater said Cadiz, Inc. has options with regard to how it will respond to the Bureau of Land Management’s mandate.
“In his letter, Director Kenna stated that the guidance determination is not final and as a result, Cadiz and its partners are first pursuing a reconsideration of the BLM decision,” Slater said. “Cadiz has written a letter to Bureau of Land Management Director Neil Kornze pointing out the errors in the determination and requesting that he overturn it. Congressional supporters have also expressed concern about this decision and requested BLM’s background materials so that the true reasoning for the guidance may be brought to light.”
Furthermore, Slater said, “If legislative and administrative remedies are unable to overturn the decision, and we do not file a right-of-way application, the company can pursue federal litigation in court because, federal courts have exclusive jurisdiction to determine questions of title, including the scope of railroad rights-of-way, so a federal court can properly declare title and bind the Bureau of Land Management regardless of the guidance memorandum.
“We have an approved water conservation project to supply water for 400,000 people, a final environmental impact report and a groundwater management approval sustained by a California Superior Court Judge who dismissed all 6 cases brought against the Project and sustained every aspect of the government approvals,” Slater continued. “We will be persistent in our efforts to demonstrate to the BLM that the public interest and its own guidance documents require that it modify its baseless decision and if our requests are unsuccessful, we will seek a swift resolution in Federal Court. We are confident in our case and that our cause is just.”