Time is running out for a coalition of environmentalists who had hoped the California legislature would pass a bill subjecting the plan to withdraw millions of gallons of water from the water table below the East Mojave Desert and convey it by pipeline for use elsewhere in California to exacting scrutiny as to its impact before those water extractions can be made.
Senate Bill 120, written by California State Senator Senator Richard Roth, would not allow the transfer of groundwater out of the desert unless the State Lands Commission and the Department of Fish and Wildlife conclude the water removal “will not adversely affect the natural or cultural resources” of nearby state or federal lands. According to Roth, the bill would not prohibit the use of desert water outside of the desert, but it will prevent water removal if such pumping has the effect of removing more water from the desert on an annual basis or within any given time frame if the recharge of water into the desert during the time period considered does not equal or exceed the amount of water taken out.
Senate Bill 120 was introduced at a very late stage in the legislative process, greatly complicating its prospect for passage. The bill was presented to Roth’s fellow and sister legislators on Friday, August 24, one week prior to the August 31 end of the 2018 legislative session. Thus, from the outset, its passage was going to require nearly Herculean expediting across a normally grueling and methodical process that typically requires months. Remarkably, Senate Bill 120 was ratified by California Lower House in just five days, as the Assembly voted 45-20 Wednesday night to accept it. But that left just a little over two days – until midnight tonight, Friday August 31, for the Senate to consider it and vote upon it. That will take some doing, as Cadiz, Inc. has over the last two years cultivated a number of powerful California state senators as allies.
Seizing that strategic high ground has been no mean feat for Cadiz, Inc., as its corporate participants and its allies have historically been closely affiliated with the Republican Party, and the California legislature – both the State Senate and the Assembly – are dominated by Democrats. Moreover, the Democrats are philosophically, conceptually and politically more in tune with the environmentalists who have emerged as the most effective opponents to the desert water extraction project than they are with Cadiz, Inc. and its aggressive corporate objective of exploiting the natural resources of one of the state’s more remote and economically challenged locations to profit by marketing that resource to well-heeled consumers in a densely populated and urbanized area. Through the application of a generous amount of money, vectored to Democratic politicians and in particular young, up-and-coming and ambitious Democratic politicians, just as the Democratic Party’s Young Turks are militating to wrest control of the party from California’s established but now rapidly-aging Democratic Old Guard, Cadiz, Inc. appears to be on the brink of placing its controversial project beyond the reach of the politicians capable of untracking it.
Beginning in the late 1980s, what was then known as the Cadiz Land Company, which had been created by Ted Dutton, a heavy-hitting Republican Party campaign donor, and Keith Brackpool, a British entrepreneur who had set his sights upon generating a fortune in the former Colonies, 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. Litigation ensued, in which the Cadiz Land Company alleged the Metropolitan Water District had backed out of the deal.
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 the 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 several 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 some of 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. The company, in both its Cadiz Land Company and Cadiz, Inc. manifestations, has never operated at a profit in its 31 years of existence. It has sustained itself with capital provided by wave after wave of investors. With each successive infusion of capital, the company has intensified its promotion of the project, accompanied by an immediate or gradual rise in stock price. But as the project would continue to languish, the stock price would fall, only to be revived by further rounds of investment. This perpetual rise and fall of the company’s stock price has sparked comparisons to a Ponzi scheme. With investors becoming increasingly nervous, the company has embarked on an ambitious effort to clear the way for the project to proceed once all of the legal and procedural issues are resolved, and has striven to line up purchasers for the water so it can begin generating revenue to satisfy its stockholders at the earliest opportunity.
With Donald Trump serving as president, the company has caught a break in that his administration has moved to arrest practically all of the federal government’s foot-dragging with regard to the project, as when in March 2017 Timothy Spisak, the acting assistant director for the Bureau of Land Management’s Division of Energy, Minerals, and Realty Management, in the form of a blanket memo revoked the Bureau of Land Management’s 2015 decision to disallow the use the existing federal railroad right-of-way for the water pipeline Cadiz, Inc. intends to construct to convey water drawn from the Cadiz aquifer to the Colorado River Aqueduct which brings water into the greater Los Angleles area. At issue was the degree to which railroads are at liberty to allow their rights-of-way to be used for non-railroad purposes. A railroad right-of-way can accommodate a water pipeline if the water is to be used by the railroad, but the use of steam engines went out of vogue last century. In 1989, an Interior Department solicitor concluded that an 1875 railroad law allowed railroads to authorize other uses for that right-of-way without Department of the Interior approval. A subsequent solicitor’s opinion altered that conclusion to state other uses had to “derive from or further” a railroad purpose. The Bureau of Land Management office for California later found that “conveyance of water for public consumption is not a railroad purpose.” Anticipating such a contretemps over the right-of-way use issue, Cadiz, Inc. had previously proposed operating an “historic” locomotive on the railroad line along the water conveyance route for its entertainment and historically-informative value as an amenity to the project. Both federal and state government officials during the Obama era saw this as a gimmick and illegitimate ploy by Cadiz to game federal regulations and stood firm against using the railroad right-of-way for the pipeline. The Donald Trump Administration, for its part, saw the effort to prohibit the use of the span of land paralleling the railroad line for the aqueduct as a gaming of the system by the environmentalists, which led to Spisak’s blanket memo.
Cadiz, Inc. has sought to move the project forward on the basis of that momentum, and the company has staked much upon the political careers of three rising rising stars in the Democratic Party in California, State Senator Ricardo Lara, D-Bell Gardens; Kevin de León D-Los Angeles, who was from 2014 until March of this year the California Senate President Pro Tem; and current California Senate Leader Toni Atkins, D-San Diego.
De León in whose district the Cadiz corporate headquarters is located, had received $9,100 in political contributions from Cadiz, Inc. as of last year. Since then Cadiz, Inc. has been a major contributor to his campaign for the U.S. Senate against Dianne Feinstein this year.
Feinstein has proven to be the most prolific and effective opponent to Cadiz, Inc.’s designs on the East Mojave’s water supply. She was the lead sponsor of the 1994 California Desert Protection Act signed into law by President Bill Clinton and the sponsor of the California Desert Protection Act of 2011, both of which feature provisions that have been wielded against the Cadiz Water Project. She was the author and sponsor of the California Desert Conservation and Recreation Act of 2015 and the California Desert Protection and Recreation Act of 2017. In 2017, Feinstein consulted with Assemblywoman Laura Friedman, who in July 2017 altered the language of pending legislation, AB 1000, which originally pertained to water meter standards, to halt significant desert water pumping until state land and wildlife officials review the proposed groundwater extractions to first certify they would not harm the desert’s ecology.
Though the Cadiz Project was not mentioned specifically in the legislation, Friedman acknowledged the alteration of AB 1000 came in response to the Trump Administration’s prioritization of the Cadiz Water Project. “When the federal government refuses to undertake these environmental reviews, the state must step up and make sure they are done,” said Friedman.
Friedman’s move triggered objections and a counteraction from Cadiz, Inc. and its corporate officers, who characterized what she was engaged in as “flawed legislation.” They rallied two of their two allies in the California Senate, Lara and de León, to their cause to block the bill’s release and keep it from making it past the California Senate Appropriations Committee, where it lay dormant at the end of the 2017 legislative session.
This week’s last minute push by environmentalists to pass Senate Bill 120 comes during the build up toward the internecine political war between Feinstein and de León, as de León is challenging Feinstein for U.S. Senatorial position she has held for more than a quarter of a century.
Environmentalists are dismayed by de León’s action, in that he had previously touted his legislative accomplishments on a number of climate change-related, clean energy, energy efficiency, environmental and anti-pollution bills. But de León appears intent on siding with Cadiz, Inc. in the current battle, in which environmental groups are seeking action from the legislature that will prevent Cadiz, Inc. from pumping up to 16.3 billion gallons of groundwater per year from the desert. The environmentalists believe the Trump administration has gutted environmental safeguards, pointing out that an earlier anticipated environmental analysis of the project sponsored by the federal government has been canceled. They want the State of California to take up that slack and carry out an exacting review using independent standards, given that the 2012 environmental impact report for the project was certified by an entity, the Santa Margarita Water District, which has an economic stake in the project and which lies more than 200 miles away from where those impacts will resound.
The opponents of the Cadiz Project and the supporters of Senate Bill 120 include some formidable members of the California political establishment, including the Old Guard and elements that have future viability. Among those are Feinstein, Governor Jerry Brown, Lieutenant Governor and the leading current candidate for governor Gavin Newsom and Los Angeles Mayor Eric Garcetti. Opposition to the project has fared well in Assembly, with Assembly Speaker Anthony Rendon militating against the project.
Cadiz, Inc. has been extremely energetic with regard to preventing the California legislature from interfering with the project, and has spared no expense in the seeking to block the efforts of environmentalists and their political allies to use the legislature as a cudgel against the water conveyance scheme. In this way, the company has vectored its monetary forces on the California Senate. In addition to cultivating de León and Lara, the company in June retained Greg Campbell’s lobbying firm, a calculated move in that Campbell is the former chief of staff to California Senate Leader Toni Atkins, who has the authority on her own to kill bill even before it is voted upon in the Senate. Doubling down, Cadiz on Monday retained another lobbying firm headed by Justin Fanslau, who was Atkins’ former legislative director. That is a repeat of the strategy used last year in blocking Friedman’s rewritten version of AB 1000, when Cadiz hired Mercury Public Affairs, which employs former Assembly Speaker Fabián Nuñez, who was instrumental in promoting the political career of de León. Cadiz, Inc. had already put itself in position to receive favorable treatment from Atkins, having contributed $15,550 to her either directly as a corporate contribution or from employees and those of its law firm, Brownstein Hyatt Farber Schreck LLP, which also employs Cadiz, Inc.’s president, Scott Slater.
The lobbyists working on behalf of Cadiz, Inc. have pushed the narrative that the project has already been subject to a California Environmental Quality Act review and that the project’s opponents have unfairly loaded the dice against the project with Senate Bill 120, in that the legislation is tailor-drafted for application against the Cadiz water project. They are further marshaling endorsement of the project by construction worker unions, as those union members stand to obtain employment in the construction of the pipeline.
Despite what environmentalists consider to be a valiant effort in pushing Senate Bill 120, project opponents stand little chance of succeeding, as Friday’s midnight end of this year’s legislative session is fast approaching and if the measure has not been voted upon and passed by then, it will have no prospect for becoming law.
-Mark Gutglueck