[Marxism] Chinatown sequel

Louis Proyect lnp3 at panix.com
Wed May 16 07:40:53 MDT 2012


Company wants to tap Mojave's public lands for Southland water
Cadiz Inc. could realize $1 billion to $2 billion in revenue over 
the plan's 50-year life. Opponents say public resources are being 
used for private profit.

By Bettina Boxall, Los Angeles Times

May 16, 2012

CADIZ, Calif. – Three decades ago a group of businessmen pored 
over NASA satellite imagery as part of a worldwide hunt for large 
groundwater reserves they could tap to grow desert crops. They 
found the signs they were looking for here in the sun-blasted 
mountain ranges and creosote-freckled valleys of the Mojave 
Desert, 200 miles east of Los Angeles.

The group, which founded Cadiz Inc., bought old railroad land, 
drilled wells and planted neat grids of citrus trees and 
grapevines, irrigating them with water that bubbled out of the 
desert depths at the rate of 2,000 gallons a minute.

But by the mid-1990s, Cadiz had a new business plan: Sell water, 
not lemons.

The company is pushing ahead with a proposal to pump enough 
groundwater every year to supply 100,000 homes and sell it to 
urban Southern California at prices that could, over the project's 
50-year life, reap $1 billion to $2 billion in revenue.

If the plan succeeds, it will turn ancient desert groundwater, a 
public resource, into a fountain of private profit, blazing a new 
— and some warn ominous — path in the state.

"I think we're setting a precedent here for the development of 
groundwater in the Mojave Desert," said hydrologist John 
Bredehoeft, a former regional manager for the U.S. Geological 
Survey who was hired by conservation groups to review the project.

Critics question whether the Southland, infamous for slaking its 
thirst with water from the Owens Valley and elsewhere, should now 
draw new supplies from pristine desert watersheds.

"It's taking a public resource that originates on public land, 
privatizing it and selling it back to the public," said Seth 
Shteir of the National Parks Conservation Assn., one of a dozen 
environmental groups challenging the project. "This water is going 
to Orange County lawns and swimming pools. The desert is being 
asked to shoulder the burden."

Keith Brackpool, the corporation's politically connected, 
British-born chief executive, has spent the last 15 years trying 
to get into the water business. He came close in 2002, nearly 
sealing a pact with the Metropolitan Water District of Southern 
California, the region's giant water wholesaler.

The company has made enough progress with its latest proposal to 
worry long-standing opponents, including Sen. Dianne Feinstein 
(D-Calif.), who on Friday called for a federal review of the 
project. Cadiz has lined up new customers, released a thick pile 
of environmental documents and hired one of the West's most 
powerful law firms.

At times sounding like they are describing a major oil discovery, 
Cadiz officials are pitching the project as a dependable 
alternative to water deliveries from Northern California and the 
Colorado River that have been squeezed by drought and 
environmental regulations.

"It is more reliable than anything out there," said Cadiz 
President and General Counsel Scott Slater, a partner in the 
Denver-based law firm of Brownstein Hyatt Farber Schreck, which 
runs one of the top-grossing lobbying operations in Washington. 
"The environmental effects are nominal."

A veteran water attorney, Slater is the project's chief spokesman. 
Brackpool, chairman of the California Horse Racing Board and a 
past contributor to high-profile Democrats, has stayed in the 
background. Thirty years ago he was fined by a British court for 
dealing in securities without a license.

Federal lands surround the 34,000 acres the company owns just 
south of Route 66 near the old railroad stop of Cadiz. A 
half-dozen congressionally designated wilderness areas are close 
by. About 15 miles to the north lies the 1.6-million-acre Mojave 
National Preserve, managed by the National Park Service.

Cadiz's proposed network of 30 wells, each about 1,000 feet deep, 
would pump groundwater that flows from beneath these public lands 
and is replenished by rain and snowmelt from their mountain 
ranges: the Providence and New York, the Marble and the Clipper.

The aquifer dates from wetter times long ago, when water seeped 
into subterranean layers of sand and gravel and deep, ancient 
formations of limestone and dolomite. Cadiz believes there is 
enough groundwater to fill California's largest reservoir roughly 
four to seven times over.

Despite Slater's assurances, the plan involves a calculated risk 
to the desert.

About 11 miles from the Cadiz lemon groves, on the south side of 
the Clipper Mountains, is Bonanza Spring. It is the closest to the 
proposed well field of more than two dozen springs in the area. 
Bighorn sheep, bobcats and other wildlife come here to lap from 
the shallow pools of water amid reeds and willow trees, a shock of 
green in the Mojave's brown palette.

Experts hired by Cadiz say they are confident the pumping would 
not hurt Bonanza and the other springs because they are at higher 
elevations and get their water before it drains into the valley 
aquifers. "There's no way we could affect springs up there," said 
Terry Foreman, senior hydrogeologist and vice president of CH2M 
HILL, nodding toward the mountains.

Federal scientists say Cadiz has yet to prove the springs have no 
connection to the aquifers. "It may be true and it might not be 
true," said Debra Hughson, science advisor for the Mojave 
preserve. Regardless, she called the project an "unsustainable 
groundwater mining proposal."

Cadiz intends to withdraw more water every year than nature puts 
back in the ground, lowering the groundwater table and depleting 
the aquifer. By how much, and whether that will harm the fragile 
desert environment of nearby public lands, remain important questions.

No one really knows the rate of natural groundwater replenishment 
in the 1,300-square-mile area that drains toward the Cadiz 
operation. Scientists can only estimate it based largely on 
conceptual modeling that has yielded a wide range of numbers over 
the years.

Federal hydrologists and scientists hired by environmental groups 
say the natural recharge rate is at most half — and could be less 
than a sixth — of what Cadiz's experts say it is.

Acknowledging the dispute, the project's draft environmental 
report, released in December, concludes that a half century of 
pumping would deplete native groundwater reserves by a minimum of 
3% and possibly as much as 13%, depending on natural replenishment 
rates and the size of the aquifer.

Nearly four centuries would have to pass before aquifer storage 
fully recovered from the larger decline.

Financing is another looming question. The project has a 
preliminary price tag of $225 million to $275 million. According 
to the company's latest annual report, Cadiz, which is publicly 
traded, is losing money on its operations and has a debt of $56.6 

It has so far struck option agreements to sell up to 80% of the 
groundwater to three investor-owned utilities and three public 
water districts that serve portions of Southern California, 
including the second largest in Orange County, Santa Margarita.

To price the supplies competitively, Cadiz is hoping for public 
subsidies. Those include credits from the Metropolitan Water 
District, state and federal grants and public financing of some or 
all of the capital costs of the project's most expensive 
component, a 43-mile pipeline that would transport water from the 
well field to the Colorado River Aqueduct.

Without subsidies, the options show that Cadiz water would be 
among the most expensive in the Southland, nearly $1,100 an 
acre-foot for untreated supplies. Treatment would further jack up 
the price. Metropolitan plans to next year charge $847 an 
acre-foot for treated supplies.

John Schatz, general manager of the Santa Margarita district, 
which has signed up for the biggest share of Cadiz water and is 
leading the project's environmental review process, said the price 
is high but Metropolitan rates are rising and the groundwater's 
reliability adds to its value.

Under the proposal, Santa Margarita and other customers would form 
a private mutual water company that would buy supplies from Cadiz 
and manage the operation. Mutual water companies are not regulated 
by the California Public Utilities Commission and members would be 
free to sell their water. "We certainly contemplated that in the 
overall approach," Schatz said.

Nor is groundwater use regulated by the state. San Bernardino 
County supervisors — who have received $79,500 combined in 
campaign contributions from Cadiz since 2007 — recently voted to 
give Cadiz an exemption from the county's desert groundwater 
ordinance, instead approving an agreement that gives the county 
authority to enforce the project's monitoring and management plan.

Missing from the oversight lineup are the federal agencies that 
manage nearby land. Cadiz argues that it does not need federal 
approval because its pipeline route follows an existing railroad 

But a recent Interior Department solicitor's opinion held that 
railroads cannot authorize activities in their federal 
right-of-ways "that bear no relationship to the construction or 
operation of a railroad."

In a Friday letter to Interior Secretary Ken Salazar, Feinstein 
dismissed Cadiz's arguments that the railroad could use the 
pipeline to put out trestle fires and wash rail cars.

"California's Mojave Desert is a unique and special place … that 
must be protected," wrote Feinstein, requesting a full review of 
the project under federal environmental law.

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