Cadiz speaks

Posted on | August 14, 2009 | 2 Comments

historyFIRST, thanks to Aquafornia, the news feed of the Water Education Foundation, for carrying today’s guest commentary from Cadiz Inc General Counsel Scott Slater, and to Mr Slater for taking the time to address questions raised here and in other publications, including the Los Angeles Times, WaterWired and Aguanomics.


Second, for readers new to this discussion, Cadiz Inc has been promoting a groundwater project in the Mojave Desert (see above image, upper right hand corner) in the Cadiz, Fenner and Bristol basins.  It argues that it can safely remove up to 150,000 acre feet of water a year from its Mojave Desert landholdings, 30,000-50,000 of it native groundwater, the rest from unnamed sources. It would pump this water roughly 40 miles to the Colorado River Aqueduct. From there, the water would be wheeled through the public water supply system to private purchasers.

For lay readers, this is an immense amount of water. To envision how much growth it could spur, consider that it is roughly half of Las Vegas’s current allocation from the Colorado River, which supplies 90% of Sin City’s water. (An acre foot of water is enough to cover an acre to the depth of one foot, and depending on the water efficiency of a city, it is thought that it can generally supply two families or 8 people per year. Recycle it and those numbers go way up.)

Cadiz also argues that it can offer desert underground storage for as much as a million acre feet of water per year. This, theoretically, would be imported from the Colorado River Aqueduct and infused into the groundwater table. How this would work is unclear. The waters of the Colorado River are, as the US Bureau of Reclamation likes to put it, “over-allocated.” Theoretically, Cadiz could buy water from agricultural allocations, but it is hard to see why any Southern Californian water agency would want to insert Cadiz, and formidable price increases, into trades that could be done directly between cities and ag water districts.

A recently redoubled effort by Cadiz to sell its project, along with the difficulty checking its claims against a massive federal review completed in 2001 that is now off-line, led this writer to start writing about Cadiz, and last week going at the company straight on with a tough roll of questions. (See Question time for Cadiz.)  Cadiz did not reply to it, but those questions then provoked a ripple of pieces in other water blogs, the sum of which clearly prompted today’s Cadiz commentary in Aquafornia.

To those who wonder if we bloggers are buddies tag-teaming Cadiz, a disclaimer. I have never met water economist David Zetland, publisher of Aguanomics, who I contacted by phone for the first time last week looking for help parsing Cadiz’s stock history. I have met WaterWired’s editor, Oregon State University professor Michael Campana, last month in Washington DC, where we both attended a water conference. Before that, I confess to being an abject fan of his blog.

And so to today’s Cadiz commentary on the water blogs of water blogs, Aquafornia: Would that it answered any of the questions that provoked Cadiz’s general counsel to write it instead of raising yet more red flags. It didn’t. So, while Cadiz is still welcome, nay, urged, to address the questions put to it last week, here is a response to Cadiz’s rebuttal.

1. From Cadiz today: “We have designed the water conservation and storage project to bank and market native groundwater conserved by reducing controllable losses from the aquifer system. Additionally, water will be imported from outside the property and stored in the aquifer system. The withdrawal and recharge of native and imported water will be conducted in a manner that achieves and then maintains optimal, long-term, safe (sustainable) yield and conjunctive use of water.”

From Emily Green: What does this mean? You show no source of incoming water to be stored. Natural precipitation recharge is estimated at 2,500 acre feet per year and you propose removing 30,000-50,000 acre feet per year and a further 100,000 afy of water whose source you can’t name.

2. From Cadiz today: We are committed to ensuring that the management of the groundwater levels will not result in harm to the aquifer system, or cause material adverse changes in the environment. To make our environmental commitment real, we’ve partnered with the Natural Heritage Institute (NHI), a recognized global environmental organization with a proven track record restoring and protecting water-dependent ecosystems. In a wide ranging “Green Compact” developed in partnership with NHI, Cadiz has pledged to pursue a series of model initiatives, including the permanent preservation of lands, a commitment to solar power development, stringent plans for groundwater management and habitat conservation, and the creation of a water bank that will be used in part to restore one or more endangered aquatic ecosystems in California and the Colorado River basin. A copy of the “Green Compact” is available on our website at: http://www.cadizinc.com/sites/default/files/cadiz/uploads/NHI%20MOU%20Original(1).pdf

From Emily Green: Removing 150,000 acre feet of water a year from a desert impacts the environment. If you take it from the Mojave, the Mojave will miss it. If you take it from Manhattan Beach Country Club, Manhattan Beach Country Club will miss it. Leaving aside promised “initiatives,” what enables the Natural Heritage Institute to make your no damage pledge “real”? NHI is a group of lawyers. For more on this, see original questions, still unanswered. Further, will NHI be doing this for free? Or will it be remunerated? If so, by whom?  Moreover, if Colorado River water does become available, what will Cadiz or NHI do to protect indigenous groundwater from the impact of the contaminants the banks would introduce, a potential load of 1,015,532 tons of salt and 12.2 tons of Perchlorate a year, according to the EIS estimate. (EIS / EIR, Vol II, F2-39).

3. From Cadiz today:  The inference has been suggested that the Cadiz Project had been previously rejected on environmental grounds. This is false. The Environmental Impact Statement (EIS) for the project was approved by the U.S. Department of the Interior in 2001, (the Environmental Impact Report (EIR) portion was finalized but not certified). Because of changes made to the project since that time, Cadiz is now pursuing a new EIR.

From Emily Green: I neither inferred nor suggested that the Cadiz Project was rejected by the Department of Interior. It did what Interior does, which is carry out a review, the details of which were withering in terms of assessing claims made by Cadiz Inc about recharge of the target basins, which it found Cadiz had over-estimated by a magnitude of 5 – 25 times. (See Vol 2, Section F, Page 2 of the Final EIS/EIR.) Rather, I stated directly that the dangers pointed out in the review and the requirements of the pumping plan were what led the Metropolitan Water District of Southern California to pull out of the project in 2002. (See Metropolitan Water District of Southern California board minutes for Oct. 7-8,  2002).

4. Cadiz writes: The project would have the capacity to deliver up to 150,000 acre-feet in a dry year. Not every year. In wet years, the project would also have the capacity to store up to 150,000 acre-feet. The project is designed to operate as a traditional groundwater bank. In some years, more water will be put into the bank than extracted (wetter years), and, in some years, more water will be extracted than recharged (drier years). That is the nature and utility of a groundwater bank. Over the 50-year project term, we believe the project can deliver between 30,000 and 50,000 acre-feet of indigenous groundwater per year on average.

From Emily Green: How? According to whom? See above, see original questions, see this recharge / sustainable yield assessment from John Bredehoeft, former Regional Hydrogeologist–USGS, Region Manager (8 states west) and now principal of the Hydrodynamics Group, or see California’s Groundwater Bulletin 118, or the Cadiz EIS / EIR, Vol 2. Attachment 1: USGS Review, F2-60.

5. Cadiz writes: Our estimates of recharge have been validated by numerous experts and will be subject to further scientific review and a prudent management plan patterned after successful programs already being administered throughout Southern California. While the USGS initially disagreed with our estimates of recharge, they did assume the role of a Participating Agency in the original project’s Groundwater Monitoring and Management Plan and approved of and were a signatory to the Final EIS. Cadiz is committed to limiting groundwater withdrawals on a long-term sustainable basis with the benefit of the best and the most recent scientific and technical information.

From Emily Green: Please name at least one of these “numerous experts” and provide a reference for their reports. The USGS comment in the final  EIS / EIR review of the original Cadiz recharge estimates was “the quantity of natural ground-water recharge to the Fenner, Bristol and Cadiz watersheds and dishcarge (evapotranspiration ) from Bristol and Dadiz dry lakes has beeen grossly overestimated [by Cadiz]. “

And, yes, the USGS was a signatory to a monitoring plan that would have so severely limited Cadiz water withdrawals that Metropolitan withdrew from the project. (See Metropolitan Water District of Southern California Board minutes, Oct 7-8, 2002).

6. From Cadiz:  A number of serious misunderstandings continue to be perpetuated about the Project’s environmental impact, including the charge that drawing water from the aquifer system will result in adverse impacts to the Mojave National Preserve and local mountain springs. There is absolutely no scientific evidence to support any of these claims. On the contrary, the original EIR/EIS documentation for Project found and all qualified experts agree that there are no native plants, habitat, or wildlife within the project area that are reliant on the aquifer system. The project area lies at the bottom of a 1,300-mile watershed and the minimum depth of the water table underlying the project area is approximately 200 feet below the land surface. The closest boundary of the Preserve is approximately 20 miles and 2,500 feet up gradient from the Project. On the face of it, it would be absurd to suggest any groundwater related impacts on the Preserve or local springs since they would need to run a half a mile uphill.

From Emily Green: From the EIS / EIR, this commentary from Mary G. Martin, Superintendent of the Mojave National Preserve:”Mojave National Preserve, a unit of the National Park System, is located approximately 15 miles north of the main [Cadiz] Project area. Fenner Basin, which is expected to provide the primary source of natural recharge groundwater to the Cadiz Project, runs nearly 30 miles into the Mojave National Preserve, and is one of the park’s major groundwater aquifers. The Cadiz Project has the potential to adversely affect the groundwater resources of the Mojave National Preserve and air quality in the Preserve.”

Further on, in Vol 2, F2-38, Martin directly addresses Cadiz’s contention that pumping the adjacent aquifer would not affect the Preserve: “Even very small sources of water in a desert environment are critical to preserving [nationally important flora and fauna]. These springs could be impacted by changes in the characteristics (eg water level or gradient) of the valley bottom aquifers … the ground-water model developed for this EIS shows predicted drawdown up to 25 miles away from the proposed pumping centers, will within the range of the Preserve. …  “

7. From Cadiz: We presently have five water providers signed up [for the project revived in 2008]. Golden State Water Company and

City of Anaheim have identified themselves. The other three providers will be identified once we finalize cost-sharing arrangements for the environmental review process.

From Emily Green: On June 5, 2009,  Cadiz Inc issued a press release claiming that it had Letters of Intent to proceed with the plan from five purchasers. Golden State Water was one named partner. The other four were then unnamed. Today, it adds the City of Anaheim as another potential partner, so only three of the five partners remain unnamed.

Regardless of who the three other potential partners are, profoundly troubling questions remain concerning this June 5 Cadiz announcement, which carried embedded endorsements of the project from Gov. Arnold Schwarzenegger, US Rep Jim Costa and San Bernardino County Supervisor Brad Mitzelfelt. According to the Los Angeles Times, Congressman Costa and Supervisor Mitzelfelt and the Governor’s Chief of Staff Susan Kennedy are all recipients of campaign donations or salaries from Cadiz. There is no law against this, but what makes it so troubling is that there were no public issuances of their endorsements outside of the Cadiz June 5 press release. Rather, the endorsements of public servants came from Cadiz and  sent Cadiz stock soaring. Further, large blocks of shares awarded only weeks earlier to two Cadiz directors, gained substantially in value. (See my own posting on this, Aguanomics and Los Angeles Times business columnist Michael Hiltzik). Yet no answers have been given by Cadiz or the concerned public officials how Cadiz came in possession of these endorsements or whether the directors shares were “in the money” at the time of the price surge drive by release of those endorsements.

On May 22, 2009 Cadiz CEO took options on 60,000 shares in his own company. Two weeks later, after the June 5, 2009 endorsement from politicians supported financially or formerly employed by Cadiz, these shares were worthon May 22 They were worth about $400,000 then and about $750,000 2 weeks later.

On May 22, 2009 Cadiz CEO Keith Brackpool took options on 60,000 shares in his own company. At the time, they were worth approximately $400,000. Two weeks later, after the June 5, 2009 endorsement from politicians supported financially or formerly employed by Cadiz, these shares were worth about $750,000.

To sum up, yes of course California and its many local water agencies need forward-thinking solutions to water management. In that quest, they need partners who they can trust, who are candid, who understand the imperative of avoiding not just impropriety but also the appearance of impropriety, who do not deliberately or inadvertently besmirch the records of the public servants with whom they deal and who, if they are publicly traded companies, are direct with their shareholders.

If Cadiz is that company, it has a long way to go to prove it, starting with answering the questions here and earlier questions left unanswered last week.

-Emily Green, Los Angeles, Friday August 14, 2009

This post has been updated. Errors in grammar and spelling have been corrected. An explanatory note putting Cadiz’s targeted 150K of water into perspective has been added and the pre-June 5 worth of Mr Brackpool’s 60,000 shares has been added to the picture caption.  A misstatement calling Cadiz a “private” company has been corrected to publicly traded. Cadiz Inc shares are publicly traded.

All errors, big or small, grammatical or factual, will be immediately corrected. Substantial errors resulting in gross misconceptions will receive public corrections and, if merited, sincere public apologies. To read the Ethics Code for Chance of Rain, click here. To those who spot mistakes, please e-mail: emily.green [at] mac.com.









Comments

2 Responses to “Cadiz speaks”

  1. james miller
    August 17th, 2009 @ 12:29 pm

    Well at least we now know your motivation for your bias against Cadiz.

    You are anti-growth.

    You also seem to intentionally get the facts wrong regarding the size of the project.

    You continually claim Cadiz wants to extract 150k AF a year, yet their own explanation of their intention has a much smaller water yield per year.

    I would ask that you re-read your own blogger ethics that you have posted and reevaluate the situation.

  2. admin
    August 17th, 2009 @ 2:35 pm

    Mr. Miller, I am not anti-growth, I am critical of growth without adequate natural resources and credible management plans for those resources. The claims of Cadiz’s expected yield from their pumping operation are not mine, they are Cadiz’s. Please see their own material, which is assiduously linked in all my postings. They claim to have access to 150K acre feet of water per year, and have argued in the past that the perennial yield of native groundwater could be 30-50k acre feet of water per year. But it remains unclear when they give the 150K afy estimate what percentage of water would be native groundwater and what would be stored water, or where that stored water would come from, or whether they would stop at 30-50K afy of native groundwater. If they did, it merits stressing that this would still constitute groundwater mining. Independent evaluations from the USGS, USNPS and the Hydrodynamics Group put the safe perennial yield at 2,500-5,000 afy. Thank you for writing. I hope this helps. The Code of Ethics is from the Society of Professional Journalists. I trust I have been explicit about where I depart from its dictums in promoting water conservation, which is not antithetical to growth. -Emily Green

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