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Cadiz Inc. Announces US Bureau of Land Management Has Concluded Cadiz Water Project Is Within Scope of Railroad Right-Of-Way 

Category : News

BLM ALSO WITHDRAWS CONTROVERSIAL 2015 CADIZ EVALUATION

(LOS ANGELES, CA) – Today, Cadiz Inc. [NASDAQ:CDZI] (“Cadiz”, the “Company”)  announced that the United States Bureau of Land Management (“BLM”) has issued a letter (“BLM Letter”) to the Company, the Santa Margarita Water District (“SMWD”) and the Arizona & California Railroad (“ARZC”) finding that the Cadiz Water Project’s proposed use of the existing ARZC right-of-way to construct a pipeline and related railroad improvements “furthers railroad purposes” and concluding that the Project is within the scope of the original right-of-way grant.  The BLM Letter also formally rescinds the agency’s controversial and widely criticized October 2015 evaluation of the Project’s proposed ARZC right-of-way use, an evaluation that sought to keep the Project from utilizing this sensible corridor. As a result, no further federal permits or authorizations are required for Project construction within the ARZC railroad right-of-way.

“The company is very pleased to receive this letter from the BLM regarding the Project’s proposed use of the railroad right-of-way,” said Scott Slater, Cadiz President and CEO. “We have long maintained that the 2015 evaluation by BLM was wrong on the law, wrong on the facts and inconsistent with the policy driving co-location of infrastructure in existing rights-of-way to minimize project footprints and environmental harm.” Slater continued “We are grateful for the determined bi-partisan Congressional effort that sought a deeper, fair and unbiased review of the Project’s proposed use of the right-of-way by BLM and are tremendously satisfied to finally have this matter resolved.”

The BLM Letter follows multiple requests from bi-partisan congressional representatives and a broad coalition of national labor organizations, water districts, railroads, rural communities, farmers and numerous stakeholders that have urged congressional action to clarify the scope of railroad rights-of-way over federal lands and criticized BLM’s October 2015 evaluation of the Cadiz Water Project for its lack of consistency with historic policy encouraging co-location of infrastructure in railroad rights-of-way.  The October 2015 evaluation not only impeded the Cadiz Water Project, but also set a troubling precedent for thousands of miles of existing uses of railroad rights-of-way in the West.

BLM revisited the October 2015 evaluation relying on a recently issued Memorandum Opinion by the US Department of the Interior Solicitor’s Office and recent case law and concluded that  “authorizing the proposed activity falls within the scope of rights granted to the Arizona and California Railroad (ARZC) under the General Railroad Right-of-Way Act of March 3, 1875 (1875 Act), and therefore does not require authorization by BLM.”

The BLM Letter also separately finds that the Project furthers railroad purposes, following a factual review of the railroad benefits of the Project: “As the railroad itself describes, these component elements of the Cadiz project all provide critical benefits to the railroad that facilitate elements of its operations. Accordingly, consistent with the incidental use doctrine, the benefits associated with the Cadiz Project further a railroad purpose.”

To view a copy of the letter, click HERE.

With the receipt of this definitive determination by the BLM, the Company will now turn its attention to final engineering design, contract arrangements with its participating agencies and a conveyance agreement with the Metropolitan Water District of Southern California in accordance with applicable law.

Background

The BLM Letter arrives following interaction over nearly a decade with the US Department of the Interior (“DOI”) regarding the proposed use of the ARZC to co-locate the Project’s conveyance pipeline while constructing necessary and related improvements for the railroad. In 2008, Cadiz entered a 99-year lease with the ARZC to utilize the right-of-way for the Project’s water pipeline and also agreed to provide necessary railroad improvements. In January 2009, DOI determined that the Project could proceed within the right-of-way without additional federal permits and was within the scope of the ARZC right-of-way.  BLM policies and appropriations language authored by Sen. Dianne Feinstein (D-CA) subsequently created a unique requirement for the Project to demonstrate that it “further railroad purposes, at least in part,” and was therefore within the scope of the right-of-way.

In response to submittals offered by Cadiz, SMWD and ARZC over several years, the former Director of the BLM California office mailed a letter to Cadiz in October 2015, which reversed DOI’s January 2009 opinion, rejected the judgement of the railroad as to critical railroad benefits, and concluded that the Project was outside the scope of the right-of-way.  BLM California reached this conclusion even though elements of the Project furthered railroad purposes. To reach its conclusions, the October 2015 evaluation applied a new standard that the pipeline and railroad benefits must “originate” from a railroad purpose. This new standard, however, was inconsistent with then applicable M-Opinion, controlling law, and evaluations for existing infrastructure within the thousands of miles of railroad rights of way throughout the West.  Consequently, the 2015 evaluation clouded thousands of third party rights and railroad uses within railroad rights-of-way in the Western United States.  If the 2015 evaluation were universally applied, other third party uses could require retroactive and future supplemental permitting from the federal government, despite more than 100 years of historic practice to the contrary in the West.

Almost immediately following BLM’s controversial 2015 evaluation it was subject to bi-partisan criticism and heightened scrutiny by lawmakers. Subsequent responses by the BLM to Freedom of Information Act (“FOIA”) requests revealed that BLM officials who reviewed the Project may have been biased in their analysis and communicated details on the timing and outcome of the review to people with ties to the Wall Street investment community.  In 2016, the US Department of the Interior Inspector General and the US House Oversight Committee launched investigations into the activities of third parties and conduct of the BLM, but have not yet issued their findings. We continue to look forward to the conclusion of those investigations.

About the Cadiz Water Project

The Cadiz Valley Water Conservation, Recovery and Storage Project is an innovative, California water project that will create a new water supply for approximately 400,000 people by conserving renewable groundwater presently lost to evaporation at the base of a vast Mojave Desert watershed. The Project is a public–private partnership between Cadiz Inc., the largest private landowner in the area, and public water providers in Southern California to provide a new, reliable water supply of 50,000 acre-feet per year for 50 years across the region without harm to the environment. Operations will be governed by an extensive, state-of-the-art groundwater management plan imposed and enforced by San Bernardino County. The Project has been extensively studied, publicly-reviewed and approved under California’s stringent environmental laws and the Project’s permits have been upheld in California’s court system. In addition to adding a new reliable water supply in Southern California, Project construction is expected to create and support thousands of jobs and generate close to $1 Billion in economic activity. Over the long-term, the Project will create $6 billion in savings for water users throughout Southern California.

About Cadiz

Founded in 1983, Cadiz Inc. is a publicly-held renewable resources company that owns 70 square miles of property with significant water resources in Southern California. The Company maintains an organic agricultural development in the Cadiz Valley of eastern San Bernardino County, California and is partnering with public water agencies to implement the Cadiz Water Project, which over two phases will create a new water supply for approximately 400,000 people and make available up to 1 million acre-feet of new groundwater storage capacity for the region.  Cadiz abides by a wide-ranging “Green Compact” focused on environmental conservation and sustainable practices to manage its land, water and agricultural resources. For more information, please visit www.cadizinc.com

FORWARD LOOKING STATEMENT: This release contains forward-looking statements that are subject to significant risks and uncertainties, including statements related to the future operating and financial performance of the Company and the financing activities of the Company.  Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Factors that could cause actual results or events to differ materially from those reflected in the Company’s forward-looking statements include the Company’s ability to maximize value for Cadiz land and water resources, the Company’s ability to obtain new financing as needed, the receipt of additional permits for the water project and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.

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Company Update on California State Lands Commission Letter Regarding Old Project

Category : News

Last week, the Company received a letter from the California State Lands Commission (“State Lands”) regarding the Cadiz Groundwater Storage and Dry-Year Supply Program (“2002 Cadiz Program”), a project we pursued in partnership with the Metropolitan Water District of Southern California from 1997-2002. The letter informs the Company that the State of California owns property that would have been crossed by the 2002 Cadiz Program’s pipeline route. On Sunday evening, the Los Angeles Times reported on the letter after having received it from unidentified sources. The letter communicates that a lease would be required to cross property owned by the State of California.  According to the letter, such a lease would be subject to the approval of the Commission and such approval may require additional environmental review in accordance with CEQA.

The State Lands letter does not discuss the current Cadiz Valley Water Conservation, Recovery & Storage Project (“Cadiz Water Project”), which plans to construct its pipeline within an existing railroad right-of-way and was fully reviewed in accordance with the California Environmental Quality Act (CEQA) starting in 2011.  It refers to the 2002 Project even though State Lands was notified of the 2011 Cadiz Water Project’s CEQA process, as were over 100 state, federal, local and regional agencies, yet, unlike countless agencies that did comment, State Lands did not.  Moreover, they did not assert any role as a responsible agency over the Cadiz Water Project, nor participate in the numerous workshops that were open to the public and all agencies. The CEQA review for the Cadiz Water Project was fully certified and then upheld by the California Court of Appeal in 2016. The EIR is final and conclusive on all parties properly notified. The Statute of Limitations to challenge the EIR has passed.

The State Lands letter notes that a parcel, which is approximately 200 feet wide and one-mile long and may have been crossed by the 2002 Cadiz Program, is owned by the State and may require a lease to be crossed.   The State Lands in question are not material to our ability to complete the Cadiz Water Project.

As we have stated, the Company’s attention is focused on securing a withdrawal of the controversial evaluation by the BLM California office in 2015 of our planned use of the railroad right-of-way.  The 2015 BLM evaluation was contrary to law and policy and has been under investigation since 2016 when it was revealed that the BLM’s review was potentially tainted by the disclosure of communications between BLM employees and people that might profit from trading of the Company’s securities. Various stakeholders, a bi-partisan group of Congressional members and the Company have supported a reversal of the 2015 BLM evaluation on the merits since its issuance.

The Company is confident we will ultimately receive validation of our position that the Project is within the scope of the right-of-way.   We look forward to providing clean and reliable water to 400,000 Californians as soon as possible.

A copy of the letter from State Lands is available here.

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Op-Ed: The myths used to needlessly delay the Cadiz water project, debunked | L.A. Times

Category : News

Los Angeles Times, Blowback

9-22-17

California is world-renowned for its protection of natural resources, and its environmental laws are America’s strongest — far more stringent than their federal equivalents. In fact, the rigor of California’s environmental process has caused many high-profile projects to seek legislative exemptions from state review. So when a critical infrastructure project makes it through California’s environmental permitting processes and is upheld by all levels of the state’s courts, it’s a big achievement.

For nearly a decade, the Cadiz Valley Water Conservation, Recovery and Storage Project, which will create a new water supply for 400,000 people and thousands of jobs, has followed the entire California Environmental Quality Act (CEQA) review and approval process from start to finish — public comment periods, public hearings, board approvals and litigation, all of which concluded last year, when the 4th District Court of Appeal sustained every approval of the project and concluded that it could be operated safely and sustainably.

So it’s disappointing that Sen. Dianne Feinstein (D-Calif.) and her allies, including state Assemblywoman Laura Friedman (D-Glendale), continue to perpetuate a series of myths about the Cadiz project as part of a campaign to derail it, including in a recent op-ed article for the Los Angeles Times. Here are just a few examples of the most common myths:

 

  • Feinstein and Friedman claim the project would be “an environmental disaster” that could “destroy the Mojave Desert.” However, independent experts, public agency decisions and 12 state court opinions have concluded that the Cadiz project is no such threat to the Mojave Desert or the surrounding ecosystem, including the springs, flora, fauna and aquifer. In their op-ed, Feinstein and Friedman cited an old U.S. Geological Survey estimate of the area’s water recharge rate, prepared in 2000 for a different project. They fail to acknowledge that this out-of-date estimate was evaluated during the project’s CEQA review process and set aside in light of actual, measured data not previously available to the USGS. What’s more, the project’s use of groundwater was ultimately limited by San Bernardino County to a specific amount — 0.3% of total storage, annually — and to a hard floor in the water table, making the recharge rate moot. It is arithmetically, physically and legally impossible for the Cadiz project to do what Feinstein and Friedman claim it could do, given the county’s strict conditions and court-approved management provisions.

 

  • Feinstein and Friedman also allege that Cadiz avoided review by locating its pipeline in a railroad right-of-way. But they ignore the fact that the federal government concluded in 2009 that no federal permits were required. Multiple federal agencies participated in the project’s CEQA review, and their comments were fully incorporated and addressed. Furthermore, sharing a right-of-way with a railroad is customary practice. Most railroads have other infrastructure in them — fiber optic lines, electric lines, sewer lines or gas lines. This “co-location” practice minimizes the potential for negative environmental effects because it protects virgin lands from new infrastructure, and it helps utilities better service communities in need. This doesn’t mean a project is not subject to environmental scrutiny. It just means a project doesn’t need a secondary permit to use the same corridor that the host railroad was already permitted to use.

 

  • Feinstein and Friedman claim that the new administration is dismantling the federal regulatory framework that could have prevented Cadiz from using the railroad right-of-way. This is very misleading, and it also ignores the role that Feinstein herself played in any “dismantling.” After the federal government determined in 2009 that no federal permits were required, Feinstein wielded her tremendous federal appropriations power to create a new regulatory framework that would force the Bureau of Land Management to certify that the Cadiz project was within the scope of the railroad right-of-way, a new requirement unique to Cadiz. At the same time, Feinstein’s appropriations policy prohibited the BLM from processing any applications for permits that could be required under that new framework. While publicly insisting that Cadiz must undergo a federal review, Feinstein blocked all potential for there to ever be one. This Catch-22 set the stage for a widely criticized precedent that threatened the sensible use of existing railroads for necessary infrastructure — a precedent now being addressed by the federal government at the request of members of Congress from both sides of the aisle.

 

Feinstein’s and Friedman’s agenda — to stop this court-validated, job-creating water project — is no secret. But it’s not based in fact or law. The Cadiz project is a privately financed California project, regulated in accordance with our state and local laws and supported broadly by major labor unions; local, state and federal representatives; and business, agriculture and public-interest organizations. It offers a new, sustainable water supply, thousands of jobs and more than $875 million in economic activity — all without any negative environmental effects.

We are grateful that the Legislature didn’t advance Feinstein’s and Friedman’s agenda in the recently ended legislative session. And we urge California’s leaders to continue to stand up for jobs, for citizens who need water, and for our state’s strong environmental review laws by rejecting sustained efforts to change the rules of the game for Cadiz or any other CEQA-approved project.

Tracy Rafter Hernandez is chief executive of the Los Angeles County Business Federation. Carlos Rodriguez is chief executive of the Baldy View chapter of the Building Industry Assn. of Southern California.

This piece is part of Blowback, our online forum for rebuttals to The Times. If you would like to write a full-length response to a recent Times article, editorial or Op-Ed and would like to participate in Blowback, here are our FAQs and submission policy.

 

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Cadiz statement on irresponsible release by Senator Feinstein regarding Cadiz water quality

Category : News

(9-23-17) Yesterday, Senator Feinstein issued a press release regarding a risk she claims is presented by conserved water that will be delivered from the Cadiz Water Project to Southern California communities. We are stunned and disappointed by the allegations made by Senator Feinstein, which reflect a lack of understanding of the Project and disregard for state requirements that all drinking water meet federal and state standards issued by the US Environmental Protection Agency and the State’s Division of Drinking Water. Her statement suggests that Cadiz water might be delivered to consumers without satisfying these standards; this is irresponsible and not true.

Water quality at Cadiz is regularly tested using licensed professional laboratory services, is the subject of annual reports to San Bernardino County and was extensively surveyed in connection with the comprehensive Court-approved environmental impact report (EIR) for the Cadiz Water Project.  Cadiz water quality, as described in the EIR, is below current State & Federal MCLs. Total Dissolved Solids (TDS) of the Cadiz supply are considerably lower than both the MCL and the amount in the Colorado River Aqueduct (“CRA”) and would reduce the service area’s treatment requirements, a benefit valued at nearly $400 million.

Delivery of Cadiz groundwater to the CRA will be done in full accordance with applicable federal and state standards.  Cost-effective and permitted treatment technologies are available to reduce constituents below existing state and federal standards should such treatment be necessary in the future.   Importantly, no water from Cadiz would ever enter the CRA that does not meet all local, state and federal standards and no water will reach consumers unless it satisfies these same standards.  It is misleading and shameful for the Senator to suggest that the state and federal drinking water regulatory system would or could be bypassed or that the water conserved by Cadiz will put the public at risk.

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