Press Release: Cadiz Inc. Announces Guidance from U.S. Bureau of Land Management Regarding Cadiz Water Project’s Proposed Use of a Railroad ROW

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Press Release: Cadiz Inc. Announces Guidance from U.S. Bureau of Land Management Regarding Cadiz Water Project’s Proposed Use of a Railroad ROW

Category : News

Los Angeles, CA (BusinessWire) — Cadiz Inc. (NASDAQ: CDZI) (“Cadiz”, the “Company”) announced today that it has indirectly received a copy of correspondence dated October 2, 2015 addressed to the Company from the California State Director of the U.S. Bureau of Land Management (“BLM”) related to the Cadiz Valley Water Conservation, Recovery and Storage Project’s (“Project”) proposed use of a portion of the Arizona and California Railroad’s 1875 Act right-of-way (“ROW”) for its water conveyance pipeline and related facilities. The letter explains that BLM has determined that the Project’s proposed use, as described to the BLM to date, is outside the scope of the ROW and therefore would require a BLM permit before proceeding.  However, the letter notes that the determination is not a final action and is subject to reconsideration upon the submittal of new information.

The Cadiz Water Project is a public-private partnership that will conserve water presently lost to evaporation and create a new water supply for 400,000 people a year. The Project will also further several railroad purposes through the installation of a 43 mile pipeline by: (1) providing power developed from an “in-line turbine” for the railroad’s exclusive use to light sidings, operate crossings and carry-out transloading activities; (2) delivering information and safety systems derived from the Project’s fiber-optic cable; (3) installing an automated fire suppression system with water and storage at various points along the 43- mile pipeline; (4) operating a tourist based steam engine reflective of the original and historic use of the railroad; and (5) making available a new access road for maintenance and crew-shifts.

In 2011, the Solicitor of the U.S. Department of the Interior, which oversees BLM, opined that “railroads have the right to undertake [and authorize others to undertake] a range of activities within their [1875 Act] ROWs, including commercial activities, so long as the activity derives from or furthers [at least in part] a railroad purpose.” The Oct 2, 2015 BLM correspondence appears to disregard the framework of the 2011 Opinion and the Company will immediately seek to clarify and if necessary rescind the BLM determination.

As the Company continues to move forward to secure legal clarification of its right to access the ARZC ROW, it will continue to complete the remaining milestones for the Project. The Project has also already passed strict scrutiny under the California Environmental Quality Act – the toughest environmental law in the U.S. The Project was independently approved by both the Santa Margarita Water District (“SMWD”) and the County of San Bernardino (“County”) in 2012 and this review was subsequently sustained in 6 sweeping trial court victories against all challenges in 2014. Appeals of these cases have been fully briefed and are awaiting oral argument, which is expected to occur in the 4th Quarter of 2015. SMWD, the County and the Company were recently joined in defense of the trial court decisions by a diverse group of amicus curie interests.

The Project has also made significant engineering progress this year, having mapped the approved wellfield, drilled numerous test wells and advanced water treatment plans. Information sharing between SMWD and the Metropolitan Water District of Southern California (“MWD”) also continues, and given the progress made, the Company anticipates board review by MWD later in the 4th Quarter of 2015 or 1st Quarter of 2016.

The Project enjoys broad and growing support from State and Federal elected officials as well as community, business, and labor groups. Most recently, U.S. Representatives Linda Sanchez (D-CA, 38) and Tony Cardenas (D-CA, 29) joined the growing list of bipartisan Congressional support for the project, which already includes Col. Paul Cook (R-Yucca Valley), Jim Costa (D-Fresno), Duncan Hunter (R-El Cajon), Darrell Issa (R-Vista), Scott Peters (D-San Diego), Ed Royce (R-Hacienda Heights), and Mimi Walters (R-Laguna Niguel). Last week, seven water districts in Southern California also expressed their support for the project.

The Company remains committed to completing the Project on schedule with deliveries of water projected to begin in 2017.

To read the Oct 2, 2015 BLM letter, click here. To read the Company’s response letter dated October 5, 2015, click here.

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