Feinstein Asks MWD to Kill Mojave Project

In what could be the most damaging blow yet to the controversial Cadiz water storage program, Sen. Dianne Feinstein (D-Calif.) on Wednesday called on the Metropolitan Water District of Southern California to vote down the $150-million proposal as unnecessary and a potential environmental threat to the Mojave Desert.

“I have come to the conclusion that the project may adversely affect the future of the California desert and should not be allowed to proceed at this time,” Feinstein wrote to MWD Chairman Philip J. Pace and the rest of the MWD board. “To allow it to move ahead would be a terrible mistake.”

The Cadiz program, proposed in 1997, has become the signature project of Keith Brackpool, an entrepreneur who has been a generous financial backer of Gov. Gray Davis and one of Davis’ trusted advisors on water policy. Brackpool’s company, Cadiz Inc., which would be MWD’s partner in the project, has borrowed heavily on the expectation that the project would have been approved earlier this year.

Feinstein’s letter came amid indications that the Interior Department is poised to issue, over her objections, the final federal environmental permits needed for the project to go forward.

But MWD sources say the board may be nearing a decision to place the project on hold anyway, in part over doubts that sufficient surplus water will be available from the Colorado River to fill the storage site. District officials said Wednesday, however, that Pace and several other board members were out of town and that most had not yet seen Feinstein’s letter.

In a statement from its Santa Monica offices, Cadiz said it was gratified to learn that issuance of the long-awaited permits was imminent. Once that happens, Cadiz said, “the project will have received sign-off from all federal agencies.”

Because the state faces strong pressure to curtail its dependence on Colorado River surplus, the statement continued, “California can not afford to lose projects that have been through five years of environmental review, public hearings, and have received support from all federal agencies.”

The project is designed to store as much as 1.5 million acre-feet of surplus Colorado River water in the sand under a Mojave Desert parcel owned by Cadiz.

Under tentative terms negotiated in 2001, Cadiz and the MWD would split the project’s capital costs, which include the expense of building a 35-mile desert pipeline connecting the MWD’s Colorado River Aqueduct and the Cadiz tract. The MWD estimates that Cadiz could earn more than $500 million in revenue from the project.

In the last few months, Feinstein has emerged as one of the project’s most vociferous opponents, largely because of concerns that exploiting the aquifer could damage the ecosystem of the Mojave National Preserve, which lies nearby. In her letter Wednesday, she also raised several other objections to the program. These include “serious financial concerns” and the availability of alternative storage programs, some of which “are more cost-effective for MWD.”

“In my view, this raises the question: ‘Why proceed with Cadiz when it isn’t necessary and when it may very well result in serious adverse impacts to California’s pristine desert?’ ” she wrote. “It does not make sense to siphon off water from this critical area of the California desert to send to the MWD when the region has other options for water and when the aquifer is vital to the health of the desert and its animal and plant life.”

Feinstein’s opposition is the latest in a series of recent potholes for the project. MWD board members have questioned the financial arrangements that would tie the water district to Cadiz, a publicly traded firm that has never turned a profit and is deeply in debt.

In recent months, an effort by Cadiz to pay off some of its debt by merging its agricultural operations with those of a wealthy Saudi prince has fallen through. No alternative recapitalization plan has been announced. This month, the company said Brackpool, its chairman and chief executive, and Dwight Makins, its former chairman, were net sellers of Cadiz shares during July, when the stock lost about half its value.

Before news of Feinstein’s letter was widely spread, Cadiz shares fell 6 cents to $4.45 on Nasdaq.