Public Trust is missing on water

In the lengthy compilation below you will find much fine insight, invective, wit, humor and history on water in California, as fascinating and horrifying to us Californians as the drug trade. The whole story is like a dark novel in which we are living and no one doubts that it will all end worse than we can imagine.
Jerry wants to get shit done. But, as one homeowner activist from LA put it, what would you say to a contractor who proposed building you a new house but didn't have either a blueprint or a budget?
Thus it is with the famous peripheral tunnels that would take fresh Sacramento River water, before it entered the Delta,
 around the Delta to tie into the grand canals that take so much Delta water south to the Heavy Metel Acres of the west side of the San Joaquin Valley and to Southern California for more growth. One question so far left undiscussed in the media as far as we know is how deep does the Delta peat go. This is not discussed because that Delta peat is the most fertile soil in California and "getting shit done" requires that we turn its water into salt to sent the fresh water down to Heavy Metal Acres. Don't ask. It has something to do with campaign contributions.
Nor do the new water literati mention the Public Trust Doctrine, enshrined in federal and state law, which requires that the government manage the resources for the benefit of all the public, rivers specifically for navigation, fishing and recreation, two out of three of which will be severely impacted if Jerry gets his shit done.
In 2010 a Public Trust lawsuit was brought by  the California Water Impact Network (C-WIN), the California Sportfishing  Protection Alliance (CSPA) and AquAlliance in Sacramento County Superior Court to protect Delta fisheries and water quality from excessive Delta pumping. Before proceeding farther, the plaintiffs must exhaust their administrative remedies before the
 state Water Quality Control Board in two upcoming hearings, one on water quality, the other on water rights.
Eventually, however, the Public Trust will directly confront Jerry's plan and we will see what the stinker is.
Badlands Journal editorial board

8-17-21
Huffington Post
The Madness of King Jerry
Glen Martin
Author, 'Game Changer: Animal Rights and the Fate of Africa's Wildlife
http://www.huffingtonpost.com/glen-martin/the-madness-of-king-jerry_b_17...

Was California Gov. Jerry Brown a Manchurian Candidate for California's water buffaloes (promoters of hugely expensive and  environmentally destructive water projects)? Kind of looks that way. Brown ran on a moderate platform that included a rational water policy. He promised to "fix" the broken Sacramento/San Joaquin Delta, restore its moribund fisheries, and provide some equity in the distribution of state water.

Well, Brown got elected; after that, he apparently had a Vulcan mind meld with the agribusiness panjandrums of the western San Joaquin Valley. His new mantra is "peripheral canal"-- or maybe "conveyance system." It amounts to the same thing: subterranean twin tunnels that shuttle water from the Sacramento River around the Delta to the South State. And by South State, I mainly mean the corporate farmers of the San Joaquin. These plutocratic land barons will get most of this government-subsidized water, while SoCal urbanites must be content with a minority share.

Brown explained his rationale late last month at a press conference to announce his plans for the behemoth twin-tunneled conveyance apparatus that will move from 9,000 to 15,000 cubic feet of water a second (and cost upward of $50 billion). He was getting on in years, he acknowledged, and was depressed that he kept going to the funerals of old friends. Ergo, he wanted, as he so memorably put it, "...to get sh-t done." I sympathize. More to the point, I empathize. I'll even express it in the colorful and colloquial language Brown prefers: getting old is something of a bitch. Anyone descending into ungraceful dotage, myself included, would like to get more shi-t done. But not all sh-t, of course, is created equal. And the canal is definitely bad sh-t.

That's because it makes no sense economically or environmentally. Jeffrey Michael, an economist with the University of the Pacific at Stockton, conducted an analysis of the proposal and concluded the costs will outweigh the benefits by $7 billion.

And while we're at it, the supposed "benefits" look decidedly slim, at least if beneficiaries are defined as the commonweal.

Yes, South State cities need water, but they can get it without additional trips to the pork barrel -- and the accrual of more state debt.

Remember, most of the water from Brown's "chunnel" will be used to irrigate the western San Joaquin Valley; this vast expanse of selenium-tainted soil already produces millions of acre feet of toxic agricultural drainwater that is a clear and present  danger to human health, fisheries and wildlife. Cities must therefore be given priority over industrial agricultural for government project water. Second, we need to pick the low-hanging fruit. Recycling, conservation, desalinization plants and rain recovery systems for new residential and commercial projects will all help assure California's water security without a Ceaucescuesque public works project.

Too, Brown and his allies disingenuously claim a canal is necessary to restore the biological health of the Delta. Exactly wrong. The chunnel will remove more of what the Delta needs: fresh water. It is the annual infusion of fresh water from the Sacramento River and rivers coming off the west slope of the Sierra that maintains the brackish conditions necessary for robust biological productivity in the Bay/Delta estuary. Brown's Orwellian doublespeak belies the fact that the chunnel's promoters are seeking a 50-year exemption from the U.S. Endangered Species Act. In other words, the Sacramento River's water can be blithely shuttled south for five decades before anyone has to worry about impacts on California's salmon runs. At the end of that period, of course, it's highly unlikely any salmon will be left. No salmon, no ESA restrictions - no problem. For the water buffaloes, at least.

This is nothing new. Southern Californians were scammed by a grandiose water export scheme before. Allow me to transport you back to the halcyon year of 1991, when voters approved the "Coastal Branch" of the State Water Project's California Aqueduct.

It tapped the main aqueduct near Kettleman City in the San Joaquin Valley, ultimately supplying the coastal communities of Santa Barbara, Santa Maria, and San Luis Obispo. Its 116 miles of pipe and five pumping stations were supposed to cost taxpayers no more than $270 million. By 1995, construction costs had spiked to $595 million; water deliveries to South Coast cities, however, have been no more than 36 percent of the total stipulated by contract. When all the hot air and construction dust settles by 2035, the total costs of the Coastal Branch are expected to exceed $1.75 billion.

And that's without Brown's Folly -- I mean, peripheral canal. If this monumental boondoggle goes through, the South Coast could very well wind up paying more for less water. A study by the California Water Impact Network (C-WIN) notes that Santa Barbara residents only need state water during droughts - precisely the times when such water is not available. Meanwhile, Santa Barbara's four South Coast water districts must continue to meet their bond obligations for the Coastal Branch - regardless of whether water is actually delivered. C-WIN observes that the Montecito Water District will shell out almost $5 million this year - or about 40 percent of its budget - to satisfy its Coastal Branch debt, even though it does not need and will not receive any state water. Construction of Brown's chunnel will only make things worse, increasing the price of water
for California's ratepayers and ensuring the destruction of the richest estuary on the West Coast of the continental United States.

Brown is doing everything he can to avoid a public decision on the project. The last time voters weighed in on a "conveyance system" was in 1982, during Brown's first tenure as governor. In that year, voters soundly rejected a referendum on a peripheral canal. The chances are very good they'd do so again. No surprise, then, that chunnel supporters are pushing for
the issuance of state revenue bonds to fund the project; that route doesn't require voter approval.

It's sad that Brown has been reduced from the "People's Governor" to agribusiness shill in the twilight of his career. But it's sadder still that Californians may have to suffer the crushing debt and environmental degradation that could result from his megalomania. We expected - and deserved --better from him
11-6-21

Mojave Water Debate: Company Wants To Use Cadiz Ranch

By NOAKI SCHWARTZ and GARANCE BURKE   AP
http://www.huffingtonpost.com/2011/11/06/mojave-water-debate-cadiz-ranch...

CADIZ, Calif. -- Off historic Route 66 in the heart of the California desert the barren landscape of dry scrub and rock abruptly gives way to an oasis of tall green trees heavy with lemons and grape vines awaiting next month's harvest.

Some believe this lush farm in the unlikeliest of places also sits atop a partial solution to Southern California's water woes.

By tapping into an aquifer the size of Rhode Island under the 35,000-acre Cadiz ranch, proponents say they can supply 400,000 people with drinking water in only a few years.

If the plan sounds familiar, it is. A decade ago, Los Angeles' Metropolitan Water District narrowly rejected it when it faced widespread environmental opposition. A scaled back version has resurfaced with a greener pitch, momentum from five water agencies and what the company claims is better science to win over skeptics.

"Do we need additional water supplies? Yes. Do we need groundwater storage? Yes," said Winston Hickox, a Cadiz board member who headed the California Environmental Protection Agency. "The question is `OK, environmental community, what are your remaining concerns?' I don't know."

But conservationists including the Sierra Club remain worried. Critics say the company has misrepresented the size of the aquifer and that mining it could harm the threatened desert tortoise, bighorn sheep, as well as the nearby Mojave National Preserve which has some of the densest and oldest Joshua tree forests in the world. Concerns over rare desert species were also echoed by state Department of Fish and Game biologists in March.

Conservationists also worry tampering with an aquifer in a place where water is so scarce could cause dust storms.

"There's a lot of unknowns here but we think this project has the potential to adversely affect air quality, draw down water resources and alter the flow of groundwater beneath the Mojave Preserve," said Seth Shteir with the National Parks and Conservation Association, which plans to scrutinize an environmental review of the project, expected to be released this month.

Groundwater has long played a part in the West's age-old water wars, which are increasingly being waged underground. These large unseen reserves of underground water nourish a place that would appear to most observers as dead.
California has few regulations when it comes to groundwater pumping, according to Carolyn Remick, who heads the Berkeley Water Center at the University of California. Consequently it is often weaker local agencies that largely oversee such extraction, leading to a raft of problems ranging from groundwater contamination to over-pumping and ground sinking.

Last year a conservation group sued the state water board in an effort to force the agency to regulate groundwater pumping that has depleted Northern California's Scott River, threatening salmon populations. In arid Kern County, north of the Mojave Preserve, a local water utility filed suit against wealthy farming interests claiming their enormous withdrawals of water lowered the water table and caused service disruptions.

Cadiz officials say they are aware of the concerns and promise an extensive monitoring system. The water in question begins in springs high atop desert mountains and travels under the Cadiz ranch before it resurfaces in dusty lake beds dozens of miles away where it evaporates.

The plan could cost as much as $225 million to sink 34 wells into the desert and build a 44-mile pipeline along a railroad right-of-way that intersects with the Colorado River Aqueduct.

In dry years, water would be pumped to burgeoning communities in Southern California. During years with above-average rainfall, Colorado River water could be pumped to the aquifer for storage. Proponents say the water would offer a much-needed alternative to boost supplies in a region hard hit with water cutbacks during the state's recent three-year drought.

For years the project was led by a colorful British businessman, Los Angeles-based Cadiz founder Keith Brackpool, who has since taken a more behind-the-scenes role. Brackpool, who also heads the California Racing Board, has deep political connections, contributing to past gubernatorial candidates, serving as a water consultant to former Gov. Gray Davis and whose company once employed Los Angeles Mayor Antonio Villaraigosa as a consultant.

Brackpool, however, became something of a distraction when it was revealed by the Los Angeles Times that years earlier he pleaded guilty in London to criminal charges that included dealing in securities without a license and that his expertise before becoming the governor's water consultant was overseeing a food company. His company reports having $145 million in assets, but generated revenue of just $1 million last year. It also is being investigated by shareholders unhappy with recent executive bonuses.

Brackpool, through a company spokesman, refused repeated requests for an interview with The Associated Press. Cadiz ranch is the company's only water project.

The Cadiz proposal was rejected in early 2000 by the Metropolitan Water District in part after conservationists raised concerns over possible environmental damage. A scaled-back version resurfaced in 2008 with a new spokesman, Scott Slater, a new greener pitch that they were conserving water that would otherwise evaporate and new studies that showed how much water they could safely pump.

"We're not taking water from anyone," Slater said. "It sincerely is depriving only the atmosphere of water that would actually evaporate."

Former Gov. Arnold Schwarzenegger has called the proposal "a path-breaking, new, sustainable groundwater conservation and storage project." But Sen. Dianne Feinstein called it a "serious threat to the desert" in a 2008 letter to the Department of the Interior, potentially depleting water supplies which plants and wildlife rely upon for survival

Since 2010, the Santa Margarita Water District, Three Valleys Water District, Golden State Water Company, Suburban Water Systems and Jurupa Community Services District entered into agreements with Cadiz to receive water. These agencies supply water to parts of Los Angeles County, Orange County, Riverside County and eastern San Gabriel Valley.

The company has invested $7 million in hiring top-flight consultants to study the science behind the project and in drilling wells. Cadiz also put together a panel of experts who reviewed the project and recently deemed it safe.

A comprehensive environmental report is expected to be released this month and if the project clears all required permits, the districts hope to get water within two years.

And if voters approve a $11 billion water bond measure intended to rebuild California's crumbling water system and fund new dams, water districts may apply for public funds available for new infrastructure to save up the precious resource for dry years. Schwarzenegger signed the bond bill in 2009, but it won't become law unless voters approve it a year from now next November.

John Schatz, Santa Margarita's general manager, calls the new vision a "conservation project," but he acknowledged potential hurdles in selling the greener pitch.

"We don't have any illusions that there may be some issues with environmental groups and what's happened in the past," he said.
August 2012

High Country News

Tunneling under California's Bay Delta water wars…Emily Green. This story was made possible with support from the Kenney Brothers.

http://www.hcn.org/issues/44.14/tunneling-under-californias-bay-delta-wa...

On July 25, California Gov. Jerry Brown announced to an expectant press corps that the state plans to construct a pair of multibillion-dollar tunnels under the Sacramento-San Joaquin Bay Delta in order to modernize and possibly expand the export of Northern California's water, mostly south to farms and cities. After decades of rancor over what was once envisioned as the "peripheral canal," there had been enough studies. There had been enough policy groups. Above all, there had been enough fighting. "I want to get shit done," said Brown.

Central and Southern California water contractors have long supported the plan, and initially some critics saw the governor's announcement as yet another blow to the Delta's fisheries -- already devastated by a combination of pumping, drought and chronic mismanagement. Yet alongside Brown stood an administrator from the National Marine Fisheries Service, which has been fighting tooth-and-nail in federal court to protect the Delta's fish from water exporters. This was no shotgun wedding,

William Stelle insisted. His department and its parent agency, the National Oceanic and Atmospheric Administration, support the tunnels. In fact, he argued, properly operated new intakes -- scaled down to the size that his scientists believe are safe -- might actually help Delta smelt, salmon and steelhead.

"The point of departure for evaluating the merits is the current environmental conditions for fish and wildlife," Stelle said, "and they are awful." That's because the pumping stations now exporting water to the Central Valley and the cities of
Southern California are located in the South Delta, where their sheer force reverses the water's natural flow to the ocean.

According to Stelle, most San Joaquin River juvenile salmon perish near or in the pumps, while the survival rate for Sacramento River migrants can be as low as 40 percent. As Stelle sees it, the ability to turn off South Delta pumps during
migration and draw water instead from new pumps roughly 45 miles north would improve life for both the fish and the water exporters.

The carnage caused by the South Delta pumps is better understood now than it was when California voters first rejected the proposed peripheral canal in 1982. At the time, Brown was a second-term governor. "I hadn't heard the word 'smelt' before," he said. Then as now, diverting fresh water before it could reach the brackish estuary was unpopular. Delta farmers worried that it would leave them salt water for irrigation, while fishermen saw the canal as an attempt to steal the entire flow of the Delta's most fecund tributary, the Sacramento River. And environmentalists believed that concentrated Delta pollutants would harm the estuary's natural outlet, the San Francisco Bay.

In contrast, the peripheral canal's proponents appeared greedy, unconvincing, irresolute or impotent. Central Valley cotton king J.G. Boswell wanted more water unencumbered by fish protections. The support of the Metropolitan Water District of Southern California, which served the suburbs steadily radiating out of Los Angeles, struck Northern Californians as simply a plea for more water for swimming pools. The case made by the California Department of Fish and Game, which used many of the same arguments that Stelle does now, never gained traction. The South Delta pumps had slowly been coming online from the
1950s through the 1980s, and the fish toll had yet to register.

Then, in 1986, licensing of four new South Delta pumps increased capacity from 11,000 cubic feet per second to nearly 15,000.

Almost simultaneously, drought hit California, where, due to serried ranges, almost half the state's stream flow ends up in the Sacramento-San Joaquin Delta system. As fish numbers tanked, and species such as the Delta smelt and chinook salmon became increasingly endangered, it dawned on horrified water managers that the Delta fisheries' continued collapse could shut off water to 3 million irrigated acres and cities from the Bay Area to San Diego.

Governor after governor called in policy wonks. Pete Wilson's "Delta Oversight Council" morphed into the federal and state "CALFED" program under Gray Davis and the Clinton administration. Then Schwarzenegger began the Bay Delta Conservation Plan, a caveat-rich operating manual for the state water hub that is still in environmental review. This was accompanied by a multi-year study called "Delta Vision." By the time Jerry Brown returned to office in 2011, Delta Vision had transmogrified into the "Delta Stewardship Council," charged with the policy side of getting rival factions to agree on "co-equal" goals.

Throughout it all, report after report, the peripheral canal kept coming up.

By 2008, fish stocks had plummeted so badly that salmon fleets were dry-docked and water exports from the Delta fell by almost 2 million acre-feet; Fresno County farmworkers formed breadlines, and Central Valley water districts sued federal fish and wildlife agencies. Ample rain in 2011 offered some respite, but 2012 brought another dry year, by which point Brown declared a hopeless case of "analysis paralysis." Exasperation was such that every federal and state agency involved in Delta oversight stood with him as he revived the peripheral canal plan, this time offering lower pumping capacity than before (reduced from 15,000 to 9,000) and no guarantees of new water for anyone.

Many Delta communities are still worried about rising salinity if a freshwater tributary is tapped before it reaches the estuary. And whether Brown has converted environmentalists or merely disarmed them remains unclear. The Nature Conservancy,

Sierra Club and Natural Resources Defense Council all want more details about who will man any new pumps, as well as how much water will be taken, when and from where. Environmentalists also wonder whether other existing commitments to habitat restoration and increased water conservation will be kept. But, this time, they better understand the cost of inaction. "The NRDC is still at the table trying to make the Bay Delta Conservation Plan work," said Kate Poole, the council's senior attorney. "We wouldn't be there if we didn't think it could."

Map of proposed Bay Delta tunnels

Infographic/Photo Essay - Bay Delta Conservation Plan

http://www.hcn.org/issues/44.14/tunneling-under-californias-bay-delta-wa...

8-20-12

The Valley Citizen

Senator Feinstein: Just dropping by? It’s the water, stupid!...Eric Caine

http://thevalleycitizen.com/?p=1390

Woody Allen has said, “Paranoia is knowing all the facts,” and the more one knows about the Modesto Irrigation District (MID) water sale to San Francisco, the more likely one is to suffer severe attacks of paranoid dementia.

Back in March, we alerted readers to one of the compelling factors behind the water sale—proposed legislation by California Senator Dianne Feinstein that would make water transfers less subject to government scrutiny and regulation.Feinstein’s efforts were widely portrayed as in the interest of “Central Valley Farmers,” but that characterization is misleading. The “farmers” who stand to gain most from easier water transfers are corporate moguls like Stewart Resnick, a billionaire resident of Beverly Hills whose Paramount Farms operation amounts to 118,000 acres.

It’s no accident that Stanislaus County farmers, supposed beneficiaries of water transfers, have been among the most vocal opponents of the MID “transfer” to San Francisco. Transfers move water from wet places to dry places. They’re based on the theory that some places have water to spare. Since Valley farmers are all too familiar with reduced allotments and have seen the summer trickle called the Tuolumne River, they aren’t ready to believe we have excess water.

By now, most local citizens know of our farmers’ concerns. What many do not know is that Senator Feinstein’s plan was as unpopular in her Bay Area home region as the proposed MID water sale was here. Feinstein’s fellow Democrat, George Miller of Martinez, said of the proposal, “she’s making a decision that jobs in the Bay Area and Northern California and the Peninsula south of San Francisco aren’t as important as jobs in the Central Valley.”

Bay Area environmentalists were also outraged, as water transfers pose serious threats to fisheries, wetlands, and the fragile San Joaquin Delta ecosystem.

Senator Feinstein’s divided loyalties resulted in a modified proposal that quieted the most vocal critics, but she didn’t give up on her plan make water transfers less subject to regulation and public scrutiny. Feinstein now realizes that unless
she wants to face hailstorms of criticism when she tries to deliver water to the likes of Stewart Resnick, she has to assure San Francisco and the Bay Area of abundant water supplies for the foreseeable future.

It is San Francisco’s and the Bay Area’s demand for a reliable water future that spurred the MID water sale, and that demand was behind the “first right of refusal” and fifty year commitment terms of the MID contract with the San Francisco Public Utilities Commission. University of the Pacific economist Jeffrey Michaels assailed these portions of the contract as far too favorable to San Francisco, but the whole point of the contract is to assure a long term water supply to Senator Feinstein’s home base so she can then return to her project of delivering water to corporate barons in the Central Valley.

In theory, the MID, with its “excess water,” would have the dominant position in a water sale, especially given water shortages state wide. But the MID is in dire financial straits and its directors are over a barrel. That’s why the initial
contract was so favorable to San Francisco.

Not long ago, the water sale would have flown under the radar with hardly a murmur of protest. It had the support of MID Directors and the approval of the Modesto Bee. Supporters of the sale are still trying to portray it as a piddling little
2,000 acre foot trickle to San Francisco, when in fact it was a prelude to a far larger sale. But social media and the Bee’s willingness to print commentary by shrewd observers of water issues like Larry Byrd and John Mensinger have changed the game.

It will be much harder now to bring the sale off without ironclad concessions to local farmers and urban residents.

Senator Feinstein’s scheduled visit to Modesto on August 29, which her staff has tried to downplay, is one more sign of just how big the water sale really is. She’s here to roll logs and bang heads. Along with the MID’s $415 per hour payout to
attorney George Petrulakis for promoting the sale, it’s confirmation that local water issues have become a focal point of high stakes political strife that may leave Valley citizens with a very bad bargain. And, given the realities of water
shortages state wide, it’s more than enough to induce a severe attack of paranoid dementia for those who know all the facts.
8-20-12
4-traders
Cadiz Inc : Cadiz Inc. Announces Plan for Implementation of Water Project Following Environmental Approval
http://www.4-traders.com/CADIZ-INC-8727/news/Cadiz-Inc-Cadiz-Inc-Announces-Plan-for-Implementation-of-Water-Project-Following-Environmental-Ap-14465999/
 
 
Cadiz Inc. (NASDAQ:CDZI) ("Cadiz" or "the Company") is pleased to report today on its objectives for implementation of the Cadiz Valley Water Conservation, Recovery and Storage Project ("Project") and other asset development programs following the unanimous approval of the Project last month by the Board of Directors of the Santa Margarita Water District ("SMWD").
As previously reported, on July 31, 2012, the SMWD Board certified the Project's environmental documents and also approved the Project, a Purchase & Sale Agreement and the Groundwater Management, Monitoring and Mitigation Plan ("GMMMP"). The Project is now approved to deliver an average of 50,000 acre-feet ("AF") of water per year throughout Southern California. As a result of this significant milestone, the Project transitions from the entitlement phase. The Company expects to implement the Project and further its other asset development objectives as follows:
Conversion of existing option agreements with the Project participants into final purchase agreements. SMWD was the first participant to convert its option agreement and approve a purchase agreement following Project approval. The structure of the SMWD purchase agreement calls for an annually adjusted water supply payment of up to $500/AF including identified income streams, plus their pro rata portion of the capital recovery charge and operating and maintenance costs. The capital recovery charge is calculated by amortizing the total capital investment by the Company over a 30 year term. In consideration of its assumption of project management responsibilities throughout pre-construction, construction and Project operations, SMWD is acquiring water from the Project at a cost less than other Project participants.
Enter into agreements with new participants for Project supplies. The Company is in active negotiations with several additional wholesale and retail water providers that are interested in acquiring supplies from the Project. The Company will progress these new arrangements concurrently with the negotiations with existing participants.
Complete final design, construction bidding and construction financing. Earlier this year, the Company engaged an investment bank specializing in infrastructure financing with significant experience in California to lead the Company through the construction financing process for the Project. Based on the evaluations conducted by this investment bank, construction financing is expected to be entirely provided with lower-cost senior debt, secured by the new facility assets.
County of San Bernardino Acceptance of GMMMP.San Bernardino County has previously accepted responsibility for independently reviewing and enforcing the groundwater management plan for the Project. The GMMMP has been approved by SMWD and, in conformity with the May 2012 Memorandum of Understanding between the County, SMWD and Cadiz, it has been transmitted to the County for its review and approval.

• Complete Tie-In Arrangements with the Metropolitan Water District ("MWD"). Project water supplies will enter the Colorado River Aqueduct in accordance with MWD's published engineering and design standards. The Project will assume responsibility for the payment of all applicable fees and charges routinely established by MWD for the conveyance of water within its service territory.
• Advance Phase II of the Project. With environmental review for Phase I completed, the Company is now in discussions with interested parties regarding the development of the imported storage component of the Project, or Phase II. Phase II would make use of the Project facilities constructed for Phase 1 to store imported water at the Project area, adding significant value for participants and the Company.
• Development of Land Conservation Bank.The Company intends to convey approximately 9,000 acres of its properties located outside of the Project area to a conservation bank, making them available for purchase by third parties that have environmental mitigation requirements. The bank will offer credits that can be acquired by third party entities and the Company would receive payment for the value of the land available in the bank.
• Progress New Water Transportation Segment. The Company continues to progress the conversion of two idle natural gas pipelines in Southern California to water transportation. The Company owns purchase options for both pipelines and is considering utilizing the lines either for the distribution of third party water or, in certain segments, as part of the Project. Initial feasibility studies indicate that, upon conversion, the two pipelines would have a combined average capacity to distribute up to 40,000 AF/year in markets that currently lack multiple water distribution opportunities.

It is standard for large infrastructure projects in California to face legal challenges. While the Company proceeds with the steps above, it expects to be party to various legal proceedings related to Project approval. Given the extensive work that was completed as part of the rigorous environmental review process, the Company does not believe that litigation will delay the next steps or alter plans for the construction of the Project.
In order to execute the important steps outlined above and to be in a position to commence construction, the Company estimates that approximately $15 million will be required to fund these activities. The structure of any capital raise will be consistent with past practices, namely the Company's goal of minimizing dilution to current shareholders. Further, consistent with the recently acquired option right to extend the Company's existing mortgage debt's maturity, the Company will continue to work with its lenders to refinance, extend or otherwise arrange that the term of the debt is coterminous with commencement of the Project's construction financing.
The current and projected demand for water and water reliability in Southern California is a key driver of the Project. As a result of ongoing challenges to California's traditional water supplies, water providers are engaged in serious efforts to identify and develop new water supply options. Earlier this month, some of the State's largest water providers announced plans to construct major tunnels around the Sacramento-San Joaquin Bay Delta at a cost of approximately $20 Billion. If implemented, this proposal would be financed by ratepayers and will likely only maintain the status quo and not revive historic deliveries from the Delta. In order to meet the challenges to California's water supply, many new solutions are being explored in addition to improvements to the Delta delivery system.
"The Project offers a unique, cost-effective Southern California-based water supply that has been developed using private capital and protects existing rate structures in Southern California," said Scott Slater, Cadiz President and General Counsel. "The Project will also offer the ability to store water in periods of excess supply for use in future dry years, which is a distinctive characteristic not offered by other new supply alternatives. As a result, our customers will receive an affordable water supply solution at a competitive advantage to other available supply investments."
In addition to the business objectives outlined above, the Company remains committed to its organic agricultural operation and new legacy investments at its property in the Cadiz Valley, including a tourist rail operation, desert cultural center, and surface land conservation initiatives. These new programs will be implemented concurrently with the Project.
About Cadiz Inc.
Founded in 1983, Cadiz Inc. is a publicly-held renewable resources company that owns 70 square miles of property with significant water resources and clean energy potential in eastern San Bernardino County, California. The Company is engaged in the development of water supply and storage projects and operates an organic farm in the Cadiz Valley. In 2009 Cadiz adopted a wide-ranging "Green Compact" to implement environmental conservation and sustainable management practices at its properties. For more information about Cadiz, 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 outcome of litigation related to the water project and other factors and considerations detailed in the Company's Securities and Exchange Commission filings.
Cadiz Inc.
Courtney Degener, 213-271-1600

8-20-12
San Francisco Chronicle

Keep fishing for a water solution
Dave Bitts
www.sfgate.com/opinion/openforum/article/Keep-fishing-for-a-water-soluti...

For all its many problems, the Sacramento River still provides in most years most of the king salmon caught in the ocean off California and Oregon. The ocean sport salmon fisheries outside the San Francisco and Monterey bays usually are the most robust fisheries south of the Columbia River, and California typically has more commercial king salmon landings than any other state.

In addition, San Francisco Bay and the Sacramento-San Joaquin River Delta provide essential rearing, feeding or spawning habitat for sturgeon, California halibut, herring and Dungeness crab. And the bay, cleaner now than it's been for many years, has a huge capacity for growing oysters.

The biggest threat to this estuarine paradise is the volume of freshwater exported south from the delta. Two recently peer-reviewed scientific studies have criticized the high level of delta water exports.

The 2009 biological opinion from the National Marine Fisheries Service on delta water operations said that continuing status quo exports would result in the extinction of all anadromous fish (salmon, steelhead, sturgeon) in the Central Valley.

A study done for the state Water Resources Control Board said that maintaining robust delta fisheries will require substantial cuts from existing water exports.

Take a football field, stand it on edge at the Bay Bridge, and imagine pushing it along Interstate 80 to Denver. You've just displaced a volume of air roughly equal to the volume of water pumped south from the delta each year.

Of course actually doing this would be extremely complicated, expensive and disastrous - much like the peripheral tunnels proposed in the Bay Delta Conservation Plan.

The starting estimate for digging these tunnels is $15 billion - at a time when the state is at a loss to find up to $100 million to cover its share of the cost of removing four fish-killing dams on the Klamath River. But fish and wildlife don't care about dollars, so let's try to look at this project from their perspective.

California's Rube Goldberg water export system, among other flaws, tends to fool young salmon swimming downstream into heading for the delta pumps instead of for the bay and then the ocean. (This is why most hatchery-produced fish are trucked to the estuary.) Most are eaten on the way to the pumps; few survive once they've made the wrong turn by following the pump-driven flow.

The peripheral tunnels might solve this problem, if the tunnel intakes (three are proposed) were properly screened, but screening the diversion points ought to be exponentially cheaper.

Otherwise, it's pretty hard to see how removing most of the freshwater entirely from the delta would be anything but a death blow to the species that depend on it. For one example, how would returning adult salmon find their native spawning stream if most of its scent-bearing water were flowing through tunnels 150 feet below them rather than all around them?

The delta is already giving much more than it can afford; its fisheries are crashing, or at extreme risk of crashing, in all but the wettest years.

Do we just write off the biggest estuary on the West Coast for the sake of more subdivisions and golf courses? If we do, will there ultimately be anything left of the natural resources that make California a great state?

For $15 billion, can't water users find other, comparably priced, sources - desalination, recycling and conservation - for the water they seem to need so desperately?

Dave Bitts is the president of the Pacific Coast Federation of Fishermen's Associations.

Read more: http://www.sfgate.com/opinion/openforum/article/Keep-fishing-for-a-water...6.php#ixzz24DxGDPEh