Scott Slater is CEO and general counsel for Cadiz.
Scott Slater
Scott Slater is CEO and general counsel for Cadiz.

LOS ANGELES — A Trump administration environmental policy shift that could allow a controversial Mojave Desert water project to move forward is a credit positive for Southern California's water supply, according to Fitch Ratings.

Cadiz Inc. wants to construct a 43-mile water pipeline on the Arizona and California Railroad right-of-way to carry water from the project site to the Colorado River Aqueduct, a move that will allow it to avoid the lengthy federal environmental review process.

The Bureau of Land Management director under the Obama administration had ruled against construction on the railroad easement land in October 2015 pointing to regulations that stipulate only railroad-related uses could be built there. The decision would have required Cadiz to build the line separately from the right-of-way on public land and undergo lengthy federal environmental reviews.

But a March 29 memo from an acting assistant director at the U.S. Bureau of Land Management overturning two legal guidelines in the 2015 decision appears to have changed the landscape.

Cadiz’s planned water pipeline would be positive for Southern California’s water supply, but isn’t without potential significant environmental risks, said Doug Scott, a Fitch Ratings managing Director.

Southern California, where drought is a recurring issue, would benefit from the additional water supply, but the project could potentially draw down the Mojave Desert aquifer harming endangered species and plants on public land, Scott said.

“Water utilities in especially dry areas will need to balance the benefits of additional supply with its potential risks as they plan for the next drought,” Scott said.

The Santa Margarita Water District in Orange County would be the biggest beneficiary of the Cadiz project as the 5,000 acre-feet of water it would receive comprises 20% of its water needs, Scott said. The agency is one of several Southern California agencies that would benefit.

Cadiz had proposed turnouts for fire suppression of railroad ties and offered to provide water to switching stations, Scott said. In the reversal, the BLM found those uses meet the required standard of railroad-related uses.

Sen. Dianne Feinstein, D-Calif., a long-time opponent of the project, said in a statement “the detrimental impact this project would have on the California desert is irreversible.”

“Rather than allow a proper environmental review, the Trump administration wants to open the door for a private company to exploit a natural desert aquifer and destroy pristine public land purely for profit,” Feinstein said.

Scott Slater, chief executive officer at Cadiz, responded saying public agencies and twelve separate court opinions have expressly repudiated Feinstein's arguments.

Slater said the project that would store water and pump water out of a Mojave Desert aquifer will “provide significant additional groundwater storage, allowing the region to retain surplus water in wet years like this one for use in future dry years.”

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