Then Donald Trump was elected president, and everything changed. Even before Trump was inaugurated, the Cadiz Water Conveyance Project showed up as No. 15 on a list of 50 infrastructure projects his team considered priorities.
“Literally, everyone in the water industry was like, ‘What the heck?'” says Peter H. Brooks, who owns a water technology firm. “There are thousands of critical infrastructure projects relating to water that I could link to either a public health or environmental crisis, and this doesn’t even make the top thousand. Not even close. This is a totally superfluous project that doesn’t solve any major supply need.”
This year, California Democrats have made a big show of standing up to Trump’s vision of America, from his immigration policies to the rolling back of environmental protections. “This is happening at the same time the Trump administration is undermining, in multiple ways, these long-held environmental laws,” David Lamfrom of the National Parks Conservation Association says of the Cadiz project. “Our thought was always that California wanted to stand up to these types of rollbacks.”
But Democrats are oddly divided over what to do about Cadiz, a politically well-connected company that’s been pulling strings for decades. It’s hard to believe that progressive, ambitious politicians would support a corporation over environmentalists. But then again, some pretty strange things happen out in the desert.
Keith Brackpool has been described as “a buccaneering self-made businessman,” a “politically connected wheeler-dealer” and “a British bon vivant.” He came to the United States in the 1980s, shortly after pleading guilty to criminal charges of dealing securities without a license (he paid a $3,200 fine). By the time he lost his job as head of the American division of a food company, he’d already founded Cadiz.
His vision was not unlike that of Harry Chandler and William Mulholland at the turn of the previous century: Find water. Take it.
Brackpool and his partner had seen satellite photographs of the Mojave Desert, showing that on the rare occasions when it rained, water pooled in the Cadiz Valley, indicating the ground underneath was full of water. It was this aquifer that feeds any seeps and streams that manage to flow in the Mojave. Brackpool and his company began buying up land.
In time, Cadiz would become a major fruit and vegetable grower. In 2001, the Guardian wrote, “Mr. Brackpool’s company has several agricultural schemes on the go, including one with the Saudi royal family in Egypt, which Cadiz Inc. says could become the largest single agricultural project in the world.”
Brackpool did not return phone calls requesting comment on this story.
Most of the schemes came to nothing. According to SEC filings, Cadiz has lost more than $430 million over the course of its 34-year history.
But the company’s fate was always linked to its water scheme, which in its first iteration entailed selling groundwater to the Metropolitan Water District (MWD), Southern California’s water wholesaler, which operates the Colorado River Aqueduct. Though extracting water from the desert may not seem like a brilliant money-making strategy, Cadiz is banking on the price of water going up. All it needs to do is get past a series of regulatory hurdles.
In 2000, the project experienced the first of many setbacks when the U.S. Geological Survey concluded that the rate at which the aquifer was replenishing was not, as Cadiz was claiming, 50,000 acre-feet per year (one acre-foot is roughly 325,851 gallons). It was more like 2,000 to 10,000. Since Cadiz’s original plan called for a pipeline capable of transporting up to 150,000 acre-feet of water a year, it became clear to environmentalists that if Cadiz had its way the aquifer would be emptied out rather quickly.
Cadiz has consistently disputed the USGS conclusion, which is now 17 years old.
“The recharge still happens, but it happens at such a low rate,” says hydrologist John Bredehoeft, who worked for the USGS for 32 years. “You suck it out, it’s not gonna recharge in our lifetime. The aquifer won’t be recharged in our kids’ lifetime.”
Two years after the USGS finding, the Metropolitan Water District pulled out of the Cadiz deal. Cadiz would sue the water agency for “breaching its fiduciary obligations to Cadiz and for denying Southern Californians a secure water supply at a time when consumers are being forced to pay more for less water,” according to a Cadiz press release at the time. The suit was later settled.
Throughout the 2000s, Cadiz retrenched and reformulated its plan. Instead of selling to MWD, it would sell 50,000 to 75,000 acre-feet of water to smaller water agencies, including the Santa Margarita Water District, which serves 165,000 customers in Orange County — a good 180 miles from the Cadiz Valley. And instead of building its pipeline through federal land, it would run it along a privately owned railroad right-of-way, thus avoiding federal environmental review, which would surely include the USGS’ findings.
Cadiz’s defenders — including labor unions, business organizations and politicians such as Congressman Tony Cardenas and former mayor Antonio Villaraigosa (who’s now running for governor) — use variations of the same argument: The project has already passed the California Environmental Quality Act (CEQA) review, perhaps the toughest environmental review process in the country. If it’s good enough for CEQA, why add another layer of oversight?
“The project has now gone through over two decades of environmental and regulatory review,” said Villaraigosa campaign spokesman Luis Vizcaino in a statement. “It has more than balanced the need to protect our environment, promote high-wage jobs and supply water to Southern California for the next drought.”
Opponents of the project point out that the lead agency for Cadiz’s CEQA process is the Santa Margarita Water District, the agency that stands to benefit the most from a new source of water (it currently gets its water from the MWD; some speculate that Santa Margarita sees the deal as a hedge against future rate increases).
Not only does Santa Margarita benefit but the potentially negative effects of the project will be most apparent 180 miles away, in the desert.
“The public that’s being impacted isn’t connected to the lead agency,” Prabhala says. “That goes against the core principals of CEQA.”
Santa Margarita spokesman Jim Leech dismisses this criticism, saying, “We had public hearings here in Santa Margarita and in the Inland Empire, out where the project is. Joshua Tree comes to mind. We went as far and wide as we could to vet this thing. There was the allegation that perhaps we weren’t the right agency, but courts completely did not agree with that.”
There were always those who doubted the project would get built. There were simply too many roadblocks. Cadiz’s water has naturally occurring Chromium-6, a dangerous carcinogen. Its water, then, will most likely have to be treated before it can slip into the region’s main water supply.
“I have been told that there are Chromium-6 issues with that groundwater, and that’s a big deal with my agency,” says MWD board chairman Randy Record.
The project’s biggest obstacle, however, has long been U.S. Sen. Dianne Feinstein. While Cadiz has been able to ingratiate itself with former governors Gray Davis (Brackpool was both a fundraiser and an adviser to him) and Arnold Schwarzenegger (his chief of staff was a consultant for Cadiz), and with Villaraigosa (not one but two stints as a Cadiz consultant), the 84-year-old senator has been immune to the company’s charms.
Feinstein is not exactly known as a champion of the environment, but she has considered the protection of the Mojave Desert part of her legacy. Ever since the USGS finding, she has bitterly opposed the project, for years adding a rider into the federal budget forbidding the U.S. Department of the Interior from spending any money on it.
In 2015, the Bureau of Land Management, under President Obama, ruled that Cadiz couldn’t use the railroad right-of-way for its pipeline. Upon news of the decision, Cadiz’s stock dropped from $7.90 to $3 a share. Scott Slater, a prominent water attorney who’d been appointed Cadiz CEO in 2011, vowed to press on.
“They’re very shrewd, and they have a tremendous amount of money,” Lamfrom says. “But no one has bought into what they are selling until Donald Trump got elected.”
In the days following Nov. 8, as the phrase “President-elect Donald Trump” sunk in, Cadiz stock climbed from the doldrums into the double digits. Traders suspected that Trump might revive the project, and they were right.
In April, Trump nominated David Bernhardt as deputy secretary for the Department of Interior. Bernhardt was a partner at Brownstein Hyatt Farber Schreck, a lobbying firm where Cadiz CEO Scott Slater also works. The Brownstein/Cadiz connection runs deep: Cadiz has paid more than $2.75 million in lobbying fees and issued 200,000 shares to Brownstein. And the firm stands to get 200,000 additional shares should the Cadiz water project get built, according to an SEC filing last year.
During his confirmation hearing, Bernhardt said: “I had no involvement on the Cadiz matter.” And in a letter, he said he would “withdraw” from his Brownstein partnership and promised to recuse himself from any matters relating to Brownstein clients for one year.
“To expect that he has cut ties with that lobbying firm and no longer has relationships there doesn’t fit with the facts,” says Frazier Haney, the conservation director at the Mojave Desert Land Trust.
Brownstein reps did not respond to requests for comment.
On Oct. 16, the Bureau of Land Management, now under President Trump, reversed its earlier decision and gave Cadiz permission to build its pipeline along the railroad right-of-way, allowing it to avoid federal review.
Feinstein tried to get the California State Legislature to pass a bill adding another layer of state-level environmental review to the project. But AB 1000, authored by Assembly member Laura Friedman, was opposed by a powerful force in Sacramento: trade unions, who say the project will create jobs. That gave two notable Cadiz supporters — state Senate President Pro Tem Kevin de León and Senate appropriations chairman Ricardo Lara — all the cover they needed to place the bill in the “suspense file,” preventing a vote in the Senate.
“It wasn’t even allowed to go in front of the committee, which is really unfortunate,” Friedman says. “I have no idea why. No one has given me an explanation.”
In a written statement, Lara said, “This particular project has gone through significant consideration and CEQA litigation. … Making an exception for one particular case will create precedent for the Legislature to block other controversial projects.”
De León, through spokesman Anthony Reyes, says he stands by Lara.
Why are ambitious elected officials like Lara, who’s running for insurance commissioner in 2018, and de León, who’s challenging Feinstein for her Senate seat, effectively siding with the Trump administration on a project environmentalists loathe?
Some Cadiz opponents point to the company’s prodigious campaign contributions — more than half a million dollars to various statewide candidates and ballot measures since 2005, including $9,000 to de León and $60,000 to Villaraigosa. Brackpool has given another $29,000 to Villaraigosa’s gubernatorial campaign.
Others point to Cadiz’s connections. To help defeat AB 1000, Cadiz turned to the lobbying firm Mercury Public Affairs. Both De León and Lara got their starts working for Fabian Nuñez, a partner at Mercury.
“Kevin de León and Ricardo Lara have been the face of resistance against Trump in California,” says Lamfrom, “and we are perplexed as to why they are opposing the bill.”
Though the Cadiz project has the Trump administration’s nod of approval, it is far from a sure thing. It still needs permits, as well as an agreement with the MWD. And the California Lands Commission recently discovered that the proposed pipeline would cross a small strip of state-owned land, which means Cadiz would have to lease the land from the commission — a three-member body that includes Lt. Gov. Gavin Newsom, who has expressed opposition to the project.
And Cadiz still needs to treat the water for Chromium-6. Some have even wondered if, in the end, the whole scheme will pencil out.
“I think when agencies see how expensive the water is, they may not even want it,” Lamfrom says.
Critics see the Cadiz project, along with proposals for desalinization plants, as part of a newer trend: the privatization of natural resources. They also see it as a throwback, a retrograde, supply-side solution to the coming water shortage.
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“We’re talking about 50,000 acre-feet a year,” Lamfrom says. “That same amount could be saved through water recycling, moving to more aggressive conservation methods. It wouldn’t be hard for us to find those types of water savings, instead of exploiting the California desert.”
On the other hand, water is like oil — the scarcer it is, the more valuable it will be. Are Californians really willing to leave it in the ground forever?
“It’s important that we look at all potential supplies,” says MWD chairman Record, “and that we also look at how we manage demand.”
As far as the Cadiz water project goes, he doesn’t want to comment on it until he sees the details, but allows: “It’s been on and off for a long time. It’s an interesting idea.”