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MWD Cancels Desert Storage Project

Board: The complex plan to keep Colorado River water underground is seen as risky, opposed by environmentalists. The vote is a blow for Davis backer and his Cadiz Inc.

October 09, 2002|MICHAEL A. HILTZIK | TIMES STAFF WRITER

The Metropolitan Water District Tuesday canceled the controversial Cadiz program, a multimillion-dollar project to store water under the desert that was once seen as a key to Southern California's water supply future but had become an environmental and political lightning rod.

The narrow vote by the district's Board of Directors provoked a brief round of applause from a boardroom audience that was heavily populated by environmentalists and public-interest activists who had made the proposal a statewide issue.

"It's great when a public agency actually does the right thing and turns down a project like this that would have been very unsound," said Simeon Herskovits, an attorney for the Western Environmental Law Center. The Taos, N.M., organization represents a coalition of environmental groups opposed to the project.

Also in the audience was the project's main sponsor, Keith Brackpool, a leading financial backer of Gov. Gray Davis and an advisor to the governor on statewide water issues.

Brackpool's company, Santa Monica-based Cadiz Inc., stood to earn $500 million to $1 billion in revenue over the 50-year term of the project, but now faces a doubtful future.

Tuesday's vote represents a personal embarrassment for Brackpool, a British-born investment professional who made his public reputation in California by proselytizing about the need for new approaches to the state's water supply crisis.

Davis, who received more than $235,000 in campaign contributions from Brackpool and the money-losing Cadiz, placed Brackpool and other Cadiz officials on statewide advisory panels on natural resources.

In one last personal appeal Tuesday, Brackpool strove to assure the board that the numerous lingering environmental and economic questions about the project could be successfully addressed.

He reminded the board that the federal government had given its final environmental approval to the project Aug. 29, after five years of costly environmental studies.

"Do we really want to throw the baby out with the bathwater less than 60 days after we received all those federal approvals?" he asked.

But responses from several board members suggested that they had become weary of debating a project about which too many environmental questions remained unresolved, along with new questions about the practicality of the proposal.

"The Cadiz program doesn't represent reliability at this point," said Timothy Brick, a board member representing the city of Pasadena. "It represents risk."

The innovative and complex project envisioned storing up to 1.5-million acre-feet of surplus Colorado River water in an aquifer under a Mojave Desert tract owned by Cadiz for extraction in dry years.

The company also stood to earn a profit by selling the MWD as much as 1.5 million acre-feet of indigenous ground water already flowing through the aquifer. The MWD and Cadiz were to share the $150-million capital cost, most of it devoted to construction of a 35-mile pipeline between the MWD's Colorado River aqueduct and the Mojave site.

Critics had argued that ground water extraction on the anticipated scale threatened permanent damage to the fragile desert ecosystem. Although the Interior Department ruled in August that a proposed network of testing wells around the site would deliver adequate warning of impending damage, few environmentalists agreed.

Among the strongest critics was Sen. Dianne Feinstein (D-Calif.), who said she feared that the project would threaten the nearby Mojave National Preserve and who asked the MWD to reject the proposal.

In any event, the district's enthusiasm for the project had ebbed markedly since it was first presented to the district in 1997. At that time, the MWD was just beginning to grapple with the implications of a looming cutback in the water it received from the Colorado River. Any program to husband the Colorado resources seemed promising.

Over the last two years, however, a severe drought on the Colorado has sharply reduced the district's expectations of the surplus it will receive over the next 12 to 15 years, making it uncertain whether there will be enough water to store at Cadiz to justify the project's expense. Continuing environmental opposition could also have slashed the volume of ground water that could have been extracted from the site.

The deteriorating financial condition of Cadiz, meanwhile, undermined its suitability as a business partner with the district.

"At a minimum, it is simply not timely for us to be making a decision to proceed with this project," MWD Chief Executive Ronald R. Gastelum told the board before its vote.

The motion to cancel the program passed with 50.25% of the board's weighted votes in favor, a razor-thin margin over the 50% needed, with the largest bloc coming from Los Angeles County board members. Cast in opposition were 44.22% of the votes, including votes from San Diego and Orange County members. The balance of the votes were held by board members not in attendance. Under the MWD system, the 37 board members are entitled to weighted votes based on the size and valuation of the 26 local and municipal water districts they represent.

The motion prevailed over a single alternative: a plan, favored by Gastelum and the district's professional staff, to defer approval of the project indefinitely. That vote failed 47.11% to 47.36%.

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