Few L.A. companies are looking forward to Donald Trump taking the presidential oath of office more than Cadiz Inc.
The L.A. land and water company, which has been trying for a quarter-century to win approval for a desert water storage and conveyance project, is optimistic that the incoming administration and the Republican-controlled Congress will remove the last major obstacle for the project’s $250 million first phase.
That barrier is an October 2015 decision by the federal Bureau of Land Management requiring extensive environmental review that could take years before Cadiz could place a water pipeline next to a railroad.
Without that pipeline, Cadiz has no way to transfer billions of gallons of water a year from its remote Mojave Desert aquifer to systems that send water to 400,000 households throughout much of Southern California.
Company executives believe that with his stated focus on infrastructure projects, Trump will appoint people to the Interior Department and the BLM who will be more receptive to the project.
“With a single rescission of a BLM determination, a Trump administration can send us down the road towards clean water for 400,000 (households) and a project that generates $1 billion in economic stimulus and 5,000 jobs,” said Cadiz Chief Executive Scott Slater.
Even if that fails, Slater said there’s still a good chance – much better than before the Nov. 8 election – that Congress will step in to help the project. A bill that would allow the Cadiz pipeline and similar third-party infrastructure projects along railroad rights-of-way is waiting for the next Congress; with Trump in the White House, its chances of getting signed into law are viewed as better than with the current administration of President Barack Obama.
Flood of activity
Investors have reacted with glee to the seemingly improved odds for the project, sending Cadiz shares to a 52-week high of $10.40 a share in the weeks after the election; as of last week, the stock was still hovering near that peak.
The company also announced last week that it had closed a public offering of 1 million shares of common stock, resulting in net proceeds of $10.6 million, to be used for working capital, business development activities, and other project planning costs.
“While it’s not a slam-dunk that the BLM determination is reversed or restructured in a way that’s entirely favorable to Cadiz, there’s enough optimism to move the stock price,” said Larry Kosmont, an L.A. economic development consultant. Kosmont reviewed an earlier iteration of the project when he sat on the 38-member board of the Metropolitan Water District of Southern California, the region’s major water wholesaler.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Federal Attention Buoys Stock of Aquifer Owner
- Aquifer Operator Rides Brief Wave of Enthusiasm
- Federal Judge Rules Cadiz Pipeline Exemption Is Invalid
- Anonymous Blogger Kicks Sand at Desert Aquifer
- Shifting Sands
- Review Ruling a Drain on Aquifer Operator’s Stock
- Aquifer Owner Soaks Up Win
- Aquifer in Desert Makes Tracks Toward Pipeline