Environmental Impact Report Addendum for Cadiz Water Project Confirms Safety and Sustainability

New document adopted by lead public agency incorporates additional detail on planned operation, concludes no significant environmental impacts associated with operations

(Los Angeles, CA) Cadiz Inc. (NASDAQ: CDZI, the “Company”) announced today that the Fenner Valley Water Authority (“FVWA”) has adopted an Addendum to the Cadiz Water Project’s Final Environmental Impact Report(“FEIR”) that addresses updates to the Project proposal, including its water treatment program and pipeline route, and evaluates recent studies of natural springs in the project watershed to determine whether they constituted material new information impacting the conclusions of the 2012 FEIR.  The Addendum found that there were no significant adverse impacts associated with the minor changes identified in the Addendum and further summarized that the springs studies “do not contain any new information that changes the conclusions of the analysis in the 2012 EIR regarding potential adverse impacts on natural springs.”

The Cadiz Water Project’s FEIRwas certified in 2012; it was then upheld by county Superior Court in 2014 and sustained against appellate cases in 2016 by the California Court of Appeal, 4thDistrict.  The approval of the Addendum in accordance with the California Environmental Quality Act (“CEQA”) serves asanother public agency evaluation of the Project that has concluded operations can be conducted without significant environmental impacts. The Addendum becomes part of the CEQA record that is relied upon by Responsible Agencies in subsequent approvals in accordance with California and federal law.

The Addendum primarily addressed updated water treatment plans and resulting facility infrastructure. Since the adoption of the FEIR, the FVWA, Cadiz and participating agencies have continued to evaluate water quality to meet all standards established by local, state and federal regulators. Cadiz water currently meets all drinking water standards without treatment, but the Project was notified that its supplies may ultimately require treatment prior to entering the Colorado River Aqueduct (“CRA”) to ensure all constituents are below what exists in that system. This includes treatment for Chromium-6 (“Cr6”), which naturally occurs at the Cadiz aquifer at levels below present drinking water standards but above levels in the CRA. The Addendum provides further clarification on the proposed Cr6 removal process following extensive pilot testing that demonstrate Cr6 can be cost-effectively removed (approximately $50 per acre foot) by the Project prior to entering the CRA. Removal of Cr6 may not ultimately be required by the State or the owners of Southern California’s water transportation system, but the Addendum evaluated plans assuming treatment would be required. A report on the successful pilot treatment program is also now available.

The new water treatment protocol resulted in a minor alteration of the planned location of certain facilities in the project area, particularly the location of the manifold and pipeline on Cadiz Inc. private property at the wellfield. As located, the slight adjustment means that the Project’s main conveyance pipeline will not cross California state land and will instead enter the ARZC railroad right-of-way from Cadiz Inc. private property. This route change will result in no significant environmental impacts.

Also following completion of the FEIR, in 2018, veteran geologist Miles Kenney, Ph.D. and hydrogeologist Terry Foreman released an analysis of natural springs in the watershed mountains surrounding the Project area confirming earlier conclusions that the Cadiz aquifer system is hydrologically and geologically disconnected from natural springs in the mountains due to observed faulting. Later that year, a study sponsored by Project opponents used water chemistry data to argue that spring water and aquifer water shared chemical components that might suggest a hydrological connection. FVWA fully evaluated all studiesreleased in 2018 aided by independent analysis by water chemistry expert Dr. David Kreamer, PhD.The Addendum concluded that there have been no changes in circumstances regarding the FEIR’s evaluation of springs and that the new studies suggesting a connection “suffer from critical weaknesses which undercut and invalidate some of [their] conclusions, and contain serious methodological omissions in interpretation of recharge and average groundwater residence time, which ultimately influence the interpretation for the hydrogeology of the study area.”

Work on permitting Phase 1 of the Project continues. Prior to moving water in the CRA, the Project requires an agreement with the Metropolitan Water District of Southern California (“MWD”) and the Project must also comply with the newly adopted SB 307, which will become law on January 1, 2020.  According to the State Legislature and Administration, the outcome of that process is not predetermined and will be carried out in an open, transparent manner based on science. Cadiz anticipates initiating that process next year.

The Company has also agreed to support further study of springs that will be overseen by the Three Valleys Municipal Water District, an MWD member agency, designed to collect further data on the source of natural springs in the Project tributary watershed. The Company has been informed that the studywill move forward in September with broad independent participation.  Environmental NGOs critical of the Project have also been invited to participate in the study plan and potentially help fund the study.

“With the approval of the Addendum followed by the completion of the Three Valleys sponsored study, a full record will be available, openly and transparently compiled, that can answer any reasonable question about the Project’s potential impact on the mountain springs,” said Scott Slater, Cadiz CEO. “We believe this comports with the State’s intention as expressed in the Governor’s signing message for SB 307 to improve confidence in the Project’s ability to safely and sustainably make new water available to 400,000 people in Southern California and we look forward to a robust year ahead for Project evaluation.”

While this Project activity is ongoing, the Company is fully approved to continue its sustainable farming, including ongoing cultivation of lemons and hemp, on up to 9,600 acres of its Cadiz Valley properties. Cadiz’s recently announced hemp research trial on five acres is continuing and new additional plantings are scheduled for September 2019.

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