8-K: Cadiz Partners with USBR on Mojave Groundwater Bank Study

Cadiz Inc. announced a non-binding Memorandum of Understanding with the U.S. Bureau of Reclamation and other entities to study water augmentation opportunities for the Colorado River through its Mojave Groundwater Bank project.

Summary

• Cadiz Inc., through its managed entity Fenner Gap Mutual Water Company (FGMWC), Fenner Valley Water Authority (FVWA), and the U.S. Bureau of Reclamation (Reclamation) entered into a Memorandum of Understanding (MOU).
• The MOU, effective September 25, 2025, establishes a framework for collaboration to share and develop data on potential opportunities for water augmentation of the Colorado River through the proposed Mojave Groundwater Bank (MGB) project in San Bernardino County.
• The MGB project aims to provide conserved water supplies non-tributary to the Colorado River and aquifer storage adjacent to the Colorado River Aqueduct (CRA).
• Reclamation will study whether conserved water from the MGB could be delivered to Lake Mead via exchange or augmentation into the CRA and if it is non-tributary to the Colorado River.
• The studies will also evaluate if conserved water is generated in accordance with applicable laws and the potential benefits of non-tributary conserved water and aquifer storage for the Lower Colorado River Basin.
• The MOU is legally non-binding, does not create new legal rights or obligations, and does not commit parties to specific funding agreements.
• It has an initial term of five years, automatically renewing for additional five-year terms unless terminated with 30-day written notice.
• The effort supports federal and state initiatives addressing drought, declining reservoir levels, and the need for increased water storage and drought resiliency in Southern California and the Lower Colorado River Basin.

Sentiment

Score: 7

Explanation: The MOU represents a significant positive step by formalizing collaboration with the U.S. Bureau of Reclamation, lending credibility and potential federal support to the Mojave Groundwater Bank project. While non-binding and focused on studies, it addresses a critical regional need for water resources and aligns with broader governmental initiatives. The lack of immediate financial commitments or guaranteed project outcomes prevents a higher score, but the strategic importance is high.

Positives

• Formal collaboration with the U.S. Bureau of Reclamation (USBR) lends significant credibility and potential federal support to the Mojave Groundwater Bank (MGB) project.
• The MOU aims to address critical water supply issues in the Lower Colorado River Basin, a region facing severe drought and declining reservoir levels.
• The MGB project has the potential to provide substantial benefits by augmenting water supplies to Lake Mead and increasing drought resiliency for Southern California.
• The studies will help determine the viability and legal compliance of delivering conserved water from the MGB to the Colorado River system.
• The MOU has a five-year initial term with automatic renewals, indicating a long-term commitment to collaboration.

Negatives

• The Memorandum of Understanding is legally non-binding, meaning no party is obligated to take specific actions or commit funds.
• The MOU does not create any new legal rights, obligations, or financial commitments, and funding for federal expenditures is contingent on appropriation or allotment of funds.
• The studies contemplated by the MOU may not demonstrate the anticipated benefits of the MGB, or the parties may not continue to collaborate.
• The MOU does not commit the parties to enter into any specific follow-on agreements for funding or project implementation.

Risks

• The parties may not continue to collaborate under the MOU.
• The studies contemplated by the MOU may not be completed.
• The studies may not demonstrate the anticipated benefits of the proposed MGB to the management of Colorado River water resources.
• Potential changes in laws or regulations could affect the contemplated efforts under the MOU.
• Funding for federal expenditures is contingent upon appropriation or allotment of funds, and no liability accrues to the United States if funds are not available.
• The MOU is non-binding and does not create legal rights or obligations, meaning project advancement is not guaranteed.

Future Outlook

The effort is expected to support ongoing federal and state initiatives to address drought conditions, declining reservoir levels, and the need for increased water storage and drought resiliency in Southern California and the Lower Colorado River Basin. Reclamation and the Department are working toward finalization of new Colorado River Basin guidelines with a Record of Decision in calendar 2026.

Management Comments

• The MGB, being developed in San Bernardino County by FVWA, FGMWC, and other local agencies and tribal nations, is an innovative water supply and storage project that has the potential to provide substantial benefits in the Lower Colorado River Basin.
• The mission of FGMWC and FVWA, collectively, is to sustainably manage the groundwater basin in Cadiz Valley in order to conserve, store, and deliver reliable and affordable new water supplies to communities in Southern California and the Lower Colorado River Basin.

Industry Context

The filing highlights the urgent need for dependable water supplies, storage, and drought resiliency in Southern California and the Lower Colorado River Basin due to catastrophic wildfires, multi-year droughts, and diminished inflows into the Colorado River system over the past twenty years. This MOU aligns with broader federal and state efforts to manage water resources in the face of climate change and increasing demand.

Stakeholder Impact

• Shareholders: Potential long-term value creation if the MGB project proves viable and receives further approvals, enhancing the company's asset value and strategic position in water resource management.
• Southern California Communities/Lower Colorado River Basin: Potential for increased reliable and affordable water supplies, enhanced water storage, and improved drought resiliency.
• Regulatory Authorities (USBR): Facilitates their mission to manage, develop, and protect water resources and address drought challenges in the Colorado River Basin.
• Local Agencies and Tribal Nations: Collaboration on the MGB project could lead to shared benefits and resource management.

Next Steps

• The parties will work collaboratively to advance the purposes identified in the MOU, including sharing and developing data.
• Reclamation will study whether conserved water from the MGB could be delivered to Lake Mead and if it is non-tributary to the Colorado River.
• Reclamation will study whether conserved water is generated in accordance with applicable laws, regulations, and court decrees.
• Reclamation will study the potential of non-tributary conserved water and aquifer storage to provide substantial benefits in the Lower Colorado River Basin.
• The parties will finalize the scope of the collaboration and enter into a cost-sharing agreement.
• Reclamation and the Department are working toward finalization of new Colorado River Basin guidelines with a Record of Decision in calendar 2026.

Key Dates

Recommendation

The non-binding Memorandum of Understanding with the U.S. Bureau of Reclamation is a strategically positive development for Cadiz Inc., as it formalizes federal collaboration on the Mojave Groundwater Bank project, enhancing its credibility and long-term potential. This addresses a critical regional need for water resources and aligns with governmental priorities. However, the MOU itself does not guarantee project approval, funding, or immediate financial returns, as it primarily outlines a framework for studies and data sharing. Investors should hold, awaiting more definitive project milestones, funding commitments, and study outcomes before considering a stronger position.

Keywords

Cadiz, Mojave Groundwater Bank, MGB, Water Augmentation, Colorado River, Bureau of Reclamation, Drought Resiliency, Water Storage, Southern California Water, Fenner Valley Water Authority, Fenner Gap Mutual Water Company