Scandal at the BLM
Inside information, investors, and a pipeline plugged by politics.
by Jim Swift
Strange things are afoot at the Bureau of Land Management (BLM), an agency housed within the Department of the Interior tasked with managing the nation’s vast swaths of publicly held land.
The main character in this mystery is a not a person, but a proposed pipeline intended to bring water from remote aquifers in the Mojave desert to drought-stricken southern California. Named the Cadiz project, it’s a privately owned venture that has been in regulatory limbo for over a decade—the work of the buzzsaw that is Senator Dianne Feinstein, who has pulled out all the stops to kill it. (You can read my earlier story on that here.)
Feinstein has used her clout on the Appropriations Committee to successfully insert a policy rider into law each and every year to specifically delay or deny the ability of the Cadiz project to move forward, running roughshod over her state’s House delegation (including Democrats), many of whom want the project to go forward.
The debate is over whether or not a proposed water pipeline within the right-of-way of a railroad that crosses over public lands “furthers a railroad purpose” and whether it has to get BLM approval. In the past, BLM pre-approval was not needed. Because of Feinstein’s urging, BLM withdrew a longstanding regulatory opinion and replaced it with one that “requires a fact specific case-by-case inquiry” for right-of-way use on BLM lands.
Despite this setback, Cadiz pushed forward and sought determination from BLM under the revised regulatory opinion.
And here’s where it gets fishy.
As the Wall Street Journal reported, a BLM employee routinely shared inside information about the Cadiz project’s future prospects with an investor at Whetstone Capital, a Kansas City firm that often short-sells publicly traded entities as part of its investment portfolio. That investor, Thomas McGannon, runs Whetstone’s investment research efforts. He exchanged a number of emails and phone calls with Erik Pignata, a realty specialist for BLM in California.
McGannon had a Freedom of Information Act Request (FOIA) pending with BLM, but repeatedly and persistently fished for more information from Pignata while it was being processed. Pignata is not a FOIA officer.
“Does the green line go through BLM lands?” Mr. McGannon asked in a Sept. 9, 2014 email, referring to a map of the Cadiz project. “I was mostly just curious if an alternate route along the green line would require BLM approval.” Mr. Pignata responded later that day that the alternative route “almost certainly” does.
On Feb. 19, 2015, Mr. McGannon inquired if there has been “any movement on the project discussions since we last spoke?” Mr. Pignata replied: “No, we are formulating our evaluation with DOI legal staff.” The emails suggest the two chatted repeatedly over the phone.
On June 4 Mr. McGannon emailed “great to catch up” along with a link to a blog post “Strong Sell On Project Failure, Insider Enrichment, And Bankruptcy, Price Target $0” that eviscerated Cadiz. On September 23 Mr. McGannon asked if there was “any news likely this week?” Mr. Pignata replied: “I have a briefing w/ the almost-highest people in my agency tomorrow . . . No pressure or anything.” Mr. McGannon cheered him on: “You got it man!”
A week later, Mr. McGannon inquired into when an adverse ruling would be finalized: “Wont [sic] it be great when I don’t bother you anymore.” Mr. Pignata replied: “I have a feeling Cadiz, Inc. isn’t going anywhere . . . so you’ll get to keep bugging me.” Several of Mr. Pignata’s emails suggest an animus toward the Cadiz project.
READ THE REST OF THIS ARTICLE HERE.