Despite a major regulatory setback this month that sent shares of Cadiz Inc. plunging more than 60 percent, the L.A. water company vows it will press ahead on its massive Mojave Desert water project, with construction likely beginning late next year.

The company has been trying for nearly 25 years to develop a water storage and sales project for an aquifer under its 45,000-acre holdings in the Cadiz Valley east of the Twentynine Palms Marine Corps Air Station. An initial plan was rejected in 2002 by regional wholesaler Metropolitan Water District.

Cadiz came back in 2009 with a scaled-down plan and has signed agreements with six water agencies to pump water out of the aquifer and send it via pipeline to the MWD-operated Colorado River Aqueduct. That plan received environmental approvals three years ago and survived numerous legal challenges from environmental groups.

Then, on Oct. 5, Cadiz disclosed that the federal Bureau of Land Management rejected the company’s plan to avoid a costly and time-consuming environmental review for its pipeline. Cadiz had hoped to invoke an obscure federal provision allowing the pipeline to be built without further environmental review because it would be within a railroad right-of-way.

Shares fell nearly 40 percent on that news and then tumbled further in the following days as a slew of negative media and analyst reports poured out.

Attempting to stem shareholder panic, Cadiz issued a statement Oct. 9 in which Chief Executive Scott Slater said the company would fight the federal agency ruling, in court if necessary.

“We believe the findings issued by the California State Director of the BLM, who retired the day the letter was sent, are contrary to federal law and policy and should be rescinded,” the statement said.

A slight rebound brought the stock to close at $3.23 on Oct. 14, down 20 percent for the week, making it the biggest loser on the LABJ Stock Index. (See page 46.) Shares are still worth less than half what they were before the ruling.

Slater said completing a new environmental review for the pipeline could delay the project for up to a year.

But the delay could be much longer, especially if environmental groups and other opponents use the opportunity to file another round of lawsuits under the California Environmental Quality Act.