For more than ten years, the Oakdale Irrigation District (OID) has relied on water sales to balance its books. Over the decade prior to 2014, OID water sales brought in well over thirty million dollars.  The bonanza enabled the district to sell water to its customers for well under the cost of delivery.

When OID annexed Trinitas Partners into the district in 2013, the terms of the contract were ballyhooed by management as a great deal for district members because Trinitas was paying so much more per acre foot than OID’s senior customers. But even if every member of the district paid Trinitas’ cost of $55 an acre foot, OID still wouldn’t bring in  enough money to cover OID’s operation and maintenance overhead.

Until recently, OID’s policy of providing water below the cost of delivery was widely popular, especially with district farmers. But the annexation of Trinitas Partners brought heightened concern over such low prices, especially after last year’s decision to cut allocations to the district’s senior members even while delivering water to Trinitas.

The four-year drought added yet another degree of difficulty for out-of-district sales. In recent years, OID has pumped near-record amounts of groundwater. Due to new state groundwater sustainability requirements, it will be much harder to justify sending water out of the district while continuing to pump groundwater.

OID has also had requests from local farmers who’ve asked to be annexed into the district and offered to pay double the price for water paid by Trinitas. As a result, district management is finding it harder and harder to justify selling water to distant buyers.

Until very recently, none of these impediments could have prevented OID management from doing exactly as it wished as long as the OID Board of Directors supported its actions. Things changed drastically last year, when farmer Louis Brichetto threatened a lawsuit if OID pursued its on-farm conservation program as a means of setting water aside for more out-of-district sales. Brichetto’s attorneys argued OID had failed to perform an Environmental Impact Review (EIR) required by the California Environmental Quality Act (CEQA).

At first, OID management attempted to treat the lawsuit as a frivolous “nuisance,” but when Brichetto refused to back down, OID water attorney Tim O’Laughlin was forced to concede the suit had merit. Last March, at an OID Board meeting, O’Laughlin admitted that OID needed a “full-blown EIR.” He added that if OID failed to follow CEQA requirements, “we will lose” (the lawsuit).

This year, OID planned once again to promote water sales via an on-farm conservation program. Again, OID tried to avoid CEQA requirements by making a “Negative Declaration” for impacts of the on-farm conservation program. And, once again, OID is facing serious legal consequences.

In a March 31 letter of, “Complaint for Declaratory and Injunctive Relief,” attorneys for Brichetto, rice farmer Robert Frobose, and the Oakdale Groundwater Alliance charged that OID’s Negative Declaration, “fails to adequately describe the Project; utilizes an improper baseline; fails to adequately analyze impacts to groundwater, air quality, biological resources and energy; and fails to adequately consider cumulative impacts.” In other words, OID needs a, “full-blown EIR.”

Years ago, negative declarations nearly always succeeded in allowing developers, irrigation districts, and others to pursue environmentally sensitive projects without an Environmental Impact Review, mostly because anyone objecting to a project would be forced to hire expensive attorneys in protest. Those supporting pet projects could almost always count on bluffing their way to success because of the exorbitantly high ante to become a player in the land use game.

Despite last year’s hard lesson, OID’s management and a majority of its directors seem unable to realize the game has changed. Even while newly-elected directors Linda Santos and Gail Altieri voiced serious reservations, board members Gary Osmundson, Steve Webb, and Herman Doornenbal voted to proceed with the on-farm conservation project and water sale.

Now the district is faced with the expense of a lawsuit it could very well lose, and, if it loses, it could be required to pay not only its own legal costs but also the expenses of those pursuing the lawsuit—that’s the way CEQA requirements work. Furthermore, loss of the water sale will put OID even further in budget deficit, most likely to the tune of double-digit millions.

Remy, Moose, and Manley, the attorneys for Brichetto, Frobose, and the Oakdale Groundwater Alliance, represent the gold standard for CEQA attorneys state-wide. In fact, they are the authors of the Guide to CEQA, the authoritative guide to the California Environmental Quality Act.

Still, a majority of OID directors seem to think they can bluff their way to success in today’s new water and land use game. They may find that fewer and fewer district members are willing to back their hand, especially when they’re going against players willing to call for a show of cards.