Oakdale Irrigation District quietly cancels water sale

Irrigation leaders have privately canceled plans to sell up to 9,000 acre-feet of Stanislaus River water to buyers south of the Delta, court documents say, but intend to pursue an undisclosed variation of the deal.

The unannounced change won’t affect the Oakdale Irrigation District’s much larger sale of 32,500 acre-feet to outside buyers paying $9.75 million. That water is temporarily swelling the now swift-flowing Stanislaus, doing double duty – as requested by state and federal wildlife agencies – in propelling young salmon toward the ocean for a few weeks.

While the larger deal represents a straight cash-for-surplus-water transaction, water in the smaller deal, potentially worth $4 million, would be freed up by OID farmers volunteering to fallow some land. Two critics sued to stop that deal and asked a judge to halt the water transfer.

A pause might have affected both sales because OID initially planned to send the total amount down the Stanislaus in so-called pulse flows benefiting fish.

But Stanislaus Superior Court Judge William Mayhew on April 19 declined to stop the flow, apparently after OID suddenly disclosed that the district no longer plans to sell the smaller amount as originally planned.

“OID reversed its position,” said Sacramento attorney Osha Meserve after the April 19 huddle, held out of public view in the judge’s chamber.

No public explanation

OID General Manager Steve Knell, citing the lawsuit, refused to clarify the change, which has not been explained in board meetings or accompanying reports. Neither did OID – dogged by criticism for lack of transparency – share with the court what it plans to do with water to be freed up in the smaller deal.

“Oakdale Irrigation District is playing a shell game with its water,” says a court briefing filed Friday by Meserve. “OID attempts to mislead the public as to what it is actually doing with its water.”

Papers filed in court Wednesday by OID attorneys confirm that the larger deal remains in place, while the initial smaller deal fell apart. OID expects to resurrect the smaller deal, the documents say without giving details.

Although the OID board narrowly approved its end of the smaller deal in March on a 3-2 vote, prospective buyers never agreed, according to court declarations. They were signed by representatives of the San Luis & Delta-Mendota Water Authority, a consortium of 29 water buyers, and State Water Contractors, composed of 27 water agencies.

The smaller deal was not consummated “in part because agencies with regulatory authority over transfers indicated they would not approve such a transfer in 2016,” said Frances Mizuno, San Luis & Delta-Mendota assistant executive director, in a declaration.

OID’s briefing says the district decided that shipping water from the smaller deal “was not necessary” and “not viable.” OID still intends to implement the fallowing program, the document says without explaining.

“If there is any confusion regarding the facts, it is due to OID’s extraordinary efforts to obfuscate them,” Meserve said in her Friday briefing.

The initial arrangement for OID’s On-Farm Conservation Program – the smaller deal – would have shipped south 9,000 acre-feet for $400 an acre-foot; participating OID farmers would get 20 percent in cash and would spend 75 percent on efficiency upgrades, with OID keeping the final 5 percent.

That payout formula remains intact, OID’s briefing indicates, although the district expects less participation: As of Tuesday, farmers with only 605 acres total had signed up. OID operations manager Eric Thorburn anticipates eventually enrolling 1,000 acres, or one third the initial expectation, he said in a court declaration.

Conflict alleged

One of those farmers is OID board member Gary Osmundson, who previously confirmed that he applied to fallow about 105 acres, representing a potential $119,000 profit and one-sixth of the enrolled acreage so far.

Those bringing the lawsuit – farmers Louis Brichetto, an OID board member from 2001-06, and Robert Frobose – contend that Osmundson has a conflict under state law and should not have voted March 15. The lawsuit accuses Osmundson of “impermissible self-dealing”; without his vote, the On-Farm program would have died in a 2-2 tie.

Osmundson has said his attorney and the district’s attorney cleared him to vote because any OID customer was free to sign up. Brichetto and Frobose contend that a small portion of OID’s customer base – less than 1 percent in terms of acreage, as of Tuesday’s count – was selected to participate. Also, the March split vote gave Knell broad freedom to “make the necessary amendments to the agreement to conform to the landowner’s individual necessities.”

OID’s court papers ignored the Osmundson question.

Meserve, representing Brichetto and Frobose, called OID’s environmental document for the On-Farm program “grossly deficient” and asked that a judge order the district to conduct an expansive environmental impact report. It should thoroughly analyze how shipping water elsewhere could harm the groundwater table here, Meserve said in a briefing.

“Once that water is transferred, it is lost,” the document says.

Volume called insignificant

In a reply, OID attorneys said the water to be transferred under the initial plan would deprive local aquifers of only about one-tenth of 1 percent the amount that typically seeps down in the local basin.

“The impact is negligible and does not have a significant effect on the environment,” says the document, signed by Sacramento attorney Valerie Kincaid.

OID asked board members in April – five weeks after signing off on the initial environmental document – to hire an environmental consultant to screen applications to put farmland in the On-Farm program. That proves OID knew its initial document was deficient, opponents charge.

“Mitigation must occur before, not after, adoption of an environmental document,” Meserve said.

Efficiency upgrades funded by water-sale profit would help OID demonstrate that it is making improvements required by state water officials, Knell said in a court declaration. Without that track record, the district could find itself ineligible for state funding, such as a $3 million grant for which OID recently applied, he said.

Knell noted that Brichetto, an OID water customer, also farms about 3,600 acres outside OID’s boundary. In February, Brichetto asked whether he might fallow land under the On-Farm program, and instead of getting money, he would transfer that freed-up water to the outlying farm. OID said “no.”

“The plaintiffs’ request (to halt the On-Farm deal) is an extension of their campaign to improperly manipulate and control OID operations,” Kincaid concluded.

Brichetto, who serves on the Stanislaus Water Advisory Committee, which works on groundwater issues, says he has been consistent with efforts to keep water in this area to benefit locals.

A lawsuit hearing is scheduled for 8 a.m. Wednesday in Department 22 of the City Towers building, 801 10th St., Modesto.

This story was originally published April 30, 2016 at 4:34 PM with the headline "Oakdale Irrigation District quietly cancels water sale."