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California appeals court rules against Westlands Water District in dispute over its contract with feds

The contract sought would have provided the district with permanent access to over one million acre-feet of water for agricultural purposes.

(CN) — A California appeals court Monday ruled against a major U.S. agricultural water supplier seeking to secure permanent access to federally controlled water in California.

The order handed down from Associate Justice Rosendo Peña Jr. affirms a 2021 judgment from the Superior Court of Fresno, which dismissed Westlands Water District’s attempt to validate a contract with the U.S. Bureau of Reclamation, primarily due to missing information regarding Westlands' financial obligations.

The ruling, however, doesn’t necessarily end the contract the district already entered into with the federal government in June 2020.

The contract, facilitated by former Westlands lobbyist and former Interior Secretary David Bernhardt, sought to provide the district with permanent access to over one million acre-feet of water for agricultural purposes under the Water Infrastructure Improvement for the Nation Act — an Obama-era law that provided a chance for water contractors to convert existing water service contracts with the bureau to repayment contracts.

As explained by Peña’s order, the conversion to repayment contracts are contingent upon the repayment of all outstanding project construction cost obligations in a lump sum or in equal installments no later than three years after the contracts' effective date. One advantage of this conversion, Peña writes, is that once capital costs are repaid, contractors are no longer subject to certain acreage limitations and associated pricing provisions of federal reclamation law.

But when Westlands submitted various drafts of its contract with the bureau for validation in 2019 and 2021, it repeatedly failed to disclose approximately how much it owed the federal agency.

Peña wrote that during Westlands' motion for validation hearing in December 2019, there was meager evidence of estimates ranging from $200 million to $362 million.

To be enforceable under law, the contract must be validated by a state court.

“Given the circumstances, we agree the contract presented for validation was missing an essential term and therefore uncertain, i.e., not sufficiently definite to be binding and enforceable,” wrote Peña, later adding that regardless of whether Westlands' president was authorized to execute its contract two months later, “the fact remains that the earlier contract Westlands sought to validate was materially deficient.”

“Even assuming the draft somehow reflected an understanding that the repayment amount would be determined and agreed upon at a later date, the December 2019 motion was properly denied," the judge wrote.

When Westland renewed its motion for validation in September 2019, it provided two versions of an exhibit pertaining to its financial obligations, ultimately claiming to have paid the bureau $209,436,667 in June 2020.

“We are unable to reconcile this figure with the calculations in either version of exhibit D,” wrote Peña.

Overall, the judge's order does nothing to end Westgate’s contract with the bureau that was finalized in 2020. The ruling merely maintains the non-obligatory nature of the unenforceable contract.

Westlands' water derives from the Central Valley Project, a federal network of waterways, dams, pumping stations and hydropower plants that delivers water to Southern California from the northern part of the state. According to Peña’s order, the project irrigates the region’s agricultural hubs, generates electricity at several power plants and provides water for about 30 million state residents.

But while Westlands' contract does not guarantee water during drought years, Peña wrote that the respondents of the appeal worried it would threaten environmental interests, particularly when it came to using precious water resources for agricultural uses that potentially harm native plants and wildlife.

“Once again the courts have ruled that these schemes to lock in permanent deliveries of California’s most precious resource are dubious and illegal,” said John Buse, senior counsel at the Center for Biological Diversity. “Massive water diversions only benefit corporate agriculture and they put our drinking water and Bay-Delta wildlife at grave risk. The courts are right to stand up to corporate interests.” 

Another respondent in the appeal included the California Sportfishing Protection Alliance, whose executive director Chris Shutes said that the denial is an opportunity for the government to abandon the controversial contract.

"This decision means California won't approve Westlands’ sweetheart deal with the Trump Administration," said Shutes. "This is an opportunity for the Biden administration to rescind this and similar illegal Trump contracts, and begin to collect more than $400 million owed to the taxpayers for required fish and wildlife mitigation."

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Categories / Courts, Environment, Law, Regional

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