The Newberry Community Services District (CSD) is facing mounting warnings of significant legal exposure as it considers a controversial partnership with Cadiz, Inc.  The NSCA is raising the alarm that the move could subject the District and its individual board members to personal liability for "gambling" with taxpayer funds.

    At the heart of the dispute is Cadiz, Inc.'s Northern Pipeline, a project that currently lacks the necessary permits for groundwater extraction and water conveyance.

    Legal analysts point out that under California law, public agencies are strictly prohibited from spending public resources on speculative ventures that lack regulatory certainty.

    The Northern Pipeline project is drowning in regulatory uncertainty.

    Under the California Constitution, any public funds used to facilitate a CSD/Cadiz, Inc. partnership - including attorney fees, staff stipends, administrative supplies, etc. - constitute an illegal expenditure of public money.  "The CSD cannot legally gamble taxpayer funds on a project that does not yet exist in a permitted capacity," noted one legal review of the proposal.

    The CSD's push to sign a Letter of Intent (LOI) with Cadiz, Inc. has also drawn fire for potential violations of the California Environmental Quality Act (CEQA).

    There is a "Catch-22" scenario: the District is attempting to formalize a water deal without first completing an Environmental Impact Report (EIR) to determine the effects of managing 3,750 acre-feet of water.  This is a huge environmental consideration that the Newberry CSD has completely ignored.

    By signing a LOI agreement before conducting this mandatory review, the CSD may be guilty of "pre-commitment," a move that has historically led to projects being halted by California courts, with court expenses levied to the defendant.

    Cadiz, Inc. has offered funding for various endeavors, but only after the consummation of a LOI.  But an expensive EIR needs to be completed before a LOI (the Catch-22).

    The warnings extend beyond the District as an entity. Should the CSD Board approve the LOI based on the recommendations of its Cadiz, Inc. Advisory Water Committee, individual members could face personal financial consequences.

    Because the CSD's expenditures were done with the CSD's Chair ordering a bypass of the proper vetting of Cadiz, Inc., and expenditures were done for a company lacking the necessary permits to fulfill its performance, and with a company with a highly questionable ability to acquire the necessary permits, the expenditures are likely in violation of the public's trust and the California Constitution, Article XVI, § 6.

    The District's board members and committee participants could be personally held liable in taxpayer lawsuits aimed at recovering "wasted" public funds, miscellaneous damages, and all court costs. (California Code of Civil Procedure § 526(a) )

    As the Board prepares for its next session on April 28, 2026, the Board and its advisory Cadiz water committee members appear aloof to the Law and whether the distant promise of possible water is worth the looming threat of more high-stakes CSD litigation.