Reported / Citable
Background
The Las Posas Valley Groundwater Basin underlies about 42,200 acres in Ventura County and supports agricultural, commercial, and residential uses. The state recognizes it as a single basin, but Fox Canyon Groundwater Management Agency manages it in eastern and western areas separated by the approximate location of the Somis Fault. After decades of declining water levels, Fox Canyon adopted ordinances limiting new wells and pumping, and in 2014 the Legislature enacted the Sustainable Groundwater Management Act (SGMA) to require local agencies to bring overdrafted basins into balance.
The Las Posas Valley Water Rights Coalition, an unincorporated association of overlying landowners, brought a comprehensive adjudication to determine all groundwater rights in the basin. The trial court conducted the adjudication in three phases. Phase 1 set the basin’s initial Total Safe Yield and quantified rights for two public water suppliers. Phase 2 allocated the remaining rights based on a settlement supported by the majority of parties, prioritizing overlying landowners with correlative rights and concluding there was no surplus available for appropriators with second-priority rights. Phase 3 adopted a comprehensive “physical solution” appointing Fox Canyon as watermaster.
A small group of landowners (collectively Mahan Ranch) and two mutual water companies, Del Norte and Solano Verde, objected to aspects of the allocation, the inclusion of mutual water companies, and the structure of the physical solution. They appealed the final judgment.
The Court’s Holding
The Second District Court of Appeal, Division Six, affirmed the judgment in full. On the priority question, the court held that California groundwater law continues to recognize a hierarchy in which overlying landowners with correlative rights take priority over appropriators, and that the trial court correctly applied that hierarchy when allocating the basin’s safe yield. There was substantial evidence to support the trial court’s factual findings about historical use, sustainable yield, and the absence of any surplus available for second-priority appropriative rights.
On the treatment of mutual water companies, the court rejected the argument that allocating water rights to the underlying shareholders rather than to the companies as separate entities deprived the companies of property. A mutual water company holds and distributes water for the benefit of its shareholders, and the trial court’s allocation method respected the underlying ownership interests while ensuring that companies could continue to deliver water to those shareholders consistent with the physical solution.
On the structure of the physical solution itself, the court held that California courts have broad equitable authority to fashion physical solutions that balance the interests of all groundwater users in an overdrafted basin. The trial court permissibly fashioned a basin-wide solution rather than allowing certain users to opt out, finding that excluding objecting parties would undermine sustainable management and the proper allocation of management costs. The court also approved the appointment of Fox Canyon as watermaster given its statutory expertise and prior involvement in basin management.
Key Takeaways
- Comprehensive groundwater adjudications under California’s 2015 statutory framework can resolve overlying, appropriative, and public agency rights in a single judgment, even over the objection of a minority of parties.
- Overlying landowners with correlative rights retain first priority; appropriators receive water only when there is a surplus above the basin’s safe yield.
- Allocations to shareholders of mutual water companies generally do not deprive the companies of property, so long as they remain able to deliver water consistent with the physical solution.
- Trial courts can use their equitable powers to design basin-wide physical solutions and to refuse to allow individual users to opt out where doing so would undermine sustainable management.
- Existing groundwater management agencies are well-positioned to serve as watermasters under court-supervised physical solutions.
Why It Matters
This is an important affirmation of the comprehensive adjudication model that California has adopted to bring overdrafted groundwater basins into compliance with SGMA. By upholding the basin-wide physical solution and the priority of correlative rights, the opinion gives lower courts a model for resolving similar disputes in other overdrafted basins. It also signals that holdout landowners and mutual water companies have a steep climb if they want to challenge a settlement-based allocation supported by the majority of basin users.
For agricultural and residential water users in California, the case underscores that participation in the adjudication process and in groundwater sustainability planning is the better strategy than attempting to opt out. Going forward, parties should expect courts to defer to the substantial expertise of existing groundwater management agencies when they are appointed as watermasters and to use their equitable powers to bind all basin users to a single management framework.