Court Denies Searles Valley Minerals’ Request For Injunction On H2O Resupply Fee

The effort by Trona-based Searles Valley Minerals to prevent the Indian Wells Valley Groundwater Authority from levying a water replenishment fee on it that the company maintains is compromising its financial viability was dashed by an Orange County judge on Thursday.
Orange County Superior Court Judge Kirk H. Nakamura granted the Indian Wells Valley Groundwater Authority’s motion to dismiss Searles Valley Minerals’ request.
The authority imposed the replenishment fee on major water users throughout its jurisdiction, including Searles Valley Minerals, in January. Searles Valley Minerals, which had already commenced legal action against the authority four months previously, had sought to be excused from paying the assessment, and had not been paying it since the charges were imposed.
The Indian Wells Valley Groundwater Authority is levying the groundwater replenishment fee as part of the ongoing effort by governmental entities in San Bernardino, Kern and Inyo counties to come into compliance with the State of California’s Sustainable Groundwater Management Act. That assessment, Searles Valley Minerals maintains, will drive it out of business.
Among other arguments, Searles Valley Minerals maintains that the joint powers authority formed under the auspices of state law is letting the federal government off the hook by ignoring federal agencies’ consumption of water at the furthest western extension of the Mojave Desert while forcing the private sector to bear the burden of the conservation efforts that are being imposed.
In the face of a four-year running drought, California state officials in 2014 undertook efforts to head off the absolute depletion of the state’s regional water sources. In September 2014, then-California Governor Jerry Brown signed into law the Sustainable Groundwater Management Act, which requires local agencies to draft plans to bring groundwater aquifers into balanced levels of pumping and recharge. That was followed in 2015 by Brown mandating water-saving measures throughout the state.
In response, pursuant to a joint exercise of powers agreement, the Indian Wells Valley Groundwater Authority was formed with Kern County, San Bernardino County, Inyo County, the City of Ridgecrest and the Indian Wells Valley Water District as general members and the United States Navy and the United States Department of the Interior Bureau of Land Management as associate members, with each general member having one voting seat on the authority board and the federal associate members participating in all board discussions, but not having a vote.
The joint powers authority took as its mandate counteracting the overdraft of the aquifer underlying Indian Wells Valley, which lies at the extreme northwestern end of the Mojave Desert and the confluence of the northwestern corner of San Bernardino County, the southeastern end of Kern County and the southwestern extension of Inyo County.
Based upon a survey of water usage patterns undertaken by an engineering consultant, Carlsbad-based Stetson Engineers, the authority and the Indian Wells Valley Water District sought to derive a strategy for both reducing water use in the valley and increasing groundwater recharge to reach a balance of both that will end the overdraft. Several different plans, or models, were contemplated. Basically, the concept was to decrease the drafting of water from the regional aquifer through conservation, increased recycling of water and perhaps the minimization of evaporation, augmented by the importation of water from outside the valley to achieve, no later than 2040, a balance of water coming in with the amount of water usage, such that the depletion of the aquifer will end.
Stetson Engineers was designated the water resources manager for Indian Wells Valley, and the authority’s board in January 2020 passed a tentative proposed groundwater sustainability plan and voted to submit it to the state. Thereafter it made adjustments to the plan, which contained water use limitation elements and water replenishment measures. The plan incorporated a farmland fallowing option as well as an increase in the monthly assessment or fee that was imposed on the extraction of water by major pumpers. That fee had been previously collected to cover the costs associated with the administrative activity of the groundwater authority.
After a survey of water use by well owners both collectively and individually was made, the authority assigned water use allowances to the region’s well owners. Excess use fees, referred to as augmentation fees, were formulated for application to those well owners who pump above their allowances as well as on farmers who go beyond their respective share of the water supply set aside for agricultural usage. Money generated in this way will be used to purchase imported water and pay for the infrastructure needed to bring in the imported water.
One issue complicating the matter is that both the Bureau of Land Management and the China Lake Naval Air Weapons Station, as federal entities, are exempt from the groundwater sustainability plan and the Sustainable Groundwater Management Act, and therefore not subject to the restrictions that will be imposed in the groundwater sustainability plan. The China Lake Naval Air Weapons Station encompasses two ranges and totals over 1,100,000 acres or 1,719 square miles, much of that within Indian Wells Valley. While the China Lake Naval Air Weapons Station has made strides in recent years in reducing its water use, it still drafts some 1,600 acre-feet of water from the aquifer annually.
In September 2020, Searles Valley Minerals, represented by Eric Garner, Jeffrey Dunn and Maya Mouawad with the law firm of Best Best & Krieger, filed a lawsuit in Kern County Superior Court against the Indian Wells Valley Groundwater Authority in an effort to protect what Garner, Dunn and Mouwad asserted are the company’s groundwater rights within the Indian Wells Valley Groundwater Basin, and to stop the collection of what they characterized as an illegal and unfair groundwater replenishment fee and a tax disguised, they assert, as an “extraction fee.”
Searles Valley Minerals uses solution mining, which involves soaking portions of the company’s dry Searles Lake in San Bernardino County with water to precipitate brine which is then extracted and processed to produce boric acid, sodium carbonate, sodium sulfate, several specialty forms of borax, and salt.
The groundwater replenishment fee, Garner, Dunn and Mouawad maintained, is unprecedented and exorbitant, and will increase the company’s water costs by 7,000 percent or $6 million per year – pushing Searles Valley Minerals out of business after more than 140 years of operation, and threatening the livelihood of the company’s 700 employees. The groundwater replenishment fee ignores and violates Searles Valley Minerals’ adjudicated water rights, according to the lawsuit.
Searles Valley Minerals’ 91-year-old water rights are the most senior in the Indian Wells Valley Groundwater Basin.
Garner, Dunn and Mouawad took issue with the fashion in which the China Lake Naval Air Station is not subject to the restrictions in the plan nor its fees.
“Searles Valley Minerals’ right to pump water in the basin for domestic uses is senior to any water right reserved to [the] Weapons Station, and because [the] water district’s groundwater pumping began no earlier than 1955, its appropriative right, if any, to basin water remains junior to Searles Valley Minerals’ right,” according to the lawsuit. “The authority falsely asserts in its groundwater sustainability plan that any pumping allocations under the groundwater sustainability plan will be ‘consistent with existing groundwater rights and priorities.’”
In a joint statement, Searles Valley Minerals and Garner, Dunn and Mouawad maintained the groundwater management plan that the authority is attempting to implement “represents an arbitrary and illegal taking of Searles Valley Minerals’ water rights,” and Searles Valley Minerals had been “singled out” by the authority.
Despite the ongoing litigation, in January 2021, the Indian Wells Valley Groundwater Authority undertook to collect groundwater replenishment fees from all well owners within its bailiwick. Citing the contentions in the lawsuit it had already initiated, Searles Valley Minerals balked at paying the fee, seeking an injunction from the court to prevent the Indian Wells Valley Groundwater authority from assessing it.
The dispute was removed to Orange County Superior Court, which was considered to be an impartial forum, since there are entities in San Bernardino, Kern and Inyo counties which have a direct interest in how water conservation measures are going to be applied by the Indian Wells Valley Groundwater Authority. Searles Valley’s legal action was one of two similar legal pleadings, the other one having come from an agricultural company, Mojave Pistachios.
Both Searles Valley Minerals and Mojave Pistachios have been pumping water since January without paying the fee to the Indian Wells Valley Groundwater Authority.
More than three months ago, on May 25, both Searles Valley Minerals and Mojave Pistachios suffered a setback when Judge Nakamura ruled that their legal actions contesting the imposition of the fee did not give them the right to excuse themselves from paying the assessment. This was summarized in the language “pay first, litigate later,” an applicable principle which prevails when the lawfulness of a tax is being contested. Both companies would need to live with the imposition of the assessment while their legal action contesting the fees are pending in the court, Judge Nakamura ruled. If the court indeed determines that the fees should not be imposed on them, they will be provided a refund at that time. Nakamura on May 25 held that a “delay in implementing the groundwater sustainability plan will cause further harm to the basin, increase the cost of imported water, and continue to damage shallow wells throughout the basin.” The judge reasoned that the replenishment fees were being used to remedy the overdraft in the basin by paying for the importation of water, which was helping to prevent shallow wells from drying up.
In his ruling yesterday, Judge Nakamura cited his May 25 ruling in ordering both Searles Valley Minerals and Mojave Pistachios to begin paying the fee forthwith. Essentially, if the two companies are to continue to pump water, they must pay the fee that the Indian Wells Valley Water Groundwater Authority has levied. In the Searles Valley Minerals case specifically, Judge Nakamura held that the “pay first, litigate later” principle applies to both local and state taxes and fees.
Referencing California Water Code, section 10726.6 subsections (c) or (e), Judge Nakamura ruled there was nothing in the law that authorized the suspension of tax payments as the result of ongoing litigation calling the tax’s or assessment’s applicability into question.
Nakamura stated, “[T]he pay first principle is explicitly included in subsection (d) where it instructs that the fee may be paid under protest and states, ‘Payments made and actions brought under this section shall be made and brought in the manner provided for the payment of taxes under protest and actions for refund of that payment.”
Neither Searles Valley Minerals nor Mojave Pistachios established that the imposition of the water replenishment was tantamount to unconstitutionally abridging either parties established water rights, Judge Nakamura found.
The community of Trona, which lies at the westernmost extreme of San Bernardino County, presently has a population of 1,900 and has been piggybacking on Searles Valley Minerals for the provision of domestic water. The groundwater management plan will transform Trona into a ghost town, according to Garner, Dunn and Mouawad.
“…all domestic and municipal activities for the disadvantaged Trona communities are supplied by groundwater that Searles Valley Minerals pumps from the basin,” according to a joint statement from Searles Vwlley Minerals and Garner, Dunn and Mouawad. “The economic impacts of the authority’s fee will devastate the Trona community.”
The authority’s decision to impose hefty new “replenishment fees” on the valley’s civilian water users while providing no check on other major groundwater users in the basin such as the China Lake Naval Air Weapons Station is indefensible, Garner, Dunn and Mouawad contend.
“Searles is a pillar of the Trona and Ridgecrest communities, providing jobs and economic benefits to these communities since we were founded in 1873,” said Burnell Blanchard, vice president of operations for Searles Valley Minerals. “We’ve maintained our workforce through natural disasters, a global pandemic and the subsequent economic crisis. Now, we face the threat of closing our doors and putting hundreds of people out of work because the authority has refused to recognize our long-established groundwater rights.”
According to the lawsuit filed a year ago by Searles Valley Minerals, which exists in the form of a petition for a writ of mandate, a complaint for declaratory and injunctive relief and a takings claim under the California Constitution, “An actual controversy has arisen and now exists as to whether the authority’s adoption of the groundwater sustainability plan, sustainable yield report, engineer’s report, extraction fee and the replenishment fee constitute an unlawful taking of property for public use without just compensation.”
The suit calls upon the court to make a finding that the “authority attempted to determine Searles Valley Minerals’ water rights in a way that is inconsistent with applicable law.” If, the suit says, “the court finds that the authority’s actions did not deprive Searles Valley Minerals of all economically beneficial use of their groundwater rights as alleged, then Searles Valley Minerals alleges in the alternative that the authority committed an unlawful physical taking by erroneously deeming the entire basin’s sustainable yield to be reserved by the Weapons Station, and then putting that groundwater to public use without compensating Searles Valley Minerals. What the authority claims as a transfer of federal reserved rights is in reality an unlawful taking of Searles Valley Minerals’ groundwater rights. Because the basin groundwater given to the Weapons Station will be physically unavailable to Searles Valley Minerals due to [the] authority’s adopted groundwater sustainability plan, sustainable yield report, engineer’s report and replenishment fee, this claimed transfer and its related actions constitute a physical taking.”
According to the joint statement by Searles Valley Minerals and its lawyers, “The authority’s ‘sustainable’ groundwater management plan is anything but sustainable – it’s a significant new burden on a select few groundwater users that will push many entirely out of operation without any regard to existing water rights.”
-Mark Gutglueck

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