A ruling handed down on Wednesday by Orange County Superior Court Judge William Claster clears the way for the Indian Wells Valley Groundwater Authority to impose water replenishment fees across the board on water users in the northwestern end of the Mojave Desert as part of an effort to end overdrafting of water in that region.
Ultimately, the imposition of that fee will drive Searles Valley Minerals, the largest company in the northwestern corner of San Bernardino County, out of business, the company’s chief executives and its attorneys maintain.
Indian Wells Valley 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.
Over the last several years, the critical shortage of water throughout California has triggered conservation and resource management measures which have fundamentally altered the way in which companies located in the state’s desert areas must operate. Nowhere is the implication of the effort at governmental regulation of the state’s water resources as pronounced as it is in Indian Wells Valley.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 resources. 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.
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 any farmer whose use exceeds his respective share of the water supply set aside for agricultural usage. Money generated in this way is used to purchase imported water and pay for the eventual provision of infrastructure needed to bring in the imported water.
Even before the California Department of Water Resources had fully examined the proposed groundwater sustainability plan for the Indian Wells Valley, a number of farms and operations in the region raised protests over the limitations being imposed on them. Among those were Searles Valley Minerals, Mojave Pistachios and Sierra Shadows Ranch, along with John Thomas Conaway and the Nugent Family Trust. Ultimately, those entities sued the groundwater authority and the Indian Wells Valley Water District as the lead agency in that joint authority, claiming the conservation efforts being undertaken imposed not only an unacceptable financial burden on them but were abrogating their long-established water use rights altogether. The legal actions have created paradoxes, as some private sector entities which are allies in their lawsuits against the district and the authority have also filed separate actions against one another.
Meanwhile, the Indian Wells Valley Groundwater Authority and the Indian Wells Valley Water District pushed ahead with the effort to refine the groundwater sustainability plan and garner state authorization to apply it.
Growing out of the litigation brought by Searles Valley Minerals, Mojave Pistachios and Sierra Shadows Ranch, along with John Thomas Conaway and the Nugent Family Trust was a cross complaint from the Indian Wells Valley Water District in the form of Indian Wells Valley Water District v. All Persons Who Claim a Right to Extract Groundwater in the Indian Wells Valley Groundwater Basin. Essentially, that suit calls for a survey of water usage among all water users and purveyors in the region, data from which will ultimately form the basis of water use allotments being apportioned to those users. Under the legal process involved in the legal action brought by the Indian Wells Valley Water District, the region’s water users are to be afforded the opportunity to object to or provide input regarding those allotments, which will ultimately be determined by the Orange County Superior Court judge.
The disputes over water in the Indian Wells Valley region have been assigned to the Orange County Superior Court to avoid bias that might manifest if the hearings were held in a court in Kern, Inyo or San Bernardino counties,
Searles Valley Minerals maintains that the water use regulation regime the Indian Wells Valley Groundwater Authority is seeking to create and enforce is a violation of California water law and the company’s long established water rights.
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, according to Garner, Dunn and Mouawad, 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 thereby 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’ 90-year-old water rights are the most senior in the Indian Wells Valley Groundwater Basin.
Garner, Dunn and Mouawad take 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 maintain 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 has been “singled out” by the authority.
The community of Trona presently has a population of roughly 1,850 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.
“Moreover, all domestic and municipal activities for the disadvantaged Trona communities are supplied by groundwater that Searles Valley Minerals pumps from the basin,” according to the statement. “The economic impacts of the authority’s new fee would devastate these communities.”
The authority’s decision to impose hefty new “replenishment fees” on the valley’s civilian water users while providing no check on other groundwater users in the basin such as the China Lake Naval Air Weapons Station is indefensible, Garner, Dunn and Mouawad contend.
The Indian Wells Valley Groundwater Authority maintains that federal autonomy trumps California law, and that it does not have the prerogative to impose water use limitations on the U.S. Navy.
What is today known as Searles Valley Minerals has been in existence since 1873, when John Wemple Searles, a gold and silver miner who had arrived in the area in the 1860s, founded the San Bernardino Borax Mining Company to extract borax, a white crystalline powder from the dry Searles Lakebed near present day Trona. Initially long mule teams were used to haul borax in wagons to San Pedro, which was thereafter shipped by train when the Southern Pacific Railroad reached the western Mojave in 1876. The company passed into the possession of Francis Smith, who shuttered the operation in 1896. Subsequently, in 1913, British investors revived the mining operation at Searles Lake, and in 1914, the American Trona Corporation established the company-owned town of Trona. at which point the Trona Railway was constructed, connecting the town with what was then the Southern Pacific line at Searles.
The America Trona Corporation proved highly profitable during World War I, when Trona was the only reliable American source of potash, an important element used in the production of gunpowder.
By the 1930s, the town’s population peaked at around 7,000, making it what was at the time the ninth largest community in the county. Workers at the company plant were paid in company scrip, which was every bit as negotiable in Trona’s commercial establishments of the time as greenbacks. Talk of incorporating Trona as a city was kiboshed, since it was not in the American Trona Corporation’s interest to surrender control over the townsite. The American Trona Corporation gave way to the American Potash & Chemical Corporation in 1926, at which time its major products were borax, soda ash and sodium sulfate. Productions of these chemicals continued to expand throughout the 20th Century and the company experienced a resurgence during World War II.
In 1962 the company received nationwide recognition and an award for its innovative solvent extraction process to recover boric acid and potassium sulfate from weak brines.
In 1967, Kerr-McGee Corporation (now a subsidiary of Anadarko Petroleum Corporation) acquired American Potash and Chemical Corporation and it operated the Searles Valley facilities until 1990. That year the operations were purchased from capital investors D. George Harris and Associates, resulting in the formation of the North American Chemical Company. Ownership changed yet again in 1998 when IMC Global Inc acquired the North American Chemical Company.
In 2004 Sun Capital Partners purchased IMC Global Inc and renamed it Searles Valley Minerals, Inc. In November 2007, Nirma, based in Ahmedabad, India purchased the company from Sun Capital Partners.
The legal actions that Sierra Shadows Ranch, John Thomas Conaway and the Nugent Family Trust lodged against the Indian Wells Valley Groundwater Authority were previously dismissed, leaving Searles Valley Minerals and Mojave Pistachios as the two entities fighting the joint powers authority over the principle of suspending previously existing water rights.
The Indian Wells Valley Groundwater Authority brought identical motions to dismiss Searles Valley Minerals and Mojave Pistachios claims that the authority’s adoption of a replenishment fee to fund implementation of its groundwater sustainability plan, as is required under the Sustainable Groundwater Management Act, would effectively deprive them of water they have established rights to and would thereby result in damages to them quantified in the amount of $250 million.
Judge Claster granted the Indian Wells Valley Groundwater Authority’s motion to dismiss the Searles Valley Minerals, Inc.’s and Mojave Pistachios LLC’s claims.
Both companies’ water rights yet stand, Judge Claster ruled, meaning they are allowed to use water in the quantities they have historically, as long as they stay current on the replenishment fees imposed by the authority.
“Nothing in the groundwater sustainability plan determines or alters groundwater rights because the Sustainable Groundwater Management Act says the groundwater sustainability plan, etc. do not determine or alter groundwater rights.”
According to James Markman, who is serving as special counsel to the Indian Wells Valley Groundwater Authority, “This puts to rest a claim that has been made for years that the authority has been taking away private property rights. The court found that contrary to the assertion of both Searles Valley Minerals and Mojave Pistachios, the authority did nothing to unlawfully ‘determine or alter water rights.’ We hope that this decision puts that claim to rest once and for all.”
Garner, Dunn and Mouawad maintain that Judge Claster’s ruling will impose a severe hardship on the companies, resulting in the collection of back unpaid replenishment fees from their delinquent clients in the millions of dollars with millions of dollars of fees to be collected in the years going forward.
Markman stated the intention of the authority to do just that, saying, “The board has directed us to seek immediate payment of all unpaid fees from all delinquent parties. We intend to seek the court’s cooperation in that regard in the new year.”
-Mark Gutglueck