By Mark Gutglueck
Orange County Superior Court Judge William Claster on June 14 upheld the Indian Wells Valley Groundwater Authority on its imposition of water drafting assessments in excess of $2,000 per acre-foot against one of the major agricultural entities in the West Mojave Desert.
For nearly a decade, there has been an intensifying dispute over the use of water in 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 eastern end of Kern County and the southwestern extension of Inyo County. The effort by the Indian Wells Valley Groundwater Authority, a joint powers entity formed to end the overdrafting of water from the region’s water table, resulted in the derivation of a strategy to simultaneously limit water use while building a 51-mile pipeline to convey water from the California Aqueduct to the valley and then convey billions of gallons of water from the northern part of the state into the local aquifer. That undertaking promises to be so expensive, however, that the water users subject to the Indian Wells Valley Groundwater Authority plan, which maintain their previously established water rights and/or usage patterns under long-existent California water law render them exempt from any newly-created water use restrictions, have balked at paying the fees imposed on their water use to pay for the construction of the pipeline and to purchase the water from the California Aqueduct.
Litigation over the Indian Wells Valley Groundwater Authority’s imposition of water use fees has ensued between the largest private entities subject to those fees, those being Searles Valley Minerals in San Bernardino County and Mojave Pistachios and Sierra Shadows Ranch, along with John Thomas Conaway and the Nugent Family Trust, located in Kern County. That litigation has been removed to Orange County Superior Court to prevent any of the entities from having an undue influence over the adjudicative process, as might be the case in Kern County or San Bernardino County superior courts, where the governmental entities that are the constituent members of the Indian Wells Valley Groundwater Authority or Searles Valley Minerals are dominant players in their respective communities.
Last week, Judge Claster dealt what many believe is a death blow to Mojave Pistachios, which will prevent it from drafting any further water without paying $30 million in backfees and fees of more than $2,100 per acre-foot of water drawn from the aquifer going forward, ending that company’s effective protest against the Indian Wells Valley Groundwater Authority and its plan by putting the company out of business or driving it into bankruptcy following the investment of what is estimated to be $35,316,400 in its Indian Wells Valley farm since its 2011 inception.
In 2014, then-California Governor Jerry Brown signed into law the Sustainable Groundwater Management Act, mandating water-saving measures throughout the state and requiring local agencies to draft plans to bring groundwater aquifers into balanced levels of pumping and recharge through the adoption of a groundwater sustainability plan.
In 2015, in the aftermath of a four-year running drought, a determination by the California Department of Water Resources that Indian Wells Valley overlies one of the 21 water basins throughout the State of California in critical overdraft and with the implementation of the requirements of the Sustainable Groundwater Management Act pending, the Indian Wells Valley Groundwater Authority was formed, pursuant to a joint exercise of powers agreement involving 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. Given that it is the entity most heavily steeped in water-related issues and that it employed a staff highly knowledgeable with regard to water operations, not to mention its control over the lion’s share of facilities pertaining to local water storage, conveyance and management, the Indian Wells Valley Water District from the outset essentially served as the staff for the Indian Wells Valley Groundwater Authority.
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.
Achieving that balance has taken on an urgency based upon a California State mandate, growing out of the Sustainable Groundwater Management Act, that depletions of the valley’s groundwater cease by 2040.
According to the surveys completed to provide the data needed to formulate the Indian Wells Valley Groundwater Sustainability Plan, the average natural annual recharge in the basin is 7,650 acre-feet while the annual drafting of groundwater in the region by all entities is three to four times that amount.
An acre-foot is the amount of water that would cover an acre to a depth of one-foot, or 43,560 cubic feet, equal to 325,851.4 gallons
Any realistic assessment of the existing population, industrial, agricultural and commercial operations in the area and the decreases in the drafting of water from the regional aquifer that could be achieved through efficientization, conservation, increased recycling of water and perhaps the minimization of evaporation demonstrated that it would not be possible to achieve use/recharge balance by 2040.
Accordingly, staff and the board of the Indian Wells Valley Groundwater Authority long ago concluded that the sought-after goal of bringing the region’s water table out of a state of overdraft can only be achieved by the importation of water from outside the valley and then injecting it deep into the ground to avoid evaporation and replenish water lost from excessive production.
The groundwater sustainability plan for Indian Wells Valley that was formulated by Stetson Engineers and staff with the Indian Wells Valley Groundwater Authority that was on track toward eventual implementation called for obtaining water from the California State Water Project on an annual or continuous basis to make up the difference between the amount of water being used in the valley and the amount of annual rainfall that recharges the valley’s aquifer.
In order to tap into the state’s aqueduct, officials said, the authority will need to construct 50.8 miles of pipe from California City to Ridgecrest, consisting of 40.6 miles of 24-inch pipe and 10.2 miles of 18-inch pipe, of which 22.8 miles will consist of steel pipe, 27.5 miles of PVC [poly-vinyl chloride] pipe and a half-mile of HDPE [high density poly-ethylene] pipe for trenchless drainage crossings; three pump stations; one 240,000-gallon regulating tank at peak elevation in the El Paso Mountains along Highway 395; and a million-gallon terminus tank at the Indian Wells Valley Water District Ridgecrest Heights Tank Facility.
In order to execute on the project, the governing board and staff of the Indian Wells Valley Groundwater Authority this summer began an effort toward determining how much of a financial burden the landowners and water users within its jurisdiction will need to assume in covering the cost of completing a water pipeline project to replenish the region’s dwindling water supply.
The preliminary cost estimate for completing the groundwater sustainability plan as projected in January 2020 was $177,975,000, including a 20 percent contingency add-on. The original cost estimate was adjusted downward to $165,740,000, including a 20 percent contingency add-on, when an alignment study for the project was completed in April 2023. Just four months later, however, in August 2023, the cost estimate had jumped to $200,536,000, including a 20 percent contingency add-on.
Those estimates, however, did not include land acquisition, permanent easements, temporary construction easements, and fee property, construction administration, permitting fees or credits on existing conservation easements for sensitive species mitigation.
Of tremendous moment for the authority is the means availability to pay for the project. Under the Groundwater Sustainability Act and related federal laws and regulations, the authority can qualify for five potential options for federal funding of construction activities associated with the interconnection pipeline project, which are administered through four separate agencies.
Under the Water Resources Development Act, the project qualifies for two programs, one being as a water resources project and the other an environmental infrastructure project, both administered by the Army Corps of Engineers. The Indian Wells Valley Groundwater Authority’s share of the cost of project completion if it were to be done as a water resources project would be $15 million. If it were to be done as an environmental infrastructure project, the authority’s share of the project completion cost would be $53 million.
Under the National Defense Authorization Act, the project could qualify for federal funding in an arrangement by which the administrative agency would be the Department of Defense, and ownership, operations and maintenance of the project would reside with the United States Navy.
Under the Water Infrastructure Improvements for the Nation Act, the project could conceivably qualify for federal funding to be administered by the Department of the Interior.
Under the US Environmental Protection Agency’s loan program, the project could qualify for federal funding assistance which would ultimately be administered through a private finance institution on behalf of the Environmental Protection Agency.
It is unclear what percentage of the project cost could be defrayed under the National Defense Authorization or the Water Infrastructure Improvements for the Nation acts. It does not appear that the funding amounts from either would approach that provided by the Water Resources Development Act, however. The US Environmental Protection Agency’s loan program could conceivably cover up to 80 percent of the currently estimated $200,536,000 cost, such that the authority would need to defray roughly $40 million. That program is subject to a number of unknowns, however, including how much of the loans might ultimately be forgiven and how many might need to be paid back in full.
Consequently, the Indian Wells Valley Groundwater Authority Board of Directors is most heavily focused on the two programs available under the Water Resources Development Act. The program to be completed as a water resources project, ultimately at a cost of $15 million to the Indian Wells Valley Water District, would take as long as 11 years to complete. The program undertaken as an environmental infrastructure project, costing the Indian Wells Valley Groundwater Authority $53 million, would be completed within a much shorter timeframe, one of roughly five years.
Board members are naturally sensitive to the $38 million difference in cost to be borne by the authority. As it stands, the authority is gravitating toward some order of taxing regime to finance the pipeline construction.
Relevant is whether the authority will opt for a tax-as-it-goes approach, whereby tax revenue brought in each year, presumably as an additional assessment on property owners’ property tax bills or water rate increases, would go directly toward paying for ongoing work on the project. Conceivably, given an 11-year timetable for the program to be completed as a water resources project, taxpayers or ratepayers within the jurisdiction of the authority could provide the roughly $1,363,636 annual local share of cost for building the pipeline. If, however, the authority seeks to have the project completed as an environmental infrastructure project, the authority’s annual share of cost over the five years it would take to complete the project would run to $10.6 million per year. That would create a taxing regime likely to be too onerous for the Indian Wells Valley’s taxpayers to bear, such that the authority would need to go to a bond-issuing arrangement, one which would spread the payments out over as many as 40 years, but which would involve having taxpayers for as many as four decades take on the added burden of paying back not just the principal of the loan but interest.
Unclear is whether the financing would involve property taxation or an increase, probably a very steep one, on water rates for the more than 11,000 Indian Wells Valley Water District customers, the roughly 1,000 ratepayers in San Bernardino County and some 300 to 400 water users in Inyo County.
There has already been resistance to fees that the authority sought to impose on major water users in the Valley.
An early strategy which the authority and Stetson Engineers, as the designated the water resources manager for Indian Wells Valley, sought to impose to both reduce water use in the valley and increase groundwater recharge involved carrying out a survey of water usage patterns in the region and then assigning 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 were pumping above their allowances as well as on any farmer whose use exceeded his respective share of the water supply set aside for agricultural usage. The excess use fee on any water beyond what was allocated to each user was set at $2,130-per-acre-foot. That fee was worked into the region’s groundwater sustainability plan and was submitted by the groundwater authority to the state, which approved it in 2022.
The concept was that money to be generated in that way is to be used to purchase imported water and pay for the eventual provision of infrastructure needed to bring in the imported water. This was accompanied by a farmland fallowing proposal, where selected farms were to have their active operations reduced.
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, Meadowbrook Dairy, Mojave Pistachios and Sierra Shadows Ranch, along with John Thomas Conaway and the Nugent Family Trust and Mead. Ultimately, Searles Valley Minerals, Mojave Pistachios and Sierra Shadows Ranch, along with John Thomas Conaway and the Nugent Family Trust 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 water use rights altogether.
Some entities tried to come to terms with the Indian Wells Valley Groundwater Authority. Others did not, sticking to their guns, while claiming they had established a water use pattern that was inviolate. One of those was Mojave Pistachios, which did not pay the excess use fee.
On June 14, Judge Claster granted the Indian Wells Valley Groundwater Authority’s request for an injunction against Mojave Pistachios LLC and required that the company pay $30 million in backfees on all of the water it had pumped in the Indian Wells Valley without allocation.
Pistachio farming is a water intensive use. It appears that in the two years since the state ratified the $2,130-per-acre-foot fee for any non-allocated pumping, Mojave Pistachios was utilizing about 4.40141 acre-feet of water per acre per year on its 1,600-acre farm and 215,000 pistachio trees or roughly 7,042.25 acre-feet per year.
Mojave Pistachio’s legal team had proceeded under the theory that the company could withhold payment on the non-allocated pumping fees while the matter was being litigated. The Indian Wells Valley Groundwater Authority, conversely, held that all of the users of non-allocated water within its jurisdiction had to front the fee even if it was taking legal action, as per California’s “pay now, sue later” policy with regard to water regulations. If the groundwater plan it was seeking to impose proved unconstitutional or in any way unlawful, the fee would be refunded, the groundwater authority maintained. Mojave Pistachios persisted with its legal theory, even after it was rebuked by an appellate court with regard to an earlier Orange County Superior Court ruling. The California Supreme Court rejected Mojave Pistachios’ request that it review that ruling. With his June 14 ruling, Judge Claster has unequivocally settled the matter in favor of the Indian Wells Valley Groundwater Authority.
Judge Claster’s ruling extends only to Mojave Pistachios, as it is the primary and major dissenter with regard to the imposition of the non-allocated water use/excessive water fee. Searles Valley Minerals in San Bernardino County engages in solution mining, involving soaking portions of the company’s dry Searles Lake in Trona 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. It has acceded to paying the fees on the water it uses beyond the free-use allotment the Indian Wells Valley Groundwater Authority has assigned it. In addition, Searles Valley Minerals wells are the source of water used for domestic purposes among Trona’s residents, the number of which have been dwindling from 1,400 at the time of the July 2019 earthquake that devastated that community. Searles Valley Mineral’s corporate predecessors stretch back to the late 1890s and its water rights are senior to any in the region, having been established more than 90 years ago. This gives Searles Valley Minerals precedence over any other entities claiming water rights in the area, including the Indian Wells Valley Water District, which began its pumping no earlier than 1955, and the China Lake Naval Air Station, which is not subject to the restrictions in the groundwater management plan nor subject to water use fees of any type imposed by the Indian Wells Valley Groundwater Authority. Because of Searles Valley Minerals’ long extant water use patterns and its water rights, which were claimed, granted and verified and reverified at multiple junctures in the past, the San Bernardino County company, which is owned by the Indian corporation Nirma, was not subject to as steep of non-allocated pumping/excess use fees as was Mojave Pistachios, which did not begin its water use until 2011 and the water rights for which have never been adjudicated.
It was Mojave Pistachio’s lack of historic water rights which led the Indian Wells Valley Groundwater Authority to claim and the Orange County Superior Court to determine in January 2023 that Mojave Pistachios should be allocated no Indian Wells Valley Groundwater Basin water, such that Mojave Pistachios had to pay $2,130 per acre-foot for all water it used.
Judge Claster’s ruling came despite amicus curiae briefs in support of Mojave Pistachios filed by the California Building Industry Association, Searles Valley Minerals Inc., the Howard Jarvis Taxpayers Association, the Western Growers Association, the California Farm Bureau Federation. American Pistachio Growers, the California Association of Winegrape Growers, the Agricultural Council of California, the California Fresh Fruit Association and California Citrus Mutual.
Efforts by the Sentinel to reach Rod Stiefvater, the owner of Mojave Pistachios, were unsuccessful.
On June 12, in a public statement, Mojave Pistachios said that if the injunction were granted, what would ensue would be “the death of 1,600 acres of trees” and the need to “shutter a locally owned, private farming operation. No farmer, including Mojave Pistachios, could ever pay this irrigation fee. Turning off the pumps will mean the loss of decades of productive life of tens of thousands of trees.”
According to that statement, prepared by the public relations firm of Stutzman Public Affairs, there remains a “question of whether the Indian Wells Valley Groundwater Authority is depriving Mojave Pistachios of its water rights.”
According to Stutzman Public Affairs, Mojave Pistachios’ attorney, Scott Slater, has advanced legal arguments that a court order to turn off the farm’s water pumps forcing Mojave Pistachios to cease maintaining its orchards is unnecessary because no one is being harmed by the company’s current water use, with negligible changes in water levels at the ranch.
“As the Indian Wells Valley Groundwater Authority argues their views on the limit on available water, it has become evident that the modeling used for their groundwater sustainability plan is not an accurate assessment of the basin’s sustainability,” according to Stutzman Public Affairs. “A new analysis by a technical working group of experienced hydrologists demonstrates there is more fresh groundwater in storage than Lake Mead and the sustainable annual recharge is conservatively 56 percent higher than what the Indian Wells Valley Groundwater Authority estimated and based its replenishment fee upon. With millions of acre-feet of freshwater available for recovery, the plan to spend hundreds of millions of dollars to build a pipeline through sensitive desert habitat is unnecessary.”