IWVGA’s Recent Water Purchase Agreement Doesn’t Mean What They Say It Means

The Indian Wells Valley Groundwater Authority (GA) recently announced they had signed a “letter of Intent” (LOI) to purchase approximately 750-acre feet (AF) of state water from the California Aqueduct from Jackson Ranch, a fully entitled, master planned development in Kings County. The water would be imported to the Indian Wells Valley and sold to residents and businesses, but only after costly pipeline infrastructure is permitted and constructed.

To be clear, a LOI is not a binding legal document. On the contrary, a LOI simply states the parties have reached an agreement on basic terms. A future document, usually a ‘Purchase and Sale Agreement,’ spells out terms and conditions, and once signed, makes the agreement legally binding on both parties.

The thing is, the LOI was not signed by any of the members of the current owners of Jackson Ranch, but by Jon Lash whose entity – reportedly Utica J.L.J. LLC – has an option to buy a portion of the Jackson Ranch. This option has not yet been exercised and expires November 20, 2022.

A few things immediately jump out as we dive into this potential deal.

Uncertainty. Will this deal actually go through? When will this deal go through? If the deal goes through, how will water be delivered given the fact there is no infrastructure in place? If a deal is done and the infrastructure built, how much water will ultimately be delivered?

The actual amount of yearly water available to the owner of this water entitlement (WE)—Jackson Ranch—and its cost varies widely. It is the Department of Water Resources (DWR) that determines the percentage of WE to be delivered based on each year’s hydrology in the Feather River Watershed in Northern California behind Oroville Dam. The last three years of drought have resulted in yearly allocations of WE of:

• 2020 --> 20%

• 2021 --> 5%

• 2022 --> 5%

Consequently, the water available to the GA in each of the last three years from the purchase of 750 AF WE would be only:

• 2020 --> 150.5 AF

• 2021 --> 37.5 AF

• 2022 --> 37.5 AF

Incredible cost. The costs and benefits of this potential acquisition just don’t pencil out.

Annual payments for 100% of each year’s total WE allocation are required, even in years like 2020-2022 when less is delivered. Additionally, according to The Bakersfield California, the GA’s purchase price for acquisition of the Jackson Ranch entitlement is 55% higher than similar prior sales. There is also studying to be done, permits to be acquired and the infrastructure to be constructed. All of this costs money. A lot of money.

And remember, all of this money is being spent on just 7.5% of the WE the GA has stated it intends to purchase (750 AF of the 10,000 AF of WE).

The bottom line is that the GA needs to have a full-scale study done of all activities, facilities, agreements, etc. for the whole water import program to determine the assumed basics of a total program, likely timeline and most importantly the permanent investment amount as well as yearly costs. This complete program needs to be presented to all water users in the Indian Wells Valley. It is likely that these costs will be more than water users can afford, and they have a right to understand the program costs and how much individual users’ water costs will increase before the GA starts committing serious monies to start parts of the total program.

Every major public works program proceeds in this manner. The GA needs to justify in advance the scope of additional costs their actions will cause the water uses in the Indian Wells Valley to incur.

Indian Wells Valley Groundwater Authority Takes Legal Action To Collect High Fees

(Ridgecrest) – In an effort to collect an unprecedentedly high groundwater replenishment fee, the Indian Wells Valley Groundwater Authority (IWVGA) has sued Mojave Pistachios, LLC, an action that effectively will put the nut grower out of business.

“To use the SGMA process to target farmers with economically impossible fees threatens the larger implementation of SGMA itself. This reckless and punitive assault on farmers under the guise of SGMA’s mandates will dangerously erode confidence in the state’s implementation of SGMA among farmers in other basins. That poses a real threat of increased conflict rather than the collaborative management approach that was explicitly woven into SGMA,” said Dave Puglia, Western Growers President and CEO.

The Authority wants Mojave to pay a $2,130/acre foot “Replenishment Fee” for all groundwater pumped after January 1, 2021. All told, the amount of the Replenishment Fee and other fees and penalties sought by the complaint would exceed $10 million for 2021 alone.

Last month, California’s Department of Water Resources (DWR) approved the IWVGA’s Groundwater Sustainability Plan (GSP), despite the ag community’s opposition and insistence that it violates both the letter and spirit of the state’s Sustainability Groundwater Management Act (SGMA)

“This GSP is radically different from those proposed in the Southern San Joaquin Valley,” said Rod Stiefvater, owner of Mojave Pistachios. “The Plan sets a dangerous precedent that could extend into other basins across the state by setting water allocations based upon a GSA’s determination of water rights.”

“DWR failed to safeguard agriculture and the intent of SGMA when they approved the Authority’s Groundwater Sustainability Plan,” continued Stiefvater. “The Authority has been fiscally irresponsible and has misrepresented many facts and conditions to the residents of the Indian Wells Valley. We intend to fight this lawsuit and we now believe we have standing to pursue our existing litigation against the authority and secure our water rights.”

The Fourth District Court of Appeals denied Mojave’s initial request for an extraordinary writ enjoining the IWVGA from the Replenishment Fee but made it clear they will be watching and prepared to involve itself further if the Authority takes legal action.

The Authority’s complaint also asks the court to levy an additional fee of 1 percent per month on the delinquent groundwater charges plus another 10 percent penalty on the total amount due. Finally, the Authority seeks civil penalties of up to $500 per acre foot extracted, and another penalty of $1000 plus $100 for every day the fee is not paid.

These fees and penalties would exceed $10 million for 2021 alone.

In 2020, the Authority adopted a GSP that gives all of the Indian Wells Valley Groundwater Basin’s average annual recharge to the United States Navy’s NAWS China Lake facility. The Authority then instituted the extraordinarily high new fees on all groundwater pumped by any groundwater user that was not awarded an annual pumping allocation.

No members of the agricultural community were granted an annual pumping allocation.

Mojave’s participated earnestly and cooperatively throughout the entire Groundwater Sustainability Agency formation and GSP adoption process but was then forced by the Authority to sue to protect their farm.

Take Action: Demand that DWR Rescind Approval of IWVGA's Groundwater Sustainability Plan

To all concerned water users, I became aware yesterday of the Department of Water Resource's approval of the Indian Wells Valley Groundwater Sustainability Plan (GSP). This GSP is radically different from those proposed in the Southern San Joaquin Valley and sets a dangerous precedent that could extend into other basins across the state by setting water allocations based upon a GSA’s determination of water rights. This purely political determination was made with the stroke of a bureaucratic pen, without providing property owners a day in court. The Indian Wells Valley Groundwater Authority (IWVGA) is clearly trying to permanently end all ag activity in the Indian Wells Valley through extreme fees and very short-term groundwater pumping allowances. The IWGA determined agriculture had no water rights to native groundwater. It then imposed a $2,130 replenishment on groundwater use. The IWVGA Board of Directors is comprised of only one major water user, the Indian Wells Valley Water District (Water District). The Water District is the only member of the IWVGA that pays fees and was recently removed from the Chairperson position by the other agencies. The Water District has been forced to file an adjudication in the basin. The Water District is not the only major water user without representation. The major water users in the Indian Wells Valley, including agriculture and industry, have had no effective input or say in the GSA’s policies or the GSP. In my opinion, the GSA has been fiscally irresponsible and has misrepresented many facts and conditions to the residents of the Indian Wells Valley and to DWR in their GSP. I am writing you to request action on your part - help me push back on out-of-control government. My farm is currently in jeopardy. Your water rights may be next on the chopping block. Please personalize and forward this letter to Jim DeBoo, the Governor's Executive Secretary, and Karen Ross, Secretary of the California Department of Food and Agriculture, at the following email addresses:

Jim.DeBoo@gov.ca.gov KB.R@cdfa.ca.gov Regards, Rod Stiefvater Mojave Pistachios, LLC