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Landmark SGMA Court of Appeals Ruling with Dangerous Implications for Farmers, Businesses and Taxpayers

On February 8, 2024, the Court of Appeal in Orange County issued the State’s first published appellate opinion interpretating the Sustainable Groundwater Management Act (SGMA) and the powers of a Groundwater Sustainability Authority (GSA). The opinion prohibits a Kern County landowner’s legal challenge to a GSA’s groundwater allocations because the landowner didn’t pay $8.5+ million per year in pumping fees.

The GSA granted ZERO annual allocation of groundwater to the landowner’s established 1,600-acre farm. The GSA determined that Mojave Pistachios’ overlying rights were “inferior” to other pumpers’ water rights, contrary to the Legislature’s declaration that SGMA preserved overlying water rights and California law.

The GSA’s expressed intent was to eliminate agriculture from the Indian Wells Valley by providing Mojave Pistachios with no allocation of native groundwater and a very limited allocation to other farmers that would end their farming in a matter of years.

The Court held that several challenges including takings of private property rights—are barred under the “pay first litigate later” doctrine because the landowner did not pay the GSA’s massive replenishment fee of $2,130 per acre-foot of groundwater pumped since 2021, which today amounts to a cumulative fee of over $25 million.

Contrary to SGMA’s Legislative intent, the Court allowed the GSA to determine that

landowners have inferior water rights as a basis to set a replenishment fee, without due

process, because the “pay first litigate later” doctrine shields the GSA’s entire action.

Under the opinion, the landowner cannot challenge the GSA’s decisions to award them zero

allocation or to impose a replenishment fee so large it will put them out of business.

This opinion will have catastrophic consequences for all California water rights’ holders and for SGMA implementation. If the opinion stands, public agencies across the state can shelter all manner of illegal conduct, including prohibiting groundwater pumping, taking water rights without payment, and imposing multi-million-dollar, unaffordable fees.

This ruling goes beyond GSAs and SGMA. Under the ruling, public agencies could adopt a

punitive fee designed to bankrupt a certain subset of customers or force them to move or

abandon their home or business.

The Court of Appeal acknowledges that its opinion is of statewide importance and a question

of first impression, inviting review by the California Supreme Court.

The GSA has filed for an injunction to bar Mojave from continuing to pump water while the

matter is litigated. That will deprive their orchard of water needed to sustain the life of the

trees. The need for immediate California Supreme Court Review is urgent.

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