Novel water rights opinion says use it or lose it

Landowners who continuously pumped water from a depleted Los Angeles water basin over the last two decades now have priority over landowners who didn't, a state appeals court ruled in a novel opinion published this week.

Ruling on a highly complex, decadeslong dispute over access to a Los Angeles water basin in the Antelope Valley, the 5th District Court of Appeal affirmed two lower court rulings which effectively bar nonpumping landowners from accessing their water rights, Del Mar plaintiff attorney Ralph B. Kalfayan of The Kalfayan Law Firm APC said before signaling his intentions to appeal Wednesday's published ruling.

"I just think the court of appeal did not get it right given the 100-year history of California water law," Kalfayan said in a phone interview. "Just because one landowner doesn't use the water, he doesn't lose his groundwater rights by virtue of the fact somebody else was using it."

However, for the defense and respondent, representing Los Angeles County, attorney Eric L. Garner of Best Best & Krieger LLP said the ruling is an important one for California as it struggles with drought and overdrawn basins.

"What the appellate court unanimously upheld that in certain situations, and in this situation, where you have brazen overdraft, and this historic pumping, the court has the authority to condition the future pumping of those who have never pumped," Garner said.

Filed in 1999, the sprawling case involves corporate landowners, government agencies, agriculture and mining operations and the federal government, to name a few. The principal source of water supporting all of these uses and stakeholders is the aquifer underlying what the court calls the Antelope Valley Adjudication Area, located in northern Los Angeles County and southeast Kern County. Antelope Valley Groundwater Cases, 2021 DJDAR 3269.

The trial court's 2015 judgment, which the appellate court just affirmed, found the collective demands by those holding water rights in the basin exceeded the available safe yield for the basin. So an adjudication of all of the water rights and a water resource management plan was required to prevent further depletion of the basin.

Referred to in the opinion as "dormant landowners," the plaintiff class and appellants, represented by Kalfayan, was formed to represent the interests of 18,000 private individuals or entities owning overlying land in the Antelope Valley area who had not extracted water from the aquifer since 2001.

Per the opinion, if dormant landowners now want to pump water, they must first seek permission, pay fees, and conform to regulations set forth by a court appointed water master.

Water law expert Heather Welles of O'Melveny & Myers LLP, who is not involved in the case, said landowners whose properties have access to an aquifer typically have correlative or equal rights in priority access to the water. Unlike prior appropriation law governing surface water, that groundwater law is based on land ownership rather than historical water use, she said.

When it comes to surface water, however, landowners' rights can be subordinated to the equal priority rights of existing users, meaning those already using the water are granted priority access, she added.

"It has been talked about as a potential doctrine that could apply in the groundwater context, as well, but it has never been done," Welles said. "So this case is particularly important because the court is upholding the trial court's decision to basically apply that doctrine here to groundwater."

Acknowledging the complexity of the litigation, 5th District Acting Presiding Justice Rosendo Peña Jr., who authored the 87-page opinion wrote: "Our Supreme Court recognized over 40 years ago that the 'scope and technical complexity of issues concerning water resource management are unequaled by virtually any other type of activity presented to the courts. What constitutes reasonable water use is dependent upon not only the entire circumstances presented but varies as the current situation changes ....'"

Justices Bruce Smith and Mark Snauffer concurred.

In 2014, Gov. Jerry Brown signed into law a three-bill legislative package, collectively known as the Sustainable Groundwater Management Act (SGMA). The bill allowed local agencies to manage basins, allocate water, and require the adoption of groundwater sustainability plans to ensure groundwater basins reach long term sustainability. As a compliment to the package, a statute was added in 2015 clarifying that courts, not agencies, remain the arbiters of water rights, water resource attorney Russell McGlothlin of O'Melveny said.

"What that statute did not do was offer new law on how you go about doing these allocations when challenges arise under SGMA or otherwise, particularly among landowners," Russell said. "Cases like the Antelope Valley case start to fill in that gap of what's the applicable law, how do we go about doing this between competing landowners and other competing water rights holders."

California water law is unique among the states because it applies a hybrid system of water rights, melding East Coast riparian law or land-based water law with West Coast prior appropriation, based on first in time, first in right, independent of land ownership, McGlothlin said.

"Our Supreme Court in 1886 decided that we were going to meld those two very fundamentally different legal doctrines together," McGlothlin said. "That hybrid has made a terrible mess in part because the folks that are serving water to our cities and our industrial users -- arguably some of the highest utility value uses -- are appropriators, so they sit there, junior in priority to landowners. So the court has really been, if you will, since 1886, been trying to put that genie back in the bottle through the use of various equitable doctrines."

The problem with the court's ruling in the Antelope Valley case, is that it leaves dormant landowners with worthless property, and will signal to future landowners the need to aggressively pump out of fear of losing their water rights, Kalfayan said.

"If I can't have access to water on my property, it's worthless," he said. "Now, if you own undeveloped raw land, you're going to hightail it to pump water because otherwise you might lose the rights."