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March 5, 2026 Get Citation Alerts Download PDF Add Note

Las Posas Valley Water etc. v. Ventura County Waterworks etc.

California Court of Appeal

• Citations: None known

• Docket Number: B330837

• Opinion

• Authorities (32)

• Cited By (0)

• Summaries (0)

• Similar Cases (1.1K)

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Combined Opinion

Filed 3/5/26
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

LAS POSAS VALLEY WATER 2d Civ. No. B330837
RIGHTS COALITION, (Super. Ct. No.
VENCI00509700)
Plaintiff, Cross-defendant (Santa Barbara County)
and Respondent;

v.

VENTURA COUNTY
WATERWORKS DISTRICT
NO. 1 et al.,

Defendants, Cross-
complainants and
Respondents;

CALLEGUAS MUNICIPAL
WATER DISTRICT,

Defendant and Cross-
complainant;

MAHAN DEVELOPMENT
CORPORATION et al.,

Defendants, Cross-
defendants and Appellants;
FOX CANYON
GROUNDWATER
MANAGEMENT AGENCY et
al.,

Defendants, Cross-
defendants and Respondents.

The Las Posas Valley Water Rights Coalition, an
unincorporated association comprised of landowners with claimed
groundwater rights to the Las Posas Valley Groundwater Basin
(Basin), initiated a comprehensive adjudication to determine all
groundwater rights in the Basin. The adjudication proceeded in
three phases.
In phase 1, the trial court set the Basin’s initial “Total Safe
Yield” and quantified the water rights for two public water
suppliers. In phase 2, the court determined and allocated the
remainder of individual groundwater rights based on a
settlement agreement supported by a majority of the parties. In
allocating water rights, the court gave priority to the overlying
landowners with correlative rights and found there was no
surplus for appropriators, who have second priority rights. In
phase 3, the court adopted a “physical solution” and appointed
Fox Canyon Groundwater Management Agency (Fox Canyon) as
the Basin’s watermaster to implement it. The final judgment
includes the physical solution and is supported by nearly all the
parties and the Basin’s major public water agencies.

2
But not all parties are satisfied. A group of landowners—
Mahan Ranch, LLC and associated parties 1 (collectively Mahan
Ranch)—and two mutual water companies—Del Norte Water
Company (Del Norte) and Solano Verde Water Company (Solano
Verde)—objected to aspects of phases 2 and 3 and the final
judgment. These appellants raise numerous contentions,
including that the trial court allocated the water rights contrary
to law and deprived the mutual water companies of their water
rights. We affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
The Basin underlies an area of approximately 42,200 acres
located entirely within Ventura County. It roughly extends from
the eastern end of Saticoy through the city of Moorpark. The
Basin is bordered in the north by South Mountain and Oak
Ridge, on the east by Big Mountain, on the south by the
Springville Fault and Las Posas Hills, and on the west by the
Oxnard subbasin.
The groundwater pumped from the Basin supports
agricultural, commercial, and domestic uses. Agriculture use
accounts for the majority of groundwater use. Some landowners
use private wells. Others are shareholders of mutual water
companies. A mutual water company is a corporation organized
for or engaged in the business of selling, distributing, supplying,

1 Ralph D. Mahan, Trustee of the Ralph D. Mahan
Separate Property Trust of June 12, 2003; Ralph D. Mahan and
Georgia A. Mahan, as Trustees of the Mahan Family Trust of
June 12, 2003; Mahan Development Corporation; Oro Del Norte,
LLC; RBV 2+5 LLC; RBV-Vanoni, LLC; US Horticulture
Farmland, LLC; Debra A. Whitson, Thomas E. Olson, and
Thomas K. Strain, Trustees of the McGonigle Ranch Trust dated
April 1, 2021.

3
or delivering water to mutual shareholders. (Corp. Code,
§ 14300.) A landowner can exclusively receive water from mutual
water companies (exclusive shareholders) or can receive water
from both private wells and from mutual water companies
(hybrid shareholders). Some water users also receive water from
three public agencies: Calleguas Municipal Water District (which
imports water), and two county waterworks districts, Ventura
County Waterworks District Nos. 1 and 19 (which supply
groundwater and imported water).
In 1982, the Legislature created Fox Canyon. Fox Canyon
was tasked as the groundwater management agency (GMA) to
plan, manage, control, preserve, and regulate the extraction and
use of groundwater within the Basin. Fox Canyon had previously
set groundwater pumping allocations based on each user’s
historical allocations. Over the years, Fox Canyon made efforts
to reduce pumping in the Basin, including the adoption of
Emergency Ordinance E in 2014. This ordinance prohibited the
issuance of permits for new groundwater wells and limited
extractions from existing wells.
After this adjudication began, Fox Canyon adopted another
allocation ordinance based on a proposed allocation schedule
created by the Las Posas Users Group (LPUG) called the LPUG
White Paper. LPUG includes landowners, public agencies, and
mutual water companies that came together to discuss and
develop groundwater sustainability in the Basin.
The Department of Water Resources (the Department)
recognizes the Basin as a single basin in a publication known as
Bulletin 118, which defines groundwater basin boundaries. Fox
Canyon has recognized and created management areas based on
the location of geologic structures. Currently, Fox Canyon

4
manages the Basin by east and west management areas, divided
by the location of the Somis Fault. The exact location of the fault
has only been approximated in this litigation.
In 2014, the Legislature enacted the Sustainable
Groundwater Management Act (SGMA) (Wat. Code, § 10720 et
seq.) to provide for the sustainable management of groundwater
basins. SGMA designated Fox Canyon as the Basin’s
groundwater sustainability agency (GSA). (Wat. Code, § 10723,
subd. (c)(1)(D).) GSA’s are responsible for regulating
groundwater extractions, imposing fees, and enforcing SGMA
requirements. (Wat. Code, §§ 10725.2, 10726.4, 10730, 10732.)
The Department designated the Basin as a “high-priority
groundwater basin,” meaning it was “subject to critical conditions
of overdraft.” (Wat. Code, § 10720.7, subd. (a)(1).) Overdraft
occurs where the average annual amount of groundwater
extraction exceeds the long-term average annual supply of water
to the Basin. (Wat. Code, § 10735.) As required under SGMA,
Fox Canyon submitted a groundwater sustainability plan (GSP),
a planning document with the objective of achieving sustainable
groundwater management in the Basin within 20 years. (Wat.
Code, §§ 10727, 10727.2.) The Department approved the GSP in
January 2022 with recommended corrective actions.
Commencement of the litigation
In March 2018, the plaintiffs filed a complaint alleging,
among other things, that Fox Canyon’s pumping restrictions were
contrary to law and disregarded water rights priorities. The
plaintiffs sought a comprehensive determination of the
groundwater rights and priorities in the Basin. The trial court

5
ordered the adjudication to proceed in three phases. (Code Civ.
Proc., 2 § 840, subd. (b)(5).)
Phase 1
In phase 1, the trial court determined the initial estimated
“Total Safe Yield” of the Basin and quantified the water rights for
Ventura County Waterworks Districts Nos. 1 and 19 (collectively
Waterworks Districts).
The parties entered into a phase 1 stipulation which set the
initial “Total Safe Yield” to be approximately 36,000 acre-feet 3 of
groundwater per year (AFY). The stipulated definition of “Total
Safe Yield” is the “amount of inflow of water from” “native and
non-native sources of water within the Basin. . . presently and in
the future.” The phase 1 stipulation allocated a total of 12.31
percent of the Total Safe Yield to the Waterworks Districts. 4 It
provides that the “remainder of the Total Safe Yield (87.69%) will
be allocated in future phases of the litigation among the Water
Rights Holders other than the Districts.” It also states that
“[n]othing in this Stipulation will be deemed to resolve any issues

2 Further unspecified statutory references are to the Code
of Civil Procedure.

3 An acre-foot of water covers one acre of land with one foot
of water. It is equivalent to 43,560 cubic feet, or 325,851 gallons.

4 This amount was apportioned between the East Las Posas
subbasin and the West Las Posas subbasin. District 1 received
10.6 percent and District 19 received 1.9 percent from the east
subbasin. District 19 also received 11.89 percent from the west
subbasin.

6
or claims inter se[ 5] amongst the parties to the litigation other
than the claims of the Districts vis-à-vis the other Water Rights
Holders. All such parties reserve all possible claims inter se.”
In September 2020, the trial court adopted the phase 1
stipulation as the “resolution of issues for this phase of trial” and
entered the stipulation as the court’s partial statement of
decision.
Phase 2
In phase 2, the trial court determined the remainder of the
water rights allocations among the groundwater users. Following
a mediation facilitated by a neutral technical expert,
approximately 87 percent of all parties who were groundwater
extractors in the Basin agreed to a phase 2 settlement. The
phase 2 settlement set forth a groundwater allocation schedule
that quantified and assigned water allocations to all groundwater
users. The allocation schedule was based on the Master
Disclosure Record, created by the stipulating parties and
included comprehensive information about historical water use,
irrigated acreage, and land ownership. For the most part, the
allocations are based on landownership and the amount of
groundwater reasonably needed for use by an individual
landowner.
The allocation schedule specified five different types of
allocations—waterworks districts, agricultural, commercial,
domestic, and mutual water company allocations. For
agricultural allocations, the phase 2 settlement provides
allocations in two forms—a base allocation based on historically
irrigated acres and a supplemental allocation for certain higher

5 “Inter se” means between or among themselves.

7
water users. The phase 2 settlement provides the protocol and
formulas to quantify each landowner’s allocation in any given
year. The allocation calculations depend, in part, on the amount
of the “operating yield” in effect. The operating yield is how
much water will be available in any particular year and may be
adjusted annually depending on Basin conditions.
The trial court held a trial on phase 2, which lasted over
one month. Mahan Ranch was the only party to present an
alternative allocation plan. The court found that Mahan Ranch’s
proposed plan was essentially based “purely on historic use.” The
court rejected this plan because it found that reliance “solely on
historic use to develop allocations in this Basin would produce
inequities, as attested to . . . by various witnesses in this case.”
The trial court adopted the phase 2 settlement’s approach
with respect to landowners with “unexercised overlying rights” or
“dormant” claims. It found it would be appropriate “to
subordinate, but not eliminate, the rights of overlying
groundwater users with only speculative demand for
groundwater.” (Italics added.) Granting dormant allocations
would impose “undue hardship on current users” and “disrupt
existing, long-standing investments in favor of speculative future
uses.” Specifically, as to Solano Verde, the court found it had not
used Basin groundwater since 2005, demonstrated no intent to
resume groundwater use, and took steps to rely exclusively on
imported water. The court concluded it would be “unfair to
allocate groundwater to Solano Verde, which has no present or
anticipated need for or reliance on groundwater.”
The trial court found the phase 2 settlement offered “an
equitable solution” that reflected the overlying landowners’
current, reasonable, and beneficial need for water. The court

8
found there was no surplus water available for appropriators,
whose rights are junior in priority to overlying landowners. The
court found the evidence, including the Master Disclosure Record,
supported the phase 2 settlement. It further found that the
settlement was consistent with the California Constitution,
consistent with water right priorities, and treated the nonsettling
parties equitably. The court adopted the phase 2 settlement in
the phase 2 statement of decision.
Phase 3
In phase 3, the trial court adopted a physical solution. A
physical solution is “an agreed-upon or judicially imposed
resolution of conflicting claims in a manner that advances the
constitutional rule of reasonable and beneficial use of the state’s
water supply.” (City of Santa Maria v. Adam (2012) 211
Cal.App.4th 266, 287 (Santa Maria).) It is “ ‘an equitable remedy
designed to alleviate overdrafts and the consequential depletion
of water resources in a particular area, consistent with the
constitutional mandate to prevent waste and unreasonable water
use and to maximize the beneficial use of this state’s limited
resource.’ ” (Ibid.)
Several parties negotiated a phase 3 settlement, which was
disclosed to the trial court and all parties. Over 80 percent of all
parties who are groundwater extractors (including those
responsible for more than 80 percent of the groundwater
extracted from 2013 to 2017) and the Basin’s public works
agencies—Calleguas, the Waterworks Districts, and Fox
Canyon—supported the phase 3 settlement. The settling parties
stipulated to a proposed judgment disclosed to the court and all
parties. The stipulated judgment incorporates the phase 1 order,
phase 2 statement of decision, and the phase 3 settlement, and

9
“integrates them into a complete document that will serve as a
‘constitution’ for the Basin moving forward.” Mahan Ranch, Del
Norte, and Solano objected to the phase 3 settlement and
proposed judgment. No objecting party proposed an alternate
comprehensive plan for Basin management.
After a trial on phase 3, the trial court adopted the phase 3
settlement and stipulated judgment. The court found the phase 3
settlement “fully resolves the Phase 3 issues,” and with the
stipulated judgment, “offer a comprehensive, reasonable, and
equitable physical solution that complies with the California
Constitution and SGMA.” The court concluded the settlement
and stipulated judgment are “appropriate for resolution of the
adjudication under . . . section 849.”
The judgment appoints Fox Canyon as watermaster (Stats.
1982, ch. 1023, p. 3734, §1, West’s Ann. Wat.—Appen. (1995 ed.)
ch. 121, §§ 121-102, 121-201) to “assist the Court in the
administration of this Judgment” as GSA and as the “special act
water agency created to manage and conserve Basin groundwater
resources.” It also set forth the watermaster’s powers and
responsibilities in managing the Basin. The judgment
incorporates the phase 1 and phase 2 rulings, including the
allocation schedule and the method of calculating each water
rights holder’s annual allocation based on a given year’s water
supply. The judgment also includes provisions relating to Basin
management, stakeholder participation in managing the Basin,
Basin assessments and funding, and other various provisions.
The judgment allows the trial court to “retain full jurisdiction,
power, and authority to oversee and address matters relating to
[its] implementation” pursuant to section 852.

10
DISCUSSION
Water rights
“Courts typically classify water rights in an underground
basin as overlying, appropriative, or prescriptive. [Citation.] An
overlying right, ‘analogous to that of the riparian owner in a
surface stream, is the owner’s right to take water from the
ground underneath for use on [their] land within the basin or
watershed; it is based on the ownership of the land and is
appurtenant thereto.’ [Citation.] One with overlying rights has
rights superior to that of other persons who lack legal priority,
but is nonetheless restricted to a reasonable beneficial use. Thus,
after first considering this priority, courts may limit it to present
and prospective reasonable beneficial uses, consonant with article
X, section 2 of the California Constitution.” (City of Barstow v.
Mojave Water Agency (2000) 23 Cal.4th 1224, 1240, fn. omitted
(Mojave).) “The priority pumping right among overliers is a
correlative interest: it is shared along with all of the other
overlying landowners.” (Antelope Valley Groundwater Cases
(2021) 62 Cal.App.5th 992, 1023 (Antelope II).) A court “may
employ equitable apportionment principles when allocating
available water among claimants holding correlative rights.” (Id.
at pp. 1051–1052.)
An appropriative right to water is the right “to take and
use surplus water for uses outside the overlying land.” (Antelope
II, supra, 62 Cal.App.5th at p. 1023.) The right of an
appropriator depends on the actual taking of water. (Mojave,
supra, 23 Cal.4th at p. 1241.) “ ‘Proper overlying use, however, is
paramount, and the right of an appropriator, being limited to the

11
amount of the surplus, must yield to that of the overlying owner
in the event of a shortage.’ ” (Id. at p. 1245.) 6
All water rights in California are subject to article X,
section 2 of the California Constitution (article X, section 2),
which limits water rights to reasonable and beneficial uses. (Cal.
Const., art. X, § 2; Mojave, supra, 23 Cal.4th at p. 1241.) It
provides that “the water resources of the State be put to
beneficial use to the fullest extent of which they are capable, and
that the waste or unreasonable use or unreasonable method of
use of water be prevented, and that the conservation of such
waters is to be exercised with a view to the reasonable and
beneficial use thereof in the interest of the people and for the
public welfare.” (Cal. Const., art. X, § 2.) “This overarching
consideration applies to all water users, regardless of the source
from which their rights are grounded [citation], because no party
has a protectable interest in the unreasonable use of water.”
(Antelope II, supra, 62 Cal.App.5th at pp. 1024–1025.) Article X,
section 2 means that paramount priority water rights holders
“may not be so profligate with their uses of available water that
they deprive others of water that would otherwise be ‘surplus’
and hence available for appropriation.” (Antelope II, at p. 1025.)
Comprehensive adjudications of groundwater rights
In 2015, the Legislature enacted Assembly Bill No. 1390
(2015–2016 Reg. Sess.) (Stats. 2015, ch. 672, § 1), which added to
the Code of Civil Procedure the method and procedure for
comprehensive groundwater adjudications. (§ 830 et seq.) Under
these statutes, the superior court “may determine all
groundwater rights of a basin, whether based on appropriation,

6 We do not discuss prescriptive rights to water because
there is no issue regarding those rights in this appeal.

12
overlying right, or other basis of right.” The court’s final
judgment may declare the priority, amount, and purpose of use
for the groundwater rights of each party to the adjudication
“subject to terms adopted by the court to implement a physical
solution.” (§ 834.) Adjudications shall be consistent with article
X, section 2 and the goals of SGMA. The statutes “[e]ncourag[e]
the compromise and settlement of comprehensive adjudications.”
(§ 830, subd. (b)(1), (3) & (4).)
In a groundwater adjudication, the superior court has the
authority and duty to impose a physical solution on the parties
where necessary. (§ 849, subd. (a).) “Physical solutions are
employed ‘to alleviate overdrafts and the consequential depletion
of water resources in a particular area’ [citation], and require the
court to apply ‘general equitable principles to achieve practical
allocation of water to competing interests so that a reasonable
accommodation of demands upon a water source can be
achieved.’ ” (Antelope II, supra, 62 Cal.App.5th at p. 1025.) A
court cannot, however, change the priorities among water rights
holders nor eliminate vested rights in applying the solution
without first considering them in relation to the reasonable use
doctrine. (Mojave, supra, 23 Cal.4th at p. 1250.) Although a
court may use physical solutions to alleviate an overdraft, an
overdraft is not required before the court may impose a physical
solution. (Santa Maria, supra, 211 Cal.App.4th at p. 288.)
Section 850, subdivision (a) provides that the court may
enter a judgment in a comprehensive adjudication if it finds that
the judgment is (1) consistent with article X, section 2, (2)
consistent with the water right priorities of all nonstipulating
parties, (3) treats all objecting parties equitably as compared to

13
the stipulating parties, and (4) considers the use and accessibility
of water for small farmers and disadvantaged communities.
If a “party or group of parties submits a proposed
stipulated judgment that is supported by more than 50 percent of
all parties who are groundwater extractors in the basin or use the
basin for groundwater storage and is supported by groundwater
extractors responsible for at least 75 percent of the groundwater
extracted in the basin during the five calendar years before the
filing of the complaint, the court may adopt the proposed
stipulated judgment, as applied to the stipulating parties, if the
proposed stipulated judgment meets the criteria described in
subdivision (a). A party objecting to a proposed stipulated
judgment shall demonstrate, by a preponderance of evidence, that
the proposed stipulated judgment does not satisfy one or more
criteria described in subdivision (a) or that it substantially
violates the water rights of the objecting party. If the objecting
party is unable to make this showing, the court may impose the
proposed stipulated judgment on the objecting party.” (§ 850,
subd. (d), italics added.)
For this Basin, the superior court must also find that the
judgment in a water rights adjudication action will not
substantially impair the ability of the GSA, the State Water
Resources Control Board, or the Department to comply with
SGMA and to achieve sustainable groundwater management.
(Wat. Code, § 10737.8.)
Contentions on appeal
Mahan Ranch, Del Norte, and Solano Verde each filed
separate appeals and briefs that raise numerous contentions. We
summarize these contentions as follows: Mahan Ranch and Del
Norte contend that the judgment deprives the mutual water

14
companies of water rights and interferes with the companies’
corporate governance, the trial court did not properly analyze the
appropriative rights of mutual water companies, and the
judgment’s provisions regarding Basin assessments violate
Proposition 218 and the California Constitution.
Mahan Ranch also contends the judgment is inconsistent
with phase 1 and is illegal for various reasons, the court erred in
making certain evidentiary findings, and the physical solution is
unnecessary. Mahan Ranch further requests that it and Del
Norte be exempted from the physical solution.
Del Norte also contends the trial court did not determine
water rights, the judgment impermissibly transfers water outside
the Basin boundaries, and the judgment does not comply with the
California Environmental Quality Act (CEQA) (Pub. Resources
Code § 21000 et seq.).
Solano Verde contends the trial court erred in
“extinguish[ing]” its water rights as an overlying landowner and
disregarding its rights to return flows from water it imported.
All three parties contend the judgment does not treat the
nonstipulating parties equitably.
We group our discussion of these contentions into three
categories: (1) water rights and priorities, (2) the physical
solution and judgment, and (3) other arguments.
Standard of review
“The most fundamental rule of appellate review is that a
judgment is presumed correct, all intendments and presumptions
are indulged in its favor, and ambiguities are resolved in favor of
affirmance. [Citations.]” Where appellants challenge the
sufficiency of evidence, our review is limited to whether there is
substantial evidence contradicted or uncontradicted that will

15
support the challenged factual finding. (Santa Maria, supra, 211
Cal.App.4th at p. 286.) When the decisive facts are undisputed,
questions of law are reviewed de novo. (Ibid.)
In groundwater adjudications, a trial court’s determination
of water allocation among claimants with equal priority and
implementation of a physical solution are exercises of the court’s
equitable powers. We review these exercises of equitable powers
for an abuse of discretion. (Mojave, supra, 23 Cal.4th at pp.
1249–1252.) “The court’s discretion as to equitable remedies,
while not unlimited, should be granted deference when the record
reflects the trial court has considered ‘the material facts affecting
the equities between the parties.’ ” (Antelope II, supra, 62
Cal.App.5th at pp. 1026–1027.)
Water rights and priorities
1. Allocations to landowners based on their overlying rights
Mahan Ranch and Del Norte contend the trial court erred
in allocating water directly to the shareholders/landowners
rather than to the water companies. They contend the water
companies own the legal title to water rights. We conclude there
was no error. 7
Generally, there are two types of mutual water companies.
(Orange County Water District v. City of Riverside (1959) 173
Cal.App.2d 137, 194 (Riverside).) In the first type, “landowners

7 Respondent Las Posas Farming Group contends Mahan
Ranch lacks standing to assert the mutual water companies’
rights. Because Del Norte raises this issue and we resolve it on
the merits, we do not reach the issue of standing. Thus, we deny
Mahan Ranch’s March 27, 2025, request for judicial notice
because the exhibits are not relevant or necessary to resolving
this appeal. (San Diego City Firefighters, Local 145 v. Board of
Administration etc. (2012) 206 Cal.App.4th 594, 600, fn. 3.)

16
with . . . overlying rights join together and form a company to
effect economy and promote convenience by use of joint
production and distribution facilities. . . . The company is merely
the agent of the . . . overlying landowner whose rights are being
exercised on their behalf.” (Ibid.; see e.g., In re Estate of Thomas
(1905) 147 Cal. 236, 242 [landowners retained their riparian
rights while water company exercised those rights on their
behalf]; Locke v. Yorba Irrigation Co. (1950) 35 Cal.2d 205, 209
(Locke) [transfer of water right from landowner to mutual water
company in exchange for stock representing the “quantum of the
right, was nothing more than a change in the formal evidence of
title” and not “change in the form of the ownership of the right,”
which remained with the landowner].)
The second type of mutual water company owns its water
rights and is not merely an agent of its shareholders, even though
their stock may be appurtenant to, or attached to, the
shareholders’ respective land. (See Erwin v. Gage Canal Co.
(1964) 226 Cal.App.2d 189, 192–193 (Erwin) [comparing the
difference between a transfer of title to water to a mutual water
company in exchange for the right to receive water from the
company, on the one hand, and entrustment of that property
right to the water company to hold as trustee for owner, who
holds stock; the former transfers title to the water but the latter
does not].) In such instances, the company owns the water before
it is delivered to its shareholders. (See e.g., Consolidated Peoples
Ditch Co. v. Foothill Ditch Co. (1928) 205 Cal. 54, 63–64
[shareholders only had a right to a proportionate share of water
that was owned and appropriated by the mutual water
company].)

17
Although a landowner may sever their overlying right to
groundwater from the land and transfer that right to a mutual
water company, the company does not gain an equal-priority
overlying right in the same form. Instead, the company can only
estop the grantor landowner from challenging the water
company’s use of water, but such use is still subject to challenge
by other overlying landowners. (See Orange County Water
District v. City of Colton (1964) 226 Cal.App.2d 642, 647–648.)
Generally, to the extent mutual water companies own water
rights, they are appropriators. (Riverside, supra, 173 Cal.App.2d
at p. 194; City of Pasadena v. City of Alhambra (1949) 33 Cal.2d
908, 925 (Pasadena) [appropriation is “any taking of water for
other than riparian or overlying uses”].)
Whether a mutual water company is acting as an
agent/trustee or is the legal owner of water rights is a factual
question. (Erwin, supra, 226 Cal.App.2d at p. 193.) In making
this determination, a trial court can consider multiple factors,
including course of conduct and the relationship between the
mutual water company and its shareholders over the years.
(Ibid.)
Here, after considering the history of the water companies
and their governing documents, the trial court found it was
“undisputed that . . . shareholders in the Basin own overlying
rights independent of the mutual water companies” and that
these “rights are superior.” The mutual water companies “do not
dictate or control the overlying landowners’ water rights; rather,
the companies control the use of the shared facilities to deliver
water.” “On the law and the facts here, the landowners retain
their overlying rights.” Each mutual water company “acts as an
agent for each of its [shareholders].”

18
Substantial evidence supports the trial court’s ruling. The
landowners never severed their overlying rights or transferred
their rights to the water companies by a written covenant. (See
Civ. Code, § 1624, subd. (a)(3) [an agreement for sale of real
property or of an interest therein is invalid unless in writing].)
Several overlying landowners testified that they have not
transferred or assigned their water rights to the mutual water
companies. Nor did the water companies represent to their
shareholders that they owned the water delivered to the
shareholders.
Several mutual water companies recognized that the
shareholders owned the legal water rights. For instance,
Berylwood Heights Mutual Water Company (Berylwood)’s annual
shareholder meeting minutes recognized that “[m]utuals can
have water rights in two ways: 1) trustee/ agent . . . exercises an
overlying right on behalf of shareholders and shareholders own
the legal right, and 2) shareholders have deeded/transferred over
their water rights to the company. Presently, Berylwood is acting
as the trustee to its shareholders.” (Italics added.) The mutual
water companies’ corporate documents do not prove the contrary.
(See post, at pp. 22–25.) These documents do not show the
landowners forfeited or severed their ownership of overlying
water rights to the water companies. (See Locke, supra, 35
Cal.2d at p. 209 [stock representing the “quantum of the right”
did not change ownership of the water right]; see also Copeland v.
Fairview Land & Water Co. (1913) 165 Cal. 148, 161–162 [stock
certificates stating that shareholders were entitled to a part of
water “ ‘belonging to’ ” the water company “did not change the
nature of the right, nor divest the beneficial interest therein
from” the owner of the land, who retained the riparian right].)

19
Furthermore, the mutual water companies’ course of
conduct does not reflect ownership of water rights. They have not
“asserted exclusive rights against their shareholders” because
they have not restricted shareholders from extracting their own
groundwater or drilling private wells. The companies did not
historically limit deliveries according to share ownership, which
gave “landowners no reason to believe that their water rights
would be so limited in the future.” Such evidence supports the
trial court’s finding that the landowners retained ownership of
their overlying water rights.
Substantial evidence also supports the trial court’s finding
that allocating water directly to the mutual water companies
would lead to inequitable results. The court relied on the
testimony of Robert Grether, one of the overlying landowners and
individuals responsible for compiling the Master Disclosure
Record. He testified and provided data to show there were
numerous shareholders whose stock ownership in mutual water
companies was not proportional to their historic use and that
allocations directly to the water companies would create massive
windfalls for some landowners while devastating others. Grether
also illustrated ways in which parties could potentially
“double-dip” and receive water both from their own historical
allocation (by way of private wells) and from water allocated to
mutual water companies. “The testimony of a single witness,
unless it is impossible or inherently improbable, will be sufficient
to support the challenged findings.” (Antelope Valley
Groundwater Cases (2020) 59 Cal.App.5th 241, 260 (Antelope I).)
Nor can we reweigh evidence or redetermine the credibility of
witnesses. (Orange Catholic Foundation v. Arvizu (2018) 28
Cal.App.5th 283, 294 (Arvizu).) The trial court found Grether’s

20
testimony credible, and it is sufficient to support the trial court’s
finding.
Mahan Ranch also contends that overlying landowners who
exclusively obtain water through mutual water companies
possess dormant rights that are subordinate to the companies
actively pumping groundwater because the landowners
themselves do not pump groundwater. We are not persuaded. As
the trial court found, such “shareholders generally are overlying
landowners actively irrigating their land with Basin
groundwater. . . . Those landowners’ interests are not in the
nature of long-unexercised rights that would disrupt existing
reasonable and beneficial uses of water.” (See In re Waters of
Long Valley Creek Stream System (1979) 25 Cal.3d 339, 358–359
(Long Valley); § 830, subd. (b)(7) [the trial court has discretion to
determine that an unexercised overlying claim has subordinate
priority if it “conflict[s] with the public interest in reasonable and
beneficial use of state waters”]; Cal. Const., art. X, § 2.)
Subordinating a landowner’s priority because they rely
solely on water companies to pump groundwater would lead to
unfair and irrational results. Because the majority of landowners
in the Basin are “exclusive” shareholders in water companies,
these landowners would be treated disparately from their
neighboring landowners who have private wells. And as we
concluded, the landowners did not forfeit their overlying rights to
the mutual water companies. We conclude the trial court
properly found that the landowners “retain[ed] their overlying
rights, and those rights must receive priority.”
The trial court’s allocation directly to landowners comports
with governing law on water rights. An overlying right is the
right of the landowner “to take water from the ground

21
underneath for use on [their] land within the basin . . . ; the right
is based on ownership of the land and is appurtenant thereto.”
(Pasadena, supra, 33 Cal.2d at p. 925.) This right is paramount
and receives priority over appropriative rights. (Id. at p. 926.)
The court properly recognized these senior water rights; there
was no error in allocating water directly to the overlying
landowners.
2. Mutual water companies’ articles and bylaws
Mahan Ranch and Del Norte contend that granting water
allocations directly to shareholders conflicts with the mutual
water companies’ articles and bylaws. They assert these
governing documents establish that shareholders only have a
vested right to receive a “proportionate share of a mutual’s
common pool of water.” But as the trial court found, the flaw in
this argument is that it “conflate[s] the physical delivery of water
. . . with a water rights assignment.” (Italics added.)
We independently reviewed the water companies’ articles
and bylaws (Morgan v. City of Los Angeles Bd. of Pension Comrs.
(2000) 85 Cal.App.4th 836, 843) and conclude that nothing in
these documents vests the companies with ownership or control
over the water rights belonging to the overlying landowners. As
these governing documents highlight, the mutual water
companies were “organized for the purpose solely of delivering
water to its stockholders at cost.” (Italics added.) The governing
documents set forth the terms in which water is delivered to their
shareholders. These terms can limit the amount of water
delivered to their shareholders. But the articles and bylaws do
not and cannot dictate water rights that the water companies do
not own.

22
In highlighting the distinction between water delivery and
water ownership, the trial court explained that the judgment
allocates water to the landowner based on the amount of water
reasonably needed for use on their land. That amount is
allocated irrespective of whether the water is pumped from a
private well or received from a mutual water company, or a
combination of both sources. The judgment allows mutual water
companies to “manage the allocations granted to their exclusive
shareholders” and “all shareholders retain the value of their
shared entitlement to use the mutual [water companies’] facilities
to obtain groundwater.” The judgment “preserves the
landowner’s existing right to determine that, at some point in the
future, [they] would rather rely on a different well . . . without
being cut off from the historical water supply in which the
landowner holds an overlying right.”
And, as the trial court observed, the judgment “does not
require the mutual water companies to change their rules
governing utilization of the companies’ infrastructure in times of
frost, fire, or some other short-term shortage that impacts the
physical supply of water.” Historically, when water supply is
sufficient, Del Norte and other mutual water companies have not
limited water deliveries according to share ownership. Some
shareholders take more than their proportionate share and some
take less. But in times of shortage, the governing documents
allow a mutual water company to limit water service in
accordance with the shareholders’ proportionate shares. Nothing
in the judgment changes this approach.
Mahan Ranch and Del Norte cite to De Boni Corp. v. Del
Norte Water Co. (2011) 200 Cal.App.4th 1163, but that case is
inapposite. In De Boni, a shareholder sued Del Norte, arguing

23
that Del Norte’s articles and bylaws governing its own water
distribution system among its shareholders violated corporate
law. (Id. at p. 1165.) Significantly, De Boni was about a
shareholder’s contractual right to water service. (Id. at p. 1170.)
It was not a groundwater adjudication determining the water
rights and allocations for an entire basin. (Id. at pp. 1169–1171.)
De Boni did not analyze whether Del Norte acquired any water
rights or whether it was the shareholders who retained the
overlying water rights. (Ibid.)
Del Norte contends there are other ways in which the
judgment interferes with the water companies’ corporate
governance. It contends the judgment allows shareholders to
transfer their water allocations outside of Del Norte’s service
area, which conflicts with its articles and bylaws. This
contention lacks merit and conflates a landowner/shareholder’s
water rights with their rights for water service and delivery from
a water company.
The judgment allows a water right holder to transfer their
allocation with the approval of the watermaster and with some
restrictions (e.g., restrictions against transfers outside the Basin).
The judgment’s transfer provision does not conflict with any of
Del Norte’s rules that prohibit water delivery or stock transfers
outside of Del Norte’s service area. Nor does the judgment
authorize a shareholder to transfer its right to receive water from
Del Norte outside of Del Norte’s service area or obligate Del
Norte to deliver water outside its service area. A landowner’s
transfer of a water right is distinct from the transfer of the right
to water service from a water company.
Del Norte also contends the judgment “changes [its]
corporate structure” by creating two new classes of shares—

24
mutual exclusive and mutual hybrid shares. This misapprehends
the judgment. There is no dispute Del Norte issues one class of
shares, and the judgment does not change that. The judgment’s
reference to exclusive shareholders and mutual shareholders only
reflects that some shareholders rely exclusively on mutual water
companies to obtain their water allocations versus other
shareholders that rely on both mutual water companies and
private wells for their allocations. Nothing about the judgment,
nor its distinction between exclusive and hybrid shareholders,
changes Del Norte’s corporate structure.
3. Appropriative rights of mutual water companies
Del Norte and Mahan Ranch contend that mutual water
companies were entitled to appropriative water rights. Del Norte
further asserts the trial court did not find there was an overdraft,
and without such a finding, their “appropriative rights cannot be
rejected.” We are not persuaded.
An appropriator is entitled to water when there is excess or
surplus water available in the basin. (Mojave, supra, 23 Cal.4th
at p. 1241.) The party asserting an appropriative right has the
burden of proving the existence of a surplus from which it can
“extract the quantity it desires from . . . subterranean flow
without injury to the uses and requirements of those who have
prior rights.” (Tulare Irrigation Dist. v. Lindsay-Strathmore
Irrigation Dist. (1935) 3 Cal.2d 489, 535 (Tulare); see also
Antelope I, supra, 59 Cal.App.5th at p. 277.)
Here, the trial court ruled that it could not grant Del Norte
or any mutual water company allocations as an appropriator
because it found there was no surplus available. The court
articulated that it “is the appropriator’s ‘burden . . . to show
surplus,’ . . . as the Court’s judgment in this case must ‘preserve

25
water right priorities . . . . In the case of an overdraft [(i.e., an
absence of surplus)], . . . overlying use is paramount, and the
rights of the appropriator must yield to the rights of the . . .
overlying owner.’ ” The court ruled it “must allocate the
landowner/shareholders, as senior priority right holders,
groundwater based on correlative rights. Any water historically
pumped by the mutual water companies went to service that same
demand.” The court could not grant separate allocations to both
the mutual water company and individual landowners based on
the same use.
Substantial evidence supports the court’s finding there was
no surplus water for appropriation. The evidence, including
historical pumping data and the report of expert Anthony Brown,
shows that the historical groundwater production and current
demand in the Basin exceeded the Basin’s Total Safe Yield of
36,000 AFY estimated in phase 1 and the higher operating yield
of 40,000 AFY. Brown concluded there was no surplus available
for appropriation.
As the trial court acknowledged, if there was any more
water available, there were overlying landowners who would
pursue additional claims of water. The court also found Del
Norte’s expert, who testified there was a surplus, to be
unpersuasive and rebutted by Brown. We do not reweigh the
trial court’s assessment of facts or credibility of witnesses.
(Arvizu, supra, 28 Cal.App.5th at p. 294.) Furthermore, Del
Norte did not quantify the amount of surplus that it could extract
without injury to the uses of those with priority rights. (Tulare,
supra, 3 Cal.2d at p. 535.) Nor did Del Norte show whether the
surplus water allocation it sought would service the same
demand from its shareholders based on their overlying rights. In

26
short, the mutual water companies did not carry their burden to
show they were entitled to appropriative water rights.
4. Solano Verde water rights
a. Dormant rights
Solano Verde contends the trial court erred in finding it
was a dormant water rights holder and “extinguish[ing] its
overlying rights.” We disagree.
A “court may employ equitable apportionment principles
when allocating available water among claimants holding
correlative rights [citation], and . . . restrictions on future
unexercised correlatively held rights are within the range of
options available.” (Antelope II, supra, 62 Cal.App.5th at
pp. 1051–1052; Long Valley, supra, 25 Cal.3d at pp. 358–359.)
Such restrictions include subordinating the priority of an
unexercised (or dormant) right of an overlying landowner. (§ 830,
subd. (b)(7).) Subordination, however, does not eliminate
dormant overlying rights, but allows the court to quantify
presently exercised pumping rights without risk of interference
by the speculative needs of a claimant with dormant rights.
(Long Valley, at p. 359; Antelope II, at p. 1052.)
Here, the trial court subordinated Solano Verde’s overlying
rights after finding it “ha[d] not used Basin groundwater since
2005 and ha[d] demonstrated no intent to resume groundwater
use.” The court did not “extinguish” Solano Verde’s rights. As it
explained, Solano Verde, and any other dormant party, is allowed
to “access groundwater in a convenient manner, but only after
demonstrating that their new use will not unduly impact the
Basin and will be offset with new water supplies.”
Substantial evidence supports the finding that Solano
Verde had dormant rights. Solano Verde had not used Basin

27
groundwater since its two wells failed around 2005. The
evidence, including testimony from Solano Verde’s water systems
operator, established that it had no plans to replace these wells
or pump groundwater. After its wells failed, Solano Verde sold or
attempted to sell its historical pumping allocation. It also
secured water through other sources, such as purchasing and
receiving imported water from Calleguas.
Based on this evidence, the trial court did not abuse its
discretion in subordinating Solano Verde’s rights. All water
rights are limited to “reasonable and beneficial uses.” (Cal.
Const., art. X, § 2.) Where water is insufficient, each overlying
landowner has a common right to take a proportionate fair share
“predicated not on his past use over a specified period of time, nor
on the time he commenced pumping, but solely on his current
reasonable and beneficial need for water.” (Tehachapi-
Cummings County Water Dist. v. Armstrong (1975) 49 Cal.App.3d
992, 1000.) Under the circumstances here, it would have been
unreasonable to allocate water to Solano Verde, who had not used
the Basin’s groundwater for over 20 years and did not establish a
current need for it. (Antelope II, supra, 62 Cal.App.5th at
p. 1024.)
Solano Verde also contends the trial court “improperly
relied upon Water Code section 1005.1” to extinguish overlying
rights. In our view, Solano Verde mischaracterizes the court’s
actions. Water Code section 1005.1 allows a landowner, who
ceases groundwater extraction in favor of using an alternative
supply of water (i.e., imported water), to preserve its
groundwater right by filing an annual statement with the Board.
“[O]n or before December 31st of each calendar year, [a
landowner must file] a statement of the amount of water from

28
such source so applied to reasonable beneficial use.” The
landowner “cannot claim the benefit of this section for any water
year for which such statement is not filed.”
At trial, Solano Verde attempted to argue that it preserved
its groundwater right by filing a statement under Water Code
section 1005.1. The trial court rejected this argument because
the statement was untimely (filed approximately 15 years too
late). The trial court did not, as Solano Verde suggests, rely on
Water Code section 1005.1 to extinguish or subordinate Solano
Verde’s water rights.
b. Return flows
Solano Verde also contends it was entitled to a water rights
allocation based on imported “return flow[s]”—water that is
imported and percolates into the Basin. (City of Los Angeles v.
City of San Fernando (1975) 14 Cal.3d 199, 260 (San Fernando),
disapproved on other grounds by Mojave, supra, 23 Cal.4th at pp.
1244–1248.) “Even though all deliveries produce a return flow,
only deliveries derived from imported water add to the ground
supply. The purpose of giving the right to recapture returns from
delivered imported water . . . is to credit the importer with the
fruits of his expenditures and endeavors in bringing into the
basin water that would not otherwise be there.” (Id. at p. 261,
italics added.)
After phase 1, all remaining groundwater allocation claims
were resolved in phase 2. But Solano Verde did not seek a
“return flows” allocation during phase 2. Because issues
adjudicated in earlier phases of a bifurcated trial are binding on
later phases (Arntz Contracting Co. v. St. Paul Fire & Marine Ins.
Co. (1996) 47 Cal.App.4th 464, 487), the trial court properly
rejected Solano Verde’s untimely claim of return flows.

29
Solano Verde’s claim also fails on the merits. It is
undisputed Solano Verde did not import any water into the
Basin—Calleguas did. As the trial court found, Solano Verde was
“a mere middle-man” that purchased water from Calleguas.
Thus, Solano Verde did not show its own “expenditures and
endeavors” brought any water into the Basin. (San Fernando,
supra, 14 Cal. 3d at p. 261.) The court also found the evidence
insufficient to prove that the purported return flows actually
recharged the Basin or that Solano Verde had any intent or
ability to use those return flows because it had no functioning
well. (See Orange County Water Dist. v. Sabic Innovative Plastics
US, LLC (2017) 14 Cal.App.5th 343, 411 [one is entitled to
imported return flows “only where the water importer intends to
reappropriate the imported water: ‘Such water is not abandoned
where there is an intent to recapture it’ ” (italics added)].) We will
not disturb the court’s evidentiary finding. (Arvizu, supra, 28
Cal.App.5th at p. 294.)
5. Consistency with water right priorities
Del Norte contends the trial court violated section 850,
subdivision (a) by not determining the water rights of the parties
before entering judgment. We reject this contention.
Section 850, subdivision (a) permits the court to enter
judgment in a comprehensive adjudication if the judgment meets
certain criteria, including that it “is consistent with the water
right priorities of all nonstipulating parties and any persons who
have claims that are exempted pursuant to Section 833 in the
basin.” (§ 850, subd. (a)(2).) Here, the court allocated water
“based on the Landowners’ Overlying Rights” and their
reasonable and beneficial need. In this adjudication, “[t]he vast
majority of the parties claiming water rights . . . are overlying

30
landowners” with correlative rights. No appropriative rights
were allocated because there was no surplus. Under these facts,
the judgment is consistent with the water right priorities of all
parties. There was no violation of section 850, subdivision (a).
Physical solution and judgment
1. Consistency with phase 1
Mahan Ranch contends the judgment is inconsistent with
the phase 1 stipulation because it disregards the Total Safe Yield
and the division of the Basin into two subbasins. We disagree.
In phase 1, the initial estimated Total Safe Yield was set at
36,000 AFY, and “may be increased or decreased based on
improved understanding of the groundwater basin, additional
monitoring, updated groundwater models, or other new
information regarding Basin conditions.” Phase 1 allocated 12.31
percent of the Total Safe Yield to the Waterworks Districts and
reserved the remaining 87.69 percent to be allocated in phase 2.
Generally, a safe yield is “usually determined over an extended
period of time” as is “representative of long-term hydrologic
conditions in the basin.” (See San Fernando, 14 Cal.3d at p. 214
[safe yield is “in essence, the maximum amount of water that
could be extracted annually, year after year, without eventually
depleting the underground basin”].) In phase 2, the settlement
used an “operating yield” as the basis for the allocations. The
settlement defined operating yield as “the cumulative amount of
Groundwater that may be sustainably pumped from the Basin for
Use in any particular year, excluding the Use of any
Groundwater pursuant to a right of Carryover.” 8 “In its simplest

8 Carryover is defined as “[a]ny portion of a Water Right
Holder’s Annual Allocation not Used in the Water Year in which

31
form, operating yield is the estimated safe yield for a given year,
considering hydrologic conditions for that year.” The operating
yield may be adjusted from year to year.
To the extent Mahan Ranch contends the use of an
operating yield in the physical solution disregards the Total Safe
Yield in phase 1, we conclude there was no error. Other
groundwater adjudications have used an operating yield in
allocating water. (See California American Water v. City of
Seaside (2010) 183 Cal.App.4th 471, 481.) Moreover, the use of
an operating yield allows for a “dynamic” allocation schedule that
can be “adjust[ed] upward and downward along with water
supply.” The settling parties presented substantial evidence,
including an expert’s report, to show that this approach
maximizes the beneficial use of water. A physical solution is an
equitable remedy, and the court has wide discretion to adopt a
solution that furthers the goal of preventing waste and
maximizing the beneficial use of water. We conclude there was
no abuse of discretion in adopting an allocation schedule based on
an operating yield. (Id. at pp. 480–481.)
We also reject Mahan Ranch’s contention that the
judgment’s single-basin allocation plan is inconsistent with phase
1’s two-subbasin management approach. Phase 1 did not
mandate that water needed to be allocated separately between
the east and west subbasin. In phase 1, the stipulation only
apportioned the Waterworks Districts’ allocation between the
east and west subbasins because Waterworks District No. 19
could extract from both subbasins. Nothing in phase 1 required

it is allowed, which may be accrued and Used in future Water
Years.”

32
that the Basin and the remaining allocations be divided into two
separate east/west subbasins.
Nor do we agree that a two-subbasin approach should have
been adopted here. The Department considers the Basin as a
single basin in Bulletin 118. The Legislature provided that the
court must adjudicate rights in the Basin in accordance with
Bulletin 118. (§§ 832, 841, subd. (a); Wat. Code, § 10721.) And
substantial evidence, including expert reports and testimony,
supports that a single-basin structure would promote “maximum
beneficial use” of water and “avoid unfair impacts to landowners
based on the location of their property.” It would also reflect the
practical realities, as the east/west boundaries are uncertain due
to the unestablished location of the Somis fault.
Moreover, other parties, including the Zone Mutual Water
Company, have delivered water across the east/west
management areas without ill effects. Other parties have a
similar capacity to transfer water between the two management
areas. The trial court did not abuse its discretion in adopting a
single-basin allocation structure.
2. Farming allocations and variances
Mahan Ranch and Del Norte challenge the judgment’s
agricultural base allocations and variances contending they
“permit waste and hoarding of water.”
The judgment grants all farmers a minimum base
allocation of 1.3 acre-feet per irrigated acre. In addition to a base
allocation, the judgment provides higher water users with a
supplemental allocation consisting of two inputs: historical
pumping average and a variance to account for equities that
require an adjustment. The supplemental allocation provides
higher users with more water, but if there is a reduction in water

33
supply, the supplemental allocation is reduced first before the
base allocation is reduced. These agricultural allocations were a
product of negotiations resulting in the phase 2 settlement and
based in part on data from the Master Disclosure Record.
Neither Del Norte nor Mahan Ranch demonstrate that the
agricultural allocation was unreasonable. Substantial evidence,
including testimony from farmers, an expert, and Mahan Ranch’s
own previous admissions, supports the trial court’s findings that
the base allocation represents reasonable current demand,
protects lower users from ramp down if supply is decreased, and
prevents hardship on lower users by providing flexibility.
Nor are we convinced that affording farmers variances to
account for unique circumstances in farming (e.g., immature
crops during a historical period, fire damage, well failure) was
unreasonable or results in a waste of water. The evidence
supports that variances are based on reasonable need. The
opportunity for farmers to obtain a variance existed under Fox
Canyon’s ordinances, and objecting parties themselves have
supported, requested, and obtained their own variances. We also
reject Mahan Ranch’s objection to certain variances because, as
the trial court concluded, “they failed to prove that any variance
. . . was factually unsupported or inequitable.”
Mahan Ranch also contends the judgment disparately
treats users with equal priority rights because agricultural users
with base allocations do not have to proportionally reduce their
water use if water supply is reduced. Instead, supplemental
allocation users and nonagricultural users must bear the
reduction of water supply before base allocations are reduced.
We are not persuaded. In our view, all parties are treated
equitably. As the trial court observed, lower users with only base

34
allocations “do not get the benefit of a higher initial allocation but
are allocated less risk of reduction to help preserve their ability
to use their land productively.” The settling parties, who
represented more than 50 percent of all groundwater extractors
in the Basin and are responsible for over 75 percent of
extractions, agreed to the farming allocation structure, and
Mahan Ranch did not prove, by a preponderance of evidence, a
violation of section 850, subdivision (a). (§ 850, subd. (d).)
In settling, many parties compromised and agreed to scale
back their water use or, in some instances, agreed to give some
parties a greater allocation than their historical allocation.
Section 830, subdivision (b)(3) promotes such compromise. We
conclude there was no discrimination between equal priority
rights holders and no error in adopting the stipulated allocation
schedule.
3. Allocations to Grimes Rock, Hypericum, and Butler Ranch
Del Norte and Mahan Ranch contend that allocations to
Grimes Rock, Inc., Hypericum Land Company, LLC, and Butler
Ranch Mutual Water Company were impermissible because they
transfer water outside the Basin’s boundaries. 9 Mahan Ranch
and Solano Verde further contend the allocations to Hypericum
and Butler Ranch were based on speculative future need.
Neither argument has merit.
Grimes Rock, Hypericum, and Butler Ranch established
they had overlying rights to groundwater because they applied

9 To the extent Del Norte argues Mesa Union School
District was allocated an appropriative right to water, the
argument is forfeited because it was not raised at trial. In any
event, Mesa Union was granted an allocation as an overlying
landowner, and not as an appropriator.

35
water within the Basin’s watershed. This evidence is undisputed.
“An overlying right . . . is the owner’s right to take water from
the ground underneath for use on his land within the basin or
watershed; it is based on the ownership of the land and is
appurtenant thereto.” (Mojave, supra, 23 Cal.4th at p. 1240,
italics added; see also Rancho Santa Margarita v. Vail (1938) 11
Cal.2d 501, 528 [contiguous land within watershed holds riparian
rights].)
To the extent Del Norte argues the trial court lacked
jurisdiction to determine these overlying rights because their
land is outside the Basin boundary as defined in phase 1, Del
Norte is incorrect. We do not read sections 831.5, 832, or 841 as
limiting the court’s jurisdiction to determine water rights to the
Basin’s boundaries set forth in Bulletin 118. Section 841,
subdivision (b) permits a trial court to “revise the boundaries” of
a basin and subdivision (c) allows the court to direct a party to a
comprehensive adjudication to submit a boundary modification
request to the Department. The trial court here acknowledged
the judgment requires the watermaster to consider whether to
request an administrative basin boundary modification under
section 841. Since a trial court may revise or request
modifications to the contours of the boundaries of a basin, it
follows that a court’s jurisdiction would not be limited to only
land within the existing boundaries.
We also conclude the allocations for Hypericum Land and
Butler Ranch were not speculative. These parties were granted
conditional domestic allocations related to a residential project
currently in development. Conditions include that water is used
promptly and allocations are not carried over from year to year.
There is nothing unreasonable or unfair about these allocations,

36
as there was proof that a project was already underway and there
were “concrete plans” for water use. Del Norte and Solano Verde
fail to demonstrate how these allocations or any other allocations
were unfair or unreasonable.
4. Necessity of the physical solution
Section 849, subdivision (a) provides that the “court shall
have the authority and the duty to impose a physical solution on
the parties in a comprehensive adjudication where necessary and
consistent with [Article X of Section 2] of the California
Constitution.” Mahan Ranch contends the physical solution was
not necessary because Fox Canyon has already been managing
the Basin for decades and that “many components of the
Judgment duplicate tasks that Fox Canyon already engages in.”
This contention has no merit.
Here, the plaintiffs initiated this action because it
contested Fox Canyon’s pumping restrictions and sought a
resolution to conflicting claims of water rights. The physical
solution resolves these conflicts. Furthermore, the adoption of
the physical solution was a necessary component of the phase 3
settlement. The settling parties agreed to the “future Basin
management under the Physical Solution, which . . . incorporates
the GSP as a material component of the Physical Solution and
recognizes [Fox Canyon]’s SGMA authority as the Basin GSA and
as the special act water agency created to manage and conserve
the Basin’s Groundwater resources.” Thus, the physical solution
was necessary to resolve the adjudication. Additionally, the
physical solution was necessary for the future management of the
Basin, as it “provides a governance structure,” allows for “judicial
oversight over groundwater planning and management,” and sets

37
forth a process to address and resolve future issues in
management.
We also reject Mahan Ranch’s contention that the
stakeholder participation provisions in the physical solution are
not necessary. The importance of stakeholder participation was
substantiated by credible evidence. As one witness testified,
stakeholder participation “ ‘will both improve decision making
and promote stakeholder buy-in.’ ” Mahan Ranch does not
demonstrate the trial court abused its discretion in adopting a
physical solution for the Basin.
5. Proposition 218
The judgment authorizes the watermaster to “set, levy and
collect Basin Assessments and fees from” water rights holders for
the management of the Basin. Mahan Ranch and Del Norte
contend the Basin assessments violate Articles XIII C and XIII D
of the California Constitution (Proposition 218). We conclude
Proposition 218 is inapplicable.
Proposition 218 places restrictions on taxes, property
assessments, and fees or charges imposed by “local governments.”
(Cal. Const., art. XIII C, § 2; art. XIII D, §§ 1, 2 & 3.) “ ‘Local
government’ ” is defined as “any county, city, city and county,
including a charter city or county, any special district, or any
other local or regional governmental entity.” (Cal. Const., art.
XIII C, § 1, subd. (b).)
We conclude Proposition 218 does not apply because the
Basin assessment is not a tax or assessment, fee, or charge
imposed by “local governments.” The watermaster’s sole
authority to impose the Basin assessment is as “an agent of the
Court,” subject to the court’s jurisdiction and oversight. The
court is the judicial branch of the state and not “local

38
government[].” (See Cal. Const., article VI, § 1.) And, Fox
Canyon’s duties as watermaster, including the collection of Basin
assessments, are distinct from its duties as GSA and GMA. (Cf.
Water Replenishment Dist. of Southern California v. City of
Cerritos (2012) 202 Cal.App.4th 1063, 1072 [appointment of a
water district as watermaster “would be judicially authorized and
therefore would not be ultra vires”].) The judgment recognizes
this distinction, noting that the watermaster’s ability to impose
Basin assessments, “does not modify or amend [Fox Canyon]’s
separate, existing authority to adopt assessments or pursue
funding under SGMA and/or deriving from [Fox Canyon]’s
enabling legislation.”
Nor do the Basin assessments violate Proposition 218.
Article XIII C of the California Constitution excludes charges
that are “imposed for a specific benefit conferred or privilege
granted directly to the payor that is not provided to those not
charged,” “does not exceed the reasonable costs to the local
government of conferring the benefit or granting the privilege,”
“the amount is no more than necessary to cover the reasonable
costs of the governmental activity,” and “the manner in which
those costs are allocated to a payor bear a fair or reasonable
relationship to the payor’s burdens on, or benefits received from,
the governmental activity.” (Cal. Const., art. XIII C, § 1, subd.
(e).)
In our view, the Basin assessments meet these criteria.
They fund the administrative management of the Basin,
investigations, inspections, compliance with and the enforcement
of the judgment, personnel costs, infrastructure maintenance,
utilities, general operation and maintenance costs, and costs
related to groundwater enhancement or basin optimization

39
projects or actions. They also confer the benefits of a managed
Basin to the groundwater user/payors. Nothing reflects the
assessments are unreasonable or excessive, and the trial court
retains jurisdiction to review any future challenge to their
reasonableness. Furthermore, the cost to each payor is fair in
relation to the benefits they receive. Each payor is charged a
uniform rate per acre-foot of their annual allocation. Thus,
“parties with correlative rights will be subject to a Basin
Assessment proportionate to their annual allocation of
groundwater.” The Basin assessments will benefit the Basin as a
whole, and in turn “all parties benefit from competent, science-
based management of the Basin.”
We also conclude article XIII D, which applies to all
“assessment[s], fee[s] and charge[s]” related to real property, is
not applicable. Basin assessments are not merely “ ‘imposed . . .
upon a parcel or upon a person as an incident of property
ownership’ within the meaning of article XIII D. ([Cal. Const.,
a]rt. XIII D, § 2, subd. (e).).” (City of San Buenaventura v. United
Water Conservation Dist. (2017) 3 Cal.5th 1191, 1202–1203, 1208
[distinguishing property-related fees imposed for the costs of
providing a service to the property owner’s land versus fees
imposed for a public service that is not merely for the benefit of
landowners].) They are imposed for the management and
conservation of the Basin as a whole, and not merely “imposed on
a property owner, in his or her capacity as a property owner, to
pay for the costs of providing a service to a parcel of property.”
(Id. at p. 1208.)
6. CEQA
The judgment provides that the watermaster “is not a
‘public agency’ subject to [CEQA]. (Pub. Resources Code,

40
§ 21063.) Accordingly, nothing in the Judgment or the Physical
Solution, nor in the implementation thereof, nor the
Watermaster’s planning . . . or decisions in accordance with the
authority of the Judgment shall be deemed a ‘project’ subject to
review under the CEQA.” Del Norte contends this ruling is
erroneous and CEQA applies. Del Norte is incorrect.
CEQA does not apply to the court or its agents. “CEQA
applies only to ‘discretionary projects proposed to be carried out
or approved by public agencies.’ (Pub. Resources Code, § 21080,
subd. (a), italics added.)” (Robinson v. Superior Court (2023) 88
Cal.App.5th 1144, 1162.) A “public agency” “includes any state
agency, board, or commission and any local or regional agency, as
defined in these guidelines. It does not include the courts of the
state.” (Cal. Code Regs., tit. 14, § 15379, italics added.) And,
where the power to act “is reserved to the courts,” the agency
charged with implementing the court order is not subject to
CEQA. (Hillside Memorial Park & Mortuary v. Golden State
Water Co. (2011) 205 Cal.App.4th 534, 550.) Fox Canyon, in its
capacity as watermaster, was charged with implementing the
judgment and physical solution under the court’s authority.
CEQA does not apply under these circumstances.
7. Compliance with section 850 and article X, section 2
Appellants contend the judgment violates section 850,
subdivision (a)(3) and article X, section 2 because it treats the
nonstipulating parties unfairly and does not allocate water based
on current reasonable or beneficial use. We conclude otherwise
because they did not carry their burden to prove they were
inequitably treated or that their water rights were substantially
violated. (§ 850, subd. (d).) Substantial evidence, including
numerous lay and expert witness testimonies and the Master

41
Disclosure Record, supports the judgment because it allocated
water to correlative overlying rights holders based on their
reasonable and beneficial use.
Other arguments
1. Evidentiary issues
Mahan Ranch raises numerous evidentiary contentions.
We review them for abuse of discretion. (Gordon v. Nissan Motor
Co., Ltd. (2009) 170 Cal.App.4th 1103, 1111.)
First, Mahan Ranch contends the trial court erred in
admitting confidential mediation evidence, including the
proposed phase 2 settlement and the Master Disclosure Record.
We are not persuaded. The court was permitted, if not required
under these circumstances, to review the proposed settlement
agreement. (§ 850, subd. (d).) A written settlement agreement
prepared during mediation is not protected from disclosure if the
settling parties sign the agreement and the agreement provides it
is admissible or states that it is enforceable or binding. (Evid.
Code, § 1123, subds. (a), (b).) Writings prepared during a
mediation and “prepared by or on behalf of fewer than all the
mediation participants” is not made inadmissible if those
participants expressly agree in writing, or orally, to its disclosure
and the writing does not disclose anything said or done or any
admission made during the mediation. (Evid. Code, § 1122, subd.
(a)(2).) The phase 2 settlement and the Master Disclosure Record
met these criteria, and Mahan Ranch does not prove otherwise.
An objecting party cannot unilaterally prevent disclosure of a
stipulated settlement. (Provost v. Regents of University of
California (2011) 201 Cal.App.4th 1289, 1293, 1305.)
Mahan Ranch also contends the trial court erroneously
prevented it from full cross-examination based on mediation

42
privilege. We have reviewed each of the record cites Mahan
Ranch provided to demonstrate such purported error. We
conclude the trial court did not abuse its discretion on these
evidentiary issues nor is prejudice shown. (Twenty-Nine Palms
Enterprises Corp. v. Bardos (2012) 210 Cal.App.4th 1435, 1449
(Bardos).)
Next, Mahan Ranch contends the trial court erred in
admitting Robert Grether’s testimony regarding the Master
Disclosure Record and phase 2 settlement because he was not an
expert witness. Again, there was no abuse of discretion. Grether
is a farmer in the Basin and was involved in developing the
Master Disclosure Record, the allocation schedule, and allocation
formula. He had personal knowledge to testify regarding the
Master Disclosure Record, and he used “simple math” and
publicly court-filed documents to calculate the number of parties
supporting the settlement. His testimony was not beyond the
scope of a percipient witness. (Evid. Code, § 800; CACI No. 223;
see People v. Williams (1988) 44 Cal.3d 883, 915 [“Lay opinion
testimony is admissible where no particular scientific knowledge
is required, or as ‘a matter of practical necessity when the
matters . . . observed are too complex or too subtle to enable [the
witness] accurately to convey them to court or jury in any other
manner’ ”]; Eger v. May Department Stores (1953) 120 Cal.App.2d
554, 558–559.)
Similarly, there was no error in allowing stipulating parties
to provide their lay opinion as to the settlement, including their
views on the allocation schedule. (See Reed v. United Teachers
Los Angeles (2012) 208 Cal.App.4th 332, 336 [trial court may
consider the reaction of class members to a proposed settlement
in determining whether the settlement is fair].) Such

43
information was relevant to determine whether the phase 2
settlement comports with section 850, subdivision (a).
Lastly, Mahan Ranch contends it was treated unfairly and
provides several examples in its brief (e.g., blanket evidentiary
rulings, inconsistent rulings, “expanding” phase 2, discovery
“anomalies,” disqualification, 10 etc.). We have reviewed these
contentions and conclude the record does not reflect unfair
treatment. Nor does Mahan Ranch demonstrate the trial court
abused its discretion or demonstrate it suffered prejudice from
these rulings. (Bardos, supra, 210 Cal.App.4th at p. 1449.)
2. Exclusion from the physical solution
Mahan Ranch requests that if this court upholds the
judgment, it and Del Norte be excluded from the physical
solution. We deny this request.
The trial court has “the power to enforce [a physical]
solution regardless of whether the parties agree.” (City of Lodi v.
East Bay Municipal Utility Dist. (1936) 7 Cal.2d 316, 341; § 849,
subd. (a).) If “any single water rights holder could bar adoption of
a proposed physical solution unless it was exempted from it by
asserting its specific unconstrained pumping would have limited
impact on the effectiveness of its remaining regulations, any
proposed physical solution could be exposed to a ‘death by a
thousand cuts’ because each objecting water claimant could
likewise claim exemption.” (Antelope I, supra, 59 Cal.App.5th at
p. 267.)

10 The order disqualifying Mahan Ranch’s counsel was
vacated in our previous opinion in Las Posas Valley Water Rights
Coalition v. Mahan Ranch, LLC (June 3, 2022, B317177)
[nonpub. opn.] 2022 WL 189326.

44
Here, the physical solution set forth the water allocations of
all parties, consistent with their water rights priorities. It was a
result of a comprehensive settlement reached by the majority of
the parties that was litigated during two phases of trial. As the
trial court concluded, it would “be unfair to the many other
groundwater users in the Basin, who are taking on their fair
share of the cost of managing the Basin, to allow these [objecting]
parties to free ride on those efforts,” and it “ ‘would be impossible
to measure their water circumstances without putting it in the
context of the entire Basin.’ ” We agree the inclusion of the
objecting parties is vital to the proper management of the Basin.
No exclusion is warranted.
DISPOSITION
The judgment is affirmed. Respondents shall recover their
costs on appeal.
CERTIFIED FOR PUBLICATION.

BALTODANO, J.

We concur:

YEGAN, Acting P. J. CODY, J.

45
Thomas P. Anderle, Judge

Superior Court County of Santa Barbara

---

Ferguson Case Orr Paterson, Neal P. Maguire, Wendy C.
Lascher, James Q. McDermott, Jessica M. Wan and Shane M.
Maguire for Defendants, Cross-defendants and Appellants
Mahan Development Corporation et al.
Ellison Schneider Harris & Donlan, Robert E. Donlan,
Christopher M. Sanders, Shawnda M. Grady; Wanger Jones
Helsley, Robert E. Donlan and Shawnda M. Grady for Defendant,
Cross-defendant and Appellant Solano Verde Mutual Water
Company.
White Brenner, Barbara A. Brenner, Angela Schrimp de la
Vergne and Kerry Fuller for Defendant, Cross-defendant and
Appellant Del Norte Water Company.
Hanson Bridgett, Michael J. Van Zandt, Nathan A. Metcalf,
Sean G. Herman and Jillian E. Ames for Defendants, Cross-
complainants and Respondents Ventura County Waterworks
District No. 1 et al.
Stoel Rives, Elizabeth P. Ewens, Michael B. Brown and
Heraclio Pimentel for Defendant, Cross-defendant and
Respondent Fox Canyon Groundwater Management Agency.
O’Melveny & Myers, Jeffrey L. Fisher, Barton Thompson,
Matt Kline, Russell McGlothlin, Anton Metlitsky and Heather
Welles for Defendants, Cross-defendants and Respondents
Leavens Ranches LLC et al.
Downey Brand, Kevin O’Brien and Brian Hamilton for
Plaintiffs, Cross-defendants and Respondents Las Posas Valley
Water Rights Coalition et al.
Brownstein Hyatt Farber Schreck and Robert J.
Saperstein for Defendants and Respondents Wonderful Citrus
LLC et al.
Klein DeNatale Goldner and R. Jeffrey Warren for
Defendant and Respondent Zone Mutual Water Company.
Aleshire & Wynder and Keith Lemieux for Defendants and
Respondents Berylwood Heights Mutual Water Company et al.
LeBeau Thelen and Robert Kuhs for Defendants and
Respondents Broadway Road Moorpark, LLC, et al.
Nossaman and Robert N. Kwong for Defendants and
Respondents Samuel and Sylvia Alvarez Family Revocable Trust
dated 02/20/1996 et al.
The Ventura Legacy Group and Steven R. Hagemann for
Defendants and Respondents Culbert Farms, LLC, et al.
Alston & Bird and Edward J. Casey for Defendants and
Respondents Butler Ranch Mutual Water Co. et al.
Barg Coffin Lewis & Trapp and Julia Graeser Mata for
Defendants and Respondents Milligan Ranch Partnership, L.P.,
et al.
Richards, Watson & Gershon and B. Tilden Kim for
Defendant and Respondent City of Moorpark.