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City of Santa Maria et al v. Richard E. Adam et al

November 21, 2012


Santa Clara County Superior Court Superior Court Nos. CV770214, 990738, 990739, CV03610, CV784900, CV784921, CV784926, CV785509, CV785511, CV785515, CV785522, CV785936, CV786971, CV787150, CV787151, CV787152 Trial Judge: Hon. Jack Komar

The opinion of the court was delivered by: Premo, Acting P.J.


(Santa Clara County Super. Ct. No. CV770214)

This appeal concerns rights to groundwater contained in the Santa Maria Valley Groundwater Basin (Basin). The Basin suffered severe water shortages beginning around the 1930's but the importation of water from outside the watershed and the local construction of dams and reservoirs relieved the historical water shortage. As a result, groundwater levels have been relatively stable for the last 30 years or so. Nevertheless, there is concern that aging reclamation facilities and growing population could lead to more shortages in the future. This litigation was commenced to identify and prioritize the water rights held by the many users of Basin groundwater. Most of the case was resolved by an agreement (Stipulation) among the Santa Maria Valley Water Conservation District (District), local cities and water companies (public water producers), and most of the owners of land overlying the Basin. The Stipulation contains a plan, referred to as a physical solution, which resolves conflicting water rights claims and allocates the various components of the groundwater (native groundwater, return flows of imported water, and salvaged water) among the stipulating parties. It also sets up a comprehensive Basin-wide groundwater management program that calls for continuing judicial oversight.

Appellants are two groups of landowners, mostly farmers, identified as the Landowner Group (the LOG parties) and the Wineman parties, who extract groundwater for agricultural use upon their lands. Respondents are public water producers that pump groundwater for municipal and industrial use by their citizens and customers.*fn2 Appellants did not join the Stipulation and went to trial against respondents in an effort to quiet title to their prior rights to water in the Basin. Appellants also objected to terms in the Stipulation that they claim affected them.

The trial court approved the Stipulation and made it part of the final judgment. The court rejected appellants' quiet title claims, finding that two of the public water producers had perfected prescriptive rights in the Basin's native groundwater. The court recognized that appellants might have preserved a prior right to some volume of groundwater by continuing to pump during the prescriptive period but, because appellants had been unable to prove the amount of water they had pumped in the past, the court concluded that the quiet title remedy was not available.

On appeal, appellants challenge the trial court's approval of the Stipulation, arguing that the physical solution was unnecessary because there is no present water shortage. They attack the sufficiency of the evidence in support of the award of prescriptive rights and argue, in the alternative, that any prescriptive rights acquired years ago have been lost by nonuse. Appellants also maintain that the trial court erred in refusing to declare their overlying rights to be paramount and in its allocation of return flows and salvaged water to respondents. We will conclude as follows:

(1) The trial court properly exercised its equitable powers to approve the physical solution proposed by the stipulating parties. The present existence of a water shortage is not a prerequisite to imposition of a physical solution.

(2) The evidence is sufficient to support the trial court's finding that Santa Maria and GSWC have perfected prescriptive rights, giving these public water producers a prior right to a specified volume of groundwater in the event of a future water shortage. Although recent water surpluses make it unnecessary to assert that priority, the prescriptive rights have not been extinguished by nonuse. (Civ. Code, § 811, subd. 4.) The right is the right to take groundwater; disuse occurs only when the holder of the right stops taking the water.

(3) Because there is no present need to allocate the native groundwater, it is unnecessary to quantify appellants' overlying rights. Appellants are entitled to a judgment declaring their overlying rights to be prior to all appropriative rights in the native groundwater, less the volume to which Santa Maria and GSWC are entitled pursuant to their prescriptive rights.

(4) The trial court did not err in approving the stipulating parties' allocation of return flows and salvaged water. Appellants have no claim to either. We do find, however, that the judgment must be clarified to insure that respondents' priority right to the salvaged water does not exceed the amount of water actually saved.

We reject the remainder of appellants' arguments, reverse the judgment, and remand with directions as specified below.


The California Constitution sets general state water policy. The 1928 amendment to the California Constitution, now article X, section 2 (article X, section 2),*fn3 limits all water rights in this state "to reasonable and beneficial uses." (City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, 1241 (Mojave); see also Wat. Code, § 100.) Individuals may have a right to use water but "[a]t least since 1928 when the predecessor to article X section 2 of the California Constitution was adopted, there [has been] no private ownership of groundwater. (State of California v. Superior Court (2000) 78 Cal.App.4th 1019, 1023, 1025.) The State of California owns all of the groundwater in California, not as a proprietary owner, but in a manner that empowers it to supervise and regulate water use. (Id. at pp. 1022, 1026.) Water rights holders have the right to 'take and use water,' but they do not own the water and cannot waste it. (Id. at p. 1025.)" (Central and West Basin Water Replenishment Dist. v. Southern Cal. Water Co. (2003) 109 Cal.App.4th 891, 905 (Central and West Basin); see also, Wat. Code, § 102.)

Other water policy is contained in the Water Code. Pertinent here is Water Code section 106, which provides that it is "the established policy of this State that the use of water for domestic purposes is the highest use of water and that the next highest use is for irrigation." Municipalities are granted special legislative protection by Water Code section 106.5, which states that it is "the established policy of this State that the right of a municipality to acquire and hold rights to the use of water should be protected to the fullest extent necessary for existing and future uses . . . ." Surface water is subject to a statutory system of permits and licenses regulating its appropriation. (Wat. Code, § 1200.) There is no statewide system for allocating rights in groundwater. The Legislature has left that to local government or, as here, to adjudication by the courts. (O.W.L. Foundation v. City of Rohnert Park (2008) 168 Cal.App.4th 568, 587-588.)

"Courts typically classify water rights in an underground basin as overlying, appropriative, or prescriptive." (Mojave, supra, 23 Cal.4th at p. 1240.) The overlying right, like the riparian right, is associated with the ownership of land. "Overlying rights are special rights to use groundwater under the owner's property." (Id. at p. 1237, fn. 7.) Appropriative rights, on the other hand, are not derived from land ownership but depend upon the actual taking of water. "Public interest requires that there be the greatest number of beneficial users which the supply can yield, and water may be appropriated for beneficial use subject to the rights of those who have a lawful priority [citation]. Any water not needed for the reasonable beneficial use of those having prior rights is excess or surplus water and may rightly be appropriated on privately owned land for non-overlying use, such as devotion to public use or exportation beyond the basin or watershed [citation]. When there is a surplus, the holder of prior rights may not enjoin its appropriation." (California Water Service Co. v. Edward Sidebotham & Son (1964) 224 Cal.App.2d 715, 725 (California Water Service).)

Although an appropriator is entitled to take groundwater that the overlying landowner does not need, the appropriator is limited to the remainder of the "safe yield." (City of Los Angeles v. City of San Fernando (1975) 14 Cal.3d 199, 214 (San Fernando).) The safe yield is "the maximum amount of water than could be extracted annually, year after year, without eventually depleting the underground basin." (Ibid.) Safe yield is generally calculated as the net of inflows less subsurface and surface outflows. (Id. at pp. 278-279.) When total extractions exceed the safe yield the basin is said to be in overdraft. (Id. at p. 280.)

When the safe yield is insufficient to satisfy the reasonable and beneficial needs of all users, those with overlying rights take precedence. As among overlying owners, the rights are correlative. "[E]ach may use only his reasonable share when water is insufficient to meet the needs of all." (California Water Service, supra, 224 Cal.App.2d at p. 725.) As among appropriators, those first in time are first in right. (Id. at p. 726.) Prescriptive rights arise when an appropriator continues to pump water during times of overdraft. "An appropriative taking of water which is not surplus is wrongful and may ripen into a prescriptive right where the use is actual, open and notorious, hostile and adverse to the original owner, continuous and uninterrupted for the statutory period of five years, and under claim of right." (Ibid.)

Overlying landowners who fail to seek an injunction preventing an adverse use may nevertheless protect their interests by means of self help. Self help in this context requires the landowner to continue to pump nonsurplus water concurrently with the adverse users. When they do, the landowners retain their overlying rights, losing only the amount of the prescriptive taking. (Hi-Desert County Water Dist. v. Blue Skies Country Club, Inc. (1994) 23 Cal.App.4th 1723, 1731-1732, citing San Fernando, supra, 14 Cal.3d at p. 293 and City of Pasadena v. City of Alhambra (1949) 33 Cal.2d 908, 931-933 (Pasadena).)*fn4


The Basin at the center of this case is a coastal groundwater basin underlying about 163,700 acres that straddle the line between Santa Barbara and San Luis Obispo Counties. It extends from Santa Barbara County northwest beyond the Nipomo Mesa to what the parties refer to as the Northern Cities area.*fn5 It contains three hydrological subareas identified at trial as the Santa Maria Valley, Nipomo, and Northern Cities subareas. The Basin is the principal source of water for thousands of residents and landowners. According to the California Department of Water Resources, groundwater satisfies a greater percentage (83 percent) of the agricultural and urban demand in the central coast area than it does in any other part of the state. (Department of Water Resources Bulletin 118-Update 2003, at p. 115.)*fn6

This case concerns three sources of groundwater: native groundwater (rainfall, natural infiltration from lakes and streams, and other natural inflows), return flows (imported water that is used on the surface which then percolates into the Basin), and salvaged water (water that would have wasted to the sea during the rainy season but for the dams and reservoirs that capture and save it). Return flows in the Basin are derived from State Water Project (SWP) water imported by several of the public water producers. Salvaged water is contributed by the Twitchell dam and reservoir in the Santa Maria Valley area and the Lopez dam and reservoir in the Northern Cities area. We shall refer to return flows and salvaged water collectively as "developed" water.

Much of the dispute in the instant case concerns the Twitchell project. The Twitchell project was conceived to address a long history of critical water shortages in the Basin. In 1945, persistent water shortages and concern about seawater intrusion led Santa Barbara County to establish the Santa Barbara County Water Agency (SBCWA). In 1954, Congress passed Public Law 774, authorizing the United States Department of the Interior, Bureau of Reclamation (Bureau of Reclamation) to contract with SBCWA for construction of the Vaquero (now Twitchell) dam and reservoir on the Cuyama River, a tributary of the Santa Maria River. As is true of many California rivers, the highest flow of the Cuyama and Santa Maria Rivers happens following storms during the rainy season. If not collected behind dams and stored in reservoirs, most of these high flows would waste to the sea in the winter and the rivers would run low or dry in the summer months. Storing the water in a reservoir can augment the groundwater supply two ways. It may add to the groundwater directly by facilitating increased infiltration from the reservoir and from streambeds that can be kept running throughout the dry season. It may also limit pumping of groundwater by piping the salvaged water directly to users. The Twitchell project was intended to operate only by increasing infiltration. The plan was for it to save floodwater during the rainy season and release it "in such manner and at such times as will provide maximum contributions to the ground water supplies . . . ."

Because river water is surface water, the Bureau of Reclamation had to obtain a license from the State Water Resources Control Board (SWRCB) to appropriate the seasonal flows of the Cuyama River. The District was formed and given the perpetual right to use the water the project made available. The project was completed in about 1962. The District has operated the project ever since, levying assessments for the project's construction and routine maintenance. The District does not pump water from the Basin and it does not distribute water from the reservoir.

The Lopez dam and reservoir in the Northern Cities area was built around the same time as the Twitchell project. Its construction and operation has been governed by agreements among the Northern Cities and related entities. It, like Twitchell, adds to the groundwater supply by infiltration from the reservoir and streambeds. It also pipes some water from the reservoir directly to users.

Completion of the Twitchell and Lopez projects, the importation of SWP water by several appropriators in the area, and a leveling off of agricultural development have contributed to stabilizing water levels in the Basin. Groundwater levels have been relatively stable since the late 1960's, reaching near historic highs in 1967. By 1997, the Basin had been in equilibrium for many years. Nevertheless, the District became concerned about future supplies. Urban population was growing. Overpumping had continued in the Nipomo area where there is no reclamation project. And the Twitchell reservoir has been accumulating silt, which reduces its capacity and threatens to diminish its ability to augment natural recharge.


A. Initial Phases*fn7

The District commenced this lawsuit in 1997 when it sued Santa Maria, Southern California Water Company (now known as GSWC), Guadalupe, and 3,000 Doe defendants. The action was principally an effort to adjudicate rights in Basin groundwater. Subsequent complaints or cross-complaints brought in other public water producers, including the Northern Cities, Nipomo, Rural Water Company, and most of the landowners, appellants among them, who claimed a right to Basin groundwater. Appellants raised several claims against the public water producers, including a claim to quiet title in their overlying right to the groundwater.

The matter was tried in five phases. Basin boundaries were adjudicated in Phases I and II. Phase III explored the question of whether the Basin was in overdraft. The trial court concluded that the Basin was not in a condition of overdraft and had not suffered overdraft in the past. The court did not calculate the safe yield but decided instead that the Basin's physical condition did not show the adverse effects one would expect from a long-term overdraft. Absent an overdraft, the public water producers could not have acquired prescriptive rights.

B. The Stipulation

Before the Phase IV trial commenced, the public water producers and most of the landowners other than appellants entered into the Stipulation. The Stipulation specifies that all stipulating landowners have a paramount overlying right to the groundwater, the public water producers have no prescriptive rights against stipulating landowners and have appropriative rights only to native groundwater that is surplus to the reasonable and beneficial needs of the stipulating landowners. In short, the Stipulation gives the stipulating parties the same rights in groundwater that they would have under the common law except that it eliminates any prescriptive rights adverse to the stipulating landowners that the public water producers may have perfected in the past. The Stipulation does not quantify the overlying or appropriative rights.

The Stipulation contains a physical solution dividing the Basin into three management areas corresponding to the three hydrological subareas. It sets forth detailed criteria for monitoring and managing groundwater in each management area, calling for the creation of technical committees or employment of a management area engineer to conduct the management programs. As to each of the three management areas, the Stipulation describes the factors used to identify a water shortage and the responses that must be taken. The Stipulation provides for continuing judicial oversight.

The Santa Maria Valley Management Area is the largest of the three management areas described in the Stipulation and is the subject of several issues raised in this appeal. The groundwater management plan for this area focuses upon the Twitchell project and calls for the creation of the Twitchell Management Authority (TMA), the members of which are the District, Santa Maria, GSWC, Guadalupe, and stipulating landowners located within District boundaries. The Stipulation specifies that, on average, the Twitchell project adds 32,000 acre feet per year to the Basin. The Stipulation refers to this volume as the "Twitchell Yield" and allocates 100 percent of the Twitchell Yield to the TMA members. Santa Maria, GSWC, and Guadalupe are allocated 80 percent and the stipulating landowners 20 percent. In exchange, the TMA is obligated to employ a management area engineer to prepare an annual report analyzing water supply and demand. The TMA must also engage an engineering consultant to develop "an integrated operation and maintenance procedure manual" for the Twitchell project and "provide recommendations for capital and maintenance projects" to maximize recharge of the Basin, including projects to address the accumulation of silt. The initial annual budget for the TMA is set to be between $500,000 and $700,000. These costs, and the cost of any extraordinary projects, are divided among the TMA members in proportion to their share of the Twitchell Yield. The District will continue to collect existing special assessments from all District landowners in order to fund routine operations and maintenance.

C. Phase IV-Prescription and Twitchell Allocation

In light of the Stipulation, the Phase IV trial involved only appellants and the public water producers. Among the issues to be tried were the prescriptive rights claims of the public water producers and the legality of the Stipulation's allocation of the Twitchell Yield. In its Phase IV statement of decision, the trial court reversed its previous conclusion rejecting the public water producers' prescriptive rights claim. The court found that the undisputed evidence showed that, even though the Basin had not suffered permanent adverse effects, the Basin had been in overdraft at least during the years 1944 through 1951, 1953 through 1957, and 1959 through 1967, and, throughout those periods, Santa Maria and GSWC had continued to pump water. The court also found "that even after the Twitchell augmentation began, there have been periods in excess of the statute of limitations during which there has been no surplus in the basin" and these public water producers continued to pump. The court found that the other elements of prescription were proved and, therefore, Santa Maria and GSWC had established prescriptive rights in the native supply.

The trial court approved the allocation of the Twitchell Yield as set forth in the Stipulation, explaining that during years there is a surplus, "all water users have the right to use the water as overlying owners or appropriators." During times of shortage, when there is no surplus, the District "may regulate and allocate the appropriated water consistent with its contract and under the terms of the License" as allowed by Water Code sections 74501, 74526, and 74592.

D. Phase V-Quiet Title and the Physical Solution

The final phase of the trial involved adjudication of appellants' quiet title claims and a determination of the effect of the trial court's previous finding of prescriptive rights. The trial court was also asked to decide whether it should impose the physical solution contained in the Stipulation and whether to enter a single judgment or enter judgment on the Stipulation separately.

The trial court concluded that the quiet title remedy was not available. Although appellants had submitted evidence to show that they had continued to pump as much water as they needed during the prescriptive periods, appellants had not submitted evidence from which the court could calculate the quantity of water they had pumped. Accordingly, the trial court held that it could not quiet title in any amount of groundwater. The court calculated the total volume of groundwater to which the prescriptive rights would attach and concluded that since the public water producers had waived their prescriptive rights against the stipulating landowners, only a fraction of the total would be enforceable against appellants.

The trial court approved the physical solution, explaining, "There is a reasonable certainty that the Basin will suffer water shortages in the future and that the court will be required to act in the future to preserve the rights of the various parties to this litigation in the event that Twitchell is not renovated and restored. Even if Twitchell is restored, there is a possibility that such shortages may occur," that the physical solution is "necessary and appropriate to provide for future exigencies," and its water management plan is "necessary and appropriate and will provide an efficacious solution to the Basin's current and future problems." As to allocation of the Twitchell Yield, the trial court held that no party had established a pre-Stipulation priority right to that water. The 80-20 allocation "does not affect any rights, contractual or otherwise, of the non-stipulating parties."*fn8


The trial court entered a single judgment on January 25, 2008, incorporating the Stipulation.*fn9 The judgment awards Santa Maria and GSWC prescriptive rights to native groundwater in the amount of 5,100 and 1,900 acre feet per year, respectively. Only a fraction may be asserted against appellants. That fraction is equal to the ratio of appellants' rights to the total of all overlying rights within the Basin.*fn10 Because appellants had failed to sustain their burden of proof in their quiet title action, and "[a]ll other LOG and ...

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