Las Posas Groundwater Adjudication Affirmed: Second District Court Endorses Comprehensive Basin Management Framework

In Las Posas Valley Water Rights Coalition v. Ventura County Waterworks District No. 1 the California Court of Appeal, Second District, affirmed a comprehensive groundwater adjudication governing the Las Posas Valley Groundwater Basin in Ventura County. The case arose from longstanding overdraft conditions in a basin designated as high priority under the Sustainable Groundwater Management Act (SGMA), where groundwater demand has historically exceeded supply.

Background

The Las Posas Valley Water Rights Coalition initiated the adjudication in 2018, seeking a judicial determination of groundwater rights and priorities after challenging regulatory pumping restrictions imposed by the Fox Canyon Groundwater Management Agency. The basin supports agricultural, commercial, and domestic uses, with agriculture accounting for the majority of groundwater demand. Over time, Fox Canyon implemented regulatory measures, including limits on new wells and pumping reductions, but disputes over water rights persisted.

The adjudication proceeded in three phases. Phase 1 established the basin’s Total Safe Yield at approximately 36,000 acre feet per year and allocated a portion to public water suppliers. Phase 2 allocated the remaining groundwater among users through a settlement supported by a substantial majority of parties. Phase 3 implemented a physical solution and appointed Fox Canyon as watermaster to oversee basin management. Certain landowners and mutual water companies appealed the resulting judgment.

Procedural Framework and Settlement Structure

The adjudication followed California’s statutory framework for comprehensive groundwater adjudications, which authorizes courts to determine all groundwater rights in a basin and implement a physical solution. The trial court structured the case to promote settlement and efficiency, resulting in broad participation by basin stakeholders.

Phase 2 produced an allocation schedule based on historical use, irrigated acreage, and reasonable beneficial need. Approximately 87 percent of groundwater extractors supported the settlement. The trial court found the agreement equitable and consistent with water rights priorities, particularly the superiority of overlying rights.

Phase 3 resulted in a stipulated judgment supported by more than 80 percent of extractors. The judgment integrated prior rulings and established a governance system that includes annual allocation adjustments based on operating yield and administration by Fox Canyon as watermaster.

The Court of Appeal’s Decision

Water Rights Priorities and Allocation Methodology

The Court of Appeal affirmed the trial court’s application of core California water law principles. Overlying landowners possess paramount rights to groundwater, subject to the constitutional requirement that use be reasonable and beneficial. These rights are correlative and must be allocated equitably among landowners.

The appellate court rejected arguments that mutual water companies should receive allocations directly. Substantial evidence supported the finding that landowners retained their overlying rights and that mutual water companies functioned primarily as delivery agents rather than owners of groundwater rights. Allocating water to companies instead of landowners would have produced inequitable results inconsistent with actual land use.

The court also upheld the determination that no surplus groundwater existed in the basin. Because appropriative rights depend on surplus availability, the absence of surplus precluded allocations to appropriators, including mutual water companies asserting such claims.

Treatment of Dormant and Disputed Claims

The court addressed the treatment of dormant overlying rights, affirming the trial court’s authority to subordinate such rights where they are unexercised. Solano Verde’s rights were subordinated based on evidence that it had not used groundwater since 2005 and had no plans to resume use.

The court emphasized that subordination does not extinguish rights but prevents speculative future claims from interfering with current reasonable uses. Dormant rights may be exercised in the future upon a showing that new use will not harm the basin.

Claims to allocations based on imported return flows were also rejected. The court found that the claimant did not import the water and failed to demonstrate actual recharge or intent to recapture the flows. Additionally, the claim was procedurally barred because it was not raised during the appropriate phase of the adjudication.

Validity of the Physical Solution

The appellate court affirmed the physical solution as a proper exercise of the trial court’s equitable authority. Physical solutions are designed to address overdraft and allocate water among competing users in a manner consistent with constitutional mandates.

The court found the solution necessary to resolve conflicts among basin users and to establish a long-term governance framework. The physical solution incorporates the basin’s groundwater sustainability plan and aligns with SGMA objectives.

Arguments that the physical solution was unnecessary or duplicative of existing regulatory efforts were rejected. The court concluded that adjudication provides a comprehensive and enforceable structure that complements, rather than duplicates, administrative regulation.

Challenges to Governance, Fees, and Environmental Review

The court rejected challenges to basin assessments imposed under the judgment. It held that such assessments are not subject to Proposition 218 because they are imposed by judicial authority through the watermaster, rather than by a local government entity. The assessments were found to be proportional and tied to basin management benefits.

The court also held that the California Environmental Quality Act does not apply to the judgment or its implementation. CEQA applies to public agencies, not courts or court-appointed agents acting under judicial authority.

Further, the court upheld the use of an operating yield, which adjusts annually based on hydrologic conditions, finding it consistent with maximizing beneficial use and preventing waste. It also rejected arguments that the judgment conflicted with earlier phase determinations.

Conclusions and Implications

The Court of Appeal’s decision affirms a comprehensive, settlement-driven approach to groundwater adjudication that prioritizes overlying rights, equitable allocation, and sustainable basin management. The ruling reinforces the principle that groundwater rights are limited by reasonable and beneficial use and that appropriative rights are subordinate in overdrafted basins.

The decision underscores the judiciary’s role in integrating adjudication with SGMA implementation and validates the use of negotiated settlements supported by a majority of stakeholders. It also clarifies that courts have broad discretion to impose physical solutions and associated governance mechanisms, including assessments and adaptive allocation frameworks.

As groundwater adjudications continue across California, this decision provides a significant precedent for resolving competing claims in critically overdrafted basins through comprehensive, enforceable, and adaptive management frameworks.

This article was originally published in the April 2026 edition of the California Water Law & Policy Reporter. It is posted here on our website with the permission of California Water Law & Policy Reporter, Argent Communications Group, Argent & Schuster, Inc., and the author, Darien Key. All rights remain with the original publisher.

Darien Key is a Land Use and Natural Resources Attorney based in Oakland. Darien’s practice focuses on Land Use entitlement (such as the Subdivision Map Act, Housing Accountability Act, and Builder’s Remedy), CEQA (California Environmental Quality Act), municipal law (such as the Brown Act, Public Records Act, Conflicts of Interest, etc.), water (SGMA compliance and groundwater adjudications), and related environmental laws both on the transactional side but also in litigation. He can be reached at dkey@fennemorelaw.com.