In 2013, the Agua Caliente Band of Cahuilla Indians (“Tribe”) and the United States (collectively “Plaintiffs”) sued the Coachella Valley Water District (“CVWD”) and the Desert Water Authority (“DWA”) (collectively “Defendants”) seeking a court declaration regarding whether the Tribe has water rights to the Coachella Valley Groundwater Basin. The Tribe alleges that the Defendants have pumped the groundwater under the reservation to the point that the aquifer is in a state of “overdraft” and that the Defendants have attempted to correct the overdraft by importing water from the Colorado River which degrades the aquifer. Currently, the Tribe does not pump any groundwater on its reservation and consequently the Tribe must purchase groundwater from the Defendants as well as from other sources.
The trial was split into three phases: Phase I – whether the Tribe has a right to the groundwater; Phase II – whether the Tribe owns the “pore space” of the Coachella Valley Groundwater Basin and whether it has the right to receive water of a certain quality from the Aquifer; and Phase III – what quantity of groundwater and/or pore space is the Tribe entitled to pursuant to their reserved rights.
In 2014, the U.S. District Court ruled in favor of the Plaintiffs in Phase I of the trial (i.e., the Court found that the Tribe had a reserved right to the groundwater). While the Defendants appealed the U.S. District Court’s decision, the U.S. District Court agreed to stay commencement of Phase II of the trial until the Ninth Circuit Court of Appeals rendered its decision. On March 7, 2017, the Ninth Circuit affirmed the Tribe’s reserved rights. Phase II of the trial is now set to go forward.
So what does this mean for Coachella Valley community associations who get their water from CVWD and DWA?
If the Court grants the relief as requested by the Tribe in its original complaint the Defendant water agencies would be prohibited from, among other things, (1) withdrawing groundwater from two particular sub-basins within the Coachella Valley Groundwater Basin; (2) injecting water of a quality that is inferior to the existing groundwater without first treating it; and (3) using the pore space underlying the Coachella Valley.
As such, it is foreseeable that a water rate increase by CVWD and DWA (possibly a significant one) is in Coachella Valley’s future – even if the Tribe does not prevail in Phases II and III of the trial because it is foreseeable that the Tribe will no longer have to pay for water it receives from CVWD and DWA as the Court found that the Tribe has a right to that groundwater. If the Tribe prevails in Phase II, then there will also be a cost for CVWD and DWA to treat the water that must be injected back into the Coachella Valley Groundwater Basin to make up for the current overdraft as well as the degraded quality of the water currently in the Basin. This cost will very likely be passed through to the customers of CVWD and DWA. If the Tribe wins Phase III of the trial, there will be less local groundwater available to CVWD and DWA to distribute resulting in the increased importation of water to Coachella Valley to make up the water shortfall and/or CVWD and DWA paying the Tribe for water pumped out of the Coachella Valley Groundwater Basin.
Consequently, Coachella Valley’s community associations need to be aware that water rate increase(s) are possibly on the horizon depending on the outcome of this trial.
Since the amount of any possible rate increase is unknown at this time, it is difficult to determine how to address any needed future budget increases. The best course of action may be to ensure that your board keeps up to date on the progress of the lawsuit and that future budgets realistically estimate the likely cost of water and other utilities in the next fiscal year given all the information available at the time of the budget preparation process.