Court Opinion

ID: 9931448
Source: CourtListenerOpinion
Date Created: 2024-02-08 23:02:03.311048+00
Date Added: 2024-06-11T12:16:17.857490
License: Public Domain

Filed 2/8/24

                             CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FOURTH APPELLATE DISTRICT

                                      DIVISION THREE

 MOJAVE PISTACHIOS, LLC et al.,

      Petitioners,                                     G062327

          v.                                           (Super. Ct. No. 30-2021-01187589)

 THE SUPERIOR COURT OF ORANGE                          OPINION
 COUNTY,

      Respondent;

 INDIAN WELLS VALLEY
 GROUNDWATER AUTHORITY et al.,

      Real Parties in Interest.

                 Original proceedings; petition for writ of mandate after the superior court
sustained real party in interest’s demurrer to petitioners’ third amended petition and
complaint. William D. Claster, Judge. Requests for judicial notice granted. Petition
denied.
              Brownstein Hyatt Farber Schreck, Scott S. Slater, Amy M. Steinfeld, and
Elisabeth L. Esposito for Petitioners.
              Best Best & Krieger, Jeffrey V. Dunn, Eric L. Garner, Wendy Y. Wang,
and Sarah Christopher Foley for Searles Valley Minerals, Inc. and California Building
Industry Association as Amici Curiae on behalf of Petitioners.
              Jason Resnick for Western Growers Association as Amicus Curiae on
behalf of Petitioners.
              Christian C. Scheuring for California Farm Bureau Federation as Amicus
Curiae on behalf of Petitioners.
              Egoscue Law Group, Tracy J. Egoscue and Tarren A. Torres for Western
Growers Association, California Farm Bureau Federation, Dairy Cares, and American
Pistachio Growers as Amici Curiae on behalf of Petitioners.
              Allen Matkins and David L. Osias for Elizabeth Cardoza, Clay Daulton,
David Gill, Landon Gill, Michele Lasgoity, Monica Lasgoity, Rosemary Lasgoity, Jeff
Lefors, Mark Peters, Sally Roberts, Candace Khanna, Rakesh Khanna, Taisto Smith,
SWD Investments, Inc., and SWD Investments-Fulton Ranch, Inc. (Madera Landowners)
as Amici Curiae on behalf of Petitioners.
              No appearance for Respondent.
              Richards, Watson & Gershon, James L. Markman, Kyle H. Brochard, and
Jacob C. Metz for Real Parties in Interest.
                                   *          *          *
                                         1
              Mojave Pistachios, LLC owns about 1,600 acres of land in the Mojave
Desert. On that acreage, it has planted a pistachio orchard that it irrigates exclusively

       1
              The petitioners in this case are Mojave Pistachios, LLC and Paul G. Nugent
and Mary E. Nugent as Trustees of the Nugent Family Trust dated June 20, 2011. We
refer to them collectively as Mojave.

                                              2
with groundwater pumped from the underlying water basin. The Department of Water
Resources has determined that basin is at risk for overdraft. Mojave currently extracts
about 4,000 acre-feet (roughly 1.3 billion gallons) of groundwater per year, but as its
trees mature, it anticipates it will need as much as 7,000 acre-feet (about 2.3 billion
                     2
gallons) per year.
              Shortly after Mojave planted its pistachio trees, the California Legislature
                                                                       3
enacted the Sustainable Groundwater Management Act (Wat. Code, § 10720 et seq.)
(SGMA), which requires the creation of groundwater sustainability plans to manage high
priority groundwater basins. Acting pursuant to that legislation, the local groundwater
sustainability agency, Indian Wells Valley Groundwater Authority (the Authority),
determined that, subject to certain exceptions discussed below, all groundwater
extractions in the basin where Mojave’s orchard is located would be subject to a basin
                                                                             4
replenishment fee of $2,130 per acre-foot of groundwater starting in 2021.
              Mojave refused to pay the replenishment fee and filed this lawsuit attacking
the Authority’s groundwater sustainability plan and related implementing actions,
including the imposition of the replenishment fee. According to Mojave, through those
implementing actions, the Authority violated Mojave’s vested common law water right to
pump native groundwater from the basin for use on its land and then illegally made that
water available to other users.

       2
             Groundwater is measured in acre-feet. An acre-foot equals a volume of
water spread over one acre in area and one foot in depth. One acre-foot is approximately
326,000 gallons.
       3
              All further undesignated statutory references are to this code.
       4
            As Benjamin Franklin once famously observed, “When the well’s dry, we
know the worth of water.”

                                              3
              A series of demurrers followed. In the most recent round, respondent court
sustained the Authority’s demurrer to certain causes of action in Mojave’s third amended
complaint, finding the claims at issue are barred by California’s “pay first, litigate later”
rule, which, subject to certain exceptions, requires a taxpayer to pay a tax before
commencing a court action to challenge the tax’s collection. The court also concluded
Mojave failed to allege facts sufficient to support its takings causes of action.
              Mojave petitioned this court for a writ of mandate overruling respondent
court’s order sustaining the demurrer. As a matter of first impression, we conclude the
well-established “pay first” rule applies to lawsuits challenging fees imposed by a local
groundwater sustainability agency under SGMA. Because any alleged economic harm to
Mojave stems from the imposition of the replenishment fee, we further conclude the “pay
first” rule bars the challenged causes of action.
              We recognize the application of the “pay first” rule may at times seem
Draconian, and the positions of both parties have arguable merit. On the one hand, we
have farmers who have invested significant funds to plant their crops; who claim to have
enjoyed the benefits of free groundwater for decades; who may be required to pay
millions of dollars in fees annually for what had historically been free; and who are
legally barred from litigating the propriety of those fees due to their failure to pay them
up front. On the other hand, we have a local water agency that has been assigned the
Herculean tasks of creating a groundwater sustainability plan for what the record suggests
is an overdrafted basin; fairly allocating a limited amount of groundwater between a
number of competing users; and calculating an equitable way to fund the importation of
water from other sources.
              While we appreciate the arguments made by both sides, we conclude on
balance that our Constitution, SGMA, and sound public policy require a water user to pay
any outstanding fee imposed under SGMA before commencing a court action to
challenge the fee and obtain a refund. We therefore deny the requested writ relief.

                                              4
                                           FACTS
             1.   The Indian Wells Valley Groundwater Basin
                  There are hundreds of designated groundwater basins and subbasins
throughout California, underlying about 62,000 square miles (42 percent) of the state.
The groundwater in these basins is a major part of California’s water supply, providing
close to 40 percent of the state’s supply during wet years and up to 60 percent in dry
         5
years.
                  According to the Department of Water Resources, many of California’s
groundwater basins are critically overdrafted, meaning “the average annual amount of
groundwater extraction exceeds the long-term average annual supply of water to the
basin. Effects of overdraft can include seawater intrusion, land subsidence, groundwater
                                                          6
depletion, and chronic lowering of groundwater levels.”
                  The Department of Water Resources has concluded the Indian Wells Valley
Groundwater Basin (the Basin) is an overdrafted groundwater basin. Located in the
northwestern part of the Mojave Desert to the east of the Sierra Nevada Mountains, the
Basin extends across roughly 382,000 acres (600 square miles) under portions of Kern
County, Inyo County, and San Bernardino County. The Basin does not have any water

             5
             See Dept. of Water Resources, California’s Groundwater (Bulletin 118)
Update 2020, p. 103, https://data.cnra.ca.gov/dataset/3f87088d-a2f9-4a46-a979-
1120069db2c6/resource/d2b45d3c-52c0-45ba-b92a-
fb3c90c1d4be/download/calgw2020_full_report.pdf [as of Feb. 8, 2024], archived at:
<https://perma.cc/R4HW-BY4N>, and Dept. of Water Resources, California’s
Groundwater Update 2020 Fact Sheet, https://water.ca.gov/programs/groundwater-
management/bulletin-118 [as of Feb. 8, 2024], archived at: <https://perma.cc/54QS-
UUC3>.
             6
               See Dept. of Water Resources, Critically Overdrafted Basins,
https://water.ca.gov/programs/groundwater-management/bulletin-
118/critically-overdrafted-basins [as of Feb 8, 2024], archived at:
<https://perma.cc/7GSW-J7XF>.

                                               5
importation infrastructure or significant surface water features, so water producers must
rely exclusively on groundwater to meet their water demands.
               According to the Department of Water Resources, groundwater levels in the
Basin have been steadily declining since 1945. The Authority estimates the Basin has
total annual outflows of 32,640 acre-feet and total annual inflows of 7,650 acre-feet,
meaning the Basin sustains an average loss of groundwater storage of about 25,000
acre-feet per year.
               Nearly 80 percent of the Basin is under federal lands. These lands are
home to the United States Navy’s (the Navy) single largest landholding in the world,
Naval Air Weapons Station China Lake. Although the Navy’s annual groundwater
extractions from the Basin have declined since the 1970’s, the Navy continues to extract
Basin groundwater for use at the base.
               The rest of the Basin is primarily used for residential and agricultural
purposes. The farming operations there, including Mojave, use Basin groundwater to
irrigate their crops.
       2.      Mojave’s Farming Operations and Water Usage
               Mojave owns or leases about 3,200 acres of land spread across over
80 parcels in Kern County, all overlying the Basin. Mojave currently uses much of its
land to grow pistachio nuts, but that was not always the case.
               According to Mojave, groundwater extractions on its property began in
1975. From 1975 to 1988, about 600 acres were used to grow alfalfa, and groundwater
usage ranged from about 1,200 to 4,000 acre-feet per year. The property used no
groundwater from 1989 to 2003. In 2004, alfalfa farming resumed on 160 acres, with
water usage averaging about 1,000 acre-feet per year from 2004 to 2012.
               In 2013, Mojave stopped farming alfalfa and began planting pistachio trees.
Mojave had to replant many of its trees in 2014 and 2015. Its initial planting covered
about 350 acres; after the replanting, its pistachio orchards now span about 1,600 acres.

                                              6
              Mojave irrigates its pistachio orchards entirely with Basin groundwater,
which it pumps from wells on the parcels; it also uses Basin groundwater for dust
mitigation. According to Mojave, it has a vested overlying water right to pump that
groundwater from the Basin.
              Mojave began using groundwater on its pistachio trees in 2013; it used only
325 acre-feet that first year. Mojave’s water usage for its pistachio trees increased to
3,700 acre-feet the following year and ranged from about 3,000 to 4,100 acre-feet per
year from 2014 to 2019. For most of that time, there was no government-imposed fee on
the extraction of groundwater in the Basin, so Mojave’s irrigation costs were limited to
the cost of well repair, maintenance, and electricity.
              Mojave completed its first commercial pistachio harvest in 2020 on about
350 acres. According to Mojave, its trees are expected to reach peak production around
2030 and have a commercial life expectancy of at least 75 years.
              As pistachio trees mature, they need more water each year. Mojave
estimates that from 2023 to 2029, its annual usage will increase from about 4,160
acre-feet per year to about 5,600 acre-feet per year. It further anticipates that from 2030
to 2080, it will need “at least” 6,000 acre-feet per year of water, and it could require as
much as 7,000 acre-feet per year.
       3.     SGMA
              In September 2014, our Legislature passed SGMA to provide for the
sustainable management of California’s groundwater basins. The Legislature’s stated
goals in enacting SGMA include establishing minimum standards for sustainable
groundwater management, giving local groundwater authorities the power and support to
sustainably manage groundwater, and creating a more efficient and cost-effective
groundwater adjudication process that protects water rights, ensures due process, and
prevents unnecessary delay. (§ 10720.1.)

                                              7
              SGMA, which took effect in January 2015, required that all basins
designated as high or medium priority be managed under a groundwater sustainability
plan by January 31, 2020. (§ 10720.7, subd. (a)(1); see §§ 10727-10728.6.) It also
authorized the creation of groundwater sustainability agencies to develop and create such
plans (§§ 10723-10724), and granted those agencies a number of powers, including the
power to perform any act necessary to carry out SGMA’s purposes (§ 10725.2, subd. (a));
to adopt rules and regulations (id., subd. (b)); to conduct investigations (§ 10725.4,
subd. (a)); to mandate the use of water-measuring devices (§ 10725.8); to acquire real
property, personal property, and water rights (§ 10726.2, subd. (a)); to import water (id.,
subd. (b)); and to create voluntary fallowing programs for agricultural lands (§ 10726.2,
subd. (c)), among other powers.
              SGMA also empowered groundwater agencies to impose fees on
groundwater extraction to fund the costs of groundwater sustainability programs,
groundwater management, investigations, and enforcement. (§§ 10730, subd. (a),
10730.2, subd. (a).) If any owner or operator knowingly fails to pay a fee on time, he or
she is liable to the agency for penalties and interest. (§ 10730.6, subd. (b).) The agency
may sue the owner or operator to recover any delinquent fees, interest, or penalties (id.,
subd. (c)) and may order him or her to cease all groundwater extraction until the
delinquent fees are paid (id., subd. (e)).
              If a person disagrees with fees imposed by the agency, SGMA provides that
he or she “may pay” the fee “under protest and bring an action against the governing
body in the superior court to recover any money that the governing body refuses to
refund.” (§ 10726.6, subd. (d) (section 10726.6(d)).) Any judicial action attacking an
ordinance that imposes or increases a fee must be commenced within 180 days of the
ordinance’s adoption. (Id., subd. (c).)
              SGMA specifies that it does not modify rights to use groundwater, and it
expressly prohibits groundwater sustainability plans from determining water rights.

                                             8
(§ 10720.5, subd. (a), (b).) To that end, the Legislature expressed an intent to enhance
local groundwater management in a manner “consistent with rights to use or store
groundwater and Section 2 of Article X of the California Constitution,” and to “preserve
the security of water rights in the state to the greatest extent possible consistent with the
sustainable management of groundwater.” (§ 10720.1, subd. (b).)
              SGMA allows a claimant to file an adjudication action to determine rights
to extract groundwater from a basin, including an action to quiet title regarding those
rights, and it requires that any such action be conducted in accordance with Code of Civil
Procedure section 830 et seq., which governs groundwater cases. (§§ 10720.5, subd. (c),
10721, subd. (a), 10737-10738.) A court may not enter judgment in such cases unless it
“finds that the judgment will not substantially impair the ability of a groundwater
sustainability agency . . . to achieve sustainable groundwater management.” (§ 10737.8.)
       4.     The Authority and Its Groundwater Sustainability Plan
              The Department of Water Resources designated the Basin as a high-priority
basin subject to critical overdraft. The Basin was therefore required under SGMA to
adopt a groundwater sustainability plan by 2020.
              In 2016, five local agencies—Kern County, Inyo County, San Bernardino
County, the Indian Wells Valley Water District, and the City of Ridgecrest—created the
Authority as a joint powers authority to serve as the groundwater sustainability agency
              7
for the Basin. The Authority spent several years preparing a groundwater sustainability
plan as required by SGMA, seeking input from a policy advisory committee and a
technical advisory committee. Mojave participated in this process.
              The Authority adopted its groundwater sustainability plan in January 2020.
In its plan, the Authority determined that the Basin cannot achieve groundwater

       7
             The Authority also has two associate members—the Navy and the United
States Bureau of Land Management.

                                               9
sustainability through extraction reductions alone; rather, augmentation and overdraft
mitigation projects must be developed. To finance those projects, the Authority
determined it would need to charge fees to the entities and individuals who will benefit
from them.
              The Authority then took several steps to implement its groundwater
sustainability plan (collectively, the Implementing Actions). Those Implementing
Actions are the crux of this case.
              a.     The Sustainable Yield Report
              First, in July 2020, the Authority adopted and approved a report on the
Basin’s sustainable yield—that is, the maximum amount of water that can be withdrawn
annually from a groundwater supply without causing chronic lowering or other
undesirable results (see § 10721, subd. (w), (x)). According to this document (the
                                                                                        8
Sustainable Yield Report), the Basin’s sustainable yield is 7,650 acre-feet per year.
              The report explained that the Basin is solely dependent on groundwater;
current outflows are about four times the estimated inflows; groundwater levels are
dropping by up to 2.5 feet annually; the Basin does not currently have access to imported
water; and up to 50 miles of infrastructure must be built in order to import water.
              The report further noted that the majority of groundwater extractions in the
Basin are by six large producers, one of which is Mojave. According to the report,
Mojave estimates its future extraction demands will be about 7,200 acre-feet per year, or
roughly 94 percent of the Basin’s sustainable yield. Two of the other largest producers
each reported historical extractions in excess of the Basin’s sustainable yield.
Collectively, those six producers’ extractions totaled nearly 3.5 times the estimated
inflow to the Basin. Thus, concluded the Authority, without changes to the Basin’s

       8
             In its briefing and at oral argument, Mojave contends this is a gross
underestimation and lacks factual support.

                                             10
overdraft condition, its groundwater infrastructure will not be able to produce the needed
water by 2065.
              The report also discussed the Navy’s federal reserve water right interest.
                                                                 9
Since the Navy had expressly declined to quantify that interest, the Authority estimated
the Navy’s potential interest by using data the Navy provided on its pumping history and
concluded the Navy could make a convincing argument that the Basin’s entire sustainable
yield was subject to the Navy’s federal reserve water right interest. The Authority also
determined it cannot regulate the Navy’s groundwater usage or charge the Navy for any
                                   10
fees for groundwater production.
              The report then concluded that all groundwater extractors in the Basin
                                                                     11
(excluding the federal government and any de minimis extractors) will be beneficially
impacted by overdraft mitigation and augmentation projects and therefore should be
responsible for the “significant costs” of those projects. The report observed that the cost
of those projects will mean “the likely cessation of large-scale agricultural uses in the
Basin due to the increased cost for surface water,” but the cost “does not prevent such a
use.” It added that “the Central Valley is expected to see very significant reductions in
crop lands due to import water supply costs,” and “Kern County alone is expected to see
upwards of 185,000 acres of currently farmed land in the Central Valley to be
permanently fallowed” (i.e., left unsown).

       9
              The Navy maintains its interest is not limited to its current on-base demand
of 2,041 acre-feet, and its interest will likely be established, if ever, through litigation.
       10
               Under SGMA, the federal government may “voluntarily agree” to
participate in a groundwater sustainability plan, but federally reserved water rights to
groundwater must be “respected in full.” (§ 10720.3, subds. (c), (d).)
       11
               SGMA prohibits charging fees to the federal government (§ 10720.3,
subds. (a-c)) or de minimis pumpers (§ 10730, subd. (a)).

                                             11
              b.     The Replenishment Fee and Exempted Pumping Allotments
              In August 2020, the Authority adopted Ordinance No. 03-20, which
provides that all groundwater extractions (except those by federal and de minimis
extractors) will be subject to a Basin replenishment fee of $2,130 per acre-foot starting in
                                                                       12
January 2021, to be paid on a monthly basis (the Replenishment Fee).        According to the
Authority, the Replenishment Fee is necessary to fund the significant costs of bringing in
supplemental water (estimated to be at least $52 million), and also mitigating damage to
shallow wells that may be impacted by dropping water levels.
              Ordinance No. 03-20 also allocated the Basin’s 7,650 acre-feet sustainable
yield to several entities (e.g., Kern County, the City of Ridgecrest, and small water
companies providing domestic water services), granting to each an annual “Exempted
Pumping Allotment” that is not subject to the Replenishment Fee. For example, the City
of Ridgecrest received an allotment of 373 acre-feet per year, meaning that the first 373
acre-feet of groundwater it pumps will not be subject to the Replenishment Fee. Neither
Mojave nor any other agricultural producers received an Exempted Pumping Allotment.
              c.     The Transient Pool and Fallowing Program
              In August 2020, the Authority created a transient pool and fallowing
program to facilitate coordinated production reductions among groundwater users and
encourage a shift away from overdraft reliance (Transient Pool and Fallowing Program).
Under this program, the Authority established a transient pool of 51,000 acre-feet of
groundwater and determined that all qualified agricultural pumpers would receive a
transient pool allotment based on their reported agricultural uses. Eligible pumpers could
then either (1) reject their allotment and continue pumping while paying the
Replenishment Fee, (2) accept their allotment and associated mitigation fee, or (3) accept

       12
             By the court’s calculation, this translates to about two-thirds of a cent
($0.0065) per gallon.

                                             12
the allotment and negotiate a sale of it to the Authority. Use of the transient pool was
voluntary.
              Ten agricultural pumpers, including Mojave, were deemed “‘potentially’
qualified” to participate in the program. Three of those pumpers, including Mojave,
failed to timely submit a required pumping verification questionnaire, so the Authority
determined they were not eligible to participate. The 51,000 acre-feet in the transient
pool were thereafter allotted among the seven eligible agricultural pumpers.
       5.     Mojave’s Failure to Pay the Replenishment Fee
              The collective effect of the Implementing Actions on Mojave is significant:
Mojave, which received neither an allotment from the transient pool nor an Exempted
Pumping Allotment, must pay the Replenishment Fee of $2,130 per acre-foot for any
groundwater it extracts from the Basin. Thus, Mojave went from paying no
                                                                        13
government-imposed fee on the extraction of water as recently as 2017 to owing over
$8 million annually in Replenishment Fees.
              Claiming it lacks the funds to pay, Mojave has not paid any portion of the
Replenishment Fee since Ordinance No. 03-20 took effect in early 2021, although it
continues to extract groundwater to irrigate its trees. According to Mojave, if Ordinance
No. 03-20 is enforced, it will render Mojave’s farming operations “economically
unviable” because the cost of water will exceed its gross revenues.
       6.     Relevant Procedural History
              In September 2020, Mojave filed a verified petition for writ of mandate and
complaint against the Authority in Kern County Superior Court, challenging the

       13
               In 2018, the Authority passed an ordinance requiring all groundwater
extractors to pay $30 per acre-foot for all groundwater extracted in the Basin (the
Extraction Fee). The Extraction Fee was later increased to $105 per acre-foot.
According to Mojave, it has paid the Extraction Fees in full, with total payments
exceeding $1 million.

                                             13
Authority’s groundwater sustainability plan and related actions. (Case No.
BCV-20-102284.) In January 2021, Mojave filed its first amended verified petition for
writ of mandamus and complaint (FAC), challenging the Authority’s groundwater
sustainability plan, the Implementing Actions, and certain post-adoption decisions.
              The FAC is 135 pages long and alleges 20 causes of action, including
claims for alleged violations of SGMA and the California Constitution, regulatory and
physical takings, and due process violations, among others. The crux of Mojave’s
petition is that the Authority’s groundwater sustainability plan illegally deprived Mojave
of its vested appurtenant overlying water rights to pump groundwater from the Basin by
conditioning Mojave’s continued use of groundwater on the payment of the
Replenishment Fee.
              Mojave’s case against the Authority was consolidated with an action filed
by Searles Valley Minerals Inc. asserting similar challenges to the Authority’s
groundwater sustainability plan. (Case No. BCV-20-102285.) The consolidated actions
were then transferred by stipulation to the Superior Court of Orange County and assigned
new case numbers. (Case Nos. 30-2021-01187589 and 30-2021-01187275.)
              Mojave filed a separate action in the Superior Court of Orange County
against the Indian Wells Valley Water District, seeking to quiet title to its water rights
and a physical solution. (Case No. 30-2021-01187275.) That case has been expanded by
cross-complaint into a comprehensive adjudication of water rights in the Basin and has
been deemed related to the consolidated cases.
              In April 2021, Mojave filed an ex parte application in the present case for a
temporary restraining order and an order to show cause why a preliminary injunction
should not issue enjoining the Authority from taking any action to implement the
Replenishment Fee in Ordinance No. 03-20. Respondent court denied Mojave’s
application in May 2021. The court reasoned that California’s “pay first, litigate later”

                                             14
rule barred injunctive relief as to the Replenishment Fee because Mojave had not yet paid
the fee it seeks to invalidate, and none of the exceptions to the “pay first” rule applied.
              In June 2021, Mojave petitioned this court for a writ of mandate as to the
ruling. We denied Mojave’s writ petition without prejudice, finding Mojave had not yet
experienced irreparable harm because the Authority had not yet filed a civil action to
enjoin Mojave’s extractions. (No. G060336.) We noted then that the petition was denied
for “prudential reasons, not as a signal regarding the correctness of the challenged order
denying a preliminary injunction or the merits of the underlying dispute.”
              Around the same time, the Authority held a public hearing on Mojave’s
failure to pay the Replenishment Fee. After the hearing, the Authority adopted a
resolution ordering Mojave to stop pumping Basin groundwater until its fee payments
became current. The Authority also indicated that if Mojave continued to extract water
from the Basin without paying the Replenishment Fee, the Authority would initiate court
proceedings to enforce its order.
              Later that month, the Authority filed a demurrer to Mojave’s FAC,
attacking some but not all of the causes of action in the FAC. As to cause of action
Nos. 6 (challenging the Replenishment Fee), 14 to 16 (regulatory and physical takings),
and 17 and 18 (due process), the Authority argued those claims must be dismissed under
                                                                                14
the “pay first” rule because Mojave has failed to pay the Replenishment Fee.
              Respondent court found the “pay first” rule applied, noting that the
challenged causes of action, despite their labels, all fundamentally sought to challenge
and impede the collection of the Replenishment Fee. Accordingly, the court sustained
the Authority’s demurrer to the sixth cause of action (challenging the Replenishment Fee)

       14
               The Authority also challenged the thirteenth cause of action on that basis,
but Mojave later voluntarily dismissed that cause of action, among others, so we will not
discuss it further here.

                                              15
without leave to amend, and it sustained the demurrer to the fourteenth through
eighteenth causes of action (takings and due process claims) with leave to amend.
              Weeks later Mojave filed its second amended verified petition for writ of
mandamus and complaint (SAC), this time asserting 15 causes of action for violations of
SGMA, regulatory and physical takings, and due process violations, among other claims.
In light of respondent court’s demurrer ruling on the “pay first” rule, Mojave deleted the
cause of action challenging the Replenishment Fee; it also removed references to the
“Replenishment Fee” from its takings claims. The Authority filed another demurrer.
              Meanwhile, in January 2022, the Authority filed a complaint against
Mojave in the Superior Court of Orange County, seeking recovery of the delinquent
groundwater fees, civil penalties, and preliminary and permanent injunctive relief. (Case
No. 30-2022-01239479.) That case is related to the present action, and according to the
parties, the Authority’s request for injunction is still pending.
              Before the hearing on the Authority’s demurrer to the SAC in the present
action, Mojave sought leave to file a third amended petition and complaint (TAC). In its
moving papers, Mojave explained that the amendments in the proposed TAC “make[]
clear that this lawsuit is not a challenge to the Replenishment Fee but to the predicate
unlawful allocation decision that preceded the imposition of the fee and which violates
SGMA and constitutes a taking.”
              Respondent court took the Authority’s demurrer to the SAC off calendar
and largely granted Mojave’s motion for leave to file its TAC. The TAC asserts
15 causes of action for violations of SGMA, regulatory and physical takings, and due
process violations, among other claims.
              As relevant here, the fifth cause of action in the TAC challenges the
                                 15
Exempted Pumping Allotments in Ordinance No. 03-20, asserting the Authority
       15
              Mojave’s TAC and briefing refer to these as “Annual Pumping
Allocations” rather than use the terminology in Ordinance No. 03-20 (“Exempted

                                              16
arbitrarily and capriciously granted groundwater pumping allotments to certain users, but
not Mojave, in violation of Mojave’s common law and constitutional rights to water.
According to Mojave, “because [Mojave was] denied any [Exempted] Pumping
[Allotments], [Mojave] can no longer rely on [its] prior and paramount overlying right to
pump [its] correlative share of the Basin’s native yield, and instead must pay the
Replenishment Fee.” (TAC ¶ 402.) Mojave therefore seeks a writ of mandate
compelling the Authority to prevent the implementation of the Exempted Pumping
Allotments and to comply with all applicable laws in adopting accurate and legal
allotments.
               Cause of action Nos. 9 through 11 of the TAC allege the Authority, through
the adoption of its groundwater sustainability plan, the Sustainable Yield Report, the
Transient Pool and Fallowing Program, and the Exempted Pumping Allotments, has
deprived Mojave of all economically beneficial use of its water rights and pistachio trees,
and this amounts to a physical and regulatory taking of private property without just
compensation in violation of the state and federal constitutions and section 1983 of
title 42 of the United States Code.
               The Authority filed yet another demurrer to the TAC, challenging the fifth
cause of action (challenging the Exempted Pumping Allotments) and the ninth through
eleventh causes of action (the takings claims). The Authority argued the fifth cause of
action is “nothing more than a further challenge to the calculation of the Replenishment
Fee,” and is thus still barred by the “pay first” rule. As for the takings claims, the
Authority argued the challenged actions (which do not include the Replenishment Fee)
imposed no economic burdens on Mojave, nor did they preclude the extraction of
groundwater.

Pumping Allotments”). We employ the terminology from the ordinance to avoid
confusion.

                                              17
               The trial court held a lengthy hearing on the matter in December 2022.
After taking the matter under submission, respondent court sustained the Authority’s
demurrer as to the fifth and eleventh causes of action without leave to amend and as to
                                                             16
the ninth and tenth causes of action with leave to amend.
               Respondent court found the fifth cause of action’s challenge to the
Exempted Pumping Allotment was “simply a disguised challenge to the Replenishment
Fee itself, meaning it’s still barred by the ‘pay first, litigate later’ rule.” As for the
regulatory takings claims (the ninth and tenth causes of action), the court reasoned the
TAC specifically removed any reference to the Replenishment Fee, and these claims are
instead based on the Authority’s groundwater sustainability plan, the Sustainable Yield
Report, Exempted Pumping Allotments, and Transient Pool and Fallowing Program,
none of which, “without reference to the Replenishment Fee, [has] an economic effect on
Mojave.” As for the physical takings claim (the eleventh cause of action), the court
reasoned Mojave had not alleged it was in fact physically prevented from extracting
water, and thus had not stated a claim.
               Mojave petitioned this court for a writ of mandate in February 2023,
requesting de novo review of respondent court’s ruling on the demurrer. We issued an
order to show cause why mandate or other appropriate relief should not be issued; we
also invited additional briefing by the parties. We later accepted briefing by several
amici curiae, entertained oral argument, and invited supplemental briefing after oral
argument.

       16
               Respondent court acknowledged that the Extraction Fee, which Mojave has
paid, is a separate basis for the ninth and tenth causes of action and therefore allowed
Mojave to file a further amended petition basing these causes of action on the Extraction
Fee explicitly.

                                               18
                                        DISCUSSION
       1.     Writ Review is Appropriate
              “In order to confine the use of mandamus to its proper office, the Supreme
Court, in various cases, has stated general criteria for determining the propriety of an
extraordinary writ: (1) the issue tendered in the writ petition is of widespread interest
[citation] or presents a significant and novel constitutional issue [citation]; (2) the trial
court’s order deprived petitioner of an opportunity to present a substantial portion of his
cause of action [citations]; (3) conflicting trial court interpretations of the law require a
resolution of the conflict [citation]; (4) the trial court’s order is both clearly erroneous as
a matter of law and substantially prejudices petitioner’s case [citations]; (5) the party
seeking the writ lacks an adequate means, such as a direct appeal, by which to attain
relief [citation]; and (6) the petitioner will suffer harm or prejudice in a manner that
cannot be corrected on appeal [citations]. The extent to which these criteria apply
depends on the facts and circumstances of the case.” (Omaha Indemnity Co. v. Superior
Court (1989) 209 Cal.App.3d 1266, 1273-1274.)
              The issues raised in this writ proceeding are of widespread interest and
importance. Litigation challenging the actions of groundwater sustainability agencies
under SGMA may impact thousands of water users throughout the state for years to
come. Whether the “pay first” rule applies in litigation challenging SGMA fees is a
novel question, the answer to which could impact groundwater extractors throughout the
state; it has yet to be addressed by any appellate decision. Accordingly, writ review is
warranted. (See Corbett v. Superior Court (2002) 101 Cal.App.4th 649, 657 [“a writ of
mandate should not be denied when ‘the issues presented are of great public importance
and must be resolved promptly,’” and the “receipt of numerous amicus curiae briefs
underscores the importance of this issue”].)

                                               19
       2.     Standard of Review
              “When a party seeks writ review of a trial court’s order [on] a demurrer,
‘[t]he “ordinary standards of demurrer review still apply.”’ [Citation.] We independently
determine whether the complaint states a cause of action. [Citation.] We reasonably
interpret the complaint, ‘reading it as a whole and its parts in their context.’ [Citation.]
We deem true ‘“all material facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. [Citation.] ‘“We also consider matters which may be
judicially noticed.”’ (Presbyterian Camp & Conference Centers, Inc. v. Superior Court
(2019) 42 Cal.App.5th 148, 153-154 (Presbyterian Camp).)
       3.     The “Pay First” Rule Generally
              “A taxpayer ordinarily must pay a tax before commencing a court action to
challenge the collection of the tax. This rule, commonly known as ‘pay first, litigate
later,’ is well established and is based on a public policy reflected in the state
Constitution, several statutes, and numerous court opinions.” (County of Los Angeles v.
Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1116 (So. Cal. Edison).)
              The constitutional source of the “pay first” rule is article XIII, section 32 of
the California Constitution: “No legal or equitable process shall issue in any proceeding
in any court against this State or any officer thereof to prevent or enjoin the collection of
any tax. After payment of a tax claimed to be illegal, an action may be maintained to
recover the tax paid, with interest, in such manner as may be provided by the
                                                                                    17
Legislature.” (Cal. Const. art. XIII, § 32 (hereafter article XIII, section 32).)

       17
              Although article XIII, section 32 is often cited in “pay first” jurisprudence,
the doctrine existed long before section 32’s predecessor provision was added to the
California Constitution in 1910, having received judicial recognition for nearly a century
before that. (See Chiatello v. City and County of San Francisco (2010) 189 Cal.App.4th
472, 495-496 (Chiatello) [collecting cases].)

                                              20
              “Read together, these two portions of section 32 establish that the sole legal
avenue for resolving tax disputes is a postpayment refund action. A taxpayer may not go
into court and obtain adjudication of the validity of a tax which is due but not yet paid.”
(State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638 (State Board).)
              The “pay first” rule also appears in numerous statutes. Some statutes use
language similar to article XIII, section 32 and “prohibit an action to prevent or enjoin the
collection of specified taxes imposed by state or local government. (E.g., Rev. & Tax.
Code, §§ 4807 [property tax], 6931 [sales and use taxes], 19381 [franchise and income
taxes].) Other statutes provide for an action to recover a refund after payment is made.
(Id., §§ 5140 [property tax], 6933 [sales and use taxes], 19382 [franchise and income
taxes].)” (So. Cal. Edison, supra, 112 Cal.App.4th at pp. 1116-1117.) As we discuss
                                                                  18
below, the rule is also codified in SGMA. (See § 10726.6(d).)

       18
               Mojave correctly notes the first sentence of article XIII, section 32 refers to
actions against the “State,” and there is a split of authority as to whether the “pay first”
rule embodied in section 32 applies to local taxes in the absence of a “pay first” statute.
A number of courts have applied section 32’s “pay first, litigate later” principle to actions
against local governments as a matter of public policy. (See, e.g., Water Replenishment
Dist. of Southern California v. City of Cerritos (2013) 220 Cal.App.4th 1450, 1466-1468
(City of Cerritos); Chodos v. City of Los Angeles (2011) 195 Cal.App.4th 675, 680;
Flying Dutchman Park, Inc. v. City and County of San Francisco (2001) 93 Cal.App.4th
1129, 1136-1137 (Flying Dutchman).) Other courts, however, have held article XIII,
section 32 applies only to actions against the state, as stated in the provision. (See, e.g.,
City of Anaheim v. Superior Court (2009) 179 Cal.App.4th 825, 830 (City of Anaheim)
[“Article XIII, Section 32 . . . does not bar the [plaintiffs’] actions here [against the city]
because courts have limited this constitutional provision to actions against the state or an
officer of the state”]; County of Los Angeles v. Superior Court (2008) 159 Cal.App.4th
353, 363 fn. 6 [‘“Section 32 applies only to actions against the state”’].) We agree with
the former group that, even in the absence of a statute calling for the application of the
“pay first” rule to a given situation, article XIII, section 32 applies to both state and local
governments as a matter of public policy. Ultimately, however, this is a moot issue
because as discussed below, the “pay first” rule also appears in the text of SGMA. (See
§ 10726.6(d).)

                                              21
               The “pay first” rule advances an important public policy in that it “ensures
that essential public services are not disrupted during the pendency of tax challenges.”
(Andal v. City of Stockton (2006) 137 Cal.App.4th 86, 90.) That is, it ‘“allow[s] revenue
collection to continue during litigation so that essential public services dependent on the
funds are not unnecessarily interrupted.’ [Citation.] ‘The fear that persistent interference
with the collection of public revenues, for whatever reason, will destroy the effectiveness
of government has been expressed in many judicial opinions.’” (State Board, supra,
39 Cal.3d at pp. 638-639.) As the United States Supreme Court recognized over
150 years ago, any delay in the collection of taxes “may derange the operations of
government, and thereby cause serious detriment to the public.” (Dows v. City of
Chicago (1870) 78 U.S. 108, 110.) “The prompt payment of taxes is always important to
the public welfare. It may be vital to the existence of a government. The idea that every
tax-payer is entitled to the delays of litigation is unreason.” (Springer v. United States
(1880) 102 U.S. 586, 594.)
               Article XIII, section 32’s “pay first” rule is “construed broadly to bar not
only injunctions but also a variety of prepayment judicial declarations or findings which
would impede the prompt collection of a tax.” (State Board, supra, 39 Cal.3d at p. 639.)
“It is well established that the applicability of section 32 does not turn on whether the
action at issue specifically seeks to prevent or enjoin the collection of a tax. . . .
[Citation.] The relevant issue is whether granting the relief sought would have the effect
of impeding the collection of a tax.” (California Logistics, Inc. v. State of California
(2008) 161 Cal.App.4th 242, 247-248 (California Logistics); see Pacific Gas & Electric
Co. v. State Bd. of Equalization (1980) 27 Cal.3d 277, 280 (PG&E) [“a taxpayer may not
circumvent restraints on prepayment tax litigation by seeking only declaratory relief”].)
In other words, “if the ‘net result of the relief prayed for . . . would be to restrain the
collection of the tax allegedly due, the action must be treated as one having that

                                               22
purpose.’” (West Hollywood Community Health & Fitness Center v. California
Unemployment Ins. Appeals Bd. (2014) 232 Cal.App.4th 12, 22.)
              The “pay first” rule is often invoked at the pleading stage, resulting in an
order sustaining a demurrer. (See, e.g., California Logistics, supra, 161 Cal.App.4th at
p. 245; Flying Dutchman, supra, 93 Cal.App.4th at p. 1132.) Indeed, “the public policy
supporting extension of the rule is more compelling when there has been no trial of the
ultimate issues but only a ruling on a demurrer to a taxpayer’s complaint or on a
dispositive pretrial motion.” (So. Cal. Edison, supra, 112 Cal.App.4th at pp. 1119-1120.)
              The fact that a petitioner’s lawsuit is based on the alleged illegality of the
challenged tax under state law does not excuse compliance with the “pay first” rule. “It
has long been established that suits to enjoin the collection of taxes may not be
maintained even though the imposition of the tax may be ‘illegal and void.’” (Flying
Dutchman, supra, 93 Cal.App.4th at p. 1141; see Chiatello, supra, 189 Cal.App.4th at
pp. 492-493 [historically, “a tax would be enjoined only in very rare instances where
more than a naked claim of illegality was raised[, and] ‘“[a] suit in equity will not lie to
restrain the collection of a tax on the sole ground that the tax is illegal”’”].)
              Nor does a petitioner’s alleged inability to pay the assessment and the
resulting lack of opportunity for judicial review violate the taxpayer’s right to due
process. (California Logistics, supra, 161 Cal.App.4th at p. 251; see Modern Barber Col.
v. Cal. Emp. Stab. Com. (1948) 31 Cal.2d 720, 725–726 [“The due process clause does
not guarantee the right to judicial review of tax liability before payment”]; PG&E, supra,
27 Cal.3d at p. 282 [historically, “the most severe financial hardship resulting in
bankruptcy was judged not to be an irreparable injury sufficient to permit judicial
intervention” in violation of “pay first” rule].)
              The “pay first” rule comports with due process requirements so long as
there is “‘a procedure which, at some point, provides the taxpayer a meaningful
opportunity to contest the legality of the exaction.’” (City of Anaheim, supra,

                                               23
179 Cal.App.4th at p. 831, italics added.) This “most often takes the form of refund
procedure provided for in the applicable statute, and courts have consistently upheld ‘pay
first’ requirements in matters involving local taxes where the taxing authority has
specifically provided for a refund procedure.” (Ibid.; see McKesson v. Div. of Alcoholic
Beverages (1990) 496 U.S. 18, 51 [federal due process principles simply require ‘“a clear
and certain remedy,”’ such as a “refund of the excess taxes paid by the petitioner”]; Reid
v. City of San Diego (2018) 24 Cal.App.5th 343, 358 (Reid) [government must provide
either a predeprivation process or postdeprivation relief; either is sufficient so long as the
remedy is clear and certain].)
              There are several recognized exceptions to the “pay first” rule. One arises
when the tax ordinance being challenged provides for criminal penalties for failure to
pay. (See Flying Dutchman, supra, 93 Cal.App.4th at pp. 1139-1140 [collecting cases].)
              A second exception applies if the party seeking to prevent the tax collection
has no adequate remedy at law, in which case the taxpayer may be entitled to equitable
relief. (Flying Dutchman, supra, 93 Cal.App.4th at p. 1138.) However, this exception
rarely applies because “[a]ny remedy that allows a taxpayer to challenge a tax already
collected, and to press any constitutional claims he or she may have, has been found to
constitute ‘“a plain, speedy and efficient remedy”’ barring equitable relief.” (Ibid.; see
Chiatello, supra, 189 Cal.App.4th at p. 493 [“if there was an adequate remedy at law—
which almost always meant a refund procedure—the collection of a tax would not be
halted by the courts”]; City of Anaheim, supra, 179 Cal.App.4th at p. 831 [noting “[t]he
‘adequate remedy at law’ most often takes the form of refund procedure provided for in
the applicable statute” and collecting cases].)
              A third exception appears when the ban on prepayment judicial review
violates the federal Constitution. However, this exception is “limited to those situations
in which it is clear that ‘“under no circumstances” can the government prevail,’” where
‘“it is . . . apparent that, under the most liberal view of the law and the facts, the

                                               24
[government] cannot establish its claim,’” or where the government “has no conceivable
basis in law or fact for assessing [the] tax.” (Western Oil & Gas Assn. v. State Bd. of
Equalization (1987) 44 Cal.3d 208, 214; see Calfarm Ins. Co. v. Deukmejian (1989)
48 Cal.3d 805, 839 (Calfarm).)
       4.     Applicability of the “Pay First” Rule in Water Cases
              No court has yet determined whether the “pay first” rule applies in cases
challenging fees imposed by a groundwater sustainability agency under SGMA.
However, two cases have recognized that groundwater assessments imposed in other
contexts are subject to the rule.
              In City of Cerritos, the court applied the “pay first” rule to a city that had
stopped paying a water replenishment assessment to the local water replenishment district
after another court made an interim order finding the assessment was invalid under
Proposition 218. (City of Cerritos, supra, 220 Cal.App.4th at pp. 1453-1454.) The court
concluded article XIII, section 32 barred the city from using the pending Proposition 218
case to defensively interfere with collection of the assessment, and the city was required
to either pay the assessment or stop producing groundwater until there was a final
judgment in the Proposition 218 lawsuit. (City of Cerritos, at pp. 1464-1470.) Thus, the
district was entitled to a preliminary injunction enjoining the city from producing
groundwater during the pendency of the Proposition 218 lawsuit unless and until the city
paid the delinquent assessment. (City of Cerritos, at pp. 1470-1471.)
              The “pay first” rule was also applied to water fees in Green Valley
Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425. That case involved a
class action complaint filed on behalf of water customers to preserve their alleged right to
continue receiving water at reasonable rates from a historical water delivery system
owned and operated by the city. (Id. at p. 428.) The trial court sustained the city’s
demurrer to causes of action seeking to enjoin the city from continuing a surcharge fee
and imposing future rate structures. The court of appeal affirmed, noting that the trial

                                             25
court had correctly cited City of Cerritos for the proposition that “water assessments are
subject to the ‘“pay first, litigate later”’ rule.” (Id. at p. 441.)
               Neither of these cases involved a challenge to fees imposed by a
groundwater sustainability agency under SGMA. More relevant to our analysis,
therefore, is the fact that the Legislature included a “pay first” requirement in SGMA.
               Specifically, section 10726.6(d) provides: “Any person may pay a fee
imposed pursuant to Section 10730, 10730.2, or 10730.4 under protest and bring an
action against the governing body in the superior court to recover any money that the
governing body refuses to refund. Payments made and actions brought under this section
shall be made and brought in the manner provided for the payment of taxes under protest
and actions for refund of that payment in Article 2 (commencing with Section 5140) of
Chapter 5 of Part 9 of Division 1 of the Revenue and Taxation Code, as applicable.”
               California courts have not yet addressed whether this statutory language
amounts to a “pay first” requirement. However, in Los Altos Golf & Country Club v.
County of Santa Clara (2008) 165 Cal.App.4th 198 (Los Altos), the court interpreted a
                                                                            19
nearly identical statutory provision, Health and Safety Code section 5472, and
concluded it meant that “payment ‘under protest’ was necessary before pursuing a claim
for refund of fees asserted to be invalid.” (Los Altos, at pp. 201, 206.) Because the
plaintiffs in that case had not paid the challenged sewer assessments before filing their

       19
              Section 10726.6(d) in SGMA tracks Health and Safety Code section 5472
nearly verbatim. Section 5472 provides: “After fees, rates, tolls, rentals or other charges
are fixed pursuant to this article, any person may pay such fees, rates, tolls, rentals or
other charges under protest and bring an action against the city or city and county in the
superior court to recover any money which the legislative body refuses to refund.
Payments made and actions brought under this section, shall be made and brought in the
manner provided for payment of taxes under protest and actions for refund thereof in
Article 2, Chapter 5, Part 9, of Division 1 of the Revenue and Taxation Code, insofar as
those provisions are applicable.” (Italics added.) We have italicized the portions of
Health and Safety Code section 5472 that also appear in Water Code section 10726.6.

                                                26
lawsuit, their “action was foreclosed by their failure to follow the prescribed procedures”;
the lower court therefore “did not err in sustaining [the city’s] demurrer without leave to
amend.” (Id. at p. 207.)
              In reaching this conclusion, the Los Altos court rejected the argument that
“the payment-under-protest language of [Health and Safety Code] section 5472—‘any
person may pay . . . under protest’—[w]as permissive, [rather than] mandatory.”
(Los Altos, supra, 165 Cal.App.4th at p. 206.) “It is the challenge itself that is optional,
not the method of raising that challenge. Of course users of sewer services may challenge
excessive fees if they wish to do so; but the manner in which they assert that challenge is
prescribed by the statute.” (Ibid.; see also Padilla v. City of San Jose (2022)
78 Cal.App.5th 1073, 1080 [relying on Los Altos and Health & Saf. Code, § 5472 to
conclude “plaintiffs were required to pay [the challenged garbage collection fees] under
protest before suing for a refund”].)
              We presume the Legislature was aware of Health and Safety Code
section 5472 and the 2008 Los Altos decision when it enacted Water Code
section 10726.6(d) in 2014. Given the two statutes use nearly identical language, we
further presume the Legislature intended that the Los Altos court’s interpretation of
section 5472 should apply to section 10726.6(d). (See Presbyterian Camp, supra,
42 Cal.App.5th at p. 154 [we presume the Legislature was aware of existing laws and
their judicial interpretation when enacting a statute, and that the Legislature intended the
same interpretation apply to laws with substantially similar language].)
              We therefore conclude that section 10726.6(d) of SGMA requires a person
who seeks to challenge a groundwater fee imposed under SGMA to first pay the fee
before bringing an action for a refund. And, just as in Los Altos, we conclude the fact
that section 10726.6(d) uses the words “may pay . . . under protest” does not make
compliance optional.

                                             27
       5.     Application of the “Pay First” Rule Here
              Having concluded the “pay first” rule, enshrined in the California
Constitution (art. XIII, § 32) and included by statute in SGMA (§ 10726.6(d)), applies to
lawsuits challenging fees imposed by a local groundwater sustainability agency under
SGMA, we must determine the rule’s application here. Mojave has not paid any portion
of the Replenishment Fee. Accordingly, any cause of action that attacks the propriety of
the Replenishment Fee or attempts to impede its prompt collection cannot proceed, unless
an exception to the “pay first” rule applies.
              We have considered the recognized exceptions to the “pay first” rule, set
out above, and conclude none apply here. Ordinance No. 03-20 does not call for criminal
penalties for failure to pay the Replenishment Fee. There is no due process concern from
imposing the “pay first” rule because water extractors have an adequate remedy at law in
the form of a postpayment refund procedure (see § 10726.6(d)). And given the Basin’s
severe overdraft status, as recognized by the Department of Water Resources, and the fact
that SGMA expressly authorizes agencies to impose fees, we cannot say the Authority
had no conceivable basis in law or fact for assessing the Replenishment Fee such that the
                                                                            20
ban on prepayment judicial review would violate the federal Constitution.

       20
                Asserting that “[o]ther exceptions apply,” and citing Reid, supra,
24 Cal.App.5th 343 for the proposition that “the ‘pay first, litigate later’ rule does not
apply where, as here, the [government] has specifically provided a prepayment remedy”
(id. at p. 357), Mojave argues the “pay first” rule does not apply because SGMA includes
a prepayment remedy in section 10726.6, subdivision (c), which states: “Any judicial
action or proceeding to attack, review, set aside, void, or annul the ordinance or
resolution imposing a new, or increasing an existing, fee imposed pursuant to Section
10730, 10730.2, or 10730.4 shall be commenced within 180 days following the adoption
of the ordinance or resolution.”

              We disagree. Mojave is correct when it argues that as long as a government
“provides a clear and certain remedy, it may determine to provide predeprivation process
instead of postdeprivation relief.” (Reid, supra, 24 Cal.App.5th at p. 358.) But that is not
what the Legislature did here. Section 10726.6, subdivision (c), is not a prepayment
remedy; rather, it is the statute of limitations applicable to any action challenging a

                                                28
              During oral argument, Mojave invited us to create a new exception to the
“pay first” rule, such that it would not apply for public policy reasons when a
groundwater agency’s sustainability plan acts inconsistently with California water law,
such as by improperly determining water rights. We decline to do so. The fact that
petitioner’s lawsuit is based on the alleged illegality of the challenged tax does not excuse
compliance with the “pay first” rule. (Flying Dutchman, supra, 93 Cal.App.4th at
p. 1141 [“It has long been established that suits to enjoin the collection of taxes may not
be maintained even though the imposition of the tax may be ‘illegal and void’”].) Also,
creating such an exception here would be problematic because it would require a court to
adjudicate the validity of a groundwater agency’s sustainability plan and competing water
rights claims at the demurrer stage. That runs contrary to what the Legislature
contemplated when it enacted SGMA—namely, that groundwater sustainability plans

groundwater fee ordinance, including a fee refund action under section 10726.6(d).

             Mojave contends this interpretation is “untenable” because Ordinance
No. 03-20 was adopted on August 21, 2020, but the first Replenishment Fee under the
ordinance was not due until February 15, 2021 (assuming a user actually extracted
groundwater in January 2021); thus, anyone who wanted to challenge the ordinance’s
Replenishment Fee would have had to file an action just two days after paying the fee, on
February 17, 2021 (180 days after the ordinance’s adoption). Mojave further asserts that
farmers who did not pump any groundwater in January would be entirely barred from
challenging any aspect of Ordinance No. 03-20, including the Exempted Pumping
Allotments, because no fee would be due before February 17, 2021.

                We are not persuaded. As we read it, section 10726.6, subdivision (c),
required any lawsuit attacking the fee imposed by Ordinance No. 03-20 to be filed by
February 17, 2021 (180 days after its adoption). If a party extracted groundwater and
owed a Replenishment Fee before filing an action, that party would need to pay the fee in
order to file the complaint as stated in section 10726.6(d). Conversely, if the party did
not extract groundwater or incur a Replenishment Fee until after the February 17, 2021
filing deadline, that party would still need to comply with the filing deadline, and then
would also have to pay the Replenishment Fee, once incurred, in order to continue
maintaining the action.

                                             29
would first be put into place, and then any dissatisfied persons could bring an
adjudication action to determine water rights. (See §§ 10737-10738.)
              Creating a new exception here would also undermine the public policies
that underlie the “pay first” rule, such as ensuring the continued provision of public
services funded by taxes, or in this case, the replenishment fees. It bears noting that for
nearly three years, Mojave has extracted thousands of acre-feet of groundwater without
paying the Replenishment Fee. If groundwater extractors like Mojave can challenge a fee
without first paying it, that could defeat SGMA’s goal of managing overdrafted
groundwater basins.
              Accordingly, we hold that any cause of action that attacks the propriety of
the Replenishment Fee or attempts to impede its prompt collection cannot proceed unless
Mojave first pays the outstanding amounts owed. This is true even if the challenged fee
allegedly violates SGMA and California water law, and even if Mojave allegedly cannot
afford to pay the fee. (See California Logistics, supra, 161 Cal.App.4th at p. 251
[rejecting due process challenge to “pay first” rule’s application, even though the plaintiff
could not afford to pay proposed $1.2 million assessment]; see also City of Cerritos,
supra, 220 Cal.App.4th at p. 1469 [applying “pay first” rule where outstanding water
assessments totaled $7 million].)
              In reaching this holding, we are mindful that a rigid application of the “pay
first” rule could allow local groundwater sustainability agencies to impose unreasonable
fees that target certain users, knowing they would be unable to afford to pay the fees
under protest, and that those users could eventually be run out of business. However, that
is not the case before us today, and we decline to resolve the slippery issue of
determining when, if ever, a fee or tax would be so extraordinarily high that the “pay
                                21
first” rule should not apply.
       21
              The Replenishment Fee of $2,130 per acre-foot is not grossly out of line
with the fees charged by other agencies. The Authority presents evidence, for example,

                                             30
              That brings us to determining how the “pay first” rule applies to the TAC.
As noted, when ruling on the Authority’s demurrer to Mojave’s FAC in 2021, respondent
court relied on the “pay first” rule to sustain the demurrer to the sixth cause of action
(challenging the Replenishment Fee) without leave, and to sustain the demurer to the
fourteenth through eighteenth causes of action (takings and due process claims) with
leave. In an attempt to plead itself out of that ruling and minimize any reliance on the
unpaid Replenishment Fee, Mojave’s TAC challenges the Exempted Pumping Allotments
in the same ordinance, as well as the other Implementing Actions such as the Sustainable
Yield Report and the Transient Pool and Fallowing Program. We conclude this amounts
to a distinction without a difference.
              a.     Cause of Action No. 5
              We first consider Mojave’s fifth cause of action, which challenges the
Exempted Pumping Allotments in Ordinance No. 03-20. As noted, Ordinance No. 03-20
provided that all groundwater extractions (except those by federal and de minimis
extractors) would be subject to the Replenishment Fee of $2,130 per acre-foot starting in
January 2021. In the subsequent paragraph, Ordinance No. 03-20 specified how the
Basin’s 7,650 acre-feet sustainable yield should be divided among certain municipal
entities, granting those entities annual Exempted Pumping Allotments in varying amounts
that are not subject to the Replenishment Fee.
              Mojave did not receive an Exempted Pumping Allotment, so in its fifth
cause of action, it alleges the Authority arbitrarily and capriciously granted Exempted
Pumping Allotment to certain users, but not Mojave, in violation of Mojave’s common
law and constitutional rights to water. According to Mojave, “because [Mojave was]
denied any [Exempted] Pumping [Allotments], [Mojave] can no longer rely on [its] prior
and paramount overlying right to pump [its] correlative share of the Basin’s native yield,

that the Antelope Valley-East Kern Water Agency charges about $1,700 per acre-foot.

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and instead must pay the Replenishment Fee.” (TAC ¶ 402.) Mojave therefore asked
respondent court to compel the Authority to prevent the implementation of the Exempted
Pumping Allotments and to comply with all applicable laws in adopting accurate and
legal allotments.
               Mojave insists it is not challenging the Replenishment Fee, but rather the
Exempted Pumping Allotments, which are not a tax and therefore not subject to the “pay
first” rule. Respondent court was not persuaded; neither are we.
               In sustaining the Authority’s demurrer to this cause of action, respondent
court determined “this cause of action is simply a disguised challenge to the
Replenishment Fee itself.” “The Court does not see how the [Exempted] Pumping
[Allotments] cause Mojave any harm other than requiring it to pay a larger
Replenishment Fee than extractors who received allocations. This means a challenge to
the [Exempted] Pumping [Allotments] is effectively a challenge to the Replenishment
Fee itself, which is barred by the ‘pay first, litigate later’ rule.”
               We agree. The Replenishment Fee and the Exempted Pumping Allotment
provisions appear on the same page and in the same section of Ordinance No. 03-20, all
under the heading, “Section 3. Basin Replenishment Fee.” They clearly operate together:
the greater an entity’s Exempted Pumping Allotment, the lower its Replenishment Fee
will be. Because Mojave did not receive any Exempted Pumping Allotment, it must pay
a Replenishment Fee on every acre-foot of groundwater it extracts. If Mojave were to
succeed in a legal challenge to the Exempted Pumping Allotment and obtain an order that
it should receive a certain portion of the annual sustainable yield, the net result would be
a lower Replenishment Fee.
               Mojave insists it is challenging the Authority’s illegal determination that
Mojave holds “inferior” water rights and should receive no allocation of native
groundwater. Again, this is not a meaningful distinction. In our view, challenging the
Authority’s determination that Mojave is not entitled to free groundwater and therefore

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must pay the Replenishment Fee is ultimately the same thing as challenging the
Authority’s determination that Mojave must pay the Replenishment Fee.
              Citing Calfarm, supra, 48 Cal.3d 805, Mojave insists the Exempted
Pumping Allotment section of the ordinance is severable from the Replenishment Fee
provision and therefore subject to judicial review notwithstanding the “pay first” rule.
We cannot agree. To be subject to review, the invalid provision must be, among other
things, grammatically severable, in that it “constitutes a distinct and separate provision
[that] can be removed as a whole without affecting the wording of any other provision.”
(Id. at p. 822.) In this case, the Replenishment Fee and the Exempted Pumping
Allotment chart all appear in the same section of Ordinance No. 03-20, all under the
heading, “Section 3. Basin Replenishment Fee.”
              Accordingly, if Mojave desires to challenge the fact that it did not receive
an Exempted Pumping Allotment under Ordinance No. 03-20 in violation of its alleged
water rights, it must first pay the Replenishment Fee due under that same ordinance.
Respondent court did not err in sustaining the Authority’s demurrer on the fifth cause of
action.
              b.     Cause of Action Nos. 9-11
              That leaves Mojave’s takings causes of action. As noted, the ninth through
eleventh causes of action of the TAC allege that the Authority, through the adoption of
the Exempted Pumping Allotments and other Implementing Actions (excluding the
Replenishment Fee), has deprived Mojave of all economically beneficial use of its water
rights and pistachio trees, and that this amounts to a physical and regulatory taking of
private property without just compensation in violation of the state and federal
Constitutions and section 1983 of title 42 of the United States Code. Mojave claims the
Authority has taken its vested overlying water right to pump native groundwater from the

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Basin for use on its land and made Mojave’s water available for public use by others
                             22
without just compensation.

       22
               It is unclear to us to what extent Mojave has such a right. As a different
panel of this court not long ago observed, “Groundwater belongs to the state, not any
person or entity, but may be extracted by those with the right to do so, including those
whose land overlies the groundwater source. ‘At least since 1928 when the predecessor
to article X section 2 of the California Constitution was adopted, there is no private
ownership of groundwater. [Citation.] 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. [Citation.] Water rights holders have the right to
“take and use water,” but they do not own the water and cannot waste it. . . . Under the
“correlative rights doctrine,” “as between the owners of land overlying strata of
percolating waters, the rights of each to the water are limited, in correlation with those of
others, to his ‘reasonable use’ thereof when the water is insufficient to meet the needs of
all.”’” (Center for Biological Diversity v. County of San Bernardino (2016)
247 Cal.App.4th 326, 336; see Antelope Valley Groundwater Cases (2021)
62 Cal.App.5th 992, 1023, 1022 [‘“landowner whose property overlies the groundwater”’
has ‘“[f]irst priority”’ to groundwater, subject to usufructuary interests of other overlying
landowner, but “when the native supply ‘is insufficient, each is limited to his
proportionate fair share of the total amount available based upon his reasonable need’”].)

               In this case, Mojave claims to have a vested water right to pump native
groundwater from the Basin for use on its land, but it has never specified the quantity of
its water right or its priority vis-à-vis other extractors, which raises several questions:

              • Assuming the Basin’s sustainable yield is only 7,650 acre-feet per year,
                how can multiple extractors each have a viable common law right to
                most or all of that water?

              • Is using the Basin’s limited groundwater to irrigate a water-intensive
                crop like pistachios in the middle of the high desert a “reasonable and
                beneficial” use of water protected under the California Constitution,
                particularly considering most of those trees were planted less than 10
                years ago? (See Cal. Const., art. X, § 2.)

              • Does a vested overlying right to groundwater mean a vested overlying
                right to free groundwater?

              • SGMA states that any judgment in an adjudication action for a basin
                required to have a groundwater sustainability plan must not
                substantially impair the ability of a groundwater sustainability agency to

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              Respondent court was not persuaded. As for the regulatory takings claims
(the ninth and tenth causes of action), the court reasoned that the TAC specifically
removed any reference to the Replenishment Fee, and these claims are instead based on
the Authority’s groundwater sustainability plan, the Sustainable Yield Report, Exempted
Pumping Allotments, and Transient Pool and Fallowing Program, none of which,
“without reference to the Replenishment Fee, [has] an economic effect on Mojave.” As
for the physical takings claim (the eleventh cause of action), the court reasoned that
Mojave had not alleged it was in fact physically prevented from extracting water, and
thus had not stated a claim.
              We agree with respondent court’s analysis. If Mojave had paid the
Replenishment Fee in compliance with the “pay first” rule, it could perhaps state a
takings cause of action on the theory that the Replenishment Fee makes Mojave’s
agricultural operations economically unviable because the fees for extracting
groundwater are so high. Perhaps because Mojave has not paid the fee, however, it
omitted any reference to the Replenishment Fee from the TAC’s takings claims, instead
relying on the other Implementing Actions.
              As respondent court correctly concluded, this attempt to escape the
previous demurrer ruling fails because the only Implementing Action with an economic
effect on Mojave is the Replenishment Fee. Since none of the other Implementing
Actions physically prevent Mojave from extracting groundwater or interfere

                 achieve sustainable groundwater management. (§ 10737.8.) What
                 impact does that rule have on common law groundwater rights?

               We need not, and expressly do not, decide these difficult issues today.
Indeed, it would be inappropriate to determine the relative priority of Mojave’s water
rights in the vacuum of an appellate writ proceeding without other water extractors
present. We anticipate these issues will instead by addressed in the related adjudication
action; we express no view on the appropriate resolution.

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economically with Mojave’s ability to extract groundwater, Mojave’s TAC fails to state a
cause of action for a taking.

                                     DISPOSITION
              The petition for writ of mandate is denied. The order to show cause is
discharged. The stay imposed by this court is dissolved upon finality of this opinion.
The parties shall each bear their own costs in this proceeding.

                                                 GOETHALS, J.

WE CONCUR:

MOORE, ACTING P. J.

SANCHEZ, J.

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