AOZ LAW ARNOLD LAROCHELLE MATHEWS VANCONAS & ZIRBEL LLP 300 ESPLANADE DR. SUITE 2100 I OXNARD, CA T F WWWATOZLAW.

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1 AOZ LAW ARNOLD LAROCHELLE MATHEWS VANCONAS & ZIRBEL LLP Writer's Via First Class Mail Only Lynn Maulhardt, Chair Board of Directors Fox Canyon Groundwater Management Agency 800 South Victoria A venue Ventura, California Re: Proposed Fox Canyon Groundwater Management Agency Resolution , A Resolution Specifying Requirements for Establishing an Annual Irrigation Efficiency by Operators that Supply Groundwater to Agricultural Users that are Non-Operators; Fox Canyon Groundwater Management Agency, Regular Board Meeting of March 25, 2015, Item No. 7. Dear Chairperson Maulhardt and Board Members: Our firm represents Pleasant Valley County Water District ("Pleasant Valley"), and appreciates the opportunity to comment on the above-referenced matter. Pleasant Valley is one of Ventura County's largest agricultural water purveyors serving one of the most productive agricultural areas in California and operates an extensive, privately-financed groundwater and surface water distribution system. Pleasant Valley is a special district ("District") that would be subject to the requirements proposed in Resolution No On March 25, 2015, the Fox Canyon Groundwater Management ("Fox Canyon") Board of Directors ("Board") will consider the adoption of proposed Resolution No which mandates certain actions and responsibilities upon various entities and persons involved in the supply, distribution and use of water for agricultural purposes. In addition to concerns raised in its January 9, 2015 comment letter on proposed Resolution and Ordinance No. 8.8, Pleasant Valley opposes the adoption of the latest version of Resolution No for the following reasons: GARY D. ARNOLD DENNIS LAROCHELLE I JOHN M. MATHEWS KENDALL A VANCONAS' I MARK A ZIRBEL SUSAN L. MCCARTHY STUART G. NIELSON I ROBERTS. KRIMMER I MARIA L. CAPRITTO I MELISSA H. SAYER OF COUNSEL DEAN W. HAZARD I ROBERT N. KWONG 300 ESPLANADE DR. SUITE 2100 I OXNARD, CA T F WWWATOZLAW.COM *Certified Specialist, Estate Planning, Trust & Probate Law State Bar of California, Board of Legal Specialization PVCW lj\correspondence\maulhardt Ltr Kesolut1on J-2J-I S.docx Item 8F-1 - Page 1 of 7

2 Page2 1. By its own terms, Resolution No misplaces legal and financial responsibility for excess extractions and corresponding surcharges on Pleasant Valley under defined circumstances. Specifically, Proposed Resolution No , if adopted by the Fox Canyon Board, requires Pleasant Valley to calculate the Irrigation Allowance Index ("IAI") and file the Annual Efficiency Allocation ("AEA") for any Pleasant Valley customer who does not receive groundwater from any other extraction facility located within the Fox Canyon that reports extractions under a Combcode different from Pleasant Valley's Combcode. If the IAI and AEA filings are determined by Fox Canyon to result in surcharges, Pleasant Valley may be held responsible for those surcharges, even though Pleasant Valley was not an end-user whose water usage caused the excess extractions resulting in surcharges. This unjust result may also occur when the Resolution is applied to mutual water companies and other extraction facility operators. Therefore, Resolution should not be approved in its current form. 2. Resolution No contravenes the well-defined statutory authority of Fox Canyon in Water Code Appendix Sections and Water Code Appendix Section sets forth the procedures by which Fox Canyon may engage in water management activities and states as follows: If the board determines after a noticed public hearing, and consideration of any relevant investigations, studies, and evidence that groundwater management activities are necessary in order to improve or protect the quantity or quality of groundwater supplies within a groundwater basin or aquifer, the board may, by ordinance, exercise any of the following powers: (a) Require conservation practices and measures within the affected portion of its territory. (b) Control groundwater extractions by regulating, limiting, or suspending extractions from extraction facilities, the construction of new extraction facilities, the enlarging of existing extraction facilities, and the reactivation of abandoned extraction facilities. ( c) Commence and prosecute legal actions to enjoin unreasonable uses or methods of use of water within the agency or outside the territory of the agency to the Item 8F-1 - Page 2 of 7

3 Page 3 extent those uses or methods of use adversely affect the groundwater supply within the agency. ( d) Impose spacing requirements on new extraction facility construction to minimize well interference. ( e) Impose reasonable operating regulations on extraction facilities to minimize well interference, including requiring pumpers to operate on a rotation basis. Emphasis added. Water Code Appendix Section also provides that the Fox Canyon Board: [m]ay, by ordinance, establish an operator's extraction allocation for each groundwater extraction facility located within the agency. The agency may, by ordinance, impose upon the operator of any groundwater extraction facility located within the agency, extraction surcharges for extractions in excess of his or her extraction allocation and late penalties for nonpayment of extraction surcharges. Emphasis added. Resolution , as drafted and as proposed, runs afoul of the statutory mandate found in Water Code Appendix sections and that Fox Canyon's groundwater management regulatory activities be adopted by ordinance with requisite findings. One of the recital paragraphs in proposed Resolution No states: WHEREAS, Ordinance Code section requires operators filing for an Annual Efficiency Allocation to submit a detailed report that includes all details specified in a resolution adopted by the Board. But Resolution No does not merely specify details to be included in a report filed by an operator for an AEA as authorized by Ordinance Code section , it assigns responsibility to specific agricultural operators and other entities involved in the supply and distribution of water for agricultural use for calculating the IAI and filing the AEA. By doing so, Resolution No seeks to regulate groundwater extraction facilities and impose surcharges which may only be accomplished by ordinance. The practical effect of proposed Resolution No is to regulate and control groundwater extraction by assigning responsibility for reporting extractions and paying surcharges to operators of specified groundwater extraction facilities under specified conditions. Item 8F-1 - Page 3 of 7

4 Page 4 In accordance with Water Code Appendix sections and , that regulation and control must be accomplished by ordinance, not resolution, with requisite findings and compliance with all applicable laws, including the California Environmental Quality Act. 3. Adoption of proposed Resolution No may constitute an ultra vires act that may result in the Resolution being null and void. Resolution No implements or extends regulatory provisions in Fox Canyon's Ordinance No The adoption of Ordinance No. 8.8 prompted Pleasant Valley to file a writ of mandate and complaint against Fox Canyon (Pleasant Valley County Water District v. Fox Canyon Groundwater Management Agency, Ventura County Superior Court Case No.: CU-WM-OXN). That writ of mandate and complaint seeks, in pertinent part, to set aside Ordinance No. 8.8 because its adoption was a quasi-legislative act in excess of Fox Canyon's statutory powers. Since the adoption of Resolution No would be an extension of Fox Canyon Board actions taken regarding Ordinance No. 8.8, it may -be subject to the same legal challenges stated in the Pleasant Valley/Fox Canyon lawsuit referenced above. 4. Proposed Resolution No is vague and ambiguous. The regulatory terms and conditions of proposed Resolution No are vague and ambiguous such that its implementation and application is suspect and uncertain. Lacking requisite clarity, Resolution No , as presently drafted, will most likely result in regulatory confusion that is counter-productive to groundwater management policy and practice. For example, consider the following requirements placed on mutual water companies and special districts by Resolution No With respect to mutual water companies, proposed Resolution No , Section 1 requires the following: Where a mutual water company ("Mutual") located with the FCGMA (i) provides groundwater to a shareholder or other for agricultural use and (ii) that shareholder or other does not receive groundwater from any other extraction facility located within the FCGMA that reports extractions under a Combcode different from that Combcode used by the Mutual, the Mutual shall be deemed the agricultural operator responsible for calculating the Irrigation Allowance Index in accordance with Resolution No for that shareholder or other water user. Item 8F-1 - Page 4 of 7

5 Page 5 With respect to special districts proposed Resolution No , Section 3 requires the following: Where a special district ("District") located with the FCGMA (i) provides groundwater to a customer for agricultural use and (ii) that customer does not receive groundwater from any other extraction facility located within the FCGMA that reports extractions under a Combcode different from that Combcode used by the District, the District shall be deemed the agricultural operator responsible for calculating the Irrigation Allowance Index in accordance with Resolution No for that shareholder or other water user. Within the jurisdictional boundaries of Pleasant Valley, a special district, there is a mutual water company ("Mutual"). The shareholders of that Mutual receive groundwater from both Pleasant Valley's extraction facilities and the Mutual's extraction facilities. Both Pleasant Valley and the Mutual have their own respective Combcodes for their respective extraction facilities. Applying the above facts to the proposed Resolution, it is impossible to determine whether Pleasant Valley or the Mutual should be deemed the agricultural operator. Citing Section 3, Pleasant Valley might argue that the Mutual should be deemed the agricultural operator because the Mutual serves its shareholders through an extraction facility with a Combcode that is different from the Combcode used by Pleasant Valley. Citing Section 1, the Mutual might argue that Pleasant Valley should be deemed the agricultural operator because the Mutual's shareholders receive water from Pleasant Valley and Pleasant Valley has a Combcode that is different from the Combcode used by the Mutual. This real life scenario does not constitute regulatory clarity. Moreover, consider which entity would be deemed the agricultural operator m the following real world situation: United Water Conservation District ("UWCD") provides groundwater from its extraction facilities to Pleasant Valley; Pleasant Valley then blends UWCD groundwater with groundwater from Pleasant Valley's extraction facilities; Blended groundwater from Pleasant Valley and UWCD is then delivered to a mutual within the jurisdictional boundaries of Pleasant Valley who, in turn, blends water from the its own extraction facilities with the blend of Pleasant Valley and UWCD water; and Item 8F-1 - Page 5 of 7

6 Page 6 Then a mutual water company shareholder, by means of a water share agreement, provides blended Pleasant Valley, UWCD, mutual groundwater to another mutual shareholder or, if allowable under the mutual by-laws, to a person outside of the mutual who may or may not have an extraction facility. Resolution No provides no clear guidance as to who would be the responsible party in the above scenario. That ambiguity would be even further complicated should the above scenario include groundwater blended with various surface water sources. The ambiguity and vagueness of the Resolution is increased further by Fox Canyon's failure to define many key terms. Examples of undefined terms in the staff letter include "agricultural operators," "agricultural water suppliers," "non-well operators," "primary well operator," "water supplier," and "grower non-well operator." Examples of undefined terms in the Resolution include "other well operators," "agricultural operator," and "non-operators." For all of the foregoing reasons, proposed Resolution No may be void due to the fact this it is vague and ambiguous in virtually all applications. 5. Proposed Resolution No delegates Fox Canyon regulatory authority to mutual water companies and special districts. Fox Canyon is equipped to enforce its own regulations without relying on mutual water companies and special districts that may lack authority to obtain information required for calculating IAI and filing the Annual Application for Efficiency Allocation. Water delivered through Pleasant Valley turnouts may be "sub-distributed" by various growers without Pleasant Valley's knowledge, monitoring or record-keeping. Sub-distribution may occur in a manner which makes it extremely difficult for Pleasant Valley to trace water use as required by proposed Resolution No Pleasant Valley customers may enter into both formal and informal agreements regarding the distribution and use of water that are constantly being modified based upon factors such as changing cropping patterns, climate conditions, transfers of land ownership and the modification of existing or execution of new land lease agreements. As a general rule, Pleasant Valley has no knowledge of formal and informal subdistribution agreements which may be required to accurately track and report water use as required by Resolution No Moreover, it is unclear under what legal authority Pleasant Valley could access and track sub-distribution agreements or obtain required information. Item 8F-1 - Page 6 of 7

7 Page 7 Pleasant Valley is authorized to provide supplemental water to its customers. Unlike Fox Canyon, Pleasant Valley is not a groundwater management agency. As an agency subject to Fox Canyon regulation, Pleasant Valley can provide certain information regarding its customer base, but Fox Canyon alone must take the lead in terms applying and enforcing Fox Canyon regulations, provided those regulations are lawfully adopted and executed. In conclusion, Pleasant Valley respectfully recommends that the Fox Canyon Board not adopt proposed Resolution No as presently drafted, explained and substantiated. Pleasant Valley continues to offer to work collaboratively with the Fox Canyon Board and Staff to find effective and legally supportable ways to address groundwater issues within the Fox Canyon jurisdictional boundaries. Pleasant Valley appreciates this opportunity to comment on proposed and Resolution No , and reserves the right to make additional comments during the public hearing on these proposed quasi-legislative actions. Very truly yours, ARNOLD LAROCHELLE MA THEWS V NCONAS & ZIRBEL LLP JMM:ck Item 8F-1 - Page 7 of 7