Chino Basin Municipal Water District v. City of Chino, et al.

Dry Year Yield Program (DYY Program).

Ontario challenged Watermaster’s proposed FY 2021/2022 Assessment Package on

November 1, 2021, and requested an explanation for the exemption of 23,000 AF of

groundwater produced from the DYY Program. Ontario claimed such exemption was

inconsistent with the Judgment. On November 3, 2022, the Court concluded Ontario’s

challenge to the FY 2021/2022 Assessment Package was really a challenge to the validity of the

2019 Letter Agreement and denied it as untimely. Then, when the Watermaster approved the

FY 2022/2023 Assessment Package on November 17, 2022, Ontario again filed a motion in the

superior court challenging the failure to levy assessments on water voluntarily produced from

the DYY Program. On August 21, 2023, the Court denied the motion on the grounds Ontario’s

position regarding the validity of the 2019 Letter Agreement was previously rejected, the

Judgment does not require assessment of stored or supplemental water, and Ontario

misconstrued the language in the 2019 Letter Agreement because Exhibit G’s performance

criteria did not apply to voluntary withdrawals. Ontario appealed again, and these appeals were

consolidated.

First, the appellate court found that the challenges were, in fact, timely because

Ontario’s challenges to both FY 2021/2022 and 2022/2023 Assessment Packages were filed

within 90 days of Watermaster’s action approving them.

Second, the appellate court noted that its Opinion focused on the interpretation and

application of the 2019 Letter Agreement. In doing so, it noted that although the parties raised

Page | 10

other issues, the appellate court left them “in the hands of the parties, who are much better

suited than the superior and appellate courts to decide.”

Next, in analyzing the circumstances that gave rise to the appeal, the appellate court

noted that as a result of the 2019 Letter Agreement, two agencies Cucamonga Valley Water

District (CVWD) and Fontana Water Company (FWC)—a party not subject to the Performance

Criteria in Exhibit G—voluntarily withdrew water from the DYY Program storage account during

FY 2020/2021 and 2021/2022. Subsequently, when calculating annual assessments,

Watermaster ignored the absence of a Local Agency Agreement (FWC) and the performance

criteria set forth in Exhibit G (CVWD) and exempted these takes. These exemptions decreased

CVWD’s and FWC’s assessments, while increasing the assessments of other parties, such as

Ontario. The appellate court found this interpretation and application of the 2019 Letter

Agreement with respect to the approval of the FY 2021/2022 and 2022/2023 Assessment

Packages violated the Judgment and the agreements that created the DYY program.

In sum, the appellate court found that the DYY Program was created to provide a buffer

against drought, allowing the Metropolitan Water District (MWD) to offset water it would

otherwise import into the Basin with water stored in the DYY Program storage account. But in

2018, MWD requested, and was allowed, to put excess water into the DYY Program storage

account. It then

persuaded the Operating Committee to propose the 2019 Letter Agreement. This agreement

fundamentally changed the recovery aspect of the DYY Program by allowing voluntary

production of water from the storage account regardless of party status or performance

criteria. The impact of these voluntary takes materially affected the rights of the Operating

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Parties and other local agencies when Watermaster interpreted and applied the 2019 Letter

Agreement inconsistently with the original DYY Program agreements, the Judgment, and prior

court orders when it calculated/approved the FY 2021/2022 and 2022/2023 Assessment

Packages.

As such, the appellate court reversed the November 3, 2022 and August 23, 2023 Orders

of the Superior Court and directed Watermaster to correct and amend the FY 2021/2022 and

2022/2023 Assessment Packages consistent with the original DYY Program agreements, the

Judgment, and prior court orders.

Finally, as mentioned earlier, the appellate court stated issues raised by Ontario are left

for the parties to resolve. These include: (1) whether water from the DYY Program is withdrawn

(not produced), (2) whether stored and supplemental water are simply two types of ground

water, (3) whether all stored and supplemental water in the Basin is categorically exempt from

assessment, and (4) the future viability and application of the 2019 Letter Agreement should be

resolved by the parties prior to judicial intervention.

Thereafter, beginning on September 29, 2025, Ontario and Watermaster began filing

status conference statements. Ontario maintained that Watermaster failed to follow the

appellate court’s directive by failing to correct the assessment packages and instead began

collaborating with other agencies to develop alternative corrected assessment packages, which

Ontario argues seek to avoid compliance.

Subsequently, the parties engaged in mediation but were unable to reach a resolution.

Now, before the Court are two motions filed by Watermaster on April 2, 2026.

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First, Watermaster filed a Request for the Court to Approve Intervention. The Motion is

supported by the declaration of Bradley J. Herrema. This motion is unopposed.

Second, Watermaster filed its Motion for Court Approval of Corrected and Amended FY

2021/2022 and 2022/2023 Assessment Packages. This Motion is supported by the declarations

of Bradley J. Herrema and Todd M. Corbin.

On June 1, 2026, FWC and CVWD filed Notices of Nonopposition to the Motion for Court

Approval. On the same day, however, the City of Ontario filed an Opposition, the declarations

of Courtney Jones and Elizabeth P. Ewens, as well as a Request for Judicial Notice.

On June 5, 2026, Watermaster filed a Reply, for which FWC, CVWD, and Inland Empire

Utilities Agency (IEUA) have filed joinders. Watermaster also filed the declaration of Bradley J.

Herrema in support of the Reply, evidentiary objections, and an opposition to the request for

judicial notice. Scott C. Cooper, for CVWD, also filed a declaration in support of its joinder.

Request for the Court to Approve Intervention. Watermaster requests the Court approve

the intervention of the San Gabriel Band of Mission Indians led by the Gabrieleno Tongva Tribal

Council (Intervenor) into the Appropriative Pool.

Paragraph 60 of the Restated Judgment provides: “Any non-party assignee of the

adjudicated appropriative rights of any appropriator, or any other person newly proposing to

produce water from Chino Basin, may become a party to this Judgment upon filing a petition in

intervention. Said intervention must be confirmed by order of this Court. Such intervenor shall

thereafter be a party bound by this judgment and entitled to the rights and privileges accorded

under the Physical Solution herein, through the pool to which the Court shall assign such

intervenor.”

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The motion is supported by the declaration of Bradley J. Herrema. He attests that on

January 11, 2026, Intervenor submitted a petition for intervention to Watermaster for the

purpose of accepting the transfer of 4 AF of stored water from NCL, Co LLC, which holds this

water under a valid Local Excess Carry Over storage agreement after receiving it from CalMat

Co. (a member of the Appropriative Pool), who received it from San Antonio Water Company as

one of its shareholders. (Herrema Decl. ¶¶ 7-8; Exh. A.) Intervenor intends to be a member of

the Appropriative Pool to receive and exercise Appropriative rights consistent with the Restated

Judgment. (Herrema Decl. ¶ 9.) To the extent that they do not produce the water they receive

from NCL, Co LLC (Appropriative), Intervenor understands that they would be required to enter

into a Storage Agreement with Watermaster. (Ibid.)

On March 12, 2026, the intervention request was presented to the Pool Committees for

consideration. The Appropriative and Overlying (Agricultural) Pool Committees unanimously

recommended moving the item forward to the Advisory Committee; and the Overlying (Non-

Agricultural) Pool Committee unanimously recommended its representatives to support at the

Advisory Committee and Watermaster Board meetings, subject to changes they deem

appropriate. (Herrema Decl. ¶ 12.)

On March 19, 2026, the request was presented to the Advisory Committee, which

unanimously recommended the Watermaster Board to recommend Court approval of the

intervention request. (¶ 13.) On March 26, 2026, the intervention request was presented to the

Watermaster Board, which unanimously voted to recommend to the Court the approval of

Intervenor’s intervention request. (¶ 14.)

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The Proposed Order, however, also includes a limited waiver of immunity. Although the

San Gabriel Band of Mission Indians is not presently a federally recognized tribe, a group known

as the Gabrielino/Tongva Nation has filed a pending federal petition for acknowledgment with

the Bureau of Indian Affairs, which was officially noticed on February 6, 2026. (Herrema Decl.

¶¶ 4-5.) As of the date of this request, Watermaster is not aware that this petition has been

approved. (Herrema Decl. ¶ 6.)

““Among the core aspects of sovereignty that tribes possess is the common law

immunity from suit traditionally enjoyed by sovereign powers.” Bodi v. Shingle Springs Band of

Miwok Indians, 832 F.3d 1011, 1016 (9th Cir. 2016) Although a tribe may waive this immunity,

such waiver “cannot be implied but must be unequivocally expressed.”” (Maverick Gaming LLC

v. United States (9th Cir. 2024) 123 F.4th 960, 978.) In the event the petition is approved,

because the intervenor could then be immune from suit, the limited waiver of immunity is

integrated into the Order so that the Court will retain the ability to enforce the Restated

Judgment as it applies to Intervenor.

No Oppositions have been filed as to this motion. Therefore, the Court GRANTS the

Request for Intervention and sign the Proposed Order submitted by Watermaster.

Motion for Court Approval of Corrected and Amended Fiscal Years 2021/2022 and

2022/2023 Assessment Packages.

Request for Judicial Notice. Ontario requests the Court take judicial notice of 45

documents. As stated in Watermaster’s Opposition, Exhibits 1 through 8 are subject to dispute,

and Ontario requested notice under Evidence Code section 452, subdivision (h). The Court

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DENIES these requests as these reference Watermaster documents, minutes, presentations,

amendments, and Watermaster staff reports.

Ontario requests the Court take judicial notice of the 2012 Restated Judgment as Exhibit

9. The Court GRANTS that request.

Exhibits 10 through 45 are all Court records within this case and include various filings

and their supporting declarations. I recommend the Court DENIES these requests as

unnecessary. While these documents are all entitled to judicial notice pursuant to Evidence

Code section 452, subdivision (d), the request is unnecessary since the Court has the authority

to look through its own file. (See Davis v. Southern California Edison Company (2011) 236

Cal.App.4th 619, 632, fn. 11 [judicial notice of document included in appellate record is

unnecessary]; Roth v. Plikaytis (2017) 15 Cal.App.5th 283 [court was required to consider

previously filed materials incorporated by reference into attorney fee motion].)

Evidentiary Objections. First, Watermaster objects to the entirety of the Courtney Jones

declaration. The Court OVERRULES this objection. Evidentiary objections are to be specific and

particularized. To the extent the material cited as being objectionable contains any statement

that is non-objectionable, even if meritorious objections could have been posed to unspecified

portions of the material, the objection is overruled. (OCFCD v. Sunny Crest Dairy, Inc. (1978) 77

Cal.App.3d 742, 753; see also Rose v. State (1942) 19 Cal.2d 713, 742 [discussion in context of

motion to strike out inadmissible evidence, but should apply equally to evidentiary objections].)

Objections 2, 3, and 4 pertain to the transcripts attached by Jones and paragraphs 6, 7,

and 11. the Court SUSTAINS the objections as the accuracy of the transcripts is called into

question, lack foundation, and they are hearsay.

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Although the objections are numbered by paragraph, the remaining objections,

consequentially 5 through 11, are all overbroad. Therefore, the Court OVERRULES the

remaining objections as such and on the grounds stated as well.

Analysis. Watermaster moves for the Court to approve the corrected and amended

packages for fiscal years 2021/2022 and 2022/2023.

These Assessment Packages had to be corrected and amended in light of the Court of

Appeal’s April 18, 2025 Opinion.3

In that Opinion, the Court of Appeal found Watermaster misinterpreted the 2019 Letter

Agreement when it allowed parties to produce (take) extra stored groundwater from the DYY

Program storage account without realizing a corresponding change or reduction in the

production of imported surface water. Thus, Watermaster exempted CVWD’s voluntary

production of 20,500 AF when it was only allowed to produce 11,353 AF in any given year. And,

for the first time, FWC (not governed by a Local Agency Agreement) voluntarily produced and

claimed 2,500 AF of stored groundwater from the DYY account. (Chino Basin Municipal Water

Dist. v. City of Ontario (Apr. 18, 2025, Nos. E080457, E082127) ___Cal.App.5th___ [2025 Cal.

App. Unpub. LEXIS 2362, at *17-19] (Opinion), emphasis added.)

Similarly, the Court found Watermaster’s interpretation of the 2019 Letter Agreement

affected its calculation of the FY 2022/2023 assessment where it shifted off imported water by

13,915 AF but claimed DYY production of 17,912 AF (4,000 AF more) and FWC shifted off 1,718

AF but claimed DYY production of 5,000 AF (3,282 AF more). (Id. at pp. 18-19.)

3 While generally unpublished decisions may not be cited or relied upon, the decision represents the law of the case. (Cal. Rules of Court, rule 8.1115(b)(1).) The Opinion is also attached as Exhibit A to the Herrema declaration.

Page | 17

As to the interpretation of the 2019 Letter Agreement, the Court of Appeal found that

“Subsequently, when calculating annual assessments, Watermaster ignored the absence of a

Local Agency Agreement (FWC) and the performance criteria set forth in Exhibit G (CVWD) and

exempted these takes. These exemptions decreased CVWD’s and FWC’s assessments, while

increasing the assessments of other parties, such as Ontario.” (Id. at p. 35.) And: “In challenging

Watermaster’s approval of the FY 2021/2022 and 2022/2023 Assessment Packages, Ontario

contends Watermaster’s interpretation and application of the 2019 Letter Agreement violated

the Judgment and the agreements that created the DYY Program. We agree.” (Ibid.)

The Court of Appeal stated its Disposition as follows: “The November 3, 2022, and

August 23, 2023, orders are reversed. The superior court is directed to enter new orders

granting Ontario’s challenges, and directing Watermaster to correct and amend its FY

2021/2022 and 2022/2023 Assessment Packages. The issues of (1) whether water from the DYY

Program is withdrawn (not produced), (2) whether stored and supplemental water are simply

two types of ground water, (3) whether all stored and supplemental water in the Basin is

categorically exempt from assessment, and (4) the future viability and application of the 2019

Letter Agreement should be resolved by the parties prior to judicial intervention. Ontario shall

recover its costs on appeal.” (Id. at pp. 50-51.)

To comply with the Court of Appeal Opinion, Watermaster now presents the corrected

and amended Assessment Packages noting that they were heavily scrutinized by the Parties to

the Judgment. Watermaster also notes that the Packages were based on the conclusion that

the economic harm identified by the Court of Appeal was attributable to noncompliance with

specific DYY parameters, namely the absence of a required Local Agency Agreement and the

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failure to achieve corresponding “roll-off” causing a “cost shift.” Watermaster’s calculation of

the cumulative increase in assessments required to ameliorate this economic injury requires

increased payments by CVWD and FWC totaling $878,712.59, which will be distributed among

the parties.

In support of the motion, Watermaster submits the declarations of Todd M. Corbin, the

General Manger for Watermaster, and Bradley J. Herrema. The Corbin declaration provides

detailed information regarding the process Watermaster used in order to correct and amend

the packages. It also provides a detailed account of the various parties’ participation and

objections throughout the process. Given the level of detail, the main points only are

highlighted here.

Corbin attests that since the Court of Appeal’s Opinion was issued, Watermaster held

workshops, sought stakeholder input, and participated in mediation with the parties. (Corbin

Decl. ¶¶ 3-5.)

Following this Court’s Order on Remittitur, Watermaster initiated the historical and

customary practices in order to correct and amend the packages. (Corbin Decl. ¶ 8.)

At the March 10, 2026 workshop, Watermaster presented the draft Corrected Packages

and explained in detail the interpretation and application of the Exhibit G provisions including

the reasons for the increases in assessments levied on CVWD and FWC. Based on the draft

Corrected Packages, Watermaster received comments and feedback. Revisions based on these

comments and feedback were incorporated into the attachments to the Advisory Committee

staff report, resulting in the Corrected and Amended Packages (CAA Packages). (Corbin Decl. ¶

9.) On March 12, 2026, the Watermaster Pool Committees met and discussed the draft

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Corrected Packages. The draft Corrected Packages proposed to impose additional assessments

upon: (a) CVWD in the amount of 8,196 AF in 2021/2022 and no change in 2022/2023 [CVWD

reduced its imported water deliveries in a manner consistent with Exhibit G] and (b) upon FWC

in the amount of 2,500 AF in 2021/2022 and 5,000 AF in 2022/2023. The cumulative

additional assessments upon CVWD and FWC were distributed to Ontario and other members

of the Appropriative Pool. (Corbin Decl. ¶¶ 10, 25.) The Appropriative Pool Committee and

Overlying (Agricultural) Pool Committee provided no additional advice and assistance. The

Overlying (Non-Agricultural) Pool Committee directed their Advisory Committee and

Watermaster Board representative to evaluate the item based on the agreements, Judgment

and all court orders. No further changes were made to the draft Corrected Packages based on

the discussions at the Pool Committee meetings. (Corbin Decl. ¶ 11.)

Ultimately, Ontario and FWC provided comments against the revised packages. FWC

raised issues that the application of the 85/15 Rule could apply and the inequality of assessing

all DYY withdrawals attributed to it, which Watermaster rejected as a legal fiction—noting that

while it is true CVWD and FWC might have chosen to qualify the purchase of the water as an

85/15 transaction, this is not what was done in reality. (See Corbin Decl. ¶¶ 15, 33.) Ontario

raised several issues, which are discussed in more detail below.

Ultimately, on March 26, 2026, the Watermaster Board approved the CAA Packages by a

7-2 vote and directed staff to submit them to the Court for review and approval. (Corbin Decl. ¶

20.) Consistent with the directives of the Court of Appeal and this Court regarding the specific

economic injury to Ontario and the manner in which the previously approved Assessment

Packages must be corrected and amended, the CAA Packages’ revisions increase assessments

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upon CVWD and FWC by approximately $78,712.59 and, as a result, proportionally reduce

production assessments for other pumpers. (Corbin Decl. ¶ 21.)

Watermaster maintains that the revisions to CVWD’s assessable pumping directly

implement the Court of Appeal’s finding that Watermaster erred by exempting CVWD’s

voluntary withdrawals from the DYY Program storage account in excess of the Exhibit G

performance criteria, thereby shifting assessment costs to other parties. (Corbin Decl. ¶ 22.)

Applying the Exhibit G baseline criteria, Watermaster recalculated CVWD’s assessable pumping

for FY 2021/2022 to include voluntary withdrawals of stored water that exceeded the

permissible performance thresholds and were therefore required to be assessed. This

correction resulted in an additional 8,196 AF being included in CVWD’s assessable pumping

total for FY 2021. (Corbin Decl. ¶ 23.) This correction resulted in an additional 8,196 AF being

included in CVWD’s assessable pumping total for FY 2021/2022, increasing CVWD’s total

pumping assessment by $475,880.28. (Corbin Decl. ¶ 24.)

As to FWC, Watermaster added 2,500 AF of previously unassessed pumping to FWC’s

total for FY 2021/2022 and 5,000 AF for FY 2022/2023. These corrections increased FWC’s total

pumping assessments by $80,820.60 for FY 2021/2022 and $364,360.92 for FY 2022/2023,

aligning FWC’s assessments with the Court’s interpretation of the governing DYY Program

requirements. (Corbin Decl. ¶ 27.)

Corbin further explains that the changes made in the compilation of the CAA Packages

were to assess pumping by CVWD and FWC to account for extractions which violated DYY

Program parameters, increasing the total acre-feet assessed, upon which the total assessable

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budget amount is spread, thereby reducing the assessments upon all parties but CVWD and

FWC. (Corbin Decl. ¶ 28.)

As noted in the Motion, the Parties advanced competing interpretations of how DYY

withdrawals should be generically treated for assessment purposes, including arguments that

all DYY withdrawals must be assessed as production of native groundwater, or conversely, that

all such withdrawals are exempt as imported water. Watermaster did not reach this question

because it maintains that the Opinion neither mandates assessment of all DYY withdrawals as

native groundwater nor exempts them categorically. Instead, the Opinion, it claims, focuses

entirely on economic harm resulting from the failure to comply with DYY Program

requirements, specifically, the absence of a Local Agency Agreement and the failure to offset

withdrawals with corresponding reductions in IEUA/MWD imported water under Exhibit G.

The Corbin declaration also addresses issues Ontario raised in the process. Ontario

argued that the pumping by CVWD and FWC during the two subject years should not be

considered withdrawals from the DYY storage account by FWC and by CVWD. (See Corbin Decl.

¶ 29.) Watermaster contends that the result of this “legal fiction” would be to consider the

pumping to be production of basin groundwater and not DYY water—meaning that water

would have to be “put back” in the DYY account. Watermaster states this does not reflect

reality. Thus, the CAA Packages reject this legal fiction and instead impose additional

assessment on FWC and CVWD to provide an economic response to the specific economic

injuries identified by the Court of Appeal. (Ibid.) Ontario also made claims that it suffered an

additional economic harm because the withdrawal from the DYY account impacts its share of

the Desalter Replenishment Obligation as calculated under the separate 2019 amendment to

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the Appropriative Pool Pooling Plan. (Corbin Decl. ¶ 30.) Watermaster notes this is an extension

of the “legal fiction” Ontario puts forth in arguing the water must be put back into the DYY

account and further notes that this argument was not presented to the Court of Appeal,

accounted for by the Court of Appeal Opinion, and is beyond the scope of the current

proceeding.

Based on Watermaster’s motion, it seems that Ontario wants the water taken also

redesignated as native groundwater in order to require it to factor into the Desalter

Replenishment Obligation (DRO). DRO is not charged for imported water from MWD. (See

Corbin Decl. ¶ 31.) Watermaster contends that the Court of Appeal Opinion addressed

Ontario’s economic harm only by allowing CVWD and FWC to make the withdrawals from the

DYY. And, as such, Watermaster argues it has fully corrected the Packages to account for the

increased financial obligation of these two agencies.

Corbin, however, also details that the actual harm to the parties of the Judgment,

including penalties for failure to perform under the DYY program and the requirement to

purchase imported water are considerable. (Corbin Decl. ¶ 32.)

Notably, notwithstanding its positions taken during the review process, FWC filed a

notice of Nonopposition stating it does not oppose this motion. CVWD filed a similar Notice of

Nonopposition. Both agencies are reserving their objections in the event the Court denies the

motion.

Ontario opposes the motion because it claims the corrected and amended packages are

still in conflict with the original DYY Program agreements, the Judgment, this Court’s prior

Orders, and the Court of Appeal’s Opinion. To be clear, the Court of Appeal’s Opinion held that

Page | 23

Watermaster was “to correct and amend the FY 2021/2022 and 2022/2023 Assessment

Packages consistent with the original DYY Program agreements, the Judgment, and prior court

orders. (Opinion at p. 49.) Ontario argues that Watermaster has failed to comply for several

reasons. First, Ontario notes that although the Opinion explained CVWD voluntarily produced in

excess its allocated shares stored from the DYY Program, it was noted that the fiscal years in

questions were not “call” years and therefore DYY production was unallowed. Next, Ontario

argues that the Opinion does not narrow Watermaster’s obligation to only addressing

economic harm or allow Watermaster to find new ways to avoid adverse financial impacts to

affected agencies like CVWD and FWC. This last point is compelling, and one Watermaster

essentially concedes. In its motion, Watermaster claims Ontario is not seeking its economic

injury, but is instead seeking accounting actions that would be punitive.

Watermaster claims Ontario’s position would require FWC and CVWD to actually

physically dedicate water to the Basin under the legal fiction that it has not physically depleted.

And DRO is never charged to a party for imported water delivered from MWD. (See Mot. at p.

11:20-22.) Watermaster then admits it also considered the actual economic consequences of

following Ontario’s suggestion and concluded that the stored water was not extracted under

Paragraph 28 because the actual harm to the parties to the Judgment collectively, including

penalties for failure to perform under the DYY Program and the requirement to purchase

imported water, are considerable. (Id. at p. 11: 23-27.) Regardless, Watermaster was to correct

the packages “consistent with the original DYY Program agreements, the Judgment, and prior

court orders.” (Opinion at p. 49.) Watermaster appears to have done an accounting in order to

minimize the economic harm to FWC and CVWD, or as Ontario puts it: attempted to correct

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some portions of the packages while ignoring others. Watermaster admits it still treats the

withdrawals as imported water from MWD such that DRO assessments are unnecessary.

Although Watermaster claims the DRO is not raised in the Opinion, it is potentially a direct

financial harm resulting from how Watermaster characterizes the actions of FWC and CVWD. In

addition, the Opinion did discuss assessments and noted “DYY Program costs are distinct

from assessment fees charged for production of groundwater from the Basin.” (Opinion at p.

12.) The Court of Appeal was also well-aware that the economic harm could be considerable

and remarked: “According to Ontario, this case boils down to whether Watermaster should be

bound by the terms of the Judgment and several court orders or by its staff’s unilateral

decisions that have million-dollar consequences for certain parties to the Judgment.” (Id. at p.

29.) Watermaster has been clear in its motion that it has tried to limit the financial impact on

other agencies and to do otherwise would have considerable economic consequences. But this

was not a directive of the Opinion.

Ontario also notes that Watermaster claims these amendments will not establish any

precedent. (See e.g., Mot. at p. 3:17-18.) Ontario, however, is correct that if the Opinion orders

Watermaster to correct and amend consistent with the original DYY Program agreements, the

Judgment, and prior court orders, then there should be uniform continuity across all years,

including future years.

Ontario also explains that it is not seeking to create a legal fiction or have agencies put

water back into the Basin. Instead, Ontario argues that Watermaster, in order to comply,

should have gone page-by-page through the packages to determine whether any of the

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members or calculations were affected by the wrongful application of the 2019 Letter

Agreement and then correct those issues. Ontario is asking for uniformity as to all parties.

Ontario argues that Watermaster selectively (though imperfectly) attempted to correct

some portions of the Assessment Packages while ignoring others. It purported to “correct”

calculations relating to general production assessments, while still giving FWC and CVWD credit

for claimed DYY production (“Storage and Recovery Adjustments”) for purposes of the DRO

assessments contained within the Assessment Packages. Using the FY 2021/2022 CAA Package

as an example, Watermaster exempts the full 2,500 AF of Fontana’s claimed DYY water from

DRO assessments notwithstanding the fact that the Court of Appeal unequivocally ruled that

Fontana was not entitled to participate in the DYY Program. (See Corbin Decl., Exh. A at 99,

columns 20G, 20H.)

In support of the Opposition, Courtney Jones submits a declaration. Jones is the

Assistant General Manager for Utilities Engineering and Operations for the City of Ontario.

(Jones Decl. ¶ 2.) She attests to several facts in order to demonstrate the economic harms at

issue and the extent of those harms. She also attests that Ontario is not arguing that

Watermaster, or FWC and CVWD should physically “put back” the water. Rather, Ontario is

claiming that Watermaster must only complete an accounting exercise to reclassify the water

FWC and CVWD claim to have withdrawn from the DYY storage account but legally could not

have pursuant to original DYY Program agreements and Judgment. (Jones Decl. ¶ 14.) Further,

she details that Watermaster created new terminology and accounting practices in the CAA

Packages, including new columns and calculations in the amended assessment package

spreadsheets. For example, a brand new “Storage and Recovery Adjustments” column was

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added to the calculation of DRO assessments, and Watermaster explains in a footnote that the

column “was added to account for (CVWD’s) withdrawal of water in excess of the Exhibit ‘G’

Performance Criteria amount, and the withdrawal of water (by Fontana) absent of [sic] a Local

Agency Agreement." (See Declaration of Todd M. Corbin, Exh. A at 99.) The effect of adding

these “Storage and Recover Adjustments”, Jones claims, is to exempt all DYY Program water

claimed by FWC and CVWD from DRO assessments. The use of a “Storage and Recovery

Adjustment” has no precedent in Watermaster’s “historical practices” and no basis in the

original DYY Program agreements, orders, or the Judgment, according to Jones. (Jones Decl. ¶

15.) Jones details additional specifics she claims are issues with the corrections and

amendments that ultimately result in imposing only partial assessments. (See Jones Decl. ¶¶

16-18.)

Ontario asks the Court for two things. Ontario asks the motion be denied and also asks

for specific direction to Watermaster to correct and amend the Assessment Packages consistent

with Ontario’s motion and proposed Order. This second request goes too far. Ontario is again,

essentially, asking the Court to make an Order where the Court does the accounting for the

parties. As noted in the Non-opposition from FWC and CVWD they had objections to the

proposed amendments and reserved them.

In any event, no party has presented this Court with sufficient information to determine

whether the CAA Packages comply with the Opinion. This is demonstrated by the issues raised

in the Replies.

In its joinder to Watermaster’s Reply, CVWD highlights several issues with Ontario’s

position that may not be entirely consistent with the Opinion and could potentially

Page | 27

overestimate their liability (e.g., whether none of CVWD’s withdrawals could come from the

DYY Program because it was not a “call” year). CVWD also raised new issues in the joinder, for

example, wider effects of reclassifying the water as groundwater instead of imported water by

claiming it would affect Readiness to Serve, or RTS, charges that would affect a number of

parties unable to currently protect their interests if the Court were to adopt Ontario’s position

outright.

In addition, IEUA submits a joinder to the Reply and claims: “As a key requirement of

Ontario’s proposed assessment package reaccounting requires Watermaster to exercise

unilateral authority it does not possess, adoption of Ontario’s proposal would lead to an absurd

result inviting serial litigation and potentially impacting entities absent from this litigation. Any

act to alter the amount of water stored in the MWD account, whether an increase or decrease

thereto, is delegated by contract to the Operating Committee.” (IEUA Reply at p. 2: 24-28.) It is

alarming that for the first time on reply a party is raising the notion that Watermaster lacks the

authority to adopt Ontario’s proposal (especially where Watermaster has elsewhere stated it

calculated the proposal and found them punitive). Watermaster itself has not claimed this.

Further, what no party explains is why Ontario’s proposal would lead to altering the water

stored in the MWD account. The parties could on paper, for example, calculate what the

assessments for FWC and CVWD would be had their withdrawals not been part of the DYY

Program. It is clear Ontario is contending there were subsequent additional assessments that

would need to be made that have not been made. The Opposition to such a task seems

hyperbolic in that suddenly there will be catastrophic chain reaction involving a party that is

never explicitly named—though it seems likely the parties are referring to MWD. No party,

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however, has presented to the Court what this catastrophic event would look like and exactly

who would be affected. Therefore, there is also no reason for the Court to dismiss Ontario’s

claims based upon these postulations alone.

However, Watermaster’s Reply is useful, and highlights an issue that requires further

briefing and consideration in order to determine what appears to be the heart of the issue.

Ontario has argued that in adopting its methodology, Watermaster was essentially settling

some of the four issues the Court of Appeal left to the parties to resolve. At the last hearing,

this Court did not find that they needed to be resolved prior to the amending the Packages;

however, in light of the parties’ issues raised herein, it appears that perhaps these issues may

need to be resolved after all. These include: (1) whether water from the DYY Program is

withdrawn (not produced), (2) whether stored and supplemental water are simply two types of

ground water, (3) whether all stored and supplemental water in the Basin is categorically

exempt from assessment, and (4) the future viability and application of the 2019 Letter

Agreement.

For example, Watermaster contends that it, as to CVWD, recalculated FY 2021/22

assessable pumping to include 8,196 AF that exceeded allowable Exhibit G thresholds, resulting

in an additional $475,880.28 in Production assessments. As to FWC, Watermaster added 2,500

AF of previously unassessed pumping for FY 2021/22 and 5,000 AF for FY 2022/23, increasing its

assessments by $80,820.60 and $364,360.92, respectively. These adjustments were tailored to

align the Assessment Packages with the Court of Appeal’s interpretation of the governing DYY

requirements and to eliminate the cost-shifting injury identified on appeal. Even Ontario

acknowledges there was at least a partial compliance with the Opinion.

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But Ontario focuses on the fact that it believes the water should be classified as

groundwater, which would then increase other fees that have not been assessed. In the Reply,

Watermaster provides further information about the Basin initiative, the Chino Basin Desalters

and the cost-sharing associated with them: the Desalter Replenishment Obligation.

Watermaster explains that beyond the distribution of native groundwater pumped by

the Desalters by contract, the Desalters carry their own independent financial structure. The

framework addresses considerations unique to the distribution of benefits and burdens

associated with the extraction of that water in a specific location in the Basin to maintain

availability of native groundwater, which is distributed among appropriators as Operating Safe

Yield. Desalter pumping groundwater has never been assessed by Watermaster as Production,

unlike any other native groundwater and no rights are assigned to the Desalters. But, in

recognizing the Desalters’ purpose in preserving Safe Yield generally, those that produce native

groundwater share in cost-allocation designed to offset that physical act of removing native

groundwater from the Basin. The financial responsibility is distributed for funding the purchase

of replenishment water required to offset the native groundwater desalted produced in the

Basin. Watermaster explains that those parties that independently produce native groundwater

and thereby benefit from the function the Desalters serve in preserving Safe Yield and pay their

relative share of its costs. The more native groundwater a party produces the more they pay to

offset the cost of acquiring replenishment water needed for the desalters. Parties that rely on

supplemental water derive less benefit and therefore pay less. As to the water FWC and CVWD

produced, Watermaster claims that in no sense did the extraction of this “Supplemental Water”

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place an additional physical burden on the Safe Yield of the Basin or any party as it related to

the Desalters.

This is the issue the parties do not make clear, and the Court requests further briefing

on this issue. When FWC and CVWD extracted their water, where did it physically come from?

Watermaster for the first time in this Reply—though it is responsive to Ontario’s argument—

claims, without any evidence in support, that the extractions did not place any “additional

physical burden on the Safe Yield of the Basin or any party as it related to the Desalters”. If so,

then there would be no justification for imposing such fees. Ontario can make a “but...for”

argument, but if in fact there is a physical distinction in the water that was extracted—if

ultimately the parties’ water did not impose a physical burden on the Safe Yield of the Basin, to

recover those fees would be a windfall. In fact, this would also put to rest the other contested

issue of whether water can be returned to the DYY account. In the Reply, Watermaster

describes the withdrawals as from “a distant watershed from the DYY storage account.” Again,

the physical aspect of the withdrawal needs to be clarified. Ontario has all along implied this

can be a paper exercise, but Watermaster’s Reply is clear that this requires a modification of

the “physical world.” Watermaster claims: “But for the paid importation

of Supplemental Water from a foreign watershed, the physical molecules of water would not

exist within the Basin. Ontario’s suggested framing only highlights the defect in its position.”

The parties have possibly taken it for granted that how the water is extracted has been made

clear, but no one has placed the Court in a position to be able to determine the physical nature

of the water such that it should not be subject to the additional fees Ontario suggests. This

information should also be supported by evidence, such as declarations detailing such

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operations and what occurred when FWC and CVWD extracted the water at issue. However, in

deciding this issue, it also seems that it is deciding or at least highly related to the four issues

the Court of Appeal stated the parties needed to resolve. For example, whether all stored and

supplemental water in the Basin is categorically exempt from assessment and whether stored

and supplemental water are simply two types of groundwater. Ultimately, in deciding this issue,

it may be that the Court is deciding issues that were to remain resolved by the parties. In fact,

in its Opposition, Ontario noted Watermaster had not even begun to address these issues, a

point Watermaster does not deny. Therefore, the Court also request further briefing regarding

whether the resolution of the physical nature of the water extracted and whether it is subject

to the DRO assessment overlaps with the four issues identified by the Court of Appeal such that

those issues must be addressed now. While it previously did not appear that the issues needed

to be resolved prior to the CAA Packages, given the potential fees identified by Ontario, it

seems possible that these issues do in fact need to be resolved.

In sum, the Court CONTINUES the motion for further briefing and ask the parties to

address these issues about the physical nature of the water and whether this issue overlaps

with the four issues noted by the Court of Appeal such that the resolution of those issues do, in

fact, impact the assessment packages.

Rulings

The Court rules as follows:

1. GRANT the Request for Intervention and sign Watermaster’s corresponding Proposed

Order;

2. DENY RJN Request Nos. 1-8;

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3. GRANT RJN Request No. 9;

4. DENY RJN Request Nos. 10-45 as unnecessary;

5. OVERRULE Watermaster Objections 1 and 5 through 11;

6. SUSTAIN Watermaster’s Objections 2, 3, and 4; and,

7. CONTINUE the Motion to Approve the Corrected and Amended Packages for further

briefing as detailed above.

Movant to give notice.

Dated-

____________________________ Judge

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