The Madera County Superior Court has issued a tentative decision upholding the groundwater sustainability fees adopted by the Madera County Groundwater Sustainability Agency (County GSA). The ruling in Valley Groundwater Coalition, an unincorporated association v. County of Madera, a political subdivision of the State of California (Madera Co. Superior Ct. Case No. MCV087677) (Valley Groundwater Coalition) is one of the first trial court applications of Las Posas Valley Water Rights Coalition v. Ventura County Waterworks District No. 1 (2026) 118 Cal.App.5th 1170 (Las Posas) [decided Mar. 5, 2026], and it demonstrates how courts expect Groundwater Sustainability Agencies to structure and justify their Sustainable Groundwater Management Act (SGMA) fees under the Las Posas framework.
Background
On June 21, 2022, the County GSA adopted resolutions imposing groundwater sustainability fees of $246 per enrolled acre in the Madera Subbasin and $138 per enrolled acre in the Delta‑Mendota Subbasin. The revenue generated by the fees was to be used to fund four SGMA‑related projects. The fees were placed on the 2022‑2023 ad valorem property tax bills, due November 1 through December 12, 2022.
While the litigation was pending, the County amended the fee structure on July 15, 2025, reducing the fee to $59 per enrolled acre for the 2025‑2026 fiscal year. The revised fee funds only the Domestic Well Mitigation Program and is supported by a July 3, 2025, technical memorandum. While only the Domestic Well Mitigation Program remained active by the time of the ruling, the Court nevertheless tentatively upheld both sets of fees.
Proposition 218
Applying Las Posas and City of San Buenaventura v. United Water Conservation District (2017) 3 Cal.5th 1191, the Court tentatively held that SGMA groundwater sustainability fees are not “property‑related fees” under Article XIII D. The fees are imposed on groundwater extractors for the management and conservation of the groundwater basin as a whole, not on property owners because they own property. Additionally, the fees fund basin‑wide groundwater management rather than parcel‑specific services. Proposition 218 therefore does not apply.
Proposition 26
The Court also evaluated whether the fees are a “special tax” under Article XIII C of the California Constitution (Proposition 26), following the structure set out in Great Oaks Water Co. v. Santa Clara Valley Water District (2025) 110 Cal.App.5th 260 (Great Oaks). Under Proposition 26, a regulatory fee is valid if the government demonstrates that (1) the imposed fee is not a tax, (2) the amount of the fee is no more than necessary to cover the reasonable costs of the governmental activity, and (3) the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. (Cal. Const. art. XIII C, § 1, subd. (e).) In Valley Groundwater Coalition, the Court conducted a full review of the County GSA’s cost basis and concluded that the groundwater sustainability fees satisfied this requirement.
The Fees Are Not a Tax
The Court found that the fees fund a specific benefit or privilege: the right to extract groundwater in areas without surface water supplies. This aligns with Great Oaks, which held that groundwater extraction rights constitute a “benefit, privilege, or service” provided directly to fee payors.
The Fees Are Reasonable Costs
The County’s rate study estimated a total Domestic Well Mitigation Program cost of $22.3 million, based on projected well failures and an assumed $30,000 per well replacement cost. Petitioner’s primary argument against the appropriateness of these fees was that the County GSA cannot establish that the fees are no more than necessary to cover the “reasonable” requirement of the Program because the County GSA admitted that the Project is currently in development and programmatic details were not yet determined. The Court accepted these estimates, citing Department of Finance v. Commission on State Mandates (2022) 85 Cal.App.5th 535 and San Diego Gas & Electric Co. v. San Diego County Air Pollution Control District (1988) 203 Cal.App.3d 1132 for the principle that fees may be based on reasonable estimates and need not be mathematically precise.
The Manner of Allocation Is Reasonable
In analyzing the reasonableness of the allocation of the subsequently reduced $246 per enrolled‑acre fee, the Court found that the fees were imposed on agricultural users, who are responsible for a disproportionate share of overdraft. At the time the County GSA developed its initial Groundwater Sustainability Plan in 2020, it was estimated that County GSA agricultural users pumped approximately 201,000 acre‑feet per year, which increased to approximately 241,900 acre‑feet in Water Year 2023‑2024, compared to 8,100 acre‑feet for all other users combined – against a sustainable yield of roughly 90,000 acre‑feet per year. In other words, in Water Year 2023‑2024, agricultural users were responsible for extracting 2.8 acre‑feet of groundwater per irrigated acre, or approximately 460% more than the sustainable yield associated with those acres. Thus, the per-acre fee rates, calculated by dividing the revenue requirement by the acres enrolled in the County GSA’s allocation program, reasonably reflects that associated burden on the subbasin’s groundwater sustainability.
Take Aways
The Valley Groundwater Coalition ruling illustrates how courts may use Las Posas to evaluate the propriety of SGMA-related fees. If SGMA fees are tied to groundwater extraction, supported by reasonable cost estimates, and allocated in a manner consistent with a GSA’s groundwater allocation framework, they are likely to be upheld under both Proposition 218 and Proposition 26.
Although the decision remains tentative, Valley Groundwater Coalition provides an early roadmap for how California courts may evaluate SGMA fees following Las Posas. For questions regarding the applicability of these new requirements, please contact:
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