The New Groundwater Legislation: Opportunities and Challenges
September 2, 2014
Governor Brown is expected in the near future to sign into law a package of legislation that brings comprehensive groundwater regulation to California. The legislation aims to give local agencies the means to manage groundwater basins in a manner that is sustainable over the long-term. The key element of the legislation is the development of “groundwater sustainability plans” by groundwater sustainability agencies (i.e., one or more local public agencies that extract groundwater from the basin). The new legislation grants groundwater sustainability agencies a broad array of new authorities, including the ability to investigate and determine the sustainable yield of a groundwater basin and the authority to limit extractions, impose fees for groundwater management, and enforce the terms of a groundwater sustainability plan. Groundwater basins that are in a state of overdraft will need to develop groundwater sustainability plans by 2020; most of the remaining large basins in California will need to develop such plans by 2022. Where no local agency completes an adequate groundwater sustainability plan in a timely fashion or fails to implement an adopted plan, the new laws give the State Water Resources Control Board the authority to intervene in what the legislation terms a “probationary basin” to develop an “interim plan” for that basin. The new legislation presents water managers, and holders of rights to surface water and groundwater, with a series of new opportunities and challenges.
It is indisputable that, with the exception of the 2009 Comprehensive Water Package, the current groundwater legislation is the most significant set of water reforms to pass the Legislature since at least the Burns-Porter Act in 1960 that authorized the State Water Project. This e-alert provides a brief summary of the new legislation and our initial thoughts on the opportunities and challenges it will create.
The New Laws
The key elements of the legislation have been widely publicized in the media since the passage of the three bills last Friday. (For a good collection of the news stories, see: http://mavensnotebook.com/2014/08/31/daily-digest-weekend-edition-groundwater-legislation-heads-to-the-governors-desk-conservation-conundrum-water-use-varies-across-the-state-the-drought-the-water-bond-the-bdcp-and-more.) Here is a brief summary of the key provisions:
Key Principles
Protection of Water Rights. The Brown Administration and the two principal authors of the legislation (Senator Pavley and Assemblymember Dickinson) have, to their credit, consistently stated that nothing in the legislation is intended to change rights to surface water or rights to groundwater. Though it will not appear in the Water Code itself, section 1(b)(4) of AB 1739 declares that the legislation is intended to respect overlying and other proprietary rights to groundwater, consistent with Water Code section 1200, which generally limits the authority of the State Water Resources Control Board (SWRCB) to surface waters and “subterranean streams flowing through known and definite channels.” Similarly, new Water Code section 10720.5(b) says that nothing in the legislation “determines or alters surface water rights or groundwater rights under common law or any provision of law that determines or grants surface water rights.” Thus, the stated intent of the legislation is to require local agencies and the SWRCB to respect all rights to surface water and groundwater.
Sustainable Groundwater Management. The thrust of the legislation is to give local agencies the means to manage the groundwater basins upon which they rely in a manner that is sustainable over the long-term. As the bills moved through the Legislature, there was much discussion over what the term “sustainable” really means. From the legislative authors’ experience, it means that a groundwater basin must be managed to maintain the “safe yield” of the basin (as defined by existing case law), while also considering the economic, social and environmental effects of limiting groundwater extractions to the safe yield of the basin. This directive is consistent with the way in which many local agencies have been managing groundwater for some time. The legislation, however, gives local agencies greater authority and responsibility.
Groundwater Sustainability Plans
Groundwater Sustainability Plans. A key element of the legislation is the new requirement that groundwater sustainability agencies (i.e., one or more local public agencies that extract groundwater from the basin) develop “groundwater sustainability plans.” As a general matter, groundwater basins that have already been adjudicated (chiefly in Southern California) or those agencies that have ongoing and successful groundwater management programs will only need to provide annual reports to the Department of Water Resources demonstrating that the groundwater basin is being managed in a manner that is consistent with the long-term “sustainable yield” (essentially the historical concept of safe yield). Other groundwater basins that are in a state of overdraft will need to develop groundwater sustainability plans by 2020. Most of the remaining non-overdrafted basins will need to develop such plans by 2022. Significantly, the development of groundwater sustainability plans is exempt from the requirements of CEQA. In the opinion of the authors, this exemption will save at least a year in the development of the required plans.
New Local Authorities. One of the criticisms of past groundwater legislation (AB 3030 and SB 1938) has been that these laws did not give local agencies the authority they needed to bring groundwater extractions into balance with the sustainable yield of the basin. The new legislation grants groundwater sustainability agencies a broad array of new authorities, modeled on the specific authorities that the Legislature has in the past granted to specific groundwater management agencies. Such authorities include not only the ability to investigate and determine the sustainable yield of a groundwater basin, but also the ability to limit groundwater extractions, impose fees for groundwater management, and enforce the terms of a groundwater sustainability plan.
Consideration of Multiple Interests. In developing a groundwater sustainability plan, a groundwater sustainability agency must consider the interests of a variety of different stakeholders, including beneficial users of water, environmental interests, disadvantaged communities, and others. (Water Code section 10723.2). However, after considering those interests and developing a groundwater sustainability plan, any judicial challenges to the plan are treated with the same deferential standard that applies to challenges to a general plan. (Water Code section 10726.6(e)). Thus, the ability of interests that are dissatisfied with the terms of a groundwater sustainability plan to challenge that plan in court will be quite limited. This provision of the law is extremely important; without it, groundwater sustainability plans would likely be tied up in court for years.
Rewarding Sound Management. One of the final amendments to the legislation dealt with the situation where most of a groundwater basin is being managed in a sound manner but some area (perhaps an area outside the boundaries of a local water district) resists the limitations on pumping, or the imposition of charges for the groundwater sustainability plan that are being imposed on the remainder of the basin. In these cases, the legislation now limits the ability of the SWRCB to penalize those portions of the basin that are managing groundwater in a sustainable fashion, and instead directs the “state intervention” to focus on the areas that are resisting sound management. (Water Code section 10735.2(e)).
State Intervention. The Administration has insisted, from the beginning of this effort, that the SWRCB must be able to intervene under certain conditions: (i) no local agency is willing to serve as a groundwater sustainability agency; (ii) the groundwater sustainability agency does not complete a groundwater sustainability plan in a timely fashion; (iii) the groundwater sustainability plan is inadequate, and remains so after a review by the Department of Water Resources and efforts to cure the deficiencies; or (iv) the groundwater sustainability plan is being implemented and simply does not work. There has been general agreement to this set of conditions; the objections have all been to the standards that the SWRCB will use to intervene in what the legislation terms a “probationary basin” and the standards that the SWRCB will apply in developing an “interim plan” for the basin. The late amendment to the bills, contained in section 10735.2(e), that prevents state intervention in areas that are engaged in sustainable groundwater management tempers these concerns to some extent by limiting the SWRCB’s authority only to areas that have taken deliberate actions to thwart groundwater management.
Opportunities and Challenges
The new legislation presents water managers and water rights holders with a series of new opportunities and challenges. Here are a few:
Opportunities. From a landowner’s perspective, the simple and straightforward language quoted earlier in this e-alert regarding the protection of water rights offers strong evidence that the Legislature – contrary to a chorus of voices that have filled the news media over the past year – fully intends to respect existing water rights and has no desire to change the current water right system.
From the perspective of local agencies, the legislation offers many water district managers an impressive set of tools that they can use to manage groundwater in a sustainable manner. Prior to this legislation, ambiguity existed as to the authority of local agencies to take specific actions to manage groundwater such as, for example, curtailing groundwater pumping to prevent overdraft. The new groundwater legislation fixes this problem.
Challenges in Developing Groundwater Sustainability Plans. With responsibility comes the challenge of actually developing good groundwater sustainability plans. In many groundwater basins, it has been difficult to develop the political consensus needed to make hard choices about groundwater. After all, the members of local governing boards are often landowners or residents of their respective districts; the last thing that they want to do is to impose hardships on their friends and neighbors. The intent of the legislation is to give local governing boards the right and ability to manage groundwater for their own long-term self-interest, with the threat of state intervention if local agencies fail to act. We are confident that, in the vast majority of cases, local agencies will meet this challenge.
One of the key ways that the State of California can (and hopefully will) ease the challenge of developing sound groundwater management strategies is through the provision of technical and financial assistance to local agencies. Many local agencies are barely able to meet the ongoing demands of providing water service to their ratepayers and landowners; the cost of developing and implementing a thoughtful and comprehensive groundwater sustainability plan in five to seven years will be very significant. The Brown Administration, to its credit, has indicated that the Department of Water Resources will be directed to assist local agencies in developing groundwater sustainability plans, and there is the possibility that funds from Proposition 1 (if it passes) could be used to fund these efforts. However, given the importance of moving quickly toward improved groundwater management, the authors believe that the Brown Administration should seek substantial additional funding to assist local agencies in this effort.
Challenges in Implementing the Legislation. In the authors’ view there are four other potential pitfalls in the legislation. First, the legislation is vague about which local agencies will become the groundwater sustainability agency for a particular basin and how multiple agencies will coordinate their efforts. This ambiguity was intentional; there are too many different circumstances across California to legislate a “one-size-fits-all” approach to identifying a groundwater sustainability agency. However, in addition to the challenge within each local agency in determining how best to manage groundwater (discussed above), there is the additional challenge associated with coordinating multiple agencies in large groundwater basins. If the development and implementation of groundwater sustainability plans bogs down, this lack of clarity in the legislation is one likely culprit.
Second, section 10733.2 directs the Department of Water Resources to adopt regulations to evaluate the development and implementation of groundwater sustainability plans, as well as the coordination agreements needed to manage large groundwater basins. That section also directs the Department to evaluate baseline conditions for the availability (or lack of availability) of surface water. The Department is required to adopt these regulations as emergency regulations, without review or comment by the Office of Administrative Law. Developing regulations that are sufficiently broad to address the variety of groundwater basins in California and yet that provide sufficiently detailed guidance to help local agencies through a very complicated set of technical issues will be quite difficult. Adding to the difficulty is the requirement that the Department issue these regulations by June 1, 2016. The Department would be wise to rely heavily on the experience and expertise of a “blue-ribbon” committee of water managers drawn from across California in developing these regulations. Without that “on the ground” experience, it seems likely that the regulations will interfere with the development of sound groundwater sustainability plans.
Third, as noted above, the legislation attempts to provide for state intervention where local efforts are not successful, consistent with the “light touch” that SWRCB Chair Felicia Marcus has been advocating. However, the language of the legislation is sufficiently broad so as to allow the SWRCB to intervene prematurely. It will be critically important that the SWRCB work cooperatively with local agencies and the Department of Water Resources to developsustainable groundwater management and not be quick to pull out the regulatory hammer. The SWRCB has been successful in the past in navigating similar terrain – most notably in assisting parties in coming to the so-called “Phase 8 Settlement” relating the Bay-Delta hearings – and it is to be hoped that the SWRCB can continue to avoid the pitfall of intervening prematurely in groundwater disputes across the state.
Fourth, but perhaps most important, in section 10735.8(b)(1) the legislation grants the SWRCB the authority to impose an interim plan on basins where groundwater extractions result in “significant depletions of interconnected surface waters.” On its face, this language seems to be limited to those situations where there is a direct and substantial relationship between surface waters and groundwater and so would be the groundwater equivalent of a “subterranean stream flowing through a known and definite channel.” After all, the term “interconnected surface water” is a longstanding term of art in water law, with a series of cases defining the relationship between surface and groundwater. However, the question of what constitutes a “significant depletion” is likely to prove controversial. If the SWRCB were to take the position that any groundwater extraction that causes or contributes to a stream reach being a “losing reach” (i.e., a reach where water in the stream percolates into the ground), then it would effectively assert control over all uses of water in the Central Valley. On the other hand, if the SWRCB were to follow the historic case law on interconnected streams, it would only develop interim plans in the most obvious cases of excessive groundwater extractions, thereby living up to Chair Marcus’ promise to intervene with a “light touch.” The challenge for the SWRCB and its staff will be, as mentioned above, to not pull out the regulatory hammer before all other avenues have been exhausted.
For more information, please feel free to contact each of us using the contact information accompanying this e-alert.