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New Groundwater Legislation Will Have Dramatic Impacts on California Agriculture

January 22, 2015

Historically, California has never managed its groundwater supplies on a state-wide basis. That has now changed. As of January 1, 2015, the Sustainable Groundwater Management Act (“SGMA”), an ambitious attempt that Governor Jerry Brown signed last September in order to regulate the use of groundwater on a more universal scale, has now gone into effect.

The new law will have profound practical impacts, particularly on the state’s agricultural community. Issues raised by the SGMA – some of which will doubtless play out in protracted court battles – will shape Western water law and policy for years to come. At the same time, the SGMA’s emphasis on local groundwater management should provide an unprecedented opportunity to shape California’s future, for those whose livelihoods and involvement in the larger economy are fundamentally dependent on access to the state’s groundwater resources.

In this article, we review the major provisions of the SGMA and highlight areas of potential controversy, litigation, and participation in the upcoming regulatory process.

California’s Approach to Managing Groundwater

Until now, the right to use groundwater in California has been viewed as a property right attached to overlying surfaced lands. In City of Pasadena v. City of Alhambra, for example, the California Supreme Court stated that the “overlying right,” or right of the owner of the land to take water from the ground underneath for use on his overlying land, “is based on ownership of the land and is appurtenant thereto.”[1] Under the doctrine of correlative rights, land owners had a common right to the beneficial use of percolating waters underlying their property. When an underlying aquifer became overdrawn, courts could allocate pumping rights among overlying land owners through an adjudicatory procedure.

The SGMA adopts a fundamentally different strategy for managing the state’s groundwater resources. At the heart of the new law is a requirement to implement sustainability plans for the majority of groundwater basins throughout the state, including many on which California’s agricultural community are highly dependent. These plans can vary from simple basin-wide plans developed and implemented by individual local agencies, to multiple plans by different local agencies operating in the same basin, to state-imposed plans where no sufficient local plan exists.[2]

While sustainability plans must contain a number of specific requirements,[3] by far the most significant is that they be designed to meet what the SGMA calls the “sustainability goal” within 20 years of implementation.[4] The sustainability goal is, in short, a stated objective to “achieve sustainable groundwater management” by ensuring that a given basin is “operated within its sustainable yield” – in other words, that the basin is operated in such a way as not to cause “undesirable results.”[5] Many of these standards leave a great deal of interpretive work to regulatory agencies and ultimately to the courts. Disputes over the on-the-ground, practical meaning of key terms such as “sustainable groundwater management,” “sustainable yield,” and “undesirable results,” for example, almost certainly will wind up in litigation.

The SGMA also contains procedural requirements for plan development and implementation, and exempts many activities involved in that process from the environmental review requirements of the California Environmental Quality Act (“CEQA”).

While the SGMA will regulate California’s groundwater on a statewide basis for the first time,[6] it does not cover every groundwater basin within the state’s jurisdiction, nor will its impacts be felt immediately. The statute generally does not apply to specified basins that have already been adjudicated under existing law,[7] for example, and it does not require sustainability plans from basins considered to be low priority.[8] Moreover, sustainability plans need not be implemented for several years, and affected basins are not required to attain sustainability goals until approximately 2040.

That said, the California Department of Water resources (“DWR”) has estimated that the Act will cover 96% of groundwater used in California.[9] California water users cannot afford to wait to get involved in efforts now underway to shape the manner in which the statute is applied.

The Importance of Local Control

In enacting the SGMA, the California legislature sought to “manage groundwater basins through the actions of local governmental agencies to the greatest extent feasible.”[10] For the most part, any local agency with water supply, water management or land use responsibilities in a given groundwater basin (or a combination of such agencies) can become the groundwater sustainability agency for that basin.[11]

The SGMA gives sustainability agencies a number of powers and authorities in addition to those they already may possess. Agencies are authorized, among other things, to conduct investigations; require registration of facilities that extract groundwater; require said facilities to measure the amount of water they extract; acquire property including water rights; regulate, limit or allocate groundwater extraction; and authorize transfers of groundwater allocations. [12] They also have the power to “impose fees, including . . . permit fees and fees on groundwater extraction” to support their activities, and to bring enforcement actions seeking civil penalties for violations relating to rules implemented pursuant to the SGMA. [13]

The SGMA’s use of local planning and management – as opposed to purely centralized state control – should be viewed as valuable opportunities for informed and proactive water users to have a say in groundwater sustainability planning from the start.

State Oversight and Intervention

While the SGMA generally emphasizes local management of groundwater resources, it does provide for state involvement on a number of levels. For example, DWR must develop and publish best management practices for sustainable groundwater management, and it is responsible for reviewing sustainability plans every five years to ensure compliance with the SGMA.[14] In addition, the State Water Resources Control Board (“SWRCB” or “State Board”) can “designate a basin as a probationary basin” for failure to develop a groundwater sustainability plan where one is needed, or for implementation of an insufficient plan.[15] If a local agency fails to remedy the problem that led to a designation, the State Board may adopt its own interim sustainability plan for the basin.[16]

DWR is also tasked with establishing the initial priority for the state’s groundwater basins, a job of considerable consequence given that many of the SGMA’s requirements apply only to those basins designated as high or medium priority.[17] DWR has announced that the basin designations it finalized under the California Statewide Groundwater Elevation Monitoring program will serve as the initial prioritization required by the SGMA.[18]

Timeline

Following are some of the more important deadlines for future actions to implement the SGMA:

  • June 1, 2016: DWR must adopt regulations for evaluating sustainability plans, implementation of sustainability plans, and plan alternatives.
  • December 31, 2016: DWR must publish a report with its best estimate of water available for groundwater replenishment throughout the state.
  • January 1, 2017: DWR must publish best management practices for sustainable groundwater management. Agencies wishing to submit alternatives to groundwater sustainability plans must do so.
  • June 30, 2017: the State Board can designate basins as probationary if no local agency has elected to be a groundwater sustainability agency and intends to develop a sustainability plan or has submitted an alternative.
  • July 1, 2017: if, after this date, a groundwater sustainability agency or county has not assumed responsibility for a groundwater basin, many water users will be subject to mandatory extraction reporting.
  • January 31, 2020: high- and medium-priority basins subject to “critical conditions of overdraft” must be managed under a groundwater sustainability plan or plans.
  • January 31, 2022: all other high- and medium-priority basins must be managed under a groundwater sustainability plan or plans.

Conclusion

The SGMA fundamentally changes the way groundwater is regulated in California. There is no doubt that implementation of the law will be controversial and will invariably generate considerable litigation, particularly in California’s Central Valley. Looming restrictions on the use of groundwater by the state’s agricultural community, at a time when other resources have become increasingly scarce, will have severe impacts on farms and ranches throughout the state. Ranchers, farming interests and water districts already are lining up to position themselves to avoid the most onerous potential consequences of the new regulatory regime.

Many with experience in the long battles over access to the state’s principal sources of surface waters (e.g., the San Francisco Bay – Sacramento and San Joaquin River Delta) worry that the real fight over water rights – this time the right to access groundwater on a continuing basis – is yet to come.

For more information, please contact Kevin Haroff in the Firm’s San Francisco office.

[1] 33 Cal. 2d 908, 207 P. 2d 17, 207 P. 217 (1949).

[2] See Cal. Water Code § 10727(b).

[3] See id. §§ 10727.2-10727.6.

[4] See id. § 10727(a), (b).

[5] Id. § 10721. The SGMA lists the following as potential undesirable results in this context: (1) chronic lowering of groundwater levels indicating a significant and unreasonable depletion of supply if continued over the planning and implementation horizon; (2) significant and unreasonable reduction of groundwater storage: (3) significant and unreasonable seawater intrusion; (4) significant and unreasonable degraded water quality, including the migration of contaminant plumes that impair water supplies; (5) significant and unreasonable land subsidence that substantially interferes with surface land uses; and (6) depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of the surface water.

[6] Id. § 10720.3.

[7] Id. § 10720.8. The Act does, however, require the water master or local agency for each adjudicated area to submit certain documents relating to the adjudication, as well as annual reports containing information relating to water use in the basin “to the extent available.” Id.

[8] Id. § 10720.7.

[9] See http://www.water.ca.gov/groundwater/sgm/SGM_BasinPriority.cfm.

[10] Cal. Water Code § 10720.1(h).

[11] See Id. § 10723(a), 10721(m). The SGMA also lists several local agencies as the presumptive exclusive sustainability agencies for their respective basins. Id. § 10723(c).

[12] Id. §§ 10725.4 – 10726.4.

[13] Id. §§ 10730(a), 10730.2, 10732.

[14] Id. §§ 10733, 10733.8.

[15] Id. § 10735.2.

[16] Id. § 10735.8.

[17] Id. § 10720.7.

[18] See http://www.water.ca.gov/groundwater/Sustainable_GW_Management/SGM_BasinPriority.cfm. A list of these basin designations can be found at http://www.water.ca.gov/groundwater/casgem/pdfs/lists/StatewidePriority_Abridged_05262014.pdf.

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