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The California Drought and Its Impact on State Water Law and Policy

July 28, 2015

California is now well into its fourth year of historic drought conditions. The drought’s impact on the state’s $2.2 trillion economy, the seventh largest in the world,[1] has been widely publicized.[2] Less well known is its impact on the arcane system of legal rules governing the distribution and use of water throughout the state. The current drought is forcing government regulators and water users alike to question the efficacy of a legal system initially put into place nearly a century ago. The result will be changes in state water law and policy that Californians are only now beginning to appreciate.

On April 1, 2015, California Governor Jerry Brown issued Executive Order B-29-15, mandating statewide water restrictions for the first time in the state’s history. The order directed the State Water Resources Control Board to impose restrictions designed to achieve a statewide 25 percent reduction in potable urban water usage through February 28, 2016. It also directed urban water suppliers to develop rate structures and other pricing mechanisms to maximize water conservation consistent with statewide water restrictions. Implementation of these restrictions on urban water use is currently underway throughout the state.

Governor Brown’s executive order did relatively little to address water use by the state’s biggest consumer of water resources – California’s agricultural sector. The state has one of the most productive agricultural communities in the nation, producing nearly half of all fruits, nuts, and vegetables grown in the United States.[3] Most of this production depends on irrigated agriculture – 9 million acres of farmland in California are irrigated, representing about 80 percent of the total amount of water used for non-environmental purposes. Yet, the state’s farmers and ranchers were effectively exempted from Brown’s mandatory use restrictions.

Some have argued that the reason for the exemption was simply because of California agriculture’s tremendous economic clout.[4] In reality, the story is more complicated and has just as much to do with the state’s long established system of water rights priorities. As a result, even though the Governor’s executive order did not focus on agriculture, the State Board nevertheless has begun to do so on its own – pursuant to its existing, independent authority over water rights under the California Water Code as a general matter.

The Challenge of Allocation in Times of Scarcity

Much of California’s irrigated agriculture, located primarily in the state’s Central Valley, depends on two, very large government water projects – the State Water Project (“SWP”), which is managed by the California Department of Water Resources (“DWR”) and the federal Central Valley Project (“CVP”), which is run by the federal Bureau of Reclamation within the U.S. Department of the Interior.

These two projects operate a complex water storage and conveyance system that takes water from the Sacramento and San Joaquin River Delta and delivers it to farmers and ranchers throughout the Central Valley pursuant to long-term contracts. Under the terms of those contracts, DWR and the Bureau have the right to reduce deliveries – even to as much as zero – at times when their own water supplies are constrained. Both the Bureau and DWR have relatively junior rights to water delivered through the Delta. This means that under California law, their rights get cut off before those with more senior rights, including riparian rights holders and users with appropriative rights obtained at an earlier point in time.

In 2014, as a direct consequence of the drought, DWR reduced deliveries to SWP contractors to zero for the first time in its history.[5] The allocation was increased in 2015, but not by much – initially set in December 2014 at 10% of the amount requested by contractors, it was later raised to just 15% of requested amounts.[6] CVP contractors have fared no better. Agricultural contractors also received zero allocations in 2015, although municipal and industrial (M&I”) contractors have been allocated enough water to meet health and safety needs or 25% of historical supply, whichever is greater.[7]

As water supplies have continued to diminish in 2015, the State Board has determined that even holders of the most senior water rights must share some burden for responding to the drought. On June 12, the Board issued administrative notices to 276 of the state’s most senior diverters, directing them to curtail their own diversions pursuant to those rights. Parties receiving curtailment notices included individual property owners, irrigation districts, hydroelectric facilities, state agencies, private businesses and at least two communities that provide drinking water for municipal use.[8] A few weeks later, the Board issued similar notices to additional senior water rights holders, including the City and County of San Francisco.[9] San Francisco’s rights to divert water from the Tuolumne for storage in Hetch Hetchy Reservoir date back to 1903.

The State Board’s curtailment notices have already prompted the commencement of litigation by disaffected water rights holders. On June 22, the San Joaquin Tributaries Authority – a group made up of the South San Joaquin, Oakdale, Modesto, Turlock and Merced irrigation districts, and the city and county of San Francisco – filed an action with the Stanislaus County Superior Court in Modesto, claiming that the State Board lacked authority to curtail their rights in the absence of evidence that curtailment was necessary to protect even more senior rights holders.[10] In a separate action, a Sacramento County Superior Court Judge has issued a temporary restraining order barring the State Board from enforcing its curtailment orders on constitutional grounds – according to the court, issuing the orders without a “pre-deprivation” hearing violated the petitioner's constitutional right of due process.[11]

Despite these challenges, the State Board appears determined to pursue aggressive enforcement actions against water diverters it believes are violating curtailment directives. In a widely-publicized example, Board staff recently issued an administrative complaint and proposed order assessing a 1.5-million fine against a Northern California irrigation district after it allegedly diverted more than 670 million gallons of water for two weeks after receiving a curtailment order.[12] 

These newly filed court cases and administrative proceedings provide a rare opportunity to test the boundaries of state authority to regulate California’s previously abundant, but now scarce surface water resources. It is a fundamental principle of California water law that “[a]ll water within the State is the property of the people of the State ….”[13] This principle is embodied in the state constitution, which makes clear that the right to use water is limited by prohibitions against waste and unreasonable use.[14] From the state’s perspective, the authority to curtail diversions during times of prolonged drought, including diversions from the most senior water rights holders, is entirely within the scope of its regulatory authority under these constitutional and statutory provisions. To the extent the courts adopt the same perspective, the rules governing California’s water rights system may be changed forever.

Implications for California’s Other Water Resource – Groundwater

The recent focus on the drought and its impact on California’s surface water resources has drawn attention away from what may be an even greater challenge – its impact on the state’s groundwater resources. As access to surface water becomes increasingly constrained, the state’s farmers and ranchers have become more and more dependent on groundwater to make up the difference. As a result, groundwater basins around the state are becoming drastically overdrawn, lowering water tables by 50 feet or more and often causing widespread land subsidence.[15]

Historically, California has never managed its groundwater supplies on a state-wide basis. The right to use groundwater traditionally has been viewed as a property right attached to overlying surface lands, and under the doctrine of correlative rights, land owners had a common right to the beneficial use of percolating waters underlying their property.[16] When an underlying aquifer became overdrawn, courts could allocate pumping rights among overlying land owners through an adjudicatory procedure; however, groundwater adjudications historically have been highly adversarial, taking years to complete at great expense. As a result, only a handful of groundwater basins, primarily in Southern California, have been successfully adjudicated.

Frustration over this state of affairs led the California legislature in 2014 to enact the Sustainable Groundwater Management Act (“SGMA”).[17] 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 agencies operating in the same basin, to state-imposed plans where no sufficient local plan exists.[18]

While SGMA has the potential to bring an element of regulatory consistency to California’s approach to groundwater management, there is some concern that it could undermine local control by landowners who view access to underlying groundwater resources as a fundamental property right. As a result, various bills have been introduced in the state legislature to streamline procedures governing court-supervised adjudications that might pre-empt application of SGMA’s regulatory approach. An example is Assembly Bill 1390 (Alejo; D-Salinas), which passed the Senate Natural Resources and Water Committee on June 23, 2015 with a bipartisan vote of 8 to 0. AB 1390 would clarify court procedures that apply to comprehensive groundwater adjudications, encourage early settlement and avoid disruption of local groundwater planning.

AB 1390 and similar legislation may or may not make its way into law. Even if it does, it is unlikely to change the dynamic triggered by the enactment of SGMA. California has set itself on an irrevocable course of change in the way it manages its groundwater resources, and as the California drought continues, the importance of change is likely to become ever more self-evident.

El Niño Saves the Day – Or Does It?

The prolonged California drought clearly has had a dramatic impact on the way in which the state is managing both surface and groundwater resources. In general, the changes that have been implemented could help sustain the state’s position as a leader not just in agriculture, but in the nation’s economy as a whole.

Some worry, however, that if the drought comes to an end, the incentive for change may end with it. They point to growing consensus that the winter of 2015-16 may be one of the wettest on record, thanks to an unusually powerful El Niño weather system that forecasters seem increasing confident is about to materialize.[19] The hope is that the system will bring rain throughout the state and snow in the Sierra Nevada and the state’s mountains to the north, replenishing the state’s reservoirs and avoiding the need for further restrictions on water use.

That may or may not happen, although even if it does, the drought has already been so persistent and severe that even the wettest of winters may not be enough to fully reverse its effects. More important, the long-term impact of global climate change is likely to result in drier conditions throughout the state generally for many years to come. As a result, many of the issues discussed above – related in particular to the scope of state authority to restrict water use by property owners and others with long established water rights – should become even more important over time.

For more on this topic, please contact Kevin Haroff or any member of Marten Law’s Water Resources team. 

[1] Michael B. Marois, and Shin Pei, “Brown’s California Overtakes Brazil with Companies Leading World,” Bloomberg Business, January 15, 2015.

[2] See, e.g., Adam Nagourney, Jack Healy and Nelson D. Schwartz, “California Drought Tests History of Endless Growth,” New York Times, April 1, 2015.

[3] California Department of Food and Agriculture, “California Agricultural Production Statistics,” (accessed July 27, 2015).

[4] David Siders and Jeremy B. White, “California Agriculture, Largely Spared in New Water Restrictions, Wields Huge Clout,” Sacramento Bee, April 2, 2015.

[5] Press Release, “DWR Drops State Water Project Allocation to Zero, Seeks to Preserve Remaining Supplies – Severe Drought Leads to Worst-Ever Water Supply Outlook,” California Department of Water Resources, January 31, 2014.

[6] Press Release, “DWR Increases 2015 Allocation to Water Contractors,” California Department of Water Resources, January 15, 2015.

[7] Press Release, “Reclamation Announces Initial Water Supply Allocation for Central Valley Project,” February 27, 2014.

[8] Kurtis Alexander, “California Tells Senior Water Rights Holders to Stop Pumping,” San Francisco Chronicle (SFGate), June 12, 2015.

[9] Dale Kasler, “California Cuts More Water Rights, Including San Francisco’s,” Sacramento Bee, June 26, 2015, .

[10] Pamela Martineau, “Irrigation Districts Sue State Water Board Over Curtailment Notices,” Association of California Water Agencies Water News, June 22, 2015.

[11] Bettina Boxall, “Superior Court Judge Faults State's Process of Curtailing Water Rights,” Los Angeles Times, July 10, 2015.

[12] Matt Stevens and Monte Morin, “State Proposes $1.5-Million Fine On Water District For Improper Diversions,” Los Angeles Times, July 20, 2015.

[13] California Water Code section 102.

[14] California Constitution, Article X, section 2.

[15] Justin Gillis and Matt Richtel, “Beneath California Crops, Groundwater Crisis Grows,” New York Times, April 5, 2015.

[16] 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.” 33 Cal. 2d 908, 207 P. 2d 17, 207 P. 217 (1949).

[17] California Water Code sections 10720-10720.9.

[18] For a more exhaustive discussion of the requirements of the SGMA and issues related to its implementation, see Kevin T. Haroff and Zachary Kearns, “New Groundwater Legislation Will Have Dramatic Impacts on California Agriculture,” Marten Law News, January 22, 2015.

[19] Hailey Branson-Potts and Rong-Gong Lin Ii, “It's Critical El Niño Hits Northern California. Why Experts Are Growing Optimistic,” Los Angeles Times, July 23, 2015.

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