California Enacts Historic Groundwater Legislation In The Midst Of A Historic Drought
In the midst of a historic drought, California groundwater law is undergoing historic changes. This past year, the California Legislature, for the first time, enacted comprehensive groundwater legislation requiring that groundwater be regulated to achieve “sustainable groundwater management”. While landowners can take some comfort in the Legislature’s stated intent to respect existing groundwater rights, landowners should be aware that the legislation authorizes agencies to restrict or even stop existing groundwater uses.
To understand the new legislation, some background on California groundwater law is necessary. There are essentially two types of groundwater rights: overlying rights and appropriative rights. Under the common-law overlying-rights rule, a property owner generally has the right to pump and use as much groundwater from underneath the property as the owner wanted, even if that water was to be exported from the property and used elsewhere. But the California Supreme Court, in the landmark 1903 case Katz v. Walkinshaw, modified the overlying-rights rule for this state. In departing from that rule, the Court observed that the common law should change with the circumstances. The common-law groundwater rule developed in a country (England) where water is “abundant”, and where there is “little difficulty” in finding alternative supplies. But the circumstances in California, observed the Court, are “radical[ly]” different: there is water “scarcity”, and much of the value of property is dependent on water being available. Adoption of the common-law groundwater rule here would likely promote only conflict and inequity.
Instead, the Court adopted what it called the “rule of correlative rights”. The correlative-rights rule imposes both an absolute and a relative limit on overlying rights. In all cases, the right is limited “to such amount of water as may be necessary for some useful purpose in connection with the land from which it is taken.” In other words, overlying rights do not entitle a landowner to export groundwater to areas that do not overlie the area from which the groundwater was pumped, or to use more water on the overlying property than necessary. And as between landowners overlying the same “water-bearing strata” (what we might today call the same groundwater basin), the correlative-rights rule gives to each “a fair and just proportion”. So property owners overlying the same groundwater basin are entitled to share that groundwater for use on their overlying properties.
Appropriative rights are more free-wheeling. Anyone who is able to extract groundwater and put it to a reasonable use may generally do so; this is called appropriation. Appropriative rights start off as junior to overlying rights, and so overlying users harmed by an appropriation are entitled to an injunction to stop the appropriation. But appropriators who take groundwater from an overdrafted basin for at least five years may gain a prescriptive right to keep doing so, even in a manner that harms overlying owners.
The courts have long been called upon to resolve groundwater disputes, either on a case-by-case or basinwide basis. But California had been the only Western state to not have any real statewide regulation of groundwater. As the late, great Professor Joseph Sax described it: “groundwater is effectively unregulated. People who have access to groundwater can just pump it. They need no one’s permission, and no one regulates their use.”
This is now set to change dramatically. Governor Brown has now signed into law sweeping new legislation to comprehensively regulate groundwater in California for the first time. The new law is complex in its details, but its overall structure is fairly straightforward. Its goal is to achieve “sustainable groundwater management”, which is essentially the concept that groundwater use should be managed so as to not cause “undesirable results”. “Undesirable results” include “[c]hronic lowering of groundwater levels”, significant loss of groundwater storage, significant seawater intrusion and degradation of water quality, significant land subsidence, and significant adverse impacts to interconnected surface-water bodies.
The legislation generally requires that basins ranked by the Department of Water Resources as being of “high” or “medium” importance be managed under a “groundwater sustainability plan” by 2022. (The Department has already ranked the State’s 515 groundwater basins and sub-basins into one of four categories of importance: “high”, “medium”, “low”, or “very low”.) Over the next two years, the Department will be developing regulations governing groundwater sustainability plans, including what those plans must contain and how the Department will evaluate whether the plans are adequate.
The new legislation looks primarily to local agencies to develop and implement these groundwater sustainability plans. (The legislation exempts the preparation and adoption of groundwater sustainability plans from the California Environmental Quality Act (CEQA).) Any local agency, or combination of agencies, with authority over an area in which a groundwater basin is located may elect to be responsible for that basin’s groundwater management. The legislation refers to the responsible agency or agencies as the “groundwater sustainability agency”. If no local agency takes responsibility for being the groundwater sustainability agency, the county is presumed to be the responsible agency. If the county declines that responsibility, then groundwater users must report their use directly to the Department of Water Resources, and may find themselves being directly regulated by the State Water Resources Control Board as a “probationary” basin.
Groundwater sustainability agencies will have broad powers to regulate groundwater use in their jurisdictions. Although the Legislature declared its intent “[t]o respect overlying and other proprietary rights to groundwater”, the legislation empowers groundwater sustainability agencies to “control groundwater extractions” by “regulating, limiting, or suspending extractions”, and by “establishing groundwater extraction allocations”. The legislation also gives groundwater sustainability agencies the power to impose substantial civil penalties for violations. In other words, these agencies will have the power to regulate and enforce who can pump, where they can pump, when they can pump, and how much they can pump.
The new law also empowers the State to act as a backstop by regulating groundwater basins if the local groundwater sustainability agency does not make sufficient progress towards achieving groundwater sustainability. If the Department of Water Resources determines that a groundwater sustainability plan is inadequate or not being implemented, that the basin remains in a condition of long-term overdraft, or that extractions from it continue to cause significant depletions of interconnected surface water, then the State Water Resources Control Board is to develop an “interim plan” of actions needed to correct those conditions. In other words, the Board will directly regulate local groundwater use.
The new law also gives substantial deference to groundwater adjudications. California courts have long entertained what are essentially actions for declaratory and injunctive relief to adjudicate the groundwater rights within a basin. Groundwater adjudications are typically brought by large landowners or groundwater producers against as many other landowners or groundwater producers within the basin as possible. Once an adjudication is filed, the court has wide latitude to fashion what the California Supreme Court has said should be a “just and equitable” solution, taking into account the parties’ respective water rights, priorities, established uses, potential physical solutions, and many other factors. Although adjudications tend to be lengthy and costly, they also tend to be effective once completed: commentators have observed that, to date, the only groundwater basins that have been effectively managed in California are those that have been adjudicated.
The legislation exempts each of the state’s approximately two dozen adjudicated basins by name in the legislation, and the three other basins where adjudications are pending will be exempted once the adjudication becomes final. The legislation also allows groundwater sustainability agencies to propose adjudication of the basin as an alternative to developing a groundwater sustainability plan. And the legislation allows the State Water Resources Control Board to stay its own direct regulation of local groundwater use if an adjudication action is pending.
The new legislation gives rise to many difficult but important decisions in the months and years ahead. Local public agencies—such as water districts, cities, and counties—will have to decide whether they want to become groundwater sustainability agencies and, if so, how to develop groundwater sustainability plans. If more than one agency volunteers for the job within a basin, those agencies will have to figure out how to cooperate in the development of one or more groundwater sustainability plans.
Private landowners will also have to understand how best to influence the regulation that is coming, and then how to comply with that regulation when it arrives. Some may ultimately decide to initiate adjudication actions in the hope of achieving a better result through the courts than they might get from the agencies.
The author is grateful to hydrogeologist Derrik Williams, of Hydrometrics WRI, for sharing his thoughts on the new legislation.
Briscoe Ivester & Bazel LLP
155 Sansome Street, 7th Floor
San Francisco, CA 94104
Telephone: (415) 402-2700
Fax: (415) 398-5630