An Overview of Current Perspectives Concerning California’s Sustainable Groundwater Management Act

I recently attended a two-day seminar entitled Groundwater Regulation and Management in California which involved a comprehensive review of California’s new Sustainable Groundwater Management Act (SGMA). The conference was heavily attended by a number of interested stakeholders, including the heads of large water districts and water agencies; government representatives (Department of Water Resources and Attorney General); prominent water, government, and land use attorneys; consultants; and others. SGMA is a landmark law that is poised to completely change the way groundwater is viewed under the law and used by everyone in California.

The focus in the law is on the various groundwater basins, or below-ground areas where groundwater flows and can be withdrawn by pumping for productive use. There have been a number of stories written recently involving areas, particularly within the Central Valley of California, in which groundwater levels have dropped dramatically and the ground surface has been shown to have subsided substantially. One photograph displayed at least three times during the conference showed an area in the Central Valley where the groundwater had subsided at least 70 feet due to groundwater pumping. Groundwater has typically been legally owned under a scheme that gives priority to the overlying property owner for the owner’s reasonable use and appropriative rights (typically to water agencies or other government agencies) for the differential not used by the overlying owners; any remaining groundwater can be acquired under the law of prescription. A prominent water law attorney advised that it is critical for landowners to immediately document their use, and specifically the pumping of their groundwater wells, in order to later prove the amount and reasonableness of their use, as these issues are certain to come into question over time and as SGMA takes effect. Otherwise, how will landowners prove their starting point or the seniority of their rights?

Historically, where there have been disputes concerning the management and use of groundwater in a particular basin, stakeholders have resorted to the courts and received a handful of adjudications determining priority and reasonable use. Some of these cases have taken more than 10 years to resolve themselves, and there is some suggestion that one of the areas of possible improvement of the SGMA law may be to enact streamlining rules for groundwater litigation. These cases are typically very complex and expensive, and because they focus on what is “fair,” the results are often unpredictable. One important unanswered question under the law is how to deal with unexercised overlying rights, since under current law, ownership of land confers the right to reasonable use of its groundwater. Several presenters warned against the idea that adjudication was a reasonable alternative to compliance with SGMA.

Two critical deadlines under SGMA were discussed at great length during the two-day conference. The first deadline is that Groundwater Sustainability Agencies (GSAs) must be formed by June 30, 2017. The GSAs must conform to a series of medium and high priority groundwater basins that bear no reasonable relationship to current County or political boundaries.  Instead, the configuration of GSAs has everything to do with the below-ground geohydrology of the basins in question and whether or not they are “critically” over-drafted (read: over-pumped). In any area of the state where a GSA is required to be formed by the June 30, 2017 deadline, if no GSA is formed the State of California will step in and assume oversight of the groundwater in that basin and impose sizable costs and other restrictions.  It was universally agreed that having the state as the backstop was a far more draconian situation than local control exercised by a GSA.

There is little guidance in SGMA concerning how GSAs are to be formed. Joint Powers Authorities are available as a mechanism. Local counties are the backstop GSA of last resort, but as indicated above, their political boundaries do not necessarily conform to those of any particular groundwater basin. Several of the presenters at the conference indicated that simply having the local water district act as the GSA and assemble a plan would be a mistake and would not bode well for the success of the eventual groundwater plan: the GSA’s only mission should be to manage groundwater. SGMA provides that the eventual plan can be prepared by a single GSA or multiple GSAs, but if multiple GSAs are involved the plan has to be submitted jointly, as the law compels collaboration or, in other words, utilization of the same data and methodologies. Anything short of this is likely doomed to fail as far as the DWR’s oversight of the eventual groundwater plan is concerned.

The ultimate groundwater plan—or more properly, the Groundwater Sustainability Plan (GSP) —must address the issue of sustainability of the groundwater within a basin and specifically four factors: (1) groundwater levels, (2) water quality, (3) ground surface subsidence, and (4) surface water/groundwater interaction (in other words whether surface waters—lakes, rivers. and creeks—are being impacted by groundwater pumping). There was extensive discussion of the measurement and utilization of recharge of groundwater basins. One representative of a large Southern California water district even offered the following equation to prove sustainability: pumping = recharge. Other concepts utilized by large water agencies that were discussed involve water banking in other jurisdictions, importing and reusing treated water.

The second important deadline under SGMA that must be borne in mind involves when the GSP is due to the DWR. For critically impacted high or medium priority basins, the GSP is due by January 31, 2020. All other high or medium priority basins for which he GSP is required must submit their reports by January 31, 2022. Although there is already a widely known document (DWR Bulletin 118) published which defines the high and medium priority basins, a DWR report is due out within days which will offer further definition of exactly where the “critically” impacted high and medium priority basin are located.

There are some important but potentially confusing exemptions under the SGMA law.  One is that the preparation of a GSP is exempt from CEQA. A prominent land-use consultant spoke about the significant disconnect between land use decisions and water supply projects. He pointed out, for example, that in a county general plan water is not a required element, and there is no requirement of consistency between a land-use and water supply. Further, the recent enactment of SB 610, which tried to bring together concepts of land-use and urban water management, only applies to projects of 500 or more units. Given the project-based, disclosure focus of CEQA, this presenter predicted that concepts within the SGMA law (for example, “sustainable yield” and “undesirable result”) would eventually make their way into land-use planning and CEQA, and that there would also be cleanup legislation enacted by the CA Legislature in the not-too-distant future.

Another exemption from the SMGA law involves basins in which the water rights of the parties have already been the subject of an adjudication.  However, various participants questioned whether adjudicated basins were really exempt. No court has thus far tested the “sustainable” part of the new law. As one large urban water district manager pointed out, the law still requires exempt parties to an earlier adjudication to report their groundwater storage and use, which means to him that the sustainability of those numbers could still (and will likely be) subject to challenge. As a practical matter, he offered, if the state Attorney General came into the court in which matter had been adjudicated and began to raise arguments that the water use was not reasonable or sustainable, the local judge could be pressured into modifying or setting aside the earlier adjudicated conclusion. Another consultant even went so far as to suggest that ultimately, sustainability under the new law could trump existing concepts of groundwater rights altogether. Many predicted further significant litigation and “a wave of legal challenges” to come. The manager of the larger urban water district opined that counties should right now be conducting an audit of groundwater supply and demand and that there are likely to be further enactments in the future which will increase the scope of regulation of groundwater in California.

There was also discussion of funding available for GSAs in connection with the preparation of their GSPs.  Areas identified as needing funding included preparation of the sustainability plan; conducting inspections/enforcement; project construction, where necessary; and operations and maintenance. Revenue sources identified included taxes, assessments, project-related fees, and regulatory fees. The SGMA law has some tools of its own available to GSAs for raising revenues. Funding for operations, for example, can be levied from groundwater extractions.

Notably absent from this conference were any agricultural groundwater users or stakeholders from those areas, particularly in the south and southwestern portions of the California Central Valley. Apparently the strength of the agricultural industry resulted in the original removal by amendment of a provision which essentially stated there could be no more agricultural use of groundwater in any particular basin unless it was proven to be sustainable. One presenter predicted this provision would be coming back in further future enactments amending the SGMA law. Most of the stakeholders agreed that some form of management or regulation of agricultural groundwater use was going to be necessary in the future in order to make the SGMA law work.

Additional questions were also raised, and it was agreed that these also posed significant additional uncertainties under the new SGMA law—for example, environmental concerns regarding the impacts of extensive groundwater pumping on surface waters (lakes, rivers, streams, and creeks) and untested legal theories regarding the existence and quantification of native Californians’ rights to groundwater and groundwater storage.

Public management of groundwater use is coming – for everybody.  The new SGMA notwithstanding, questions concerning the reasonableness of any party’s use of groundwater and of the sustainability of groundwater pumping in a particular area will continue to present uncertainty for the various stakeholders for the foreseeable future.

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