By Russell McGlothlin

The enactment of the Sustainable Groundwater Management Act of 2014 (“SGMA”) was a bold first step toward managing California groundwater.  SGMA requires local agencies to elect to be “groundwater sustainability agencies” or “GSAs” to develop “groundwater sustainability plans” or “GSPs” for the state’s most at-risk basins.  If local agencies fail to timely comply with SGMA’s requirements, the act allows the state to intervene and promulgate a plan for the basin.  GSPs must curtail the adverse consequences of groundwater overdraft, such as subsidence, seawater intrusion, and long-term supply depletion, within 20 years of the plan’s adoption.

Despite its merits, SGMA is an incomplete remedy to California’s groundwater management problems.  The legislature left key issues unresolved.  The act does not provide for a determination of groundwater rights and how they relate to pumping allocations and obligations to fund basin replenishment and management.  SGMA also does not does not set definitive criteria for determining a basin’s sustainable yield and resolving other technical matters that inform the amount of groundwater that may legally be pumped from a basin and who is allowed to do so.  Further, SGMA does not establish a procedure to resolve disagreements over which local agency or combination of agencies will assume the role of the GSA.  These difficult issues must either be resolved through negotiation or litigated through groundwater basin adjudication.

Historically, roughly two dozen groundwater basins in California have been adjudicated and are now managed pursuant to court-administered management plans.  Once complete, adjudications typically afford efficient and sustainable groundwater management by limiting cumulative groundwater production to the basin’s “safe yield,” establishing programs to enhance available yield, comprehensively adjudicating groundwater rights, and creating discrete individual pumping allocations.  Adjudications also allow for voluntary transfers of pumping allocations and maintain the court’s continuing jurisdiction to oversee the management plan and to adapt the plan over time.  The significant downside of historical groundwater basin adjudications has been the time and expense required to complete them; some adjudications last several decades or longer.

The potential delay in processing of an adjudication is inconsistent with SGMA’s goal of achieving sustainable groundwater management within 20 years.  The adjudication process must be sustainably streamlined.  In his signing statement for SGMA, Governor Brown promised to introduce legislation to reform the adjudication process.  In July 2015, the Brown Administration released its proposal.  The Administration’s proposal borrows heavily from the provisions in AB 1390 (Alejo), a pending bill to reform the adjudication procedure which was promulgated by the California Farm Bureau with input from the Association of California Water Agencies and other stakeholders.  Another adjudication reform bill carried by Senator Pavley (SB 226) was amended on August 10, 2015 to incorporate much of the Administration’s proposal.

Many aspects of the Administration’s proposal and AB 1390 are similar and appear to have broad support within the water management community.  Each proposal includes provisions to:

•  Ensure that adjudications comprehensively cover all groundwater rights within the basin;

•  Establish an efficient method to serve all potential groundwater claimants, including all landowners overlying the basin, whether or not they are current pumpers;

•  Deem adjudications as complex litigation;

•  Limit or eliminate peremptory judicial challenges and establish special judicial assignment procedures;

•  Authorize the court to set trial phases, stay the litigation to allow for progress on a GSP or other settlement initiatives, and appoint special masters;

•  Require litigants to make early factual disclosures concerning groundwater pumping and use, among other disclosure requirements;

•  Require parties to submit direct testimony in writing; and

•  Create special features to encourage the parties to pursue settlement and specific procedures for the court to review proposed settlement stipulations.

AB 1390 and the Administration’s proposal differ in the location of the new law in California Code. AB 1390 would place the reform provisions in the Code of Civil Procedure whereas the Administration’s proposal places the reforms in the Water Code as a new chapter within SGMA.  Other notable differences include provisions in the Administration’s proposal that would:

•  Allow the state to intervene as a party in adjudications;

•  Empower the court to adopt a preliminary injunction limiting groundwater production while the adjudication proceeds;

•  Authorize a court to “subordinate” dormant (unexercised) overlying rights of landowners in a manner similar to subordination of riparian rights within a comprehensive stream adjudication; and

•  Expressly allow the court to join individuals claiming rights to divert from surface water sources that are interconnected with the basin’s groundwater supply.

The two proposals also differ with respect to how a final judgment in an adjudication action would relate to SGMA’s GSP requirements.  The Administration’s proposal would allow an approved stipulated judgment to avoid SWRCB enforcement under Chapter 11 of SGMA, but only if any existing GSA and the Department of Water Resources (DWR) both concur that the stipulated judgment is consistent with SGMA’s objectives.  The Administration’s proposal should be revised in this respect.  As written, it would allow a GSA and DWR to determine compliance with the law over a court’s determination, effectively inverting the checks and balances between the judicial and executive branches of government.  While it is entirely appropriate that a GSA and DWR both participate in proceedings to inform the court of their views of consistency between an adjudication judgment and SGMA objectives, the ultimate determination of legal sufficiency must rest with the court.  If a court determines that an adjudication judgment sets forth a management plan that will achieve sustainable groundwater management in the same caliber as a GSP under SGMA, the judgment should govern the basin and a separate GSP should not be required for the basin.  A contrary result would risk incongruous management directives between the judgment and a GSP, leading to an unworkable result.

Overall, there appears to be substantial consensus on many aspects of adjudication reform, and a bill is likely to pass this year.  Provided that the critical issue of harmonizing groundwater adjudication judgments and SGMA, noted above, can be resolved appropriately, the result will be the second necessary step for a complete legal framework to achieve sustainable groundwater management in California