Existing law prohibits a court from approving entry of judgment in certain adjudication actions for a basin required to have a groundwater sustainability plan under the Sustainable Groundwater Management Act, unless the court finds that the judgment would not substantially impair the ability of a groundwater sustainability agency, the State Water Resources Control Board, or the Department of Water Resources to comply with the act and to achieve sustainable groundwater management.

This bill would require the court parties to an adjudication action to refer a submit a proposed settlement agreement determining rights to water to the board for a nonbinding advisory determination as to whether the proposed judgment settlement agreement will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management, management before filing the proposed settlement agreement with the court. The bill would require the board to provide its nonbinding advisory determination to the parties no later than 120 days after the proposed settlement agreement was submitted, and would require the parties to include the boards nonbinding advisory determination in the court filing, as provided. The bill would require the board to consult with the department before making its nonbinding advisory determination, and would require the nonbinding advisory determination to include findings on the consistency of the proposed judgment settlement agreement with the groundwater sustainability plan, as specified, plan and on how the proposed judgment settlement agreement would affect small and disadvantaged groundwater users. users, as specified.

Existing law prohibits a court from approving entry of judgment in certain adjudication actions for a basin required to have a groundwater sustainability plan under the Sustainable Groundwater Management Act, unless the court finds that the judgment would not substantially impair the ability of a groundwater sustainability agency, the State Water Resources Control Board, or the Department of Water Resources to comply with the act and to achieve sustainable groundwater management.

This bill would require the court to refer a proposed settlement determining rights to water to the board for a nonbinding advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management, as provided. The bill would require the board to consult with the department before making its determination. advisory determination, and would require the advisory determination to include findings on the consistency of the proposed judgment with the groundwater sustainability plan, as specified, and on how the proposed judgment would affect small and disadvantaged groundwater users.

Existing law prohibits a court from approving entry of judgment in certain adjudication actions for a basin required to have a groundwater sustainability plan under the Sustainable Groundwater Management Act, unless the court finds that the judgment would not substantially impair the ability of a groundwater sustainability agency, the State Water Resources Control Board, or the Department of Water Resources to comply with the act and to achieve sustainable groundwater management.

This bill would require the court to refer the proposed judgment a proposed settlement determining rights to water to the board for a nonbinding advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management, as provided. The bill would require the board to consult with the department before making its determination.

Existing law prohibits a court from approving entry of judgment in certain adjudication actions for a basin required to have a groundwater sustainability plan under the Sustainable Groundwater Management Act, unless the court finds that the judgment would not substantially impair the ability of a groundwater sustainability agency, the State Water Resources Control Board, or the Department of Water Resources to comply with the act and to achieve sustainable groundwater management.

This bill would require the court to refer the proposed judgment to the board for an a nonbinding advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management. management, as provided. The bill would require the board to consult with the department before making its determination.

Existing law prohibits a court from approving entry of judgment in certain adjudication actions for a basin required to have a groundwater sustainability plan under the Sustainable Groundwater Management Act, unless the court finds that the judgment would not substantially impair the ability of a groundwater sustainability agency, the State Water Resources Control Board, or the Department of Water Resources to comply with the act and to achieve sustainable groundwater management.

This bill would require the court to refer the proposed judgment to the board for an advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management. The bill would require the board to consult with the department before making its determination.

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 560 (Bennett) - Sustainable Groundwater Management Act: groundwater adjudication

Bill Summary:

This bill would require that parties to a groundwater management adjudication action submit a proposed settlement agreement, prior to filing it with the court, to the State Water Resources Control Board (SWRCB) for a nonbinding advisory determination regarding its impact on sustainable groundwater management and small and disadvantaged users, and would also require the SWRCB to provide the determination within 120 days, among other things.

Fiscal Impact:

• The SWRCB estimates ongoing costs of approximately $450,000 annually (Water Rights Fund) to review proposed settlement agreements. However, the SWRCB notes these costs would be offset by a potentially significant savings of staff time if the work avoids a judgement in groundwater adjudication that is inconsistent with the Sustainable Groundwater Management Act (SGMA), and that requiring reimbursement by the parties to the groundwater adjudication could result in the net fiscal impact being minimal.
• The Department of Water Resources (DWR) estimates ongoing costs of roughly $100,000 per year (General Fund) to assist the SWRCB in identifying basin impacts, but notes these costs might not necessarily be incurred every year depending on adjudications.

Background:

Groundwater is a critical source of supply that meets more than 40 percent of water demand in an average year and more than 60 percent of demand during drought years. There are three types of groundwater rights: overlying, appropriative, and prescriptive. The most common of these is the overlying right that entitles “an owner of land overlying groundwater to drill a well and pump groundwater for use of that water, within the basin or watershed” (Littleworth and Garner, 2019). No permit is required to obtain overlying rights and these rights are typically not quantified. Due to this, any landowner may pump as much groundwater as they want so long as the water is put to beneficial use and the use is reasonable (Article X, Section 2 of the California Constitution). As a result of this lack of regulation, many groundwater basins in California are in a state of overdraft (a condition where average annual pumping exceeds average annual groundwater supply in a basin).

The Sustainable Groundwater Management Act (SGMA). To address overdraft and other adverse effects of excessive pumping, the Legislature passed SGMA, which put in place a statewide framework for groundwater management for the first time, but also stipulated that it did not alter surface or groundwater rights. SGMA requires local agencies to sustainably manage groundwater in high- or medium-priority basins by 2040. It also defines sustainable management of groundwater as the avoidance of the following six “undesirable results:” (a) chronic lowering of groundwater levels; (b) reduction of groundwater storage; (c) seawater intrusion; (d) degraded water quality; (e) land subsidence; and (f) depletions of interconnected surface water. SGMA called for the formation of local Groundwater Sustainability Agencies (GSAs), and required that critically overdrafted, high- and medium-priority groundwater basins be managed under a Groundwater Sustainability Plan (GSP). However, because of this existing court-mandated governance, oversight, and management, SGMA does not apply to adjudicated basins.

Groundwater adjudications. A groundwater adjudication is when parties ask a court to resolve conflicts over groundwater rights. An adjudication is initiated when one or more groundwater pumpers files a civil action asking the court to intervene to determine groundwater rights and/or limit pumping to a basin’s “safe yield” (the amount of groundwater pumped that is equal to the average replenishment rate of a groundwater basin).

Groundwater adjudications can cover an entire basin, a portion of a basin, or a group of basins, and may include non-basin areas. Groundwater rights are defined for the overlying landowners and appropriators within the adjudicated area. The court decides who is allowed to extract groundwater, how much they are allowed to extract, and designates a watermaster who ensures the adjudicated areas are managed in accordance with the court ruling. According to Bulletin 118, as of 2020, there are 30 adjudicated areas, mostly in Southern California, that cover portions of 42 groundwater basins. Five of the 42 basins are covered with two or more adjudications.

According to the Water Education Foundation, “through adjudication, the courts can assign specific water rights to water users and can compel the cooperation of those who might otherwise refuse to limit their pumping of groundwater."

State law gives every overlying property owner a potential right in an unadjudicated groundwater basin. As such, determining who has groundwater rights that could be affected by an adjudication and the scope of those rights is difficult and can be a lengthy process; adjudications typically take more than a decade to resolve. Identifying and noticing every party that may have a right, completing technical work and sorting through disagreements over this technical work, and determining historic groundwater use which could affect the scope of one's rights are all factors that can contribute to increasing the time and expense of an adjudication.

In an attempt to streamline the groundwater adjudication process, the Legislature passed SB 226 (Pavley, Chapter 676, Statutes of 2015) and AB 1390 (Alejo, Chapter 672, Statutes of 2015), in the wake of SGMA’s passage. SB 226 requires the court, in an adjudication action to determine rights to groundwater in a basin that is required to have a groundwater sustainability plan (GSP) under SGMA, to manage the proceedings in a manner that minimizes interference with the timely completion and implementation of a GSP, avoids redundancy and unnecessary costs in the development of technical information and a physical solution, and is consistent with the attainment of sustainable groundwater management within the timeframes established by SGMA.

As noted in its analysis of this bill, the Senate Committee on Natural Resources and Water is aware of five pending groundwater adjudications:

• Santa Clara Valley – Oxnard (No. 4-001.2) and Pleasant Valley (No. 4-006) groundwater basins, commenced in December 2022.
• Cuyama Valley groundwater basin (No. 3-013), commenced in March 2022.
• Indian Wells groundwater basin (No. 6-54), commenced in November 2021.
• Upper Ventura River (No. 4-3.01), Ojai Valley (No. 4-2), Lower Ventura River (No. 4-3.02), and Upper Ojai Valley (No. 4-1) groundwater basins, commenced in November 2019.
• Las Posas Valley groundwater basin (No. 4-8), commenced in November 2018.

An additional adjudication in the Borrego Valley groundwater subbasin (No. 7-024.1) commenced in July 2020; the court approved a stipulated judgment to settle this adjudication on April 8, 2021 and the case is no longer active.

Proposed Law:

This bill would require that parties to a groundwater management adjudication action submit a proposed settlement agreement, prior to filing it with the court, to the SWRCB for a nonbinding advisory determination regarding its impact on sustainable groundwater management and small and disadvantaged users, and would also require the SWRCB to provide the determination within 120 days, among other things. Specifically, this bill would:

1. Require the parties to an adjudication action, before filing a proposed settlement agreement with the court, to submit the proposed settlement agreement to the SWRCB for a nonbinding advisory determination as to whether the proposed settlement agreement will substantially impair the ability of a groundwater sustainability agency, the SWRCB, or the DWR to achieve sustainable groundwater management.
2. Require the SWRCB to consult with DWR before making its nonbinding advisory determination and to provide its nonbinding advisory determination to the parties of the adjudication action no later than 120 days after the submission of the proposed settlement agreement.
3. Require the SWRCB’s nonbinding advisory determination to include findings on both of the following:
   1. the consistency of the proposed settlement agreement with the technical findings and conclusions from the existing groundwater sustainability plan adopted by a groundwater sustainability agency and approved by the department; and
   2. how the proposed settlement agreement would affect small and disadvantaged groundwater users under the existing GSP adopted by a GSA and approved by DWR.
4. Require parties to include the SWRCB’s nonbinding advisory determination of the proposed settlement agreement when filing the proposed settlement agreement with the court. The proposed settlement agreement filed with the court is required to be the same as was submitted to the SWRCB for a nonbinding advisory determination.
5. Specify that the court is not bound to enter judgment in a manner consistent with the nonbinding advisory determination of the board.

Related Legislation:

AB 779 (Wilson, 2023) would make various changes relating to the process for groundwater adjudication proceedings, including adding requirements that a court take into account the needs of disadvantaged communities and small farmers when entering a judgment and that groundwater pumpers continue in a groundwater basin subject to an adjudication continue to comply with any applicable GSP.

Staff Comments:

The SWRCB notes that bill could potentially lead to substantial savings by creating an alternative to the State Water Board having to make a formal referral to the Attorney General’s Office to either intervene as a party in groundwater adjudication cases or to file an amicus brief. Both of these current options create costs due to the involvement of the Office of the Attorney General as legal representation and incurring court filings costs.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 560 (Author:Bennett)

Version: June 26, 2023

Hearing Date: July 11, 2023

Fiscal: Yes

Urgency: No

Consultant: AM

SUBJECT

Sustainable Groundwater Management Act: groundwater adjudication

DIGEST

This bill requires the parties to an adjudication action regarding groundwater management, before filing a proposed settlement agreement with the court, to submit the proposed settlement agreement to the State Water Resources Control Board (SWRCB) for a nonbinding advisory determination as to whether the proposed settlement agreement will substantially impair the ability of a groundwater sustainability agency (GSA), the SWRCB, or the Department of Water Resources (DWR) to achieve sustainable groundwater management, as provided. The bill requires the determination to be provided no later than 120 days after the submission, and for it to contain specified findings, including how the proposed settlement agreement would affect small and disadvantaged groundwater users under the existing groundwater sustainability plan (GSP). The bill requires the parties to submit the advisory determination to the court when filing the proposed settlement, and specifies that a court is not bound to enter judgment in a manner consistent with the nonbinding advisory determination of the board.

EXECUTIVE SUMMARY

The adjudication of water rights in the state can be complex and involve many parties and counterclaims. Groundwater is a critical source of water supply in this state that meets more than 40 percent of water demand in an average year and more than 60 percent of demand during drought years. In 2014, the Sustainable Groundwater Management Act (SGMA) was passed to establish local GSAs, who are responsible for implementing SGMA by bringing their over-drafted groundwater basins into sustainable yield. However, SGMA does not apply to certain adjudicated basins. According to the author, this has created a situation where it is more appealing to some to seek adjudication over a basin’s ground water rights then complying with SGMA. In light of this, the bill seeks to require parties to an adjudication action regarding groundwater management, before filing a proposed settlement agreement with the court, to submit the proposed agreement to SWRCB for a nonbinding advisory determination as to whether it will substantially impair the ability of a GSA, SWRCB, or DWR to achieve sustainable groundwater management.

The bill is author sponsored and supported by California Environmental Voters, several other small water users, and Indian Wells Valley Groundwater Authority. The bill is opposed by a coalition of water agencies, agricultural interests, and the Chamber of Commerce. The Judicial Council removed their opposition to the bill and are now neutral as a result of recent amendments. This bill passed the Senate Natural Resources and Water Committee on a vote of 6 to 3.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes SGMA with the goal of providing for the sustainable management of groundwater basins, enhancing local management of groundwater consistent with rights to use or store groundwater, providing local groundwater agencies with the authority and the technical and financial assistance necessary to sustainably manage groundwater, and establishing minimum standards for sustainable groundwater management.
   1. Defines sustainable management of groundwater as the avoidance of the following six “undesirable results:” (i) chronic lowering of groundwater levels; (ii) reduction of groundwater storage; (iii) seawater intrusion; (iv) degraded water quality; (v) land subsidence; and (vi) depletions of interconnected surface water (Wat. Code § 10720 et seq.)
2. Requires, pursuant to SGMA, all groundwater basins designated as high- or medium-priority basins by DWR to develop and be managed under a GSP or coordinated GSPs. (Wat. Code § 10720.7.)
3. Exempts 26 groundwater basins or sub-basins that are subject to existing adjudications from the requirements of SGMA; requires adjudicated areas to report groundwater elevation and other groundwater data to DWR annually (Wat. Code § 10720.8.)
4. Authorizes the creation of local GSAs and requires GSAs to consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing groundwater sustainability plans. (Wat. Code § 10723.2.)
5. Establishes the procedures for a court to use when adjudicating a groundwater basin. (Code of Civ. Proc. § 830 et seq.)
6. Authorizes any of the following parties to intervene in a groundwater adjudication:
   1. a groundwater sustainability agency for the basin or a portion of the basin;
   2. a city, county, or city and county that overlies the basin or a portion of the basin;
   3. the state; and
   4. any person upon an ex parte application that demonstrates that the person holds fee simple ownership in a parcel in the basin, or extracts or stores water in the basin. (Code of Civ. Proc. § 837 & 837.5.)
7. Provides that a court may enter a judgment in a comprehensive groundwater adjudication if the court finds that the judgment meets all of the following criteria:
   1. it is consistent with Section 2 of Article X of the California Constitution;
   2. it is consistent with the water right priorities of all non-stipulating parties and any persons who have claims that are exempted in the basin; and
   3. it treats all objecting parties and any persons who have claims that are exempted as compared to the stipulating parties. (Code of Civ. Proc. § 850(a).)
8. Provides that if a party or group of parties submits a proposed stipulated judgment that is supported by more than 50 percent of all parties who are groundwater extractors in the basin or use the basin for groundwater storage and is supported by groundwater extractors responsible for at least 75 percent of the groundwater extracted in the basin during the five calendar years before the filing of the complaint, the court may adopt the proposed stipulated judgment, as applied to the stipulating parties, if the proposed stipulated judgment meets the criteria described in 6). (Code of Civ. Proc. § 850(b).)
9. Authorizes a party proposing a stipulated judgment to submit the proposed stipulated judgement to DWR for evaluation and assessment that it satisfies the objectives of SGMA for the basin. If DWR determines that a judgement satisfies the objectives of SGMA, DWR submits to the court the assessments and recommended corrective actions and the court, if necessary, determines whether to amend the judgment to adopt the DWR’s recommended corrective actions. (Wat. Code § 10737.4.)
10. Requires a court presiding over an adjudication to manage the proceedings in a manner that does not interfere with the completion and implementation of a GSP and that is consistent with sustainable groundwater management under SGMA. (Wat. Code § 10737.2.)
11. Provides a court is not to approve entry of judgment in an adjudication action for a basin required to have a groundwater sustainability plan unless the court finds that the judgment will not substantially impair the ability of a GSA, SWRCB, or DWR to comply with SGMA and to achieve sustainable groundwater management. (Wat. C. § 10737.8)
12. Authorizes the State Water Board to serve as a referee in a court case involving a water rights dispute upon the request of a state or federal court. (Wat. Code § 2000 et seq.)
13. Declares that because of the conditions prevailing in this state the general welfare requires that the water resources of the state be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare, and that the right to water or to the use or flow of water in or from any natural stream or water course in this state is to be limited to such water as is reasonably required for the beneficial use to be served, and such right does not extend to the waste or unreasonable use or unreasonable method of use or unreasonable method of diversion of water. (Cal. Const. art. X, § 2.)
14. Provides that no water is to be available for appropriation by storage in, or by direct diversion from, any of the components of the California Wild and Scenic Rivers System, as such system exists on January 1, 1981, where such appropriation is for export of water into another major hydrologic basin of the State, as defined by the Department of Water, unless such export is expressly authorized prior to such appropriation by an initiative statute approved by the electors, or the Legislature, by statute passed in each house by roll call vote entered in the journal, two-thirds of the membership concurring. (Ibid.)
15. Prohibits a judge of a court of record from receiving the salary for the judicial office held by the judge while any cause before the judge remains pending and undetermined for 90 days after it has been submitted for decision. (Cal. Const. art VI, § 19.)

This bill:

1. Requires the parties to an adjudication action, before filing a proposed settlement agreement with the court, to submit the proposed settlement agreement to the State Water Resources Control Board (SWRCB) for a nonbinding advisory determination as to whether the proposed settlement agreement will substantially impair the ability of a groundwater sustainability agency, the SWRCB, or the DWR to achieve sustainable groundwater management.
2. Requires SWRCB to consult with DWR before making its nonbinding advisory determination and to provide its nonbinding advisory determination to the parties of the adjudication action no later than 120 days after the submission of the proposed settlement agreement.
3. Requires SWRCB’s nonbinding advisory determination to include findings on both of the following:
   1. the consistency of the proposed settlement agreement with the technical findings and conclusions from the existing groundwater sustainability plan adopted by a groundwater sustainability agency and approved by the department; and
   2. how the proposed settlement agreement would affect small and disadvantaged groundwater users under the existing GSP adopted by a GSA and approved by DWR.
4. Requires parties to include SWRCB’s nonbinding advisory determination of the proposed settlement agreement when filing the proposed settlement agreement with the court. The proposed settlement agreement filed with the court is required to be the same as was submitted to SWRCB for a nonbinding advisory determination.
5. Specifies that the court is not bound to enter judgment in a manner consistent with the nonbinding advisory determination of the board.

COMMENTS

1. Stated need for the bill

The author writes:

A lot of work has been done by local governments and state agencies in putting together groundwater sustainability plans. Through the basin adjudication process, it is possible for a single local judge to undercut all that work with a single determination. My bill asks that judges who are making decisions in complicated groundwater matters simply have their determinations reviewed by the departments for consistency with current SGMA law. This will ensure that SGMA is upheld and that everyone’s hard work is preserved.

1. Adjudication of water rights and SGMA

The adjudication of water rights in the state can be complex and involve many parties. According to the State Water Resources Control Board, a “water right is a legal entitlement authorizing water to be diverted from a specified source and put to beneficial, nonwasteful use. Water rights are property rights, but their holders do not own the water itself.^[1]” Existing state law recognizes three types of water rights—riparian rights, appropriative rights, and groundwater rights. With the impacts of climate change affecting the scarcity and availability of water, via droughts and other conditions, litigation around water rights will likely increase in the near future. This bill is focused on the groundwater rights.

In 2014, the Legislature passed SGMA, which put in place a statewide framework for groundwater management for the first time, but specified that it did not alter surface or groundwater rights. The purpose of SGMA was to address overdraft and other adverse effects of excessive pumping of groundwater. After the enactment of SGMA, the Legislature passed SB 226 (Pavley, Ch. 676, Stats. 2015) and AB 1390 (Alejo, Ch. 672, Stats. 2015) with the intent of streamlining the adjudication process for groundwater rights. Under SB 226, a court must adjudicate rights to groundwater in a basin that is required to have a GSP under SGMA in a manner that minimizes interference with the timely completion and implementation of a GSP, avoids redundancy and unnecessary costs in the development of technical information and a physical solution, and is consistent with the attainment of sustainable groundwater management within the timeframes established by SGMA. (Wat. Code § 10737.2.) AB 1390 authorized a GSA for the basin, a city, county, or city and county that overlies the basin, and certain persons to intervene in a groundwater adjudication. (Code of Civ. Proc. § 837 & 837.5.)

Under state law, every overlying property owner has a potential right in an unadjudicated groundwater basin, which makes adjudication of those rights difficult and often a very lengthy process. Sometimes taking more than a decade for water rights holders and basin managers to come to an agreement. The author notes that during the adjudication process, judges only need to consider “safe yield” for the basin, rather than future basin sustainability. A “safe yield” determination merely necessitates that the amount of water coming into the basin equals the amount of water going out. But, since the judgement is made during a single point in time, adjudicated basins have no way of considering future changes in basin sustainability without relitigating the adjudication agreement. The author states that there have been instances of judges making determinations that go against the sustainable water allocations determined by the GSA. These allocations were approved by DWR during the GSP review process outlined under SGMA. The author argues that judgement determinations that rule in favor of higher use allocations prevent the basin from reaching future sustainable yields, and also runs the risk of rendering SGMA ineffective by setting precedent in court.

Existing state law provides a court may enter a judgement in a comprehensive groundwater basin adjudication if the judgement is consistent with the reasonable use doctrine, is consistent with the rights of parties exempted from the adjudication, and treats all objecting and exempted parties equitably. (Code of Civ. Proc. § 850(a).) Any party to the adjudication may propose a stipulated judgment to the court, and the court may adopt the stipulated judgement if the parties proposing the settlement represent 75 percent of the groundwater pumped in the basin or if 50 percent of the pumpers in the basin agree to the stipulated judgment (Id. at (b).) The party proposing the stipulated judgment may submit the proposed stipulated judgment to DWR for an evaluation and assessment that it satisfies the objects of SGMA for the basin, and DWR can recommend corrective actions. (Wat. Code § 10737.4.) The court may determine it is necessary to amend the judgment to adopt DWR’s recommended corrective actions. (Ibid.). This process, however, is only triggered if a party chooses to submit the proposed settlement. Under this bill, the submittal of a proposed settlement would be required. Additionally, a court is not to approve entry of judgment in an adjudication action for a basin required to have a groundwater sustainability plan unless the court finds that the judgment will not substantially impair the ability of a GSA, SWRCB, or DWR to comply with SGMA and to achieve sustainable groundwater management. (Wat. C. § 10737.8)

The bill proposes to address this issue by requiring the parties to an adjudication action, before filing a proposed settlement agreement with the court, to submit the proposed settlement agreement to SWRCB for a nonbinding advisory determination as to whether the proposed settlement agreement will substantially impair the ability of a GSA, SWRCB, or DWR to achieve sustainable groundwater management. Before making its nonbinding advisory determination, SWRCB must consult with DWR. In order to ensure that the adjudication is not unduly burdened with additional time constraints, the bill requires SWRCB to provide its determination no later than 120 days after the submission of the proposed settlement agreement. The advisory determination should include findings on both: (a) the consistency of the proposed settlement agreement with the technical findings and conclusions from the existing groundwater sustainability plan adopted by a GSA and approved by DWR; and (b) how the proposed settlement agreement would affect small and disadvantaged groundwater users under the existing approved and adopted GSP. The parties would then provide the nonbinding advisory determination to the court when filing the proposed settlement agreement with the court. In order to ensure that the bill does not violate constitutional provisions related to separation of powers, the bill specifies that the court is not bound to enter judgment in a manner consistent with the nonbinding advisory determination of the board.

According to the Senate Natural Resources Committee, there are currently five pending groundwater adjudications:

• Santa Clara Valley – Oxnard (No. 4-001.2) and Pleasant Valley (No. 4-006) groundwater basins, commenced in December 2022.
• Cuyama Valley groundwater basin (No. 3-013), commenced in March 2022.
• Indian Wells groundwater basin (No. 6-54), commenced in November 2021.
• Upper Ventura River (No. 4-3.01), Ojai Valley (No. 4-2), Lower Ventura River (No. 4-3.02), and Upper Ojai Valley (No. 4-1) groundwater basins, commenced in November 2019.
• Las Posas Valley groundwater basin (No. 4-8), commenced in November 2018.^[2]

In July 2020, an additional adjudication in the Borrego Valley groundwater subbasin (No. 7-024.1) commenced; however, the court approved a stipulated judgment to settle this adjudication on April 8, 2021 and the case is no longer active.^[3]

1. Opposition concerns

The bill is opposed by a coalition of water agencies, agricultural interests, and the Chamber of Commerce. They fear that the bill will lead to further delays in groundwater adjudications, which are already lengthy proceedings. They note that existing law already requires a court presiding over an adjudication to manage the proceedings in a manner that does not interfere with the completion and implementation of a GSP and that is consistent with sustainable groundwater management under SGMA. (Wat. Code § 10737.2.) Additionally, they point to the fact that a GSA is many times a lead defendant in an adjudication and has the right to intervene. (Code of Civ. Proc. § 837.) Existing law also allows a court to request recommendations from the SWRCB on individuals who would be suitable special masters for a groundwater adjudication. (Code of Civ. Proc. § 845.) The opposition points to the findings that must be included in an advisory determination as also adding more delay into the process stating:

AB 560 adds several other items for State Water Board to opine upon. Not only do these additions have the potential to further increase the delay imposed by mandating State Water Board participation, but they also turn the roles of the State Water Board, GSAs, and the courts on their heads. For instance, the bill would require the State Water Board to opine on the consistency of the proposed settlement with a groundwater sustainability plan (GSP). This question is completely irrelevant, particularly because in the plain language of SGMA, neither a GSA nor a GSP can modify rights to water. (Water Code, §§ 10726.4(a)(2), 10726.8(b), 10738.) Rather, only a judgment in a comprehensive groundwater adjudication may modify groundwater rights within a basin. Thus, the question of whether and to what degree a proposed judgment may be consistent with a GSP has no bearing on the ultimate determination by a court as to the water rights within a basin. Furthermore, it presumes that a GSP is legally unassailable, which is certainly not the case for any agency plan or policy.

AB 560 also require the State Water Board to advise on potential impacts of the proposed settlement on “small and disadvantaged groundwater users.” First, these terms are not defined anywhere in the bill, making it difficult to understand the scope of the provision. We will note that some basins are located entirely within DACs. More importantly, it presumes that the State Water Board has specialized knowledge as to whatever small and disadvantaged groundwater users might mean within a particular basin. This is likely outside of the scope of the State Water Board’s expertise generally, and particularly as to individual basins.

The Judicial Council of California was in opposition, but recent amendments have addressed their concerns and they are now neutral.

1. Statements in support

The Community Alliance with Family Farmers writes in support stating:

Though this bill will not address the inequities in the adjudication process,

nevertheless its attempt to bring the state in for review is a step in the right direction. We would prefer for the state to be brought in earlier in the process when it might be able to influence the court’s treatment of small water users and the environment, since neither of these has fared well in the history of adjudication.

The small farms and rural residents that CAFF represents are at such a disadvantage in the adjudication proceedings that it is unfortunate that this legal proceeding is an option to circumvent the SGMA process. As we have seen in Cuyama, where the largest agricultural pumpers—Grimmway and Bolthouse, both now owned by hedge funds— decided they could get a better deal from the court than from the GSA process and forced everyone into court, the costs of legal representation are too high for the small pumpers. Similarly, a large pistachio grower from Kern County filed for adjudication in Indian Wells when he decided the SGMA process wasn’t going his way.

Unless the Legislature intervenes and limits the ability of the largest groundwater pumpers to circumvent the GSAs by going to court, we will see this scenario play out over and over. The idea of SGMA—that all stakeholders would be represented, and their interests considered, and that there would be local community processes to achieve sustainability—will mean nothing if all these overdrafted basins end up in court. CAFF urges an “aye” vote on this and any other bill that seeks to reform the adjudication process and better align it with the SGMA process.

1. Statements in opposition

The opposition coalition writes:

Comprehensive groundwater adjudications are notoriously complex, lengthy, and expensive legal proceedings. We are concerned that the bill as currently drafted mandates a consultation that will lead to further delays in groundwater adjudications. These adjudications are already lengthy, fact-intensive, and expensive legal proceedings, and creating a new mandatory step that does not include a deadline for the State Water Board to respond will add further delay and expense.

Under existing law, the court must make a finding that the judgment will not impair a groundwater sustainability agency’s (GSA) or the state’s ability to achieve sustainable groundwater management. (Water Code, § 10737.8.) This means that the court is already charged with ensuring that the Sustainable Groundwater Management Act (SGMA) is complied with. Additionally, the GSA is often the lead defendant in a groundwater adjudication, or if they are not initially named, a GSA has a right to intervene in an adjudication affecting its basin. (Code Civ. Proc., § 837.) This means that the perspective of GSAs, and their ability to meet their duties under SGMA, will be directly represented and considered in an adjudication proceeding. […]

Instead of encouraging use of the referral processes in existing law, but keeping them voluntary, AB 560 serves to further delay lengthy adjudication proceedings by adding a mandatory consultation requirement and then potentially puts the brakes on the adjudication for 4 months while the State Water Board considers the matter. In the meantime, the court and litigants are left in limbo, waiting for some future time when the State Water Board will file a response. This means that the case would stay open and pending, while just steps from the finish line. This is also a significant time commitment that will divert State Water Board resources from existing tasks and responsibilities.

SUPPORT

California Environmental Voters

CivicWell

Community Alliance with Family Farmers

Cuyama Valley Community Association
Indian Wells Valley Groundwater Authority

OPPOSITION

African American Farmers of California

Agricultural Council of California

Almond Alliance of California

American Pistachio Growers

Association of California Egg Farmers

Association of California Water Agencies

California Apple Commission

California Association of Winegrape Growers

California Blueberry Association

California Blueberry Commission

California Chamber of Commerce

California Fresh Fruit Association

California League of Food Producers

California Grain and Feed Association

California Seed Association

California State Association of Counties

California Walnut Commission

California Warehouse Association

Kings River Conservation District

Kings River Water Association

Nisei Farmers League

United Water Conservation District

Valley Ag Water Coalition

Western Growers Association

Western Plant Health Association

RELATED LEGISLATION

Pending Legislation: AB 779 (Wilson, 2023) makes various changes relating to the process for groundwater adjudication proceedings, including adding requirements that a court take into account the needs of disadvantaged communities and small farmers when entering a judgment and that groundwater pumpers continue in a groundwater basin subject to an adjudication continue to comply with any applicable GSP. AB 779 will be heard in this Committee on the same day as this bill.

Prior Legislation:

SB 226 (Pavley, Ch. 676, Stats. 2015) see Comment 2, above.

AB 1390 (Alejo, Ch. 672, Stats. 2015) see Comment 2, above.

PRIOR VOTES

Senate Natural Resources and Water Committee (Ayes 6, Noes 3)

Assembly Floor (Ayes 48, Noes 19)

Assembly Appropriations Committee (Ayes 11, Noes 4)

Assembly Judiciary Committee (Ayes 7, Noes 2)

Assembly Water, Parks and Wildlife Committee (Ayes 9, Noes 4)

**************

1. State Wat. Resources Control Bd., The Water Right Process (updated Aug. 20, 2020), available a https://www.waterboards.ca.gov/waterrights/board_info/water_rights_process.html. ↑

2. Sen. Natural Resources Comm. Analysis of AB 560 (2023-24 Reg. Sess.) as amended Jun. 14. 2023 at p. 2. ↑

3. Ibid. ↑

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Dave Min, Chair

2023 - 2024 Regular

Bill No: AB 560 Hearing Date: June 22, 2023

Subject: Sustainable Groundwater Management Act: groundwater adjudication

BACKGROUND AND EXISTING LAW

Background

1. Groundwater 101 and the Sustainable Groundwater Management Act (SGMA). Groundwater is a critical source of supply that meets more than 40 percent of water demand in an average year and more than 60 percent of demand during drought years. There are three types of groundwater rights: overlying, appropriative, and prescriptive. The most common of these is the overlying right that entitles “an owner of land overlying groundwater to drill a well and pump groundwater for use of that water, within the basin or watershed” (Littleworth and Garner, 2019). No permit is required to obtain overlying rights and these rights are typically not quantified. Due to this, any landowner may pump as much groundwater as they want so long as the water is put to beneficial use and the use is reasonable (Article X, Section 2 of the California Constitution). As a result of this lack of regulation, many groundwater basins in California are in a state of overdraft (a condition where average annual pumping exceeds average annual groundwater supply in a basin). To address overdraft and other adverse effects of excessive pumping, SGMA put in place a statewide framework for groundwater management for the first time, but also stipulated that it did not alter surface or groundwater rights (Water Code § 10720.5).
   
2. Adjudications. A groundwater adjudication is when parties ask a court to resolve conflicts over groundwater rights. An adjudication is initiated when one or more groundwater pumpers files a civil action asking the court to intervene to determine groundwater rights and/or limit pumping to a basin’s “safe yield” (the amount of groundwater pumped that is equal to the average replenishment rate of a groundwater basin).
   

Groundwater adjudications can cover an entire basin, a portion of a basin, or a group of basins, and may include non-basin areas. Groundwater rights are defined for the overlying landowners and appropriators within the adjudicated area. The court decides who is allowed to extract groundwater, how much they are allowed to extract, and designates a watermaster who ensures the adjudicated areas are managed in accordance with the court ruling. According to Bulletin 118, as of 2020, there are 30 adjudicated areas, mostly in Southern California, that cover portions of 42 groundwater basins. Five of the 42 basins are covered with two or more adjudications.

According to the Water Education Foundation, “through adjudication, the courts can assign specific water rights to water users and can compel the cooperation of those who might otherwise refuse to limit their pumping of groundwater."

State law gives every overlying property owner a potential right in an unadjudicated groundwater basin. As such, determining who has groundwater rights that could be affected by an adjudication and the scope of those rights is difficult and can be a lengthy process; adjudications typically take more than a decade to resolve. Identifying and noticing every party that may have a right, completing technical work and sorting through disagreements over this technical work, and determining historic groundwater use which could affect the scope of one's rights are all factors that can contribute to increasing the time and expense of an adjudication.

In an attempt to streamline the groundwater adjudication process, the Legislature passed SB 226 (Pavley, Chapter 676, Statutes of 2015) and AB 1390 (Alejo, Chapter 672, Statutes of 2015), in the wake of SGMA’s passage. SB 226 requires the court, in an adjudication action to determine rights to groundwater in a basin that is required to have a groundwater sustainability plan (GSP) under SGMA, to manage the proceedings in a manner that minimizes interference with the timely completion and implementation of a GSP, avoids redundancy and unnecessary costs in the development of technical information and a physical solution, and is consistent with the attainment of sustainable groundwater management within the timeframes established by SGMA.

The Committee is aware of five pending groundwater adjudications:

• Santa Clara Valley – Oxnard (No. 4-001.2) and Pleasant Valley (No. 4-006) groundwater basins, commenced in December 2022.
• Cuyama Valley groundwater basin (No. 3-013), commenced in March 2022.
• Indian Wells groundwater basin (No. 6-54), commenced in November 2021.
• Upper Ventura River (No. 4-3.01), Ojai Valley (No. 4-2), Lower Ventura River (No. 4-3.02), and Upper Ojai Valley (No. 4-1) groundwater basins, commenced in November 2019.
• Las Posas Valley groundwater basin (No. 4-8), commenced in November 2018.

An additional adjudication in the Borrego Valley groundwater subbasin (No. 7-024.1) commenced in July 2020; the court approved a stipulated judgment to settle this adjudication on April 8, 2021 and the case is no longer active.

Existing law

1. Enacts the Sustainable Groundwater Management Act that requires local agencies to sustainably manage groundwater in high- or medium-priority basins by 2040. Defines sustainable management of groundwater as the avoidance of the following six “undesirable results:” (a) chronic lowering of groundwater levels; (b) reduction of groundwater storage; (c) seawater intrusion; (d) degraded water quality; (e) land subsidence; and (f) depletions of interconnected surface water (Water Code (Wat. C.) § 10720 et seq.).
   
2. Requires critically overdrafted groundwater basins to be managed under a GSP by January 31, 2020 and high- or medium-priority groundwater basins to be managed under a GSP by January 31, 2022 (Wat. C. § 10720.7).
   
3. Exempts 26 groundwater basins or sub-basins that are subject to existing adjudications from the requirements of SGMA; requires adjudicated areas to report groundwater elevation and other groundwater data to DWR annually (Wat. C. § 10720.8).
   
4. Outlines process and scope for a comprehensive adjudication of a groundwater basin (Code of Civil Procedure (CCP) § 830 et seq.).
   
5. Permits a court to enter a judgment in a comprehensive groundwater basin adjudication if the judgment: a) is consistent with the reasonable use doctrine (Article X, Section 2 of the California Constitution); b) is consistent with the rights of parties exempted from the adjudication; and c) treats all objecting and exempted parties equitably. Allows the court to adopt a “stipulated judgement” (i.e., a settlement) proposed by a party or group of parties if the proposing parties represent 75 percent of the groundwater pumped in the basin or if 50 percent of the pumpers in the basin agree to the stipulated judgment (CCP § 850).
   
   1. Authorizes a party proposing a stipulated judgment to submit the proposed stipulated judgement to DWR for evaluation and assessment that it satisfies the objectives of SGMA for the basin. If DWR determines that a judgement satisfies the objectives of SGMA, DWR submits to the court the assessments and recommended corrective actions and the court, if necessary, determines whether to amend the judgment to adopt the DWR’s recommended corrective services. (Wat. C. § 10737.4).
      
6. Requires a court presiding over an adjudication to manage the proceedings in a manner that does not interfere with the completion and implementation of a GSP and that is consistent with sustainable groundwater management under SGMA (Wat. C. § 10737.2).
   
7. Permits the State Water Resources Control Board (SWRCB) to serve as a referee in a court case involving a water rights dispute upon the request of a state or federal court. Also authorizes, in a suit for determination for water rights, a state or federal court to refer the suit to SWRCB for investigation of and report upon any or all of the physical facts involved (Wat. C. §§ 2000 et seq.).

PROPOSED LAW

This bill:

1. Before entering final judgement, requires the court to refer the proposed settlement to SWRCB for an advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency (GSA), SWRCB, or DWR to achieve sustainable groundwater management.
   
   1. Requires SWRCB to consult with DWR before making its advisory determination.
      
2. Requires SWRCB’s advisory determination to include findings on both of the following:
   
   1. The consistency of the proposed judgment with the technical findings and conclusions of the GSP adopted by the GSA and approved by DWR.
      
   2. How the proposed judgement would affect small and disadvantaged groundwater users.
      
3. Requires that the court not be bound to enter judgement in a manner consistent with SWRCB’s advisory determination.

ARGUMENTS IN SUPPORT

According to the author, “a lot of work has been done by local governments and state agencies in putting together groundwater sustainability plans. Through the basin adjudication process, it is possible for a single local judge to undercut all that work with a single determination. My bill asks that judges who are making decisions in complicated groundwater matters simply have their determinations reviewed by the departments for consistency with current SGMA law. This will ensure that SGMA is upheld and that everyone’s hard work is preserved.”

According to Indian Wells Valley Groundwater Authority, “Within the Sustainable Groundwater Management Act (SGMA), the Legislature did not intend for adjudication proceedings to overturn the need to achieve sustainability. Adjudication proceedings determine the allocation of water rights for a particular basin and do not supersede or provide a mechanism to bypass SGMA requirements through the courts. While SGMA provided exemptions for groundwater basins that were previously adjudicated, it did not intend to provide a mechanism for de novo review by the court of the GSP’s findings. Yet some large groundwater users seek to use the adjudication process to overturn all or portions of an approved-GSP. …

Parties disagreeing with the findings of the GSP have the ability to seek redress through the regulatory process but, unfortunately many have sought to use the adjudication process as a means to deny, delay and obfuscate the ability to meet SGMA requirements. In this process, opponents of groundwater sustainability agencies often seek to deny due process to small and disadvantaged groundwater users who are financially unable to participate in the adjudication process. … AB 560 appropriately addresses those issue[s] by allowing the enforcement authority under SGMA, the State Water Resources Control Board, to review and provide opinion to the court regarding findings that may include impairment of a GSP, the sustainable yield, and representation of all groundwater users in the basin.”

ARGUMENTS IN OPPOSITION

According to a coalition letter, “Water Code Section 2000 already authorizes courts to refer issues, such as those relating to the sustainable yield of a basin and relative allocations, to [SWRCB]. Many courts do take advantage of this ability. … Instead of encouraging use of the referral processes in existing law, [by] keeping them voluntary, AB 560 serves to further delay lengthy adjudication proceedings by adding a mandatory consultation requirement that lacks any timeframe for [SWRCB’s] response. … In addition, recent amendments add even more items for [SWRCB] to opine upon. Not only do these additions have the potential to further increase the delay imposed by mandating [SWRCB] participation, but they also turn the roles of [SWRCB], GSs, and the courts on their heads” (emphasis in original). The stakeholders also point out that the terms “small and disadvantaged groundwater users” are not defined in the bill, “making it difficult to understand the scope of the provision” that the SWRCB advise on potential impacts to those users.

COMMENTS

Double referral. This bill is double referred with the Senate Judiciary Committee, with this committee being the committee of first referral. Elements of this bill under the jurisdiction of the Senate Judiciary Committee are included here for context and completeness only and will be discussed before that committee.

This bill. In 2014, SGMA was passed, requiring the formation of local GSAs for the purpose of ensuring that groundwater basins are managed sustainably. However, SGMA does not apply to adjudicated basins.

Historically, the basin adjudication process could take more than a decade for water rights holders and basin managers to come to an agreement. During the adjudication process, judges only need to consider “safe yield” for the basin, rather than future basin sustainability. A “safe yield” determination merely necessitates that the amount of water coming into the basin equals the amount of water going out. However, since the judgement is made during a single point in time, adjudicated basins have no way of considering future changes in basin sustainability without re-litigating the adjudication agreement. Because of this existing court-mandated governance, oversight, and management, SGMA does not apply to adjudicated basins.

According to the author, there have been instances of judges making determinations that go against the sustainable water allocations determined by the GSAs in their GSPs. These plans were approved by DWR as being able to achieve sustainable management. Judgement determinations that permit greater allocations than what is provided for in the GSP prevent the basin from reaching future sustainable yields. By having SWRCB review settlement agreements for consistency with SGMA and an approved GSP, this bill protects the sustainability of groundwater basins.

Do existing court processes already achieve the bill’s purpose? Existing law authorizes a court to enter a judgement in a comprehensive groundwater basin adjudication if the judgement is consistent with the reasonable use doctrine, is consistent with the rights of parties exempted from the adjudication, and treats all objecting and exempted parties equitably. A party to the suit may propose a stipulated judgment to the court, and the court may adopt the stipulated judgement if the proposing parties represent 75 percent of the groundwater pumped in the basin or if 50 percent of the pumpers in the basin agree to the stipulated judgment (CCP § 850).

The party proposing the stipulated judgment may submit the proposed stipulated judgment to DWR for an evaluation and assessment that it satisfies the objects of SGMA for the basin. DWR can recommend corrective actions and the court, if necessary, determines whether to amend the judgment to adopt DWR’s recommended corrective services (Wat. C. § 10737.4).

It is noted, however, the above process is only triggered if the party proposing the stipulated judgment submits it to DWR. There is no requirement that the party do so.

Existing law also requires that a court must make a finding that the judgment will not impair a GSA or the state’s ability to achieve sustainable groundwater management. And while a court can refer issues to SWRCB (Wat. C. § 2000), it is not required to so do.

This bill ensures that SWRCB, in consultation with DWR, has the opportunity to provide an advisory determination. The bill also explicitly provides that the court is not required to follow the advisory determination.

Small and disadvantaged groundwater users. AB 560 requires, as a part of its advisory determination, SWRCB to include how the proposed judgment would affect small and disadvantaged groundwater users. As pointed out by some stakeholder groups, this term is undefined. The author may wish to define the term to provide better clarity and understanding of SWRCB’s responsibilities in this matter.

Related legislation

AB 779 (Wilson) of the current legislative session, makes various changes relating to the process for groundwater adjudication proceedings, including adding requirements that a court take into account the needs of disadvantaged communities and small farmers when entering a judgment and that groundwater pumpers continue in a groundwater basin subject to an adjudication continue to comply with any applicable GSP. This bill is pending before this committee.

SUPPORT

California Environmental Voters (formerly CLCV)
CivicWell (formally the Local Government Commission)
Community Alliance With Family Farmers
Indian Wells Valley Groundwater Authority

OPPOSITION

African American Farmers of California
Agricultural Council of California
Almond Alliance of California
American Pistachio Growers
Association of California Egg Farmers
Association of California Water Agencies (ACWA)
California Apple Commission
California Association of Wheat Growers
California Association of Winegrape Growers
California Blueberry Commission
California Chamber of Commerce
California Fresh Fruit Association
California Grain and Feed Association
California League of Food Producers
California Seed Association
California State Association of Counties (CSAC)
California Walnut Commission
California Warehouse Association
Judicial Council of California
Kings River Conservation District
Kings River Water Association
Nisei Farmers League
Pacific Egg and Poultry Association
United Water Conservation District
Western Growers Association
Western Plant Health Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 560

Author:(Bennett)

As Amended Ver:May 18, 2023

Majority vote

SUMMARY

Requires a court, before finalizing a groundwater adjudication, to refer the proposed adjudication to the State Water Resources Control Board (State Water Board) for an advisory determination as to whether it will impair the ability of a groundwater sustainability agency (GSA), the State Water Board, or the Department of Water Resources (DWR) to achieve sustainable groundwater management. The State Water Board must consult with DWR before making its determination.

Major Provisions

COMMENTS

Groundwater is a critical source of supply that meets more than 40% of water demand in an average year and more than 50% of demand during drought years. There are three types of groundwater rights: overlying, appropriative, and prescriptive. The most common of these is the overlying right that entitles "an owner of land overlying groundwater to drill a well and pump groundwater for use of that land, within the basin or watershed" (Littleworth and Garner, 2019). No permit is required to obtain overlying rights and these rights are typically not quantified. Due to this, any landowner may pump as much groundwater as they want so long as the water is put to beneficial use and the use is reasonable (California Constitution Article X, Section 2). As a result of this lack of regulation, many groundwater basins in California are in a state of overdraft (a condition where average annual pumping exceeds average annual groundwater supply in a basin). To address overdraft and other adverse effects of excessive pumping, the Sustainable Groundwater Management Act (SGMA) put in place a statewide framework for groundwater management for the first time, but also stipulated that it did not alter surface or groundwater rights (Water Code Section 10720.5).

Adjudications. A groundwater adjudication is a process in which parties ask a court to resolve conflicts over groundwater rights. An adjudication is initiated when one or more groundwater pumpers files a civil action asking the court to intervene to determine groundwater rights and/or limit pumping to a basin's "safe yield" (the amount of groundwater pumped that is equal to the average replenishment rate of a groundwater basin). According to the Water Education Foundation, "through adjudication, the courts can assign specific water rights to water users and can compel the cooperation of those who might otherwise refuse to limit their pumping of groundwater. Watermasters are typically appointed by the court to ensure that pumping conforms to the limits defined by the adjudication." Of the 515 groundwater basins identified by DWR in Bulletin 118 only 27 basins or sub-basins are adjudicated. These are predominantly in urban and suburban parts of Southern California.

State law gives every overlying property owner a potential right in an unadjudicated groundwater basin. As such, determining who has groundwater rights that could be affected by an adjudication and the scope of those rights is difficult and can be a lengthy process;

adjudications typically take more than a decade to resolve. Identifying and noticing every party that may have a right, completing technical work and sorting through disagreements over this technical work, and determining historic groundwater use which could affect the scope of one's rights are all factors that can contribute to increasing the time and expense of an adjudication. In an attempt to streamline the groundwater adjudication process, the Legislature passed SB 226 (Pavley), Chapter 676, Statutes of 2015, and AB 1390 (Alejo), Chapter 672, Statutes of 2015, in the wake of SGMA's passage.

There are at least five pending groundwater adjudications at present:

1. Santa Clara Valley – Oxnard (No. 4-001.2) and Pleasant Valley (No. 4-006) groundwater basins, commenced in December 2022.
2. Cuyama Valley groundwater basin (No. 3-013), commenced in March 2022.
3. Indian Wells groundwater basin (No. 6-54), commenced in November 2021.
4. Upper Ventura River (No. 4-3.01), Ojai Valley (No. 4-2), Lower Ventura River (No. 4-3.02), and Upper Ojai Valley (No. 4-1) groundwater basins, commenced in November 2019.
5. Las Posas Valley groundwater basin (No. 4-8), commenced in November 2018.

An additional adjudication in the Borrego Valley groundwater sub-basin (No. 7-024.1) commenced in July 2020; the court approved a stipulated judgment to settle this adjudication on April 8, 2021 and the case is no longer active.

According to the Author

The impetus for this bill is the pending groundwater adjudication in the Las Posas Valley groundwater basin. The initial complaint in this adjudication was filed in March 2018 and it appears that a judgment may be imminent. The action was brought by a group of groundwater pumpers in the basin that asked the court to determine groundwater rights in the basin and to invalidate "Emergency Ordinance E" that was adopted by the basin's GSA, the Fox Canyon Groundwater Management Agency (Fox Canyon), during the previous drought to limit groundwater extractions. The plaintiffs in this adjudication have proposed a "stipulated judgment" that the author and Fox Canyon maintain will result in unsustainable groundwater pumping in the basin. The author is concerned that, if successful, this adjudication would set a poor precedent for future groundwater adjudications and that by requiring the technical expertise of the State Water Board and DWR in the adjudication process, this bill "will ensure that SGMA is upheld" and prevent a single judge from undercutting the work of local agencies.

Arguments in Support

The Community Alliance with Family Farmers (CAFF) supports this bill asserting that it is a step in the right direction to bring the state in to review adjudication judgments. CAFF states that small farms and rural residents are at a disadvantage in the adjudication process due to the costs of legal representation and laments that "this legal proceeding is an option to circumvent the SGMA process." CAFF points to examples in the Cuyama and Indian Wells basins where large growers initiated an adjudication because they did not agree with the direction the SGMA process was going. Finally, CAFF contends that "the idea of SGMA – that all stakeholders would be represented and their interests considered, and that there would be local community processes to achieve sustainability – will mean nothing if these overdrafted basins end up in court."

Arguments in Opposition

The California Chamber of Commerce (CalChamber) and several agricultural trade associations write in opposition to this bill. CalChamber et al. argue that this bill is duplicative of existing law and "may serve as a means to provide a veto power over a judicial proceeding by the executive." These groups argue that the existing adjudication process allows for input from the State Water Board at various junctures and that the step added by this bill comes at the end of the adjudication process and will serve "to further delay lengthy adjudication proceedings by adding yet a further consultation requirement that lacks any timeframe for the State Water Board's response." Finally, CalChamber et al. maintain that this bill violates the separation of powers doctrine and gives "an executive agency the power to essentially disapprove of a judicial decision" thereby taking away "a court's ability to independently find facts and make legal determinations regarding the rights and responsibilities of the parties before it."

FISCAL COMMENTS

According to the Assembly Appropriations Committee, this bill has the following fiscal impacts:

1. An estimated ongoing costs to the State Water Board of at least $450,000 (General Fund) for two positions to manage the anticipated workload associated with preparing advisory determinations upon an adjudication referral, reviewing each stipulated judgment in the context of existing groundwater sustainability plans, and conducting other SGMA-related analyses.

2) Costs of an unknown amount, ranging from minor and absorbable to hundreds of thousands of dollars, for DWR (General Fund). DWR's costs will ultimately depend on the number, length, and complexity of the adjudications referred to the State Water Board and DWR for review.

VOTES

ASM WATER, PARKS, AND WILDLIFE: 9-4-2

YES: Bauer-Kahan, Bennett, Friedman, Hart, Wood, Pellerin, Schiavo, Ward, Weber

NO: Mathis, Alanis, Megan Dahle, Davies

ABS, ABST OR NV: Blanca Rubio, Villapudua

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Kalra, Papan, Reyes, Robert Rivas

NO: Dixon, Sanchez

ABS, ABST OR NV: Essayli, Pacheco

ASM APPROPRIATIONS: 11-4-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Ortega

NO: Megan Dahle, Dixon, Mathis, Sanchez

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: May 18, 2023

CONSULTANT: Pablo Garza / W., P., & W. / (916) 319-2096 FN: 0000951

Date of Hearing: May 3, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 560

Author:(Bennett) – As Amended Ver:April 12, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires, before entering final judgment in a groundwater adjudication, a court to refer the proposed judgment to the State Water Resources Control Board (State Water Board) for an advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency (GSA), the State Water Board, or the Department of Water Resources (DWR) to achieve sustainable groundwater management. This bill also requires the State Water Board to consult with DWR before making its determination, and provides that a court is not bound to enter judgment in a manner consistent with the advisory determination of the State Water Board.

FISCAL EFFECT:

1) The State Water Board estimates ongoing costs of at least $450,000 (General Fund) for two positions to manage the anticipated workload associated with preparing advisory determinations upon an adjudication referral, reviewing each stipulated judgment in the context of existing GSPs, and conducting other SGMA-related analyses.

2) Costs of an unknown amount, ranging from minor and absorbable to hundreds of thousands of dollars, for DWR (General Fund). The department’s costs will ultimately depend on the number, length, and complexity of the adjudications referred to the State Water Board and DWR for review.

COMMENTS:

1) Purpose. According to the author:

A lot of work has been done by local governments and state agencies in putting together groundwater sustainability plans. Through the basin adjudication process, it is possible for a single local judge to undercut all that work with a single determination. My bill asks that judges who are making decisions in complicated groundwater matters simply have their determinations reviewed by the departments for consistency with current groundwater management law. This will ensure that Sustainable Groundwater Management Act is upheld and that everyone’s hard work is preserved.

2) Background. Sustainable Groundwater Management Act (SGMA). According to DWR, groundwater is a critical source of water for both farms and cities in California, supplying 40% of water in a typical year and as much as 60% in drought years. About 80% of Californians use groundwater for drinking or other household uses. Signed into law in 2014, after nearly a century of mismanagement of the state’s groundwater resources, SGMA established a statewide framework to help protect groundwater resources over the long term. SGMA requires local agencies to form GSAs for medium- and high-priority basins as designated by DWR. A GSA, which is made up of one or more local agencies overlying a groundwater basin, is required to develop and implement a groundwater sustainability plan (GSP). GSPs provide a roadmap for how groundwater basins will reach long-term sustainability without causing undesirable results, namely significant groundwater level declines, groundwater storage reductions, seawater intrusion, water quality degradation, land subsidence, and surface water depletions.

Groundwater Adjudications. A groundwater adjudication is when parties ask a court to resolve conflicts over groundwater rights. An adjudication is initiated when one or more groundwater pumpers files a civil action asking the court to intervene to determine groundwater rights or limit pumping to a basin’s “safe yield” (the amount of groundwater pumped that is equal to the average replenishment rate of a groundwater basin). According to the Water Education Foundation:

Through adjudication, the courts can assign specific water rights to water users and can compel the cooperation of those who might otherwise refuse to limit their pumping of groundwater. Watermasters are typically appointed by the court to ensure that pumping conforms to the limits defined by the adjudication.

According to the Water, Parks, and Wildlife Committee analysis of this bill, there are five pending groundwater adjudications, and, out of 515 groundwater basins identified by DWR, 27 basins or sub-basins are adjudicated. These are predominantly in urban and suburban parts of Southern California. State law gives every overlying property owner a potential right in an unadjudicated groundwater basin. For this reason, determining who has groundwater rights that could be affected by an adjudication and the scope of those rights is difficult and can be a lengthy process; adjudications typically take more than a decade to resolve. Identifying and noticing every party that may have a right, completing technical work and sorting through disagreements over this technical work, and determining historic groundwater use which could affect the scope of one's rights are all factors that can contribute to increasing the time and expense of an adjudication.

Author’s Intent. The impetus for this bill is a pending groundwater adjudication in the Las Posas Valley groundwater basin. The initial complaint in this adjudication was filed in March 2018 and it appears a judgment may be imminent. The action was brought by a group of groundwater pumpers in the basin that asked the court to determine groundwater rights in the basin and to invalidate “Emergency Ordinance E” that was adopted by the basin’s GSA during the previous drought to limit groundwater extractions. The plaintiffs in this adjudication have proposed a “stipulated judgment” that the author and Fox Canyon maintain will result in unsustainable groundwater pumping in the basin. The author is concerned that, if successful, this adjudication would set a poor precedent for future groundwater adjudications. Adjudications and the development of GSPs may be commenced and developed on parallel tracks, and not in coordination with one another. The author notes this lack of coordination may result in final judgments in groundwater adjudications that substantially impair the implementation of a local GSP. By requiring the technical expertise of the State Water Board and DWR in the adjudication process, the author contends this bill “will ensure that SGMA is upheld” and prevent a single judge from undercutting the work of local agencies.

Support, Opposition, and Concerns. Writing in support, the Community Alliance with Family Farmers (CAFF) notes this bill’s attempt to bring the state in for review in the adjudication process is a step in the right direction, because the small farms and rural residents CAFF represents are at a significant disadvantage in adjudication proceedings:

As we have seen in Cuyama, where the largest agricultural pumpers—Grimmway and Bolthouse, both now owned by hedge funds— decided they could get a better deal from the court than from the GSA process and forced everyone into court, the costs of legal representation are too high for the small pumpers. Similarly, a large pistachio grower from Kern County filed for adjudication in Indian Wells when he decided the SGMA process wasn’t going his way.

Writing in opposition, a coalition of agricultural, water, and business organizations contend, among other things, that this bill is duplicative of existing law, under which a court must make a finding that a judgment will not impair a GSA’s or the state’s ability to achieve sustainable groundwater management. They argue current law already authorizes courts to refer issues, such as those relating to the sustainable yield of a basin and relative allocations, to the State Water Board, and that many courts already take advantage of this ability. The opposition also argues that this bill gives the State Water Board “veto” power over a proposed judicial decision, violating the separation of powers doctrine. However, an amendment taken in a prior committee clarifying that a court is not bound to enter judgment in a manner consistent with the advisory determination of the State Water Board should address this specific concern.

A coalition of environmental justice organizations, in a support-if-amended positon, state they support the intent of this bill to ensure the State Water Board provides assistance for the courts when determining rights to groundwater, but believe an earlier and more active role in intervention is necessary to ensure efficient and effective groundwater adjudications, and to avoid additional delay.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: April 11, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

ABPCA Bill Id:AB 560

Author:(Bennett) – As Introduced Ver:February 8, 2023

As Proposed to be Amended

SUBJECT: Sustainable Groundwater Management Act: groundwater adjudication

KEY ISSUE: should proposed settlements in actions involving a groundwater adjudication be sent to the state water resources control board for an advisory opinion before a final judgment is rendered?

SYNOPSIS

As a result of California’s boom and bust precipitation cycles the state is forced to significantly rely on groundwater. Indeed, estimates suggest that during droughts half of the state’s water may come from underground aquifers. However, as a result of the state’s historic inability to regulate groundwater many of the state’s groundwater basins are overdrafted and unable to maintain supplies. As a result groundwater users frequently find themselves in legal conflict. The manner by which a groundwater conflict is decided is through a court adjudication, a process that begins only after a groundwater basin’s sustainability is imperiled. Seeking to be more proactive in managing its groundwater resources, in 2014, the state adopted the Sustainable Groundwater Management Act. That Act put in place a regulatory system when local groundwater management plans would be developed to manage basins before they reach stages of critical overdraft. However, for some overdrafted basins, the basin may be simultaneously subject to an adjudication and the development of the sustainable groundwater management plan. In such a case, because the two processes are independent of one another, the basin may end up being subject to two conflicting legal plans for protecting the groundwater supply.

Seeking to avoid conflicts in groundwater management, this measure would require a judge to submit a proposed settlement in a groundwater adjudication to the State Water Resources Control Board for an advisory judgment as to whether or not the settlement would substantially impair the ability of a groundwater sustainability agency; the Water Board; or the Department of Water Resources to achieve sustainable groundwater management in the basin. Proposed amendments clarify that this opinion is merely advisory and the judge is not compelled to concur with the Water Board’s opinion.

This measure is supported by California Environmental Voters and several advocates for smaller water users. They argue that state-level guidance would be helpful to avoiding potential conflicts in groundwater management. This measure is opposed by several water agencies as well as agricultural and business groups. The opposition worries that the bill in print would give an executive branch agency “veto” power over a court, thus violating the doctrine of the separation of powers. Proposed amendments appear to address these concerns. However, more minor issues related to the timing of the Water Board review, may remain. This bill was previously heard and approved by the Committee on Water, Parks, and Wildlife by a vote of 9 to 4.

SUMMARY: Requires proposed settlements in groundwater adjudications to be sent to the State Water Resources Control Board for an advisory determination prior to the issuance of a final judgment. Specifically, this bill:

1. Requires, prior to entering a final judgment, a court to refer a proposed settlement to the State Water Resources Control Board for an advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the Board, or the Department of Water Resources to achieve sustainable groundwater management.
2. Provides that, notwithstanding with 1), a court is not bound to enter a final judgment in a manner consistent with the advisory determination of the State Water Resources Control Board.

EXISTING LAW:

1. Establishes the Sustainable Groundwater Management Act with the goal of providing for the sustainable management of groundwater basins, enhancing local management of groundwater consistent with rights to use or store groundwater, providing local groundwater agencies with the authority and the technical and financial assistance necessary to sustainably manage groundwater, and establishing minimum standards for sustainable groundwater management. (Water Code Section 10720 et seq.)
2. Requires, pursuant to the Sustainable Groundwater Management Act, all groundwater basins designated as high- or medium-priority basins by the Department of Water Resources to develop and be managed under a groundwater sustainability plan or coordinated groundwater sustainability plans. (Water Code Section 10720.7.)
3. Authorizes the creation of local groundwater sustainability agencies and requires the agencies to consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing groundwater sustainability plans. (Water Code Section 10723.2.)
4. Establishes the procedures for a court to use when adjudicating a groundwater basin. (Code of Civil Procedure Section 830 et seq.)
5. Authorizes any of the following parties to intervene in a groundwater adjudication:
   1. A groundwater sustainability agency for the basin or a portion of the basin;
   2. A city, county, or city and county that overlies the basin or a portion of the basin;
   3. The state; and
   4. Any person upon an ex parte application that demonstrates that the person holds fee simple ownership in a parcel in the basin, or extracts or stores water in the basin. (Code of Civil Procedure Sections 837 & 837.5.)
6. Provides that a court may enter a judgment in a comprehensive groundwater adjudication if the court finds that the judgment meets all of the following criteria:
   1. It is consistent with Section 2 of Article X of the California Constitution;
   2. It is consistent with the water right priorities of all non-stipulating parties and any persons who have claims that are exempted in the basin; and
   3. It treats all objecting parties and any persons who have claims that are exempted as compared to the stipulating parties. (Code of Civil Procedure Section 850 (a).)
7. Provides that if a party or group of parties submits a proposed stipulated judgment that is supported by more than 50 percent of all parties who are groundwater extractors in the basin or use the basin for groundwater storage and is supported by groundwater extractors responsible for at least 75 percent of the groundwater extracted in the basin during the five calendar years before the filing of the complaint, the court may adopt the proposed stipulated judgment, as applied to the stipulating parties, if the proposed stipulated judgment meets the criteria described in 6). (Code of Civil Procedure Section 850 (b).)
8. Requires a party objecting to a proposed stipulated judgment to demonstrate, by a preponderance of evidence, that the proposed stipulated judgment does not satisfy one or more criteria described in 6) or that it substantially violates the water rights of the objecting party, and that if the objecting party is unable to make this showing, the court may impose the proposed stipulated judgment on the objecting party. (Ibid.)
9. Permits the State Water Board to serve as a referee in a court case involving a water rights dispute upon the request of a state or federal court. (Water Code Section 2000 et seq.)
10. Provides that no water is to be available for appropriation by storage in, or by direct diversion from, any of the components of the California Wild and Scenic Rivers System, as such system exists on January 1, 1981, where such appropriation is for export of water into another major hydrologic basin of the State, as defined by the Department of Water, unless such export is expressly authorized prior to such appropriation by an initiative statute approved by the electors, or the Legislature, by statute passed in each house by roll call vote entered in the journal, two-thirds of the membership concurring. (Cal. Const. art. X Section 2.)
11. Prohibits a judge of a court of record from receiving the salary for the judicial office held by the judge while any cause before the judge remains pending and undetermined for 90 days after it has been submitted for decision. (Cal. Const. art VI, Section 19.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: As a result of the significant annual fluctuations in the availability of surface water in California, groundwater makes up a significant portion of the water resources utilized by the state. For most of California’s history groundwater rights were largely unregulated, resulting in numerous court actions to divide a groundwater basin’s supply between users through a process known as groundwater adjudication. Groundwater adjudications can be complex, lengthy, expensive, and opaque undertakings that frequently involve numerous scientific studies and expert witnesses. However, because these adjudications are critical to allocating precious water rights in California’s groundwater basins, ensuring that all users of a groundwater basin are properly represented and protected is critical to ensuring the proper allocation of such a scarce resource.

In recent years, the state has started moving toward proactive and local regulation of groundwater sustainability through the development of groundwater management plans. However, adjudications and the development of groundwater plans may be commenced and developed on parallel tracks and not in coordination with one another. The author of this measure notes that this may result in final judgments in groundwater adjudications that substantially impair the implementation of a local groundwater sustainability plan. In order to avoid this conflict this bill simply seeks to have a court submit a proposed settlement in a groundwater adjudication to the State Water Resources Control Board for an advisory determination if the settlement would impair state and local efforts to sustainably manage groundwater basins.

Author’s statement. Recognizing the need to avoid conflicts between groundwater adjudications and the development of local groundwater management plans, the author states in support of this bill:

A lot of work has been done by local governments and state agencies in putting together groundwater sustainability plans. Through the basin adjudication process, it is possible for a single local judge to undercut all that work with a single determination. My bill asks that judges who are making decisions in complicated groundwater matters simply have their determinations reviewed by the departments for consistency with current groundwater management law. This will ensure that Sustainable Groundwater Management Act is upheld and that everyone’s hard work is preserved.

A brief background on groundwater sustainability and adjudications. Given California’s propensity to swing between crippling drought and hazardously excessive rainfall, groundwater is one of the most important water sources in the state. During drought, some estimates suggest as much as half of the state’s water supply comes from groundwater. During wet years, groundwater recharge basins are being an increasingly helpful tool to manage excess runoff. The right to access groundwater is typically entwined with the rights afforded to the overlying landowners without the need to obtain permits or other legal documents granting access to the water. Accordingly, and as codified in the Constitution, for much of California’s history access to groundwater has been a free-for-all. As a result of the lack of oversight of groundwater, many of the state’s groundwater basins became overdrafted, essentially a condition where average annual pumping exceeds average annual recharge from rainwater.

To reign in the unregulated nature of groundwater, and address overdrafted basins, California has long provided a process for adjudicating water rights. In an adjudication every groundwater user within a groundwater basin is entitled to go to court and enforce their rights. Should a basin be adjudicated, and a user failed to adequately argue for their water rights, they may be facing a situation in which they will have legally lost access to some of their water. Because groundwater involves complex science related to underground geology, and because state law confers every overlying property owner a potential right in an unadjudicated groundwater basin, these proceedings can be lengthy and expensive.

Frequently, special masters or other referees are brought in by the court to handle the expert testimony and determine the scope of interests that may be impacted by the adjudication to ensure all rights are properly represented. To assist the courts, existing law also enables the court to seek technical input from the state’s water regulators, the Department of Water Resources and the State Water Resources Control Board, although nothing in the law requires this input or that the consultation occur early in the adjudication process. In an attempt to streamline this process the Legislature enacted SB 226 (Pavley), Chap. 676, Stats. 2015, and AB 1390 (Alejo), Chap.672, Stats. 2015. However, all of the stakeholders involved in this bill note that adjudications still are complex and lengthy.

Recognizing that groundwater adjudications were largely used after a groundwater basin began to reach levels of unsustainable use, the Legislature sought to proactively stop groundwater overdraft by enacting the Sustainable Groundwater Management Act (AB 1739 (Dickinson) Chap. 347, Stats. 2014, SB 1186 (Pavley) Chap. 346, Stats. 2014, and SB 1319 (Pavley) Chap. 348, Stats. 2014) in 2014. The Act adopted a statewide legal framework for the creation and adoption of local groundwater management plans. While these plans are slowly coming into place, they do not directly impact water right adjudications, thus a groundwater basin may simultaneously be in the process of a court adjudication and development of a local management plan. When these instances arise, it is entirely possible that a basin could become subject to conflicting legal requirements for how the basin is to be managed.

As proposed to be amended, this bill balances the court’s independence with the need to ensure litigation and local regulatory processes do not conflict. As noted, this bill is designed to avoid, whenever possible, conflicts between the outcome of a groundwater adjudication and a local groundwater sustainability plan. However, a coalition of water agencies, agricultural interests, and the Chamber of Commerce have all written in opposition to the bill in print expressing that, “we are concerned that the bill is intended to give the State Water Board—an arm of the executive branch— “veto” power over a proposed judicial decision.” Indeed, the author recognizes that the existing language of the bill may be too ambiguous regarding what a judge is permitted to do upon receipt of the State Water Resource Control Board’s advisory determination, specifically, if the judge can approve a final judgment that contradicts the Water Board’s opinion. Accordingly, and in order to ensure that the bill does not create separation of powers concerns, the author is proposing the following amendment to clarify that judges are not obligated to agree with the Water Board. Thus a new paragraph will be added to subdivision (b) of Water Code Section 10737.8 to read:

(2) Notwithstanding paragraph (1), the court shall not be bound to enter judgment in a manner consistent with the advisory determination of the board.

Although it is not entirely clear that this language will address all of the concerns of the stakeholders opposing this measure, including those related to State Water Resource Control Board review timelines, the language is sufficient to address the separation of powers concerns that are primarily in the jurisdiction of this Committee and certainly do address one of the oppositions primary concerns with the bill in print.

Additional proposed amendments ensure this bill will not inadvertently cost a judge in a groundwater adjudication their well-deserved salary. In addition to the broader concerns surrounding separations of powers expressed by the entire opposition coalition, the Judicial Council of California also informed the Committee that this bill may result in judges not being paid while the State Water Resources Control Board reviews the adjudication. As currently in print the bill would have the “proposed judgment” reviewed by the Board. Interestingly, by utilizing the “proposed judgment” language this bill appears to have inadvertently run afoul of Section 19 of Article VI of the California Constitution, which prohibits a judge from being paid if a matter “remains pending and undetermined for 90 days after it has been submitted for decision.” Essentially, this means that if a proposed judgment is pending before a judge for longer than 90 days they would not be paid. Given the amount of time and effort judges must expend in groundwater adjudications, they should not be penalized financially because of a potential delay at the Water Board.

It would appear that the use of the term “proposed judgment” is what triggers this timeline. A settlement proposal, however, does not have the same degree of finality as a judgment and does not appear to trigger the provisions of the Constitution. In fact, because settlement proposals typically arise prior to proposing judgments, swapping the two terms may also have the effect of bringing the state into an adjudication earlier, thus eliminating some of the timing concerns expressed by opposition. Accordingly, the provisions of the bill referring to sending “proposed judgments” to the Water Board will be amended to read:

(b) (1) Before entering final judgment, the court shall refer a proposed settlement the proposed judgment, pursuant to Section 2001, to the board for an advisory determination as to whether the proposed judgment will substantially impair the ability of a groundwater sustainability agency, the board, or the department to achieve sustainable groundwater management. The board shall consult with the department before making its determination.

ARGUMENTS IN SUPPORT: This measure is supported by California Environmental Voters and several other small water users. In support of the bill, California Environmental Voters writes:

To protect the sustainability of the basin, AB 560 mandates judges to have all basin adjudication determinations confirmed by the Water Boards and Department of Water Resources for consistency with Sustainable Groundwater Management Act code and to ensure it aligns with the approved Groundwater Sustainability Plan.

The adjudication process also affects more people than just the local agency and rights holders. Because the process can take many years, only those who can afford to pay for representation are able to have a seat at the table during lengthy negotiations. This often excludes farmworkers, nearby disadvantaged communities, and low-income homeowners with a single domestic well from having their welfare taken into consideration.

ARGUMENTS IN OPPOSITION: As noted this bill is opposed by a coalition of water agencies, agricultural interests, and the Chamber of Commerce. The coalition notes:

Under existing law, the court must make a finding that the judgment will not impair a groundwater sustainability agency’s (GSA) or the state’s ability to achieve sustainable groundwater management. Currently, the GSA is often the lead defendant in a groundwater adjudication, or if they are not initially named, a GSA has a right to intervene in an adjudication affecting its basin. (Code Civ. Proc., § 837.) This means that the perspective of GSAs, and their ability to meet their duties under the Sustainable Groundwater Management Act (SGMA), will be directly represented in the adjudication proceedings.

In addition, Water Code section 2000 already authorizes courts to refer issues, such as those relating to the sustainable yield of a basin and relative allocations, to the State Water Board. Many courts do take advantage of this ability. Importantly, the ability to refer specific questions, framed with input from the court and all parties, occurs within the pendency of the proceeding. Additionally, under Code of Civil Procedure (CCP) section 837, the state can intervene and become a party to a groundwater adjudication. A court can request the State Water Board’s recommendations on individuals who would be suitable as a special master in an adjudication pursuant to CCP section 845. These consultations or intervention occur at a time when the State Water Board’s input may be most helpful in informing the outcome of a judgment. That is, while the proceedings are still ongoing and allocations are being determined. In this sense, AB 560 as currently drafted is duplicative of existing law and serves to further delay lengthy adjudication proceedings by adding yet a further consultation requirement that lacks any timeframe for the State Water Board’s response. Perhaps a cross-reference to the provisions in Water Code section 2000 and/or CCP sections 837.5 and 845 would achieve AB 560’s goals without layering further steps on an already complex process.

REGISTERED SUPPORT / OPPOSITION:

Support

California Environmental Voters
CivicWell
Community Alliance with Family Farmers

Opposition

African American Farmers of California
Agricultural Council of California
Association of California Water Agencies
California Apple Commission
California Association of Winegrape Growers
California Blueberry Association
California Blueberry Commission
California Chamber of Commerce
California Farm Bureau Federation
California Food Producers
California Fresh Fruit Association
California State Association of Counties (CSAC)
California Walnut Commission
Kings River Conservation District
Kings River Water Association
Nisei Farmers League
United Water Conservation District
Valley Ag Water Coalition
Western Growers Association
Western Plant Health Association

Concerns

Clean Water Action

Community Water Center

Leadership Counsel for Justice and Accountability

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334

Date of Hearing: March 28, 2023

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Rebecca Bauer-Kahan, Chair

ABPCA Bill Id:AB 560 (

Author:Bennett) – As Introduced Ver:February 8, 2023

SUBJECT: Sustainable Groundwater Management Act: groundwater adjudication

SUMMARY: Requires a court, before finalizing a groundwater adjudication, to refer the proposed adjudication to the State Water Resources Control Board (State Water Board) for an advisory determination as to whether it will impair the ability of a groundwater sustainability agency (GSA), the State Water Board, or the Department of Water Resources (DWR) to achieve sustainable groundwater management. The State Water Board must consult with DWR before making its determination.

EXISTING LAW:

1. Enacts the Sustainable Groundwater Management Act (SGMA) that requires local agencies to sustainably manage groundwater in high- or medium-priority basins by 2040. Defines sustainable management of groundwater as the avoidance of the following six “undesirable results:” (a) chronic lowering of groundwater levels; (b) reduction of groundwater storage; (c) seawater intrusion; (d) degraded water quality; (e) land subsidence; and (f) depletions of interconnected surface water (Water Code § 10720 et seq.).
2. Requires critically overdrafted groundwater basins to be managed under a GSP by January 31, 2020 and high- or medium-priority groundwater basins to be managed under a GSP by January 31, 2022 (Water Code § 10720.7).
3. Exempts 26 groundwater basins or sub-basins that are subject to existing adjudications from the requirements of SGMA; requires adjudicated areas to report groundwater elevation and other groundwater data to DWR annually (Water Code § 10720.8).
4. Outlines process and scope for a comprehensive adjudication of a groundwater basin (Code of Civil Procedure § 830 et seq.).
5. Permits a court to enter a judgment in a comprehensive groundwater basin adjudication if the judgment: a) is consistent with the reasonable use doctrine (Article X, Section 2 of the California Constitution); b) is consistent with the rights of parties exempted from the adjudication; and c) treats all objecting and exempted parties equitably. Allows the court to adopt a “stipulated judgement” (i.e., a settlement) proposed by a party or group of parties if the proposing parties represent 75 percent of the groundwater pumped in the basin or if 50 percent of the pumpers in the basin agree to the stipulated judgment (Code of Civil Procedure § 850).
6. Requires a court presiding over an adjudication to manage the proceedings in a manner that does not interfere with the completion and implementation of a GSP and that is consistent with sustainable groundwater management under SGMA (Water Code § 10737.2).
7. Permits a party or group of parties proposing a stipulated judgement under the procedures outlined in #6, above, to also submit the proposal to DWR for evaluation and assessment as an alternative to a GSP [Water Code § 10734.4(b)].
8. Permits the State Water Board to serve as a referee in a court case involving a water rights dispute upon the request of a state or federal court (Water Code § 2000 et seq.).

FISCAL EFFECT: Unknown. This bill is keyed fiscal.

COMMENTS:

1. Purpose of this bill. The impetus for this bill is the pending groundwater adjudication in the Las Posas Valley groundwater basin. The initial complaint in this adjudication was filed in March 2018 and it appears that a judgment may be imminent. The action was brought by a group of groundwater pumpers in the basin that asked the court to determine groundwater rights in the basin and to invalidate “Emergency Ordinance E” that was adopted by the basin’s GSA, the Fox Canyon Groundwater Management Agency (Fox Canyon), during the previous drought to limit groundwater extractions. The plaintiffs in this adjudication have proposed a “stipulated judgment” that the author and Fox Canyon maintain will result in unsustainable groundwater pumping in the basin. The author is concerned that, if successful, this adjudication would set a poor precedent for future groundwater adjudications and that by requiring the technical expertise of the State Water Board and DWR in the adjudication process, this bill “will ensure that SGMA is upheld” and prevent a single judge from undercutting the work of local agencies.
2. Background. Groundwater is a critical source of supply that meets more than 40 percent of water demand in an average year and more than 50 percent of demand during drought years. There are three types of groundwater rights: overlying, appropriative, and prescriptive. The most common of these is the overlying right that entitles “an owner of land overlying groundwater to drill a well and pump groundwater for use of that land, within the basin or watershed” (Littleworth and Garner, 2019). No permit is required to obtain overlying rights and these rights are typically not quantified. Due to this, any landowner may pump as much groundwater as they want so long as the water is put to beneficial use and the use is reasonable (Article X, Section 2 of the California Constitution). As a result of this lack of regulation, many groundwater basins in California are in a state of overdraft (a condition where average annual pumping exceeds average annual groundwater supply in a basin). To address overdraft and other adverse effects of excessive pumping, SGMA put in place a statewide framework for groundwater management for the first time, but also stipulated that it did not alter surface or groundwater rights (Water Code § 10720.5).
   
   Adjudications. A groundwater adjudication is when parties ask a court to resolve conflicts over groundwater rights. An adjudication is initiated when one or more groundwater pumpers files a civil action asking the court to intervene to determine groundwater rights and/or limit pumping to a basin’s “safe yield” (the amount of groundwater pumped that is equal to the average replenishment rate of a groundwater basin). According to the Water Education Foundation, “through adjudication, the courts can assign specific water rights to water users and can compel the cooperation of those who might otherwise refuse to limit their pumping of groundwater. Watermasters are typically appointed by the court to ensure that pumping conforms to the limits defined by the adjudication." 27 basins or sub-basins are adjudicated out of 515 groundwater basins identified by DWR in Bulletin 118. These are predominantly in urban and suburban parts of Southern California.
   
   State law gives every overlying property owner a potential right in an unadjudicated groundwater basin. As such, determining who has groundwater rights that could be affected by an adjudication and the scope of those rights is difficult and can be a lengthy process;

adjudications typically take more than a decade to resolve. Identifying and noticing every party that may have a right, completing technical work and sorting through disagreements over this technical work, and determining historic groundwater use which could affect the scope of one's rights are all factors that can contribute to increasing the time and expense of an adjudication. In an attempt to streamline the groundwater adjudication process, the Legislature passed SB 226 (Pavley), Chapter 676, Statutes of 2015, and AB 1390 (Alejo), Chapter 672, Statutes of 201, in the wake of SGMA’s passage.

The Committee is aware of five pending groundwater adjudications:

• Santa Clara Valley – Oxnard (No. 4-001.2) and Pleasant Valley (No. 4-006) groundwater basins, commenced in December 2022.
• Cuyama Valley groundwater basin (No. 3-013), commenced in March 2022.
• Indian Wells groundwater basin (No. 6-54), commenced in November 2021.
• Upper Ventura River (No. 4-3.01), Ojai Valley (No. 4-2), Lower Ventura River (No. 4-3.02), and Upper Ojai Valley (No. 4-1) groundwater basins, commenced in November 2019.
• Las Posas Valley groundwater basin (No. 4-8), commenced in November 2018.

An additional adjudication in the Borrego Valley groundwater subbasin (No. 7-024.1) commenced in July 2020; the court approved a stipulated judgment to settle this adjudication on April 8, 2021 and the case is no longer active.

1. Arguments in support. The Community Alliance with Family Farmers (CAFF) supports this bill asserting that it is a step in the right direction to bring the state in to review adjudication judgments. CAFF states that small farms and rural residents are at a disadvantage in the adjudication process due to the costs of legal representation and laments that “this legal proceeding is an option to circumvent the SGMA process.” CAFF points to examples in the Cuyama and Indian Wells basins where large growers initiated an adjudication because they did not agree with the direction the SGMA process was going. Finally, CAFF contends that “the idea of SGMA – that all stakeholders would be represented and their interests considered, and that there would be local community processes to achieve sustainability – will mean nothing if these overdrafted basins end up in court.”
2. Arguments in opposition. The California Chamber of Commerce (CalChamber) and several agricultural trade associations write in opposition to this bill. CalChamber et al. argue that this bill is duplicative of existing law and “may serve as a means to provide a veto power over a judicial proceeding by the executive.” These groups argue that the existing adjudication process allows for input from the State Water Board at various junctures and that the step added by this bill comes at the end of the adjudication process and will serve “to further delay lengthy adjudication proceedings by adding yet a further consultation requirement that lacks any timeframe for the State Water Board’s response.” Finally, CalChamber et al. maintain that this bill violates the separation of powers doctrine and gives “an executive agency the power to essentially disapprove of a judicial decision” thereby taking away “a court’s ability to independently find facts and make legal determinations regarding the rights and responsibilities of the parties before it.”
3. Double referral. This bill is also referred to the Assembly Judiciary Committee.
4. Related legislation. AB 779 (Wilson), current session, makes various changes relating to the process for groundwater adjudication proceedings, including adding requirements that a court invite DWR or the State Water Board to provide technical assistance in a proceeding and take into account the needs of disadvantaged communities and small farmers when entering a judgement. AB 779 is set for hearing before the Assembly Committee on Water, Parks, and Wildlife on March 28, 2023.
   
   SB 1372 (Stern), Chapter 682, Statutes of 2022, provides that the approval of a GSP by DWR shall not be construed as a determination or opinion by DWR that the allocation of pumping rights in a GSP is consistent with groundwater rights law.
   
   AB 2313 (Bloom), 2021-22 Session, would have required the Judicial Council to establish a program to train judges in water law and expanded the utilization of special experts in complex cases involving water law.
   
   AB 938 (Rodriguez), 2015-16 Session, would have permitted a local agency or water master administering an adjudicated groundwater basin to elect that the adjudicated basin be subject to SGMA. AB 928 died in the Senate Committee on Natural Resources and Water.
   
   SB 226 (Pavley), Chapter 676, Statutes of 2015, integrates and streamlines the groundwater adjudication process for groundwater basins that are subject to SGMA.
   
   AB 1390 (Alejo), Chapter 672, Statutes of 2015, establishes methods and procedures for comprehensive groundwater adjudications that are consistent with sustainable groundwater management.

REGISTERED SUPPORT / OPPOSITION:

Support

Community Alliance with Family Farmers

Opposition

African American Farmers of California
Agricultural Council of California
California Apple Commission
California Blueberry Commission
California Chamber of Commerce
California Farm Bureau Federation
California Food Producers
California Fresh Fruit Association
California State Association of Counties
California Walnut Commission
Kings River Conservation District
Kings River Water Association
Nisei Farmers League
United Water Conservation District
Western Growers Association
Western Plant Health Association

Analysis Prepared by: Pablo Garza / W., P., & W. / (916) 319-2096