Groundwater adjudications, notoriously expensive and time consuming, emerged as an issue during the development and ultimate passage of the Sustainable Groundwater Management Act of 2014, and the Brown Administration has made it a priority to consider possible reforms. To that end, on November 20, the Senate Committee on Natural Resources and Water held an informational hearing on groundwater adjudications titled, “Resolving Disputes Regarding Groundwater Rights: Why Does It Take So Long and What Might Be Done to Accelerate the Process?”
Stefanie Morris, State Water Contractors general counsel
Stefanie Morris began by saying that she is here, not because of her current position as counsel for the State Water Contractors, but because of her past experience working on groundwater adjudications as the attorney primarily responsible for dealing with the service, notice, and discovery at the tail end of the Santa Maria adjudication and the middle section of the Antelope Valley groundwater adjudication.
Ms. Morris said she is participating in an ACWA attorney working group charged with looking at ways to expedite groundwater adjudications, and that she would be sharing initial concepts coming out of that working group. “They haven’t been completely vetted by ACWA so they shouldn’t be viewed as an official ACWA proposal at this point in time,” she said.
“So what do we mean by expedited adjudication,” she said. “I think what everybody has in mind is a process that allows due process and respects California water rights priorities, but is more efficient.”
She said the wroking group consists of attorneys from across the state who represent all sides: overlying landowners, appropriators, municipal water providers, and private water companies. “We got together in a room and we asked if the Superior Court was the right venue, and the overwhelming consensus was yes, Superior Court was the right venue, given the complexity of groundwater adjudications and more importantly the fact that it’s not just the determination of water rights, but it’s a physical solution. The courts have continuing jurisdiction in most cases, and it changes over time. It’s not just saying who can pump what, but more importantly, a management plan that has to exist over time, so given all of those factors, the group felt that Superior Court was the right place.”
The attorneys divided the issues into two groups, one group that are procedural or process issues, and the other group are more substantive. Ms. Morris says she refers to them as ‘time sinks’ because they are inefficiencies and even sometimes a little bit of litigation tactics.
She then discussed the procedure and process issues:
Basin boundaries: “In traditional adjudications, you have to know who to serve so you have to define the basin boundaries,” she explained. “Someone files an adjudication, you have a trial on the basin boundaries, then you have to serve people. So you serve a bunch of people, they come in and they say, ‘I don’t like these basin boundaries, I haven’t had a chance to dispute them,” and you end up having a second trial phase on the basin boundaries. That’s really inefficient and can take one or two years. So a potential solution that we’ve come up with is to use the groundwater Bulletin 118 as the boundaries as the starting point. That’s a key point because you are bringing the parties in initially and you’re giving everybody a chance to participate fully from the beginning of the litigation.”
Notice and service: “The number of parties that can be potentially be involved and the importance of serving all the landowners makes serving everyone really time consuming and really expensive,” she said, noting that in the Antelope Valley, it was about 5 years just to get all the parties into the case. “So a possible solution is to include a notice that’s approved by the court in the property tax bills. That’s better than mail service because it’s something that’s reasonably calculated to get to the actual property owner whose right is going to be affected, and they are going to open it. It’s not a class action notice that some people might just tear up and throw in the trash, so we want to make sure that it’s reasonably calculated to get to the person.”
Discovery: “One of the key issues to settlement is understanding and then being able to quantify the problem – Is there overdraft and how much water is being currently pumped by the landowners,” she said. “Trials are phased to help segregate the issues and to piecemeal it so it’s manageable. A lot of time we’ve seen litigation games played where somebody will get a discovery hold, and so we’ll be five years into the case, seven years into the case, we don’t know how much water is being pumped by each party because they haven’t had to produce anything in discovery. So a way to solve that and front load the process to encourage settlement among other things is to copy the federal rules of civil procedure, which require as you come into a case, that you produce relevant documents. … A potential concept is that as you come into the case, you have so many days to produce your pumping data and the basis of your water right that’s available to all parties.”
Phasing:“It’s critical when you have complex litigation to be able to phase things to make it manageable, but what we’ve seen in past litigations is that after a statement of decision from one phase of trial comes out, at the next phase of trial, parties then try to re-litigate issues that have already been decided,” she said. “That can be a huge time sink and waste of the court’s resources. So something that might fix that is some kind of rule or process that the parties would be bound by those statements of decision. Of course they can exercise their appeal rights and at the end, when the final decision is made, but they can’t go back and forth in phases and try to re-litigate issues that have already been decided.”
Judges, venue: “The 170.6 solution is to define the sides,” she said. “Again, designating things complex litigation will help the process because it just gives judges more tools to manage the number of parties and it can lend itself to putting these cases in a neutral venue.”
Ms Morris said that based on her experience, she estimated that 35% to 50% of the time could be cut if solutions could be found to those procedural issues.
Ms. Morris then turned to the more substantive issues:
Compatibility with the new legislation: “My impression from the ACWA attorney working group is that we see expedited adjudication as a tool to work within the groundwater sustainability legislation, not as something that should be used separately,” she said. “We were thinking about mechanisms for discouraging one landowner who may be a dissenter from putting everybody in a groundwater adjudication during the time period when you’re trying to develop a plan, so some kind of solution could be some sort of tolling provision of the adjudication to allow for parties to continue to develop that plan. That could be beneficial because a lot of the technical work developed for the plan would be useful in the adjudication.”
Senator Pavley asks if the tolling provision would encourage people who want the status quo and no changes to delay that five year time period in developing the plan?
“It could have that impact, but I think whatever provision you had would have, the party who was requesting would have to show good cause for the tolling agreement,” Ms. Morris replied. “I think a situation where you have one person who doesn’t like what a groundwater sustainability agency is doing, and everybody else is working together on a management plan, I think you’d have to have a caveat to make sure there was sufficient evidence to support that it wasn’t just a delay tactic.”
Testimony: “We would propose that the courts be able to request parties to do written testimony for direct testimony,” she said, noting that on phase 3 in the Antelope Valley case, they spent a month of court days taking direct testimony. “So by providing written testimony ahead of time, it can help the parties move more efficiently through trial and reduce the cost and the number of trial days.”
Expert reports: “Expert testimony is really important and is probably the key piece of testimony in groundwater adjudications besides the water use,” she said. “What we have seen is people play games, they don’t want their experts to have to commit so they don’t do a report in writing. As you can imagine, this area is very technical, and not having the information, including the opinions and the basis for those opinions in a written report makes it difficult to go through the discovery process and then also prepare for trial. A proposed solution for that would be to follow again the rules of federal civil procedure that require that an expert, so many days before their deposition, to produce a written report, so that’s again another way to save time, money, and effort, which is the entire goal of this.”
“So on behalf on ACWA, thank you for inviting me,” Ms. Morris concluded.
Chris Scheuring, managing counsel for the California Farm Bureau Federation
Chris Scheuring began with a personal story. “My family farms walnuts and almonds in western Yolo County, and this summer, I knew that things were not good in the local water district,” he said. “In fact, we had a zero percent surface water allocation this year. I asked my dad, what are you going to do? And he said, ‘we’re going to have to turn on the pumps and see if we can bring home a crop anyway.’ And that is what groundwater is to my members. Groundwater is fallback; it’s an important resource, and for that reason, the right is a very serious one for my members.”
“I do represent farmers and ranchers across California who do pump groundwater under established legal rights, so my perspective today would be that of a direct stakeholder,” he said. “The Sustainable Groundwater Management Act is the law of the land on January 1st, and groundwater management planning is now the order of the day, at least for medium and high priority basins. At the Farm Bureau, we’re spending a lot of time getting our members ready for that, providing a lot of information, and a lot of assistance to help them formulate local efforts to bring basins into compliance with the act in a proactive way. We view adjudication as an adjunct or a parallel process and something that hopefully will be completely complementary with the act’s intent to engender prudent and proactive management of the resource.”
“In some instances, as the groundwater sustainability plans are adopted and developed under the act, farmers and other pumpers are going to be told they need to cut back, and that will be hard,” he acknowledged. “Under the act, we understand that those cutbacks would be completely consistent with water rights priorities, and so the question is, what are the water rights priorities. Those water rights priorities have been developed over the last hundred years as a body of law by California’s court system, and it has been applied where necessary through groundwater adjudications. They are necessarily complex and difficult, not just in terms of parties but in terms of technical issues and all kinds of other things. Our members fundamentally want to keep that process, they want to keep the judicial recourse, keep it in the court system, initiated in county courthouses in the first instances as it is, and then potentially referred to complex litigation departments when it’s necessary, which may be most cases, and or to referees for some of the heavy lifting involved in adjudications.”
“In the past, groundwater adjudications in California have not been a model of efficiency,” he said. “They’ve been expensive and time consuming; all of that is well known. So we absolutely need to improve adjudications because they are going to happen, with or without the implementation of the act. How do we do that without ditching due process protections is the biggest deal.”
On some things, there simply are no shortcuts, Mr. Schuering said. “But on other things, we can provide some shortcuts. Notice and service can hopefully fixed or improved. I think we’re looking at ways to do that through APNs or other real estate based means. The question of personal service versus other means of notice. It’s clear to me that everybody needs to know about it, and it’s clear to me that there are constitutional due process protections, but there may be ways to speed that up. Unnecessary venue changes, dispense with some of that, and perhaps dispense with some of the preemptory challenges of judges.”
“Initial fact finding can be standardized and made more efficient,” he said, “and the products developed under implementation of the surface groundwater management act can actually be helpful to that because we’re going to have a parallel process in a lot of places where this information is being developed, and that can probably help make some of these adjudications a little quicker.”
Mr. Scheuring acknowledged that discovery is a problem. “Any lawyer who’s been involved with discovery knows how just painful that is, even for a lawyer that’s getting paid to do it,” he said, and he suggested streamlining the process by using a referee. “If we can send these cases to a shortlist of qualified referees, it could relieve the courts of the day to day burdens of a complex piece of adjudication.” He added that building in a fair amount of deference to a referee’s report could be another tool for encouraging settlement.
Pavley asks Mr. Scheuring to define referee. He said a referee would be a groundwater expert designated by the court, someone who would be qualified and experienced in handling adjudications and could handle tasks such as serving all the parties, bringing in the claims, and undertaking the investigation.
“Unlike Ms. Morris, who described a process where you could prevent a dissenting landowner from blowing up an ongoing groundwater sustainability planning process under the new legislation, I thought of it the other way,” he said. “I thought of it as the allocations or whatever that was determined in a groundwater sustainability plan could be brought in and imposed as interim or injunctive relief during the pendency of a groundwater adjudication, but the groundwater adjudication would continue to go forward. That could be something the referee or the judge decides.”
Mr. Scheuring said that there has been active discussion about having the State Water Board take on the role, but his membership is not in favor of this for three reasons:
The State Board is not presently funded or structured to handle the quasi-judicial function over all of California’s groundwater resources.
His members are not comfortable that adjudicators can be sufficiently firewalled at the State Board. “The State Water Board is a unit of the executive branch, which is a political branch of government like the legislature,” he said. “My members are very comfortable with the judicial branch and the judiciary as the final arbiter of rights, and that’s where my members would like to keep it.”
There are significant differences between surface water adjudications and groundwater adjudications, he said. “Understand that stream adjudication statute is being principally ordering rights and claims, but groundwater adjudication is a great deal more. It involves development of hydrogeological data, a physical solution and a number of things that we feel are best handled in the court system.”
Finally, Mr. Scheuring addressed Mr. O’Connor’s question posed to Justice Robie about the disconnect between groundwater adjudication, the new groundwater legislation and the ecosystems and surface water depletion issue. “I would urge you to view the surface groundwater management act as casting a broader net, that it does not present a conflict in that sense,” he said. “An adjudication determines rights – that’s its primary function. It’s a zero sum, dividing up the pie kind of thing. The surface groundwater management act allows local agencies to do a lot more than just play a zero sum baseball. It allows them to undertake projects, it’s allows them to expand the pie, to engage in proactive projects that mean the pain need to be quite as bad in managing groundwater.”
Gordon Burns, Undersecretary for the California Environmental Protection Agency
Gordon Burns began by saying that the administration is committed to proposing improvements to the groundwater adjudication process this year, but they don’t have a proposal yet. “We are getting feedback on a concept for an administrative adjudication process at the State Board alluded to by my colleague, but we want to have a conversation about that and judicial reforms.”
“The administration would like to see reforms that make the process more cost effective, that is – make it less expensive and faster, but also be fair and consistent with due process,” he said. “But I’d strike a note of caution that adjudications are always going to be expensive and slow, and they are complex, obviously, factually, legally and procedurally, and so there’s a limit to how fast we can make them and be consistent with due process. So really we’re talking about making them less slow and less expensive, but they are still going to be slow and expensive, relatively.”
Mr. Burns said that the Sustainable Groundwater Management Act can get you to a similar place as an adjudication can. “Ultimately, you want to end up with a durable management plan. It may include allocations, replenishment projects, and may even include some sort of water market, all of those are things that local agencies can create with their powers under the act, in addition to the benefits of them developing a lot of the technical understanding and data that would be useful in an adjudication. Also, they could be developing the same sort of solutions and management plan that an adjudication would latch on to in settlement discussions.”
Mr. Burns noted there are some differences between adjudications and groundwater management plans. “An adjudication can quantify water rights, but they don’t always do that in the settlements, and it can require the participation of federal government and tribes that’s voluntary under the act,” he said.
Mr. Burns then discussed a proposal for an alternative administrative adjudication process, rather than a judicial process. He noted that under water code section 2500, there is a statutory adjudication that applies to stream water. “The concepts that we’re discussing would extend it to groundwater, and add certain things to modernize or make it more efficient,” he said.
He pointed out that most western states have similar administrative processes, some of which are limited to stream water, some are limited to groundwater, and some of them apply to both. Some of the procedures have been tested by the courts and found to comply with due process, so there’s a fair amount of certainty about how the process is set up, he said.
“In a statutory adjudication, most of the work is done by an administrative agency, in this case, the State Board,” he said. “But a court reviews the agency’s conclusions, it can change them, and a court eventually issues the final decree. The process is potentially more efficient because of the agency’s resources and some of the aspects of its process and procedures. Some of the benefits include early disclosure of claims and evidence under the statutory process that automatically happens early as the parties are required to put in their claims and their evidence. There is no personal service. There is notice given and we like the idea of including notice in property tax or assessment notices.”
In the statutory adjudication process, once the Board receives the claim, it does the evaluation and technical work, which includes determining the technical aspects of the basin and the safe yield, he said. “It means there is no traditional discovery process with the parties responsible for putting on the evidence and experts, although they would have a chance later to object to certain aspects of whatever the board comes up with and bring in their own witnesses at that point. It does circumvent a lot of the discovery wars. Trial is faster because direct testimony is submitted in writing, and much of the evidence is based on the board’s investigation.”
If the statute for surface water adjudications were extended to groundwater, there could be combined surface and groundwater adjudications where that might make sense, or they could be kept separate where that might make sense. “That may provide certainty for both surface right holders and groundwater right holders when the two are interconnected and resolving the two of them together makes sense,” he said.
Mr. Burns pointed out that there are institutional benefits to having adjudications handled by an agency, especially if there’s going to be more of them. “The agency can get better at it, it can build up expertise and knowledge and data that it can use and apply later,” he said. “A lot of people had said today that the best way to resolve these things is through negotiated settlement. Obviously an agency and its personnel can get better at figuring out how to manage the process towards settlement, and that can be a benefit. You don’t necessarily have the same judges all the time, but at an agency, you could have a core group of staff who are able to grow with the process and learn from it.”
He added that there isn’t any reason why they couldn’t reform the judicial process as well as reform the statutory adjudication process. He noted that he was, in the interest of full disclosure, go through some of the concerns they’ve heard about the process, but Mr. Schuering articulated them quite well.
“We look forward to working with the legislature and stakeholders as this goes forward,” he said.
“Let’s say the legislature decides that it wants to expand the statutory adjudication process to include groundwater, either separately or comingled,” said Dennis O’Connor, Principal Consultant to the Committee. “Are we really comfortable with all aspects of the current statutory adjudication process for surface water, or would some tweaks need to be made, whether or not we add groundwater? Tweaks to the 2500?”
“Yes, we think it would be good to make some tweaks to make the process more efficient and also to help it adapt to groundwater,” he said. “You’d want to be able to explicitly provide for a physical solution and some of the other things that you would do in a groundwater adjudication that you wouldn’t do in a surface water one.”
Senator Pavley asks Mr. Burns about the importance of a watermaster and ongoing monitoring of a groundwater basin. “Just because it’s adjudicated doesn’t always mean that it’s managed well,” she pointed out.
“You’d want to have some kind of governance entity that could resolve disputes and manage the basin according to the terms of the settlement or the final decree,” Mr. Burns replied. “Interestingly, often the watermasters as I understand are boards of stakeholders, not unlike perhaps the board at a local agency that is managing according to whatever plan it has so there’s a lot of parallels there and potential duplication, too.”
“I think the watermaster and the ongoing management plays towards looking at keeping in courts because you have continuing jurisdiction,” said Stefanie Morris. “An example of where that has been really critical is the Chino Basin. They’ve changed the management plan because they have additional technical data on the basin, and instead of having to re-serve and bring in all the parties, the court retains the jurisdiction over those parties. They are able to make changes by filing a motion with the court, rather than having to go through this long, exhaustive process again, so I think that’s a critical distinction between having an administrative type hearing and keeping this in the Superior Court.”
Dennis O’Connor asks about the potential for a hybrid process that would initiate in the courts, and the court could, if it so desired, refer certain things to the board to work out the details, and then have that then go back to the court for ratification … ?
“You can and in fact, there is,” responded Ms. Morris. “We already have the ability under the water code to file an adjudication, stream or groundwater, in Superior Court and the parties can ask for a reference to the State Board to make certain determinations, so that mechanism is already in play in existing water code.”
Justice Robie wraps it up …
Senator Pavley then asks Justice Robie for his thoughts on the discussion today. Did he hear any suggestions or concepts that ‘held water’ or raised any red flags?
Justice Robie said that they were very constructive thoughts, and many of the things suggested may be compatible with the judicial council’s ideas. “In other words, we’ve already committed to using complex litigation courts, and I’m sure you could directly assign them to there and solve the venue problem,” he said. “I didn’t really hear any thoughts that were not constructive, but you have to see the words to see what they really mean.”
Senator Pavley asks him what the term ‘referee’ means to him.
“Courts often refer matters to a referee for fact finding, and there is a statutory provision for using the board as a referee,” he said.
In the early days of surface water adjudications, the court would get an adjudication request and instead of a trial, they’d refer it to the state engineer. “I had a case that I decided not to long ago where we were interpreting a 1930 decree,” he said. “We referred to the report of the referee as to what the decree meant because it was a legal decree, but the report of the referee which we found in obscure libraries had the words and the rationale for what came about.”
“The courts use referees for fact finding and they come back to the court so it remains in the jurisdiction of the court,” said Justice Robie. “Even when you refer to the water board, the water board then reports to the court. But there have been some suggestions that the court, as an entity, decides who could be a referee. I think individual judges can talk to the parties and say, would it be appropriate for a referee to do this, and then the parties can toss in suggestions. … Referees are used a lot but they need to be very flexible so that the court decides which referee is appropriate in a given case.”