On January 1st, the new Sustainable Groundwater Management Act took effect. The statewide regulation of groundwater is one of the most important and controversial challenges facing the water managers and water users. At the fall conference of the Association of California Water Agencies, Best Best & Krieger’s managing partner Eric Garner gave the Thursday luncheon keynote address. In his speech, Mr. Garner discussed the new legislation, putting it in a practical and historical perspective.
Here’s what he had to say.
Groundwater regulation is controversial because it’s difficult, began Eric Garner. “It’s managing a common resource, and managing a common resource has always been a problem going back thousands of years, so this is nothing new. Unfortunately, no one’s figured out a good way to do it in the last few thousand years, so it falls to us to do our best to do that.”
“This has been an epic year in California, although there have been other epic years,” he said. “Every 100 years, the state gets around to regulating a type of water, so in 1914, there was surface water legislation. In 1928, Article 10 Section 2 of the California constitution that said, ’all water use must be reasonable’ – the most important principle in California, more important than priority, so that was a big year. In 1960, there was the bond for the State Water Project, another huge epic year, and then in 1977, of course, the extreme drought of 76-77 and one of the driest years on record.”
“This year may go down as THE epic year in California water: statewide legislation, which does not happen very often, a water bond every 50 years or so, extreme drought which we have periodically, and the California Water Action Plan – all those things – that’s a lot of change in water,” he said. “I like to say that water law changes at glacial pace, but not this year. There have been a lot of changes, and of course because water is so important, that inevitably means controversy, and it inevitably means some pain and difficulty for people. People get bruised and bloodied, and unfortunately that’s the reality.”
“I read recently that there haven’t been more armed conflicts over water because water is too important to fight about, and I think there’s almost an element of truth to that,” Mr. Garner said. He then presented a slide with the quote by Benjamin Franklin, ‘We must all hang together or we shall certainly all hang separately,’ and he said, ”I just love this quote because there are certainly plenty of people outside this room who would love to hang us separately, and I do think it’s important to work together. We may not have always had to work together, but now we have 38 million people in this state, and now we really have to.”
“We have a new law, it’s not going to go away, and I think our task and our challenge now is to implement it fairly and effectively,” he said. “But before I get the new law, I think it’s useful to take a moment and talk about where we are today.”
He then briefly reviewed the three types of groundwater rights. An overlying right is usually primarily an agricultural right to pump water and use it on your land for reasonable and beneficial use within the groundwater basin. There are appropriative rights, which usually are the public water systems that take water and put it in a common system, even within the basin, they have appropriative rights, he said. He pointed out that the significance of those two different types of rights is that under the common law the overlying right has a priority over the appropriative right, and that priority can shift if the appropriator can prove prescription.
So who owns the water? “Nobody owns it except the state of California, who owns it and holds it in trust for everyone – unless you purchased it in a bottle this morning from somewhere,” he said. “It’s a used-based right, and the cardinal principle of it is that it has to be reasonable. The trick with reasonableness is that under case law, reasonableness changes over time, depending on where you are in the state of California. It’s a flexible thing, so no one really owns a right to water. It is a different type of property, and that’s something that makes it very complex to regulate.”
“Nobody cares about water rights unless there’s a shortage, and then people care a whole lot and in a big hurry,” he said. “The way we typically describe shortages when they come to groundwater is as extractions in excess of safe yield, and safe yield is quite simply how much water is going in versus how much water is going out. It’s tough to measure in a groundwater basin at times, but the concept is pretty simple. It’s a lot like your checking account. If you’ve got more going out on a regular basis than going in, you’ve got a problem. And safe yield is simply the maximum amount you can take out without an undesirable result.”
The 1975 Supreme Court Case, Los Angeles versus San Fernando, defined one undesirable result as the gradual lowering of groundwater levels resulting in the eventual depletion of the supply; land subsidence is another undesirable result, he said.
“So what are your risks? If you’re an overlying owner and you’re pumping water for farming use, there are a couple of risks to you right now, and none of these risks to you will go away with the new law, of course,” he said. “The key one is all of your fellow overlying pumpers, because if you have no cities and no public agencies, and more water is being pumped out and there’s an overdraft, everybody’s going to have to cutback. That cutback is correlative; it’s just like a riparian right, so everyone shares the pain if there has to be a reduction, so risk one is all the other overlying pumpers.”
“Risk two is if public agencies are pumping, they may have established prescriptive right and if they have, that right can impair the overlying right,” he said, noting that the recent City of Santa Maria lawsuit was a case where prescription was proved.
He said there are two provisions in the water code that are risks to overlying rights, with one being the provision that domestic use is the highest priority. “It’s always been a little unclear how that interfaced with the overlying priority,” he said. The other is the new code section that says there’s a basic human right to water in California. “Nobody knows what that means, frankly, as it’s never been tested in court. I don’t think anyone’s eager to find out, but if we wind up in litigation in the future, it’s probably going to get raised.”
“Those are uncertainties that exist today,” he said. “This is all separate and apart from the Sustainable Groundwater Management Act.”
Appropriative users, usually cities and public agencies, have a lot of risk, too, he said. “The risk is that if they don’t prove prescription, they could be completely cutoff and the overliers have their priority and they can pump,” he said. The typical way prescription is done is through an adjudication. “It’s a fancy name for massive litigation where you have to have all the claimants in the room and they have to go through that expense and pain to sort out their water rights.”
“It’s not exactly a great situation that we have today,” he said. “We don’t know who is pumping what, and we don’t know what they have a right to, and that seriously is the law, so what does that lead to? It means conflicts get resolved by a judge, you have lengthy bet-the-farm litigation, and let me tell you, lawyers love bet-the-farm litigation because that means you’re going to pay our bills no matter what … You sue them all and let a judge sort it out, or as I like to say, you pump until a judge tells you not to, and that was the law of California groundwater in one sentence.”
“But next month on January 1st when the act takes effect, no rights are going to be changed,” he said, pointing out that the provisions specifically state that the legislation is consistent with the constitution and that nothing in the new groundwater legislation modifies rights or priorities to groundwater. “The legislation doesn’t alter surface water rights or groundwater rights under the common law or any provision of that law; Groundwater Sustainability Agencies (GSAs) not allowed to determine water rights, and can’t make binding water rights determinations. What the legislation did is that it requires GSAs to manage groundwater through a groundwater sustainability plan in CASGEM high and medium priority basins, and it provides those GSAs authority and some financial enforcement powers to manage that.”
He noted that the CASGEM basins are defined by DWR and those that are classified as medium and high priority basins will be focused on in this legislation. The timeline is key, he said, because nothing happens on January 1, except the law goes into effect. “It’s important to understand that there’s a pretty generous timeline that often doesn’t exist in a courtroom to get our collective acts together and do something without having to deal with evidentiary deadlines and the code of civil procedure.”
The legislation gives until January 1st, 2017 to form a Groundwater Sustainability Agency, and then three years after the agency is formed or by January 31st, 2020, the GSA must have completed a groundwater sustainability plan in critically overdrafted basins; medium and high-priority basins not considered critically overdrafted have until 2022. “So even in the most critically overdrafted basins, you have five years from January 1st to put together a plan, but you don’t have to be at safe yield in 5 years. You have 20 years to implement that, so depending on the type of basin you’re in, that’s 2040 or 2042, to actually get the basin to sustainable yield. So that’s 25 years, even in a critically overdrafted basin.”
Mr. Garner pointed out that you’ll never get that kind of time in a courtroom. “A judge would never allow that long,” he said. “In an adjudication, there is typically something called a ramp-down, which is once you get a judgment, parties are given time to reduce their pumping to safe yield, but I never seen that longer than 5 years, maybe a couple years longer than that, so 25 years is a really good business planning horizon to work on that if you’re in a critically overdrafted basin.”
A groundwater sustainability plan has measurable objectives and milestones to achieve sustainability in 20 years, and it includes monitoring and measurement of groundwater elevations, subsidence, water quality, surface flow, and storage change, he said. Groundwater sustainability plans identify recharge areas and identify surface water that might be uses for in-lieu recharge, which is using surface water instead of pumping, as well as reporting total water use, he said.
This all seems good and sensible, but clearly it has created angst, he said. “This maybe the most important point I want to make today,” he said. “Groundwater Sustainability Agencies are authorized to impose fees, either fixed or volumetric, to fund the management plan, prepare and build facilities, conduct investigations, control extractions – they can’t determine water rights but they are given power to control extractions, as well as require measurement and reporting, and enforce the plan requirements. The reason this is so important is that this is what a court can do now. What you typically get out of an adjudication is something looks a lot like that. … So what this legislation has done has provided everyone a non-judicial forum to do the same thing, which is the hugely key point. Right now you’d have to go to court with all the expense and uncertainty that causes. You can actually do this in a participatory public process now, and I’d heartily recommend everyone takes advantage of that process, as opposed to the alternative.”
“What is sustainable groundwater management?” he said. “It’s the management and use of groundwater in a manner that can be maintained during the planning and implementation horizon which is 50 years. So you effectively have 5 years or 7 years to do a plan; you have 20 years to get to the sustainable yield, and once you get there, you need to be able to stay sustainable for 50 years. Sustainable yield is similar to safe yield; it’s basically just the maximum quantity of water that can be pulled out of a basin on a long term basis. We’re talking hydrologic cycle here, not one individual year, because in a drought year, obviously, water levels are going to drop.”
Sustainable groundwater management means avoiding undesirable results, such as chronic lowering of groundwater levels, reductions in storage, seawater intrusion, degradation of groundwater quality, land subsidence, and significant surface water depletions, he said, noting that significant surface water depletion is an addition. “I think there was always probably a pretty argument if anyone had wanted to make it that it was something that should be an undesirable result; it was not so clear in the law as it is now.”
The new groundwater legislation also allows for a state backstop, another controversial thing, Mr. Garner said. “Essentially if we don’t do it, they will, and the worst nightmare is they get to charge us for doing it, so you’re paying your own attorney’s fees and you’re going to pay their costs,” he said. “No one wants to do that, so let’s talk about the ways we can avoid having the state come in and do this.”
“The way to avoid that is to form the GSA by 2017, because if that deadline is mixed, that drops a flag where they can start the process to come in,” he said. “The second is getting the plans done on time, 2020 and 2022. As long as you form your GSA, the state has no ability come in and do anything before 2022, and then, only if the basin is in long term overdraft and the plan is inadequate. In 2025, if the plan is inadequate and groundwater extractions are depleting surface water, they can come in. But if you do an adequate plan, the state has to stay out, and that, I think, is the real key for everyone in this room.”
“So what’s the real challenge that we face in California right now?” he said. “It’s not a legal challenge. … it’s really a political challenge and it’s an engineering challenge. It’s not the Groundwater Sustainability Act. It’s the fact that we’re so dependent on groundwater, which is not going to change. We pump 15 MAF of groundwater a year. It’s about a third of California’s total supply in an average year, I haven’t seen a status of what it was this past year but you know it had to be higher than that. 80% of Californians rely on groundwater, and we pump more groundwater than the rest of the United States combined. It is a big part of our water supply.”
He noted that there’s ongoing subsidence, not only in the Central Valley, but on the Central Coast, Southern California, and other places, and there’s seawater intrusion as well.
“So really what the challenge is that we’re all facing together is that the resource has been depleted,” he said. “There’s still a lot of groundwater. If we manage it, it’s going to serve us well for a very long time, but it has been depleted from where it was. There’s a risk of long-term drought or climate change; it doesn’t matter if you believe in climate change or not, there are plenty of examples of long-term droughts … probably the biggest risk and the biggest challenge is the growing population. We have 38 million people now, and we have certainly more on the way.”
“I’ve had the good fortune to work in a number of different countries on water issues,” he said. “This is really the most sophisticated group of water professionals in the world; I really do believe that, because if you think of the use of water in our state, it’s almost miraculous. From the Central Valley Project, the State Water Project, the Colorado River, what was historically done with Tulare Lake, which I was just reading about recently, that’s amazing, to recycling, stormwater capture and desal and all the things that are going on right now. We know you can’t do anything without water here and yet California is again, the 8th largest economy in the world, poised to go past Brazil and Russia this year and become the 6th largest economy in the world.”
“Although our water law is often ridiculed, and sometimes with good reason, it has been flexible enough to allow California to transform itself,” he said. “We could have stayed a mining state if we had a pure priority system like Colorado and some other states, but we’ve transformed ourselves from being just a mining state to an incredibly diverse economy that feeds much of the world and leads the world in technology. That transformation could not have happened with a static water law. If water law had stayed the same, the state would not be what it is, the economy would not be what it is, and most of us probably wouldn’t be sitting here today.”
There have been changes, he pointed out. “In 1884, the California Supreme Court outlawed hydraulic gold mining to protect primarily agriculture and navigation uses. There’s the 1914 surface water law, and article 10 section 2 in 1928 which really allowed cities to build dams and take some water away from riparians – otherwise cities never would have developed. So the next change for California water law and the challenge that faces us all is to implement the Sustainable Groundwater Management Act.”
“We now have a forum to manage groundwater that used to only be available in court, and we all need to take advantage of that,” he said. “There are going to be disagreements, there are going to be controversies, and there are going to be fights. We all have to protect our interests, but we do need to work together to find a way through those disagreements and controversies because one thing I know … is that the people in this room can do a much better job of managing groundwater than a person in a black robe or the State Water Resources Control Board, but if we don’t’ do it, they are going to have to do it. They don’t want that and we shouldn’t want that, so let’s all roll up our sleeves and get the job done.”
“Thank you very much.”
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