California Water Law Symposium: The Role of Reasonable Use in the Russian River Frost Protection Litigation

Vineyards_in_Russian_River,_Sonoma

A panel of lawyers discusses the appeals court ruling upholding the State Water Resources Control Board’s authority to regulate diversions in the Russian River watershed by riparian water rights holders for the purposes of frost protection

russianriver_mapThe Russian River is California’s second largest river, flowing 110 miles through the heart of Northern California’s wine country.  The river flows from the Redwood Valley to the Pacific Ocean through a picturesque landscape encompassing forests, agricultural lands, and urban areas. The Russian River watershed is home to 360,000 people, 150 streams and creeks, 30 species fish – and 60,000 acres of vineyards spread between Mendocino and Sonoma counties.

During the late spring months, as the vines begin to bear fruit, frost events tend to occur in the area.  Then this occurs, vintners will mist the grapes continually to protect the plants from the frost damage, often drawing directly from the river or its tributaries and diverting under riparian rights. The practical effect of hundreds of riparian users diverting water at about the same time can lead to sudden decreases in flow conditions in the river and its tributaries and stranding fish along the banks.  In April of 2008, young salmon were found dead along the banks of parts of the river; federal scientists later determined the deaths were due to diversion of water for frost protection.

On September 20, 2011, the State Water Resources Control Board adopted Regulation 862, which applied to ‘any diversion of water from the Russian River stream system for purposes of frost protection from March 15 through May 15.’   The regulation provided that any diversion for the purpose of frost protection that occurs from March 15 through May 15, with the exception of those above Warm Springs Dam in Sonoma County or Coyote Dam in Mendocino County,  shall be diverted in accordance with a Board-approved Water Demand Management Plan.

Regulation 862 became effective on December 29, 2011, and in January 2012, two lawsuits were filed, delaying implementation. In those cases, which were eventually consolidated into Light versus the State Water Resources Control Board, growers challenged the regulation on the basis that it exceeded the Board’s authority to regulate reasonable use; it improperly delegates power to a local, self-interested group; and that the State Water Board failed to comply with CEQA. In 2013, the Mendocino County Superior Court agreed, invalidating the regulation on the grounds that the State Water Board exceeded its authority, unlawfully delegated power, and failed to adequately analyze certain elements in the EIR.

In June of 2014, a California appeals court reversed the decision and upheld the state’s authority; in October of 2014, the California Supreme Court declined to review the case, setting the stage for implementation of the regulation for the 2015 frost protection season.

Russian River vineyard by Ward KadelIn this panel from the Golden Gate Law School’s 2015 Water Law Symposium, Tony Rossman of Rossman and Moore moderated the discussion between Brian Johnson from Trout Unlimited, the group that advocated for the regulation; David Rose, from the State Water Resources Control Board; and Nick Jacobs, from Somach Simmons & Dunn, who represented the largest group of vendors in the litigation.

Tony Rossmann began by saying they would be focusing on the case of Light versus the State Water Resources Control Board which was decided last year. “In some respects, it might seem like a replay, but in many respects not so, of the thorny litigation against the State Board where the State Board uses power under Article 10, Section 2, a constitutional provision to regulate the use of water for frost protection on the vineyards in the Russian River watershed,” he said. “Let me assure you that in your next edition of your Water Law Casebook, this case will show up in your casebook because it’s clearly a gem of a case that raised the standard and some great trends in California water law.”

While the ostensible subject of the panel is the power of the state board under Article 10, Section 2, which by its terms is self-enforcing, and it enjoins all agencies of the state, including local agencies, in carrying out its provisions, the case also has another dimension, which is the question of delegation of authority to those who are regulated,” Mr. Rossman continued. “You will see in the description of this setting how that comes to play. And while our panelists will focus on the Article 10 section to the reasonable use question, the issue of delegation to the regulated is one that I think is going to emerge even more in our state.”

Mr. Rossman then turned the floor over to Brian Johnson from Trout Unlimited.

Brian Johnson began by saying that the panel would be describing how the rulemaking came together and the issues it was meant to address, but first he explained how vineyard frost protections works and its inadvertent effect on salmon. “What is frost protection?,” he said. “It’s a period in the late spring where it’s warm enough that the vines have come out of dormancy and bud break has happened and they’re starting to grow, but it’s still cold enough that frost events happen. And that can be very destructive for a crop.”

Russian_River,_Sonoma_CaliforniaMr. Johnson explained that the most effective and most common way to protect vines is to spray water on them at a rather high rate, although there are other technologies. “The main alternative is fans,” he said. “But these work only on some landscapes; it depends on the topography, and they don’t work for all types of frost events. They work for the most common type of frost event, which is where we’ll get a little inversion layer, and the warm air will rise, and the cold air will drop. And if it’s a still night, and particularly in vineyards that are enclosed by forest, you get that event. But they don’t work everywhere.”

The rate of water applied in frost protection is high, certainly relative to irrigation, which is not that high, he said. “It works out to about 1.1 CFS for 10 acres of grapes,” he said. “And unlike irrigation, they’re on all at once, so when the temperature drops toward freezing, they all go on.”

So you have a situation where a handful of frost events might equal the entire year’s worth of water for other purposes, and they’re all on, all at once,” he said. “Estimates vary, but there are about 20,000 acres of vineyards in the Russian River that are frost-protected by this method, at 1 CFS for 10 acres. So you can get a sense of the scale.”

Just for context, Mr. Johnson gave the latest gauge data for the Russian River. He said it was running at about 130 CFS up near Hopland, with a lot of the larger tributaries running at about 10 to 12 CFS. The smaller ones that are big enough to have coho salmon or steelhead farther up in the watershed are probably running from a half a CFS to maybe 3. “So 10 or 20 or 30 acres of frost-protected vineyards in that watershed would be all of the water, but of course it depends on how the grower gets the water,” he said.

Mr. Johnson noted that this issue has been around awhile, saying he first heard of the problem around 2005-2006 from grape growers during discussions about cooperative projects for irrigation.

He then discussed three means of water delivery used in the watershed:

Classic direct diversion: This type of diversion present the most extreme risk for fish, Mr. Johnson said. “There’s a pump right in the river that takes all of the water and applies it directly to the vineyard,” he said. “Those existed mostly in the main stem river, where there’s enough water to be able to do that.” He pointed out that the fish kill in April of 2208 was in an area with this type of diversion. “There were several days of bad frost, and the river dropped about 80 CFS out of about 200. With the shape of a river when it’s dropping like that, the edges recede very quickly, and there were steelhead that were not very mobile yet because they had just emerged from eggs, and they’re in the gravel, and so that was an issue.”

Fill and spill reservoirs: This type of diversion tends to be in the tributaries, he said. “The issue is when the pumping out of the reservoir is greater than the inflow into the reservoir, and would then dry up below the reservoir while the frost event was happening,” he said. “There were some academic papers that documented this and the gauge data. And that’s the type of delivery system there.”

Flashboard dams: This type of diversion involves people putting flashboards across stream channels to divert water for irrigation and for frost protection. “These are the ones that I was most concerned about, and still are most largely concerned about,” Mr. Johnson said.

There was a large fish kill near Hopland that was well publicized, and a smaller fish kill that happened two years in a row that led to an ESA enforcement case, he said. “There were a number of reports and sightings and gauge data, which led to a series of things, including the ESA lawsuits and a taskforce organized by wardens and NOAA enforcement folks, and calls for the State Water Board to get in the game,” Mr. Johnson said.

Russian_River_Valley_Vineyard_in_autumnThe industry rallied and particularly the folks near Hopland pretty quickly built themselves off-stream reservoirs and more or less solved their issue, but a lot less progress was made on the tributaries, he said.

There was one example that I know of that had three blue-line miles of stream and two flashboard dams and 20 acres of grapes,” Mr. Johnson said. “It was never in the news, and it didn’t make it into the administrative record, but we knew it was there, and we knew of others. And looking at the maps you could get a sense of what else was out there.” He noted that those diversions are now fixed, but they weren’t at the time.

That set up the dynamic, because the Hopland growers in particular and Sonoma County growers at the same time were saying, ‘We can fix this. We’ve shown that we can fix this. We’ve already fixed it. Maybe there’s some places where we haven’t fixed it. But leave us alone, we can fix this,” he said. “I think it’s fair to say probably all the state board members really didn’t want to try to design a system where the state board had to identify all possible circumstances in advance and do all this work, but at the same time, they didn’t have really any patience at all for the idea that there is no issue here or ‘leave us alone and we’ll solve it, but we don’t have to talk to you about it.’”

That led to a process where there was a lot of industry engagement in a design that had gauging and reporting to try to feed back and be able to document to the public that that would work, Mr. Johnson said. “That was fine with me because it was consistent with all of my preexisting biases, too, about the ability of the state to do these things and wanting to work with industry.”

David Rose from the State Water Board picked up the story from there, first noting that his statements and opinions don’t necessarily reflect those of the State Water Board, its members, or the State of California, he said.  He then laid out the legal foundation for Section 862.

The State Water Board’s permitting authority is not the measure of its other authorities,” he said. “It’s generally well known that the State Water Board’s permitting authority doesn’t apply to riparians and pre-14s. That authority is generally found in Water Code Division 2 Part 2, starting with Section 1200. The Water Board’s non-permitting authority, so specifically or often reflecting the public trust is in waste, unreasonable use.”

Armida_Winery_vineyards_0001He then gave some other relevant excerpts from the water code. “Section 275 is a big one for the court in the case that we’re talking about here, Light,” he said. “It says, ‘The department and board shall take all appropriate proceedings or actions before executive, legislative, or judicial agencies to prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in the state.’ So that’s every type of waste or unreasonable use, and it’s every type of agency you could possibly have. There are only courts, legislative and administrative agencies, so it pretty much covers it all.”

Section 1051 talks about investigative authority that’s similarly not limited to the board’s permitting authority, he said. “The best or clearest statement that you have on the board’s authority exceeding that of its permitting authority is California Farm Bureau Federation 2011, where the Supreme Court said pretty clearly that the board has authority to prevent illegal diversions and to prevent waste or unreasonable use of water, regardless of the basis of right under which the right is held.”

There’s a laundry list of cases and things just talking about the board’s authority; the Court of Appeal decision in Light and Russian River Water Users for the Environment against State Water Board doesn’t address half of these things, he said. “And what I’m addressing isn’t half of what I could … but I only have 10 minutes.”

There are two basic types of authority the board could exercise: quasi-judicative authority or quasi-legislative, Mr. Rose said. “Quasi-adjudicative is court-like, and quasi-legislative is legislature-like, as the names imply. The cases and statutes I’ve already talked about, as well as 1052, which is the board’s ACL, Administrative Civil Liability or penalty authority, are generally reflecting quasi-adjudicative authority. Water Code Sections 1120 and 1126 provide for writ proceedings, review by writ to the courts of the board’s actions I think it’s pretty safe to say that, if a court can review a board’s action on a writ proceeding, that the board can take that action in the first place.”

Mr. Rose said that in the case of Hallett Creek in 1986 and in IID versus State Water Resources Control Board in 1990 both indicate the State Water Board has authority to regulate the reasonable use of riparian water right holders.  Young versus State Water Resources Control Board and Millview versus the State Water Resources Control Board said that the Board has authority to investigate all diversions, including riparian and pre-1914.  He also cited National Audubon in 1977, and Environmental Defense Fund v. East Bay MUD in 1980. “National Audubon and EDF – those two basically respectively stand for the proposition that courts and boards have concurrent jurisdiction over public trust and reasonableness,” he said.

Russian_River_and_Russian_River_ValleyThe State Water Board also has quasi-legislative authority over waste and unreasonable use of water, Mr. Rose said.  He pointed out that CalTrout was a pretty big decision about the authority of the legislature to enact statutes which determine the reasonableness of water, setting the stage for the board to exercise its quasi-legislative authority. Water Code Section 100-102 are basically a laundry list of statutes that lay out the board’s authority over waste and unreasonable use, he said. “The legislature said the board can do this,” Mr. Rose said.

Water Code Section 174 says that, ‘The legislature hereby finds and declares that in order to provide for the orderly and efficient administration of the water resources of the state, it is necessary to establish a control board which will exercise the adjudicatory and regulatory functions of the state in the field of water resources, he said. “Water Code Section 174 was pretty heavily relied on by the Court of Appeal in the Light decision,” he said.

There are many additional cases that talk about the Board’s broad authority, but the main case is State Water Board v. Forni,. He said. “This case seems at first blush very similar to the frost reg case in that in Forni the board had adopted a regulation regarding frost protection using its waste and unreasonable use authority,” he said. “That mostly answered the question for the board; that was our opinion, that we had done it once, we could do it again.”

There were a few differences, like that the Forni case came as an action for declaratory relief and injunction where the board brought the case after having adopting the reg to try to get that enforced by a court,” Mr. Rose said. “In the Light case, we didn’t get that far. There was a facial challenge before we even did anything on it. So there’s a different posture between the two cases.”

Mr. Rose also noted that the Forni decision was in 1976, so Water Code 275 and 1052 had both been recently changed, but there were no Sections 1120, 1126, or 1825 or 1831. “Those have to do with giving the board adjudicative authority to do enforcement that it didn’t have before,” he said. “Before, if the board wanted to do enforcement, it went to court. So that’s one way of looking at a difference between the administration of the reg that the board did in Forni where it didn’t have administrative authority to enforce, versus now where the Section 862 that we’re talking about – it looked a little bit different, just because we do have the authority now.

Foothills and vineyards by Kristin WallMr. Rose then spoke of the difference between the two regulations. “One difference is that the board now has the administrative authority, but it probably also relies on the difference in board members, and that’s the delegation to the governing bodies,” he said. “The way the reg is structured, the board was considered to have delegated some authority to governing bodies which are essentially local entities, and the question was whether it was an unlawful delegation.”

The delegation of the State Water Board power to the local entity was integral to the success of the program; the local expertise in managing diversions during frost event would be paramount to a successful solution, Mr. Rose said.

The court in the Light case did look at that issue. “The court said an unconstitutional delegation of authority occurs only when a legislative body, one, leaves the resolution of fundamental policy issues to others; or, two, fails to provide adequate direction for the implementation of that policy.’ The court went on to say the board clearly set out the fundamental purposes of WDMPs. It established detailed standards for the manner in which the government bodies are supposed to work and do the things they’re supposed to do. And the board placed itself in between the governing bodies and the regulated growers.”

He then ended with quote from National Audubon in 1983: ‘The function of the State Water Board has steadily evolved from the narrow role of deciding priorities between competing appropriators to the charge of comprehensive planning and allocation of water.’

David Rose PPTSo my moral of the story is that the court in this case, Light, was asked to look at the board’s authority as reflecting only each of those independent dots. But what we asked the court to do was look at it as a whole picture, connect the dots, and we think that was our view of the authority.

Nicholas Jacobs, one of the attorneys representing a large group of growers involved in the proceedings, then discussed how they responded to the State Board’s initial action and how the Court of Appeal responded to his response.

Nicholas Jacobs began by clarifying that he represented a large group of growers, but they weren’t large growers. “My clients were the small and medium-size growers in the Russian River watershed: family farms and folks from 30 acres up to a couple of hundred acres, but not the big operations,” he said. “The bigger operations didn’t join the lawsuit for a couple of reasons. The first is that I think the bigger operators with their economies of scale, were able to handle the regulation in an economic manner. The bigger operators also are the names that you would recognize on the wine shelf. They’re vertically integrated, and there were concerns that there could be boycotts and things of that nature if they were to show up in litigations.”

His clients were smaller, and for many, it was ‘bet-the-farm litigation. “They were and they are very concerned that this is going to put them out of business,” he said.   Mr. Jacobs filed his case in Sacramento Superior Court, and the Lights, the couple which lives up in the Mendocino Area, filed in Mendocino Superior Court; the cases were ultimately consolidated in Mendocino Superior Court.

Mr. Jacobs said there were five main reasons his group filed:

1 – There were no other water users implicated by Section 862.The whole focus is on grape growers in the Russian River watershed,” he said. “The Sonoma County Water Agency operates the two huge reservoirs up in the Russian River watershed, and the statute explicitly exempts any diversions above those dams and reservoirs. Now those reservoirs have had a huge impact on salmonid species, yet they’re not part of the solution to the problem in 862.”

2 – Extensive efforts to address the problem not recognized. Mr. Jacobs’ clients along with other growers and other organizations had made extensive efforts to address the two fish stranding situations that happened in 2008 by establishing the Russian River Frost Program. The group consisted of growers in Mendocino and Sonoma County, the Russian River Flood Control and Water Conservation District which holds water rights in Lake Mendocino, which is impounded by Coyote Dam, the California Land Stewardship Institute, the UC Extension, local county ag commissioners, California Farm Bureau, and a lot of other folks who came together and spent a lot of time figuring out how to address the issue, he pointed out.

The group determined that better gauging was needed to improve accuracy, so they had a new gauging system put in and hired a weather consultant to improve forecasting, he said. The California Land Stewardship Institute and the Russian River Water Flood Control and Conservation District partnered on a grant application and were awarded $5.7 million to be used to do things like put in wind machines and off-stream storage. “Those projects to date have taken more than 90 CFS of direct diversions for frost off rivers and streams in the Russian River watershed,” Mr. Jacobs said. “For context, the fish kill incident that is the subject of the study that is the impetus for this entire regulation was on a night in which flows in the Russian River depleted it by 83 CFS. So these grants and these projects have taken more water off the river than was lost to the river that night.”

The whole thesis of Section 862 is that rapid down-ramping in the rivers strands salmonids,” Mr. Jacobs reminded. “So the growers made these efforts, and then they felt like the State Water Board turned around and said, ‘That’s not enough.’ And that didn’t seem fair to the growers.”

3-“Junk” science and the fish kill numbers.   “This whole regulation is about two fish strandings in 2008, 31 fish observed in one spot, 10 fish in another,” he said. “The study that gets cited over and over in every publication – It’s cited in the introduction in the materials here [for this panel] that there were in fact 25,000 fish killed. And I’ll let you be the judge about whether or not you think that study stands the test of pure science or not.”

The State Water Board relied on a report that was done by a biologist who spent one hour on one day at one spot in the Russian River watershed,” he continued. “He walked a hundred feet, and he counted 10 dead fish. He then went back to his office, and in his office made some assumptions and wrote a report. The assumptions are that 25 percent of the Russian River watershed is similar to the hundred feet that he walked. And since he found 10 dead fish, that must mean that there were dead fish in all the other 25 percent of the watershed. So he did some math on that. And then he took the 14 days in March and April of 2008 in which it was cold enough to frost protect, and he came to 25,000 fish kills.”

One hour, one day, one spot, and now you have a regulation in place that is going to have a huge economic impact,” Mr. Jacobs said. “That is one of the other reasons why we filed suit.”

4 – Huge economic impacts.The State Water Board’s own estimates for how much this regulation is going to cost the growers to comply with was $9,600 to $352,000 in initial compliance, and this was in the notice of preparation that the State Board issued,” Mr. Jacobs said. “Then there are annual compliance costs beyond that of $3,000 to $36,000 a year every year going forward.”

 A study prepared by an economist at Sonoma State professor estimated crop losses between 10% and 30%, he said, noting that those crop losses would occur because of crop losses from being unable to divert water due to regulation or too expensive for the farmer to comply. “So the study just says if you had 10 percent crop loss because people can’t comply, that would be $2 billion in economic losses annually,” he said. “A 30 percent crop loss would be almost $7 billion. We’re talking this is huge impacts. And these huge impacts are against the backdrop of the junk science.”

5 – The State Water Board has not determined the requirements for salmonids in the Russian River watershed.From our perspective, the fact that the State Water Board did nothing and still has done nothing to figure out what conditions are necessary in the Russian River watershed to protect salmonids is another reason,” he said. “There was an EIR prepared for this project but nothing in the EIR about what do you actually need to do to protect salmonids. That has been put now onto the laps of the hundreds of farmers in the Russian River watershed to try and figure that out. That’s the exact kind of analysis that could have been done in a programmatic EIR that would have given us a better EIR because we would have known what impacts.”

If there needed to be lots of water taken off the river, then that means there would need to be lots of construction activities – lots of windmills put in and lots of storage ponds put in,” he said. “Conversely, if there doesn’t need to be a lot of water taken off the river, if we’re okay, then there would be less, and you could have an EIR then that would be more focused.”

There were two decisions that came out, one in 2012 and one in 2013. “They were incredibly thorough and fair,” he said. “The first decision was 41 pages and it’s the most thorough trial court decision I’ve ever read in my career. It dealt with these sort of substantive law issues. There was then a subsequent decision that was 10 pages that dealt with the CEQA issues. And they were combined into a final judgment.”

Russian_river_valley_Pinot_grisI say that the ruling was fair because in the ruling, I believe this was a very fair and balanced judge,” Mr. Jacobs said. “She wrote, ‘Ensuring the viability of these species is not only a public trust mandate, but also a significant element in the environmental and economic stability for Sonoma and Mendocino counties.’ So I think she took a balanced approach to things. This is important. The trial court understood the regulation the same way that we did, which is the State Water Board got jurisdiction over riparian users, pre-1914 users, and even groundwater users in some contexts by declaring those uses unreasonable.”

They said, that’s our jurisdiction, and now we can make you do these Water Demand Management Programs,” Mr. Jacobs said. “The Water Demand Management Programs is the heart of this regulation.” He explained that the WDMP requires paperwork information identifying diverters, they require the formation “governing bodies” that are supposed to oversee these water management plans, and the preparation of a threat assessment for salmonid strandings. “Sort of the teeth of it is that there has to be corrections put in place if necessary,” he said.

The way the regulations works is that there can literally be a water demand management program for every single diversion in the Russian River watershed, Mr. Jacobs pointed out. “There can be, like, 800 of these, and they’re governed by farmers. Let’s say that the farmers got together to try and get some economies of scale and to keep the cost down. They’re going to have a board, essentially, governing the farmers, and at some point telling each other who has senior water rights. And I think you can imagine how that might go. ‘I have senior water rights.’ ‘No, I have senior water rights.’ ‘So you do the corrective action.’ ‘I’m not going to do that.’ So the court understood the same way we did. It’s unreasonable. Therefore we have jurisdiction.”

So the key ruling really in the trial court decision was that the State Water Board has broad and extensive authority, but when the State Water Board declares your water use unreasonable, it has to do so on a case by case basis – for instance in a quasi-adjudicatory proceeding before the State Water Board. So you can present your evidence and say, ‘Actually, you know what, the way we use water for frost protection is not unreasonable. We don’t use much water at all,’ or this and that. And it was based on significant case analysis, which I can’t get into today,” said Mr. Jacobs.

He then addressed the Forni decision. “David [Rose] mentioned that it was in the context of the state board really stepping in to protect grape growers in the Napa River, so the folks that were upstream weren’t senior, they were upstream riparians and were taking all the water for frost protection in the Napa River, and the downstream riparians had nothing,” he said. “The State Water Board stepped in to help them. But the ruling in Forni – I’ve read that case like maybe 10 times. It is a very complicated and kind of weird case, to be honest. But this is important. To say that the court upheld the Water Board’s regulation in Forni is not honest. The court chided the Water Board for arguing that it had jurisdiction over riparian users in particular to enact a regulation regarding frost protection, and the court said, ‘You know you don’t have that authority because you came to us.’”

In the Forni decision, the State Water Board was the plaintiff,” Mr. Jacobs continued. “They sued all the riparians who wouldn’t comply with their regulation. And so the Forni court took jurisdiction over the case as if it were the regulation aside. It was going to deal with the water issues and claims of unreasonable use, because the court now had jurisdiction, and it referred to the regulation as mere policy. So I don’t think Forni offers any support at all. In fact, as I’ll talk about, the appellate court in the Light decision had to reverse Forni because Forni said that the State Water Board didn’t have jurisdiction over riparians.”

The court also found that there was an improper delegation of authority to these governing bodies, in particular because these kind of decisions about who can divert water and who can’t divert water are happening in the middle of the night, in the springtime, and there was nothing in place in the regulation that would ensure that there was proper oversight of senior water rights,” he said.  “And similarly, the court found that there had been a violation of the rule of priority for senior water rights on the same basis, essentially that there was not going to be any proper oversight. There were also secret rulings in our favor. I’m not going to get into those.”

The El Dorado case out of the Third District Court of Appeal was important to our case, said Mr. Jacobs. “It said that … the public trust doctrine and reasonable use doctrine trump the seniority water rights. But when that happens, every effort has to be made to honor the rule of priority. And so that was something the trial court focused on.”

The Court of Appeal decision took a fundamentally different approach,” he said. “The Court of Appeal decision said Section 862 does not declare any water rights unreasonable, any uses unreasonable. The Water Board simply has that jurisdiction to require these water demand management programs on every kind of water right.”

That was a change from the trial court, which said, well, you tried to get jurisdiction by claiming unreasonableness,” he said. “The Court of Appeal said they don’t have to do that. They have that power. The Court of Appeal reversed the Forni decision to get to the point that the State Water Board has jurisdiction over riparians.”

I think the most interesting part about the Court of Appeal decision was an unexpected reliance on my part on Water Code 174, which is the enabling statute for the State Water Board,” he said. “I think this is the key sentence in the case. It says, ‘as discussed above, the remaining provisions of the Water Code as construed by decisional authority vests in the board broad adjudicatory and regulatory power and suggests the board’s regulatory authority is coincident with that of the legislature.’ I think that’s a change in the law. And I think that that, if upheld in future cases, gives the State Water Board quite broad jurisdiction.”

Sonoma County wine caveRegarding the science, the Court of Appeal acknowledged there were issues, but it was ‘coarse but correct,’ he said. “I hope our science is better than “coarse but correct.” There were some misrepresentations of our arguments that I won’t go into. There was some clarification that the State Water Board is going to resolve disputes about the water demand management programs and disputes within them, which is not in the regulation, but the court clarified that. And it okayed the delegation of authority to these governing bodies to do the water demand management programs, again, interpreting the regulation to allow the State Water Board oversight, therefore proper delegation.”

It really didn’t take a hard look at the trial court’s take on State Water Board — or anybody taking water rights away, vested water rights away, and the needs to go on a case-by-case basis when applying the reasonable use doctrine,” Mr. Jacobs said. “But the opinion was clear that, while the regulation is facially valid, its application on these case-by-case WDMPs, Water Demand Management Programs, it still has to comport with all applicable laws. And so I think we could see some interesting things come out of that.”

What you see here is how water law gets made,” said Tony Rossmann. “We have a published decision of the Court of Appeal, which is on a very high plane, about the importance of Article 10, Section 2, and the importance of the State Board’s ability to implement that over entities that it cannot directly regulate because permits are not required of pre-1914 rights holders or riparians. And so the State Board in the Forni case went to one extreme and asked the court to enforce Article 10, Section 2. Now they went to the other extreme.”

Mr. Rossmann then asked each of the panelists to discuss their expectations of where things were going to now. “As Dave [Rose] is going to tell us, the State Board now has before it the question of approving the first set of these water management plans,” he said. “But questions that arise in my mind, in fairness to the small growers, are the transaction costs. All of us who have represented clients before the State Board know that transaction costs for good intentions can get pretty awesome on private water users. And secondly, the degree of dissent. Was it necessary for the board to regulate? You mentioned that most people went along. But were there folks who were just going to be outlaws if there was not the enforcement authority of the board behind this?

800px-SonomamtnvineyardOne thing that Nick and I would agree about, and we probably wouldn’t agree about a lot of it, was that there was a much greater degree of confidence in the process and acceptance of the outcome by the bigger grape growers,” said Brain Johnson. “I think there were smaller grape growers who were all over the place, too. But the folks who had the scale to have professional staff who could be following it, I think probably assumed that they would have a lot of say over how the programs got implemented and were definitely more comfortable. I think some of that was because they knew more about it, but also because they knew that they had the capacity.”

But there was also a lot of effort to, for lack of a better word, to spread those costs out through the industry and to have ways for the whole industry to pay for the program,” he said. “In Sonoma County the folks actually went with my organization and some others and got the Board of Supervisors to adopt an ordinance that basically would tax them to pay for the monitoring program. I’m sure we didn’t use the word “tax,” but there was a transfer of funds that would go to the county. They were going to be collecting the gauge data and also the monitoring data, which was good for the industry because having that go directly to the regulators, you know, was seen as a challenge. And that was in place.”

We were at the point of picking the gauge locations, and we were working through some confidentiality issues, when it became that the litigation was going to happen anyway, so we didn’t close those, but I think we could have,” Mr. Johnson said. “But it wasn’t going to head off the litigation, so we kind of put it on the shelf.

It would have covered a lot of the transaction costs, he said. “That was one of the reasons why folks felt like the rule had to start out by covering everybody was because of the cumulative nature of it,” Mr. Johnson said. “It’s hard to look at one by itself and say they’re obviously not a problem. And the other reason was that we all knew of a few diversions that were risky and that people hadn’t talked about, but we knew they were out there. And so the board and the big growers really wanted to start with a list that included everybody and then sort from there.

Russian River vinesWhen the litigation started, Sonoma County repealed the part of the ordinance that had the tax and the payment for the gauges, but kept the registration, so we have that data now,” he said. “I think there are maybe 30 or 40 direct diversions left, and it’s hard to tell how many flashboard and sort of onstream, but it’s a fairly confined world. There probably will be a pretty quick sort to the really deep wells and folks with off-stream storage as they’re not much of an issue. If we had been able to design it in a way that they believed that they wouldn’t have much of an issue, there might have been a lot less opposition to it.”

But if you’re a small grape grower with 10 acres, and they tell you you’re not going to be able to divert until you get approval, yet it’s a little bit unclear what the approval process is going to look like, and you’re going to be a part of a program that’s run by Gallo and Kendall Jackson, you can see why people would get pretty nervous about that,” he said. “But I’ll go out on a limb and say nobody’s going to lose their farm. And the things will probably not be smooth, and people will spend more money than they want. But that’s kind of how it went.”

David Rose then gave his thoughts. “Let me start with how the reg is actually implemented,” he said. “The reg sets asks people to either themselves or to create a governing body to create a water demand management program, or WDMP. So that can be either an individual or a governing body. The board structured it that way with the hope that people would come together for economies of scale and work things out because this is a cumulative problem that we’re trying to address here, not an individual problem. If it were individual, we would have done it quasi-adjudicatively. But that’s not at all what the issue was that we were addressing. But the board allowed individuals to come in with their own WDMP, just so that nobody would be left out in the cold because they couldn’t join somebody else.”

We had hoped that we wouldn’t be dealing with hundreds and hundreds of individual WDMPs, Mr. Rose said. “I think we have reason to expect that, both because the more savvy people, the farm bureaus and everybody else … would, I think, in general, rather just join something that exists than do all of their own work; but also because there are five main aspects to a WDMP, and some of those really do involve coordination. So if you’re doing your own individual WDMP, you are going to, by necessity, going to have to coordinate with everybody else on the same stream system.”

Mr. Rose noted that the five main points of a WDMP are an inventory of all the diverters and their diversion information; a stream stage monitoring program; a risk assessment in coordination with the fisheries agencies to determine risk of salmonid stranding, corrective actions, and annual reporting.

The last two points were a major bone of contention, but that’s the teeth to it. Something has to be done if there’s a determination of risk,” he said. “Four out of five of those things are about information gathering. And you heard in earlier panels how we need information. Well, we didn’t have complete information. We still don’t. So we’re trying to get it to determine whether there is in fact a risk and what people can do about it. Again, this is a cumulative problem.”

Mr. Rose said it came down to that the board wanted locally managed solutions. “The board is very big on locally managed solutions,” he said. “And the board rejected voluntary agreements because they didn’t have the enforceable backstops. So what the reg does is it provides for local solutions. We didn’t tell anybody what to do or how to do it. We said, “You’ve got to figure out if there’s a risk and then do something in order of priority, preferably consistent with EID.”

He offered up a brief discussion noting that it is entirely conjecture on his part and reminding that his opinions don’t necessarily reflect the State Water Board’s. “I don’t think our perspective is that this tool is a new one. But now that it’s been upheld, the board has adopted a regulation, and that regulation provides for delegation to local entities to come together and address a cumulative problem. And it has a waste and unreasonable use backstop such that it’s going to apply to everybody who needs to participate in the solution.”

OLYMPUS DIGITAL CAMERAOur perspective was it was a waste and unreasonable use if they didn’t coordinate,” Mr. Rose said. “Your two options are to consider doing everything individually, or you coordinate – it’s unreasonable not to. So that was our perspective. But so that process, the type of regulation the board adopted — it’s not a tremendous sword going to solve all the problems in the future. But I think it’s certainly relevant going forward because the board does want local cooperative solutions amongst people who are on the ground and better suited to decide what’s going to work from them, but also needs this backstop.”

CEQA’s going to be an issue if the board wants to use this again in the future,” he said. “For the emergency regs we adopted this summer, CEQA was suspended. But for permanent regulations like the frost reg, well, CEQA’s out there, and it’s kind of a big deal for how quickly things can move.”

Mr. Rose closed by noting that they were hoping they wouldn’t get 800 individual WDMPs. “Right now we’ve received one WDMP submittal capable of covering substantially all affected Sonoma County growers. And we’ve been in discussions on two separate WDMPs, separate in they work together addressing different areas that are together capable of covering substantially all affected Mendocino County growers. So it is possible at the end of the day we could see three WDMPs that together cover everybody covered by the reg.”

Nicholas Jacobs then had the opportunity for the last word. “What’s up next is a three-year phased approach to phasing in these Water Demand Management Programs,” he said. “Information gathering in the first year, and then second and third year getting down to details and corrective actions in place by the third year. So that’s what they’re working on right now.

RussianRiverMeetsOceanI think, again, the biggest thing that came out of this case is this language that says the board’s regulatory authority is coincident with that of the legislature,” said Mr. Jacobs. “So what does that mean? Does that mean that tomorrow the board can adopt a regulation that it requires permits for riparians and pre-14s? I mean, the legislature could do that; right? So I don’t know. This is very strong language. And I don’t know where it’s going to take us.”

And with that, the panel was out of time.

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