The impact of new regulations on water rights in California

A view from Daou Vineyards at sunrise looking towards the valley in Paso Robles, Calif. on April 28th, 2015.
A view from Daou Vineyards at sunrise looking towards the valley in Paso Robles, Calif. on April 28th, 2015.
An overview of how new reporting requirements, frost protection regulations, water curtailments, and some pending litigation could affect water rights

Earlier this year, the U.C. Davis Viticulture & Enology Department held a one-day seminar  on Changing Water Regulations and the Impact on Vineyard Management in California which touched on several topics of interest to small- and mid-sized growers. One of the speakers was Paula Whealan, consulting civil engineer with Wagner and Bonsignore, who gave a presentation on the impacts that new regulations in effect this year could have on growers and their water rights.

Paula Whealan began by saying that she was asked to speak about water rights and the regulatory system, and how the new regulations and changes will affect people’s water rights, but in order to do that, she will need to briefly present the basics of California’s water rights system.

Part 1: Water rights 101

California’s system is extremely complicated because it has a dual system of water rights, she said. “You have two different types of surface water rights: you have appropriative and riparian; then you also overlaid on that, you have groundwater, which is regulated differently that surface water rights – at least for right now, but maybe not into the future.”

Sources of water and claims of right

Ms. Whealan explained that there are different sources of water for water rights.

Surface water is water flowing in a known and definite channel on the surface. “It’s water you can see flowing down a creek, a swale, or a river, but unfortunately there’s no legal division for what constitutes a surface water channel,” she said. “They do not have legal definition; I guess the regulators know what it is when they see it. But unfortunately, that can be very cumbersome for people who are trying to decide whether or not they are appropriating water pursuant to the permitting authority of the State Water Board, because there’s no legal definition for a channel.”

Surface water diversions are regulated by the State Water Resources Control Board. “You can get a permit to appropriate surface water under a permit process established in 1913 when the Water Commission Act set up a way for people to appropriate surface water from channels,” she said. “You can also divert surface water under claim of a riparian right, which is a property right, or you can have a pre-1914 appropriation claim on that water.”

Subterranean stream flow is water flowing in a channel underground. “Different than groundwater, this is water that is flowing; it has beds and banks underground flowing in one direction and is hydrologically connected to the surface flow,” Ms. Whealan explained. “Now for subterranean stream flow, they actually have a legal definition for water that you can’t see, but they don’t have a legal definition for water that you can see, so therein lies the complication for deciding whether or not you have water on your property that you are using that is subject to some state regulation. The ways to appropriate the subterranean stream flow, is a permit from the State Board as with the regular surface water and the claim of riparian right and the pre-1914 right.”

Groundwater is water not bounded within a subterranean stream. “It has never been regulated by the State Water Board,” she said. “The only way it has been regulated is when there has been state adjudications on various groundwater basins, and the court requires people within that basin to report, but that recent legislation is going to change that. It provides a mechanism for regulation and it will be over time that that’s going to occur.”

California’s dual system of water rights

She also explained that there are two systems of water rights: appropriative water rights and riparian water rights:

Appropriative: The appropriative right system is the prior appropriation process with ‘first in time, first in right’; whoever files their water right first has a priority over those who have come later. So if I file today, I’m senior in priority to you who file tomorrow. And supposedly, that is how it’s supposed to work in times of shortage. For people who have a higher priority, they should get their water first, than people who have a lower priority. … That is how the system is supposed to work. And generally during normal years and above average precipitation years, there’s not much of a problem, but as we’ve seen in the last two dry years, the priority system has really come into play big time.”

Hillside vineyard pond Sonoma County NRCSThe pre-1914 appropriation water right is valuable throughout California and its used by many people who divert water, especially municipalities and some larger districts,” she said. “But the use had to have commenced prior to 1914, because 1914 is when the Water Commission Act was issued and it said after this you have to have a permit. … People who are diverting water under the claim of pre-1914 right can change certain things with those rights: They can change the point where they take the water; they can change where they are using the water. The City of San Francisco is served water under pre-1914 right, and as long as it envisioned and stated in the pre-1914 claim that it was going to continue to serve all the people in the environs of San Francisco, the amount that you appropriate under a pre-1914 right can be expanded.”

The big issue with the pre-1914 right is that it has to have been continuously used, and that means that for the last 101 years, you had to continuously use that water without more than a 5 consecutive year break,” she said. “That means that during the war when people left their crops untended, if it was longer than 5 years, that could constitute a break and a loss of a pre-1914 right. We’re obviously seeing fewer and fewer claim of pre-1914 right because there’s less evidence that can be presented as people pass on and if that right wasn’t documented in the 50s and 60s, it’s going to be very hard to document it now.

The other type within the dual system is the appropriation by permit, which is post-1914, and the State Water Resources Control Board regulates that,” she said.

Riparian:A riparian right is a property right and it is by virtue of where you’re property is located with respect to the stream or the river or the underflow, and how you’re land connects to that,” Ms. Whealan said. “It only applies to the smallest tract of land that is still connected, so if you sold off other pieces around you that didn’t have a connection, those riparian rights would be lost. It doesn’t require a permit, though, from the State Water Board, but you do have to file something called a Statement of Water Diversion and Use to report use.”

Russian_River,_Sonoma_CaliforniaIt’s a claim of right; it’s not an actual permit that you can hold,” she said. “It’s a claim of right and that claim remains a claim throughout the life of the diversion unless you go to court and have it declared in a court of law that it is a right. So until a court confers that you have an actual riparian right, it remains a claim until that time.”

The simple test for riparian rights is that the water can’t be foreign in source or time,” she said. “That means that if you divert it from one stream system, you have to put it to use within that same stream system. You can’t move it across watersheds. The land it gets used on has to be riparian to the source. The other is that it can’t be foreign in time, and in several parts of the state, this is a problem because the streams don’t run year around, so when you need it for irrigation, the stream is dry, so you’d have to store it. Well, you can’t do that under a claim of riparian right. You would need a water right permit to do that.”

Ms. Whealan noted that while riparian rights are not subject to the State Water Board’s jurisdiction, they may be subject to Fish and Game Code 1602, a stream bed alteration agreement for the disturbance within the beds and banks of a stream for diversion.

Riparian rights diagramShe then presented a cartoon of a stream system. She explained that the land parcel B is riparian to the stream, so it’s in the same watershed you’d be putting the water to use; The land on the far side of the mountains is outside the watershed, so you could not put riparian water over there, because it would presumably drain to another place.

If you owned both parcel A and C, it could all be considered riparian to the source,” she said. “But if I decide to sell you parcel A, parcel A would have lost its riparian rights because it’s no longer connected to the stream, and those rights can never be reattached. You would lose your riparian rights unless at the time that I sold it to you, I provided you an access or an easement or something in my deed that made it clear that I intended for parcel A to continue to using the water from the stream. It’s a real big deal right now because many people are having to show evidence of what their claim of riparian right is, so if I sold A to you, and didn’t reserve those rights, they would be lost, even if I’d bought A back later, A would still not be able to use riparian water. It’s a huge deal.”

Part 2: What’s new in 2015

With the basics now explained, Ms. Whealan then turned to the latest changes in water regulations.  The State Water Resources Control Board is the governing agency for the appropriation of water and the license and permit reporting in California. “If you hold the water right license or a water right permit, you are obligated to report on annual basis,” she said. “This became operational in 2009 and it said that you have to report annually on July 1st of each year, you have to provide the amounts that you actually diverted, the amount that you used, and it all has to be done electronically. It’s very important that you file these mainly because the state is now very easily able to tell who doesn’t file. People who used to fill these out by just checking the boxes, that’s not allowed anymore. You actually have to put a value in, and those values mean something to somebody looking at them in Sacramento, so you need to be very careful about what you put in there. It should be the most accurate information that you can obtain or that you have on your water diversions and use.”

Exif_JPEG_PICTUREObviously failure to file those reports is a non-compliance, and it really could jeopardize your water right with the SWRCB, plus it could incur fines,” she said. “But more important than that, they’re using those water use reports to determine how much these different regions need and who is diverting what and they are going to use that information in future curtailments, so it’s important for you as an industry to do the best jobs you can on reporting those.”

Ms. Whealan acknowledged that some people fear that if they don’t say they are using 100% of their water, the state will take some away. “That’s just not true,” she said. “You’re only going to be able to justify how much water you are using. If you are using water on 20 acres of orchard or vineyard, pretty much everybody in the state knows how much you need to put on that, based on temperature, rainfall – anyone can figure that out very easily, so if you elevate your numbers so it’s five times what is normally used, it’s never going to fly, so it’s best to be as accurate as you can on that. Plus it’s required.”

Riparian water right holders are required to file a Statement of Water Diversion and Use once every three years. “You could file them annually, but they are really only due every 3 years, on July 1st, and you have to provide the monthly amounts and the rates. Like the other, it is subject to penalty of law. If you do not file, they can initiate action against you at some point. They have to go through a little bit more than they do with a permit or a license, but they can take action against you for not filing. Again, it behooves you to put down the most accurate amount that you can with you are filling out these Statements of Water Diversion and Use. And they are reported electronically as well.”

State Water Resources Control Board Frost Protection Regulation 862 – Russian River Watershed

Because of the 2008 fish stranding event that occurred during the frost protection season, the State Water Board has issued Frost Protection Regulation 862, which regulates all water use for frost protection, surface or groundwater, Ms. Whealan said. “However you divert it, it pertains to everything, it pertains to people who divert under pre-1914 right, appropriative, riparian, and something called interconnected groundwater, which I do not think has been legally defined. I don’t really know what they meant by that.”

As a result, everyone in the Russian River watershed has to become part of a water demand management program or plan. A Water Demand Management Plan must have an inventory of the frost diversion system, stream stage monitoring, assessment of potential risk of stranding due to frost protection diversions, identification and timelines for implementation of any necessary corrective actions, and annual reporting. “You can do an individual one, or you can join in with groups,” she said, noting that there is an excellent group put together in Mendocino County, and another large group coming together in Sonoma County. She noted the requirement was to join a group by February 1st. “Again, I advocate for you to make sure you are in a program and that your name is somewhere in that program.”

Shiloh_Hill_Vineyard_in_Chalk_HillMs. Whealan warned that the implications of the new frost protection regulation could extend far beyond the Russian River. “The regulation shifted the burden of proof from the challenger to the user to demonstrate that there’s no impact on flow,” she said.  “Let me repeat that a different way. In the past, if someone felt you were having an impact on stream flow and you were hurting the environment in some way, they had to show the evidence that, ‘Look this is what he did, I have this evidence, this is what happened.’ But the frost protection regulation says you have to demonstrate as a diverter that you’re not having an impact on the stream flow. You have to prove a negative, that’s very difficult to do. It’s very difficult to do when there’s people all around you pumping at the same time and there’s two big projects run by the Sonoma County Water Agency that are taking, releasing water, municipalities and it’s very difficult to be able to prove that, so this burden of proof was turned on its ear with this frost protection regulation. The reason that is concerning is that could permeate and likely will permeate to other areas, and I think we’re going to be seeing that really soon. It’s already moved from the Russian River watershed to the Delta. You have to provide evidence. The challenger does not.”

The amount or type of data necessary to demonstrate lack of impact has not been defined, she pointed out. “Who knows how much data because like I said, proving a negative is difficult. And through the regulation, the State Water Board will have an opportunity to limit diversions or change bypass amounts and limit the times when people can divert water under their riparian and pre-1914 permits and licenses. That’s to come because that what it says is we can tell you when you should be diverting water and not diverting water, and so it’s a chance for your water right to be modified without an opportunity for a regular State Water Board hearing.”

The lack of the definition of ‘interconnected groundwater’ is another problem, she noted. “We’re starting to see that term turn up more and more places, so I think we need a legal definition on that soon.”

Water curtailments

The State Water Board curtailments are relatively new on the horizon in water rights. “Last year, because of the drought, the SWB restricted diversion and pumping; it’s the first time they’ve done that,” she said. “In the 76-77 drought, they had something similar but it wasn’t exactly the same as far as curtailments so this is monumental. They reached out to several watersheds – the Sacramento-San Joaquin watershed, the Russian River, the Scott River, parts of the Eel and the whole Delta area was told not to divert water. In the Russian River, they only curtailed people who were diverting water that was initiated after 1954, and that’s because the Lake Sonoma and Lake Mendocino projects were initiated before 1954, so those were allowed to keep going. But everybody else was curtailed.”

That created a flurry of paperwork where people had to send in information right away on what they were going to do because they couldn’t be using their water rights, what alternative source did they plan to use. “You had to provide all of that information on a form and then the State came out and inspected,” she said. “They devoted their entire water right permitting staff and others to the drought inspections to see that everybody was abiding by the curtailment. It’s the first time I’d seen it done.”

Sonoma County hillside vineyard NCRSDeveloping a protocol for how curtailments are put on rights and how they are lifted is a very, very complicated thing, she acknowledged. “There’s got to be a way to do it,” he said. “It’s very difficult to say, everybody from this point forward you can’t divert water, because the priorities are different all around the different watersheds. If you cut everybody off, it’s like cutting it off with a hatchet and then trying to put it back together with a scalpel, and it’s going to be a very difficult thing.”

The State Water Board will be curtailing again this year. “So that means that people are going to have to dance a little faster and find other sources of water to add to your water portfolio,” she said. “If you can’t frost protect with water, maybe you can put in wind machines, maybe you can put in micro-emitters, so all of those things are going to be important. Maybe you can drill a groundwater well to help get through the year. Maybe you can build an off-stream storage reservoir to take water when it’s plentiful so you’re not having to divert from the stream in the summer.”

The emergency water right curtailment has the potential to limit and restrict your water uses without a determination of water availability,” she said. “The curtailment was based on a perceived water availability in certain watersheds but there was not time to do a full-on analysis of really whether water was available for each and every diverter, and that, it sometimes can’t be helped when you have an emergency situation. But I still think it’s an exercise that needs to be done.”

The process for setting or lifting these curtailments is a very complicated process and the State Water Board is trying to get their arms around it, Ms. Whealan pointed out. “They’ve just never had to deal with it before in this widespread of a situation. And the State Water Board model, our concern is, it isn’t going to include impacts to and from other sources and other diverters, and that’s why it’s so complicated. It’s got to look at all of those things.”

Fish and Game Code 1602 Lake and Streambed Alteration Agreement

Another new issue on the horizon has to do with Fish and Game’s Code 1602, the stream bed alteration agreement. “Many of you have had to get these from your local DFW reps to build a culvert, put a bridge in, put a pump in, build a dam, or build a water collection device if you’re trying to put a stilling basin into the creek – all of those things require you to notify DFW to get a stream bed alteration agreement.”

It really was meant to keep siltation out of streams so that people built and did things the correct way during the correct seasons, but they’ve kind of expanded their authority a little bit to other things,” she said. “They’ve decided now that the actual act of diverting water constitutes the need for stream bed alteration agreements, so if you’ve had a facility that’s been in there for 40 years and you decide to flip the switch, the flipping of the switch would constitute you diverting water that requires a notification. You have to go to them for a stream bed alteration agreement.”

NorCal Creek FlickrYou might think it’s just paying a fee, but it’s much more than that, Ms. Whealan said. “Each time they issue a stream bed alteration agreement, in some parts of the state, we are seeing Fish and Game use it as an opportunity to decide to make changes to your water rights, to make changes to how much you can divert, what your rate is, how long you can divert, how you ramp your pump up and turn it on and off – all of those things. We find that to be way outside of what the original of the goal of Section 1602 was. I guess the Farm Bureau did too because they brought a lawsuit against Fish and Game that said that it’s not a diversion within the meaning of the code section, especially if you are diverting water under a legal claim of right that you already had and that you were operating within the terms and conditions of that right; the mere act of diverting water should not trigger a stream bed alteration agreement. Siskiyou County agreed with the California Farm Bureau, and they said it did not require notification where there’s no alteration to the bed, bank, or stream.”

The Siskiyou County Superior Court held on December 24, 2012, that ‘Fish and Game Code 1602 does not require notification of the act of extracting water pursuant to a valid water right where there is no alteration to the bed, bank, or stream.’ The Department of Fish and Wildlife filed an appeal in October of 2013, with a decision expected in early 2015. “We’re waiting to hear whether or not that’s something Fish and Game will be able to do, because if they are doing it up in Siskiyou County and they prevail, that will be something that you will see in every county state,” she said. “For Fish and Wildlife, it’s a great way for them to generate some funds, not a lot, but for you – the water diverter, it is very dangerous. It’s a way for someone to come in and twist up your water rights a little bit.

Groundwater Sustainability Act

Ms. Whealan then briefly touched on the Sustainable Groundwater Management Act. “It is something new on the horizon for water rights,” she said. “It’s monumental because it’s the first regulatory structure that we’ve had in this state for groundwater basin management, other than adjudications that take place here and there throughout the state and primarily in Southern California. We’ve nearly never experienced anything where the state has tried to manage groundwater basins. I agree that it has to be done. I knew it was just a matter of time.”

The Act applies to all the groundwater basins designated in Bulletin 118, she said. “The Sustainable Groundwater Act requires an agency to be created to manage it. It’s required by 2020 for high priorities, and for medium priorities, it’s 2022,” she said. “The interesting thing about the act and where it concerned me with regard to water rights is that the act says sustainable yield is ‘water that can be withdrawn annually from the groundwater supply without causing an undesirable result.’ The act defines one of the undesirable results as ‘surface water depletions that have adverse impacts on beneficial uses of the surface water’, and there’s some concern about how that’s going to be determined, what those surface water depletions are – what’s significant, what’s unreasonable, all of those things have to be defined. They are not defined now, but they will be in time, but that’s how it’s going to affect your surface water diversions. Also, diversions from subterranean streams, underflow or springs hasn’t all been identified but those also may be regulated through this act.”

Navigating it all

Ms. Whealan had some recommendations for navigating all of these regulatory changes.

The first thing I think everybody needs to do, if you are using water in California, is you need to know what your source of water is. Are you diverting surface water, are you taking groundwater and is it really groundwater or is it subterranean flow? What are you using – that’s the first thing. Identify that.

Next, know what is your legal claim of right,” she said. “If you think you have a riparian right … well do you? Has someone done a chain of title review? Have you looked to see if anybody’s been split off? Are you in the same watershed? Know your legal claim of right to that water.”

Monitor and record how much you are using, even if you’re not required to report it,” she said. “Even if you are taking groundwater and no one is asking you for that data right now, I highly recommend that you record on a monthly basis how much water you are using from each and every source that you have. That is quite possibly the only defense you might have in the future, when push comes to shove. Everyone says you can’t lose a riparian right for not exercising it, well, if you have proof that you’ve been exercising it, that even puts you in better position.”

Know what regulations do and don’t affect you,” she said. “How does the groundwater act affect you? How does the frost protection, how about the curtailments, what does affect my ability to continue to put water on my crop?

Evaluate the local hydrology,” she advised. “You’d be surprised how many people don’t know exactly where there water comes from onto their property or where it goes after they’ve used it or it’s bypassed their property. Both of those things can impact your ability to use water, and also who has a right to it once it goes by your property.

Learn and find out about what’s going to be affecting your ability to farm,” she advised. “Being proactive in your community is the very best way to do it. Get a seat at the table. Be part of the solution, not just being in reactive mode. Be in the proactive mode so that you have a say in the things that are going to affect you and your livelihood and your company’s livelihood way into the future. … People need to start getting involved in the agricultural entities in the state. They are picking you off, one at a time, and the regulatory agencies are grasping for the low hanging fruit and that’s no pun intended, but they are looking to regulate people who aren’t properly represented, properly organized, so this is your opportunity to start doing that.”

And with that …

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