Panel discussion: “Fixing” California’s water rights system

Panel picPanel of prominent attorneys discusses how the state’s water rights system performed in the drought and what changes, if any, should be made to the current system

California’s recent drought and the State Water Board’s curtailments of water rights starting in 2014 has brought complaints about the state’s antiquated water rights system and alleged oversubscription of our surface water resources to a crescendo.  Even during non-drought conditions, our state’s water rights system is complicated.  The multiplicity of Native American tribes in the state with unquantified yet priority Winters rights adds an often overlooked layer of complexity to the state’s water rights system.

CWPC_logo_final 1 smSome argue for drastic reform while others prefer maintaining the status quo.  Many express concern that our water rights system produces winners and losers, and inhibits sustainable management of the state’s resources.

At the 2016 California Water Policy Conference, a multi-faceted panel of prominent water lawyers that most interestingly included a lawyer who represents tribal interests discussed how the state’s water rights system performed in the drought and what changes, if any, should be made to the current system.

THE PANELISTS

Valerie Kincaid 1Valerie Kincaid, a partner in the firm of O’Laughlin and Paris LLP; her practice focuses on water law, including water rights, water transfers, water quality, and groundwater matters.  She also handles environmental law issues related to the use of water resources including state and federal endangered species law, public trust issues, and state and federal environmental regulations.  Valerie represents various public irrigation districts, water districts, and water authorities in the area of permitting, enforcement, and regulatory matters in both the administrative and judicial lights.

short dividing lineMichael George 1Michael George, the Delta Watermaster, was appointed to a four-year term in January of 2015.  The Delta Watermaster is an independent officer of the state who reports jointly to the State Water Resources Control Board and the Delta Stewardship Council, and has statutory responsibility for administering water rights in the Sacramento and San Joaquin River Delta.  Prior to starting his term, he was active in western water law and policy as a water lawyer, as the CEO of a publicly traded water resources management company, as a senior executive of an investor-owned water company, as well as an investment banker serving both public and private entities in the water industry.

short dividing lineScott Williams 1Scott Williams is a partner in the firm Berkey Williams LLP, the firm provides comprehensive legal services exclusively to Indian tribes and tribal organizations.  The firm’s work has included representation of a tribe in negotiating agreements to remove dams and restore the Klamath River in California and Oregon, quantification and protection of water rights for tribes in Nevada, Colorado, and New Mexico, and protection of tribal access to significant off-reservation cultural sites.

short dividing lineProfessor Richard Frank 2Professor Richard Frank is the professor of environmental practice and director of the Environmental Law and Policy Center at the University of California – Davis School of Law.  From 2006 to 2010, he served as the executive director of the Center for Law, Energy and the Environment, and is a lecturer in residence at the UC Berkeley School of Law.  Prior to that, he served in various legal capacities for the California Department of Justice, culminating as chief deputy attorney general for legal affairs; during most of his career with the Department, he focused on constitutional, environmental, land use, and public land management issues.

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THE MODERATOR

Moderator Jim McIntyreJoseph McIntyre, president of Ag Innovations, a nonprofit organization that brings stakeholders together to work on some of the most contentious issues in the American food system, from GMOs to water to land use to food safety.

He began by setting the stage. The state has been enduring an extended and severe drought, and the question has come up, are we managing our water resources correctly?  Are we using the tools that we can to maximize the beneficial use of water?  Is our property rights system as it relates to water serving the public’s interest and making sure that water is used in the most efficient and effective manner?  Simply put, the question before is, does our water rights system work?  And if it does, for who and it what way?  And if it doesn’t, for who, why, and what can be done?

There is no simple or easy answer,” Mr. McIntyre continued.  “California water rights history and water rights law goes back to 1850 when we were first enshrined as a state and adopted English common law for defining water rights for riparian use.  A year later, California adopted its appropriative rights, which had to do with essentially how to manage how water was being used by miners, but which became the law under which we finally distributed most of the water that exists in California today.  These two systems sit side by side in some uncomfortable marriage and what exactly is that marriage – if indeed there is one.  Which leads us to that question, does it work?

First question to the panelists: how well did the California water rights system perform in the drought?

Valerie Kinkaid

Valerie Kincaid 1

“The way I think of the water rights system is that it’s multi-faceted, and there are different parts of the system.  I represent water users so I’m biased, but I think the water users in the system did a fairly good job throughout this drought.  One of the documents that we looked at is the 1976-77 drought report, and interestingly, the State Water Board reported that there were 211 complaints for water right holders saying, ‘I’m being shorted unlawfully; someone else is taking my water and I deserve that water.’  This year, there were no complaints in the system that made that allegation.  There were complaints about different facets, but no one was coming out and saying, ‘I’m getting shorted and it’s someone else taking my water.’  … I don’t think a lot of people were happy with the system; I don’t think people wanted to take cuts but they did.”

“I think that the regulators really struggled a lot in this drought, compared to the 76-77 drought.  Maybe they didn’t have complaints to manage, but they were looking for a position and I think they were looking for an action to take.  There was clearly this extreme drought that we were all in and they couldn’t sit by and do nothing.  There was the drought legislation in 2014; they came out and did emergency drought regs and curtailment, and from a water users perspective, those were okay, legally.  I think from the State Water Board’s perspective, my guess is that they felt like it didn’t save any water; there wasn’t any extreme action.  So in 2015 they changed that direction a lot and came up out with curtailments and enforcement.  We’re still seeing how that’s playing out at the State Water Board right now, but from a water users perspective, that was largely an unsuccessful effort. I’m not sure that they could quantify any water that was saved or conserved, and I know other colleagues who could very easily quantify the dollar amount of defending against enforcement actions. It was very expensive, it was very intense, and we don’t know the outcome yet, but it looks like they will be dismissed.”

Michael George

Delta Watermaster Michael George began by noting that he is speaking for himself and not the entities with which or for whom he works.

Michael George 1“Regardless of whatever side you’re on, the system that we have didn’t serve us well in the drought and maybe doesn’t serve us well generally, but I think it isn’t necessarily informative to compare how many complaints there were. I think one of the things that constrained complaints is a feeling of uncertainty about what the system is, how it’s supposed to operate. We have this system of riparian rights on one hand and appropriative rights on the other. In shortage is where these systems come into conflict and where they are really tested, because these systems are really designed to figure out how to allocate water when its scarce. When there’s lots of water in the system, when there’s lots of slop, you can be imprecise about what your water right is because there’s enough for everybody, or at least there is enough that we develop ways of dealing with each other.”

“I agree completely that the best part of the drought story was the way water managers who had prepared and planned for shortage implemented those plans, worked out compromises, and figured out ways to deal with the terrible shortage. But our system is supposed to have some certainty and the ability to allocate shortage. Just start with the fact that riparians are supposed to experience shortage on a correlative basis – that is they share the shortage in their percentage, and yet the appropriative system is much more draconian – you cut off the junior to save the senior; it is a rigorous priority system. You can’t administer those two systems side by side because there are riparians side to side with appropriators. That’s a big problem, it is a problem that has been baked into the state laws since way longer, since really the hydraulic mining days as the appropriative system came out of mining. So we’ve had it for a long time. In 2015, four years into a drought, when the State Board attempted to administer it, I think we did better in 2015 than we did in 2014. We have to do a lot better to make it work.”

Scott Williams

Moderator Joseph McIntyre asks Scott Williams from the perspective of the tribes, how did the water right system work?

Scott Williams 1“I think the reason I’m here add to the complexity of water rights and water rights management, especially in drought times, and the layer of complexity that I add is that the people I work for, for the most part, want the water where it is – in the ground, in the river, in the ocean.  These aren’t diverters or users; to them, the beneficial use, the highest and best use of water is keeping it where it belongs.  So my short answer to the question is that many of the people that I work for did not do well in the drought.”

“To take one example, diversions continued out of the Eel River into the Russian River throughout the drought. They went down, they were modified, and there were periods of variances and things like that, but fundamentally, diversions out of the Eel River basin into the Russian River basin continued.  And that process keeps the Eel River basin in the state of economic poverty as compared to the Russian River basin which is doing quite well.”

Professor Richard Frank

Professor Richard Frank 2“I teach at the law school, and this semester I’m teaching water law and water policy so I’ve been thinking about a lot of these issues, not just in preparation for this conference, but for quite awhile.  I’ll tell you what I tell my law students on the first day of class. I analogize California’s water rights system to the water conveyance system that runs through the Delta.  There’s a huge amount of acrimony and disagreement over Delta water policy, but I think the one thing that you can everybody, all the stakeholders to agree upon is that if in 2016, you were starting on a blank slate and developing a water conveyance system for California, the system we’ve got now, which is kind of a Rube Goldberg gerrymandered system is nowhere close to the system we would want to create.  I think that’s also true in California’s water rights system.  I can say categorically that California has the most convoluted, most complex system of water rights that any of the 50 states, and it’s a Rube Goldberg gerrymandered system that has evolved – some would say devolved – over the last 166 years.”

“With respect to your question about how that water rights system was performing in the face of an unprecedented drought that we’ve been experiencing over the past five years, I go back to the adage, where you stand depends on where you sit.  …  I think the folks that have done the best and have been served the best by the existing water rights system have been the urban users – municipal and industrial, residential uses.  As a result of some sacrifices and implementation of Governor Brown’s 25% urban conservation mandate, I think on a macro sense at least, urban users have come through the drought so far pretty darn well.”

“Turning to agriculture, it’s a mixed story.  On a macro sense again, and contrary to what you might be hearing in the general media, the evidence shows that up until now, agriculture has done not as well as urban users, but pretty darn well on the macro sense.  Gross state agricultural revenues are actually up each of the last two years relative to what they were before the drought.  To be sure, several thousand acres of land previous cultivated have been fallowed in the face of the drought, and some ag employees, particularly farmworkers as a result have been out of work, but largely as a result of the conversion of many lower value row crops to higher value crops like vineyard and orchards and reliance on groundwater sources when surface water deliveries have been limited as a result of the drought, have meant that on a statewide basis, ag has done pretty well.”

“The big loser in the current drought as a result of the existing water rights system has been the environment.  The environment has been hammered, already listed threatened and endangered species are in worse shape and I don’t think the California water rights system in this era of drought has responded well and adequately to the needs of the environment and those like Native Americans who rely on them.”

Moderator Jim McIntyre: “Tribal interests were clearly not actual factored into the equation in some cases.  Scott, tell us a little bit about the unique position that California tribes find themselves in relative to their water rights and their position in the system.”

Scott Williams

Scott Williams 1“There are riparian water rights in California, and there are appropriative water rights in California. There are also Indian water rights in California, and they are different.  The law has been fairly well settled on this for the past 116 years.  What it says is that when the United States sets aside a reservation, whether that be for a national park, a military base, or Indians, implicit in that act is the promise to supply enough water to meet the purposes of the reservation.  That’s the right.”

“The amount of the water that’s granted depends on what theory one uses to determine how much water they are entitled to.  For tribes with the capacity to irrigate, there’s something called a PIA, practicable irrigable acreage standard.  Otherwise it’s known as the homeland standard.  If the purpose of the reservation is to set aside a home for the Yurok people, then how much water do they need to satisfy the purposes of that reservation?  If the purpose of the Yurok Reservation was to create a safe place for fishing people, then how much water do we need in the Klamath River to make sure they have fish?  That’s the amount.”

“Indian water rights are theoretically entire separate from California’s water regulatory system.  The tribes aren’t subject to California law.  The reservations are in California; the Klamath River flows through California, so at some point we have to acknowledge and deal with California water rights, but the state in theory has no authority to regulate the water inside an Indian reservation, so that is the way in which I continue to fulfill my assignment of reminding you that there is an additional layer of complexity here.”

Audience question:  Agriculture uses most of the water, so why were the restrictions focused on urban users?

Michael George

Michael George 1“The Governor’s proclamation which required 25% reduction only on the urban side, was not because he was overlooking the rest of the water users, but because the reductions in supplies to the ag sector were far deeper than 25%.  Farms kept up the value of the farmgate by essentially doing two major things: by migrating to more valuable crops and not cultivating annual crops, so they save water that way; the by hitting the groundwater really hard – too hard to sustain, so we did a pretty good job of getting through a four-year drought.  If the drought had continued into this year as severe as it was last year, all the rabbits had been pulled out of the hat.  Many of the groundwater basins are in distress such that they couldn’t have been tapped as hard, and we would have lost a lot more of the permanent crops, so there’s no doubt that there was a big reduction in water use on the ag side.”

“There’s this myth in California that ag uses 80% of the water; it’s an input to a product that ends up on our dinner tables, or granted in almonds that were shipping to China, but the fact is water is an input for what people eat.  I haven’t had many people who want more conservation on the ag side to agree to give up one of their three meals a day.”

Valerie Kincaid

Valerie Kincaid 1“Ag water conservation definitely happened.  We represent large agricultural irrigation districts, and they saved much more than the 25% and that was out of supply necessity.  There’s always an ag-urban friction, there probably always will be, so I guess the short answer to your question is ag did conserve and they conserved probably more than the urban water conservation; there just wasn’t a regulation requiring an ag conservation effort.  Part of it was because it was taken care of by shortage, there just was not supply.

Urban water users can pay huge amounts of money for water.  An urban agency can pay $2000 an acre-foot of water, and ag sometimes is charged only $12 an acre-foot, so there are huge economic disparities too, and that drives water use as well.  … Ag is also the sector that really bears the burden of water quality objectives, flow objectives; it’s very rare that it’s an urban that is giving to those because they can pay so much more money for water.”

Professor Richard Frank

Professor Richard Frank 2“When you talk about ag versus urban users, it’s a little bit comparing apples to oranges.  I’m not a hydrologist, but there are a lot of hydrologists who work here on the UC Davis campus, and they are quick to remind me that there’s such a thing called return flows, and that is the water that agriculture uses is not necessarily consumed, but it goes back into the water table and can and often is available for other uses, ultimately including urban uses, so that’s important.  In some ways, the most wasteful ag practices hypothetically are the best in terms of enhancing the return flows to groundwater aquifers or the surface streams and rivers from which the water is diverted. … Frankly, I don’t think the administration in announcing this 25% cut for urban did a really good job of explaining why ag wasn’t being asked to sacrifice.  These folks have identified what was going on and the hits that ag took in great detail, but I think some of those points were not thoroughly communicated by the administration.”

Valerie Kinkaid

Valerie Kincaid 1

“It’s interesting you say that – the more traditionally thought of as wasteful practices. We have a huge number of ag folks who are looking at the micro-drip irrigation systems that they put in and now SGMA is passed, they are thinking about going back to flood because they can count it as recharge.  The complexity in the system and what used to be thought of as wasteful is now the most reasonable use because now you’re putting it on the crop and recharging the groundwater and counting a couple of different uses.  Then the rice fields and the waterfowl habitat – you add that in there and there’s some really interesting decisions to make about how you put water on a field.”

Moderator Joseph McIntyre then asked about curtailments.  What is a curtailment, and what do we know about the potential short and long-term consequences of recent drought curtailments?

Professor Richard Frank

Professor Richard Frank 2“What’s normally meant by curtailment in a time of shortage such as the severe drought we faced is that generally everyone concedes that there’s not enough water to go around, and that not everybody is able to enjoy their normal full water right that they have under law, and that’s a built in assumption into the legal system and the water rights system, so the question is how is that curtailment system going to be imposed and administered.  In California it is largely imposed by the state through the State Water Resources Control Board led and chaired by Felicia Marcus, with the exception of federally-reserved water rights including Native American rights.”

“There wasn’t really a systematic means utilized to try and impose those curtailments up until 2015.  They just muddled through ad-hoc relying on things like the cutbacks in water contract deliveries from the State and federal water projects, but that wasn’t really a systematic system of curtailments.  Last year, for the first time in a long time, the State Water Board attempted to impose a more systematic curtailments, and it did so by relying upon and working through the traditional system of senior and junior water rights.  The most senior rights were insulated and the Board started its curtailment with the most junior which are the most recently developed and asserted water rights, and so it provided for some unequal results.”

“In my opinion, the board had the ability to be far more equitable in imposing those curtailments under existing law; it doesn’t require changes.  They have two overarching principles of California water law: one is embedded in our state constitution, a mandate under article 10 Section 2 a requirement that all water that is used in the state is subject to the requirement of reasonable use, and conversely that water cannot be wasted.  The second doctrine is one that was originally articulated by the California Supreme Court in the so-called iconic National Audubon decision that is now part of our state statutes; it’s in the water code, and that’s the public trust doctrine.  Those two doctrines separately or together give, in my opinion, the state board a lot more authority to adopt a curtailment protocol that spreads the pain more fairly, albeit those people who hold senior water rights would say it is very unfair if their senior water rights are not affected.”

“In any event, to broaden the curtailments and impose them more evenly, and at least in 2015, the water board did not choose to rely on either or both of those key doctrines in imposing the water curtailments that they did.  I would think, assuming that we’re in an era of ongoing droughts or series of droughts in the light of climate change, would hope and expect that in the future, the water board will be interested in relying on some of those overarching doctrines to sand off the corners of hardships related to curtailments.”

Moderator Joseph McIntyre asked if curtailments impacted the tribes this year.  “Were they affected?  They are not subject to California regulatory schemas, so how does it play out?”

Scott Williams

Scott Williams 1“When there’s not enough water in the river, they are subject to the curtailments.  It doesn’t take a State Water Board order to make that happen.  The environment got hammered, which means that the people that I work for got hammered during this period.”

“One of the things about federal Indian water rights is that the priority date is determined by the date the reservation was created for many tribes, is that if they are on their ancestral lands, their priority date is time immemorial.  They beat everybody.  But the State Water Board doesn’t administer those rights, so if an Indian tribe wanted to say that those upstream users can’t divert because we have a time immemorial priority right down river on our river, that would require going to federal court.  That would require anywhere from 3 to 7 years of litigation and $300,00-$400,000 a year against every single water user on that upstream river. It is totally unworkable and impractical way to enforce water rights, and for many tribes, their priority dates and their water rights are not adjudicated for the same reason.  We’re involved in a water rights adjudication in Southern California that has been going on for 60 years.  I don’t have answers for this.  I’m adding complexities.”

In the Delta in particular, how did curtailments work?

Michael George

Michael George 1

“In the drought, it sucks to be regulated.  But in a drought, it sucks not to be regulated because what happens with this system of water rights that are not under the state administration, there is in fact no basis on which to protect them, except these doctrines.  Here’s what I’d say.  Fairness is an important factor in how the laws are administered; responsiveness – we wouldn’t design the system we’ve got today if we were starting with a clean slate, but the third leg of that stool is predictability, and that’s something that you mess with at your peril.”

“One of the reasons that the priority system was designed was to protect someone who came and put water to beneficial use.  That was the strategy of the state, to put water to beneficial use to build its economy and to build its systems, but you had to protect that first comer against someone who would come later and would put in another straw upstream, so when we talk about changes to the system, fairness is largely dependent upon where you stand in the existing system.  You might think it was extremely unfair if you were first to come, made significant investments, built your chip factory or beef factory or almond factory on the basis of a prior right, and have that taken away.  Now we have ways of doing that in a democracy, and in the US, the fifth amendment of the constitution says when there is an overriding need to take away a property right, we pay for it.”

“Now let’s not be confused; water is a sovereign asset.  It is the right of use regulated by the state under state law, and the federal governments rights have been subjected to state law in all the 50 states, so we have a system.  It doesn’t work very well.  The question is, tinker with the system or throw it out and start over?  I don’t think we have the ability to throw it out and start over, so that takes us to these doctrines.  I happen to think the State Board has a lot more capability of meeting its responsibilities through the reasonable use doctrine than the public trust doctrine.  And I think that’s where we’re going to see the law and the practice extended more muscularly.”

Valerie Kinkaid

Valerie Kincaid 1“The reasonable use doctrine and the public trust doctrine, as a practitioner, is something that is different than curtailment.  I’m not saying you couldn’t use them as tools in a curtailment context, but curtailment is separate and apart from those doctrines.  I think frankly the State Water Board was smart not to use them.”

“In 2014, the State Water Board approach to curtailment was through emergency regulation.  I think as everyone knows, the Governor issued a drought proclamation and in that, he created water code 1058.5.  1058.5 issues emergency regulations.  It allows the State Water Board specifically to issue curtailment emergency regulations.  From my perspective, this is the only way the State Water Board can curtail, and it’s for a limited time.  These are emergency actions that the Governor has given the State Water Board.  These are not regular water code tools that they can use.”

“Another complexity we haven’t talked a lot about is the difference between a pre-1914 and a post-1914 appropriative right.  Certainly it’s my position that the State Board cannot regulate and did not issue a pre-1914 right.  The emergency regulations that allowed them to curtail specifically acknowledged that; they said you can curtail post-1914’s in this manner.  In 2014, the State Water Board went through a harrowing process of drafting curtailment regulations, looking at them, having policy direction weighing in, changing them literally on the fly; at the end they had a post-1914 curtailment reg and a pre-14 curtailment reg and they got to the end and the State Water Board adopted the post-1914s consistent with 1058.5, and decided to walk away from the pre-14 curtailment regulation because it wasn’t allowed for by law.  They did the right thing, but unfortunately, we were looking at June at that point, very little water savings resulted from that and that was frustrating, and I understand that.”

“Fast forward to 2015, it was a completely different process.  It was from a practitioner’s perspective who was there representing clients in this process, it was night and day.  No one even talked about 1058.5, there were no regulations proposed.  State Water Board staff came out with a regulation that was watershed wide and included pre-1914s.  As practitioner, I had no idea where they would come up with that; I don’t think it’s based in any legal theory.  In my opinion, they were frustrated by the red tape of not getting to pre-1914s and not really having any water impact of doing it the regulatory-approved way.  And so in 2015, they came out with watershed wide curtailment, and it was frankly confusing what that meant.  Was it that people were shut off, was the question.  When you got a curtailment notice from the State Water Board, was your water right done or was it suggested that there wasn’t water available for your diversion.”

“In the penalty phase of that and when you violate water right law, it really depends on that.  Were you just told you have no more water and the State Water Board made a decision on your water right, or were you told we think there isn’t enough water in the system, proceed at your own risk?  We got in this huge legal argument and debacle that is still ongoing over the issuance of that curtailment notice, and that’s what happened in 2015.  So the process from 2014 to2015 was vastly different.  We’re all still litigating the meaning of that curtailment notice.”

“Unfortunately, I think that there wasn’t a lot of success in both ways. I do understand the frustration from a regulators perspective – that you feel you need to be on the ground really making a difference in2014, but from my perspective it was way outside the envelope in 2015, but I’m not sure anymore other than pushing the envelope was achieved in 2015 on the ground either.  So it’s tough.”

Professor Richard Frank

Professor Richard Frank 2“I would disagree with the concept that the two doctrines, the reasonable use doctrine and the public trust doctrine, are not limited to permanent appropriative rights, or post 1914 rights.  It’s well established, I think, under existing California law that those doctrines are overarching principles that apply to all surface water resources of the state of California. I think it’s also is or should be undisputed that the reasonable use doctrine applies to groundwater resources, and I’m currently litigating a case where we initially sued the Water Board and the Water Board came around to our position that at least those groundwater resources that are hydrologically connected to surface water resources are also subject to the public trust doctrine.”

“I’m well aware of the litigation over the water board’s efforts to impose curtailment efforts in 2015.  You have a pre-1914 appropriators and riparians saying that the board has no jurisdiction whatsoever over them, that the Board can’t even demand that they report water diversions to the water board, which is to me rather extraordinary and legally unsupportable position, so we’ll see how this litigation plays out.  I would be very surprised if the Board’s authority under the reasonable use doctrine and the public trust doctrine to the extent the Board seeks to assert it, is not upheld with respect to essentially all water rights in California – a not uncontroversial position.”

Moderator Jim McIntyreModerator Joseph McIntyre then recapped the discussion so far.  “Michael, you have said that water is a sovereign right subject to fifth amendment taking provisions, so it’s bedrock; it’s a property right, just like my house, just like everything else.  Valerie, you said the State Board could under emergency regulations as described in 1058.5, curtailed the only way they could, curtailed post- 1914 water rights, it was an emergency temporary order having to do with a unique hydrological condition.  But in 2015, they went well beyond that and they covered a whole watershed and included pre-1914, and all of a sudden we’re in different territory, that it’s unclear whether or not that the state actually has the ability to curtail under those conditions.  Then Richard you make the point that no, actually reasonable use doctrine and public trust doctrine may actually give the state a public interest in that.”

Valerie Kinkaid

Valerie Kincaid 1“You sort of talked about what Michael George said, what I said, and what Professor Frank said as if they were not consistent, and I actually think that they are.  I think that it reflects the complexity of the system.  I think there is a property right in water, but it’s your right to divert it, use it and put it to beneficial use.  It is true that that right is subject to shortage provisions; if there’s nothing to divert and you don’t have a right to it, and that’s just a strange nuance of what’s called a usufructuary right.  I also think Professor Frank is right in the sense that the reasonable use doctrine and the public trust doctrine do apply to pre-1914s but those aren’t regulatory doctrines.  In my position, the State Water Board can’t regulate a pre-1914, and that’s what curtailment was.  I agree, and frankly feel an uncomfortable weakness in protecting clients and upstream water right holders on reasonable use and public trust doctrine because they can penetrate pre-1914s.”

“Now the State Water Board and other folks know that, that’s why those are their doctrines du jour.  That is the first thing that they try to pull out, because they are doctrines that are outside and can penetrate that water rights system on all levels, unlike other things.  Now from my perspective, I see those different than curtailment.”

Michael George

Michael George 1“I want to disagree a little bit with Valerie as well.  In 2015, it was not that the Water Board has the right to regulate riparian and pre-1914 rights; but clearly they have through case law demonstrated that the State Board has the responsibility under statute to prevent unlawful diversions.  So why I think 2015 was better than 2014, and I hope and 2016 and beyond when we deal next with acute circumstances, but the basis on which the State Board ultimately settled is that we have to look at whether there is water in the system to satisfy all needs and clearly there wasn’t.  Therefore how do you decide how to reduce demand on the system to meet the supply? That’s where we tried to use the priority system and to say, it’s a harsh system but it is the law that you cutoff the junior to protect the next most senior and so on, until you bring supply into balance.”

“Now that may not be viewed as fair particularly by people who perfected their right later in time, but that’s what the law is and that’s what the attempt of the curtailment process was.  It was poorly handled, we were learning, and we didn’t get it right, but the theory on which the State Board operated was to say, there’s only this much water in the system.  And we started giving people the notice that we’ve looked at supply and demand and here are the curves and here’s where they cross; and so we started cutoff everybody with post 1914 rights, and then we started to cut in, not to say we’re regulating your right, but to say there is not water available at your priority.”

“The term curtailment and a lot of the arguments will get sorted out, but where the cheese comes to bind is where you figure out there’s only this much water in the system and who’s got the right to it; if it’s a seniority system, in order to prevent unlawful diversions of that water, you’ve got to stop the juniors, and that was the attempt.  Not entirely well administered, but that’s what was going on.  The guiding principle underneath this is ‘first in time, first in right’.  It’s an interesting doctrine because you wouldn’t teach kids necessarily that in terms of how to allocate how they play with blocks.  You wouldn’t create that system necessarily today.”

Moderator Jim McIntyre turned to Scott Williams and asked him to bring in the tribal perspective.  What might they say about the guiding principles of water?

Scott Williams

Scott Williams 1“All tribes are different.  There are different histories and different cultures and different traditions, but one of the threads that seems to run through this is the right to use water as a property interest.  It’s not property. Property suggests that if you don’t’ get it, you get compensated for it.  If there’s not water in the river and there aren’t fish, the tribes won’t take money for the absence of fish, they won’t take money for the absence of water – it’s not that kind of property, so the notion of water as property right just doesn’t fit with a lot of tribal communities.”

“The guiding principle that has moved Indian tribes in the last 15 years toward shortage sharing agreements or equitable allocation agreements is not to litigate priority rights and time immemorial rights in a federal court some place.  That hasn’t produced wet water; we’ve done that.  It just doesn’t generate water.  What has produced wet water for Indian tribes is figuring out where the common values are with the upstream water users and the ocean fishers, sitting down together in a room and not talking past each other, not making speeches about who is right or who was here first, but figuring out how to share a common resource.  It has worked, water basin by water basin.  If it hadn’t worked, I’d feel silly here about proposing this as a solution, but the Bay Delta has been the subject of these kinds of conversations for many, many years and it aint’ done yet there.  The Klamath isn’t over, the Eel isn’t over, but I don’t see that an inherited legal system of appropriative rights and riparian rights and priority systems and discuss arguments over the extent of the State Water Board’s authority is going to solve our problems for us.  I just don’t see that happening.”

Audience question:  There have been analyses done that show the amount of water rights that have been granted is many times larger than the annual average runoff in this system, so how are we going address that fatal flaw in our current system when one thing we know about this system is we already living beyond our water means in this state, and when you factor in climate change and then groundwater, here does that drive us with regards to these discussions of water rights and whether we tinker with the existing system or we redesign it from the ground up?

Professor Richard Frank

Professor Richard Frank 2“When I was on an advisory panel trying to figure out how to fix the Delta, the stunning number we heard in testimony from the State Water Board was that on paper, the water rights that have been issued by the state is eight times the average amount of available water.  That was shocking to me then; it’s still surprising to me now.  The hydrologists who I rely on for these reality checks tell me that’s an oversimplification, but the bottom line is we are essentially fully subscribed; absent new desal plants up and down the coast, we have a finite amount of water and we’ve already given it out.  So it seems to me that we’re going to have to figure out how to move that water around more equitably and efficiently through water transfers and some other things, because there isn’t any more water to allocate to new uses.”

“As the state’s population continues to grow, we’re going to have more people fighting over a shrinking resource, and we really haven’t even talked about climate change and how that’s going to reduce the amount available for human purposes water in the years and the decades to come.  It’s going to be a difficult process but, to answer your question directly, in my view at least, there’s no additional water to speak of in this system.”

Scott Williams

Scott Williams 1

“One of the things that’s completely obvious now but wasn’t to me a few years ago is that relying on history to address over allocated basins doesn’t work anymore.  We don’t know what the future is going to be like.  We can’t rely on what happened in the last hundred years to guide us for the next hundred.  The world doesn’t cooperate that way.”

Michael George

Michael George 1“From eight times oversubscribed, I think systemic changes have occurred, and I think we’re now only five times oversubscribed, but is that a problem, is that progress?  Again, a lot depends on how you think about it and how much of the complexity of the system you’re able to take into account, because first of all, since we’ve got a shortage allocation system, and our supply is inherently hugely variable, it makes sense to get everybody in order, so that when there’s a lot of water in the system, you know who gets it, and as the water be taken it out of the system or not be supplied to the system, we know how to reduce the allocation to the juniors in order to protect the seniors.”

“Now that’s what the law is.  You may say that the law might need to change, but remember when you do that, you’re then going to get into the very sticky problem that we might all agree that the current system doesn’t work very well, and we need to start over, but it’s like having a constitutional convention.  We probably couldn’t get to anything that works as well as what we’ve got because we wouldn’t agree and we wouldn’t have the political wherewithal to come to an agreement in an extraordinarily diverse society.”

Valerie Kinkaid

Valerie Kincaid 1“The overallocated water is called paper water and usually it’s not used.  You can tell how oversubscribed we are when you’re in drought years and people talk about shortage.  That’s not an every year type of thing.  Between return flows and paper water that people don’t use, the practical reality is we are way over subscribed, and I agree with Professor Frank that probably every system is subscribed at this point, so what is the practical result of that? One, you don’t issue any more permits.  You’re oversubscribed, your done issuing permits.  Two, they go look at people’s paper water, which is not wet water – it’s water that people have a permit to but never take out of the system, the Board should forfeiture them.  If you don’t’ use that water in four years, it’s a forfeiture claim.”

“There are practical things you can do to reduce paper water problems, but to be honest, when you’re in the system, it’s in major drought times that people start complaining about shortage, so from my perspective, that makes me feel a little bit better that we’re oversubscribed but there’s a lot of people holding a piece of paper that don’t use it. “

“There are also return flows, and it’s the same problem with the water availability analysis that was done in curtailment.  If you’re overprescribed but there’s tons of return flows, how do you count that?  Once it’s diverted once, how often can you recount a return flow?  It’s complicated, and so you can’t just say full natural flow input, prescriptive output, we’re done – that just ignores the complexity of the system.”

Moderator Jim McIntyreModerator Jim McIntyre: “Where we can go from here?  Given the challenging hydrological conditions that we faced in the past and we’re likely to face in the future, what are the actual incremental changes that we could make right now or in some reasonable way, where a diverse group of litigators could potentially agree, where are the opportunities for people to come back and talk together about reforms that would make life better for everyone?”

Valerie Kinkaid

Valerie Kincaid 1“I don’t advocate dumping the existing system.  I think that you have to work within that framework for a lot of the reasons that have been said.  For one, if we created a brand new system, it might be different in some ways and it might be same in some ways, but there’s an existing system that people have invested in huge amounts of money, and rely on the system that we have.”

“From my perspective, increased reliability of water supply needs to happen for not only water users, but for the environment as well.  I’ll tell you as a representative of water users, those folks want the environment to do well as well, because if for no other reason – even if they are horrible, cold hearted people, it means less regulation for them.  They are not cold-hearted; they are stewards of the system, farmers are out there on the ground dealing with the ecosystem and the system that they run every day, so they do care and they are invested.”

“Certainly coming together and talking about reliability.  I don’t think paying for ecosystem and fish flows is off the table to create reliability for that system; I don’t think shifting around and transferring water is out of the purview of what people should talk about, but we should all come together and talk about what we all really need to maximize the beneficial use of water for everyone, and if that beneficial use is having water in the fisheries and keeping water local and regional, then that is a priority that everyone has to put on the table.”

“There’s a lot of things that we can do.  In times of shortage in particular, the system kind of goes wacky because we don’t have a very good system of knowing exactly who is in line and what’s going to happen, so again from my perspective, it comes down to reliability, both of water deliveries and what happens to the ecosystem in times of shortage.”

“The challenges that we’ve had in the times of shortage in the last two years is that we’re all trying to make up the system as we go, and everyone has their different perspective and wants to put their different card on the table. It would be nice if we didn’t have to do that while we are under the gun. It would be nice to come back in times of plenty and really talk about how the system is going to work, and how people think the system should work fairly and provide reliability for all uses, and plan for that in times of plenty because I think that’s going to help in times of shortage.”

Michael George

Michael George 1“Like Valerie, I’m an evolutionist. I think we need to refine and make this system that we have better, because I don’t see how we can build a bridge from what we’ve got that we’re all unsatisfied with to that nirvana, because we’d all build that bridge to a different nirvana.  I despair of ever agreeing on what would be perfect.”

“We have to do some things.  One thing is I think some of the litigation that has been set off is going to be useful because there are aspects of water rights law on which learned counsel have very strong well-developed arguments that need to be resolved.  One of these things I’m trying to do is get some of those issues teed up so the water board can make a decision on the merits to resolve the issue.  We all know that there’s too much at stake to leave it there.  Whatever decisions are made to resolve those ambiguities will be appealed to the courts, so ultimately over a period of time, processes that are already in place are going to result in some certainty over some issues.  We can get some clarity, and that’s a good thing.”

“We can accelerate that by getting better information, knowing what the priorities are, and how much paper water there is in the system, so again, we’ve set some things in place.  Last year in June, the legislature passed and the Governor signed SB 88, which improves the information that we get about who is using the water, for what purpose, and where so that we can start to sort out the rights to the natural flows compared to the rights to the return flows, etc.”

“In 2014, we embarked on this long term process of integrating and rationalizing our use of groundwater.  We’re 100 years late to the party, but we’ve started, and we need to work through that process in a way that allows people to make decisions about what the future will be like.  That means we have to identify for instance, a line in the sand that people can look to.  Twenty years from now, we’re going to have sustainable groundwater management basins and we’re developing plans, so that people can know what that means to them, they can arrange their affairs in light of a more certain future. “

“Right now we irrigate about 9 million acres in California, and it’s pretty clear to anybody who is looking at it with climate change with the change in hydrology even in a normal year, even probably in most wet years, we don’t have enough water in the system to support that much irrigated agriculture.  We can’t turn on a dime. What we ought to be saying in my view is twenty years from now, the ag sector is going to have to be sustainable, profitable, but safe and affordable food on our tables using 60% or 70% of the water that currently goes to food and fiber.  Those are the kinds of things that we can do that are practical that we can start today some of which will have value to us the next time we get into a drought, and we all think we’re going to be in droughts more often and perhaps more sustained, those are the things that we can do now to make it incrementally getter as we go forward.”

Scott Williams

Scott Williams 1“Three points.  The words reliability and certainty have been used here today, and I think they are fantastic guiding principles, and it’s helpful to have a guiding principle.  In working with agricultural communities, it’s critical; they need to know how much water they are going to have as it affects their financing, it affects their times of planting, so delivering some certainty to them is important.  For my clients, the notion that there will be enough water in the river to support the fish is critical, so certainty and reliability are important principles.”

“Secondly, there are ways that we can more efficiently preserve and use the water that we have.  Forest rehabilitation has the incidental benefit of reducing fire risk, and it generates water.  Aquifer Storage and Recovery projects, are expensive but they work.  I think that small off-stream storage is very practical and not that expensive, so there are ways to be efficient and sensible about how we use water, in addition to all of the conservation things .  I think the debate about drip versus flood and return flows is a difficult one.”

“The third point is that I think that the sustainable groundwater legislation is not perfect, but very interesting in the approach which starts with local communities figuring out how best to use their groundwater and what the problems are and how to fix them.  There are places in this vast and diverse state where water basins can get together to figure out how deal with shortage, now and into the future. We may not be able to predict when it’s going to come or how great it will be, but we can figure out how to deal with it and how to increase degree of certainty in that basin that they will get the water that they need.  It may be 60% of what they have an entitlement to, but they are going to get it.”

“There are other places in California where that’s more difficult.  The Central Valley water system is extraordinarily difficult, and it’s hard to get people in Los Angeles to sit in the same room with the people in Northern California and look each other in the eye and figure out how to deal with shortage.  So there are challenges there, but the notion that is embodied in the sustainable groundwater statute, late as it is, is a valuable one and one that we are really trying hard, our clients are trying very hard to implement.”

“It’s difficult for the tribes to swallow 200 years of horrors and sit down with the people that have taken their land and taken their water, and figure out how they can live as neighbors.  But if they can do it, the rest of us can do it.”

Professor Richard Frank

Professor Richard Frank 2“A couple things.  In the 20th century, we built a water storage and transfer system that from a engineering perspective is the wonder of the world, and it’s generated a lot of benefits for a lot of people in this state.  The problem is it’s a 20th century designed program, and we’re now facing different 21st century conditions.  If there’s one criticism of client scientists, in my mind it’s that they’ve been too conservative in projecting the impacts of climate change.  I was teaching ten years ago climate science saying California’s snowpack, the Sierra snowpack would be reduced from 30 to 70% by the end of this century, 2100, compared to what it is now, and last year we had 0 snowpack.  The point is we have an infrastructure system that doesn’t compare well to current conditions and it’s going to be more disjointed and disconnected from current conditions as we go forward, so we need to find a way to evolve our system of infrastructure to meet those anticipated 21st century conditions.”

“The 2015 legislation to create better monitoring and reporting of diversions and use, and that relates to surface water; we’ll see how SGMA legislation works out, which doesn’t require but authorizes the same kind of monitoring and reporting with respect to groundwater extractions – I think that’s essential as many key officials have said, you can’t’ manage what you don’t measure and I think that’s exactly right.”

“Good examples in localized areas of two other reforms that I want to mention.  One is conjunctive use, which is a fancy term for managing surface water resources collaboratively and in an interrelated nature with groundwater resources.  If and when we get our groundwater resources into a sustainable condition, we need to adopt a system where in wet years we use the excess surface water to recharge groundwater aquifers so that in dry years we can use groundwater aquifers as that savings account and draw water from it.  Good example of that is in Orange County.  We in Northern California like to look down our noses at Southern California, particularly when it comes to water issues, and that’s unfair because some of the best and most successful efforts at groundwater management in general and conjunctive use practices is coming from Orange County and we should learn from that.”

“Finally, water marketing.  I’ve become a reluctant convert to more reliance on water markets.  I think that’s going to be a key part in stretching those finite water resources to make their use most efficient in the coming years and decades.  To make that happen in my opinion, water markets and water marketing has to be a lot more transparent and publicly accessible than it is right now.  In recent years, it’s been pretty much a black box and that generates a lot of distrust and apprehension in the media and the general public, so we have to get past that.  There’s legislation pending in the California legislature this year that would start in that direction.  A good model and precedent is there, with respect to energy and electricity in particular, we have developed a state of the art system through the California Independent System Operator to make a transparent system and effective system of moving electricity around the state in a very efficient way and I think using that as a model and applying it to water markets and water reporting is a great way to go.”

Closing question:  What is one transformational thing we could do in this system, what is the thing your users would love to see happen?

Professor Richard Frank

Professor Richard Frank 2“It’s already been done with some other resources.  With the coast and with the Tahoe basin, we have gotten past these polarizing views of economy versus environment to the view that a sound and healthy environment is essential to a long-term sustainable economy.  I think our discussion over water hasn’t yet gotten to that issue.  We’re getting there with the now urban users and environmentalists have aligned lately philosophically and bought that premise.  Agriculture not so much, but I hope that we will get there to a common ethic of economic and environmental sustainability when it comes to water policy.”

Scott Williams

Scott Williams 1“I think that we need to ensure that all interests have a seat at the table.  That means minority interests, and Indians, it also means majority interests, it means environmental and conservation people and agricultural users.  It means everybody has a seat at the table and everybody has a voice, otherwise it just doesn’t work.”

Michael George

Michael George 1“I think we agree that we need to develop a new ethic around water that recognizes that every drop of water serves many purposes.  They all have to be honored.  I think the way you build that up, if you’re talking about transition, I don’t think it’s at a statewide level.  There’s too much diversity and too much complexity.  I think to build that up, you have to do what we tried to do with the sustainable groundwater management act; say here’s the objective, you guys region by region, work it out.  If you can’t, if you can’t make your region work in a way that fits with the state, then the state’s going to have to come in over top, but the way you get those conversations to be fruitful is at a local or regional level.  It’s not statewide legislation or a definitive decision of the State Water Resources Control Board.”

Valerie Kinkaid

Valerie Kincaid 1

“I agree with local management, and I also agree with everyone putting their card on the table and maximizing their beneficial use to however they define that.  In departing from these really large macro ideas, a smaller idea is a lot of folks have talked about adjudicating the Delta, and that locals and statewide folks should give that some thoughts.  It would help in incrementally getting to the next step. At least everyone would know what their water rights card said.”

Michael George

Michael George 1“You’ll be happy to know the Delta Watermaster has that in mind.”

More from the California Water Policy Conference …

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