PANEL DISCUSSION: The State Water Board’s 2015 curtailment notices and proceedings against BBID and WSID

In 2015, the State Water Resources Control Board sent curtailment notices to pre- and post- 1914 water rights holders based on water availability analyses for different watersheds.  A Division of Water Rights prosecution team pursued two separate enforcement actions in front of the Board – one Cease and Desist Order and one Administrative Civil Liability Complaint – against two districts for alleged unauthorized diversions.

At the request of the districts, the enforcement hearings were consolidated on the question of the water availability analyses, with hearings held in March of 2016.  After the State Water Board’s prosecution team put on its case, the districts moved to dismiss.  The Board dismissed the two actions in June of 2016 through Order WR 2016-0015, concluding that the prosecution had not met its burden of proof against the districts.

The districts and a number of other parties have sued the Board over Order WR 2016-0015 and also over the notices themselves.  The litigation is still pending in Santa Clara Court and in Sacramento Court regarding the curtailments, so this issue is going to be ongoing for the next few years.

At the Association of California Water Agencies’ fall conference, a panel of lawyers discussed their perspectives on the proceedings.  Seated on the panel was:

  • David Rose, with the State Water Resources Control Board Office of the Chief Counsel representing the  Board’s position;
  • Dan Kelly, now in-house counsel with Placer County Water Agency, but formerly was with Somach Simmons & Dunn and was the general counsel with Byron Bethany Irrigation District, one of the districts against whom an enforcement action was brought;
  • Jeanne Zolezzi, general counsel for the Westside Irrigation District, the other district who had an enforcement action brought against it.

DAVID ROSE, State Water Resources Control Board

First and foremost, I’m here to say is that my statements don’t necessarily reflect the opinions or views of the State Water Board, any board member, the executive director, the Delta Watermaster, or anybody including me, so please don’t attribute them to anybody,” began David Rose, eliciting chuckles from the audience.

I’m going to go through a summary and the questions that we had here about State Water Board process and how we got here, but that’s a little bit difficult because there may be differing views about where ‘here’ is, so it’s hard to describe,” acknowledged Mr. Rose.  He noted that his discussion will focus mainly on the Delta, although the State Water Board had issued similar notices for other watersheds in the state.

He first explained the water rights priority system.  Generally, it’s first in time, first in right, except riparians who take correlative reductions when the water gets there, but then there’s also pre-1914 appropriative water right holders who may have rights that predate riparians, he acknowledged.  “But generally it’s first in time, first in right,” he said.  “Especially in the Delta, we have all the issues with riparians and who is first and who has the senior right.”

There is also the constant presence of water, he noted.  “It would be easy in some watersheds to say, ‘I’m a riparian and there’s water flowing by my property, so I have the right to take that water.’  In the Delta, somebody could say the same thing, and it wouldn’t necessarily be right because there is always water present in the Delta – there’s tidal influence, there’s water coming from the projects, and there’s questions of water quality as opposed to just water quantity.  Even then, it may not answer the question of whether water is available for you, because you may be junior to somebody who is downstream of you.”

A drought is where ‘the rubber hits the road’ for the priority water rights system, because it doesn’t really matter who has the most senior right to divert water when there’s enough water to divert for everybody who wants it, said Mr. Rose.  “We have been for several years now where water is scarce and there is not enough water to serve all of the competing interests, which would include non-right holders like the environment, let alone all right holders, so that’s what really brought us to where we are.”

There are at least three different types of notices that can be considered as curtailment notices:

Notice of potential curtailment: The State Water Board issued a number of notices of potential curtailment starting in January of 2014, which is issued when the likelihood of the water rights priority system means that some people will not have all the water that they would want available to them.  “That’s a starting point,” Mr. Rose said.  “It doesn’t have to happen but the Board has been issuing those to let people know curtailment might be coming.”

Notice of unavailability of water: The notice of unavailability of water is a type of curtailment notice where the Board is notifying people that with the information that the Board has, there is not water available under your right unless you have a transfer or water from somewhere else.   “These notices were signed by the Executive Director, they were written and presented by the Division of Water Rights, “ he said.  “Unless you have a transfer or water from somewhere else, there is a global analysis that’s showing on a watershed by watershed basis that water appears to not be available based on this class of rights, essentially, down to this priority date.”

There’s the Division of Water Rights plotting of the demand and supply data that they have, which comes from a lot of different places,” he continued.  “The Board in January 2015 had a dry year program report presented to it that was reissued in February that talked about a lot of the areas the Board was considering in coming up with these supply and demand curves.  We’ve had improvements since then, but it does give a flavor for all the different types of information the Board’s using for those curtailment water availability analyses.”

Enforceable curtailment notice or order: Another type of notice of curtailment that the Board can issue is an enforceable curtailment notice or order.  There are two different versions of these.  Diverters in the Delta whose rights are post 1965 have a term, Term 91, that says that as soon as you receive a notice of curtailment, based on certain factors, you are obligated to immediately cease diverting as your right does not cover diversion after that point.  It’s immediately enforceable because it has the backing of a board order, in this case, the permit or license, he said.

There are also orders that currently only exist in Mill, Deer, and Antelope creeks in Tehama County, tributaries to the Sacramento River, where the Board has adopted and readopted an emergency regulation for protection of endangered salmonids that authorizes the board to issue a curtailment order, which requires immediate curtailment of anybody’s diversions if the parameters are not met.

Those are a couple of different things that might be called a curtailment notice,” said Mr. Rose.  “I think that’s important to consider as we’re talking about this is that, you can be saying the same thing and meaning something different, depending on the enforceability of it, what proceeds it, what’s going on behind the scenes with it, and what it looks like.”

The Board issued the curtailment notices in 2015 specifically in the Delta.  Part of the challenge is that there’s a data shortage.  “The question in my mind is, who has sufficient data to determine whether water that somebody is legally entitled to is present for them to divert?,” said Mr. Rose.  “I’m not 100% sure of the answer to that other than it seems like no one, for the most part.  Every diverter has the obligation to know whether water is available to them to divert.  Whether or not the Board tells you, if water is not available for your priority of right and you divert, that could be an unauthorized diversion.”

But does every diverter statewide have the information they would need to know that, especially in the Delta where there is always water present from the projects, whether for releases for downstream users, or releases for water quality issues, or water coming in from the Bay and the ocean?,” said Mr. Rose.  “So there’s a significant data shortage that individual diverters likely have … I assume every diverter knows the parameters of their right, but they don’t have all the data that would lead to the triggers for those parameters.  Now that might lead to the conclusion that the Board should have all the information, but of course the Board doesn’t have all the information to determine the same thing.  The Board has more information that uses full natural flow data from DWR, uses return flow data, it uses a number of sources of data to make sure it has the most accurate information about water rights, actual diversions, and actual presence of water, but that’s very far from complete.”

Prior to 2010, since there was no penalty for failure to file a statement of water diversion and use, most riparians and pre-1914 appropriators didn’t file a statement of water diversion and use identifying what their right was and what the scope of that was.  In 2010, the water code was changed so that everybody is now required to file a statement of water diversion and use or face penalties.

The adoption of SB-88 in the 2015-16 legislative session requires everybody to submit their water diversion data annually.  Prior to passage of SB-88, pre-1914 appropriators and riparians were submitting it every three years.  “When you need to be nimble in a drought, relying on information that you got 3 years ago is not ideal,” said Mr. Rose.  “It does highlight some deficiencies in the data that the State Water Board and the Division of Water Rights have, and that is again assuming that the Water Board actually has more information that your average diverter about what availability and the sum of the rights below and above any specific diverter.”

It’s the shortage of water that kicks in the priority system, said Mr. Rose.  “Since at least January of 2014, when the Governor declared a drought state of emergency, and told the water board to put water rights holders throughout the state on notice that they may be directed to cease or reduce water diversions based on water shortages, a number of things have happened.  The Water Board has issued notices, it’s adopted emergency regulations for water conservation, for fish protection, and for curtailments as well, and the Water Board has taken a number of different actions including enforcement actions.  The Board implemented Term 91 and a whole host of other actions.”

In July of 2015, there was a draft Cease and Desist Order against the Westside Irrigation District, which is the initiation of an enforcement action for unauthorized or threatened unauthorized diversion under water code section 1831, issued by the prosecution team of the Division of Water Rights.  On July 20, 2015 an Administrative Civil Liability complaint under water code section 1052, initiating a proceeding to enforce water code section 1052 to prevent unauthorized diversion, was initiated against Byron Bethany Irrigation District.

Preceding that, Byron Bethany Irrigation District and West Side Irrigation District had challenged in court the curtailment notices that were sent out in May for the post-1914 and in June for the pre-1914 diverters in the Delta; those five cases are coordinated in Santa Clara now.  “Based on the notices were these enforcement actions that to a degree alleged some of the same things that were in the curtailment notices, which is unavailability of water,” he said.

Mr. Rose then jumped to what they have learned from the process of the Board identifying availability of water based on the priority system that exists in the State of California, issuing a notice of curtailment, and then proceeding through the enforcement actions that were based largely on the idea of unavailability of water for Byron Bethany ID and West Side Irrigation District.

The first thing I learned is not everybody agrees about what constitutes regulation of riparian and pre-1914 appropriative rights,” said Mr. Rose.  “The Board has repeatedly said it doesn’t regulate pre-1914 appropriative rights and riparian rights, so that brings up the question of what does regulating those rights mean?  The Board in dismissing the enforcement actions against WSID and BBID said the Board was not regulating pre-1914 and appropriative water rights in the prosecution, but looking into whether the irrigation districts in fact had the right to divert under the circumstances of the water shortage that was present at the time.  Not everyone agrees.”

This drought was historic but not unprecedented, said Mr. Rose.  The Board will be issuing a retrospective about what the Board has learned through these proceedings that will be posted on the Board’s website when it is released.

They also learned through the enforcement actions that the Delta Watermaster has an indispensable role in enforcement actions in the Delta.  “I have prosecuted the Woods Irrigation Company Cease and Desist Order,” he said.  “I think one thing we got out of that is all of the parties at the end of the day, after Board acted, after the Court acted, we ended up with an agreed upon solution between the water contractors, Delta San Luis water users, and the Woods Irrigation Company users.  What we learned from that was that everybody who can participate in a settlement agreement or decide what the outcome of something is has to be on the same page and has to be working together.  I’m not sure that the Delta Watermaster’s office was integrated very well or fully into the enforcement actions that took place with BBID and WSID.  I think that has to happen.

Mr. Rose said there were some options for how things might be handled differently in the future.  “One is the same way but with better data, because the Board is not going to accept data that’s not better looking forward, and is actively trying to get it with new measurement and reporting regulations that are in effect.  We’re going to have that better data, but we can stick with status quo of curtailment notices and enforcement, eventually if necessary, with better data.”

There’s the option of curtailment regulations, like the Board did in Mill, Deer, and Antelope creeks where the Board can issue curtailment orders that are subject to reconsideration but there can be immediate penalties – not the $10,000 a day unauthorized diversion penalties, but $500 a day violation of a regulation penalties at a minimum,” he said.  “That’s a tool that the Board has used and could use.  And legislation is of course, an option, I don’t know what it could look like but it could look like anything.”

Finally, I want to close on one way that could be a way of handling this differently in the future and that is agreements,” said Mr. Rose.  “I was involved in the Woods Irrigation Company prosecution and ultimate settlement agreement.  I witnessed a panel about 2 years after the historic Mono Lake agreement was signed, and somebody asked, is this going to give any pathway for how people can proceed in the Delta? And most people laughed, because in the Delta there’s not one water right holder with one essential issue that needs to be resolved; there are ten thousand different issues that need to be resolved all at the same time, and many of them aren’t resolved.”

But what happened with the Woods Irrigation Company was that we got the Board, the in-Delta interests, the Central Delta Water Agency, the South Delta Water Agency, the Woods Irrigation Company, and the south of Delta interests as well to come up with an agreement that provides certainty to those Woods Irrigation Company diverters that they can do what’s on that face of the settlement agreement and nobody’s going to hassle them about it,” Mr. Rose said.  “Whether they have those rights or not, that’s really not at issue anymore; it’s ‘let’s just move forward.’  That did involve more parties than the Mono Lake issues, so I think that that is a viable path, but we’re not there yet, I don’t think, because we have to reach a tipping point.  What got us to that is initiating of a prosecution action, going to court, and everybody knowing what they could possibly know about the strength of their position, so until all of the interests in the Delta know the strengths of their positions – everybody knows their positions, but not everybody knows the full strength of their positions.  Until we get a little closer to that, I don’t think we’re going to hit that tipping point, allowing people to come to the table and get the certainty that they really want.  But that’s my take on it.

DAN KELLY, Byron Bethany Irrigation District

Dan Kelly spoke next.  Mr. Kelly was formerly with Somach Simmons & Dunn, and served as general counsel for Byron Bethany Irrigation District through the proceedings.   “Interestingly enough, I agree with David that there’s a lot we don’t agree about, so let’s go through some of what happened from my perspective and from BBID’s perspective, and I’m going to build the context around what happened.”

Mr. Kelly recalled how in his first year of law school, his property law professor assigned them all cases to read, and then he’d drill them with questions about what the basis of a decision was.  People would raise their hands and say, ‘the rule against perpetuities,’ and he would say, ‘no,’ and go on to the next person.  “This went on for a couple of days until he finally said, ‘you can’t understand cases unless you understand the story.’  Up until that point, every case we had read in class involved a widow losing her property, and he said “it’s not the rule against perpetuities, it’s not this or that, it’s that widows never lose.’  So every case has a story behind it, and so I’m going to talk a little bit about the story of BBID.”

Byron Bethany Irrigation District is a multi-county special district, serving portions of Alameda, Contra Costa, and San Joaquin Counties.  They provide ag and M&I water supplies to a service area of about 30,000 acres, including the community of Mountain House, which is a community of about 15,000 residents within BBID’s service area.  BBID also provides water to two energy facilities within its boundaries and provides fire suppression water to the Contra Costa airport near Byron.

Although it’s quite a diverse constituency that BBID serves, the most impact was likely to be felt by the agricultural users in the district, because of the realization that some amount of water would have to have gone to Mountain House,” Mr. Kelly said.

Mr. Kelly noted that the picture on the slide is BBID’s original pump house built in 1918.  “When the ACL was issued, I was receiving calls from the press before I actually got the email from the State Water Board with the ACL complaint,” he said.  “I was struck a little bit by a quote that somebody gave me that prosecutor in this case gave them, and that was that this was really a straightforward case, it was easy math, and it was a good case to tee up what the board saw was some really important legal issues that the Board thought needed to be resolved.  I had heard that statement being made over and over again at different board hearings, and that really stuck with me throughout the year of those proceedings.”

In July, the ACL was issued.  “A couple of the legal issues I thought the board was looking to tee up had a lot to do in my opinion with why they picked BBID and West Side,” he said.  “BBID is a pre-1914 water right holder in the Delta and West Side Irrigation District is a post-1914 water right holder in the Delta.  If in fact it’s a simple case of unavailability, this is a great way to get at whether or not the State Water Board had jurisdiction to do some of the stuff that we think it wanted to do.”

Mr. Kelly talked about the farmers in the district: Alfred Chesney, known as the King of Organic Farming and the Simoni & Massoni packing shed that employs 75 people.  “We actually had a State Water Board member come down and do a tour of the district in the spring of 2015, and we visited both of these farms,” Mr. Kelly said.  “We heard stories about how Simoni & Massoni, if curtailments came, they were going to lay off the 75 or so people that work in the packing shed and what that was going to mean for the town of Byron.  And the same with Al; Al is in Brentwood and had those same kind of stories.  We toured the facility and we met some of the workers.”

These aren’t test cases,” Mr. Kelly said.  “These are state actions that impact real people in a real way.  These folks, had they been completely cutoff and had the State Water Board had been successful, it’s likely that some of these folks would have permanently gone out of business.  And so it was a big deal to them, and it was a tough decision to decide to fight, but it was ultimately the right decision.”

The curtailments came down overnight; while there were notices of possible future curtailments that came out in January, the curtailments came down on June 12.  “Folks that have truck crops can’t operate on 24 hours notice of water being shut off,” Mr. Kelly said.  “They would have liked to have had a week or two week notice if the State Water Board really knew water was going to be unavailable for people, but they didn’t get it.  And so that made it even more tough, because a lot of these folks had crops that were very close to harvest and only needed one more irrigation to get those crops out of the ground, and the State Water Board’s order said that we couldn’t do it.

Mr. Kelly then presented a slide of the curtailment notice for pre-1914 that BBID received, noting that the notice was very similar noting that the notice was similar for post-1914 water rights.  “Those of you who received this, I don’t think construed this as anything other than a directive from the State Water Resources Control Board to stop diverting water, period,” he said.  “It says immediate curtailment; you had to immediately stop diverting water and that you were required to certify under penalty of perjury that you had ceased diverting water.  So while I get, now we want to say that these are just notices and they’re unenforceable, certainly the language contained in those under the letterhead of the State Water Board and signed by its Executive Director, I think folks took those as being enforceable curtailment orders.”

So when BBID and West Side received that notice, they both went into court to try to get interim relief from what they saw as a curtailment order.  “What the State Water Board did when we all sought temporary relief was that the Board signed declarations in court that these notices aren’t enforceable, that they have no meaning at all, that there’s no teeth to them, and they are just public information notices that there might not be water available,” Mr. Kelly said.  “A lot of the folks I talked to were absolutely shocked that the State Water Board had backtracked on what was clearly included on the face of those curtailment notices.”

The headline at the Manteca Bulletin the next day was ‘We were just kidding.’  “They were saying what the State Board had done when it got to court, they said, ‘we were just kind of kidding about those curtailment orders,’ so I think that whole process went horribly wrong.  I think it was done to avoid having to provide pre-deprivation hearings before you can cut off water rights, but it caused problems for the Board by backtracking.”

The court issued an order finding that the May 1st curtailment notice violated due process.  The court said that the curtailment letter was coercive and goes beyond the informational purposes that the State Water Board suggested that it was intended for, said Mr. Kelly.  “The court completely disagreed with the State Water Board that they will informational, and that anybody who read that curtailment notice would have understood that it was a government directive to stop doing what you were doing.  In issuing the TRO, the court said that the curtailment notice was unenforceable, and issued an order to show cause why an injunction shouldn’t be issued, preventing the State Water Board from doing anything else with respect to any of the curtailment notices.”

As a follow up, on July 15 the State Water Board issued a rescission and clarification of the curtailment notice.  “One of the interesting things was that the court found the notices violated due process because of the course of language, and one would think that what you would simply do is recall that letter and issue a new letter that complied with what the court found wrong,” said Mr. Kelly.  “But instead, the State Water Board issued a partial rescission and clarification of the curtailment notices.  (reading from the letter): It says, ‘the purpose of this notice is to rescind the curtailment portions of the unavailability notices that you received, to the extent that any of the notices described above contains language that may be construed as an order requiring you to stop diversions under your affected water right, that language is hereby rescinded.’”

So what did they rescind?  “Anything that any individual construed as being an order was rescinded, so it was up to each individual person to determine what in that June 12 notice they found coercive,” Mr. Kelly said.  “I think that created problems because it wasn’t a clear articulation of what was coming out of the State Water Board.  It really left it up to every individual reader, every individual attorney to determine what in those original notices was coercive.

Mr. Kelly said that this all created a problem, because one of the reasons the State Water Board took action was to get at the issue of the authority to curtail, and by saying they weren’t actually curtailing anybody, they cut that legal issue out from underneath themselves.  “When we went to some of the pre-hearing conferences before the State Water Board and the enforcement proceeding, the hearing officer had issued an order, and wanted as one of the questions answered, ‘does the State Water Resources Control Board have the authority to curtail?’ Well, it tried to, and when it was faced with interim relief, backtracked and said it actually didn’t’ curtail anybody, it was just providing people with information.”

So in response, BBID just sent over a notice of position saying that because of the State Board’s change of position, curtailments were absolutely not at issue in the proceeding any longer, and the prosecution team said the same thing,” he continued.  “So what we had was an enforcement proceeding that dropped what I thought was one of the most significant issues that the State Water Board was going to try to get at, and so to the extent that this was supposed to be a test case, and that was the reason for cutting water off from all these folks, it certainly wasn’t going to be a test case for that important legal issue anymore.”

There were other problems as well.  The Delta is a unique place but the water availability analysis didn’t recognize the Delta as a unique place.  “I was absolutely floored when I asked some of the prosecution staff in depositions about the presence of water in Delta channels when the flows would drop off, to actually have people tell me they didn’t know whether or not there was water in the Delta channels when flows had dropped off, and I thought, how can the people conducting the water availability analysis not know that? But that’s the kind of responses we got, and I was troubled by that, to say the least.”

Mr. Kelly presented a slide of a graph of river flows he used in his opening statement that was from Bulletin 23 from 1931.  The Board’s water availability analysis that was conducted used full natural flow at the full natural flow stations, which are essentially at the rim dams upstream.  “The way the analysis worked was once the daily full natural flow at those stations dropped below demand, so when there was insufficient full natural flow to meet a demand, that that justified a curtailment, or that meant that water was unavailable.  One of the things I pointed out was in 1931, there was a condition where the Sacramento River water flow dropped to zero, but in that same Bulletin 23, BBID had diverted water that entire summer – thousands of acre-feet of water, all summer long, irrigating crops, and there was significant ag production within BBID, even though there was no flow in the Sacramento River.  How can that possibly be?  Well, the Delta is a unique place, there’s water that’s always present.  Maybe it’s a question of quality for the intended beneficial use, but the reality was that the analysis that was conducted by the State Water Board didn’t include any of that supply at all.”

I actually think this troubled the hearing officers a little bit,” he said.  “The hearing officers had actually expressed an interest in hearing about that historic condition in the Delta.  I think they were a little bit surprised to find out that the analysis didn’t consider any of them.”

Another problem was the ‘squiggly’ line, which was the daily full natural flow that was plotted by State Water Board staff on these charts.  “A question I asked throughout the proceeding, and that was, if the enforcement action wasn’t about the curtailment notice, what was it about?,” said Mr. Kelly.  “If it was really just about the availability of water and the availability of water was based upon the analysis in that graph on the left, how is it that BBID and West Side were singled out for enforcement?

One of the things I thought was, what happened to Oroville that spring?” he continued. “Our experts couldn’t manipulate these availability graphs, we tried and tried, so at the hearing, I asked the State Water Board prosecution team witnesses to manipulate that graph for me, and I asked them to show me what the 1950 priority would be, where it would show up on that graph, and that’s the yellow dashed line. The prosecution team put that on that exhibit at the hearing.”

One of the arguments I made was, DWR’s priority for Oroville’s 1951.  Now they have a 1927 priority that was assignment of a state filed application, but they had diverted all of the water authorized under the 1927 by December 24th of 2014, so everything they diverted to storage in 2015 was under the 1951 priority.  So what?,” continued Mr. Kelly.  “Well, if the question is really availability and not notices, if you look at the month of March and April, which is the left hand side of the graph, those first two large columns, the daily full natural flow line is only about a third of the total watershed-wide demand, and certainly substantially below DWR’s priority, and so if this was an accurate depiction of supply and demand, it had to have been physically impossible for there to be water for DWR to put in Oroville in March and April.  DWR stored water until April 17 of 2015.  They kept putting water in storage, and it seemed impossible to me, and nobody on the prosecution team could explain how that was possible or why they didn’t go after anybody else between the blue squiggly line and the top of the demand graph.  They simple had no answer to that.

Something’s wrong with the analysis if you have everybody diverting water in March and April when it looks like the supply is only sufficient to actually maybe to meet 20% of all the demand, something’s got to be wrong because people weren’t in serious trouble that early in the year,” said Mr. Kelly.

Mr. Kelly said there were some things that went right.  “Up until this proceeding, the prosecution team had rarely lost a case at the State Water Board.  They always won every time.  They might not of convicted the water right holder and everything, but they’ve rarely lost,” he said.   “So what I think went right is that the hearing officers, Tam Doduc and Fran Spivy Weber, really held the prosecution team to their burden of proof.  This was a case that got dismissed on a motion for non-suit following the prosecution team’s case in chief.  We never put a case on.  We simply challenged whether or not they had made a prima fascia case that we diverted water when none was available, and I think that’s probably unprecedented that the prosecution team’s case was dismissed that early in the proceeding.  So what I think went right is that it had to be incredibly hard for the hearing officers to do what they did, and it probably took a lot of courage.   I thought that the Board had the right hearing officers for that proceeding.”

So what did we learn?  “I’m convinced that the ex parte isn’t really a rule, it’s kind of like a guideline at the Board,” Mr. Kelly said.  “I litigated on behalf of the Morongo Band of Mission Indians an ex parte case back in the early 2000 that went to the California Supreme Court.  That case was decided in the State Water Board’s favor based in part on a declaration that the State Water Board had filed in that case that articulated how the ex parte rule actually works at the State Water Board.  As part of that, the declaration was filed by the then Chief of the Division of Water Rights and she said that even all the staff are all separated so there’s no way that anybody can talk to somebody they’re not supposed to talk to.”

During discovery, I was amazed at how many people were talking to how many other different people at the State Water Board about these curtailments and this stuff all year long,” he said. “We had indications that the Executive Director had actually met with some Board members and got nods on when to issue the curtailments.  When I was at one of the depositions, I had asked one of the prosecution team members, who is on the prosecution team and he didn’t know.  The attorney for the witness said I shouldn’t be able to quiz prosecution team members about whose on their team.  So I said, how do you know who you can and can’t talk to at the Water Board? and he told me he didn’t to anybody anyway.  But I thought how can you enforce a rule when you don’t even know where the boundaries are that you can’t pass, so I think it’s more of a guideline.  I’m sure there are folks that would disagree with me.”

In the future, Mr. Kelly said he thinks the State Water Board should no longer be a unitary agency.  “I think the State Water Board should not be able to be judge, jury, and executioner in these enforcement proceedings.  Whether or not they go right, it doesn’t matter.  There’s always a perception that people that are hauled before the Board don’t get a fair shake.  And so I’m a big advocate for taking that function out of the State Water Board, whether that’s California creating water courts like they have in Colorado, or whether they simply have to go to an Office of Administrative Hearings for contested cases, I’m not sure.  There are others who could probably think of the best way to do that, but I think having the State Water Board as a unitary agency is a bad idea and continues to undermine the confidence that water users have in the process there.”

JEANNE ZOLEZZI, West Side Irrigation District

Jeanne Zolezzi then gave the perspective of West Side Irrigation District, who was also a party to the enforcement actions.  “West Side is so small that it makes BBID look like a Goliath,” she began.   “We are a small district with less than 6000 acres of farmland located in the Delta, just adjacent to the state pumping facilities.  We have a very senior post 1914 right with the priority of 1916 to divert about 82 cfs from Old River.”

Ms. Zolezzi pointed out that the water districts had already significantly reduced their water use.  “In a normal year, the district pumps an average of 22,000 acre-feet of water; in 2014, it pumped 8000, and in 2015, the year that we’re talking about here, the District pumped under 6,000 acre-feet, which was 25% of a normal year.  So there was injury going on in the District already before these cease and desist orders came out.”

In May, the West Side Irrigation District was curtailed, and was directly told by these curtailment orders that it had to cease pumping and certify that it ceased pumping, Ms. Zolezzi said.  “To put that in perspective, the threats of fine of $1000 per day plus $2500 per acre-foot diverted meant that the irrigation of a single 100-acre farm with 3 acre-feet of water over 20 days would amount to a penalty of $770,000,” she said.  “For the entire district, if they continued to divert their 82 cfs, they’d be looking at a penalty in one month of over $12 million, so this was not something the District could take lightly.  When we asked the State Board if we continue pumping, do the penalties apply from when you sent the curtailment notice, or when you prove that we were pumping illegally, and they are retroactive.  So even though we believed we had water to pump, if the enforcement went against us and we lost, those fines would be applied way back when the curtailment notice came out in May.”

We felt we had to ask for reconsideration because we felt we had a right to pump, so we filed a petition for reconsideration with the State Board,” she continued.  “We were told that the curtailment letter was not an order, so there was nothing to reconsider.  So we were facing millions of dollars worth of fines and had no appeal provision to the State Board.  We did take them to court and we were successful in getting a TRO, but immediately following that TRO was a revised curtailment order which is essentially said the same thing, that you had to stop diverting because the State Board had determined that there was no water available for diversion.  So in fact, West Side did cease pumping, and we certified that we ceased pumping, but we still had an enforcement action against us.”

To get by that summer, West Side Irrigation District got water by pumping irrigation tailwater and groundwater that seeped into its canals and by entering into a contract with the city of Tracy to divert some of their wastewater outfall that was discharged into Old River just near the pumping facilities of West Side. But there was still an enforcement.

Ms. Zolezzi then discussed the issues raised by the process from West Side’s perspective, noting that they are different than BBID’s.

Preemptive penalties were an issue because it puts people in a position that even if they believe there is water available to divert at their facilities, in essence, they can’t exercise that right because the risk is too great, she said.  “When you’re looking at millions of dollars worth of fines, the coercive power of the State Board to suggest that there’s not enough water and that you may be liable for these fines is simply too great, so we think there is a problem with the preemptive penalties and the Goliath aspect that this gives to the State Board – that whether they are right or wrong, they have this threat over diverters that is simply too great to overlook.”

Another important issue was what evidence is needed to curtail.  “There is a lot of complexity in the Delta and there is not enough data, so the information that the board had is that generally there’s not enough water coming down the rivers to meet the demand in the Delta,” she said.  “That is not what the law requires.  The law doesn’t say, ‘well if there’s generally not enough water, you have to stop diverting.’  That’s not what a water right gives you.”

In the State Board’s CDO against West Side, they were accused of taking water that was needed for appropriators with a more senior right.  “But the State Water Board didn’t introduce any evidence that anybody was harmed with a senior water right in the proceedings,” she said.  “They didn’t do any analysis of the availability of water at West Side’s point of diversion.  Staff testified that they did a “comparison” which is different – and not a water availability determination.  The water availability analysis was based solely on upon what the staff conducted on a watershed wide basis, so they determined that there was not enough water for all of the people on the San Joaquin River to divert, given the water that was there.  But again, this isn’t what the law requires.”

When you’re given a water right permit, regardless of the priority, that permit gives you a right to divert unless you injure someone who is more senior to you,” Ms. Zolezzi said.  “Not everybody diverts at the same time.  There may be a senior water right diverter downstream from me who has a right very senior to me to divert 1000 acre-feet of water.  If he’s not diverting on Tuesday, I get to divert under my junior water right, and because he has no demand, I’m not injuring him, that’s the way the priority system works.  The State Board didn’t’ take any of that into consideration.  Instead they assumed that every water right holder senior to West Side Irrigation District was pumping their entire right all at the same time, and if that happened, there was not enough for West Side to pump.  Well, that is not what is required to curtail a water right and that’s not what is required to give penalties.”

Staff acknowledged in their testimony that it had no evidence that the failure of West Side to stop diverting actually harmed another more senior water diverter; they had only made that presumption, she said.  “So we had a very strong position that we advocated at the hearings that it requires something more to impose a curtailment, and that is a determination of water availability at the point of diversion, not somewhere on the stream system and not generally on a stream system.  That’s something we hope will be resolved in the court; that’s something we’re not going to let go, we’re going to push for that.

Ms. Zolezzi said they heard again and again from the State Board that they didn’t have the staff or the time to do that.  “I understand that; I’m sorry it’s hard, but it’s required, because what you’re talking about is the livelihood of people.  This is not an abstract exercise on paper.  This is people’s business, this is their job, and this is their future.  You can’t simply put charts on a line and say we don’t think there’s enough water, shut off your pumping, let your trees die, and go do something else for a living.”

There were also issues with the legal authority to pump tailwater.  “The State Board changed its position numerous times on this, and as a result, we don’t know what their position is,” said Ms. Zolezzi.  “At first they said we had no right to pump tailwater; then they acknowledged that we do have a right to pump tailwater, but only if it’s not foreign water; and then we had a right to pump tailwater but we needed a water right permit to do it.  Mind you, a water right permit was needed to pump water from our own canals and use it on the fields in the district, they went so far as to say that.  Again, this is not the law.  The law is very clear, that if you have water in your control, you maintain control over it, you measure it, and you can pump it out, you have a right to use it.  That law was established long before I became a lawyer and long before anyone in this room.  That was another thing that wasn’t resolved that we do hope to get resolved.  It was extreme overreaching by the State Board and to this day, we honestly don’t know why they pursued that cause of action against the District.”

There were also issues over the application of water code section 1211.  “West Side had a contract with the City of Tracy to take wastewater from its treatment facility and pump it out of Old River,” she explained.  “Now 1211 generally indicates that you need to go to the State Board to get a change in point of diversion before you can do a contract like that, but there’s an exception under 1211(b) that says if you’re not changing the rate of flow in the river, you don’t need to get the permission of the State Board, so that is what we proceeded under.  There was no change in flow in Old River so we proceeded by contract.  Again, the State Board took various positions on that, but when it ended up after all the testimony, the State Board acknowledged under oath that there was no change in flow in the river, so they weren’t going under 1211, they couldn’t find a violation of 1211, but again, they said that in order for West Side to take that water, they needed to get a water right permit.

Ms. Zolezzi said when she was taught in water law in law school, she understood that if you had control over water, and you wanted to transfer it to someone, you could put it in a natural water course, convey it down that natural water course under a contract and someone else could pick it up.  “That’s my understanding, that is the way that hundreds of thousands of acre-feet of water in California are transferred every year, but for some reason, for West Side to do it and convey it the 500 feet or 1000 feet however far between the diversion point and the waste discharge point, we needed to get a water right permit.  We challenged that, but again because this was dismissed, it wasn’t resolved, but that’s something that definitely needs to be resolved in the future.”

Ms. Zolezzi then gave her thoughts as to what should be done in the future.  “We think there needs to be a public process.  In 2014, the State Board members stated that they would like to see a public process put together to determine how curtailments should work, to get input from all the water right users as to how this should be done if it has to be done in the next few years.  The Board members noted that they needed a hearing on hydrology and an open and public process undertaken by the Board itself and not delegated to staff to ensure the Water Board had a level of trust moving forward.  That never happened.  What we got was exactly what they didn’t want, which was staff moving forward without a public process, leading to enforcement actions and court actions.”

Penalties should be incurred only after an evidentiary hearing, she said.  “We think the water board should follow the statutory process.  There is some dispute as to whether the water board even has curtailment authority.  They do have some specifically granted by the water code in 1058.5, but that requires the Board adopt emergency regulations and it didn’t do that for these particular enforcement actions and these particular curtailments in 2015.”

Finally, any curtailment has to be diversion specific; it cannot be on a watershed-wide basis.  “There has to be proof that there is no water available under your right at your diversion point,” she said.  “We understand that this is difficult, we understand that there’s data shortage, but if that’s the case, then there can’t be any curtailments.  And that’s not the end of the world.”

At the hearings, the Water Board made it sound like they had to do something, because if they didn’t do something, this drought was going to be out of control and people were going to be injured,” Ms. Zolezzi said.  “Well, people have been diverting water for hundreds of years in California, and there have been droughts, and the State Board has never taken this kind of extreme enforcement action.  That’s what the courts are for.  I know people don’t like to hear that, but when you have a dispute between a senior and junior water right holder in court, you get the kind of detail that was missing in the State Board process.  You get evidence of water at your diversion point, you get a determination as to whether the complaining person was injured or not.  That’s what has to happen before the Water Board if they want to impose curtailments and they currently do not have the staff, the data, or the information to do that.

So personally, I think we have to leave curtailments and determinations of water availability to the courts or until what we’ve all been hoping for, we have water courts or adjudicative processes separate from the State Water Board,” she said.

DISCUSSION HIGHLIGHTS

Question:  There would be certain engineering firms that would indicate that 0 flow would be there, and there is some history that would indicate that there would be salt water as high as the city of Sacramento in drought years, so how do you reconcile the idea that without project water in the system, there wouldn’t have been water below a certain lines? That is so fuzzy that there’s no illegal or inappropriate diversions in the Delta; do you believe yours weren’t illegal diversions but that there were others?  Because clearly there was project water maintaining sweet water in the Delta, and people without rights or contracts to project water, should they have been taking it?

One of the things that we tried to find out early on was whether or not BBID or West Side were actually being accused of taking water,” responded Mr. Kelly.  “We wanted to know if that was an issue in the proceeding, and the prosecution team made very clear that we were not being accused of taking project water, so it was a non-issue in the proceeding.  We were being accused solely of taking water that was needed by senior water right holders and not project water, so that kind of resolved itself as a non-issue early in the proceeding.”

One of the interesting things that happened around the time the curtailments were issued, the State Water Contractors about a week ahead of the BBID curtailment had submitted a complaint with the State Water Board alleging that people in the south Delta generally are stealing project water and oddly enough, BBID was one of the named parties being accused of doing that,” continued Mr. Kelly.  “What I found very interesting was that the complaint included some modeling runs that showed a with- and without-project condition of the Delta, as the State Water Contractors kind of painted that picture.  I think there were a lot of problems that they had with their without project condition.  When I asked questions about it, it seemed like it wasn’t an appropriate modeling run, but they did it anyway, and even that analysis done by the State Water Contractors showed that in a natural pre-project condition, the south Delta would have been sufficiently sweet for BBID to divert water for at least the entire month of June, without having water of insufficient quality to grow those crops, and so it may be that under certain circumstances, folks with claims of water rights do take project water, but it wasn’t an issue in this proceeding because they said it wasn’t, and even the information that was available by what I would consider to be BBID’s adversaries demonstrated that in the without project condition, BBID would have been fine.”

Follow up question: “So did nobody take project water in the Delta during 14 & 15?”

If you’re asking what kind of movie this was, this is 12 Angry Men where you get to decide what you think based on the evidence you hear, but there’s not a cutaway to show what actually happened,” said Mr. Rose.  “What was presented to the Board was a certain type of evidence of alleged unauthorized diversions by two water districts, and the prosecution team didn’t make its case.  I don’t want to say that that means that they weren’t taking water unauthorized, and I’m not going to say that they were, but that issue was never decided; the prosecution didn’t make its case of an unauthorized diversion.  I believe only one other case was brought about unauthorized diversion in the Delta in this time period, so we don’t know.”

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