At the October 7 meeting of the State Water Resources Control Board, Alan Lilly, the presiding hearing officer in the Administrative Hearings Office, updated the Board Members on the first year of operations of the newly-formed office.
Background of the Administrative Hearings Office
Under the traditional water right hearing process, which was in effect for many years and still is in effect, one or two board members act as the hearing officers; afterward, Board staff works with the hearing officers to prepare the draft decision or order that the entire Board considers in both closed session and in a public meeting. The Board would receive comments from the public and interested parties, makes any necessary edits, and then vote.
In 2018, the legislature passed AB 757, which established the Administrative Hearings Office and giving the new office the authority to conduct water right hearings. This legislation did not change the statute regarding the traditional water right hearing process which remains as an alternative process.
Relevant statutes and processes
Water Code Section 1110 established the Administrative Hearings Office as an independent organizational unit within the State Water Board to provide a neutral, fair, and efficient forum for adjudications. Section 1111 created the presiding hearing officer’s position and authorized the presiding hearing officer to hire other personnel. Consistent with the statute, the Board put the Administrative Hearings Office in the organizational chart as an independent unit. The chart shows the context of there the Administrative Hearings Office fits in with the Board’s overall Divisions and Offices.
The legislation went into effect on July 1, 2019 at which time, the Board conducted a hiring process for the presiding hearing officer which culminated in the selection of Mr. Alan Lilly on September 18. Mr. Lilly started the new position on November 1. The funding for the 2019-2020 fiscal year also funded six additional positions within the office which are shown on this org chart. These include two attorneys, an Environmental Program Manager, a Senior Water Resources Engineer, an AGPA (?), and a Staff Services Analyst.
Water Code 1112 lists the various types of matters that may be assigned to the Administrative Hearings Office. Matters involving Administrative Civil Liabilities complaints, proposed cease and desist orders, or revocations of water rights permits or licenses are automatically assigned to the Administrative Hearings Office. The Water Board statute provides that the Water Board may assign other adjudicatory hearings to the Office, and the statute also provide that the Office may assist the board in conducting other adjudicative hearings or other matters and may perform additional work requested by Board including hearings in non-adjudicative matters, mediations and overseeing investigations. Mr. Lilly noted that so far, no additional assignments have been requested, but they look forward to assisting the Board in other matters as necessary in the future.
Section 1114 of the Water Code spells out the process for the Administrative Hearings Office orders and proposed orders. For certain types of proceedings, the hearings office adopts a final order within 90 days after the matter is submitted; that final order is then subject to review by the board through a petition for reconsideration. For all other types of proceedings, the hearing officer prepares a proposed order within 90 days which is then considered by the Board; the statute has various options for how to process that proposed order which is then subject to a second 90-day deadline.
“So far everything we have received has been in the second category,” said Mr. Lilly. “We’ve already transmitted two proposed orders to the Board and we are working on several others that we will be transmitting to the Board soon.”
The Administrative Hearings Office process
Mr. Lilly then discussed the steps they have taken to move their hearings online and make the information and documents regarding the hearing proceedings available to interested parties and members of the public.
The Administrative Hearings Office has a webpage on the Water Board’s website which has links to all of the notices and orders that have been issued. They also email all the notices and orders to those who have signed up to receive them through the Lyris subscription service. There are currently 203 Lyris subscribers.
There are also webpages for each of the specific matters where the important documents are posted. Mr. Lilly noted that there are significant limitations on what can be posted due to accessibility requirements, but subject to those limitations, they post the important documents for each matter.
For those interested in watching the hearings, it is set up to be broadcast through YouTube; people can either watch in real-time or watch the recording. The various recordings for each matter are assembled into a play list so that they can be easily accessed.
“We haven’t exactly reached rock star status and probably won’t, but I am happy to see that some of these are getting close to 100 views, so there’s certainly some interest in those proceedings,” he said.
Separate from the webpage, there is an FTP site where the pertinent documents are posted for each matter. Mr. Lilly noted that he has spent a lot of time on this because he feels it’s important for the parties as well as the integrity of the process. Historically, for water rights matters, if a party was interested in seeing the historical documents, they had to go to the water rights records unit, look at the paper files, and order copies of the pages that they wanted; those files could be many inches thick or even feet thick in some cases.
“With the covid-19 pandemic, it’s obviously much harder for people to do that as the water rights record office is not open as much,” said Mr. Lilly. “It is harder for people to access those files, so for both that reason and also just so we can have a common database for each matter, we have set up an FTP site where we post the historical documents for each matter. It does mean we have to spend some time copying and scanning the documents from the paper files and then posting them there, but we do think it’s worth the effort because of the benefits it provides to the parties. Then as hearings proceed, we post all the exhibits and testimony that the parties submit. This database is not only valuable to us and the parties to the hearing, but it will also help the Board when considering our proposed orders and will make it easy to set up an administrative record if we need to.”
So far, the Administrative Hearings Office has held five hearings. Due to the COVID-19 pandemic, they have shifted to holding all the hearings by Zoom teleconference. It took some time to adjust to the process, but it is working very well. The parties still have opportunities to have their witnesses testify and to cross-examine other parties’ witnesses, and so far, nobody has complained about the hearing process.
“I really do think we give everyone a fair and equal opportunity as what would be done with an in-person hearing,” said Mr. Lilly. “It has several advantages over in-person hearings. We don’t have to reserve hearing rooms, which historically were very hard to come by and it was starting to delay our hearing schedules. We can now set hearings whenever we want. The parties don’t have to travel to Sacramento, and for some of the smaller hearings, they have been very grateful for the people who live many hours drive away who have been happy to participate remotely.”
The hearings are recorded through the Zoom platform and posted to the FTP site the very next day, which is a stark contrast to the days when it took over a month at times for the court reporters to prepare the transcripts and get those posted and circulated to the parties.
“Frankly, we also have a more detailed and understandable hearing record because we have both the audio and video recording of what people say during the hearing, and then we post next to that the exhibit or other document that the parties are referring to,” said Mr. Lilly. “Frankly, I don’t know whether we’ll go back to large hearings, even if we can. In some ways, I think this process is so much superior that we’ll stick with it. Of course, we’ll cross that bridge when we get there, but I’ve been very happy with how we’ve been able to do things by remote teleconference and zoom hearings.”
The Zoom platform also automatically generates a hearing transcript which lists both who speaks and the time in the recording of the person who spoke, and the text is pretty good, he said. He acknowledged it would not be used as the official hearing record, but they do help flip through the transcript of a hearing quickly, determine the time, hour, minute, and second of a particular passage, and then go to the video recording and get right to that.
“It is a nice perk,” Mr. Lilly said. “We will continue to have these transcripts generated and include them in the official administrative record, but the actual video recording will be the official hearing record.”
Pending enforcement matters
When the Administrative Hearings Office first opened, there were eight matters regarding alleged failures to file timely licensee reports and supplemental statements of water diversion and use for 2018. The Office held hearings in three of those matters; two of the proposed orders have already gone to the Board, and they are working on the third order. The other five matters ending up being resolved without the need for hearings.
The Office did also have one combination of draft cease and desist order and administrative civil liability complaint where they held a hearing that ended up taking several days and included a site visit and site inspection as well. The parties are currently preparing closing briefings and then they will work on the proposed orders.
There are also were three draft cease and desist orders involving Delta diversions that dated back to 2010 for a variety of reasons that were recently assigned to the Administrative Hearings Office. One of those cases had to be split into three different hearings, so those three draft cease and desist orders will end up being five hearings, which have been scheduled on various dates in November of this year through January of next year.
Permitting matters have also been assigned to the Administrative Hearings Office: Two petitions to amend the fully appropriated stream declaration for the Kings River, which they are currently in the prehearing process, and three different water right change petitions. On one of the change petitions, they have completed the hearing and the parties have filed their closing briefs; they will be preparing the draft decision within the 90-day time frame. The two different change petitions are in the prehearing process, but the goal is to get those noticed and set for hearings as soon as possible.
Future assignments to the Administrative Hearings Office
Regarding future assignments, Mr. Lilly said he spent some time earlier this summer with Erik Eckdahl, the Deputy Director of the Division of Water Rights, working to develop a detailed memorandum regarding future assignments of water right permitting matters to the Administrative Hearings Office which has been posted to the AHO webpage.
“It spells out three different tiers of projects depending on levels of complexity and levels of prior water board staff involvement,” Mr. Lilly said. “It discusses the ex parte rules and how people within the Division of Water Rights will be assigned to respect those rules and yet to allow the process to move forward. It’s really detailed process. Mr. Eckdahl and I with input from a lot of other people have developed a pretty workable process. There will also be times in the more complicated proceedings where we need to have Division of Water Rights staff from the hearings branch and the permitting and petition sections provide technical assistance to our office, and the memo talks about that as well.”
Goals of the Administrative Hearings Office
The most important goal is to have neutral and fair hearings, which is spelled out in Water Code Section 1110 and is their number one goal, said Mr. Lilly. The slide lists several different types of actions that they will take to continue to achieve this goal.
While all of the actions are important, he highlighted the issue of ex parte or individual contacts. “I’ve set forth a pretty rigorous rule where we try to avoid having any contacts with some parties to a hearing where all of the other parties to the hearing are not involved,” he said. “We hold lots of prehearing and status conferences as necessary so all the parties can participate. We post all the communications to our FTP site where all the parties can review that, and we encourage the parties to even cc other parties to begin with, we require that so everyone is in the loop.”
There are times when a party may have a question regarding a fairly simple procedural issue, such as how to label their exhibits or how to upload their files to our FTP site, but Mr. Lilly has told them that he doesn’t want them to do that.
“I want to be fairly rigorous about avoiding one-party communications. The reason is that my experience over the years is a lot of those contacts or discussions that started out on routine procedural matters ended up sort of shifting over one way or another into substantive issues that the other parties I know would be quite interested in hearing about, so I’m trying to insist that we do everything with the communications where everyone can be involved,” he said. “Certainly with email, it’s a lot easier than it was before we had that, and with conference calls, and video conferencing if we need them. We can loop everyone in. If somebody has an important question, we can set up a conference call on very short notice and everyone can participate. It’s not as efficient as a simple one party call, but it avoids these ex parte concerns, and so far, I’ll just say, I think it’s worked pretty well.”
Another goal is to have efficient hearings, and they have taken a number of steps to do that. One is hiring staff with water right expertise. And based on statute, the entire process of holding hearings and preparing proposed orders is within the AHO so we don’t have the delays or inefficiencies associated with differences offices or departments or divisions having to do different things. They can also focus primarily on water right hearings. They also want to continue to focus on making prompt decisions. The statute is clear that there are 90-day limits after matters are submitted for an adjudicatory hearing, and with Zoom hearings, this avoids a lot of the delays in the process.
Their overall big picture goal is to help the Division of Water Rights reduce its water right backlogs, particularly in enforcement matters and permitting matters, and Mr. Lilly said they have made a start on that. In the future, they may be able to play a role with statutory adjudications and court references as those come in.
“Our success in achieving these goals is going to depend both on our continued efficiency which we will continue to work on, but also on the numbers of new matters that are assigned to our office,” said Mr. Lilly.
In conclusion …
“We were able to adjust to the fairly major changes and unanticipated events and I think in some ways, I view that as an opportunity to improve our process and particularly our hearing process. Considering what has happened in 2020, it’s a little scary to think about what could happen that we don’t know about for 2021, and if it’s unanticipated, there’s no way we anticipate it. But I am confident that with the staff I have on board in our office, we have our experience and track record so far that we do have the resources and creativity to deal with unforeseen developments to continue to strive to reach our goals as we move forward.”
“In conclusion, one thing that I’m pretty certain will not change in 2021 or future years, is the fact that there will not be enough water in California in most water years to satisfy all the demands for all purposes of use, so there will continue to be water right disputes,” said Mr. Lilly. “Our office is set up and will continue to be ready to do its part to try to address and resolve these disputes.”
During the Q&A period, board members and Mr. Lilly discussed how the Administrative Hearings Office can help reduce the backlog of matters. Mr. Lilly noted that in several matters when he first noticed the status hearings, parties would want to delay the process, but he has refused every single time.
“I blamed all of you,” he said. “I said, I’ve gotten directions from all five board members to move water right proceedings forward and not just to do business as usual and delay.”
There is a huge backlog of cases within the Division of Water Rights – over 700 backlogged change petitions and over 350 backlogged water right applications, so the Division of Water Rights is working to get these cases to the Administrative Hearings Office to set up schedules and timelines and get these issues resolved.