California’s Reaction to...

California’s Reaction to the Drought — Statewide Groundwater Management and $7.5 Billion in Water Funding

By Kirk Tracy

In the midst of a multi-year drought,[1] California recently passed two major pieces of legislation which are aimed at having significant impacts to water management statewide.  On September 16, 2014, Governor Jerry Brown signed three companion bills, SB 1168, AB 1739, and SB 1319, which together compose the Sustainable Groundwater Management Act (the “SGMA”).[2] The Act is the first statewide groundwater management legislation in California’s history, leaving Texas as the only state in the nation that does not have such legislation on its books.  Soon after, on November 4, 2014, California voters approved Proposition 1, a $7.5 billion general obligation bond to fund investments in water programs and projects statewide, including programs for water conservation, water recycling, groundwater cleanup, and water storage.  Together, the two pieces of legislation are set to have impacts statewide.

SUSTAINABLE GROUNDWATER MANAGEMENT ACT (SGMA) – A STATEWIDE PROGRAM TO IMPLEMENT LOCAL APPROACHES

The SGMA creates the first comprehensive framework for regulating groundwater in California, placing managerial and monitoring responsibilities in the hands of local agencies while also creating mechanisms under which state agencies may oversee and potentially even intervene in groundwater management.[3] The “locally-controlled” system of sustainable groundwater management purports to leave a limited role for state intervention when necessary to protect the resource.  The SGMA is only one element of a comprehensive water action plan advanced by the Governor’s Administration that also includes investment in water conservation, expanded water storage, safe drinking water, water recycling, and wetlands and watershed restoration.  Although the SGMA will take years to implement, the first deadlines are already upon us.

“Sustainable groundwater management” is defined as the maintenance of groundwater use in a manner that does not cause “undesirable results.”[4] An undesirable result is the occurrence of at least one of the following:

• Chronic lowering of groundwater levels, indicating a significant and unreasonable depletion of supply.
• Significant and unreasonable reduction of groundwater storage.
• Significant and unreasonable seawater intrusion.
• Significant and unreasonable degradation in water quality.
• Significant and unreasonable land subsidence that substantially interferes with surface land uses.
• Surface water depletions that have significant and unreasonable adverse impacts on beneficial uses of the surface water.[5]

The basic approach of the SGMA is for local agencies to adopt groundwater management plans that meet the sustainability criteria set by state agencies.  If the local agencies fail to adopt a sufficient plan, the SGMA provides mechanisms for the state to step in and develop a plan.  Further, if the localities aren’t complying with an approved plan, the SGMA provides enforcement powers to state agencies.  The goal is for local stakeholders to have a heavy hand in decision making throughout the process, with very little state-level involvement in an ideal situation.  Getting there, however, is a multi-step, decade-long process.

The SGMA went into effect on January 1, 2015, and contains numerous implementation deadlines.[6] Stakeholders throughout the state should prepare for increased regulation, oversight, and possibly even litigation.

The Basic Steps

At a local level, the main benchmarks are:[7]

• Step One: Local agencies must form local groundwater sustainability agencies (GSAs), organized by groundwater basin, by June 30, 2017.
• Step Two: GSAs (the local agencies) in basins deemed high- or medium-priority must adopt groundwater sustainability plans (GSPs) within five to seven years, depending on whether a basin is in critical overdraft. Deadline of January 31, 2020 for “critical overdraft” basins, or January 31, 2022 for basins not in critical overdraft.
• Step Three: Once the GSPs (the local plans) are in place, the GSAs (the local agencies) have 20 years to fully implement them and achieve the sustainability goal.  This leave a final target date of January 31, 2025.

Proposition 1 will provide $100 million in funding to GSAs for the development and implementation of GSPs.  Some GSAs have already been identified.[8]

Present AB 3030 groundwater management plans (Water Code Sections 10750 et seq., passed on January 1, 1993) in medium- and high-priority basins may no longer be adopted or updated under the mechanism of AB 3030, and must be replaced or augmented to comply with the requirements for a groundwater sustainability plan under the SGMA.[9]

The Basic Requirements and Parameters

The local agencies (the GSAs) responsible for high- and medium-priority groundwater basins must create and implement a GSP for their basins.  The SGMA provides options for local agencies to develop the required plans. Agencies may opt to create a single plan covering the entire basin, or knit together multiple plans created by multiple agencies.  The SGMA applies to basins or subbasins designated by the DWR as high- or medium priority basins, based on a statewide ranking that uses criteria including population and extent of irrigated agriculture dependent on groundwater.  It is anticipated that about 125 basins throughout the state will be designated as high- or medium-priority basins, and thus will be required to develop a plan.  Those basins account for about 90% of California’s annual groundwater use.[10] Groundwater basins, or portions of groundwater basins, which are subject to a previous groundwater adjudication are exempt from the GSP requirement.

Once formed, GSAs will have broad groundwater management and investigatory powers to prepare and execute the GSP.  GSAs will have authority to inspect property or facilities to ensure the requirements of the GSP are being met.  Additionally, the GSA will have the authority to regulate and limit groundwater extractions, require the submission of annual extraction reports or impose well spacing requirements, among other substantial powers.[11] The GSP may be corrective as well as preemptive, in order to remedy past undesirable results, and GSAs will be authorized to impose civil penalties against persons who violate regulations adopted in furtherance of the GSP, or who extract groundwater in excess of the amount authorized.  Of note, interested parties will be given opportunities to influence the drafting of the GSP before it is adopted.[12]

Impact to Private Rights is Potentially Ambiguous

Under California common law, unless otherwise altered by state statute, senior priority water rights holders are generally not required to reduce extractions or incur significant expense for the benefit of lower-priority water rights holders. Although requirements under the SGMA may result in regulating, limiting, or suspending extractions by individual well owners, the SGMA expressly states that it does not determine or quantify water rights.[13] Therefore, significant conflicts may arise in the development of a GSP where water rights priorities are contested or the allocations and equities of a proposed GSP are disputed.  Significant stakeholder and public outreach is highly advised at the outset of any GSP development process.  It is of note that local agencies are not, however, authorized to issue or deny well-drilling permits, unless authorized to do so by the county authority.[14]

Considering the further groundwater controls on the horizon, and possible increases in groundwater adjudications to solidify water rights, groundwater users should gather all their documents, data, and other evidence to support their volumes and types of water use, and consider how they can be pro-active in their local process.

Other Major Milestones on the Horizon

By January 31, 2015, the Department of Water Resources (DWR) was required to classify each groundwater basin (as identified by DWR Bulletin 118)[15] as high, medium, low or very low priority.  On Dec. 15, 2014, the Department of Water Resources (DWR) announced that the basin prioritization finalized in June 2014 under the California Statewide Groundwater Elevation Monitoring (CASGEM) program will be used as the initial prioritization required by the Act.[16]

Assuming all goes according to plan, and the DWR and the State Water Resources Control Board (SWRCB) do not have to invoke oversight powers and designate basins as probationary,[17] the following major milestones are expected:

• June 1, 2016: DWR must adopt regulations for evaluating GSPs (the local plans).
• January 1, 2017: DWR must publish best management practices for the sustainable management of groundwater
• June 30, 2017: A local agency must be named as GSA for all high- and medium-priority basins
• January 31, 2020: A GSP must be adopted for high- or medium-priority basins in a critical condition of overdraft
• January 31, 2022: A GSP must be adopted for all other high- or medium-priority basins
• January 31, 2025: The state water board may designate as probationary any basin which has not met the deadlines, or which has adopted a GSP which the DWR has found inadequate.

PROPOSITION 1 – STATEWIDE FUNDING FOR WATER PROGRAMS

As noted, Proposition 1 is a $7.5 billion general obligation bond to fund investments in water programs and projects statewide, including programs for water conservation, water recycling, groundwater cleanup, and water storage.  The bond funds are to be distributed through a competitive grant process, which will be overseen by various state agencies, including the California Water Commission (CWC), Department of Water Resources (DWR), and the State Water Resources Control Board (SWRCB).  Proposition 1 is intended to leverage additional local and regional funds to potentially quadruple the total investment.  Funding is limited to projects that are deemed to be for “public benefits,” which includes restoring habitats, improving water quality, reducing damage from floods, improving recreation, and responding to emergencies.  Projects that could potentially tap into the funding range from surface storage projects identified in the CALFED Bay-Delta Program,[18] groundwater storage or contaminated groundwater remediation projects that provide water storage benefits, local and regional surface storage projects, various water recycling projects, drinking water protection and recharge projects, and statewide flood management projects.  Additionally, funds are allocated by hydrologic region for water security, climate, and drought preparedness programs, as well as watershed protection measures.

Critics say too many funds under Proposition 1 are focused on building more dams and surface storage projects, while doing little for near-term drought relief.[19] Indeed, the CWC is underway with making plans for allocating $2.7 billion in bond funds for the public benefits of specified water storage projects.[20] As the drought continues, increased surface storage capacity may largely be useless if there is no snowmelt and rainfall to fill such reservoirs.  Even so, Proposition 1 provides a comprehensive state water plan, at least marginally in line with the statewide focus of the SGMA—although, the SGMA touts a heavier reliance on local authorities for implementation.

California has reacted to the severe drought conditions with groundbreaking (in California, at least) legislation to manage groundwater use, likely to have impacts on all citizens and each level of government, and with a renewed push to fund statewide water resource projects—although the debate continues as to whether the monetary allocations have been made in the most effective way.

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[1] January 2015 was the first time in recorded history that the City of San Francisco had zero rainfall in the month of January.

[2] See http://www.water.ca.gov/groundwater/groundwater_management/legislation.cfm.

[3] For the latest developments by the DWR, see http://www.water.ca.gov/groundwater/sgm/.

[4] Cal. Water Code § 10721(u).

[5] Id. § 10721(w).

[6] See http://www.water.ca.gov/groundwater/.

[7] For a detailed timeline, see http://www.water.ca.gov/groundwater/sgm/pdfs/GW%20Legislation%20Timeline_DWR_draft6.pdf.

[8] See http://www.water.ca.gov/groundwater/sgm/gsa.cfm.

[9] Cal. Water Code § 10750.1.

[10] See http://www.acwa.com/sites/default/files/post/groundwater/2014/04/sustainable-gw-management-act-brochure.pdf.

[11] Id.

[12] Id.

[13] See, e.g., Cal. Water Code §§ 10720.5(b), 10726.4(a)(2) & 10726.8(b).

[14] Cal. Water Code § 10726.4(b).

[15] http://www.water.ca.gov/groundwater/bulletin118/index.cfm.

[16]http://www.water.ca.gov/groundwater/Sustainable_GW_Management/SGM_BasinPriority.cfm.

[17] Water Code § 10735.2(a)(1); see http://www.water.ca.gov/groundwater/sgm/pdfs/GW%20Legislation%20Timeline_DWR_draft6.pdf.

[18] See http://www.calwater.ca.gov/calfed/about/; http://theyodeler.org/?p=9789.

[19] See https://cavotes.org/vote/election/2014/november/4/ballot-measure/proposition-1.

[20] The CWC included discussions on this topic at its January 21, 2015, meeting.  See https://cwc.ca.gov/Pages/2015/01_January/012115agenda.aspx.  See more on the CWC’s efforts towards “Defining and Quantifying the Public Benefits of Water Storage Projects” at https://cwc.ca.gov/Pages/PublicBenefits1.aspx.