BILL ANALYSIS Ó AB 2453 Page 1 ASSEMBLY THIRD READING AB 2453 (Achadjian) As Amended March 28, 2014 Majority vote LOCAL GOVERNMENT 6-1 ----------------------------------------------------------------- |Ayes:|Achadjian, Alejo, | | | | |Bradford, Gordon, | | | | |Melendez, Waldron | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Levine | | | | | | | | ----------------------------------------------------------------- SUMMARY : Establishes, in California Water District Law, a governance and elections structure for the Board of Directors for the Paso Robles Basin Water District. Specifically, this bill : 1)Establishes, in California Water District Law, the governance and elections structure for the Paso Robles Basin Water District (District), and defines the District to mean "the Paso Robles Basin Water District, the boundaries of which shall be established and may be modified by the San Luis Obispo County Local Agency Formation Commission" (SLO LAFCO). 2)Requires, notwithstanding any other law or the bylaws of the District, that all elections for the Board of Directors of the District (Board) be conducted in accordance with the following: a) Requires the composition of the Board to be as follows: i) Provides that there shall be a total of nine directors, each of whom shall be qualified for office by being a person who holds title to land within the District or a person authorized to vote in elections by landowners pursuant to 4) below. ii) Provides for the election of those nine members, as follows: AB 2453 Page 2 (1) Six of the directors are required to be elected by landowners within the District, except that each voter shall be entitled to cast one vote for each acre owned by the voter within the District. If the voter owns less than one acre, the voter shall be entitled to one vote and any fraction shall be rounded to the nearest full acre. (2) Specifies, for the purposes of the election of the six directors, that the landowners within the District be divided into three classes, as specified below, and provides that large landowners shall elect two directors, medium landowners shall elect two directors, and small landowners shall elect two directors: (a) "Large landowners" means holders of title owning a total of 400 acres or more; (b) "Medium landowners" means holders of title owning a total of 40 acres or more, but less than 400 acres; and, (c) "Small landowners" means holders of title owning a total of less than 40 acres of land. (3) Specifies that candidates for the six directors may be within any landowner class. (4) Provides that three of the directors shall be elected by registered voters within the District at large. iii) Requires all nine directors to reside within the District, within two miles of the District boundary, or within the boundaries of the City of Pas Robles, the Atascadero Mutual Water Company, the Templeton Community Services District, the San Miguel Community Services District, or the San Luis Obispo County Service Area 16. 3)Requires the elections of the District to be conducted in conformance with the Uniform District Election Law and the laws generally applicable to Districts created and operated AB 2453 Page 3 pursuant to the California Water District Law, provided the following shall apply: a) Requires separate ballots to be prepared and separate elections to be conducted for those director positions which will be elected by resident voters and for those which will be elected by landowner voters. Specifies that landowner voter elections and resident voter elections shall be conducted simultaneously. b) Allows District elections to be conducted by all-mailed ballots pursuant to existing law contained in the Elections Code. Requires separate voter lists of resident voters and landowner voters eligible to vote with the District to be prepared and maintained according to applicable provisions of law. Requires separate all-mailed ballot elections to be held for the directors to be elected by resident voters and for those to be elected by landowner voters. c) Requires the directors elected upon formation of the District to hold office pursuant to existing law contained in the Elections Code. d) Requires the director positions elected by large landowners, medium landowners, and small landowners to be divided into two director term classes for each (large, medium and small), and requires the directors elected by registered voters to be divided into two director term classes. e) Requires the election of directors to be held on the first Tuesday after the first Monday in October of each odd-numbered year. f) Requires the voters list used for purpose of an election of directors to be based upon the last assessment roll prepared by the county assessor, which shall be conclusive evidence of ownership and acreage for the purpose of carrying out the election. Allows the voters list to be amended if satisfactory evidence of a change in ownership is presented at least 45 days prior to the election to the elections official in the case of the formation election, and thereafter to the District secretary. Provides that the county assessor shall be compensated for all costs AB 2453 Page 4 incurred in determining ownership and acreage information and providing information to the county clerk. 4)Requires, notwithstanding any other provision contained in the California Water District Law of the Uniform District Election Law, election participation by landowners to be carried out as follows: a) If the holder of title is a trust, any trustee of the trust may vote on behalf of the trust; b) If the holder of title is a corporation, the president, vice president, secretary, or other duly designated officer may vote on behalf of the corporation; c) If the holder of title is a limited liability company (LLC), any managing member may vote on behalf of the LLC; and, d) Any officer or partner with managerial responsibilities of a legal entity not listed in a) to c) above, inclusive, may vote on behalf of the entity. 5)Provides the District with the authority afforded to local agencies as provided in the section of law contained in the Water Code related to Groundwater Management Plans, as that part may be amended, consistent with the requirements and limitations of applicable law. 6)Finds and declares that the bill's provisions are enacted in order to provide a governmental framework for the District to balance the supply to and consumption of groundwater within the basin underlying the District, and thereby pursue stabilizing that basin and sustaining its resources for the beneficial use of all who use water within the District. 7)Declares that the creation of the District is not intended to and shall not modify the powers of the County of San Luis Obispo and the San Luis Obispo County Flood Control and Water Conservation District, carried out consistent with applicable law, to manage and protect groundwater resources within the County of San Luis Obispo, including the Paso Robles Groundwater Basin. AB 2453 Page 5 FISCAL EFFECT : None COMMENTS : 1)Purpose of this bill. This bill establishes, in the California Water District Act (Division 13 of the Water Code), a governance and elections structure for the District, and specifies that boundaries of the District shall be established and may be modified by the SLO LAFCO. The bill provides an alternate structure for the elections of the Board of Directors for the not-yet-established District other than what is contained in the California Water District Act, specifies the qualifications of the directors to hold office, and provides the procedures for the District's elections for the Board of Directors. The bill specifies that the Board of Directors is a nine-member board. To be qualified to be a director, a person must hold title to land within the District or be a person authorized to vote in elections by landowners as provided in the bill, and must reside within the District, two miles of the District boundary, or within the boundaries of several other specified local agencies. Of the nine directors, six will be electors by landowners within the District, in three categories - large landowners (400+ acres), medium landowners (40 - 399 acres), and small landowners (less than 40 acres). The bill specifies that each landowner category would elect two directors, and candidates for the six director slots may be within any landowner class. Provisions in the bill specify that each voter in these landowner classes will be entitled to cast one vote for each acre owned by the voter within the District. The bill also provides that three of the directors would be elected by registered voters within the District at large. The bill also provides that the District shall have the authority afforded to local agencies as provided in the section of the Water Code related to groundwater management plans. Because the bill amends the California Water District Act, it is implied that the District to be formed by SLO LAFCO would be a California Water District, with the powers and duties contained in the District's Act (Division 13 of the Water Code), absent any further specification in the bill AB 2453 Page 6 about the District's powers. The boundaries of the District are also not specified in the bill, although the bill makes a finding and declaration that the District is formed to "balance the supply to and consumption of groundwater within the basin underlying the District." This bill is sponsored by Paso Robles Agriculture Alliance for Groundwater Solutions (PRAAGS) and PRO Water Equity. 2)Background on the Paso Robles Groundwater Basin and actions at the local level. According to a Paso Robles Groundwater Basin newsletter published by the County of San Luis Obispo's Department of Planning and Building, Public Works and Public Health in June of 2011 and sent to all rural property owners throughout the North County, "The basin covers approximately 800 square miles and is the primary, and in many places the only, source of water available to property owners throughout the North County?the county Board of Supervisors, after a four-year study, has concluded that groundwater levels are dropping throughout the basin. The Board has also concluded that pumping of groundwater from the basin has reached or is quickly approaching the basin's 'perennial yield.' Once the perennial yield of a groundwater basin is reached, additional pumping beyond that amount will result in lowering groundwater levels. "The entire population of the rural North County gets its water from groundwater wells. What that means is that there are a lot of 'straws' in the same glass; in fact, there are over 8,000 wells in the Paso Robles Groundwater Basin." The San Luis Obispo County and other jurisdictions in the County of San Luis Obispo have undertaken a number of efforts to address the basin decline, including the following: a) In 2010/2011, the City of Paso Robles and the County of San Luis Obispo led a voluntary effort along with other basin stakeholders to prepare a groundwater management plan (GMP) for the Paso Robles Groundwater Basin. The GMP address groundwater conditions, identifies local and basin-wide groundwater issues, and outlines measures to protect groundwater within the basin. On March 18, 2014, the Board of Supervisors held a public hearing to consider AB 2453 Page 7 adopting a resolution that would direct staff on drafting amendments to the existing [GWP] that was originally adopted on March 27, 2012. b) On September 25, 2012, the Board of Supervisors adopted the Paso Robles Groundwater Basin water conservation ordinance, which requires large land uses to offset new water use, prohibits the creation of new parcels in the basin and requires changes to the county's general plan to be water neutral. The ordinance did not affect the cities of Paso Robles and Atascadero, or the towns of Templeton, San Miguel or Shandon, and did not affect the drilling of wells or the building of single family homes. c) The County Board of Supervisors on August, 27, 2013, adopted an Urgency Ordinance that established a moratorium on new or expanded irrigated crop production, conversion of dry farm or grazing land to new or expanded irrigated crop production and new development dependent upon a well in the Paso Robles Groundwater Basin, unless such uses offset their total protect water use, including certain exemptions. d) On October 8, 2013, the Board of Supervisors continued the Urgency Ordinance adopted on August 27, 2013, for two years. e) On February 25, 2014, the Board of Supervisors approved a resolution adopting the New Development Water Conservation Program. The program implements the Paso Robles Groundwater Basin Urgency Ordinance, which requires all new development in the Paso Robles Basin Area to offset new water use through verifiable evidence or participation in an approved County Water Conservation Program. The County of San Luis Obispo, jurisdictions within the county, and residents and community groups continue to look for solutions to manage the groundwater basin. 3)Author's statement. According to the author, this bill is "the culmination of a year-long negotiation between two groups in my district and has the support of the San Luis Obispo County Board of Supervisors as well as the City Council for the City of Paso Robles. This bill would allow the Paso AB 2453 Page 8 Robles Groundwater Basin (Basin) to elect a hybrid board of directors to manage groundwater in the Basin. "This hybrid board structure attempts to represent the unique composition of landowners/residents in the Basin. The water district itself will be a California Water District and will be established via the Local Agency Formation Commission once the sponsors file a petition for formation. [I recognize] that groundwater in the basin is in decline, with wells going dry; therefore a need for groundwater management is essential. Given the unique composition of landowners in the Basin - large agriculture, small wine grape growers, and landowners/residents - the need for a unique board structure is necessary." 4)Options for groundwater management. According to the Department of Water Resources, in 1914 California created a system of appropriating surface water rights through a permitting process, but groundwater use has never been regulated by the state. Though the regulation of groundwater has been considered on several occasions, the Legislature has repeatedly held that groundwater management should remain a local responsibility. There are three ways to manage groundwater resources in California: 1) management by local agencies (special districts) under authority granted in the California Water Code or other applicable state statutes; 2) local government groundwater ordinances or joint powers agreements; and, 3) court adjudications. a) Special districts with groundwater management authority. Greater authority to manage groundwater has been granted to a small number of local agencies or districts created through a Special Act of the Legislature. Currently, 13 local agencies have specific groundwater management authority as a result of being special act districts. The specific authority of each agency varies, but they can generally be grouped into two categories: 1) the agency has authority to limit export and extraction (upon evidence of overdraft or threat of overdraft); or, 2) the agency does not have authority to limit extraction but the users in the basin are required to report extractions to the agency (who can levy fees from groundwater management or AB 2453 Page 9 water supply replenishment). The Special Act special districts with groundwater management authority include the following: Desert Water Agency, Fox Canyon Groundwater Management Agency, Honey Lake Groundwater Management District, Long Valley Groundwater Management District, Mendocino City Community Services District, Mono County Tri-Valley Groundwater Management District, Monterey Peninsula Water Management District, Ojai Groundwater Management Agency, Orange County Water District, Pajaro Valley Water Management Agency, Santa Clara Valley Water District, Sierra Valley Water District, and Willow Creek Groundwater Management Agency. Special Act special districts are located in the Water Appendix. b) Groundwater ordinances and groundwater management plans. Groundwater management can also be achieved through local groundwater ordinances. According to the Department of Water Resources (DWR), more than 27 counties have adopted groundwater ordinances. These counties include: Alpine, Butte, Calaveras, Colusa, Fresno, Glenn, Imperial, Inyo, Kern, Lake, Lassen, Madera, Mendocino, Modoc, Mono, Monterey, Napa, Sacramento, San Benito, San Bernardino, San Diego, San Joaquin, Shasta, Sierra, Siskiyou, Stanislaus, Tehama, Tuolumne, Ventura and Yolo. Another option for local agencies to manage groundwater is through a groundwater management plan. AB 3030 (Costa), Chapter 708, Statues of 1992, the California Groundwater Management Act, was passed by the Legislature in 1992. It was a significant addition to the groundwater management authorities granted under the Water Code in that it greatly increased the number of local agencies authorized to develop GMPs and set forth a common framework for management by local agencies throughout California. Adoption of a GMP was encouraged under AB 3030 but not required. SB 1938 (Machado), Chapter 603, Statutes of 2002, took a further step when it set out certain specified components for GMPs and required any local agency seeking state funds administered by DWR to meet those requirements. Subsequent bond initiatives have also made an adopted GMP an eligibility criterion for receiving groundwater project and program funds. Since its passage, 149 agencies have AB 2453 Page 10 adopted GMPs in accordance with AB 3030. Other agencies have begun the process. As mentioned above, in some basins, groundwater is managed under other statutory or judicial authority. The California Groundwater Management Act (Act), as amended, provides a systematic procedure to develop a GMP and requires the inclusion of certain minimum components. These include basin management objectives as well as monitoring and management of groundwater levels, inelastic surface subsidence, and changes in surface flow and surface quality that directly affect groundwater levels or quality or are caused by groundwater pumping. The Act also requires a description of how recharge areas identified in the plan substantially contribute to the replenishment of the groundwater basin. In addition, suggested optional components that might be relevant for a particular groundwater basin are listed. c) Court adjudication. According to DWR, another form of groundwater management in California is through court adjudication. In basins where a lawsuit is brought to adjudicate the basin, the groundwater disputes of all the overliers and appropriators are determined by the court. The court also decides: 1) who the extractors are; 2) how much groundwater those well owners can extract; and, 3) who the Watermaster will be to ensure that the basin is managed in accordance with the court's decree. 5)What is a California Water District and how is it formed? a) Powers. A California Water District may exercise powers that are enumerated in Division 13 of the Water Code, including the acquisition and operation of works for the production, storage, transmission, and distribution of water for irrigation, domestic, industrial and municipal purposes, and any drainage or reclamation works connected with such undertakings. A California Water District may also acquire and operate facilities and services for the collection, treatment, and disposal of sewage, waste, and storm waters. b) Governing body and election to the Board. The governing body of a California Water District is generally composed AB 2453 Page 11 of a five-member elected Board of Directors, each of whom must be a landowner within the district. At any time after four years from the date of the district's formation, the board may, by resolution, increase the number of directors from 5 to 7, 9, or 11. In general, the election for directors is based on one vote for each dollar's worth of land to which he or she holds title. However, if an equalized assessment book of the district does not exist, then each voter shall be entitled to cast one vote for each acre owned by the voter within the district. c) Formation of a California Water District. The formation of a California Water District is initiated by petition to LAFCO by holders of title to a majority of land (based on acreage) that is capable of using water beneficially for irrigation, domestic, industrial or municipal purposes, and that can be serviced from common sources of supply and by the same system of works. LAFCO then considers the application for formation. If approved, a protest process would be conducted, and, if successful, an election would then be conducted. 6)California Water District vs. this bill. a) Powers. This bill does not specify which powers the District will have under Division 13 of the Water Code. Instead, those powers will be determined through the LAFCO process. The bill does, however, grant specific authority to the District related to AB 3030 and groundwater management plans. b) Governing body and election to the Board. The bill specifies that the governing board will consist of nine directors, all landowners. The election for the directors is based on one vote for each acre owned by the voter within the District, with respect to the six directors that will be elected by landowners. The other three directors will be elected by registered voters at large (meaning one vote per person). c) Formation. The bill does not modify any provisions related to formation in the California Water District Act. The SLO LAFCO would be involved in the formation process and once a petition is filed, they would consider the AB 2453 Page 12 petition and then undertake a protest process, and, if successful, an election would be conducted pursuant to the provisions regarding formation elections in the California Water District Act. 7)SLO LAFCO. According to the SLO LAFCO, a Notice of Intent to circulate a petition has not been submitted, meaning that there has been no petition filed to form this District. According to the SLO LAFCO, the petition is on hold until there is certainty that the governance and elections structure in this bill will be chaptered into law. 8)Groundwater management legislation and Governor's budget trailer bill. There are currently two legislative efforts to address better local groundwater management in the Legislature, and a proposal contained in the Governor's proposed budget released in January of 2014. Both bills represent initial groundwater management concepts developed after extensive stakeholder processes. a) AB 1739 (Dickinson) of 2014 requires sustainable groundwater management in all groundwater subbasins determined by DWR to be at medium to high risk of significant economic, social and environmental impacts due to an unsustainable and chronic pattern of groundwater extractions exceeding the ability of the surface water supplies to replenish the subbasin. The bill passed the Assembly Water, Parks and Wildlife Committee on April 29, 2014, on a 9-5 vote and is pending in the Assembly Appropriations Committee. b) SB 1168 (Pavley) of 2014 establishes the statutory framework for a new Sustainable Groundwater Management Act. The bill states the intent of the Legislature that all groundwater basins and subbasins be managed sustainably by local entities pursuant to an adopted sustainable groundwater management plan; attention to develop, adopt, and implement a sustainable groundwater management plan be directed first to high and medium priority groundwater basins and subbasins; and, upon a finding of compelling state interest, the state would have recourse to cause a sustainable groundwater management plan to be developed, adopted, and implemented where local interests either cannot or will not do so themselves. The bill passed the AB 2453 Page 13 Senate Natural Resources and Water Committee on April 22, 2014, on a 7-2 vote and is currently pending in the Senate Appropriations Committee. c) Governor's proposed budget. The January proposed budget included $1.9 million General Fund and 10 positions for the State Water Resources Control Board (Water Board) to act as a backstop when local or regional agencies are unable or unwilling to sustainably manage groundwater basins. The Water Board will protect groundwater basins at risk of permanent damage until local or regional agencies are able to do so. 9)Landowner qualification. The California Constitution provides that the right to vote or serve in elected office may not be conditioned on a landownership qualification. However, in 1973, the U.S. Supreme Court ruled in Salyer Land Co. v. Tulare Water District that the California statute requiring a landownership qualification did not violate the Equal Protection Clause of the U.S. Constitution. The court ruled there was no violation because those districts do not exercise normal governmental authority and their activities disproportionally affect landowners. The California Supreme Court, in Choudhry v. Free (1976) 17 Cal. 3d 660, declared unconstitutional a section of the Irrigation District Law requiring potential board candidates to be landowners. The court ruled that this section was unconstitutional as applied to the Imperial Irrigation District and its board of directors, the real parties in interest, because it deprived the irrigation candidates and voters, including petitioner voters, of equal protection. The court's opinion gave two reasons it did not extend its ruling to other irrigation districts. First, the Imperial Irrigation District was singular at that time among irrigation districts in that it had more residents, land, and employees than any other irrigation district and it was providing retail water service. Second, neither respondents nor real parties in interest had opposed petitioners' claim that Water Code Section 21100 was unconstitutional, and numerous irrigation districts in the state that would have been affected by a finding of unconstitutionality did not have the opportunity to present their views or offer evidence regarding the characteristics and operation of irrigation districts in general. AB 2453 Page 14 The Teamsters Public Affairs Council raises the issue that this bill's proposed governance structure for the District is unconstitutional and undemocratic and argues that "all eligible voters within the District should be able to run for office, regardless of whether they are property owners." Additionally, they argue that "the control of a public resource like groundwater that can be used for drinking water, irrigation, industrial or other purposes is clearly a matter of vital concern to all citizens in the region, regardless of whether they own property." 10)Policy considerations. a) Alternatives. There are many other ways for local agencies and communities to manage groundwater, including the formation of a special act special district, adoption of groundwater ordinances or GWPs, and other types of special districts that have groundwater management authority. Each of these options has been tried and tested throughout California. The Legislature may wish to ask the author why a California Water District, with this governance structure, presents the best option for the management of Paso Robles groundwater basin, and what other options were considered throughout the stakeholder conversations. b) Powers of the District. How will the District manage groundwater and what powers, of those enumerated in the California Water District Act, would the proponents of the District like the District to exercise? c) Boundaries. What will the boundaries of the District be? Will the entire region overlaying the groundwater basin be included? What is the composition of the area within the boundaries of the District - largely agricultural, residential, etc.? 11)Arguments in support. Supporters argue that this bill contains a unique, equitable representation that continues and promotes cooperation among residents, and prevents a dominant faction. Supporters believe that this approach reflects the agreement that was reached locally and that the voting AB 2453 Page 15 structure elegantly allows for representation of the different interests of the Basin, grouping like with like, and preventing any single landowner or group of landowners from controlling the seats in their category or the board as a whole. Additionally, supporters argue that this bill allows further scrutiny by SLO LAFCO and the opportunity for the public to weigh in at that forum as well. 12)Arguments in opposition. Opponents of the bill argue that the governance and elections structure in the bill favors large landowner control by allowing the formation vote and election of directors to be based on acreage, rather than one owner, one vote. Opponents argue that the better approach is a voting system where residents are treated equally regardless of the amount of lands owned and could be achieved by a one-voter, one-vote system. Opponents also question the need for this type of District and think that this bill harms water rights. Analysis Prepared by : Debbie Michel and Misa Yokoi-Shelton / L. GOV. / (916) 319-3958 FN: 0003384