BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1390


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          Date of Hearing:  April 14, 2015


                  ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE


                                 Marc Levine, Chair


          AB 1390  
          (Alejo) - As Amended March 26, 2015


          SUBJECT:  Groundwater:  adjudication


          SUMMARY:  Streamlines legal processes used during a legal action  
          to assign rights in a groundwater basin and, upon a final  
          judgment, makes the adjudicated basin exempt from all provisions  
          of the Sustainable Groundwater Management Act (SGMA) except  
          annual court-mandated reporting.   Specifically, this bill:  


          1)Creates a new chapter in the Code of Civil Procedure related  
            to groundwater rights.


          2)Finds and declares the benefits of a streamlined groundwater  
            adjudication process.


          3)Defines various terms.


          4)Establishes special procedures that govern all groundwater  
            adjudication actions, with exceptions, and allows a court to:


             a)   Determine all rights in a groundwater basin;








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             b)   Declare the priority, amount, purpose of use, extraction  
               location, and place of use of the groundwater, together  
               with other relief or a "physical solution" to conflicts.


             c)   Expedite resolution, including encouraging the parties  
               to use a Groundwater Sustainability Plan (GSP) developed  
               pursuant to SGMA as the basis of a stipulated judgment  
               setting forth a physical solution for management of the  
               basin.


          5)Specifies that a claimant shall name as defendants in an  
            adjudication action: counties, special districts, public water  
            systems, and small water systems.


          6)Specifies duties of a plaintiff (the party bringing the suit)  
            to serve (meaning provide notice of the action to) all parties  
            with a potential interest, including appearing at any relevant  
            boards of supervisors and mailing notices of the action, as  
            specified, to all landowners in the basin as an enclosure with  
            their next property tax statement and including with that  
            notice a "form answer" for parties wishing to participate.


          7)Allows any party owning land overlying the basin to become a  
            party.


          8)Allows a court to hold a preliminary hearing to determine if  
            the case should proceed.


          9)Requires the court, upon motion of any party, to transfer the  
            adjudication to a neutral county if a local agency is a party.









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          10)Limits judge disqualifications for the adjudication.


          11)Defines groundwater adjudications as complex civil matters.


          12)Encourages electronic service of pleadings.


          13)Allows the court to convene a case management conference, as  
            specified, and take actions to organize the case including  
            dividing it into discrete phases.


          14) Specifies that the initial basin boundaries for purposes of  
            the groundwater adjudication shall be the same as those found  
            in the Department of Water Resources publication Bulletin 118,  
            but allows the court to adjust the boundaries.


          15)Requires that parties initially and expeditiously disclose  
            specifics regarding their preceding 10 years of groundwater  
            use; any other relevant, associated, water use; and, the  
            contact information of persons who could verify.  Encourages  
            information in electronic form.


          16)Allows the court to require any supplemental disclosures.


          17)Specifies requirements for expert witness identification,  
            qualifications, subject matter, and reporting, including  
            disclosing amount of compensation.


          18)Allows a court to impose lesser requirements on expert  
            witnesses uses for impeachment or rebuttal.









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          19)Allows a court to require witnesses submit written testimony  
            and species certain content and timing for written testimony.


          20)Allows the court to establish a list of special masters;  
            appoint a special master in the adjudication in order to  
            facilitate and mediate include creating a technical committee  
            of the parties, the parties' representatives, or both; and,  
            sets out special masters' duties.


          21)Sets out duties for a technical committee to an adjudication,  
            if created.


          22)Applies Evidence Code rules, as specified, to all mediations,  
            settlement conferences, and other out-of-court negotiations.


          23)Makes it the policy of the state, and sets forth procedures,  
            to encourage settlement and compromise including granting the  
            court broad powers to stay an action (pause it).


          24)Allows a party, or group of parties, that is more than 50  
            percent of all named parties in the adjudication and who hold  
            at least 75% of the groundwater rights to enter into a  
            proposed stipulated judgment and binds the court to impose any  
            physical solution from that settlement.


          25)Exempts the basin subject to an adjudication order or final  
            judgment from all requirements of SGMA except minimal  
            reporting, to the extent feasible.


          EXISTING LAW:  









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          1)Allows a party with rights to a groundwater basin to initiate  
            a lawsuit so the court can decide the groundwater rights of  
            all parties overlying the basin and others who may export  
            water out the basin.

          2)Empowers the court to decide who the extractors are, how much  
            groundwater those well owners can extract, and who will ensure  
            that the basin is managed according to the court's decree  
            (generally called a "watermaster"), including periodically  
            reporting to the court.

          3)Requires the Department of Water Resources (DWR) prioritize  
            California's groundwater basins in order to focus state  
            resources.  The basins are prioritized as either high, medium,  
            low, or very low based on a combination of factors including,  
            but not limited to, overlying population, level of dependence  
            for urban and agricultural water supplies, and impacts on the  
            groundwater from overdraft, subsidence, saline water  
            intrusion, and water quality degradation.

          4)Requires, by June 30 2017, the formation of one or more  
            Groundwater Sustainability Agencies (GSAs) in all high and  
            medium priority basins subject to the Sustainable Groundwater  
            Management Act (SGMA).

          5)Requires, by January 31, 2020, that GSAs in all high and  
            medium priority basins subject to a chronic condition of  
            overdraft develop and adopt Groundwater Sustainability Plans  
            (GSPs) that provide for the sustainable management of the  
            groundwater basin, as defined.

          6)Requires, by January 31, 2022, that GSAs in all other high and  
            medium priority basins subject to SGMA develop and adopt GSPs.

          7)Allows the State Water Resources Control Board (State Water  
            Board) to impose an interim plan for management of a  
            groundwater basin if no GSA is formed by the deadline, no GSP  
            is adopted by the appropriate deadline, or a GSP is adopted  








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            which DWR deems insufficient and where the basin is in a  
            chronic condition of overdraft or in a condition where  
            groundwater pumping is causing a significant depletion of  
            interconnected surface waters. 



          COMMENTS:  This bill addresses the legitimate need to provide a  
          more streamlined groundwater adjudication process but might  
          create a separate legal path for groundwater management that  
          conflicts with and undermines SGMA if the two are not  
          reconciled.  This bill is dual referred to the Assembly  
          Committee on Judiciary. For that reason, this analysis only  
          covers this bill's general and SGMA-related ramifications for  
          groundwater management in California.  


          The adoption of SGMA last year was a historic effort that only  
          took effect on January 1, 2015 - a little over four months ago.   
          It has tight timelines for the formation of GSAs and the  
          formation of GSPs and it will take many years and substantial  
          local investments for GSPs to be developed and implemented.  The  
          primary difference between SGMA and previous groundwater  
          statutes in California is that SGMA has a sustainability  
          requirement, a 50 year planning horizon, and mandates that  
          sustainability be reached (with certain exceptions) in 20 years.  
          It also empowers locals to charge fees for groundwater  
          management, require groundwater reporting, and enforce their  
          local requirements.  If locals are unable or unwilling to come  
          together as a GSA or develop a plan that meets the acts  
          requirements, the State Water Board can declare a basin  
          probationary and impose an interim plan until the locals can  
          act. 


          1.  The need to streamline groundwater adjudications is  
          well-documented










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          As the Water Education Foundation, a nonprofit nonpartisan  
          educational entity states succinctly in its definition of  
          adjudication: "When multiple parties withdraw water from the  
          same aquifer, groundwater pumpers can ask the court to  
          adjudicate, or hear arguments for and against, to better define  
          the rights that various entities have to use groundwater  
          resources.  This is known as groundwater adjudication.  Through  
          adjudication, the courts can assign specific water rights to  
          water users and can compel the cooperation of those who might  
          otherwise refuse to limit their pumping of groundwater.   
          Watermasters are typically appointed by the court to ensure that  
          pumping conforms to the limits defined by the adjudication."

          Determining who has groundwater rights that could be affected by  
          an adjudication and the scope of those rights is difficult as  
          there are no state law requirements to report groundwater  
          withdrawals.  State law gives every overlying property owner a  
          potential right in an unadjudicated groundwater basin.  So  
          noticing all of those parties that there will be an adjudication  
          action can be lengthy and expensive.  There are also technical  
          disagreements among parties, including as to the historic  
          groundwater use which could affect the scope of one's rights.


          On November 20, 2014 the Senate Natural Resources and Water  
          Committee held an information hearing entitled Resolving  
          Disputes Regarding Groundwater Rights: Why Does It Take So Long  
          and What Might Be Done To Accelerate The Process? In that  
          hearing expert observations from Third District Court of Appeals  
          Judge Ronald B. Robie and others were presented that raised many  
          of the issues discussed above.  In addition, the Antelope Valley  
          groundwater adjudication provided an example.  As Fiona Smith  
          reports in the Daily Journal article State Looking to Speed  
          Groundwater Lawsuits (October 29, 2014), the Antelope Valley  
          groundwater basin adjudication "has been sitting in a trial  
          court for 15 years. The case is enormous, involving a multitude  
          of public agencies and landowners large and small who hold  
          groundwater pumping rights.  Parties include cities, farmers,  








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          the federal government, and a class of 85,000 property owners  
          who hold groundwater rights but who have never pumped water.   
          There are 9,404 docket entries in the case so far and more than  
          100 lawyers listed on the case."  She also references the Santa  
          Maria groundwater basin, in Santa Barbara and San Luis Obispo  
          counties, as an adjudication that "took 15 years to work through  
          the trial and appellate courts, and it is still not completely  
          resolved.  That case involved thousands of parties and has cost  
          tens of millions of dollars, said Henry S. Weinstock, a partner  
          at Nossaman LLP who worked on the case."


          This bill tries to address some of the delays in groundwater  
          adjudications by creating some standardized forms, processes,  
          and requirements.  Importantly, it wrestles with the notice  
          issue utilizing multiple approaches including that notice can be  
          made on property tax bills.  This bill wrestles with the  
          groundwater history issue by requiring that parties disclose  
          specifics regarding their preceding 10 years of groundwater use  
          up front.  This bill also encourages information being provided  
          in electronic form, sets out standards for the role of technical  
          experts, and encourages settlement.


          2. Future groundwater adjudications should be harmonized with  
          SGMA


          After entry of final judgment in a groundwater adjudication,  
          this bill makes the adjudicated basin exempt from SGMA except  
          for requiring certain reporting information, to the extent  
          available.  That is the requirement for adjudications which  
          existed prior to the enactment of SGMA but it is not analogous.   
          Prior adjudications were listed and excluded from SGMA to make  
          it clear that the statute was not retroactive.  It would be  
          unfair to re-open prior adjudications, which as discussed above  
          are lengthy and complex, and subject them to a standard that was  
          not in effect at the time the adjudication decision was  
          rendered.  








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          The same is not true of adjudications on a going-forward basis.   
          There is now a new sustainability standard for basin management.  
          SGMA defines sustainable groundwater management as the  
          management and use of groundwater in a manner that can be  
          maintained during the planning and implementation horizon  
          without causing undesirable results.  It then goes on to define  
          undesireable results as the following effects caused by  
          groundwater conditions occurring throughout the basin:


            (1) Chronic lowering of groundwater levels indicating a  
            significant and unreasonable depletion of supply if continued  
            over the planning and implementation horizon?. 


            (2) Significant and unreasonable reduction of groundwater  
            storage.


            (3) Significant and unreasonable seawater intrusion.


            (4) Significant and unreasonable degraded water quality,  
            including the migration of contaminant plumes that impair  
            water supplies.


            (5) Significant and unreasonable land subsidence that  
            substantially interferes with surface land uses.


            (6) Surface water depletions that have significant and  
            unreasonable adverse impacts on beneficial uses of the surface  
            water.


          Pre-SGMA groundwater adjudications did not include the new  








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          standard because it didn't exist.  That means that the body of  
          case law surrounding adjudications, and which some attorneys  
          will attempt to rely on, does not address or meet sustainability  
          goals.  This bill references SGMA and allows a court to consider  
          the Act, but it does not mandate that an adjudication action be  
          consistent.  It says that a GSP may serve as the basis of a  
          stipulated judgment, but it doesn't require it.  As stated  
          above, it then makes the adjudicated basin exempt from the Act.   
           


          This has the potential to de-stabilize local agencies efforts to  
          comply with SGMA.  At every turn where locals attempt to develop  
          a plan provision that is disliked but necessary - such as  
          charging fees or limiting withdrawals in any way - a  
          dissatisfied minority could pull the rug out from under the plan  
          development by filing an adjudication action and thus enveloping  
          the future of the plan in a cloud of uncertainty as the  
          subsequent action could supersede all SGMA requirements.  This  
          is compounded by the fact that locals will still have to develop  
          and implement SGMA plans, even if an adjudication is pending.   
          The Act was purposely drafted that way so that entities could  
          not throw themselves into decades-long adjudications as a way of  
          circumventing sustainable basin management.


          Supporting arguments:  The author states that when Governor  
          Brown signed SGMA last year he acknowledged the need to develop  
          a streamlined groundwater adjudication process.  The author adds  
          that this bill is "meant to address the time sinks that occur in  
          current groundwater adjudications by clarifying the processes  
          that must be followed.  The author states that streamlining  
          adjudications "will ease the burden on the courts, provide the  
          parties with the most efficient resolution possible, protect  
          individual rights, all while appropriately integrating  
          adjudication actions with SGMA."  Other supporters state that  
          this bill will address particular challenges that exist in  
          groundwater adjudications including determination of venue,  
          identification of basin boundaries, disqualification of judges,  








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          notice and service of parties, discovery and the ability of the  
          parties to reach settlement." Supporters add this bill will do  
          that "without impacting due process or changing California water  
          law."


          Opposing arguments:  Opponents advise the worked diligently to  
          ensure that the historic groundwater legislation that passed in  
          2014 protects communities whose water supplies are or will be  
          threatened by the unsustainable management of California's  
          groundwater resources.  Opponents state that while they  
          "appreciate the need to streamline the adjudication process and  
          support the goals of the bill, it is imperative that the rights  
          of underrepresented and disadvantaged communities are adequately  
          represented in the process."  Opponents state that the  
          legislation does not adequately address those needs unless  
          amended to provide for attorney's fees and costs, ensure that  
          appropriate notices are translated and that the adjudication  
          will not delay implementation of SGMA's goals.


          Committee staff suggests this bill be amended to conform with  
          SGMA


          SGMA currently requires that a future adjudication be submitted  
          to DWR for an evaluation as to whether it could serve as a  
          functional equivalent to a GSP.  It is only a potential conflict  
          of laws if the way that a future adjudications and SGMA  
          harmonize is not spelled out.   If the adjudication is designed  
          to be functionally equivalent to a GSP, there will be no  
          conflict.  Committee staff suggests, on a going-forward basis,  
          that the author revise the bill to make clear that future  
          adjudications will meet SGMA sustainability requirements and  
          that future adjudications will not be automatically  
          grandfathered in under the statute.


          Related legislation








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          SB 226 (Pavley) also seeks to streamline groundwater  
          adjudication processes and timelines but as a new chapter under  
          SGMA. 


          Other SGMA-related legislation


          In addition to SB 226, mentioned above, there are 13 other bills  
          in the Legislature proposing changes to SGMA and its related  
          statutes.  The other bills are: AB 452 (Bigelow) prohibiting the  
          State Water Board from using Water Rights Fund monies for SGMA  
          enforcement, except funds collected from SGMA enforcement; AB  
          453 (Bigelow) allowing groundwater management plans adopted  
          prior to SGMA to be amended and extended; AB 454 (Bigelow)  
          adding one year to the deadline to form a GSA or adopt a GSP; AB  
          455 (Bigelow) requiring the Judicial Council to come up with a  
          270-day process for completing all California Environmental  
          Quality Act (CEQA) legal challenges to SGMA projects; AB 617  
          (Perea) adding mutual water companies to GSAs; AB 938 (Salas)  
          making minor technical changes to SGMA; AB 939 (Salas) changing  
          the time period for providing technical data upon which a fee is  
          based from 10 days to 20 days before the meeting to adopt the  
          fee;  AB 1242 (Gray) prohibiting the State Water Board from  
          setting in-stream flows standards unless the Board mitigates for  
          the potential local response of increased groundwater use; AB  
          1243 (Gray) rebating 50% of all SGMA enforcement penalties back  
          to local governments and water districts for groundwater  
          recharge projects; AB 1531 (Environmental Safety and Toxic  
          Materials Committee) making minor technical changes to SGMA; SB  
          13 (Pavley) making noncontroversial technical cleanup changes to  
          SGMA; and SB 487 (Nielsen) exempting SGMA projects from CEQA.


          










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          REGISTERED SUPPORT / OPPOSITION:




          Support


               Agricultural Council of California
               Almond Hullers and Processors   Association
               Association of California Egg Farmers
               California Association of Wheat Growers
               California Bean Shippers Association
               California Cattlemen's Association
               California Chamber of Commerce
               California Citrus Mutual
               California Cotton Ginners Association
               California Cotton Growers Association
               California Dairies Inc.
               California Farm Bureau Federation
               California Fresh Fruit Association
               California Grain and Feed Association
               California Pear Growers Association
               California Seed Association
               California Tomato Growers Association
               Pacific Egg and Poultry Association
               Western Agricultural Processors Association
               Western Growers  


          AssociationOpposition


               Clean Water Action (unless amended)
               Community Water Center (unless amended)
               Sierra Club California (unless amended)








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          Analysis Prepared by:Tina Cannon Leahy / W., P., & W. / (916)  
          319-2096