BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 28, 2015


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


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


                              As Proposed to be Amended


          SUBJECT:  Groundwater:  adjudication


          KEY ISSUES:  


          1)How many lawyers does it take to adjudicate a groundwater  
            basin?


          2)Should procedures for SEEKING AND obtaining a basin-wide  
            groundwater ADJUDICATION BE streamined, so song as the new  
            procedures respect due process rights of all affected persons?  



                                      SYNOPSIS


          According to the author, this bill will "streamline" the  
          procedures for adjudicating a groundwater basin.  Last year's  
          Sustainable Groundwater Management Act (SGMA) requires local  
          agencies to develop sustainable basin-wide groundwater plans by  








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          2020 (or 2022 in some cases). If the local agencies fail to  
          develop a plan, one will be developed by the State Water  
          Resources Control Board.  During last year's Senate Natural  
          Resources Committee hearings on groundwater management,  
          California Court of Appeal Judge Ronald Robie suggested that  
          even with comprehensive sustainable management plans, the state  
          would still need to streamline its groundwater adjudication  
          procedures.  Governor Brown made the same point when he signed  
          the SGMA legislation.   In that spirit, this bill would make  
          several changes in the manner in which basin-wide adjudications  
          are initiated, noticed, and conducted.  Specifically, the bill  
          hopes to make the process more efficient by, among other things,  
          changing notice requirements, requiring a preliminary hearings,  
          making greater and earlier use of case management conferences,  
          limiting motions to change venue or disqualify a judge,  
          maximizing the use of electronic service, appointing special  
          masters, and having all adjudications presumptively designated  
          as "complex litigation."  The bill in print includes a provision  
          that would exempt a basin adjudicated under this bill from SGMA.  
           However, because the bill's purpose is to streamline the  
          adjudication process without impacting SGMA, the author will  
          amend the bill in this Committee to remove that provision.  The  
          analysis reflects the bill as proposed to be amended.  The bill  
          is sponsored by the California Farm Bureau Federation and  
          supported by a coalition of business and farm organizations.   
          The Sierra Club, Clean Water Action, and the Community Water  
          Center, and other organizations either oppose or express deep  
          concerns about the bill. The proposed amendment appears to  
          address most, but not all, of those concerns.  This bill passed  
          out of the Assembly Water, Parks, and Wildlife Committee on a  
          14-0 vote.  


          SUMMARY:  Streamlines procedures used in a legal action to  
          obtain a basin-wide adjudication of groundwater rights.  
          Specifically, this bill:  


          1)Makes findings and declarations on the need for a more  








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            streamlined groundwater adjudication process and states  
            legislative intent to ensure that the judicial process is not  
            used to unnecessarily delay or thwart the goal of managing  
            groundwater in a sustainable manner. 


          2)Defines "adjudication action" to mean an action filed in  
            superior court to determine the rights to extract groundwater  
            within a basin, including, but not limited to, actions to  
            quiet title or an action brought to impose a physical  
            solution. 


          3)Establishes special procedures that govern all groundwater  
            adjudication actions and generally allows a court to do the  
            following: determine all rights in a groundwater basin;  
            declare the priority, amount, purpose of use, extraction  
            location, and place of use of the groundwater; impose a  
            "physical solution" to conflicts; expedite resolution; and  
            encouraging parties to use a Groundwater Sustainability Plan  
            (GSP) developed pursuant to SGMA as the basis of a stipulated  
            judgment.


          4)Requires a plaintiff bringing a basin adjudication action to  
            name and serve as defendants all counties, special districts,  
            public water systems, and small water systems within the  
            basin; publish a specified notice; and personally appear at a  
            meeting of the relevant boards of supervisors to announce  
            filing of the action.  Specifies that, together with the  
            filing of the complaint, the plaintiff shall draft a specified  
            notice and form answer to be served upon all property owners  
            within the basin and, after the court authorizes the action to  
            proceed, the plaintiff shall have the assessor send the notice  
            and form answer to the owners with their property tax  
            statements. 


          5)Requires the court to hold a preliminary hearing to determine  








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            if the case should proceed.  After the preliminary hearing the  
            court shall either issue an order declaring that the case is  
            an adjudication action subject to the provisions of this bill  
            or dismiss the action without prejudice.  Specifies that the  
            court may hear expert or lay testimony and allow expedited  
            discovery. 


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


          7)Limits judge disqualifications for the adjudication.


          8)Defines groundwater adjudications as complex civil matters.


          9)Encourages electronic service of pleadings.


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


          11) 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.


          12)Requires parties to early and expeditiously disclose, among  
            other things, information regarding their preceding 10 years  
            of groundwater use and any other relevant, associated, water  
            use.


          13) Sets forth requirements for expert witness identification,  








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            qualifications, subject matter, and reporting and allows a  
            court to require witnesses submit written testimony, as  
            specified. 


          14)Allows the court to appoint a special master in the  
            adjudication and sets forth the special master's duties,  
            including fact-finding, conducting mediation and settlement,  
            and providing draft reports to all parties. 


          15) Provides that if a party, or group of parties, submit a  
            settlement that is supported by more than 50% of the named  
            parties and those holding title to at least 75% of groundwater  
            production within the last 10 years, then the court shall  
            approve and give effect to the settlement.


          EXISTING LAW:  


          1)Declares that because of the conditions prevailing in this  
            State the general welfare requires that the water resources of  
            the state shall be put to beneficial use to the fullest extent  
            to which they are capable, and that the waste or unreasonable  
            use of water be prevented, and that the conservation of such  
            waters is to be exercised with a view to the reasonable and  
            beneficial use thereof and in the interest of the people and  
            the public welfare. (California Constitution, Article X  
            Section 2.) 

          2)Requires local agencies, under the Sustainable Groundwater  
            Management Act (SGMA), to form Groundwater Sustainability  
            Agencies (GSAs) by June 30, 2017, in all high and medium  
            priority basins that have not been adjudicated.  Requires GSAs  
            in all high and medium priority basins, as defined, to develop  
            and adopt Groundwater Sustainability Plans (GSPs) that provide  
            for the sustainable management of the groundwater basin by  
            January 31, 2020, or January 31, 2022, as specified.  Allows  








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            the State Water Resources Control Board to impose an interim  
            plan for groundwater management if no GSA is formed by the  
            deadline, no GSP is adopted by the appropriate deadline, or a  
            GSP is adopted which the Department of Water Resources deems  
            insufficient. (California Water Code Section 10720 et seq.) 

          FISCAL EFFECT:  As currently in print this bill is keyed fiscal.  



          COMMENTS:  How many lawyers does it take to adjudicate a  
          groundwater basin?  This is not the start of a joke.  For  
          example, efforts to adjudicate groundwater rights in the  
          Antelope Valley groundwater basin have dragged on for fifteen  
          years. The case involves multiple cities, public agencies, and  
          85,000 property owners who potentially hold groundwater rights  
          in the basin.  And, of course, more than 100 lawyers have been  
          listed on the case. This last statistic may hearten young  
          lawyers facing a bleak job market, but it is probably not the  
          most efficient way to make policy in a state with too little  
          water, too many people, and unpredictable yet inevitable periods  
          of drought.  


          According to the author, this bill will "streamline" procedures  
          for adjudicating water rights in a groundwater basin.  Among  
          other things, the bill changes notice requirements, requires a  
          preliminary hearings, encourages initial disclosures to avoid  
          drawn out discovery, makes greater and earlier use of case  
          management conferences, limits motions to change venue or  
          disqualify a judge, maximizes the use of electronic service,  
          appoints special masters, and makes all basin-wide adjudications  
          presumptively designated as "complex litigation."


          Sustainable Groundwater Management Act (SGMA):  For the past 100  
          years California has had a water commission (currently called  
          the State Water Resources Control Board) that uses a permit  
          system to regulate surface waters, but it lacked a comprehensive  








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          regulatory approach for groundwater regulation until the passage  
          of SGMA last year.  Instead of creating a state board or  
          commission, as the Legislature did in 1913 to regulate surface  
          waters, SGMA requires local agencies to develop "groundwater  
          sustainability agencies" (GSAs) that conform with state  
          standards, with the additional caveat that if the locals fail to  
          develop a groundwater plan the State Water Resources Control  
          Board (SWRCB) will do if for them.  SGMA applies to those water  
          basins designated as either "high" or "medium" priority basins  
          subject to a chronic overdraft.  As such, SGMA only applies to  
          127 of the state's 515 water basins.   Under the timeline  
          established by SGMA, designated local entities in a given basin  
          must create Groundwater Sustainability Agencies (GSAs) by June  
          30 of 2017, and the GSAs in turn must develop Groundwater  
          Sustainability Plans (GSPs) by January 31. 2020, or January 31,  
          2022, depending upon the severity of overdraft.  If the local  
          agencies fail to form a GSA, if the GSA fails to adopt a GSP, or  
          if the state does not approve the plan, then SWRCB will step in  
          and develop and implement an interim plan.  The primary purpose  
          of the GSP is to ensure groundwater sustainability, whether by  
          limiting pumping or requiring more efficient uses, so that the  
          amount of water pumped out of the basin is less than or equal to  
          the rate of water returned by natural or artificial recharge. 


          Existing Adjudication Procedures: Prior to SGMA groundwater  
          rights were regulated, if at all, by "Watermasters" appointed by  
          the courts to oversee a court-ordered adjudication.  According  
          to the testimony offered last year by Court of Appeal Judge  
          Ronald Robie during the Senate Natural Resource hearings, an  
          adjudication begins when a person brings a court action, often  
          to quite title in his or her groundwater rights and ask the  
          court to either limit pumping or impose a "physical solution"  
          that will allocate and manage water uses in order to prevent  
          overdraft.  As Judge Robie noted, bringing a lawsuit can be a  
          long and complicated process because there may be thousands of  
          rights holders within a basin, each if with different kinds of  
          rights.  Under California groundwater law, a person can have  
          "overlying rights" (by virtue of owning land over the  








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          groundwater), "appropriative rights" (by appropriating surplus  
          groundwater and transferring it to non-overlying lands), or  
          "prescriptive rights" (by adversely appropriating non-surplus  
          water for a specified period of time without a rights holder  
          seeking to stop it).  Regardless of the type of right claimed,  
          the amount of water is generally based upon the right holder's  
          historic usage.  Determining such rights depends upon any number  
          of factual questions, which may or may not be well-documented,  
          such as how much water a person put to reasonable and beneficial  
          use in past years, the timing of an appropriation, whether the  
          water appropriated was surplus or non-surplus, and whether one  
          claiming a prescriptive right actually appropriated the water  
          "adversely" and met the statutory time period.  To help the  
          court determine these rights, the parties must usually engage in  
          extensive pleading and discovery. 


          In addition to determining complex claims to individual water  
          rights, the court must also resolve questions that involve  
          highly technical matters, such as defining the boundaries of the  
          basin or determining the "annual safe yield" of the basin, all  
          of which may require examination of extensive government and  
          scientific reports.  Once these questions have been resolved,  
          the court must then develop a plan to manage the adjudicated  
          basin.  Implementing the plan often entails appointment of a  
          Watermaster to manage the basin and allowing the court to retain  
          continuing jurisdiction.  Another possibility is that the  
          parties will settle before any court order.  The court-approved  
          settlement similarly sets out a management plan and, if  
          necessary, imposes a physical solution.


          Streamlining the Existing Adjudication Process:  Echoing the  
          concerns of Judge Robie, the author and sponsor of this bill  
          point to a similar list of problems and then some: the need to  
          determine basin boundaries; the need to serve each individual  
          owner in the basin; the ability of a party to delay the action  
          by endless motions; delay in production of evidence during  
          discovery, especially historical groundwater pumping data and  








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          historical use; and the cost in time and money that these delays  
          entail.  


          The author argues that this bill makes three changes that are  
          especially significant.  First, the bill requires a preliminary  
          hearing to determine if a comprehensive adjudication is  
          appropriate.  Second, the bill eliminates the requirement for  
          personal service to every property owner within the basin (which  
          can run to the thousands) and instead requires the plaintiff to  
          name as defendants the counties, special districts, public water  
          systems, and small water systems within the basin.  Notice to  
          others would be provided by appearance at relevant boards of  
          supervisors and mailing notices (instead of personal service) to  
          all landowners in the basin.  These notices would be included as  
          an enclosure in the property owner's next property tax statement  
          and would include a "form answer" for parties wishing to  
          participate.  Third, the bill will require initial disclosures  
          of groundwater use data, thereby eliminating the need for  
          extensive discovery. Other significant changes include making  
          designating all water adjudications as "complex litigation" and  
          the appointment of a special master to initiate joint  
          fact-finding, conduct mediation and settlement, and provide  
          draft reports to all parties.  Other reforms seek to avoid  
          delays by limiting the number of motions, encouraging earlier  
          case management conferences and stipulated judgments, and using  
          electronic service and filing to the maximum extent possible. 


          Some But Not All Concerns Addressed by Recent Amendments:  Most  
          of the letters of opposition and concern sent to the Committee  
          relate to the relationship between this bill and SGMA,  
          especially suspicion that the sponsors seek to speed up the  
          adjudication process so that basins will be adjudicated before  
          the GSA plans are implemented.   SGMA expressly exempted those  
          basins that were already adjudicated at the time that SGMA  
          became operative. (Between 22 and 24 basins have already been  
          adjudicated, depending upon which source one consults.)  Even  
          though those adjudicated basins were among the 127 "high" or  








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          "medium" priority basins covered by SGMA, they are not subject  
          to SGMA or the GSA plans.  As introduced, this bill would also  
          have additionally exempted from SGMA any basin adjudicated  
          between now and 2020, when the first GSA plans must be  
          implemented. Because SGMA only intended to exempt those basins  
          adjudicated at the time that SGMA was enacted, and left all  
          other high and medium priority basins subject to the GSA plans,  
          this provision in the bill would have altered SGMA.   Both the  
          author and sponsor insist that the purpose of the bill is to  
          improve adjudication procedures and not change SGMA.  Therefore  
          the author will amend the bill in this Committee to remove that  
          provision.  


          Possible Issues to be addressed if the Bill Moves Forward: Not  
          all of the concerns that have been raised, however, deal with  
          the bill's relationship with SGMA.  As noted below, some  
          opponents criticize the bill for not adequately protecting the  
          interests of disadvantaged communities; for example, these  
          opponents support awarding attorney's fees and costs for those  
          who qualify as having a significant financial hardship so that  
          all can participate.  Other concerns include the bill's failure  
          to provide notices in multiple languages and the requirement  
          that notices be sent with property tax statements, which are  
          only sent twice per year and are sometimes sent to escrow  
          companies that send the taxes, and not to the property-owning  
          taxpayer.  Others contend that a provision in the bill allowing  
          a stipulated judgment if supported by 50% of parties with 75% of  
          groundwater production will harm smaller landowners.  Groups  
          representing local government express concern that the bill will  
          impose new burdens on cities and counties, especially the  
          requirement that the plaintiff name cities and counties as  
          defendants whether the cities and counties have an interest in  
          the adjudication or not.  The author has communicated to the  
          Committee that he is aware these issues and that he will  
          continue to work with all stakeholders to address remaining  
          concerns if the bill moves forward.










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          ARGUMENTS IN SUPPORT:  According to the author, the "goal of AB  
          1390 is to address the time sinks that occur in current  
          groundwater adjudications by clarifying the processes that must  
          be followed.  Streamlining the process will ease the burden on  
          the courts, provide the parties with the most efficient  
          resolution possible, [and] protect individual rights, all while  
          appropriately integrating adjudication actions with SGMA."

          The sponsor, the California Farm Bureau Federation, writes on  
          behalf of a coalition of business and farm organizations that  
          "the goal of AB 1390 is to address the time sinks that occur in  
          current groundwater adjudications by clarifying the processes  
          that must be followed."  The supporter points in particular to  
          challenges regarding the "determination of venue, identification  
          of basin boundaries, disqualification of judges, notice and  
          service of parties, discovery and ability of the parties to  
          reach settlement."  Supporters believe that this measure will  
          "reform procedural rules to improve the functioning of each of  
          these areas by providing tools to the court and claimants to  
          move more efficiently through the adjudication process, such as  
          trial phasing, deadlines for disclosures of water usage and  
          submission of written testimony and expert disclosures."   
          Finally, supporters contend that this bill will "facilitate and  
          encourage the early settlement of groundwater adjudications by  
          providing tools and opportunities for courts, claimants, and  
          local groundwater management entities to develop solutions in a  
          [timelier] manner."

          Finally the author and supporters note that when "Governor Brown  
          signed the Sustainable Groundwater Management Act bill package  
          last year, interest in improving the groundwater adjudication  
          process was expressed by the Administration and authors of the  
          bill package. In basins impacted by the Sustainable Groundwater  
          Management Act, AB 1390 will work in conjunction with the Act to  
          clarify groundwater rights in a basin, which may be important to  
          the planning process, and allow the court to encourage the  
          parties to cooperatively develop a groundwater sustainability  
          plan pursuant to the Act to serve as the basis of a stipulated  
          judgment setting forth a physical solution for management of the  








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          basin."
          


          ARGUMENTS IN OPPOSITION:  The Sierra Club opposes AB 1391 in  
          part because it believes that the bill may undermine the efforts  
          of SGMA.  Although the proposed amendments may address some the  
          Sierra Club's concerns, it does not address all of them.  For  
          example the Sierra Club argues that provisions that permit a  
                                                   stipulated judgment and settlement based on an agreement of only  
          50% of parties with 75% of water production for the past 10  
          years will adversely affect smaller landowners and leave them  
          without a voice in a settlement.   





          The California League of Conservation Voters, Clean Water  
          Action, and Community Water Center criticize the bill for not  
          adequately protecting the interests of disadvantaged  
          communities, failing to provide attorney's fees and costs for  
          those with a significant financial hardship, failing to provide  
          notices in multiple languages, and requiring notices to be sent  
          with property tax statements, which are only sent twice per year  
          and are sometimes sent to escrow companies that send the taxes,  
          and not to the property-owning taxpayer.  





          The California State Association of Counties and the Rural  
          County Representatives do not officially oppose the bill at this  
          time, but they write to express their considerable concern that  
          the bill will impose new burdens on cities and counties,  
          especially by requiring that the plaintiff to name cities and  
          counties as defendants whether the cities and counties have an  
          interest in the adjudication or not.








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          Proposed Author Amendments:  The amendments below remove  
          proposed Section 848, which would exempt SGMA any basins  
          adjudicated under the provisions of this bill.  


          


             -    On page 22 delete lines 17 to 39 and on page 23 delete  
               lines 1-9



          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








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          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 Association



          Concern





          California State Association of Counties


          Rural County Representatives of California 




          Opposition (To pre-amended version)


          California League of Conservation Voters (unless amended)


          Clean Water Action (unless amended)


          Community Water Center (unless amended) 


          Sierra Club










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          Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334