BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2015 - 2016 Regular Session SB 226 (Pavley) Version: April 6, 2015 Hearing Date: April 28, 2015 Fiscal: Yes Urgency: No TH SUBJECT Sustainable Groundwater Management Act: Groundwater Rights DESCRIPTION This bill would establish special procedures for courts use in determining rights to groundwater under the Sustainable Groundwater Management Act (SGMA). This bill would specify procedures for, among other things, making determinations of rights to groundwater under SGMA, for serving notice to unknown parties, for providing initial disclosure of discoverable information, including information pertaining to expert witnesses, and for intervention by the Department of Water Resources and the Department of Fish and Wildlife. BACKGROUND Groundwater adjudications -- civil cases to determine rights to groundwater in a particular area -- are among the lengthiest court proceedings in California. These cases typically involve hundreds if not thousands of parties, often with conflicting claims over the right to extract groundwater. According to one commenter: There is a joke among lawyers that working on one groundwater adjudication can make your career. The laborious court process settles fights over rights to the state's increasingly overtapped aquifers and sets out long-term management plans for them. And while they are crucial to resolving water rights disputes, getting there is not easy. Case in point is an adjudication of the Antelope Valley groundwater basin, which 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 SB 226 (Pavley) Page 2 of ? groundwater pumping rights. Parties include cities, farmers, 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 . . . There are several reasons these cases take so long, and attorneys agree some parts of the process could be improved to speed them up. Finding a way to expedite the service process is one. Identifying all the parties and getting them personally served is "a very lengthy and expensive and not very reliable process," said Thomas S. Bunn, with Lagerlof, Senecal, Gosney & Kruse LLP, who is involved in the Antelope Valley adjudication. He said it took six years to serve the parties in that case. Discovery is also a real headache because a lot of time is spent trying to figure out the basic information in the case - who is pumping, how much they are pumping, how much water they are claiming a right to and how they use the water . . . Requiring litigants to provide that information up front could cut a big chunk off time and expense . . . (Fiona Smith, State Looking to Speed Groundwater Lawsuits, Daily Journal (Oct. 29, 2014).) This bill would create special procedures for adjudicating rights to water in groundwater basins under the Sustainable Groundwater Management Act (Wat. Code Sec. 10720 et seq.). It would provide that in making determinations of rights to groundwater, a court shall avoid undesirable results, as defined. This bill would also provide special procedures for conducting initial discovery, for determining the boundaries of a groundwater basin, for serving affected parties, and for allowing the Departments of Water Resources and Fish and Wildlife to intervene in an adjudication. CHANGES TO EXISTING LAW Existing law , the Sustainable Groundwater Management Act, requires all groundwater basins designated as basins subject to critical conditions of overdraft to be managed under a groundwater sustainability plan by January 31, 2020, and requires all other groundwater basins designated as high- or medium-priority basins by the Department of Water Resources to SB 226 (Pavley) Page 3 of ? be managed under a groundwater sustainability plan by January 31, 2022, except as specified. (Wat. Code Sec. 10720 et seq.) Existing law defines "undesirable result" to mean one or more of the following effects caused by groundwater conditions occurring throughout a groundwater basin: chronic lowering of groundwater levels indicating a significant and unreasonable depletion of supply if continued over the planning and implementation horizon, as specified; significant and unreasonable reduction of groundwater storage; significant and unreasonable seawater intrusion; significant and unreasonable degraded water quality, including the migration of contaminant plumes that impair water supplies; significant and unreasonable land subsidence that substantially interferes with surface land uses; or depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of the surface water. (Wat. Code Sec. 10721(w).) This bill would find and declare that it establishes special procedures for courts to use in determining rights to groundwater, and that unless otherwise provided, a court shall determine rights to groundwater using the procedures codified in the Code of Civil Procedure. This bill would provide that in making its determination of rights to groundwater, a court shall avoid an undesirable result as defined in Section 10721 of the Water Code. This bill would provide that an action to determine water rights shall be deemed provisionally complex within the meaning provided in Rule 3.400 of Title 3 of the California Rules of Court. This bill would state that Section 389 of the Code of Civil Procedure (dismissal for failure to join an indispensable party) shall not apply to any failure to join an Indian tribe or the United States to an action or proceeding. This bill would state that upon timely motion, a court shall permit the Department of Water Resources or the Department of Fish and Wildlife, or both, to intervene in an action or proceeding if the movant claims an interest relating to the SB 226 (Pavley) Page 4 of ? action or proceeding and is so situated that disposing of the action or proceeding may, as a practical matter, impair or impede the movant's ability to protect its interest. This bill provides that in addition to other requirements for the service of a summons by publication, the publication shall describe the groundwater basin that is the subject of the action, and shall provide the Internet address for a map depicting the basin and any other identifying information that the court deems appropriate. This bill would state, except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties all of the following: the name and, if known, the address and telephone number of each individual likely to have discoverable information, along with the subjects of that information, who the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment; a copy or a description by category and location, of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control that it may use to support its claims or defenses, unless the use would be solely for impeachment; and a quantification of claims to water in the basin by the disclosing party, and access to any documents or other evidentiary material, unless privileged or protected from disclosure, on which each claim is based, including materials bearing on the nature and extent of those claims. This bill would provide that a party shall make all required disclosures at or within 14 days after the parties' initial case management conference unless a different time is set by stipulation or court order, or unless a party objects during the conference that initial disclosures are not appropriate in this action and states the objection in a proposed discovery plan. This bill states that in ruling on the objection, the court shall determine what disclosures, if any, are to be made and shall set the time for disclosure. This bill would provide that a party that is first served or otherwise joined after the initial case management conference shall make its initial disclosures within 30 days after being served or joined, unless a different time is set by stipulation SB 226 (Pavley) Page 5 of ? or court order. This bill would provide that a party shall make its initial disclosures based on the information then reasonably available to it, and that a party is not excused from making its disclosures because it has not fully investigated the case or because it challenges the sufficiency of another party's disclosures or because another party has not made its disclosures. This bill would state that in addition to the other required disclosures, a party shall disclose to the other parties the identity of any expert witness it may use at trial to present evidence. This bill would provide that, unless otherwise stipulated or ordered by the court, the disclosures pertaining to expert witnesses shall be accompanied by a written report, prepared and signed by the expert witness, if the expert witness is retained or specially employed to provide expert testimony in the case or whose duties as the party's employee regularly involve giving expert testimony. This bill would specify that the report shall contain all of the following: a complete statement of all opinions the expert witness will express and the basis and reasons for them; the facts or data considered by the expert witness in forming his or her opinions; any exhibits that will be used to summarize or support the opinions of the expert witness; the expert witness' qualifications, including a list of all publications authored in the previous 10 years; a list of all other cases in which, during the previous four years, the expert witness testified as an expert at trial or by deposition; and a statement of the compensation to be paid to the expert witness for the study and testimony in the case. This bill would also provide that, unless otherwise stipulated or ordered by the court, if the expert witness is not required to provide a written report, the disclosure shall state both of the following: the subject matter on which the expert witness is expected to present evidence; and a summary of the facts and opinions to which the expert SB 226 (Pavley) Page 6 of ? witness is expected to testify. This bill would state that a party shall make the required disclosures at the times and in the sequence that the court orders, and that absent a stipulation or a court order, the disclosures shall be made at either of the following times: at least 90 days before the date set for trial or for the case to be ready for trial; or if the evidence is intended solely to contradict or rebut evidence on the same subject matter identified by another party, within 30 days after the other party's disclosure. COMMENT 1.Stated need for the bill According to the author: In California, the method for determining groundwater rights is through the common law process of groundwater adjudication. Given the different kinds of groundwater rights and the relationships between them, coming to a determination is a complex task, often taking well over a decade of judicial activity - the Antelope Valley adjudication has taken 15 years and counting . . . On November 20, 2014, the Senate Natural Resources and Water Committee held an informational hearing, titled "Resolving Disputes Regarding Groundwater Rights: Why Does It Take So Long and What Might Be Done to Accelerate the Process?" At that hearing, witnesses identified a number of items that cause unnecessary delay. These included issues of basin boundaries, notice and service, discovery, and expert testimony. SB 226 addresses these issues as follows: Basin Boundaries - boundaries shall be as identified in [Department of Water Resources'] Bulletin 118, unless modified as provided in [Sustainable Groundwater Management Act]. Notice & Service - notice to known parties is as provided in the Code of Civil Procedure (CCP). Unknown parties would be served by publication. Discovery - Copies the Federal procedures, which require disclosure of specific items without awaiting a discovery request. SB 226 (Pavley) Page 7 of ? Expert Witness - Copies the Federal procedures, which require an expert witness to provide a written report on opinions the witness will express and the basis and reasons for them. With these changes, SB 226 will reduce needless delays while still protecting due process rights. 1.Special Procedures to Accelerate Adjudications This bill would establish special procedural rules under the Sustainable Groundwater Management Act (SGMA) for determining rights to groundwater in an effort to accelerate groundwater adjudication proceedings. Drawn from the Federal Rules of Civil Procedure, this bill would set new requirements for making initial disclosures of discoverable evidence and for disclosing information about a party's expert witnesses, for allowing the Department of Water Resources and the Department of Fish and Wildlife to intervene in groundwater adjudications, and for serving both known and unknown parties. This bill would also set specific standards by which groundwater cases shall be adjudicated. a. Non-joinder of Parties This bill would provide that Section 389 of the Code of Civil Procedure shall not apply to any failure to join an Indian tribe or the United States to a groundwater adjudication under SGMA. Section 389 provides that a person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If such a person cannot be made a party, Section 389 empowers the court to dismiss the action if it determines the non-joined party is indispensable to resolution of the matter. In California, groundwater basins are shared by a multitude of people and SB 226 (Pavley) Page 8 of ? entities, including federally recognized Indian tribes and instrumentalities of the United States. Since these entities might have a claim or interest in a groundwater basin, and since California may, in some instances, be unable to compel them to become a party in a groundwater adjudication, this provision of the bill ensures that the non-joinder of those parties would not result in the dismissal of the adjudication. b. Intervention This bill provides that the Department of Water Resources and the Department of Fish and Wildlife shall have intervention by right into a groundwater adjudication under SGMA if they claim an interest in the proceeding and that the proceeding may, as a practical matter, impair or impede their ability to protect that interest. As managers of natural resources dependent on groundwater and interconnected surface water, the adjudication of groundwater basins may impact the interests of these Departments. Several agricultural stakeholders writing in opposition state that this provision "would fundamentally change water rights in California." They state: Under current law, groundwater rights are an overlying right, an appropriative right or a prescriptive right. By allowing the above referenced agencies to intervene in an adjudication action, the court would be forced to examine the impairment of the agency's claimed interest and potentially grant the agency a groundwater right not otherwise entitled to under established law. Staff notes that merely allowing these Departments to join as parties to an adjudication would not lead to the recognition of a groundwater right. Just like any other party, these Departments would have to establish their claim to groundwater in the basin under applicable law. Further, it would be premature to conclude as a matter of law that these Departments could not claim a right to groundwater in basins undergoing adjudication, particularly in light of recent court decisions recognizing that certain quantities of groundwater may be subject to the public trust doctrine. (See Environmental Law Foundation et al. v. State Water Resources Control Board, 34-2010-800000583 (Sacramento Superior Court).) SB 226 (Pavley) Page 9 of ? c. Notice and Service This bill would provide that publication to unknown defendants -- those who may have a claim to groundwater extraction in a basin -- shall be served by publication, and that the publication shall describe the groundwater basin that is the subject of the action, and shall provide the Internet address for a map depicting the basin and any other identifying information that the court deems appropriate. Under existing law, a summons is generally served to defendants in an action by personal delivery of a copy of the summons and of the complaint to the person to be served. (Code Civ. Proc. Sec. 415.10.) If a court determines that a party to be served cannot with reasonable diligence be served by personal service or in another manner specified in the Code of Civil Procedure, then it may order service by publication. (Code Civ. Proc. Sec. 415.10.) This method of service is useful for giving unknown parties notice of a proceeding which they may have an interest in. Service by publication is generally accomplished by publishing a summons in a named newspaper, published in this state, that is most likely to give actual notice to the party to be served. This bill would enhance the notice given to unknown defendants served by publication by requiring additional information about the groundwater basin undergoing adjudication, thereby better enabling readers of the publication to determine if they have an interest in the adjudication. d. Discovery and Expert Witnesses This bill would also require all parties to disclose through discovery specific limited information about their claims and defenses in a groundwater adjudication, as well as information about expert witnesses that will provide testimony on their behalf, without waiting for a discovery order from the court. As noted in the Background above, the discovery process in groundwater adjudications leads to significant delays as parties wait for each other to submit information about their claimed rights to groundwater. The process required by this bill, drawn from Rule 26 of the Federal Rules of Civil Procedure, would require all parties to provide basic information about their claimed interest in the adjudication and about the expert witnesses they plan to have testify on SB 226 (Pavley) Page 10 of ? their behalf very early in the proceedings. The provision of this information at the beginning stages of an adjudication will allow the court and the parties to more quickly frame the issues to be addressed, and should reduce delays associated with parties strategically waiting to produce discoverable evidence. 2.Avoiding Undesirable Results In addition to the procedural changes noted in Comment 2, this bill would specify that in making its determination of rights to groundwater, a court shall avoid an undesirable result as defined in SGMA. In general, an undesirable result under SGMA is one that results in any of the following: the chronic lowering of groundwater levels; significant and unreasonable reduction of groundwater storage; significant and unreasonable seawater intrusion; significant and unreasonable degraded water quality; significant and unreasonable land subsidence that substantially interferes with surface land uses; or depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of surface water. (Wat. Code Sec. 10721(w).) This adjudicatory standard differs somewhat from that used in common law groundwater adjudications. In a common law adjudication, groundwater basins are managed according to the concept of "safe yield," and overlying appropriators are limited when total basin groundwater extraction exceeds safe yield, leading to basin overdraft. The safe yield of a groundwater basin is "the maximum amount of water that could be extracted annually, year after year, without eventually depleting the underground basin. Safe yield is generally calculated as the net of inflows less subsurface and surface outflows." (City of Santa Maria v. Adam (Cal.App.6th Dist. 2012), 211 Cal.App.4th 266, 279.) The author states that this bill's focus on "sustainable yield" is to ensure that any decision rendered through the procedures established through the bill would be consistent with the goals and objectives of SGMA, which include providing for the sustainable management of groundwater basins. (Wat. Code Sec. 10720.1(a).) 3.Impact to Common Law Adjudication SB 226 (Pavley) Page 11 of ? The California Supreme Court has held that "[i]t is settled that the law of this state includes the common law as well as the Constitution and the codes. The code establishes the law of this state respecting the subjects to which it relates; but this does not mean that there is no law with respect to such subjects except that embodied in the code. Where the code is silent, the common law governs." Rojo v. Kliger (1990) 52 Cal.3d 65, 74 (citations and internal quotation marks omitted).) Further, "[t]here is a presumption a statute does not, by implication, repeal the common law." (Id., citing 3 Sutherland, Statutory Construction (4th ed. 1986) Sec. 61.03, p. 95 ["The repeal of a common law rule may be evidenced by various other . . . aids of statutory interpretation."].) Through this bill, the author intends to establish a process to adjudicate groundwater rights under SGMA that operates parallel to California's existing common law groundwater adjudication process. To ensure that this bill does not preclude parties from using the existing common law adjudication process, the author offers the following amendment: Author's Amendment : On page 8, between lines 23 and 24, insert "(c) Nothing contained in this chapter shall be deemed to repeal or preclude an action to determine rights to groundwater in accordance with the common law." 4.Other Stakeholder Concerns Clean Water Action and Community Water Center state, "we appreciate the need to streamline the adjudication process and are encouraged by the bill so far. However, it is imperative that the rights of underrepresented and disadvantaged communities . . . are adequately represented in the process." To better represent these communities and enhance their ability to participate in adjudications under this bill, these stakeholders suggest that the bill be amended to allow for the awarding of attorney's fees and costs to those beneficial users who can prove significant financial hardship; to require notices related to an adjudication to be translated in any and all languages spoken by 10 percent or more of the population residing in a basin, as well as any other languages as appropriate; and to expand the bill's intervention by right SB 226 (Pavley) Page 12 of ? provision to authorize intervention by the State Water Board and local groundwater sustainability agencies. Support : Clean Water Action; Community Water Center; Sierra Club California Opposition : African American Farmers of California; California Citrus Mutual; California Cotton Ginners Association; California Cotton Growers Association; California Dairies Inc.; California Farm Bureau Federation; California Floral Council; California Fresh Fruit Association; California Tomato Growers Association; National Hmong American Farmers; Nisei Farmers League; Western Agricultural Processors Association; Western Plant Health Association HISTORY Source : Author Related Pending Legislation : AB 1390 (Alejo, 2015) would establish special procedures for adjudication actions filed in superior court to determine the rights to extract groundwater within a basin or store water from a basin. Among other things, this bill would require each party to make specified initial disclosures within 60 days after an initial case management conference, and would authorize the court to appoint a special master whose duties could include initiating a technical committee to conduct joint factfinding regarding the basin. This bill is pending in the Assembly Judiciary Committee. Prior Legislation : None Known Prior Vote : Senate Natural Resources and Water Committee (Ayes 6, Noes 2) ************** SB 226 (Pavley) Page 13 of ?