BILL ANALYSIS                                                                                                                                                                                                    



                             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  







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            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  








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          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  








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          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  








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          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  








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            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.








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                 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  








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            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).)








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              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  








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            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








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          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  








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          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)

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