BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 226


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          Date of Hearing:   July 7, 2015


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          SB  
          226 (Pavley) - As Amended May 5, 2015


          SENATE VOTE:  23-14


          SUBJECT:  Sustainable Groundwater Management Act: groundwater  
          rights


          KEY ISSUE:  Should procedures for SEEKING AND obtaining a  
          basin-wide groundwater ADJUDICATION BE streamlined, especially  
          as to the early and time-consuming phase of such adjudications  
          in which basin boundaries are identified, Parties are identified  
          and served, and pre-trial discovery is conducted? 


                                      SYNOPSIS


          Last year, when Governor Brown signed the historic package of  
          bills constituting the Sustainable Groundwater Management Act  
          (SGMA), he noted that the Legislature still needed to find ways  
          to streamline the determination of groundwater rights because  
          the process remains notoriously costly and time-consuming.   
          Although a number of bills introduced during the current session  
          are follow-up measures to SGMA, two bills, in particular, seek  
          to streamline the process of groundwater adjudication: AB 1390  
          (Alejo), which this Committee heard earlier in the current  








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          session, and the bill now before the Committee: SB 226 (Pavley).  
           While both AB 1390 and SB 226 will streamline adjudication,  
          there are three important differences between the bills.  First,  
          SB 226 is placed within SGMA's statutory framework in the Water  
          Code, while AB 1390 adds a chapter to the Code of Civil  
          Procedure, independent of SGMA.  Second, SB 226 is more limited  
          and focuses on streamlining the early phase of litigation,  
          including the process of identifying of basin boundaries,  
          identifying and serving parties, and making required disclosures  
          prior to discovery.  AB 1390 addresses these issues and many  
          others, setting forth detailed procedures that cover the entire  
          course of litigation, from commencement to the appointment of  
          special masters.  Third, SB 226 expressly authorizes the  
          Department of Water Resources and the Department of Fish and  
          Game to intervene as parties.  This bill is supported by several  
          environmental, conservation, and water recreation groups.  It is  
          opposed by several farm and grower associations that prefer AB  
          1390 to the bill under consideration.  However, it should be  
          noted that both bills serve the same goal of streamlining  
          adjudication and are fully consistent with each other in that  
          regard.  Despite the suggestions of some opponents, this bill  
          does not alter any existing statutory or common law rights.   
          Both AB 1390 and SB 226 streamline the procedure for  
          adjudicating rights; neither bill alters existing groundwater  
          rights or remedies.  This bill recently passed out of the  
          Assembly Water, Parks, and Wildlife Committee on an 8-5 vote. 


          SUMMARY:  Establishes special procedures for court adjudication  
          of groundwater rights.  Specifically, this bill:  


          1)Establishes special procedures for timely and comprehensive  
            procedures by which any court of competent jurisdiction shall  
            determine groundwater rights and requires a court to use  
            procedures codified in the Code of Civil Procedure, unless  
            otherwise provided.  Specifies that nothing in the provisions  
            of this bill shall be deemed to repeal or preclude an action  
            to determine rights to groundwater in accordance with the  








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            common law. 
          2)Specifies that the provisions of this bill will only apply to  
            rights claimed by an Indian tribe or the federal government to  
            the extent authorized by federal and tribal law. 


          3)Provides that an action requesting a court to determine water  
            rights under this bill shall be deemed provisionally complex  
            as provided in Rule 3.400 Title 3 of the California Rules of  
            Court.


          4)Requires the boundaries of a basin to be identified by using  
            Bulletin 118 of the Department of Water Resources, unless  
            other basin boundaries are established pursuant to SGMA.


          5)Authorizes the Department of Water Resources and the  
            California Department of Fish and Wildlife to intervene in an  
            action or proceeding if they claim an interest relating to the  
            action or proceeding. 


          6)Requires all known defendants to be served by personal service  
            in the manner provided in Chapter 4 (commencing with Section  
            413.10) of Title 5 of Part 2 of the Code of Civil Procedure.


          7)Requires all unknown defendants to be served by publication as  
            provided in Section 415.50 of the Code of Civil Procedure.   
            Specifies that, in addition to other requirements required  
            under this section, the publication shall describe the  
            groundwater basin, as specified, the Internet address for a  
            map depicting the basin, and any other identifying information  
            the court deems appropriate. 


          8)Requires a party, without awaiting a discovery request, to  
            provide specified initial disclosures to the other parties,  








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            including, among the other things, the name and contact  
            information of persons likely to have discoverable  
            information; a copy or description, by category and location,  
            any documents or tangible things that the disclosing party has  
            in its possession and which the party may use at trial to  
            support claims or defenses; and a quantification of claims to  
            water in the basin, as specified.  Specifies the timelines and  
            manner for making these initial disclosures. 


          9)Provides that, in addition to other initial disclosures  
            required by this bill, a party shall disclose to the other  
            parties the identity of any expert witness that it may use at  
            trial to present evidence.  Unless otherwise stipulated or  
            ordered by the court, this initial disclosure shall be  
            accompanied by a written report, prepared and signed by the  
            expert witness.  The report shall contain specified  
            information, including, among other things, a complete  
            statement of all opinions, facts, and exhibits that the expert  
            witness will present at trial, and a summary of the expert's  
            qualifications, including publications and a list of all cases  
            in which the witness has offered expert testimony over the  
            previous four years. 


          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.) 










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          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  
            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:  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.   
          However, the state lacked a comprehensive regulatory approach  
          for groundwater regulation until the passage of the Sustainable  
          Groundwater Management Act (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 it for them.  SGMA  
          applies to those water basins designated as either "high" or  
          "medium" priority basins subject to a chronic overdraft.  As  
          such, SGMA applies to only 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  








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          develop Groundwater Sustainability Plans (GSPs) by January 31,  
          2020, or January 31, 2022, depending upon the severity of their  
          overdraft problem.  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 use of groundwater, so that the amount  
          of water pumped out of the basin is less than, or equal to, the  
          rate of water returned to the basin 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 quiet title in his or her groundwater rights, and asks the  
          court to either limit pumping, or impose a "physical solution"  
          that will allocate and manage water use in order to prevent an  
          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 with a different kind of  
          right.  Under California groundwater law, a person can have  
          "overlying rights" (by virtue of owning land over the  
          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  
          taking action to stop it).  Regardless of the type of right that  
          is 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  








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          actually appropriated the water "adversely" and met the  
          statutory time period.  To help the court determine these  
          rights, the parties usually must first engage in extensive  
          pleading and discovery. 




          SB 226 would expedite this adjudication process.  The bill will  
          establish special procedures for courts to use in determining  
          the rights to groundwater within a groundwater basin.   
          Specifically, the bill will do the following: streamline  
          disputes over basin boundaries by relying on the Bulletin 118 of  
          the Department of Water resources; facilitate notice and service  
          requirements, in part by allowing for notice and service by  
          publication for unknown defendants; require initial disclosure  
          of discoverable information, including information pertaining to  
          expert witnesses, without awaiting a discovery request; and  
          permit the Department of Water Resources and the Department of  
          Fish and Wildlife to intervene as parties.




          SB 226 and AB 1390 Comparison: As noted, this Committee already  
          heard and passed AB 1390 (Alejo), which like this bill sought to  
          streamline groundwater adjudication.  The authors of both bills  
          contend that they are responding to the Governor's call, upon  
          signing the SGMA legislation last year, to address the problem  
          of prolonged groundwater litigation, which in some cases can  
          drag on for a decade or more.  While both AB 1390 and SB 226  
          seek to streamline adjudication, there are some important  
          differences between the two bills: 




           SB 226 amends SGMA's statutory framework in the Water Code,  
            while AB 1390 adds a chapter to the Code of Civil Procedure,  








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            independent of SGMA.  When AB 1390 was heard before this  
            committee, there was much discussion of the relationship  
            between AB 1390 and SGMA.  SB 226 highlights the essential  
            compatibility of its streamlined adjudication process by  
            placing its provisions within SGMA and expressly declaring  
            that the procedures it establishes for determining groundwater  
            rights must be "in furtherance of the objectives of this part  
            [i.e. SGMA]."  SB 226 also provides that, in making its  
            determination of rights to groundwater, a court shall avoid an  
            "undesirable result," as defined in SGMA.  (SGMA generally  
            defines an "undesirable result" as one that leads to chronic  
            lowering of groundwater levels, degradation of water quality,  
            land subsidence, or depletion of surface water.)  AB 1390 only  
            provides that where the adjudication occurs in a basin that is  
            subject to SGMA, the court should "encourage the parties to  
            cooperatively develop a groundwater sustainability plan that  
            may serve as the basis of a stipulated judgment setting forth  
            a physical solution for management of the basin."   




           SB 226 is more limited in that it focuses on streamlining the  
            earlier phases of litigation, including identification of  
            basin boundaries, identification and service of parties, and  
            requiring initial disclosures prior to discovery.  AB 1390  
            addresses these issues and many others, setting forth detailed  
            procedures that cover the entire course of litigation, from  
            commencement of the action to the appointment of special  
            masters. 




           SB 226 expressly authorizes the Department of Water Resources  
            and the Department of Fish and Game to intervene as parties to  
            the extent that either agency claims an interest relating to  
            the action or if the resolution of the action could impair or  
            impede the ability of the agency to protect its interest.  AB  








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            1390 does not contain any such express provision, though it is  
            not clear whether AB 1390 would necessarily preclude either  
            agency from intervening. 




          Despite these differences, it should be noted that both bills  
          serve the same goal of streamlining adjudication and are fully  
          consistent with each other in that regard.  Despite the  
          suggestions of some opponents, this bill does not alter any  
          existing statutory or common law rights.  Both AB 1390 and SB  
          226 streamline the procedure for adjudicating rights; neither  
          bill alters existing rights or remedies.  


          ARGUMENTS IN SUPPORT:  This bill is supported by several  
          environmental, conservation, and water recreation groups.  These  
          supporters believe that SB 226 will create a streamlined process  
          for judicial adjudication of groundwater basins in a manner that  
          protects individual rights, ensures the prevention of  
          "undesirable results" as defined by SGMA, and allows agency  
          intervention where environmental concerns necessitate it.   
          Supporters add that "until the implementation of plans under  
          SGMA, individuals with their groundwater rights being infringed  
          upon do not have easy access to relief through the courts.   
          Final decisions only deal with water rights, ignoring the  
          numerous other problems that can occur within a groundwater  
          basin that SGMA addresses."  Supporters add that this bill helps  
          ease the burden on individuals and the courts by standardizing  
          and expanding service of process requirements, and allowing DWR  
          and DFW to intervene in an adjudication, should their interests  
          need to be addressed.  Supporters conclude that, finally, "any  
          decision a court issues will attempt to avoid an undesirable  
          result as defined under SGMA" which "creates a better process  
          for adjudication of groundwater rights holders and the  
          environment." 










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          ARGUMENTS IN OPPOSITION:   Many of the opponents of this bill do  
          not seem to object to its provisions so much as preferring AB  
          1390, which they claim will add "a new chapter to the Code of  
          Civil Procedure making improvements to the judicial proceedings  
          of comprehensive adjudications of groundwater rights in a  
          basin."  Opponents state that AB 1390 will reduce the burden of  
          groundwater adjudications on both the courts and claimants  
          without altering the law of groundwater rights and without  
          disruption to the [SGMA] planning process.  Opponents add that  
          while they appreciate this author's "interest in the issue of  
          adjudication we respectfully prefer the approach offered in AB  
          1390."  Other opponents support "aligning streamlined  
          adjudications process with SGMA objectives," but do not support  
          this bill's approach of including streamlined groundwater  
          adjudications within SGMA, as SGMA is a law that "already  
          includes significant groundwater reforms" focused on improving  
          the sustainability and reliability of California's groundwater  
          basins.  Opponents therefore believe SGMA "should be given time  
          to be implemented and that it is premature to make significant  
          policy changes to the Act at this time."


          REGISTERED SUPPORT / OPPOSITION:




          Support


          All Outdoors


          American River Conservancy


          American River Touring Association Inc. (ARTA)










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          American Whitewater


          California Canoe and Kayak


          California Outdoors


          California Sportfishing Protection Alliance


          California Water Impact Network (C-WIN)


          Clean Water Action


          Community Water Center


          Delta Kayak Adventures


          Foothill Conservancy


          Friends of the Eel River


          Friends of the River


          Friends of the San Francisco Estuary


          Merced River Conservation Committee










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          North Coast Rivers Alliance


          Northern California Council of the International Federation of  
          Fly Fishers


          Planning and Conservation League


          Restore Hetch Hetchy


          Restore the Delta


          Rivers for Change


          Rose Foundation for Communities and the Environment


          Sacramento River Preservation Trust


          Save the American River Association


          Sierra Club California


          Sierra Nevada Alliance


          Smith River Alliance


          South Yuba River Citizens League









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          The Nature Conservancy


          Tuolumne River Trust


          Winnemem Wintu Tribe




          Opposition


          African American Farmers of California


          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










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          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 Grain and Feed Association


          California Pear Growers Association


          California Seed Association


          California Tomato Growers Association


          Kings River Conservation District


          Kings River Water Association










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          National Hmong American Farmers 


          Nisei Farmers League


          Pacific Egg and Poultry Association


          Southwest California Legislative Council


          Western Agricultural Processors Association


          Western Growers Association


          Western Plant Health Association




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