California enacts basin adjudication statutes with the goal of reducing uncertainty, costs and time of water rights litigation.

On October 9, 2015, California Governor Jerry Brown signed AB 1390 (Alejo) and SB 226 (Pavley) to implement a comprehensive approach to groundwater basin adjudications throughout the state. Basin adjudications involve a judicial process in which a party initiates a lawsuit against all other users in a groundwater basin so that the court can determine the groundwater rights of all parties overlying the basin and whether others may export water from the basin. Through basin adjudications, courts can require the cooperation of users who otherwise might resist limits the on pumping of groundwater. Currently, 22 basins in California have been adjudicated. (There are over 500 such basins.)

Basin adjudications, however, have been costly and time consuming (in some cases taking over a decade to complete). In light of the time and expense associated with basin adjudications, the Legislature developed AB 1390 and SB 226 ostensibly to reduce the burden of groundwater adjudications on both the courts and claimants without modifying groundwater rights law. The new law will be effective January 1, 2016. A summary of these two companion bills follows.

AB 1390 Attempts to Streamline Basin Adjudications

AB 1390 adds a new Chapter 7 to Title 10 of Part 2 of the Code of Civil Procedure to establish a detailed procedure for comprehensive groundwater adjudications, defined as an “action filed in superior court to comprehensively determine rights to extract groundwater in a basin.” The chapter defines the scope of comprehensive adjudications, identifies notice and service requirements for initiating a comprehensive adjudication, and provides for permitted interventions by additional parties and judicial assignment, among other preliminary considerations.

AB 1390 requires the court to convene a case management conference and authorizes the court to consider certain matters, including adjustment of basin boundaries, appointment of a special master, issuance of preliminary injunctions, divisions of the adjudication into phases, limited discovery, and formation of classes to the adjudication. In addition, AB 1390 requires each party to provide specified initial disclosures to all other named parties and the special master, if one has been appointed. The initial disclosure must be served by each party within six months of appearance in the adjudication, and describe under penalty of perjury the type of water right claimed, the quantity of groundwater extracted from the basin and the method of measurement for the 10 years preceding adjudication, a description of use, well locations, and use locations, identification of alternative sources of water used by the party and of the person most knowledgeable.

AB 1390 authorizes courts to require the parties to submit written testimony of relevant witnesses in the forms of affidavits or declarations under penalty of perjury in lieu of presenting live direct testimony.

Under AB 1390 courts are also authorized to issue a preliminary injunction (limiting or restricting certain appropriations, extractions, allocations and transfers) upon a finding that the basin is in a condition of “long-term overdraft.” Long-term overdraft is defined as a “condition of a groundwater basin where the average annual amount of water extracted for a long-term period, generally 10 years or more, exceeds the long-term average annual supply of water to the basin, plus any temporary surplus” The court is required to issue a preliminary injunction if (1) the basin is in a condition of long-term overdraft; (2) the basin has been designated as a probationary basin or if the Sustainable Groundwater Management Act (SGMA) planning deadlines for implementing a groundwater sustainability plan have not been met; and (3) there is no interim plan in effect under Section 10735.8 of the Water Code.

The bill also allows the court to adopt a proposed stipulated judgment as to the stipulating parties, if it is supported by more than 50% of all parties and is supported by groundwater extractors responsible for at least 75% of the groundwater extractions. To adopt the stipulated judgment, the court must find that the proposed judgment meets all of the following criteria:

• It is consistent with Section 2 of Article X of the California Constitution, requiring that the water resources of the State be put to beneficial use to the fullest extent possible.
• It is consistent with the water right priorities of all non-stipulating parties and any persons who have claims that are exempt.
• It treats all objecting parties and any persons who have claims that are exempt equitably as compared to the stipulating parties.

A party objecting to a proposed stipulated judgment must demonstrate that the proposed stipulated judgment does not satisfy one or more criteria above or that it substantially violates the water rights of the objecting party. Otherwise, the court may impose the proposed stipulated judgment on an objecting party.

SB 226 Focuses on Ensuring Consistency with Sustainable Groundwater Management Act Mandates

In October 2014, the Governor signed the SGMA to address depletion of groundwater reserves in many parts of the state and to bring groundwater management into a comprehensive regulatory scheme. SGMA requires every high- and medium-priority groundwater basin statewide to be managed under a groundwater sustainability plan (GSP). Under the SGMA, the California Department of Water Resources (DWR) identified 127 groundwater basins as high- or medium-priority. Improved basin management may allow some groundwater basins to meet SGMA sustainability requirements without resorting to limiting existing rights of groundwater users. Given the likelihood that some basins subject to SGMA will need to be adjudicated to meet state management and sustainability targets imposed under SGMA, the legislature sought to streamline groundwater adjudications.

SB 226 reflects the legislature’s intent respecting SGMA “to provide a more efficient and cost-effective groundwater adjudication process that protects water rights, ensures due process, prevents unnecessary delay, and furthers the objectives of [SGMA].” (Cal. Water Code 10720.1(i).) SB 226 enacts changes to SGMA to facilitate expedited adjudications in high- and medium-priority basins. Specifically, SB 226 addresses the early phases of litigation in a SGMA-governed groundwater basin by introducing features designed to improve the efficiency of basin adjudications:

• Allowing the state to intervene in a comprehensive adjudication conducted as specified in AB 1390
• Requiring courts supervising basin adjudications for basins required to have a GSP to manage proceedings in a manner that minimizes interference with the timely completion and implementation of a GSP, avoids redundancy and unnecessary costs in the development of technical information and a physical solution and ensures consistency with the timeframes established by SGMA
• Authorizing an entity, as directed by the court, to request that DWR revise the boundaries of a basin
• Prohibiting provisions relating to probationary basins and interim plans from applying to a judgment approved by the court, if the judgment is submitted to DWR for evaluation and assessment and if DWR determines that the judgment satisfies the objectives of SGMA
• Requiring DWR to submit to the court assessments and any recommended corrective actions for approved judgments, and in turn obligating the court to determine whether to amend a judgment to adopt DWR’s recommendation
• Prohibiting a court from approving entry of a judgment in a basin adjudication for a basin required to have a GSP under SGMA, unless the court finds that the judgment will not substantially impair the ability of a groundwater sustainability agency, board, or department to comply with SGMA and to achieve sustainable groundwater management

Implications

Together, AB 1390 and SB 226 provide comprehensive groundwater basin adjudication procedures with intent of reducing the time and expense associated with such adjudications. It remains to be seen whether groundwater adjudications become more frequent in the years to come, and to what extent these procedural changes influence groundwater basin adjudication law. Certainly, competition for limited groundwater resources has intensified during the course of the ongoing historic drought. SGMA is intended to help California manage groundwater basins and limited groundwater resources, providing potential non-litigation recourse. In anticipation of a continued focus on groundwater rights and allocations, users should appreciate the value of documenting their historical beneficial use of water on their property and otherwise, through well records, crop history, energy use and/or by other means.