CA WATER LAW SYMPOSIUM: Groundwater adjudication under SGMA

Attorney Eric Garner and EDF’s Christina Babbitt discuss adjudication and management under SGMA in a panel discussion moderated by Justice Ron Robie

The Sustainable Groundwater Management Act explicitly states that nothing in the legislation will alter surface or groundwater rights under the common law. However, the legislation requires groundwater basins be managed to prevent the “undesirable results” caused by extraction of groundwater. This begs the question: how will these two seemingly-opposing provisions of the legislation be reconciled?

At the 2019 California Water Law Symposium, Eric Garner, managing partner of Best Best & Krieger, and Christina Babbitt, Program Manager for Groundwater at the Environmental Defense Fund discussed groundwater adjudications in the new age of groundwater management under Sustainable Groundwater Management Act in a panel discussion moderated by the Honorable Ronald Robie. This panel was organized by students from McGeorge School of Law.

The Sustainable Groundwater Management Act (or SGMA) became effective on January 1, 2015, which required all basins designated as medium or high priority to form local Groundwater Sustainability Agencies and develop Groundwater Sustainability Plans to achieve sustainable management by 2040/2042.

Justice Robie began by defining three key terms in SGMA:

Sustainable yield: The maximum quantity of water calculated over long-term conditions in the basin, including any temporary excess that can be withdrawn over a year without an undesirable result.
Sustainable groundwater management: The management and use of groundwater that can be maintained without causing an undesirable result.
Undesirable results: The persistent lowering of groundwater levels, a significant reduction in groundwater storage, salt water intrusion, degradation of water quality, significant land subsidence, and surface water depletion.

In 2015, the legislature followed up passage of SGMA with groundwater adjudication reform legislation in an attempt to make adjudications less lengthy. Ron Robie asked Eric Garner if groundwater adjudications are going to be the way going forward, or will there be lawsuits between individual pumpers?

Eric Garner began by noting that while he has done a substantial number of adjudications, in all of them, he has represented public agencies – either a city or a water district, so his comments will reflect the perspective of his clients. And despite having spent 30 years involved in adjudications, he remains optimistic about the ability to solve groundwater problems in California.

“While adjudication doesn’t really solve anything, it provides a framework that then can be implemented under court jurisdiction to solve the problems,” he said. “So the idea behind SGMA was to provide all those tools to local agencies so they didn’t have to go through a court process and I’m very optimistic about the state’s ability to get that done. That said, all these adjudications have made me realistic, and it’s not easy – it won’t be cheap, it won’t be inexpensive, and there will be a lot of litigation, probably.”

A BRIEF HISTORY OF GROUNDWATER ADJUDICATIONS IN CALIFORNIA

Mr. Garner then discussed the history of adjudications around the state to set the stage for the upcoming discussion. Until 2014, groundwater was not regulated by the state; it was ‘pump until a judge tells you not to.’ Basically only a ministerial permit from the county was needed to make sure the well complied with health code safety requirements in how it was drilled. Then you turned it on and pumped, unless your neighbor sued you or unless you got caught up in one of these big lawsuits and a judge told you, you had to pump less, he said.

Historically, California water rights to groundwater developed with a different types of rights. There are overlying rights, which are landowners who pump water and use it on their land, and appropriative rights, which are pumpers that basically take water and export it out of the basin.

Mr. Garner cautioned that there is a nuance to that appropriative right that comes from an old Supreme Court case which laid the groundwork to say that if a water supplier puts groundwater they pump in a common system, and then distributes it to its inhabitants, even if it’s overlying the groundwater basin, then that’s an appropriative use. That is important because an appropriative use is junior to an overlying use, so this means effectively under the common law that overlying rights, which are primarily agricultural farming rights, have a priority over a city pumping water out of a groundwater basin and delivering it to its residents and that is the common law in the state of California to this day, he said.

“I’m a big fan of Water Code Section 106.3, the basic human right to water, and the whole 106 sections which relate to priorities for domestic use which those benefit public water suppliers for sure,” he said. “But there is no case directly on point saying that those trump the overlying right, and so someday a court is going to have to decide that issue before the human right to water gets implemented in any meaningful way. My guess is it will be the California Supreme Court because I think it would go that far, and so that’s just one example of why this is so complex and why it is so difficult.”

“We’re not alone in this,” he continued. “There is no place in the world that I’ve seen – and I’ve worked on a number of different continents on groundwater – that manages groundwater very well or very sustainably. I think we human beings have a really tough time doing it. It’s a very tough issue. It’s tougher than surface water and surface water is hard enough. Groundwater is really hard at least in part because you can’t see it, and so when water levels are falling, it’s not quite the same as a reservoir drying where we can see it and we have to use less water.”

Adjudication is just a fancy word for suing everybody in the basin, and to resolve groundwater rights, you have to bring in all the users. In 1949, the Supreme Court took up the case, Pasadena v. Alhambra; it was the first time that a conflict between city appropriators and farming overlyers in a basin in overdraft where there was insufficient water had made it to the Supreme Court. If they followed the priority system, the overlyers win and the cities are cutoff.

“The California Supreme Court did not want to do that, so they reached way back to an early 1900s appellate court case called Smith v. Hampshire and created effectively out of whole cloth, a doctrine called mutual prescription which was that priority didn’t quite trump because the appropriator cities were pumping adversely to the overlyers, so basically there was a pro rata deduction,” Mr. Garner said. “And that was the doctrine of mutual prescription, so that’s the first time the court found a way to avoid just having to implement this overlying priority. It was to protect the cities.”

And so mutual prescription was considered the law of the state of California until the case, Los Angeles vs. San Fernando, was filed in 1955. This case had a different fact pattern than Pasadena v. Alhambra. Everyone had started pumping before the overdraft began, and because water levels were falling, the City of Los Angeles started importing more water from the Owens Valley, which had ramifications that played out in other litigation, and so they reduced their level of pumping.

“As per public policy, they did the right thing; they reduced local sources and they got water from somewhere else,” he said. “Of course, no good deed goes unpunished when it comes to adjudications, so other parties used that against them, and prevailed at the trial court. The court went with mutual prescription, so because Los Angeles had pumped less, they got less. The California Supreme Court got the case and they threw that out. They said that mutual prescription was not needed to get to a fair result in this case, and so they didn’t use mutual prescription.”

“When I started practicing law which was about a dozen years after that, people thought that mutual prescription has been overruled,” he continued. “Now we understand that if you read it very carefully, they didn’t overrule it – they just said in that situation, they were not going to use it.”

Next, the Mojave Adjudication is important in terms of how quickly SGMA will get implemented and how much litigation there will be around it. Mr. Garner noted that in the 100-page decision in the LA v San Fernando case, there were two important footnotes that were argued in the Mojave Adjudication case. One was footnote 61, which referenced the doctrine of equitable apportionment and which said, ‘this is where the Supreme Court was pointing the law should go when a basin is in overdraft; all the pumping is unreasonable, you have to look at all these factors and reach a fair allocation.’ The other side said ‘no, water rights are water rights, look at footnote 100, it says that overlying rights have priority and you have to go with the priority on overlying rights.’

“When we were sitting in oral argument and the justice asked the question when the person was arguing this and said what about footnote 100, you knew where it was going to go,” he said. “So we got a very strict water rights decision from the California Supreme Court in Mojave which said reasonable use is the most important thing in California water law, but first you have to go through and determine water rights and only then can you make adjustments to priority. As I like to say, in California we always start with priority but we rarely end with priority. But it is a journey to get there.”

Justice Ron Robie notes that SGMA says it doesn’t affect water rights in any way, and so nothing in the Groundwater Sustainability Plans is going to create a right or take away a right from anybody. So that absence then may mean the law in Mojave is still going to be significant.

“Yes absolutely, let me be very clear,” said Mr. Garner. “I think anyone who was involved in the drafting of SGMA would say that there was zero chance this would have passed if it affected water rights, so it had to be in there in multiple places that it was not going to affect water rights, and yet at the same time, you’re giving these GSAs and the GSPs the authority to reduce pumping. You can reduce pumping, but you can’t affect water rights. How exactly does that fit together? That’s a really good question. Admittedly when we were drafting it, we didn’t really exactly know, but we knew we needed to get something done. It was going to have to get sorted out later, and it will get sorted out later.”

The Santa Maria case started in 1997 and took 15 years to get to a decision. “As lawyers sitting there, we were saying what do we do after this Mojave case? We have to try the water rights.”

He pointed out that what brings settlements about in adjudications is people having to go to court and prove their water rights, so they did try water rights. “It’s the first time prescription was actually tried because it had been stipulated to in the prior cases where it had been involved, and we were successful in proving prescription and it was upheld on appeal,” he said.

The Antelope Valley adjudication took 16 years to make it through trial court and is currently on appeal. “It’s the largest adjudication ever,” he said. “The Antelope Valley basin is 1390 square miles. We had 70,000 parties; 65,000 in one class. We created a class in the basin; no one had ever used a class in a groundwater rights case before, but we had two classes. The federal government was involved; there is an exception in federal law that you can bring the federal government into the state court in a full basin adjudication if it’s comprehensive, so we did that extraordinarily complex case. And so that’s up on appeal right now.”

Mr. Garner noted that there always seems to be some party who challenges the decision. “Most parties settled, but in this case, we have the unexercised overlyers who did not go along with that class, and so they are appealing it.”

“The reasons these cases take so long is the complete lack of data,” he said. “I have to dash to the airport after this and I have a lot more information about traffic patterns than we do about the most essential resource that we have, which is ridiculous but it’s true. We generally in these basins do not know who is pumping and we do not know how much their pumping. That’s the baseline that’s trying to be established right now to get to a point where you can even start to regulate.”

Justice Robie noted that during the Antelope Valley adjudication, Mr. Garner’s client, the County of Los Angeles, hired people to fly over the farms to measure the acreage that was being farmed, as nobody really knows because you don’t have to report. “They had to spend money on that kind of discovery to figure out if these people were really telling the truth when they put their claims,” he said.

Mr. Garner noted that the case started before the technology was anywhere close to where it is now, and acknowledged that in fact, they did do that.

WILL ADJUDICATIONS CONTINUE UNDER SGMA?

In terms of the future and where things are headed, Mr. Garner said that he does think there will be continued litigation in the future. He noted that he is currently involved in an adjudication in the Las Posas Basin; the GSP is not even in place yet and a group of landowners have filed a lawsuit. Another lawsuit has been filed by the City of Ventura that mostly involves the Ventura River but implicates two groundwater basins that are interconnected with the river.

Mr. Garner said he thinks there will be continued litigation for two reasons. First, lawyers are cheap compared to water. “If you do the math, water is $10,000 an acre-foot, and you can pay a lawyer a lot of money for a long time and that doesn’t come anywhere close to the cost of replacing that water supply,” he said. “I’ve seen that play out in some of the adjudications I described, most dramatically in the Antelope Valley where the other side was doing that to our client, and it is very easily to delay cases procedurally as Justice Robie and other jurists could tell you.”

Secondly, with SGMA there is the ability to reduce pumping so what’s the standard going to be? “Certain parties will stand up and say, you haven’t determined my water rights, you can’t cut my pumping, but I think it really comes back to reasonableness in Article 10, Section 2,” he continued. “Is the reduction unreasonable? If the estimate is that the basin is 25% in overdraft, and the GSA cuts everyone 20% and gradually decline to that number while the water rights are sorted out, and then someone prevails and they should have only been cut 15%. So was that 5% really unreasonable for that period of time and now they get their full amount back? I think that’s tough to show. Now if they should have cut back 5% and they are cutback 50%, then that’s going to be a whole different issue.”

As the GSPs go forward, there really is the ability to provide relief even while the litigation is going on, so it’s not end of management that the litigation goes on, it just may slow some things down, he said. “The SGMA timeline is long,” Mr. Garner said. “One way, SGMA, or another way, courts and adjudications, we are going to have groundwater management by 2040, so I think that’s the bright side.”

SB 226 and AB 1390: STREAMLINING THE ADJUDICATION PROCESS

Ron Robie noted that SB 226 and AB 1390 that passed in 2015 changed some things to streamline adjudications and harmonize the process more with SGMA. Previous adjudications were under common law. The new legislation codified the rules for basin-wide adjudications; it amended the code of civil procedure, and also added a chapter on adjudications in SGMA.

Mr. Garner noted that service (meaning notifying landowners of the adjudication) is difficult and expensive, so the new legislation now allows for service by publication, which will be a big timesaver.

Other elements of the streamlining legislation include presumption that adjudications are complex so they will now automatically go to a judge that handles complex litigation; the court can divide the case into phases; there are limitations on discovery, and measures to prevent relitigating issues. It also requires the court to consider some matters in advance of other things, such as deciding prescriptive rights; it authorizes the appointment of a special master which is not under the present law, and it requires all parties all serve the quantity of groundwater extractions for past 10 years, type of water rights claimed, purpose to which groundwater is being used, and other data.

“The groundwater adjudication law is going to speed things up if it works, and we’ll see if it does,” said Justice Robie.

WATER TRADING AND THE ROLE OF ALLOCATIONS AND ADJUDICATIONS

Next, Christina Babbitt discussed the work that the Environmental Defense Fund (EDF) is doing to help GSAs and stakeholders to resolve issues without having to resort to adjudication.

First, she explained the mission of the Environmental Defense Fund, which is an international environmental non-profit that works across numerous natural resource issue areas to devise solutions that work both for people and for nature. Science and economics are at the foundation of the work that we do, she said. EDF strongly believes in the role of trading to achieve better outcomes for both the natural environment and resource users as long as these programs are designed well. EDF works on programs such as carbon markets, catch share programs for fisheries, and designing crediting programs for habitat enhancement and protections.

Ms. Babbitt is part of the EDF team working on western water issues, and in particular, she is working on surface and groundwater markets which they think offers a lot of promise in working towards solutions. She noted that EDF has a long history in working on water trading in California, specifically healthy water trading. In her presentation, she said she would be deviating somewhat from the topic of adjudications to discuss water trading and allocations, but there is a strong nexus with adjudications as clearly defined groundwater pumping rights are the foundation for any trading program.

She began with the potential role of water trading under SGMA. Under SGMA, overdrafted basins will need to decrease their dependence on declining groundwater resources. This will be perhaps most acutely felt in the San Joaquin Valley where there are predictions that up to 750,000 acres of irrigated land will need to go out of production to comply with SGMA, she said. Many GSAs will inevitably need to impose reductions in pumping to achieve sustainability goals.

“One tool that we think offers a lot of promise is groundwater trading programs or groundwater markets,” Ms. Babbitt said. “We think there’s a lot of opportunity to help soften the landing for GSAs working to comply with SGMA by adding increased flexibility and providing increased access to water in times of scarcity.”

Although water trading is one tool, it is definitely not a silver bullet, she cautioned. “It offers promise in a lot of areas, but you’re really going to need a portfolio of approaches. You’re going to need to think about supply solutions and demand management strategies in combination with one another.”

Water trading in California will increase under SGMA, and in fact, it’s already starting in Ventura County with Fox Canyon Groundwater Management Agency implementing the first groundwater trading program under SGMA. EDF is working on establishing a water trading program in Kern County, as are other parts of the state.

There is an opportunity to improve the way water trading programs are designed. Ms. Babbitt acknowledged that markets are not universally accepted and not trusted by some, and rightfully so. “Trading programs haven’t always been designed with the utmost transparency in mind, and a lot of transfers often favor the big players within the system,” she said. “You also have to consider third party impacts. That’s one of the reasons EDF is so involved – because we really think there’s an opportunity to design healthy water trading programs that consider environmental and community needs and use this to build a more resilient water system in California.”

Ms. Babbit noted that water trading is definitely not new to California; it’s been happening for some time, both through informal and formal mechanisms. Adjudications have helped pave the way for some of these markets by parties having clearly defined groundwater pumping rights. Groundwater trading programs are an important tool to help people manage their water more flexibly, which can be a motivating factor in settling adjudications, she said.

She also noted that water trading programs are now going to have to be designed to comply with SGMA which means addresses the six undesirable results, including declining groundwater levels, water quality degradation, and subsidence.

While water trading programs are on the horizon, it will take time for them to develop. “Stakeholder buy-in is essential and really laying the foundation on which to build these programs,” she said. “You need to have information and data. How much water do you even have to work with in your basin? What are the needs within your basin? Can you quantify those? And above that, you’re going to have to establish a cap and then decide how you actually want to divide the pie – how you want to allocate groundwater.”

Ms. Babbitt then turned to her experiences working with EDF to advance water trading to date, and in particular, the challenge of groundwater allocations. Back in 2015, when SGMA implementation was just getting underway, not too many groups were thinking seriously about the different projects and actions they are going to achieve sustainability.

“In all honesty, I think people were thinking about what is SGMA, what does it mean to my area, what does it mean to me individually, what does it mean to my livelihood, is it really here to stay, and do I need to think seriously about it,” she said. “Once those realizations started to sink in, people then started to turn to these supply-side solutions. OK, what water can I import into my basin or thinking about recharge, and without a doubt, these both are going to be vital strategies in moving forward. But it really is about a portfolio of approaches that in some areas are really going to need to do a lot more of.”

In order to build the knowledge base and identify some of the uncertainties, the EDF worked with Mammoth Trading to develop a water trading paper intended to demystify trading programs and how they might work under SGMA. They also hosted a series of workshops with the Water Foundation and with Mike Young, one of the architects of Australia’s water program, that brought in legal and technical experts. Through all of these efforts, the one big challenge identified was the role of groundwater allocations as a foundation to these programs.

“The real challenge is how you devise a legally acceptable allocation scheme that fits with local conditions and that are accepted by stakeholders,” Ms. Babbitt said. “As a groundwater manager, you see the legislation that SGMA does not impact groundwater rights, but then you have this task in front of you of managing groundwater and in a lot of areas, you’ll have to cut back, so how do you reconcile these and what does that mean? A lot of people are struggling with how to best move forward.”

She also acknowledged that not all Groundwater Sustainability Agencies are thinking about allocations – there are other strategies, and not all of the GSAs that are thinking about allocations are thinking about water trading programs, although allocations do pave the way for those programs and other incentive programs to be placed on top. But you can’t have a water trading program if you don’t have clearly defined groundwater pumping rights, she noted.

EDF recently released a paper with New Current Water and Land, a groundwater management strategic consulting firm in the Central Valley, that offered some recommendations for GSAs as they consider groundwater allocations. The paper provides some information on groundwater rights and parties, and lays out some potential allocation methods as well as some advantages and disadvantages of each approach.

Ms. Babbitt then discussed different ways people are considering allocating groundwater. She noted that most of these strategies aren’t actually legal, but people are thinking about them. “One method is essentially you have a cap, you look at your overlying acres, and all landowners are given an equal amount of groundwater to pump, whether they use that water or not. You could also look at only the people who have used groundwater in the past and then divide groundwater equally among those users. Or, if you even have enough information which might be questionable, you could look at historic pumping and allocate a percentage of that.”

Justice Robie noted that in the Antelope Valley adjudication, there were carrot growers that used 2 acre-feet per acre per year and the alfalfa growers, who used 5 acre-feet per acre per year. “Now it occurred to me, the parties were not going to raise the constitutional waste of water or reasonable use provision because the only people in the adjudication were just the water users, and so they’re not going to do that,” he said.

“But now the Attorney General can join in an adjudication and you can have a public interest adjudication where maybe somebody would say those rights that were claimed were unreasonable, and you just said, give everybody a certain amount,” continued Justice Robie. “If you just looked at it normally, you might say, why not give everybody the same? But you have these crop patterns. I think that was one of the things that was wrong with the old adjudication law – that you could validate an unreasonable use of water because there was nobody there to point the finger at them.”

“It certainly was an argument we had in our cross complaint,” said Mr. Garner. “We never actually had to make the argument that growing certain types of crops out in the desert was unreasonable, but that is, shall we say, an incendiary argument, frankly.”

Ms. Babbitt noted that with all the different allocation methods, there are a lot of challenges that exist with each of those. “Some people might say it’s fair if every overlying user gets a share of water, but then you could also look at people who have spent money to develop those rights,” she said. “Obviously different crops require different demands, and equity is a big issue that enters this discussion on all levels, and it is something that is going to need to be considered.”

One of the recommendations in the paper is that when moving forward with groundwater allocations, the role of groundwater rights and priorities must be considered to the extent possible. “We make the case if you devise groundwater allocation schemes in a manner that’s consistent with the fundamental principles of groundwater law, the allocation scheme they devise will more likely be durable and legally defensible,” she said.

Ms. Babbitt cautioned that the allocations schemes being considered in terms of equal across users and others might be politically expedient, but if there isn’t broad consensus on those allocation methodologies and it gets brought court and tested, you could be sent back to square one, and SGMA deadlines are not necessarily going to be that forgiving. “It’s important that under SGMA, if people do come together to agree on an allocation scheme, the question begs, at one point into the future will someone decide that they are not happy?”

There are other considerations to be thinking about with respect to allocations. Ms. Babbitt acknowledged that she works for an environmental organization so perhaps that’s her bias, but the needs of the environmental and the communities need to be considered up front when thinking about groundwater allocations, because one can’t develop an allocation scheme, throw a trading program on top of that, and hope things turn out well. It’s probably not going to work out, she said.

“SGMA doesn’t operate in a silo, so if you’re in a basin and you have endangered species issues or you have flow requirements, there’s the human right to water … to the extent that pumping impacts any of those issues, there’s going to need to be some kind of coordination between these groups coming together and figuring out how to address those issues,” she said. “And I can’t emphasize too much that measurement tracking and enforcement are essential. You need to know how to best move forward. You need to be able to include mechanisms in your allocation scheme that allow you to adapt as you get more information.”

Ms. Babbitt said she thinks the SGMA process offers a lot of promise in bringing local groups together to devise groundwater management solutions that are tailored to local conditions. When stakeholders come together and agree, they have good leadership, then the path forward is going to be a lot smoother, she said. Noting the Las Posas and City of Ventura adjudications will be the first under the new law, so it will be interesting to see how these cases lay the foundation for how the SGMA process in these streamlined adjudications will play out on the ground. Even with the new legislation, adjudications are going to remain expensive, time consuming, and take a lot of resources, which unfortunately in California groundwater management, are not in ample supply, she said.

Ending on a hopeful note, she said that in advancing the SGMA process, if people can’t come together to come to an agreement, there are probably ways to use those streamlined adjudications to establish clear deadlines in how to move forward while also creating certainty around pumping rights.

“So in closing, I’ll just say I hope groups take advantage of the streamlined adjudication as a tool to help facilitate the process instead of a tool to impede the process.”

STIPULATED AGREEMENTS, UNEXERCISED RIGHTS

Justice Robie asked that if an agreement was worked out among a basin, why couldn’t that agreement be a stipulated adjudication? Then you would have definitive rights and they could be much more flexible in the future.

Mr. Garner said that it absolutely could. The Mojave court basically said that the parties could stipulate effectively whatever they wanted to; the issue was that if they were impacting other users who don’t agree, they would want to challenge it.

Justice Robie noted that the Long Valley case says that unexercised riparian rights have to be recognized; is that still an issue?

Mr. Garner agreed, noting that the ruling says they can’t be extinguished. The issue is the unexercised overlying rights -the people who have never pumped water on their land. “There is a body of law that’s very clear that says an overlying right is acquired by real property ownership; it’s not gained by use or lost by disuse,” he said. “Then on the other side, there is the adjudication law which talks about this concept of self-help, so when prescription is happening, farmers don’t have to file a lawsuit to protect their water rights. Mojave says that in black and white, it says they can retain some of their rights, it picks up on Pasadena by pumping self-help – that’s the mutual prescription idea.”

“If you take those two pieces: pumping shouldn’t matter at all but self help matters in a prescription case and you get to Antelope Valley where you have a situation where the agricultural pumping alone exceeded the safe yield during the period of prescription, and you have public agencies that did prescript, what do you do with the unexercised overlyers?,” he continued. “Because of the self-help doctrine, doesn’t pumping have to matter at some point? Or should anyone who didn’t prescript, which would be all the non-public agencies, do all the self-helpers and the non-pumpers have to share all that water equally?”

Mr. Garner said that the case was never going to settle if that was the result. “So the self helpers got the benefit and the unexercised overlyers got subordinated and we’ll see how that plays out. But Long Valley didn’t say they had to be equal; Long Valley said you can’t extinguish them but you could subordinate them under certain circumstances which we did, so we’ll see … “

“I understand the reason for the rule, but in a case of absolutely limited resources, you shouldn’t be able to sit on your rights,” replied Justice Robie. “You shouldn’t be able to come in and pre up people who invested a lot of money and so forth, so we’ll see what happens with this in the long run because the courts have to struggle to try to find a way of complying with the law determined by the California Supreme Court.”

Justice Robie noted that the Mojave case is the structure of the law as it is today, which does give a primacy to overlying landowners. Mr. Garner noted that because prescription was not pled in Mojave, there was no prescription to flip it. “The uncertainty in the overlying right is where the issue could arise with just allocating water to people who pumped, but again, if everyone agrees to it, it’s not a problem.”

Ms. Babbitt noted that groundwater managers on the ground need to know what the possible scenarios are that they could move forward with. They are working to develop some sort of legal guidance so managers can weigh their options.

“The courts are very happy with people who agree to things,” said Justice Robie. “If people can come forward with an agreement, you don’t have to exactly and completely follow the law if everybody agrees to it. The Supreme Court said in the Mojave case, they wanted people to work things out. That’s the policy of the law, and I think if you do it right, you can do it.”

AUDIENCE QUESTIONS

Question: Christina, I’m having a difficult time conceptualizing water trading. Can you give an example of water trading that has occurred or typical of water trading?

Ms. Babbitt noted that sometimes in conversations, domestic users think they would have to participate in a water market to get water, and that would not be a well-designed market. She then gave an example of water trading: “If you do an allocation scheme and you recognize your human uses and environmental uses; then for irrigated agriculture, you could enter the market if you’re an irrigator and you have almond trees and a hardened demand for water, so in a drought year, you might have a neighbor that grows alfalfa and has the flexibility of fallowing their field and selling their water to someone who has a hardened demand. That’s what I mean by these well-designed healthy markets.”

Justice Robie added that there is the potential to do water trading on a larger scale. “For years, there have been transfers using the California Aqueduct and other physical facilities. People in Kern County have sold their contract amounts of water from the State Water Project to people in the Bay Area, and the reason they can do it is because the pipeline can deliver it to the Bay Area and just not deliver it to Kern County, so there have been a lot of exchanges in the past … those are the obvious ones because people have a contract right or a contract entitlement, but we’re now trying to deal with people who don’t have that but want to do it anyway in a given area.”

Question: Do any of you have any thoughts about the recent quiet title action down in the Paso Robles basin? My understanding is that the landowners there were incentivized to pursue that and to be aggressive with that, possibly with a fear of what might happen with the parallel SGMA process. What is the intersection between that quiet title action and SGMA?

Eric Garner began his answer by noting that his law firm represents the City of Paso Robles and he worked on the case. “I can’t say that I think the SGMA process incentivized them to proceed with that,” he said. “They sued the city, proclaiming the primacy of the water rights, which is a fact pattern I’ve seen in Santa Maria, the Antelope Valley, and then Paso; the city is defending itself and prescription in this last round. It’s a different situation, because no one has joined all the users, so basically you’re just dealing with something where those parties water rights will get determined against the city’s rights. No other landowner in the basin is going to be bound by that and so you’ll have a situation where a GSA/GSP goes forward, they’ll have to incorporate to some extent that water rights determination and different types of rights between the overlyers, so that’s another scenario playing out.”

“That was a preemptive strike, basically,” said Justice Robie.

“Here’s where my bias comes out, but at best, the cities pumping is 10%, more like 5% of the basin,” said Mr. Garner. “You add all the public water suppliers together, you get 10%, which can guess what the other 90% is, and that’s probably where the solution lies, yet it’s a preemptive strike to prevent the public agencies from pumping.”

Question: One of the features of the groundwater adjudication law that was important to the administration was the provision for a preliminary injunction, the thinking being that the obvious reason for preliminary injunction is to prevent irreparable harm during the decades before you reach judgement. The administration also thought this might promote settlement, because people who could live with the preliminary injunction might decide to settle and it might focus the issues on how to change from interim relief to the final. My question is, do you think that’s going to work? Do you that that will be effective, speed up adjudications?

Justice Robie added that what the court would be saying is, now the lawsuit has been filed, everybody stop where you are and we’re not going to let you pump further amounts while we’re adjudicating, which was not possible under the old law.

Eric Garner said he thought that it might. “I was very supportive of that. I wish we had that in Antelope Valley because the case went on, year after year after year. I do think there is potentially some hope that that will speed it up.”

Question: We’ve talked a lot about how SGMA says it doesn’t change existing water rights, but it does have an exception in there, and so my question’s going to be whether you think the exception is going to matter. The exception in SGMA is that between the time of the passage of SGMA and the time of the adoption of a groundwater sustainability plan, nobody can use any new pumping or increased pumping in a claim of prescription. Do you think it’s going to matter in a post-Mojave world?

“I think it matters,” answered Mr. Garner. “I thought that was an important provision to have in there because there is a line from Pasadena about the race to the pumphouse and one of our concerns was in working on that legislation was okay, we’ve set this date, the next four years, everyone’s going to be drilling wells and turning on their pumps and pumping like crazy to establish a higher pumping right, so I think it helps protect the basin, absolutely, because there’s no benefit to pumping more over this period until the GSP is in place.”

“That is consistent with the concept that water rights are not involved in SGMA,” added Justice Robie. “Because you’re not determining a water right, you shouldn’t let it be used also to enhance your potential water right either. So that is a good provision.”

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