Published in the March/April 2015 issue of Vineyard & Winery Management.

In 2014, for the first time in its 164-year history, California enacted a law that comprehensively regulates the extraction and use of the state’s groundwater. This legislative action came against the dramatic backdrop of California’s extended and increasingly severe drought, which has resulted in huge cutbacks in surface water availability and put a spotlight on the state’s strained groundwater supplies. As a result, California’s farmers, municipalities, irrigation districts and other water users must adapt to a new, unknown and unpredictable legal frontier.

The new legislation is embodied in a package of bills adopted by the California legislature and signed by Governor Jerry Brown in September 2014. The proposed legislation is not without controversy. Many stakeholders questioned the need for change and highlighted the potential adverse impacts on farmers who were already reeling from restricted surface water supplies. Although the water planning, water conservation and habitat protection goals that largely prompted this legislation are laudable, the complicated state/local regulatory scheme and unknown outcomes have created legitimate concern.

In this article, we will discuss the structure of the new groundwater legal regime, upcoming milestones, and the possible impacts it could have on California vineyard owners and other stakeholders who need reliable access to groundwater supplies. This comprehensive regulatory framework will also be closely followed by other states to see whether it will become a new paradigm for effective groundwater regulation.

California’s Historic Groundwater Regulation

California has traditionally had two different sets of water rights and corresponding set of legal regimes. First, surface water has been governed by a hybrid system of riparian and appropriative rights. A landowner adjacent to a stream or other water body generally has a riparian right to use the natural flow of the stream for beneficial purposes on riparian land without a permit, although this diversion is correlative to other riparian users. In addition, a person can apply to the State Water Resources Control Board (State Board) for an appropriative right to divert surface water or for long-term storage. These rights require environmental and agency review and, once this process is navigated, the water must be put to beneficial use. Riparian rights are not governed by a priority system, while appropriative rights are governed by a first-in-time rule whereby an earlier right has priority in times of shortage.

California’s groundwater has not been directly regulated by the state, except in situations where a court adjudication of a groundwater basin has been instituted. In general, landowners have “overlying rights” to extract groundwater underneath their land and put it to beneficial use. These rights are subject to accommodating the rights of other landowners overlying that aquifer. California does not however have an appropriative right system for groundwater use.

The New Legislation

The new groundwater legislation is designed to “achieve integrated management of surface water and groundwater” and to “promote sustainable groundwater management.” It recognizes the traditional primacy of local government regulation in the groundwater area and states its intent to protect overlying and other groundwater rights. However, it does provide several state agencies with authority to regulate important aspects of the law.

The heart of the law is its technical goal of “sustainable groundwater management,” which is defined to be “management and use of groundwater that can be maintained during a 50-year time period without causing an undesirable result.” The listed “undesirable results” are the usual suspects, including depleted supply, degraded water quality, seawater intrusion and land subsidence. Notably, the statute does not specify how much supply depletion or water quality degradation will be allowed during the 50-year planning horizon, so it is impossible to predict at this early point how the statutory criteria will affect groundwater extraction.

The Act will initially be implemented at the local and/or regional levels. A Groundwater Sustainability Agency (GSA) will be designated for each groundwater basin that is categorized as a medium or high priority. Each GSA will need to develop a Groundwater Sustainability Plan (GSP) that will govern groundwater extraction. The GSAs are given expansive powers: among other things, GSAs can limit or suspend extractions, require a rotating use of wells and establish groundwater allocations.

The GSA and GSP process is being “rolled out” over a fairly long time frame. The designation of GSAs does not need to be complete until June 30, 2017 and the adoption of a GSA does not need to occur until 2020 or 2022 (depending on the basin conditions). However, a few very important activities that will help shape the content of the GSPs is occurring in the next two years. The priority categorization of all basins must occur by January 31, 2015. Perhaps most significantly, the State Department of Water Resources (DWR) must publish regulations governing best management practices and other technical aspects to implement the law by January 1, 2017.

Potential Issues

Stakeholders have three major concerns with this new legislation.

1) Is this a disguised shift to state control over groundwater extraction and use?

Although the law expresses an intent to preserve local autonomy over groundwater extraction and use, it provides important powers to several state agencies. Thus, DWR controls adoption of the key technical standards and has the power to approve or disapprove GSPs submitted by GSAs. The State Board can assume management of probationary basins and take other actions. This potential shift to centralized control could be undesirable because state authorities may not be as knowledgeable about, or sensitive to, local conditions. Moreover, given the huge regulatory delays and financial problems involved in the state’s administration of surface water appropriative rights, there is legitimate worry that the same problems will inevitably emerge for groundwater use.

2) Will existing groundwater rights be eliminated or diminished?

Because the legislation specifically articulates a goal of preserving existing groundwater rights, it seems unlikely that such rights will be eliminated. However, it is almost certain that, for many basins, these rights will be conditioned and regulated in ways that they have not been in the past. It is too early to predict how this will play out in the individual basins.

3) Will the law inevitably result in a reduction in the groundwater available for extraction?

This is the key question for many farmers and vineyard owners who need to plan for a reliable future supply of groundwater for their crops and grapes. There is a plausible scenario where the state adopts very conservative technical criteria (or GSP review criteria) to prevent any of the “undesirable results” from occurring over a 50-year period and it thereafter requires all of the GSPs to conform to this standard, thereby reducing in many basins the amount of groundwater available for use. It is too early to know exactly whether, when and where this scenario might play out.

Practical Impacts

Although the exact nature and extent of future groundwater extraction limits in particular basins is impossible to fully identify at this early time, some predictions about the new law can be made:

• The law will likely lead to limitations on a landowner’s right to extract groundwater in medium and high priority basins.
• Existing groundwater rights will likely be conditioned in the future as adverse impacts to groundwater basins are identified, which will change the practical use and value of such rights.
• Well owners will certainly be required to register their wells and will need to file periodic reports on groundwater production and likely on groundwater quality and other parameters as well. There may be de minimis exceptions for low yield wells.
• Producers will likely be charged a fee by the GSA to support the groundwater regulatory structure, and will need to spend funds to meet the expected monitoring and reporting requirements.
• Well owners will be required to comply with all ordinances, rules and regulations established by the basin GSA and will face enforcement action if they do not. 

How to Get Involved

Implementation of the new law will take time. During this ramp-up period, there are a number of avenues to pursue to stay abreast of developments and to possibly help shape the eventual implementation of this legislation.

First, we recommend monitoring DWR public notices and joining applicable listservs. Doing so will provide information on DWR efforts to prioritize groundwater basins, and will also provide current information on DWR’s progress on development of GSPs, Alternative Management Plans (AMPs) and best management practices.

Second, we suggest getting involved in the local GSA process. There will be publically noticed initial hearings and meetings before the GSAs are formed. For some, it may make sense to seek appointment to the local GSA, or to become involved in applicable GSA advisory committees.

Third, we advise associating with stewardship councils, watershed organizations or industry associations that will help provide information and shape policy and regulatory direction.

Finally, because groundwater sustainability will continue to be a key issue in local land use planning and decision making, these forums will provide opportunities to be involved and track progress under the new legislation.

Stay tuned for further developments as this complicated groundwater regime is implemented by California’s state agencies and the newly formed GSAs. California’s groundwater users and many other observers will be closely tracking whether this new regime effectively meets the goals of providing reliable groundwater supplies and promoting sustainable groundwater use.

Buzz Hines and Skip Spaulding are environmental law partners at Farella Braun + Martel LLP. Both frequently assist wine industry clients with environmental law counseling and compliance advice.