The Sustainable Groundwater Management Act and the Common Law of Groundwater Rights: Finding a Consistent Path Forward for Groundwater Allocation.

• Author: Garner, Eric

TABLE OF CONTENTS INTRODUCTION I. THE LEGAL PITFALLS OF GROUNDWATER ALLOCATION UNDER SGMA II. THE BASIN'S AVAILABLE SUPPLY A. Safe Yield v. Sustainable Yield B. Reductions to Sustainable Yield for Environmental Flows and Other Equitable Considerations III. THE EXTENT OF CONNECTIVITY WITHIN THE BASIN AND WITH ADJACENT BASINS A. Groundwater Rights Based on Interconnectivity B. Connectivity Changed by Pumping C. Harmonizing SGMA and the Common Law IV. DEVELOPED WATER A. Developed and Salvaged Water B. Imported Water C. Salvaged Water D. Recycled Water V. DETERMINING WHO HAS A RIGHT TO PUMP GROUNDWATER AND ON WHAT LEGAL BASIS A. Overview of Groundwater Rights B. Prescription and Self-Help in Overdrafted Basins: The Conflict Between Overlying Pumpers and Appropriators C. Conflicts Among Overlying Landowners: The Law of Correlative Rights D. Unexercised (Dormant) Overlying Rights E. California Water Code Sections 106, 106.3, 106.5 F. The Role of Reasonable Use and Equity in Allocating Groundwater VI. POTENTIAL MEANS OF ALLOCATION AND LEGAL RISKS A. Division Between Overlying Landowners and Appropriators/ Prescriptors B. Division Among Users of the Same Class C. Gross Acreage D. Net Irrigated Acreage Approach E. Historic Groundwater Pumping F. Hybrid Approach VII. BASIC ALLOCATION UNDER THE COMMON LAW VIII. PHYSICAL SOLUTIONS AND NOTABLE TRENDS FROM PAST ADJUDICATIONS A. The Role of GSAs in Promoting Compromise and Settlement B. Method of Assigning Rights and Pumping Allocations C. Reduction in Existing Use D. Creating Classes of Users E. Governance and Management F. Carryover G. Transfers H. Allocations for Endangered Species and Flow Requirements I. Consideration of Disadvantaged Community Water Supplies J. Summary CONCLUSION INTRODUCTION

The Sustainable Groundwater Management Act (SGMA) (1) of 2014 imposes considerable responsibilities on local agencies that are tasked with implementing much of the statute. Groundwater Sustainability Agencies (GSAs) (2) must assess how to meet the statute's sustainability goals, define the path to sustainability in a Groundwater Sustainability Plan (GSP), and submit that plan by 20203 or 2022, depending on whether the basin is in critical overdraft, to the Department of Water Resources (DWR) for approval. GSAs must then implement that plan in a manner that achieves sustainability within twenty years. (4) In overdrafted basins, GSAs face the challenging task of decreasing historical reliance on groundwater by either reducing pumping, finding new, and likely more expensive sources of water, or a combination of the two. (5)

SGMA provides GSAs with the powers necessary to achieve these results. It authorizes GSAs to set and enforce pumping allocations, permit transfers of allocations, and assess fees on pumping that may be used to fund basin replenishment. (6) However, SGMA leaves unchanged the common law system of water rights, stating "nothing in [the act], or in any groundwater management plan adopted pursuant to [the act], determines or alters ... groundwater rights under common law." (7) Similarly, the act affirms that a GSA-implemented limitation on pumping "shall not be construed to be a final determination of rights to extract groundwater." (8) The consequence of those clauses is that GSAs cannot change or determine water rights. A dissatisfied groundwater user may challenge in court a GSA's pumping allocation, restriction, or assessment as inconsistent with common law water rights. These complaints will often be litigated within a comprehensive groundwater adjudication--the traditional means of determining contested groundwater rights and management frameworks in California.

GSAs therefore must develop effective solutions to difficult groundwater management challenges while facing the risk of litigation asserting violations of common law water rights. The complexity and uncertainty inherent in the common law amplifies the difficulties facing GSAs. The law of groundwater rights is not a single coherent set of principles; rather, a relatively small number of California Supreme Court cases have developed a highly fact-dependent framework of doctrines and rules. The factual complexities of these issues have made most groundwater basin adjudications contentious, lengthy, and expensive.

Courts hearing these claims must determine the relationship between SGMA and water rights. They must also apply water law principles that are often far from straightforward. And Article X, section 2 of the California Constitution requires all water, including groundwater, be put to "reasonable and beneficial" use. (9) These are not fixed concepts; they change with time and varying circumstance. (10) Creating further uncertainty, the courts' equitable powers require consideration of "physical solutions"--physical groundwater management remedies that harmonize water right priorities with the California constitutional standard to maximize the beneficial use of the resource. (11)

In this Article, we evaluate the key principles, gaps, and ambiguities of groundwater law in California that apply to groundwater allocations, as well as where the law allows for flexibility and creativity. Our goal is to help GSAs reduce the risk of lawsuits and increase the likelihood that their GSPs will survive litigation intact. We make the case that there is much GSAs can do to manage litigation risk and enhance the durability of their GSPs. GSAs can take steps to make groundwater allocations in their GSPs consistent with water rights and can seek to reach a consensus among affected stakeholders. To achieve this, GSAs should develop an understanding of groundwater right priorities, make key findings required by groundwater rights precedent, and, perhaps most importantly, encourage and facilitate negotiations among stakeholders. Even if such efforts do not yield full consensus, they may reduce the scope of any future litigation in terms of the number of opposing parties and the extent of contested issues. Because some disputes will go to court, we also aim to provide a framework for courts to use when determining the appropriate relationship between SGMA and water rights. Lastly, we identify allocation and management schemes in past groundwater adjudications that courts determined were either consistent with water rights or an acceptable compromise submitted by stipulation among the affected parties.

1. THE LEGAL PITFALLS OF GROUNDWATER ALLOCATION UNDER SGMA

   SGMA charges GSAs with achieving "sustainable groundwater management," which is defined as avoiding six specified "undesirable results." (12) Most of the undesirable results are related to the lowering of groundwater levels due to overpumping. The statute gives GSAs a broad range of tools to achieve this sustainability goal, including the power to regulate the quantity of pumping. (13) Basins in which overpumping occurs will have to augment their supply, deploy demand management tools to reduce the amount of groundwater being pumped, or a combination of both strategies. (14) Even if GSAs succeed in supplementing their supplies with managed aquifer recharge or otherwise, basins in severe overdraft will almost certainly need to reduce pumping, sometimes significantly.

   The primary strategy for reducing pumping will require setting a limit on the quantity of water that can be pumped within the basin, allocating available groundwater among users, and enforcing each user's allocation. (15) GSAs will likely require the use of groundwater allocations as a tool to regulate and enforce pumping limitations and to assign responsibility for any pumping decrease needed to achieve sustainability. Virtually all adjudicated basins and special act districts that have sought to remedy significant overdraft have developed pumping allocations in some form. (16) Additionally, basins will need to obtain funding if they hope to use managed aquifer recharge, acquire greater supplies of surface water, build water recycling facilities, or implement some other physical solution. (17) One option for funding these additional supplies is to assess charges on users who exceed their pumping allocation. Pumping assessments can be applied in a variety of ways, and in some circumstances, may be used to incentivize reduced pumping without mandatory limits. (18) Finally, pumping allocations are necessary to facilitate groundwater markets, which, if well-designed, can serve as an efficient and voluntary means of reallocating water in the context of an increasingly limited supply. (19) To function smoothly, groundwater markets require that each user has a well-defined, enforceable, and quantified right they can sell or lease.

   Allocating water to specific users and limiting the amount they can pump, however, is a legally fraught path. The common law in California gives owners of land above a groundwater basin the right to pump water from that basin and use it on the land that overlies the basin. Municipal water suppliers and other appropriators have the right to pump water that is in surplus to the needs of overlying landowners, and also can perfect prescriptive rights against the overlying landowners in specific circumstances. (20) Courts consider these rights to be a form of real property, and in many overdrafted basins in California, groundwater has been allocated by courts resolving disputes about who holds these rights and how much they can pump pursuant to them.

   As noted above, the legislature attempted to dodge the potential conflict between SGMA's mandates and these preexisting water rights by both making clear that nothing in SGMA "determines or alters ... groundwater rights under common law," (21) and that any allocations or limits imposed by a GSA do not constitute a determination of those rights. (22) Consequently, if any party files an adjudication, the ultimate decision concerning pumping allocations will rest with the courts, not the GSA. (23)

   Pumpers who are dissatisfied with...