On Friday, October 9, 2015, Governor Brown signed a suite of bills that has the potential to significantly increase litigation over groundwater rights. Together, Assembly Bill 1390 and Senate Bill 226 authorize streamlined procedures for comprehensive groundwater adjudications in California superior courts, and ensure that these procedures will not conflict with groundwater management under the recently-enacted Sustainable Groundwater Management Act (SGMA). The Governor also signed Assembly Bill 617, giving private parties the opportunity to participate in implementation of the SGMA and help shape management strategy for the basins over which their land is situated.

Implications for Landowners

Enactment of these bills makes it significantly easier to initiate an action to adjudicate all claims of a right to extract groundwater from a basin. The new legislation also requires relatively quick disclosure of evidence supporting a party's right to extract groundwater, potentially streamlining what had previously been a lengthy and expensive process. Thus, landowners may soon find themselves involved in a global adjudication of groundwater rights, and will need to quickly gather and provide to other parties documentation and evidence required to support their claimed rights. Landowners located in affected basins would be well served to begin gathering information and engaging the consultants and counsel needed to establish their claims.

The new bills will also allow a court to impose on objecting parties a proposed stipulated judgment supported by only some of the parties to the adjudication. Because these new procedures may make comprehensive groundwater adjudication a more viable, attractive option for efficiently determining parties' water rights and priorities, the number of actions filed may significantly increase. Thus, if an adjudication is initiated, landowners should stay engaged with other stakeholders in the basin and consult with legal counsel as necessary to protect their rights.

Outside of the adjudication process, AB 617 elevates the status of private parties under SGMA to potential participants, presenting an opportunity to proactively engage with public agencies in the basin management planning process. If a groundwater sustainability agency has been formed in a basin, any interested private party should approach the agency regarding their willingness to enter into an agreement concerning development of the basin’s groundwater sustainability plan.

The Bills

AB 1390

AB 1390 establishes a framework for comprehensive adjudication of groundwater rights in a basin, including streamlined procedures for notice, case management, and proof of claims. In adjudications under this new framework, California superior courts are empowered to make determinations regarding all groundwater rights and priorities of a basin – whether based on appropriation, overlying right, prescription, or other basis of right – and use of storage space in the basin. AB 1390 also allows courts to issue preliminary injunctions in basins for which a condition of long-term overdraft is demonstrated, placing a moratorium on new or increased extractions.

Plaintiffs may initiate a comprehensive groundwater adjudication by following certain expedited procedures, including serving by mail a detailed notice with a complaint on all landowners overlying a groundwater basin, warning that the lawsuit may impact the landowners' rights to pump or store groundwater. Notice must also be published in one or more newspapers of general circulation in each county overlying the basin. Compliance with the notice and service requirements set forth in AB 1390 is deemed service of process on all interested parties for purposes of establishing jurisdiction.

Parties to the adjudication will be required to fairly quickly disclose extensive information supporting their claimed right to extract groundwater, including the quantity of groundwater extracted from the basin and method of measurement used, the type of water rights claimed, the place of use, any claims for increased or future use of groundwater, and the names and contact information of any person with information that supports the party’s disclosures, including expert witnesses.

AB 1390 also allows a court to approve and enter a proposed stipulated judgment that is submitted by: (1) more than 50 percent of all parties who extract groundwater from or store water in the basin; and (2) groundwater extractors responsible for at least 75 percent of the groundwater extracted in the basin during the five calendar years preceding filing of the complaint. Non-stipulating parties may object to the judgment, but must demonstrate that the judgment does not meet specified criteria or substantially violates the objecting party's water rights. If the objecting party cannot make the required showing, the court may impose the proposed stipulated judgment on the objecting party.

SB 226

SB 226, a companion bill to AB 1390, mandates that groundwater adjudications be managed to minimize interference with completion and implementation of the groundwater sustainability plans in basins where these plans are required (i.e., medium- and high-priority basins). Adjudications in such basins must also proceed in a manner that permits attainment of sustainable groundwater management within the timeframes established by SGMA.

AB 617

Under SGMA, for any groundwater basin designated as medium- or high-priority, a groundwater sustainability agency is required to be formed by June 30, 2017. After formation, the agency is responsible for groundwater management within the basin and is required to prepare and adopt a groundwater sustainability plan. Assembly Bill 617 gives private parties an opportunity to participate in implementation of SGMA, and authorizes groundwater sustainability agencies to enter into written agreements and funding arrangements with private parties to assist in, or facilitate the implementation of, groundwater sustainability plans. Thus, AB 617 authorizes a public-private partnership between the groundwater sustainability agency and other interested private parties in the basin for the purpose of developing and implementing the plans to manage the basin’s groundwater.