MUNICIPAL LAW INSTITUTE SPS - McGeorge School of Law · California due to severe drought conditions (January 2014 Proclamation). The January 2014 Proclamation finds that dry conditions

Symposium ProgramFriday, February 5, 2016

MUNICIPAL LAW INSTITUTES Y M P O S I U M

ENSURING INTEGRITY IN21ST CENTURY CALIFORNIA:

WATER & PUBLIC WORKS IN OUR ARID STATE

PRESENTED BY:The Municipal Law Institute of the League of California Cities

McGeorge Capitol Center for Public Law and PolicyThe County Counsel’s Association

The State Bar of California Public Law Section

ABOUT THE SYMPOSIUMThe Municipal Law Institute Symposium will focus on the challenging issues public agency attorneys face in the areas of water and public works. Panels will focus on: water rights, drought, and enforcement; water issues related to CEQA and land use; alternative watersupplies, including storm water, groundwater, and recycled water; water and public worksfinance issues including those related to Proposition 218; and conflicts of interest, includingan update on the new FPPC Regulations and conflict of interest issues relevant to public works projects.

Registration & Continental Breakfast 8:00 a.m. - 8:45 a.m.

Welcome and Introductions 8:45 a.m. - 9:00 a.m Dean Francis J. Mootz III, McGeorge School of Law James C. Sanchez, City Attorney, City of Sacramento

Panel I: 9:00 a.m. - 10:00 a.m.Navigating the Labyrinth: What Public Agency Attorneys Need to Know About Water Rights and Drought

Panel II: 10:00 a.m. - 11:00 a.m.Balancing Water Supply and Growth in Good Times and Bad

Panel III: 11:15 a.m. - 12:15 p.m.21st Century Gold: The Quest for New Supplies

Lunch Program 12:15 p.m. - 1:30 p.m.Explaining the DroughtThis lunch program is generously sponsored by the Witkin Legal Institute.

Panel IV: 1:30 p.m. - 2:30 p.m.The New Economic Reality: Maintaining Long-Term Solvency for Water Utilities

Panel V: 2:45 p.m. - 4:00 p.m.Topical Ethics Issues in Water and Public Works

Reception: 4:00 p.m.

PROGRAM

Panel INavigating the Labyrinth: What PublicAgency Attorneys Need to Know About Water Rights and DroughtPanelists:Jennifer Harder, Assistant Professor, McGeorge School of LawMichael Lauffer, Chief Counsel, SWRCBMeredith Nikkel, Downey Brand

Panel DescriptionThis panel will explore drought issues relevant to water suppliers and public works projects, including a brief overview of California water law, and cutting-edge insight into the State Water Resources Control Board’s recent drought actions and water conservation regulations. The panel will describe relationships between these drought issues and the Sustainable Groundwater Management Act.

PROFESSOR JENNIFER HARDER MCGEORGE SCHOOL OF LAW

Page 1 of 3

CALIFORNIA WATER LAW1

SOURCE RIGHT SWRCB PERMIT -Land-based: deed

-Use-based: use

SWRCB

REGULATORY

JURISDICTION

COURT

JURISDICTION

Surface Riparian No (deed) Yes*

Enforcement

Reasonable Use

Public Trust

Yes

Surface Pre-1914

Appropriative

Right

No (use) Yes*

Enforcement

Reasonable Use

Public Trust

Yes

Surface Post-1914

Appropriative

Right

YES Yes Yes (often but not

necessarily appeal

from SWRCB)

Percolating Groundwater

pumped from and used on

overlying land

Overlying No (deed) Limited; expanding*

2014 SGMA

Yes

Percolating Groundwater

used on non-overlying

land OR any public

agency use of percolating

groundwater for public

purposes

Appropriative

Right

No (use) Limited; expanding*

2014 SGMA

Yes

Subterranean Stream

pumped from and used on

overlying land

“Riparian” No (deed) Yes* Yes

Subterranean Stream used

on non-overlying land

Pre-1914

pumping

No (use) Yes* Yes

Subterranean Stream used

on non-overlying land

Post-1914

pumping

YES Yes Yes (often but not

necessarily appeal

from SWRCB)

1 Not covered: springs, pueblo rights, federal reserved & tribal rights, adjudication, prescription, area of origin.

* = some ambiguity or controversy: rules currently evolving via pending cases, policy changes, or other.


Page 2 of 3

CALIFORNIA WATER RIGHTS

ACTIVITY WATER RIGHT

SURFACE WATER

Use of surface water (rivers, streams, creeks) on

property touching watercourse.

Riparian Right (no permit)

Use of surface water without riparian property

ownership prior to 1914 and continuing to present day.

Pre-1914 Appropriative Right (no

permit)

Diversion of surface water from watercourse without

ownership of contiguous riparian property and after

1914

Post-1914 Appropriative Right (need

permit)

WATER UNDER THE GROUND

PERCOLATING

Pumping groundwater from underground formation

(e.g., aquifer) that is not a “subterranean stream

flowing through known and definite channels,” and

using such water on property overlying the aquifer

Overlying (no permit)

Any non-overlying use of percolating GW

Appropriative (no permit)

Appropriative pumping during overdraft when

overlying users and appropriators with higher priority

are not pumping

Prescriptive (no permit)

SUBTERRANEAN STREAMS OR UNDERFLOW

Pumping groundwater from aquifer classified as a

“subterranean stream” and using such water on

property overlying the subterranean stream

Treated as riparian surface water right

(no permit)

Pumping groundwater from “subterranean stream” and

initiated prior to 1914

Treated as pre-1914 appropriative surface

water right (no permit)

Pumping groundwater from “subterranean stream” of a

surface watercourse and initiated after 1914

Treated as post-1914 appropriative

surface water right (need permit)

OTHER/HYBRIDS

Any use of water subject to the terms and conditions of

a court decree or judgment

Adjudicated

Use of water pursuant to agreement with someone who

has a valid water right

Contract (underlying water right may or

may not need permit)


Page 3 of 3

CALIFORNIA WATER LAW RESOURCES

BOOKS

Getches, David. Water Law in a Nutshell (4th Ed. 2009)

Hundley, Norris, Jr., THE GREAT THIRST: CALIFORNIANS AND WATER 1770S–1990S (University

of California Press, 1992).

Hutchins, Wells A., THE CALIFORNIA LAW OF WATER RIGHTS (State of California, 1956).

Littleworth & Garner, CALIFORNIA WATER II (Solano Press 2007).

Reisner, Marc, CADILLAC DESERT: THE AMERICAN WEST AND ITS DISAPPEARING WATER

(Penguin Books, 1986).

Stegner, Wallace, BEYOND THE HUNDREDTH MERIDIAN: JOHN WESLEY POWELL AND THE SECOND

OPENING OF THE WEST (Penguin Books, 1992).

Weber, Harder & Bearden, CASES & MATERIALS ON WATER LAW, 9th ed. 2014

ONLINE RESOURCES

Association of California Water Agencies (water supplier association), www.acwa.com

Aquafornia (Water Education Foundation) (water news aggregator) http://aquafornia.com

California Department of Water Resources (State Water Project; California Water Plan; water

use efficiency, etc.), www.water.ca.gov

CA Water Plan Update 2013: www.waterplan.water.ca.gov/cwpu2013/

Water Use Efficiency: www.water.ca.gov/wateruseefficiency/

California Water Law Journal, an online journal published by McGeorge School of Law

http://blogs.mcgeorge.edu/waterlawjournal/

California Water News (email) http://listhost2.water.ca.gov/mailman/listinfo/water_news

CA DWR, one email per weekday, Monday through Friday.

Maven’s Notebook http://mavensnotebook.com/

State Water Resources Control Board, Division of Water Rights,

www.waterboards.ca.gov/waterrights/

http://www.acwa.com/

http://aquafornia.com/

http://www.water.ca.gov/

http://www.waterplan.water.ca.gov/cwpu2013/

http://www.water.ca.gov/wateruseefficiency/

http://blogs.mcgeorge.edu/waterlawjournal/

http://listhost2.water.ca.gov/mailman/listinfo/water_news

http://mavensnotebook.com/

http://www.waterboards.ca.gov/waterrights/

STATE WATER RESOURCES CONTROL BOARD RESOLUTION NO. 2015-0032

TO ADOPT AN EMERGENCY REGULATION FOR STATEWIDE URBAN WATER CONSERVATION

WHEREAS: 1. On April 25, 2014, Governor Edmund G. Brown Jr. issued an executive order

(April 2014 Proclamation) to strengthen the State’s ability to manage water and habitat effectively in drought conditions, and called on all Californians to redouble their efforts to conserve water. The April 2014 Proclamation finds that the continuous severe drought conditions present urgent challenges across the State, including water shortages in communities and for agricultural production, increased wildfires, degraded habitat for fish and wildlife, threat of saltwater contamination, and additional water scarcity, if drought conditions continue into 2015. The April 2014 Proclamation also suspends the environmental review required by the California Environmental Quality Act to allow the emergency regulation and other actions to take place as quickly as possible;

2. The April 2014 Proclamation refers to the Governor’s Proclamation No. 1-17-2014, issued on January 17, 2014, declaring a drought State of Emergency to exist in California due to severe drought conditions (January 2014 Proclamation). The January 2014 Proclamation finds that dry conditions and lack of precipitation present urgent problems to drinking water supplies and cultivation of crops, which put farmers’ long-term investments at risk. The conditions also threaten the survival of animals and plants that rely on California’s rivers, including many species in danger of extinction. The January 2014 Proclamation also calls on all Californians to reduce their water usage by 20 percent;

3. On December 22, 2014, in light of the continued lack of rain, Governor Brown issued Executive Order B-28-14, which extends the California Environmental Quality Act suspension through May 31, 2016 for Water Code section 13247 and certain activities identified in the January 2014 and April 2014 proclamations;

4. On April 1, 2015, Governor Brown issued a new Executive Order that directs the State Water Board to impose restrictions on urban water suppliers to achieve a statewide 25 percent reduction in potable urban usage through February 2016; require commercial, industrial, and institutional users to implement water efficiency measures; prohibit irrigation with potable water of ornamental turf in public street medians; and prohibit irrigation with potable water outside newly constructed homes and buildings that is not delivered by drip or microspray systems; along with other directives;

5. Water Code section 1058.5 grants the State Water Board the authority to adopt emergency regulations in certain drought years in order to: “prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion, of water, to promote water recycling or water conservation, to require curtailment of diversions when water is not available under the diverter’s priority of right, or in furtherance of any of the foregoing, to require reporting of diversion or use or the preparation of monitoring reports”;

http://gov.ca.gov/news.php?id=18379

http://gov.ca.gov/news.php?id=18815

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6. On July 15, 2014, the State Water Board adopted an emergency regulation to support water conservation (Resolution No. 2014-0038), and that regulation became effective July 28, 2014 upon approval by the Office of Administrative Law (OAL);

7. On March 17, 2015, the State Water Board amended and readopted the emergency regulation to support water conservation (Resolution No. 2015-0013), which became effective March 27, 2015 upon approval by OAL;

8. The current emergency regulation has supported Californians’ water conservation efforts, with over 125 billion gallons saved from August 2014 through March 2015; however, statewide water use is only nine percent less than the same months in 2013. Achieving a 25 percent reduction in use will require even greater conservation efforts across the state. In particular, many communities must dramatically reduce their outdoor water use;

9. In many areas, 50 percent or more of daily water use is for lawns and outdoor landscaping. Outdoor water use is generally discretionary, and many irrigated landscapes will survive while receiving a decreased amount of water;

10. Although urban water suppliers have placed restrictions on outdoor watering, the State Water Board continues to receive reports of excessive outdoor water use;

11. Water conservation is the easiest, most efficient and most cost-effective way to quickly reduce water demand and extend supplies into the next year, providing flexibility for all California communities. Water saved this summer is water available later in the season or next year, reducing the likelihood of even more severe water shortages should the drought continue;

12. Education and enforcement against water waste is a key tool in conservation programs. When conservation becomes a social norm in a community, the need for enforcement is reduced or eliminated;

13. Public information and awareness is critical to achieving conservation goals, and the Save Our Water campaign, run jointly by the Department of Water Resources (DWR) and the Association of California Water Agencies, is an excellent resource for conservation information and messaging that is integral to effective drought response (http://saveourwater.com);

14. Many California communities are facing social and economic hardship due to this drought. The rest of us can make adjustments to our water use, including landscape choices that conserve even more water;

15. The California Constitution declares, at article X, section 2, that the water resources of the state must be put to beneficial use in a manner that is reasonable and not wasteful. Relevant to the current drought conditions, the California Supreme Court has clarified that “what may be a reasonable beneficial use, where water is present in excess of all needs, would not be a reasonable beneficial use in an area of great scarcity and great need. What is a beneficial use at one time may, because of changed conditions, become a waste of water at a later time.” (Tulare Dist. v. Lindsay Strathmore Dist. (1935) 3 Cal.2d 489, 567.) In support of water conservation, the legislature has, through Water Code section 1011, deemed reductions in water use due to conservation as equivalent

http://www.waterboards.ca.gov/board_decisions/adopted_orders/resolutions/2014/rs2014_0038_regs.pdf

http://www.waterboards.ca.gov/board_decisions/adopted_orders/resolutions/2014/rs2014_0038_regs.pdf

http://saveourwater.com/

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to reasonable beneficial use of that water. Accordingly, this regulation is in furtherance of article X, section 2 during this drought emergency. This temporary emergency regulation is not to be used in any future administrative or judicial proceedings as evidence or finding of waste and unreasonable use of any individual water user or water supplier subject to this regulation, and are not to affect or otherwise limit any rights to water conserved under applicable law, including without limitation, water conserved consistent with Water Code section 1011;

16. Directive two of the Governor’s April 1, 2015 Executive Order directs the State Water Board to consider the relative per capita usage of each urban water supplier’s service area and require that areas with high per capita use achieve proportionally greater reductions than areas with low per capita use;

17. On April 7, 2015, the State Water Board issued a draft framework proposing increasing levels of required water reduction based upon residential per capita per day use (R-GPCD) for the proposed regulation, and solicited public comments. The Board received over 300 comments on the framework, primarily relating to the levels of required water reduction;

18. On April 18, the State Water Board issued draft regulatory language for public comment based on the April 7 framework and the comments received. The draft regulatory language reflected careful consideration of all comments including those directed at the levels of required reduction. Again, the Board received close to 300 comments;

19. On April 28, 2015, the State Water Board issued a final version of draft regulatory language for comment, followed on April 29 by a formal public notice that it would consider the adoption of the emergency regulation at the Board’s regularly-scheduled May 5 and 6, 2015 public meeting, in accordance with applicable State laws and regulations. The State Water Board also distributed for public review and comment a Finding of Emergency that complies with State laws and regulations;

20. As discussed above, the State Water Board is adopting the emergency regulation because of the continuing emergency drought conditions, the need for prompt action to prevent the waste and unreasonable use of water and to promote conservation, and the specific actions called for in the Governor’s April 1, 2015 Executive Order; and

21. Nothing in the regulation or in the enforcement provisions of the regulation precludes a local agency from exercising its authority to adopt more stringent conservation measures. Moreover, the Water Code does not impose a mandatory penalty for violations of the regulation adopted by this resolution, and local agencies retain the enforcement discretion in enforcing the regulation to the extent authorized. Local agencies are encouraged to develop their own progressive enforcement practices to promote conservation.

THEREFORE BE IT RESOLVED THAT: 1. The State Water Board adopts California Code of Regulations, title 23, section 866 and

re-adopts sections 863, 864,and 865, as appended to this resolution as an emergency regulation;

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2. State Water Board staff will submit the regulation to OAL for final approval;

3. If, during the approval process, State Water Board staff, the State Water Board, or OAL determines that minor corrections to the language of the regulation or supporting documentation are needed for clarity or consistency, the State Water Board Executive Director or the Executive Director’s designee may make such changes;

4. This regulation shall remain in effect for 270 days after filing with the Secretary of State unless the State Water Board determines that it is no longer necessary due to changed conditions, or unless the State Water Board renews the regulation due to continued drought conditions as described in Water Code section 1058.5;

5. The State Water Board directs staff to provide the Board with monthly updates on the implementation of the emergency regulation and its effect. These updates shall include information regarding the progress of the Building Standards Commission, Department of Housing and Community Development, and other state agencies in the adoption and implementation of emergency regulations or other requirements that implement increased outdoor irrigation efficiency for new construction. These regulations and other requirements will extend existing efficiency standards for new construction to the outdoor environment and ensure that California’s new homes are constructed to meet the growing demand with the most efficient standards;

6. The State Water Board directs staff to condition funding upon compliance with the emergency regulation, to the extent feasible;

7. The State Water Board directs staff to work with DWR and the Save Our Water campaign to disseminate information regarding the emergency regulation; and

8. The State Water Board directs staff to update the electronic reporting portal to include data fields for the new reporting required by the emergency regulation.

THEREFORE BE IT FURTHER RESOLVED THAT:

9. The State Water Board shall work with DWR, the Public Utilities Commission, and other agencies to support urban water suppliers’ actions to implement rates and pricing structures to incent additional conservation, as required by directive eight in the Governor’s April 1, 2015 Executive Order. The Fourth District Court of Appeal’s recent Decision in Capistrano Taxpayer Association Inc. v. City of San Juan Capistrano (G048969) does not foreclose the use of conservation-oriented rate structures;

10. The State Water Board calls upon water suppliers to:

a. ensure that adequate personnel and financial resources exist to implement conservation requirements not only for 2015, but also for another year of drought should it occur. Water suppliers that face budget shortfalls due to reduced sales should take immediate steps to raise necessary revenues in a way that actively promotes continued conservation;

b. expedite implementation of new conservation programs by minimizing internal review periods and utilizing emergency authorities, as appropriate;

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c. consider the relative water use and conservation practices of their customers and target those with higher water use to achieve proportionally greater reductions than those with low use;

d. minimize financial impacts to low-income customers;

e. preserve safe indoor water supplies in areas with very low R-GPCD and where necessary to protect public health and safety;

f. promote low-water use methods of preserving appropriate defensible space in fire-prone areas, consistent with local fire district requirements;

g. educate customers on the preservation of trees;

h. promote on-site reuse of water; and

i. promptly notify staff of the supplier’s need for an alternate method of compliance pursuant to resolved paragraph 16.

11. The State Water Board calls upon all businesses within California’s travel and tourism

sectors to inform visitors of California’s dire drought situation and actions visitors should take to conserve water;

12. The State Water Board commends wholesale water agencies that have set aggressive conservation targets for their retail water suppliers;

13. The State Water Board commends water suppliers that have made investments to boost drought-resistant supplies, such as advanced treated recycled water and desalination. Those investments help to make communities more resilient in the face of drought;

14. The State Water Board commends the many water suppliers that have already surpassed their 20x2020 conservation targets. Long-term conservation efforts are critical to maintaining economic and social well-being, especially in light of the impacts of climate change on California’s hydrology;

15. During this drought emergency, heightened conservation that extends urban resilience is necessary. The State Water Board’s focus is primarily on immediate reductions in outdoor water use. Some short-term conservation efforts, such as landscape conversions and installation of efficient appliances, will also support long-term conservation objectives, and are encouraged wherever possible;

16. The State Water Board recognizes that some commercial and industrial customers, while accounting for a significant portion of total use in a service area, have already taken steps to significantly reduce their water consumption and cannot further reduce their use without substantial impacts. However, the Board also recognizes that in many areas there are significant opportunities for reductions in water use by industries and commercial enterprises that have yet to take action, especially those with large areas of non-functional turf. The Board directs staff to respond promptly upon receipt of any request for alternate enforceable methods of compliance. If the supplier believes the conservation standard is unachievable due to firm commercial and industrial water use

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and residential use reductions that would affect public health and safety, it should provide any supporting information or documentation for an alternate method of compliance; and

17. Some water suppliers have called for further refinement of the tiers to reflect a range of factors that contribute to water use, including but not limited to temperature, lot size, and income. Others have called for an approach that provides greater recognition for early investments in conservation, the development of local, drought resistant water supplies, and health and safety needs. These suggestions and many others are important considerations in the development of a more comprehensive, and long term, conservation framework. The State Water Board directs staff to work with stakeholders on a thoughtful process to devise options for extended and expanded emergency regulations should the drought continue into 2016.

CERTIFICATION The undersigned Clerk to the Board does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on May 5, 2015. AYE: Chair Felicia Marcus Vice Chair Frances Spivy-Weber Board Member Tam M. Doduc Board Member Steven Moore Board Member Dorene D’Adamo

NAY: None

ABSENT: None

ABSTAIN: None

Jeanine Townsend Clerk to the Board

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ADOPTED TEXT OF EMERGENCY REGULATION

Article 22.5. Drought Emergency Water Conservation.

Sec. 863. Findings of Drought Emergency.

(a) The State Water Resources Control Board finds as follows:

(1) On January 17, 2014, the Governor issued a proclamation of a state of

emergency under the California Emergency Services Act based on drought conditions;

(2) On April 25, 2014, the Governor issued a proclamation of a continued state of

emergency under the California Emergency Services Act based on continued drought

conditions;

(3) On April 1, 2015, the Governor issued an Executive Order that, in part,

directs the State Board to impose restrictions on water suppliers to achieve a statewide

25 percent reduction in potable urban usage through February, 2016; require commercial,

industrial, and institutional users to implement water efficiency measures; prohibit

irrigation with potable water of ornamental turf in public street medians; and prohibit

irrigation with potable water outside newly constructed homes and buildings that is not

delivered by drip or microspray systems;

(4) The drought conditions that formed the basis of the Governor’s emergency

proclamations continue to exist;

(5) The present year is critically dry and has been immediately preceded by two or

more consecutive below normal, dry, or critically dry years; and

(6) The drought conditions will likely continue for the foreseeable future and

additional action by both the State Water Resources Control Board and local water

suppliers will likely be necessary to prevent waste and unreasonable use of water and to

further promote conservation.

Authority: Section 1058.5, Water Code.

References: Cal. Const., Art., X § 2; Sections 102, 104, 105, and 275, Water Code;

Light v. State Water Resources Control Board (2014) 226 Cal.App.4th 1463.

Sec. 864. End-User Requirements in Promotion of Water Conservation.

(a) To prevent the waste and unreasonable use of water and to promote water

conservation, each of the following actions is prohibited, except where necessary to

address an immediate health and safety need or to comply with a term or condition in a

permit issued by a state or federal agency:

(1) The application of potable water to outdoor landscapes in a manner that causes

runoff such that water flows onto adjacent property, non-irrigated areas, private and

public walkways, roadways, parking lots, or structures;

(2) The use of a hose that dispenses potable water to wash a motor vehicle, except

where the hose is fitted with a shut-off nozzle or device attached to it that causes it to

cease dispensing water immediately when not in use;

(3) The application of potable water to driveways and sidewalks; and

(4) The use of potable water in a fountain or other decorative water feature,

except where the water is part of a recirculating system;

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(5) The application of potable water to outdoor landscapes during and within

48 hours after measurable rainfall;

(6) The serving of drinking water other than upon request in eating or drinking

establishments, including but not limited to restaurants, hotels, cafes, cafeterias, bars, or

other public places where food or drink are served and/or purchased;

(7) The irrigation with potable water of ornamental turf on public street medians;

and

(8) The irrigation with potable water of landscapes outside of newly constructed

homes and buildings in a manner inconsistent with regulations or other requirements

established by the California Building Standards Commission and the Department of

Housing and Community Development.

(b) To promote water conservation, operators of hotels and motels shall provide

guests with the option of choosing not to have towels and linens laundered daily. The

hotel or motel shall prominently display notice of this option in each guestroom using

clear and easily understood language.

(c) Immediately upon this subdivision taking effect, all commercial, industrial and

institutional properties that use a water supply, any portion of which is from a source

other than a water supplier subject to section 865, shall either:

(1) Limit outdoor irrigation of ornamental landscapes or turf with potable water to

no more than two days per week; or

(2) Reduce potable water usage supplied by sources other than a water supplier by

25 percent for the months of June 2015 through February 2016 as compared to the

amount used from those sources for the same months in 2013.

(d) The taking of any action prohibited in subdivision (a) or the failure to take any

action required in subdivisions (b) or (c), is an infraction, punishable by a fine of up to

five hundred dollars ($500) for each day in which the violation occurs. The fine for the

infraction is in addition to, and does not supersede or limit, any other remedies, civil or

criminal.


References: Cal. Const., Art., X § 2; Sections 102, 104, 105, 275, 350, and 10617,

Water Code; Light v. State Water Resources Control Board (2014) 226 Cal.App.4th

1463.

Sec. 865. Mandatory Actions by Water Suppliers.

(a) As used in this section:

(1) “Distributor of a public water supply” has the same meaning as under

section 350 of the Water Code, except it does not refer to such

distributors when they are functioning solely in a wholesale capacity,

but does apply to distributors when they are functioning in a retail

capacity.

(2) “R-GPCD” means residential gallons per capita per day.

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(3) “Total potable water production” means all potable water that enters

into a water supplier’s distribution system, excluding water placed into

storage and not withdrawn for use during the reporting period, or water

exported outsider the supplier’s service area.

(4) “Urban water supplier” means a supplier that meets the definition set

forth in Water Code section 10617, except it does not refer to suppliers

when they are functioning solely in a wholesale capacity, but does

apply to suppliers when they are functioning in a retail capacity.

(b) In furtherance of the promotion of water conservation each urban water

supplier shall:

(1) Provide prompt notice to a customer whenever the supplier obtains

information that indicates that a leak may exist within the end-user’s exclusive control.

(2) Prepare and submit to the State Water Resources Control Board by the 15th

of

each month a monitoring report on forms provided by the Board. The monitoring report

shall include the amount of potable water the urban water supplier produced, including

water provided by a wholesaler, in the preceding calendar month and shall compare that

amount to the amount produced in the same calendar month in 2013. The monitoring

report shall specify the population served by the urban water supplier, the percentage of

water produced that is used for the residential sector, descriptive statistics on water

conservation compliance and enforcement efforts, and the number of days that outdoor

irrigation is allowed, and monthly commercial, industrial and institutional sector use.

The monitoring report shall also estimate the gallons of water per person per day used by

the residential customers it serves.

(c)(1) To prevent the waste and unreasonable use of water and to meet the

requirements of the Governor’s April 1, 2015 Executive Order, each urban water supplier

shall reduce its total potable water production by the percentage identified as its

conservation standard in this subdivision. Each urban water supplier’s conservation

standard considers its service area’s relative per capita water usage.

(2) Each urban water supplier whose source of supply does not include

groundwater or water imported from outside the hydrologic region in which the water

supplier is located, and that has a minimum of four years’ reserved supply available may,

submit to the Executive Director for approval a request that, in lieu of the reduction that

would otherwise be required under paragraphs (3) through (10), the urban water supplier

shall reduce its total potable water production by 4 percent for each month as compared

to the amount used in the same month in 2013. Any such request shall be accompanied

by information showing that the supplier’s sources of supply do not include groundwater

or water imported from outside the hydrologic region and that the supplier has a

minimum of four years’ reserved supply available.

(3) Each urban water supplier whose average July-September 2014 R-GPCD was

less than 65 shall reduce its total potable water production by 8 percent for each month as

compared to the amount used in the same month in 2013.


65 or more but less than 80 shall reduce its total potable water production by 12 percent

for each month as compared to the amount used in the same month in 2013.

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110 or more but less than 130 shall reduce its total potable water production by

24 percent for each month as compared to the amount used in the same month in 2013.







(10) Each urban water supplier whose average July-September 2014 R-GPCD

was 215 or more shall reduce its total potable water production by 36 percent for each

month as compared to the amount used in the same month in 2013.

(d)(1) Beginning June 1, 2015, each urban water supplier shall comply with the

conservation standard specified in subdivision (c).

(2) Compliance with the requirements of this subdivision shall be measured

monthly and assessed on a cumulative basis.

(e)(1) Each urban water supplier that provides potable water for commercial

agricultural use meeting the definition of Government Code section 51201, subdivision

(b), may subtract the amount of water provided for commercial agricultural use from its

potable water production total, provided that any urban water supplier that subtracts any

water provided for commercial agricultural use from its total potable water production

shall:

(A) Impose reductions determined locally appropriate by the urban water supplier,

after considering the applicable urban water supplier conservation standard specified in

subdivision (c), for commercial agricultural users meeting the definition of Government

Code section 51201, subdivision (b) served by the supplier;

(B) Report its total potable water production pursuant to subdivision (b)(2) of this

section, the total amount of water supplied for commercial agricultural use, and shall

identify the reduction imposed on its commercial agricultural users and each recipient of

potable water for commercial agricultural use;

(C) Certify that the agricultural uses it serves meet the definition of Government

Code section 51201, subdivision (b); and

(D) Comply with the Agricultural Water Management Plan requirement of

paragraph 12 of the April 1, 2015 Executive Order for all commercial agricultural water

served by the supplier that is subtracted from its total potable water production.

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(2) Submitting any information pursuant to subdivision (e)(1)(B) or (C) of this

section that is found to be materially false by the board is a violation of this regulation,

punishable by civil liability of up to five hundred dollars ($500) for each day in which the

violation occurs. Every day that the error goes uncorrected constitutes a separate

violation. Civil liability for the violation is in addition to, and does not supersede or

limit, any other remedies, civil or criminal.

(f)(1) To prevent waste and unreasonable use of water and to promote water

conservation, each distributor of a public water supply that is not an urban water supplier

shall take one or more of the following actions:

(A) Limit outdoor irrigation of ornamental landscapes or turf with potable water

by the persons it serves to no more than two days per week; or

(B) Reduce by 25 percent reduction its total potable water production relative to

the amount produced in 2013.

(2) Each distributor of a public water supply that is not an urban water supplier

shall submit a report by December 15, 2015, on a form provided by the Board, that either

confirms compliance with subdivision (f)(1)(A) or identifies total potable water

production, by month, from June through November, 2015, and total potable water

production, by month, for June through November 2013.


References: Cal. Const., Art., X § 2; Sections 102, 104, 105, 275, 350, 1846, 10617

and 10632, Water Code; Light v. State Water Resources Control Board (2014) 226

Cal.App.4th 1463.

Sec. 866. Additional Conservation Tools.

(a)(1) To prevent the waste and unreasonable use of water and to promote

conservation, when a water supplier does not meet its conservation standard required by

section 865 the Executive Director, or the Executive Director’s designee, may issue

conservation orders requiring additional actions by the supplier to come into compliance

with its conservation standard.

(2) A decision or order issued under this article by the board or an officer or

employee of the board is subject to reconsideration under article 2 (commencing with

section 1122) of chapter 4 of part 1 of division 2 of the California Water Code.

(b) The Executive Director, or his designee, may issue an informational order

requiring water suppliers, or commercial, industrial or institutional properties that receive

any portion of their supply from a source other than a water supplier subject to section

865, to submit additional information relating to water production, water use or water

conservation. The failure to provide the information requested within 30 days or any

additional time extension granted is a violation subject to civil liability of up to

$500 per day for each day the violation continues pursuant to Water Code section 1846.


References: Cal. Const., Art., X § 2; Sections 100, 102, 104, 105, 174, 186, 187, 275,

350, 1051, 1122, 1123, 1825, 1846, 10617 and 10632, Water Code; Light v. State Water

Resources Control Board (2014) 226 Cal.App.4th 1463.

December 21, 2015

1

Proposed Regulatory Framework for Extended Emergency Regulation for Urban Water Conservation

Background: On April 1, 2015, Governor Brown issued the fourth in a series of executive orders on actions necessary to address California’s drought. On May 5, 2015, the State Water Resources Control Board (State Water Board) adopted an Emergency Regulation to address specific provisions of the April 1 Executive Order, including a mandatory 25 percent statewide reduction in potable urban water use between June 2015 and February 2016. To reach the statewide 25 percent reduction mandate, the Emergency Regulation assigns each urban water supplier a conservation tier that ranges between 4 and 36 percent based residential per capita water use for the months of July – September 2014. At the time the State Water Board adopted the current Emergency Regulation some urban water suppliers had proposed further refinement to the conservation tiers to reflect a range of factors that contribute to water use. State Water Board Resolution No. 2015-0032 directed staff to work with stakeholders to further develop and consider these factors, including but not limited to temperature, growth, use of drought resilient supplies, and others for adjustment to the Emergency Regulation should it need to be extended into 2016. On November 13, 2015, Governor Brown issued Executive Order B-36-15 (EO B-36-15) calling for an extension of urban water use restrictions until October 31, 2016, should drought conditions persist through January 2016. Between August and November 2015 State Water Board staff convened a small group of individuals representing a variety of water interests to further explore potential modification of the Emergency Regulation. The State Water Board also held a public workshop on December 7, 2015, to solicit input on elements of the existing Emergency Regulation, if any, that should be modified. The stakeholder process and workshop led to development of several proposals for modification of the Emergency Regulation, which are discussed below, along with staff recommendations. Staff recommendations are based on the criteria that modifications to the Emergency Regulation be transparent, intelligible, equitable, reasonable, provide sufficient water savings statewide, and be feasible to implement and enforce. As directed by the Governor in EO B-36-15, this proposal would extend until October 31, 2016 restrictions to achieve a statewide reduction in urban potable water usage.

Climate adjustment:

Stakeholder Proposal: Water suppliers in warmer climates would be granted a reduced conservation standard based on their service area evapotranspiration (ET) relative to statewide average ET. The adjustments would be calculated by multiplying the deviation from average ET by the water supplier’s conservation standard and would range from a 0-15 percentage point decrease to suppliers existing conservation requirement. As proposed, no supplier would have their standard increased. Staff Recommendation: Incorporate a climate adjustment in the Emergency Regulation that reduces the conservation requirement by up to 4 percentage points for water suppliers located in

December 21, 2015

2

the warmest regions of the State. The climate adjustment would be based on each urban water supplier’s approximate service area ET for the months of July through September as compared to statewide average ET for the same months. The adjustment would range from a 2-4 percentage point decrease in an urban water supplier’s conservation requirement depending on service area ET as follows:

Deviation from Average ET Reduction in Conservation Standard

>20% 4%

10 to 20% 3%

5 to <10% 2%

Default service area ET will be based on the California Irrigation Management Information System (CIMIS) Mapped ET Zone for which the supplier’s service area has the greatest overlap. Each Urban Water Supplier will have the opportunity to refine its service area ET using specific data from CIMIS stations within its service area, provided each station used has a continuous period of record of at least 5 years. Staff estimates that this adjustment will result in 1.4 percentage point reduction in statewide water savings from that currently required.

Example Calculation of Climate Adjustment Original Conservation Requirement 32%

Statewide Average ET Jul-Sep 6.13 inches

Service Area Average ET Jul-Sep (Zone 17) 8.4 inches

Service Area % Deviation from Average ET = (8.4-6.13)/6.13 0.37 or 37%

Climate Adjustment -4%

Adjusted Conservation Requirement 28%

Growth adjustment:

Stakeholder Proposal: Each urban water supplier’s 2013 baseline water use would be increased to account for growth in new service connections since 2013. The volume of water per connection in 2013 would be calculated (based on total use divided by number of connections) and multiplied by the number of connections added since 2013. This volume of water could be added to the 2013 baseline to account for new growth, resulting in a decrease to the supplier’s conservation volume requirement but not its conservation standard. Staff Recommendation: Provide a mechanism to adjust urban water supplier conservation standards to account for water efficient growth since 2013. The adjustment will be equal to the ratio of the additional volume of water used since 2013 to the baseline water use for 2013, multiplied by the water supplier’s conservation standard. The volume of water added due to growth will be calculated as the sum of:

http://wwwcimis.water.ca.gov/App_Themes/images/etozonemap.jpg

December 21, 2015

3

1. Number of new residential connections since 2013 multiplied by 165 gallons (55 gallons per person per day multiplied by three people) multiplied by 270 days.

2. Area of new residential landscaped area (square feet) served by connections since 2013 multiplied by 55% of total service area ET (inches) for the months of February through October multiplied by a conversion factor of 0.623 (converting inches to gallons).

3. Number of new commercial, industrial, and intuitional (CII) connections since 2013 multiplied by the average commercial industrial, and institutional water use per connection during February through October 2015.

Staff estimates that this adjustment will result in about a one percentage point reduction in statewide water savings compared to the current requirements, assuming that growth has increased by 4% since 2013 for every urban water supplier.

Example Calculation of Growth Adjustment

# of new residential connections since 2013 4,000

Residential landscaped area served by connections since 2013 10,000,000 sq. feet

Total ET February through October 44 inches

Volume of water attributable to new residential connections = [4000*165*270] + [10,000,000 * 44 *0.55*0.623] 328,966,000 gallons

# of new commercial, industrial, and institutional connections since 2013 700

Average use per CII connection Feb-Oct 2015 900,000 gallons

Volume of water attributable to new CII connections = 700 * 900,000 630,000,000 gallons

Total volume of water attributable to growth since 2013 958,966,000 gallons

Baseline 2013 total water production Feb-Oct 16,000,000,000 gallons

Gallons of water attributable to growth 958,966,000 gallons

Percentage change in potable water production due to growth 6%

Original Conservation Requirement 36%

Adjusted Conservation Requirement = .36 * [1-0.06] 34%

Drought Resilient Sources of Supply Credit:

Stakeholder Proposal Suppliers would receive a credit for desalinated seawater or indirect potable re-use (IPR) water. The credit would come in the form of a one-to-one reduction from the calculated amount of water that needs to be saved under the Emergency Regulation. A supplier could deduct all water derived from desalination or IPR from their total savings requirement. San

December 21, 2015

4

Diego County Water Authority proposes a similar credit for Colorado River water received through long-term transfers of conserved water. No supplier would be allowed to have an effective conservation rate below 8%. Staff Recommendation: Provide a one-tier (four percentage point) reduction to the conservation standard of urban water suppliers using new drought resilient water supplies. The credit would apply to urban water suppliers that certify, and provide documentation upon request, that at least 4 percent of its potable supply is comprised of indirect potable reuse of coastal wastewater (the creation and use of which does not injure another legal user of water or the environment) or desalinated seawater developed since 2013. Staff does not recommend extending this credit to Colorado River water received through long-term transfer of conserved water. Staff estimates that this credit will result in about a 0.6 percentage point decrease in statewide water savings.

Non-potable Recycled Water Use Credit:

Stakeholder Proposal: This proposal would apply to suppliers that meet a large portion of irrigation demand with non-potable recycled water. These suppliers would be able to reduce their 2016 monthly potable water production by the ratio of non-potable recycled water use to total potable water production multiplied by their total water production and their conservation. Reducing 2016 total potable water production would have the effect of reducing the required volume of water saved. Staff Recommendation: Staff does not recommend providing additional credit for non-potable recycled water use. Under the current Emergency Regulation, non-potable recycled water is not counted in total potable water production. Suppliers’ conservation standards are based on residential use of potable water, and while suppliers have been generally expected to target outdoor irrigation as a means of achieving savings, high use of recycled water should not, by itself, prevent a supplier from meeting those standards with reductions from residential and non-residential customers. These suppliers have already realized the benefit of providing recycled water by not having that water counted as part of their total production and not having to reduce use of that water. Urban water suppliers that cannot meet their conservation standard due to a disproportionate share of recycled water use may pursue relief through the existing alternate compliance process on case by case basis.

Groundwater Credits:

Stakeholder Proposal: This set of proposals would provide credit for “sustainable” groundwater management and groundwater augmentation. Suppliers would provide verification that the groundwater supply is formally certified to meet certain eligibility requirements and then would be eligible to deduct certain groundwater use from their total potable production. In effect, the use of eligible groundwater would be counted the same as conserved water. There are four proposed credit scenarios: 1) Groundwater Banking; (2) Conjunctive Use; (3) “Sustainable” Groundwater Management; and (4) Adjudicated Basins. The proposals include requirements that would govern the use of the credits under each scenario.

December 21, 2015

5

Staff Recommendation: Staff does not recommend providing credits for groundwater use or management since the effect of such credits are not well-defined and are generally inconsistent with goal of conserving the state’s remaining surface and groundwater supplies during the drought. While groundwater augmentation with surface water is a critical element of drought resilience, it is materially different than creation of new drought-resilient sources of supply, such as through indirect potable reuse of wastewater or seawater desalination. Using seawater and wastewater that, for example, would otherwise have been discharged to the ocean to create supply adds to existing surface and groundwater supplies, whereas groundwater augmentation uses water that was already part of existing freshwater resources. Moreover, the proposed groundwater management credits do not adequately demonstrate how other users of a groundwater basin, whether adjudicated or not, would be impacted from pumping by the supplier receiving a credit. Suppliers whose basins are replenished with imported water would place additional strain on those supplies by using more water under a credit system. Suppliers whose basins fill without imports may impact others by increasing pumping under a credit system. Even self-sufficient, adjudicated basins are not guaranteed to maintain all uses during an extended severe drought, where the next opportunity for recharge is unknown. Additionally, there is no credible estimate of how much credit would accrue for groundwater management and how that credit would impact statewide savings. Credit for sustainable groundwater management may be appropriate for a permanent regulation, and certainly will be addressed by the Sustainable Groundwater Management Act as that legislation is implemented, but it is not adequately transparent, intelligible, implementable, or reasonable for an Emergency Regulation of limited duration, the chief aim of which is to preserve existing surface and groundwater supplies through conservation while extreme drought conditions persist.

Regional Compliance Approach:

Stakeholder Proposal: This proposal would allow suppliers to jointly comply with their aggregated conservation standards as a single entity. Regions would be allowed to form, on a voluntary basis, based on the criteria for forming a SBx7-7 regional alliance, per Water Code Section 10608.28. A lead agency for the region would report the Regional Conservation Standard monthly to the State Water Board on behalf of the region. Each urban retail water supplier would also continue to report their individual monthly water use data. If a group as whole did not meet its regional conservation target, the suppliers would revert back to their individual requirements. Staff Recommendation: Staff does not recommend providing an option for regional compliance because it will impede timely compliance and enforcement action by the Board and has the potential to reduce individual water supplier accountability. While a regional approach could help water suppliers provide a consistent message about a regional target to their customers, residents and businesses need to conserve differing amounts to achieve a supplier’s reduction target, so the benefits of this approach are not well substantiated. There is no reason that suppliers (and their regional or wholesale partners) cannot develop consistent messaging under the current Emergency Regulation, such as limits on outdoor watering, nor does the current emergency regulation inhibit regionally-grouped suppliers or wholesalers from working together on messaging to encourage conservation. In addition, there are multiple drawbacks to the proposed regional approach. First, it would impede the Board’s enforcement and compliance efforts, by disallowing the Board from using its enforcement tools to timely address the shortcomings of an individual supplier if that supplier’s region was meeting its target. In the case where a region dropped out of compliance late

December 21, 2015

6

in the 270 day life of the regulation, the Board would have little time to institute corrective actions for the individual suppliers. Second, it could encourage regional agencies to focus efforts on additional conservation savings in high-performing communities rather than on steps to change the conservation behaviors of poorer performing communities in order to meet the regional target. Finally, the regional approach would undermine the direct accountability for water supply managers established through the existing regulation. Staff encourages suppliers to work together on messaging and outreach, but believes the drawbacks of a regional approach outweigh any potential benefits.

Elimination of Commercial Agriculture Exclusion:

Stakeholder Proposal: The current Emergency Regulation allows water supplied for commercial agricultural use to be excluded from total potable production, if certain conditions are met. The proposal is to eliminate the exclusion or to change the definition of what constitutes commercial agricultural use to prevent exclusion of water attributable to noncommercial agricultural use or non-agricultural use that may be excluded improperly.

Staff Recommendation: Staff recommends modifying the Commercial Agriculture Exclusion to require certification that customers whose water use is subtracted under the exclusion produce a minimum of $1,000 per year in revenue from agricultural sales and are not subtracting water used on ornamental landscapes. This change would limit use of the exclusion for properties with minimal agricultural sales or mixed commercial agricultural and ornamental landscape use. The $1,000 threshold is consistent with the US Department of Agriculture’s definition of a farm.1 Staff estimates the existing agricultural exclusion has resulted in about an 11,000 acre feet reduction in conserved water since June 2015. Modifying the commercial agriculture exclusion as proposed could result in a slight increase of conserved water.

Exemption for regions without drought conditions and no exports/imports: Stakeholder Proposal: This proposal would allow isolated hydrogeological regions that do not have drought conditions and do not import or export water to be excluded from the conservation standard element of the Emergency Regulation. Suppliers would apply to the State Water Board for an exemption from the conservation standard and provide verification that water resources in these regions are not available to benefit other regions. Staff Recommendation: Staff does not recommend exempting or relaxing conservation requirements for isolated hydrogeologic regions. The current Emergency Regulation contains a reserved four percent tier for suppliers that can demonstrate multiple years of supply and no use of imported water and groundwater. Staff continues to believe the four percent tier is adequate and appropriate for an extended Emergency Regulation given the uncertainty of the state’s surface and groundwater suppliers during the drought.

Revisions for suppliers with significant seasonal or transient populations:

1 See http://www.ers.usda.gov/topics/farm-economy/farm-household-well-being/glossary.aspx, accessed December

11, 2015.

http://www.ers.usda.gov/topics/farm-economy/farm-household-well-being/glossary.aspx

December 21, 2015

7

Stakeholder Proposal: The Emergency Regulation assigned conservation tiers based on R-GPCD during the months of July, August, and September 2014. The proposal is to re-assign tiers based on 12 months of R-GPCD data, because some areas, mainly the desert regions, have the highest population during the winter months. Staff Recommendation: Staff does not recommend changing the process for assigning conservation tiers to account for year round residential per capita water use because it would reduce the regulation’s current emphasis on saving water where outdoor use is highest. In addition, this proposal would in effect provide allowances for properties that are unoccupied for part of the year but irrigated year-round. However, staff proposes to update each water suppliers R-GPCD values using the most up to date July-September 2014 data that had been provided as of January 1, 2016. Water suppliers have also been encouraged and allowed to correct any inaccurate data and provide modified population information to account for monthly changes in population.

A Cap on Credits and Adjustments: Staff recommends that all credits and adjustments be capped to allow up to a maximum of a four percentage point decrease to any individual water supplier’s conservation standard (tier).

Staff Recommendations on Other Elements of an Extended Emergency Regulation: Staff recommends maintaining other elements of the current Emergency Regulation in the extended Emergency Regulation. These elements include the alternate compliance approach, the statewide prohibited end-uses, the monthly reporting requirements for urban water suppliers, and the conservation and reporting requirements for small suppliers. Staff proposes that small suppliers again be required to report after six months of conservation under a readopted emergency regulation. Staff also recommends, based on feedback from both suppliers and the general public, adding a prohibition against homeowners’ associations interfering with certain conservation actions of their association members in violation of existing law.

Next Steps:

Comments are due on this proposed regulatory framework by January 6, 2016

A draft Emergency Regulation will be released for public comment in mid-January 2016

State Water Board consideration of an extended emergency regulation is anticipated in early February 2016.

Input Requested: The State Water Board is interested in receiving feedback on this proposed regulatory framework. Please submit comments with the subject line: “Comments on Proposed Regulatory Framework” by email to: Kathy Frevert at [email protected] by January 6, 2016.

mailto:[email protected]

1

Municipal Law Institute Symposium (Feb. 5, 2016)

State Water Resources Control Board’s Response to the

Deepening Drought in 2015

2016 Municipal Law Institute Symposium

February 5, 2016

Slide 1

Michael A.M. LaufferChief Counsel


2014 as Precursor

• Responding to unusual confluence of conditions• Exceptionally wet start to 2012-2013 winter

rains• Essentially no rain after December 7, 2012• 2013 became the driest calendar year on

record• Mantra of legislative and administrative

response was Flexibility

Slide 2


Drought – Jun 2014

Abnormally Dry 100.00%

Moderate Drought 100.00%

Severe Drought 100.00%

Extreme Drought 76.69%

Exceptional Drought 32.98%

Slide 3Source: noaa.gov/droughtmonitor.unl.edu

2











Abnormally Dry 99.86% -0.14%

Moderate Drought 98.71% -1.29%

Severe Drought 93.91% -6.09%

Extreme Drought 69.61% -7.08%

Exceptional Drought 46.73% +13.75%


Change from June 2015


Drought – Sep 29, 2016







3


Drought – Jan 26, 2016








2015 – Supplies and Hydrology

• Reservoirs were generally the same or worse

• Worst recorded snow pack• Groundwater supplies are

significantly depleted• Four-year persistence and

deepening of the drought in the central growing regions means the situations are more dire

Slide 8

Municipal Law Institute Symposium (Feb. 5, 2016)Ca. Water Law & Policy (Jun. 19, 2015)

Reservoir Storage – Jan 2013

• Shasta & Oroville at 115-116% of historical average

• Folsom at 113%• San Luis at 79%

Source: cdec.water.ca.govSlide 9

4



• Shasta & Oroville at 56% of historical average





• Shasta & Oroville at 66 & 62% of historical average








5


Reservoir Storage – Feb 2016





But we finally have a . . .

Slide 14

Snowpack Source: NOAA MODIS

January 31, 2015 February 1, 2016


Drought Effects

Slide 15

6


2015

• Building off tools from last year• Temporary urgency changes

• Fine-tuning• Informational orders• Iterative water availability analysis

• Enforceable Restrictions• Mandatory conservation regulations

• Expanding Drought-Proof Supplies• Desal Policy

• Funding

Slide 16


Building Off 2014 –2015 Delta TUCPs

• TUCP submitted January 23, Order February 3, modified Order March 5, April 6, and July 3

• Final order resolving all objections December 15• TUCP Changes:

• Delta Cross Channel Gate Closures• San Joaquin River Flows• Delta Outflows• Export Limits• Western Delta Salinity

• Continued the Real-Time Drought Operations Management Team

• Required planning for carryover storage through 2016http://www.waterboards.ca.gov/waterrights/water_issues/programs/drought/tucp.shtml

Slide 17


1,2129%

2,00816%

3,11724%

4423%

7456%

1,61512%

3,89830%

2014 Sacramento-San Joaquin Watershed Use (TAF)

In-Delta Net Use (9%)

Total Delta Exports (15%)

Salinity Control (24%)

Uncapturable Outflow (3%)

Regulatory Outflow (6%)

San Joaquin Upstream NetUse (12%)Sacramento Upstream NetUse (30%)

Slide 18

Source: SWRCB

Total = 13 Million Acre Feet

7

Municipal Law Institute Symposium (Feb. 5, 2016) Slide 19

Source: SWRCB

Total = 13 Million Acre Feet

1,2129%

2,00816%

3,11724%

4423%

7456%

1,61512%

3,89830%









2014 TUCP Water “Savings”

With TUCP• Regulatory outflow was

745 TAF and about 6% of watershed “use”

Without TUCP• Regulatory outflow would

have been ≈400 TAF higher

• 1,145 TAF and 9%• Water available for

conservation and other use

Slide 20

7456% 1,145

9%


1,1178%

1,91813%

3,50825%

1,91813%

8696%

1,2649%

3,75826%








Slide 21

Source: SWRCB

Total = 14.4 Million Acre Feet

8


1,1178%

1,91813%

3,50825%

1,91813%

8696%

1,2649%

3,75826%








Slide 22

Source: SWRCB

Total = 14.4 Million Acre Feet


2015 TUCP Water “Savings”

With TUCP• Regulatory outflow was

869 TAF and about 6% of watershed “use”

Without TUCP• Regulatory outflow would

have been ≈910 TAF higher

• 1,789 TAF and 12%• Water available for

conservation and other use

Slide 23

8696%

1,78912%


Sacramento River Temperature

• Water Year (WY) 2014 Hindcast Modeling• Difficulty predicting temperatures with low storage,

temperatures in late summer/fall of 2014 ~4ºF higher than modeled

• WY 2015 forecast/Temperature Management Plan• Draft April 14/15, updated May 4, final due June 1• End of September Shasta storage levels similar to 2014• More storage now than 2014 but less of the coldest water• Reclamation indicates that Proposed Temperature

Management Plan will meet 56ºF at Clear Creek

Slide 24

9


Shasta Temperature

0

500

1000

1500

2000

2500

3000

1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1

2014 & 2015 Isothermobaths (TAF)

> 56

54 to 56

52 to 54

50 to 52

48 to 50

< 48

20142015

Water Temperature (F)

Slide 25


Fine-Tuning –2015 Informational Orders

• February 4, 2015• Informational order to 1,061 statement

holders • Represents the top 90% of reported pre-

1914 and riparian demand in the Delta• Represents the remaining top 90% of

riparian and pre-1914 demand in the Sacramento and San Joaquin watersheds.

http://www.waterboards.ca.gov/waterrights/water_issues/programs/drought/informational_orders.shtml

Slide 26


Fine-Tuning –2015 Informational Orders

• March 17, 2015• Readopted, expanded, and clarified

authority• Complaint alleging interference• Claimed right with no prior statements• Claimed contract or transfer right for which

no board record• Information supporting waste, unreasonable

use or method of diversion, or unauthorized diversion

Slide 27

10


Fine-Tuning –Future Information Gathering

• Senate Bill 88 (Stats. 2015, ch. 27)• Requires more frequent reporting• Requires more granular data• Ability for real-time diversion data• Eliminates exemptions that limited utility of

existing data• Less likely to have a need for informational

orders in future droughts• Regulations adopted January 19, 2016

Slide 28


Fine-Tuning –2015 Iterative Availability

• No priority-based curtailment regulations in 2015

• Relying on demand and availability curves

• Requires accurate and timely data

Slide 29

5/11/2015

0

10,000

20,000

30,000

40,000

50,000

60,000

3/1/2015 4/1/2015 5/1/2015 6/1/2015 7/1/2015 8/1/2015 9/1/2015

Time‐Averaged Cubic Feet per Second (CFS)

2015 Sacramento River Basin Supply/Demand

Demand includes Legal Delta demand in proportion to the Sacramento River's contribution to the combined Sacramento/San Joaquin 90% FNF inflow to the Delta. The distribution of the Delta water right demand based on proportional inflows from stream systems is only for this curtailment analysis, and does not represent a legal or policy position of the State Water Board.

Daily Full Natural Flow (FNF) from CDEC Stations BND, ORO, YRS, and FOL, current through 5/6/2015.

Monthly Adjusted FNF Forecast points include DWR's May 2015 FNF Forecasts for BND, ORO, YRS, and FOL, and estimated FNF of minor streams for the 90% and 99% exceedance levels. Minor stream FNFs were obtained from DWR's May 2007 Unimpaired Flow Data report, Tables UF 1 through UF 5, UF 7, and UF 10. Water year 1977 was used to reflect similarities in snowpack conditions.

Monthly 50‐Year Average FNF points based on data years 1961‐2010.

Post‐1914 Demand

Riparian Demand

Pre‐1914 Demand

90% AdjustedFNF Forecast


DailyFNF

50‐YearAverage FNF

Water Year 2010 FNF


Post‐14 Curtailment Start

Daily FNFTrend Line

Return flows were added to the three Adjusted FNF Forecast values as follows: For the Delta contribution, an assumed 40% of the prorated Riparian and Pre‐14 demand was used as return flow.

http://www.waterboards.ca.gov/waterrights/water_issues/programs/drought/analysis/



• Assessed each watershed independently• Delta is combined watershed of Sacramento and

San Joaquin• Moved back through priority dates based on continual

reassessment of demand and availability data• Updated priority level on a bi-weekly basis

Slide 30

http://www.waterboards.ca.gov/waterrights/water_issues/programs/drought/water_availability.shtml

11



Notices of Water Unavailability to Implement Priority System• Scott River - April 23-December 10 • Sacramento River and Delta

• May 1-November 2 – All Post-1914 rights • June 12-Sep 18/Oct 27 – All post 1903 rights

• San Joaquin River • April 23-November 2 – All Post-1914 rights• June 12-October 27 – All Post-1903 rights• June 26-October 27 – All Post-1858 rights in Merced Subwatershed

• Deer Creek – April 17-June 3• Antelope Creek – April 3-May 29

Total of 9,329 water rights issued notices of water unavailability

Slide 31



• In-Delta Voluntary Agreements – May 22, 2015• Limited to riparians• Proposed 25% reductions in

• Applied water • Land fallowed

• Subject to inspections• Approximately 200 received by June 1

deadline

Slide 32


Fine-Tuning –2015 Iterative Curtailments

• Inspections prioritized based on:• Non-response to Curtailment Certification

Form• Size of diversion • Season of diversion is currently active• Geographic location• Flow conditions• Inspections began on May 1, 2015

Slide 33

12


Enforceable Restrictions –2015 Conservation Regulations• Covered by Meredith• First ever statewide mandatory conservation

requirements• Specific practices• Enforceable reduction requirements for

urban water suppliers• Tremendous progress compared to voluntary

requirements…

Slide 34


Enforceable Restrictions –2015 Conservation Regulations

Slide 35

4.3%7.3%

11.7%10.3%

6.7%

10.0%

22.3%

6.8%2.6%

3.9%

13.5%

4.3%5.9%

7.9% 8.4% 8.1% 8.4%9.7% 9.5% 9.0% 8.6% 9.0%

0%

5%

10%

15%

20%

25%

Jun‐14 Jul‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Jan‐15 Feb‐15 Mar‐15 Apr‐15

Month over Month Percent Reduction

Cumulative Percent Reduction

Statewide Water Conservation ResultsWater Production Percentage Reduction

(Compared to 2013) 2014 Voluntary Conservation


Enforceable Restrictions –2015 Conservation Regulations

27.5%31.4%

27.0%26.2%

22.4%20.4%

18.3%

27.5%29.6% 28.7% 28.1% 27.1% 26.3% 25.5%

0%

5%

10%

15%

20%

25%

30%

35%

Jun‐15 Jul‐15 Aug‐15 Sep‐15 Oct‐15 Nov‐15 Dec‐15 Jan‐16 Feb‐16Reporting Month

Monthly Percent Reduction Cumulative Percent Reduction 25% Statewide Target

2015 Mandatory Conservation

13


Drought-Proof Supplies –2015 Desal Policy

Slide 37

• May 6, 2015 – Desalination Amendment to the California Ocean Plan• Consistent statewide standards for intake

and mitigation• Two tracks to compliance for intakes• Salinity discharge limits• Provides clear compliance path

for development of future coastal desalinationhttp://www.waterboards.ca.gov/water_issues/programs/ocean/desalination/


Drought-Proof Supplies –2015 Reuse and Funding

Slide 38

• Regulatory• 2014 Adopted Indirect Potable Reuse regulations

for groundwater recharge• 2016 Accelerated schedule for Direct Potable

Reuse• 2015 Conversion of 2014 recycled water general

waste discharge requirements to water reclamation requirements

• Funding• 2014 $800 million in 1% loans for recycled water• 2015 $700 million in Proposition 1 for recycled water


Other 2015 Drought Activities

Slide 39

• Approvals of TUCPs outside of the Delta watershed to preserve water supplies

• Conservation and reporting requirements specific to the Russian River watershed (not just urban)

• Expediting transfers • Implementation of Executive Order Directive 8 on

water pricinghttp://www.waterboards.ca.gov/waterrights/water_issues/programs/drought/pricing/

• Approval of Emergency Drought Salinity Barrier• Emergency drinking water funding • Emergency drinking water connections and

permitting

14

Municipal Law Institute Symposium (Feb. 5, 2016) Slide 40

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page i As Effective January 1, 2016 [rev. 1/15/2016]

Sustainable Groundwater Management Act [And Related Statutory Provisions from

SB1168 (Pavley), AB1739 (Dickinson), and SB1319 (Pavley) as Chaptered]

Table of Contents Uncodified Findings ........................................................................................................................... 1

Government Code ......................................................................................................................................... 2

65350.5. Review and Consideration of Groundwater Requirements ............................................... 2

65352. Referral of Proposed General Plan Updates to Other Agencies ........................................... 3

65352.5. Requirement to Provide Water-Related Documents to General Plan Agency .................. 4

Water Code ................................................................................................................................................... 6

113. State Policy of Sustainable, Local Groundwater Management ................................................ 6

348. Emergency Regulations for Electronic Filing ............................................................................. 6

1120. Reconsideration of State Water Board Decisions and Orders ............................................... 6

1529.5. Fees for Groundwater Extraction Reports Filed with the State Water Board ..................... 6

1552. Authorized Expenditures for the Water Rights Fund .............................................................. 7

1831. Cease and Desist Orders ......................................................................................................... 7

PART 5.2. Groundwater Extraction Reporting for Probationary Basins and Basins Without a Groundwater Sustainability Agency.......................................................................................................... 8

5200. Findings ................................................................................................................................... 8

5201. Definitions ............................................................................................................................... 8

5202. Applicability of Extraction Reporting Requirements .............................................................. 9

5203. Extraction Reporting Requirements........................................................................................ 9

5204. Failure to File Extraction Report; Authority of the Board to Investigate .............................. 10

5205. Report is Not Evidence of Right to Divert or Use .................................................................. 10

5206. Personal Information Treated Like Utility Information ........................................................ 10

5207. Limitations on Claims of Persons not Filing Required Extraction Reports ............................ 10

5208. Enforcement ......................................................................................................................... 11

5209. Submittal of Reports to Local Entities in Certain Circumstances .......................................... 11

2015 Amendments (effective January 1, 2016) are shown in underline and strikeout. BOLD-SMALL CAPS section headings are provided for convenience and reference and are not part of the California Code.

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page ii As Effective January 1, 2016 [rev. 1/15/2016]

PART 2.74. Sustainable Groundwater Management .............................................................................. 11

CHAPTER 1. General Provisions.......................................................................................................... 11

10720. Title ..................................................................................................................................... 11

10720.1. Legislative Intent .............................................................................................................. 11

10720.3. Applicability of Part and Participation of Other Sovereigns ............................................ 12

10720.5. No Modification of Water rights or Priorities, and No Determination of Water Rights Pursuant to this Part ....................................................................................................................... 12

10720.7. Planning Deadlines ........................................................................................................... 13

10720.8. Inapplicability of Part to Adjudicated Basins; Reporting Requirements for Entity Administering Adjudication ............................................................................................................ 13

10720.9. Requirement of State Agencies to Consider this Part and Plans Developed Under this Part .................................................................................................................................................. 15

CHAPTER 2. Definitions ...................................................................................................................... 15

10721. Definitions ........................................................................................................................... 15

CHAPTER 3. Basin Boundaries ............................................................................................................ 18

10722. Use of Bulletin 118 Basin Boundaries ................................................................................. 18

10722.2. Process for Requesting and Approving Basin Boundary Revisions .................................. 18

10722.4. Prioritization of Basins ..................................................................................................... 19

CHAPTER 4. Establishing Groundwater Sustainability Agencies ........................................................ 20

10723. Election of Groundwater Sustainability Agency; Statutorily Designated Agencies and Opt Out Provision ................................................................................................................................... 20

10723.2. Consideration of All Interests of All Beneficial Uses and Users of Groundwater ............ 21

10723.4. Maintenance of Interested Persons List .......................................................................... 22

10723.6. Collective Action to Serve as Groundwater Sustainability Agency; Participation by PUC-Regulated Water Companies .......................................................................................................... 22

10723.8. Notification of Department and Posting by Department ................................................ 22

10724. Presumption that County Will Manage Areas Not Covered by a Groundwater Sustainability Agency; Extraction Reporting to State Board if County Does Not Manage Those Areas ............................................................................................................................................... 23

CHAPTER 5. Powers and Authorities .................................................................................................. 24

10725. Authority Pursuant to This Part Supplementary to Existing Powers .................................. 24

10725.2. Authority of Groundwater Sustainability Agency; Notice ............................................... 24

10725.4. Investigations ................................................................................................................... 24

10725.6. Registration of Extraction Facilities ................................................................................. 25

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page iii As Effective January 1, 2016 [rev. 1/15/2016]

10725.8. Measurement Devices and Reporting; Inapplicability of Section to De Minimis Extractors ........................................................................................................................................................ 25

10726. Reporting of Diversion of Surface Water to Underground Storage .................................... 25

10726.2. Additional Authorities of Groundwater Sustainability Agency Relating to Acquisitions; Augmentation of Local Water Supplies; Transfers and Exchanges of Water; and Treatment ....... 25

10726.4. Additional Authorities of Groundwater Sustainability Agency ........................................ 26

10726.5. Agreements with Private Parties .............................................................................. 27

10726.6. Validation Proceedings; Venue; Time Limitations for Bringing Certain Actions .............. 27

10726.8. Relationship of this Part to Other Laws ........................................................................... 28

10726.9. Requirement of Plan to Take Account of General Plan Assumptions .............................. 28

CHAPTER 6. Groundwater Sustainability Plans .................................................................................. 28

10727. Requirement to Develop Groundwater Sustainability Plan for Medium- and High-Priority Basins; Form of Plan ........................................................................................................................ 28

10727.2. Required Plan Elements ................................................................................................... 29

10727.4. Additional Plan Elements ................................................................................................. 31

10727.6. Requirements for Coordinated Plans, When Multiple Plans Cover a Basin .................... 31

10727.8. Public Notification and Participation; Advisory Committee ............................................ 32

10728. Annual Reporting by Groundwater Sustainability Agency to Department ......................... 32

10728.2. Periodic Review and Assessment ..................................................................................... 32

10728.4. Adoption or Amendment of Plan Following Public Hearing ............................................ 33

10728.6. CEQA Not Applicable to Plan Preparation and Adoption ................................................ 33

CHAPTER 7. Technical Assistance ....................................................................................................... 33

10729. Technical Assistance by Department and Groundwater Sustainability Agency; Department Estimate of Water Available for Replenishment; Department Best Management Practices ......... 33

10729.2. Guideline, Criterion, Bulletin; Administrative Procedure Act Exception ..................... 33

CHAPTER 8. Financial Authority ......................................................................................................... 34

10730. Regulatory Fees Authority; Limited Exception for De Minimis Extractors ......................... 34

10730.2. Additional Fee Authority Following Adoption of a Plan .................................................. 34

10730.4. Authority to Use Fees for Activities Pursuant to Part 2.75 .............................................. 35

10730.6. Fee Collection and Enforcement ...................................................................................... 35

10730.8. No Limitation on Other Authorities; Personal Information Treated Like Utility Information ..................................................................................................................................... 36

10731. Authority to Determine Amounts Extracted ....................................................................... 36

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page iv As Effective January 1, 2016 [rev. 1/15/2016]

CHAPTER 9. Groundwater Sustainability Agency Enforcement Powers ............................................ 37

10732. Civil Penalties ...................................................................................................................... 37

10732.2. State Entity Cooperation .......................................................................................... 37

CHAPTER 10. State Evaluation and Assessment ................................................................................ 38

10733. Department Review of Plans .............................................................................................. 38

10733.2. Department to Adopt Emergency Regulations Concerning Plan Review and Implementation .............................................................................................................................. 38

10733.3. Notice Requirements ................................................................................................ 39

10733.4. Submittal of Plans to Department for Evaluation ............................................................ 39

10733.6. Alternative Submittals ..................................................................................................... 40

10733.8. Department Review of Plans at Least Every Five Years ................................................... 40

CHAPTER 11. State Intervention ........................................................................................................ 40

10735. Definitions ........................................................................................................................... 40

10735.2. Designation of Probationary Basins by State Water Board ............................................. 41

10735.4. Opportunity for Remedy of Absence of Local Governance before State Water Board Prepares Interim Plan ..................................................................................................................... 43

10735.6. Opportunity for Remedy of Plan Inadequacy or Lack of Plan Implementation before State Water Board Prepares Interim Plan....................................................................................... 44

10735.8. Interim Plans .................................................................................................................... 44

10736. Procedures Applicable to Designating Probationary Basins and Adopting Interim Plans .. 45

10736.2. CEQA Applicability ............................................................................................................ 46

10736.4. Extraction in Violation of an Interim Plan Shall Not Be Relied Upon to Support a Water Right Claim ...................................................................................................................................... 47

10736.6. Reports and Inspections .................................................................................................. 47

CHAPTER 12. Determination of Rights to Groundwater .............................................................. 47

10737. Groundwater Adjudication .......................................................................................... 48

10737.2. Adjudication Proceedings and Sustainability Plan ..................................................... 48

10737.4. Department Review of Judgment ............................................................................. 48

10737.6. Department Assessments and Recommendations .................................................... 48

10737.8. Court Findings .......................................................................................................... 49

[PART 2.75. Groundwater Management] ............................................................................................... 49

10750.1. Limitation on Authority to Adopt New Plans ................................................................... 49

[PART 2.11. Groundwater Monitoring] ................................................................................................... 49

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page v As Effective January 1, 2016 [rev. 1/15/2016]

10927. Entities Authorized to Assume Responsibility for Monitoring and Reporting .................... 49

10933. Groundwater Elevation Monitoring; Prioritization of Basins by the Department .............. 50

[PART 6. Water Development Projects] .................................................................................................. 52

[Chapter 7.5. Protection of Groundwater Basins] .................................................................................. 52

12924. Identification of Groundwater Basins ................................................................................. 52

Sustainable Groundwater Management Act, and related provisions (as chaptered) Page 1 As Effective January 1, 2016 [rev. 1/15/2016]

Sustainable Groundwater Management Act [And Related Statutory Provisions from

SB1168 (Pavley), AB1739 (Dickinson), and SB1319 (Pavley) as Chaptered]

UNCODIFIED FINDINGS (a) The Legislature finds and declares as follows:

(1) The people of the state have a primary interest in the protection, management, and reasonable beneficial use of the water resources of the state, both surface and underground, and that the integrated management of the state’s water resources is essential to meeting its water management goals.

(2) Groundwater provides a significant portion of California’s water supply. Groundwater accounts for more than one-third of the water used by Californians in an average year and more than one-half of the water used by Californians in a drought year when other sources are unavailable.

(3) Excessive groundwater extraction can cause overdraft, failed wells, deteriorated water quality, environmental damage, and irreversible land subsidence that damages infrastructure and diminishes the capacity of aquifers to store water for the future.

(4) When properly managed, groundwater resources will help protect communities, farms, and the environment against prolonged dry periods and climate change, preserving water supplies for existing and potential beneficial use.

(5) Failure to manage groundwater to prevent long-term overdraft infringes on groundwater rights.

(6) Groundwater resources are most effectively managed at the local or regional level.

(7) Groundwater management will not be effective unless local actions to sustainably manage groundwater basins and subbasins are taken.

(8) Local and regional agencies need to have the necessary support and authority to manage groundwater sustainably.

(9) In those circumstances where a local groundwater management agency is not managing its groundwater sustainably, the state needs to protect the resource until it is determined that a local groundwater management agency can sustainably manage the groundwater basin or subbasin.

Newly added code sections are shown in black text. Where existing code sections were amended, those modifications are shown in underline and strikeout. BOLD-SMALL CAPS section headings are provided for convenience and reference and are not part of the

California Code.


(10) Information on the amount of groundwater extraction, natural and artificial recharge, and groundwater evaluations are critical for effective management of groundwater.

(11) Sustainable groundwater management in California depends upon creating more opportunities for robust conjunctive management of surface water and groundwater resources. Climate change will intensify the need to recalibrate and reconcile surface water and groundwater management strategies.

(12) Sustainability groundwater management is part of implementation of the California Water Action Plan.†

(b) It is, therefore, the intent of the Legislature to do all of the following:

(1) To provide local and regional agencies the authority to sustainably manage groundwater.

(2) To provide that if no local groundwater agency or agencies provide sustainable groundwater management for a groundwater basin or subbasin, the state has the authority to develop and implement an interim plan until the time the local groundwater sustainability agency or agencies can assume management of the basin or subbasin.

(3) To require the development and reporting of those data necessary to support sustainable groundwater management, including those data that help describe the basin’s geology, the short- and long-term trends of the basin’s water balance, and other measures of sustainability, and those data necessary to resolve disputes regarding sustainable yield, beneficial uses, and water rights.

(4) To respect overlying and other proprietary rights to groundwater, consistent with Section 1200 of the Water Code.†

(5) To recognize and preserve the authority of cities and counties to manage groundwater pursuant to their police powers.

Government Code

65350.5. REVIEW AND CONSIDERATION OF GROUNDWATER REQUIREMENTS Before the adoption or any substantial amendment of a city’s or county’s general plan, the planning agency shall review and consider all of the following:

(a) An adoption of, or update to, a groundwater sustainability plan or groundwater management plan pursuant to Part 2.74 (commencing with Section 10720) or Part 2.75 (commencing with Section 10750) of Division 6 of the Water Code or groundwater management court order, judgment, or decree.

(b) An adjudication of water rights.

† Italicized findings language represents finding language included in AB1739 (Dickinson) that does not appear in SB1168 (Pavley).


(c) An order or interim plan by the State Water Resources Control Board pursuant to Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6 of the Water Code.

65352. REFERRAL OF PROPOSED GENERAL PLAN UPDATES TO OTHER AGENCIES (a) Before a legislative body takes action to adopt or substantially amend a general plan, the planning agency shall refer the proposed action to all of the following entities:

(1) A city or county, within or abutting the area covered by the proposal, and any special district that may be significantly affected by the proposed action, as determined by the planning agency.

(2) An elementary, high school, or unified school district within the area covered by the proposed action.

(3) The local agency formation commission.

(4) An areawide planning agency whose operations may be significantly affected by the proposed action, as determined by the planning agency.

(5) A federal agency, if its operations or lands within its jurisdiction may be significantly affected by the proposed action, as determined by the planning agency.

(6) (A) The branches of the United States Armed Forces that have provided the Office of Planning and Research with a California mailing address pursuant to subdivision (d) of Section 65944, if the proposed action is within 1,000 feet of a military installation, or lies within special use airspace, or beneath a low-level flight path, as defined in Section 21098 of the Public Resources Code, and if the United States Department of Defense provides electronic maps of low-level flight paths, special use airspace, and military installations at a scale and in an electronic format that is acceptable to the Office of Planning and Research.

(B) Within 30 days of a determination by the Office of Planning and Research that the information provided by the Department of Defense is sufficient and in an acceptable scale and format, the office shall notify cities, counties, and cities and counties of the availability of the information on the Internet. Cities, counties, and cities and counties shall comply with subparagraph (A) within 30 days of receiving this notice from the office.

(7) A public water system, as defined in Section 116275 of the Health and Safety Code, with 3,000 or more service connections, that serves water to customers within the area covered by the proposal. The public water system shall have at least 45 days to comment on the proposed plan, in accordance with subdivision (b), and to provide the planning agency with the information set forth in Section 65352.5.

(8) Any groundwater sustainability agency that has adopted a groundwater sustainability plan pursuant to Part 2.74 (commencing with Section 10720) of Division 6 of the Water Code or local agency that otherwise manages groundwater pursuant to other provisions of law or a court order, judgment, or decree within the planning area of the proposed general plan.


(9) The State Water Resources Control Board, if it has adopted an interim plan pursuant to Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6 of the Water Code that includes territory within the planning area of the proposed general plan.

(10) The Bay Area Air Quality Management District for a proposed action within the boundaries of the district.

(11) A California Native American tribe that is on the contact list maintained by the Native American Heritage Commission and that has traditional lands located within the city’s or county’s jurisdiction.

(12) The Central Valley Flood Protection Board for a proposed action within the boundaries of the Sacramento and San Joaquin Drainage District, as set forth in Section 8501 of the Water Code.

(b) An entity receiving a proposed general plan or amendment of a general plan pursuant to this section shall have 45 days from the date the referring agency mails it or delivers it to comment unless a longer period is specified by the planning agency.

(c) (1) This section is directory, not mandatory, and the failure to refer a proposed action to the entities specified in this section does not affect the validity of the action, if adopted.

(2) To the extent that the requirements of this section conflict with the requirements of Chapter 4.4 (commencing with Section 65919), the requirements of Chapter 4.4 shall prevail.

65352.5. REQUIREMENT TO PROVIDE WATER-RELATED DOCUMENTS TO GENERAL PLAN AGENCY (a) The Legislature finds and declares that it is vital that there be close coordination and consultation between California’s water supply or management agencies and California’s land use approval agencies to ensure that proper water supply and management planning occurs to accommodate projects that will result in increased demands on water supplies or impact water resource management.

(b) It is, therefore, the intent of the Legislature to provide a standardized process for determining the adequacy of existing and planned future water supplies to meet existing and planned future demands on these water supplies and the impact of land use decisions on the management of California’s water supply resources.

(c) Upon receiving, pursuant to Section 65352, notification of a city’s or a county’s proposed action to adopt or substantially amend a general plan, a public water system, as defined in Section 116275 of the Health and Safety Code, with 3,000 or more service connections, shall provide the planning agency with the following information, as is appropriate and relevant:

(1) The current version of its urban water management plan, adopted pursuant to Part 2.6 (commencing with Section 10610) of Division 6 of the Water Code.

(2) The current version of its capital improvement program or plan, as reported pursuant to Section 31144.73 of the Water Code.


(3) A description of the source or sources of the total water supply currently available to the water supplier by water right or contract, taking into account historical data concerning wet, normal, and dry runoff years.

(4) A description of the quantity of surface water that was purveyed by the water supplier in each of the previous five years.

(5) A description of the quantity of groundwater that was purveyed by the water supplier in each of the previous five years.

(6) A description of all proposed additional sources of water supplies for the water supplier, including the estimated dates by which these additional sources should be available and the quantities of additional water supplies that are being proposed.

(7) A description of the total number of customers currently served by the water supplier, as identified by the following categories and by the amount of water served to each category:

(A) Agricultural users.

(B) Commercial users.

(C) Industrial users.

(D) Residential users.

(8) Quantification of the expected reduction in total water demand, identified by each customer category set forth in paragraph (7), associated with future implementation of water use reduction measures identified in the water supplier’s urban water management plan.

(9) Any additional information that is relevant to determining the adequacy of existing and planned future water supplies to meet existing and planned future demands on these water supplies.

(d) Upon receiving, pursuant to Section 65352, notification of a city’s or a county’s proposed action to adopt or substantially amend a general plan, a groundwater sustainability agency, as defined in Section 10721 of the Water Code, or an entity that submits an alternative under Section 10733.6 shall provide the planning agency with the following information, as is appropriate and relevant:

(1) The current version of its groundwater sustainability plan or alternative adopted pursuant to Part 2.74 (commencing with Section 10720) of Division 6 of the Water Code.

(2) If the groundwater sustainability agency manages groundwater pursuant to a court order, judgment, decree, or agreement among affected water rights holders, or if the State Water Resources Control Board has adopted an interim plan pursuant to Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6 of the Water Code, the groundwater sustainability agency shall provide the planning agency with maps of recharge basins and percolation ponds, extraction limitations, and other relevant information, or the court order, judgment, or decree.


(3) A report on the anticipated effect of proposed action to adopt or substantially amend a general plan on implementation of a groundwater sustainability plan pursuant to Part 2.74 (commencing with Section 10720) of Division 6 of the Water Code.

Water Code

113. STATE POLICY OF SUSTAINABLE, LOCAL GROUNDWATER MANAGEMENT It is the policy of the state that groundwater resources be managed sustainably for long-term reliability and multiple economic, social, and environmental benefits for current and future beneficial uses. Sustainable groundwater management is best achieved locally through the development, implementation, and updating of plans and programs based on the best available science.

348. EMERGENCY REGULATIONS FOR ELECTRONIC FILING (a) The department or the board may adopt emergency regulations providing for the electronic filing of reports of water extraction or water diversion or use required to be filed with the department or board under this code, including, but not limited to, any report required to be filed under Part 5.1 (commencing with Section 5100) or Part 5.2 (commencing with Section 5200) of Division 2 and any report required to be filed by a water right permittee or licensee.

(b) Emergency regulations adopted pursuant to this section, or any amendments thereto, shall be adopted by the department or the board in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. The adoption of these regulations is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health, safety, and general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, any emergency regulations or amendments to those regulations adopted under this section shall remain in effect until revised by the department or the board that adopted the regulations or amendments.

1120. RECONSIDERATION OF STATE WATER BOARD DECISIONS AND ORDERS This chapter applies to any decision or order issued under this part or Section 275, Part 2 (commencing with Section 1200), Part 2 (commencing with Section 10500) of Division 6, Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6, Article 7 (commencing with Section 13550) of Chapter 7 of Division 7, or the public trust doctrine.

1529.5. FEES FOR GROUNDWATER EXTRACTION REPORTS FILED WITH THE STATE WATER BOARD (a) The board shall adopt a schedule of fees pursuant to Section 1530 to recover costs incurred in administering Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6. Recoverable costs include, but are not limited to, costs incurred in connection with investigations, facilitation, monitoring, hearings, enforcement, and administrative costs in carrying out these actions.

(b) The fee schedule adopted under this section may include, but is not limited to, the following:

(1) A fee for participation as a petitioner or party to an adjudicative proceeding.


(2) A fee for the filing of a report pursuant to Part 5.2 (commencing with Section 5200) of Division 2.

(c) Consistent with Section 3 of Article XIII A of the California Constitution, the board shall set the fees under this section in an amount sufficient to cover all costs incurred and expended from the Water Rights Fund for the purposes of Part 5.2 (commencing with Section 5200) and Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6. In setting these fees, the board is not required to fully recover these costs in the year or the year immediately after the costs are incurred, but the board may provide for recovery of these costs over a period of years.

1552. AUTHORIZED EXPENDITURES FOR THE WATER RIGHTS FUND The money in the Water Rights Fund is available for expenditure, upon appropriation by the Legislature, for the following purposes:

(a) For expenditure by the State Board of Equalization in the administration of this chapter and the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code) in connection with any fee or expense subject to this chapter.

(b) For the payment of refunds, pursuant to Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code, of fees or expenses collected pursuant to this chapter.

(c) For expenditure by the board for the purposes of carrying out this division, Division 1 (commencing with Section 100), Part 2 (commencing with Section 10500) and Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6, and Article 7 (commencing with Section 13550) of Chapter 7 of Division 7.

(d) For expenditures by the board for the purposes of carrying out Sections 13160 and 13160.1 in connection with activities involving hydroelectric power projects subject to licensing by the Federal Energy Regulatory Commission.

(e) For expenditures by the board for the purposes of carrying out Sections 13140 and 13170 in connection with plans and policies that address the diversion or use of water.

1831. CEASE AND DESIST ORDERS (a) When the board determines that any person is violating, or threatening to violate, any requirement described in subdivision (d), the board may issue an order to that person to cease and desist from that violation.

(b) The cease and desist order shall require that person to comply forthwith or in accordance with a time schedule set by the board.

(c) The board may issue a cease and desist order only after notice and an opportunity for hearing pursuant to Section 1834.

(d) The board may issue a cease and desist order in response to a violation or threatened violation of any of the following:


(1) The prohibition set forth in Section 1052 against the unauthorized diversion or use of water subject to this division.

(2) Any term or condition of a permit, license, certification, or registration issued under this division.

(3) Any decision or order of the board issued under this part, Section 275, Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6, or Article 7 (commencing with Section 13550) of Chapter 7 of Division 7, in which decision or order the person to whom the cease and desist order will be issued, or a predecessor in interest to that person, was named as a party directly affected by the decision or order.

(4) A regulation adopted under Section 1058.5.

(5) Any extraction restriction, limitation, order, or regulation adopted or issued under Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6.

(e) This article does not authorize the board to regulate in any manner, the diversion or use of water not otherwise subject to regulation of the board under this part.

PART 5.2. Groundwater Extraction Reporting for Probationary Basins and Basins Without a Groundwater Sustainability Agency

5200. FINDINGS The Legislature finds and declares that this part establishes groundwater reporting requirements for the purposes of subdivision (b) of Section 10724 and Chapter 11 (commencing with Section 10735) of Part 2.74 of Division 6.

5201. DEFINITIONS As used in this part:

(a) “Basin” has the same meaning as defined in Section 10721.

(b) “Board-designated local area” has the same meaning as defined in Section 5009.

(c) “De minimis extractor” has the same meaning as defined in Section 10721.

(d) “Groundwater” has the same meaning as defined in Section 10721.

(e) “Groundwater extraction facility” has the same meaning as defined in Section 10721.

(f) “Groundwater sustainability agency” has the same meaning as defined in Section 10721.

(g) “Person” has the same meaning as defined in Section 10735.

(h) “Personal information” has the same meaning as defined in Section 1798.3 of the Civil Code.

(i) “Probationary basin” has the same meaning as defined in Section 10735.


(j) “Water year” has the same meaning as defined in Section 10721.

5202. APPLICABILITY OF EXTRACTION REPORTING REQUIREMENTS (a) This section applies to a person who does either of the following:

(1) Extracts groundwater from a probationary basin 90 days or more after the board designates the basin as a probationary basin pursuant to Section 10735.2.

(2) Extracts groundwater on or after July 1, 2017, in an area within a basinhigh- or medium-priority basin subject to the requirements of subdivision (a) of Section 10720.7 that is not within the management area of a groundwater sustainability agency and where the county does not assume responsibility to be the groundwater sustainability agency, as provided in subdivision (b) of Section 10724.

(b) Except as provided in subdivision (c), a person subject to this section shall file a report of groundwater extraction by December 15 of each year for extractions made in the preceding water year.

(c) Unless reporting is required pursuant to paragraph (2) of subdivision (c) of Section 10735.2, this section does not apply to any of the following:

(1) An extraction by a de minimis extractor.

(2) An extraction excluded from reporting pursuant to paragraph (1) of subdivision (c) of Section 10735.2.

(3) An extraction reported pursuant to Part 5 (commencing with Section 4999).

(4) An extraction that is included in annual reports filed with a court or the board by a watermaster appointed by a court or pursuant to statute to administer a final judgment determining rights to water. The reports shall identify the persons who have extracted water and give the general place of use and the quantity of water that has been extracted from each source.

(d) Except as provided in Section 5209, the report shall be filed with the board.

(e) The report may be filed by the person extracting water or on that person’s behalf by an agency that person designates and that maintains a record of the water extracted.

(f) Each report shall be accompanied by the fee imposed pursuant to Section 1529.5.

5203. EXTRACTION REPORTING REQUIREMENTS Each report shall be prepared on a form provided by the board. The report shall include all of the following information:

(a) The name and address of the person who extracted groundwater and of the person filing the report.

(b) The name of the basin from which groundwater was extracted.


(c) The place of groundwater extraction. The location of the groundwater extraction facilities shall be depicted on a specific United States Geological Survey topographic map or shall be identified using the California Coordinate System or a latitude and longitude measurement. If assigned, the public land description to the nearest 40-acre subdivision and the assessor’s parcel number shall be provided.

(d) The capacity of the groundwater extraction facilities.

(e) Monthly records of groundwater extractions. The measurements of the extractions shall be made by a methodology, water-measuring device, or combination thereof satisfactory to the board.

(f) The purpose of use.

(g) A general description of the area in which the water was used. The location of the place of use shall be depicted on a specific United States Geological Survey topographic map or on any other maps with identifiable landmarks. If assigned, the public land description to the nearest 40-acre subdivision and the assessor’s parcel number shall also be provided.

(h) As near as is known, the year in which the groundwater extraction was commenced.

(i) Any information required pursuant to paragraph (3) of subdivision (c) of Section 10735.2.

(j) Any other information that the board may require by regulation and that is reasonably necessary for purposes of this division or Part 2.74 (commencing with Section 10720) of Division 6.

5204. FAILURE TO FILE EXTRACTION REPORT; AUTHORITY OF THE BOARD TO INVESTIGATE (a) If a person fails to file a report as required by this part, the board may, at the expense of that person, investigate and determine the information required to be reported pursuant to this part.

(b) The board shall give a person described in subdivision (a) notice of its intention to investigate and determine the information required to be reported pursuant to this part and 60 days in which to file a required report without penalty.

5205. REPORT IS NOT EVIDENCE OF RIGHT TO DIVERT OR USE A report submitted under this part or a determination of facts by the board pursuant to Section 5104 shall not establish or constitute evidence of a right to divert or use water.

5206. PERSONAL INFORMATION TREATED LIKE UTILITY INFORMATION Personal information included in a report of groundwater extraction shall have the same protection from disclosure as is provided for information concerning utility customers of local agencies pursuant to Section 6254.16 of the Government Code.

5207. LIMITATIONS ON CLAIMS OF PERSONS NOT FILING REQUIRED EXTRACTION REPORTS A right to extract groundwater that may otherwise occur shall not arise or accrue to, and a statute of limitations shall not operate in favor of, a person required to file a report pursuant to this part until the person files the report.


5208. ENFORCEMENT Section 5107 applies to a report or measuring device required pursuant to this part. For purposes of Section 5107, a report of groundwater extraction, measuring device, or misstatement required, used, or made pursuant to this part shall be considered the equivalent of a statement, measuring device, or misstatement required, used, or made pursuant to Part 5.1 (commencing with Section 5100).

5209. SUBMITTAL OF REPORTS TO LOCAL ENTITIES IN CERTAIN CIRCUMSTANCES For groundwater extractions in a board-designated local area, reports required pursuant to this part shall be submitted to the entity designated pursuant to subdivision (e) of Section 5009 if both of the following occur:

(a) The board determines that the requirements of subdivision (e) of Section 5009 have been satisfied with respect to extractions subject to reporting pursuant to this part, in addition to any groundwater extractions subject to Part 5 (commencing with Section 4999).

(b) The designated entity has made satisfactory arrangements to collect and transmit to the board any fees imposed pursuant to paragraph (2) of subdivision (b) of Section 1529.5.

PART 2.74. Sustainable Groundwater Management

CHAPTER 1. General Provisions

10720. TITLE This part shall be known, and may be cited, as the “Sustainable Groundwater Management Act.”

10720.1. LEGISLATIVE INTENT In enacting this part, it is the intent of the Legislature to do all of the following:

(a) To provide for the sustainable management of groundwater basins.

(b) To enhance local management of groundwater consistent with rights to use or store groundwater and Section 2 of Article X of the California Constitution. It is the intent of the Legislature to preserve the security of water rights in the state to the greatest extent possible consistent with the sustainable management of groundwater.

(c) To establish minimum standards for sustainable groundwater management.

(d) To provide local groundwater agencies with the authority and the technical and financial assistance necessary to sustainably manage groundwater.

(e) To avoid or minimize subsidence.

(f) To improve data collection and understanding about groundwater.

(g) To increase groundwater storage and remove impediments to recharge.


(h) To manage groundwater basins through the actions of local governmental agencies to the greatest extent feasible, while minimizing state intervention to only when necessary to ensure that local agencies manage groundwater in a sustainable manner.

(i) 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 this part.

10720.3. APPLICABILITY OF PART AND PARTICIPATION OF OTHER SOVEREIGNS (a) This part applies to all groundwater basins in the state.

(b) To the extent authorized under federal or tribal law, this part applies to an Indian tribe and to the federal government, including, but not limited to, the United States Department of Defense.

(c) The federal government or any federally recognized Indian tribe, appreciating the shared interest in assuring the sustainability of groundwater resources, may voluntarily agree to participate in the preparation or administration of a groundwater sustainability plan or groundwater management plan under this part through a joint powers authority or other agreement with local agencies in the basin. A participating tribe shall be eligible to participate fully in planning, financing, and management under this part, including eligibility for grants and technical assistance, if any exercise of regulatory authority, enforcement, or imposition and collection of fees is pursuant to the tribe’s independent authority and not pursuant to authority granted to a groundwater sustainability agency under this part.

(d) In an adjudication of rights to the use of groundwater, and in the management of a groundwater basin or subbasin by a groundwater sustainability agency or by the board, federally reserved water rights to groundwater shall be respected in full. In case of conflict between federal and state law in that adjudication or management, federal law shall prevail. The voluntary or involuntary participation of a holder of rights in that adjudication or management shall not subject that holder to state law regarding other proceedings or matters not authorized by federal law. This subdivision is declaratory of existing law.

10720.5. NO MODIFICATION OF WATER RIGHTS OR PRIORITIES, AND NO DETERMINATION OF WATER RIGHTS PURSUANT TO THIS PART (a) Groundwater management pursuant to this part shall be consistent with Section 2 of Article X of the California Constitution. Nothing in this part modifies rights or priorities to use or store groundwater consistent with Section 2 of Article X of the California Constitution, except that in basins designated medium- or high-priority basins by the department, no extraction of groundwater between January 1, 2015, and the date of adoption of a groundwater sustainability plan pursuant to this part, or the approval by the department of an alternative submitted under Section 10733.6, whichever is sooner, may be used as evidence of, or to establish or defend against, any claim of prescription.

(b) Nothing in this part, or in any groundwater management plan adopted pursuant to this part, determines or alters surface water rights or groundwater rights under common law or any provision of law that determines or grants surface water rights.


(c) Water rights may be determined in an adjudication action pursuant to Chapter 7 (commencing with Section 830) of Title 10 of Part 2 of the Code of Civil Procedure.

10720.7. PLANNING DEADLINES (a) (1) By January 31, 2020, all basins designated as high- or medium-priority basins by the department

that have been designated in Bulletin 118, as it may be updated or revised on or before January 1, 2017, as basins that are subject to critical conditions of overdraft shall be managed under a groundwater sustainability plan or coordinated groundwater sustainability plans pursuant to this part.

(2) By January 31, 2022, all basins designated as high- or medium-priority basins by the department that are not subject to paragraph (1) shall be managed under a groundwater sustainability plan or coordinated groundwater sustainability plans pursuant to this part.

(b) The Legislature encourages and authorizes basins designated as low- and very low priority basins by the department to be managed under groundwater sustainability plans pursuant to this part. Chapter 11 (commencing with Section 10735) does not apply to a basin designated as a low- or very low priority basin.

10720.8. INAPPLICABILITY OF PART TO ADJUDICATED BASINS; REPORTING REQUIREMENTS FOR ENTITY ADMINISTERING ADJUDICATION (a) Except as provided in subdivision (e), this part does not apply to the following adjudicated areas or a local agency that conforms to the requirements of an adjudication of water rights for one of the following adjudicated areas:

(1) Beaumont Basin.

(2) Brite Basin.

(3) Central Basin.

(4) Chino Basin.

(5) Cucamonga Basin.

(6) Cummings Basin.

(7) Goleta Basin.

(8) Lytle Basin.

(9) Main San Gabriel Basin.

(10) Mojave Basin Area.

(11) Puente Basin.


(12) Raymond Basin.

(13) Rialto-Colton Basin.

(14) Riverside Basin.

(15) San Bernardino Basin Area.

(16) San Jacinto Basin.

(17) Santa Margarita River Watershed.

(18) Santa Maria Valley Basin.

(19) Santa Paula Basin.

(20) Scott River Stream System.

(21) Seaside Basin.

(22) Six Basins.

(23) Tehachapi Basin.

(24) Upper Los Angeles River Area.

(25) Warren Valley Basin.

(26) West Coast Basin.

(b) The Antelope Valley basin at issue in the Antelope Valley Groundwater Cases (Judicial Council Coordination Proceeding Number 4408) shall be treated as an adjudicated basin pursuant to this section if the superior court issues a final judgment, order, or decree.

(c) Any groundwater basin or portion of a groundwater basin in Inyo County managed pursuant to the terms of the stipulated judgment in City of Los Angeles v. Board of Supervisors of the County of Inyo, et al. (Inyo County Case No. 12908) shall be treated as an adjudicated area pursuant to this section.

(d) The Los Osos Groundwater Basin at issue in Los Osos Community Service District v. Southern California Water Company [Golden State Water Company] et al. (San Luis Obispo County Superior Court Case No. CV 040126) shall be treated as an adjudicated basin pursuant to this section if the superior court issues a final judgment, order, or decree.

(e) If an adjudication action has determined the rights to extract groundwater for only a portion of a basin, subdivisions (a), (b), (c), and (d) apply only within the area for which the adjudication action has determined those rights.


(f) The watermaster or a local agency within a basin identified in subdivision (a) shall do all of the following:

(1) By April 1, 2016, submit to the department a copy of a governing final judgment, or other judicial order or decree, and any amendments entered before April 1, 2016.

(2) Within 90 days of entry by a court, submit to the department a copy of any amendment made and entered by the court to the governing final judgment or other judicial order or decree on or after April 1, 2016.

(3) By April 1, 2016, and annually thereafter, submit to the department a report containing the following information to the extent available for the portion of the basin subject to the adjudication:

(A) Groundwater elevation data unless otherwise submitted pursuant to Section 10932.

(B) Annual aggregated data identifying groundwater extraction for the preceding water year.

(C) Surface water supply used for or available for use for groundwater recharge or in-lieu use.

(D) Total water use.

(E) Change in groundwater storage.

(F) The annual report submitted to the court.

10720.9. REQUIREMENT OF STATE AGENCIES TO CONSIDER THIS PART AND PLANS DEVELOPED UNDER THIS PART All relevant state agencies, including, but not limited to, the board, the regional water quality control boards, the department, and the Department of Fish and Wildlife, shall consider the policies of this part, and any groundwater sustainability plans adopted pursuant to this part, when revising or adopting policies, regulations, or criteria, or when issuing orders or determinations, where pertinent.

CHAPTER 2. Definitions

10721. DEFINITIONS 10721. Unless the context otherwise requires, the following definitions govern the construction of this part:

(a) “Adjudication action” means an action filed in the superior or federal district court to determine the rights to extract groundwater from a basin or store water within a basin, including, but not limited to, actions to quiet title respecting rights to extract or store groundwater or an action brought to impose a physical solution on a basin.

(b) “Basin” means a groundwater basin or subbasin identified and defined in Bulletin 118 or as modified pursuant to Chapter 3 (commencing with Section 10722).


(c) “Bulletin 118” means the department’s report entitled “California’s Groundwater: Bulletin 118” updated in 2003, as it may be subsequently updated or revised in accordance with Section 12924.

(d) “Coordination agreement” means a legal agreement adopted between two or more groundwater sustainability agencies that provides the basis for coordinating multiple agencies or groundwater sustainability plans within a basin pursuant to this part.

(e) “De minimis extractor” means a person who extracts, for domestic purposes, two acre-feet or less per year.

(f) “Governing body” means the legislative body of a groundwater sustainability agency.

(g) “Groundwater” means water beneath the surface of the earth within the zone below the water table in which the soil is completely saturated with water, but does not include water that flows in known and definite channels.

(h) “Groundwater extraction facility” means a device or method for extracting groundwater from within a basin.

(i) “Groundwater recharge” or “recharge” means the augmentation of groundwater, by natural or artificial means.

(j) “Groundwater sustainability agency” means one or more local agencies that implement the provisions of this part. For purposes of imposing fees pursuant to Chapter 8 (commencing with Section 10730) or taking action to enforce a groundwater sustainability plan, “groundwater sustainability agency” also means each local agency comprising the groundwater sustainability agency if the plan authorizes separate agency action.

(k) “Groundwater sustainability plan” or “plan” means a plan of a groundwater sustainability agency proposed or adopted pursuant to this part.

(l) “Groundwater sustainability program” means a coordinated and ongoing activity undertaken to benefit a basin, pursuant to a groundwater sustainability plan.

(m) “In-lieu use” means the use of surface water by persons that could otherwise extract groundwater in order to leave groundwater in the basin.

(n) “Local agency” means a local public agency that has water supply, water management, or land use responsibilities within a groundwater basin.

(no) “Operator” means a person operating a groundwater extraction facility. The owner of a groundwater extraction facility shall be conclusively presumed to be the operator unless a satisfactory showing is made to the governing body of the groundwater sustainability agency that the groundwater extraction facility actually is operated by some other person.


(op) “Owner” means a person owning a groundwater extraction facility or an interest in a groundwater extraction facility other than a lien to secure the payment of a debt or other obligation.

(pq) “Personal information” has the same meaning as defined in Section 1798.3 of the Civil Code.

(qr) “Planning and implementation horizon” means a 50-year time period over which a groundwater sustainability agency determines that plans and measures will be implemented in a basin to ensure that the basin is operated within its sustainable yield.

(rs) “Public water system” has the same meaning as defined in Section 116275 of the Health and Safety Code.

(st) “Recharge area” means the area that supplies water to an aquifer in a groundwater basin.

(tu) “Sustainability goal” means the existence and implementation of one or more groundwater sustainability plans that achieve sustainable groundwater management by identifying and causing the implementation of measures targeted to ensure that the applicable basin is operated within its sustainable yield.

(uv) “Sustainable groundwater management” means the management and use of groundwater in a manner that can be maintained during the planning and implementation horizon without causing undesirable results.

(vw) “Sustainable yield” means the maximum quantity of water, calculated over a base period representative of long-term conditions in the basin and including any temporary surplus, that can be withdrawn annually from a groundwater supply without causing an undesirable result.

(wx) “Undesirable result” means one or more of the following effects caused by groundwater conditions occurring throughout the basin:

(1) Chronic lowering of groundwater levels indicating a significant and unreasonable depletion of supply if continued over the planning and implementation horizon. Overdraft during a period of drought is not sufficient to establish a chronic lowering of groundwater levels if extractions and groundwater recharge are managed as necessary to ensure that reductions in groundwater levels or storage during a period of drought are offset by increases in groundwater levels or storage during other periods.

(2) Significant and unreasonable reduction of groundwater storage.

(3) Significant and unreasonable seawater intrusion.

(4) Significant and unreasonable degraded water quality, including the migration of contaminant plumes that impair water supplies.

(5) Significant and unreasonable land subsidence that substantially interferes with surface land uses.


(6) Depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of the surface water.

(xy) “Water budget” means an accounting of the total groundwater and surface water entering and leaving a basin including the changes in the amount of water stored.

(yz) “Watermaster” means a watermaster appointed by a court or pursuant to other law.

(zaa) “Water year” means the period from October 1 through the following September 30, inclusive.

(aaab) “Wellhead protection area” means the surface and subsurface area surrounding a water well or well field that supplies a public water system through which contaminants are reasonably likely to migrate toward the water well or well field.

CHAPTER 3. Basin Boundaries

10722. USE OF BULLETIN 118 BASIN BOUNDARIES Unless other basin boundaries are established pursuant to this chapter, a basin’s boundaries shall be as identified in Bulletin 118.

10722.2. PROCESS FOR REQUESTING AND APPROVING BASIN BOUNDARY REVISIONS (a) A local agency or an entity directed by the court in an adjudication action to file the request may request that the department revise the boundaries of a basin, including the establishment of new subbasins. A local agency’s request shall be supported by the following information:

(1) Information demonstrating that the proposed adjusted basin can be the subject of sustainable groundwater management.

(2) Technical information regarding the boundaries of, and conditions in, the proposed adjusted basin.

(3) Information demonstrating that the entity proposing the basin boundary adjustment consulted with interested local agencies and public water systems in the affected basins before filing the proposal with the department.

(4) Other information the department deems necessary to justify revision of the basin’s boundary.

(b) By January 1, 2016, the department shall adopt regulations regarding the information required to comply with subdivision (a), including the methodology and criteria to be used to evaluate the proposed revision. The department shall adopt the regulations, including any amendments thereto, authorized by this section as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). The adoption of these regulations is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding the Administrative Procedure Act, emergency regulations adopted by the


department pursuant to this section shall not be subject to review by the Office of Administrative Law and shall remain in effect until revised by the department.

(c) Methodology and criteria established pursuant to subdivision (b) shall address all of the following:

(1) How to assess the likelihood that the proposed basin can be sustainably managed.

(2) How to assess whether the proposed basin would limit the sustainable management of adjacent basins.

(3) How to assess whether there is a history of sustainable management of groundwater levels in the proposed basin.

(d) Prior to adopting and finalizing the regulations pursuant to subdivision (b), the department shall conduct three public meetings to consider public comments. The department shall publish the draft regulations on its Internet Web site at least 30 days before the public meetings. One meeting shall be conducted at a location in northern California, one meeting shall be conducted at a location in the central valley of California, and one meeting shall be conducted at a location in southern California.

(e) The department shall provide a copy of its draft revision of a basin’s boundaries to the California Water Commission. The California Water Commission shall hear and comment on the draft revision within 60 days after the department provides the draft revision to the commission.

10722.4. PRIORITIZATION OF BASINS (a) Pursuant to Section 10933, for the purposes of this part the department shall categorize each basin as one of the following priorities:

(1) High priority.

(2) Medium priority.

(3) Low priority.

(4) Very low priority.

(b) The initial priority for each basin shall be established by the department pursuant to Section 10933 no later than January 31, 2015.

(c) Any time the department updates Bulletin 118 boundaries pursuant to subdivision (b) of Section 12924, the department shall reassess the prioritization pursuant to Section 10933.

(d) Any timeIf the department changes the basin priorities pursuant to Section 10933, if10933 to elevate a basin is elevatedfrom a low- or very low priority basin to a medium- or high-priority basin after January 31, 2015, athe agency formation and planning deadlines of this part shall be extended as follows:


(1) A local agency shall have two years from the date of reprioritization to either establish a groundwater sustainability agency pursuant to Chapter 4 (commencing with Section 10723) and five years from the date of reprioritization to adopt a groundwater sustainability plan pursuant to Chapter 6 (commencing with Section 10727) or two years to satisfy the requirements of Section 10733.6.

(2) A groundwater sustainability agency shall have five years from the date of reprioritization to meet the requirements of subdivision (a) of Section 10720.7, except that if the reprioritization occurs before January 31, 2017, a groundwater sustainability agency subject to paragraph (2) of subdivision (a) of Section 10720.7 shall have until January 31, 2022.

CHAPTER 4. Establishing Groundwater Sustainability Agencies

10723. ELECTION OF GROUNDWATER SUSTAINABILITY AGENCY; STATUTORILY DESIGNATED AGENCIES AND OPT OUT PROVISION (a) Except as provided in subdivision (c), any local agency or combination of local agencies overlying a groundwater basin may electdecide to bebecome a groundwater sustainability agency for that basin.

(b) Before electingdeciding to bebecome a groundwater sustainability agency, and after publication of notice pursuant to Section 6066 of the Government Code, the local agency or agencies shall hold a public hearing in the county or counties overlying the basin.

(c) (1) Except as provided in paragraph (2), the following agencies created by statute to manage groundwater shall be deemed the exclusive local agencies within their respective statutory boundaries with powers to comply with this part:

(A) Alameda County Flood Control and Water Conservation District, Zone 7.

(B) Alameda County Water District.

(C) Desert Water Agency.

(D) Fox Canyon Groundwater Management Agency.

(E) Honey Lake Valley Groundwater Management District.

(F) Long Valley Groundwater Management District.

(G) Mendocino City Community Services District.

(H) Mono County Tri-Valley Groundwater Management District.

(I) Monterey Peninsula Water Management District.

(J) Ojai Groundwater Management Agency.

(K) Orange County Water District.


(L) Pajaro Valley Water Management Agency.

(M) Santa Clara Valley Water District.

(N) Sierra Valley WaterGroundwater Management District.

(O) Willow Creek Groundwater Management Agency.

(2) An agency identified in this subdivision may elect to opt out of being the exclusive groundwater management agency within its statutory boundaries by sending a notice to the department, which shall be posted pursuant to Section 10733.3.on the department’s Internet Web site within 15 days of receipt. If an agency identified in paragraph (1) elects to optopts out of being the exclusive groundwater management agency, any other local agency or combination of local agencies operating within the statutory boundaries of the agency that has elected to optopted out may notify the department pursuant to subdivision (d)Section 10723.8 of its electiondecision to be the groundwater sustainability agency.

(3) A local agency listed in paragraph (1) may comply with this part by meeting the requirements of Section 10733.6 or electingopting to become a groundwater sustainability agency pursuant to this section. A local agency with authority to implement a basin-specific management plan pursuant to its principal act shall not exercise any authorities granted in this part in a manner inconsistent with any prohibitions or limitations in its principal act unless the governing board of the local agency makes a finding that the agency is unable to sustainably manage the basin without the prohibited authority.

(d) AThe decision of a local agency or combination of local agencies that elects to be thebecome a groundwater sustainability agency shall submit a notice of intent to the department, which shall be posted pursuant to Section 10733.3. The notice of intent shall include a description of the proposed boundaries of the basin or portion of the basin that the local agency or combination of local agencies intends to manage pursuant to this part.take effect as provided in Section 10723.8.

10723.2. CONSIDERATION OF ALL INTERESTS OF ALL BENEFICIAL USES AND USERS OF GROUNDWATER The groundwater sustainability agency shall consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing groundwater sustainability plans. These interests include, but are not limited to, all of the following:

(a) Holders of overlying groundwater rights, including:

(1) Agricultural users.

(2) Domestic well owners.

(b) Municipal well operators.

(c) Public water systems.


(d) Local land use planning agencies.

(e) Environmental users of groundwater.

(f) Surface water users, if there is a hydrologic connection between surface and groundwater bodies.

(g) The federal government, including, but not limited to, the military and managers of federal lands.

(h) California Native American tribes.

(i) Disadvantaged communities, including, but not limited to, those served by private domestic wells or small community water systems.

(j) Entities listed in Section 10927 that are monitoring and reporting groundwater elevations in all or a part of a groundwater basin managed by the groundwater sustainability agency.

10723.4. MAINTENANCE OF INTERESTED PERSONS LIST The groundwater sustainability agency shall establish and maintain a list of persons interested in receiving notices regarding plan preparation, meeting announcements, and availability of draft plans, maps, and other relevant documents. Any person may request, in writing, to be placed on the list of interested persons.

10723.6. COLLECTIVE ACTION TO SERVE AS GROUNDWATER SUSTAINABILITY AGENCY; PARTICIPATION BY PUC-REGULATED WATER COMPANIES (a) A combination of local agencies may form a groundwater sustainability agency by using any of the following methods:

(1) A joint powers agreement.

(2) A memorandum of agreement or other legal agreement.

(b) A water corporation regulated by the Public Utilities Commission or a mutual water company may participate in a groundwater sustainability agency if the local agencies approvethrough a memorandum of agreement or other legal agreement. The authority provided by this subdivision does not confer any additional powers to a nongovernmental entity.

10723.8. NOTIFICATION OF DEPARTMENT AND POSTING BY DEPARTMENT (a) Within 30 days of electingdeciding to bebecome or formingform a groundwater sustainability agency, the groundwater sustainabilitylocal agency or combination of local agencies shall inform the department of its election or formationdecision and its intent to undertake sustainable groundwater management. The notification shall include the following information, as applicable:

(1) The service area boundaries, the boundaries of the basin or portion of the basin the agency is managingintends to manage pursuant to this part, and the other agencies managing or proposing to manage groundwater sustainability agencies operating within the basin.


(2) A copy of the resolution forming the new agency.

(3) A copy of any new bylaws, ordinances, or new authorities adopted by the local agency.

(4) A list of interested parties developed pursuant to Section 10723.2 and an explanation of how their interests will be considered in the development and operation of the groundwater sustainability agency and the development and implementation of the agency’s sustainability plan.

(b) The department shall post all complete notices received under this section on its Internet Web site within 15 days of receipt.

(c) The decision to become a groundwater sustainability agency shall take effect 90 days after the department posts notice under subdivision (b) if no other local agency submits a notification under subdivision (a) of its intent to undertake groundwater management in all or a portion of the same area. If another notification is filed within the 90-day period, the decision shall not take effect unless the other notification is withdrawn or modified to eliminate any overlap in the areas proposed to be managed. The local agencies shall seek to reach agreement to allow prompt designation of a groundwater sustainability agency. If agreement is reached involving a material change from the information in the posted notice, a new notification shall be submitted under subdivision (a) and the department shall post notice under subdivision (b).

(d) Except as provided in subdivision (d), 90 days following the posting of the notice pursuant to this sectionsubdivisions (e) and (f), after the decision to be a groundwater sustainability agency takes effect, the groundwater sustainability agency shall be presumed to be the exclusive groundwater sustainability agency within the area of the basin thewithin the service area of the local agency that the local agency is managing as described in the notice, provided that no other notice was submitted.

(ce) A groundwater sustainability agency may withdraw from managing a basin by notifying the department in writing of its intent to withdraw.

(df) This section does not preclude the board from taking an action pursuant to Section 10735.6.

(e) The department shall post all notices received under this section in accordance with Section 10733.3.

10724. PRESUMPTION THAT COUNTY WILL MANAGE AREAS NOT COVERED BY A GROUNDWATER SUSTAINABILITY AGENCY; EXTRACTION REPORTING TO STATE BOARD IF COUNTY DOES NOT MANAGE THOSE AREAS (a) In the event that there is an area within a high- or medium-priority basin that is not within the management area of a groundwater sustainability agency, the county within which that unmanaged area lies will be presumed to be the groundwater sustainability agency for that area.

(b) A county described in subdivision (a) shall provide notification to the department pursuant to Section 10723.8 unless the county notifies the department that it will not be the groundwater sustainability agency for the area. Extractions of groundwater made on or after July 1, 2017, in that area shall be


subject to reporting in accordance with Part 5.2 (commencing with Section 5200) of Division 2 if the county does either of the following:

(1) Notifies the department that it will not be the groundwater sustainability agency for an area.

(2) Fails to provide notification to the department pursuant to Section 10723.8 for an area on or before June 30, 2017.

CHAPTER 5. Powers and Authorities

10725. AUTHORITY PURSUANT TO THIS PART SUPPLEMENTARY TO EXISTING POWERS (a) A groundwater sustainability agency may exercise any of the powers described in this chapter in implementing this part, in addition to, and not as a limitation on, any existing authority, if the groundwater sustainability agency adopts and submits to the department a groundwater sustainability plan or prescribed alternative documentation in accordance with Section 10733.6.

(b) A groundwater sustainability agency has and may use the powers in this chapter to provide the maximum degree of local control and flexibility consistent with the sustainability goals of this part.

10725.2. AUTHORITY OF GROUNDWATER SUSTAINABILITY AGENCY; NOTICE (a) A groundwater sustainability agency may perform any act necessary or proper to carry out the purposes of this part.

(b) A groundwater sustainability agency may adopt rules, regulations, ordinances, and resolutions for the purpose of this part, in compliance with any procedural requirements applicable to the adoption of a rule, regulation, ordinance, or resolution by the groundwater sustainability agency.

(c) In addition to any other applicable procedural requirements, the groundwater sustainability agency shall provide notice of the proposed adoption of the groundwater sustainability plan on its Internet Web site and provide for electronic notice to any person who requests electronic notification.

10725.4. INVESTIGATIONS (a) A groundwater sustainability agency may conduct an investigation for the purposes of this part, including, but not limited to, investigations for the following:

(1) To determine the need for groundwater management.

(2) To prepare and adopt a groundwater sustainability plan and implementing rules and regulations.

(3) To propose and update fees.

(4) To monitor compliance and enforcement.

(b) An investigation may include surface waters and surface water rights as well as groundwater and groundwater rights.


(c) In connection with an investigation, a groundwater sustainability agency may inspect the property or facilities of a person or entity to ascertain whether the purposes of this part are being met and compliance with this part. The local agency may conduct an inspection pursuant to this section upon obtaining any necessary consent or obtaining an inspection warrant pursuant to the procedure set forth in Title 13 (commencing with Section 1822.50) of Part 3 of the Code of Civil Procedure.

10725.6. REGISTRATION OF EXTRACTION FACILITIES A groundwater sustainability agency may require registration of a groundwater extraction facility within the management area of the groundwater sustainability agency.

10725.8. MEASUREMENT DEVICES AND REPORTING; INAPPLICABILITY OF SECTION TO DE MINIMIS EXTRACTORS (a) A groundwater sustainability agency may require through its groundwater sustainability plan that the use of every groundwater extraction facility within the management area of the groundwater sustainability agency be measured by a water-measuring device satisfactory to the groundwater sustainability agency.

(b) All costs associated with the purchase and installation of the water-measuring device shall be borne by the owner or operator of each groundwater extraction facility. The water measuring devices shall be installed by the groundwater sustainability agency or, at the groundwater sustainability agency’s option, by the owner or operator of the groundwater extraction facility. Water-measuring devices shall be calibrated on a reasonable schedule as may be determined by the groundwater sustainability agency.

(c) A groundwater sustainability agency may require, through its groundwater sustainability plan, that the owner or operator of a groundwater extraction facility within the groundwater sustainability agency file an annual statement with the groundwater sustainability agency setting forth the total extraction in acre-feet of groundwater from the facility during the previous water year.

(d) In addition to the measurement of groundwater extractions pursuant to subdivision (a), a groundwater sustainability agency may use any other reasonable method to determine groundwater extraction.

(e) This section does not apply to de minimis extractors.

10726. REPORTING OF DIVERSION OF SURFACE WATER TO UNDERGROUND STORAGE An entity within the area of a groundwater sustainability plan shall report the diversion of surface water to underground storage to the groundwater sustainability agency for the relevant portion of the basin.

10726.2. ADDITIONAL AUTHORITIES OF GROUNDWATER SUSTAINABILITY AGENCY RELATING TO ACQUISITIONS; AUGMENTATION OF LOCAL WATER SUPPLIES; TRANSFERS AND EXCHANGES OF WATER; AND TREATMENT A groundwater sustainability agency may do the following:

(a) Acquire by grant, purchase, lease, gift, devise, contract, construction, or otherwise, and hold, use, enjoy, sell, let, and dispose of, real and personal property of every kind, including lands, water rights, structures, buildings, rights-of-way, easements, and privileges, and construct, maintain, alter, and


operate any and all works or improvements, within or outside the agency, necessary or proper to carry out any of the purposes of this part.

(b) Appropriate and acquire surface water or groundwater and surface water or groundwater rights, import surface water or groundwater into the agency, and conserve and store within or outside the agency that water for any purpose necessary or proper to carry out the provisions of this part, including, but not limited to, the spreading, storing, retaining, or percolating into the soil of the waters for subsequent use or in a manner consistent with the provisions of Section 10727.2. As part of this authority, the agency shall not alter another person’s or agency’s existing groundwater conjunctive use or storage program except upon a finding that the conjunctive use or storage program interferes with implementation of the agency’s groundwater sustainability plan.

(c) Provide for a program of voluntary fallowing of agricultural lands or validate an existing program.

(d) Perform any acts necessary or proper to enable the agency to purchase, transfer, deliver, or exchange water or water rights of any type with any person that may be necessary or proper to carry out any of the purposes of this part, including, but not limited to, providing surface water in exchange for a groundwater extractor’s agreement to reduce or cease groundwater extractions. The agency shall not deliver retail water supplies within the service area of a public water system without either the consent of that system or authority under the agency’s existing authorities.

(e) Transport, reclaim, purify, desalinate, treat, or otherwise manage and control polluted water, wastewater, or other waters for subsequent use in a manner that is necessary or proper to carry out the purposes of this part.

(f) Commence, maintain, intervene in, defend, compromise, and assume the cost and expenses of any and all actions and proceedings.

10726.4. ADDITIONAL AUTHORITIES OF GROUNDWATER SUSTAINABILITY AGENCY (a) A groundwater sustainability agency shall have the following additional authority and may regulate groundwater extraction using that authority:

(1) To impose spacing requirements on new groundwater well construction to minimize well interference and impose reasonable operating regulations on existing groundwater wells to minimize well interference, including requiring extractors to operate on a rotation basis.

(2) To control groundwater extractions by regulating, limiting, or suspending extractions from individual groundwater wells or extractions from groundwater wells in the aggregate, construction of new groundwater wells, enlargement of existing groundwater wells, or reactivation of abandoned groundwater wells, or otherwise establishing groundwater extraction allocations. Those actions shall be consistent with the applicable elements of the city or county general plan, unless there is insufficient sustainable yield in the basin to serve a land use designated in the city or county general plan. A limitation on extractions by a groundwater sustainability agency shall not be construed to be a final determination of rights to extract groundwater from the basin or any portion of the basin.


(3) To authorize temporary and permanent transfers of groundwater extraction allocations within the agency’s boundaries, if the total quantity of groundwater extracted in any water year is consistent with the provisions of the groundwater sustainability plan. The transfer is subject to applicable city and county ordinances.

(4) To establish accounting rules to allow unused groundwater extraction allocations issued by the agency to be carried over from one year to another and voluntarily transferred, if the total quantity of groundwater extracted in any five-year period is consistent with the provisions of the groundwater sustainability plan.

(b) This section does not authorize a groundwater sustainability agency to issue permits for the construction, modification, or abandonment of groundwater wells, except as authorized by a county with authority to issue those permits. A groundwater sustainability agency may request of the county, and the county shall consider, that the county forward permit requests for the construction of new groundwater wells, the enlarging of existing groundwater wells, and the reactivation of abandoned groundwater wells to the groundwater sustainability agency before permit approval.

10726.5. AGREEMENTS WITH PRIVATE PARTIES In addition to any other authority granted to a groundwater sustainability agency by this part or other law, a groundwater sustainability agency may enter into written agreements and funding with a private party to assist in, or facilitate the implementation of, a groundwater sustainability plan or any elements of the plan.

10726.6. VALIDATION PROCEEDINGS; VENUE; TIME LIMITATIONS FOR BRINGING CERTAIN ACTIONS (a) A groundwater sustainability agency that adopts a groundwater sustainability plan may file an action to determine the validity of the plan pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure no sooner than 180 days following the adoption of the plan.

(b) Subject to Sections 394 and 397 of the Code of Civil Procedure, the venue for an action pursuant to this section shall be the county in which the principal office of the groundwater management agency is located.

(c) Any judicial action or proceeding to attack, review, set aside, void, or annul the ordinance or resolution imposing a new, or increasing an existing, fee imposed pursuant to Section 10730, 10730.2, or 10730.4 shall be commenced within 180 days following the adoption of the ordinance or resolution.

(d) Any person may pay a fee imposed pursuant to Section 10730, 10730.2, or 10730.4 under protest and bring an action against the governing body in the superior court to recover any money that the governing body refuses to refund. Payments made and actions brought under this section shall be made and brought in the manner provided for the payment of taxes under protest and actions for refund of that payment in Article 2 (commencing with Section 5140) of Chapter 5 of Part 9 of Division 1 of the Revenue and Taxation Code, as applicable.


(e) Except as otherwise provided in this section, actions by a groundwater sustainability agency are subject to judicial review pursuant to Section 1085 of the Code of Civil Procedure.

10726.8. RELATIONSHIP OF THIS PART TO OTHER LAWS (a) This part is in addition to, and not a limitation on, the authority granted to a local agency under any other law. The local agency may use the local agency’s authority under any other law to apply and enforce any requirements of this part, including, but not limited to, the collection of fees.

(b) Nothing in this part shall be construed as authorizing a local agency to make a binding determination of the water rights of any person or entity, or to impose fees or regulatory requirements on activities outside the boundaries of the local agency.

(c) Nothing in this part is a limitation on the authority of the board, the department, or the State Department of Public Health.

(d) Notwithstanding Section 6103 of the Government Code, a state or local agency that extracts groundwater shall be subject to a fee imposed under this part to the same extent as any nongovernmental entity.

(e) Except as provided in subdivision (d), this part does not authorize a local agency to impose any requirement on the state or any agency, department, or officer of the state. State agencies and departments shall work cooperatively with a local agency on a voluntary basis.

(f) Nothing in this chapter or a groundwater sustainability plan shall be interpreted as superseding the land use authority of cities and counties, including the city or county general plan, within the overlying basin.

10726.9. REQUIREMENT OF PLAN TO TAKE ACCOUNT OF GENERAL PLAN ASSUMPTIONS A groundwater sustainability plan shall take into account the most recent planning assumptions stated in local general plans of jurisdictions overlying the basin.

CHAPTER 6. Groundwater Sustainability Plans

10727. REQUIREMENT TO DEVELOP GROUNDWATER SUSTAINABILITY PLAN FOR MEDIUM- AND HIGH-PRIORITY BASINS; FORM OF PLAN (a) A groundwater sustainability plan shall be developed and implemented for each medium- or high-priority basin by a groundwater sustainability agency to meet the sustainability goal established pursuant to this part. The groundwater sustainability plan may incorporate, extend, or be based on a plan adopted pursuant to Part 2.75 (commencing with Section 10750).

(b) A groundwater sustainability plan may be any of the following:

(1) A single plan covering the entire basin developed and implemented by one groundwater sustainability agency.


(2) A single plan covering the entire basin developed and implemented by multiple groundwater sustainability agencies.

(3) Subject to Section 10727.6, multiple plans implemented by multiple groundwater sustainability agencies and coordinated pursuant to a single coordination agreement that covers the entire basin.

10727.2. REQUIRED PLAN ELEMENTS A groundwater sustainability plan shall include all of the following:

(a) A description of the physical setting and characteristics of the aquifer system underlying the basin that includes the following:

(1) Historical data, to the extent available.

(2) Groundwater levels, groundwater quality, subsidence, and groundwater-surface water interaction.

(3) A general discussion of historical and projected water demands and supplies.

(4) A map that details the area of the basin and the boundaries of the groundwater sustainability agencies that overlie the basin that have or are developing groundwater sustainability plans.

(5) A map identifying existing and potential recharge areas for the basin. The map or maps shall identify the existing recharge areas that substantially contribute to the replenishment of the groundwater basin. The map or maps shall be provided to the appropriate local planning agencies after adoption of the groundwater sustainability plan.

(b) (1) Measurable objectives, as well as interim milestones in increments of five years, to achieve the sustainability goal in the basin within 20 years of the implementation of the plan.

(2) A description of how the plan helps meet each objective and how each objective is intended to achieve the sustainability goal for the basin for long-term beneficial uses of groundwater.

(3) (A) Notwithstanding paragraph (1), at the request of the groundwater sustainability agency, the department may grant an extension of up to 5 years beyond the 20-year sustainability timeframe upon a showing of good cause. The department may grant a second extension of up to five years upon a showing of good cause if the groundwater sustainability agency has begun implementation of the work plan described in clause (iii) of subparagraph (B).

(B) The department may grant an extension pursuant to this paragraph if the groundwater sustainability agency does all of the following:

(i) Demonstrates a need for an extension.

(ii) Has made progress toward meeting the sustainability goal as demonstrated by its progress at achieving the milestones identified in its groundwater sustainability plan.


(iii) Adopts a feasible work plan for meeting the sustainability goal during the extension period.

(4) The plan may, but is not required to, address undesirable results that occurred before, and have not been corrected by, January 1, 2015. Notwithstanding paragraphs (1) to (3), inclusive, a groundwater sustainability agency has discretion as to whether to set measurable objectives and the timeframes for achieving any objectives for undesirable results that occurred before, and have not been corrected by, January 1, 2015.

(c) A planning and implementation horizon.

(d) Components relating to the following, as applicable to the basin:

(1) The monitoring and management of groundwater levels within the basin.

(2) The monitoring and management of groundwater quality, groundwater quality degradation, inelastic land surface subsidence, and changes in surface flow and surface water quality that directly affect groundwater levels or quality or are caused by groundwater extraction in the basin.

(3) Mitigation of overdraft.

(4) How recharge areas identified in the plan substantially contribute to the replenishment of the basin.

(5) A description of surface water supply used or available for use for groundwater recharge or in-lieu use.

(e) A summary of the type of monitoring sites, type of measurements, and the frequency of monitoring for each location monitoring groundwater levels, groundwater quality, subsidence, streamflow, precipitation, evaporation, and tidal influence. The plan shall include a summary of monitoring information such as well depth, screened intervals, and aquifer zones monitored, and a summary of the type of well relied on for the information, including public, irrigation, domestic, industrial, and monitoring wells.

(f) Monitoring protocols that are designed to detect changes in groundwater levels, groundwater quality, inelastic surface subsidence for basins for which subsidence has been identified as a potential problem, and flow and quality of surface water that directly affect groundwater levels or quality or are caused by groundwater extraction in the basin. The monitoring protocols shall be designed to generate information that promotes efficient and effective groundwater management.

(g) A description of the consideration given to the applicable county and city general plans and a description of the various adopted water resources-related plans and programs within the basin and an assessment of how the groundwater sustainability plan may affect those plans.


10727.4. ADDITIONAL PLAN ELEMENTS In addition to the requirements of Section 10727.2, a groundwater sustainability plan shall include, where appropriate and in collaboration with the appropriate local agencies, all of the following:

(a) Control of saline water intrusion.

(b) Wellhead protection areas and recharge areas.

(c) Migration of contaminated groundwater.

(d) A well abandonment and well destruction program.

(e) Replenishment of groundwater extractions.

(f) Activities implementing, opportunities for, and removing impediments to, conjunctive use or underground storage.

(g) Well construction policies.

(h) Measures addressing groundwater contamination cleanup, groundwater recharge, in-lieu use, diversions to storage, conservation, water recycling, conveyance, and extraction projects.

(i) Efficient water management practices, as defined in Section 10902, for the delivery of water and water conservation methods to improve the efficiency of water use.

(j) Efforts to develop relationships with state and federal regulatory agencies.

(k) Processes to review land use plans and efforts to coordinate with land use planning agencies to assess activities that potentially create risks to groundwater quality or quantity.

(l) Impacts on groundwater dependent ecosystems.

10727.6. REQUIREMENTS FOR COORDINATED PLANS, WHEN MULTIPLE PLANS COVER A BASIN Groundwater sustainability agencies intending to develop and implement multiple groundwater sustainability plans pursuant to paragraph (3) of subdivision (b) of Section 10727 shall coordinate with other agencies preparing a groundwater sustainability plan within the basin to ensure that the plans utilize the same data and methodologies for the following assumptions in developing the plan:

(a) Groundwater elevation data.

(b) Groundwater extraction data.

(c) Surface water supply.

(d) Total water use.

(e) Change in groundwater storage.


(f) Water budget.

(g) Sustainable yield.

10727.8. PUBLIC NOTIFICATION AND PARTICIPATION; ADVISORY COMMITTEE (a) Prior to initiating the development of a groundwater sustainability plan, the groundwater sustainability agency shall make available to the public and the department a written statement describing the manner in which interested parties may participate in the development and implementation of the groundwater sustainability plan. The groundwater sustainability agency shall provide the written statement to the legislative body of any city, county, or city and county located within the geographic area to be covered by the plan. The groundwater sustainability agency may appoint and consult with an advisory committee consisting of interested parties for the purposes of developing and implementing a groundwater sustainability plan. The groundwater sustainability agency shall encourage the active involvement of diverse social, cultural, and economic elements of the population within the groundwater basin prior to and during the development and implementation of the groundwater sustainability plan.

(b) For purposes of this section, interested parties include entities listed in Section 10927 that are monitoring and reporting groundwater elevations in all or a part of a groundwater basin managed by the groundwater sustainability agency.

10728. ANNUAL REPORTING BY GROUNDWATER SUSTAINABILITY AGENCY TO DEPARTMENT On the April 1 following the adoption of a groundwater sustainability plan and annually thereafter, a groundwater sustainability agency shall submit a report to the department containing the following information about the basin managed in the groundwater sustainability plan:

(a) Groundwater elevation data.

(b) Annual aggregated data identifying groundwater extraction for the preceding water year.

(c) Surface water supply used for or available for use for groundwater recharge or in-lieu use.

(d) Total water use.

(e) Change in groundwater storage.

10728.2. PERIODIC REVIEW AND ASSESSMENT A groundwater sustainability agency shall periodically evaluate its groundwater sustainability plan, assess changing conditions in the basin that may warrant modification of the plan or management objectives, and may adjust components in the plan. An evaluation of the plan shall focus on determining whether the actions under the plan are meeting the plan’s management objectives and whether those objectives are meeting the sustainability goal in the basin.


10728.4. ADOPTION OR AMENDMENT OF PLAN FOLLOWING PUBLIC HEARING A groundwater sustainability agency may adopt or amend a groundwater sustainability plan after a public hearing, held at least 90 days after providing notice to a city or county within the area of the proposed plan or amendment. The groundwater sustainability agency shall review and consider comments from any city or county that receives notice pursuant to this section and shall consult with a city or county that requests consultation within 30 days of receipt of the notice. Nothing in this section is intended to preclude an agency and a city or county from otherwise consulting or commenting regarding the adoption or amendment of a plan.

10728.6. CEQA NOT APPLICABLE TO PLAN PREPARATION AND ADOPTION Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the preparation and adoption of plans pursuant to this chapter. Nothing in this part shall be interpreted as exempting from Division 13 (commencing with Section 21000) of the Public Resources Code a project that would implement actions taken pursuant to a plan adopted pursuant to this chapter.

CHAPTER 7. Technical Assistance

10729. TECHNICAL ASSISTANCE BY DEPARTMENT AND GROUNDWATER SUSTAINABILITY AGENCY; DEPARTMENT ESTIMATE OF WATER AVAILABLE FOR REPLENISHMENT; DEPARTMENT BEST MANAGEMENT PRACTICES (a) The department or a groundwater sustainability agency may provide technical assistance to entities that extract or use groundwater to promote water conservation and protect groundwater resources.

(b) The department may provide technical assistance to any groundwater sustainability agency in response to that agency’s request for assistance in the development and implementation of a groundwater sustainability plan. The department shall use its best efforts to provide the requested assistance.

(c) The department shall prepare and publish a report by December 31, 2016, on its Internet Web site that presents the department’s best estimate, based on available information, of water available for replenishment of groundwater in the state.

(d) (1) By January 1, 2017, the department shall publish on its Internet Web site best management practices for the sustainable management of groundwater.

(2) The department shall develop the best management practices through a public process involving one public meeting conducted at a location in northern California, one public meeting conducted at a location in the San Joaquin Valley, one public meeting conducted at a location in southern California, and one public meeting of the California Water Commission.

10729.2. GUIDELINE, CRITERION, BULLETIN; ADMINISTRATIVE PROCEDURE ACT EXCEPTION With the exception of regulations required by Sections 10722.2 and 10733.2, a guideline, criterion, bulletin, or other technical or procedural analysis or guidance prepared by the department as required by this part is not subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).


CHAPTER 8. Financial Authority

10730. REGULATORY FEES AUTHORITY; LIMITED EXCEPTION FOR DE MINIMIS EXTRACTORS (a) A groundwater sustainability agency may impose fees, including, but not limited to, permit fees and fees on groundwater extraction or other regulated activity, to fund the costs of a groundwater sustainability program, including, but not limited to, preparation, adoption, and amendment of a groundwater sustainability plan, and investigations, inspections, compliance assistance, enforcement, and program administration, including a prudent reserve. A groundwater sustainability agency shall not impose a fee pursuant to this subdivision on a de minimis extractor unless the agency has regulated the users pursuant to this part.

(b) (1) Prior to imposing or increasing a fee, a groundwater sustainability agency shall hold at least one public meeting, at which oral or written presentations may be made as part of the meeting.

(2) Notice of the time and place of the meeting shall include a general explanation of the matter to be considered and a statement that the data required by this section is available. The notice shall be provided by publication pursuant to Section 6066 of the Government Code, by posting notice on the Internet Web site of the groundwater sustainability agency, and by mail to any interested party who files a written request with the agency for mailed notice of the meeting on new or increased fees. A written request for mailed notices shall be valid for one year from the date that the request is made and may be renewed by making a written request on or before April 1 of each year.

(3) At least 10 days prior to the meeting, the groundwater sustainability agency shall make available to the public data upon which the proposed fee is based.

(c) Any action by a groundwater sustainability agency to impose or increase a fee shall be taken only by ordinance or resolution.

(d) (1) As an alternative method for the collection of fees imposed pursuant to this section, a groundwater sustainability agency may adopt a resolution requesting collection of the fees in the same manner as ordinary municipal ad valorem taxes.

(2) A resolution described in paragraph (1) shall be adopted and furnished to the county auditor-controller and board of supervisors on or before August 1 of each year that the alternative collection of the fees is being requested. The resolution shall include a list of parcels and the amount to be collected for each parcel.

(e) The power granted by this section is in addition to any powers a groundwater sustainability agency has under any other law.

10730.2. ADDITIONAL FEE AUTHORITY FOLLOWING ADOPTION OF A PLAN (a) A groundwater sustainability agency that adopts a groundwater sustainability plan pursuant to this part may impose fees on the extraction of groundwater from the basin to fund costs of groundwater management, including, but not limited to, the costs of the following:


(1) Administration, operation, and maintenance, including a prudent reserve.

(2) Acquisition of lands or other property, facilities, and services.

(3) Supply, production, treatment, or distribution of water.

(4) Other activities necessary or convenient to implement the plan.

(b) Until a groundwater sustainability plan is adopted pursuant to this part, a local agency may impose fees in accordance with the procedures provided in this section for the purposes of Part 2.75 (commencing with Section 10750) as long as a groundwater management plan adopted before January 1, 2015, is in effect for the basin.

(c) Fees imposed pursuant to this section shall be adopted in accordance with subdivisions (a) and (b) of Section 6 of Article XIII D of the California Constitution.

(d) Fees imposed pursuant to this section may include fixed fees and fees charged on a volumetric basis, including, but not limited to, fees that increase based on the quantity of groundwater produced annually, the year in which the production of groundwater commenced from a groundwater extraction facility, and impacts to the basin.

(e) The power granted by this section is in addition to any powers a groundwater sustainability agency has under any other law.

10730.4. AUTHORITY TO USE FEES FOR ACTIVITIES PURSUANT TO PART 2.75 A groundwater sustainability agency may fund activities pursuant to Part 2.75 (commencing with Section 10750) and may impose fees pursuant to Section 10730.2 to fund activities undertaken by the agency pursuant to Part 2.75 (commencing with Section 10750).

10730.6. FEE COLLECTION AND ENFORCEMENT (a) A groundwater fee levied pursuant to this chapter shall be due and payable to the groundwater sustainability agency by each owner or operator on a day established by the groundwater sustainability agency.

(b) If an owner or operator knowingly fails to pay a groundwater fee within 30 days of it becoming due, the owner or operator shall be liable to the groundwater sustainability agency for interest at the rate of 1 percent per month on the delinquent amount of the groundwater fee and a 10-percent penalty.

(c) The groundwater sustainability agency may bring a suit in the court having jurisdiction against any owner or operator of a groundwater extraction facility within the area covered by the plan for the collection of any delinquent groundwater fees, interest, or penalties imposed under this chapter. If the groundwater sustainability agency seeks an attachment against the property of any named defendant in the suit, the groundwater sustainability agency shall not be required to furnish a bond or other undertaking as provided in Title 6.5 (commencing with Section 481.010) of Part 2 of the Code of Civil Procedure.


(d) In the alternative to bringing a suit pursuant to subdivision (c), a groundwater sustainability agency may collect any delinquent groundwater charge and any civil penalties and interest on the delinquent groundwater charge pursuant to the laws applicable to the local agency or, if a joint powers authority, to the entity designated pursuant to Section 6509 of the Government Code. The collection shall be in the same manner as it would be applicable to the collection of delinquent assessments, water charges, or tolls.

(e) As an additional remedy, a groundwater sustainability agency, after a public hearing, may order an owner or operator to cease extraction of groundwater until all delinquent fees are paid. The groundwater sustainability agency shall give notice to the owner or operator by certified mail not less than 15 days in advance of the public hearing.

(f) The remedies specified in this section for collecting and enforcing fees are cumulative and may be pursued alternatively or may be used consecutively as determined by the governing body.

10730.8. NO LIMITATION ON OTHER AUTHORITIES; PERSONAL INFORMATION TREATED LIKE UTILITY INFORMATION (a) Nothing in this chapter shall affect or interfere with the authority of a groundwater sustainability agency to levy and collect taxes, assessments, charges, and tolls as otherwise provided by law.

(b) Personal information included in a report or record pursuant to this chapter has the same protection from disclosure as is provided for information concerning utility customers of local agencies pursuant to Section 6254.16 of the Government Code.

10731. AUTHORITY TO DETERMINE AMOUNTS EXTRACTED (a) Following an investigation pursuant to Section 10725.4, the governing body may make a determination fixing the amount of groundwater production from the groundwater extraction facility at an amount not to exceed the maximum production capacity of the facility for purposes of levying a groundwater charge. If a water-measuring device is permanently attached to the groundwater extraction facility, the record of production as disclosed by the water-measuring device shall be presumed to be accurate unless the contrary is established by the groundwater sustainability agency after investigation.

(b) After the governing body makes a determination fixing the amount of groundwater production pursuant to subdivision (a), a written notice of the determination shall be mailed to the owner or operator of the groundwater extraction facility at the address as shown by the groundwater sustainability agency’s records. A determination made by the governing body shall be conclusive on the owner or operator and the groundwater charges, based on the determination together with any interest and penalties, shall be payable immediately unless within 20 days after the mailing of the notice the owner or operator files with the governing body a written protest setting forth the ground for protesting the amount of production or the groundwater charges, interest, and penalties. If a protest is filed pursuant to this subdivision, the governing body shall hold a hearing to determine the total amount of the groundwater production and the groundwater charges, interest, and penalties. Notice of the hearing shall be mailed to each protestant at least 20 days before the date fixed for the hearing. Notice of the determination of the governing body hearing shall be mailed to each protestant. The owner or operator


shall have 20 days from the date of mailing of the determination to pay the groundwater charges, interest, and penalties determined by the governing body.

CHAPTER 9. Groundwater Sustainability Agency Enforcement Powers

10732. CIVIL PENALTIES (a) (1) A person who extracts groundwater in excess of the amount that person is authorized to extract

under a rule, regulation, ordinance, or resolution adopted pursuant to Section 10725.2, shall be subject to a civil penalty not to exceed five hundred dollars ($500) per acre-foot extracted in excess of the amount that person is authorized to extract. Liability under this subdivision is in addition to any liability imposed under paragraph (2) and any fee imposed for the extraction.

(2) A person who violates any rule, regulation, ordinance, or resolution adopted pursuant to Section 10725.2 shall be liable for a civil penalty not to exceed one thousand dollars ($1,000) plus one hundred dollars ($100) for each additional day on which the violation continues if the person fails to comply within 30 days after the local agency has notified the person of the violation.

(b) (1) A groundwater sustainability agency may bring an action in the superior court to determine whether a violation occurred and to impose a civil penalty described in subdivision (a).

(2) A groundwater sustainability agency may administratively impose a civil penalty described in subdivision (a) after providing notice and an opportunity for a hearing.

(3) In determining the amount of the penalty, the superior court or the groundwater sustainability agency shall take into consideration all relevant circumstances, including, but not limited to, the nature and persistence of the violation, the extent of the harm caused by the violation, the length of time over which the violation occurs, and any corrective action taken by the violator.

(c) A penalty imposed pursuant to this section shall be paid to the groundwater sustainability agency and shall be expended solely for purposes of this part.

(d) Penalties imposed pursuant to this section are in addition to any civil penalty or criminal fine under any other law.

10732.2. STATE ENTITY COOPERATION If a groundwater sustainability agency finds that a state entity is not working cooperatively regarding implementation of a groundwater sustainability plan, the groundwater sustainability agency may file notice with the board regarding its finding. The board shall notice proceedings to investigate the finding of the groundwater sustainability agency. If the board determines that the failure of the state entity to work cooperatively regarding implementation of a groundwater sustainability plan compromises the ability of the groundwater sustainability agency to implement the plan in a manner that will likely achieve the sustainability goal, the board may direct the state entity to cooperate in the implementation of the groundwater sustainability plan unless the state entity indicates its


authority for not complying with a groundwater sustainability plan in the same manner as subdivision (f) of Section 10735.8.

CHAPTER 10. State Evaluation and Assessment

10733. DEPARTMENT REVIEW OF PLANS (a) The department shall periodically review the groundwater sustainability plans developed by groundwater sustainability agencies pursuant to this part to evaluate whether a plan conforms with Sections 10727.2 and 10727.4 and is likely to achieve the sustainability goal for the basin covered by the groundwater sustainability plan.

(b) If a groundwater sustainability agency develops multiple groundwater sustainability plans for a basin, the department shall evaluate whether the plans conform with Sections 10727.2, 10727.4, and 10727.6 and are together likely to achieve the sustainability goal for the basin covered by the groundwater sustainability plans.

(c) The department shall evaluate whether a groundwater sustainability plan adversely affects the ability of an adjacent basin to implement their groundwater sustainability plan or impedes achievement of sustainability goals in an adjacent basin.

10733.2. DEPARTMENT TO ADOPT EMERGENCY REGULATIONS CONCERNING PLAN REVIEW AND IMPLEMENTATION (a) (1) By June 1, 2016, the department shall adopt regulations for evaluating groundwater sustainability

plans, the implementation of groundwater sustainability plans, and coordination agreements pursuant to this chapter.

(2) The regulations shall identify the necessary plan components specified in Sections 10727.2, 10727.4, and 10727.6 and other information that will assist local agencies in developing and implementing groundwater sustainability plans and coordination agreements.

(b) (1) The department may update the regulations, including to incorporate the best management practices identified pursuant to Section 10729.

(2) The regulations adopted pursuant to paragraph (1) of subdivision (a) shall identify appropriate methodologies and assumptions for baseline conditions concerning hydrology, water demand, regulatory restrictions that affect the availability of surface water, and unreliability of, or reductions in, surface water deliveries to the agency or water users in the basin, and the impact of those conditions on achieving sustainability. The baseline for measuring unreliability and reductions shall include the historic average reliability and deliveries of surface water to the agency or water users in the basin.

(c) By June 1, 2016, the department shall adopt regulations for evaluating alternatives submitted pursuant to Section 10733.6.

(d) The department shall adopt the regulations, including any amendments thereto, authorized by this section as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5


(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). The adoption of these regulations is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding the Administrative Procedure Act, emergency regulations adopted by the department pursuant to this section shall not be subject to review by the Office of Administrative Law and shall remain in effect until revised by the department.

(e) Before adopting and finalizing the regulations pursuant to this section, the department shall conduct three public meetings to consider public comments. The department shall publish the draft regulations on its Internet Web site at least 30 days before the public meetings. One meeting shall be conducted at a location in northern California, one meeting shall be conducted at a location in the central valley of California, and one meeting shall be conducted at a location in southern California.

10733.3. NOTICE REQUIREMENTS The department shall post all notices it receives pursuant to Section 10723 or 10723.8 on its Internet Web site within 15 days of receipt.

10733.4. SUBMITTAL OF PLANS TO DEPARTMENT FOR EVALUATION (a) Upon adoption of a groundwater sustainability plan, a groundwater sustainability agency shall submit the groundwater sustainability plan to the department for review pursuant to this chapter.

(b) If groundwater sustainability agencies develop multiple groundwater sustainability plans for a basin, the submission required by subdivision (a) shall not occur until the entire basin is covered by groundwater sustainability plans. When the entire basin is covered by groundwater sustainability plans, the groundwater sustainability agencies shall jointly submit to the department all of the following:

(1) The groundwater sustainability plans.

(2) An explanation of how the groundwater sustainability plans implemented together satisfy Sections 10727.2, 10727.4, and 10727.6 for the entire basin.

(3) A copy of the coordination agreement between the groundwater sustainability agencies to ensure the coordinated implementation of the groundwater sustainability plans for the entire basin.

(c) Upon receipt of a groundwater sustainability plan, the department shall post the plan on the department’s Internet Web site and provide 60 days for persons to submit comments to the department about the plan.

(d) The department shall evaluate the groundwater sustainability plan within two years of its submission by a groundwater sustainability agency and issue an assessment of the plan. The assessment may include recommended corrective actions to address any deficiencies identified by the department.


10733.6. ALTERNATIVE SUBMITTALS (a) If a local agency believes that an alternative described in subdivision (b) satisfies the objectives of this part, the local agency may submit the alternative to the department for evaluation and assessment of whether the alternative satisfies the objectives of this part for the basin.

(b) An alternative is any of the following:

(1) A plan developed pursuant to Part 2.75 (commencing with Section 10750) or other law authorizing groundwater management.

(2) Management pursuant to an adjudication action.

(3) An analysis of basin conditions that demonstrates that the basin has operated within its sustainable yield over a period of at least 10 years. The submission of an alternative described by this paragraph shall include a report prepared by a registered professional engineer or geologist who is licensed by the state and submitted under that engineer’s or geologist’s seal.

(c) A local agency shall submit an alternative pursuant to this section no later than January 1, 2017, and every five years thereafter.

(d) The assessment required by subdivision (a) shall include an assessment of whether the alternative is within a basin that is in compliance with Part 2.11 (commencing with Section 10920). If the alternative is within a basin that is not in compliance with Part 2.11 (commencing with Section 10920), the department shall find the alternative does not satisfy the objectives of this part.

10733.8. DEPARTMENT REVIEW OF PLANS AT LEAST EVERY FIVE YEARS At least every five years after initial submission of a plan pursuant to Section 10733.4, the department shall review any available groundwater sustainability plan or alternative submitted in accordance with Section 10733.6, and the implementation of the corresponding groundwater sustainability program for consistency with this part, including achieving the sustainability goal. The department shall issue an assessment for each basin for which a plan or alternative has been submitted in accordance with this chapter, with an emphasis on assessing progress in achieving the sustainability goal within the basin. The assessment may include recommended corrective actions to address any deficiencies identified by the department.

CHAPTER 11. State Intervention

10735. DEFINITIONS As used in this chapter, the following terms have the following meanings:

(a) “”Condition of long-term overdraft” means the 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. Overdraft during a period of drought is not sufficient to establish a condition of long-term overdraft if extractions and recharge are


managed as necessary to ensure that reductions in groundwater levels or storage during a period of drought are offset by increases in groundwater levels or storage during other periods.

(b) “”Person” means any person, firm, association, organization, partnership, business, trust, corporation, limited liability company, or public agency, including any city, county, city and county, district, joint powers authority, state, or any agency or department of those entities. “Person” includes, to the extent authorized by federal or tribal law and subject to the limitations described in subdivisions (c) and (d) of Section 10720.3, the United States, a department, agency or instrumentality of the federal government, an Indian tribe, an authorized Indian tribal organization, or interstate body.

(c) “”Probationary basin” means a basin for which the board has issued a determination under Section 10735.2.

(d) “”Significant depletions of interconnected surface waters” means reductions in flow or levels of surface water that is hydrologically connected to the basin such that the reduced surface water flow or levels have a significant and unreasonable adverse impact on beneficial uses of the surface water.

10735.2. DESIGNATION OF PROBATIONARY BASINS BY STATE WATER BOARD (a) The board, after notice and a public hearing, may designate a high- or medium-priority basin as a probationary basin, if the board finds one or more of the following applies to the basin:

(1) After June 30, 2017, none of the following have occurred:

(A) A local agency has electeddecided to bebecome a groundwater sustainability agency that intends to develop a groundwater sustainability plan for the entire basin.

(B) A collection of local agencies has formed a groundwater sustainability agency or prepared agreements to develop one or more groundwater sustainability plans that will collectively serve as a groundwater sustainability plan for the entire basin.

(C) A local agency has submitted an alternative that has been approved or is pending approval pursuant to Section 10733.6. If the department disapproves an alternative pursuant to Section 10733.6, the board shall not act under this paragraph until at least 180 days after the department disapproved the alternative.

(2) The basin is subject to paragraph (1) of subdivision (a) of Section 10720.7, and after January 31, 2020, none of the following have occurred:

(A) A groundwater sustainability agency has adopted a groundwater sustainability plan for the entire basin.

(B) A collection of local agencies has adopted groundwater sustainability plans that collectively serve as a groundwater sustainability plan for the entire basin.

(C) The department has approved an alternative pursuant to Section 10733.6.


(3) The basin is subject to paragraph (1) of subdivision (a) of Section 10720.7 and after January 31, 2020, the department, in consultation with the board, determines that a groundwater sustainability plan is inadequate or that the groundwater sustainability program is not being implemented in a manner that will likely achieve the sustainability goal.

(4) The basin is subject to paragraph (2) of subdivision (a) of Section 10720.7, and after January 31, 2022, none of the following have occurred:

(A) A groundwater sustainability agency has adopted a groundwater sustainability plan for the entire basin.

(B) A collection of local agencies has adopted groundwater sustainability plans that collectively serve as a groundwater sustainability plan for the entire basin.

(C) The department has approved an alternative pursuant to Section 10733.6.

(5) The basin is subject to paragraph (2) of subdivision (a) of Section 10720.7, and either of the following have occurred:

(A) After January 31, 2022, both of the following have occurred:

(i) The department, in consultation with the board, determines that a groundwater sustainability plan is inadequate or that the groundwater sustainability plan is not being implemented in a manner that will likely achieve the sustainability goal.

(ii) The board determines that the basin is in a condition of long-term overdraft.

(B) After January 31, 2025, both of the following have occurred:

(i) The department, in consultation with the board, determines that a groundwater sustainability plan is inadequate or that the groundwater sustainability plan is not being implemented in a manner that will likely achieve the sustainability goal.

(ii) The board determines that the basin is in a condition where groundwater extractions result in significant depletions of interconnected surface waters.

(b) In making the findings associated with paragraph (3) or (5) of subdivision (a), the department and board may rely on periodic assessments the department has prepared pursuant to Chapter 10 (commencing with Section 10733). The board may request that the department conduct additional assessments utilizing the regulations developed pursuant to Chapter 10 (commencing with Section 10733) and make determinations pursuant to this section. The board shall post on its Internet Web site and provide at least 30 days for the public to comment on any determinations provided by the department pursuant to this subdivision.

(c) (1) The determination may exclude a class or category of extractions from the requirement for reporting pursuant to Part 5.2 (commencing with Section 5200) of Division 2 if those extractions are


subject to a local plan or program that adequately manages groundwater within the portion of the basin to which that plan or program applies, or if those extractions are likely to have a minimal impact on basin withdrawals.

(2) The determination may require reporting of a class or category of extractions that would otherwise be exempt from reporting pursuant to paragraph (1) of subdivision (c) of Section 5202 if those extractions are likely to have a substantial impact on basin withdrawals or requiring reporting of those extractions is reasonably necessary to obtain information for purposes of this chapter.

(3) The determination may establish requirements for information required to be included in reports of groundwater extraction, for installation of measuring devices, or for use of a methodology, measuring device, or both, pursuant to Part 5.2 (commencing with Section 5200) of Division 2.

(4) The determination may modify the water year or reporting date for a report of groundwater extraction pursuant to Section 5202.

(d) If the board finds that litigation challenging the formation of a groundwater sustainability agency prevented its formation before July 1, 2017, pursuant to paragraph (1) of subdivision (a) or prevented a groundwater sustainability program from being implemented in a manner likely to achieve the sustainability goal pursuant to paragraph (2), (3), (4), or (5) of subdivision (a), the board shall not designate a basin as a probationary basin for a period of time equal to the delay caused by the litigation.

(e) The board shall exclude from probationary status any portion of a basin for which a groundwater sustainability agency demonstrates compliance with the sustainability goal.

10735.4. OPPORTUNITY FOR REMEDY OF ABSENCE OF LOCAL GOVERNANCE BEFORE STATE WATER BOARD PREPARES INTERIM PLAN (a) If the board designates a basin as a probationary basin pursuant to paragraph (1), (2), or (24) of subdivision (a) of Section 10735.2, a local agency or groundwater sustainability agency shall have 180 days to remedy the deficiency. The board may appoint a mediator or other facilitator, after consultation with affected local agencies, to assist in resolving disputes, and identifying and implementing actions that will remedy the deficiency.

(b) After the 180-day period provided by subdivision (a), the board may provide additional time to remedy the deficiency if it finds that a local agency is making substantial progress toward remedying the deficiency.

(c) The board may develop an interim plan pursuant to Section 10735.8 for the probationary basin at the end of the period provided by subdivision (a) or any extension provided pursuant to subdivision (b), if the board, in consultation with the department, determines that a local agency has not remedied the deficiency that resulted in designating the basin as a probationary basin.


10735.6. OPPORTUNITY FOR REMEDY OF PLAN INADEQUACY OR LACK OF PLAN IMPLEMENTATION BEFORE STATE WATER BOARD PREPARES INTERIM PLAN (a) If the board designates a basin as a probationary basin pursuant to paragraph (3) or (5) of subdivision (a) of Section 10735.2, the board shall identify the specific deficiencies and identify potential actions to address the deficiencies. The board may request the department to provide local agencies, within 90 days of the designation of a probationary basin, with technical recommendations to remedy the deficiencies.

(b) The board may develop an interim plan pursuant to Section 10735.8 for the probationary basin one year after the designation of the basin pursuant to paragraph (3) or (5) of subdivision (a) of Section 10735.2, if the board, in consultation with the department, determines that a local agency has not remedied the deficiency that resulted in designating the basin a probationary basin.

10735.8. INTERIM PLANS (a) The board, after notice and a public hearing, may adopt an interim plan for a probationary basin.

(b) The interim plan shall include all of the following:

(1) Identification of the actions that are necessary to correct a condition of long-term overdraft or a condition where groundwater extractions result in significant depletions of interconnected surface waters, including recommendations for appropriate action by any person.

(2) A time schedule for the actions to be taken.

(3) A description of the monitoring to be undertaken to determine effectiveness of the plan.

(c) The interim plan may include the following:

(1) Restrictions on groundwater extraction.

(2) A physical solution.

(3) Principles and guidelines for the administration of rights to surface waters that are connected to the basin.

(d) Except as provided in subdivision (e), the interim plan shall be consistent with water right priorities, subject to Section 2 of Article X of the California Constitution.

(e) The board shall include in its interim plan a groundwater sustainability plan, or any element of a plan, that the board finds complies with the sustainability goal for that portion of the basin or would help meet the sustainability goal for the basin. Where, in the judgment of the board, an adjudication action can be relied on as part of the interim plan, either throughout the basin or in an area within the basin, the board may rely on, or incorporate elements of, that adjudication into the interim plan adopted by the board.


(f) In carrying out activities that may affect the probationary basin, state entities shall comply with an interim plan adopted by the board pursuant to this section unless otherwise directed or authorized by statute and the state entity shall indicate to the board in writing the authority for not complying with the interim plan.

(g) (1) After the board adopts an interim plan under this section, the board shall determine if a groundwater sustainability plan or an adjudication action is adequate to eliminate the condition of long-term overdraft or condition where groundwater extractions result in significant depletions of interconnected surface waters, upon petition of either of the following:

(A) A groundwater sustainability agency that has adopted a groundwater sustainability plan for the probationary basin or a portion thereof.

(B) A person authorized to file the petition by a judicial order or decree entered in an adjudication action in the probationary basin.

(2) The board shall act on a petition filed pursuant to paragraph (1) within 90 days after the petition is complete. If the board, in consultation with the department, determines that the groundwater sustainability plan or adjudication action is adequate, the board shall rescind the interim plan adopted by the board for the probationary basin, except as provided in paragraphs (3) and (4).

(3) Upon request of the petitioner, the board may amend an interim plan adopted under this section to eliminate portions of the interim plan, while allowing other portions of the interim plan to continue in effect.

(4) The board may decline to rescind an interim plan adopted pursuant to this section if the board determines that the petitioner has not provided adequate assurances that the groundwater sustainability plan or judicial order or decree will be implemented.

(5) This subdivision is not a limitation on the authority of the board to stay its proceedings under this section or to rescind or amend an interim plan adopted pursuant to this section based on the progress made by a groundwater sustainability agency or in an adjudication action, even if the board cannot make a determination of adequacy in accordance with paragraph (1).

(h) Before January 1, 2025, the state board shall not establish an interim plan under this section to remedy a condition where the groundwater extractions result in significant depletions of interconnected surface waters.

(i) The board’s authority to adopt an interim plan under this section does not alter the law establishing water rights priorities or any other authority of the board.

10736. PROCEDURES APPLICABLE TO DESIGNATING PROBATIONARY BASINS AND ADOPTING INTERIM PLANS (a) The board shall adopt or amend a determination or interim plan under Section 10735.2 or 10735.8 in accordance with procedures for quasi-legislative action.


(b) The board shall provide notice of a hearing described in subdivision (a) of Section 10735.2 or subdivision (a) of Section 10735.8 as follows:

(1) At least 90 days before the hearing, the board shall publish notice of the hearing on its Internet Web site.

(2) At least 90 days before the hearing, the board shall notify the department and each city, county, or city and county in which any part of the basin is situated.

(3) (A) For the purposes of this paragraph, the terms “board-designated local area” and “local agency” have the same meaning as defined in Section 5009.

(B) At least 60 days before the hearing, the board shall mail or send by electronic mail notice to all persons known to the board who extract or who propose to extract water from the basin, or who have made written or electronic mail requests to the board for special notice of hearing pursuant to this part. If any portion of the basin is within a board-designated local area, the records made available to the board by the local agency in accordance with paragraph (4) of subdivision (d) of Section 5009 shall include the names and addresses of persons and entities known to the local agency who extract water from the basin, and the board shall mail or send by electronic mail notice to those persons.

(c) The board shall provide notice of proceedings to amend or repeal a determination or plan under Section 10735.2 or 10735.8 as appropriate to the proceedings, taking into account the nature of the proposed revision and the person likely to be affected.

(d) (1) Except as provided in paragraphs (2) and (3), Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 2 of Title 2 of the Government Code does not apply to any action authorized pursuant to Section 10735.2 or 10735.8.

(2) The board may adopt a regulation in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 2 of Title 2 of the Government Code setting procedures for adopting a determination or plan.

(3) The board may adopt a regulation applying or interpreting this part pursuant to Section 1530 if the board determines that the emergency regulation is reasonably necessary for the allocation, administration, or collection of fees authorized pursuant to Section 1529.5.

10736.2. CEQA APPLICABILITY Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to any action or failure to act by the board under this chapter, other than the adoption or amendment of an interim plan pursuant to Section 10735.8.


10736.4. EXTRACTION IN VIOLATION OF AN INTERIM PLAN SHALL NOT BE RELIED UPON TO SUPPORT A WATER RIGHT CLAIM The extraction or use of water extracted in violation of an interim plan under this part shall not be relied upon as a basis for establishing the extraction or use of water to support a claim in an action or proceeding for determination of water rights.

10736.6. REPORTS AND INSPECTIONS (a) The board may order a person that extracts or uses water from a basin that is subject to an investigation or proceeding under this chapter to prepare and submit to the board any technical or monitoring program reports related to that person’s or entity’s extraction or use of water as the board may specify. The costs incurred by the person in the preparation of those reports shall bear a reasonable relationship to the need for the report and the benefit to be obtained from the report. If the preparation of individual reports would result in a duplication of effort, or if the reports are necessary to evaluate the cumulative effect of several diversions or uses of water, the board may order any person subject to this subdivision to pay a reasonable share of the cost of preparing reports.

(b) (1) An order issued pursuant to this section shall be served by personal service or registered mail on the party to submit technical or monitoring program reports or to pay a share of the costs of preparing reports. Unless the board issues the order after a hearing, the order shall inform the party of the right to request a hearing within 30 days after the party has been served. If the party does not request a hearing within that 30-day period, the order shall take effect as issued. If the party requests a hearing within that 30-day period, the board may adopt a decision and order after conducting a hearing.

(2) In lieu of adopting an order directed at named persons in accordance with the procedures specified in paragraph (1), the board may adopt a regulation applicable to a category or class of persons in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 2 of Title 2 of the Government Code.

(c) Upon application of a person or upon its own motion, the board may review and revise an order issued or regulation adopted pursuant to this section in accordance with the procedures set forth in subdivision (b).

(d) In conducting an investigation or proceeding pursuant to this part, the board may inspect the property or facilities of a person to ascertain whether the purposes of this part are being met and to ascertain compliance with this part. The board may obtain an inspection warrant pursuant to the procedures set forth in Title 13 (commencing with Section 1822.50) of Part 3 of the Code of Civil Procedure for the purposes of an inspection pursuant to this subdivision.

CHAPTER 12. Determination of Rights to Groundwater


10737. GROUNDWATER ADJUDICATION Except as provided in this chapter, an adjudication action to determine rights to groundwater in a basin shall be conducted in accordance with the Code of Civil Procedure, including pursuant to Chapter 7 (commencing with Section 830) of Title 10 of Part 2 of that code.

10737.2. ADJUDICATION PROCEEDINGS AND SUSTAINABILITY PLAN In an adjudication action for a basin required to have a groundwater sustainability plan under this part, the court shall manage the proceedings in a manner that minimizes interference with the timely completion and implementation of a groundwater sustainability plan, avoids redundancy and unnecessary costs in the development of technical information and a physical solution, and is consistent with the attainment of sustainable groundwater management within the timeframes established by this part.

10737.4. DEPARTMENT REVIEW OF JUDGMENT (a) Chapter 11 (commencing with Section 10735) shall not apply to a judgment approved by the court pursuant to Section 850 of the Code of Civil Procedure if both of the following apply:

(1) A local agency or a party directed by the court to file the submission submits the judgment to the department for evaluation and assessment pursuant to paragraph (2) of subdivision (b) of Section 10733.6.

(2) The department determines that the judgment satisfies the objectives of this part for the basin.

(b) A party or group of parties proposing a stipulated judgment pursuant to subdivision (b) of Section 850 of the Code of Civil Procedure may submit the proposed stipulated judgment to the department for evaluation and assessment pursuant to paragraph (2) of subdivision (b) of Section 10733.6.

(c) Notwithstanding subdivision (c) of Section 10733.6, a judgment or proposed stipulated judgment pursuant to this section may be submitted to the department after January 1, 2017.

(d) A determination of the department on a submission pursuant to this section is subject to judicial review pursuant to Section 1085 of the Code of Civil Procedure. Venue shall be in the court with jurisdiction over the adjudication action and the case shall be coordinated with the adjudication action.

10737.6. DEPARTMENT ASSESSMENTS AND RECOMMENDATIONS If the department determines that a judgment satisfies the objectives of this part in accordance with paragraph (2) of subdivision (a) of Section 10737.4, the department shall submit to the court the assessments and any recommended corrective actions that the department issues pursuant to Section 10733.8. The court, after notice and, if necessary, an evidentiary hearing, shall determine whether to amend the judgment pursuant to Section 852 of the Code of Civil Procedure to adopt the department’s recommended corrective actions.


10737.8. COURT FINDINGS In addition to making any findings required by subdivision (a) of Section 850 of the Code of Civil Procedure or any other law, the court shall not approve entry of judgment in an adjudication action for a basin required to have a groundwater sustainability plan under this part unless the court finds that the judgment will not substantially impair the ability of a groundwater sustainability agency, the board, or the department to comply with this part and to achieve sustainable groundwater management.

* * *

[PART 2.75. Groundwater Management]

10750.1. LIMITATION ON AUTHORITY TO ADOPT NEW PLANS (a) Beginning January 1, 2015, a new plan shall not be adopted and an existing plan shall not be renewed pursuant to this part, except as provided in subdivision (b). A plan adopted before January 1, 2015, shall remain in effect until a groundwater sustainability plan is adopted pursuant to Part 2.74 (commencing with Section 10720).

(b) This section does not apply to a low- or very low priority basin as categorized for the purposes of Part 2.74 (commencing with Section 10720).

(c) This section does not apply to a plan submitted as an alternative pursuant to Section 10733.6, unless the department has not determined that the alternative satisfies the objectives of Part 2.74 (commencing with Section 10720) on or before January 31, 2020, or the department later determines that the plan does not satisfy the objectives of that part.

[PART 2.11. Groundwater Monitoring]

10927. ENTITIES AUTHORIZED TO ASSUME RESPONSIBILITY FOR MONITORING AND REPORTING Any of the following entities may assume responsibility for monitoring and reporting groundwater elevations in all or a part of a basin or subbasin in accordance with this part:

(a) A watermaster or water management engineer appointed by a court or pursuant to statute to administer a final judgment determining rights to groundwater.

(b) (1) A groundwater management agency with statutory authority to manage groundwater pursuant to its principal act that is monitoring groundwater elevations in all or a part of a groundwater basin or subbasin on or before January 1, 2010.

(2) A water replenishment district established pursuant to Division 18 (commencing with Section 60000). This part does not expand or otherwise affect the authority of a water replenishment district relating to monitoring groundwater elevations.


(3) A groundwater sustainability agency with statutory authority to manage groundwater pursuant to Part 2.74 (commencing with Section 10720).

(c) A local agency that is managing all or part of a groundwater basin or subbasin pursuant to Part 2.75 (commencing with Section 10750) and that was monitoring groundwater elevations in all or a part of a groundwater basin or subbasin on or before January 1, 2010, or a local agency or county that is managing all or part of a groundwater basin or subbasin pursuant to any other legally enforceable groundwater management plan with provisions that are substantively similar to those described in that part and that was monitoring groundwater elevations in all or a part of a groundwater basin or subbasin on or before January 1, 2010.

(d) A local agency that is managing all or part of a groundwater basin or subbasin pursuant to an integrated regional water management plan prepared pursuant to Part 2.2 (commencing with Section 10530) that includes a groundwater management component that complies with the requirements of Section 10753.7.

(e) A local agency that has been collecting and reporting groundwater elevations and that does not have an adopted groundwater management plan, if the local agency adopts a groundwater management plan in accordance with Part 2.75 (commencing with Section 10750) by January 1, 2014. The department may authorize the local agency to conduct the monitoring and reporting of groundwater elevations pursuant to this part on an interim basis, until the local agency adopts a groundwater management plan in accordance with Part 2.75 (commencing with Section 10750) or until January 1, 2014, whichever occurs first.

(f) A county that is not managing all or a part of a groundwater basin or subbasin pursuant to a legally enforceable groundwater management plan with provisions that are substantively similar to those described in Part 2.75 (commencing with Section 10750).

(g) A voluntary cooperative groundwater monitoring association formed pursuant to Section 10935.

10933. GROUNDWATER ELEVATION MONITORING; PRIORITIZATION OF BASINS BY THE DEPARTMENT (a) The department shall commence to identify the extent of monitoring of groundwater elevations that is being undertaken within each basin and subbasin.

(b) The department shall prioritize groundwater basins and subbasins for the purpose of implementing this section. In prioritizing the basins and subbasins, the department shall, to the extent data are available, consider all of the following:

(1) The population overlying the basin or subbasin.

(2) The rate of current and projected growth of the population overlying the basin or subbasin.

(3) The number of public supply wells that draw from the basin or subbasin.

(4) The total number of wells that draw from the basin or subbasin.


(5) The irrigated acreage overlying the basin or subbasin.

(6) The degree to which persons overlying the basin or subbasin rely on groundwater as their primary source of water.

(7) Any documented impacts on the groundwater within the basin or subbasin, including overdraft, subsidence, saline intrusion, and other water quality degradation.

(8) Any other information determined to be relevant by the department, including adverse impacts on local habitat and local streamflows.

(c) If the department determines that all or part of a basin or subbasin is not being monitored pursuant to this part, the department shall do all of the following:

(1) Attempt to contact all well owners within the area not being monitored.

(2) Determine if there is an interest in establishing any of the following:

(A) A groundwater sustainability plan pursuant to Part 2.74 (commencing with Section 10720).

(B) A groundwater management plan pursuant to Part 2.75 (commencing with Section 10750).

(BC) An integrated regional water management plan pursuant to Part 2.2 (commencing with Section 10530) that includes a groundwater management component that complies with the requirements of Section 10753.7.

(CD) A voluntary groundwater monitoring association pursuant to Section 10935.

(d) If the department determines that there is sufficient interest in establishing a plan or association described in paragraph (2) of subdivision (c), or if the county agrees to perform the groundwater monitoring functions in accordance with this part, the department shall work cooperatively with the interested parties to comply with the requirements of this part within two years.

(e) If the department determines, with regard to a basin or subbasin, that there is insufficient interest in establishing a plan or association described in paragraph (2) of subdivision (c), and if the county decides not to perform the groundwater monitoring and reporting functions of this part, the department shall do all of the following:

(1) Identify any existing monitoring wells that overlie the basin or subbasin that are owned or operated by the department or any other state or federal agency.

(2) Determine whether the monitoring wells identified pursuant to paragraph (1) provide sufficient information to demonstrate seasonal and long-term trends in groundwater elevations.

(3) If the department determines that the monitoring wells identified pursuant to paragraph (1) provide sufficient information to demonstrate seasonal and long-term trends in groundwater


elevations, the department shall not perform groundwater monitoring functions pursuant to Section 10933.5.

(4) If the department determines that the monitoring wells identified pursuant to paragraph (1) provide insufficient information to demonstrate seasonal and long-term trends in groundwater elevations, the department shall perform groundwater monitoring functions pursuant to Section 10933.5.

[PART 6. Water Development Projects]

[Chapter 7.5. Protection of Groundwater Basins]

12924. IDENTIFICATION OF GROUNDWATER BASINS (a) The department, in conjunction with other public agencies, shall conduct an investigation of the state’s groundwater basins. The department shall identify the state’s groundwater basins on the basis of geological and hydrological conditions and consideration of political boundary lines whenever practical. The department shall also investigate existing general patterns of groundwater extraction and groundwater recharge within those basins to the extent necessary to identify basins that are subject to critical conditions of overdraft.

(b) The department may revise the boundaries of groundwater basins identified in subdivision (a) based on its own investigations or information provided by others.

(c) The department shall report its findings to the Governor and the Legislature not later than January 1, 2012, and thereafter in years ending in 5 or 0.

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CALIFORNIA CODE OF REGULATIONS TITLE 23. WATERS

DIVISION 2. DEPARTMENT OF WATER RESOURCES CHAPTER 1.5. GROUNDWATER MANAGEMENT

SUBCHAPTER 1. GROUNDWATER BASIN BOUNDARIES

ARTICLE 1. Introductory Provisions

§ 340. Authority and Purpose

These regulations specify the information a local agency is required to provide when requesting that the Department revise the boundaries of a basin or subbasin, including the establishment of new subbasins, and the methodology and criteria used by the Department to evaluate a modification to existing basin or subbasin boundaries.

Note: Authority cited: Section 10722.2, Water Code.

Reference: Sections 10722.2 and 12924, Water Code.

§ 340.2. Intent

The revision of the boundaries of any basin or subbasin or creation of new subbasins that are adopted by the Department shall be consistent with the State’s interest in the sustainable management of groundwater basins as expressed in the Sustainable Groundwater Management Act (Part 2.74 of Division 6 of the Water Code, beginning with Section 10720).


Reference: Sections 10720.1, Water Code.

§ 340.4. Basin Boundaries

Unless other basin or subbasin boundaries are established pursuant to these regulations, a basin or subbasin’s boundaries shall be as identified in Bulletin 118. A clear and unambiguous written description of a basin or subbasin boundary in Bulletin 118 shall prevail over any inconsistent basin or subbasin boundary as depicted on a map, in an electronic data file, or otherwise, except when modified pursuant to these regulations. Any discrepancy or uncertainty shall be resolved by the Department based upon the best available technical information.


Reference: Sections 10721(b), 10722, 10722.2, and 12924, Water Code.

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ARTICLE 2. DEFINITIONS

§ 341. Definitions

In addition to terms defined in the Sustainable Groundwater Management Act and in Bulletin 118, which definitions apply to these regulations, the following terms used in this Chapter have the following meanings:

(a) “Act” means the Sustainable Groundwater Management Act (Part 2.74 of Division 6 of the Water Code, beginning with Section 10720).

(b) “Administrative adjustment” means a basin or subbasin boundary adjustment by the Department that either (1) amends existing basin or subbasin boundary data files to accurately reflect an unambiguous written basin or subbasin boundary description as defined in Bulletin 118 or amended pursuant to this Part, or (2) restates the description of a basin or subbasin boundary to more precisely reflect a mapped basin or subbasin boundary consistent with the original description.

(c) “Affected agency” means a local agency, as defined in Water Code Section 10721(m), whose jurisdictional area would, as a result of a boundary modification, include more, fewer, or different basins or subbasins than without the modification.

(d) “Affected basin” means a basin or subbasin that is the subject of a boundary modification request and any basin or subbasin where the ability to achieve sustainable groundwater management could be significantly affected by groundwater use or management practices in another existing or proposed basin or subbasin. An adjacent basin or subbasin is presumed to be an affected basin for purposes of this Subchapter. The Department may determine a non-adjacent basin or subbasin is an affected basin if convincing evidence shows that the hydraulic connection to another basin or subbasin is likely to affect the ability of the non-adjacent basin or subbasin to achieve sustainable groundwater management over the planning and implementation horizon.

(e) “Affected system” means a public water system, as defined in Water Code Section 10721(r), whose service area would, as a result of a boundary modification, include more, fewer, or different basins or subbasins than without the modification.

(f) “Aquifer” refers to a three-dimensional body of porous and permeable sediment or sedimentary rock that contains sufficient saturated material to yield significant quantities of groundwater to wells and springs, as further defined or characterized in Bulletin 118.

(g) “Basin” is defined in the Sustainable Groundwater Management Act as a groundwater basin or subbasin identified and defined in Bulletin 118. For purposes of

3

this Chapter, unless the context indicates otherwise, those terms are further defined as follows:

(1) The term “basin” shall refer to an area specifically defined as a basin or “groundwater basin” in Bulletin 118, and shall refer generally to an aquifer or stacked series of aquifers with reasonably well-defined boundaries in a lateral direction, based on features that significantly impede groundwater flow, and a definable bottom, as further defined or characterized in Bulletin 118.

(2) The term “subbasin” shall refer to an area specifically defined as a subbasin or “groundwater subbasin” in Bulletin 118, and shall refer generally to any subdivision of a basin based on geologic and hydrologic barriers or institutional boundaries, as further described or defined in Bulletin 118.

(h) “Basin consolidation” refers to any boundary modification that would reduce the number of subbasins within a basin or merge two or more adjacent basins but would change only shared boundaries and would not change the external boundary of any basin or subbasin.

(i) “Basin subdivision” refers to any boundary modification that would increase the number of subbasins within a basin or subbasin.

(j) “Boundary modification” means a change to the boundaries of an existing basin or subbasin or the establishment of a new subbasin.

(k) “Commission” means the California Water Commission.

(l) “County basin consolidation” means the consolidation of all contiguous basins or subbasins within a county into a single basin or subbasin whose boundaries do not extend beyond those of the county. If there are non-contiguous basins within a county, the consolidation applies separately to each basin or group of contiguous basins in the county. A county basin consolidation may redefine the shared boundaries of one or more adjacent basins or subbasins, but would not result in a net change in the amount of area included within a basin.

(m) “Department” means the Department of Water Resources.

(n) “External boundary modification” refers to any proposal that would modify the boundary between the groundwater basin and the area outside any basin.

(o) “GIS” means a Geographic Information System that collects, stores, analyzes, and displays spatial or geographically referenced data.

(p) “Hydrogeologic barrier” refers to any subsurface feature that significantly impedes groundwater flow.

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(q) “Hydrogeologic conceptual model” means a description of the geologic and hydrologic framework governing the occurrence of groundwater and its flow through and across the boundaries of a basin and the general groundwater conditions in a basin or subbasin.

(r) “Internal boundary modification” refers to any boundary modification that would modify the location of a boundary between subbasins within a basin or the shared boundary between adjacent basins.

(s) “Professional engineer” means a professional engineer licensed pursuant to Business and Professions Code, Division 3, Chapter 7, Section 6700 et seq.

(t) “Professional geologist” means a professional geologist licensed pursuant to Business and Professions Code, Division 3, Chapter 12.5, Section 7800 et seq.

(u) “Qualified map” means a geologic map of a scale no smaller than 1:250,000 that is published by the U. S. Geological Survey or the California Geological Survey, or is a map published as part of a geologic investigation conducted by a state or federal agency, or is a geologic map prepared and signed by a professional geologist that is acceptable to the Department.

(v) “Requesting agency” means the local agency that requests a boundary modification as authorized by Water Code Section 10722.2.

(w) “Request manager” is an employee or authorized representative of a requesting agency who has been delegated responsibility for submitting the boundary modification request and serving as the point of contact between the requesting agency and the Department.

(x) “State” means the State of California.

(y) “Technical study” means a geologic or hydrologic report prepared and published by a state or federal agency, or a study published in a peer-reviewed scientific journal, or a report prepared and signed by a professional geologist or by a professional engineer.

(z) “Written notice” means notification by electronic mail or U.S. Mail.


Reference: Division 3, Chapter 12.5, Section 7800 et seq., and Chapter 7, Section 6700 et seq., Business and Professions Code; Sections 25299.97 and 116275, Health & Safety Code, Sections 10721, 10722.2, and 12924, Water Code.

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ARTICLE 3. BOUNDARY MODIFICATION CATEGORIES

§ 342. Introduction to Boundary Modifications

This Article describes different categories of boundary modifications. The identified categories are scientific modifications, based on geologic or hydrologic criteria, and jurisdictional modifications, which promote sustainable groundwater management. An administrative adjustment does not constitute a boundary modification subject to this Subchapter.


Reference: Sections 10720.1, 10722.2 and 12924, Water Code.

§ 342.2. Scientific Modification

A scientific modification to a basin or subbasin boundary consists of one of the following modifications and involves the addition, deletion, or relocation of a boundary based on the geologic or hydrologic conditions that define a groundwater basin or subbasin:

(a) An external boundary modification. Except in the case of some basin consolidations involving adjacent basins, external basin boundaries will only be modified as a result of scientific modifications.

(b) An internal boundary modification. A basin or subbasin boundary may be modified, deleted, or added based on the presence or absence of a hydrogeologic barrier.



§ 342.4. Jurisdictional Modification

A jurisdictional modification involves the addition, deletion, or relocation of a basin or subbasin boundary that is not a scientific modification but promotes sustainable groundwater management and is one of the following:

(a) Internal boundary modification.

(b) Basin consolidation, including county basin consolidation.

(c) Basin subdivision.


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§ 342.6. Other Boundary Modifications

Any boundary modification that does not conform to the categories specified in this article may be considered by the Department based on information the Department deems adequate to evaluate the modification in accordance with Section 10722.2 of the Water Code.



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ARTICLE 4. PROCEDURES FOR MODIFICATION REQUEST AND PUBLIC INPUT

§ 343. Introduction to Procedures

This Article describes procedural requirements related to boundary modification requests and public input to those requests.


Reference: Section 10722.2, Water Code.

§ 343.2. Eligibility to Request Boundary Modification

A request for boundary modification may be initiated by a local agency whose jurisdictional area lies within or borders the existing or proposed basin or subbasin for which boundary modification is sought.



§ 343.4. Forms and Instructions

The Department shall make the forms and instructions for boundary modification requests available on its Internet Web site prior to basin boundary submission periods.



§ 343.6. Combination of Requests

Requesting agencies shall, to the greatest extent practicable, combine all boundary modification requests that affect the same basin or subbasin and coordinate with other affected agencies and affected systems, as necessary, to present the information as a single request. The Department may require the combination of boundary modification requests to avoid duplicative or conflicting requests, and may consider and adopt all or any proposals contained in a combined boundary modification request.



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§ 343.8. Submission Periods

Prior to updating or revising Bulletin 118, and at other times, as needed, the Department shall establish submission periods during which boundary modification requests will be accepted. The initial submission period shall start January 1, 2016, and remain open at least 90 days. The Department shall announce the start of each subsequent submission period on its Internet Web site at least 60 days before the period begins, and the period will remain open at least 60 days. However, the submission periods described in this Section shall not apply to any request made pursuant to Section 841 of the Code of Civil Procedure.


Reference: Section 841, Code of Civil Procedure; Sections 10722.2 and 12924, Water Code.

§ 343.9. Initial Notification

(a) Within 15 days of a local agency’s decision to explore boundary modification, the relevant local agency shall notify the Department by written notice of its interest in exploring a boundary modification and make general information about its process publicly available by posting relevant information to the local agency’s Internet Web site or by other suitable means. The initial notification shall include a brief description and preliminary map of the proposed boundary modification.

(b) The Department shall post the initial notification required by this Section on the Department’s Internet Web site within ten (10) working days of receipt.



§ 343.10. Status of Request

(a) The Department shall acknowledge the receipt of all boundary modification requests by written notice and shall post all materials received on the Department’s Internet Web site within ten (10) working days of receipt.

(b) The Department shall determine whether the boundary modification request is complete and provide written notice to the requesting agency of its determination or of the need for additional information.

(1) A boundary modification request will be deemed complete if it substantially complies with the requirements of this Subchapter. Substantial compliance means that the requesting agency has attempted to comply with these regulations and the

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legislative intent of the Act in good faith, and the supporting information submitted and the form of submission are sufficiently detailed and necessary, as determined by the Department, to evaluate the boundary modification request.

(2) The Department will not evaluate a boundary modification request until the request has been deemed complete and the requesting agency has provided any other information specifically requested by the Department. However, the Department may begin its evaluation before evidence of support as described in Section 344.8(d) has been made available if the requesting agency affirms that the required support is likely forthcoming.

(c) When the Department determines that a request for boundary modification is complete, the Department shall update information posted to the Department’s Internet Web site to reflect that the Department is prepared to evaluate the request on its merits and to receive public input to the request pursuant to Section 343.12.

(d) The requesting agency shall, upon receiving notice that the request is complete, within five (5) working days notify all local agencies and public water systems in the affected basins and any other person or entity who has made a written request for notification of the proposed modification to the requesting agency. The notice from the requesting agency shall describe the procedural requirements to provide public input to a request pursuant to Section 343.12, including the deadlines to submit public input, the form in which public input must be submitted, and the address to which public input must be submitted.


Reference: Sections 10722.2 and 10723.4, Water Code.

§ 343.12. Public Input

(a) Any person may provide information to support or oppose a proposed boundary modification request as follows:

(1) Public input must be submitted by written notice to the Department within 30 days after the Department posts a notice that the request is complete pursuant to Section 343.10(c), and provide the requesting agency a duplicate copy of that information the same day.

(2) Public input must include the name, address, and electronic mail address of the person or entity providing that input.

(3) Public input must include a clear statement of the basis for the support of or opposition to the proposed boundary modification.

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(4) The level of detail provided by public input need not be as comprehensive as that contained in the request, but must rely on similar scientific and technical information as the particular boundary modification request to which it is addressed, and will be evaluated by the Department using the same criteria.

(b) The Department shall post all public input on the Department’s Internet Web site.

(c) The Department is not required to respond to comments received through public input, but will consider such comments as part of its evaluation of a boundary modification request.

(d) The Department shall give the requesting agency a reasonable opportunity to respond to public input, including the opportunity to modify the boundary modification request.



§ 343.14. Withdrawal of Request

The requesting agency may withdraw a boundary modification request at any time before the request is finalized by providing written notice to the Department.



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ARTICLE 5. SUPPORTING INFORMATION

§ 344. Introduction to Supporting Information

This Article describes the type of information provided by a requesting agency to support a boundary modification request.



§ 344.2. Requesting Agency Information

Each request for boundary modification shall include the following information:

(a) The name and mailing address of the requesting agency.

(b) A copy of the statutory or other legal authority under which the requesting agency was created with specific citations to the provisions setting forth the duties and responsibilities of the agency.

(c) A copy of the resolution adopted by the requesting agency formally initiating the boundary modification request.

(d) The name and contact information, including phone number, mailing address and electronic mail address, of the request manager.



§ 344.4. Notice and Consultation

Each request for boundary modification shall include information demonstrating that the requesting agency consulted with affected agencies and affected systems including, but not limited to, the following:

(a) A list of all local agencies and public water systems in the affected basins with the subset of affected agencies and affected systems specifically identified.

(b) An explanation of the methods used to identify affected agencies and affected systems.

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(c) Information regarding the nature of consultation, including copies of correspondence with affected agencies and affected systems and any other persons or entities consulted, as appropriate.

(d) A summary of all public meetings at which the proposed boundary modification was discussed or considered by the requesting agency, including copies of any meeting agendas or minutes, if prepared, and any notices published.

(e) A copy of all comments regarding the proposed boundary modification received by the requesting agency and a summary of any responses made by the requesting agency.



§ 344.6. Description of Proposed Boundary Modification

(a) Each request for boundary modification shall include a concise description of the proposed modification, including an overview of the request and a description or explanation of the following:

(1) The category of boundary modification proposed.

(2) The identification of all affected basins or subbasins, including Bulletin 118 basin or subbasin names and numbers.

(3) A proposed name for each new subbasin or consolidated basin, if applicable.

(b) Each request for a jurisdictional boundary modification pursuant to Section 342.4 shall also include the following:

(1) An explanation of how the proposed boundary modification would promote sustainable groundwater management in the proposed basin or subbasin.

(2) An explanation of how the proposed boundary modification would affect the ability of adjacent basins or subbasins to sustainably manage groundwater in those basins or subbasins.

(3) A historical summary of groundwater management in the proposed basin or subbasin.

(4) An explanation of how the proposed boundary modification may affect state programs, including, but not limited to the California Statewide Groundwater Elevation Monitoring (Water Code Section 10920 et seq.), Groundwater Management Plans developed pursuant to AB 3030 (Water Code Section 10750 et seq.), Groundwater Sustainability Plans or alternatives developed pursuant to the Sustainable Groundwater Management Act (Water Code Section 10720 et seq.), any

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applicable state or regional board plans, and other water management and land use programs.

(c) Any other information deemed appropriate by the requesting agency, including but not limited to, an explanation of opportunities that would arise from or obstacles that would be overcome by the boundary modification request.



§ 344.8. Local Agency Input

(a) Each request for boundary modification shall include the following:

(1) Evidence that the requesting agency provided information to affected agencies and affected systems regarding the proposed boundary modification as required by Section 344.4 and provided those affected agencies and affected systems an opportunity to comment in support or opposition.

(2) Copies of all comments and documents from affected agencies and affected systems in support of or opposition to the proposed modification.

(3) Any evidence the requesting agency believes will rebut any opposition to the proposed boundary modification or otherwise assist the Department in its evaluation.

(b) Any affected agency or affected system that elects to support or oppose the proposed boundary modification shall provide the requesting agency with one of the following:

(1) A copy of a resolution formally adopted by the decision-making body of the affected agency or affected system.

(2) A letter signed by an executive officer or other official with appropriate delegated authority who represents the affected agency or affected system.

(c) The level of detail provided by an affected agency or affected system in support or opposition to a proposed boundary modification need not be as comprehensive as that contained in the request, but the support or opposition must rely on similar scientific and technical information as the particular boundary modification request to which it is addressed, and will be evaluated by the Department using the same criteria.

(d) A request that involves basin subdivision pursuant to Section 342.4(c) shall provide information demonstrating that the proposed boundary modification is supported by at least three-fourths of the local agencies and public water systems in the affected basins.



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§ 344.10. General Information

Each request for boundary modification shall include the following information:

(a) A description of the lateral boundaries and definable bottom of the proposed basin or subbasin that is in clear and definite terms, based on authoritative sources, and of sufficient detail to allow a map of the proposed lateral basin or subbasin boundaries to be plotted from that description.

(b) A graphical map of adequate scale and GIS files showing the proposed basin or subbasin boundary in relation to the existing Bulletin 118 basin or subbasin boundary and the affected agencies and affected systems that are within or bordering the existing and proposed basin or subbasin.



§ 344.12. Hydrogeologic Conceptual Model

(a) Each request for boundary modification shall include a clearly defined hydrogeologic conceptual model demonstrating the following for the proposed basin or subbasin:

(1) Principal aquifers.

(2) Lateral boundaries, including:

(A) Geologic features that significantly impede or impact groundwater flow.

(B) Aquifer characteristics that significantly impede or impact groundwater flow.

(C) Significant geologic and hydrologic features and conditions of the principal aquifers, as appropriate, including information regarding the confined or unconfined nature of the aquifers, facies changes, truncation of units, the presence of faults or folds that impede groundwater flow, or other groundwater flow restricting features.

(D) Key surface water bodies, groundwater divides and significant recharge sources.

(3) Recharge and discharge areas within or adjacent to the basin or subbasin.

(4) Definable bottom of the basin or subbasin.

(b) The Department may waive the requirement of this section for an internal boundary modification pursuant to Section 342.4(a) if the requesting agency is able to demonstrate

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that the proposed boundary modification is unlikely to affect sustainable groundwater management.



§ 344.14. Technical Information for Scientific Modifications

(a) Each request for a scientific modification pursuant to Section 342.2 shall include information that demonstrates the extent of the aquifers, including the following:

(1) A qualified map that depicts the lateral boundaries of the aquifers that define the basin or subbasin.

(2) A technical study that provides subsurface data demonstrating the vertical thickness and relevant physical properties of the aquifers, such as hydrogeologic cross section(s), if available.

(b) In addition to the information required in Section 344.14(a), each request for scientific modification involving a hydrogeologic barrier pursuant to Section 342.2(b) shall demonstrate the presence or absence of impediments to subsurface groundwater flow, such as impermeable material, a fault, or groundwater divide, based on the following information:

(1) A qualified map depicting geologic structures or features that could significantly impact or impede groundwater flow.

(2) A technical study that provides geologic and hydrologic evidence of groundwater conditions including, as appropriate:

(A) Historical and current potentiometric surface maps, groundwater levels, groundwater recharge and discharge areas of the aquifers within the vicinity of proposed boundary modification.

(B) Aquifer testing results demonstrating boundary condition response.

(C) Water quality information of the aquifers including but not limited to general water quality parameters and isotopic analysis.

(D) Geophysical investigations and supporting data.

(E) Other information that the requesting agency considers relevant to the boundary modification request.

(c) Other technical information required by the Department that is necessary to evaluate a boundary modification request made pursuant to Section 342.2.

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(d) A request for a scientific modification to an external boundary pursuant to Section 342.2(a) may utilize any of the information in Section 344.14(b) if the requesting agency believes it may assist the Department in its evaluation.



§ 344.16. Technical Information for Jurisdictional Modifications

(a) Each request for a boundary modification that involves a jurisdictional modification pursuant to Section 342.4 shall include the following:

(1) A water management plan that covers all or a portion of the proposed basin or subbasin and contributes to meeting the requirements of Water Code Sections 10753.7(a) or 10727, including any of the following:

(A) An adopted groundwater management plan, a basin wide management plan, or other integrated regional water management program or plan that meets the requirements of Water Code Section 10753.7(a).

(B) Management pursuant to an adjudication action.

(C) One or more technical studies that cover the relevant portion of a basin or subbasin.

(D) A valid Groundwater Sustainability Plan adopted pursuant to the Act or an alternative approved by the Department in accordance with Water Code 10733.6.

(2) A Statement of the existing and planned coordination of sustainable groundwater management activities and responsibilities where required by the Act.

(b) Each request for a boundary modification that involves a basin subdivision pursuant to Section 342.4(c) shall provide, where applicable, a description and supporting documentation of historical and current conditions and coordination within the existing and proposed basin or subbasin related to the following:

(1) Groundwater level monitoring programs, historical and current groundwater level trends, and areas of significant groundwater level declines.

(2) Groundwater quality issues that may impact the supply and beneficial uses of groundwater, including a map of known impacted sites and areas, mitigation measures planned or in place, and a description of impact to water budget.

(3) Inelastic land surface subsidence including a map of known land subsidence areas, historical trends within known land subsidence areas, and a description of impacts to the water budget.

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(4) Groundwater-surface water interactions, which may be demonstrated by a map identifying significant surface water bodies, and a groundwater elevation contour map or detailed written description of the direction of groundwater movement relative to the water bodies, the location and nature of seeps and springs, and known water quality issues within the basin or subbasin and in hydraulically connected adjacent basins or subbasins.

(5) A map identifying the recharge areas.


Reference: Sections 10722.2, 10727, 10733.6, 10753.7, and 12924, Water Code.

§ 344.18. CEQA Compliance

The requesting agency shall satisfy requirements of the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.), including, if necessary, information to enable the Department to satisfy the requirements of a responsible agency.



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ARTICLE 6. METHODOLOGY AND CRITERIA FOR EVALUATION

§ 345. Introduction to Methodology and Criteria for Evaluation

This Article establishes the methodology and criteria for the evaluation of proposed boundary modifications.



§ 345.2. Basis for Denial of Request for Boundary Modification

The Department will evaluate boundary modification requests to determine whether the request has the overall effect of promoting sustainable groundwater management. A request may be denied if one or more factors that could limit substantial compliance with the Act are identified, including the following:

(a) The proposed boundary modification may limit the opportunity or likelihood of any of the following:

(1) Sustainable groundwater management in the proposed basin or subbasin.

(2) Sustainable groundwater management in other basins or subbasins.

(3) Groundwater storage or recharge in the proposed or adjacent basins or subbasins.

(4) Coordination of management activities and the sharing of data and information across basin or subbasin boundaries.

(b) The requesting agency is unable to provide information that would allow the Department to assess whether there is a history of sustainable management of groundwater levels in the existing or proposed basin or subbasin.

(c) For scientific modifications, if the Department does not consider that the available scientific evidence supports the addition, deletion, or relocation of a basin or subbasin boundary.

(d) The requesting agency has failed to provide all required information or information deemed necessary by the Department or has failed to substantially comply with the requirements of this Subchapter.

(e) The proposed boundary modification could result in the isolation of areas with known groundwater management problems, or of areas, including disadvantaged communities, that may lack the institutional infrastructure or economic resources to form an effective

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groundwater sustainability agency or develop an implementable groundwater sustainability plan or alternative, or any other groundwater management plan.

(f) The proposed boundary modification could result in the creation of unmanaged areas.

(g) An objection to a jurisdictional boundary modification has been raised by any of the following:

(1) An agency created by statute to manage groundwater.

(2) The Watermaster or other manager of an adjudicated groundwater basin or portion of a groundwater basin.

(3) An exclusive local agency for compliance with the Act within their statutory boundaries.

(4) A county in which the proposed boundary modification would occur.

(h) Where the Department finds that the requested boundary modification would be inconsistent with the objectives of the Act.


Reference: Sections 10720.8, 10722.2, 10723, 10727, 10733.6, and 10753.7, Water Code.

§ 345.4. Criteria for Evaluating Supporting Information

The Department shall apply the following criteria to assess whether the proposed basin or subbasin can be sustainably managed or would limit the sustainable management of adjacent basins or subbasins, and whether there is a history of sustainable management of groundwater levels in the proposed basin or subbasin.

(a) For scientific modifications pursuant to Section 342.2, the Department will consider the adequacy of hydrogeologic conceptual models and technical studies based on their demonstration of scientific support for the boundary modification. The models and technical studies will be evaluated according to the following:

(1) Hydrogeologic conceptual models will be evaluated to determine the degree to which they apply technical information to describe the geologic framework, the direction and movement of groundwater flow, the water budget for the basin or subbasin, and any other feature as required by Section 344.12.

(2) Qualified maps of surficial geology, structural geology, or geophysical investigations, supporting subsurface interpretations, and any other feature as required by Section 344.14, will be evaluated to assess the presence or absence of a groundwater flow boundary.

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(3) Potentiometric surface maps, groundwater levels, groundwater recharge and discharge areas, aquifer testing results, water quality data, and any other feature as required by Section 344.14 will be evaluated to assess the presence or absence of a groundwater flow boundary.

(b) For jurisdictional modifications pursuant to Section 342.4, the Department shall review evidence from existing water management plans that cover all or a portion of the proposed basin or subbasin. The Department shall evaluate the likelihood that the proposed basin or subbasin can be sustainably managed, the groundwater management practices in place within the basin or subbasin, and the historical and existing aquifer response to these management practices. The water management plan will also serve to provide additional information should it be necessary to clarify questions regarding management activities or supporting technical information.

(c) For jurisdictional modifications of basin consolidation or county basin consolidation or basin subdivision pursuant to Section 342.4(b) and (c), the Department will evaluate the adequacy of hydrogeologic conceptual models. The evaluation will assess the degree to which the models apply technical information to describe the geologic framework, the direction and movement of groundwater flow, the components of the water budget for the basin or subbasin, and any other feature as required by Section 344.12.

(d) For jurisdictional modifications of basin subdivision pursuant to Section 342.4(c), the Department will evaluate, where applicable, the adequacy of the description and supporting documentation of historical and current conditions and coordination in the existing and proposed basin or subbasin of the following:

(1) Current and historical groundwater levels from a groundwater monitoring well network that satisfies the following criteria:

(A) A sufficient density of monitoring wells to evaluate and implement sustainable groundwater management as determined by the Department.

(B) Wells with perforated intervals in all principal aquifers.

(C) The density and distribution of wells is adequate to characterize the potentiometric surface for each of the principal aquifers.

(D) The methods of data collection follow best management practices and data are collected at similar intervals and frequency.

(E) Groundwater level data demonstrate that the principal aquifers have not experienced long-term declines in groundwater levels.

(2) Water quality data, including data showing that areas with known water quality impacts would not be more isolated or concentrated.

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(3) Current and historical land subsidence data demonstrating that no significant inelastic land subsidence is occurring.

(4) Technical information related to groundwater–surface water interactions showing that surface water is not adversely affected by groundwater extractions.

(5) Technical information related to recharge areas showing that recharge is not adversely affected by the proposed boundary modification.

(6) Evidence of coordination between local agencies and public water systems pertaining to water budgets, data collection, and other agreements designed to promote sustainable groundwater management, as appropriate.

(e) For any boundary modification request, the Department may consider any other scientific or technical information that relates to the ability of a proposed basin or subbasin to achieve sustainable groundwater management.



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ARTICLE 7. ADOPTION OF BOUNDARY MODIFICATION

§ 346. Introduction to Department Procedures

This Article describes the procedure for the adoption of boundary modifications by the Department.



§ 346.2. Presentation of Draft Boundary Modifications

(a) If the Department determines that a boundary modification is supported by adequate technical information and meets the requirements of this Subchapter, the Department shall post the draft revised basin and subbasin boundaries on the Department’s Internet Web site and hold at least one public meeting to solicit comments on the draft boundaries prior to submitting them to the Commission.

(b) The Department shall present a copy of the draft revised basin and subbasin boundaries to the Commission to hear and comment on the draft revisions pursuant to Section 10722.2(e).

(c) The Department may finalize the revised basin and subbasin boundaries 60 days after the draft revisions have been presented to the Commission or 30 days after the Commission has met to hear and comment on the draft revisions, whichever comes earlier, if no substantial changes are required.

(d) If the Department makes substantial changes to a proposed boundary modification after presentation to the Commission, the Department shall notify the requesting agency and resubmit the proposed changes to the Commission for further review consistent with the Act.



§ 346.4. Record of Boundary Modifications

After revising the boundaries of a basin or subbasin, or establishing a new subbasin, the Department shall record that information on the Department’s Internet Web site and incorporate the revised basin and subbasin boundaries in subsequent updates to Bulletin 118.

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§ 346.6. Subsequent Modifications by Department.

If, after revising the boundaries of a basin or subbasin, or establishing a new subbasin, the Department determines, based on substantial evidence, that assumptions regarding the sustainable management of the new basin or subbasins were incorrect, and that as a result the boundary modification should not have been adopted, the Department may, after consultation with the requesting agency, either restore the boundaries that existed before the boundary modification or revise the boundaries consistent with this Subchapter.



GSA FORMATION NOTIFICATION GUIDELINES FOR LOCAL AGENCIES

January 6, 2016 SUBJECT TO CHANGE Page 1 of 6

ACTIONS FOR LOCAL AGENCIES TO FOLLOW WHEN DECIDING TO BECOME OR FORM A

GROUNDWATER SUSTAINABILITY AGENCY (GSA)

INTRODUCTION The Sustainable Groundwater Management Act (SGMA), which became effective January 1, 2015, established a framework of priorities and requirements to help local agencies sustainably manage groundwater within a basin or subbasin (basin). The information in this document highlights the requirements that should be followed by a local agency in order to become or form a groundwater sustainability agency (GSA) and to be identified as an exclusive GSA by the Department of Water Resources (DWR or department). The GSA formation requirements are located in Division 6 of the Water Code, Part 2.74, Chapter 4, Section (§) 10723 et seq. and this document incorporates the amendments made to SGMA by Senate Bill (SB) 13 in September 2015. For reference, the definitions for GSA and local agency as defined in Water Code §10721 are as follows:

“Groundwater sustainability agency” means one or more local agencies that implement the provisions of this part [Part 2.74]. For purposes of imposing fees pursuant to Chapter 8 (commencing with [Water Code] Section 10730) or taking action to enforce a groundwater sustainability plan, “groundwater sustainability agency” also means each local agency comprising the groundwater sustainability agency if the plan authorizes separate agency action. “Local agency” means a local public agency that has water supply, water management, or land use responsibilities within a groundwater basin.

One local agency can decide to become a GSA or a combination of local agencies can decide to form a GSA by using either a joint powers authority (JPA), a memorandum of agreement (MOA), or other legal agreement. However, a local agency will only be presumed to be the exclusive GSA within their respective service area or combined service areas. A local agency must define its service area as part of its GSA formation process. SUMMARY OF INFORMATION REQUIRED TO BE FILED WITH DWR A local agency is required to file the following information with DWR in order to complete the GSA formation notification requirements of Water Code §10723.8(a). Effective January 1, 2016, a notice of GSA formation will not be determined complete until all applicable information is submitted – please see Attachment A.

• Information that clearly shows the GSA formation notice was submitted to DWR within 30 days of the decision to become or form a GSA – the decision date is generally the date the local agency signed the resolution or legal agreement that formed the GSA.

• A map and accompanying narrative indicating: (1) the local agency’s service area boundaries; (2) the boundaries of the basin or portion of the basin the agency intends to manage; and (3) any other agencies managing or proposing to manage groundwater within the basin.

o Please include a hard-copy map and GIS shape files. The area of a basin claimed by a local agency in the GSA formation notice should match the area provided in the GIS shape files. DWR’s Region Office staff will contact local agencies if those areas do not match.

• A copy of the resolution or legal agreement forming the new agency. • A copy of any new bylaws, ordinances, or new authorities developed by the local agency. • A list of interested parties developed pursuant to Water Code §10723.2 and an explanation of how their

interests will be considered in the development and operation of the GSA and the development and implementation of the GSA’s sustainability plan.



A representative of the local agency deciding to become a GSA, or a designated representative from the group of local agencies deciding to form a GSA, should include a statement in its notification that all applicable information listed in Water Code §10723.8(a) has been provided. DWR recommends that the local agency submitting the GSA formation notice include a copy of its Government Code §6066 notice, as well as evidence demonstrating that a public hearing in accordance with Water Code §10723(b) was held in the county or counties overlying the basin. Additional information related to a local agency’s decision to be a GSA is welcomed and will help demonstrate to DWR, the State Water Resources Control Board (SWRCB), and other local agencies that a proposed GSA has the long-term technical, managerial, and financial capabilities to sustainably manage basin-wide groundwater resources and prepare a groundwater sustainability plan (GSP) or coordinated GSP for an entire groundwater basin. FORMING A GSA AND PUBLIC NOTIFICATION REQUIREMENTS The following summarizes the public notification and GSA formation requirements identified in SGMA. Relevant Water Code sections are excerpted for reference. Step 1: Decision to Form a GSA The first step in the GSA formation process is public notification that a local agency is either (1) deciding to become a GSA or (2) deciding to form a GSA together with other local agencies. Water Code §10723(b) requires that a local agency or group of local agencies hold a public hearing(s) in the county or counties overlying the groundwater basin. SGMA identifies 15 exclusive local agencies created by statute to manage groundwater within their respective statutory boundaries; however, the 15 exclusive local agencies must still decide to become GSAs and follow the same public notification process as all other local agencies. The 90-day period described in Water Code §10723.8(c) does not apply to the 15 exclusive agencies, and no other local agency can decide to be a GSA in those areas unless one of the exclusive agencies opts out of its presumed role. The relevant Water Code sections are excerpted below. WATER CODE §10723

(a) Except as provided in subdivision (c), any local agency or combination of local agencies overlying a groundwater basin may decide to become a GSA for that basin.

(b) Before deciding to become a GSA, and after publication of notice pursuant to Section 6066 of the Government Code, the local agency or agencies shall hold a public hearing in the county or counties overlying the basin.

(c) [Includes list of 15 “exclusive” local agencies – these agencies do not become a GSA until they submit a notification of GSA formation to DWR].

GOVERNMENT CODE §6066

Publication of notice pursuant to this section shall be once a week for two successive weeks. Two publications in a newspaper published once a week or oftener, with at least five days intervening between the respective publication dates not counting such publication dates, are sufficient. The period of notice commences upon the first day of publication and terminates at the end of the fourteenth day, including therein the first day.



Step 2: Consideration of Interests of Beneficial Uses and Users of Groundwater Water Code §10723.2 requires GSAs to consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing GSPs. An explanation of how those interests will be considered by a GSA when developing and implementing a GSP is required as part of the GSA formation notification requirements. The details of the explanation will be considered by DWR staff when performing its completeness review. The relevant Water Code sections are excerpted below. WATER CODE §10723.2

The GSA shall consider the interests of all beneficial uses and users of groundwater, as well as those responsible for implementing GSPs. These interests include, but are not limited to all of the following: (a) Holders of overlying groundwater rights, including:

(1) Agricultural users. (2) Domestic Well owners.

(b) Municipal well operators. (c) Public water systems. (d) Local land use planning agencies. (e) Environmental users of groundwater. (f) Surface water users, if there is a hydrologic connection between surface and groundwater bodies. (g) The federal government, including, but not limited to, the military and managers of federal lands. (h) California Native American Tribes. (i) Disadvantaged communities, including, but not limited to, those served by private domestic wells or

small community water systems. (j) Entities listed in Section 10927 that are monitoring and reporting groundwater elevations in all or a part

of a groundwater basin managed by the GSA. GSAs are encouraged to engage additional stakeholders in order to develop the relationships and expertise necessary to develop and implement GSPs. As stated in Water Code §10727.8, “The GSA shall encourage the active involvement of diverse social, cultural, and economic elements of the population within the groundwater basin prior to and during the development and implementation of the GSP.”

Step 3: Submittal of GSA Formation Information to DWR for Completeness Review A local agency or group of local agencies must notify DWR and document its intent to become or form a GSA. The requirement for DWR to post complete GSA notices was added by an amendment made by SB 13 and is included in the Water Code references below. DWR will not post GSA formation notifications on its website that are determined incomplete – please see Attachment A. WATER CODE §10723.8

(a) Within 30 days of deciding to become or form a GSA, the local agency or combination of local agencies shall inform the department of its decision and its intent to undertake sustainable groundwater management. The notification shall include the following information, as applicable: (1) The service area boundaries, the boundaries of the basin or portion of the basin the agency intends

to manage pursuant to this part, and the other agencies managing or proposing to manage groundwater within the basin.

(2) A copy of the resolution forming the new agency. (3) A copy of any new bylaws, ordinances, or new authorities adopted by the local agency. (4) A list of interested parties developed pursuant to Section 10723.2 and an explanation of how their

interests will be considered in the development and operation of the GSA and the development and implementation of the agency’s sustainability plan.



(b) The department shall post all complete notices received under this section on its Internet Web site within 15 days of receipt.

EXCLUSIVE GSA FORMATION TIMELINE – OVERLAPPING GSA SERVICE AREAS Water Code §10735.2(a) says the SWRCB, after notice and a public hearing, may designate a high- or medium-priority basin as a probationary basin after June 30, 2017, if a local agency or a collection of local agencies has not decided to become a GSA(s) and develop a GSP(s) for the entire basin – or if a local agency has not submitted an Alternative Plan for the entire basin. A local agency that decides to become a GSA within its service area, or a group of local agencies that decides to form a GSA within their combined service areas, does not effectively become the exclusive GSA for those areas until the provisions of Water Code §10723.8(c) and (d) are met – these provisions address overlapping GSAs and management within a service area. If multiple local agencies form separate GSAs in a basin within a 90-day period, and if any of those GSA formations result in a service area overlap in the areas proposed to be managed, then none of the local agencies will become the exclusive GSA unless the overlap is resolved, which could require making a material change to the posted notice(s). The relevant Water Code sections are excerpted below. WATER CODE §10723.8

(c) The decision to become a GSA shall take effect 90 days after the department posts notice under subdivision (b) if no other local agency submits a notification under subdivision (a) of its intent to undertake groundwater management in all or a portion of the same area. If another notification is filed within the 90-day period, the decision shall not take effect unless the other notification is withdrawn or modified to eliminate any overlap in the areas proposed to be managed. The local agencies shall seek to reach agreement to allow prompt designation of a GSA. If agreement is reached involving a material change from the information in the posted notice, a new notification shall be submitted under subdivision (a) and the department shall post notice under subdivision (b).

(d) Except as provided in subdivisions (e) and (f), after the decision to be a GSA takes effect, the GSA shall be presumed to be the exclusive GSA within the area of the basin within the service area of the local agency that the local agency is managing as described in the notice.

WATER CODE §10726.8

(b) Nothing in this part shall be construed as authorizing a local agency to make a binding determination of the water rights of any person or entity, or to impose fees or regulatory requirements on activities outside the boundaries of the local agency.

CONDITIONS FOR DETERMINING A GSA NOTIFICATION INCOMPLETE A GSA formation notice could be determined incomplete if the provisions of Water Code §10723.8(a) are not clearly addressed. An incomplete notice will not be posted on DWR’s GSA Formation Table – DWR staff will inform local agencies of the reason(s) for not posting. Local agencies will be given an opportunity to provide additional required information, if applicable. A complete notice will be posted within 15 days of being determined complete. Examples of what could deem a GSA formation notification to be incomplete include, but are not limited to, the following:

• Informing DWR of the decision to become a GSA more than 30 days after the decision was made. • Submitting an incomplete map or insufficient information to clearly define the local agency’s service

area boundaries with respect to the area of the basin proposed to be managed as a GSA. o DWR must be able to determine if one GSA notice overlaps with another GSA notice, and a GIS

shapefile may be required to make this determination. Please submit an accurate shapefile. • No copy of a resolution or legal agreement forming the new agency. • No copy of any new bylaws, ordinances, or new authorities adopted, if applicable.



• An incomplete list of interested parties developed pursuant to Water Code §10723.2 or an insufficient explanation of how their interests will be considered by the GSA when developing a GSP.

• Submitting a GSA formation notification for a basin or portion of a basin where a local agency is already presumed to be the exclusive GSA.

• Deciding to become or form a GSA for an area that is outside the service area boundary of the local agency(s) forming the GSA (without a legal coordination agreement).

• Forming a GSA outside the boundaries of a basin defined in DWR’s Bulletin 118. Questions related to GSA formation can be directed to DWR by contacting Mark Nordberg at [email protected] or calling 916-651-9673. Other information and responses to frequently asked questions are located on DWR’s GSA webpage at: http://water.ca.gov/groundwater/sgm/gsa.cfm. Please e-mail your GSA formation notification and GIS shape files, and send via postal mail a hardcopy, to the following DWR staff: Mark Nordberg, GSA Project Manager Sustainable Groundwater Management Program California Department of Water Resources 901 P Street, Room 213-B P.O. Box 942836 Sacramento, CA 94236

DWR Region Office Groundwater Contact http://water.ca.gov/groundwater/gwinfo/contacts.cfm

Bill Ehorn, Northern Region Bill Brewster, North Central Region Mike McKenzie, South Central Region Tim Ross, Southern Region

SELECT SGMA AND GSA RESOURCES

• Sustainable Groundwater Management Website: http://water.ca.gov/groundwater/sgm/index.cfm • 2014 SGMA Legislation Text with 2015 Legislative Amendments:

http://www.water.ca.gov/cagroundwater/docs/2014%20Sustainable%20Groundwater%20Management%20Legislation%20_with%202015%20amends%2011-10-2015_clean-2.pdf

• GSA Frequently Asked Questions: see http://water.ca.gov/groundwater/sgm/gsa.cfm • GSA Formation Table: http://www.water.ca.gov/groundwater/sgm/gsa_table.cfm • GSA Interactive Map: http://water.ca.gov/groundwater/sgm/gsa_map.cfm. • Water Management Planning Tool: http://water.ca.gov/groundwater/boundaries.cfm • Basin Boundaries Assessment Tool: http://water.ca.gov/groundwater/sgm/bbat.cfm • GIC Interactive Map (Data): http://water.ca.gov/groundwater/MAP_APP/index.cfm

mailto:[email protected]

http://water.ca.gov/groundwater/sgm/gsa.cfm

http://water.ca.gov/groundwater/gwinfo/contacts.cfm

http://water.ca.gov/groundwater/sgm/index.cfm



http://water.ca.gov/groundwater/sgm/gsa.cfm

http://www.water.ca.gov/groundwater/sgm/gsa_table.cfm

http://water.ca.gov/groundwater/sgm/gsa_map.cfm

http://water.ca.gov/groundwater/boundaries.cfm

http://water.ca.gov/groundwater/sgm/bbat.cfm

http://water.ca.gov/groundwater/MAP_APP/index.cfm



ATTACHMENT A PROCESS FOR REVIEWING GSA FORMATION NOTICES AND ADDRESSING

OVERLAPPING SERVICE AREA BOUNDARIES

1. DWR receives a GSA formation notification (notification or notice) from a local agency(s). 2. DWR reviews the notice for completeness.

a. If incomplete, the local agency(s) is contacted and the notice is not posted. DWR informs the local agency(s) of the reason(s) for being determined incomplete – the local agency will be given an opportunity to make the notification complete.

b. If complete, the notice is posted on DWR’s GSA Formation Table within 15 days. 3. Complete GSA notifications are posted with (1) the posting date and (2) a date that indicates the

posting-date-plus-90-calendar-days. This is the active 90-day period for that portion of the basin. a. The GSA area submitted with the notice is included on DWR’s GSA Interactive Map after DWR

Region Office staff determines the suitability of the GIS shape files. The area included as a shape file must match the area depicted in the notice.

b. The 90-day period does not apply to the statuary boundaries of the exclusive local agencies listed in Water Code §10723(c).

4. If no other local agency(s) submits a notification within the 90-day period in all or a portion of the same basin area, the local agency(s) that submitted the notification will become the “exclusive” GSA for the area of the basin as described in the notice. a. Status as “exclusive” GSA will be indicated on the GSA Formation Table and the area claimed by

the GSA will be distinctly colored on the GSA Interactive Map. b. If any other local agency(s) submits a notification for all or a portion of an area managed by an

“exclusive” GSA, DWR will determine the notification to be incomplete and will contact that local agency(s).

5. If another local agency(s) submits a complete notification within an active 90-day period, and that notification results in an overlap in all or a portion of the same area of an existing notice, then: a. The notification will be included on the GSA Formation Table with a posting date. b. The column with the posting-date-plus-90-days date for all affected notifications will be labeled

with “overlap” to indicate a GSA formation overlap. c. The GIS shape files on the GSA Interactive Map for all affected notifications will be labeled with

a color that clearly indicates the extent of the GSA formation overlap. 6. All local agencies that are affected by overlapping notifications will remain in overlap status until the

conditions stated in Water Code §10723.8(c) are met. a. “Exclusive” designation of a GSA will not proceed unless conflicting notifications are withdrawn

or modified to eliminate any overlap in the areas proposed to be managed. 7. If agreement is reached involving a material change from the information in the posted notice, a

new notification shall be submitted in accordance with Water Code §10723.8(a) and the new notification will be reviewed and posted by DWR as described in this process. a. A material change includes, but is not limited to: a significant GSA boundary revision; a change

of local agencies forming the GSA; or a consolidation of local agencies or proposed GSAs through a JPA or MOA or other legal agreement.

8. If overlapping GSA notifications exist in a basin after June 30, 2017, then that basin is subject to probationary status by the SWRCB per Water Code §10735.2(a). In addition, the groundwater extraction reporting requirements in Water Code §5200 et seq. apply to the portions of that basin where local agencies have not been determined “exclusive” GSAs.

1

1

The Effect of Drought on California Water Rights:

Emergency Conservation and Groundwater Regulation

Meredith E. NikkelMunicipal Law Institute

February 5, 2016

Article X, Section 2

“The right to water or to the use or flow of water in or from any natural stream or water course in this State is and shall be limited to such water as shall be reasonably required for the beneficial use to be served, and such right does not and shall not extend to the waste or unreasonable use …”

2

Water Conservation

3SWRCB, December 2015

2

Groundwater Use in California

4Source: Legislative Analysts' Office

January 17, 2014 – Governor declares state of emergency due to severe drought conditionsMarch 1, 2014 – Revisions to SWRCB emergency regulatory authority in Water Code section 1058.5.June 16, 2014 – Light v. State Water Resources Control BoardJuly 2, 2014 – Emergency regulations adopted for Statewide Drought Related Curtailment of Water Diversions to Protect Senior Water RightsJuly 29, 2014 – Emergency water conservation regulationsSeptember 1, 2014 – Sustainable Groundwater Management Act of 2014 5

Emergency Water Conservation Regulations

6

3

Water Code § 275

The department and board shall take all appropriate proceedings or actions before executive, legislative, or judicial agencies to prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in this state.

7

Emergency Regulations

Adopted in response to conditions which exist, or are threatened, in a critically dry year immediately preceded by two or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency based on drought conditions.Cal. Water Code § 1058.5 8

Initial Conservation Regulations

July 29, 2014Prohibits certain uses, restricted outdoor irrigation, reporting

March 27, 2015Additional prohibited uses, increased reporting requirements

9

4

May 2015 Conservation Regulations

To prevent the waste and unreasonable use of water and to meet the requirements of the Governor’s April 1, 2015 Executive Order, each urban water supplier shall reduce its total potable water production by the percentage identified as its conservation standard in this subdivision.

10

Water Conservation Results2013 compared to 2014/15

SWRCB Staff Presentation, December, 2015 11

November 2015 Executive Order

If drought conditions persist through January 2016, the Water Board shall extend until October 31, 2016, restrictions to achieve a statewide reduction in urban potable water usage. The Water Board shall consider modifying its existing restrictions to address uses of potable and non-potable water, as well as to incorporate insights gained from existing restrictions.

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5

Proposed Emergency Regulations

• Climate adjustment up to 4%• Adjustment for water efficient growth since 2013• 4% to 8% adjustment for new drought-resilient

potable water supplies • No reductions below 8%• Prevent HOAs from impeding water conservation• Further define ag uses that may be subtracted• Updates to compliance and reporting timelines

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The Sustainable Groundwater Management Act of 2014

Fundamental Principles

Local Primacy

Local agencies and counties have primacy with respect to the development and implementation of groundwater sustainability plans. However, if local agencies or counties fail to act or take inadequate action, the State of California may intervene.

15

6


Sustainability

Groundwater basins must be managed for long-term reliability and multiple economic, social and environmental benefits for current and future beneficial uses.Water Code § 113

16


Sustainable yield"[T]he maximum quantity of water, calculated over a base period representative of long-term conditions in the basin and including any temporary surplus, that can be withdrawn annually from a groundwater supply without causing an undesirable result." Water Code § 10721(v)

17


Undesirable ResultOne or more of the following: (1) chronic lowering of groundwater levels; (2) reduction of groundwater storage; (3) seawater intrusion; (4) degraded water quality; (5) land subsidence that substantially interferes with surface land uses; and (6) surface water depletions that have significant and unreasonable adverse impacts on beneficial uses of the surface water. Water Code § 10721(w)

18

7


No Alteration of Water Rights

"Nothing in this part, or in any groundwater management plan adopted pursuant to this part, determines or alters surface water rights or groundwater rights under common law or any provision of law that determines or grants surface water rights." Water Code § 10720.5(b)

19

Key Requirements

"By January 31, 2020, all basins designated high-or medium-priority basins. . . as basins that are subject to critical conditions of overdraft shall be managed under a groundwater sustainability plan or coordinated groundwater sustainability plans pursuant to this part." §10720.7(a)(1)

20

Key Requirements (cont.)

"By January 31, 2022, all basins designated high-or medium-priority basins. . .that are not subject to paragraph 1 [i.e., are notsubject to critical conditions of overdraft] shall be managed under a groundwater sustainability plan or coordinated groundwater sustainability plans pursuant to this part." §10720.7(a)(2)

21

8

22

23

Groundwater Sustainability Agency

Any local agency or combination of local agencies with land use, water management, or planning authority overlying a groundwater basin may elect to be a GSA for that basin. § 10723(a)

1196862.1 24

9

Regulatory Authority of GSAs• GSA may require that every groundwater

extraction facility be measured by a device satisfactory to the GSA §10725.9(a)

• GSA may impose spacing requirements on new groundwater well construction and impose "reasonable operating regulations on existing groundwater wells to minimize well interference, including requiring extractors to operate on a rotation basis." §10726.4(a)(1)

25

Regulatory Authority of GSAs GSA may "control groundwater extractions by regulating, limiting or suspending extractions from individual groundwater wells or extractions from groundwater wells in the aggregate, construction of new groundwater wells, enlargement of existing groundwater wells, or reactivation of abandoned groundwater wells, or otherwise establishing groundwater extraction allocations." §10726.4(a)(2) 26

Groundwater Sustainability Plans

• GSPs must include "[m]easurable objectives, as well as interim milestones in increments of five years, to achieve the sustainability goal in the basin within 20 years of the implementation of the plan. §10727.2(b)(1)

• Where multiple GSPs developed for same basin, GSAs "shall coordinate with other agencies preparing a groundwater sustainability plan within the basin to ensure that the plans utilize the same data and methodologies [for specified parameters]." §10727.6 27

10

DWR Oversight

• Upon adoption of GSP, the GSA shall submit the GSP to DWR for review. §10733.4(a)

• Upon receipt, DWR shall post the plan on its website (60 day public comments)

• DWR shall evaluate the GSP within two years of submission and issue an assessment of the plan. §10733.4(d)

1196862.1 28

State Intervention• GSA not formed by June 30, 2017• Plan not adopted by the required time• DWR (together with the SWRCB) determines plan

for basin in critical overdraft is inadequate or not being implemented to achieve sustainability

• For basins with an inadequate plan or implementation, SWRCB determines that a basin is in a condition of long-term overdraft or where groundwater extractions result in significant depletions of interconnected surface waters §10735.2(a)(1-5) 29

State InterventionSWRCB, after notice and hearing, may adopt an interim plan for a probationary basin to include elements including "[i]dentification of the actions that are necessary to correct a condition of long-term overdraft or a condition where groundwater extractions result in significant depletions of interconnected surface waters, . ." § 10735.8(b). It mayinclude "[r]estrictions on groundwater extractions." §10735.8(c)(a)

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31

Panel IIBalancing Water Supply and Growth in Good Times and BadPanelists:Jim Moose, Remy Moose & ManleyEric Robinson, Kronick, Moskovitz, Tiedemann & Girard Jennifer Harder, Assistant Professor, McGeorge School of Law

Panel DescriptionThis panel will explore issues related to water, land use, and growth, including insight into the key cases addressing the relationship between land use and water supply. Panelists will describe issues related to the California Environmental Quality Act, water supply, and growth, and detail practical approaches to compliance with California’s “show me the water” laws. Panelists will also explore water neutral development policies, also known as demand offsets, a cutting-edge tool for protecting water supply while also accommodating smart growth.

1/13/2016

1

Leading CEQA Cases on Water Supply Issues

Jim MooseRemy Moose Manley, LLP

2016 Municipal Law Institute Symposium:Ensuring Integrity in 21st Century California:

Water & Public Works in Our Arid StateMcGeorge School of Law

February 5, 20161

2

Cases for Review

Vineyard Area Citizens for Responsible Growth v. Rancho Cordova (2007) 40 Cal.4th 412

SCOPE v. County of LA (2007) 157 Cal.App.4th 149

Watsonville Pilots Assoc. v. City of Watsonville(2010)183 Cal.App.4th 1059

Cherry Valley Pass Acres and Neighbors v. City of Beaumont (2010) 190 Cal.App.4th 316

Preserve Wild Santee v. City of Santee(2012) 210 Cal.App.4th 260

Habitat and Watershed Caretakers v. City of Santa Cruz(2013) 213 Cal.App.4th 1277

3

Vineyard Area Citizens for Responsible Growth v. Rancho Cordova (2007)

Major California Supreme Court decision on EIR adequacy, first such decision in many years

EIR for 6,000-acre, 22,000-unit community plan and nearer-term 9,900-unit specific plan inadequate because EIR failed to adequately evaluate long-term water sources needed for build-out

1/13/2016

2

4

Vineyard (cont.)

Analysis of water supply was inadequate because it:

Failed to provide an adequate description of long-term water sources, as briefly mentioned in challenged EIR and as discussed at greater length in prior EIR for “Water Forum” process

EIR for land use plans failed to formally incorporate by reference information from Water Forum EIR, and contained numerical information at odds with parallel sets of water demand and water supply numbers in Water Forum EIR

EIR was also inadequate because lead agency failed to recirculate after identifying possible significant biological impacts on Cosumnes River due to groundwater pumping associated with short-term water supply

5

Vineyard (cont.)

Mitigation measure providing for the curtailment of development should water sources not materialize or be delayed is an appropriate tool under CEQA, but is not a substitute for an adequate impact analysis

Adequate analysis should contain the following elements:

a) identification of the water sources needed for full build-out;

b) assessment of the environmental impacts associated with providing water for the project;

6

Vineyard (cont.)

c) where there are both short-term and long-term supplies needed, analysis of long-term supplies and their impacts in at least programmatic level of detail;

d) assessment of the extent to which identified water sources are “certain” or “likely” to be available;

e) where “it is impossible to confidently determine that anticipated future water sources will be available,” identification of possible alternative water sources and analysis of the environmental impacts of curtailing planned development due to inadequate supplies

1/13/2016

3

7

Vineyard (cont.)

Note: CEQA analysis of how “certain” or “likely” proposed water sources are naturally raises the question of whether climate change could adversely affect the extent or reliability of such sources AB 32 declares that

• “The potential adverse impacts of global warming include . . . a reduction in the quality and supply of water to the state from the Sierra snowpack[.]”

• “Global warming will have detrimental effects on some of California’s largest industries, including agriculture, wine, tourism, skiing, recreational and commercial fishing, and forestry.”

(Health & Saf. Code, § 38501, subds. (a), (b).)

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SCOPE (2007)

EIR for development project upheld Water supply for project – a 41,000 afy

transfer between two water agencies – was “reasonably likely” despite pending litigation over water transfer

Litigation over the transfer had not resulted in invalidation of transfer, and water had been delivered for several years

Substantial evidence supported lead agency’s determination that the water transfer would remain in place and the supply would continue to be delivered

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SCOPE (cont.)

“Reasonable likelihood” determination under Vineyard is a factual question for lead agency to resolve

Case does not stand for general proposition that litigation over a water supply is never a basis for finding the supply to be uncertain

1/13/2016

4

10

SCOPE (cont.)

Practical implications Lead agencies must deal head-on with

uncertainties associated with a proposed water supply for a land use project

Courts should defer to “reasonable likelihood” determinations if supported by substantial evidence and rigorous analysis

Watsonville Pilots Assoc. v. City of Watsonville (2010)

Court sets aside EIR for Watsonville’s 2030 General Plan

The FEIR adequately analyzed water supply: The analysis complied with the Vineyard decision

A General Plan EIR need not establish a likely source of water

The EIR included a detailed discussion of conservation and offsets that would provide sufficient water for future development

The EIR included evidence to support its conclusions

Watsonville Pilots (cont.)

The area suffers from severe groundwater overdraft: The EIR concluded that overdraft will be a long-

term problem

The EIR was not required to resolve the overdraft problem, “a feat that was far beyond its scope.”

1/13/2016

5

Cherry Valley Pass Acres and Neighbors v. City of Beaumont (2010)

Court upholds water supply analysis for Sunny-Cal Specific Plan, which contemplated 560 residential units on 200 acres of ag land Cherry Valley overlies the Beaumont

Groundwater Basin:• Basin adjudication allocated project a

1,484 ac-ft/yr water right

Cherry Valley (cont.)

Baseline for analyzing water impact was 1,484 afy entitlement, not existing 50 afy use: Court held choice of baseline was a discretionary

decision of how existing physical conditions without project could most realistically be measured

City’s decision was supported by substantial evidence:

• Adjudicated water right was close to prior egg farm water use at site

• Adjudicated water right was unaffected by closure of egg farm

• Groundwater entitlement is not a hypothetical allowable condition


Water Supply Assessment (WSA) prepared for original, larger project proposal: Water district concluded that there is water

sufficient for project

Supplier described existing and future water sources in detail

1/13/2016

6


Court rejects argument that alleged inconsistencies between WSA and water district’s UWMP update were not addressed in the EIR: EIR satisfactorily showed a reasonable likelihood that water

from an identified source would meet project demands over 20 years

Project site has sufficient water right; water district has capacity to deliver that water

Court not required to determine whether project demand will be met from sources other than the entitlement and water district

EIR not required to show total water supply/demand within water district are in balance

Project would cause no additional withdrawals from groundwater basin beyond existing overdraft conditions

Preserve Wild Santee v. City of Santee

Court strikes down EIR for FanitaRanch project: 1,380 homes, village center, and 15 live/work units on 970 acres and 1,400 acres of open space Court upholds some aspects of EIR, but

finds fault with water supply analysis

Preserve Wild Santee (cont.)

Court finds water supply analysis to be defective Project was at subdivision map stage, and thus was

subject to Senate Bill 221 requirements, including showing of “firm assurances of future water supplies” (see Gov. Code § 66473.7)

Project also required Water Supply Assessment (WSA) under Senate Bill 610 (see Wat. Code § 10910 et seq.)

But “ultimate question” was whether EIR adequately addresses the reasonably foreseeable impacts of supplying water to the project

Vineyard Area Citizens case (2007) requires analysis of potential water supply alternatives where “the uncertainties inherent in long-term land use and water planning make it impossible to confidently identify the future water sources”

1/13/2016

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Project site was within Padre Dam Municipal Water District (PDWD)• PWD gets its water from San Diego County

Water Authority (SDCWA)• SDCWA gets most of its water from

Metropolitan Water District (MWD)• MWD gets its water primarily from State

Water Project (SWP) and Colorado River Aqueduct

WSA estimated water demand at 881 acre feet per year (afy)

EIR estimated water demand at 1,446 afy


EIR failed to satisfy requirements of Vineyard Area Citizens case Water supply projections in addendum to

WSA depend on supply projections in reliability plans of SDCWA and MWD

MWD’s projections and reliability plans “depend heavily” on reliability of SWP supplies• MWD’s Urban Water Management Plan (UWMP)

stated that reliability goals could be met only if SWP yielded

• 1.5 Million Acre Feet (MAF) per year on average• Increased yield in critically dry years to 650,000 afy• Access to “full contract amounts” in wet years to

replenish surface and groundwater storage


August 2007 court decision involving SWP operations created at least short-term uncertainty in MWD’s SWP supplies• WSA Addendum acknowledged that PDWD

could not predict whether the court decision would lead to cutbacks and if so by how much

EIR did not discuss uncertainties caused by court case or uncertainties relating to successful implementation of planned water development, water delivery, and water conservation projects

1/13/2016

8


• New EIR is therefore required to• Evaluate the “pros and cons of fulfilling the

project’s water needs”• Address the impacts of likely future water

sources• Provide “a reasoned analysis of the

circumstances affecting the likelihood of the water’s availability”

• (if City cannot confidently determine the availability of a reliable supply) Discuss possible replacement sources or alternatives to the use of anticipated water source and the environmental consequences of those contingencies


EIR and WSA failed to address potential impacts of providing potable water to 10-acre lake portion of project• Project included lake for treatment of stormwater• Potable source was needed to fill lake• Groundwater was available to recharge lake, but

only if monitoring showed that water table drop of one meter did not damage riparian areas relying on water table

• Evidence showed difficulty of using groundwater for recharge without adversely affecting riparian areas

• Neither WSA nor EIR addressed potential effects of having to obtain recharge water from PDWD

Habitat and Watershed Caretakers v. City of Santa Cruz

Court finds only one problem with EIR for a proposed sphere of influence (SOI) amendment that, if approved by LAFCO, would allow City of Santa Cruz to provide water and sewer service to “North Campus” area of University of California Santa Cruz, consistent with 2005 UCSC Long Range Development Plan (LRDP)

1/13/2016

9

Habitat and Watershed Caretakers (cont.)

BACKGROUND

City sued UCSC over EIR for 2005 Long Range Development Plan (LRDP), resulting in comprehensive settlement agreement addressing off-site housing and traffic concerns

LRDP contemplated the development of “North Campus,” an area outside the City’s territorial boundaries and SOI

Agreement contemplated that City and UCSC jointly request LAFCO to grant SOI amendment allowing City to provide extraterritorial water and sewer service to North Campus City was not required to file SOI application, but had to do so in

order to trigger UCSC’s commitment relating to provision of on-campus housing

Consistent with agreement, City as lead agency prepared an EIR to support its application to LAFCO for the SOI amendment


CITY’S WATER SUPPLY SITUATION City has long suffered from a water supply deficit in dry

years, requiring significant cutbacks Only viable long-term solution is proposed desalination

plant, as described in 2006 Integrated Water Plan Without desalination plant, the situation will grow even

more challenging in future years due to: possible cutbacks in the City’s use of certain surface water

sources due to impacts on listed fish species the threat of salt water intrusion from overuse of groundwater possible impacts from climate change


EIR concluded that desalination plant was not “reasonably likely” water supply within meaning of Vineyard: Although plant was “the most likely future water

source,” its future was “uncertain until design, environmental review and regulatory approvals are completed”

Although 2006 EIR for City’s Integrated Water Plan included program-level review for plant, project level review was still to be completed

Proposed plant would be shared with Soquel Creek Water District

Because service to expanded UCSC would exacerbate existing problem unless and until desalination plant came on line, EIR called water supply impact significant and unavoidable

1/13/2016

10


Under Vineyard, an EIR is not required to establish a likely source of water, but may satisfy CEQA by addressing the reasonably foreseeable impacts of

supplying water to project acknowledging the degree of uncertainty involved discussing reasonably foreseeable alternatives to

preferred (though uncertain) supply disclosing significant foreseeable environmental

effects of each alternative source, as well as mitigation measures to minimize significant effects


City’s EIR met these standards by discussing the impact of the project on the City’s

water supply acknowledging the City’s inadequate supplies noting that the construction of a desalination

facility was uncertain EIR acknowledged the “harsh reality” that,

absent construction of desalination plant, the project would increase the ongoing imbalance between supply

and demand require additional conservation by existing

customers during droughts and in future normal years


Court: EIR should have included a “limited water alternative” Draft EIR addressed two alternatives:

• No Project• Modified SOI alternative excluding undeveloped

land from SOI Draft EIR rejected possible alternatives

that would• Relocate proposed growth from North Campus

to Main Campus• Redirect new student enrollment to other UC

campuses Final EIR added “annexation alternative”

1/13/2016

11


City was not required to consider “reduced-development” alternative• Under Cortese-Knox-Hertzberg Act, LAFCO

cannot “impose any conditions that would directly regulate land use density or intensity, property development, or subdivision requirements” (Gov. Code, §56375(a)(6))


In contrast, LAFCO would not be precluded from approving a “limited water” alternative allowing some, but not all, proposed development in North Campus• This would partially meet project objectives• This would secure UCSC housing commitments

under settlement agreement• CKH would allow LAFCO to condition the

provision of water service on water supply availability

• Options include conditioning development on “supply ceiling” by requiring City to decrease off-site demand before meeting new demand on campus

Show Me The Water!

Water Supply Impact Analysis

In An Era of Drought

And Supply Uncertainty

Eric N. Robinson

2016 Municipal Law Institution Symposium

February 5, 2016

2

Presenter Background

Water Practice Manager at Kronick Firm

Prepare/review water supply documentation

to support land-use approvals

Negotiate/document water transactions—

transfers, banking

Regulatory proceedings and negotiations

Litigation

3

Show Me The Water!

Water is one of the most important factors

affecting land-use planning decisions

One of the most complicated factors

One of the hardest to clearly communicate

Now add:

A four-year drought

New groundwater regulation (SGMA)

4

Lake Folsom 2014

5

Can you grow

despite drought?

6

Yes, you can grow during drought

But you have to . . .

7

Show Me The Water!

8

Show Me the Water!

Special water counsel’s perspective

Use SB 610 water supply assessment approach

Update dry year water availability projections

Minimize project demand

Show how project’s demand would be

met during drought

Address SGMA, if you rely on groundwater

from a high- or medium-priority basin

9

Show Me the Water!

Invoke water availability assessment

approach from SB 610, which asks if:

Total projected water supplies

In normal, single dry, multiple dry years

Over 20-year projection

Will meet demand of proposed project, in

addition to existing and planned future uses,

including agriculture and manufacturing

10

Show Me the Water!


Last Urban Water Management Plans 2010/11

Last CEQA process

Last source-specific availability projection

SWP Delivery Capability Report

Water supply master plan

11

Show Me the Water!


Last Urban Water Management Plan update

Last CEQA process

Last source-specific availability projection

SWP Delivery Reliability Report

Water supply master planLocal Reservoir

Recycled Water

12

Show Me the Water!


Last Urban Water Management Plan update

Last CEQA process

-

2011 vs. 2013 vs. 2015 SWP Delivery Capability


13

Show Me the Water!

Update dry year water

availability projections

Last Urban Water Management

Plan update

Last CEQA process

Last source-specific availability

projection

SWP Delivery Reliability Report


Local Reservoir

Recycled Water

14

Show Me The Water!

Next: Minimize project water demand

15

Show Me The Water!

Offsite actions reduce existing water demand

Convert to artificial turf

Convert

to recycled

irrigation

Cash

for

grass

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2600288

http://papers.ssrn.com/sol3/papers.cfm?abstract

16

Show Me The Water!

Augment local

water availability

Water transfers

Groundwater

17

Show Me The Water!

Sustainable

Groundwater

Management Act

Sustainability

Agencies by 2017

Sustainability

Plans by 2020/22

127 basins affected

18

Show Me The Water!

Does SGMA affect strategy for complying

with SB 610/CEQA/SB 221?

May project rely on groundwater before

Sustainability Plan(s) adopted (2020/22)?

How do you know how much groundwater

is available for new projects?

19

Show Me The Water!

Before Sustainability Plans are adopted,

how do you know how much (if any)

groundwater is available for new projects?

20

Show Me The Water!




O.W.L. v. City of Rohnert Park, 168 Cal.App.4th

568 (2008)

21

Show Me The Water!




O.W.L. v. City of Rohnert Park, 168 Cal.App.4th

568 (2008)

WSA analyzed past, present, future groundwater

conditions within “Study Area”

SB 610 prescribes no particular analytical method

Need not analyze all basin pumping

Use any reasonable analytical method

that is not arbitrary or entirely lacking

in evidentiary support

22

Show Me The Water!

Summing up:

Use the SB 610 framework to structure your

water supply impacts analysis

Update water availability projections to account

for actual drought water availability

Minimize project water demand

Consider demand offsets through off-site

conservation or supply augmentation

23

Show Me The Water!

Summing up:

Use the SB 610 framework to structure your

water supply impacts analysis

Update water availability projections to account

for actual drought water availability

Minimize project water demand

Consider demand offsets through off-site

conservation or supply augmentation

What if your service area faces shortage?

May project still be approved?

24

Show Me The Water!

Habitat &Watershed Caretakers v. City of Santa Cruz, 213 Cal.App.4th 1277 (6 DCA 2013):

EIR invalidated for City SOI expansion, water

agreement to serve UC expansion

Existing dry-year shortage without project

Future normal-year shortage without project

Supply uncertainties disclosed perVineyard

Overrode significant impact from shortages

Failed to analyze “reduced-water”

alternative

25

Show Me The Water!

Concluding thoughts

Politically, the drought makes it challenging

to approve growth

Invoke SB 610 assessment structure

Want clear showing that new project would

not reduce water availability for existing

customers

Better yet if new project improves water

availability for existing customers

Be careful about groundwater

26

Q&A

Eric N. Robinson

Show Me The Water!

103

Demand Offsets: Water Neutral Development in California

Jennifer L. Harder*

TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................ 104

II. WATER NEUTRAL: AN OVERVIEW ............................................................... 106

III. A SAMPLING OF WATER NEUTRAL PROGRAMS ........................................... 111 A. California Water Neutral Programs ..................................................... 112 B. Non-California Programs ..................................................................... 128 C. Water Neutral Variants and Trends ...................................................... 132

IV. PRACTICAL AND POLICY ISSUES, CHALLENGES AND OPPORTUNITIES

FOR CALIFORNIA WATER NEUTRAL PROGRAMS ......................................... 135 A. Retrofit Saturation ................................................................................. 135 B. Ensuring Wet Water: Mandatory Conservation Requirements ............. 137 C. Ensuring Wet Water: Enforcement ........................................................ 142 D. The “Problem” of Demand Hardening ................................................. 147 E. Cost (Developers, Homeowners, Communities) .................................... 148 F. Emergency Drought Measure or Sustainability Tool ............................ 151

V. LEGAL ISSUES, CHALLENGES, AND OPPORTUNITIES FOR CALIFORNIA

WATER NEUTRAL PROGRAMS ..................................................................... 153 A. Authority to Establish a Water Neutral Program .................................. 153 B. Environmental Compliance for Water Neutral Programs .................... 156 C. Costs and Fees Imposed by Water Neutral Programs .......................... 158 D. Adequacy of the Record Supporting a Water Neutral Program ............ 160

VI. CONSIDERATIONS AND RECOMMENDATIONS .............................................. 161 A. General Considerations ........................................................................ 161 B. Specific Recommendations .................................................................... 162

V. CONCLUSION .................................................................................................. 164

*Assistant Professor of Lawyering Skills, Water Resources Law Program, University of the Pacific, McGeorge School of Law. I am grateful to my mentor and colleague Greg S. Weber, Executive Director of the California Urban Water Conservation Council and Professor Emeritus, Pacific McGeorge School of Law, for his thoughtful review, insight, and unfailing support, and to Miles Hogan, 2012–2013 Environmental Law Fellow at the California Environmental Law and Policy Center, UC Davis School of Law, for invaluable research and collaboration. I am also indebted to the wonderfully patient staff at the McGeorge Law Review. All errors, opinions, and passive voice violations are entirely my own.

2014 / Water Neutral Development in California

104

I. INTRODUCTION

Urban water use efficiency is lauded as the best source of “new” water for drought-prone California.1 Recurring droughts have energized the state’s search for improved urban efficiency, starting with the severe drought of 1976–1977, which is credited with sparking a trend of legal, policy, and technical innovation that continues today.2 As a result of these innovations, studies demonstrate that some cities are decreasing per capita consumption and using less water, despite growing populations.3 Water use efficiency has been touted as one of the most promising, and least expensive, sources of water for California.4

Programs that require “water neutral development,” often referred to as “demand offset programs,”5 are one of the innovations inspired by drought.6

1. See, e.g., PAC. INST. & NATURAL RES. DEF. COUNCIL, URBAN WATER CONSERVATION AND

EFFICIENCY POTENTIAL IN CALIFORNIA (June 2014), available at http://pacinst.org/wp-content/uploads/sites/21/ 2014/06/ca-water-urban.pdf (urban efficiency measures “could reduce urban water use by 2.9 million to 5.2 million acre-feet per year”); ELLEN HANAK ET AL., PUB. POLICY INST. OF CAL., WATER AND THE CALIFORNIA

ECONOMY 6 (2012), available at http://wspc.ucr.edu/newsletter_links/PPIC%20Report.pdf (on file with the McGeorge Law Review); AQUACRAFT, INC., WATER ENG’G & MGMT, CALIFORNIA SINGLE-FAMILY WATER

USE EFFICIENCY STUDY 228 (2011) [hereinafter AQUACRAFT]; PETER G. GLEICK ET AL., PAC. INST., WASTE

NOT, WANT NOT: THE POTENTIAL FOR URBAN WATER CONSERVATION IN CALIFORNIA (2003), available at http://www.pacinst.org/wp-content/uploads/sites/21/2013/02/waste_not_want_not_full_report3.pdf (on file with the McGeorge Law Review).

2. See, e.g., Jay Lund et al., California Droughts Precipitate Innovation, CALIFORNIA WATER BLOG (Jan. 21, 2014), http://californiawaterblog.com/2014/01/21/california-droughts-precipitate-innovation/ (on file with the McGeorge Law Review); Caitlyn S. Dyckman, Symposium on the 25th Anniversary of the Report of the Governor’s Commission to Review California Water Rights Law Part 1 of 2: A Dynastic Disruption: The Use Efficiency and Conservation Legacy of the Governor’s Commission to Review Water Rights Law Recommendation, 36 MCGEORGE L. REV. 175, 182 (2005).

3. See, e.g., AQUACRAFT, supra note 1, at 230; CAL. DEP’T OF WATER RES., FINAL 20X2020

CONSERVATION PLAN 15 (Feb. 2010), available at http://www.swrcb.ca.gov/water_issues/hot_topics/ 20x2020/docs/20x2020plan.pdf (on file with the McGeorge Law Review) [hereinafter 20X2020 PLAN]; Ellen Hanak, Is Water Policy Limiting Residential Growth? Evidence from California, Land Economics, 43 J. OF THE

AM. WATER RESOURCES Ass’n, 5 (2007), reprinted in CAL. WATER PLAN UPDATE, Reference Guide (2009) [hereinafter Is Water Policy Limiting Residential Growth?].

4. CAL. DEP’T OF WATER RES., CALIFORNIA WATER PLAN UPDATE 2013 v.3 3-5, 3-9 to 3-26 (2013) [hereinafter 2013 DWR WATER PLAN UPDATE] (describing potential water savings by sector and concluding that efficiency could reduce potable water demand by more than 2 million acre-feet per year); HEATHER

COOLEY, KRISTINA DONNELLY & NEWSHA AJAMI, PAC. INST., ENERGIZING WATER EFFICIENCY IN

CALIFORNIA: APPLYING ENERGY EFFICIENCY STRATEGIES TO WATER, 19–20 (Dec. 2013), available at http://pacinst.org/wp-content/uploads/2013/12/energizing-water-efficiency-pacinst.pdf (on file with the McGeorge Law Review); WATER AND THE CALIFORNIA ECONOMY, supra note 1, at 6 (“There is still considerable room for cost-effective urban water savings, which can help offset demands from anticipated population growth.”); but cf. Hanak et al., Myths of California Water - Implications and Reality, 16 HASTINGS

W.-N.W. J. ENV. L. & POL’Y 3, 31–34 (2010) (arguing that the potential for net savings from conservation is often overstated); AQUACRAFT, supra note 1, at 230–31 (discussing revenue impacts to water suppliers, and rate increases, resulting from conservation).

5. “Demand offset” is the most common term in California and the western states, where the programs primarily focus on fixture retrofits. This article refers to such programs as “water neutral” to invoke a broader concept than retrofit-only programs. Water neutral programs may also be referenced as a means for reducing “water footprint,” and thus called “zero water footprint.” See Sarah Bates, Bridging the Governance Gap: Emerging Strategies to Integrate Water and Land Use Planning, 52 NAT. RESOURCES J. 61, 87 (2012).

McGeorge Law Review / Vol. 46

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These programs require that new development that causes increased water demand to offset such demand through conservation or new supplies, with the goal of ensuring that the new development is “neutral” to the water supplier’s system.7 Water neutral programs are reflective of a broader U.S. offset trend, in which the concept is applied in areas such as wastewater, stormwater, and energy.8 Offsets are themselves related to a broader “concurrency” movement, in which local governments seek to ensure that growth occurs only where there are available resources over long-term planning periods.9

In California, water neutral programs have been adopted primarily in service areas experiencing chronic supply shortages.10 This raises the question of whether such programs might be useful outside of dire shortages, to help communities develop stronger drought resiliency and to work toward sustainability.11 To help address that question, this article describes water neutral programs in California and reviews key concepts, approaches, costs, and benefits. Part II provides an overview of water neutral programs. Part III samples water neutral programs across California and other jurisdictions, describing individual programs and summarizing key features across these programs. Part IV identifies practical and policy issues and opportunities associated with California water neutral programs. Part V reviews the basic legal framework in which water neutral programs operate. Finally, Part VI suggests considerations for a defensible program, and recommends integration of creative approaches to conservation into water neutral programs, adoption of water neutral programs outside of the drought context, and creation of standardized measurement, monitoring, and reporting regarding water neutral programs. Part VI also recommends creation of

6. See infra Part III (describing water neutral programs in California that were initiated in drought years); cf. LLOYD S. DIXON, NANCY Y. MOORE & ELLEN M. PINT, DROUGHT MANAGEMENT POLICIES AND ECONOMIC

EFFECTS IN URBAN AREAS OF CALIFORNIA, 1987–1992, at 54 (1996), available at http://www.rand.org/ content/dam/rand/pubs/monograph_reports/2007/MR813.pdf (on file with the McGeorge Law Review).

7. Various entities provide water for residential, commercial, industrial and agricultural purposes in California, including city and county water departments, special districts, investor-owned utilities, and mutual water companies. Except where distinction is important, this Article refers to these collectively as “water suppliers.”

8. See CNTY. OF SAN LUIS OBISPO, WATER CONSERVATION IMPLEMENTATION PLAN FOR THE LOS OSOS

WASTEWATER PROJECT 7 (Oct. 2012), available at www.newtimesslo.com/news/8558/bowl-me-over/ (on file with the McGeorge Law Review) [hereinafter SLO COUNTY PLAN FOR LOS OSOS]; ENVTL PROT. AGENCY, PENNSYLVANIA TRADING AND OFFSET PROGRAMS REVIEW OBSERVATIONS (Feb. 17, 2012) (on file with McGeorge Law Review); Robert Glennon, Op-Ed., Is Solar Power Dead in the Water?, WASH. POST, June 7, 2009, http://www.washingtonpost.com/wp-dyn/content/article/2009/06/05/AR2009060501988.html (on file with the McGeorge Law Review).

9. See, e.g., Lincoln Davies, Just a Big, “Hot Fuss”? Assessing the Value of Connecting Suburban Sprawl, Land Use, and Water Rights Through Assured Supply Laws, 34 ECOLOGY L.Q. 1217, 1244–46 (2007); Janet C. Neuman, Dusting Off the Blueprint for a Dryland Democracy: Incorporating Watershed Integrity and Water Availability Into Land Use Decisions, 35 ENVTL. L. RPTR. 10236, 10253 & n. 173 (Apr. 2005).

10. ELLEN HANAK, PUB. POLICY INST. OF CAL., WATER FOR GROWTH: CALIFORNIA’S NEW FRONTIER, 61–64 (2005), available at http://www.ppic.org/content/pubs/report/R_705EHR.pdf (on file with the McGeorge Law Review) [hereinafter WATER FOR GROWTH].

11. Id.


106

a water neutral model ordinance as a tool to help more water suppliers consider and develop new programs. This article concludes that, although water neutral programs may not be appropriate to every jurisdiction, under the right circumstances they can and should play a larger role within the portfolios of California water suppliers.

II. WATER NEUTRAL: AN OVERVIEW

Although water neutral programs take a variety of forms, the core principle is the requirement that new water uses offset their impact to water supplies.12 In this regard, “new water uses” can include new uses from any source—e.g., individual homes, businesses, institutions, and residential or mixed-use subdivisions—whether those uses are newly initiated or are expansions or additions that result in intensified water use.13 This article refers to all of these new sources of water demand as “new development.”

In a water neutral program, new development may follow two steps.14 In the first step, demand is minimized through on-site water-saving choices.15 In some programs, the first step may not be expressly required or incentivized, although in others it is mandatory.16 In the second step, the development facilitates, via a direct undertaking or funding, off-site actions that will increase supply or reduce existing water demand elsewhere in the supplier’s service area, equivalent to at least 100% of the new development’s water demand.17 The second step is the feature that defines a water neutral program and distinguishes water neutral from other approaches to water efficiency and conservation.

If the new development minimizes demand through on-site choices, those may include indoor measures such as highly efficient fixtures, dual-flush toilets, front-loading washing machines, or hot water on-demand systems.18 The measures may also include outdoor water saving choices such as sub-metering

12. CHARLOTTE HODDE ET AL., PLANNING & CONSERVATION LEAGUE FOUND., EIGHT AFFORDABLE

WATER SOLUTIONS FOR CALIFORNIA 3 (2010), available at http://www.pcl.org/pdfs/8-Affordable-Water-Solutions.pdf (on file with the McGeorge Law Review).

13. See generally CAL. WATER CODE §10912(a) (West 2011). 14. See Randele Kanouse & Doug Wallace, Optimizing Land Use and Water Supply Planning: A Path to

Sustainability?, 4 GOLDEN GATE U. ENVTL. L. J. 145, 158 (2010) (detailing the two basic steps for water savings).

15. See Michelle L. Maddaus, William O. Maddaus, Marshall Torre & Richard Harris, Innovative Water Conservation Supports Sustainable Housing Development, AM. WATER WORKS ASS’N J. 107 (May 2008) [hereinafter Maddaus et al.].

16. Compare CAMBRIA CMTY. SERVS. DIST., 2010 URBAN WATER MANAGEMENT PLAN 2–23 (2010) [hereinafter CCSD 2010 PLAN] (pointing out that Cambria has included mandatory on-site water saving requirements), with Maddaus et al., supra note 15, at 107–08 (indicating the recommended measures for the Alamo Creek approach to maximizing onsite water conservation).

17. See Maddaus et al., supra note 15, at 109–11 (outlining the various methods of an offsite mitigation program).

18. Id.


107

for common area irrigation and multi-family/senior housing, xeriscaping and drip irrigation, self-adjusting irrigation controllers in all landscaped areas, and use of recycled water in common areas, parks, and other community outdoor facilities.19 Depending on cost, regulatory requirements, and other factors, more sophisticated measures such as rainwater cisterns, greywater systems,20 and stormwater capture21 may also be included.

After integration of on-site water-saving measures, the new development then offsets remaining demand through offsite action. Offsite actions include the same range of water-saving measures as are available on-site, with the options being controlled by the feasibility of integrating such measures into existing development. In California, the offsite action most often required is retrofit of indoor or outdoor water-using fixtures, typically toilet retrofits.22 Retrofit of older toilets is popular because they present the opportunity to achieve a relatively large volume of savings in a single transaction, with relatively little inconvenience to the homeowner and the water supplier.23 Other offsite actions may include retrofit of irrigation systems or other agricultural conservation measures, installation of rainwater cisterns or graywater systems, or contribution to stormwater capture, recycled water, or desalination programs.24 Some water

19. E. Bay Mun. Util. Dist., Ensuring Water Neutral Demand in New Developments, Powerpoint Presentation (2011) (on file with the McGeorge Law Review) [hereinafter Ensuring Water Neutral Demand Powerpoint]; see Maddaus et al., supra note 15, at 107–09; see generally FlexTrack Option, CAL. URBAN

WATER CONSERVATION COUNCIL (last visited Mar. 31, 2015), http://www.cuwcc.org/Resources/Memorandum-of-Understanding/Exhibit-1-BMP-Definitions-Schedules-and-Requirements/Flex-Track-Option (on file with the McGeorge Law Review) (describing efficient urban water management practices).

20. See AQUACRAFT, supra note 1, at 243, 257 (estimating that a typical family could offset nearly 60% of irrigation demand through an expanded gray water system).

21. See Alf W. Brandt, Moderator at American Bar Association Spring Conference Breakout Session: Stormwater: Regulation to Resource (Mar. 2013); cf. CITY OF L.A. DEP’T OF WATER AND POWER, SECURING

LA’S WATER FUTURE 26–27 (2008) (describing program to increase stormwater capture to recharge groundwater).

22. See Part III.A. (describing California water neutral programs); see also Is Water Policy Limiting Residential Growth?, supra note 3 (indoor plumbing retrofits are the “low hanging fruit” of water conservation); cf. 2013 DWR WATER PLAN UPDATE, supra note 4, at 3-16 to -17, 3-21 (2013); CAL. STATE

WATER RES. CONTROL BD., DEVELOPMENT OF AN URBAN WATER CONSERVATION REGULATORY PROGRAM

(2008), available at http://www.swrcb.ca.gov/water_issues/programs/water_conservation/docs/urban/urban _conservation_workshop_comments_summary_121908.pdf (on file with the McGeorge Law Review) (discussing effective activities of retrofitting).

23. See sources cited supra note 22 and accompanying text. 24. See BORREGO WATER DIST., POLICY FOR WATER AND SEWER SERVICE TO NEW DEVELOPMENTS

(2013); BORREGO WATER DIST., DEMAND OFFSET MITIGATION WATER CREDITS POLICY 5, 10 (2013) [BORREGO DEMAND OFFSET POLICY] (requiring 1:1 offsets for new development through measures such as turf removal and agricultural fallowing to mitigate groundwater overdraft); see also CNTY. OF SAN DIEGO, CNTY. CODE tit. 6, div. 7, § 67.720(A) (2013) (establishing offset requirements for new pumping in Borrego); Maddaus et al., supra note 15, at 109; WATER FOR GROWTH, supra note 10, at 75; cf. Christine G.K. LaPado-Breglia, America’s Water Woes, NEWSREVIEW (Oct. 4, 2012), http://www.newsreview.com/chico/americas-water-woes/content?oid=7978307 (on file with the McGeorge Law Review) (“[A] developer who needs more water would have to pay a farmer who already has his straw in the glass ‘to replace his earthen ditch with a lined canal and use the water saved in the process.’”).


108

neutral programs allow developers to provide water to the service area, through water transfers or dedication of water rights.25

Water neutral offsets may be required in greater than 1:1 ratios, meaning that the developer must offset more than 100% of the new demand.26 In a 2:1 ratio, for example, a developer must offset two gallons for every gallon of demand created by the new development.27 Ratios greater than 1:1 (“higher offset ratios”) may be designed to accomplish several goals. Higher offset ratios recognize that demand is always an estimate, because weather conditions, human behavior, and other supply factors vary.28 Higher offset ratios also address the fact that water saving fixtures lose efficiency with wear and tear.29 Higher offset ratios help protect against the potential to underestimate future demand or overestimate future supply. Higher ratios also help protect existing supply reliability during drought periods,30 help ensure a net gain to improve degraded water resource conditions,31 and create cost equities for existing customers.32

Water neutral programs provide several types of benefits. Well-designed programs result in tangible water savings,33 which may provide drought reliability

25. See, e.g., CITY OF VENTURA, AGENDA PACKET, ITEM 17 (June 16, 2014) (Water Dedication and In-Lieu Fee Ordinance and Resolution); see also WATER FOR GROWTH, supra note 10, at 75 (describing residential projects in Placer, Riverside and Glendora County that had been proposed to require introduction of new surface water supplies).

26. Krista B. Anderson, Analysis of Water Offset Programs for Implementation in the Ipswich River Watershed, Massachusetts 27–28 (June 2006) (Master of Environmental Management thesis, Yale University), available at http://ipswichriver.org/wp-content/uploads/2012/10/Analysis_of_Water_Offset_Programs.pdf (on file with the McGeorge Law Review) (pointing out Weymouth, MA’s heightened requirement of “saving two gallons of water for each gallon requested”).

27. Id. 28. Telephone Interview with Bill Maddaus, Maddaus Water Management (Mar. 10, 2014) (notes on file

with the McGeorge Law Review) [hereinafter Maddaus Interview]; Anderson, supra note 26, at 56 (“even a 1:1 ratio cannot guarantee maintenance of the status quo due to the likelihood that not all measures will be implemented, some will not be as effective as anticipated, and estimates of water savings or impact reductions associated with offset activities naturally involve a margin of error”); SOQUEL CREEK WATER DIST., RESOLUTION NO. 03-31 (2003) [hereinafter SCWD RESOLUTION NO. 03-31] (Resolution Establishing A Water Demand Offset Policy for New Development) (“Given that water demand varies and can only be estimated prior to actual usage records, and given that water saving devices lose efficiency over time, it is prudent to require an offset of estimated demand in a ratio somewhat higher than estimated use.”).

29. Maddaus Interview, supra note 28; SCWD RESOLUTION NO. 03-31, supra note 28. 30. See, e.g., Kanouse & Wallace, supra note 14, at 158 (2010). 31. See, e.g., COMMONWEALTH OF MASS., EXEC. OFFICE OF ENERGY & ENVTL. AFFAIRS AND WATER

RES. COMM’N, WATER CONSERVATION STANDARDS 43–44 (discussing use of ratios to prevent further deterioration of degraded basins).

32. See Memorandum summarizing key findings from survey of Soquel Creek Water District customers (Apr. 10, 2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 8 (June 3, 2014), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/ packets/06-03-14_Board_Packet_.pdf (on file with the McGeorge Law Review) [hereinafter SCWD Survey Memo].

33. See Memorandum for Soquel Creek Water District Board of Directors on Agenda Item No. 3.2, at 3 (Apr. 29, 2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 12 (June 3, 2014), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/packets/06-03-14_Board_ Packet_pdf (on file with the McGeorge Law Review) [hereinafter SCWD Agenda Item 3.2 Memo] (demand offset programs accounts for 150 acre-feet per year, equivalent to 600 households); but cf. AQUACRAFT, supra


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and contribute to long-term supply sustainability. In the shortage context, water neutral programs have facilitated economic growth, housing, and jobs that would otherwise be foregone due to moratoriums on new water connections.34 Outside of the shortage context, conservation of supply through offsets contributes to protection of water resources, leaving more water in groundwater aquifers, to combat overdraft or seawater intrusion, and in surface water systems to support instream resources and geomorphic functions.35 Water neutral programs that expressly reduce the development’s offset obligation based on water demand create a clearer obligation for development to “pay its own way,” and provide an incentive for new development to be water-conservation friendly.36 Water neutral programs shift the burden of accommodating new development from local government and existing customers to the developer and subsequent property owners; although this shift may be controversial, it does provide some benefit to local government and existing customers.37 In one program, a 2013–2014 survey of existing customers demonstrated that awareness of the district’s offset program prompted an increase in customer confidence in water supply reliability and support for new development.38 Water neutral programs can also provide a means of bringing conservation to low-income residents that otherwise may not have the ability to implement such water efficiency measures.39 Water neutral programs provide an incentive for the private sector to support and promote new urban efficiency conservation techniques and technology.40 Finally, water neutral programs that require water budgets and that track water use help generally to promote quantitative approaches to demand management, which has proven effective.41

note 1, at 273 (“These data show that water savings from installation of higher efficiency devices tend to get obscured by increased water use elsewhere.”).

34. Anderson, supra note 26, at 28 (showing fees have not affected new development). 35. See Bates, supra note 5, at 87 & n. 152 (asserting that urban water use efficiency could play a role in

reducing surface water appropriations). 36. See LaPado-Breglia, supra note 24 (“‘We need to substitute this mindless open season with a

‘demand-offset’ system.’”) (quoting in part Arizona professor and author Robert Glennon). 37. See PETER GLEICK, PRESIDENT., PAC. INST., TESTIMONY TO CALIFORNIA STATE WATER RESOURCES

CONTROL BOARD, ON THE CALIFORNIA DROUGHT 5 (Feb. 26, 2014), available at http://pacinst.org/wp-content/uploads/sites/21/2014/02/urban-water-efficiency-testimony.pdf (on file with the McGeorge Law Review) [hereinafter GLEICK TESTIMONY] (asserting that water supplier expenditures on efficiency “are inadequate compared to the potential for efficiency improvements . . .”); WATER FOR GROWTH, supra note 10, at 98–99 (describing existing customers’ unwillingness to share water resources with new development, and the potential for new development to provide funding for existing customer conservation).

38. See SCWD Survey Memo, supra note 32, at 4 (“Two in three (66%) [of existing customers] say that new development is making the water shortage worse. But when told that all new development is required to offset its water use via retrofitting of existing buildings, and that in fact new developments are actually reducing net water use, we found that just 26% want to ban new development and now 66% support it.”).

39. CAL. DEP’T OF WATER RES., URBAN DROUGHT GUIDEBOOK 2008 UPDATED EDITION 6 (2008) [hereinafter 2008 URBAN DROUGHT GUIDEBOOK].

40. Caitlin S. Dyckman, The Covenant Conundrum in Urban Water Conservation, 40 URB. LAW. 17, 49 (2008) (“government regulation manufactures developer incentive”).

41. See AQUACRAFT, supra note 1, at 276; see also CAL. DEPT. OF WATER RES., A REPORT TO THE


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Water neutral programs also have costs and risks. The supplier incurs the cost of developing and implementing the program, and new development incurs the cost of offsets and in-lieu fees.42 The cost to developers may translate to increased housing or homeowner costs, which may result in higher home prices and potentially less affordable housing.43 If costs are too high, they may preclude new development, resulting in less housing stock (or less affordable housing stock).44 Foregone development may result in fewer jobs, less economic growth, and lost amenities for the community.45 Water neutral programs also have the potential to invite controversy, and even litigation, if the costs of compliance are high or the development community perceives a disconnect between project impacts and program fees.46

Some water neutral programs may delay rather than avoid impacts of additional water demand.47 However, even where savings are temporary, the delay may be valuable to water suppliers, as it provides time to investigate supplemental sources of supply while also reaping other benefits of water neutral.48 The benefits can be increased if the offset standard is set at a greater than 1:1 ratio and if mandatory use restrictions are imposed.49 A retrofit program that is combined with other measures, such as landscaping changes, greywater systems, recycled water infrastructure, or stormwater recharge, may contribute significantly to long-term sustainability by increasing the total supply, encouraging attention to efficiency in new development, and promoting innovation.50

Water neutral programs are necessarily different within each jurisdiction, and the specific design of each program will determine the balance between potential

LEGISLATURE PURSUANT TO AB 1881 SECTION 65595(A)(2), 11 (2009). 42. See Lincoln L. Davies, Just a Big, “Hot Fuss”? Assessing the Value of Connecting Suburban Sprawl,

Land Use, and Water Rights through Assured Supply Laws, 34 ECOLOGY L.Q. 1217, 1234 (2007). 43. Id. 44. Id. 45. Id. 46. See Kanouse & Wallace, supra note 14, at 157–58 (2010) (describing the controversy surrounding a

proposal of a large development in the wake of hotly contested litigation regarding water savings measures). 47. See Memorandum for Soquel Creek Water District Board of Director on Agenda Item 5.2, at 7 (June 3,

2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 243 (June 3, 2014), available at http://www. soquelcreekwater.org/sites/default/files/documents/board-meeting/packets/06-03-14_Board_Packet_pdf (on file with the McGeorge Law Review) [hereinafter SCWD Agenda Item 5.2 Memo] (“[T]he program speeds up conservation that would already happen. But every year that conservation doesn’t happen compounds the amount of required conservation as well”); id. (estimating that the district’s retrofit-focused water demand offset program delays the impact of new development by approximately twenty years).

48. See id. 49. Id. at 4 (“If the [offset] program continues, developers will likely help pay to offset some of this

additional use . . . since the [offset] program has now been changed to require an offset of 200%, resulting in a net positive effect for 20 years. Assuming a continued average growth of 10 acre feet per year starting in 2014, by 2020 we will see not increased demand but will see reductions of about 240 acre-feet paid for by developers rather than rate payers.”).

50. See AQUACRAFT, supra note 1, at 256.


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benefits and costs. Each water supplier must evaluate the potential benefits and costs to determine whether a water neutral program makes sense within its service area or within the broader region or watershed.51

III. A SAMPLING OF WATER NEUTRAL PROGRAMS

The following sample of California water neutral programs was developed by searching the Internet and legal research databases, and reviewing water supplier urban water management plans, water conservation plans, and related documents.52 As of March 2015, California does not collect information about regional and local water neutral programs in a standardized form.53 For illustrative purposes, this Article surveys a non-comprehensive sample of select water neutral programs.54 The sample provides an opportunity to introduce water

51. Cf. HILDA BLANCO, JOSH NEWELL, L. STOTT & M. ALBERTI, UNIV. OF S. CAL., WATER SUPPLY

SCARCITY IN SOUTHERN CALIFORNIA: ASSESSING DISTRICT LEVEL STRATEGIES, at xix (2012) (“If water districts pursue both new water supply and conservation, then economic benefits of conservation . . . are not realized.”).

52. State-approved urban water management plans, and some water conservation plans, are available through the California Department of Water Resources at http://www.water.ca.gov/urbanwatermanagement/ 2010uwmps/ (on file with the McGeorge Law Review). In preparing this Article, these documents were searched using the terms “offset,” “neutral,” “new development,” “retrofit” and “footprint.” Results are limited by the fact that not all documents are searchable, and because water neutral programs are not always identified in UWMPs or water conservation plans.

53. The lack of standardized electronic reporting has been identified as an improvement recommended for water conservation programs generally. See, e.g., CAL. DEP’T OF WATER RES., REPORT TO THE LEGISLATURE

ON URBAN WATER MANAGEMENT PLAN DEMAND MANAGEMENT MEASURES REPORTING AND REQUIREMENTS 14 (Feb. 2014) (recommending that the Department of Water Resources be authorized to require electronic filing of UWMPs, including standardized forms, to facilitate better data about conservation programs). Some of the recommendations for improving reporting were enacted in September 2014 via SB 1420 (Wolk) and AB 2067 (Weber). In relevant part, SB 1420 provided that UWMPs or amendments thereto must be submitted electronically and must include “any standardized forms, tables, or displays specified by the department.” CAL. WATER CODE § 10644(a)(2) (enacted by 2014 Stat. Ch. 490) (SB 1420 (Wolk)). AB 2067 required narrative descriptions of certain demand management measures including “innovative measures, if implemented.”

WATER § 10631(f)(B)(vii) (enacted by 2014 Stat. Ch. 463) (AB 2067 (Weber)). 54. Other studies have identified similar but not identical lists. See ALLIANCE FOR WATER EFFICIENCY,

WATER OFFSET POLICIES FOR WATER-NEUTRAL COMMUNITY GROWTH: A LITERATURE REVIEW & CASE

STUDY COMPILATION (Jan. 2015), available at http://www.allianceforwaterefficiency.org/WorkArea/ DownloadAsset.aspx?id=9167 (on file with the McGeorge Law Review) [hereinafter WATER OFFSET POLICIES] (describing examples of past and current water neutral policies in the United States); WESTERN RESOURCE

ADVOCATES, WATER CONSERVATION OFFSET PROGRAMS, SUMMARY (June 2012); Anderson, supra note 26, at 27–28. Some of the programs identified but not explored here include: (1) closed programs in the California cities of Ojai, San Luis Obispo, and Santa Barbara, Abington-Rockland Joint Water Works, Massachusetts, and the Town of Sharon, Massachusetts; and (2) existing California programs in Borrego Water District, Monterey Peninsula Water Management District, San Diego County Water Authority, and the City of Santa Monica, and the Town of Danvers in Massachusetts. Other programs likely exist. See generally WATER OFFSET POLICIES, supra; see also infra notes 243–245 (describing programs identified but not described in the sample). Various California communities are pursuing new water neutral programs, or have identified demand offset as a policy objective or recommendation, and are not included in the sample: e.g., CITY OF VENTURA, supra note 25 (Water Dedication and In-Lieu Fee Ordinance and Resolution); CITY OF WATSONVILLE, WATSONVILLE VISTA

2030 GENERAL PLAN 17 (2013) (Policy 12.2.32, Water Demand Offset Ordinance) (“The City of Watsonville


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neutral programs, review the nature and scope of a range of such programs, identify examples of different kinds of programs, and establish a basis for further investigation. As described in Part VI, the sample set could be used as a starting point for development of a model ordinance that would provide water suppliers with standard recitals and a suite of options to assist with developing a water neutral program.

A. California Water Neutral Programs

The sample highlights a couple of facts. First, California water netural programs are primarily retrofit programs, with a focus on toilet retrofit programs.55 A few of these programs allow retrofit of other fixtures or recognize

shall adopt a Water Demand Offset Ordinance. The ordinance shall require applicants for new water service to offset at least the amount of water the new development is projected to use so that there is “zero” impact on the City’s water supply. Applicants for new service could accomplish the offset requirements by paying for water conservation measures such as low-flow fixture retrofits or synthetic turf retrofits for existing customers within City limits.”); see also J. Ricker, Water Res. Div. Dir., Cnty. of Santa Cruz, Presentation: Water Neutral Development in Santa Cruz County (Dec. 5, 2011) (on file with the McGeorge Law Review); TOWN OF

WINDSOR, 2010 URBAN WATER MANAGEMENT PLAN (June 2011) 3-6 to -7 tbl. 3-6, 4-7, tbl. 4-6 (demand table footnotes stating that “projected water use is based on the findings of the Maddaus Water Management Report, November 2010, assuming Plumbing Code, New Development Offsets, Tier 1 . . .”). In other cases, organizations and individuals involved with water policy have recommended adoption of water neutral programs. SPUR REPORT, FUTURE-PROOF WATER, 26 (Mar. 2013) (recommending water neutral as a tool for Bay Area water supply reliability); CITY OF TRACY, CITYWIDE WATER SYSTEM MASTER PLAN 22–23 (Nov. 2012) (recommending adoption of offset program for new development that exceeds Master Plan projections); RMC WATER & ENV’T MOKELUMNE/AMADOR/CALAVERAS INTEGRATED REGIONAL WATER MANAGEMENT

PLAN UPDATE (2012) [hereinafter 2012 RMC WATER PLAN] (adopting demand offset programs as regional objective for participating suppliers); S.F. WATER POWER SEWER, CITIZEN ADVISORY COMM., WATER

CONSERVATION AND NEW DEVELOPMENT RESOLUTION (2011) (committee “urges the Commission to adopt . . . a ‘water neutral’ development policy”); HODDE ET AL., supra note 12, at 13–14 (recommending water neutral development); SANTA ANA WATERSHED PROJECT AUTHORITY, 2010 INTEGRATED REGIONAL WATER

MANAGEMENT PLAN Ch. 5.5 (2010) (suggesting demand offsets on a watershed basis); GREEN LA COALITION, NOT ENOUGH TO WASTE: SOLUTIONS TO SECURING LA’S WATER FUTURE, 4, 14 (July 2010) (recommending water neutral development); CITY OF PASADENA ENVTL. ADVISORY COMMITTEE, SPECIAL MEETING

ENVIRONMENTAL ADVISORY COMMISSION OFFICIAL MINUTES FOR SEPTEMBER 22, 2009 (Sept. 22, 2009) (inquiring whether staff had considered a development offset program); cf. Best Water Practices: Water Demand Offsets, GREEN CITIES CAL., http://greencitiescalifornia.org/best-practices/water/soquel_water-demand-offsets.html (last visited July 29, 2014) (on file with the McGeorge Law Review) (identifying water demand offsets as a “best practice” for green cities); YUCAIPA VALLEY WATER DISTRICT, A STRATEGIC PLAN

FOR A SUSTAINABLE FUTURE 20–24 (2008) (requiring new development in designated groundwater basin to purchase water supplies). Related programs include a program in Phoenix, Arizona that charges a “water resources acquisition fee” that can be reduced via credits for conservation measures. See, e.g., Alex Wilson, Water Policies: Encouraging Conservation, BUILDING GREEN (Aug. 28, 2008), at www2.buildinggreen. com/article/water-policies-encouraging-conservation (on file with the McGeorge Law Review). Tucson, Arizona has issued a drought plan that lists demand offsets as a potential option during the later stages of a drought emergency. See CITY OF TUCSON WATER DEPARTMENT DROUGHT PREPAREDNESS AND RESPONSE PLAN (Feb. 2012) (stating that in a Stage 4 emergency “‘demand offset programs’ may be developed and implemented–meaning that new commercial and residential development may not be permitted unless the projected water demand of that development is ‘offset’ through water demand reductions elsewhere, such as through retrofitting older facilities to reduce water consumption”).

55. See Part III.A (describing retrofit programs in Cambria, East Municipal Utility District, Lompoc,


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additional methods for increasing supply, such as participation in recycling projects or even bringing in new supplies.56 In some jurisdictions, developers must find and carry out the retrofits themselves, i.e., “go knocking on doors” to identify retrofit opportunities.57 Other jurisdictions maintain lists of eligible retrofits.58 Most programs also provide for an in-lieu fee, which is used by the supplier to carry out water conservation programs, expand rebate programs, or even acquire new supplies.59

The sample also suggests that in California, water neutral programs are most likely to exist where two factors are present.60 The first factor is the presence of a community that is largely dependent on a slow-replenishing source of supply, such as groundwater, or that because of location depends on annual rainfall or imported water for supplemental supplies.61 Geography also precludes some of the communities from importing water, which itself is also a vulnerable source of supply due to droughts and environmental constraints. The second factor is the occurrence of a multi-year drought that highlights the vulnerability of that community’s supply.62 Most of the programs in the sample were adopted in either in the drought of 1988–1991, 2007–2009, or 2012–2014.63 With rare exception,

Morro Bay, Napa, St. Helena, and Soequel Creek Water District); see supra notes 22 & 23 and accompanying text (describing reasons for primacy of toilet retrofit programs).

56. See, e.g., CITY OF VENTURA, supra note 25, at 8 (Water Dedication and In-Lieu Fee Ordinance and Resolution) (requiring new water supplies or in lieu fee); Memorandum from Mark S. Norris, Assistant Public Works Director, to City Council on Water Supply Outlook and Confirmation of Policies Regarding Projects Creating New Water Demands 188–89 (Oct. 19, 2009) (on file with the McGeorge Law Review) [hereinafter Norris Memo].

57. ST. HELENA, CAL. MUNICIPAL CODE § 13.12.050(F); Telephone Interview with D. Hight, City of St. Helena, Assistant Dir. Public Works (Feb. 24, 2014) (notes on file with the McGeorge Law Review) [hereinafter Hight Interview].

58. See, e.g., CNTY. OF SAN LUIS OBISPO, WATER CONSERVATION IMPLEMENTATION PLAN FOR THE LOS

OSOS WASTEWATER PROJECT (Oct. 2012), available at http://www.slocounty.ca.gov/Assets/PW/LOWWP/ document+library/Revised+Final+Draft+WCIP.pdf (on file with the McGeorge Law Review) (detailing eligible retrofit fixtures).

59. BLANCO ET AL., supra note 51, at xix (“If water districts pursue both new water supply and conservation, then economic benefits of conservation . . . are not realized.”); Ron Duncan, Soquel Creek Water District, Presentation Slides of Soquel Creek Water District’s Water Demand Offset Program at Planning & Conservation League Symposium (2009) (on file with the McGeorge Law Review) [hereinafter Duncan SCWD Presentation] (water neutral program intended to bridge the gap between shortage and new supplies rather than defer capital facilities).

60. See, e.g., CCSD 2010 PLAN, supra note 16, at 2-2 to -3 (discussing water and its difficulties in Cambria).

61. Id. 62. SAN DIEGO CNTY. WATER AUTH., URBAN WATER MANAGEMENT PLAN 11-5 (2010) (describing the

impact a multi-year drought has on the areas water supply). 63. See, e.g., CCSD 2010 PLAN, supra note 16, at 2-1 to -2 (discussing the initiation of the program in

1988); CITY OF LOMPOC URBAN WATER MANAGEMENT PLAN 27 (2010), available at http://www1. cityoflompoc.com/utilities/water/2010_LompocUWMP.pdf (on file with the McGeorge Law Review) [hereinafter LOMPOC 2010 PLAN] (noting the beginning of the program in 1990 during a statewide drought); Trading New Development for Water Savings in Napa, CURRENTS: AN ENERGY NEWSLETTER FOR LOCAL

GOVERNMENTS (Summer 2013), http://www.lgc.org/currents2013-summer-5 (on file with the McGeorge Law Review) [hereinafter Trading New Development in Napa] (mentioning the start of the program in 1991 during


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water neutral programs were not adopted outside of the drought or shortage context as a proactive tool to improve drought resilience or sustainability.

Cambria Community Services District. Cambria Community Services District is a special district that provides water service to the unincorporated community of Cambria, in San Luis Obispo County, on the central California coast.64 The district serves about 6,000 year-round customers plus a significant tourist demand.65 Cambria’s water supply is a key limiting factor for local growth, with projects sitting on long-term wait-lists for approval due to development limits.66 Cambria’s supply is derived from two groundwater aquifers with limited storage so that the aquifers are drawn down each summer before recharging in the winter and spring.67 Droughts, or even late-arriving rainfall, can cause the supply to become very low by late summer or early fall.68 These low groundwater levels exacerbate the intrusion of seawater into the aquifers, which makes the water unusable without high treatment costs.69 Moreover, Cambria has limited opportunities for supplemental water; the area cannot receive water from the state project due to its isolated geographic location.70 As a result of these supply constraints, Cambria has existed in a perpetual “water emergency” per the California Water Code, with an accompanying building moratorium, since 2001.71

Cambria’s building moratorium contains a water neutral exception, under which new construction or improvements that increase water use are allowed only where the development undertakes water-saving retrofits that meet the district’s 2:1 offset standard, or pays an in-lieu fee.72 The district developed its

the statewide drought); Paso Robles Groundwater Basin, COUNTY OF SAN LUIS OBISPO (Feb. 2014), http://www.slocounty.ca.gov/planning/commguidelines/PRgroundwater.htm (on file with the McGeorge Law Review) [hereinafter Paso Robles Groundwater Basin] (discussing the implementation of an ordinance in 2012 as a result of low supplies and new developments).

64. See CCSD 2010 PLAN, supra note 16, at 2-2. 65. Id. 66. Water Wait List, CAMBRIA COMMUNITY SERVICES DISTRICT, http://www.cambriacsd.

org/cm/water_wastewater/water_permits/wait_list.html (last visited July 29, 2014) (on file with the McGeorge Law Review).

67. CCSD 2010 PLAN, supra note 16, at 2-2, 2-4. 68. Id. 69. Id. 70. Id. 71. See Wilson, supra note 54 (describing Cambria’s moratorium and offset program); see also Long

Term Water Supply, CAMBRIA COMMUNITY SERVICES DISTRICT, www.cambriacsd.org/cm/projects/Long%20 Term%20Water%20Supply/Home.html (last visited July 29, 2014) (on file with the McGeorge Law Review); WATER OFFSET POLICIES, supra note 54, at 15–18 (describing Cambria’s water neutral policy and growth management limits imposed by San Luis Obispo County).

72. CAMBRIA, CAL. MUNICIPAL CODE, tit. 4, ch. 4.20.080 (describing transferability of retrofit credits and value of retrofit points); see CAMBRIA CMTY. SERV. DIST., WATER USE EFFICIENCY PLAN 26 (2013) (demand management measure requires retrofit of existing home upon resale or remodel, or payment of in-lieu fee to support water conservation programs); Retrofit-to-Build, CAMBRIA COMMUNITY SERVICES DISTRICT, http://www.cambriacsd.org/cm/water_wastewater/water_permits/retrofits_remodels.html (last visited July 29, 2014) (on file with the McGeorge Law Review); CCSD 2010 PLAN, supra note 16, at 6-2 (explaining the


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water neutral retrofit program in the late 1980s, and has implemented the program for about two decades.73 As of 2010, 88% of homes in Cambria had been retrofitted under the program with only an estimated 430 homes remaining, limiting the potential for new development under the program absent new offset options.74 The district has suggested that more water savings can be realized if previous retrofits are upgraded to newer, higher-efficiency fixtures.75

City of Big Bear Lake. The service area for the City of Big Bear is located in Bear Valley, near Lake Arrowhead in the San Bernardino Mountains in San Bernardino County.76 Big Bear has a significant second-home and vacation population, with a full time service area of approximately 11,320, and an average weekend and holiday population of approximately 55,000.77 Big Bear’s water supply is derived primarily from groundwater wells in an adjudicated basin, with a small imported supply from Crestline Lake Arrowhead Water Agency for one portion of the service area.78

In August 2005, Big Bear implemented a water demand offset program that required new development to pay an offset fee for new demand.79 The fees were used to fund rebates for toilet retrofits for a short-term program, with the city processing 628 retrofits between 2005 and 2010.80 The water demand offset fee ended in 2009, with the city’s operations and maintenance budget covering subsequent toilet rebate funding.81

City of Lompoc. The City of Lompoc is in Santa Barbara County, on the Central Coast, with a population of approximately 43,300.82 The city’s primary source of drinking water is groundwater,83 supplemented by recycled water and a small amount of surface water from a local spring.84 The groundwater basin is recharged by precipitation and Santa Ynez River flow, and occasionally through release of stored water from the U.S. Bureau of Reclamation’s Cachuma Project.85

district’s point system for retrofitting). 73. See CCSD 2010 PLAN, supra note 16, at 6-2. 74. See id (discussing retrofit program). 75. Id. 76. CITY OF BIG BEAR LAKE, DEPARTMENT OF WATER AND POWER, 2010 URBAN WATER MANAGEMENT

PLAN 2-1 (2012) [hereinafter BIG BEAR LAKE 2010 PLAN]. 77. Id. at 2-2. 78. Id., at 3-1. 79. Id. 6-16; see Judi Bowers, DWP Program Helps Save Natural Resource, BIG BEAR GRIZZLY (Apr. 16,

2008, 12:00 AM), http://www.bigbeargrizzly.net/news/article_7bbe359b-582d-5379-acee-2a000d5ac823. html (on file with the McGeorge Law Review).

80. BIG BEAR LAKE 2010 PLAN, supra note 76, at 6-16 to -17. 81. Id. 82. LOMPOC 2010 PLAN, supra note 63, at 12. 83. Id. at 14. 84. Id. 85. Id. at 15.


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The city first adopted a water neutral retrofit program in 1990, during a period of statewide drought, and re-authorized the program in 2010.86 Under the program, the Lompoc Municipal Code prohibits the city from issuing building permits for new construction unless the applicant implements a 1:1 offset for the project’s water use.87 The offsets can be accomplished directly through retrofits or, in the past, indirectly by paying an in-lieu fee to the city, which funds a general city retrofit program.88 The in-lieu fee program was suspended in 2010.89

City of Morro Bay. The coastal City of Morro Bay is located in San Luis Obispo County and has a population of approximately 10,461 persons, divided between seasonal and permanent residents.90 The city obtains its water via a contract with the County of San Luis Obispo for supplies from the State Water Project; the city also has access to groundwater and sometimes desalinated water.91 The city’s water supply has been so limited that the city and the California Coastal Commission have required the city to limit the number of new residential uses that may be approved each year.92

Since at least the late 1970s, the city’s code has contained an “equivalency” requirement under which water use by new development or other water intensifying projects must be offset through retrofits or other water conservation measures.93 An equivalency is defined as “average amount of water used by a single-family residence over the period of one year,” established by code at 10,780 cubic feet per year.94 Different land uses are assigned equivalency factors as percentages of this baseline.95 The code limits retrofit credits to half of the retrofit savings to create a margin for error in estimating savings and to reduce demand on already-limited water resources; the code does not allow retrofits of prior retrofits for new uses, and appears to limit the availability of credits to “infill” development.96 Low-income areas have priority for retrofit projects.97

86. Id. at 27. 87. LOMPOC, CAL. MUNICIPAL CODE tit. 13, ch. 13.04.070; see LOMPOC 2010 PLAN, supra note 63, at

47–48. 88. LOMPOC 2010 PLAN, supra note 63, at 47–48. 89. CITY OF LOMPOC, RESOLUTION NO. 5629, A Resolution of the Council of the City of Lompoc,

County of Santa Barbara, State of California, Amending the Standards and Guidelines Relating to Development Project Impact on Water Supply (2010) (Retrofit/Rebate Program); see also WATER OFFSET POLICIES, supra note 54, at 23 (describing status of Lompoc’s in-lieu fee program as of January 2015).

90. Morro Bay (city), California, U.S. CENSUS BUREAU, http://quickfacts.census.gov/qfd/states/06/ 0649362.html (last updated Mar. 24, 2015) (2013 estimate).

91. CITY OF MORRO BAY URBAN WATER MANAGEMENT PLAN, 1-2 (2010). 92. CITY OF MORRO BAY, RESOLUTION NO. 32-14, A Resolution of the Council of the City of Morro Bay,

California, Modifying the Water Allocation Program for 2014 (May 13, 2014) (describing Coastal Commission requirements); CITY OF MORRO BAY MUNICIPAL CODE, tit. 13, ch. 13.20.020 (water equivalency definition established in 1977).

93. CITY OF MORRO BAY MUNICIPAL CODE, tit. 13, ch. 13.20.080; see also id. 13.20.070 (equivalency table).

94. Id. ch. 13.20.020. 95. Id. ch. 13.20.070. 96. Id. 13.20.080(C)(3), (C)(5); id. 13.20.120(A)(3).


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In May 2014, declaring that its water supply was severely restricted, the city adopted a more detailed retrofit requirement for new water allocations requested for 2014.98 The city’s resolution specifies that retrofits must offset increased use at a 2:1 or 440 gallons per day, or else the project proponent may provide “non-required water savings features for new development.”99 These features may include, among others, lawn replacement, gray water installation, rainwater harvesting, or payment of an in-lieu fee of $2,900 per equivalency unit.100

City of Napa. The City of Napa is located in the County of Napa, north of the San Francisco Bay Area, in one of the state’s best-known wine regions.101 The city’s municipal water system serves over 85,000 people in the city and adjacent areas; in addition to providing water in its own service area, the city sells retail water to local communities including the Town of Yountville and the City of St. Helena.102 The city’s water supply comes from two local reservoirs and a State Water Project (SWP) contract.103 The SWP contract is managed through a special district, the Napa Flood Control & Water Conservation District, which provides water supply, flood control, and stormwater management services on a countywide basis.104 The city’s SWP contract is vulnerable to significant cuts during dry years, as are all SWP municipal contracts.105 To supplement its supply, Napa participates in water transfers and exchanges with other SWP contractors and local agencies.106

Napa adopted a water neutral program in 1991, during the statewide drought, when the city amended its municipal code to incorporate a toilet retrofit program for new development.107 The Napa Municipal Code requires that any new project “completely offset its water requirements” through retrofits or in-lieu fees.108 The Code specifies that residential remodels must comply if the change would result

97. Id. 13.20.080(C)(8). 98. CITY OF MORRO BAY, RESOLUTION NO. 32-14, A Resolution of the Council of the City of Morro Bay,

California, Modifying the Water Allocation Program for 2014 (May 13, 2014); see also Water Conservation, CITY OF MORRO BAY, http://www.morro-bay.ca.us/index.aspx?nid=320 (last visited Mar. 31, 2015) (on file with the McGeorge Law Review) (declaring supply severely restricted) (last visited Mar. 28, 2015).

99. CITY OF MORRO BAY, RESOLUTION NO. 32-14, A Resolution of the Council of the City of Morro Bay, California, Modifying the Water Allocation Program for 2014 (May 13, 2014).

100. Id. 101. About Napa, CITY OF NAPA (Aug. 28, 2013), http://www.cityofnapa.org/index.php?option=com_

content&task=view&id=92&Itemid=148 (on file with the McGeorge Law Review). 102. PATRICK COSTELLO, CITY OF NAPA, URBAN WATER MANAGEMENT PLAN 2010 UPDATE 1-3, 5-10,

5-17 (June 21, 2011). 103. Id., at 3-1. 104. Id. 105. Id. at 4–5. 106. Id. 107. NAPA, CAL. MUNICIPAL CODE tit. 13, ch. 13.09.010(A), (G) (mandating that new development

“completely offset its water requirements” through retrofits or in-lieu fees and noting that residential remodels “trigger a retrofit if the remodeling work would increase water use False”); see Trading New Development in Napa, supra note 63.

108. NAPA, CAL. MUNICIPAL CODE tit. 13, ch. 13.09.010(A)–(B).


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in an increase in water use.109 If hardship is demonstrated, projects may qualify to pay an in-lieu fee, which the city uses to fund retrofit of toilets or other water-saving devices.110 An exemption is provided for low-income households.111 For many years the city’s program was primarily focused on toilet replacement, but due to fewer fixtures available for replacement, the city may be considering a broader conversion to an offset fee that can be used for a wider variety of conservation measures, such as use of recycled water.112

City of Oxnard. Located on the Southern California coast in Ventura County, approximately thirty-five miles outside of Los Angeles city limits, the City of Oxnard has a population of over 200,000 residents. Oxnard’s local supply is entirely groundwater from city wells, with the remainder of demand being met from imported surface water113 and groundwater.114

In 2008, the Oxnard City Council gave its staff direction to require that “all projects of significant size” be neutral to the city’s water system.115 Oxnard’s policy is broad; it provides that developments can contribute not only physical or financial offsets, but also water rights or supplies.116 Developers can dedicate groundwater allocations to the city, participate in expansion of the city’s recycled water system, or participate in water conservation projects that result in

109. Id. at (G). 110. Id. at (B). 111. Id. at (A)(1)–(4). 112. Trading New Development in Napa, supra note 63. 113. Oxnard purchases imported surface water from Calleguas Municipal Water District, a wholesale

agency which in turn purchases most of its water from the Metropolitan Water District. Metropolitan has multiple sources of supply including the California State Water Project, the Colorado River, and local storage and pumping. Water Resources Overview-Water Quality is Our Priority-Ventura County, CALLEGUAS

MUNICIPAL WATER DISTRICT, www.calleguas.com/water_resources_overview.htm (last visited July 29, 2014) (on file with the McGeorge Law Review).

114. Oxnard purchases groundwater from the United Water Conservation District, which manages the Santa Clara River and tributaries conjunctively with groundwater pumping to provide water to Oxnard and other cities, districts and individual water users. Facilities and Strategies, UNITED WATER CONSERVATION

DISTRICT, www.united water.org/about-us-6/facilities-a-strategies (last visited July 29, 2014) (on file with the McGeorge Law Review).

115. CITY OF OXNARD WATER CONSERVATION MASTER PLAN 29 (2010) [hereinafter 2010 OXNARD

PLAN] (“New ConstructionCThe City Council affirmed a policy to require any new development coming into the City to be conditioned to ensure that it is water neutral. In other words, it should not put an extra burden on our water supply. Projects can become water neutral by a number of means, including contribution to water conservation programs with quantifiable, long•term results.”); see Norris Memo, supra note 56, at 188–89; see also Jack Searles, Oxnard: Council To Study Water Saving Steps, L.A. TIMES, Aug. 17, 1991, http://articles.latimes.com/1991-08-17/local/me-403_1_water-usage (proposing to investigate a water neutral policy in 1991, near the end of several years of drought); WATER OFFSET POLICIES, supra note 54, at 49–51 (describing city’s 2008 actions).

116. OXNARD, CAL. CODE OF ORDINANCES § 22-154(C)(19) (June 23, 2009) (Limits on New Water Service) (“Depending on the severity of the drought, issuance of building permits which require new or expanded water service may be limited or withheld, except to protect the public’s health, safety and welfare, or in cases which meet City Council adopted conservation offset requirements.”); see 2010 OXNARD PLAN, supra note 115 and accompanying parenthetical; see Norris Memo, supra note 56, at 188–89.


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“measurable sustainable water savings.”117 In 2009, staff reported that the program was proceeding successfully—several larger projects had complied and others were discussing offsets with the city.118

In 2011, Oxnard’s water neutral policy was an issue in a legal challenge related to a battle between the city and Southern California Edison over a new electrical generating facility.119 The California Coastal Commission approved the facility, but Oxnard challenged the approval on several grounds, and asserted that Edison had to comply with the water neutral policy.120 The trial court stated, without detailed discussion, that any disagreement between the city and Edison over the water neutral policy was not relevant to the commission’s decision.121 In an unpublished opinion, the Second District Court of Appeal upheld the approval of the facility.122 With respect to the water neutral policy, the court found that the policy had not been incorporated into relevant local coastal plan policies or otherwise made sufficiently formal so as to mandate application to Edison, at least not at the local coastal plan stage.123 The court noted that the city could apply the policy to Edison at a later stage in the approval process “if the program has been adopted and implemented.”124

City of St. Helena. The City of St. Helena, located in Napa County to the north of the San Francisco Bay Area, is a small community with a population of approximately 6,000.125 St. Helena’s water supply depends on local reservoir storage, city wells, and a water contract with the City of Napa that yields between 400 and 800 acre-feet per year.126

St. Helena’s water neutral policy was adopted in 2011, after the city concluded that its supply was insufficient to allow the city to serve its customers without undue hardship.127 The city’s water neutral policy requires new

117. Norris Memo, supra note 56, at 188–89. 118. Id. 119. City of Oxnard v. Cal. Coastal Comm., No. B227835, 2011 WL 3612215, at *3 (Cal. Ct. App. Aug.

17, 2011). 120. Id. 121. Id. 122. 2010 OXNARD PLAN, supra note 115, at 29 (“While this City policy has not been codified, it has

been applied to every development project approved since 2008.”); City of Oxnard, 2011 WL 3612215, at *11. 123. City of Oxnard, 2011 WL 3612215, at *4. 124. Id. 125. About St. Helena, ST. HELENA, CALIFORNIA, http://www.ci.st-helena.ca.us/content/about-st-helena

(last visited Aug. 28, 2014) (on file with the McGeorge Law Review). 126. ST. HELENA MUNICIPAL CODE 13.12.050 (requiring zero water use increase through any

combination of on-site conservation, off-site retrofitting/in-lieu fee, or use of well water); see also CITY OF ST. HELENA, 1993 ST. HELENA GENERAL PLAN [hereinafter 1993 ST. HELENA GENERAL PLAN] (“new development” contingent on ability of City to provide water without exceeding safe yield); Hight Interview, supra note 57.

127. St. Helena’s policy was contemplated as early as 1993. See 1993 ST. HELENA GENERAL PLAN supra note 126 (defining St. Helena’s water neutral policy); ST. HELENA, CAL., MUNICIPAL CODE § 13.12.050(A) (“new development shall completely offset its water requirement”). Gary Broad, City Declares Phase I and II Water Shortage Emergencies–Conservation Critical!, CITY OF ST. HELENA, http://cityofsthelena.org/


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development to offset demand at a 1:1 ratio to ensure neutrality to the city’s water system.128 Because the purpose of the policy is to protect city suppliers, the city has indicated that uses that rely on individual groundwater wells are exempt.129 If the proposed development is an expansion or remodel, the retrofits can be within the same building; otherwise, the retrofits take place offsite.130 Developers are responsible for identifying retrofit opportunities and for submitting reports that quantitatively demonstrate a zero increase in water use.131 The rule previously allowed for acceptance of fees in-lieu of retrofits;132 however, the city subsequently suspended this option for an indeterminate period, which was still in effect as of August 2014.133 The city’s policy provides that an applicant can petition to use an “alternative innovative method,” instead of fixture retrofits, to achieve water neutrality.134

County of San Luis Obispo. The County of San Luis Obispo, located along the central California coast, is a focal point for water supply shortages due to its location and consequent dependence on rainfall and groundwater, juxtaposed with increasing agricultural, vineyard, and residential development.135 The county’s water neutral initiatives have focused on protecting groundwater supplies in the face of severe shortages, including claims of dry wells, and the potential for groundwater adjudication.136

Water neutral standards currently apply to the Paso Robles groundwater basin, which encompasses over 500,000 acres in the county.137 The basin is the

content/city-declares-phase-ii-water-emergency (last visited Mar. 30, 2015) (on file with McGeorge Law Review) (stating that in February 2014, “Bell Canyon was at 38.6% of capacity (295 acre feet versus 730 acre feet in 2013)”, with the city’s monthly demand increasing from prior years. City consumption was “almost 30% higher” in February 2014 than the prior year; that same month, the city instituted phase two of a formal water emergency).

128. See ST. HELENA WATER NEUTRAL POLICY FOR DEVELOPMENT (2011); 1993 ST. HELENA GENERAL

PLAN, supra note 16, at Policy 9.2.1 (requiring water neutrality with “no net increase in demand”). 129. See ST. HELENA, CAL., MUNICIPAL CODE § 13.12.020 (defining “water” as “treated water that is

supplied by the city’s water enterprise water distribution system unless otherwise indicated.”); Hight Interview, supra note 57.

130. ST. HELENA WATER NEUTRAL POLICY FOR DEVELOPMENT (2011). 131. ST. HELENA, CAL., MUNICIPAL CODE § 13.12.050(F) (“The developer shall be responsible for

identifying residential or nonresidential properties eligible for retrofitting”). 132. Id. § 13.12.050(B) (describing the circumstances under which in-lieu fees will substitute for

retrofits). 133. WATER OFFSET POLICIES, supra note 54, at 32 n. 57. 134. Id. § 13.12.050(C) (indicating that “alternative innovative method” is available upon petition and

acceptance by the city council). 135. E.g., CNTY. OF SAN LUIS OBISPO, CAL., ORDINANCE 3246 (Aug. 27, 2013) [hereinafter SLO

ORDINANCE 3246]. 136. Id. 137. Id.; see also CNTY. OF SAN LUIS OBISPO, RESOLUTION NO. 2014-56 (2014) [hereinafter RESOLUTION

NO. 2014-56]; CNTY. OF SAN LUIS OBISPO, CAL., COUNTY CODE § 22.92.020(D)(5), (5)(b) [hereinafter SAN

LUIS OBISPO COUNTY CODE § 22.92.020] (“New development [in the Paso Robles Groundwater Basin area] requiring discretionary land use permits shall offset the resulting net new water demand as follows . . . [t]he net new water demand shall be offset at a ratio of 2:1 through participation in [listed] water conservation


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primary water source for the northern part of the county, including residential, vineyard, and irrigated agriculture users.138 In September 2012, the county adopted a water conservation ordinance that required new development within the Paso Robles Groundwater Basin to meet a 2:1 offset requirement.139 The ordinance applied primarily to new large land uses, prohibiting the creation of new parcels in the basin and directing integration of water neutral standards into the County General Plan.140 The ordinance had limited applicability by its terms and contained exemptions for certain communities and for construction of single-family homes.141

In August 2013, faced with continuing water shortages including claims of wells going dry, the county adopted a forty-five day temporary urgency ordinance that banned additional pumping unless new development, including new irrigation, offsets water use from the groundwater basin at a 1:1 ratio.142 In October 2013, the county extended the ordinance for approximately two years, and in February 2014, the county adopted a resolution containing a “vested rights exemption” policy under which applicants that had taken specified well drilling, crop production, and other commitments prior to the August 2013 ordinance approval were exempt from the offset requirements.143

For residential and commercial development, the ordinance is implemented through a water conservation program adopted by resolution in February 2014.144 The program offers applicants the opportunity to purchase offset credits.145 The county reports that it is in the process of developing a similar program for

programs”); Paso Robles Groundwater Basin, supra note 64 (identifying demand offsets as a land use measure for managing development in the basin).

138. Paso Robles Groundwater Basin, supra note 64 (noting the capacity and use of the Paso Robles Groundwater Basin).

139. CNTY. OF SAN LUIS OBISPO, ORDINANCE 3231 (Sept. 25, 2012) (section 1.D(5)(b)) (adopted but not yet codified at http://www.slocounty.ca.gov/clerk/County_Codes___Traffic_Codes/codesadopted.htm); see also Paso Robles Groundwater Basin, supra note 64 (identifying demand offsets as a land use measure for managing development in the basin).

140. SAN LUIS COUNTY CODE § 22.92.020, supra note 137. 141. Id. at figure 92-4 (exempting cities of Paso Robles, Atascadero, the towns of Templeton, San Miguel

and Shandon, drilling of wells, and building of single family homes). 142. SLO ORDINANCE 3246, supra note 135; see also Resolution no. 2014-56, supra note 137. 143. See CNTY. OF SAN LUIS OBISPO BD. OF SUPERVISORS LANGUAGE APPROVED BY THE BOARD OF

SUPERVISORS–11/26/13 DETERMINATION OF AN EXEMPTION FROM ORDINANCE 3246 (2013) (vested rights exemption); CNTY. OF SAN LUIS OBISPO, ORDINANCE 3247 (Oct. 8, 2013) (extension of temporary urgency ordinance).

144. Resolution no. 2014-56, supra note 137; see also You May Qualify for Free Water-Efficient Plumbing Fixtures, PASO BASIN, http://www.pasobasin.org/urgency-ordinance/plumbing-retrofit-program/ (last visited Mar. 30, 2015) (on file with the McGeorge Law Review).

145. Id.


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agriculture.146 The program will investigate the potential for irrigation efficiency and removal of land from production to achieve offsets.147

The Paso Robles water neutral initiatives are not the county’s first foray into offsets, and may not be the last. The county has required retrofits in the Los Osos groundwater basin for new construction and on resale as part of the land use and construction permit processes since 2008.148 That program subsequently overlapped with county-imposed retrofit requirements for properties seeking new connections to the wastewater system, adopted in response to a California Coastal Commission requirement for water conservation as part of the Los Osos wastewater project.149 The county has also required retrofits in the Nipomo Mesa Conservation Area.150 In March 2014, the county directed staff to develop a proposal to extend water neutral development requirements to the entire unincorporated county.151

The County’s offset policies apply to individual groundwater pumping and agricultural activities in addition to water delivered by a supplier for urban use,152 and this pumping element creates distinct challenges such as allegations of interference with property rights and the overlay of complex (and evolving) groundwater regulation in California. The county’s emergency ordinance establishing the offset requirement for the Paso Robles basin was challenged by local pumpers in superior court in November 2013.153 The lawsuit challenged the

146. Paso Robles Groundwater Basin, supra note 64; How Can I Offset Water Use for New or Expanded Irrigated Crop Production?, PASO BASIN, http://pasobasin.org/urgency-ordinance/water-usage-offset-new-or-expanded-irrigated-crop-/ (last visited Mar. 30, 2015) (on file with the McGeorge Law Review).

147. Paso Robles Groundwater Basin, supra note 64. 148. SAN LUIS OBISPO CNTY., CAL., COUNTY CODE, tit. 19, § 19.07.042(e); SAN LUIS OBISPO CNTY.,

LOS OSOS GROUNDWATER BASIN RETROFIT, Title 8 Ordinance (Apr. 22, 2008); see SAN LUIS OBISPO CNTY., LOS OSOS GROUNDWATER BASIN RETROFIT, Title 19 Ordinance (Apr. 22, 2008); see also Memorandum from James Caruso, Senior Planner and Builder, to San Luis Obispo Cnty. Bd. of Supervisors, Re: Amendments to Retrofit Ordinances (Jan. 14, 2014) (on file with the McGeorge Law Review); Rhys Heyden, Supes OK Drive-Thru McDonald’s in Los Osos, NEW TIMES (Apr. 9, 2014), http://www.newtimesslo.com/news/10807/supes-ok-drivethru-mcdonalds-in-los-osos/ (on file with the McGeorge Law Review) (describing application of retrofit ordinances).

149. SLO COUNTY PLAN FOR LOS OSOS, supra note 8, at 1-2, 7. 150. SAN LUIS OBISPO CNTY., CAL., COUNTY CODE, tit. 19, § 19.07.042(d) (Nipomo Mesa Conservation

Area). 151. Cnty. of San Luis Obispo Bd. Of Supervisors, 3/4/2014 Agenda Item Transmittal, Ex. A (predicting

6-12 month timeline for development); see also Michael F. Brown, State Water Board Threat Raises Serious Questions, 4 COAL. OF LABOR AGRIC. & BUS. 2–3 (May 2014) (reporting on County of San Luis Obispo Board of Supervisors meeting of Tuesday March 4, 2014) (countywide water conservation ordinance).

152. Cf. BORREGO DEMAND OFFSET POLICY, supra note 24; UTTON TRANSBOUNDARY RESOURCES

CENTER, UNIV. OF NEW MEXICO SCH. OF LAW, WATER MATTERS!, at 6-6 “Groundwater” (2014) (Darcy S. Bushnell ed.), available at http://uttoncenter.unm.edu/pdfs/water-matters-2014/2014-water-matters-lr.pdf (on file with the McGeorge Law Review) (describing Utah requirements for groundwater offsets).

153. E.g., Janet Lavelle & David Sneed, Several Landowners Suing County Over Water Law Have Deep Roots in the Area, SAN LUIS OBISPO TRIB. (Dec. 14, 2013), http://www.sanluisobispo.com/2013/12/14 /2835992/several-landowners-suing-county.html (on file with the McGeorge Law Review); Julie Lynem & David Sneed, Lawsuits Filed Against Emergency Ordinance on Paso Robles Basin, SAN LUIS OBISPO TRIB. (Nov. 26, 2013), http://www.sanluisobispo.com/2013/11/26/2805 000/paso-robles-groundwater-basin.html (on


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county’s authority to adopt offsets for groundwater pumping, and alleged unlawful interference with water rights.154 The county superior court rejected these claims, holding that Article X section 2 of the California Constitution supports the offset policy.155 A second lawsuit filed in November 2013 sought judicial action to address various groundwater rights in the Paso Robles Basin; that case was transferred to another county and, as of March 2015, the court had scheduled trial on preliminary issues for December 2015.156 Simultaneously, various local groups are pursuing the idea of allocating basin management responsibility to a new special district dedicated to that purpose.157

East Bay Municipal Utility District (EBMUD). Located in the eastern San Francisco Bay Area, EBMUD’s water system serves twenty incorporated cities and fifteen unincorporated communities in Alameda and Contra Costa counties, approximately 1.3 million customers within a 332 square-mile area.158 EBMUD’s principal water source is the Mokelumne River in the Sierra Nevada, diverted at Pardee Reservoir in Calaveras and Amador counties.159 Although EBMUD has substantial water supplies, some of its rights have relatively junior status, and EBMUD serves one of the most populated and fastest-growing areas in northern California.160

EBMUD has been a leader among California water providers on water and growth issues.161 Although EBMUD was not the first provider to impose a water neutral standard, the district appears to be the first in California to implement such a program in the context of large-scale development.162 As of March 2015 EBMUD had integrated offset fees for approximately five housing projects that

file with the McGeorge Law Review). 154. David Sneed, Judge to Decide in April Whether to Suspend Paso Basin Ordinance, SAN LUIS

OBISPO TRIB. (Mar. 17, 2014), http://www.sanluisobispo.com/2014/03/17/2976870/paso-groundwater-basin-pumping. html (on file with the McGeorge Law Review).

155. Paso Robles Water Integrity Network v. County of San Luis Obispo et al., No. CV13-8301, slip op. at 7–15 (San Luis Obispo Cnty. Ct. Jan. 12, 2015) (on file with the McGeorge Law Review) (rejecting claim that Article X section 2 limited the County of San Luis Obispo’s ability to adopt a water demand offset ordinance and holding that “increased use of groundwater to irrigate additional acreage . . . would constitute, in the context of our current drought conditions, an unreasonable use of water”).

156. Docket in Steinbeck Vineyards #1, Lic. v. County of San Lois [sic] Obispo et al., No. 1-14-CV-265039, SANTA CLARA SUPERIOR COURT, http://www.sccaseinfo.org (follow “Civil Index Search by ‘Case Number’” hyperlink; then search case number 114CV265039 (related case at 1-14-CV-269212) (last visited Mar. 31, 2015); see also Lavelle & Sneed, supra note 153.

157. Id. 158. EAST BAY MUNICIPAL UTILITY DISTRICT, URBAN WATER MANAGEMENT PLAN 2-1 (2010). 159. Id. 160. Id. 161. See, e.g., Kanouse & Wallace, supra note 14, at 148–52 (describing litigation over annexation of

Dougherty Valley to EBMUD’s service area and the development of SB 610 and 221). 162. New Technology Reduces Home Water Use by 5 Percent, E. BAY MUN. UTIL. DIST. (Jan. 14, 2014),

https://www.ebmud.com/about/news/releases/2014/01/14/new-technology-reduces-home-water-use-5-percent (on file with the McGeorge Law Review) (indicating the EBMUD water saving program as the first to implement on a large scale).


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required annexation into EBMUD’s service area.163 EBMUD originally required a 1:1 ratio, but later increased the ratio to 2:1 to account for uncertainty in implementation and enforcement.164 EBMUD has not required water neutral for all new development or remodels within its service areas, although district regulations do allow imposition of conditions to promote water efficiency, including retrofits, in new development.165 Instead, EBMUD has primarily applied the requirement to new developments seeking permission to enter the district’s service area on a project-specific basis, with the goal of avoiding impacts to EBMUD’s water supplies and existing customers and mitigating environmental impacts.166

EBMUD’s foray into water neutral began with a request, circa 2001, by several developers to newly annex a portion of a 1,200-home, mixed-use subdivision into EBMUD’s service area.167 The request triggered substantial community debate, and EBMUD ultimately agreed to serve the project only if the development provided water demand offsets.168

EBMUD developed a detailed process for achieving water savings in the new development. The first step required assessing anticipated water use, as the project was originally proposed, and then considering where efficiency upgrades could provide cost-effective water-savings.169 These upgrades ultimately resulted in a 20–30% reduction from a typical, comparable development.170 The water use features and associated water demand of the development were summarized in a

163. Kanouse & Wallace, supra note 14, at 156–57. Wendt Ranch, Weidemann Ranch, The Meadows and the Camino Tassajara Integrated Project, the latter of which encompassed the Alamo Creek project and other projects totaling 1,400 homes by four developers. EBMUD has also required offsets for Gale Ranch project. East Bay Municipal Utility District, Fiscal Year 2015 Water Service Rates, Charges and Fees, EAST

BAY MUN. UTIL. DIST., SCHEDULE N – WATER DEMAND MITIGATION FEES (effective Aug. 11, 2014), available at https://www.ebmud.com/sites/default/files/pdfs/schedn-081114_0.pdf (on file with the McGeorge Law Review).

164. Id.; EAST BAY MUN. UTIL. DIST., REGULATIONS GOVERNING WATER SERVICE TO CUSTOMERS OF

THE EAST BAY MUNICIPAL UTILITY DISTRICT § 3D at 3-P (effective Jan. 28, 2003), available at https://www. ebmud.com/sites/default/files/pdfs/service_in_the_camino_tassajara.pdf (on file with the McGeorge Law Review) [hereinafter EBMUD § 3D] (“A Water Demand Mitigation Fee shall be sufficient to fund offsite conservation programs to offset Project water demand at a rate of 2:1, as determined by the District.”).

165. EAST BAY MUN. UTIL. DIST., REGULATIONS GOVERNING WATER SERVICE TO CUSTOMERS OF THE

EAST BAY MUNICIPAL UTILITY DISTRICT § 31-A (effective July 1, 2003) available at https://www. ebmud.com/sites/default/files/pdfs/Section%2031%20Water%20Efficiency%20Requirements%20070113_0.pdf (on file with the McGeorge Law Review) (“The District will review applications for new standard services and determine the applicability of, and compliance with, water-efficiency requirements. Applicants for expanded service shall be require to meet the water-efficiency requirements for all new water service facilities and may be required to retrofit existing water service facilities or uses to comply with these requirements.”).

166. See EBMUD § 3D, supra note 164, at 3-O; Kanouse & Wallace, supra note 14, at 158; see Ensuring Water Neutral Demand Powerpoint, supra note 19.

167. Kanouse & Wallace, supra note 14, at 157. 168. Kanouse & Wallace, supra note 14, at 157–58. 169. Id. at 158–60. 170. Id at 162.


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water budget for the project as a whole.171 Each lot size was also assigned a water budget.172 Offsets were assigned at a 2:1 ratio, and, based on this information, EBMUD staff calculated the cost of undertaking an offset action.173 The total cost was charged to the new development as a “water demand mitigation fee.”174 EBMUD used the fee within its existing service area to finance fixture retrofits, irrigation controllers, recycled and greywater systems, and sub-metering of new family units, as well as efficiency measures in the commercial and industrial sectors.175

EBMUD then took an additional step that is uncommon among California water neutral programs; the district required that new developments form homeowner’s associations (HOAs) charged with ensuring that the new developments stay within their water budgets.176 Each HOA was required to adopt covenants, conditions, and restrictions (CC&Rs) that would apply to the HOA itself and to individual lot owners.177 Water use information was conveyed to EBMUD and the HOAs,178 and HOAs were required to ensure that each development stay within its water budget.179 If water consumption exceeded the budget by 20% or more in a year, the HOA would be charged an additional mitigation fee to EBMUD.180 The HOA could pay the fee out of its dues or charge individual homeowners exceeding their lot budgets, at the HOA’s option.181 In another unusual move, EBMUD was identified as a third-party beneficiary of the CC&Rs, so that they could not be altered without EBMUD’s consent.182

Soquel Creek Water District (SCWD). SCWD is located on Monterey Bay, near the City of Santa Cruz, approximately eighty miles south of San Francisco.183 SCWD serves approximately 38,000 mostly residential customers in four service areas within Santa Cruz County.184 SCWD’s water supply is derived from two groundwater aquifers.185 Like many water purveyors in the coastal areas

171. Id. at 158, 160–62. 172. Id. at 158–60. 173. Id. 174. Id. at 160–62. 175. Id. 176. Id.; see Maddaus et al., supra note 15, at 109. 177. Kanouse & Wallace, supra note 14, at 160–62; Maddaus et al., supra note 15, at 107. 178. Kanouse & Wallace, supra note 14, at 161 (CC&Rs required lot owners to consent to release of their

water use information by EBMUD to the HOA as a condition of accepting the property deed); Maddaus et al., supra note 15, at 107.

179. Kanouse & Wallace, supra note 14, at 160–62; Maddaus et al., supra note 15, at 109. 180. Kanouse & Wallace, supra note 14, at 160–62; Maddaus et al., supra note 15, at 109. 181. Telephone Interview with Randele Kanouse, former consultant, EBMUD (June 2013) (notes on file

with the McGeorge Law Review) [hereinafter Kanouse Interview]. 182. Kanouse & Wallace, supra note 14, at 161–62. 183. SCWD RESOLUTION NO. 03-31, supra note 28, at 2-12. 184. Id. at 2-13. 185. Id. at 4-2.


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of California, SCWD is battling seawater intrusion into these aquifers; as water levels in the aquifers drop, salt levels increase.186

SCWD has one of the best-documented water neutral programs in the California sample described in this Article. SCWD adopted its first water neutral policy in 2003.187 SCWD’s 2003 Water Demand Offset Policy required new development to offset water use by 120% (a ratio of 1.2:1). SCWD’s stated purpose was to avoid a development moratorium and to protect the groundwater supply until a supplemental water supply became available; the policy specifies that it will be discontinued once sufficient supply is available or when there are no further opportunities for offsets, whichever occurs first.188 When the program started, developers were in charge of facilitating the retrofits; however, when the economy declined and development slowed, customers expecting retrofits had yet to receive them.189 SCWD modified the policy in 2009 by requiring an offset fee for new development, which the district used to purchase high-efficiency fixtures, hire contractors, and manage the installations.190 According to the district, the retrofit program resulted in a savings of 146 acre-feet per year.191 The district later revised its policy to require 160% offsets, a ratio of 1.6:1, and in 2013 increased the requirement to 2:1.192

SCWD’s retrofits have been primarily limited to residential toilets.193 At program inception, developers were responsible for actual installation of the retrofits; SCWD later developed a credit system under which credits could be purchased from the district.194 For direct installs, developers have been responsible for ensuring that retrofits are performed by licensed and bonded contractors and are properly completed.195 Developers were required to provide retrofit candidates with a letter that explains the program, and both developers and participating customers must sign a release of liability that absolves SCWD of responsibility for retrofit issues.196 The customer selected their own appliance

186. Id. at 4-7. 187. SCWD’s program was developed based on the City of San Luis Obispo’s program. Telephone

Interview with Ron Duncan, Conservation & Customer Service Field Manager, Soquel Creek Water District (June 4, 2014) (notes on file with the McGeorge Law Review) [hereinafter Duncan Interview]; cf. WESTERN

RESOURCE ADVOCATES, supra note 54 (describing City of San Luis Obispo’s program). 188. See SOQUEL CREEK WATER DISTRICT, URBAN WATER MANAGEMENT PLAN 2010, at 6-33 (2010)

http://www.soquelcreekwater.org/sites/default/files/documents/Reports/uwmp-final-master-oct7_0.pdf (on file with the McGeorge Law Review) [hereinafter SCWD 2010 PLAN].

189. Id. 190. Id.; Water Demand Offset Program, SOQUEL CREEK WATER DISTRICT, http://www.soquel

creekwater.org/conserving-water/water-demand-offset-program (last visited Mar. 28, 2015) [hereinafter SCWD Water Demand Offset] ($18,000 per acre foot in 2010 increased to $55,000 per acre foot in 2014).

191. See SCWD 2010 PLAN, supra note 188, at 6-33. 192. See SCWD Water Demand Offset, supra note 190; SOQUEL CREEK WATER DIST., RESOLUTION 13-

17 (July 9, 2013). 193. SCWD 2010 PLAN, supra note 188, at 6-29. 194. Id. 195. Id. 196. Memorandum for Soquel Creek Water District Board of Director on Agenda Item 5.1, at 3 (Oct. 1,


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for retrofit, and the resultant savings were documented on a form signed by both developer and customer, which was submitted to SCWD for approval.197 Upon completion of new development and installation of measures qualifying for offset credit, SCWD staff conducted an inspection to verify compliance.198

As of 2010, SCWD reported that approximately 3,450 high-water use toilets had been replaced,199 saving an estimated 134 acre-feet of water per year.200 An additional twelve acre-feet per year was saved as a result of urinal, showerhead, and faucet retrofits.201

SCWD’s offset program also offers a green-building option called the “Go Green” program, which encourages developers to design their projects with higher-efficiency fixtures and more efficient landscaping than required by SCWD, and thus lower their ultimate offset requirement. Developers participating in this program may apply to receive SCWD-specified credit reductions, or may propose credit reductions for commercial development based on estimated water savings. Developers must first agree to install ultra-efficiency toilets before receiving credit for additional measures. SCWD estimates that the Go Green program facilitates reductions in water usage up to 15%.

In June 2014, SCWD proposed to amend the Water Demand Offset Program to address two concerns about the program.202 The first concern was that offsets were causing water demand to “harden,” i.e., that efficiency improvements in the short-term were using up conservation opportunities, thus precluding future efficiency improvements and conservation measures.203 The second concern was that development was taking advantage of the lowest-cost offsets in the near-term, thus forcing existing customers to pay higher costs to undertake efficiency improvements in the long-term.204 To address these issues, SCWD proposed to

2013), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 103 (Oct. 1, 2013), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/packets/10-01-13%20Board%20 Packet.pdf (on file with the McGeorge Law Review).

197. Id. 198. Id. 199. “Conservation literature and staff estimates indicate that replacement of a commercial 3.5 [gallons

per flush] toilet with an [Ultra Low Flow Toilet] is assumed to save 0.035 afy, and replacement of a commercial 3.5 [gallon per flush] toilet with a [high efficiency toilet] is estimated to save 0.042 afy.” SCWD 2010 PLAN, supra note 188, at 6-32.

200. Id. This saving is on a “net” basis, meaning that the savings represent the difference between the former higher-flow models and the new lower-flow models. Id.

201. Id. 202. Memorandum for Soquel Creek Water District Board of Director on Water Demand Offset (WDO)

Program, at 1 (June 3, 2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 264 (June 3, 2014), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/packets/06-03-14_Board_Packet_.pdf (on file with the McGeorge Law Review) [hereinafter June 2014 SCWD Water Demand Offset Memo].

203. Id. 204. Id. SCWD noted that “demand hardening” might not occur as anticipated “because it would be

several years out (e.g., 10 years) before the more expensive methods are implemented and during this time, it is expected that new water-saving devices, regulations, etc. will be developed . . . .”. Id. at 4.


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require developers to undertake more expensive offsets, such as turf replacements, or to charge a fee that SCWD would use for more comprehensive offset projects, such as rainwater harvest and recharge.205

On June 17, 2014 SCWD amended the program so that all water intensifying uses satisfy offset requirements by paying a fee equivalent to $55,000 per acre foot of offset.206 This appears to have been done in part to avoid imposition of a building moratorium as a result of limited water supplies.207 SCWD designed the fee to reflect the cost of “achieving actual water savings for existing customers through retrofits.”208 Fee revenue will be used to retrofit fixtures at public schools within SCWD’s service area; according to SCWD, these retrofits that otherwise would be difficult to achieve due to limited school funds.209

B. Non-California Programs

Water neutral development programs are being adopted around the United States and the world. This article does not attempt an exhaustive survey of such programs,210 but describes some examples below to illustrate the purpose and scope of such programs for comparative purposes. Some of the programs contain elements that could be incorporated into future California programs.

Santa Fe, New Mexico. The City of Santa Fe has developed an extensive regulatory framework for its water neutral program.211 With a population of approximately 70,000,212 the City of Santa Fe is, like most cities in the arid west, grappling with the need to match limited water supplies to growth.213 In 2003,

205. Id. at 3–5; Duncan Interview, supra note 187. 206. SCWD Water Demand Offset, supra note 190; see also Minutes, Regular Meeting of Soquel Creek

Water District, at 9 (June 17, 2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 104 (July 15, 2014), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/packets/ 07-15-14_board%20packet_secured.pdf (on file with the McGeorge Law Review) [hereinafter SCWD June 17, 2014 Meeting Minutes] (containing draft meeting minutes for June 17, 2014 that noted passage of motion to adopt new offset fee).

207. See Declaration of Connection Moratorium, Powerpoint Presentation at Special Meeting of Soquel Creek Water District, at 3 (June 3, 2014), in SOQUEL CREEK WATER DISTRICT, BOARD AGENDA PACKET, at 92 (July 15, 2014), available at http://www.soquelcreekwater.org/sites/default/files/documents/board-meeting/ packets/07-15-14_board%20packet_secured.pdf (on file with the McGeorge Law Review); June 2014 SCWD Water Demand Offset Memo, supra note 202.

208. SCWD Water Demand Offset, supra note 190. 209. Id. 210. Additional non-California programs are identified at supra note 54. 211. SANTA FE, N.M., CITY CODE § 14-8; 25 SANTA FE, N.M., CITY CODE § 9.4; see Administrative

Procedures for Water Demand Offset Requirements (Exhibit A) (Res. No. 2010-20) (Mar. 31, 2010); see also Bates, supra note 5, at 87 (describing Santa Fe’s water neutral program); Sandra Zellner, Symposium: Collaboration and the Colorado River: The Anti-Speculation Doctrine and Its Implications for Collaborative Water Management, 8 NEV. L.J. 994, 1015–16 (Spring 2008) (referencing Santa Fe’s water neutral program).

212. Santa Fe, New Mexico: Why We’re Watching, ONLINE CODE ENFORCEMENT AND ADEQUACY

NETWORK, http://energycodesocean.org/tenplaces/Santa%20Fe (last visited July 29, 2014) (on file with the McGeorge Law Review).

213. Id.; see generally A. Dan Tarlock & Sarah Bates, Western Growth and Sustainable Water Use: If


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Santa Fe concluded that the city would be unable to supply sufficient water to meet city-wide demand, and adopted a water neutral ordinance requiring toilet retrofits for new development.214 This retrofit program was succeeded by a more comprehensive water neutral program in 2009, which requires that “the impact of proposed new development be offset either through conservation in existing development or transfer of water rights to the city.” 215

Santa Fe’s detailed water neutral program includes water conservation credits, water rights transfers, development water budgets, a city water budget, and a city water bank.216 In this program, only small projects requiring ten acre-feet per year or less are eligible for conservation credits (i.e., retrofit credits). To obtain an offset requirement, a proposed development must have a water budget approved by the city.217 The development can dedicate conservation credits to the city’s water bank, acquired by participating in retrofits or paying an in-lieu fee.218 The offset fees are based on the city’s water rights purchase price plus administrative and due diligence fees; in 2010, the city’s water price was approximately $15,000 per acre-foot plus $2,600 in fees.219

Residential projects requiring more than ten acre-feet per year are required to participate in the city’s water rights transfer program. Water rights can be transferred to a particular development, or into the city’s water bank.220 The applicant pays a deposit toward a due diligence investigation by the city, during which the city determines whether the water rights are acceptable.221 If they are accepted, the city and the applicant cooperate in a petition to the state engineer to transfer the water rights to the city’s point of diversion.222 The applicant is responsible for administrative and hearing costs associated with the change.223

Weymouth, Massachusetts. The Town of Weymouth developed a water neutral program to ensure that the town would not exceed its authorized water withdrawal while also accommodating new development.224 The program requires

There Are No “Natural Limits,” Should We Worry About Water Supplies? 38 ENVTL. L. RPTR. 10582 (2008) (describing western efforts to match limited water supplies to growth).

214. A. Dan Tarlock & L. Lucero, Water Supply and Urban Growth in New Mexico: Same Old, Same Old or a New Era?, 43 NAT. RESOURCES J. 803, 824 (2003).

215. SANTA FE, N.M., CITY CODE §14-8.13 (2010). 216. Id. §§ 25-9.5; 25-10; 25-11; 25-12 (2010). 217. Id. § 14-8.13(B)(2) (2010) (requiring that water budgets be based on either standard formulas using

historical data for similar types of development or a reliable alternative approach that results in a lower estimate).

218. Id. § 14.8.13(A)(2). 219. SANTA FE, N.M., ORDINANCE 2009-38 § 1.3.6 (2010). 220. Water rights must be submitted with proof of ownership, title report, permits/licenses/court orders,

copy of relevant options or agreements, and an affidavit that the rights are free from encumbrances. Id. at § 3.3.6.

221. Id. § 3.3.6(j)–3.4.1. 222. Id. § 3.6.1. 223. Id. § 3.6.4. 224. Water System, WEYMOUTH, MASSACHUSETTS (June 21, 2014), http://www.weymouth.ma.us/water-

sewer/pages/water-system (on file with the McGeorge Law Review).


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that new development, including existing customers that seek to increase water use, to offset use at a 2:1 ratio through fixture and irrigation system retrofits or in-lieu fees.225

Weymouth provides a list of existing businesses and residences eligible for retrofit. At the program’s inception, applicants were responsible for retrofits; in 2000, the program was expanded to give applicants the option of paying an in-lieu fee.226 The fee is held in a dedicated enterprise fund which is used to pay for the identified conservation activities.227 Conservation beyond a 2:1 ratio may be deposited in the Weymouth water bank.228 Although affordable housing is required to comply, the policy provides a hardship exemption for individual homeowners.229 According to a 2012 summary, the Weymouth program has conserved 1.2 million gallons a day. In describing the program, the State of Massachusetts reported in 2012 that the program “has not had a negative impact on development, which remains robust.”230

Massachusetts Water Conservation Standards. In 2012, the state of Massachusetts issued a “Water Conservation Standards” document (“Plan”) that recommends water neutral measures including offsets, stormwater recharge, and other methods, as techniques for protecting supply reliability, accommodating growth, and protecting the environment.231 The Plan refers to water neutral measures as “water banking,” and specifically explains that although the term “water bank” in the western states generally references to a program for “valuing, trading, buying or selling water rights,” in Massachusetts, the term generally means “a system of accounting and paying for measures that offset or mitigate water losses due to water withdrawals, sewering, and/or increased impervious areas that prevent aquifer recharge.”232 The Plan highlights several core principles

225. Id.; see also Wilson, supra note 54 (describing Weymouth, MA 2:1 offset requirement); Anderson, supra note 26.

226. Anderson, supra note 26. 227. THE COMMONWEALTH OF MASS. EXEC. OFFICE OF ENERGY AND ENVTL. AFFAIRS & WATER

RESOURCES COMMISSION, WATER CONSERVATION STANDARDS 44 (2012), available at http://www.mass.gov/ eea/docs/dcr/watersupply/intbasin/waterconservationstandards.pdf (on file with the McGeorge Law Review) [hereinafter MASS. WATER CONSERVATION STANDARDS].

228. Id. 229. Id. 230. Id. 231. Id. at 9, 43. The primary goals of a water bank are to balance the water budget, reduce water losses, increase water efficiency, and keep water local. There is no ‘one size fits all’ approach, and municipalities should have the flexibility to adopt a program that best fits their particular circumstances. . . . A water-banking program can free up water and ensure that there is an adequate supply of water for competing usesCi.e., instream flow and habitat, recreation, wetlands, water supply, and economic development. It can mitigate, or offset, the impacts of water withdrawals, balance the water budget, assist in restoring and protecting instream flow, promote water conservation, and ensure an adequate supply of potable water. Massachusetts’ communities are beginning to use this tool to accommodate future growth while ensuring the sustainability of their water resources. 232. Id.


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for water neutral “banking” programs, including: (1) use of a dedicated fund, or banking mechanism; (2) programs should require at least a 2:1 offset ratio “in medium- and high-stressed basins;” (3) in-lieu fees must be reasonably related to the actual cost of the offset plus the program’s administrative costs; and (4) offsets implemented by developers must be documented and verified.233

The Massachusetts Plan recommends an offset ratio of at least 2:1 in part due to uncertainty in measurement and in implementation,234 and also because a 1:1 ratio merely protects the status quo in degraded watersheds. The Plan envisions offset options beyond fixture retrofits, including reduced infiltration and inflow, recharge of stormwater, and retrofit of existing development.235 Such options may include low-impact development principles, recycled water, groundwater recharge, xeriscaping, and installation of rainwater collection systems.236

The Massachusetts Plan differs from the California approach in its focus and breadth; California plans tend to be provider-centric, applying only to new water uses that impinge on a particular water supplier’s resources.237 The Massachusetts Plan suggests a focus on protecting watersheds rather than individual providers and would allow offsets to be created on a watershed or basin basis.238 The Plan specifically suggests that it is worth considering evolution of the approach into a banking and credit purchase system, involving multiple communities and organized on a regional or watershed basis.239 Moreover, whereas most California plans are fixture retrofit plans, the Massachusetts Plan envisions a broader range of supply enhancement and offset opportunities.

England. In 2007 and 2009, England’s Environment Agency issued a series of reports exploring the potential for the use of new development offsets as one element in a broader movement toward water efficiency.240 The report suggests that the ideal target would be a 1:1 offset, but that community conditions may support use of offsets even where 1:1 cannot be achieved, due to existing low per

233. Id. 234. Id. at 43–44 (“[r]atios ranging from 4:1 to 10:1 are typical”). 235. Id. 236. Id. 237. Compare SCWD 2010 PLAN, supra note 188, at 131 (focusing on keeping development water-

neutral in order to avoid over-taxing individual water suppliers), with MASS. WATER CONSERVATION

STANDARDS, supra note 227, at 44. 238. MASS. WATER CONSERVATION STANDARDS, supra note 227, at 44. 239. Id. 240. E.g., ENV’T AGENCY ET AL., TOWARDS WATER NEUTRALITY IN THE THAMES GATEWAY –

SUMMARY REPORT (Nov. 2007), available at https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/291668/scho1107bnmc-e-e.pdf (on file with the McGeorge Law Review); VICTORIA

ASHTON ET AL., ENV’T AGENCY, DELIVERING WATER NEUTRALITY: MEASURES AND FUNDING STRATEGIES

(Oct. 2009), available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/2917 39/scho1009bqzt-e-e.pdf (on file with the McGeorge Law Review); ANNE KELMO & ROB LAWSON, ENV’T

AGENCY, WATER NEUTRALITY: AN IMPROVED AND EXPANDED WATER RESOURCES MANAGEMENT DEFINITION

(Oct. 2009), available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/291 675/scho1009bqzr-e-e.pdf (on file with the McGeorge Law Review).


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capita consumption and high efficiency.241 The implicit conclusion is that requiring offsets is a better idea than not requiring offsets, because some benefits are better than none.242

C. Water Neutral Variants and Trends

Emergency Programs. Some California communities have identified demand offsets as a late-stage emergency drought measure, an option identified by the California Department of Water Resources in its 2008 Drought Handbook.243 The idea is that the water neutral requirement would be triggered by hydrologic conditions leading the water supplier to declare an emergency, which typically proceeds through approximately four management stages. Some suppliers identify water neutral as a future program that would be triggered by declaration of a stage three drought emergency.244

Assuming the program was fully formed at the time the emergency was declared, it is unclear how such programs would reconcile development timelines with drought periods, unless the emergency lasts for a number of years. The program would have to clarify which developments would be covered: those proposed during a drought emergency, those who seek permits during that period, or some other subset. The program would also have to clarify applicability if the emergency were to end before the development has been substantially planned, approved, or obtained building permits or other entitlements.

Watershed or Resource-Based Programs. Another variant is to include water neutral as a tool for integrated regional planning or protection of specific

241. ASHTON ET AL., supra note 240, at 49–50. The aspiration for water neutrality should be to offset 100 per cent of the predicted increase in consumption from the new development. However, the potential for offsetting may be reduced in some areas (for example, where metering levels are already high, or the area already has a high level of water efficiency activity and low per capita consumption), in these areas, there may be a case for setting the water neutrality target below 100 per cent. 242. Id. (noting that realistic offset goals may be less than one hundred percent). 243. 2008 URBAN DROUGHT GUIDEBOOK, supra note 39, at 76; see also VICTORVILLE WATER DISTRICT,

2010 URBAN WATER MANAGEMENT PLAN § 8.2.1 at 8-3 (2011) [hereinafter VWD 2010 PLAN] (identifying offset program as potential emergency drought measure); CITY OF CAMARILLO, CAL. MUNICIPAL CODE § 14.12.040(D)(5) (during Stage 4 water emergency, unless building permit already issued or project is necessary to protect health, safety and welfare, then no new potable water service, meters or will-serve letters will be issued unless “applicant provides substantial evidence of an enforceable commitment that water demands for the project will be offset prior to the provision of a new water meter . . . .”) (based on URGENCY ORDINANCE

NO. 1039 (2009)); CITY OF SAN JACINTO ORDINANCE NO. 09-16, § H.2.c (adopting water demand offset program for Stage 3 water emergency); CITY OF CLOVIS, 2005 URBAN WATER MANAGEMENT PLAN 49 (2005) [hereinafter 2005 CLOVIS PLAN] (in Stage 3 emergency, “[n]o new connections are allowed unless the developer can offset the new expected water use by a two to one water savings in existing development”); see also CAL. WATER CODE §§ 350 et seq. (authorizing declaration of a water shortage emergency).

244. E.g., CITY OF SAN JACINTO, CAL., ORDINANCE NO. 09-16 § H.2.c; 2005 CLOVIS PLAN, supra note 243, at 48.


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water resources, such as a river or groundwater system.245 Regional planning efforts could consider whether it is feasible and desirable to include water neutral goals and objectives as common participant goals. Inclusion in regional plans might facilitate a new version of water neutral, in which the focus is on rivers and watersheds rather than the portfolio of a single water supplier. This approach could potentially have larger water resource sustainability benefits than a program that focuses on a single water supplier’s disparate sources.

In-Lieu Fees and Impact Fees. Many of the above-described water neutral programs allow developers to pay an “in-lieu” fee instead of undertaking retrofits. As a variant, some jurisdictions rely solely on such a fee, which is deposited in a dedicated fund from which the water supplier pays for various conservation programs, including retrofits.246 Whether a fee is an option within a larger program, or the total program, fees have a few characteristics. Fees provide an opportunity to aggregate resources that might be used to generate greater conservation savings than piecemeal projects.247 They shift the burden from carrying out conservation programs from an individual developer to a water supplier, which has both positive and negative aspects.248

Depending on the design of the water neutral program, fees may be classified as in-lieu fees, mitigation fees, or impact fees.249 Regardless of what they are called, there are a couple of general approaches. Some fees are tailored to the specific details of a development, and adjusted depending on design choices made for the development.250 The detailed approach may involve calculation of a unique water budget for each structure or categories of structures.251 Other fees calculate the cost of undertaking a conservation program or programs, then

245. 2012 RMC WATER PLAN, supra note 54, at 3-3, 3-6 to -7 (adopting demand offset programs as regional objective for participating suppliers).

246. See FOLSOM, CAL., CITY CODE § 13.30.10 et seq.; CITY OF SANTA MONICA, CAL., ORDINANCE NO. 1571 (1991) (adopting Water Demand Mitigation Fee program); CITY OF SANTA MONICA RESOLUTION NO. 8196 (CCS) (1991) (setting the fee).

247. See CITY OF SANTA MONICA, STAFF REPORT 1 (2014). The Water Demand Mitigation Fee generates approximately $300,000 annually. The amount varies depending on how many new construction and remodel projects are permitted each year. With the clarification of the appropriate uses, the Water Demand Mitigation Fee by 2020 could generate a total of approximately $2,100,000. These funds could help offset water-efficient related public facility capital improvement projects, that would likely account for greater level of water reduction than if solely used for toilets, showers, and faucets. 248. WATER OFFSET POLICIES, supra note 54, at 3 (noting that fee programs shift the burden to the

supplier to ensure, among other things, that fees must be proportional to the new demand, disbursed cost-effectively, and expended timely so as to actually offset the new demand); see also id. (noting that City of Lompoc fees were discontinued because funds were not expended fast enough).

249. U.S. ENVTL. PROT. AGENCY, Wetlands Conservation, www.epa.gov/owow/wetlands/pdc/ CMitigation.pdf (last visited Sept. 13, 2014) (on file with the McGeorge Law Review) (describing types of water conservation fees).

250. See, e.g., Wilson, supra note 54. 251. Id.


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spread that cost among anticipated growth.252 Under this approach, new development is charged a per-structure fee, typically based on the size of the connection.253

Each of these approaches has pros and cons. Fees specific to a development theoretically create an incentive for new development to adopt aggressive or innovative conservation measures, sometimes called “extraordinary” measures.254 They also create an opportunity to design a program that monitors water use and imposes penalties or forces reductions for exceeding budget.255 General fees are more straightforward for the water supplier to the extent that resources are not required to assess each new development; instead, resources are devoted to the conservation programs themselves.256 This second fee category is also more straightforward for the developer, avoiding the investment of time on the part of the developer to carry out the program.257

Credit Banking. Credit banking may be an aspect of some water neutral programs. Some water neutral programs track completed offsets as credits, and still others provide central repositories or “banks” for those credits so that they may be purchased or traded.258 Developers can purchase credits from the bank in-lieu of undertaking direct retrofits. Sometimes the water supplier or land use authority may undertake conservation actions, which are then repaid by the purchase of credits by new development. Banked credits may be traded between new developments, or may allow development interests to purchase credits ahead of project proposals.259 This market system can create incentives and efficiencies, but can also lead to claims of credit hoarding and speculation.260

252. Id. 253. Id. 254. Id. 255. Id. 256. U.S. ENVTL. PROT. AGENCY, Wetlands Conservation, www.epa.gov/owow/wetlands/pdc/

CMitigation.pdf (last visited Sept. 13, 2014) (on file with the McGeorge Law Review) (describing types of water conservation fees).

257. Id. 258. See Anderson, supra note 26, at 57; cf. MONTEREY PENINSULA WATER MGMT. DIST., ORDINANCE

NO. 156 (2013) (An Ordinance of the Board of Directors of the Monterey Peninsula Water Management District Clarifying and Amending Terms and Procedures Related To Water Permits, Water Use Credits, Rebates and Landscape Water Audits) (Nov. 28, 2013) (district inspects each home and sets the number of fixture units assigned to that home, and these fixture units translate into credits; a home with substantial water fixtures has more credits for future remodels).

259. See Save Our Carmel River v. Monterey Peninsula Water Management Dist., 141 Cal. App. 4th 677 (2006) (each city within MPWMD’s jurisdiction is assigned a specific quantity of water as a credit allocation and new development must obtain water from the city’s allocation; cities may transfer credits between themselves); see also MONTEREY PENINSULA WATER MGMT. DIST., ORDINANCE NO. 52 (1990).

260. Jessica Lyons, Four Defiant Members of the Monterey Peninsula Water Board Have Made Enemies in High Places, MONTEREY COUNTY WKLY., May 9, 2002, http://www.montereycountyweekly.com/ news/local_news/article_ca07f599-ba85-584e-9735-1d91b57a8eb7.html (on file with the McGeorge Law Review); WESTERN RESOURCE ADVOCATES, supra note 54, at 4.


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IV. PRACTICAL AND POLICY ISSUES, CHALLENGES AND OPPORTUNITIES FOR

CALIFORNIA WATER NEUTRAL PROGRAMS

This section provides a reconnaissance look at practical and policy issues that have been raised about water neutral programs. Water suppliers contemplating water neutral programs should consider these issues as part of their assessment. Existing programs should consider these issues as part of improving and expanding their programs.

A. Retrofit Saturation

As described herein, the first wave of California water neutral programs appear to have focused primarily on fixture retrofits, particularly toilets, due to the potential for a relatively large volume of savings. However, all retrofit programs eventually experience saturation, i.e., the point at which most existing eligible fixtures have been replaced with high efficiency models.261 A saturation rate between 75% and 90% appears to be the levels at which suppliers conclude that remaining water savings do not justify the cost of further retrofits.262 Saturation at these levels has already occurred in a few communities in the sample,263 and will likely occur in others.264 Saturation may be a problem for water neutral programs that focus exclusively on indoor fixture retrofits; such programs must either integrate new approaches to saving water or end.265

261. See, e.g., BLANCO ET AL., supra note 51, at 208–09, 211 (discussing retrofit saturation in southern California service areas).

262. Duncan Interview, supra note 187; see BLANCO ET AL., supra note 51, at 208–09; cf. Water Retrofit Upon Sale Repealed, CITY OF SANTA MONICA (last updated July 1, 2013), http://www.smgov.net/departments/ ose/categories/water/retrofit_upon_sale.aspx (on file with the McGeorge Law Review) [hereinafter Water Retrofit] (City of Santa Monica repealed retrofit on sale program in June 2013 due to 92% saturation).

263. CAMBRIA COMMUNITY SERVS. DIST., CAMBRIA URBAN WATER MANAGEMENT PLAN 6-2 (2010) (88% saturation); see Water Best Practice: Water Demand Offsets, Soquel, CA, GREEN CITIES CALIFORNIA, (last visited July 29, 2014), http://greencitiescalifornia.org/best-practices/water/soquel_water-demand-offsets.html (on file with the McGeorge Law Review) (based on City of San Luis Obispo experience, 85% retrofits would be considered saturated); CITY OF L.A. DEP’T OF WATER & POWER, SECURING L.A.’S WATER

FUTURE 12–13 (May 2008), available at http://www.greencitiescalifornia.org/assets/water/LA_Emergency-Water-Conservation-Plan_Water-Supply-Report-2008.pdf (on file with the McGeorge Law Review) [hereinafter SECURING L.A.’S WATER FUTURE] (noting that toilet retrofit program ended in 2006 due to saturation and demonstrated effectiveness of city’s retrofit on resale ordinance, prompting city to focus on reducing outdoor water use); cf. Water Retrofit, supra note 262 (92% saturation).

264. BLANCO ET AL., supra note 51, at 208–09 (predicting 75% saturation rate for indoor residential, commercial, institutional and industrial retrofits by 2020). It is not clear whether this prediction is specific to southern California, which generally undertook retrofits earlier than northern California, or whether the predicted saturation accounts for potential gaps in SB 407 compliance, described in section IV(B). Id.

265. See SECURING L.A.’S WATER FUTURE, supra note 263, at 12–13 (noting that toilet retrofit program ended in 2006 due to saturation and demonstrated effectiveness of city’s retrofit on resale ordinance, prompting city to focus on reducing outdoor water use). But see infra Part IV.E (discussing the potential for a lack of real water savings where fixture retrofit occurs as a result of mandatory conservation requirements).


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Although each program must be individually assessed, it appears that, generally, water neutral programs have the potential to find new savings beyond fixture retrofits. This conclusion is based on at least three considerations. First, for early water neutral programs created circa 1980s–1990s that focus on retrofits, sufficient time has passed that technological advances in water fixtures may provide opportunities for additional savings, i.e., through retrofit of retrofits.266 Although the savings from secondary retrofits will be relatively smaller, at sufficient volumes such savings might be valuable from a water neutral perspective if they exceed mandatory minimum efficiency requirements.267 Second, and more importantly, outdoor water efficiency initiatives (e.g., installation of irrigation controllers or lawn replacement) represent a potentially significant area for new water savings, and these have not reached saturation.268 Third, technological and legal advances in areas such as rainwater harvest, graywater use, and stormwater capture, combined with an increasing marginal cost for water, will increase the potential to integrate new initiatives into water neutral programs.269 Although some of these programs may be costly at present,270 feasibility is likely to increase over time as water supplies become scarcer, and conservation technology and techniques continue to improve. One approach that has been suggested to address cost is to convert a retrofit program into an offset fee, and use the proceeds to fund new conservation initiatives that may not be affordable at the individual development level.271

266. See Memorandum from Dean Kubani, Manager, Office of Sustainability and the Env’t & Martin Pastucha, Dir., Pub. Works, Recommending Adoption of a Resolution Clarifying Uses of the Water Demand Mitigation Fees to City of Santa Monica City Council (Mar. 25, 2014), available at http://www.smgov.net/d epartments/council/agendas/2014/20140325/s2014032503-F.htm (on file with the McGeorge Law Review) (“However, advances in plumbing fixture technology, irrigation and landscaping have resulted in even more water-efficient products and processes that are not specifically named in the original staff report and resolution.”).

267. See infra Part IV.A (describing importance of exceeding mandatory minimum requirements); BLANCO ET AL., supra note 51, at 211 (noting that percent savings from second innovation is smaller than from the first innovation).

268. See AQUACRAFT, supra note 1, at 266; BLANCO ET AL., supra note 51, at 208–12. 269. WHOLLY H20, GRAYWATER USE IN CALIFORNIA SINGLE AND MULTI-RESIDENTIAL UNITS:

POTENTIAL BEST MANAGEMENT PRACTICES 46 (2012) (“research suggests that reusing all Tier 1 and Tier 2 [laundry, shower, dishwasher, faucet, washing machine] would be sufficient to meet 100% outdoor water use in Southern California.”); see MOJAVE WATER AGENCY, EVALUATING THE EFFECTIVENESS OF CASH FOR GRASS

PROGRAMS 2, 16 (June 2011), available at http://mojavewater.granicus.com/MetaViewer.php?view_id= 2&clip_id=78&meta_id=7028 (on file with the McGeorge Law Review) (concluding that turf replacement program between 2008 and 2010 was cost-effective means of saving 718 acre-feet per year); Maddaus et al., supra note 15, at 110 (offset measures will change as technology changes).

270. See, e.g., CAL. DEP’T OF WATER RES., CALIFORNIA WATER PLAN UPDATE 2009, at 11-10 to -11 (describing costs associated with recycled water).

271. Trading New Development in Napa, supra note 63 (“Due to the dwindling number of 3.5+ gpf toilets eligible for replacement, Napa may need to convert it to simply a water-offset fee (with the proceeds used for a broader range of conservation and supply enhancement activities). The City has gotten creative . . . with some large development projects funding recycled water conversions as their offset method rather than toilet replacement.”); see Part III.C (discussing fee programs).


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The feasibility of new types of offsets will vary by community and will change over time. One challenge associated with moving beyond toilet retrofits to other offset opportunities272 is that retrofit of older toilets presents an opportunity for a relatively large volume of savings in a single transaction, with relatively little inconvenience to the homeowner and the water supplier.273 Other types of efficiency improvements may require a greater investment of time and expense, and likely a greater commitment to efficiency on the part of water suppliers, homeowners, and developers. Because offsets typically require improvements at several existing structures in order to earn sufficient credits for a new structure, larger communities may have an advantage over smaller communities. Relevant variables may include factors such as the amount of existing housing stock and existing degree of efficiency, local water use factors, community socio-economics, and the vitality of the housing and development market, including the ability to absorb the extra cost associated with water neutral programs.

B. Ensuring Wet Water: Mandatory Conservation Requirements

Water neutral programs must ensure that offsets result in real water savings. One concern is that where a developer’s offset actions would have to be undertaken without the water neutral program, such as in the case of mandatory conservation requirements, there are no actual water savings associated with the program.274 The program would then result in the dual problem of incurring unnecessary implementation costs on the part of the water supplier, while also facilitating new development that might not otherwise be approved or supported by the community because of increased water demand.

Fixture retrofit programs may encounter this problem where retrofits or high efficiency fixtures are otherwise mandated by federal, state, or local law. Federal, state and local agencies impose efficiency standards for new fixtures and require retrofits under various laws. In 1991, a number of California water suppliers formed the California Urban Water Conservation Council, signing an MOU that pledged water savings through best management practices (BMPs), including toilet retrofits.275 BMPs were typically voluntary, but individual water suppliers

272. Toilet Fixtures, CAL. URBAN WATER CONSERVATION COUNCIL, https://www.cuwcc.org/ Resources/Product-Information/Toilet-Fixtures (last visited Mar. 31, 2015) (“Toilet fixture replacement represented one of the most popular water efficiency initiatives of the 1990s, as drought conditions motivated water providers to implement water conservation programs.”).

273. Is Water Policy Limiting Residential Growth?, supra note 3 (indoor plumbing retrofits are the “low hanging fruit” of water conservation); cf. 2013 DWR WATER PLAN UPDATE, supra note 4, at 2 (“Residential toilet retrofits have had the greatest impact on urban water use, accounting for almost half of all BMP water savings through 2004.”) .

274. Duncan Interview, supra note 187. 275. Memorandum of Understanding (MOU), CAL. URBAN WATER CONSERVATION COUNCIL (Sept. 17,

2014), https://www.cuwcc.org/About-Us/Memorandum-of-Understanding (on file with the McGeorge Law


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could choose to mandate the measures. Fixture efficiency standards became mandatory at both the federal and state level in 1991–1992, with California’s SB 1224276 and the federal Energy Policy Act of 1992,277 which required that fixtures meet mandatory efficiency standards after 1994. California efficiency standards were upgraded in 2007,278 and subsequently incorporated into California’s innovative building code, CALGreen;279 CALGreen mandates high-efficiency fixtures in, among other things, new low-rise residential construction after January 1, 2014.280

The foregoing laws applied to new construction, but not to pre-1994 structures.281 To address the gap, California enacted SB 407 in 2009.282 SB 407 amended the Civil Code to require that, on or after January 1, 2014, all properties constructed before January 1, 1994 meet specified high efficiency standards for water fixtures such as toilets, faucets, and urinals.283 SB 407 requires that noncompliant plumbing fixtures in all single-family residential property be replaced with water-conserving fixtures on or before January 1, 2017.284 Multi-family housing and commercial properties must comply by January 1, 2019.285 These standards are enforced when developers seek building permits or other approvals for new or intensified water uses, as defined.286

In addition to state-imposed requirements, cities and counties may also require mandatory retrofits and installation of high-efficiency fixtures through

Review) (agreeing to implement “Best Management Practices” or BMPs, including toilet retrofits, to achieve water use efficiency).

276. The first state-level mandatory water efficiency law in the United States, SB 1224, Ch. 1347 (1992), required all toilets and urinals sold or installed January 1, 1994 to use no more than an average of 1.6 gallons and 1 gallon per flush, respectively. SB 1224, 1992 Leg., 1991–1992 Reg. Sess. (Cal. 1992).

277. Energy Policy Act of 1992, H.R. 776, 102nd Cong. (1992). 278. CAL. HEALTH & SAFETY CODE §§ 17921.3, 17921.4 (West 2009), § 17921.5 (West Supp. 2014), §

18944.11 (West Supp. 2014). 279. Part of the California Building Standards Code, CALGreen was the first state-level mandatory green

building code in the U.S. Part 11 of Title 24, Cal. Building Standards Code. CALGreen requires all local governments to adopt the mandatory provisions of the Code. The standards in the 2013 CALGreen Code are prescriptive standards with specific water use criteria pursuant to the Health and Safety Code. See CALGREEEN, GUIDE TO THE 2013 CALIFORNIA GREEN BUILDING STANDARDS CODE RESIDENTIAL 25–27 (2013), available at http://www.hcd.ca.gov/codes/shl/CALGreen_Guide_REV_12-13.pdf (on file with the McGeorge Law Review)

280. CAL. CIV. CODE § 4.303 (discussion water efficiency and conservation, indoor water use, and mandatory requirements for residential dwellings).

281. Energy Policy Act of 1992, H.R. 776, 102nd Cong. (1992). 282. CAL. CIVIL CODE § 1101 (West 2009). 283. Id. § 1101.2, 1101.3(c) (standards). 284. Id. § 1101.4(b). See generally Informational Bulletin from the Department of Housing and

Community Development to Local Code Agencies on Senate Bill 407 (Dec. 3, 2013), available at http://www.hcd.ca.gov/codes/shl/infobulls/IB_2013-07_SHL.pdf (on file with McGeorge Law Review).

285. CIV. § 1101.5(a) (West Supp. 2006). On or after January 1, 2014, multi-family and commercial property must meet fixture standards when making certain identified additions and improvements. Id. § 1101.5(d).

286. Id. §§ 1101.1–1101.8.


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local ordinances.287 Local ordinances may sometimes exceed the requirements of state law.288 New local water efficiency ordinances and mandatory efficiency requirements have been indirectly encouraged by California’s 2009 statewide mandate to reduce per capita water use by 2020.289

As a result of SB 407, CALGreen, and other fixture efficiency laws, the percentage of water savings that can properly be credited to new development will decrease, because if the retrofit would have occurred absent the water neutral program, then there is no appreciable water savings.290 The question for water neutral programs is whether mandatory requirements cover all possible efficiency improvements, and whether the requirements will translate into action.291 If the efficiency law does not encompass all uses, or if enforcement models create timing or coverage gaps in compliance, then there may be an opportunity for water neutral savings.292 Although typically these savings would be considered temporary, such temporary savings can be significant enough to be valuable to a supplier.293

Under SB 407 and related state laws, for example, fixture efficiency standards will typically be enforced at three points in time for homeowners.294 First, as fixtures wear out, homeowners will have to replace the fixtures with higher-efficiency models.295 Second, homeowners that seek to remodel or expand their homes will have to demonstrate compliance in order to obtain a building permit.296 Third, homeowners must disclose whether their fixtures comply with efficiency laws when the home is sold; however, this disclosure requirement does not mandate that the retrofit take place at sale.297 As explained below, as a result

287. The Environmental Protection Agency sometimes sets efficiency standards. See generally U.S. ENVTL PROT. AGENCY, WaterSense® New Home Specification (effective July 4, 2014), available at http://www.epa.gov/watersense/docs/home_finalspec508.pdf (on file with the McGeorge Law Review).

288. See CIV. § 1101.8(b) (West. Supp. 2014) (exempting from SB 407 local governments that adopted a retrofit on remodel or resale ordinance with the same or more stringent standards prior to July 1, 2009); cf. METRO. WATER DIST. OF S. CAL., MODEL WATER CONSERVATION ORDINANCE (2009) (suggesting that cities and counties mandate installation of water conserving plumbing fixtures prior to any sale or transfer of real property) (on file with the McGeorge Law Review).

289. CAL. WATER CODE § 10608(g) (West Supp. 2014); see also Retrofit Upon Resale Requirements, CITY OF BURBANK WATER & POWER (2010), available at http://www.burbankwaterandpower.com/water/rules-and-regulations-water/retrofit-upon-resale-requirements (on file with the McGeorge Law Review).

290. See CIVIL §1101.5 (mandating retrofits to pre-1994 structures and thereby preventing the use of retrofits in those buildings to offset new developments).

291. See CAL. BLDG. OFFICIALS, THE APPLICATION OF SB 407 (2009) (discussing the possibility of SB 407 being enforced in a “realistic and manageable” manner).

292. See id. (discussing the “realistic and manageable” implementation of SB 407, which could leave said gaps in compliance).

293. See BLANCO ET AL., supra note 51, at 2–3 (noting increasing saturation of regions with water conservation measures, leading to the potential for temporary savings to have increased value).

294. CIV. § 1101.5 (West 2009). 295. Id. 296. See id. §§ 1101.4(a), 1101.5(d) (West Supp. 2014). 297. See id. § 1102.155(a)(2) (“[T]his disclosure is not intended to be part of any contract between the

buyer and the seller”); see also ASSEMBLY COMMITTEE ON JUDICIARY, COMMITTEE ANALYSIS OF SB 407, at 6


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of this enforcement model, there will be a time lag before some homeowners will be required to, or will actually, retrofit their fixtures.298

The compliance time lag occurs because, under SB 407, only specific subsets of existing homes trigger an enforcement mechanism that imposes a consequence for non-compliance.299 For example, only a subset of homeowners will undertake remodels or additions that trigger the need for a qualifying building permit; even if this subset is significant,300 it will not include all pre-1994 homeowners. Although other homeowners could unilaterally comply, this seems unlikely on a broad scale due to cost and time.301 Moreover, there are no known plans for code enforcement or other home inspections that would result in mandatory compliance.302 Finally, the disclosure required at sale does not result in a mandatory duty to retrofit at the time of sale.303 As a result, until fixtures naturally require replacement, there will be some homeowners that would not retrofit absent a water neutral program. Water neutral programs can capture some of these savings.304

The potential for savings during a compliance gap, however, does not necessarily mean that the savings will be meaningful in a water neutral program. Each jurisdiction will have a different level of potential savings based on factors such as the current level of retrofit saturation and the size of the community, other supplier retrofit incentives, and community conservation ethos.305 Water

(June 30, 2009) (describing how SB 407 was amended prior to passage to “move away from a retrofit-on-resale approach” and does not “inextricably” link the blanket requirement for replacement of non-compliant fixtures to the sale or transfer of property): Kathleen Wilson, Low-Flow Toilets Required in California for All Home Renovations, VENTURA COUNTY STAR, Aug. 22, 2013, http://www.vcstar.com/lifestyle/under-new-law-if-you-remodel-anything-you-will (on file with McGeorge Law Review) (“Building inspectors say they won’t become ‘toilet police,’” and although some compliance is expected, “‘[t]here’s no language that compels local building departments to write letters and knock on people’s doors . . I don’t think the law anticipates there will be 100% compliance.’”).

298. See id. (explaining the enforcement pattern, which leaves a time lag before retrofitting will actually occur).

299. Id. § 1101.5(d) (describing the circumstances which trigger immediate enforcement mechanisms). 300. Remodeling Market Index Steady at Historical High, NATIONAL ASSOCIATION OF HOME BUILDERS,

http://www.nahb.org/news_details.aspx?sectionID=136&newsID=16615 (last visited Jan. 23, 2006) (on file with the McGeorge Law Review).

301. See Legislative Analysis by California Building Officials, Installation of Water Use Efficiency Improvements: SB 407, at 2 (2009), available at http://www.co.fresno.ca.us/ViewDocument.aspx?id=57036 (on file with the McGeorge Law Review) (suggesting that SB 407 should be applied in a “realistic and manageable” manner to avoid “dramatic impact on building departments and homeowners performing alterations and improvements . . . . It is feared that the application of this law will lead to excessive costs for property owners and increased permit avoidance.”).

302. See Elizabeth Kalfsbeek, Homeowners Planning To Remodel Face New Water-Conservation Rules, WOODLAND DAILY DEMOCRAT, Dec. 29, 2013, http://www.dailydemocrat.com/ci_24808002/homeowners-planning-remodel-face-new-water-conservation-rules (on file with the McGeorge Law Review) (noting that resale inspection does not trigger compliance unless a permit is required as a result of a resale inspection).

303. CAL. CIVIL CODE § 1101.4 (West 2009). 304. See SCWD Agenda Item 5.2 Memo, supra note 47, at 7 (describing how “Water Demand Offset

Program” can delay impacts of additional water use). 305. See MASS. WATER CONSERVATION STANDARDS, supra note 227, at 44 (“There is no ‘one size fits


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neutral programs that are fixture retrofit programs, and potential new water neutral retrofit programs, should evaluate the level of existing and likely future compliance with mandatory retrofit and efficiency laws in their communities in order to assess the potential for water neutral savings.306 In some instances, savings may be too temporary or otherwise minimal to be feasible or cost-effective. In other instances, temporary savings may be valuable within a supplier’s overall supply portfolio.

Beyond fixture retrofits, the same assessment should be undertaken for other potential areas of water savings through water neutral programs. Outdoor water use, for example, makes up a substantial percentage of urban water demand.307 State resource agencies and organizations such as the California Urban Water Conservation Council are partnering to transform attitudes about lawns and other aspects of sustainable landscaping, encouraging a “new normal” that may provide increased opportunities for water neutral programs to redesign and retrofit existing residential and commercial landscapes and produce meaningful water savings.308 Retrofit or improvement programs that focus on outdoor efficiency measures such as turf replacement and irrigation upgrades have the potential to save meaningful water quantities, but need to be evaluated against mandatory legal requirements to determine if those savings can be credited to water neutral programs.309 Likewise, water meters are mandatory in California,

all’ approach . . . .”). 306. Id. (noting that differing approaches will be necessary in different areas). 307. See AQUACRAFT, supra note 1, at 232–38; CAL. DEP’T OF WATER RES., A REPORT TO THE

LEGISLATURE PURSUANT TO AB 1881 SECTION 65595(A)(2), at 5 (Jan. 14, 2009), available at http://www.water.ca.gov/legislation/docs/watercons_land_1990.pdf (on file with the McGeorge Law Review) [hereinafter DWR REPORT ON AB 1881] (landscape irrigation makes up one-third to half of all urban water use) (citing California Department of Water Resources, California Water Plan Update 2005); see generally PETER H. GLEICK ET AL., PAC. INST., WASTE NOT, WANT NOT: THE POTENTIAL FOR URBAN WATER CONSERVATION IN

CALIFORNIA (Nicholas L. Cain ed., Nov. 2003), available at http://www.pacinst.org/wp-content/uploads/ sites/21/2013/02/waste_not_want_not_full_report3.pdf (on file with the McGeorge Law Review) (California could reduce outdoor residential use by 25 to 40 percent through improved landscape design and management, and technology improvements).

308. See generally CAL. URBAN WATER CONSERVATION COUNCIL, ACHIEVING A NEW NORMAL IN

CALIFORNIA LANDSCAPES, 2014 LANDSCAPE SYMPOSIA REPORT (2014), available at http://cuwcc.org/ Portals/0/Document%20Library/Resources/Workshops/Landscape%20Symposia/CUWCC%20Landscape%20Symposia%20Report.pdf (on file with the McGeorge Law Review); CAL. URBAN WATER CONSERVATION

COUNCIL; SUSTAINABLE LANDSCAPING: MARKET TRANSFORMATION FRAMEWORK (Feb. 13, 2015), available at http://www.water.ca.gov/calendar/materials/sustainable_landscaping_market_transformation_framework_ v8a_18595.pdf (on file with the McGeorge Law Review).

309. Such mandatory legal requirements may apply in connection with a local water-efficient landscape ordinance, for example, adopted pursuant to the requirements of the Water Conservation in Landscaping Act of 2006 (AB 1881). AB 1881 directed development of a “Model Water Efficiency Landscape Ordinance,” and required cities and counties to either adopt the ordinance or alternative at least as effective by January 2010. See DWR REPORT ON AB 1881, supra note 307; see also AQUACRAFT, supra note 1, at 247 (landscape model ordinance will encompass approximately 30% of California single family homes and applies to new landscaping or major renovations affecting 5,000 square feet or more of landscape area, or 2,500 square feet (0.06 acres) for other structures with outdoor landscaping); CAL. DEP’T OF WATER RES., INSIDE THE MODEL WATER EFFICIENT

LANDSCAPE ORDINANCE 2–3 (on file with the McGeorge Law Review). In some instances, CALGreen may also


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but there may be opportunity for water neutral programs to accelerate installation or upgrade already-required meters.310 In this regard, water neutral programs should explore efficiency approaches for which there are as yet no mandatory retrofit or new home requirements in California, such as rainwater harvest, graywater systems, and stormwater capture.

In summary, to ensure that water savings are real, each water neutral program should evaluate the savings that would occur without the program, given the existing regulatory environment, versus with the program. In some instances, the savings that can be associated with water neutral programs will be small or limited in time, and the supplier should evaluate whether these savings are sufficient. If savings are too small, then the supplier should evaluate the potential to shift the water neutral program into other areas for which there are as yet no mandatory requirements, such as stormwater capture.

C. Ensuring Wet Water: Enforcement

Enforcement is another key challenge for a successful water neutral program.311 In this context, enforcement refers to all methods of assuring that existing and new developments are faithful to the water neutral program elements such as, for example, using efficient fixtures where installed, maintaining low-water use landscaping, and prohibiting excessive use elsewhere that might otherwise cancel out program savings.312 Lack of compliance does not necessarily imply malice or fault;313 enforcement is intended to ensure the integrity of the program. If water demand is underestimated or offsets are too low, then a water

impose mandatory requirements, including automatic weather or soil moisture-based irrigation controller systems. CAL. GREEN BUILDING CODE § 4301.1; see, e.g., CAL. HOUSING & CMTY. DEV., 2013 CALGREEN

RESIDENTIAL MANDATORY MEASURES (2013). 310. See CAL. WATER CODE § 520 (West 2009); AQUACRAFT, supra note 1, at 282 (smart meters can

help address leaks, which represents substantial water savings); GLEICK TESTIMONY, supra note 37, at 3 (“Dozens of urban agencies still have unmetered connections. [Metering] deadlines should be pushed forward rapidly . . . .”); Bryan Barnhart, Upgrading Conservation Pricing: Proposition 218, Smart Meters, and the Step Beyond Tiered Rates, CALIFORNIA WATER LAW JOURNAL (Jan. 3, 2014), http://blogs.mcgeorge.edu/waterlaw journal (on file with McGeorge Law Review) (describing smart meters).

311. Kanouse Interview, supra note 181; Duncan SCWD Presentation, supra note 59. 312. E.g. SOQUEL CREEK WATER DISTRICT ORDINANCE NO. 13-02 §VIII.B.1.a (2013) (fines and

potential imprisonment); OXNARD CITY CODE §22-137 (escalating from warnings to increasing surcharges to flow-restricting device to service discontinuance and other penalties; id. at §22-136 (listing specific prohibitions plus “any indiscriminate and unreasonable waste”); cf. CAMARILLO CITY CODE §14.12.050(5) (2009) (at fourth violation city may install flow restrictor for minimum of forty-eight hours at customer expense; only willful violations result in service disconnection); see generally WATER § 377 (violation of water conservation plan is a misdemeanor).

313. There are various reasons why a development might exceed estimated water use, some systemic and some behavioral, such as: inherent uncertainties in demand prediction, changes to indoor and outdoor water use behavior, substitution of planned elements such as low-water landscaping with more water-intensive choices, replacement of low-flow fixtures to satisfy personal preference and convenience, and lack of efficiency in or failure of water-conserving fixtures or systems (such as graywater or cisterns) due to technical faults or wear-and-tear.


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neutral program will not provide the benefits anticipated at adoption. General water conservation ordinances routinely identify penalties for

excessive use and waste; these may include monetary penalties, temporary or permanent discontinuance of service, criminal fines, and jail time.314 In order to ensure such penalties are meaningful, the supplier first must identify excessive or wasteful water use.315 One method for identifying excessive use at the household level is through meters.316 In some instances, excessive water use may be corrected through higher cost unit pricing, i.e., tiered pricing, rather than through penalties or threat of service termination.317

Suppliers also identify and correct individual wasteful behavior through physical enforcement patrols that canvass neighborhoods, respond to complaints, and issue citations.318 Some suppliers have adopted neighborhood reporting programs, wherein neighbors can report violators by calling a hotline.319 Behavioral approaches and new technologies may encourage conservation at the individual level, including the use of social media and new digital applications

314. See sources cite supra note 312. 315. 2010 OXNARD PLAN, supra note 115, at 29. The ordinance requirements need to be communicated to the parties effected by the ordinance. For example, Water Resources Division staff have been actively enforcing the Water Conservation Ordinance through water waste patrols. During the weekdays, field‐based workers keep an eye out for water waste and report it back to conservation staff for follow up. During the weekends, water waste patrols inspect the streets for water waste and educate water customers when waste is observed. To date, more than a thousand written Water Waste Alerts have been delivered. There must be enforcement of the ordinance to ensure that requirements are being properly implemented. For example, a lawn watering ordinance may state that there are time and day limits on watering with penalties in place for abuse of the ordinance. If there is no enforcement at 2am, for instance, customers will figure this out and simply reset their timers for these time slots. 316. See WATER § 521(a). 317. The ability of water suppliers to adopt tiered rates has been challenged as inconsistent with

California’s constitutional standards requiring that rates be based on cost of service. City of Palmdale v. Palmdale Water Dist., 198 Cal. App. 4th 926 (2011) (holding that water district’s conservation rate structure was inconsistent with constitutional cost of service standards under Proposition 218); but cf. WATER § 370(b) (“It is in the best interest of the people of California to encourage public entities to voluntarily use allocation-based conservation water pricing, tailored to local needs and conditions, as a means of increasing efficient uses of water, and further discouraging wasteful or unreasonable use of water under both normal and dry-year hydrologic conditions.”). As of March 2015, a similar challenge is pending before California’s Fourth District Court of Appeal. Capistrano Taxpayers Ass’n v. City of San Juan Capistrano, No. 30-2012-00594579.

318. CITY OF SACRAMENTO, CITY COUNCIL REPORT 2014-00140 (Mar. 4, 2014) (“To improve enforcement, the Departments of Utilities and Community Development have collaborated to use building inspection and code enforcement staff to assist with outdoor water use patrols. This strategy bolsters the number of City staff involved in patrols from approximately seven to forty, providing a significant augmentation to outdoor irrigation enforcement efforts.”); see Paul Rogers, California Drought: ‘Water cop’ Being Hired by Bay Area Agencies to Root Out Water Waste, SAN JOSE MERCURY NEWS, July 21, 2014, http://www. mercurynews.com/science/ci_26191180/california-drought-water-cops-being-hired-by-bay (on file with the McGeorge Law Review).

319. See MARION BOULICAULT & ADAM SCHEMPP, ENVTL LAW INST., FIVE THINGS TO CONSIDER WHEN

DEVELOPING AND ADAPTING WATER POLICIES AND PROGRAMS IN THE WEST 6 (Jan. 2014), available at http://www.eli.org/sites/default/files/five_things_to_consider_-_web_eli.pdf (on file with the McGeorge Law Review ) (discussing water “enforcers”).


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(“apps”) to shame water wasters and otherwise help reduce water use.320 Physical patrols and reporting programs serve to increase awareness, and also act as a brake on individual water users who may openly and repeatedly flaunt the law.321 Such hands-on enforcement, however, cannot be effective on a broad scale as a result of staff limits and the sheer impossibility of patrolling every yard and each home. Also, patrols and reporting raise issues of cost and community image: outside of a significant drought or shortage, water suppliers may wish to avoid the role of “water cop” on a long-term, intensive basis.

Where hands-on enforcement does occur, it is unlikely to reach inside homes and businesses. California counties and cities have the authority to conduct inspections and issue warrants to enforce code provisions,322 but such authority is typically not shared by water suppliers that are not cities and counties, such as the special districts that supply most of California’s water.323 In this regard, California’s Department of Water Resources has recommended providing special districts and other non-land use suppliers with additional enforcement tools, including delegated citation authority.324 Even with such changes, however, none of the water suppliers are likely to wield that authority on a sufficiently broad scale to make a difference in efficiency.325

With respect to enforcement of water neutral programs, offset ratios that are greater than 1:1 may provide some cushion against higher-than-projected water use.326 But active enforcement would still be needed to ensure that use is

320. Keith Wagstaff, Drought-Shaming Apps Target California Water Wasters, NBCNEWS.COM (July 29, 2014), http://www.nbcnews.com/storyline/california-drought/drought-shaming-apps-target-california-water-wasters-n167651 (on file with McGeorge Law Review).

321. Id. 322. CAL. CODE CIV. PROC. § 1822.50 (West 2007) (“[a]n inspection warrant is an order, in writing, in the

name of the people, signed by a judge of a court of record, directed to a state or local official, commanding him to conduct any inspection required or authorized by state or local law or regulation relating to building, fire, safety, plumbing, electrical, health, labor, or zoning.”); see Currier v. City of Pasadena 48 Cal. App. 3d 810 (1975).

323. Cf. Thum v. Bd. of Dirs. Monterey Peninsula Water Mgmt. Dist., No. H039566, 2014 Cal. App. Unpub. LEXIS 9159, *58–61 (Dec. 23, 2014) (exploring but ultimately not deciding whether water supplier had statutory authority to conduct inspection of water fixtures).

324. 20X2020 PLAN, supra note 3, at 44: [R]ecommending that the state “[p]rovide additional enforcement tools for water suppliers: Communities where the local government is not the water supplier face many unique challenges. One is that water suppliers generally monitor water use for waste, but unlike local governments they do not have the authority to issue citations. It would help water suppliers mount effective waste prevention programs if state law provided clear authority for local governments to transfer citation authority to water suppliers to discourage water waste. Better communication and coordination among local governments and water suppliers is essential, with or without new citation authorities. 325. In addition to practical limitations such as resources and costs, inspections can cause ill-will between

residents and service providers, and result in additional liabilities for the provider. Thum, 2014 Cal. App. Unpub. LEXIS 9159 *1–6; see also Brief for Respondents at 6, Thum v. Bd. of Dirs. Monterey Peninsula Water Mgmt. Dist., No. H039566, 2014 Cal. App. Unpub. LEXIS 9159 (Dec. 23, 2014) (describing controversy).

326. See VWD 2010 PLAN, supra note 243, at 8-3. Prohibitions on new development may conflict with other policies and needs. However, if existing customers are called upon to make sacrifices during a drought period, they may feel that water


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consistent with offset estimates. Some approaches that have been explored include formal accounting mechanisms for tracking water budgets, and imposition of financial penalties for use that exceeds budgeted quantities. The East Bay Municipal Utility District in California, and the City of Santa Fe, New Mexico, provide examples of these types of approaches.

The East Bay Municipal Utility District (EBMUD) employs a detailed approach to enforcement in new subdivisions that are subject to water neutral requirements. Each subdivision subject to water neutral standards must develop a water budget with the assistance of a professional engineer; this water budget is required to be included in enforceable deed restrictions for each home within the subdivision.327 The subdivision is further conditioned on the creation of a homeowner’s association responsible for interacting with EBMUD on water use issues.328 Water use for a subdivision is reported through each homeowner’s association; if the budget is exceeded, EBMUD levies a fine against the association, which is paid through homeowner dues or is passed on to an individual homeowner, as circumstances warrant.329

Santa Fe also has a detailed enforcement program. Santa Fe assigns budgets or allotments of water use, and then monitors water use on an annual basis.330 If there is a water use exceedance, then monitoring shifts to monthly, tracking water use over the same month during the prior year to evaluate the degree of non-compliance. Customers with monthly increased use are charged a 50% surcharge for water used beyond their allotment.331

If the customer is still exceeding the water budget after four months by 10% or more, Santa Fe recalculates the budget based on actual consumption over the exceedance period.332 The customer then must provide any additional credits or transfers required by the new, larger water budget.333 A customer that fails to

agencies should concentrate on fulfilling current obligations rather than taking on new customers. Such prohibitions may need to be considered in the event of a critical shortage, such as a 50 percent reduction program. If necessary, an offset program cold be considered . . . [i]n some cases, a two to one offset may be required of the new development. 327. Kanouse & Wallace, supra note 14, at 160–62. 328. Id. 329. See generally Caitlin S. Dyckman, supra note 40, at 49 (describing the role of homeowner’s

associations and CC&Rs in California water conservation and suggesting that developers can achieve “real water savings” by integrating conservation in built form such as landscape design, recycled water infrastructure, and conservation in CC&Rs).

330. SANTA FE, N.M., CODE, ch. 14, § 8.13; SANTA FE, N.M., ADMINISTRATIVE PROCEDURES FOR

WATER DEMAND OFFSET REQUIREMENTS, § 1.7 (Exhibit A, Resolution 2010-20) (Mar. 31, 2010), available at http://www.santafenm.gov/m/development_water_budgets (on file with the McGeorge Law Review).

331. SANTA FE, N.M., ADMINISTRATIVE PROCEDURES FOR WATER DEMAND OFFSET REQUIREMENTS, § 1.7.1 (Exhibit A, Resolution 2010-20) (Mar. 31, 2010), available at http://www.santafenm.gov/m/development_ water_budgets (on file with the McGeorge Law Review).

332. Id. 333. Id.


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provide additional offsets will be charged for the cost of city-provided offsets plus a 50% surcharge on out-of-budget water delivered during the second year.334

Although costly to establish and implement, enforcement programs like those in EBMUD and Santa Fe facilitate a quantitative understanding of water use that is becoming more important as California grapples with limited supplies and a growing population. The quantification and tracking that occurs with water budgets provide accountability335 that can shed light on whether costs invested in water conservation programs—including, but not limited to water neutral programs—have been efficiently invested.

These active enforcement approaches may be substituted or supplemented with passive or “autopilot” measures that hardwire conservation through technology, as well as legal or behavioral measures that assign responsibility for water use to the customers themselves. According to some sources, water users conserve the most when water use is monitored, when increased water use results in higher water bills, and when they have the ability to monitor their own water use.336 A combination of water meters and pricing signals is considered one of the most effective and cost efficient routes to increased conservation.337 More recently, suppliers have begun experimenting with “smart meters,” which offer water users the ability to monitor and adjust their water use in real time.338 Increasingly in the future, smart meters may be integrated into personal dashboards, in which users monitor water (and energy) consumption in real time from their personal electronic devices.339

Another approach to conservation was highlighted by a 2013 pilot program jointly undertaken by the California Water Foundation and EBMUD.340 The program involved preparation of individual household water use reports using a technology that tracks and compares water use, here called WaterSmart Software.341 The software compares individual household use to average use by

334. Id. § 1.7.4 335. See GLEICK TESTIMONY, supra note 37, at 6 (describing the need for better water use measurement

and verification); AQUACRAFT, supra note 1, at 279 (recommending tracking customer performance based on water use).

336. GLEICK TESTIMONY, supra note 37, at 6; AQUACRAFT, supra note 1, at 279. 337. See KRISTINA DONNELLY & HEATHER COOLEY, PAC. INST., METERS IN CALIFORNIA 2 (Sept. 18,

2014), available at http://pacinst.org/wp-content/uploads/sites/21/2014/09/pacinst-metering-in-california.pdf (on file with the McGeorge Law Review); AQUACRAFT, supra note 1, at 279 (noting that smart meters enabling customers to monitor their usage led to significant conservation).

338. See AQUACRAFT, supra note 1, at 282 (noting that smart meters can help address leaks leading to substantial water savings); see also Barnhart, supra note 310.

339. AQUACRAFT, supra note 1, at 279; cf. John Schmid, Badger Meter App Monitors Water Use, MILWAUKEE WIS. J. SENTINEL, Aug. 7, 2014, http://www.jsonline.com/business/badger-meter-app-monitors-water-use-b99320297z1-270260781.html (on file with the McGeorge Law Review).

340. DAVID MITCHELL & THOMAS W. CHESNUTT, EVALUATION OF EAST BAY MUNICIPAL UTILITY

DISTRICT’S PILOT OF WATERSMART HOME WATER REPORT, at iii–vi (2013), available at http://californiawater foundation.org/uploads/1389391749-Watersmart_evaluation_report_FINAL_12-12-13(00238356).pdf (on file with the McGeorge Law Review) (prepared for EBMUD and the California Water Foundation).

341. Id. at iii.


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similar homes and provides personalized recommendations about how to save water.342 A control group accounted for other factors, such as weather, market influences, and other consumer behaviors.343 This “social norms” approach to efficiency embodied by EBMUD’s pilot study is currently used in the energy industry; although it is new to water suppliers, it is rapidly evolving.344 EBMUD’s pilot study concluded that the reports resulted in a residential water use reduction between 4.6% and 6.6%.345 The study also concluded that participants were more likely to participate in other conservation programs and to request a home water audit to assess conservation opportunities.346 Based on the success of study, EBMUD announced its intention to expand the program in 2014, and other water suppliers are experimenting with the program.347

D. The “Problem” of Demand Hardening

Water neutral programs are sometimes criticized for “hardening demand” by “using up some of the slack in the community’s existing water use practices.”348 This criticism assumes that water use in existing communities is typically inefficient, and further that this inefficiency is valuable because high water use allows conservation measures to be implemented during drought to free up water.349 When baseline use becomes highly efficient, however—through installation of water-saving fixtures, irrigation controllers, and other measures—there may be little flexibility for further conservation during a drought period.350 In other words, as a community becomes more efficient, it loses the ability to implement new efficiencies during drought periods.351

The demand-hardening effect is not unique to water neutral programs; it is a common effect of water conservation programs generally. As such, demand hardening is an important phenomenon to track but not necessarily to avoid. California is committed by law and policy to water conservation and efficiency; these choices are reflected by adoption of the statewide goal of reducing per

342. Id. at 9. 343. Id. at iii. 344. Id. at 1. 345. Id. at iv. 346. Id. 347. Id.; New Technology Reduces Home Water Use By 5 Percent, EAST BAY MUNICIPAL UTILITY

DISTRICT, https://www.ebmud.com/about/news/releases/2014/01/14/new-technology-reduces-home-water-use-5-percent (last visited July 28, 2014) (on file with the McGeorge Law Review); Marin County Water District Pits Neighbors Against Each Other To See Who Uses Less Water During Drought, CBS SF BAY AREA (Aug. 4, 2014), http://sanfrancisco.cbslocal.com/2014/08/04/marin-county-water-district-pits-neighbors-against-each-other-to-see-who-uses-less-water-during-drought/ (on file with the McGeorge Law Review) (Marin County water district partnering with WaterSmart for pilot program of bimonthly water reports).

348. 2008 URBAN DROUGHT GUIDEBOOK, supra note 39, at 76. 349. Id. 350. Id. 351. Id.


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capita use by 20%, as well as by the enactment of laws such as SB 407, AB 1881 and the local counterparts to those laws. Accordingly, local agencies should pursue water-neutral programs despite the tendency to harden demand. Indeed, if implementation of traditional conservation methods hardens demand, local agencies may be inspired to adopt innovative new conservation approaches.

Critique of demand-hardening sometimes may be an implicit critique of the value choice underlying water neutral programs; i.e., the choice to allocate conserved water to new development rather than to other purposes such as drought protection for the existing community, or even instream flow.352 This is, at bottom, a question of whether the community has decided to seek growth. The fundamental question of whether to allocate water to drought protection, instream flow, growth, or some other purposes is one that should be expressly addressed by the community. In some instances, the water supplier and the land use agency will be the same institution; in other instances, they will be separate. In both cases, the water service goals—and any associated program, including water neutral—should be consistent with the growth goals and objectives as defined by the community.

E. Cost (Developers, Homeowners, Communities)

One major challenge for water neutral programs is the cost to developers and, consequently, to homeowners.353 Whether these costs are truly prohibitive or merely undesirable is unclear. The cost of offsets to new development ranges considerably depending on specific program requirements and the cost per acre-foot for the supplier. Typical single-family home costs appear to range from $2,000 to $7,000 at present, although costs may be lower or considerably higher.354 According to building industry advocates, increased costs drive up

352. See June 2014 SCWD Water Demand Offset Memo, supra note 202 (detailing concern SCWD’s demand offset program is “stealing” from the future water conservation supply pool and thus insufficient water savings will be achievable to prevent seawater intrusion).

353. See 20X2020 PLAN, supra note 3, at 44 (“Conservation offsets can also be controversial. Total offsets may raise the price of new housing significantly in a state where affordable housing is already an issue.”); 2010 OXNARD PLAN, supra note 115, at 29 (“The ordinance must be well designed and reasonable. Many ordinances are overly burdensome, causing ill will on the part of the customer. For instance, New Construction Ordinances must be designed to be builder friendly and not negatively impact salability of the property, as a result of the ordinance.”).

354. Costs are variously reported as per home or per acre-foot; a typical home does not use a full acre-foot per year. Also, some costs are reported as the direct in-lieu fee; however, the entire fee may or may not be passed on directly to the homeowner. See Fact Sheet, Soquel Creek Water District, Water Demand Offset Policy Fact Sheet, available at http://greencitiescalifornia.org/assets/water/Soquel_water-demand-offsets_ WDO-FactSheet.pdf (on file with the McGeorge Law Review) (identifying cost of $18,000 per acre-foot for retrofit program, with a typical single-family home cost ranging from $4,320–$6,264); Maddaus et al., supra note 15, at 109 (2:1 offsets imposed by EBMUD cost $6000 per home); Wilson, supra note 54; BIG BEAR LAKE

2010 PLAN, supra note 76 (identifying cost per acre-foot at $2,111 for toilet rebates and $6,700 for direct installs; over the 20-year lifetime of a toilet, the cost per acre-foot decrease to $106 per acre-foot for rebates, and $335 per acre-foot for direct installs); cf. id. (noting that while the cost per acre-foot for rebates is


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home prices and may affect project feasibility, which in turn would affect growth and employment opportunities.355

Concern about impacts to costs and jobs have been significant enough to forestall legislation that proposed to integrate water neutral principles into water planning on a statewide basis.356 In 2009, building industry and economic development groups opposed legislation that would have imposed a water neutral standard on all new development in California.357 The bill, AB 1408, was the product of the combined efforts of the East Bay Municipal Utility District (EBMUD) and the nonprofit environmental group, the Planning and Conservation League (PCL).358 As described in Part IV.C of this Article, EBMUD had designed its own water neutral program for out-of-service-area subdivisions and thus had experience with the programs on a fairly large scale.359 PCL’s policy initiatives were focused on programs that had the potential to result in measurable positive change in California, with water neutral among the top ten selections.360 With the continuing drought of 2008 moving water issues to the front of the legislative agenda, EBMUD and PCL took the opportunity to join forces on seeking a statewide water neutral standard.361

The resulting bill, AB 1408, proposed to impose a water neutral standard through an existing approval process under the state Subdivision Map Act called “water supply verification.”362 State law requires that tentative maps for subdivisions of more than 500 units contain a condition requiring the subdivision to verify that it has a sufficient water supply.363 AB 1408 would have added that as part of demonstrating a sufficient supply, subdivisions could participate in a voluntary Water Conservation Mitigation Fund, which would be required to offset “at least 100 percent of the projected demand associated with the

significantly cheaper than for direct installs, customer participation is much higher for direct installs, allowing more toilets to be retrofitted); see also Kanouse Interview, supra note 181 (citing costs equivalent to $30,000 per new home); June 2014 SCWD Water Demand Offset Memo, supra note 202, at 4 (suggesting option of $40,000 offset level per acre-foot); SCWD Water Demand Offset, supra note 190 ($55,000 offset fee per acre-foot).

355. E.g., 2005 CLOVIS PLAN, supra note 243, at 45 (“[N]ew development requirements, restrictions, offset programs and plumbing code changes do not have any significant direct costs. However, restrictions on connections can have significant indirect costs to the City in the form of lost revenues.”).

356. California Chamber of Commerce: Cal. Chamber Status Update Report on Major Legislation for Business, 35 ALERT 7, 22 (Sept. 18, 2009).

357. Id. 358. See AB 1408, 2009 Leg., 2009–2010 Reg. Sess. (Cal. 2009) (as amended on Apr. 23, 2009, but not

enacted). 359. See supra Part IV.C. 360. AB 2153 (KREKORIAN) CALIFORNIA WATER EFFICIENCY & SECURITY ACT OF 2008 FACT SHEET,

PLANNING AND CONSERVATION LEAGUE (Apr. 7, 2008) (on file with the McGeorge Law Review) [hereinafter AB 2153 FACT SHEET].

361. See AB 1408, 2009 Leg., 2009–2010 Reg. Sess. (Cal. 2009) (as amended on Apr. 23, 2009, but not enacted).

362. Id. 363. Id.


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subdivision.”364 The bill required conservation measures to be “quantifiable, verifiable, have a planned completion date that is concurrent with when the buildings within the subdivision will require service, and have a life expectancy of at least 20 years.”365 To provide an incentive for new development to propose conservation measures during the offset process, the bill incorporated EBMUD’s distinction between baseline and extraordinary conservation measures.366 The bill also would have retained EBMUD’s enforcement approach, requiring that conservation requirements be integrated into the deed restrictions for new developments, with financial penalties where projected water conservation did not occur.367

AB 1408 was one of four bills proposed from 2007 through 2010 that would have integrated water neutral principles into state law.368 Neither AB 1408 nor any of the other bills moved forward due in large part to opposition from the California Chamber of Commerce, the building industry, and others.369 These organizations opposed the bills on the basis that significant costs would affect the feasibility of new development, with the secondary potential to reduce construction jobs.370 As it happened, the foregoing water neutral proposals coincided with a period of financial crisis for the state, making it difficult to enact measures that imposed more obligations on already-struggling new

364. Id. 365. Id. 366. See id. (referencing “permanently fixed extraordinary water conservation measures”). 367. Id. 368. Kanouse & Wallace, supra note 14, at n. 115 (listing AB 2153, 2007–2008 Reg. Session. (Cal.

2008); AB 2219, 2007–2008 Reg. Sess. (Cal. 2008); AB 300, 2009–2010 Reg. Sess. (Cal. 2009); AB 1408, 2009–2010 Reg. Sess. (Cal. 2009)). AB 2153 would have amended the California Environmental Quality Act (“CEQA”) “to require every new residential or commercial building subject to CEQA to implement all feasible and cost-effective water efficiency measures, then mitigate its annual water consumption as projected by the water supplier.” ASSEMBLY FLOOR, COMMITTEE ANALYSIS OF AB 2153, at 1 (May 24, 2008); AB 2153 FACT

SHEET, supra note 360. AB 2153 would also have dedicated a portion of the mitigation fund to improvements and retrofits within disadvantaged communities. See Mindy McIntire, Dampening Growth, L.A. TIMES, Apr. 9, 2008, http://www.latimes.com/opinion/la-op-snow-mcintyre9apr09-story.html#page=1 (on file with the McGeorge Law Review).

369. See California Chamber of Commerce: Cal. Chamber Status Update Report on Major Legislation for Business, 35 ALERT 7, 22 (Sept. 18, 2009) (noting opposition to AB 1408); Interview with Evon Wilhoff, California Department of Water Resources, in Sacramento, CA (notes on file with the McGeorge Law Review); Vote Record: Job Creators, ‘Job Killers’, ALERT, at 3 (July 25, 2008) (identifying AB 2153 as a ‘job killer’ and stating that it “[i]mposes an unconstitutional developer fee on new residential and commercial development that will be used to finance water conservation strategies in existing communities by requiring that all new development be water-demand neutral.”); see ACWA Releases 2008 Legislative Vote Record, ACWA NEWS (Ass’n of Cal. Water Agencies, Sacramento, Cal.), Dec. 15, 2008, at 6 (on file with the McGeorge Law Review) (opposing AB 2153 because it was “impractical to implement”); see also Allen Lind, Capitol Snapshot, May 7, 2008 (on file with the McGeorge Law Review) (stating that policy should be part of Water Code, rather than CEQA, and AEP would support if amended accordingly).

370. SENATE COMMITTEE ON NATURAL RESOURCES AND APPROPRIATIONS, ANALYSIS OF AB 2153, at 2 (May 19, 2008).


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development.371 That timing virtually guaranteed that the proposals would be considered too costly.372

In addition to concerns about the cost to development and housing, another financial concern associated with water neutral programs is the perception that existing customers will be burdened by higher costs in the long term. According to this theory, new development will have already implemented lower cost offsets, thus forcing existing customers to bear the burden of more expensive conservation methods.373 To address this issue, one water supplier proposed to modify its offset program to require new development to undertake more expensive conservation measures that have significant water savings, and ultimately adopted a substantial fee of $55,000 per acre-foot in lieu of undertaking retrofits.374

Concerns about the cost of water neutral programs are countered by at least two related factors. First, in jurisdictions experiencing an emergency shortage, the cost of water neutral may be preferable to a moratorium on new connections. Second, as supplies decrease and the marginal cost of water increases, the relative cost of water neutral will decrease. These factors explain why, in California, water neutral development standards are most prevalent in areas of critical water shortage.

F. Emergency Drought Measure or Sustainability Tool

Water neutral programs have been identified both as a potential long-term conservation tool to meet statewide water efficiency objectives,375 and also as a potential “stop-gap” measure adopted during the late stages of an emergency drought program.376 This dual, conflicting perception of water neutral is reflected in attitudes throughout California, where water neutral is praised as innovative

371. Another factor affecting these bills may have been the perception that they encroached too substantially on the ability of water suppliers to evaluate the desirability and feasibility of water neutral programs in light of the particular circumstances of their service areas. Id. (“[T]his bill would require each new building to mitigate any protected water use, on the basis that net water consumption should be avoided for new construction as a statewide matter, regardless of individual project details or local circumstances.”).

372. Id. 373. See SCWD Survey Memo, supra note 32. 374. Id.; SCWD Water Demand Offset, supra note 190; see also SCWD June 17, 2014 Meeting Minutes,

supra note 206, at 9 (containing draft meeting meetings for June 17, 2014 that noted passage of motion to adopt new offset fee).

375. See 20X2020 PLAN, supra note 3, at 44 (recommending investigation of total or partial offsets for new development if 2015 efficiency targets are not met, noting that “[c]onservation offsets can be a useful mechanism for promoting new development with a low-water use foot print.”).

376. See 2008 URBAN DROUGHT GUIDEBOOK, supra note 39, at 76 (characterizing water neutral programs as a stop-gap measure to be used during periods of shortage, after rationing is imposed, “[i]f a supplier does not stop issuing new meters during rationing”). The program lists water neutral as element of a Stage 3 Drought Emergency. Id. For more details on the concept of water neutral as a late-stage emergency measure see infra note 243.


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conservation tool, yet adoption is limited to areas experiencing critically short water supplies.377

As noted in Part IV.E., water neutral programs in California appear to be concentrated in chronically water-short communities, or those experiencing a shortage.378 One reason for this phenomenon may be that costs of water neutral may seem too high in years of plenty, but the relative cost of a water neutral program is more reasonable during shortages, i.e., where a shortage might otherwise preclude development, a water neutral program becomes more valuable.379 Another factor may simply be that suppliers are not motivated to turn their attention to new programs like water neutral until they are facing a shortage.380

Water neutral programs have demonstrated value during shortages.381 At the same time, multiple factors suggest that water neutral should be considered as a tool to facilitate proactive planning for drought, drought resiliency and sustainability beyond shortages.382 First, climate change has the potential to disrupt prior drought planning and result in a mismatch in supply and demand.383 Second, water planners are adjusting their assumptions about water availability in light of evidence that existing allocations may be based on periods of high precipitation and that drought cycles may be more frequent and extensive than anticipated.384 Third, there is increasing tension between urban and environmental water demand, and innovative programs like water neutral may help ease that tension.385 These and other factors suggest that water neutral programs should be considered as part of proactive planning for drought resiliency386 and sustainability, rather than limited to the emergency sphere.387

377. Id.; see also programs described at Part III.A. 378. Supra, Part IV.E. 379. But cf. Aquacraft, supra note 1, at 281 (“As the marginal cost of water increases, so will the value of

conserved water and the cost-effectiveness of water conservation efforts.”) 380. Id. 381. See, e.g., supra notes 200–201 and accompanying text (describing savings associated with Soquel

Creek Water District’s demand offset program.) 382. See WATER OFFSET POLICIES, supra note 54, at 3 (noting that Denver Water allocates efficiency

savings to storage to achieve drought resiliency). 383. See, e.g., Dan Tarlock, How Well Can Water Law Adapt To the Potential Stresses of Global Climate

Change, 14 U. DENV. WATER L. REV. 1, 34–36 (2010) (describing how climate change will impact water availability, use and management, and proposing that urban growth should be linked to available supplies as a method of adapting to climate change).

384. Id. 385. Id. 386. Id. 387. See ESTHER CONRAD, PREPARING FOR NEW RISKS: ADDRESSING CLIMATE CHANGE IN

CALIFORNIA’S URBAN WATER MANAGEMENT PLANS 28 (2013) (“There are limits to the demand reductions a supplier can achieve once drought has already set in. In the context of climate change, disaster management literature has increasingly emphasized the need for long-term planning to reduce risks posted by disasters, rather than simply disaster response.”); 2013 DWR WATER PLAN UPDATE, supra note 4, at 3-1 (proposing to include environmental and social requirements as a factor in calculating drought resilience); FRASER SHILLING ET AL.,


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In addition to assisting with drought resiliency and sustainability, water neutral programs adopted outside of the shortage context could help promote a culture of conservation. Under this paradigm, communities assume that new development will offset water supply impact as a matter of course. The cultural trend of conservation-as-norm seems to be taking hold in California, in part due to frequent droughts, assisted by the 2009 adoption of a statewide goal of reducing water use by 20% by the year 2020.388 Water neutral programs would help foster a culture that prioritizes conservation and efficiency in water use.

V. LEGAL ISSUES, CHALLENGES, AND OPPORTUNITIES FOR CALIFORNIA WATER

NEUTRAL PROGRAMS

Legal challenges to water neutral programs are likely to focus on four general topics: authority, environmental compliance, costs, and the adequacy of the record. This section describes those topics and some key parameters.

A. Authority to Establish a Water Neutral Program

Cities, counties, special districts, and other water suppliers have varying degrees of authority to engage in water conservation, manage and protect water supplies, and mitigate impacts. The authority held by land use agencies, such as cities and counties, is sometimes different from the statutory authority exercised by water districts. The following discussion explores major sources of authority that may support adoption of water neutral programs; other authorities may exist depending on the water supplier and circumstances.

Article X section 2 of the California Constitution requires all uses of water in the state to be reasonable and not wasteful.389 Article X section 2 has been traditionally interpreted by the courts to enforce some reasonable degree of efficiency, but generally not to require maximum efficiency.390 Although the level of efficiency authorized by Article X section 2 has traditionally been something less than maximum possible efficiency, the standard may be evolving as the state’s understanding of water management improves and as the needs of the

ENVIRONMENT AND WATER INSTITUTE, MANAGING WATER RESOURCES FOR SUSTAINABILITY IN CALIFORNIA 1, available at http://message.asce.org/ManagingWRforSustainabilityinCA?elq=7e60e7f2316246029cef693a 873e8c60&elqCampaignId=637 (on file with the McGeorge Law Review).

388. See CAL. URBAN WATER CONSERVATION COUNCIL, ACHIEVING A NEW NORMAL IN CALIFORNIA

LANDSCAPES, 2014 LANDSCAPE SYMPOSIA REPORT (2014), available at http://cuwcc.org/Portals/0/Document %20Library/Resources/Workshops/Landscape%20Symposia/CUWCC%20Landscape%20Symposia%20Report.pdf (on file with the McGeorge Law Review); CAL. URBAN WATER CONSERVATION COUNCIL; SUSTAINABLE

LANDSCAPING: MARKET TRANSFORMATION FRAMEWORK (Feb. 13, 2015), available at http://www.water.ca. gov/calendar/materials/sustainable_landscaping_market_transformation_framework_v8a_18595.pdf (on file with the McGeorge Law Review); 20X2020 WATER PLAN, supra note 3.

389. CAL. CONST. art X § 2. 390. E.g., Tulare Dist. v. Lindsay-Strathmore Dist., 3 Cal. 2d 489, 547 (1935).


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state change over time.391 Regardless of the details of the outer limits of that authority, Article X section 2 provides a basis for suppliers to adopt water conservation programs and to require water-saving behavior from their customers.392 Water suppliers routinely invoke Article X section 2 as one of several sources of authority for water conservation and water use efficiency measures.393

Cities and counties have broad authority to condition development via the police power, i.e., the power to regulate for the general health, safety, and welfare.394 The police power includes the authority to control land use and to levy fees to mitigate the impacts of development.395 This general police power is not shared by other water suppliers that are not cities and counties, such as special districts.396 Cities and counties routinely invoke the police power as one of several sources of authority for water conservation and water use efficiency measures, and at least one superior court decision has upheld that authority.397

Although special districts do not wield a general police power, they are statutorily invested with the power to regulate to further their water supply missions.398 Special districts are creatures of statute, and all districts that supply water are charged with responsibility for safeguarding and managing water supplies for their service areas.399 These responsibilities inherently require suppliers to plan for drought and for physical or regulatory constraints on supply.

391. See, e.g., CRAIG M. WILSON, THE REASONABLE USE DOCTRINE & AGRICULTURAL WATER USE

EFFICIENCY: A REPORT TO THE STATE WATER RESOURCES CONTROL BOARD AND THE DELTA STEWARDSHIP

COUNCIL 14 (2011) [hereinafter CRAIG M. WILSON]. 392. Paso Robles Water Integrity Network v. County of San Luis Obispo et al, No. CV13-8301, slip op.

at 7–15 (San Luis Obispo Cnty. Ct. Jan. 12, 2015) (rejecting claim that Article X section 2 limited the County of San Luis Obispo’s ability to adopt a water demand offset ordinance and holding that “increased use of groundwater to irrigate additional acreage . . . would constitute, in the context of our current drought conditions, an unreasonable use of water.”); see, e.g., CAL. WATER CODE § 13550 (a) (West 2009) (declaring that “the use of potable domestic water for nonpotable uses, including . . . irrigation of certain landscaped areas, and industrial and irrigation uses, is a waste or an unreasonable use of the water within the meaning of Section 2 of Article X of the California Constitution if recycled water is [feasibly] available”).

393. See CRAIG M. WILSON, supra note 391, at 6–8 . 394. CAL. CONST. art. XI § 7 (declaring that a city or county may make and enforce within its limits all

local, police, sanitary and other ordinances and regulations not in conflict with general laws). 395. See, e.g., Ayres v. City Council of Los Angeles, 207 P.2d 1 (Cal. 1949); Euclid v. Amber Realty

Co., 272 U.S. 365 (1926). 396. SENATE LOCAL GOV’T COMM., WHAT’S SO SPECIAL ABOUT SPECIAL DISTRICTS? A CITIZEN’S

GUIDE TO SPECIAL DISTRICTS IN CALIFORNIA 3 (2010). 397. Paso Robles Water Integrity Network, No. CV13-8301, slip op. at 15 (holding that the County of

San Luis Obispo’s demand offset ordinance was within its police powers); see, e.g., Gin S. Chow v. City of Santa Barbara, 217 Cal. 673, 701 (1933) (allowing the city to use its police power to adopt water conservation measures).

398. See Getz v. Pebble Beach Cmty Serv. Dist., 219 Cal. App. 3d 229, 233 (1990) (holding that a community services district had the authority to withhold sewer service was “analogous to that exercised by a municipal water district that had to ‘fairly allocate this vital finite resource for the benefit of the entire populace with the District.”)

399. SENATE LOCAL GOV’T COMM., WHAT’S SO SPECIAL ABOUT SPECIAL DISTRICTS? A CITIZEN’S

GUIDE TO SPECIAL DISTRICTS IN CALIFORNIA 6 (2010).


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These responsibilities are accompanied by authority sufficient to engage in such planning and management, and to take action to avoid and mitigate the effect of new demand on existing customers.400 The common law “duty to serve” arguably provides the same mandate and accompanying authority.401

Beyond general statutory authority, California Water Code sections 375(a) provides all water suppliers in the state—whether city, county, special district or corporation—with authority to adopt water conservation programs.402 These programs may require as a condition of new service that reasonable water-saving devices and water reclamation devices be installed.403 The code specifically authorizes suppliers to adopt a water conservation program aimed at reducing individual water demand, including retrofits and tiered pricing.404 Programs must be adopted after notice and hearing, and violation of the program is a misdemeanor.405 Water Code section 375 is routinely invoked as a source of authority for water neutral programs.

Distinct from conservation, the Water Code separately authorizes water suppliers to declare a water shortage emergency.406 Suppliers must find that there is insufficient water to meet ordinary demands without jeopardizing the amount of water necessary “for human consumption, sanitation, and fire protection.”407 Unless there is potential for immediate interruption in service, a supplier must

400. For example, the California Water Code provides that any county water district has the power to restrict water use during any existing or threatened shortage and “may undertake a water conservation program to reduce water use . . . .” CAL. WATER CODE §§ 31026, 31035 (West 1984). Cf. Thum v. Bd. of Dirs. of the Monterey Peninsula Water Mgmt. Dist., No. H039566, 2014 Cal. App. Unpub. LEXIS 9159, *48–53 (Dec. 23, 2014) (unpublished appellate decision holding that water district had broad power to regulate household water fixtures).

401. See, e.g., Bldg. Indus. Ass’n of N. Cal. v. Marin Mun. Water Dist, 235 Cal. App. 3d 1641, 1644 (1991) (“[A] water district is necessarily entrusted with extensive discretion to accomplish its challenging [water management] task.”); Butte Co. W.U. Ass’n. v. R.R. Comm., 185 Cal. 218, 230 (1921) (“[A] water company . . . has not the power to take on new consumers without limit. . . it is not always easy to determine just when the limit of supply is reached, and the factor of safety which should be allowed against exceptional seasons may vary from locality to locality . . . . The matter is one of judgment.”); see also Tarlock & Bates, supra note 213, at 10584–86, fn. 35 (2008) (describing the duty to serve and concluding that modern courts recognize that “in the absence of fraud, corruption or arbitrary action,” the question of whether to extend water service to new customers is within the discretion of water suppliers and “beyond judicial control”) (citing Dateline Builders, 194 Cal. Rptr. at 266).

402. WATER § 375(a) (West 2009). 403. Id. § 1009. 404. Id. § 375(a) (“[A]ny public entity which supplies water at retail or wholesale for the benefit of

persons within the service area [may] . . . adopt and enforce a water conservation program to reduce the quantity of water used by those persons for the purpose of conserving the water supplies of the public entity.”); see also id. § 375(c) (defining “public entity” as “city, whether general law or chartered, county, city and county, special district . . . or any other political subdivision of the state.”); id. § 375(a) (declaring that water provider must hold a public hearing and adopt findings of necessity).

405. Id. §§ 376, 377. 406. Id. § 350; see generally Dennis Herman, Sometimes There’s Nothing Left To Give: The Justification

for Denying Water Service to New Consumers to Control Growth, 44 STAN. L. REV. 429, 436 (Jan. 1992) (describing use of emergency moratorium under Water Code section 350).

407. WATER § 351.


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hold a public hearing prior to declaring an emergency.408 Once an emergency is properly declared, a supplier may take actions that will, in its discretion, “conserve the water supply for the greatest public benefit with particular regard for domestic use . . .,” including a moratorium on new service connections or, arguably, a water neutral program.409 Where an emergency exists, the water shortage emergency provisions of the Water Code may provide a basis for adoption of a water neutral program.

In some instances, the California Environmental Quality Act (CEQA)410 may provide a framework for public agencies to adopt a water neutral requirement for a specific project.411 CEQA applies when a public agency makes a discretionary decision that may have an adverse physical effect on the environment.412 If the underlying project requires compliance with CEQA, such as in the case of a subdivision approval, then the environmental analysis will provide a framework for identifying the water supply impact of the project and for imposition and enforcement of mitigation measures. CEQA does not provide additional authority to a supplier, but the process can provide structure for assessing and imposing offsets.

Water suppliers that approve a water neutral program by way of ordinance or resolution, sometimes as part of a broader water conservation plan, typically invoke some combination of the above authorities. Recitals typically identify both Article X section 2 and Water Code section 375 et seq., with the addition of the police power (for cities and counties) and specific organic authorities, where they exist (for special districts).

B. Environmental Compliance for Water Neutral Programs

CEQA applies to discretionary decisions made by public agencies that may have an adverse physical effect on the environment.413 A public agency complies with CEQA by preparing one of several types of environmental documents.414 For water neutral programs, the need for and scope of the environmental review required depends on the circumstances of the program, including the context in which the program is adopted and applied.415 For example, one water supplier adopted its water neutral policy as a General Plan policy and prepared an EIR for

408. Id. § 352. 409. Id. § 353; see Bldg. Indus. Ass’n. v. Marin Mun. Water Dist., 235 Cal. App. 3d 1641 (1991). 410. See CAL. PUB. RES. CODE §§ 21000, et seq. (West 2007). 411. Id. 412. Id. § 21151(a). 413. Id. §§ 21080, 21082.2, 21100, 21151. 414. See id. §§ 21080–21080.42 (statutory exemptions); 14 CAL. CODE REGS. tit. 14 §§ 15260–15285

(2014) (statutory exemptions); id §§ 15300–15332 (categorical exemptions). 415. PUB. RES. § 21151(a).


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that General Plan.416 Another water supplier applied its water neutral requirement in the context of an EIR for a mixed-use development project.417

Water suppliers that adopt their water neutral policies as part of a water conservation plan pursuant to Water Code section 375 sometimes invoke a CEQA exemption in the ordinance adopting the Plan.418 Water suppliers that invoke exemptions focus on the underlying purpose of water neutral policies, i.e., to conserve water resources by requiring that an action that would normally use resources (new development) not require such resources on a net basis. The range of exemptions thus tends to include those for: 1) “existing facilities;”419 2) actions by regulatory agencies for protection of natural resources;420 and 3) actions by regulatory agencies for protection of the environment.421 The exemptions invoked sometimes include the so-called “common sense” exemption, under which CEQA does not require preparation of environmental documents if there is no possibility of a significant environmental effect.422 CEQA also identifies exceptions to exemptions, i.e., circumstances under which exemptions may trigger significant environmental impacts.423 For example, a normally exempt project must prepare an environmental document if there are unusual circumstances, or if the project takes place in a sensitive location.424 Likewise, a project that contributes to a significant cumulative impact must prepare an environmental document, even if the individual impact is otherwise exempt.425

Suppliers adopting a water neutral program or policy should consider whether circumstances are present that trigger the need for CEQA compliance, even if an exemption would otherwise apply. For example, if a water neutral program serves to allow development that would otherwise be precluded due to lack of water supplies, the supplier may need to comply with CEQA.426 In such circumstances, development may be most appropriately described in a separate

416. See Watsonville Pilots Ass’n. v. City of Watsonville, 183 Cal. App. 4th 1059, 1065 (2010). 417. Id. at 1090. 418. See, e.g., SLO ORDINANCE 3246, supra note 135, at 1. 419. 14 CAL. CODE REGS. tit 14 § 15301 (“operation, repair, maintenance, permitting, leasing, licensing,

or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use”)

420. Id. § 15307 (“actions taken by regulatory agencies as authorized by state law or local ordinance to assure the maintenance, restoration, or enhancement of a natural resource where the regulatory process involves procedures for protection of the environment . . . [c]onstruction activities are not included in this exemption”).

421. Id. § 15308 (“actions taken by regulatory agencies, as authorized by state or local ordinance, to assure the maintenance, restoration, enhancement, or protection of the environment where the regulatory process involves procedures for protection of the environment . . . [c]onstruction activities and relaxation of standards allowing environmental degradation are not included . . .”).

422. Id. § 15061(b)(3) (“[w]here it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA”).

423. See Berkeley Hillside Pres. v. City of Berkeley, 60 Cal. 4th 1086 (2015) (describing the process for evaluating exceptions to exemptions).

424. 14 CAL. CODE REGS tit 14 § 15300.2(c). 425. Id. § 15300.2(b). 426. Id. § 15300.2(a).


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CEQA process, such as through a general plan, specific plan, or project-level environmental impact analysis.427 In each case, the specific features and context of a water neutral program will determine the need for and scope of CEQA compliance.428

C. Costs and Fees Imposed by Water Neutral Programs

California law governing the ability of water suppliers to adopt and impose fees is complex, and a detailed examination of the types of such fees, legal authorities, and adequacy standards is outside the scope of this article.429 This complexity underscores a need for reform of water financing, which has been identified as key area for improving California water management.430 Generally, when imposing a fee or charge it is important to ensure that the supplier has the authority to levy the fee in question, and that the fee is properly tailored to meet the applicable legal standard.431 Fees that do not meet applicable legal standards may be declared an impermissible tax requiring voter approval.432 Several factors will affect the question of whether a fee is defensible, including the authority invoked for the program (i.e., police power or statutory), whether the fee was legislatively adopted for all projects via ordinance or resolution, or established for a specific project, and whether the fee is demonstrated to have a certain degree of relationship to the costs imposed by or the benefit conferred on the new development.433

For impact fees, mitigation fees, in-lieu fees, and other fees and exactions, a common standard is that there must be a “reasonable relationship” or “nexus” between the impact caused by the development and the charges imposed.434 These

427. Cf. Watsonville Pilots Assn. v. City of Watsonville, 183 Cal. App. 4th 1059, 1065 (2010). 428. Id. 429. See generally CAL. GOV’T CODE § 66000 et seq. (West 2009); see id. § 66001(a) (imposing fees as a

condition of property development); id, § 66013 (water capacity charges). 430. E.g., PUB. POLICY INST. OF CAL., CALIFORNIA’S FUTURE: WATER 5 (Feb. 2015), available at

http://www.ppic.org/content/pubs/report/R_215EH2R.pdf (on file with the McGeorge Law Review) (“Three constitutional reforms approved by voters since the late 1970s—Propositions 13, 218, and 26—have improved transparency but also severely limited the ability of local agencies to raise funds to meet critical water sector needs. For robust solutions, California will have to better align its funding laws with the goals of modern water management.”)

431. Id. 432. Cf. e.g., Sinclair Paint Co. v. State Board of Equalization, 15 Cal. 4th 866 (1997); see generally CAL.

CONST. art. XIIIC & XIIID (Proposition 218); id. art. XIII C § 1(e) (Proposition 26) (fees which exceed the fair or reasonable costs of conferring a benefit, granting a privilege, or providing a service or product to the payor are taxes); cf. GOV’T. § 50076 (fees which exceed the reasonable cost of providing the regulatory activity or service for which they are charged and which are not levied for general revenue purposes may be “special taxes”).

433. Id. 434. E.g., HANAK ET AL., PUB. POLICY INST. OF CAL., PAYING FOR WATER IN CALIFORNIA 19–20 (March 2014) (describing Proposition 218 and Proposition 26); Ehrlich v. City of Culver City, 12 Cal. 4th 854, 865–66 (1996) (describing Government Code and constitutional requirements for reasonable relationship); see generally


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requirements may be imposed by constitutional requirements such as those established by Proposition 218 and Proposition 26, by the California Government Code, or by laws specifically applicable to the adopting entity. Some laws may require a more or less detailed accounting of that relationship, but the basic idea is that the supplier establishing the fee must demonstrate, with reference to evidence, a fair or sensible connection. A fee that is set without reference to the costs of addressing impacts would not have the requisite relationship, and neither would a fee that clearly exceeds the costs of addressing impacts.435 Fees that exceed such costs may be challenged as an unconstitutional tax.436 In some instances, voter approval may be required.437

Another lens for judging adequacy of fees may be whether there is an essential nexus between the impact and the nature of the mitigation, and rough proportionality between the impact and the scope of the mitigation.438 These standards are applicable to decisions that require individuals or entities to dedicate resources—whether funds or property—as part of an approval or entitlement process.439 The best approach for ensuring that the decision meets these standards is to ensure that the supplier identifies and weighs the impacts, costs and benefits, and that the analysis and ultimate decision is supported by reliable evidence documented in a well-maintained record.440 There should be a logical path between facts, evidence, and decision.441

In some circumstances, courts may inquire as to whether there is substantial evidence in the record to support the offset and/or fee in the amount charged.442 The substantial evidence standard requires the agency to base its decision on reliable facts, inferences, or assumptions that are supported by the record in front

CAL. CONST. art. XIII C § 1 (Proposition 26); GOV’T § 66000 et seq. (Mitigation Fee Act); see id. § 66001(a) (fees imposed as a condition of property development); see id. § 66013 (water capacity charges).

435. CAL. CONST. art. XIII C § 1 (Proposition 26). 436. Id. (fees which exceed the fair or reasonable costs of conferring a benefit, granting a privilege, or

providing a service or product to the payor are taxes); cf. GOV’T. § 50076 (fees that exceed the reasonable cost of providing the regulatory activity or service for which they are charged and which are not levied for general revenue purposes may be “special taxes”).

437. Fees that are imposed as a condition of project approval are governed by the Mitigation Fee Act (Government Code section 66000 et seq.) and do not require voter approval. See CAL. CONST., art. XIIID(b)(1). Fees that are not imposed as a condition of project approval may require voter approval if they exceed the reasonable cost of the benefit provided. Compare CAL. CONST., art. XIII C § 1 (Proposition 26) (requiring voter approval for certain regulatory fees) with Cal. Bldg. Indus. Ass’n v. San Joaquin Valley Air Pollution Control Dist., 178 Cal. App. 4th 120 (2009) (fee imposed “in lieu” of air emissions offsets was not imposed as a condition of project approval and not subject to the Mitigation Fee Act).

438. See Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (2013); Dolan v. City of Tigard, 512 U.S. 374 (1994) (rough proportionality); Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (1987) (nexus); see also Powell v. County of Humboldt, 222 Cal. App. 4th 1424, 1439–40 (2014) (applying Koontz in California); see generally Fernando Villa, Practice Tips: Koontz Curbs Government Power To Impose Development Fees, 36 LOS ANGELES LAWYER 14 (Jan. 2014).

439. See Powell, 222 Cal. App. 4th at 1439–40. 440. Id. 441. Id. 442. See Watsonville Pilots Ass’n. v. City of Watsonville, 183 Cal. App. 4th 1059 (2010).


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of the agency.443 The substantial evidence standard does not require scientific certainty or crystal-ball prediction, but allows the supplier to make decisions in the face of uncertainty, and to rely on its discretion and judgment as to that which is reasonably foreseeable, as long as uncertainty is acknowledged and contrary evidence is accounted for. The substantial evidence standard also allows the supplier to choose between differing expert opinions, as long as contrary opinions raised during the proceedings are identified and addressed.

If a water neutral program adopts an offset ratio that is greater than 1:1, it will be even more important that the supplier document the basis for the ratio. The ratio should be supported by engineering judgment, facts, and inferences based on facts where possible. In this regard, however, because the ratios themselves are designed to address uncertainty, ratios are inherently uncertain and a likely topic for expert disagreement. Accordingly, suppliers should clearly identify their reasoning in the record, and invoke their right to exercise discretion based on limited facts and uncertainty. Suppliers should ensure that the record explains all sources of uncertainty, such as unpredictable drought cycles, climate change, instream needs, and imperfect demand planning. Suppliers should also be sure to identify and address contrary opinions. Some water suppliers have taken the approach of starting with a 1:1 ratio, and then increasing the ratio over time based on data received about program implementation.444

D. Adequacy of the Record Supporting a Water Neutral Program

The need to ensure an adequate record of decision-making is not a separate category from those described above; a good record is critical to ensuring the defensibility of a water neutral program with respect to issues such as authority, costs, and environmental review.445 This is because, as a general rule, absent fraud or malice, courts will review the decisions of water suppliers for legal adequacy, but will not second guess their judgment or exercise of discretion provided that the record establishes the basis for the decision.446 Although the standard for record adequacy may technically less stringent in some instances—such as when an agency with the police power adopts a water neutral program via ordinance, thereby exercising broad quasi-legislative authority447—decisions are most defensible when records are thorough and clearly establish the basis for the decision.

443. Id. at 1080–81. 444. See supra, Parts III, IV.E (Soquel Creek Water District offset ratios). 445. Protect Our Water v. County of Merced, 110 Cal. App. 4th 362, 362–64 (2003) (“[T]here are at least

three immutable rules: first, take great care to prepare a complete record; second, if it is not in the record, it did not happen; and third, when in doubt, refer back to rules one and two.”).

446. See Bldg. Indus. Ass’n of N. Cal. v. Marin Mun. Water Dist., 235 Cal. App. 3d 1641, 1646 (1991). 447. See Paso Robles Water Integrity Network v. County of San Luis Obispo et al., No. CV13-8301, slip

op. at 18 (San Luis Obispo Cnty. Ct. Jan. 15, 2015) (describing a court’s limited review of factual bases for quasi-legislative acts).


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The record consists of all documents considered by the agency when it made its decision, including those that contain contrary information.448 The court must be able to follow the paper trail to discern the agency’s decision process.449 Water suppliers should consider the use of “findings,” i.e., a clear and carefully worded enumeration of considerations and reasoning that support a decision. Findings do not have to be extensive; the goal is not to add a costly paper exercise to the decision-making process. The decision document should refer to specific scientific and technical evidence supporting the supplier’s determinations regarding the objectives, costs, offset ratios and other elements of its water neutral program. Findings should identify and address contrary evidence and sources of uncertainty. Findings can be part of an ordinance or resolution, or prepared in a separate document and incorporated by reference. Findings are required by some laws and not by others, but even where not required can be useful in ensuring a defensible record. Findings also help ensure that the water supplier and its customers are well informed about the details of the water neutral program.

VI. CONSIDERATIONS AND RECOMMENDATIONS

For water suppliers, water neutral programs may be a valuable tool in their total supply portfolio. The sample programs discussed above suggest various areas of inquiry for new or evolving water neutral programs. Below are a few general considerations for water suppliers, and several specific recommendations for facilitating awareness and improving the effectiveness of water neutral programs. Where different legal standards may apply, compliance with the most demanding standard is recommended if such compliance is feasible.

A. General Considerations

Below are some general considerations for water suppliers that are considering adoption of a water neutral program. These considerations will vary in applicability and importance depending on the identity of the water supplier, the context in which the program is being considered, applicable law, and other factors. Generally, water suppliers should:

448. See generally KATHERINE E. STONE & LISABETH D. ROTHMAN, PREPARING A DEFENSIBLE

ADMINISTRATIVE RECORD 4–8 (City Attorneys Department Spring Conference, League of California Cities, May 2004), available at http://www.cacities.org/UploadedFiles/LeagueInternet/ef/ef6aef99-48e2-46c3-bd1f-caa881ec644b.pdf (on file with the McGeorge Law Review); BILL HIGGINS ET AL., INST. FOR LOCAL GOV’T, AN

OUNCE OF PREVENTION: BEST PRACTICES FOR MAKING INFORMED LAND USE DECISIONS 23 (2006), available at http://www.ca-ilg.org/sites/main/files/file-attachments/2006_-_an_ounce_of_prevention.pdf (on file with the McGeorge Law Review); CAL. PUB. RES. CODE § 21167.6(e) (West 2007) (listing materials required to be included in a CEQA record).

449. E.g., W. States Petroleum Ass’n. v. Superior Court, 9 Cal. 4th 559, 569 (1995).


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1. Design the water program to ensure that it is reasonable to anticipate, within the exercise of the supplier’s judgment, that the actions taken will result in appreciable water savings.

2. Consider whether retrofits, if any, are close to saturation.

3. Provide incentives for new development to integrate extraordinary conservation measures into the new development.

4. Provide offset credit for conservation technology and techniques that go beyond minimum legal requirements.

5. Provide quantitative standards and measurable objectives where possible.

6. Provide a method for measuring and monitoring water use, perhaps through water budgets, reporting, and financial consequences for exceeding the allotment.

7. Formally adopt the program by way of ordinance or resolution, in an open public process, after hearing.

8. In the decision and supporting documents, describe a clear logical path, or nexus, between the anticipated impacts of development and the cost of the program (or the benefit to the development).

9. In the decision and supporting documents, describe how cost to a development is roughly proportional to the impact of the development on water demand.

10. In the decision and supporting documents, identify evidence supporting the above logical path, nexus, and rough proportionality, and ensure that evidence is properly maintained in the supplier’s records.

11. In the decision and supporting documents, identify and explain contrary evidence.

12. In the decision and supporting documents, identify sources of uncertainty.

13. Accumulate program fees in a specially-created fund, segregate them from other funds, and direct them only toward identified programs.

14. Review the program on a regular basis and correct elements to ensure that the above standards are met.

B. Specific Recommendations

1. Integrate New Conservation Techniques into Water Neutral Programs & Consider Water Neutral as a Tool to Achieve Drought Resiliency and Sustainability Outside the Shortage Context. California water neutral


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programs have been primarily focused on toilet and other fixture retrofits.450 Such retrofit-only programs have a limited lifespan as eventually most fixtures in a community will undergo retrofit, with most savings being squeezed out at the first retrofit when high-volume fixtures are replaced. Mandatory fixture retrofit laws will speed this phenomenon of “saturation” going forward. Retrofit programs that experience saturation should integrate new conservation techniques to accomplish their water neutral goals including, among other things, recycling, rainwater harvest, graywater use, and stormwater capture. Where feasible, creative and innovative approaches to water neutral should be integrated into water supplier portfolios outside the shortage context, to help foster a closer relationship between the availability of water resources and new development. Water supplier coalitions should consider whether water neutral policies would improve sustainability of water resources on a river or watershed basis.

2. Voluntary Water Neutral Model Ordinance. To facilitate consideration of water neutral in more California communities, standard provisions from existing ordinances and other sources should be collected into a model ordinance. The model ordinance would be a sample ordinance, and suppliers could choose to adopt in whole or in part. The model ordinance should provide water suppliers with both standard and suggested recitals, sample findings, and a suite of optional program elements derived from successful elements of current programs.451 Suppliers can select from these options to design a program that fits the needs of their community or watershed, as appropriate. The model ordinance should be designed with input from legal, water supplier, and engineering perspectives.

In January 2015 the non-profit Alliance for Water Efficiency announced a nationally-focused sustainable communities project called Net Blue.452 In partnership with the Environmental Law Institute and River Network, Net Blue will provide a toolbox for facilitating sustainable community growth through information about conservation and efficiency actions such as water neutral.453 Among other things, the toolbox will include ordinance components that water suppliers can use to design water neutral programs specific to their needs.454

3. Improving Information: Measurement, Monitoring, and Reporting. Centralized and standardized electronic information management and collection has been suggested as an improvement for water planning and demand management generally, and in 2014 California enacted measures designed to

450. See Maddaus et al., supra note 15, at 107. 451. See METROPOLITAN WATER DISTRICT OF SOUTHERN CAL., MODEL WATER CONSERVATION

ORDINANCE (Jan. 22, 2009, v. 2) (providing local jurisdictions with a model ordinance as a tool to be adapted or revised as appropriate to improve water use efficiency).

452. Mary Ann Dickinson, No Water, No Growth: Are Water-Neutral Growth Policies the Key to Building Sustainable Communities? NAT’L GEOGRAPHIC (Feb. 2, 2015), available at http://voices.National geographic.com/2015/02/02/no-water-no-growth-are-water-neutral-growth-policies-the-key-to-building-sustainable-communities/ (on file with the McGeorge Law Review) (posted by Alliance for Water Efficiency).

453. Id. 454. Id.


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further this goal.455 As the state continues to improve information management, water neutral programs should be identified as a specific category for conservation reporting. For example, this field could be added to urban water management plan reporting requirements or expressly identified by state guidance as one of the programs that should be reported as a demand management measure. The state should consider routinely collecting and making available supplier-created water conservation plans adopted pursuant to Water Code section 375 et seq. The plans could be created and submitted consistent with the protocols that are developed for urban water management plans.

Where feasible, water suppliers should also consider the potential to integrate more sophisticated approaches to measuring, monitoring, reporting, and enforcing water use. Water suppliers should consider requiring water budgets, measurement and reporting technology, feedback processes, and enforcement mechanisms for new development. Where funding and political will allow, water suppliers might consider integrating these requirements into existing development through retrofit with smart meters and other technologies. Project-specific assessment of the challenges encountered by pioneers in water budgets, reporting, and enforcement techniques (such as the East Bay Municipal Utility District and Santa Fe, New Mexico, discussed supra) would provide a basis for further development of such approaches.

V. CONCLUSION

Water neutral programs can be a valuable tool in a water supplier’s portfolio, but may not be appropriate in every jurisdiction. Programs should be tailored to the specific needs and circumstances of the supplier, the community, and the water resource. Communities should consciously choose specific goals for their water neutral programs. Water neutral programs may be designed to support growth where growth is desirable, improve drought resiliency, and/or facilitate an environmentally and economically sustainable approach to allocation of water between new and existing uses.

Consideration of water neutral programs should be encouraged at local, regional, or watershed levels. Water suppliers should consider integrating a broader range of conservation techniques, including stormwater, recycling, graywater, and similar tools for augmenting supply. Next steps should include development of tools such as model ordinance provisions, assessment of opportunities to support new technology, and improvement of information systems including measuring, monitoring, and reporting water use within the service areas of water suppliers, and between water suppliers and the state.

455. See supra note 53 (describing SB 1420 and AB 2067).

Panel III21st Century Gold:The Quest for New Supplies Panelists:Joel D. Kuperberg, Partner, Rutan & Tucker LLPBruce Marlow, Board Member, WaterFXAlf Brandt, Principal Consultant, California State Assembly

Panel DescriptionThis panel will explore current issues in alternative and supplemental “soft path” water supply sources, including recycled water, stormwater capture, and the new technology of solar desalination. Panelists will discuss the experiences, opportunities, and challenges associated with real-world projects that are currently being implemented.

2/3/2016

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21st Century Gold:The Quest for New Supplies

The Orange County Water District Experience

Presented by Joel KuperbergRutan & Tucker, LLP

Municipal Law InstituteFebruary 5, 2016

9177161

Orange County Water District

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•Formed by Legislature in 1933 to manage and protect the OC groundwater basin

•OCWD: 229,000 acres in lower watershed of the Santa Ana River (northern half of OC)

•OC groundwater basin provides 70% of water supply for 2.4+ million residents

OCWD: A History of Recycling

• 1976: Water Factory 21– Seawater intrusion barrier

• 1991: Green Acres Project– Landscape irrigation, industrial applications (purple pipe)

• 2008: Groundwater Replenishment System (GWRS)– 70 MGD

– Groundwater replenishment

– Seawater intrusion barrier

• 2015: GWRS Initial Expansion– 30 MGD

3

2/3/2016

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What is the GWRS?

4

• New 100 MGD advanced water purification facility

• Purifies to near‐distilled qualitysewer water that otherwise would be wasted to the ocean

• Recharges purified sewer water into the groundwater basin

• Provides a new 103,000 AFYwater source‐‐sufficient for700,000+ people

• Operational since January 2008, expanded in 2015

GWRS System Components

5

OceanOutfall

OCWD

Groundwater Basin

Santa Ana River

Pacific Ocean

Santiago Creek

OCSDTreatmentFacilities

AdvancedWater TreatmentPlant

Pumping Facilities

SeawaterIntrusionBarrier

Kraemer Basin

GWR Pipeline

Future Mid‐BasinInjection/Recharge

N

Project Capital and Operational Costs

• Capital Cost—First Phase (70 MGD): approx. $480MM– Federal and State grants/loans: $93MM– Remainder of costs shared 50‐50 by OCWD and OCSD

• Capital Cost—Initial Expansion (30 MGD): approx. $130MM– State loans, COPs

• Project Operational Cost– $40MM/year– $7.5MM/year O&M subsidy from MWDSC (21‐year term)

• Total Unit cost (Capital and O&M)– $525/AF with subsidies– $850/AF without subsidies (cfMWDSC 2016 Tier 1 Treated Rate: $942/AF)

6

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Legal and Institutional Challenges

• Regulatory

• Institutional

• Procurement/Construction

• CEQA/NEPA

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Regulatory – Pioneering Beneficial Use of Recycled Water

8

Regulatory

• GWRS Process:– Microfiltration (MF), plus– Reverse Osmosis (RO), plus– Ultraviolet with Hydrogen Peroxide (UV)

• CDPH now calls this Full Advanced Treatment (FAT)

• Lengthy Regulatory Approval Process – Regional Board Participation via TIN/TDS Task Force

• Critical—spreading GWRS water did not trigger Clean Water Act Permit.

– Close coordination with CDPH—residency time, dilution.

9

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Institutional:Inter‐Agency Joint Venture

OCWD/OCSD Partnership

• Almost identical service areas, population

• History of cooperation– Water Factory 21– GWRS Acres Project

• OCSD Wastewater Outfall dilemma

10

Institutional:Inter‐Agency Joint Venture

Joint Exercise of Powers Agreement• 50/50 capital cost‐sharing for first phase of project

• OCSD provides “polished”secondary treated wastewater to OCWD at no cost

• OCWD managed construction, pays all GWRS O&M

• Joint OCWD‐OCSD Steering Committee

JPA amended over time to address new issues• 1997: Cooperative planning for GWRS

• 2002: Project design, construction, operation and maintenance

• 2010: New and expanded facilities for GWRS Initial Expansion

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Institutional:Capital Financing

• Government Grants and Loans– U.S.B.R. Title XVI: $20MM– State Bond (Prop. 13): $37MM– DWR: $30MM– Cal C.E.C. and U.S. E.P.A.: 0.8MM

• OCSD 50% capital contribution for initial project (70 MGD)

• Debt financing

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Procurement/Construction

• Pre‐purchase of Critical Components– R‐O membranes– UV lights

• Multiple Contracts and Contractors– Treatment Facility (AWTF)– Pipeline Phases 1, 2 and 3

• Contractor prequalification and selection

• Value engineering

13

Procurement /Construction Disputes

• R‐O membrane selection lawsuit

• Pipeline contractor/subcontractor litigation– Subcontractor substitution challenge– Subcontractor/supplier stop notices

• No prime contractor–owner disputes

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CEQA/NEPA

• Programmatic EIR/EIS– Initial Construction: 70 mgd– Ultimate Capacity: 130 mgd

• NEPA Trigger: Federal grants

• Issues:– Air quality– Energy consumption– Growth inducement– Construction Impacts

• Addenda

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2/3/2016

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GWRS: Future Issues

• Ultimate Expansion: To 130 mgd

• New Replenishment Basin Acquisitions– 2010: Mira Loma Basin (13.7 acres, $13.6 million)– 2013: Proposed La Palma Basin (16 acres, $25 million)

• Mid‐Basin Injection– 2015: Pilot project

• Direct potable reuse?

• 9177161

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Lunch PanelExplaining the DroughtPanelist:Dale Kasler, Senior Writer, Sacramento BeeDale Kasler has been a senior writer at the Bee since 1996. He’s covered the economy, the state’s two big public pension funds, the downfall of Tower Records, the fight over the future of the Kings and now the drought. The Hartford, Conn., native previously worked at the Des Moines Register and other newspapers and is a Northwestern University graduate.

Panel DescriptionEveryone in California is aware of the drought. However, few understand the complexities of California’s man-made water delivery system, the implications of the Endangered Species Act and the chronic tug-of-war between farmers, urban interests and environmentalists over the state’s precious water supplies - conflicts that rage even during good times. And who on earth can grasp how the Delta works?

Dale Kasler’s job these days is to try to make sense of California’s Byzantine water world for readers of the Sacramento Bee. He is part of the three-reporter team that has been covering the drought since last spring and is now turning its attention to the impacts of El Nino. He’ll provide conference attendees a sense of how the Bee is covering California’s epic water woes.

Panel IVThe New Economic Reality: Maintaining Long-Term Solvency for Water Utilities

Panelists:Tim Bittle, Director of Legal Affairs, Howard Jarvis Taxpayers AssociationMichael G. Colantuono, Colantuono, Highsmith & Whatley, PCJohn H. Minan, Professor, University of San Diego School of Law

Panel DescriptionThe panel will focus on the financial challenges presented to water utilities by the shift in state policy from supply enhancement to water conservation and drought response; with an emphasis on how current lawprovides both opportunities and obstacles to maintaining solvency.

CURRENT TRENDS IN WATER FUNDING

1. Water delivery charges are property-related fees under Prop 218. (Bighorn-Desert ViewWater Agency v. Verjil (2006) 39 Cal.4th 205)

a. Who gets notice? Prop 218 says “record owner,” but defines “ownership” to includetenancies. OK to notify only owners on Assessor’s Roll. (Griffith v. Pajaro WaterMgmt. Agency (2013) 220 Cal.App.4th 586.) Or may use billing database. But forliens must include owners. (Gov. § 53755.) Either way, written protests from tenantsmust be counted. (Morgan v. Imperial Irr. Dist. (2014) 223 Cal.App.4th 892.)

2. Connection and capacity charges (Water § 66013) are not property-related under 218(Richmond v. Shasta Comm. Services Dist. (2004) 32 Cal.4th 409), but still limited to costsunder their enabling statute, Prop 26 & Gov. § 50076.

3. All costs recoverable: “all the required costs of providing service, short-term and long-term,including operation, maintenance, financial, and capital expenditures.” (Moore v. City ofLemon Grove (2015) 237 Cal.App.4th 363)

a. Must document Gen’l Fund costs, not use an arbitrary percentage. (Howard JarvisTaxpayers Assn. v. City of Roseville (2002) 97 Cal.App.4th 637)

b. Is PILOT an element of “costs?” No per Howard Jarvis Taxpayers Assn. v. City ofFresno (2005) 127 Cal.App.4th 914 (but see Citizens for Fair REU Rates v. City ofRedding (2015) 233 Cal.App.4th 402 (review granted)).

4. Rate zones OK, but must reflect costs. (Green Valley Landowners Assn. v. City of Vallejo(2015) 241 Cal.App.4th 425.) Uniform rates based on commingled costs OK too. (Griffithv. Pajaro Water Mgmt. Agency (2013) 220 Cal.App.4th 586.)

5. Subsidized rates must be funded from another source (Capistrano Taxpayers Assn. v. Cityof San Juan Capistrano (2015) 235 Cal.App.4th 1493)

6. Compensating for reduced sales during a drought:

a. Increase consumption rates?

i. Revisit assignment of costs to consumption charge v. other charges.

(1) Fixed meter charge (Paland v. Brooktrails Tp. Comm. Services Dist.(2009) 179 Cal.App.4th 1358 (fixed meter charge for “maintenance,operation, and capital improvements”)

(2) Standby charge on unconnected property. (Gov. § 38743; 54984 etseq., pays for reserve capacity to accommodate future development)

ii. Uncertain drought duration v. 5-year schedule of rates. (Gov. § 53756)

b. Add a drought surcharge?

i. To meter charge, consumption charge, or separate line item?

ii. If purely to raise revenue, when no change in costs, is it a “tax?” (SinclairPaint Co. v. Bd. of Equalization (1997) 15 Cal.4th 866)

7. Promoting conservation

a. Tiered rates OK, but must reflect costs. (Capistrano Taxpayers Assn. v. City of SanJuan Capistrano (2015) 235 Cal.App.4th 1493; City of Palmdale v. Palmdale WaterDist. (2011) 198 Cal.App.4th 926)

b. Adopt a maximum allocation and fine? Water § 370 et seq. authorizes allocation;Capistrano Taxpayers prohibits fine.

c. Adopt an emergency moratorium on new connections? (OK per Swanson v. MarinMun. Water Dist. (1976) 56 Cal.App.3d 512)

8. Groundwater regulation

a. Affects individuals and public utilities alike. (Great Oaks Water Co. v. Santa ClaraValley Water Dist. (2015) 242 Cal.App.4th 1187.)

b. Sustainable Groundwater Management Act - Water § 10720 et seq. requiresformation of local groundwater sustainability agencies (GSAs) for nonadjudicatedbasins to assess conditions in their local basins and adopt management plans. Empowers GSAs to levy fees and impose civil penalties.

c. Pumping charges are property-related fees under 218. (Griffith v. Pajaro WaterMgmt. Agency (2013) 220 Cal.App.4th 586.) Ca S.Ct. granted review of contraryholding in City of San Buenaventura v. United Water Consv. Dist. (2015) 235Cal.App.4th 228 (“Whether we consider this specific pump fee or pump fees ingeneral, we conclude that the fee is not property-related and that article XIII D doesnot apply.”)

i. Statutory favoritism for agricultural rates (Water § 75594) pending review inCity of San Buenaventura v. United Water Cons. Dist. (2015) 235Cal.App.4th 228.

9. Funding additional sources of water

a. Need to add supplemental sources can be attributed to upper tiers for stable

population (Capistrano Taxpayers Assn. v. City of San Juan Capistrano (2015) 235Cal.App.4th 1493) or to new residents through development fee (Mitigation Fee Act,Gov. § 66000 et seq.)

b. Stormwater reclamation - election required for fee? (Howard Jarvis Taxpayers Assn.v. City of Salinas (2002) 98 Cal.App.4th 1351; Gov. § 53750(m) (definition of“water”) and Cal. Const., art. XIII D, § 6(c))

c. Wastewater recycling - cost to sewer customers or water customers?

d. Acquiring private water rights by eminent domain - special tax on customers to fundacquisition OK per Golden State Water Co. v. Casitas Mun. Water Dist. (2015) 235Cal.App.4th 1246.

10. When ratepayers fight increases

a. Referendum authorized? (Cal. Const., art. XIII C, § 3 silent.)

b. How to handle an initiative: Adopt or call election. (Elec. § 9215 (cities), § 9311(districts); Native American Sacred Site and Env’l Protection Assn. v. City of SanJuan Capistrano (2004) 120 Cal.App.4th 961.) Challenge using petition for writ ofmandate against elections official. (Save Stanislaus Area Farm Economy v. Bd. ofSupervisors (1993) 13 Cal.App.4th 141.)

i. Extent of voters’ initiative power: coextensive with governing body. (Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205;Brooktrails Tp. Comm. Services Dist. v. Bd. of Supervisors (2013) 218Cal.App.4th 195; Mission Springs Water Dist. v. Verjil (2013) 218Cal.App.4th 892)

1/27/2016

1

Tim BittleDirector of Legal Affairs

Howard Jarvis Taxpayers Association

(916) 444‐9950

[email protected]

Water Delivery Charges

Property‐related fees under Prop 218(Bighorn‐Desert View Water Agency v. Verjil (2006) 39 Cal. 4th 205)

May use billing database for mailed notice, but for liens must include owners(Gov. § 53755)

Connection and Capacity Charges

NOT property‐related under Prop 218(Richmond v. Shasta Comm. Services Dist. (2004) 32 Cal.4th 409)

BUT… Still limited to costs under their enabling statute, Prop 26, and Gov. §50076

(Water § 66013)

1/27/2016

2

All Costs Recoverable

“All the required costs of providing service, short‐term and long‐term, including operation, maintenance, financial, and capital expenditures.”

(Moore v. City of Lemon Grove (2015) 237 Cal.App.4th 363)

All Costs Recoverable

Must document General Fund costs, not use arbitrary percentage.(Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 Cal.App.4th 637)

Is PILOT an element of “costs?”(Citizens for Fair REU Rates v. City of Redding (2015) 233 Cal.App.4th 402 (review granted) )

(cont.)

Setting Water Rates

Rate Zones OK, but must reflect costs.(Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App4th 425)

Subsidized Rates must be funded from another source(Capistrano Taxpayers Assn. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493)

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3

Compensating for Reduced Sales During a Drought

Adjust Rates?

Revisit cost assignments:

Consumption charge v. fixed meter charge(Paland v. Brooktrails Tp. Comm. Services Dist. (2009) 179 Cal.App.4th 1358 [fixed meter charge for “maintenance, operation, and capital improvements”] Gov. § 38743; 54984 et seq.)

Drought duration v. 5‐year schedule of rates(Gov. § 53756)

Adjust Rates?

Revisit cost assignments (cont.)

Standby charge on unconnected property(Gov. § 53756; 54984 et seq.)

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4

Add a drought surcharge?

To fixed meter charge or variable consumption charge?

If purely to raise revenue, when no change in costs, is it a “tax?”(Sinclair Paint Co. v. Bd. Of Equalization (1997) 15 Cal.4th 866)

Promoting Conservation

Tiered Rates OK, but must reflect costs.(Capistrano Taxpayers Assn. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493; City of Palmdale v. Palmdale Water Dist. (2011) 198 Cal.App.4th 926)

Adopt a maximum allocation and fine?(Water § 370 et seq. authorizes allocation;

Capistrano Taxpayers prohibits fine.)

Emergency moratorium on new connections(Swanson v. Marin Mun. Water Dist. (1976) 56 Cal.App.3d 512)

Groundwater Regulation

Affects individuals and

public utilities alike(Great Oaks Water Co. v. Santa Clara Valley Water Dist. (2015) 239 Cal.App.4th 456)

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5

Sustainable Groundwater Management Act – Water § 10720 et seq.

Requires formation of local groundwater sustainability agencies (GSAs) for non‐adjudicated basins to assess conditions in their local basins and adopt management plans.

Empowers GSAs to levy fees and impose civil penalties

Pumping Charges

Property‐related fees under Prop 218(Griffith v. Pajaro Water Mgmt. Agency (2013) 220 Cal.App.4th 586)

Notice required for owners only…(Griffith v. Pajaro Water Mgmt. Agency)

…but tenant protests must be counted.(Morgan v. Imperial Irr. Dist. (2014) 223 Cal.App.4th 892)

Pumping Charges

Statutory favoritism for agricultural rates (Water § 75594) pending review (City of San Buenaventura v. United Water Cons. Dist. (2015) 235 Cal.App.4th 228 (review granted))

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6

Funding Additional Sources of Water

Attributing Costs

Need to add supplemental sources can be attributed to upper tiers for stable population(Capistrano Taxpayers Assn. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493)

…OR attributable to new residents through development fee (Mitigation Fee Act, Gov. § 66000 et seq.)

Additional Sources of Water

Stormwater reclamation – election required for fee?(Howard Jarvis Taxpayers Assn. v. City of Salinas (2002) 98 Cal.App.4th 1351; Gov. § 53750(m) (definition of “water”) and Cal. Const., art. XIII D, § 6(c) )

Wastewater recycling – cost to sewer customers or water customers?

Acquiring private water rights by eminent domain –special tax on customers to fund acquisition.(Golden State Water Co. v. Casitas Mun. Water Dist. (2015) 235 Cal.App.4th 1246)

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7

When Ratepayers Fight Increases

Referendums

Referendum authorized?

(Cal. Const., art. XIII C, § 3 silent.)

How to Handle an Initiative

Adopt or call election[Elec. § 9215 (cities), § 9311 (districts); Native American Sacred Site and Env’l Protection Assn. v. City of San Juan Capistrano (2004) 120 Cal.App.4th 961.]

Challenge using petition for writ of mandate v. elections official before ballots go to print(Save Stanislaus Area Farm Economy v. Bd. Of Supervisors (1993) 13 Cal.App.4th 141)

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8

How to Handle an Initiative

Extent of voters’ initiative power: coexistive with governing body(Bighorn‐Desert View Water Agency v. Verjil (2006) 39 Cal.4th

205; Brooktrails Tp. Comm. Services Dist. v. Bd. Of Supervisors (2013) 218 Cal.App.4th 195; Mission Springs Water Dist. v. Verjil (2013) 218 Cal.App.4th 892)

No.S226036 Exempt from Filing Fees

Government Code § 6103

Service on Attorney General

required by Rule 8.29(c)(I)

IN THE SUPREME COURT OF THE S TATE OF CALIFORNIA

City of San Buenaventura

Plaintiff, Cross-Defendant and Respondent I Cross-Appellant

vs.

United Water Conservation District and Board of Directors of United Water Conservation District

Defendants, Cross-Complainants and Appellants I Cross-Respondents

ANSWER TO BRIEFS FILED BY AMICUS CURIAE

Of a Published Decision of the Second Appellate District, Case No. B25 1810

Reversing a Judgment of the Superior Court of the State of California County of Santa Barbara, Case Nos.VENCI 00401714 and 1414739

Honorable Thomas P.Anderle, Judge Presiding

*MICHAEL G. COLANTUONO ( 143551) [email protected]

DAVID J. RUDERMAN (245989) [email protected]

MEGAN S. KNIZE (257970) [email protected]

COLANTUONO, HIGHSMITH &

WHATLEY, PC

300 S. Grand Avenue, Suite 2700 Los Angeles, California 90071-3137

Telephone: (213) 542-5700 Facsimile: (213) 542- 5710

GREGORY G. DIAZ (156318) [email protected]

City Attorney CITY OF SAN BUENAVENTURA

P.O. Box 99 Ventura, California 93002-0099

Telephone: (805) 654-7818 Facsimile: (805) 641-0253

Attorneys for Plaintiff, Cross-Defendant and Respondent I Cross-Appellant City of San Buenaventura

158438.6

TABLE OF CONTENTS

INTRODUC TION .................................................................................................. 1 I

I. DE NOVO APPELLATE REVIEW ON UWCD'S

ADMINIS TRATIVE RECORDS IS APPROPRIATE ............................... 12

II. UWCD'S FEES ARE SUBJECT TO PROPOSITION 218 .................... 18

158438.6

A. ApartmentAssociation Does Not Apply To

Water Service Fees ........................................................................ 18

I . Apartment Association viewed property

related fees narrowly, but Richmond and

Bighorn rejected that view as to fees for

ongoing water service ...................................................... 19

2. Even if this Court wished to reverse a

decade of case law, Proposition 218 cannot

be read to exclude water rates ...................................... 25

3. Applying Apartment Association to water

rates to overturn Pajaro I is unnecessary and

disruptive ............................................................................. 30

B. Regulatory Fees Are Exempt from Proposition 218,

but the Fee in Issue Here Is Not Such a Fee ............................ 32

C. Amici's Suggested Limitations on Richmond and

Bighorn Serve Neither the Language of

Proposition 218 Nor the Facts Here ......................................... 39

I. Proposition 218 does not distinguish

commercial from residential water use ........................ 39

2. Proposition 218 does not distinguish water

delivered via the groundwater table from

that delivered by pipe ...................................................... .41

3. Proposition 218 is not triggered by some

minimum number of residential users .......................... .44

4. Violation of Proposition 2 I 8's substantive

requirements cannot exempt a fee from

its reach ............................................................................... 45

2

5. That UWCD's fee is mandatory does not

exempt it from Proposition 218 ..................................... 46

6. Proposition 218 does distinguish "parcels"

from "property" ................................................................. 4 7

7. Proposition 218 is not limited to

consumption-based fees ................................................... 49

8. Whether groundwater is served to an

adjudicated or unadjudicated basin is

immaterial.. .......................................................................... 52

D. UWCD's Fees Are Incident to the Exercise of

Ventura's Property Rights in Groundwater .............................. 53

E. The City's Amici Go Too Far on Some Points .......................... 56

Ill. UWCD'S FEES VIOLATE PROPOSITION 218 BECAUSE

THEY EXCEED THE PROPORTIONAL COST OF

SERVING THE CITY .................................................................................. 59

IV. IF PROPOSITION 26 PROVIDES THE RULE OF DECISION,

v.

UWCD'S FEES ALSO FAIL ....................................................................... 63

A. UWCD's Service, If Not Property Related,

Is Not Provided Directly to the City without

Free Riders as Proposition 26 Requires .................................... 63

B. UWCD's Fees Are Not Limited to Service Cost .................... 67

C. UWCD Failed to Apportion Its Fees as

Proposition 26 Requires ............................................................... 74

THE FARM BUREAU'S ARGUMENTS DO NOT

SAVE WATER CODE SECTION 75594 ................................................. 76

CONCLUSION ....................................................................................................... 80

3 158438.6

TABLE OF AUTHORITIES

Page(s)

Federal Cases

Duquesne Light Co. v. Barasch

(1989) 488 U.S. 299 ............................................................................... 73

Fulton Corp. v. Faulkner

(1996) 516 U.S. 325 ............................................................................... 57

Minnesota v. Clover Leaf Creamery

(1981) 449 U.S. 456 ............................................................................... 79

State Cases

20th Century Ins. Co. v. Garamendi

(1994) 8 Cal.4th 216 ................................................................. 13, 61, 73

American Bank & Trust Co. v. Community Hospital

(1984) 36 Cal.3d 359 ............................................................................. 79

Apartment Ass'n of Los Angeles County, Inc. v. City of Los

Angeles

(2001) 24 Cal.4th 830 .................................................................... passim

Apple Inc. v. Superior Court

(2013) 56 Cal.4th 128 ........................................................................... .41

Bay Area Cellular Telephone Co. v. City of Union City

(2008) 162 Cal.App.4th 686 ................................................................. 70

Beutz v. County of Riverside

(2010) 184 Cal.App.4th 1516 ............................................................... 17

Bighorn-Desert View Water Agency v. Verjil

(2006) 39 Cal.4th 205 .................................................................... passim

4 158438.6

Brydon v. East Bay Mun. Utility Dist.

(1994) 24 Cal.App.4th 178 ......................... .......................................... 60

California Farm Bureau Federation v. State Water Resources

Control Board

(2011) 51 Cal.4th 421 ......................................................... 59, 60, 74, 75

California Redevelopment Assn. v. Matosantos

(2011) 53 Cal.4th 231 ............................................................................ 23

Capistrano Taxpayers Association, Inc. v. City of San Juan

Capistrano

(2015) 235 Cal.App.4th 1493 ...................................... 23, 30, 35, 39, 73

Carman v. Alvord

(1982) 31 Cal.3d 318 ............................................................................. 24

Citizens Ass'n of Sunset Beach v. Orange County Local

Agency Formation Com'n

(2012) 209 Cal.App.4th 1182 .............................................................. .46

City and County of San Francisco v. County of San Mateo

(1995) 10 Cal.4th 554 ......................................................................... . . . 33

City of Palmdale v. Palmdale Water Dist.

(2011) 198 Cal.App.4th 926 .............................................. 23, 30, 35, 39

City of San Buenaventura v. United Water Conservation

District

(2015) 185 Cal.Rptr.3d 207 .......................................................... passim

City of San Diego v. Shapiro

(2014) 228 Cal.App.4th 756 ... . . . . . . . ............................................... . ...... .57

Collier v. City and County of San Francisco

(2007) 151 Cal.App.4th 1326 ............................................................... 70

County of Orange v. Barratt American, Inc.

(2007) 150 Cal.App.4th 420 ................................................................ . 71

5 158438.6

Crawley v. Alameda County Waste Management Authority

(Dec. 1, 2015, A143650) _Cal.App.4th _ ................................... 27

El Camino Community College Dist. v. Superior Court

(1985) 173 Cal.App.3d 606 .................................................................. 28

Evans v. City of San Jose

(2005) 128 Cal.App.4th 1123 ............................................................... 61

Great Oaks Water Co. v. Santa Clara Valley Water Dist.

(2015) 242 Cal.App.4th 1187 ....................................................... passim

Green Valley Landowners Association v. City of Vallejo

(2015) 241 Cal.App.4th 425 ................................................................. 77

Greene v. Marin County Flood Control and Water

Conservation Dist.

(2010) 49 Cal.4th 277 ................................................... 24, 31, 33, 40, 63

Griffith v. Pajaro Valley Water Management Agency

(2013) 220 Cal.App.4th 586 ......................................................... passim

Harris v. Capital Growth Investors XN (1991) 52 Cal.3d 1142 ........................................................................... 73

Hassan v. Mercy American River Hospital

(2003) 31 Cal.4th 709 ........................................................................... .49

Healing v. California Coastal Com.

(1994) 22 Cal.App.4th 1158 ................................................................. 78

Howard Jarvis Taxpayers Ass'n v. City of Fresno

(2005) 127 Cal.App.4th 914 .......................................................... 22, 51

Howard Jarvis Taxpayers Assn. v. City of Los Angeles

(2000) 85 Cal.App.4th 79 .................................................. 20, 21, 23, 50

Howard Jarvis Taxpayers Ass'n v. City of Salinas

(2002) 98 Cal.App.4th 1351 ................................................................. 31

6 158438.6

Kern County Farm Bureau v. County of Kern

(1993) 19 Cal.App.4th 1416 .......................................................... 36, 70

Mission Springs v. Verjil

(2013) 218 Cal.App.4th 892 ................................................................. 22

Moore v. Lemon Grove

(2015) 237 Cal.App.4th 363 ........................................ 13, 18, 30, 31, 71

Morgan v. Imperial Irrigation District

(2014) 223 Cal.App.4th 892 ......................................................... passim

Pajaro Valley Water Management Agency v. AmRhein

(2007) 150 Cal.App.4th 1364 ....................................................... passim

Paland v. Brooktrails Tp. Community Services Dist. Board of

Directors

(2009) 179 Cal.App.4th 1358 ............................................................... 42

Ponderosa Homes, Inc. v. City of San Ramon

(1994) 23 Cal.App.4th 1761 ................................................................ .46

Richmond v. Shasta Community Services Dist.

(2004) 32 Cal.4th 409 .................................................................... passim

Sierra Club v. State Bd. of Forestry

(1994) 7 Cal.4th 1215 ............................................................................ 17

Silicon Valley Taxpayers Ass'n, Inc. v. Santa Clara County

Open Space Authority

(2008) 44 Cal.4th 431 ..................................................................... 24, 61

Sinclair Paint Co. v. State Bd. of Equalization

(1997) 15 Cal.4th 866 ................................................... 32, 37, 38, 57, 74

Utility Audit Co., Inc. v. City of Los Angeles

(2003) 112 Cal.App.4th 950 ................................................................. 50

Ventura Group Ventures, Inc. v. Ventura Port District

(2001) 24 Cal.4th 1089 .......................................................................... 78

7 158438.6

Western States Petroleum Association v. Superior Court

(1995) 9 Cal.4th 559 ........................................................... 13, 16, 17, 61

California Constitution

Article X, § 2 .................................................................................. 19, 30, 53

Article XI, § 7 ....................................................................................... 19, 78

Article XI, § 9 .............................................................................................. 78

Article XIII .................................................................................................. 26

Article XIII, § 11 ........................................................................................ .55

Article XIII A, § 4 ................................................................................ 46, 58

Article XIII C ....................... . . . . ............................................. . . . . . . . ........ 15, 16

Article XIII C, § 1, subd. (e) ............ . ................. . ......... . . . . .................. passim

Article XIII C, § 1, subd. ( e )(1) ............................... . . . . . . ............... 63, 77, 81

Article XIII C, § 1, subd. ( e )(2) ........................................ 58, 66, 67, 70, 72

Article XIII C, § 1, subd. (e)(3) .......................................................... 32, 77

Article XIII C, § 1, subd. (e)(4) ................................................................ .55

Article XIII C, § 1, subd. (e)(6) ................................................................. 21

Article XIII C, § 3 ....................................................................................... 40

Article XIII D ..................................................................... 16, 26, 27, 37, 79

Article XIII D, § 1, subd. (a) ..................................................................... 79

Article XIII D, § 1, subd. (b) .................................................................... .22

Article XIII D, § 2 ........................................................................... ........... .56

Article XIII D, § 2, subd. (e) ............................................ 25, 38, 46, 47, 48

8 158438.6

Article XIII D, § 2, subd. (g) .............................................................. 27, 47

Article Xill D, § 2, subd. (h) ........................................................ 26, 41, 44

Article Xill D, § 3, subd. (a) ........................... ................................... 26, 28

Article XIII D, § 3, subd. (b) .............................................................. 27, 31

Article XIII D, § 4 ....................................................................................... 17

Article XIII D, § 4, subd. (f) ...................................................................... 17

Article XIII D, § 6 .................................................... ............................ 25, 52

Article Xill D, § 6, subd. (a) .............................................................. 21, 27

Article XIII D, § 6, subd. (a)(l) ............................. ............................. 27, 45

Article XIII D, § 6, subd. (b) ........................................................ 27, 28, 45

Article XIII D, § 6, subd. (b )(1) ................................................... 67, 72, 77

Article XIII D, § 6, subd. (b )(2) ............................................. 28, 66, 70, 72

Article XIII D, § 6, subd. (b)(3) ....................................... 59, 60, 68, 72, 77

Article XIII D, § 6, subd. (b)(5) ................................................... 17, 61, 63

Article XIII D, § 6, subd. (c) ............................... .............. 26, 27, 31, 36, 58 _,

State Statutes

Government Code, § 50076 ............................................................... 37, 58

Government Code, § 53750, subd. (m) ............................................ 18, 36

Government Code, § 53758, subd. (b) ............................................. 64, 65

Government Code, § 53758, subd. (b) .................................................... 66

Water Code, § 15 .............................................................................. ......... 77

Water Code, § 370 ..................................................................................... 31

9 158438.6

Water Code, § 372 ..................................................................................... 31

Water Code, § 10720 ..................................................................... 32, 33, 43

Water Code, § 10720.8 ............................................................................. .53

Water Code, § 10730, subd. (a) ................................................... 36, 43, 53

Water Code, § 10730.2 ........................................................... 33, 36, 43, 53

Water Code, §§ 75521-75523 .......................................... ......................... 70

Water Code, § 75522 ................................................................................. 65

Water Code, § 75523 ................................................................................. 35

Water Code, § 75591 ................................................................................. 72

Water Code, § 75592 ................................................................................. 72

Water Code, § 75593 .......................................................................... 35, 72

Water Code, § 75594 ......................................................................... passim

Other Authorities

Jacks v. City of Santa Barbara

(5225589, review granted June 10, 2015) ................................... 56, 57

Newhall County Water District v. Castaic Lake Water

Agency

(B257964, app. pending) ..................................................................... 62

Prop. 218, § 5, reprinted at Historical Notes,

West's Ann. Cal. Codes (2013) foll. Cal. Const.,

art. XIII C, § 1. ................................................................................ 24, 59

10 158438.6

INTRODUCTION

Application of Propositions 218 and 26 to water delivery

charges has fomented substantial litigation, including disputes

among each of California's major groundwater replenishment

agencies and their customers, and between wholesale water

providers and their customers. These issues divide the memberships

of the State's local government associations, which typically provide

amicus briefs reflecting consensus views of local government. Thus,

those groups are absent here. Instead, amid are litigants in other

cases pending. While some of their analysis is helpful, much

amounts to requests for advisory opinions on those other disputes.

To the extent the briefs are helpful, they confirm the analysis

of the principal briefing - Proposition 218 extends to water service

charges of all types, ether delivered via pipes or the groundwater

table. If it did not, Proposition 26 would impose comparable duties

on Appellant United Water Conservation District ("UWCD" or the

"District") to prove the fees challenged here recover no more than its

cost to serve Respondent City of San Buenaventura ("City" or

"Ventura") and are fairly apportioned to reflect the City's benefits

from or burdens on UWCD' s service.

A few of UWCD' s amid urge this Court to overturn nearly a

decade's worth of case law to follow a road not taken in 2006. They

urge this Court to overrule Pajaro Valley Water Management Agency v.

AmRhein (2007) 150 Cal.App.4th 1364 (Pajaro I) and to extend the

11 158438.6

reasoning of Apartment Association of Los Angeles County, Inc. v. City

of Los Angeles (2001) 24 Cal.4th 830 (Apartment Association) to water

service charges. Apartment Association found a fee on landlords to

fund housing code enforcement not subject to Proposition 218

because it was triggered not by property ownership alone but by a

voluntary decision to participate in a regulated market. However,

the argument does not serve the language of Proposition 218 well

and would unsettle law and require this Court to take a path it

rejected nearly a decade ago in Bighorn-Desert View Water Agency v.

Verjil (2006) 39 Cal.4th 205 (Bighorn).

Accordingly, to the extent amid illuminate the issues here,

they support the City's demonstration that UWCD's fees cannot

survive review under either Proposition 218 or Proposition 26 and

the facial unconstitutionality of Water Code section 75594' s mandate

of a 3:1 ratio of the fees UWCD charges non-agricultural

groundwater users to those it charges agricultural users.

I. DE NOVO APPELLATE REVIEW O N UWC D'S

ADM I N ISTRATIVE RECORDS IS APPROPRIATE

A helpful new authority has been published since the

principal briefing that illuminates a debate engaged by UWCD's

amid as to the standard of appellate review of disputes under

Propositions 218 and 26. (Great Oaks Water Co. v. Santa Clara Valley

Water Dist. (2015) 242 Cal.App.4th 1187 [2015 WL 8236204] (Great

Oaks).) In particular, that opinion holds a challenger bears the

12 158438.6

burden to identify a specific legal basis on which to attack a revenue

measure; if so, the rate-maker then bears the burden to demonstrate

compliance with our Constitution and the legal character of a

revenue measure is a legal question to be determined independently

by the trial court and reviewed de novo on appeal. (Id. at p. *7.)

Rate-making is, of course, legislative activity. (20th Century

Ins. Co. v. Garamendi (1994) 8 Cal.4th 216, 277 (20th Century); Great

Oaks, supra, 2015 WL 8236204 at p. *24.) In such cases, judicial review

is confined to the record before the rate-making agency under the

rule of Western States Petroleum Association v. Superior Court (1995) 9

Cal.4th 559, 579 ("Western States") (mandamus review of legislative

action limited to agency's record). Great Oaks appropriately applies

this rule to Proposition 218 and statutory challenges to rates for

water supply services. (Great Oaks, 2015 WL 8236204 at p. *27.) As

explained in the principal briefing, when such a case is tried only on

a cold administrative record, that record is equally accessible to

appellate as to trial courts and no justification for deference to the

trial court appears. (Opening Brief on the Merits ("OB") at pp. 25-26;

Reply Brief on the Merits ("RB") at pp. 12, 14-15).

Great Oaks also helpfully addresses the role of appellate courts

in cases in which the trial court does not adhere to Western States, as

was true there, in Moore v. Lemon Grove (2015) 237 Cal.App.4th 363

(Moore) and in Morgan v. Imperial Irrigation District (2014) 223

13 158438.6

Cal.App.4th 892 (Morgan). Because its analysis is fresh and cogent, it

bears quotation at some length.

It first discusses appellate review of statutory claims under the

usual deferential rule:

158438.6

However, the fact that the [trial] court cannot be faulted

for admitting this [extra-record] evidence [to which the

District stipulated] does not mean that it was free to

depart from all constraints on judicial review of quasi

legislative actions. Regardless of the evidence before it,

a court reviewing a quasi-legislative act cannot reweigh

the evidence or substitute its own judgment for that of

the agency. Even when extra-record evidence has been

received, the determination whether the decision was

arbitrary, capricious or entirely lacking in evidentiary

support must be based on the "evidence" considered by

the administrative agency. If courts were to

independently weigh conflicting evidence in order to

determine which side had a preponderance of the

evidence, this would indeed usurp the agency's

authority and violate the doctrine of separation of

powers. Thus, while the parties' stipulation entitled the

trial court to consider the evidence before it for

purposes of illuminating the controversy, it should have

confined itself to the question whether the challenged

14

I '

actions were arbitrary, capricious, or wholly

unsupported by the evidence before the District.

(Great Oaks, supra, 2015 WL 8236204 at p. *28, citations and internal

quotations omitted.)

Thus, the extra-record evidence to which the Great Oaks

parties stipulated could not invalidate the District's rates, but is not

useless:

Here, given the parties' mutual agreement to try the

matter in an unorthodox manner, the testimony of such

witnesses might reasonably be consulted on matters

such as industry practice or applicable accounting

concepts.

(Ibid.) It then turned to independent judgment review required by

articles XIII C and XIII D of the California Constitution1:

(Ibid.)

Of course, application of an independent standard of

review does not require or permit us to substitute our

judgment for that of the trial court on purely factual

questions as to which the trial court's finding .is

supported by substantial evidence.

1 References to articles and sections of articles are to the California

Constitution.

15 158438.6

Thus, Great Oaks establishes that appellate review of factual

issues is de novo when the rule of Western States is observed and for

substantial evidence when facts are found on the basis of extra

record evidence when that rule is not applied.

Moreover, Great Oaks recognizes that factual disputes will

rarely drive rate challenges under Articles XIII C and XIII D: "it does

not appear, however, that the trial court's imposition of liability

under Article 13D depends on any such factual issues." (Id. at p. *7.)

So, too, here. The City and UWCD argue the legal significance

of the record facts here, but dispute few factual issues as such.

UWCD's amicus Santa Ynez Water Conservation District

("Santa Ynez"), faults the City's reliance on the doctrine of

constitutional fact to justify its claim for de novo review of UWCD's

administrative records. (Santa Ynez Water Conservation District

Brief ("Sta. Ynez Br.") at p. 31.) It observes that the doctrine extends

only to facts on which constitutional rights tum. So, for example,

constitutional review of defamation claims is often limited to facts

which touch on "malice" as that term is used in First Amendment

case law. (Ibid.) True enough. However, given the demands of

Propositions 218 and 26, what facts in UWCD's records might be

relevant here that are not also germane to the demands of our

Constitution? While defamation law may allow a court to

distinguish constitutional from ordinary fact, rate-making may not

- especially given our Constitution's demand that the rate-maker

16 158438.6

prove its rates are not taxes. (Cal. Const., art. XIII D, § 6, subd. (b)(5);

art. XIII C, § l, subd. (e) [final, unnumbered para.].)

Similar concerns motivated the Court of Appeal in Beutz v.

County of Riverside (2010) 184 Cal.App.4th 1516 to allow a plaintiff to

question for the first time on appeal compliance with the

requirements of article XIII D, section 4 as to the special benefit and

proportionality of assessment. (Id. at p. 1535.) It reasoned these

issues arise in "any legal action contesting the validity of any

assessment" whether or not pleaded and argued under the language

of article XIII D, section 4, subdivision (f). (Id. at pp. 1534-1535.)

The City doubts Proposition 218 was intended to alter

litigation practice in this way. It expressly shifts the burden the

burden of proof in these cases. Why would it merely imply a change

in the duties to exhaust administrative remedies and to raise all legal

claims in trial courts? (Sierra Club v. State Bd. of Forestry (1994) 7

Cal.4th 1215, 1231 [under expressio unius est exclusio alterius statutory

exemptions beyond those expressed may not be implied].)

In any event, Beutz's approach reflects an understanding that

the factual issues on which Proposition 218 cases turn appear in

administrative records equally accessible to trial and appellate

courts and the burden is on the local government to prove

compliance with the Constitution - once a prima facie case of a

violation is made. Of course, when the rule of Western States is not

observed and trial courts admit extra-record evidence- as in Great

17 158438.6

Oaks, Morgan and Moore - the trial court does have its usual

institutional advantage as a fact-finder. Thus, the appellate court

reviews an agency's record de novo and the trial court's

determination of facts disputed there for substantial evidence.

Santa Ynez also misapprehends the City's observation that the

consequence of an administrative record is a legal question reviewed

de novo on appeal. (Sta. Ynez Br. at p. 31.) That Judge Anderle gave

no deference to UWCD' s fact-finding (as the Constitution required

he not) does not control whether an appellate court should defer to

him. For the reasons stated in the City's principal briefs and above,

the City respectfully argues this Court owes the trial court's fact

finding no deference. (OB at pp. 25-26; RB at pp. 12-13.)

I I . UWC D'S F E ES ARE SUBJECT TO

PROPOSITION 2 18

A. Apartment Association Does Not Apply To Water

Service Fees

Water service includes resource management, along with

other activities for the production, supply, treatment, and

distribution of water. (Gov. Code, § 53750, subd. (m); Griffith v.

Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586,

595-596 (Pajaro II).) Local agencies may recover the cost of

management as part of the water service charge along with the costs

of activities and facilities that comprise the enterprise. (Pajaro II,

supra, 220 Cal.App.4th at pp. 598-600; see also, Moore, supra, 237

18 158438.6

Cal.App.4th at pp. 275-276.) This Court suggested in Richmond v.

Shasta Community Services Dist. (2004) 32 Cal.4th 409 (Richmond) and

held in Bighorn that fees for on-going water service are subject to

Proposition 218. The use of water and water rights, like the use of

any property, is subject to regulation under the police power of

article XI, section 7 and, as to water in particular, the anti-waste

mandate of article X, section 2. This Court held in Apartment

Association that fees imposed to fund regulation of voluntary

economic activity are generally not subject to Proposition 218.

UWCD's amici seek to extend Apartment Association's rationale to

water service fees to overturn Pajaro I and a decade of settled case

law. The City respectfully urges this Court to decline the invitation.

I . Apartment Association viewed property

related fees narrowly, but Richmond and

Bighorn rejected that view as to fees for

ongoing water service

UWCD's amici urge this Court to overrule Pajaro I and to

extend the reasoning of Apartment Association to fees based on

measured use of supplied water. (E.g., Santa Clara Valley Water

District Brief ("Sta. Clara Br.") at pp. 9-23.) While such an approach

has intellectual integrity, it is not a persuasive construction of

Proposition 218 - as Pajaro I explained in thoughtful detail.

Moreover, it requires this Court to change a course it set almost a

decade ago in Bighorn. Indeed, the Sixth District recently confirmed

19 158438.6

its view of Pajaro I in a case presenting the very issues presented

here. (Great Oaks, supra, 2015 WL 8236204 at p. *13.)

Apartment Association concluded a fee on multi-family

landlords to fund housing code enforcement was not a property

related fee because it was not triggered by property ownership

alone, but by elective participation in a regulated industry. (24

Cal.4th at p. 842.) However, this Court has since refused to extend

that reasoning to water service fees, citing article XIII D, section 6,

subdivision (c)'s partial exception of such fees from Proposition 218

to conclude they are within its reach. (Richmond, supra, 32 Cal.4th

409; Bighorn, supra, 39 Cal.4th 205.) Amici urge this Court to revisit

those cases to extend Apartment Association's reasoning to water

service fees, or at least, groundwater fees. (E.g., Water

Replenishment District of Southern California Brief ("WRD Br.") at

pp. 11-13.)

This approach would limit Proposition 218 to water fees

imposed in flat amounts, perhaps collected via the property tax roll,

as Pajaro I explained. (Pajaro I, supra, 150 Cal.App.4th at p. 1387; see

also City of Signal Hill Brief ("Signal Hill Br.") at p. 16, fn.3.)

This approach is also consonant with Howard Jarvis Taxpayers

Association v. City of Los Angeles (2000) 85 Cal.App.4th 79 (HJTA v. Los

Angeles). There, the Second District found Proposition 218

inapplicable to metered water rates because those rates require more

than property ownership - they also require voluntary water use.

20 158438.6

However, Richmond and Bighorn reject this approach and the latter

expressly overruled HJTA v. Los Angeles. (Bighorn, supra, 39 Cal.4th at

pp. 205 & 217, fn. 5.)

Richmond can be made consistent with the Apartment

Association approach to water fees that UWCD's amici urge only by

ignoring as dicta its language that Proposition 218 does apply to fees

for ongoing water service through an existing connection. (Sta. Clara

Br. at pp. 13-14.) Indeed, the Water Replenishment District of

Southern California ("WRD") argues that, like the housing

developer in Richmond, the City could avoid UWCD's fees by

disusing its water rights. (WRD Br. at p. 15.)

However, this analogy to Richmond is unpersuasive for four

reasons. First, this Court rejected it in Bighorn, elevating Richmond's

dicta to a holding. (Bighorn, supra, 39 Cal.4th 205 at pp. 212-215.)

Second, UWCD knows precisely who is pumping groundwater from

the eight basins it replenishes and can therefore comply with the

notice requirements of article XIII D, section 6, subdivision (a) as the

Shasta Community Services District in Richmond could not. Third,

the City's water rights are property which have only one meaningful

use - the pumping of groundwater for use in the City's utility

services to its customers. Fourth, Richmond involved a one-time

payment to mitigate impacts of development - not recurring fees

for continuing water service. (Cf. Cal. Const., art. XIII C, § 1,

21 158438.6

subd. ( e )( 6) [exempting development impact fees from Prop. 26];

art. XIII D, § 1, subd. (b) [same as to Prop. 218].)

Thus, UWCD's fees are imposed on activity that is

"indispensable to most uses of [this] real property" just as the Court

found water fees for domestic service to be in Bighorn. (Bighorn,

supra, 39 Cal.4th at p. 214, quoting Richmond, supra, 32 Cal.4th at

p. 415.) WRD would distinguish Richmond because the fee there was

triggered by "nothing other than the normal ownership and use of

property." (WRD Br. at p. 23, quoting Richmond, supra, 32 Cal.4th at

p. 427; cf. Sta. Clara Br. at pp. 13-15.) However, the same can be said

of Ventura's water rights - the normal ownership and use of that

property is alone sufficient to trigger UWCD's fees.

Bighorn squarely rejected an approach to water service charges

based on Apartment Association and elevated Richmond's dicta to a

holding. As a result, a growing body of case law applies

Proposition 218 to a variety of water rates which are not the flat

charges collected on the property tax roll to which an Apartment

Association approach would confine it:

• Howard Jarvis Taxpayers Ass'n v. City of Fresno (2005) 127

Cal.App.4th 914 (HJTA v. Fresno) (transfer of proceeds of water

rate to general fund violated Prop. 218);

• Morgan (retail water rates subject to Prop. 218);

• Mission Springs v. Verjil (2013) 218 Cal.App.4th 892 (same);

22 158438.6

• City of Palmdale v. Palmdale Water Dist. (2011) 198 Cal.App.4th

926 (Palmdale) (tiered water rates require cost-justification

under Proposition 218);

• Capistrano Taxpayers Association, Inc. v. City of San Juan

Capistrano (2015) 235 Cal.App.4th 1493 (San Juan Capistrano)

(same).

The City's amid develop this argument more fully. (E.g., Howard

Jarvis Taxpayers Association Brief ("HJTA Br.") at p. 8; Jack Cohen

Brief ("Cohen Br.") at p. 4; Tesoro Refining and Marketing

Company, LLC Brief ("Tesoro Br.") at pp. 7-8; Great Oaks Water

Company Brief ("Great Oaks Br.") at pp. 14-15.)

UWCD's amid who argue for application of Apartment

Association to water rates cases read Bighorn narrowly and neglect

this case law. Indeed, Santa Clara Valley Water District ("Santa

Clara"), represented by able counsel who make a cogent case for this

approach, cites none of these cases. A need to wipe away a decade's

development of Proposition 218 case law demonstrates how much

work will be required of the courts if this Court is to belatedly

pursue the road not taken in Bighorn. Pajaro I notes the doctrinal

significance of Bighorn's rejection of HJTA v. Los Angeles. (Pajaro I,

supra, 150 Cal.App.4th at p. 1387; see also Signal Hill Br. at pp. 21,

23.)

Indeed, this Court has cited Apartment Association just four

times - and with little analysis. (California Redevelopment Assn. v.

23 158438.6

Matosantos (2011) 53 Cal.4th 231, 279 [noting Apartment Association's

refusal to apply liberal construction provision of Proposition 218' s

uncodified § 5]; Greene v. Marin County Flood Control and Water

Conservation Dist. (2010) 49 Cal.4th 277, 287 (Greene) [construction of

Prop. 218 is legal question reviewed de novo]; Silicon Valley Taxpayers

Ass'n, Inc. v. Santa Clara County Open Space Authority (2008) 44

Cal.4th 431, 442-443 (Silicon Valley) [historic relationship of

Proposition 218 to Proposition 13]; id. at p. 449 [ballot arguments as

measure of Prop. 218's intent regarding assessments]; Richmond,

supra, 32 Cal.4th at p. 414 [Prop. 218 adopted arts. XIII C and XIII D

in 1996].) Thus, WRD rightly argues these passing citations make

Apartment Association "vital," but they tell us little about its reach.

(WRD Br. at p. 21.)

Indeed, as the City's amid note, no court has substantively

applied Apartment Association to a water rates case since Pajaro I

concluded Bighorn precluded it. (Cohen Br. at p. 15-16; HJTA Br. at

p. 8.)

Santa Clara cites a January 1997 annotation of Proposition 218

by the Howard Jarvis Taxpayers Association ("HJTA"), a proponent

of Proposition 218, to urge application of Apartment Association to

volumetric water rates. (Sta. Clara Br. at pp. 8, 12, fn. 1.) However,

the post-election views of an initiative proponent do not evidence

intent of voters who adopted it. (E.g., Carman v. Alvord (1982) 31

Cal.3d 318, 331, fn. 10 [rejecting declaration of the late Howard Jarvis

24 158438.6

in construing Proposition 13].) Indeed, the HJTA does not espouse

the view. It argues Proposition 218 applies here. (HJTA Br. at p. 6.)

2. Even if this Court wished to reverse a

decade of case law, Proposition 218 cannot

be read to exclude water rates

Proposition 218 defines "property related fee" to encompass

more than fees collected on the property tax roll. Article XIII D,

section 2, subdivision (e) defines the property related fees to which

article Xill D, section 6 applies to include:

• "any levy"

• "imposed by an agency"

• "upon a parcel or upon a person as an incident of property

ownership"

• "including a user fee or charge for a property related service."

(Cal. Const., art. XIII D, § 2, subd. (e).) Thus, it plainly includes more

than fees on parcels.

While the phrase "as an incident of property ownership"

might have meant "because of ownership of property," that is hard

to reconcile with "a user fee . . . for a property related service."

Plainly, fees triggered by bare title are not the universe of property

related fees under Proposition 218. Fees triggered by use of a

"property related service" are such fees, too. Such a fee necessarily

25 158438.6

involves both some ownership interest in property (a fee or

leasehold) and the use of some service. (Cf. Great Oaks Br. at p. 18.)

Nor is "property ownership" limited to fee title, as

article XIII D, section 2, subdivision (h) defines that term to "include

tenancies of real property where tenants are directly liable to pay the

.. . fee, or charge in question." Thus, at least fee titles and tenancies

are "property ownership" sufficient to bring fees within the reach of

article XIII D.

Finally, "property related service" is defined - in somewhat

circular terms - as "a public service having a direct relationship to

property ownership." (Cal. Const., art. XIII D, § 2, subd. (h).) This

phrase, too, suggests "property related fees" include more than

those collected on the property tax roll.

Article XIII D's remaining terms provide context that

illuminates this issue. Fees are distinguished from taxes and

assessments by the permissible levies "upon any parcel of property

or upon any person as an incident of property ownership" listed in

article XIII D, section 3, subdivision (a).

Property related fees apparently include those for "sewer,

water and refuse collection services" because, otherwise, the

exclusion of such fees from the election requirement of article XIII D,

section 6, subdivision (c) would be unnecessary. (See also Pajaro II,

supra, 220 Cal.App.4th at p. 596 [groundwater augmentation charge

was a fee for "water" service exempt from election requirement of

26 158438.6

art. XIII D, § 6, subd. (c)]; see also Crawley v. Alameda County Waste

Management Authority (Dec. 1, 2015, Al 43650) _Cal.App.4th_

[2015 WL 9437953 at pp. *6-*7] (Crawley) [property tax roll fee for

household hazardous waste management services was a fee for

"refuse" service exempt from election requirement of art. XIII D, § 6,

subd. (c)].)

Moreover, Proposition 218' s framers deemed it necessary to

expressly exempt "fees for the provision of electrical or gas service."

(Cal. Const., art. XIII D, § 3, subd. (b).) If ordinary utility fees were

not "fees for a property related service," these two exemptions

would be unnecessary.

Other provisions of article XIII D limit the reach of its

definition of "property related fee." Article XIII D, section 6,

subdivision (a)'s notice requirements impliedly limits these fees to

those as to which it is possible to know in advance what parcels are

affected. (Cal. Const., art. XIII D, § 6, subd. (a)(l); Richmond, supra, 32

Cal.4th at pp. 422-423.) Some sort of service to property - as

article XIII D, section 2, subdivision (g) defines the term - must be

associated with the fee for these rate-making requirements of

article XIII D, section 6, subdivision (b) to be sensible:

158438.6

(1) Revenues derived from the fee or charge shall not

exceed the funds required to provide the property

related service.

27

(3) The amount of a fee or charge imposed upon any

parcel or person as an incident of property ownership

shall not exceed the proportional cost of the service

attributable to the parcel.

(4) No fee or charge may be imposed for a service

unless that service is actually used by, or immediately

available to, the owner of the property in question.

(5) No fee or charge may be imposed for general

government services ... where the service is available to

the public at large in substantially the same manner as it

is to property owners.

(Cal. Const., art. XIII D, § 6, subd. (b), emphases added; cf. Cohen Br.

at p. 19 [arguing Proposition 218 prohibits property related fees

other than for property related services].) This refutes Santa Ynez's

argument (Sta. Ynez Br. at p. 19) that a fee can be incident to

property ownership without triggering Proposition 218 if imposed

for something other than a property related service. Such a fee must

logically fall into another exception to article XIII D, section 3,

subdivision (a) - as for taxes or assessments.

Still further, a property related fee must be imposed with

respect to a purpose, identifiable when the fee is legislated for

article XIII D, section 6, subdivision (b)(2) to be sensible: "Revenues

derived from the fee or charge shall not be used for any purpose

other than that for which the fee or charge was imposed."

28 158438.6

For these reasons, the Sixth District recently concluded

groundwater replenishment charges are subject to Proposition 218 as

fees for a property related service. (Great Oaks, supra, 242

Cal.App.4th 1187 [2015 WL 8236204 at pp.*11-*12].) It reasoned as

follows:

(Ibid.)

In Amrhein [i.e., Pajaro I] we essentially concluded that

the groundwater augmentation charge there was

conceptually indistinguishable, for purposes of

property-relatedness, from the charges in those two

cases [i.e., Richmond and Bighorn].)

In Griffith [i.e., Pajaro II] we took the further step

of acknowledging that the indirect delivery of water to

groundwater extractors - whether by replenishment of

the groundwater basin, or by measures reducing

demands on it - was conceptually indistinguishable

from the direct delivery of water.

Thus, Great Oaks explains why this Court chose in Bighorn not

to follow the path suggested by Apartment Association as to water

service charges, but to follow instead the path suggested in

Richmond. (Bighorn, supra, 29 Cal.4th at pp. 216-217.)

29 158438.6

3. Applying Apartment Association to water

rates to overturn Pajaro I is unnecessary

and disruptive

Local governments have adapted to Proposition 218's

demands for water rates in the decade since Bighorn. This has

required more careful cost justification of rates and has required

some litigation to clarify our Constitution's demands, as

demonstrated by Pajaro I, Pajaro II, Palmdale, Morgan, and San Juan

Capistrano. However, Proposition 218 does not prevent water utilities

from recovering all of their costs or managing limited resources, as

UWCD's amid fear. (E.g., Sta. Ynez Br. at p. 26; Pajaro II, supra, 220

Cal.App.4th at pp. 597-598 [property related fee under Prop. 218 can

recover agency's costs, including debt incurred for abandoned

projects and costs to plan future services], Moore, supra, 237

Cal.App.4th at pp. 369-370 [same].) Above-cost pricing is neither

essential to conserving water nor permitted by Proposition 218 or

Proposition 26, despite Santa Ynez's unpersuasive claim to the

contrary. (Sta. Ynez Br. at pp. 26-27.)

Santa Ynez is more persuasive when it argues San Juan

Capistrano over-reached in rejecting the use of fines to accomplish

regulatory goals attendant to water service, including the

conservation goal of article X, section 2. (Sta. Ynez Br. at pp. 26-28.)

However, whether or not one accepts the very exacting review

of legislative rate-making espoused by San Juan Capistrano; utilities

30 158438.6

plainly may decide how much water to make available, for what

uses, and on what terms. (Wat. Code,§ 370 et seq. [safe harbor for

tiered rates]; id. at§ 372.)

Applying Apartment Association to water rates now, and thus

limiting Proposition 218 to water rates imposed in flat amounts

collected on the tax roll - as Pajaro I suggests is a possible reading

of Apartment Association (Pajaro I, supra, 150 Cal.App.4th at pp. 1386-

1387) - would unsettle expectations that have arisen over the last

decade and raise questions as to the application of Proposition 218 to

other fees - including:

• sewer fees as in Moore;

• the refuse collection fees mentioned in article XIII D,

section 6, subdivision (c); and

• the water quality and flood control fees at issue in Howard

Jarvis Taxpayers Association v. City of Salinas (2002) 98

Cal.App.4th 1351 and in Greene.

Thus, although the path amici would blaze from Apartment

Association to the original (i.e., pre-rehearing) ruling in Pajaro I is

intellectually consistent and could have been the law, it is not the

law. It does not comport well with the language of Proposition 218

- especially the partial exemption of water fees from the election

requirement of article XIII D, section 6, subdivision (c) and the

complete exemption for gas and electric fees of article XIII D,

section 3, subdivision (b) - and would require this Court to

31 158438.6

overturn a decade of case law. It would unsettle the law to create

rate-making discretion not necessary to allow utilities to recover all

of their costs and to manage scarce water resources.

In any event, it is not possible to sustain the rates in issue here

without overruling Pajaro I, as the trial court concluded and as the

City's amici demonstrate. (10JA:88:2150; Great Oaks. Br. at p. 22.)

B. Regulatory Fees Are Exempt from Proposition

218, but the Fee in Issue Here Is Not Such a Fee

As Apartment Association, Richmond and the analysis of Pajaro I

demonstrate, a fee on voluntary conduct to fund regulation of that

conduct is not a fee for a property related service subject to

Proposition 218. (Cf. Cal. Const., art. XIII C, § 1, subd. (e)(3)

[regulatory fee exemption from Prop. 26].) To this extent, the City

disagrees with its amicus, Jack Cohen, who entirely rejects Sinclair

Paint's purpose test of the legal character of revenue measures.

(Cohen Br. at p. 11; see also Sinclair Paint Co. v. State Bd. of

Equalization (1997) 15 Cal.4th 866, 874 (Sinclair Paint).) Even the

HJTA, which reads the regulatory fee exception to Proposition 26

very narrowly (HJTA Br. at p. 19), agrees with this point. The

Sustainable Groundwater Management Act, Water Code

sections 10720 et seq. ("SGMA"), authorizes such fees, too, as the

Kern County (at pp. 6, 13-16), Signal Hill (at p. 13) and Cohen (at

p. 13) briefs demonstrate. However, these are not fees for a property

related service, such as delivery of the volume of water needed for

32 158438.6

residential use of property. (Richmond, supra, 32 Cal.4th at p. 415;

Bighorn, supra, 39 Cal.4th at p. 214.) Santa Ynez's claim (Sta. Ynez Br.

at p. 18) that this amounts to a legislative recognition that only water

supply fees need comply with Proposition 218 is imprecise. It better

serves the Constitution to observe that only fees for a property

related water service need comply with Proposition 218.

Thus, Apartment Association exempted from Proposition 218 a

fee for housing code enforcement as to those who chose to

participate in the rental housing market. Richmond similarly

exempted a fee to fund public services to new development. The

SGMA fees which the Legislature has not required to comply with

Proposition 218 involve regulation of the use of groundwater - as

distinct from groundwater augmentation service. (County of Kern

Brief ("Kern County Br.") at pp. 6, 13-16; Signal Hill Br. at pp. 13,

32). That statute does require Proposition 218 compliance for

groundwater service charges. (Wat. Code, § 10730.2; Cohen Br. at

p. 13 [arguing the SGMA statute codifies Pajaro II]; Signal Hill Br. at

p. 34 [noting Greene, supra, 49 Cal.4th at pp. 290-291 stated: "In cases

of ambiguity we also may consult any contemporaneous

constructions of the constitutional provision made by the Legislature

or by administrative agencies." (quoting City and County of San

Francisco v. County of San Mateo (1995) 10 Cal.4th 554, 563, construing

art. XIII, § 11)].)

33 158438.6

However, UWCD's is not such a fee. Rather, it is a fee for

groundwater service and acts to encourage agricultural water use by

delivering water at rates subsidized by higher rates on non

agricultural customers. Great Oaks reached the same conclusion

regarding the similar fee of the Santa Clara Valley Water

Conservation District:

The District directs us to nothing in the record that

would compel or even permit a finding that the

extraction fee here falls within the "regulatory purpose"

hypothesis we posited in Amrhein [i.e., Pajaro I]. While

the fee as a whole may be intended in part to influence

the consumption of groundwater, it is not "structured"

in the sense contemplated above. Nor does anything in

the District Act "clearly establish[ ]" that it has a

regulatory purpose. Nothing in the notice to owners

explaining the basis for the fee alluded to any such

objective. The trial court expressly found that the charge

"does not serve a significant regulatory purpose." We

detect no error in that finding.

(Great Oaks, supra, 2015 WL 8236204 at p. *13, all but first abridgment

original.) Accordingly, the claims of UWCD' s amid that its fees can

be justified as regulatory because they promote water conservation

simply misread the records here. (E.g., Sta. Clara Br. at p. 20.)

Moreover, the same claim could have been made in Bighorn and was

34 158438.6

expressly rejected as a basis to exempt water service fees from

Proposition 218 in Palmdale and San Juan Capistrano. (Bighorn, supra,

39 Cal.4th 205; see also Palmdale, supra, 198 Cal.App.4th at p. 985; San

Juan Capistrano, 235 Cal.App.4th at p. 1510.)

In fact, as the City has explained, UWCD's principal act

precludes it from imposing fees that promote conservation because

Water Code section 75593 requires uniform rates throughout the

District. (See OB at p. 39; RB at pp. 20-21, 31; see also Cohen Br. at

p. 31; Great Oaks Br. at p. 23; Signal Hill Br. at p. 36.) Unlike the

tiered rates that some water retailers - who also have a duty to

conserve water - impose, UWCD's flat rates do not discourage

wasteful use of groundwater. (See RB at pp. 20-21.) Instead, the

subsidized rate agriculture pays makes it profitable for growers to

switch from low-water-intensity orchard crops to water-hungry

berry crops. (OB at p. 39; RB at p. 20.)

As the HJTA observes, nothing in the ordinance imposing the

fee in issue here speaks to a regulatory objective. (HJTA Br. at p. 20.)

UWCD's two records also demonstrate it imposes this fee to recover

the cost of augmenting groundwater supplies, not to cover its cost to

regulate groundwater use. (AR1:65 [resolution imposing FY2011-

2012 rates]; AR2:142 [resolution imposing FY2012-2013 rates]; see

also Wat. Code, § 75523 [groundwater charge proceeds may be used

for any "district purposes authorized by [the Water Conservation

District Law of 1931]"].)

35 158438.6

Of course, every water provider engages in regulation to some

extent - to limit the demand for their services, to protect public

health, and to manage a scarce resource. This is apparent from the

definition of "water" services partially exempt from Proposition 218.

(Cal. Const., art. XIII D, § 6, subd. (c); Gov. Code, § 53750, subd. (m);

Pajaro II, supra, 220 Cal.App.4th at p. 596.) It is also apparent from

the similarities - and differences - between the two Water Code

sections authorizing newly formed SGMAs to impose regulatory

and service fees. (Wat. Code, §§ 10730, subd. (a), 10730.2; see also

Kern County Br. at pp. 6-7; Signal Hill Br. at pp. 13, 32). Indeed, fees

that mix service and regulatory purposes have arisen in other

contexts. (Cohen Br. at p. 9, citing Kern County Farm Bureau v. County

of Kern (1993) 19 Cal.App.4th 1416, 1424 [fee on tax roll to fund

county landfill was both service fee and served "a regulatory or

police power function"].) Thus, a broad exemption from Proposition

218 for fees with a "regulatory" purpose could prevent its

application to fees for property related services entirely, effectively

excising that phrase from our Constitution. (Cf. Signal Hill Br. at

p. 40.)

How, then, ought courts to distinguish regulatory fees

governed by Propositions 13 and 26 pertinent to water use from

retail water service fees governed by Proposition 218 and wholesale

water service fees governed by Proposition 26? As this Court

distinguishes all revenue measures - in light of the principal

36 158438.6

purpose for which they are imposed. (Sinclair Paint, supra, 15 Cal.4th

at p. 874; cf. Richmond, supra, 32 Cal.4th at p. 426 [finding connection

fees imposed not "on such persons 'as an incident of property

ownership' but instead as an incident of their voluntary decisions to

request water service"]; Bighorn, supra, 39 Cal.4th at pp. 216-217

["Because it is imposed for the property-related service of water

delivery, the Agency's water rate, as well as its fixed monthly

charges, are fees or charges within the meaning of article XIII D."];

see also Signal Hill Br. at pp. 36--40.)

Although the myriad fees that now exist or may hereafter be

created will undoubtedly create some hard cases, the general rules

of decision are plain: a fee imposed to recover the cost of water

service is subject to Proposition 218 if it is a property related fee (as

Bighorn and its progeny define the term) and subject to

Proposition 26 otherwise (because Proposition 26 applies to all fees

government imposes unless an exception applies); and a fee

imposed to regulate conduct to achieve public purposes is subject to

Proposition 26 - and, of course, Proposition 13 and its

implementing statute. (Gov. Code, § 50076 [defining "special tax"

under Prop. 13 to include fees in excess of service or regulation]).

Although Proposition 218 does not expressly apply such a

purpose test, its definitions are consistent with it - fees are subject

to that measure if they are property related, i.e., if imposed on a

parcel or on a person as an incident of property ownership,

37 158438.6

including a fee for a property related service. (Cal. Const.,

art. XIII D, § 2, subd. (e).) A fee for a property related service is a fee

imposed for the purpose of funding such a service and thus, Sinclair

Paint's test of fees under Proposition 13 is consonant with the

requirements of the successor to that measure - Proposition 218.

This approach respects both the language of Proposition 218,

which treats fees for property related services as within its reach,

and earlier case law upholding regulatory fees not incident to

property ownership. Great Oaks recently adopted this approach:

Here the District Act states that the charge is levied

upon extraction facilities within affected zones "for the

benefit of all who rely directly or indirectly upon the

ground water supplies of such zone or zones and water

imported into such zone or zones." (District Act, § 26.3)

It then declares that the proceeds of the charge shall be

used for importing, treating, and distributing water, as

well as replenishing the groundwater basin. (District

Act, § 26.3) We see no material distinction between

these purposes and the purposes that, as we held in

Griffith [i.e., Pajaro II], made the charge in that case one

for water service.

(Great Oaks, supra, 2015 WL 8236204, at p. *12.)

Thus, the regulatory fee rule need not eviscerate

Proposition 218 as UWCD and its amid argue and as Jack Cohen

38 158438.6

fears. (Cohen Br. at pp. 9-10.) Whether or not the categories of

regulatory fees and fees for property related services overlap, as

Cohen argues (at p. 11) - and Apartment Association would seem to

belie - Proposition 218 applies to fees for property related services

by its terms.

C . Amici's Suggested Limitations o n Richmond and

Bighorn Serve Neither the Language of

Proposition 218 Nor the Facts Here

Perhaps recognizing their primary argument overreaches,

UWCD's amici suggest a number of distinctions between rates for

piped water service as in Richmond and Bighorn and groundwater

augmentation charges at issue here and in Pajaro I and Pajaro II.

None respects the language of Proposition 218 and many simply do

not comport with the facts here.

I . Proposition 218 does not distinguish

commercial from residential water use

Although Pajaro I persuasively rejects any distinction under

Proposition 218 between fees for commercial water use and those for

residential water use, UWCD's amici argue the point, while the

City's amici refute it. (Compare Sta. Clara Br. at pp. 14-19, 20 with

Great Oaks Br. at p. 23; HJTA Br. at p. 11; Cohen Br. at p. 12, citing

Palmdale, San Juan Capistrano and Morgan; and Signal Hill Br. at

pp. 24-26.) Santa Clara purports to cite Bighorn for this distinction,

39 158438.6

but, to do so, finds it necessary to add "domestic" to this Court's

language there. (Sta. Clara Br. at p. 21, fn. 5.) This Court's own short

hand references to Bighorn read it to apply to all water delivery

charges: "In [Bighorn], we addressed whether water delivery charges

to existing customers were fees or charges within the meaning of

article XIIIC, section 3 . . . . " (Greene supra, 49 Cal.4th at p. 296.)

Even UWCD's amicus WRD agrees with the City on this

point. (WRD Br. at p. 21.) This argument also makes the result in this

case tum on who sued (a water utility or a rural resident) rather than

the purpose and legal character of the rates in issue.

UWCD and most other groundwater agencies are statutorily

obliged to establish "uniform" rates, so fees lawful as to those who

use water for residential purposes must be uniform with fees on

those who use water for other purposes. (Signal Hill Br. at pp. 7-8

[noting WRD has statutory obligation like UWCD's].) Thus, this

distinction would not help decide this case - or most others. Even

the intensely urban service area of the Water Replenishment District

of Southern California in the coastal plain of Los Angeles County

includes at least some wells operated for residential use. (WRD Br. at

pp. 1-2; Signal Hill Br. at pp. 5, 26-28.)

40 158438.6

2. Proposition 218 does not distinguish water

delivered via the groundwater table from

that delivered by pipe

Pajaro I found groundwater augmentation charges to be

property related fees because it could find no constitutional basis to

distinguish water supplied via the groundwater table from that

delivered by pipes. (Pajaro I, supra, 150 Cal.App.4th at pp. 1388-

1389.) UWCD's amid argue for just that distinction, urging this

Court to overrule Pajaro I. (E.g., Sta. Clara Br. at p. 20.)

What basis in our Constitution's text allows a distinction

among fees for water service based on the means of delivery? The

essential language of Proposition 218 gives not a hint of such a

purpose: "'Property-related service' means a public service having a

direct relationship to property ownership." (Cal. Const., art. XIII D,

§ 2, subd. (h).) Nothing in this definition suggests the technology by

which water is delivered is of constitutional significance. Moreover,

technology changes, but our Constitution does not. (E.g., Apple

Inc. v. Superior Court (2013) 56 Cal.4th 128, 137 ["'Drafters of every

era know that technological advances will proceed apace and that

the rules they create will one day apply to all sorts of circumstances

they could not possibly envision.' (Scalia & Garner, Reading Law:

The Interpretation of Legal Texts (2012) pp. 85-86.)"].) Thus, it is a

fraught task to construe Proposition 218 as depending on the

technology by which government delivers water.

41 158438.6

Santa Clara nevertheless urges this distinction, characterizing

use of domestic water delivered by mains as "passive" and

extraction of groundwater by a well as "active." (Sta. Clara Br. at

pp. 18-19.) However, every use of water requires some action of the

customer, whether it be to open a tap or to operate a well. Indeed,

the Court of Appeal has rejected a distinction between active and

passive customer conduct in deciding the scope of Proposition 218's

requirement that property related services be "immediately

available":

In sum, we conclude the water and sewer base rates

imposed on parcels with water or sewer connections

regardless of whether they are active or inactive, and

whether or not the property owner uses the services, are

fees subject to the provisions of article XIII D, section 6

(Paland v. Brooktrails Tp. Community Services Dist. Board of Directors

(2009) 179 Cal.App.4th 1358, 1137.) Nor is there anything in the

language of Proposition 218 that can sustain such a distinction.

Kern County urges a broad rule exempting all groundwater

fees from Proposition 218. (Kem County Br. at pp. 15-16.) However,

it notes groundwater providers can comply with Proposition 218's

procedures, as the Shasta Community Services District in Richmond

could not as to the water connection fees disputed there. (Id. at

p. 12.) It more persuasively argues to limit Pajaro I to water delivery

42 158438.6

and water service charges, subjecting true regulatory fees to

Proposition 26 instead. (Id. at p. 16.) This argument is the more

persuasive and better accounts for case law, as Signal Hill's brief

demonstrates. (Signal Hill Br. at p. 15.) The fees in dispute here are

for water service and can and should be imposed consistently with

Proposition 218. That conclusion need not impair the power of

Sustainable Groundwater Management Agencies to impose fees to

fund regulation consistently with Proposition 26 despite Kern

County's fears.

Moreover, these amici misconstrue the Sustainable

Groundwater Management Act. Water Code section 10730,

subdivision (a), allows groundwater management agencies to

impose fees under SGMA to recover costs that are plainly and solely

regulatory without requiring Proposition 218 compliance. Water

Code section 10730.2 authorizes fees for groundwater augmentation,

but requires Proposition 218 compliance. The Legislature's

interpretation of the reach of Proposition 218 as expressed in these

contrasting, adjacent code sections, reflects this Court's holdings in

Richmond and Bighorn, as well as the Court of Appeal's conclusions

in Pajaro I and Pajaro II, while recognizing that Apartment Association

applies to purely regulatory fees but not to charges for water supply

services. This point is elaborated in the City's supplemental brief to

the Court of Appeal filed September 29, 2014.

43 158438.6

Thus, WRD's repeated suggestion that UWCD's fees can be

saved because it serves its customers via the groundwater table

rather than through pipes is unsupported and unpersuasive. (WRD

Br. at p. 22.) Water delivery does not become groundwater

regulation merely because delivery is via the groundwater table.

3. Proposition 218 is not triggered by some

minimum number of residential users

The Court of Appeal opinion here purports to distinguish

Pajaro I by observing UWCD serves relatively fewer residential

groundwater users than does the Pajaro Agency. (City of San

Buenaventura v. United Water Conservation District (2015) 185

Cal.Rptr.3d 207, 221-222 (Buenaventura).) UWCD's amid repeat the

claim, citing only the Court of Appeal opinion in this case as

authority. (Sta. Clara Br. at pp. 17, fn. 3; 20.) This suggests

Proposition 218's constitutional standards have a residential-density

trigger nowhere stated in our Constitution. The relevant definition

of Proposition 218 is: "Property-related service means a public

service having a direct relationship to property ownership." (Cal.

Const., art. XIII D, § 2, subd. (h).) This says nothing of any number of

customers or residential customers. Thus, the claimed residential

density threshold fails. Moreover, the factual predicate is incorrect

on this record. (OB at p. 30 ["[T]he record contains no evidence of

the number of residential groundwater users in the District . . . . "]; RB

at p. 28.) As Great Oaks and Jack Cohen argue persuasively, the facts

44 158438.6

here are not distinguishable from those in Pajaro I. (Great Oaks Br. at

pp. 22-23; Cohen Br. at pp. 5-6.)

4. Violation of Proposition 21 B's substantive

requirements cannot exempt a fee from its

reach

Santa Ynez turns Proposition 218 on its head by arguing a fee

that violates the substantive restrictions of article XIII D, section 6,

subdivision (b) is - for that reason - not a property related fee

subject to Proposition 218. (Sta. Ynez Br. at p. 19.) As Great Oaks

demonstrates, the Court of Appeal did so, too. (Great Oaks Br. at

pp. 24-25.) This cannot have been the intent of the voters who

adopted Proposition 218, for it would make the measure

meaningless and circular - the only measures which need comply

with Proposition 218 are those which do.

Santa Ynez mistakes an argument this Court found persuasive

in Richmond - that a measure cannot (rather than did not) comply

with the procedural requirements of Proposition 218 suggests that

measure was not intended to be within its scope. Because the Shasta

Community Services District could not predict who might develop

new buildings requiring water service so as to provide the notice

required by article XIII D, section 6, subdivision (a)(l) of a fee

imposed on new service connections illustrated that the fee was not

within the reach of Proposition 218. That a fee cannot comply with

45 158438.6

Proposition 218' s procedures is very different from a fee which does

not comply with its substantive restrictions.

S. That UWCD's fee is mandatory does not

exempt it from Proposition 218

Santa Ynez also claims UWCD's fee must be for a benefit

rather than for a service because it is unlawful to pump water from

the basins UWCD serves without paying its fee. (Sta. Ynez Br. at

pp. 20-21 .) The same might be said of any government revenue - it

is unlawful to evade government fees, just as taxes whether by gate

jumping at a ticketed event; tampering with a water meter; or

engaging in untaxed, black-market transactions. The mandatory

nature of a government revenue measure is necessary to trigger any

of our constitutional revenue limitations; it is of no use in

distinguishing their respective reaches. (Cal. Const., art. XIII A, § 4

[local governments may "impose" special taxes]; art. XIII C, § l,

subd. (e) [taxes include "any levy, charge, or exaction of any kind

imposed by a local government"]; art. XIII D, § 2, subd. (e) [defining

property related fee as "any level . . . imposed by an agency"]; see

also Ponderosa Homes, Inc. v. City of San Ramon (1994) 23 Cal.App.4th

1761, 1770 [defining "impose" for purpose of Fee Mitigation Act as

involving the use of force or authority]; Citizens Ass'n of Sunset

Beach v. Orange County Local Agency Formation Com'n (2012) 209

Cal.App.4th 1182, 1194 [defining "impose" under Prop. 218 as "the

first enactment of a tax"].)

46 158438.6

6. Proposition 218 does distinguish "parcels"

from "property"

WRD would read Proposition 218 to protect property owners

from fees on their "parcels" but not on other property interests, like

the City's water rights. (WRD Br. at pp. 3, 14 [arguing water rights

are severable from land], 16.) This reading ignores our Constitution,

which defines a property related fee as a charge "upon a parcel or

upon a person as an incident of property ownership." (Cal. Const.,

art. XIII D, § 2, subd. (e).) It defines "property ownership" "to

include tenancies of real property where tenants are directly liable to

pay the assessment, fee, or charge in question." (Id., § 2, subd. (g).)

Had Proposition 218's framers meant to limit its protections to fees

on parcels, the words "property ownership" would not appear in

section 2, subdivision ( e ), nor would they be specially defined in

section 2, subdivision (g) to include some tenancies. WRD offers this

crabbed reading while acknowledging the use of the word

"including" in a definitional section like article XIII D, section 2,

subdivision (g), is a term of enlargement. (WRD Br. at p. 8.)

Perhaps WRD means to argue that, whether a fee is paid by an

owner or a tenant, it must affect a parcel of land and not some

severable interest in land like water rights. Even that argument is not

well taken for two reasons. First, nothing in the text or legislative

history of Proposition 218 supports it. It defines the property related

fees to which it applies as "any levy other than an ad valorem tax, a

47 158438.6

special tax, or an assessment, imposed by an agency upon a parcel

or upon a person as an incident of property ownership." (Cal.

Const., art. XIII D, § 2, subd. (e).) Justice Mosk explained that "as an

incident" does not mean "on an incident" and thus, property related

fees are not those triggered by title alone. (Apartment Association,

supra, 24 Cal.4th at pp. 840-841.) However, neither Apartment

Association nor the text of Proposition 218 allow us to read this broad

language out of the Constitution entirely. Plainly, Proposition 218

reaches further.

More fundamentally, such a reading cannot account for

Richmond and Bighorn and their progeny reaching water fees, as

detailed above. (See section II.A, supra.)

Still further, if the City's water rights, and its title to the

parcels from which it exercises those rights, were not a "parcel" to

be protected by Proposition 218, neither would home sites of rural

residents UWCD serves. And, as the City's principal briefs argue,

UWCD's duty to impose "uniform rates" requires it to charge the

City comparably with those who are protected by Proposition 218.

(OB at pp. 9-10, 35; RB at p. 31.) Thus, WRD's observation that the

City is not situated precisely as a residential pumper does not

persuade, as WRD overlooks UWCD's (and WRD's own) duty to

impose uniform rates. (WRD Br. at p. 14, fn. 7; p. 21, fn. 9.)

Plainly, WRD' s restrictive reading of Proposition 218' s

definitions cannot save UWCD's fees here nor can it justify

48 158438.6

application of the 3:1 ratio of Water Code section 75594. Pajaro I's

more thorough reading better harmonizes Apartment Association

with Proposition 218's specific references to rates for water service

underlying this Court's conclusions in Richmond and Bighorn. WRD' s

claim Pajaro I somehow turns only on "the method of calculating the

amount of the charge" simply does not respect the depth of that

court's analysis. (Compare WRD Br. at p. 22 with Pajaro I, supra,

150 Cal.App.4th at pp. 1384-1394.)

7. Proposition 218 is not limited to

consumption-based fees

WRD misquotes Bighorn to propose another untenable

limitation of Proposition 218. Bighorn ruled that water service fees

are subject to Proposition 218 even when measured by consumption,

refusing to extend Apartment Association to conclude a fee triggered

by voluntary use of property in a particular way is not a property

related fee. To understand WRD's error, it is necessary to quote the

language of Bighorn from which it argues:

158438.6

Article XIII D defines "fee" or "charge" as "including a

user fee or charge for a property related service." (Cal.

Const., art. XIII D, § 2, subd. (e), italics added.) The

word "including" is "'ordinarily a term of

enlargement."' (Hassan v. Mercy American River Hospital

(2003) 31 Cal.4th 709, 717, 3 Cal.Rptr.3d 623, 74 P.3d

49

726.) As we explained in Richmond, supra, 32 Cal.4th 409,

9 Cal.Rptr.3d 121, 83 P.3d 518, domestic water delivery

through a pipeline is a property-related service within

the meaning of this definition. (Id. at pp. 426-427, 9

Cal.Rptr.3d 121, 83 P.3d 518.) Accordingly, once a

property owner or resident has paid the connection

charges and has become a customer of a public water

agency, all charges for water delivery incurred

thereafter are charges for a property-related service,

whether the charge is calculated on the basis of

consumption or is imposed as a fixed monthly fee.5

Consumption-based water delivery charges also fall

within the definition of user fees, which are "amounts

charged to a person using a service where the amount

of the charge is generally related to the value of the

services provided." (Utility Audit Co., Inc. v. City of Los

Angeles (2003) 112 Cal.App.4th 950, 957, 5 Cal.Rptr.3d

520.) Because it is imposed for the property-related

service of water delivery, the Agency's water rate, as

well as its fixed monthly charges, are fees or charges

within the meaning of article XIII D . . . .

(Bighorn, supra, 39 Cal.4th at p. 227, emphases added.) The footnote

five omitted from this quote expressly overrules HJTA v. Los Angeles'

50 158438.6

holding that consumption-based water fees are outside the reach of

Proposition 218 under the logic of Apartment Association.

WRD's able counsel renders this as a limitation of

Proposition 218 to consumption-based fees:

As used in article XIII D, section 2, subdivision (e), the

term "user fee" means an "'amount[] charged to a

person using a service where the amount of the charge

is generally related to the value of the services

provided."' (Bighorn, supra, 39 Cal.4th at p. 217.) The

amounts of the pump charges at issue are not related to

the value of any service the pumper receives from the

District. Instead, the amounts are determined by the

volume of water the pumper extracts from the ground

. . . . Accordingly, the pump charges are not "user fees"

within the meaning of article XIII D. The City does not

disagree; its briefs on the merits do not address "user

fees."

(WRD Br. at p. 9.)

This argument is entirely unsupported by the cited language

from Bighorn, as the fuller quotation above plainly reveals. Thus, the

City does disagree. It briefs no separate argument about "user fees"

because no authority supports WRD' s effort to limit Proposition 218

to such fees. (Cf. HJTA v. Fresno, supra, 127 Cal.App.4th at p. 918

["Proposition 218 uses the words 'fees' and 'charges'

51 158438.6

I

I

interchangeably and, usually, in combination, as 'fee or charge.'

(See, e.g., art. XIII D, § 6.) For convenience, we shall refer to these

simply as 'fees."'].)

8. Whether groundwater is served to an

adjudicated or unadjudicated basin is

immaterial

Seeking to litigate its own disputes here, WRD urges this

Court to reserve whether Proposition 218 applies equally to agencies

which serve water via adjudicated and unadjudicated basins. (WRD

Br. at pp. 27-32.) WRD would distinguish its legal obligations from

UWCD's, stating:

• the Central and West Basins of Los Angeles County it

maintains have been adjudicated to operate as a common

pool,

• pumping there exceeds the safe yield of those basins,

• it operates under a different statute than UWCD, and

• it has no obligation to distinguish agricultural from non

agricultural water use.

(WRD Br. at pp. 28-32.) Signal Hill, WRD's recent adversary in

litigation, rebuts these claims. (Signal Hill Br. at pp. 8-12.)

The City need not referee a dispute to which it is a stranger.

However, it must observe that water rights are property whether

limited by adjudication or only by the duty to use water reasonably

52 158438.6

I

I .

and to avoid the waste forbidden by article X, section 2. (Tesoro Br.

at pp. 1-5.) Moreover, the distinctions WRD asserts do not actually

distinguish this case, which involves both adjudicated (Santa Paula)

and unadjudicated basins (the remaining seven). (AR1:95:0004 &

0033.) The "common pool" theory is disputed both here (OB at

pp. 16-17) and in Los Angeles (Signal Hill Br. at pp. 8-12). Both

agencies exist to address overdraft - water pumping in excess of

safe yield leading to subsidence and salt water intrusion. (OB at

pp. 42-43, citing AR1:62:0069--0070; AR2:53:0069--0070; AR1:62:0034;

AR2:53:0034; WRD Br. at pp. 9-10.) The Sustainable Groundwater

Management Act distinguishes adjudicated and unadjudicated

basins for purposes of groundwater management - largely

excluding adjudicated basins governed by court-appointed water

masters. (WRD Br. at p. 31 , citing Wat. Code, § 10720.8.) It does not

do so for purposes of fee-setting power. (Wat. Code, §§ 10730, subd.

(a), 10730.2.) That WRD does not distinguish farmers from others in

its intensely urbanized boundaries does not undermine the force of

this case for the broader rate-making principles in issue.

In short, WRD' s desire that this Court write narrowly cannot

justify writing more narrowly than the facts of this case require.

D. UWCD's Fees Are Incident to the Exercise of

Ventura's Property Rights in Groundwater

The City's amid persuasively demonstrate the City's

groundwater rights are themselves real property. (Tesoro Br. at

53 158438.6

pp. 2-5; Great Oaks Br. at pp. 16-17.) Indeed, as Great Oaks freshly

states:

That it is incidental to ownership of the property also

follows from the statutory definition of "appurtenant"

as a synonym of "incidental." (Civ. Code, § 662 ["A

thing is deemed to be incidental or appurtenant to land

when it is by right used with the land for its benefit, as

in the case of a way, or watercourse, or of a passage for

light, air, or heat from or across the land of another."].)

(Great Oaks, supra, 2015 WL 8236204 at p. *7.) It further goes on to

hold that the appropriative right to extract groundwater is, of itself,

ownership of real property. (Id. at p. *9-*10 ["an appropriative water

right is itself real property"].)

Thus, a fee that must be paid because the City exercises its

groundwater rights is necessarily incident to those property rights.

Indeed, amicus Great Oaks draws a helpful analogy to case law

holding excise taxes on privileges related to property are property

related taxes. (Great Oaks Br. at p. 13.)

It is Orwellian to claim, as Santa Ynez does, that UWCD may

impose a fee on Ventura so the City may "enjoy the privilege of

exercising their rights to pump groundwater." (Sta. Ynez Br. at

p. 21.) Rights are not mere privileges conferred by government.

Charging Ventura to use its groundwater is akin to charging a

homeowner to occupy his house. (Cf. Buenaventura, supra, 185

54 158438.6

Cal.Rptr.3d at p. 226 [finding homeowner analogy "inapt''].) Either

of these hypothetical charges is a tax requiring voter approval unless

it complies with Proposition 218's rules for property related fees and

Proposition 26' s rules for other fees.

The Court of Appeal's contention UWCD's fee is comparable

to a park entrance fee would persuade if UWCD owned Ventura's

water rights as the state owns its parks. (Buenaventura, supra, 185

Cal.Rptr.3d at p. 226.) The City's amid persuasively demonstrate

otherwise. The City's groundwater rights are its property, not

UWCD's. Indeed, our Constitution's understanding that public

agencies own property appears not only in article XIII, section ll's

provisions for its taxation (specifically including water rights), as

Signal Hill notes (at p. 19), but also in Proposition 26's recognition

that fees for the use of government property are not taxes and need

not be limited to any cost of service. (Cal. Const., art. XIII C, § 1,

subd. (e)(4).) The Court of Appeal and Santa Ynez overlook this

separate treatment of fees for use of property, treating park fees as a

species of fees for a government-conferred benefit or privilege.

(Buenaventura, supra, 185 Cal.Rptr.3d at p. 226; Sta. Ynez Br. at p. 24.)

158438.6

Great Oaks is more persuasive on this point:

The ultimate question is not how legal scholars might

view the rights in question, but whether the voters

intended to extend Article 13D's reach to such a charge.

As in the foregoing cases, this question must be

55

answered by consulting other evidence of the voters'

intent.

[T]he voter pamphlet provides strong evidence that the

voters expected, and thus intended, that the article

would reach charges for water service.

(Great Oaks, supra, 2015 WL 8236204 at p. *10.) Tesoro also shows

voters intended Proposition 218 to apply to water service fees.

(Tesoro Br. at pp. 5-7.)

In sum, because groundwater rights are real property rights, a

fee for the City's exercise of those rights is property related.

E. The City's Amici Go Too Far on Some Points

HfTA contends UWCD's fees are subject to Proposition 218

because the City passes them through to its rate-payers in its retail

water service rates. (HfTA Br. at p. 13.) This argument is

unpersuasive for several reasons. First, this would make every

wholesale fee subject to Proposition 218 even though those who buy

water for resale may have no property to which this service can

relate, thus taking them outside the language of article XIII D,

section 2. Second, as HfTA's reference to Jacks v. City of Santa Barbara

(pending here as case number 5225589, review granted June 10,

2015) demonstrates, this argument allows the economic incidence of

a fee (who ultimately pays it) to control its legal character, rather

56 158438.6

than its legal incidence (who legislation obliges to pay it). That

deviates from the "purpose" principle of Sinclair Paint and this

Court's other cases characterizing disputed revenue measures.

(Sinclair Paint, supra, 15 Cal.4th at pp. 874 [collecting cases].) And, as

detailed in the City of Santa Barbara's briefs on the merits in Jacks,

such a rule would destabilize the law by allowing mutual and

debatable questions of econometric fact (i.e., who actually bears the

economic burden of a fee) control over the more stable legal

incidence inquiry, which turns only on the usual tools of statutory

construction. (E.g., City of San Diego v. Shapiro (2014) 228 Cal.App.4th

756, 783, fn. 28, citing Fulton Corp. v. Faulkner (1996) 516 U.S. 325, 341

[distinguishing economic and legal incidences of revenue measure].)

Economic incidence can change from time to time and place to

place depending on the market power of the parties to a given

transaction. Although this Court is immune from taxation, it pays

sales taxes imposed on the privilege of selling except when its

vendors declare "sales tax holidays" and decide not to pass on the

tax.

Moreover, HJTA offers no means to distinguish every other

cost government incurs to provide service. (See, e.g., Pajaro II, supra,

220 Cal.App.4th at p. 598 [detailing costs property related fee may

recover].) If UWCD's charges are subject to Proposition 218 because

Ventura funds them by its retail water rates, are the City's contracts

57 158438.6

for labor and materials subject to Proposition 218, too? HJTA's pass

through test proves too much.

Amicus Great Oaks suggests UWCD's fee is a special tax

because it has a purpose to benefit society generally and because the

City does not benefit from UWCD's services. (Great Oaks Br. at

pp. 9, 18-19, 25, 27.) The City disagrees. It does benefit (to differing

degrees based on well location and basin hydrogeology) from the

water UWCD delivers. Cost-limited fees for such services are plainly

excluded from our Constitution's definition of "tax". (Cal. Const.,

art. XIII C, § 1, subd. (e)(2) [fees for government services limited to

cost and apportioned consistently with payor's benefits from or

burdens on service not taxes under Prop. 26]; art. XIll D, § 6,

subd. (c) [water service fees are property-related fees exempt from

election requirement of Prop. 218]; Gov. Code, § 50076 [user fees

limited to cost are not taxes under Prop. 13].) Adopting Great Oaks'

claim would prevent UWCD from funding its services without the

two-thirds voter approval Proposition 13' s article XIII A, section 4

requires for special taxes - assuming it has statutory power to tax,

as not all special districts do. Yet Proposition 218's framers

specifically exempted water service charges from that high hurdle.

(Cal. Const., art. XIII D, § 6, subd. (c).)

The City's own water utility service is funded by fees subject

to the demands of Proposition 218 and exempt from those of

Propositions 13 and 26. (Bighorn, supra, 39 Cal.4th at p. 217.) Thus,

58 158438.6

the Constitution protects City customers from abuse of its rate

making power. It is not necessary to impair governments' ability to

fund water services to address UWCD's unlawful rate

discrimination between agriculture and others.

Signal Hill urges application of the liberal construction rule of

Proposition 218's uncodified section 5. (Signal Hill Br. at pp. 28-29.)

Of course, if this Court concludes the language of Proposition 218 is

genuinely ambiguous in light of case law construing it to date, resort

to this rule of construction may provide some assistance. In general,

however, such self-serving language in initiative proposals can

contort our law to partisan advantage in ways voters are unlikely to

have considered. Thus, this Court's previous reluctance to resort to

that rule strikes the City as prudent. (Apartment Association, supra, 24

Cal.4th at pp. 844-845.)

I l l . UWC D'S F E E S VIOLATE P ROPOSITION 2 18

BECAUSE THEY EXC E E D THE P ROPORTIONAL

COST OF S E RVI N G THE C ITY

Cases arising under Proposition 13 have allowed rate-makers

to establish rates for rationally drawn classes of customers who take

comparable services at comparable cost. (E.g., California Farm Bureau

Federation v. State Water Resources Control Board (2011) 51 Cal.4th 421,

438 (Farm Bureau).) Despite the more specific language of

Proposition 218's article XIII D, section 6, subdivision (b)(3) ("the

proportional cost of the service attributable to the parcel"), cases

59 158438.6

I I i

allow the practice for property related fees, too. (Pajaro II, supra, 220

Cal.App.4th at p. 601; Morgan, supra, 223 Cal.App.4th at pp. 908-909

["There is nothing in section 6 that prohibits an agency from

charging different rates to its customers as long as the fees paid by

customers are proportional and the total amount the agency collects

does not surpass the cost of providing the service"].)

The reason is one of practicality - it is not administratively

feasible to make minute distinctions between thousands of similarly

situated utility customers, and the cost to do so would overcome any

benefit. The rule, thus, cannot apply without practical justification

for it. State Water Project contractors with a handful of customers

therefore may not have the benefit of this rule, and the San Diego

County Water Authority persuasively rebuts the incomplete analysis

of the Metropolitan Water District of Southern California. (San Diego

County Water Authority Brief ("SDCWA Br.") at pp. 3-6;

Metropolitan Water District of Southern California Brief

("Metropolitan Br.") at pp. 11-13.) The authorities on which

Metropolitan relies, Farm Bureau and Brydon, construe

Proposition 13. (See Farm Bureau, supra, 51 Cal.4th at p. 437; Brydon v.

East Bay Mun. Utility Dist. (1994) 24 Cal.App.4th 178, 187.) They

cannot account for the final, unnumbered paragraph of

Proposition 26, adopted in 2010, or the demand of article XIII D,

section 6, subdivision (b)(3) adopted by 1996's Proposition 218.

60 158438.6

Amicus Jack Cohen wishes the Constitution might become

more demanding as technology makes fine distinctions among

customers more practicable and less costly. (Cohen Br. at pp. 29, 36.)

However, no language in Proposition 218 invites such an evolving

legal standard. Rate-making is legislative. (20th Century, supra, 8

Cal.4th at p. 277; Great Oaks, supra, 2015 WL 8236204 at p. *24.) And

judicial review of rate-making is generally confined to the rate

maker' s administrative record. (Great Oaks, supra, 2015 WL 8236204

at p. *27; see also Western States, supra, 9 Cal.4th at p. 576 [mandamus

review of legislative action confined to legislative record]; Evans v.

City of San Jose (2005) 128 Cal.App.4th 1123, 1144 ["A fundamental

rule of administrative law is that a court's review is confined to an

examination of the record before the administrative agency at the

time it takes the action being challenged"].)

Thus, whether an agency may make rates on the basis of well

drawn customer classes is, initially, a legislative choice then subject

to judicial review. That judicial review is independent under

Propositions 218 and 26. (Cal. Const., art. XIII D, § 6, subd. (b)(5);

art. XIII C, § 1, subd. (e) [final, unnumbered para.]; Silicon Valley,

supra, 44 Cal.4th at p. 448; Crawley, supra, 2015 WL 9437953 at p. *3

[de novo appellate review and independent trial court review under

Prop. 218].) Thus, Metropolitan's argument that class-by-class rate

making is always permissible (at p. 15), even for an entity like

Metropolitan with a few dozen customers, cannot be true as a

61 158438.6

I

general matter. Although class-by-class rate-making is reasonable

when administrative necessities require it and the rate-making

record supports it, it is not a privilege to be applied when the

rationale for it does not pertain.2

The City has no objection here to classes that distinguish

agricultural water customers from others. It does object, however, to

UWCD's logically inconsistent treatment of costs arising from its

Freeman Diversion Dam - which it isolates to its Zone B - from

costs to operate other recharge facilities - which it charges to a

District-wide Zone A. It alleges a common pool for most of its costs,

but disparate impacts on some basins from the Freeman Diversion

Dam. This unexplained inconsistency makes UWCD's rates difficult

to justify on any record and indefensible on this one.

The City (OB at pp. 42-52, 55-58; RB at pp. 16-20, 22-24) and

its amici (e.g., Great Oaks Br. at p. 29) demonstrate that UWCD fails

to cost-justify its fees to the City on its records here. That is the

extent of the necessary judicial inquiry, for UWCD bears the burden

to prove that point on its records under either Proposition 218 or

2 Application of class-by-class rate-making to a water supplier with

just four customers with distinct costs of service is pending in

Newhall County Water District v. Castaic Lake Water Agency (B257964,

app. pending). The Second District heard argument December 17,

2015 and decision is therefore due by March 16, 2016.

62 158438.6

I

Proposition 26. (Cal. Const., art. XIII C, § 1, subd. (e)(l) & (2) & final,

unnumbered para.; art. XIII D, § 6, subd. (b)(S).)

IV. I F PROPOSITION 26 PROVIDES THE RULE OF

DECISION, UWCD'S FEES ALSO FAI L

A. UWCD's Service, If Not Property Related, Is Not

Provided Directly to the City without Free Riders

as Proposition 26 Requires

Every service to a fee-payor has - in our interconnected,

global world - some impact on others. The existence of potable

water service allows water customers to engage in health and

sanitation practices that promote public health for themselves and

others. However, this does not mean domestic water service is a

general social benefit rather than a property related service under

Proposition 218. Nor does it mean this service is provided to one

other than the payor.

The Legislature has observed as much, in language worthy of

this Court's consideration under the holding of Greene, supra, 49

Cal.4th at page 291 (Omnibus Act is good authority to construe

Prop. 218):

158438.6

For purposes of Article XIII C of the California

Constitution and this article:

63

(b) "Specific government service" means a service that

is provided by a local government directly to the payor

and is not provided to those not charged. A specific

government service is not excluded from classification

as a "specific government service" merely because an

indirect benefit to a nonpayor occurs incidentally and

without cost to the payor as a consequence of providing

the specific government service to the payor. A "specific

government service" may include, but is not limited to,

maintenance, landscaping, marketing, events, and

promotions.

(Gov. Code, § 53758, subd. (b).)

To defeat the demands of Proposition 218, UWCD and its

amid argue its services are provided not to the City or even to

groundwater users, but to society at large. (See Answer Brief on the

Merits ("AB") at pp. 35-36; Sta. Ynez Br. at pp. 14-16; WRD Br. at

p. 10.) Perhaps unwittingly, these descriptions echo the legislative

guidance of Government Code section 53758, subdivision (b). They

emphasize "indirect benefit to a nonpayor" that "occurs incidentally

and without cost to the payor as a consequence of providing"

UWCD's groundwater augmentation service to Ventura and others

who benefit from that water supply.

For instance, by imposing its charges not "for the District's

delivery of water to customers, but on the extraction of groundwater

64 158438.6

by predominately commercial users, like the City" (AB at p. 33),

UWCD acknowledges its service is provided "directly to the payor"

(Gov. Code, § 53758, subd. (b)). Although UWCD argues it does not

impose the fee on "every parcel or owner of a parcel of property in

the District," the revenue the District receives from the fee "fund the

District's mandates, including conservation of the groundwater for

future use." (AB at pp. 34-35.) Santa Ynez reinforces this notion by

arguing UWCD's "duty is not to the homeowner or parcel, but to the

basin." (Sta. Ynez Br. at p. 14.) "[I]f UWCD dissolved, . . . [p)umps

would continue to pull groundwater up from the basin . . . until the

basin runs dry." (Id. at p. 16.) WRD emphasizes "the District's efforts

to conserve water resources may fairly be characterized as a public

service" that benefits "[p]roperty owners and non-owners alike."

(WRD Br. at p. 10.) UWCD's amid thus also acknowledge that the

District provides "indirect benefit to a nonpayor . . . incidentally and

without cost to the payor." (Gov. Code, § 53758, subd. (b).) The

diffuse benefit UWCD claims to provide is accordingly incident to

providing the "specific government service" to the City both

logically and under Government Code section 53758,

subdivision (b).

Indeed, as Jack Cohen points out, UWCD has no statutory

authority to impose the fee in issue here unless it finds the fee funds

services of benefit to those who use groundwater. (Cohen Br. at

p. 20, citing Wat. Code, § 75522.) Great Oaks makes the similar point

65 158438.6

that a fee imposed to fund service to society at large must be

approved by voters as a tax. (Great Oaks Br. at pp. 18-19, 27-28.)

Nor is there additional cost to Ventura for these benefits of

UWCD's groundwater service, thus bringing this case squarely

within Government Code section 53758, subdivision (b)'s

interpretation that incidental benefits of services without additional

cost to service recipients do not defeat the character of the service as

one directly to its recipient.

Moreover, if UWCD' s services were as it wishfully describes

them - to society at large rather than to groundwater users - they

would be taxes under either Proposition 218 or Proposition 26, as the

City's amici argue. (Great Oaks Br. at pp. 18-19, 25-29; HJTA Br. at

pp. 16, 27; SDCWA Br. at pp. 4-5.) This is because the fee on

Ventura's exercise of its property rights in groundwater would fund

not services to Ventura, but to others -violating article XIII D,

section 6, subdivision (b)(2), which requires property related fees to

fund only services to fee payors. Indeed, Ventura argues this is the

case here as to some of UWCD's expenditures. (See OB at pp. 48--49,

52-53.) Similarly, such arrangements would violate Proposition 26's

requirements that service fees fund services provided "directly" to

the payor and that such services not be provided to those who do

not pay them - its "no free riders" rule. (Cal. Const., art. XIII C, § 1,

subd. (e)(2).)

66 158438.6

Indeed, UWCD's amid seemed trapped by their illogic. They

argue UWCD's services provide direct benefit to the City, so as to

survive review under Proposition 26, without being a service related

to the City's use of its property implicating Proposition 218, even

though it draws water from wells on land it owns and its water

rights are themselves property. (Compare, e.g., Sta. Ynez Br. at

pp. 14-16 [groundwater service is of no direct benefit to Ventura]

with id. at p. 22 ["Groundwater Charges Fund Specific Services that

Benefit Only Fee Payors"].)

Thus, UWCD and its amid are unpersuasive in their efforts to

describe a groundwater service as an environmental enhancement

program. No doubt, the environment is enhanced, but that is an

incidental consequence of supplying groundwater, just as public

health benefits are incidental to a domestic water supply. If

Proposition 26 provides the rule of decision here, UWCD's fees fail

as not provided directly to the City without free-riders.

B. UWCD's Fees Are Not Limited to Service Cost

Proposition 26 has two cost-of-service limitations: one the

Court of Appeal cites and applies; another it overlooked.

Article XIII C, section 1, subdivision (e)(2) exempts service fees from

the "taxes" which require voter approval only if limited "to the

reasonable costs to the government of providing the service." This is

a limit on fee revenues in toto - across all fee payors - and is

comparable to Proposition 218's similar restriction. (Cal. Const.,

67 158438.6

art. XIII D, § 6, subd. (b)(l).) However, the final, unnumbered

paragraph of Proposition 26 applies, too, to limit allocation of costs

among fee payors. While, as Metropolitan observes (at pp. 6--8), it is

not identical to the "proportional cost of service" rule of

Proposition 218's article XIII D, section 6, subdivision (b)(3); it is

comparable. It states:

The local government bears the burden of proving by a

preponderance of the evidence that a levy, charge, or

other exaction is not a tax, that the amount is no more

than necessary to cover the reasonable costs of the

governmental activity, and that the manner in which

those costs are allocated to a payor bear a fair or

reasonable relationship to the payor's burdens on, or

benefits received from, the governmental activity.

(Cal. Const., art. XIII C, § 1, subd. (e) [final, unnumbered para.],

emphasis added.) Thus, it is not enough to find (as the Court of

Appeal erroneously did) that UWCD spends the proceeds of the

challenged fee only on groundwater augmentation. (Ventura, supra,

185 Cal.Rptr.3d at p. 227 ["The District need only ensure that its

charges in the aggregate do not exceed its regulatory costs."].) To

uphold this fee, a court must also find that Ventura's bill bears a

"fair or reasonable relationship to [its] burdens on, or benefits

received from" UWCD's service. Metropolitan and Santa Ynez err,

then, to argue Proposition 26 limits fees to cost only in toto and does

68 158438.6

not restrict the allocation of cost among fee-payors. (Compare

Metropolitan Br. at pp. 11-13 and Sta. Ynez Br. at p. 25 with SDCWA

Br. at pp. 3-4; Ventura, supra, 185 Cal.Rptr.3d at p. 227.)

Moreover, as its administrative records here demonstrate,

UWCD cannot even meet this aspect of Proposition 26 because it

spends proceeds of the challenged fees on purposes unrelated to

groundwater delivery, as the City's principal briefs detail. UWCD

did not lawfully apportion its charges because, first, it distributes

costs equally to its eight basins for benefits that affect those basins

disparately. (See OB at p. 50-52, 59). Thus, the District improperly

imposes the same Zone A charge on the City's wells in the Santa

Paula Basin to fund recharge operations, though its recharge

operations do not benefit Santa Paula Basin wells equally as other

basins. (E.g., AR1 :81:17 ["Santa Paula Basin doesn't respond to

recharge at United Water's Saticoy spreading grounds."]; AR1:22:144

[2011-2012 budget chart showing negligible recharge of Santa Paula

Basin from Lake Piru releases].) Second, the District cannot show the

charges do not fund services to non-payors because it commingles

Zone A charges with discretionary revenue. (See OB at pp. 48-50,

citing, inter alia, AR2:106:49 [water treatment chemicals], AR2:106:58

[State Water Import costs to serve delivered water], & AR2:106:51

["Recreation Activities subfund," which includes potable water

delivery to Lake Piru concessionaire].) Finally, as Judge Anderle

69 158438.6

properly concluded, UWCD's records entirely lack evidence to

justify the 3:1 ratio. (10JA88:2123, 2157.)

UWCD's failure to properly apportion its costs among fee

payors is fatal under Proposition 26. (Cal. Const., art. XIll C, § 1 ,

subd. (e)(2) [service fees limited to "the reasonable costs to the local

government of providing the service"].) This is also true under case

law construing Proposition 13 on which Proposition 26 builds, as

detailed by the Howard Jarvis Taxpayers Association. (HJTA Br. at

p. 22, citing Kern County Farm Bureau v. County of Kem (1993) 19

Cal.App.4th 1416, 1421 [property tax roll fee funding County

landfills not a tax because limited to service cost and fairly

apportioned], Collier v. City and County of San Francisco (2007) 151

Cal.App.4th 1326, 1346 [same as to building permit and inspection

fees], and Bay Area Cellular Telephone Co. v. City of Union City (2008)

162 Cal.App.4th 686, 694 [emergency services fee a tax because paid

by those who do not receive service].)

To avoid Proposition 218, Santa Ynez argues Ventura must

pay UWCD's fees whether or not UWCD recharges groundwater.

(Santa Ynez Br. at p. 15.) This is only true in the short-run - UWCD

cannot use the fee for any other purpose both by statute (Wat. Code,

§§ 75521-75523) and because Propositions 218 and 26 each limit use

of fee proceeds to the purpose for which it is imposed. (Cal. Const.,

art. XIIl D, § 6, subd. (b)(2); art. XIII C, § 1 , subd. (e)(2) & final,

unnumbered para.)

70 158438.6

Rate-makers need not show the rates a customer pays fund

the very increments of service he or she receives - my rates need

not fund the molecules of water I consume - but only that rates

fund service from which the customer benefits. Thus, Pajaro II

concluded the agency there could use rate proceeds to repay debt as

well as to plan for future services. (Pajaro II, supra, 220 Cal.App.4th

at pp. 597-598; see also Moore, supra, 237 Cal.App.4th at pp. 369-

370.)

Indeed, as rate-making relies on estimates of such

unpredictable things as weather (we use less water when it rains),

rate-making will always produce surpluses and deficits. This is

permissible provided surpluses fund future service and deficits are

repaid from future rates. (See County of Orange v. Barratt American,

Inc. (2007) 150 Cal.App.4th 420, 432--433 [construing Mitigation Fee

Act].)

Similarly, Santa Ynez notes UWCD's services do not change

when a customer stops pumping. (Sta. Ynez Br. at p. 15.) This is true

of retail rates subject to Proposition 218 under Bighorn, too. Nothing

happens at the water utility when you turn off your tap or go on

vacation. Thus, this distinction tells us little about whether

Proposition 218 or 26 controls here. Volumetric rates exempt

customers from fees when they consume no service but the

Constitution does not require such rates, but only that:

71 158438.6

• fees not exceed cost of service in toto (Cal. Const., art. XIII D,

§ 6, subd. (b )(1 ); art. XIII C, § 1, subd. ( e )(2) & final,

unnumbered para.),

• fees fund only the service for which they are imposed (Cal.

Const., art. XIII D, § 6, subd. (b)(2); art. XIII C, § 1,

subd. (e)(2)), and

• property related service fees be limited to proportional cost of

service (Cal. Const., art. XIII D, § 6, subd. (b)(3)) and other fees

be apportioned in fair or reasonable relation to the payor's

benefits from or burdens on the service. (Cal Const.,

art. XIII C, § 1, subd. (e) [final, unnumbered para.].)

Santa Ynez next argues retail water rates are more easily

attributed to customers than are groundwater rates. (Sta. Ynez Br. at

p. 16.) Perhaps so. Yet each can be constructed as a volumetric

charge based on the amount of water used. Indeed, Water Code

sections 75592 through 75594 require UWCD to impose volumetric

rates per acre-foot of water use; and Water Code sections 75591 and

75593 allow UWCD to levy different charges within different zones

of the District. Yet Santa Ynez claims that determining the degree of

hydrological connection between groundwater basins is an

"unanswerable question." (Sta. Ynez Br. at p. 17.) It worries that

overlapping Sustainable Groundwater Management Agency service

areas will confound the task. (Ibid.) Yet the Legislature requires

UWCD to attempt it.

72 158438.6

Case law old and new demonstrates that rate-making -

whether for retail or wholesale service, groundwater or piped water

- is a complex, legislative task.

"The economic judgments required in rate proceedings

are often hopelessly complex and do not admit of a

single correct result. The Constitution is not designed to

arbitrate these economic niceties." (Duquesne Light Co. v.

Barasch, supra, [(1989)] 488 U.S. [299] at p. 314.) And, of

course, courts are not equipped to carry out such a task.

(See, e.g., Harris v. Capital Growth Investors XW (1991) 52

Cal.3d 1142, 1166 [stating that "we are ill equipped to

make" "microeconomic decisions"].)

(20th Century, supra, 8 Cal.4th at p. 293.)

Thus, there is no one, right way to make rates. Indeed, the

City's concern with Capistrano is that it underestimates the challenge

of the rate-making task and defers too little to the policy choices

which remain open to rate-makers under our Constitution. Instead,

provided rates are reasonable, supported by the rate-making record,

and comply with statutory and Constitutional standards, they ought

to survive judicial review. That apportionment can be difficult

requires judicial review to be sensitive to that difficulty. It is not an

excuse to ignore our Constitution - or UWCD's principal act. Nor

need this Court undertake the rate-making task, as Santa Ynez, at

least, seems to ask. (Sta. Ynez Br. at p. 28.)

73 158438.6

Thus, these rate-making realities do little to distinguish

Proposition 218 here and Santa Ynez fails to persuade.

C . UWCD Failed to Apportion Its Fees as

Proposition 26 Requires

Few of UWCD' s amid seek to defend under Proposition 26 its

rates and the 3:1 ratio demanded by Water Code section 75594. As

Kern County observes, those who do repeat the Court of Appeal's

error - they overlook the requirement of the final, unnumbered

paragraph of article XIII C, section 1, subdivision (e) that the

government prove - whether its fees are justified as a government

conferred benefit, a government service, or regulation - "that the

manner in which those costs are allocated to a payor bear a fair or

reasonable relationship to the payor's burdens on, or benefits

received from, the governmental activity." (See, Kem County Br. at

pp. 16-17.)

The Court of Appeal opinion never applies this test, though it

does cite it, quote the language of Sinclair Paint from which it is

drawn, and affirm the trial court's conclusion on the point. (Ventura,

supra, 185 Cal.Rptr.3d at pp. 214-217.) Instead, it applies California

Farm Bureau Federation v. State Water Resources Control Board, a

Proposition 13 case involving a charge imposed under the State's

police power, which it quotes as follows:

74 158438.6

A regulatory fee does not become a tax simply because

the fee may be disproportionate to the service rendered

to individual payors. [Citation.] The question of

proportionality is not measured on an individual basis.

Rather, it is measured collectively, considering all rate

payors. [Citation.] ['l[] Thus, permissible fees must be

related to the overall cost of the governmental

regulation. They need not be finely calibrated to the

precise benefit each individual fee payor might derive.

What a fee cannot do is exceed the reasonable cost of

regulation with the generated surplus used for general

revenue collection. An excessive fee that is used to

generate general revenue becomes a tax.

(Ventura, supra, 185 Cal.Rptr.3d at 226, quoting Farm Bureau, supra, 51

Cal.4th at p. 438.)

Applying Proposition 13's more lenient standard (and

ignoring that this Court remanded the proportionality issue in Farm

Bureau for further trial court fact-finding (Farm Bureau, supra, 51

Cal.4th at p. 442), it concluded "the District's pump fees do not

exceed the reasonable cost of regulating the District's groundwater

supply. Accordingly, these regulatory fees are not taxes and are not

subject to approval by the voters." (Ventura, supra, 185 Cal.Rptr.3d at

p. 227.) Yet Proposition 26 was plainly intended to require more than

Proposition 13. The City demonstrated with copious citations to

75 158438.6

UWCD's two records here that the charge it pays UWCD does not

bear a fair or reasonable relationship to the City's benefits from or

burdens on UWCD's services. (OB at pp. 42-53, 58-61; RB at pp. 16-

20.) Great Oaks develops this point, too. (Great Oaks Br. at pp. 29-

30.)

Yet, like the Court of Appeal, UWCD's amid read

Proposition 26's apportionment requirement out of our Constitution.

(See, e.g., WRD Br. at pp. 24-26.) Indeed, WRD entirely omits the

language of the final, unnumbered paragraph of Proposition 26 in

discussing its cost limitations. (Id. at p. 4.)

That language is, of course, part of our Constitution and

applies here if Proposition 26 does. The City's briefs demonstrate

that UWCD failed to comply with its duty to fairly or reasonably

apportion its fees to the City's benefits from or burdens on UWCD's

water augmentation service. For that reason, too, the fees challenged

here cannot survive scrutiny under Proposition 26.

V. THE FARM B U REAU'S ARG U M E NTS DO NOT

SAVE WATER CODE SECTIO N 75 594

The Farm Bureau of Ventura County ("Farm Bureau") argues

that Water Code section 75594 is facially constitutional because

UWCD can harmonize its statutory duty to set fees at a ratio

between 3:1 and 5:1 for non-agricultural and agricultural water users

with the cost limitations of our Constitution. It claims this is possible

by using non-rate revenues to "buy down" the agricultural price

76 158438.6

from the cost of service to a subsidized rate desired for reasons of

legislative policy. (Farm Bureau of Ventura County Brief ("Farm

Bureau Br.") at pp. 9-11 & fns. 6-8.)

It is unquestionably true that a rate-maker with discretionary

revenue may charge some customers less than the cost of service

provided that the subsidy is not at the expense of other customers.

(Morgan, supra, 223 Cal.App.4th at p. 923 [rates may be less than

cost]; cf. Green Valley Landowners Association v. City of Vallejo (2015)

241 Cal.App.4th 425, 439--440 [cross-subsidies violate art. XIII D, § 6,

subd. (b)(3)]; see also Cohen Br. at p. 29.) Propositions 218 and 26

provide only that fees may not exceed cost; they do not mandate

that fees equal cost. (Cal. Const., art. XIII D, § 6, subd. (b)(l), (3);

art. XIII C, § 1, subd. (e)(l)-(3), & final, unnumbered para.)

However, this broad statement of legislative discretion is of

little use to UWCD in construing its statutory authority. Its statute

states:

Except as provided in Section 75595, any ground water

charge in any year shall be established at a fixed and

uniform rate for each acre-foot for water other than

agricultural water which is not less than three times

nor more than five times the fixed and uniform rate

established for agricultural water . . . .

(Wat. Code, § 75594.) "Shall," of course, is mandatory. (Wat. Code,

§ 15.) Thus, under Water Code section 75594, the charge challenged

77 158438.6

here "shall be established at a fixed and uniform rate" that bears the

specified ratio. The discretion to subsidize rates to preferred

customers a city or a county would enjoy under the utility power of

article XI, section 9 or the police power of article XI, section 7 confers

no discretion on UWCD. A creature of statute, it has the power the

Legislature conferred and no more. (See Healing v. California Coastal

Com. (1994) 22 Cal.App.4th 1158, 1178 ["[A]n ad:rninistrative agency

created by statute is vested only with the powers expressly

conferred by the Legislature and cannot exceed the powers granted

to it."], citing El Camino Community College Dist. v. Superior Court

(1985) 173 Cal.App.3d 606, 612.) The Farm Bureau's general

statement of rate-making discretion, which neither quotes nor

engages the language of Water Code section 75594 (at pp. 9-12 &

fns. 6-9), cannot save it from Propositions 218 and 26. The Howard

Jarvis Taxpayers Association makes this point in other terms. (HJTA

Br. at p. 29.)

The Farm Bureau makes policy arguments, too. (Farm Bureau

Br. at pp. 13-16.) These are better directed to legislators than to

judges, as Signal Hill demonstrates. (Signal Hill Br. at p. 41.)

As Signal Hill also points out, there need be no concern here

about allowing implied preemption of Water Code section 75594 by

Propositions 218 and 26. (Signal Hill Br. at pp. 41-42.) Ventura Group

Ventures, Inc. v. Ventura Port District (2001) 24 Cal.4th 1089

demonstrates this was the intended effect of Proposition 218. (Id. at

78 158438.6

pp. 1098-1099 [Prop. 218 impliedly preempts statutory taxing

powers of special district].) Moreover, article XIII D commences with

sweeping language to describe its intended impact:

Sec. 1 . Application. Notwithstanding any other

provision of law, the provisions of this article shall

apply to all assessments, fees and charges, whether

imposed pursuant to state statute or local government

charter authority.

(Cal. Const., art. XIlI D, § 1, subd. (a).) Thus, law vitiated by

Proposition 218 is not impliedly preempted, but expressly so.

The claim that agricultural groundwater use returns some

water to the groundwater table while other uses do not is a factual

argument to be resolved by the rate-maker on its rate-making record

in the first instance. (See Farm Bureau Br. at p. 16.)

It is not the judiciary' s function, however, to reweigh

the "legislative facts" underlying a legislative

enactment. (See, e.g., Minnesota v. Clover Leaf Creamery

(1981) 449 U.S. 456, 464, 101 S.Ct. 715, 724, 66 L.Ed.2d

659 ["states are not required to convince the courts of

the correctness of their legislative judgments ... ").)

(American Bank & Trust Co. v. Community Hospital (1984) 36 Cal.3d

359, 372.) While Propositions 218 and 26 do require independent

judicial review of rate-making, they do not require courts to make

79 158438.6

rates in the first instance, or to establish legislative facts rather than

to review such facts independently on a legislative record.

The parties here have briefed the records in detail. (E.g., OB at

pp. 10-17; AB at pp. 5-9; RB at pp. 16-20.) UWCD cannot justify a

3:1 ratio of non-agricultural to agricultural rates as an abstract

principle divorced from the facts of this case. Watering tomatoes in a

resident's garden returns water to the groundwater table just as does

watering those in a farmer's field. There is no conceptual difference

between the two that can save Water Code section 75594. If there are

differences in degree and consequence for the groundwater table,

that is a question of fact for the rate-maker to determine and to

document in its rate-making record and for a court to review on that

record. It is not a legal issue to be resolved in the first instance by

courts.

CONCLUSION

Thus, it is too late and too disrespectful of the language of

Proposition 218 to take now the path rejected in Bighorn in 2006 by

applying Apartment Association to water service charges. Applying

Proposition 218 to UWCD's two records here, as Judge Anderle did,

must lead to affirmance of his judgment for the City. UWCD simply

cannot prove on its records that its fees are limited to the

proportional cost to serve the City or that they are spent for

groundwater service alone. Such review therefore also justifies the

relief the City seeks by cross-appeal with respect to UWCD' s failures

80 158438.6

to justify all uses of the proceeds of the fees and to reflect the

differential benefits its eight groundwater basins receive from its

replenishment efforts. That analysis demonstrates that Water Code

section 75594 is facially unconstitutional because it demands a 3:1

ratio of non-agricultural to agricultural fees without respect to the

cost of service shown by UWCD's rate-making records.

If this Court takes the alternative path and applies

Proposition 26, UWCD's fees and Water Code section 75594 fail

nevertheless. UWCD's amici's efforts to show its fees comply with

Proposition 26 instead prove it does not. Review of the record

evidence cited in the City's principal briefs - and unrefuted by

UWCD and its amid -show the fee is not limited to UWCD's

service cost. Moreover, if UWCD' s amid' s arguments are accepted,

the charge funds services to those who do not pay it in violation of

the no-free-rider principal of article XIII C, section 1,

subdivisions (e)(l) and (e)(2). Finally, UWCD's fees can survive

Proposition 26 review only if one ignores, as did the Court of

Appeal, the requirement of the final, unnumbered paragraph of

article XIII C, section 1, subdivision (e) that UWCD apportion its fees

to fairly or reasonably reflect the City's benefits from or burdens on

UWCD's service.

For all these reasons, the City respectfully asks this Court to

reverse the Court of Appeal, affirm Judge Anderle' s judgment for

81 158438.6

the City, and grant the declaratory relief sought by the City's cross

appeal.

DATED: January 15, 2016

158438.6


WHATLEY, PC

� � �c� MICHAEL G. COLANTUONO

DAVID J. RUDERMAN

MEGAN S. KNIZE

Attorneys for Respondent I Cross-Appellant

CITY OF SAN BUENAVENTURA

82

C E RTIFICATION OF COMPLIANCE

Pursuant to California Rules of Court, rules 8.204(c)(l) and

8.520(c)(l), I hereby certify that the foregoing Answer to Briefs Filed

by Amicus Curiae contains 16,409 words including footnotes, but

excluding the tables and this Certificate. It exceeds the 14,000 words

permitted by those rules and is therefore accompanied by an

Application for Leave to File an Overlength Answer Brief. In

preparing this certificate, I relied on the word count generated by

Microsoft Word 2013.

DATED: January 15, 2016

158438.6


WHATLEY, PC

DAVID J. RUDERMAN

Attorneys for Respondent I Cross-Appellant

CITY OF SAN BUENAVENTURA

83

PROOF OF SERVICE

City of San Buenaventura v. United Water Conservation District, et al.

Supreme Court Case No. S226036

Court of Appeal, Second Appellate District, Div. 6, Case No. B251810

Santa Barbara Superior Court Case Nos. VENCI 00401714 & 1414739

I, Ashley A. Lloyd, declare:

I am employed in the County of Nevada, State of California. I

am over the age of 18 and not a party to the within action. My

business address is 420 Sierra College Drive, Suite 140, Grass Valley,

California 95945. On January 15, 2016, I served the document

described as ANSWER TO BRIEFS FILED BY AMICUS

CURIAE on the interested parties in this action as by placing a true

copy thereof enclosed in a sealed envelope addressed as follows:

SEE ATTACHED LIST

__J(_ BY MAIL: The envelope was mailed with postage

thereon fully prepaid. I am readily familiar with the firm's practice

of collection and processing correspondence for mailing. Under that

practice it would be deposited with the U.S. Postal Service on that

same day with postage thereon fully prepaid at Grass Valley,

California, in the ordinary course of business. I am aware that on

motion of the party served, service is presumed invalid if the postal

cancellation date or postage meter date is more than one day after

service of deposit for mailing in affidavit.

I declare under penalty of perjury under the laws of the State

of California that the above is true and correct.

Executed on January 15, 2016, at Grass V,

2 158438.6

SERVICE LIST

City of San Buenaventura v. United Water Conservation District, et al.

Supreme Court Case No. S226036

Court of Appeal, Second Appellate District, Div. 6, Case No. B251810

Santa Barbara Superior Court Case Nos. VENCI 00401714 & 1414739

Anthony H. Trembley Dennis LaRochelle Jane E. Usher Susan L. McCarthy Cheryl A. Orr John M. Mathews Musick, Peeler & Garrett LLP Arnold LaRochelle Mathews 2801 Townsgate Road, Suite 200 Vanconas & Zirbel, LLP Westlake Village, CA 91361 300 Esplanade Dr., Suite 2100 Phone: (805) 418-3100 Oxnard, CA 93036 Fax: (805) 418-3101 Phone: (805) 988-9886 Attorneys for Defendant and Fax: (805) 988-1937 Appellant United Water Attorneys for Intervener Pleasant Conservation District and Board of Valley County Water District Directors of United Water Conservation District

Alan Diamond Stanly Tokio Yamamoto Greines Martin Stein & Richland Office of District Counsel 5900 Wilshire Blvd., 12th Floor 5750 Almaden Expressway Los Angeles, CA 90036 San Jose, CA 95118 Attorneys for Santa Clara Valley Attorneys for Santa Clara Valley Water District, Amicus Curiae Water District, Amicus Curiae

Joseph Martin Quinn Theresa Ann Goldner Hanson Bridgett LLP Office of Kern County Counsel 425 Market Street, 26th Floor 1115 Truxtun Avenue, 4th Flr. San Francisco, CA 94105 Bakersfield, CA 93301 Attorneys for Santa Clara Valley Attorneys for County of Kern, Water District, Amicus Curiae Amicus Curiae

3 158438.6

Antonio Rossmann Nancy McDonough Rossmann and Moore LLP Chris Scheuring 2014 Shattuck Avenue California Farm Bureau Berkeley, CA 94704 2300 River Plaza Drive Attorneys for County of Kern, Sacramento, CA 95833 Amicus Curiae Attorneys for California Farm

Bureau Federation and Farm Bureau of Ventura County, Amicus Curiae

James R. Cogdill Jeffrey J. Patrick Howard Jarvis Taxpayers Fnd. Ernest A. Conant 921 Eleventh Street, Suite 1201 Law Offices of Young Sacramento, CA 95814 W olldridge, LLP Attorneys for Howard Jarvis 1800 30th Street, 4th Floor Taxpayers Foundation, Amicus Bakersfield, CA 93301 Curiae Santa Ynez River Water

Conservation District, Amicus Curiae

Jeffrey S. Lawson Robert K. Johnson Silicon Valley Law Group Johnson & James, LLP 50 West San Fernando St., #750 331 Bonita Drive San Jose, CA 95113 P.O. Box 245 Attorneys for Great Oaks Water Aptos, CA 95003 Company, Amicus Curiae Attorneys for Great Oaks Water

Company, Amicus Curiae

Timothy S. Guster Jack David Cohen Great Oaks Water Company Attorney at law P.O. Box 23490 P.O. Box 6273 San Jose, CA 95153 Beverly Hills, CA 90212-1273 Attorneys for Great Oaks Water Attorney for Jack David Cohen, Company, Amicus Curiae Amicus Curiae

4 158438.6

Robert M. Dato Heather C. Beatty Buchalter & Nemer, PC Marcia Scully 18400 Von Karman Ave., #800 The Metropolitan Water Irvine, CA 92612-0514 District of Southern California Attorneys for Tesoro Refining and 700 North Alameda Street Marketing Company LLC, Amicus Los Angeles, CA 90012-2944 Curiae Attorneys for The Metropolitan

Water District of Southern California, Amicus Curiae

Miles P. Hogan Daniel Jackson Alshire & Wynder, LLP John W. Keker 18881 Von Karman Ave., #1700 Warren A. Braunig Irvine, CA 92612 Keker & Van Nest, LLP Attorneys for City of Signal Hill, 633 Battery Street Amicus Curiae San Francisco, CA 94111

Attorneys for San Diego County Water Authority, Amicus Curiae

David M. Axelrad Office of the Attorney General Mitchell C. Tilner 1300 I Street Horvitz & Levy, LLP Sacramento, CA 95814-2919 15760 Ventura Blvd., 18th Floor Encino, CA 91436 Attorneys for Water Replenishment District of Southern California, Amicus Curiae

Clerk of the Court Clerk of the Court Santa Barbara Superior Court Court of Appeal 1100 Anacapa Street Second District, Division 6 Santa Barbara, CA 93121-1107 200 East Santa Clara Street

Ventura, CA 93001

5 158438.6

1

Water Rates in Drought

Municipal Law Institute

February 5, 2016

Sacramento, CA

MICHAEL G. COLANTUONO

Colantuono, Highsmith & Whatley, PC420 Sierra College Drive, Ste. 140Grass Valley, CA 95945-5921(213) 542-5737

(530) 432-7357

(530) 432-7356 (fax)

[email protected]

(c) 2015 Colantuono, Highsmith & Whatley, PCJanuary 13, 20162

MICHAEL G. COLANTUONO

www.chwlaw.us

Twitter: @MColantuono

LinkedIn: Michael G. Colantuono


2

How to Fund Water Service if Drought Greatly Reduces Sales?

Most utilities will have to raise rates– Comply with Prop. 218

– wholesalers with Prop. 26

Use reserves

Defer maintenance and cut other costs

Borrow

But: beware of rate covenants

Raising rates frequently by small amounts may be best policy

January 13, 2016(c) 2015 Colantuono, Highsmith &

Whatley, PC4

Policy challenges

Political acceptance of more money for less water

Revenue stability w/ falling sales

How to justify tiered rates

How to cover stranded costs

How to balance water affordability w/ incentive to conserve


Whatley, PC5

218 Allows Full Cost Recovery

Griffith v. Pajaro Water Mgmt. Agency (2013) 220 CA4th 586– Charge is a fee for “water service” exempt from

13D, 6(c) election requirement

– Omnibus Act’s definitions are good authority notwithstanding HJTA v. Salinas

– Notice of protest hearing can be given to property owners alone


Whatley, PC6

3

Griffith (continued)

Debt service, GA&O, service planning all permissible uses of fee

AWWA M-1 Manual’s cost-accounting process complies w/ Prop. 218

Parcel-by-parcel cost analysis is not required; class-by-class is okay provided the classes are rationally drawn


Whatley, PC7

Legislative Reaction to Griffith

AB 2403 (Rendon, D-So. Gate)– Codifies Griffith v. Pajaro

– Amends GC 53750(m) to add “from any source” to definition of “water” in Prop. 218 Omnibus Implementation Act

– Chaptered 6/28/14


Whatley, PC8

Tiered Rates

City of Palmdale v. Palmdale Water District (2011) 198 CA4th 926– City challenged conservation water rates, claiming

Prop. 218 disallows them

– DCA found 218 and Constitutional provision against wasting water could be harmonized, but struck down PWD rates as insufficiently justified

– Caution required when constructing conservation rates


4

Tiered Rates

Capistrano Taxpayers Assn v. City of San Juan Capistrano (2015) 235 Cal.App.4th

1493– Precise cost justification required for tiered rates

– Domestic rate can fund new recycled system b/c definition of “water service” is broad

– Rejects fines arguments


Whatley, PC10

More on San Juan Capistrano

Very narrow reading of Article X, section 2

Doesn’t reach argument limiting Prop. 218 to base tiers

Much consternation at state & local levels

Disagrees with other appellate decisions (Griffith, Morgan, Moore); trial courts therefore can choose which appellate authority to follow


Whatley, PC11

218 Bars Cross-Subsidies

Green Valley Landowners Ass’n v. City of Vallejo (2015) 214 CA4th 425– Landowners served by antiquated water system

sued to prevent its sale on terms they disfavored

– Court noted the pay first, litigate later rule

– Cross-subsidy of these landowners by customers of main utility was “unreasonable” and therefore prohibited by Prop. 218


Whatley, PC12

5

Water Rate Litigation

Tiered Rate Challenges in Glendale and Sweetwater Authority before SJC

Marin MWD and Otay Water District since, with more threatened

pending in CA S. Ct.– Ventura v. UWCD

– CBIA v. SWRCB


Whatley, PC13

Options if San Juan is the law

Use flat rates and fines

Carefully cost-justify tiers– New technical theories about cost allocation

under development

2/3-voter approval as a tax

IOUs can impose tiered rates

LCC / CSAC / ACWA Initiative– Tiered rates, low-income rates, storm-water rates


Whatley, PC14

Low-Income Water Rates

AB 401 (Dodd, D-Napa)– Water Code § 189.5

– SWRCB to develop plan to fund low-income water rate assistance program by 1/1/18

– To benefit those below 200% of federal poverty line

– Prop. 13 will require a funding source other than other rate-payers


Whatley, PC15

6

Options for Drought Rates

Drought rates

Drought surcharges

Fines & penalties

Higher ratio of fixed to variable rates

Rates following LCC / ACWA / CSAC initiative


Whatley, PC16

Questions?


2016 Municipal Law Institute SymposiumFebruary 5, 2016

The New Economic Reality: Maintaining Long-Term Solvency for Water Utilities The Interplay between Water Conservation and Tiered Water Rates 1

I. Introduction: “The Times They Are A Changin’ ”2

California water supply and demand are affected by numerous factors. These includechanging weather patterns, climate change, environmental and other legal constraints, and theneeds of a growing population. Regardless of whether El NinÞo provides a temporary respite asthe state enters the fifth year of the drought, the new normal is likely to stress continuedconservation.

The state has faced water shortages in the past. But water management and planning aremore challenging today. Recent changes to the California constitution and statewide regulatorymandates have changed the legal framework within which public agencies are forced to operate.3

Policymakers are implementing various techniques to promote conservation, includingthe use of market-based water pricing mechanisms. One such measure includes providingeconomic incentives to promote conservation through the design of water rates, which typicallyassess additional fees or charges as water consumption increases. This approach presents astruggle between the view that water rates may be used to promote conservation beyond a setbaseline, and the view that water rates are limited by cost of service principles and fees tomitigate negative external effects are prohibited.

The prevention of waste and water conservation are securely anchored by the Californiaconstitution, state legislation, and executive and regulatory requirements.

The California constitution states “that the waste or unreasonable use or unreasonablemethod of use of water be prevented, and that the conservation of such waters is to be exercisedwith a view to the reasonable and beneficial use.”4 This provision broadly authorizes the

1 John H. Minan, Professor of Law, University of San Diego.

2 As immortalized in song by Bob Dylan in 1964.

3 Cal. Wat. Code § 10616. Public agency “means any board, commission, county, cityand county, city, regional agency, district, or other public entity.” The term “urban watersupplier means a supplier, either publicly or privately owned, providing water for municipalpurposes” subject to certain limitations. See, Cal. Wat. Code § 10617.

4 Cal. Const. art. 10, § 2.

1

legislature and executive agencies, such as the State Water Resources Control Board, to defineand limit reasonable water use and to make unreasonable use unlawful. This general authorityalso is supported the Public Trust Doctrine.5

Numerous provisions of state law also call for conservation. For example, the CaliforniaWater Code provides:

Any public entity which supplies water at retail or wholesale for the benefit of personswithin the service area or area of jurisdiction of the public entity may, by ordinance orresolution adopted by a majority of the members of the governing body after holding apublic hearing upon notice and making appropriate findings of necessity for the adoptionof a water conservation program, adopt and enforce a water conservation program toreduce the quantity of water used by those persons for the purpose of conserving thewater supplies of the public entity.6

Governor Brown also has issued a series of executive orders declaring a state ofemergency due to severe drought conditions and directing the State Water Resources ControlBoard to impose mandatory restrictions to achieve a statewide benchmark minimum 25%reduction in potable urban water usage through October 31, 2016.7

The State Water Board is primarily responsible for enforcing the reductions in water use. Failure of public agency water suppliers to meet the assigned water use conservation standard istreated as an infraction and is punishable by fines of up to $500 per day.8 According to newsreports, the State Water Board has fined a few suppliers around the state for missing thestatewide benchmark. In addition, a larger number of districts have received formal noticeswarning of fines if improvements aren’t made in meeting conservation goals.

Public entities also have enforcement authority. For example, “a public entity may

5 National Audubon Society v. Sup. Ct., 33 Cal. 3d 419 (1983) (holding that the state’snavigable waters are subject to a public trust and the state, as trustee, has a duty to preserve thistrust property from harmful water diversions).

6 Cal. Wat. Code § 375 (authorizing water conservation through rate structure design). See also, Cal. Wat. Code §§ 350 (agency authority to declare a water shortage emergency) and10632 (urban water management plan water shortage contingency).

7 Executive Orders B-26-14; B-28-14; B-29-15; and, B-36-15.

8 Http://waterboards.ca.gov/water issues/ Water Conservation Portal-FAQ (last visitedJan. 1, 2016).

2

enforce water use limitations established by an ordinance or resolution adopted pursuant to thischapter, or as otherwise authorized by law, by a volumetric penalty (emphasis added) in anamount established by the public entity.”9 Public entities are also authorized to “adopt andenforce a water conservation program to reduce the quantity of water used by those persons forthe purpose of conserving water supplies of the public entity.”10

Few would disagree with the general proposition that water conservation is desirable as amatter of public policy. But it presents an economic challenge for public agencies. Savingwater through conservation does not always mean saving money.

Conservation is good for stretching water supplies, but it comes with a downside–a threatto financial stability.11 Some cities are selling almost half as much water as they traditionallyhave sold. This presents public agencies with a financial challenge. City and county watersuppliers face fixed and variable costs. These ongoing costs, which include new infrastructurefinancing and debt service, treatment plant operational costs, supply and delivery contractobligations, increased energy costs, and so on, can exceed the avoided cost associated withdecreased demand and the reduction of variable costs. This unenviable situation requiresincreasing the per volume charge to maintain fiscal solvency.

But this does not completely describe the challenge. California public agencies also mustmeet supply and demand within a complex set of rate-making legal and regulatory constraints. As one looks to the future, two things seem certain: the cost of water is--and will--continue toincrease, and conservation will be a continuing part of the new normal for Californians.

Water service providers have several ways to allocate their total cost to customers. Theycan use (1) a flat water rate regardless of the amount of water used, or (2) a uniform unit rate tiedto the volume of water used, or (3) some form of block or tiered rates. Increasing block waterrates charge higher prices as the water use increases. Higher prices are intended to encourageconservation. Experts maintain that 66 to 80 percent of water suppliers use some type of tiered

9 Cal. Wat. Code § 377.

10 Cal. Wat. Code § 375.

11 Conservation is only one area of concern. Other areas of concern include dealing withthe interface with nontraditional sources of water supply, implementing sustainable managementof groundwater supply, and providing affordable water service to low-income households.

3

rate, which is arguably the most effective – but certainly not the only12 – way to promoteconservation and to avoid waste.13 The State Water Board, as well as others, has concluded that“conservation water pricing is an effective tool to prevent wasteful water use.”14

But using tiered rates to promote conservation and to avoid waste has its critics. Thefundamental legal question is whether this approach is constitutional with the requirement thatfees be proportional to the cost of service.

II. Legal Constraints: Propositions 21815 and 2616

Prior to the adoption of Proposition 13 in 1978, voter approval was not required for taxes,charges, or fees. Proposition 13, which was a political response to increasing property taxes andthe existence of a large state financial surplus, added taxpayer protections to the Californiaconstitution.

But this was not the end of the matter because many local governments responded toProposition 13 and the reduction of property tax revenues by increasing the use of various fees.In 1996, the voters responded by adopting Proposition 218, called the “Right to Vote on TaxesAct,” which again amended the constitution. It was intended to close unintended loopholesallowing local agencies to circumvent the taxpayers’ protections contained in Proposition 13. Proposition 218 requires voter approval for all taxes and for certain fees that are “propertyrelated.” Voter approval was not required, however, for “fees or charges for sewer, water, andrefuse collection services.”17 The new substantive requirements generally tightened the

12 For example, outdoor irrigation schedules, limitations on various types of water use,such as washing down driveways, expanded water reuse, desalinization, and various incentives toreduce consumption are possible.

13 A 2014 University of California at Riverside study estimated that tiered rates similar tothe one in Capistrano Taxpayers Association reduce water over time by up to 15 percent.

14 www.waterboards.ca.gov/water issues/ (last visited January 7, 2016).

15 Cal. Const. art. 13 C and D. Generally requiring a majority vote for “general taxes” ingeneral law and charter cities and counties; property-owner approval required for assessmentsand property related fees and charges. League of California Cities, Proposition 26Implementation Guide, p.1 (2011).

16 Cal. Const. art. 13C, §1, subd. (e).

17 Cal. Const. art. 13D, §6, subd. (c).

4

connection or nexus between “property related” fees and the services they fund.

The courts were increasingly called upon to construe Proposition 218. In 2006, theCalifornia Supreme Court decided Bighorn-Desert View Water Agency v. Verjil.18 The Courtfound that metered rates for the consumption of water were “property related” under Proposition218. More specifically, the Court found that once a property owner or resident becomes acustomer of a public water agency, all charges “for water delivery” are charges for a “property-related” service regardless of how the charges are imposed.

In 2010, California voters adopted Proposition 26. Pre-Proposition 26 cases recognizedthat the term “tax” had no fixed meaning, and therefore the distinction between “taxes” and“fees” was frequently blurred, often to the disadvantage of the taxpayer. Proposition 26 wasintended to clarify the law by including a constitutional definition of “tax,” unless one of sevenexceptions applied. 19 More specifically, Proposition 26 provides that “tax means any levy,charge, or exaction of any kind imposed by local government except the following: ... A fine,penalty, or other monetary charge imposed by the judicial branch of government or a localgovernment, as a result of a violation of law.” 20

Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano,21 decided by theCourt of Appeal for the Fourth District in 2015, is a window into the legal complexity of tieredwater rates and conservation within the context Propositions 218 and 26.

The Capistrano decision came after Governor Brown ordered the State Water ResourcesControl Board to direct public agencies to develop rate structures that maximize conservation.

18 Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006). In City of SanBuenaventura v. United Water Conservation District (235 Cal. App. 4th 228), the Second DistrictCourt of Appeal found that the rate charged was not property related. The Supreme Courtgranted review in 185 Cal. Rptr. 3d 207 (2015) and the Second District opinion has beensuperseded.

19 If a local government imposed fee does not fall within an exception, it is deemed a taxthat must be approved by either a majority (general tax) or a 2/3 (special tax) vote.

20 Cal. Const. art. 13 C §1 subd. (e)(5).

21 Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano (2015) 235Cal.App.4th 1493 [186 Cal.Rptr.3d 362], as modified (May 19, 2015). The California SupremeCourt rejected the State Water Resource Control Board’s request dated June 5, 2015 to depublishthe decision.

5

Whether the timing of the Executive Order would have influenced that part of the decisiondealing with “penalty rates,” discussed below, is unclear.

The Court of Appeal struck down the City’s increasing four-tiered water pricing system,which required customers to pay progressively more per-unit as water usage went up, asunconstitutional.22 The City’s rate structure charged customers $2.47 per unit of water in the firsttier and up to $9.05 per unit in the fourth tier. More specifically, the first two tiers were based onthe amount of water determined necessary for reasonable indoor and outdoor usage, whereas theremaining two tiers were based on the City’s determination of excessive or overuse.

In short, the Court of Appeal stated that the various water tiers must correspond with theactual cost of delivering water to a given parcel. Tiered water rates are constitutional providingthey (1) satisfy the proportionality and revenue-neutrality provisions of Proposition 218, (2)relate to a service that is immediately available, and (3) have been disclosed to the public prior toimplementation.

Tiered water rates are not automatically unconstitutional. The court agreed that if a wateragency is able to show increased cost for higher users, a rate reflecting this fact would passconstitutional muster. Thus, it reasoned that tiered rates are generally permissible, but only forthe purpose of allocating higher costs to consumers.

The court reasoned that the City failed to present credible evidence that the incrementalincreases between its tiered rates satisfied this constitutional cost of service requirement. Thefailure of the water agency was that it did not calculate the cost of actually providing water at thevarious tier levels. Rather, it allocated costs on predetermined usage budgets. Under Proposition218, the City bore the burden of proof to satisfy this cost of service requirement, which it failedto do. The court also found that the significant rate jumps between the tiers suggested they werenot cost-related as required by Proposition 218. Finally, it found that the tiered rates were notproportional to the cost of service to each parcel.

The Court of Appeal went further in its opinion, however. The following excerpt from itsdiscussion of “penalty rates” illustrates this fact.

c. Penalty Rates

22 The court also held that Proposition 218 generally allowed the City to pass on to itscustomers the capital costs of building a water recycling plant. The court found that there wasinsufficient evidence to determine whether certain lower that average water users wereimproperly burdened with recycling costs, and thus this issue was remanded to the trial court.

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A final justification City Water gives for not tying tier prices to the cost of service is tosay it doesn’t make any difference because the higher tiers can be justified as penaltiesnot within the purview of Proposition 218 at all. In the context of article X, section 2,City Water euphemistically refers to its higher tiered rates as conservation rates as if sucha designation would bring them within article X, section 2 and exempt them fromsubdivision (b)(3), but as we have explained, article X, section 2, does not require whatarticle XIII D, section 6, subdivision (b)(3) forbids and designating something a“conservation rate” is no more determinative than calling it an “apple pie” or“motherhood” rate.

City Water's theory of penalty rates relies on article XIII C, section 1, subdivision (e)(5).This subdivision defines the word “tax” to exclude fines “imposed by” a localgovernment “as a result of a violation of law.” That is hardly a revelation, of course. Wemay take as a given that Proposition 218 was never meant to apply to parking tickets.

But City Water's penalty rate theory is inconsistent with the Constitution. It would openup a loophole in article XIII D, section 6, subdivision (b)(3) so large it would virtuallyrepeal it. All an agency supplying any service would need to do to circumvent article XIIID, section 6, subdivision (b)(3), would be to establish a low legal base use for thatservice, pass an ordinance to the effect that any usage above the base amount is illegal,and then decree that the penalty for such illegal usage equals the incrementally increasedrate for that service. Such a methodology could easily yield rates that have no relation atall to the actual cost of providing the service at the penalty levels. And it would make amockery of the Constitution.23

Although the City argued in its trial briefing that its higher tiered rates might be justifiedas penalties, the trial court found that there was insufficient evidence in the record to support theclaim. Because the City failed to meet its burden under Proposition 218, the Court of Appeal’sterse discussion of penalty rates is dictum. Nevertheless, this part of the court’s discussion islikely to create uncertainty and spur additional litigation.

The court’s view that “penalty rates” to promote conservation are generallyunconstitutional is questionable for several reasons. First, Proposition 26 expressly exemptsfrom coverage a “fine, penalty, or other monetary charge” imposed by local government “as aresult of a violation of law.” The critical question is whether an excess consumption charge castas “a fine, penalty, or other monetary charge” to encourage conservation is imposed as a result of“violation of law.”

23 Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano (2015) 235Cal.App.4th 1493, 1514 15 [186 Cal.Rptr.3d 362, 380], as modified (May 19, 2015).

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The term “violation of law” includes federal and state statutes, and city ordinances as wellas implementing regulations. The failure to comply with statewide or local directives mandatingconservation and subjecting noncompliance to penalties arguably fits within the term “violationof law.”24 The fact that other options are available to promote conservation doesn’t change thisfact. It is important to appreciate that the essence of a financial penalty occurs when a legalobligation is disobeyed, whereas a tax or fee raises revenue when compliance with a legalobligation occurs.

Second, Proposition 218 analysis is triggered by a “fee” or “charge” imposed “upon aparcel or upon a person as an incident of property ownership.” Property-related services aredefined as “a public service having a direct relationship to property ownership.”25 Penalties ormonetary charges for excess water consumption arguably are outside the definition a “fee” or“charge” imposed as an incident of property ownership or the provision of property-relatedservices. Proposition 218 states that “fee or charge means any levy other than an ad valorem tax,a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as anincident of property ownership, including a user fee or a charge for a property related service.”26 The Court of Appeal’s discussion did not address these considerations.

Finally, the appellate court was concerned with an agency establishing a low legalbaseline and then adopting an ordinance that any usage above the baseline would be subject to apenalty. To the extent this is a legitimate concern, it should be dealt with on a case-by-casebasis. Rather than creating a “loophole” to circumvent Proposition 218, the court’s view appearsto be a crabbed view of the fines and penalties exception established by Proposition 26. Theterm “violation of law” generally has been construed to have a broad and encompassing meaning.

24 The Court of Appeal’s reasoning on Article 10, Section 2, is curious. Its view that thisprovision of the California Constitution establishes only “a policy that favors beneficial use ofwater as against waste of water for non-beneficial use and not on the larger reasonable usedoctrine” is not consistent with the language or history of Article 10, Section 2. “Beneficial use”and prevention of “waste” are different concepts. For example, a “beneficial use” of water mightsubsequently become wasteful and unreasonable when circumstances change. In addition, thecourt’s view of the relation between Article 10, Section 2, and Proposition 218 that it may havecarved out an exception because it is “both more recent, and more specific” is without supportingauthority and is at odds with the constructional principle that separate constitutional provisionsshould be construed to promote consistency and to avoid conflict.

25 Cal. Const. art. 13 D, § 2 subd. (h).

26 Cal. Const. art. 13 D, § 2, subd. (e).

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III. Conclusion

Providing water service involves more than supplying a user with water through a pipe. Italso includes managing and ensuring an ongoing supply of potable supply of water for all users.27

Public agencies must set water rates within the context of drought conditions, climate change,environmental mandates, as well as statutory and constitutional constraints.

The state of California has directed public agencies to develop rate structures and otherpricing mechanisms to maximize conservation. This mandate presents financial and legalchallenges for those agencies. It is clear, however, that local demand and supply considerationsvary across the state, and thus no one-size-fits-all approach to water rates exists.

On the one hand, opponents of using tiered water rates to promote conservation argue thisviolates cost of service principles. On the other hand, proponents may reasonably argue thatconservation charges are simply “penalties” or “other monetary charges” for excess consumptionunder Proposition 26 that are necessary to meet associated legal obligations.

The 2015 Court of Appeal decision in Capistrano Taxpayers Association, Inc. v. City ofSan Juan Capistrano is important to understanding the debate. It is equally important tounderstand that the case turned on the City’s failure to meet its burden of proof.

As a matter of judicial precedent, the Capistrano decision is binding on those courtswithin the Fourth District (Orange, San Diego, Imperial, San Bernardino and RiversideCounties). But its precedential value understates its potential statewide significance. That partof the court’s opinion dealing with “penalty rates” invites further discussion and possiblelitigation. Unless properly understood as a “failure of proof” decision, Capistrano has thepotential to disrupt statewide the use of conservation as a tool in setting water rates.

So what should be done?

One response of local water agencies to Capistrano is to require water departments tocarefully include within the cost-of-water-service analysis the facts supporting any conservationrate recommendation. To the extent that some water users impose additional costs on the publicagency, those users may be charged with those costs. Over utilization beyond an established

27 Griffith v. Pajaro Valley Water Management Agency, 220 Cal. App. 4th 586 (2013)(finding that “water service” includes managing and ensuring an ongoing, potable supply ofwater, and is more than just supplying water.)

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baseline, disproportionately adds to the need for additional conservation, and in some situations,may add to the cost of acquiring additional water supplies.

If water agencies cannot justify increased incremental costs associated with conservation,another approach might be to characterize the conservation charge as a “special tax” subject toProposition 218 and to ask local voters to validate it as such. Charges for programs that providegeneral public benefits or that exceed the costs of providing the service are special taxes. Thisapproach would present the obvious challenge of convincing two-thirds of the voters to supportit.

Another possibility is to amend the constitution clarifying Proposition 218 and 26 as theyapply to conservation and water rates. This strategy is already underway. A ballot initiativeentitled “The California Water Conservation, Flood Control and Stormwater Management Act of2016" has been filed with the California Attorney General. Among other things, it wouldauthorize local agencies to “set rates for customers to encourage conservation, and discourageexcessive use of water.” 28

28 The California Water Conservation, Flood Control and Stormwater Management Act of2016, Section 2, G (i).

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Panel VTopical Ethics Issues in Water andPublic Works

Panelists:Gary S. Winuk, Esq., Of Counsel, Murphy Austin Adams Schoenfeld LLP and Adjunct Professor at McGeorgeBrian Lau, Staff Counsel, California Fair Political Practices CommissionShawn Mason, City Attorney, City of San Mateo

Panel DescriptionEthics issues don’t get attention until something goes wrong. This panel will provide timely information about ethics issues relevant to water and public works projects. The panelists will cover important updates to conflict of interest laws, highlight a landmark case on public infrastructure financing ethics, and explore revolving door issues.

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GARY WINUK

A D J U N C T P R O F E S S O R , M C G E O R G E S C H O O L O F L A W

O F C O U N S E L , M U R P H Y , A U S T I N , A D A M S S C H O E N F E L D L L P

Revolving Door

Leaving Office Conflicts

One-year Ban applicable to high-level local officials (Section 87406.3) and a one-year ban applicable to officials and employees of air pollution control and air quality management districts (Section 87406.1).

Who is an Official?

The following officials are subject to the one-year ban of Section 87406.3:

Local elected officials.

Chief administrative officers of counties.

City managers or chief administrative officers of cities.

General managers or chief administrators of special districts, including general managers or chief administrators of air pollution control districts or air quality management districts. (Section 87406.3; Regulation 18746.3(a).)

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Who is an Official?

Local government agencies include any county, city, or district of any kind including a school district, or any other local or regional subdivision, or any department, division, bureau, office, board, commission or other agency of the foregoing. (Section 82041.)

Have You Left?

An official has permanently left an office or employment on the date on which the official is no longer authorized to perform the duties the office or employment and stops performing those duties, even if the official is still receiving compensation for accrued leave credits. (Regulation 18146.4(b).)

What is an Appearance?

An appearance or communication includes all of the following:

Conversing by telephone or in person. Corresponding with in writing or by electronic communication. Attending a meeting. Delivering or sending any communication. (Regulation 18746.2.)

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Are You Being Paid?

An appearance or communication includes all of the following:

Conversing by telephone or in person. Corresponding with in writing or by electronic communication. Attending a meeting. Delivering or sending any communication. (Regulation 18746.2.)

Are You Representing Another Person?

Appearances or communications in representation of any of the following are not prohibited:

Another local government agency or any other public agency. (Regulation 18746.3(c).)

The former official’s personal interests as defined in Regulation 18702.4(b)(1), unless the appearance or communication is made in a quasi-judicial proceeding in which the official participated while serving as a local government employee or officer. (Regulation 18746.3(b)(4).)

Are You Influencing A Decision?

The local one-year ban prohibits an appearance or communication if it is made for the purpose of influencing any of the following:

An administrative action

Quasi-legislative proceedings

Quasi-judicial proceedings

A legislative action,

Any action involving the issuance, amendment, awarding, or revocation of a permit, license, grant, or contract, or the sale or purchase of goods or property.

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Influencing a Decision

The following conduct is not prohibited because it does not involve an attempt to influence a decision: Formal participation in a panel or conference for

educational purposes or to disseminate research.

Attendance at general informational meetings, seminars, or similar events.

Making requests for information about any matter of public record.

Communications with the press. (Regulation 18746.2.)

What is an Agency?

An official subject to the local one-year ban may not appear before or communicate with any officer or employee of either of the following:

The local agency, or any committee, subcommittee, or present member of the local agency that the official worked for

Any local agency that is subject to the direction and control of the agency that the official worked for

Influencing Prospective Employment

Ban on influencing prospective employment, prohibits current local officials from taking part in decisions that directly relate to a prospective employer. (Section 87407.)

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THANK YOU!

Gary Winuk

Adjunct Professor, McGeorge School of lawOf Counsel, Murphy, Austin, Adams Schoenfeld LLP

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The Conflict of Interest Streamlining Project began September 2012, and was completed in 2015.

Former 8-Step Test

Step 1: Is the person a governmental official?Step 2: Is the official making, participating in making, or using positon to influence a decision?Step 3: What are the official’s interests?Step 4: Are interests directly or indirectly involved in the decision?Step 5: Is the financial effect on the interests reasonably foreseeable?Step 6: Is the financial effect on the interests material?Step 7: Exception - Does the decision affect the public generally?Step 8: Exception – Is the official legally required to participate?

Step 1: Is it reasonably foreseeable that the decision will have a financial effect on any of the official's financial interests?

Step 2: Will the effect be material?

Step 3: Does the decision affect the public generally?

Step 4: Is the official making, participating in making, or using position to influence the decision?

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None of the former 8 steps has been removed form the analysis entirely. Although removed, former Steps 1 and 8 must still be considered.

• Former Step 1: Is the person a governmental official?

An official is any “member, officer, employee, or consultant of a state or local governmental agency.”

• Former Step 8: Is the official legally required to participate?

This exception still exists and allows an agency to randomly select a disqualified official to take part in a decision if the agency cannot establish a quorum because too many officials are disqualified.

Is it reasonably foreseeable that the decision will have a financial effect on any of the official's financial interests?

Disqualifying Interests

Determining the official’s interest (former Step 3) now incorporated in Step 1. Disqualifying interests have not changed and include:

(1) Investment in business.

(2) Investment in real property.

(3) Source of income of $500 or more in the previous 12 months.

(4) Employment/Position with business entity.

(5) Source of gifts of $460 or more in the previous 12 months.

(6) Official’s personal finances or those of an immediate family member.

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Explicitly (Directly) or Not Explicitly (Indirectly) Involved

Determining whether an interest is directly (explicitly) or indirectly (not explicitly) involved (former Step 4), has also been merged into Step 1.

• Under former analysis, if interest was directly involved in the decision the financial effect on the interest was generally found foreseeable and presumed material.

• Under current analysis, if interest is explicitly involved in the decision the financial effect on the interest is presumed foreseeable and will be material under applicable materiality standards.

Explicitly Involved (General Rule)

An interest is explicitly involved if it is a named party in, or the subject of, a governmental decision. An interest is the subject of a proceeding if the decision involves the issuance, renewal, approval, denial or revocation of any license, permit, or other entitlement to, or contract with, the financial interest, and includes any governmental decision affecting a real property financial interest as described in Regulation 18702.2(a)(1)-(6).

Explicitly Involved (Property Interest)

Property is explicitly involved whenever the governmental decision:

(1) Involves a general or specific plan, and the parcel is located within the proposed boundaries of the plan.

(2) Determines the parcel's zoning or rezoning, annexation or de-annexation, or inclusion in or exclusion from any subdivision, or other boundaries.

(3) Would impose, repeal, or modify any taxes, fees, or assessments that apply to the parcel.

(4) Authorizes the sale, purchase, or lease of the parcel.

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Explicitly Involved (Property Interest)

(5) Involves a license, permit or other land use entitlement authorizing a specific use of or improvement to the parcel or any variance that changes the permitted use of, or restrictions placed on, the parcel.

(6) Involves construction of, or improvements to, streets, water, sewer, storm drainage or similar facilities, and the parcel will receive new or improved services distinguishable from those provided to other similarly situated properties or the official will otherwise receive a disproportionate benefit or detriment.

Points of Emphasis for property within 500 feet.

• Property not explicitly involved in the decision merely because it is within 500 feet of property that is the subject of the decision. (However, still presumed disqualified if the property is residential.)

• For property more than 500 feet from property subject of the decision, a stricter reasonable person standard now applies.

Reasonably Foreseeable

Former Foreseeability Rule

Effect is reasonably foreseeable if there is a substantial likelihood that it will occur. Certainty is not required. However, if an effect is only a mere possibility, it is not reasonably foreseeable.

Current Foreseeability Rule

If interest is explicitly involved in the decision the effect is presumed foreseeable.

If interest is not explicitly involved in the decision the effect is foreseeable if it “can be recognized as a realistic possibility and more than hypothetical or theoretical.” An “effect need not be likely to be considered reasonably foreseeable.”

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Reasonably Foreseeable

Points of Emphasis

An effect maybe “foreseeable” even if “not substantially likely.”

The effect on any interest explicitly involved is presumed to be foreseeable.

Materiality (Former Rules)

Directly involved interest (except personal finances) previously subject to “one-penny rule” and any effect at all was presumed material.

Personal finances subject to $250 materiality standard.

Indirectly involved interests subject to varying materiality thresholds depending on the nature of the interest. For example:

• Business interests ranged from $5,000 to $10,000,000.• Property interests generally not material (unless “sore thumb”).• Interests in individuals subject to $1,000 materiality standard or

material effect on individual’s property. • Interests in nonprofit ranged from $2,500 to $1,000,000.

Materiality (New Rules)Explicitly Involved Interest

Like former directly involved standard, an effect on any interest explicitly involved is material under each applicable regulation. (Note, however, that an effect is not material if “nominal, inconsequential, or insignificant” even if the effect is on a directly involved interest . (Regulation 18702.))

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Materiality (New Rules)Interest Not Explicitly Involved (Business Entity)

Effect on interest in business entity not explicitly involved is material if “prudent person” would find it “reasonably foreseeable” that the decision would change the price of the business’s stock, or the value of a privately-held business.

Materiality (New Rules)Interest Not Explicitly Involved (Property)

Effect on property not explicitly involved is material if the decision would:

Change development potential.

Change income producing potential.

Change highest and best use.

Change character of parcel (traffic, intensity of use, parking, views, privacy, air quality).

Consider property within 500 feet of official's property (other than a commercial property interest).

Cause a “reasonable prudent person” using “due care and consideration” to believe the effect would influence market value of the property.

Materiality (New Rules)Interest Not Explicitly Involved (Individual)

Effect on interest in individual not explicitly involved is material if:

The individual would “receive a measurable financial benefit or loss.”

The official knows or has reason to know the individual has a business interest or property interest materially affected under applicable materiality rules.

(However, if income results from the sale of personal property including real property in a noncommercial transaction and interest is not explicitly involved, the effect is material only if the official knows or has reason to know of a material effect on individual’s business or property.)

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Materiality (New Rules)Interest Not Explicitly Involved (Nonprofit)

Financial effect on an interest in a nonprofit not explicitly involved is material if:

The nonprofit will receive a “measurable” financial benefit or loss.

The official knows or should know that the nonprofit has an interest in a business entity or property that is materially affected by the decision.

Materiality (New Rules)(Personal Financial Effect)

Financial effect on the official interest in his or her personal finances including the personal finances of the official’s immediate family is material if the official will receive a “measurable financial benefit or loss from the decision.”

Materiality (New Rules)Points of Emphasis

If the interest is explicitly involved in the decision, the effect of the decision will be material unless the effect is “nominal, inconsequential, or insignificant.”

New regulations substantially lower the materiality standards for interest in business and nonprofit entities.

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Public Generally

An official is disqualified from a decision only if it is reasonably foreseeable that the decision will have a material financial effect on the official's financial interest, distinguishable from its effect on the public generally.

Public Generally (Former Rule)

Former rule established a two-prong test. First, the official had to determine that a certain threshold of the public or “significant segment” would be affected by the decision, and second the official had to determine that those in the significant segment were affected in “substantially the same manner.”

Former “significant segment” thresholds:

1. At least 10% or 5,000 or more of the residents of the jurisdiction.2. At least 10% or 5,000 property owners or residential property

owners in the jurisdiction.3. At least 25% or 2,000 business entities in the jurisdiction.

“Substantially the same manner” interpreted rather narrowly even the slightest differences within the significant segment would result in disqualification. (Square footage, lot size, multiple interests.)

Public Generally (Current Rule)

Current Public Generally Exception is still a two-prong test:

1. The official must still determine that a certain threshold of the public or “significant segment” will be affected by the decision.

2. The official must then determine whether he or she will be “uniquely affected” by the decision as compared to the significant segment.

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Public Generally (Current Rule Cont.)Significant Segment:

The significant segment threshold has been raised to at least 25 percent of (1) all businesses or non-profit entities within the jurisdiction; (2) all real property, commercial real property, or residential real property within the jurisdiction; or (3) all individuals within the jurisdiction.

Unique Effect Test:

The unique effect test moves away from the overly strict interpretation of the “substantially the same manner” standard. So long as a significant segment of the public is affected, the unique effect test is intended to allow officials to take part in more decisions under the public generally provision despite minor differences between the interests affected by the decision.

Public Generally (New Rules for Special Circumstances)

Note that in addition to the basic public generally exception there are several unique rules applicable for special circumstances. While new rules repeal some of these rules, there are two new rules for special circumstances:

1) Rule permitting an official to take part in decisions regarding general use or licensing fees that apply to the entire jurisdiction.

2) Rule permitting an official to take part in decisions affecting an interest in his or her residence involving parking, , traffic controls, vagrancy, nuisance, or public safety if the body has gathered sufficient evidence of a need for the action in the specific location.

Public GenerallyPoints of Emphasis

Because of increased thresholds, the public generally rule is now less likely to apply in larger jurisdictions (for example a county).

In smaller jurisdictions it is easier to meet thresholds. And because the unique effects test is less strict, the public generally exception is now more likely to apply. (See I-15-113.)

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Is the official making, participating in making, or using position to influence a decision?

Former Step 2 moved to Step 4. There is no reason you can’t analyze Step 4 prior to Steps 1-3. Rules have been condensed but are essentially the same.

1. Making a decision is authorizing or directing any action, voting, appointing a person, committing agency to course of action, or entering into a contract.

2. Participating in decision is providing information, opinion, or recommendation without significant intervening review.

3. Influencing a decision is contacting or appearing before (a) any official in agency for the purpose of affecting a decision or (b) any official of another agency if the official purports to act on behalf of official's agency.

Streamlined analysis vs. more complicated application.

Better results?

• It can be harder to apply the reasonable person standard as opposed to the former bright-line rules. And, the new standards may require more work for the official in compiling the relevant facts in order for the Commission to provide written advice.

• However, we have also received positive feedback that as applied the regulations are resulting in more common sense conclusions.

We realize there are multiple areas that still need refinement. If anyone has thoughts or suggestions on possible revisions, we would encourage you to send us your comments. We anticipate bringing further revisions to the Commission later this year.

DAVIS V. FRESNO UNIFIED SCHOOL DISTRICT The CITIZEN’S UNITED of California Conflicts of Interest Law, or

When is a Corporation an “Employee”?

Prepared by

Shawn M. Mason City Attorney

City of San Mateo

I INTRODUCTION California conflict of interest law has long prohibited state and local public officials from exercising their official authority when they have a personal interest in their public actions. Over time, the Legislature and the people of the state codified and refined conflict laws through statutes and initiatives such as Government Code Section 1090 and the Political Reform Act of 1974.1 As stated in the Attorney General’s Conflicts of Interest Guide, these laws are “…grounded on the notion that government officials owe paramount loyalty to the public, and that personal and private considerations on the part of government officials should not be allowed to enter into the decision‐making process.” (Emphasis added.) The notion that the state’s conflict of interest laws exist to prevent government officials from participating in public decision‐making when they have a private interest in the decision is pretty straightforward when the official is a natural person. However, some interesting questions arise when one considers application of these laws to corporate entities. Can a corporation have a personal interest in a public decision? Can a corporation be a public “official” or “employee”? In Citizen’s United v. Federal Elections Commission (2010) 558 U.S. 310, the United States Supreme Court declared that “corporations are people, too” when it comes to the First Amendment right to make independent expenditures to support political speech. Last June, the California Court of Appeal for the Fifth Appellate District declared that along with legal rights, corporations may also have legal duties. In Davis v. Fresno Unified School District, (2015) 237 Cal.App.4th 261, the court declared that at least some of the legal obligations imposed by the state’s conflict of interest laws apply to corporate entities. That is, under certain circumstances, corporate entities will be considered public “officials” or “employees” prohibited from participating in government decisions when their “personal” interests could be affected by the decision.

1 The Act is codified at California Government Code Sections 81000 et seq.

II. CASE SUMMARY The Facts This case arises out of the approval by the Fresno Unified School District (“FUSD”) of two contracts for the construction of a new middle school. The first contract was a lease by which FUSD leased to Harris Construction Company (“HCC”) the site of the new school. This contract was referred to as the Site Lease. The second contract, referred to as the Facilities Lease, was a lease of the site and improvements constructed on the site back to the district. Under the Site Lease, FUSD leased to HCC the property for $1 in rent. The term of the lease began in September 2012, and expired on the same day as the Facilities Lease. Under the Facilities Lease, HCC promised to build the new school pursuant to “Construction Provisions” that were attached to the lease as an exhibit. HCC also promised to lease the property with the improvements back to FUSD. In return FUSD promised to make lease payments under a Schedule of Lease Payments. The Construction Provisions exhibit was a typical 55 page construction agreement with plans and specifications and a promise by FUSD to pay a guaranteed maximum of $36.7 million dollars. The Schedule of Lease Payments was a reference to progress payments to be paid under the Construction Provisions. The “lease payments” due were based upon the amount of construction accomplished. Under the Facilities Lease, it (and as a consequence the Site Lease) terminated upon completion of the construction of the school and the making of the final “lease payment.” Title to the land and improvements would vest in FUSD upon termination of the Facilities lease. Davis was a taxpayer in the district who was concerned about the lease‐leaseback arrangement between FUSD and HCC. Davis maintained that the deal was an illegal attempt to avoid the requirement to competitively bid the school construction project. FUSD argued that the transaction fit within an exception to the competitive bidding requirements provided in Section 17406 of the Education Code. In addition, Davis argued that FUSD’s approval of the lease/leaseback contracts violated California conflict of interest laws. Davis asserted that in the efforts leading up to the approval of the leases, HCC had acted as a professional consultant to FUSD, and had participated in developing the plans and specifications for the new middle school. Davis asserted that because of this consulting relationship, state conflicts law prohibited HCC from being awarded a contract that it had a role in developing. Procedural Status Davis filed a complaint to invalidate the lease/leaseback contracts between FUSD and HCC. FUSD and HCC demurred to the complaint and the trial court sustained the demurrers. In its order the court gave Davis 30 days to amend his complaint, but he did not do so. After judgment was entered in favor of FUSD and HCC, Davis appealed.

Issues Presented2 Because the appeal was taken from the denial of a demurrer, the issues presented were as follows: [1] Did Davis plead sufficient facts to establish a violation of the Political Reform Act of 1974? [2] Did Davis plead sufficient facts to establish a violation of California Government Code Section 1090? [3] Did Davis plead sufficient facts to establish a common law conflict of interest? The Court’s Holding [1] Davis did not plead sufficient facts to establish a violation of the Political Reform Act of 1974. Government Code Section 87100 prohibits public officials from making or participating in decisions in which they have a financial interest. In Davis, the plaintiff alleged that HCC (the corporate entity, not a specific HCC officer or employee) served as a consultant to FUSD on the middle school project. Thus, the question presented was whether, for the purposes of Section 87100, a corporate entity could be considered a “public official.” The court concluded that corporate entities are not “public officials” for the purposes of Section 87100. The court noted that Government Code Section 82028 defines “public official” as including “every member, officer, employee, or consultant of a state or local government agency.” The court also noted that while no statute defined what “consultant” means, the FPPC has adopted a regulation that does. Under Regulation 18704.6,3 a consultant is defined as “an individual who, pursuant to a contract with a state or local government agency…(1) makes a governmental decision…, or (2) …serves in a staff capacity and in that capacity participates in making a governmental activity.” (Emphasis added.) The court concluded that since Davis had not named any individual in their complaint, and since, by definition, only individuals are “consultants”, Davis had failed to state sufficient facts to establish a violation of the Act. [2] Davis pled sufficient facts to establish a violation of Government Code Section 1090 California Government Code Section 1090 provides that government “officers and employees shall not be financially interested in any contract made by them in their official capacity.” The Davis court began its 1090 analysis by addressing the question of whether HCC made a contract

2 The greater part of the appellate court’s opinion addresses the Education Code requirements for competitive bidding, and whether the lease/leaseback arrangement fell within the statutory exception. This paper addresses only the conflict of interest issues presented in the case. 3 This regulation was renumbered to 18700.3 after the Davis opinion was published.

in its official capacity. In disposing of this issue, the court cited the longstanding precedent established by the Supreme Court in Stigall v. City of Taft (1952) 58 Cal.2d 565. In that case, the court broadly interpreted the concept of “making a contract’” to include not only the act of approving and signing the contract, but also “planning, preliminary discussions, and drawing plans and specifications” engaged in as part of the contracting process. The court then turned to the question of whether HCC could be considered a government “employee” for the purposes of the 1090 prohibition. The court concluded that at least in the context of a civil action seeking to invalidate a contract, a corporate entity providing consulting services to a public agency could be considered an “employee” of the agency. In reaching this conclusion the court starts by citing two cases, California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.App.4th 682 and HUB City Solid Waste Services, Inc. v. City of Compton (2010) 186 Cal.App.4th 1114, for the proposition that outside consultants may be subject to the 1090 prohibition. The court then noted that both of these cases involved individuals serving as consultants, and not allegations against a corporate entity consultant. Thus, the court determined it was reaching an issue of first impression. FUSD and HCC argued that Section 1090 should not be extended to consultants for the reasons cited in a case entitled People v. Christiansen (2013) 216 Cal.App.4th 1181. In Christiansen, a consultant to the Beverly Hills Unified School District was criminally prosecuted and convicted by a jury for violating Section 1090 in connection with a number of school district contracts. In overturning the conviction, the appellate court ruled that Ms. Christiansen could not have been convicted of a 1090 violation, because it was undisputed that she was an independent contractor and not an officer or employee of the District. In reaching its conclusion, the Christiansen court criticized the conclusions of the Hanover and Hub City courts. The Davis court rejected FUSD and HCC’s argument. The court opined that Christiansen was distinguishable, because it involved a criminal prosecution, and not a civil case brought to invalidate a public agency contract. The court concluded that in the context of a civil suit, the word “employee” ought to be given a broader interpretation to achieve to public purpose underlying section 1090, the prevention of self‐dealing. Having determined that a broader interpretation should be given, the court noted that a corporate consultant is as capable of influencing an official decision as an individual consultant, and as a consequence, corporate entities should be subject to the 1090 prohibition. The court then concluded that since Davis had alleged that HCC had served as a professional consultant to FUSD and had a hand in designing the plans and specifications of the school project, Davis had pled sufficient facts to establish a 1090 violation where HCC was awarded the project contracts. [3] Davis pled sufficient facts to establish a common law conflict of interest Having concluded that Davis had pled sufficient facts to establish a 1090 violation, the court found that Davis pled sufficient facts to establish a common law conflict of interest. The court

noted that Section 1090 codified a longstanding common law prohibition against self dealing in public contracts. The court explained that the statute’s overlap of the common law is not complete, as the common law prohibits not only financial self interest, but also applies to nonfinancial interests that might cause a public official to have divided loyalties with respect to a particular governmental decision. The court concluded that since the complaint alleged sufficient facts to state a 1090 violation, it must state a common law conflict, since the purpose underlying 1090 is subsumed by the common law.