Updates on California Water Law: New Legislation and Regulations

The California 2023 Legislative Session ended on September 14, 2023, and presented the Governor with several important changes to California’s water-related statutes.  The Governor had until October 14, 2023, to sign all bills into law.  In addition, the State Water Resources Control Board (State Board) recently issued revised regulations concerning water rights reporting requirements and deadlines.  This alert highlights key water legislation approved by the Governor, as well as the State Board’s new reporting requirements. 

Legislation Related to Surface Water Rights

SB 389: State Board Authority to Investigate Water Rights

The Water Code has historically given the State Board broad oversight of appropriative rights to surface water established after the year 1914, but its oversight authority has been less clear with regard to appropriative rights established before 1914 and over riparian rights, for which State Board-issued permits are not required. A decision from a California Court of Appeal last year confirmed that the State Board’s regulatory authority is limited with respect to pre-1914 appropriative rights and riparian rights. The decision restricted the State Board’s power to curtail water uses under a riparian or pre-1914 claim during the drought. SB 389 was introduced in response to that decision, and expands the State Board’s authority in four important ways.

Under SB 389, Section 1051 of the Water Code is amended to authorize the State Board to: (1) investigate a diversion and use of water from a stream system to determine whether the diversion and use is exercised under a valid right; (2) issue information orders to water rights claimants requiring them to provide certain information related to their water diversions and use, including information concerning the basis of their claims; (3) issue decision orders making determinations on the extent or validity of water rights claims; and (4) make findings that a water right has been forfeited even in the absence of a conflicting claim by another water user. SB 389 therefore expands the State Board’s investigative and oversight authority and it now applies to all appropriative right to surface water as well as all riparian water rights.

Governor Newsom signed SB 389 on October 9, 2023. Individuals and businesses with claims to surface water rights should retain historical records of their water diversions and uses and maintain current records of the same.

Legislation Related to Groundwater Management Projects

SB 122: Increased Funding for Groundwater Recharge Projects

A little-noticed trailer bill, SB 122, was added to sweeping budget-related legislation that passed in July of this year and designated aquifers as “natural infrastructure.” The small change could have significant impacts for efforts to recharge depleted groundwater resources across the state. Existing law requires the California Natural Resources Agency to update the state’s climate adaptation strategy, known as the Safeguard California Plan (Plan), and to coordinate with other agencies to identify vulnerabilities to climate change and prioritize actions necessary to reduce risk. The Plan is used to inform the allocation of billions of dollars in state funds targeted toward climate impacts, including funding for the use of natural infrastructure to address these issues. Previously, projects to expand floodplains or restore wetlands for wildlife interests and flood control could not qualify for state funds earmarked for recharging groundwater. Likewise, many groundwater projects that could simultaneously respond to flooding did not qualify for state funds reserved for environmental restoration and flood control. By adding aquifers to the definition of natural infrastructure, SB 122 responds to the integrated nature of these issues and opens the door for more funds to be available for groundwater recharge projects. The change will likely be particularly useful to local groundwater management agencies charged with reaching sustainability objectives under the Sustainable Groundwater Management Act.

Legislation Concerning Water Services

SB 3: Expansion of the Water Shutoff Protection Act

This bill expands provisions of the Water Shutoff Protection Act (the Act) that provide protections and process to water suppliers’ customers against discontinued water service due to nonpayment. The Act, established in 2018 pursuant to SB 998, made numerous changes to water providers’ policies when discontinuing residential water service to delinquent customers. Specifically, the Act required water suppliers to: (1) prohibit the shutoff of water service until the residential water bill has been delinquent for 60 days; (2) require the water utility to have a written policy on discontinuation of residential water service due to nonpayment and provide that policy in multiple languages; (3) include provisions to prevent discontinuation of water service for certain customers that meet specified criteria; and (4) cap the reconnection fees for restoring water service. The bill exempted water service providers that serve less than 200 service connections. SB 3 changed that exemption. Now, the same requirements will apply to water suppliers with at least 15 service connections. SB 3 therefore expands the number of customers protected with respect to water shutoffs. The Governor signed SB 3 into law on October 13, 2023.

AB 1572: Prohibition on Use of Potable Water for Irrigating Decorative Lawns

This bill expands on prior legislation that restricts certain water uses deemed wasteful and incompatible with the state’s water conservation policies. It also cements regulations that the State Board adopted in 2022 in response to the Governor’s emergency drought orders. AB 1572, backed in part by the Metropolitan Water District of Southern California, specifically restricts the use of potable water (water that is safe for human consumption) for irrigating “nonfunctional turf,” defined as grass that is purely decorative and includes grass located within street rights-of-way and parking lots. The restriction applies to commercial, industrial, municipal and institutional properties. It also applies to common areas of residential homeowners’ associations. “Community spaces” such as parks, sports fields, and other recreational areas are exempt, as are areas that are irrigated with recycled water. Public water systems, cities, and counties are authorized to enforce these provisions and the State Board is also authorized to create a form for compliance certification that would require owners of covered properties to certify their compliance. The Governor also signed AB 1572 into law on October 13, 2023.

The ban will take effect in phases: public water providers must revise their ordinances, regulations and policies to incorporate these restrictions by January 1, 2027; commercial and industrial properties must be in compliance by January 1, 2028; and homeowners’ associations must be in compliance by January 1, 2029.

Changes to Water Rights Reporting Regulations

Last month, the State Board posted new forms for submitting notifications of changes of ownership and contact information associated with water rights. The updated forms conform with new regulations that the State Board adopted earlier this year under Resolution No. 2023-001 (“Resolution”). The State Board’s regulations require riparian and pre- and post-1914 appropriative water rights owners to notify the State Board of any change in ownership or contact information associated with those water rights. The Resolution imposes a strict deadline for when such notifications must be submitted: Whenever one of these water rights is transferred to a new owner, either the transferor or transferee, or one of their respective agents, must notify the State Board within 30 days of the transfer; likewise, any change in contact information must be submitted within 30 days of the change. If the applicable form is not submitted within the 30-day deadline, owners may be subject to fines of up to $500 per day until the form is received. The updated change of ownership and contact information forms are provided on the State Board’s website. The forms can be submitted electronically through the State Board’s Water Rights Online Portal.

The Water Code also requires all permitted and licensed appropriative water rights holders to file annual progress reports with the State Board reflecting, among other details, the amount of water diverted and the purpose of the diversion from the prior water year (October 1 through September 30). Riparian and pre-1914 appropriative water rights holders are also required to file annual statements of water diversion and use (SWDUs), reporting on similar information. The Resolution additionally modified the reporting deadline under these regulations. All progress reports and SWDUs must now be submitted to the State Board before February 1, following the end of the prior water year. Accordingly, all progress reports for permitted and licensed water rights and all SWDUs for water year beginning October 1, 2022, through September 30, 2023, will be due on February 1, 2024.

Conclusion

We are happy to respond to any questions you may have concerning these changes to California water laws, and the impact they may have on your interests and businesses. We are also available to assist with filing annual water rights reports or change of ownership forms.