Key Takeaways
Bottom Line:
The Water Board is proposing changes to SGMA fees for the probationary districts that would reduce costs for most small and mid-sized farmers and is seeking feedback on other fee adjustments.
Water Rights Fund Budget Overview
- Budget reduced by $1.1 million (2.8%) from $38.8M to $37.7M for fiscal year 2025-26
- Large fund reserve of 29% – significantly higher than the typical 10% target
- Structural deficit of about $1.9M projected, which would require either a 5% fee increase or use of reserves
Proposed SGMA Fee Changes (Major Focus)
The Water Board presented a graduated fee structure to replace the current flat $20 per acre-foot rate for probationary basins (currently Tulare Lake and Tule sub-basins):
New Proposed Rate Structure:
- First 2 acre-feet: FREE
- Up to 305 acre-feet: $5 per acre-foot
- Next bracket: $9 per acre-foot
- Higher brackets: Up to $40 per acre-foot for largest users
Impact:
- Reduces fees for almost all pumpers in probationary basins
- Anyone pumping under 2,669 acre-feet would pay LESS than the current $20 flat rate
- Only affects large-scale pumpers with higher fees
Stakeholder Feedback Themes
- Strong support for using reserves to reduce/eliminate fee increases
- Support for graduated SGMA structure from farming advocates
- Concerns about additional burden on farmers already paying GSA fees
- Warnings about fund sweeps – Department of Finance may target large reserves
Next Steps
- Written comments due: June 25, 2025 to waterrightsfees@waterboards.ca.gov
- Next stakeholder meeting: July 31, 2025
- Board consideration: September 16, 2025
Key Contacts for Questions
- David Rose (Office of Chief Counsel) – FERC fees
- Natalie Stork (Office of Sustainable Groundwater Management) – SGMA fees
- General questions: waterrightsfees@waterboards.ca.gov
Note: Current numbers based on May budget revise; final budget may change these projections.
Ryo’s Thoughts
While the Water Board's graduated SGMA fee structure aims to help small farmers, a critical question went unaddressed: What prevents large operations from splitting into smaller entities to avoid higher fees?
With top-tier rates jumping to $40 per acre-foot while lower tiers pay just $5, large farms have strong incentives to split into multiple entities. The proposal mentioned fees "per individual" but provides no definition. Could corporations create multiple LLCs? What about family partnerships?
Without clear enforcement mechanisms, this well-intentioned policy could become a regulatory arbitrage opportunity rather than the equitable solution it's designed to be.
