The Klamath River Dam Removal Agreement: Lessons for Negotiation

The Klamath River.  Photo: Linda Tanner.

An agreement to implement the largest river restoration project in the United States was signed last week on a fish cleaning table at the mouth of the Klamath River in northern California.  The agreement hasn't garnered much national attention, but serves as a model for negotiating a complex stakeholder agreement over water resources.  This week I've been running negotiation simulations in my Natural Resources Law and Ocean and Coastal Law classes to drive home the significance of multi-party conflicts over natural resources, and the challenges of coming to a mutually beneficial agreement when so many parties have an interest in the resource.  The Klamath River is a textbook example of a multiple use resource conflict.  

The river and its network of dams provide irrigation to farmers in Oregon's upper basin and California's lower basin, hydropower to energy markets, instream flows to federal public lands, domestic water and aquatic species for several tribes, and sustain a diverse ecosystem that includes three species listed under the federal Endangered Species Act (including the Coho Salmon).  The operator of the dams is owned by Berkshire Hathaway, the river provides recreation and tourism opportunities to local communities, and its path crosses the state boundary between Oregon and California.  In other words, stakeholders include large-scale farmers, small-scale farmers, federal agencies, endangered species, tribal governments, conservationists, corporate interests, two western states, and watershed communities.  For many years the dynamic of the conflict pitted the dam operator and farmers benefiting from the irrigated water dams provide against the downstream tribes and conservationists who were critical of the cumulative impacts dams were having on the watercourse as a whole.  There has been extensive litigation and political wrangling in the last several decades, intensifying the conflict.  Compounding these issues is a decline in the absolute quantity of water resources available in recent years.  

It seems remarkable, then, that this diverse group of stakeholders could have come to an agreement.  Upon closer inspection, it seems that ancient doctrines of water law and the judicial system may have played a necessary role in getting the parties to the negotiating table.  The United States federal government holds a reserved water right to sustain federal public lands, from which it must also protect and preserve the water rights of the several tribes.  In this case, the Klamath Tribes (established by the Klamath Treaty of 1864), had priority water rights.  In the western water law system of prior appropriation, senior water users have priority over junior water users, but it can take many years of legal battles to validate senior water rights.  In 2013, an arbitration court finally validated the tribes senior water rights over upstream farmers using the dams.  In a previous case, United States v. Adair, the judge concluded:

"Although the reservation has now been terminated, members of the Klamath Tribe and the tribe itself have the right to sufficient water to protect their hunting and fishing rights on lands of the former reservation and for agricultural purposes on those lands. Protection of these rights, the court notes, will require maintenance of a natural stream flow through both an existing marsh and forest land on the former reservation."

That court decision prompted the stakeholders to negotiate an agreement that would operationalize the tribes' legal victory.  And it didn't hurt, I suppose, that the dam operator's financial projections were ambivalent: it might have been more expensive to continue maintaining and licensing the dams than removing them.  These new legal and financial developments gave the parties the mutual reality needed to get the deal done, which included a second agreement designed to compensate farmers and ranchers who stand to lose from dam removal. 

The Klamath River restoration agreement is remarkable in its scope, representing the largest river restoration project in the country.  It is remarkable in its promise, providing hope to tribes, conservationists, and local communities dependent on the health of the river's ecosystems.  But it might be most remarkable in its resolution, providing a fascinating example of a multi-party stakeholder negotiation that will likely result in a ground-breaking restoration agreement.  While centuries-old water laws are much maligned, it is clear they still have a powerful role to play in twenty-first century water management.  

Indoor agriculture's future: bright or blight?

Photo: Phil Hendley

Indoor agriculture - growing food in greenhouses instead of in an outdoor field - is nothing new.  Roman gardeners used a greenhouse-type system to provide cucumbers to the Emperor Tiberius every day of the year.   Today greenhouses cover 0.25% of the Netherlands' total area.  But two recent developments are making agronomists and the private sector look at indoor agriculture on a larger systemic scale. The first is that climate change is wreaking havoc on traditional agricultural areas.  California, for example, grows most of the United States supply of produce, but now faces a recurring lack of water to irrigate those crops.  Indoor agriculture can grow produce any time of the year, virtually anywhere:

In an indoor farm, water doesn’t inconveniently evaporate. LED lights can lengthen the hours of sunlight so plants can grow faster. CO2 levels can be tweaked. Even as the weather outside goes haywire, plants farmed indoors can live out an optimized version of the weather that they coevolved with — the weather of the past. The best weather of the past. 

The second development is an advancement in greenhouse technology and software that monitors plants and growing conditions and adjusts those conditions to reach that optimized environment.  Importantly, these technological advances can mitigate the two major downsides of indoor agriculture: cost and energy.  Outdoor crops use sunlight and rain, so replicating that process makes indoor agricultural products more expensive.  And the massive amounts of electricity required to mimic the sun and pump water into the system dramatically increases the energy footprint of an already carbon-intensive industry.  

Agricultural start-ups are working on these inefficiencies and looking at ways to make indoor agriculture more sustainable (e.g. incorporating solar powered electricity sources).  But, as promising as indoor agriculture might seem, it will be some time until the energy demands are reduced to the point of sustainability.  Indoor agriculture can contribute to food security by ensuring stability in the supply chain, but the most resilient and sustainable food system grows crops at the time, place, and location where they are best suited.  If California isn't a suitable place to grow arugula anymore, it's likely there is a region somewhere else that is.  

Perpetuating agriculture in unsuitable locations, or deciding to replicate natural processes indoors, is partly a by-product of negative externalities and the difficulty in pricing resources like water and electricity to reflect their true cost.   Agricultural policies can make this more difficult as well, providing subsidies to traditional agricultural regions or placing zoning restrictions on lands with potential to support agriculture.  In the face of these barriers to agricultural mobility it's not surprising that market disrupters are enthusiastic about indoor agriculture, but let's not forget that policy changes in the agricultural sector can make a big difference in the resilience and efficiency of the food system.  The sun and the rain still have a role to play.

Greenhouses in the Netherlands.  Photo: Pieter Edelman

Photo: Sint -Katelijne-Wave

California passes bills to regulate marijuana cultivation

California Governor Jerry Brown.  Image: Ohad Ben-Yoseph.

Medical marijuana has been legal in California since 1996, when the state passed Proposition 215 establishing the Compassionate Use Act.  It took almost 20 years, but legislators finally took steps to create regulations for the marijuana industry.  Over the weekend three bills - AB 243, AB 266, and SB 643 - were signed into law by Governor Jerry Brown.  Of these, AB 243 is the most significant in my view, as it finally creates a regulatory framework for marijuana cultivation, the first step in the supply chain that is often overlooked.  The bill would empower several agencies, including the Department of Food and Agriculture, the Department of Fish and Wildlife, and the State Water Resources Control Board, to develop regulations that would minimize the environmental impacts of marijuana cultivation while encouraging farmers to participate in the regulatory process instead of remaining in the shadows.

That last part is important - by some counts there are around 50,000 marijuana farms in California, and many of them are adept at clandestine agriculture.  Alissa Walker, writing for Gizmodo, wrote a really nice article this week pushing back on the "weed is sucking rivers dry" narrative.  It's worth a read.  She also quotes me saying that the job isn't done yet: regulators still have to develop the regulations and get farmers to participate:

[T]here’s another risk for suddenly applying regulations to what has thrived as an essentially black market industry for decades, according to a study by Ryan Stoa, a Senior Scholar at Florida International University who specializes in environmental and natural resources law.

He spent the last few months interviewing cultivators and scientists throughout the Emerald Triangle and believes that some regulatory water rights issues still need to be worked out—especially because so much of the state’s meager rain falls in those northern counties where pot cultivation is expanding. “If you take a really heavy-handed approach to regulation, people will stay on the black market,” he says. “Regulators need to find that delicate balance between regulations that protect the environment while providing incentives for farmers to participate.”

It will be fascinating to watch California set up these environmentally-conscious cultivation regulations.  Even states that have legalized recreational marijuana use (like Colorado or Washington) have done very little to address cultivation, much less the environmental impacts of it.  California, it seems, is giving it a shot.

Introducing "Weed and Water Law"

Satellite image of the Island Mountain area and the Eel River.  Taken from Google Maps.

If you've been following this blog you've probably noticed that I've been exploring the environmental impacts of marijuana policy for some time now (see archived blog posts on the topic here).  While so many states have either legalized or are close to legalizing marijuana, almost none of them have created a regulatory framework to address environmental issues.  

Since May I've been working on an article about marijuana and water rights.  Water allocation is regulated at the state level, so there are a number of different water rights systems in the United States.  My article is the first to look at these various rights regimes and consider how they will interact with the marijuana industry.  The full draft of the article is now available here.  Below is the introduction:

In late June of 2015, a convoy of vehicles carrying enforcement officers from four different counties of northern California drove up and into the remote and rugged slopes of Island Mountain. The mountain had been given its name by 18th century settlers who observed that it was nearly surrounded by the waters of the Eel River and its tributaries. Today it represents “the dark green heart of the Emerald Triangle,” a region known for its prolific cultivation of marijuana. The enforcement officers conducted open-field searches on private lands, and by the end of the week-long ‘Operation Emerald Tri-County’ had confiscated 86,578 marijuana plants.

While police raids of marijuana farms is nothing new for the area, this particular operation raised some eyebrows. Unusually for a raid of this magnitude, no federal officials were involved – the raid was a wholly state operation. Since legalizing the medicinal use and cultivation of marijuana in 1996, California has been reticent to allocate state resources towards marijuana enforcement, decriminalizing possession of small amounts state-wide in 2010 and capping civil fines at $100. Also unusual were the lands being targeted by the county officers. Seventy percent of marijuana plants seized by law enforcement are illegally grown on public lands, but this operation went after privately held marijuana grows with some measure of legal protection under the state’s Compassionate Use Act. Until this point, a state raid of private lands was uncommon. The raid thus signaled a shift in the enforcement of marijuana laws, but not because the counties were cracking down on marijuana per se. Marijuana, like every other crop in the state, had fallen victim to water scarcity.

Months earlier, in January of 2014, the Governor of California issued a drought state of emergency in response to ongoing shortfalls in freshwater supplies. The declaration asked state agencies and officials to “take all necessary actions to prepare for these drought conditions.” Since then, the drought in California and across the United States has become a mainstream topic of conversation, dominating headlines and forcing governments to re-examine their water regulations. Water scarcity affects virtually all sectors of economic life, and as an agricultural commodity, marijuana is not immune. There is a paucity of research on marijuana and water supplies, almost certainly due to the covert nature of marijuana production. But in March of 2015, the first credible scientific study of the impacts of cultivation on water resources found that the demand for water to irrigate marijuana plants often outstripped water supplies. Data from the study came from the Eel River watershed.

‘Operation Emerald Tri-County’ is the clearest sign yet that the rapidly evolving forces of marijuana legalization and water scarcity are about to collide. The enforcement officers may not have been joined by federal officials, but they were accompanied by personnel from the state Department of Fish and Wildlife on suspicion of water abuses. Later the four counties claimed the raid itself was motivated by violations of state water regulations, not marijuana cultivation. After finding unpermitted stream bed alterations, diversions, and reservoirs, the officials moved to confiscate the privately grown plants.

In the aftermath of the raid, it became clear that the environmental intentions of the state may not have produced the greenest long-term consequences. Several victims of the raids were members of a political action group working with the counties to draft ordinances that would increase transparency and bring growers into compliance with environmental laws. The group’s director was dismayed that the raid would force growers back into the shadows, away from the state and county’s regulatory framework. A previous effort in 2010 was successful in partnering private growers with county officials to monitor plants and facilitate regulatory compliance, but a federal raid and subpoena of the program’s paperwork shut it down and broke up the partnership.  While states can and should enforce water laws in the marijuana industry, doing so without alienating the regulatory targets will be challenging.

This is especially true when considering the pace and mechanism of marijuana legalization initiatives. Marijuana is already legal for recreational use in Colorado, Washington, Oregon, Alaska, and Washington DC. Between now and election day 2016, an additional 14 states may place marijuana legalization initiatives on their ballots. In addition, 23 states and Washington DC have legalized medical marijuana, with up to seven states pending legislation. The fact that legalization is largely taking place through ballot initiatives suggests that the public won’t be waiting for state governments to get their regulatory ducks in a row. A majority of Americans favor marijuana legalization, raising the likelihood that state water law doctrines will be tested sooner rather than later.

Reconciling marijuana legalization within the structures of water laws and regulations reveals two broad conclusions. First, for many states the legalization of marijuana is likely to strain existing water regulation resources, disrupt water markets, and interfere with water rights. Marijuana is arguably the largest cash crop in the United States, and while the industry has already been using significant water resources, simply enshrining historical uses is not a viable option for many jurisdictions. On the other hand, states must bring marijuana producers into the fold lest the industry continue to operate in the shadows, and doing so will require some accommodations for producers to use water resources.

Second, and conversely, water scarcity will play an increasingly large role in the development of the marijuana industry. The tri-county raid set a precedent that more law enforcement officers and state agencies are likely to follow in order to safeguard precious water supplies. Even well-established water rights in the agricultural sector have been cut and re-negotiated, and marijuana producers joining the regulatory fray will need to navigate the various idiosyncrasies of centuries-old water laws to maximize their allocations. States are likely to place increased scrutiny on producers who choose to grow or irrigate outside of legal channels.

These broad conclusions stem from a systematic analysis that addresses the gap in understanding the relationship between water rights and marijuana legalization. Section II begins by describing status quo marijuana production taking place outside the context of state water law doctrines. While marijuana can be grown sustainably, unregulated production often leads to illegal and destructive water practices affecting downstream rights holders.

Sections III and IV envision a legal marijuana market governed by the predominant doctrines of US water law: prior appropriation and riparianism. Each system presents a unique set of legal and regulatory challenges, and for states like Colorado, these challenges are already evident. In the American West, prior appropriation states will need to adapt to the relatively rigid nature of priority water rights, as well as the federal government’s outsized role in water allocation and marijuana prohibition. States employing riparianism or regulated riparianism will have a slightly easier time incorporating marijuana cultivation into existing systems, as long as the doctrinal or regulated administration of water rights is holistically applied to the legal marijuana industry.

In Section V the theoretical becomes reality. California’s uniquely mixed system of riparian and appropriative rights provides a number of opportunities for marijuana cultivators to come into compliance with water laws. However, the state’s decentralized and haphazard approach to marijuana regulation creates uncertainty in the marijuana industry. That uncertainty bleeds into the administration of water rights despite the intentions of both cultivators and regulators.

Section VI concludes with recommendations for states in the process of legalization. By applying water laws to the emerging legal marijuana industry, this study identifies a number of key trade-offs states must make in reconciling marijuana cultivation with water scarcity. This section considers the costs and benefits of decentralization, restrictive cultivation licensing, and the “no action alternative.” While water laws will occasionally clash with the new marijuana economy, this Article identifies opportunities to smooth the transition.

Regulating Marijuana: Water Agencies vs. Law Enforcement

Photo: USFS Region 5

Marijuana legalization is spreading quickly across the United States.  One of the toughest challenges for state governments will be to create a regulatory infrastructure for the marijuana industry that strikes the right balance.  Enact policies that are heavy-handed and the industry will continue to show itself capable of surviving on the black market.  Fail to regulate at all and the legal marijuana market will struggle with uncertainty and negative externalities.  Colorado's nascent marijuana regulations have been relatively well-reviewed, in part because it had the luxury of starting from nothing.  But in California the marijuana industry has been entrenched for decades, while cultivation and consumption for medicinal use has been legal since 1996.  Nonetheless, the state has not prioritized regulation of the industry, nor made any meaningful attempts to innovate or adapt to changing conditions.  I've written in the past about the environmental impacts of excluding the industry from the regulatory framework (see here and here), as well as the difficulties states may have when choosing which of their many administrative agencies will take responsibility for regulation (see here).

Both of those issues are now converging in Northern California, where the state's regional water board is at odds with state and local law enforcement.  Adrian Fernandez Baumann reports on the North Coast Regional Water Quality Control Board's efforts to partner with marijuana farmers to regulate water resources:

The water board reps' basic pitch: Starting this summer, and going fully into effect next spring, the board would regulate cannabis cultivation on the basis of environmental impacts. Growers would be asked to invest time and money in the proper stewardship of the land and in repairing damage that had already been done. In exchange, the board offered, basically, an understanding: the government would give growers time to fix old problems and would provide a them with a framework to diagnose and repair issues. And all of it would be totally, officially, unconcerned with the legality of marijuana.

In principle the system should work, and some growers are enthusiastic.  But this program, and any others promulgated by state or local agencies, will face the same challenge: establishing sufficient (if not exclusive) control over marijuana regulation such that the actions of other agencies don't interfere.  This was a problem for a similar program that was eventually broken up by the federal government.  And considering that marijuana raids as recently as late June targeted private property owners, it may be a problem for the water board's program as well.

For law enforcement, there are strong incentives to ignore the water board's call for cooperation and to just keep raiding. Asset forfeiture laws allow police to seize large amounts of money and assets in pot busts. In 2014, Mendocino County seized $5.2 million in assets, including $3.9 million in cash.The Mendocino District Attorney's Office takes things even further with its "restitution" program, which co-opts a law intended to pay for meth lab clean-ups to extract more money from growers. Basically, the DA approaches busted growers with a deal: Give us some cash for each pound confiscated and you get no jail time. The amount is negotiable. Officially, it's $50 per plant and $500 per pound, but it often ends up in the tens of thousands of dollars. The funds then get divided up between the DA and the arresting agency, creating a revenue stream with little democratic oversight.  

There are advantages to decentralized regulation, among them the innovation and experimentation that local agencies create.  But there are drawbacks as well, and generally speaking, decentralization and fragmentation are not the same thing.  The former shifts power to local governments with local expertise, while the latter spreads overlapping mandates around between agencies and requires extensive coordination and cooperation.  The marijuana industry will implicate many state and local agencies, but to be effective and integrated, the state will need to set some ground rules for how those agencies interact.  If it does not, expect more programs working at cross-purposes.

The Environmental Impacts of Marijuana Prohibition, Ctd

Photo: California National Guard.

A reader sends along an interesting take from Mother Jones on the recent large-scale raids on marijuana properties in northern California.  The report supports my concerns (outlined here) that water-stressed areas might start experiencing an awkward convergence of water and marijuana legal frameworks as states begin focusing their limited enforcement capacities on properties allegedly violating both paradigms:

There were helicopters, SWAT teams, and nearly 100,000 marijuana plants yanked out of the ground, but last week's massive raid in Northern California's rugged Emerald Triangle was not your father's pot bust. Carried out by county law enforcement with no help from the DEA, it targeted private landowners—and not just because they were growing pot, police say, but because they were illegally sucking some 500,000 gallons of water a day from a section of the nearby Eel river that is now stagnant and moss-ridden.  In short, the cops say this was as much a water raid as a pot raid. 

I remain skeptical of using water rights violations as a justification for marijuana raids, largely because marijuana cultivation remains at-best a gray-market activity, making it difficult for growers to comply with state environmental regulations without making themselves vulnerable to federal seizures and arrests.  And as with other regulatory realms, the state will struggle to enforce consistently:

A leading advocate for Northern California pot growers scoffs at the notion that the raid was environmentally motivated. "This isn't about the environment; this is about business as usual," says Hezekiah Allen, director of the Emerald Growers Association [...] "There are 2,200 un-permitted water diversions for wine grapes in the Central Valley," he points out, citing a state report, "so I am curious when we are going to see the sheriff show up and chop down un-permitted vines. If we are agnostic about what the crop is, the same crime should lead to the same activity. That is all we are asking, just to be treated like any other crop."

Regulating the drought in California, Ctd

Groundwater pumping in California.  Photo: General Physics Laboratory.

For the first time in the Public Policy Institute of California's polling history, Californians now list 'water and drought' as the most important issue facing the state, almost twice as important as 'jobs and the economy.'  No wonder, then, that water law reform is developing quickly.  Last week the state Senate passed a bill that would finally make data from well logs (showing well location and depth) a matter of public record.  California had been the only Western state that did not provide public access to well logs.  According to stakeholders, the drought has precipitated rapid shifts in public opinion on water regulation:

This is the third time that Pavley has introduced legislation to make the well logs public. The data have been restricted to the well owner, the Department of Water Resources, and selected state agencies for more than 50 years. The Legislature required well drillers to file the completion reports starting in 1949, but two years later lawmakers, at the request of well drillers who claimed the information was a trade secret, halted public access to the documents.

Times have changed. John Hofer, executive director of the California Groundwater Association, which represents well drilling companies, said the organization will not oppose the bill.  “We’re not going to stand in the way,” Hofer told Circle of Blue. “It’s not an issue for us now. We’re not going to fight it. It’s coming.”

The legislation is a good start, but remains incomplete for two reasons.  First, because while the logs are made public, the actual owners and users of those logs remain confidential.  Public shaming of excessive water users in Silicon Valley led to California tightening public access to water consumption records in the late 1990s.  Public shaming may not be the most effective route towards use reductions, but knowing who is operating and using wells is important for groundwater management.  And that leads to the second concern: California water laws still lack a mechanism to monitor and distribute actual extraction data.  In other words, well users still aren't required to report how much water they're using.  Until then hydrological models will estimate supply and demand, but the legislature still has work to do to make extraction data more accessible.  Still, if public opinion on the drought remains steady, more reforms to California water law are sure to come.  Stay tuned.

Regulating the drought in California, Ctd

California cabbage crops.  Photo: Naotake Murayama.

In a sign of how wobbly California's water law regime has become, farmers with long-standing water rights in the Sacramento-San Joaquin Delta made an offer to the state of California late last month in which they promised to cut their water use by 25%, in exchange for a promise from the state that no further reductions would be applied.  It was a shrewd and unprecedented tactic, considering many farmers hold decades or even centuries-old water rights.  Under California's hybrid prior appropriation/riparian system of water law, many farmers obtained their water rights by making use of waterways in the early 20th century.  Because older rights take priority over newer rights, older rights holders are virtually guaranteed their allotment, even in times of scarcity.  But this year's drought is so severe that state regulators are enforcing mandatory cuts on even the most senior water rights holders.  

And that prompted farmers in the Sacramento-San Joaquin Delta to negotiate the 25% reduction settlement, which the state agreed to last week.  The feeling is that while 25% cuts are painful, at least farmers can plan for those reductions with some certainty, and avoid a doomsday 100% reduction scenario.  This farmer sums it up well:

“For me, 25 percent I can handle,” said Gino Celli, who farms 5,000 acres of tomatoes, alfalfa and corn in the delta. “Anything more than that — man, I’m done.”

Said another:

“There is a threat that the state might try the unthinkable and tell us that we cannot use any of the water,” said Dennis Gardemeyer, a delta farmer who helped spur the deal. “I and almost everyone in the delta think that will result in all manner of lawsuits and they will not prevail, but there’s always that threat.”

Now that the framework for agricultural water reductions are in place, farmers will have to choose between a painful but feasible voluntary reduction, or roll the dice with their existing rights and potential litigation.  It seems all but certain that cuts to long-standing rights holders are forthcoming:

Other cuts are virtually inevitable for farmers who don’t participate, said Felicia Marcus, chair of the state Water Resources Control Board. [...] Further cuts will go beyond any that have ever happened before: “Senior [water rights] holders have never been cut as much as they will be this year,” Marcus said. “Lawsuits are inevitable.”

Under the deal farmers in the Sacramento-San Joaquin Delta had until today, June 1, to submit their reduction plans to the state.  It will be interesting to see how many of the region's farmers submit plans and how many of those plans get approved.  It's not clear at this point what the state's criteria will be for evaluating those plans, but a pragmatic approach would favor reductions that can be easily monitored and enforced, like foregoing a crop entirely or fallowing a field.  In some cases cutback orders are being enforced by the honor system, and as little as one fifth of farmers may be complying with mandatory water reductions.  Negotiated water reduction deals are promising, but reducing the monitoring and enforcement pressure on state regulators should be a central component to any lasting water law reform.  

Regulating the drought in California, Ctd

On the Public Record, a pseudonymous blogger on California water issues, responds to my post outlining some drawbacks to bottom-up water management with an interesting observation on government discourse:

This is the second time we’ve needed people who are employed by universities, not water agencies to tell us this.  There is certainly no will to acknowledge this from within the state bureaucracies.  Local agencies are not magic: some are good, some are inept, some are overwhelmed.  We will find out which ones are which, but we’ll have lost years to the process.

Sacramento Delta.  Photo: Daniel Parks.

The stakes are so high in the California water sector I'm not surprised government agencies are keeping their heads down.  Groundwater regulations can ensure some measure of fairness between users and long-term sustainability, but there's no doubt reforms will turn some status quo winners into losers, and some losers into winners.  As a case in point, Maven's Notebook has a blog roundup on this week's California water news which features, in addition to this blog, an article demonstrating the trade-offs between endangered species, urban populations, and agriculture in the Sacramento-San Joaquin Delta.  There isn't an easy solution for water managers: 

Given tight water supplies, there’s little doubt that this additional water flowing from the Delta could have been used for other purposes. But some of the fish species that depend on the Delta are struggling mightily during this drought. Reallocating more water to other uses almost certainly would have caused further environmental harm, and increased the chances of stricter future regulations to protect endangered fish. 

The South Florida Water Management District orchestrates a similar balancing act between water needed for the Everglades, the sugar industry, and coastal populations.  Florida's water management districts are relatively well-funded and staffed, yet groundwater management still presents problems.  Local agencies in California now have to bear the responsibility for making complex trade-offs between groundwater users whether they are prepared for it or not.  Let's hope the legislature gives them the support they need.