Page 7 - Beaumont Basin Watermaster

consensus regarding timing of when an overlying right becomes an
appropriative right.

BCVWD Counsel Jim Markman indicated that over the years, he has
spoken to various overlyers who are trying to monetize their rights more
quickly or in addition to what they need for development. He explained
that the mechanism is a conversion where the overlyer forgoes pumping
the amount of water necessary to serve a project on his property, and
that amount of water goes to the public water supplier who is required
to serve the project. This has been done in the Chino Basin for 40 years.
The Beaumont Basin judgment is different in that it is more complex,
Markman explained. He said the transfer appears to occur for two
reasons: when someone hooks up a meter and starts serving potable
water to a development or as it goes on over time. The calculation of
the amount of water that has converted is reported annually to the
Watermaster through meter readings (deemed to have been pumped)
and the overlyer has a right backing up that pumping. Markman posited
that it appears the transfer is annual and can only be transferred when
the water is actually moving through the meter; that is the mechanism.
He acknowledged there are ambiguities in the judgment.

Counsel Markman also pointed to the BBWM policy that if an overlyer
does not pump its overlying allocation in a given year, the amount not
pumped is distributed into the storage accounts for all of the
appropriators on a pro-rata basis – so it cannot be counted twice. Those
two things occur annually, he stated. Markman said he had read of other
things being done and has been in meetings where developers or
landowners ask for early allocations leading to the question whether the
public water supplier can serve anywhere within the service area with
this add-on production right, because it is being forgone by the overlyer.
If nothing is being built, the overlyer would have forgone it anyway, and
then the lack of production would have been distributed to everyone
else’s storage account, Markman pointed out. He recommended walking
back the procedure and further study by the Watermaster Committee to
create a policy to reconcile all of the viewpoints and different potential
accountings. The result may entail an amendment to the judgment that
is clear and can be put in front of the court.

Markman counseled that the BCWVD does not see the transfer occurring
until the water flows with an accounting every year including the un-
pumped water that is distributed every year to the appropriators. He
indicated support for formation of an ad hoc committee.

Member Zoba said he believes the current wording in the draft annual
report makes sense and suggested that some of the discussion seemed
opportunistic to create a third party beneficiary which would receive this
water. An overlyer has three options to use their water: pump it and
use it on the property, not pump it (at which point it becomes an unused

BEAUMONT BASIN WATERMASTER COMMITTEE - MINUTES 2019-03-06 PAGE 4 OF 8

Beaumont Basin Watermaster - March 27, 2019 - Page 7 of 58