Natural resources offsets are a legal tool often used by regulators charged with protecting those resources to permit an activity that impacts them adversely in exchange for a compensatory measure that reduces or negates that adverse impact. Offset rules span resources as diverse as wetlands, streams, water quality, air quality, endangered species, and native vegetation. The literature on offsets in these environmental contexts is voluminous. Water offsets, the focus of this Article, are analogous to environmental offsets in contexts such as wetlands mitigation and greenhouse gas emissions. Groundwater offsets enable a groundwater pumper to reduce their net impact on hydrologically connected surface waters by neutralizing some or all of the adverse impact associated with their pumping on surface water rights. This form of offset is one way of addressing the oft-recognized problem of many water laws in failing to recognize the impacts of pumping groundwater on surface water rights. Though some evaluation of groundwater offset rules has been undertaken for single jurisdictions,^[1] they are generally poorly explored in the literature, particularly in a comparative and empirical sense, focusing on implementation on the ground. The Article provides the first systematic, comparative, empirical analysis of groundwater offset rules as they stand across the West. It comes at a time when the significance of groundwater pumping and its potential impacts on surface water rights is increasingly recognized. Notably, Assembly Bill 1739 passed the California Legislature in August 2014.^[2] This state’s first, politically charged attempt at statewide groundwater regulation explicitly recognizes the impacts of groundwater pumping impairing surface waters on the overall sustainability of California’s water systems. In a larger sense, the Article adds to the broad natural resources and environmental policy design literature by deriving lessons for natural resources policy drawn from understanding how offsets in the water sphere take shape, are implemented in practice, and contrast with more well-known environmental offset rules. The starting point for this analysis is an evaluation method developed by Salzman and Ruhl for environmental offsets, ^[3] which this Article extends to accommodate a broader range of natural resources, including water quantity. Connecting offset concepts across the environmental and water contexts has not previously been done, making the Article of key interest not only to water lawyers and water agencies across the West, who seek legal solutions for managing an increasingly scarce resource, but also to environmental and natural resources lawyers who deal with mitigation and offsets in environmental contexts more generally.

This Article focuses on the groundwater offset rules of the eight western states in the United States that have adopted them based on original review and analysis of the large body of relevant legal rules and policy documents in these states and interviews conducted by the author with each of the eight state administering agencies, which were directed at understanding the challenges of implementing the rules. The Article asks five key questions: What are the key elements of groundwater offset rules around the western United States? How can we evaluate the effectiveness of the rules to preserve the integrity of water rights, using techniques of evaluation developed in the context of offsets for other natural resources, like greenhouse gas emissions and wetlands? How do groundwater offset rules perform when evaluated? How do they work in practice? And, finally: What do the lessons of groundwater offset rules teach us about the design of offset rules for other natural resources?

^{[1] For exceptional examples, see Eva Lieberherr, Acceptability of the Deschutes Groundwater Mitigation Program, 38 Ecology L. Currents 25, 27 (2011) and Clive J. Strong, Conjunctive Administration of Surface and Ground Water: The Crossroads Between Law and Economics, Law Seminars International: Idaho Water Law, Boise, Idaho, Sept. 23, 2011 (2011). There is some academic discussion of the concept more generally. See, e.g., Barton H. Thompson, Jr., Beyond Connections: Pursuing Multidimensional Conjunctive Management, 47 Idaho L. Rev. 273 (2011).}

^{[2] A.B. 1739, 2013-14 Leg., Reg. Sess. (Cal. 2014) (codified at Cal. Water Code §§ 348, 1120, 1529.5, 1552, 1831, 5200-09, 10721, 10726.4, 10726.7, 10726.9, 10729-733.8, 10735-736.6 (West 2015)).}

^{[3] James Salzman & J.B. Ruhl, Currencies and Commodification of Environmental Law, 53 Stan. L. Rev. 607 (2000).}