The Language of Water: California’s Water Lexicon Expands A survey of water policies and their effects on residents. by Diane Kindermann Henderson
Water Fights and Solutions Making sense of government efforts to improve conservation efforts and to change consumers’ thinking. by Darcy Burke
Continuing Water Wars in California—Different Issues, Same Fight Northern and Southern California square off. by Geoffrey Willis
Water Rate Pricing Under Proposition 218: The State of the Problem and the Problem of the State Case authority for reining in rates. by Benjamin T. Benumof and W. Michael Hensley
The 2014 California Water Bond—A Fluid Situation An $11.4 billion bond measure explained. by Boyd Hill
The Language of Water: California’s Water Lexicon Expands by Diane Kindermann Henderson
Shakespeare had his own secret language buried in his plays, by which he included implicit instructions for the actors. Victorians had their language of flowers, encrypted in small nosegays to express emotions not allowed to be spoken in Victorian society. Californians have our own special language of water, allowing us to manipulate a scarce resource with enough explicit and implicit legal, technical, and political instructions to badger Macbeth, and ample emotions to support a Victorian florist on Valentine’s day.
Three important concepts in the 2014 California water lexicon are examined in this article: water conservation, curtailment, and groundwater regulation. These concepts are not entirely new, but their legal, technical, and political applications have evolved in significant new ways as a result of the drought.
Water Conservation: 20x2020: “Much Ado About Something” California’s thirst for adequate water supplies has shaped its own history and landscape. In the 1980s, water conservation existed only in general public policy terms with little legal or technical back up. The state legislature and local government followed by creating legal and technical frameworks to identify and implement specific water conservation efforts. The 2014 water crisis accelerated implementation and enforcement of conservation efforts at an unprecedented level. Two facets of the state water conservation prism are examined, followed by a survey of current local potable water conservation efforts.
20x2020: Statewide Guidance In 2009, the California legislature passed the Water Conservation Act (Senate Bill X7-7) requiring a 20% reduction in per capita water use by the end of 2020. The associated 20x2020 Water Conservation Plan (20x2020 Plan) sets forth a statewide roadmap to maximize the state’s urban water efficiency and conservation opportunities to the year 2020 and beyond. It identifies urban water conservation as the ultimate water management strategy to match supply and demand. The 20x2020 Plan includes a range of strategies to achieve the 20% per capita reduction in urban water demand by 2020. Strategies include incentivizing water agencies to promote water conservation and creating evaluation and enforcement mechanisms.
Water conservation is affected primarily through Civil Code sections 1101.1 through 1101.8, which were amended in January 2014. They require non-compliant fixtures to be replaced with water-conserving fixtures during alterations or improvements of single-family residences, multi-family, and commercial properties. Additional water conservation fixture requirements will go into effect in 2017 and 2019. Many local jurisdictions have enacted local ordinances or policies to comply with these requirements. The California Green Building Standards Code (Green Building Code) includes requirements for water-conserving fixtures designed to reduce potable water demand by at least 20%, in keeping with the 20x2020 Plan. Various other measures help reduce climate change-related impacts at the project level.
In January 2014, Governor Brown released the final “California Water Action Plan” (2014 Plan). The 2014 Plan meets three water supply objectives: reliability, restoration, and resilience. The 2014 Plan is designed to complement, not replace, local programs. Conservation and efficiency efforts are at the top of the list and the 2014 Plan will ensure expanded conservation and efficiency efforts.
Local Guidance The bulk of water conservation work is done at the local level with many local governments adopting regulations or ordinances mandating water conservation and efficiency. Many of California’s approximately 3,000 water providers have taken similar action, but actions are varied.
Civil Code Section 1101.8 permits local governments and retail water suppliers to enact ordinances or adopt regulations that promote compliance with or exceed water savings targets established in Section 1101.1. To date, many cities and counties have enacted ordinances regarding water conservation and efficiency and are enforcing them in this 2014 water emergency.
City and County of San Francisco: The City and County of San Francisco first adopted a Residential Water Conservation Ordinance in 1992, amended in 2009. For example, owners of most residential buildings must obtain a certificate of compliance prior to transfer of title as result of a sale. Certification requires low-flow showerheads, faucets and faucet aerators, efficient toilets, and leak detection and repair, among other criteria. These mirror Civil Code Section 1101.3(c)’s standards.
City of Sacramento: The City of Sacramento’s Water Conservation Ordinance (WCO) of 2009 addresses outdoor water conservation and limits the days and times when outdoor watering can occur. Because of current drought conditions, the city has adopted a Stage 2 Water Shortage Contingency plan, which further limits outdoor watering.
On October 29, 2013, Sacramento adopted its Water Conservation Plan (WCP). The WCP provides a comprehensive approach to guide the city’s water conservation efforts, including how water conservation in lieu of additional infrastructure can meet a significant portion of the city’s future water demand.
City of Petaluma: The City of Petaluma’s Water Conservation Regulations Ordinance requires that all new construction and existing customers use water as efficiently as possible. New development standards, landscape water use efficiency standards, and regulations prohibiting water waste are included. New development standards for new single-family and multi-family residential dwellings mandate the use of approved high-efficiency toilets, fixtures with maximum gallon-per-minute (gpm) requirements, and dishwashers with the EPA’s Energy Star label. Multi-family units must each be separately metered or sub-metered.
Also, vehicle wash facilities must reuse a minimum of 50% of water from previous vehicle rinses. Other requirements apply to facilities using reverse osmosis or offering self-service vehicle wash facilities. Similar to other local ordinances, much attention is paid to outdoor water use. Extensive efficiency standards apply to new and renovated residential, commercial, industrial, and institutional landscape projects.
Finally, the Petaluma ordinance prohibits water waste. Non-essential water uses are prohibited, including washing sidewalks without a hose equipped with a shut-off nozzle, irrigation that allows runoff or over-spray, and using water for non-recycling water features. The water waste portion also requires covers on all outdoor swimming pools and spas. Violations of the ordinance may result in penalties, fees, and additional charges.
City of Los Angeles: In 2009, the City of Los Angeles adopted water efficiency requirements for new development and renovation of existing buildings (Ordinance No.180822) to reduce water consumption over time, thereby seeking to minimize the effects of any water shortage. The ordinance requires water-efficient plumbing fixtures including toilets, faucets, showerheads, and dishwashers. Flow restrictions are more stringent than those required under Civil Code Section 1101.1 and apply to both residential and commercial development and renovation.
Los Angeles subsequently adopted the Emergency Water Conservation Plan in 2010 (2010 Plan) (Ordinance No. 181288). Phase I of the 2010 Plan prohibits many activities, including using a water hose to wash paved areas without use of a department-approved, water-conserving spray cleaning device; serving drinking water in restaurants, unless requested; irrigating during rain; and irrigating in a manner that allows excess water runoff. Phase II includes landscape irrigation restrictions based on address and maximum watering times. Phase III limits landscape watering to once per week, prohibits vehicle washing other than at a commercial facility, and prohibits filling residential swimming pools or spas with potable water. Phase IV prohibits all landscape irrigation. Phase V does not specify prohibitions, but authorizes additional restrictions based on the water supply. Los Angeles is currently enforcing Phase II restrictions.
Water Provider Response California includes approximately 3,000 water providers, including cities, corporations, and farm districts. Some providers have significant amounts of stored water, while some have none. As might be expected, responses to drought conditions have varied greatly across the state. Some request voluntary conservation, while others mandate restrictions. Below are just a handful of the agencies and their responses.
Bella Vista Water District (Shasta County): The Bella Vista Water District adopted Resolution 14-04, declaring that rural, residential, commercial, and public/institutional customers would receive a baseline water allocation, as well as a quantity equal to a percentage of historical use. Agriculture and aquaculture customers that also serve as a residence (family dwelling) would also receive a water allocation, though agriculture and aquaculture customers that do not serve as a residence would receive a zero allotment. Penalties for excess use are included.
The District may grant new service requests only if there is available water, and service is conditioned on water being used primarily for internal household purposes and subject to allotments. All District customers are subject to prohibitions on outdoor watering, no filling of new ponds or new lakes, and no car washing without hose-end shut-off nozzles.
Bonanza Springs Water System (Lake County): The Bonanza Springs Water System serves 178 connections in Lake County. In March 2014, the Lake County Board of Supervisors adopted an ordinance in response to emergency water supply conditions of the Bonanza Springs Water System (Ordinance No. 3003), imposing hefty surcharges for water use in excess of 900 cubic feet per month per connection, with additional surcharges for use exceeding 1,110 cubic feet. Furthermore, the administrator is authorized to discontinue water service or install a water restrictor device at the water meter for any customer determined to be in willful and continuous violation of the ordinance. While some other water providers reserve the right to allow new connections only if sufficient supplies exist, the Bonanza Springs ordinance declares that no new service connections will be allowed for the duration of the ordinance’s effectiveness.
Montecito Water District (Santa Barbara County): The Montecito Water District serves approximately 4,500 connections in the southern coastal portion of Santa Barbara County, receiving roughly one-third of its water supplies from the State Water Project. In February 2014, the District declared a water shortage emergency and placed several restrictions on water use (Ordinance No. 92), including discontinuing the processing of all applications for new water service or increases in size of existing service. While the water level of existing pools may be maintained, water will not be available for new private or public swimming pools, ponds, or major water features. Other restrictions include serving water to restaurant customers only upon request, offering hotel guests the option to forego new linens each day, vehicle washing at commercial facilities or with a bucket and hose with a hand-operated shut-off nozzle, and prohibition of washing hard surfaces. The overall goal of the restrictions is a minimum 30% reduction in district-wide water use.
Carlsbad Municipal Water District (San Diego County): In January 2009, the Carlsbad Municipal Water District enacted several water conservation measures to be in effect at all times, including prohibition on washing of hard surfaces, prohibiting runoff or overspray from irrigation, and serving water to restaurant patrons only upon request (Ordinance No. 44).
The ordinance also established four drought-response levels and action to be taken under each scenario. Under Level 1, conservation is targeted at 10%, and irrigation watering is limited to specific hours daily. Level 2 asks customers to reduce water use by 20%, and limits the number of days per week for irrigation watering. Level 3 seeks to reduce water consumption by up to 40%, places additional limits on irrigation watering, and prohibits filling ornamental lakes or ponds unless necessary to sustain aquatic life. Under Level 3, no new potable water service shall be provided. Level 4 demands reduction greater than 40% and prohibits landscape irrigation except crops and landscape products of commercial growers and nurseries. Level 4 also permits flow-restricting devices for customers that have repeatedly violated the ordinance.
Following the Governor’s January 2014 Drought Proclamation, the District declared a Drought Response Level 1, urging customers to reduce water use by 10%.
Other Water Providers: Water provider response to current drought conditions runs the gamut from mandatory reductions to asking customers to voluntarily reduce water waste. The providers with the most aggressive responses appear to be those that rely on the State Water Project or the Central Valley Project for the majority of their supplies. Water providers with more relaxed responses seem to be those with extensive local storage capacity.
State Action: The State Water Resources Control Board met on June 17, 2014, and its staff report was clarion: here, in the midst of the worst drought in a generation, state residents have not done enough to reduce their water uses, falling short of the 20% target set by Governor Brown in his January Drought Proclamation, and falling short of progress towards the 20x2020 Plan target. Nevertheless, California did cut its water use 5% compared to the same period the preceding three years. The need for more statewide conservation measures was confirmed, while recognizing that conservation targets need to be tailored to each region since there are climate variations throughout California.
The lack of water conservation mandates at the state level has led to diverse conservation efforts by water suppliers and local governments. Governor Brown’s call for a 20% reduction is uniformly acknowledged, but more measures are needed since conservation efforts yield mixed results in different regions of the state.
Curtailment: “As You Won’t Like It” Article X Section 2 of the California Constitution and Water Code section 100 mandate that the Board prevent waste and unreasonable use of the state’s water supplies. Accordingly, the Board has been anointed with specific emergency powers this year to address the drought. In lockstep with increased conservation efforts, the Board has exercised powers in Water Code sections 275 and 1058.5 to adopt emergency regulations that curtail over 4,000 junior water rights in the Central Valley, requiring those users to cease their diversions from hundreds of streams and tributaries. Cal. Code Regs. tit. 23, §§ 877-879.2 (2014). The goal is to preserve senior water rights in addition to protecting wildlife and habitat resources. The restrictions are intended to protect some of the last remaining natural salmon and steelhead populations as flows decline in the summer. Curtailments could be lifted when the fish migration pattern ends. Some senior riparian water rights elsewhere in California may be curtailed as well. Even though older water rights by law generally are superior, they do not guarantee water. Recent legislation also allows the Board to enforce its emergency regulations through cease-and-desist orders and fines.
Therefore, curtailment is another emerging term in the water lexicon, hidden in the story of the 2014 drought and an emotional challenge for water rights holders, formerly confident that their rights were secure.
Groundwater Regulation: “All’s Well That Ends Well” The third term in our drought drama is “groundwater regulation.” In general, existing law relating to extraction and use allows the regulation of groundwater flowing in subterranean streams, but not the regulation of percolating groundwater, which is a predominant condition in California. The right to use groundwater falls in one of three categories: overlying rights, appropriative rights, or prescriptive rights. This article focuses on overlying rights, which are rights of an owner of land overlying groundwater to drill a well and pump groundwater for use on the land within the basin or watershed. California Water Serv. Co. v. Edward Sidebotham & Sons, 224 Cal. App. 2d 715, 725 (1964).
Unless the basin has been adjudicated, or other local regulations apply, no discretionary permit is required to produce the groundwater, making groundwater akin to the last wild stallion in California. Most local governments require a well drilling permit, but it is ministerial and not discretionary. Even before the 2014 Drought Proclamation, however, environmental groups threatened litigation against several counties, claiming that the issuance of well drilling permits should be discretionary and subject to review under the California Environmental Quality Act (CEQA) PRC Section 21000 et seq. For example, in January 2014, environmental groups sued Stanislaus County and permit holders demanding that the County revoke permits for two hundred irrigation wells approved during the prior five months. The petitioners alleged that CEQA analyses should have been performed because well permits are discretionary actions that could result in an impact to the environment.
Consistent with Drought Proclamation instructions, the California Legislature is formalizing efforts toward groundwater extraction regulation in California for the first time. Senate Bill 1168 (the “Sustainable Groundwater Management Act”) has been described as an assault on the management of California groundwater. The following provisions would apply to all groundwater basins and sub-basins in the state:
In May 2014, SB 1168 was passed by the Senate and forwarded to the Assembly.
In October 2013, the Board issued a draft of its “Groundwater Workplan Concept Paper” (Groundwater Workplan) supporting groundwater regulation. The Board’s Groundwater Workplan aligns its current groundwater protection efforts with ongoing actions of other entities having groundwater management responsibilities, and potential actions the Board can pursue. Population growth and more intensive land use will place increased demands on the state’s water supply. Concurrently, surface water runoff is projected to decline due to the effects of climate change. These factors point to an increased reliance on groundwater, yet many of California’s aquifers are already experiencing contamination and overdraft. Varying physical and institutional characteristics of California’s groundwater basins limit a “one-size-fits-all” solution. The workplan aims to promote collaboration and cooperation among local, regional, and state agencies to help promote more effective groundwater management over the long term.
Thus, groundwater is losing its wild-stallion status, with the legislature, the board, and litigious environmental groups pursuing stricter controls over groundwater extraction and usage.
Conclusion The language of water in California will continue to evolve to insure adequate surface water and groundwater supplies for people, species, natural resources, and the environment. Water conservation, curtailment, and groundwater regulation are a small part of the new lexicon. The law, new technology, and politics will continue to grace the water stage with explicit and implicit instructions; and resulting emotions can still be hidden in nosegays, created of course with drought-tolerant blooms.
Diane Kindermann Henderson practices environmental, land use, and real estate law at Abbott & Kindermann, LLP located in Sacramento and St. Helena, California. She can be reached at dkindermann@aklandlaw.com.
Water Fights and Solutions by Darcy Burke
Western water law and policy are some of the most complex of our land. An arid climate and dry conditions changed the perspective and value of this resource as the West grew both in population and in prosperity. Water was worth something; it had great value.
In California, water fights have been fought in the courthouse, as well as in the court of public opinion, since the 1800s. Take the Sacramento-San Joaquin Bay Delta (Bay Delta) as an example. This unique and once diversified estuary has been modified beyond recognition. Vast wetlands and unique habitat have been leveed off to create rich farmland. Invasive species have actually been delivered by train and dumped in the waterways, left to feed on native, endangered fish while reproducing at alarming rates. Add on top of that the transformation of the Delta into a water delivery system that provides water to 25 million Californians, and you have the perfect recipe for conflict.
Since the 1930s, California has been trying to “fix” the Bay Delta. One hundred studies, plans, and projects that have cost tax payers hundreds of millions of dollars have been proposed to address the problems in the Delta. These proposals range from seawater barriers to new intake facilities to the now-infamous “peripheral canal.” And yet, the Delta remains in an extremely precarious and unsustainable state. In 2007, Judge Oliver Wanger’s ruling to shut off the largest water pumps in the world in order to save an endangered species, the Delta Smelt, caused immediate and long-standing consequences throughout the state. This ruling changed how California managed water for 25 million people and vast stretches of farmland, and it affected our $1.9-trillion economy in ways no one could have predicted. The effects on California’s agricultural industry were swift and devastating. Farming communities like Mendota had an unemployment rate of over 42%.
Simultaneously, Southern California’s other primary supply of imported water, the Colorado River basin, was experiencing an extended dry period. As a result, Southern California went into mandatory conservation, affecting not only urban water users but also businesses during the heart of the Great Recession.
Water resource managers plan for dry periods, including droughts. They plan long-term water reliability projects such as Metropolitan Water District of Southern California’s Diamond Valley Lake reservoir, advanced water recycling projects like the Orange County Water District’s Groundwater Replenishment System, and innovative, environmentally friendly ocean desalination projects like the Doheny Ocean Desalination Project. However, water resource managers do not plan for court-ordered “regulatory droughts.”
Eventually, the California legislature engaged in the issue—more policy and more politics. Governor Arnold Schwarzenegger made water policy a top priority. Not only was California going to address the Bay Delta with co-equal goals of environmental sustainability and long-term water reliability, but it was going to address water use efficiency, water supply projects, and overall water management. What resulted from the legislative effort was a mandated 20% reduction of water use by all Californians by the year 2020, an $11.1 billion Water Bond to be considered by California voters, and, at last, a mandate to develop a comprehensive plan to fix the Bay Delta.
Where are we today with those objectives? Water agencies throughout the state are working with their customers to improve overall water use efficiency. The Water Bond has been moved back twice, and efforts to modify it, reduce it, and get rid of the “pork” continue as we speak. Southern California, and especially Orange County, is on track to meet the 20% reduction by 2020. That is not easily achieved everywhere within the state when many areas, including Sacramento, do not have water meters installed. But the Bay Delta has made progress, namely in the form of the Bay Delta Conservation Plan (BDCP). This fifty-year plan is the closest we have gotten to addressing the myriad issues in the Delta and improving overall water reliability for California.
Purpose of the Bay Delta Conservation Plan The BDCP has been proposed in order to achieve the co-equal goals of providing for the recovery and conservation of endangered/vulnerable species and their habitats, and to protect and restore water supplies for more than 25 million people in the Bay Area, Central Valley, and Southern California.
The BDCP is being developed in compliance with the Federal Endangered Species Act and the California Communities Conservation Planning Act. Once completed, it will serve as the basis for the issuance of endangered species permits for the operation of state and federal water projects. This will allow for a greater level of habitat restoration than is currently available under existing laws and will also protect water supplies from additional regulations being added on a species-to-species basis. The plan has three main components: habitat restoration, conveyance, and other stressors.
Habitat Restoration More than a century of altering the Delta’s river channels and floodplains for farming, flood control and water conveyance has permanently changed the area’s natural habitat. The BDCP Habitat Restoration Program Technical Team’s goal is to improve the Delta’s ecosystem and its ability to support native species, primarily through increased food availability and spawning locations for fish and wildlife. Several major physical habitat restoration approaches are currently being considered, including:
Floodplain restoration: This strategy would restore current and historical floodplains (i.e., land located along river channels that are or were flooded during periods of high flow) by flooding the selected areas more often, at greater depths, and possibly for longer periods of time. Inundated floodplains produce large amounts of fish food (phytoplankton and zooplankton) and will increase the number of spawning locations.
Intertidal marsh restoration: This strategy would restore brackish and freshwater intertidal marsh lands (areas exposed to air during low tide and inundated during high tide) by reintroducing a daily inflow and outflow of water to land that is currently diked and leveed. Intertidal marshes produce large amounts of phytoplankton and zooplankton, as well as other organic material beneficial to the Delta’s ecosystem.
Channel margin restoration: This strategy would restore current riverbanks to a more natural state by increasing in-stream wood material, such as logs, and restoring natural tree and plant vegetation along the shore, which provides overhanging shade. Natural riverbanks provide increased food production, improved water temperature, and other benefits to fish species.
Conveyance The movement of water through the Delta is referred to as “conveyance.” Water is moved through the Delta for farming and urban use, which requires natural waterways and manmade infrastructure, such as canals, pipelines, and pumping plants. The State Water Project (SWP) is one example of conveyance. The SWP originates in Oroville (Northern California) at the Oroville dam and travels on the equivalent of a six-lane super highway to the Bay Delta where it meets the equivalent of a two-lane dirt road. The SWP was never finished. This super highway of water was intended to travel around the Delta in the now-infamous Peripheral Canal. (The Peripheral Canal was put out to the voters in the early 1980s and was defeated.)
The fragile Delta estuary has now been modified to be farmland, a home to world-class sport fishing, a wastewater dumping station, and a water conveyance system for 25 million Californians. The lack of infrastructure has compromised the Delta’s ability to support native fish species by altering its habitat, changing water flows and other hydrodynamics, and in some locations, killing fish that are pulled into the giant pumps used to push water into the State Water Project.
The BDCP includes potential changes to the Delta conveyance infrastructure. Since 2007, the development of the BDCP has been focusing on what is widely considered the most promising approach for meeting the BDCP’s co-equal goals of ecosystem restoration and water supply reliability—a dual conveyance system. A dual conveyance system would improve existing infrastructure in the southern Delta (where the large pumps are located) and also create a new conveyance system in the northern Delta that would transport water around the Delta, not through it.
Other Stressors In addition to the problems caused by habitat loss and water conveyance, the Delta suffers from many other stressors to its ecosystem. These include toxic contaminates from farming and waste water discharges, non-native invasive species, both legal and illegal fish harvesting, as well as other water quality issues. The BDCP has identified and developed a list of conservation measures to address these stressors.
Colorado River Southern California’s other primary source of imported water is the Colorado River (River). For over seventy-five years, conflict and courtroom battles ensued on the River by allocating more water than was available. The conflicts and effects of this over-allocation are vast and complex; very similar to the Bay Delta.
Eventually, the Quantification Settlement Agreement (QSA) was completed in October 2003. This historic agreement provides California the means to implement water transfers and supply programs that will allow California to live within the state’s 4.4 million acre-foot basic annual apportionment of Colorado River water. Six key agencies including Metropolitan Water District of Southern California, Coachella Valley Water District, State of California, United States Department of the Interior, Imperial Irrigation District, and San Diego County Water Authority developed, approved, and at long last executed this milestone agreement. There are three key areas of the QSA that have statewide benefit (San Diego County Water Authority Fact Sheet, 2003):
Local Project Development and Water Use Efficiency Southern California has spent over $15 billion dollars over the last twenty years investing in water supply reliability. These projects include:
Storage: groundwater storage as well as above-ground reservoirs, like Metropolitan Water District’s Diamond Valley Lake.
Water recycling: including advanced wastewater recycling, like the Orange County Water District/Orange County Sanitation District’s Ground Water Replenishment System.
Ocean Desalination: including the Municipal Water District of Orange County’s environmentally-sensitive Doheny Ocean Desalination project.
Water Use Efficiency: Orange County has invested in rebates, technical assistance programs, and innovative pilot studies to improve the overall efficiency of the region. Through these efforts, Orange County has saved enough water to supply over 58,000 families a year.
So, while Southern California has invested and saved water for extra sunny days, water is serious business that requires ongoing water infrastructure investments, innovative water supply projects, and improvements in water use efficiency among all water users.
Darcy Burke, M.B.A., is Director of Public Affairs for the Municipal Water District of Orange County. She can be reached at dburke@mwdoc.com.
Continuing Water Wars in California—Different Issues, Same Fight by Geoffrey Willis
Whisky is for drinking; water is for fighting over. —often attributed to Mark Twain
Shaping both the history and future of California, battles over water rights are so intense and emotional that they have been the subject of several Hollywood movies including Chinatown and The Milagro Beanfield War. Today, not only are those wanting to use water in conflict with each other, but the three branches of federal government are each pursuing different and conflicting approaches to attempt to resolve California’s water resource issues. Further complicating matters, these three approaches by the federal government are all different from the plan proposed by California Governor Jerry Brown through his Bay Delta Conservation Plan.
Fighting over scarce water resources is so ingrained into the law and culture of California that it has been in the state’s constitution from its inception, “The use of all water now appropriated, or that may hereafter be appropriated, for sale, rental, or distribution, is hereby declared to be a public use, and subject to the regulation and control of the State, in the manner to be prescribed by law.” Cal. Const. art. X, § 5. Battles over water during the Gold Rush, both literal and figurative, led to a complex set of overlapping laws and regulations that often seem to require a history degree as well as a law degree to decipher.
Sometimes the fighting, even between states, has spilled out of meeting rooms and onto a quite literal battlefield. In 1934, the State of Arizona called the state National Guard and militia units to the California border to protest diversions from the Colorado River. For a few days, the “Arizona Navy” patrolled the river in commandeered ferry boats—the Nellie T and Julia B. Fortunately, the dispute was ultimately settled in court.
Today, the fight has shifted from the gold mining streams of more than 150 years ago to a battle between fish, farms, and fuel. The interests of endangered species have pitted against the interests of farmers, while both interests are challenged by the rising demand for the development of fuel, which exists in abundance in close proximity to key farmland but requires significant water resources to develop.
While there are heated disputes about the right to water throughout the State of California, the fight over water in Northern California’s Bay Delta is currently the most contentious. This continuing legal tug-of-war started at least three decades ago, and involves dozens of court cases, conflicting regulatory orders, and emotionally charged issues. While “water wars” have always been a heated issue in California, the alliances and opponents in this battle involve many of California’s key economic interests. This is not an issue with “two sides”—a flowchart showing the competing interests would resemble a plate of spaghetti.
Water flowing through the Bay Delta is home to the tiny delta smelt, a listed endangered species under the federal Endangered Species Act. Significant water diversions had been allowed for decades to flow through canals to farmland in California’s Central Valley. The United States Fish and Wildlife Service and environmentalists contend that the delta smelt is a food source critical to the survival of several of California’s salmon populations. They further contend that waters diverted from the Bay Delta for farming and other uses affect water quality threatening the survival of the delta smelt. These parties have sought, with success, court and regulatory actions to stop the diversions from the Bay Delta that forced the water to flow to the Pacific Ocean without diversion to farmlands in the Central Valley.
The farming industry is divided. Farmers along the San Joaquin Delta contend that diversion of water away from their farms increases the salinity of the water, ruining their fields. In contrast, farmers in the San Joaquin Valley contend that more than 300 square miles of formerly productive farmland has gone fallow because of court-ordered measures directing the reduction or elimination of the flow of water from the Delta to California’s Central Valley.
California’s energy interests are also squarely at issue because underlying the land of the Central Valley farms are some of the largest untapped reserves of natural gas and other fuel sources remaining in California. Development of these currently untapped energy reserves would require the use of a large amount of the same water fought over by farmers and environmentalists.
On June 10, 2014, yet another lawsuit was filed in federal district court challenging the use of water from California’s Bay Delta. This suit, filed by the California Sportfishing Protection Alliance and AquaAlliance, alleges that the United States Bureau of Reclamation has failed to adequately assess the environmental impacts of delivering water from the Delta to farms in the San Joaquin Valley. The water is currently diverted into irrigation canals for use in California’s Central Valley, home to the world’s largest swath of ultra-fertile Class 1 soil, threatening California’s $36.9 billion a year high-tech agricultural industry. The Central Valley’s 6.3 million acres of farmland produce more than 350 crops, from fruits and vegetables to nuts and cotton, representing 25% of the food put on the nation’s tables every day. Central Valley farmers contend that current limitations on Bay Delta Diversion starve farms of water while allowing more than 81 billion gallons of water to flow out to the ocean.
In addition, the plaintiffs in this new action contend that the ecological health of the Bay Delta eco-system is threatened by these diversions of water: “The delta smelt is just an indicator species for what is happening to all the species in this estuary,” said Bill Jennings, executive director of the California Sportfishing Protection Alliance, one of two plaintiffs in the lawsuit. “Whether you’re talking about striped bass or sturgeon or splittail or delta smelt, they’re all down to historic low numbers.” Water Transfer Lawsuit Filed, Sacramento River Preservation Trust, http://sacrivertrust.org/2014/06/water-transfer-lawsuit-filed/ (last visited June 29, 2014).
Barbara Vlamis of AquAlliance, the other plaintiff in the action, said the huge demand for water in the orchards and vineyards south of Stockton does not just affect the Sacramento Valley, but also has indirect effects on Northern California groundwater supplies. Ms. Vlamis contends that these impacts are caused by farmers who sell their own river water allotments to buyers in the San Joaquin Valley, which lacks its own reliable source. Ms. Vlamis further contends that those farmers frequently continue watering their fields using groundwater pumped to the surface via wells. According to the filed complaint, this process, called groundwater transferring, has serious environmental consequences permanently threatening the Bay Delta eco-system. Id.; see also Alistair Bland, Legal suit alleges mismanagement of Delta water delivery, negative environmental impacts, Newsreview.com (June 26, 2014), http://www.newsreview.com/sacramento/legal-suit-alleges-mismanagement-of/content?oid=13832283.
The intensity of the positions of the parties is captured by AquAlliance’s mission statement: “AquAlliance exists to defend northern California waters and to challenge threats to the hydrologic health of the northern Sacramento River watershed. We are prepared and willing to confront the escalating attempts to divert more and more water from the northern Sacramento River hydrologic region each year.” AquAlliance, http://www.aqualliance.net/ (last visited June 28, 2014).
Of course, this newly filed action is just one in the seemingly endless court battles over Bay Delta water. On March 13, 2014, the United States Ninth Circuit Court of Appeals in San Francisco ruled that water from California’s San Joaquin Delta must continue to flow out to sea to protect the tiny delta smelt, a federally listed endangered species consistent with a 2007 federal court order. San Luis & Delta-Mendota Water Authority v. Jewell, 747 F.3d 581 (9th Cir. 2014); see also, Lucas Rossmerz, Water Transfer Lawsuit Filed, Sacramento River Preservation Trust, http://sacrivertrust.org/2014/06/water-transfer-lawsuit-filed (last visited June 29, 2014).
The Ninth Circuit ruling came only a month after the United States House of Representatives passed and sent to the Senate H.R. 3964, the “Sacramento-San Joaquin Valley Emergency Water Delivery Act,” which would require water from the Delta to be released to restore production to more than 300 square miles of farmland that went fallow because of the 2008 federal court order which prevented the continued flow of water from the Bay Delta to California’s fertile Central Valley as it had for decades. That 2007 order issued by U.S. District Judge Oliver Wanger (unpublished) directed the U.S. Fish and Wildlife Service, in conjunction with the United States Department of the Interior, to issue an opinion or permit that dramatically reduced the delivery of water from the Delta. The result was the diversion of tens of billions of gallons of fresh water away from agriculture and population needs, and directly into the Pacific Ocean.
Consistent with neither the Ninth Circuit ruling nor congressional action, California is currently considering implementation of the Bay Delta Water Conservation Plan which proposes an alternative source of water for the Central Valley, and is supported by California Governor Jerry Brown. Governor Brown is pursuing a creative strategy that would involve the construction of 40‑foot diameter tunnels in and around the California Bay Delta, moving 9,000 cubic feet per second of water from the surface to more than 150 feet below ground and back to the surface over a stretch of 30 miles. The state estimates the cost of this project would be $25 billion dollars, while others contend that the costs will be much higher.
With numerous simultaneous strategies in play, it is unclear whether the next battle over Bay Delta water will be fought in the U.S. Supreme Court, in the U.S. Senate, within California State government, or if a completely different strategy will be used. What is clear is that this battle over water will continue to be fought for years, and its outcome will play a significant role in shaping California’s future.
Geoffrey Willis is a partner in the Orange County office of Brown Rudnick LLP and can be reached at gwillis@brownrudnick.com.
Water Rate Pricing Under Proposition 218: The State of the Problem and the Problem of the State by Benjamin T. Benumof and W. Michael Hensley
Water rate pricing in California has become one of the state’s most contested water law issues. In particular, Proposition 218 water rate cases recently litigated in California highlight the region’s water fights.
On the one hand, taxpayer groups have challenged the imposition of illegal taxes or penalties not vetted through the Proposition 218 public hearing process. On the other hand, certain water retailers such as the City of San Juan Capistrano have maintained that progressively exponential tiered water rates (i.e., penalties) are necessary for water conservation (citing California Constitution, Article X, section, 2) and are outside the scope of 218’s mandate. Meanwhile, other water retailers such as Mesa Water District—which is an AAA-rated independent special district that provides water service to more than 108,000 residents in an eighteen-square mile area covering most of Costa Mesa, parts of Newport Beach, and some unincorporated areas of Orange County, including John Wayne Airport—(1) charge a uniform rate for potable and recycled water; (2) have a voluntary conservation program; and (3) have already met the rigorous state-mandated goal of 20% reduction in water use by 2020 for urban water retailers.
Notably, Proposition 218 is basically a Proposition 13 add-on with important directives for imposing property-based fees for water provided to all users. In this article, we present to you key requirements that Orange County’s Hon. Gregory Munoz (Ret.) recently explained in terms of assessing the constitutionality of water rate pricing in Capistrano Taxpayers Ass’n, Inc. v. City of San Juan Capistrano (Orange County Superior Court Case No. 30-2012-00594579; currently pending on appeal, Fourth Appellate District, Division Three, Case No. G048969), ultimately ruling that the city’s tiered rate structure violated Proposition 218 because the city’s rates do not meet 218’s “proportionality” and “immediately available” mandates, and are not cost-based. While different courts are faced with interpreting these requirements, it is valuable to understand the answers to key ongoing issues arising from Judge Munoz’s decision.
1. Does an agency’s water rate structure have to be cost-based under Proposition 218? Answer: Absolutely. As far as constitutional mandates are concerned, Proposition 218 (codified as Article XIID, Section 6, of the California Constitution) is as simple, to the point, and unambiguous as they come.
Building on the foundation laid earlier by Proposition 13 in 1978, Proposition 218 further limits the government’s ability to impose taxes. Paland v. Brooktrails Township Comm. Svcs. Dist. Bd. of Dir., 179 Cal. App. 4th 1358, 1365 (2009). Growing weary of “special taxes” under the guise of “assessments” without a two-thirds electorate vote, California voters adopted Proposition 218 curtailing assessments in these key ways:
In Capistrano Taxpayers Ass’n, after a “careful review” of the entire Administrative Record (“A/R”) and after considering and weighing the briefs and motions filed by the parties, as well as all of the evidence submitted in the case, Judge Munoz issued a Final Statement of Decision and Judgment making the following rulings:
Based on these findings, Judge Munoz issued a mandate ordering an abandonment of the city’s water structure and restraining taxpayers from bearing non-compliant water fees under Proposition 218 (CT 1213). City, however, still bills for these rates today based on the stay that often applies to governmental defeat when a public entity files an appeal. However, as in Palmdale, the city—as do other municipalities—must justify any inequality between tiers in a tiered water rate structure. We shall see if the appellate court agrees with Judge Munoz that the city did not justify the inequality between tiers.
2. Can tiered water rates satisfy Proposition 218? Answer: Yes, under the right circumstances. Currently pending on appeal, Capistrano Taxpayers Ass’n has recently garnered the interest of seven amici curiae parties, including Mesa Water District and Howard Jarvis Taxpayers Association in support of Respondent Capistrano Taxpayers Association, and Natural Resources Defense Council, Planning and Conservation League, Association of California Water Agencies, League of California Cities, and California State Association of Counties in support of Appellant City of San Juan Capistrano. Of these seven briefs, Mesa Water’s Brief is unique in that it explains—using the City of San Juan Capistrano’s own rate-setting data—how a conservation-oriented pricing system that is 218-compliant can be structured if the difference in pricing between tiers is a reflection of source-based or delivery-based costs, not arbitrarily assigned costs.
More specifically, Mesa Water explains that a conservation-oriented pricing system can only be accomplished by giving an accurate pricing signal to all users—not just some users. “For example, it seems very obvious that an agency can structure tiers based directly on the cost of various sources of water. ... Tiers may also be structured based around differential cost of delivery. But when random ‘allocations’ of any type are imposed on top of true cost-based tiers, there is an unconstitutional deviation from a cost-based rate structure. This is the ‘inequality between tiers’ found infirm in Palmdale and which pervades the city’s 218 noncompliant tiered water structure. The cost differentials connected with the allocations, in fact, become arbitrary—an act of policy or ‘social engineering’ instead of following Proposition 218’s cost-based mandate/formula.”
3. Which standard of review should appellate courts use when scrutinizing trial court Proposition 218 decisions? Answer: It depends—if all facts are undisputed, de novo; if there are disputed facts, substantial evidence. In most Proposition 218 cases, the superior court record is fairly voluminous, containing a city’s rate consultant study, historical information, the publicly vetted 218 hearing, not to mention the pleadings by the parties to the litigation. However, once the dust has settled, the inquiry shifts to what review standard does the appellate court use when scrutinizing the decision made by the trial court, no matter which side won.
Our answer to this question is it depends, based on the existing decisions relating to the standard of review.
Proposition 218, unlike many schemes where the government gets a large degree of deference or leeway in its decision making process for assessments, actually shifts the normal burden of proof so that the agencies (not challenging rate payers) have to demonstrate compliance with its constitutional directives. Cal. Const. art. XIIID, § 6, subd. (b)(5). This shift in traditional presumptions means that many published decisions in the governmental area, whether involving CEQA or regulatory fees, simply are not applicable as far as determining who has the burden and the review standard to be utilized by reviewing appellate courts.
In 2008, the California Supreme Court clarified that the proper appellate standard of review for a Proposition 218 case is an “exercise of independent judgment,” especially given the shift in the burden of proof normally not borne by the governmental entity. Silicon Valley Taxpayers Ass’n, Inc. v. Santa Clara Cty. Open Space Auth., 44 Cal. 4th 431, 445, 448 (2008).
But Silicon Valley hardly ends the inquiry. Is there a difference where the trial court decision was based on undisputed versus disputed facts? We think so.
Many of the cases in the Proposition 218 area involve undisputed facts. See, e.g., Silicon Valley, 44 Cal. 4th at 440-41, 456; Beutz v. Cty. of Riverside, 184 Cal. App. 4th 1516, 1538 (2010). Independent (or de novo) review was what one would expect, much like the review of a summary judgment/adjudication motion on appeal—after all, pure legal issues would be under consideration.
However, where disputed facts are involved, the San Diego appellate court in Morgan v. Imperial Irrigation Dist., 223 Cal. App. 4th 892 (2014), rev. denied, recently found that the substantial evidence test, not the de novo standard, should apply in reviewing the correctness of the trial judge’s decision. This deferential standard makes sense where a lower court has made credibility determinations, such as finding that the rate consultant or expert testimony on one side is not persuasive or found not to have presented probative proof. Otherwise, appellate courts become fact finders on rate inequality determinations, something likely not intended unless the record is undisputed in nature.
The proper appellate standard of review has been put into controversy in Capistrano Taxpayers Ass’n, so we may soon have a ruling by our local Court of Appeal on the correct review compass for scrutinizing trial court Proposition 218 decisions. Stay tuned.
4. Is there a “common benefit“ exception to Proposition 218? Answer: Unsettled, but should be “No“ based on proportionality rules.
In not only Capistrano Taxpayers Ass’n, but other cases as well, municipalities, water districts, and supporting amici curiae frequently argue that reasoning in Griffith v. Pajaro Valley Water Mgmt. Agency, 220 Cal. App. 4th 586 (2013) creates a “common benefit” exception to Proposition 218’s constitutional directives, particularly the proportionality requirement. Griffith, however, involves very unique facts and does not support engrafting any common benefit exception onto the constitutional mandate.
Unlike standardized block-rate or tiered water system cases, Griffith involved an augmentation charge for saltwater intrusion threatening the overall water supplies. The appellate court sustained the charge, but only after acknowledging that the apportionment of the charge was proportional as required under Proposition 218. Id. at 600. Sans any truly exigent circumstances, this is far different than a standard case involving tiered water rates that have arbitrary, exponentially progressive jumps in pricing between the tiers without justification, which Judge Munoz found to be the case in Capistrano Taxpayers Ass’n.
Also, there is an important issue of whether any “common benefit” exception exists under Proposition 218. No such exception is mentioned in the constitutional provision, which focuses on special benefits and proportionality. Our local appellate court, if the issue is ripe and has not been waived, may give all of us more guidance in this developing area of the law—discussing or distinguishing Griffith in the process.
Conclusion
In the midst of California’s drought, we must all be mindful of the importance of conserving water—this we can all agree on. That, however, does not mean that agencies have unfettered discretion to set rates or impose penalties however they see fit under disguised umbrellas of conservation. Rather, as articulated by the Second District in Palmdale, conservation and Proposition 218 compliance may be harmonized: “California Constitution, article X, section 2 is not at odds with article XIIID so long as, for example, conservation is attained in a manner that ‘shall not exceed the proportional cost of the service attributable to the parcel.’” Palmdale, 198 Cal. App. 4th at 937 (citing Cal. Const., art. XIIID) (emphasis added).
Benjamin T. Benumof, Ph.D., is a Shareholder of AlvaradoSmith’s Santa Ana office. He has extensive experience in bench and jury trials, complex binding and non-binding arbitrations, mediations and appellate work in state and federal courts, with an emphasis in land use, water law, real estate, construction, business law, and litigation. He can be reached at bbenumof@alvaradosmith.com. W. Michael Hensley is also a Shareholder of AlvaradoSmith’s Santa Ana office. Mr. Hensley specializes in law and motion proceedings, trials, arbitrations, mediations, and appeals as well as specialty writ proceedings. He can be reached at mhensley@alvaradosmith.com.
The 2014 California Water Bond—A Fluid Situation by Boyd Hill
Come November 4, California voters will likely see a new water bond on their ballot. The Bond measure is crucial because of our severe three-year drought, as well as the need to upgrade decades-old water infrastructure and water supply deficiencies for California’s growing population. This year has seen significant debate over the amount of the Bond and its funding priorities, and the deadline for a replacement measure was extended into the summer months in hopes of crafting one that would appeal to enough voters in order to pass.
The current bond measure, the Safe, Clean and Reliable Drinking Water Supply Act was enacted in 2009 under Governor Schwarzenegger. Under the Act, spending priorities are at a rough equilibrium between local water resources development, Bay Delta and other ecosystem restoration, and public benefits associated with new water storage projects. Every $1 authorized as part of the Bond would leverage $3 to $4 in other funds, for a total of up to $40 billion for water-related investments. The public vote to approve the Bond financing for the Act requires a two-thirds majority. The vote was postponed to 2014 due to concerns about its size and funding priorities.
The $11.4 billion Bond amount is high in comparison to prior bond measures. The Bond would significantly increase California’s general fund bond debt of $75 billion, which currently requires more than $6 billion in taxpayer repayment every year. Repayments for the Bond would add an additional obligation of between $600 million and $800 million a year, for a total of $22 to $24 billion over the thirty-year borrowing period. On top of that, the legislature is also contemplating placing a $9 billion school bond measure on the ballot, which would compete with the Water Bond.
However, water agencies argue that large-scale investments are needed for water storage capacity, recycling facilities, levee improvements, flood control facilities, groundwater remediation, and demand management. The current water infrastructure is decades old, and there has been no major water storage or conveyance infrastructure in years, despite major population increases. The existing water supply has been increasingly limited by restrictive environmental regulations and is under threat by earthquakes and climate change.
The high cost of the Bond is driven in part by the inability to reach consensus on the Bond funding priorities. Many water agencies, generally supported by Republicans, will only support legislation that includes significant funding for new and upgraded above-ground reservoirs. They advocate for three long-planned reservoirs and the process of “continuous appropriation” for those reservoirs (Water Commission rather than approval). Other constituencies, including a former head of the State Resources Agency, generally supported by Democrats, favor underground water storage, environmental cleanup, and conservation measures.
There is considerable debate about the benefit, environmental impact, and cost of the contemplated above-ground storage facilities. A recent study concluded that demand management, recycled water development, and storm water capture would provide sufficient supplies to account for the new water yield otherwise provided by new surface reservoirs.
Another concern is that the significant cost of the proposed new reservoirs might not be justified given that much of the new water yield from those facilities might be allocated to fish and environmental protection, not people. Given prior statutes enacted by the legislature requiring water allocation for the environment, the new facilities might only provide new water yield usable for a few hundred thousand people rather than for millions.
There is also considerable debate about whether to exclude Bond fund allocation for a tunnel project that would allow the intake valves for water going to Central California farms and Southern California cities to be relocated thirty miles north from their current location in the Delta. The Sacramento-San Joaquin Delta is a large estuary that captures more than half of California’s surface water. The major rivers of the Sierra Nevada flow into the Delta where their flows meet the tidal influences of the San Francisco Bay. Two out of every three Californians depend on the Delta as a key water source. Currently, operations of water intake pumps located in the south end of the Delta can alter flows in the Delta, causing saltwater intrusion from the Bay.
The State’s Bay Delta Conservation Plan calls for three new Sacramento River intakes north of the Delta and two thirty-mile long, large diameter underground tunnels to replace the existing infrastructure. Democratic legislators want to require Bond funding for the Bay Delta restoration to undergo a second level of scrutiny by an entity called the Delta Conservancy, claiming that the tunnels might be politically unpopular for Northern Californians. Large water agencies (and likely the Governor) oppose that additional level of scrutiny, given that the Conservancy would likely not approve funding for the new intake pumps and tunnels.
As of the date of submission of this article, the two leading bills being considered by lawmakers appear to be SB 848 at $10.5 billion and AB 2686 at $9.25 billion. Both provide funding for above-ground water storage projects, in an amount similar to the Act, but the latter bill, supported by California water agencies, appears to be more supportive of the Bay Delta Conservation Plan. The governor recently weighed in with a much smaller $6 billion proposal. The governor’s proposal would allocate $2 billion to water storage, $1.5 billion to water quality and supply reliability, $1.5 billion for watershed protection and restoration, $0.5 billion to Delta restoration and flood protection, and $0.5 billion to statewide flood management. The ongoing negotiations for a replacement bond measure should make for a long and interesting summer focusing on the priorities for California’s water future.
Boyd Hill is a partner with Santa Ana law firm, Hart King. He has over 25 years of public agency, water, and environmental law experience, and is well versed in regulatory compliance issues under the Clean Water Act and groundwater management. Boyd can be reached at bhill@hartkinglaw.com.