1. Conservation Water Rates Under Prop. 218
Urban Water Institute’s Spring Water Conference
Palm Springs
February 20, 2013

2. MICHAEL G. COLANTUONO Colantuono & Levin, PC
Pleasant Valley Road
Penn Valley, CA
(213)
(530)
(530) (fax)
December 28, 2018

3. Groundwater Extraction Charges
Pajaro Valley Water Mgmt. Agency v. AmRhein (6th DCA 2007)
Groundwater augmentation / extraction charges are property related fees subject to Prop. 218
December 28, 2018

4. Groundwater Extraction Charges
Griffith v. Pajaro Water Mgmt. Agency (2013) 220 CA4th 586 (6th DCA)
Charge is a fee for “water service” exempt from 13D, 6(c) election requirement
Omnibus Act’s definitions are good authority notwithstanding HJTA v. Salinas
Notice of protest hearing can be given to property owners alone
December 28, 2018

5. Groundwater Extraction Charges
Griffith (continued)
Debt service, GA&O, service planning all permissible uses of fee
AWWA M-1 Manual’s cost-accounting process complies w/ Prop. 218
Parcel-by-parcel cost analysis is not required; class-by-class is okay provided the classes are rationally drawn
December 28, 2018

6. Groundwater Extraction Charges
Cerritos, Downey & Signal Hill v. Water Replenishment District of So. Cal. LA Superior Court Case No. BS128136
Trial court invalidated WRD’s charges for non-compliance w/ 218 in 2011; appeal likely when remedies resolved
Ventura v. United Water Conservation Dist., 2nd DCA No. B251810
Trial court found Prop. 218 violation and awarded $1.3m refund, appeal and cross-appeal filed; briefing underway
December 28, 2018

7. Groundwater Extraction Charges
Great Oaks Water Company v. Santa Clara Valley Water District, 6th DCA Case No. H035885
Revisits AmRhein v. Pajaro and application of 218
Did SCVWD comply w/ 218?
Fully briefed 12/8/11
December 28, 2018

8. Water Fees
City of Palmdale v. Palmdale Water District (2011) 198 CA4th 926 (2nd DCA)
City challenged conservation water rates, claiming Prop. 218 disallows them
DCA found 218 and Constitutional provision against wasting water could be harmonized, but struck down PWD rates as insufficiently justified
Caution required when constructing conservation rates
December 28, 2018

9. Prop. 218 & Water Rates
Morgan v. Imperial Irr. Dist WL (4th DCA 1/17)
Farmers not entitled to separate rate protest
Applied deferential substantial evidence review to trial court rulings
Allowed secrecy of protests
Rates can be less than cost
Pet’n for review may be likely
December 28, 2018

10. San Juan Capistrano’s Rates
Has used inclining-block, budget-based rates since 1991
Four tiers:
1 super efficient use 6 hcf/mo
2 efficient use on av. 17 hcf/mo
3 up to twice tier 2 volume
4 above twice tier 2 volume
December 28, 2018

11. San Juan Capistrano’s Rates
Tier 1 & 2 calculated to recover 70% of fixed costs and 75% of local well costs
90% of water sales are in these tiers
Tier 3 is 50% more expensive and covers most costs to operate groundwater recovery plan and part of Met imported water costs
Tier 4 is 175% more expensive and covers the balance of GWRP and Met costs
December 28, 2018

12. San Juan Capistrano’s Rates
Tier 1 fixed & groundwater
Tier 2 same
Tier 3 GWRP & Met imports
Tier 4 same
December 28, 2018

13. San Juan Capistrano’s Rates
Proceeds of Tier 3 and 4 rates fund
Marginal supplies
Additional conservation
If no or little water sold in these tiers, these expenses are not incurred; thus, rates are self-balancing
December 28, 2018

14. Prop. 218 Builds on Prop. 13
Bryden v. EDMUD ruled Prop. 13 did not make conservation rates special taxes
Citizens Assn of Sunset Beach v. OC LAFCO found Prop. 218 to preserve Prop. 13 precedents not expressly overruled
Therefore, Bryden is good law even after Prop. 218 because nothing in the later measure expressly disagrees with it
December 28, 2018

15. Conservation Rates are Penalties
Penalties are not subject to Props. 218 & 26:
CalTax v. FTB: penalty for late corporate taxes was not a tax because it is intended to change behavior rather than raise money
Article 13C, section 1(e)(5)
Prop. 26 excludes fines and penalties from its definition of taxes
No one pays conservation penalty rates without exceeding a water budget
December 28, 2018

16. Prop. 218 Doesn’t Apply to Excess Water Use
Rationale for applying Prop. 218 to metered water rates is that water service “indispensable to most uses of real property”
One can make good use of real property without wasting water
Therefore, water use above reasonable levels is not a property related service subject to Prop. 218
December 28, 2018

17. Prop. 218 Doesn’t Apply to Excess Water Use
Cases support this argument
Bighorn-Desert View Water Agency v. Verjil
Apartment Assn v. City of LA
AmRhein v. Pajaro Valley WMA
December 28, 2018

18. Environmentalists Argue Conservation Rates are Required
SWRCB Petition Against United Water Conservation District argues its failure to use conservation rates encourages water waste in violation of Article 10, section 2
December 28, 2018

19. Recommendations Allow reasonable water use at non-penalty rates
Justify higher rates both as penalties and as based on cost
Establish record basis for cost-justification of higher rates by assigning more expensive water sources and funding supplemental conservation services or marginal supplies
December 28, 2018

20. More recommendations Make a good record
Not just tables of numbers, but text easily understood by folks who went to law school
Stay tuned for new developments
CTA v. SJC
Groundwater cases (Great Oaks v. Santa Clara VWD)
Initiative Cases (Vagim v. Fresno)
December 28, 2018

21. Questions?
December 28, 2018