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This case was last updated from Los Angeles County Superior Courts on 08/15/2019 at 09:18:20 (UTC).

IRVINE RANCH WATER DIST. VS. ORANGE COUNTY WATER DIST., ETAL

Case Summary

On 03/02/2017 IRVINE RANCH WATER DIST filed an Other lawsuit against ORANGE COUNTY WATER DIST , ETAL. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is AMY D. HOGUE. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8278

  • Filing Date:

    03/02/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

AMY D. HOGUE

 

Party Details

Plaintiffs, Petitioners and Cross Defendants

IRVINE RANCH WATER DISTRICT A CALIFORNIA

IRVINE RANCH WATER DISTRICT

Defendants, Respondents and Cross Plaintiffs

ALL PERSONS INTERESTED IN THE MATTER OF

ORANGE COUNTY WATER DISTRICT A CALIF.

DOES 1 TO 20 INCLUSIVE

ORANGE COUNTY WATER DISTRICT

GOLDEN STATE WATER COMPANY

MESA WATER DISTRICT

YORBA LINDA WATER DISTRICT

EAST ORANGE COUNTY WATER DISTRICT

CITY OF ANAHEIM A CALIFORNIA MUNICIPAL CORPORATION AND CHARTER CITY

Interested Parties and Cross Plaintiffs

GOLDEN STATE WATER COMPANY

MESA WATER DISTRICT

CITY OF ANAHEIM

CITY OF BUENA PARK

YORBA LINDA WATER DISTRICT

CITY OF SEAL BEACH

EAST ORANGE COUNTY WATER DISTRICT

Attorney/Law Firm Details

Defendant and Plaintiff Attorneys

RUTUAN & TUCKER

ALSTON & BIRD LLP

NAMUO CLYNTON WILLIAM

CASEY EDWARD JOSEPH

Plaintiff and Petitioner Attorney

ALSTON & BIRD LLP

Defendant and Respondent Attorneys

RUTAN & TUCKER LLP

NEWMARK GREGORY JOE

KUPERBERG JOEL DAVID

ALISON M. KOTT CITY ATTORNEY'S OFFICE

MEYERS NAVE RIBACK SILVER & WILSON

LARSEN JOSEPH DAVID

RUTUAN & TUCKER

Defendant and Cross Plaintiff Attorney

NEWMARK GREGORY JOE

Defendant and Interested Party Attorneys

ALISON M. KOTT CITY ATTORNEY'S OFFICE

MEYERS NAVE RIBACK SILVER & WILSON

FOLEY & MANSFIELD LLP

KIDMAN LAW LLP

BROWNSTEIN HYATT FARBER SCHRECK LLP

RICHARDS WATSON & GERSHON APC

BEST BEST & KRIEGER LLP

KOTT ALISON MELLOR

SLATER SCOTT STEVEN

DEFELICE DIANE CATHERINE

DUNN JEFFREY VINCENT

DIAZ JESSICA LANA

 

Court Documents

Stipulation and Order

6/10/2019: Stipulation and Order

Minute Order

6/28/2019: Minute Order

Notice of Lodging

7/26/2019: Notice of Lodging

ANSWER OF IRVINE RANCH WATER DISTRICT TO CITY OF ANAHEIM'S CROSS-COMPLAINT FOR DECLARATORY RELIEF

3/2/2017: ANSWER OF IRVINE RANCH WATER DISTRICT TO CITY OF ANAHEIM'S CROSS-COMPLAINT FOR DECLARATORY RELIEF

CITY OF BUENA PARK'S CROSSCOMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

3/2/2017: CITY OF BUENA PARK'S CROSSCOMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

CITY OF BUENA PARK?S VERIFIED ANSWER TO FIRST AMENDED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

3/2/2017: CITY OF BUENA PARK?S VERIFIED ANSWER TO FIRST AMENDED PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

STIPULATION TO EXTEND TIME TO RESPOND TO FIRST AMENDED PETITION FOR WRIT OF MANDATE AM) COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

3/2/2017: STIPULATION TO EXTEND TIME TO RESPOND TO FIRST AMENDED PETITION FOR WRIT OF MANDATE AM) COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

NOTICE OF RULING RE: (I) STIPULATION FOR LEAVE TO FILE FIRST AMENDED PETITION; (2) APPLICATION FOR PUBLICATION OF SUMMONS; AND (3) CONTINUED CASE MANAGEMENT CONFERENCE

3/2/2017: NOTICE OF RULING RE: (I) STIPULATION FOR LEAVE TO FILE FIRST AMENDED PETITION; (2) APPLICATION FOR PUBLICATION OF SUMMONS; AND (3) CONTINUED CASE MANAGEMENT CONFERENCE

Minute Order

3/2/2017: Minute Order

Minute Order

3/2/2017: Minute Order

GOLDEN STATE WATER COMPANY'S VERIFIED ANSWER TO SECOND AMENDED AND ETC

7/20/2017: GOLDEN STATE WATER COMPANY'S VERIFIED ANSWER TO SECOND AMENDED AND ETC

STIPULATION AND ORDER TO CONTINUE TRIAL SETTING CONFERENCE

9/11/2017: STIPULATION AND ORDER TO CONTINUE TRIAL SETTING CONFERENCE

JOINT TRIAL SETTING CONFERENCE STATEMENT

9/22/2017: JOINT TRIAL SETTING CONFERENCE STATEMENT

JOINT TRIAL SETTING CONFERENCE STATEMENT OF EAST ORANGE COUNTY WATER DISTRICT, YORBA LINDA WATER DISTRICT, MESA WATER DISTRICT, AND GOLDEN STATE WATER COMPANY

9/26/2017: JOINT TRIAL SETTING CONFERENCE STATEMENT OF EAST ORANGE COUNTY WATER DISTRICT, YORBA LINDA WATER DISTRICT, MESA WATER DISTRICT, AND GOLDEN STATE WATER COMPANY

GOLDEN STATE WATER COMPANY'S VERIFIED ANSWER TO THIRD AMENDED AND SUPPLEMENTAL PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

1/3/2018: GOLDEN STATE WATER COMPANY'S VERIFIED ANSWER TO THIRD AMENDED AND SUPPLEMENTAL PETITION FOR WRIT OF MANDATE AND COMPLAINT FOR REVERSE VALIDATION AND DECLARATORY RELIEF

PLAINTIFFAND PETITIONER'S REQUEST FOR JUDICIAL NOTICE; DECLARATION OF ROGER A. CERDA IN SUPPORT THEREOF

3/9/2018: PLAINTIFFAND PETITIONER'S REQUEST FOR JUDICIAL NOTICE; DECLARATION OF ROGER A. CERDA IN SUPPORT THEREOF

Answer

11/30/2018: Answer

Notice of Lodging

5/2/2019: Notice of Lodging

250 More Documents Available

 

Docket Entries

  • 03/27/2020
  • Hearingat 09:30 AM in Department 86 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Petition for Writ of Mandate

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  • 08/02/2019
  • Docketat 09:30 AM in Department 86; Trial Setting Conference (on Fifth Amended Petition/Compaint) - Held

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  • 08/02/2019
  • DocketMinute Order ( (Trial Setting Conference on Fifth Amended Petition/Complaint ...)); Filed by Clerk

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  • 08/02/2019
  • DocketAnswer; Filed by ALL PERSONS INTERESTED IN THE MATTER OF (Defendant)

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  • 08/02/2019
  • DocketNotice of Ruling; Filed by Irvine Ranch Water District (Plaintiff)

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  • 07/30/2019
  • Docketat 09:30 AM in Department 86; Non-Appearance Case Review (Re Submitted Matter) - Held - Taken under Submission

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  • 07/30/2019
  • DocketNotice (PLAINTIFF AND PETITIONER IRVINE RANCH WATER DISTRICT'S TRIAL SETTING CONFERENCE STATEMENT); Filed by Irvine Ranch Water District (Plaintiff)

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  • 07/30/2019
  • DocketMinute Order ( (Non-Appearance Case Review Re Submitted Matter)); Filed by Clerk

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  • 07/30/2019
  • DocketNotice of Joinder (Name Extension) (DEFENDANT AND RESPONDENT ORANGE COUNTY WATER DISTRICT?S JOINDER IN REAL PARTIES IN INTERESTS? OBJECTIONS TO SUPPLEMENTAL TRIAL BRIEF AND REQUEST FOR JUDICIAL NOTICE FILED BY PETITIONER AND PLAINTIFF IRVINE RANCH WATER DISTRICT); Filed by ORANGE COUNTY WATER DISTRICT, A CALIF. (Defendant)

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  • 07/30/2019
  • DocketObjection (REAL PARTIES IN INTEREST?S OBJECTIONS TO SUPPLEMENTAL TRIAL BRIEF AND REQUEST FOR JUDICIAL NOTICE FILED BY PETITIONER AND PLAINTIFF IRVINE RANCH WATER DISTRICT); Filed by Golden State Water Company (Real Party in Interest)

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443 More Docket Entries
  • 03/02/2017
  • DocketStipulation and Order; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketNotice; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketAnswer to Cross-Complaint; Filed by Plaintiff/Petitioner

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  • 03/02/2017
  • DocketNotice; Filed by Clerk

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  • 03/02/2017
  • DocketMiscellaneous-Other; Filed by Clerk

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  • 03/02/2017
  • DocketMiscellaneous-Other; Filed by Clerk

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  • 03/02/2017
  • DocketComplaint; Filed by IRVINE RANCH WATER DISTRICT, A CALIFORNIA (Plaintiff)

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Tentative Rulings

Case Number: BS168278    Hearing Date: September 11, 2020    Dept: 86

IRVINE RANCH WATER DISTRICT v. ORANGE COUNTY WATER DISTRICT

Case Number: BS168278 [Lead Case], BS175192 [Consolidated Case]

Hearing Date: September 11, 2020

[Tentative] ORDER ON PHASE 2a OF TRIAL:

____________ Relief on Eleventh Cause of Action in IRWD’s Petition and Complaint

____________ Relief on Twelfth Cause of Action in IRWD’s Petition and Complaint


On April 17, 2019, the Orange County Water District (OCWD) adopted a production limitation and surcharge (the 2019 PL/S) through its Resolution D. (AR2a 8007-8010.)[1] Irvine Ranch Water District (IRWD) challenges the 2019 PL/S and asserts it is invalid on three grounds. First, IRWD contends the OCWD improperly calculated the 2019 PL/S under the plain language of the Orange County Water District Act (the Act). Second, IRWD argues the OCWD abused its discretion when it calculated the 2019 PL/S because substantial evidence does not support its required findings. Finally, IRWD claims the 2019 PL/S is an unconstitutional assessment and/or charge.

IRWD’s challenge to the 2019 PL/S is contained in the Sixth Amended and Supplemental Petition and Complaint (the Petition) in its eleventh cause of action for a writ of mandate and the twelfth cause of action, a derivative claim, for declaratory relief.

IRWD alleges at paragraph 115 of the Petition:

“In adopting Resolution No. D on April 17, 2019, OCWD imposed a production limitation and surcharge that violates applicable law, including the OCWD Act and the California Constitution. Without limiting the foregoing, the 2019 production limitation and associated surcharge are legally impermissible because (a) the purpose of said action is to prohibit the export of groundwater to a location outside the OCWD district boundaries, which is contrary to the legislative purpose for a production limitation under the OCWD Act and in contravention of the restrictions on OCWD’s authority to prohibit exports set forth in Section 2(9) of the Act; (b) OCWD would use a methodology to determine an exceedance of the production limitation . . . that is in contravention of the OCWD Act; and (c) the surcharge bears no reasonable relationship to OCWD’s cost of service or the groundwater producer’s burden on the governmental activity at issue.”

The OCWD as well as Real Parties in Interest, various water districts and the City of Anaheim, (Water Producers) oppose IRWD’s request to invalidate the 2019 PL/S.

STATEMENT OF THE CASE

The Parties:

IRWD is a California water district formed pursuant to Water Code section 34000 et seq. As a retail water agency, IRWD services approximately 110,000 water service connections within its service area, which includes all of the City of Irvine and portions of the cities of Tustin, Newport Beach, Costa Mesa, Orange and Lake Forest as well as unincorporated areas of Orange County.

The OCWD is a special district formed under the Act. (Water Code, Appendix Chapter 40.)[2] The OCWD is a public entity established by the California Legislature and generally empowered to manage, replenish, regulate, and protect groundwater supplies within its boundaries. (Orange County Water Dist. v. Sabic Innovative Plastics US, LLC (2017) 14 Cal.App.5th 343, 357 [citing §§ 40-1 and 40-2].) “Despite its name, the District is not a county water district under the County Water District Law (Wat. Code, § 30000 et seq.) or a state water district under the California Water District Law (id., § 34000 et seq.). Instead, it operates under its own governing act, the OCWD Act, with its own set of powers and responsibilities.” (Ibid.) OCWD’s district boundaries lie within the boundaries of the Orange County Groundwater Basin (OC Basin), although a portion of the OC Basin is outside the OCWD’s political boundaries. (AR1-4159.)

OCWD Management of the OC Basin:

Pursuant to Sections 23, 27, 27.1 and 31.5 of the Act, the OCWD establishes and collects “replenishment assessments” and “basin equity assessments” as a means of purchasing water to replenish the OC Basin, including imported water (for example, water imported from the State Water Project in Northern California or the Colorado River) from a Metropolitan Water District member agency. OCWD’s other powers concerning management of the OC Basin are specifically set forth in Section 2 of the Act.

Phase 2 of Trial:

In Phase 2 of trial the court adjudicated the question of the extent of the OCWD’s authority with unlawful exports of water outside the district. Resolution of the issue required the court ot interpret the Act at Section 2(9).

The court agreed with IRWD’s interpretation. The court explained:

“As noted earlier—and as not disputed by OCWD or the Water Producers—OCWD has only the powers bestowed upon it by the Legislature. (Palmer v. West Kern County Water Dist., supra, 193 Cal.App.2d 41, 45 [quoting Biggart v. Lewis (1920) 183 Cal. 660, 666].) Section 2(9) expressly speaks to the manner in which OCWD may prevent unlawful exports. The Legislature clearly determined OCWD may prevent unlawful exportation of water through the legal process; the Legislature did not empower OCWD with broad regulatory authority.[3] The Legislature expressly defined OCWD’s power in that way. Contrary to the position of the Water Producers, the statutory provision operates as a limit.”

(Phase 2 Trial Order, p. 6.) Thus, the court determined that Section 2(9) limits the authority of the OCWD to commencing legal action to prevent unlawful exports of water outside the district.

ISSUES:

Section 31.5 of the Act:

To accomplish its purpose, the Legislature provided the OCWD certain management tools, including authority to impose a production limits and surcharges. For example, Section 31.5 of the OCWD Act allows the OCWD to impose production limits. Section 31.5, subdivision (g)(2)(c) provides the OCWD board may determine for an ensuing water year:

“That a . . . . limitation from groundwater within the district [is] necessary for the protection of the water supply of the district.”

In dispute here is the meaning of Section 31.5, subdivision (g)(2)(G). It provides:

“Production requirements or limitations and the surcharge for production in excess of the basin production limitations on persons and operators within the district that will apply during the ensuing water year. The requirements and limitations shall be on the amount of groundwater produced by those persons and operators expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.”

Resolution D and 2019 PL/S:

As noted, the OCWD board adopted Resolution D on April 17, 2019. The production limitation limits a producer’s production of groundwater to the amount of its water demands within the district. The surcharge is imposed for all water exceeding the production limitation. (AR2a 8007-8010.)

At the time it adopted Resolution D, the OCWD board found and determined:

“The Production Limitation is 100 percent for all 19 retail Groundwater Producers and is necessary for the protection of the water supply of the District. The Surcharge for production in excess of the Production Limitation is $2,000 per acre-feet.” (AR2a 8008.)

It also found:

“The Basin Equity Assessment and production requirements and limitations from groundwater within the District established by this resolution are necessary to prevent excessive groundwater production to protect the water supply of the District.” (AR2a 8008.)

The Parties’ Positions:

IRWD argues the 2019 PL/S constitutes a de facto prohibition on the exportation of groundwater outside the district, thereby unlawfully circumventing the court’s ruling that the OCWD’s authority to limit the exportation of ground is confined to legal action under Section 2(9). IRWD contends the “OCWD attempted to fashion a production limitation that would mirror OCWD’s methodology for determining when an export occurs. . . . To implement that plan, OCWD sought to impose a production limitation of 100%, so that the surcharge would be paid if groundwater production exceeded 100% of the producer’s total water demands within OCWD.” (Opening Brief 15:5-10.)[4]

In opposition, the OCWD and Water Producers dispute IRWD’s characterization of the 2019 PL/S. Specifically, they argue the 2019 PL/S merely seeks to limit production in excess of the production limitations by creating a financial disincentive to exporting groundwater from the OC Basin. As corroborated by an OCWD staff report: “Board action to establish a Production Limitation and Surcharge would not prevent a Producer from pumping as much water as it desires.” (AR2a 7537.) The also argue the 2019 PL/S does not affect any groundwater export that occurs so long as groundwater production is at less than 100 percent of total water use within the district.

IRWD’S CLAIM THE 2019 PL/S IS INCONSISTENT WITH THE PLAIN LANGUAGE OF THE ACT

IRWD claims the 2019 PL/S is inconsistent with the plan language of Section 31.5, subdivision (g)(2)(G).

The interpretation of provisions of the Act is a question of law. To interpret a statute, the court begins “with the actual language of the statute, and if the text is clear as applied to a given case, and it does not fall into any of the exceptions [such as absurd results, and results at odds with the unmistakable or clear intent of the Legislature], stop there. [Citation omitted.] As Oliver Wendell Holmes said, ‘we do not inquire what the legislature meant; we ask only what the statute means.’ [Citation omitted.]” (J.A. Jones Constr. Co. v. Superior Court (1994) 27 Cal.App.4th 1568, 1575.)

Here, Section 31.5, subdivision (g)(2)(G), states in its entirety:

“Production requirements or limitations and the surcharge for production in excess of the basin production limitations on persons and operators within the district that will apply during the ensuing water year. The requirements and limitations shall be on the amount of groundwater produced by those persons and operators expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.”

IRWD asserts “[u]nder Section 31.5(g)(2)(G), a production limitation is based on production within the OCWD boundaries, not the amount of water used within those boundaries.” (Opening Brief 15:22-23 [emphasis added].) IRWD describes its interpretation in a percentage formula as:

Groundwater produced within OCWD’s Boundaries

Groundwater produced within OCWD + Supplemental Sources

IRWD argues the OCWD’s 2019 PL/S instead interprets the production limitation to be based on the amount of water used within those boundaries. This interpretation as expressed in mathematical formula is as follows:

Groundwater produced within OCWD’s Boundaries

Groundwater used within OCWD’s Boundaries + Supplemental Source water

Based on the plain language of the statute, IRWD states the OCWD’s adoption of a 100 percent production limitation is improperly based on the amount of groundwater used within the district, instead of on the amount of groundwater produced within the district—the latter being the proper methodology under the plain language of the statute.

IRWD notes Section 31.5, subdivision (g)(2)(G) states a production limitation is “expressed in a percentage of overall water produced or obtained by those persons or operators from groundwater within the district and from supplemental sources.” IRWD asserts the Water Producers and the OCWD apply two different meanings to the term “groundwater produced” in this same sentence of the subdivision. Such statutory interpretation conflicts with well-establish rules on statutory construction. (See Braun v. Bureau of State Audits (1998) 67 Cal.App.4th 1382, 1389 [“Where the same words are repeated in a statute there is a presumption that the same meaning is intended . . . .”])

Under IRWD’s plain language interpretation of Section 31.5, subdivision (g)(2)(G), a production limitation may only be expressed as a percentage of water pumped from within the district (regardless of where the water is used) plus supplemental sources (regardless of where the water is used).

As a matter of plain language interpretation, IRWD’s argument makes sense. IRWD suggests a straightforward application of the language.

It appears to the court both the OCWD and the Water Producers implicitly concede IRWD’s plain language interpretation is correct. That is, if the court considered nothing outside of Section 31.5, subdivision (g)(2)(G), IRWD is correct.[5]

Moving past the plain language meaning of the statute [and it is not entirely clear to the court why the court should do so], the OCWD focuses on the statutory scheme as a whole and the legislative history [again the need for extrinsic evidence is unclear given the plain language of the statute] suggesting management ratios have always focused on water use within the district. Based on context and the OCWD’s purpose, the OCWD and Water Producers assert IRWD’s interpretation of Section 31.5, subdivision (g)(2)(G) is wrong.

The court recognizes, as argued by the OCWD, the court “must read statutes as a whole, giving effect to all of their provisions” and read all parts of a statute together “in a manner that gives effect to each, yet does not lead to disharmony with the others.” (Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 893.) The court also acknowledges the general language in other subdivisions of Section 31.5 addressing basin equity assessment, production requirements and production limitations were created to assist the OCWD in protecting water supplies within the district. (§ 31.5, subd. (a).) Without harmonizing all of Section 31.5, the OCWD contends IRWD’s interpretation leads to absurd results. (Remington Investments, Inc. v. Hamedani (1997) 55 Cal.App.4th 1033, 1040. [“Whenever one of two or more possible constructions of a status leads to an absurdity, the appearance of the absurdity is an indication that the proposed construction is incorrect.”])

[The OCWD makes additional contextual arguments – the jurisdiction of the Act is limited to the district itself and operators “within the district,” supplemental sources are sources outside the OC Basin, and annexation.]

The Water Producers note that although a production limitation has been imposed 24 times since 1980 (AR2a 11924-11926, 11963-11964), the OCWD has never used a formula that presumes the water extracted from the OCWD could be used anywhere. (Kennedy Decl. ¶¶ 5-7.) They argue this fact further supports to the OCWD’s interpretation. (Doe v. Becerra “[E]vidence that the agency ‘has consistently maintained the interpretation in question, especially if [it] is long-standing’ . . . , and indications that the agency’s interpretation was contemporaneous with legislative enactment of the statute being interpreted,” are factors to consider in determining whether an agency’s interpretation is probably correct.”])

Additionally, every year, IRWD submits a “Basin Equity Assessment Report,” which is used to determine pumping over the basin production percentage as it relates to IRWD, and therefore its liability for basin equity assessment payments. (AR2a 11412 – 11446 [Weghorst Depo., Exh. 191].) In each of these reports, the denominator of the basin production percentage equation is based on water use within the district. (See, e.g., AR2a 11412, [Line 2, reporting “All water from Supplemental Sources (Ag AND Non-ag) used solely within OCWD boundaries . . . .”]) The Water Producers and the OCWD argue producers have always determined compliance with the basin production percentage based on the percentage their production of OCWD groundwater represents in relation to their total water use within the district.

[The court requests the OCWD and Water Producers address why the plain language interpretation of Section 31.5, subdivision (g)(2)(G) advanced by IRWD leads to absurd results in terms of basin equity assessments, basin production percentages and production limitations. The court also requests the OCWD explain the narrative (and chart) in Kennedy’s declaration.]

IRWD’S CLAIMS THE OCWD’S FINDINGS ARE UNSUPPORTED

Section 31.5 of the Act requires the OCWD make certain findings to adopt a production limitation such as 2019 PL/S. In addition to other findings, to adopt a production limitation, the OCWD must find:

“That a . . . production . . . limitation from groundwater within the district [is] necessary for the protection of the water supply of the district.”

IRWD argues the OCWD’s findings lack evidentiary support. More specifically, IRWD contends substantial evidence does not support the OCWD’s finding “the 2019 PL/S was ‘necessary for the protection of the water supply of the district.’ ” (Opening Brief 21:22-23.)

The decision to impose a production limitation is a quasi-legislative act and entitled to some deference from the court. (See e.g. Home Builders Assn. of Tulare/Kings Counties, Inc. v. City of Lemoore (2010) 185 Cal.App.4th 554, 561; Balch Enterprises, Inc. v. New Haven Unified School District (1990) 219 Cal.App.3d 783, 792.)[6]

Traditional mandate actions are generally used to review an administrative agency’s quasi-legislative actions of administrative agencies. Judicial review in such cases are governed by several principals. First, the judicial inquiry is generally “confined to the question whether the classification is ‘arbitrary, capricious, or [without] reasonable or rational basis.” (American Coatings Assn. v. South Coast Air Quality Management Dist. reasonable basis Garrick Development Co. v. Hayward Unified School Dist.

Where administrative proceedings are quasi-legislative in nature, “courts exercise limited review out of deference to separation of powers between the Legislature and the judiciary, and to the presumed expertise of the agency within the scope of its authority.” (Western Oil & Gas Assn. v. Air Resources Board Ibid.)

Accordingly, under this deferential standard of review, the OCWD quasi-legislative actions—such as setting a production limitation—are presumed to be valid. IRWD therefore has the burden to establish the OCWD’s decisions are arbitrary, capricious or without a reasonable or rationale basis.

IRWD attacks three justifications offered by the OCWD for the production limitations it believes are unsubstantiated.

First, IRWD argues OCWD implemented the 2019 PL/S solely to prevent the export of district groundwater to areas outside of the OCWD’s service area. (AR2a 7553, 8024-8025.) IRWD contends such a justification is contrary to the Act and constitutes an impermissible expansion of the OCWD’s authority. According to IRWD, the 2019 PL/S should be rejected as an

improper attempt by the OCWD to restrict the exportation of water outside the district. Such power, IRWD argues, is in direct conflict with the authority provided to the OCWD under Section 2(9) of the Act.

Second, to the extent the OCWD justifies its actions as a way to “disincentivize any Groundwater Producer from unilaterally pumping groundwater in excess of its total water demands and potentially exporting the groundwater to neighboring agencies inside or outside of OCWD,” IRWD cries disingenuous. (AR2a 7533-34, 8025.) IRWD so contends because the OCWD admits no sale or transfer of groundwater to another agency outside of the district’s boundaries has ever previously occurred. (AR2a 8453.) IRWD argues OCWD merely created speculative hypotheticals to justify its actions. (Opening Brief 19:11-23.) Accordingly, IRWD argues this false justification does not constitute substantial evidence sufficient to withstand this court’s review. (Poncio v. Department of Resources Recycling & Recovery (2019) 34 Cal.App.5th 663, 673.)

Finally, IRWD argues the OSCWD’s final justification—“[s]etting a 100% Production Limitation ensures that large amounts of additional groundwater pumping will not unexpectedly occur in the future, which would have the effect of worsening this situation and negating District efforts to refill the Basin”—is factually untrue. (AR2a 7554, 8025.) First, IRWD notes the OC Basin is currently at “optimal” level. Second, according to IRWD, the 2019 PL/S will not reduce groundwater pumping and is merely concerned with the location where the water is used.

The OCWD disputes IRWD’s factual spin. The OCWD contends the OC Basin is in constant overdraft—a situation necessitating the use of the OC Basin management tools provide to the OCWD by the Legislature.[7] (AR1 3777; 3790; 3791; AR2a 7066-7067; 7606.) Further, as the population continues to grow within the district, demand for water will increase requiring active management by the OCWD. (AR 942; 1958)

The OCWD persuasive argues the 2019 PL/S does not prevent the exportation of groundwater. Instead, the OCWD designed the production limitation to stop overproduction generally. (AR2a 7606-7607.) In fact, the OCWD acknowledges a producer could export water from the OC Basin with no surcharge so long as the producer did not exceed the 100 percent production limitation on an annual basis. Finally, the OCWD notes the surcharge provides a disincentive but not a prohibition; in this context and given the circumstances, the court recognizes this is a difference with a distinction.

Based on the foregoing, the court finds IRWD did not meet its burden of demonstrating the 2019 PL/S is arbitrary, capricious or without reasonable or rationale support.

IRWD’S CLAIM THE 2019 PL/S IS UNCONSTITUTIONAL

Finally, IRWD contends the surcharge promulgated by the OCWD violates the constitutional limitation on assessments and fees that can lawfully be charged by water agencies. According to IRWD, the surcharge bears no relationship to OCWD’s operating costs for management and replenishment of the OC Basin. In fact, IRWD contends the $2,000 per AF surcharge is “exorbitant.”

The OCWD argues the surcharge is not a tax. It is a penalty; therefore, it is not subject to the constitutional limitation.

In 1996, Proposition 218 added (among other things) article XIII C to the California Constitution, which restricts the authority of local governments to impose taxes by requiring voter approval of all taxes imposed by local governments. (City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191, 1200.) In 2010, when Proposition 26 was passed by voters, it expanded the reach of article XIII C’s voter approval requirement by broadening the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government.” (Id. [quoting Cal. Const., art. XIII C, § 1, subd. (e)].)

“The local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” (Cal. Const., art. XIII C, § 1, subd. (e)(7).)

In support of its argument the surcharge associated with the 2019 LP/S is a tax, IRWD relies on Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493. IRWD argues a tiered pricing structure—similarly to the surcharge here—cannot be considered a penalty because it would create a “loophole” so large it would virtually repeal the relevant constitutional provisions. (Id. at 1515.)

The OCWD and Water Producers argue Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano is distinguishable. The court agrees.

The tiered water rate structure at issue in Capistrano Taxpayers Assn., Inc. is not analogous to the OCWD’s use of basin equity assessments, basin production percentage and production limitations as legislatively-approved water district management tools. As the OCWD argues, each mechanism serves a different purpose and function; importantly, the OCWD does not use the production limitation surcharge to generate revenue, unlike the revenue producing tiered water rate structure in Capistrano Taxpayers Assn., Inc. (See Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano, supra, 235 Cal.App.4th at 1499-1500.) It is also worth noting that the Court found the tiered water rate structure at issue in Capistrano Taxpayers Assn., Inc. violated Proposition 218, a proposition that no party argues is applicable to the OCWD. (See City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191, 1198.)

Here, the OCWD primarily funds its operations through a combination of property taxes collected on lands within the district, and volumetric groundwater charges (known as replenishment assessments) paid by water producers for each acre foot of water pumped. (AR2a 11045.) Additionally, the OCWD collects basin equity assessments from water producers who pump in excess of the basin production percentage, which is set annually by the OCWD at levels a water producer may pump without significantly depleting the OC Basin. (AR2a 280, 5733-5737, 11045.)

The OCWD Board set a $2,000 surcharge – it argues, a penalty – for purposes of preventing overproduction from the OC Basin in furtherance of “the protection of the water supply of the district.” (AR2a 8127- 8130.) Thus, as authorized by the Act, the production limitation is not intended to raise revenue but to discourage specific conduct.

Finally, the OCWD set the surcharge at an amount determined by the OCWD board to deter excessive pumping of the OC Basin. (AR2a 3736-3751; 10468-10502; Kennedy Decl. ¶ 3.)[8] The OCWD notes the Legislature expressly granted the OCWD the authority to set a “surcharge in an amount to be determined in the discretion of the board.” (§ 31.5, subd. (g)(2)(D).) The evidence demonstrates the OCWD did not set the surcharge to generate revenue; it did so to disincentive behavior. (AR2a 8024.) On behalf of the OCWD, John Kennedy testified that in setting the OCWD’s surcharge at a very high level he “wanted to make it a large enough penalty that nobody would do it.” (AR2a 8475, 7604.)

The court finds that the surcharge is properly characterized as a penalty, not subject to Proposition 26.

CONCLUSION

For the foregoing reasons, the court finds for/against IRWD as to causes of action eleven and twelve in the Petition.

IT IS SO ORDERED.

September 11, 2020

Hon. Mitchell L. Beckloff, Judge


[1] Citations to the Administrative Record are in the following format: “AR1 page number” for the Administrative Record prepared for Phase 1 of Trial and “AR2 page number” for the Compendium of Evidence prepared for Phase 2 of Trial, and “AR2a page number” for the Compendium of Evidence and Administrative Record prepared for Phase 2a of Trial.

[2] All further statutory references are to this Code unless otherwise noted.

[3] Unlike the services district discussed in Gomes v. Mendocino City Community Services District (2019) 35 Cal.App.5th at 249 or the Almeda County Water District (§ 31142.26, subd. (a)), the Legislature did not empower OCWD with broad regulatory authority.

[4] “Total Water Demand” is not defined in the Act, but, as described by IRWD, the concept refers to the water served by the producer and used by its customers from all sources, such as imported water, groundwater, etc. (Opening Brief 15:2-4.)

[5] The court finds the implicit concession in language such as: “In doing so, IRWD strips the context surrounding the setting of a PL and isolates language found in subdivision (g)(2)(G) of § 31.5 of the Act in a manner that leads to absurd results, namely a PL that would be useless for managing the basin.” (OCWD Opposition 15:21-23.) The Water Producers similarly argue the plain text of the statute supports their interpretation, but they focus on reasons the plain language of the statute should not apply. (Water Producers’ Opposition 14:27, 16:7.)

[6] Collectively, these cases suggest an agency’s decision to impose a fee, charge or other exaction is a quasi-legislative act.

[7] The annual overdraft is the quantity by which the production of groundwater exceeds natural replenishment of groundwater supplies within OCWD. (§ 24 [AR2a 37]; AR1 3853; AR2a 7066.) OCWD contends that OCWD groundwater remains in a constant overdraft; for example, Basin’s annual overdraft for water year 2017-18 was 195,000 acre feet. (AR2a 7066.)

[8] OCWD notes that the 2019 PL/S surcharge of $2,000 is less than the surcharge set in 2009 ($2,400/AF) and 2010 ($2,800/AF). According to the OCWD, IRWD did not challenge these past surcharge amounts.

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