Cal. Farm Bureau Fed'n v. State Water Res. Control Bd.
| Decision Date | 20 April 2011 |
| Docket Number | No. S150518.,S150518. |
| Citation | 2011 Daily Journal D.A.R. 1698,11 Cal. Daily Op. Serv. 1429,121 Cal.Rptr.3d 37,51 Cal.4th 421,247 P.3d 112 |
| Court | California Supreme Court |
| Parties | CALIFORNIA FARM BUREAU FEDERATION et al., Plaintiffs and Appellants,v.STATE WATER RESOURCES CONTROL BOARD, Defendant and Respondent. |
OPINION TEXT STARTS HERE Gibson, Dunn & Crutcher, David A. Battaglia, William E. Thomson, Eileen M. Ahern, Kahn A. Scolnick; Nancy N. McDonough and Carl G. Borden for Plaintiff and Appellant California Farm Bureau Federation.Somach, Simmons & Dunn, Stuart L. Somach, Kristen T. Casta~nos , Robert B. Hoffman and Daniel Kelly for Plaintiffs and Appellants Northern California Water Association and Central Valley Project Water Association.O'Laughlin & Paris, Tim O'Laughlin and William C. Paris for San Joaquin River Group Authority as Amicus Curiae on behalf of Plaintiffs and Appellants.Jason E. Resnick for Western Growers Association, California Cattlemen's Association and California Grape and Tree Fruit League as Amici Curiae on behalf of Plaintiffs and Appellants.Harold Griffith as Amicus Curiae on behalf of Plaintiffs and Appellants.Downey Brand, Kevin M. O'Brien, Jennifer L. Harder and Joseph S. Schofield for Association of California Water Agencies, Regional Council of Rural Counties and Family Water Alliance as Amicus Curiae on behalf of Plaintiffs and Appellants.Erica Frank; Michele Pielsticker; Law Office of Anthony T. Caso and Anthony T. Caso for California Chamber of Commerce, Personal Insurance Federation of California, Association of California Insurance Companies, Wine Institute, Federation of Independent Business Legal Foundation and California Taxpayers' Association as Amici Curiae on behalf of Plaintiffs and Appellants.Trevor Grimm, Jonathan M. Coupal and Timothy A. Bittle for Howard Jarvis Taxpayers Association as Amicus Curiae on behalf of Plaintiffs and Appellants.Fulbright & Jaworski, Jeffrey B. Margulies; and Heidi K. McAuliffe for National Paint & Coatings Association, Inc., as Amicus Curiae on behalf of Plaintiffs and Appellants.Bill Lockyer and Edmund G. Brown, Jr., Attorneys General, Amy J. Winn, Acting Assistant Attorney General, David S. Chaney and Paul Gifford, Assistant Attorneys General, Gordon Burns, Deputy Solicitor General, William L. Carter, Matthew J. Goldman and Molly K. Mosley, Deputy Attorneys General, for Defendant and Respondent.David R. Owen; Rossmann and Moore, Antonio Rossman, Robert B. Moore; Hamilton Candee, Katherine S. Poole; and Joanne S. Spalding for The Planning and Conservation League, Natural Resources Defense Council and Sierra Club as Amicus Curiae on behalf of Defendant and Respondent.Diane F. Boyer–Vine, Robert A. Pratt and Marian M. Johnson for the California Legislature as Amicus Curiae on behalf of Defendant and Respondent.CORRIGAN, J.
[247 P.3d 117 , 51 Cal.4th 428]
The California Constitution provides that any act to increase taxes must be passed by a two-thirds vote of the Legislature. 1 ON THE OTHER HAND, statutes that create or raise regulatory fees need only the assent of a simple majority.2 In 2003, the Legislature passed amendments to the Water Code 3 by a 53 percent majority. Current section 1525 was enacted as part of these amendments. The threshold issue here is whether section 1525, subdivision (a) imposes a tax or a fee. We hold that the amendments and section 1525 do not explicitly impose a tax and, therefore, are not facially unconstitutional. However, because the record is unclear as to whether the fees were reasonably apportioned in terms of the regulatory activity's costs and the fees assessed, we direct the Court of Appeal to remand the matter to the trial court to make these findings.
A second issue is whether the Water Code amendments, or their implementing regulations, violate the supremacy clause of the United States Constitution by over-assessing the beneficial interests of those who hold contractual rights to delivery of water from the federally administered Central Valley Project (hereafter, the federal contractors). We conclude that the statutes are not facially unconstitutional. We further determine that the constitutionality of the implementing regulations depends on whether they fairly assess and apportion the federal contractors' beneficial interests. However, because of conflicting factual assertions and an unclear record concerning the extent and value of those interests, we also direct remand to the trial court for findings on this issue.
I. FACTUAL AND PROCEDURAL BACKGROUND4
The State Water Resources Control Board (SWRCB or Board) is responsible for the “orderly and efficient administration of ... water resources” and exercises “adjudicatory and regulatory functions of the state.” (§ 174.) The water in California belongs to the people, but the right to use water may be acquired as provided by law. (§§ 102, 1201.) The SWRCB's Division of Water Rights (Water Rights Division or Division) 5 administers the water rights program, but its authority is limited. The SWRCB regulates all appropriative water rights acquired since 1914. An appropriative right is the right to take water from a watercourse that does not run adjacent to a landowner's property. Since 1914, all appropriative rights have been acquired through a system of permits and licenses 6 that the SWRCB or its predecessor state entities have issued. Before 1914, appropriative rights were acquired under common law principles or earlier statutes. The Water Rights Division has no permitting or licensing authority over riparian 7 or pueblo 8 rights, or over appropriative rights acquired before 1914. The SWRCB does have authority to prevent illegal diversions and to prevent waste or unreasonable use of water, regardless of the basis under which the right is held. (§ 275.) Riparian, pueblo, and pre–1914 appropriative rights account for 38 percent of currently held water rights.
Rights regulated under SWRCB licenses and permits include about 40 percent of state water subject to water rights. The federal government holds the remaining 22 percent of water rights. The United States Bureau of Reclamation (Bureau of Reclamation or Bureau) holds the permits and licenses to, and operates, the Central Valley Project (CVP or Project.) The Project diverts and stores water from numerous sources.9 The Bureau contracts out the responsibility to control, distribute, and use water under the permits it holds. However, these federal contracts involve use of less than 6 percent of the water over which the Bureau holds rights. The remaining water is diverted and stored by the Bureau for hydroelectric, wildlife and other purposes.
Historically, the operation of the Water Rights Division was supported by the state's general fund (General Fund), with only 0.5 percent of costs covered by fees. In 2003, the Legislative Analyst recommended that the Division's operating costs be shifted from the General Fund and covered instead by user fees imposed on permit and license holders.10 The SWRCB strongly opposed the recommendation. The SWRCB pointed out that its authority to impose fees did not extend to those holding water rights that were not based on its permits and licenses. While riparian, pueblo, and pre–1914 rights (collectively, RPP rights) are protected by conditions in new (post–1914) permits and through the Water Rights Division's enforcement of activity, the Division did not have authority to impose fees on those RPP rights holders. As noted, the RPP holders comprise 38 percent of water rights holders in California. The SWRCB argued that while permit and license holders should pay their share, proportional fees on them could not cover the total cost of the Division's operation. Additionally, as explained in greater detail below, the federal Bureau of Reclamation and Indian tribes resist paying fees, relying on the principle of sovereign immunity.
These difficulties notwithstanding, the Legislature adopted the Legislative Analyst's recommendation and passed Senate Bill No. 1049 (2003–2004 Reg. Sess.), repealing certain sections of the Water Code and enacting sections 1525–1560. Together, these statutes are designed to make the Water Rights Division entirely fee supported.
We begin with a summary of the relevant statutes.
Section 1525
Section 1525 sets forth the parties and entities subject to the new fees. 11 Section 1525, subdivision (a) requires the SWRCB to adopt a schedule of annual fees to be paid by each permit or license holder. This group does not include riparian, pueblo, or pre–1914 rights holders. Subdivision (b) of section 1525 requires the SWRCB to establish the schedule for a one-time application fee for permits to appropriate water, for approval of leases, and for petitions relating to those applications.
Section 1525, subdivision (c) provides that the SWRCB “shall set the fee schedule authorized by this section so that the total amount of fees collected pursuant to this section equals that amount necessary to recover costs” of the Division's activities. Subdivision (c) sets out “recoverable costs” in substantial detail but the costs recoverable are “not limited to” those activities identified. (§ 1525, subd. (c).) Subdivision (d)(3) similarly requires the SWRCB to “set the amount of total revenue collected each year through the fees authorized by this section at an amount equal to the revenue levels set forth in the annual Budget Act for this activity.” (§ 1525, subd. (d)(3).)
In other words, the statute requires that the total budgeted cost of the Division's operations be recovered from the fees. The SWRCB is to review and revise the fees each year as necessary, to ensure they conform with the revenue levels set in the annual budget act (Budget Act). If the revenue collected during the preceding year is either greater or less than the revenue levels set forth in the Budget Act, the SWRCB may adjust the...
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