Environmental Defense Fund, Inc. v. East Bay Mun. Utility Dist., S.F. 23422

• Citation: 20 Cal.3d 327,142 Cal.Rptr. 904,572 P.2d 1128
• Decision Date: 20 December 1977
• Docket Number: S.F. 23422
• Court: California Supreme Court
• Parties: , 572 P.2d 1128, 12 ERC 1134, 8 Envtl. L. Rep. 20,105 ENVIRONMENTAL DEFENSE FUND, INC., et al., Plaintiffs and Appellants, v. EAST BAY MUNICIPAL UTILITY DISTRICT et al., Defendants and Respondents, County of Sacramento, Intervener and Appellant.

Page 904

142 Cal.Rptr. 904

20 Cal.3d 327, 572 P.2d 1128, 12 ERC 1134,

8 Envtl. L. Rep. 20,105

ENVIRONMENTAL DEFENSE FUND, INC., et al., Plaintiffs and Appellants, v. EAST BAY MUNICIPAL UTILITY DISTRICT et al., Defendants and Respondents County of Sacramento, Intervener and Appellant.

S.F. 23422.

Supreme Court of California.

Dec. 20, 1977.

As Modified on Denial of Rehearing Feb. 23, 1978.

Thomas J. Graff, Morrison, Foerster, Holloway, Clinton & Clark, Morrison & Foerster and F. Bruce Dodge, San Francisco, for plaintiffs and appellants.

John B. Heinrich, County Counsel, and L. B. Elam, Deputy County Counsel, Sacramento, for intervener and appellant.

Evelle J. Younger, Atty. Gen., Carl Boronkay and Robert H. O'Brien, Asst. Attys. Gen., Roderick Walston, Richard C. Jacobs, Nicholas C. Yost and Jan E. Chatten, Deputy Attys. Gen., Henderson, Goodwin, Marking & Rogers and Robert E. Goodwin, Santa Barbara, as amici curiae on behalf of plaintiffs and appellants and intervener and appellant.

John B. Reilley, Oakland, for defendants and respondents.

Kronick, Moskovitz, Tiedemann & Girard, Adolph Moskovitz and Clifford W. Schulz, Sacramento, as amici curiae on behalf of defendants and respondents.

CLARK, Justice.

Plaintiffs and intervener appeal from judgment of dismissal following the court's sustaining defendants' demurrers without leave to amend. We affirm the judgment.

Plaintiffs, three corporations and three individuals, are residents of an area served by defendant East Bay Municipal Utility District (EBMUD), a governmental agency. Intervener is the County of Sacramento.

PLAINTIFFS' COMPLAINT

We first summarize the allegations of plaintiffs' complaint. Delivering water to approximately 1,100,000 persons in Alameda and Contra Costa Counties, EBMUD possesses water rights to 325 million gallons per day (mgd) from the Mokelumne River watershed, its principal source of water. The current average water consumption within EBMUD's service area is 212 mgd.

EBMUD organized and controls Special District One which operates a waste water treatment facility. This facility performs only "primary treatment" on the water, discharging the effluent into San Francisco Bay.

In the early 1960s EBMUD determined its Mokelumne River supply would be insufficient to meet the needs of its service area by the year 1985. EBMUD thereupon undertook a wide-ranging search for supplemental water supplies. In 1968, it entered an agreement with, among others, the United States Bureau of Reclamation (Bureau). By the terms of this agreement, EBMUD obligated itself to perform specified conditions if it later signed a contract with the Bureau. One condition obligated EBMUD to construct a canal, known as the Hood-Clay Connection, if the Bureau found such a canal necessary. The Hood-Clay Connection is an integral part of the Bureau's Central Valley Project, East Side Division.

EBMUD contracted with the Bureau in December 1970, agreeing to purchase, beginning in the year the Bureau completes its Auburn-Folsom-South Project on the American River, up to 150,000 acre feet of water annually for a period of 40 years. This water is to be delivered to EBMUD from a diversion point on the Folsom-South Canal above its intersection with the proposed Hood-Clay Connection. This choice of diversion point renders the water unavailable to the lower American River.

EBMUD's actions will cause its 1985 consumers to pay a higher price for water than if EBMUD were to reclaim waste water. And EBMUD did not, in the course of its contractual negotiations, consider waste-water reclamation as a means of supplementing existing water supplies. EBMUD's agreements have contributed to the likelihood the Bureau will complete its East Side Division. And the Bureau's completion of this project will in turn diminish flows on the lower American River, injuring recreational opportunity, increasing salination, and accelerating wild river destruction. Finally, EBMUD's conduct will pollute San Francisco Bay.

On the basis of their allegations, plaintiffs assert three causes of action. As their first cause, plaintiffs claim EBMUD's decision not to develop reclamation facilities violates article X, section 2, of the California Constitution and Water Code sections 100 and 13500 et seq. Plaintiffs' second cause contends EBMUD's decision to obtain water from the American River violates the same provisions because it contributes to the likelihood the Bureau will complete the East Side Division project. The third cause asserts the combination of the two EBMUD decisions violates the constitutional and statutory provisions.

Plaintiffs seek three orders, one requiring EBMUD to use its best efforts to rescind the 1970 contract with the Bureau, the second prohibiting EBMUD from issuing bonds to finance the construction of facilities for transmitting and distributing American River water, and the third requiring EBMUD to undertake a reclamation program "as the proof will determine is required by law."

INTERVENER'S COMPLAINT

The complaint in intervention incorporates plaintiffs' allegations. We summarize its additional allegations. The "lower" American River lies within the boundaries of Sacramento County. The river has been used by the public for scenic and recreational purposes for numerous years. In 1962, the county began developing an area along the river for a regional park, having now expended over $6 million.

EBMUD might have acquired water from the federal government at a point below the confluence of the Sacramento and lower American Rivers just as economically as from the diversion point actually chosen. As recognized by decision No. 1400 of the California Water Resources Control Board, the lower diversion point would not impair the recreational use of the American River.

In addition to the relief sought in plaintiffs' complaint, the complaint in intervention prays for a declaration that EBMUD lacked legal capacity to enter the 1970 contract because the diversion point constitutes an unreasonable water use.

Plaintiffs' first amended complaint combines the allegations of their original complaint and of intervener's complaint, seeking the relief claimed in both.

The trial court sustained defendants' general demurrers on the ground the case is governed by federal not state law. In its extensive and well reasoned opinion, the trial court noted that EBMUD is purchasing water from a federal project authorized by Congress, that the Bureau has obtained a permit for the project from the State Water Resources Control Board (SWRCB), and that plaintiffs had not challenged the legality of the federal project. The trial court was of the opinion application of state law might render the water unsalable, interfering with the federal government's water rights and with the project itself.

While holding that federal law controls this proceeding, the trial court addressed plaintiffs' state law causes of action. The court held plaintiffs failed to assert a cause of action on the basis of article X of the California Constitution or Water Code section 100 because they were not claiming a property right in the water adverse to the rights of the defendants. The court further ruled Water Code section 13500 et seq. do not impose a legal duty on EBMUD to reclaim waste water.

FEDERAL PREEMPTION

At the outset we must determine whether the Reclamation Act of 1902 (43 U.S.C. § 371 et seq.) precludes application of state law to a contract between a state entity and the Bureau. It is undisputed that EBMUD in general possesses authority to contract with the Bureau. (Pub.Util.Code, §§ 12721, 12801, 12844.)

EBMUD contends the United States Supreme Court has interpreted the act as limiting application of state law to merely defining what constitutes a compensable property interest. EBMUD asserts state law is otherwise preempted. Plaintiffs and intervener on the other hand argue that the cooperative relationship between the states and the federal government established by federal law permits the states to determine who may receive water from a federal project and under what conditions. (See generally, Sax, Problems of Federalism in Reclamation Law (1965) 37 Colo.L.Rev. 49.)

We conclude the Reclamation Act preempts state law (1) when state law conflicts with federal law, (2) when federal law vests the federal agency with final authority over the subject matter, or (3) when the application of state law would frustrate a federal objective. Insofar as the complaints challenge construction of the canal and the choice of diversion point on the basis of state law, they fail to state a cause of action because they attempt to use state law to determine a matter within the authority of the federal agency. Insofar as the complaints seek to compel EBMUD to reclaim water, there is no federal or state conflict, application of state law will not impinge on federal controls or interests, and state law is not preempted.

Under the terms of the 1970 contract, EBMUD will purchase water from the Auburn-Folsom South Unit, an integral part of the Bureau's Central Valley Project being constructed under authority of the 1902 act. (43 U.S.C. § 616aaa.) Projects constructed pursuant to the 1902 act are predicated on congressional authority under the general welfare clause of the United States Constitution. (Art. I, § 8; Ivanhoe Irrig. Dist. v. McCracken (1958) 357 U.S. 275, 294, 78 S.Ct. 1174, 2 L.Ed.2d 1313; United States v. Gerlach Live Stock Co. (1950) 339 U.S. 725, 738, 70 S.Ct. 955, 94 L.Ed. 1231.)

The Reclamation Act of 1902 includes provisions concerning preemption. Section 8 states that the act is not to be construed as interfering with state laws relating to "control, appropriation, use or distribution of water used in irrigation . . . ." The congressional enactments specifically authorizing the Central Valley Project contain a similar provision. Section 616eee of 43 United States Code directs the Secretary of the...