Pajaro Valley Water Mgmt. Agency v. Amrhein, H027817.

CourtCalifornia Court of Appeals
Writing for the CourtRushing
Citation59 Cal.Rptr.3d 484,150 Cal.App.4th 1364
PartiesPAJARO VALLEY WATER MGMT. AGENCY, Plaintiff and Respondent, v. Ray AMRHEIN et al., Defendants and Appellants.
Docket NumberNo. H027817.,H027817.
Decision Date21 May 2007
59 Cal.Rptr.3d 484
150 Cal.App.4th 1364
PAJARO VALLEY WATER MGMT. AGENCY, Plaintiff and Respondent,
Ray AMRHEIN et al., Defendants and Appellants.
No. H027817.
Court of Appeal, Sixth District.
May 21, 2007.

[59 Cal.Rptr.3d 485]

Johnson & James, Robert K. Johnson, Aptos, for Defendants and Appellants Ray Amrhein et al.

Harold Griffith, Amicus Curiae for Appellants Ray Amrhein et al.

Maria Luisa Menchaca, Amicus Curiae for Appellants Fair Political Practices Commission.

Nossman, Guthner, Know & Elliott, Stephen N. Roberts, Nicole A. Tutt, Sophie N. Froelich, San Francisco, for Plaintiff and Respondent Pajaro Valley Water Management Agency.

San Diego County Water Authority, Daniel S. Hentschke, General Counsel, Oceanside, Amicus Curiae for Respondent Association of California Water Agencies.


Plaintiff and respondent Pajaro Valley Water Management Agency (Agency) brought this validation proceeding to ascertain the validity of its 2003 ordinance increasing the groundwater augmentation fee to be charged to operators of wells within its jurisdiction. Defendants and appellants Ray Amrhein, Guy George, Mark Pista, San Andreas Mutual Water Company, Patrick Layhee, and John Sheffield (Objectors) appeared in opposition to the requested decree. After taking evidence, the trial court held the ordinance valid, ruling that the matter was proper for a validation proceeding, that two Agency board members did not have disqualifying conflicts of interest, and that the ordinance did not contravene constitutional limitations on the power of local entities to impose property taxes, assessments, and property-related charges. Objectors brought this appeal, contending that the court erred in each of these determinations.

We originally issued an opinion finding no error and affirming the judgment. We granted rehearing, however, to consider the effect of Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 46 Cal.Rptr.3d 73, 138 P.3d 220 (Bighorn). In light of that decision we are now compelled to conclude that the augmentation fee is a fee or charge "imposed ... as an incident of property ownership" and thus subject to constitutional preconditions for the imposition of such charges. (Cal. Const., art. XIII D, § 2, subd. (e), added by initiative, Gen. Elec. (Nov. 5, 1996); see id., § 6.) Since the Agency made no attempt to comply with those conditions, we must reverse the judgment validating the charge.


The area subject to the Agency's jurisdiction is home to around 80,000 persons,

59 Cal.Rptr.3d 486

about half of whom reside in Watsonville. This area lies atop the Pajaro Valley Groundwater Basin, which the trial court found to be "a single, interconnected basin of fresh groundwater to supply the whole region."1 Extraction of groundwater through wells supplies slightly over 95 percent of the water used in the basin.2 The remainder comes from a variety of surface sources including sloughs, rivers, creeks, and springs. About 86 percent of the water used within the basin goes to agriculture.

Since the 1950's the basin's groundwater supply has been subjected to chronic overuse, resulting in overdraft and seawater intrusion. Overdraft directly depletes supply by extracting more water than is replenished (recharged) by natural processes. Recent annual extractions from the basin total about 70,000 acre-feet, which reflects an overdraft of about 9,000 acre-feet. This in turn leads to seawater intrusion, which occurs when fresh groundwater is drawn below sea level, causing seawater to flow into the neighboring freshwater, rendering it too saline for use. Freshwater has been drawn to below sea level throughout much of the basin. An Agency witness testified that if seawater were allowed to intrude unimpeded into the areas of declining ground water elevation, "it would eventually fill that void with seawater. The entire basin would be impacted." As it is, seawater intrusion renders unusable 11,000 additional acre-feet of fresh groundwater every year.

Because of the depletion that has already occurred, seawater intrusion would not be halted merely by reducing extractions by the 9,000 acre-feet per year of overdraft, or even the 20,000 acre-feet of overdraft plus water lost to increased salinity. Rather, the Agency estimates that to achieve seawater exclusion by reduced extractions alone would require a reduction of about 44,000 acre-feet per year.

The Agency was created in 1984 through the Legislature's enactment, as an urgency measure, of the Pajaro Valley Water Management Agency Act. (Stats.1984, ch. 257, §§ 1 et seq., pp. 798 et seq., 72B West's Ann. Wat.-Appen. (1995 ed.) ch. 124, §§ 124-1 et seq. (Act).) It established an agency composed of a seven-member board of directors, each of whom must be a voter and resident of the basin. (Stats. 1984, ch. 257, § 402, p. 805.) In creating the Agency, the Legislature found that "the management of the water resources within the Pajaro Valley Water Management Agency for agricultural, municipal, industrial, and other beneficial uses is in the public interest and that the creation of a water agency pursuant to this act is for the common benefit of all water users within the agency." (Stats.1984, ch. 257, § 101, p. 798.) It declared the Agency's purpose as "to efficiently and economically manage existing and supplemental water supplies in order to prevent further increase in, and to accomplish continuing reduction of, long-term overdraft and to provide and insure sufficient water supplies for present and anticipated needs within the boundaries of the agency." (Id., § 102, subd. (f), p. 799.) It decreed that the Agency "should, in an efficient and economically feasible manner, utilize supplemental water and available underground storage and should manage the groundwater supplies to meet the future needs of the basin." (Id., § 102, subd. (g),

59 Cal.Rptr.3d 487

p. 799.) It directed that the management of water resources under the Act be carried out in light of a number of objectives, including "the avoidance and eventual prevention of conditions of long-term overdraft, land subsidence, and water quality degradation" (id, § 102, subd. (a), p. 799), the establishment of "reliable, long-term supplies" rather than "long-term overdraft as a source of water supply" (id., § 102, subd. (b), p. 799), the reduction of long-term overdraft "realizing that an immediate reduction in long-term overdraft may cause severe economic loss and hardship" (id., § 102, subd. (c), p. 799), and the achievement of economic efficiency by "requirfing] that water users pay their full proportionate share of the costs of developing and delivering water" (id, § 102, subd. (d), p. 799). The Legislature anticipated that "long-term overdraft problems may not be solved unless supplemental water supplies are provided." (Id., § 102, subd. (g), p. 799.) Accordingly it declared that the Agency could appropriately "acquire, buy, and transfer water and water rights in the furtherance of its purposes." (Id., § 102, subd. (e), p. 799.) It declared that "[a]gricultural uses shall have priority over other uses under this act within the constraints of state law." (Id., § 102, subd. (d), p. 799.)

The Act specifically empowers the Agency to adopt ordinances levying "groundwater augmentation charges on the extraction of groundwater from all extraction facilities within the agency for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use within the boundaries of the agency." (Stats.1984, ch. 257, § 1001, p. 815.) It also authorizes the Agency to "regulate, limit, or suspend extractions from extraction facilities" (id, § 711, p. 811), and provides criteria for the allocation of rights to use available groundwater (id, § 712, pp. 809-810).

The Act also empowers the Agency to commence a "groundwater rights adjudication" (Stats.1984, ch. 257, § 1106, p. 817), which would effect "the determination of substantially all rights in the groundwater basin or the area subject to the adjudication" (id, § 310, p. 804). An economist testified about the effects on the local economy of a "worst case scenario" in which a groundwater rights adjudication would reduce groundwater extractions to 24,000 acre-feet per year, of which 12,000 would be allocated to residential use, leaving about 0.4 acre-feet per acre for farmers. He testified that this scenario would result in the loss of 9,000 jobs and an annual reduction in agricultural production of $360 million.3

In 2002, the Agency enacted, by unanimous vote, a Revised Basin Management Plan (BMP), which evaluated the problems of overdraft and seawater intrusion, examined a variety of potential solutions, identified a preferred solution, and recommended specific projects to implement it. The result was a plan whose primary components were (1) construction of a 23-mile

59 Cal.Rptr.3d 488

pipeline from San Benito County to the coast; (2) construction of a coastal distribution system for delivery of water to the area west of Highway 1 within the Basin; (3) procurement of water, or water rights, from owners in the Central Valley; (4) development of additional water supplies from local sources4; and (5) eventual delivery of the resulting supplies to coastal farmers as well as some farmers along the pipeline route.5

An Agency expert opined that the plan represents a reasonable engineering approach to achieving Agency goals, and is the most reasonable of many alternatives considered in terms of cost, environmental effects, and ability to meet those goals. The plan would bring in a total of about 18,500 acre-feet composed of 1,000 from Harkins Slough, 4,000 in recycled Watsonville water, and 13,400 in pipeline imports. The plan also sought to achieve savings of about 5,000 acre-feet through conservation. An Agency witness opined that these measures would solve the problems of overdraft and seawater intrusion,...

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