As the legislature contemplates how to “Make Conservation a California Way of Life”, a panel discusses some of the legal issues posed: How do mandates interplay with Reasonable Use? Could mandates be considered a takings? And what about charter cities?
In May of 2016, the Governor issued an executive order titled “Making Conservation a California Way of Life” directing the Department of Water Resources and the State Water Resources Control Board to develop new water use targets as part of a permanent framework for urban retail water suppliers. In April of 2017, a group of five agencies led by the Department of Water Resources and the State Water Resources Control Board issued a final report on implementation of the executive order that proposed adoption of a methodology that urban water suppliers would be required to use to calculate their water use targets with failure to meet those targets resulting in some form of enforcement. In order to implement the proposal, additional legislative authorities would be needed.
In response, several bills were introduced last year and have been held over for consideration in the legislature this year, most notably AB 1668 introduced by Assemblymember Friedman and SB 606 introduced by Senator Skinner and Senator Hertzberg.
Conservation mandates pose some unique legal issues. For instance, how do conservation mandates relate to the reasonable use requirements in Article X, Section 2 of the California Constitution? Does a conservation mandate constitute a taking or pose an impairment to contracts? How might this relate to the authorities granted to charter cities? At the fall conference of the Association of California Water Agencies, a panel of lawyers discussed the possible implications.
On the panel:
- Melanie Tory, Deputy City Attorney in the LA City Attorney’s Office
- Brian Poulsen, General Counsel at the El Dorado Irrigation District
- Ryan Bezerra, shareholder with Bartkiewicz, Kronick & Shanahan
- Adam Robin, Legislative and Regulatory Affairs Manager with the Sacramento Regional Water Authority, Moderator.
Adam Robin began the discussion by giving a brief overview of the legislative proposals currently under consideration that would create new objectives for urban water use that urban retail water suppliers serving 3000 or more people would be required to meet.
In January of 2014, with reservoirs low and snowpack meager, Governor Brown declared a statewide drought state of emergency. A series of executive orders followed over the next several years, culminating in Executive Order B-37-16 titled, “Making Water Conservation a California Way of Life,” that directed the Department of Water Resources and the State Water Resources Control Board to develop new water use targets as part of a permanent framework for urban retail water suppliers. The targets are intended to build upon and increase the existing 20% by 2020 urban conservation requirements.
The executive order provided that the water use targets be customized to the unique conditions of each water agency, generate more water conservation than the existing 20×2020 requirements, and that they be based on strengthening standards for indoor residential per capita water use and outdoor irrigation in a manner that incorporates landscape area, local climate, and new satellite imagery data. Other provisions address commercial, industrial, and institutional water use and water losses from leaks. Mr. Robin noted that the framework would be permanent and would apply to all urban water suppliers around the state, regardless of the hydrology being wet or dry and regardless of water availability.
In April of 2017, a group of five agencies led by the Department of Water Resources and the State Water Resources Control Board issued a final report on implementing the executive order. The report proposed that if given the statutory authorization, the Water Board and DWR would adopt a new water use target study methodology that urban water suppliers would be required to use that would calculate unique water use targets based upon the standards adopted by state agencies, and that water agencies that did not meet their annual objective would be subject to some form of enforcement. The report contemplated a progressive approach to enforcement, starting with informational orders and proceeding all the way through cease and desist orders and administrative civil liability penalties.
Concurrent with the release of the final framework report, the administration released a budget trailer bill to grant the necessary statutory authorities. Mr. Robin explained that the regular policy bill process involves moving through various committees before coming to a vote on the floor, but budget trailer bills are a parallel process that skip the policy committees that regular bills must clear. However, both houses of the legislature declined to advance the budget trailer bill and opted to take the policy bill approach instead.
As a result, several bills were introduced in the 2017 legislative session. These include AB 968 and AB 1654, which were co-sponsored by the Regional Water Authority and the Irvine Ranch Water District; AB 1323, AB 1667, AB 1668, and SB 606 were also active measures. There was no legislation enacted in 2017, but it’s very much a live issue going into the second year of a two-year legislative session, Mr. Robin said. He noted that AB 1668 and SB 606 seem to have the most energy behind them and so he will focus on the relevant provisions of those bills and the the new target setting methodology under discussion.
Mr. Robin presented a slide showing the formula that every urban retail water supplier in the state would have to use to calculate their water use target, noting that the ultimate details of the mathematical formula would be determined based on guidelines and methodologies that would be adopted by the State Water Resources Control Board, if and when the legislation were to become law.
The annual calculation would be a sum of the aggregate estimated efficient residential water use, aggregate estimated efficiency outdoor water use, aggregate estimated outdoor irrigation associated with CII water use, aggregate estimated efficient water loss amount, and aggregate estimated water use in accordance with variances as appropriate. The text of the formula written in green are the standards defined in statute, the the text in red are the standards the State Water Resources Control Board would be authorized to develop and adopt, and the text in yellow relates to variances.
Under AB 1668 and SB 606, the State Water Resources Control Board would be authorized – but not required — to adopt variances to account for a variety of unique local conditions. Urban water suppliers would be obligated to calculate the number once every year and compare it to their actual use, and report the results.
Where the rubber meets the road is in the enforcement provisions of the bill, Mr. Robin pointed out. The Water Board will be authorized to take enforcement actions against those urban retail water suppliers that do not meet their urban water use objectives, including issuing informational orders, issuing written notices, and issuing conservation orders.
AB 1668 and SB 606 are companion measures; they are double joined and they would have to be concurrently enacted; Mr. Robin noted that the various provisions he discussed are broken up between the two bills, but they are one package.
“Conservation mandates pose some pretty unique legal issues,” he said. “Whether it’s SBX7-7, the emergency conservation regulations, or the discussion that’s currently happening in the legislature over proposals for enforceable long-term permanent annual urban water use objectives, these are the essential legal issues that our panel will be exploring in detail today. Melanie Tory will be talking about the relationship of conservation mandates to the reasonable use requirements of the California Constitution. Brian Poulsen is going to be exploring potential takings issues associated with the emerging framework, and Ryan Bezerra will be talking about whether conservation mandates pose potential impairments to contracts and infringements of charter city authorities.”
MELANIE TORY: WATER CONSERVATION MANDATES AND THE REASONABLE USE DOCTRINE
Melanie Tory then discussed the relationship of conservation mandates to the reasonable use requirements of Article X, section 2 of the California Constitution.
“Basically the bottom line is that the legislature has pretty broad authority under the California constitution, Article 10, Section 2 to enact these mandates and given past case law, it seems that the courts would uphold these mandates,” she said.
Article X, Section 2 requires water resources to be put to beneficial use to fullest extent of which they are capable, waste or unreasonable use to be prevented, and that conservation be exercised with a view to the reasonable and beneficial uses in the interests of the people and for the public welfare. This is codified in Water Code Section 100 and 101.
Article 10 Section 2 was adopted in 1928 after the California Supreme Court ruled on Hemminghouse v Southern California Edison in 1926. “Basically that case held that as between appropriators and riparian owners, riparian owners have the right to the customary flow of water which is or may be beneficial to the land, and the court said neither it nor the legislature had the right to say that even if someone could use the water more beneficially, that that person could take the water,” she said. “It also said this area of public policy was a vague and uncertain guide. So the legislature and then the voters adopted Article X, Section 2, changing the landscape for California water rights.”
Since then, the judicial interpretation of Article X, Section 2 has held that the state has the power to conserve its water resources and to regulate them, and the legislature also has given a fair amount of power to the State Water Board, she said. The courts have interpreted that Article X, Section 2 applies the rule of reasonableness to all water rights, and what is reasonable is a question of facts, based on the circumstances, and also might have statewide considerations. In one of the cases, Ms. Tory noted that a paramount consideration was said to be the ever increasing need for the conservation of water use in the state.
There are many cases, but Ms. Tory cited four in particular: Chow v. City of Santa Barbara, 217 Cal. 673 (1933), Peabody v. City of Vallejo, 2 Cal. 2d 351 (1935), Joslin v. Marin Municipal Water District, 67 Cal. 2d 132 (1967), and Imperial Irrigation District v. State Water Resources Control Board, 225 Cal. App. 3d 548 (1990).
The first three cases are those in which municipal water suppliers dammed water bodies and were subsequently sued by downstream riparian users who alleged they themselves were using the water for beneficial uses.
“In Peabody, the beneficial use was the silt that the water left behind and also washed out some of the salts, and in Joslin it was similarly sand and gravel which the owners were then mining and selling,” she said. “In all of those cases, the courts basically said, no these uses aren’t reasonable given the statewide considerations. It’s better used for municipal uses and so the court found in favor of the municipalities.”
The case, Imperial Irrigation District v State Water Resources Control Board, is a bit different, and speaks to the State Water Board’s expansive authority in adjudicating what is wasteful and unreasonable, she said. The case started with a farmer who complained to the Department of Water Resources that the Imperial Irrigation District was letting water go to the Salton Sea, that water was then flooding his land, and that it was wasteful and unreasonable; DWR agreed and referred it to the State Water Board who then issued a decision saying among other things that Imperial Irrigation District needed to come up with a conservation plan.
The Imperial Irrigation District then went to the Superior Court and complained that it didn’t have the authority. “In the ruling, one of the questions that the court asked was, does the Board have the right to establish standards of reasonableness?” said Ms. Tory. “The Imperial Irrigation District said no, it’s always been a local issue and the local agencies determine what’s unreasonable. The Court said, no that’s not the case. The Board has more than enough power under state law to determine what’s reasonable. And in this case, it wasn’t reasonable.”
Another question in the ruling was, does the State Water Board have the power to interfere with vested water rights? “The Court said here that the Board is not interfering because you don’t have a vested water right in using water wastefully and unreasonably,” she said.
The legislature has already used Article X, Section 2 as a basis for enacting legislation; it did so in 1983 with the Urban Water Management Planning Act and more recently with SBX 7-7 in 2009, which had both urban and agricultural requirements. She noted that it basically required urban water suppliers to reduce per capita water use by 20% by 2020, but didn’t put a cap on the total amount of use in either the urban or ag sectors; it also required agricultural water suppliers to adopt water management plans and implement efficient management practices and those suppliers who didn’t comply were ineligible for state water grants and loans.
The reliance on Article X, Section 2 is evidenced in the legislative intent section of SBX 7-7, which states that water is a public resource that the California constitution protects against waste and unreasonable use, the California constitution requires that water in the state be used in a reasonable and beneficial manner, and that conservation of ag water supplies is a great statewide concern. “As they are enacting these measures, they are making it very clear that they rely on Article X, Section 2,” she noted.
Ms. Tory noted that within the proposed language of SB 606 would be the ability for Administrative Civil Liability fees to be assessed for violations, which goes beyond the step of being ineligible for grant funding. She noted that SB 606 has a layered approach to enforcement: information orders, then moving to written notices, then conservation orders which is similar to the type of enforcement authority that the State Board exercised during the emergency drought regulations.
She noted that the current language of SB 606 explicitly states ‘conservation orders shall not curtail or otherwise limit the exercise of water rights,’ as well as ‘nothing is this chapter shall be construed to determine or alter water rights.’ Water code Section 1010 and 1011 apply to water conserved through implementation of SB 606, meaning that conserved water can be sold, leased, exchanged, or otherwise transferred. “So the state is saying if you conserve it, we’re not going to take it away from you; you can make money off of it or use it for any beneficial use,” she said.
Ms. Tory pointed out that an interesting thing in both bills is that both revise Water Code Section 1120 pertaining to reconsideration, amendment and judicial review of water right decisions and orders to include conservation decisions and orders issued under Water Code Section 10608, and this proposed revision seems contrary to the explicit statements in SB 606 regarding water rights.
“That may be something that as these bills move forward, it’s cleaned up or it’s not,” she said. “But the State Water Board and the legislature probably have enough power to enforce water rights on this, even though at this point, there’s enough language in there I think that’s been added to say it doesn’t affect water rights, but that could be changed.”
In a related action, the State Board recently proposed regulations to prohibit ten wasteful water use practices pursuant to Article X, Section 2 which would make permanent a lot of the temporary emergency regulations that recently expired. The State Board held a workshop on November 21st with public comments closed in December. “Interestingly the regulations will only allow the State Board to enforce the regulations and they’re hoping that localities will use these regulations for those who haven’t adopted some of them into their own local ordinances,” she said.
BRIAN POULSEN: WATER CONSERVATION MANDATES AND TAKINGS
Brian Poulsen, General Counsel at the El Dorado Irrigation District, next discussed how long-term water conservation mandates could potentially affect a takings under the US constitution takings clause.
The fifth amendment, fourth clause of the US Constitution says ‘nor shall private property be taken for public use without just compensation,’ and notwithstanding how brief that clause in the Constitution is, it has generated significant jurisprudence, so Mr. Poulsen would be focusing on the most important and significant cases as they pertain to water.
He noted that there is also a state takings clause in the California Constitution’s Article 1, Section 19 that states, ‘Private property may be taken or damaged for public use only when just compensation … has first been paid to, or into the court for, the owner.’ Mr. Poulsen noted that the language is actually quite different than the language in the US Constitution, but even state cases that have considered takings of water rights have analyzed the takings using the rubric established by the US Supreme Court for the federal takings clause.
“Of course the rationale behind the takings clause is that it’s not that the government can’t take property or can’t decide that private property should be subject to a different use; that is a function of the government,” he said. “The purpose, though, is to ensure that when the government makes those decisions, it’s not individuals or private property interests that have to bear the full weight that should be borne by the public at large.”
There is a two part test for evaluating a takings under the US Constitutional takings clause: The first question is whether or not the claimant (the person alleging the takings) has a valid or a cognizable fifth amendment property interest, and the second question is did the government action amount to a compensable takings of that interest.
For the first prong of the test, Mr.Poulsen noted that courts have routinely recognized that although a water right does not confer ownership of the water itself, it does confer a right to the use of that water and that right is a property interest that is subject to ownership and disposition, so there is a cognizable fifth amendment property interest in a water right under California law. However, he noted that right is limited by Article X, Section 2 of the state constitution to such water ‘as shall be reasonably required for the beneficial use to be served,’ with one case describing beneficial use as the proper measurement or extent of a cognizable fifth amendment property interest in water.
The second prong of the takings analysis is more complicated and asks whether the government action has affected a taking of that property interests. Mr. Poulsen said that these cases can be into two types: The first type is whether or not the government action amounts to a physical taking of property (or per se) such as eminent domain where the government comes in and takes your property and has to pay you for it. In some cases, it could be some kind of regulatory requirement that could require of use of your property but may not physically invade it, or a regulatory action that completely deprives the property owner of all economic beneficial use of his or her property.
The second type is whether or not it is a regulatory action or balancing test that constitutes a takings; these are more nebulous, he said. He noted that fellow panelist Ryan Bezerra has written an article that analyzes takings in which he identified that those takings cases that have analyzed the taking with the physical takings rubric have tended to result in finding that there was in fact a taking, and those that have analyzed it in the regulatory context have tended to conclude that there was no taking.
In the balancing test, essentially the courts have just looked at the effect of the government action and if that effect is the functional equivalent of physically taking the property. “Some of the factors analyzed are what is the economic impact of the regulation on the claimant, and to what extent does the regulation interfere with the distinct investment-backed takings of the plaintiff,” he said. “These are the kinds of analysis that’s done within the regulatory takings framework.”
Mr. Poulsen presented a list of some of the cases that have analyzed takings in the context of water rights, noting that those listed in red are cases involving California water rights. He also pointed out that the earlier cases resulted in a taking and the latter cases have resulted in no taking.
In the case of Casitas Municipal Water District v. US, the Court of Appeal for the Federal Circuit held that the water agency, Casitas Municipal Water District, did not suffer a taking when NMFS issued a biological opinion that required Casitas to construct a fish screen on the Ventura River where it had a diversion facility. During operation of the fish screen, Casitas was unable to divert up to its licensed water right of 100,000+ acre-feet for storage, although that particular water right had a beneficial use limit of 24,000 AF.
“In analyzing this case, the Court of Appeal concluded that one, Casitas a cognizable fifth amendment property interest in its licensed water right,” he said. “It further concluded that the NMFS biological opinion that required Casitas to construct a fish screen facility that physically bypassed water from its diversion facility constituted a permanent physical invasion of the property interest, and so it analyzed the taking within the physical takings framework, but it concluded there was no taking because though Casitas was not able to divert up to its maximum amount of its licensed right to storage, the evidence didn’t show that there was any reduction in the amount that it could put to its beneficial use; that is to say that Casitas could continue to apply 24,000 acre-feet (or whatever the licensed amount was) to beneficial use, and because there was no reduction in beneficial use. Remember, beneficial use is the extent of the property right interest, so there was no taking.”
With that context in mind, Mr. Poulsen then turned to the question of will the long-term conservation mandates being contemplated affect the takings in violation of the US Constitution 5th amendment takings clause? And to answer that question, he said, you have to answer a lot of other questions:
Does the claimant have a valid appropriate water right? He noted that that is a fact specific analysis as not every district or water agency relies on the same level of property interest in order to supply their customers with water; for example, contract based or licensed or permitted rights.
Will the mandate result in the reduction of beneficial use? “Isn’t that what it’s supposed to do? The conservation mandate says you have to use less water than you’re using today or that you’ve historically been using.”
Will the mandate result in a permanent invasion of the property interest? “Remember, the property interest is the use of water. If all it does is say you have to use less today than you’ve been using, but you’re still able to use up to that amount in the future if you for example add more customers to your service area, it becomes harder to make that argument that there’s been a permanent physical invasion,” he said.
Will the mandate result in a physical invasion of the water right? “This is a fact specific analysis. Perhaps it could in theory, but I think this is a regulatory takings context, which is going to make it much more difficult to prove up that there was a constitutional takings without compensation.”
“If it is in fact a regulatory takings analysis, the questions to be answered are the following: what’s the economic impact of the mandate on the water right holder? Does the mandate unreasonable impair the use of the water right? How has the mandate interfered with the water rights holders’ distinct investment-backed expectations?”
Mr. Poulsen noted that the latter question about interfering with water rights holders’ distinct investment-backed expectations is really critical to water agencies. “Many of us have long-term water supply analyses and planning documents that we’ve relied upon to incur bonded indebtedness in order to construct facilities or to acquire water supplies,” he said. “We clearly have investment backed expectations on the interests that we have in water rights, and so the bottom line here is are we going to be able to demonstrate that this long-term water conservation mandate is functionally equivalent to a physical invasion of the beneficial use of our rights.”
“Getting back to the question, will long-term water conservation mandates affect a taking? Maybe,” Mr. Poulsen said. “I don’t know. It depends. But as you can see, it’s not a straightforward answer. I think it is complicated. There are a lot of questions.”
He concluded with a quote from Justice Holmes in a case from the 1920s: “We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for that change.”
RYAN BEZERRA: CONSERVATION MANDATES, CALIFORNIA’S CHARTER CITIES, AND CONTRACT IMPAIRMENT
Lastly, Ryan Bezerra, shareholder with Bartkiewicz, Kronick & Shanahan, then discussed conservation mandates and the implications for charter cities and contract impairment. The issue of charter cities is strictly a California constitutional issue that only applies to a some cities, but there are a lot of them and some of them (such as Los Angeles) are quite large. It’s sort of a contract impairment issue, and he acknowledged there is a lot of overlap between takings law and contract impairment law.
“Similar to the takings clause, the contract impairment clause of the US constitution is worded simply as ‘thou shall not impair a contract’, but for 100 years at least, the courts have said that’s not really what it means – there’s a lot more to that,” he said. “So we have an issue where we have pretty blunt constitutional language that is not interpreted bluntly, much like the takings analysis that Brian described.”
The constitutional rule of contract impairment applies to many contracts. Mr. Bezerra noted that currently, there are essentially two combined pending cases in front of the California Supreme Court on contract impairment as a result of The California Public Employees’ Pension Reform Act (PEPRA), which changed the way CalPERS retirement and health benefits are applied, making changes related to spiking and buying service credits. “The state law is saying you can’t do those things anymore, and the argument in these cases by certain public employees unions was no, that is an unconstitutional impairment of our contracts via our retirement benefits,” he said. “We’re going to be getting more law on this in California on these constitutional sections in the retirement setting relatively soon.”
The key case related to contract impairment was the 1977 case, the U.S. Trust Co. v. New Jersey. In this case, the Port of New York and the Port of New Jersey have a two-state compact; both states had adopted laws limiting their ability to incur certain indebtedness in order to provide financial security for their bond holders. The states subsequently repealed those laws, and the bond holders sued them alleging the states had defaulted on their financial obligations and breached the contracts. The United States Supreme Court agreed, and said that in this case, the states were self-dealing by changing their laws to their own financial benefit.
“Where states generally lose contract impairment cases are when they are trying to improve their own finances,” Mr. Bezerra said. “That of course is not a long-term water conservation issue, but it’s instructive for what’s happening.”
The fundamental issue that exists under the contract impairment clauses in these cases is an irresistible force versus an immovable object kind of issue, he said.
“If you have contract obligations, you’re supposed to obey contract obligations and they are supposed to be legally binding versus states retaining their police power authority to regulate in the public interest,” he said. “Both of those things on their own, you’re not supposed to mess with, but when they run into each other, it’s very messy. That’s when you get what attorneys call balancing tests, which is never the most satisfactory kind of law. It doesn’t give you many black and white rules as to what will happen, but basically that’s the balancing you have in contract impairment cases.”
On one side of the balancing test, the court asks a lot of questions to determine how secure the contract really was. Does the contract have a clause that excludes liability from certain things? For example, Central Valley Project water service contracts tend to have a clause that has a liability exclusion and the courts might look at that if you rely on CVP service contracts, he said. The courts also look at how regulated the field is; if you’re operating on a regulated field, maybe you should expect some further regulations, he said.
On the other side of the balancing test, is the state exempting itself from liability (as in the New York and New Jersey case)? If the state’s doing that, it’s much less likely the state is going to be able to win a contract impairment case, Mr. Bezerra said. “That’s not exactly what’s going on in the water business of course, but the two parts here that are really striking to me is, is there an emergency? Is the state acting to protect the public health and safety, really? And is this regulation really tailored to a firm state interest? I think in this field, those could potentially be important.”
During the drought and the emergency regulations, the state required reducing water use; although one could argue about whether or not that was necessary, Mr. Bezerra said that if the issue were to end up in court, the court is likely to give the state a fair amount of deference to manage through a drought emergency.
“I think most people thought,’ we’re going to try to live with this because it’s temporary and it’s an emergency,’ but as you go forward in the long-term issues, is it really very tailored to any particular state interest?,” he said. “What is the state interest in long-term conservation mandates exactly? What public emergency, what serious public concern would be addressed by long-term conservation mandates, particularly if you’re dealing with water agencies that deal with firm water supplies? I think there might be some serious legal issues there if we go down that road.”
Mr. Bezerra pointed out that there has been some consideration of contract impairment issues under state law already. “In the Racanelli case from 1986, the US actually raised contract impairment as grounds for attempting to invalidate the State Board’s Water Quality Control Plan because they said, ‘you’re going to prevent us from delivering the water that we otherwise would deliver to our contractors,’” he said. “The Court of Appeals said no, absolutely not. Water rights and contracts in the State of California are subject to reasonable use and we already found in this 200 page opinion that the reasonable use doctrine would support this so no, you lose.”
However, he noted that the water conservation mandate is a very different state interest than attempting to manage for Bay Delta Water Quality and for species in the Delta. “I know that certainly some people north of the Delta have this in the back of their mind – Are these conservation mandates potentially self dealing by the state in that by commanding north of Delta water agencies to reduce their water use, you are putting more water into the State Water Project,” he said. “That strikes me as potentially an important legal issue here for some agencies because yes, DWR is a different agency than the Water Board which is a different agency from Fish & Wildlife, which is a different agency from everything, but they are all the state of California. And so if one arm of the state of California is benefitting another arm of the state of California by commanding people to use less water than they have available to them under contract, that strikes me that it starts to edge towards that kind of state self-dealing that you see in that New York and New Jersey case, so to my mind, there may be a little break here with north of Delta, south of Delta on some of these issues.”
Conservation mandates present some unique issues pertaining to municipal affairs and charter cities. Mr. Bezerra said it doesn’t have anything to do with how big the city is; the state’s charter cities range from large such as Los Angeles to small, such as Lemoore or Shafter. The concept of charter cities dates back to the 1800s, when a body of law developed called ‘Dillon’s rule’ that was a rule of interpretation that says that local agencies and cities only have the powers that the state grants them specifically and what is necessarily included with that power. That was rather constraining so a lot of states then countermanded that by adopting constitutional amendments that give charter cities more authority to act both independently and to supersede state law in some cases.
The California Constitution has specific language that says, with respect to municipal affairs, they shall supersede all laws inconsistent therewith, Mr. Bezerra noted. “In 1903, there’s this great opinion from the California Supreme Court where one of the justices described this as the loose, indefinable wild words, ‘municipal affairs’, so that is the law, the “governing law” here and the courts have been struggling with that for a long time,” he said.
For a long time, the courts thought about the state and local powers as one sort of body, and that it would be divided by subject matter – some things would be for the state, some things would be for the cities. “It was very vague, loose, and wild as to which side anything lied on. Now for the water business, that was not so bad because a lot of these cases found that water issues were municipal affairs that the cities had more control over, so that was the law for a long time.”
However, in the early 90s, the California Supreme Court adopted two decisions that really reset the fundamental basis of analysis; the debate then took a different approach that the state has its powers and the charter cities have their powers, and it’s only sometimes they run into each other, so you don’t have to declare something to be on the state’s side or the city’s side for all time, you just have to figure out specific case when there is a conflict, he said.
Some analytical steps were set up to approach the issue. The first is, is there actually a conflict between state and city law? Is this an issue where the state should really be involved at all? Then if there is actually a conflict, is the state’s law reasonably related to what they are trying to do and is it narrowly tailored to that so they are staying out of charter city business to the maximum extent possible? “To me, these things are potentially very important for the purposes of long-term conservation mandates,” he said.
In 2012, the California Supreme Court issued a decision in case where the city of Vista had enacted a sales tax increase to do the various recruitments in the city and specifically adopted a charter to get themselves out of prevailing wage laws to make their projects cheaper, which had been a motivating factor for some cities to adopt a charter. They were sued and they won; the California Supreme Court said, no, the state really doesn’t have an interest here in how the city spends its own money.
“The state had a lot of arguments about how they were regulating regional compensation patterns and regional internships and expanding the industry, and the California Supreme Court said no, you don’t really have a valid state interest here and certainly your law is not nearly tailored to it, so the city won that battle,” Mr. Bezerra said. “The next year, the legislature enacted a law that says if you don’t apply prevailing wage laws through your projects, you can’t get grant funding for them. And that law was upheld as a valid exercise of state authority, so two steps forward, one step back.”
In relation to how this might apply to long-term conservation mandates, Mr. Bezerra acknowledged that some of the older cases said water is a municipal affair, with is helpful. “However, I think really under this analytical standard from the 1990s cases, there are two really key issues,” he said. “What exactly is the state interest that would underline long-term conservation mandates? Let’s say you have a secure local water supply and now the state’s going to tell you, you can’t use all of that. It’s not a drought, it’s a not a state emergency, why is the state doing this? The title is ‘Making Conservation a California Way of Life’. Okay, what is the public health issue that’s embedded there? It’s somewhat nebulous.”
“In particular, if you get into the kind of level of detail that thou shalt calculate the number of gallons per acre of grass, thou shalt calculate the number of gallons per person in your house, etc,” he continued. “That kind of level of detail in mandating how you do your water use locally, is that really narrowly tailored to the state interest? I think that’s a pretty interesting question, so I think for those ACWA members that are charter cities, there is potentially a pretty good municipal affairs argument in relation to conservation mandates, if and when they happen.”
“Thank you very much.”
FOR MORE INFORMATION …
- For the Executive Order B-37-16, click here.
- For the State agency framework for implementing the executive order, click here.
- For the text of AB 1668, click here.
- For the text of SB 606, click here.
- For basic information on urban water use and efficiency, click here.
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