Court Strikes Down Tiered Water Rates Targeting Guzzlers

A panel of appellate court justices in Santa Ana today issued a ruling striking down some tiered-rate structures for water usage if the agency cannot justify the cost of providing water.

Gov. Edmund G. Brown Jr. issued a statement denouncing the ruling, saying it would act as a “straitjacket” on agencies dealing with the drought crisis.

“The practical effect of the court’s decision is to put a straitjacket on local government at a time when maximum flexibility is needed,” Brown said in the statement. “My policy is and will continue to be -- employ every method possible to ensure water is conserved across California.”

The ruling has officials throughout the state attempting to assess how it will impact tiered rates at their water agencies. In Orange County, several agencies make use of tiered rates for customers in Seal Beach, Los Alamitos, Lake Forest, Aliso Viejo, Mission Viejo, Laguna Beach, Laguna Niguel, San Clemente, and Rancho Santa Margarita.

In a statement emailed to Patch, San Juan Capistrano officials said, “City officials are analyzing the ruling and the City Council will consider the City’s options shortly.”

Two attorneys who represented the Capistrano Taxpayers Association, which sued the city of San Juan Capistrano to challenge its rate structure, said the ruling would not handicap water agencies’ conservation efforts.

“This decision doesn’t invalidate tiered rates, per se,” attorney Benjamin Benumof told City News Service. “It invalidates arbitrary tiered rates. You can’t just come up with willy-nilly rates to meet revenue goals. You have to tie it to your costs.”

Benumof’s co-counsel Mike Hensley said studies have shown the tiered- rate systems don’t lead to conservation.

“I don’t think this is a straitjacket at all,” Hensley said. “There’s a lot of studies that show tiered systems do not promote conservation.”

Today’s ruling -- authored by Associate Justice William Bedsworth with Associate Justices Eileen Moore and David Thompson concurring -- has good news for conservationists, Benumof and Hensley said.

“I think it’s actually a win for conservation, too,” Benumof said. “The court inferred there are ways to promote conservation goals and at the same time have a cost-based structure. They’re not mutually exclusive.”

Attorney Kelly Salt -- who represented the League of California cities, the Association of California Water Agencies and the California State Association of Counties in the lawsuit -- said it was extraordinarily difficult for water providers to establish the costs.

“The costs of water are not just (reflected in) the purchasing the water,” Salt said. “It’s managing a water resource not just for today, but for tomorrow and future generations.”

The taxpayers association challenged San Juan Capistrano’s water rates by citing Proposition 218, which was approved by voters in 1996 to stop government from disguising tax increases by calling them fees and assessments, Hensley said.

Supporters of the city’s water rates argued the constitution allows for some discretion in setting the costs for water use to meet conservation goals. The appellate justices did not buy that argument.

San Juan Capistrano, “merely used what it thought was its legislative, discretionary power to attribute percentages of total costs to the various tiers,” the justices wrote.

“While an interesting conversation might be had about whether this was reasonable or wise, we can find no room for arguing its constitutionality. It does not comply with the mandate of the voters as we understand it.”

The tiered pricing rates sought to promote conservation by taxing some users more than others. The opponents of the city’s rates, however, argued that the rates must be tied to the costs of providing the service.

Similar lawsuits against Glendale and the Sweetwater Authority company in San Diego were pending the appellate court ruling, Benumof said.

“We’d much rather all work together toward compliance and conservation rather than litigate all of these cases city by city,” Benumof said.

The city could seek to have the opinion “unpublished,” meaning it would no longer be considered precedent, or an appeal could be made to the state Supreme Court.

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City News Service and Patch staffer Paige Austin contributed to this report.

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