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Judge again rules that water district’s rate-setting procedures violate state constitution

By Mike Sprague, SGVN
September 6, 2012

Lawsuits Against Water Replenishment District

A regional water district could be facing more than a $100 million in damages after a Superior Court judge ruled on Thursday it had violated the state constitution when it didn’t follow procedural requirements for an assessment on pumping from the underground water basin.

Judge James C. Chalfant, who had ruled in April 2011 against Water Replenishment District in a case brought by three cities, maintained his position in a lawsuits brought by the Central Basin Municipal Water District on behalf on nearly every water utility the replenishment district serves as well as Tesoro Refining and Marketing Co. of Carson.

Chalfant again said that Proposition 218 – approved by voters in November 1996 – applies to the Water Replenishment District.

As such the district was required to mail written notices of rate increases 45 days before the action. Should written protests be made by a majority of those affected, the charge couldn’t be imposed.

The district charges $244 per acre-foot for water pumped out by utilities in its area that includes much of southern Los Angeles County.

Curtis Parvin, attorney for Central Basin, said that the cities represented in the lawsuit are owed about $80 million in pumping assessments since fiscal 2006.

The cities of Cerritos, Downey and Signal Hill, which filed the first lawsuit, are seeking $20 million. Tesoro is seeking about $3 million and the city of Pico Rivera which filed a similar lawsuit Friday is asking for $2.9 million.

However, Chalfant’s ruling didn’t grant any damages to the parties suing the replenishment district.

Instead, Chalfant said a trial under another judge must be held to decide damages.

A trial has yet to be held in the lawsuit brought by Cerritos, Downey and Signal Hill.

Robb Whittaker, general manager for the replenishment district, said he is looking at all possible options, including having the board of directors re-enact the assessments for each year going back to fiscal 2006-07 and follow the Proposition 218 procedures.

Parvin said he didn’t think such a process would resolve the issue.

He also said he believes the replenishment district has the money to pay fines.

The district had nearly $99 million in reserves – although all but about $2.7 million was set aside for water purchases, capital projects, debt service, employee benefits and other things.

Art Aguilar, general manager for Central Basin, said it wouldn’t be the court judgment that would bankrupt the replenishment district.

“It’s their misapplication of the replenishment assessment (process),” Aguilar said. They didn’t do it right and they have to put up with the consequences.”

Ed Casey, attorney for the replenishment district, argued Thursday that Proposition 218 doesn’t apply to his client because its provisions only apply to property-related fees and taxes.

“The extraction of ground water has nothing to do with the land,” Casey said. “We’re not talking about the district through (water) pipes wanting to serve anybody.”

Instead, the district purchases water to replenish the basin and doesn’t serve any particular person, he said.

But Judge Chalfant disagreed, saying that you can’t pump water from the underground aquifer unless you have some property.

“Ground water rights are real property rights and attach to the land,” he said. “You can’t get ground water without having property rights.”