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Appellate Court Upholds State Water Board’s Drought Emergency Regulations and Curtailment Orders Issued for Deer Creek

June 23, 2020 | Written by Michelle E. Chester

On June 18, 2020, the Third District Court of Appeal affirmed the lower court’s determination that the State Water Resources Control Board (State Water Board) lawfully adopted emergency regulations and curtailment orders during the State’s most recent drought emergency. The regulations and orders at the center of the court’s decision were issued by the State Water Board in 2014 and 2015 during a period of severe and persistent drought conditions. Then-Governor Brown had declared a state of emergency and signed urgency legislation aimed at expediting drought relief. The legislation had provided, in part, for the adoption of emergency regulations by the State Water Board “to prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion, of water,” or “to require curtailment of diversions . . . .” Wat. Code, § 1058.5.

Stanford Vina Ranch Irrigation Company (Stanford Vina), an irrigation company whose shareholders own agricultural land with riparian rights to Deer Creek, a tributary of the Sacramento River, filed suit claiming that the State Water Board’s emergency regulations and curtailment orders amounted to a taking of its vested water rights for public use without complying with constitutional and statutory requirements of due process and reasonable compensation. The State Water Board argued in opposition that it possessed authority to adopt the emergency regulations and subsequently issue curtailment orders for Deer Creek and other watersheds for the protection of threatened and endangered fish species, in part, under its authority to regulate the unreasonable use of water in accordance with article X, section 2 of the California Constitution. In support of its position, the State Water Board primarily relied on a prior opinion by the First District Court of Appeal, Light v. State Water Resources Control Bd. (2014) 226 Cal.App.4th 1463, 1481 (Light), wherein the court held that, following the enactment of article X, section 2, the State Water Board’s regulatory authorities include not merely deciding priorities between competing appropriators, but also comprehensive planning and allocation of waters.

The Third District Court of Appeal first reviewed whether the challenged emergency regulations were within the scope of authority conferred by the Constitution and the Legislature to the State Water Board. Finding that the regulations were consistent with article X, section 2 of the Constitution, as well the Water Code—particularly section 1058.5—the court turned to whether the Board’s quasi-legislative action in adopting the regulations was arbitrary, capricious, or entirely lacking in evidentiary support. Borrowing language from the trial court’s opinion, and relying, in part, on the First District Court of Appeal’s reasoning in Light, the appellate court concluded that the Board’s determination that allowing diversions to reduce flows below the minimum, “belly-scraping” amounts necessary for fish migrations and survivability would be unreasonable and was neither arbitrary, capricious, nor entirely lacking in evidentiary support. The court found no basis on which to override the State Water Board’s determination that the minimum flow requirements in the emergency regulations were reasonably necessary to prevent unreasonable use of water within the meaning of article X, section 2.

Next, the court reviewed the State Water Board’s quasi-adjudicative application of the regulations by issuing the curtailment orders. To determine the applicable standard of review, the court considered whether the decision to curtail diversions from Deer Creek substantially affected a fundamental vested right. The court concluded that, because a riparian right consists only of a right to the reasonable use of the flow of the water, and because the State Water Board validly exercised its authority in adopting emergency regulations defining as unreasonable any diversions that would drop the flow below the emergency minimum flow requirements, Stanford Vina did not possess a fundamental vested right to divert in contravention of the emergency regulations.

Because a fundamental vested right was not at issue, the court applied the substantial evidence standard of review in assessing the validity of the curtailment orders. Upon review of the record, the court found that substantial evidence supported the State Water Board’s conclusion the curtailed diversions would have caused or threatened to cause the flow of water in Deer Creek to fall below the emergency minimum flow requirements. The court held that the orders were not, as Stanford Vina contended, a taking of the company’s water rights, because mere regulation of the use and enjoyment of a property right for the public benefit is a permissible exercise of the State’s police power and does not amount to a taking under eminent domain. Accordingly, the court concluded that the Board was within its authority to determine that diversions from Deer Creek that threatened to violate the emergency minimum flow requirements constituted an unreasonable use of water.