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Judge says water right fee is invalid

The Recorder

Posted 9/18/2013

A disputed fee charged to California water rights holders is invalid, a judge says in a proposed decision, because insufficient connection exists between the amount charged, the benefits received and the burdens imposed by those who pay the bill. In his proposed decision, Sacramento County Superior Court Judge Raymond Cadei said that the State Water Resources Control Board should not “apply or enforce” the fee, which it has imposed since the 2003-04 fiscal year.

The California Farm Bureau Federation challenged the fee as an unconstitutional tax, because those who pay the fee bear a disproportionate burden of funding the water board’s Division of Water Rights. Judge Cadei agreed, noting that “no fees are assessed against the holders of approximately 38 percent of all water rights in California,” and that the fees pay more than a minimal amount “for activities that benefit the public in general.”

As a result, the judge said, the fees “do not provide a fair, reasonable, and substantially proportionate assessment of all costs related to the regulation of the affected payors.”

Further, Judge Cadei wrote, there is no evidence that the water board considered fairly apportioning the fees before they were imposed.

“Farmers and ranchers are willing to pay their fair share to support programs that benefit them, but not to shoulder the full burden of programs just because that’s a convenient way for a government agency to support itself,” CFBF President Paul Wenger said. “We’re encouraged by the judge’s proposed decision and will continue to seek a refund of fees that have been improperly charged to farmers and ranchers.”

The judge also ruled that the water board had erred by charging water contractors in the Central Valley Project for the full amount of the federal project’s water permit, rather than the proportion of that water actually made available under CVP contracts, and that the board had charged “arbitrary” fees to other permit holders.

Since the water right fee was first imposed, Farm Bureau has urged holders of some 13,000 water rights to pay the bills under protest, by filing a protest form with the board when paying the fee to the Board of Equalization. CFBF also challenged the fee in court, pursuing the case all the way to the state Supreme Court, which in January 2011 directed the lower court to take more evidence and hear additional arguments.

Farm Bureau has pursued this case for many years because we believe fees should be limited to the amount necessary to provide a service, not as a substitute for taxes,” CFBF Associate Counsel Carl Borden said. “The water right fee is simply an illegal tax.”

In his proposed decision, Judge Cadei said he would schedule a hearing to address whether all those who have paid the fees should be granted refunds. The case, California Farm Bureau Federation v. California State Water Resources Control Board, was consolidated with a similar challenge filed by the Northern California Water Association and other plaintiffs.

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