SAN BUENAVENTURA, CITY OF v. UNITED WATER CONSERVATION DISTRICT

Appellant, City of San Buenaventura, Reply Brief on the Merits

Cal.October 19, 2015

Exemptfrom Filing Fees No. S226036 Government Code § 6103 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA United Water Conservation District and Board of Directors of United Water Conservation District Defendants and Appellants / Cross-Respondents vs. City of San Buenaventura Plaintiff and Respondent/ Cross-Appellant SUPREME COURT REPLY BRIEF ON THE MERITS OCT #9 2015 Of a Published Decisionof the Frank A. McGuire Clerk Second Appellate District, Case No. B2518@ Deputy Reversing a Judgment of the Superior Court of the State of California County of Santa Barbara, Case Nos.VENCI 00401714 and 1414739 Honorable ThomasP.Anderle,Judge Presiding *MICHAEL G. COLANTUONO(143551) GREGORYG.DIAZ (156318) MColantuono@chwlaw.us GDiaz@cityofventura.net DAVID J. RUDERMAN(245989) City Attorney DRuderman@chwlaw.us CITY OF SAN BUENAVENTURA MEGAN S. KNIZE (257970) PO. Box 99 MKnize@chwlaw.us Ventura, California 93002-0099 COLANTUONO, HIGHSMITH & WHATLEY, PC 300 S. Grand Avenue,Suite 2700 Los Angeles, California 90071-3137 Telephone: (213) 542-5700 Facsimile: (213) 542-5710 Telephone: (805) 654-7818 Facsimile: (805) 641-0253 Attorneys for Respondent and Cross-Appellant City of San Buenaventura 156457.3 Exemptfrom Filing Fees No. $226036 Government Code § 6103 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA United Water Conservation District and Board of Directors of United Water Conservation District Defendants and Appellants / Cross-Respondents vs. City of San Buenaventura Plaintiff and Respondent / Cross-Appellant REPLY BRIEF ON THE MERITS Of a Published Decision of the Second Appellate District, Case No. B25180 Reversing a Judgment of the Superior Court of the State of California County of Santa Barbara, Case Nos.VENCI 00401714 and 1414739 Honorable Thomas P.Anderle, Judge Presiding *MICHAEL G. COLANTUONO(143551) GREGORYG.DIAZ (156318) MColantuono@chwlaw.us GDiaz@cityofventura.net DAVID J. RUDERMAN (245989) City Attorney DRuderman@chwlaw.us CITY OF SAN BUENAVENTURA MEGANS. KNIZE (257970) PO. Box 99 MKnize@chwlaw.us Ventura, California 93002-0099COLANTUONO,HIGHSMITH & Telephone: (805) 654-7818 WHATLEY, PC Facsimile: (805) 641-0253 300 S. Grand Avenue, Suite 2700 Los Angeles, California 90071-3137 Telephone: (213) 542-5700 Facsimile: (213) 542-5710 Attorneys for Respondent and Cross-Appellant City of San Buenaventura 156457.3 TABLE OF CONTENTS INTRODUCTION...ceeeccseecsssssssccssssscssssccssssssecsssessssessssessucsssussssssseersuecssseeraesase 9 LEGAL DISCUSSION ..0..eessssssssssesssssssecssssecssssessnsssscssssossssssessssssnsecersecssessssesuss I] I. UWCDMISSTATES THE STANDARD OF REVIEW.......0....-ccescceeeoes II Il. UWCD MISCONSTRUES THE FACTS.......cccccscsscsssssssssssescseeceeesussneenes 16 A. UWCDCannot ProveIts Fees Do Not Exceed Cost of Service ......eccsssssssssesssessssssssssssssssesssssssesssssssseseesuecaeseneseese 16 B. UWCDProvides a Service; It Does Not Regulate................. 20 Hl. UWCD MISAPPREHENDSTHECITY’S ARGUMENTGB...........0..00000. 22 IV. UWCD MAKESPAJARO 1A STRAWMAN.....ccccscsesssssssssscsecsseecseesssees 24 A. Groundwater Charges Are Property Related.........c.cccscesses 25 B. Proposition 218, Like Proposition 13, Impliedly Repeals Statutes Allowing Rates to Exceed Costu....ecscees 29 Cc. Richmond Found Water Connection Charges Outside Proposition 218 Because Procedural Compliance Was Impossible ............::.ssssssssssssesssesseesssesssessssesneeees 3| D. UWCD Can Comply with Proposition 218’s Cost PINCiPleS........s ee essessesseeceeessecsseecsscssssssesscsssseeaessesssssscssesesesuccneeserss 32 V. UWCD IGNORES BOTHSINCLAIR PAINTAND PROPOSITION 26 00... eeseececssessseessesssssesssscssccsscsnessscssesssssscssssssssessesensenees 38 A. Sinclair Paint Requires a Fair or Reasonable Allocation Of Service COSts0... ecsecsesscssesssssesssessssssesscssssssessssssesssssssseesseesecsess 39 B. Proposition 26 Does, T00......ssscssssssssssescenesssesssesssesssiesseeeneenes 40 C. Proposition 26 Requires Service Fees Be Imposed Only for Services Provided “Directly” to a Payor Without Free Riders...ccccscscsssssescsessssssssscssessssecessesscseceeccccceees 41 Vi. REMANDIS INAPPROPRIATE.........c.c:.ccccssesssecccccssscssccssosoceroscececcecceceees 42 CONCLUSION...cccecccssesececesssesessesssnssesseseescscssesssssssesesssesseceversrcecesesececeeees 44 2 156457.3 TABLE OF AUTHORITIES Federal Cases Marbury v. Madison (1803) 5 U.S. 137 woeeeeeeseseeceeeseecsesesesteseseessseecscseesesaeesanseseees State Cases Apartment Association ofLos Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal4th 830...eceecesesessesesssesesesssscseeseresestsecsees Barratt American,Inc. v. City of San Diego (2004) 117 Cal.App.4th 809 ..cccsssssssccsssssssssssssssssssssesseseeesee Beaumont Investors v. Beaumont-Cherry Valley Water Dist. (1985) 165 Cal.App.3d 227 sessssssssssussssssesssssssssssssssessessssstien Bighorn-Desert View Water Agencyv. Verjil Page(s) seeeees 14,15 seesserseeees27 seesenseceee29 seeeees 11, 43 (2006) 39 Cal.4th 205...ccccescssscsscsssssssssscssesesesssssseseesssssseeesseseseee25, 27, 30 Brydon v. East Bay Municipal Utility District (1994) 24 Cal.App.4th 179 ..cccsssssssssessssssssssssssesssessssessssssesiee California Assn. ofNursing Homes,etc., Inc. v. Williams (1970) 4 Cal.App.3d 800...ecceccssseetsssssssessesesseseesessessenes California Farm Bureau Federation v. State Water Resources Control Board sesssceasenee 21 sessensaesees43 (2011) 51 Cal.4th 42.ooeeesecesssteeetseseesssesseseesseseeeses 11, 34, 35 Capistrano Taxpayers Association v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1498 ..ecccccccssscssssesssssssssssssssssseeeessssee 156457.3 sesenee21, 28 City of Palmdale v. Palmdale Water District (2011) 198 CalApp.4th 926.000...eenscenstesnsesnensecseneanes21, 28 City of San Buenaventura v. United Water Conservation District (2015) 185 Cal.Rptr.3d 207...cssseesseseeeesetssecsensseeeeeseees25, 26, 28 Inre D.S. (2014) 230 Cal.App.4th 1238...eseserecseseneeeesseeseeseseeeasaeeeees 14 Garden Water Corp. v. Fambrough (1966) 245 Cal.App.2d 324 .....cccccccsessssssssesrssesesesnssssnessnsecseaserasneeees 25 Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586.00...cccsessessssenssseseeeseseseneseseeesenees passim Harris v. Superior Court (1992) 3 Cal.App.4th 661 .....cccccsssecscssssscssssscsseesscsessssssssseesenscaseaeeees 28 Homebuilders Ass'n of Tulare/Kings Counties, Inc. v. City of Lemoore (2010) 185 Cal.App.4th 554...escseesesesssneesesescseseeneseaceeeseeecaeeeess43 Hotel Employees and Restaurant Employees Intern. Union v. Davis (1999) 21 Cal4th 585.0... ccssscscscssstsesssesseeescecesesessacensseeeesseeeerseeeaes 31 Howard Jarvis Taxpayers Ass’n v. City ofFresno (2005) 127 Cal.App.4th 914...cesssesccceeseeeesessenseeensteeeeeeeeeeeees 37 Howard Jarvis Taxpayers Ass’n v. City of Roseville (2002) 97 CalApp.4th 637 ....cccccccssessssesssssesesecseerecsneseararenseseeneeeneees37 Kavanaugh v. West Sonoma Union High School Dist. (2003) 29 Cal4th 911.cccceeseseseseesesesessssseseserssessaseteesseeenassenees 13 Kolender v. San Diego County Civil Service Comm'n (2005) 132 CalApp.4th 716.00...ccceeseeeseseeeeasesseeeenssesesteeeeeeseeeees 12 4 156457.3 Moorev. City ofLemon Grove (2015) 237 CalApp.4th 363.00... ccsccscssesssesseseseesssesesecsseesssseneeeees 11, 13 Morgan v. ImperialIrrigation District (2014) 223 Cal.App.4th 892.00... cccessceeeesessneeeseteeeeeees 11, 12, 13, 37 Orange County Water District v. Farnsworth (1956) 138 Cal.App.2d 518 uo. eccccccccsscesesseenseseesseseecesseenseaesees 26, 27 Pajaro Valley Water Mgmt. Agency v. AmRhein (2007) 150 Cal.App.4th 1364.00...ceescsseesseeeeeseseeeeeeeeeseeees passim People v. Cromer (2001) 24 Cal4th 889.00...ecsesessseeseseesesesenseaseseesscasenenseensaceees 12 Professional Engineers in California Governmentv. Kempton (2007) 40 Cal4th 1016.0...cesesescsesesseseeseessesseeseseeenessnseseenages 13 Richmondv. Shasta Community Services Dist. (2004) 32 Cal.4th 409.0...ceeeeseeeesesneceecesscesscenesscessaneees24, 27, 31, 32 Schmeer v. County of Los Angeles (2013) 213 Cal.App.4th 1310...eeeeeececscssecsessssescsnsnsessseesesees39 Silicon Valley Taxpayers Ass’n, Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal4th 431ooecceceseeeessceeseceeecseesenessanenesecsnsesseeseaes37 Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal4th 866.000...cesses eseeeeeeseseseeesesnseeeeseesaessenees38, 39, 40 State Bldg. and Const. Trades Council of Cal., AFL-CIO v. City of Vista (2012) 54 Cal4th 547occceecccscsessesecscasssssesssescessesssssessesseesaesesetens 15 Trask v. Moore (1944) 24 Cal.2d 365cecesseeteesserssssserssssssssesesssssessesseeesees25, 26 Ventura Group Ventures, Inc. v. Ventura Port Dist. (2001) 24 Cal4th 1089...ceeeseceescessceeesensnseeseesssecesenseseneeee29, 30 5 156457.3 Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova (2009) 40 Cal.4th 412.0.cesseseseescesessssscsesesessseseeeesneeeseeeeeseseeseees 12 Voices of the Wetlands v. State Water Resources Control Bad. (2011) 52 Cal.4th 499.0.esesessseeeessenseseerssesssecsescesesseeseeeeeeeeesees44 Walker v. City of San Clemente (2015) 239 Cal.App.4th 1350.0... eceessscsessesseseeesceeseseaeneeeenens43, 44 Water Replenishment District of Southern California v. City of Cerritos (2013) 220 Cal.App.4th 1450.0.cecsecsescsssessseseressseeneeetaeeseeeees36 Western States Petroleum Association v. Superior Court (1995) 9 Cal4th 559ocecesescceessecsseseeeseeesseseeeeessesssetessetetaes passim California Constitution Article TL, § 3 ..cccccccsssscsssssessessessessesscessseeseessesesseseeessesnessesnessessssesanes 15 Article TIL, § 3.5, Subd. (a) ceecceccesceseessesesseseessessessceeseesesseeesneeseees43 Article X, § 2 eeeecscesecscteeseeeeseesceceeteceseeseessesesssesceceeacesseesseaes 20, 21, 23 Article XID C cece csesccssecesseeessesseceeeeesseeseseeseesesesesssesseseseeeseessens 21, 36 Article XIII C, § 1, subd.(€) ....eccccceccssscsessetecssceessenseseees 11, 38, 40, 41 Article XIIC, § 1, subd. (e)(1) occ eeceeessssseseesesseeeeeeccesseneaeensens40, 41 Article XII C, § 1, subd. (€)(2) ....ceeeccsessseseeseesessesseseeesenens 19, 40, 41 Article XIII C, § 1, subd. (€)(7) ....ceccccesesssseeseseessseeseeeseseessseenesees29, 40 Article XII D ooo. ccccsctcssssseesssescesceceeceeesseseesseecsssesecesesesseaeens21, 33, 36 Article XIII D, § 1, subd. (€).......eeessescesccssesessesescssessesseseasecseeesessesees20 Article XIII D, § 2, Subd. (2)...ceccssceesccseseeeseeeeeeseseeneteeetseeeseeeeneaees30 Article XII D, § 6, SUD. (a)...eeccesseeeceteeeeteceeeeesesseseesesseeseeasenees32 Article XIII D, § 6, subd. (a)(1) occeeccececeeeesseeescessesseseeeeesssseeaees32 Article XIII D, § 6, subd. (D)(1)oeeeeseeessesseseeseescescsecsseseeseeesesees26 Article XIII D, § 6, subd. (D)(2)......cc ccceescssseseeseescessssesssceseseesseeeeesees 26 Article XIII D, § 6, subd. (D)(3) 0... eescccctsscesessesesseeeesseesensees 20, 26, 31 Article XIII D, § 6, subd. (D)(4)0ccceeeesessesessssessenssesseseeseaeeee 35, 36 Article XIII D, § 6, subd. (b)(5)....ee ceecceesceseeseseeeeesesseseesessessscseeeees 11 6 156457.3 Statutes Code of Civil Procedure § 1094.5, SUDA. (€)......eeeeesceseecensescecenseecscecesesceesesseeeeeeeeseseessessessessrenees44 Government Code § 53750, SUDA. (IM)... eceecesecesessessessesecsescesesesscsecseessesscessecseeresesees21, 36 Water Code § 102eee eececcstcesecessetcessessessssessscsssecsecsecseceeesecsussesssessecessessecsssessssseceease 26 § 10723, subd. (c)(1)(D) & (2) ...ececececccssssesessesecessensecsseesecessesseseseenees20 G 72D oo eeccsssessessccsscesteessessesessecscecseessecseceessesscssssessscstecesscausussessssessusesees42 § 75571 oo ecscccsssscescenscesscescescssesseessessccsecseecssessessssesecssscsceusssecseseessssssesssvnes43 § 75573 oo eccscccscesesssccsecsessessesseeecescessecnecseccstesessesssecsesessseessecseussccssssssnaeess43 § 7559S oo. eeeccsccscssccssceesecsscssessssscsscessesseessessseseeseeecsesssesseeceasecasessseecsaseeesass 31 § 75594 oe eccscsscessscssessscessesessesscensecsecsseessecseseesscesseesesessseenese30, 31, 43, 45 Rules Cal. Rules of Court, rule 8.500(C)(2)......cccccscsssssssssssssesrscsseeesscsesseessenes 13 Other Authorities Stats. 1965, ch. 1836, § 2....cccscsccsscssessccsscecesessssestectsessecssseesssesesecsees 16, 17 Great Oaks Mutual Water Company v. Santa Clara Valley Water District (Rehearing granted Apr. 24, 2015 & Sept. 10, 2015, F035260).....cceessesscsecessssceceesnsssssscssssseueecsscssarensceeessceesecedseesenenseserseees25 Borgmann, Appellate Review of Social Facts in Constitutional Rights Cases (2013) 101 Cal. L.Rev. 1185, 1209-1210...eeeeeseseeseseeeeeeseeseeeeees 14 156457.3 Heise & Sisk, Religion, Schools, and Judicial Decision Making: An Empirical Perspective (2012) 79 U. Chi. L.Rev. 185, 192... ccccccescssccssesssssscsssssctssceesseeeees 15 Monaghan,Constitutional Fact Review (1985) 85 Colum.L.Rev. 229, 268 ......cccccccceccsssssscscsscsesssceeeenees 14,15 Woolhandler, Judicial Deference to Administrative Action—A Revisionist History (1991) 43 Admin. L.Rev. 197, 239 woesccecsscessccssesseceesseseeasees 14 156457.3 INTRODUCTION The AnswerBrief is remarkable for it omits. Appellants and Cross-Respondents United Water Conservation District andits Boardof Directors(collectively, “UWCD”) barely acknowledgethat UWCDlegislated a separate rate for customers overlying certain groundwater basins — the Zone B rate — to recoverits cost to construct and operate its Freeman Diversion Dam. This cannot be reconciled with UWCD’sclaim it cannotallocate its costs in proportion to the benefits its services provide, as Propositions 218 and 26 demand. (AnswerBrief (“AB”) at pp. 13, 38.) The AnswerBrief also barely mentions UWCDcharges non-agricultural groundwaterusers three times whatit charges agricultural users. UWCDoffers no defense of this 3:1 ratio under the cost-allocation requirements of Proposition 218 or Proposition 26. These omissions cannotjustify UWCD’s mandate that non-agricultural groundwaterusers subsidize agriculture. The AnswerBrief defends claims Respondent and Cross- Appellant City of San Buenaventura (“the City”) does not make, ignoring those it does. The City does not challenge UWCD’s authority to recharge groundwater. Nor does the City denigrate the value of UWCD’sservices. Or claim it does not benefit from those services. Rather, the City challenges the 3:1 rate ratio. It asks UWCD to properly accountforits costs, use rate proceeds lawfully, and reasonablyallocate costs among customers. The City will happily 156457.3 payits share of UWCD’scharges, but cannot subsidize agriculture in violation of our Constitution. Finally, remandis not appropriate. UWCDis notentitled to yet another opportunity to make a record to sustain its rates. The law does not permit one-sided reopening of rate-making disputes. Otherwise, such cases would never end. UWCDborethe burden to make a record adequateto sustain its rates and failed to do so. Moreover, remand would be futile, as two administrative records are present here. UWCD madethe second with detailed knowledge of the City’s arguments. That UWCD madenobetter record in the secondyear suggests third bite at this apple is unwarranted. Moreover, it would befifth bite at the apple — UWCD maderates in eachof five fiscal years since this dispute arose. It will do so yet again next June, likely before this case is resolved. Remandis simply not warranted. Accordingly, this Court can confidently reverse the Courtof Appeal and affirm thetrial court’s conclusionsthat the 3:1 rate ratio cannotsatisfy our Constitution’s demands regardless of whether Proposition 218 or Proposition 26 controls. Further, this Court can grant the declaratory relief sought by the City’s cross-appeal to enforce UWCD’s otherconstitutional duties. 10 156457.3 LEGAL DISCUSSION I. UWCD MISSTATES THE STANDARD OF REVIEW This Court’s guidance as to the mechanics of Propositions 218 and 26 challengesis plainly necessary. Although the OpeningBrief on the Merits (“OB”) describes a rational system that respects precedent but requires de novo review of UWCD’srecords, language from recent cases allows UWCDtoargue for deferential appellate review.(AB at pp. 16-18.) A rate-maker has two burdens whenits rates are challenged. First, it must producea record adequate to supportits rates. (Beaumont Investors v. Beaumont-Cherry Valley Water Dist. (1985) 165 Cal.App.3d 227, 236-237 [applying Prop. 13] (Beaumont).) Second,it has the burden of persuasion thatits rates are not taxes. (Cal. Const., art. XIII D, § 6, subd.(b)(5) [Prop. 218]; art. XIII C, § 1, subd.(e) [final paragraph].)! A challenger must make a primafacie case that rates are unlawful. Doingso triggers the rate-maker’s burden of persuasion. (California Farm Bureau Federation v. State Water Resources Control Board (2011) 51 Cal.4th 421, 436 (Farm Bureau) {applying Prop. 13]; see also Morganv. Imperial Irrigation District (2014) 223 Cal.App.4th 892, 913 [appellant must identify errors on appeal underProp. 218] (Morgan); Moorev. City ofLemon Grove (2015) 237 Cal.App.4th 363, 368 [same, citing Morgan] (Moore).) 1 References to articles and sectionsof articles in this Brief are to the California Constitution. 11 156457.3 Under Western States Petroleum Association v. Superior Court (1995) 9 Cal.4th 559 (Western States), judicial review of rate-makingis generally limited to the administrative record. Review of factual findings on conflicting evidence, however,is for substantial evidence. (People v. Cromer (2001) 24 Cal.4th 889, 994.) But, if a trial decision did not turn on disputedfacts, de novo review is appropriate. (See Kolender v. San Diego County Civil Service Comm'n (2005) 132 Cal.App.4th 716, 721 [trial and appellate scope of review identical in administrative mandate].) Thus, if the trial court reviewed a “cold” administrative record, review is de novo. (Vineyard Area Citizens for Responsible Growth v. City ofRancho Cordova (2009) 40 Cal.4th 412, 427 [de novo appellate review of administrative record].) These standards apply unless a rate-making agency waives the Western States rule and offers — or allowsa petitioner to offer — extra-record evidence. Then,trial court findings are reviewed for substantial evidence. (Morgan, supra, 223 Cal.App.4that p. 915).) This Court canassistlitigants and the lowercourtsbyplainly stating these rules here. UWCD’sdesire for appellate deference to lower courtfindings is partial, however. It attacks Judge Anderle’s conclusion that neither administrative record here supports the 3:1 ratio of non-agricultural to agricultural rates, while seeking deferenceto his findings on cost- accounting issues. (AB at pp. 14-15, 17.) The law is more consistent. 12 156457.3 Only Morgan supports UWCD’sargumentfor deference and the agency there waived the Western States rule. (Id. at p. 17.) Although this Court does not grant review to resolve factual disputes, on review,it has the samerole as the Court of Appeal. (Cal. Rules of Court, rule 8.500(c)(2) [rehearing required to preserve factual issues for Supreme Court].) The City did, of course, seek rehearing here to question facts stated in the Court of Appeal’s opinion unsupported by the records.(Petition for Rehearing (“Petn.”) at pp. 16-20.) Because the City asserted the Western States rule, Judge Anderle properly tried these cases on UWCD’s administrative records. (11JA:103:2473-2474; 10JA88:2134.) Accordingly, no facts are disputed here, despite UWCD’s contrary claim. (ABatp. 11.) Instead, the parties dispute the weight and legal significance of the evidence, not the records’ authenticity or accuracy. Whethera chargeis a tax or a fee is a question of law reviewed de novo.(Kavanaugh v. West Sonoma Union High School Dist. (2003) 29 Cal.4th 911, 916; Professional Engineers in California Government v. Kempton (2007) 40 Cal.4th 1016, 1032; Moore, supra, 237 Cal.App.4th at p. 369.) The doctrine of constitutional facts is not limited to federal constitutional claims, as UWCDurges. (AB at pp. 17-18.) This doctrine allows de novo review offactual issues on which constitutional rights turn, recognizing the “importantjudicial role in preserving the constitutional order is adequately insured by the 13 156457.3 universal judicial duty to expound andrefine the applicable constitutional law.” (Monaghan, Constitutional Fact Review (1985) 85 Colum.L.Rev. 229, 268 [Monaghan]; see In re D.S. (2014) 230 Cal.App.4th 1238, 1245 [mixed questions of law andfact (such as constitutional right to due process before terminating parental relationship) are reviewed de novoif the inquiry requires “a critical consideration, ina factual context, of legal principles and their underlying values [and thus] is predominantly legal”’].) That constitutional tort actions have remained exemplars of the de novo model of review seems entirely appropriate, not only because of their common- law antecedents, but also because “[i]n constitutional adjudication, Marbury indicates that the court’s [interpretive] duty is that of supplying the full meaning of the relevant constitutional provisions (except for ‘political questions’).” (Woolhandler, Judicial Deference to Administrative Action—A Revisionist History (1991) 43 Admin. L.Rev. 197, 239.) Deferential review oftrial court fact finding would frustrate judicial developmentof constitutional norms. Questions of law and fact commonly intertwine. (Borgmann, Appellate Review of Social Facts in Constitutional Rights Cases (2013) 101 Cal. L.Rev. 1185, 1209-1210; Woolhandler, supra, at p. 240 [“Policing of the law necessarily 14 156457.3 requires somepolicing of the facts, and especially the application of law to fact.” (citations omitted)].) Finally, de novo review of constitutionalfacts serves a “need to guard against systemic bias brought aboutor threatened by other actors in the judicial system.” (Monaghan,supra, at p. 272.) This review will ease fears of “systemic distortion of fact finding and law application.” (Ibid.) Moreover,trial and appellate judges “share parallel responsibilities for resolving contested constitutional questions” to prevent “the idiosyncrasies of a single judgeorjury from having far-reaching effects.” (Heise & Sisk, Religion, Schools, and Judicial Decision Making: An Empirical Perspective, (2012) 79 U. Chi. L.Rev. 185, 192.) Noneof these considerations —the courts’ role in declaring law under Marbury’s, the need to develop constitutional norms consistently and authoritatively, or institutional competence — is uniqueto the federal Constitution. This Court, too, has followed Marbury v. Madison (1803) 5 U.S. 137. (E.g., State Bldg. and Const. Trades Council of Cal., AFL-CIO v. City of Vista (2012) 54 Cal.4th 547, 565.) Our Constitution also embodies the separation of powers. (Cal. Const., art. III, § 3.) Our legislators, administrators, trial and appellate courts have institutional competencies comparable to their federal peers. Thus, UWCD’sfails to persuadethat the doctrine of constitutional fact is limited to federal constitutional questions. 15 156457.3 Accordingly, this Court should not insulate fact finding as to our Constitution’s demands for governmentrate- and fee-making from appellate review, but should employ de novo review — especially on review of cold administrative records as to whichtrial and appellate courts have equal vantage. In any event, the City respectfully urges this Courtto clarify the standard of appellate review of Proposition 218 and 26 challenges both whenthe Western States rule has been applied and whenit has not. Il. UWCD MISCONSTRUES THE FACTS A. UWCDCannot Prove Its Fees Do Not Exceed Cost of Service UWCDclaims“the fee did not exceed UWCD’s reasonable groundwaterprotection costs.” (AB at p. 1.) However, whatlittle evidenceit marshals for the claim does not outweigh contrary evidence. The claim seawaterintrusion is “primarily an urban problem” based ona bald, half-century-old, legislative declaration is simply untenable. (AB at pp. 6-7 [citing Stats. 1965, ch. 1836, § 2].) As the Opening Brief notes, UWCD’s records demonstrate otherwise. (OB at pp. 10-11; AR1:62:0034 [“A second reason for maintaining the currentratio is that the majority of the overdraft in the Oxnard [P]lain aquifers has been caused by agricultural pumping in the eastern/southern part of the plain” ]; AR2:53:0034 [same].) The City’s 16 156457.3 Oxnard Plain wells, however, are at its northwestern edge, far from the pumping hole. (Ibid.; see also AR1:78:0013.) UWCD’s records further show it spends muchto addressagricultural overdraft, and its “current operations and long-range planning efforts are focused heavily on [the eastern/southern Oxnard Plain] area.” (AR1:62:0069; AR2:53:0069 [same]; see also AR2:54:0004.) UWCDclaimsit funds state water import costs by a voter- approved assessment,citing its 2011 Water Study andits special fund balance sheet for the FY 2011-2012 Proposed Annual Budget. (AB atpp. 8 [citing AR1:22:0026;id. at pp. 0071-0073; AR1:62:0020; id. at p. 0047].) UWCDalso cites the water fund’s balancesheet in the FY 2012-2013 Proposed Annual Budget, concluding “[nJeither the City nor its residents pay this assessment.” (AR2:106:0058.) However, these record citations do not address the City’s arguments. (OBatp.48.) If the City does not pay UWCD’sstate watercosts, why are “State Water Import Costs” a budgeted expenditure from UWCD’s General Fund/Water Conservation Budget — funded by Zone A revenues? (AR2:106:0043 [General Operating Activities Fund accountsfor all expenditures for conservation in Zone AJ];id. at p. 0049.) Moreover, UWCD’sterse defense of its cost accounting does not persuade.(ABat pp. 48-49.) The Court of Appeal opinion which UWCDcites(id. at p. 48) is not evidence, especially as the City’s Petition for Rehearing apprised the Court of Appealits factual 17 156457.3 recitation was unsupported bythe records. (Petn. at pp. 16-20.) Unhelpful, too, is UWCD principal act. (ABat p. 49.) That UWCD has a dutyto limit its charges to cost is not evidence it did. These statutes show onlythat the failure of cost accounting the Opening Brief demonstrates is both a statutory anda constitutionalviolation. (OB at pp. 42-52.) UWCD'srecordcitations are equally unconvincing. UWCD claimsit uses fee proceeds only for “water conservation, management, and replenishmentactivities,” citing resolutions and its FY 2012-2013 Proposed Annual Budget. (ABat p. 48[citing AR1:71:0006; AR1:72:0003-0004 [resolutions]; AR1:22:0056-0060; AR2:106:0041—45 {budget text].) However, the budgets appropriate Zone A revenuesfor water treatment chemicals and water imports. (See AR1:22:0058.) Further, UWCDclaims groundwater revenues were “appreciably less” than budgeted in FYs 2011-2012 and 2012- 2013. (AB at p. 48.) However, FY 2012-2013 revenue produced a budgetsurplus. (AR2:106:0047.) UWCD’s unexplainedstringcites to the records simply do not convincethat it uses proceedsof the Zone A charge only to serve those whopayit. UWCDalsocites a single page of the transcriptof its June 13, 2012 hearing to claim fees on Zone A producers payonly for services that benefit them. (OB at pp. 48-49 [citing AR2:175:0075].) This isolated, self-serving statement that rates do not exceed the cost of service does not refute the record evidencethe City cites to show 18 156457.3 UWCDcommingles Zone A proceeds with unrestricted funds and uses the balancefor a range of purposes unrelated to groundwater augmentation. (OB at pp. 55-57.) Additionally, UWCDarguesit serves the City and others at no cost, using non-rate revenue.(ABatp. 49 [citing AR1:22:0071-0073; AR2:106:0058-0060].) UWCD’s Board, however, did notfind the City benefits from programsfor whichit does not pay. (AR1:72:0004— 0005; AR2:149:0004-0006.) UWCD thus impeachesits ownrates, especially if — as it contends — Proposition 26 providesthe rule of decision here. (Cal. Const., art. XIII C, § 1, subd. (e)(2) [fees may fundonlya service “that is not provided to those not charged”].) UWCDcannotexplain why non-agricultural users alone benefit from services funded from non-rate revenue. That the City does not pay for these services doesnotjustify higher groundwater charges on it if agriculture receives those services, too, and also pays groundwaterrates at one-third the rates charged the City. UWCD'scitation of proposed budgets for FYs 2011-2012 and 2012-2013 to claim the Freeman Diversion Fund “containsall revenue in Zone B”is equally puzzling. (AB at p. 49.) Those pages do not show howcapital expensesare allocated to the Zone A (District-wide) and Zone B (Freeman Diversion) funds, but onlythat they are allocated. As discussed in Part V.C below, the law requires more. 19 156457.3 Thus, UWCDdoesnotprovide “detailed analysis of anticipated costs anda fair allocation of the fees necessary to fund UWCD's regulatory purposes.” (ABatp. 29.) It bears the burden under either Proposition 218 (Cal. Const., art. XII D, §6, subd. (b)(3)) or Proposition 26 (id., § 1, subd.(e) [final paragraph]) to proveits fees do not exceedits service cost, but the City has shown otherwise. B. UWCDProvidesa Service; It Does Not Regulate UWCDalsoerrs to argue it regulates groundwateruse. (AB at p. 29.) It does not. Groundwater managementis reserved to the Fox Canyon Groundwater Management Agencyin the southern portion of UWCD’sterritory and to a yet-to-be-designated Sustainable Groundwater Management Agencyelsewhere. (City’s Sept. 26, 2014 Supplemental Letter Brief at pp. 4-5 [citing Wat. Code, § 10723, subd.(c)(1)(D) & (2)].) Obtaining and delivering wateris a “service” under any reasonable definition of the term. Moreover, forall its prolix discussion of the values of water conservation underarticle X, section 2 andits principal act, UWCD has no reply to the City’s observation UWCD’srates do not encourage conservation. (AB at pp. 4-5; 38-40.) Rather, they promote such wasteful practices as replacing water-efficient orchards with water-hungry berry crops over a deep,coastal, pumpinghole. (OBatp. 39 [citing AR1:22:0139].) UWCD’sflat rates thus arguably violate its obligation underarticle X, section 2 to avoid waste. 20 156457.3 Conservation rates to serve a regulatory purposeas hypothesized in Pajaro Valley Water Mgmt. Agency v. AmRhein (2007) 150 Cal.App.4th 1364 (Pajaro I) would look morelike the tiered rates challenged in Brydon v. East Bay Municipal Utility District (1994) 24 Cal.App.4th 179, 195 (inclining block rates not taxes under Prop.13), City ofPalmdale v. Palmdale Water District (2011) 198 Cal.App.4th 926, 934-938 (such rates require cost justification under Prop. 218) and Capistrano Taxpayers Association v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493, 1505-1507, 1515-1516 (same) than UWCD’s flat rates with deep subsidies for agriculture. UWCD’sclaim its rates serve such a regulatory purpose (AB at pp. 32-33)cites only thetrial court’s conclusion UWCD’s charges have a regulatory purpose. (ABatp. 33, fn. 8.) However, this is not proof the charges serve that purposeso as to escape Proposition 218. Nor is UWCDdistinct from retailers subject to Proposition 218 in its responsibility to conserve water. (AB at p. 30.) All water providers have a range of duties. (E.g., Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586, 595 (Pajaro II) [“water service” includes producing, storing, supplying, treating, or distributing water]; Gov. Code, § 53750, subd. (m) [defining “water” underarticles XIII C and XIII D].) Article X, section 2’s broadly stated prohibition on waste applies to all water use —wholesale or retail. UWCD’s distinction is not even a difference. It therefore 21 156457.3 cannot marshalevidence that its charges escape Proposition 218 as regulatory, rather than service,fees. Il. UWCD MISAPPREHENDS THECITY’S ARGUMENTS The City does not question the value of UWCD’sservices. (ABatp. 36, fn. 9.) Nor doesit claim it receives no benefit from them.(ABatpp.6, 9.) Or question UWCD’sauthority to recharge groundwater.(Id. at p. 40.) The City has no doubtthere is “some” hydrological link among the eight basins. (Id. at pp. 8, 13, 47.) Rather, the City notes the records here show theeight basins benefit disparately from UWCD’sservices and arguesit must apportionits costs among usersin each basin in proportion to that disparate benefit. (OB at pp. 10-17; Respondent's Brief and Cross-Appellant’s Opening Brief at pp. 11-21; Cross-Appellant’s Reply Brief at pp. 5- 11.) UWCD’s ownrecords — and the very existence of the Freeman Diversion Dam Zone B — showthatflow from basin to basin varies greatly. For example, the seminal work on these basins concluded “there is essentially no possibility of water moving from the Oxnard aquifer to the Mound Basin.” (AR1:4:0005; AR2:5:0070.) Nor does groundwater from the Santa Paula Basin meaningfully recharge the neighboring MoundBasin; instead 22 156457.3 [a]dditional geophysical, water chemistry, and groundwaterlevel data may be necessary to adequately define the subsurface flow between Santa Paula Basin and the adjacent Mound and Montalvo [a.k.a. Oxnard Forebay] basins. (E.g., AR1:34:0009; AR2:66:0013.) Moreover, because the MoundBasinis relatively isolated, conservation releases do nothingforit. (AR2:165:0021 [depicting City’s MoundBasin wells]; AR1:22:0144 [water releases provide no benefit to Mound Basin].) Moreover, UWCD’srate study showsthe MoundBasinreceiveslittle benefit from Lake Piru releases. (Ibid. [Mound Basin not among basins benefitting from lake releases].) Yet the City’s production there funds those releases in equal measure with production in other (primarily agricultural) basins which do benefit from those releases. (OB at pp. 13-14 [citing AR1:22:0144].) Indeed, UWCDconcedesthepoint. (AB at p. 13.) Similarly, the Santa Paula Basin does not respond to recharge at the Saticoy spreading ground. (AR1:81:0017, 0022.) As the OpeningBrief notes, groundwaterlevels in the Mound and Santa Paula Basinsdiffer by more than 100 feet, confirming that mountains and faults are boundaries to groundwater flow between the two. (OB at pp.9, 23-24 [citing AR1:16:0122 (identifying boundaries to groundwaterflow); AR1:28:0062 (“dramatic” groundwaterelevation differences)].) 23 156457.3 UWCDclaims underflow from Santa Paula Basin supplies MoundBasin. (AR2:164:0005-0006.) But UWCDoverlooksits citation to the Combined 2009 and 2010 Santa Paula Basin Annual Report, whichstates “[a]dditional testing may be necessary to adequately define the subsurface flow between Santa Paula basin and the adjacent Mound and Montalvobasins... .” (AR2:66:0013.) UWCDalso cited maps of MoundBasinto claim the basins are connected, butfails to note these are of “generalized conceptual groundwaterflow paths.” (AR2:52:0045; AR1:113.) UWCD grasps at straws. The issues become, then, how UWCDallocatesthe cost ofits services amongbeneficiaries, how it spends rate proceeds,andits utter inability to demonstrate that agricultural customers can be served at one-third the cost of others who draw the same water from the samebasins replenished by the samefacilities. IV. UWCD MAKESPAJARO |! A STRAWMAN Someof the difficulty of this case arises from the hybrid nature of groundwater recharge. To a waterretailer like the City, UWCDactslike a wholesaler. As to a rural residential groundwater user, however, UWCDactslike a retailer. This confoundsthe usual rules that wholesale water providers are subject to Proposition 26 because they do not provide a property related service andretail water providersare subject to Proposition 218 because they do. (Richmond v. Shasta Community Services Dist. (2004) 32 Cal.4th 409, 24 156457.3 428 (Richmond) [water connection charges not subject to Proposition 218, dicta suggesting water service fees are]; Bighorn- Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205, 216 (Bighorn) [initiative reduction of water service fees within Proposition 218 becausefees paid for property related service].) A. Groundwater Charges Are Property Related The Sixth District found groundwater augmentation charges subject to Proposition 218 in disputes broughtby residential groundwaterusers.(Pajaro I, supra, 150 Cal.App.4th at p. 1364; Pajaro II, supra, 220 Cal.App.4th at p. 586.)? The SecondDistrict disagreedhere. (City of San Buenaventura v. United Water Conservation District (2015) 185 Cal.Rptr.3d 207 (Buenaventura).) Like the proverbial blind men andthe elephant, which part of the problem one grasps influences how one perceivesit. The City respectfully submits the Sixth District’s conclusions are more persuasive. The right to use groundwateris a property right. (Trask v. Moore (1944) 24 Cal.2d 365, 370; Garden Water Corp. v. Fambrough (1966) 245 Cal.App.2d 324, 327.) There is no meaningful distinction betweenthe right to use water on the parcel from which ? As both parties note, the Sixth District will review these issues a third time in a case, reheard a second time: Great Oaks Mutual Water Company v. Santa Clara Valley Water District. (H035260, rehg. granted Apr. 24, 2015 & Sept. 10, 2015 [2015 WL 1393289].) 25 156457.3 it is drawn (an overlying water right) and the rightto distributeit (an appropriative water right); both are appurtenantto the wellsite. (OB at pp. 34-35; Trask, supra, 24 Cal.2d at p- 370.) Indeed, water extraction is “more intimately connected with property ownership” than is receiving delivered water. (Pajaro I, supra, 150 Cal.App.4th at p- 1391.) UWCDomitsa critical part of Water Codesection 102 to argue the City does not ownits water rights. (AB at p. 35.) That section provides: All water within the State is the property of the people of the State, but the right to the use of water may be acquired by appropriation in the manner provided by law. Thus, the right to use water is connected with property ownership. UWCDgrantsnoprivilege here. It provides a service for which may recoverits costs in compliance with our Constitution’s cost-of- service limits (Cal. Const., art. XIII D, § 6, subds.(b)(1), (2) or id., art. XIIEC, § 1, subd.(e)(2)) and its cost-allocation requirements (Cal. Const., art. XIII D, § 6, subd. (b)(3) orid., art. XIII C, § 1, subd.(e) [final paragraph]). Its contrary claim (ABatp. 1) is simply wrong. Reliance on Orange County Water District v. Farnsworth (1956) 138 Cal.App.2d 518 (Farnsworth), a post-World WarII authority characterizing groundwater chargesas an excise tax rather than a servicefee, is unavailing. (AB at p. 26; Buenaventura, supra, 185 26 156457.3 Cal.Rptr.3d at p. 222.) This dated case cannot teach much about distinctions between taxes and fees established by 1978's Proposition 13, 1996’s Proposition 218, and 2010's Proposition 26. Farnsworth’s broad language simply does not accountforlegal categories established decadeslater. UWCDseeksshelter in Apartment Association ofLos Angeles County, Inc. v. City of Los Angeles (2001) 24 Cal.4th 830. (AB at pp. 21- 22, 25-28.) It rejects Pajaro I’s compelling, contrary analysis, suggesting its reasoning is “odd.” (ABat p. 31.) But Pajaro I persuasively demonstrates logical tension between Apartment Association and Bighorn which this Court may wish to address. Surely the rural residents who paythe charges challenged here need not vacate their homes to avoid UWCD’sfees as an apartment owner might be expected to exit the multi-family housing market to avoid regulation of that market. UWCDignoresthat the fees here apply to rural householders and the City alike. (AB at pp. 23, 27.) UWCDsimply overlooks this Court's essential insight in Richmond and Bighorn that property ownership is meaningless withoutuse, and mostland uses require water. (Richmond, supra, 32 Cal.4th at p. 426 [supplying water a property related service]; Bighorn, supra, 39 Cal.4th at pp. 216-217 [ongoing water delivery a property related service].) Recognizing that Bighorn is a problem forits case, UWCD labels its essential holding “dicta.” (AB at p. 31.) It was notdicta to 27 156457.3 hold that water service charges are property related fees subject to Proposition 218 even if based on measured consumption.(Pajaro I, supra, 150 Cal.App.4th at p. 1398.) Those facts were essential to the cases and defeat UWCD’s contrary argumentthere. For rural residents, UWCD’s groundwater augmentationis a vital water source. (AR1:62:0030, 0038 [District charges residential customers]; id. at 72:0004 [reference to residential customers]; 4]A:32:0683.) Why should they be denied the protection Proposition 218 affords their neighbors in Ventura County’scities? UWCDarguesthere are too few residential groundwater usershereto justify application of Proposition 218. (AB at pp. 32- 33.) Its only supportis citation to the opinion below. (Buenaventura, supra, 185 Cal.Rptr.3d at pp. 221-222.) As the Opening Brief demonstrated, the Court of Appeal’s statement cannot be sustained on this record. (OBat pp. 30-31.) Similarly, UWCD’sefforts to limit Palmdale and San Juan Capistrano to urban water systems are unpersuasivein lightof PajaroI. (ABat pp.14, 38, 41.) Mere observation that many Proposition 218 cases involvedretail rates for piped, treated water does not distinguish Proposition 218 here. (AB at p. 41.) As Justice Gilbert aptly put it: “The Palsgraf rule, for example, is not limited to train stations.” (Harris v. Superior Court (1992) 3 Cal.App.4th 661, 666.) That this Court has not yet addressed whether Proposition 218 applies to groundwater charges does not decide the point. UWCD 28 156457.3 provides no persuasive rebuttal of Pajaro I’s reasoning which brings this case within Proposition 218. Nor does it answer Pajaro I to observe it predates Proposition 26. (ABat p. 42.) That latter measure expressly exempts revenue measures subject to Proposition 218. (Cal. Const., art. XIII C, § 1, subd.(e)(7).) Thus, if UWCD’s rates are subject to Proposition 218, Proposition 26 does not changethat fact. B. Proposition 218, Like Proposition 13, Impliedly Repeals Statutes Allowing Rates to Exceed Cost UWCDcorrectly notes that implied repealof statutes is disfavored. (ABat p. 1.) Indeed, the rule has been applied to a dispute under Proposition 218 regarding a statute of limitations — a topic as to which Proposition 218 is silent. (Barratt American, Inc.v. City of San Diego (2004) 117 Cal.App.4th 809, 817.) It is no great task to harmonize a statute with constitutionalsilence. However, when voters amend our Constitution to adopt fundamentally newrules, inconsistent statutes must give way. This is true as to Proposition 13 and its progeny, Propositions 218 and 26. Ventura Group Ventures, Inc. v. Ventura Port Dist. (2001) 24 Cal.4th 1089 (Ventura Group Ventures) considered whether Proposition 13 vitiated statutes authorizing the port to impose a property tax. This Court held “the question is what the voters intended when they adopted Proposition 13,” and concludedvoters intended to discontinue the port’s powerto tax. (Id. at p. 1099, original 29 156457.3 emphasis.) Legislation implementing Proposition 13 superseded the Port's principal act where the two wereinconsistent. (Ibid.) Here, as UWCD admits, it must impose “uniform” rates on rural residents and the City under Water Codesection 75594. (AB at p- 5.) However, those rural residents are entitled to the same protection against excessive water rates Proposition 218 requires for those served piped water. (Pajaro I, supra, 150 Cal.App.4th at pp. 1388-1389.) Thus Proposition 218 applies to protect UWCD’s residential customers, and the City is protected by the uniform-rates requirement of UWCD’s principalact. The City may “not stand in the same shoes as” UWCD’sresidential customers(ABatp. 33, fn. 7), but need only pay rates “uniform”with theirs. Moreover, UWCDoverlooks article XIII D, section 2, subdivision(g): “Property ownership” shall be deemed to include tenancies of real property wheretenantsare directly liable to pay the assessment, fee, or charge in question. Thus, rural residents who use groundwater for domestic purposes receive a property related service from UWCDjust as did urban customers in Bighorn — as Pajaro I explains. “Property ownership” under Proposition 218 includes owner occupants and tenantsalike. This case does involve a fee “imposed on a property owner to pay for the costs of providing a service to a parcel of property,” (AB at pp. 2, 35) and UWCD’scontrary argumentfails. 30 156457.3 Similarly, it is not possible to “harmonize” a statutory obligation to charge non-agricultural groundwaterusers three times whatagriculture pays without respect to cost with our Constitution’s cost-allocation requirements.(ABat p. 10.) This is so undereither the relatively more demanding Proposition 218(Cal. Const., art. XIII D, § 6, subd. (b)(3)) or the somewhatless demanding Proposition 26 (id., art. XIII C, § 1, subd.(e) [final paragraph].) Flatly inconsistent duties to account for — and to ignore — cost cannot be harmonized. Indeed, UWCDseemsto concedethe point, observing Water Codesections 75593 and 75594 “tak[e] any discretion away from UWCD”asto both non-uniform rates and the 3:1 ratio. (AB at p. 36.) Thus, statute forbids what our Constitution commands. (Hotel Employees and Restaurant Employees Intern. Union v. Davis (1999) 21 Cal.4th 585, 602 [“A statute inconsistent with the California Constitution is, of course, void”].) The constitutional demandsof Propositions 218 and 26 control over a datedstatute. C. Richmond Found Water Connection Charges Outside Proposition 218 Because Procedural ComplianceWas Impossible UWCDclaimsits groundwater charges are not subject to Proposition 218 because of feigned inability to implementits procedures. (ABat pp. 27-28.) Richmond held Proposition 218’s scope can be determined by its procedural requirements. (Richmond, supra, 32 Cal.Ath atp. 428.) 31 156457.3 Richmond considered whethera charge for a new connection to a water system to finance capital improvements wassubject to Proposition 218. (Id. at p. 415.) This Court concluded thedistrict could not determine on which parcels new connections would be madeto send notice required byarticle XIII D,section6, subdivision(a). (Id. at p. 419.) Impossibility of complying with the measure’s procedures warranted a conclusion that water connection charges are not subject to Proposition 218atall. (Ibid.) No comparable procedural obstacle appears here: UWCD knowswhoits customers are, and admits it complied with Proposition 218’s procedures.(ABat p. 10.) The City has never argued to the contrary. Only UWCD’ssubstantive compliance with Proposition 218is in issue — i.e., its allocation of costs to rate-payers andits use of fee proceeds. D. UWCD Can Comply with Proposition 218’s Cost Principles UWCDarguesit cannotallocate costs as Proposition 218 demands.(ABat pp. 13, 40.) Pajaro I demonstrates otherwise. That court found a fee based on water consumption can comply with Proposition 218 even though “it quite probably will be impossible to predict the quantity consumed,andthusto forecast the precise ‘amountof the fee or charge proposed to be consumed”as article XIII D, section 6, subdivision (a)(1) requires. (Pajaro I, supra, 150 Cal.App.4th at pp. 1388-1389 [original emphasis].) It concluded 32 156457.3 “the notice requirementsof Article 13D aresatisfied if the agency apprises the ownerof the proposedrate to be charged.”(Id.at p- 1388, fn. 15 [original emphasis].) UWCD’sestablishmentof a Zone B chargeto fundits Freeman Diversion Dam demonstrates UWCD cansegregate its costs by rechargefacility, identify who benefits from each, and allocate costs accordingly. UWCDhasno counterto this argument. The AnswerBrief’s sole reference to Zone is a fleeting statementat page 59.Its claim Zone B wasnotatissueattrial is wrong. (AB at p. 49; 4JA:30:0625 [defining Zone B in Phase1 trial brief]; 5JA:44:0840-0841 [establishment of Zone B showsnotall activities affecting groundwaterhave District-wide impact; allocations apply to Zone B chargesas well]; 9JA:75:1809-1810, 1812, 1834; 10JA:84:2039- 2040 [rates vary by zone and byuser; Zone B disprovesDistrict-wideutility of services].) UWCDobserves the Opening Brief provides no recordcite at page 58 to support argument UWCDchargesmore thancost. (AB at p. 49.) Indeed. To avoid repetition, the City referenced argumentat pages 42-52 in the brief which UWCDfails to rebut. That UWCD offers no responseto that evidentiary discussion — replete with record citations — is admission it has none. The City’s request that UWCDallocate costs for Lake Piru and its spreading grounds to those who pumpfrom basins those facilities recharge is thus well within UWCD’s demonstrated 33 156457.3 competence. Neither Judge Anderle nor the City reads Proposition 218 to require UWCDto trace each water molecule from recharge source to wellhead. (AB at pp. 13-14.) If justification of the 3:1 ratio is “quixotic” (ABatp. 14), then the statutory requirementof thatratio falls to Proposition 218’s (and Proposition 26’s) demand that customers pay no morethantheir fair share of the cost of service. (OB at p. 61.) UWCD’s claim thateffort to justify the 3:1 ratio wouldbe quixotic concedesthe City’s claim it is overcharged. The City does not argue UWCD must“attribute the cost of [its] environmental compliance efforts to a specific parcel.” (AB at pp.9, 46.) Instead UWCDcanidentify whichofits facilities triggers a compliance cost. Indeed, its own briefing does so, noting Lake Piru triggers many suchcosts. (Appellants’ Reply Brief and Cross- Respondents’ Brief at pp. 27-28.) As UWCD’srecordsshow,it can identify the basins each facility benefits. (AR2:168:0150; AR1:22:0144.) It is a simple matter to apportion costs to basins and to charge those who draw water from each.Each basin’s customers amountto a reasonably drawnclass of customers who may paysimilar rates under Pajaro II and Farm Bureau, supra (applying Prop.13). Indeed, UWCDcites these cases to argue for class-by-class cost allocation. (ABat p. 38.) What UWCDcan dofor the Freeman Diversion Dam, it can do forall its facilities. What UWCD cando for onebasin,it can do for eight. 34 156457.3 Indeed, UWCD developed an “environmentalactivity cost allocation policy to fairly and proportionately allocate” those costs after this litigation commenced. (ABat pp. 8-9.) That policy charges “environmentalrelated activities” with a “District-wide benefit” to the General Fund which Zone A charges fund. (AR2:106:0208.) UWCDacknowledges some “environmentalactivities provide benefit to all District customers (Zone A) but a proportionately greater benefit to customers downstream of the Freeman Diversion (Zone B).” (Ibid.) These are equally divided between the two zones as an “equitable representation of the benefit.” (Ibid.) If UWCD can distinguish areas benefited by the Freeman Diversion Dam,it can create similar zones for Lake Piru and otherfacilities. Its failure to do so reflects its preference, not the limits of accounting practice. Indeed UWCDsuggests the Ferro-Rose Recharge Project and the Noble Basin benefit only the Oxnard Forebay and Oxnard Plain basins. (AB at pp. 9-10.) Yet it offers no explanation for recovering those facilities’ costs from the District-wide Zone A. Whycharge those costs to the City’s wells in the upstream Santa Paula and MoundBasinsthat cannot benefit from those facilities? Proposition 218 and Proposition 26 forbid UWCDto doso. Nor need we be detained by UWCD’sterse claim article XIII D, section 6, subdivision (b)(4) precludes application of Proposition 218 here. (AB at p. 35.) That section states: 35 156457.3 No fee or charge may be imposedfor a service unless that service is actually used by, or immediately available to, the ownerof the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4. (Cal. Const., art. XIII D, § 6, subd.(b)(4).) Pajaro IT persuasively explains that the current water service for which a property related fee may be imposedincludes costs incurred to ensure service over time. (Pajaro II, supra, 220 Cal.App.4th at p. 595.) Waterservice is not a one-time delivery of some water molecules; UWCD doesnotsell bottled water. It is an ongoing, reliable service of water of adequate quantity and quality. (Ibid.; see also Gov. Code, § 53750, subd. (m) [defining “water” for articles XIII C and XIII D].) Noris the remedyfor a failure to allocate costs as our Constitution demandsthe debilitating full refund UWCDfears. (ABat p. 39.) No law requires UWCDto serveits customersfor free or to recoverless than its costs. Rather, the remedy is what Judge Anderle granted here —refund of the difference between what the City paid and whatit would have paid undera lawful rate supported by the administrative records here. (12JA:112:2570-2585 [Sept. 6, 2013 judgment]; see also Water Replenishment District of 36 156457.3 Southern California v. City of Cerritos (2013) 220 Cal.App.4th 1450, 1464 [remedy for unconstitutional groundwaterfeeis partial refund].) Nor need UWCDendurea “deficit.” (AB at p. 40.) It may recover the full cost of its services, but must allocate that cost constitutionally. (Howard Jarvis Taxpayers Ass'n v. City of Fresno (2005) 127 Cal.App.4th 914, 927 [utility rates can recoverall costs under Prop. 218]; Howard Jarvis Taxpayers Ass’n v. City of Roseville (2002) 97 Cal.App.4th 637, 648 [same]; Pajaro II, supra, 220 Cal.App.4th atp. 600 [same]; Morgan, supra, 223 Cal.App.4th at p. 923 [same].) If UWCDandotherrate-makersrisk “‘cost of service’ battles,” (AB at p- 40) that results from constitutional amendments requiring de novo review oflegislative rate-making and shifting the burden of proof from to rate-makers. As this Court wrote of Proposition 218: We must... enforce the provisions of our Constitution and may notlightly disregard orblink at ... a clear constitutional mandate. In so doing, we are obligated to construe constitutional amendments in a mannerthat effectuates the voters’ purpose in adoptingthe law. (Silicon Valley Taxpayers Ass’n, Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448, internal quotations andcitations omitted.) 37 156457.3 Moreover, the current spate of water-rate litigation can be expected to abate with this Court’s guidance here andin other cases now on review.Local governmentswill adaptto rulingsclarifying whatour Constitution demands. We need not endure the Hobbesian world of constantlitigation UWCDfears. Vv. UWCD IGNORES BOTHSINCLAIR PAINTAND PROPOSITION 26 UWCDasksthis Court to rely on the Court of Appeal’s reasoning that compliance with the total cost requirementof Proposition 26 is sufficient to comply with its command that the manner in which... costs are allocated to a payorbeara fair or reasonable relationship to the payor’s burdenson, or benefits received from, the governmentalactivity. (ABat pp. 4445; Cal. Const., art. XIII C, § 1, subd.(e)[final paragraph].) Compliance with the total cost limit, of course, tells us nothing about compliance with the duty to allocate costs among payors in proportion to their benefits from or burdens on governmentalactivity. 38 1564573 A. Sinclair Paint Requires a Fair or Reasonable Allocation of Service Costs Sinclair Paint articulates this test to distinguish regulatory fees from special taxes under Proposition 13, requiring governmentto prove: 1. the estimated costs of the service or regulatory activity, and 2. the basis for determining the mannerin which the costs are apportioned,so that chargesallocated to a payorbear fair or reasonablerelationship to the payor’s burdens on or benefits from the regulatory activity. (Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866, 879 (Sinclair Paint), see also Schmeer v. County ofLos Angeles (2013) 213 Cal.App.4th 1310, 1321-1322, 1326 [citing Sinclair Paint to construe Prop. 26].) Sinclair Paint limits a fee to the reasonable cost of providing the service for whichit is charged. (Sinclair Paint, supra, 15 Cal.4th at pp. 870, 881.) Charges mustbeara fair or reasonable relationship to the payor’s burdensonor benefits from the regulatory activity. (Id. at pp. 878, 881.) UWCDassertsit need only show “reasonable proportionality” of its fees on a “collective basis.” (AB at p. 44.) Sinclair Paint demands more. UWCDhasyetto cost-justify the 3:1 rate ratio (10JA:88:2123.) or to demonstrate a fair or reasonable allocation of Zone A charges, which distribute equally costs for services that do not benefit pumpersequally. Instead, it commingles Zone A revenue 39 156457.3 with discretionary revenue to serve non-payors. UWCD must show its charges to non-agricultural and to agricultural users are proportionate to each group’s benefits from, and burdenson, UWCD’'sservices. (Cal. Const., art. XIII C, § 1, subd.(e) [final paragraph].) B. Proposition 26 Does,Too Proposition 26 defines “taxes” requiring voter approval under Propositions 13 and 218. It provides seven exceptions to that definition. Some codify Sinclair Paint. For example, “tax” excludes a charge that “does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege” or which “does not exceed the reasonable costs to the local government of providing the service or product.” (Cal. Const., art. XIH C, § 1, subd.(e)(1), (2).) Charges subject to Proposition 218 are exempt from Proposition 26.(Id. at § 1, subd.(e)(7).) Thus, if the fees here are not subject to Proposition 218, Proposition 26 applies. UWCDdefendsits fees (AB at pp. 43-44) underarticle XIII C, section 1, subdivision (e)(1): (1) A charge imposed for a specific benefit conferred or privilege granted directly to the payorthat is not provided to those not charged, and which does not 40 156457.3 exceed the reasonable costs to the local governmentof conferring the benefit or granting the privilege. (Cal. Const., art. XIII C, § 1, subd. (e)(1.) Underthefinal unnumbered paragraphofarticle XIII C, section 1, subdivision(e), UWCDmustalso show: the mannerin which... costs are allocated to a payor beara fair or reasonable relationship to the payor’s burdenson,or benefits received from, the governmental activity. UWCDcannot. C. Proposition 26 Requires Service Fees Be Imposed Only for Services Provided “Directly” to a Payor Without Free Riders UWCDcriticizes the City’s argumentfor “a ‘direct’ correlation betweenthe fee charged and the benefits conferred on the payor.” (ABat p. 45 [citing OB at pp. 55-57].) Those pages of the Opening Brief do not argue that point. Instead, they argue that Proposition 26 allowsservice fees only for a service provided “directly to the payor that is not providedto those not charged.” (Cal. Const., art. XIII C, § 1, subd. (e)(2).) UWCD arguesits services are of general social benefit. (AB at pp. 3-4; Appellant’s Opening Brief at p. 17; 4JA:32:0656-0665; 5JA:45:0863-0873.) Therefore, it has no answer to this point. 4] 156457.3 That UWCD’s principal act authorizes it to provide services “for the benefit of all who rely directly or indirectly upon the groundwater supplies of a district” is problematic under Proposition 26. (Wat. Code, § 75522 [cited in AB at pp. 4-5].) Unless UWCDseeks voter approval, Proposition 26 requiresit to charge only for services provided to fee payors alone, withoutfree riders. Vi. REMAND IS INAPPROPRIATE UWCDarguesthetrial court erred by refusing to consider extra-record evidence “to show that evidence could be hadto justify the 3:1 fee differential and demonstrating proportionality” and by “refusing remand to allow introduction of additional cost of service calculationsjustifying its ratemaking.” (AB at p. 42.) UWCD argues that if this Court finds the charges subject to Proposition 218, it should remandfor “reconsideration ofall the evidence justifying the rate differential.” (Ibid.) However, Western States, supra, 9 Cal.4th at p. 578 forbids UWCDtorely on extra-record evidence it could have presented at its own hearings. Moreover, remand would allow further attempts to rationalize — post hoc — noncompliant rates UWCD imposedin each offive fiscal years since this dispute arose. If UWCD could not justify its rates in the second record here, made with knowledge of the first case, why grant a further opportunity now? The Court of Appeal recently noted the implications of such a remand: 42 156457.3 If we accepted the City’s contention, a local agency could avoid refunding unexpended developmentfees by makinganyfindings, no matter how inadequate, and the only repercussion would be another opportunity to repeat the process. (Walker v. City of San Clemente (2015) 239 Cal.App.4th 1350, 1370.) Moreover, remand would be bootless. Water Code section 75594 demands UWCDapply the 3:1 ratio “unless an appellate court has made a determination that such statute is unconstitutional.” (Cal. Const., art. IIL, § 3.5, subd.(a).) Accordingly, the trial court properly refused notice of portions of the record of UWCD’s June 2013 rate-making. (12JA:105:2505.) It was UWCD’s burden to make a record on which to defendits rates. (Beaumont, supra, 165 Cal.App.3d at pp. 236-237; Homebuilders Ass'n of Tulare/Kings Counties, Inc. v. City ofLemoore (2010) 185 Cal.App.4th 554, 562-563.) Moreover, extra-record evidence can never be usedto attack or bolster legislative action or to impeachthe record. (Western States, supra, 9 Cal.4th at p. 574.) The commonlawfair hearing doctrine requires the same result. That rule requires the public have opportunity to respond to an agency’s evidence.(California Assn. ofNursing Homes, etc., Inc. v. Williams (1970) 4 Cal.App.3d 800, 810.) UWCD’sprincipalact requires the same. (See Wat. Code, § 75571 [notice of hearing], § 75573 [right to rebut evidence].) 43 156457.3 Given that Western States forbids the City to rely on extra- record evidence, it would be unfair to allow UWCDto do so on remand. As Walker warns, such a rule woulddisincentivize compliance with law; as Western States warns, it would mean administrative process withoutend. Finally, UWCDcites Voices of the Wetlands v. State Water Resources Control Bd. (2011) 52 Cal.4th 499, 532. That CEQAcase held that Code of Civil Procedure section 1094.5, subdivision (e) authorizes a court to: remand for agency consideration of such evidence, or may consider the evidenceitself, only if that evidence could not have been presented, or was improperly excluded, at the administrative proceeding. (Id. [original emphasis].) This is not the case here, nor does UWCD claim it is. Rather, UWCDseeks to remedyits constitutional failure by resort to evidence generated post hoc. It seeks a mulligan. Remand should be denied. CONCLUSION The Answer claims UWCD’s fees do not exceed service cost, yet cannot muster record evidence to convincingly support the claim.It fails to justify the 3:1 rate ratio undereither Propositions 218 or 26. 156457.3 Accordingly, the City respectfully urges this Court to reverse the Court of Appeal andaffirm thetrial court’s judgmentsfor the City and to provide the declaratory relief sought on cross-appeal: 1. On the present administrative records, UWCD’s charges violate Proposition 218 (or Proposition 26) because they fail to reflect the differing costs to serve users of groundwaterin different basins and the differing benefit pumpersin those basins receive from UWCD’s rechargeefforts, e.g., the “common pool” theory cannot be sustained on either record here; 2. UWCD’s use of proceeds from the Zone A charge to pay for expenses unrelated to groundwater management violates Proposition 218 (or Proposition 26); and 3. Water Code section 75594 is facially unconstitutional. DATED:October16, 2015 COLANTUONO, HIGHSMITH & WHATLEY, PC MICHAEL G. COLANTUONO Attorneys for Respondent/ Cross-Appellant CITY OF SAN BUENAVENTURA 45 156457.3 CERTIFICATION OF COMPLIANCE WITH CAL.R. CT. 8.520(B) & 8.204(C)(1) Pursuant to California Rules of Court, rules 8.204(a)(1) and 8.520(c)(1), [hereby certify that the foregoing Reply Brief on the Merits contains 8,101 words(including footnotes, but excluding the tables and this Certificate) and is within the 8,400 word limit set by California Rules of Court, rule 8.520(c). In preparing this certificate, I relied on the word count generated by Wordversion 14, included in Microsoft Office Professional Plus 2010. DATED:October 16, 2015 COLANTUONO, HIGHSMITH & WHATLEY, PC Wdbadirrne | MICHAEL G. COLANTUONO Attorneys for Respondent/ Cross-Appellant CITY OF SAN BUENAVENTURA 46 156457.3 PROOF OF SERVICE City of San Buenaventura v. United Water Conservation District,etal. Supreme Court Case No. 5226036 Court of Appeal, Second Appellate District, Division 6, Case No. B251810 I, Ashley A. Lloyd, declare: I am employedin the County of Nevada,State of California. I am over the age of 18 and nota party to the within action. My business address is 420 Sierra College Drive, Suite 140, Grass Valley, California 95945. On October 16, 2015, I served the documentdescribed as REPLY BRIEF ON THE MERITSonthe interested parties in this action as by placing a true copy thereof enclosed in a sealed envelope addressedasfollows: SEE ATTACHEDLIST X BY MAIL: The envelope was mailed with postage thereon fully prepaid. Iam readily familiar with the firm’spractice of collection and processing correspondencefor mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Grass Valley, California, in the ordinary course of business. [am awarethat on motionofthe party served, service is presumedinvalid if the postal cancellation date or postage meter date is more than one dayafter service of deposit for mailing in affidavit. I declare under penalty of perjury underthe lawsof the State of California that the aboveis true and correct. Executed on October, at Grass Valley, CaJéfornia. 156457.3 SERVICE LIST City of San Buenaventura v. United Water Conservation District, et al. Supreme Court Case No. 5226036 Court of Appeal, Second Appellate District, Division 6, Case No. B251810 Anthony H. Trembley Jane E. Usher Musick, Peeler & Garrett LLP 2801 Townsgate Road, Suite 200 Westlake Village, CA 91361 Phone:(805) 418-3100 Fax: (805) 418-3101 E-mail: A.Trembley@mpglaw.com; J.Usher@mpglaw.com; Y.Dubeau@mpglaw.com Attorneysfor Defendant and Dennis LaRochelle Susan L. McCarthy John M. Mathews Arnold LaRochelle Mathews Vanconas & Zirbel, LLP 300 Esplanade Drive, Suite 2100 Oxnard, CA 93036 Phone: (805) 988-9886 Fax: (805) 988-1937 E-mail: dlarochelle@atozlaw.com; jmathews@atozlaw.com Attorneys for Intervener Pleasant Valley Sacramento, CA 95814-2919 Appellant United Water County Water District Conservation District and Board of Directors of United Water Conservation District Office of the Attorney General Nancy McDonough 1300 I Street Chris Scheuring Associate Counsel California Farm Bureau 2300 River Plaza Drive Sacramento, CA 95833 Phone: (916) 561-5500 Fax: (916) 561-5699 E-mail: cscheuring@cfbf.com; dchasteen@cfbf.com Attorneys for California Farm Bureau Federation and Farm Bureau of Ventura County, Amicus Curiaefor Appellant 156457.3 Paul N. Singarella Latham & Watkins 650 Town Center Drive, 20Floor Costa Mesa, CA 92626 Attorneys for Water Replenishment District of Southern California, Amicus Curiae Patricia J. Quilizapa Alshire & Wynder, LLP 18881 Von Karman Ave., Suite 1700 Irvine, CA 92612 Attorneys for Cerritos, City of Downey and City of Signal Hill, Amicus Curiae Clerk of the Court Santa Barbara Superior Court 1100 Anacapa Street Santa Barbara, CA 93121-1107 Clerk of the Court Court of Appeal Second District, Division 6 200 East Santa Clara Street Ventura, CA 93001 156457.3