CALIFORNIA BUILDING INDUSTRY ASSOCIATION v. STATE WATER RESOURCES CONTROL BOARDAppellant’s Petition for ReviewCal.May 29, 2015 S226753 SUPREME CUURT Case No. F | L E D MAY 29 2015 In the Supreme Court Frank A. McGuire Clerk of the State of California Deputy CALIFORNIA BUILDING INDUSTRY ASSOCIATION, a California nonprofit corporation, Plaintiffand Appellant, VS. STATE WATER RESOURCES CONTROL BOARD,etal., Defendants and Respondents. PETITION FOR REVIEW After a Decision by the First Appellate District, Division Two Court of Appeai Case No. A137680 On Appeal from the Superior Court, City & County of San Francisco Superior Court Case No. CGC-11-516510 Honorable Curtis E.A. Karnow, Judge Presiding RUTAN & TUCKER, LLP DAVID P. LANFERMAN(SBN 71593) Five Palo Alto Square 3000 El Camino Real, Suite 200 Palo Alto, CA 94306-9814 Telephone: 650-320-1500 dlanferman@rutan.com ATTORNEYS FOR PLAINTIFFAND APPELLANT CALIFORNIA BUILDING INDUSTRY ASSOCIATION Case No. In the Supreme Court of the State of California CALIFORNIA BUILDING INDUSTRY ASSOCIATION, a California nonprofit corporation, PlaintiffandAppellant, VS. STATE WATER RESOURCES CONTROL BOARD,etal., Defendants and Respondents. PETITION FOR REVIEW After a Decision by the FirstAppellate District, Division Two Court ofAppeal Case No. A137680 On Appeal from the Superior Court, City & County of San Francisco Superior Court Case No. CGC-11-516510 Honorable Curtis E.A. Karnow, Judge Presiding RUTAN & TUCKER, LLP DAVID P. LANFERMAN(SBN 71593) Five Palo Alto Square 3000 EI Camino Real, Suite 200 Palo Alto, CA 94306-9814 Telephone: 650-320-1500 dlanferman@rutan.com ATTORNEYS FOR PLAINTIFFANDAPPELLANT CALIFORNIA BUILDING INDUSTRY ASSOCIATION TABLE OF CONTENTS Page PETITION FOR REVIEW .uuiiccc cee cccccssccccccccecssccccesscssscseccesscessssssecceeeeeess 1 I. ISSUES PRESENTED...ceccscccsecneceneeeessecnesseseseeseesnenesseeseeeee 2 II. WHY REVIEW SHOULD BE GRANTED wu.ciceeeeeeeeeceneees 5 A. Review Should Be Granted To Require That Fees, To Be Valid As “Fees,” Must Be Limited To The Costs Of The Service Or Regulatory Activity For Which The Fees Are Charged...ieee6 B. Review Should Be Granted To Resolve A New Conflict Between The Courts Of Appeal As To How Governmental Agencies Must Show That They Fairly Allocate The Costs Of Their Services Among Different Classes OfFee Payers sessceaceaeesenecaeeneesceseeceeseesacessescessessensesesecesesssessesnseesetanseasaessesogs 7 C. Review Should Be Granted To Clarify That The Government Agency HasThe Initial Burden Of Demonstrating The Validity Of Its “Fees”oeeeeeeeeeee 8 D. Review Should Be Granted Because, Otherwise, Permissible “Fees” Will Become Indistinguishable From Invalid “Taxes.” 0.0... cseeeeeeeeeseeeeees 9 E. Review Should Be Granted To Require The The Board Limits Its Authorized “Regulatory Fees” To The Recoverable Costs Of Its Services 0.0... 11 F. Review Should Be Granted Because Of The Procedural Invalidity Of The Board’s Action In Violation Of The Water COd€...eeesevseecensesceceeevecoeees 12 G. Review Should Be Granted Because, Otherwise, A Minority Of An Unelected Board Will Be Empowered To Enact “Taxes” In the Guise Of Unjustified “Fees”... esscsseescceesscceseesseeeesseesseeesateesenees 13 2644/030584-0002 : 8443441.3 a05/29/15 -1- Page lil. STATEMENT OF FACTS AND PROCEDURAL HISTORY .....ccccsccscsssscstesessecsceecsecceesneseeesesesersersacerssesesseesesossevnes 14 A. Statutory Contextoesceeceeseseeseseeceeeessseecseesseeesseseeees 14 B. The “Board’s” Approval Of The Disputed Schedule Of Fees 20...ce ccessseseesceseesseeeseressesesessssevseseeseenes 15 C. The Litigation And Appeal.............cescseeseeeseseesseeeeeseeeeenes 17 TV. ARGUMENT ..vessssssssssessssssssssscsscsssssssssssssscsesscsceseeceessssssenseeeeeeee 19 A. Review Is Necessary To Assure That “Fees” Are Limited To The Costs Of Services Or The Regulatory Activity For Which The Fees Are Charged .....cccccsseseesessecesesecsseeeesersesecessevsseeosssssseessesseasoeees 20 B. Review Is Necessary To Clarify The Burden of Demonstrating The Validity Of Charges Imposed By Government As Purported “Fees”............00 22 C. Review Is Necessary To Assure Proper Interpretation OfThe Water Code As It Governs the Actions Of The State Water Resources Control Board — And To Again MakeIt Clear That “ANY Final Action OfThe Board Be Taken" By A Majority Of All The Members Of The Board” As Required By Section 183 oo...eee eeseceseeeeeneee 24 V. CONCLUSION1.0... eeeeeeseeseeceseeessesesseseesascsaeseseecsseeseeneesesseeeenees 27 _ 2644/030584-0002 we 84434413 a05/29/15 -ll- TABLE OF AUTHORITIES Page(s) CASES California Farm Bureau Fed’n. v. State Water Resources Control Board (2011) 51 Cal4th 421cccsecsssecesscenseseseeeeeeeeeeseeeeeseesenees 2, 6-7, 9, 20-21, 23 Capistrano Taxpayers Ass’n. v. City ofSan Juan Capistrano (2015) 235 CalApp.4th 1493 oo.ceecccsssecccssneesceneesscescesseseseacessaeeesatees 3, 7,27 City ofSan Buenaventura v. United Water Conservation Dist. (2015) 235 Cal.App.4th 228 00... ccecsccsssssececssecesssseseecseesseesseeeeeeenesnenees 9, 21, 24 County ofPlumas v. Wheeler (1906) 149 Cal.758oeescccccescessecsscssecssceseeecesesesecsecseceesesaeeeserseeenseeseseseseees 10, 20 County ofSonoma v. Superior Court (2009) 173 Cal.App.4th 322.0... ccccsscsseccesecceececcseceesecsecseceeeeseseneseaseeeneaeeaes 12 Pennell v. City ofSan Jose (1986) AD Cal.3d 365eeeecescsenesseneecnecseeeccseseseeeececesssesaesnaseaeessneeaeessesenenes 10, 20 Price v. Tennant Comm. Services Dist. (1987) 194 CalApp.3rd 491 oo. cceccscesesssssceccsecessecssneeceeseeeseneeessneessseesesaeess 12 Schmeerv. County ofLos Angeles (2013) 213 Cal.App.4th at pp. 1322.eeeeeeeesseceeeseeesesseeessereaserseaens 21, 23 Sinclair Paint Co. v. Board ofEqualization (1997) 15 Cal.4th 866.000... ccccccsscsssesescssssseeecesnesseesessessneceneesseessessesenees 2, 9, 21-22 Southern Cal. Edison v. Public Utilities Comm. (2014) 227 Cal.App.4th 172... ccccssccsssecceesseeenseeseeeeesseesssecssnseesereseneeeseees 9, 24 Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 CalAth 1029...eccccssessesseecneesssscessneceeesceaceseeseeeeeesaeeaeeeaseasseneesees 26 United Business Com. v. City ofSan Diego (1979) 91 CalApp.3d 156... ccssssccsssccsessnscessecscccseeesceeesseecnecesseeeeeessseesseraes 20 Western States Petroleum Ass’n v. Board ofEqualization (2013) 57 Cal.Ath 401oececcccssesscsseceeneeseseessaeeecseesessaceseaeeaeesseesssensesseverassaeees 8 2644/030584-0002 84434413 a05/29/15 -1U1- Page(s) STATE STATUTES Government Code section 50076 ...........cssccsscssseccessseerecsseesneaeeessseerenscessennees 12 Water Code SECTION 175 Ct SEQ. .....scesscccesscersesscessssscescesecseasecescecceessaescenacesenessseeeeneeens 14 SOCTION 181] oo... eseceseccssseecesccsecsseesecsncsseeseeesssecssseevseseeeeseseeeenees 18, 24-26 SECTION 183.00... eeseessecseseececesserseeeeeesecsesenseeeaeers 3-4, 12-14, 17-19, 24-26 SECTION 1525 .o..eecceessccesssccccssscessessnsseseceesenscececesscseeesssesnseseceeaesensausesseaes 23 SOCTION 13260 ........ccececccsessssscccssssessseecesseecseeecessseesseeceseeceeeseseraneeeeesues 14-15 SECTION 13260) ..... eee eeeseceeseeeceseeeeeceeesecsnecesseeteeesesseeseaeeseaeeeeeeeeeaseeeeens 12 section Bocasees saceeeeecceesssesseecacesersesteseesuecsecstesaseesspeceeseueesssneeeaees 15 Section 13260(d)(1)(C) ......eeescssssecessssssseeeceesssnecsscssseeceseeeeenaeeeesenseeeens 15 SECTION 13260(E)........ccccesscccesscessessescesecseccssececessscsesstscssseseeeesseeseesneeeseees 12 SECTION 13260(£)(1) oon... eeeesecssscessesessssseceseeseeeceesscseessseesssreceesteeseesnseenaes 15 CONSTITUTIONAL PROVISIONS California Constitution article XT] A oo... eeeccccsssssecssceesseessecesneesecsseneeceseesseseesesessaeesenaeesesseeensees 20 article XIE A, section 3(a).........ceeeecesecscessceeeseeeecsecneseseaeeesnenesnesesasonseenes 8 article XIII A, section 3(d) ........c cee ccessesceesssceesseeteeeeeeeessneeeenseees 9, 23, 24 article XIII C, section 1(€).........cceesseseeseececeeseeeeseserseesseeseeeeeneeeoaaeoes 9, 24 article XIII D, section 6(b)(5)...........cscccecceeteeeees sesseeteresseeceesenserseaeees 9, 24 OTHER AUTHORITIES Citizensfor Fair REURates v. City ofRedding (No. S224779, rev. granted 03/03/2015) .......ccscsssessseeceesseesesenseeeneeses 5 2644/030584-0002 84434413 a05/29/15 -IV- PETITION FOR REVIEW To the Honorable Tani G. Cantil-Sakauye, ChiefJustice of California, and the Honorable Associate Justices of the Supreme Court of California: The California Building Industry Association (““CBIA”), plaintiff and appellant, hereby petitions the Supreme Court for review of the decision (2- 1) by the Court of Appeal, First Appellate District, Division Two,filed and certified for publication on April 20, 2015, as modified by that Court’s order filed May 11, 2015. Petitioner prays that, upon review, the decision be reversed and that the respondent’s approval of the challenged schedule of “fees” be determined to be invalid as a matter of law, or alternatively, be remanded for further proceedings on the merits. A true copy of the Court of Appeal’s majority Opinion [“Opn.”] and dissenting Opinion (“Dissent”) published April 20, 2015, is attached to this Petition as Exhibit A. CBIA timely petitioned the Court of Appeal on May 5, 2015, for rehearing of the Court’s divided decision, and a true copy ofthat Petition for Rehearing is attached hereto as Exhibit B. The Court of Appeal denied rehearing by its Order dated May 11, 2015, although that Order noted that “Richman, J. would grant the petition for rehearing.” A true copy ofthe Court of Appeal’s “Order modifying opinion and denying rehearing”(also certified for publication) is attached as Exhibit C. 2644/030584-0002 844344 1.3 205/29/15 -i- F ISSUES PRESENTED California’s Constitution protects the voters’ rights to approve “taxes,” and has been repeatedly amended to make it more difficult for government agencies to circumvent these requirements by levying charges in the guise of “fees.” With increasing frequency, the courts, including this Court, are called on to distinguish permissible “fees” from invalid “taxes.” This Court has repeatedly mandated that governmental agencies show that their fees not exceed “the costs of the service or regulatory activity for which they are imposed” and show that their fees fairly apportion the agency’s costs “so that charges allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on or benefits from the regulatory activity.” (E.g., California Farm Bureau Fed’n. v. State Water Resources Control Board (2011) 51 Cal.4th 421, 428, 435-443; Sinclair Paint Co.v. BoardofEqualization (1997) 15 Cal.4th 866, 878.) The majority Opinion allowed respondents to circumvent, or violate, this Court’s requirements that valid “fees” must be based on the costs of the service or activity for which they are imposed, and would — for the first time — allow an agency to “allocate” its costs by charging different levels of purported fees that admittedly bear no evidentiary relationship to the costs of the service for whichthey are charged.! It also conflicts with a new decision 1 As discussed below, Justice Richman’ Dissenting Opinion did not address these issues, explaining that he would have held, as urged by 2644/030584-0002 8443441.3 a05/29/15 -2- published (on the same day) by the Fourth Appellate District, Capistrano Taxpayers Ass’n. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493.) This petition therefore presents the following constitutional questions, of increasing state-wideimportance, for review: 1. Can a governmental agency lawfully establish purported “fees” by combining the total costs of all of its services provided to multiple permittees for different types ofprogramsandthen “allocating”its total costs by creating different charges at different rates on distinct classes of permittees which are admittedly not based on evidence of the agency’s costs of providing services to the various classes of fee payors? | 2. When the agency admits, or its evidence shows, that an agency’s chargesfail to fairly apportion the agency’s costs “so that charges allocatedto a payor bear a fair or reasonable relationship to the payor’s burdens on or benefits from the regulatory activity,” are the purported “fees” in reality “taxes?” | 3. After Proposition 26, does the government agency have the initial burden of producing evidence demonstrating the validity of its purported fees? petitioner, that the respondent Board failed to lawfully adoptthe disputed fee schedule by a vote of “‘a majority ofall the members ofthe Board”as required by Water Code section 183. 2 Appellate No. G08969,pet. for rehearing withdrawn (“Capistrano”). 2644/030584-0002 84434413 a05/29/15 -3- The Opinion also presents an important second set_of issues for review, involving interpretation of the Water Code and the authority (if any) of the respondent State Water Resources Control Board (“Board”) to take effective “final action” on matters such as its annual adoption of fees with fewerthan a majority of all the members of the Board. The majority and the dissent split sharply on these issues, which present an issue of first impression to this Court: 4. Does Water Code section 183, which states that “... any final action of the board be taken by a majority ofall the members ofthe board,” apply to adoption of its annual schedule of fees? 5. Wasthe schedule of fees here properly and lawfully adopted based on the votes ofjust two membersofthe five-member Board? The majority Opinion concluded that Water Code section 183 was not controlling and that the Board could instead “transact business” with a mere “majority of a quorum.” The Dissenting Opinion by Justice Richman demonstrated that the Legislature had specifically made Water Code section 183 applicable to “any final action” by the Board, and that approval by just two members for the disputed schedule of fees was not valid final action. The Dissent, therefore, did not address the substantive challenge to the unjustified “fees” (but nevertheless noted that the appeal challenged an enactmentthat “might, in different circumstances, have been proved to be an invalid tax ofmany millions of dollars.” (Dissent, p. 19.) 2644/030584-0002 8443441.3 a05/29/15 -4- Tl. WHY REVIEW SHOULD BE GRANTED The constitutional issue of how governments must demonstrate that their charges — imposed without voter approval as purported “fees” — are related and limited to the costs of the services for which they are imposed is of growing importance and urgency.2 This Court has previously, and repeatedly, made it clear that governmental agencies must make such a showing that their fees do not in fact exceed the costs of the service or regulatory activity for which they are ostensibly imposed. The majority Opinion in this case, however, creates a huge new loophole in that requirement, and pointedly raises the question of how that showing must be made, and who has the initial burden of making that showing. The majority Opinion would allow the respondent Board to adopt a “schedule of fees” that admittedly continues to overcharge oneclass of fee payors substantially more than the costs of the Board’s services and regulatory activities provided to that class. The majority Opinion would excuse such disproportionate misallocation of the Board’s costs by noting that the Board underchargesother classes of fee payors (less than the costs ofthe services provided to them), so that the total amount of “fees” collected > For example, the Court has recently granted review ofthe Third Appellate District’s decision in Citizens for Fair REU Rates v. City ofRedding (No. $224779, rev. granted 03/03/2015), raising the issue of whether a payment in lieu of taxes (“PILOT”) from the city’s utility to the city’s general fund a “tax” under Proposition 26? 2644/030584-0002 8443441.3 a05/29/15 -5- from all classes of fee payors does not exceed the total combined costs of services provided by the Board. The majority Opinion, disregarding the voters’ repeated constitutional amendments, then erroneously transformed the government’s “burden” of demonstrating the validity of its fees into the challenger’s burden to demonstrate invalidity. No published California court decision has ever before held that a governmental agency mightjustify its “fees” by playing such a shell game with its costs of service. Petitioner respectfully submits that such an approachto establishing regulatory fees without regard to the evidence ofthe costs of the service or the regulatory activity for which the “fee” is imposed is a significant contradiction of this Court’s prior explanations of the legal standards governing valid regulatory “fees.” A. Review Should Be Granted To Require That Fees, To Be Valid As “Fees,” Must Be Limited To The Costs Of The Service Or Regulatory Activity For Which The Fees Are Charged. Review is necessary in order to resolve the uncertainty arising from the majority Opinionin this case as to how governmental agencies must show that their purported “fees” are based on evidence demonstrating that the agency’s fees do not exceed “the reasonable cost of providing services necessary to regulate the activity for which the fee is charged.” (Cal. Farm | Bureau, supra, 51 Cal.4th at 437 [emph. added].) Despite the respondent Board’s own uncontradicted evidence calling out that its “schedule of fees” repeatedly charged one class of permittees far 2644/030584-0002 8443441.3 a05/29/15 -6- more than their burdens on the Board’s regulatory activity, the majority Opinion would find no abuse in such admittedly disproportionate “fees” in excess of the fairly-allocated costs of service. B. Review Should Be Granted To Resolve A New Conflict Between The Courts Of Appeal As To How Governmental Agencies Must Show That They Fairly Allocate The Costs Of Their Services AmongDifferent Classes Of Fee Payers. The reasoning used in the majority Opinion here is directly contrary to, and in conflict with, the Fourth Appellate District’s decision in Capistrano, supra, published the same day as the decision in this case. Capistrano, supra, unanimously held that the defendant City had improperly establisheda “tiered rate” schedule of fees for its water because the City “did not attempt to correlate its rates with cost of service.” (235 Cal.App.4th at 1505.) Capistrano, supra, follows the Supreme Court’s Farm Bureau example, and holds an agency must do more than merely balance its total costs with its total fee revenues to comply with the Constitution (id. at p. 1506), and holds that if an agency chooses to charge different fees to different groups, it must also provide evidence to correlate those differing fees to the actual costs of service attributable to the different classes of fee payors. In this case, however, the majority Opinion upheld the Board’s unjustified multiple fees, based on reasoning that was explicitly rejected in Capistrano. Here, the uncontradicted evidence showed that the Board made 2644/030584-0002 844344 1.3 a05/29/15 -7]- no attemptto “correlate” the various fees charged for its eight or so different types of permits underits waste discharge regulatory authority to the actual costs of its services or activities in those distinct permit programs. Nevertheless, the majority Opinion found no flaw merely becausethe total fees did not exceedthetotal costs ofall activities. Both decisions cannot be right. C. Review Should Be Granted To Clarify That The Government Agency Has The Initial Burden Of Demonstrating The Validity Of Its “Fees”. The majority Opinion erroneously inverted the parties’ evidentiary burdens, and failed to recognize that, at least following Proposition 26, the governmentagencyhastheinitial burden ofproducing evidence sufficient to demonstrate that it used a valid method for imposing the fee and fairly allocating its costs of service. The majority Opinion suggested, in footnote 9, that Proposition 26 should have no impactonthis case simply because “the 399Board’s fee schedule is not a ‘changein state statute.’” However, Western States Petroleum Ass’n v. Board ofEqualization (2013) 57 Cal.4th 401, 423, cited in the footnote, dealt only with a distinct argument that the Board of Equalization’s change of an assessment rule was a new “tax” requiring 2/3 approval by each house of the Legislature, under art. XIIIA, section 3, subdivision (a). The decision did not address the impact of Proposition 26 on the burden of proof nor address the broad new provisions in section 3 subdivision (d), makingit clear that “the State bears the burden....” As noted 2644/030584-0002 84434413 05/29/15 -8- above,this aspect of Proposition 26 has been viewed as confirmingthat the burdenis on the governmentto justify the imposition of fees, charges or other exactions. (See, e.g., City of San Buenaventura v. United Water Conservation Dist. (2015) 235 Cal.App.4th 228, 242; Southern Cal. Edison v. Public Utilities Comm. (2014) 227 Cal.App.4th 172, 198; see also Cal. Const. art. XIII A, § 3 subd. (d); art. XTII C, § 1, subd. (e); art. XIII D, § 6, subd. (b)(5).) As a result, the majority Opinion erroneously excused the Board’s absolute failure to produce any evidence in the record demonstrating that its fees were limited to its costs of the services for which they were charged. (CE, Cal. Farm Bureau, supra, 51 Cal.4th at 428, remanding for necessary findings on the relationship between the Board’s costs and its fees.) D. Review Should Be Granted Because, Otherwise, Permissible “Fees” Will Become Indistinguishable From Invalid “Taxes.” Review should be granted because the majority Opinion in this case otherwise creates a significant new exception to this Court’s jurisprudence distinguishing “taxes” from permissible “fees” for governmentalservices or regulatory activities. (E.g., California Farm Bureau, supra, 51 Cal.4th 421, at 435-443; Sinclair Paint, supra, 15 Cal.4th at 875-881.) The majority Opinion erodes and erases the distinction drawn by the line of decisions from this Court (and by most other appellate courts) \ requiring that “fees” be justified by evidence showing that the charges “do 2644/030584-0002 84434413 a05/29/15 -9- not exceed the reasonable costs ofproviding services necessary to the activity for whichthe fee is charged...” (Pennell v. City ofSan Jose (1986) 42 Cal.3d 365, 375, quoting Mills v. County ofTrinity (1980) 108 Cal.App.3d 656, 659- 660; County ofPlumas v. Wheeler (1906) 149 Cal.758, 764.) The majority Opinion radically alters this limitation, and obliterates the requirement for a “fair and reasonably allocation of costs,” by removing the requirement that fees be limited to the costs of the particular service or activity for which they are ostensibly charged, and instead merely limits the total amount of fees imposedtothe total costs of all of the agency’s services or regulatory activities, without “allocation” based on costs of service. The exception that would be created by the majority Opinion in its extraordinary efforts to sustain a “schedule of fees” adopted by a minority of the membership ofthe respondent Board would allow agencies to impose “fees” that admittedly exceed the actual “costs ofthe services or activities forwhich the charge is ostensibly imposed,” and without any allocation of the fair or proportional share of the agency’s actual costs of providing services necessary to the activity for which the fee is charged. Underthe new exception created by the majority Opinion, any agency could adopt the Board’s expedient argument that so long as the total amount of fees chargedto all classes of fee payors does not exceedthe total costs of the agency’s variousactivities and services, it doesn’t matter how the agency allocates the costs among the groups of fee payors. In fact — asin this case 2644/030584-0002 0 8443441,3 a05/29/15 -10- — it doesn’t even matter if the Board’s own evidence showsthat the fees imposed on oneclass ofpermittees substantially exceeds the costs of services to that group year after year. Illustrating constitutional distortion and perils implicit in the majority Opinion, underits approach an agency that has expenditures of $100 million for the cumulative costs of its entire program of services could set up a “schedule of fees” generating $95 million in revenues from one small class ofpermit applicants even thoughthat class actually require less than 10% of the agency’s services and generate less than $10 million of its costs. The majority Opinion would deem that to be legitimate, so long as the total fee revenues collected from all classes of fee payors does not exceed the $100 million cumulative total costs of all programs. No other California court has ever upheld such a skewed and disproportionate “justification” for purported fees, and this Court rejected a similarly-flawed fee program in Cal. Farm Bureau Fed, supra. E. Review Should Be Granted To Require The The Board LimitsIts Authorized “Regulatory Fees” To The Recoverable Costs Of Its Services. The Court should grant review because the majority Opinion disregarded the statutory, as well as the constitutional, limits on the Board’s authority to establish regulatory fees. Instead, the majority Opinion allowed the Board to continue the imposition of purported “fees” that deliberately require one class of permit applicants to subsidize the rest of the Board’s 2644/030584-0002 84434413 a05/29/15 -11- activities. The evidence showed that, year-after-year, the Board’s storm water permit fees admittedly exceed (substantially) the agency’s costs of providing services or regulatory activity for that group of permittees, contrary to existing case law and Legislation (e.g., Gov. Code § 50076, and Water Code § 13260, subd. (d) and (f) limiting the Board’s fees to its “recoverable costs” as defined by statute). F. Review Should Be Granted Because Of The ProceduralInvalidity Of The Board’s Action In Violation Of The Water Code. Review should also be granted because ofthe procedural invalidity of the Board’s purported action whereby just two members ofthe five member Board were deemedto have taken “final action” on behalf of the Board in approving the disputed schedule of fees, in violation of Water Code, § 183. The majority Opinion’s strained and flawed “interpretation” of the Water Code violates established canonsofstatutory interpretation, as pointed out in the Dissent, and creates conflicts with other appellate decisions interpreting similar statutory language(e.g., County ofSonoma v. Superior Court (2009) 173 Cal.App.4th 322, 347; Price v. Tennant Comm. Services Dist. (1987) 194 Cal.App.3rd 491, 495.) The majority Opinion fails to apply established rules of statutory interpretation in concluding that Water Code section 183 does not govern the “final actions” of the Board despite its explicit text. As emphasized in the 99 66Dissent, the majority Opinion also disregards the “relevant,” “germane,” and 2644/030584-0002 84434413 a05/29/15 -12- “virtually dispositive” evidence of the Legislature’s intent in amending the Water Code in 1969, expressly to remove any prior “ambiguity” and amending section 183 “requiring that final board action shall always require the concurrence of a majority of all the members of the board, not just a majority of a quorum.” (Opn., Richman,J. dissenting, at p. 15, discussing the “Report of the Senate Committee on Water Resources on Assembly Bill 412” submitted by Sen. Gordon Cologne, Chair of the Senate Committee, in August 1969 [printed in full in the dissent at pp. 9-10].) G. Review Should Be Granted Because, Otherwise, A Minority Of An Unelected Board Will Be Empowered To Enact “Taxes” In the Guise Of Unjustified “Fees”. Review should be granted because, as pointed out in the Dissent (pp. 19-20), the majority Opinion would otherwise lead to “an absurd and invidious result” allowing a minority of just two members to take “quasi- legislative” action to impose statewide charges of many millions of dollars, which might otherwise be proved to be invalid taxes, in derogation of constitutional demands in California for public accountability (including Proposition 26) and voter control of “taxes.” Review should be granted for each andall ofthese reasons. 2644/030584-0002 8443441.3 a05/29/15 ~13- I. STATEMENT OF FACTS AND PROCEDURAL HISTORY The factual background and procedural history ofthis litigation are detailedin the Petitioner’s “Appellant’s Opening Brief’ on appeal, and were summarized in the majority Opinion (pp. 2-5). A. Statutory Context. The California Water Code establishes a five-member Board, the composition of which is spelled out in some detail. Water Code section 175 et seq. Water Code, § 183 requires that “any final action of the board shall be taken by a majority of all the members of the board,” i.e., by a minimum of three (3) members of the Board. The Water Code authorizes and requires the five-member Board to annually adopt a “schedule of fees” to fund the various water quality and waste discharge regulatory programs for which the Board is responsible. (Water Code, § 13260.) Section 13260 directs the Board to adopt such fee schedules, by emergency regulations, and “further requires the Board to adjust the annual fees for each fiscal year to conform to the revenue levels set forth in the Budget Act.” [AR, Tab 16, p. 000091.] The Board maintains eight (8) distinct “waste discharge” regulatory programs under the authority of Section 13260. The Board funds each of those programsbydistinct fees charged under Section 13260, and separately accounts for the proceeds and use ofthe various fees. This action challenges the “fees” charged for permits under the Board’s “Storm Water” regulatory 2644/030584-0002 8443441.3 a05/29/15 -14- activity. Water Code, section 13260 further specifies how the Board is to determine and establish that schedule of fees, the factors to be considered, the limitations on the Board’s authority to establish the fee schedules, and the Board’s duty to annually adjust its fee schedules to reflect specified changesin the costs and revenues of the Board’s programs, as well as any prior over-collections of fees. Section 13260(d)(1)(B) requires the Board to establish fees which are equal to, but which do not exceed, the amounts necessary to cover the Board’s “recoverable costs,” which are specifically defined in Section 13260(d)(1)(C)). Section 13260((1) also imposes a statutory duty on the Board “to automatically adjust the annual fees each fiscal year to conform to the revenuelevels set forth in the Budget Act” and to further adjust the annual fees “to compensate for” the over-collection of excess fees in previous years. B. The “Board’s” Approval Of The Disputed Schedule Of Fees. Petitioner objected to the new schedule of fees proposed for Board approval in September 2011. Petitioner’s objections were largely inspired by evidence produced by the Board’s own staff, showing that the fee schedule was skewed, so that applicants for Storm Water permits were charged substantially more than the Board’s costs of services and expenditures for that regulatory program. The Staff Report for the Board meeting of September 16, 2011 (at AR, Tab 16, p. 000095) explicitly called 2644/030584-0002 8443441 .3 a05/29/15 -15- out this gross failure to correlate the Board’s fees with its costs ofproviding the services for which the fees are ostensibly charged: E.g.: Between FY 2004-05 and FY 2009-10, the Storm Water Program collected approximately $22 million more in revenue than it incurred in expenditures. This amount contributed to the large reserve balances carried in the WDPFduring these years. It also allowed the State Water Board to minimize fee increases during this time period. The Board further acknowledged that the proposed new schedule of fees under consideration would perpetuate this disproportionate imposition of Storm Water permit fees substantially in excess of the Board’s costs or expenditures to operate the Storm Water regulatory activity. The Board’s own records showedthat in every one of the seven fiscal years leading up to the consideration of the new fee schedule in September 2011, the Board received substantially more revenues in Storm Water fees than it reported as “expenditures” for the Storm Water program. In fact, the net surplus over the seven years since FY 2004-05 is reported as $23,506,000. (SWRCB’s Revenue andExpenditures by Program [AR Tab 9, p. 000079--80}.) Petitioners, and many others including municipalities and local water agencies subject to Storm Water permit fee, objected to the proposed fee schedule at the Board hearing. Three members of the Board were in attendance. At the end of the hearing, one of the three Board members 2644/030584-0002 84434413 a05/29/15 -16- announced they would abstain. Only two members of the Board actually voted in favor of the proposed schedule offees. Petitioner then timely filed this action for judicial review andrelief from the Board’s unlawful adoption of unjustified “fees. C. The Litigation And Appeal. Petitioner timely filed its writ petition and complaint in December 2011. The parties stipulated to the Board’s preparation ofan “agreed record” and the case was tried on documentary evidence before the Hon. Curtis Karnow in San Francisco Superior Court. Althoughthetrial court issued a tentative ruling that would have held that the vote by just two members of the Board violated Water Code, section 183, the trial court eventually ruled against petitioner on all counts. Petitioner filed a timely appeal in January 2013. Following the submission of briefing by both sides, the appeal came on for its first oral argument in January 2014. That oral argument focused almost exclusively on the question of the procedural invalidity of the action taken by just two members of the five-member Board. Following argument the case was submitted. On March 13, 2014 the Court of Appeal vacated the submission, and requested the parties to provide supplemental briefing “discussing the application and interplay, if any, of Water Code sections 181 and 183.” The parties submitted their respective supplemental briefs, and petitioner also 2644/030584-0002 8443441.3 205/29/15 -17- requested judicial notice of materials relevant to the legislative history of Water Code sections 181 and 183, which wasgranted. The appeal was heard again at the second oral argument on January 20, 2015.4 The Court of Appeal issued, and published, its decision on April 20, 2015, which consisted of the majority Opinion by Presiding Justice Kline, joined by Judge Brick, and a Dissenting Opinion by Justice Richman. The majority Opinion concluded that the Board was operating properly under Water Code section 181, rather than section 183, when it approved the fee schedule with the votes ofjust two Board members. The majority Opinion then proceeded to address the substantive challenge to the validity of the “fees” and concludedthat the fee schedule wasnot invalid, becausethetotal . fees collected under the fee schedule did not exceed the Board’s total expenditures for the eight regulatory activities conducted under the umbrella of its “waste discharge” program. The Dissenting Opinion explained at length, and in detail, that the majority Opinion failed to properly apply the governing rules of statutory interpretation and failed to give proper weight to the explicit statement of 4 Theappellate panel for this second oral argument wasdifferent than the first argument, and the panel included the Hon. Steven A. Brick of the Alameda County Superior Court. Judge Brick was not present in Court during the second oral argument, however, as the parties consented to Judge Brick participating by listening to a recording of the argument. 2644/030584-0002 8443441 3 a05/29/15 -18- legislative intent when Section 183 was amended to require “a majority of all the membersofthe Board”and notjust “a majority of a quorum”for the Boardto take “any final action.” (Richman,J. dissenting, at p. 15, discussing the “Report of the Senate Committee on Water Resources on Assembly Bill 412” by Sen. Gordon Cologne, Chair of the Senate Committee, in August 1969 [printed in full in the Dissent at pp. 9-10].) In view of the Dissent’s conclusion that the fee schedule had not been lawfully adopted by just two votes, it did not address the substantive challenge to the failure of the Board to provide evidence showing that its fees did not exceed the costs of the services for which they are imposed. Petitioner timely filed a Petition for Rehearing with the Court of Appeal. The Court denied that Petition on May 11, 2015, although it made numerous corrections and modifications to the decision. As noted in the Court of Appeal’s “Order Modifying Opinion and Denying Rehearing” of May11, 2015, “Richman, J. would grant the petition for rehearing.” IV. ARGUMENT As the quest for revenues by state and local governmental agencies increasingly pushes the limits set by the Constitution, by the voters, and by this Court, the challenge of distinguishing reasonable, and lawful, governmental“fees” from unjustified charges or disguised “taxes”takes on even more urgency and importance. The majority Opinion in this case would stretch those limits beyond the bursting point. It would instead allow 2644/030584-0002 8443441.3 a05/29/15 -19- agencies to evade this Court’s mandates that, in order to establish valid “fees,” an agency must show that its charges are reasonably related to, and limited to, the costs of the services or activities for which they are imposed, and fairly apportion the relevant costs to fee payors according to their respective burdens on services for which the charges are ostensibly imposed. (Cf., California Farm Bureau, supra, 51 Cal.4 421, 437.) A. Review Is Necessary To Assure That “Fees” Are Limited To The Costs Of Services Or The Regulatory Activity For Which The Fees Are Charged. This Court long ago explainedthat to be a valid regulatory “fee” rather than an unlawfullicense tax, the charge “must not be more than is reasonably necessary for the purpose sought, i.e., the regulation of the business.” (County of Plumas v. Wheeler (1906) 149 Cal. 758, 763 [emph. added].) “The general rule is that a regulatory ... fee ... cannot exceed the sum reasonably necessary to cover the costs of the regulatory purpose sought.” (United Business Com. v. City ofSan Diego (1979) 91 Cal.App.3d 156, 165 [emph. added].) This Court subsequently restated the requirements for valid “fees” in Pennell v. City ofSan Jose (1986) 42 Cal.3d 365, 375, explaining that valid fees “do not exceed the reasonable costs of providing services necessary to the activity for which the fee is charged....” (quoting Mills v. County of Trinity (1980) 108 Cal.App.3d 656, 659-660 [emph. added].) Following passage of Proposition 13 (Cal. Const., art. XII[A), the 2644/030584-0002 84434413 a05/29/15 -20- Court again explained that regulatory fees “do not exceed the reasonable cost of providing services necessary to the activity for which the fee is charged, and which are not levied for unrelated revenue purposes.” (Sinclair Paint, supra, 15 Cal.4th at 878 [emph. added].) The burdens on governmental agencies to demonstrate the validity of charges they imposeas “fees” have been further clarified by the courts, and made morestringent by amendments to the Constitution. See, e.g., City of San Buenaventura v. United Water Conservation Dist., supra, 235 Cal.App.4th at 239: “Largely in response to the Sinclair Paint decision, California voters approved Proposition 26 in 2010 to close the perceived loopholes in Propositions 13 and 218 that had allowed ‘a proliferation of regulatory fees imposed by the state without a 2/3 vote of the Legislature or imposed by local governments without the voters’ approval. (Schmeerv. County ofLos Angeles (2013) 213 Cal.App.4th at pp. 1322, 1326.)” Most recently, in a case involving the respondent Board, this Court again explained the limitations on regulatory fees: “A fee may be charged by a governmententity so long as it does not exceed the reasonable cost of providing services necessary to regulate the activity for which the fee is charged.” (Cal. Farm Bureau, supra, 51 Cal.4th at 437 [emph. added].) The majority Opinionin this case allows the Board to defy this Court’s holdings as to the requirements for valid “fees.” In this case, the “regulatory purpose ostensibly sought to be covered” 2644/030584-0002 71 84434413 a05/29/15 cain by the Board’s distinct Storm Water fees was the regulation of Storm Water permittees — not the combinedcosts ofthe eight or more activities embraced in the overall waste discharge program. Had the Board intendedto setits fees to coverthe total combined costs ofall aspects its activities under the umbrella of just “one big waste discharge program,” it presumably could have done so — but would have been required to fairly allocate those combined costs to all regulated parties included in that program at uniform — rates, (or at least “reasonably allocated” rates) rather than setting up eight different rates that subsidize somefee payers and over-charge others, without regard to the differential costs of services to variousclasses offee payors the Board chooseto create. B. Review Is Necessary To Clarify The Burden of Demonstrating The Validity Of Charges Imposed By Government As Purported “Fees”. Following passage of Proposition 13, the Court explained the government’s burden in distinguishing fees from taxes: “[T]o show ‘fee’is a regulatory fee and not a special tax, the government should 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 charges allocated to a payor bear a fair or reasonable relationship to the payor’s burdenson or benefits from the regulatory activity:”* (Sinclair Paint, supra, 15 Cal.4th at 878 [emph. added].) The majority Opinion here, however, erroneously asserted (and 2644/030584-0002 84434413 a05/29/15 -22- frequently repeated) the mantra that the appellant CBIA had “the burden of making a prima facie case showing the fee (sic) was invalid.” (Slip Opn., p. 2.) This is a mistake of law, undermining the rest of the Opinion. The majority Opinion cited Farm Bureau, supra, 51 Cal.4th at 436, out of context, and erroneously conflated the agency’s initial “burden of producing evidence”the distinct, and contingent, “burden of proof”attrial. In Farm Bureau, supra, 51 Cal4th at 442, the Court reviewed a pre- Proposition 26 challenge to the Board’s regulatory fees for water rights permits under Water Code section 1525. The Court there reiterated the constitutional burden on the Water Board to make a sound evidentiary showing in the first instance, “that the associated costs of the regulatory activity were reasonably related to the fees assessed on the payors,” citing Sinclair Paint, supra, and did not put“the burdenofproof” onthe challenger. In any event, the majority Opinion erroneously dismissed the impact of the passage of Proposition 26 in 2010. It is now clearthat: “The State bears the burden of proving by a preponderanceof the evidencethata levy, charge, or other exaction is not a tax, that the amount is no more than necessary to coverthe reasonable costs ofthe governmentalactivity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on or benefits received from the governmental activity.” (Cal. Const. art. XTIIA § 3 subd. (d) [emph. added].) (See Schmeer v. County ofLos Angeles (2013) 213 Cal.App.4th 2644/030584-0002 8443441.3 a05/29/15 . -23- 1310, 1326: Prop 26 shifted the burden of proof to the state to show the validity of its fees.) Review should be granted to reverse the erroneous holding ofmajority Opinion onthis point and to makeit clear that, following Proposition 26, the government agencyhasthe initial burden ofproducing evidencesufficient to demonstrate that it used a valid method for imposing the fee and fairly allocating its costs of service. (See, e.g., City ofSan Buenaventura v. United Water Conservation Dist. (2015) 235 Cal.App.4th 228, 242; Southern Cal. Edison v. Public Utilities Comm. (2014) 227 Cal.App.4th 172, 198; see also, Cal. Const. art. XII A, § 3 subd. (d); art. XIII C, § 1, subd. (e);art. XIII D, § 6, subd. (b)(5).) C. Review Is Necessary To Assure Proper Interpretation Of The Water Code As It Governs the Actions Of The State Water Resources Control Board — And To Again Make It Clear That “ANYFinal Action OfThe Board Be Taken By A Majority OfAll The Members Of The Board” As Required By Section 183. The Dissent vigorously criticized the majority Opinion for its conclusion that Water Code section 181 governed the Board’s operations, rather than section 183, and pointed out that the Board had previously assumed that section 183 was applicable and required a “majority of all the members”to take “any”effective final action. Review should be granted so that these weighty criticisms may be addressed, since the operations of a very critical state agency are at stake. Significantly, the respondent Board never even arguedthatthe actions 2644/030584-0002 84434413 a05/29/15 -24- of its two members were authorized by section 181, until after the first oral argument in the Court of Appeal, and the Court’s subsequent request for supplemental briefing on sections 181 and 183. The majority Opinion erroneously dismissed the language of the statute, as well as highly-relevant legislative history and explicit statements of the Legislature’s intent, and instead distorts section 181. As the Dissent emphasized, rarely is a court afforded such clear and explicit evidenceofthe Legislature’s intention as in this case. That evidence included the “Report of the Senate Committee on Water Resources on Assembly Bill 412” submitted by Sen. Gordon Cologne, Chair of the Senate Committee, in August 1969 in conjunction with the Legislature’s amendment ofWater Code Section 183. That Report explicitly stated that the Legislature was amending Section 183 to remove any prior “ambiguity” about the operations of the Board, and explicitly “requiring that final board action shall always require the concurrenceof a majority ofall the members of the board, not just a majority of a quorum.” (Opn., Richman, J. dissenting, at p. 15, and printing the “Report of the Senate Committee” in full in the dissent at pp. 9-10].) | The Dissent found the majority’s dismissal of this explicit legislative declaration of intent virtually inexplicable, and contrary to established practices in statutory construction. The majority Opinion misstated petitioner’s position, and asserted that 2644/030584-0002 84434413 a05/29/15 -25- “CBIAclaims that section 183 creates an exception to the common law rule set forth in section 181.” (Slip Opn., p. 7.) Notso. Like the respondent Board, CBIA never even mentioned “section 181” until after the first oral argument. To the contrary, both parties have always contended that the operations of the Board are governed by statutes, rather than by “common law.” Invocation of “common law” arguments is misplaced. The majority Opinion stretched the text of section 181 beyond reason, interpreting it to “save” the respondent’s action in this case but at the same time rendered section 183 either surplusage or inconsistent with section 181, e.g., if section 181 allows a “majority of a quorum”to take “‘any final action,” then the part of section 183 requiring “a majority of all the members ofthe Board”to take action would be inconsistent with section 181. The canons of statutory construction forbid such “interpretations.” (Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1036 [Words must be construed in context, and statutes must be harmonized wees Interpretations that lead to absurd results or render words surplusage are to be avoided.”].) Finally, as pointed out by the Dissent, the majority Opinion’s “statutory construction” would invite non-democratic quasi-legislative action by a mere minority of a unelected regulatory Board, despite a “contrary statutory provision,” and the constitutional demands for public accountability and limitations on taxes or “fees” in excess of the costs for 2644/030584-0002 84434413 205/29/15 -26- which they are imposed. Vv. CONCLUSION For each of the reasons set forth above, it is respectfully submitted that the majority Opinion is based on legal error, and creates several new conflicts with established authority. The majority Opinionis also in direct conflict with the new decision of the Fourth Appellate District in Capistrano, supra, as set forth above. Accordingly, petitioner respectfully urges the Court to grant this Petition for Review. Dated: May 29, 2015 RUTAN & T Me,LLP ead P.Mey Attorneys for Plaintiff and Appellant CALIFORNIA BUILDING INDUSTRY ASSOCIATION 2644/030584-0002 2 8443441.3 a05/29/15 -27- CERTIFICATE OF WORD COUNT The text ofthis Petition for Review consists of 6,377 words as counted by the Microsoft Word 2013 word-processing program usedto generate this Petition. Dated: May 29, 2015 RUTAN & TUCKER, LLP MalGoole DP. LANFERMAW Attorney for Appellant and Plaintiff CALIFORNIA BUILDING INDUSTRY ASSOCIATION 2644/030584-0002 28 8443441.3 a05/29/15 “LO~ PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF SANTA CLARA I am employed by the law office of Rutan & Tucker, LLP in the County of Santa Clara, State of California. I am over the age of 18 and not a party to the within action. My business address is Five Palo Alto Square, 3000 El Camino Real, Suite 200, Palo Alto, CA 94306-9814. On May 29, 2015, I served on the interested parties in said action the within: PETITION FOR REVIEW as stated below: [Xx] (BY FEDEX) by depositing in a box or other facility regularly maintained by FedEx, an express service carrier, or delivering to a courier or driver authorized by said express service carrier to receive documents, a true copy ofthe foregoing documentin sealed envelopes or packages designated by the express service carrier, addressed as shown on the attached mailing list, with fees for overnight delivery provided for or paid. I certify that I am employedin the office of a memberofthe bar of this Court at whose direction the service was made. Executed on May29, 2015, at Palo Alto, California. I declare under penalty of perjury that the foregoing is true and correct. Janet Lee tee (Typeor print name) J (Signature) 2644/030584-0002 8443441.3 a05/29/15 SERVICE LIST Tiffany Yee Attorneys for Deputy Attorney General Defendant/Respondent California Department of Justice STATE WATER RESOURCES 1515 Clay Street, 20th FI. CONTROL BOARD Oakland, CA 94612 tiffany.yee@doj.ca.gov Kamala D. Harris Attorneys for Robert E. Asperger Defendant/Respondent Office of the Attorney General STATE WATER RESOURCES 1300 I Street CONTROL BOARD Sacramento, CA 94244-2550 Hon. Curtis E.A. Karnow Trial Court San Francisco County Superior Court 400 McAllister St. San Francisco, CA 94102 Court ofAppeal of the Appellate Court State of California First Appellate District, Division Two 350 McAllisterSt. San Francisco, CA 94102 2644/030584-0002 84434413 a05/29/15 H U G G E R 800-422-9194 /RECYCLED TAB www.prosupplies.nat A Pro Office a n d Filing S u p p l i e s P r o d u c t Filed 4/20/15 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO CALIFORNIA BUILDING INDUSTRY ASSOCIATION, Plaintiff and Appellant, A137680 v. . STATE WATER RESOURCES CONTROL (San Francisco City and County BOARD, Super. Ct. No. CGC-11-516510) Defendant and Respondent. _ Whenparties discharge waste that could affect the quality of California’s water they must pay an annual permit fee set by the State Water Resources Control Board (the Board). (See Wat. Code, § 13260.)!1 In 2011, two ofthe five seats of the Board were vacant; two of the remaining three Board members voted to approve an increase of fees for the 2011-2012 fiscal year. The California Building Industry Association (CBIA) asserts that section 183 required the fees to be approved by a majority of the five-person Board. CBIAalso contends that the Board violated section 13260 and imposedanillegal tax because the fee imposed on the dischargers in the storm water program—oneofeight program areas in the waste discharge permit program—exceededthe cost of regulating this particular program. The Board respondsthat a majority of the Board’s quorum voted to approve the fee in compliance with section 181, the applicable statute. The charge wasa valid regulatory fee under section 13260, according to the Board, becausethetotal fees collected for all eight programs did not exceedthe total cost to regulate the entire waste 1 All further unspecified code sections refer to the Water Code. 1 discharge permit program. The Board maintains that CBIA incorrectly interprets the law to impose a requirementthat the fees charged to storm water dischargers must correspond exactly to the costs of regulating that one program. We concludethat section 181, not section 183, applies to the Board’s adoption of the fee schedule and that the Board’s action complied with section 181. Wealso reject CBIA’sprincipal argumentthat the fees and regulating expenses for one particular program must be equal; we hold that section 13260 requiresthat the total fees collected from all waste dischargers must equal the costs of regulating the entire waste discharge permit program. CBIA bears the burden of making a prima facie case showing the fee wasinvalid. (See California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal.4th 421, 436 (Farm Bureau).) Courts haveheld that a regulatory fee is valid as long" as the charges do not surpass the costs of regulating the program andthe allocation of the fees to the payoris fair and reasonable. (See,e.g., Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866, 878 (Sinclair Paint); San Diego Gas & Electric Co. vy. San Diego County Air Pollution Control Dist. (1988) 203 Cal.App.3d 1132, 1146; Beaumont Investors v. Beaumont-Cherry Valley Water Dist. (1985) 165 Cal.App.3d 227, 235.) Here, CBIA did not make a prima facie case that the charges surpassedthe costs of regulating the program orthat allocation of the fees was unfair or unreasonable. Accordingly, we affirm the judgment. BACKGROUND The Permit Feesfor Water Dischargers The Board, a state agency within the California Environmental Protection Agency, regulates water rights and water quality. (§§ 175, 179.) In 1969, the Legislature addedto the Water Code, Assembly Bill No. 413 (Stats. 1969, ch. 482), which included the Porter- Cologne Water Quality Act (the Act), a statewide program for water quality control. (§ 13000 et seq.) Underthis Act, nine regional boards, overseen by the Board, administer the state program in their respective regions. (§§ 13140, 13200 et seq., 13240, 13301.) The Act vests the Board with authority to formulate and adopt state policy for water quality control. (§ 13140.) Parties who discharge waste or propose to discharge waste “that could affect the quality of the waters of the state” are required by the Act to file a “report of waste discharge”(i.e., a permit application) with the Board. (§ 13260, subds.(a)-(c).) Each party filing a permit application under the Act must pay an annual fee according to a fee schedule established by the Board. (§ 13260, subd. (d)(1)(A).) The fees collected are deposited in the Waste Discharge Permit Fund (the Fund), and “[t]he money in the {F]undis available for expenditure by” the Board “upon appropriation by the Legislature solely for the purposesof carrying out this division.” (Ud, subd. (d)(2)(A).) “Thetotal amount of annual fees collected . . . shall equal that amount necessary to recover costs incurred in connection with the issuance, administration, reviewing, monitoring, and enforcement of waste discharge requirements and waivers of waste discharge requirements.” (/d., subd. (d)(1)(B).) The Board must annually adopt a water quality fee schedule by emergency — regulation to establish the amount of fees each discharger must pay that year. (§ 13260, subd. (f)(1).) “The total revenue collected each year through annualfees shall be set at an amount equal to the revenuelevels set forth in the Budget Actfor this activity. The state board shall automatically adjust the annual fees each fiscal year to conform with the revenue levels set forth in the Budget Act for this activity. If the state board determines that the revenue collected during the preceding year was greater than, or less than, the revenuelevels set forth in the Budget Act, the state board may further adjust the annual fees to compensate for the over and undercollection of revenue.” (bid.) The Schedule ofFeesfor the 2011-2012 Fiscal Year For the 2011-2012 fiscal year, the annual Budget Act provided for $100,672,000 in spending from the Fundfor the waste discharge permit program, but the projected revenue based on the existing fee schedule was $73,070,000. The Board staff calculated that it would have to increase the fees to compensate for a $27.6 million dollar shortfall, and proposed significant fee increases in the eight program areaswithin the waste 3 discharge program,including the storm water program area.2, With regard to the storm water program, the Board had collected substantially more revenues than it reported as “expenditures” for each of the sevenfiscal years prior to the fiscal year 201 1-2012. The net surplus overthe seven years since fiscal year 2004-2005 was $23,506,000. The Board’s staff proposed a 34.9 percent increase in fees for all storm water dischargers to generate fee revenue to equal the storm water program area’s budget of $26,619,000for fiscal year 2011-2012. The Board scheduled a public hearing for September 19, 2011, for the consideration of new “emergency regulations” related to the proposedschedule offees for fiscal year 2011-2012. The Board currently consists of five members. (§ 175, subd. (a).) At the time of the hearing on September 19, 2011, two seats on the Board were vacant. The remaining three Board members conducting the hearing considered the opposition to the fee increase presented by CBIA and others. The Board adopted Resolution 2011-0042, which approved the proposed new schedule of fees. The new fee schedule increased the storm water program fees by 34.9 percent; the total fee increase forall eight programs cumulatively averaged 37.8 percent. Twoofthe three Board members voted for the _ resolution, while the third abstained. On September 22, 2011, the Board submitted the emergency regulation adopted at the Board meeting on September19, 2011, to the Office of Administrative Law for approval. The emergency regulations werefiled with the Secretary of State, and published in the California Code of Regulations. | 2 The Board asserts that these are eight program areas but acknowledgesthatits ownstaff often refers to them as programs, not program areas. The Board claimsthat “falll eight program areas are merely different components ofthe same regulatory activity.” Withoutproviding significant detail or description, the Board identifies the following eight program areas: the storm water program, the national pollutant discharge elimination system program, the waste discharge requirements program, the land disposal with a “tipping” fee, the land disposal without a “tipping” fee, the 401 certification program,the confined animalfacilities program,andtheirrigated lands regulatory program. Court Proceedings On December 9, 2011, CBIAfiled a petition for writ of mandateand a complaint for declaratory and injunctive relief. CBIA is a nonprofit corporation with 3000 members whoare “active in all aspects of the home-building industry throughout California.” CBIA and its members“are required to seek waste discharge and storm water discharge permits from the Board[.]” CBIA claimed the storm water fees were higher than the amount permitted under section 13260 and were not a valid regulatory fee. Additionally, it claimed that section 183 requires a majority vote by all members of the Board to adopt a fee schedule, which did not occur; therefore the fee, according to CBIA,wasinvalid. Thetrial court held a hearing on September 20, 2012, and later that day issued an order denying the writ petition. CBIA filed a motion for reconsideration, which was heard on October 25, 2012. The court denied this motion andfiled its judgmentin favor of the Board. CBIAfiled a timely notice of appeal. After filing their briefs, and at our request, the parties provided supplemental briefing on the applicability of sections 181 and 183. DISCUSSION I. The Number ofBoardMembers Necessaryfor Approvalofthe Fee Asnoted, in September 2011, when the Board adopted the fee schedule for fiscal year 2011-2012, two Board seats were vacant. Of the three remaining Board members conducting the hearing in September 2011, two voted to approve the fee schedule; the third memberabstained. CBIA contends that underthe plain languageof section 183, a majority of the Board members—three—had to approvethe fee schedule, and the approval by two Board members wasnot procedurally valid. The Board respondsthat section 181, not section 183, applies to the Board’s action and the fee was validly approved pursuant to section 181 because two of the three Board members, a majority of the quorum, voted to adopt the fee schedule. A. Standard ofReview Interpreting statutes is a question of law subject to de novo review. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 311.) “ ‘[A]s in any case of statutory interpretation, our task is to determine afresh the intent of the Legislature by construing in context the languageofthe statute.’ [Citation.] In determining such intent, we begin with the languageofthe statute itself. [Citation.] That is, we look first to the words the Legislature used, giving them their usual and ordinary meaning. [Citation.] ‘If there is no ambiguity in the languageofthe statute, “then the Legislature is presumed to have meant whatit said, and the plain meaning of the language governs.” ’ [Citation.] ‘But whenthe statutory language is ambiguous, “the court may examine the context in which the language appears, adopting the constructionthat best harmonizesthe statute internally and with related statutes.” ’ [Citation.] [§] In construing a statute, we must also consider ~ © “the object to be achieved andthe evil to be prevented bythelegislation.” ’ [Citation.]” (People v. Superior Court (Zamudio) (2000) 23 Cal.4th 183, 192-193.) We “ ‘avoid a construction that would produce absurd consequences, which we presumethe Legislature did not intend.’ ” Un re Greg F. (2012) 55 Cal.4th 393, 406.) B. The Plain LanguageofSection 181 and 183 Section 181, consistent with the common-law rule, provides that “[t]hree members of the board shall constitute a quorum for the purpose of transacting any business of the board.” (See Civ. Code, § 12 [Words giving a joint authority to three or more public officers or other personsare construed as giving such authority to a majority of them, unless it is otherwise expressed in the Act giving the authority”]; Code Civ. Proc., § 15 [same].) “The almost universally accepted common-lawrule. . . is, in the absence of a contrary statutory provision, a majority of a quorum constituted of a simple majority of a collective body is empoweredto act for the body. Where the enabling statute is silent on the question, the bodyis justified in adhering to that common-law rule.” (F.T.C. v. Flotill Products, Inc. (1967) 389 U.S. 179, 183-184, fn. omitted; see also McCrackenv. City of San Francisco (1860) 16 Cal. 591, 602.) Here, three Board members were present at the meeting and a majority of the quorum approvedthe fee schedule. Under section 181 and the commonlaw, the Board’s approvalof the fee schedule was procedurally valid. CBIAclaimsthat section 183 creates an exception to the commonlaw ruleset forth in section 181. According to CBIA,the plain language in the second paragraph of section 183 requires a majority of the Board, which is three members, to approve any final action of the Board. Section 183 reads: “The board may hold any hearings and conduct any investigations in any part of the state necessary to carry out the powersvestedin it, and for such purposes has the powers conferred upon heads of departments ofthe state by Article 2 (commencing with Section 11180), Chapter 2, Part 1, Division 3, Title 2 of the Government Code. [{] Any hearing or investigation by the board may be conducted by any member upon authorization of the board, and he shall have the powers granted to the board by this section, but any final action of the board shall be taken by a majorityofall the members of the board, at a meeting duly called and held. [{] All hearings held bythe board or by any memberthereofshall be open and public.” (§ 183, fn. omitted.) Webegin with the presumptionthat, in the absence of an express provision, statutes do not alter the commonlaw and should be construed to avoid conflict with common law rules. (Saala v. McFarland (1965) 63 Cal.2d 124, 130, fn. omitted; see also Liv. Yellow Cab Co. (1975) 13 Cal.3d 804, 815.) Accordingly, “ ‘[r]epeal by implication is recognized only wherethere is no rational basis for harmonizing two potentially conflicting laws.’ [Citation.]” (California Assn. ofHealth Facilities v. Department of Health Services (1997) 16 Cal.4th 284, 297.) The middle paragraph of section 183 authorizes a single memberofthe Board to conduct a hearing or investigation, but specifies that no final action can be takenat that hearing. Thefirst part of the sentence permits hearings and investigations to be “conducted by any member uponauthorization of” the Board, and the secondpart of the same sentence specifies “but any final action of the board shall be taken by a majority of all the membersofthe board, at a meeting duly called and held.” (§ 183, italics added.) The word “but” is a conjunction and is “used to express a difference or to introduce an 7 added statement.” (.) The use of the word “but”plainly ties the requirementoftaking any final action by a majority to the first phrase, which refers to a hearing conducted by one Board member. Furthermore, the end of the sentence specifies that the final action will be taken by a majority of Board members “at a meeting duly called and held” (§ 183); no subsequent meeting would needto be called except in a situation where fewer than a quorum participated in the first hearing or meeting. Focusing on the word “any,” CBIA asserts that the “plain meaning”of section 183 is that “any final action” of the Board must be taken by a majority of the membersofthe 9099Board. Theyinsist that “ ‘[t]he word “any” is not ambiguous[.]’” (See People v. Dunbar (2012) 209 Cal.App.4th 114, 117-118 [statute targets the forgery of “ ‘any book of records[,]’ ” and the use of the word “ ‘any’ ” indicated that it applied to public or private records, not just public records]; see also Department ofCalifornia Highway Patrol v. Superior Court (2008) 158 Cal.App.4th 726, 736 [use of “the word ‘any’ .. . in a statute unambiguously reflects a legislative intent for that statute to have a broad application’’].) We agree that, standing alone, the word “any” is unambiguous. However, CBIA has not construed this word, as it must, in the context in which it appears. (See Lungren __y. Deukmejian (1988) 45 Cal.3d 727, 735.) Weinterpret “any,” as we interpretall the wordsofthe statute, in context, harmonizing to the extent possible all provisions relating to the same subject matter. (County ofAlameda v. Pacific Gas & Electric Co. (1997) 51 Cal.App.4th 1691, 1698.) “[T]he word ‘any’ means without limit and no matter what kind.” (Delaney v. Superior Court (1990) 50 Cal.3d 785, 798.) The plain meaning of this word in contextis that all final actions following a hearing or investigation by one Board member mustbe “taken by a majority ofall the members ofthe board”at another duly called meeting. (§ 183.) This construction is consistent with a broad rather than narrow application of the word “any”(see, e.g., Utility Cost Managementv. Indian Wells Valley Water Dist. (2001) 26 Cal.4th 1185, 1191 [“[t]he use of the word ‘any’ andthe inclusion of several disjunctives to link essentially synonymous wordsall serve to 8 broaden the applicability of the provision”), as no particular action or subset of actions following the hearing or investigation of a single Board member is exempt from the requirementthat final action can only be “taken by a majority of all the members ofthe board, at a meeting duly called and held.” (§ 183.) The Legislature by using the word “any” clearly intended to prevent the Board from everbeingableto delegate final decision-making authority to one Board member. Furthermore, our interpretation of section 183 is consistent with section 175. Subdivision (b) of section 175 states that members of the Board “shall, to the extent possible, be composed of members from different regions of the state” and subdivision (a) provides that the members must represent diverse specialties: “One of the members appointed shall be an attorney admitted to practice law in this state whois qualified in the fields of water supply and waterrights, one shall be a registered civil engineer under the lawsofthis state who is qualified in the fields ofwater supply and waterrights, one shall be a registered professional engineer under the lawsofthis state who is experienced in sanitary engineering and whois qualified in the field of water quality, and one shall be qualified in the field of water quality. One of the above-appointed persons, in addition to havingthe specified qualifications, shall be qualified in the field of water supply and water quality relating to irrigated agriculture. One membershail not be required to have specialized experience.” (§ 175, subd. (a).) Section 175 indicates that the Legislature appreciated that the hearings and investigations before the Board requires specialized knowledge and thus under section 183 the Legislature permits the Board to delegate the responsibility of a hearing or an investigation to a Board memberwith the requisite specialization. However, the expertise of that Board member does not enable him or her to makeanyfinal decision; any final action pursuant to this section requires a subsequent hearing and must “be taken by a majority of all the members of the board... .” (§ 183.) The interpretation urged by CBIA and Justice Richman creates an unnecessary conflict between sections 181 and 183. These statutes can clearly be harmonized, as the express language of section 183 indicatesthat it applies only to situations in which the Board has delegated authority to one member to conduct a hearing or meeting. 9 Accordingly, because a quorum participated in the hearing pertinentto this case, section 183 does not apply. C. Legislative History Because webelieve the plain language of section 183 makes clear that it does not apply to all final decisions, we do notneedthe aid oflegislative history to determine the ~ statute’s true meaning. (See People v. Gonzalez (2014) 60 Cal.4th 533, 537-538.) We considerthelegislative history only because CBIA and Justice Richman rely so heavily upon it.5 CBIAreadsthe legislative history as indicating that section 183 appliesto all final actions of the Board. Sections 181 and 183, which were formerly sections 191 and 193, respectively, were enacted in 1956. At that time, the Board was comprisedofthree members. Formersection 191 provided: “The board shall maintain its headquartersat Sacramento and shall hold meetings at such times andat suchplacesasshall be determined by it. The Governor shall designate the time and place for the first meeting of the board. All meetings of the board shall be open and public.” (Stats. 1956, 1st Ex. Sess., ch. 52, § 7.) Former section 193 stated: “The board may hold hearings and conduct any investigations in any part of the State necessary to carry out the powers vested in it, and for such purposes as the powers conferred upon heads of departments of the State by Article 2.... [§] Any hearing or investigation by the board may be conducted by any member of the board upon authorization of the board, and he shall have 3 Justice Richman criticizes us for analyzing the “naked language of the two statutes,” while he avoids any substantial examination of the text of section 183. (Dis. ‘opn. of Richman,J., p. 1.) As is often said, the wordsofthe statute “are the most reliable indicatoroflegislative intent.” (People v. Lopez (2003) 31 Cal.4th 1051, 1056.) He also states that he is “puzzled” by our“invocation of the principle that statutes in derogation of the commonlaw are to be strictly construed.” (See dis. opn., p. 11, fn. 8.) This is a clear misreadingofour opinion. Section 183, unlike other statutes that expressly conflict with the commonlawrule(see, ¢.g., Gov. Code, § 25005), does notalter the common law quorum ruleset forth in section 181. Had the Legislature intended the interpretation advocatedby the dissent it would havesaid so clearly in section 183. (See Civ. Code, § 12; Code Civ. Proc., § 15.) 10 the powers granted to the board bythis section, but any final action of the board shall be taken by the board as a whole. [§] All hearings held by. the board or by any member thereof shall be open and public.” (Stats. 1956, lst Ex. Sess., ch. 52, § 7.) In 1957, sections 191 and 193 were renumbered as sections181 and 183 (Stats. 1957, ch. 1932), and section 181 was amendedto add the followingas the final sentence: “Two membersofthe board shall constitute a quorum for the purposeoftransacting any business of the board.”4 (Stats. 1957, ch. 947, § 4.) Section 183 was amended to change “any final action of the board shall be taken by the board as a whole”to “any final action of the board shall be taken by a majority of membersofthe board at a meeting duly called and held.” (Stats. 1957, ch. 1824, § 2.) On June 14, 1957, Office of Legislative Counsel provided a “Report on Senate Bill No. 2199,” stating in pertinent part the following: “Section 181 of the code, as amended by Chapter 947 (A.B. 2970) of this session, provides that two members of the board shall constitute a quorum for the purposeoftransacting any business of the board. This bill would makeit clear that the same number of members maytake anyfinal action of the board.”5 Sections 181 and 183 have developed parallel to each other and the Board’s interpretation of the statutes, consistent with the Office of Legislative Counsel’s statement, reflects that the Legislature never intended for section 183 to supplant section 181. Rather, the Board’s long-established interpretation of section 181 has beenthatit generally applies to “any final action” of the Board. Whenan administrative agency has consistently interpreted statutory language overtime, its long-standing analysis is entitled to greater deference. (Yamaha Corp. ofAmericav. State Bad. ofEqualization (1998) 19 Cal.4th 1, 13.) 4 In 1967, when the size of the Board wasincreased to five members, section 181 was amendedto state that three members of the Board constitute a quorum. 5 At oral argument, CBIA claimed, without citing any authority, that section 183 concerns“quasi-legislative, rule-making” decisions and section 181 applies solely to business decisions. This argumentis inconsistent with the Legislative Counsel’s comment and the plain language of section 183. 11 In 1969, Assembly Bill No. 412 amendedthe secondparagraphof section 183 by adding the word“all” so that section 183 required that “any final action of the board shall be taken by a majority ofall the members ofthe board at a meeting dulycalled and heldf.]” (Stats. 1969, ch. 482, § 2.) CBIA andJustice Richman rely heavily on a letter dated July 29, 1969, from Senator Gordon Cologne, Chair of the Senate Water Resources Committee, regarding this bill. This letter, printed in the Senate Journal, quotes the report from the Committee on Water Resources, and specifies that the following comments in the report are to “beutilized to assist in the determination oflegislative intent” in approving AssemblyBill No. 412. Underthe heading of “Section 183,” the report provides: “The present law is ambiguousasto whetherfinal action by the state board always requires a majority consisting of three membersof the five-manstate board, or whetherthe majority required is only that of the ‘membersofthe board (present) at a meeting duly called and held.’ In the latter case three members could constitute a quorum,and the vote of two members would constitute a majority of the membersat the meeting. An amendment has been madeto this section to remove the ambiguity by requiring that final board action shall always require the concurrence of a majority of all the membersofthe board, not merely a majority of a quorum.” CBIA and Justice Richmanattribute far more significance to Senator Cologne’s letter quoting the report from the Committee on Water Resources thanit warrants.® 6 CBIAalso cites Marina County Water Dist. v. State Water Resources Control Bad. (1984) 163 Cal.App.3d 132. In Marina County Water Dist., the Court ofAppeal did not interpret section 183. The appellate court, whensetting forth the backgroundfacts, noted that the superior court had declared a Board order void “becauseit was not approved by a majority, i.e., three members, of the Board as required by . . . section 183.” It pointed out that the Board “[s]ubsequently issued a second order... exactly the same as the first, but approved by the requisite majority. (Marina County Water Dist., at p. 136.) It is unclear from this opinion whether one member or a quorum participated in the first vote. Moreover, the court did not consider the correct interpretation of section 181 or section 183. Accordingly, Marina County Water Dist. does not provide any authority for the properconstruction of section 183. (See,e.g., Silverbrand v. County ofLos Angeles (2009) 46 Cal.4th 106, 127 [cases are not authority for issues they did not consider or decide].) 12 According to our colleague, Senator Cologne’s letter “is virtually conclusive proofthat the Legislature expressly intended that section 183 [require] that ‘final board action shall always require a concurrence of a majority of all the membersofthe board, not merely a : quorum.’ ” (Dis. opn., p. 1, Justice Richman’s italics.) That is clearly not the case. CBIA and Justice Richman misread the letter quoting the report. As the “comment” states, the ambiguity to be eliminated was “whetherfinal action by the state board always requires a majority consisting of three members of the five-man state board, or whether the majority is only that of the ‘members of the board (present) at a meeting duly called and held.’ ” The amendment was needed to makeclear “that final board action shall always require the concurrence of a majority of all the members of the board, not merely a majority of a quorum.” The “final action” mentionedin the report referred solely to the portion of section 183 concerned with a hearing or investigation conducted by a single member. The amendmentsimplyclarified that section 183 requires a majority vote of the Board with respect to final action on any matter heard or investigated by a single member of the Board. Itis telling that Senator Cologne’s letter and the report never mention section 181; his silence demonstrates the absence of any intention to do away with the general rule set forth in section 181 that “[t]hree members of the board shall constitute a quorum for the purpose of transacting any business of the board.” CBIA’s and Justice Richman’s expansive reading of section 183 ignores the principle that commonlawrules canbe statutorily altered only expressly, not by implication. (Saala v. McFarland, supra, 63 Cal.2d 124, 130; California Assn. ofHealth Facilities v. Department ofHealth Services, supra, 16 Cal.4th 284, 297; County of Sonoma v. Superior Court (2009) 173 Cal.App.4th 322, 345-346 & fn. 11 [court explained that Government Code section 25005 expressly modifies the common law rule because this statute provides, “ ‘[n]o act ofthe .board shall be valid or binding unless a majority ofall members concur therein’ ”|.) If the purpose of section 183 wasto overrule section 181, as CBIA andJustice Richmaninsist, the Legislature would certainly have done so explicitly. It did not. 13 For the foregoing reasons, we conclude that section 181 applies to the Board’s adoption of the fee schedule and the Board complied with this statute when three Board members attended the hearing on the fee schedule for the 2011-2012 fiscal year and two of the three voted to adoptthe fee schedule.’ | II. Compliance with Section 13260 _ CBIA contendsthat the Board violated section 13620 by collecting fees beyond the sum neededto regulate the storm water program. The Board acknowledgesthat the fees for storm water dischargers exceededthe actual expenditures forthat program but claims CBIA’s interpretation of the requirements under section 13620 is incorrect. The statute, according to the Board, obligates it to collect fees from all the water dischargers equalto the total expense ofregulating the entire waste discharge permit program andit does not need to balance the fees for one program by that one program’s costs. Thetrial court agreed with the Board’s interpretation of the statute and wereviewits ruling de novo. (See,e.g., Jn re TobaccoII Cases, supra, 46 Cal.4th at p. 311.) Whenspecifying who mustfile a report of water discharge, section 13260, subdivision (a), does notrefer to the storm water program oranyofthe other seven program areas. Rather, it provides that the following persons must file a report of discharge with the appropriate regional board: “(1) A person discharging waste, or proposing to discharge waste, within any region that could affect the quality of the waters of the state, other than into a community sewer system. [{] (2) A person whois a citizen, domiciliary, or political agencyor entity of this state discharging waste, or proposing to discharge waste, outside the boundaries of the state in a manner that could affect the quality of the waters of the state within any region. [{] (3) A person 7 The Board arguesthat an independentreason for rejecting CBIA’s argument is that section 183 requires a majority of the Board members(three) to participate in the final action, and does not require a majority to vote in the affirmative. Because the Board hearing at issue was not conducted by a single member andsection 183 does not apply, we have no need to decide whether section 183 expressly modifies the commonlaw rule for final actions taken on matters heard or investigated by a single member pursuantto section 183. 14 operating, or proposing to construct, an injection well.” (§ 13260, subd. (a).) Each party applying for a permit must pay an annual fee specified by a schedule established by the Board. (§ 13260, subd. (d)(1)(A).) The references to the fees and costs are not to a specific program butrelate to “the total” amountoffeesorall recoverable costs. Thus, subdivision (d)(1)(B) of section 13260 states: “The total amount ofannualfees collected pursuant to this section shall equal that amount necessary to recover costs incurred in connection with the issuance, administration, reviewing, monitoring, and enforcement of waste discharge requirements and waivers of waste discharge requirements.” (Italics added.) Except as noted below,the statute does nottie any recoverable costs to a particular program: “Recoverable costs may include, but are not limited to, costs incurred in reviewing waste dischargereports, prescribing terms of waste discharge requirements and monitoring requirements, enforcing and evaluating compliance with waste discharge requirements and waiver requirements, conducting surface water and groundwater monitoring and modeling, analyzing laboratory samples, adopting, reviewing, and revising water quality control plans andstate policies for water quality control, and reviewing documents prepared for the purpose of regulating the discharge of waste, and administrative costs incurred in connection with carrying out these actions.” (§ 13260, subd. (d)(1)(C).) Section 13260, subdivision (d)(1)(B) refers to the “total amount of annual fees collected” and the total fees must equal “[t]he total amount . . . necessary to recover” the Board’s costs relating to all waste discharge requirements. Similarly, subdivision (f)(1) of section 3260 refersto all fees or the “total” fees imposed under section 13260, not to fees associated with a particular program. Section 13260, subdivision (f)(1) requires the Board to adopt a water quality fee schedule by emergencyregulation each year to establish the amount of fees each discharger must pay. (§ 13260, subd. (f)(1).) “The total revenue collected each year through annualfees shall be set at an amount equalto the revenuelevels set forth in the Budget Act for this activity. The state board shall automatically adjust the annual fees eachfiscal year to conform with the revenue levels set forth in the Budget Act for this activity. If the state board determines that the revenue 15 collected during the preceding year was greater than, or less than, the revenue levels set forth in the Budget Act, the state board mayfurther adjust the annual fees to compensate for the over and undercollection of revenue.” (Ibid., italics added.) Section 13260 repeatedly refers to the total costs and expensesofthe discharge water program. Noneofthe language in section 13260 indicates that the fees and expenses are to be correlated for each ofthe eight program areas within the current waste discharge program. The Legislature’s failure to mention the storm water program while discussing the Board’s obligation to balance the fees byits regulating costs cannot be deemed an oversight becausethe Legislature does specifically name the storm water program elsewherein section 13260. Section 13260 provides that some stormwater dischargers, those subject to the national pollutant discharge elimination system (NPDES), must be separately accounted for in the Fund and requires some of those funds to be spent within the same region wherethose dischargers are located “to carry out stormwater programs in the region.” (§ 13260, subds. (d)(2)(B)(4), (d)(2)(B)(ii).) Some of those funds must also be spent “on stormwaterinspection and regulatory compliance issues associated with industrial and construction stormwater programs.” (§ 13260, subd. (d)(2)(B)(iii).) This provision requires special treatment of fees and funds for storm waterdischargers subject to NPDESbut there is no suggestion that the Board must balancethe fee for the storm water program with the revenue from that program.’ (See § 13260, subds. (d)(2)(B)(i)-Gii).) | CBIA contends that reference in section 13260 to multiple fees confirms that the statute requires the Boardto establish a schedule of fees for each program. CBIAalso maintains that the record establishes that the Board’s claim of one feeis a fiction, as the Boardhascreated eight separate budgets andcalculated eight separate fees for each program. 8 Neither the Board nor CBIA explainsthe reasons for these requirements, although the Board declares, “The reasonsfor these requirements are not stated in section 13260 and are not relevant here.” The complaint does notallege that CBIA orits membersare participants in NPDES. 16 \ The reference to multiple fees in section 13260, subdivision (f)(1), simply indicates that the total fee is to be comprised of the various fees. Indeed, the Board acknowledgesthat it sets different fees for each program areaprior to calculating the total fee. As just explained, the statute does not mandate that the fee.for each program area must correspondto the costs of that particular program. “Where the wordsofthestatute are clear, we may not addto oralter them to accomplish a purposethat does not appear on the face of the statute or from its legislative history.” (Burden v. Snowden (1992) 2 Cal.4th 556, 562.) Furthermore, section 13260 states that the fees shall be adjusted to conform “with the revenuelevels set forth in the Budget Act” and this revenue consists of a single appropriation from the Fundto help support the entire waste discharge permit program. Finally, the legislative history of section 13260 does not support CBIA’s construction of section 13260. In 1969, this statute provided that any person discharging waste or proposing to discharge waste wasto file a report “accompaniedbya filing fee not to exceed one thousanddollars ($1,000) according to a reasonable fee schedule established by the state board.” (Former § 13260, subd. (d).) The amountofthe maximum fee was increased to $10,000 in 1989, and the “[f]ees [were to] be calculated on the basis of total flow, volume, number of animals, or area involved.” (Former § 13260, subd. (d).) No program is mentionedin the original statute or in its amendment in 1989. Subdivision (f)(1), which also refers to the “total revenue collected,” was added to section 13260 and enacted in 1989. In 2003, section 13260 was amendedto specify that each person filing a report of waste discharge must “submit an annual fee according to a fee schedule established by the state board” and “the total amount of annual fees”are to “equal that amount necessary to recover costs incurred in connection” with regulating the entire waste discharge program. (§ 13260, subds. (d)(1)(A) & (B).) Indeed, the Legislature amended section 13260 repeatedly through 2011, but none ofthe amendments required the fee for a particular program to equal the cost for regulating that program. To the contrary, the language connecting the schedule of fees to the “total 17 revenue” remainedintact. “ ‘Thefailure of the Legislature to change the law ina particular respect when the subject is generally before it and changes in other respects are madeis indicativeof an intent to leave the law as it stands in the aspects not amended.’ [Citations.]” (Estate ofMcDill (1975) 14 Cal.3d 831, 837-838.) Accordingly, we affirm thetrial court’s construction of section 13260, which did ~ not require the Board to correlate the fees for a particular program with the costs for that program. Ill. Valid Regulatory Fee or Invalid Tax? A. The Difference Between a Fee and a Tax CBIAcontends thatthe fee charged to the storm water dischargers was not a legal regulatory fee, but an invalid tax.2 The Board’s authority under section 13260 is limited to collecting revenue reasonably equalto the costs for regulating the water discharge permit program;thus, it does not have broadlegislative authority underthis statute to impose a tax on water dischargers. (See,e.g., Abbott Laboratoriesv. Franchise Tax Bd. (2009) 175 Cal.App.4th 1346, 1360.) Theterm “ ‘ “tax” has no fixed meaning [and] the distinction between taxes and 399 fees is frequently “blurred,” taking on different meaningsin different contexts. (Farm Bureau, supra, 51 Cal.4th at p. 437.) Regulatory fees are imposed underthe state’s police powerrather than its taxing power, and mustbear a reasonable relationship to the 9 CBIA argues that the Board’s fee is an unconstitutional tax butit does notcite any constitutional provision. It relies on cases applying Proposition 13, which became part of the California Constitution and the original provision required a two-thirds vote of the Legislature to impose “any changes in state taxes enacted for the purpose of increasing revenues.” (Former Cal. Const., art. XIII A, § 3.) However, Proposition 26 modified Proposition 13, effective November 2, 2010. The current provision in the California Constitution restricts “[a]ny change in state statute whichresults in any taxpayer paying a higher tax....” (Cal. Const., art. XIII A, § 3.) The Board’s fee schedule is not a “changein state statute,” and this constitutional provision does not apply. (See Western States Petroleum Assn. v. Board ofEqualization (2013) 57 Cal.4th 401, 423-424.) Rather than a constitutional challenge to the fee, CBIA’s argument is essentially that, under the case law applying the original language of Proposition 13, the Board’s imposition is not a valid regulatory fee, but an illegaltax. 18 fee payor’s burdens onor benefits from the regulatory activity. (Sinclair Paint, supra, 15 Cal.4th at pp. 874-878.) In contrast, a tax may be imposed upona class that may enjoy no direct benefit from its expenditure andis not directly responsible for the condition to be remedied. (Leslie ’s Pool Mart, Inc. v. Department ofFood & Agriculture (1990) 223 Cal.App.3d 1524, 1543; see also Schmeer v. County ofLos Angeles (2013) 213 Cal.App.4th 1310, 1326 [generally, “tax” “refers to a compulsory payment madeto the governmentor remitted to the government”].) B. The Testfor Determining Whether the Charge is a Fee or a Tax Whether the Board’s imposition is a tax or a fee is a question of law decided upon an independentreview of the record. (Farm Bureau, supra, 51 Cal.4th at p. 436 .) “The plaintiff challenging a fee bears the burden of proof to establish a prima facie case showing that the fee is invalid. [Citations.] In other words, the plaintiff bears the burden of proof ‘with respectto all facts essential to its claim for relief.’ [Citations.] The plaintiff ‘must present evidence sufficient to establish in the mindofthetrier of fact or the court a requisite degree of belief (commonly proof by a preponderanceofthe evidence).” (bid., fn. omitted.) “TO]nce plaintiffs have made their prima facie case, the state bears the burden of production and must show ‘ “(1) the estimated costs of the service or regulatory activity, and (2) the basis for determining the manner in whichthe costs are apportioned, so that charges allocated to a payor bear fair or reasonable relationship to the payor’s burdens on or benefits from the regulatory activity.” ’ [Citations.]” (Farm Bureau, supra, 51 Cal.4th at pp. 436-437; quoting Sinclair Paint, supra, 15 Cal.4th at p. 878; see also Beaumont Investors v. Beaumont-Cherry Valley Water Dist., supra, 165 Cal.App.3d at p. 235.) Flexibility in establishing the amount of regulatory fees is important (California Assn. ofProf. Scientists v. Department ofFish & Game (2000) 79 Cal.App.4th 935, 950 (Prof. Scientists)), but “[a]n excessive fee that is used to generate general revenue becomes a tax” (Farm Bureau, at pp. 436-437). 19 C. The Reasonableness ofthe Fee With regard to CBIA’s burdenofproducing prima facie evidencethat the fee was unreasonable,the trial court stated that CBIA made “no showing”that the fees were unreasonable.! In the trial court and on appeal, CBIA focuses on the discrepancy between the costs and fees for the storm water program. As discussed ante, the reasonablenessofthe feesrelates to the costs of regulating the entire water discharge program. Moreover, the reasonablenessofthe fee is not measured by the impact on an individual payor; “[t]he question of proportionality is not measured on an individual basis. Rather, it is measured collectively, considering all rate payors.” (Farm Bureau, supra, 51 Cal.4th at p. 438.) “Thus, permissible fees must berelated to the overall cost of the governmental regulation. They need not be finely calibrated to the precise benefit each individual fee payor might derive.” (bid.; see also Collier v. City and County of San Francisco (2007) 151 Cal.App.4th 1326, 1353 [court held it was reasonable to transfer building permit fee revenues from the departmentofbuilding inspectionto the planning andfire departments to cover actual costs incurred in performing regulatory activities related to the building permit process].) “ ‘legislators “nepd only apply sound judgment andconsider‘probabilities according to the best honest viewpoint of informed officials’ in determining the amount ofthe regulatory fee.” [Citation.]’ [Citation.]” (Farm Bureau, at p. 438.) Thetrial court correctly found that CBIA failed to make a prima facie case that the fee was unreasonable.J! CBIA did argue that the fees were too high because the Board 10 Thetrial court also rejected CBIA’s claim that the fees violated its due process rights based on their being retrospective. On appeal, CBIA does not argue that the fees are illegally retroactive and we maydisregard issues not addressed in the briefs; we may treat them as having been abandoned or waived. (See Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.) Accordingly, we do not consider the legality of retroactive fees. 11 In its reply brief, CBIA does attack the evidence presented by the Board, butit . doesnot cite evidence it presentedin the trial court that showed the total fees charged by the Board surpassed the estimated costs for regulating the entire water discharge program. 20 anticipated a $27 million increase in program expendituresfor fiscal year 2011-2012 but did not increase program activities that year.12 The Board respondedthat the permit program lost muchof its general fund subsidy, and the Board had toincreaseall fees, including the stormwater discharge fee, to cover the program’s costs as established in the Budget Act. Thus, fees were increased to maintain adequate revenue in the Fund even though total spending for the waste discharge permit program remained the same. Although the burden of production never shifted to the Board,it did produce evidence regarding the reasonablenessofthe total fee. For fiscal year 2011-2012, the - Board’s fee schedule was based uponanticipated revenue of $101.2 million, including $100.7 million in fee revenue and $602,000 in other revenue. Those anticipated revenues closely corresponded to the projected expenditures of $101.4 million from the Fund. Moreover, the fees collected were deposited in the Fund and that money could be used “solely for the purposes of” the waste discharge permit program. (§ 13260, subd. (d)(2)(A).) Accordingly, the trial court properly rejected CBIA’s contention that the amount of fees anticipatedto be collected surpassed the cost of the regulatory services or programs they were designed to support. D. The Reasonablenessofthe Cost Allocations Thetrial court did not consider the second prongofthe test for assessing whether the imposition is a fee or a tax, which is whether the Board’s method ofassessing the challenged fees among the payors was reasonableorfair “ ‘ “so that chargesallocated to 12 To the extent CBIA is arguing that the Board’s projections were based on expenditures, rather than costs, we reject this argument. Section 13260refers to both costs and expenditures. Subdivision (d)(1)(B)states that the annual fees “shall equal that amount necessary to recover costs” of regulating the program. (§ 13260, subd. (d)(1)(B).) Subdivision (d)(2)(A) providesthat the fees are to be deposited in the Fund and that money“is available for expenditure by the state board... .” (§ 13260, subd. (d)(2)(A).) CBIA doesnot present evidence that the Board made any improper expenditures and it was not unreasonable for the Board to estimate the costs based on expected expenditures. (See Farm Bureau, supra, 51 Cal.4th at p. 438.) 21 a payor bear a fair or reasonable relationship to the payor’s burdens onor benefits from the regulatory activity.” ’” (Farm Bureau, supra, 51 Cal.4th at pp. 436-437.) The Board claims that CBIA did not contend in thetrial court or on appeal that the fee was unreasonably allocated. CBIA vigorously disputes this assertion andstressesthat its principal objection to the fee was that storm water dischargers were paying an unreasonably high fee given that the Board had collected substantially more revenue than it reported as “expenditures”for the storm water program for each of the seven fiscal years priorto the fiscal year 2011-2012 for a net surplus of $23,506,000. CBIA might not have used the word allocation in its openingbrief orin thetrial court, butits argumentthat the storm water dischargers were paying an unfair fee is essentially an unfair allocation argument. Asthe court in Prof Scientists, supra, 79 Cal.App.4th 935 pointed out, most courts considering whether a chargeis a fee or a tax have considered the reasonableness of the fee and not “[tJhe more difficult issue . . . [of] what latitude [the state agency] has in establishing the amountof a fee imposed on an individual payor.” (Id. at p. 946; see Sinclair Paint, supra, 15 Cal.4th at pp. 872, 881 [paint manufacturers were assessed fees in proportion to their share of the market and plaintiffs would have opportunity attrial to show “that the amount ofthe fees bore no reasonablerelationship to the social or economic ‘burdens’ its operations generated”].) The court in Prof Scientists reviewed the few decisions that considered this latter issue and concluded: “While the formula or rate structure may not have been exact, each bore somerelationship to the benefit reaped or the burden imposedby the payor. Put another way, the payors had some control over the amount of the regulatory fee they were compelled to pay by the degree to which their respective activities impacted the environment. The morethey polluted the air and consumed the water, the more they paid.” (Prof Scientists, at pp. 949-950, citing Pennell v. City ofSan Jose (1986) 42 Cal.3d 365, 375 [upheld a rent control ordinance, which imposeda flat annualfee on each rental unit, as a regulatory fee, because fee was “designed to defray the costs of providing and administering the hearing process prescribed in the ordinance, not to pay general revenue to the local government”]; San 22 Diego Gas & Electric Co. v. San Diego County Air Pollution Control Dist., supra, 203 Cal.App.3d at p. 1136 [fee to support air pollution control district was reasonable asit was apportioned to be based in part on the amount of emissions on premises]; Brydon v. East Bay Mun. Utility Dist. (1994) 24 Cal.App.4th 178, 196-204 [new rate structure increasing the price of water was not arbitrary or capricious].) With regard to the challenged fee in Prof Scientists, supra, 79 Cal.App.4th 935, the court concludedthata flat filing fee imposed by the Department of Fish and Gameto help defray someofits costs in meeting its environmental review obligations was a regulatory fee, not a tax. The court held “that a regulatory fee, to survive as a fee, does not require a precise cost-fee ratio. A regulatory fee is enacted for purposes broader than the privilege to use a service or to obtain a permit. Rather, the regulatory program is for the protection of the health and safety of the public. The legislative body charged with enacting laws pursuant to the police powerretains the discretion to apportion the costs of regulatory programsin a variety of reasonable financing schemes.” (Prof: Scientists, at p. 950.) Wedecline to consider whether the Board metits burden of production because we conclude that CBIA failed to make a prima facie case. CBIA did not offer evidence that the Board’s allocation of the fee based on expected expenditures for the 2011-2012 fiscal year was unfair or unreasonable. Although the burden of production therefore never shifted, the Board nevertheless submitted evidence that the fee imposed on storm water dischargers did bear a reasonablerelationship to the burdens of regulating that program. The storm water program area’s budget for the fiscal year of 2011-2012 was $26.6 million and projected revenue was $19.7 million. The Board’s action in increasing the fee for storm water dischargers by 34.9 percent was not unreasonable as this increase ‘ generated the $6.9 million difference between the budget and projected revenue for the storm water program. Furthermore, the fee increase for the storm water program was slightly Jess than the average increaseforall of the programs, which was 37.8 percent. CBIA presented evidence that the Board had collected substantially more revenue than it reported as “expenditures” for the storm water program for each of the seven fiscal 23 years prior to the fiscal year 2011-2012 for a net surplus of $23,506,000. CBIA’s argument is essentially that the fee was unfair because the Board should have compensated storm water dischargers in 2011-2012 for the overpayment in earlier years. It maintainsthat the Board had no reasonable reason for refusing to do this andcites the Board’s statement that it considered limiting the increase in fees for storm water dischargers but decided not to compensate them forthe prior years of surplus, primarily because it concludedthat those who contributed to the surplus were probably not the © same people who would benefit. CBIA claimsthat the Board provided no evidence to support this latter conclusion. The Board did not need to provide evidence unless CBIA metits burden of making a prima facie case, whichit failed to do. CBIA did notpresent evidencethat the . Board unfairly deviated from its usual method when calculating the fee for the storm water program; nordid it submit evidencethat the Board had limited increases in fees for any of the other seven programsto offset their surpluses in prior years. Subdivision (f)(1) of section 13260 states that the Board “may further adjust the annual fees to compensate for the over and undercollection of revenue.” There is no requirement that it must do so and thus CBIA hadto provide evidence that the Board’s failure to do so whensetting the 2011-2012 fees was unreasonableor unfair. Additionally, CBIA proffered no evidencethat the Board’s method unfairly caused the surplus revenuein earlier years. Again, although the burden of production nevershifted, the Board offered evidencethat its method did not cause the surplus. The . inaccurate projections for the storm water program were dueto this program’s revenue being generated by the economically volatile construction industry. CBIAarguesthat we should remandto thetrial court to provide it with an opportunity to makefactualfindings. (See Farm Bureau, supra, 51 Cal.4th at p. 442.) Wedecline to do so because CBIA failed as a matter of law to meet its burden of making a prima facie case that the fee was an illegal tax. DISPOSITION Weaffirm the judgment. CBIAis to pay the costs of appeal. 24 Kline, P. J. I Concur: Brick, J.* California Building Industry Association v. State Water Resources Control Board (A137680) * Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuantto article VI, section 6 of the California Constitution. 25 Trial Court: Trial Judge: Attorneys for Plaintiff and Appellant: Attorneys for Defendant and Respondent: 26 San Francisco County Superior Court Hon. Curtis E. A. Karnow Rutan & Tucker, LLP David P. Lanferman Kamala D.Harris Attorney General of California Paul D. Gifford Robert W. Byrne Senior Assistant Attorneys General Gavin G. McGabe Molly K. Mosley Supervising Deputy Attorneys General Robert E. Asperger Tiffany Yee Deputy Attorneys General A137680, California Building Industry Association v. State Water Resources Control Boardet al. Dissenting opinion of Richman,J. A rule of the common law,codified in a numberof California statutes, is that a quorum ofthe full membership of a decisionmaking entity may transact business, and a majority of that quorum mayenact, pass, or approve any measure entrustedto that entity. The question presented here is whether the commonlaw rule, codified as Water Code section 181 (section 181) and applicable to the five members of the State Water Resources Control Board (Board), overrides another statute, Water Code section 183 (section 183), which commandsthat “any final action of the board shall be taken by a majority of all the membersofthe board.” 1 The majority concludes that section 181 states the generalrule, to whichthe differing rule of section183 constitutes an exception not applicable here. If all we had to work with was the naked language ofthe twostatutes, I might agree with the majority. But we are not required to hazard an answer based on such a slim basis. The majority-of-a-quorum commonlawrule has, from the earliest days of the state, always been recognized assubject to statutory modification requiring a specified or absolute majority to take certain action. An unusualitem of legislative history from the 1969 amendingof section 183 constitutes what I think is virtually conclusive proofthat the Legislature expressly intendedthat section 183 be such a statute, one requiring that “final board action shall always require a concurrenceof a majority of all the members of the board, not merely a majority ofa quorum.” (Italics added.) Thus, when the Board considers whether to vote yea or nay on a proposedfinal action, it is section 183, not section 181, that states the general rule, thus requiring at least three affirmative or negative votes. Here, the Board purportedto take a very significant “final action”—adopting a resolution setting the fees charged for administering a number of regulatory programs under the Porter-Cologne Water Quality Control Act (see § 13260, subds. (d), (f)(1); Cal. 1 Statutory references are to the Water Code unless otherwise indicated. 1 Code Regs.,tit. 23, §§ 2200-2200.7}—with the affirmative votes of only two ofthe Board’s statutory membership of five. Two is not a majority of five. I concludethat the Board’s purported adoption ofthe resolution is therefore void, and consequently should be set aside. Havingfailed to persuade my colleagues to adopt this approach,I respectfully dissent from their conclusion that the two-vote passage of the resolution was properand valid. The Problem The Boardconsists of five members. (§ 175, subd. (a).) The resolution challenged here was adopted when the Board had only three members, there being two vacancies. Two of the three members voted for the resolution, while the third abstained. The current disagreementis about section 183, which in its entirety provides: “The board may hold any hearings and conduct any investigation in any part of the state necessary to carry out the powers vested in it, and for such purposes has the powers conferred upon heads of departments ofthe state by Article 2 (commencing with Section 11180), Chapter 2, Part I, Division 3, Title 2 of the Government Code. “Any hearing or investigation by the board may be conducted by any member upon authorization of the board, and he shall have the powers granted to the board bythis section, but anyfinal action ofthe board shall be taken by a-majority ofall the members ofthe board, at a meeting duly called and held. “All hearings by the board, or by any memberthereof shall be open and public.” The difficulty is with the languageI haveitalicized. Thetrial court termed section 183 “ambiguous.”2 If section 181 is considered with section 183, neither the majority nor I dispute that a thorny ambiguity is indeed presented. 2 Thetrial court was clearly troubled on the point. It initially decided that the Board’s action was invalid, but was persuadedto reverse this conclusion at oral argument on thetentative ruling. The court reexaminedthe issue on the Board’s defective motion for reconsideration, acknowledging “there are extremely awkward results on both sides of this.” The court remained uneasyto the end,stating in its “Order Denying Petition For Writ”: “Section 183 is ambiguous, and mytentative found much meritin [the Association’s] position. But on reflection it seems that I need more than some ambiguity 2 Does “a majority of all the members of the board” mean just that, namely, that every final action must have the recorded support of at least three members of the Board? Or, is the statutory languagesatisfied by a majority of a simple quorum of the Board’s entire statutorily-authorized membership? Certainty does not come from examining the statutory language alone andatfirst glance the majority’s answer would not be an unnatural interpretation—thatis, if there is a quorum of a governing body, then a majority of that quorum is empoweredto transact business and make decisionsfor the entity. This is the standard common law conclusion, not only in California (People v. Harrington (1883) 63 Cal. 257, 259; County ofSonoma v. Superior Court (2009) 173 Cal.App.4th 322, 346, fn. 11; Martin v. Ballenger (1938) 25 Cal.App.2d 435, 437), but nationwide. (FTC vy. Flotill Products, Inc. (1967) 389 U.S. 179, 183; 4 McQuillin, The Law of Municipal Corporations (3d ed. 2011) § 13:34, pp. 1182-1183, § 13:37, pp. 1191-1192; 2 Fletcher Cyclopedia of Corporations (2014 rev. ed.) § 425, p. 286.) This majority-of-a-quorum rule is codified and made applicable to the Board by the final sentence of section 181, which (alsoin its entirety) provides: “The board shall maintain its headquarters in Sacramento and mayestablish branch offices in such parts of the state as the board deems necessary. The board shall hold hearings at such times and at such places as shall be determined by it. The Governorshall designate the time and place for the first meeting of the board. Three membersofthe board shall constitute a quorum for the purposeof transacting any business of the board.” Butthere is an exception to the general commonlaw tule. “If the law governing the body provides that certain acts may be doneonly by a majority of the members .. ey it is apparentthat the acts specified may notbedone legally by a bare majority of a quorum, or of memberspresent. An affirmative majority ...is required.... In the if I am to determine that the Legislature desired to trumpsettled procedures, especially as the Board’s reading [of § 183] is plausible.” It is only fair to note that the trial court was making its decision pretty much on the languageof sections 181 and 183 alone, whereas this court has had the time and luxury of consulting an array of materials pertaining to the legislative histories of the twostatutes. absenceofthe required majority, the measure fails passage.” (4 McQuillin, The Law of Municipal Corporations, supra, § 13:40, pp. 1199-1200 and authorities cited, fns. omitted; see Annot., What Constitutes Requisite Majority of Members ofMunicipal Council Voting on Issue (1955) 43 A.L.R.2d 698, §§ 2-5, pp. 703-709; see also Streep v. Sample (Fla. 1956) 84 So.2d 586, 588; City ofHaven v. Gregg (Kan. 1988) 766 P.2d 143, 147: Blood v. Beal (Me. 1905) 60 A. 427, 428-429; Scheipe v. Orlando (Pa. 1999) 739 A.2d 475, 477-478; State ex rel. Doyle v. Torrence (Tenn. 1958) 310 S.W.2d 425, 428.) California has recognized this exception since the first years of statehood. (E.g., City ofSan Francisco v. Hazen (1855) 5 Cal. 169, 171-172; Grogan v. San Francisco (1861) 18 Cal. 590, 607-608; Satterlee v. San Francisco (1863) 23 Cal. 314, 318; Fisher v. Board ofPolice Commissioners (1965) 236 Cal.App.2d 298, 301; Pricev. Tennant Community Services Dist. (1987) 194 Cal.App.3d 491, 495-496.) A 1992 opinion by the Attorney Generalstates the general principle and the exception, with a notable economy of words: “In the absence of express contrary indication, a simple majority of a collective body constitutes a quorum,and a majority of a quorum is empoweredto act for the body. [Citations.] [‘[] Such express contrary indication has been found in thosestatutes which refer specifically to the membersofa collective body as distinguished from the bodyitself. [Citations.]” (75 Ops.Cal.Atty.Gen. 47, 49 (1992), fns. omitted.) Examples ofthis majoritarian principle can be foundatall levels of government.3 Andit is surely not without relevance to the present context that this 3 The majoritarian exception governs the Legislature (Cal. Const., art. IV, § 8, subd.(b) [““No bill maybe passed unless, by rollcall vote . . . , a majority of the membership of each house concurs”]; 65 Ops.Cal.Atty.Gen. 512, 515 (1982) [“majority” requirementrefersto “all memberselected to each of the two houses of the Legislature”); Cal. Const., art., 13, § 28, subd.(i) [“The Legislature, a majority of all the members elected to each of the two houses voting in favor thereof, may by law changethe rate or rates of taxes herein imposed upon insurers.”]). It also governs boards of supervisors in general law counties (Gov. Code, § 25005 [“Noact of the board shall be valid or binding unless a majority of all the members concur therein”]; Dry Creek Valley Assn., Inc. v. Board ofSupervisors (1977) 67 Cal.App.3d 839, 842-845 [“This statute makesclear that 4 principle also governs a myriad of local agencies dealing with water, particularly concerning decisions with significant financial consequences.4 while a majority of the board will constitute a quorum for the transaction of business, no act of the board is valid unless a majority of the board, and not a majority ofthose present and constituting a quorum,shall concur,”italics added]; 58 Ops.Cal.Atty.Gen. 706 (1975) [““Government Code section 25005 establishes an express exception to the commonlaw rule that the vote of a majority of a quorum is sufficient”]; County of Sonoma v. Superior Court, supra, 173 Cal.App.4th 322, 346, fn. 11 [same]) and charter cities (Gov. Code, § 43120 [“The legislative body of any city operating undera charter ...may adopt an ordinance by a majority ofall its members, changing the fiscal year of the city”]); and the Judicial Council (Gov. Code, § 68508 [‘‘No act of the Judicial Council shall be valid unless concurred in by a majority of its members”]; Cal. Rules of Court, Appen. G, Parliamentary Procedures for the Judicial Council of California, § IV [“To take any substantive action, a majority of all voting members of the Judicial Council must vote in favor of the action. (See Gov. Code, § 68508.) Because there are 21 voting members on the council, ... a vote on a substantive motion . . . requires 11 affirmative votes to pass”]). 4 E.g., §§ 30525 [“No ordinance, resolution, or motion shall be passed or become effective without the affirmative votes of at least a majority of the membersofthe [county water district] board”], 81636 [“the affirmative vote of a majority of all voting membersofthe [San Francisco Bay Area Regional Water System Financing Authority] _ board is necessary and sufficient to carry any motion, resolution, or ordinance”); Health & Saf. Code, §§ 4730.65, subd. (c) [“No action shall be taken [by the Orange County Consolidated Sanitation District] unless a majority of all authorized members of the board of directorsis in attendance”], 4795 [county sanitation district may authorize issuance of bonds “by resolution passed by a vote of a majority ofall its members”]; Wat. Code Appen. § 51-7, pp. 59-60 [“no act of the [Santa Barbara County Water Agency’s board of directors] shall be valid or binding unless a majority ofall the members concur therein”]; Wat. Code Appen. § 53-4, pp. 137-138 [“no act of the [Sonoma County Flood ~ Control and Water Conservation District’s board of directors] shall be valid or binding unless a majority of all the members concur therein”]; Wat. Code Appen. § 93-33, pp. 104 [no act of the [Yuba-Bear Basin Authority Act’s board of directors] shall be valid or binding unless a majority of all members concur therein”]; Wat. Code Appen. § 128-401, p. 809 [“Fouraffirmative votes [of the seven members of the Mono County Tri-Valley Groundwater ManagementDistrict’s board of directors] shall be required to take an action]’]; Wat. Code Appen. § 136-108, p. 1030 [“the decision of a majority of all the membersofthe board[of directors of the Antelope Valley Storm Water Conservation and Flood Control District] shall be necessary to take any action”]; cf. Wat. Code Appen . § 132-505, p. 894 [“no act of the board [of directors of the Odessa Water 5 The problem before us is not whether section 183 is such an exception to the majority-of-a-quorum principle of section 181, because the majority concedesthatit is. The question that dividesus is the extent of the exception. Likethetrial court, we found the point sufficiently troubling that we took a second look. Thus, we vacated submission of the cause following oral argument, and directed the parties to file supplemental briefing “discussing the application andinterplay, if any, between Water Code sections 181 and 183.” Armed with that supplemental briefing, and independentresearchat this end, I submit that the evolution and developmentofthe two statutes is more nuanced than might initially appear from the majority opinion. | TheLegislative Histories of Section 181 and 183 I agree with the majority that section 181 and 183 should be construed together. Not only are both statutes in the samearticle of the Water Code establishing the Board and procedures for its operation (§§ 174-189), but they are the only statutes dealing with voting by the Board. In addition,as will be seen, in large measure, sections 181 and 183 share a joint legislative heritage. Most importantly, it is only with a joint consideration that the magnitude of the ambiguity appears. Reading them together is not only natural but proper. (DeVita v. County ofNapa (1995) 9 Cal.4th 763, 778; Eel River Disposal and Resource Recovery, Inc. v. Humboldt (2013) 221 Cal.App.4th 209, 231-232; Main San Gabriel Basin Watermaster v. State Water Resources Control Bd. (1993) 12 Cal.App.4th 1371, 1379-1380 & fn. 5.) Section 181 was adopted in 1956. Then numbered section 191, it provided: “The board shall maintain its headquarters at Sacramento and shall hold meetingsat such times and at such placesas shall be determined by it. The Governor shall designate the time and place for the first meeting of the board. All meetings of the board shall be open and public.” (Stats. 1956, Ist Ex. Sess., ch. 52, § 7.) The following year it was renumbered District] shall be valid or binding unless a majority ofthose members present and voting concur in the act” (italics added)]. without changeas section 181 (Stats. 1957, ch. 1932, § 30), and then amended with the addition of this as the final sentence: “Two members ofthe board shall constitute a quorum for the purpose oftransacting any business of the board.” (Stats. 1957, ch. 947, § 4.) In 1967, when the Board’s membership was expanded from threeto five, the final sentence was amendedto reflect this increase (Stats. 1967, ch. 284, § 2.4 [amending § 175 to increase Board], § 5 [“Three membersofthe board shall constitute a quorum”]), which is how it has remained to this day. Section 183 was also adopted in 1956. Then numberedsection 193, it provided: “The board may hold hearings and conduct any investigations in any part of the State necessary to carry out the powers vested in it, and for such purposes as the powers conferred upon heads of departments of the State by Article 2 (commencingat Section 11180), Chapter 2, Part 1, Division 3, Title 2 of the Government Code. [{] Any hearing or investigation by the board may be conducted by any memberofthe board upon authorization of the board, and he shall have the powers grantedto the board bythis section, but any final action ofthe board shall be taken by the board as a whole. [{] All hearings held by the board or by any memberthereof shall be open and public.” (Stats. 1956, Ist Ex. Sess., ch. 52, § 7.) . In 1957, section 193 was renumbered without change as section 183. (Stats. 1957, a ch. 1932, § 30.) That sameyear the “any final action of the board shall be taken by the board as a whole” language was amendedto “any final action of the board shall be taken by a majority of membersofthe board at a meeting duly called and held.” (Stats. 1957, ch. 1824, § 2.) In 1967, the Legislature added an exception to the hearings or investigations that could be conducted by a single member. (Stats. 1967, ch. 284, § 5.2 [“Any hearing or investigation by the board, except pursuant to Division 7, . .. may be conducted by any memberofthe board upon authorization of the board”].) In 1969, the Legislature was considering Assembly Bills 412 and 413. Assembly Bill 413—which was designated the California Water Quality Improvement Act of 1969, and which included the Porter-Cologne Water Quality Control Act—was sponsored by the Board, which described it as “incorporat[ing] the recommendations of the State Water 7 Resources Control Board Study Panel as adopted by the Board.” (State Wat. Resources Control Bd., Enrolled Bill Rep. ofAssem. Bill No 413 (1969-1970 Reg.Sess.) July 8, 1969, p. 1.) The measure was signed by Governor Reagan on July 14, 1969. (Stats. 1969, ch. 482, p. 1046.) Assembly Bill 412 was signed five weekslater, on August 22. Both bills were introduced by Carley Porter, chairman of the Assembly Committee on Water. (Assembly Final History, Assem. Bills Nos. 412, 413 (1969-1970 Reg. Sess.), pp. 159-160.) | With respect to section 183, Assembly Bill 413 continued the “any final action of the board shall be taken by a majority of the membersofthe board at a meeting duly called and held” language. (Stats. 1969, ch. 482, § 2.) Assembly Bill 412 added the word“all,” so that the statute in its current form reads: “anyfinal action of the board shall be taken by a majority of all the members of the board at a meeting duly called and held” language. (Stats. 1969, ch. 800, § 1.) On August 4, 1969, Assembly Bill 413 had already been signed by the Governor, while Assembly Bill 412 wasstill pending in the Assembly, after having been amended by the Senate as recommended by the Senate Committee on Water Resources and sent to the Assembly two daysearlier. (Assem. Final History, Assem. Bill No. 412 (1969-1970 Reg. Sess.), p. 159; 3 Sen. Journal (1969-1970 Reg. Sess.) pp. 5093-5094.) On August 4, Senator Gordon Cologne,the chairman of that committee andthe floor manager for both bills in the Senate, successfully movedthat a letter be printed in the Senate Journal. For obvious reasons, Senator Cologne’s letter is too significant to risk paraphrase. “Senate Committee on Water Resources “Sacramento, July 29, 1969 “Hon. Ed Reinecke, President ofthe Senate “Dear Mr. President: The Committee on Water Resources, having considered Assembly Bill 412 and having reported it out with a favorable recommendation, submits this report concerning Assembly Bill 412. “This report contains commentsto reflect the actions and intent of the Committee in approving AB 412 and,additionally, the intent of the author’s amendments [to AB 412] adopted by the Senate on July 21, 1969.5 “Tt is intended that these comments be utilized to assist in the determination of legislative intent. “Respectfully submitted, “GORDON COLOGNE,Chairman “REPORT OF SENATE COMMITTEE ON WATER RESOURCES “ON ASSEMBLYBILL 412 “In order to indicate more fully its intent on Assembly Bill No. 412, as amended July 10, 1969, the Senate Committee on Water Resources makes the following report: “The following commentsto various sections ofAssembly Bill 412 supplement the comments of the Senate Committee on Water Resources made with respectto the related subject matter in Assembly Bill No. 413 (Senate Journal, July 2, 1969, 5 Being author of the amendments wasthe third of Senator Cologne’s connections to the version of section 183 we are considering. Parenthetically, it should be noted that the apparent anomaly of a committee report explaining a bill that had already been passed might seem a textbook example ofpost hoc ergo propter hoc. However, in the days when California legislative histories were far from the robust specimensoftoday, the practice of inserting committee reports into a legislative journal was not unusual. The most pertinent example was that Assembly Chairman Porter had a “Report ofAssembly Committee on Water on Assembly Bill No. 413” printed in the Assembly Journal after that bill had been passed by the Assembly. (See 2 Assem. Journal (1969-1970 Reg. Sess.) p. 2677; see also Peoplev. Massie (1998) 19 Cal.4th 550, 567 [“on May 28, 1935... the Special Committee Report was recorded in the Senate Journal]; Garcia v. Industrial Accident Com.(1953) 41 Cal.2d 689, 692 [“in the language of the report of the Senate Interim Committee on UnemploymentInsurance, Senate Journal, May 7, 1945, p. 126”]; Ne Casek v. City ofLos Angeles (1965) 233 Cal.App.2d 131, 139 [“The commentofthe Legislative Committee inserted in the Senate Journal of April 24, 1963”], 141 [“The Legislative Committee Comment, recorded in the Assembly Journal of June 15, 1963)’].) In any event, the anomaly is only apparent because the report that Senator Cologne had put into the Senate Journal had obviously been seen, at a minimum,by the Senate committee which generatedit, prior to Senate passage ofAssembly Bill 412. Thereport, as reproducedin the Senate Journal, is thus no different in dissemination and impact than the committee reports that are now far more common. 9 pp. 3933-39346), and also reflect the intent of the Senate Committee on Water Resources in approving Assembly Bill No. 412. “WATER CODE PROVISIONS “Section 183 “Comment. The present law is ambiguousas to whetherfinal action by the state board always requires a majority consisting of three membersofthe five-man state board, or whether the majority required is only that of the ‘membersofthe board (present) at a meeting duly called and held.’7 In the latter case three memberscould constitute a quorum,andthe vote of two members would constitute a majority of the membersat the meeting. An amendment has been madetothis section to removethe ambiguity by requiring that final board action shall always require the concurrence of a majority ofall the members ofthe board, not merely a majority of a quorum. ...” (3 Sen. Journal. (1969-1970 Reg.Sess.) p. 5154.) The following day, August 5, the Assembly concurred in the Senate amendments, and four dayslater the enrolled bill was sent to Governor Reaganforhis signature. (Assem. Final History, Assem.Bill No. 412 (1969-1970 Reg. Sess.), p. 159; 3 Assem. Journal (1969-1970 Reg. Sess.) pp. 7496-7502; 3 Sen. Journal (1969-1970 Reg. Sess.) pp. 5093-5094.) My Conclusion Like the trial court, I am willing to concede that the unadorned language of section 183 is “ambiguous”in the sense that it alone does not provide a conclusive answer. (See fn. 2, ante.) The majority does not expressly concede that section 183is ambiguous, although it does cite the governing canonofstatutory construction justifying 6 The cited pages in the Senate employthe sameletter formatto set out the “Report of the Senate Committee on Water Resources on Assembly Bill 413.” There are additional “comments”to various provisions, but no mention of either section 181 or section 183. (2 Sen. Journal (1969-1970 Reg.Sess.) pp. 3933-3934.) 7 The source of the ambiguity is not identified, but it may trace to when section 183 was amended in 1957, and the Legislative Counsel described the measure as amending section 183 “to require final action of State Water Rights Board [the predecessor to the State Water Quality Resources Board] to be taken by a majority of membersat [a] meeting duly called and held, rather than by [the] board as a whole.” (Legis. Counsel’s Dig., Sen. Bill No 2199 (1957 Reg. Sess.) Summary Digest, p. 128.) 10 resort to legislative history. The majority partially parses the middle sentence of section 183, focusing on the words “but” and “any” (maj. opn., pp. 8-9), but completely ignoring the word “all.” The majority concludes: “the express language of section 183 indicates that this statute applies only to those situations where the Board has delegated authority to one memberto conduct a hearing or meeting. ... [B]ecause a quorum participated in the hearing pertinent to this case, section 183 does not apply.” (Maj. opn., pp. 9-10.) As for 8 I admit to being puzzled by the majority’s invocation ofthe principle that statutes in derogation of the commonlaw areto bestrictly construed. (See maj. opn., pp. 7, 13.) California repudiated this rule when it undertook the systematic codification ofits statutes. (Civ. Code, § 4 [The rule of the commonlaw,that statutes in derogation thereof are to be strictly construed, has no application to this code. The code establishes the law ofthis state respecting the subjects to whichit relates, and its provisions are to be liberally construed with a view to effect its objects and promote justice.”]; Code Civ. Proc., § 4 [same]; Evid. Code, § 2 [same]; Pen. Code, § 4 [“The rule of the commonlaw, that penal statutes in derogation thereof are to be strictly construed, has no application to this Code.”].) My impression is that our Supreme Court has been generally moving in this direction for some time, particularly as the scope and frequencyoflegislative output has mushroomed. (See, e.g., Estate ofParrott (1926) 199 Cal. 107, 112-113 [“[T]here is no room in this case for the play ofthe strict construction rule. .. . The maxims of jurisprudencethat ‘interpretation must be reasonable’ (sec. 3542, Civ. Code) andthat a statute is to be ‘liberally construed with a view to effect its object and to promotejustice’ (sec. 4, Civ. Code) are generally applicable and mustbe given effect.... No construction should be given a statute which would makeits application impracticable, unfair, or unreasonable.”]; Raynor v. City ofArcata (1938) 11 Cal.2d 113, 121 [‘the rule that statutes . . . in derogation of the commonlaw areto bestrictly construed . . . does not confer upon courts the powerto nullify legislation where the statute itself evinces a clear intention on the part of the lawmakers to depart from the common law rule”]; Baughv. Rogers (1944) 24 Cal.2d 200, 211 [“the asserted rule ofstrict construction does not authorize us to thwart, by narrow andstrained interpretation, the palpable intentof the Legislature”]; Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 815 [Civ. Code, § 4 means “ ‘If a provision of the code is plain and unambiguous,it is the duty of the court to enforceit as it is written.’ ”]; Barrett v. Rosenthal (2006) 40 Cal.4th 33, 46 [“The policy ofstrictly construing statutes in derogation of the common law doesnot require literal interpretation conflicting with the obviouslegislative intent.”]; Franchise Tax Bad.v. Superior Court (2011) 51 Cal.4th 1006, 1016 [“the statute in derogation of the common law rule was ‘befitting to this more enlightened age.’ ”].) Similarly mystifying is the majority’s citation of rule of deference to a longstanding administrative interpretation of a statute (maj. opn., p. 11), when the Board has drawn our attention to no such interpretation. 1] the 1969 legislative history, the majority misidentifies the crucial item as “aletter . . . from Senator Gordon Cologne,” and then dismisses it as merely a “comment”that “simply clarified that section 183 requires a majority vote with respectto final action on any matter heard or investigated by a single member ofthe Board.” There is no mention of section 181 and thusno indication ofintent to “do away with the generalrule set forth in section 181.” (Maj. opn., pp. 12-13.) The majority appears willing to read the second sentence of section 183 as stating an exception to the majority-of-a-quorum rule of section 181. So, in instances where if one memberofthe Board conducts a “hearing or investigation . . . upon authorization of the board,” the majority seems to concede that the language “any final action of the board shall be taken by a majority of all the membersofthe board” meansthat decision must have the votes ofat least three members of the Board. But every other “final action of the board” need only commandtwovotes of a quorum. With this construction I cannot agree. I am perfectly willing to admit that certainly section 181 and,to a lesser extent, section 183, each begantheir respective existences in 1956 addressing more than one subject. Amendments werethereafter madeto both in 1957 and 1967. Ina perfect world, the Legislature, intending to makethetask of the judiciary easier, might have made moreexplicit whatis the interplay between sections 181 and 183. In fact, I believe the Legislature did just that, albeit hardly in a linear or an unambiguousfashion. Whatthe majority dismisses as merely “aletter . . . from Senator Gordon Cologne” is not what we are considering—andnot whatis at issue. The actual document from the senatoris simply a coverletter for the Report of the Senate Committee on Water Resources. It wasthat report, not the senator’s transmissionletter, which sets out the intent of the amending author and the Committee in amending section 183. The report conveyed not just the view of Chairman Cologne,but the view of the entire Committee. It was the Committee’s report that was, with Senator Cologne’s cover letter, ordered printed in the Senate Journal. 12 Certainly, Senator Colognedid state in his coverletter that “It is intendedthat these comments beutilized to assist in the determination oflegislative intent,” butthis hardly makesit a purely personal opinion of a single individual. The senator was acting in his capacity as chairman of the committee whose report he was transmitting to the full Senate, the report he wassecuring permission from the entire Senate to be printedin its official journal. True, Senator Cologne’s letter recites that the report “contains comments to reflect the actions and intent of the Committee . . . and additionally the intent of the author’s [ i.e., Senator Cologne’s] amendments.” But the actual report ofthe Committee also makes the samestatement: that the purpose of that report by the Committee is “to indicate morefully its [the Committee ’s] intent on Assembly Bill No. 412. So,it is the “comment” ofthe Committee, in the Committee’s report, explaining whatit, the Committee, meant byits proposed amendmentof section 183, that is before this court. The Senate Journal is a source accepted by this court and others for ascertaining legislative intent. (Garcia v. Industrial Accident Com., supra, 41 Cal.2d 689, 692; City and County ofSan Francisco v. Evankovich (1977) 69 Cal.App.3d 41, 52; Belliv. Roberts Bros. Furs (1966) 240 Cal.App.2d 284, 287.) Its status is elevated still higher when it expresses a legislative committee report, which is the preeminent coin of the realm in determining legislative intent. (E.g., People v. Cruz (1996) 13 Cal.4th 764, 774-775, fn. 5; accord, Benson v. Workers’ Compensation Appeals Bd. (2009) 170 Cal.App.4th 1535, 1554, fn. 16; see fh. 5, ante.) Thus, wehave granted the Association’s request to take judicial notice of the letter and the report. Un re JW. (2002) 29 Cal.4th 200, 211; Kaufinan & Broad Communities, Inc. v. Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 32.) . Unlike the majority, I cannot disregard the “comment” of the Senate Committee on Water Resources concerning the meaningofthe language of section 183 weare here considering. Unlike the majority, I cannot ignore the Committee’s commentin the belief that it has no bearing onthis issue before usin that it does not address the interplay between sections 181 and 183, nor suggest that the amendmentto section 183 overrules 13 or in any way modifies section 181. On the contrary, I think this was exactly what the Committee did address. It is true that the comment does not make express reference to section 181. However, I submit that when the Committee spoke of an instance where “three members could constitute a quorum, and the vote of two members would constitute a majority,” the Committee obviously had section 181 in mind. In all the statutes governing the Board’s operations, the word “quorum”appears only in section 181, so no other statute qualifies. By putting its comment under the heading “Water Code... Section 183,” I submit that the Committee was indeed addressing the interplay between sections 181 and 183. And how did the Committee addressthat interplay? Let us examine each ofthe three sentences in the Committee’s comment. | (1) “The present law is ambiguousas to whether final action bythe state board always requires a majority consisting of three membersofthe five-man stateboard, or whether the maj ority required is only that ofthe ‘membersofthe board(present) at a meeting duly called and held.” Thislitigation testifies to the continuing existence ofthis ambiguity. | (2) “In the latter case three memberscould constitute a quorum, and the vote of two members wouldconstitute a majority of the membersat the meeting.” This is an obvious reference to section 181. (3) “An amendment has been madeto this section [i.e., section 183] to remove the ambiguity by requiring that final board action shall always require the concurrence of a majority of all the members of the board, not merely a majority of a quorum.” By intending “to remove the ambiguity,” the Committee was certainly addressing the _ interplay between sections 181 and 183 that was the source of that ambiguity. The Committee’s solution was the 1969 amendmentto section 183, to specify “that final board action shall always require the concurrenceof a majority of all the membersofthe board, not merely a majority of a quorum.” Thelast seven words again demonstrate that the Committee had section 181 in mind. 14 The Committee’s report demandsattention. Unlike the majority, I believe the Committee’s commentis not only relevant, and not only germane, but thatit is virtually decisive. It directly addressed the meaning of the language of section 183 amended in 1969 and now being contested. It constitutes the last and most recent expression of the legislative purpose behind that language. It showsnot only that the Legislature was aware of a lurking ambiguity in section 183 as it then read concerning the majority-of-a-quorum principle of section 181, but it also establishes beyondquestion that the Legislature unanimously meantto displace that principle by inserting the word “all” so that section 183 would state that “any final action of the board shall be taken by a majority of all the members of the board.” Where “final action “ was concerned, section 183 was meantto trump section 181. Unlike the majority, I cannot confine section 183’s “majority ofall the members of the board” language to instances where there has been a hearing or investigation conducted by one member of the Board. Viewed in splendid isolation, such a reading might not beillogical as a matter of mere words. However, such a reading must be rejected because it makes almost no sense in the real world—and wasnot what the Legislature intended. (Burris v. Superior Court (2005) 34 Cal.4th 1012, 1017-1018; People v. Nelson (2011) 200 Cal.App.4th 1083, 1098; People v. Wilen (2008) 165 Cal.App.4th 270, 285.) The present case will illustrate. Suppose that a sole member of the Board had conducted the hearings on modifying the waste discharge fees. According to the majority, formal adoption of the new fees would require three votes, that is, an absolute majority of the full Board. But if the hearings had been held by the full Board, it would—asit did here—take only twoaffirmative votes of the bare quorum of three Board members present. Whereis the logic in that’? The majority correctly notes that the Board’s membersare statutorily intended to broadenits outlook. Section 175 directs that four of the Board’s five membersshall “represent diverse specialties.” (Maj. opn., p. 9.) But the utility of this diversity seemsto be nullified with the majority-of-a-quorum rule. Why would the Legislature establish a procedure system that does not take the fullest advantage of all that talent? 15 The difficulty comes upon consideration of the 1969 amendmentdirecting that “anyfinal action of the board shall be taken by a majority of all the members of the board.” The disturbing words are “any final action by the board,” conjoined with the Senate Committee’s commentthat the amendment wasintended to “[require] that final board action shall always require the concurrence of a majority ofall the membersofthe board, not merely a majority ofa quorum.” (Italics added.) The meaning of section 183 is not to be gleaned solely from its language alone. The statutory scope and purposeis to be discerned from an appreciation ofthe entirety of the statutory scheme, of which section 183 is but a single part. We have noted: “ ‘ “[T]o seek the meaningofa statute is not simply to look up dictionary definitions and then stitch together the results. Rather, it is to discern the sense of the statute and therefore its words, in the legal and broader culture ee (People v. Wilen, supra, 165 Cal.App.4th 270, 285.) “The rules of grammar. . . are but tools, ‘guides to help courts determinelikely legislative intent. [Citations.] And that intentis critical. Those whowrite statutes seek to solve human problems. Fidelity to their aims requires usto approach an interpretiveproblem notasif it were a purely logical game, like a Rubik’s Cube, but as an effort to divine the human intent that underlies the statute.’ ” (Burris v. Superior Court, supra, 34 Cal.4th 1012, 1017-1018.) Becauseofthe ambiguity from the language of section 183, by itself and when read in conjunction with section 181, it is appropriate to consult the sparse legislative history for assistance, particularly “extrinsic evidence bearing upon the meaningof[the] ambiguous phrase.” (Eel River Disposal and Resource Recovery, Inc.v. Humboldt, supra, 221 Cal.App.4th 209, 224.) Thesearchis for the construction that most closely effectuates the Legislature’s intended purpose and soundpublic policy. (Cazlin v. Superior Court (2011) 51 Cal.4th 300, 304; Mays v. City ofLos Angeles (2008) 43 Cal.4th 313, 321.) This court has repeatedly madeit clear thatfidelity to plain languageis not followedto the point of sanctioning absurdity. (People v. Nelson, supra, 200 Cal.App.4th 1083, 1097-1098; Brown v. Valverde (2010) 183 Cal.App.4th 1531, 16 1546; MacIsaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1082-1083.) It is true that section 183 does not use the word “vote” (for that matter, neither does section 181), or expressly tie it to the existence of a “final decision.” The omissions are not consequential, because the nexusis implicit in the concept of “a majority ofall the membersofthe board ” taking “final action.” How else is “final action” to be “taken” if not by voting? This is apparent from the Board’s own procedures.? Representing the Board, the Attorney General appears to equate the “opportunity to participate” with actual voting.10 I am not sure whether the majority agrees with this approach 9 With respect to the uncontested items calendar at Board meetings, the Board’s rules of practice and procedure (Cal. Code Regs., tit. 23, §§ 647-647.5) direct: “After an opportunity for requests to remove any matters from the uncontested items calendar has been given, a vote shall be taken on the uncontested items calendar. Upon a vote to approve the uncontested items calendar, each matter on the uncontested items calendar shall be approved and shall have the same force and effect as it would have if approved as a separate agenda item.” (/d., § 647.2(f)(4).) The clear implication is that separate agenda items are approvedbya vote. 10 Tn its original and its supplemental briefs, the Board has treated a 1956 opinion by Attorney General Edmund G. Brownas imbuing the word “participate” with a special meaning. The predecessor of the Board queried the Attorney General: “Does section 193 of the Water Code, providing that any final action of the State Water Rights Board ‘shall be taken by the board as a whole’ require that all three members participate in eachfinal action, or may final action be taken by twoofthe three members?” The Attorney General’s conclusion wasthat “the action oftwo of the three members may constitute the final action of the board.” The underlying reasoning wasas follows: “By section 12 of the Civil Code and section 15 of the Code of Civil Procedure, the general rule is established that ‘Words giving a joint authority to three or more public officers or other persons are construed as giving such authority to a majority of them, unless it is otherwise expressed in the Act giving the authority.’ Can it be said that ‘it is otherwise expressed’ and the general rule made inapplicable by virtue of the phrase ‘shall be taken by the board as a whole’? Wethink not. The phrase, when viewedin its context, simply constitutes aproviso to the clause preceding it and authorizing the board to delegate all its powers to any one of its members. The phrase constitutes a command only that the board not delegate to one memberits final decision making power. Consequently, the words ‘as a whole’ may not properly be interpreted as specifically requiring unanimous decisions—.e., that all three members in each case actually participate in the taking of any ‘final action’. Rather, they contemplate merelythatall 17 (see maj. opn., p. 10 [“[B]ecause a quorum participated in the hearing pertinentto this case, section 183 does not apply”]), but I do not. Mere presenceortalkingis certainly not the same as voting. (See City ofSan Francisco v. Hazen, supra, 5 Cal. 169, 172 [rejecting the argumentthat statutory language requiring acts be “ ‘passed by a majority’ ... do not necessarily imply a consent or acquiescence, but only a presence or participation. ...”].) And voting is no arid formality. The Board hasa vast and significant jurisdiction. Pursuant to Porter-Cologne,it is vested with the authority to “formulate and adopt state policy for water quality control.” (§ 13140.) It is charged with “the orderly and efficient administration of the... adjudicatory and regulatory functionsofthe state in the field of water resources,” (§ 174; see § 275 [Board to prevent waste, unreasonable use, and unreasonable diversion “of waterin this state”]) namely, “ ‘the water rights and the water pollution and water quality functions of state government . . . and availability of unappropriated water.’ ” (State Water Resources Control Bd. Cases (2006) 136 Cal.App.4th 674, 696.) The Board promulgates regulations (§ 1058), adopts schedules of fees (§§ 1525, subd.(a), 13260, subd.(f)(1)), imposes cease and desist orders (§ 13301), issues permits (see Attwater & Markle, Overview ofCalifornia Water Rights and Water Quality Law (1988) 19 Pac. L.J. 957, 997), andlevies civil penalties (§ 13308). Such decisions would seem to require what section 183 termsa “final action.” In exercising the power delegated by the Legislature to adopt the schedule offees now being challenged by the Association, the Board wasexercising quasi-legislative power. (See Yamaha Corp.ofAmerica v. State Bd. ofEqualization (1998) 19 Cal.4th 1, 10; California Building Industry Assn. v. San Joaquin Valley Air Pollution Control Dist. (2009) 178 Cal.App.4th 120, 135-137; City Council v. Superior Court (1960) members ofthe board, in each case, shall have full opportunity to participate in any final decision (City ofNevada v. Slemmons (Iowa 1953) 59 N.W.2d 793, 795; Duesselv. Proch (Conn. 1905), 62 Atl. 152, 154). Accordingly, we are of the opinion that final actions of the State Water Rights Board may be taken by a majority of its members.” (28 Ops.Cal.Atty.Gen., 259, 260 (1956).) 18 179 Cal.App.2d 389, 393.) The exercise of that power is where the needs of legitimacy and accountability are most acute. “There is a strong public policy ‘that members of public legislative bodies take a position, and vote on issues brought before them... .’ ” (Kunec v. Brea Redevelopment Agency (1997) 55 Cal.App.4th 511, 520, quoting Dry Creek Valley Assn., Inc. v. Board ofSupervisors, supra, 67 Cal.App.3d 839, 844; accord, City ofKing City v. Community Bank ofCentral California (2005) 131 Cal.App.4th 913, 940-941, fin. 18; see 4 McQuillin, The Law of Municipal Corporations, supra, § 13:64, p. 1253 [Statutory requirements for the passage of ordinances and resolutions. . . are .. .for the protection of the public”].) “The common law andstatutory rules requiring legislative bodies act only by majority rule reflect ‘the deeply embeddedprinciple of majority rule in a democratic society ....’ ” and are essential “ ‘in our system for giving policies legal effect and legitimacy.’ ” (County ofSonoma v. Superior Court, supra, 173 Cal.App.4th 322, 346, fn. omitted.) The Board’s reading of section 183 as requiring, or permitting, only nonvoting “participation”(see fn.10 and accompanying text, ante) is entirely artificial. (See City of San Francisco v. Hazen, supra, 5 Cal. 169, 172.) If the middle paragraph ofsection 183, with its “any final action of the board shall be taken by a majority ofall the members of the board” language, is confined to the Board’s consideration of a hearing or investigation conducted by a single member, the connection between voting and a “final action” by the Board would be severedin all other instances where the Board was considering final action on a matter. Such a restriction could have the consequence of greatly reducing the numberofsituations where the Board’s members have to announce their votes at a meeting that is both open to the public (§ 183) and recorded for public review. (Cal. Code Regs., tit. 23, § 647.4.) This case provides a dramatic illustration of why such a result should not be countenanced. Two membersofthe Board enacted what the majority acknowledges might, in different circumstances, have been provedto bean invalid tax of many millions of dollars. (Maj. opn., pp. 16-22.) It would be hard to imagine an issue where the demand for public accountability is greater. Enacting a tax with a minority votestrikes 19 me as an absurd and invidious result, particularly in this age of Proposition 26,as it would give the Board a power denied to local water agencies. Andit is directly contrary to whatthe Legislature intended with the 1969 amendmentofsection 183——“thatfinal board action shall always require the concurrence ofa majority ofall the members ofthe board.” (Italics added.) Accedingto the Board’s reading of section 183 would also obligeus to disregard “a cardinal rule of statutory construction that the languageof a statute should be construed to effect, rather than defeat, its evident object and purpose.” (East Bay Garbage Co. v. Washington Township Sanitation Co. (1959) 52 Cal.2d 708, 713.) Finally,“ ‘[t]hat construction ofa statute . . . is favored which would defeat subterfuges, expediencies, or evasions employed to continue the mischief sought to be remedied or to’ defeat compliance with its terms, or any attempt to accomplish by indirection what the statute forbids.’ ” (Freedland v. Greco (1955) 45 Cal.2d 462, 468.) Given what we now know about the 1969 Senate Water Resources Committee report of what was intended,I submit that section 183 has a far broader reach than the majority’s conception. Conversely, insofar as a “final action of the board” is involved,I believe that the majority-of-a-quorum principle of section 181 should receive a far more modest scope. Just what constitutes “any final action” by the Boardis to be given a broad application. (See California Highway Patrolv. Superior Court (2008) 158 Cal.App.4th 726, 736 andauthorities cited.) We are not at this time called upon to decide how a decision by the Boardis to be categorized as a “final action,” but I am confident this one does.!! It easily includes the quasi-legislative adoption of a schedule of increased fees for the Storm Water Management Program, whichsection 183 requires to “be taken by a majority of all the membersof the Board.” That majority would bethree. (See County of 11 There is obviously somedistinction between what constitutes “any business of the board” that section 181 authorizes the majority of a quorum to “transact” and the apparently weightier “final action of the board” which section 183 commands“shall be taken by a majority ofall of the membersofthe board.” Determining the contoursofthat distinction may be deferred to anotherday. 20 Sonoma v. Superior Court, supra, 173 Cal.App.4th 322, 347 [“Because ‘three members must “concur” in orderto act’. .., the votes of .. . two members of a governing body simply cannot be construed as an act of the governing bodyitself]; Price v. Tennant Community Services Dist., supra, 194 Cal.App.3d 491, 495 [“a majority of the five member board ofdirectors . . . is three”]; 66 Ops.Cal.Atty.Gen. 336, 337 (1983) [“Since a board has five members ..., three members must ‘concur’ in order to act.... A vote of two to one thus would beinsufficient to bind the board.”].) The final action here had only two. Myvoteis to reverse the judgment, and remandthe causeto thetrial court with directions to issue a writ ofmandate directing the Boardto set aside its purported approval of Resolution 2011-0042.12 Because the majority votes otherwise, I respectfully dissent. Richman,J. 12 Jn light of this conclusion, I express no opinion on the other issues addressed in the majority opinion. 21 CASE NO. A137680 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO > CALIFORNIA BUILDING INDUSTRY ASSOCIATION, Plaintiff and Appellant, V. STATE WATER RESOURCES CONTROL BOARD etal., Defendants and Respondents. Appeal from the Superior Court of California for the City & County of San Francisco Superior Court Case No. CGC-11-516510 Curtis E. A. Karnow, Judge PETITION FOR REHEARING RUTAN & TUCKER, LLP DAVID P. LANFERMAN(State Bar No. 71593) THEODORE K. KLAASSEN(State Bar No. 198866) Five Palo Alto Square 3000 El Camino Real, Ste. 200 Palo Alto, CA 94306 Telephone: 650-320-1500 Facsimile: 650-320-9905 Attorneys for Plaintiff and Appellant CALIFORNIA BUILDING INDUSTRY ASSOCIATION 2644/030584-0002 8384103.3 a05/05/15 TABLE OF CONTENTS Page I. INTRODUCTION ....eccsccccssssesesesessseeseseessessessesessesesasssesneeeesneneeswl Il. ARGUMENT...cescsccessectcessersnesnsssesacsassasersecsnrscneeneesesnaereeseeesaesanay 4 A. Rehearing Is Necessary And Appropriate...........0 eoraees 4 TI. MISTAKES OF LAW oo. cccceseneecenteeeeenenerseresessneesteespeesiaes 7 A. 2644/030584-0002 $384103,3 a05/05/15 The Opinion Misstated The Constitutional Burden On Government Agencies To Initially Demonstrate The Validity And Fair Allocation Of Their Purported Regulatory Fees Among Fee PAYOILS....sesscesessssstesesesenecseseceseesereceessonsnessiensneseanenesnanees 1. The Majority Opinion Erroneously Conflated The Board’s Initial Burden Of Producing Evidence Demonstrating The Reasonableness OfThe Amount And Allocation Of Its Fees AmongFee Payors With The Appellant’s Distinct Burden Of ProofAt Trial... ..ceecssesseeeeeeeesdesestceeseseevessenenss 2. After Proposition 26, The Burden OfProof Is Now On The Board To Demonstrate The Constitutional Validity OfPurported Fees...... 3. The Majority Opinion Erroneously Reversed The Respective Evidentiary Burdens Of The Parties...........cccccsseseceseneeeeeeeees The Majority Opinion Erroneously Allowed The Board To “Allocate” The Board’s Required Revenue Needs (Not Necessarily Its “Costs”) Among Various Classes OfFee Payors With NO Evidentiary Basis Justifying The Arbitrary Allocation Of Fees wo... ccccccccccccesssecescrseessneeeceeeeueneanenees The Majority Opinion Mistakes The Board’s Purported Compliance With Water Code Section _ 13260 For Compliance With Constitutional Requirements...peeseeseenseenceeeenoeseee seeseees 7 veoneuce ] seve 10 seve 13 severe L4 evens 18 D. The Majority Opinion Erroneously Construedthe Water Code Which Explicitly Requires That “ANY Final Action of the Board Be Taken by a Majority ofAll the Membersofthe Board.” ...............0 20 1, The Majority Opinion Erroneously Concluded That a Vote By a Mere “Majority of a Quorum” WasSufficient “Under Section 181 and the Common LAW.” ..cccsesssssescseccsecssssseeevsnpereseeeneeeneesheseheceessseeenens 20 2. The Majority Opinion Erroneously “Construed” Section 183 weeeeeeeeessereerees seve 2d 3. The Majority Opinion Erroneously Dismissed Evidence of Legislative Intent and the Board’s OwnPractices Demonstrating That Section 183 Applies and Requires a Majority of All Board Members........:csceseceeesdeedetenesaedsaeeeaecneceseessaneneeseees 24 IV. MISSTATEMENTS OF MATERIAL FACT....cececeeseeeseeteeees 26 - A, The Board Did NOT Produce Evidence Showing The Reasonableness OfThe Total Fee...eeeenteee 20 B. CBIA DID Produce Evidence That The Board’s “Allocation Of The Fee” Was Unfair Or Unreasonable ..........cecscccscscccccescsescsscessececsessessanenccescesveseeees 27 Vv. CONCLUSIONccceeescsceerseeseeseseesessessessersesnsenssseeasneserssareseese 29 2644/030584-0002 ee 8384103.3 a05/05/15 -il- TABLE OF AUTHORITIES Page(s) CALIFORNIA CASES Barratt American, Inc. v City ofRancho Cucamonga (2005) 37 Cal.4th 685 ccccccccccscssscsssecseccsescescsersavsaeeessesseseseseepecsussssnaseaessesanens 27 Calif, Ass’n ofProf. Scientists v. Dept. ofFish & Game (2000) 79 Cal.App-4th 935 cicccccccesceseeseseesessessssneneresseerseenseseenerenees sevens ET California Farm Bureau Fed’n. v. | State Water Resources Control Board (2011) 51 Cal.4th 421 vccecccccescesessesscsessscsassseseessneees 2-3, 6-9, 15-17, 19, 28 Capistrano Taxpayers Association v. City ofSan Juan Capistrano (4th Dist., Div. 3, No. G048969)......cscsreeeeseeeetee 3, 5, 11, 17, 28 City ofDublin v. County ofAlameda (1993) 14 Cal.App.4th 264 oicssssesceseseereterccteceeesessserstersens saseeneaeesneeesnes 10 City ofSan Buenaventura v. United Water Conservation Dist. (2015) 235 Cal.App.4th 228 .ocecccscsereeeecenenees sedvaceenaeseuaceneseceaeosseneeeseeees 5, 12 Collier v. City & County ofSan Francisco (2007) 151 Cal.App.4th 1326 occccccseseeeneeeeseeneraserscersensensesssrerereeenrssee 19 Home Builders Ass’n ofTulare/Kings Counties v. City ofLemoore (2010) 185 Cal.App.4th 554 ....... eveceascarstcesecenseeususcesenersasesessasererecsasenspenes 5,9 Jacks v. City ofSanta Barbara (2015) 234 Cal.App.4th 925 oo eicccsccceeeneseseeneesressesesesscsenesessenreesseeesenneetey 6 Kern County Farm Bureau v. County ofKern (2013) 19 Cal.App.4th 1416 occcccscseseesesesesseeererserersrseensesesssseneeesenssnnens 16 Marina County Water Districtv. State Water Resources Control Board (1984) 163 Cal.App.3d 132... ssseccscccsessseneeteneecesseeteresrerersseresesenensees reer 25 Northwest Energetic Services v. California Franchise Tax Bd. (2008) 159 CalApp.4th 841 oo ssccssssesesessesesseessseeeeesssassanessensanenenenenees 6, 8 2644/030584-0002 -iii- 8384103.3 a05/05/15 Page(s) CALIFORNIA CASES (CONT.) Pennell v. City ofSan Jose (1986) 42 Cal.3d 365 v.ccccccscccssesssessessescnscescssecssderessseeessusecsecessrseseesnseseeeets 17, 19 San Diego Gas & Electric v. San Diego County APCD (1988) 203 CalApp.3d 1132.0cscesneeseeescteneesseeseessecsesserseceneseneresses sentees 16 Schmeer v. County ofLos Angeles (2013) 213 CalApp.4th 1310 oeeeceecceeseeneesereeeedeaaeecseneesateeanesenneeeaeeaes 11 Sinclair Paint Co. v. Board ofEqualization (1997) 15 Cal.4th 866 ooo. .ccccccccsccsecssesssceceeeeecsssneseseeescseeseneessaeeees 2, 8-9, 15, 19 Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029 oo. ccscssssssscsescesscsssssseceesessescseaaeceaeesseesneesacensessaeeaetes 22 Western States Petroleum Ass’n v. Board ofEqualization (2013) 57 Cal.4th 401 oo... ceccccscsssesessscesscsscseceseseseevseasecereescsesesaenasenesesesnenss 11 ‘STATE STATUTES Civil Code SCCTION 4.0... sicccscssssccessenseccersreccensecseeeeessssecssuausanaeueaececeeseenageesesenaneeeseaaes 21 Water Code SOCHON 181... cececcssscccsssscsssescessecesecseestsesscsssuseesesstetersees 4, 20, 22, 24 SCCTIONI 83 vi...iececeececcesscsssecsssussesssseeseccssstsesserecensuecseesersestsasessses Foy DU-29 SOCHION 1525 ooo... cscessecenseesecceecceseecenecenessdetsesesetesenaceesseeseseseseeersaaeetens 9 SOCHON 13260 uu... ccecccesseesccesecesscsseeseseesteeeteceseseaneerees 3, 6, 15, 18-19, 26 SECtON 13260) oo... ccecssessesscesecseeseneeeerseseeveesesseesssssesssseasesteneessserseese 4 section 13260(A)()(BY sevcrsesvesseoessvtesrsusersrasssuaneine sevseeaess 4 Section 13260(G)(1)(C) oc ccecseecessctsereeectsesecteesseesseneasesesenensesseases 15, 26 SECtION 132G0(L)... er eceecccecsseseeseeseeesseceseteteneveeesensseeeeseesessessseasaseasenens 27 RULES California Rules of Court TUE 8.268 eeciccccccerseecessssseseevecevscsesescsesesesseesstuseeeseeesetees peetesseesseeereee I /TI lf] HT] 2644/030584-0002 8384 103.3 205/05/15 -1V- Page(s) CONSTITUTIONAL PROVISIONS California Constitution | art. XTITA ...cceeesceeeseeseeeeeeeeeeceeeeneeensacesustaegeeneeesaceeneeesenesenenecenenenenes 8, 10 art. XIITA, § 3, SUbd. (@)occtseesteeeesenseeneesssaceeseeesaeeserseseeseesesess 11 art. XILIA, § 3, SUDA. (d).ccecceeseeseesesresssseeteesssertsseesssnenecasseneneneesesaees 11 OTHER AUTHORITIES 3 Sen. Journal. 1969-1970 Reg.Sess., p. 5154.......ceeseeeeeessceeeeeeate 24 2644/030584-0002 -v- 8384103.3 a05/05/15 IL INTRODUCTION Appellant, the California Building Industry Association (““CBIA”), respectfully requests that the Court grant rehearing in this matter, pursuant to Rule 8.268 ofthe California Rules of Court.’ The Opinion for the majority of the Court, as issued and published on April 20, 2015 (the “Opinion”) is based upon critical mistakes of law, and misstatements of material facts in the record. Based on these underlying errors regarding the applicable constitutional standards limiting “regulatory fees,” and the Board’s burden of producing evidence showing the constitutionality of the purported “fees,” as well as mistakes as to material facts, the majority Opinion reaches several erroneous conclusionsofdistinct, State-wide, significance: (a) The Opinion misstated — and erroneously reversed — the parties’ respective evidentiary burdens regarding the demonstration of the validity of the disputed regulatory fees. The Opinion erroneously conflated the Board’s initial burden of producing evidence to justify its purported regulatory fees with the challenger’s burden of proofat trial, * Appellant notes that the respondent State Water Resources Control Board sent a letter to the Court, dated Friday May 1, 2015, pointing out more than a dozen purported “errors” in the Opinion issued on April 20, 2015. While most ofthe Board’s issues with the Court’s Opinion involve purported typographical or stylistic errors, the Board’s letter also raises substantive issues (and appellant will respondto that letter separately). If nothing else, however, the Board’sletter further confirms the need for the Court to more carefully review and reconsider this matter. 2644/030584-0002 1 8384103.3 2305/05/15 cit under older, pre-Proposition 26, case law. In addition, the Opinion misread, and conflicted with, the Supreme Court’s holdings in California Farm Bureau Fed’n. v. State Water Resources Control Board (2011) 51 Cal.4th 421 [“Farm Bureau’’|. In Farm Bureau, supra, as in Sinclair Paint Co. v. Board ofEqualization (1997) 15 Cal.4th 866, 878 [“Sinclair Paint’|, the Court explained that. the initial evidentiary burden is on agencies like the respondent State Water Resources Control Board (the “Board”) to produce evidence demonstrating that their purported regulatory fees are in fact (1) reasonably limited to the costs of the regulatory activity for which the fees are imposed, and (2) that the costs of the regulatory activity are fairly apportioned through the fees so that the portion of the regulatory costs allocated to a payor “bear a fair or reasonable relationship to the payor’s burdens on or benefits from the regulatory activity.” The majority Opinion erroneouslyrelieves the Board. of its constitutional burden, and would improperly foist it on the challenger, CBIA,instead. (b) The majority Opinion erroneously accepted the Board’s post hoc assertion of unfettered discretion to “allocate”the entire costs of all of its various waste discharge regulatory activities among multiple classes of fee payors without any evidenceor findings in the record showing that the resulting “schedule of fees” fairly reflects the actual costs of their 2644/030584-0002 2 8384103.3 a05/05/15 wh respective burdens on the regulatory program for which the fees are ostensibly imposed, in disregard of the constitutional requirements. This novel (and unsupported) aspect of the majority Opinion was contradicted by the unanimous decision published later the same day in Capistrano Taxpayers Association v. City of San Juan Capistrano (4th Dist., Div. 3, No. G048969). Capistrano Taxpayers followed the Supreme Court’s Farm Bureau example, and holds an agency must do more than merely balance its total costs withits total fee revenues to comply with the Constitution, and if it chooses to charge different fees to different groups, it must also provide evidence to correlate those differing fees to the actual costs attributable to the different classes of fee payors. (c) The foregoing errors were compounded in the majority Opinion by disregarding the undisputed evidence in the record — from the ' Board’s own staff-- calling out the Board for having misallocated the costs of its regulatory program so that fee payors subject to the Board’s “stormwater discharge” requirements had been paying far more than the costs of that program for years, and would continue to “overpay” and subsidize other waste discharge regulatory costs under the disputed schedule of fees proposed for FY 2011-2012. [JA 0220-221; 0236; 0289; 0330.] (d) The majority Opinion erroneously elevated the Board’s purported “compliance” with the minimal statutory requirements of Water 2644/030584-0002 , 3 8384103.3 a05/05/15 -3- Code § 13260 above compliance with the constitutional requirements explained in Farm Bureau, and moreover ignored the Board's failure to comply with requirements of Water Code section 13260(d)(1)(B) requiring the fees not exceed “recoverable costs” as defined in section 13260(d), and with 13260(f)(1) requiring that the Board annually adjust its schedule of fees to “compensate for” any over-collections of fees in prior years. (e) The majority Opinion rewrote the provisions of the Water Code specifying that “any final action of the Board be taken by a majority. of all the members of the Board” (§ 183), and instead relied on an incongruous melding of a superseded “common law rule” and portions of § 181 to allow the Board to take dramatic, quasi-legislative, “final action” by a mere majority of a quorum. The interpretation in the majority Opinion is contrary to the canonsofstatutory construction, and created an unnecessary conflict between Water Code §§ 181 and 183. These are fundamentaland constitutional issues, having State-wide _ importance, and should be carefully considered — indeed reconsidered — by this Court. Il ARGUMENT A. Rehearing Is Necessary And Appropriate. The majority Opinion erred,first, in concluding that a vote by just two members of the five-member Board was legally sufficient under the 2644/030584-0002 4 8384103.3 05/05/15 “to Water Code to adopt the disputed schedule of fees. As detailed below, that conclusion was inconsistent with the plain wording ofthe statute, and inconsistent with explicit statements of the Legislature’s intent. Moreover, the only evidence in the record as to the Board’s own “interpretation” or practices demonstrated that the Boardhas previously acknowledged that Section 183 applies and requires at least 3 votes from the Board to take “final action.” The majority Opinion then addressed CBIA’s substantive challenges to the the Board’s resulting “schedule of waste discharge permit fees”’— but erred in concluding that the Board had complied with both statutory and constitutional requirements governing such fees. At the outset of its analysis, the majority Opinion erroneously inverted the parties’ evidentiary burdens, and failed to recognize that the | government agency (the Board) “has the initial burden of producing evidence sufficient to demonstrate that it used a valid method for imposing the fee in question.” (E.g., Home Builders Ass’n of Tulare/Kings Counties v. City ofLemoore (2010) 185 Cal.App.4th 554, 562; see also, City of San Buenaventura v. United Water Conservation Dist. (2015) 235 Cal.App.4th 228, 242; Capistrano Taxpayers, supra.) As a result, the majority Opinion erroneously excused the Board’s absolute failure to produce any evidence in the record demonstrating that its fees as a whole, or as arbitrarily “allocated” among eight (8) separate classes of 2644/030584-0002 5 8384103.3 a05/05/15 TIT fee payors comply with constitutional requirements. In the absence of such evidence, CBIA hadno burden to “make a prima facie case” to show the invalidity of the fees — or, if it did have some evidentiary burden, CBIA carried that burden by producing the complete Board proceedings in the record below which showedthe absence of any evidence purporting to relate the Board’s fees to the recoverable costs of its regulatory program(s). Even if the Court accepted the Board’s post hoc arguments that its eight separate fees could lawfully be lumped together for purposes of attempting to cumulatively satisfy the specific calls of Water Code § 13260, the Opinion nevertheless disregarded undisputed evidence in the record demonstrating that the Board never even tried to meet the distinct and more stringent constitutional standards. As a result of the Board’s failure to produce evidence in the record on these essential points, the judgment should be reversed and the case should either be remandedto the trial court to make findings “focused on the Board’s evidence” (Farm Bureau, supra), or, in light of the undisputed record, more appropriateley, the Court may simply determine that the purported “fees” are invalid because they do not meet constitutional requirements of a “fee” (Northwest Energetic Services v. California Franchise Tax Bd. (2008) 159 Cal.App.4th 841, 861) or are really “illegal taxes masquerading as fees” (Jacks v. City of Santa Barbara (2015) 234 Cal.App.4th 925, 927.) 2644/030584-0002 6 : 8384103.3 a05/05/15 “Ue These are important and far-reaching matters, as all members of this Court have acknowledged, and deserve rehearing. Il. MISTAKES OF LAW The majority Opinion erroneously relied on legally-unsupported arguments put forth by the Board, and is based on several mistakes of law. A. The Opinion Misstated The Constitutional Burden On Government Agencies To Initially Demonstrate The Validity And Fair Allocation Of Their Purported Regulatory Fees Among Fee Payors. 1. The Majority Opinion Erroneously Conflated_ The Board’s Initial Burden Of Producing Evidence Demonstrating The Reasonableness Of The Amount And Allocation Of Its Fees Among Fee Payors With The Appellant’s Distinct Burden OfProofAt Trial. ~ First, the majority Opinion erroneously asserted (at p. 18, n. 9) that “CBIA does not cite any constitutional provision” as part of CBIA’s challenge to the purported fees and mischaracterizes CBIA’s constitutional challenge as simply arguing that the purported fee is in reality an illegal tax. To the contrary, CBIA argued below that (a) there are constitutional limits on valid regulatory fees (Opening Brief, pp. 29- 30), as explained in Farm Bureau, supra, 51 Cal.4th at 437 [regulatory fees may only be deemedto be valid, “so long as a fee does not exceed the reasonable cost of providing services necessary to regulate the activity for which the fee is charged”]; (b) the Board failed to produce evidence required for constitutionally valid regulatory fees (Opening Brief, pp. 30- 2644/030584-0002 7 8384103,3 a05/05/15 an 32); and (c) that the Board’s unjustified fees were in reality unlawful ‘special taxes.’ (Opening Brief, pp. 32-34, citing inter alia, several “constitutional provisions.”) Those constitutional arguments were further amplified in Appellant’s Closing Brief. | Next, the majority Opinion asserted (and frequently repeated) the mantra that the appellant CBIA had “the burden of making a prima facie case showing the fee (sic) was invalid.” (Slip Opn., p. 2.) This is a mistake of law, undermining the rest of the Opinion. The majority Opinion cited Farm Bureau, supra, p. 436, out of context, and erroneously conflated the agency’s initial “burden of producing evidence” sufficient to demonstrate that it used a valid method for imposing the fee in question” with the petitioner’s distinct, and contingent, “burden of proof? to make a “prima facie showing” of invalidity of the fee at trial. (Farm Bureau, supra, at .436, quoting Home Builders Ass’nv. City ofLemoore (2010) 185 Cal.App.4th 554, 562.) | In order to sustain a valid regulatory fee following the passage of Proposition 13 (Cal. Const., art. XIIIA), the Supreme Court explained in Sinclair Paint, supra, 15 Cal.4th at 878, that “the government should prove (1) the estimated costs of the service or regulatory activity, and (2)... that the charges allocated to a payor bears a fair or reasonable relationship to the payor’s burden on or benefits from the regulatory 2644/030584-0002 8 8384103.3 a05/05/15 TOT activity.” (See also, Northwest Energetic Services v. California Franchise Tax Bd., supra, 159 Cal.App.4th 841, 861.) This “burden” on the government was further detailed in Home Builders v. Lemoore, supra, 185 Cal.App.4th at 562 [involving analogous fees under the Mitigation Fee Act, but following Sinclair Paint and its description of the “burden”in a regulatory fee challenge]: “Accordingly, the local agency has the initial burden of producing evidence sufficient to demonstratethat it used a valid method for imposing the fee in question, one that established a reasonable relationship between the fee charged and the burden posed by the development. If the © local agency does not produce evidence sufficient to avoid a ruling against it on the validity of the fee, the plaintiff challenging the fee will prevail. However, if the local -agency’s evidence is sufficient, the plaintiff must establish a requisite degree of belief in the mind ofthetrier of fact or the court that the fee is invalid, e.g., that the fee’s use and the need for the public facility are not reasonably related to the development. project on which the fee is imposed or the amount of the fee bears no reasonable relationship to the cost of the public facility attributable to the development. (Cf. Sinclair Paint Co. v. State Bd. ofEqualization (1997) 15 Cal.4th 866, 881.)” Home Builders vy. Lemoore, supra, 185 Cal.App.4th at 562 (emph. added) In 2011, the Supreme Court in Farm Bureau, supra, 51 Cal.4th at 442, reviewed a pre-Proposition 26 challenge to the Board’s regulatory fees for water rights permits under Water Code section 1525. The Court there reiterated the constitutional burden_on the Water Board to make a sound evidentiary showing in thefirst instance, “that the associated costs of the regulatory activity were reasonably related to the fees assessed on 2644/030584-0002 9 8384103.3 a05/05/15 “ae the payors,” citing Sinclair Paint, supra. The Court concluded that the record was unclear as to “whether the fees were reasonably apportioned in terms ofthe regulatory activity’s costs and the fees assessed” on the various classes of fee payors, and so remanded that case with directions to “make detailed findings focusing on the Board’s evidentiary showing.....” (emph. added.) The Supreme Court did not put the burden ofproof on the fee challenger. Had the “burden of proof” been on the appellant Farm Bureau to make a “prima facie case” showing that the Board’s fees were invalid in that case, obviously the “unclear record” would have meant defeat for the appellant, not remand. | 2. After Proposition 26, The Burden Of Proof Is Now On The Board To Demonstrate The Constitutional Validity Of Purported Fees. The respondent Board, and now the majority Opinion, erroneously invoked older case law for the outdated notion that the Board’s regulatory fees should be “presumed”to bevalid, thus putting the “burden of proof’ at trial on a challenger to demonstrate the invalidity of the fees. However, as the CBIA previously pointed out (e.g., Closing Brief, pp. 19-21) that notion is no longer consistent with California law (if it - ever was; cf. City ofDublin v. County ofAlameda (1993) 14 Cal.App.4th 264, 281-283 [burden is on the agency to produce evidence to show that fees do not exceed costs, and are fairly apportioned to permittees].) 2644/030584-0002 / 10 8384103.3 a05/05/15 - - Especially following voter approval of Proposition 26 in November 2010, amending Cal. Const. XIIA, it is now clear that: “The State bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which thosecosts are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on or benefits received. from the governmental activity.” (Cal. Const. art. XTIIA § 3 subd. (d) [emph. added].)* (See, Schmeer v. County of Los Angeles (2013) 213 Cal.App.4th 1310, 1326, explaining that, “Proposition 26, in an effort to curb the perceived problem ofa proliferation of regulatory fees imposed by the state without a two-thirds vote of the Legislature...” shifted the burden of proof to the state.) (See also, Capistrano Taxpayers, supra, citing Cal. Const. art. XIIID, section 6, subd. (b)(5).)° This language echoesearlier case law. The majority Opinion suggested, in footnote 9, that Proposition 26 should have no impact on this case simply because “the Board’s fee schedule is not a ‘change in state statute.” However, Western States Petroleum Ass’n v. Board of Equalization (2013) 57 Cal.4th 401, 423, cited in the footnote, dealt only with a distinct argument that the Board of Equalization’s change of an assessment rule was a new “tax” requiring 2/3 approval by each house of the Legislature, under art. XIIIA, section 3, subdivision (a). The decision did not address the impact ofProposition 26 on the burden of proof nor address the broad new provisions in section 3 subdivision (d), making it clear that“the State bears the burden .... “ As noted above, this aspect of Proposition 26 has been viewed as confirming that the burden is on the government to justify the imposition of fees, charges or other exactions. 2644/030584-0002 . 1 1 8384103.3 a05/05/15 vLin Other recent appellate decisions have similarly recognized thatthe Constitution now clearly puts the initial burden of proof on the government in the trial court to demonstrate the constitutional validity of its fee and that the allocation of the regulatory costs among fee payors fairly and reasonably reflects the burden attributed to the fee payor or class of fee payors. See, e.g., City ofSan Buenaventurav. United Water Conservation Dist. (2015) 235 Cal.App.4th 228, 242 [groundwater extraction charges were valid fees because the amounts were shown to be reasonably related to payor-specific benefits]: Wereview de novo a trial court’s determinations whether taxes, fees, and assessments imposed by a local governmental entity are constitutional, exercising our independent judgment. (Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448-450.) In thetrial court, the governmental entity has the burden of showing, by reference to the face of the record beforeit, that its charges satisfy the Constitution. (See Cal. Const., arts. XIII A, § 3, subd. (d), XIII C, § 1, subd. (e), XIII D, § 6, subd. (b)(5); see also California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal.4th 421, 436-437.) The Opinionfailed to recognize these changesin constitutional law applicable to fees imposed by State agencies, and committed a prejudicial and misleading mistake of law by failing to test the Board’s schedule of fees under the current constitutional requirements. Indeed, the majority Opinion (1) failed to recognize that the initial burden of producing evidence regarding the validity or invalidity of the disputed schedule of 2644/030584-0002 1 2 8384103.3 a05/05/15 cian fees was on the Board, and (2) failed to acknowledge that, following Proposition 26, the burden of proofat trial was also on the Board. As explained in City ofSan Buenaventura, supra, at 237-239: Largely in response to the Sinclair Paint decision, California voters approved Proposition 26 in 2010 to close the perceived loopholes in Propositions 13 and 218 that had allowed “a proliferation of regulatory fees imposed by the state without a two-thirds vote of the Legislature or imposed by local governments without the voters’ approval.” (Schmeer v. County ofLos Angeles, supra, 213 Cal.App.4th at pp. 1322, 1326.) Proposition 26 broadened the constitutional definition of “‘tax’ to include ‘any levy, charge, or exaction of any kind imposed by’ the state or a local government, with specified exceptions.” (Ud. at p. 1326, citing Cal. Const., art. XIII C, § 1; see Prop. 26, § 1, subd. (f) [“[T]his measure ... defines a ‘tax’ for state and local purposes so that neither the Legislature nor local governments can circumvent the[] restrictions [in Props. 13 and 218] on increasing taxes by simply defining new or expandedtaxes as ‘fees’”’].) 3. The Majority Opinion Erroneously Reversed The | Respective Evidentiary Burdens OfThe Parties. The majority Opinion madea critical and prejudicial error of law by reversing the burden of production and the burden of proof, and erroneously placing both on the appellant. The Opinion states (Slip Opn. at p. 23) that the majority “decline to consider whether the Board metits burden of production [of evidence demonstrating that its allocation of regulatory costs by differing fees was reasonable] because we conclude that CBIA failed to make a primafacie case.” 2644/030584-0002 l 3 8384103.3 a05/05/15 - - Here, the Opinion not only erred by relieving the Board ofits constitutional obligations to demonstrate the validity of its purported fees, but compoundsit by placing an unjustified “burden of proof” onto CBIA and then claiming that CBIA’s supposedfailure to carry this unwarranted burdenexcusesthe Court in refusing to examine the evidence to determine if the Board carried its burden of production. And, asdetailed in Section C, below, the Opinion disregarded the evidence in the record affirmatively showing that the proposed FY 2011- 2102 “schedule of fees” did not meet constitutional requirements for valid regulatory fees, nor did the record evidence, cited by CBIA attrial and on appeal, show that the Board hadcarriedits evidentiary burdens. B. The Majority Opinion Erroneously Allowed The Board To “Allocate” The Board’s Required Revenue Needs (Not Necessarily Its “Costs”) Among Various Classes Of Fee Payors With NO Evidentiary Basis Justifying The Arbitrary Allocation Of Fees. The Opinion erroneously accepted the Board’s post hoc assertion that it could lawfully adopt a schedule ofdifferent fees to be charged to at least eight different classes of permit applicants for various distinct waste discharge “Program Areas” administered by the Board underthe umbrella of its “waste discharge regulatory program” without any evidence of findings purporting to show that the resulting “fees” imposed for stormwater discharge permits bear any fair or reasonable relationship to the burdens on or benefits from the regulatory activities attributable to 2644/030584-0002 1 4 8384103.3 a05/05/15 where such permit applicants. The Board provided no evidence or analysis of the differing “costs” of the different Program Areas for which it charges separate fees.’ The Board had to make such arguments on appeal out of necessity, because the record did not contain any evidence purporting to show that the various fees were reasonably related to differential “costs” of the Board’s self-separated regulatory responsibilities. There was no basis, however, for the majority Opinion to accept these contentions, which were not_supported by legal authority or by evidence. In essence, the Opinion would hold that a regulatory agency has unfettered discretion to “allocate” the overall “costs” of its regulatory activities among multiple classes of fee payors, without regard to the burden of such fee payors on the agency’s costs or the “benefits” to such classes of fee payors. This novel proposition is contrary to the Constitution and Water Code section 13260. (See Appellant’s Opening 4 The Board never contended, much less provided any evidence, that the total amount of the fees it charges under the waste discharge program “schedule of fees” are based on its reasonable costs or statutorily “recoverable costs” (§ 13260(d)(1)(C) specifically defines the “recoverable costs” that may be included in the Board’s fees). Instead, it merely contends that its needs for revenues from “fees” are dictated annually by the State Legislature, when it issues the Budget,telling the Board how much to spend for regulatory activities, how much State — funding to expect, and leaving a gapto be filled by various “fees.” There is no record evidence showing any overt attempt to balance “fees” against “costs” per se. Cf., Farm Bureau, supra, at 439; Sinclair Paint, supra, at 870, 878. 2644/030584-0002 1 5 8384103.3 a05/05/15 “LJ Brief, pp. 26-34; Closing Brief, pp. 21-37.) Neither the Board nor the Opinion cited any authority supporting this approachto setting regulatory fees. To the contrary, the majority Opinion sanctioned an arbitrary and unconstitutional tolerance for fees divorced from costs. For example, California courts have upheld regulatory fees imposed on the basis of “polluter pays” — i.e., those who pollute more pay more. (See, &.g., Kern County Farm Bureau y. County of Kern (2013) 19 Cal-App.4th 1416, 1424-25 [substantial data and “reasonably complete empirical basis” sufficient to sustain landfill fees]; San Diego Gas & Electric v. San Diego County APCD (1988) 203 Cal.App.3d 1132, 1145-49 [regulatory fees based on evidence of estimated pollution discharges].) The Board’s fees have none of that “cost/fee” evidence or analysis, and the majority Opinion is inconsistent with cases upholding regulatory fees only upon an substantial evidentiary showing of fees being related to regulatory costs attributable to the fee payors orclass of fee payors. The majority Opinion is thus inconsistent with Farm Bureau, supra, 51 CaL4th at 441: “the question [of the validity of the Board’s fees] revolves around the scope and the cost of the ... regulatory activity and the relationship between those costs and the fees imposed.” (Emph. added.) Indeed, the only evidence in the record here was just to the contrary — the Board’s own staff reports called out the fact that fee payors subject to the Board’s “stormwater discharge” permitting requirements 2644/030584-0002 1 6 8384103.3 a05/05/15 “LO- had been paying far more than the costs of that program for years, and would continue to “overpay” under the disputed schedule of fees proposed for FY 2011-2012. [JA 0220-221; 0233-236: 0289.] If the Board wants to claim that it operates just one big “waste discharge regulatory program”consisting of 8 or more separate “Program Areas” it may presumably do so. But if the Board choosesto divide up the overall costs of its regulatory activities and charge separate fees at differing rates to different groups of fee payors, it must at least make an evidentiary showing that correlates those differential fees to the Board’s differential costs, and that the various fees fairly and reasonably reflect the benefits and burdens of the Board’sactivities attributable to those groups of fee payors. (Capistrano Taxpayers, supra; see also, Calif, Ass’n ofProf. Scientists v. Dept. ofFish & Game (2000) 79 Cal.App.4th 935, 945-51.) The Opinion erroneously suggested (Slip Opn., p. 22) that CBIA contended that the fees must be finely calibrated to the precise benefit or cost attributable to each individual fee payor. Not so. CBIA simply pointed out that no prior decision has allowed fees to differ from class to class without a substantial evidentiary justification for such differential treatment. (See, e.g., Closing Brief, pp. 24-34; also, Farm Bureau, supra, 51 Cal.4th at 442; Pennell v. City ofSan Jose (1986) 42 Cal.3d 365, 375 2644/030584-0002 1 7 8384103.3 a05/05/15 -Lic [upholdinga flat rental unit regulatory fee based on the number ofrental units owned].) The majority Opinion in this case would, for example, allow the Board (or any other California regulatory agency) to “allocate” the costs of its regulatory activities so that 99% of its total costs were charged as “fees” to just one small class of regulated people however the agency chooses to define that class (perhaps politically disfavored or disenfranchised) without regard to their actual cost “burden” on the agency, while all other remaining fee payors would be charged far less than their fair share of costs. Such an unconstitutional and arbitrary result would betolerated if notencouraged by the majority Opinion, in disregard of the constitutional limits on such fees. C. The Majority Opinion Mistakes The Board’s Purported Compliance With Water Code Section 13260 For Compliance With Constitutional Requirements. The majority Opinion concluded that the Board’s schedule of fees complied with Section 13260 even though “the Board acknowledges that the fee for storm water dischargers exceeded the actual expenditures for that program...” (Slip. Opn. 14-18) That startling conclusion is based, in part, on some puzzling word-smithing, e.g.: “The reference to multiple fees in section 13260 (f)(1) simply indicates that the total fee is to be 2644/030584-0002 l 8 8384103.3 a05/05/15 “Lor comprised of the various fees.” (Slip Opn., p. 17.) There is no explanation or authority offered for that “interpretation.” More puzzlingstill is the conclusion that “none ofthe amendments [to section 13260] required the fee for a particular program to equal the cost for regulating that program.” (/bid.) However, the Constitution and Supreme Court decisions interpreting the Constitution have imposed such a requirement, over and above whatever the Water Code may minimally specify with regard to the Board’s fees. (E.g., Farm Bureau; Sinclair - Paint; Pennell y. San Jose, supra.) The Opinion cited Collier v. City & County of San Francisco (2007) 151 Cal.App.4th 1326, 1353, to support the validity of the fees despite exceeding the costs of storm water discharge regulatory activities. This case, however, is the “flip side” of Collier, and Collier actually refutes the validity of the Board’s fees rather than supporting them. In Collier, the City imposed the same “one big fee” on all fee payors, based on the costs of services provided by three separate departments; here by contrast, the Board imposes eight separate and different fees to fund the "costs ofactivities provided in what the Board now describes as “one big regulatory program.” Collier is the opposite of this case. Finally, it should go without saying that even if the Board’s fees may have complied with the minimal requirements of section 13260, that 2644/030584-0002 1 9 83841033 a05/05/15 “La is far from showing that the fees meet the distinct and more stringent constitutional standards for valid regulatory fees described above. D. The Majority Opinion Erroneously Construed the Water Code Which Explicitly Requires That “ANY Final Action of the Board Be Taken by a Majority of All the Members of the Board.” The majority Opinion began with a misreading of the Water Code that violates several fundamental canons of statutory construction, and concluded that the schedule of fees could be lawfully adopted by fewer than sg majority of all the members of the Board” as otherwise plainly required by Water Code section 183. In doing so, the majority Opinion erroneously dismissed the plain languageofthe statute, as well as highly- relevant legislative history and explicit statements of the Legislature’s intent, and instead grasps at section 181. The respondent Board never even argued that the actions of its two members were authorized by section 181, until after the first oral argument in | this Court and the Coutt’s subsequent request for supplemental briefing on sections 181 and 183. 1. The Majority Opinion Erroneously Concluded That a Vote By a Mere “Majority of a Quorum” Was Sufficient “Under Section 181 and the Common Law.” The majority Opinion erroneously melded “the common law” and distinct statutory provisions of section 181 specifically providing for “a quorum” of the Board to transact business so as to avoid upsetting the 2644/030584-0002 20 8384103.3 a0S/05/15 TAN vote by just two out of five members to approve the fee schedule (Slip Opn. p. 7.) However, if section 181 couldtruly be stretched to statutorily authorize “anyfinal action” then why is there any need to invoke a supposed common law rule — or room to do so? As pointed out in the dissent (p. 11, n. 8), California long ago abandoned old notions that statutes “in derogation of common law” should be strictly construed, (E.g., Civil Code § 4.) The majority Opinion erroneously misstated CBIA’s position, and asserts that “CBIA claims that section 183 creates an exception to the common law rule set forth in section 181.” (Slip Opn. , p. 7.) Not so. Like the respondent Board, CBIA never even mentioned “section 181” until after the first oral argument, and does not claim that the common law rule has any applicability, whether or not it is “set forth” in section 181. To the contrary, both parties have always contended that the operations of the Board are governed bystatutes, rather than by “common law.” Therefore, the Opinion’s invocation of “common law” arguments is misplaced. Evenif it were somehowrelevant, the majority Opinion improperly overlooked the first part of the so-called “common law rule” upon which it so heavily relies (i.e., “in the absence ofa contrary statutoryprovision,” -a majority ofa quorum may act). The majority Opinion ignored the “contrary statutory provision” in Water Code section 183, requiring that 2644/030584-0002 2 1 8384103.3 a05/05/15 Tain “any final action” of the Board be taken only by “all the members ofthe Board.” This is not an uncommon provision in California. The Dissent (Slip Opn. pp. 3-4) lists dozens of similar statutory provisions codifying “the majoritarian exception” to the common law, particularly in matters governing legislative action, and water, which agencies and courts have enforced without reservation. Section 181 does not support the Board. Section 181 merely defines a quorum for “purposes of transacting any business of the board.” If that “transacting business” language is interpreted so as to be synonymous with “taking any final action” then section 183 (or a key portion of it) would be rendered either surplusage or inconsistent with section 181. If section 181 allows a “majority of a quorum” to take “any final action” thenthe portion of section 183 requiring “a majority of all the members ofthe Board”to take action wouldbe inconsistent with 181. Even if, as the majority Opinion contends, section 183 only requires a majority of all members to take action following a hearing or investigation conducted by one member of the Board, such an interpretation still renders section 183 fatally inconsistent with the majority’s interpretation of section 181. The canons of statutory construction forbid such “interpretations.” (Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal4th 1029, 1036 (“Words must be construed in context, and statutes must be 2644/030584-0002. 22 8384103.3 a05/05/15 - - harmonized .... Interpretations that lead to absurd results or render words - surplusage are to be avoided.”’].) 2. The Majority Opinion Erroneously “‘Construed” Section 183. Unlike the situation at the first oral argument, when it appeared that all three Justices then sitting on this matter expressed strong doubts or questions about the sufficiency of “action” taken by just two Board membersin light of section 183, the majority Opinion now strains to deny the applicability of section 183. There is no authority, however, forits argument (at p. 8) that section 183’s requirement for a majority of all the members of the Board in order to take “any final action” should be limited to cases where a hearing or investigation has been conducted by a single Board member. As noted above, such an interpretation would create an inconsistency between 183 and 181 (if 181 is deemed to authorize “final action” by a mere majority of a quorum). The majority Opinion improperly added words to the text of section 183 in order to try to limit it. Section 183 says nothing about a “subsequent meeting” being called and held to take action on a preliminary one-member hearing or investigation; it merely states the unremarkable proposition that “final action” must be taken at a meeting “duly called and held.” The Opinion thus relies on a misleading straw. man argument whenit asserts that “no subsequent meeting would need to ~ 2644/030584-0002 23 8384 103.3 a05/05/15 eed be called except in a situation where fewer than a quorum participated in the first hearing or meeting.” In cases following a one-member investigation, no “meeting”of the Board would have taken place, so some meeting would need to be “duly called and held” for the Board to take final action on any such preliminary investigation or hearing. On the other hand, a quorum of the Board or even the full Board may have conducted preliminary meetings, hearings, or study sessions on a matter before being ready to take “final action” at a meeting “duly called and held” — so again this argumentprovesnothing. 3. The Majority Opinion Erroneously Dismissed Evidence of Legislative Intent and the Board’s Own Practices Demonstrating That Section 183 Applies and Requires a Majority ofAll Board Members. At the Court’s request, appellant provided supplemental briefing on sections 181 and 183 of the Water Code, along with a requestfor judicial notice of extensive “legislative intent” materials. Although the motion for judicial notice was granted, the majority Opinion now tries to dismiss the significance of those materials, including explicit statements of the Legislature’s intention (when it amended section 183 in 1969) “to remove any ambiguity” as to “whether final action by the Board always requiresa majority consisting of three members of the five-man state board or whether the majority required is only that of the members of the board (present) at a meeting duly called and held.” (3 Sen. Journal. 1969-1970 2644/030584-0002 94 83841033 a05/05/15 LIT Reg. Sess., p. 5154.) The Legislature stated that it had acted to amend Section 183, to remove any ambiguity “by requiring that final board action shall always require a concurrence of all the members of the Board, not merely a majority of a quorum.” (/d.) Rarely is a court afforded such clear and explicit evidence of the Legislature’s intention in resolving an “ambiguity” that might otherwise lead to misinterpretation of the statutory language. It is error to dismissit. The majority Opinion also disregarded the evidence of the Board’s own historic practices in conformance with the provisions of section 183. CBIA cited Marina County Water District v. State Water Resources Control Board (1984) 163 Cal.App.3d 132, 136, because it illustrated the Board’s own practice in a situation involving a similar challenge to “final action” taken by less than a majority of the full Board, As explained in the Closing Brief (p. 42): As appellant has been careful to note, appellant does not contend that the Court of Appeal in Marina affirmatively decided, as a contested issue before that Court, that Section 183 required affirmative votes by more than two Board membersin order to take valid final action. Rather, the Marina case is relevant because it demonstrates when the validity of purported Board action was challenged for violation of Section 183, and summary judgment was granted invalidating the Board’s action “because it was not approved by a majority, i.e., three members, of the Board,” the Board did not contest that ruling. Instead, the Court of Appeal reported that the Board subsequently issued a second order, exactly the same as the first, “but approved by the requisite majority.” (163 Cal.App.3d at 136.) Marina at least implies that the Board has recognized that Section 183 2644/030584-0002 25 8384103.3 a05/05/15 hed = makes “three_members” the “requisite majority” to take valid Board action. Finally, as eloquently pointed out by the dissent, the majority Opinion’s “statutory construction” would tolerate non-democratic quasi- legislative action by a mere minority of a unelected regulatory Board, despite a “contrary statutory provision,” and the constitutional demands for majority approval of taxes or “fees” in excess of the costs for which they are imposed. | IV. MISSTATEMENTS OF MATERIAL FACT A. The Board Did NOT Produce Evidence Showing The Reasonableness Of The Total Fee. The Opinion erroneously asserted (p. 21) that the Board “did produce evidence regardingthe reasonablenessofthe total fee.” However, constitutional “reasonableness” is notshown merely because of the Board’s claim that the “projected expenditures” from the Board’s waste discharge regulatory Fund “closely corresponded with”the “anticipated revenues” to the Board. As noted in the briefing, there is no evidence in the record of the Board’s “costs” for either its total program or for the various “Program Areas” such as the storm water discharge area. “Expenditures” are not the same as the Board’s regulatory “costs” recoverable by fees under Water Code section 13260. Even the Board admitted that budgeted “expenditures” were not the same as “regulatory costs.” To the contrary, section 13260(d)(1)(C) narrowly defines the 2644/030584-0002 96 8384103.3 a05/05/15 eI kinds of “recoverable cost” items that could be included in the Board’s fee program. B. CBIA DID Produce Evidence That The Board’s “Allocation Of The Fee” Was Unfair Or Unreasonable. The Board’s ownstaff report (the only substantive evidence in the record on this point) demonstrated that “between FY 2004-2005 and FY 2009-10, the Storm Water Program collected approximately $22 million more in revenue than it incurred in expenditures.” (AR, Tab 9, p. 95.)° The Board had a constitutional duty to account or compensate for that surplus, independent of any statutory duty under § 13260(f). (See, Barratt American, Inc. v City ofRancho Cucamonga (2005) 37 Cal.4th 685, 703.) Moreover, CBIA cited to the record evidence showing that the proposed new schedule of fees would continue to disproportionately overcharge applicants for Storm Water permits more than the estimated or reasonable costs of their “fair share” of the Board’s specifically designated “Storm Water Program” or the overall waste discharge regulatory ptogram. (Appellant’s Opening Brief, pp. 26-32; Closing > The record further showed, without contradiction, that in every one of the seven (7) fiscal years leading up to September 2011, the Board had collected substantially more revenues than it reported as “expenditures” for the Storm Water program, and Board staff showed the net surplus over the seven years since FY 2004-05 as $23,506,000. (See, the Table attached to Appellant’s Opening Brief at Appendix 1 (Revenue and Expenditures by Program [JA 0220-0221.) 2644/030584-0002 7 8384103.3 a05/05/15 a Brief, pp. 22- 32.) The majority Opinion ignored that evidence produced at trial by CBIA. At a minimum, the evidence in the record fails to show that the schedule of fees, or the various fees on the schedule, are in any way related to the recoverable or reasonable costs of the various regulatory activities for which they are charged, either cumulatively or as a whole. Instead, the Board simply argued that it raised the amount of its waste discharge regulatory fees across the board in response to the dictates and revenue take-aways imposed by the State budget — without any evidence of the Board’s actual or reasonable costs of running the waste discharge program cumulatively or any of the eight separate “Program Areas” for which it charges separate fees. In the Farm Bureau case, the Supreme Court held that such an absence of evidence required at least a remand tothetrial court, for the trial court to “focus on the Board’s evidentiary showing”at the time it adopted the fees to see if they met constitutional requirements. (51 Cal.4th at 442.) Similarly, in the recent Capistrano Taxpayers case, the Court of Appeal applied Farm Bureau to the record before the Court and found “an analogous lacuna” of evidence regarding “the issue of apportionment between a regulatory activity’s fees andits costs” (citing 51 Cal.4th at 428.) The Court of Appeal in Capistrano also remanded the case “for further factual findings” by the trial court on whether the 2644/030584-0002 28 8384103.3 a05/05/15 -L0- disputed water charges “have been improperly allocated” to those who cannot be said to beresponsible for the increased costs underlying the charges. At a minimum, even if the majority Opinion were correct in holding that two membersof the Board sufficiently enacted a new fee schedule, it would still be necessary to grant rehearing and to order this case be remanded to the trial court for review of the evidence before the Board underthe proper legal standards. Vv. CONCLUSION It is respectfully submitted that it is appropriate and necessary for the Court to grant a rehearing in this matter, and to reverse the judgment of the trial court. Dated: May 5, 2015 | .Myie By:_y LalLPneow ~ Bavill P. Lanferman J Attorneys for Plaintiff and Appellant, CALIFORNIA BUILDING INDUSTRY ASSOCIATION 2644/030584-0002 39 8384103.3 a05/05/15 ™ ° 10 11 12 13 14 15 16 17 18 19 20 2) 22 23 24 25 26 27 28 PROOF OF SERVICE BY FEDEX STATE OF CALIFORNIA, COUNTY OF SANTA CLARA In Re: Casé No. A137680 . California Building Industry Association v. State Water Resources Control Board,et al. In The Court Of Appeal, First Appellate District Iam employed bythe law office of Rutan & Tucker, LLP in the County of Santa Cl ara, State of California. I am over the age of 18 and not a party to the within action. M ybusiness address is Five Palo Alto Square, 3000 El Camino Real, Suite 200, Palo Alto, CA 9 4306-9814. On May5, 2015, I served on the interested parties in said action the within: PETITION FOR REHEARING by depositing in a box orother facility regularly maintained by FedEx, an expres s service carrier, or delivering to a courieror driver authorized by said express service carrier to receive documents, a true copy of the foregoing documentin sealed envelopes or packages desig nated by the express service caitier, addressedas stated below,with fees for overnight delivery p rovidedfor or paid. Tiffany Yee Office of the Clerk (1 copy ) (By FedEx) Office of the Attomey General San Francisco County Supe rior Court 1515 Clay Street, 20" Floor 400 McAllister P.O Box 70550 San Francisco, CA 94102 Oakland, CA 94612 Office ofthe Clerk Robert Asperger (By Fed Ex) California State Supreme Court Office of the Attorney G eneral 350 McAllister Street 1300 I Street ‘San Francisco, CA 94102 Sacramento, CA 95814 (Electronic Service via Rule 8.212) Executed on May 5, 2015, at Palo Alto, California. [declare under penalty of perjury underthe laws of the State of California t hat the foregoing is true and correct. Shannon Lacerda WheyLAL,4-7 (Typeor print name) ~ (Sighature) 2644/030584-0002 78411791 a1 2/08/14 P N o i g $ yo u s o n d d n s a x a m a n AV L G I D M o d L G L 6 - 2 o P - 0 0 8 a e E e Filed 5/11/15: Order modifying opinion filed 4/20/15 and denying rehearing CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT Court ofAppealFirst Appellate istrict DIVISION TWO MAY 11 2015 CALIFORNIA BUILDING INDUSTRY og D Herbert, CASSOCIATION, A137680 yyDenaty Clerk Plaintiff'and Appellant, (San Francisco City and County V. Super. Ct. No. CGC-11-516510) STATE WATER RESOURCES CONTROL . BOARD, ORDER MODIFYING OPINION Defendant and Respondent AND DENYING REHEARING " NO CHANGEIN JUDGMENT BY THE COURT: It is ordered that the published opinion, filed on April 20, 2015, be modified as follows: 1. Page 2, bottomparagraph, fourth line: Porter-Cologne Water Quality Act should be Porter-Cologne Water Quality Control Act. 2. Page 14, second paragraph,first and fourth lines: section 13620 should be section 13260. . 3. Page 15, last paragraph, fourth line: section 3260 should be section 13260. 4. Page 16,first full paragraph, fourth line is deleted and replaced with: Section 13260 provides that some stormwater dischargers, those subject to a general industrial or construction stormwater permit under the national pollutant discharge elimination system (NPDES), must be separately accounted for in the Fund and requires some ofthose funds to be spent within the same region where those dischargers are located “to carry out stormwater programsin the region.” (§ 13260, subds. (d)(2)(B)Q), (d)(2)(B)Gi).) 5. Page 16,first full paragraph, sixth line is deleted and replaced with: This " provision requires special treatment of fees and funds for some storm water dischargers 1 but there is no suggestion that the Board must balance the fee for the storm water program with the revenue from that program.® (See § 13260, subds. (d)(2)(B)(@)-(iii).) 6. Page 16, delete the last sentence in footnote 8: The complaint does not allege that CBIA or its membersare participants in NPDES. 7. Page 20, first sentence of footnote 10: “retrospective” should be “retroactive.” 8. Water discharger or water discharge should be replaper with waste discharger or waste discharge, respectively, in the following instances: a. Page 2, subheading before bottom paragraph: “The Permit Fees for Water Dischargers” should be “The Permit Fees for Waste Dischargers.” b. Page 14, second paragraph, fifth line: “water dischargers” should be “waste dischargers.” C. Page 14, bottom paragraph,first line: “report ofwater discharge” should be “report of waste discharge.” d. Page 16,first full paragraph,first and second lines: “discharge water program”should be “waste discharge program.” e, Page 18, second full paragraph,third line: “water discharge” should be “waste discharge.” f. Page 18, secondfull paragraph, fifth line: “water dischargers” should be “waste dischargers.” g. Page 20,first paragraph,fifth line: “water discharge” should be “waste discharge.” h. Page 20, footnote 11, third line: “water discharge” should be “waste discharge.” 9. Dissenting opinion at page 2, footnote 2: “the Board’s defective motion for reconsideration” should be “the Association’s defective motion for reconsideration” Thepetition for rehearing, filed on May 5, 2015, is denied. Richman,J. would grantthe petition for rehearing. There is no change in judgment. Kline,P.J. Dated: MAY | | 2015 KLINE, PJ. Trial Court: Trial Judge: Attorneys for Plaintiff and Appellant: Attorneys for Defendant and Respondent: San Francisco County Superior Court Hon. Curtis E. A. Karnow Rutan & Tucker, LLP David P. Lanferman Kamala D.Harris Attorney General of California Paul D. Gifford Robert W. Byrne Senior Assistant Attorneys General Gavin G.McGabe Molly K. Mosley Supervising Deputy Attorneys General Robert E. Asperger Tiffany Yee Deputy Attorneys General .
