California Farm Bureau Federation v. State Water Resources Control Board
51 Cal. 4th 421
| Cal. | 2011Background
- California Constitution requires two-thirds vote to raise taxes; regulatory fees require only a simple majority.
- Legislation in 2003-04 amended Water Code to fund Water Rights Division entirely by fees (Senate Bill 1049).
- Section 1525 sets fee scheme, allocating costs to post-1914 permit/license holders and certain applications; revenues go to Water Rights Fund.
- Emergency regulations 1066 and 1073 implement fee formulas for post-1914 holders and federal contractors, respectively.
- Plaintiffs challenge the scheme as facially constitutional but seek thorough factual findings on whether fees reasonably relate to regulatory costs.
- Court remands for detailed trial court findings on proportionality of fees to costs and on federal contractor apportionment under supremacy clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does section 1525 impose a tax or a fee on its face? | Farm Bureau argues it imposes an unconstitutional tax. | Water Board argues it is a regulatory fee tied to costs, not a tax. | Section 1525 facially constitutes a regulatory fee, not a tax. |
| Are the fees as applied to proportional costs and benefits valid? | Fees piggyback on 40% of rights holders for the entire system; thus unconstitutional as overbroad. | Fees are tied to the overall regulatory costs and benefits extend to the public; agency has flexibility in allocation. | Record inadequate; remand for detailed findings on whether costs and benefits establish a fair, proportional fee. |
| Do the fee provisions violate the Supremacy Clause as applied to federal contractors? | Regulation 1073 taxes federal contractors beyond their contractual interest, unconstitutional under supremacy. | Costs may be allocated to contractors based on their beneficial interests; not limited to delivered water. | Remand to determine contractors' beneficial interest and fair apportionment; no facial supremacy violation found. |
| Do the fees amount to an unconstitutional ad valorem tax on real property? | Water rights are real property; fee scheme resembles new ad valorem tax; prohibited by Prop. 13. | Face of section 1525 does not impose a real-property tax; remand needed for factual findings. | Facial validity affirmed; remand to assess whether charges are taxes in fact. |
Key Cases Cited
- Sinclair Paint Co. v. State Bd. of Equalization, 15 Cal.4th 866 (Cal. 1997) (defines tax vs. regulatory fee; focuses on cost relationship)
- Prof. Scientists v. Department of Fish & Game, 79 Cal.App.4th 935 (Cal. App. 2000) (costs-based analysis of regulatory fees)
- Sargent Fletcher, Inc. v. Able Corp., 110 Cal.App.4th 1658 (Cal. App. 2003) (burden-shifting and prima facie case in fee challenges)
- United States v. County of Fresno, 429 U.S. 452 (U.S. Supreme Court 1977) (supremacy clause and tax on federal properties; segregate interests)
- United States v. Nye County, 938 F.2d 1040 (9th Cir. 1991) (apportioned taxes to federal interests; fair allocation principles)