Central San Joaquin Water Conservation District v. Stockton East Water District
7 Cal. App. 5th 1041
| Cal. Ct. App. | 2016Background
- Central San Joaquin Water Conservation District and Stockton East Water District dispute fair compensation for wheeling Central’s water through Stockton East’s conveyance system under Water Code §1810–1813.
- Stockton East sought approximately $40 per acre-foot to recover 38% of system costs, while Central urged rates reflecting incremental costs only.
- Conveyance system cost about $65 million to build; annual operating costs over $1 million; debt service over $2 million annually.
- Contracts in 1990–1991 set $21.15/acre-foot; 2009–2010 negotiations produced a $5/acre-foot fallback; 2010–2011 rates used proportional cost allocations.
- Trial court held the Wheeling Statutes must be read as a whole, and Stockton East failed to consider all factors (incremental costs, offsetting benefits), making 2010–2011 rates unreasonable; judgment was entered for Central/Intervenor with appeal by Stockton East and Cal Water.
- Metropolitan Water District v. Imperial Irrigation Dist. informs the analysis but was distinguished because this case involves a nonmember purchaser rather than a member agency; court affirmed lower court’s reasoning.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wheeling Statutes require incremental-cost-based rates for nonmembers. | Central contends rates must reflect incremental costs. | Stockton East argues pro rata/system-wide costs are permissible. | Rates must consider incremental costs and other factors; not strictly pro rata. |
| Whether a conveyance owner may charge a nonmember based on a pro rata share of fixed costs. | Central rejects full pro rata allocation. | Stockton East defends pro rata treatment as permissible. | Pro rata on fixed/system-wide costs is not required for nonmembers; must be reasonable. |
| Whether Metropolitan governs the methodology for nonmembers as it did for member agencies. | Metropolitan supports considering system-wide costs. | Metropolitan applies only to member agencies; nonmembers differ. | Metropolitan informs the analysis but not binding; need case-specific reasonableness. |
| Whether the trial court erred in concluding 2010–2011 rates were unreasonable. | Central/East argue court’s findings supported by statutes and history. | Stockton East contends evidence supports rates. | Substantial evidence supports the court’s conclusion that rates were not reasonable. |
| Is it permissible to set a fixed wheeling rate in advance of a particular transaction? | Not applicable since dispute involves nonmember use. | Fixed-rate approach may be valid. | Fixed rates can be appropriate if consistent with law; here, not upheld due to flawed methodology. |
Key Cases Cited
- Metropolitan Water Dist. v. Imperial Irrigation Dist., 80 Cal.App.4th 1403 (Cal.App.4th 2000) (addressed point-to-point vs system-wide costs and role of member vs nonmember)
- International Engine Parts, Inc. v. Feddersen & Co., 9 Cal.4th 606 (Cal.4th 1995) (statutory interpretation and standard of review)
- Souza v. Lauppe, 59 Cal.App.4th 865 (Cal.App.4th 1997) (statutory interpretation and purpose)
- White v. Ultramar, Inc., 21 Cal.4th 563 (Cal.4th 1999) (legislative history and purposive construction)
- Lakin v. Watkins Associated Industries, 6 Cal.4th 644 (Cal.4th 1993) (need for reasonable construction aligning with legislative intent)
- Clean Air Constituency v. California State Air Resources Bd., 11 Cal.3d 801 (Cal.3d 1974) (principle of reasonable construction matching legislative purpose)
- Freedom Newspapers, Inc. v. Orange County Employees Retirement System, 6 Cal.4th 821 (Cal.4th 1993) (interpretation with legislative history when language unclear)
- Delaney v. Superior Court, 50 Cal.3d 785 (Cal.3d 1990) (interpretation and statutory purpose)