By Paula Hernandez and Derek R. Hoffman
The California Third District Court of Appeal recently upheld a determination that the State Water Resources Control Board’s (SWRCB or Board) possesses broad authority to issue temporary emergency regulations and curtailment orders which establish minimum flow requirements, regulate unreasonable use of water, and protect threatened fish species during drought conditions. [Stanford Vina Ranch Irrigation Company v. State of California, 50 Cal.App.5th 976 (3rd Dist. 2020).[
Background
Plaintiff/appellant Stanford Vina Ranch Irrigation Company (Stanford Vina) diverts water for agricultural uses from Deer Creek, a tributary to the Sacramento River. Stanford Vina is entitled to use 66% of the flow of Deer Creek and holds both riparian and pre‑1914 appropriative water rights.
Two species of anadromous fish, chinook salmon (fall run and spring run) and steelhead trout migrate from the Pacific Ocean to Deer Creek each year to spawn. The spring chinook salmon and steelhead trout are listed as a threatened species under the California Endangered Species Act and the federal Endangered Species Act. Federal and state agencies have concluded that Deer Creek has “high potential” for supporting viable populations of both spring-run salmon and steelhead trout. The water diversion structures operated by Stanford Vina on Deer Creek were alleged to have the potential to dewater Deer Creek during low flow periods and to also negatively affect the outmigration of juvenile spring-rule salmon and steelhead trout.
In 2014, California was in the midst of one of the most severe droughts on record. Extreme drought conditions threatened to dewater high priority streams during critical migration periods for threatened and endangered fish species. In response, then-Governor Jerry Brown declared a drought state of emergency and signed urgency legislation that included authority for the SWRCB to adopt emergency regulations. Those emergency regulations included, among other provisions, Board authority to prevent waste and unreasonable use of water, to promote water conservation, and to require curtailment of certain surface water diversions. The SWRCB thereafter began promulgating regulations implementing in-stream flow requirements for Deer Creek and other surface water courses.
Specifically, the regulations declared that any diversion reducing flows beneath drought emergency minimums would be a per se waste and unreasonable use in violation of Article X, § 2 of the California Constitution. The emergency regulations barred water from being diverted from Deer Creek and other specific streams during the effective period of any SWRCB curtailment orders issued pursuant to the regulations.
On June 5, 2014, the Board issued the first curtailment order for Deer Creek, which directed all water rights holders to immediately cease or reduce their diversions in order to maintain the drought emergency minimum flows specified by the regulation. Between June 2014 and October 2015, the Board issued three more curtailment orders to Deer Creek water users.
Procedural History
Stanford Vina filed suit against the SWRCB in October 2014 asserting causes of action for inverse condemnation and declaratory relief over the temporary emergency regulations. Stanford Vina argued that the emergency regulations and curtailment orders were unreasonable, violated due process requirements, and amounted to a taking of vested water rights without just compensation.
The trial court concluded that the Board possessed quasi-legislative authority to adopt the challenged emergency regulations without first holding an evidentiary hearing. It found that under the extreme drought conditions, the Board rationally determined that allowing diversions to reduce flows below the minimum amounts necessary for fish migrations and survivability would be an unreasonable use of water. The trial court also rejected Stanford Vina’s taking argument and rule of priority argument and entered judgment against Stanford Vina on all causes of action.
The Court of Appeal’s Decision
In its recent published opinion, the Third District Court of Appeal affirmed the trial court’s decision and held that the Board has broad authority to regulate the unreasonable use of water. This authority, the court found, included the right to adopt regulations, establish minimum flow requirements to protect the migration of threatened fish species during drought conditions, and to declare unreasonable diversions of water would cause in-stream flows to fall below levels needed by those fish. Because different standards of review apply to the Board’s quasi-legislative rule making power and its quasi-adjudicative enforcement actions, the court addressed the validity of the challenged regulations and challenged curtailment orders separately.
Validity of the Challenged Regulations
The Court of Appeal determined that the emergency regulations were within the Board’s regulatory authority in furtherance of its constitutional and statutory mandate to prevent waste and unreasonable uses of water and consistent with Article X, § 2 of the California Constitution and Water Code §§ 100, 275, 1058, and 1058.5:
Section 100: Provides in relevant part that ‘the right to water or to the use or flow of water in or from any natural stream or watercourse in this State is and shall be limited to such water as shall be reasonably required for the beneficial use to be served, and such right does not and shall not extend to the waste or unreasonable use or unreasonable method of use or unreasonable method of diversion of water.’
Section 275: The Board is authorized to ‘take all appropriate proceedings or actions before executive, legislative, or judicial agencies to prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in this state.’
Section 1058: The Board is authorized to ‘make such reasonable rules and regulations as it may from time to time deem advisable in carrying out its powers and duties.’
Section 1058.5: The Board is authorized to adopt emergency regulations to prevent ‘unreasonable use, unreasonable method of use, or unreasonable method of diversions’ during severe drought conditions.
The court further held that adoption of the regulations was not arbitrary, capricious, or lacking in evidentiary support.
The court then concluded that, contrary to Stanford Vina’s arguments, the Board was not required to hold an evidentiary hearing before making a “reasonableness determination” as to plaintiff’s use of water. According to the court, neither the due process clauses of the federal or California Constitutions, nor article X, § 2 of the California Constitution, require the Board to hold an evidentiary hearing prior to adoption of a regulation governing reasonable water use.
Citing heavily to and expanding upon Light v. State Water Resources Control Bd., 226 Cal. App. 4th 1463 (2014) (Light) and the line of reasonable use cases before it, the Court of Appeal also concluded that the Board’s authority included the direct regulation of riparian and pre-1914 appropriative water rights holders without first holding an evidentiary hearing, and the ability to adopt curtailment orders that notified the affected water rights holders the emergency regulations were put into effect.
Validity of the Challenged Curtailment Orders
The Court of Appeal next analyzed whether the SWRCB had properly implemented the emergency regulations by issuing the challenged curtailment orders. Contrary to Stanford Vina’s assertion, the court found that Stanford Vina possessed no vested right to divert water from Deer Creek in contravention of the emergency regulations regardless of its status as a senior riparian and that it held pre-1914 water rights. Thus, the court applied the substantial evidence standard of review in assessing the validity of the curtailment orders.
Upon review of the record, the court found that substantial evidence supported the SWRCB’s conclusion that curtailed diversions would have caused or threatened to cause the flow of water in Deer Creek to fall below the emergency minimum flow requirements. The court further held that the curtailment orders were not a taking of the company’s water rights, because the mere regulation of the use and enjoyment of a property right for the public benefit is a permissible exercise of the state’s police power and does not amount to a taking under eminent domain. Therefore, the Board had acted within its authority to determine that diversions from Deer Creek threatened to violate the emergency regulations minimum flow requirements constituted an unreasonable use of water.
The court further rejected the argument that the curtailment orders were a taking of private property without just compensation since it found that Stanford Vina possessed no vested right to divert water from Deer Creek in contravention of the emergency regulations. Along those lines, the court dismissed any claims that the regulations and curtailment orders impermissibly interfered with a prior judicial degree declaring its water rights, because rights declared by a judicial decree are subject to the rule.
Conclusion and Implications
The Stanford Vina decision is an interesting and consequential case among those pertaining to the applicability and use of the reasonable use doctrine. Whereas in Light the court acknowledged that the curtailment and regulation of riparian and pre-1914 water users would be pursuant to local programs and not by the State Water Resources Control Board itself, the Third District Court of Appeal in this case found that the Board may, under certain circumstances itself declare diversions unreasonable and issue curtailment orders to cease all diversions of water without first holding an evidentiary hearing. While the SWRCB authority during the unique circumstances of an extraordinary multi-year drought is made more-clear by the court’s opinion, it leaves unanswered whether a similar approach would work during less extreme circumstances. The court’s opinion is available online at: https://www.courts.ca.gov/opinions/documents/C085762.PDF
