Major Setback for Jerry Brown’s Water Conservation Plan?

A California state appellate court struck down a tiered water rate plan used by the city of San Juan Capistrano as unconstitutional on Monday. The ruling that could represent a major setback for the state’s recently amended water conservation plan, backed by Gov. Jerry Brown as an answer to California’s crippling, historic drought.

The 4th District Court of Appeals found that the city’s water rate structure, in which customers are charged a sliding price based on the amount of water they use, violated voter-approved Proposition 218, which forbids government agencies from charging customers any more for a service than what it costs, according to the Los Angeles Times.

“The water agency here did not try to calculate the cost of actually providing water at its various tier levels,” the court wrote in its ruling. “It merely allocated all of its costs among the price tier levels, based not on costs, but on pre-determined usage budgets.”

The district court’s ruling could throw a wrench into the newly amended statewide water cutback plan unveiled Saturday by the State Water Resources Control Board. The plan, created under the direction of Gov. Jerry Brown’s executive order to reduce water use statewide by 25% from 2013 levels, relies on cities’ adoption of tiered rate structures to encourage conservation. According to the Times, between 66%-80% of California’s 400 water agencies already use some form of tiered rate plan.

“The practical effect of the court’s decision is to put a straitjacket on local government at a time when maximum flexibility is needed,” Brown said in a statement. “My policy is and will continue to be: Employ every method possible to ensure water is conserved across California.”

The Capistrano Taxpayers Association filed the original lawsuit against the city, with residents claiming they were being charged more for their water than should be allowed under the law. The city’s 2010 rate plan charged customers $2.47 for each unit (748 gallons) of water used in Tier 1, $3.29 in Tier 2, $4.94 in Tier 3, and $9.05 in Tier 4. Heavy water users argued that they were being charged more for their water than the cost of its delivery, a violation of Proposition 218. The Supreme Court in Orange County ruled for the residents in 2013, declaring the rate structure unconstitutional, before the appellate court upheld the ruling on Monday, according to the Sacramento Bee.

“We do hold that above-cost-of-service pricing for tiers of water service is not allowed by Proposition 218 and in this case, [the city] did not carry its burden of proving its highest tiers reflected its costs of service,” the court ruled.

Tim Quinn, executive director of the Association of California Water Agencies, told the Bee that the court’s ruling could weaken conservation efforts at water agencies across California, and said his agency’s attorneys were reviewing it.

“We are very concerned,” Quinn told the paper. “My gut tells me it is a serious problem.”

An attorney for the taxpayers, Benjamin Benumof, told the Bee that the ruling could serve as an important clarification for the state’s water board.

“The court simply invalidated ‘arbitrary’ tiered rates,” Benumof told the paper. “There are lots of ways to conserve, and if anything, (the ruling) provides a better road map for governments to become compliant and have a real conservation program that attains real conservation goals.”

If the ruling represents a significant challenge to the state water conservation plan, water regulators will have to act quickly to sort it out: the plan is set to take effect in early May, with enforcement measures like fines and penalties for water wasters kicking in in July.