The court held that the State Water Resources Control Board has broad regulatory authority to prevent the unreasonable use of water, upholding a Board regulation that prohibits certain diversions by grape growers in the Russian River watershed. The First District Court of Appeal issued a partially published opinion in Light v. State Water Resources Control Board (2014) __Cal.App.4th __ (Case No. A138440) on June 16, 2014.

In April 2008, young salmon were found to have been fatally stranded along the banks of the Russian River stream system. Scientists from the National Marine Fisheries Service concluded the deaths were caused by abrupt declines in water level that occurred when water was drained from the streams and sprayed on vineyards and orchards to prevent frost damage, a common practice in the watershed.

Following a series of hearings and the preparation of an EIR, the Board adopted Regulation 862 in September 2011. Regulation 862 is likely to require a reduction in diversion of water from the stream system for frost protection, at least under certain circumstances. It applies to “any diversion of water from the Russian River stream system … for purposes of frost protection from March 15 through May 15.” The regulation itself contains no substantive regulation of water use, instead delegating the task of formulating regulatory programs to “water demand management programs” (WDMPs), which will be created by self-organized groups of agricultural diverters who will act as the “governing bodies.” Each WDMP must be submitted annually to the Board for approval. The regulation declares that any water use inconsistent with the programs, once they have been formulated and approved by the Board, is unreasonable, and therefore prohibited.

Regulation 862 was challenged in two petitions for writ of mandate. The petitions alleged that the Board lacked regulatory authority to adopt the regulation and that the regulation would unlawfully interfere with plaintiffs’ use of water drawn from the Russian River stream system. The trial court granted a writ invalidating the regulation on several grounds. The Board appealed. The Court of Appeal reversed.

The Court of Appeal first addressed plaintiffs’ argument that Regulation 862 was invalid because the Board lacked sufficient regulatory authority to adopt the regulation. Plaintiffs argued that the Board lacked authority to adopt the regulation because, according to them, the Boards’ authority to regulate the unreasonable use of water was limited to enforcement actions. The Court of Appeal disagreed, finding that the Board may exercise its regulatory powers through the enactment of regulations, as well as through the pursuit of judicial and quasi-judicial proceedings. The court noted that the Board is charged with acting to prevent unreasonable and wasteful uses of water, regardless of the claim of right under which the water is diverted, and that the Board’s authority to enact regulations in furtherance of this purpose was addressed and upheld nearly 40 years ago in People ex rel. State Water Resources Control Bd. v. Forni (1976) 54 Cal.App.3d 743. The court concluded that, given the Board’s statutory charge to “prevent waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in this state” and the recognized power of the Legislature to pass legislation regulating reasonable uses of water, the Board’s grant of authority to “exercise the … regulatory functions of the state” necessarily includes the power to enact regulations governing the reasonable use of water.

The Court of Appeal next addressed Plaintiffs’ contention that the Board lacks regulatory authority to limit water use by riparian users and early (pre-1914) appropriators, whose diversion is beyond the permitting authority of the Board. Rejecting this argument, the court explained that, although the Board has no authority to require such users to obtain a permit to divert, that does not mean their use of California’s water is free from Board regulation. Preventing these users from the unreasonable use of water necessarily requires the imposition of limits on that use by the Board. The Court explained that there is “no question” the Board has the power to prevent riparian users and early appropriators from using water in an unreasonable manner.

The court also determined that the regulation did not violate the rule of priority. When the supply of water is insufficient to satisfy all persons and entities holding water rights, it is ordinarily the function of the rule of priority to determine the degree to which any particular use must be curtailed. Yet, as the court explained, even in these circumstances, the Board has the ultimate authority to allocate water in a manner inconsistent with the rule of priority, when doing so is necessary to prevent the unreasonable use of water. Because no one can have a protectable interest in the unreasonable use of water, when the rule of priority clashes with the rule against unreasonable use of water, the latter must prevail. The court was careful to point out that since this was a facial challenge, its holding extended only to whether the regulation was valid on its face. It explained that the regulation does not declare any specific diversion of water for frost protection unreasonable, much less all such use. Rather, frost protection diversion is unreasonable only when it occurs in violation of the WDMP. As among individual water rights holders, the regulation requires the WDMP’s to respect the rule of priority in assigning corrective actions. Thus, a determination of whether specific regulatory measures adopted by the WDMP’s violate the rule of priority, must await implementation of the regulation.

The court also concluded that the Board properly found the regulation to be necessary to enforce water use statutes and did not unlawfully delegate its authority by requiring local governing bodies to formulate the substantive regulations.

Lastly, in an unpublished portion of the opinion, the court upheld the Board’s certification of the EIR for the regulation.

The Supreme Court denied a petition for review in Rocky Mountain Farmers Union v. Corey, letting stand the Ninth Circuit’s holding that the state’s low carbon fuel standard (LCFS) is constitutional on its face. RMM previously wrote about the Ninth Circuit decision here. The issue before the court was whether the LCFS discriminates against out-of-state businesses, thereby violating the dormant commerce clause. The court held that the LCFS is neither facially discriminatory nor discriminatory in purpose or effect with respect to the regulation’s crude oil provisions.

On remand, the district court will be tasked with determining whether the regulation’s ethanol provisions place burdens on interstate commerce that outweigh the benefits, rendering the LCFS invalid, and also whether the Clean Air Act preempts the LCFS program.