Finding the issue to be of “continuing public interest and importance,” the Third District Court of Appeal ruled in Young et al. v. State Water Resources Control Board, ___Cal.App.4th ___ (Sep. 4, 2013, Case No. C068559), that the State Water Resources Control Board (the “Board”) has jurisdiction under the Water Code to determine whether or not a diverter’s use of water is – or is not – exempt from the Board’s regulatory authority. Such a determination by the Board (as opposed to by a court in a lawsuit) is an integral part of the state’s legislatively created water rights permitting system, and the court found that plaintiffs’ claim that the Board lacked authority to adjudicate the underlying jurisdictional issue because they were exempt from regulation was “flawed” because it “. . . beg[ged] the question central to the appeal . . . .” The court was clear that where a water user claims to be exempt from Board regulation, the Board gets first crack at the question. If the water user disagrees with the Board’s determination, the water user must seek subsequent judicial review.
The underlying dispute arose in 2009, when a group of South-of-Delta (i.e., upstream on the San Joaquin River and its tributaries) irrigation districts, conscious of their own flow obligations under the Board’s orders for maintaining fresh water in the Delta, questioned whether or not private in-Delta irrigation companies were illegally diverting water from Delta channels. The Board responded with a number of draft cease and desist orders and hearing schedules, including one directed to the irrigation company from which plaintiffs receive their water. Plaintiffs responded with claims of riparian or pre-1914 rights.
A “riparian” water right is the right of a user to take water out of a stream and apply it to the user’s land that abuts the stream. An “appropriative” water right involves the diversion of water from a stream for use on land that doesn’t abut the stream itself. When the Legislature enacted the Water Commission Act of 1913 to begin regulating water use in California, riparian use and already-established appropriations (“pre-1914 rights”) were excluded from the new permitting process. When as part of the cease and desist order process the Board asked plaintiffs’ irrigation company to prove the nature of its rights, plaintiffs and the company argued that their rights were riparian or pre-1914, and that, therefore, the Board lacked jurisdiction to ask for evidence concerning even this threshold question. Plaintiffs argued that the Board was required to first file a lawsuit against their company and them, and to convince a court that their rights were other than riparian or pre-1914.
The Board relied upon its cease and desist order powers under Water Code section 1831. Plaintiffs argued that a provision in that section that specified that the Board no authority to regulate diversions “not otherwise subject to . . . regulation” meant that the Board lacked authority to determine even the threshold question of whether or not their use was subject to Board regulation. Citing two California Supreme Court decisions that predated section 1831 but dealt with the Board’s investigative and permitting powers (Meridian, Ltd. v. San Francisco  13 Cal.2d 424, and Temescal Water Co. v. Dept. of Public Works  44 Cal.2d 90), the court found that the Legislature had expressly vested in the Board the authority “to determine if any person is unlawfully diverting water . . .,” and that it was a necessary part of that authority that the Board determine whether or not the use in question was riparian or pre-1914.
The importance of this decision: If it were necessary for the Board to first file a lawsuit for a court determination of a user’s rights, the Board would in all likelihood have the burden of proving by a preponderance of the evidence that the use was neither riparian nor pre-1914 (a potential “proving a negative” situation). In contrast, an initial factual determination by the Board may be challenged only by an action for writ of mandate, in which the challenger would ordinarily bear the significantly higher burden of demonstrating that the Board’s decision had been made without substantial evidence, or had been an abuse of its discretion.
[Written by Rob Sawyer]