Filed 5/26/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
CITY OF SAN 2d Civ. No. B312471
BUENAVENTURA, (Super. Ct. No. 19CV06168)
(Santa Barbara County)
Plaintiff and Respondent,
v.
UNITED WATER
CONSERVATION DISTRICT,
Defendant and Appellant.
United Water Conservation District (District) manages the
groundwater resources in central Ventura County. City of San
Buenaventura (City) pumps groundwater from the District’s
territory and sells it to residential and commercial customers.
The District collects a fee from the City and other groundwater
users based on the volume of water they pump.
The District applies a fixed ratio of rates for non-
agricultural users, such as the City, who pump groundwater for
municipal and industrial (M&I) uses. The District charges such
users three times more than agricultural (also known as “Ag”)
users in accordance with Water Code section 75594. 1
This appeal arises out of the trial court’s judgment
declaring (1) the groundwater extraction charge adopted by the
District for the 2019-2020 water year is invalid as to non-
agricultural users and must be set aside and (2) section 75594
violates Article XIII C, section 1, subdivision (e) of the California
Constitution and is therefore unconstitutional. We affirm.
I. FACTS AND PROCEDURAL HISTORY
A. Factual Background
The District was formed to manage, protect, conserve and
enhance groundwater for those entitled to use it. (§ 74000 et
seq.) The District covers 214,000 acres in central Ventura
County and the Santa Clara River watershed and encompasses
eight groundwater basins. It serves those who pump
groundwater from the basins, including the City’s water utility.
The District funds its work through property taxes, fees on
its surface water sales, investment earnings and the groundwater
extraction charges at issue here. The District has established
two zones for the charges: Zone A covers the whole District; Zone
B includes those who benefit directly from the Freeman Diversion
Dam on the Santa Clara River. Wells in Zone B, some of which
belong to the City, pay both Zone A and Zone B extraction
charges.
In imposing its extraction charges, the District divides
groundwater pumpers into two classes: Ag and M&I. Ag uses
include the production of food and commercial crops, livestock
1All statutory references are to the Water Code unless
otherwise stated.
2
support and aquaculture. M&I uses include drinking water,
residential and commercial uses and landscape irrigation.
According to the District’s rate consultant, Ag uses
accounted for approximately 75 to 80 percent of all groundwater
pumping between 2005 and 2018. District data shows a similar
relationship of about 80 percent between Ag and M&I uses in the
1980s and 1990s. By way of example, the City was the District’s
third highest fee payor in fiscal year 2017-2018 even though it
accounted for less than five percent of the District’s groundwater
use.
Notwithstanding this disparity, the District has historically
charged M&I customers three times what it charges Ag
customers in accordance with section 75594, which provides, in
pertinent part: “[A]ny ground water charge in any year shall be
established at a fixed and uniform rate for each acre-foot for
water other than agricultural water which is not less than three
times nor more than five times the fixed and uniform rate
established for agricultural water.”
The District adopted the rates at issue here based on a Cost
of Service Analysis (COSA) by an accounting firm, HF&H
Consultants, LLC, and an economics analysis by Stratecon, Inc.
(Stratecon Report). The District has relied upon these firms to
support the 3:1 rate ratio since the City filed its initial challenge
in 2011.
B. Legal Background
“Through a series of initiatives — Proposition 13 in 1978,
Proposition 218 in 1996, and Proposition 26 in 2010 — California
voters have ‘limit[ed] the authority of state and local
governments to impose taxes without voter approval.’
[Citations.]” (Humphreville v. City of Los Angeles (2020) 58
3
Cal.App.5th 115, 122 (Humphreville).) These limitations “only
apply if the local government is seeking to levy a ‘tax.’” (Ibid.)
Since the enactment of Proposition 26, “‘tax’ has been
broadly defined to encompass ‘any levy, charge, or exaction of any
kind imposed by a local government.’ [Citations.]”
(Humphreville, supra, 58 Cal.App.5th at p. 122.) This definition
has several exceptions, including “[a] charge imposed for a
specific government service or product provided directly to the
payor that is not provided to those not charged, and which does
not exceed the reasonable costs to the local government of
providing the service or product.” (Cal. Const., art. XIII C, § 1,
subd. (e)(2).)
“In assessing whether the charge for a specific service or
product exceeds the costs of providing it, the costs allocated to
each payor must also ‘bear a fair or reasonable relationship to the
payor’s burdens on, or the benefits received from, the
governmental activity.’ [Citations.] The local government bears
the burden of proving that its proposed tax fits within this
exception. (Cal. Const., art. XIII C, § 1, subd. (e).”
(Humphreville, supra, 58 Cal.App.5th at p. 123.)
C. United Water
In an earlier appeal involving the City’s challenge to the
District’s pumping charges for the 2011-2012 and 2012-2013
water years, we determined the charges were not unauthorized
taxes under article XIII C. On review, the California Supreme
Court agreed “that article XIII C of the California Constitution,
as amended by Proposition 26 . . . supplies the proper framework
for evaluating the constitutionality of the groundwater pumping
charges.” (City of San Buenaventura v. United Water
Conservation Dist. (2017) 3 Cal.5th 1191, 1198 (United Water).)
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The Court remanded the matter to us “to consider whether the
record sufficiently establishes that the District’s rates for the
2011-2012 and the 2012-2013 water years bore a reasonable
relationship to the burdens on or the benefits of its conservation
activities, as article XIII C requires.” (Id. at p. 1214.) Absent a
reasonable relationship, the rates are unapproved taxes imposed
in violation of the Constitution. (Ibid.)
The Court did not decide “whether the three-to-one ratio in
. . . section 75594 is facially unconstitutional under article XIII
C,” but invited the parties “to argue the point on remand.”
(United Water, supra, 3 Cal.5th at p. 1214, fn. 9.) In a concurring
opinion, Justice Liu indicated he would hold the statute
unconstitutional. (Id. at p. 1215 (conc. opn. of Liu, J.).)
On remand, we determined the administrative records for
the 2011-2012 and 2012-2013 water years were insufficient to
establish whether the District’s rates for those years bore a
reasonable relationship to the burdens on or the benefits of its
conservation activities. (City of San Buenaventura v. United
Water Conservation Dist. (Mar. 4, 2019, B251810) [nonpub.
opn.].) Consistent with the Supreme Court’s remittitur, we
afforded the parties an opportunity to supplement the
administrative records with evidence bearing on this question.
(Ibid.) We instructed the trial court to remand the matter to the
District to allow for augmentation of the 2011-2012 and 2012-
2013 administrative records in Superior Court Case Nos. VENCI
00401714 and VENCI 1414739. (Ibid.)
In lieu of augmenting these records, the trial court and the
parties decided to litigate the City’s more recent challenge to the
rates for the 2019-2020 water year (Superior Court Case No.
5
19CV06168).2 The court found that addressing the City’s
challenges for the 2011-2012 and 2012-2013 water years along
with those for subsequent years “would be an unnecessarily
complex effort” given “the multiple and potentially different
administrative records.”
The trial court explained it would “determine the
substantive merits of City’s challenge to the District’s rates for
FY 2019-2020 in this phase 1. In phase 2, the Court will
determine the remedy based upon its determinations in phase 1.
Further proceedings – and perhaps stipulations – are expected
following the Court’s determination on the administrative record
for FY 2019-2020 with respect to City’s challenge to District’s
charges for other years based upon the similarities or differences
from the arguments and administrative record of those other
years from this disposition on this administrative record.”3
D. Trial Court’s Ruling
The City filed its complaint for determination of invalidity
and declaratory relief and petition for writ of mandate in 2019.
The City alleged the groundwater extraction rates charged by the
District for the water year 2019-2020 were not allocated to the
2The City has filed annual challenges to the District’s rates
since 2011.
3We express no opinion as to whether this procedure is
consistent with the Supreme Court’s remittitur in United Water
and our subsequent remand order with respect to the 2011-2012
and 2012-2013 water years. (See, e.g., Butler v. Superior Court
(2002) 104 Cal.App.4th 979, 982 [“When an appellate court’s
reversal is accompanied by directions requiring specific
proceedings on remand, those directions are binding on the trial
court and must be followed”]; Martinez v. Rite Aid Corp. (2021) 63
Cal.App.5th 958, 969 [same].)
6
City and other M&I users in a manner that bears a reasonable
relationship to the City’s burdens on or benefits from the
District’s activities. The City further alleged that section 75594,
which requires a minimum 3:1 groundwater rate extraction ratio
between M&I and Ag users, is facially unconstitutional.
In a comprehensive statement of decision, the trial court
rejected the District’s argument that the appropriate standard of
review is the flexible rational or reasonable basis test. It
determined the City’s challenge requires independent review of
the administrative record to assess whether the District has met
its burden to establish that the groundwater charges are not
taxes within the meaning of Proposition 26.
Applying this standard, the trial court determined the
evidence does not show a “fair or reasonable relationship”
between the 3:1 ratio and M&I and Ag customers’ relative
“burdens on, or benefits received from” the District’s services. It
also concluded that section 75594’s mandate that the District
charge M&I pumpers at least three times more than Ag pumpers
regardless of the pumpers’ proportionate impacts on the
groundwater resources conflicts with Proposition 26’s cost-of-
service requirement and is therefore unconstitutional.
The parties stipulated to enter judgment in the City’s favor
to facilitate this appeal of the trial court’s phase 1 ruling. The
judgment declares section 75594 invalid and directs “the District
to: (a) vacate and rescind its groundwater extraction charge
adopted on or about June 12, 2019 as that charge pertains to non-
agricultural groundwater users; (b) set any future groundwater
extraction charge in compliance with California Constitution,
article XIII C, section 1, subdivision (e), without regard to . . .
section 75594; and (c) pay the City a partial refund of the
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invalidated groundwater extraction charges it paid in fiscal year
2019-2020 in the amount of $1,002,083, inclusive of prejudgment
interest, as determined by the parties’ Settlement Agreement.”
The trial court stayed the terms’ enforcement pending “a final,
non-appealable judgment in this action.”
II. DISCUSSION
A. Standard of Review
The threshold issue on appeal concerns the applicable
standard of review. Citing two Proposition 13 cases, Brydon v.
East Bay Municipal Utility Dist. (1994) 24 Cal.App.4th 178
(Brydon) and California Association of Prof. Scientists v.
Department of Fish & Game (2000) 79 Cal.App.4th 935
(Professional Scientists), the District argues the deferential
“rational basis” or “reasonable basis” test applies in Proposition
26 cases. The District claims the trial court “was compelled
under rational basis review to accept the District’s
approximations and generalizations in setting rates, even when
‘not made with mathematical nicety or because in practice it
results in some inequality.’ [Citation.]”
The trial court rejected this argument, finding that the
independent review standard employed in Proposition 218 cases,
as stated in Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara
County Open Space Authority (2008) 44 Cal.4th 431 (Silicon
Valley), also applies in Proposition 26 cases. The court reasoned:
“The Supreme Court’s brief discussion of Brydon and Professional
Scientists in United Water cannot be read to supplant the Silicon
Valley standard of independent review. The United Water
discussion, together with its remand allowing for further
factfinding, demonstrates only that there is flexibility in
determining what is ‘fair or reasonable.’ The constitutional
8
requirement of a ‘fair or reasonable relationship’ is not resolved
by application of a rigid judicial standard nor by application of a
deferential standard of substantial evidence. Had the Supreme
Court intended a wholesale change in the Silicon Valley standard
– a question that warranted pages of analysis in Silicon Valley –
the Supreme Court would have stated that change clearly, rather
than leave such a significant change in the law to an implication
from a short comment.”
1. Proposition 26 Claims are Subject to
Independent Review
We agree with the trial court’s analysis. As United Water
observed, Propositions 13, 218 and 26 were enacted as a “series of
voter initiatives” to restrict “local government taxes, fees,
charges, and other exactions.” (United Water, supra, 3 Cal.5th at
pp. 1199-1200.) Proposition 218 added article XIII C, which
requires voter approval of all taxes imposed by local
governments. (United Water, at p. 1200.) It also “tighten[ed] the
two-thirds voter approval requirement for ‘special’ taxes and
assessments imposed by Proposition 13.” (Brooktrails Township
Community Services Dist. v. Board of Supervisors of Mendocino
County (2013) 218 Cal.App.4th 195, 197 (Brooktrails).)
Proposition 218 is “‘liberally construed to effectuate its purposes
of limiting local government revenue and enhancing taxpayer
consent.’ [Citation.]” (Silicon Valley, supra, 44 Cal.4th at p. 448.)
Silicon Valley determined that “[b]ecause Proposition 218’s
underlying purpose was to limit government’s power to exact
revenue and to curtail the deference that had been traditionally
accorded legislative enactments on fees, assessments and
charges, a more rigorous standard of review [i.e., independent
review] is warranted.” (Silicon Valley, supra, 44 Cal.4th at
9
p. 448.) The Court explained: “Before Proposition 218 became
law, special assessment laws were generally statutory, and the
constitutional separation of powers doctrine served as a
foundation for a more deferential standard of review by the
courts. But after Proposition 218 passed, an assessment’s
validity, including the substantive requirements, is now a
constitutional question.” (Ibid, italics omitted.)
The same is true here. The validity of the District’s
charges is also a constitutional question. Proposition 26 amended
article XIII C with the goal of “further tightening Proposition
218’s restrictions on revenue-generating measures that are not
approved by voters” and “halt[ing] evasions of Proposition 218.”4
(Brooktrails, supra, 218 Cal.App.4th at pp. 198, 203, fn. omitted.)
4 The findings and declarations of purpose for Proposition
26 state: “Since the enactment of Proposition 218 in 1996, the
Constitution of the State of California has required that increases
in local taxes be approved by the voters. [¶] . . . Despite these
limitations, California taxes have continued to escalate. Rates
for . . . a myriad of state and local business taxes are at all-time
highs. Californians are taxed at one of the highest levels of any
state in the nation. [¶] . . . [¶] . . . This escalation in taxation
does not account for the recent phenomenon whereby . . . local
governments have disguised new taxes as ‘fees’ in order to extract
even more revenue from California taxpayers without having to
abide by these constitutional voting requirements. . . . [¶] . . . In
order to ensure the effectiveness of these constitutional
limitations, this measure . . . defines a ‘tax’ for state and local
purposes so that neither the Legislature nor local governments
can circumvent these restrictions on increasing taxes by simply
defining new or expanded taxes as ‘fees.’” (Voter Information
Guide, Gen. Elec. (Nov. 2, 2010) text of Prop. 26, § 1, subds. (b),
(c), (e), (f), p. 114.)
10
Since Propositions 218 and 26 have the same underlying
purpose, i.e., to “limit government’s power to exact revenue and
. . . curtail the deference that had been traditionally accorded
legislative enactments on fees, assessments and charges” (Silicon
Valley, supra, 44 Cal.4th at p. 448), we join the courts that have
applied independent review of Proposition 26 claims. (E.g.,
Griffith v. City of Santa Cruz (2012) 207 Cal.App.4th 982, 989-
990 [Proposition 218 and 26 violations “are subject to a de novo or
independent standard of review”]; San Diego County Water
Authority v. Metropolitan Water Dist. of Southern California
(2017) 12 Cal.App.5th 1124, 1152 [“‘We review de novo the
question whether the challenged rates comply with [Proposition
26] constitutional requirements’”]; Newhall County Water Dist. v.
Castaic Lake Water Agency (2016) 243 Cal.App.4th 1430, 1440
(Newhall) [same].)
The District cites no persuasive authority suggesting an
alternative standard. The term “rational basis” does not appear
in United Water, as the District suggests, and the only mention of
“reasonable basis” appears in a brief reference to Professional
Scientists’ decision “upholding higher fees for filing certain
environmental review documents as having ‘sufficient reasonable
basis.’” (United Water, supra, 3 Cal.5th at p. 1214.) Not only did
Professional Scientists involve only Proposition 13, but it also
applied independent review, recognizing “the fundamental
principle that ‘whether impositions are “taxes” or “fees” is a
question of law for the appellate courts to decide on independent
review of the facts.’ [Citation.]” (Professional Scientists, supra,
79 Cal.App.4th at p. 944.)
The District’s reliance on Brydon is similarly misplaced.
While Brydon “might still be read as evidence that tiered pricing
11
not otherwise connected to cost of service would survive a
rational basis or equal protection challenge – [it] simply has no
application to post-Proposition 218 cases.” (Capistrano
Taxpayers Assn., Inc. v. City of San Juan Capistrano (2015) 235
Cal.App.4th 1493, 1512.) “Brydon . . . was part of the general
case law which the enactors of Proposition 218 wanted replaced
with stricter controls on local government discretion.” (Id. at
p. 1513.)
2. Findings of Fact are Reviewed for
Substantial Evidence
Even when we exercise our independent judgment, we
presume the appealed judgment is correct and do not decide
disputed issues of fact. (Moore v. City of Lemon Grove (2015) 237
Cal.App.4th 363, 368-369.) Silicon Valley’s independent review
standard “does not change the substantial evidence standard of
review and does not allow us to independently resolve issues of
disputed fact already decided by the trial court. If an appellant
challenges a finding of fact, we must employ the substantial
evidence standard of review. As such, we are not concerned
about a conflict in the evidence. . . . ‘Rather, it is simply whether
there is substantial evidence in favor of the respondent. If this
“substantial” evidence is present, no matter how slight it may
appear in comparison with the contradictory evidence, the
judgment must be upheld. As a general rule, therefore, we will
look only at the evidence and reasonable inferences supporting
the successful party, and disregard the contrary showing.’
[Citation.]” (Morgan v. Imperial Irrigation Dist. (2014) 223
Cal.App.4th 892, 917 (Morgan); Newhall, supra, 243 Cal.App.4th
at p. 1440.)
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B. The District’s Rates for the 2019-2020 Water Year
Do Not Comply with Proposition 26
The principal issue before us is whether the District’s rates
for the 2019-2020 water year “bore a reasonable relationship to
the burdens on or the benefits of [the District’s] conservation
activities, as article XIII C requires.” (United Water, supra, 3
Cal.5th at p. 1214.) Based on our independent review of the law,
facts and administrative record, we agree with the trial court
that the 3:1 ratio between M&I and Ag rates does not pass
constitutional muster.
The trial court rejected the District’s assertions, based on
the COSA and Stratecon Report, that the 3:1 ratio between the
M&I and Ag groundwater charges is constitutional. The court
found that (1) “M&I users do not enjoy a more reliable
groundwater supply than Ag users,” (2) “Ag does not have a
preferential right to pump the safe yields of the basins the
District augments” and (3) the Stratecon Report “credits
regarding recharge on Ag and natural lands do not reflect an
accurate ‘cost-based valuation for replenishment.’”
The District does not challenge these factual findings,
arguing instead that the record supports contrary findings. Even
if that is true, we are bound by the trial court’s findings to the
extent they are supported by substantial evidence. (Morgan,
supra, 223 Cal.App.4th at p. 917.) We may not reweigh a
judgment “supported by substantial evidence even if substantial
evidence to the contrary also exists.” (DeNike v. Mathew
Enterprise, Inc. (2022) 76 Cal.App.5th 371, 382.)
For example, the District focuses on the undisputed
evidence that Ag land has greater natural recharge of water than
urbanized land. This evidence was offset, however, by
13
substantial evidence that Ag’s relatively high recharge rate per
acre-foot is swamped by its total pumpage, which accounts for 77
percent of net extractions.
The parties produced considerable expert evidence to
support their positions. The trial court did “not find persuasive
the District’s arguments or evidence that the COSA allocation of
costs for reliability or regulatory compliance costs are reasonably
related to the benefits for which Ag and M&I are charged.” It
found the “City’s expert opinions more persuasive as to the lack
of reasonable relationship of costs to benefits set forth in the
COSA.” It also found the City’s expert’s criticism of the Stratecon
Report “more credible.”
It is not our role to reweigh the evidence or reassess the
strength of the experts’ opinions. (See People v. Poe (1999) 74
Cal.App.4th 826, 831.) Construing the evidence in the light most
favorable to the judgment, we conclude, based on the evidence,
that the District’s rates for the 2019-2020 water year did not bear
“a reasonable relationship to the burdens on or the benefits of
[the District’s] conservation activities, as article XIII C requires.”
(United Water, supra, 3 Cal.5th at p. 1214.)
We reject the District’s contention that Proposition 26
conflicts with article X, section 2 of the California Constitution.
As Newhall recognized, “article X’s conservation [of water]
mandate cannot be read to eliminate Proposition 26’s
proportionality requirement.” (Newhall, supra, 243 Cal.App.4th
at p. 1449; see City of Palmdale v. Palmdale Water Dist. (2011)
198 Cal.App.4th 926, 936-937 [Article X “is not at odds with
article XIII D [Proposition 218] so long as, for example,
conservation is attained in a manner that ‘shall not exceed the
proportional cost of the service attributable to the parcel’”].)
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C. Section 75594 is Facially Unconstitutional
Justice Liu’s concurring opinion in United Water succinctly
explains why section 75594 is constitutionally invalid: “One of
the issues on which [the Supreme Court] granted review was
whether . . . section 75594’s requirement for at least a three-to-
one ratio of fees on nonagricultural use of groundwater to such
fees on agricultural use survives the adoption of . . . articles XIII
C and XIII D. The answer, which is apparent from today’s
opinion, is that the requirement does not survive. There may be
circumstances in which the three-to-one ratio is justified, but
justification will not have anything to do with . . . section 75594.
Instead, the justification will be that the fees imposed on
ratepayers bear ‘a fair or reasonable relationship to the payor’s
burdens on, or benefits received from, the governmental activity.’
[Citations.]” (United Water, supra, 3 Cal.5th at p. 1215 (conc.
opn. of Liu, J.).)
Adopting this reasoning, we uphold the trial court’s ruling
striking down this statute.
III. DISPOSITION
The judgment on appeal is affirmed.
CERTIFIED FOR PUBLICATION.
PERREN, J.
We concur:
GILBERT, P.J. YEGAN, J.
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Thomas P. Anderle, Judge
Superior Court County of Santa Barbara
______________________________
Atkinson, Andelson, Loya, Ruud & Romo, David D. Boyer,
Brian M. Wheeler, Dan J. Bulfer and Lana Milojevic, for
Defendant and Appellant.
Colantuono, Highsmith & Whatley, Michael G. Colantuono,
David J. Ruderman, and John R. di Cristina; City of San
Buenaventura, Gregory G. Diaz and Miles P. Hogan, for Plaintiff
and Respondent.
16