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By Wayne Lusvardi.
Remember Proposition 26, the Stop Hidden Taxes Initiative, passed by 52.5 percent of California’s voters in 2010? Probably no one who voted at that time had any idea Prop. 26 would help resolve — at least for now — the 68-year water rate battle between the San Diego County Water Authority and the Metropolitan Water District of Southern California.
SDCWA and MWD have been fighting a water war since 1946 over who has paramount water rights during droughts and how much SDCWA should pay for the transport of water through MWD’s aqueduct and pipeline system.
After 68 years of nearly perpetual water war, on April 24 San Francisco County Superior Court Judge Curtis E. Karnow issued a decision in the water rate battle of the war in favor of SDCWA. The judge ruled that MWD had overcharged SDCWA in violation of the California Constitution, state water wheeling (transportation) laws and Prop. 26.
MWD is the wholesale water supplier to the Southern-most six urban counties in the state. MWD built and operates the Colorado River Aqueduct and pays for most of the costs to operate the California Aqueduct that delivers water from Northern California.
(MWD is not identical to the Los Angeles Department of Water and Power that built the Los Angeles Aqueduct from Owens Valley. MWD is so big that LADWP is just one of its member water agencies.)
If California’s water system were to be characterized as one big pipeline from Northern to Southern California, SDCWA would be at the very end of the line. And since SDCWA had few groundwater basins due to its geology, it was also the largest urban county most dependent on imported water.
SDCWA lost water war before it started up
Historically, SDCWA was a latecomer to MWD’s current confederation of 26 cities and water district; it joined MWD in 1946. Two years earlier, in 1944, President Franklin D. Roosevelt had forced SDCWA to abandon its plans to use the gravity-fed All American Canal in favor of MWD’s costly Colorado River Aqueduct that had to pump water over Mojave Desert mountain chains. Roosevelt’s main interest was to supply water to Navy bases in SDCWA during World War II.
SDCWA has always agonized over whether the original 13 cities that formed MWD could exert preferential rights to water over SDCWA, leaving it dry in a drought. MWD’s Laguna Declaration of 1952 stated it would supply all the water all member agencies needed at any one time, either in wet or dry years. Nevertheless, in 1991 SDCWA’s share of MWD water was reduced by 31 percent in a drought.
Even though SDCWA is MWD’s biggest water customer, it has never had enough political clout on MWD’s Board of Directors to undo what it has long considered an unfair arrangement. According to an email from spokesman Mike Lee, SDCWA buys on average about 25 percent of MWD’s water, but has only four votes on its 37-member board — or 11 percent of the votes. The voting formula on MWD’s board is weighted based on assessed property values, not on what pays most of the bills.
From 1947 to the 1990’s, six pipelines were built branching off from MWD’s Colorado River Aqueduct, then stretching some 70 miles to San Diego. The U.S. Navy built most of the lines, but MWD operated them. The only user of these pipelines was SDCWA. Yet, SDCWA was charged a “water wheeling” (transportation) fee over MWD’s entire grid of 800 miles of pipelines across nearly all of Southern California.
Back in 2000, MWD prevailed in court in a water-wheeling rate case against SDCWA. SDCWA argued that wheeling fees should be charged on a point-to-point basis. But the Appeals court ruled that MWD was entitled to recover its full system costs.
MWD ended up counter-suing SDCWA, Imperial County, private water developer Cadiz Inc., and some Indian tribes to validate the Appeals court’s decision.
Along came Proposition 26
Then in 2010, along came Prop. 26, which only applied to fees imposed after Nov. 3, 2010, the date of the election. The provisions of Prop. 26 required that fees must be based on the actual costs of a particular government service, not full system costs. Prop. 26 reclassified regulatory fees as a taxes requiring a two-thirds vote of local voters consistent with prior Props. 13 and 218.
Prop. 26 re-opened the spillway to the longstanding water rate dispute between SDCWA and MWD. MWD insisted that its water-rate structure is legal and is reportedly in the process of appealing Judge Karnow’s decision to a higher court. However, unlike MWD and SDCWA’s 2000 water-rate court case, for the current case an appeals court would have to overcome the “will of the electorate” expressed in Prop. 26.
This is a good example of how water cases commonly last decades in the courts, and in some cases never really end.
But so far, at least, Prop. 26 is a taxpayer-built dam to hold back a flood of taxes.
Contributions for and Against Prop. 26 in 2010
|Oil & Gas||29 %||Unions||36%|
|Food & Beverage||27 %||Financial||24%|
|Construction, Real Estate||12 %||Democratic Party||20%|
|TOP CONTRIBUTORS||TOP CONTRIBUTORS|
|California Chamber of Commerce||$3.9 M||Democratic State Central Committee||$1.3 M|
|Chevron||$3.8 M||Thomas F. Steyer||$1.0 M|
|American Beverage Association||$2.5 M||League of Conservation Voters||$0.9 M|
|Phillip Morris, USA||$2.3 M||Calif. Teacher’s Ass’n.||$0.5 M|
|Anheuser_Busch||$0.9 M||California State Council of Service Employees||$0.5 M|
|Source: California Secretary of State|
Originally posted at CalWatchdog.