Lauren Bernadett and Michael Vergara from Somach Simmons & Dunn

It is no secret that the State of California was tasked with handling one of the worst droughts in California’s recorded history. In 2015, a group of several irrigation districts and water agencies (Public Agencies) located in the Delta challenged how the State curtailed water users during the drought and, after years of litigation, recently obtained victory in Santa Clara Superior Court. The decision protects water right holders by requiring the State Water Resources Control Board (Water Board) to provide due process protections before requiring California water rights holders to stop lawful water diversions.

The case began when the Water Board issued written notices to large groups of water diverters in the Sacramento-San Joaquin River and Delta watersheds, requiring the diverters to immediately stop diverting water and report to the Water Board when they stopped diverting water. No due process hearings were conducted prior to issuing these notices. Thus, when they received the notice, diverters faced two choices: (1) comply and stop diverting water, causing harm to their residential, commercial and agricultural customers; or (2) defy the notice and risk substantial administrative penalties for every day of diversion. Initially baffled by notices, some Public Agencies decided to continue diverting, some stopped diverting and, if available, purchased water from other sources, and some complied and ceased diversions.

Ultimately responding to the notices, several Public Agencies filed separate civil suits against the Water Board in various superior courts in Northern California counties. Shortly after these suits were filed and served, the Water Board issued administrative proceedings against two Public Agencies that sued the Water Board—the Byron-Bethany Irrigation District (BBID) and the West Side Irrigation District (WSID). In March 2016, BBID and WSID, joined by several other water agencies, defended themselves before the Water Board (the same agency that issued the notices) against a consolidated administrative enforcement proceeding. In an unprecedented decision, the Water Board’s hearing team determined that the Water Board’s own staff members failed to present sufficient evidence to carry its prosecutorial burden of proof. Both administrative actions were dismissed.

In the meantime, the lawsuits filed by the Public Agencies were coordinated as the California Water Curtailment Cases and transferred to the complex litigation division of the Santa Clara County Superior Court. After several rounds of demurrers, the parties agreed to separate trial of the issues into three phases. Phase 1 addressed whether the Water Board had the jurisdiction to issue curtailment notices to the most senior water right holders in the state and whether the Water Board provided the required due process to all water right holders who received the notices.

The superior court heard oral arguments for Phase 1 in January 2018 and issued its decision within a month. Reviewing the issues de novo, the court issued decisions on multiple topics including standing and administrative law issues, but the decisions primarily focused on the extent of the Water Board’s jurisdiction to curtail and whether the curtailment notices violated due process.

Regarding jurisdiction, the court determined that the Water Board did not have the authority to curtail pre-1914 and riparian water right holders, the most senior water right holders in the state. The decision is limited to circumstances under which the Water Board curtails these senior water right holders under Water Code section 1052, which provides that diverting water is a trespass except as authorized by the water permitting and licensing statutes in Division 2 of the Code. Pre-1914 and riparian water right holders are not subject to the permitting and licensing requirements under Division 2. The court viewed the Water Board’s argument as an improper attempt to expand its own jurisdiction without legislative approval. The court emphasized that the Water Board’s actions must be authorized by some statutory foundation. Because no statute supported the Water Board’s actions, the court found that the Water Board did not have the authority to curtail pre-1914 and riparian water right holders under the trespass provision.

Regarding due process, the Public Agencies argued that the curtailment notices violated their constitutional due process rights by curtailing diversions without first providing a hearing or other opportunity to challenge the Water Board’s decisions and actions. The Water Board characterized the curtailment notices as informational, but the court focused on the notices’ order to immediately stop diverting water or risk large administrative penalties—like the more than $5 million threatened against BBID. The Water Board’s failure to provide any due process resulted in the court holding that the Water Board violated due process requirements and that the Water Board must provide an opportunity for those who receive such a notice to challenge the stated findings before curtailments are implemented and fines are issued.

While the court announced its decision to issue the writs requested by the Public Agencies, the writ will not issue until completion of Phases 2 and 3, which involve other constitutional claims and a takings claim. Since 2015, the Water Board has not issued curtailment notices. However, the court’s decision provides that the Water Board must find a different method for implementing curtailments, and it will be required to provide heightened due process opportunities to water right holders it seeks to curtail.

Lauren D. Bernadett, an associate with Somach Simmons & Dunn in Sacramento, Calif., is a natural resources lawyer who has counseled private and public clients through administrative processes and litigation in state and federal courts. She can be reached at lbernadett@somachlaw.com.

Michael E. Vergara, a shareholder with the firm, serves as outside litigation and general counsel to businesses and public entities that have environmental law issues. He can be reached at mvergara@somachlaw.com.