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California American Water v. City of Seaside

April 1, 2010


(Monterey County Super. Ct. No. M66343). Trial Judge: Hon. Roger D. Randall.

The opinion of the court was delivered by: Elia, J.


The Monterey Peninsula Water Management District (MPWMD or the District) appeals from an order clarifying and enforcing a prior decision, which had defined the rights of parties interested in the production of groundwater from the Seaside Basin. The MPWMD contends that the court exceeded its jurisdiction and violated the doctrine of separation of powers by restricting the District's authority to require environmental review of subsequent permit applications by the water-producing parties. We find no error and will therefore affirm the order.


The MPWMD was created in 1977 with the enactment of the Monterey Peninsula Water Management District Law. (Water Code App. §§ 118-1, 118-101.)*fn1 In establishing the District, the Legislature recognized the shortage of water resources in the Monterey Peninsula area and declared the need for "integrated management of ground and surface water supplies, for control and conservation of storm and wastewater, and for promotion of the reuse and reclamation of water." (§ 118-2.) Toward these objectives of conservation, the MPWMD was empowered to store water, appropriate water rights, control waste and exportation, and maintain proceedings to prevent interference with beneficial water use. (§ 118-328.) Its authority includes the right to approve the establishment or expansion of water distribution systems. (§ 118-363.)

Respondent California American Water Company (Cal-Am) is an investor-owned public utility which extracts groundwater from the Seaside Basin and delivers it to locations in its service area in Monterey County. Security National Guaranty, Inc. (SNG) is a real estate developer which owns land overlying the Basin and produces groundwater from it. Although Cal-Am originally named SNG as a defendant in the action that gave rise to the motion at issue, the two companies have taken the same position in the motion proceedings and on appeal from the resulting order.

1. The 2007 Amended Decision and Order

The controversy leading to the challenged order centers on water distribution from the Seaside Basin, which underlies the cities of Seaside, Sand City, Monterey, and Del Rey Oaks, as well as portions of unincorporated areas. On August 14, 2003, Cal-Am sought a declaration of rights among the parties interested in the production and storage of groundwater from the Seaside Basin. Cal-Am further requested an injunction "requiring the reasonable use and coordinated management of groundwater within the Seaside Basin," along with the appointment of a watermaster to administer the resulting decision. The complaint named multiple defendants, including respondents City of Seaside, City of Sand City (Sand City), and SNG. The MPWMD intervened, resulting in multiple cross-complaints among the parties and an appearance by Sierra Club as amicus curiae in support of the District.*fn2 Seaside, Sand City, and other "Water User Defendants" joined Cal-Am in requesting approval of a stipulated judgment, which was opposed by the MPWMD and another intervenor, the Monterey County Water Resources Agency.

Exercising its authority under article X, section 2, of the California Constitution, the superior court adjudicated the rights of the parties. In its amended decision on February 9, 2007, the court partially rejected the stipulation and set forth its findings regarding the status and permissible use of the Seaside Basin. The court recognized that groundwater production from the Basin had exceeded its "Natural Safe Yield"*fn3 in each of the preceding five years, which could lead to deleterious intrusion of seawater in the area. It therefore created and defined the position of Watermaster, a 13-member group, and it adopted a "Physical Solution" to provide coordinated management of the groundwater resources and thereby "maximize the reasonable and beneficial use of [w]ater resources" in a manner consistent with the California Constitution and the public's interest in a maximum natural yield. The court's specifically stated objective was "to ultimately reduce the drawdown of the aquifer to the level of the Natural Safe Yield; to maximize the potential beneficial use of the Basin; and to provide a means to augment the water supply for the Monterey Peninsula." The Watermaster's function was to oversee the process and implement regulations to ensure compliance with the physical solution.

The court set forth a method of calculating the amount each producer was permitted to extract from the Basin, subject to a determination by the Watermaster and the court that continued pumping at the designated amount would cause "Material Injury to the Seaside Basin or to the Subareas or will cause Material Injury to a Producer due to unreasonable pump lifts." In the event of such injury, the court specified the method of calculating the "modified Operating Yield" and concomitant revised production allocations. Toward the goal of augmenting the total yield of the Basin, the court's decision provided for artificial means (i.e. recapture, storage, and recovery), transfer of allocations, utilization of reclaimed water for irrigation, and specified schedules of reduction in extractions when required by the court, the watermaster, or "other competent governmental entity." The court further ruled that each producer was "prohibited and enjoined from [p]roducing [g]roundwater from the Seaside Basin except pursuant to a right authorized by this Decision, including Production Allocation, Carryover, Stored Water Credits, or Over-Production subject to the Replenishment Assessment."*fn4 If Cal-Am were to intrude on a water defendant's production allocation, the Decision spelled out the substantive and procedural consequences of the harm caused by the intrusion.

Addressing the MPWMD's complaint in intervention, the court rejected the District's request to be the Watermaster in favor of the 13-member collaborative group. Specifically addressing the MPWMD's assertion of exclusive authority to regulate groundwater pumping under the separation of powers doctrine, the court pointed out that the District itself had requested a physical solution, thereby conceding that the court had superior authority to regulate the use of the Basin. Water Code section 10753, the court noted, precluded any local agency's adoption and implementation of groundwater management plans to the extent that its service area is already managed by "a court order, judgment, or decree."*fn5 Accordingly, "the District will not be able in the future to adopt a Groundwater management plan for the Seaside Basin. Clearly the [L]egislature contemplated that courts had the power to develop management plans for aquifer management even if a water management district already existed in a geographical area." The court acknowledged that "the District possesses certain authority, which it is free to exercise according to the legislative mandate which created it. However, it is apparent [that] the [L]egislature did not intend that all of the powers it granted to the District be held exclusively by the District, [or] else it would not at a later time have created the Monterey County Water Resources Agency and endowed it with many of the powers granted to the MPWMD." Should the powers of the Watermaster overlap those of the MPWMD, the court would, under its retained jurisdiction, be in a position to resolve any resulting conflict. One conflict already asserted by the District was the interference with its authority by the Watermaster "regarding maintenance and modification of the Operating Safe Yield."*fn6 The court rejected this assertion, finding that its decision did not conflict with "any procedure or plan currently in place by the District to establish an Operating Yield for the Basin."

Finally, the court specified the means by which the parties could obtain future adjudication of their rights. De novo review of Watermaster decisions, for example, was to be pursued within 30 days by noticed motion. Of particular relevance to this appeal was the court's reservation of jurisdiction: "Full jurisdiction, power and authority are retained by and reserved by the Court upon the application of any [p]arty or by the Watermaster, by a noticed motion to all [p]arties, to make such further or supplemental orders or directions as may be necessary or appropriate for interpretation, enforcement, or implementation of this Decision." The court did not purport to retain authority to adjust any producer's base water right or production allocation, except upon intervention by a new party and then only under certain conditions. As to other remedies between the parties, the court stated that "Nothing in this Decision shall either expand or restrict the rights or remedies of the [p]arties concerning any subject matter that is unrelated to the use of the Seaside Basin for Extraction and/or Storage of Water as allocated and equitably managed pursuant to this Decision."

2. The 2009 Order

On September 15, 2008, respondents Cal-Am and SNG applied to the MPWMD for a permit allowing Cal-Am to pump water from the Seaside Basin in order to serve a proposed project, the Monterey Bay Shores Ecoresort. The resort site, comprising just over 39 acres, was to encompass a 161- room hotel, 226 condominium units, a restaurant, a spa, and conference facilities, in addition to outdoor areas and parking. Cal-Am sought to extract up to 90 acre-feet per year for distribution to the resort site. Cal-Am and SNG represented that no water would be removed from any source other than the Seaside Basin. ...

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