A San Francisco-based law firm suing Marin Municipal Water District over its longstanding tiered water-rate structure is claiming the district arbitrarily charges more for greater water use.
The suit follows an April ruling in a Southern California appellate court, in which a judge found a water district in Orange County had violated Proposition 218. That proposition, passed by state voters in 1996 and incorporated into the state constitution, intended to limit local government revenue and enhance taxpayer consent by requiring that utility rates be tied to the cost of providing services.
Walker, Hamilton and Koenig is requesting that a Marin Superior Court judge certify the case as a class action lawsuit.
Libby Pischel, a spokeswoman for M.M.W.D., said she could not discuss the legal matter with the Light. But in an emailed statement, she wrote that the district believes its rate system “meets cost-of-service requirements, is legally defensible, and follows Prop. 218 protocol.” The district is reviewing the rate structure, and a study will soon be completed and released to the public.
In 2012, a group called the Capistrano Taxpayers Association asserted that tiered water rates—which charged more per unit of water after a certain threshold—in San Juan Capistrano’s water district did not reflect the cost of providing more water, but were instead intended as a conservation measure meant to dissuade high water consumption.
Tiered water rates have become increasingly common in California in the past two decades; about two-thirds of urban water utilities have implemented them. But the constitutional language enacted by the provision states that “[re]venues derived from the fee or charge shall not exceed the funds required to provide the property related service” and that “the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.”
A three-judge panel ruled in the tax group’s favor, although not without some handwringing. “We are called upon to determine not what is the right—or even the more reasonable—approach…but what is the one chosen by the state’s voters,” wrote Judge P. J. Bedsworth, who authored the opinion.
In order to comply with the constitution, a water agency needs to prove that providing more water costs more, and demonstrate the amount of those costs, the judge wrote.
For example, if a water district has multiple water sources, one source may cost more to provide than others, so the district could set pricing accordingly.
In Marin Municipal Water District, which has tiered its rates since the 1990s, customers currently pay $3.74 per 100 cubic feet of water for the first tier. After customers use a set volume of water, the cost doubles, to $7.49 per 100 cubic feet. The cost doubles again when usage hits the third tier, and it increases by 50 percent from the third to the fourth tier.
The tiers shift slightly in different seasons; for instance, between December and May, the first tier for single-family residential customers includes the initial 21 units of water used, whereas from June to November the initial 26 units are included.
To Beau Burbridge, the lawyer handling the suit, those “really clean increments”—such as the doubling—more or less “screamed to us” that the structure was illegal.
There is only one named plaintiff in the case at the moment: Anne Walker, a water district customer and the wife of one of the principals at the law firm. Ms. Walker is acting as a placeholder until the case is certified as a class action suit.
“We have had a lot of complaints” about the district’s rate structure, Mr. Burbidge said, but he added that not everyone has wanted to broadcast their name on a lawsuit.
Mr. Burbidge argued that there seem to be two ways to legally impose tiered rates: by clearly correlating the tiers to the costs of the services, or by letting voters approve the tiered rates, effectively self-imposing a penalty for heavy water use.
Neither he nor his firm oppose water conservation measures, he said. “The message we’re trying to get out is that we’re pro-conservation. We’re all for it. The method just has to be legal.”
But Larry Bragman, a lawyer who won a seat on the water board last November and represents the San Geronimo Valley and Fairfax, said the board has always been aware of—and sought to comply with—Proposition 218.
Mr. Bragman was disappointed in the Capistrano ruling. He said he believes the judge should have given greater weight to a different section of the state constitution: Article X. It reads, in part, that “the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented.”
In Judge Bedsworth’s ruling, Prop. 218 trumped Article X, but Mr. Bragman feels it should have been the other way around. To him, the state has an obligation under the public trust doctrine to protect water. “When you’re dealing with a fundamental resource like water, it is unwise to strictly monetize its value and to put government agencies in a market-based straightjacket of cost-of-service,” he said.
Studies have shown that tiered water rates decrease use. An analysis conducted of 11 water agencies in California and Nevada by the federal Bureau of Reclamation in 2014 found that more rate tiers for residential customers was correlated with reduced water use. A 2013 working paper from researchers at the University of California, Riverside, found that tiered pricing implemented by the Eastern Municipal Water District, in Southern California, reduced consumption by 18 percent over a period of years.
“They can be a very effective way of sending a price signal to customers to conserve,” said Heather Cooley, the water program director at the Pacific Institute, an Oakland-based nonprofit.
In fact, tiered pricing could become even more common in California: on April 1, Governor Jerry Brown issued an executive order to the State Water Resources Control Board to, among other things, direct urban water districts to create conservation-based water rates—though the board acknowledges on its website that Proposition 218 means water agencies “must carefully construct and document their rate structures” to comply with the law. The board is holding a workshop on the matter next month with urban districts.
Water districts not only have to toe a line between the letter of the law and encouraging conservation, however, but must also balance conservation measures with revenue stability. Much of the cost of providing water—like maintaining infrastructure—doesn’t change drastically when districts deliver less water.