In Bighorn-Desert View Water Agency v. Beringson, (2004 Daily Journal, D.A.R. 389, Cal 4 Dist., January 13, 2004) the California Court of Appeal, Fourth Appellate District, considered whether a voter initiative can be used to reduce the rates and charges fixed by a public water agency.
The Bighorn-Desert View Water Agency (Bighorn) supplies domestic water service in its area. The Legislature empowered Bighorn to fix water rates in a manner that will pay the operations, maintenance and capital expenses of the agency. E.W. Kelley qualified an initiative petition (Initiative) seeking to reduce Bighorn’s water rates and charges and to also require two-thirds voter approval for any subsequent increases. Bighorn filed an action seeking a judicial declaration that the initiative was facially invalid. The trial court found that the initiative was invalid on its face, because Bighorn’s electorate lacks the power to affect, by means of an initiative, Bighorn’s rates, fees, and charges.
Appellate Court Decision
The Court of Appeal agreed with the trial court. The Court rejected Mr. Kelley’s argument that the California Constitution, Article 13C and Article 13D, approved by California’s voters as Proposition 218, authorizes the Initiative. Article 13C, section 3, provides that “the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” However, the Court concluded that Proposition 218 does not apply to the rates, fees, and charges fixed by Bighorn for water services.
The Court explained that Proposition 218, like Proposition 13 before it, was intended to place limits on property-related levies. Thus, the types of fees and charges subject to the initiative power under Article 13C are the same types as those restricted by Article 13D, namely, ones that are property-based. The Court noted that Bighorn’s water rates and charges were usage-based and were not “an incident of property ownership” or fees for “a property-related service,” as defined in Article 13D.
Since Article 13C did not apply, the Court explained that, under the law pre-dating Proposition 218, the initiative or referendum process cannot be used in areas in which a local legislative body’s discretion is largely preempted by a statutory mandate. Here, the Legislature mandated that Bighorn’s board of directors fix water rates and charges at a sufficient amount. Furthermore, the initiative process cannot be used where the effect of the process would be “greatly to impair or wholly destroy the efficacy of some … governmental power, the practical application of which is essential.” Here, the initiative process would disrupt public water service because Bighorn could no longer afford to operate.
Please see our Legal Alert on the California Court of Appeal decision in this case at California Court Of Appeal: Water Agency’s Usage-Based Water Rates Are Excluded From The Voter Approval And Initiative Provisions Of Proposition 218, September 15, 2004.
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