e-Bulletin: Drought and Water Shortages – Reacting and Preparing

On June 4th, California Governor Arnold Schwarzenegger declared the first statewide drought in sixteen years.  Less than a week later, on June 10th, the Metropolitan Water District of Southern California issued a Water Supply Alert in Southern California.  The Alert urges cities, counties, and regional and local water agencies to pursue extraordinary conservation measures, including adoption and implementation of local drought ordinances. 

Like the rest of the southwestern United States, California has experienced dry weather conditions for several years.  Water supplies in California have been significantly depleted and demands for imported water have been at or near all-time records.  In addition to these climatic conditions, recent court decisions have affected exports from the Sacramento-San Joaquin Delta because of impacts to flow conditions and fish and wildlife. 

As a result of these impacts to the State’s water supplies, and pending legislation related to both agricultural and municipal water conservation, it is anticipated that mandatory water cutbacks may be required.  Depending upon its existing water supplies, storage capacity, and existing revenues, a public agency that provides water within its jurisdiction should consider undertaking an evaluation of the following issues that may impact its operations during the current drought:

• Does the agency need to update its existing drought management response and water conservation program?
  
• How does the agency adopt a drought response and water conservation program?
  
• Does the agency need to declare a water shortage emergency, and if so, how does it do so?
  
• Must the agency implement mandatory water cutbacks and/or water allocations as part of its drought response and water conservation program, and if so, how does it implement such cutbacks and/or allocations?
  
• As part of its water conservation program, may the agency implement a conservation-based water rate structure, and if so, does it need to comply with the substantive and procedural requirements of Proposition 218?[i]
  
• Will the agency need to increase its water rates in order to have sufficient revenues to recover reduced revenues resulting from decreased water sales, and if so, must it comply with Proposition 218?
  
• Are monetary penalties or regulatory fees implemented as part of a water conservation program subject to Proposition 218?         

Best Best & Kreiger LLP attorneys are available to assist you in addressing these issues and the actions necessary to accomplish them.  If you have any questions concerning these issues, California’s anticipated water shortages, or the implications for your agency, please feel free to contact the firm for assistance.

 ^{[i] As you will recall, Proposition 218 restricts the fees that can be charged for “property-related” services such as water service.  Among other things, water rates cannot exceed an agency’s cost of providing water service.  Also, an agency must follow specific procedures in raising rates, one that allows voters to reject the rate increase through a majority protest.  These requirements raise certain challenges in the context of water conservation-related rate adjustments.}  

 Disclaimer: BB&K eBulletins are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué. ©2008 Best Best & Krieger LLP