Is Water Ripe for the Taking? The SWRCB’s Lower Yuba River Decision and the Public Trust Doctrine
California Water Law & Policy Reporter
On May 17, 2001, the State Water Resources Control Board (State Board; SWRCB) rejected, with some minor changes, a number of petitions that requested it to reconsider Water Right Decision No. 1644 on the Lower Yuba River (“D-1644”). By issuing a final decision on the flows required in Lower Yuba River, the State Board has closed a chapter in one of the major water rights battles of the 1990s. In rendering D-1644, however, the State Board misconstrued the terms of the public trust doctrine and, in so doing, may inadvertently have laid the foundation for the next great water war.
This article reviews D-1644, focusing on the decision’s analysis of the State Board’s authority under the public trust doctrine. D-1644 gives the State Board far-reaching power to impose obligations under the public trust doctrine on any user of water, whether or not there is a nexus between the user’s diversion of water and harm to fish and wildlife or other public trust resources. Although there is no case on directly point, this failure to establish a nexus between harm to public trust resources and the flows required by the decision is quite similar to what Justice Scalia described as impermissible regulatory “leverage” in the seminal decision of Nollan v. California Coastal Commission, 483 U.S. 825 (1987). Further, the lack of the requisite nexus suggests, under both Dolan v. City of Tigard, 512 U.S. 374 (1994) and Erlich v. City of Culver City, 12 Cal.4th 854 (1996), that the State Board’s expansion of the public trust doctrine perhaps has closed a chapter on the long-running Lower Yuba River hearings but instead has opened a new chapter that will be characterized by an action for inverse condemnation by Yuba County Water Agency.
D-1644’s Interpretation of the Public Trust Doctrine
The State Board’s discussion of the public trust doctrine in D-1644 is fairly brief and to the point. Appropriately, the touchstone of the analysis is the Supreme Court’s decision in National Audubon Society v. Superior Court, 33 Cal.3d 419 (1983). D-1644 begins its analysis by noting that, under National Audubon Society, the State of California retains “ongoing supervisory control over navigable waters and the lands beneath those waters” for the purpose of protecting “navigation, fishing, recreation, fish and wildlife habitat, and aesthetics.” D-1644 at 30. In applying the public trust doctrine, “the State has the power to reconsider past water allocations even if the State considered public trust impacts in its original water allocation decision.” Id . at 31. Further, the State “has the duty of continuing supervision over the taking and use of appropriated water and an affirmative duty to protect public trust uses whenever feasible.” Id .
With these basic outlines of the public trust in mind, D- 1644 reaches the central issue: the extent to which it will require additional flows in the Lower Yuba River to protect public trust resources. The decision continues: [t]he instream flow requirements and other provisions of this decision will protect fish and fish habitat in the lower Yuba River and will partially mitigate for the ongoing adverse effects of Englebright Dam, Daguerre Point Dam, and ongoing diversion of water under YCWA’s permits.
Id. Recognizing that Englebright Dam and Daguerre Point Dam both are downstream of and pre-date New Bullards Bar Reservoir, D-1644 then notes that the operation of Yuba County Water Agency’s Yuba River Project relies on these earlier facilities for the delivery of water under its permits. Because these dams are “a continuing harm to the fishery,” D-1644 concludes that it is appropriate to take the impacts of these facilities into account in reconsidering the effects of Yuba County Water Agency’s diversions on public trust resources. Id . at 31-32.
D-1644 implicitly recognizes that including impacts from Daguerre Point and Englebright Dams in its consideration of the impacts of New Bullards Bar could start the SWRCB down a slippery slope where, because all new projects rely upon existing facilities, all new projects must mitigate for unrelated existing facilities. D-1644 addresses this concern by stating: [t]he extent to which a project developer may be required to provide mitigation for adverse effects on public trust resources caused by unrelated prior projects need not be decided in the present case. In this instance, YCWA benefits from, and participates in, the ongoing operation of previously constructed facilities that eliminate or reduce access to suitable upstream habitat for anadromous fish. Moreover, although the record shows that overall fish populations have stabilized or slightly increased following YCWA’s construction of New Bullards Bar Dam, the record is also clear that diversion of water under YCWA permits has resulted, and is continuing to result, in the loss of thousands of young salmonids annually. Id. at 32.
The Public Trust Doctrine only Applies Where an Action Harms Public Trust Resources
D-1644’s rationale for its conclusions about the public trust doctrine appears quite reasonable on first glance. Upon examination, though, it becomes clear that the SWRCB has omitted a key concept—harm to public trust resources—that the Supreme Court relied upon in developing the accommodation between the public trust doctrine and the appropriative water rights system in National Audubon Society v. Superior Court, 33 Cal.3d 419 (1983).
National Audubon Society Establishes Harm as the Key Element in the Accommodation Between the Public Trust Doctrine and the Appropriative Water Rights System
In National Audubon Society, the Supreme Court addressed the direct conflict between two competing legal regimes governing natural resources in California—the public trust doctrine and the appropriative water rights system. As is well-known, rather than favoring either of these legal regimes, the Supreme Court established a series of principles that balanced the needs of public trust resources against the needs for consumptive uses of water and vice-versa. In reaching this balance between the two system, the Supreme Court relied heavily on the concept of harm to public trust resources. In its first principle, the Court stated that: [t]he state as sovereign retains continuing supervisory control over its navigable waters and the lands beneath those waters. This principle … prevents any party from acquiring a vested right to appropriate water in a manner harmful to the interests protected by the public trust.
Id. at 445 (emphasis added). In its second principle, the Court stated that: [a]s a matter of current and historical necessity, the Legislature, acting directly or though an authorized agency such as the Water Board, has the power to grant usufructuary licenses that will permit an appropriator to take water from flowing streams and use that water in a distant part of the state, even though this taking does not promote, and may unavoidably harm, the trust uses at the source stream. Id. at 446. (emphasis added).
The Court continued: [n]ow that the economy and population centers of this state have developed in reliance upon appropriated water, it would be disingenuous to hold that such appropriations are and have always been improper to the extent that they harm public trust uses, and can be justified only upon theories of reliance or estoppel. Id. (emphasis added).
Finally, in its third principle, the Court noted that the state has an affirmative duty to protect public trust interests in the planning and allocation of water resources, when feasible. The Court continued: [j]ust as the history of this state shows that appropriation may be necessary for efficient use of water despite unavoidable harm to public trust values, it demonstrates that an appropriative water rights system administered without consideration of the public trust may cause unnecessary and unjustified harm to trust interests. Id. (emphasis added).
The National Audubon Society discussion of the accommodation between the public trust doctrine and the appropriative water rights system, therefore, used the concept of harm to public trust resources as central to striking a balance that serves the public interest. The first principle states—in fairly plain terms—that the purpose of the State’s supervisory control over public trust resources is to prevent the acquisition of rights that cause harm to public trust resources. The second principle recognizes that consumptive uses of water serve the public interest even though they may cause unavoidable harm to public trust resources and that such uses are not illegitimate based on the harm that they cause to public trust resources. The third principle links the entire accommodation between the public trust doctrine and the appropriative water rights system to avoiding “unnecessary and unjustified harm to trust resources.” Id. As the Court of Appeal noted, in a case decided shortly after National Audubon Society, the “dominant theme” of the State’s obligation as trustee described in National Audubon Society is “to prevent parties from using the trust in a harmful manner.” People v. Harbor Hut Restaurant, 174 Cal.App.3rd 1151, 1154 (1983). (It is interesting to note that, implicitly, D-1644 accepts this conclusion. As discussed below, in advancing the “benefits” test, D-1644 relies on the claim that “diversion of water under YCWA permits has resulted, and is continuing to result, in the loss of thousands of young salmonids annually.” D-1644, at 32.) Accordingly, it is fair to say that the essence of the public trust doctrine is the concept of preventing “harm” to public trust resources.
The SWRCB’s “Benefits” Test
Given this focus on harm to public trust resources, D-1644’s analysis of the public trust doctrine is nothing short of astonishing. D-1644 acknowledges that “overall fish populations have stabilized or slightly increased following YCWA’s construction of New Bullards Bar Dam.” D-1644, at 32. Under the National Audubon Society analysis of the public trust doctrine, and these facts, the State Board’s inquiry should have been at an end. However, D-1644 contends that, because “YCWA benefits from, and participates in, the ongoing operation of previously constructed facilities that eliminate or reduce access to suitable upstream habitat for anadromous fish,” the SWRCB is justified in imposing mitigation requirements on Yuba County Water Agency. Lest anyone be justifiably concerned that this “benefits” test might be the first step on a slippery slope, D-1644 expressly states that: [t]he extent to which a project developer may be required to provide mitigation for adverse effects on public trust resources caused by unrelated prior projects need not be decided in the present case.
Despite the SWRCB’s reassurance, the “benefits” test is inconsistent with California law and will have the effect of discouraging future efforts at ecosystem restoration like the CALFED Bay-Delta Program. As noted above, the key to the application of the public trust doctrine is a finding that the diversion in question harms public trust resources. D-1644 acknowledges that, considered on its own, the New Bullards Bar diversion has had no effect or a slightly beneficial effect on public trust resources in the Yuba River. Accordingly, in order to find harm, D-1644 must cumulate the effects of New Bullards Bar with other diversions on the Yuba River where water is diverted under Yuba County Water Agency’s permits.
No California case or SWRCB decision applying the public trust doctrine directly addresses the situation where mitigation measures designed to address effects of existing diversions are imposed upon a new diversion that relies upon those existing facilities for a portion of its operations. By analogy to law developed under the California Environmental Quality Act (CEQA), however, it appears that there is no legal basis for such cumulative responsibility.
As noted in D-1644, Daguerre Point Dam was constructed in 1909 by the U.S. Army Corps of Engineers for the purpose of debris control. Id. at 15. Daguerre Point is still owned and operated by the Corps of Engineers. Id. Englebright Dam was constructed in 1941, again by the Corps of Engineers. Id. New Bullards Bar, by contrast, was constructed in 1970 and is owned and operated by Yuba County Water Agency. Id. Assuming that the SWRCB were engaged in analyzing the impacts of New Bullards Bar under CEQA, the State Board would be required to consider the potential cumulative impacts of all three facilities on the Yuba River fisheries but would not be able to condition its grant of a permit to New Bullards Bar on mitigation for pre-existing problems with Yuba River fisheries. As noted in the CEQA Guidelines, a “mitigation measure must be roughly proportional to the impacts of the project.” CEQA Guidelines, 14 Calif. Code Regs. §15126(a)(4)(B), citing Dolan v. City of Tigard, 512 U.S. 374 (1994). Given the broad constitutional reasoning of Dolan, there is no reason to suppose that there should be greater cumulative responsibility under the public trust doctrine than under CEQA; both legal frameworks are governed by the same constitutional principles.
Further, even if the “benefits” test is consistent with California law, it could have the practical effect of precluding efforts at integrated resources management, including, but not limited to, the CALFED Bay-Delta Program. In recent years, water agencies have developed a number of programs that are based on the concept of integrated resources management, wherein increased diversions, improved water quality, ecosystem restoration, and other goals are all sought to be achieved together. Many, if not most, of these programs rely heavily on reoperating existing facilities in a manner that reduces impacts on public trust resources or, in some cases, provides actual benefits to those resources. The effect of the “benefits” test will be that these programs may be forced to mitigation not only for their own (minimal) impacts but also to mitigate for impacts of existing facilities.
For instance, suppose the CALFED Bay-Delta Program develops a program to store additional water in Shasta Reservoir by means of the proposed enlargement and export the newly conserved water south of the Delta at times when it will have few, if any, impacts on listed species. All would agree that reducing impacts of exports on listed species would benefit those species and that CALFED agencies must mitigate for the impacts of the enlargement of Shasta and the subsequent export of newly conserved water on the environment. But, under the “benefits” test, because the export program “benefits” from the existing pumping facilities in the Delta, it is entirely plausible that the SWRCB could require that all of the conserved water could be dedicated to increased outflow in order to mitigate for what the SWRCB believes to be effects of Shasta Dam or the Central Valley Project that have not been adequately mitigated for in the past. With such a free-ranging—and unbalanced—mitigation requirement, integrated resources management of the type exemplified by the CALFED Bay-Delta Program will become virtually impossible because there will be no predictability to mitigation requirements and no closure for mitigation once facilities are constructed or programs implemented.
D-1644’s Misinterpretation of the Public Trust Doctrine Opens a Potential Claim for Inverse Condemnation
As noted above, D-1644 fails to respect the fact that National Audubon Society limited the application of the public trust doctrine to consumptive uses that harm public trust resources. This failure potentially gives rise to liability on the part of the State of California for inverse condemnation.
As a general rule, a regulatory action can rise to a taking if it satisfies factors first identified in Penn Central Transp. Co. v. New York City , 438 U.S. 104 (1978). Those factors were the economic impact of the regulation on the claimant, the extent to which the regulation interfered with distinct investment-back expectations, and the character of the governmental action. Id . at 124. The California Supreme Court, describing recent developments at the United States Supreme Court, has noted that, with regard to the government’s purpose, a regulation of property can effect a taking if it does not substantially advance legitimate state interests. Kavanau v. Santa Monica Rent Control Board, 16 Cal.4th 761, 776 (1997). In the context where the government demands property as a condition for a permit, there is a requirement that there be rough proportionality between the exaction and the impacts of the property subject to the permit. Id. citing Dolan v. City of Tigard, 512 U.S. 374, 391 (1994). In the absence of such rough proportionality, there is a danger of what Justice Scalia has called regulatory “leveraging:” i.e., the imposition of unrelated conditions in exchange for a permit approval. Erlich v. City of Culver City, 12 Cal.4th 854, 867-68 (1996).
(It could be argued that the reallocation of water as needed to satisfy the needs of public trust resources could be said to be the type of pre-existing limitation on title that would not give rise to a taking. E.g., Lucas v. South Carolina Coastal Comm’n , 505 U.S. 1003, 1028-29 (1992). Under the present circumstances, however, Lucas does not protect D-1644 from a claim of inverse condemnation. The public trust doctrine, as noted above, is premised on protecting public trust resources against harm. Applying the public trust doctrine in a context where the diverter in question has not harmed public trust resources, though, is not within the scope of any pre-existing limits on title and so must be justified in the same manner as any other governmental regulation of property.)
The reallocation of water by D-1644 without a claim of harm to public trust resources fails to pass constitutional muster in two ways. First, this reallocation—which is not within the scope of reallocations permitted under National Audubon Society — extinguishes a fundamental attribute of ownership by divesting Yuba County Water Agency of permitted rights without a basis in law. Kavanau, supra, at 775. As the federal Court of Claims recently noted in a different context, such a restriction on the use of a usufructuary water right “completely eviscerates the right itself” and so constitutes a taking. Tulare Lake Basin Water Storage District v. United States, 49 Fed. Cl. 313, 319 (2001). Second, the lack of harm fails to satisfy the “rough proportionality” test articulated by the U.S. Supreme Court in Dolan. As stated by the California Supreme Court in Erlich v. City of Culver City, 12 Cal.4th 854, 880 (1996):
[w]e view the [ Dolan ] requirement that the local government demonstrate a factually sustainable proportionality between the effects of a proposed land use and a given exaction as one which furthers the assurances implicit in the Nollan test that the condition at issue is more than theoretically or even plausibly related to legitimate regulatory ends. (emphasis added)
Again, this standard is intended to preclude regulatory leveraging as described by Justice Scalia. Here, Yuba County Water Agency is being compelled to give up water under permit when the record indicates that the New Bullards Bar Dam (by contrasted with Daguerre Point and Englebright) has had no adverse impacts—and perhaps slight benefits—for the fishery in the Yuba River. Under these circumstances, requiring Yuba County Water Agency to give up any water is inversely proportional to the impacts of the New Bullards Bar project and so fails to pass constitutional muster.
For many years—at least since the Court of Appeal’s decision in United States v. State Water Resources Control Board, 182 Cal.App.3d 82 (1986) — some have suggested that the State Board ignore notions of water rights in favor of unbounded public interest balancing. Those suggestions, as noted above, ignored the Supreme Court’s clear intent in National Audubon Society to achieve an accommodation that protected both appropriative water rights and the public trust doctrine. Last year, in City of Barstow v. Mojave Water Agency, 23 Cal.4th 1224 (2000), the Supreme Court signaled again that property rights in water matter. D-1644—by ignoring the need to show harm from a specified diversion—reflects a relatively expansive view of the public trust doctrine. Given the Supreme Court’s insistence on respecting property rights—as shown in National Audubon Society and in City of Barstow—it appears that D- 1644’s view of the public trust doctrine probably will not stand the test of time. Both property rights and the public trust doctrine will be more secure as a result.
David R.E. Aladjem is a partner with the law firm of Downey, Brand, Seymour & Rohwer, LLP, where his practice involves the representation of clients in a wide variety of matters relating to the acquisition and exercise of water rights. Downey, Brand appeared in the Lower Yuba River hearings on behalf of Western Aggregates. Mr. Aladjem also presented comments on the State Water Resources Control Board’s draft decisions that led up to D- 1644 on behalf of a number of Downey, Brand’s clients in the Sacramento Valley.
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