By Diane Kindermann and Jessica Melms

Stanford Vina Ranch Irrigation Co. v. State of California (2020) 50 Cal.App.5th 976

On June 18, 2020, the Third Appellate District upheld the State Water Resources Control Board’s (“SWRCB”) authority to curtail unreasonable use of pre-1914 appropriative and riparian water rights through emergency regulations. Historically, post-1914 appropriative rights were afforded less protection in shortages compared to riparian and pre-1914 water rights. On top of these principles, the reasonable use doctrine limits the right to use all water rights enjoyed or asserted in the state only to the extent that “reasonably required for beneficial use to be served.”

The spring-run Chinook salmon and steelhead trout are both threatened fish under the California and federal Endangered Species Acts (“CESA” and “ESA”, respectively). Each year, some of these anadromous fish species journey from the ocean to Deer Creek within the Lassen National Forest. The California Department of Fish and Wildlife (“CDFW”) identifies the creek as a high priority stream, and during years of drought or low water flow, water diversions can prevent adult salmon and trout from reaching spawning habitat. Two irrigation companies, Stanford Vina Ranch Irrigation and Deer Creek Irrigation, divert water for agricultural use from Deer Creek. By virtue of a judicial decree entered in 1923, Stanford Vina is entitled to roughly 66 percent of Deer Creek’s flow based on its senior riparian and pre-1914 water rights.

In May 2014, during the peak of one of California’s most severe droughts, Governor Brown declared a state of emergency. In response, SWRCB began the process of promulgating emergency regulations implementing in-stream flow requirements for Deer Creek and two other creeks. SWRCB adopted the emergency regulations, providing that continued diversions would threaten to cause flows to dip beneath the drought emergency minimum flow requirements, and therefore constituted a waste and unreasonable use under Article X, section 2 of the California Constitution. Diversions were labeled unreasonable per se, and SWRCB was authorized to issue curtailment orders without a noticed hearing to ensure adequate water supply for the threatened species. Both irrigation companies were subjected to four total curtailment orders and were banned from diverting water from Deer Creek for several years.

Stanford Vina Ranch sued the SWRCB challenging its discretion in the issuance and implementation of certain temporary emergency regulations in 2014 and 2015 and claiming that the orders violated due process requirements and amounted to a taking without just compensation. Specifically, Stanford Vina asserted causes of action for inverse condemnation and declaratory relief, claiming that the curtailment order and emergency regulations amounted to a taking of their vested water rights for public “fishery enhancement purposes” without just compensation. Additionally, Stanford Vina sought writs of mandate and injunctive relief ordering SWRCB to rescind the regulations and curtailment orders, and to refrain from adopting further orders without first complying with statutory and constitutional requirements of due process and reasonable compensation. The trial court bifurcated the condemnation and declaratory relief causes of action and upheld SWRCB’s adoption of the emergency regulations limiting water diversions to protect fish migration. Stanford Vina appealed.

The Court of Appeal affirmed, holding that SWRCB acted within its broad authority to prevent unreasonable use of water under Article X, section 2 of the California Constitution. SWRCB’s enabling statute “grants it the power to ‘exercise the adjudicatory and regulatory functions of the state in the field of water resources’ and in that role, the Board is granted ‘any powers that may be necessary or convenient for the exercise of these duties.’” Specifically, SWRCB has the authority to take all appropriate actions to prevent waste, unreasonable use, or unreasonable method of diversion of water in California. The Court held that fish survival is an appropriate consideration in determining what is or is not an “unreasonable use, unreasonable method of use, or unreasonable method of diversion of water in the state.”

Stanford Vina argued that the requirement for a hearing stemmed from the federal and California Constitutions. However, even though the “determination of reasonableness would necessarily have been determined ad hoc, adjudicatively, this does not mean due process requires the Board to hold an evidentiary hearing before engaging in promulgating a regulation.” Consistent with this constitutional provision, the Legislature may enact per se rules of unreasonable use without a hearing. Therefore, the Court held that SWRCB did not act arbitrarily, capriciously, or contrary to procedure, and it was not required to hold an evidentiary hearing.

Additionally, the curtailment orders were valid because substantial evidence supported findings that the diversions would have violated the regulations, and senior water rights holders are not exempt. Stanford Vina did not challenge the sufficiency of the evidence supporting SWRCB’s conclusion. Nor could they point to any purported errors relating to the issuance of the curtailment orders themselves. Lastly, the takings claim failed because Stanford Vina did not possess a vested right to divert water from Deer Creek in contravention of the emergency regulations.

Diane Kindermann is a shareholder and Jessica Melms is a law clerk at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.