The state attorney general has interceded in the recent court decision concerning water rate tiers. While Attorney General Kamala Harris is not appealing the actual ruling, her letter argues that there are occasions when rates higher than actual costs are constitutional and necessary for conservation purposes.

In the June 5 letter on behalf of the State Water Resources Control Board to California Supreme Court justices, Harris requests that it de-publish the Fourth District Court of Appeal’s opinion in Capistrano Taxpayers Association v. the City of San Juan Capistrano.

De-publication would not override the San Juan case, but it would eliminate its use in future water rate cases throughout the state.

In the letter, Harris said, “The board is concerned that unnecessary and overbroad language in the opinion may lead to misuse of the opinion in future litigation and could have an immediate chilling effect on urgently needed water conservation efforts.”

In April, the appellate court upheld a lower court’s decision, which invalidated the city’s rate structure because it did not comply with Proposition 218. While the court upheld the right of imposing a tiered rate structure, Prop 218, which state voters approved in 1996, requires special districts and government agencies to establish fees based on the cost of providing the service.

The lower court found no connection between San Juan Capistrano’s higher rates and the cost to produce or provide the water. However, the opinion explicitly stated that the concept of higher rates was legal, but their imposition must comply with Prop 218’s requirements.

More specifically, the AG’s letter states that the San Juan case does not allow for a full adjudication of penalties for excessive water use, “… even when the excessive level of use is prohibited by law.”

This may become an important issue if the drought continues. The state budget bill passed last week includes a provision that “allows local water agencies to issue penalties for violations of local and state water conservation regulations with penalties up to $10,000 for first violation (increasing for continuing violations). Penalties for residential water users are generally limited to $1,000.”

Also, the board and Harris believe the court of appeal decision will create confusion over Article X, section 2 of the State Constitution, which, according to Harris, “erects an overriding constitutional limitation that water use must be reasonable.”

Consequently, Harris argues “there may be circumstances when the constitutional standard of reasonable use does require (or at least justify) ‘above-cost’ water rates,” for example, penalties during droughts.