Barring appeal, many local water rights holders may soon receive a refund on three years' worth of fees paid to the State Water Resources Control Board (SWRCB). In a Jan. 17 ruling, a Sacramento appeals court found the agency's funding scheme unconstitutional and ordered the refund of up to $20 million in collected fees to the petitioners.
Currently, officials with the agency are considering whether to appeal the ruling to the California Supreme Court, but couldn't comment on the active litigation.
"It's a 55-page decision," SWRCB spokesperson Liz Kanter said. "We're mulling over it and deciding what the best course of action is."
The state imposed the annual fee of three cents per-acre-foot with a $100 minimum in 2004 to fund its new Water Rights Division, raised by a Senate bill the year before.
However, the California Farm Bureau and several smaller property rights lobbies vocally objected to the SWRCB's blanket funding method, which taxed all permitted water rights holders whether they used the resource or not. Further outcry came from the $100 base fee that applies to even small seasonal ponds.
Paso cattleman Hy Blythe owns many such ponds and said that he filed several requests with the SWRCB to reassess the bills he began receiving three years ago. The rancher explained that most of his ponds are so small that they serve no other use than providing seasonal drinking water for his herd. He further asserted that the pools actually serve an environmental purpose by effectively blocking silt from reaching the Salinas River basin and providing an alternative to drilling wells on his property.
Blythe, whose supplemental avocado and citrus crop was significantly impacted by the recent freeze, estimated that the fees drained roughly $5,000 from his bottom line since 2004.
"Farming isn't quite the business it was 50 years ago," Blythe said. "Every little bit we gotta watch."
The formal legal challenge, filed by the Farm Bureau in 2004 and upheld by the District 3 appellate last month, contested the manner by which the state assessed the tax that is, without assessment. According to the decision, regulatory fees can only be used to recoup the cost of a provided service, and not to fund other programs or perform budgetary patchwork.
"It was not passed through the system correctly," local Farm Bureau coordinator Steven Knudsen said.