Metropolitan Water District v. Imperial Irrigation District

Opinion

TURNER, P. J. I. Introduction

State law mandates that the owner of a water conveyance system with unused capacity allow others to use the facility to transport water. The use of a water conveyance facility by someone other than the owner or operator to transport water is referred to as “wheeling.” In return for wheeling, the water conveyance system owner is entitled to “fair compensation.” (Wat. Code,1 § 1810.) The question in this case is whether as a matter of law the “Wheeling Statutes” (§§ 1810-1814) prevent the Metropolitan Water District of Southern California from adopting a fixed wheeling rate applicable to its member agencies that is based on the volume of water transported without regard to the nature of a particular wheeling proposal, including the distance traveled, or the particular facilities used, and that includes in its calculation capital investment and other system-wide costs. We conclude the Metropolitan Water District could act as it did subject to defendants’ right to judicial review pursuant to section 1813. We reverse the judgment to the contrary [1408]and remand for further proceedings where the parties can litigate the appropriateness of the wheeling rate pursuant to section 1813.

II. Background

A. Procedural History

The Metropolitan Water District adopted a fixed rate for wheeling transactions by its member agencies. The Metropolitan Water District pledged its expected wheeling revenues as security for certain commercial paper obligations and revolving notes. The Metropolitan Water District filed this action to obtain court validation of its wheeling rate. (Code Civ. Proc., § 860 et seq.; 72B West's Ann. Wat. Code—Appen. (1995 ed.) § 109-163, p. 55.) Seven defendants appeared in the trial court. They opposed the Metropolitan Water District’s adoption of a fixed wheeling rate.2 Six of those defendants have appeared in this court. They are: the San Diego County Water Authority3; the Imperial Irrigation District4; the Chemehuevi Indian Tribe; the Quechan Indian Tribe; Cadiz Inc. (previously Cadiz Land Company, Inc.); and the Center for Public Interest Law (CPIL).5

The trial court reached two conclusions as a matter of law based on the language of the Wheeling Statutes. First, the trial court concluded as a matter of law the Metropolitan Water District could not set a fixed wheeling rate in advance of a particular transaction and without regard to the nature of a specific wheeling proposal. Second, the trial court concluded as a matter of law the Metropolitan Water District could not include system-wide costs in calculating its wheeling rate. The trial court’s decision will be set forth in greater detail later in this opinion. The trial court entered a judgment against the Metropolitan Water District and in favor of the defendants. The Metropolitan Water District appealed from that judgment. It also appealed from a postjudgment order as to costs and attorney’s fees. Several defendants cross-appealed from the postjudgment order.