Summary
The California Court of Appeal affirmed a judgment concerning challenges to tiered water rates imposed by the Los Angeles Department of Water and Power under article XIII D of the California Constitution. The court held that Health and Safety Code section 5472 required payment under protest for a refund claim and that the City demonstrated its tiered rates were proportional to the cost of providing water service. The court upheld a writ requiring removal of a low-income subsidy charge but rejected the plaintiffs’ claims for refunds and further relief.
Topics
Practice areas
Questions Presented
- Whether Health and Safety Code section 5472 applies to a refund claim concerning water-delivery charges imposed by a city under section 5471.
- Whether failure to pay the challenged charges under protest bars the Drehers' claim for a prejudgment refund of the unlawful low-income subsidy charges.
- Whether the City's tiered water rates complied with article XIII D, section 6, subdivision (b)(3), including whether the City had to trace the physical source of water delivered to each parcel and tier.
- Whether the City's allocation of peak pumping and storage costs to higher-usage tiers violated the proportionality requirement.
- Whether the City's use of water-conservation objectives in setting tier allotments violated article XIII D, section 6, subdivision (b)(3).
Holdings
- Section 5472 applies to the Drehers' claim for a refund of the low-income subsidy portion of LADWP's water-delivery charges because the charges were fixed pursuant to section 5471 by a city ordinance approved by more than a two-thirds vote and were charges for services connected with the City's water system.
- The Drehers' failure to pay the water charges under protest barred their claim for a prejudgment refund of the low-income subsidy charges.
- The City's tiered water rates, excluding the invalid low-income subsidy component, complied with article XIII D, section 6, subdivision (b)(3), because the City demonstrated that the rates did not exceed the proportional cost of service attributable to the parcel.
Key quotations
“The City was required to prove that the rates it charged were proportional to the cost of service attributable to the parcel. It was not required to meet the Drehers’ proposed standard of proving it determined the exact water supply costs for each individual parcel by, among other things, tracing each of its four separate sources of water from its genesis to the parcel where it was used.” (at 2-3)
“In sum, section 5472 afforded the Drehers an appropriate refund remedy for the unlawful LISA charges, but they failed to comply with the payment under protest requirement. Consequently, their claim for a retrospective refund is barred.” (at 61-62)
“The Constitution requires proportionality, not exactness.” (at 67-68)
Factual background
In 2016, the Los Angeles City Council approved LADWP water rates containing four usage tiers, a water supply cost adjustment, peak pumping and storage costs, and a low-income subsidy adjustment charged to most customers. The Drehers challenged the rates under article XIII D, section 6, subdivision (b), contending that the low-income subsidy unlawfully charged nonqualifying customers for another customer's subsidy and that the tiered rates exceeded the proportional cost of service attributable to their parcel. LADWP's rate study calculated the costs of four water sources, allocated supply costs among tiers through formulas, and assigned incremental peak pumping and storage costs to higher-usage tiers. The trial court invalidated the low-income subsidy component but upheld the tiered rates.
Procedural history
The Drehers filed a class claim in 2018 and then filed an action in 2019 seeking damages, refunds, declaratory relief, injunctive relief, and a writ of mandate. The trial court held that the low-income subsidy adjustment violated article XIII D and issued a peremptory writ requiring the City to stop charging it and to refund postjudgment charges, but held that the City's tiered water rates otherwise complied with the Constitution. The court denied a prejudgment refund because the Drehers had not paid the charges under protest as required by Health and Safety Code section 5472. The Court of Appeal affirmed.