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1 OLIVAREZ MADRUGA LEMIEUX O’NEILL, LLP Exempt from filing fee pursuant to
STEVEN P. O’NEILL (SBN. 143075) Government Code § 6103
2 soneill@omlolaw.com
CHELSEA M. SCHARF (SBN. 312215) ELECTRONICALLY
3 cscharf@omlolaw.com F I L E D
2659 Townsgate Rd., Suite 226 Superior Court of California,
4 Westlake Village, CA 91361 County of San Francisco
Telephone: (805) 495-4770 03/22/2021
5 Facsimile: (805) 495-2787 Clerk of the Court
BY: EDWARD SANTOS
Deputy Clerk
6 Attorneys for Real Parties in Interest,
EASTERN MUNICIPAL WATER
7 DISTRICT, FOOTHILL MUNICIPAL
WATER DISTRICT, LAS VIRGENES
8 MUNICIPAL WATER DISTRICT, WEST
9 BASIN MUNICIPAL WATER DISTRICT,
and WESTERN MUNICIPAL WATER DISTRICT
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
FOR THE COUNTY OF SAN FRANCISCO
12
13
SAN DIEGO COUNTY WATER AUTHORITY, Case No.: CPF-14-514004
14
Petitioner and Plaintiff, Assigned for all purposes to the
15 Hon. Anne-Christine Massullo, Dept. 304
vs.
16 LAS VIRGENES MUNICIPAL WATER
DISTRICT’S ANSWER TO SAN DIEGO
17 THE METROPOLITAN WATER DISTRICT COUNTY WATER AUTHORITY’S
OF SOUTHERN CALIFORNIA, ALL FIRST AMENDED PETITION FOR
18 PERSONS INTERESTED IN THE WRIT OF MANDATE AND
VALIDITY OF THE RATES ADOPTED BY COMPLAINT
19 THE METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA ON APRIL 8,
20 2014 TO BE EFFECTIVE JANUARY 1, 2015
AND JANUARY 1, 2016; and DOES 1-10,
21
Respondents and Defendants.
22
23
24 Pursuant to Code of Civil Procedure1 § 860, et seq., Real Party In Interest Las Virgenes
25 Municipal Water District (“Las Virgenes”) hereby answers the first, second, third, and fifth
26 causes of action2 in Petitioner and Plaintiff San Diego County Water Authority’s (“San Diego”)
27 1
All Code references are to the California Code unless otherwise noted.
2
28 Las Virgenes does not answer the fourth cause of action for breach of contract against
Metropolitan Water District of Southern California and therefore is not a party to the claims made
1
LAS VIRGENES WATER DISTRICT’S ANSWER
1 unverified First Amended Petition for Writ of Mandate and Complaint For Determination of
2 Invalidity, Damages and Declaratory Relief (“FAC”), as follows:
3 GENERAL DENIAL
4 Pursuant to Code of Civil Procedure section 431.30(d), Las Virgenes generally denies
5 each and every allegation in the FAC, and further denies that San Diego is entitled to any of the
6 relief prayed for in the FAC.
7 GENERAL ALLEGATIONS IN SUPPORT OF GENERAL DENIAL AND
8 AFFIRMATIVE DEFENSES
9 Metropolitan, a Collective of Public Member Agencies
10 1. Respondent and Defendant Metropolitan Water District of Southern California
11 (“Metropolitan”) is a public agency and a regional wholesale water provider. It exists and
12 operates as a collective of its member agencies, which themselves are public agencies, and it is
13 governed by a Board of Directors composed of representatives from each member agency. Today,
14 Metropolitan has 26 member agencies, including San Diego.
15 2. Each member agency has proportional representation on the Board of Directors,
16 and is entitled to at least one seat on the Board, plus an additional seat for every full 3% of the
17 total assessed value of the property within the member agency’s service area that is taxable for
18 district purposes. Currently, the Board is made up of 38 directors: 23 of the agencies have no
19 more than two directors, two agencies – San Diego and Municipal Water District of Orange
20 County – each have four, and City of Los Angeles Department of Water and Power has five. Each
21 director is guaranteed one vote, which may be weighted more heavily depending on the property
22 valuation in his or her agency’s service area. San Diego controls approximately 18% of the
23 Board’s vote.
24 3. Las Virgenes, like San Diego, is a Metropolitan member agency. Las Virgenes is a
25 municipal water district under California Water Code §§ 71000 et seq.
26 Metropolitan’s Rates
27
28 with respect to that cause of action, including to the extent they appear in the causes of action
answered here.
2
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 4. Las Virgenes, like San Diego, participated in the public Board of Directors’
2 meetings, hearings, and workshops leading up to the Board’s adoption of the rate components
3 challenged by San Diego.
4 5. In order to provide its wholesale water service to its member agencies,
5 Metropolitan imports water from the Colorado River via the Colorado River Aqueduct and from
6 the State Water Project (“SWP”), which is operated by the California Department of Water
7 Resources (“DWR”). The water is delivered to member agencies through an extensive
8 interconnected regional network of canals, pipelines, and appurtenant facilities, as well as supply,
9 treatment, and storage facilities. The extensive statewide integrated conveyance and distribution
10 system is the result of collective investment by the cooperative since Metropolitan’s formation in
11 1928. To pay for its activities, Metropolitan presently collects ad valorem property taxes from
12 real property within its service area and water rates and charges that Metropolitan’s Board of
13 Directors, comprised solely of member agency representatives, sets for services Metropolitan
14 provides to those member agencies.
15 6. Metropolitan has provided two services to its member agencies for which it has
16 charged established rates: (1) full service water service in which Metropolitan supplies and
17 transports water; and (2) short-term “wheeling” service, in which Metropolitan transports water
18 supplied by others. The rate for full service water includes supply and transportation rate
19 components.
20 7. San Diego in part challenges the pre-set rate for wheeling service applicable to
21 Metropolitan’s wheeling service to its member agencies on wheeling transactions for a duration
22 of one year or less (“pre-set wheeling rate”). The pre-set wheeling rate was set by Metropolitan’s
23 Board over two decades ago and was addressed in Metropolitan Water Dist. of So. Cal. v.
24 Imperial Irrigation Dist., et al. (“Imperial”), 80 Cal. App. 4th 1403, 1407 (2000) and San Diego
25 County Water Authority v. Metropolitan Water Dist. of So. Cal. (“SDCWA”), 12 Cal. App. 5th
26 1124, 1135 (2017).
27 8. In January 1997, Metropolitan’s Board of Directors first voted to adopt the pre-set
28 wheeling rate, effective January 15, 1997. “Wheeling” generally refers to use of a public agency’s
3
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 facilities to convey water that is not owned by the agency, if there is unused capacity, in exchange
2 for fair compensation. Water Code §§ 1810 et seq. (the “Wheeling Statutes”) (applying to use of
3 up to 70 percent of the facility’s unused capacity); SDCWA, 12 Cal. App. 5th at 1135; Imperial,
4 80 Cal. App. 4th at 1407. Metropolitan’s pre-set wheeling rate for short-term wheeling to member
5 agencies avoided the need for negotiations with its own members over the price it would charge
6 for these short-term transactions, other than any applicable offsetting benefits credit that may
7 apply to a particular transaction and certain other matters. Imperial, 80 Cal. App. 4th at 1407,
8 1434.
9 9. In 1997, Metropolitan’s Board of Directors adopted Resolution 8520, following
10 consultation and collaboration with its member agencies. Resolution 8520 supported the new
11 wheeling service for member agencies and the pre-set wheeling rate and it also included findings
12 that ensured compliance with the Wheeling Statutes. See SDCWA, 12 Cal. App. 5th at 1135. The
13 definition of short-term wheeling service for member agencies was added to Metropolitan
14 Administrative Code Section 4119 and the pre-set wheeling rate for that service was added to
15 Section 4405.
16 10. Among other things, Resolution 8520 established the specific short-term service,
17 the basis for the pre-set wheeling rate for that service, and also accounted for “offsetting
18 benefits.” The Wheeling Statutes provide that wheeling service cannot be denied by the owner of
19 a conveyance system if “fair compensation” is offered, and subject to a list of specified
20 conditions. Water Code, § 1810. “Fair compensation” is defined as including the costs incurred
21 by the owner, minus a credit for “offsetting benefits” if the wheeling transaction provides benefits
22 to the owner for use of the conveyance system. Water Code, § 1811, subd. (c). Resolution 8520
23 accounted for “offsetting benefits” of the defined short-term wheeling transactions with its
24 member agencies by providing that Metropolitan shall determine whether any such offsetting
25 benefits exist on “a case-by-case basis in response to a particular wheeling transaction.”
26 Resolution 8520, Section 10; Imperial, 80 Cal. App. 4th at 1420.
27 11. In 2000, the California Court of Appeal held that Metropolitan may have a pre-set
28 wheeling rate, including the methodology of pre-setting a rate and leaving the determination of
4
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 offsetting benefits, if any, on a case-by-case basis based on a particular transaction. The Court of
2 Appeal held that the Wheeling Statutes did not as a matter of law prevent Metropolitan from
3 having a fixed, pre-set rate for a particular type of short-term wheeling transactions with its
4 member agencies, rather than setting a price based on each transaction. Imperial, 80 Cal. App. 4th
5 at 1407-08. The Court noted that under Resolution 8520, “Metropolitan will provide offsetting
6 benefits on a case-by-case basis.” Id. at 1420. The Court explained that Metropolitan’s pre-set
7 wheeling rate “simplifies the factors to be considered in setting the rate for a particular
8 transaction. The Metropolitan Water District need only modify the fixed rate as applied to a
9 proposed wheeling transaction after considering any necessitated power costs, treatment costs,
10 replacement costs, or offsetting benefits.” Id. at 1434 (emphasis added).
11 12. Twenty years after that appellate decision, San Diego now alleges this
12 methodology approved by the Court of Appeal violates the same Wheeling Statutes reviewed by
13 that Court. San Diego alleges Metropolitan failed to credit offsetting benefits when it set its pre-
14 set wheeling rate on April 15, 2014. For the same reasons the pre-set wheeling rate did not violate
15 the Wheeling Statutes in 1997, there is no violation of the Wheeling Statutes in 2014: the
16 supporting Resolution provides for offsetting benefits if applicable in a given transaction.
17 Additionally, no member agency including San Diego presented any request to Metropolitan for
18 wheeling service subject to the pre-set wheeling rate challenged by San Diego in the years in
19 question in this lawsuit. Therefore, Metropolitan could not have refused to apply a credit for
20 offsetting benefits to any transaction subject to the pre-set wheeling rate.
21 13. San Diego also challenges a different aspect of Metropolitan’s pre-set wheeling
22 rate, as well as the transportation rate components of the full service rate. San Diego alleges the
23 Water Stewardship Rate, a component of the pre-set wheeling rate and also a transportation-
24 related component of the full service rate, should be allocated solely to Metropolitan’s supply
25 function and not to any function that is recovered through Metropolitan’s transportation-related
26 rate components. The Water Stewardship Rate recovers costs that Metropolitan uses to fund
27 demand management programs to develop and conserve local water supplies in member agencies’
28 service areas. The demand management programs help increase water supply reliability, reduce
5
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 imported water demands, decrease the burden on Metropolitan’s infrastructure, reduce system
2 costs, and free up conveyance capacity.
3 14. In addition, the demand management programs help Metropolitan meet its unique
4 legislative mandate under Senate Bill 60, codified in Metropolitan Water District Act § 130.5, to
5 “expand water conservation, water recycling, and groundwater recovery efforts,” and “place
6 increased emphasis on sustainable, environmentally sound, and cost-effective water conservation,
7 recycling, and groundwater storage and replenishment measures,” with annual reports on its
8 progress to the Legislature. SB 60 further directed, as codified in Metropolitan Water District Act
9 § 130.7, that Metropolitan participate, in cooperation with its member agencies and others, in
10 considering groundwater recharge and replenishment and other programs utilizing the resource
11 potential of Southern California rivers, including storm water runoff. Metropolitan’s annual
12 progress reports to the Legislature document the amount of water developed and conserved
13 through its demand management programs.
14 15. Overall, Metropolitan’s demand management programs provide benefits to all
15 member agencies regardless of the location of the local resource development project or the
16 conservation measure. In helping to increase water supply reliability, the demand management
17 programs do not create or conserve Metropolitan’s water supply. The water developed and
18 conserved through the demand management programs instead is at the local level, within
19 Metropolitan’s member agencies’ service area. The financial impact of this for Metropolitan, and
20 thus for its member agencies, is the reduction in conveyance system costs that would have
21 otherwise been charged to member agencies under Metropolitan’s transportation-related rate
22 components. By managing demand on Metropolitan, the demand management programs reduce
23 the need to import water from the Colorado River and the Bay Delta into Metropolitan’s service
24 area. As a result, Metropolitan reduces the costs it would have to spend to expand, operate,
25 maintain, replace, and refurbish its entire system if demands on Metropolitan were higher. By
26 reducing the need to import water into the service area, Metropolitan also frees up conveyance
27 capacity within its system, making that capacity available for other transactions.
28 16. In the late 1990s, Metropolitan began a revision of its overall water rates and
6
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 charges, again in consultation and cooperation with San Diego and Metropolitan’s other member
2 agencies. On October 16, 2001, Metropolitan’s Board of Directors, representing each member
3 agency, voted to adopt a revised rate structure to be effective January 1, 2003. Among other
4 things, this rate structure unbundled water rates and charges to reflect the different functions
5 within the services provided by Metropolitan and more transparently allocated costs to those
6 functions. Among the unbundled rates in the new structure were: (1) a “System Access Rate”
7 charged on every acre-foot of water conveyed through Metropolitan’s conveyance system,
8 whether the water is purchased from Metropolitan or is non-Metropolitan water; (2) a “Water
9 Stewardship Rate,” also charged on every acre-foot of water conveyed through Metropolitan’s
10 conveyance system and used to fund conservation and other demand management programs; and
11 (3) a “System Power Rate,” which recovers the costs of moving Metropolitan’s water along its
12 system and also reflects the benefits Metropolitan receives when it produces energy as a result of
13 moving water along its system. The Board assigned two of these new rate components – the
14 System Access Rate and the Water Stewardship Rate – to the pre-set wheeling rate. The Board
15 also included in the pre-set wheeling rate a treatment surcharge (for treated water), actual power
16 costs unless the wheeling party provided its own power, and an administrative fee.
17 17. The conservation and local supply development programs funded by the Water
18 Stewardship Rate provide conveyance services and benefits to all member agencies, and the
19 Water Stewardship Rate applicable to all member agencies is properly treated as a conveyance
20 charge. The conveyance benefits afforded by demand management programs include preserved
21 conveyance capacity and reduced capital and operational expenditures on additional new
22 conveyance capacity. As stated, the programs do not create a supply resource for Metropolitan to
23 serve to its member agencies or to use in any way, but rather develop and conserve water at the
24 local level, and the costs that are reduced are conveyance costs that would otherwise be charged
25 in transportation rates that all member agencies pay. Therefore, the costs are not treated as supply
26 charges.
27 18. By 2001, when Metropolitan adopted its unbundled rate structure and allocated the
28 Water Stewardship Rate as a conveyance charge, it followed the reasoning of experts in the area
7
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 of demand management and the United States Environmental Protection Agency (“EPA”).
2 During that time and in the years since, experts and the EPA all published reports concluding that
3 investments in demand management programs resulted in decreasing water agencies’ need to
4 spend greater amounts of money in additional infrastructure, operations, and maintenance that
5 would have been necessary if demands would not have been reduced.
6 19. Additionally, Metropolitan analyzed the effect investments in demand
7 management would have specifically for Metropolitan. In 1996, Metropolitan performed analyses
8 in connection with its long-term regional planning, which forecast that investments in demand
9 management programs would avoid specific conveyance infrastructure projects that would be
10 needed to meet anticipated increased demands. Metropolitan’s 1996 Integrated Resource Plan
11 (“IRP”) included an analysis of future demand scenarios and their effect on infrastructure
12 requirements over the next 25 years. A comparison of capital infrastructure costs with and
13 without demand management programs showed a difference of around $2 billion through 2020.
14 In other words, the ability to meet demand through demand management programs resulted in
15 what was back in 1996 an anticipated $2 billion savings in capital costs. A sensitivity analysis in
16 1996 further showed that a 5% increase or decrease in demand had a correlative effect on when
17 Metropolitan would need to incur capital infrastructure costs.
18 20. The Metropolitan Board’s decision to recover the Water Stewardship Rate
19 component as a conveyance charge was therefore informed and supported by the extensive
20 independent expert reports, government studies, and Metropolitan’s own analysis of the specific
21 projects it would avoid by investing in demand management instead of expanding conveyance-
22 related infrastructure.
23 21. As stated, revenues from the Water Stewardship Rate element of Metropolitan’s
24 rate structure are used by Metropolitan to support water conservation and local resource
25 development programs. The programs provide incentives for development by member agencies or
26 their customers of new water resources – such as through recycling, seawater desalination, and
27 groundwater recovery projects – and water conservation, at the local level within Metropolitan’s
28 service area, thereby reducing the need for Metropolitan to import water into the area. All
8
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 member agencies benefit from the water developed and conserved through these programs, by
2 reducing the need to invest in the development of and maintain additional and larger, more
3 expensive water delivery infrastructure, as well as free up capacity in Metropolitan’s system.
4 22. Metropolitan implements the local water development programs by entering into
5 long-term contracts with a Metropolitan member agency, or a Metropolitan member agency and
6 that agency’s own member agency (and also sometimes other parties) that provides financial
7 incentives for the Metropolitan member agency or its own member agency to create their own
8 locally produced water supply, based on program criteria. Metropolitan also funds programs to
9 reduce water use through conservation by providing incentives directly to consumers, such as
10 conservation device rebates and turf removal incentives; funding to member agencies to
11 implement their own conservation programs; and education and community outreach.
12 23. These local resource development and water conservation programs are an
13 important component of Metropolitan’s IRP, which is Metropolitan’s long-term planning
14 mechanism to ensure that the decreased demand on Metropolitan enhances its ability to provide
15 its services to the Southern California region for the long-term future. Since 1996, the IRP has
16 been updated three times, in 2004, 2010, and 2015, each reaffirming demand management
17 remains an important part of Metropolitan’s long-term planning.
18 24. Metropolitan’s demand management funding is significant. From 1998 to 2018,
19 Metropolitan spent nearly $1.3 billion on this funding. San Diego and its service area have always
20 been one of the highest recipients of demand management funding from Metropolitan, applying
21 for substantial sums that Metropolitan has provided. From 1998 to 2018, San Diego received
22 nearly $205 million in demand management funding from Metropolitan. In comparison to the
23 other 25 member agencies, San Diego was the third highest recipient of demand management
24 funding overall; the third highest recipient of local resource development funding; and the second
25 highest recipient of conservation funding. San Diego is slated to become the highest recipient of
26 funding based on new local resource project funding commitments Metropolitan has made. For
27 example, in 2019, Metropolitan’s Board approved two local resource project agreements with San
28
9
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 Diego and two of San Diego’s member agencies for Pure Water recycling projects, with
2 committed funding by Metropolitan of up to $328 million.
3 25. Metropolitan conducted a look-back analysis in 2016 and again in 2018 to assess
4 the conveyance system cost savings through demand management that were forecast in 1996 at
5 the beginning of the 25-year IRP capital planning period. As stated, that forecast had estimated
6 that demand management programs could save Metropolitan (meaning its member agencies)
7 approximately $2 billion in deferred and avoided capital infrastructure costs. The 2016 and 2018
8 look-back analyses found the demand management programs had in fact saved Metropolitan (its
9 member agencies) significant sums in deferred and avoided capital infrastructure costs, and even
10 more than had been forecast: approximately $3 billion.
11 26. The 25-year capital planning period of the IRP concluded in 2020. Accordingly, a
12 new phase began in 2021 in regard to the relationship between demand management,
13 Metropolitan’s future capital planning, and Metropolitan’s cost structure. Consequently, in April
14 2018, the Metropolitan Board directed a study of the most appropriate method for the allocation
15 and recovery of demand management costs going forward after 2020.
16 27. As part of this forward-looking demand management study, in a first phase, Peter
17 Mayer, P.E., Principal of Water Demand Management, LLC (“WaterDM”) conducted an analysis
18 to determine the most appropriate method for assigning demand management costs to
19 Metropolitan’s system functions. In August 2019, Mr. Mayer issued a Report on Functional
20 Assignment of Metropolitan’s Demand Management Costs. Mr. Mayer found that Metropolitan’s
21 demand management occurs at the local level and decreases the burden on Metropolitan’s
22 infrastructure, reduces system costs, and frees up conveyance capacity to the benefit of all system
23 users. Mr. Mayer further found that Metropolitan’s approach for recovering demand management
24 costs is widely accepted in the water industry and has been proven effective. In light of the
25 completion of the 25-year capital planning period and changed circumstances going forward, Mr.
26 Mayer recommended a methodology for updating Metropolitan’s functional assignment of
27 demand management program costs after 2020.
28
10
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 28. In a second phase, Richard Giardina, Senior Vice President of Raftelis, conducted
2 an analysis to incorporate the phase one recommendations into the cost-of-service process and
3 develop demand management cost recovery mechanisms, whether through Metropolitan’s
4 existing rate and charge structure or alternative cost recovery mechanisms. Mr. Giardina issued a
5 Demand Management Cost Recovery Alternatives Report in December 2019, in which he
6 concluded that four proposed alternatives, some of which involved the allocation of costs to the
7 conveyance function in Metropolitan’s rates, were each reasonable and consistent with industry
8 guidelines and standards. Mr. Giardina advised that it was a policy decision of the Metropolitan
9 Board to determine which alternative is most appropriate for Metropolitan to adopt.
10 29. In December 2019, the Metropolitan Board considered the proposed alternatives
11 for a future demand management cost recovery mechanism, and decided to continue the study
12 through a rate refinement workgroup of staff representatives of the member agencies.
13 Consequently, the Board voted in April 2020 to suspend use of the Water Stewardship Rate in
14 2021 and 2022 during the workgroup’s efforts, and to fund demand management in these years
15 with reserve funds from the Water Stewardship Fund. The member agency rate refinement
16 workgroup study, which includes San Diego, continues to date, along with Metropolitan’s work
17 on its most recent IRP update.
18 30. By the time it adopts rates in April 2022 for 2023 and 2024, the Metropolitan
19 Board is expected to consider the most appropriate cost recovery mechanism for demand
20 management costs for the future. The Water Stewardship Reserve fund, relied upon for demand
21 management funding commitments in 2021 and 2022, is not sufficient to maintain indefinite
22 funding of demand management costs, particularly with the new commitments for local resource
23 projects Metropolitan has entered into with San Diego.
24 31. In SDCWA, 12 Cal. App. 5th 1124, the Court of Appeal in part considered the
25 sufficiency of the record for the years 2011 to 2014 to support Metropolitan’s inclusion of the
26 Water Stewardship Rate in the pre-set wheeling rate. Based on the record before it, the Court held
27 the pre-set wheeling rate was valid, except to the extent this included the Water Stewardship Rate
28 component. The Court found the record for 2011 to 2014 lacked substantial evidence to support
11
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 including the Water Stewardship Rate in those years. SDCWA, 12 Cal. App. 5th at 1130, 1149,
2 1150-51. The Court of Appeal’s decision did not address Metropolitan’s inclusion of the Water
3 Stewardship Rate in the pre-set wheeling rate in subsequent years, including the years at issue in
4 the present case, based on a different record with additional support for allocating demand
5 management costs to transportation rather than supply.
6 32. San Diego not only seeks invalidation of the Water Stewardship Rate’s inclusion
7 in the pre-set wheeling rate, but also seeks a writ of mandate prospectively commanding
8 Metropolitan on the manner of setting the pre-set wheeling rate and demand management cost
9 recovery in the future.
10 33. However, in August 18, 2020, the Metropolitan Board of Directors repealed the
11 pre-set wheeling rate and Resolution 8520. By that time, no transactions governed by the pre-set
12 wheeling rate had occurred in over 10 years. Since the Board’s action in August 2020, the price
13 for all wheeling by member agencies, regardless of duration, will be set based on each
14 transaction, as is the case for third-party wheeling transactions and wheeling to member agencies
15 for more than one year. And, as stated, the Metropolitan Board has suspended use of the Water
16 Stewardship Rate pending its forward-looking demand management cost recovery study.
17 34. San Diego also alleges in its fifth cause of action that Metropolitan’s rates and
18 charges for the services it provides to its member agencies are subject to the requirements of the
19 constitutional provisions added by the passage of Proposition 26 in 2010. However, those
20 requirements apply to exactments that are “imposed” on ratepayers. For multiple reasons,
21 Metropolitan’s rates and charges are not imposed on San Diego or its other member agency
22 ratepayers. Metropolitan is a voluntary cooperative of its member agencies, and is governed by a
23 Board of Directors comprised only of the representatives of its members. Metropolitan has only
24 26 customers – its 26 member agencies – and those customers through the representative Board
25 set the rates and charges that are applicable to themselves and no others. Consequently, the rates
26 and charges are voluntarily set by the customers, including San Diego, which comprise a
27 voluntary cooperative. Metropolitan’s rates and charges are also not imposed because San Diego
28 is not required to utilize Metropolitan’s system. The Court of Appeal has not yet decided the issue
12
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 of whether Metropolitan’s rates and charges are imposed and, therefore, whether Proposition 26
2 applies to Metropolitan’s rates and charges. SDCWA, 12 Cal. App. 5th at 1152-53 (noting
3 Metropolitan’s position that Proposition 26 is inapplicable because its rates are not imposed;
4 declining to decide that issue by holding “whether or not ‘imposed’” the System Access Rate and
5 System Power Rate comply with constitutional requirements). In any event, Metropolitan’s rates
6 and charges are collected for a service and do not exceed the reasonable costs of providing the
7 service and/or are fees for the use of Metropolitan’s services. The manner in which the rates and
8 charges are allocated to a member agency bears a fair or reasonable relationship to the member
9 agency’s burdens on, or benefits received from, Metropolitan.
10 SPECIFIC AFFIRMATIVE DEFENSES
11 Las Virgenes asserts the following affirmative defenses to the claims for relief made
12 against it in the FAC without admitting it has the burden of proof on any of the issues raised
13 below:
14 First Affirmative Defense
15 (Failure to Name Real Parties in Interest)
16 Las Virgenes incorporates by reference the General Allegations stated above.
17 San Diego fails to name the 25 other Metropolitan member agencies, whose interests are
18 directly at issue in this litigation and in whose absence complete relief cannot be accorded
19 among San Diego and Metropolitan, pursuant to Code of Civil Procedure § 389(a).
20 Second Affirmative Defense
21 (Failure to State Facts Sufficient to Constitute a Cause of Action)
22 Las Virgenes incorporates by reference the General Allegations stated above.
23 San Diego fails to state facts in its FAC sufficient to constitute a cause of action on which
24 relief can be granted. Among other grounds, San Diego fails to state a violation of Proposition 26,
25 i.e., Article XIII C, § 1, subdivision (e) of the California Constitution (adopted by Proposition
26 26), Government Code § 50076, Government Code § 54999.7(a), Government Code § 66013,
27 Water Code §§ 1810 et seq., the Metropolitan Water District Act, or the common law, and/or
28 these laws are not applicable to the facts alleged in the FAC. Moreover, San Diego fails to allege
13
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 it engaged in any transaction with Metropolitan that is subject to the pre-set wheeling rate it
2 challenges in the first through third causes of action, which was previously set by the
3 Metropolitan Board of Directors pursuant to former Metropolitan Administrative Code Sections
4 4119 and 4405.
5 Third Affirmative Defense
6 (Statute of Limitations)
7 Las Virgenes incorporates by reference the General Allegations stated above.
8 San Diego’s claims are barred in whole or in part by the applicable statutes of limitations,
9 including but not limited to, Code of Civil Procedure §§ 337, 338(a) and 343, Government Code
10 §§ 945.4, 945.6, and 945.8.
11 Fourth Affirmative Defense
12 (California Government Claims Act)
13 Las Virgenes incorporates by reference the General Allegations stated above.
14 Those portions of San Diego’s claims for relief that may implicate the California
15 Government Claims Act, are barred in whole or in part because San Diego failed to comply with
16 all provisions of the Government Claims Act, including but not limited to Government Code §§
17 901, 905, 905.2, 910 et seq., 911.2, 911.3, 911.4, 935, 945.4, and 946.6, and the Metropolitan
18 Water District of Southern California Administrative Code §§ 9300-9310, including by failing to
19 timely file a claim, and failed to timely file a court action relieving it from its failure to timely
20 present a claim, as required by Government Code §§ 945.4 and 945.6, and the Metropolitan
21 Administrative Code. Among other reasons, San Diego did not reference “offsetting benefits”
22 anywhere in its written communications to Metropolitan (attached to the FAC). San Diego
23 does not allege it made any such request to Metropolitan, as a claim or otherwise. The
24 monetary relief sought in the FAC is barred by the claim presentation requirements in
25 Government Code §§ 900 et seq.
26 Fifth Affirmative Defense
27 (Laches)
28 Las Virgenes incorporates by reference the General Allegations stated above.
14
LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER
1 San Diego’s claims are barred by the doctrine of laches.
2 Sixth Affirmative Defense
3 (Exercise of Administrative Discretion)
4 Las Virgenes incorporates by reference the General Allegations stated above.
5 Metropolitan has no ministerial duty to structure its rates in the manner alleged by San
6 Diego. Rather, the legal directives under which Metropolitan operates broadly leave the design of
7 water rates to Metropolitan’s sound discretion and the majority vote of Metropolitan’s Board of
8 Directors.
9 The applicable legal standards for Metropolitan’s rates are reasonableness, resulting in
10 revenue which will pay the costs of the district, and uniform for like classes of service.
11 Metropolitan’s principal act, the Metropolitan Water District Act, states that Metropolitan “shall
12 fix the rate or rates at which water shall be sold” (Cal. Water Code § 109-133), and that those
13 rates shall recover sufficient revenue, together with other sources of revenue, to fund all of
14 Metropolitan’s costs and “shall be uniform for like classes of service throughout the district” (id.
15 at § 109-134). The state common law applicable to Metropolitan’s rates calls for rates to be
16 reasonable. The California Supreme Court has stated: “Reasonableness . . . is the beginning and
17 end of the judicial inquiry” and courts will not overturn a water rate if there is a reasonable basis
18 such as the “cost of service or some other reasonable basis.” Hansen v. City of San Buenaventura,
19 42 Cal.3d 1172, 1180-81 (1986).
20 A wheeling rate also must comply with the “Wheeling Statutes,” Water Code §§ 1810 et
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PEOPLE CENTER, INC. D/B/A RIPPLING, A DELAWARE VS. ASURE PAYROLL TAX MANAGEMENT LLC, A DELAWARE LLC ET AL
Jul 11, 2024 |
CGC24615613
Matter on the Law & Motion calendar for Thursday, July 11, 2024, Line 15. PLAINTIFF PEOPLE CENTER, INC. D/B/A RIPPLING's Motion For Preliminary Injunction. Plaintiff People Center, Inc. d/b/a Rippling's motion for a preliminary injunction is denied. (The Court's complete tentative ruling has been emailed to the parties.) For the 1:30 p.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
A & A GENERAL BUILDING CONSTRUCTION INC., A VS. ARLENE S. TASIM ET AL
Jul 12, 2024 |
CGC23609755
Matter on the Law & Motion calendar for Friday, July 12, 2024, Line 12. DEFENDANT ARLENE TASIM AND ALI TASIM'S Motion For Sanctions Against A A General Building Construction Inc. Pursuant To Code Of Civil Procedure Section 1281.99. Defendants and Cross-Complainants' unopposed Motion for Sanctions in the amount of $8350.00 is granted (CCP section 1281.99), payment to be made within 30 days of the filing of this order. Friday's Law & Motion Calendar will be called out of Dept. 301. Anyone intending to appear in person should report to Dept. 301. However, anyone intending to appear remotely should use the regular Zoom information for Dept. 302's Law & Motion Calendar for 9:30 a.m. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RCE)
Ruling
YOLANDA JONES ET AL VS. GENERAL MOTORS, LLC ET AL
Jul 10, 2024 |
CGC23609805
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 10. 2 - DEFENDANT GENERAL MOTORS, LLC's MOTION TO STRIKE 1ST Amended COMPLAINT. Off calendar. The Quezada declaration fails to show that the parties met and conferred "in person, by telephone, or by video conference" in compliance with CCP 435.5. The parties are ordered to comply with the code. The response to the complaint is now due August 7, 2024. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
EDWARD WESTERMAN VS. FTI CONSULTING, INC. ET AL
Jul 09, 2024 |
CGC24615152
Matter on the Law & Motion Calendar for Tuesday, July 9, 2024, Line 12. PLAINTIFF EDWARD WESTERMAN's Motion To Seal. Plaintiff's unopposed motion to seal is granted. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
CLEAR HOMES LLC, A NEW MEXICO LIMITED LIABILITY VS. BRENDAN MICHAEL WEE ET AL
Jul 11, 2024 |
CGC23607972
Real Property/Housing Court Law and Motion Calendar for July 11, 2024 line 2. DEFENDANT BRENDAN WEE, ERIKA HILTON MOTION FOR JUDGMENT ON THE PLEADINGS is Off Calendar - Per request of moving party. =(501/HEK) Parties may appear in-person, telephonically or via Zoom (Video - Webinar ID: 160 560 5023; Password: 172849; or Phone Dial in: (669) 254-5252; Webinar ID: 160 560 5023; Password: 172849). Parties who intend to appear at the hearing must give notice to opposing parties and the court promptly, but no later than 4:00 p.m. the court day before the hearing unless the tentative ruling has specified that a hearing is required. Notice of contesting a tentative ruling shall be provided by sending an email to the court to Department501ContestTR@sftc.org with a copy to all other parties stating, without argument, the portion(s) of the tentative ruling that the party contests. A party may not argue at the hearing if the opposing party is not so notified and the opposing party does not appear.
Ruling
ELIANE DOS SANTOS VITAL, AN INDIVIDUAL ET AL VS. AMERICAN HONDA MOTOR CO., INC., A CALIFORNIA ET AL
Jul 12, 2024 |
CGC22601133
Matter on the Discovery Calendar for Friday, Jul-12-2024, Line 2, PLAINTIFFS ELIANE DOS SANTOS VITAL, AN INDIVIDUAL, and WIDES VITAL DA SILVA'S, AN INDIVIDUAL, Motion To Compel Further Responses To Plaintiffs Request For Production Of Documents, Set Two. Pro Tem Judge William Lynn, a member of the California State Bar who meets all the requirements set forth in CRC 2.812 to serve as a temporary judge, has been assigned to hear this motion. Prior to the hearing all parties to the motion will be asked to sign a stipulation agreeing that the motion may be heard by the Pro Tem Judge. If all parties to the motion sign the stipulation, the hearing will proceed before the Judge Pro Tem who will decide the motion with the same authority as a Superior Court Judge. If a party appears by telephone, the stipulation may be signed via fax or consent to sign given by email. If not all parties to the motion sign the stipulation, the Pro Tem Judge will hold a hearing on the motion and, based on the papers submitted by the parties and the hearing, issue a report in the nature of a recommendation to the Dept. 302 Judge, who will then decide the motion. If a party does not appear at the hearing, the party will be deemed to have stipulated that the motion will be decided by the Pro Tem Judge with the same authority as a Superior Court Judge. The Pro Tem Judge has issued the following tentative ruling: Parties to appear if the motion remains unresolved. For the 9:00 a.m. Discovery calendar, all attorneys and parties are required to appear remotely. Hearings will be conducted by videoconference using Zoom. To appear at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link (DISCOVERY, DEPARTMENT 302 DAILY AT 9:00 A.M.), or dial the corresponding number and use the meeting ID, and password for Discovery Department 302. Any party who contests a tentative ruling must send an email to williamclynn@gmail.com with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. If the tentative ruling is not contested, the parties are deemed to have stipulated to the Pro Tem hearing the motion and the Pro Tem will sign an order confirming the tentative ruling. The prevailing party is required to prepare a proposed order repeating verbatim the substantive portion of the tentative ruling and must e-mail it to the Judge Pro Tem. The court no longer provides a court reporter in the Discovery Department. Parties may retain their own reporter, who may appear remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/JPT)
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Y.P. VS. WELLS FARGO & COMPANY, ET AL
Jul 10, 2024 |
CGC24613065
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 12. DEFENDANT EARL IGNACIO AND WELLS FARGO BANK, N.A.'s Motion To Compel Arbitration. Defendants Wells Fargo Bank, N.A. and Earl Ignacio's motion to compel arbitration and stay is denied. (The Court's complete tentative ruling has been emailed to the parties.) For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
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MARY ELIZABETH LEMASTERS VS. SCHOENBERG FAMILY LAW GROUP P.C. ET AL
Jul 09, 2024 |
CGC22600572
Matter on the Law & Motion Calendar for Tuesday, July 9, 2024, Line 4. PLAINTIFF MARY LEMASTERS' MOTION FOR WITHDRAWAL OF ATTORNEY OF RECORD. Hearing required. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
JOHN P BERNARD VS. BMW OF NORTH AMERICA, LLC ET AL
Jul 10, 2024 |
CGC23608339
Matter on the Law & Motion calendar for Wednesday, July 10, 2024, Line 8. PLAINTIFF JOHN BERNARD's Motion For Award Of Attorneys Fees, Costs, And Expenses. Off calendar for noncompliance with Local Rule 2.7(B) (courtesy copies). The motion may be re-set for a Mon.-Thurs. after July 24, with papers to bear new hearing date. In meantime, counsel shall meet and confer to resolve their differences. For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Preview
1 OLIVAREZ MADRUGA LEMIEUX O’NEILL, LLP Exempt from filing fee pursuant to STEVEN P. O’NEILL (SBN. 143075) Government Code § 6103 2 soneill@omlolaw.com CHELSEA M. SCHARF (SBN. 312215) ELECTRONICALLY 3 cscharf@omlolaw.com F I L E D 2659 Townsgate Rd., Suite 226 Superior Court of California, 4 Westlake Village, CA 91361 County of San Francisco Telephone: (805) 495-4770 03/22/2021 5 Facsimile: (805) 495-2787 Clerk of the Court BY: EDWARD SANTOS Deputy Clerk 6 Attorneys for Real Parties in Interest, EASTERN MUNICIPAL WATER 7 DISTRICT, FOOTHILL MUNICIPAL WATER DISTRICT, LAS VIRGENES 8 MUNICIPAL WATER DISTRICT, WEST 9 BASIN MUNICIPAL WATER DISTRICT, and WESTERN MUNICIPAL WATER DISTRICT 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 FOR THE COUNTY OF SAN FRANCISCO 12 13 SAN DIEGO COUNTY WATER AUTHORITY, Case No.: CPF-14-514004 14 Petitioner and Plaintiff, Assigned for all purposes to the 15 Hon. Anne-Christine Massullo, Dept. 304 vs. 16 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER TO SAN DIEGO 17 THE METROPOLITAN WATER DISTRICT COUNTY WATER AUTHORITY’S OF SOUTHERN CALIFORNIA, ALL FIRST AMENDED PETITION FOR 18 PERSONS INTERESTED IN THE WRIT OF MANDATE AND VALIDITY OF THE RATES ADOPTED BY COMPLAINT 19 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA ON APRIL 8, 20 2014 TO BE EFFECTIVE JANUARY 1, 2015 AND JANUARY 1, 2016; and DOES 1-10, 21 Respondents and Defendants. 22 23 24 Pursuant to Code of Civil Procedure1 § 860, et seq., Real Party In Interest Las Virgenes 25 Municipal Water District (“Las Virgenes”) hereby answers the first, second, third, and fifth 26 causes of action2 in Petitioner and Plaintiff San Diego County Water Authority’s (“San Diego”) 27 1 All Code references are to the California Code unless otherwise noted. 2 28 Las Virgenes does not answer the fourth cause of action for breach of contract against Metropolitan Water District of Southern California and therefore is not a party to the claims made 1 LAS VIRGENES WATER DISTRICT’S ANSWER 1 unverified First Amended Petition for Writ of Mandate and Complaint For Determination of 2 Invalidity, Damages and Declaratory Relief (“FAC”), as follows: 3 GENERAL DENIAL 4 Pursuant to Code of Civil Procedure section 431.30(d), Las Virgenes generally denies 5 each and every allegation in the FAC, and further denies that San Diego is entitled to any of the 6 relief prayed for in the FAC. 7 GENERAL ALLEGATIONS IN SUPPORT OF GENERAL DENIAL AND 8 AFFIRMATIVE DEFENSES 9 Metropolitan, a Collective of Public Member Agencies 10 1. Respondent and Defendant Metropolitan Water District of Southern California 11 (“Metropolitan”) is a public agency and a regional wholesale water provider. It exists and 12 operates as a collective of its member agencies, which themselves are public agencies, and it is 13 governed by a Board of Directors composed of representatives from each member agency. Today, 14 Metropolitan has 26 member agencies, including San Diego. 15 2. Each member agency has proportional representation on the Board of Directors, 16 and is entitled to at least one seat on the Board, plus an additional seat for every full 3% of the 17 total assessed value of the property within the member agency’s service area that is taxable for 18 district purposes. Currently, the Board is made up of 38 directors: 23 of the agencies have no 19 more than two directors, two agencies – San Diego and Municipal Water District of Orange 20 County – each have four, and City of Los Angeles Department of Water and Power has five. Each 21 director is guaranteed one vote, which may be weighted more heavily depending on the property 22 valuation in his or her agency’s service area. San Diego controls approximately 18% of the 23 Board’s vote. 24 3. Las Virgenes, like San Diego, is a Metropolitan member agency. Las Virgenes is a 25 municipal water district under California Water Code §§ 71000 et seq. 26 Metropolitan’s Rates 27 28 with respect to that cause of action, including to the extent they appear in the causes of action answered here. 2 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 4. Las Virgenes, like San Diego, participated in the public Board of Directors’ 2 meetings, hearings, and workshops leading up to the Board’s adoption of the rate components 3 challenged by San Diego. 4 5. In order to provide its wholesale water service to its member agencies, 5 Metropolitan imports water from the Colorado River via the Colorado River Aqueduct and from 6 the State Water Project (“SWP”), which is operated by the California Department of Water 7 Resources (“DWR”). The water is delivered to member agencies through an extensive 8 interconnected regional network of canals, pipelines, and appurtenant facilities, as well as supply, 9 treatment, and storage facilities. The extensive statewide integrated conveyance and distribution 10 system is the result of collective investment by the cooperative since Metropolitan’s formation in 11 1928. To pay for its activities, Metropolitan presently collects ad valorem property taxes from 12 real property within its service area and water rates and charges that Metropolitan’s Board of 13 Directors, comprised solely of member agency representatives, sets for services Metropolitan 14 provides to those member agencies. 15 6. Metropolitan has provided two services to its member agencies for which it has 16 charged established rates: (1) full service water service in which Metropolitan supplies and 17 transports water; and (2) short-term “wheeling” service, in which Metropolitan transports water 18 supplied by others. The rate for full service water includes supply and transportation rate 19 components. 20 7. San Diego in part challenges the pre-set rate for wheeling service applicable to 21 Metropolitan’s wheeling service to its member agencies on wheeling transactions for a duration 22 of one year or less (“pre-set wheeling rate”). The pre-set wheeling rate was set by Metropolitan’s 23 Board over two decades ago and was addressed in Metropolitan Water Dist. of So. Cal. v. 24 Imperial Irrigation Dist., et al. (“Imperial”), 80 Cal. App. 4th 1403, 1407 (2000) and San Diego 25 County Water Authority v. Metropolitan Water Dist. of So. Cal. (“SDCWA”), 12 Cal. App. 5th 26 1124, 1135 (2017). 27 8. In January 1997, Metropolitan’s Board of Directors first voted to adopt the pre-set 28 wheeling rate, effective January 15, 1997. “Wheeling” generally refers to use of a public agency’s 3 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 facilities to convey water that is not owned by the agency, if there is unused capacity, in exchange 2 for fair compensation. Water Code §§ 1810 et seq. (the “Wheeling Statutes”) (applying to use of 3 up to 70 percent of the facility’s unused capacity); SDCWA, 12 Cal. App. 5th at 1135; Imperial, 4 80 Cal. App. 4th at 1407. Metropolitan’s pre-set wheeling rate for short-term wheeling to member 5 agencies avoided the need for negotiations with its own members over the price it would charge 6 for these short-term transactions, other than any applicable offsetting benefits credit that may 7 apply to a particular transaction and certain other matters. Imperial, 80 Cal. App. 4th at 1407, 8 1434. 9 9. In 1997, Metropolitan’s Board of Directors adopted Resolution 8520, following 10 consultation and collaboration with its member agencies. Resolution 8520 supported the new 11 wheeling service for member agencies and the pre-set wheeling rate and it also included findings 12 that ensured compliance with the Wheeling Statutes. See SDCWA, 12 Cal. App. 5th at 1135. The 13 definition of short-term wheeling service for member agencies was added to Metropolitan 14 Administrative Code Section 4119 and the pre-set wheeling rate for that service was added to 15 Section 4405. 16 10. Among other things, Resolution 8520 established the specific short-term service, 17 the basis for the pre-set wheeling rate for that service, and also accounted for “offsetting 18 benefits.” The Wheeling Statutes provide that wheeling service cannot be denied by the owner of 19 a conveyance system if “fair compensation” is offered, and subject to a list of specified 20 conditions. Water Code, § 1810. “Fair compensation” is defined as including the costs incurred 21 by the owner, minus a credit for “offsetting benefits” if the wheeling transaction provides benefits 22 to the owner for use of the conveyance system. Water Code, § 1811, subd. (c). Resolution 8520 23 accounted for “offsetting benefits” of the defined short-term wheeling transactions with its 24 member agencies by providing that Metropolitan shall determine whether any such offsetting 25 benefits exist on “a case-by-case basis in response to a particular wheeling transaction.” 26 Resolution 8520, Section 10; Imperial, 80 Cal. App. 4th at 1420. 27 11. In 2000, the California Court of Appeal held that Metropolitan may have a pre-set 28 wheeling rate, including the methodology of pre-setting a rate and leaving the determination of 4 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 offsetting benefits, if any, on a case-by-case basis based on a particular transaction. The Court of 2 Appeal held that the Wheeling Statutes did not as a matter of law prevent Metropolitan from 3 having a fixed, pre-set rate for a particular type of short-term wheeling transactions with its 4 member agencies, rather than setting a price based on each transaction. Imperial, 80 Cal. App. 4th 5 at 1407-08. The Court noted that under Resolution 8520, “Metropolitan will provide offsetting 6 benefits on a case-by-case basis.” Id. at 1420. The Court explained that Metropolitan’s pre-set 7 wheeling rate “simplifies the factors to be considered in setting the rate for a particular 8 transaction. The Metropolitan Water District need only modify the fixed rate as applied to a 9 proposed wheeling transaction after considering any necessitated power costs, treatment costs, 10 replacement costs, or offsetting benefits.” Id. at 1434 (emphasis added). 11 12. Twenty years after that appellate decision, San Diego now alleges this 12 methodology approved by the Court of Appeal violates the same Wheeling Statutes reviewed by 13 that Court. San Diego alleges Metropolitan failed to credit offsetting benefits when it set its pre- 14 set wheeling rate on April 15, 2014. For the same reasons the pre-set wheeling rate did not violate 15 the Wheeling Statutes in 1997, there is no violation of the Wheeling Statutes in 2014: the 16 supporting Resolution provides for offsetting benefits if applicable in a given transaction. 17 Additionally, no member agency including San Diego presented any request to Metropolitan for 18 wheeling service subject to the pre-set wheeling rate challenged by San Diego in the years in 19 question in this lawsuit. Therefore, Metropolitan could not have refused to apply a credit for 20 offsetting benefits to any transaction subject to the pre-set wheeling rate. 21 13. San Diego also challenges a different aspect of Metropolitan’s pre-set wheeling 22 rate, as well as the transportation rate components of the full service rate. San Diego alleges the 23 Water Stewardship Rate, a component of the pre-set wheeling rate and also a transportation- 24 related component of the full service rate, should be allocated solely to Metropolitan’s supply 25 function and not to any function that is recovered through Metropolitan’s transportation-related 26 rate components. The Water Stewardship Rate recovers costs that Metropolitan uses to fund 27 demand management programs to develop and conserve local water supplies in member agencies’ 28 service areas. The demand management programs help increase water supply reliability, reduce 5 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 imported water demands, decrease the burden on Metropolitan’s infrastructure, reduce system 2 costs, and free up conveyance capacity. 3 14. In addition, the demand management programs help Metropolitan meet its unique 4 legislative mandate under Senate Bill 60, codified in Metropolitan Water District Act § 130.5, to 5 “expand water conservation, water recycling, and groundwater recovery efforts,” and “place 6 increased emphasis on sustainable, environmentally sound, and cost-effective water conservation, 7 recycling, and groundwater storage and replenishment measures,” with annual reports on its 8 progress to the Legislature. SB 60 further directed, as codified in Metropolitan Water District Act 9 § 130.7, that Metropolitan participate, in cooperation with its member agencies and others, in 10 considering groundwater recharge and replenishment and other programs utilizing the resource 11 potential of Southern California rivers, including storm water runoff. Metropolitan’s annual 12 progress reports to the Legislature document the amount of water developed and conserved 13 through its demand management programs. 14 15. Overall, Metropolitan’s demand management programs provide benefits to all 15 member agencies regardless of the location of the local resource development project or the 16 conservation measure. In helping to increase water supply reliability, the demand management 17 programs do not create or conserve Metropolitan’s water supply. The water developed and 18 conserved through the demand management programs instead is at the local level, within 19 Metropolitan’s member agencies’ service area. The financial impact of this for Metropolitan, and 20 thus for its member agencies, is the reduction in conveyance system costs that would have 21 otherwise been charged to member agencies under Metropolitan’s transportation-related rate 22 components. By managing demand on Metropolitan, the demand management programs reduce 23 the need to import water from the Colorado River and the Bay Delta into Metropolitan’s service 24 area. As a result, Metropolitan reduces the costs it would have to spend to expand, operate, 25 maintain, replace, and refurbish its entire system if demands on Metropolitan were higher. By 26 reducing the need to import water into the service area, Metropolitan also frees up conveyance 27 capacity within its system, making that capacity available for other transactions. 28 16. In the late 1990s, Metropolitan began a revision of its overall water rates and 6 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 charges, again in consultation and cooperation with San Diego and Metropolitan’s other member 2 agencies. On October 16, 2001, Metropolitan’s Board of Directors, representing each member 3 agency, voted to adopt a revised rate structure to be effective January 1, 2003. Among other 4 things, this rate structure unbundled water rates and charges to reflect the different functions 5 within the services provided by Metropolitan and more transparently allocated costs to those 6 functions. Among the unbundled rates in the new structure were: (1) a “System Access Rate” 7 charged on every acre-foot of water conveyed through Metropolitan’s conveyance system, 8 whether the water is purchased from Metropolitan or is non-Metropolitan water; (2) a “Water 9 Stewardship Rate,” also charged on every acre-foot of water conveyed through Metropolitan’s 10 conveyance system and used to fund conservation and other demand management programs; and 11 (3) a “System Power Rate,” which recovers the costs of moving Metropolitan’s water along its 12 system and also reflects the benefits Metropolitan receives when it produces energy as a result of 13 moving water along its system. The Board assigned two of these new rate components – the 14 System Access Rate and the Water Stewardship Rate – to the pre-set wheeling rate. The Board 15 also included in the pre-set wheeling rate a treatment surcharge (for treated water), actual power 16 costs unless the wheeling party provided its own power, and an administrative fee. 17 17. The conservation and local supply development programs funded by the Water 18 Stewardship Rate provide conveyance services and benefits to all member agencies, and the 19 Water Stewardship Rate applicable to all member agencies is properly treated as a conveyance 20 charge. The conveyance benefits afforded by demand management programs include preserved 21 conveyance capacity and reduced capital and operational expenditures on additional new 22 conveyance capacity. As stated, the programs do not create a supply resource for Metropolitan to 23 serve to its member agencies or to use in any way, but rather develop and conserve water at the 24 local level, and the costs that are reduced are conveyance costs that would otherwise be charged 25 in transportation rates that all member agencies pay. Therefore, the costs are not treated as supply 26 charges. 27 18. By 2001, when Metropolitan adopted its unbundled rate structure and allocated the 28 Water Stewardship Rate as a conveyance charge, it followed the reasoning of experts in the area 7 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 of demand management and the United States Environmental Protection Agency (“EPA”). 2 During that time and in the years since, experts and the EPA all published reports concluding that 3 investments in demand management programs resulted in decreasing water agencies’ need to 4 spend greater amounts of money in additional infrastructure, operations, and maintenance that 5 would have been necessary if demands would not have been reduced. 6 19. Additionally, Metropolitan analyzed the effect investments in demand 7 management would have specifically for Metropolitan. In 1996, Metropolitan performed analyses 8 in connection with its long-term regional planning, which forecast that investments in demand 9 management programs would avoid specific conveyance infrastructure projects that would be 10 needed to meet anticipated increased demands. Metropolitan’s 1996 Integrated Resource Plan 11 (“IRP”) included an analysis of future demand scenarios and their effect on infrastructure 12 requirements over the next 25 years. A comparison of capital infrastructure costs with and 13 without demand management programs showed a difference of around $2 billion through 2020. 14 In other words, the ability to meet demand through demand management programs resulted in 15 what was back in 1996 an anticipated $2 billion savings in capital costs. A sensitivity analysis in 16 1996 further showed that a 5% increase or decrease in demand had a correlative effect on when 17 Metropolitan would need to incur capital infrastructure costs. 18 20. The Metropolitan Board’s decision to recover the Water Stewardship Rate 19 component as a conveyance charge was therefore informed and supported by the extensive 20 independent expert reports, government studies, and Metropolitan’s own analysis of the specific 21 projects it would avoid by investing in demand management instead of expanding conveyance- 22 related infrastructure. 23 21. As stated, revenues from the Water Stewardship Rate element of Metropolitan’s 24 rate structure are used by Metropolitan to support water conservation and local resource 25 development programs. The programs provide incentives for development by member agencies or 26 their customers of new water resources – such as through recycling, seawater desalination, and 27 groundwater recovery projects – and water conservation, at the local level within Metropolitan’s 28 service area, thereby reducing the need for Metropolitan to import water into the area. All 8 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 member agencies benefit from the water developed and conserved through these programs, by 2 reducing the need to invest in the development of and maintain additional and larger, more 3 expensive water delivery infrastructure, as well as free up capacity in Metropolitan’s system. 4 22. Metropolitan implements the local water development programs by entering into 5 long-term contracts with a Metropolitan member agency, or a Metropolitan member agency and 6 that agency’s own member agency (and also sometimes other parties) that provides financial 7 incentives for the Metropolitan member agency or its own member agency to create their own 8 locally produced water supply, based on program criteria. Metropolitan also funds programs to 9 reduce water use through conservation by providing incentives directly to consumers, such as 10 conservation device rebates and turf removal incentives; funding to member agencies to 11 implement their own conservation programs; and education and community outreach. 12 23. These local resource development and water conservation programs are an 13 important component of Metropolitan’s IRP, which is Metropolitan’s long-term planning 14 mechanism to ensure that the decreased demand on Metropolitan enhances its ability to provide 15 its services to the Southern California region for the long-term future. Since 1996, the IRP has 16 been updated three times, in 2004, 2010, and 2015, each reaffirming demand management 17 remains an important part of Metropolitan’s long-term planning. 18 24. Metropolitan’s demand management funding is significant. From 1998 to 2018, 19 Metropolitan spent nearly $1.3 billion on this funding. San Diego and its service area have always 20 been one of the highest recipients of demand management funding from Metropolitan, applying 21 for substantial sums that Metropolitan has provided. From 1998 to 2018, San Diego received 22 nearly $205 million in demand management funding from Metropolitan. In comparison to the 23 other 25 member agencies, San Diego was the third highest recipient of demand management 24 funding overall; the third highest recipient of local resource development funding; and the second 25 highest recipient of conservation funding. San Diego is slated to become the highest recipient of 26 funding based on new local resource project funding commitments Metropolitan has made. For 27 example, in 2019, Metropolitan’s Board approved two local resource project agreements with San 28 9 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 Diego and two of San Diego’s member agencies for Pure Water recycling projects, with 2 committed funding by Metropolitan of up to $328 million. 3 25. Metropolitan conducted a look-back analysis in 2016 and again in 2018 to assess 4 the conveyance system cost savings through demand management that were forecast in 1996 at 5 the beginning of the 25-year IRP capital planning period. As stated, that forecast had estimated 6 that demand management programs could save Metropolitan (meaning its member agencies) 7 approximately $2 billion in deferred and avoided capital infrastructure costs. The 2016 and 2018 8 look-back analyses found the demand management programs had in fact saved Metropolitan (its 9 member agencies) significant sums in deferred and avoided capital infrastructure costs, and even 10 more than had been forecast: approximately $3 billion. 11 26. The 25-year capital planning period of the IRP concluded in 2020. Accordingly, a 12 new phase began in 2021 in regard to the relationship between demand management, 13 Metropolitan’s future capital planning, and Metropolitan’s cost structure. Consequently, in April 14 2018, the Metropolitan Board directed a study of the most appropriate method for the allocation 15 and recovery of demand management costs going forward after 2020. 16 27. As part of this forward-looking demand management study, in a first phase, Peter 17 Mayer, P.E., Principal of Water Demand Management, LLC (“WaterDM”) conducted an analysis 18 to determine the most appropriate method for assigning demand management costs to 19 Metropolitan’s system functions. In August 2019, Mr. Mayer issued a Report on Functional 20 Assignment of Metropolitan’s Demand Management Costs. Mr. Mayer found that Metropolitan’s 21 demand management occurs at the local level and decreases the burden on Metropolitan’s 22 infrastructure, reduces system costs, and frees up conveyance capacity to the benefit of all system 23 users. Mr. Mayer further found that Metropolitan’s approach for recovering demand management 24 costs is widely accepted in the water industry and has been proven effective. In light of the 25 completion of the 25-year capital planning period and changed circumstances going forward, Mr. 26 Mayer recommended a methodology for updating Metropolitan’s functional assignment of 27 demand management program costs after 2020. 28 10 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 28. In a second phase, Richard Giardina, Senior Vice President of Raftelis, conducted 2 an analysis to incorporate the phase one recommendations into the cost-of-service process and 3 develop demand management cost recovery mechanisms, whether through Metropolitan’s 4 existing rate and charge structure or alternative cost recovery mechanisms. Mr. Giardina issued a 5 Demand Management Cost Recovery Alternatives Report in December 2019, in which he 6 concluded that four proposed alternatives, some of which involved the allocation of costs to the 7 conveyance function in Metropolitan’s rates, were each reasonable and consistent with industry 8 guidelines and standards. Mr. Giardina advised that it was a policy decision of the Metropolitan 9 Board to determine which alternative is most appropriate for Metropolitan to adopt. 10 29. In December 2019, the Metropolitan Board considered the proposed alternatives 11 for a future demand management cost recovery mechanism, and decided to continue the study 12 through a rate refinement workgroup of staff representatives of the member agencies. 13 Consequently, the Board voted in April 2020 to suspend use of the Water Stewardship Rate in 14 2021 and 2022 during the workgroup’s efforts, and to fund demand management in these years 15 with reserve funds from the Water Stewardship Fund. The member agency rate refinement 16 workgroup study, which includes San Diego, continues to date, along with Metropolitan’s work 17 on its most recent IRP update. 18 30. By the time it adopts rates in April 2022 for 2023 and 2024, the Metropolitan 19 Board is expected to consider the most appropriate cost recovery mechanism for demand 20 management costs for the future. The Water Stewardship Reserve fund, relied upon for demand 21 management funding commitments in 2021 and 2022, is not sufficient to maintain indefinite 22 funding of demand management costs, particularly with the new commitments for local resource 23 projects Metropolitan has entered into with San Diego. 24 31. In SDCWA, 12 Cal. App. 5th 1124, the Court of Appeal in part considered the 25 sufficiency of the record for the years 2011 to 2014 to support Metropolitan’s inclusion of the 26 Water Stewardship Rate in the pre-set wheeling rate. Based on the record before it, the Court held 27 the pre-set wheeling rate was valid, except to the extent this included the Water Stewardship Rate 28 component. The Court found the record for 2011 to 2014 lacked substantial evidence to support 11 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 including the Water Stewardship Rate in those years. SDCWA, 12 Cal. App. 5th at 1130, 1149, 2 1150-51. The Court of Appeal’s decision did not address Metropolitan’s inclusion of the Water 3 Stewardship Rate in the pre-set wheeling rate in subsequent years, including the years at issue in 4 the present case, based on a different record with additional support for allocating demand 5 management costs to transportation rather than supply. 6 32. San Diego not only seeks invalidation of the Water Stewardship Rate’s inclusion 7 in the pre-set wheeling rate, but also seeks a writ of mandate prospectively commanding 8 Metropolitan on the manner of setting the pre-set wheeling rate and demand management cost 9 recovery in the future. 10 33. However, in August 18, 2020, the Metropolitan Board of Directors repealed the 11 pre-set wheeling rate and Resolution 8520. By that time, no transactions governed by the pre-set 12 wheeling rate had occurred in over 10 years. Since the Board’s action in August 2020, the price 13 for all wheeling by member agencies, regardless of duration, will be set based on each 14 transaction, as is the case for third-party wheeling transactions and wheeling to member agencies 15 for more than one year. And, as stated, the Metropolitan Board has suspended use of the Water 16 Stewardship Rate pending its forward-looking demand management cost recovery study. 17 34. San Diego also alleges in its fifth cause of action that Metropolitan’s rates and 18 charges for the services it provides to its member agencies are subject to the requirements of the 19 constitutional provisions added by the passage of Proposition 26 in 2010. However, those 20 requirements apply to exactments that are “imposed” on ratepayers. For multiple reasons, 21 Metropolitan’s rates and charges are not imposed on San Diego or its other member agency 22 ratepayers. Metropolitan is a voluntary cooperative of its member agencies, and is governed by a 23 Board of Directors comprised only of the representatives of its members. Metropolitan has only 24 26 customers – its 26 member agencies – and those customers through the representative Board 25 set the rates and charges that are applicable to themselves and no others. Consequently, the rates 26 and charges are voluntarily set by the customers, including San Diego, which comprise a 27 voluntary cooperative. Metropolitan’s rates and charges are also not imposed because San Diego 28 is not required to utilize Metropolitan’s system. The Court of Appeal has not yet decided the issue 12 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 of whether Metropolitan’s rates and charges are imposed and, therefore, whether Proposition 26 2 applies to Metropolitan’s rates and charges. SDCWA, 12 Cal. App. 5th at 1152-53 (noting 3 Metropolitan’s position that Proposition 26 is inapplicable because its rates are not imposed; 4 declining to decide that issue by holding “whether or not ‘imposed’” the System Access Rate and 5 System Power Rate comply with constitutional requirements). In any event, Metropolitan’s rates 6 and charges are collected for a service and do not exceed the reasonable costs of providing the 7 service and/or are fees for the use of Metropolitan’s services. The manner in which the rates and 8 charges are allocated to a member agency bears a fair or reasonable relationship to the member 9 agency’s burdens on, or benefits received from, Metropolitan. 10 SPECIFIC AFFIRMATIVE DEFENSES 11 Las Virgenes asserts the following affirmative defenses to the claims for relief made 12 against it in the FAC without admitting it has the burden of proof on any of the issues raised 13 below: 14 First Affirmative Defense 15 (Failure to Name Real Parties in Interest) 16 Las Virgenes incorporates by reference the General Allegations stated above. 17 San Diego fails to name the 25 other Metropolitan member agencies, whose interests are 18 directly at issue in this litigation and in whose absence complete relief cannot be accorded 19 among San Diego and Metropolitan, pursuant to Code of Civil Procedure § 389(a). 20 Second Affirmative Defense 21 (Failure to State Facts Sufficient to Constitute a Cause of Action) 22 Las Virgenes incorporates by reference the General Allegations stated above. 23 San Diego fails to state facts in its FAC sufficient to constitute a cause of action on which 24 relief can be granted. Among other grounds, San Diego fails to state a violation of Proposition 26, 25 i.e., Article XIII C, § 1, subdivision (e) of the California Constitution (adopted by Proposition 26 26), Government Code § 50076, Government Code § 54999.7(a), Government Code § 66013, 27 Water Code §§ 1810 et seq., the Metropolitan Water District Act, or the common law, and/or 28 these laws are not applicable to the facts alleged in the FAC. Moreover, San Diego fails to allege 13 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 it engaged in any transaction with Metropolitan that is subject to the pre-set wheeling rate it 2 challenges in the first through third causes of action, which was previously set by the 3 Metropolitan Board of Directors pursuant to former Metropolitan Administrative Code Sections 4 4119 and 4405. 5 Third Affirmative Defense 6 (Statute of Limitations) 7 Las Virgenes incorporates by reference the General Allegations stated above. 8 San Diego’s claims are barred in whole or in part by the applicable statutes of limitations, 9 including but not limited to, Code of Civil Procedure §§ 337, 338(a) and 343, Government Code 10 §§ 945.4, 945.6, and 945.8. 11 Fourth Affirmative Defense 12 (California Government Claims Act) 13 Las Virgenes incorporates by reference the General Allegations stated above. 14 Those portions of San Diego’s claims for relief that may implicate the California 15 Government Claims Act, are barred in whole or in part because San Diego failed to comply with 16 all provisions of the Government Claims Act, including but not limited to Government Code §§ 17 901, 905, 905.2, 910 et seq., 911.2, 911.3, 911.4, 935, 945.4, and 946.6, and the Metropolitan 18 Water District of Southern California Administrative Code §§ 9300-9310, including by failing to 19 timely file a claim, and failed to timely file a court action relieving it from its failure to timely 20 present a claim, as required by Government Code §§ 945.4 and 945.6, and the Metropolitan 21 Administrative Code. Among other reasons, San Diego did not reference “offsetting benefits” 22 anywhere in its written communications to Metropolitan (attached to the FAC). San Diego 23 does not allege it made any such request to Metropolitan, as a claim or otherwise. The 24 monetary relief sought in the FAC is barred by the claim presentation requirements in 25 Government Code §§ 900 et seq. 26 Fifth Affirmative Defense 27 (Laches) 28 Las Virgenes incorporates by reference the General Allegations stated above. 14 LAS VIRGENES MUNICIPAL WATER DISTRICT’S ANSWER 1 San Diego’s claims are barred by the doctrine of laches. 2 Sixth Affirmative Defense 3 (Exercise of Administrative Discretion) 4 Las Virgenes incorporates by reference the General Allegations stated above. 5 Metropolitan has no ministerial duty to structure its rates in the manner alleged by San 6 Diego. Rather, the legal directives under which Metropolitan operates broadly leave the design of 7 water rates to Metropolitan’s sound discretion and the majority vote of Metropolitan’s Board of 8 Directors. 9 The applicable legal standards for Metropolitan’s rates are reasonableness, resulting in 10 revenue which will pay the costs of the district, and uniform for like classes of service. 11 Metropolitan’s principal act, the Metropolitan Water District Act, states that Metropolitan “shall 12 fix the rate or rates at which water shall be sold” (Cal. Water Code § 109-133), and that those 13 rates shall recover sufficient revenue, together with other sources of revenue, to fund all of 14 Metropolitan’s costs and “shall be uniform for like classes of service throughout the district” (id. 15 at § 109-134). The state common law applicable to Metropolitan’s rates calls for rates to be 16 reasonable. The California Supreme Court has stated: “Reasonableness . . . is the beginning and 17 end of the judicial inquiry” and courts will not overturn a water rate if there is a reasonable basis 18 such as the “cost of service or some other reasonable basis.” Hansen v. City of San Buenaventura, 19 42 Cal.3d 1172, 1180-81 (1986). 20 A wheeling rate also must comply with the “Wheeling Statutes,” Water Code §§ 1810 et