LOS ANGELES — More than a year into a battle between the San Diego County Water Authority and the Los Angeles-based Metropolitan Water District of Southern California over rate increases, the central issues appear to be far from resolved.
Both sides have contended in motions that the other has failed to provide sufficient discovery despite the fact that, according to court documents, both have produced a truckload of documents.
The water authority sued MWD in 2010 and again in 2012 contending that MWD imposed unlawful rates that are not based on the costs of providing the services for which they are collected.
SDCWA receives the majority of its water from the Los Angeles-based water provider.
A Superior Court judge in San Francisco wrote in a ruling on May 13 that SDCWA does not appear to be seeking documents on MWD’s rates that do not currently exist. If the MWD, does, however have documents responding to a list of questions related to rates it should produce them, the judge wrote.
SDCWA officials interpreted the judge’s ruling as a victory on discovery issues, but an MWD attorney sees the matter as far from resolved.
Daniel Purcell, an attorney with San Francisco law firm Keker & Van Nest and special counsel for SDCWA argues that documents sought by MWD from the water authority are unrelated to the issues at hand, according to court documents.
Superior Court Judge Curtis E. A. Karnow denied the majority of a motion to compel filed by MWD saying that most of MWD’s discovery requests were too broad and not related to the pending litigation.
The first challenge to the water district’s rate increases was filed by SDCWA in June 2010, after MWD set its 2011 and 2012 rates. The water authority filed a second complaint in June 2012, after MWD set rates for 2013 and 2014 based on the same methodology.
Under MWD’s current rate scheme, SDCWA contends that water ratepayers in San Diego County will be overcharged for water transportation services this year by $57 million. By 2021, the overcharges could grow to more than $217 million annually.
“The court saw MWD’s tactic for exactly what it was – a fishing expedition that would serve no purpose but to distract the court from the real issues in the case, namely, MWD’s illegal water rates and charges,” Purcell said.
On April 23, Judge Karnow ordered MWD to produce information no later than May 10 that shows how it allocates its costs to rates, or admit it does not have any such documentation. On May 10, MWD confirmed in court documents that it does not perform any allocation of its costs to its individual rates.
SDCWA further argued that numerous state statutes, the California Constitution and common law require that public water agencies – including MWD – base rates on the actual cost of providing services. The judge, however, ruled against the water authority on that issue on March 29 granting MWD’s motion to strike SCDWA’s assertion that Proposition 26 adopted by the California voters in November 2010 is retroactively applicable to rates adopted by Metropolitan in April 2010.
Based on court documents, the two parties appear far from reaching an agreement on discovery issues that need to be resolved before they can resolve the central issue as to whether SDCWA is being overcharged for transportation costs on the water MWD provides.
Karnow has said he intends to try both cases in November.
SDCWA officials contend that MWD has attempted to block SDCWA from obtaining any documents that are directly related to its rates and cost-of-service standards.
Marcia Scully, general counsel for the MWD said in an email however, “it is not an accurate statement that no documents have been provided or that MWD has attempted to block SDCWA from obtaining “any documents.”
“The nature of this litigation, a reverse validation, action is one that is generally decided on an “administrative record,” Scully wrote. “Metropolitan filed an administrative record in the 2010 litigation of 602 documents totaling 11,574 pages.”
In the 2012 litigation, the administrative record includes all of the documents in the 2010 record with an additional 359 documents totaling 5,948 pages for a grand total of 17,522 pages.
In addition to the administrative record, the court has allowed discovery in this litigation.
“While Metropolitan has not agreed with the breadth of discovery requested by SDCWA, as indicated in the attached May 17, 2013 status report on discovery, Metropolitan has produced more than 490,000 pages of documents in response to discovery requests.”
In recent court filings, MWD has stated that it is exempt from the requirements of California statutes and the California Constitution requiring public agencies to tie the rates they charge to the actual cost of the services they provide.
SDCWA agreed to respond to 28 of MWD’s 78 discovery requests, which were consistent with prior court orders – but it objected to what it described as the large number of MWD’s requests that were overbroad and not relevant to any of the issues pending before the court.
For example, MWD had requested more than four years of records related to the Water Authority’s own rate-setting process, which is not being challenged in this or any other case. MWD also sought all documents related to the Water Authority’s Carlsbad Desalination Project.
SDCWA issued $781 million worth of bonds through the state’s California Pollution Control Financing Authority on Dec. 20 in conjunction with Poseidon Resources, a Stamford, Conn.-based company. The public-private desalination project is expected to produce 50 million gallons of water per day over a 30-year period and lessen the amount of water it receives from MWD.
“Neither the [SDCWA’s] rates nor the desalination plant have anything to do with how MWD sets its rates, and the court’s ruling reflects that,” Purcell said in a statement.