News Release

Appellate Court to Review Key Pre-Trial Decision in Water Authority Rate Case vs. Metropolitan Water District

MWD seeks to prevent discovery in case from revealing “bad facts” and “bad acts”
March 16, 2012

Late Thursday afternoon, the First District Court of Appeal issued a preliminary order asking for further briefing on a request by the Metropolitan Water District of Southern California to prevent discovery in litigation filed by the San Diego County Water Authority challenging its 2011 and 2012 water rates.  The court did not grant MWD’s request, or writ petition.  It only asked the other parties in the case to set forth their positions on that request. 

MWD is seeking to overturn a Jan. 6, 2012 decision by San Francisco Superior Court Judge Richard A. Kramer granting discovery under a specific California statute, Water Code section 1813.  The action by the appellate court temporarily stays discovery under section 1813.

The Water Authority’s lawsuit alleges that MWD violated numerous aspects of California law by setting water rates that are arbitrary, far higher than the costs to MWD of providing its services, and expressly intended to discriminate against and disadvantage San Diego and its ratepayers.  In addition to claims under section 1813, the Water Authority has brought claims under the California constitution, other California statutes, California common law and MWD’s own contract with the Water Authority.  Both Judge Kramer’s original ruling and the Court of Appeal’s request for further briefing relate only to discovery under section 1813, and not any other aspect of the Water Authority’s other claims, including the Water Authority’s right to discovery under those other claims.

“There will be discovery in this case, regardless of the outcome of MWD’s writ petition,” said Daniel Purcell, an attorney representing the Water Authority.  “Although MWD has consistently told Judge Kramer that it wants to resolve this case quickly, it has used every procedural maneuver in the book to create delays and prevent the Court from taking a hard look at its misconduct.  This is just more of the same.  MWD is not going be able to delay forever.

“MWD knows it has bad facts and bad acts behind its rate-making decisions, and it is working very hard to shield those bad facts and bad acts from public exposure,” Purcell said. “We already know, from thousands of pages we have received from MWD and most of its member agencies under the California Public Records Act, that MWD management and the managers of its member agencies have worked together in secret, outside of the public eye, to devise and defend a corrupt rate structure that unlawfully discriminates against San Diego County ratepayers and enriches the other member agencies.

"MWD is trying to prevent scrutiny of its conduct, because that conduct is so indefensible.  But ultimately, both the public and the Court are entitled to know the facts.  We remain confident that, when all the facts are out, the Court will find that MWD has failed to follow California law.”

The Water Authority will file an opposition brief by the Court's March 26 deadline.  A reply brief from MWD is due April 5.

"All this order means is that the Court would like to hear from all parties, including the Water Authority, before making a careful and correct decision," Purcell said.

In June 2010, the Water Authority filed a lawsuit challenging MWD’s 2011 and 2012 wholesale water rates.  The Water Authority alleges that MWD improperly overcharges for the transportation of water and uses that money to subsidize the cost of MWD water.  This violates California’s Constitution, other state law and standard water utility practice.  Because the Water Authority pays MWD to transport the Water Authority’s independent water transfer supplies it obtains from the Imperial Valley, MWD’s rate structure overcharges San Diego County ratepayers.  In 2012 alone, the overcharges are estimated at $40 million.  By 2021, if left unchallenged, the overcharges could grow to more than $217 million annually.

To learn more about the lawsuit, visit: www.sdcwa.org/mwdrate-challenge.

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