Valley Water Management v. Superior Court CA5 ( 2023 )

Filed 3/28/23 Valley Water Management v. Superior Court CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
VALLEY WATER MANAGEMENT
COMPANY, F083744
Plaintiff and Respondent, (Super. Ct. No. BCV-19-101630)
v.
OPINION
THE SUPERIOR COURT OF KERN COUNTY,
Respondent;
CALIFORNIA REGIONAL WATER QUALITY
CONTROL BOARD, CENTRAL VALLEY,
Real Party in Interest and Appellant.
APPEAL from a judgment of the Superior Court of Kern County. David R.
Lampe, Judge.
Rob Bonta, Attorney General, Robert W. Byrne, Assistant Attorney General, Eric
M. Katz and Jennifer Kalnins Temple, Deputy Attorneys General, for Real Party in
Interest and Appellant Regional Water Quality Control Board.
Downey Brand and Melissa A. Thorme for Plaintiff and Respondent Valley Water
Management Company.
-ooOoo-
2.
Valley Water Management Company brought this action against the California
Regional Water Quality Control Board for the Central Valley Region, challenging
beneficial use designations for groundwater in the Tulare Lake Basin. Judgment was
entered in favor of Valley Water Management Company. Thereafter, the trial court
awarded attorneys’ fees to Valley Water Management Company under Code of Civil
Procedure section 1021.5. The Regional Water Quality Control Board for the Central
Valley Region appealed the trial court’s ruling awarding the attorneys’ fees. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
This matter was initiated in the Kern County Superior Court by Valley Water
Management Company (Valley Water) against California Regional Water Quality
Control Board, Central Valley Region (Regional Board or Central Valley Regional
Board). More specifically, on June 12, 2019, Valley Water filed a petition for writ of
mandate and complaint for declaratory and injunctive relief against the Regional Board,
challenging two Regional Board actions by way of traditional mandamus under Code of
Civil Procedure section 1085.1
A. The Regional Board’s Tulare Lake Basin Plan Designated Beneficial Uses for
Groundwater in the Tulare Lake Basin
Under the 1969 Porter-Cologne Water Quality Control Act (Porter-Cologne Act,
Wat. Code, § 13000 et seq.), the state agency charged with formulating and adopting state
policy for water quality control within the state is the State Water Resources Control
Board (State Board). (Wat. Code, §§ 13140, 13160.) Nine regional water quality boards
operate under the purview of the State Board, and the State Board and regional boards are
collectively responsible for protecting water quality in the state. (California Assn. of
Sanitation Agencies v. State Water Resources Control Bd. (2012) 208 Cal.App.4th 1438,
1 Subsequent statutory references are to the Code of Civil Procedure unless
otherwise specified.
3.
1444 (CASA).) The State Board establishes statewide policy and plans for water quality
control (Wat. Code, §§ 13140, 13170, 13170.2), and the regional boards formulate and
adopt water quality control plans (basin plans) for areas within given regions (Wat. Code,
§ 13240). As relevant here, the Central Valley Regional Board is responsible for
protecting and regulating the quality of surface waters and groundwater in the Central
Valley through various basin plans, including the Tulare Lake Basin Water Quality
Control Plan (Tulare Lake Basin Plan or Basin Plan), which is at issue in this matter.
Basin plans have several elements, including: (1) designating beneficial uses (e.g.,
agricultural, municipal, and recreational uses) for the waterbody at issue; (2) setting water
quality objectives or standards to further the designated beneficial uses; and (3) a
program of implementation. (Wat. Code, § 13050, subd. (j); City of Arcadia v. State
Water Resources Control Bd. (2010) 191 Cal.App.4th 156, 177.) The Tulare Lake Basin
Plan was first adopted in 1975 and has been updated and revised 23 times thereafter.
This case concerns the Tulare Lake Basin Plan’s designation of beneficial uses for
groundwaters in the Tulare Lake Basin.
The 1975 Tulare Lake Basin Plan adopted by the Regional Board designated
“Present and Potential Beneficial Uses” for the Basin’s surface waters and groundwaters.
As relevant here, the Tulare Lake Basin Plan blanket-designated groundwaters in the
Basin as suitable for, inter alia, municipal (MUN) and agricultural (AGR) uses, with the
caveat that “specific beneficial uses of the groundwater [would] be determined at [a later]
time.”
In 1988, the State Board adopted Resolution No. 88-63, a “ ‘Sources of Drinking
Water Policy,’ ” in light of a newly enacted law, Proposition 65, the Safe Drinking Water
and Toxic Enforcement Act of 1986, which included protections for existing and
potential municipal drinking water sources. (Health & Saf. Code, § 25249.5 et seq.) The
State Board’s Resolution No. 88-63 provided that “[a]ll surface and ground waters of the
4.
State are considered to be suitable, or potentially suitable, for municipal or domestic
water supply and should be so designated by the Regional Boards,” subject to certain
exceptions.2 (Fn. omitted.)
The Central Valley Regional Board incorporated the State Board’s Sources of
Drinking Water Policy into the Tulare Lake Basin Plan on May 26, 1989. The Regional
Board designated all surface and ground waters within the Basin as potentially suitable
for municipal supply, except for waters that, inter alia, had an excessive mineral content,
were otherwise contaminated beyond the point of reasonable remediation, or represented
an insufficient yield for the purpose of constituting a domestic water supply. Since then,
the Tulare Lake Basin Plan has blanket-designated all groundwaters in the Basin for, inter
alia, existing or potential municipal and agricultural use, with certain specifically
identified exceptions. As for municipal use, the Basin Plan states: “Due to the ‘Sources
of Drinking Water Policy,’ all ground waters are designated MUN (the use may be
existing or potential) unless specifically exempted by the Regional Water Board and
approved for exemption by the State Water Board.” As for agricultural use, the Basin
Plan states: “In addition, unless otherwise designated by the Regional Water Board, all
ground waters in the Region are considered suitable or potentially suitable, at a
minimum, for agricultural supply (AGR).” As mentioned above, the Basin Plan lists
specific groundwater areas that are exempted from the blanket MUN and AGR
designations.
2 The State Board’s Resolution 88-63 was subsequently determined by the
California Office of Administrative Law to be “ ‘a regulation’ ” that was “required to be
adopted in compliance with the Administrative Procedure Act,” but suffered from certain
procedural defects.
5.
B. Valley Water Faced a Proposition 65 Lawsuit from Environmental Groups as
well as a Cease-and-Desist Order from the Central Valley Regional Board
Valley Water, a membership organization with oil company members, had
operated, for several decades, two interconnected oilfield-produced wastewater disposal
ponds collectively referred to as the McKittrick Facility. 3 The Regional Board’s brief
explains: “The McKittrick Facility served oil producers [that] generated wastewater as a
byproduct of their oil extraction operations. Oil wells bring up oil, but the oil is usually
mixed with unwanted water. After the useable oil is separated from the water, the
produced water, which contains numerous oil related contaminants, requires disposal.
Valley Water facilitated such disposal by way of its disposal ponds.” Valley Water’s
McKittrick Facility operated under a permit initially issued by the Regional Board in the
1950s. Under the permit, Valley Water could discharge wastewater into its on-site
disposal ponds but was prohibited from creating pollution and/or a nuisance.
California’s Proposition 65 prohibits discharges of chemicals known to cause
cancer, to sources of drinking water, and authorizes private citizens to bring civil lawsuits
to enforce its terms after giving 60 days’ notice of intent to file suit. (Health & Saf.
Code, §§ 25249.5, 25249.7, subd. (d).) Proposition 65 applies when cancer-causing
chemicals are discharged into “any source of drinking water.”4 (Health & Saf. Code,
§ 25249.5.) Under Proposition 65, a “source of drinking water” is defined as a present
source of drinking water or water that is identified in a water quality control plan as being
suitable for domestic or municipal uses. (Health & Saf. Code, § 25249.11, subd. (d);
Cal. Code Regs., tit. 27, § 25102, subd. (w) [“water” includes both surface and ground
3 “Produced water” is a term of art in the oil industry; it refers to water produced as
a byproduct of oil and gas production.
4 Health and Safety Code section 25249.5 provides: “No person in the course of
doing business shall knowingly discharge or release a chemical known to the state to
cause cancer or reproductive toxicity into water or onto or into land where such chemical
passes or probably will pass into any source of drinking water.”
6.
waters].) A court may award up to $2,500 per day of violation of Proposition 65’s
prohibitions. (Health & Saf. Code, § 25249.7, subd. (b)(1).) On April 15, 2019, two
environmental groups gave notice to Valley Water of an intent to file a citizen suit under
Proposition 65 seeking potentially millions of dollars in civil penalties for unlawful
discharge of pollutants into a source of drinking water.
The environmental groups then filed a Proposition 65 complaint on June 24, 2019,
in the Kern County Superior Court (Clean Water Fund et al. v. Valley Water
Management Co. (Super. Ct. Kern County, BCV-19-101750)), regarding Valley Water’s
oilfield wastewater discharges to its McKittrick Facility that was subject to the Tulare
Lake Basin Plan.5 The complaint alleged that Valley Water “has been operating since
approximately 1955 and has operated in its current configuration with wastewater storage
and treatment ponds, and conveyances, such as pipelines or impoundments, since
approximately 1980.” It further alleged that Valley Water “discharges and/or disposes as
much as 4.4 million gallons of wastewater into these pits in a single day, and that on
average, [Valley Water] discharges and/or disposes 2.5 million gallons per day.” In
addition, the complaint alleged that the Regional Board staff, “after investigation,
identified discharges from the unlined pits at [Valley Water’s] Facility, which have
migrated through the soil and caused documented groundwater pollution that has spread
past the alluvium and into deeper aquifers. The plume from [Valley Water’s] Facility has
migrated laterally for miles.” Next, the complaint alleged that Valley Water had
discharged Proposition 65-listed chemicals into groundwater designated for drinking, and
5 The Regional Board has filed a request asking us to take judicial notice of the
complaint in the related Proposition 65 case, pursuant to Evidence Code section 452,
subdivision (d). Evidence Code section 452, subdivision (d) permits a court to take
judicial notice of the records of any state court. The Regional Board’s request is hereby
granted. (See Jefferson Street Ventures, LLC v. City of Indio (2015) 236 Cal.App.4th
1175, 1191-1192 [court took judicial notice of relevant court documents filed in related
matter]; In re Sodersten (2007) 146 Cal.App.4th 1163, 1171, fn. 1.)
7.
sought “penalties of $2,500 per day for each violation.” The complaint also sought a
permanent injunction requiring Valley Water to cease discharging pollutants in violation
of Proposition 65.
Around the same time, on June 7, 2019, the Regional Board issued a cease-and-
desist order to Valley Water. The cease-and-desist order noted: “The Discharger has
generated an oil field produced wastewater plume that … greatly exceeds the quality with
respect to [certain minerals and other substances, etc.] required to support the Basin Plan
designated beneficial uses of MUN and AGR.” The cease-and-desist order required
Valley Water to further investigate the extent of the groundwater plume emanating from
its facility as identified by the Regional Board. The cease-and-desist order also required
Valley Water to cease discharging pollutants to groundwater by September 1, 2020,
unless it made operational changes allowing it to obtain a new permit that would be in
compliance with the Tulare Lake Basin Plan.
On June 12, 2019, Valley Water initiated the instant lawsuit. Valley Water filed a
Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive
Relief in the Kern County Superior Court, seeking to void the Regional Board’s
beneficial use designations for groundwater throughout the Tulare Lake Basin as waters
potentially suitable for agricultural use and drinking water. More specifically, Valley
Water challenged the Regional Board’s 1975 action, when it initially adopted the Tulare
Lake Basin Plan, to designate groundwater in the Tulare Lake Basin as suitable for
agricultural use. Valley Water also challenged the Regional Board’s 1989 action to
amend the Tulare Lake Basin Plan to incorporate the State Board’s “ ‘Sources of
Drinking Water Policy’ ” (State Board Resolution No. 88-63), whereby groundwater in
the Tulare Lake Basin was designated as suitable for use as municipal drinking water,
with specific exceptions. By way of these actions, the Regional Board had “blanket
8.
designated” large areas of the Tulare Lake Basin as suitable for both agricultural and
municipal use.
On June 28, 2019, Valley Water filed a Petition for Review of the Regional
Board’s cease-and-desist order with the State Board, in which Valley Water sought, in
part, the same relief as it did in the instant writ action. As relevant here, Valley Water
contended the cease-and-desist order protected a “non-existent MUN use,” as the
groundwaters under its facility “should not have been designated [for municipal use] in
the first place.” (Unnecessary capitalization omitted.) Valley Water further contended
that “the initial MUN use designation under and around the Facility where the
groundwater was and is not capable of being used for municipal supply[,] was arbitrary,
capricious, unsupported by substantial evidence, and, therefore, unlawful.” The petition
for review requested, inter alia, the following relief: “Valley Water requests that the
State Water Board urge the Central Valley Water Board to act with all due haste to
correct improperly designated uses of ground water near and below Valley Water’s
facilities.” The petition for review also contained a request that the State Board place the
petition for review in abeyance for two years “to allow Valley Water to work with the
Regional Board on the issues raised herein.” In the meantime, Valley Water pursued the
instant lawsuit against the Regional Board.
C. The Instant Lawsuit and the Trial Court’s Ruling and Judgment
As noted, on June 12, 2019, Valley Water filed the instant lawsuit against the
Regional Board. More specifically, Valley Water filed a combined verified petition for
writ of mandate pursuant to Code of Civil Procedure section 1085 and complaint for
declaratory and injunctive relief. The prayer for relief sought a judicial declaration that
the Tulare Lake Basin Plan’s beneficial use designations were invalid and/or a writ of
mandate directing the Regional Board to invalidate them. In addition, Valley Water
sought injunctive relief enjoining the Regional Board from enforcing the designations of
9.
beneficial uses for groundwater in the Basin, specifically: “An order enjoining
Defendant Central Valley Regional Board from utilizing and enforcing the improperly
and unlawfully designated MUN, AGR, and other non-existent uses complained of herein
for groundwater regulated under the Tulare Lake Basin Plan.”
On July 8, 2019, Valley Water filed a notice of related case seeking to relate the
instant lawsuit to the Proposition 65 case previously filed against it by the environmental
groups. On August 9, 2019, the trial court related the cases assigning them both to the
Honorable David J. Lampe.
On September 9, 2019, Valley Water filed its operative first amended verified
petition for writ of mandate and complaint for declaratory relief (petition/complaint)
Valley Water’s petition/complaint clarified that Valley Water filed the instant action on
account of the enforcement action filed by the environmental groups under Proposition
65 as well as the separate action by the Regional Board. Thus, the petition/complaint
asserted, as part of its general factual allegations, that invalidation of the beneficial use
designations as to groundwater in the Tulare Lake Basin Plan was necessary because
absent such relief, “Valley Water … will be subject to unnecessary enforcement actions
by the Central Valley Regional Board and under Proposition 65.” The petition/complaint
further alleged that in such scenarios, Valley Water “may be required to expend millions
of dollars to install additional storage, evaporation, and/or treatment facilities (e.g.,
micro-filtration/reverse osmosis) that are specific and unique to removing salinity
compounds,” all of which would “be unnecessary if water quality objectives based on
inapplicable beneficial uses (e.g., MUN, AGR, etc.) did not apply.”
The petition/complaint specifically noted: “[T]wo non-profit corporations recently
filed a Notice of Violation letter against Valley Water on April 15, 2019, prompting [the
instant] litigation filed on June 12, 2019.” (Italics added.) The petition/complaint further
noted that the non-profit organizations thereafter “sued Valley Water on June 25th, 2019,
10.
under Proposition 65 … seeking civil penalties and injunctive relief.” The
petition/complaint added: “Thus, Valley Water has already been harmed and is currently
facing unnecessary enforcement actions under Proposition 65 due to the Central Valley
Regional Board’s inaccurate MUN designation.”
On November 6, 2020, the trial court heard the merits of the petition/complaint.
On May 14, 2021, after directing Valley Water to prepare a statement of decision and
hearing various related objections, the trial court entered judgment in favor of Valley
Water, and issued an accompanying statement of decision and peremptory writ of
mandate.
The statement of decision summarized the court’s ruling at the top:
“The Court renders judgment for the Petitioner Valley Water
Management Company (“Petitioner” or “Valley Water”) and against
Respondent California Regional Water Quality Control Board for the
Central Valley Region (“Respondent” or “Regional Board”) upon the First
Amended Verified Petition for Writ of Mandate (“Petition”) and issues a
writ of mandamus limited to requiring the Respondent to initiate and pursue
a Basin Plan Amendment process for portions of the Tulare Lake Basin to
determine the scope and extent of actual and potential beneficial uses of
groundwater near the Petitioner’s McKittrick 1 and 1-3 facilities
(“McKittrick Facilities”), including the propriety and reasonableness of the
current designation of municipal drinking water supply (“MUN”) and/or
agricultural (“AGR”) use as to all or any portion of that groundwater.
“Otherwise, the Court denies the Petition without prejudice to
Petitioner’s right to seek further proceedings. Also, the Court declines to
consider at this time the Petitioner’s collateral cause of action for
declaratory relief or the collateral remedy of injunction pursuant to the
doctrine of judicial abstention, without prejudice to further proceedings
upon further order of the Court. (See Acosta v. Brown (2013) 213
Cal.App.4th 234.) The Court shall retain continuing equitable jurisdiction
for this matter pending a return demonstrating that an amendment process
has been initiated and finalized after judgment as necessary.
“Petitioner is to have judgment for costs incurred. The propriety of
an award of attorney’s fees can be determined by separate motion and
ruling.” (Italics added.)
11.
The court discussed its reasoning and ruling in more depth in subsequent sections
of its statement of decision. For example, the court clarified that blanket designations of
beneficial uses for groundwaters in basin plans is not per se improper, but such blanket
designations need further refinement under certain circumstances. Specifically, the court
noted:
“Valley Water argues that these ‘blanket’ designations lack
evidentiary support and are improper because they encompass much
groundwater that has never been suited and never will be suited for such
designations. This issue must be considered in context. While it is literally
true that the assignations of beneficial uses here were not based upon
individualized factual analyses, it was not unreasonable or entirely lacking
in evidentiary support for the Regional Board, as a policy matter, to create a
working assumption that the beneficial uses existed or were attainable
where it is impractical to list every groundwater formation in the region.
This is a sensible approach and ensures that water quality is protected. It is
a ‘useful tool’ for managing the state water quality program, provided that
there is an established reasonable regulatory process to make adjustments
for actual uses.
“This Court recognizes that an MUN and AGR beneficial use may
not be appropriate for some of the groundwater covered by the initial
blanket designations, including groundwaters affected by Valley Water’s
discharges. But if the Regional Board or this Court were to invalidate the
blanket designated MUN or AGR uses, much of the groundwater in the
region might lack any beneficial use designation. Thus, the ‘blanket’
language represents a reasonable means of protecting the beneficial uses of
the groundwaters of the region unless or until the Regional Board has or
gains knowledge that such uses do not or likely will not in the future exist
in ‘individual’ groundwater formations, then the use designations must be
expeditiously modified. (See CASA, 208 Cal.App.4th at 1460-1461 [the
Basin Plan ‘impose[s] upon the Regional Board an affirmative obligation to
determine the factual accuracy of a use previously designated by blanket
application …, where such analysis is necessary for rational regulatory
action’].) [¶] … [¶]
“The Regional Board has an affirmative continuing obligation to
determine the factual accuracy of a use previously designated by blanket
application, where such analysis is necessary for rational regulatory action.
Here, the Regional Board acknowledges that the groundwater near Valley
12.
Water’s discharges at its facilities is not likely suitable for MUN
designation[6 ] … The blanket designation was a reasonable approach to a
complex problem; it was also, admittedly, based upon unavailable specific
use data, and in some cases, a known falsehood. ([Citation] [record
evidence showing that the Regional Board had data indicating that
groundwater in many areas was too saline to support drinking water or
irrigation uses]….) In addition to [evidence reflected in] the permits the
Regional Board issued to Valley Water in the 1950s and 1960s, the record
contains several examples of locations where the Regional Board was
aware that groundwater was too high in salinity or boron to be able to be
used for drinking water or irrigation. [Citation.] Therefore, the Basin Plan
explicitly and implicitly charges the Regional Board with the responsibility
to correct erroneous designations when circumstances require it, for
example, when the Regional Board is considering pursuing monitoring
requirements or alleged violations for discharges. (CASA, 208 Cal.App.4th
at 1461.) Where the Regional Board has evidence that a use may not exist
nor likely cannot be feasibly attained, the Regional Board must
expeditiously initiate efforts to consider correcting or removing the use
designation. (Ibid.) If the Regional Board unreasonably fails or refuses to
do so, mandamus will lie. (Ibid.)
“Here the Regional Board has and previously had evidence … that
the underlying groundwater near Valley Water’s McKittrick Facilities are
unsuitable for MUN or AGR designation.… In order to preserve the
reasonableness of its initial overall blanket designations for the entire basin,
the Regional Board must initiate a Basin Plan amendment process, where
warranted. (CASA, 208 Cal.App.4th at 1461 [‘[W]here a Regional Board
has evidence that a use neither exists nor likely can be feasibly attained, the
Regional Board must expeditiously initiate appropriate basin plan
amendments to consider dedesignating the use.’].)
As for the writ granted by the trial court, it directed as follows: “In accordance
with the Court’s Statement of Decision on Petition for Writ of Mandate, dated May 14,
6 The court was referring here to, inter alia, a Regional Board Staff Report attached
to the Board’s cease-and-desist order, which report stated on page 22: “The ground water
directly under the Facility appears to be primarily produced water from the Facility ponds
and possibly other Valley Water facilities. This groundwater may be suitable for
dedesignation. However, this water is migrating to the northeast into areas where
groundwater [is] not suitable for dedesignation, because it is of higher quality and is
being beneficially used.” (Italics added.)
13.
2021, Respondent Regional Water Board shall initiate a basin planning amendment
procedure to review the scope and extent of actual and potential beneficial uses of
groundwater near and underlying the Valley Water Management Company’s McKittrick
1 and 1-3 facilities.” (Italics added.) The writ further specified: “The Court will not
dictate the precise nature or result of this review, but does require that the Regional Board
consider all relevant factors, develop a factual record to allow for judicial review of its
decision, and explain how its discretion was exercised.”
Finally, the trial court judgment noted that Valley Water’s petition for writ of
mandate was “granted in part,” while its causes of action for declaratory and injunctive
relief were “denied without prejudice.”
D. Valley Water’s Settlement of the Proposition 65 Case
As noted above, Valley Water’s petition/complaint alleged the Proposition 65 case
that sought penalties of $2,500 per day for Proposition 65 violations, was the impetus for
Valley Water’s instant action against the Regional Board. Valley Water similarly
characterized the Proposition 65 case in its present motion for attorney fees: “Valley
Water had hoped [the instant] case would have been a tool to avoid further litigation in a
related case alleging that Valley Water violated Proposition 65.” Valley Water sought, in
the instant action, to void the beneficial uses designated for groundwaters throughout the
Tulare Lake Basin.
Valley Water ultimately settled the Proposition 65 case by means of a stipulated
consent judgment. The plaintiff environmental organizations in the Proposition 65 case
filed a memorandum of points and authorities in support of the stipulated consent
judgment. The memorandum of points and authorities candidly stated: “[W]hile this
Court’s tentative ruling in the related case may weigh against a full penalty assessment in
this case, Plaintiffs allege and can prove violations beyond just discharges to MUN
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designated waters, for which the penalty amount is a reasonable settlement compromise.”
(Emphasis in original.)
Under the stipulated consent judgment, Valley Water settled the Proposition 65
case for a total of $645,000, consisting of $139,000 in civil penalties pursuant to Health
and Safety Code section 25249.7, subdivision (b); $481,000 as reimbursement for the
plaintiffs’ reasonable attorneys’ fees, experts’ fees, and costs; and $25,000 as an
additional settlement payment, to be paid to the Clean Water Fund. Pursuant to the
stipulated consent judgment, Valley Water closed down the McKittrick Facilities in 2021.
E. Valley Water’s Motion for Attorneys’ Fees
After entry of judgment in the instant matter, Valley Water filed, on July 20, 2021,
a motion seeking attorneys’ fees under section 1021.5. Valley Water sought a lodestar
amount of $239,479.65 and a multiplier of 1.5, for a total fee award in the amount of
$359,219.48. The Regional Board opposed the motion on grounds that Valley Water had
not satisfied the statutory criteria for an award of attorneys’ fees set forth in section
1021.5. The Regional Board further argued that any award of attorneys’ fees should be
subject to a negative multiplier given the limited nature of the relief obtained by Valley
Water in this matter.
The court issued a final ruling on Valley Water’s motion for attorneys’ fees on
October 6, 2021. The court’s barebones ruling, in its entirety, states:
“The Court grants in part Petitioner/Plaintiff Valley Water
Management Company’s Motion for Attorneys’ Fees, finding Valley Water
Management’s action has resulted in the enforcement of an important right
affecting the public interest, a significant benefit has been conferred on the
general public or a large class of persons, private enforcement was
necessary and the financial burden of private enforcement was such as to
make the award appropriate. (Code Civ. Proc.[,] § 1021.5.) In light of
Valley Water Management’s failure to obtain relief as to the entire Tulare
Lake Basin, as well as the Court’s determination that this action did not
involve novel or complex issues, the Court declines to award a multiplier as
requested. The Court awards the lodestar amount of $239,479.65.
15.
The Regional Board appeals the trial court’s award of attorneys’ fees to Valley Water.
DISCUSSION
I. Standard of Review
Section 1021.5 provides in relevant part: “Upon motion, a court may award
attorneys’ fees to a successful party against one or more opposing parties in any action
which has resulted in the enforcement of an important right affecting the public interest
if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on
the general public or a large class of persons, (b) the necessity and financial burden of
private enforcement, or of enforcement by one public entity against another public entity,
are such as to make the award appropriate, and (c) such fees should not in the interest of
justice be paid out of the recovery, if any.”
“Section 1021.5 provides for court-awarded attorney fees under a private attorney
general theory.” (Baggett v. Gates (1982) 32 Cal.3d 128, 142; see Serrano v. Priest
(1977) 20 Cal.3d 25.) “[T]he private attorney general doctrine ‘rests upon the
recognition that privately initiated lawsuits are often essential to the effectuation of the
fundamental public policies embodied in constitutional or statutory provisions ....
[Without] some mechanism authorizing the award of attorney fees, private actions to
enforce such important public policies will as a practical matter frequently be
infeasible.’ ” (Baggett v. Gates, supra, 32 Cal.3d at p. 142.) The private attorney general
doctrine as codified in section 1021.5 “is an exception to the usual rule that each party
bears its own attorney fees.” (Vosburg v. County of Fresno (2020) 54 Cal.App.5th 439,
449 (Vosburg).) “The section acts as an incentive for the pursuit of public interest-related
litigation that might otherwise have been too costly to bring.” (Coalition for a
Sustainable Future in Yucaipa v. City of Yucaipa (2015) 238 Cal.App.4th 513, 520-521
(Yucaipa); Ryan v. California Interscholastic Federation (2001) 94 Cal.App.4th 1033,
1045 [“where the financial burden is disproportionate, section 1021.5 serves to
16.
underwrite successful litigation that effectuates strong public policy and obtains benefits
for a broad class of citizens”].)
Rulings under section 1021.5 are reviewed for abuse of discretion.7 (Lyons v.
Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1344.) “The questions are whether
the court applied the proper legal standards under section 1021.5 and, if so, whether the
result was within the range of the court’s discretion [citation], i.e., whether there was a
reasonable basis for the decision [citation].” (Ibid.; see Yucaipa, supra, 238 Cal.App.4th
at p. 519 [“Although [the abuse of discretion] standard is deferential, a court abuses its
discretion where no reasonable basis for the action is shown.”]; Baggett v. Gates, 32
Cal.3d at p. 143 [“ ‘discretion may not be exercised whimsically and, accordingly,
reversal is appropriate “where no reasonable basis for the action is shown.” ’ ”]; Ryan v.
California Interscholastic Federation (2001) 94 Cal.App.4th 1033, 1044 [an attorney
fees award under section 1021.5 will “be reversed where ‘ “it is clearly wrong or has no
reasonable basis” ’ ”]. )
II. Legal Framework
Under section 1021.5, the private attorney general statute, “[a] superior court may
award attorney fees to (1) a successful party in any action (2) that has resulted in the
enforcement of an important right affecting the public interest if (3) a significant benefit
7 See, however, McGuigan v. City of San Diego (2010) 183 Cal.App.4th 610, 623
[“Where the material facts are undisputed, and the question is how to apply statutory
language to a given factual and procedural context, the reviewing court applies a de novo
standard of review to the legal determinations made by the trial court.”]. But see Carian
v. Department of Fish and Wildlife (2015) 235 Cal.App.4th 806, 816 [“Even assuming
the underlying facts are undisputed, it remains the trial court’s duty to consider those
facts and the circumstances of the case and exercise its discretion in d etermining whether
the requirements were satisfied for an award of attorney fees under section 1021.5, and
we can reverse the court’s determination only if there is no reasonable basis for it.”].
17.
has been conferred on the general public or a large class of persons,[8 ] (4) private
enforcement is necessary because no public entity or official pursued enforcement or
litigation, (5) the financial burden of private enforcement is such as to make a fee award
appropriate, and (6) in the interests of justice the fees should not be paid out of the
recovery.” (Robinson v. City of Chowchilla (2011) 202 Cal.App.4th 382, 390
(Robinson), fn. omitted.)
“As section 1021.5 states the criteria in the conjunctive, each of the statutory
criteria must be met to justify a fee award.” (County of Colusa v. California Wildlife
Conservation Bd. (2006) 145 Cal.App.4th 637, 648; McGuigan v. City of San Diego,
supra, 183 Cal.App.4th at p. 623 [“ ‘Because the statute states the criteria in the
conjunctive, each must be satisfied to justify a fee award.’ ”].)
“The burden of proving the existence of the first five statutory elements listed in
Robinson is placed on the party requesting attorney fees under section 1021.5.”
(Vosburg, supra, 54 Cal.App.5th at p. 450; Ryan v. California Interscholastic Federation,
supra, 94 Cal.App.4th at p. 1045 [same].)
III. The Trial Court Abused its Discretion in Awarding Attorney Fees Under
Section 1021.5
As noted above, here the trial court listed the factors the court must consider in
determining whether an award of attorney fees is appropriate under the private attorney
general statute, section 1021.5, but the court awarded Valley Water $239,479.65 in
8 “Because the public always has a significant interest in seeing that laws are
enforced, it always derives some benefit when illegal private or public conduct is
rectified. Nevertheless, the Legislature did not intend to authorize an award of fees under
section 1021.5 in every lawsuit enforcing a constitutional or statutory right. [Citations.]
The statute specifically provides for an award only when the lawsuit has conferred ‘a
significant benefit’ on ‘the general public or a large class of persons.’ The trial court
must determine the significance of the benefit and the size of the class receiving that
benefit by realistically assessing the gains that have resulted in a particular case.”
(Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 635.)
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attorney fees without any discussion or analysis with respect to the application of those
factors to the factual and procedural context of this case.
The Regional Board does not contest Valley Water’s showings as to the first
statutory element (fees may be awarded to successful party) and sixth statutory element
(fees may not be paid out of any monetary recovery). Rather, the Regional Board
contends that Valley Water “failed to carry its burden to satisfy the remaining four
elements.” We will focus on the fifth statutory element, that is, whether the financial
burden of private enforcement is such as to make a fee award appropriate.
A. The “Financial Burden” Element of Section 1021.5
The Regional Board persuasively contends the trial court abused its discretion in
awarding Valley Water fees under section 1021.5, because it failed to meet its burden of
showing that the costs of the instant lawsuit disproportionately transcended its personal
financial interest in the matter. (See Ryan v. California Interscholastic Federation,
supra, 94 Cal.App.4th at pp. 1043-1044, 1047 [holding that the “trial court abused its
discretion in awarding Ryan attorney fees under section 1021.5, because he failed meet
his burden of showing that … [the costs of his lawsuit] disproportionately transcended his
personal [financial] interest in the matter”].)
The financial burden requirement examines “ ‘ “whether the financial burden of
private enforcement warrants subsidizing the successful party’s attorneys.” ’ ”
(Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214 (Whitley).) “In determining
the financial burden on litigants, courts have quite logically focused not only on the costs
of the litigation but also any offsetting financial benefits that the litigation yields or
reasonably could have been expected to yield.” (Id. at p. 1215.) “ ‘ “An award on the
‘private attorney general’ theory is appropriate when the cost of the claimant’s legal
victory transcends his personal interest, that is, when the necessity for pursuing the
lawsuit placed a burden on the plaintiff ‘out of proportion to his individual stake in the
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matter.’ ” ’ ” (Ibid.) “ ‘This requirement focuses on the financial burdens and incentives
involved in bringing the lawsuit.’ ” (Ibid.; see Press v. Lucky Stores, Inc. (1983) 34
Cal.3d 311, 321, fn. 11 [“[Section 1021.5, subd. (b)] focuses not on plaintiffs’ abstract
personal stake, but on the financial incentives and burdens related to bringing suit.”
(italics added)]; Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 152 (Collins)
[“The appropriate inquiry is whether the financial burden of the plaintiff’s legal victory
outweighs the plaintiff’s personal financial interest.”].)
Significantly, “in assessing the financial burdens and benefits in the context of
section 1021.5, we are evaluating incentives rather than outcomes.” (Whitley, supra, 50
Cal.4th at p. 1220.) “ ‘ “[W]e do not look at the plaintiff’s actual recovery after trial, but
instead we consider ‘the estimated value of the case at the time the vital litigation
decisions were being made.’ ” [Citation.] The reason for the focus on the plaintiff’s
expected recovery at the time litigation decisions are being made, is that Code of Civil
Procedure section 1021.5 is intended to provide an incentive for private plaintiffs to bring
public interest suits when their personal stake in the outcome is insufficient to warrant
incurring the costs of litigation.’ ” (Id. at pp. 1220-1221.)
Whitley set out a “method for weighing costs and benefits” of bringing the lawsuit
at issue. (Whitley, supra, 50 Cal.4th at p. 1215.) “ ‘The trial court must first fix—or at
least estimate—the monetary value of the benefits obtained by the successful litigants
themselves …. Once the court is able to put some kind of number on the gains actually
attained it must discount these total benefits by some estimate of the probability of
success at the time the vital litigation decisions were made which eventually produced the
successful outcome…. Thus, if success would yield … the litigant group … an aggregate
of $10,000 but there is only a one-third chance of ultimate victory[,] they won’t
proceed—as a rational matter—unless their litigation costs are substantially less than
$3000.” (Ibid., italics added; City of Oakland v. Oakland Police & Fire Retirement
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System (2018) 29 Cal.App.5th 688, 700 & fn. 2 [“Whitley … requires consideration of the
monetary value of the benefits that the successful litigant reasonably expected to
obtain”]; see Collins, supra, 205 Cal.App.4th 140, 154-155 & fn. 10 [“The successful
litigant’s reasonably expected financial benefits are determined by discounting the
monetary value of the benefits that the successful litigant reasonably expected at the time
the vital litigation decisions were made by the probability of success at the time.”].)
“ ‘After approximating the estimated value of the case at the time the vital
litigation decisions were being made, the court must then turn to the costs of the
litigation—the legal fees, deposition costs, expert witness fees, etc., which may have
been required to bring the case to fruition. … [¶ ] The final step is to place the estimated
value of the case beside the actual cost and make the value judgment whether it is
desirable to offer the bounty of a court-awarded fee in order to encourage litigation of the
sort involved in this case…. [A] bounty will be appropriate except where the expected
value of the litigant’s own monetary award exceeds by a substantial margin the actual
litigation costs.’ ” (Whitley, supra, 50 Cal.4th at pp. 1215-1216; Espejo v. The Copley
Press, Inc. (2017) 13 Cal.App.5th 329, 379 [“trial court … was required to consider the
estimated value of the case at the time the vital litigation decisions were being made,
rather than plaintiffs’ actual recovery, and compare that amount to actual litigation
costs”]; Norberg v. California Coastal Com. (2013) 221 Cal.App.4th 535, 545 [under
§ 1021.5, a court must “compare the estimated value of the case at the time the vital
litigation decisions were being made, to the costs of the litigation”]; Collins, supra, 205
Cal.App.4th at p. 154 [“An attorney fee award under section 1021.5 is proper unless the
plaintiff’s reasonably expected financial benefits exceed by a substantial margin the
plaintiff’s actual litigation costs.”].)
Sufficient financial incentives may exist that preclude an award under section
1021.5 even where the plaintiff seeks no monetary award in the litigation. (Summit
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Media, LLC v. City of Los Angeles (2015) 240 Cal.App.4th 171, 192-194 (Summit Media)
[rejecting the “dubious proposition that the absence of a monetary award necessarily
equates to ‘zero’ financial benefits”; “[n]ot all cases involve a monetary award” and
“Whitley [did not] say that a plaintiff’s financial incentive must ‘direct’ ”]; see DiPirro v.
Bondo Corp. (2007) 153 Cal.App.4th 150, 199 (DiPirro) [§ 1021.5 attorney fee award
not appropriate where manufacturer’s in litigation was to avoid the cost of placing
warnings on its product].)
B. Analysis: Valley Water Did Not Meet its Burden Under Whitley
Valley Water has been operating wastewater disposal facilities for oil companies
since the 1950s or 1960s. The Tulare Lake Basin Plan was first adopted in or about
1975, when groundwater in the Tulare Lake Basin was blanket-designated as suitable for
agricultural use. In 1989, groundwater in the Tulare Lake Basin was blanket-designated
as suitable for use for the municipal drinking water supply. For decades, Valley Water
did not undertake any steps to challenge the beneficial use designations for groundwater
in the Tulare Lake Basin or around its facilities.
On April 15, 2019, Valley Water received notice that environmental groups
intended to file a citizen suit under Proposition 65 seeking potentially millions of dollars
in civil penalties for unlawful discharge of pollutants into a source of drinking water.
The environmental groups then filed a Proposition 65 complaint on June 24, 2019,
targeting Valley Water’s oilfield wastewater discharges to its McKittrick Facility that
was subject to the Tulare Lake Basin Water Quality Control Plan. The Proposition 65
complaint sought hefty civil penalties ($2,500 per day per violation of Proposition 65)
and a permanent injunction requiring Valley Water to cease discharging pollutants in
violation of Proposition 65 to groundwater designated as suitable for drinking under a
basin plan.
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Around the same time, on June 7, 2019, the Regional Board issued a cease-and-
desist order to Valley Water. The cease-and-desist order required Valley Water to cease
discharging pollutants to groundwater by September 1, 2020, unless it made operational
changes allowing it to obtain a new permit that would be in compliance with the Tulare
Lake Basin Plan.
In light of these developments, Valley Water initiated the instant lawsuit on June
12, 2019, seeking to void the municipal and agricultural beneficial uses of groundwater
throughout the Tulare Lake Basin, which uses were blanket designated in the Basin Plan.
To the extent a plume of contaminated groundwater from the McKittrick Facility had
migrated down gradient thereof, a voiding of the beneficial use designations throughout
the Tulare Lake Basin would have greatly benefitted Valley Water. Valley Water
explicitly acknowledged it filed the instant lawsuit on account of the Proposition 65
enforcement action it was facing at the time. Valley Water’s petition/complaint noted:
“[T]wo non-profit corporations recently filed a Notice of Violation letter against Valley
Water on April 15, 2019, prompting [the instant] litigation filed on June 12, 2019.”
(Italics added.) Valley Water moved to relate the two cases, and subsequently
acknowledged in its motion for attorney fees that it viewed the instant case as a “tool to
avoid further litigation in [the] related case alleging that Valley Water violated
Proposition 65.”
The Proposition 65 case and the Regional Board’s cease-and-desist order posed
massive financial risks for Valley Water. Valley Water faced the expensive prospect of
upgrading its equipment and facilities and its ability to continue to run its McKittrick
Facility was threatened. In addition, the Proposition 65 case raised a very real possibility
of millions of dollars of civil penalties being levied against Valley Water. The instant
action sought dedesignation of groundwater in the Tulare Lake Basin, which groundwater
had been blanket designated for municipal and agricultural use decades earlier.
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Dedesignation of this groundwater, including the groundwater under and around the
McKittrick Facility, would have provided a complete defense to the Proposition 65
lawsuit and potentially stymied the cease-and-desist order as well. In short, Valley
Water’s financial interest in bringing the instant lawsuit was enormous. Moreover, in
light of CASA, supra, 208 Cal.App.4th 1438, which the trial court applied in resolving the
merits of this matter, Valley Water had every reason to expect it would achieve some
success in this lawsuit.
On the other hand, the expected costs of litigation—somewhere in the vicinity of
$239,479.65, the attorney fees amount awarded in this matter—were much smaller in
magnitude as compared to the potential financial fallout from the Proposition 65 case and
cease-and-desist order. Indeed, upon issuance of the trial court’s tentative ruling in this
matter, Valley Water was able to negotiate reduced penalties and settle the Proposition 65
case (the environmental groups acknowledged they had to “compromise” on the penalties
in light of the trial court’s tentative ruling).
This record manifestly establishes that Valley Water had a personal financial stake
in this litigation that was more than sufficient to warrant its decision to incur significant
attorney fees and costs in the vigorous prosecution of the lawsuit. (Summit Media, supra,
240 Cal.App.4th at pp. 193-194 [if the plaintiff had a “personal financial stake” in the
litigation “sufficient to warrant [the] decision to incur significant attorney fees and costs
in the vigorous prosecution” of the lawsuit, an award under section 1021.5 is
inappropriate].) There was no reasonable basis for the trial court to find otherwise.
In sum, Valley Water did not meet its burden to show the financial burden of
bringing the instant lawsuit was disproportionate to its own pecuniary stake in the
litigation. It bears mention that Valley Water’s brief does not address at all the Whitley
formula for evaluating the “financial burden” element of section 1021.5; nor did the trial
court’s ruling granting attorneys’ fees do so. We conclude the trial court abused its
24.
discretion in awarding Valley Water $239,479.65 in attorneys’ fees.9 (See Millview
County Water Dist. v. State Water Resources Bd. (2016) 4 Cal.App.5th 759, 767-769, 773
(with respect to the issue of financial burden, “the trial court abuses its discretion in
making an award under section 1021.5 when there is no substantial evidence to support
the required findings”].)
DISPOSITION
The trial court’s ruling granting Valley Water’s motion for attorneys’ fees is
reversed. The Regional Board is awarded its costs on appeal.
SMITH, J.
WE CONCUR:
FRANSON, Acting P. J.
PEÑA, J.
9 Given our determination, it is unnecessary for us to consider whether any of the
other statutory elements were satisfied; Valley Water would not be entitled to an award
even if the other requirements of section 1021.5 were met.
25.