Appeals Court Ruling a Victory for MWD

In a court decision that could have far-reaching effects on matters of water, power and money, the Metropolitan Water District of Southern California won a major victory Tuesday in the battle for control of the agency’s maze-like delivery system.

The same issue is being debated in the Legislature as opponents of the mammoth water agency try to wrest away some of its historic control over the region’s water supply.

The decision by the state 2nd Court of Appeal reversed a 1998 decision against the MWD by San Francisco Superior Court Judge Laurence Kay.

In political terms, the appeals court decision could strengthen the MWD’s hand in warding off legislative efforts to strip the agency of the power to set the price for allowing outsiders to use its system, including the 242-mile Colorado Aqueduct.

The MWD’s many opponents--including key politicians, smaller water agencies, and several private companies seeking to enter the water business--fear that the agency will protect its dominance by charging an exorbitant rate that will discourage establishment of a water market of willing buyers and sellers.

“The Kay decision was critical in opening up the water market in California,” said a disappointed Mark Watton, member of the San Diego County Water Authority. “Now it’s up to the Legislature.”

MWD officials contend that they are protecting ratepayers in Southern California by requiring outsiders seeking to use the MWD system to pay a share of the giant system’s upkeep. If outsiders are allowed a lower rate, the district’s ratepayers will, in effect, be subsidizing those transfers, officials said.

“What they want is to be able to get a cheaper ride on the system than anybody else--so that they can make a greater profit or pay more to farmers for their water,” said Ronald Gastelum, MWD general manager.

Kay had sided against the MWD and in favor of the San Diego County Water Authority, the Imperial Irrigation District, Cadiz Inc., two Native American tribes along the Colorado River and a coalition of environmental groups.

Santa Monica-based Cadiz, which wants to extract and sell water from beneath the land it owns in the Mojave Desert, is owned by Keith Brackpool, one of Gov. Gray Davis’s top advisors on water matters.

San Diego, Cadiz and the others argued that the MWD should be allowed to charge only the actual cost of shipping water and not to add infrastructure costs.

Kay found that nothing in a 1986 bill calling for water markets in California allowed for adding such costs. The appeals court, in effect, overruled Kay by saying that nothing in the 1986 law disallowed adding such costs.

While both sides are now looking to the Legislature, the issue may well end up with the U.S. Supreme Court, where California water issues are often settled.

“Our preference is to solve this in the Legislature but we’re not precluding the idea of going to the Supreme Court,” Watton said.

Gastelum said that the decision will show legislators and others that the MWD’s interpretation of the 1986 law has been correct.

“This judgment is now the law of the land,” Gastelum said.