California Trout, Inc. v. State Water Resources Control Board (207 Cal. App. 3d 585, 1989)

Opinion

BLEASE, J.

This is a consolidated appeal from judgments dismissing petitions for writs of mandate by which California Trout, Inc., National Audubon Society, and Mono Lake Committee (plaintiffs) would command the State Water Resources Control Board (Water Board) to rescind two licenses, issued to the City of Los Angeles and its Department of Water and Power (collectively referred to as L.A. Water and Power) in 1974, which confirm rights to the appropriation of water. The licenses validate the diversion of water by means of dams from four creeks in Mono County, tributaries to Mono Lake, for the generation of power and for domestic uses by L.A. Water and Power. Plaintiffs contend the licenses violate Fish and Game Code section 5946, which directs that “[n]o . . . license to appropriate water [in portions of Mono and Inyo Counties] shall be issued . . . after September 9, 1953, unless conditioned upon full compliance with Section 5937.” Section 5937 mandates that “[t]he owner of any dam shall allow sufficient water at all times ... to pass over, around or through the dam, to keep in good condition any fish that may be planted or exist below the dam.”

The trial court denied the petitions on the view that section 5946 does not apply to the appropriation of water by diversion from dams constructed, as in this case, before September 9, 1953. As we shall explain, this view confuses two distinct requirements of section 5946. The provisions which apply to the construction of dams concern their physical capacity to accommodate fish ladders (see § 5938), a matter not at issue here. The provision applicable to a license for the appropriation of water by means of diversion from dams is limited only by the date of issuance of the license.

L.A. Water and Power makes three principal arguments supporting the premise that section 5946 should not be construed to affect its licenses.

First, it claims that section 5946 does not apply to licenses which authorize the appropriation of all of the available water from a stream. We answer that this reading would nullify the express terms of the section.

Second, it claims that the application of section 5946 to the 1974 licenses would retroactively divest it of rights to the appropriation of water, secured by permits 5555 and 5556, issued prior to the effective date of section 5946, September 9, 1953. The argument fails. L.A. Water and Power gained no rights to the appropriation of water prior to Septenber 9, 1953, since it was not able to put the full amount of authorized water to beneficial use, as required by water law. That occurred for two reasons. First, as L.A. Water and Power informed the Water Board in 1953, in seeking the extension of permit 5555, the full amount of water was not then “required by municipal needs.” Second, the project contemplated by the permits lacked the transportation and storage facilities necessary to make consistent beneficial use of the available water. Such facilities, principally the second Los Angeles aqueduct, were not authorized by permits 5555 and 5556 but by “amendments” thereto or new permits issued after September 9, 1953. The second aqueduct was not completed until 1970, 17 years after the enactment of section 5946. The challenged licenses did not issue until some three years thereafter.

Third, it seeks to nullify section 5946 by an implied facial challenge to its constitutional validity. Embedded in this challenge is the claim that the Legislature lacks the constitutional power to make reasonable determinations of the priority of water uses. We uphold the power of the Legislature to make such choices.

The Water Board takes no issue with plaintiffs’ substantive claims, but argues that they are time barred. Nonetheless, it concedes that section 5946 does affect the appropriation of water and that it has the present authority to act prospectively to condition the affected licenses on compliance with it. Given the validity of the concession, the public nature of the rights at issue, and that prospective relief is sought by petitioners, the argument is devoid of substance.

For these reasons we will reverse the judgment and direct the trial court to mandate the Water Board to apply section 5946 prospectively to the licenses at issue.

Facts

The present controversy stems from a long history of actions taken by the City of Los Angeles to appropriate the water of creeks tributary to Mono Lake and of the Owens River for the domestic use of the city and for the generation of electricity.

For our purposes the history commences in 1916. In that year L.A. Water and Power applied for a permit from the State Water Commission to appropriate the water of the Owens River for the purpose of generating electricity. The application proposed to take water from Long Valley Reservoir at the head of the Owens River Gorge for use in three hydroelectric power plants to be located in the gorge. The application describes the works (means) of diversion as follows: “for Plant #1, Long Valley Reservoir Dam, for Plants #2 and #3, low concrete with emergency spillway over crest.” The proposed completion date for construction was January 23, 1925. For reasons that do not appear in the record, action on the permit was not forthcoming until many years later.

In 1923 L.A. Water and Power applied for two related permits to appropriate the entire flow of Lee Vining Creek, Walker Creek, Parker Creek, and Rush Creek, all tributaries of Mono Lake, for domestic consumption and generation of electricity. The plan of diversion called for a dam on Lee Vining Creek with a tunnel and conduit to carry the water to a reservoir created by a dam on Rush Creek. Along the way, the waters of Walker Creek would be diverted by means of a shaft into the tunnel and of Parker Creek by direct diversion over the side of the conduit. The water was to be diverted from the reservoir on Rush Creek by a tunnel to the headwaters of the Owens River in Long Valley and then, after use in the Owens Gorge power plants, through the Owens River aqueduct system to Los Angeles. The construction of the proposed works was to be completed by July 1, 1933. Once again, initial action on the permits came later than the proposed completion date.

In 1933 the direct predecessor to section 5937 was first enacted. (Stats. 1933, ch. 73, § 525, p. 443.) In 1934 L.A. Water and Power submitted new applications for permits to appropriate the waters of the aforementioned tributaries of Mono Lake. It explains this action as follows. “During design of the Mono Basin project, it became clear that more water storage would be required than had been requested in the 1923 applications. Therefore, in 1934, the City sought to amend its applications to increase storage capacity and also to add the waters of Mill Creek, north of Lee Vining Creek, as part of the project. However, the Water Board asked the City to file new applications instead and assured the City that its municipal status would protect its priority for water rights. The City then filed [the 1934 applications].” The new applications proposed to accomplish the diversion of water from each of the Mono Lake tributary creeks by use of a dam. The construction of diversion works was to be completed within four years after approval of the application and the accomplishment of the appropriation within seven years after such approval.

All of these applications were still pending in 1935 when L.A. Water and Power applied to the State Department of Public Works for approval of plans to construct the dam on Rush Creek to create Grant Lake Reservoir. The Fish and Game Commission conducted a hearing concerning the necessity of a fishway to allow fish to bypass the proposed dam. The commission found on June 7, 1935, that “a fishway is not practicable and will not be required.”

In 1936 L.A. Water and Power applied to the State Department of Public Works for approval of plans to construct the dam on the Owens River at Long Valley. The Fish and Game Commission conducted a hearing, on April 1, 1936, concerning the necessity for a fishway at this dam and a reconsideration of that issue as to the Grant Lake Dam. There was no immediate resolution of these issues. The “tentative” resolution was that the commission staff and L.A. Water and Power should “get together and work out the possibilities of a [fishcultural reservoir] on Hot Creek [a tributary of the Owens River above Long Valley] that was proposed as a structure to be provided in lieu of fishways at these dams . . . .”

In 1940, Water Board hearings were conducted on the pending applications for permits to appropriate the water of the Mono Lake tributary creeks and the water of the Owens River for electricity generation. L.A. Water and Power withdrew the 1923 applications and the applications of 1916 and 1934 were approved, except for the denial of the proposed appropriation of waters of Mill Creek. Permits for these projects were issued on June 1, 1940. These permits, numbers 5555 and 5556, for appropriation of the waters of the Mono Lake tributary creeks, provide that the construction work “shall be completed on or before December 1st, 1945” and that “[cjomplete application of the water to the proposed use shall be made on or before December 1st, 1948.” The amount of water to be appropriated under these permits is limited to “the amount which can be beneficially used” and in any event may not exceed 200 cubic feet per second by direct diversion and storage of 93,540 acre-feet per year. L.A. Water and Power did not comply with the deadlines within which the proposed use was to be completed. However, as appears, the permits were periodically amended, by the Water Board, to extend these deadlines, once before September 9, 1953, and several times thereafter.

The applications for approval of plans for construction of Grant Lake Dam and Long Valley Dam were also finally resolved in 1940. The Fish and Game Commission adopted an order on August 19, 1940, apparently embodying a negotiated agreement that in lieu of fishways for these dams L.A. Water and Power would provide rights to and partial funding for the establishment of a fish hatchery on Hot Creek. Thereafter, on November 25, 1940, L.A. Water and Power and state officials executed a contract to carry out the agreement establishing the hatchery. The agreement provided: “That [L.A. Water and Power] shall be and is hereby fully and unconditionally relieved and released of any and all obligations, under and by reason of the provisions of [the Fish and Game Code], excepting [former] Sections 528, 531, and 535 to 548, inclusive, by reason of the construction, operation, and maintenance of said two dams, in addition to and over and above those set forth in said order and this agreement, and if [L.A. Water and Power] complies with the provisions of said order and this agreement the State will not at any time whatsoever or at all make any demands upon said [L.A. Water and Power] in addition thereto or beyond those so agreed upon herein.”

Grant Lake Dam and Reservoir construction had been started in 1935 and was completed in 1940. Long Valley Dam and Reservoir construction was apparently commenced in 1936 and completed in 1941.

Prior to the beginning of diversion of water from the Mono Lake tributary streams each had good trout populations, sustained almost entirely by natural propagation. All were extensively fished by the public. As recently as 1985 trout have inhabited portions of Lee Vining Creek and Walker Creek below the diversion dams, apparently surviving on springs, seepage, spillage, and local runoff. Walker Creek and Parker Creek join Rush Creek before it empties into Mono Lake. Land adjoining all four creeks downstream of the points of diversion is owned by the City of Los Angeles. Some land adjoining the lower reaches of Lee Vining Creek and Rush Creek below the points of diversion is owned by the federal government.

In October 1952 the subject of the drying up of the Owens River Gorge as a result of L.A. Water and Power’s appropriations was raised during a hearing conducted by the State Senate Interim Committee on Fish and Game. During the hearing counsel for L.A. Water and Power was asked if it planned to “dry up” Rock Creek. Counsel said that L.A. Water and Power still had on file an application for diverting Rock Creek. Counsel was asked if the Owens Gorge applications had called for diversion of all water from the gorge. Counsel answered that the application had called for a diversion of more than the mean runoff figure for Long Valley. L.A. Water and Power gave economic costs of lost power as the reason why no water could be permitted to flow down the gorge.

When the conmittee chairman asked where else in California a river had been dried up in such fashion as the Owens Gorge, L.A. Water and Power countered with its report on improved fisheries as a result of Hot Creek hatchery and Long Valley Reservoir. During the hearing “Aubrey Lyon, in behalf of Bishop Izack Walton League chapter, made a strong appeal for some water to be left in the Gorge for benefit of wildlife. He requested the committee to aid attempts to secure provisions in state laws establishing a priority in the use of water for the benefit of fish, plant and wildlife. He pointed out that if the City could dry up the Gorge, all streams are in jeopardy of being dried up, and then ‘we’d have no wildlife in this area.’ ”

In 1953 the Senate Interim Committee on Fish and Game issued a report to the Legislature that cited as a major problem in the Inyo-Mono area the development of the stream in the Owens River Gorge for power purposes. The report recounted the history of the project and asserted that the planned program would result in the diversion of all water from the gorge, removing the area as a fishing ground. The report suggested that there was still an opportunity to negotiate “for the maintenance of a minimum stream flow through the Owens River Gorge to preserve this portion of the stream as a fishway.” However, it appears that the complete diversion of the stream from the gorge was accomplished in August 1953.

In the water years between 1940-1941 and 1962-1963 the amount of water diverted from the Mono Lake creeks out of the Mono Basin varied from a low of zero to a high of 96,900 acre-feet. The median amount was 64,400 acre-feet in the water year 1952-1953. The average yearly amount diverted for this period was approximately 51,000 acre-feet. The discrepancy between the amounts of water actually diverted and the theoretical maximum amount of acre-feet per year that could have been diverted under the 200 cubic feet per second limit in the permits for appropriation was attributable to the inability of L.A. Water and Power’s facilities outside of the Mono Basin to handle any greater amounts of water. This situation led representatives of the Water Board and the Department of Water Resources to warn L.A. Water and Power “to take steps to develop its full entitlement to the waters of the Mono Basin or risk the potential that other appropriations might be granted rights by the Water Board.” Because of those warnings, the city’s need for additional water, and the presence of many of the conveyance facilities required for the development of additional water resources from Inyo and Mono Counties, in 1963 the city authorized construction of the second Los Angeles aqueduct project.

The reason for this is contained in a declaration by D. L. Georgeson, Assistant General Manager of L.A. Water and Power; “As originally conceived, planned, and executed, [this] project required the construction of no new facilities in the Mono Basin. Principal construction was to increase the capacity of the conveyance canal from Alabama Gates near Lone Pine into Haiwee Reservoir and to construct a new aqueduct, roughly paralleling the First [Los Angeles aqueduct], to carry the water to the City of Los Angeles. The project was anticipated to develop an additional approximately 150,000 [acre-feet per year] for the City from three principal sources in approximately three equal parts or approximately 50,000 [acre-feet per year] apiece. These sources were increased groundwater pumping from the Owens Valley Groundwater Basin, operational savings within Inyo County, and increased average diversions from the Mono Basin . . . .” (Italics added.) The means of conveyance of this increased diversion to Los Angeles, the second Los Angeles aqueduct, was completed in 1970. Thereafter, L.A. Water and Power was able to put to beneficial use the full appropriation of waters allowed by the diversion and storage limits of permits 5555 and 5556. In the water years 1970-1971 through 1973-1974 Mono Basin diversions in acre-feet respectively were: 94,300; 104,500; 101,700; and 123,600.

In 1974 the Water Board issued licenses 10191 and 10192 asserting that L.A. Water and Power had made proof, as of May 2, 1973, of a right to take water at the rate of 189 cubic feet per second by diversion and to store 89,200 acre-feet per year of the aggregate flows of the Mono Lake tributary creeks, under permit 5555 and somewhat lesser included amounts under permit 5556, as these permits had been amended and “extended” by action of the Water Board after September 9, 1953.

We will relate the facts pertinent to the amendments and the extensions of these permits later in this opinion. This will occur in the discussion of L.A. Water and Power’s argument that their effect was to preserve an existing right to water so as to preclude the application of section 5946 to the succeeding licenses.

Discussion

I.

The Construction of Section 5946

L.A. Water and Power asks us to construe section 5946 as inapplicable to its 1974 licenses, issued 21 years after the enactment of the section.

The task of construing a statute requires that we “ ‘read and examine the text of the act and draw inferences concerning meaning from its composition and structure’ ” as applied to the material facts of a case. (Nunez v. Superior Court (1983) 143 Cal.App.3d 476, 480 [191 Cal.Rptr. 893], quoting from 2A Sutherland, Statutory Construction (4th ed. 1973) § 47.01, p. 70.) Where the application of the text to the facts is clear, it must be so applied. That is the case here. As will be seen, the difficulty with L.A. Water and Power’s statutory claims is that they either do not address or satisfactorily account for the language of section 5946.

A.

Section 5946 Expressly Applies to the Licenses at Issue

The controlling language of section 5946 is contained in its second sentence. It forbids the issuance of a “permit or license” (italics added) after September 9, 1953, to “appropriate water in District 4Vi . . . unless conditioned upon full compliance with Section 5937.” Section 5937 mandates that “[t]he owner of any dam shall allow sufficient water at all times to pass through a fishway, or in the absence of a fishway, allow sufficient water to pass over, around or through the dam, to keep in good condition any fish that may be planted or exist below the dam.”

These provisions straightforwardly limit the amount of water that may be appropriated by diversion from a dam in the designated area by requiring that sufficient water first be released to sustain fish below the dam.

Notwithstanding its express language L.A. Water and Power claims that section 5946 does not apply to a permit or license which authorizes the appropriation of all of the available water of a stream. The argument has two parts: (1) section 5946 only reiterates section 5937 as it applied before the enactment of section 5946; (2) section 5937 does not apply to limit the appropriation of water.

Section 5937, so its argument goes, establishes a rule only for the operation of dams, presupposing and addressed to the usual circumstances in which sufficient h/z appropriated water remains to keep some fish below the dam alive if carefully disgorged. (See Friant Dam, 18 Ops.Cal.Atty.Gen. 31, 36-39 (1951); cf. generally Instream Flow Requirements, 63 Ops.Cal.Atty.Gen. 95 (1980); but see State Water Resources Control Board Water Appropriation Regulation, 57 Ops.Cal.Atty.Gen. 577, 578-583 (1974); cf. Comment, Use It or Lose It: California Fish and Game Code Section 5937 and Instream Fishery Resources (1980) 14 U.C.Davis L.Rev. 431.) Thus, in the face of the express direction of section 5946 to apply the conditions of section 5937 to limit the appropriation of water, L.A. Water and Power would have us construe it so as to apply only to unappropriated water.

It accomplishes this transmutation by severing section 5937 from the effect given it by section 5946, reading section 5937 as if it were not made applicable by section 5946 to permits or licenses for the appropriation of water. That reading is embedded in its argument that the meaning to be given section 5937 is that which preceded the enactment of section 5946.

L.A. Water and Power reasons that until 1937 the predecessor of section 5937, section 525, only addressed the release of water through fishways. (Cf. Stats. 1933, ch. 73, p. 443 with Stats. 1937, ch. 456, p. 1400.) In 1937 the present language extending section 525 to all releases of water “over, around or through the dam” was enacted. In 1937, and for many preceding years, the Water Code provisions pertaining to appropriation declared as state policy that the use of water for domestic purposes is the highest use of water and the use of water for irrigation purposes is the next highest use. (Stats. 1921, ch. 329, § 1, p. 443.) It apparently was assumed in some quarters at the time of adoption of those sections that the appropriation of water for “higher” domestic or irrigation uses must be approved regardless of the detriment to “lower” uses, e.g., in-stream use for fishery or recreation purposes. (Cf. National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 428 [189 Cal.Rptr. 346, 658 P.2d 709], [hereafter Audubon] disclosing this as the view held by the Water Board in 1940.) Given this assumption, so it is claimed, section 5937 is not meant to operate as a rule affecting the appropriation of water.

We need not reach the question of the application of section 5937 alone as a rule affecting the appropriation of water. In any event the manifest flaw in the argument is that, regardless of the original scope of application of section 5937, the purpose of its incorporation into section 5946 is, as section 5946 says, to “condition,” and therefore limit, the “appropriation]” of water by the priority given to the preservation of fish as set forth in section 5937.

Section 5946 provides that “[n]o permit or license to appropriate water in District AVz shall be issued . . . after September 9, 1953, unless conditioned upon full compliance with Section 5937.” One does not show compliance with a rule by claiming that it is inapplicable. Compulsory compliance with a rule requiring the release of sufficient water to keep fish alive necessarily limits the water available for appropriation for other uses. Where that effects a reduction in the amount that otherwise might be appropriated, section 5946 operates as a legislative choice among competing uses of water. L.A. Water and Power’s argument would render section 5946 senseless, a conclusion we are not permitted to reach.

The purpose that is manifest in the language of section 5946 also appears as an explicit chapter in the legislative history of its enactment. As introduced, the bill by which former section 526.5, the predecessor to section 5946, became law carried an urgency clause explaining its necessity. It said: “Proposals for diversions of water in District W2 are now being considered which, if effected will destroy all of the fish life in large sections of the streams in that district and interfere with the economy in area which is dependent to a large extent on recreation. It is necessary that this act take effect immediately to prevent further destruction offish life in District 4ki.” (Sen. Bill No. 78 (1953 Reg. Sess. as introduced Jan. 6, 1953, italics added.) As the recitation of facts shows, this bill followed interim conmittee hearings at which were discussed both the impending diversion of water in the Owens River Gorge, for which permits had already issued and some dams completed, and planned diversions from another stream in the district.

The urgency clause was later deleted and language inserted to preclude the application of (current) section 5947, which prohibits excessive releases of water so “as to destroy fish life below such release,” to the operation of the generating facilities of a hydroelectric project then under construction. However, the provisions of (current) section 5946 remained fully applicable. Thus the legislative policy to “prevent further destruction of the fish life in District 4Vi” by “sufficient releases” of water from dams remained as embodied in section 5946. The deletion of the urgency clause affected only the effective date of the section and not its purpose or legal effect. The urgency clause, as part of the history of section 5946 available to the Legislature, emphasizes what the language of the section tells us, that it was meant to apply as a rule preventing the destruction of fish by the appropriation of water for other uses by permits or licenses issued after September 9, 1953. That purpose could not be achieved if, as L.A. Water and Power would have it, the rule allowed the appropriation of all of the water of a stream.

In view of the language and syntax of section 5946, the history of its enactment, and the extrinsic evidence of contemporaneous views of its purpose, we reject as untenable the argument that section 5946 does not apply in the case in which all of the water of a stream is sought to be appropriated.

B.

Section 5946 Applies to Licenses Predicated Upon Permits Issued Before September 9, 1953

L.A. Water and Power suggests that section 5946 does not apply to any case in which a postenactment license is predicated upon a permit issued prior to the effective date of the section, September 9, 1953. That argument succeeds only if the disjunctive “permit or license” in the second sentence is exclusively read in the conjunctive as “permit and license.” It cannot be so read, even if “or” is read as “and/or.”

Section 5946 says that “[n]o permit or license to appropriate water in District AVz shall be issued . . . after September 9, 1953” unless conditioned by full compliance with section 5937. (Italics added.) It facially applies to a license issued after the specified date without regard to whether it is based upon a permit issued prior to that date. L.A. Water and Power would have us write a condition into the statute precluding such an application. If that were meant to be the case, the natural phrasing would be “no permit and license” or, more precisely, “no permit and ensuing license.” It does not so read and the legislative circumstances in which section 5946 was enacted militate against such a reading.

As discussed above, section 5946 was meant “to prevent further destruction of the fish life in District 4 Vz” insofar as that could be accomplished by the attachment of section 5937 conditions to postenactment licenses. The legislative hearings preceding the enactment of section 5946 were addressed inter alia to the amelioration of projects already begun, necessarily involving permits issued prior to its enactment.

C.

The Trial Court Incorrectly Limited the Application of Section 5946 to the Appropriation of Water Obtained by Diversion From Dams Constructed After September 9, 1953

The trial court held that section 5946 applies only to licenses for the appropriation of water from dams constructed after September 9, 1953. That result is predicated upon the extension of conditions applicable only to the construction of dams, as provided in the first and third sentences, to the appropriation of water from dams, as provided in the second sentence.

Section 5946 presently reads in full: “The provisions of Section 5938 shall not be applicable to dams constructed in District 4W i after September 9, 1953. [%] No permit or license to appropriate water in District 4Vz shall be issued by the State Water Rights Board after September 9, 1953, unless conditioned upon full compliance with Section 5937. Plans and specifications for any such dam shall not be approved by the Department of Water Resources unless adequate provision is made for full compliance with Section 5937.”

Each sentence of section 5946 pertains to action consigned to a different unit of state government. The first sentence pertains to action within the domain of the Fish and Game Commission. The second sentence to action within the domain of the Water Board. The third sentence to action within the domain of the Department of Water Resources. The second and third sentences are joined in one paragraph apparently because they pertain to related units of state government. As we have explained above, the provision which governs the appropriation of water is the second sentence. That sentence contains no words of limitation tied to the construction of dams. Rather, such limitations are contained in the first and third sentences which are directed to the construction of fishways which must be built during construction of the dam.

Section 5937 is addressed to the release of water from dams. Although the section refers to fishways it does so only as an avenue for the release of water from a dam. Section 5937 does not mandate the construction of a fishway but requires that dam owners must “at all times” release sufficient water “to keep in good condition any fish that may be planted or exist below the dam” whether that is accomplished by means of a fishway or other means of release.

Fishways is the subject of another provision of the Fish and Game Code, section 5938, to which the first and third sentences of section 5946 are directed. The first sentence of section 5946 says that the provisions of section 5938 shall not apply to dams constructed after September 9, 1953. Section 5938 authorizes the development of a fish hatchery in lieu of the construction of a fishway over or around a dam, if that proves impracticable. The removal of that option compels the building of a fishway whenever “there is not free passage for fish over or around any dam . . . .” (§ 5931.) A fishway enables free passage for fish around a dam. That, of course, like the provision of section 5937 for water below the dam, is for the benefit of fish populations. But that common purpose does not make for a common means.

The third sentence of section 5946 says that “[p]lans and specifications for [the construction of] any such dam” must comply with section 5937. (Italics added.) “[S]uch dam” refers to the provisions of the first sentence, for that is the only other reference in section 5946 having to do with the construction of dams. Since section 5937 requires the release of water from a dam for use in the maintenance of fish populations below, it is obvious that to accomplish that purpose the dam should be appropriately designed and constructed. Hence the requirement that plans for “such” dams provide for full compliance with section 5937 means that they shall be designed and constructed so as to have a fishway (and) or other physical means of conveying water past the dam for use in maintenance of the fish population below the dam.

D

There Is No Administrative Construction of Section 5946 Supportive of the Reading Urged by L.A. Water and Power

We also find unpersuasive the argument that we should defer to a claimed long-standing administrative interpretation of the statute. L. A. Water and Power suggests that the Water Board has consistently interpreted section 5946 as inapplicable to licensing proceedings stemming from permits issued before the effective date of the statute. The Water Board does not join in this claim.

The claim is predicated upon a memorandum legal opinion of counsel to the Water Board dating from December 1953, which L.A. Water and Power asserts had been endorsed de facto by the actions of the Water Board. In the memorandum counsel concluded that, where a dam had been constructed without facilities for compliance with section 5946 under a permit issued before the enactment of that statute, the subsequent issuance of a license need not be conditioned upon such compliance. The counsel’s opinion is not persuasive for two reasons.

It does not address the prospective application of section 5946 to the circumstances presented here. It does not consider the application of section 5946 to cases in which a dam as constructed is capable of being operated in a manner allowing compliance with section 5946.

Nor is it binding on the courts. The ultimate resolution of a question of statutory meaning is a judicial question. “ ‘[A]n erroneous administrative construction does not become decisive no matter how long continued.’ ” (People v. Union Oil Co. (1957) 48 Cal.2d 476, 480 [310 P.2d 409].) “An administrative officer may not make a rule or regulation that alters or enlarges the terms of a legislative enactment.” (Whitcomb Hotel, Inc. v. Cal. Emp. Com. (1944) 24 Cal.2d 753, 757 [151 P.2d 233, 155 A.L.R. 405].)

The policies which underlie judicial deference to administrative constructions of statutes are not served by deference to the opinions of legal counsel for an administrative agency which inform the agency that it is constrained by law to adopt a certain construction. In such a situation the agency has not selected between policies based upon its expertise or delegated political authority; it has merely adhered to a view of the general law advanced by counsel. As to such matters the court, rather than the staff counsel for an agency, is the superior arbiter.

II

The Application of Section 5946 to the L.A. Water and Power Licenses Does Not Retroactively Alter Rights Claimed to Be Acquired Under Permits Issued Prior to September 9, 1953

A.

L.A. Water and Power next argues that section 5946 cannot be applied to licenses issued to it in 1974 because they confirm rights acquired under permits which were issued prior to the enactment of section 5946 on September 9, 1953. L.A. Water and Power appeals to the rule that a statute ordinarily should not be construed to apply so as to unfairly change the legal significance of material facts occurring before its enactment. The unfairness, it is claimed, lies in the divestment of rights acquired under permits 5555 and 5556 issued to L.A. Water and Power prior to September 9, 1953.

The rule is a rule of construction, which applies only when it is not clear whether a statute applies restrospectively. (See In re Marriage of Bouquet, supra, 16 Cal.3d at p. 587 [“the presumption against the retroactive application of statutes” is subordinated “to the transcendent canon of statutory construction that the design of the Legislature be given effect”]; see also 58 Cal.Jur.3d, Statutes, § 23, p. 341, citations omitted.) Where such an ambiguity exists, and the statute can be read to affect pre-enactment rights, values of fairness emanating from due process principles of fair notice aid in the determination whether the statute was meant to be so applied. (See generally Retrospectivity and Retroactivity of Civil Legislation Reconsidered, 2 Sutherland, Statutory Construction (4th ed. 1986) Legal Commentary, p. 171.)

The rule is of no aid to L.A. Water and Power unless section 5946 is ambiguous. As related, the history of the section strongly suggests that section 5946 is meant to be applied to all projects of appropriation in District 4 Vi that had not proceeded to license status prior to its effective date. In the circumstances of this case, the only reasonable reading of the statute is that it was meant to apply precisely as it is written: “No . . . license to appropriate water in District 4 Vi shall be issued by the [Board] after September 9, 1953, unless conditioned upon full compliance with Section 5937.” (Italics added.)

As appears, it is immaterial in this case whether the statute might be viewed as ambiguous with respect to its application to some projects commenced prior to its enactment. To tender an argument that language is ambiguous, a litigant must show that the statute could reasonably be read in a manner favorable to it as applied to the facts tendered. L.A. Water and Power cannot do so for it cannot show that it obtained rights under the permits as issued prior to the enactment of section 5946. For the purpose of examining this argument, we shall assume that it is unclear whether section 5946 was meant to apply to the case in which the post-enactment license merely confirmed rights acquired prior to enactment by actions taken pursuant to pre-enactment permits. In further pursuit of the argument we additionally assume that section 5946 could reasonably be read as not intended to apply to the issuance of a license to an appropriator who (1) had received a permit prior to the enactment, (2) expended significant sums in the reasonable expectation of full completion of the project as described in the permit, and (3) that project, as described in the permit, would enable the licensee to put the water authorized to be appropriated to full beneficial use in an amount that would not allow full compliance with section 5937. These conditions are minimally necessary to implicate the policies which give rise to the presumption against retroactivity. As appears, the assumption of ambiguity in the statute is unavailing in this case.

B.

The Test of Retroactivity

The test of retroactivity is whether section 5946 operates retroactively to materially alter the legal significance of a prior event. That problem arises because “[l]aw operates in the flow of time, and a single controversy may involve a series of events, and occasions for official decision, occurring at many different points in the flow.” (Hart & Sacks, The Legal Process (tent.ed. 1958) p. 640.) The problem is to discern the materiality of events with respect to the policy advanced by the presumption of prospectivity. (8) The source of the presumption is the “general consensus that notice or warning of the rule should be given in advance of the actions whose effects are to be judged.” (2 Sutherland, Statutory Construction, supra, § 41.02, p. 340.) Application of a statute is retroactive only when it gives a different and potentially unfair legal effect to actions taken in reliance on the preenactment law. (Mahon v. Safeco Title Ins. Co. (1988) 199 Cal.App.3d 616, 620-623 [245 Cal.Rptr. 103].)

That could occur here only if the application of section 5937, via section 5946, would substantially alter the legal effect of actions taken by L.A. Water and Power pursuant to permits 5555 and 5556 as they read before the September 9, 1953, enactment of section 5946, e.g., reduces or obliterates a right to the appropriation of water obtained under the permits as they then read, acquired incident to the pre-enactment construction of works of diversion and the (appropriative) use of water made available thereby. As we will show at length, it did not.

To show why not implicates the water law by which such rights are acquired, a subject we next examine.

C.

The Statutory Scheme for Acquiring Water Rights

The exclusive method of acquiring rights to appropriate or use water is by compliance with the statutory scheme in the Water Code. (Wat. Code, § 1225.)

The process is initiated by application to the Water Board for a permit to put unappropriated water to beneficial use. (Wat. Code, § 1252.) The application must set forth, inter alia, the nature and amount of the proposed use, the location and description of proposed works to accomplish diversion, the time for completion of construction, and the time for the complete application of the water to the proposed use. (Wat. Code, § 1260.) The Water Board must act upon the application and may grant, or refuse to grant, a permit and may reject any application after a hearing. (Wat. Code, §§ 1250, 1350.)

“Upon the approval of an application the board shall issue a permit.” (Wat. Code, § 1380.) The permit gives the right to take and use water only to the extent and for the purpose granted and under the terms and conditions of division 2 of the Water Code as specified in the permit (Wat. Code, §§ 1381-1391), and the right is conditional.

To perfect the right, the permittee must diligently commence and complete construction of the project and apply the water to beneficial use in accordance with the law and the terms of the permit. (Wat. Code, §§ 1395-1397; Madera Irr. Dist. v. All Persons (1957) 47 Cal.2d 681, 690-691 [306 P.2d 886].)

The board requires the filing of annual progress reports by each permittee detailing the progress made in complying with the conditions of a permit. (Cal. Code Regs., tit. 23, § 782.) “A permit shall be effective for such time as the water actually appropriated under it is used for a useful and beneficial purpose in conformity with [Division 2 of the Water Code] but no longer.” (Wat. Code, § 1390.) As applicable to the permits and licenses at issue, Water Code section 1241 formerly provided; “When the person entitled to the use of water fails to beneficially use all or any part of the water claimed by him, for which a right of use has vested . . . for a period of three years, such unused water reverts to the public and shall be regarded as unappropriated public water.” (Stats. 1943, ch. 368, § 1241, pp. 1615-1616.) The Water Board may reserve jurisdiction to amend, revise, supplement, or delete terms and conditions in a permit in specified circumstances by decision or order. (Wat. Code, § 1394.) “[Construction of the works of diversion] shall be completed and the water applied to beneficial use in accordance with this division, the rules and regulations of the board, and the terms of the permit and within the period specified in the permit.” (Wat. Code, § 1397.) These periods may be extended by the Water Board for good cause shown. (Wat. Code, § 1398.)

“There shall be cause for revocation of a permit if the work [of diversion] is not commenced, prosecuted with due diligence, and completed or the water applied to beneficial use as contemplated in the permit and in accordance with this division and the rules and regulations of the board.” (Wat. Code, § 1410, subd. (a); Stats. 1986, ch. 670, § 4.) “Immediately upon completion of the construction of works and application of the water to beneficial use the permittee shall report the completion to the board.” (Wat. Code, § 1600.) “If the determination (of the board) as to completion is favorable to the permittee, the board shall issue a license which confirms the right to the appropriation of such an amount of water as has been determined to have been applied to beneficial use.” (Wat. Code, § 1610.)

“As soon as project construction and application of the water to full beneficial use have been accomplished, the information is reported to the board (Wat. Code, § 1600), and the board’s staff conducts an inspection (Wat. Code, § 1605). If the board finds that the permittee has completed construction and has applied the water to beneficial use in accordance with the law and the permit, it issues a license which confirms the appropriation. (Wat. Code, § 1610.) If the findings are favorable to the permittee, the issuance of the license is mandatory and ministerial. (Wat. Code, § 1610, Cal. Admin. Code, tit. 23, § 2712, subd. (c).)” (Environmental Defense Fund, Inc. v. East Bay Mun. Utility Dist. (1980) 26 Cal.3d 183, 197-198 [161 Cal.Rptr. 466, 605 P.2d 1].)

We accept, for purposes of the argument under consideration, L.A. Water and Power’s synopsis of the general effect of actions concerning permits and licenses. “California law, as it exists today and as it existed in 1953, provides that appropriative water rights are acquired by placing water to beneficial use in accordance with the terms of a permit granted by the Water Board. It is the granting of the permit, not the issuance of the license, which ‘gives [the permittee] the right to take and use the amount of water specified in the permit.’ (Water Code Section 1455.) The right then vests when the water is actually diverted and placed to beneficial use.” L.A. Water and Power assumes that in view of these considerations it had acquired a vested right to divert the entire flow of the Mono Lake tributary streams before 1953 when section 5946 came into effect. We do not concur in this critical assumption.

D.

The Project Contemplated by the Permits Issued Prior to September 9, 1953 Was Insufficient to Accomplish the Full Appropriation of Water Authorized

1.

Although the diversion works authorized by permits 5555 and 5556 were completed prior to September 9, 1953, they were insufficient to accomplish the full appropriation of water authorized by the permits and such water was not in fact appropriated to beneficial use until 1973, 20 years after the effective date of section 5946.

That delay was occasioned because the second Los Angeles aqueduct, the facility necessary to the full transport of water from the diversion dams to the domestic uses specified in the permits, was not completed until that year. As a consequence, the actual beneficial use of 50,000 acre-feet of water by which rights to its appropriation are acquired did not, because it could not, occur until completion of the second aqueduct. That aqueduct was not within the projects listed in permits 5555 and 5556 issued in 1940. Its construction was prompted, inter alia, by the consideration that the plans and projects contemplated in the permits as they issued prior to the enactment of section 5946 on September 9, 1953, had not resulted in a successful appropriation by beneficial use of the amount of water in the Mono Lake tributary creeks. Accordingly, application of section 5946 to the L.A. Water and Power licenses, insofar as they sought to affirm an appropriation essentially based on post enactment conduct, is simply not a retroactive application of the statute.

L.A. Water and Power argues in a petition for rehearing that the 50,000 acre-feet of water which we assert could not be put to beneficial use is not the measure of the shortfall of the original project. It argues that in three of the years preceding the enactment of section 5946, but not the years inmediately preceding September 9, 1953, it had in fact diverted from the affected streams and put to beneficial use water in the amount of 95,000 acre-feet and that a right to this amount was thereby vested and that section 5946 cannot be retroactively applied to its permits so as to divest it of this right. There are numerous flaws in this argument.

If L.A. Water and Power obtained vested rights as claimed, the question arises—why did it not seek licenses immediately following the (claimed) high use years (1948-1951) rather than extensions for failure to beneficially use the water authorized by the permits? The answer is that L.A. Water and Power could not consistently use the flows of the Mono County streams, and we are told why. In its brief to this court, L.A. Power and Water says: “During several of the years between 1941 [when the dams were completed] and 1970 the City diverted virtually its full Mono Basin entitlement authorized by the 1940 water rights permits, but found it could not do so consistently without constructing additional conveyance capacity downstream from the Mono Basin. In response to advice from the Water Board, and because the City needed the additional firm water supply, the City, in 1963, authorized the Second Los Angeles Aqueduct (LAA) Project. (Decl. of D.L. Georgeson, . . . .) The project was to develop an additional approximately 150,000 acre feet annually, of which approximately 50,000 AFY would come from the already authorized diversions in the Mono Basin. (Deck of D. L. Georgeson . . . .) [fl] The Second LAA was completed and placed into service in June 1970. Since that time, the City has exported a long term average of approximately 100,000 AFY from the Mono Basin for use by the people of the City of Los Angeles. (Dec. of D. L. Georgeson . . . .)” The reference to the declaration of D.L. Georgeson is a reference to a declaration tendered to the trial court by L.A. Water and Power, from which we quote on this point in the facts. D.L. Georgeson is, or was at the time of the declaration, the Assistant General Manager—Water of L.A. Water and Power with direct responsibility and supervision of all of the water system operations of the City of Los Angeles.

Georgeson’s assertions are borne out by the history of the permit process by which L.A. Water and Power ultimately obtained the licenses under review. L.A. Water and Power conceded in its applications for extension of the initial permits beyond September 9, 1953, that it was not entitled to the full amount of water authorized to be appropriated under its initial permits until completion of the second aqueduct because it could not put that water to beneficial use in Los Angeles and because it lacked the conveyance facilities to transport the water. The needed conveyance facilities were not constructed until growth in the population of Los Angeles, occurring long after the enactment of section 5946, spurred the city to develop the second aqueduct in anticipation of even more future growth.

All of this is reflected in the applications and progress reports tendered the Water Board incident to the claimed “extension” of permits 5555 and 5556 beyond September 9, 1953, as next we show.

2.

The Permit Extensions

During the hearing of this appeal we inquired whether the permits had expired, since, on the record before the court, the full appropriation of water was to have been completed prior to September 9, 1953. L.A. Water and Power replied that the permits had been extended on numerous occasions by action of the Water Board. Thereafter, it moved that we take additional evidence on appeal relating thereto pursuant to Code of Civil Procedure section 909. It proffered orders of the Water Board granting extension of permits 5555 and 5556. We granted the motion.

Thereafter, on this court’s motion, after notice to the parties, we adduced additional evidence relating to the orders, the applications for extension of time (23 Cal. Code Regs. § 842) and annual progress reports (id, § 847) filed by L.A. Water and Power with the Water Board as required by its regulations.

As related, the regulations of the Water Board provide for progress reports and petitions for the extension of permits showing the progress of projects for the appropriation of water and the beneficial use of the water authorized under the permit. Permits 5555 and 5556 were extended on several occasions pursuant to either petitions or progress reports treated as petitions.

The petitions and progress reports consist of pre-printed questions to which the applicant must respond. The information thus provided bears on the issues in this case as follows. On each of the forms L.A. Water and Power was asked the question “Have you used as much water as you expect to use under this permit?” In each instance, save the last, the answer was “No.” With respect to each of the orders granting an extension of a permit pursuant to these applications, the order specifies that it was an “Order Granting Extension of Time Within Which to Complete Use of Water.”

In the case of both permits L.A. Water and Power gave as reasons for the extension the need to construct additional facilities to permit the beneficial use of the full amount of authorized water. With respect to both permits the reason given was the need to construct additional transportation and storage facilities, principally the second aqueduct. With respect to permit 5556, concerning the production of electrical power, the additional reason given was the need to raise the height of Long Valley Dam in order to store more water.

Thus, the first “extension” of permit 5555 issued after enactment of section 5946 on September 9, 1953, was preceded by progress reports, in the form of answers to printed questions, which, for the years, 1952, 1953, and 1954 provide “No” in answer to the question “Have you used as much water as you expect to use under this permit?” Identical responses are provided in the progress reports for subsequent years. The progress report for 1953, the year of enactment of section 5946, provided: “Is construction complete?” (original italics) “Yes.” “Have you used as much water as you expect to use under this permit?” “No.” “If not, when will such use be full and complete?” “When required by municipal needs.” (Italics added.)

The petition for extension of permit 5555 filed in 1958 provided in answer to the question “Estimated year in which full use of water will be made - Uncertain—dependent on runoff and municipal needs.” The petition for extension of permit 5555 filed in 1962, together with the progress report of that year, provided a further reason for the requested extension. “The steady growth in population and water use in Los Angeles dictates that it will be necessary in the relatively near future to make provision for increased importation of water into the City. Hydrologic studies indicate that maximum beneficial use of existing water rights of the City and maximum diversions for beneficial use under the above permits [including 5555] would provide a substantial portion of the water needed for Power and Municipal use, but such deliveries would require additional Aqueduct capacity. Rf] With this in mind the Board of Water and Power Commissioners . . . approved the recommendation . . . that studies be made to determine the design and cost and the most feasible route of aqueduct facilities . . . .”

A later petition for extension provided: “Preliminary studies have been completed and detailed Engineering Studies are now being made for enlargement of the L.A. Aqueduct. Upon completion of this enlargement all water available under this application will be used.” The progress report for 1963 provided that “Work has begun on a Second Los Angeles Aqueduct . . . . Construction is scheduled to start in July 1964 and to be completed sometime in 1968.”

Permit 5556 was also extended. The progress report for the year 1953 asserted that “It is proposed to increase the height of Long Valley Dam to provide greater storage capacity.” The report also answered “No” in response to the question—“Have you used as much water as you expect to use under this permit?” and “When the project is completed” in answer to the question “If not, when will such use be full and complete?” Similar answers were given in the progress reports for 1954, 1955, 1956, 1957 and later years. The applications and progress reports thereafter parallel those submitted in connection with permit 5555 chronicling the planning and construction of the second aqueduct. The petition for extension of time filed in 1967 provided as follows: “Reasons why use of water was not completed within time previously allowed: Enlargement of the present Los Angeles Aqueduct is now under way with completion estimated in 1969. Upon completion of this project, all water available under this application will be used.”

From the record before us, permit 5555 expired, inter alia, on June 1, 1960, and what is labeled as an extension of that permit is impliedly a new permit because it is premised upon a new construction project. Similarly, permit 5556 expired on December 1, 1953, and the so-called extension, not issued until July 29, 1959, is a new permit since it is premised upon the new project of raising the height and thereby the storage capacity of Long Valley Dam. Moreover, that “extension” expired on June 1, 1960, and a further “extension” of September 28, 1961, is a further new permit since it is premised upon construction of a new project, the second aqueduct. These facts bear on the question of the rights granted under the original permits 5555 and 5556, as next we show.

3.

L.A. Water and Power Gained No Rights to the Appropriation of Water by the Extensions of Permits 5555 and 5556

As related, a permit gives a right to take and use water only for the purpose specified in the permit “and the right is conditional. To perfect the right, the permittee must diligently commence and complete construction of the project and apply the water to beneficial use in accordance with the law and the terms of the permit.” (Environmental Defense Fund, Inc., supra, 26 Cal.3d at p. 197, italics added.) Whatever claims L.A. Water and Power may make to the ephemeral peak use of available water from the project as originally specified, that project was incapable of achieving the consistent beneficial use of the available water until completion of the second aqueduct. There is recognition of this fact in the actions taken by the Water Board after the enactment of section 5946. The record shows that the project as conceived in the original permits was substantially changed by orders issued after the advent of section 5946. The unmistakable implication of the documents in the record is that these changes were in essence the construction of the second aqueduct.

L.A. Water and Power’s legal theory is that the maximum amount of water taken in any year under a permit is the measure of the vested appropriation right. This claim relies wholly upon cases in which the physical project had been completed and the parties claiming appropriative rights had used all of the available water permitted by the variant flows of the source from which the water was diverted for the project. (See e.g., Tulare Dist. v. Lindsay-Strathmore Dist. (1935) 3 Cal.2d 489, 548-549 [45 P.2d 972] [“appropriators have for many years used, as a group, the entire flow of the river up to [the permitted] 2,000 cubic feet per second, whenever it was available, and all lesser flows when that quantity was not available . . . .”].) This case differs materially in that the inability to beneficially use all of the authorized and available water was not a function of variant flows but the result of a physical inability to transport the water so as to put it to beneficial use in the City of Los Angeles. That inability was ended by completion of the second aqueduct. However, that event came two decades after the enactment of section 5946.

The logical extension of L.A. Water and Power’s legal theory would permit an appropriator of water from a complex of sources to lock up artificially high “vested” water rights from each of the sources by manipulating the sources from which it elected to draw its water levels despite the inability to apply such waters to beneficial use. Such cold storage is not permitted by law.

The circumstances here are not materially different from those which would obtain if L.A. Water and Power had sought licenses in 1953 based upon its completed works of diversion and actual diversion of water that could be accomplished thereby and then in 1963 had applied for permits to appropriate an additional 50,000 acre-feet per year. Section 5946 would apply to the later permit and license in that circumstance and no plausible claim of retroactivity could be maintained.

That is essentially what occurred here, except that, through the conduct of the Water Board and L.A. Water and Power, the original permit process was first allowed to tarry interminably and then improperly employed to authorize a new project, which required a new permit, under the guise of “extending” the original project. As noted, the initial permits, 5555 and 5556, were purportedly extended by act of the Water Board on several occasions, all but one of which occurred after September 9, 1953. Reliance on these so-called “extensions” is unwarranted. It is apparent that the “extensions” were unjustifi