El Dorado Irrigation District v. State Water Resources Control Board (142 Cal. App. 4th 937, 2006)

Opinion

ROBIE, J.

In this water rights case, El Dorado Irrigation District and El Dorado County Water Agency (jointly El Dorado) sought and received from the State Water Resources Control Board (the Board) the assignment of an application to appropriate water from the South Fork of the American River that was filed by the state more than 75 years ago, in 1927. The benefit of the assignment of this state-filed application was that El Dorado’s right to divert water would be deemed senior to other appropriative rights based on applications filed after 1927.

Ultimately, however, the Board decided to include in El Dorado’s permit a standard term (term No. 91) that requires the appropriator to curtail its diversion of water when the United States Bureau of Reclamation (the Bureau) and/or the Department of Water Resources (the Department) are releasing stored water from the Central Valley Project (the CVP) and/or the State Water Project (the SWP) to meet water quality objectives in the Sacramento-San Joaquin Delta. The Board included this term in El Dorado’s permit even though other water users in the Delta watershed with appropriative water rights based on applications filed after 1927 are not bound by this restriction.

El Dorado brought this administrative mandamus proceeding in the superior court to challenge the Board’s inclusion of term No. 91 in its permit. The trial court agreed with El Dorado that by including term No. 91 in El Dorado’s permit, but not in the permits and licenses of other junior appropriators, the Board “contravened . . . critical statutory policies for the appropriation of water: a rule of priority set forth in Water Code section 10500 and area of origin protections set forth in Water Code sections 10505, 10505.5 and 11460 — 11 [4]63.” Accordingly, the trial court ordered the issuance of a writ of mandate directing the Board to set aside its decision to include term No. 91 in El Dorado’s permit, although the Board could conduct further proceedings on El Dorado’s petition for assignment of the state-filed application to determine appropriate conditions relating to El Dorado’s responsibility for Delta water quality.

The Board and two other parties with interests in water from the projects— Westlands Water District (Westlands) and State Water Contractors — have appealed from the judgment, arguing the trial court erred in directing the Board to remove term No. 91 from El Dorado’s permit. In turn, El Dorado has cross-appealed from the judgment to attack the interlocutory ruling of the trial court that made the Bureau, the Department, Westlands, and State Water Contractors parties to the action.

As will be seen, we agree with the trial court that the Board abused its discretion in imposing term No. 91 on El Dorado’s permit, when it has not included that term in the permits and licenses of appropriators in the Delta watershed whose rights are junior to those of El Dorado’s. The Board’s action contravened the rule of priority, which is one of the fundamental principles of California water law, because appropriators junior to El Dorado can divert water when El Dorado cannot. Although the rule of priority is not absolute, the Board is obligated to protect water right priorities unless doing so will result in the unreasonable use of water, harm to values protected by the public trust doctrine, or the violation of some other equally important principle or interest.

Such is not the case here. To the extent the restriction on El Dorado’s right to divert water serves to protect water stored by the projects for export to other regions of the state, the Board has not shown that its interest in protecting the projects’ stored water is of greater importance than the rule of priority. Similarly, although the Board has a legitimate interest in requiring El Dorado to contribute natural flow that it would otherwise divert toward meeting water quality objectives in the Delta, the Board has not shown that its interest in requiring a contribution from El Dorado justifies the subversion of the rule of priority, which has occurred here only because the Board has chosen not to seek similar contributions from what appear to be hundreds of appropriators in the Delta watershed junior to El Dorado. Indeed, by imposing term No. 91 on El Dorado but not on other, junior appropriators, the Board’s goal of helping meet Delta water quality objectives with natural flow, rather than the projects’ stored water, is undercut because natural flow that El Dorado bypasses to improve water quality in the Delta can be diverted by those junior appropriators. Thus, it is questionable the extent to which the limitation imposed on El Dorado will actually serve its ostensible purposes. For this reason, we conclude the Board abused its discretion because the imposition of term No. 91 in these circumstances subverted the rule of priority without adequate justification.

We disagree with the trial court that the Board’s action contravened the county of origin and area of origin statutes in the Water Code, but we likewise reject any argument that those statutes require the inclusion of term No. 91 in El Dorado’s permit.

Finally, we conclude El Dorado does not have standing to appeal from the judgment in its favor to challenge an adverse interlocutory ruling ordering El Dorado to join the Bureau, the Department, Westlands, and State Water Contractors as real parties in interest.

Accordingly, we will dismiss El Dorado’s cross-appeals and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The History of Comprehensive Water Planning in California

This case has its roots in what is perhaps California’s most fundamental water problem, which Erwin Cooper described as “maldistribution of moisture in relation to human needs.” (Cooper, Aqueduct Empire: A Guide to Water in California, Its Turbulent History and Its Management Today (1968) p. 35 (hereafter Cooper, Aqueduct Empire).) As former Presiding Justice John T. Racanelli explained in United States v. State Water Resources Control Bd. (1986) 182 Cal.App.3d 82, 98 [ 227 Cal.Rptr. 161]: “California’s critical water problem is not a lack of water but uneven distribution of water resources. The state is endowed with flowing rivers, countless lakes and streams and abundant winter rains and snowfall. But while over 70 percent of the stream flow lies north of Sacramento, nearly 80 percent of the demand for water supplies originates in the southern regions of the state.”

Efforts to solve this problem date back more than 100 years. In the early 1870’s, President Ulysses Grant appointed a commission under the leadership of Colonel B. S. Alexander (Alexander Commission), to study California’s “irrigation problem.” (Cooper, Aqueduct Empire, supra, p. 42.) The Alexander Commission “was the first to point out . . . that the Central Valley’s most bountiful water supplies lay in the Sacramento River region, in contrast to potential shortages in the valley of the San Joaquin.” (Id. at pp. 42-43.) The commission “made several proposals for basin-wide storage and distribution of water.” (Id. at p. 42.)

The work of the Alexander Commission was followed in the late 1870’s by the work of William Hammond Hall, the first State Engineer, who was appointed to investigate, among other things, “the problems of irrigation” in California. (Stats. 1878, ch. 429, § 3, p. 634; Cooper, Aqueduct Empire, supra, at p. 43.) Hall “took his assignment seriously and spoke out for coordinated region-wide water development. But in that respect he was a generation ahead of his time. ... In a time of rampant self-interest Hall’s farsighted vision of systematic development went largely unrecognized.” (Cooper, supra, at pp. 43-44.)

Forty years later, in 1919, Colonel Robert Bradford Marshall, chief hydrographer of the United States Geological Survey, followed in Hall’s footsteps when he “proposed to the governor of California a series of storage reservoirs and canals in the Central Valley.” (Cooper, Aqueduct Empire, supra, at p. 50; see also Rogers & Nichols, Water for Cal. (1967) § 27, p. 46.) “[I]n the hortatory language of a crusader, [Colonel Marshall] sketched, summarized and espoused for California the inevitable water logistics which seventy years of cumulative geographic and hydrologic evidence demanded: redistribution of water from north to south; an integrated system of statewide waterworks; the Central Valley Project in all its splendid promise; the east and west side canals flanking that valley; tunnels and pumps conveying to southern California a share of the state’s endowment.” (Cooper, supra, at pp. 50-51.)

In 1921, the California Legislature took up the search for a solution to California’s water problem when it directed the state engineering department “to determine a comprehensive plan for the accomplishment of the maximum conservation, control, storage, distribution and application of all the waters of the state, and to estimate the cost of constructing dams, canals, reservoirs or other works necessary in carrying out this plan.” (Stats. 1921, ch. 889, § 4, p. 1686.) Development of this comprehensive water plan for California continued over the next decade, with periodic reports to the Legislature. (See Rogers & Nichols, Water for Cal., supra, § 27, p. 46; Ivanhoe Irr. Dist. v. All Parties (1957) 47 Cal.2d 597, 614 [306 P.2d 824], revd. 357 U.S. 275 [2 L.Ed.2d 1313, 78 S.Ct. 1174].)

In 1927, while the water plan was still being developed, a joint Senate-Assembly committee recognized the need “ ‘to file on, or withdraw from filing by private parties, the water rights to be utilized and required for the consummation of the co-ordinated plan.’ ” (25 Ops.Cal.Atty.Gen. 8, 11 (1955).) Accordingly, the Legislature passed the Feigenbaum Act (Stats. 1927, ch. 286, pp. 508-510), which was later codified as Water Code section 10500 et seq. (See 25 Ops.Cal.Atty.Gen., supra, at p. 11.) The Feigenbaum Act directed the Department of Finance “to make and file an application or applications for any water or the use thereof which in the judgment of the state department of finance is or may be required in the development and completion of the whole or any part of a general or coordinated plan looking towards the development, utilization or conservation of the water resources of the state.” (Stats. 1927, ch. 286, § 1, pp. 508-509; see § 10500.) The act further provided that the priority of any such application would be the effective date of the act, which was July 29, 1927. (Stats. 1927, ch. 286, § 1, p. 508.) “The effect of the [Feigenbaum Act] was to withdraw the then unappropriated waters of the State filed on by the Department of Finance from any further appropriation by private parties.” (25 Ops.Cal.Atty.Gen., supra, at p. 11.) The Feigenbaum Act also gave the Department of Finance the “power, in its discretion, to release from priority or to assign any portion of or all of any of the appropriations that may be filed under the provisions of this act when such release or assignment is for the purpose of development not in conflict with such general or coordinated plan.” (Stats. 1927, ch. 286, § 1, p. 509; see § 10504 [“The board may release from priority or assign any portion of any application filed under this part when the release or assignment is for the purpose of development not in conflict with such general or coordinated plan or with water quality objectives established pursuant to law”].)

“It was under th[e] authorization [of the Feigenbaum Act] that the Director of Finance, beginning in 1927, filed some 37 applications on behalf of the state on streams within the central valley area . . . .” (Ivanhoe Irr. Dist. v. All Parties, supra, 47 Cal.2d at p. 614.) One of those state-filed applications, application No. 5645, was filed on July 30, 1927. That application sought a permit to appropriate for irrigation and domestic use various amounts of water from various points in El Dorado County on tributaries to the American and Cosumnes Rivers, including — as relevant here — the South Fork of the American River.

The History of the Area of Origin Protections

In 1931, the Division of Water Resources submitted a comprehensive series of reports on the State Water Plan to the Legislature. (25 Ops.Cal.Atty.Gen., supra, at p. 13.) That same year, “the Legislature was called upon to amend the Feigenbaum Act of 1927 by extending the date to which State filings would be exempted from requirements of diligence.” (Id. at p. 14.) The bill introduced to make this amendment “was [itself] amended before final passage to provide a further restriction on the authority of the Department of Finance to release from priority or to assign any of the State’s filings.” (Ibid.) Specifically, the Legislature amended the Feigenbaum Act to provide that “no such priority shall be released, or assignment made of any such appropriation that will, in the judgment of the state department of finance, deprive the county in which such appropriated water originates, of any such water necessary for the development of such county.” (Stats. 1931, ch. 720, § 1, pp. 1514-1515.) This amendment was the culmination of several attempts since 1925 “to protect the counties of origin against exportation of water which might be needed by them in their own future development.” (25 Ops.Cal.Atty.Gen., supra, at p. 12.)

Two years later, in 1933, “[a]s the result of the prolonged studies and planning by the state, the Legislature . . . enacted a statute designating the Sacramento-San Joaquin coordinated project as the Central Valley Project” (the CVP). (Ivanhoe Irr. Dist. v. All Parties, supra, 47 Cal.2d at p. 614.) Part of the Central Valley Project Act of 1933 was a provision that later became section 11460, which provides: “In the construction and operation by the department of any project under the provisions of this part a watershed or area wherein water originates, or an area immediately adjacent thereto which can conveniently be supplied with water therefrom, shall not be deprived by the department directly or indirectly of the prior right to all of the water reasonably required to adequately supply the beneficial needs of the watershed, area, or any of the inhabitants or property owners therein.” (Stats. 1933, ch. 1042, § 11, pp. 2650-2651.)

The CVP

“Construction of the CVP began in 1937. It is now one of the world’s most extensive water transport systems. . . . Shasta Dam on the upper Sacramento River is the focal point of the CVP. Shasta Dam was completed in 1945 but began storing water and generating electric power in 1944. The waters of the Sacramento River which flow past the Shasta Dam are augmented by additional water supplies brought through a tunnel from the Trinity River and from reservoirs formed by Folsom and Nimbus Dams on the American River. About 30 miles south of Sacramento, the Delta Cross Channel regulates the passage of Sacramento River water through the Delta to the Tracy Pumping Plant.

“At Rock Slough, a portion of the water is pumped into the Contra Costa Canal for municipal uses in Contra Costa County. At the Tracy Pumping Plant, the water is lifted nearly 200 feet above sea level into the Delta[-]Mendota Canal and flows 117 miles southward to the Mendota Pool. Here, the waters from the north replace the natural flow of the San Joaquin River. At Friant Dam, the flow of the San Joaquin River is impounded and diverted through the Friant-Kem Canal 152 miles south to the southern reaches of the San Joaquin Valley.” (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at p. 99.)

The appropriative water rights necessary for operation of the CVP included rights acquired by assignment of various state-filed applications. Indeed, as of 1957, “[t]he greater portion of water to which the United States ha[d] acquired rights [wa]s by assignments from the state’s Director of Finance. [Citation.] Four assignments of applications for the appropriation of unappropriated water of the Sacramento River, totaling 35,000 second-feet diversion and 12,690,000 acre-feet annual storage, were made on September 3, 1938. On September 30, 1939, three assignments of applications for the appropriation of unappropriated water of the San Joaquin River, totaling 9,500 second-feet diversion and 4,420,000 acre-feet annual storage, were made to the United States.” (Ivanhoe Irr. Dist. v. All Parties, supra, 47 Cal.2d at p. 618.)

The SWP

“Following World War II, state authorities renewed their efforts to develop a comprehensive statewide water plan. In 1951 the Legislature authorized the Feather River and Sacramento-San Joaquin Delta Diversion Project. [Citation.] This project — referred to as the SWP — began operations in 1967 under management of the [Department]. Water from the Feather River is stored behind Oroville Dam and is released into the Feather River and its eventual confluence with the Sacramento River. The water flow continues through the Delta to the Clifton Court Forebay [in the southern Delta] where a portion of it enters the South Bay Aqueduct for delivery to [urban and agricultural areas in Alameda and Santa Clara Counties]. A much greater portion is lifted [at the Harvey O. Banks Delta Pumping Plant] into the Edmund G. Brown California Aqueduct for transport through the San Joaquin Valley and eventually again lifted by a series of pumping stations over the Tehachapi Mountains for delivery and use in the Southern California region.” (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at pp. 99-100, fn. omitted.)

Water Rights for the Federal and State Projects

In 1958 — after initial construction of the CVP was already complete and the project was already in operation — the first permits to appropriate water were issued to the Bureau for the project; the principal permits were issued three years later, in 1961. Six years after that, in 1967, the permits for the SWP were issued. (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at p. 106.)

Meanwhile, due to incomplete information regarding water availability, in 1965 the State Water Rights Board (the Water Rights Board) began inserting a standard permit term known as term No. 80 into permits issued for the appropriation of water within the Sacramento-San Joaquin Delta watershed. Term No. 80 reserved the Water Rights Board’s jurisdiction over the permits “for the purpose of conforming the season of diversion to later findings of the Board on prior applications involving water in the Sacramento River Basin and Delta.”

“In 1976 the Board convened a hearing for two declared purposes; to formulate a water quality control plan for the Delta and to determine whether the water-use permits held by the . . . Bureau and the [Department] should be amended to implement the plan. In August 1978, following an extensive evidentiary hearing over an 11-month period, the Board adopted the ‘Water Quality Control Plan for the Sacramento-San Joaquin Delta and Suisun Marsh’ [the 1978 Delta Plan] . . . and ‘Water Right Decision 1485’. . . . [¶] In the [1978 Delta] Plan the Board established new water quality standards for salinity control and for protection of fish and wildlife in the Delta and Suisun Marsh. In Decision] 1485 the Board modified the permits held by the . . . Bureau and the [Department], compelling the operators of the projects to adhere to the water quality standards as set out in the Plan.” (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at pp. 97-98.) As the Board itself later explained in decision No. 1594, the effect of decision 1485 was “to require the Projects to release water from storage or to curtail diversions when the flow entering the Delta would otherwise be insufficient to meet the water quality standards” set in the 1978 Delta Plan.

Term No. 91 and the Protection of the Projects’ Stored Water

Following the Board’s adoption of decision No. 1485, the Bureau and the Department protested most of the water right applications in the Delta watershed because diversion of water by new applicants would, at certain times, require the projects to release more stored water to meet Delta water quality objectives, and they believed all new appropriators within the Delta watershed should share in the responsibility for meeting those objectives. As an interim solution, to avoid withholding action on the protested applications, the Board adopted standard water right permit term No. 91 on March 25, 1980. According to the Board, “Term 91 prohibits permittees from diverting water when stored Project water is being released to meet Delta water quality standards or other inbasin demands.” Meanwhile, in April 1980, the Board authorized a water availability study to develop a long-term solution that would address the projects’ concerns. Around this same time, the Board revised term No. 80 so that it reserved the Board’s jurisdiction “to change the season of diversion to conform to the results of a comprehensive analysis of the availability of unappropriated water in” the basin or watershed of the applicable permit.

In order No. WR 81-15, issued in November 1981, the Board adopted a method for calculating when term No. 91 conditions exist. In effect, water is considered unavailable for appropriation under term No. 91 when the amount of water the projects are releasing from storage in the Shasta, Oroville, and Folsom reservoirs, plus the amount of water the Bureau is importing from the Trinity River, exceeds the amount of water the projects are exporting from the Delta plus “carriage water,” which is “the amount of additional Delta outflow required to compensate for currents created by the export pumps.” Under such circumstances, the projects are deemed to be releasing their own stored or imported water to meet Delta water quality objectives or other inbasin demands.

In order No. WR 81-15, the Board determined that because “Term 91 is an interim measure, and was developed as a result of Project operator protests precipitated by the adoption of Board Decision 1485 on August 16, 1978, Term 91 shall apply only to permits and licenses having a priority date after August 16, 1978.” The Board anticipated that term No. 91 would be “replaced by the results of the Board’s Water Availability Study for the Sacramento-San Joaquin Delta Watershed.”

Originally, Board staff “proposed a comprehensive analysis of water supply and demand which attempted to identify and quantify water usage by all diverters below the foothill reservoirs within the Delta watershed.” That approach was discontinued, however, due to lack of adequate data. At a hearing in April 1983, the Board considered several other methods for determining water availability in the Delta watershed. Ultimately, however, the Board decided to adopt the term No. 91 methodology on a long-term basis. In decision No. 1594 issued in November 1983, the Board announced that it would continue including term No. 91 in new permits for diversion in the Delta watershed (with certain exceptions not applicable here). The Board also added term No. 91 to many of the term No. 80 permits that did not already include term No. 91. The Board found “the Term 91 Method to be a simple and acceptable method for determining water availability on a real-time basis.”

El Dorado’s Water Right Applications

Meanwhile, in May 1980, El Dorado had filed applications for the proposed South Fork American River (SOFAR) project, which involved diversions from the South Fork of the American River and many of its tributaries. In connection with that project, El Dorado also petitioned for assignment of various state-filed applications, including application No. 5645.

In decision No. 1587, issued in November 1982, the Board partially approved one of El Dorado’s applications, partially assigned various state-filed applications to El Dorado (including application No. 5645), and issued permits on those applications. The Board also released another state-filed application from priority in favor of the applications it had approved and assigned. The Board included term No. 91 in all of the permits it issued to El Dorado, including the permits issued on the state-filed applications, on the ground that “any release from priority or assignment of state-held applications should include conditions to protect Delta water quality objectives.” Apparently El Dorado did not challenge the Board’s decision to include term No. 91 in its permits.

The following year, in decision No. 1594, when it added term No. 91 to many of the term No. 80 permits that did not already include term No. 91, the Board retained term No. 91 in the permits for the SOFAR project.

In March 1991, El Dorado filed four applications to appropriate water from Silver Lake, Capíes Lake, Lake Aloha, and the South Fork of the American River. The following year, in May 1992, having decided not to pursue the SOFAR project, El Dorado surrendered the permits for that project and reassigned the state-filed applications for that project to the Board. At the same time, El Dorado once again petitioned for partial assignment of state-filed application No. 5645. El Dorado explained that the new petition covered the same water rights as the four applications it had filed in March 1991 and that it would seek water rights under the state-filed application as the “first option,” with water rights under the 1991 applications “only as an alternative.”

As amended in 1994, El Dorado’s applications and petition for partial assignment sought to appropriate water for storage at the three lakes and to appropriate water for direct diversion at Folsom Reservoir. The total amount of water sought by direct diversion and rediversion from storage was not to exceed 17,000 acre-feet per year, with the total amount to be taken by direct diversion not to exceed 15,000 acre-feet per year. The water taken by direct diversion was to be limited to water originating in the South Fork of the American River watershed upstream of the El Dorado Canal diversion near Kyburz (apparently, water originating in El Dorado County). The water was to be used for domestic, municipal, and irrigation purposes.

A hearing was held on El Dorado’s applications and petition for assignment in June 1993 and again in October 1995. In August 1996, the Board issued its draft decision. The Board determined that on an annual basis there appeared to be sufficient water available for El Dorado to appropriate. In previous decisions, however, the Board had already determined that based on flow records before and after 1927 there was no unappropriated water available for direct diversion or diversion to storage in the South Fork American River during the late summer and early fall months.

The Board went on to note that El Dorado’s petition for assignment of state-filed application No. 5645 sought “to appropriate water for purposes of use and a place of use that [are] consistent with . .. Application 5645.” As the Board noted, “Fundamentally, Application 5645 was filed to assure a priority claim on the right to divert and use water from the South Fork American River to supply the future needs of El Dorado County and some adjoining areas.” Accordingly, the Board determined that “subject to appropriate conditions to protect the counties o[f] origin,[] public interest and the environment” El Dorado’s petition for partial assignment of state-filed application No. 5645 to divert water to storage at the three lakes, to redivert water released from storage in the lakes at Folsom Reservoir, and to directly divert water from Folsom Reservoir should be approved.

The Board then went on to address whether term No. 91 should be included in El Dorado’s permit. The Board explained that “[t]he purpose of the term is to protect persons claiming paramount rights to divert water from the Delta and the water quality upon which such rights depend and to protect fish and wildlife. . . . The effect of Term 91 is to reduce the months of each year during which a permit holder can divert water.”

The Board noted it had previously included term No. 91 in permits issued to El Dorado in decision No. 1587, when it approved the assignment of various state-filed applications, including application No. 5645, to El Dorado in connection with the SOFAR project, but the Board claimed that decision No. 1587 did “not include an explanation for why the term was imposed.” The Board continued: “Term 91 should apply to condition all new, junior, diversions of water when the satisfaction of inbasin entitlements requires that the CVP and SWP release supplemental project water. . . . [¶] . . . [Sjtate filed Application 5645 is senior to many if not most of the permitted applications under which the Bureau and the Department operate the CVP and the SWP. Further, Water Code section 11128 provides that the watershed of origin protection shall apply to Bureau and Departmental operations of units of the CVP, as defined by the Water Code, irrespective of the priority of the permitted applications under which the projects are operated. Finally, at this time, it would be inequitable to apply Term 91 to Application 5645, because the Board has not imposed Term 91 on many permitted applications which are junior to Application 5645.”

In comments on the draft decision, several parties — including the Department — objected to the Board’s decision not to include term No. 91 in El Dorado’s permit. The Board issued a revised draft decision in September 1996, but did not change its position regarding term No. 91. The Board did state, however, that it would reserve jurisdiction over the permit “via the language of standard condition 80, to change the season of diversion to conform to later findings of the Board concerning the availability of water and the protection of beneficial uses of water in the Sacramento-San Joaquin Delta and the San Francisco Bay.”

In comments on the revised draft decision, the Department continued to object to the Board’s decision not to include term No. 91 in El Dorado’s permit. In addition, Westlands objected to this aspect of the Board’s decision. Westlands urged the Board to “regulate all appropriators to prevent the diversion of water when unappropriated water is unavailable, regardless of whether Term 91 is included in any particular permit.”

The Board issued its final decision — decision No. 1635 — in October 1996. In that decision, without further explanation, the Board affirmed its earlier determination not to include term No. 91 in El Dorado’s permit.

Various parties, including the Bureau, Westlands, and State Water Contractors, petitioned for reconsideration of decision No. 1635 on numerous grounds, including the Board’s failure to include term No. 91 in El Dorado’s permit. In November 1996, the Board granted the petitions, thereby deciding to reconsider whether it should include term No. 91 in El Dorado’s permits.

Several years passed with no apparent action on the reconsideration of decision No. 1635. Meanwhile, in March 2000, the Board issued revised decision No. 1641 following the completion of phases Nos. 1 through 7 of the Bay-Delta water rights hearing — a water rights proceeding commenced to address the implementation of the water quality objectives for the Delta that the Board had adopted in 1995 in the water quality control plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (the 1995 Bay-Delta Plan). In that decision, the Board assigned responsibility for meeting the flow-dependent objectives in the 1995 Bay-Delta Plan. With respect to various watersheds within the Delta watershed, the Board accepted the commitment of various water users to contribute specific amounts of water, with the Bureau and the Department ultimately responsible for ensuring the Delta water quality objectives were met. On an interim basis, the Board required the Bureau and the Department to meet all objectives that were not assigned to other parties. The Board expressed its intent to shortly commence phase No. 8 of the Bay-Delta water rights hearing “to determine the permanent allocations of responsibility with respect to the Sacramento River basin, the Cosumnes River, and the Calaveras River to meet the flow-dependent objectives.” Permanent allocation of responsibility with respect to the San Joaquin River was to occur 12 years later, after the expiration of an agreement the Board had approved addressing the responsibility with respect to that river in the interim.

In April 2001, the Board issued order No. WR 2001-05, which addressed phase No. 8 of the Bay-Delta water rights hearing. Instead of resuming that phase of the hearing, the Board stayed resumption for 18 months, with phase No. 8 to be automatically dismissed at the end of that period unless either the Bureau or the Department insisted on resumption. The purpose of this action, which the Board took at the urging of the Bureau and the Department, among others, was “to facilitate negotiations that may lead to a settlement of the potential responsibilities of numerous water users to implement the objectives of the” 1995 Bay-Delta Plan. Essentially, the effect of the order was to impose on the Bureau and the Department “for an indefinite interim period” all of the responsibility of water users in the watersheds of the Sacramento, Calaveras, and Cosumnes Rivers for meeting the flow-dependent Delta water quality objectives.

Two months later, in June 2001 — over four and one-half years after the Board granted reconsideration of decision No. 1635 — the Board issued a draft order on reconsideration in which it decided term No. 91 should be included in El Dorado’s permit. Numerous parties, including El Dorado, filed comments on the draft order objecting to the Board’s change of position.

In August 2001, the Board issued its order on reconsideration, order No. WR 2001-22. In that order, the Board agreed with those seeking reconsideration “that, notwithstanding the 1927 priority date of Application 5645, El Dorado should be required to curtail diversions when natural and abandoned flows in the Delta watershed are insufficient to meet water quality objectives in the San Francisco Bay and Sacramento-San Joaquin Delta Estuary and other inbasin uses.” In response to El Dorado’s claim “that it has a senior right to flows in the [South Fork of the American River] under area of origin protection laws, and that including Term 91 in its permit would negate its priority of right,” the Board stated: “Term 91 only applies when the Projects are bypassing all natural and abandoned flows and are releasing stored water. When Term 91 is in effect, all natural and abandoned flows are needed for inbasin entitlements and water quality objectives. Thus, the seniority of El Dorado’s right relative to the Projects is irrelevant. ... A water right holder’s seniority over the Projects does not allow diversions when the Projects are not diverting natural and abandoned flows and there is insufficient natural and abandoned flows for additional appropriations. Nor does seniority over the Projects entitle a water right holder to make use of stored water which the Projects diverted to storage when natural flows were sufficient to divert water under the Projects’ priorities, either by taking that water from Project reservoirs or by requiring the Projects to release additional stored water to meet water quality objectives.”

In addressing its previous “concern that it would be inequitable to include Term 91 in El Dorado’s permit when the [Board] has not included Term 91 in many permits that are junior in priority to Application 5645,” the Board recognized that in some term No. 91 conditions, “natural and abandoned flows may be insufficient to meet water quality objectives alone, or may be insufficient to meet water quality objectives, riparian rights and inbasin appropriative rights that have priorities senior to Application 5645. Under these conditions, there is no water available for appropriation. [Citations.] The authority of the [Board] to issue water right permits applies to unappropriated water. [Citation.] Equitable concerns cannot provide a basis for issuing a permit to appropriate water at times when no water is available for appropriation.”

The Board also recognized that in some circumstances “natural and abandoned flows [may] exceed those necessary to satisfy water quality objectives and all inbasin users who are senior to El Dorado, but are insufficient to satisfy all inbasin entitlements.” Under those circumstances, appropriators with priorities junior to El Dorado but without term No. 91 in their permits would be able to divert the excess water while El Dorado would be prohibited from doing so. The Board decided, however, that “it is not clear based on the record in this proceeding how frequently those circumstances occur or whether there are equities that favor some of the junior basin users over El Dorado. The [Board] cannot impose Term 91 on junior inbasin users as part of this proceeding, and to the extent that it may be inequitable to restrict diversions by El Dorado at times when junior inbasin users continue their diversion because their permits do not include Term 91, it would be inequitable to shift that burden to the Projects.”

Ultimately, the Board concluded “that Term 91 constitutes the best method presently available for determining when water is available for appropriation by El Dorado.” The Board “reserve[d] jurisdiction to modify El Dorado’s permit in light of subsequent findings regarding water availability.” In a footnote, the Board noted that El Dorado could “participate] in any proceeding before the [Board] regarding implementation of water quality objectives for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary, and present] evidence and legal or policy arguments in that proceeding regarding El Dorado’s responsibility for meeting water quality objectives or applicability of Term 91 to El Dorado.” Presumably this was a reference to phase No. 8 of the Bay-Delta water rights hearing, which at that time remained stayed at the request of the Bureau and the Department.

The Current Litigation

Dissatisfied with the Board’s decision, in September 2001 El Dorado Irrigation District filed a petition for writ of mandate and complaint for declaratory and injunctive relief in the Sacramento County Superior Court (case No. 01CS01319) claiming, among other things, that the Board’s inclusion of term No. 91 deprived El Dorado “of the protections given to it under the area or watershed of origin statutes (Water Code section 11460 et seq.)” and “negate[d El Dorado’s] priority water right given to it under state law.” El Dorado County Water Agency filed a similar petition and complaint (case No. 01CS01321). In February 2002, the trial court consolidated the two cases with a third case challenging the Board’s decision and assigned the consolidated cases to Judge Lloyd Connelly.

In May 2002, the Board moved to dismiss the petitions filed by El Dorado to the extent they challenged the Board’s decision regarding term No. 91 because El Dorado had not named any real parties in interest in its petitions and thereby had failed to join various parties whom the Board claimed were either indispensable or necessary. The court denied that motion. In doing so, the court found the Bureau, the Department, State Water Contractors, and Westlands were necessary, but not indispensable, parties and ordered El Dorado to join them. The court further. ordered that in equity and good conscience the actions would be allowed to proceed even if those parties failed to appear or were dismissed from the actions based on valid sovereign immunity or statute of limitations defenses.

Subsequently, El Dorado filed amended petitions naming the Bureau, the Department, State Water Contractors, and Westlands as real parties in interest. The Bureau specially appeared to advise the court that it would not waive its sovereign immunity and participate in the action.

Meanwhile, in October 2002, the Board extended the stay and postponed the automatic dismissal of phase No. 8 of the Bay-Delta water rights hearing until January 2003. According to the Board, “[t]he Projects did not request resumption of phase eight on or before January 31, 2003, and phase eight was dismissed automatically.” Accordingly, as of early 2003, the Bureau and the Department continued — albeit on an interim basis — to be ultimately responsible for meeting Delta water quality objectives, just as they had been since the adoption of decision No. 1485 in 1978. The Board has yet to make any final decision regarding the allocation of responsibility among the water users in the Delta watershed for meeting those objectives.

Eventually, in December 2003, the trial court issued its final ruling on El Dorado’s petitions. The court determined that “when the Board included Term 91 in El Dorado’s permit . , the Board contravened . . . critical statutory policies for the appropriation of water: a rule of priority set forth in Water Code section 10500 and area of origin protections set forth in Water Code sections 10505, 10505.5 and 11460-11[4]63. The Board incorrectly deemed these statutory priorities and protections to be irrelevant.”

The trial court first explained that allowing “appropriators with priority dates junior to El Dorado’s 1927 priority date ... to continue their diversions under Term 91 conditions when El Dorado would be required to curtail its diversions” was “contrary to ... the rule of priority under California water law, as modified by Water Code section 10500.” Although “the Board has authority to modify the priorities of appropriative water rights to the extent necessary to assure the reasonable uses of state water resources in the public interest” and may “alter the rule of ‘first in time, first in right’ through permit conditions giving a higher priority to a preferred beneficial use occurring later in time,” “the Board’s authority to impose terms and conditions under Water Code sections 1253 and 1257 cannot properly include authority to impose terms and conditions that effectively nullify legislative policies for state-filed applications.” By determining “that the 1927 priority date was irrelevant to the operation of Term 91 and that equitable considerations may favor the junior rights,” the Board “acted contrary to the policy of Water Code sections 10500 and 10504.”

The trial court next explained that “the preference in Water Code sections 11460 and 11128 for El Dorado’s use of water within the watershed of origin to meet El Dorado’s increasing development needs was intended to trump the Projects’ use of that water — including previously stored water — for project operations outside the watershed.” Similarly, “the preference in Water Code sections 10505 and 10505.5 for El Dorado’s use of water originating in El Dorado County to meet its development needs properly trumped out of county use of that water by parties holding permits for appropriation of the water that were issued pursuant to an assignment of a section 10500 state-filed application and that were not subject to Term 91.”

Based on this reasoning, the court determined the Board had to set aside its decision to include term No. 91 in El Dorado’s permit, although the Board could conduct further proceedings on El Dorado’s petition to determine appropriate conditions relating to El Dorado’s responsibility for Delta water quality. Any such conditions, however, could not “significantly deprive El Dorado of the statutorily mandated priorities and preferences.”

The court entered judgment on December 23, 2003, ordering the issuance of a peremptory writ of mandate “requiring the . . . Board ... to set aside the provisions of Order WR 2001-22 that include Term 91 in the permit issued” to El Dorado and “to conduct such proceedings as the Board, in its sound discretion, deems necessary to assure that the terms and conditions of the permit are consistent with Water Code sections 10500, 10505, 10505.5, 11460 and 11128.”

The Board, Westlands, and State Water Contractors filed timely notices of appeal from the judgment. El Dorado filed timely notices of cross-appeal. This court later granted a motion by the Department to participate as a cross-respondent in El Dorado’s cross-appeals.

DISCUSSION

I

Standard Of Review

“[I]n undertaking to allocate water rights, the Board performs an adjudicatory function.” (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at p. 113.) Accordingly, Code of Civil Procedure section 1094.5 applies to a writ proceeding seeking to challenge a water rights decision by the Board. (§ 1126.) “The inquiry in such a case shall extend to the questions whether the [Board] has proceeded without, or in excess of jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if the [Board] has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence.” (Code Civ. Proc., § 1094.5, subd. (b).)

“In a case[, like the present case,] wherein no limited trial de novo is authorized by law, ... the trial court . . . exercises an essentially appellate function in that only errors of law appearing on the administrative record are subject to its cognizance. In such a case, ... the trial and appellate courts occupy identical positions with regard to the administrative record, and the function of the appellate court, like that of the trial court, is to determine whether that record is free from legal error.” (Merrill v. Department of Motor Vehicles (1969) 71 Cal.2d 907, 915-916 [80 Cal.Rptr. 89, 458 P.2d 33].)

Of course, questions of law are subject to de novo review. (E.g., Pollak v. State Personnel Bd. (2001) 88 Cal.App.4th 1394, 1404 [107 Cal.Rptr.2d 39].) The proper interpretation of a statute and its application to undisputed facts is a question of law. (Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 357 [127 Cal.Rptr.2d 516, 58 P.3d 367].)

II

Imposition of Term No. 91

We begin with the Board’s arguments as to “why the trial court erred by finding that Term 91 violates the principles of priority, [area] of origin and county of origin statutes.”

The Board asserts it has broad discretion to grant a permit to appropriate water subject to “terms and conditions as in its judgment will best develop, conserve, and utilize in the public interest the water sought to be appropriated.” (§ 1253; see also Bank of America v. State Water Resources Control Bd. (1974) 42 Cal.App.3d 198, 212 [116 Cal.Rptr. 770].) The Board further asserts it has broad discretion to impose conditions on the assignment of a state-filed application. (See § 10504 [“The board may . . . assign any portion of any application” filed under the Feigenbaum Act].)

We do not disagree with either of these assertions. The question, however, is whether the Board abused this broad discretion by imposing term No. 91 on El Dorado’s permit. More specifically, did the Board abuse its discretion (as the trial court concluded) because the imposition of term No. 91 on El Dorado’s permit contravened the rule of priority, as well as the area of origin and county of origin statutes?

A

The Rule of Priority

We start with the rule of priority. “California operates under a ‘dual’ or hybrid system of water rights which recognizes both doctrines of riparian rights and appropriation rights. . . . The riparian doctrine confers upon the owner of land the right to divert the water flowing by his land for use upon his land, without regard to the extent of such use or priority in time. . . . [¶] . . . [T]he appropriation doctrine confers upon one who actually diverts and uses water the right to do so provided that the water is used for reasonable and beneficial uses and is surplus to that used by riparians or earlier appropriators. Appropriators need not own land contiguous to the watercourse, but appropriation rights are subordinate to riparian rights so that in times of shortage riparians are entitled to fulfill their needs before appropriators are entitled to any use of the water. [Citation.] And, as between appropriators, the rule of priority is ‘first in time, first in right.’ [Citation.] The senior appropriator is entitled to fulfill his needs before a junior appropriator is entitled to use any water.” (United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at pp. 101-102.)

Over 60 years ago, our Supreme Court stated with respect to the Board’s predecessor, the Department of Public Works, that “[i]t should be the first concern of the court in any case pending before it and of the department in the exercise of its powers ... to recognize and protect the interests of those who have prior and paramount rights to the use of the waters of [a] stream.” (Meridian, Ltd. v. San Francisco (1939) 13 Cal.2d 424, 450 [90 P.2d 537], italics added.) More recently, our Supreme Court stated that “water right priority has long been the central principle in California water law.” (City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, 1243 [99 Cal.Rptr.2d 294, 5 P.3d 853], italics added; see also Hutchins, The Cal. Law of Water Rights (1956) p. 130 [“Priority of right is the essence of the appropriation doctrine”].)

Of course, the rule of priority applies only to the use of natural or abandoned flows in a watercourse. No riparian or appropriator has a right to use water that was previously stored or imported by another upstream and then released into the watercourse for use downstream. (See §§ 1201 [“All water flowing in any natural channel, excepting so far as it has been or is being applied to useful and beneficial purposes upon, or in so far as it is or may be reasonably needed for useful and beneficial purposes upon lands riparian thereto, or otherwise appropriated, is hereby declared to be public water of the State and subject to appropriation in accordance with the provisions of this code”], 7075 [“Water which has been appropriated may be turned into the channel of another stream, mingled with its water, and then reclaimed”]; Lindblom v. Round Valley Water Co. (1918) 178 Cal. 450, 457 [173 P. 994].)

Furthermore, it is important to understand that priority of right is significant only when the natural or abandoned flows in a watercourse are insufficient to supply all demands being made on the watercourse at a particular time. Obviously, when flows are of sufficient abundance that every water user can fulfill his or her needs, the rule of priority does not matter.

As for the determination of an appropriator’s priority over other appropriated, for appropriations since 1914 an appropriator’s priority is generally fixed by the date of his or her application to appropriate the water. (See § 1450; Hutchins, The Cal. Law of Water Rights, supra, at pp. 94-95, 97, 116.) Section 10500 specifically confirms this application-date priority with respect to applications filed by the state under the Feigenbaum Act. (§ 10500 [“Applications filed pursuant to this part shall have priority, as of the date of filing, over any application made and filed subsequent thereto”].)

The rule of priority is of utmost importance to the Board’s role in issuing appropriation permits because “[a]s prerequisite to the issuance of a permit to appropriate water ... [¶] ... [¶] (d) [t]here must be unappropriated water available to supply the applicant.” (§ 1375, subd. (d); see also United States v. State Water Resources Control Bd., supra, 182 Cal.App.3d at p. 102 [the decision of whether unappropriated water is available “requires] an examination of prior riparian and appropriative rights”].)

B

The Effect of Term No. 91 on the Rule of Priority

As previously explained, the trial court concluded the inclusion of term No. 91 in El Dorado’s permit contravened “the rule of priority under California water law, as modified by Water Code section 10500” because “appropriators with priority dates junior to El Dorado’s 1927 priority date would be able to continue their diversions under Term 91 conditions when El Dorado would be required to curtail its diversions.” The Board contends, however, that the inclusion of term No. 91 in El Dorado’s permit was a proper exercise of its discretion because “the vast majority of the time when Term 91 is in effect, no water is available for appropriation by either [El Dorado] or the junior appropriators.” According to the Board, since most of the time there is no water available for El Dorado to appropriate when term No. 91 conditions exist, even taking into account its 1927 priority, El Dorado’s priority over the junior appropriators who do not have term No. 91 in their permits or licenses is irrelevant.

To support its argument, the Board purports to show how term No. 91 would have operated if it had been applied to all major diverters in the Delta watershed under the hydrological conditions during the 73 years between 1922 and 1994. According to the Board’s data, term No. 91 conditions would have existed in 5 Aprils, 15 Mays, 49 Junes, and 67 Julys. The Board then seeks to show how often El Dorado would have been required to curtail its diversions if term No. 91 had been applied by priority during that historical period — that is, if the major diverters in the Delta watershed had been “required to curtail their diversions in order of priority based on water availability.” Dividing the various diverters into groups based on their priority dates, the Board contends El Dorado’s group would have been required to curtail its diversions in 2 Aprils, 4 Mays, 37 Junes, and 62 Julys. In the Board’s view, this shows that “[t]he amount of time when Term 91 would have been in effect, but [El Dorado’s group] would not have been curtailed ranges from just 4 to 16 percent. [Citation.] [¶] Put another way, 84 to 96 percent of the time, either Term 91 would not have been in effect, or no water would have been available for appropriation by” El Dorado. The Board also asserts that “[d]uring the periods when Term 91 would have been in effect, [El Dorado’s group and all junior appropriators] would have been curtailed approximately three quarters of the time.” Based on these figures, the Board contends that “Term 91 accurately reflects when water is available for appropriation under the 1927 priority of [El Dorado’s] permit.”

We cannot agree. First of all, in determining whether the inclusion of term No. 91 contravened El Dorado’s priority, we are not concerned with those times when term No. 91 would not have been in effect. Obviously, term No. 91 cannot contravene El Dorado’s priority when term No. 91 conditions do not exist and El Dorado is not prohibited from diverting by that term. As we have noted, priority of right is important only when the natural or abandoned flows in a watercourse are insufficient to supply all demands being made on the watercourse — i.e., during periods of water shortage, such as when term No. 91 is in effect. Accordingly, we limit our examination of the Board’s data to those times.

As to those times, the Board contends term No. 91 accurately reflects water availability for El Dorado even taking into account its 1927 priority because 75 percent of the time during term No. 91 conditions there would have been no water available for El Dorado or any of the appropriators junior to El Dorado. What this means, of course, is that 25 percent of the time when term No. 91 conditions existed between 1922 and 1994, there would have been water available for El Dorado to divert based on its 1927 priority. If El Dorado were always prohibited from diverting under term No. 91 conditions, and junior appropriators were not, then El Dorado’s priority would have been violated 25 percent of the time because 25 percent of the time those junior appropriators would have been allowed to divert the available natural flow that should have gone to El Dorado first under the rule of priority.

As to the 75 percent of the time when the Board contends there would have been no water available for El Dorado or any of the junior appropriators to divert, term No. 91 may accurately reflect water availability — taking into account the need for water to meet water quality objectives in the Delta — but its inclusion in El Dorado’s permit still contravenes the rule of priority. This is so because even under those conditions the junior appropriators would not have been prohibited from diverting by term No. 91 while El Dorado would have been. Of course, under the rule of priority, neither El Dorado nor any of the junior appropriators is entitled to divert water when all of the natural and abandoned flows otherwise available to them are required to fulfill the needs of downstream riparians and senior appropriators. Term No. 91 is not necessary to prohibit diversions under such circumstances because the rule of priority compels that result. There may be circumstances, however, in which there is sufficient natural flow to satisfy the needs of downstream riparians and senior appropriators, with some surplus, but Delta water quality objectives are still unmet. In such circumstances, there is natural flow available for appropriation under the rule of priority, so the inclusion of term No. 91 in El Dorado’s permit ostensibly serves the purpose of preserving the surplus natural flow to assist in meeting water quality objectives in the Delta. The problem is that, without term No. 91 in their permits or licenses, appropriators junior to El Dorado can divert this surplus water. Thus, the natural flow El Dorado is required to bypass under term No. 91 may never actually reach the Delta. In this circumstance also, the priority of El Dorado’s water right is contravened.

Of course, the rule of priority is not absolute, nor is the Board without power to act contrary to that rule in appropriate circumstances. Sometimes, a competing principle or interest may justify the Board’s taking action inconsistent with a strict application of the rule of priority.

For example, the California Constitution provides that all water use must be reasonable. (Cal. Const., art. X, § 2.) “[T]he rule of reasonable use as enjoined by . . . the Constitution applies to all water rights enjoyed or asserted in this state . . . .” (Peabody v. City of Vallejo (1935) 2 Cal.2d 351, 383 [40 P.2d 486].) Thus, “no one can have a protectible interest in the unreasonable use of water” (City of Barstow v. Mojave Water Agency, supra, 23 Cal.4th at p. 1242), and when the rule of priority clashes with the rule against unreasonable use of water, the latter must prevail. Every effort, however, must be made to respect and enforce the rule of priority. A solution to a dispute over water rights “must preserve water right priorities to the extent those priorities do not lead to unreasonable use.” (Id. at p. 1243, italics added.)

Another important principle that may compete with the rule of priority is the public trust doctrine. That doctrine recognizes that “the sovereign owns ‘all of its navigable waterways and the lands lying beneath them “as trustee of a public trust for the benefit of the people.” ’ ” (National Audubon Society v. Superior Court (1983) 33 Cal.3d 419, 434 [189 Cal.Rptr. 346, 658 P.2d 709].) Ecological values are among those values protected by the public trust. (Id. at p. 435.) “The state has an affirmative duty to take the public trust into account in the planning and allocation of water resources, and to protect public trust uses whenever feasible.” (Id. at p. 446.) Indeed, this duty “prevents any party from acquiring a vested right to appropriate water in a manner harmful to the interests protected by the public trust.” (Id. at p. 445.) Thus, like the rule agai