Hanson Bridgett Facilitates Three New Laws Protecting Water Agencies and Customers From Higher Costs
Legislation Will Benefit Customers Who Conserve Water and Increase Rate-making Transparency
October 4, 2024 (Los Angeles, CA) — In a win for California water agencies and their water-conserving customers, Governor Gavin Newsom in late September signed into law three new bills that will ensure water rate equity and transparency, as well as minimize rate hikes due to lawsuits. California law firm Hanson Bridgett LLP was pleased to contribute to the passage of all three bills, each of which amends the Proposition 218 Omnibus Implementation Act.
“This trio of laws benefits the water sector significantly. In particular, this is great news for water customers who conserve,” said Claire Collins, head of Hanson Bridgett’s Public Revenue team, which specializes in representing public water suppliers. “The legislation will ensure that big water users pay their fair share of infrastructure costs without being subsidized by users who consume less, and that water agencies aren’t ambushed by lawsuits. Unnecessary lawsuits raise the costs of water for everyone, with a disproportionate impact on low-income customers.”
SB 1072: Usage of Excess Funds
Customers who use less water will especially benefit from SB 1072, which requires any charges exceeding the cost of services to be used to defray future costs. California’s Constitution requires public water agencies to limit their charges to each customer’s proportional cost of the services received, but it does not specify what to do with excess funds. Heavy consumers often sue water agencies for the return of excess funds, seeking to avoid paying their share of larger facilities needed to serve their larger demand. Granting such refunds causes lower-demand users to subsidize the cost of those facilities unfairly. SB 1072 clarifies that refunds are permissible only if a statute explicitly provides for them—such as refunds issued to correct billing errors. Through drafting assistance and technical advice, Collins worked closely with clients and State Senator Steve Padilla at each step of the SB 1072 legislative process. Collins testified in support of the bill before committees of both the Assembly and Senate.
AB 1827: Meter Charges & Peaking
AB 1827 affirms the long-standing practice of allocating certain water service costs to customers based on meter size and peak water use. The law codifies that the incrementally higher costs of water service associated with higher water use, maximum potential use, and projected peak use can be factored into the rates charged. Collins provided input in her capacity as general counsel for the Irvine Ranch Water District, the largest water agency in Orange County.
AB 2257: Pre-Adoption Objections to Rates
Water agencies have repeatedly faced lawsuits from “Monday-morning quarterbacks” who object to a water rate structure only after the rate has been adopted—and after customers have already been charged. These objections often are not known to the agency until the lawsuit is filed. AB 2257 authorizes water agencies to create official procedures requiring an objection before rate adoption, ensuring that agencies can respond to objections and fix any errors in advance. Only ratepayers who filed an objection will be permitted to challenge the rate structure in court, and the admissible evidence will be limited to the official record of proceedings. This bill is the culmination of a multi-year effort by water agencies throughout California, including Hanson Bridgett clients, to adopt reasonable “administrative exhaustion” procedures.
“Hanson Bridgett has been representing public agencies since the firm was formed in 1958,” said Allison Schutte, Hanson Bridgett’s Government Section Leader. “Our attorneys work hand in hand with agencies, engineers, and rate consultants to ensure that rates and fees subject to Proposition 218 are fair, reasonable, and defensible. We are proud to work on behalf of public agencies and the customers they serve to keep California’s water safe and affordable.”
Claire Collins and Allison Schutte are available to speak with the media about the impact of this important new legislation.
About Hanson Bridgett LLP
Hanson Bridgett LLP is a full-service AmLaw 200 law firm with more than 200 attorneys across California. Creating a diverse workforce by fostering an atmosphere of belonging and intentional support has been a priority at Hanson Bridgett since its founding in 1958. We are dedicated to creating an environment that provides opportunities for people with varied backgrounds, both for attorneys and administrative professionals. As the first law firm recognized as a certified B Corp, we are committed to the communities where our employees live and work and consider it part of our professional obligation to serve justice by encouraging and supporting pro bono and social impact work.
For media inquiries contact:
Patrick L. Clos
Communications Manager
Hanson Bridgett LLP
415-995-5098
pclos@hansonbridgett.com