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May 30, 2018  |  Written by Lauren D. Bernadett

Fifth District Court of Appeal to Hear Restore Hetch Hetchy’s Appeal of Preemption and Statute of Limitations Issues

Today, the Fifth District Court of Appeal will hear oral argument in Restore Hetch Hetchy v. City and County of San Francisco.  Although the lawsuit is based on the allegation that diverting water via the dam and reservoir in Hetch Hetchy Valley violates the California Constitution, the issues on appeal are whether, in this case, the California Constitution is preempted by federal law, and whether the non-profit’s claim is blocked by a statute of limitations.  The outcome will determine how Restore Hetch Hetchy’s litigation efforts to restore this part of Yosemite National Park may proceed and will provide important precedent to environmental law practitioners.

In 2015, Restore Hetch Hetchy filed a lawsuit against the City and County of San Francisco (San Francisco) based on the single claim that diverting water via the O’Shaughnessy Dam in Hetch Hetchy Valley is an unreasonable method of diversion prohibited by Article X, section 2, of the California Constitution.  San Francisco demurred, claiming that California’s constitutional prohibition on unreasonable methods of diversion was, in this circumstance, preempted by the federal Raker Act.  The Raker Act directed the construction of the dam and reservoir at Hetch Hetchy in order to supply water and electricity to San Francisco.  The trial court found that an interpretation of Article X, section 2 prohibiting the reservoir and dam is preempted because such an interpretation is inconsistent with the Raker Act.  The court also observed that Article X, section 2 was enacted after the Raker Act directed construction of the O’Shaughnessy Dam, and after the dam’s construction was complete.  Thus, the trial court found that retroactive application of the constitutional provision would require that the dam be torn down in disregard of the bargaining required for the project.

In its demurrer, San Francisco also argued that the statute of limitations for challenging the construction of the dam and reservoir expired.  The trial court agreed.  It found the applicable statute of limitations was four years, and that Restore Hetch Hetchy’s cause of action accrued in 1928, when Article X, section 2 was enacted.  Therefore, the court rejected Restore Hetch Hetchy’s arguments based on theories of continuing violation and continuous accrual.

Because the trial court found the application of Article X, section 2 was preempted by federal law, and that the claim was untimely, it declined to determine whether San Francisco’s method of diversion is unreasonable under the California Constitution.

Likewise, the substantive constitutional determination is not the crux of Restore Hetch Hetchy’s appeal.  Instead, the non-profit argues that (1) the trial court’s conclusion that the Raker Act preempts Article X, section 2’s application to the dam and reservoir in Hetch Hetchy Valley was erroneous, and (2) no statute of limitations should apply to its claim.

On appeal, San Francisco argues that the trial court correctly found that Restore Hetch Hetchy’s claim fails under preemption principles and is time-barred.  San Francisco also argues that Restore Hetch Hetchy fails to state a claim as a matter of law, and that the non‑profit is asking the court to require water right holders “to continually reconsider their method of diversion to further the greatest number of beneficial uses.”  This, San Francisco argues, is a novel request and unsupported by existing law.

The case on appeal drew the interest of several amicus curiae.  Former Yosemite superintendents, the Stanford Environmental Law Clinic, and former Attorneys General and secretaries of California’s natural resources agency submitted amicus briefs supporting Restore Hetch Hetchy.  The Santa Clara Valley Water District and, jointly, the Association of California Water Agencies and the Northern California Water Association filed amicus briefs supporting San Francisco.

The State Water Resources Control Board (State Water Board) filed an amicus brief explicitly supporting neither party.  It argues that Restore Hetch Hetchy’s claim is not time-barred, and the appellate court should clarify that the State Water Board’s authority to exercise its regulatory authority is not restricted by a statute of limitations.  The State Water Board also argues that Article X, section 2 does not conflict with the Raker Act in most or all circumstances, and that the trial court should have determined whether state law applies and what it requires before reaching the issue of preemption.

After oral argument, the appellate court will have 90 days to issue its opinion.

The final determination on the issues in Restore Hetch Hetchy’s case will advise environmental law practitioners how to approach future challenges based on preemption and statutes of limitations.  The trial court noted that savings clauses – which are often at the root of preemption claims – can be worded similarly, so case law applying a savings clause can be applied to a case involving a similar savings clause from a different statute.  Thus, the holding in this case could be applied to other laws to determine preemption claims.  Likewise, the final holding will clarify approaches to statute of limitations defenses in cases challenging long-standing projects and cases that involve constitutional challenges.

For additional information on this issue please contact Lauren Bernadett at 916-446-7979 or lbernadett@somachlaw.com.

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