Introduction
A recent decision from the Sixth District Court of Appeal in Rosedale-Rio Bravo Water Storage District v. Buena Vista Water Storage District, et al. (Dec. 23, 2024, H051858) (nonpub. opn.) (Rosedale Decision) offers insight into how future courts may treat the interpretation and applicability of California’s wheeling statutes. Enacted in 1986 as Water Code sections 1810-1814 (Wheeling Statutes), California’s Wheeling Statutes generally require that a public agency with unused capacity in its water conveyance facility may not deny a water transferor the use of the conveyance facilities to “wheel” the water being transferred. Wheeling refers to the use of a water conveyance facility by someone other than the owner or operator to transport water. The prohibition against denying access to wheeling transactions is subject to certain listed conditions, and the water transferor must pay fair compensation, as defined, for that use.
Three prior cases have interpreted the terms of the Wheeling Statutes: San Luis Coastal Unified School Dist. v. City of Morro Bay (2000) 81 Cal.App.4th 1044, 1053-1054 (San Luis Coastal) (interpreting “bona fide transferor” of water includes both “transferees” and “transferors” of water); Metropolitan Water Dist. v. Imperial Irrigation Dist. (2000) 80 Cal.App.4th 1403, 1433 1434 (interpreting “fair compensation” as permitting an irrigation district to adopt a fixed wheeling rate based on the volume of water transported); and Central San Joaquin Water Conservation Dist. v. Stockton East Water Dist. (2016) 7 Cal.App.5th 1041, 1045 (Central San Joaquin) (defining a water conveyance system as including “a dam, a tunnel, canals, improved natural creek channels, and a pipeline to transport water”).
In December 2024, the Rosedale Decision interpreted two terms found in the Wheeling Statutes. In affirming a trial court’s decision that the Wheeling Statutes applied to a water transferor moving water through Isabella Dam and reservoir, the appellate court determined that the definition of “owner,” as defined in Water Code section 6005 (Section 6005), applies to the Wheeling Statutes such that the public entities which operate the capacity of Isabella Dam were considered its “owners.” Furthermore, the appellate court affirmed the trial court’s decision that Isabella Dam and its reservoir are considered a “conveyance facility” under the Wheeling Statutes because the Kern River passes through Isabella Dam and reservoir before being diverted and allocated.
Factual Background
The Appellant, Rosedale-Rio Bravo Water Storage District (Rosedale), is a California water storage district that purchased ranch lands between 2013 and 2018 (known collectively as the “Onyx Lands”) in the South Kern River Valley. The purchases included the ranch lands’ claimed water rights, referred to as the “SF Water Rights.” Subsequently, Rosedale developed a project (known as the “Onyx Project”) for the purpose of addressing groundwater sustainability in Rosedale. Under the Onyx Project, Rosedale intended to transfer water downstream through the South Fork Kern River and Isabella Dam to the main stem of the Kern River. The transferred water would then be diverted from the Kern River for groundwater recharge within the boundaries of Rosedale.
The Respondents were the City of Bakersfield, Kern Delta Water District, North Kern Water Storage District, Kern County Water Agency, Buena Vista Water Storage District, and the Kern River Water Master, which operate the capacity of Isabella Dam and reservoir to store and convey water (collectively, “Kern River Interests”).
Rosedale sued the Kern River Interests, seeking an order from the court declaring that it could change the point of diversion and place of use for its Onyx Lands’ claimed water rights to facilitate the transfer. Furthermore, Rosedale sought an order directing the Kern River Water Master to account for the transferred water that Rosedale would allow to flow to and through Isabella reservoir and permit the delivery of such water downstream as directed by Rosedale.
The trial court granted a demurrer filed by the Kern River Interests on the grounds that Rosedale failed to exhaust its administrative remedies by first pursuing an application to wheel water through Lake Isabella.
Appellate Court Determines that the Wheeling Statutes Apply to the Proposed Water Transfers
The Sixth District Court of Appeal resolved two main issues on appeal: (1) whether the Kern River Interests are considered “owners” of Isabella Dam and reservoir; and (2) whether Isabella Dam and reservoir are water conveyance facilities subject to the Wheeling Statutes’ administrative procedures.
In addressing the first question, the appellate court agreed with the trial court that the definition of “owner” in Section 6005 applies to the Kern River Interests and rejected Rosedale’s contention that the Wheeling Statutes do not apply because the United States, and not the Kern River Interests, is the owner of Isabella Dam and reservoir. Section 6005 provides that the owner of a dam or reservoir includes a municipal corporation, public agency, district, or person who “control[s], operate[s], maintain[s], [or] manage[s]” a dam or reservoir. Rosedale alleged that the Kern River Interests – through their agent, the Kern Water Master – exercised some control over Isabella Dam and reservoir, and thus the appellate court affirmed the trial court’s determination that the Kern River Interests were owners for purposes of applying the Wheeling Statutes. The court reasoned that although Section 6005 is located in a different division of the Water Code than the Wheeling Statutes, under well-established canons of statutory construction, when the same word appears in different places within a statutory scheme, courts generally presume that the Legislature intended the word to have the same meaning each time it is used. Moreover, the relief sought by Rosedale recognized that the Kern River Interests exert control over the release and allocation of water from Isabella Dam and reservoir to the Kern River for diversion downstream. For that reason, the court determined that Rosedale’s own allegations demonstrated that the Kern River Interests are owners for purposes of the Wheeling Statutes pursuant to the definition of “owner” in Section 6005.
Turning to the second issue, the court rejected Rosedale’s argument that Isabella Dam and reservoir are storage facilities that do not constitute a water conveyance facility within the meaning of the Wheeling Statutes. Rosedale’s own allegations established that Isabella Dam and reservoir are an integral part of the water conveyance system for the Kern River because, as alleged by Rosedale, the river water passes through Isabella Dam and reservoir before being diverted. In relying on San Luis Coastal, the court reasoned, despite the Water Code making no mention of water storage facilities, “incidental use of the storage facilities will be necessary for the transportation of water. Such necessary and incidental use of integrated storage facilities must be considered as within the scope of the statutory scheme for the conveyance of water.” (San Luis Coastal, supra, 81 Cal.App.4th at p. 1049.) Moreover, the court applied the definition of a water conveyance system from Central San Joaquin as including “a dam, a tunnel, canals, improved natural creek channels, and a pipeline to transport water” from a reservoir to a water district’s service area to determine that Isabella Dam and reservoir constitute a water conveyance system within the meaning of the Wheeling Statutes. (Central San Joaquin, supra, 7 Cal.App.5th at p. 1045.)
Having determined that the Wheeling Statutes apply in this case, the court then explained that the administrative remedies exhaustion doctrine also applied. The appellate court agreed Rosedale failed to exhaust its administrative remedies by not first pursuing an application to wheel water with the Kern River Interests. On those grounds, the appellate court upheld the demurrer without leave to amend.
In conclusion, although the opinion was not certified for publication, its reasoning may apply in future cases interpreting the Wheeling Statutes.
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