The San Diego County Water Authority announced that it has filed suit against the San Diego Local Agency Formation Commission (LAFCO), challenging LAFCO’s decision to allow two local water agencies to leave the Water Authority without paying certain fees.
In July 2023, LAFCO allowed the Fallbrook and Rainbow water agencies to leave the Water Authority. The agencies would instead get their water supply from Riverside County, in hopes of cheaper water rates. The authority says that this would increase water rates for the rest of the area's water agencies, claiming that it would lead to $140 million in costs to the rest of its service area over the next decade.
The Water Authority said that its suit would “stop an imminent and illegal rate increase from harming farmers, working families, small businesses, and other water ratepayers across San Diego County.”
In the suit, the San Diego County Water Authority claims that LAFCO failed to comply with several laws, including the County Water Authority Act, the Metropolitan WaterDistrict Act, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, and the California Environmental Quality Act (CEQA).
“Litigation is a last resort, but LAFCO’s deeply flawed decision leaves us with no choice but to stand up for residents, businesses and the environment,” said Water Authority Board Chair Mel Katz, adding that LAFCO denied a request by the Water Authority to extend a key litigation deadline to accommodate settlement talks. “Even though we were forced to file this lawsuit, we have had several good-faith discussions with Fallbrook and Rainbow, and we look forward to continued talks in hopes of finding a mutually agreeable resolution outside the court process.”
The Water Authority’s lawsuit also argues that LAFCO failed to assess and/or address the detachment’s impacts to:
- The environment, including the effects of Fallbrook and Rainbow taking more water from the strained Sacramento-San Joaquin Bay-Delta
- Disadvantaged communities that will bear the brunt of cost shift
- Farmers in other parts of the Water Authority service area
“LAFCO should have acted as a backstop to protect the region’s ratepayers from this misguided and outdated attempt by these agencies to secure cheaper water without regard to the loss of reliability to their ratepayers and at the expense of the entirety of the Water Authority, i.e., its other 22 members, its constituents, and the region as a whole,” according to the suit, filed in San Diego County Superior Court.
LAFCO’s approval of the Fallbrook and Rainbow detachment applications in July 2023 included an exit fee for the two districts. The Water Authority claims that this LAFCO-designed fee fell $140 million short of covering the two agency’s costs over the first decade of detachment.
“LAFCO staff reverse-engineered an exit fee that would impose the least possible economic burden on Fallbrook and Rainbow, ignoring the guidance provided by its own expert and relying on stale data and projections, despite the availability of updated revenue figures that could have been used in calculating the fee,” the lawsuit said. “Despite prior Commission discussion and the public discourse about the need for more data and options, LAFCO approved the Resolutions that adopted staff’s arbitrary number for exit fees without any substantial evidence or legal support.”
The Water Authority also claims that, in violation of state law, the detachment approval by LAFCO denied voters the opportunity to vote on the proposal.
