Fees to increase for many state water programs

Issue Date: September 28, 2011
By Kate Campbell

Fees will be going up for a variety of water-related programs and services. The State Water Resources Control Board voted last week to shift nearly $25 million in new or increased program fees to participants in the programs.

The decision was made after the state cut nearly all General Fund support for board programs. Adopted as an emergency fee-setting regulation, the increases are effective for the 2011-12 fiscal year that began July 1.

Basically, the Legislature shifted the shared cost of water quality programs from taxpayers to permit fee payers, which in this case is largely the state's farmers and ranchers.

"This is a complex decision on the part of the water board and it will take some time to figure out exactly what the new fee structures will mean for agriculture," said Danny Merkley, California Farm Bureau Federation water resources director. "We will advise our members as details are available."

An additional $3.2 million will be collected from holders of water rights permits and licenses. Those holding a water right permit will pay a minimum fee of $150 for each permit, up from $100. In addition, a water right holder with a right to divert more than 10 acre-feet will pay an additional five cents—up from three cents—for each acre-foot diverted above the baseline.

Fees for nine separate programs that will be collected from permitees will be placed into the Waste Discharge Permit Fund.

Money to be collected from permitees includes $1.4 million for the National Pollution Discharge Elimination System, $1.8 million for the Irrigated Lands Regulatory Program, $6.7 million for basin planning activities, and $11.5 million for Total Maximum Daily Load activities.

Fees for land disposal and stormwater runoff will go into the fund, along with dollars collected for 401 Certification and Confined Animal Facilities fees.

And, charges for the Surface Water Ambient Monitoring Program and Groundwater Ambient Monitoring and Assessment Program will likewise be collected under the new fund for water quality programs.

In addition to the fees, since 2003, farmers have spent more than $20 million of their own money to comply with the Irrigated Lands Regulatory Program in the Central Valley Region alone. Now, program fees will be rising there and in other regions that have adopted the program—from 12 cents per acre to 56 cents per acre.

The land disposal program will increase its costs nearly 36 percent. The 401 Certification program needs to generate an additional $1.4 million in revenue to meet its budget requirements, which translates into a 47.5 percent increase to all fee categories within the program.

Participants in the Confined Animal Feeding program face a 27.4 percent increase in all fee categories.

In a report to its members, Dairy Cares, an organization that promotes sustainable dairy practices, said the water board's decision on fee increases indicates that "the state Legislature has essentially shifted all tax support for water quality programs out of the state budget."

Because of these funding shifts, Dairy Cares analysts said there should be less volatility in fees in future years, and fee increases should be more directly related to program costs and services.

"The water board is required to match fees with their legislatively authorized programs and the benefits provided to fee payers," Dairy Care representatives said.

"The real issue with these programs is not so much the increase in fees, but how much overall compliance is costing," Merkley said.

"What the state has done is move to a 100 percent fee-based system," he noted. "That means there needs to be a way for the regulated community to evaluate the efficiency and usefulness of these programs and make recommendations to the water board to ensure program quality.

"If we're paying the fees, we want to see that the dollars are going to help improve or protect water quality," Merkley stressed, adding that Farm Bureau will recommend that advisory groups be formed and that "the various state water board programs be carefully evaluated in the future."

In the case of fees charged to water rights holders, Farm Bureau and other organizations sued the state in 2003 in an effort to block the fees, on the grounds that they are actually taxes that require a two-thirds vote of the Legislature to be imposed. The case was heard by the California Supreme Court, which has sent it back to Sacramento County Superior Court for further review.

Notices of assessments, which will include the new, higher fees, are expected to be mailed to about 6,500 water right permitees by the end of the year.

CFBF Associate Counsel Carl Borden said bill recipients should follow protest procedures used in the past. A protest form will be posted on the CFBF website soon after the notices have been mailed.

Sacramento attorney Daniel Kelly of the law firm Somach, Simmons & Dunn said regulatory fees are a relatively new type of government charge, employed by the California Legislature after passage of Proposition 13.

"This loophole has gained in popularity as the Legislature continues to search for funding sources for many statewide programs," Kelly said.

(Kate Campbell is an assistant editor of Ag Alert. She may be contacted at kcampbell@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.