Comments on Proposed Decision

The proposed decision of the Administrative Law Judge (ALJ) in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Cal-Am, DRA, and the District filed comments in opposition to the proposed decision on January 10, 2011.

In its comments on the proposed decision, Cal-Am disavowed all responsibility for the District's Carmel River mitigation and Aquifer Storage programs and contended that these were "local government programs funded by a utility users' tax."²⁴ Specifically, Cal-Am stated that the proposed decision is premised on a "factual error" in accepting that the District's mitigation and aquifer storage programs are Cal-Am obligations with no evidence to support that conclusion.²⁵ Instead, Cal-Am explained that as a result of the meet and confer process ordered in D.09-07-021, the parties reached "agreement between the Company and [the District] (and ultimately DRA) that neither the Mitigation Program nor [the District's] [aquifer storage project] activities were California American Water's responsibility."²⁶

The District, however, took the opposite position and, citing to Cal-Am's application, explained that "[b]y its Application, [Cal-Am] seeks authorization to collect funds required by the Water Management District to carry out projects on behalf of [Cal-Am], and which [Cal-Am] is mandated to carry out."²⁷

DRA agreed with Cal-Am.²⁸

The parties showed a similar divergence of opinion on the exact nature of the fee. Cal-Am declared that the District's user fee "is a utility user tax" within the meaning of D.89-05-063 and that the Commission has no jurisdiction to determine the validity of such taxes.²⁹

DRA and the District were more circumspect and contended that the "Commission has limited authority to question a local government agency's collection of a fee or tax," without specifying the precise legal nature of the District's user fee.³⁰ The District carefully stated that (1) it was "a government agency," (2) it has the authority to "impose taxes, fees, and other assessments," and (3) "the Commission lacks authority to contest the District's lawful exercise of its authority."³¹ In contrast to Cal-Am, the District did not argue specifically that the user fee was a utility user tax or that the District was authorized by the Legislature to levy such a tax.

All parties agreed that the proposed decision was premature in dismissing the application without further proceedings after rejecting the settlement. As set forth above, the proposed decision has been modified to authorize Cal-Am to amend its application.

²⁴ Cal-Am Comments at 12.

²⁵ Id.

²⁶ Id. at 11, but see, Application at 5, "In this application, California American Water - with the support of MPWMD - describes the user fee as the appropriate means to fund projects (i.e., the Aquifer Storage and Recovery Program and Mitigation Program) currently performed by the District but properly or ultimately the responsibility of the Company."