Agribusiness Committee of the Business Law Section 2017 Year in Review

Carl Borden, Kari Fisher, Justin Fredrickson, Christopher Passarelli, Chris Scheuring, Jackson Waste, and Danny Zlatnik

Groundwater Extraction Fees—In City of San Buenaventura v. United Water Conservation District,¹ the California Supreme Court decided a case with important implications for groundwater extraction fees associated with groundwater management programs. In the case, the United Water Conservation District had imposed a groundwater management fee structure that set up a 3:1 ratio between the rate charged groundwater users in urban areas and the rate charged groundwater users in agricultural areas. The City of Ventura mounted a variety of challenges to the fee regime, arguing that it amounted to an unfair subsidy of agricultural users at the expense of urban users. The supreme court rejected the City’s challenge to the fee structure under Proposition 218, which requires that property-related fees are set at a rate no more than the costs of providing the service to a property. Instead, the court held that the proper framework for the fee structure was Proposition 26, which requires that a local agency prove that its rates bear a reasonable relationship to the benefit provided by its activities, and the amount allocated to each payor bears a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the relevant program.² This case may have broad application going forward with respect to ground-water extraction fees imposed under the Sustainable Groundwater Management Act.

Day’s Rest for Employees—In Mendoza v. Nordstrom,³ the California Supreme Court construed Labor Code section 552, which prohibits an employer from causing employees to work more than six days in seven. The court held that cause means to compel or induce work. Thus, allowing an employee who understands the right to a day of rest to work on seven consecutive days does not violate the prohibition. The court noted that paying employees the legally required premium for seven-day overtime does not induce an employee to work. The court also ruled that a day of rest is guaranteed for each workweek, not each rolling seven-day period. The Mendoza opinion is especially noteworthy for employers of agricultural employees, who became covered by the day’s rest guarantee on January 1, 2017, due to a provision in Assembly Bill 1066, the Phase-In Overtime for Agricultural Workers Act of 2016.

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