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April 17
1930 - Telephone switchboard operator Louise Gipe, heroine of the 1928 St. Francis Dam disaster, tries & fails to kill herself over an unrequited love [story]
Louise Gipe


valenciawaterco_logoIt’s not so much a matter of what “is” is. It’s more a question of what “or” means.

Santa Clarita Organization for Planning and the Environment isn’t satisfied with a court ruling that cleared the way for the Castaic Lake Water Agency to own and operate the Valencia Water Co.

SCOPE filed a notice of appeal Thursday.

CLWA, the SCV’s wholesaler of state water, purchased the private Valencia Water Co. in early 2013 for $73.8 million. SCOPE sued, alleging the acquisition was illegal under state law.

In March, Superior Court Judge Robert H. O’Brien ruled for the plaintiffs – CLWA (the buyer) and The Newhall Land and Farming Co. (the seller) and affiliates.

“This purchase was not only legal,” CLWA President Tom Campbell said at the time, “but also it was just a good water management decision.”

Campbell said SCV residents will benefit from “more cohesive water supply planning” and economies of scale as a result of the acquisition.

In a statement Thursday, SCOPE President Lynne Plambeck said the judge made “several unusual rulings,” did not “admit relevant facts” and made “an incorrect finding.” She further chastised what she termed a “sweetheart deal” between the Newhall Land and CLWA, which is contractually obligated to provide water to Newhall Land’s Newhall Ranch development west of Interstate 5 – other aspects of which SCOPE has also litigated.

To a degree, the judge’s ruling boils down to an interpretation of the word, “or.”

O’Brien notes that state law allows government agencies (such as CLWA) to buy “any mutual water company or corporation” as long as it intends to supply water to the public.

(A “mutual” water company is a private water company that provides water to stockholders and members at cost. Valencia Water Co. is not a mutual water company.)

To SCOPE, the words “any mutual water company or corporation” means the law allows CLWA to buy “any mutual water company” or “any mutual water corporation,” and since Valencia Water is neither, CLWA can’t buy Valencia Water.

To CLWA – and to the judge – the words “any mutual water company or corporation” signify two different and unrelated things: they mean CLWA can buy “any mutual water company” … or “any corporation” of any type, regardless of whether it’s a “mutual” water corporation.

“Use of the word ‘or’ indicates that there is more than one category of entities in which (CLWA) can obtain capital stock,” O’Brien said. Valencia Water Co. is a corporation, and because the intent is to provide water, the acquisition doesn’t violate state law, he said.

SCOPE’s lawsuit also asserts that state law prohibits CLWA, a wholesaler, from operating as a water retailer.

SCOPE points to the so-called “Klajic I” lawsuit, filed after CLWA bought Santa Clarita Water in 1999. Then-City Councilwoman Jill Klajic sued on grounds that state law forbade wholesalers from selling water at retail to end users (residents and businesses). Klajic lost, but Plambeck – a member of the Newhall County Water Board – personally appealed and won. The appellate court sent the case back to the trial court.

The case hinged on a point of state law that said a wholesaler can sell water at retail only if it has a written contract with a retailer that’s regulated by the California Public Utilities Commission.

Klajic and Plambeck argued that since CLWA bought Santa Clarita Water Co., it couldn’t operate it, because having a contract with itself wouldn’t satisfy the law. Furthermore, upon acquisition, Santa Clarita Water was no longer regulated by the CPUC, which was a requirement.

For a short time, CLWA was in the position of owning a water company that it couldn’t legally operate. Then, CLWA circumvented the court process by sponsoring state legislation that allowed it to operate as a retailer – but only within the boundaries of the formerly independent Santa Clarita Water Co.

SCOPE asserts in the Valencia Water case that CLWA is in the same predicament today. SCOPE says Valencia Water Co. has become an alter-ego of CLWA, and thus CLWA doesn’t have a contract with an independent, CPUC-regulated retailer.

O’Brien determined there is insufficient evidence to suggest Valencia Water is an alter-ego of CLWA. Just because CLWA owns Valencia Water and appoints its directors doesn’t make it an alter-ego, he said.

SCOPE also raised the argument that CLWA can’t sell water to end users outside of the old Santa Clarita Water boundaries, but CLWA said it can, and O’Brien ruled that SCOPE “fails to show otherwise.”

In his ruling, O’Brien acknowledges that a wholesaler can sell water at retail “pursuant to a written contract with a water corporation that is subject to regulation by the Public Utilities Commission.” Valencia Water Co. is no longer regulated by the CPUC.

Read Judge O’Brien’s ruling and SCOPE’s notice of appeal [here].

 

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3 Comments

  1. waterwatcher says:

    So with this contract between Newhall Land/Lennar Corporation and Castaic Lake Water Agency, no wonder its General Manager, Dan Masnada, keeps saying there is plenty of water. I guess he needs us to cut back so he can send the water we save to Newhall Ranch. Don’t forget to attend the hearing June 4th, 6PM, Rancho Pico Jr. High, for Newhall’s 1754 unit Entrada project to be built on a closed oil field.

  2. Heisenberg says:

    Newhall Ranch will have its own potable water supply from the agricultural wells currently on their property. It won’t use existing potable supplies from either CLWA or VWC.

  3. CastaicClay says:

    This is from the article – “CLWA, which is contractually obligated to provide water to Newhall Land’s Newhall Ranch development west of Interstate 5”. So if it is not potable water from CLWA, what are they providing?

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