Coastside Fishing Club v. California Resources Agency

Opinion

The trial court interpreted a statute as conferring authority on an executive branch agency to enter a contract to obtain private funds to defray the costs of implementing a statutory scheme for which the Legislature failed to provide adequate public funds. This appeal challenges that interpretation of the statute primarily on the ground that it is inconsistent with the rule against delegation of legislative power implicit in the doctrine of separation of powers.

FACTS AND PROCEEDINGS BELOW

On August 27, 2004, respondents, the California Resources Agency (Agency) and the California Department of Fish and Game (DFG), which is

On September 6, 2006, the trial court issued an order determining that (1) a provision of the MLPA—subdivision (b)(1) of section 2855—authorized the Agency and DFG to enter into the MOU; (2) the resources provided by the Foundation under the MOU are not monies drawn on the state treasury and the MOU therefore does not involve the legislative power to appropriate money in violation of article XVI, section 7, of the California Constitution; (3) the use by an executive branch agency of public funds to seek private “matching funds” does not violate the doctrine of separation of powers set forth in article III, section 3, of our Constitution; and (4) the resources provided by the Foundation do not amount to a “gift” and the MOU therefore does not violate Government Code section 11005, which requires approval by the California Director of Finance of certain gifts or dedications to the state. For these reasons, the court granted the motion for judgment on the pleadings without leave to amend, sustained the demurrer without leave to amend, and dismissed with prejudice the complaint for declaratory and injunctive relief and petition for writ of mandate. Judgment for respondents was entered on September 21, 2006.

This timely appeal was filed on November 3, 2006.

DISCUSSION

The Standard of Review

Orders granting judgment on the pleadings or sustaining a demurrer are reviewed in this court de novo. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468 , 515 [ 101 Cal.Rptr.2d 470 , 12 P.3d 720 ] [judgment on the pleadings]; Filet Menu, Inc. v. Cheng (1999) 71 Cal.App.4th 1276 , 1279 [ 84 Cal.Rptr.2d 384 ] [demurrer].) “ ‘Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court’s discretion, an

in.

The Funds Provided by the Foundation Were Not a Gift

Appellants’ claim that the Foundation received no consideration for the funds it provided pursuant to the MOU, which was for that reason not a “contract” (Civ. Code, § 1550), and the funds were therefore a gift to the state. Because such gifts must be approved by the Director of Finance (Gov. Code, § 11005), and the MOU was not so approved, appellants claim the gift is void. The trial court correctly rejected this claim.

By statute, consideration for a promise to pay money may consist of “[a]ny benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled.” (Civ. Code, § 1605, italics added.) Appellants contend that, because the MOU “cannot be read to require DFG or the [Agency] to do anything of substance that they were not otherwise required to do by statute,” the Foundation was legally entitled to the benefits provided by the MOU, and lawful consideration was therefore absent.

This argument is inexplicably indifferent to the numerous duties imposed on the Agency and DFG under the MOU that are not mandated by (but, as will be seen, are fully consistent with) the MLPA. First, unlike the MLPA, which imposes no specific duties on the Agency, the MOU requires the Secretary of the Agency to establish and appoint seven to 10 members of “a California MLPA Blue Ribbon Task Force” (Task Force) charged not only with overseeing DFG’s preparation of the draft master plan, but also with “(i) preparing a comprehensive strategy for long-term funding of planning, management and enforcement of MPA’s; (ii) developing a recommendation for improved coordination of the management of MPA’s with federal agencies involved in ocean management; and (iii) selecting one of its members to serve as the liaison to the Central [MLPA] Coast Stakeholder Group,” which the MOU requires the Task Force and DFG to create to assist it in developing proposed alternative networks of MPA’s in an area along the central coast. The Agency is also obliged by the MOU, but not by the MLPA, to dedicate a senior policy level staff person to provide advice to the Task Force and its executive director, and to “provide office space, telecommunications equipment and support, and general clerical support necessary to fulfill the Agency’s commitments under [the] MOU.”

Appellants claim the language of subdivision (b)(1) of section 2855 is plain. As they see it, the provision simply commands DFG to itself prepare a draft master plan, “or by contract . . . cause to be prepared a master plan,” and to “convene a master plan team to advise and assist in the preparation of the master plan, or hire a contractor with relevant expertise to assist in convening such a team.” Appellants maintain that the statutory language limits the assistance that may be obtained by contract to that of parties possessing the expertise necessary to either prepare the master plan or assist in convening the master plan team, and to pay for those services with public funds; it does not include contracts to procure private resources in return for the performance of public services. We cannot say appellants’ view of the statute is manifestly unreasonable. Executive branch agencies are not commonly authorized to solicit and employ private funds to defray the costs of implementing public laws, because adequate appropriations of public funds for that purpose are ordinarily made by the Legislature. It is therefore not unreasonable to assume that if such an authorization was intended the Legislature would have said so explicitly.

Respondents acknowledge that DFG’s statutory authority to enter into the MOU is not express. However, resting on the settled principle that “ ‘ “officials may exercise such additional powers as are necessary for the due and efficient administration of powers expressly granted by statute, or as may fairly be implied from the statute granting the powers . . .” ’ ” (Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805 , 824-825 [ 258 Cal.Rptr. 161 , 771 P.2d 1247 ], quoting Rich Vision Centers, Inc. v. Board of Medical Examiners (1983) 144 Cal.App.3d 110 , 114 [ 192 Cal.Rptr. 455 ], quoting Dickey v. Raisin Proration Zone No. 1 (1944) 24 Cal.2d 796 , 810 [ 151 P.2d 505 ]), respondents claim that supplemental private funds “matching” those appropriated by the Legislature are necessary to enable DFG to implement

The DFG was unable to prepare a draft master plan even within the legislatively extended periods. As explained in a 2005-2006 analysis prepared by the Legislative Analyst’s Office, DFG “began implementing the MLPA in 2000 using funds redirected from other activities. The 2003-04 Budget Act provided $800,000 from the Environmental License Plate Fund ... to match private funds for support of MLPA activities. However, the department was not able to secure private matching support and thus eliminated this funding as part of the overall program reductions required in the 2003-04 Budget Act. Consequently, in early 2004, DFG halted its MLPA implementation efforts, [f] The department’s initial efforts at implementing the MLPA received considerable criticism. Concerns were raised that the process adopted by DFG of establishing MPAs did not provide for sufficient public participation, lacked a strong foundation in science, and was not sufficiently funded.” (Legis. Analyst, analysis of Sen. Bill No. 77 (2005-2006) Reg. Sess.) 2005 Budget Bill for DFG, pp. B-63 to B-64.)

It bears emphasizing that DFG’s funding problem did not begin with and is not confined to the MLPA. As the Legislature statutorily acknowledged as long ago as 1978, DFG “has in the past not been adequately funded to meet its mandates. The principal causes have been the fixed nature of the department’s revenues in contrast with the rising costs resulting from inflation, the increased burden on the department to carry out its public trust responsibilities, and additional responsibilities placed on the department by the Legislature. This lack of funding has prevented proper planning and manpower allocation. The lack of funding has required the department to restrict warden enforcement and to defer essential management of lands acquired for wildlife conservation. The lack of funding for fish and wildlife conservation activities other than sport and commercial fishing and hunting activities has resulted in inadequate wildlife and habitat conservation and wildlife protection pro grams.” (§ 710, italics added.)

DFG’s funding problems arose primarily from the fact that its activities have traditionally been supported by user fees, such as recreational hunting and fishing licenses, landing taxes, commercial licenses, permits and entitlements, and other fees for the use of resources regulated or managed by the department. As the Legislature recognized, the revenues generated by this user-based funding system declined during a period in which DFG’s regulatory and program responsibilities increased. (§ 710.7, subd. (a)(1).) The Legislature acknowledged in 1990, and reaffirmed in 2006, that DFG “continues to be inadequately funded to meet its mandates,” and is as a result unable

In the Spring of 2004, the Agency and DFG informed the appropriate Senate and Assembly budget subcommittees that they were negotiating the MOU with the Foundation, which had pledged “private matching funds” up to $2 million to pay for MLPA implementation, and that in order to take advantage of those funds DFG needed an appropriation of $500,000. (Assem. Com. on Budget, Agenda, subcom. No. 3 (Apr. 21, 2004) p. 6.) In assessing whether such an appropriation would have any other impact on the general fund, Assembly budget committee staff concluded that “[potentially [there would be] none if special funds can once again be utilized.” (Ibid.) Senate staff also recommended the requested appropriation, advising the Senate budget subcommittee that budget bill language should state clearly that these funds “shall be available to match private funds.” (Sen. Com. on Budget and Fiscal Review, Agenda, subcom. No. 2 (May 19, 2004) p. 35.) In accordance with the foregoing recommendations, the 2004 budget bill appropriated the $500,000 sought by the Agency and DFG “to match private funds for expenditure for activities in support of the protection and management of marine resources,” including “ecological and socioeconomic studies and data compilation pursuant to the [MLPA],” and “research, monitoring, and planning efforts necessary to meet the goals of the Marine Life Protection Program.” (Stats. 2004, ch. 208, Budget Item 3600-001-0647.) Respondents signed the MOU on August 27, 2004, about a month after the Governor signed the Budget Act for that year.

In the California Ocean Resources Stewardship Act of 2000 (Pub. Resources Code, §§ 36970-36973), which became law shortly after the MLPA was enacted, the Legislature noted that state agencies like DFG that have ocean and coastal management responsibilities “often lack basic information on which to base decisions,” and that the “existing means for coordinating agency efforts need to be improved.” (Pub. Resources Code, § 36971, subd. (e).) That act also stated that “[approximately one hundred million dollars ($100,000,000) in current, recent, or planned marine science projects funded by the federal government, foundations, the University of California and California State University systems, and private institutions could be of great benefit to the state’s coastal and ocean resource management agencies.” (Pub. Resources Code, § 36971, subd. (f), italics added.) Aware of the importance of such assistance, the Legislature declared it the

The foregoing events and statutes may appropriately be taken into consideration in ascertaining the intent of the Legislature in enacting subdivision (b)(1) of section 2855. As we stated in Steilberg v. Lackner (1977) 69 Cal.App.3d 780 [ 138 Cal.Rptr. 378 ], in ascertaining legislative intent not clearly expressed, courts should take into account such matters as “the object in view, the evils to be remedied, the history of the times, [and] legislation upon the same subject, public policy and contemporaneous construction.” (Id. at p. 785, citing Alford v. Pierno (1972) 27 Cal.App.3d 682 , 688 [ 104 Cal.Rptr. 110 ]; Estate of Jacobs (1943) 61 Cal.App.2d 152 , 155 [ 142 P.2d 454 ].) The fact that the Legislature, which knew funds it provided in the Budget Act were to be used to obtain “private matching funds” permitting implementation of the MLPA pursuant to an MOU with a private foundation, did not then think it necessary to explicitly indicate that such a contract was legislatively authorized suggests a legislative belief that the MLPA already provided the necessary authorization. The Legislature knew the costs of the elaborate planning process DFG and the master plan team were directed to carry out could not be paid for with the public funds it had provided. For that reason, and because preparation of the draft master plan and convening of the master plan team are the referents of the provisions of subdivision (b)(1) of section 2855 permitting contracts with private parties, the Legislature apparently concluded that DFG was authorized by that statute to enter into the MOU. In any case, the Legislature’s repeated declarations, both before and after enactment of the MLPA, regarding the increasing inability of DFG’s user-based funding system to support its growing responsibilities to protect marine resources, such as those imposed by the MLPA, and the need for DFG to “identify and propose new alternative sources of revenue” to fund those responsibilities (§ 710.7, subd. (c); see §§ 710, 710.5), render it difficult if not impossible to think the Legislature intended to exclude from the contracts authorized by subdivision (b)(1) of section 2855 those providing the supplemental private funds needed to enable DFG to prepare the draft master plan or convene the master plan team. In effect, the MOU represents a cooperative effort with a conservation organization “to identify and propose new alternative sources of revenue to fund [DFG’s] necessary marine conservation, restoration, and resources management, and protection responsibilities,” as

Appellants argue that when the Legislature intends to authorize the solicitation and use of private funds to achieve public purposes it does not do so by implication but employs “clear[] directive language.” As an example, appellants point to Streets and Highways Code section 143, subdivision (b)(1), which authorizes the Department of Transportation to “solicit proposals, accept unsolicited proposals, negotiate, and enter into comprehensive development lease agreements with . . . private entities, or consortia thereof, for transportation projects.” (See Professional Engineers v. Department of Transportation (1993) 13 Cal.App.4th 585 , 593 [ 16 Cal.Rptr.2d 599 ] [describing this statute as authorizing “a new experimental program enlisting private financing, design, construction and operation of transportation facilities to solve state transportation needs that cannot be met with available public revenue”].) It is, of course, always preferable for the Legislature to speak clearly and avoid ambiguity, but this certainly does not mean that when it does not do so a court cannot ascertain legislative intent by going beyond the language and examining the legislative history of the statute and, in this case more significantly, “the wider historical circumstances of its enactment.” (Dyna-Med, Inc. v. Fair Employment & Housing Com., supra, 43 Cal.3d at p. 1387.) The historical factors we have described satisfactorily demonstrate that, facially ambiguous as the language of subdivision (b)(1) of section 2855 may be, the contracts authorized by that statute include those to obtain private resources that, given the dearth of available public funds, were necessary to enable DFG to prepare a master plan and convene a master plan team to assist in those statutorily mandated efforts.

We are also mindful that “[l]aws providing for the conservation of natural resources are of great remedial and public importance and thus should be construed liberally . . .” (San Bernadino Valley Audubon Society v. City of Moreno Valley (1996) 44 Cal.App.4th 593 , 601 [ 51 Cal.Rptr.2d 897 ]) so as to promote the general object sought to be accomplished (Alford v. Pierno, supra, 27 Cal.App.3d at p. 688). Because the narrow interpretation of subdivision (b)(1) of section 2855 urged by appellants would obstruct the purpose of the MLPA, we cannot accept it unless, as appellants maintain, the only competing interpretation would unconstitutionally delegate a legislative power to an executive branch agency, because “[a] statute should be construed whenever possible so as to preserve its constitutionality. [Citations.]” (Dyna-Med, Inc. v. Fair Employment & Housing Com., supra, 43 Cal.3d at p. 1387.) That is not, however, the case.

The trial court’s determination that the resources provided by the Foundation under the MOU are not monies drawn on the state treasury and therefore not an “appropriation” within the meaning of article XVI, section 7, of the California Constitution was unquestionably correct. However, the theory that the power to solicit and use private funds for a public purpose constitutes an “appropriation” within the meaning of the Constitution is not crucial to appellants’ separation of powers claim. As we understand that claim, it rests on the broader premise that he who pays the piper invariably calls the tune. That is, even if the funds provided by the Foundation pursuant to the MOU are not an “appropriation” in the constitutional sense, permitting an executive branch agency to confer on certain private interests—those able and willing to commit private resources to the implementation of a publicly underfunded statutory scheme in which they are self-interested—would provide certain private parties a degree of power and authority enabling them to subordinate legislatively defined public interests to their private interests. Thus, the complaint and writ petition assert that “[p]rivate funding arrangements like that contained in the MOU provide the California [Legislature with ‘off the books’ funding for a myriad of California laws. If private funding such as that provided by the MOU is sanctioned, the [L]egislature can elect to under-fund a variety of important laws, knowing that special interests most affected by a law will bridge any funding shortfall. In the end, the MOU, and agreements like it, open the door for special interests to bid against one another in order to develop and draft California laws and regulations.”

To the extent that the foregoing statements suggest it is bad policy for the Legislature to refuse to appropriate public funds necessary to carry out its mandates and instead authorize the executive agencies subject to those mandates to seek and employ private funds for that purpose, we express no opinion. In reviewing statutes enacted by the Legislature, courts “ ‘may not undertake to evaluate the wisdom of the policies embodied in such legislation; absent a constitutional prohibition, the choice among competing policy considerations in enacting laws is a legislative function.’ ” (Marine Forests Society v. California Coastal Com. (2005) 36 Cal.4th 1 , 25 [ 30 Cal.Rptr.3d 30 , 113 P.3d 1062 ], quoting Superior Court v. County of Mendocino (1996) 13 Cal.4th 45 , 53 [ 51 Cal.Rptr.2d 837 , 913 P.2d 1046 ].) We therefore confine our analysis to what we believe is the essence of appellants’ constitutional claim: that construing subdivision (b)(1) of section 2855 as granting DFG authority to enter into a contract for the purpose of obtaining private funds to defray the cost of implementing the MLPA would violate “[t]he nondelegation doctrine [that] is rooted in the principle of separation of powers that underlies our tripartite system of Government.” (Mistretta v. United States (1989) 488 U.S. 361 , 371 [ 102 L.Ed.2d 714 , 109 S.Ct. 647 ].)

Appellants’ claim that the MLPA lacks the necessary safeguards rests on cases involving the delegation of rulemaking authority. Bayside Timber Co. v. Board of Supervisors (1971) 20 Cal.App.3d 1 [ 97 Cal.Rptr. 431 ] (Bayside Timber), the case appellants rely upon most heavily, is illustrative.

The issue in Bayside Timber was whether the Z’berg-Nejedly Forest Practice Act of 1973 (Pub. Resources Code, §4511 et seq.) impermissibly delegated legislative power to private timber owners and operators. After explaining the composition of the State Board of Forestry and “district forest practice committees” created by the forest practice act (Bayside Timber, supra, 20 Cal.App.3d at p. 9), whose memberships consisted almost entirely of private timber owners or operators, and the rulemaking powers of such bodies, the court summarized the relevant portions of the act as follows: “The content of the rules under which private logging operations are conducted is decreed exclusively by persons pecuniarily interested in the timber industry, i.e., timber owners and operators. The ultimate basis of this exclusive control rests in the hands of the ‘private timber ownership,’ two-thirds of which must agree before any proposed rule may be adopted. Ordinarily such rules are formulated by the four timber owners or operators of the forest practice committee, but they may nevertheless be drafted by the district’s private timber ownership. The rules are submitted to the State Board of Forestry which may approve or disapprove them. It is noteworthy that the [B]oard is powerless itself to promulgate any forest practice rule. It may only approve or disapprove those which are submitted. pf] It follows that without agreement of the ‘private timber ownership,’ no power in California has authority to impose rules to insure reasonable environmental and public protection from logging abuses.” (20 Cal.App.3d at p. 10.)

The Bayside Timber court pointed out that the legislative delegation at issue not only gave timber owners and operators “the exclusive power to formulate forest practice rules which, when adopted, have the force and effect of law,” but laid down “no guides or standards” to prevent abuse of the discretion conferred. (Bayside Timber, supra, 20 Cal.App.3d at p. 10.) “The

With the foregoing considerations in mind, we move to the central question whether, if the trial court’s interpretation of subdivision (b)(1) of section 2855 were accepted, the MLPA would impermissibly delegate to the DFG or those with whom it contracts the power to resolve “truly fundamental issues” constitutionally committed to the Legislature, because the MLPA fails to establish effective mechanisms, or safeguards, containing the discretion of the DFG or its contractors, enabling them to distort or obstruct enforcement of the Legislature’s policy decisions. (Kugler v. Yocum, supra, 69 Cal.2d 371 , 376-377.)

As we have seen, the fundamental issue the MLPA addresses is the need “to modify the existing collection of MPAs to ensure that they are designed and managed according to clear, conservation-based goals and guidelines that take full advantage of the multiple benefits that can be derived from the establishment of marine life reserves” (§ 2851, subd. (h)), through promulgation of a comprehensive Marine Life Protection Program. Delegating the power to adopt such a program and an implementing master plan to the Commission (§ 2853), the Legislature delegated to the DFG the duty to prepare and submit to the Commission a draft master plan guiding adoption and implementation of the Marine Life Protection Program. (§ 2855, subds. (a), (b)(1).) We conclude that the delegation to the DFG contains safeguards adequately ensuring that the draft master plan it prepares or causes to be prepared conforms to the legislative will.

The judgment of the trial court dismissing the complaint for declaratory and injunctive relief and petition for writ of mandate with prejudice is affirmed.

Raerle, J., and Richman, J., concurred.