DEPARTMENT Finance Department
AGENDA NO. 8
MEETING DATE
January 27, 2026
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Calendar: Regular Calendar
Project Manager: Nancy Hom
Public Hearing to Adopt Rules and Regulations Governing Procedures for Submitting Written Objections to Proposed Water and Sewer Fees or Charges
Summary of Proposed
Commission Action:
Public Hearing to consider and possible action to adopt Rules and Regulations Governing Procedures for Submitting Written Objections to Proposed Water and Sewer Fees or Charges.
Background: The San Francisco Public Utilities Commission (SFPUC) provides water and sewer service to all residents and businesses within the jurisdictional boundaries of the City and County of San Francisco.
To recover the costs associated with providing these services, SFPUC sets water and sewer rates and bills its customers according to each customer’s ratepayer class and metered utility usage. SFPUC sets these rates according to the substantive and procedur al requirements of article XIII D, section 6, of the Califo rnia Constitution (Proposition 218).
One of the key procedural requirements for rate setting under Proposition 218 is the protest process. The protest process allows property owners who would be subject to a proposed new, increased, or extended rate to submit a written protest opposing the proposed rate change
. If a majority of affected property owners submit
protests, then the agency cannot impose the proposed rates. The process does not require the protest to raise any substantive legal issues regarding the proposed rate change nor does it require SFPUC to provide a response.
In 2023, the California state legislature enacted an additional process for objecting to proposed rates (Government Code sections 53759.1 and 53759.2) that a public utility may adopt. The purpose of the objection process is to increase public engagement in and awareness of a public utility’s ratemaking process and also to set a prerequisite for
legal challenges, known as an exhaustion of administrative remedies requirement.
Agenda Title: Public Hearing to Adopt Rules and Regulations Governing Procedures for Submitting Written Objections to Proposed Water and Sewer Fees or Charges
Commission Meeting Date: January 27, 2026
The procedure in section 53759.1 creates an administrative feedback process for customers to raise substantive legal objections in writing to water and sewer rate studies and proposed rates. It further provides for the public utility to write responses to any substantive legal objections customers may raise within the comment period.
Government Code sections 53759.1 and 53759.2 set minimum requirements for adopting an administrative exhaustion procedure, such as setting a minimum comment- period deadline
; informing
ratepayers of the exhaustion procedure in the Proposition 218 ratemaking notices to customers; and providing timelines by which SFPUC would make information available relating to its proposed rate changes. A customer’s c ompliance with the exhaustion procedure would be a prerequisite to any legal challenge to the rate action. Government Code section 53759.2 further specifies the types of evidence that may be admitted in court
in a challenge that is
subject to the administrative exhaustion procedure.
Following the parameters of Government Code sections 53759.1 and 53759.2, SFPUC staff ha s prepared the Proposed Draft Rules and Regulations
Governing Procedures for Submitting Written
Objections to Proposed Water and Sewer Fees or Charges (Draft Rules) in Attachment A.
Public Hearing Notice
Pursuant to Charter Section 4.104, staff posted a Notice of Public Hearing on the SFPUC website and at the San Francisco Public Library on January 6, 2026.
Proposed Rules: The Draft Rules are comprised of two main parts.
The first part of the Draft Rules specifies what constitutes a timely - submitted written objection for purposes of the administrative exhaustion procedure. To be considered timely, a written objection must be submitted no later than 45 days after SFPUC mails its customers the Proposition 218 notice of the proposed rulemaking, which deadline may be extended at the sole discretion of the General Manager. The Draft Rules further specify
how customers who
submit written objections must deliver written objections to the SFPUC as well as their required contents.
The second part of the Draft Rules detail s the procedures SFPUC will implement as part of the new administrative exhaustion process.
Agenda Title: Public Hearing to Adopt Rules and Regulations Governing Procedures for Submitting Written Objections to Proposed Water and Sewer Fees or Charges
Commission Meeting Date: January 27, 2026
These new procedures include providing early access to water or sewer rate studies and proposed rate changes, ensuring customers have proper notice of the deadlines and requirements to submit written objections, SFPUC’s responses to written objections, and the Commission’s consideration of written objections and SFPUC’s responses before concluding the protest hearing required by Proposition 218.
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act Guidelines section 15378 because there would be no physical change in the environment.
Attachment: 1. Draft Rules and Regulations Governing Procedures for Submitting Written Objections to Proposed Water and Sewer Fees or Charges
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.:
WHEREAS, Article XIII D, section 6, of the California Constitution establishes certain procedural requirements and substantive limitations the San Francisco Public Utilities Commission (SFPUC) must follow to adopt property- related fees or charges for water or sewer service; and
WHEREAS, Government Code section 53759.1 authorizes the Commission to adopt a procedure for ratepayers to raise objections regarding new, increased, or extended water or sewer fees or charges earlier in the ratemaking process, and to provide an opportunity for the SFPUC to address or resolve any such objections before the Commission adopts proposed water or sewer fees or charges; and
WHEREAS, The purpose of the Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges (Rules) is to provide a meaningful opportunity for ratepayer s to present objections to a proposed new , amended, or extended water or sewer fee or charge prior to the Commission’s action on the proposed fee or charge, thus providing increased opportunities for transparency and public participation earlier in SFPUC’s ratemaking process and to establish an administrative exhaustion procedure for potential legal challenges to the proposed rates as provided under state law; and
WHEREAS, The Rules specify that SFPUC will make available to the public the proposed water or sewer fee or charge, post the written basis for the proposed water or sewer fee or charge on its I nternet website, provide at least 45 days for a ratepayer or property owner to review the proposed fee or assessment and timely submit to the SFPUC written objections to the fee or charge that specifies the grounds for alleging noncompliance, and require SFPUC to consider and respond in writing to any timely submitted written objections prior to the close of the protest hearing or ballot tabulation hearing required under article XIII D , section 6 of the California Constitution ; and
WHEREAS, As a prerequisite to bringing any judicial action or proceeding that alleges a new, increased, or extended water or sewer fee or charge does not comply with article XIII D of the California Constitution, a person or entity shall be required to have complied with the Rules and first timely submit a written objection that details the specific grounds by which the person or entity believes the proposed fee or charge does not comply with article XIII D of the California Constitution; and
WHEREAS, The Commission intends to adopt the Rules under the authority provided in Government Code section 53759.1, and the administrative record principles contained in Government Code section 53759.2; and
WHEREAS, This action does not constitute a project under the California Environmental
Quality Act Guidelines section 15378 because there would be no physical change in the environment; now, therefore, be it,
RESOLVED, The Commission hereby adopts the Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges (Rules) effective immediately; and, be it,
FURTHER RESOLVED, A s to any new, increased, or extended water or sewer fee or charge adopted by the Commission, a ny person or entity who fails to timely submit a written objection to the SFPUC that adequately specifies grounds for SFPUC’s alleged noncompliance with article XIII D of the California Constitution , and in a manner that fully complies with the Rules, shall be barred from bringing a judicial action or proceeding against the City and County of San Francisco alleging noncompliance with article XIII D of the California Constitution ; and be it,
FURTHER RESOLVED, The Commission hereby adopts the administrative record principles contained in Government Code section 53759.2.
I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of January 27, 2026.
Director of Commission Affairs
San Francisco Public Utilities Commission
Attachment A
[PROPOSED DRAFT]
San Francisco Public Utilities Commission
Rules and Regulations Governing the
Procedures for Submitting Written Objections
to Proposed Water or Sewer Fees or Charges
Daniel Lurie, Mayor
COMMISSIONERS
Joshua Arce, President
Stephen E. Leveroni, Vice President
Avni Jamdar
Kate H. Stacy
Meghan Thurlow
Adopted: [DATE], by Commission resolution No. [######] Effective: [#######]
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
Commission actions:
Action Resolution No. Date Adopted Effective Date
Adopt Rules 26-[####] [##], 2026 [##], 2026
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
Rule 1. General Provisions
1.1 Authority
The San Francisco Public Utilities Commission (SFPUC), as the water and sewer utility provider for the City and County of San Francisco, must set water and sewer utility rates in conformance with San Francisco Charter 8B and the California Constitution Article XIII D.
Under California Government Code Section 53759.1, the SFPUC may adopt an administrative exhaustion procedure for Ratepayers to object to proposed new, increased, or extended fees or charges.
1.2 Purpose
The purpose of these Rules and Regulations is to implement the authority under Government Code Section 53759.1 and to provide procedural guidance to Ratepayers who seek to object to proposed changes to fees or charges.
1.3 Effect of these Rules and Regulations
No claim, cause of action, suit for damages, suit for injunctive relief, petition for writ of mandamus, or administrative or judicial proceeding shall be brought against San Francisco regarding a challenge to a proposed Fee unless a Ratepayer first exhausts the Ratepayer’s administrative remedies by fully complying with the Written Objection procedure specified in these Rules. The failure of a Ratepayer to sufficiently raise a legal issue regarding alleged noncompliance with California Constitution Article XIII D of the California Constitution, in the time and in the manner prescribed in these Rules shall bar the Ratepayer from alleging such noncompliance in another venue or at a later date.
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
Rule 2. Definitions
Unless otherwise expressly stated and defined in a separate Rule, the following terms in bold font shall, for the purpose of these Rules, have the meaning indicated following the colon (:)
Commission : The Public Utilities Commission, as established under San Francisco Charter Articles 4 and 8B, that serves as the decision-making body of the SFPUC.
Fee: A fee or charge for water or sewer service, as those terms are used in Article XIII D, sections 2 and 6 of the California Constitution. As used in these Rules, Fee may refer to either a single fee or charge or multiple fees and charges depending on the rate action and the context.
Protest : A written opposition to a new, increased, or extended proposed Fee governed by Article XIII D, section 6 of the California Constitution. A Protest may, but is not required to, contain substantive comments regarding a Rate Study or proposed Fee.
Ratepayer : A current owner of record of a parcel within the retail water or sewer jurisdiction of the SFPUC, a current water or sewer service customer who is not the property owner, or any other person or entity a court of competent jurisdiction has determined has legal standing to sue San Francisco alleging noncompliance with Article XIII D, section 6 of the California Constitution.
Rate Study : The report prepared by, or on behalf of, SFPUC that describes the basis upon which SFPUC calculated a Fee or proposed Fee.
Response : SFPUC’s written response to a Written Objection, as that term is used in Section 53759.1, subdivision (c)(5) of the California Government Code.
Rules : These Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges.
San Francisco : The City and County of San Francisco, including its departments, legislative bodies, officers, employees, and designees.
SFPUC : The San Francisco Public Utilities Commission.
Written Objection : A written submission by a Ratepayer to the SFPUC, that fully complies with these Rules. Any written submission or any portion of a written submission that does not fully comply with these Rules shall not be considered a Written Objection.
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
Rule 3. Written Objections
In considering a proposed new, increased, or extended Fee, the Commission will consider only those Written Objections that meet all of the following requirements:
3.1. Ratepayer. Only a Ratepayer may submit a Written Objection.
3.2. Time for Submission.
SFPUC must receive the Written Objection no later than 4:30 p.m. Pacific Time on the 45th day after the date SFPUC mailed the notice described in Rule 4.2. The General Manger has the sole discretion to extend the deadline to submit a Written Objection. A Written Objection shall be untimely if it is postmarked but not received before the close of the Written Objection period.
3.3 Location of Submission. Each Written Objection must be submitted to the attention of the SFPUC Director of Commission Affairs either in person at the SFPUC headquarters or by mail using the address and location information provided in the notice described in Rule 4.2.
3.4 Title and Content s of Submission .
(a) To qualify as a Written Objection must contain all of the following information:
1. The submission must state that it is a Written Objection.
2. The submission must identify the name and the property location (customer account number, street address, or assessor’s parcel number) of the Ratepayer submitting the Written Objection. For purposes of this Rule 3, a Post Office Box number or other non-physical address shall not constitute a property location.
3. The submission must contain one or more substantive allegations (i.e., grounds) that, if found to be true, may constitute noncompliance with Article XIII D of the California Constitution. Each allegation in the Written Objection must further specify the Fee change (i.e., the new, increased, or extended Fee) and corresponding information in the Rate Study that forms the basis for the allegation, including the manner in which the Ratepayer believes that information supports the conclusion of the allegation, as well as how the Ratepayer believes SFPUC could revise the information in the Rate Study or the proposed Fee to comply with Article XIII D of the California Constitution.
(b) Any comment that generically alleges noncompliance with Article XIII D of the California Constitution without reference to any Fee change or relevant factual information contained in the Rate Study shall not constitute a Written Objection. (c) Each Ratepayer may only submit one Written Objection.
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
Rule 4. SFPUC Procedures
The SFPUC will follow the procedure outlined below to allow for receipt and consideration of any Written Objection.
4.1. Availability of Fee and Rate Study Information .
At least 45 days before the deadline for a Ratepayer to submit a Written Objection, SFPUC will:
(a) Make its proposed Fee available to the public; and
(b) Post on its internet website the Rate Study that describes the basis for the proposed Fee.
(c) SFPUC will provide the Rate Study described in subdivision (b) of this Rule 4.1 to a Ratepayer upon request.
4.2 Content s of Notice. Each notice SFPUC sends pursuant to Article XIII D, section 6, subdivision (a) of the California Constitution will prominently display the following information:
(a) That all Written Objections must be submitted within 45 days after the mailing of the notice, and that a failure to timely submit a Written Objection bars any right to challenge the Fee referenced in the notice through a legal proceeding; (b) All substantive and procedural requirements for submitting a Written Objection; and (c) A link to the page on SFPUC’s internet website where the Rate Study that describes the basis for the proposed Fee is located.
4.3 Responses to Written Objections.
(a) Before the close of the Protest hearing or ballot tabulation hearing required under Article XIII D, section 6 of the California Constitution, SFPUC will consider and respond in writing to each Written Objection that was timely submitted in compliance with Rule
3. (b) In its response to each Written Objection, SFPUC will:
1. Explain whether each allegation in the Written Objection will result in an amendment to the proposed Fee; and
2. Explain the substantive basis for retaining or altering the proposed Fee in response to the Written Objection.
4.4 Consideration of Written Objections and Responses. (a) Before or during a Protest hearing or ballot tabulation hearing required under Article XIII D, section 6 of the California Constitution, SFPUC will present to the Commission for its consideration all timely submitted Written Objections and SFPUC responses.
Attachment A
[Draft] Rules and Regulations Governing the Procedures for Submitting Written Objections to Proposed Water or Sewer Fees or Charges
(b) After considering all timely submitted Written Objections and SFPUC responses, the Commission may determine any of the following:
1. Whether the Written Objections and SFPUC’s responses warrant clarifications to the proposed Fee;
2. Whether to adjust the proposed Fee;
3. Whether further review is required before making a determination on whether clarification or reduction is needed; or
4. Whether to proceed with the Protest hearing or ballot tabulation hearing required under Article XIII D, section 6 of the California Constitution.