As California enters another summer under severe drought conditions, regulators are taking steps to encourage significant reductions in water usage. After years of a “carrot” approach, Californians may start seeing the “stick.”

On May 5, 2015, the State Water Resources Control Board (SWRCB) adopted emergency regulations requiring a 25% reduction in overall potable water use statewide. These regulations apply to municipal water suppliers; on May 7, 2015, the California Public Utilities Commission (CPUC) ordered the privately owned water companies under its jurisdiction to comply with the SWRCB regulations as well. The regulations are designed to meet the mandatory reductions set forth in Governor Brown’s April 1, 2015, Executive Order. Last year, Governor Brown called for a 20% reduction, but voluntary conservation efforts fell far short—reaching only 9% overall.

For water suppliers serving more than 3,000 connections, the regulations allocate conservation savings across nine tiers based on historical usage. Communities with the highest usage must reduce total potable water production by 36% as compared to 2013. Communities with lowest usage must achieve an 8% reduction as compared to 2013, with other communities directed to meet goals in between. Water suppliers serving fewer than 3,000 connections must reduce water use by 25%, or restrict outdoor irrigation to no more than two days per week. The expectation is that these savings will be achieved by reducing outdoor water usage, which can be as high as half of the total water usage.

The SWRCB established a special tier for communities that can establish that they have developed an alternative water supply (beyond groundwater or imported water) and have a minimum of four years’ reserved supply available. Even communities that meet this stringent standard will not be off the hook, however—they still must reduce total potable water production by 4% as compared to 2013.

Commercial, industrial and institutional entities that do not get water from municipal water suppliers or private water companies (or provide their own supply, such as by a groundwater well) must reduce water use by 25% or restrict outdoor irrigation to no more than two days per week. The expectation is that entities with large green spaces, such as golf courses, will transition to irrigation with recycled water or develop other alternatives.

In a move that could further criticism that agriculture is not doing its fair share, water suppliers may subtract the amount of water provided for commercial agricultural use from potable water production totals. These suppliers will have the discretion to impose reductions on agriculture users that are “locally appropriate.”

The regulations also added new prohibitions to existing restrictions. The SWRCB adopted prohibitions against irrigation of ornamental turf on street medians with potable water and irrigation with potable water outside newly constructed homes and buildings not in accordance with the emergency regulations or other state standards. Previous regulations prohibit washing sidewalks and driveways using potable water, allowing runoff when irrigating with potable water, washing cars with hoses without automatic shutoff nozzles, using potable water in decorative water features that do not recirculate the water, irrigating outdoors during and within 48 hours following measurable rainfall, and for restaurants, serving water to customers unless specifically requested. Additionally, hotels and motels must offer guests the option to not have linens and towels laundered daily.

Traditionally, water suppliers have favored a “carrot” approach to water conservation—focusing efforts on education and offering rebates. Given the conservation poor performance in 2014, however, it is clear that now is the time to consider using the “stick.”

In addition to any existing powers, local agencies can fine property owners up to $500 per day for failure to comply with water use prohibitions and restrictions. The water suppliers themselves could be penalized for failure to meet their mandatory water reduction targets. The SWRCB can issue cease and desist orders to water suppliers that fail to achieve the required conservation goals. Water suppliers that violate cease and desist orders are subject to a civil liability of up to $10,000 per day.

One “stick” that municipal water suppliers may not be able to use is tiered rate plans. Tiered rates are generally considered to be the single most effective tool to promote conservation. In April 2015, however, a state appellate court ruled in Capistrano Taxpayers Association v. City of San Juan Capistrano that a tiered water rate structure was unconstitutional because it violated Proposition 218, under which municipalities cannot impose fees for services that exceed the actual cost. The court faulted San Juan Capistrano for failing to show that the rates for each tier were based on the actual cost of providing service. (This ruling only applies to municipal water suppliers; it does not apply to privately owned water companies, whose rates are set by the CPUC.)

Although tiered rate structures were not struck down entirely, the need to justify the tiers with a cost-of-service study could leave some communities vulnerable. Such studies are data-intensive and take time to develop—time that water suppliers do not have. One alternative may be to set penalties per unit for usage above a certain level. If the charge is clearly labeled a penalty, and is not used to pay for daily operations of the water system, it should not run afoul of Prop 218.

While Governor Brown has also taken steps to develop long-term water supply solutions, such as prioritizing government review of projects that increase water supplies, in the short-term conservation can be the fastest way to address drought—as long as the “stick” is impressive enough to ensure compliance.