Dep't of Fin. v. Comm'n on State Mandates

• Decision Date: 19 December 2017
• Docket Number: C070357
• Court: California Court of Appeals Court of Appeals
• Parties: DEPARTMENT OF FINANCE et al., Plaintiffs and Respondents, v. COMMISSION ON STATE MANDATES, Defendant; County of San Diego et al., Real Parties in Interest and Appellants.

18 Cal.App.5th 661

226 Cal.Rptr.3d 846

DEPARTMENT OF FINANCE et al., Plaintiffs and Respondents,

v.COMMISSION ON STATE MANDATES, Defendant;

County of San Diego et al., Real Parties in Interest and Appellants.

C070357

Court of Appeal, Third District, California.

Filed December 19, 2017

Thomas E. Montgomery, County Counsel, Timothy M. Barry, Chief Deputy, James R. O'Day, Senior Deputy, Office of the County Counsel, County of San Diego; Best Best & Krieger, Shawn Hagerty ; and Lounsbery Ferguson Altona & Peak, Helen Holmes Peak, San Diego for Real Parties in Interest and Appellants.

Shanda M. Beltran, Irvine and Andrew W. Henderson for Building Industry Legal Defense Foundation as Amicus Curiae on behalf of Real Parties in Interest and Appellants.

Somach Simmons & Dunn, Theresa A. Dunham, and Nicholas A. Jacobs, Sacramento for the California Stormwater Quality Association as Amicus Curiae on behalf of Real Parties in Interest and Appellants.

Morrison & Foerster and Robert L. Falk, San Francisco for Santa Clara Valley Urban Runoff Pollution Prevention Program as Amicus Curiae on behalf of Real Parties in Interest and Appellants.

Pamela J. Walls, County Counsel, Karin Watts-Bazan, Principal Deputy County Counsel, Office of the County Counsel, County of Riverside, for Riverside County Flood Control and Water Conservation District and County of Riverside as Amici Curiae on behalf of Real Parties in Interest and Appellants.

Meyers Nave Riback Silver & Watson and Gregory J. Newmark, Los Angeles for Alameda Countywide Clean Water Program as Amicus Curiae on behalf of Real Parties in Interest and Appellants.

Kamala D. Harris and Xavier Becerra, Attorneys General, Douglas J. Woods, Senior Assistant Attorney General, Peter K. Southworth, Nelson R. Richards, and Kathleen A. Lynch, Deputy Attorneys General, for Plaintiffs and Respondents.

No appearance for Defendant.

NICHOLSON, J.

The California Constitution requires the state to provide a subvention of funds to compensate local governments for the costs of a new program or higher level of service the state mandates. ( Cal. Const., art. XIII B, § 6 (section 6 ).) Subvention is not available if the state imposes a requirement that is mandated by the federal government, unless the state order mandates costs that exceed those incurred under the federal mandate. ( Gov. Code, § 17556, subd. (c).) The Commission on State Mandates (the Commission) adjudicates claims for subvention.

In Department of Finance v. Commission on State Mandates (2016) 1 Cal.5th 749, 207 Cal.Rptr.3d 44, 378 P.3d 356 ( Department of Finance ), the California Supreme Court upheld a Commission ruling that certain conditions a regional water quality control board imposed on a storm water discharge permit issued under federal and state law required subvention and were not federal mandates. The high court found no federal law, regulation, or administrative case authority expressly required the conditions. It ruled the federal requirement that the permit reduce pollution impacts to the "maximum extent practicable" was not a federal mandate, but rather vested the regional board with discretion to choose which conditions to impose to meet the standard. The permit conditions resulting from the exercise of that choice were state mandates.

In this appeal, we face the same issue. The parties and the permit conditions are different, but the legal issue is the same—whether the Commission correctly determined that conditions imposed on a federal and state storm water permit by a regional water quality control board are state mandates. The Commission reached its decision by applying the standard the Supreme Court later adopted in Department of Finance . The trial court, reviewing the case before Department of Finance was issued, concluded the Commission had applied the wrong standard, and it remanded the matter to the Commission for further proceedings.

Following the analytical regime established by Department of Finance , we reverse the trial court's judgment. We conclude the Commission applied the correct standard and the permit requirements are state mandates. We reach this conclusion on the same grounds the high court in Department of Finance reached its conclusion. No federal law, regulation, or administrative case authority expressly required the conditions. The requirement to reduce pollution impacts to the "maximum extent practicable" was not a federal mandate, but instead vested the regional board with discretion to choose which conditions to impose to meet the standard. The permit conditions resulting from the exercise of that choice in this instance were state mandates.

We remand the matter so the trial court may consider other issues the parties raised in their pleadings but the court did not address.

BACKGROUND

In Department of Finance , the Supreme Court explained the storm water discharge permitting system and the constitutional reimbursement system in detail. We quote from the opinion at length:

A. The storm water discharge permitting system

"The Operators' municipal storm sewer systems discharge both waste and pollutants.^{[1 ]} State law controls ‘waste’ discharges. ( Wat. Code, § 13265.) Federal law regulates discharges of ‘pollutant[s].’ ( 33 U.S.C. § 1311(a).) Both state and later-enacted federal law require a permit to operate such systems.

"California's Porter-Cologne Water Quality Control Act (Porter-Cologne Act or the Act; Wat. Code, § 13000 et seq. ) was enacted in 1969. It established the State Water Resources Control Board (State Board), along with nine regional water quality control boards, and gave those agencies ‘primary responsibility for the coordination and control of water quality.’ ( Wat. Code, § 13001 ; see City of Burbank v. State Water Resources Control Bd. (2005) 35 Cal.4th 613, 619, 26 Cal.Rptr.3d 304, 108 P.3d 862 (City of Burbank ).) The State Board establishes statewide policy. The regional boards formulate and adopt water quality control plans and issue permits governing the discharge of waste. ( Building Industry Assn. of San Diego County v. State Water Resources Control Bd. (2004) 124 Cal.App.4th 866, 875, 22 Cal.Rptr.3d 128 ( Building Industry ).)

"The Porter-Cologne Act requires any person discharging, or proposing to discharge, waste that could affect the quality of state waters to file a report with the appropriate regional board. ( Wat. Code, § 13260, subd. (a)(1).) The regional board then ‘shall prescribe requirements as to the nature’ of the discharge, implementing any applicable water quality control plans. ( Wat. Code, § 13263, subd. (a).) The Operators must follow all requirements set by the Regional Board. ( Wat. Code, §§ 13264, 13265.)

"The federal Clean Water Act (the CWA; 33 U.S.C. § 1251 et seq. ) was enacted in 1972, and also established a permitting system. The CWA is a comprehensive water quality statute designed to restore and maintain the chemical, physical, and biological integrity of the nation's waters. ( City of Burbank, supra, 35 Cal.4th at p. 620, 26 Cal.Rptr.3d 304, 108 P.3d 862.) The CWA prohibits pollutant discharges unless they comply with (1) a permit (see 33 U.S.C. §§ 1328, 1342, 1344 ); (2) established effluent limitations or standards (see 33 U.S.C. §§ 1312, 1317 ); or (3) established national standards of performance (see 33 U.S.C. § 1316 ). ( 33 U.S.C. § 1311(a).) The CWA allows any state to adopt and enforce its own water quality standards and limitations, so long as those standards and limitations are not ‘less stringent’ than those in effect under the CWA. ( 33 U.S.C. § 1370.)

"The CWA created the National Pollutant Discharge Elimination System (NPDES), authorizing the Environmental Protection Agency (EPA) to issue a permit for any pollutant discharge that will satisfy all requirements established by the CWA or the EPA Administrator. ( 33 U.S.C. § 1342(a)(1), (2).) The federal system notwithstanding, a state may administer its own permitting system if authorized by the EPA.^{[2 ]} If the EPA concludes a state has adequate authority to administer its proposed program, it must grant approval ( 33 U.S.C. § 1342(b) ) and suspend its own issuance of permits ( 33 U.S.C. § 1342(c)(1) ).^{[3 ]}

"California was the first state authorized to issue its own pollutant discharge permits. ( People ex rel. State Water Resources Control Bd. v. Environmental Protection Agency (9th Cir. 1975) 511 F.2d 963, 970, fn. 11, revd. on other grounds in EPA v. State Water Resources Control Board (1976) 426 U.S. 200, 96 S.Ct. 2022, 48 L.Ed.2d 578.) Shortly after the CWA's enactment, the Legislature amended the Porter-Cologne Act, adding chapter 5.5 ( Wat. Code, § 13370 et seq. ) to authorize state issuance of permits ( Wat. Code, § 13370, subd. (c) ). The Legislature explained the amendment was ‘in the interest of the people of the state, in order to avoid direct regulation by the federal government of persons already subject to regulation under state law pursuant to [the Porter-Cologne Act].’ (Ibid .) The Legislature provided that chapter 5.5 be ‘construed to ensure consistency’ with the CWA. ( Wat. Code, § 13372, subd. (a).) It directed that state and regional boards issue waste discharge requirements ‘ensur[ing] compliance with all applicable provisions of the [CWA] ... together with any more stringent effluent standards or limitations necessary to implement water quality control plans, or for the protection of beneficial uses, or to prevent nuisance.’ ( Wat. Code, § 13377, italics added.)^{[4 ]} To align the state and federal permitting systems, the legislation provided that the term ‘ "waste discharge requirements" ’ under the Act was equivalent to the term ‘ "permits" ’ under the CWA. ( Wat. Code, § 13374.) Accordingly, California's permitting system now regulates discharges under both state and federal law. ( WaterKeepers Northern California v. State Water Resources Control Bd. (2002) 102 Cal.App.4th 1448, 1452, 126 Cal.Rptr.2d 389 ; accord, Building Industry, supra, 124 Cal.App.4th at p. 875...