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

• Decision Date: 29 January 2014
• Docket Number: B237153
• Citation: 163 Cal.Rptr.3d 439
• Court: California Court of Appeals Court of Appeals
• Parties: STATE DEPARTMENT OF FINANCE et al., Plaintiffs and Respondents, v. COMMISSION ON STATE MANDATES, Defendant and Respondent; County of Los Angeles et al., Real Parties in Interest and Appellants.

163 Cal.Rptr.3d 439

STATE DEPARTMENT OF FINANCE et al., Plaintiffs and Respondents,

v. COMMISSION ON STATE MANDATES, Defendant and Respondent;County of Los Angeles et al., Real Parties in Interest and Appellants.

B237153

Court of Appeal, Second District, Division 1, California.

Filed October 16, 2013

As Modified November 14, 2013

Review Granted January 29, 2014

See 9 Witkin, Summary of Cal. Law (10th ed. 2005) Taxation, § 119 et seq.

APPEAL from a judgment of the Superior Court of Los Angeles County, Ann I. Jones, Judge. Affirmed. (Los Angeles County Super. Ct. No. BS130730)

Burhenn & Gest, Howard Gest, David W. Burhenn, for Appellants and Real Parties in Interest County of Los Angeles, Cities of Bellflower, Carson, Commerce, Covina, Downey and Signal Hill.

John F. Krattli, County Counsel, and Judith Fries, Principal Deputy Counsel, for Appellant and Real Party in Interest County of Los Angeles.

Somach Simmons & Dunn, Theresa A. Dunham, Nicholas A. Jacobs for California Stormwater Quality Association, Santa Clara Valley Urban Runoff Pollution Prevention Program, Riverside County Flood Control and Water Conservation District and County of Riverside, the Alameda County Clean Water Program, and City/County Association of Governments of San Mateo County as Amici Curiae on behalf of Real Parties in Interest and Appellants.

Building Industry Legal Defense Foundation, Andrew R. Henderson, as Amicus Curiae on behalf of Real Parties in Interest and Appellants.

Kamala D. Harris, Attorney General, Douglas J. Woods, Senior Assistant Attorney General, Peter K. Southworth, Supervising Deputy Attorney General, and Kathleen A. Lynch, Deputy Attorney General, for Plaintiffs and Respondents State of California Department of Finance, State Water Resources Control Board, and California Regional Water Quality Control Board, Los Angeles Region.

No appearance for Defendant and Respondent Commission on State Mandates.

JOHNSON, J.

In December 2001, the California Regional Water Quality Control Board, Los Angeles Region (Regional Board) issued a municipal stormwater sewer permit (Permit) to real parties in interest Los Angeles County and designated cities within the county, including the cities of Bellflower, Carson, Commerce, Covina, Downey and Signal Hill (collectively County). The Permit is governed by a complex state and federal statutory scheme regulating pollutant discharge into waterways under the federal Clean Water Act and the California Porter–Cologne Water Act. The Permit's subvention status is subject to initial determination by the Commission on State Mandates (Commission). Real parties in interest filed a test claim before the Commission, seeking to determine whether four requirements of the Permit (to install trash receptacles at transit stops and to conduct inspections of commercial, industrial, and construction sites) constituted unfunded state mandates subject to reimbursement under the California Constitution, article XIII B, section 6 because although the Permit was governed by both federal law and state law, the County asserted the Permit contained additional state requirements not found in the governing federal statutes and regulations. The Commission agreed and found that the requirements constituted state mandates, although it concluded subvention was required only for the trash receptacles because the County had the ability to levy fees to pay for the inspections.

The Department of Finance filed a petition for writ of mandate in the trial court, seeking to overturn the Commission's ruling, contending that the requirements were solely federal mandates because they implemented the directive of the federal statutes and regulations and thus were not subject to state subvention. The trial court agreed and found that the Commission erred in finding the Permit requirements were state mandates because it did not apply the applicable federal “maximum extent practicable” standard, and issued a writ of mandate ordering the Commission to vacate its decision.

On appeal, the dispute centers on whether the federal standard requiring the reduction of pollutants to the maximum extent practicable encompassed the specific four requirements of the Permit, given that the federal regulations at issue did not expressly spell out such requirements. The amici parties California Stormwater Quality Association et al. (collectively CSQA) join in the County's arguments that the trial court erred in finding the maximum extent practicable standard controlled. The amicus party Building Association Legal Defense Foundation (Building Association) asserts that the issue is one of preemption, and the trial court erred in finding that the federal regulations governed the court's mandate analysis. We agree with the trial court's conclusion that the Commission failed to apply the controlling maximum extent practicable standard, that the Permit's mandates implement the maximum extent practicable objective, and thus are federal mandates. We affirm the judgment.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Regulatory Structure

The Permit was issued as a “National Pollutant Discharge Elimination System” (NPDES) permit pursuant to the Clean Water Act, Title 33 United States Code section 1342. The Clean Water Act requires operators of municipal separate storm sewer systems to obtain NPDES permits that contain controls to “reduce the discharge of pollutants to the maximum extent practicable.” (33 U.S.C. § 1342(p)(3)(B)(iii).) The Commission did not consider this standard in evaluating the Permit's requirements, instead looking solely to whether the requirements were expressly set forth in the implementing federal regulation at 40 Code of Federal Regulations, part 122.26(d)(2)(iv)(A)–(D) (a copy of appendix A is attached).

1. Federal Framework

In 1972, Congress passed the Clean Water Act. (33 U.S.C. § 1251 et seq.) The Clean Water Act's national goal was to eliminate discharge of pollutants into navigable waters of the United States by 1985. ( PUD No. 1 of Jefferson County v. Washington Dept. of Ecology (1994) 511 U.S. 700, 704, [114 S.Ct. 1900, 128 L.Ed.2d 716]; City of Burbank v. State Water Resources Control Board (2005) 35 Cal.4th 613, 619–620, 26 Cal.Rptr.3d 304, 108 P.3d 862 (City of Burbank ).) To achieve this goal, the Clean Water Act “established restrictions on the ‘quantities, rates, and concentrations of chemical, physical, biological, and other constituents' ” that could be discharged into the nation's waterways. “[T]hese effluent limitations permit the discharge of pollutants only when the water has been satisfactorily treated to conform to federal water quality standards. (33 U.S.C. §§ 13111362(11).)” (City of Burbank, at p. 620, 26 Cal.Rptr.3d 304, 108 P.3d 862.)

“The Clean Water Act employs the basic strategy of prohibiting emissions from ‘point sources,’ ¹ unless the [emitter] obtains ... an NPDES permit.” ( Building Industry Assn. of San Diego County v. State Water Resources Control Bd. (2004) 124 Cal.App.4th 866, 872, 22 Cal.Rptr.3d 128, fns. omitted ( Building Industry ).) NPDES permits are required for “a discharge from a municipal separate storm sewer system serving a population of 250,000 or more.” ( 33 U.S.C. § 1342(p)(2)(C).) NPDES permits have “ ‘five components: technology-based limitations, water-quality based limitations, monitoring and reporting requirements, standard conditions, and special conditions.’ ” ( WaterKeepers Northern California v. State Water Resources Control Bd. (2002) 102 Cal.App.4th 1448, 1452, 126 Cal.Rptr.2d 389.)

Special rules apply to storm sewers. In 1987, Congress amended the Clean Water Act to require operators of “municipal separate storm sewer systems” (MS4) ² to control or reduce the discharge of pollutants to the “maximum extent practicable” (MEP).³ ( 33 U.S.C. § 1342(p)(3)(B)(iii).) Congress “clarified that the EPA [Environmental Protection Agency (EPA) ] had the authority to fashion NPDES permit requirements to meet water quality standards without specific numerical effluent limits and instead to impose ‘controls to reduce the discharge of pollutants to the maximum extent practicable....’ ” ( Building Industry,supra, 124 Cal.App.4th at p. 874, 22 Cal.Rptr.3d 128; 33 U.S.C. § 1342(p)(3)(B)(iii).) Stormwater discharge is a significant source of water pollution, and contains suspended metals, sediments, algae-promoting nutrients, trash, used motor oil, raw sewage, pesticides, and other toxic contaminants. Sources of polluted stormwater discharge are “urban development, industrial facilities, construction sites, and illicit discharges and connections to storm sewer systems.” ( Environmental Defense Center, Inc. v. U.S.E.P.A. (9th Cir.2003) 344 F.3d 832, 840.) Unlike a sanitary sewer system, which transports sewage for treatment at a wastewater facility, MS4's convey only stormwater. ( Natural Resources Defense Council, Inc. v. County of Los Angeles (2013) 725 F.3d 1194, 1197, fn. 2.) As a result, the flexible maximum extent practicable standard is designed to permit MS4 dischargers to comply with such requirement on a permit-by-permit basis.

The EPA promulgated regulations to provide guidance to stormwater system permittees concerning requirements for MS4 permits. The regulations contain certain requirements, such as requiring MS4 permittees to include a program to monitor discharge from municipal landfills, hazardous waste treatment plants, but otherwise allow permittees to develop their own programs to meet the maximum extent practicable standard. (See 40 C.F.R. § 122.26(d)(2)(iv)(A)–(C).) Before an NPDES permit is issued, the federal or state regulatory agency must follow an extensive administrative hearing procedure. (See, e.g., 40 C.F.R. §§ 124.3, 124.6, 124.8, 124.10.)

2. State Framework

With respect to concurrent state regulation, “[t]he Clean Water Act anticipates a partnership between the States and the Federal Government, animated by a shared objective: ‘to restore and maintain...