Department of Finance v. Commission on State Mandates
1 Cal. 5th 749
| Cal. | 2016Background
- The Los Angeles Regional Water Quality Control Board issued an NPDES-style permit (the Permit) to Los Angeles County, the County Flood Control District, and 84 cities requiring measures to reduce stormwater pollutants, including: twice-in-five-year inspections of certain commercial/industrial facilities, inspections of construction sites (≥1 acre) during wet season, and placement/maintenance of trash receptacles at transit stops.
- Operators (county and cities) filed test claims with the Commission on State Mandates seeking reimbursement under Cal. Const. art. XIII B, § 6 for costs imposed by the Permit; the Commission found the requirements were state-mandated but denied reimbursement for inspections on fee-authority grounds.
- The State (Department of Finance, State Board, Regional Board) argued the requirements were federally mandated under the Clean Water Act (CWA) and EPA implementing regulations (i.e., the federal "maximum extent practicable" standard and 40 C.F.R. § 122.26 guidance), so no state reimbursement was required (Gov. Code § 17556(c)).
- The trial court and Court of Appeal held the Permit conditions were federally mandated; the California Supreme Court granted review to resolve whether federal law compelled those specific permit conditions.
- The Supreme Court considered the interplay between the CWA/NPDES delegation to states, federal regulations that set flexible standards (e.g., "maximum extent practicable"), and California reimbursement law requiring the State to pay for state-imposed local costs unless federal law mandates them.
Issues
| Issue | Plaintiff's Argument (Operators) | Defendant's Argument (State) | Held |
|---|---|---|---|
| Whether Permit conditions (inspections, trash receptacles) are "mandated by federal law or regulation" so as to be excepted from state reimbursement under Gov. Code § 17556(c) | Conditions are not federally mandated: neither CWA nor cited EPA regs expressly require these specific inspections or trash receptacles; the Regional Board had discretion and in fact historically retained inspection duties | Federal law/regulations require permits to reduce pollutants to the "maximum extent practicable" and EPA regs contemplate such practices; because state administered NPDES, the Permit’s conditions implement federal mandates | Held: Reversed Court of Appeal. The Permit conditions were not federally mandated. Federal law/regulations left the State/regional boards discretion; the Regional Board’s imposition of specific conditions was a discretionary state action and thus subject to reimbursement (except issues remanded) |
| Whether the Commission should defer to the Regional Board/EPA about what federal law would have required | Operators: Commission should independently decide the federal-mandate question; burden on State to prove federal mandate | State: Commission should defer to Regional Board’s technical judgment and the Permit as reflecting what federal law required | Held: Commission need not defer absent a specific Board finding that conditions were the only means to meet the federal standard; the State bears burden to show a federal mandate in reimbursement proceedings |
| Whether the inspection requirements were in practice duties of the Regional Board (affecting who bears costs) | Operators: State law and statewide permits made the Regional Board primarily responsible for inspections; Regional Board shifted responsibility to Operators | State: EPA regulations and the CWA contemplated operator inspections as part of compliance | Held: Evidence showed Regional Board had primary inspection responsibility and shifted it to Operators; inspections are not federally mandated |
| Whether trash-receptacle requirement is federally mandated | Operators: No federal statute/regulation explicitly requires trash receptacles at transit stops; EPA permits elsewhere lacked that condition | State: EPA regulation required a description of practices for operating/maintaining public streets/roads and reducing impacts, supporting the trash-receptacle condition | Held: No federal requirement specifically mandated transit-stop trash receptacles; condition was discretionary and thus not federally mandated |
Key Cases Cited
- City of Sacramento v. State of California, 50 Cal.3d 51 (1990) (federal coercion that leaves state without practical choice converts state action into response to a federal mandate)
- County of Los Angeles v. State of California, 43 Cal.3d 46 (1987) (codification of existing federal constitutional obligations is a federal mandate)
- Hayes v. Commission on State Mandates, 11 Cal.App.4th 1564 (1992) (when federal law leaves manner of implementation to state discretion, state’s free choice to impose requirements creates reimbursable state mandate)
- Division of Occupational Safety & Health v. State Bd. of Control, 189 Cal.App.3d 794 (1987) (state adoption of a federally approved plan is voluntary; costs resulting from such state choices are not federally mandated)
- San Diego Unified School Dist. v. Commission on State Mandates, 33 Cal.4th 859 (2004) (distinguishes discretionary vs. mandatory triggers for federal-mandate exception; state-imposed requirements beyond federal mandate are reimbursable)