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.
No. S214855
Supreme Court of California
Aug. 29, 2016.
749
Burhenn & Gest, Howard Gest and David W. Burhenn for Real Parties in Interest and Appellants County of Los Angeles, City of Bellflower, City of Carson, City of Commerce, City of Covina, City of Downey and City of Signal Hill.
John F. Krattli and Mark Saladino, County Counsel, and Judith A. Fries, Principal Deputy County Counsel, for Real Party in Interest and Appellant County of Los Angeles.
Meyers, Nave, Riback, Silver & Wilson, Gregory J. Newmark, John D. Bakker; Morrison & Foerster, Robert L. Falk and Megan B. Jennings for Alameda Countywide Clean Water Program, City/County Association of Governments of San Mateo County and Santa Clara Valley Urban Runoff Pollution Prevention Program as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Somach Simmons & Dunn, Theresa A. Dunham, Nicholas A. Jacobs; Pamela J. Walls and Gregory P. Priamos, County Counsel (Riverside), Karin Watts-Bazan, Principal Deputy County Counsel, and Aaron C. Gettis, Deputy County Counsel, for California Stormwater Quality Association, Riverside County Flood Control and Water Conservation District and County of Riverside as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Nicholas S. Chrisos, County Counsel (Orange), Ryan M.F. Baron and Ronald T. Magsaysay, Deputy County Counsel, for County of Orange as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Best Best & Krieger, Shawn Hagerty and Rebecca Andrews for County of San Diego and 18 Cities in San Diego County as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Thomas E. Montgomery, County Counsel (San Diego), and Timothy M. Barry, Chief Deputy County Counsel, for California State Association of Counties and League of California Cities as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Best Best & Krieger and J. G. Andre Monette for City of Aliso Viejo, City of Lake Forest and City of Santa Ana as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Michael R.W. Houston, City Attorney (Anaheim), for City of Anaheim as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Richards, Watson & Gershon and Candice K. Lee for City of Brea, City of Buena Park and City of Seal Beach as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Baron J. Bettenhausen for City of Costa Mesa and City of Westminster as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Aleshire & Wynder, Anthony R. Taylor and Wesley A. Miliband for City of Cypress as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Rutan & Tucker and Richard Montevideo for City of Dana Point as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Jennifer McGrath, City Attorney (Huntington Beach), and Michael Vigliotta, Chief Assistant City Attorney, for City of Huntington Beach as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Rutan & Tucker and Jeremy N. Jungreis for City of Irvine, City of San Clemente and City of Yorba Linda as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Woodruff, Spradlin & Smart and M. Lois Bobak for City of Laguna Hills and City of Tustin as Amici Curiae on behalf of Real Parties in Interest and Appellants.
Terry E. Dixon for City of Laguna Niguel as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Mark K. Kitabayashi for City of Mission Viejo as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Aaron C. Harp for City of Newport Beach as Amicus Curiae on behalf of Real Parties in Interest and Appellants.
Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney General, Peter K. Southworth, Kathleen A. Lynch, Tamar Pachter and Nelson R. Richards, Deputy Attorneys General, for Plaintiffs and Respondents.
No appearance for Defendant and Respondent.
OPINION
CORRIGAN, J.-Under our state Constitution, if the Legislature or a state agency requires a local government to provide a new program or higher level of service, the local government is entitled to reimbursement from the state for the associated costs. (
The services in question here are provided by local agencies that operate storm drain systems pursuant to a state-issued permit. Conditions in that permit are designed to maintain the quality of California‘s water, and to comply with the federal Clean Water Act (
I. Background
The Regional Water Quality Control Board, Los Angeles Region (the Regional Board or the Board) is a state agency. It issued a permit authorizing Los Angeles County, the Los Angeles County Flood Control District, and 84 cities (collectively, the Operators) to operate storm drainage systems.1 Permit
Some Operators sought reimbursement for the cost of satisfying the conditions. The Commission on State Mandates (the Commission) concluded each required condition was a new program or higher level of service, mandated by the state rather than by federal law. However, it found the Operators were only entitled to state reimbursement for the costs of the trash receptacle condition, because they could levy fees to cover the costs of the required inspections. (See discussion, post, at p. 761.) The trial court and the Court of Appeal disagreed, finding that all of the requirements were federally mandated.
We granted review. To resolve this issue, it is necessary to consider both the permitting system and the reimbursement obligation in some detail.
A. The Permitting System
The Operators’ municipal storm sewer systems discharge both waste and pollutants.2 State law controls “waste” discharges. (
California‘s Porter-Cologne Water Quality Control Act (Porter-Cologne Act or the Act;
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. (
The federal Clean Water Act (the CWA;
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. (
In 1987, Congress amended the CWA to clarify that a permit is required for any discharge from a municipal storm sewer system serving a population of 100,000 or more. (
EPA regulations specify the information to be included in a permit application. (See
In 2001, Los Angeles County (the County), acting for all Operators, applied for a permit from the Regional Board. The Board issued a permit (the Permit), with conditions intended to “reduce the discharge of pollutants in storm water to the Maximum Extent Practicable” in the Operators’ jurisdiction. The Permit stated that its conditions implemented both the Porter-Cologne Act and the CWA.
Part 4 of the Permit contains the four requirements at issue. Part 4.C addresses commercial and industrial facilities, and required the Operators to inspect certain facilities twice during the five-year term of the Permit. Inspection requirements were set out in substantial detail.5 Part 4.E of the Permit addresses construction sites. It required each Operator to “implement a program to control runoff from construction activity at all construction sites within its jurisdiction,” and to inspect each construction site of one acre or greater at least “once during the wet season.”6 Finally, Part 4.F of the Permit addresses pollution from public agency activities. Among other things, it directed each Operator not otherwise regulated to “[p]lace trash receptacles at all transit stops within its jurisdiction,” and to maintain them as necessary.
C. Local Agency Claims
1. Applicable procedures for seeking reimbursement
As mentioned, when the Legislature or a state agency requires a local government to provide a new program or higher level of service, the state must “reimburse that local government for the costs of the program or increased level of service.” (
The Legislature has enacted comprehensive procedures for the resolution of reimbursement claims (
The first reimbursement claim filed with the Commission is called a test claim. (
2. The test claims
The County and other Operators filed test claims with the Commission, seeking reimbursement for the Permit‘s inspection and trash receptacle requirements. The Department, State Board, and Regional Board (collectively, the State) responded that the Operators were not entitled to reimbursement because each requirement was federally mandated.
The Department argued that the EPA had delegated its federal permitting authority to the Regional Board, which acted as an administrator for the EPA, ensuring the state‘s program complied with the CWA. The Department acknowledged the Regional Board had discretion to set detailed permit conditions, but urged that the challenged conditions were required for the Permit to comply with federal law.
The State and Regional Boards argued somewhat differently. They contended the CWA required the Regional Board to impose specific permit
The Operators argued the conditions were not mandated by federal law, because nothing in the CWA or in the cited federal regulations required them to install trash receptacles or perform the required site inspections. They also submitted evidence showing that none of the challenged requirements were
As to the inspection requirements, the Operators argued that state law required the state and regional boards to regulate discharges of waste. This regulatory authority included the power to inspect facilities and sites. The Regional Board had used the Permit conditions to shift those inspection responsibilities to them. They also presented evidence that the Regional Board was required to inspect industrial facilities and construction sites for compliance with statewide permits issued by the State Board (see ante, p. 758, fns. 5, 6). They urged that the Regional Board had shifted that obligation to the Operators as well. Finally, the Operators submitted a declaration from a county employee indicating the Regional Board had offered to pay the County to inspect industrial facilities on behalf of the Regional Board, but revoked that offer after including the inspection requirement in the Permit.
The EPA submitted comments to the Commission indicating that the challenged Permit requirements were designed to reduce the discharge of pollutants to the “maximum extent practicable.” Thus, the EPA urged the requirements fell “within the scope” of federal regulations and other EPA guidance regarding stormwater management programs. The Bay Area Stormwater Management Agencies Association, the League of California Cities, and the California State Association of Counties submitted comments urging that the challenged requirements were state, rather than federal, mandates.
3. The commission‘s decision
By a four-to-two vote, the Commission partially approved the test claims, concluding none of the challenged requirements were mandated by federal law. However, the Commission determined the Operators were not entitled to reimbursement for the inspection requirements because they had authority to levy fees to pay for the required inspections. Under
4. Petitions for writ of mandate
The State challenged the Commission‘s determination that the requirements were state mandates. By cross-petition, the County and certain cities challenged the Commission‘s finding that they could impose fees to pay for the inspections.
The trial court concluded that, because each requirement fell “within the maximum extent practicable standard,” they were federal mandates not
II. Discussion
A. Standard of Review
Courts review a decision of the Commission to determine whether it is supported by substantial evidence. (
B. Analysis
The parties do not dispute here that each challenged requirement is a new program or higher level of service. The question here is whether the requirements were mandated by a federal law or regulation.
1. The federal mandate exception
Voters added
The “concern which prompted the inclusion of section 6 in
As noted, reimbursement is not required if the statute or executive order imposes “a requirement that is mandated by a federal law or regulation,” unless the state mandate imposes costs that exceed the federal mandate. (
In City of Sacramento, supra, 50 Cal.3d 51, this court addressed local governments’ reimbursement claims for the costs of extending unemployment insurance protection to their employees. (Id. at p. 59.) Since 1935, the applicable federal law had provided powerful incentives for states to implement their own unemployment insurance programs. Those incentives included federal subsidies and a substantial federal tax credit for all corporations in states with certified federal programs. (Id. at p. 58.) California had implemented such a program. (Ibid.) In 1976, Congressional legislation required
Two local governments sought reimbursement for the costs of complying with that requirement. Opposing the claims, the state argued its action was compelled by federal law. This court agreed, reasoning that, if the state had “failed to conform its plan to new federal requirements as they arose, its businesses [would have] faced a new and serious penalty” of double taxation, which would have placed those businesses at a competitive disadvantage against businesses in states complying with federal law. (City of Sacramento, supra, 50 Cal.3d at p. 74.) Under those circumstances, we concluded that the “state simply did what was necessary to avoid certain and severe federal penalties upon its resident businesses.” (Ibid.) Because “[t]he alternatives were so far beyond the realm of practical reality that they left the state ‘without discretion’ to depart from federal standards,” we concluded “the state acted in response to a federal ‘mandate.‘” (Ibid., italics added.)
County of Los Angeles, supra, 32 Cal.App.4th 805, involved a different kind of federal compulsion. In Gideon v. Wainwright (1963) 372 U.S. 335, the United States Supreme Court held that states were required by the federal Constitution to provide counsel to indigent criminal defendants. That requirement had been construed to include “the right to the use of any experts that will assist counsel in preparing a defense.” (County of Los Angeles, at p. 814.) The Legislature enacted
The state prevailed. The Court of Appeal reasoned that, even without
Hayes v. Commission on State Mandates (1992) 11 Cal.App.4th 1564 (Hayes) provides a contrary example. Hayes involved the former federal Education of the Handicapped Act (EHA;
Two local governments sought reimbursement for the costs of special education assessment hearings which were required under the state‘s adopted plan. The state argued the requirements imposed under its plan were federally mandated. The Hayes court rejected that argument. Reviewing the historical development of special education law (Hayes, supra, 11 Cal.App.4th at pp. 1582–1592), the court concluded that, so far as the state was concerned, the requirements established by the EHA were federally mandated (Hayes, at p. 1592). However, that conclusion “mark[ed] the starting point rather than the end of [its] consideration.” (Ibid.) The court explained that, in determining whether federal law requires a specified function, like the assessment hearings, the focus of the inquiry is whether the “manner of implementation of the federal program was left to the true discretion of the state.” (Id. at p. 1593, italics added.) If the state “has adopted an implementing statute or regulation pursuant to the federal mandate,” and had “no ‘true choice‘” as to the manner of implementation, the local government is not entitled to reimbursement. (Ibid.) If, on the other hand, “the manner of implementation of the federal program was left to the true discretion of the state,” the local government might be entitled to reimbursement. (Ibid.)
According to the Hayes court, the essential question is how the costs came to be imposed upon the agency required to bear them. “If the state freely chose to impose the costs upon the local agency as a means of implementing a federal program then the costs are the result of a reimbursable state mandate regardless whether the costs were imposed upon the state by the federal government.” (Hayes, supra, 11 Cal.App.4th at p. 1594.) Applying those principles, the court concluded that, to the extent “the state implemented the [EHA] by freely choosing to impose new programs or higher levels of service upon local school districts, the costs of such programs or higher levels of service are state mandated and subject to” reimbursement. (Ibid.)
From City of Sacramento, County of Los Angeles, and Hayes, we distill the following principle: If federal law compels the state to impose, or itself imposes, a requirement, that requirement is a federal mandate. On the other hand, if federal law gives the state discretion whether to impose a particular implementing requirement, and the state exercises its discretion to impose the requirement by virtue of a “true choice,” the requirement is not federally mandated.
Division of Occupational Safety & Health v. State Bd. of Control (1987) 189 Cal.App.3d 794 (Division of Occupational Safety) is
The court agreed with the fire districts. As the court explained, a Fed. OSHA regulation arguably required the maintenance of three-person firefighting teams. (Division of Occupational Safety, supra, 189 Cal.App.3d at p. 802.) However, that federal regulation specifically excluded local fire districts. (Id. at p. 803.) Had the state elected to be governed by Fed. OSHA standards, that exclusion would have allowed those fire districts to maintain two-person teams. (Division of Occupational Safety, at p. 803.) The conditions for approval of the state‘s plan required effective enforcement and coverage of public employees. But those conditions did not make the costs of complying with the state regulation federally mandated. “[T]he initial decision to establish a federally approved [local] plan is an option which the state exercises freely.” (Ibid.) In other words, the state was not “compelled to extend jurisdiction over occupational safety to local governmental employers,” which would have otherwise fallen under a federal exclusion. (Ibid.) Because the state “was not required to promulgate [the state regulation] to comply with federal law, the exemption for federally mandated costs does not apply.” (Id. at p. 804.)13
San Diego Unified School Dist. v. Commission on State Mandates (2004) 33 Cal.4th 859 (San Diego Unified) provides another example. In Goss v. Lopez (1975) 419 U.S. 565, the United States Supreme Court held that if a school principal chose to recommend a student for expulsion, federal due process principles required the school district to give that student a hearing.
The school district argued it was entitled to reimbursement of all expulsion hearing costs. This court drew a distinction between discretionary and mandatory expulsions. We concluded the costs of hearings for discretionary expulsions flowed from a federal mandate. (San Diego Unified, supra, 33 Cal.4th at pp. 884–890.)14 We declined, however, to extend that rule to the costs related to mandatory expulsions. Because it was state law that required an expulsion recommendation for firearm possession, all hearing costs triggered by the mandatory expulsion provision were reimbursable state-mandated expenses. (San Diego Unified, at pp. 881–883.) As was the case in Hayes, the key factor was how the costs came to be imposed on the entity that was required to bear them. The school principal could avoid the cost of a federally mandated hearing by choosing not to recommend an expulsion. But, when a state statute required an expulsion recommendation, the attendant hearing costs did not flow from a federal mandate. (San Diego Unified, supra, 33 Cal.4th at p. 881.)
2. Application
Review of the Commission‘s decision requires a determination as to whether federal statutory, administrative, or case law imposed, or compelled the Regional Board to impose, the challenged requirements on the Operators.
It is clear federal law did not compel the Regional Board to impose these particular requirements. There was no evidence the state was compelled to administer its own permitting system rather than allowing the EPA do so under the CWA. (
The State argues the Commission failed to account for the flexibility in the CWA‘s regulatory scheme, which conferred discretion on the State and regional boards in deciding what conditions were necessary to comply with the CWA. In exercising that discretion, those agencies were required to rely on their scientific, technical, and experiential knowledge. Thus, the State contends the Permit itself is the best indication of what requirements would have been imposed by the EPA if the Regional Board had not done so, and the Commission should have deferred to the Board‘s determination of what conditions federal law required.
We disagree that the Permit itself demonstrates what conditions would have been imposed had the EPA granted the Permit. In issuing the Permit, the Regional Board was implementing both state and federal law and was authorized to include conditions more exacting than federal law required. (City of Burbank, supra, 35 Cal.4th at pp. 627–628.) It is simply not the case that, because a condition was in the Permit, it was, ipso facto, required by federal law.
We also disagree that the Commission should have deferred to the Regional Board‘s conclusion that the challenged requirements were federally mandated. That determination is largely a question of law. Had the Regional Board found, when imposing the disputed Permit conditions, that those conditions were the only means by which the maximum extent practicable standard could be implemented, deference to the Board‘s expertise in reaching that finding would be appropriate. The Board‘s legal authority to administer the CWA and its technical experience in water quality control would call on sister agencies as well as courts to defer to that finding.15 The State, however, provides no authority for the proposition that, absent such a finding, the Commission should defer to a state agency as to whether requirements were state or federally mandated. Certainly, in a trial court action challenging a regional Board‘s authority to impose specific permit conditions, the Board‘s findings regarding what conditions satisfied the federal standard would be entitled to deference. (See, e.g., City of Rancho Cucamonga v. Regional Water Quality Control Bd. (2006) 135 Cal.App.4th 1377, 1384;
citing Fukuda v. City of Angels (1999) 20 Cal.4th 805, 817-818 [85 Cal.Rptr.2d 696, 977 P.2d 693].) Resolution of those questions would bring into play the particular technical expertise possessed by members of the regional board. In those circumstances, the party challenging the board‘s decision would have the burden of demonstrating its findings were not supported by substantial evidence or that the board otherwise abused its discretion. (Rancho Cucamonga, at p. 1387; Building Industry, supra, 124 Cal.App.4th at pp. 888-889.)
Reimbursement proceedings before the Commission are different. The question here was not whether the Regional Board had authority to impose the challenged requirements. It did. The narrow question here was who will pay for them. In answering that legal question, the Commission applied California‘s constitutional, statutory, and common law to the single issue of reimbursement. In the context of these proceedings, the State has the burden to show the challenged conditions were mandated by federal law.
Moreover, the policies supporting
Applying the standard of review described above, we evaluate the entire record and independently review the Commission‘s determination the challenged conditions were not federal mandates. We conclude the Commission was correct. These Permit conditions were not federally mandated.
Neither the
Further, as the Operators explained, state law made the Regional Board responsible for regulating discharges of waste within its jurisdiction. (
In addition, federal law and practice required the Regional Board to inspect all industrial facilities and construction sites. Under the
The Operators showed that, in those statewide permits, the State Board had placed responsibility for inspecting facilities and sites on the Regional Board. The Operators submitted letters from the EPA indicating the State and regional boards were responsible for enforcing the terms of the statewide permits. The Operators also noted the State Board was authorized to charge a fee to facilities and sites that subscribed to the statewide permits (
The State argues the inspection requirements were federally mandated because the
(b) The trash receptacle requirement
The Commission concluded the trash receptacle requirement was not a federal mandate because neither the
The Commission‘s determination was supported by the record. While the Operators were required to include a description of practices and procedures in their permit application, the issuing agency has discretion whether to make
(c) Conclusion
Although we have upheld the Commission‘s determination on the federal mandate question, the State raised other arguments in its writ petition. Further, the issues presented in the Operators’ cross-petition were not addressed by either the trial court or the Court of Appeal. We remand the matter so those issues can be addressed in the first instance.
III. Disposition
We reverse the judgment of the Court of Appeal and remand for further proceedings consistent with our opinion.
Cantil-Sakauye, C. J., Werdegar, J., and Chin, J., concurred.
CUÉLLAR, J., Concurring and Dissenting. — A local government is entitled to reimbursement from the state when the Legislature or a state agency requires it to provide new programs or increased service. (
What the majority concludes is that federal law did not compel imposition of the conditions, and that the local agencies would not necessarily have been required to comply with them had they not been imposed by the state. In doing so, the majority upholds and treats as correct a decision by the Commission on State Mandates (the Commission) that is flawed in its approach and far too parsimonious in its analysis. This is no small feat: not
Moreover, when the majority considers whether the permit conditions are indeed federally mandated, it purports to apply de novo review to the Commission‘s legal determination. (See maj. opn., ante, at pp. 762, 768, 770.) What it actually applies seems far more deferential to the Commission‘s decision—something akin to substantial evidence review—despite the Commission‘s own failure in affording deference to the Regional Board and, more generally, its reliance on the wrong decisionmaking framework. (Cf. People v. Barnwell (2007) 41 Cal.4th 1038, 1052 [63 Cal.Rptr.3d 82, 162 P.3d 596] [“A substantial evidence inquiry examines the record in the light most favorable to the judgment and upholds it if the record contains reasonable, credible evidence of solid value upon which a reasonable trier of fact could have relied in reaching the conclusion in question“].) Indeed, what the majority overlooks is that the Commission itself should have considered the effect of the evidence on which the majority now relies in deciding whether the challenged permit conditions were necessary to comply with federal law. And in doing so, the Commission should have extended a measure of deference to the Regional Board‘s expertise in administering the statutory scheme. (See County of Los Angeles v. State Water Resources Control Bd. (2006) 143 Cal.App.4th 985, 997 [50 Cal.Rptr.3d 619] (State Water Board).)
Because the Commission failed to do so, and because the Commission‘s interpretation of the federal Clean Water Act (the
I.
To determine whether it is the state rather than local governments that should bear the entirety of the financial burden associated with a new program or increased service, the Commission must examine the nature of the federal scheme in question. That scheme is the
But states undertaking such implementation must do so in a manner that complies with regulations promulgated by the Environmental Protection Agency (the EPA), as well as the
With no statutory safe harbor that the Regional Board could have relied on to ensure the EPA‘s approval of the state permitting process, the Board interpreted the federal standard in light of the statutory text, implementing regulations, and its technical appraisal of potential alternatives. In discharging its own role, the Commission was then bound to afford the Regional Board a measure of “sister-agency” deference. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7 [78 Cal.Rptr.2d 1, 960 P.2d 1031] [explaining that “the binding power of an agency‘s interpretation of a statute or regulation is contextual: Its power to persuade is both circumstantial and dependent on the presence or absence of factors that support the merit of the interpretation“].) In this case, the Regional Board informed localities that, in its view, the various permit conditions it imposed would satisfy the maximum extent practicable standard. The EPA agreed the requirements were within the scope of the federal standard. The Regional Board‘s judgment that these conditions will control pollutant discharges to the extent required by federal law is at the core of the agency‘s institutional expertise. That expertise merits a measure of deference because the Regional Board‘s ken includes not only its greater familiarity with the
Remand to the Commission would have been the more appropriate course for multiple reasons. First, the Commission applied the wrong framework for its analysis. It failed to consider all the evidence relevant to whether the permit conditions were necessary for compliance with federal law. The Commission compounded its error by relying on an interpretation of the
In particular, the Commission treated the problem as essentially a simple matter of searching the statutory text and regulations for precisely the same terms used by the Regional Board‘s permit conditions. Unless the requirement in question is referenced explicitly in a federal statutory or regulatory provision, the Commission‘s analysis suggests, the requirement cannot be a federal mandate. With respect to trash receptacles, the Commission stated: “Because installing and maintaining trash receptacles at transit stops is not expressly required of cities or counties or municipal separate storm sewer dischargers in the federal statutes or regulations, these are activities that ‘mandate costs that exceed the mandate in the federal law or regulation.’ ” And with respect to industrial facility inspections, the Commission said this: “Inasmuch as the federal regulation (
Existing law does not support this method of determining what constitutes a federal mandate. Instead, our past decisions emphasize the need to consider the implications of multiple statutory provisions and broader statutory context when interpreting federal law to determine if a given condition constitutes a federal mandate. (See City of Sacramento v. State of California (1990) 50 Cal.3d 51, 76 [266 Cal.Rptr. 139, 785 P.2d 522] (City of Sacramento); see also San Diego Unified School Dist. v. Commission on State Mandates (2004) 33 Cal.4th 859, 890 [16 Cal.Rptr.3d 466, 94 P.3d 589] [“challenged state rules or procedures that are intended to implement an applicable federal law and whose costs are, in context, de minimis should be treated as part and parcel of the underlying federal mandate” (italics added)].) In contrast,
But if the Commission applied the wrong framework for its analysis, the right course is to remand. Doing so would obviate the need to cobble together scattered support for a decision by the Commission that was premised, in the first instance, on the Commission‘s own misconstrual of the inquiry before it. Instead, we should give the Commission an opportunity to reevaluate its conclusion in light of the entire record and to, where appropriate, solicit further information from the parties to shed light on what permit conditions are necessary for compliance with federal law.
The potential consequences of allowing the Commission to continue on its present path are quite troubling. For if the law were as the Commission suggests, the state would be unduly discouraged from participating in federal programs like the NPDES—even though participation might otherwise be in California‘s interest—if the state knows ex ante that it will be unable to pass along the expenses to the local areas that experience the most costs and benefits from the mandate at issue. Our law on unfunded mandates does not compel such a result. Nor is there an apparent prudential rationale in support of it.
The Commission‘s approach also fails to appreciate the EPA‘s role in implementing (through its interpretation and enforcement of the
Second, beyond failing to consider all the relevant evidence bearing on the necessity of the imposed permit conditions, the Commission failed to extend any meaningful deference to the Regional Board‘s conclusions—even though such deference was warranted given that the nature of the decisions involved in interpreting the
Conditions as prosaic as trash receptacle requirements initially may not seem to implicate the Regional Board‘s expertise. Yet its unique experience and technical competence matter even with respect to these conditions, because the use of such conditions implicates a decision not to use alternatives that might require greater conventional expert judgment to evaluate. Moreover, the Regional Board is likely to accumulate a distinct and greater degree of knowledge regarding issues such as the reactions of stakeholders to different requirements, and related factors relevant to determining which conditions are necessary to satisfy the
The Commission acknowledged that the State Water Resources Control Board—as well as the EPA—believed the permit requirements did not exceed
Nor is the majority correct in suggesting that the Commission had only a limited responsibility, if it had one at all, to extend any deference to the Regional Board. (See maj. opn., ante, at pp. 768-769.) The Regional Board‘s judgment as to whether the imposed permit conditions were necessary to comply with federal law was a prerequisite to the Commission‘s own task, which was to review the Board‘s determination in light of all the relevant evidence. To the extent ambiguity exists as to whether the Regional Board‘s conclusions incorporated any findings that these conditions were necessary to meet the federal standard (see id. at pp. 768-769), remand to clarify the Board‘s position is in order. By instead simply upholding the Commission‘s conclusion without remand, the majority displaces any meaningful role for the Regional Board‘s expert judgment.
The majority does so even though courts have routinely emphasized the pivotal role regional boards play in interpreting the
Third, the Commission devoted insufficient attention in its analysis to the role of states in implementing the
In light of these concerns with the Commission‘s approach to this case, it is difficult to see the basis for—or utility of—upholding the Commission‘s decision, even under the inscrutable standard of review the majority employs. (See California Youth Authority v. State Personnel Bd. (2002) 104 Cal.App.4th 575, 586 [128 Cal.Rptr.2d 514] [substantial evidence review requires that all evidence be considered, including evidence that does not support the agency‘s decision]; see also Sierra Club v. U.S. Army Corps of Engineers (2d Cir. 1983) 701 F.2d 1011, 1030 [“the court may properly be skeptical as to whether an [agency report‘s] conclusions have a substantial basis in fact if the responsible agency has apparently ignored the conflicting views of other agencies having pertinent expertise“].) The better course, in my view, would be for us to articulate the appropriate standard for evaluating the question whether these permit conditions are state mandates and then remand for the Commission to apply it in the first instance.
II.
The Commission relied on a narrow approach that only compares the terms of a permit with the text of the
The majority may be correct that the facts of City of Sacramento are distinguishable. (See maj. opn., ante, at p. 768.) In that case, the state risked forsaking subsidies and tax credits for its resident businesses if it failed to comply with federal law requiring that unemployment insurance protection be extended to local government employees. (Id. at p. 764.) Here, in contrast, the negative consequences of failing to comply with federal law may seem less severe, at least in fiscal terms: the EPA may determine that the state is not in compliance with the
So instead of adopting an approach foreign to our precedent, the Commission should have begun its analysis with the statutory and regulatory text—and then it should have considered other relevant materials and record evidence bearing on whether the permit conditions are necessary to satisfy federal law. Crucially, such evidence includes how the federal regulatory scheme operates in practice. The Commission could have examined, for instance, previous permits issued by the EPA in similarly situated jurisdictions, comparing them to the inspection and trash receptacle requirements the Regional Board imposed here and giving due consideration to the EPA‘s conclusion that the maximum extent practicable standard is applied in a highly site-specific and flexible manner in order to account for unique local challenges and conditions. (See 64 Fed.Reg. 68722, 68754 (Dec. 8, 1999).) The Commission could also have considered whether, instead of identifying permitting conditions necessary to comply with the
***
The Commission‘s decision—and the approach that produced it—fails to accord with existing law and with the nature of the applicable federal scheme. The state is not responsible for reimbursing localities for permit conditions that are necessary to comply with federal law, a circumstance that renders interpretation of the
Accordingly, I would remand the matter to the Court of Appeal with directions that it instruct the Commission to reconsider its decision. On reconsideration, the Commission should appropriately defer to the Regional Board, consider all relevant evidence bearing on the question at hand, and ensure the evidence clearly shows the challenged permit conditions were not necessary to comply with the federal mandate. This is the standard that most
Liu, J., and Kruger, J., concurred.
The petition of plaintiffs and respondents for a rehearing was denied November 16, 2017, and the opinion was modified to read as printed above. Cuéllar, J., was of the opinion that the petition should be granted.