After several years of administrative and courtroom battling, the California Supreme Court handed down a decision on August 29, 2016, that promises to relieve pressure on the building industry to fund costly storm water quality programs throughout the state.
The case was Department of Finance v. Commission on State Mandates, and involved a challenge brought by the County of Los Angeles seeking to have the state fund portions of their implementation program for the municipal separate storm sewer system (MS4) permit. Public storm drain permits often cost millions or billions of dollars for local governments to implement and the specific requirements challenged by the County of Los Angeles included requiring trash receptacles at transit stops and inspections of various facilities, including construction sites.
Per the California Constitution (Article XIII B, §6.a) the state is required to reimburse local governments that state law or regulations require them to implement programs that go beyond federal law. Many local governments have argued that numerous aspects of their municipal storm sewer permits—issued by the State Water Resources Control Board or Regional Water Quality Control Boards—go beyond the requirements of the federal Clean Water Act and are thus state mandates eligible for reimbursement. The County of Los Angeles along with most of the cities therein filed a claim with the Commission on State Mandates demanding such reimbursement and the case was the first one of its kind filed in the state. Other local governments, including the Counties of San Diego and Orange, also have matters pending before the courts or the Commission that will be impacted by this decision.
BILD Foundation was involved in each stage of the litigation, filing friend of the court briefs supporting the argument that the terms of the storm drain permits extend beyond federal requirements, are imposed at the discretion of the state, and are, thus, subject to reimbursement by the state. The goal of the BILD briefs was to support the local governments, ensure access to funding of the local programs, and thereby relieve some pressure felt by the building and construction community to contribute to the funding of these costly programs.
Regarding inspections, the Supreme Court found that the federal “maximum extent practicable” standard required operator inspections of construction sites, and further, that via statewide permits (such as the California Construction General Permit) responsibility for such inspections belonged to the Regional Water Boards. For the trash receptacles the Supreme Court ruled that “[t]he fact that the [US] EPA itself had issued permits in other cities, but did not include the trash receptacle condition, fatally undermines the argument that the requirement was federally mandated.” In its opinion remanding the case back to the Court of Appeal, the Supreme Court found that the permit conditions at issue “were imposed as a result of the state’s discretionary action” and thus would be eligible for reimbursement by the state.
The case represents a significant win for the regulated community. The case will inform other pending cases wherein local governments are seeking reimbursement for storm water program implementation, aiding the financing of these programs and relieving pressure on local government to look to others, including the building industry, to pay for the programs. Moreover, the case is likely to lead to a reexamination of many of the excessive requirements contained in these storm water permits and could lead to relaxation of the requirements, benefiting the local governments and the building industry alike. After this case, it is also likely that state regulators will be cautioned against blithely exercising their discretion to go beyond federal requirements without careful examination and analysis of the costs and benefits of doing so.
BILD will continue to monitor other pending claims and cases and will continue to advocate for determinations that many elements common to storm water permits are discretionary, go beyond federal requirements, and open up eligibility for state reimbursement.
The text of the California Supreme Court’s opinion in Department of Finance v. Commission on State Mandates can be found here.