County of Los Angeles v. Commission on State Mandates and the Regional Water Quality Control Board

By Kate J. Hart

On May 10, 2007, the California Second District Court of Appeal issued a potentially significant decision concerning unfunded state mandates dictated by a Regional Board permit issued in 2001.  The case is County of Los Angeles v. Commission on State Mandates and the Regional Water Quality Control Board (May 10, 2007) 2007 Cal.App.Lexis 711.  This case goes to the heart of state enforced regulatory authority because it calls into question whether the Regional Boards can issue permits (or enforcement orders) that require local governments, special districts, cities and counties to comply with a “new program or [provide] higher level of service of any existing program” without providing reimbursement for additional program costs.

Briefly, the case involves Los Angeles County and several cities that were issued a revised NPDES permit for municipal stormwater discharges in their respective jurisdictions.  Two of the provisions of the new permit required the permittees to (1) inspect industrial, commercial and construction water treatment facilities and (2) install and maintain trash receptacles at transit stops.  Permittees filed a claim with the Commission on State Mandates (“Commission”) seeking reimbursement for all costs related to complying with these requirements, arguing that the California Constitution (Art. XIII B, §6) provides for such reimbursement.  (“Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse that local government for the costs of the program or increased level of service….”) 

The Commission denied the claims, holding that Government Code section 17516(c) specifically excludes reimbursement for state mandates contained in “any order, plan, requirement, rule or regulation issued by the State [or] Regional Board …”  The permittees filed a declaratory relief action in superior court, claiming (among other things) that section 17516(c) was unconstitutional on its face.  Both the trial court and Court of Appeal agreed with the permittees, and the matter has now been remanded back to the Commission on State Mandates for a factual determination of whether the reimbursement claims fall within Art. XIII B, §6.

Approved by the voters in 1979, Article XIII B, §6 is known as the “Spirit of Prop 13” because it limits the ability of the State to impose new mandates on local governments, given that local governments have less money after Prop 13 was enacted in 1978.  Article XIII B, §6 has three exceptions for when reimbursement is not required for a state-imposed mandate.  These include:  (1) legislative mandates requested by the local agency affected; (2) legislation defining a new crime or changing an existing definition of a crime; and (3) legislative mandates enacted prior to January 1, 1975.  Also by the terms of the provision and significant to the issue of State and Regional Board-issued plans, policies, regulations and permits, the subvention requirements do not apply to federally-imposed local mandates.

On appeal, the Commission (and Regional Board) argued that the subvention requirements do not apply because 1) the 90-day statute of limitations was time-barred; and 2) the Regional Board’s NPDES stormwater permit was merely a conduit of the federal mandate or, in the alternative, the permit was issued pursuant to the state’s Porter-Cologne authority that pre-dated January 1, 1975.

With respect to the statute of limitations issue, the Court of Appeal held that the Commission had waived its right to assert the statute of limitations defense, but in any event that the 90-day statute of limitations contained in section 341.5 of the Code of Civil Procedure did not apply to a challenge to an action by an administrative agency. With respect to the federal mandate issue, the Court of Appeal determined these were factual issues that must be addressed in further Commission proceedings.  As such, what happens next will be important to all local governmental agencies, special districts, cities and counties with regard to stormwater permits, TMDL implementation, POTW permits, and the like.

This case is important because the Regional Boards clearly have authority to issue more and more restrictive permits to protect water quality in their respective regions. However, should the Commission on State Mandates find that local subvention is required to cover the compliance costs of those permits, the Legislature and the Governor will be faced with a monumental fiscal crisis in trying to fund new treatment facilities, best management practices (BMPs), etc. Should the State of California have to write a check at the same time it mandates regulatory upgrades, it would be reasonable to expect regulations to largely level off, given the state of the State of California budget. 

Kate Hart is an associate with Abbott & Kindermann, LLP.  For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.
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