On January 29, 2014, the California Supreme Court granted review of State Department of Finance v. Commission on State Mandates, 220 Cal. App. 4th 740 (2013), depublished by 2014 Cal. LEXIS 473 (Cal., Jan. 21, 2014) to settle an important question of law:  Are certain requirements in National Pollutant Discharge Elimination System permits under the Clean Water Act (CWA) issued to real parties in interest by the Regional Water Quality Control Boards (RWQCB) state mandates subject to reimbursement under article XIII B, section 6, of the California Constitution?  The appeal flows from the Court of Appeal’s determination that several aspects of a stormwater sewer permit are not reimbursable mandates because they are intended to implement the CWA’s general requirement to reduce water pollutants to the maximum extent practicable.  The decision may have potentially far-reaching consequences and has, accordingly, garnered significant interest from the regulated community.  Somach Simmons & Dunn represents the California Stormwater Quality Association as amicus curiae in this appeal.

Article XIII B, section 6, subdivision (a), of the California Constitution provides that, when the Legislature or a state agency mandates a new program or higher level of service on a local government, the state shall reimburse that local government for the cost of the mandate.  The purpose of this constitutional article is to preclude the state from shifting financial responsibilities for government functions to local governments, whose ability to raise funds is significantly limited by the California Constitution.  The Commission on State Mandates (Commission) is tasked with hearing and deciding claims (referred to as “test claims”) alleging that the Legislature or a state agency imposed a reimbursable mandate upon local agencies and school districts.

This case concerns an RWQCB’s issuance of a stormwater permit, which imposed various obligations on the County of Los Angeles (County), the Los Angeles County Flood Control District, and 84 cities (Permittees).  The permit requires the Permittees to, among other things, place trash receptacles at public transit stops, and to perform inspections at certain commercial facilities, industrial facilities, and construction sites (Obligations).  In 2009, following a series of appeals, the Commission considered the test claims filed by the County and several cities (Appellants), finding that the permit’s trash and inspection obligations constituted state mandates.  The Commission further found that the state had to reimburse the Appellants for the trash obligation, but not for the inspection obligations, because the Appellants could assess fees on others to pay for the inspections.  On appeal, the trial court set aside the Commission’s decision, and the appellate court affirmed the trial court’s ruling.  To reach its decision, the Court of Appeal found that because the federal statute in question was unique, the general-purpose mandate analysis was of limited use.  The Court of Appeal held that, because the state was functioning as the federal Environmental Protection Agency under the CWA, the Obligations were, as a matter of law, not state mandates, and, thus, not reimbursable under the California Constitution.

This case raises constitutional issues that are a matter of statewide importance, and creates significant uncertainty with respect to the role of the Commission in the area of clean water law.  Updates on this case will be posted to the website as they become available.

For further information regarding this case, please contact Louinda Lacey at 916-446-7979 or by email at llacey@somachlaw.com.

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